EXHIBIT 10.4
AMENDED AND RESTATED CHANGE IN
CONTROL SEVERANCE AGREEMENT
This Amended and Restated Change in
Control Severance Agreement (“ Agreement
”) is made effective as of
(“ Effective Date ”), by and between
Tessera Technologies, Inc., a Delaware corporation (the “
Company ”), and
(“ Executive ”). For purposes of this
Agreement (other than Section 1(c) below), the “
Company ” shall mean the Company and its
subsidiaries.
WHEREAS, the Company and Executive
entered into a Change in Control Severance Agreement (the “
Prior Agreement ”) dated as of
,
2008 (the “ Original Effective Date ”);
and
WHEREAS, the Company and Executive
desire to amend and restate the Prior Agreement on the terms and
conditions set forth herein.
The parties agree as
follows:
1. Definitions . For purposes
of this Agreement, the following terms shall have the following
meanings:
(a) “ Board
” shall mean the Board of Directors of the
Company.
(b) “ Cause
” shall mean any of the following: (i) Executive’s
gross negligence or willful misconduct in the performance of his
duties to the Company where such gross negligence or willful
misconduct has resulted or is likely to result in material damage
to the Company or its subsidiaries; (ii) Executive’s
willful and habitual neglect of or failure to perform
Executive’s duties of consulting or employment, which neglect
or failure is not cured within thirty (30) days after written
notice thereof is received by Executive;
(iii) Executive’s commission of any act of fraud or
dishonesty with respect to the Company that causes material harm to
the Company or is intended to result in substantial personal
enrichment; (iv) Executive’s failure to cooperate with
the Company in any investigation or formal proceeding initiated by
a governmental authority or otherwise approved by the Board or the
Audit Committee of the Board, which failure is not cured within
thirty (30) days after written notice thereof is received by
Executive; (v) Executive’s conviction of or plea of
guilty or nolo contendere to felony criminal conduct;
(vi) Executive’s material violation of the
Company’s Confidentiality and Proprietary Rights Agreement
(as defined below) or similar agreement that Executive has entered
into with the Company; or (vii) Executive’s material
breach of any obligation or duty under this Agreement or material
violation of any written employment or other written policies that
have previously been furnished to Executive, which breach or
violation is not cured within thirty (30) days after written
notice thereof is received by Executive, if such breach or
violation is capable of being cured.
(c) “ Change in
Control ” shall mean and include each of the
following:
(i) A transaction or series of
transactions (other than an offering of the Company’s common
stock to the general public through a registration statement filed
with the Securities and Exchange Commission) whereby any
“person” or related “group” of
“persons” (as such terms are used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the
“ Exchange Act ”)) (other than the
Company, any of its subsidiaries, an employee benefit plan
maintained by the Company or any of its subsidiaries or a
“person” that, prior to such transaction, directly or
indirectly controls, is controlled by, or is under common control
with, the Company) directly or indirectly acquires beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act)
of securities of the Company possessing more than 50% of the total
combined voting power of the Company’s securities outstanding
immediately after such acquisition; or
(ii) The consummation by the Company
(whether directly involving the Company or indirectly involving the
Company through one or more intermediaries) of (x) a merger,
consolidation, reorganization, or business combination or
(y) a sale or other disposition of all or substantially all of
the Company’s assets in any single transaction or series of
related transactions or (z) the acquisition of assets or stock
of another entity, in each case other than a
transaction:
(A) Which results in the
Company’s voting securities outstanding immediately before
the transaction continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
Company or the person that, as a result of the transaction,
controls, directly or indirectly, the Company or owns, directly or
indirectly, all or substantially all of the Company’s assets
or otherwise succeeds to the business of the Company (the Company
or such person, the “ Successor Entity
”)) directly or indirectly, at least a majority of the
combined voting power of the Successor Entity’s outstanding
voting securities immediately after the transaction, and
(B) After which no person or group
beneficially owns voting securities representing 50% or more of the
combined voting power of the Successor Entity; provided,
however, that no person or group shall be treated for purposes
of this Section 1(c)(ii)(B) as beneficially owning 50% or more
of combined voting power of the Successor Entity solely as a result
of the voting power held in the Company prior to the consummation
of the transaction.
