EXHIBIT 10.7
SUMMIT DESIGN, INC.
EMPLOYMENT AGREEMENT
EMPLOYEE: XXXXXXX XXXXXXXXX
EFFECTIVE DATE: SEPTEMBER 9, 1997
This agreement (the "Agreement") is entered into as of the above date by
and between SUMMIT DESIGN, INC., a Delaware corporation ("SUMMIT"), and the
above-named employee ("Xxxxxxxxx").
RECITALS
X. Xxxxxxxxx is an employee of Simulation Technologies Corp.
("SimTech"); and
B. SUMMIT, SimTech and Star Acquisition, Inc., a wholly-owned
subsidiary of SUMMIT ("Merger Sub"), have entered into an Agreement and Plan
of Reorganization dated as of September 5, 1997 (the "Reorganization
Agreement"), which requires, among other things, that the Employee enter into
this Employment Agreement in connection with the merger of SimTech with and
into Merger Sub (the "Merger"), as described in the Reorganization Agreement
(capitalized terms not otherwise defined herein shall have the meanings set
forth in the Reorganization Agreement);
NOW, THEREFORE, IT IS HEREBY AGREED by and between the parties hereto as
follows:
1. EMPLOYMENT AND DUTIES. SUMMIT hereby employs Xxxxxxxxx to serve
and perform in the role of Vice President, General Manager of Verification
Products Division reporting to the Chief Executive Officer or Chief Operating
Officer of SUMMIT. Xxxxxxxxx agrees to perform the duties of this position
to the best of his ability and to devote full time and attention to the
transaction of SUMMIT's business.
2. TERM AND TERMINATION.
(a) This Agreement shall have an initial term of three (3) years,
unless sooner terminated in accordance with Subsection 2(b), 2(c), 2(d)
and/or 2(e) below. After the initial term of three (3) years, or any
extension thereof, the term of the Agreement shall automatically extend for
additional one (1) year periods unless terminated by either party with at
least ninety (90) days' advanced written notice prior to the end of the
then-current term. Both parties acknowledge that the
employment created herein is Employment-at-Will and may be terminated with or
without cause under the terms stated herein.
(b) In the event that Xxxxxxxxx notifies SUMMIT of termination of
his employment with SUMMIT for any reason other than specified in Section
2(d), this Agreement shall terminate as of the date of such notification.
Termination under this Section 2(b) is "Resignation."
(c) In the event that SUMMIT notifies Xxxxxxxxx of termination of
his employment by SUMMIT because Xxxxxxxxx willfully abandoned the duties of
his position or engaged in any business or criminal practice which the Chief
Executive Officer and Board of Directors reasonably determines is detrimental
or harmful to the good name, goodwill or reputation of SUMMIT, or which does
or could adversely effect the interests of SUMMIT, then this Agreement shall
terminate as of the date of such notification. Termination under this
Section 2(c) is "Cause."
(d) In the Event that Xxxxxxxxx notifies SUMMIT of his resignation
as an employee of SUMMIT for any of the following reasons:
(i) the assignment to Xxxxxxxxx of employment
responsibilities which are not of substantially comparable
responsibility and status as the employment responsibilities held
by Xxxxxxxxx immediately following the Closing in the position of
Vice President, General Manager of the Verification Products
Division of SUMMIT;
(ii) a reduction by SUMMIT in Xxxxxxxxx'x base salary as
provided in Section 3 or the failure to pay up to the target bonus
as provided in Section 3 if such bonus is paid to other executive
officers of SUMMIT;
(iii) SUMMIT requiring Xxxxxxxxx to be based anywhere
other than within fifty (50) miles of Minneapolis, Minnesota,
except for requirements of temporary travel on the Company's
business to an extent substantially consistent with Xxxxxxxxx'x
business travel obligations;
(iv) except to the extent otherwise required by applicable
law, the failure by SUMMIT to provide Xxxxxxxxx with substantially
the same benefits under SUMMIT's employee benefits plans as are
provided to the Chief Financial Officer and the Senior Vice
President of World Wide Marketing of SUMMIT;
(v) the failure by SUMMIT to release the Securities from the
lock-up as provided in Section 4; or
(vi) the failure by SUMMIT to obtain, as specified in Section
18, an assumption of the obligations of Summit to perform this
Agreement by any successor to SUMMIT;
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then this Agreement shall terminate as of the date of such notification.
Termination under this Section 2(d) is "Construction."
(e) In the event that SUMMIT notifies Xxxxxxxxx of termination of
his employment by SUMMIT for any reason other than specified in Section 2(b)
and/or 2(c) and/or 2(d), this Agreement shall terminate as of the date of
such notification. Termination under this Section 2(e) is "Convenience."
