EMPLOYMENT AGREEMENT Exhibit 10.16
This EMPLOYMENT AGREEMENT is made as of the 1st day of October,
2000 by and between and Xxxx Xxxxxx Xxx(the "Employee") and Avant! Company, a
Delaware corporation (the "Company"). This Agreement restates and supersedes all
previous Employment Agreements or Severance Agreements between the Employee and
the Company.
WITNESSETH:
WHEREAS, the Employee has been and is now in the employment of the
Company; and
WHEREAS, the Company has concluded that securing the service of the
Employee will benefit it.
NOW, THEREFORE, in consideration of the premises and the mutual
promises and agreements hereinafter set forth, the parties therefore agree as
follows:
1. TERM OF EMPLOYMENT
(A) Basic Rules. The Company hereby employs the Employee, and the Employee
hereby accepts such employment with the Company from the date of this Agreement
until the date when the Employee's employment terminates pursuant to subsection
(b) below. The Employee shall subject to his appointment as such from time to
time (the "Term") serve during the Term in the Company and its subsidiaries or
affiliates. During the Term, the Employee will devote his best efforts to such
employment and all of his business time and attention to the performance of his
duties hereunder; provided, however, that the Employee may devote reasonable
periods required for serving as a director or member of any Company,
partnership, trust or other entity ("Entity") organization involving no conflict
of interest with the interests of the Company or his personal affairs so long as
the same does not interfere with the performance of his duties hereunder.
(B) Termination of Employment. The Company may terminate the Employee's
employment at any time and for any reason by giving the Employee 30 days'
advance notice in writing. The Employee may resign his employment by giving the
Company 30 days' advance notice in writing. The Employee's employment shall be
terminated automatically in the event of his death.
(C) Termination of Agreement. This Agreement shall be renewed automatically for
successive periods of three (3) years unless the Company notifies the Employees)
of its intention not to renew at least 1 month prior to the expiration of this
agreement. This Agreement shall also be terminated when all obligations of the
parties hereunder have been satisfied.
(D) Compensation (Salary and Cash Bonus). The Company shall pay to the Employee,
not less frequently than monthly; an annual base salary (the "Minimum Salary")
as fixed from time to time by the Company during the Term of his employment
hereunder. The Minimum Salary is USD $300,000 as of October 1, 2000 The Company
may increase the Minimum Salary from time to time and upon each such increase
the term "Minimum Salary" shall mean such increased total amount. References to
the Minimum Salary in this Agreement are to the Minimum Salary, as adjusted, in
the year in which the event requiring such reference occurs. In addition to the
Minimum Salary, the Employee shall be entitled to receive during the Term an
annual cash bonus based on the performance of the Company and the Employee. The
actual amount of any such annual cash bonus to be paid to the Employee will be
determined by the Company. Payment of any bonus compensation in this Section
shall be made within 60 days after such determination.
(E) Expenses, Benefit Plans, and Pay-time-off. The Company will reimburse the
Employee for all reasonable and necessary business and entertainment expenses
incurred by him in connection with the performance of his duties hereunder. The
Employee shall be eligible to participate in any employee benefit programs,
pension, profit sharing, stock option or similar plan or program and in any
group life insurance, hospitalization, mental, dental, accident, disability or
similar plan or program of the Company non-existing or establishes hereafter. In
addition, so long as the Company employs the Employee, the Employee shall be
entitled to receive other benefits - generally available to all employees and
any other, which are now or may hereafter be placed in effect.
The Employee shall be entitled to pay-time-off (the "PTO"), at such times and
for such periods, as are in accordance with the policies of the Company then in
effect for all employees employed by the Company, but in no event shall the
Employee be entitled to fewer than 80 hours of PTO per year. The Employee shall
not be required to take any PTO to which he is entitled in a given year. In the
event the Employee does not take all of the PTO to which he is entitled in a
given year, such PTO will be deferred and accumulated for use by the Employee in
a subsequent year up to a maximum of 240 hours.
