EXHIBIT 10.22
SIMPLEX SOLUTIONS, INC.
MANAGEMENT CONTINUITY AGREEMENT
This Management Continuity Agreement (the "Agreement") is dated as of
March 21, 2002 by and between Xxxxx Xxxxxxxx ("Employee") and Simplex Solutions,
Inc., a Delaware corporation (the "Company" or "Simplex").
RECITALS
A. It is expected that another company may from time to time consider
the possibility of acquiring the Company or that a change in control may
otherwise occur, with or without the approval of the Company's Board of
Directors. The Board of Directors recognizes that such consideration can be a
distraction to Employee and can cause Employee to consider alternative
employment opportunities. The Board of Directors has determined that it is in
the best interests of the Company and its stockholders to assure that the
Company will have the continued dedication and objectivity of the Employee,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company.
B. The Company's Board of Directors believes it is in the best interests
of the Company and its stockholders to retain Employee and provide incentives to
Employee to continue in the service of the Company.
C. The Board of Directors further believes that it is imperative to
provide Employee with certain benefits upon a Change of Control which benefits
are intended to provide Employee with financial incentives to remain with the
Company, notwithstanding the possibility of a Change of Control.
D. To accomplish the foregoing objectives, the Board of Directors has
directed the Company, upon execution of this Agreement by Employee, to agree to
the terms provided in this Agreement.
Now therefore, in consideration of the mutual promises, covenants and
agreements contained herein, and in consideration of the continuing employment
of Employee by the Company, the parties hereto agree as follows:
1. AT-WILL EMPLOYMENT. The Company and Employee acknowledge that
Employee's employment is and shall continue to be at-will, as defined under
applicable law, and that Employee's employment with the Company may be
terminated by either party at any time for any or no reason. If Employee's
employment terminates for any reason, Employee shall not be entitled to any
payments, benefits, damages, award or compensation other than as provided in
this Agreement, or as may otherwise be available in accordance with the terms of
the Company's established employee plans and written policies at the time of
termination. The terms of this Agreement shall terminate upon the earlier of (i)
the date on which Employee ceases to be employed as an executive corporate
officer of the Company, other than as a result of an Involuntary Termination,
(ii) the date that all obligations of the parties hereunder have been satisfied,
or (iii) upon a Change of Control. A
termination of the terms of this Agreement pursuant to the preceding sentence
shall be effective for all purposes, except that such termination shall not
affect the payment or provision of compensation or benefits on account of a
termination of employment occurring prior to the termination of the terms of
this Agreement. The rights and duties created by this Section 1 may not be
modified in any way except by a written agreement executed by an officer of the
Company upon direction from the Board of Directors.
2. TREATMENT OF STOCK OPTIONS AND PAYMENT UPON A CHANGE OF CONTROL.
(a) ACCELERATION OF VESTING AND PAYMENT UPON A CHANGE OF CONTROL.
In the event of a Change of Control, then, to the extent not limited by the
provisions of Section 5, Employee shall be entitled to the following: (i) each
stock option to purchase the Company's Common Stock granted to Employee over the
course of his or her employment with the Company and held by Employee on the
effective date of the Change of Control shall become immediately vested on such
date as to that number of shares that would have vested in accordance with the
terms of such option (assuming that Employee remains in Continuous Status as an
Employee, as defined in the relevant plan and option agreement, for twelve (12)
months after the date of the Change of Control) as of the date twelve (12)
months after the date of the Change of Control and each such option shall be
exercisable in accordance with the provisions of the option agreement and plan
pursuant to which such option was granted and (ii) payment by the Company of an
amount equal to six (6) month's salary at the Employee's then current base
salary, which payment shall be made to Employee in one lump sum within (10) days
of the effective date of the Change of Control.