(f) Notwithstanding the above, termination of this Agreement shall
not release Xxxxxxxxx from any obligations under Sections 4 through 8, 10, 12
through 14 and 16 hereof.
3. COMPENSATION AND BENEFITS. In consideration of the services to be
performed by Xxxxxxxxx, SUMMIT agrees to pay Xxxxxxxxx the compensation and
extend to Xxxxxxxxx the benefits consisting of the following:
(a) Annual Base Salary of $141,000, paid twice monthly and
prorated and beginning on the first pay period following the date agreed upon
by Xxxxxxxxx and the Chief Executive Officer.
(b) Auto allowance of $750 per month.
(c) An annual bonus commencing with SUMMIT'S 1998 fiscal year of
up to 25% of annual base salary plus auto allowance under the terms of the
Executive Bonus Plan.
(d) Xxxxxxxxx shall be provided the right to participate in the
health, dental, and life insurance programs provided for the senior level
executives of SUMMIT.
(e) Xxxxxxxxx shall earn four (4) weeks paid time off during his
first year of employment and each year thereafter. This paid time off shall
be available for use as earned according to the standard policy of SUMMIT.
(f) In the event that this Agreement is terminated for
Construction as defined in Section 2(d) or Convenience as defined in Section
2(e), then SUMMIT shall pay Xxxxxxxxx $12,500 per month. This payment shall
continue monthly for twelve (12) months provided, however, that if Xxxxxxxxx
accepts full-time employment from another party prior to the end of such
twelve (12) months, these monthly payments shall immediately terminate.
4. LOCK-UP AGREEMENT. In consideration of the agreement of SUMMIT to
enter into the Reorganization Agreement, to Xxxxxxxxx and for other good and
valuable consideration, receipt of which is hereby acknowledged by Xxxxxxxxx,
Xxxxxxxxx hereby agrees, from the date hereof until and including the date
which is three (3) years from the date hereof, (the "Lock-Up Period"), not to
offer to sell, contract to sell or otherwise sell, dispose of or grant any
rights with respect to (collectively, a "Disposition") any shares of Common
Stock of SUMMIT issued to Xxxxxxxxx in connection with the Merger or issuable
to Xxxxxxxxx upon exercise of options granted by SimTech
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and assumed by SUMMIT in connection with the Merger (collectively, the
"Securities" and the aggregate of such Securities, the "Initial Securities
Amount") otherwise than as follows:
(a) Subject to compliance with applicable securities laws, twenty
percent (20%) of the Initial Securities Amount may be sold six (6) months
after the Closing Date.
(b) Subject to compliance with applicable securities laws, an
additional twenty percent (20%) of the Initial Securities Amount may be sold
twelve (12) months after the Closing Date.
(c) Subject to compliance with applicable securities laws, an
additional twenty percent (20%) of the Initial Securities Amount may be sold
eighteen (18) months after the Closing Date.
(d) Subject to compliance with applicable securities laws, an
additional twenty percent (20%) of the Initial Securities Amount may be sold
twenty-four (24) months after the Closing Date.
(e) Subject to compliance with applicable securities laws, the
remaining twenty percent (20%) of the Initial Securities Amount (the "Escrow
Shares") may be sold twenty-four (24) months and one (1) day after the
Closing Date. Xxxxxxxxx agrees that the Escrow Shares shall be held in
escrow by SUMMIT from the Closing Date until the date which is twenty-four
(24) months and one (1) day after the Closing Date.
The foregoing restriction is expressly agreed to preclude Xxxxxxxxx from
engaging in any hedging or other transaction which is designed to or
reasonably expected to lead to or result in a Disposition of Securities
during the Lock-Up Period even if such Securities would be disposed of by
someone other than the undersigned. Such prohibited hedging or other
transactions would include without limitation any short sale (whether or not
against the box) or any purchase, sale or grant of any right (including
without limitation any put or call option) with respect to any Securities or
with respect to any security (other than a broad-based market basket or
index) that includes, relates to or derives any significant part of its value
from Securities. Furthermore, Xxxxxxxxx hereby agrees and consents to the
entry of stop transfer instructions with SUMMIT's transfer agent against the
transfer of the Securities held by the undersigned except in compliance with
this Lock-Up Agreement.
5. EFFECT OF TERMINATION ON SECURITIES. If Xxxxxxxxx is terminated
for:
(a) Cause or Resignation during the two (2) year period following
the Closing Date, (i) Xxxxxxxxx will forfeit the Escrow Shares that have not
yet become eligible for sale by Xxxxxxxxx as provided in Section 4 and (ii)
Xxxxxxxxx will not effect a Disposition of any Securities not previously
released pursuant to Section 4 for a period of three (3) years from the
Closing Date.
