EXHIBIT 10.59
This offer given to Executive on August 29, 2001
This offer is valid until September 19, 2001
EXECUTIVE SEPARATION, RELEASE AND CONSULTING AGREEMENT
This Executive Separation, Release and Consulting Agreement (the
"Agreement") is entered into between Xxxxxx X. Xxxxxxxxxx (the "Executive"), on
the one hand, and Cadence Design Systems, Inc., a Delaware corporation
("Cadence") and Tality Corporation, a Delaware corporation ("Tality"), on the
other hand, (collectively, the "Company"), as of this ___ day of _________,
2001.
WHEREAS, the Executive desires to resign his employment as President
and Chief Executive Officer of Tality; and
WHEREAS, Cadence and Executive entered into that certain Tality
Corporation 2000 Equity Incentive Plan Stock Option Agreement with Consent dated
as of July 13, 2000 (the "Tality Option Agreement"); and
WHEREAS, Cadence and Executive desire to amend the Tality Option
Agreement as more particularly set forth herein; and
WHEREAS, the Executive and the Company desire to reach an agreement
concerning the circumstances under which the Executive's full-time employment
relationship with the Company will terminate; and
WHEREAS, the Company desires to be relieved of any and all duties,
obligations, and/or liabilities, if any exist, with respect to Executive, other
than those obligations and duties which are expressly stated in herein;
NOW THEREFORE, in consideration of the foregoing recitals, the mutual
promises contained herein, and for other good and valuable consideration, the
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receipt and adequacy of which are hereby acknowledged, the Executive and the
Company agree as follows:
1. Full-Time Employment.
Executive will cease his full-time employment as President and Chief
Executive Officer of Tality on August 31, 2001, at the close of
business.
2. Part-Time Employment Period.
a. From September 1, 2001 through September 1, 2002, Executive shall
continue as a part-time employee of the Company for a one-year term
(the "Part-Time Employment Period"). Employee's employment with the
Company shall terminate at the end of the Part-Time Employment Period.
Executive recognizes that he is committing to remain as a part-time
employee with the Company through the end of the Part-Time Employment
Period and he agrees not to voluntarily terminate his employment with
the Company during the Part-Time Employment Period. Likewise, the
Company may not terminate Executive's employment during such period
except for cause. Cause shall exist if the Executive: (1) materially
breaches this Agreement or the Employee Proprietary Information and
Inventions Agreement, which is referenced in Section 11 hereof; (2)
fails to perform his duties after receipt of written notice of such
failure and a reasonable opportunity to cure; (3) commits any breach of
fiduciary duty or act of theft, misappropriation, embezzlement,
intentional fraud or other violation of the law or similar conduct
involving the Company or any affiliate; (4) receives a conviction or
enters a plea of Nolo Contendere or the equivalent in respect of a
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felony involving an act of dishonesty, moral turpitude, deceit or
fraud; or (5) willfully or negligently causes any damage of a material
nature to the business or property of the Company or any affiliate. If
the Company terminates Executive without cause during the Part-Time
Employment Period, or his employment terminates as a result of
Executive's death or permanent disability, he (or his estate) shall
continue to receive the same pay and benefits as if though his
employment had continued through the end of the Part-Time Employment
Period.
b. During the Part-Time Employment Period, Executive shall be available
to consult to the Company, and/or the Board of Directors of Tality or
Cadence as necessary. During the Part-Time Employment Period, Executive
shall report to Xxx Xxxxxxx (or his successor(s)) and shall, in
addition to providing general advice and consultation to the Company
and its Board(s), perform other duties, including but not limited to,
facilitating the transfer of customer relationships to members of the
management team, participating in creating strategic direction for
Tality, assist with litigation, claims, customer and/or supplier issues
when requested by the Board or management of the Company to do so, and
participate as a member of the Tality Board. Executive's performance of
his duties during this period shall not require him to work more than a
maximum of twenty (20) hours per week.
c. In consideration for such employment, Executive shall be paid a
monthly salary of $29,166.66, less taxes and standard withholdings
required by law to be withheld, and deductions requested by Executive.