(b) TERMINATION FOR CAUSE OR VOLUNTARY RESIGNATION. If Employee's
employment is terminated for Cause or as the result of Employee's voluntary
resignation at any time, then Employee shall not be entitled to receive payment
of any severance benefits. Employee will receive payment(s) for all salary,
bonuses and unpaid vacation accrued as of the date of Employee's termination of
employment and Employee's benefits will be continued under the Company's then
existing benefit plans and policies in accordance with such plans and policies
in effect on the date of termination and in accordance with applicable law.
3. DEFINITION OF TERMS. The following terms referred to in this
Agreement shall have the following meanings:
(a) CHANGE OF CONTROL. "Change of Control" shall mean the
occurrence of any of the following events:
(i) OWNERSHIP. Any "Person" (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) is
or becomes 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 without the approval of the Board;
(ii) MERGER/SALE OF ASSETS. A merger or consolidation of
the Company whether or not approved by the Board, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent
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(either by remaining outstanding or by being converted into voting securities of
the surviving entity) at least 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, or the stockholders of the
Company approve 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; or
(iii) CHANGE IN BOARD COMPOSITION. 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 July 1, 1999 or (B) are
elected, or nominated for election, to the Board with the affirmative votes of
at least a majority of the Incumbent Directors at the time of such election or
nomination (but an Incumbent Director shall not include an individual whose
election or nomination is in connection with an actual or threatened proxy
contest relating to the election of directors to the Company).
(b) CAUSE. "Cause" shall mean (i) gross negligence or willful
misconduct in the performance of Employee's duties to the Company where such
gross negligence or willful misconduct has resulted or is likely to result in
substantial and material damage to the Company or its subsidiaries (ii) repeated
unexplained or unjustified absence from the Company, (iii) a material and
willful violation of any federal or state law; (iv) commission of any act of
fraud with respect to the Company or (v) conviction of a felony or a crime
involving moral turpitude causing material harm to the standing and reputation
of the Company, in each case as determined in good faith by the Board.
(c) INVOLUNTARY TERMINATION. "Involuntary Termination" shall
include any termination by the Company other than for Cause and Employee's
voluntary termination, upon 30 days prior written notice to the Company,
following (i) a material reduction or change in job duties, responsibilities and
requirements inconsistent with the Employee's position with the Company and the
Employee's prior duties, responsibilities and requirements or a change in
Employee's reporting relationship such that Employee is no longer reporting to
the Board; (ii) any reduction of Employee's base compensation (other than in
connection with a general decrease in base salaries for most officers of the
successor corporation); or (iii) Employee's refusal to relocate to a facility or
location more than 30 miles from the Company's current location.
4. LIMITATION ON PAYMENTS. In the event that the benefits provided for
in this Agreement to the Employee (i) constitute "parachute payments" within the
meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code") and (ii) but for this Section, would be subject to the excise tax
imposed by Section 4999 of the Code, then the Employee's benefits under Section
2(a) shall be payable either:
(a) in full, or
(b) as to such lesser amount which would result in no portion of
such benefits being subject to excise tax under Section 4999 of the Code,
whichever of the foregoing amounts, taking into account the applicable federal,
state and local income taxes and the excise tax imposed by Section 4999, results
in the receipt by the Employee on
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an after-tax basis, of the greatest amount of benefits under Section 2(a),
notwithstanding that all or some portion of such benefits may be taxable under
Section 4999 of the Code. Unless the Company and the Employee otherwise agree in
writing, any determination required under this Section 4 shall be made in
writing by independent public accountants agreed to by the Company and the
Employee (the "Accountants"), whose determination shall be conclusive and
binding upon the Employee and the Company for all purposes. For purposes of
making the calculations required by this Section 4, the Accountants may make
reasonable assumptions and approximations concerning applicable taxes and may
rely on reasonable, good faith interpretations concerning the application of
Section 280G and 4999 of the Code. The Company and the Employee 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 4.
