Document:

Exhibit 10.37

 

SYNOPSYS, INC.

 

FORM OF FIRST AMENDMENT TO THE EMPLOYMENT
AGREEMENT

 

This FIRST AMENDMENT
TO THE EMPLOYMENT AGREEMENT (this “Amendment”),
dated March     , 2006 (the “Effective
Date”), is executed by and between Synopsys, Inc., a
Delaware corporation (the “Company”),
and                   
(the “Employee”). The Company and the Employee
 are collectively referred to in this
Amendment as the “Parties.”  In this Amendment, all capitalized terms that
are otherwise undefined will have the respective meanings specified for such
terms as set forth in the Employment Agreement (as defined below).

 

RECITALS

 

A.                                   Employee
and the Company are parties to an Employment Agreement, dated October 1,
1997 (the “Employment Agreement”). The
Employment Agreement outlines the general terms of employment for the Employee.

 

B.                                     Pursuant
to this Amendment and effective immediately upon the Parties’ mutual execution
and delivery of this Amendment, the Parties desire to amend the Employment
Agreement as follows.

 

AGREEMENT

 

In consideration of the mutual promises and covenants
set forth in this Amendment, the receipt and sufficiency of which are
acknowledged by the Parties, the Parties agree as follows:

 

1.                                       Amendment to Employment Agreement. The Parties agree that upon the Effective Date
of this Amendment, the Employment Agreement will be amended as follows:

 

1.1                                 The
following shall be added as Section 6(e): 
“(e)   No Participation In The Synopsys, Inc.
Executive Change of Control Severance Benefit Plan, established effective March 23,
2006. It is agreed that the severance benefits described in this Agreement
are in lieu of the severance benefits described in The Synopsys, Inc.
Executive Change of Control Severance Benefit Plan, as effective March 24,
2006 (the “Plan”), and that Employee will
not be eligible to participate in the Plan.”

 

1.2                                 The
following shall be added as Section 6(f):  
“(f)   Application of Section 409A. If (i) any
severance benefits provided under this Agreement fail to satisfy the
distribution requirement of Section 409A(a)(2)(A) of the Internal
Revenue Code of 1986, as amended (the “Code”) as
a result of the application of Section 409A(a)(2)(B)(i) of the Code,
the payment of such benefits shall be delayed to the minimum extent necessary
so that such benefits are not subject to the provisions of Section 409A(a)(1) of
the Code. The Company may attach conditions to or adjust the amounts paid
pursuant to this Section 6(f) to preserve, as closely as possible,
the economic consequences that would have applied in the absence of this Section 6(f);
provided, however, that no such
condition shall result in the payments being subject to Section 409A(a)(1) of
the Code.”

 

1

 

1.3                                 The
following shall be added as Section 6(g):  
“(g)   Parachute Payments. Except as otherwise
provided in an agreement between Employee and the Company, if any payment or
benefit the Employee would receive in connection with a Change of Control from
the Company or otherwise (“Payment”)
would (i) constitute a “parachute payment” within the meaning of Section 280G
of the Code, and (ii) but for this sentence, be subject to the excise tax
imposed by Section 4999 of the Code (the “Excise
Tax”), then such Payment shall be equal to the “Reduced Amount.” 
The Reduced Amount shall be either (x) the largest portion of the
Payment that would result in no portion of the Payment being subject to the
Excise Tax, or (y) the largest portion, up to and including the total, of the
Payment, whichever amount, after taking into account all applicable federal,
state and local employment taxes, income taxes, and the Excise Tax (all
computed at the highest applicable marginal rate), results in the Employee’s
receipt, on an after-tax basis, of the greater amount of the Payment
notwithstanding that all or some portion of the Payment may be subject to
the Excise Tax. If a reduction in payments or benefits constituting “parachute
payments” is necessary so that the Payment equals the Reduced Amount, reduction
shall occur in the following order unless the Employee elects in writing a
different order (provided, however, that such election shall be subject to
Company approval if made on or after the date on which the event that triggers
the Payment occurs): (1) reduction of cash payments; (2) cancellation
of accelerated vesting of equity awards other than stock options; (3) cancellation
of accelerated vesting of stock options; and (4) reduction of other
benefits paid to Employee. If acceleration of vesting of compensation from
Employee’s equity awards is to be reduced, such acceleration of vesting shall
be cancelled by first canceling such acceleration for the vesting installment
that will vest last and continuing by canceling as a first priority such
acceleration for vesting installment with the latest vesting unless the Employee elects in writing
a different order for cancellation prior to any Change of Control.”

