8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 23, 2004

MICROSEMI CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	0-8866	95-2110371
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

2381 Morse Avenue, Irvine, California	92614
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code

(949) 221-7100

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

INFORMATION TO BE INCLUDED IN THE REPORT

Section 1 - Registrant’s Business and Operations

Item 1.01 Entry into a Material Definitive Agreement.

1. Automatic adjustments were made under our 1987 Stock Plan, as amended, on account of our February 20, 2004 two-for-one stock split effected by a stock dividend. In addition our 1987 Stock Plan, as amended, provides for annual increases in the number of shares authorized for future grants. Exhibit 10.13.1 is a formal restatement of various quantities and amounts under the Plan to reflect these automatic adjustments as required pursuant to the 1987 Stock Plan.

2. Form of Executive Retention Agreement—We attach as Exhibit 10.93 a form of Executive Retention Agreement. The purpose of the Executive Retention Agreements is to add incentives so that employees are retained and continue to provide services to the Company despite the significant uncertainty and instability that could potentially attend a future change of control of the Company. We plan to enter into the four almost-identical Executive Retention Agreements that we refer to in the list accompanying the Form of Executive Retention Agreement in the Exhibit Index. These agreements will be identical to one another except for the parties thereto, the dates of execution, or other details, and were materially different from one another only as to the amount of the potential payout, which would be a multiple of one or two times the other relevant amount or number, such as the amount of the person’s past base pay and bonus, or represents the number of years during which benefits are payable in certain events. The respective amounts are shown opposite the name of the party in the list in the Exhibit Index.

3. Form of Employee Stock Option Agreement prior to August 17, 2004—We have attached as Exhibit 10.94 the form of agreement that we have previously executed and delivered to grantees of incentive stock options under the Microsemi Corporation 1987 Stock Plan, as amended. Grantees have included our chief executive officer and each of the four other most-highly compensated executive officers.

4. Form of Employee Stock Option Agreement from and after August 17, 2004—We have attached as Exhibit 10.95, a new form of incentive stock option agreement for grants to employees, including executive officers who are employees. As of the date of this report, no grants have been made since adoption of the new option form. Pursuant to the 1987 Plan, the Compensation Committee, which is the Administrator of the 1987 Plan, can from time to time adopt a new form of option agreement consistent with the 1987 Plan. The new agreement form provides grantees with additional provisions that may make the options vested and exercisable in the event of a change of control. The purpose of these provisions is to assure that employees will have an incentive to remain in the employment of the Company despite uncertainties and risks that might attend a potential future change in control. The form differs from the prior form only in regard to the provision concerning acceleration of vesting in the event of a change in control. The acceleration provision also states that, in the discretion of the Compensation Committee, accelerated vesting would not occur if the vested and unvested options are to be assumed by the acquiring party and certain post-acquisition protections against actual or constructive termination are put into place, as more fully described in the form of agreement. Grantees will include our chief executive officer and each of the four other most-highly compensated executive officers.

5. Form of Non-Employee Stock Option Agreement—We have attached as Exhibit 10.96 the form of agreement that we have executed and delivered to all grantees of non-qualified stock options under the Microsemi Corporation 1987 Stock Plan, as amended. Grantees have included and will include all of our non-employee directors.

6. Description of Cash Bonus Plan—We have attached as Exhibit 10.97 a description of the Cash Bonus Program as presently in effect. There is no formally adopted plan document. Participants have included and will include our chief executive officer and each of the four other most-highly compensated executive officers.

7. Supplemental Medical Plan—We have attached as Exhibit 10.98 the contract governing the Supplemental Medical Plan as presently in effect. Participants have included and will include our chief executive officer and each of the four other most-highly compensated executive officers.

The forms of agreement and description of benefits mentioned above are filed as exhibits to this Report pursuant to Rule 601 of Regulation S-K. The descriptions in this Report are qualified in their entirety by the respective related exhibits.

Section 7 - Regulation FD

Item 7.01 Regulation FD Disclosure.

Exhibit 10.13.1 reflects adjustments made automatically pursuant to a stockholder-approved plan. Exhibits 10.94 and 10.96 reflect agreements adopted under and pursuant to the 1987 Stock Plan. Further Exhibits 10.97 and 10.98 reflect benefits that have been in place, are currently in place. All of these, moreover, are accounted for in our financial statements and have been described previously in relevant reports and proxy statements.

The only new benefits are in Exhibits 10.93 and 10.95, neither of which has yet been executed, but which we intend to execute following the filing of this report. Also, these new agreements refer to a potential future “change-in-control.” The new agreements or new provisions are part of our longer-term compensation strategy that focuses on retention of key executives, and we definitely did not adopt these agreements in response to any specific situation involving any known potential “change-in-control.”

Section 9 - Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

Exhibit No.	Description
10.13.1	Adjustment of 1987 Plan for February 2004 Stock Split
10.93	Form of Executive Retention Agreement

Date	Executive	Potential Payout as a Multiple of Pay (marked with “X”s)
	Ralph Brandi	Two (2)
	John Holtrust	One (1)
	James Gentile	One (1)
	Steven Litchfield	One (1)

10.94	Form of Employee Stock Option Agreement prior to August 17, 2004
10.95	Form of Employee Stock Option Agreement from and after August 17, 2004
10.96	Form of Non-Employee Stock Option Agreement
10.97	Description of Cash Bonus Plan
10.98	Supplemental Medical Plan

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

MICROSEMI CORPORATION

(Registrant)

Date: September 23, 2004

/s/ DAVID R. SONKSEN

(Signature)

David R. Sonksen,

Executive Vice President

Chief Financial Officer

Treasurer and Secretary

(Name and Title)

EXHIBIT INDEX

Exhibit No.	Description
10.13.1	Adjustment of 1987 Plan for February 2004 Stock Split
10.93	Form of Executive Retention Agreement

Executive	Potential Payout as a Multiple of Pay
Ralph Brandi	Two (2)
John Holtrust	One (1)
James Gentile	One (1)
Steven Litchfield	One (1)

10.94	Form of Employee Stock Option Agreement prior to August 17, 2004
10.95	Form of Employee Stock Option Agreement from and after August 17, 2004
10.96	Form of Non-Employee Stock Option Agreement
10.97	Description of Cash Bonus Plan
10.98	Supplemental Medical Plan

EX-10.13.1

Exhibit 10.13.1

ADJUSTMENTS

FOR

THE FEBRUARY 2004 TWO-FOR-ONE STOCK SPLIT EFFECTED BY A STOCK DIVIDEND

The Committee adjusted the number of shares and Option Price in all outstanding Grants made on or before February 20, 2004, pursuant to Section 4(b)(i) of the 1987 Microsemi Corporation Stock Plan, as heretofore amended (“1987 Plan”), as follows:

A. The exercise price per share stated in such outstanding Grants is divided by two to yield the adjusted exercise price per share.

B. The number of shares covered by such outstanding Grants then remaining unexercised and unexpired is multiplied by two to yield the adjusted number of shares then remaining covered by the Grant.

In order to reflect the proportionate adjustments made by the Committee under Section 4(b)(i) of the 1987 Plan as a result of the two-for-one stock split effected by means of a stock dividend with a record date of the close of business on February 20, 2004, as of February 23, 2004 the following provisions of the 1987 Plan read as follows:

Section 2(a) of the Plan is amended and restated in its entirety to read as follows:

2. Shares Available for Grant.

(a) Shares Subject to Issuance or Transfer. Subject to adjustment as provided in Section 4(b), the aggregate number of shares of Microsemi Stock that may be issued or transferred under the 1987 Plan is 7,600,000 shares (as adjusted for the February 20, 2004 two-for-one stock split), before including the adjustments under Section 4(b)(ii). The shares may be authorized but unissued shares or treasury shares. The number of shares available for Grants at any given time shall be 7,600,000 (as adjusted for the February 20, 2004 two-for-one stock split), subject to past and future adjustment as provided in Section 4(b), and before including the adjustments under Section 4(b)(ii), reduced by the aggregate split-adjusted amounts of all shares previously issued or transferred and of shares which may become subject to issuance or transfer under then-outstanding Grants. Payment in cash in lieu of shares shall be deemed to be an issuance of the shares.

Section 2(b)(ii) of the Plan is amended and restated in its entirety to read as follows:

(i) Stockholder-Approved Annual Increases. The number of shares of Microsemi Stock available for awards under the 1987 Plan has increased at the beginning of each of the Company’s respective fiscal years listed below by amounts each year equal to 2% of the number of shares of Microsemi Stock outstanding as of the Company’s immediately prior fiscal year end:

Fiscal Year	Increase
1995	607,564	(restated)
1996	623,690	*(restated)
1997	632,636	(restated)
1998	698,864	(restated)
1999	933,300	(restated)
2000	2,121,600	(restated)*

* Includes an increase of approximately 2% plus a shareholder-approved increase of 1,200,000 shares (restated) of Microsemi Stock which became available for awards under the 1987 Plan as of the first day of fiscal year 2001.

2004 ADJUSTMENTS PAGE 1

The number of shares of Microsemi Stock available for awards under the 1987 Plan has increased at the beginning of each of the Company’s respective fiscal years listed below by amounts each year equal to 4% of the number of shares of Microsemi Stock outstanding as of the Company’s immediately prior fiscal year end:

Fiscal Year	Increase
2001	2,207,104	(restated)
2002	2,259,760	(restated)
2003	2,311,432	(restated)
2004	2,328,026	(restated)
2005	2,385,207	(restated)**

** Estimated. Adjustment becomes effective on the first day of fiscal year 2005.

Each subsequent increase will be equal to 4% of the number of outstanding shares (other than treasury shares) of Microsemi Stock as of the first day of fiscal year 2006 and the first day of the five (5) consecutive fiscal years thereafter during the term of the Plan. The number of authorized shares under the 1987 Plan, including the increases pursuant to this Section 4(b)(ii), shall be reduced by the aggregate of the number of all shares previously issued or transferred and of shares which may become subject to issuance or transfer under then-outstanding Grants. Any award which expires or lapses without being exercised, and shares of restricted stock which are forfeited to or repurchased by the Company, again become available for use under the 1987 Plan. Payment in cash in lieu of shares shall be deemed to be an issuance of the shares. Notwithstanding the provision for annual increases in the number of shares available under the 1987 Plan, the maximum number of shares which may be issued pursuant to incentive stock options granted under the 1987 Plan may not exceed 28,000,000.

Section 3 of the 1987 Plan is amended and restated in full to read as follows:

3. Eligibility. The 1987 Plan shall include:

(a) Grants may be made to any employee of the Company who is an officer or other key executive, professional or administrative employee, including a person who is also a member of the Board of Directors, non-employee officers, non-employee consultants or service providers (“Eligible Person”). The Committee shall select the persons to receive Grants (“Grantees”) from among the Eligible Persons and determine the number of shares subject to any particular Grant. However, non-employee directors serving on a Committee that selects Grantees and/or approves Grants under the 1987 Plan are intended to be Non-Employee Directors within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934 and therefore shall not, while serving on such Committee, be granted options for services rendered as a consultant or in any capacity other than as a director, except to such extent as would be permitted in accordance with said rule. For avoidance of doubt, discretionary grants (as well as these annual grants) may be made to non-employee directors for service as a director at any time and may be made to non-employee directors for service as a consultant or other non-director capacity while that non-employee director is not serving on the

2004 ADJUSTMENTS PAGE 2

Committee that selects Grantees or approves Grants under the 1987 Plan. Effective as of December 20, 1993, and thereafter, no one person will receive more than 600,000 options or restricted shares or share equivalents under performance awards or SARs under the 1987 Plan in any one (1) calendar year. For purposes of applying the limit in the immediately preceding sentence to Grants made prior to stock splits, each one pre-split share subject to the Grant is equivalent to the number of post-split shares of Common Stock that would have been issuable after all adjustments (the amount of shares that could have been held by the Grantee as if fully exercised and as if the underlying Common Stock was held continuously by the Grantee through the dates of all subsequent stock splits or dividends).

(b) Formula grants shall be made to each non-employee director of the Company as of the last day of fiscal year 2001 and each subsequent fiscal year, automatically, of a nonqualified option under the 1987 Plan to purchase 12,000 shares of the Company’s Common Stock, which shall be immediately vested as of the grant date. The options granted to non-employee directors of the Company shall have an exercise price equal to 100% of the fair market value of the underlying Common Stock on the date of grant of the options, as determined in accordance with the terms of the 1987 Plan, and shall have terms of ten years, on the terms and subject to the provisions of the 1987 Plan. All such options shall be otherwise on the terms and subject to the provisions of the 1987 Plan.

2004 ADJUSTMENTS PAGE 3

EX-10.93

Exhibit 10.93

EXECUTIVE RETENTION AGREEMENT

by and between

MICROSEMI CORPORATION

and

(“Executive”)

TABLE OF CONTENTS

				Page
1.	Term.			1
2.	Terminations by Executive.			1
	a.	Termination by Executive for “Good Reason.”		1
	b.	Change of Control.		2
	c.	Voluntary Termination by Executive.		2
3.	Executive’s Benefits Following Termination by Executive for “Good Reason” or by Company, in either Case only following Change in Control.			2
		(i)	Salary.	3
		(ii)	Incentive Compensation.	3
		(iii)	Car Allowance.	3
		(iv)	Stock Options.	3
		(v)	Medical and Life Insurance.	3
		(vi)	Retirement Plans; Unvested Company Contribution.	3
		(vii)	Vacation and Sick Leave.	4
		(viii)	General.	4
4.	Other Benefits Following Termination			4
	a.	COBRA		4
5.	Indemnification			4
6.	Obligatory Restrictions on Executive			4
	a.	Non-Competition		4
	b.	No Solicitation of Employees		5
	c.	Consideration		5
7.	Termination of Certain Benefits Following New Employment			5
8.	No Mitigation by Executive Required			5
9.	Binding Agreement			6
10.	No Attachment			6
11.	Assignment and Other Rights			6
12.	Waiver			6
13.	Notice			6
14.	Governing Law			7
15.	Costs			7
16.	Severability			7
17.	Arbitration			7
18.	Entire Agreement			8
19.	Withholding			8
20.	Separate Counsel			8

EXECUTIVE RETENTION AGREEMENT

THIS EXECUTIVE RETENTION AGREEMENT (this “Agreement”) dated as of             , 200     is made by and between              (“Executive”) and MICROSEMI CORPORATION, a Delaware corporation (“Company”).

NOW, THEREFORE, for good and valuable considerations, receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. Term. The term of this Agreement shall commence on the date hereof. The term of this Agreement shall be renewed automatically on a daily basis so that the outstanding term is always X year(s) after the date on which notice of non-renewal or termination of this Agreement is given by the Executive to the Company or by the Company to the Executive. This Agreement relates to Executive’s employment with the Company, or any subsidiary, successor, assign or affiliate of the Company, under any written or oral agreement. For purposes of the following provisions “Date of Termination” means the effective date of termination of Executive’s employment with any of the entities described above, after notice and lapse of the notice period as required herein.

