EXECUTIVE OFFICER SEVERANCE AGREEMENT
This Executive Officer Severance Agreement (the "Agreement") is effective as
of November 30, 1999 ("Effective Date"), and is by and between XXXXX XXXXXXXX
(the "Executive"), an individual currently residing at 00000 Xxxx Xxxxx,
Xxxxxxxxx, XX 00000-0000 and INSILICON CORPORATION, a Delaware corporation
(the "Company"), with its principal place of business at 000 Xxxx Xxxxxxxx
Xxxxx, Xxx Xxxx, XX 00000.
R E C I T A L S
A. The Company desires to employ Executive and Executive desires
to provide employment services to the Company, on all the terms and
conditions set forth herein.
B. The Board of Directors of the Company believes it to be in the
best interest of the Company and its stockholders to provide the Executive
with certain severance benefits should Executives employment with the Company
terminate under certain circumstances, and the parties wish to provide
Executive with financial security and with sufficient incentive and
encouragement for Executive to remain with the Company
C. Certain capitalized terms used in the Agreement are defined in
Section 9 below.
A G R E E M E N T
In consideration of the mutual covenants herein contained, and in
consideration of the continuing employment of Executive by the Company, the
parties agree as follows:
1. DUTIES AND SCOPE OF EMPLOYMENT. Executive has been hired as
Executive Vice President and Chief Technical Officer of Company. Executive
shall have such duties with the Company, its subsidiaries or affiliates, as
the Company shall determine. The Executive shall comply with and be bound by
the Company's operating policies, by-laws, procedures and practices from time
to time in effect during his employment. Executive shall devote his full
time, skill and attention to his duties and responsibilities, and shall
perform them faithfully, diligently and competently, and the Executive will
use his best efforts to further the business of the Company and its
affiliated entities. In connection with his employment under this agreement,
Executive shall be based at the Company's principal place of business which
is currently located in San Jose, California, but Executive understands and
agrees that he may be required to perform services anywhere in the world, and
will perform his employment at such location or locations as may be
determined by the Board of Directors of the Company.
2. BASE COMPENSATION. As of the Effective Date of this Agreement
Executive's annual base salary will be $ 173,250.00 ("Base Compensation").
The Company will pay the Base Compensation in accordance with normal Company
payroll practices. The Base Compensation shall be reviewed annually and may
be increased from time to time, in which case the "Base Compensation" will
refer to the base salary earned by Executive at the time in question.
3. EXECUTIVE'S BENEFITS. The Executive shall be eligible to participate
in the employee benefit plans and Executive compensation programs maintained
by the Company applicable to other Executives of the Company, including
(without limitation) retirement plans, savings or profit-sharing plans, stock
option and employee stock purchase plans, incentive or other bonus plans,
life, disability, health, medical and hospital, accident and other insurance
programs, paid vacations, and similar plans or programs, subject in each case
to the terms and conditions of the plan or program in question and to the
sole determination of the Board of Directors, or any committee administering
such plan or program. The Company agrees that Executive shall maintain and
carry over to Company his current accrued vacation and sick time from his
employment with Phoenix Technologies Ltd., and thereafter while being
employed by Company earn vacation at a rate of 15 days per year provided
Executive does not accrue a total of more than 40 days of vacation. After
Executive has accrued 40 days of vacation, Executive shall no longer be
eligible to earn further vacation until he uses some vacation, at which point
Executive can again begin to accrue vacation up to the 40 day vacation cap.
The following additional Executive benefits will be made available:
(a) EXCHANGE OF PHOENIX STOCK OPTIONS. Executive shall be able to
participate in Company's option exchange plan, allowing Executive to exchange
his vested and unvested Phoenix stock options for Company stock options at an
exchange ratio of 1.862 Company stock options for each Phoenix stock option.
The vesting schedule for all stock options exchanged under the plan will
remain unchanged, generally over four years.
(b) ADDITIONAL STOCK OPTION GRANTS. Executive will receive an
additional grant of stock options as of December 21, 1999, in the amount of
shares designated in the inSilicon Option Memo issued to Executive, at $7.36
per share. These options will vest ratably over a four-year term and expire
on December 21, 2009. In addition, Executive will be entitled to receive
future annual grants of options during the term of this Agreement at the
discretion of the Compensation Committee of the Board of Directors.
(c) BONUS ELIGIBILITY AND PAYMENT. The target amount of Executive's
fiscal year 2000 bonus will be $ 45,000.00. Actual payments under the bonus
plan will be based on application of the terms of the Executive Bonus Plan in
effect at the time of this Agreement.
