Exhibit 10.I
[Date]
[Officer name]
[Address]
Dear [Name]:
On [date], you entered into a letter
agreement (the “Agreement”) with Mentor Graphics
Corporation (the “Corporation”) regarding compensation
and benefits arrangements in connection with a Change in Control
(as defined herein). You and the Corporation now desire to make
certain changes to the Agreement. Accordingly, you and the
Corporation have agreed to amend and restate the Agreement as
follows.
The Board of Directors (the
“Board”) of 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. 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.
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 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, consolidation or share exchange
involving the Corporation (a “Merger”), other than a
Merger which would result in the voting securities of the
Corporation outstanding immediately prior to such Merger 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 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) a plan or proposal
for the liquidation or dissolution of the Corporation or (b) the
sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) 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 or successor item on any similar or
successor 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.
3. Termination Following a Change
in Control.
3.1 General. You shall be
entitled to the benefits provided in Section 4 upon (a) the
termination of your employment if your employment is terminated
after the Change in Control Date or (b) the Change in Control Date
if your employment is terminated 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”).
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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, if applicable, or the
Change in Control 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, if applicable, or the Change in Control Date, or any other
action by the Corporation that results in a material diminution in
your position, authority, title, duties or
responsibilities;
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(b) the Corporation’s
reduction of your annual base salary as in effect on the Approval
Date, if applicable, or the Change in Control 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, if applicable, or the
Change in Control 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, if applicable, or the Change in Control 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, if applicable, or the Change in Control
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, if applicable, or
the Change in Control 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, if
applicable, or the Change in Control 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
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(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.
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 Corporat
