Exhibit 10.19
PIXELWORKS, INC.
CHANGE OF CONTROL SEVERANCE AGREEMENT

This Change of Control Severance Agreement (the “Agreement”) is made and entered
into effective as of January 1, 2012 (the “Effective Date”), by and between John
Lau (the “Executive”) and Pixelworks, Inc., an Oregon corporation (the
“Company”). Certain capitalized terms used in this Agreement are defined in
Section 1 below.
R E C I T A L S
The Board believes that it is in the best interests of the Company and its
shareholders to provide the Executive with an incentive to continue Executive's
employment following, and so to maximize the value of the Company upon, a Change
of Control for the benefit of its shareholders. To do so, the Board believes it
appropriate to provide the Executive with certain severance benefits upon the
Executive's termination of employment following a Change of Control.
AGREEMENT
The parties therefore agree as follows:
1.Definition of Terms. The following terms referred to in this Agreement shall
have the following meanings:
(a)Cause. “Cause” shall mean Executive engaged in any one or more of the
following:  (i) a material act of dishonesty, fraud, misconduct, or willful
violation of any material law, ethical rule or fiduciary duty that is in
connection with Executive's responsibilities as an executive of the Company;
(ii)  acts constituting a felony or moral turpitude 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 to perform Executive's
duties as an executive of the Company and the failure to effect such cure within
30 days after written notice of such violation or breach is given to Executive;
or (iv) the willful violation of any material Company policy or procedure, or
breach of any material provision of this Agreement or other agreement with the
Company, and if such violation or breach is susceptible of cure, the failure to
effect such cure within 30 days after written notice of such violation or breach
is given to Executive.
(b)Change of Control. “Change of Control” shall mean the occurrence of any of
the following events:
(i)the approval by shareholders of the Company of a merger or consolidation of
the Company with any other corporation, or of a subsidiary of the Company with
any other corporation, other than a merger or consolidation which would result
in effective voting control over the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation;
(ii)the approval by the shareholders of the Company of a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets;
(iii)any “person” (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended) becoming the “beneficial owner” (as
defined in Rule 13d-3 under said Act), directly or indirectly, of securities of
the Company representing 50% or more of the total voting power represented by
the Company's then outstanding voting securities; or
(iv)a change in the composition of the Board, 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 date
hereof, or (B) are elected, or nominated for election, to the Board with the
affirmative votes of at least a majority of those directors who are either
identified in (A) or identified as their successors elected under this clause
(B).

