[Date]
[Officer name]
[Address]
Dear [Name]:
The Board of Directors (the "Board") of Mentor Graphics Corporation
(the "Corporation") has determined that it is in the best interests of the
Corporation and its shareholders to assure that the Corporation will continue to
have your dedication and services notwithstanding the possibility, threat or
occurrence of a Change in Control (as defined herein). The Board believes it is
imperative to diminish the distraction that you would face by virtue of the
personal uncertainties created by a pending or threatened Change in Control and
to encourage your full attention and dedication to the Corporation currently and
in the event of any threatened or pending Change in Control. Further, the Board
desires to provide you with compensation and benefits arrangements upon a Change
in Control which ensure that your compensation and benefits expectations will be
satisfied and which are competitive with those of other corporations. Therefore,
in order to accomplish these objectives, the Board has caused the Corporation to
enter into this Agreement (the "Agreement").
1. Term of Agreement. The terms of this Agreement shall become
effective upon the execution hereof by the Corporation and shall continue unless
terminated by written agreement between you and the Corporation; provided, that
if a Change in Control occurs, then the term of this Agreement shall continue in
effect for a period of not less than [twelve (12)][twenty-four (24)] months
beyond the date (the "Change in Control Date") on which a Change in Control
occurs. No benefits shall be payable hereunder unless there has been a Change in
Control.
2. Change in Control. A Change in Control shall be deemed to occur
upon the earliest to occur after the date of this Agreement of any of the
following events:
2.1. Acquisition of Stock by Third Party. Any Person (as defined
below) is or becomes the Beneficial Owner (as defined below), directly or
indirectly, of securities of the Corporation representing twenty percent (20%)
or more of the combined voting power of the Corporation's then outstanding
securities;
2.2. Change in Board of Directors. During any period of two (2)
consecutive years (not including any period prior to the execution of this
Agreement), individuals who at the beginning of such period constitute the
Board, and any new director (other than a director designated by a person who
has entered into an agreement with the Corporation to effect a transaction
described in
Page 2
Sections 2.1, 2.3 or 2.4) whose election by the Board or nomination for election
by the Corporation's shareholders was approved by a vote of at least two-thirds
of the directors then still in office who either were directors at the beginning
of the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority of the members
of the Board;
2.3. Corporate Transactions. The effective date of a merger or
consolidation of the Corporation with any other entity, other than a merger or
consolidation which would result in the voting securities of the Corporation
outstanding immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 51% of the combined voting power
of the voting securities of the surviving entity outstanding immediately after
such merger or consolidation and with the power to elect at least a majority of
the board of directors or other governing body of such surviving entity;
2.4. Liquidation. The approval by the shareholders of the
Corporation of a complete liquidation of the Corporation or an agreement for the
sale or disposition by the Corporation of all or substantially all of the
Corporation's assets; or
2.5. Other Events. There occurs any other event of a nature that
would be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A (or a response to any similar item on any similar schedule or
form) promulgated under the Exchange Act (as defined below), whether or not the
Corporation is then subject to such reporting requirement.
2.6. Certain Definitions. For purposes of this Section 2, the
following terms shall have the following meanings:
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
"Person" shall have the meaning as set forth in Sections
13(d) and 14(d) of the Exchange Act; provided, however, that Person shall
exclude (i) the Corporation, (ii) any trustee or other fiduciary holding
securities under an employee benefit plan of the Corporation and (iii) any
corporation owned, directly or indirectly, by the shareholders of the
Corporation in substantially the same proportions as their ownership of stock of
the Corporation.
"Beneficial Owner" shall have the meaning given to such term
in Rule 13d-3 under the Exchange Act; provided, however, that Beneficial Owner
shall exclude any Person otherwise becoming a Beneficial Owner by reason of the
shareholders of the Corporation approving a merger of the Corporation with
another entity.
3. Termination Following a Change in Control.
3.1. General. You shall be entitled to the benefits provided in
Section 4 upon the termination of your employment, provided (a) that such
termination occurs after the date on which the shareholders of the Corporation
approve a transaction the consummation of which would result in the occurrence
of a Change in Control (the "Approval Date") and (b) the Change in Control
actually occurs, unless such termination is (x) because of your death or
Disability (as defined in Section 3.2), (y) by the Corporation for Cause (as
defined in Section 3.3), or (z) by you other than for Good Reason (as defined in
Section 3.4).
