UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported)  October 10, 2007
 
 
 
 
MIPS TECHNOLOGIES, INC.
(Exact Name of Registrant as Specified in its Charter)


 
Delaware
 
(State or Other Jurisdiction of Incorporation or Organization)
000-24487
 
(Commission File Number)
77-0322161
 
(IRS Employer Identification No.)


1225 Charleston Road
Mountain View, CA  94043
(Address of Principal Executive Offices, including zip code)
 
 
 
(650) 567-5000
(Registrant's telephone number including area code)
 
 
N/A
(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions (see General Instruction A.2. below):
 
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 


Item 5.02(b).   Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers; Compensatory Arrangements of Certain Officers.
 
On October 12, 2007, the Company's Board of Directors determined that Messrs. Browne, Hays and Uhler who were previously executive officers of the Company in their former roles as Vice President of Marketing, Vice President of Engineering, and Chief Technology Officer, respectively, will no longer be executive officers in light of internal restructuring of the organization as a result of the acquisition of Chipidea, with the Company now operating out of two functional business groups, the Processor Business Group and the  Analog Business Group, in addition to the corporate functional groups.  Messrs. Browne, Hays and Uhler will continue as officers of the Company in the Processor Business group.

Item 5.02(e).   Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers; Compensatory Arrangements of Certain Officers.
 
Performance-Based Bonus Plan for Executives
 
On October 12, 2007, the Company's Board of Directors approved revisions to the Performance-Based Bonus Plan for Executives, which includes the Chief Executive Officer.  The revisions provide that for those participants who are in business groups rather than corporate functions, one-half of the bonus multiplier will be based upon overall corporate performance and one-half will be based upon business group performance.  A copy of the Performance-Based Bonus Plan for Executives is attached hereto as Exhibit 99.01.

Special Bonus Plan for the Vice President of Worldwide Sales
 
On October 12, 2007, the Company entered into a letter agreement with the Vice President of Worldwide Sales, Brad Holtzinger, regarding modifications to the special bonus plan for him as the Vice President of Worldwide Sales. The modifications add an additional 15% of base salary to the target bonus amount, which additional target bonus is tied specifically to achievement of the contract revenue goal in the Analog Business Group financial plan.  A copy of the letter agreement is attached hereto as Exhibit 99.02.

Revised Change in Control Agreements
On October 12, 2007, the Company's Board of Directors approved the Company's entry into Change in Control Agreements with Messrs. Bourgoin, Browne, Hays and Uhler, and Ms. Creighton, the Company's named executive officers in the most recently filed proxy statement, as well as with Messrs. Franca and Dias, who have been named executive officers of the Company by the Board of Directors on October 12, 2007, as a result of the Chipidea acquisition and the restructuring of the organization, and Messrs. Holtzinger, Kato, and Tyndall who continue as executive officers of the Company.  A copy of the form of the Change in Control Agreement is attached hereto as Exhibit 99.03.

Item 9.01.   Financial Statements and Exhibits.
 
(d)       Exhibits
 
            99.01     Performance-Based Bonus Plan for Executives
 
            99.02     Special Bonus Plan Letter Agreement
 
            99.03     Change in Control Agreement
 

 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
Dated:  October 16, 2007
                                                   MIPS TECHNOLOGIES, INC.
                           (Registrant)


                            By:   /s/ MERVIN S. KATO            
                            Mervin S. Kato
                            Chief Financial Officer and Treasurer
 
 
EXHIBIT INDEX
 
Exhibit
No.
  
Description
 
99
 
.01
  
 
Performance-Based Bonus Plan for Executives
  
         
99 .02   Special Bonus Plan Letter Agreement  
         
99 .03    Change in Control Agreement  
 

MIPS Technologies, Inc.
Performance-Based Bonus Plan for Executives
Effective October 12, 2007
adopted by the Board of Directors on October 12, 2007

 
1.
Purpose. The purpose of the MIPS Technologies, Inc. Performance-Based Bonus Plan for Executives is to enhance employee retention, to incentivize selected employees to strengthen their focus on key corporate financial goals, and to align individual and group actions with the corporate financial performance objectives on behalf of the stockholders.  In addition, for those executives who are General Managers of a business group, or on the staff of General Managers of a Business Group, the plan also incentivizes focus on business group financial goals.