2. Terminations by Executive.

a. Termination by Executive for “Good Reason.” Following a Change in Control, Executive may terminate his active employment under his oral or written employment agreement with the Company upon five (5) days’ written notice to the Company given within ninety (90) days following the date on which the Executive becomes aware of any of the following events, each of which shall be deemed to be good reason for termination by Executive:

(i) any reduction in, or limitation upon, the compensation, reimbursable expenses or other benefits provided in this Agreement, other than (A) as generally effected by valid public law or regulation or (B) as results from change in the amount of the incentive compensation pool if not resulting from changes in the incentive pool formula or allocations and not resulting from accounting or operational effects of the acquisition;

(ii) any change in assignment of Executive’s primary duties to a work location more than 50 miles from the Company’s principal executive office at 2381 Morse Avenue, Irvine, California 92614, without Executive’s prior written consent;

(iii) any failure by the Company to obtain the assumption of this Agreement by any successor or assign of the Company;

(iv) any material breach by the Company of any provision of this Agreement; or

(v) any action taken by the Board or a standing Committee of the Board in connection with, or the formation of a special Committee of the Board for the purpose of, effecting any of the events listed in subparagraphs (i) through (iv) immediately above.

b. Change of Control. For purposes of this Agreement, “Change in Control” means the occurrence of any of the following events:

(i) Any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the total voting power represented by the Company’s then outstanding voting securities;

(ii) Consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least fifty-one percent (51%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or the stockholders of the Company approving a plan of complete liquidation of the Company or a consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets.

c. Voluntary Termination by Executive. After a Change in Control, without reason or for any reason other than “Good Reason” as set forth in Section 2.a above, Executive may voluntarily terminate his employment with the Company under any oral or written employment agreement upon a minimum of one (1) month’s written notice to the Company; provided, however, Executive shall receive only the compensation that would otherwise be accrued or payable as of or prior to the termination date.

3. Executive’s Benefits Following Termination by Executive for “Good Reason” or by Company, in either Case only following Change in Control. If Executive terminates his active employment under his oral or written employment agreement with the Company for “Good Reason” following a Change in Control or

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the Company terminates his active employment under his oral or written employment agreement with the Company following a Change in Control:

(i) Salary. Executive or his estate shall be entitled to payment, to be received not later than the fifteenth (15th) day following the Date of Termination, of an amount equal to X multiplied by Executive’s base salary as of the Date of Termination.

(ii) Incentive Compensation. Executive or his estate will be entitled to receive, not later than the fifteenth (15th) day following the Date of Termination, an incentive compensation payment of X multiplied by the highest annual incentive compensation amount paid during any of the preceding three (3) full plan years.

(iii) Car Allowance. The car allowance shall continue for a period of X year(s) following the Date of Termination, subject to termination as described in Section 7.

(iv) Stock Options. The restriction or forfeiture period on any restricted stock granted by the Company to Executive under all plans and all stock options and general stock appreciation rights granted by the Company to Executive shall lapse or accelerate, as the case may be, and become fully vested and exercisable on the Date of Termination, and shall remain exercisable for a period of X year(s) following the Date of Termination, subject to the latest expiration date specified in the restricted stock or option agreements.

(v) Medical and Life Insurance. Payment of premiums for medical, dental and vision insurance and life insurance by the Company shall continue on and subject to the terms of this Agreement for a period of X year(s) following the Date of Termination, subject to termination under Section 7.

(vi) Retirement Plans; Unvested Company Contribution. The Executive shall be entitled to receive, not later than the fifteenth (15th) day following the Date of Termination, all benefits payable to him upon or on account of termination under any of the Company’s tax-qualified employee benefit plans and any other plan, program or arrangement relating to deferred compensation, retirement or other benefits including, without limitation, any profit sharing, 401(k), employee stock ownership plan, or any plan established as a supplement to any of the aforementioned plans. The Company shall also pay Executive, not later than the fifteenth (15th) day following the Date of Termination, an amount equal to all unvested Company contributions credited to the Executive’s account under any tax-qualified employee benefit plan maintained by the Company as of the Date of Termination. In the event that this subparagraph (vi) should conflict with the provisions of any of the Company’s tax-qualified employee benefit plans and any other plan, program or arrangement relating to deferred compensation, retirement or other benefits including, without limitation, any profit sharing, 401(k), employee stock ownership plan, or any plan established as a supplement to any of the aforementioned plans, then the provisions of the plan shall govern, provided that the Company’s contribution shall vest pursuant to this subparagraph (vi) to the maximum extent permissible.

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(vii) Vacation and Sick Leave. The Company shall also pay Executive, not later than the second day following the Date of Termination, a pro rata amount of his base salary under his employment agreement, in effect on the Date of Termination, for each day of vacation leave which has accrued as of the Date of Termination, but which is unpaid as of such date, to which Executive is entitled under the Company’s vacation leave policy. The Company shall be required to pay for sick leave days only to the extent that Executive has taken sick leave on or prior to the Date of Termination to which Executive is entitled under the Company’s sick leave policy.

(viii) General. Executive or his estate shall also be entitled to any other amounts then owing or accrued but unpaid to the Executive pursuant to any plans or arrangements of the Company.

4. Other Benefits Following Termination. Executive shall also be entitled to the following additional benefits upon or following any such termination following a Change in Control as described in Section 3:

a. During the period following employment or benefits hereunder, to the extent required by law, Executive shall have the rights under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), or any successor statute.

5. Indemnification. For at least ten (10) years following the Date of Termination for any reason, Executive shall continue to be indemnified under the Company’s Certificate of Incorporation and Bylaws at least to the same extent indemnification was available prior to the Date of Termination and permitted by law, and Executive shall be insured under the directors’ and officers’ liability insurance, the fiduciary liability insurance and the professional liability insurance policies that are the same as, or provide coverage at least equivalent to, those applicable or made available by the Company to the then members of senior management of the Company. Independent of such provision, if at any time Executive is made, or threatened to be made, a party to any legal action or proceeding, whether civil or criminal, by reason of the fact that Executive is or was a director or officer of the Company or serves or served any other corporation fifty percent (50%) or more owned or controlled by the Company in any capacity at the Company’s request, Executive shall be indemnified by the Company, and the Company shall pay Executive’s related expenses when and as incurred, all to the full extent permitted by law.

6. Obligatory Restrictions on Executive. In addition to any and all other similar restrictions and limitations on Executive pursuant to law, other agreements and policies of the Company, Executive agrees that following a Change in Control and following a termination of a kind described in Section 3 for which the Company is obligated to pay and in fact tenders the benefits as described in Section 3, except as provided below or with the Company’s written consent, Executive will be bound by the following restrictive covenants during the period commencing on the Date of Termination and extending X year(s):

a. Non-Competition. Executive will not, directly or indirectly, engage for his own account in, or own, manage, operate, control, be employed as an employee or consultant, buy, participate in, or be connected

4

in any manner with the ownership, management, operation or control of any firm, corporation, association, or other business entity which is in competition with the business of the Company; provided that Executive may invest in a business competitive with the Company to an extent not exceeding five percent (5%) of the total outstanding shares at the time of such investment in each one or more companies. A business will be considered for this purpose in competition with the Company if and only if the products of such business include more than one-third of the Company’s products as of immediately prior to the Change in Control.

b. No Solicitation of Employees. Executive will not solicit or, with the exception of any persons related to Executive by blood, marriage, or adoption, not more remote than first cousin, employ any current or future employee of the Company and will not intentionally disparage the Company, its management or its products.

c. Consideration. Executive’s obligations are made in consideration of the salary and other benefits paid or committed to be paid by the Company following the Date of Termination. The restrictive covenants on the part of Executive set forth in this Section 6 shall survive the termination of this Agreement, and the existence of any claims or cause of action by Executive against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense in the enforcement of these covenants. In the event of a breach or threatened breach by Executive of the provisions of this Section 6, the Company shall be entitled to an injunction restraining Executive from violating the provisions of this Section.

7. Termination of Certain Benefits Following New Employment. If Executive accepts a substantial engagement or employment (“New Employment”) with any other corporation, partnership, trust, government or other entity at any time during the term of benefit continuation referred to above, the Company may elect that Executive cease to be entitled to car allowance or medical, dental or vision insurance benefits effective upon the commencement of such other engagement or employment. However, Executive shall nevertheless continue to be entitled to the other benefits of this Agreement and shall continue to be bound by the provisions of this Agreement for any remaining duration of any period then applicable to Executive. For the purposes of this provision, “employment” or “engagement” shall exclude (i) service as an officer or director of a personal investment holding company, (ii) service as a director on the Board of a corporation or nonprofit organization, (iii) engagement as a bona fide part-time consultant, or (iv) self-employment or engagement as an officer or director of an operating corporation or enterprise (as opposed to a personal investment holding company) founded or controlled by Executive and which has (and only so long as it continues to have) revenues of less than $25 million per year.

8. No Mitigation by Executive Required. Company recognizes that because of Executive’s special talents, stature and opportunities in the electronics industry, in the event of termination by the Company or Executive before the end of the agreed term, the parties acknowledge and agree that the provisions of this Agreement regarding further payment of base salary, bonuses, and the exercisability of stock options and lapse of the restrictive or forfeiture period on restricted stock constitute fair and reasonable provisions for the consequences of such termination, do not constitute a penalty, and such payments and benefits shall not be limited or reduced by

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amounts Executive might earn or be able to earn from any other employment or ventures during the remainder of the agreed term of this Agreement. Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise.

9. Binding Agreement. This Agreement shall be binding upon and inure to the benefit of Executive, his heirs, distributees and assigns, and the Company, its successors and assigns. Executive may not, without the express written permission of the Company, assign or pledge any rights or obligations hereunder to any person, firm or corporation. Such permission shall not be unreasonably withheld. If the Executive should die while any amount would still be payable to Executive if he had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with this Agreement to the Executive’s estate.

10. No Attachment. Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge or hypothecation or to execution, attachment, levy or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void and of no effect.

11. Assignment and Other Rights. The Company will require any successor (whether direct or indirect, by operation of law, by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company) to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle Executive to compensation from the Company in the same amount and on the same terms as the Executive would be entitled hereunder, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be the Date of Termination. As used in this Agreement, “Company” shall mean the Company as defined above and any successor to its business and/or assets that assumes and agrees to perform this Agreement by operation of law, or otherwise.

12. Waiver. No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.

13. Notice. For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the Executive at his home address appearing in the records of the Company, in the case of the Executive, and in the case of the Company, to the attention of the Chairman of the Board at the principal executive offices of the Company, or to such other address as

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either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. Acceptance by Executive of benefits of participation shall constitute a certification by Executive of his continued eligibility for participation.

14. Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of California.

15. Costs. Each of the parties shall pay its own expenses, including attorneys’ fees, in the negotiation and preparation of this Agreement.

16. Severability. If, for any reason, any provision of this Agreement is held invalid, such invalidity shall not affect any other provision of this Agreement not held so invalid, and each such other provision shall to the full extent consistent with law continue in full force and effect. If any provision of this Agreement shall be held invalid in part, such invalidity shall in no way affect the rest of such provision not held so invalid, and the rest of such provision, together with all other provisions of this Agreement, shall to the full extent consistent with law continue in full force and effect. If this Agreement is held invalid or cannot be enforced, then to the full extent permitted by law, any prior agreement between the Company (or any predecessor thereof) and Executive shall be deemed reinstated as if this Agreement has not been executed.

17. Arbitration.

a. Any disagreement, dispute, controversy or claim arising out of or in any way related to this Agreement or the subject matter thereof or the interpretation hereof or any arrangements relating hereto or contemplated herein or the breach, termination or invalidity hereof shall be settled exclusively and finally by arbitration.

b. The arbitration shall be conducted in accordance with the Commercial Arbitration Rules (the “Arbitration Rules”) of the American Arbitration Association (the “AAA”). The arbitral tribunal shall consist of one arbitrator.

c. The Company shall pay all of the fees, if any, and expenses of such arbitration, and shall also pay all Executive’s expenses, including attorneys’ fees, incurred in connection with the arbitration regardless of the final outcome of such arbitration.

d. The arbitration shall be conducted in Orange County, California, or in any other city or county in the United States of America as the parties to the dispute may designate by mutual written consent.

e. Any decision or award of the tribunal shall be final and binding upon the parties to the arbitration proceeding. The parties hereto hereby waive to the extent permitted by law any rights to appeal or to review such award by any court or tribunal. The parties hereto agree that the award may be enforced against the parties to the arbitration proceeding or their assets wherever the award may be entered in any court having jurisdiction thereof.

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f. The parties stipulate that discovery may be held in any such arbitration proceeding as provided in Section 1283.05 of the California Code of Civil Procedure, as may be amended or revised from time to time.

g. During the period until the dispute is finally resolved in accordance with this Section, the Company will continue to pay the Executive his full compensation in effect when the notice giving rise to the dispute was given (including, but not limited to, base salary) and continue the Executive as a participant in all compensation, employee benefit and insurance plans, programs, arrangements and perquisites in which the Executive was participating or entitled when the notice giving rise to the dispute was given, until the dispute is finally resolved in accordance with this Section 17. Amounts paid under this subparagraph g shall be repaid to the Company or be offset against or reduce any other amounts due the Executive under this Agreement, as appropriate, only upon the final resolution of the dispute.

18. Entire Agreement. As of the date hereof, all previous agreements relating to the employment of Executive, however styled, are hereby superseded to the extent inconsistent herewith, and, excepting Executive’s present participation in Company stock and/or other benefit plans or programs and the agreements thereunder, which are hereby reaffirmed in all respects by both parties thereto except as expressly modified by this Agreement, this Agreement embodies all agreements, contracts, and understandings by and between the parties hereto. In addition, this Agreement supersedes and amends any subsequent employment agreement between Executive and the Company except to the extent such subsequent agreement expressly provides or provides benefits in excess of those herein provided. Should any other agreement, plan or arrangement between Company and Executive or other officers or employees of the Company provide for greater benefits upon a change in control, the terms of such other agreement, plan or arrangement shall apply to Executive on a “most favored” basis. This Agreement may not be changed orally, but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, extension, or discharge is sought.

19. Withholding. All payments or benefits under this Agreement are subject to, and the net payment to Executive will be reduced by, any applicable payroll tax withholding requirements, and will be payable net of appropriate amounts properly credited to the payment of income taxes of the Executive. The determination of the amount of any such withholding shall be made or confirmed by the independent accounting firm then employed by the Company.

20. Separate Counsel. The Company has been represented by Yocca Patch & Yocca, LLP in the negotiation and execution of this Agreement. The Executive has been invited and given opportunity to engage counsel independently to review or negotiate this Agreement, and Executive has had an adequate opportunity to do so and has either done so or chosen not to engage counsel.

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IN WITNESS WHEREOF, the parties have executed this Executive Retention Agreement as of the day and year first above written.

COMPANY:

MICROSEMI CORPORATION

By:

Name:

Title:

EXECUTIVE:

Name:

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EX-10.94

Exhibit 10.94

NOTICE OF STOCK OPTION GRANT

under the

1987 MICROSEMI CORPORATION STOCK PLAN

You have been granted the following Option to purchase Common Stock, par value $.20 per share, of Microsemi Corporation (the “Company”):

Name of Employee:	«First_Name» «Last_Name»
Total Number of Shares Subject to this Option:	«M__Shares»
Type of Option:	ISO
Exercise Price Per Share:	«Price_per_Share»
Date of Grant:	«Grant_Date»

Date First Exercisable:	Until the first anniversary of the Date of Grant, this Option may not be exercised with respect to any of the Shares covered hereby.
	During the second year it may be exercised as to not more than twenty-five percent of the total number of Shares covered hereby.
	During the third year it may be exercised as to an additional twenty-five percent, but not more than fifty percent of the total number of Shares covered hereby.
	During the fourth year it may be exercised as to an additional twenty-five percent, but not more than seventy-five percent of the total number of Shares covered hereby.
	On or after the fourth anniversary of the Date of Grant, this Option may be exercised up to one hundred percent of the total number of Shares covered hereby.

The Purchase Price shall be payable in any of the following forms: (i) in United States dollars and paid in cash, by certified check or by bank draft, or (ii) shares of the Company’s Common Stock already owned by Employee for a period of at least 6 months and surrendered in good form for transfer (such shares shall be valued at their Fair Market Value on the date the Option is exercised).

By your signature and the signature of the Company’s representative below, you and the Company agree that this Option is granted under and governed by the terms and conditions of the 1987 Microsemi Corporation Stock Plan, as amended, and the Stock Option Agreement, both of which are attached to and made a part of this document.