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(c)Good Reason Event. A “Good Reason Event” shall be any of the following: (i)
without the Executive's express written consent, a material diminution of the
Executive's duties, authority or responsibilities; (ii) without the Executive's
express written consent, a reduction by the Company of the Executive's base
salary; (iii) without the Executive's express written consent, the imposition of
a requirement that Executive's primary place of employment be at a facility or a
location more than fifty (50) miles from the Executive's current work location,
provided that such requirement to relocate materially increases the Executive's
commute; or (iv) the failure of the Company to obtain the assumption of this
Agreement by any successors contemplated in Section 7 below.
(d)Involuntary Termination. “Involuntary Termination” shall mean (i) any
termination of the Executive's employment by the Company which is not effected
for valid Cause; or (ii) any termination by the Executive for Good Reason.
(e)Termination Date. “Termination Date” shall mean the effective date of any
notice of termination delivered by one party to the other hereunder.
2.Term of Agreement. This Agreement shall terminate upon the earlier of two (2)
years after a Change of Control, or (ii) the date that all obligations of the
parties hereto under this Agreement have been satisfied.
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. If the Executive's employment terminates for any reason, the
Executive shall not be entitled to any payments, benefits, damages, awards or
compensation other than as provided by this Agreement, or as may otherwise be
established under the Company's then existing employee benefit plans or policies
at the time of termination.
4.Severance Benefits.
(a)Termination Following a Change of Control.
(i)If Within Twelve Months Following a Change of Control. If the Executive's
employment with the Company terminates as a result of an Involuntary Termination
at any time within twelve (12) months after a Change of Control, and the
Executive signs the release of claims pursuant to Section 7 hereto, Executive
shall be entitled to the following severance benefits:
(1)twelve (12) months of Executive's base salary as in effect as of the date of
such termination or, if greater, as in effect immediately prior to the Change of
Control, less applicable withholding, payable in a lump sum within thirty (30)
days of the Involuntary Termination;
(2)all stock options granted by the Company to the Executive prior to the Change
of Control shall accelerate and become vested and exercisable as to the number
of shares that would have otherwise vested during the twelve (12) months
following such termination as if the Executive had remained employed by the
Company (or its successor) through such date under the applicable option
agreements to the extent such stock options are outstanding and unexercisable at
the time of such termination; and all stock subject to a right of repurchase by
the Company (or its successor) that was purchased prior to the Change of Control
shall have such right of repurchase lapse with respect to that number of shares
which would have had such right of repurchase lapse under the applicable
agreement within twelve (12) months of the date of the termination as if the
Executive had remained employed through such date; and
(3)the same level of Company-paid health (i.e., medical, vision and dental)
coverage and benefits for such coverage as in effect for the Executive (and any
eligible dependents) on the day immediately preceding the Executive's
Termination Date; provided, however, that (i) the Executive constitutes a
qualified beneficiary, as defined in Section 4980B(g)(1) of the Internal Revenue
Code of 1986, as amended; and (ii) Executive elects continuation coverage
pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended (“COBRA”), within the time period prescribed pursuant to COBRA. The
Company shall continue to provide Executive with such Company-paid coverage
until the earlier of (i) the date Executive (and Executive's eligible
dependents) is no longer eligible to receive continuation coverage pursuant to
COBRA, or (ii) twelve (12) months from the Termination Date.
(ii)If Between Twelve Months and Twenty-Four Months Following Change of Control.
If the Executive's employment with the Company terminates as a result of an
Involuntary Termination at any time during the period that is from twelve (12)
months after a Change of Control to twenty-four (24) months after a Change of
Control (such period being the “Second Year”), and the Executive signs the
release of claims pursuant to Section 7 hereto, Executive shall be entitled to
the following severance benefits:
(1)a lump sum cash amount payable within thirty (30) days of the Involuntary
Termination representing a portion of the Executive's base salary and any
applicable allowances, with such amount being the resulting product of: the
number of months remaining in the Second Year as of the Termination Date,
multiplied by the per-month portion of the Executive's base salary and
allowances as in effect as of the Termination Date or, if greater, as in effect
immediately prior to the Change of Control, less applicable withholding. For
purposes of this subsection (1), only entire months that remain in the Second
Year shall be counted as “remaining,” and any fraction of a month that remains
after the date of the termination shall not be counted hereunder;

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(2)the health benefits set forth in Section 4(a)(i)(3) above, provided, however,
that the twelve (12) month period shall be pro-rated to reflect that number of
months remaining in the Second Year as of the date of termination. For purposes
of this subsection (2), only entire months that remain in the Second Year shall
be counted as “remaining,” and any fraction of a month that remains after the
date of the termination shall not be counted hereunder; and
(3)the stock option acceleration benefits set forth in Section 4(a)(i)(2) above,
provided, however, that the twelve (12) month period shall be pro-rated to
reflect that number of months remaining in the Second Year as of the date of
termination. For purposes of this subsection (2), only entire months that remain
in the Second Year shall be counted as “remaining,” and any fraction of a month
that remains after the date of the termination shall not be counted hereunder.
(b)Termination Apart from a Change of Control. If the Executive's employment
with the Company terminates other than as a result of an Involuntary Termination
within the twenty-four (24) months following a Change of Control, then the
Executive shall not be entitled to receive severance or other benefits
hereunder, but may be eligible for those benefits (if any) as may then be
established under the Company's then existing severance and benefits plans and
policies at the time of such termination.
(c)Accrued Wages and Vacation; Expenses. Without regard to the reason for, or
the timing of, Executive's termination of employment: (i) the Company shall pay
the Executive any unpaid base salary due for periods prior to the Termination
Date; (ii) the Company shall pay the Executive all of the Executive's accrued
and unused vacation through the Termination Date; and (iii) following submission
of proper expense reports by the Executive, the Company shall reimburse the
Executive for all expenses reasonably and necessarily incurred by the Executive
in connection with the business of the Company prior to the Termination Date.
These payments shall be made promptly upon termination and within the period of
time mandated by law.
5.Limitation on Payments. In the event that the severance and other benefits
provided for in this Agreement or otherwise payable to the Executive
(i) constitute “parachute payments” within the meaning of Section 280G of the
United States Internal Revenue Code (the “Code”), and (ii) would be subject to
the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then
Executive's benefits under this Agreement shall be either
(a)delivered in full, or
(b)delivered as to such lesser extent which would result in no portion of such
benefits being subject to the Excise Tax,
(c)