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Such compensation will be paid in accordance with the Company's normal
payroll schedule.
d. So long as Executive remains a part-time employee of the Company
through September 1, 2002 and does not in any way breach this
Agreement, Executive shall receive a bonus in the amount of $167,000,
less taxes and withholdings required by law to be withheld, and
deductions requested by Executive, on or about September 1, 2002.
e. Executive shall continue to receive medical, dental and/or vision
insurance coverage which the Executive elected and which the Executive
continues to pay for under the Cadence Composition plan through the end
of the Part-Time Employment Period, or until he secures such benefits
through other means, after which time the Executive will become
eligible to continue such coverage pursuant to the terms of COBRA at
prevailing rates. All other employee benefits, including but not
limited to the Employee Stock Purchase Plan, 401(k) contribution, life,
dependent life and disability insurance and Midwest Legal Services
likewise will terminate at the end of the Part-Time Employment Period.
Executive's funds invested in the Company's Non Qualified Deferred
Compensation Plan (the "Plan"), if any shall be treated in accordance
with the terms of the Plan.
f. Executive's Company stock options that were previously granted to
Executive shall continue to vest during the Part-Time Employment Period
in accordance with the Stock Option Plan(s) and Stock Option
Agreement(s) under which the options were granted, so long as Executive
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has executed all necessary stock option agreements on or before August
31, 2001. Those options will cease vesting at the end of the Part-Time
Employment Period, and Executive will have the period of time following
his Termination Date that is provided in the applicable stock option
agreement(s) to exercise the vested portions, if any.
g. No Acceleration of Tality Options on Change in Control. Executive
hereby acknowledges and agrees that Section 11 (b) of the "Plan" (as
that term is defined in the Tality Option Agreement) shall not apply to
the options granted to Executive under the Tality Option Agreement (the
"Tality Options"). For the avoidance of doubt, but without limiting the
generality of the foregoing, Executive hereby acknowledges and agrees
that the Tality Options shall not vest or accelerate upon a "Change in
Control" (as that term is defined in the Plan).
h. Executive will be free to accept other employment or consulting
engagements during the Part-Time Employment Period, so long as such
other employment or consulting engagement does not violate paragraph 12
herein.
3. 2001 Bonus
Executive shall receive a bonus in the amount of $250,000, less taxes
and withholdings required by law to be withheld, and amounts requested
by him to be deducted, on or about February 15, 2002, so long as
Executive continues in his part-time employment capacity with the
Company through that date and has not in any way breached this
Agreement.
4. Computer
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Executive shall be given all right, title and interest in the IBM
Thinkpad, monitor, docking station, keyboard and mouse which was
provided to him for business use by the Company during the year
2000.Executive agrees, however, to delete all proprietary and
confidential information belonging to the Company from the computer
when requested to do so, and agrees to allow a representative of the
Company to review the files on the computer upon request to ensure that
all such information has been deleted.
5. Business Expense
Executive shall be reimbursed for all reasonable and necessary business
expenses incurred during his full and part-time employment with the
Company. Such expenses must be approved by Xxx Xxxxxxx, or an
individual designated by Xx. Xxxxxxx to approve such expenses, and must
be submitted for reimbursement with appropriate documentation not more
than ninety (90) days following the date on which the expense was
incurred, and prior to the termination of his employment with the
Company.
6. DSL
The Company will continue to pay for the Executive's DSL line at his
residence through the end of the Part-Time Employment Period, at which
time such payments on behalf of Executive shall cease.
7. Executive acknowledges and agrees that he is not entitled to any of the
benefits provided in that Tality Corporation Employment Agreement
between he and Tality that was entered into on July 14, 2000, and that
this Agreement supercedes the Tality Corporation Employment Agreement.
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8. During the Part-Time Employment Period, and following his termination
of employment, Executive shall fully cooperate with the Company in all
matters relating to his employment, the winding up of his pending work
on behalf of the Company and the orderly transfer of any such pending
work to other employees of the Company as may be designated by the
Company.
9. The Executive agrees not to make any statement, written or oral, or
otherwise engage in any communication which disparages the Company or
any of the Company's employees, directors, or representatives,
products, or business practices.