 
2.
Eligibility. The CEO and other executives or employees as recommended by the CEO and approved by the Compensation Committee of the Board of Directors shall be eligible to participate in the plan.  An eligible employee must be an employee in good standing at MIPS Technologies, Inc. or one of its subsidiaries at the completion of each plan period and at the time of payout.  The Board of Directors shall retain in its sole discretion the authority to approve payments to the CEO.  Upon the recommendation of the CEO, the Compensation Committee shall in its sole discretion approve payments to other participating executives or employees.  

 
3.
Plan Period.  Each plan period shall be the MIPS Technologies, Inc. fiscal year.

 
4.
Financial Plan.  The financial plan is the Statement of Operations approved annually by the Board of Directors for the upcoming fiscal year which includes overall corporate revenue and operating income goals to be used for the corporate performance calculations below and business group revenue and contribution margin goals to be used for the business group performance calculations below.  The calculations described below shall be based on the actual revenue, operating income and contribution margin derived on the same basis as the financial plan goals approved by the Board of Directors.
     
 
5.
Calculation of Payments.  Individual payouts shall be calculated as follows:

a.  
A specific percentage of base salary shall be established for each selected participant as the target for “on plan” compensation.  For the CEO, the target shall be 70%.  For the senior executive staff, the target shall be 40%.   Other selected participants may have other targets as determined by the CEO.
b.  
The target percentage of base salary shall be multiplied by a multiplier, which multiplier for those participants in corporate functions shall be based 100% on overall corporate performance and for those participants in a business group shall be based on a 50-50 split between overall corporate performance and business group performance.  For those participants having a multiplier based on a 50-50 split between overall corporate performance and business group performance, the multiplier is determined by multiplying the corporate performance multiplier by the business group performance multiplier and then taking the square root of the product.
c.  
In calculating the multiplier associated with corporate performance, the following applies:
i.  
Zero payment if either actual corporate revenue or operating income is less than 90% of the approved financial plan.
ii.  
Payment of one times the target percentage if both actual corporate revenue and operating income are exactly at financial plan numbers.
iii.  
Payment of a maximum of two times the target percentage if the actual corporate revenue exceeds the financial plan by 20% or more, and the actual corporate operating income exceeds the financial plan by 30% or more.
iv.  
When actual corporate revenue and operating income fall between the categories above, payment of from zero to two times the target percentage shall be determined using a formula which provides for a multiplier based on both revenue and operating income achieved.
d.  
In calculating the multiplier associated with business group performance, the following applies:
i.  
Zero payment if either actual business group revenue or contribution margin is less than 90% of the approved financial plan.
ii.  
Payment of one times the target percentage if both actual business group revenue and contribution margin are exactly at financial plan numbers.
iii.  
Payment of a maximum of two times the target percentage if the actual business group revenue exceeds the financial plan by 20% or more, and the actual business group contribution margin exceeds the financial plan by 30% or more.
iv.  
When actual business group revenue and contribution margin fall between the categories above, payment of from zero to two times the target percentage shall be determined using a formula which provides for a multiplier based on both revenue and contribution margin achieved.
e.  
The Board of Directors and the Compensation Committee, as applicable, shall have discretion to vary the amount of the multiplier in light of the CEO’s and other executive’s or employee’s performance to goals, notwithstanding the above calculation.

 
6.
Payments.  Payments will be paid in cash, typically within two months after the completion of each plan period, unless the participant has exercised a right under a company established plan to defer such payment, in which case, when applicable, payment in accordance with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, will be made in accordance with such deferral plan and applicable law.   A participant has no right to any payment if such participant is not employed on the date of payment unless otherwise determined by the Compensation Committee in its sole discretion.

