Exhibit 99.1
CHANGE IN CONTROL SEVERANCE
AGREEMENT
This Change in Control Severance
Agreement (the “Agreement”) is entered into as of
_________________, 2007 (the “Effective Date”), by and
between ________________ (“Executive”) and Virage Logic
Corporation, a Delaware corporation (the
“Company”).
Whereas, the Board of Directors of
the Company (the “Board”) has determined that it is in
the best interests of the Company and its stockholders to assure
that the Company will have the continued dedication of its
executive and senior officers notwithstanding the possibility or
occurrence of a Change in Control (as defined below) of the
Company;
Whereas, the Board also believes
that it is desirable to encourage Executive’s full attention
and dedication to the Company and alleviate uncertainty, and to
provide Executive with accelerated vesting of a portion of his or
her equity incentives in the event of a Change in Control and
Executive’s termination of employment with the Company under
the circumstances described in this Agreement;
Now, therefore, in consideration of
the agreements contained herein and other good and valuable
consideration, the receipt of which is mutually acknowledged,
Executive and the Company hereby agree as follows:
1. Definitions . The
following definitions shall apply for all purposes under this
Agreement:
(a) Affiliate .
“Affiliate” shall have the meaning assigned to such
term in Rule 12b-2 promulgated under the Exchange Act.
(b) Cause .
“Cause,” solely for purposes of this Agreement, shall
mean any of the actions relevant to Executive committed by the
Executive (or omitted to be done by Executive) that occur on or
after the Effective Date:
(i) A conviction of or plea of
“guilty” or “no contest” to a felony under
the laws of the United States or any state thereof; or
(ii) Conviction of any crime
constituting fraud, theft or misappropriation of Company property,
or of any other crime that materially injures the Company’s
business or reputation.
(c) Change in Control .
“Change in Control” means the consummation of a
transaction or series of transactions resulting in one or more of
the following events:
(i) The acquisition, directly or
indirectly, in one or more transactions, by any individual, person
or group of persons, within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act (a “Person”), of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act),
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individually or in the aggregate, of
fifty percent (50%) or more of either (1) the outstanding
shares of common stock of the Company or (2) the combined
voting power of the Company’s outstanding securities entitled
to vote generally in the election of directors; provided, however,
that the following transactions shall not constitute, or be deemed
to cause, a Change in Control of the Company: (A) any increase
in percentage ownership by a Person to fifty percent (50%) or
more resulting solely from any acquisition of shares directly from
the Company or any acquisition of shares by the Company that
reduces the number of shares outstanding; or (B) any Business
Combination described in clauses (A) and (B) of
Section 1(a)(iii) below;
(ii) A change in the composition of
the Board of the Company as a result of which fewer than a majority
of the directors are Incumbent Directors. “Incumbent
Directors” shall mean directors who either: (A) are
directors of the Company as of the Effective Date hereof;
(B) are elected, or nominated for election, to the Board of
the Company with the affirmative vote of at least a majority of the
directors of the Company who are Incumbent Directors described in
(A) above at the time of such election or nomination; or
(C) are elected, or nominated for election, to the Board of
the Company with the affirmative votes of at least a majority of
the directors of the Company who are Incumbent Directors described
in (B) above at the time of such election or nomination.
Notwithstanding the foregoing, “Incumbent Directors”
shall not include an individual whose election or nomination is in
connection with an actual or threatened proxy contest relating to
the election of directors to the Company;
(iii) Consummation of a
reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the
Company (a “Business Combination”), in each case,
unless, following such Business Combination, (A) no Person,
individually or in the aggregate, nor any corporation resulting
from such Business Combination or any employee benefit plan (or
related trust) sponsored or maintained by the Company or such
corporation resulting from such Business Combination beneficially
owns, directly or indirectly, individually or in the aggregate,
fifty percent (50%) or more of the then outstanding shares of
common stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that
such ownership existed prior to the Business Combination, and
(B) at least a majority of the members of the Board of the
corporation resulting from such Business Combination were members
of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such
Business Combination; or
(iv) Approval by the stockholders of
the Company of the liquidation or dissolution of the
Company.
(d) Change in Control Period
. “Change in Control Period” means the twelve
(12) month period immediately following the date of a Change
in Control under this
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Agreement, provided, however, that
notwithstanding anything in this Agreement to the contrary, if a
Change in Control occurs and not more than 30 days prior to the
date on which the Change in Control occurs, Executive’s
employment with the Company is terminated by the Company, such
termination of employment will be deemed to be a termination of
employment after a Change in Control for purposes of this Agreement
if Executive reasonably demonstrates that such termination of
employment (i) was at the request of a third party who has
taken steps reasonably calculated to effect a Change in Control, or
(ii) otherwise arose in connection with or in anticipation of
such Change in Control.