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(b) Convenience, Construction or circumstances of death and
disability during the two (2) year period following the Closing Date, (i) the
Escrow Shares shall be promptly released to Xxxxxxxxx and (ii) the Lock-up
Period shall immediately terminate.
6. NON-COMPETITION.
(a) The parties understand and agree that this Agreement is
entered into in connection with the acquisition of SimTech by SUMMIT,
effected by the Merger. The parties further understand and agree that
Xxxxxxxxx was a substantial shareholder of SimTech, a key and significant
member of the management of SimTech, and that SUMMIT paid Xxxxxxxxx
substantial consideration in order to acquire Xxxxxxxxx'x stock interest in
SimTech. In addition, the parties agree that, prior to the Merger, SimTech
was engaged in its business in each of the fifty states of the United States
(hereinafter referred to as the "Geographic Scope of SimTech's business").
The parties further agree that SUMMIT and Merger Sub following the Merger
will continue conducting such business in all parts of the Geographic Scope
of SimTech's business. As a result of the foregoing, the parties expressly
understand and agree that the non-competition provisions contained in this
Agreement are permissible and enforceable pursuant to the provisions of
applicable law, including without limitation California Business and
Professions Code Section 16601.
(b) Xxxxxxxxx agrees that during his employment with SUMMIT, its
subsidiaries or Merger Sub (collectively, the "Employer"), Xxxxxxxxx will not
engage in any other employment competitive with the business or proposed
business of the Employer or which otherwise conflicts with or adversely
affects in any way Xxxxxxxxx'x performance of his employment obligation to
the Employer.
(c) Commencing at the Closing Date and continuing until one (1)
year following termination by Resignation or for Cause, Xxxxxxxxx will not,
as an Xxxxxxxxx, agent, consultant, advisor, independent contractor, general
partner, officer or director of any corporation, partnership or other entity,
or in any other similar capacity, participate or engage in the design,
development, manufacture, production, marketing, sale or servicing of any
product, or the provision of any service, that relates to the hardware
definition language design analysis, verification, simulation and graphical
user interface business (the "Business") in the United States.
Without limiting the foregoing, SUMMIT hereby acknowledges that
Xxxxxxxxx'x ownership, directly or indirectly, of up to five percent (5%) of
any class of "publicly traded securities" of any person or entity which owns
a competitive Business shall not be a violation of this Agreement. For the
purposes of this Section 6, the term "publicly traded securities" shall mean
securities that are traded on a national securities exchange or listed on the
National Association of Securities Dealers Automated Quotation System.
Notwithstanding the foregoing, Xxxxxxxxx will not be prohibited from
competing with Employer in the United States if Employer, or any entity
deriving title to their goodwill or shares, ceases to carry on a like
Business therein; this exception to Xxxxxxxxx'x covenant not to compete
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only applies to the country in which the Business is no longer carried on and
does not effect the enforceability of this Section 6(c) in the countries in
which the Business is continued.
Notwithstanding the foregoing, with the prior approval of the Chief
Executive Officer or Chief Operating Officer of SUMMIT (which approval shall
not be unreasonably withheld), Xxxxxxxxx will be permitted to acquire any
class of securities of private companies that engage in a competitive
Business.
(d) Notwithstanding any provision of this Agreement to the
contrary, the provisions of this Section 6 shall not apply in the event this
Agreement is terminated for reasons other than a termination for Resignation
or a termination for Cause.
(e) If any restriction set forth in Sections 6(a), (b) or (c)
above is held to be unreasonable, then Xxxxxxxxx agrees, and hereby submits,
to the reduction and limitation of such prohibition to such area or period as
shall be deemed reasonable.
7. COVENANT NOT TO SOLICIT. Xxxxxxxxx agrees that he will not, while
employed by SUMMIT, Merger Sub or any other subsidiary of SUMMIT and for a
period of one (1) year following termination of such employment:
(a) solicit, encourage, or take any other action which is intended
to induce any other employee of SUMMIT, Merger Sub or any of their
subsidiaries to terminate his or her employment with SUMMIT, Merger Sub or
any of their subsidiaries; or
(b) interfere in any manner with the contractual or employment
relationship between SUMMIT, Merger Sub or any of their subsidiaries and any
such employee of SUMMIT, Merger Sub or any of their subsidiaries.
The foregoing shall not prohibit Xxxxxxxxx or any entity with which Xxxxxxxxx
may be affiliated from hiring a former or existing employee of SUMMIT, Merger
Sub or any of their subsidiaries, provided that such hiring results
exclusively from such employee's affirmative response to a general
recruitment effort carried out through a public solicitation or a general
solicitation. In addition, notwithstanding any provision of this Agreement
to the contrary, the provisions of this Section 8 shall not apply in the
event this Agreement is terminated for reasons other than a termination for
Resignation or a termination for Cause.