Page 3
3.2. Definition of Disability. If, as a result of your incapacity
due to physical or mental illness, you shall have been absent from the full-time
performance of your duties with the Corporation for six (6) consecutive months,
and within thirty (30) days after written notice of termination is given you
shall not have returned to the full-time performance of your duties, your
employment may be terminated for "Disability."
3.3. Definition of Cause. Termination by the Corporation of your
employment for "Cause" shall mean termination (a) upon your willful and
continued failure to perform substantially your duties with the Corporation
(other than any such failure resulting from your incapacity due to physical or
mental illness or any such actual or anticipated failure after your issuance of
a Notice of Termination (as defined in Section 3.5) for Good Reason), after a
written demand for substantial performance is delivered to you by the Board
which demand specifically identifies the manner in which the Board believes that
you have not substantially performed your duties, (b) upon your willful and
continued failure to follow and comply substantially with the specific and
lawful directives of the Board, as reasonably determined by the Board (other
than any such failure resulting from your incapacity due to physical or mental
illness or any such actual or anticipated failure after your issuance of a
Notice of Termination for Good Reason), after a written demand for substantial
performance is delivered to you by the Board, which demand specifically
identifies the manner in which the Board believes that you have not
substantially followed or complied with the directives of the Board, (c) upon
your willful commission of an act of fraud or dishonesty resulting in material
economic or financial injury to the Corporation, or (d) upon your willful
engagement in illegal conduct which is materially and demonstrably injurious to
the Corporation. For purposes of this Section 3.3, no act, or failure to act, on
your part shall be deemed "willful" unless done, or omitted to be done, by you
not in good faith. Notwithstanding the foregoing, you shall not be deemed
terminated for Cause pursuant to Sections 3.3(a), (b), (c) or (d) hereof unless
and until there shall have been delivered to you a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board (after reasonable notice to
you, an opportunity for you, together with your counsel, to be heard before the
Board and a reasonable opportunity to cure), finding that in the Board's good
faith opinion you were guilty of conduct set forth above in Section 3.3(a), (b),
(c) or (d) and specifying the particulars thereof in reasonable detail. In the
event of a Change in Control under Section 2.3 pursuant to which the Corporation
is not the surviving entity, then on and after the Change in Control Date all
determinations and actions required to be taken by the Board under this Section
3.3 shall be made or taken by the board of directors of the surviving entity, or
if the surviving entity is a subsidiary, then by the board of directors of the
ultimate parent corporation of the surviving entity.
3.4. Good Reason. You shall be entitled to terminate your
employment for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean, without your express written consent, the occurrence after the Approval
Date of any of the following circumstances unless, in the case of Sections
3.4(a), (f), (g), or (h), such circumstances are fully corrected (provided such
circumstances are capable of correction) prior to the Date of Termination (as
defined in Section 3.6) specified in the Notice of Termination given in respect
thereof:
(a) the assignment to you of any duties inconsistent with
the position in the Corporation that you held immediately prior to the
Approval Date, a significant adverse alteration in the nature or status of
your responsibilities or the conditions of your employment from those in
effect immediately prior to the Approval Date, or any other action by
Page 4
the Corporation that results in a material diminution in your position,
authority, title, duties or responsibilities;
(b) the Corporation's reduction of your annual base salary
as in effect on the Approval Date or as the same may be increased from time
to time;
(c) the relocation of the Corporation's offices at which you
are principally employed immediately prior to the Approval Date (your
"Principal Location") to a location more than twenty-five (25) miles from
such location or the Corporation's requiring you, without your written
consent, to be based anywhere other than your Principal Location, except
for required travel on the Corporation's business to an extent
substantially consistent with your present business travel obligations;
(d) the Corporation's failure to pay to you any portion of
your current compensation or to pay to you any portion of an installment of
deferred compensation under any deferred compensation program of the
Corporation within seven (7) days of the date such compensation is due;
(e) the Corporation's failure to continue in effect any
material compensation or benefit plan or practice in which you are eligible
to participate in on the Approval Date (other than any equity based plan),
unless an equitable arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to such plan, or the
Corporation's failure to continue your participation therein (or in such
substitute or alternative plan) on a basis not materially less favorable,
both in terms of the amount of benefits provided and the level of your
participation relative to other participants, as existed at the time of the
Approval Date;
(f) the Corporation's failure to continue to provide you
with benefits substantially similar in the aggregate to those enjoyed by
you under any of the Corporation's life insurance, medical, health and
accident, disability, pension, retirement, or other benefit plans or
practices in which you and your eligible family members were eligible to
participate in on the Approval Date (other than any equity based plans),
the taking of any action by the Corporation which would directly or
indirectly materially reduce any of such benefits, or the failure by the
Corporation to provide you with the number of paid vacation days to which
you are entitled on the basis of years of service with the Corporation in
accordance with the Corporation's normal vacation policy in effect on the
Approval Date;
(g) the Corporation's failure to obtain a satisfactory
agreement from any successor to assume and agree to perform this Agreement,
as contemplated in Section 6 hereof; or
(h) any purported termination of your employment that is not
effected pursuant to a Notice of Termination satisfying the requirements of
Section 3.6 hereof (and, if applicable, the requirements of Section 3.3
hereof), which purported termination shall not be effective for purposes of
this Agreement.
