Exhibit 10.K
MENTOR GRAPHICS
CORPORATION
RETENTION BONUS
PLAN
1. Establishment and Purpose
. The Plan is hereby established effective as of September 1,
2008 (the “ Effective Date ”). The purpose of
the Plan is to reinforce and encourage the continued attention and
dedication of certain key employees by providing the opportunity
for such employees to receive retention bonus payments under the
circumstances set forth herein and to provide an incentive for such
individuals to remain in the employ of the Company (and its
Subsidiaries) or its successor in order to provide transition
assistance for a period of time in the event of an acquisition of
the Company.
2. Definitions . The
following terms as used herein shall have the meanings set forth in
this Section 2.
2.1 “ Administrator
” shall mean (a) the Board or such committee thereof as
shall be designated by the Board to administer the Plan, or
(b) the Independent Committee (as defined in
Section 3.1), to the extent provided in
Section 3.1.
2.2 “ Base Salary
” shall mean (a) for Participants in the sales
organization of the Company or a Subsidiary with pay based on
product sales, the total targeted compensation payable to such a
Participant by the Company or such Subsidiary assuming full quota
attainment, before deductions or voluntary deferrals authorized by
the Participant or required by law to be withheld from such
compensation, and (b) for all other Participants, the annual
base rate of compensation payable to a Participant by the Company
or a Subsidiary, before deductions or voluntary deferrals
authorized by the Participant or required by law to be withheld
from such compensation. For purposes of determining the amount of a
Participant’s Retention Bonus, Base Salary shall mean the
higher of Participant’s Base Salary immediately prior to the
date of payment of such Retention Bonus, or Participant’s
Base Salary in effect at any time after the Effective
Date.
2.3 “ Beneficial Owner
” and “ Beneficial Ownership ” shall have
the meanings set forth in Rule 13d-3 promulgated under the Exchange
Act.
2.4 “ Board ”
shall mean the Board of Directors of the Company, as constituted
from time to time.
2.5 “ Cause ”
shall mean, the occurrence by a Participant of any one or more of
the following events:
(a) the conviction of, or entry of a
plea of “guilty” or “no contest” to, a
felony or a crime involving moral turpitude or;
(b) an unauthorized use or
disclosure of confidential information or trade secrets of the
Company (or a Subsidiary) or any successor or parent or subsidiary
thereof;
(c) other intentional misconduct,
fraud, embezzlement or act of dishonesty that has a material
adverse impact on the Company (and its Affiliates) or any successor
or parent or subsidiary thereof; or
(d) an intentional and continued
refusal or failure to act in accordance with any lawful and proper
direction or order of the Board or the appropriate individual to
whom Participant reports.
2.6 “ Change in Control
” shall mean the first to occur of any of the
following:
(a) The acquisition by any Person of
Beneficial Ownership of 40% or more of either the then-outstanding
shares of common stock of the Company or the combined voting power
of the then-outstanding voting securities of the Company entitled
to vote generally in the election of directors (the “
Outstanding Voting Securities ”); provided, however,
that, for purposes of this Section 2.6, the following
acquisitions shall not constitute a Change in Control: (i) any
acquisition directly from the Company, (ii) any acquisition by
the Company, or (iii) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or
any of its Subsidiaries;
(b) Individuals who, as of the
Effective Date, constitute the Board, and any new director whose
election by the Board or nomination for election by the
Company’s shareholders was approved by a vote of at least two
thirds of the directors then still in office who were directors on
the Effective Date or whose election or nomination for election was
previously so approved (collectively, the “ Continuing
Directors ”), cease for any reason to constitute at least
a majority of the members of the Board;
(c) The effective date of a
reorganization, merger or consolidation of the Company (a “
Business Combination ”), in each case, unless
immediately following such Business Combination: (a) all or
substantially all of the Persons who were Beneficial Owners of
Outstanding Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 51%
of the combined voting power of the then outstanding securities
entitled to vote generally in the election of directors of the
corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such
transaction either owns the Company or all or substantially all of
the Company’s assets either directly or through one or more
Subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination, of the
Outstanding Voting Securities; (b) no Person (excluding any
corporation resulting from such Business Combination) is the
Beneficial Owner, directly or indirectly, of 40% or more of the
combined voting power of the then outstanding securities entitled
to vote generally in the election of directors of such corporation
except to the extent that such ownership existed prior to such
Business Combination; and (c) at least a majority of the board
of directors of the corporation resulting from such Business
Combination were Continuing Directors at the time of the execution
of the initial agreement, or of the action of the Board, providing
for such Business Combination;
(d) The approval by the shareholders
of the Company of a complete liquidation of the Company or an
agreement or series of agreements for the sale or disposition by
the Company of all or substantially all of the Company’s
assets, other than factoring the Company’s current
receivables or escrows due (or, if such approval is not required,
the decision by the Board to proceed with such a liquidation, sale
or disposition in one transaction or a series of related
transactions); or
(e) 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 or successor item on any similar or successor schedule
or form) promulgated under the Exchange Act, whether or not the
Company is then subject to such reporting requirement.
2.7 “ Code ”
shall mean the Internal Revenue Code of 1986, as
amended.
2.8 “ Company ”
shall mean Mentor Graphics Corporation, an Oregon
corporation.
2.9 “ Covered
Termination ” shall mean (a) a termination of
Participant’s employment due to Participant’s death or
Disability, or (b) following a Change in Control, either a
termination of Participant’s employment by the Company (or
any Subsidiary) for any reason other than Cause or the termination
of Participant’s employment by Participant for Good Reason
(which must occur within 180 days following the existence of the
condition giving rise to Good Reason). Notwithstanding anything
herein to the contrary, to the extent that the benefits provided
hereunder constitute a deferral of compensation which is subject to
Section 409A of the Code, the termination of
Participant’s employment shall not constitute a Covered
Termination unless such termination constitutes a Separation from
Service.
2.10 “ Disability
” shall mean a Participant’s absence from full-time
performance of Participant’s duties with the Company or a
Subsidiary for six (6) consecutive months as a result of the
incapacity of Participant due to physical or mental
illness.
2.11 “ Employee ”
shall mean an individual who is an employee of the Company (or any
Subsidiary) within the meaning of Section 3401(c) of the
Code.
2.12 “ Exchange Act
” shall mean the Securities Exchange Act of 1934, as
amended.
2.13 “ Executive
” shall mean a Participant who is (a) an officer of the
Company for purposes of Section 16 of the Exchange Act, or
(b) a division officer or general manager.
2.14 “ Good Reason
” shall mean the occurrence of any one or more of the
following events without a Participant’s written consent,
unless the Company (or Subsidiary) fully corrects the circumstances
constituting Good Reason within thirty (30) days after its
receipt of a written notice from Participant specifying the event
giving rise to Good Reason, such written notice to be received
within ninety (90) days of the first occurrence of such
event:
(a) a diminution in the nature or
status of Participant’s position, authority, title, duties or
responsibilities;
(b) with respect to a Participant
who is in the sales organization of the Company or a Subsidiary and
whose pay is directly determined in part by bookings and shipment
of product or services, a material increase in Participant’s
sales quota or material changes in Participant’s account
responsibilities or sales territory;
(c) a reduction in
Participant’s Base Salary;
(d) a reduction in
Participant’s target bonus;
(e) a relocation of
Participant’s place of employment by more than twenty-five
(25) miles from Participant’s place of employment
immediately prior to such relocation;
(f) a failure of the Company to
expressly require, in writing, any successor to the Company to
assume the Pl
