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Exhibit 99.2
CONSULTANT SERVICES AGREEMENT
Agreement Number A
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This Agreement is made this 9th day of October, 1995 (Effective Date), between
Xxxxx Xxxx, (Consultant) and Mentor Graphics Corporation, an Oregon corporation,
0000 X.X. Xxxxxxxx Xxxx, Xxxxxxxxxxx, Xxxxxx 00000 (Mentor Graphics).
BACKGROUND
A. On October 9, 1995, M Acquisition Sub, Inc., a Delaware corporation (M Sub),
Mentor Graphics, Microtech Research, Inc., a Delaware corporation (Company),
signed an Agreement and Plan of Merger (Merger Agreement) under which M Sub and
Company intend to merge, and under which Company will become a wholly owned
subsidiary of Mentor Graphics (Merger). Capitalized terms used and not
otherwise defined shall have the meanings ascribed to them in the Merger
Agreement.
B. Company markets embedded software and real time operating system computer
software products in North America, Western Europe, Japan and the Pacific Rim
directly and through a network of distributors and value added resellers.
C. Consultant is a founder, director, officer, and key employee of Company and
has significant holdings in Company in the form of common stock and options to
purchase common stock. In connection with the transactions contemplated by the
Merger Agreement, Consultant will exchange all of those holdings for common
stock of Mentor Graphics and options to purchase common stock of Mentor
Graphics.
D. As an inducement to Parent to enter into the Merger Agreement, Consultant
and Company have agreed that Consultant will continue providing services to
Company as a consultant for two years on the terms set forth in this Agreement,
and will enter into noncompete and nonsolicitation commitments for a period of
three years.
AGREEMENT
The parties agree as follows:
1. The Services. Consultant will provide certain services to Company or its
customers on behalf of the Company as provided in attachment A to this
Agreement.
2. Fees. Consultant will be paid fees for services as set forth in the
applicable attachment to this Agreement. Consultant will invoice Company
for services, and Company will pay all correct invoices, as provided in
the applicable purchase order or attachment to this Agreement. Consultant
shall reference this Agreement on all invoices.
3. Representations and Warranties. Consultant represents and warrants as
follows:
(a) The services and any designs or products resulting from such
services will not violate or in any way infringe upon the rights
of third parties, including property, contractual, employment,
trade secrets, proprietary information and non-disclosure rights,
or any trademark, copyright or patent rights.
(b) The services shall not be in violation of any applicable law,
rule or regulation. Consultant has complied with all Federal,
state and local laws regarding business
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permits, certificates and licenses that may be required to carry
out the services to be performed under this Agreement.
(c) Consultant maintains its own place of business and maintains a
separate set of books and records that reflect all items of
income and expense for Consultant's business. Consultant holds
itself out as self-employed or makes its services generally
available to the public.
(d) Consultant has obtained, or will obtain, a Federal Employer
Identification Number and will provide that number to Company
prior to performing any services under this Agreement.
(e) Consultant will use sound and professional principles and
practices in accordance with generally accepted industry
standards in the performance of services under this Agreement.
4. Confidentiality Agreement. Consultant and Company are parties to a
Confidentiality Agreement dated as of June 15, 1993 (Confidentiality
Agreement). Consultant and Company agree and confirm that,
notwithstanding the change in Consultant's status from employee to
consultant as of the Effective Date, during the term of this Agreement.
Consultant shall continue to be bound by the provisions of the
Confidentiality Agreement, and such agreement is incorporated by
reference into this Agreement.
5. Section 5 intentionally omitted.
6. Term and Termination.
(a) The term of this Agreement shall commence on the above Effective
Time and terminate twenty four months later unless terminated as
provided in Paragraph 6 (b).
(b) Each party has the right to terminate this Agreement if the other
party breaches or is in default of any obligation under this
Agreement and the breach or default has not been cured within 45
days after the breaching party's receipt of written notice from
the other party.
(c) Upon the termination of this Agreement by either party, each
party shall promptly return to the other all tangible data,
materials and other properties of the other held by it.
7. Status as Consultant: Non-compete and Non-solicitation
(a) Consultant and Company are contractors independent of one
another. Consultant and Company agree:
(i) Neither has the authority to bind the other to any third
person or act in any way as the representative of the
other, unless expressly agreed to in writing by authorized
representatives of both parties.
(ii) Consultant acknowledges and agrees that it is not an
employee of Company and is in no way entitled to
participate in employee benefit programs maintained by
Company for its employees. Consultant further acknowledges
and agrees that it is not entitled to receive workers'
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compensation coverage or unemployment insurance payments
which might be available to Company's employees.
(b) For a period of three years from the date of this Agreement,
Consultant will not directly solicit or attempt to influence, any
customer of Company or Mentor Graphics, to cease doing or reduce
its business with Company or Mentor Graphics.
(c) For period of three years from the date of this Agreement,
Consultant shall not, whether as employee, officer, director,
shareholder, partner or otherwise, directly or indirectly, have
any interest in any entity (other than investment interests
constituting less that 5% of publicly-held entities) or engage or
assist others to engage in any activity in locations where the
Company currently does business involving the planning, operation
or management of (i) any business conducted by the Company, at
the Effective Time as such term in defined in the Merger
Agreement, or (ii) any business pursuing a business opportunity
or a contemplated business opportunity of Company or any of its
affiliates to the extent Consultant has had direct involvement
with or exposure to information about the business opportunity or
contemplated business opportunity of the Company or any of its
affiliates during the Term.
