EXHIBIT 10.1
EXECUTIVE TRANSITION AND RELEASE AGREEMENT
This Executive Transition and Release Agreement (this "Agreement") is
entered into between Xxxx Xxx ("Executive") and Cadence Design Systems, Inc.
("Cadence" or the "Company").
1. TRANSITION COMMENCEMENT DATE. As of January 1, 2005 (the "Transition
Commencement Date"), Executive will no longer hold the position of Executive
Vice President and General Manager and will be relieved of all of Executive's
authority and responsibilities in that position. Executive will be paid all
accrued salary for his services as Executive Vice President and General Manager
to the Transition Commencement Date by not later than the following regular
payroll date. Following the Transition Commencement Date, Executive will no
longer participate in Cadence's medical, dental, and vision insurance plans
(unless Executive elects to continue coverage pursuant to COBRA), and will not
be eligible for a bonus for any services rendered after that date.
2. TRANSITION PERIOD. The period from the Transition Commencement Date
to the date when Executive's employment with Cadence terminates (the
"Termination Date") is called the "Transition Period" in this Agreement.
Executive's Termination Date will be the earliest to occur of:
a. the date on which Executive resigns from all employment with
Cadence;
b. the date on which Cadence terminates Executive's employment
due to a breach by Executive of Executive's duties or
obligations under this Agreement; and
c. February 2, 2006.
3. DUTIES AND OBLIGATIONS DURING THE TRANSITION PERIOD AND AFTERWARDS.
a. During the Transition Period, Executive will assume the
position of Executive Consultant. In this position, Executive will render those
services requested by Xxxx Xxxxxx, Cadence's Chief Executive Officer ("CEO"),
Xxx Xxxxxx, Senior Vice President of Development, their successors or
appointees, or the Board of Directors on an as-needed basis. Executive's time
rendering those services is not expected to exceed twenty (20) hours per week
but is expected to consume 20 hours per month.
b. As a Cadence Executive Vice President and General Manager, as
well as other positions Executive may have held with Cadence, Executive has
obtained extensive and valuable knowledge and information concerning Cadence's
business (including confidential information relating to Cadence and its
operations, intellectual property assets, contracts, customers, personnel,
plans, marketing plans, research and development plans and prospects). Executive
acknowledges and agrees that it would be virtually impossible for Executive to
work as an employee, consultant or advisor in the electronic design automation
("EDA") industry (as defined below) without inevitably disclosing confidential
and proprietary information belonging to Cadence. Accordingly,
during the Transition Period, Executive will not, without the prior written
consent of Cadence, directly or indirectly, provide services, whether as an
employee, consultant, independent contractor, agent, sole proprietor, partner,
joint venture, corporate officer or director, on behalf of any corporation,
limited liability company, partnership, or other entity or person that (i) is
engaged in the EDA industry, (ii) directly competes against Cadence or any of
its existing or future affiliates in the EDA industry anywhere in the world, or
(iii) produces, markets, distributes or sells any products, directly or
indirectly through intermediaries, that are competitive with EDA industry
products produced, marketed, sold or distributed by Cadence. Such prior written
consent shall not be unreasonably withheld by Cadence; provided, however, that
such consent may be in all cases withheld with respect to the companies listed
in Exhibit A attached hereto and up to five (5) other companies as may be
designated by the Board of Directors of Cadence from time to time and delivered
to Executive prior to the Company's termination of his employment (or, in the
event Executive terminates his employment, prior to the date on which Executive
has notified the Company of his decision to terminate such employment) or are
named as a competitor of Cadence in the most recent applicable document filed by
Cadence before the Transition Commencement Date with the Securities and Exchange
Commission that contains such information.