2. RIGHTS UPON CERTAIN TERMINATIONS
(A) Employee's Rights. Unless otherwise defined in this section, each
capitalized tern used in this Agreement shall have the meaning assigned to it in
the Company's 1995 & 2000 Stock Option/Stock Issuance Plan in effect on the date
of this Agreement (the "Plan"). Without limiting any other rights which the
Employee or the Company may have in such event, upon any voluntary resignation
or involuntary termination of the Employee's employment without Employee's
written consent (including but not limited to a Constructive Termination as
defined below) that occurs within six months after a Change in Control (as
defined below), and subject to Section 7 below, the Company shall:
(a) pay to the Employee cash termination payment equal to three
(3) years (the "Termination Payment Period") of the Employee's Minimum
Salary in effect on the date of termination, in addition to any other
payments, benefits, or other rights to which the Employee may then be
entitled. The Company shall pay the above-mentioned payment amount in
this Section 2.A.a to the Employee in full on the Termination Date;
(b) allow the Employee to automatically vest in full of the
shares of Common Stock then subject to any option granted by the Company
to the Employee and then outstanding (including but not limited to any
such option drat may hereafter be granted to Employee, under the Plan or
otherwise) but not otherwise vested; and all outstanding repurchase
rights applicable to any Common Stock previously issued to the Employee
by the Company (including any Common Stock hereafter issued which is
then held by Employee) shall also terminate automatically. If any
provisions of the preceding sentence regarding acceleration of options
or early termination of repurchase rights shall conflict with any
provision of any existing or future option agreement, stock purchase
agreement or other agreement between the Employee and the Company, the
provisions of the preceding sentence in this Agreement shall govern if
they are more favorable to the Employee under the circumstances than the
conflicting provisions in such other agreements, unless such other
agreements expressly refers to the preceding sentence and states that it
is intended to govern in the event of such a conflict with such
sentence.
(B) Change in Control. For all purposes under this Agreement, "Change in
Control" shall mean the occurrence of any of the following events after the date
of this Agreement:
(a) The consummation of a merger or consolidation of the Company
with or
into another entity or any other corporate reorganization, if more than
50% of the combined voting power of the continuing or surviving entity's
securities outstanding immediately after such merger, consolidation or
other reorganization is owned by persons who were not stockholders of
the Company immediately prior to such merger, consolidation or other
reorganization;
(b) The sale, transfer, exchange or other disposition of all or
substantially all of the Company's assets;
(c) A change in the composition of the Company's Board of
Directors (the "Board") as a result of which fewer than a majority of
the directors are directors who either (A) had been directors of the
Company of the date 12 months prior to the date of the event that may
constitute a Change in Control (the "original directors") or (B) were
elected, or nominated for election, to the Board with the affirmative
votes of at least a majority of the aggregate of the original directors
who were still in office at the time of the election or nomination and
the directors whose election or nomination was previously so approved;
(d) Any transaction as a result of which any person is the
"beneficial owner" (as defined in rule 13(d)-3 under the Securities
Exchange Act of 1934, as amended - the "Exchange Act"), directly or
indirectly, of securities of the Company representing at least 50% of
the total voting power represented by the Company's then outstanding
voting securities. For purpose of this subsection (d), the terse
"person" shall have the same meaning as when used in sections 13(d) and
14(d) of the Exchange Act but shall exclude (A) a trustee or other
fiduciary holding securities under an employee benefit plan of the
Company or of a parent or subsidiary of the Company and (B) a
corporation owned directly or indirectly by the stockholders of the
Company in substantially the same proportions as their ownership of the
common stock of the Company; or
(e) In the event of Xxxxxx X. Xxx ceases to be the Chairman and
CEO of the Company.
A transaction shall in no event constitute a Change in Control if its sole
purpose is to change the state of the Company's incorporation or to create a
holding company that will be owned in substantially the same proportions by the
persons who held the Company's securities immediately before such transaction.