(d) For a period of three years from the date of this Agreement,
Consultant will not hire, solicit or encourage to leave the
employ of the Company or of any of its affiliates, any employee
of the Company or any of its affiliates, or hire any such
employee who has left the employ of the Company or any of its
affiliates, provided, however, that this clause shall not apply
to the hiring of employees of the Company or its affiliates (i)
while Consultant is actively employed by the Company during the
term of this Agreement, (ii) during the survival of the Section
by a subsequent employer of Consultant so long as Consultant does
not participate in any hiring or solicitation activities related
to employees of Mentor Graphics or its affiliates, (iii) with
Mentor Graphics prior written consent which shall not be
unreasonably withheld; or (iv) of any such person who has not
been employed by the Company, Mentor Graphics or their affiliates
for a period of six months or more.
8. Liquidated Damages. Consultant acknowledges that; (i) Consultant
possesses knowledge and skills that are of great importance to the
business and intended business of the Company; (ii) Mentor Graphics is
entering into the Merger Agreement in reliance on Consultant's agreement
to enter into this Agreement and to comply with the covenants in $ 7
above; (iii) the loss of Consultant's services during the term would
cause serious financial harm to the Company; (iv) the size of the
financial loss that would occur as a result of the loss of Consultant's
services during the Term would be difficult to prove given the many
intangible ways in which Consultant contributes to the success of the
business and intended business of the Company; and (v) it would be
difficult or impossible for the Company to replace Consultant or to
mitigate such financial loss through the means of a lawsuit for damages
or otherwise. Accordingly, Consultant agrees to pay the amount of
$10,000,000 as liquidated damages in the event Consultant (i) voluntarily
terminates his engagement during the six month period following the
Effective Time of the Merger (other than for death or disability); (ii)
repeatedly refuses to perform duties reasonably assigned to him under
this Agreement during such six month period provided the Company has
previously given Consultant notice of such refusal and Consultant is
given reasonable opportunity to cure the same and Consultant has failed
to cure the same; or (iii) breaches his obligations under Section 7 (c)
hereof during the first six months after the Effective Time. Consultant
and the Company agree that the liquidated damages set forth above
constitute a
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reasonable estimate of the financial loss that would be experienced by
the Company if the Company loses the benefit of Consultant's services
within the six month period following consummation of the Merger or
Consultant breaches section 7 (c) above during the first six months
following the Effective Time of the Merger.
9. Taxes. Consultant shall be responsible for, pay when due, and indemnify
Company for, all local, municipal, state, provincial and Federal taxes,
imposed upon Consultant including but not limited to taxes on
Consultant's income. Consultant further agrees to execute such documents
as Company may require as evidence of Consultant's payment of applicable
taxes.
10. Section 10 intentionally omitted.
11. Damages. Except for damages arising out of Consultant's default of its
obligations under Paragraph 7, neither party shall be liable to the other
party, under any legal theory, for payment of any special, incidental,
punitive or consequential damages.
12. General Provisions.
(a) Entire Agreement. This Agreement, including all attachments
hereto, and the Confidentiality Agreement, constitutes the entire
agreement between Consultant and Company on this subject matter
and supersedes all prior or contemporaneous agreements, written
or oral, between the parties. This Agreement may not be modified
except by written document signed by an authorized representative
of each party.
(b) Notices. All notices required or authorized under this Agreement
shall be given in writing and refer to this Agreement by date and
title. All notices shall be effective upon delivery if delivered
in person or upon mailing if mailed at a U.S. Post Office, first
class mail, postage prepaid, addressed or delivered to Consultant
at Consultant's address listed on page one and to Company
Corporation, 0000 XX Xxxxxxxx Xxxx, Xxxxxxxxxxx, Xxxxxx
00000-0000. Attention: General Counsel or at such other address
that either party provides by advance written notice to the other
party.
(c) Savings Provisions. If a court finds any provision of this
Agreement unenforceable as written, then the court shall
interpret, modify or strike all or a portion of that provision so
as to effect as much of the parties' agreement and intent as is
legally possible. Regardless of the enforceability of any
particular provision, the other portions of this Agreement shall
continue in full force and effect.
(d) Waiver. No term or provision of this Agreement shall be deemed
waived and no breach excused unless such waiver or consent is in
writing and signed by the party claimed to have waived or
consented. No consent, waiver or excuse by either party, express
or implied, shall constitute a subsequent consent, waiver or
excuse.
(e) Applicable Law. This Agreement shall be governed by the laws,
excluding choice of law rules, of the State of California.
13. The parties agree that Consultant may assign his rights and obligations
under this Agreement to Microsystem Services, Inc. a corporation wholly
owned by Consultant provided that Consultant shall not be personally
relieved thereby of his obligations under
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sections 7(d) or 4 hereof, Consultant shall personally guarantee such
corporation's performance hereunder on terms reasonably satisfactory to
Mentor Graphics, and such corporation shall undertake to make Consultant
available to perform hereunder. The parties agree to amend and restate
this agreement to reflect such assignment promptly after it shall occur.
CONSULTANT MENTOR GRAPHICS CORPORATION
By: /s/ Xxxxx Xxxx By: /s/ Xxxx Xxxxx
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Name: XXXXX XXXX Name: XXXX XXXXX
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Title: Title: General Counsel and
--------------------------- Secretary
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Date: 10/9/95 Date: 10/9/95
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