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EXHIBIT 10.8
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT is made as of the 24th day
of August, 2000 by and between AVANTI CORPORATION, a Delaware corporation
(the "Corporation"), and Gerard C. Hsu (the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive has been and is now in the employ of the
Corporation as its Chairman, President and Chief Executive Officer, pursuant
to an employment agreement dated July 21, 1998 (the "Agreement");
WHEREAS, the Board of Directors of the Corporation has concluded that the
Corporation will be benefitted by securing the service of the Executive; and
WHEREAS, the Corporation and the Executive desire to amend and restate
the Agreement to reflect certain changes to the Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual promises
and agreements hereinafter set forth, the parties therefore agree as follows:
1. EMPLOYMENT
(a) The Corporation hereby employs the Executive as its Chairman,
President and Chief Executive Officer, and the Executive hereby
accepts such employment with the Corporation for a term commencing on
the date of this Agreement and expiring on December 31, 2008. The
Executive shall subject to his election as such from time to time
(the "Term") serve during the Term in such additional offices of
comparable or greater stature and responsibility in the Corporation
and its subsidiaries and as a director and as a member of any
committee of the Board of Directors of the Company and its
subsidiaries, to which he may be elected from time to time. During
the Term, the Executive shall report only to the Board of Directors,
will devote his best efforts to such employment and all of his
business time and attention to the performance of his duties
hereunder; provided, however, that the Executive may devote
reasonable periods required for serving as a director or member of
any corporation, partnership, trust or other entity ("Entity")
organization involving no conflict of interest with the interests of
the Corporation or his personal affairs so long as the same does not
interfere with the performance of his duties hereunder.
(b) The Executive shall have all of the duties, powers,
responsibilities, functions and authority inherent in the position of
its Chairman, President and Chief Executive Officer. All executives
of the Corporation, its divisions and subsidiaries shall report,
directly or indirectly, to the Executive and shall be subordinate to
the Executive Services by the Executive shall be rendered in the
East Bay Area near Fremont, California, except that the Executive
will continue to travel as required by the business of the Corporation
and consistent with the Executive's current practices and duties.
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The Corporation shall use its best efforts to cause the Executive to
be a member of its Board of Directors throughout the term of
employment during the Term and shall include him in the management
slate during the Term as the Chairman of the Board of Directors at
every Stockholders' meeting at which his term as the director would
otherwise expire.
(c) Upon the termination of Executive's employment, except for death,
disability or Cause (as hereinafter defined), the Executive shall
have the right, but not the obligation, to serve for a period of up
to five years as a consultant to the Corporation in accordance with
the terms of this Section. During the period of consultancy, the
Executive shall be paid, not less frequently than monthly, an annual
amount equal to 60% of his Minimum Salary (as hereinafter defined)
at the time of such termination; to the extent eligible, he, his
spouse, and members of his immediate family under the age of 21
shall continue to be part of the medical reimbursement program of the
Corporation or shall be furnished substantially equivalent coverage;
and he shall be provided with a suitable office with normal support
services (including secretarial services equivalent to those provided
on the date of this Agreement) in the Bay Area near Fremont,
California, any office of the Corporation around the world, or such
other location as Executive may select. During such time that
Executive serves as a consultant pursuant to the provisions hereof,
he shall be entitled to the benefits provided under Section 3 of this
Agreement, and, at his election, Executive shall be entitled to
security services as may be appropriately required during the period
of consultancy. The Executive shall be available for consultation
during regular business hours, on adequate notice, and the Executive
shall not be required to travel. The Executive shall not be required
to devote more than 10 business days per month to the consulting
services, and availability by telephone shall constitute availability
for purposes hereof. The consulting services shall be scheduled so as
not to interfere with reasonable vacation and personal plans of the
Executive. During this period, the Executive's services shall be
non-exclusive, but the Executive shall continue to be subject to the
provisions of Sections 16 and 17 of this Agreement as if he were
continuing in the employ of the Corporation.
(d) It is understood that the Executive may retire at any time
(hereinafter, "Voluntary Retirement").