Page 5
Your right to terminate your employment pursuant to this Section 3.4 shall not
be affected by your incapacity due to physical or mental illness. Your continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder.
3.5. Notice of Termination. Any purported termination of your
employment by the Corporation or by you (other than termination due to death
which shall terminate your employment automatically) shall be communicated by
written Notice of Termination to the other party hereto in accordance with
Section 7. "Notice of Termination" shall mean a notice that shall indicate the
specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
3.6. Date of Termination, Etc. "Date of Termination" shall mean
(a) if your employment is terminated due to your death, the date of your death;
(b) if your employment is terminated for Disability, thirty (30) days after
Notice of Termination is given (provided that you shall not have returned to the
full-time performance of your duties during such thirty (30) day period), and
(c) if your employment is terminated pursuant to Section 3.3 or Section 3.4 or
for any other reason (other than death or Disability), the date specified in the
Notice of Termination (which, in the case of a termination for Cause shall not
be less than thirty (30) days from the date such Notice of Termination is given,
and in the case of a termination for Good Reason shall not be less than fifteen
(15) nor more than sixty (60) days from the date such Notice of Termination is
given). Notwithstanding anything to the contrary contained in this Section 3.6,
if within fifteen (15) days after any Notice of Termination is given, the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, then the Date of Termination shall be the
date on which the dispute is finally determined, either by mutual written
agreement of the parties, or otherwise; provided, however, that (i) the Date of
Termination shall be extended by a notice of dispute only if such notice is
given in good faith and the party giving such notice pursues the resolution of
such dispute with reasonable diligence; and (ii) in the event of your death
pending a dispute, and the resolution of such dispute is ultimately in your
favor, then the Date of Termination shall be the date specified in the Notice of
Termination.
4. Compensation Upon Termination. The benefits to which you are
entitled upon termination of your employment, subject to Section 3 and the other
terms and conditions of this Agreement, are:
4.1. Cause or Voluntary Termination. If your employment shall be
terminated by the Corporation for Cause or voluntarily terminated by you other
than for Good Reason, the Corporation shall pay you your full base salary
through the Date of Termination at the rate in effect at the time Notice of
Termination is given, plus all other amounts to which you are entitled under any
compensation plan or practice of the Corporation, and the Corporation shall have
no further obligations to you under this Agreement.
