Exhibit 10.1
LOGICVISION, INC.
AMENDED AND RESTATED CHANGE OF CONTROL SEVERANCE
AGREEMENT
This
Amended and Restated Change of Control Severance Agreement (this
“Agreement”), is made and entered into by and between
James T. Healy (the “Executive”) and LogicVision, Inc.,
a Delaware corporation (the “Company”), subject to and
conditioned upon the closing of the acquisition of the Company by
Mentor Graphics Corporation (the “Mentor Graphics
Acquisition”) pursuant to an agreement and plan of merger by
and among the Company, Mentor Graphics Corporation and a
wholly-owned subsidiary of Mentor Graphics Corporation (the
“Mentor Agreement”). This Agreement amends and restates
the Change of Control Agreement between the Executive and the
Company previously made and entered into effective as of November
11, 2008 (the “Original Agreement”). This Agreement
will become effective on the date of, but immediately prior to, the
closing of the Mentor Graphics Acquisition (the “Effective
Date”). If the Mentor Agreement is terminated in accordance
with its terms such that the Mentor Graphics Acquisition will not
occur, this Agreement will be null and void and the Original
Agreement will remain in full force and effect. Certain capitalized
terms used in this Agreement are defined in Section 1
below.
RECITALS
A.
It is expected that the Company from time to time will consider the
possibility of a Change of Control. The Board of Directors of the
Company (the “Board”) recognizes that such
consideration can be a distraction to the Executive and can cause
the Executive to consider alternative employment
opportunities.
B.
The Board believes that it is in the best interests of the Company
and its shareholders to provide the Executive with an incentive to
continue the Executive’s employment and to maximize the value
of the Company upon a Change of Control for the benefit of its
shareholders.
C.
In recognition of Executive’s service with the Company during
which time Executive’s leadership has been fundamental to the
Company’s development and in order to provide the Executive
with enhanced financial security and sufficient encouragement to
remain with the Company notwithstanding the possibility of a Change
of Control, the Board believes that it is imperative to provide the
Executive with certain severance benefits upon the
Executive’s termination of employment in connection with a
Change of Control.
AGREEMENT
In
consideration of the mutual covenants herein contained and the
continued employment of the Executive by the Company, the parties
agree as follows:
1. Definition of Terms . The following terms referred to in this
Agreement shall have the following meanings:
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(a) Cause . “Cause” shall mean (i) commission
of a felony, an act involving moral turpitude, or an act
constituting common law fraud, and which has a material adverse
effect on the business or affairs of the Company or its affiliates
or stockholders; (ii) intentional or willful misconduct or refusal
to follow the lawful instructions of the Board; or (iii)
intentional breach of Company confidential information obligations
which has an adverse effect on the Company or its affiliates or
stockholders. For these purposes, no act or failure to act shall be
considered “intentional or willful” unless it is done,
or omitted to be done, in bad faith without a reasonable belief
that the action or omission is in the best interests of the
Company.
(b) Change of Control . “Change of Control” shall mean the
occurrence of any of the following events:
(i) the approval by the shareholders of the Company
of a plan of complete liquidation or dissolution of the Company or
the closing of a sale or disposition by the Company of all or
substantially all of the Company’s assets, other than a sale
or disposition to a subsidiary of the Company or to an entity, the
voting securities of which are owned by the stockholders of the
Company in substantially the same proportions as their ownership of
the Company’s voting securities immediately prior to such
sale or disposition;
(ii) a merger or consolidation of the Company with
any other corporation, other than a merger or consolidation which
would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent directly or
indirectly (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than fifty
percent (50%) of the total voting power represented by the voting
securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; or
(iii) any “person” (as such term is used
in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended) becoming the “beneficial owner” (as defined
in Rule 13d-3 under said Act), directly or indirectly, of
securities of the Company representing fifty percent (50%) or more
of the total voting power represented by the Company’s then
outstanding voting securities.