(C) Constructive Termination. For all purposes under this Agreement,
"Constructive Termination" shall be deemed to have occurred, within six months
after a Change in Control, that on written notice by the Employee to the
Company, upon:
(a) the Employee's voluntary resignation within six (6) months
after a Change in Control;
(b) any refusal by the Employee to relocate the Employee's
principal place of employment to a location requested by the Company
that is more than fifty (50) miles from the Employee's current principal
place of employment;
(c) a reduction by more than fifteen percent (15%) in the
Employee's level of compensation including his Minimum Salary,
non-stock-related fringe benefits, and cash bonus (to the extent that
any reduction in bonus is disproportionate to a reduction in the
Company's earnings per share between (i) the period for which the
reduced bonus is paid, and (ii) the period for which the Employee's most
recent prior bonus was paid);
(d) any material adverse change in the Employee's position,
title, job responsibilities, or reporting lines; or any activity by the
Company that constitutes constructive termination of employment under
applicable law. Without limiting the events which may constitute a
material adverse change in the Employee's position, title, job
responsibilities, or reporting lines under this definition, such a
material adverse change shall conclusively be deemed to have occurred
upon any material diminution or other material adverse of Company
employees reporting to the Employee at the time of a Change in Control,
or in the extent or nature of the Employee's authority with respect to
such function or responsibilities or the employees who perform them.
For all purposes under this Agreement, all of the compensation, cash bonus and
other relevant benefits provided on this Agreement shall be in no event applied
to the Employee(s) who maliciously takes advantage of the bona fide goodwill of
the Company - not only acquire(s) the above-mentioned compensation, bonus, and
benefits but also return(s) to work for Avant! after the Change in Control with
or without any cause.
3. COVENANT NOT TO COMPETE
(A) Non-Competition. For the purpose of this Section 3, a company, entity, or
person shall be deemed in competition with the Company, if any company, entity,
or person engages in the electronic design automation (the "EDA") industry or,
to the knowledge of the Employee, has definitive plans to engage in the EDA
industry. The parties confirm that it is reasonably necessary for the protection
of the Company that the Employee agree, and accordingly, the Employee does
hereby agree that he will not, directly or indirectly, except for the benefit of
the Company, at any time during his employment hereunder and thereafter during
the Restricted Period, as hereinafter defined, from the date of termination of
this Agreement provided the Company shall duly perform its obligations to the
Employee pursuant to this Agreement:
(i) Become an officer, director, partner, associate, employee,
owner, agent, creditor, independent contractor, or otherwise, or be
interested in or associated with any other EDA company, firm or business
engaged, in any geographical area in which the Company is engaged, in
making or selling one or more EDA products competitive with a product or
products made or sold by Company now or during the term of this
Agreement. However, after obtaining the prior approval from the Company,
the Employee may devote reasonable periods required for serving as a
director or member of any Company, partnership, trust or other entity
("Entity") organization involving no conflict of interest with the
interests of the Company or his personal affairs so long as the same
does not interfere with the performance of his duties hereunder;
(ii) Solicit, cause or authorize, directly or indirectly, to be
solicited for or on behalf of himself or third parties, from parties who
were customers of the Company in the EDA industry at any time within six
(6) months prior to the cessation of his employment hereunder, any
business competitive to the business transacted by the Company with such
customers in the EDA industry;
(iii) Accept or cause or authorize, directly or indirectly, to
be accepted for or on behalf of himself or third parties, any such
business in the EDA industry from any such customers of the Company as
defined in the preceding subsection;
(B) Restricted Period. The tern "Restricted Period" as used in this Section 3
shall mean the Termination Payment Period of the cash termination payment as a
consequence of Constructive Termination due to a Change in Control, which the
Employee is entitled to receive pursuant to the provisions of Section 2 hereof.
(C) Others. This Section 3 shall survive the termination of the Employees
employment hereunder for the period provided in paragraph (B).
The Employee further agrees that any breach or threatened breach by him of any
provisions of this Section 3 shall entitle the Company, in addition to any other
legal or equitable remedies available to it, to apply to any court of competent
jurisdiction to enjoin such breach or threatened breach.