 
7.
Amendment or Termination of Plan.  The plan shall continue in effect until modified or eliminated by the Board of Directors.  The Board of Directors may amend, modify or terminate the plan at any time without the consent of any person.



 
October 12, 2007
 
 
Mr. Brad Holtzinger
 
 
Dear Brad:
 
MIPS Technologies, Inc. is pleased to confirm the modifications to the Special Bonus Plan for the Vice President of Worldwide Sales which have now been approved by the Compensation Committee of the Board of Directors.  This special bonus plan is to be effective for fiscal year 2008 and is in addition to your participation in the Performance-Based Bonus Plan for Executives.

Under the special bonus plan as now modified, you are eligible for an additional bonus of up to 25% of base salary based on achievement of the annual contract revenue goal in the corporate financial plan (25% accrues linearly at contract revenue performance levels of 0-100% of the corporate financial plan, but does not pay until 80% of the contract revenue goal in the corporate financial plan is achieved), plus an additional bonus of 2% for each 1% contract revenue increase above the annual contract revenue goal in the financial plan.  In addition, you shall be eligible for an additional bonus of up to 15% of base salary based on achievement of the annual contract revenue goal in the financial plan for the Analog Business Group (15% accrues linearly at contract revenue performance levels of 0-100% of the Analog Business Group financial plan, but does not pay until 80% of the contract revenue goal in the Analog Business Group financial plan is achieved), plus an additional bonus of 2% for each 1% contract revenue increase above the annual contract revenue goal in the Analog Business Group financial plan.  The payout is subject to adjustment on the discretion of the CEO and upon the advice and consent of the Compensation Committee.  The financial plan is the Statement of Operations approved annually by the Board of Directors for the fiscal year which includes an annual corporate contract revenue goal to be used for the purposes of the 25% additional bonus above, and subsequent to the acquisition of Chipidea, also includes an annual Analog Business Group revenue goal to be used for the purposes of the 15% additional bonus above.
 
Please acknowledge your understanding of the above terms by signing below and returning a signed copy to MIPS Technologies Human Resources. The team and I are looking forward to your making a major contribution to our success in FY08.
 
Sincerely,
 
/s/ JOHN BOURGOIN
John Bourgoin
President and Chief Executive Officer
MIPS Technologies, Inc.
 
 
 
I acknowledge the above special bonus terms with the understanding that it is not an employment contract. I understand that my employment with the company is not for any fixed term and constitutes at-will employment in which either I or the company may terminate at any time, for any reason, with or without notice. The terms stated in the letter above supersede all prior discussions and negotiations with respect to the subject matter, and no other writing published by the company is intended to modify the presumptions of at-will employment status.
 

/s/ BRAD HOLTZINGER                                                              October 12, 2007                    
Employee Signature                                                                                                      Today's Date
 
 
 
 


EXECUTION COPY


MIPS TECHNOLOGIES, INC.
1225 Charleston Road
Mountain View, CA  94043-1353

[Date]

[Name]
[Title]
MIPS Technologies, Inc.
1225 Charleston Road
Mountain View, CA  94043-1353

Dear [Name]:

MIPS Technologies, Inc. (the “Company”) considers it essential to the best interests of its shareholders to foster the continuous employment of key management personnel. In this connection, the Board (as defined in Section 2(b) below) recognizes that, as is the case with many publicly held corporations, the possibility of a change in control may exist and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its shareholders.

The Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of officers of the Company, including you, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a change in control of the Company, although no such change is now contemplated.

In order to induce you to remain in the employ of the Company and in consideration of your agreement set forth in Section 2(i) below, the Company agrees that you shall receive the benefits set forth in this agreement (the “Agreement”) under the circumstances described below.

1.           Term of Agreement.  This Agreement shall commence on the date hereof and shall continue in effect until your employment with the Company is terminated other than after a Change in Control (as defined in Section 2(d) below), unless sooner terminated by written agreement of the Company and you.

2.           Definitions.  As used in this Agreement:

(a)           “Beneficial Owner” shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

(b)           “Board” shall mean the Board of Directors of the Company.