2. COMPENSATION
(a) The Corporation shall pay to the Executive, not less frequently than
monthly; an annual salary (the "Minimum Salary") as fixed from time
to time by the Board of Directors or its Compensation Committee
during the term of his employment hereunder. The Minimum Salary is
$1,200,000 as of January 1, 2000. The Minimum Salary may be increased
from time to time by the Board of Directors or its Compensation
Committee but shall not be decreased thereafter and upon each such
increase the term "Minimum Salary" shall mean such increased total
amount. References to the Minimum Salary in this Agreement are to
the Minimum Salary, as adjusted, in the year in which the event
requiring such reference occurs.
(b) In addition to the Minimum Salary, the Executive shall be entitled
to receive during the Term an annual cash bonus based on the
performance of the Company and the Executive. The actual amount of
any such annual cash bonus to be paid to the
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Executive will be determined by Compensation Committee of the Board
of Directors, but shall not be less than 50% of the Minimum Salary,
as adjusted. Payment of any bonus compensation this Section shall
be made within 60 days after such determination.
3. BENEFITS AND EXPENSES
(a) The Corporation will reimburse the Executive for all reasonable
and necessary business and entertainment expenses incurred by
him in connection with the performance of his duties hereunder.
To the extent such expenses include air travel by the Executive,
such travel will be first class. In the event that any Federal,
state or local government agency or authority determines that any
such expenses which are reimbursed to the Executive constitute taxable
income to the Executive, the Corporation agrees to reimburse the
Executive (i) for all costs in disputing such action, including
counsel fees, and (ii) for all taxes and penalties incurred by the
Executive in connection with such action.
(b) The Corporation shall furnish to the Executive, for his sole use in
connection with company business, a suitable automobile comparable
to the automobile heretofore furnished to the Executive and shall
make available to Executive a suitable Jet that the Company shall
lease for domestic or international travel in connection with the
Company's business. The Corporation shall pay for all of the
operating costs, including a chauffeur, pilots, and maintenance and
storage costs of such automobile and such jet comparable to the
automobile heretofore furnished to the Executive and such jet. The
Corporation shall keep the automobile and jet fully insured against
any and all liabilities for injuries to passengers or other persons
and damages to property, including the automobile and jet.
(c) The Corporation shall reimburse Executive for reasonable legal and
accounting fees which he may incur in connection with the preparation
and periodic review of: his estate plan; tax planning; tax returns;
and this Employment Agreement and related employment arrangements.
4. BENEFIT PLANS
The Executive shall be eligible to participate in any employee benefit
programs, pension, profit-sharing, stock-option or similar plan or program
and in any group life insurance, hospitalization, mental, dental, accident,
disability or similar plan or program of the Corporation non-existing or
establishes hereafter. In addition, so long as Executive is an employee of
the Corporation, the Executive shall be entitled to receive other
benefits--generally available to all senior executives and any other which
are now or may hereafter be placed in effect.
5. STOCK OPTIONS OR OTHER SIMILAR BENEFITS
(a) With respect to shares of Common Stock of the Corporation which may
be acquired by the Executive pursuant to options or rights heretofore
or hereafter granted to him, the Corporation agrees that, to the
extent permitted by applicable law, at the Executive's
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request, the Corporation will lend or cause to be lent to the
Executive funds sufficient to enable him to pay (i) the exercise
price on such options or rights from time to time up to the total
number of shares covered by said options or rights and (ii) any
applicable federal, state and local income taxes incurred by the
Executive as a result of the exercise of such options and rights.
Such loans may be secured or unsecured, at the Corporation's
discretion, but if secured, the Corporation agrees that shares of its
Common Stock, taken at market value at the time, will be accepted by
the Corporation as adequate security, subject to applicable Federal,
state or local governmental or agency laws, rules or regulations. The
term of each loan shall be for a term to be fixed by the Board of
Directors. Interest on any such loan, if charged by the Corporation,
shall be at an appropriate rate as determined by the Board of
Directors, not exceeding the prime rate of the Corporation's
principal banking institution prevailing at the time and from time to
time thereafter. All of the other terms of such loan or loan shall be
as mutually agreed.
(b) The Corporation also agrees, at the Executive's request, to use its
best efforts to cause a registration statement to become effective
with respect to shares which the Executive may purchase pursuant to
said options or rights in order that the Executive may sell such
shares to the public, provided (i) the Executive shall not request
such registration statement with respect to shares subject to
restrictions on sale or transfer imposed by the terms of any stock
options or rights until such restrictions shall have ceased to be
effective, (ii) at the Corporation's election, such registration
statement may include, as well, other securities of the Corporation
and the securities of other senior executives employed by the
Corporation, (iii) such request shall not be made more frequently
than once in any 12 months period, and (iv) the Executive's request
for such registration statement shall not require the Corporation to
use audited financial statements other than those regularly prepared
for it by its independent public accountants and auditors unless the
Executive agrees to bear the cost of auditing such statements PRO
RATA with other persons selling securities. Except as set forth in
(iv) herein the Corporation shall bear all expenses in connection
with such registration statement.