Notwithstanding anything in this Agreement to the contrary, if the Employee
violates any of the provisions of paragraph (a) hereof during the Restricted
Period and fails to cease such violation and to remedy the consequences of such
violation within ninety (90) days after notice from the Company specifying such
violation and if the Company obtains a final judgment from a court of competent
jurisdiction to the effect that the Employee has violated a provision of
paragraph (a) and has failed to cease such violation and to remedy the
consequences of such violation within ninety (90) days after notice from the
Company, all obligations of the Company to compensate the Employee and to
forgive indebtedness, if any, of the Employee to the Company shall cease, and
the Company shall be entitled to recover from the Employee compensation received
by the Employee and any indebtedness forgiven while such violation existed.
(D) Special Non-Competition Cash Payment. The Company recognizes that a Change
in Control Termination will subject the Employee to losses and damages, the
amount of which might not readily be determined, and that there exist only a
limited number of employment opportunities comparable in statue, compensation
and opportunity to employment as an Employee of the Company. Therefore, the
Employee shall not be required to seek or accept employment in mitigation of any
obligations of the Company arising by reason of his Constructive Termination due
to a Change in Control. In consideration of the Employee's special services and
the Employee's agreement to not compete in the EDA industry during the
Restricted Period after the date of termination of his employment, hereunder the
Company agrees to pay the Employee a lump sum of USD $2 Million dollars, payable
within 30 days after the termination of his employment.
4. MUTUAL RELEASES AFTER TERMINATION OF EMPLOYMENT
Upon the termination of the Employee's employment, the Company and the Employee
agree that in consideration for the Employee's services, the Company shall
execute a general release, in form and substance, satisfactory to the Employee's
counsel, that releases and forever discharges the Employee, his heirs,
successors and assigns, from any and all actions, causes of actions, claims, or
demands for general, special or punitive damages, attorney's fees, expenses, or
other compensation, which in any way relate to or arise out of the Employee's
employment with the Company or any of its subsidiaries.
5. INDEMNIFICATION
To the fullest extent not inconsistent with applicable law, in the event that
the Employee is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or was a
director, officer, consultant, employee or agent of the Company or any of its
subsidiaries, or is or was serving at the request of the Company as a director,
officer, consultant, employee or agent of another Company, partnership, joint
venture, trust or other enterprise, the Company shall indemnify the Employee and
hold him harmless, against all expenses (including costs and attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by his in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the Employee did not act in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interest of the Company, or that, with respect to any criminal action or
proceeding, the Employee had reasonable cause to believe that his conduct was
unlawful. The provisions of this Section 5 shall not be deemed exclusive of any
other rights of indemnification to which the Employee maybe entitled or which
may be granted to him, and it shall be in addition to any rights of
indemnification to which he may be entitled under any policy of insurance. The
provisions of this Section 5 shall continue in effect after the Employee has
ceased to be an officer, employee or agent of the Company, shall inure to the
benefit of the Employee's heirs, executors, administrators and in testate
distributes and shall survive the termination of this Agreement under all
circumstances.
All litigation or inquiries by third parties (for example, but not
limited to, those by shareholders - direct or derivative - or government
agencies) arising out of or in connection with this Agreement or the
Employee's performance hereunder, against either the Company or the
Employee or both, shall be defended or opposed by the parties hereto, as
the case may be, to support this Agreement, and the costs, fees and
expenses thereof, including fees of counsel for the parties, shall be
home by the Company.
Notwithstanding the foregoing provisions of this Section 5, during the
term of the Employee's employment hereunder and during such time he
continues as an officer, the Company agrees to maintain substantially
the same Officers' liability insurance in place on the date hereof and
shall increase such coverage in the event the Employee determines that
it is in the best interest of the Company to have such increased
coverage.
6. CONFIDENTIAL INFORMATION
The Employee recognizes that as an Employee of the Company he has had and will
have access to secret and confidential information regarding the Company, its
products, customers and plans relating to the EDA industry. The Employee
acknowledges that such information is of great value to the Company, and is the
sole property of the Company and that such information has been and will be
acquired by his in confidence. In consideration of the obligations undertaken by
the Company as set forth herein, the Employee will not, at any time, during or
for a period of one year after his employment of the Company hereunder, reveal,
divulge or make known, except as authorized by the Company or required on its
behalf or required pursuant to legal or administrative processes, any
information of a confidential nature concerning the Company's business involving
the EDA industry acquired by the Employee during the course of his employment to
any competitor to the Company in the EDA industry.