4.2. Good Reason or Termination By Corporation Without Cause. If
your employment by the Corporation shall be terminated by you for Good Reason,
or by the Corporation other than for Cause, Disability or death, then you shall
be entitled to the benefits provided below:
(a) the Corporation shall pay to you your full base salary,
when due, through the Date of Termination at the rate in effect at the time
Notice of Termination is given, at the time specified in Section 4.3, plus
(i) that portion of your targeted cash bonuses prorated
Page 6
through the Date of Termination, (ii) all accrued but unused vacation time
through the Date of Termination and (iii) all other amounts to which you
are entitled under any compensation plan or practice of the Corporation at
the time such payments are due;
(b) in lieu of any further salary payments to you for
periods subsequent to the Date of Termination, the Corporation shall pay as
severance pay to you, at the time specified in Section 4.3, a lump sum
payment equal to the sum of the following:
(1) [one and one-half (1.5)][two (2)] times your annual
base salary as in effect at the time the Notice of Termination is
given or immediately prior to the Change in Control Date (or the
Approval Date if the Date of Termination is prior to the Change in
Control Date), whichever is greater; and
(2) [one and one-half (1.5)][two (2)] times your
targeted annual bonus as in effect at the time the Notice of
Termination is given or immediately prior to the Change in Control
Date (or the Approval Date if the Date of Termination is prior to the
Change in Control Date), whichever is greater;
(c) for a period of two (2) years following the Date of
Termination, the Corporation shall, at its sole expense as incurred,
provide you with outplacement services, the scope and provider of which
shall be consistent with your status at the Corporation on the Date of
Termination;
(d) for a [eighteen (18)][twenty-four (24)] month period
after such termination, the Corporation shall continue to provide you and
your eligible family members, based on the cost sharing arrangement between
you and the Corporation at the time the Notice of Termination is given,
with medical and dental health benefits and life and disability benefits at
least equal to those which would have been provided to you and them if your
employment had not been terminated or, if more favorable to you, as in
effect generally at any time thereafter; provided, however, that if you
become re-employed with another employer and are eligible to receive such
benefits under another employer's plans, the Corporation's obligations
under this Section 4.2(d) shall be reduced to the extent comparable
benefits are actually received by you during the [eighteen
(18)][twenty-four (24)] month period following your termination, and any
such benefits actually received by you shall be reported to the
Corporation. In the event you are ineligible under the terms of such
benefit plans or programs to continue to be so covered, the Corporation
shall provide you with substantially equivalent coverage through other
sources or will provide you with a lump-sum payment in such amount that,
after all taxes on that amount, shall be equal to the cost to you of
providing yourself such benefit coverage. At the termination of the medical
and dental benefits coverage under the second preceding sentence, you, your
spouse and your dependents shall be entitled to continuation coverage
pursuant to section 4980B of the Internal Revenue Code of 1986, as amended
(the "Code"), sections 601-608 of the Employee Retirement Income Security
Act of 1974, as amended, and under any other applicable law, to the extent
required by such laws, as if you had terminated employment with the
Corporation on the date such benefits coverage terminates. The lump-sum
shall be determined on a present value basis using the interest rate
provided in section 1274(b)(2)(B) of the Code on the Date of Termination;
Page 7
(e) the Corporation shall furnish you for six (6) years
following the Date of Termination (without reference to whether the term of
this Agreement continues in effect) with directors' and officers' liability
insurance insuring you against insurable events which occur or have
occurred while you were a director or officer of the Corporation, such
insurance to have policy limits aggregating not less than the amount in
effect immediately prior to the Change in Control or the Approval Date
(whichever is more favorable to you), and otherwise to be in substantially
the same form and to contain substantially the same terms, conditions and
exceptions as the liability issuance policies provided for officers and
directors of the Corporation in force from time to time, provided, however,
that (i) such terms, conditions and exceptions shall not be, in the
aggregate, materially less favorable to you than those in effect on the
date hereof and (ii) if the aggregate annual premiums for such insurance at
any time during such period exceed two hundred percent (200%) of the per
annum rate of premium currently paid by the Corporation for such insurance,
then the Corporation shall provide the maximum coverage that will then be
available at an annual premium equal to two hundred percent (200%) of such
rate;
(f) you shall be fully vested in your accrued benefits under
all qualified or nonqualified pension, profit sharing, deferred
compensation or supplemental plans maintained by the Corporation for your
benefit, and the Corporation shall provide you with additional fully vested
benefits under all defined benefit and cash balance plans in an amount
equal to the benefits which you would have accrued had you continued your
employment with the Corporation until the second anniversary of your Date
of Termination; provided, however, that to the extent that the acceleration
of vesting or enhanced accrual of such benefits would violate any
applicable law or require the Corporation to accelerate the vesting of the
accrued benefits of all participants in such plan or plans or to provide
additional benefit accruals to such participants, the Corporation shall pay
you a lump-sum payment at the time specified in Section 4.3 in an amount
equal to the value of such benefits;
(g) in the event you relocate during the period of [twelve
(12)][twenty-four (24)] months following the Date of Termination in order
to begin new employment, your costs (grossed up for taxes) of such
relocation shall be provided by the Corporation as if the Corporation had
(i) hired you as of the date of this Agreement and provided you with its
"B+" relocation package or (ii) hired you on the Date of Termination,
whichever is greater; and
(h) all unvested stock options held by you on the Date of
Termination shall immediately vest and become exercisable in full and shall
remain exercisable for the period specified in such options,
notwithstanding any vesting schedule or other provisions to the contrary in
the agreements or plans evidencing such options.