(c)           “Business Combination” means and includes each and all of the following occurrences:

(i)           a consolidation or merger pursuant to which more than 75% of the Company’s Majority Voting Stock is transferred to different holders, except for a transaction intended primarily to change the state of the Company’s incorporation;

(ii)           more than 75% of the assets of the Company are sold or otherwise disposed of; or

(iii)           the Company dissolves or liquidates or effects a partial liquidation involving more than 75% of its assets.

(d)           “Change in Control” of the Company means and includes each and all of the following occurrences:

(i)           A Business Combination.

(ii)           When any “person” as defined in Section 3(a)(9) of the Exchange Act and as used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) of the Exchange Act but excluding the Company and any subsidiary and any employee benefit plan sponsored or maintained by the Company or any subsidiary (including any trustee of such plan acting as trustee), directly or indirectly, becomes the Beneficial Owner of securities of the Company representing thirty percent (30%) or more of the Majority Voting Stock; provided, however, that no crossing of such 30% threshold shall be a "Change in Control" if it is caused (i) solely as a result of an acquisition by the Company of its voting securities or (ii) solely as a result of an acquisition of the Company’s voting securities directly from the Company, in either case until such time thereafter as such person acquires additional voting securities other than directly from the Company and, after giving effect to such transaction, such person owns 30% or more of the Majority Voting Stock.

(iii)           During any period of three (3) consecutive years, individuals who, at the beginning of such period, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, that any person becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by the vote of at least a majority of the directors then comprising the Incumbent Board.

For purposes of this Agreement, the Board of Directors may by resolution, clarify the date as of which a Change in Control shall be deemed to have occurred.

(e)           “Code” shall mean the Internal Revenue Code of 1986, as amended.

(f)           "Current Compensation" shall mean your monthly base salary, as in effect immediately prior to your termination of employment with the Company.

(g)           “Disability” shall mean a physical or mental illness or injury which, as determined by the Company, continuously prevents you from performing your duties with the Company for a period of six months prior to termination.

(h)           “Good Reason” shall mean grounds for termination by you of your employment by the Company based upon prior constructive termination by the Company as provided in Section 5 hereof.

(i)           "Majority Voting Stock" shall mean the class of the Company’s voting stock which, as of the time of determination, possesses the right to elect a majority of the directors of the Company.

(j)           “Potential Change in Control of the Company” shall be deemed to have occurred if (i) the Company enters into an agreement or letter of intent, the consummation of which would result in the occurrence of a Change in Control of the Company; (ii) any person (including the Company) publicly announces an intention to take or to consider taking actions which if consummated would constitute a Change in Control of the Company; (iii) any person, other than a trustee or other fiduciary holding securities under an employee benefit plan for the Company, who is or becomes the beneficial owner, directly or indirectly, of 9.5% or more of the Majority Voting Stock increases his beneficial ownership of such securities by five (5) percentage points or more over the percentage so owned by such person; or (iv) the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control of the Company has occurred.  You agree that, subject to the terms and conditions of this Agreement, in the event of a Potential Change in Control of the Company, you will remain in the employ of the Company (or the subsidiary thereof by which you are employed at the date such Potential Change in Control occurs) until the earliest of (x) a date which is six months from the occurrence of such Potential Change in Control of the Company, (y) the termination by you of your employment by reason of Disability or (z) the occurrence of a Change in Control of the Company.

(k)          “Separation from Service” shall mean a “separation from service” as defined in any regulations or other Internal Revenue Service guidance promulgated under Section 409A of the Code.

(l)           "Termination Payment" shall mean the severance pay to which you are entitled upon termination of your employment within 24 months after a Change in Control as provided in Section 3(a) hereof.

3.           Compensation Following a Change in Control.

(a)           Subject to Section 6 below, if you have a Separation from Service  with the Company within 24 months after a Change in Control either as a result of (i) the involuntary termination of your employment by the Company other than a Termination for Cause or (ii) your voluntary termination of employment with the Company for Good Reason:

           (i)           you shall be entitled to a Termination Payment, payable in cash, in an amount equal to 24 months of your Current Compensation at the rate in effect immediately prior to such Change in Control, subject to applicable withholding.