10. General Release by Executive
(a) The Executive agrees that the payments and benefits
provided herein are in full satisfaction of all obligations of the
Company to the Executive arising out of or in connection with the
Executive's employment including, without limitation, all salary,
bonuses, accrued vacation, sick pay, and two weeks salary as standard
termination notice period, and that the benefit of continued stock
vesting constitutes consideration for the covenants and releases of the
Executive as set forth herein. The Executive acknowledges that the
Executive has no claims against the Company based on the Executive's
employment by the Company or the Executive's separation therefrom and
irrevocably, fully and finally releases the Company, its parent,
subsidiaries and affiliates, and its current and former directors,
officers, agents, attorneys, and employees ("Releasees") from all
causes of action, claims, suits, demands or other obligations or
liabilities, whether known or unknown, that Executive ever
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had, or now has, including but not limited to, any claims that may be
alleged to arise out of or in connection with the Executive's
employment with the Company, or separation therefrom, including, not by
way of limitation, any claims for wages, bonuses, and any claims that
any terms of the Executive's employment with the Company or any
circumstances of the Executive's separation were wrongful, in breach of
any obligation of the Company or in violation of any rights,
contractual, statutory or otherwise, of the Executive, including but
not limited to rights arising under Title VII of the Civil Rights Act
of 1964, as amended, the California Fair Employment and Housing Act, as
amended, the California Labor Code, the Age Discrimination in
Employment Act of 1967, as amended, the Americans with Disabilities
Act, the Equal Pay Act, the Fair Labor Standards Act, as amended, the
Executive Retirement Income and Security Act of 1974, as amended,
(except for Executive's rights under COBRA and Executive's rights to
the money in Executive's 401(k) plan account and deferred compensation
plan account(s)), and any other local, state, or federal law, or law of
any country, governing discrimination in employment, the payment of
wages or benefits, or any other aspect of employment (collectively,
"Claims").
IN THIS REGARD THE EXECUTIVE WAIVES ANY RIGHTS CONFERRED BY CALIFORNIA
CIVIL CODE SECTION 1542 WHICH PROVIDES AS FOLLOWS:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR WHICH IF KNOWN BY HIM MUST
HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."
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(b) The release set forth in section (a) above does not and
shall not extend to any obligations of the Company incurred under this
Agreement or under the Indemnification Agreement which was signed by
Executive on or about July 14, 2001 and is attached hereto as Exhibit
A.
(c) The Executive acknowledges that he understands that he may
take twenty-one (21) days to consider this Agreement and that he has
been advised that he should consult with an attorney, if he desires to
do so, prior to executing this Agreement. The Executive further
acknowledges that he understands that he may revoke this Agreement
within seven (7) days of his execution of this document and that the
consideration to be paid to the Executive pursuant to this Agreement
will be paid only after that seven (7) day revocation period.
11. Executive acknowledges and incorporates herein by reference his
continuing obligations under the Employee Proprietary Information and
Inventions Agreement executed by Executive on July 14, 2000, a copy of
which is attached hereto as Exhibit B.
12. As President and CEO of Tality and as a Senior Executive and Officer of
Cadence, Executive has obtained extensive and valuable knowledge and
information concerning the business of the Company (including
confidential information relating to the Company and its operations,
assets, contracts, customers, personnel, plans, marketing plans,
research and development plans and prospects). The Executive and the
Company agree that it would be virtually impossible for Executive to
work as an employee, consultant or advisor to a company in the
electronic design automation
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industry without inevitably disclosing confidential and proprietary
information belonging to the Company. Accordingly, the Executive agrees
that, during the Part-Time Employment Period he will not, directly or
indirectly, provide services on behalf of any competing corporation,
limited liability company, partnership, or other competing entity or
person, specifically including but not limited to Avant! Corporation,
Synopsys Inc., Mentor Graphics Corporation, Simplex Solutions, Inc.,
Magma Design Automation, Inc., or any subsidiary, affiliate, division,
distributor or partial or complete successor thereof, whether as an
employee, consultant, independent contractor, agent, sole proprietor,
partner, joint venture, corporate officer or director; nor shall
Executive acquire by reason of purchase during the term of his
employment with the Company the ownership of more than one percent (1%)
of the outstanding equity interest in any such competing entity. For
purposes of this Section 12, a "competing" entity is one that is
engaged in the research, design, development, marketing and/or sale of
electronic design automation software and related products, including
products containing hardware, software and both hardware and/or
software. For purposes of this Section 12 a "competing" entity is also
one that derives a substantial portion of its business from design
services and/or intellectual property sales and/or licensing relating
to semiconductors, systems and/or design methodologies.