As used in this paragraph, the term "EDA industry" means the
research, design or development of electronic design automation software,
electronic design verification, emulation hardware and related products, such
products containing hardware, software and both hardware and/or software
products, designs or solutions for, and all intellectual property embodied in
the foregoing, or in commercial electronic design and/or maintenance services,
such services including all intellectual property embodied in the foregoing.
c. During the Transition Period, Executive will be prohibited, to
the full extent allowed by applicable law, and except with the written advance
approval of Cadence's CEO (or his successor(s)), from voluntarily or
involuntarily, for any reason whatsoever, directly or indirectly, individually
or on behalf of persons or entities not now parties to this Agreement: (i)
encouraging, inducing, attempting to induce, soliciting or attempting to solicit
for employment, contractor or consulting opportunities anyone who is employed at
that time, or was employed during the previous one year, by Cadence or any
Cadence affiliate; (ii) interfering or attempting to interfere with the
relationship or prospective relationship of Cadence or any Cadence affiliate
with any former, present or future client, customer, joint venture partner, or
financial backer of Cadence or any Cadence affiliate; or (iii) soliciting,
diverting or accepting business, in any line or area of business engaged in by
Cadence or any Cadence affiliate, from any former or present client, customer or
joint venture partner of Cadence or any Cadence affiliate (other than on behalf
of Cadence), except that Executive may solicit or accept business, in a line of
business engaged in by Cadence or a Cadence affiliate, from a former or present
client, if and only if Executive had previously provided consulting services in
such line of business, to such client, prior to ever being employed by Cadence,
but in no event may Executive violate paragraph 3(b) hereof. The restrictions
contained in subparagraph (i) of this paragraph 3(c) shall also be in effect for
a period of one year following the Termination Date. This paragraph 3(c) does
not alter any of the obligations the
2
Executive may have under the Employee Proprietary Information Agreement, dated
as of May 24, 2004.
d. Executive will fully cooperate with Cadence in all matters
relating to his employment, including the winding up of work performed in
Executive's prior position and the orderly transition of such work to other
Cadence employees.
e. Executive will not make any statement, written or oral, that
disparages Cadence or any of its affiliates, or any of Cadence's or its
affiliates' products, services, policies, business practices, employees,
executives, officers, or directors. Similarly, Cadence agrees to instruct its
executive officers and members of the Company's Board of Directors not to make
any statement, written or oral, that disparages Executive. The restrictions
described in this paragraph shall not apply to any truthful statements made in
response to a subpoena or other compulsory legal process.
f. Notwithstanding paragraph 10 hereof, the parties agree that
damages would be an inadequate remedy for Cadence in the event of a breach or
threatened breach by Executive of paragraph 3(b) or 3(c), or for Cadence or
Executive in the event of a breach or threatened breach of paragraph 3(e). In
the event of any such breach or threatened breach, the non-breaching party may,
either with or without pursuing any potential damage remedies, obtain from a
court of competent jurisdiction, and enforce, an injunction prohibiting the
other party from violating this Agreement and requiring the other party to
comply with the terms of this Agreement.
4. TRANSITION COMPENSATION AND BENEFITS. In consideration and
compensation for Executive's services during the Transition Period, Cadence will
provide the following to Executive:
a. a monthly salary of $2,000 less applicable tax withholdings
and deductions, payable in accordance with Cadence's regular
payroll schedule;
b. continued vesting of stock options and restricted stock
granted to Executive prior to the Termination Date, provided
that Executive has executed all necessary stock option and
restricted stock agreements, and with the understanding that
upon Executive's Termination Date, all vested options may be
exercised in accordance with the applicable stock option
agreement, any unvested options will expire, and any unvested
restricted stock will be forfeited;
c. if Executive elects to continue coverage under Cadence's
medical, dental, and vision insurance plans pursuant to COBRA
following the Transition Commencement Date, Cadence will pay
Executive's COBRA premiums during the Transition Period; and
d. continued access to Cadence voicemail.
3
Except as so provided, Executive will receive no other compensation or benefits
from Cadence in consideration of Executive's services during the Transition
Period.
5. FIRST TERMINATION PAYMENT AND BENEFITS. Provided that Executive does
not resign from employment with Cadence and Cadence does not terminate
Executive's employment with Cadence due to a breach by Executive of Executive's
duties under this Agreement, and in consideration for Executive's acceptance of
this Agreement, Cadence will provide to Executive within ten business days after
the Effective Date (as defined in paragraph 9 hereof) of this Agreement and
after Executive has returned to the Company all hard and soft copies of records,
documents, materials and files relating to confidential, proprietary or
sensitive company information in his possession or control, as well as all other
Company-owned property, the following termination payment to which Executive
would not otherwise be entitled:
a. a lump-sum payment of one year's base salary at the highest rate
in effect during Executive's employment as Executive Vice
President and General Manager (i.e., $450,000), less applicable
tax deductions and withholdings.