The Board shall have full and final
authority, which shall be exercised in its discretion, to determine
conclusively whether a Change in Control of the Company has
occurred pursuant to the above definition, and the date of the
occurrence of such Change in Control and any incidental matters
relating thereto.
(d) “ Good
Reason ” shall mean the occurrence of any of the
following events or conditions without Executive’s written
consent:
(i) a material diminution in
Executive’s authority, duties or responsibilities;
(ii) a material diminution in
Executive’s base compensation, unless such a reduction is
imposed across-the-board to senior management of the
Company;
(iii) a material change in the
geographic location at which Executive must perform his or her
duties; or
(iv) any other action or inaction
that constitutes a material breach by the Company or any successor
or affiliate of its obligations to Executive under this
Agreement.
Executive must provide written
notice to the Company of the occurrence of any of the foregoing
events or conditions without Executive’s written consent
within ninety (90) days of the occurrence of such event. The
Company or any successor or affiliate shall have a period of thirty
(30) days to cure such event or condition after receipt of
written notice of such event from Executive. Any voluntary
Separation from Service for “Good Reason” following
such thirty (30) day cure period must occur no later than the
date that is six (6) months following the initial occurrence
of one of the foregoing events or conditions without
Executive’s written consent. Executive’s voluntary
Separation from Service by reason of resignation from employment
with the Company for Good Reason shall be treated as
involuntary.
(e) “ Code
” means the Internal Revenue Code of 1986, as amended, and
the Treasury Regulations and other interpretive guidance
thereunder.
(f) “ Permanent
Disability ” means Executive’s inability to
perform the essential functions of his or her position, with or
without reasonable accommodation, for a period of at least 120
consecutive days because of a physical or mental
impairment.
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(g) “ Separation
from Service ” means an involuntary separation from
service within the meaning of Section 409A of the
Code.
(h) “ Stock
Awards ” means all stock options, restricted stock
and such other awards granted pursuant to the Company’s stock
option and equity incentive award plans or agreements and any
shares of stock issued upon exercise thereof.
2. Term .
(a) The initial term
of this Agreement (the “ Initial Term ”)
shall continue until the earlier of the third (3
rd
) anniversary
of the Original Effective Date or the date on which all payments or
benefits required to be made or provided hereunder have been made
or provided in their entirety, except as otherwise provided in this
Section 2.
(b) During the one-year period
commencing immediately prior to the expiration of the Initial Term
or any Renewal Term (as defined below) then in effect, the Board
shall determine, in its sole discretion, whether and for what
period, if any, and upon what terms and conditions (including any
modification to the terms and conditions of this Agreement as then
in effect that the Committee shall determine to be advisable) the
Company shall offer to Executive to extend the term of this
Agreement (any such extension being referred to herein as a
“ Renewal Term ” ) following the
expiration of the then-effective Initial Term or Renewal Term as
the case may be. Following its determination, the Board shall
advise Executive in writing of the terms and conditions upon which
the Company would be willing to extend the term of this Agreement;
provided , however , that if the Board fails to so
advise Executive or if Executive does not accept the terms and
conditions upon which the Company would be willing to extend the
term of the Agreement, the Agreement shall terminate upon the
expiration of the Initial Term or Renewal Term then in effect,
except as otherwise provided by Section 2(c) or
(d).
(c) Notwithstanding the provisions
of Sections 2(a) and (b), the then-effective Initial Term or
Renewal Term shall automatically be extended in the event that such
term would otherwise expire during the period commencing upon the
first public announcement of a definitive agreement that would
result in a Change in Control (even though still subject to
approval of the Company’s stockholders and other conditions
and contingencies) and ending on the date that is eighteen
(18) months following the occurrence of such Change in
Control. Such extension shall be upon the terms and conditions of
this Agreement as then in effect, provided that such extension of
the Term of this Agreement shall expire upon the first to occur of
the first public announcement of the termination of such definitive
agreement or the date that is eighteen (18) months following
the occurrence of such Change in Control.