13. During the Term of Executive's employment with the Company, Executive
agrees that he will not, except with the written advance approval of
Xxx Xxxxxxx (or his successor(s)), voluntarily or
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involuntarily, for any reason whatsoever, directly or indirectly,
individually or on behalf of persons not now parties to this Agreement,
or as a partner, stockholder, director, officer, principal, agent,
employee or in any other capacity or relationship, for his own account
or for the benefit of any other person or entity: (a) encourage,
induce, attempt to induce, solicit or attempt to solicit anyone who is
employed at that time, or was employed during the previous one (1)
year, by the Company or any affiliate to leave his or her employment
with the Company or any affiliate; or (b) interfere or attempt to
interfere with the relationship or prospective relationship of the
Company or any affiliate with any former, present or future client,
customer, joint venture partner, or financial backer of the Company or
any affiliate; or (c) solicit, divert or accept business, in any line
or area of business engaged in by the Company or any affiliate, from
any former, present or future client, customer or joint venture partner
of the Company or any affiliate (other than on behalf of the Company).
This paragraph shall supercede paragraph five (5) of the Employee
Proprietary Information and Inventions Agreement executed by Executive
on July 14, 2000, a copy of which is attached hereto as Exhibit B.
14. During the six (6) months following Executive's employment with the
Company, Executive agrees that he will not, except with the advance
written approval of the the Chairman of the Board of Tality,
voluntarily or involuntarily, for any reason whatsoever,
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directly or indirectly, individually or on behalf of persons not now
parties to this Agreement, or as a partner, stockholder, director,
officer, principal, agent, employee or in any other capacity or
relationship, for his own account or for the benefit of any other
person or entity: (a) encourage, induce, attempt to induce, solicit or
attempt to solicit anyone who is employed at that time, or was employed
during the previous one (1) year, by Tality or any affiliate to leave
his or her employment with Tality or any affiliate; or (b) interfere or
attempt to interfere with the relationship or prospective relationship
of Tality or any affiliate with any former, present or future client,
customer, joint venture partner, or financial backer of Tality or any
affiliate; or (c) solicit, divert or accept business, in any line or
area of business engaged in by Tality or any affiliate, from any
former, present or future client, customer or joint venture partner of
Tality or any affiliate. This paragraph shall supercede paragraph five
(5) of the Employee Proprietary Information and Inventions Agreement
executed by Executive on July 14, 2000, a copy of which is attached
hereto as Exhibit B.
15. Notwithstanding the language in paragraph 24 herein, the parties hereto
agree that damages would be an inadequate remedy for the Company in the
event of a breach or threatened breach of Section 8, 11, 12, 13, 14 or
19 of this Agreement by Executive, and in the event of any such breach
or threatened breach, the Company may, either with or without pursuing
any potential damage remedies, obtain and enforce an injunction
prohibiting Executive from violating this
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Agreement and requiring Executive to comply with the terms of this
Agreement.16.Executive represents and acknowledges that the Executive's
decision to enter into this Agreement has been made voluntarily,
knowingly, and without coercion of any kind.
17. Executive represents and warrants that there has been no assignment or
other transfer of any interest in any Claim, which Executive may have
against the Releasees.
18. Executive agrees that if the Executive hereafter commences, joins in,
or in any manner seeks relief through any suit, claim, demand, charge,
complaint or otherwise, arising out of, based upon, or relating to any
of the Claims released hereunder or in any manner asserts against the
Releasees any of the Claims released hereunder, then the Executive will
pay to the Releasees, in addition to any other damages caused thereby,
all reasonable attorneys' fees incurred by the Releasees in defending
or otherwise responding to said suit or Claim.