           (ii)           in the event (x) that your ability to sell the stock of the Company is limited by the provisions of the Securities Act of 1933, as amended, or any rule or regulation promulgated thereunder, or (y) that your ability to sell the stock of the Company is limited by an agreement between you and the Company, you shall be entitled to exercise any stock option granted to you by the Company until the earlier of either (A) the date which is thirty (30) days after the end of the period during which such limitation applies or (B) the end of the maximum term of the stock option.  For purposes of clarity, this paragraph may only extend and shall not reduce the post-termination exercise period provided for in the respective option agreement.

(b)           Subject to Section 6 below, upon the occurrence of a Change in Control:

           (i)           (A) any stock option granted to you by the Company shall become fully vested and exercisable and shall remain exercisable in accordance with the terms of the applicable option award agreement, except to the extent modified by Section 3(a), and (B) you shall have the right during the six month period following such Change in Control to have any such option "cashed out" at its market value determined as provided herein.  The cash out proceeds shall be paid to you or, in the event of your death prior to payment, the representative of your estate.  For this purpose, the market value of an outstanding option shall be measured as the difference between the option exercise price and the closing sales price of the common stock as reported by the NASDAQ National Market System (or, in the event the Company’s common stock is listed on a stock exchange, the highest closing price on such exchange as reported on the composite transactions reporting system) on the day prior to the date you elect to cash out the stock option.

           (ii)           all forfeiture restrictions applicable to restricted stock granted to you by the Company shall lapse and such restricted stock shall be released from the Company’s repurchase right set forth in the applicable restricted stock agreement.

(c)           Any cash payable to you under Section 3(a)(i) shall be payable between 30 and 60 calendar days after your Separation from Service, provided, however, if, at the time of your Separation from Service, you are a “specified employee” (as defined in Section 409A of the Code) and the payment under Section 3(a)(i) is subject to Section 409A of the Code, then such payment shall not be made until six months and one day following the date of your Separation from Service, except as may otherwise be permitted under Section 409A of the Code.  Any cash payable to you under Section 3(b)(i) shall be made within 30 calendar days after the date the Company receives your written notice electing to be cashed out on the value of your options.

(d)           Anything contained in Sections 3(a) or 3(b) above to the contrary notwithstanding, the Company shall have no obligation to pay you a Termination Payment, to accelerate the vesting of your options, to cash out your options or to release your restricted shares from their forfeiture restrictions or repurchase rights under this Agreement in the event of your Separation from Service prior to a Change in Control.  The Company shall also have no obligation to pay you a Termination Payment if, after a Change in Control, the Company terminates your employment for "Cause" or if your employment terminates due to your death, retirement or resignation other than for "Good Reason."

(e)           In the event that the terms of this Agreement relating to options or restricted stock conflict with the terms of any option, stock award or related agreement between you and the Company, the terms that are more favorable to you will control.  For purposes of clarity, the terms of this Agreement may only extend and shall not reduce the post-termination exercise period provided for in the respective option agreement.

4.           Termination for Cause.  Termination of your employment with the Company shall be regarded as termination for “Cause” only upon:

(a)           your willful and continued failure to substantially perform your duties with the Company (other than such failure resulting from your incapacity due to physical or mental illness) after there is delivered to you by the Board a written demand for substantial performance which sets forth in detail the specific respects in which it believes you have not substantially performed your duties;

(b)           your willfully engaging in gross misconduct which is materially and demonstrably injurious to the Company;

(c)           your committing a felony or an act of fraud against the Company or its affiliates; or

(d)           your breaching materially the terms of your employee confidentiality and proprietary information agreement with the Company.

No act, or failure to act, by you shall be considered “willful” if done, or omitted to be done, by you in good faith and in your reasonable belief that your act or omission was in the best interest of the Company and/or required by applicable law.