(d)whichever of the foregoing amounts, taking into account the applicable
federal, state and local income taxes and the Excise Tax, results in the receipt
by Executive on an after-tax basis, of the greatest amount of benefits,
notwithstanding that all or some portion of such benefits may be taxable under
Section 4999 of the Code.
Any determination required under this section shall be made in writing by the
Company's independent public accountants (the “Accountants”), whose
determination shall be conclusive and binding upon the Executive and the Company
for all purposes. For purposes of making the calculations required by this
section, the Accountants 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. The Company and the Executive shall furnish to the Accountants such
information and documents as the Accountants may reasonably request in order to
make a determination under this section. The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this section.
6.Successors.
(a)Company's Successors. Any successor to the Company (whether direct or
indirect and whether by purchase, lease, merger, consolidation, liquidation or
otherwise) to all or substantially all of the Company's business and/or assets
shall assume the Company's obligations under this Agreement and agree expressly
to perform the Company's obligations under this Agreement in the same manner and
to the same extent as the Company would be required to perform such obligations
in the absence of a succession. For all purposes under this Agreement, the term
“Company” shall include any successor to the Company's business and/or assets
which executes and delivers the assumption agreement described in this
subsection (a) or which becomes bound by the terms of this Agreement by
operation of law.
(b)Executive's Successors. Without the written consent of the Company, Executive
may not assign or transfer this Agreement or any right or obligation under this
Agreement to any other person or entity. Notwithstanding the foregoing, the
terms of this Agreement and all rights of Executive hereunder shall inure to the
benefit of, and be enforceable by, Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
7.Execution of Release Agreement upon Termination. As a condition of receiving
the benefits under Section 4 of this Agreement, the Executive shall within
twenty five days after the Executive's Termination Date, , execute and not
revoke a general release of claims against the Company in form satisfactory to
the Company.

