Exhibit 10.12
SEVERANCE AGREEMENT
     This Severance Agreement (the “Agreement”) is made and entered into
December 12, 2006, by and between Hans Olsen (the “Executive”) and Pixelworks,
Inc., an Oregon corporation (“Company”).
RECITALS
     A. Executive has been asked by Company to undertake broad new duties as the
Company’s Interim CEO, and in that capacity to manage a critical restructuring
of the company realizing that the long-term leadership of the Company is subject
to considerable flux.
     B. Company wishes to provide additional security to Executive through
provision of a Severance Benefit, as described herein, after the date on which
this Agreement becomes operative.
AGREEMENT
     NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which the parties acknowledge, the parties agree as follows:
          1. Termination by Company without Cause. In the event Company
terminates Executive’s employment without Cause, as that term is defined below,
then upon Executive’s satisfaction of the Release of Claims requirement stated
in Paragraph 4 below, Company shall provide Executive with the following
severance benefits: (a) twelve (12) months of base salary and (b) in the event
Executive is eligible for and properly elects to continue his group health
benefits through COBRA, the Company shall pay Executive an amount equal to the
premium cost to continue such benefits for twelve (12) months. The severance
benefits shall be payable in a lump sum on or before the first regularly
scheduled pay date following Executive’s satisfaction of the Release of Claims
requirement stated in Paragraph 4 below. All payments to Executive shall be
reduced by such amounts as are required to be withheld by law. Severance
benefits shall not be owed if termination of Executive’s employment with Company
occurs due to Executive’s death, disability, Executive’s resignation, or
Company’s termination of Executive for Cause.
          2. Cause Definition. “Cause” shall mean any one or more of the
following: (i) a material act of dishonesty, fraud, or misconduct by the
Executive that is in connection with Executive’s responsibilities as an
Executive of the Company; (ii) Executive’s commission of acts constituting a
felony which the Board reasonably believes has had or will have a material
detrimental effect on the Company’s reputation or business; or (iii) repeated
willful failure by the Executive to perform Executive’s duties as an employee of
the Company after there has been delivered to the Executive a written demand for
performance from the Company which describes the basis for the Company’s belief
that the Executive has not substantially performed Executive’s duties and had a
30-day opportunity to cure, no cure having been made.
          3. 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 severance benefits in this Agreement shall be in lieu of the
severance benefits in the Offer Letter and in lieu of any other severance
benefits or policies maintained by Company that may otherwise be applicable to
Executive.
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          4. Execution of Release As a condition of receiving the severance
benefits, Executive shall, on or before forty-five (45) days after Company
delivers the release to Executive, enter into and not revoke a general release
of claims against the Company, its subsidiaries and affiliates, satisfactory to
Company. The release shall be substantially in the form attached hereto as
Exhibit A, with such modifications as Company determines to be reasonably
necessary or desirable to ensure effective release of all claims.
          5. Notices. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. In the case of the Executive, mailed
notices shall be addressed to Executive at the home address which Executive most
recently communicated to the Company in writing. In the case of the Company,
mailed notices shall be addressed to its corporate headquarters, and all notices
shall be directed to the attention of its Secretary.
          6. Arbitration. Any dispute or controversy arising out of, relating
to, or in connection with this Agreement, or the interpretation, validity,
construction, performance, breach, or termination thereof, shall be settled by
binding arbitration before a single arbitrator to be held in Portland, Oregon,
in accordance with the National Rules for the Resolution of Employment Disputes
then in effect of the American Arbitration Association (the “Rules”). The
decision of the arbitrator shall be final, conclusive and binding on the parties
to the arbitration. Judgment may be entered on the arbitrator’s decision in any
court having jurisdiction. The arbitrator shall apply Oregon law to the merits
of any dispute or claim, without reference to conflicts of law rules.
          7. Integration. This Agreement replaces the severance provisions of
the Offer Letter. Except as expressly stated in this paragraph, the Offer Letter
remains in effect according to its terms. This Agreement and the Offer Letter
represent the entire agreement and understanding between the parties as to the
subject matter herein and supersede all prior or contemporaneous agreements,
whether written or oral.
          8. Severability. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or enforceability
of any other provision hereof, that can be given effect without the invalid or
unenforceable provisions of the Agreement.
     IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Company by its duly authorized officer, as of the day and year first
above written.