 

1.4                                 Arbitration.
Section 11(f) shall be deleted and replaced with the following:   “Any dispute or controversy arising out of,
relating to or in connection with this Agreement shall be resolved to the
fullest extent permitted by law by final, binding and confidential arbitration
in San Jose, California, in accordance with the National Rules for the
Resolution of Employment Disputes of the American Arbitration Association (“AAA”) then in effect, as consistent with applicable
law. By agreeing to this arbitration procedure, Employee and the Company both agree 
to waive the right to resolve any such dispute through a trial by jury,
judge or administrative proceeding. The arbitrator shall: (a) have the
authority to compel adequate discovery for the resolution of the dispute and to
award such relief as would otherwise be permitted by law; and (b) issue a
written arbitration decision, to include the arbitrator’s essential findings
and conclusions and a statement of the award. The arbitrator shall be
authorized to award any or all remedies that Employee or the Company would be
entitled to seek in a court of law. The Company shall pay all AAA’ arbitration
fees in excess of the amount of court fees that would be required if the
dispute were decided in a court of law. Judgment may be entered on
the arbitrator’s award in any court having jurisdiction.”

 

2.                                       Agreements. Except as expressly amended by this Amendment, the Employment Agreement
will continue in full force and effect. If any inconsistency, ambiguity, or
conflict exists between this Amendment and the Employment Agreement, then the
terms and conditions of this Amendment will govern and control such inconsistency,
ambiguity, or conflict.

 

3.                                       Amendments, Waivers, and Termination. As of any particular time, any term of this
Amendment may be amended, the observance of any term of this Amendment may be
modified,

 

2

 

waived or discharged (either generally or in a
particular instance and either retroactively or prospectively), or this
Amendment may be terminated, in each case only with the written consent of
the Company and the Employee.

 

4.                                       Effectiveness. This Amendment is effective upon the execution and delivery of this
Amendment by the Company and the Employee.

 

* * *
* *

 

3

 

The Parties have executed this First Amendment to the Employment Agreement
as of the Effective Date.

 

	
  THE COMPANY:

  
	
   

  
	
  SYNOPSYS, INC.

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  
	
  Its:

  
	
   

  
	
  THE EMPLOYEE:

  
	
   

  
	
   

  	
   

  
	
   

  	
   

  
					

 

4Exhibit 10.38

 

Form of FY06 Individual Compensation Plan

Effective Date:10/30/05 - 10/28/06

	
   

  	
   

  	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Type:

  	
  x

  	
  Initial

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Revision

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  NAME:

  	
   

  	
  Vicki
  Andrews

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TITLE:

  	
   

  	
  Senior
  Vice President, World Wide Sales

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
   

  	
   

  	
   

  	
   

  	
   

  
	
  FY06 COMPENSATION PLAN:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ANNUAL (in USD)

  	
   

  	
   

  
	
  Base Salary:

  	
   

  	
  $

  	
   350,000

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Annual Bookings Bonus:

  	
   

  	
  [*]

  	
   

  	
  (paid at fiscal year-end
  based on FY06 results)

  
	
  Quarterly Revenue Bonus:

  	
   

  	
  [*]

  	
   

  	
  (paid quarterly based on
  quarterly results; 25% target each quarter)

  
	
  FY06 Annual Revenue Bonus:

  	
   

  	
  [*]

  	
   

  	
  (paid at fiscal year-end
  based on FY06 results)

  
	
  FY07 Deferred Revenue Bonus:

  	
   

  	
  [*]

  	
   