EMPLOYEE:		MICROSEMI CORPORATION
Signature:		By:
Name:	«First_Name» «Last_Name»	Name:	James J. Peterson
		Title:	President & CEO

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MICROSEMI CORPORATION

STOCK OPTION AGREEMENT

UNDER THE 1987 MICROSEMI CORPORATION STOCK PLAN

THIS STOCK OPTION AGREEMENT is made pursuant to an option grant notice (the “Notice of Stock Option Grant”) attached hereto and incorporated into this Agreement by this reference, made as of the Date of Grant as set forth in the Notice of Stock Option Grant, between Microsemi Corporation, a Delaware corporation (the “Company”) and the Holder, whose identity is as set forth in the Notice of Stock Option Grant. (Capitalized terms in the Notice of Option Grant attached hereto shall have the meanings ascribed to them in this Agreement.)

WHEREAS, the Company desires to carry out the purposes of the 1987 Microsemi Corporation Stock Plan (the “Plan”) by affording the Employee an opportunity to purchase shares of the Company’s Common Stock (the “Stock”);

WHEREAS, if and to the extent provided in the Notice of Option Grant, this Option is intended to qualify as an ISO (as defined below);

THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties have agreed, and do hereby agree as follows:

Section 1. Grant of Option

On the terms and conditions set forth in the Notice of Stock Option Grant and this Agreement, the Company grants to the Employee on the Date of Grant a right and option to purchase, at the Exercise Price, all or any portion of the number of Shares set forth in the Notice of Stock Option Grant (the “Option”) to the extent exercisable as set forth in the Notice of Option Grant. If this Option is granted pursuant to a Notice of Stock Option Grant that indicates that the Option is an Incentive Stock Option (“ISO”), then this Option is intended to qualify as an ISO under Section 422 of the Code but shall constitute a nonqualified stock option to the extent that it fails in whole or in part to qualify as an ISO for any reason.

Section 2. Purchase Price

The Exercise Price represents not less than one hundred percent (100%) of the Fair Market Value per Share as of the Date of Grant; or in the event that the Employee owns more than 10% of the total combined voting power of all classes of stock of the Company, the Exercise Price represents not less than 110% of the Fair Market Value per Share at Date of Grant.

Section 3. Medium of Payment

The Purchase Price shall be payable in any form of consideration described in the Notice of Stock Option Grant, or in any combination thereof. The Company shall not be required to issue or permit transfer of Shares of the Company Stock upon exercise of a Stock Option until the Purchase Price is fully paid.

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Section 4. Option Term

(a) No part of the Option shall be exercised after 10 years from the Date of Grant, except in the event Employee owns at the Date of Grant more than 10% of the total combined voting power of the Company, in which case no part of the Option may be exercised after 5 years from the Date of Grant.

(b) If an employee ceases to be employed by the Company or its parent or any of its subsidiaries (if any) issuing or assuming a Stock Option in a transaction to which Section 424(a) of the Code applies, for any reason whatsoever, except for death or disability, any unexercised options which have become exercisable shall terminate three months after the date he ceases to be an employee. Options that are not exercisable on the date of termination shall be deemed to have immediately expired. A leave of absence (not in excess of three months) approved in writing by the Committee shall not be deemed a termination of employment for the purposes of this paragraph. Any leave of absence in excess of three months shall be equivalent to a termination of employment. If Employee dies, or becomes disabled within the meaning of Section 22(e) (3) of the Code, before this option is terminated, the three-month period will become one year.

Section 5. Time of Exercise

The portion of this Option which has become exercisable may be exercised at any time or from time to time (so long as this Option has not expired), as to any part or all hereof; provided that this Option may not be exercised for a fraction of a share of Stock.

Section 6. Method of Exercise

(a) Each exercise of this Option shall be by written notice of exercise delivered to the President of the Company at its principal place of business specifying the number of shares of Stock to be purchased and accompanied by payment in the manner described in Section 3 hereof. The notice shall be in substantially the form of the Notice of Exercise of Stock Option attached hereto.

(b) As soon as practicable after any exercise of this Option in accordance with the foregoing provisions, the Company shall, without transfer or issue tax to the Employee, deliver certificate(s) to the Employee representing the Stock as to which this Option has been exercised.

Section 7. Non-Transferability

This Option, and all rights and privileges hereunder, shall be non-assignable and non-transferable by the Employee, either voluntarily or by operation of law (except by will or by operation of the laws of descent and distribution), shall not be pledged or hypothecated in any way, and shall be exercisable during the Employee’s lifetime only by the Employee.

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Section 8. Shares Authorizations, Consents, Etc.

The Company, during the term of this Option, will keep available the number of shares of Stock required to satisfy this Option. The Company will seek to obtain from each regulatory commission or agency having jurisdiction such authority as may be required to issue and sell Stock to satisfy the Option. Inability of the Company to obtain from any such regulatory commission or agency authority which counsel for the Company deems necessary for the lawful issuance and sale of the Stock to satisfy the Option, shall relieve the Company from any liability for failure to issue and sell Stock to satisfy the Option until such time as that such authority is obtained.

Section 9. Investment Representations

Employee may be required, if it is deemed necessary in the opinion of counsel for the Company, to represent to the Company at the time of exercise that it is his or her intention to acquire the Stock for his private investment only and not for resale or distribution to the public. The Company may stamp any certificates representing such Stock with a legend to the effect that such Stock has not been registered under the Securities Act of 1933 and that the Stock may not be sold or transferred until so registered, or until an opinion of counsel satisfactory to the Company is received to the effect that such registration is not necessary. In the event this Option and the Stock issued pursuant to this Option are registered under the Securities Act of 1933, as amended, then such investment representations and legend restrictions pursuant to Federal securities law shall be inapplicable with respect to such Stock. Nothing herein shall be deemed to obligate the Company to so register any of such Stock.

Section 10. Rights as Stockholder

The Employee shall have no rights as a stockholder with respect to any Stock covered by this Option until the certificate(s) representing such Stock shall have been issued and delivered to him or her. No adjustment shall be made for dividends or other rights for which the record date is prior to the date such Stock certificate(s) are delivered to the Employee.

Section 11. Adjustments for Changes in Capital Structure

(a) If the Shares of the Company’s stock are increased, decreased, changed into or exchanged for a different number or kind of shares pursuant to a reorganization, recapitalization, reclassification, stock dividend, stock split or reverse stock split, an appropriate and proportionate adjustment shall be made changing the number or kind of Shares allocated to any unexercised portion of this Option; except that if such change results from a stock dividend, such adjustment shall only be made if the aggregate of all stock dividends paid by the Company (including the one causing the change) during the one-year period ending at the close of business on the day the change occurs exceeds 5% of the Shares of the Company’s Stock as it was constituted at the beginning of such one-year period (and any such adjustment shall equal all such stock dividends in the event that no adjustment was made for prior stock dividends during such year because such stock dividends aggregated less than such 5%). All adjustments shall be made without changing the aggregate Purchase Price applicable to the unexercised portion of this Option, and therefore a corresponding adjustment shall be made in the Exercise Price for each Share covered by this Option.

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(b) Upon a reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, the Company shall use its best efforts but shall be under no obligation, to cause the reorganization, merger or consolidation agreement to include a provision for the continuance of the Plan and for the assumption of this Option, or the substitution for this Option of new options covering the stock of a successor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to number and kind of shares of Stock and Exercise Prices, and if the reorganization, merger or consolidation agreement so provides, the Plan and this Option shall continue in the manner and under the terms so provided in such agreement. Upon the dissolution or liquidation of the Company, or upon a sale of substantially all of its property, or a reorganization, merger or consolidation described above which does not include a provision for continuance of the Plan or assumption of this Option (“Terminating Transactions” herein), the Plan shall terminate forthwith, and this Option shall terminate. Notwithstanding the preceding sentence, if as of immediately prior to the Terminating Transaction, Employee would be entitled to exercise any unexercised portions of this Option, he or she shall have the right at such time immediately prior to the consummation of the Terminating Transaction as the Company shall designate, to exercise this Option to the full extent provided herein.

Section 12. Continuation of Employment

Nothing herein shall confer upon Employee any right to continue in the employment of the Company or any of its subsidiaries, or interfere in any way with the right of the Company or any such subsidiary (subject to the terms of any separate employment agreement to the contrary) at any time to terminate such employment or increase or decrease the compensation of Employee from the rate in existence on the Date of Grant.

Section 13. Tax Treatment and Withholding Taxes

The aggregate Fair Market Value (determined with respect to each ISO at the time such ISO is granted) of the Shares with respect to which ISOs are exercisable for the first time by an option holder during any calendar year (under this Plan or any other plan of the Company) shall not exceed $100,000. Any portion exceeding this annual limit shall be a nonqualified stock option. Also, in order to qualify as an ISO, the underlying Stock may not be sold within one year from the date the Option is exercised and also may not be sold within two years from the date the Option was granted. Also, in order to qualify as an ISO, the Option must be granted to an employee of the Company or a parent or subsidiary corporation as of the Date of Grant. Further requirements apply, including without limitation that the Option exercise period may not be extended beyond that originally provided herein. If the Option does not qualify as an ISO, or is subsequently disqualified by a disposition of the shares, the Company has the right to require Employee or Employee’s permitted successor in interest to pay the Company the amount of any taxes which the Company may be required to withhold with respect to such shares and the Employee shall be responsible for the additional taxes on the Employee that result. The Company has the right to require Employee or

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Employee’s permitted successors in interest to pay the Company the amount of any taxes which the Company may be required to withhold with respect to Option Shares. The Company expects that any difference between the Exercise Price and the Fair Market Value of a nonqualified option on the day of exercise will be treated as compensation by the Internal Revenue Service and subject to withholding taxes on the date of exercise.

The foregoing is not intended to provide tax advice. The Employee should consult his or her own tax adviser.

Section 14. The Plan

The Option is subject to, and the Company and Employee agree to be bound by, all of the terms and conditions of the Plan as the same shall be amended from time to time in accordance with the terms thereof, but, without the consent of Employee, no such amendment shall adversely affect the Employee’s rights under this Option. Pursuant to the Plan, the Committee has the final authority to construe and interpret the provisions of the Plan and this Option. A copy of the Plan in its present form is available for inspection by the Employee during business hours at the principal office of the Company.

Section 15. Governing Law

This Agreement shall be subject to, and governed by, the laws of the State of California irrespective of the fact that one or more of the parties now is, or may become, a resident of a different state.

Section 16. Construction

In the event any parts of this Agreement are found to be void, the remaining provisions of this Agreement shall nevertheless be binding with the same effect as though the void parts were deleted.

Section 17. Binding Effect

This Agreement shall inure to the benefit of and be binding on the parties hereto and their respective heirs, executors, administrators, successors and assigns.

Section 18. Definitions

“Agreement” shall mean this Stock Option Agreement.

“Code” shall mean the Internal Revenue Code of 1986, as amended.

“Date of Grant” shall mean the date specified in the Notice of Stock Option Grant, or, if later, the later of (i) the date on which the Board of Directors resolved to grant this Option or (ii) the first day of the Employee’s service as a common-law employee of the Company, a parent or a subsidiary.

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“Exercise Price” shall mean the amount for which one Option Share may be purchased upon exercise of this Option, as specified in the Notice of Stock Option Grant.

“Notice of Stock Option Grant” shall mean the document so entitled to which this Agreement is attached.

“Employee” shall mean the individual named in the Notice of Stock Option Grant.

“Fair Market Value” shall mean the fair market value of a Share, as determined by the Committee in good faith. Such determination shall be conclusive and binding on all persons.

“ISO” shall mean an incentive stock under Section 422 of the Code.

“Option Shares” shall mean the Shares acquired upon exercise of the Option.

“Purchase Price” shall mean the Exercise Price multiplied by the number of Shares with respect to which this Option is being exercised.

“Share” shall mean one share of Stock, as adjusted in accordance with Section 11 (if applicable).

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NOTICE OF EXERCISE OF STOCK OPTION

Microsemi Corporation

2381 Morse Avenue

Irvine, CA 92614

Attention: President

Ladies and Gentlemen:

The undersigned hereby elects to exercise the option indicated below:

Date of Grant:

Type of Option:

Number of Shares Being Exercised:

Exercise Price Per Share:

Total Purchase Price:

Method of Payment:

Enclosed herewith is payment in full of the Purchase Price, a copy of the Notice of Stock Option Grant and Stock Option Agreement.

My exact name, current address and social security number for purposes of the stock certificates to be issued and the shareholder list of the Company are:

Name:

Address:

Social Security Number:

	Sincerely,
Date of Exercise:
	(Employee’s Signature)
	(Employee’s Name Printed)

EX-10.95

Exhibit 10.95

NOTICE OF STOCK OPTION GRANT

under the

1987 MICROSEMI CORPORATION STOCK PLAN

You have been granted the following Option to purchase Common Stock, par value $.20 per share, of Microsemi Corporation (the “Company”):

Name of Employee:	«First_Name» «Last_Name»
Total Number of Shares Subject to this Option:	«M    Shares»
Type of Option:	ISO
Exercise Price Per Share:	«Price_per_Share»
Date of Grant:	«Grant_Date»

Date First Exercisable:	Until the first anniversary of the Date of Grant, this Option may not be exercised with respect to any of the Shares covered hereby.
	During the second year it may be exercised as to not more than twenty-five percent of the total number of Shares covered hereby.
	During the third year it may be exercised as to an additional twenty-five percent, but not more than fifty percent of the total number of Shares covered hereby.
	During the fourth year it may be exercised as to an additional twenty-five percent, but not more than seventy-five percent of the total number of Shares covered hereby.
	On or after the fourth anniversary of the Date of Grant, this Option may be exercised up to one hundred percent of the total number of Shares covered hereby.

The Purchase Price shall be payable in any of the following forms: (i) in United States dollars and paid in cash, by certified check or by bank draft, or (ii) shares of the Company’s Common Stock already owned by Employee for a period of at least 6 months and surrendered in good form for transfer (such shares shall be valued at their Fair Market Value on the date the Option is exercised).

By your signature and the signature of the Company’s representative below, you and the Company agree that this Option is granted under and governed by the terms and conditions of the 1987 Microsemi Corporation Stock Plan, as amended, and the Stock Option Agreement, both of which are attached to and made a part of this document.

EMPLOYEE:	MICROSEMI CORPORATION
Signature:	By:
Name:«First_Name» «Last_Name»	Name:	James J. Peterson
	Title:	President & CEO

1

MICROSEMI CORPORATION

STOCK OPTION AGREEMENT

UNDER THE 1987 MICROSEMI CORPORATION STOCK PLAN

THIS STOCK OPTION AGREEMENT is made pursuant to an option grant notice (the “Notice of Stock Option Grant”) attached hereto and incorporated into this Agreement by this reference, made as of the Date of Grant as set forth in the Notice of Stock Option Grant, between Microsemi Corporation, a Delaware corporation (the “Company”) and the Holder, whose identity is as set forth in the Notice of Stock Option Grant. (Capitalized terms in the Notice of Option Grant attached hereto shall have the meanings ascribed to them in this Agreement.)

WHEREAS, the Company desires to carry out the purposes of the 1987 Microsemi Corporation Stock Plan (the “Plan”) by affording the Employee an opportunity to purchase shares of the Company’s Common Stock (the “Stock”);

WHEREAS, if and to the extent provided in the Notice of Option Grant, this Option is intended to qualify as an ISO (as defined below);

THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties have agreed, and do hereby agree as follows:

Section 1. Grant of Option

On the terms and conditions set forth in the Notice of Stock Option Grant and this Agreement, the Company grants to the Employee on the Date of Grant a right and option to purchase, at the Exercise Price, all or any portion of the number of Shares set forth in the Notice of Stock Option Grant (the “Option”) to the extent exercisable as set forth in the Notice of Option Grant. If this Option is granted pursuant to a Notice of Stock Option Grant that indicates that the Option is an Incentive Stock Option (“ISO”), then this Option is intended to qualify as an ISO under Section 422 of the Code but shall constitute a nonqualified stock option to the extent that it fails in whole or in part to qualify as an ISO for any reason.