(c) Notwithstanding the
provisions of Section 2.1 and 2.2, the obligation of the
Company to make payments or provide benefits pursuant to this
Agreement to which Executive has acquired a right in accordance
with the applicable provisions of this Agreement prior to the
expiration of the then-effective Initial Term or Renewal Term shall
survive the termination of this Agreement until such payments and
benefits have been provided in full.
3. Severance .
(a) If Executive has
a Separation from Service as a result of Executive’s
discharge by the Company without Cause or by reason of
Executive’s resignation for Good Reason, in either case
within eighteen (18) months following a Change in Control,
Executive shall be entitled to receive, in lieu of any severance
benefits to which Executive may otherwise be entitled under any
severance plan or program of the Company, the benefits provided
below, which, with respect to clause (ii) and the last
sentence of clause (iii) below, will be payable in a lump sum
within ten (10) days following the effective date of
Executive’s Release, but in no event later than two and
one-half (2 1
/
2 ) months following the last day
of the calendar year in which the date of Executive’s
Separation from Service occurs:
(i) The Company shall pay to
Executive his or her fully earned but unpaid base salary, when due,
through the date of Executive’s Separation from Service at
the rate then in effect, plus all other the benefits, if any, under
any Company group retirement plan, nonqualified deferred
compensation plan, equity award plan or agreement (other than any
such plan or agreement pertaining to Stock Awards whose treatment
is prescribed by Section 3(a)(iii) below), health benefits
plan or other Company group benefit plan to which Executive may be
entitled pursuant to the terms of such plans or agreements at the
time of Executive’s Separation from Service;
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(ii) Subject to Section 3(c)
and Executive’s continued compliance with Section 4,
Executive shall be entitled to receive severance pay in an amount
equal to
( %) multiplied by Executive’s annual
base salary as in effect immediately prior to the date of
Executive’s Separation from Service;
(iii) Subject to Section 3(c)
and Executive’s continued compliance with Section 4, for
the period beginning on the date of Executive’s Separation
from Service and ending on the date which is
( ) full months following the date of
Executive’s Separation from Service (or, if earlier, the date
on which the applicable continuation period under COBRA expires),
the Company shall arrange to provide Executive and his or her
eligible dependents who were covered under the Company’s
health insurance plans as of the date of Executive’s
Separation from Service with health (including medical and dental)
insurance benefits substantially similar to those provided to
Executive and his dependents immediately prior to the date of such
Separation from Service. If the Company is not reasonably able to
continue health insurance benefits coverage under the
Company’s insurance plans, the Company shall provide
substantially equivalent coverage under other third-party insurance
sources. If any of the Company’s health benefits are
self-funded as of the date of Executive’s Separation from
Service, instead of providing continued health insurance benefits
as set forth above, the Company shall instead pay to Executive an
amount equal to
( ) multiplied by the monthly premium
Executive would be required to pay for continuation coverage
pursuant to the COBRA for Executive and his or her eligible
dependents who were covered under the Company’s health plans
as of the date of Executive’s Separation from Service
(calculated by reference to the premium as of the date of
Separation from Service);
(iv) Subject to Section 3(c)
and Executive’s continued compliance with Section 4, the
vesting and/or exercisability of each of Executive’s
outstanding Stock Awards shall be accelerated in full effective as
of the date of Executive’s Separation from Service. Nothing
in this Section 3(a)(iv) shall be construed to limit any more
favorable vesting applicable to Executive’s Stock Awards in
the Company’s equity plan(s) and/or the stock award
agreements under which the Stock Awards were granted. The foregoing
provisions are hereby deemed to be a part of each Stock Award and
to supersede any less favorable provision in any agreement or plan
regarding such Stock Award; and
(v) Notwithstanding any other
provision of this Agreement to the contrary, any severance benefits
payable to Executive under this Agreement shall be reduced by any
severance benefits payable by the Company or an affiliate of the
Company to such individual under any other policy, plan, program,
agreement or arrangement, including, without limitation, any
severance agreement between such individual and any
entity.