  	
  (paid at fiscal year-end
  based on FY06 results)

  
	
  FY06 MBO:

  	
   

  	
  [*]

  	
   

  	
  (paid at fiscal year-end
  based on FY06 results)

  
	
  Total Variable at Target:

  	
   

  	
  [*]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Target Compensation at Plan:

  	
   

  	
  $

  	
    [*]

  	
   

  	
   

  

 

I. PLAN TARGETS:

 

	
   

  	
   

  	
   

  	
   

  	
  1H

  	
   

  	
   

  	
   

  	
  2H

  	
   

  	
  FY06 Total

  	
   

  
	
  WORLDWIDE BOOKINGS QUOTA:

  	
   

  	
   

  	
   

  	
  $[*]

  	
   

  	
   

  	
   

  	
  $[*]

  	
   

  	
  $[*]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Q1

  	
   

  	
  Q2

  	
   

  	
  Q3

  	
   

  	
  Q4

  	
   

  	
  FY06
  Total

  	
   

  
	
  FY06 REVENUE TARGETS:

  	
   

  	
  $[*]

  	
   

  	
  $[*]

  	
   

  	
  $[*]

  	
   

  	
  $[*]

  	
   

  	
  $[*]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  FY07 WORLDWIDE DEFERRED REVENUE
  TARGET (FYE06 deferred revenue recognizable in FY07):

  	
   

  	
  $[*]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

A. Annual
Bookings Bonus:

 

Annual
Bookings Bonus is paid at year-end based on FY06 Worldwide Bookings Quota
achievement, according to the FY06 Sales Commission & Bonus Policy and the
current Synopsys Sales Order Acceptance Policy. In addition to the standard
payout rates listed, additional points may be awarded for Bookings achievement
above quota for attaining 100% or more of the FY06 Annual Revenue Target and
FY07 Deferred Revenue Target.

 

Annual
Bookings Bonus is paid according to the following schedule:

 

	
   

  	
   

  	
   

  	
   

  	
  Accelerators
  per Achievement %

  
	
  % of FY06 Annual Regional Bookings Quota
  Achieved

  	
   

  	
  Percent
  of Target Bonus

  	
   

  	
  Bookings
  Achievement Only

  	
   

  	
  FY06 Rev
  Target Achieved

  	
   

  	
  FY06 Rev
  Target and Deferred Rev Target Achieved

  
	
  < [*]%

  	
   

  	
  [*]%

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]% - [*]%

  	
   

  	
  [*]% - [*]%

  	
   

  	
  [*] pts per point

  	
   

  	
  [*] pts per point

  	
   

  	
  [*] pts per point

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]% - [*]%

  	
   

  	
  [*]% - [*]%

  	
   

  	
  [*] pts per point

  	
   

  	
  [*] pts per point

  	
   

  	
  [*] pts per point

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]% - [*]%

  	
   

  	
  [*]% - [*]%

  	
   

  	
  [*] pts per point

  	
   

  	
  [*] pts per point

  	
   

  	
  [*] pts per point

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]%+

  	
   

  	
  [*]%+ - [*]%+

  	
   

  	
  [*] pts per point

  	
   

  	
  [*] pts per point

  	
   

  	
  [*] pts per point

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

A-1.
Bookings Linearity Draw

 

If worldwide bookings achievement through Q2FY06 exceed the
1H quota target a draw against future FY06 earnings will be paid equal to [*]% of the Annual Bookings Bonus target. Draw will be recoverable against
all year-end variable compensation payouts. At the close of FY06 plan, any draw
not yet fully recovered from the payable year-end variable compensation will be
forgiven.

 

1

 

B.
Quarterly Revenue Bonus

 

Quarterly
Revenue Bonus is paid quarterly based on achieving 100% or more of the
Quarterly Revenue Target. No quarterly revenue bonus is paid unless the current
quarter’s revenue target is achieved (100% or greater). Quarterly revenue
targets will be adjusted to match current CFO target each quarter.