Section 2. Purchase Price

The Exercise Price represents not less than one hundred percent (100%) of the Fair Market Value per Share as of the Date of Grant; or in the event that the Employee owns more than 10% of the total combined voting power of all classes of stock of the Company, the Exercise Price represents not less than 110% of the Fair Market Value per Share at Date of Grant.

Section 3. Medium of Payment

The Purchase Price shall be payable in any form of consideration described in the Notice of Stock Option Grant, or in any combination thereof. The Company shall not be required to issue or permit transfer of Shares of the Company Stock upon exercise of a Stock Option until the Purchase Price is fully paid.

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Section 4. Option Term

(a) No part of the Option shall be exercised after 10 years from the Date of Grant, except in the event Employee owns at the Date of Grant more than 10% of the total combined voting power of the Company, in which case no part of the Option may be exercised after 5 years from the Date of Grant.

(b) If Employee ceases to be employed by the Company or its parent or any of its subsidiaries (if any) issuing or assuming a Stock Option in a transaction to which Section 424(a) of the Code applies, for any reason whatsoever, except for death or disability, any unexercised options which have become exercisable shall terminate three months after the date he ceases to be an employee. Options that are not exercisable on the date of termination shall be deemed to have immediately expired. A leave of absence (not in excess of three months) approved in writing by the Committee shall not be deemed a termination of employment for the purposes of this paragraph. Any leave of absence in excess of three months shall be equivalent to a termination of employment. If Employee dies, or becomes disabled within the meaning of Section 22(e) (3) of the Code, before this option is terminated, the three-month period will become one year.

Section 5. Time of Exercise

The portion of this Option which has become exercisable may be exercised at any time or from time to time (so long as this Option has not expired), as to any part or all hereof; provided that this Option may not be exercised for a fraction of a share of Stock.

Section 6. Method of Exercise

(a) Each exercise of this Option shall be by written notice of exercise delivered to the President of the Company at its principal place of business specifying the number of shares of Stock to be purchased and accompanied by payment in the manner described in Section 3 hereof. The notice shall be in substantially the form of the Notice of Exercise of Stock Option attached hereto.

(b) As soon as practicable after any exercise of this Option in accordance with the foregoing provisions, the Company shall, without transfer or issue tax to the Employee, deliver certificate(s) to the Employee representing the Stock as to which this Option has been exercised.

Section 7. Non-Transferability

This Option, and all rights and privileges hereunder, shall be non-assignable and non-transferable by the Employee, either voluntarily or by operation of law (except by will or by operation of the laws of descent and distribution), shall not be pledged or hypothecated in any way, and shall be exercisable during the Employee’s lifetime only by the Employee.

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Section 8. Shares Authorizations, Consents, Etc.

The Company, during the term of this Option, will keep available the number of shares of Stock required to satisfy this Option. The Company will seek to obtain from each regulatory commission or agency having jurisdiction such authority as may be required to issue and sell Stock to satisfy the Option. Inability of the Company to obtain from any such regulatory commission or agency authority which counsel for the Company deems necessary for the lawful issuance and sale of the Stock to satisfy the Option, shall relieve the Company from any liability for failure to issue and sell Stock to satisfy the Option until such time as that such authority is obtained.

Section 9. Investment Representations

Employee may be required, if it is deemed necessary in the opinion of counsel for the Company, to represent to the Company at the time of exercise that it is his or her intention to acquire the Stock for his private investment only and not for resale or distribution to the public. The Company may stamp any certificates representing such Stock with a legend to the effect that such Stock has not been registered under the Securities Act of 1933 and that the Stock may not be sold or transferred until so registered, or until an opinion of counsel satisfactory to the Company is received to the effect that such registration is not necessary. In the event this Option and the Stock issued pursuant to this Option are registered under the Securities Act of 1933, as amended, then such investment representations and legend restrictions pursuant to Federal securities law shall be inapplicable with respect to such Stock. Nothing herein shall be deemed to obligate the Company to so register any of such Stock.

Section 10. Rights as Stockholder

The Employee shall have no rights as a stockholder with respect to any Stock covered by this Option until the certificate(s) representing such Stock shall have been issued and delivered to him or her. No adjustment shall be made for dividends or other rights for which the record date is prior to the date such Stock certificate(s) are delivered to the Employee.

Section 11. Adjustments for Changes in Capital Structure

(a) If the Shares of the Company’s stock are increased, decreased, changed into or exchanged for a different number or kind of shares pursuant to a reorganization, recapitalization, reclassification, stock dividend, stock split or reverse stock split, an appropriate and proportionate adjustment shall be made changing the number or kind of Shares allocated to any unexercised portion of this Option; except that if such change results from a stock dividend, such adjustment shall only be made if the aggregate of all stock dividends paid by the Company (including the one causing the change) during the one-year period ending at the close of business on the day the change occurs exceeds 5% of the Shares of the Company’s Stock as it was constituted at the beginning of such one-year period (and any such adjustment shall equal all such stock dividends in the event that no adjustment was made for prior stock dividends during such year because such stock dividends aggregated less than such 5%). All adjustments shall be made without changing the aggregate Purchase Price applicable to the unexercised portion of this Option, and therefore a corresponding adjustment shall be made in the Exercise Price for each Share covered by this Option.

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(b) Upon a reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, the Company shall use its best efforts but shall be under no obligation, to cause the reorganization, merger or consolidation agreement to include a provision for the continuance of the Plan and for the assumption of this Option, or the substitution for this Option of new options covering the stock of a successor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to number and kind of shares of Stock and Exercise Prices.

(c) Upon the dissolution or liquidation of the Company, or upon a sale of substantially all of its property, or a reorganization, merger or consolidation described above which does not include a provision for continuance of the Plan or assumption of this Option (“Terminating Transactions” herein), the Plan shall terminate forthwith, and this Option shall terminate. Notwithstanding the preceding sentence, if as of immediately prior to the Terminating Transaction, Employee would be entitled to exercise any unexercised portions of this Option, he or she shall have the right at such time immediately prior to the consummation of the Terminating Transaction as the Company shall designate, to exercise this Option to the full extent provided herein.

(d) Subject to Section 11(e), in the event of a Change in Control, each Option shall, at the discretion of the Committee either (i) be canceled in exchange for a payment in cash of an amount equal the number of Shares covered by the Option multiplied by the excess, if any, of the fair value, as determined in good faith by the Board of Directors, of the price paid per share of Common Stock in the Change in Control transaction over the Exercise Price and/or (ii) vest and become fully exercisable regardless of the vesting and exercise schedule otherwise applicable to such Option. If the reorganization, merger or consolidation agreement so provides, the Plan and this Option shall continue in the manner and under the terms so provided in such agreement.

(e) Notwithstanding Section 11(d), no cancellation, acceleration of exercisability, vesting, cash settlement or other payment provided in Section 11(d) shall occur with respect to an Option upon a Change in Control if the Committee reasonably determines in good faith prior to the occurrence of the Change in Control that such Option shall be honored or assumed, or new rights substituted therefor (such honored, assumed or substituted award an “Alternative Award”), by the Employee’s new employer (or the parent or a subsidiary of such new employer) immediately following the Change in Control, provided that such Alternative Award (i) is based on stock which is or will be, within 60 days after the Change in Control, traded on an established securities market; (ii) provides Employee with rights and entitlements substantially equivalent to or better than the rights, terms and conditions applicable under the Option; (iii) has substantially equivalent economic value to the Option (determined at the time of the Change in Control); and (iv) vests and becomes fully exercisable and transferable in the event that Employee’s employment is involuntarily terminated or terminated by Employee following a material reduction in the Employee’s base salary or Employee’s incentive compensation opportunity or a material reduction in the Employee’s responsibilities, in any such case without the Employee’s written consent.

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Section 12. Continuation of Employment

Nothing herein shall confer upon Employee any right to continue in the employment of the Company or any of its subsidiaries, or interfere in any way with the right of the Company or any such subsidiary (subject to the terms of any separate employment agreement to the contrary) at any time to terminate such employment or increase or decrease the compensation of Employee from the rate in existence on the Date of Grant.

Section 13. Tax Treatment and Withholding Taxes

The aggregate Fair Market Value (determined with respect to each ISO at the time such ISO is granted) of the Shares with respect to which ISOs are exercisable for the first time by an option holder during any calendar year (under this Plan or any other plan of the Company) shall not exceed $100,000. Any portion exceeding this annual limit shall be a nonqualified stock option. Also, in order to qualify as an ISO, the underlying Stock may not be sold within one year from the date the Option is exercised and also may not be sold within two years from the date the Option was granted. Also, in order to qualify as an ISO, the Option must be granted to an employee of the Company or a parent or subsidiary corporation as of the Date of Grant. Further requirements apply, including without limitation that the Option exercise period may not be extended beyond that originally provided herein. If the Option does not qualify as an ISO, or is subsequently disqualified by a disposition of the shares, the Company has the right to require Employee or Employee’s permitted successor in interest to pay the Company the amount of any taxes which the Company may be required to withhold with respect to such shares and the Employee shall be responsible for the additional taxes on the Employee that result. The Company has the right to require Employee or Employee’s permitted successors in interest to pay the Company the amount of any taxes which the Company may be required to withhold with respect to Option Shares. The Company expects that any difference between the Exercise Price of a nonqualified option and the Fair Market Value of a share of Common Stock on the day of exercise will be treated as compensation by the Internal Revenue Service and subject to withholding taxes on the date of exercise.

The foregoing is not intended to provide tax advice. The Employee should consult his or her own tax adviser.

Section 14. The Plan

The Option is subject to, and the Company and Employee agree to be bound by, all of the terms and conditions of the Plan as the same shall be amended from time to time in accordance with the terms thereof, but, without the consent of Employee, no such amendment shall adversely affect the Employee’s rights under this Option. Pursuant to the Plan, the Committee has the final authority to construe and interpret the provisions of the Plan and this Option. A copy of the Plan in its present form is available for inspection by the Employee during business hours at the principal office of the Company.

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Section 15. Governing Law

This Agreement shall be subject to, and governed by, the laws of the State of California irrespective of the fact that one or more of the parties now is, or may become, a resident of a different state.

Section 16. Construction

In the event any parts of this Agreement are found to be void, the remaining provisions of this Agreement shall nevertheless be binding with the same effect as though the void parts were deleted.

Section 17. Binding Effect

This Agreement shall inure to the benefit of and be binding on the parties hereto and their respective heirs, executors, administrators, successors and assigns.

Section 18. Definitions

“Agreement” shall mean this Stock Option Agreement.

“Change in Control” shall mean the occurrence of any of the following events:

(i) Any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) is or becomes the “beneficial owner” (as defined in Rule 13d 3 under said Act), directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the total voting power represented by the Company’s then outstanding voting securities;

(ii) Consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or the stockholders of the Company approving a plan of complete liquidation of the Company or a consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets.

“Code” shall mean the Internal Revenue Code of 1986, as amended.

“Date of Grant” shall mean the date specified in the Notice of Stock Option Grant, or, if later, the later of (i) the date on which the Board of Directors resolved to grant this Option or (ii) the first day of the Employee’s service as a common-law employee of the Company, a parent or a subsidiary.

“Exercise Price” shall mean the amount for which one Option Share may be purchased upon exercise of this Option, as specified in the Notice of Stock Option Grant.

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“Notice of Stock Option Grant” shall mean the document so entitled to which this Agreement is attached.

“Employee” shall mean the individual named in the Notice of Stock Option Grant.

“Fair Market Value” shall mean the fair market value of a Share, as determined by the Committee in good faith. Such determination shall be conclusive and binding on all persons.

“ISO” shall mean an incentive stock under Section 422 of the Code.

“Option Shares” shall mean the Shares acquired upon exercise of the Option.

“Purchase Price” shall mean the Exercise Price multiplied by the number of Shares with respect to which this Option is being exercised.

“Share” shall mean one share of Stock, as adjusted in accordance with Section 11 (if applicable).

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NOTICE OF EXERCISE OF STOCK OPTION

Microsemi Corporation

2381 Morse Avenue

Irvine, CA 92614

Attention: President

Ladies and Gentlemen:

The undersigned hereby elects to exercise the option indicated below:

Date of Grant:

Type of Option:

Number of Shares Being Exercised:

Exercise Price Per Share:

Total Purchase Price:

Method of Payment:

Enclosed herewith is payment in full of the Purchase Price, a copy of the Notice of Stock Option Grant and Stock Option Agreement.

My exact name, current address and social security number for purposes of the stock certificates to be issued and the shareholder list of the Company are:

Name:

Address:

Social Security Number:

	Sincerely,
Date of Exercise:________________
	(Employee’s Signature)
	(Employee’s Name Printed)

EX-10.96

Exhibit 10.96

NOTICE OF STOCK OPTION GRANT

under the

1987 MICROSEMI CORPORATION STOCK PLAN

You have been granted the following Option to purchase Common Stock, par value $.20 per share, of Microsemi Corporation (the “Company”):

Name of Grantee:	«Grantee»
Total Number of Shares Subject to this Option:	«Total_Shares»
Type of Option:	Non-Qualified
Exercise Price Per Share:	«Exercise_Price»
Date of Grant:	«Date_of_Grant»

Date First Exercisable: Exercisable as to 100% of the Shares subject to this Option commencing on the Date of Grant.

The Purchase Price shall be payable in any of the following forms: (i) in United States dollars and paid in cash, by certified check or by bank draft, or (ii) shares of the Company’s Common Stock already owned by Grantee for a period of at least 6 months surrendered in good form for transfer (such shares shall be valued at their Fair Market Value on the date the Option is exercised) (iii) by the Company withholding from Grantee out of the Company’s Stock otherwise deliverable upon exercise a number of shares having a fair market value equal to the aggregate Purchase Price, (iv) by the execution and delivery of Grantee’s promissory note in the principal amount of the exercise price, with such term, interest rate and other terms and provisions, including, without limitation, requiring the Company’s Stock acquired upon exercise to be pledged to the Company to secure payment of the note, as the Board of Directors may specify, (v) by cancellation of indebtedness of the Company to Grantee, equal to the amount of the exercise price; (vi) by waiver of compensation due or accrued to Grantee for services rendered, equal to the amount of the exercise price, (vii) provided that a public market for the Company’s Stock exists, through a “same day sale” commitment from Grantee and a broker-dealer that is a member of the National Association of Securities Dealers (an “NASD Dealer”), whereby Grantee irrevocably elects to exercise his Option and to sell a portion of the Company’s Stock so purchased to pay for the exercise price and whereby the NASD Dealer irrevocably commits upon receipt of such Company Stock to forward the exercise price directly to the Company, or (viii) provided that a public market for the Company’s Stock exists, through a “margin” commitment from Grantee and the NASD Dealer whereby Grantee irrevocably elects to exercise this Option and to pledge the Company Stock so purchased to the NASD Dealer in a margin account as security for a loan from the NASD Dealer in the amount of the exercise price, and whereby the NASD Dealer irrevocably commits upon receipt of such Company Stock to forward the exercise price directly to the Company. Grantee shall pay the Purchase Price not later than thirty (30) days after the date of a statement from the Company following exercise setting forth the Purchase Price, Fair Market Value of the Company Stock on the exercise date, the number of shares of the Company Stock that may be delivered in payment of the Purchase Price, and the amount of withholding tax

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due, if any. If Grantee fails to pay the Purchase Price within the thirty (30) day period, the Company shall have the right to take whatever action it deems appropriate, including but not limited to cancellation of Shares with or without voiding the option exercise.

By your signature and the signature of the Company’s representative below, you and the Company agree that this Option is granted under and governed by the terms and conditions of the 1987 Microsemi Corporation Stock Plan, as amended, and the Stock Option Agreement, both of which are attached to and made a part of this document.

