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Exhibit 10.27(a)
SPANSION
INC.
CHANGE OF CONTROL
SEVERANCE AGREEMENT
This Change of Control
Severance Agreement (the “Agreement”) is made and
entered into by and between
(the “Executive”) and Spansion Inc. (the
“Company”), effective as of the latest date set forth
by the signatures of the parties hereto below (the “Effective
Date”). For purposes of the employment relationship only, the
“Company” includes Spansion LLC.
RECITALS
A. It is expected that the
Company from time to time will consider the possibility of an
acquisition by another company or other change of control. The
Board of Directors of the Company (the “Board”)
recognizes that such consideration can be a distraction to the
Executive and can cause the Executive to consider alternative
employment opportunities. The Board has determined that it is in
the best interests of the Company and its securityholders to assure
that the Company will have the continued dedication and objectivity
of the Executive, notwithstanding the possibility, threat or
occurrence of a Change of Control (as defined below) of the
Company.
B. The Board believes that it
is in the best interests of the Company and its securityholders to
provide the Executive with an incentive to continue the
Executive’s employment and to motivate the Executive to
maximize the value of the Company upon a Change of Control for the
benefit of its securityholders.
C. The Board believes that it
is imperative to provide the Executive with severance benefits upon
the Executive’s termination of employment following a Change
of Control that provides the Executive with enhanced financial
security and provides incentive and encouragement to the Executive
to remain with the Company notwithstanding the possibility of a
Change of Control.
D. Certain capitalized terms
used in the Agreement are defined in Section 4
below.
The parties hereto agree as
follows:
1. Term of Agreement .
This Agreement shall terminate upon the date that all obligations
of the parties hereto with respect to this Agreement have been
satisfied or upon cancellation with written notice by either of the
parties setting forth the effective date of such cancellation;
provided , however , that the effective date of such
cancellation shall in no event be earlier than two (2) years
from the date on which the written notice of cancellation is given.
If, prior to the occurrence of a Change of Control, the Executive
ceases to be employed by the Company for any reason, then this
Agreement shall terminate on the effective date of the
Executive’s termination of employment.
2. At-Will Employment
. The Company and the Executive acknowledge that the
Executive’s employment is and shall continue to be
“at-will,” as defined under applicable law. The
Executive understands that nothing in this Agreement modifies the
Executive’s “at-will” employment status with the
Company; the Company or the Executive may terminate the employment
relationship at any time, with or without cause.
3. Change of Control
Severance Benefits .
a. Involuntary Termination
other than for Cause, Death or Disability or Voluntary Termination
for Good Reason Following A Change of Control . If, within
twenty-four (24) months following a Change of Control, the
Executive’s employment is terminated involuntarily by the
Company other than for Cause, or due to death or Disability, or by
the Executive pursuant to a Voluntary Termination for Good Reason,
and the Executive executes and does not revoke a general release of
claims against the Company and its affiliates in a form acceptable
to the Company, which release shall be executed by the Executive
within 60 days of its receipt, then the Company shall provide the
Executive with the benefits set forth below:
(i) Cash Award . A
lump sum payment in the amount of
percent (
%) of the aggregate of (AA) the Executive’s annual base
salary immediately prior to such employment termination plus (BB)
the Executive’s target opportunity under the pay for
performance plan for such year as is in effect immediately prior to
such termination, in addition to any other earned but unpaid
compensation due through the date of such termination, as well as a
pro rata portion of any payment due the Executive under the pay for
performance plan for such year as is in effect immediately prior to
such termination based on the number of days elapsed during such
year through the date of termination. This lump sum payment is to
be paid as soon as practicable after the effective date of the
employment termination but in any case, by no later than
March 14 of the calendar year following the calendar year in
which such termination occurs.
(ii) Acceleration of
Vesting of Equity Awards . All vesting for (AA) outstanding
options to purchase the common stock of the Company or any
affiliate of the Company granted under any equity plan of the
Company or affiliate of the Company then held by the Executive,
(BB) restricted stock granted under any equity plan of the
Company or affiliate of the Company then held by the Executive and
(CC) other equity and equity equivalent awards granted under
any equity plan of the Company or affiliate of the Company then
held by the Executive shall be accelerated in full to on or before
the effective employment termination date, and thereafter all such
options, restricted stock and other equity awards shall be
immediately vested, and, where applicable, exercisable for such
period of time following termination as provided for by the
specific agreements governing each such award.
(iii) Benefits
Continuation . For the period beginning on the date such
involuntary termination by the Company other than for Cause,
termination due to death or Disability, or the Executive’s
Voluntary Termination for Good Reason occurs, and ending on the
date which is eighteen (18) months following the date of such
termination, the Company shall pay directly, on behalf of the
Executive, or reimburse the Executive, at the Company’s
option, for premium costs incurred by the Executive and the
Executive’s dependents for medical and dental benefits
continuation coverage pursuant to Section 4980B of the
Internal Revenue Code of 1986, as amended (the “Code”),
Sections 601-608 of the Employee Retirement Income Security Act of
1974, as amended, and under any other applicable law, to the extent
required by such laws, as if the Executive had terminated
employment with the Company on the date such benefits coverage
terminates. If
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Executive commences receiving medical
and/or dental coverage through another employer on some date during
the above-referenced eighteen (18) month period, from that
date through the end of the eighteen (18) month period,
coverage under the applicable Spansion medical and/or dental plan
will become secondary to the coverage of the other
employer.