Notwithstanding the foregoing, the term
“Change of Control” shall not be deemed to have
occurred if the Company files for bankruptcy protection, or if a
petition for involuntary relief is filed against the
Company.
(c) Involuntary Termination . “Involuntary Termination” shall
mean:
(i) without the Executive’s express written
consent, a material reduction in the Executive’s authority,
duties or responsibilities relative to the Executive’s
authority, duties or responsibilities in effect immediately prior
to the Change of Control provided that no such material reduction
shall be deemed to occur solely by reason of the Company becoming a
subsidiary or division of an acquiring entity;
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(ii) without the Executive’s express written
consent, a material reduction by the Company of the
Executive’s base compensation as in effect immediately prior
to the Change of Control;
(iii) without the Executive’s express written
consent, the relocation of the Executive’s principal place of
employment to a facility or a location more than fifty (50) miles
from the Executive’s current location;
(iv) any termination of the Executive by the Company
which is not effected for Cause; or
(v) the failure of the Company to obtain the
assumption of this Agreement or any other agreement between the
Company and Executive by any successors contemplated in Section 7
below.
A
termination shall not be considered an “Involuntary
Termination” unless the Executive provides notice to the
Company of the existence of the condition described in subsections
(i), (ii), (iii) or (v) above within ninety (90) days of the
initial existence of such condition, and the Company fails to
remedy the condition within thirty (30) days following the receipt
of such notice.
(d) Termination Date . “Termination Date” shall mean the
effective date of any notice of termination delivered by one party
to the other hereunder.
2. Term
of Agreement . This
Agreement shall terminate upon the date that all obligations of the
parties hereto under this Agreement have been satisfied.
3. At-Will Employment . The Company and the Executive acknowledge
that the Executive’s employment is and shall continue to be
at-will, as defined under applicable law.
4. Severance Benefits .
(a) Involuntary Termination in Connection with a
Change of Control . If
the Executive’s employment with the Company terminates as a
result of an Involuntary Termination on or at any time within three
(3) months before or twelve months (12) months after a Change of
Control, and the Executive signs and does not revoke a standard
release of claims with the Company in a form reasonably acceptable
to the Company, then the Executive shall be entitled to the
following severance benefits (it being understood that no such
benefits shall accrue and be payable (or take effect, as the case
may be) unless and until a Change in Control occurs):
(i) 100% of the Executive’s annual base salary
as in effect as of the Termination Date, less applicable
withholding, payable in a lump sum within thirty (30) days of the
Involuntary Termination or, if later, the Change in
Control;
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(ii) acceleration of the vesting and exercisability
of all of the Executive’s options to acquire common stock of
the Company or its successor, or the parent of either, to the
extent outstanding, or of any deferred compensation into which the
Executive’s stock options were converted upon the Change of
Control; and
(iii) reimbursement by the Company of the group health
continuation coverage premiums for the Executive and the
Executive’s eligible dependents under Title X of the
Consolidated Budget Reconciliation Act of 1985, as amended
(“COBRA”) as in effect through the lesser of (x) twelve
(12) months from the date of such termination, (y) the date upon
which the Executive and the Executive’s eligible dependents
become covered under similar plans or (z) the date the Executive no
longer constitutes a “Qualified Beneficiary” (as such
term is defined in Section 4980B(g) of the Code); provided,
however, that the Executive will be solely responsible for electing
such coverage within the required time period; and provided
further, however, that payment of the reimbursement shall not be
made prior to the Change in Control, but shall be deferred and paid
within thirty (30) days after the Change in Control.
(b) Termination Apart from a Change of
Control . If the
Executive’s employment with the Company terminates other than
as a result of an Involuntary Termination on or within three (3)
months before or twelve (12) months after a Change of Control then
the Executive shall not be entitled to receive severance or other
benefits hereunder.
(c) Accrued Wages and Vacation; Expenses
. Without regard to the reason for,
or the timing of, the Executive’s termination of employment:
(i)