GRANTEE:		MICROSEMI CORPORATION
Signature:		By:
Name:	«Grantee»	Name:	James J. Peterson
		Title:	President & CEO

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MICROSEMI CORPORATION

NONQUALIFIED STOCK OPTION AGREEMENT

UNDER THE 1987 MICROSEMI CORPORATION STOCK PLAN

THIS NONQUALIFIED STOCK OPTION AGREEMENT is made effective as of the Date of Grant between MICROSEMI CORPORATION, a Delaware corporation (the “Company”) and the Grantee.

WHEREAS, the Company desires, by affording the Grantee an opportunity to purchase shares of its Common Stock (the “Stock”), pursuant to a nonqualified stock option, not intended to qualify as an ISO, to carry out the purposes of the 1987 Microsemi Corporation Stock Plan (the “Plan”);

THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties have agreed, and do hereby agree as follows:

Section 1. Grant of Option

On the terms and conditions set forth in the Notice of Stock Option Grant and this Agreement, the Company grants to the Grantee on the Date of Grant the right and option to purchase, at the Exercise Price, all or any portion of the number of Shares set forth in the Notice of Stock Option Grant (the “Option”). This Option is not intended to qualify as an ISO.

Section 2. Purchase Price

The Exercise Price represents not less than one hundred percent (100%) of the Fair Market Value per Share as of the Date of Grant.

Section 3. Medium of Payment

The Purchase Price shall be payable in any form of consideration described in the Notice of Stock Option Grant, or in any combination thereof. The Company shall not be required to issue or permit transfer of Shares of the Company Stock upon exercise of a Stock Option until the Purchase Price is fully paid.

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Section 4. Option Term

(a) No part of the Option shall be exercised after 10 years from the Date of Grant.

(b) This Option shall expire a specified time after the termination of the last to exist of any of the following relationships between the Grantee and the Company (or its parent or any of its subsidiaries (if any) issuing or assuming a Stock Option in a transaction to which Section 424(a) of the Code applies): as a director, as an officer, or as an employee or other service provider or consultant. If such status terminates for any reason whatsoever except for death or disability, any unexercised options which have become exercisable shall terminate three months after the date such status ceases. If a Grantee dies, or becomes disabled within the meaning of Section 22(e) (3) of the Code, and such status terminates for such reason, the three-month period will be one year. Options which are not exercisable on the date of termination of such status shall be deemed to have immediately expired.

Section 5. Time of Exercise

This Option, to the extent it has become exercisable, may be exercised at any time or from time to time (so long as this Option has not expired), as to any part or all hereof; provided that this Option may not be exercised for a fraction of a share of Stock.

Section 6. Method of Exercise

(a) Each exercise of this Option shall be by written notice of exercise delivered to the President of the Company at its principal place of business specifying the number of shares of Stock to be purchased and accompanied by payment in a manner described in Section 3 hereof. The notice shall be in substantially the form of the Notice of Exercise of Stock Option attached hereto.

(b) As soon as practicable after any exercise of this Option in accordance with the foregoing provisions, the Company shall, without transfer or issue tax to the Grantee, deliver certificate(s) to the Grantee representing the Stock as to which this Option has been exercised.

Section 7. Non-Transferability

This Option, and all rights and privileges hereunder, shall be non-assignable and non-transferable by the Grantee, either voluntarily or by operation of law (except by will or by operation of the laws of descent and distribution), shall not be pledged or hypothecated in any way, and shall be exercisable during Grantee’s lifetime only by Grantee.

2

Section 8. Shares Authorizations, Consents, Etc.

The Company, during the term of this Option, will keep available the number of shares of Stock required to satisfy this Option. The Company will seek to obtain from each regulatory commission or agency having jurisdiction, such authority as may be required to issue and sell Stock to satisfy the Option. Inability of the Company to obtain from any such regulatory commission or agency authority which counsel for the Company deems necessary for the lawful issuance and sale of the Stock to satisfy the Option, shall relieve the Company from any liability for failure to issue and sell Stock to satisfy the Option until such time as that such authority is obtained.

Section 9. Investment Representations

Grantee may be required, if it is deemed necessary in the opinion of counsel for the Company, to represent to the Company at the time of exercise that it is his or her intention to acquire the Stock for his or her private investment only and not for resale or distribution to the public. The Company may stamp any certificates representing such Stock with a legend to the effect that such Stock has not been registered under the Securities Act of 1933 and that the Stock may not be sold or transferred until so registered, or until an opinion of counsel satisfactory to the Company is received to the effect that such registration is not necessary. In the event this Option and the Stock issued pursuant to this Option are registered under the Securities Act of 1933, as amended, then such investment representations and restrictive legends imposed pursuant to Federal securities law shall be inapplicable with respect to such Stock. Nothing herein shall be deemed to obligate the Company to so register any of such Stock.

Section 10. Rights as Stockholder

The Grantee shall have no rights as a stockholder with respect to any Stock covered by this Option until the certificate(s) representing such Stock shall have been issued and delivered to him or her. No adjustment shall be made for dividends or other rights for which the record date is prior to the date such Stock certificate(s) are delivered to the Grantee.

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Section 11. Adjustments for Changes in Capital Structure

(a) If the Shares of the Company’s stock are increased, decreased, changed into or exchanged for a different number or kind of shares or other securities of the Company pursuant to a reorganization, recapitalization, reclassification, stock dividend, stock split or reverse stock split, an appropriate and proportionate adjustment shall be made changing the number or kind of Shares allocated to any unexercised portion of this Option; except that if such change results from a stock dividend, such adjustment shall only be made if the aggregate of all stock dividends paid by the Company (including the one causing the change) during the one-year period ending at the close of business on the day the change occurs exceeds 5% of the Shares of the Company’s Stock as it was constituted at the beginning of such one-year period (and any such adjustment shall equal all such stock dividends in the event that no adjustment was made for prior stock dividends during such year because such stock dividends aggregated less than such 5%). All adjustments shall be made without changing the aggregate Purchase Price applicable to the unexercised portion of this Option, and therefore a corresponding adjustment shall be made in the Exercise Price for each Share covered by this Option.

(b) Upon a reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, the Company shall use its best efforts but shall be under no obligation, to cause the reorganization, merger or consolidation agreement to include a provision for the continuance of the Plan and for the assumption of this Option, or the substitution for this Option of new options covering the stock of a successor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to number and kind of shares of Stock and prices, and if the reorganization, merger or consolidation agreement so provides, the Plan and this Option shall continue in the manner and under the terms so provided in such agreement. Upon the dissolution or liquidation of the Company, or upon a sale of substantially all of its property, or a reorganization, merger or consolidation described in subparagraph (a) above which does not include a provision for continuance of the Plan or assumption of this Option (“Terminating Transactions” herein), the Plan shall terminate forthwith, and this Option shall terminate. Notwithstanding the preceding sentence, if as of immediately prior to the Terminating Transaction, Grantee would be entitled to exercise any unexercised portions of this Option, he or she shall have the right at such time immediately prior to the consummation of the Terminating Transaction as the Company shall designate, to exercise this Option to the full extent provided herein.

Section 12. Continuation of Relationship

Nothing herein shall confer upon Grantee any right to continue in any capacity with the Company or any of its subsidiaries, or interfere in any way with the right of the Company or any such subsidiary (subject to the terms of any separate agreement to the contrary) at any time to terminate such relationship.

4

Section 13. Tax Treatment and Withholding Taxes

The Company has the right to require Grantee or Grantee’s permitted successors in interest to pay the Company the amount of any taxes which the Company may be required to withhold with respect to Option Shares. The Company expects that any difference between the Exercise Price and the Fair Market Value of a nonqualified option on the day of exercise will be treated as compensation by the Internal Revenue Service and subject to withholding taxes on the date of exercise.

The foregoing is not intended to provide tax advice. The Grantee should consult his or her own tax adviser.

Section 14. The Plan

The Option is subject to, and the Company and Grantee agree to be bound by, all of the terms and conditions of the Plan as the same shall be amended from time to time in accordance with the terms thereof, but, without the consent of Grantee, no such amendment shall adversely affect the Grantee’s rights under this Option. Pursuant to the Plan, the Committee has the final authority to construe and interpret the provisions of the Plan and this Option. A copy of the Plan in its present form is available for inspection by the Grantee during business hours at the principal office of the Company.

Section 15. Governing Law

This Agreement shall be subject to, and governed by, the laws of the State of California irrespective of the fact that one or more of the parties now is, or may become, a resident of a different state.

Section 16. Construction

In the event any parts of this Agreement are found to be void, the remaining provisions of this Agreement shall nevertheless be binding with the same effect as though the void parts were deleted.

Section 17. Binding Effect

This Agreement shall inure to the benefit of and be binding on the parties hereto and their respective heirs, executors, administrators, successors and assigns.

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Section 18. Definitions

“Agreement” shall mean this Nonqualified Stock Option Agreement.

“Code” shall mean the Internal Revenue Code of 1986, as amended.

“Date of Grant” shall mean the date specified in the Notice of Stock Option Grant, which date shall be the later of (i) the date on which the Board of Directors resolved to grant this Option or (ii) the first day of the Grantee’s service as a director of the Company.

“Exercise Price” shall mean the amount for which one Option Share may be purchased upon exercise of this Option, as specified in the Notice of Stock Option Grant.

“Notice of Stock Option Grant” shall mean the document so entitled to which this Agreement is attached.

“Grantee” shall mean the individual named in the Notice of Stock Option Grant.

“Fair Market Value” shall mean the fair market value of a Share, as determined by the Committee in good faith. Such determination shall be conclusive and binding on all persons.

“ISO” shall mean an incentive stock under Section 422 of the Code.

“Option Shares” shall mean the Shares acquired upon exercise of the Option.

“Purchase Price” shall mean the Exercise Price multiplied by the number of Shares with respect to which this Option is being exercised.

“Share” shall mean one share of Stock, as adjusted in accordance with Section 11 (if applicable).

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NOTICE OF EXERCISE OF STOCK OPTION

Microsemi Corporation

2381 Morse Avenue

Irvine, CA 92614

Attention: President

Ladies and Gentlemen:

The undersigned hereby elects to exercise the option indicated below:

Date of Grant:

Type of Option: Nonqualified stock option

Number of Shares Being Exercised:

Exercise Price Per Share:

Total Purchase Price:

Method of Payment:

Enclosed herewith is payment in full of the Purchase Price, a copy of the Notice of Stock Option Grant and Nonqualified Stock Option Agreement.

My exact name, current address and social security number for purposes of the stock certificates to be issued and the shareholder list of the Company are:

Name:

Address:

Social Security Number:

	Sincerely,
Date of Exercise:
	(Grantee’s Signature)
	(Grantee’s Name Printed)

EX-10.97

Exhibit 10.97

CASH BONUS PROGRAM

The Microsemi Corporation Cash Bonus Program (“Program”) provides cash awards based on the achievement of goals relating to the performance of the Company. The intention of the Program is to increase the Company’s shareholder value and the success of the Company by motivating executives and employees (1) to perform to the best of their abilities, and (2) to achieve the Company’s objectives.

The Compensation Committee administers the Program and, in its sole discretion, selects the executives and employees of the Company who shall be participants in the Program for any performance period. Our Chief Executive Officer and the four most-highly-compensated executive officers have been and will generally be participants in the Program.

The Compensation Committee, in its sole discretion, establishes the performance goal or goals for each participant for each performance period and establishes formulae for purposes of determining the actual award (if any) payable to each participant assuming the performance goals for the performance period are achieved (“Target Award”).

Actual awards may be greater than or less than the participant’s Target Award, depending in part upon the extent to which actual performance exceeds or falls below the performance goals. The award formulae are generally based on overall corporate profit performance, direct profit results controlled by the executive and on performance against individual-specific goals. Notwithstanding the preceding, in no event shall a participant’s actual award for any performance period exceed 150% of the participant’s annual salary.

Nevertheless, the Compensation Committee, in its sole discretion, may (a) eliminate or reduce the award payable to any participant below that which otherwise would be payable under the payout formula, and (b) determine whether or not any award will be paid in the event of a participant’s termination of service prior to the end of the performance period.

Payment of each award shall be made as soon as practicable after the end of the performance period during which the award was earned. Each award normally shall be paid in cash in a single lump sum, subject to payroll taxes and tax withholding.

Each award that may become payable under the Program shall be paid solely from the general assets of the Company. Nothing in the Program should be construed to create a trust or to establish or evidence any participant’s claim of any right to payment of an award other than as an unsecured general creditor with respect to any payment to which a participant may be entitled.

EX-10.98

Exhibit 10.98

CERTIFICATE AMENDMENT NO. 1

TO BE ATTACHED TO THE CERTIFICATE FOR GROUP POLICY NO: 05-000199

ISSUED TO:	US Bank, as Trustee of Jefferson Pilot Financial Insurance Company’s Medical Expense
	Reimbursement Insurance Trust

FOR CERTIFICATES DELIVERED IN CALIFORNIA

A. Under Part IV - POLICY TERMINATION, the following is added to the POLICY TERMINATION section.

The Participating Employers must:

(1) promptly mail a copy of the policy termination notice to each Insured Person along with information on any continuation rights; and

(2) provide the Company with proof of the mailing and the mailing date.

B. Under Part VI - MEDICAL EXPENSE REIMBURSEMENT INSURANCE, the following items are added to the COVERED MEDICAL EXPENSES section as allowable medical care or expense, subject to the Per Occurrence Limit and Maximum Medical Benefit:

(7) sterilization procedures, infertility treatments (including in vitro fertilization), and management of pregnancy and childbirth including:

(a) prenatal diagnosis of fetal disorders in high risk pregnancy; and

(b) perinatal services of a certified nurse midwife or a licensed nurse practitioner;

(8) cervical cancer, osteoporosis and mammography screening tests; and prosthetics or reconstructive surgery after a medically necessary mastectomy (including surgery to restore symmetry);

(9) preventive health care for covered children (including immunizations and screening for bad blood levels);

(10) treatment of substance abuse, mental disorders and organic brain disorders, including:

(a) schizophrenia and schizo-affective disorders;

(b) bipolar and delusional depression; and

(c) pervasive developmental disorders;

(11) home health care services, under a plan established and approved by a physician;

(12) acupuncture;

(13) telemedicine services:

(a) including health care delivery, diagnosis treatment, medical data transfer and education using interactive audio, video or data communications; but

(b) not including phone or fax consultations;

(14) orthotic and prosthetic devices (including devices to restore speech after a laryngectomy);

(15) diabetic daycare self-management education programs; and

(16) treatment of jaw joint disorders (including dental and medically necessary surgical procedures.

GL92-AMEND.CA Exec-U-Care

CERTIFICATE AMENDMENT (CONTINUED)

C. Under Part VIII - CLAIM PROCEDURES, the following sections are added.

LATE PAYMENTS. If benefits are not paid by the 30th working day after the Company receives proper written proof of loss, and the required premium has been paid on the Insured Person’s behalf; then interest will be paid on the benefits:

(1) from the calendar day next following the 30th working day;

(2) at the rate of 10% per annum.

INFORMATION AND COMPLAINTS. To obtain information or dispute a claim, the Insured person or Employer may phone Exec-U-Care’s toll-free telephone number at (800) 552-1213. If the dispute is not resolved, California residents may also contact the Consumer Service Division of the California Department of Insurance at (800) 927-4357.

This amendment applies only to Certificates delivered to Participating Employers in the state of California. This amendment takes effect on the Policy effective date, or on the Insured Person’s effective date of coverage under the Policy; whichever is later. In all other respects, the Certificate remains the same.