 

Quarterly
Revenue Bonus is paid according to the following schedule:

 

	
   

  	
   

  	
  Q1

  	
   

  	
  Q2

  	
   

  	
  Q3

  	
   

  	
  Q4

  	
   

  	
  Total

  	
   

  
	
  Quarterly Revenue
  Achievement >=100%

  	
   

  	
  $[*]

  	
   

  	
  $[*]

  	
   

  	
  $[*]

  	
   

  	
  $[*]

  	
   

  	
  $[*]

  	
   

  

 

C. FY06 Annual Revenue Bonus

Annual Revenue Bonus is paid based on achievement
against the FY06 Annual Revenue Target. Annual Revenue Target will be adjusted
for in-year acquisitions. Target assumes [*]% or less upfront license ratio; Target will be subject to review and
change if upfront ratio exceeds [*]%.

 

Annual Revenue Bonus is paid according to the
following schedule:

 

 

	
   

  	
   

  	
  % of
  FY06

  	
   

  	
  Percent
  of Target

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Annual
  Revenue Target

  	
   

  	
  Bonus

  	
   

  	
  Comments

  	
   

  	
   

  
	
   

  	
   

  	
  < [*]%

  	
   

  	
  [*]%

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [*]%

  	
   

  	
  [*]%

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [*]% - [*]%

  	
   

  	
  [*]%
  - [*]%

  	
   

  	
  [*] pts per point

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [*]%+

  	
   

  	
  [*]%+

  	
   

  	
  [*] pts per point

  	
   

  	
  (Max Payout = [*]%)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

D. FY07 Deferred Revenue Bonus

FY07 Deferred Revenue Bonus is paid based on
achievement against the Deferred Revenue Target. FY07 Deferred Revenue target
will be adjusted for in-year acquisitions. Metric calculated at total FY07
backlog at the end of FY06 from FY06 orders impact on FY07 revenue. Deferred
Revenue Target will be subject to review and change if WW FY06 Services (DS, BU
Consulting, Test Chip) bookings are greater than $[*]m.

 

FY07 Deferred Revenue Bonus is paid according to the
following schedule:

 

	
   

  	
   

  	
  % of FY07

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Deferred Revenue

  	
   

  	
  Percent of Target

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Target Achieved

  	
   

  	
  Bonus

  	
   

  	
  Comments

  	
   

  	
   

  
	
   

  	
   

  	
  < [*]%

  	
   

  	
  [*]%

  	
   

  	
  [*] pts per point

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [*]% - [*]%

  	
   

  	
  [*]%
  - [*]%

  	
   

  	
  [*] pts per point

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [*]% - [*]%

  	
   

  	
  [*]%
  - [*]%

  	
   

  	
  [*] pts per point

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [*]% - [*]%

  	
   

  	
  [*]%
  - [*]%

  	
   

  	
  [*] pts per point

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [*]%+

  	
   

  	
  [*]%
  +

  	
   

  	
  [*] pts per point

  	
   

  	
   

  

 

NOTES:

 

This plan is subject to all provisions of the current
“FY06 Synopsys Commission & Bonus Policy” and the current “Synopsys Sales
Order Acceptance Policy”. All elements of this plan are subject to change at
any time during the year.

 

Plan targets reflect those in place at this time.
These targets may be revised as conditions require subject to the approval of
the CEO and/or COO.

 

This plan is applicable only if the CEO, CFO and Sr.
VP of HR approve.

 

SIGNATURES:

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Vicki Andrews

  	
   

  	
  Date

  	
   

  	
  Aart de Geus

  	
   

  	
  Date

  
	
  Senior Vice President,
  World Wide Sales

  	
   

  	
  Chairman & CEO

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Jan Collinson

  	
   

  	
  Date

  	
   

  	
  Brian Beattie

  	
   

  	
  Date

  
	
  Senior Vice President, HR
  & Facilities

  	
   

  	
  Chief Financial Officer

  	
   

  	
   

  

 

*
Represents specific quantitative or qualitative performance-related factors, or
factors or criteria involving confidential commercial or business information,
the disclosure of which would have an adverse effect on the Registrant.

 

2

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