(c) In addition to the foregoing and any other rights which Executive may
have under each of the 1995 Stock Option Plan and the 2000 Stock
Option Plan (collectively, the "Plans"), and in addition to any other
future plans granted to replace shares of stock of the Corporation
sold to pay the exercise price and withholding taxes on options
exercised, and any other plan in which Executive may be entitled to
participate, the Company agrees that the Executive shall receive
options to purchase such number of shares that the Compensation
Committee shall determine during each calendar year, and each
subsequent grant each calendar year to be made at such time and on
such terms as may be determined by the Board of Directors. The
Executive's right under the foregoing sentence to receive options
shall apply only so long as the Executive is employed by the
Corporation under this Agreement. Furthermore, any such options, as
well as any options held by the Executive pursuant to the Plans, shall
be made transferrable pursuant to whatever actions are required to be
taken by the Compensation Committee.
(d) This section shall apply to the executors, heirs or legal
representatives of the Executive to the extent such executors, heirs
or legal representatives succeed to the right of Executive to acquire
shares of Common Stock of the Corporation.
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6. VACATIONS
The Executive shall be entitled to such vacations, at such times and for such
periods, as are in accordance with the vacation policies of the Corporation
then in effect for senior executives employed by the Corporation, but in no
event shall the Executive be entitled to fewer than six weeks of vacation per
year. The Executive shall not be required to take any vacation time to which
he is entitled in a given year. In the event the Executive does not take all
of the vacation time to which he is entitled in a given year, such vacation
time will be deferred and accumulated for use by the Executive in a
subsequent year up to a total of eighteen weeks of vacation time.
7. INSURANCE
(a) The Corporation shall assist in obtaining and shall during the
Executive's employment hereunder, keep in effect and pay premiums
upon insurance on the life of the Executive (the "Insurance") as
described herein. The Corporation will continue to pay sufficient
premiums in substantially equal installments over a ten year period
to fund the Insurance to the point that no further premiums shall
thereafter be necessary, provided that, if it is determined at any
time that such premiums are insufficient to provide the required
death benefit as set forth below, then additional premiums shall be
paid by the Corporation to maintain the required death benefit. The
Insurance will be purchased on a "split dollar" basis, so that upon
the death of the Executive, the Corporation, pursuant to Split
Dollar and Collateral Assignment Agreements, will be entitled to
receive out of the proceeds of insurance the amount which it has
spent on premiums. The Insurance will have a death benefit of no
less than $4,000,000, provided that the Corporation will pay such
additional premiums as may be necessary to provide a net death
benefit payable to the aforesaid Trust of no less than $2,000,000
after subtraction of the amount which must be repaid to the
Corporation. The Corporation will be required to make premium
payments irrespective of whether the Executive is employed by the
Corporation, except if Executive's employment has been terminated
for Cause.
(b) Amounts payable upon the Executive's death pursuant to this Section
7 are in addition to benefits payable pursuant to a Group Life
Insurance program which is or may be established and maintained by
the Corporation for which the Executive is eligible.
(c) The Executive agrees to submit to any physical examination required
by any prospective insurer, and will otherwise cooperate with the
Corporation in connection with any life insurance on the
Executive's life the Corporation may wish to obtain.
8. TERMINATION OF EMPLOYMENT
(a) The Executive's employment shall terminate hereunder upon any of
the following events:
(i) Voluntary termination by the Executive, including Voluntary
Retirement;
(ii) Termination for Cause (as hereinafter defined);
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(iii) Termination by reason of the Executive's mental or physical
disability (as hereinafter defined);
(iv) Termination by reason of the Executive's death; or
(v) Termination upon expiration of the term of employment set
forth in Section 1(a) of this Agreement or any renewal term.