JEFFERSON PILOT FINANCIAL INSURANCE COMPANY

/s/ Robert A. Reed

Officer of the Company

OL92-AMEND.CA Exec-U-Cure

CERTIFICATE AMENDMENT NO. 2

TO BE ATTACHED TO THE CERTIFICATE FOR GROUP POLICY NO.- 05-000199

ISSUED TO: US Bank, as Trustee of Jefferson Pilot Financial Insurance Company’s Medical Expense Reimbursement Insurance Trust

FOR CERTIFICATES DELIVERED IN CALIFORNIA

Under Part VI - MEDICAL EXPENSE REIMBURSEMENT INSURANCE, the following changes are made to the COVERED MEDICAL EXPENSES section as allowable medical care or expense, subject to the Per Occurrence Limit and Maximum Medical Benefit:

1. Item (10) is amended to read as follows;

(10) treatment of substance abuse, mental disorders and organic brain disorders, including:

(a) schizophrenia and schizo-affectivc disorder;

(b) bipolar disorder (manic-depressive illness) and major depressive disorders;

(c) panic disorder;

(d) obsessive-compulsive disorder;

(e) pervasive developmental, disorders or autism;

(f) anorexia nervosa and bulimia nervosa; and

(g) serious emotional disturbances of a child;

A child suffering from “serious emotional disturbances of a child” means a child who (1) has one or more mental disorders as identified in the most recent edition of the Diagnostic and Statistical Manual of Mental Disorders, other than a primary substance use disorder or developmental disorder, that result in behavior inappropriate to the child’s age according to expected developmental norms; and (2) who meets the criteria in paragraph (2) of subdivision (a) of Section 5600.3 of the Welfare and Institutions Code.

2. Item (17) is added.

(17) medically necessary enteral formulas or special food products which are prescribed by a physician to treat phenylketonuria (PKU) to the extent that the cost of formulas or special food products exceed the cost of a normal diet. Any exclusions and limitations will not apply;

3. Item (18) is added:

(18) routine patient care costs related to the clinical trial if the Insured Person Or Dependent is diagnosed with cancer and is accepted into a phase I, phase II, phase III, or phase IV clinical trial for cancer; provided the treating physician recommends participation in a cancer clinical trial after determining that participation in the clinical trial has a meaningful potential to benefit the Insured Person or Dependent. The treatment shall be provided in a clinical trial that either:

(a) involves a drug that is exempt under federal regulations from a new drug application; or

(b) that is approved by one of the following:

(i) one of the National Institutes of Health;

(ii) the federal Food and Drug Administration, in the form of an investigational new drug application;

(iii) the United States Department of Defense or

(iv) the United States Veterans’ Administration.

GL92-AMEND.CA.2 Exec-U-Care

CERTIFICATE AMENDMENT (CONTINUED)

“Routine patient care costs” means the costs associated with the provision of health care services, including drugs, items, devices, and services that would otherwise be covered if those drugs, items, devices, and services were not provided in connection with an approved clinical trial program, including the following:

(a) health care services typically provided absent a clinical trial;

(b) health care services required solely for the provision of the investigational drug, Item, device, or service;

(c) health care services required for the clinically appropriate monitoring of the investigational item or service;

(d) health care services provided for the prevention of complications arising from the provision of the investigational drug, item, device, or service; and

(e) health care services needed for the reasonable and necessary care arising from the provision of the investigational drug, item, device, or service, including the diagnosis or treatment of the complications.

“Routine patient care costs” does not include the costs associated with the provision of any of the following:

(a) drugs or devices that have not been approved by the federal Food and Drug Administration and that are associated with the clinical trial;

(b) services other than health care services, such as travel, housing, companion expenses, and other nonclinical expenses, that an insured Person or Dependent may require as a result of the treatment being provided for purposes of the clinical trial;

(c) any item or service that is provided solely to satisfy data collection and analysis needs and that is not used in the clinical management of the patient;

(d) health; care services which, except for the fact that they are not being provided in a clinical trial, are otherwise specifically excluded from coverage under the: Insured Person’s or Dependent’s health plan; or

(e) health care services customarily provided by the research sponsors free of charge for any enrollee in the trial.

This amendment applies only to Certificates delivered to Participating Employers in the state of California. This amendment takes effect on the Policy effective date, on July 1, 2000 (for 1. and 2.), or January 1, 2003 (for 3.), or an the Insured Person’s effective date of coverage under the policy; whichever is later. In all other respects, the Certificate remains the same.

JEFFERSON PILOT FINANCIAL INSURANCE COMPANY

/s/ Robert A. Reed

Officer of the Company

GL92-AMEND. CA.2 Exec-U-Care

CERTIFICATE AMENDMENT NO. 3

TO BE ATTACHED TO THE CERTIFICATE FOR GROUP POLICY NO. 05-000199

ISSUED TO: US Bank, as Trustee of Jefferson Pilot Financial Insurance Company’s Medical Expense Reimbursement Insurance Trust

FOR CERTIFICATES DELIVERED IN CALIFORNIA

Part VIII. CLAIM PROCEDURES is amended to read as follows:

VIII. CLAIM PROCEDURES

MEDICAL EXPENSE REIMBURSEMENT CLAIMS. For Medical Expense Reimbursement claims, the Insured Person is not required to send a written notice of claim or a request for claims forms to the Company. Instead, the Insured Person may submit proof of any Covered Medical Expenses to the Participating Employer on forms furnished by the Employer. This may be done:

(1) at any time during the calendar year in which such expenses are incurred; or

(2) within 90 days after the close of that calendar year.*

The Participating Employer will then:

(1) verify any amounts payable for such expenses under the Base Health Plan; and

(2) submit the verified claims to the Company at least monthly.

Any Medical Expense Reimbursement benefits will be paid as soon as the Company receives proper written proof of loss; provided the required premium has been paid on the Insured Person’s behalf.

ACCIDENTAL DEATH OR DISMEMBERMENT CLAIMS

Notice of Claim. For an accidental death or dismemberment claim, a written notice of a claim must be given within 20 days after the loss occurs or as soon as reasonably possible after that.* The notice must be sent to the Company’s Home Office. It should include:

(1) the Insured Person’s name and address; and

(2) the number of the Policy.

Claim Forms. When this notice of claim is received, the Company will send the Insured Person forms for filing the required proof. If the Company does not send these forms within 15 days, then the Insured person or the Insured Person’s Beneficiary (the claimant) may send the Company written proof of claim in a letter. It should state the nature, date and cause of the loss.

Proof of Claim. The Company must be given written proof of claim within 90 days after the loss occurs, or as soon as reasonably possible after that.*

Proof of claim must be provided at the claimant’s own expense. It must show the nature, date and cause of the loss. In addition to the information requested on the claim form, documentation must include the following:

(1) A certified copy of the death certificate, for proof of death.

(2) A copy of any police report, for proof of accidental death or dismemberment

(3) A signed authorization for the Company to obtain more information.

(3) Any other items the Company may reasonably require in support of the claim.

GL92-ANEND.CA-CP Exec-U-Care

CERTIFICATE AMENDMENT

(Continued)

*EXCEPTION. Failure to give notice or furnish proof of claim within the required time period will not invalidate or reduce the claim; if it is shown that it was done:

(1) as soon as reasonably possible; and

(2) in no event more than one year after it was required.

These time limits will not apply while the claimant lacks legal capacity,

EXAM OR AUTOPSY. At anytime while a claim is pending, the Company may have the Insured Person examined:

(1) by a Physician of the Company’s choice;

(2) as often as reasonably required.

If the Insured Person fails to cooperate with an examiner or fails to take an exam, without good cause; then the Company may deny benefits, until the exam is completed. In case of death, the Company may also have an autopsy done, where it is not forbidden by law. Any such exam or autopsy will be at the Company’s expense.

TIME OF PAYMENT OF CLAIMS. Any benefits payable under the Policy will be paid immediately after the Company receives complete proof of claim and confirms liability.

TO WHOM PAYABLE. Any benefits payable for the Insured Person’s death will be paid in accord with the Beneficiary, Facility of Payment, and Settlement Options sections of the Policy. Any benefit, other than a death benefit, will be paid to the Insured Person.

NOTICE OF CLAIM DECISION. The Company will send the claimant a written notice of its claim decision. If the Company denies any part of the claim; then the written notice will explain:

(1) the reason or the denial, under the terms of the Policy and any internal guidelines;

(2) whether more information is needed to support the claim; and

(3) how the claimant may request a review of the decision by the Company, or by the state Department of Insurance. It will include the address and phone number of their consumer complaint unit.

The Company will send this notice within 15 days after it receives complete proof of claim and enough information to determine liability. If reasonably possible, the Company will send it within:

(1) 30 days for a Medical Expense Reimbursement claim; or

(2) 90 days for an Accidental Death or Dismemberment claim;

after receiving the first proof of claim.

Delay Notice. If the Company needs more time to process a claim, in a special case; then an extension will be permitted. If needed, the Company will send the claimant a written delay notice.

(1) by the 15th day after receiving the first proof of claim; and

(2) every 30 days after that, until the claim is resolved.

The notice will explain the special circumstances which require the delay, and when a decision can be expected.

In any event, the Company must send written notice of its decision within:

(1) 45 days for a Medical Expense Reimbursement claim;

(2) 180 days for an Accidental Death or Dismemberment claim;

after receiving the first proof of claim. If the Company fails to do so; then there is a right to an immediate review, as if the claim was denied.

Exception: If the Company needs more information from the claimant to process a claim; then it must be supplied within 45 days after the Company requests it. The resulting delay will, not count towards the above time limits for claim processing.

GL92-AMEND.CA-CP Exec-U-Care

CERTIFICATE AMENDMENT

(Continued)

REVIEW PROCEDURE. The Insured Person or Insured Person’s Beneficiary may request a claim review, within:

(1) 180 days for Medical Expense Reimbursement claim; or

(2) 60 days for an Accidental Death or Dismemberment claim;

after receiving a denial notice of such claim.

To request a review, the claimant must send the Company a written request, and any written comments or other items to support the claim. The claimant may review certain non-privileged information relating to the request for review.

Notice of Decision. The Company will review the claim and send the claimant a written notice of its decision. The notice will explain the reasons for the Company’s decision, under the terms of the Policy and any internal guidelines. If the Company upholds the denial of all or part of the claim; then the notice will also describe:

(1) any further appeal procedures available under the policy;

(2) the right to access relevant claim information; and

(3) the right to request a state Insurance department review, or to bring legal action.

The notice will be sent within:

(1) 30 days for Medical Expense Reimbursement claims; or

(2) 60 days for an Accidental Death or Dismemberment claim;

after the Company receives the request for review. Or, if a special case requires more time, within 120 days for an Accidental Death or Dismemberment claim.

Delay Notice. If the Company needs more time to process an appeal, in a special case; then it will send the Insured Person a written delay notice, by the 30^th day after receiving the request for review. The notice will explain:

(1) the special circumstances which require the delay;

(2) whether more information is needed to review the claim; and

(3) when a decision can be expected.

Exception: If the Company needs more information from the claimant to process an appeal; than it must be supplied within 45 days after the Company requests it. The resulting delay will not count towards the above time limits for appeal processing.

INDEPENDENT MEDICAL REVIEW. An Insured Person working or residing in Califomia may be eligible for an independent Medical Review, through the California Department of Insurance (the Department); when he or she believes that^:

(1) the Company has improperly denied or reduced benefits for a Covered Medical Expense; and

(2) the decision was based, in whole or in part, upon lack of medical necessity.

Application. The Insured Person may apply for an Independent Medical Review of a disputed decision, or a provider may do so on a patient’s behalf; when:

(1) an Insured Person or Dependent has received urgent medical care or emergency services, or a provider’s recommendation that a proposed service is medically necessary;

(2) the Policy’s benefits have been denied or reduced, based upon lack of medical necessity;

(3) an appeal has been filed. in accord with the Company procedures; and

(4) the disputed decision has been upheld or has not been resolved within 30 days; or 3 days, if the proposed service is urgent. (“Urgent” means needed to prevent severe pain, death, loss of a major bodily function; or other serious harm to the patient’s health.)

GL92-AMEND.CA-CP Exec-u-Care

CERTIFICATE AMENDMENT

(Continued)

Application may be made to the Department, on a form supplied by the Company, within six months after:

(1) the disputed decision is upheld: or

(2) the above appeal period expires,

The Department will determine whether the disputed decision involves a question of medical necessity subject to Independent Medical Review. The Department will then promptly notify the parties.

Documentation. Upon receipt of the Department’s notice that an Independent Medical Review will be done, the Company will promptly forward to the review organization:

(1) copies of any relevant medical or dental records in its possession; and

(2) any correspondence with the parties concerning the disputed decision and its appeal.

At the same time, the Company will furnish copies of this information to the Insured Person or provider; except for any parts that are protected by law or legally privileged. The review organization may request further documentation from the parties.

Decision. Upon receipt and review of this Information, the review organization’s professional medical reviewer(s) will determine the medical necessity of the disputed service. Their decision will be based upon the patient’s specific medical condition and any of the following:

(1) scientific evidence of the service’s efffectiveness, and the availability of other effective treatments

(2) expert opinion and nationally recognized, generally accepted professional standards of medical practice.

Within 30 days of receipt of the application for review and supporting documents, the review organization will send the parties a written notice explaining their decision.

Claims Subject to ERISA (Employee Retirement Income Security Act of 1974). Before bringing a civil legal action under the federal labor law known as ERISA, an employee benefit plan paticipant or beneficiary must exhause available administrative remedies. Under the Policy, the claimant must first seek two administrative reviews of the adverse claim decision, in accord with this section. If an ERISA claimant brings legal action under Section 502(a) of ERISA after the required review, then the Company will waive any right to assert that he or she failed to exhause administrative remedies.

RIGHT OF RECOVERY. If benefits have been overpaid on any claim; then full reimbursement to the Company is required within 60 days. If reimbnursement is not made; then the Company has the right to:

(1) reduce future benefits until full reimbursement is made, and

(2) recover such overpayments from the Insured Person, or from his or her Beneficiary or estate.

Such reimbursement is required whether the overpayment is due to fraud, the Company’s error in processing a claim, or any other reason.

LEGAL ACTIONS. No legal action to recover any benefits may be brought until the 60 days after the required written proof of loss is given. No legal action may be brought more than three years after the date written proof of loss is required to be given.

COMPANY’S DISCRETIONARY AUTHORITY. Except for the functions that the Policy clearly reserves to othe Group Policyholder or Employer, the Company has the authority to:

(1) manage the Policy and administer claims under it; and

(2) interpret the provisions and to resolve questions arising under the Policy.

The Company’s authority includes (but is not limited to) the right to:

(1) establish and enforce procedures for administering the Policy and claims under it;

(2) determine Employees’ eligibility for insureance and entitlement to benefits;

(3) determine what information the Company reasonably requires to make such decisions; and

(4) resolve all matters when a claim review is requested.

GL92-AMEND.CA-CP Exec-U-Care

CERTIFICATE AMENDMENT

(Continued)

Any decision the Company makes, in the exercise of its authority, shall be conclusive and binding; subject to the Insured Person’s rights to:

(1) request a state insurance department review; or

(2) bring legal action.

This amendment applies only to Certificates delivered to Participating Employers in the state of California. This amendment takes effect on the Policy effective date, on January 1, 2002, or in the Insured Person’s effective date of coverage under the Policy; whichever is later. In all other respects, the Certificate remains the same.

JEFFERSON PILOT FINANCIAL INSURANCE COMPANY

/s/ Robert A. Reed

Officer of the Company

GL92-AMEND.CA-CP Exec-U-Care

CALIFORNIA LIFE AND HEALTH INSURANCE

GUARANTY ASSOCIATION ACT

SUMMARY DOCUMENT AND DISCLAIMER

Residents of California who purchase life and health insurance and annuities should know that the insurance companies licensed in this state to write these type of insurance are members of the California Life and Health Insurance Guaranty Association (“CLHIGA”). The purpose of this Association is to assure that policyholders will be protected, within limits, in the unlikely event that a member insurer becomes financially unable to meet its obligations. If this should happen, the Guaranty Association will assess its other member insurance companies for the money to pay the claims of insured persons who live in this state and, in some cases, to keep coverage in force. The valuable extra protection provided through the Association is not unlimited, as noted below, and is not a substitute for consumers’ care in selecting insurers.