6. SECOND TERMINATION PAYMENT AND BENEFITS. Provided that Executive
does not resign from employment with Cadence and Cadence does not terminate
Executive's employment with Cadence due to a breach by Executive of Executive's
duties under this Agreement, upon the Termination Date, and in consideration for
Executive's acceptance of this Agreement and Executive's further execution of a
Release of Claims in the form of Attachment 1 to this Agreement, Cadence will
provide to Executive within ten business days after the expiration of the
revocation period of the Release of Claims (as defined in that document) the
following termination payment to which Executive would not otherwise be
entitled:
a. a lump-sum payment of one year's target bonus at the highest
rate in effect during Executive's employment as Executive Vice
President and General Manager (i.e., $450,000), less applicable
tax deductions and withholdings.
7. GENERAL RELEASE OF CLAIMS.
a. Executive hereby irrevocably, fully and finally releases
Cadence, its parent, subsidiaries, affiliates, directors, officers, agents and
employees ("Releasees") from all causes of action, claims, suits, demands or
other obligations or liabilities, whether known or unknown, suspected or
unsuspected, that Executive ever had or now has as of the time that Executive
signs this Agreement which relate to his hiring, his employment with the
Company, the termination of his employment with the Company and claims asserted
in shareholder derivative actions or shareholder class actions against the
Company and its officers and Board of Directors, to the extent those derivative
or class actions relate to the period during which Executive served as Executive
Vice President and General Manager. The claims released include, but are not
limited to, any claims arising from or related to Executive's employment with
4
Cadence, such as claims arising under (as amended) Title VII of the Civil Rights
Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment
Act of 1974, the Americans with Disabilities Act, the Equal Pay Act, the Fair
Labor Standards Act, the California Fair Employment and Housing Act, the
California Labor Code, the Employee Retirement Income and Security Act of 1974
(except for any vested right Executive has to benefits under an ERISA plan), the
state and federal Worker Adjustment and Retraining Notification Act, and the
California Business and Professions Code; any other local, state, federal, or
foreign law governing employment; and the common law of contract and tort. In no
event, however, shall any claims, causes of action, suits, demands or other
obligations or liabilities be released pursuant to the foregoing if and to the
extent they relate to:
i. any amounts or benefits to which Executive is or becomes
entitled to pursuant to the provisions of this Agreement or pursuant to the
provisions designated in Section 9.9 of the Employment Agreement to survive the
termination of Executive's full-time employment;
ii. claims for workers' compensation benefits under any of
the Company's workers' compensation insurance policies or funds;
iii. claims related to Executive's COBRA rights; and
iv. any rights that Executive has or may have to be
indemnified by Cadence pursuant to any contract, statute, or common law
principle.
b. Executive represents and warrants that he has not filed any
claim, charge or complaint against any of the Releasees.
c. Executive acknowledges that the payments provided in this
Agreement constitute adequate consideration for the release set forth in this
paragraph 7.
d. Executive intends that this release of claims cover all
claims, whether or not known to Executive. Executive further recognizes the risk
that, subsequent to the execution of this Agreement, Executive may incur loss,
damage or injury which Executive attributes to the claims encompassed by this
release. Executive expressly assumes this risk by signing this Agreement and
voluntarily and specifically 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.
e. Executive represents and warrants that there has been no
assignment or other transfer of any interest in any claim by Executive that is
covered by this release.
5
8. REVIEW OF AGREEMENT; REVOCATION OF ACCEPTANCE. Executive has been
given at least 21 days in which to review and consider this Agreement, although
Executive is free to accept this Agreement anytime within that 21-day period.
Executive is advised to consult with an attorney about the Agreement. If
Executive accepts this Agreement, Executive will have an additional 7 days from
the date that Executive signs this Agreement to revoke that acceptance, which
Executive may effect by means of a written notice sent to the CEO or General
Counsel. If this 7-day period expires without a timely revocation, this
Agreement will become final and effective on the eighth day following the date
of Executive's signature, which eighth day will be the "Effective Date" of this
Agreement.
