EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into as of July 21, 1998, by and between
XXXXXX X. XXX (the "EMPLOYEE") and AVANT! CORPORATION, a Delaware corporation
(the "COMPANY"). This Agreement amends and restates the Employment Agreement
between the parties dated July 21, 1997.
1. TERM OF EMPLOYMENT.
(a) BASIC RULE. The Company agrees to continue the Employee's
employment, and the Employee agrees to remain in employment with the
Company, from the date of this Agreement until the date when the
Employee's employment terminates pursuant to Subsection (b) below.
(b) TERMINATION. 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 terminate automatically in the event of his
death. Any waiver of notice shall be valid only if it is made in
writing and expressly refers to the applicable notice requirement of
this Section 1.
(c) TERMINATION OF AGREEMENT. This Agreement shall terminate when
all obligations of the parties hereunder have been satisfied.
(d) RIGHTS UPON TERMINATION. Unless otherwise defined in this
subsection, each capitalized term used in this subsection shall have
the meaning assigned to it in the Company's 1995 Stock Option/Stock
Issuance Plan in effect on the date of this Agreement (the "PLAN").
Upon any Involuntary Termination (as hereinafter defined) of Employee's
employment, and subject to subsection 1(e) below: (1) the Company shall
pay to Employee a cash termination payment equal to three times the
amount of Employee's annual base salary in effect on the date of
termination, in addition to any other payments, benefits or other
rights to which Employee may then be entitled; (2) the shares of Common
Stock then subject to any option granted by the Company to Employee and
then outstanding (including but not limited to any such option that may
hereafter be granted to Employee, under the Plan or otherwise) but not
otherwise vested shall automatically vest in full; and (3) 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 provision 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 Employee and the Company, the provisions of the preceding
sentence shall govern if they are more favorable to Employee under the
circumstances than the conflicting provisions in such other agreement,
unless such other agreement expressly refers to the preceding sentence
and states that it is intended to govern in the event of such a
conflict with such sentence.
As used in this subsection, "INVOLUNTARY TERMINATION" shall mean a
termination of Employee's employment with the Company which occurs by
reason of:
(i) Employee's involuntary dismissal or discharge by the
Company for reasons other than Misconduct (as defined below in
this subsection), or
(ii) Employee's voluntary resignation within six months
after a Change in Control or a Corporate Transaction; or
(iii) Employee's voluntary resignation within six months
after any of the following events occurs without Employee's
written consent:
(A) a change in Employee's position or title
with the Company which materially reduces his level of
responsibility,
(B) a reduction by more than fifteen percent
(15%) in Employee's level of compensation -- including base
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 Employee's most recent prior bonus was paid).
(C) a relocation of Employee's place of
employment by more than fifty (50) miles.
As used in this subsection, "MISCONDUCT" shall mean any of the
following conduct by Employee occurring on or after the date hereof in
connection with the performance of his duties hereunder which adversely
affects the business or affairs of the Company (or any Parent or
Subsidiary) in a material manner: (1) the commission of any act of
fraud, embezzlement or dishonesty, (2) the unauthorized use or
disclosure by Employee of confidential information or trade secrets of
the Company (or any Parent or Subsidiary), or (3) any other intentional
misconduct of Employee.
Except as provided above in this subsection with respect to an
Involuntary Termination, upon the termination of the Employee's
employment pursuant to this Section 1, the Employee shall only be
entitled to the compensation, benefits and reimbursements described in
Sections 3, 4 and 5 for the period preceding the effective date of the
termination. The payments under this Agreement shall fully discharge
all responsibilities of the Company to the Employee.
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(e) LIMITATION ON PAYMENTS UNDER SUBSECTION 1(d).
(1) APPLICATION OF LIMITATION. This Subsection 1(e) shall
apply only if the Employee, on an after-tax basis, would receive more
value under an Involuntary Termination that is subject to subsection
1(d) after the application of this subsection 1(e) than the Employee
would receive before the application of this subsection 1(e). For this
purpose, "AFTER-TAX BASIS" shall mean a calculation taking into account
all federal and state income and excise taxes imposed on the Employee,
including (without limitation) the excise tax described in section 4999
of the Internal Revenue Code of 1986, as amended (the "CODE"). If this
subsection 1(e) is applicable, it shall supersede any conflicting
provision of this Agreement.
