<PAGE>
Exhibit 10.01
INDEMNITY AGREEMENT
This Indemnity Agreement, dated as of , 2000,
is made by and between Cadence Design Systems, Inc., a Delaware corporation
(the "Company"), and , a of
the Company (the "Indemnitee").
RECITALS
A. The Company is aware that competent and experienced persons are
increasingly reluctant to serve as directors or officers of corporations
unless they are protected by comprehensive liability insurance or
indemnification, due to increased exposure to litigation costs and risks
resulting from their service to such corporations, and due to the fact that
the exposure frequently bears no reasonable relationship to the compensation
of such directors and officers;
B. The statutes and judicial decisions regarding the duties of
directors and officers area often difficult to apply, ambiguous, or
conflicting, and therefore fail to provide such directors and officers with
adequate, reliable knowledge of legal risks to which they are exposed or
information regarding the proper course of action to take;
C. Plaintiffs often seek damages in such large amounts and the costs
of litigation may be so substantial (whether or not the case is meritorious),
that the defense and/or settlement of such litigation is often beyond the
personal resources of officers and directors;
D. The Company believes that it is unfair for its directors and
officers and the directors and officers of its subsidiaries to assume the
risk of large judgments and other expenses that may be incurred in cases in
which the director or officer received no personal profit and in cases where
the director or officer was not culpable;
E. The Company recognizes that the issues in controversy in
litigation against a director or officer of a corporation such as the Company
or a subsidiary of the Company are often related to the knowledge, motives
and intent of such director or officer, that he is usually the only witness
with knowledge of the essential facts and exculpating circumstances regarding
such matters and that the long period of time which usually elapses before
the trial or other disposition of such litigation often extends beyond the
time that the director or officer can reasonably recall such matters; and may
extend beyond the normal time for retirement for such director or officer
with the result that he, after retirement or in the event of his death, his
spouse, heirs, executors or administrators, may be faced with limited ability
and undue hardship in maintaining an adequate defense, which may discourage
such a director or officer from serving in that position;
Based upon their experience as business managers, the Board of
Directors of the Company (the "Board") has concluded that, to retain and attract
talented and experienced
1
<PAGE>
individuals to serve as officers and directors of the Company and its
subsidiaries and to encourage such individuals to take the business risks
necessary for the success of the Company and its subsidiaries, it is
necessary for the Company to contractually indemnify its officers and
directors and the officers and directors of its subsidiaries in connection
with claims against such persons in connection with their service, and has
further concluded that the failure to provide such contractual
indemnification could result in great harm to the Company and its
subsidiaries and the Company's shareholders;
F. The Company desires and has requested the Indemnitee to serve or
continue to serve as a director or officer of the Company and/or the
subsidiaries of the Company free from undue concern for claims for damages
arising out of or related to such services to the Company and/or the
subsidiaries of the Company; and
G. The Indemnitee is willing to serve, or to continue to serve, the
Company and/or the subsidiaries of the Company that he is furnished the
indemnity provided for herein.
AGREEMENT
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. DEFINITIONS.
(a) COVERED PERSON. For purposes of this Agreement, a
"covered person" shall include the Indemnitee and any heir, executor,
administrator or other legal representative of the Indemnitee following his
or her death or incapacity.
(b) EXPENSES. For purposes of this Agreement, "expenses"
includes all direct and indirect costs of any type or nature whatsoever
(including, without limitation, all attorneys' fees and related disbursements
and other out-of-pocket costs) actually and reasonably incurred by the
Indemnitee in connection with either the investigation, defense or appeal of
a proceeding or establishing or enforcing a right to indemnification under
this Agreement, Section 145 or otherwise.
(c) PROCEEDING. For the purposes of this Agreement,
"proceeding" means any threatened, pending, or completed action, suit or
other proceeding, whether civil, criminal, administrative, investigative or
any other type whatsoever, and including any of the foregoing commenced by or
on behalf of the Company, derivatively or otherwise.