9. ARBITRATION. Subject to paragraph 3(f) hereof, all claims, disputes,
questions, or controversies arising out of or relating to this Agreement,
including without limitation the construction or application of any of the
terms, provisions, or conditions of this Agreement, will be resolved exclusively
in final and binding arbitration in accordance with the Arbitration Rules and
Procedures, or successor rules then in effect, of Judicial Arbitration &
Mediation Services, Inc. ("JAMS"). The arbitration will be held in the San Jose,
California, metropolitan area, and will be conducted and administered by JAMS
or, in the event JAMS does not then conduct arbitration proceedings, a similarly
reputable arbitration administrator. Executive and Cadence will select a
mutually acceptable, neutral arbitrator from among the JAMS panel of
arbitrators. Except as provided by this Agreement, the Federal Arbitration Act
will govern the administration of the arbitration proceedings. The arbitrator
will apply the substantive law (and the law of remedies, if applicable) of the
State of California, or federal law, as applicable, and the arbitrator is
without jurisdiction to apply any different substantive law. Executive and
Cadence will each be allowed to engage in adequate discovery, the scope of which
will be determined by the arbitrator consistent with the nature of the claim[s]
in dispute. The arbitrator will have the authority to entertain a motion to
dismiss and/or a motion for summary judgment by any party and will apply the
standards governing such motions under the Federal Rules of Civil Procedure. The
arbitrator will render a written award and supporting opinion that will set
forth the arbitrator's findings of fact and conclusions of law. Judgment upon
the award may be entered in any court of competent jurisdiction. Cadence will
pay the arbitrator's fees, as well as all administrative fees, associated with
the arbitration. Each party will be responsible for paying its own attorneys'
fees and costs (including expert witness fees and costs, if any). However, in
the event a party prevails at arbitration on a statutory claim that entitles the
prevailing party to reasonable attorneys' fees as part of the costs, then the
arbitrator may award those fees to the prevailing party in accordance with that
statute.
10. NO ADMISSION OF LIABILITY. Nothing in this Agreement will constitute
or be construed in any way as an admission of any liability or wrongdoing
whatsoever by Cadence or Executive.
11. INTEGRATED AGREEMENT. This Agreement is intended by the parties to
be a complete and final expression of their rights and duties respecting the
subject matter of this Agreement. Except as expressly provided herein, nothing
in this Agreement is intended to negate Executive's agreement to abide by
Cadence's policies while serving
6
as a Cadence employee, including but not limited to Cadence's Employee Handbook,
Sexual Harassment Policy and Code of Business Conduct, or Executive's continuing
obligations under Executive's Employee Proprietary Information and Inventions
Agreement, or any other agreement governing the disclosure and/or use of
proprietary information, which Executive signed while working with Cadence or
its predecessors; nor to waive any of Executive's obligations under state and
federal trade secret laws.
12. FULL SATISFACTION OF COMPENSATION OBLIGATIONS; ADEQUATE
CONSIDERATION. Executive agrees that the payments and benefits provided herein
are in full satisfaction of all obligations of Cadence to Executive arising out
of or in connection with Executive's employment through the Termination Date,
including, without limitation, all compensation, salary, bonuses, reimbursement
of expenses, and benefits.
13. TAXES AND OTHER WITHHOLDINGS. Notwithstanding any other provision of
this Agreement, the Company may withhold from amounts payable hereunder all
federal, state, local and foreign taxes and other amounts that are required to
be withheld by applicable laws or regulations, and the withholding of any amount
shall be treated as payment thereof for purposes of determining whether
Executive has been paid amounts to which he is entitled.
14. WAIVER. 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 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 of the same or any other provision of this Agreement.
15. MODIFICATION. This Agreement may not be modified unless such
modification is embodied in writing, signed by the party against whom the
modification is to be enforced.
16. ASSIGNMENT AND SUCCESSORS. Cadence shall have the right to assign
its rights and obligations under this Agreement to an entity that, directly or
indirectly, acquires all or substantially all of the assets of Cadence. The
rights and obligations of Cadence under this Agreement shall inure to the
benefit and shall be binding upon the successors and assigns of Cadence.