(iv) All of the foregoing
benefits shall replace and be in lieu of any other severance
benefit(s) to which Executive would otherwise be entitled following
a Change of Control.
b. Voluntary
Resignation . Termination For Cause. If the Executive’s
employment terminates by reason of the Executive’s voluntary
resignation (and is not a Voluntary Termination for Good Reason),
or if the Executive is terminated for Cause, then the Executive
shall not be entitled to receive severance or other benefits
pursuant to this Agreement. In such event, the Executive shall
receive all earned but unpaid compensation as may be required by
law.
c. Disability; Death .
If the Executive’s employment with the Company terminates as
a result of the Executive’s Disability, or if the
Executive’s employment is terminated due to the death of the
Executive, then the Executive or the Executive’s estate shall
not be entitled to receive severance or other benefits pursuant to
this Agreement. In such event, the Executive or the
Executive’s estate shall receive all earned but unpaid
compensation as may be required by law.
d. Termination Apart from
Change of Control . In the event the Executive’s
employment is terminated for any reason not related to a Change of
Control prior to the occurrence of a Change of Control, or for any
reason after the twenty-four (24) month period following a
Change of Control, then the Executive shall not be entitled to
receive severance or other benefits pursuant to this Agreement. In
such event, the Executive shall receive all earned but unpaid
compensation as may be required by law.
4. Definition of Terms
. The following terms referred to in this Agreement shall have the
following meanings:
a. Cause .
“Cause” means (i) an act of personal dishonesty
taken by the Executive in connection with the Executive’s
responsibilities as an employee and intended to result in
substantial personal enrichment of the Executive, (ii) the
Executive’s conviction of, or plea of guilty or no contest
to, any felony, (iii) a willful act by the Executive which
constitutes gross misconduct and which is injurious to the Company,
(iv) following delivery to the Executive of a written demand
for performance from the Company which describes the basis for the
Company’s reasonable belief that the Executive has not
substantially performed the Executive’s duties, continued
willful and deliberate failure by the Executive to substantially
perform such duties, or (v) the Executive’s material
breach of this Agreement or of the Executive’s Proprietary
Information Agreement. Where the Company determines Cause for
termination exists and the Executive disagrees with such
determination, the Executive will be given an opportunity to refute
such determination before the Company’s directors, at an
executive session of the Board of Directors, whose determination
will be binding.
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b. Change of Control.
“Change of Control” means the occurrence of any of the
following events :
(i) The acquisition by any
individual, entity or group (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), directly or
indirectly, of more than thirty three percent (33%) of either
(1) the then-outstanding shares of common stock of the
Corporation (the “ Outstanding Company Common Stock
”) or (2) the combined voting power of the
then-outstanding voting securities of the Corporation entitled to
vote generally in the election of directors (the “
Outstanding Company Voting Securities ”); provided,
however, that, for purposes of this clause (a), the following
acquisitions shall not constitute a Change of Control Event;
(A) any acquisition directly from the Corporation,
(B) any acquisition by the Corporation, (C) any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Corporation or any affiliate of the
Corporation or a successor, or (D) any acquisition by any
entity pursuant to a transaction that complies with Sections
b.(ii), (iii) and (iv), below;
(ii) Individuals who, as of
the date hereof, constitute the Board or the board of directors of
any entity that directly or indirectly owns all of the outstanding
equity securities of the Corporation (the “ Incumbent
Board ”) cease for any reason to constitute at least a
majority of the Board (or the board of directors of any entity that
directly or indirectly owns all of the outstanding equity
securities of the Corporation); provided, however, that any
individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Corporation’s
stockholders, was approved by a vote of at least two-thirds of the
individuals then comprising the Incumbent Board (including for
these purposes, the new members whose election or nomination was so
approved, without counting the member and the member’s
predecessor twice) shall be considered as though such individual
were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board or the board of directors of any entity
that directly or indirectly owns all of the outstanding equity
securities of the Corporation;
(iii) Consummation of a
reorganization, merger, statutory share exchange or consolidation
or similar corporate transaction involving the Corporation or any
of its Subsidiaries or any parent entity, a sale or other
disposition of all or substantially all of the assets of the
Corporation, or the acquisition of assets or stock of another
entity by the Corporation or any of its Subsidiaries (each, a
“ Business Combination ”), in each case unless,
following such Business Combination, (1) all or substantially
all of the individuals and entities that were the beneficial owners
of the Outstanding Company Common Stock and the Outstanding Company
Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of the
then-outstanding shares of common stock and the combined voting
power of the then-outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the
entity resulting from such Business Combination (including, without
limitation, an entity that, as a result of such transaction, owns
the Corporation or all or substantially all of the
Corporation’s assets directly or through one or more
subsidiaries (a “ Parent ”)) in substantially
the same proportions as their ownership immediately prior to such
Business Combination of the Outstanding Company Common Stock and
the Outstanding Company Voting Securities, as the case may be,
(2) no Person (excluding any entity resulting from such
Business Combination or a Parent
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or any employee benefit plan (or related
trust) of the Corporation or such entity resulting from such
Business Combination or Parent) beneficially owns, directly or
indirectly, more than thirty three percent (33%) of,
respectively, the then-outstanding shares of common stock of the
entity resulting from such Business Combination or the combined
voting power of the then-outstanding voting securities of such
entity, except to the extent that the ownership in excess of thirty
three percent (33%) existed prior to the Business Combination,
and (3) at least a majority of the
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