(d) SUBSIDIARY. For purposes of this Agreement,
"subsidiary" means any corporation of which more than 50% of the outstanding
voting securities is owned directly or indirectly by the Company, and one or
more other subsidiaries, or by one or more other subsidiaries.
2. AGREEMENT TO SERVE. The Indemnitee agrees to serve and/or
continue to serve the Company and/or its subsidiaries in his present
capacity, so long as he is duly appointed or elected or until such time as he
tenders his resignation in writing, provided, however, that nothing contained
in this Agreement is intended to create any right to continued employment by
Indemnitee.
2
<PAGE>
3. MAINTENANCE OF LIABILITY INSURANCE.
(a) The Company hereby covenants and agrees that, so long
as the Indemnitee shall continue to serve as an officer or director of the
Company or any of its subsidiaries, and thereafter so long as the Indemnitee
shall be subject to any possible proceeding by reason of such service, the
Company, subject to Section 3(b), shall use reasonable efforts to obtain and
maintain in full force and effect directors' and officers' liability
insurance ("D&O Insurance") in reasonable amounts from established and
reputable insurers.
(b) Notwithstanding the foregoing, the Company shall have
no obligation to obtain or maintain D&O Insurance if the Company determines
in good faith that such insurance is not reasonably available, the premium
costs for such insurance are disproportionate to the amount of coverage
provided, the coverage provided by such insurance is limited by exclusions so
as to provide an insufficient benefit, or the Indemnitee is covered by
similar insurance maintained by a subsidiary of the Company.
4. MANDATORY INDEMNIFICATION.
(a) RIGHT TO INDEMNIFICATION. In the event a covered person
was or is made a parity or is threatened to be made a party to or is involved
in any proceeding, by reason of the fact that the Indemnitee is or was a
director, officer or employee of the Company (including any subsidiary or
affiliate thereof or any constituent corporation or any of the foregoing
absorbed in any merger) or is or was serving at the request of the Company
(including such subsidiary, affiliate or constituent corporation) as a
director, officer or employee of another corporation, or of a partnership,
joint venture, trust or other entity, including service with respect to
employee benefit plans, such person shall be indemnified and held harmless by
the Company to the fullest extent permitted by applicable law, against all
expenses, liability and loss (including, without limitation, attorneys' fees,
judgments, fines, ERISA excise and other taxes and penalties and amounts paid
or to be paid in settlement) reasonably incurred or suffered by such person
in connection therewith. Such indemnification shall continue after the
Indemnitee has ceased to serve in such capacity and shall inure to the
benefit of his heirs, executors and administrators; provided, however, that
except for a proceeding pursuant to Section 7, the Company shall indemnify
any such person in connection with a proceeding (or part thereof) initiated
by such person only if such proceeding (or part thereof) was authorized by
the Board of Directors of the Company.
(b) EXCEPTION FOR AMOUNTS COVERED BY INSURANCE.
Notwithstanding the foregoing, the Company shall not be obligated to
indemnify a covered person for expenses or liabilities of any type whatsoever
(including, but not limited to, judgments, fines, ERISA excise taxes or
penalties, and amounts paid in settlement) which have been paid directly to
such person by D&O Insurance.
(c) PARTIAL INDEMNIFICATION. If a covered person is
entitled under any provision of this Agreement to indemnification by the
Company for some or a portion of any expenses or liabilities of any type
whatsoever (including, but not limited to, judgments, fines, ERISA excise
taxes or penalties, and amounts paid in settlement) incurred by him in the
3
<PAGE>
investigation, defense, settlement or appeal of a proceeding but not
entitled, however, to indemnification for all of the total amount thereof,
the Company shall nevertheless indemnify such person for such total amount
except as to the portion thereof to which the Indemnitee is not entitled.