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
upon his death, solely to the extent permitted by this Agreement, or as
otherwise agreed to by Cadence.
17. SEVERABILITY. In the event that any part of this Agreement is found
to be void or unenforceable, all other provisions of the Agreement will remain
in full force and effect.
7
18. GOVERNING LAW. This Agreement will be governed and enforced in
accordance with the laws of the State of California, without regard to its
conflict of laws principles.
8
EXECUTION OF AGREEMENT
The parties execute this Agreement to evidence their acceptance of it.
Dated: 1/3/2005. Dated: 1/3/2005.
Xxxx Xxx CADENCE DESIGN SYSTEMS, INC.
By: /s/ Xxxx Xxx By: /s/ Xxx Xxxxx
------------------------- ---------------------------------
Xxx Xxxxx
Senior Vice President, Human Resources &
Organizational Development
9
EXHIBIT A
Synopsys, Inc.
Magma Design Automation, Inc.
Mentor Graphics Corporation
PDF Solutions, Inc.
Monterey Design Systems, Inc.
ATTACHMENT 1
RELEASE OF CLAIMS
(To be executed on or about February 2, 2006)
1. For valuable consideration, I irrevocably, fully and finally
release Cadence Design Systems, Inc. ("Cadence"), its parent, subsidiaries,
affiliates, directors, officers, agents and employees from all causes of action,
claims, suits, demands or other obligations or liabilities, whether known or
unknown, suspected or unsuspected, that I ever had or now have as of the time
that I sign this Release which relate to my hiring, my employment with Cadence,
the termination of my employment with Cadence and claims asserted in shareholder
derivative actions or shareholder class actions against Cadence and its officers
and Board of Directors, to the extent those derivative or class actions relate
to the period during which I served as Executive Vice President and General
Manager. The claims released include, but are not limited to, any claims arising
from or related to my employment with Cadence, such as claims arising under (as
amended) Title VII of the Civil Rights Act of 1964, the Civil Rights Act of
1991, the Age Discrimination in Employment Act of 1974, the Americans with
Disabilities Act, the Equal Pay Act, the Fair Labor Standards Act, the
California Fair Employment and Housing Act, the California Labor Code, the
Employee Retirement Income and Security Act of 1974 (except for any vested right
I have to benefits under an ERISA plan), the state and federal Worker Adjustment
and Retraining Notification Act, and the California Business and Professions
Code; any other local, state, federal, or foreign law governing employment; and
the common law of contract and tort. This Release is not intended to, and does
not, encompass any right to compensation or benefits that I have under my
Executive Transition and Release Agreement with Cadence. In no event, however,
shall any claims, causes of action, suits, demands or other obligations or
liabilities be released pursuant to the foregoing if and to the extent they
relate to:
i. any amounts or benefits to which I am or become entitled
to pursuant to the provisions of this Agreement or pursuant to the provisions
designated in Section 9.9 of the Employment Agreement to survive the termination
of my full-time employment;
ii. claims for workers' compensation benefits under any of
the Company's workers' compensation insurance policies or funds;
iii. claims related to my COBRA rights; and
iv. any rights that I have or may have to be indemnified by
Cadence pursuant to any contract, statute, or common law principle.
2. I intend that this Release cover all claims, whether or not known to
me. I further recognize the risk that, subsequent to the execution of this
Agreement, I may incur loss, damage or injury which I attribute to the claims
encompassed by this Release. I expressly assume this risk by signing this
Release and voluntarily and
specifically waive 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.
3. I represent and warrant that there has been no assignment or other
transfer of any interest in any claim by me that is covered by this Release.
4. I acknowledge that Cadence has given me 21 days in which to consider
this Release and advised me to consult an attorney about it. I further
acknowledge that once I execute this Release, I will have an additional 7 days
in which to revoke my acceptance of this Release by means of a written notice of
revocation given to the CEO or General Counsel. This Release will not be final
and effective until the expiration of this revocation period.
Dated:__________________________. ________________________________
Xxxx Xxx
________________________________
Sign Name
12