19. Executive acknowledges that during his employment he has had access to
confidential and/or proprietary information of the Company and of third
parties and acknowledges the Executive's obligation by agreement and/or
at common law to continue to hold such information in confidence and
neither disclose and/or use such information, notwithstanding the
termination of his employment, and that he has returned to the Company
all copies and records in any form of such information to Xxx
Xxxxxxxxxxxx, or will do so prior to his termination date. Executive
further agrees to return all other property (including but not limited
to computers, phones,
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fax machines, and printers) to Xxx Xxxxxxxxxxxx by September 1, 2001,
except for as provided for in paragraph 4.
20. This Agreement shall be governed and enforced in accordance with the
laws of the State of California, excluding its conflict of laws rules.
21. In the event that any part of this Agreement is found to be void or
unenforceable then (a) such provision or part thereof shall, with
respect to such circumstances and in such jurisdiction, be deemed
amended to conform to applicable laws so as to be valid and enforceable
to the fullest possible extent, (b) the invalidity or unenforceability
of such provision or part thereof under such circumstances and in such
jurisdiction shall not affect the validity or enforceability of such
provision or part thereof under any other circumstances or in any other
jurisdiction, and (c) such invalidity or enforceability of such
provision or part thereof shall not affect the validity or
enforceability of the remainder of such provision or the validity or
enforceability of any other provision of this Agreement as each
provision is separable from every other provision. If for any reason a
court of competent jurisdiction or arbitrator finds any provision of
this Agreement to be unenforceable, the provision shall be deemed
amended as necessary to conform to applicable laws or regulations, or
if it cannot be so amended without materially altering the intention of
the parties, the remainder of the Agreement shall continue in full
force and effect as if the offending provision were not contained
herein.
22. Neither party shall, by mere lapse of time, without giving notice or
taking other action hereunder be deemed to have waived any breach by
the other
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party of any of the provisions of this Agreement. Further, the waiver
by either party of a particular breach of this Agreement by the other
shall neither be construed as, nor constitute, a continuing waiver of
such breach or of other breaches by the same or any other provision of
this Agreement.
23. The Company shall have the right to assign its rights and obligations
under this Agreement to an entity that acquires substantially all of
the assets of the Company. The rights and obligations of the Company
under this Agreement shall inure to the benefit and shall be binding
upon the successors and assigns of the Company. Executive shall not
have any right to assign his obligations under this Agreement and shall
only be entitled to assign his rights under this Agreement by will or
the laws of descent and distribution.
24. The Company and Executive agree that any dispute regarding the
interpretation or enforcement of this Agreement or any dispute arising
out of Executive's employment or the termination of that employment
with the Company, except for disputes regarding the interpretation of
those sections referred to in Paragraph 14 and disputes involving the
protection of the Company's intellectual property, shall be decided by
confidential, final and binding arbitration conducted by Judicial
Arbitration and Mediation Services ("JAMS") under the then-existing
JAMS rules, rather than by litigation in court, trial by jury,
administrative proceeding, or in any other forum.
25. The parties hereto acknowledge that each has read this Agreement,
understands it, and agrees to be bound by its terms. The parties
further agree that this Agreement, including the agreements referenced
herein and attached as Exhibits hereto, constitute the complete and
exclusive statement
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of the agreement between the parties and supersede any and all prior or
contemporaneous understandings, agreements, representations,
conditions, covenants, proposals, and all other communications between
the parties, whether written or oral, relating to the subject matter
hereof.
26. This Agreement and the terms and conditions of the matters addressed in
this Agreement may only be amended in writing executed both by the
Executive and a duly authorized representative of the Company.
In witness whereof, the parties hereto have executed this Executive Termination
and Release Agreement, effective eight (8) days after the date it is signed by
both parties below (the "Effective Date").
XXXXXX X. XXXXXXXXXX CADENCE DESIGN SYSTEMS, INC.
By: By:
--------------------------- ------------------------------------
H. Xxxxxxx Xxxxxxx
Date: President & Chief Executive
------------------------- Officer
Date:
---------------------------------
TALITY CORPORATION
Date:
---------------------------------
H. Xxxxxxx Xxxxxxx
Chairman of the Board
Date:
---------------------------------
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