(b) "Cause" for purposes hereof shall be deemed to exist if:
(i) The Executive is convicted by a jury to of any crime or
offense involving theft or diversion of monies, intellectual
property, or other property of the Corporation which
conviction or plea, through lapse of time or otherwise, is not
subject to appeal and which constitutes a felony in the
jurisdiction involved; or
(ii) Material breach by the Executive of any provision of this
Agreement, provided that such breach continues for ninety
business days after delivery of notice to him of the facts on
which the Corporation bases a claim for a material breach.
Such notice shall be given only if approved by all of the
members of the Board of Directors, not including the Executive.
(c) The Executive may elect, by notice to the Corporation in accordance
with the provisions of paragraph (f) of this Section 8, to treat
the following acts or omissions by the Corporation to which he has
not given his express consent as termination of Executive's
employment without Cause:
(i) With respect to acts or omissions other than those specifically
stated in this paragraph (c), if the Corporation shall not
substantially comply with its obligations under this
Agreement and such failure shall not be corrected within
five business days after delivery of notice to the
Corporation of the facts on which the Executive bases a
claim of non-compliance.
(ii) The assignment to the Executive of any duties inconsistent
with his position as Chairman, President, and Chief
Executive or the Executive being required to report to
persons other than those specified in Section 1(a);
(iii) A relocation of the Executive's office to a place other than
the East Bay Area near Fremont, California or requiring
executive's services to be rendered at a place other than
the Corporation executive offices as determined by the
Executive;
(iv) A charge of material breach by the Corporation under Section
8(b)(ii) hereof which is determined by final judgment to
have been made without adequate basis in law or fact.
(v) The sale by the Corporation of all or substantially all of
its assets and business or a merger or consolidation of the
Corporation with a company other than a
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subsidiary of the Corporation in which the shareholders of
the Corporation, prior to the merger or consolidation, own
less than a majority of the company surviving such merger or
consolidation.
(vi) A change in control (as hereinafter defined) of the
Corporation.
(vii) Any attempt to reduce the Minimum Salary paid to the
Executive hereunder.
(viii) The Corporation failing to cause the Successor to all or
substantially all of the business and assets of the
Corporation expressly to assume the Corporation under this
Agreement.
(d) "Mental or physical disability" shall be deemed to exist if, in the
judgment of a physician licensed to practice in the State of
California, mutually selected by the Board of Directors and the
Executive (or his representative), the Executive has been unable or
will be unable, due to mental or physical incapacity, disease or
injury, to perform the duties or services specified herein for a
period of not fewer than 180 consecutive calendar days. For purposes
of this Agreement, the date of such disability shall be the date of
the determination by such physician.
(e) For purposes hereof, a "change in control" shall be deemed to have
occurred if, at any time prior to the expiration or termination of
this Agreement, voting power representing more than 25% of the
Corporation's outstanding Common Stock (or equivalent in voting
power of any class or classes of outstanding securities of the
Corporation ordinarily entitled to vote in elections of directors)
shall be acquired, directly or indirectly, by any individual,
corporation or group, other than persons who are members of the
Board of Directors at the date hereof or who succeed to the
ownership of securities of the Corporation of any such members of
the Board as executor, administrator, heir or intestate distributee
of such persons. "Group" shall mean persons who act in concert as
described in Section 14(d)(2) of the Securities Exchange Act of
1934, as amended. "Change in control" shall not include increases
in the percentage of voting power of persons who beneficially own
or control stock on the date of this Agreement which occur solely
as a result of a reduction in the amount of stock outstanding.
(f) The notice required by paragraph (c) of this Section 8 shall be
given within 90 days of the occurrence of a described event which
is not required to be reported on a Schedule 13D or Schedule 14D or
equivalent, or within 120 days after the filing of a report on
Schedule 13D or Schedule 14D or equivalent, reporting the event on
which the Executive elects to claim a termination without Cause.