4. OTHER BUSINESS AFFILIATIONS. In addition to Executive's obligations
under Section 8, Executive agrees that, without the approval of the Company,
he shall not, while employed by the Company, devote any time to any business
affiliation which would interfere with or derogate from his obligations under
this Agreement with respect of the Company and any of its subsidiaries,
parents or affiliates
5. EXPENSES. The Company shall reimburse Executive for all reasonable
business expenses incurred in the performance of his duties hereunder on
behalf of the Company, upon submission of expense reports to the extent
necessary to substantiate the Company's federal income tax deductions for
such expenses under the Internal Revenue Code (as amended) and the
Regulations there under and according to such expense report regulations as
may be established by the Company.
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6. TERM AND TERMINATION.
(a) TERM OF EMPLOYMENT. Executive's employment with the Company
under this Agreement shall continue from the Effective Date until terminated
by the Board Of Directors in accordance with the terms of this Agreement.
(b) TERMINATION FOR CAUSE. The Board Of Directors may terminate
this Agreement and the employment of Executive hereunder, with immediate
effect, including, without limitation, the termination of all compensation
and benefits (except as may be expressly provided in this Agreement), for
Cause, as defined hereunder. However, the Executive shall remain eligible for
severance and other benefits (if any) as may then be available under the
Company's then existing severance and benefit plans and policies at the time
of Executive's termination.
(c) TERMINATION NOT FOR CAUSE If the Company terminates
Executive's employment for any reason other than Cause, or Executive's
employment is terminated by Constructive Termination as defined in this
Agreement, the Executive shall be entitled to receive the severance benefits
stated in Section 7(a) below unless the termination or Constructive Discharge
is as a result of death or disability, in which event Executive shall be
entitled to receive the benefits set forth in Section 7(b), if any. Both
Company and Executive agree that Executive's employment is "at will" and may
be terminated at any time by either party.
(d) RETURN OF INFORMATION. On termination of employment for any
reason, Executive will return to the Company all originals and copies of all
or any part of: lists and sources of customers and suppliers; lists of
employees; proposals to clients or drafts of proposals; business plans and
projections; reports; job notes; specifications; and drawings pertaining to
the Company or its customers; or any and all other things, equipment and
written materials obtained by Executive during the course of employment from
the Company or from any client of the Company, unless Company provides in
writing its waiver of the forgoing.
7. SEVERANCE BENEFITS.
(a) TERMINATION NOT FOR CAUSE. Except as provided in Section 7(b),
if the Board of Directors terminates Executive's employment for any reason
other than Cause, or Executive's employment is terminated by Constructive
Termination as defined in this Agreement, the Executive shall be entitled to
receive the following severance benefits:
(1) GUARANTEED SEVERANCE PAYMENTS. Subject to Executive
entering into a Release of Claims (in a form substantially similar to the
form of release of claims attached as Exhibit A), Executive shall be
entitled to receive severance payments for twelve (12) months from the
date of termination at Executive's then current base salary, which may be
greater than, but will not be less than the Base Compensation (the
"Guaranteed Severance Payment"). The Guaranteed Severance Payment will
be paid to Executive in accordance with the Company's standard payroll
practices. Upon termination, Executive will also be entitled to receive
a pro-
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rated portion of his then current targeted bonus for the fiscal year
of his termination as described in Section 3(b) based on the date that
Executive's employment is terminated.
(2) MEDICAL BENEFITS. The Company, at the Company's
sole expense, shall provide Executive (and, if applicable, his
eligible dependents) with the same level of health coverage and
benefits as in effect for Executive (and, if applicable, his eligible
dependents) on the day immediately preceding the day of the
Executive's termination of employment (the "Company-Paid Coverage");
provided, however, that: (i) Executive and each eligible dependent
constitutes a qualified beneficiary, as defined in Section 4980B(g)(1)
of the Internal Revenue Code of 1986, as amended (collectively,
"Qualified Beneficiaries"); (ii) each Qualified Beneficiary elects
continuation coverage under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"), within the time
period prescribed pursuant to COBRA; and (iii) if the health coverage
is no longer offered by the Company to its current employees, then the
Company shall be under no obligation to continue the existing coverage
for Executive (and, if applicable, his eligible dependents). Such
Company-Paid Coverage shall continue in effect for each Qualified
Beneficiary until the earlier of (i) the Qualified Beneficiary is no
longer eligible to receive continuation coverage under COBRA, or (ii)
thirty (30) months following termination of employment.