5. CONFLICTS. Employee represents that his or her performance of all the
terms of this Agreement will not breach any other agreement to which Employee is
a party. Employee has not, and will not during the term of this Agreement, enter
into any oral or written agreement in conflict with any of the provisions of
this Agreement. Employee further represents that he or she is entering into or
has entered into an employment relationship with the Company of his or her own
free will and that he or she has not been solicited as an employee in any way by
the Company.
6. 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 obligations under this Agreement and agree expressly to perform the
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. The terms of this Agreement and all of Employee's rights hereunder
and thereunder shall inure to the benefit of, and be enforceable by, Employee's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.
7. NOTICE. 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. Mailed notices to Employee shall be
addressed to Employee at the home address which Employee 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.
8. MISCELLANEOUS PROVISIONS.
(a) NO DUTY TO MITIGATE. Employee shall not be required to
mitigate the amount of any benefits contemplated by this Agreement (whether by
seeking new employment or in any other manner), nor shall any such benefits be
reduced by any benefits that Employee may receive from any other source.
(b) WAIVER. No provision of this Agreement shall be modified,
waived or discharged unless the modification, waiver or discharge is agreed to
in writing and signed by
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Employee and by an authorized officer of the Company (other than Employee). 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.
(c) WHOLE AGREEMENT. No agreements, representations or
understandings (whether oral or written and whether express or implied) which
are not expressly set forth in this Agreement have been made or entered into by
either party with respect to the subject matter hereof. This Agreement
supersedes any agreement of the same title and concerning similar subject matter
dated prior to the date of this Agreement, and by execution of this Agreement
both parties agree that any such predecessor agreement shall be deemed null and
void.
(d) CHOICE OF LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California without reference to conflict of laws provisions.
(e) SEVERABILITY. If any term or provision of this Agreement or
the application thereof to any circumstance shall, in any jurisdiction and to
any extent, be invalid or unenforceable, such term or provision shall be
ineffective as to such jurisdiction to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable the remaining
terms and provisions of this Agreement or the application of such terms and
provisions to circumstances other than those as to which it is held invalid or
unenforceable, and a suitable and equitable term or provision shall be
substituted therefor to carry out, insofar as may be valid and enforceable, the
intent and purpose of the invalid or unenforceable term or provision.
(f) ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement may be settled at the option of either party by
binding arbitration in the County of Santa Clara, California, in accordance with
the rules of the American Arbitration Association then in effect. Judgment may
be entered on the arbitrator's award in any court having jurisdiction. Punitive
damages shall not be awarded.
(g) LEGAL FEES AND EXPENSES. The parties shall each bear their
own expenses, legal fees and other fees incurred in connection with this
Agreement.
(h) NO ASSIGNMENT OF BENEFITS. The rights of any person to
payments or benefits under this Agreement shall not be made subject to option or
assignment, either by voluntary or involuntary assignment or by operation of
law, including (without limitation) bankruptcy, garnishment, attachment or other
creditor's process, and any action in violation of this Section 9(h) shall be
void.
(i) EMPLOYMENT TAXES. All payments made pursuant to this
Agreement will be subject to withholding of applicable income and employment
taxes.
(j) ASSIGNMENT BY COMPANY. The Company may assign its rights
under this Agreement to an affiliate, and an affiliate may assign its rights
under this Agreement to another affiliate of the Company or to the Company. In
the case of any such assignment, the term
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"Company" when used in a section of this Agreement shall mean the corporation
that actually employs the Employee.
(k) 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.
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The parties have executed this Agreement on the date first written
above.
SIMPLEX SOLUTIONS, INC.
By: /s/ XXXX X. XXXXXX
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Title: CFO
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Address: 000 Xxxxxxx Xxxxxx
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Xxxxxxxxx, XX 00000
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Xxxxx Xxxxxxxx
Signature: /s/ XXXXX XXXXXXXX
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Address: 00 Xxxxxxxx Xxxxx
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Xxxxxxxx, XX 00000
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[SIGNATURE PAGE TO MANAGEMENT CONTINUITY AGREEMENT]