4.3. Timing of Payments under Sections 4.1 and 4.2. The payments
provided for in (a) Section 4.1 and (b) Sections 4.2(a), (b) and (f) shall be
made not later than the fifth day following the Date of Termination; provided,
however, that if the amounts of such payments cannot be finally determined on or
before such day, the Corporation shall pay to you on such day an estimate, as
determined in good faith by the Corporation, of the minimum amount of such
payments and shall pay the remainder of such payments (together with interest at
the rate provided in section 1274(b)(2)(B) of the Code) from the Date of
Termination as soon as the amount thereof can be determined but in no event
Page 8
later than the thirtieth day after the Date of Termination. In the event that
the amount of the estimated payments exceeds the amount subsequently determined
to have been due, such excess shall constitute a loan by the Corporation to you,
payable on the fifth day after demand by the Corporation (together with interest
at the rate provided in section 1274(b)(2)(B) of the Code) from the date such
payment was made by the Corporation.
4.4. Death or Disability. If your employment by the Corporation
shall be terminated by reason of death or Disability, the Corporation shall
continue payment of your annual base salary, at the rate then in effect on the
date of such termination, for a period of one year.
4.5. No Mitigation. You shall not be required to mitigate the
amount of any payment provided for in this Section 4 by seeking other employment
or otherwise nor, except as provided in Section 4.2(d), shall the amount of any
payment or benefit provided for in this Section 4 be reduced by any compensation
earned by you as the result of employment by another employer or
self-employment, by retirement benefits, by offset against any amount claimed to
be owed by you to the Corporation, or otherwise.
5. Taxes. You shall bear all expense of, and be solely responsible
for, all federal, state, local or foreign taxes due with respect to any payment
received hereunder, including, without limitation, any excise tax imposed by
Section 4999 of the Code; provided, however, that any payment or benefit
received or to be received by you in connection with a Change in Control or the
termination of your employment (whether payable pursuant to the terms of this
Agreement ("Contract Payments") or any other plan, arrangements or agreement
with the Corporation or an affiliate (collectively with the Contract Payments,
the "Total Payments")) that would constitute a "parachute payment" within the
meaning of Section 280G of the Code, shall be reduced to the extent necessary so
that no portion thereof shall be subject to the excise tax imposed by Section
4999 of the Code but only if, by reason of such reduction, the net after-tax
benefit received by you shall exceed the net after-tax benefit received by you
if no such reduction was made. For purposes of this Section 5, "net after-tax
benefit" shall mean (i) the Total Payments which you receive or are then
entitled to receive from the Corporation that would constitute "parachute
payments" within the meaning of Section 280G of the Code, less (ii) the amount
of all federal, state and local income and employment taxes payable by you with
respect to the foregoing calculated at the highest marginal income tax rate for
each year in which the foregoing shall be paid to you (based on the rate in
effect for such year as set forth in the Code as in effect at the time of the
first payment of the foregoing), less (iii) the amount of excise taxes imposed
with respect to the payments and benefits described in (i) above by Section 4999
of the Code. The foregoing determination will be made by the Corporation's
independent certified public accountants serving immediately prior to the Change
in Control (the "Accountants"). In the event that the Accountants are also
serving as accountant or auditor for the individual, group or entity effecting
the Change in Control you may appoint another nationally recognized public
accounting firm to make the determination required hereunder (which firm shall
then be referred to as the Accountants hereunder). All fees and expenses of the
Accountants shall be borne by the Corporation. You will direct the Accountants
to submit their determination and detailed supporting calculations to both you
and the Corporation within fifteen (15) days of receipt from you or the
Corporation that you have received or will receive the Total Payments. If the
Accountants determine that such reduction is required by this Section 5, you, in
your sole and absolute discretion, may determine which Total Payments shall be
reduced to the extent necessary so that no portion thereof shall be subject to
the excise tax imposed by Section 4999 of the Code, and the Corporation shall
pay such reduced amount to you. You and the Corporation will each provide the
Accountants access to and copies of any
Page 9
books, records, and documents in the possession of you or the Corporation, as
the case may be, reasonably requested by the Accountants, and otherwise
cooperate with the Accountants in connection with the preparation and issuance
of the determinations and calculations contemplated by this Section 5.