Anything contained in this Section 4 to the contrary notwithstanding, you shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to you a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the entire membership of the Board at a meeting of the Board called and held for that purpose (after reasonable notice to and an opportunity for you, together with your counsel, to be heard before the Board), finding that in the good faith opinion of the Board, you were guilty of conduct set forth in this Section 4 and specifying the particulars thereof in detail.

5.           Termination for Good Reason.  Your employment with the Company, may be regarded as having been constructively terminated by the Company and you shall become entitled to compensation pursuant to Section 3 above if, upon notice to the Company within ninety (90) days following the occurrence of one or more of the following events, with a thirty (30) day opportunity for the Company to cure, you terminate your employment within two (2) years after a Change in Control by reason of one or more of the following events (unless such event(s) applies generally to all officers of the Company and any successor to the Company, or applies to a person solely in his capacity as a member of the Board.

(a)           without your express written consent, the assignment to you of any duties or the significant reduction of your duties, either of which is inconsistent with your position with the Company (or the duties and responsibilities of such position) immediately prior to a Change in Control, or your removal from or any failure to re-elect you to any such position;

(b)           without your express written consent, the substantial reduction, without good business reasons, of the facilities and perquisites (including office space and location) available to you immediately prior to a Change in Control;

(c)           a reduction by the Company in your salary or in any bonus compensation formula applicable to you as in effect immediately prior to a Change in Control, or the failure by the Company to increase such base salary each year following a Change in Control by an amount which equals at least one-half (1/2), on a percentage basis, of the average annual percentage increase in base salary for all officers of the Company (and any successor of the Company) during the prior two full calendar years;

(d)           a material reduction by the Company in the kind or level of employee benefits to which you were entitled prior to a Change in Control with the result that your overall benefits package is significantly reduced after the Change in Control; or the taking of any action by the Company which would materially and adversely affect your participation in any plan, program or policy generally applicable to executives or employees of the Company or any successor of the Company (including but not limited to paid vacation days), or deprive you in a material and substantial way of any fringe benefits enjoyed by you prior to a Change in Control;

(e)           the Company’s requiring you to be based at a location that is more than 25 miles from your then present location without your consent (except for required travel on the Company’s business to an extent substantially consistent with your present business travel obligations);

(f)           any purported termination of your employment by the Company which is not effected for Disability or for Cause, or any purported termination for which the grounds relied upon are not valid; or

(g)           the failure of the Company to obtain the assumption of this Agreement by any successor as contemplated in Section 9 hereof.

6.             Parachute Payments.  In the event that any payment or benefit received or to be received by you in connection with a Change in Control, including any payments with respect to the termination of your employment with the Company or any corporation which is a related corporation (collectively, the “Severance Payments”) would (i) constitute a “parachute payment” within the meaning of section 280G of the Code or any similar or successor provision and (ii) but for this Section 6, be subject to the excise tax imposed by section 4999 of the Code or any similar or successor provision (the “Excise Tax”), then such Severance Payments shall be paid to you either as:
(i)           the full amount of the Severance Payments, or
(ii)           such lesser amount, which would result in no portion of such Severance Payments being subject to the Excise Tax,

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 you, on an after-tax basis, of the greatest amount, notwithstanding that all or some portion of such Severance Payments may be taxable under Section 4999 of the Code.

Unless the Company and you otherwise agree in writing, any determination required under this Section shall be made in writing by a mutually agreed independent public accounting firm or other independent third party (the “Accountants”), whose determination shall be conclusive and binding upon you 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 you 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.

                      The Accountants shall provide their calculations, together with detailed supporting documentation, to the Company and you within fifteen (15) calendar days after the date on which your right to Severance Payments is triggered (if requested at that time by the Company or you) or such other time as requested by the Company or you.  If the Accountants determine that no Excise Tax is payable with respect to the Severance Payments, either before or after the application of the adjustment provided for in this Section, it shall furnish the Company and you with an opinion reasonably acceptable to you that no Excise Tax will be imposed with respect to such benefits and payments.  Any good faith determinations of the Accountants made hereunder shall be final, binding and conclusive upon the Company and you.