5. MANDATORY ADVANCEMENT OF EXPENSES. The Company shall pay all
expenses incurred by a covered person, or in defending any such proceeding as
they are incurred in advance of its final disposition; provided, however,
that if the Delaware General Corporations Law then so requires, the payment
of such expenses incurred in advance of the final disposition of such
proceeding shall be made only upon delivery to the Company of an undertaking,
by or on behalf of such covered person, to repay all amounts so advanced if
it should be determined ultimately that such person is not entitled to the
payment of such expenses by the Company.
6. NOTICE AND OTHER INDEMNIFICATION PROCEDURES.
(a) Promptly after receipt by a covered person of notice of
the commencement of or the threat of commencement of any proceeding, such
person shall, if such person believes that indemnification with respect
thereto may be sought from the Company under this Agreement, notify the
Company of the commencement or threat of commencement thereof.
(b) If, at the time of the receipt of a notice of the
commencement of a proceeding, the Company has D&O Insurance in effect, the
Company shall give prompt notice of the commencement of such proceeding to
the insurers in accordance with the procedures set forth in the respective
policies. The Company shall thereafter take all necessary or desirable action
to cause such insurers to pay, on behalf of the covered person, all amounts
payable as a result of such proceeding in accordance with the terms of such
policies.
(c) In the event the Company shall be obligated to advance
the expenses for any proceeding against the covered person, the Company, if
appropriate, shall be entitled to assume the defense of such proceeding, with
counsel approved by the covered person (such approval not to be unreasonably
withheld), upon the delivery to the covered person of written notice of its
election so to do. After delivery of such notice, approval of such counsel by
the covered person and the retention of such counsel by the Company, the
Company will not be liable to the covered person under this Agreement for any
fees of counsel subsequently incurred by the covered person with respect to
the same proceeding, provided that (i) the covered person shall have the
right to employ separate counsel in any such proceeding at the covered
person's expense; and (ii) if (A) the employment of counsel by the covered
person has been previously authorized by the Company, (B) the covered person
shall have reasonably concluded that there may be a conflict of interest
between the Company the covered person in the conduct of any such defense of
(C) the Company shall not, in fact, have employed counsel to assume the
defense of such proceeding, the fees and expenses of the covered person's
counsel shall be at the expense of the Company.
7. RIGHT OF INDEMNITEE TO BRING SUIT. If a claim for indemnification
or advancement of expenses hereunder is not paid in full by the Company
within sixty days after a written claim has been received by the Company,
except in the case of a claim for an advancement of expenses, in which case
the applicable period shall be twenty days, the covered person may at
4
<PAGE>
any time thereafter bring suit against the Company to recover the unpaid
amount of the claim. If successful in whole or in part in any such suit, or
in a suit brought by the Company to recover and advancement of expenses
pursuant to the terms of an undertaking, the covered person shall be entitled
to be paid also the expense of prosecuting or defending such suit. In (i) any
suit brought by a covered person to enforce a right to indemnification
hereunder (but not in a suit brought by a covered person to enforce a right
to an advancement of expenses) it shall be a defense that, and (ii) in any
suit by the Company to recover an advancement of expenses pursuant to the
terms of an undertaking the Company shall be entitled to recover such
expenses upon a final adjudication that, indemnification is not permitted by
applicable law. Neither the failure of the Company (including its Board of
Directors, independent legal counsel or its stockholders) to have made a
determination prior to the commencement of such suit that indemnification of
the covered person is proper in the circumstances, nor an actual
determination by the Company (including its Board of Directors, independent
legal counsel or its stockholders) that indemnification is not proper, shall
create a presumption that the covered person is not entitled to
indemnification or, in the case of such a suit brought by a covered person,
be a defense to such suit. In any suit brought by a covered person to enforce
a right to indemnification or to an advancement of expenses hereunder, or by
the Company to recover an advancement of expenses pursuant to the terms of an
undertaking, the burden of proving that the covered person is not entitled to
be indemnified, or to such advancement of expenses, shall be on the Company.