Except for those obligations in subsection (2)(ii) above, the Company's
obligations under paragraphs 1 and 2 of this Section 7(a) shall terminate
upon Executive's breach of his agreements under Section 8 hereof.
(b) DISABILITY; DEATH. If the Company terminates the Executive's
employment as a result of the Executive's Disability or if the Executive's
employment terminates due to the death of the Executive, then the Executive
shall not be entitled to receive severance or other benefits pursuant to this
Agreement, unless the Company has no benefit plan in place to account for
death or disability of employees, in which case Executive will be entitled to
receive the Guaranteed Severance Payment specified in Section 7(a)(1).
Executive shall remain eligible for those severance and other benefits (if
any) as may then be available under the Company's then existing severance and
benefits plans and policies at the time of Executive's termination or death.
(c) STOCK OPTIONS. All of Executive's options not otherwise
forfeited under the terms of this Agreement will continue to vest during the
twelve month Severance Benefits Period. Executive will forfeit options that
have not vested as of the end of the twelve month Severance Benefits Period.
Executive and the Company will negotiate a consulting agreement under which
Executive will provide advisory services to the Company's executive
management or board of directors during the 12 months after his termination.
If there is an inconsistency between this Agreement and the Company's stock
option plans or a stock option agreement, the terms of this Agreement will
prevail.
(d) XXXXXXX XXXXXXX. While Executive receives severance payments,
Executive will no longer be deemed a Section 16(b) officer, but agrees to be
considered an "insider" and comply with the Company's Xxxxxxx Xxxxxxx Policy,
unless otherwise agreed to in writing by the Company for matters related to
reduction of Executive's stock holding.
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8. COVENANTS NOT TO COMPETE AND NOT TO SOLICIT.
(a) While employed by the Company, Executive agrees that he shall
not, directly or indirectly, engage on his own behalf, or as owner, manager,
advisor, principal, agent, partner, employee consultant, director, officer,
stockholder or other proprietor owning more than a five percent (5%)
interest, in any firm, corporation, partnership or other organization which
is in the business of manufacturing, selling or distributing products in
competition with the products of the Company. In case of any such ownership
or participation, Executive shall furnish a detailed statement thereof to the
Board of Directors of the Company, and, as from time to time requested by
said Board, resubmit for approval a detailed statement thereof, which
statement may be approved by said Board as not constituting such a violation
or conflict, and in the event said Board determines that such violation or
conflict exists, Executive shall immediately divest himself of such ownership
or participation (or of representing or promoting others engaged in any such
business). It is intended and agreed that during the term of this Agreement,
Executive will not knowingly perform any act which may confer any competitive
benefit or advantage upon any enterprise competing with the Company or any
successor.
(b) Upon the termination of the Executive 's employment with the
Company within the terms of Section 7(a) and for a period of eighteen (18)
months thereafter, Executive agrees that he shall not, on his own behalf, or
as owner, manager, advisor, principal, agent, partner, employee consultant,
director, officer, stockholder or other proprietor owning more than a five
percent (5%) interest of any business entity, or otherwise, in any territory
in which the Company is actively engaged in business: (i) open or operate any
business which is in competition with any business of the Company, (ii) act
as an employee, agent, advisor or consultant of any competitor of the
Company, (iii) take any action to or do anything reasonably intended to
divert business from the Company or influence or attempt to influence any
existing customers of the Company to cease doing business with the Company or
to alter its business relationship with the Company, or (iv) take any action
or do anything reasonably intended to influence any suppliers of the Company
to cease doing business with the Company or to alter its business
relationship with the Company. Executive further covenants and agrees that
he will not for himself or on behalf of any other person, partnership, firm,
association or corporation in any territory served by the Company, directly
or indirectly solicit or accept business from any of the Company's existing
customers for the purchase or sale of products or services of a like kind to
those sold or provided the Company. The foregoing covenant shall not be
deemed to prohibit Executive from acquiring an investment not more than one
percent (1%) of the capital stock of a competing business, whose stock is
traded on a national securities exchange or through the automated quotation
system of a registered securities association.
(c) While employed by the Company and upon the termination of the
Executive's employment with the Company within the terms of Section 7(a) and
for a period of eighteen (18) months thereafter, Executive agrees that he
shall not either directly solicit, induce, attempt to hire, recruit,
encourage, take away, hire any employee of the Company or cause any employee
of the Company to leave his or her employment either for Executive or for any
other entity or person.