9. COMPENSATION AFTER TERMINATION OF EMPLOYMENT; MUTUAL RELEASES
(a) In the term of Executive's employment expires pursuant to Section
1(a) hereof or in the event the Executive's employment is
terminated hereunder prior thereto for any reason, the Corporation
shall have no further obligations or duties to the Executive,
except as provided in Sections 1(c), 3, 5, 13 and 14 hereof and
except that the Executive shall be entitled to receive:
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(i) All salary due and owing to the Executive up to the
termination or expiration date, as the case may be
(hereinafter collectively referred to as the "Termination
Date"), and any bonus or incentive compensation for any year
prior to the Termination Date which has not been paid, and
any bonus or incentive compensation for the year of
termination, prorated to the Termination Date, provided
that, if such bonus or incentive compensation is
discretionary in amount, the Executive shall receive a
payment for any year at least equal to the last previous
bonus or incentive compensation payment made to him, which
amount shall, in the case of a bonus or incentive
compensation for the year of termination, be prorated to the
Termination Date. Any bonus payable to the Executive over a
number of years shall be accelerated and paid in full on the
Termination Date,
(ii) Expense reimbursements due and owing to the Executive as of
the Termination Date, plus payment for accrued vacation as
of the Termination Date at the Current Minimum Salary,
(iii) Payment, in accordance with prior Corporation practice, and
subject to the provisions of Section 7, of life insurance
premiums through Termination Date and of all benefits
accrued for the account of the Executive under the
Corporation's executive and employee benefits plans,
including, but not limited to, Corporation's Employee Stock
Ownership Plan, Pension Plan, Annual Incentive Bonus Plan
and Supplemental Executive Retirement Plan or any other such
plans then in effect and available to senior executives of
the Corporation as of the Termination Date,
(iv) Unless termination of Executive's employment is for Cause,
the Corporation shall continue to pay during Executive's
lifetime premiums for health insurance which is
substantially the same as the health insurance provided to
Executive as of the Termination Date, and
(v) Any monies owing to the Executive pursuant to subsection (b)
below.
(b) (i) In the event that the Executive's employment under this
Agreement is terminated other than for Cause, he shall be
entitled to receive for a number of months equal to one
month for each year he was employed by the Corporation and
its predecessors, compensation at the Adjusted Compensation
Rate, as hereinafter defined. Such amount shall be paid
semi-monthly in equal installments over the same number of
months as determined in the preceding sentence. "Adjusted
Compensation Rate" shall mean the sum of the Minimum Salary
on the Termination Date and 110% of the amount of the bonus
paid during the year preceding the Termination Date,
excluding the amount, if any, of loans forgiven during the
year. Any such payment is hereinafter referred to in this as
the "Deferred Compensation". Payment shall begin on the
first regular salary payment date during the month after the
month in which the Executive elects Voluntary Retirement.
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(ii) In the event of the termination of employment due to the
Executive's death, the Corporation shall pay to his
designated beneficiary (as hereinafter defined) the Deferred
Compensation, provided that such Deferred Compensation shall
not be paid over the period set forth in (i) above, but
shall be paid semi-monthly in twelve equal installments,
commencing on the Termination Date.
(iii) In addition to the Deferred Compensation, in the event the
Executive's employment under this Agreement is terminated
other than for Cause, in consideration of Executive's
services and obligations hereunder, including, where
applicable, his covenant not to compete with the Corporation
set forth in Section 17, the Corporation shall pay to the
Executive or his designated beneficiary, on the Termination
Date, a lump sum equal to his annual Minimum Salary on the
Termination Date multiplied by the greater of (i) the number
of years remaining in the balance of the term of Executive's
employment under this Agreement or any renewal or extension
hereof, of (ii) five years. Executive or his designated
beneficiary shall also be entitled to receive the Deferred
Compensation commencing on the Termination Date. For
purposes of this subsection (iii), years remaining in the
balance of the term of Executive's employment shall be
calculated on a calendar year basis, and part of a calendar
year shall be deemed to be a full year.
(iv) Notwithstanding anything in this Agreement or in any stock
option agreement between the Company and the Executive to
the contrary, if the Executive's employment under this
Agreement is terminated other than for Cause, then, at the
Executive's election (or the election of his designated
beneficiaries), Corporation will pay to the Executive (or
his designated beneficiaries) as additional compensation the
excess of the market value at the close of business on the
Termination Date of all shares of stock which the Executive
had an option to acquire from the Corporation over the
option price for such shares; and such options shall vest in
their entirety by the Executive and shall thereafter be
terminated.
(v) In the event the term of Executive's employment under this
Agreement expires without the execution of a new agreement
of employment (or extension of this Agreement), or his
employment continues after December 31, 2008, without the
execution of a new agreement of employment (or the extension
of this Agreement) and thereafter terminates at any time and
for any reason, such termination shall be deemed, for
purposes of this Section 9(b) to be a termination of
Executive's employment under this Agreement without Cause
entitling his or his designated beneficiary to payments
hereunder.