8. PROPRIETARY INFORMATION AGREEMENT. Upon commencement of the
Xxxxxxxxx'x employment, the Xxxxxxxxx will sign SUMMIT's standard proprietary
information agreement.
9. CONFIDENTIALITY. Xxxxxxxxx acknowledges that certain customer
lists, design work, and related information, equipment, computer software,
and other proprietary products and information, whether of a technical or
non-technical nature, including but not limited to schematics, drawings,
models, photographs, sketches, blueprints, printouts, and program listings of
SUMMIT, collectively referred to as "Technology", were and will be designed
and developed by SUMMIT at
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great expense and over lengthy periods of time, are secret and confidential,
are unique and constitute the exclusive property and trade secrets of SUMMIT,
and any use or disclosure of such Technology, except in accordance with and
under the provisions of this or any other written agreements between the
parties, would be wrongful and would cause irreparable injury to SUMMIT.
Xxxxxxxxx hereby agrees that he will not, at any time, without the express
written consent of SUMMIT, publish, disclose, or divulge to any person, firm,
or corporation any of the Technology, nor xxxx Xxxxxxxxx use, directly or
indirectly, for Xxxxxxxxx'x own benefit or the benefit of any other person,
firm, or corporation, any of the Technology, except in accordance with this
Agreement or other written agreements between the parties.
10. INVENTIONS. All original written material including programs,
charts, schematics, drawings, tables, tapes, listings, and technical
documentation which are prepared partially or solely by Xxxxxxxxx in
connection with employment by SUMMIT shall belong exclusively to SUMMIT.
11. RETURN OF DOCUMENTS. Xxxxxxxxx acknowledges that all originals and
copies of records, reports, documents, lists, plans, drawings, memoranda,
notes, and other documentation related to the business of SUMMIT or
containing any confidential information of SUMMIT shall be the sole and
exclusive property of SUMMIT, and shall be returned to SUMMIT upon the
termination of employment for any reason whatsoever or upon the written
request of SUMMIT.
12. COMPLIANCE. Xxxxxxxxx agrees to comply with all of SUMMIT's
written employment policies, guidelines, and procedures as contained in an
employment manual, including revisions and additions thereto.
13. INJUNCTION. In addition to all other legal rights and remedies,
SUMMIT shall be entitled to obtain from any court of competent jurisdiction
preliminary and permanent injunctive relief of any actual or threatened
violation of any term hereof without requirement of bond, as well as an
equitable accounting of all profits or benefits arising out of such violation.
14. WAIVER. The waiver of either party of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any
subsequent breach thereof.
15. DISPUTES. The legal relations of the parties hereunder, and all
other matters hereunder, shall be governed by the laws of the State of
Oregon. Unresolved disputes shall be resolved in a court of competent
jurisdiction in Washington County, Oregon, and all parties hereto consent to
the jurisdiction of such court.
16. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement
between the parties hereto, and fully supersedes any and all prior agreements
or understandings, written or oral, between the parties hereto pertaining to
the subject matter hereof. No modification or amendment hereof is effective
unless in writing and signed by both parties.
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17. INDEMNIFICATION. As an officer of Merger Sub, Xxxxxxxxx shall be
entitled to indemnification by Merger Sub in his capacity as an officer of
Merger Sub to the extent provided in the Articles of Incorporation or Bylaws
of Merger Sub.
18. SUCCESSORS; BINDING AGREEMENT; ASSIGNMENT. SUMMIT 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
SUMMIT, by agreement in form and substance satisfactory to Xxxxxxxxx, to
expressly assume and agree to perform this Agreement in the same manner and
to the same extent that SUMMIT would be required to perform it if no such
succession had taken place. Failure of SUMMIT to obtain such agreement prior
to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle Xxxxxxxxx to compensation from SUMMIT in the same
amount and on the same terms as Xxxxxxxxx would be entitled hereunder if
Xxxxxxxxx terminated his employment for Construction, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the termination date. As used in this
Agreement, "SUMMIT" shall mean SUMMIT as hereinbefore defined and any
successor to its business and/or assets as aforesaid which executes and
delivers the agreement provided for in this Section 18 or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation
of law.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first herein above written.
"EMPLOYER":
SUMMIT DESIGN, INC.
A Delaware Corporation
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------
Xxxxx X. Xxxxxxx
President and Chief Executive Officer
"EMPLOYEE":
/s/ Xxxxxxx Xxxxxxxxx
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Xxxxxxx Xxxxxxxxx
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