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8.Litigation/Audit Cooperation. Following the termination of Executive's
employment for any reason, Executive shall reasonably cooperate with the Company
or any of its subsidiaries or affiliates (the “Company Group”) in connection
with (a) any internal or governmental investigation or administrative,
regulatory, arbitral or judicial proceeding involving any member of the Company
Group with respect to matters relating to Executive's employment with or service
as a member of the board of directors of any member of the Company Group other
than a third party proceeding in which Executive is a named party and Executive
and the Company (or the applicable member(s) of the Company Group) have not
entered into a mutually acceptable joint defense agreement (collectively,
“Litigation") or (b) for a two year period following the Termination Date, any
audit of the financial statements of any member of the Company Group with
respect to the period of time when Executive was employed by any member of the
Company Group (“Audit”). Executive acknowledges that such cooperation may
include, but shall not be limited to, Executive making himself available to the
Company or any other member of the Company Group (or their respective attorneys
or auditors) upon reasonable notice for: (i) interviews, factual investigations,
and providing declarations or affidavits that provide truthful information in
connection with any Litigation or Audit; (ii) appearing at the request of the
Company or any member of the Company Group to give testimony without requiring
service of a subpoena or other legal process; (iii) volunteering to the Company
or any member of the Company Group pertinent information related to any
Litigation or Audit; (iv) providing information and legal representations to the
auditors of the Company or any member or any member of the Company Group, in a
form and within a timeframe requested by the Board, with respect to the
Company's or any member of the Company Group's opening balance sheet valuation
of intangibles and financial statements for the period in which Executive was
employed by the Company or any member of the Company Group; and (v) turning over
to the Company or any member of the Company Group any documents relevant to any
Litigation or Audit that are or may come into Executive's possession. The
Company shall reimburse Executive for reasonable travel expenses incurred in
connection with providing the services under this Section 9, including lodging
and meals, upon Executive's submission of receipts. The Company shall also
compensate Executive for each hour that Executive provides cooperation in
connection with this Section 9 at an hourly rate equal to Executive's base
salary as of the Termination Date divided by 2080. Executive shall submit
invoices for any month in which Executive performs services pursuant to this
Section 9 that details the amount of time and a description of the services
rendered for each separate day that Executive performed such services. The
Company shall reimburse Executive for such services rendered within fifteen (15)
days of receiving an invoice from Executive.
9.409A Savings Clause. If Executive is a “specified employee” within the meaning
of Section 409A of the Internal Revenue Code of 1986, as amended by the rules
and regulations issued thereunder by the Department of Treasury and the Internal
Revenue Service (“409A”) as of the date of the Executive's “separation from
service” within the meaning of Section 409A, Executive shall not be entitled to
any payment or benefit pursuant to Section 4 until the earlier of (i) the date
which is six (6) months after his separation from service for any reason other
than death, or (ii) the date of Executive's death. The provisions of this
Section 10 shall only apply if, and to the extent, required to avoid the
imputation of any tax, penalty or interest pursuant to Section 409A. Any amounts
otherwise payable to Executive upon or in the six (6) month period following the
Executive's separation from service that are not so paid by reason of this
Section 10 shall be paid (without interest) as soon as practicable (and in all
events within thirty (30) days) after the date that is six (6) months after
Executive's separation from service (or, if earlier, as soon as practicable, and
in all events within thirty (30) days, after the date of Executive's death). To
the extent that any benefits pursuant to Section 4 or reimbursements pursuant to
Section 5 are taxable to the Executive, any reimbursement payment due to the
Executive pursuant to any such provision shall be paid to the Executive on or
before the last day of the Executive's taxable year following the taxable year
in which the related expense was incurred. The benefits and reimbursements
pursuant to Section 4 are not subject to liquidation or exchange for another
benefit and the amount of such benefits and reimbursements that the Executive
receives in one taxable year shall not affect the amount of such benefits or
reimbursements that the Executive receives in any other taxable year.
10.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.
11. Arbitration.
(a)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 to be
held in Santa Clara, California in accordance with the National Rules for the
Resolution of Employment Disputes then in effect of the American Arbitration
Association (the “Rules”). The arbitrator may grant injunctions or other relief
in such dispute or controversy. 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.
(b)The arbitrator(s) shall apply California law to the merits of any dispute or
claim, without reference to conflicts of law rules. The arbitration proceedings
shall be governed by federal arbitration law and by the Rules, without reference
to state arbitration law. Executive hereby consents to the personal jurisdiction
of the state and federal courts located in California for any action or
proceeding arising from or relating to this Agreement or relating to any
arbitration in which the parties are participants.