7. MISCELLANEOUS PROVISIONS
(A) No right to Employment. Notwithstanding this Agreement, either party may
terminate the Employee's employment at any time and for any reason, or for no
reason upon written notice to the other party; provided, however, that any
Change in Control Termination shall be subject to all of the consequences
described in sections 2 and 3 above.
(B) 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 mail, return receipt requested and
postage personally delivered or when the Employee, mailed notices shall be
addressed to the Employee at the home address shown below on this Agreement or
at the home address which the 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 addressed to
the attention of its Secretary.
(C) 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 Employee and by an authorized officer of the Company (other
than the Employee). No waiver by either party of any breach of, or of compliance
with, any condition or provision of his 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.
(D) Whole Agreement; Modifications. No agreements, representations or
understanding (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 part with respect to the subject matter hereof. This Agreement contains
the entire understanding of the parties with respect to the subject matter
hereof. A modification of this Agreement shall be valid only if it is made in
writing and executed by both parties hereto.
(E) Withholding Taxes. All payments made under this Agreement shall be subject
to reduction to reflect taxes or other charges required to be withheld by law.
(F) Choice of Law. The validity, interpretation, construction, and performance
of this Agreement shall be governed by the laws of the State of California
(except their provisions governing the choice of law).
(G) 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.
(H) Company's Successors. This Agreement shall be binding upon any successor
(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. For all purposes under this Agreement, the
term "Company" shall include any successor to the Company's business and/or
assets, which become bound by this Agreement.
(I) Employee's Successors. This Agreement and all right of the Employee
hereunder shall inure to the benefit of, and be enforceable by, the Employee's
personal of legal representatives, executors, heirs, distributes, devisees, and
legatees.
(J) No Assignment. 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 imitation)
bankruptcy, garnishment, attachment, or other creditor's process, and any action
in violation of this paragraph shall be void.
(K) Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
(L) Confidentiality. The Employee agrees that the Employee will not disclose the
existence or the terms of this Agreement to anyone other than the Employee's
spouse, tax advisor, or legal advisor. In the event the Employee breaches this
confidentiality obligation, the Company may immediately terminate this
Agreement.
(M) Arbitration. Any controversy or claim between the Company and Employee,
their representatives, heirs, successors and assigns, arising out of or relating
to this Agreement or any breach or asserted breach hereof or questioning the
validity and binding effect hereof shall be determined by arbitration conducted
in San Francisco in accordance with the Rules of the American Arbitration
Association then obtaining, and judgment upon any award rendered may be entered
in any court having jurisdiction thereof. The decision of the arbitrators shall
be final and binding upon the parties hereto. All of the Employee's costs and
expenses (including attorneys, fees) arising out of or in connection with any
matters submitted to arbitration pursuant to this subsection shall be paid by
the Company, unless the award of the arbitrators shall explicitly find that the
Employee's claim or his defense against a claim by the Company was frivolous and
completely without merit, in which case the Employee shall pay the costs and
expenses (including, without limitation, reasonable attorneys, fees) incurred by
the Company in such connection.
(N) Section Headings. The headings or titles of the sections of this Agreement
are not a part of this Agreement and are not intended to aid in the construction
of any provision thereof.
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.
/s/ Xxxx X. Xxx
Signature Of the Employee
Xxxx X. Xxx
Printed name of the Employee
Oct. 1, 2000
Date of Signature
15F-Z. Xx. 00 Xxx 0
Xxxx-Xx Xxxx, Xxxxxx X.X.X
The Employee's mailing address
AVANT! CORPORATION
/s/ Xxxxxx X. Xxx
Xxxxxx X. Xxx
Chairman, Chief Executive Officer, & President
Oct. 1, 2000
Date of Signature