(vi) For purposes of calculating the Deferred Compensation under
this Section 9(b), the number of years the Executive will be
deemed to have been employed by the Corporation and its
predecessors shall be calculated on a calendar year basis
commencing with the year 1994. For purposes of computing the
Deferred Compensation, if Executive is employed for part of
a calendar year, he shall be credited with a full year's
employment with the Corporation for each such year. For
purposes of any calculation set forth above, the Executive
shall not be
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deemed to be in the employ of the Corporation for any period
during which he is paid pursuant to this Section 9(b).
(vii) In the event the Executive dies during the period he is
receiving any monies pursuant to this Section 9(b), or in the
event any monies are payable pursuant to this Section 9(b)
commencing upon the Executive's death, the monies due shall be
paid by the Corporation to such person or persons as may be
designated in writing from time to time by the Executive, or
in the absence of any such designation to the personal
representatives of his estate. (For purposes of this Section
9(b), any such payee shall be referred to as the "designated
beneficiary").
c. Upon the termination of the Executive's employment, the Corporation
and Executive agree that in consideration for Executive's unique
talents and services, the Corporation shall execute a general release,
in form and substance, satisfactory to Executive's counsel, that
releases and forever discharges Executive, his heirs, successors and
assigns, from any and all actions, causes of actions, claims, or
demands for general, special or punitive damages, attorney's fees,
expenses, or other compensation, which in any way relate to or arise
out of Executive's employment with the Corporation or any of its
subsidiaries.
10. APPLICABLE LAW
This Agreement is to be governed by and interpreted in accordance with the
laws of the State of California applicable to agreements made and to be
performed wholly within such State, except with respect to the powers of the
Corporation, which are governed by Delaware law.
11. AMENDMENT OF PLANS
Notwithstanding anything to the contrary herein, nothing herein is intended to
or shall operate to restrict the right of the Corporation to amend, terminate
or modify, in accordance with the terms hereof, any employee benefit programs
or practices heretofore or hereafter adopted by the Corporation.
12. ASSIGNMENT
This Agreement shall be binding upon the parties hereto, their heirs,
successors and assigns, except as otherwise set forth herein. This Agreement
is personal in nature and may not be assigned by either party except that,
subject to the provisions of Section 8(c) herein, the Corporation will
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 in the same manner and to the same extent that the Corporation
would be required to perform as if no such succession had taken place.
Notwithstanding the foregoing sentence, the Corporation shall not by virtue
of any such succession be relieved of any obligations hereunder.
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13. INDEMNIFICATION
To the fullest extent not inconsistent with applicable law, in the event that
the Executive is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he is
or was a director, officer, consultant, employee or agent of the Corporation
or any of its subsidiaries, or is or was serving at the request of the
Corporation as a director, officer, consultant, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, the
Corporation shall indemnify the Executive and hold his harmless, against all
expenses (including costs and attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by his in connection with
such action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the Executive did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interest of the Corporation, or that, with respect to any criminal action or
proceeding, the Executive had reasonable cause to believe that his conduct
was unlawful. The provisions of this Section 13 shall not be deemed exclusive
of any other rights of indemnification to which the Executive maybe entitled
or which may be granted to him, and it shall be in addition to any rights of
indemnification to which he may be entitled under any policy of insurance.
The provisions of Section 13 shall continue in effect after the Executive has
ceased to be a director, officer, employee or agent of the Corporation, shall
inure to the benefit of Executive's heirs, executors, administrators and
interstate distributees and shall survive the termination of this Agreement
under all circumstances.
All litigation or inquiries by third parties (for example, but not limited
to, those by shareholders - direct or derivative - or government agencies)
arising out of or in connection with this Agreement or Executive's
performance hereunder, against either the Corporation or the Executive or
both, shall be defended or opposed by the parties hereto, as the case may be,
to support this Agreement, and the costs, fees and expenses thereof,
including fees of counsel for the parties, shall be borne by the Corporation.
Notwithstanding the foregoing provisions of this Section 13, during the term
of Executive's employment hereunder and during such time he continues as an
officer or member of the Board of Directors, the Corporation agrees to
maintain substantially the same Directors' and Officers' liability insurance
in place on the date hereof and shall increase such coverage in the event the
Executive determines that it is in the best interest of the Corporation to
have such increased coverage.
