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EXHIBIT
10.1
CHANGE IN CONTROL
SEVERANCE AGREEMENT
This Change in Control
Severance Agreement (“ Agreement ”) is
made effective as of
, 2008 (“ Effective Date ”), by and
between Tessera Technologies, Inc., a Delaware corporation (the
“ Company ”), and
(“ Executive ”).
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 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; provided
that continued assignment to Executive after a Change in Control of
substantially the same duties and responsibilities to be performed
by Executive for the Company, its successor or a business unit of a
parent entity that continues substantially all of the business of
the Company shall not constitute Good Reason, notwithstanding that
the entity for which Executive is to perform such duties and
responsibilities is not directly owned by public
stockholders;
(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) “ Performance
Awards ” means any Stock Awards granted pursuant to
the Company’s performance-based compensation bonus plan or
pursuant to any agreement that Executive has entered into with the
Company providing for an equity bonus payment or equity vesting
based upon the Executive’s or the Company’s
performance.
(g) “ 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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(h) “
Separation from Service ” means an involuntary
separation from service within the meaning of Section 409A of
the Code.
(i) “ 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
commence on the Effective Date and shall continue until the earlier
of the third (3 rd ) anniversary of the 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.
(d) 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
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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;
(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 the sum of:
(A) Executive’s monthly
base salary as in effect immediately prior to the date of
Executive’s Separation from Service for the [For Chief
Executive Officer: twenty-four (24) ][For other
executives: twelve (12) ] month period following the
date of Executive’s Separation from Service, plus
(B) An amount equal to
[For other executives: fifty percent (50%) of ]
Executive’s maximum target bonus for the fiscal year of the
Company during which the date of Executive’s Separation from
Service occurs, plus
(C) [For Chief Executive
Officer: An amount equal to six (6) multiplied by the
monthly premium Executive would be required to pay for continuation
coverage pursuant to the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended (“ 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);
]
(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 [For Chief Executive Officer: eighteen (18)] [For other
executives: twelve (12) ] full months following the date
of Executive’s Separation from Service (or, if earlier, the
date on which the applicable continuation period under [For
Chief Executive Officer: COBRA ] [For other
executives: the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended (“ 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 twelve (12) 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); and
(iv) Subject to
Section 3(c) and Executive’s continued compliance with
Section 4:
(A) The vesting and/or
exercisability of each of Executive’s outstanding Stock
Awards (other than Performance Awards) providing for an exercise or
purchase price equal to or greater the fair market value,
determined as of the date of grant of such Stock Award in
accordance with the terms of the applicable plan or agreement, of
the shares of stock subject to such Stock Award shall be
accelerated in full effective as of the date of Executive’s
Separation from Service.
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(B) The vesting and/or
exercisability of each of Executive’s outstanding Stock
Awards (other than Performance Awards) not providing for an
exercise or purchase price at least equal to the fair market value,
determined as of the date of grant of such Stock Award in
accordance with the terms of the applicable plan or agreement, of
the shares of stock subject to such Stock Award shall be
accelerated with respect to fifty percent (50%) of the
portions of such Stock Awards remaining unvested as of the date of
Executive’s Separation from Service effective as of the date
of Executive’s Separation from Service.
(C) The vesting and/or
exercisability of fifty percent (50%) of any outstanding
unvested portions of Executive’s Performance Awards shall be
automatically accelerated 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.
(D) 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.
(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) 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
attached hereto as Exhibit A . In the event Executive does
not sign or revokes the Release within the sixty (60) day
period following the date of Executive’s Separation from
Service, Executive shall not be entitled to the aforesaid payments
and benefits.
(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
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