6. Successors; Binding Agreement.
6.1. Successor to Assume Agreement. The Corporation shall require
any successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Corporation to expressly assume and agree to perform this Agreement. Failure of
the Corporation to obtain such assumption and agreement prior to the Change in
Control Date shall be a breach of this Agreement and shall entitle you to
terminate your employment and receive compensation from the Corporation in the
same amount and on the same terms to which you would be entitled hereunder if
you terminate your employment for Good Reason following the Approval Date,
except that for purposes of implementing the foregoing, the Change in Control
Date shall be deemed the Date of Termination. Unless expressly provided
otherwise, "Corporation" as used herein shall mean the Corporation as defined in
this Agreement and any successor to its business and/or assets as aforesaid.
6.2. Binding Agreement. This Agreement shall inure to the benefit
of and be enforceable by you and your personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If you should die while any amount would still be payable to you
hereunder had you continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to your
devisee, legatee or other designee or, if there is no such designee, to your
estate.
7. Notice. All notices, requests, demands and other communications
which are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given when received if personally delivered;
when transmitted if transmitted by telecopy; the day after it is sent, if sent
for next day delivery to a domestic address by recognized overnight delivery
service (e.g., Federal Express); and upon receipt, if sent by certified or
registered mail, return receipt requested. All notices, requests, demands and
other communications shall be addressed to the respective addresses set forth on
the first page of this Agreement, provided that all notices to the Corporation
shall be directed to the attention of the Board with a copy to the Secretary of
the Corporation, or to such other address as either party may have furnished to
the other in writing in accordance herewith, except that notice of change of
address shall be effective only upon receipt.
8. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by you and such officer as may be specifically designated
by the Board. No waiver by either party hereto at any time of any breach by the
other party hereto of or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement. All references to
sections of the Exchange Act or the Code shall be deemed also to refer to any
successor provisions to such sections. Any payments provided for hereunder shall
be paid net of any applicable withholding required under federal, state or local
law. The obligations of the Corporation under Section 4 shall survive the
Page 10
expiration of the term of this Agreement. The section headings contained in this
Agreement are for convenience only, and shall not affect the interpretation of
this Agreement.
9. Severability. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
10. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
11. Suits, Actions, Proceedings, Etc.
11.1. Compensation During Dispute, Etc. Your compensation during
any disagreement, dispute, controversy, claim, suit, action or proceeding
(collectively, a "Dispute"), arising out of or relating to this Agreement or the
interpretation of this Agreement shall be as follows: If there is a termination
followed by a Dispute as to whether you are entitled to the payments and other
benefits provided under this Agreement, then, during the period of that Dispute
the Corporation shall pay you fifty percent (50%) of the amount specified in
Sections 4.2(a) and 4.2(b) hereof, and the Corporation shall provide you with
the other benefits provided in Section 4.2 of this Agreement, if, but only if,
you agree in writing that if the Dispute is resolved against you, you shall
promptly refund to the Corporation all payments you receive under Sections
4.2(a) and 4.2(b) of this Agreement plus interest at the rate provided in
Section 1274(d) of the Code, compounded quarterly. If the Dispute is resolved in
your favor, promptly after resolution of the dispute the Corporation shall pay
you the sum that was withheld during the period of the Dispute plus interest at
the rate provided in Section 1274(d) of the Code, compounded quarterly.
11.2. Legal Fees. The Corporation shall pay to you all legal fees
and expenses incurred by you in connection with any Dispute arising out of or
relating to this Agreement or the interpretation thereof in which you are the
prevailing party (including, without limitation, all such fees and expenses, if
any, incurred in contesting or disputing any termination of your employment or
in seeking to obtain or enforce any right or benefit provided by this Agreement,
or in connection with any tax audit or proceeding to the extent attributable to
the application of section 4999 of the Code to any payment or benefit provided
hereunder).