14. ARBITRATION
Any controversy or claim between the Corporation and the Executive, their
representatives, heirs, successors and assigns, arising out of or relating to
this Agreement or any breach or asserted breach hereof or questioning the
validity and binding effect hereof shall be determined by arbitration
conducted in San Francisco in accordance with the Rules of the American
Arbitration Association then obtaining, and judgment upon any award rendered
may be entered in any court having jurisdiction thereof. The decision of the
arbitrators shall be final and binding upon the parties hereto. All of the
Executive's costs and expenses (including attorneys' fees) arising out of or
in connection with any matters submitted to arbitration pursuant to this
Section 14 shall be
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paid by the Corporation, unless the award of the arbitrators shall explicitly
find that the Executive's claim or his defense against a claim by the
Corporation was frivolous and completely without merit, in which case the
Executive shall pay the costs and expenses (including, without limitation,
reasonable attorneys, fees) incurred by the Corporation in such connection.
15. NOTICES
Any notice or other communication required to or which may be given to any
party hereunder shall be in writing and shall be deemed given effectively if
delivered personally to such party (or any officer thereof in the case of the
Corporation except that any notice to be given by the Executive to the
Corporation shall be to an officer other than himself) or if mailed, by
registered or certified mail, postage prepaid, return receipt requested,
addressed to such other party at the address first set forth above. Any party
may change the address to which notices are to be sent by giving written
notice of any such change in the manner provided herein.
16. CONFIDENTIAL INFORMATION
The Executive recognizes that as an executive of the Corporation he has had
and will have access to secret and confidential information regarding the
Corporation, its products, customers and plans relating to the electronic
design automation industry. The Executive acknowledges that such information
is of great value to the Corporation, and is the sole property of the
Corporation and that such information has been and will be acquired by his in
confidence. In consideration of the obligations undertaken by the Corporation
as set forth herein, the Executive will not, at any time, during or for a
period of one year after his employment as the Chairman and Chief Executive
Officer hereunder, reveal, divulge or make known, except as authorized by the
Corporation or required on its behalf or required pursuant to legal or
administrative processes, any information of a confidential nature concerning
the Corporation's business involving the electronic design automation industry
acquired by the Executive during the course of his employment to any
competitor to the Corporation in the EDA industry.
17. COVENANT NOT TO COMPETE
(a) The Executive recognizes that the services to be performed by him
hereunder are special, unique and extraordinary. The parties confirm
that it is reasonably necessary for the protection of the Corporation
that the Executive agree, and accordingly, the Executive does hereby
agree that he will not, directly or indirectly, except for the
benefit of the Corporation, at any time during his employment
hereunder and thereafter during the Restricted Period, as hereinafter
defined, for a period of three years from the date of termination of
this Agreement provided the Corporation shall duly perform its
obligations to the Executive pursuant to this Agreement:
(i) Become an officer, director, partner, associate, employee,
owner, agent, creditor, independent contractor, co-venturer or
otherwise, or be interested in or associated with any other
corporation, firm or business engaged, in any geographical
area in which the Corporation is engaged, in making or selling
one or more products competitive with a product or products
made or sold by Corporation in the EDA industry now or during
the term of this Agreement, which products made or sold by the
Corporation accounted for at least 10% of Corporation's annual
sales for any year during such period;
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(ii) Solicit, cause or authorize, directly or indirectly, to be
solicited for or on behalf of himself or third parties, from
parties who were customers of the Corporation in the EDA
industry at any time within one year prior to the cessation of
his employment hereunder, any business competitive to the
business transacted by the Corporation with such customers in
the EDA industry;
(iii) Accept or cause or authorize, directly or indirectly, to be
accepted for or on behalf of himself or third parties, any
such business in the EDA industry from any such customers of
the Corporation as defined in the preceding subsection;
(iv) Solicit, or cause or authorize, directly or indirectly, to be
solicited for employment for or on behalf of himself or third
parties, any persons who served in a full-time executive
capacity at any time within six months prior to the cessation
of his employment hereunder, the parties agree that the
restrictions set forth in this subsection shall not apply to any
solicitation directed by the Executive at the public in general
in publications available to the public in general or any
contact which Executive can demonstrate was initiated by such
employee.
(v) Take any public position contrary to a public position taken
by the Board of Directors of Corporation, provided that the
foregoing shall not apply to actions taken by the Executive to
enforce his rights under this Agreement or to testimony or the
production of documents by the Executive which may be required
by legal process.