The California Life and Health Insurance Guaranty Association may not provide coverage for this policy. If coverage is provided, it may be subject to substantial limitations or exclusions, and require continued residency in California. You should not rely on coverage by the Association in selecting an insurance company or in selecting an insurance policy.

Coverage is NOT provided for your policy or any portion of it that is not guaranteed by the insurer or for which you have assumed the risk, such as a variable contract sold by prospectus.

Insurance companies or their agents are required by law to give or send you this notice. However, insurance companies and their agents are prohibited by law from using the existence of the Guaranty Association to induce you to purchase any kind of insurance policy.

Policyholders with additional questions should first contact their insurer or agent or may then contact:

California Life & Health Insurance	or	Consumer Services Division
Guaranty Association		California Department of Insurance
P.O. Box 17319		300 South Spring Street
Beverly Hills, CA 90209		Los Angeles, CA 90013

Below is a brief summary of this law’s coverages, exclusions and limits. This summary does not cover all provisions of the law; nor does it in any way change anyone’s rights or obligations under the Act or the rights or obligations of the Association.

COVERAGE

Generally, individuals will be protected by the California Life and Health Insurance Guaranty Association if they live in this state and hold a life or health insurance contract, or an annuity, or if they are insured under a group insurance contract, issued by a member insurer. The beneficiaries, payees or assigneees of insured persons are protected as well, even if they live in another state.

CA NOTICE 96 P/C-L,A&H

EXCLUSIONS FROM COVERAGE

However, persons holding such policies are not protected by this Guaranty Association if:

• Their insurer was not authorized to do business in this state when it issued the policy or contract;

• Their policy was issued by a health care service plan (HMO, Blue Cross, Blue Shield), a charitable organization, a fraternal benefit society, a mandatory state pooling plan, a. mutual assessment company, an insurance exchange, or a grants and annuities society;

• They are eligible for protection under the laws of another state. This may occur when the insolvent insurer was incorporated in another state whose guaranty association protects insureds who live outside that state.

The Guaranty Association also does not provide coverage for:

• Unallocated annuity contracts; that is, contracts which are not issued to and owned by an individual and which guarantee rights to group contractholders, not individuals;

• Employer and association plans, to the extent they are self-funded or uninsured;

• Any policy or portion of a policy which is not guaranteed by the insurer or for which the individual has assumed the risk, such as a variable contract sold by prospectus;

• Any policy of reinsurance unless an assumption certificate was issued;

• Interest rate yields that exceed an average rate;

• Any portion of a contract that provides dividends or experience rating credits.

LIMITS ON AMOUNT OF COVERAGE

The Act limits the Association to pay as follows:

LIFE AND ANNUITY BENEFITS

• 80% of what the life insurance company would owe under a life policy or annuity contract up to:

• $100,000 in cash surrender values;

• $100,000 in present value of annuities; or

• $250,000 in life insurance death benefits.

• A maximum of $150,000 for any one insured life no matter how many policies and contracts there were with the same company, even if the policies provided different types of coverages.

HEALTH BENEFITS

• A maximum of $200,000 of the contractual obligations that the health insurance company would owe were it not insolvent. The maximum may increase or decrease annually based upon changes in the health care cost component of the consumer price index.

PREMIUM SURCHARGE

Member insurers are required to recoup assesments paid to the Association by way of a surcharge on premiums charged for health insurance policies to which the Act applies.

CA NOTICE 96 P/C-L,A&H

[GRAPHIC OF EXEC-U-CARE^® SUPPLEMENTAL REIMBURSEMENT INSURANCE COVER APPEARS HERE]

I - DEFINITIONS

BASE HEALTH PLAN means the Participating Employer’s major medical plan, which is not a part of the plan provided by the Policy. The Base Health Plan may be an insured, self-insured or service plan; but it must provide at least the following hospital and medical benefits:

(1) $250,000 lifetime maximum per person; subject to:

(a) an annual deductible not to exceed $1,000 per person; and

(b) copayments not to exceed 20% of the first $10,000 of covered expenses beyond deductible incurred by each person each plan year;

If a PPO (preferred provider organization) option is included, copaymcnts may not exceed 20% of that amount for covered expenses incurred within the PPO network, or 40% of that amount for covered expenses incurred outside the PPO network.

(2) coverage of the full cost of semi-private hospital room and board, intensive care and extended care;

(3) coverage of the usual, customary and reasonable charges for professional services and supplies, including (but not limited to):

(a) physician’s or surgeou’a services, nursing care and physiotherapy;

(b) prescription drugs and medicines; and

(c) x-ray, laboratrary and ambulance services; and

(4) any other cove required by federal law and by the state laws which apply where the Participating Employer’s Certificates are delivered.

For Insured Persons and Dependents who are eligible for Medicare, the Base Health Plan may also consist of coverage under Medicare Parts A and B; plus a Medicare Supplement Insurance Policy which meets the minimum state requirements for such plans.

Unless requested otherwise on the Employer’s Participation Agreement, the Base Health Plan:

(1) must remain in effect throughout the period the Participating Employer’s Policy coverage is in effect; and

(2) must cover each Insured Person and Dependent throughout his or her period of Policy coverage.

If a claimant is not covered by a Base Health Plan when Covered Medical Expenses are incurred, Policy coverage will remain in effect; but benefits will be determined as if he or she was covered for the minimum benefits shown above.

COMPANY means Jefferson Pilot Financial Insurance Company, a Nebraska corporation, Office address is 8801 Indian Hills Drive, Omaha, Nebraska 68114-4066.

DEPENDENT means a person who:

(1) is covered as a dependent under the Base Health Plan; unless requested otherwise on the Employer’s Participation Agreement; and

(2) is the Insured Person’s:

(a) lawful spouse;

(b) unmarried child under the age 19;

(c) unmarried child under age 25, who is a full-time student at an accredited educational institution; or

(d) unmarried child who, since age 19, has been unable to earn a living due to a mental or physical handicap;

As used above, the term “child” includes the Insured Person’s:

(1) natural born child;

(2) legally adopted child; or a child the Insured Person intends to adopt;

(a) from the date of placement in his or her home for an agency adoption; or

(b) from any later date the adoption petition is filed for a private adoption; or

(3) step child or foster child, who resides in the Insured Person’s household and is chiefly dependent upon him or her for support.

In addition, the term “Dependent” includes any child whose medical care is the Insured Person’s responsibility, pursuant to a divorce decree or other court order.

GL92 -1-

GROUP POLICYHOLDER means the person, partnership, corporation, or trust which is shown on the Face Page of the Policy,

INSURANCE MONTH means that period of time which:

(1) begins on the first day of the calendar month at 12.01 A.M., standard time, at the Participating Employer’s main place of business; and

(2) ends on the last day of the same month at 12:00 midnight at the same place.

INSURED PERSON means an employee of the Participating Employer:

(1) who is regularly scheduled to work at least 25 hours per week;

(2) who bas been named by the Participating Employer as eligible for Policy coverage;

(3) who has completed an enrollment card provided by the Company;

(4) for whom premiums for Policy coverage are being paid; and

(5) who is covered under a Base Health Plan; unless requested otherwise on the Employer’s Participation Agreement.

If requested on the Employer’s Participation Agreement, the term “Insured Person” may also include:

(1) a Participating Employer’s retired employee;

(2) an Insured Person’s surviving spouse who is not remarried; or

(3) a member of a Participating Employer’s board of directors.

Such persons must meet parts (1) through (4) above; but their Base Health Plan may consist of coverage under Medicare Parts A and B, plus a Medicare Supplement Insurance Policy.

LOSS OF A MEMBER means Loss of Hand or Foot, or Loss of an Eye.

LOSS OF HAND OR FOOT means complete severance through or above the wrist or ankle joint. (In South Carolina, “Loss of Hand” can also mean the loss of four whole fingers from one hand.)

LOSS OF AN EYE means total and irrevocable loss of sight in that eye.

LOSS OF THUMB AND INDEX FINGER means severance of the thumb and index finger of the same hand, through or above the joint closest to the wrist. (In California, it can also mean loss by complete severance of at least one whole phalanx of each.)

PARTICIPATING EMPLOYER or EMPLOYER means an employer who has been accepted and approved by the Company for participation in the plan of coverage provided by the Policy.

PLAN YEAR means:

(1) that calendar year during which the Employer’s coverage first takes effect; and

(2) each subsequent calendar year after that.

PHYSICIAN means a licensed physician, surgeon or other medical practitioner who:

(1) must be recognized as a physidan for insurance purposes under the state laws which apply where the Employer’s Certificates are delivered; and

(2) is acting within the scope of his or her license.

The term “Physician” does not include:

(1) the Insured Person;

(2) the Insured Person’s spouse, parent, child or sibling; or

(3) anyone related to the Insured Person’s spouse by the same degree.

POLICY means the Group Accident and Medical Expense Reimbursement Insurance Policy issued by the Company to the Group Policyholder.

GL92 -2-

II - GENERAL PROVISIONS

ENTIRE CONTRACT. The entire contract between the parties consists of:

(1) the Policy and the Group Policyholder’s application attached to it;

(2) the Participating Employers’ Participation Agreements; and

(3) the Instated Persons’ enrollment cards, if any.

All statements made by the Group Policyholder, by the Participating Employers, and by Insured Persons are representations and not warranties. No statement made by an Insured Person will be used to contest the coverage provided by the Policy, unless a copy of the statement is furnished to:

(1) the Insured Person with the Group Certificate; or

(2) the Insured Person’s Beneficiary.

Only an Officer of the Company may change the Policy or extend the time for payment of any premium. No change will be valid unless made in writing and signed by an Officer of the Company. Any change so made will be binding on all persons referred to in the Policy.

INCONTESTABILITY. Except for the non-payment of premiums, the Company may not contest the validity of the Policy as to any Insured Person, after coverage has been in force for that person for two years during his or her lifetime. No statement made by an Insured Person will be used to contest the validity of the Policy; unless the statement is contained in a written application signed by the Insured Person.

INFORMATION TO BE FURNISHED. The Group Policyholder and Participating Employers may be required to furnish information needed to administer the Policy. Clerical error by the Group Policyholder or a Participating Employer:

(1) will not effect insurance which otherwise would be in effect; and

(2) will not continue insurance which otherwise would be terminated.

Once an error is discovered, an equitable adjustment in premium will be made. If a premium adjustment involves the retun of unearned premium, the amount of the refund will be limited to the 12 month period prior to the date the Company receives proof such an adjustment should be made. The Company may inspect any of the Group Policyholder’s and Participating Employers’ records which relate to the Policy.

MISSTATEMENT OF AGE. If an Insured Person’s age has been misstated, premiums will be subject to an equitable adjustment. If the amount of benefit depends upon age, the benefit will be the amount which would have been payable based upon the person’s correct age.

CERTIFICATES. The Participating Employer will be furnished individual Certificates for delivery to each Insured Person. These Certificates summarize the benefits provided by the Policy. If there is a conflict between the Policy and the Certificate, the Policy will control.

NON-PARTICIPATION. The Policy does not participate in the Company’s profits or surplus.

ASSIGNMENT. The insurance and benefits provided under the Policy many not be assigned.

CONFORMITY WITH STATE STATUTES. If any provision of the Policy conflicts with any applicable state law, then the provision will be deemed to conform to the minimum requirements of the law.

WORKER’S COMPENSATION. The Policy is not to be construed to provide benefits required by Worker’s Compensation laws.

GL92 -3-

III - PARTICIPATING EMPLOYERS

A Participating Employer has no rights under the Policy; except as provided in this Section. The Participating Employer will be liable for all acrued premiums payable for any of its employees and their Dependants who are insured under the Policy.

EMPLOYER’S EFFECTIVE DATE. The Participating Employer’s Effective Date of participation under the Policy will be the latest of:

(1) the date the Policy is issued;

(2) the first day of the Insurance Month after the Company approves the employer’s Participation Agreement; or

(3) any other date agreed upon by the Company and the Participating Employer.

EMPLOYER TERMINATION. A Participating Employer’s participation under the Policy ends on the earliest of the following dates:

(1) the date the Participating Employer suspends active business operations; is placed in bankruptcy or receivership; dissolves, merges or otherwise alters its existence;

(2) the date she Participating Employer is excluded from coverage by amendment or termination of the policy;

(3) the end of the Insurance Month in which the Company receives the Participating Employer’s written request to cease participation; or

(4) the end of the last Insurance Month for which premium is paid.

On the day participation ends, Policy coverage will terminate for all of the Participating Employer’s employees and their Dependents. After participation ends, the employer may not become a Participating Employer again; until the Company re-approves it as such.

IV - POLICY TERMINATION

GRACE PERIOD. A grace period of 60 days from the due date will be allowed for the payment of each premium after the first. If any quarterly premium remains unpaid through the last day of the grace period; then Policy coverage will terminate automatically, on the day the grace period ends. The Participating Employer will remain liable for premium for the period Policy coverage remains in effect during the grace period.

POLICY TERMINATION. Until the premium rate has been in effect for at least 12 months, the Company may terminate the Policy coverage on any premium due date; but only if:

(1) the Participating Employer suspends active business operations; is placed in bankruptcy or receivership, dissolves, merges or otherwise alters its existence;

(2) there are fewer than 100 Insured Persons covered under the Policy;

(3) there is a change in state or fedetal law affecting the terms of the Policy; or

(4) the Participating Employer without good cause, fails to perform its duties relating to the Policy or to promptly furnish any information the Company may reasonably require.

To do so, the Company must give the Group Policyholder and Participating Employers at least 31 days’ prior written notice of its intent to terminate the Policy.

EFFECT OF POLICY TERMINATION. On the date the Policy ends, Policy coverage will terminate for all of the Employer’s employees and their Dependents. The Employer cannot become a Participating Employer again, until the company reapproves it as such.

NOTICE TO INSURED PERSONS. The Employer shall forward the notice of cancellation, nonrenewal or expiration of the Policy to each Insured Person, as soon as reasonably possible.

GL92 -4-

V - INSURED PERSONS AND DEPENDENTS

ELIGIBILITY AND EFFECTIVE DATES. An employee becomes eligible for Policy coverage on the later of:

(1) the date his or her employer becomes a Participating Employer; or

(2) the first day of the month following the date the employee first meets the definition of Insured Person shown in Section I.

An employee’s coverage takes effect on the date he or she becomes eligible. A Dependent’s coverage takes effect on the later of:

(1) the date the Inured Person’s coverage takes effect; or

(2) the date he or she first meets the definition of an eligible Dependent shown in Section I.

INDIVIDUAL TERMINATION. An Insured Person’s coverage will end on the earliest of:

(1) the date the Policy terminates;

(2) the date his or her employer is no longer a Participating Employer;

(3) the last day of the Insurance Month in which the Insured Person requests to cancel the insurance;

(4) the last day of the Insurance Month for which the last premium is paid for the insurance;

(5) the date he or she is no longer an eligible Insured Person as defined in Section 1;

(6) the date the Insured person enters the Armed Forces of any state or country on active duty; except for duty of 30 days or less for training in the Reserves or National Guard. (The Company will refund any unearned premium upon receipt of proof of military service); or

(7) the date the Insured Person’s employment with the Participating Employer ends; except when:

(a) the Insured Person is entitled to a Continuation provided below; or

(b) the Participating Employer has elected to cover the Insured Person as a retired employee, surviving spouse or member of its board of directors.

If an Insured Person is covered as a retired employee, surviving spouse or member of the Participating Employer’s board of directors; then that person’s Accidental Death and Dismemberment Insurance will end on his or her 65^th birthday.

A Dependent’s coverage will end on the earliest of:

(1) the date the Insured Person’s insurance ends;

(2) the date he or she is no longer an eligible Dependent as defined in Section I; or

(3) the date the Dependent enters the Armed Forces of any state or country on active duty, except for duty of 30 days or less for training in the Reserves or National Guard. (The Company will refund any unearned premium upon receipt of proof of military service.)