8. LIMITATION OF ACTIONS AND RELEASE OF CLAIMS. No proceeding shall
be brought and no cause of action shall be asserted by or on behalf of the
Company or any subsidiary against the Indemnitee, his spouse, heirs, estate,
executors or administrators after the expiration of one year from the act or
omission of the Indemnitee upon which such proceeding is based; however, in a
case where the Indemnitee fraudulently conceals the facts underlying such
cause of action, no proceeding shall be brought and no cause of action shall
be asserted after the expiration of one year from the earlier of (i) the date
the Company or any subsidiary of the Company discovers such facts, or (ii)
the date the Company of any subsidiary of the Company could have discovered
such facts by the exercise of reasonable diligence. Any claim or cause of
action of the Company or any subsidiary of the Company, including claims
predicated upon the negligent act or omission of the Indemnitee, shall be
extinguished and deemed released unless asserted by filing of a legal action
within such period. This Section 8 shall not apply to any cause of action
which has accrued on the date hereof and of which the Indemnitee is aware on
the date hereof, but as to which the Company has no actual knowledge apart
from the Indemnitee's knowledge.
9. NON-EXCLUSIVITY. The provisions for indemnification and
advancement of expenses set forth in this Agreement shall not be deemed
exclusive of any other rights which the Indemnitee or any covered person may
have under any provision of law, the Company's Certificate of Incorporation
or Bylaws, the vote of the Company's shareholders or disinterested directors,
other agreements, or otherwise, both as to action in his official capacity
and to action in another capacity while occupying his position as an officer,
director or employee of the Company, and the Indemnitee's right hereunder
shall continue after the Indemnitee has ceased to so act and shall inure to
the benefit of any heir, executor, administrator or other legal
representative of the Indemnitee. Notwithstanding the foregoing, the prior
indemnification agreement, executed by the Indemnitee on __________, is
superceded by this Agreement.
5
<PAGE>
10. INTERPRETATION OF AGREEMENT. It is understood that the parties
hereto intend this Agreement to be interpreted and enforced so as to provide
indemnification to the Indemnitee to the fullest extent now or hereafter
permitted by law.
11. SEVERABILITY. If any provision or provisions of this Agreement
shall be held to be invalid, illegal or unenforceable for any reason
whatsoever, (i) the validity, legality and enforceability of the remaining
provisions of the Agreement (including, without limitation, all portions of
any paragraphs of this Agreement containing any such provision held to be
invalid, illegal or unenforceable, that are not themselves invalid, illegal
or unenforceable) shall not in any way be affected or impaired thereby, and
(ii) to the fullest extent possible, the provisions of this Agreement
(including, without limitation, all portions of any paragraphs of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid, illegal or unenforceable)
shall be construed so as to give effect to Section 10 hereof.
12. MODIFICATION AND WAIVER. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by
both of the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provision
hereof (whether or not similar) nor shall such waiver constitute a continuing
waiver.
13. SUCCESSORS AND ASSIGNS. The terms of this Agreement shall bind,
and shall inure to the benefit of, the successors and assigns of the parties
hereto.
14. NOTICE. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed duly given (i)if
delivered by hand and receipted for by the party addressee or (ii) if mailed
by certified or registered mail with postage prepaid, on the third business
day after the mailing date. Addresses for notice to either party are as shown
on the signature page of this Agreement, or as subsequently modified by
written notice.
15. GOVERNING LAW. This Agreement shall be governed exclusively by
and construed according to the laws of the State of Delaware, as applied to
contracts between Delaware residents entered into and to be performed
entirely with Delaware.
16. CONSENT TO JURISDICTION. The Company and the Indemnitee each
hereby irrevocably consent to the jurisdiction of the courts of the State of
Delaware for all purposes in connection with any action or proceeding which
arises out of or relates to this Agreement.
6
<PAGE>
The parties hereto have entered into this Indemnity Agreement
effective as of the date first above written.
CADENCE DESIGN SYSTEMS, INC.
By
---------------------------------
Its
-------------------------------
Address:
---------------------------
INDEMNITEE
By
---------------------------------
Address:
-------------------------------
-------------------------------
7