(d) Executive represents that he (i) is familiar with the foregoing
covenants not to compete and not to directly solicit, and (ii) is fully aware
of his obligations hereunder, including, without limitation, the
reasonableness of the length of time, scope and geographic coverage of these
covenants. Executive agrees that the provisions of this Section 8 contain
restrictions that are not greater than necessary to protect the interests of
the Company. In the event of the breach or threatened breach by
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Executive of this Section 8, the Company, in addition to all other remedies
available to it at law or in equity, will be entitled to seek injunctive
relief and/or specific performance to enforce this Section 8.
(e) Company will respond within 14 days to any written request by
Executive to exclude a particular company or business entity from the scope
of this Section 8. Company will not unreasonably deny such a request. The
parties agree that a passive financial investment by Executive in a third
party will not constitute competition within the scope of this Section 8.
9. DEFINITION OF CERTAIN TERMS. The following terms referred to in this
Agreement shall have the following meanings for the purposes of this
Agreement only:
(a) CAUSE. "Cause" shall mean (i) any act of personal dishonesty
taken by the Executive in connection with his responsibilities as Executive
Vice President and Chief Technical Officer and intended to result in
substantial personal enrichment of the Executive, (ii) conviction of a felony
resulting from any action or failure to act by the Executive in the
performance of Executive's duties, that is injurious to the Company, (iii) a
willful act by the Executive which constitutes gross misconduct and which
results in material injury to the Company, (iv) continued violations by the
Executive of the his material obligations under this Agreement that are
demonstrably willful and deliberate on the Executive's part after there has
been delivered to the Executive a written demand for performance from the
Company which describes the basis for the Company's belief that the Executive
has not substantially performed his duties; and (v) the breach by Executive
of the non-competition provisions of this Agreement, or of the Company's
standard form of confidentiality and proprietary inventions agreement, which
shall be supplemental hereto and incorporated by reference herein.
(b) CONSTRUCTIVE TERMINATION. "Constructive Termination" shall
mean any of the following: (1) any material reduction in compensation,
including bonus, unless such a reduction is applied, by resolution of the
Board of Directors, to all of the Company's officers; (2) reduction of
Executive's title; (3) material reduction in Executive's responsibilities;
(4) a relocation that is more than 75 miles from San Jose, California; and
(5) material reduction in the number of Company employees in the organization
for which Executive is responsible (said reduction not being based on
voluntary resignation of Company employees, but through an internal
reorganization, or other shifting of personnel that is not under the control
of Executive).
(c) DISABILITY. "Disability" shall mean that Executive has been
unable to perform his duties under this Agreement as the result of his
incapacity due to physical or mental illness, and such inability, at least
ninety (90) days after its commencement, is determined to be total and
permanent by a physician selected by the Company or its insurers and
acceptable to the Executive or the Executive's legal representative (such
Agreement as to acceptability not to be unreasonably withheld). Termination
resulting from Disability may only be effected after at least 30 days'
written notice by the Company of its intention to terminate the Executive 's
employment. In the event that the Executive resumes the performance of
substantially all of his duties hereunder before the termination of his
employment becomes effective, the notice of intent to terminate shall
automatically be deemed to have been revoked.
10. NO BREACH OF DUTY. Executive represents that Executive's performance
of this Agreement and as an employee of the Company does not and will not
breach any agreement or duty to keep in confidence proprietary information
acquired by Executive in confidence or in trust prior to
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employment with the Company. Executive has not and will not enter into any
agreement either written or oral in conflict with this Agreement. Executive
is not presently restricted from being employed by the Company or entering
into this Agreement.
11. 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 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. For all purposes under this
Agreement, the term "Company" shall include any successor to the Company's
business and assets which executes and delivers the assumption agreement
described in this Section or which becomes bound by the terms of this
Agreement by operation of law.
(b) EXECUTIVE'S SUCCESSORS. The terms of this Agreement, and all
rights of the Executive hereunder, shall inure to the benefit of, and be
enforceable by, the Executive's personal or legal representatives, executors,
administrators, successors, heirs, devisees and legatees.
12. NOTICE.
(a) GENERAL. 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 him at the home address
that he 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 Vice President and
General Counsel.
(b) NOTICE OF TERMINATION. Any termination by the Company for
Cause pursuant to Section 6(b) hereof shall be communicated by a notice of
termination to the Executive given in accordance with Section 12(a) of this
Agreement. Such notice shall indicate the specific termination provision in
this Agreement relied upon, shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination under the
provision so indicated, and shall specify the termination date (which shall
be not more than 15 days after the giving of such notice).