(b) The Executive agrees that any breach or threatened breach by him of
any provisions of this Section 17 shall entitle the Corporation, in
addition to any other legal or equitable remedies available to it, to
apply to any court of competent jurisdiction to enjoin such breach or
threatened breach.
(c) This Section 17 shall not be construed to prevent the Executive
from owning in the aggregate an amount not exceeding three per cent
(3%) of the issued and outstanding voting securities of any class of
any corporation which is in competition with the corporation in the
EDA industry whose voting capital stock is traded on a national
securities exchange or in the over-the-counter market. For this
purpose "outstanding voting securities" shall be deemed to include
the voting securities issuable upon conversion of a corporation's
outstanding convertible securities, whether or not immediately
convertible, and the voting securities of a corporation issuable upon
exercise of outstanding warrants and options to acquire voting
securities, whether or not immediately exercisable, and "voting
securities" of a corporation shall be deemed to include securities
convertible into or exercisable for voting capital stock, valued at
the number of shares such securities are convertible into or
exercisable for the purpose of determining percentage ownership of
outstanding voting securities.
(d) The term "Restricted Period" as used in this Section 17 shall mean
the shorter of (i) one year or (ii) any period during which the
Executive is entitled to compensation hereunder pursuant to the
provisions of Section 2(a) hereof.
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(e) This Section 17 shall survive the termination of the
Executive's employment hereunder for the period provided in
paragraph (d).
(f) Notwithstanding anything in this Agreement to the contrary,
if the Executive violates any of the provisions of paragraph
(a) hereof during the Restricted Period and fails to cease
such violation and to remedy the consequences of such
violation within ninety days after notice from the Corporation
specifying such violation and if the Corporation obtains a
final judgment from a court of competent jurisdiction to the
effect that the Executive has violated a provision of
paragraph (a) and has failed to cease such violation and to
remedy the consequences of such violation within ninety days
after notice from the Corporation, all obligations of the
Corporation to compensate the Executive and to forgive
indebtedness, if any, of the Executive to the Corporation
shall cease, and the Corporation shall be entitled to
recover from the Executive compensation received by the
Executive and any indebtedness forgiven while such violation
existed.
(g) For the purpose of this Section 17, a company, entity or
person shall be deemed in competition with the Corporation,
if any company, entity or person engages in the EDA industry
or, to the knowledge of the Executive, has definitive plans
to engage in the EDA industry. In consideration of the
Executive's agreement to not compete in the EDA industry for
three years after the date of termination of his employment
as Chairman and CEO, hereunder the Corporation agrees to pay
the Executive a lump sum of 10 million dollars, payable
within 30 days after the termination of his employment.
18. MODIFICATION
The foregoing is the entire agreement between the parties relating to the
subject matter hereof and supersedes all prior agreements. This Agreement may
not be altered, modified, changed or discharged and none of the provisions
hereof may be waived except in writing, signed by the party to be charged
therewith. A failure strictly to enforce any of the terms of this Agreement
shall not be deemed to be a waiver of the right to enforce any such term at
any subsequent time.
19. SEVERABILITY
If any provision of this Agreement thereby; provided, however, that the
parties shall negotiate in good faith with respect to equitable modification
of the provision or application thereof held to be invalid. To the extent that
it may effectively do so under applicable law, each party hereby waives any
provision of law, which renders any provision of this Agreement invalid,
illegal or unenforceable in any respect.
20. MISCELLANEOUS
The Corporation recognizes that a termination without Cause will subject
the Executive to losses and damages, the amount of which might not readily be
determined, and that there exist only a limited number of employment
opportunities comparable in stature, compensation and opportunity to
employment as the Chief Executive Officer of the Corporation. Therefore, the
Executive shall not be required to seek or accept employment in mitigation of
any obligations of the Corporation arising by reason of his termination
without cause.
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21. SECTION HEADINGS
The headings or titles of the sections of this Agreement are not a part of
this Agreement and are not intended to aid in the construction of any
provision thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date and year first above written.
AVANTI CORPORATION
By: /s/ Charles L. St. Clair By: /s/ Dan Taylor
--------------------------------- ------------------------------
Charles L. St. Clair Dan Taylor
Compensation Committee Compensation Committee
/s/ Gerald C. Hsu
------------------------------------
Gerald C. Hsu
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