                  PIXELWORKS, INC.
 
           
 
  By:  /s/ Frank Gill
 
   
 
           
 
  Title: Lead Director    
 
           
 
                EXECUTIVE
 
                /s/ Hans Olsen               Hans Olsen

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Exhibit A to Severance Agreement of Hans Olsen
RELEASE OF CLAIMS
This Document Affects Important Legal Rights You May Have.
Please Read It Carefully Before Signing.
     For and in consideration of the severance benefits described in the
Severance Agreement dated as of March ___, 2006 between Pixelworks, Inc. (the
“Company”), and Hans Olsen (the “Executive”), and for other good and valuable
consideration, Executive hereby releases the Company, its divisions, affiliates,
subsidiaries, parents, branches, predecessors, successors, assigns, officers,
directors, trustees, employees, agents, shareholders, members, administrators,
representatives, attorneys, insurers and fiduciaries, past, present and future
(the “Released Parties”) from any and all claims of any kind that Executive now
has or may have against the Released Parties, whether known or unknown to
Executive, by reason of facts that have occurred on or prior to the date that
Executive has signed this Release. Such released claims include, without
limitation, any and all claims for other severance benefits pursuant to any
Company severance pay policy, and any and all claims under federal, state or
local laws pertaining to employment, including the Age Discrimination in
Employment Act, 29 U.S.C. Section 621 et seq., Title VII of the Civil Rights Act
of 1964, as amended, 42 U.S.C. Section 2000e et seq., the Fair Labor Standards
Act, as amended, 29 U.S.C. Section 201 et seq., the Americans with Disabilities
Act, as amended, 42 U.S.C. Section 1981 et seq., the Family Medical Leave Act of
1992, 29 U.S.C. Section 2601 et seq., and any and all state or local laws
regarding employment discrimination and/or federal, state or local laws of any
type or description regarding employment, including but not limited to any
claims arising from or derivative of my employment with the Company and its
subsidiaries, as well as any and all claims under state contract or tort law.
[* * * To be completed if Executive is over age 40 on date of termination]. In
accordance with the Age Discrimination in Employment Act and Older Workers’
Benefit Protection Act (collectively, the “Act”), Executive acknowledges that:
(1) s/he has been, and hereby is, advised in writing to consult with an attorney
prior to executing this Release; (2) s/he is aware of certain rights to which
s/he may be entitled under the Act; (3) as consideration for executing this
Release, Executive has received additional benefits and compensation of value to
which s/he would otherwise not be entitled; (4) by signing this Release, s/he
will not waive rights or claims under the Act which may arise after the
execution of this Release; (5) Executive has been given a period of at least
21 days from _________to consider this offer; (6) in the event s/he has not
executed this Release on or before _________, the offer shall expire; (7) in the
event Executive signs the Release prior to 21 days, s/he does so voluntarily;
(8) any changes to the terms of the Agreement, whether material or immaterial
shall not re-start the 21-day consideration period; (9) Executive has a period
of seven days from the date of execution in which to revoke this Release by
written notice to _________; (10) in the event Executive does not exercise
his/her right to revoke this Release, the Release shall become effective on the
date (the “Effective Date”) immediately following the seven-day waiting period
described above.
     Executive has read this release carefully, acknowledges that s/he has been
given at least 21 days to consider all of its terms, and have been advised to
consult with an attorney and any other
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advisors of his or her choice prior to executing this Release, and Executive
fully understands that by signing below s/he is voluntarily giving up any right
which Executive may have to sue or bring other claims against the Released
Parties. Finally, Executive has not been forced or pressured in any manner
whatsoever to sign this Release, and Executive agrees to all of its terms
voluntarily.
     This Release is final and binding and may not be changed or modified except
in a writing signed by an authorized representative of the parties. If any part
of this Release is held invalid, the invalidity shall not affect other parts of
the Release that can be given effect without the invalid parts.
     The severance check will be mailed to Executive’s last home address on file
with Company.

                 
 
      Date:        
 
Hans Olsen
         
 
   

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