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(c)Executive understands that nothing in this Section modifies Executive's
at-will employment status. Either Executive or the Company can terminate the
employment relationship at any time, with or without Cause.
(d)EXECUTIVE HAS READ AND UNDERSTANDS THIS SECTION, WHICH DISCUSSES ARBITRATION.
EXECUTIVE UNDERSTANDS THAT SUBMITTING ANY CLAIMS ARISING OUT OF, RELATING TO, OR
IN CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY,
CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION THEREOF TO BINDING ARBITRATION,
CONSTITUTES A WAIVER OF EXECUTIVE'S RIGHT TO A JURY TRIAL AND RELATES TO THE
RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE EMPLOYER/EXECUTIVE
RELATIONSHIP, INCLUDING BUT NOT LIMITED TO, THE FOLLOWING CLAIMS:
(i)ANY AND ALL CLAIMS FOR WRONGFUL DISCHARGE OF EMPLOYMENT; BREACH OF CONTRACT,
BOTH EXPRESS AND IMPLIED; BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING,
BOTH EXPRESS AND IMPLIED; NEGLIGENT OR INTENTIONAL INFLICTION OF EMOTIONAL
DISTRESS; NEGLIGENT OR INTENTIONAL MISREPRESENTATION; NEGLIGENT OR INTENTIONAL
INTERFERENCE WITH CONTRACT OR PROSPECTIVE ECONOMIC ADVANTAGE; AND DEFAMATION.
(ii)ANY AND ALL CLAIMS FOR VIOLATION OF ANY FEDERAL STATE OR MUNICIPAL
CONSTITUTION OR STATUTE, INCLUDING, BUT NOT LIMITED TO, TITLE VII OF THE CIVIL
RIGHTS ACT OF 1964, THE CIVIL RIGHTS ACT OF 1991, THE AGE DISCRIMINATION IN
EMPLOYMENT ACT OF 1967, THE AMERICANS WITH DISABILITIES ACT OF 1990, THE FAIR
LABOR STANDARDS ACT, THE CALIFORNIA FAIR EMPLOYMENT AND HOUSING ACT, AND THE
CALIFORNIA LABOR CODE (except for claims for underlying workers' compensation
benefits); and
(iii)ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER LAWS AND REGULATIONS RELATING
TO EMPLOYMENT OR EMPLOYMENT DISCRIMINATION.
12.Proprietary Information and Inventions Assignment Agreement. Executive shall
execute and comply with the terms of the Company's standard Proprietary
Information and Inventions Assignment Agreement.
13.Miscellaneous Provisions.
(a)Effect of Any Statutory Benefits. If any severance benefits are required to
be paid to the Executive upon termination of employment with the Company as a
result of any requirement of law or any governmental entity in any applicable
jurisdiction, the aggregate amount payable pursuant to Section 4 hereof shall be
reduced by such amount.
(b)Effect of Standard Company Policy or Other Agreements. To the extent that any
severance benefits or payments are required to be paid to the Executive upon
termination of employment with the Company as a result of any standard Company
policy or other existing agreement(s), Executive shall be entitled to the most
favorable of any given benefit (e.g., cash, option vesting, health benefits)
available under any one such source, but shall not be entitled also to cumulate
the same kind of benefit from multiple agreements or policies.
(c)No Duty to Mitigate. The Executive shall not be required to mitigate the
amount of any payment contemplated by this Agreement, nor shall any such payment
be reduced by any earnings that the Executive may receive from any other source.
(d)Waiver. No provision of this Agreement may be modified, waived or discharged
unless the modification, waiver or discharge is agreed to in writing and signed
by the Executive and by an authorized officer of the Company (other than the
Executive). No waiver by either party of any breach of, or of compliance with,
any condition or provision of this Agreement by the other party shall be
considered a waiver of any other condition or provision or of the same condition
or provision at another time.
(e)Integration. This Agreement and any agreements referenced herein represent
the entire agreement and understanding between the parties as to the subject
matter herein and collectively supersede all prior or contemporaneous
agreements, whether written or oral, with respect to the same subject matter,
provided that, for clarification purposes, this Agreement shall not affect any
agreements between the Company and Executive regarding intellectual property
matters or confidential information of the Company.
(f)Choice of Law. The validity, interpretation, construction and performance of
this Agreement shall be governed by the internal substantive laws, but not the
conflicts of law rules, of the State of California.
(g)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, which shall remain in full force and effect.
(h)Employment Taxes. All payments made pursuant to this Agreement shall be
subject to withholding of applicable income and employment taxes.
(i)Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original, but both of which together will constitute one and
the same instrument.
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.

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Pixelworks, Inc.

 
Executive

/s/ Bruce A. Walicek
 
/s/ John Lau 12/27/2011
Bruce Walicek
 
John Lau