CONTINUATION. Ceasing active work results in termination of eligibility; but coverage may be continued as follows:

(1) If the Insured Person is disabled due to illness or injury; then insurance may be continued during the disability resulting from that condition.

(2} If the Insured Person is on a temporary layoff or an approved leave of absence; then insurance may be continued for three Insurance Months following the month in which the layoff began.

(3) If the Insured Person or Dependent is entitled to continue coverage in accord with any federal or state law, which. applies where the Participating Employer’s Certificates are delivered; then insurance may be continued for the period required by law.

Throughout any period of continued coverage, the employer must remain a Participating Employer; and premium payments must be made on the person’s behalf.

INDIVIDUAL REINSTATEMENT. An Insured Person who returns to work within 12 months after insurance ends will again be eligible for Policy coverage on the date of return to active work; provided:

(l) the employer remains a Participating Employer;

(2) the employee meets the definition of an Insured Person; and

(3) premium payments are resumed on his or her behalf.

GL92 -5-

V1 - MEDICAL EXPENSE REIMBURSEMENT INSURANCE

BENEFITS. If an Insured Person or Dependent incurs Covered Medical Expenses, during the Participating Employer’s Plan Year; then the Company will pay benefits equal to the amount of such expenses incurred to excess of the Deductible. Benefits will not exceed:

(1) the Per Occurrence Limit for Covered Medical Expenses incurred as a result of any one condition or period of confinement during any calendar year; or

(2) the Maximum Medical Benefit for Covered Medical Expenses incurred by the Insured person and any Dependants combined during any calendar year.

The Per Occurrence Limit and Maximum Medical Benefit are shown in the Schedule of Benefits on the face page.

PER OCCURRENCE LIMIT. Covered Medical Expenses incurred by the same Insured Person or Dependent during any one calendar year will be subject to the Per Occurrence Limit, if such expenses result from:

(1) the same or related condition, illness or injury. Treatment of all injuries sustained by any one Insured Person or Dependent, as a result of the same accident, will be considered one occurrence.

(2) the same or related. surgical procedures. Two or more surgical procedures will be considered one occurrence if performed bilaterally, on two or more phalanges, or in the same orifice or operative field; unless the procedures are performed during separate operative sessions and are due to unrelated conditions.

(3) the same period of confinement in a hospital, ski11ed nursing care facility or other health care facility. Two or more confinements will be considered parts of the same period of confinement, whether they are in the same or different health care facilities; unless they are separated by at least 30 consecutive days without confinement.

(4) the same course of dental treatment. A course of dental treatment is a series of dental or orthodontic services prescribed by a dentist to correct a specific dental condition. It will be considered one occurrence; regardless of the number of teeth, quadrants, procedures, prothodontics, sessions of adjustments involved.

COVERED MEDICAL EXPENSES. Covered Medical Expenses include reasonable expenses for necessary medical care which:

(1) are allowed as a medical deduction by Section 213 of the U.S. Internal Revenue Code of 1954, as amended;

(2) are incurred for the Insured Person’s or Dependent’s medical care;

(3) are the Insured Person’s legal obligation to pay; and

(4) are not payable under the Base Health Plan.

Such medical care or expense may include (but is not limited to):

(1) hospital, medical and surgical services to diagnose of treat an illness or injury;

(2) routine physical exams, routine laboratory tests and preventive inoculations;

(3) dental work, prescription drugs and medical equipment;

(4) the fitting cost of hearing aids, eyeglasses and contact lenses;

(5) transportation that is primarily for and essential to medical care; and

(6) premiums, contributions, subscriber or capacitation fees an Insured Person pays for:

(a) the Participating Employer’s Base Health Plan (or Medicare and a Medicare Supplement Insurance Policy); and

(b) any dental, vision or prescription drug plan provided by that Employer.

Covered Medical Expenses will not exceed the usual and customary charge. This is the amount charged by most other Physicians or health care practitioners with similar training and experience, within the same geographic area, for a comparable service. That “area” may be a city, metropolitan area, county or greater area; as needed to identify a cross section of providers of the same or similar service. For expense incurred outside the United States, the Usual and Customary Charge will be the amount allowed for that service, if performed in the Company’s domicile in Omaha, Nebraska.

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DEDUCTIBLE. The Deductible is any amount of benefits payable to the Insured Person or Dependent for the same medical care under:

(1) the Base Health Plan;

(2) any other self insured health plan or group health, dental, vision or prescription drug policy; or

(3) worker’s compensation, Medicare or other government program.

If a claimant is not covered by a Base Health Plan when Covered Medical Expenses are incurred; then the Deductible will be determined as if he or she was covered for the minimum benefits shown in Section I.

EXCLUSIONS AND LIMITATIONS. Covered Medical Expenses do not include charges:

(1) which are in excess of the usual, and customary charge for that service.

(2) for services or supplies which:

(a) are not recommended, approved or certified as medically necessary by a Physician;

(b) are provided by a Physician or other health care practitioner who is the Insured Person; his or her spouse, parent, child or sibling; or anyone related to the Insured Person’s spouse by the same degree; or

(c) are beyond the scope of the Physician’s, health care practitioner’s or facility’s license; or are illegal where they were provided.

(3) for any cosmetic surgical procedures, cosmetic dental procedure, or drug or medicine prescribed for cosmetic use; except to restore function or repair a disfigurement resulting from:

(a) a congenital birth defect; or

(b) an injury, disease or its surgical treatment (such as reconstruction after removal of a malignancy).

Cosmetic surgical procedure include (but are not limited to):

(a) face lifts, dermabrasion, chemical peels and collagen injections;

(b) voluntary radial kerototomy, blepharoplasty, rhinoplasty, or otoplasty;

(c) liposuction, breast augmentatation or reduction; and

(d) hair transplants and electrolysis.

Cosmetic dental procedures include (but are not limited to) tooth bleaching, facings on crowns or pontics distal to the second bicuspid, and characterization of dentures.

Drugs or medicines prescribed for cosmetic use include (but are not limited to) wrinkle treatments and hair growth stimulants.

(4) for the following services or expenses, whether or not they are prescribed or recommended by a physician;

(a) weight loss or smoking cessation programs or medications, when provided for general health;

(b) physical therapy, massage therapy, hydrotherapy, or steam baths; when provided for general health or to relieve discomfort, rather than for a specific medical condition;

(c) nonprescription drugs or medicines (except insulin);

(d) vitamins, minerals, enzymes, herbal or homeopathic preparations, special foods or dietary supplements; which:

(i) can be obtained without a Physician’s written prescription; or

(ii) have an over-the-counter equivalent;

(e) non-nursing services provided by a personal attendant, companion or housekeeper;

(f) travel, lodging or meals while vacationing at a health spa, resort, camp or retreat;

(g) health club, athletic association or country club membership or dues; or

(h) any other service or expense not allowed as a medical deduction. by Section 213 of the U.S. Internal Revenue Code, as amended.

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(5) for modification of the Insured Person’s home, yard, motor vehicle or workplace; or the purchase or rental of nonmedical equipment, such as:

(a) an air conditioner, humidifier or purifier:

(b) exercise, sports or motorized transportation equipment;

(c) a ramp, lift, escalator or elevator; or

(d) a sun or heat lamp, whirlpool bath, hot tub, sauna or swimming pool;

(6) for transportation which is not primarily for and essential to medical care;

(7) for premiums, contributions, or fees an Insured Person pays for the cost of:

(a) any disability income Insurance;

(b) any accidental death and dismemberment insurance; or

(c) any health care plan; except for the Base Health Plan (or Medicare and a Medicare Supplement Insurance Policy) and any dental, vision or prescription drug plan provided by the Employer;

(8) for medical treatment provided by a health care facility or practitioner which:

(a) does not charge the Insured Person for the services; or

(b) does not normally charge for such services in the absence of insurance;

(9) for services which are provided by or reimbursable under Worker’s Compensation, Medicare or any other government program (except Medicaid); or

(10) in connection with any sickness contracted or injury sustained:

(a) during active duty or training in the armed forces, Reserves or National Guard of any state or country; or

(b) as a result of war, whether declared or undeclared; any act of war; or resistance to armed invasion or aggression.

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VII. ACCIDENTAL DEATH AND DISMEMBERMENT INSURANCE

DEATH OR DISMEMBERMENT BENEFIT. The Company will pay the benefit listed below, if.:

(1) an Insured Person sustains an Injury while insured under the Policy; and

(2) the Injury directly causes one of the following Covered Losses within 365 days after the date of the accident.

The loss must result directly from the injury and from no other causes.

TABLE OF COVERED LOSSES	BENEFIT
Loss of Life	Principal Sum
Loss of One Member (Hand, Foot or Eye)	1/2 Principal Sum
Loss of Two or More Members	Principal Sum
Loss of Thumb and Index Finger	1/4 Principal Sum

The Principal Sum is shown in the Schedule of Insurance. If an Insured Person sustains more than one loss resulting from the same accident, the benefit will be the one largest amount listed. Benefits will not exceed the Principal Sum for all of his or her losses combined.

TO WHOM PAYABLE. Benefits for the Insured Person’s loss of life will be paid in accord with the Beneficiary section. Any other benefits will be paid to the Insured Person.

EXCLUSIONS. Accidental Death and Dismemberment Insurance benefits will not be paid for Loss resulting from:

(1) intentionally self-inflicted injury or attempted injury, while sane or insane;

(2) sickness, disease or bodily infirmity; except for:

(a) bacterial infection resulting from an accidental cut or wound; or

(b) the accidental ingestion of a poisonous food substance;

(3) medical or surgical treatment; except when it is for a covered injury;

(4) the Insured Person’s voluntary participation in a riot, insurrection or the commission of a felony;

(5) war or any act of war, whether declared or undeclared; or any injury which occurs during active duty or training in the armed forces, Reserves or National Guard of any state or country;

(6) travel or flight in any aircraft; except as a fare-paying passenger on a regularly scheduled flight with a licensed commercial airline;

(7) the Insured Person’s taking part in any aeronautical sport, ballooning, hang gliding or parachute jumping except when a parachute jump is made to preserve his or her life;

(8) the Insured Person’s driving a motor vehicle while intoxicated, impaired or under the influence of drugs:

(a) as defined by the jurisdiction where the accident occurs;

(b) whether or not the driver is convicted of the offense.

However, this Part 8 will not apply when drugs are taken as prescribed by a Physician.

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VIII. CLAIM PROCEDURES

MEDICAL EXPENSE REIMBURSEMENT CLAIMS. For Medical Expense Reimbursement claims, the Insured Person is not required to send a written notice of claim or a request for claims forms to the Company. Instead, the Insured Person may submit proof of any Covered Medical Expenses to the participating Employer on forms furnished by the employer. This may be done:

(1) at any time during the calendar year in which such expenses are incurred; or

(2) within 90 days after the close of that calendar year. (Exceptions for late proof will be made only as provided below.)

The Participating Employer will then:

(1) verify any amounts payable for such expenses under the Base Health Plan; and

(2) submit the verified claims to the Company at least monthly.

Any Medical Expense Reimbursement benefits will be paid as soon as the company receives proper written proof of loss; provided the required premium has been paid on the Insured Person’s behalf.

ACCIDENTAL DEATH OR DISMEMBERMENT CLAIMS. For an accidental death or dismemberment claim, a written notice of a claim must be given within 20 days after the loss occurs. The notice must be sent to the Company’s Home Office. It should include:

(1) the Insured Person’s name and address; and

(2) the number of the Policy.

When this notice of claim is received, the Company will send the Insured Person forms for filing the required proof. If the Insured Person does not receive these forms within 15 days; then the proof of loss requirement may be met by giving the Company a written statement of the nature and extent of the loss, within, the required time period.

For an accidental death or dismemberment claim, the Company must be given written proof of loss within 90 days after the loss occurs. (Exceptions for late proof will be made only as provided below.) Any benefits payable for accidental death or dismemberment will be paid as soon as the Company receives proper written proof of loss.

EXCEPTIONS FOR LATE PROOF. If it was not reasonably possible to give written proof in the time required, the claim will not be reduced or denied solely for this reason; provided proof is filed as soon as reasonably possible. In any event, proof of loss must be given no later than one year from such time; unless the Insured Person was legally Incapacitated.

LEGAL ACTIONS. No legal action to recover any benefits may be brought until the 60 days after the required written proof of loss is given. No legal action may be brought more than three years after the date written proof of loss is required to be given.

PHYSICAL EXAMINATIONS. The Company, at its expense, may:

(1) have an Insured Person examined, as often as reasonably necessary, while any claim is pending; and

(2) have an autopsy made , where allowed by law, if a claim for death benefits is made.

RIGHT OF RECOVERY. If benefits are overpaid on any claim, full reimbursement is required:

(1) within 60 days after the Company requests reimbursement;

(2) whether the overpayment is due to fraud, misrepresentation, the Company’s error in processing a claim, or any other reason.

If reimbursement is not made, the Company has the right to reduce future benefits until full reimbursement is made; or to recover such overpayments from the Insured Person or his or her estate.

COMPANY’S DISCRETIONARY AUTHORITY. Except for those functions which the Policy specifically reserves to the Group Policyholder or Participating Employer, the Company has the authority to manage the Policy, administer claims, interpret its provisions and resolve questions arising under it. The Company’s authority includes the right to.

(1) establish administrative procedures, determine eligibility and resolve claims questions; and

(2) determine what information, it reasonably requires to make such decisions.

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IX. BENEFICIARY

PAYMENTS TO BENEFICIARY. At the death of an Insured Person, any amount payable as a result of his of her death will be paid to the payment named Beneficiary who survives the insured person. If no named Beneficiary survives the Insured Person, payment will be made:

(1) to the Insured Person’s estate; or

(2) in accord with the Facility of Payment section.

The right of a Beneficiary to receive any such amount is subject to the Facility of payment section of the Policy.

If the Inured Person’s Beneficiary dies:

(1) within 15 days of the Insured Person’s death; and

(2) before the Company receives satisfactory proof of the insured Person’s death;

payment will be made as if the Insured Person had survived the Beneficiary; unless the other provisions have been made.

NAMING THE BENIFICIARY. An Insured Person’s Beneficiary will be as shown on his or her enrollment card; unless changed. If the Policy replaces a group policy providing similar covers then an insured Person’s Beneficiary named under the prior policy will be the Beneficiary under the Policy, until changed.

CHANGING THE BENEFICIARY. Only the Insured Person (or his or her assignee) may change the Beneficiary. A new Beneficiary may be named by filing a written, notice of the change with the Company at its Home Office. The change will be effective as of the date it was signed; subject to any action taken by the Company before it received notice of the change.

X. FACILITY OF PAYMENT

If any benefit under the Policy becomes payable to an Insured Person’s estate, a minor, or any person who (in the Company’s opinion) is not competent to give a valid release; then the Company, at its option, may make Payment to any one or more of the following.

(1) a person who has assumed the care and support of the Insured Person or Beneficiary;

(2) a Person who has incurred expense as a result of the Insured Person’s last illness or death;

(3) the personal representative of the Insured Person’s estate; or

(4) any person related by blood or marriage to the Insured Person.

No Payment made as provided above may exceed $1,000; or the amount permitted by state law, if less. A payment made in good faith under this Section will discharge the Company to the extent of that payment. Any unpaid balance will be paid to the Insured persons’ estate; or to the Insured Person’s Beneficiary upon attaining the age of majority; or becoming competent to give a valid release.

XI. SETTLEMENT OPTIONS

All or part of any death or dismemberment benefit may be received in installments, by making written election to the Company. Such election may be made:

(1) by the Insured Person, while living; or

(2) by the person who is to receive payment, if no such election is in effect at the time of the Insured Person’s death.

Any such election must comply with the Company’s practices at the time it is made. The amount applied under a settlement option must be at least $2,000. It must be sufficient to provide a payment of at least $20 per month.

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