(b) Other Terminations . If
Executive’s employment is terminated by the Company without
Cause or by Executive for Good Reason prior to a Change in Control
or more than eighteen (18) months following a Change in
Control, or at any time by the Company for Cause, by Executive
without Good Reason, or as a result of Executive’s death or
Permanent Disability, the Company shall not have any other or
further obligations to Executive under this Agreement (including
any financial obligations)
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except that Executive shall be entitled to
receive (i) Executive’s fully earned but unpaid base
salary, through the date of termination at the rate then in effect,
and (ii) all other amounts or benefits to which Executive is
entitled under any compensation, retirement or benefit plan or
practice of the Company at the time of termination in accordance
with the terms of such plans or practices, including, without
limitation, any continuation of benefits required by COBRA or
applicable law. In addition, all vesting of Executive’s
unvested Stock Awards previously granted to him by the Company
shall cease and none of such unvested Stock Awards shall be
exercisable following the date of such termination. The foregoing
shall be in addition to, and not in lieu of, any and all other
rights and remedies which may be available to the Company under the
circumstances, whether at law or in equity.
(c) Release . As a condition
to Executive’s receipt of any post-termination benefits
pursuant to Section 3(a) above, Executive shall execute and
not revoke a general release of all claims in favor of the Company
(the “ Release ”) in the form
substantially similar to that attached hereto as Exhibit A (and any
applicable revocation period applicable to such Release shall have
expired) within the sixty (60) day period following the date
of Executive’s Separation from Service.
(d) Exclusive Remedy . Except
as otherwise expressly required by law (e.g., COBRA) or as
specifically provided herein, all of Executive’s rights to
salary, severance, benefits, bonuses and other amounts hereunder
(if any) accruing after the termination of Executive’s
employment shall cease upon such termination. In the event of a
termination of Executive’s employment with the Company,
Executive’s sole remedy shall be to receive the payments and
benefits described in this Section 3.
(e) No Mitigation . Except as
otherwise provided in Section 3(a)(iii) above, Executive shall
not be required to mitigate the amount of any payment provided for
in this Section 3 by seeking other employment or otherwise,
nor shall the amount of any payment or benefit provided for in this
Section 3 be reduced by any compensation earned by Executive
as the result of employment by another employer or self-employment
or by retirement benefits; provided , however , that
loans, advances or other amounts owed by Executive to the Company
may be offset by the Company against amounts payable to Executive
under this Section 3.
(f) Return of the Company’s
Property . If Executive’s employment is terminated for
any reason, the Company shall have the right, at its option, to
require Executive to vacate his or her offices prior to or on the
effective date of termination and to cease all activities on the
Company’s behalf. Upon the termination of his or her
employment in any manner, as a condition to Executive’s
receipt of any post-termination benefits described in this
Agreement, Executive shall immediately surrender to the Company all
lists, books and records of, or in connection with, the
Company’s business, and all other property belonging to the
Company, it being distinctly understood that all such lists, books
and records, and other documents, are the property of the Company.
Executive shall deliver to the Company a signed statement
certifying compliance with this Section 3(g) prior to the
receipt of any post-termination benefits described in this
Agreement.
(g) Best Pay Provision
.
(i) If any payment or benefit
Executive would receive under this Agreement, when combined with
any other payment or benefit Executive receives pursuant to the
termination of Executive’s employment with the Company
(“ Payment ”), would (A) constitute
a “parachute payment” within the meaning of
Section 280G of the Code, and (B) but for this sentence,
be subject to the excise tax imposed by Section 4999 of the
Code (the “ Excise Tax ”), then such
Payment shall be either (1) the full amount of such Payment or
(2) such lesser amo