(e) Control .
“Control” shall have the meaning assigned to such term
in Rule 12b-2 promulgated under the Exchange Act.
(f) Good Reason . “Good
Reason” shall mean, without the express written consent of
Executive, the occurrence after a Change in Control of any of the
following circumstances, unless such circumstances are fully
corrected prior to the date of termination specified in a notice of
termination by Executive:
(i) the material diminishment of
Executive’s authority, duties or responsibilities, or the
assignment to Executive of any duties inconsistent with
Executive’s authority, duties or responsibilities from those
in effect immediately prior to the Change in Control, provided,
however, that if, following a Change of Control pursuant to which
the Company becomes part of a larger entity, Executive no longer
holds the title previously held within the Company, but Executive
retains management responsibility for that portion of the business
of the Company’s business presently overseen as part of such
larger entity, or Executive is given general management
responsibility for operations comparable to or larger than the
operations of the Company overseen by Executive immediately prior
to the Change of Control, such arrangements shall not constitute
“Good Reason” under this clause (i);
(ii) a reduction in
Executive’s base salary as in effect immediately prior to the
Change in Control, or diminishment of Executive’s bonus
opportunity at the Company, if any, other than a reduction in base
salary or bonus opportunity that is part of a broad readjustment in
compensation practices applied to the executive management team of
the Company generally and which results in a percentage reduction
of base salary or bonus opportunity no greater than the average
percentage reduction applied to the other members of the executive
management team of the Company;
(iii) a reduction by the Company in
the kind or level of employee benefits to which Executive was
entitled to immediately prior to such reduction with the result
that Executive’s overall benefits package provided by the
Company is significantly reduced;
(iv) the Company requiring Executive
to be based at any office or location more than 35 miles from that
location at which Executive performed
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Executive’s services
immediately prior to the occurrence of a Change in Control, except
for travel reasonably required in the performance of
Executive’s responsibilities; or
(v) the failure of the Company to
obtain agreement from any successor to assume and agree to perform
this Agreement
(g) “ Exchange Act
” shall mean the Securities Exchange Act of 1934, as
amended.
2. Benefits to be Received
.
(a) Equity Acceleration;
Eligibility . An aggregate of fifty percent (50%) of the
unvested shares or securities (or entitlement to cash in lieu
thereof) covered by each issued and outstanding equity incentive
award granted by the Company and held by Executive as of the
effective date of any termination of employment hereunder shall
automatically and without further action by the Company accelerate
and become fully vested if either of the below events occurs during
the Change in Control Period:
(i) The Company terminates
Executive’s employment with the Company for any reason other
than Cause; or
(ii) Executive resigns his or her
employment with the Company for Good Reason, which notice must be
given by Executive to the Board within sixty (60) days
following the occurrence of the event giving rise to Good Reason
for termination.
(b) Extension of Exercise Period
for Options . The exercise period for each stock option that
Executive shall have the right to exercise following the date of
termination shall be extended by an additional ninety
(90) days beyond the ninety (90) days for exercisability
post-termination stated in the underlying stock option plan, for an
aggregate post-termination exercise period for all vested stock
options of one hundred and eighty (180) days. Following the
date of termination, in the event that during the time period
within which Executive is entitled to exercise vested stock options
pursuant to the terms hereof (the “Option Exercise
Period”) and sell shares received, Executive shall be unable
to effect sales transactions in company securities due to
Company-wide restrictions on the sale of Company securities, or
otherwise as the result of applicable securities laws (each, a
“Black-Out Period”), then the Option Exercise Period
shall be extended by a number of calendar days equal to that of
each and any Black-Out Period that may occur during the Option
Exercise Period. The Company shall deliver advance notice in
writing to Executive of the imposition or existence of any
Black-Out Period, including the date of the beginning and end
thereof, if known, and in any event promptly provide written notice
to Executive confirming the termination of any such Black-Out
Period.
(c) Accrued Compensation . In
addition to the equity acceleration provided in Section 2(a)
above, Executive will also receive a lump cash payment on the date
of termination, of any accrued and unpaid salary through the date
of termination and/or
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bonuses earned for any completed
performance period but not yet paid and any earned, unused vacation
time.
(d) Other Compensation
Programs . A termination of employment as described in this
Section 2 will not affect any rights that Executive may have
pursuant to any other agreement, policy, plan, program or
arrangement of the Company providing for benefits, which rights
will be governed by