(2) BASIC RULE. The Company shall not make any payment or
property transfer to, or for the benefit of, the Employee (under this
Agreement or otherwise) that would subject the Employee to the excise
tax described in section 4999 of the Code. All calculations required by
this subsection 1(e) shall be performed by the independent auditors
retained by the Company most recently prior to the Involuntary
Termination (the "AUDITORS"), based on information supplied by the
Company and the Employee, and shall be binding on the Company and the
Employee. All fees and expenses of the Auditors shall be paid by the
Company.
(3) REDUCTIONS. If the amount of the aggregate payments
or property transfers to the Employee must be reduced under this
subsection 1(e), then the Employee shall direct in which order the
payments or transfers are to be reduced, but no change in the timing of
any payment or transfer shall be made without the Company's consent. As
a result of uncertainty in the application of section 4999 of the Code
at the time of an initial determination by the Auditors hereunder, it
is possible that a payment will have been made by the Company that
should not have been made (an "OVERPAYMENT") or that an additional
payment that will not have been made by the Company could have been
made (an "UNDERPAYMENT"). In the event that the Auditors, based upon
the assertion of a deficiency by the Internal Revenue Service against
the Employee that the Auditors believe has a high probability of
success, determine that an Overpayment has been made, such Overpayment
shall be treated for all purposes as a loan to the Employee that he
shall repay to the Company, together with interest at the applicable
federal rate specified in section 7872(f)(2) of the Code; provided,
however, that no amount shall be payable by the Employee to the Company
if and to the extent that such payment would not reduce the amount that
is subject to an excise tax Under section 4999 of the Code. In the
event that the Auditors determine that an Underpayment has occurred,
such Underpayment shall promptly be paid or transferred by the Company
to, or for the benefit of, the Employee, together with interest at the
applicable federal rate specified in section 7872(f)(2) of the Code.
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2. DUTIES AND SCOPE OF EMPLOYMENT.
(a) POSITION. The Company agrees to employ the Employee as its
President, Chief Executive Officer and Chairman of the Board of
Directors for the term of his employment under this Agreement
("Employment").
(b) OBLIGATIONS. During the term of his Employment, the Employee
shall devote his full business efforts and time to the Company and its
subsidiaries, affiliates and investments. He shall not render services
to any other person or entity without the express prior approval of the
Company's Board of "Directors (the "BOARD").
3. CASH COMPENSATION.
(a) SALARY. The Company agrees to pay the Employee as compensation
for his services a base salary at an annual rate of not less than
$600,000. Such salary shall be payable in accordance with the Company's
standard payroll procedures.
(b) BONUS OPPORTUNITY. The Employee shall have the opportunity to
earn an annual bonus in an amount to be determined by the Board.
4. EMPLOYEE BENEFITS. During the term of his Employment, the Employee
shall be eligible to participate in the employee benefit plans maintained by the
Company, subject in each case to the generally applicable terms and conditions
of the plan in question and to the determinations of any person or committee
administering such plan.
5. BUSINESS EXPENSES. During the term of his Employment, the Employee
shall be authorized to incur necessary and reasonable travel, entertainment and
other business expenses in connection with his duties hereunder. The Company
shall reimburse the Employee for such expenses upon presentation of an itemized
account and appropriate supporting documentation, all in accordance with the
Company's generally applicable policies.
6. SUCCESSORS.
(a) 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 becomes bound
by this Agreement.
(b) EMPLOYEE'S SUCCESSORS. This Agreement and all rights of the
Employee hereunder shall inure to the benefit of, and be enforceable
by, the Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
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7. MISCELLANEOUS PROVISIONS.
(a) 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 prepaid. In the case of the
Employee, mailed notices shall be addressed to him at the home address
which 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
Secretary.
(b) WAIVER. No provision of this Agreement shall be modified,
waived or discharged unless the modification, waiver or discharge is
agreed to in writing and signed by 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 this Agreement by the other party shall be considered a
waiver of any other condition or provision or of the same condition or
provision at another time.
(c) WHOLE AGREEMENT; MODIFICATIONS. No agreements, representations
or understandings (whether oral or written and whether express or
implied) which are not expressly set forth in this Agreement have been
made or entered into by either party with respect to the subject matter
hereof. This Agreement 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.
(d) 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.
(e) 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).
(f) 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.
(g) 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 limitation) bankruptcy,
garnishment, attachment or other creditor's process, and any action in
violation of this Subsection (h) shall be void.
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(h) 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.
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/ Xxxxxx X. Xxx
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XXXXXX X. XXX ("EMPLOYEE")
AVANT! CORPORATION
By /s/ Xxxxxxx St. Clair
--------------------------------
Title Member of the Board and
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Compensation Committee
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