7.           Disputes.  To dispute a termination for Good Reason by you, the Company must give you written notice of such dispute within ten business days after your effective date of termination. To dispute a termination by the Company or any failure to make payments claimed to be due hereunder, you must give written notice of such dispute to the Company within 30 days after receiving a notice of termination, or within 30 days after the date on which a payment claimed by you to be due hereunder was due to be made, as the case may be.

If any such dispute is finally determined in your favor, the Company shall pay all reasonable fees and expenses, including attorneys’ and consultants’ fees, that you incur in good faith in connection therewith.

8.           No Mitigation.

(a)           You shall not be required to mitigate the amount of any payment provided for in Section 3 hereof by seeking other employment or otherwise, nor shall the amount of such payment be reduced by reason of compensation or other income you receive for services rendered after your termination of employment with the Company; provided, however, that the amount of any payment provided for in Section 3 may be offset by the Company by the amount of any indebtedness you may have to the Company at the time of your termination of employment.

(b)           In addition to the Termination Payment payable pursuant to Section 3 hereof, you shall be entitled to receive all benefits payable to you under any benefit plan of the Company in which you participate.

                      9.           Company’s Successors.  The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business and/or assets of the Company, to expressly assume and agree to perform the obligations under this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.  As used in this Section, “Company” includes any successor to its business or assets as aforesaid which executes and delivers this Agreement or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

10.           Notice.  Notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or five (5) days after deposit with postal authorities transmitted by United States registered or certified mail, return receipt requested, postage prepaid, addressed to the applicable address set forth on the first page of this Agreement, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

11.           Amendment or Waiver.  No provisions of this Agreement may be modified, waived, or discharged unless such waiver, modification, or discharge is agreed to in writing by you and the Company.  No waiver of either party at any time of the breach of, or lack of compliance with, any conditions or provisions of this Agreement shall be deemed a waiver of other provisions or conditions hereof.

12.           Sole Agreement.  This Agreement represents the entire agreement between you and the Company with respect to the matters set forth herein.  No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter of this Agreement will be made by either party which are not set forth expressly herein.

13.           Employee’s Successors.  This Agreement shall inure to the benefit of and be enforceable by your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, and legatees.  If you should die while any amounts are still payable to you hereunder, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to your devisee, legatee, or other designee or, if there be no such designees, to your estate.

14.           Validity.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provisions of this Agreement, which shall remain in full force and effect.

15.           Applicable Law.  This Agreement shall be interpreted and enforced in accordance with the laws of the State of California.

16.           Withholding.  The Company shall be entitled to withhold, or cause to be withheld, from any payment made to you in respect of your employment by the Company any amount of, as, or on account of, withholding taxes and other amounts required by law to be withheld, with respect to such payment.

17.           Section 409A.
 
           (a)           It is the Company’s intention that the benefits and rights to which you could become entitled to in connection with this Agreement, including any termination of employment, comply with Section 409A of the Code.  If you or the Company believes, at any time, that any such benefit or right does not comply, such party will promptly advise the other and both parties will negotiate reasonably and in good faith to amend the terms of this Agreement so that it complies with Section 409A of the Code in the manner that has the most limited possible economic effect on you.

           (b)             The Company will not take any action that would expose any payment or benefit to you to be accelerated or impose additional tax under Section 409A of the Code, unless (i) the Company is obligated to take the action under an agreement, plan or arrangement to which you are a party; (ii) you request the action; (iii) the Company advises you in writing that the action may result in the imposition of accelerated or additional tax under Section 409A of the Code and you subsequently request in writing that the action be taken.

18.           Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument.

If the foregoing conforms with your understanding of the matters described herein, please indicate your agreement to the terms hereof by signing where indicated below and returning one copy of this Agreement to the undersigned.

                             Very truly yours,

                              MIPS TECHNOLOGIES, INC.



                             By:
                          Name:  John Bourgoin
                          Title:    President and Chief Executive Officer


ACCEPTED AND AGREED TO AS OF
THE DATE FIRST SET FORTH ABOVE:



                                                                
Name: