Stock Option Exchange Program

Informational Presentation

2

Option Exchange Program Timeline

Begins: Tuesday, June 2, 2009

Ends: 5:00 p.m. Pacific, Wednesday, July 1, 2009, unless

extended

This informational presentation is only a summary of the Stock Option Exchange

Program. For additional details, please review the documents included in your

Offer Information Document that was posted to Tessera’s Intranet on June 2,

2009 or mailed to selected employees.

3

Stock

Option

Overview

–

Philosophy

and

History

•

Our Equity Incentive Plan is a key component of our

compensation, incentive and retention programs

•

We believe stock options encourage our employees to act

like owners of the business by:

•

Motivating our employees to continue to build stockholder value

•

Providing our employees with compensatory benefits

•

Tessera

completed its initial public offering in November

2003 with fewer than 100 employees located in San Jose,

CA. Today we have more than 400 employees in eight

countries with the majority participating in our Equity

Incentive Plan.

•

Option Exchange only applies to stock options

4

Purpose of the Option Exchange

•

The Option Exchange Program is a voluntary, one-time

opportunity for eligible employees to surrender eligible

outstanding underwater stock options in exchange for a

lesser number of Replacement Options with a possible

lower exercise price.

•

The purpose of the Option Exchange Program is to

motivate employees who hold eligible underwater stock

options to work towards our success and reward our

employees’

contributions by allowing them to benefit from

increases in our stock price.

5

Stock Option Overview –

Underwater Stock Options

The decline in Tessera’s stock price has left a significant number of

employee stock options significantly above the recent trading prices of

our stock (“underwater”). These underwater stock options become less

effective in providing employees a stake in the growth and success of

our company than was originally intended.

Eligible Underwater 

Stock Options

Grant Date

Range

Original

Exercise Price

5/9/05 –

7/18/06

$26.08 -

$30.60

11/16/04

–

8/20/07

$31.51 -

$34.78

1/26/05

–

5/15/08

$36.02 -

$43.76

Tessera Average

Stock Price for the month

of May 2009 =

$16.40

6

Key Terms

•

Stock

Options:

The

right

to

buy

shares

of

Tessera

stock

at

a

set

price

(exercise price) for a specified period of time

•

Eligible Options:

Those outstanding stock options granted more than 12

months prior to the commencement of the Offer and which will not

expire

within

the

12

months

immediately

following

the

completion

of

the

offer and have an exercise price of at least $26.08. Also referred to as

“Original Stock Options”

•

Underwater:

When the exercise price of the eligible options is

significantly

above

the

recent

trading

prices

of

Tessera’s

stock

•

Example:

A stock option grant on 8/27/07 has an exercise price of $37.21

because that was the closing price of Tessera’s

stock on that date.

Tessera’s

stock is currently trading well below this price; therefore this

stock option grant is considered “underwater”

•

Surrender:

If you choose to participate in this program, you will be

giving up your right to the Eligible Option

•

Exchange:

To surrender Eligible Options and receive a lesser number

of Replacement Options with a lower exercise price under this offer

7

Key Terms (continued)

•

Replacement

Options:

Refers

to

options

that

participating

employees

will

receive

upon

“surrendering”

their

eligible

outstanding

stock

options

•

Exercise

Price:

The

price

at

which

Tessera’s

stock

can

be

purchased

by exercising a stock option; the exercise price is fixed when the stock

option

is

granted

and

is

always

the

closing

price

of

Tessera’s

stock

on

the grant date

•

Outstanding:

Previously granted stock options that have not been fully

exercised or cancelled

•

Vesting:

The time period that passes which gives you the right to

exercise

your

stock

option

over

a

period

of

time;

when

a

portion

of

your

stock

option

has

vested,

you

may

exercise

the

vested

portion

for

actual

shares

of

Tessera’s

stock

•

Exercise:

To purchase the underlying shares of stock at the exercise

price, regardless of the current market price

8

How

the

Option

Exchange

Works

-

Eligibility

•

You are an eligible employee if you are:

•

A U.S. or international employee that is eligible under the Fourth

Amended and Restated 2003 Equity Incentive Plan (“the 2003

Plan”)

•

Employed on the date the Option Exchange program began    

(June 2, 2009) and remain employed through the date the

Replacement

Options

are

granted

(expected

to

be

July

1,

2009)

•

Not a member of the Board of Directors or an executive officer

•

On an approved

leave of absence are permitted to participate as

long as all eligibility requirements are met

9

–Eligible Stock Options

How the Option Exchange Works

•

Must be an outstanding stock option grant with an exercise

price of at least $26.08;

•

Granted more than 12 months prior to the commencement

of the offer and will not expire within the 12 month period

immediately following the completion of the offer; and

•

Granted under the 2003 Equity Incentive Plan.

10

How the Option Exchange Works –

Exchange Ratios

If you choose to participate in the Option Exchange, the number of

Replacement Options you will receive depends on three factors:

1)

The exercise price of the Eligible Options surrendered,

2)

The exchange ratio, and

3)

The number of Eligible Options surrendered.

If the Per Share

Exercise Price is…

…

the Exchange Ratio is*

$26.08 to $30.60

1.07 to 1

$31.51 to $34.78

1.17 to 1

$36.02 to $43.76

1.25 to 1

* Number of Eligible Options required for one Replacement Option

11

How the Exchange Program Works –

Example Joe Smith

The example below illustrates the exchange of one of Joe’s stock option grants

Joe’s Replacement Option Grant of 1,000 shares will have a new grant

date

(expected

to

be

July

1,

2009)

and

a

possible

lower

exercise

price

Grant Date

Eligible Stock

Option Grant

Exercise

Price

Exchange

Ratio

Replacement Option

Grant*

8/27/07

1,250 stock

options

$37.21

1.25 to 1

1,000 Stock Options

(1,250 divided by 1.25)

* Note: Replacement Options will be rounded down to the nearest whole share

12

How the Option Exchange Works –

Example Joe Smith

(continued)

The

example

below

shows

how

the

exchange

ratios

would

be

applied

to

all of Joe's stock option grants

Grant Date

Eligible Stock

Option Grant

Exercise

Price

Exchange

Ratio

Replacement Option

Grant*

5/15/2008

Not Eligible

$19.75

N/A

N/A

11/24/2008

Not Eligible

$17.36

N/A

N/A

11/22/2005

4,500

$28.07

1.07

4,205

(4,205.61 rounded down to 4,205)*

10/10/2006

2,000

$34.78

1.17

1,709

8/27/2007

1,250

$37.21

1.25

1,000

Total Options Exchanged: 7,750

Total Replacement Options: 6,914

* Note: Replacement Options will be rounded down to the nearest whole share

13

Certain Terms and Conditions of the Replacement

Option Grants

•

Date of Grant: expected to be July 1, 2009

•

Exercise Price: closing price of Tessera’s stock on grant

date

•

Three-year Vesting Period:

•

1/3 after Year 1 (e.g., July 1, 2010); remainder monthly

thereafter over 2 years (1/36 per month)

•

Expiration Date:

•

New option grants retain the original expiration date of

the option surrendered

14

Certain Terms and Conditions of the Replacement

Option Grant –

Vesting Schedule Comparison

The chart below compares the current standard 4-year vesting schedule

with the new 3-year vesting schedule and assumes the Replacement

Option grant date will be July 1, 2009 and for illustrative purpose, all

options will fully vest as follows:

Eligible Stock Options

Replacement Options

Grant Date

Percent Vested as

of June 2, 2009

Final Vesting

Date

(100% vested)

First Vesting

Date

(1/3 vested)

Final Vesting Date

(100% vested)

5/1/2005

100%

5/1/2009

July 1, 2010

July 1, 2012

5/1/2006

75%

5/1/2010

July 1, 2010

July 1, 2012

5/1/2007

50%

5/1/2011

July 1, 2010

July 1, 2012

5/1/2008

25%

5/1/2012

July 1, 2010

July 1, 2012

15

How

to

Participate

–

Making

your

Elections

•

We believe the easiest way

for most employees to

participate is to complete the Election Form on the internal

Option Exchange Website at:

http://options-exchange

•

You are required

to check the “yes”

or “no”

box for each

eligible stock option grant

•

Submit, Change or Withdraw using the same web form

Your final elections must be received prior to the

Option Exchange deadline of

5:00 p.m. Pacific, July 1, 2009

Your final elections received as of the Exchange Program

deadline will supersede any previous elections

16

How to Participate –

Continued

•

If

you

don’t

have

access

to

the

website,

you

are

required

to

complete the Election Form and submit it by:

1.

FAX signed copy to:  1-408-904-5265, or

2.

Email

signed

copy

to:

options-exchange@tessera.com

•

You are required

to check the “yes”

or “no”

box for each

eligible stock option grant

•

Submit, Change or Withdraw –

using the paper form and

submit using either one of the methods above

Your final elections must be received prior to the

Option Exchange deadline of

5:00 p.m. Pacific, July 1, 2009

Your final elections received as of the Exchange Program

deadline will supersede any previous elections

17

Electing Not to Participate

•

This Option Exchange will have no effect on Eligible

Options that you choose not to exchange. No changes will

be made to the terms and conditions of the Eligible Options

you continue to hold.

•

If you choose not to participate, take no action.

This is a voluntarily, one-time opportunity, so

please review the materials carefully before

making a decision. Tessera cannot advise you

whether to participate.  The decision is yours.

18

Taxation

•

The tax effects of participating in the Option Exchange vary

depending on where you are working and/or living

•

Please consult your tax advisor

We encourage all eligible employees to consult with

their own tax advisors with respect to the federal,

state, and local tax consequences of participating in

the Option Exchange program

19

Taxation

•

Employees in the United States…

•

Will not

be subject to tax as a result of the exchange of Eligible

Options for Replacement Options

•

Will not be subject to tax when the Replacement Options are

granted

20

Steps to Prepare

1.

Read the Option Exchange program information

2.

Log into the Option Exchange Website via

http://options-exchange

and make your election(s), or fax

or email the completed Election Form

3.

All elections must be received by the deadline: 5:00 p.m.

Pacific, July 1, 2009

4.

If you choose NOT to participate, you do not need to do

anything

21

Timeline –

New Grant Information

Exchange Ratio Determination

June 1, 2009

Program Offered

June 2, 2009 –

July 1, 2009

(expected)

Exchanged stock options cancelled

July 1, 2009 (expected)

Replacement Option grant date

July 1, 2009 (expected)

Replacement Option grants will be

viewable online through E*TRADE

account

at

www.etrade.com

July 20, 2009 (expected)

Replacement Option grant

agreements will be mailed to your

work location

July 20, 2009 (approximately)

22

Available Resources

Contact: 

John Price, VP of Finance, Corporate Controller

+1 (408) 321-6716

Richard Morales, Equity Manager

+1 (408) 321-6727

By

email:

options-exchange@tessera.com

By fax:  +1 (408) 904-5265

Option

Exchange

website:

http://options-exchange