11.3. Choice of Law; Arbitration. The internal laws of the State
of Oregon, United States of America, applicable to contracts entered into and
wholly to be performed in Oregon by Oregon residents, without reference to any
principles concerning conflicts of law, shall govern the validity of this
Agreement, the construction of its terms and the interpretation of the rights
and duties of the parties hereunder; provided, however, that this Section 11.3
and the parties' rights under this Section 11.3 shall be governed by and
construed in accordance with the Federal Arbitration Act, 9 U.S.C. ss. 1 et.
sec. Any controversy or claim arising out of or relating to this Agreement, or
the breach thereof, shall be settled by the following procedures: Either party
may send the other written notice identifying the matter in dispute and
involving the procedures of this Section 11.3. Within fourteen (14) days after
such written notice is given, one or more principals of each party shall meet at
a mutually agreeable location in Portland, Oregon, for the purpose of
determining whether they can resolve the dispute themselves by written
agreement, and, if not, whether they can agree upon a third-party impartial
arbitrator (the "Arbitrator") to whom to submit the matter in dispute for final
and binding arbitration. If the parties fail
Page 11
to resolve the dispute by written agreement or agree on the Arbitrator within
such twenty-one (21) day period, either party may make written application to
the Judicial Arbitration and Mediation Services ("JAMS"), 600 University Street,
Suite 1910, Seattle, Washington 98101, for the appointment of a single
Arbitrator to resolve the dispute by arbitration and at the request of JAMS, the
parties shall meet with JAMS at its offices or confer with JAMS by telephone
within ten (10) calendar days of such request to discuss the dispute and the
qualifications and experience which each party respectively believes the
Arbitrator should have; provided, however, the selection of the Arbitrator shall
be the exclusive decision of JAMS and shall be made within thirty (30) days of
the written application to JAMS. Within 30 days of the selection of the
Arbitrator, the parties shall meet in Portland, Oregon with such Arbitrator at a
place and time designated by the Arbitrator after consultation with the parties
and present their respective positions on the dispute. Each party shall have no
longer than one day to present its position, the entire proceedings before the
Arbitrator shall be on no more than three consecutive days, and the award shall
be made in writing no more than 30 days following the end of the proceeding.
Such award shall be a final and binding determination of the dispute and shall
be fully enforceable as an arbitration award in any court having jurisdiction
and venue over the parties. The prevailing party (as determined by the
Arbitrator) shall in addition be awarded by the Arbitrator such party's own
attorneys' fees and expenses in connection with such proceeding. The
non-prevailing party (as determined by the Arbitrator) shall pay the
Arbitrator's fees and expenses.
12. Effect on Other Agreements. In the event that you are a party to
any employment agreement ("Employment Agreement") with the Corporation, it is
the intention that this Agreement provide benefits which are not otherwise
provided by any Employment Agreement. Therefore, in the event that during the
term of this Agreement you are entitled to payment under both this Agreement and
any Employment Agreement, then you shall only receive the greater of the
benefits provided under either this Agreement or such Employment Agreement, but
not both. In the event you receive benefits under this Agreement, you waive all
rights to receive any benefits under such Employment Agreement, and vice versa.
13. Entire Agreement. This Agreement sets forth the entire agreement
of the parties hereto in respect of the subject matter contained herein and
supersedes all other prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any prior agreement
of the parties hereto in respect of the subject matter contained herein,
including, without limitation, any prior severance agreements, is hereby
terminated and canceled; provided, however, that any Employment Agreement as
amended by Section 12 hereof shall remain in full force and effect and shall,
pursuant to the terms and conditions thereof, provide certain severance benefits
to you upon certain terminations of employment. Any of your rights hereunder
shall be in addition to any rights you may otherwise have under benefit plans or
agreements of the Corporation to which you are a party or in which you are a
participant, including, but not limited to, any Corporation sponsored employee
benefit plans and stock options plans. Provisions of this Agreement shall not in
any way abrogate your rights under such other plans and agreements.
Page 12
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Corporation the enclosed copy of this letter. A
duly authorized officer of the Corporation will sign this letter and a fully
executed copy will be returned to you, constituting our agreement on this
subject. Unless and until accepted in writing by the Corporation, this Agreement
is deemed to be neither executed nor effective.
Sincerely,
MENTOR GRAPHICS CORPORATION
By: _____________________________________
Its: ____________________________________
Agreed and Accepted,
this _____ day of _______________, 199__.
_______________________________________
[Officer signature]