13. ARBITRATION.
(a) The Company and Executive agree that any dispute or controversy
arising out of, relating to, or in connection with this Agreement, the
interpretation, validity, construction, performance, breach, or termination
hereof, or any of the matters herein released, excepting claims under
applicable workers' compensation law and unemployment insurance claims, shall
be settled exclusively by binding arbitration to be held in Santa Xxxxx
County, 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.
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Judgment may be entered on the arbitrator's decision in any court having
jurisdiction. This provision confers complete and total jurisdiction for
final, binding arbitration with full and complete relief for any and all
covered disputes, including all contract, tort, and statutory claims, and any
other causes of action unless otherwise prohibited by law. This arbitration
provision will survive after the termination of this Agreement.
(b) The arbitrator(s) shall apply California law to the merits of
any dispute or claim, without reference to conflicts of law rules. 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, and hereby waives any rights he may have to a jury trial with
respect thereto.
(c) EXECUTIVE HAS READ AND UNDERSTANDS THIS SECTION, WHICH
DISCUSSES ARBITRATION. EXECUTIVE UNDERSTANDS THAT BY SIGNING THIS AGREEMENT,
EXECUTIVE AGREES TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN
CONNECTION WITH THIS AGREEMENT, THE INTERPRETATION, VALIDITY, CONSTRUCTION,
PERFORMANCE, BREACH OR TERMINATION THEREOF, OR ANY OF THE MATTERS HEREIN TO
BINDING ARBITRATION, AND THAT THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF
EXECUTIVE'S RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL
DISPUTES RELATING TO ALL ASPECTS OF THIS SEVERANCE AGREEMENT AND RELEASE OF
ALL CLAIMS.
14. MISCELLANEOUS PROVISIONS.
(a) 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 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.
(b) WHOLE AGREEMENT. This Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof and
supersedes in its entirety any and all prior undertakings and agreements of
the Company and Executive with respect to the subject matter hereof.
(c) CHOICE OF LAW. The validity, interpretation,
construction and performance of this Agreement shall be governed by the
internal substantive laws but not the choice of law rules of the State of
California.
(d) 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.
(e) 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
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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 14(e) shall be void.
(f) EMPLOYMENT TAXES. All payments made pursuant to this
Agreement will be subject to withholding of applicable income and employment
taxes.
(g) 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.
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.
INSILICON CORPORATION Executive: XXXXX XXXXXXXX
/s/ Xxxxx Xxxxxxxx /s/ Xxxxx Xxxxxxxx
------------------------------------ -------------------------------------
By: Xxxxx Xxxxxxxx By:
President and Chief Executive Officer Febr. 3, 2000
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EXHIBIT A
In consideration for Executive accepting the benefits under his
Executive Officer Severance Agreement dated November 30, 1999, Executive
agrees to release Company of all claims arising from or relating to his
employment as set forth below.
Executive hereby forever waives for himself, his attorneys, heirs,
executors, administrators, successors and assigns any claim against Company,
including its subsidiaries, affiliates, insurers, shareholders, officers,
directors and employees (the "Parties Released"), for any action, loss,
expense or any damages arising from any occurrence from the beginning of time
until the date of the signing of this Agreement and arising or in any way
resulting from Executive's employment with Company or the termination
thereof. The only exceptions to the above waiver are claims by Employee
under any worker's compensation or unemployment statutes and any right
arising under this Agreement. Employee represents that he has no current
intention to assert any claim on any basis against the Parties Released.
Company releases its claims on intellectual property created by Employee
after the date of execution of this Agreement.
EXECUTIVE ACKNOWLEDGES THAT HE HAS BEEN GIVEN AT LEAST TWENTY-ONE (21)
DAYS WITHIN WHICH TO CONSIDER SIGNING THIS RELEASE. EXECUTIVE MAY REVOKE THIS
AGREEMENT BY WRITTEN NOTICE TO COMPANY WITHIN SEVEN DAYS FOLLOWING ITS
EXECUTION. THIS RELEASE SHALL NOT BECOME EFFECTIVE AND BINDING UNTIL SUCH
PERIOD HAS EXPIRED. EXECUTIVE WILL RETURN ALL CONSIDERATION AND BENEFITS
PROVIDED IN CONNECTION WITH THE GRANTING OF THIS RELEASE IF HE REVOKES THE
RELEASE.
In the event of breach of this Agreement by Company, Executive's
exclusive remedy for such breach shall be limited to the enforcement of the
terms of this Agreement.
COMPANY: EXECUTIVE: XXXXX XXXXXXXX
INSILICON CORPORATION
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By: By:
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Title:
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