EXHIBIT 10.3
SEVERANCE
AGREEMENT
This Severance Agreement (“
Agreement ”) is made effective as of
(“ 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 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) “ Code
” means the Internal Revenue Code of 1986, as amended, and
the Treasury Regulations and other interpretive guidance
thereunder.
(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) “ 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.
(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.
(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. 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, 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:
(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 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 2(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 2(c)
and Executive’s continued compliance with Section 3,
Executive shall be entitled to receive severance pay in an amount
equal to
percent ( %) 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 2(c)
and Executive’s continued compliance with Section 3, 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 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
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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); and
(iv) Subject to Section 2(c)
and Executive’s continued compliance with
Section 3:
(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 as to the number of Stock Awards that would vest over
the
( ) month period following the date of
Executive’s Separation from Service had Executive remained
continuously employed by the Company during such period, with such
acceleration to be effective as of the date of Executive’s
Separation from Service.
(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 as to the number of Stock Awards that would vest over
the
( ) month period following the date of
Executive’s Separation from Service had Executive remained
continuously employed by the Company during such period, with such
acceleration to be effective as of the date of Executive’s
Separation from Service.
(C) Nothing in this
Section 2(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.
(b) Other Terminations . If
Executive’s employment is terminated 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 2(a) above, Executive shall execute and
not revoke a general release of all claims in
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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 2.
(e) No Mitigation . Except as
otherwise provided in Section 2(a)(iii) above, Executive shall
not be required to mitigate the amount of any payment provided for
in this Section 2 by seeking other employment or otherwise,
nor shall the amount of any payment or benefit provided for in this
Section 2 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 2.
(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 2(f) 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 amount (with cash payments being reduced
before stock option compensation) as would result in no portion of
the Payment being subject to the Excise Tax, whichever of the
foregoing amounts, taking into account the applicable federal,
state and local employment taxes, income taxes, and the Excise Tax,
results in Executive’s receipt, on an after-tax basis, of the
greater amount of the Payment notwithstanding that all or some
portion of the Payment may be subject to the Excise Tax.
(ii) All determinations
required to be made under this Section 2(g), including whether
and to what extent the Payments shall be reduced and the
assumptions to be utilized in arriving at such determination, shall
be made by the nationally recognized certified public accounting
firm used by the Company immediately prior to the effective date of
the Change in Control or, if such firm declines to serve, such
other nationally recognized certified public accounting firm as may
be designated by the Company (the “ Accounting
Firm ”). The Accounting Firm shall provide
detailed supporting calculations both to Executive and the Company
at such time as is requested by the Company. All fees and
expenses of the Accounting Firm shall be borne solely by the
Company. Any determination by the Accounting Firm shall be
binding upon Executive and the Company. For purposes of making
the calculations
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required by this Section 2(g), the
Accounting Firm may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good-faith
interpretations concerning the application of Sections 280G and
4999 of the Code.
3. Confidentiality and
Proprietary Rights . Executive and the Company have executed
the Company’s Employee Proprietary Information and Inventions
Agreement, a copy of which is attached to this Agreement as
Exhibit B and incorporated herein by reference. The Company
shall be entitled to cease all severance payments and benefits to
Executive in the event of his or his or her material breach of this
Section 3.
4. Agreement to
Arbitrate . Any dispute, claim or controversy based on, arising
out of or relating to Executive’s employment or this
Agreement
