Document:

exv10w01

Exhibit 10.01

Agreement No.: MICA-11VINCENT0209

Effective Date of Agreement: 02-09-2011

MASTER INDIVIDUAL

CONSULTING AGREEMENT

between

CADENCE DESIGN SYSTEMS, INC.

and

ALBERTO SANGIOVANNI-VINCENTELLI, Ph.D.

This agreement is a Master Agreement. As such, it is intended to be put into place once with
the consulting party. Thereafter, as more consulting activity is desired by Cadence with the
consulting party, additional schedules are written up, signed by the parties and filed with the
Master Agreement.

 

 

MASTER INDIVIDUAL

CONSULTING AGREEMENT

This
Master Individual
Consulting Agreement (this
“Agreement”) is entered into as of the last date signed by the parties below (the “Effective
Date”), between Cadence Design Systems, Inc., a Delaware corporation, located at 2655 Seely Avenue,
San Jose, CA 95134 (“Cadence”), and Alberto Sangiovanni-Vincentelli, Ph.D. (the “Consultant”).
Cadence and Consultant are each referred to as a “party” and collectively, as the “parties”.

In consideration of the mutual promises set forth herein, the parties hereby agree as follows:

1. Consultancy.

1.1 Consulting Period.

Consultant will serve as a consultant to Cadence for
a period commencing on the Effective Date and
concluding on the date this Agreement is terminated
as set forth herein (the “Consulting Period”). This
Agreement may be terminated at will by either party
for any reason or no
reason upon thirty (30) days prior written notice to
the other party. Termination of this Agreement will
terminate all Schedule(s) then in effect.

1.2 Schedules.

The initial Schedule is attached hereto as Exhibit A
(“Schedule”). Additional Schedules may be attached
to include other Work that the parties agree
Consultant will provide to Cadence. The Schedule(s)
may be amended from time to time by mutual written
consent of the parties.

2. Duties of
Consultant.

2.1 Scope of
Work.

Consultant will perform the services and deliver the
deliverables set forth in the applicable Schedule
(collectively, the “Work”). Consultant will perform
the Work in accordance with the provisions of this
Agreement and the applicable Schedule. Consultant
will determine the manner and means by which the Work
is accomplished.

2.2 Work Rules, Availability.

Consultant will abide by the rules and policies of
Cadence while working on Cadence’s premises. In
connection with the Work provided hereunder,
Consultant may require access to the Cadence
facilities and network. If such access is required,
Cadence will provide the terms and conditions
required for such access. At any time, Cadence may
audit Consultant’s security policies and procedures
regarding the access and use of any confidential or
proprietary materials and systems of Cadence.

3. Compliance With Laws.

Consultant will comply with all applicable federal,
state and local laws and regulations, and foreign
laws and regulations, including without limitation,
immigration, health and safety, anti-bribery and
anti-corruption and workers’ compensation laws in the
performance of the Work hereunder.

4. Project Management.

4.1 Progress Reports and Meetings.

If the Cadence Chief Executive Officer (“CEO”)
requests, Consultant will participate in status
meetings with the CEO or his designee to review the
status and progress of the Work.

5. Other Affiliations.

5.1 Existing Agreements Do Not Conflict.

Consultant represents that Consultant is not
prevented by any existing agreement or in any other
way from entering into this Agreement and performing
in accordance with this Agreement and the applicable
Schedule(s).

5.2 Conflict of Interest.

Consultant warrants that Consultant is not obligated
under any other agreement which would conflict with
or adversely affect Cadence’s rights or Consultant’s
duties under this Agreement or applicable Schedule,
other than those expressly identified in an
attachment. Cadence understands and agrees that
during the Consulting Period, Consultant may be
retained by other companies, corporations, and/or
commercial enterprises which do not compete with
Cadence and are not engaged in the design,
development, manufacture or marketing of products
similar to those of Cadence. During the Consulting
Period, Consultant agrees that Consultant will not
own, manage, operate, control, enable (whether by
license, sublicense, assignment or otherwise),
participate in or be connected as a securityholder,
director, officer, employee, partner, member, lender,
guarantor or advisor of or consultant to, or perform
services for any companies, corporations, and/or
commercial enterprises other than Cadence which will
be engaged in the research, design, development,
manufacture or marketing of electronic design
automation software, electronic design verification
and emulation hardware and commercial electronic
design and/or maintenance services without the prior
written consent of Cadence.

5.3 Segregation of Work.

Except to the extent permitted under valid and
enforceable agreements, Consultant will not use,
disclose or deliver any proprietary or confidential
information of any third party in dealings with
Cadence or in performing the Work hereunder.
Consultant agrees to use its best efforts to
segregate Work done under this Agreement from all
work done at, or for, any such other person, company,
corporation, and/or other commercial enterprise. In
any dealings with any such other person, company,
corporation, and/or commercial enterprise, Consultant
will protect and guard Cadence’s Confidential

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Information (as defined herein) in accordance with
the terms of this Agreement.

6. Compensation.

6.1 Payment by
Cadence.

Cadence agrees to pay Consultant and Consultant
agrees to accept for all Work hereunder consulting
fees (the “Consulting Fees”) as set forth in the
applicable Schedule. In no event will Consultant be
entitled to any fringe benefits available to
employees of Cadence. Consultant waives any rights
Consultant may now or in the future have in such
fringe benefits even if Consultant is later deemed “a
common law employee” by any legislative,
administrative or judicial entity.

6.2 Reimbursement for Costs/Expenses.

Consultant agrees to obtain reimbursement and Cadence
agrees to reimburse for reasonable and necessary
out-of-pocket costs and expenses actually incurred by
Consultant in performance of the Work pursuant to the
Cadence Directors Travel Policy and Procedures.
Reimbursement will be made within forty-five (45)
days after submission to Cadence of the last of
adequate and appropriate documentation of such costs
and expenses.

6.3 Payment for Services.

Invoicing by Consultant will include all Work
rendered and expenses incurred by Consultant during
the period invoiced for payment.

6.4. Intentionally Omitted.

6.5 Taxes and Other Benefits.

Consultant acknowledges and agrees that it will be
Consultant’s obligation to formally report as its
income all compensation received by Consultant from
Cadence for Consultant’s services.

6.6 Accounting Records.

Consultant will maintain complete and accurate
accounting records to substantiate Consultant’s
charges and expenses and will retain such records for
a period of at least one (1) year from the date of
final payment made under the applicable Schedule.

7. Confidentiality.

Consultant’s Work for Cadence creates a relationship
of trust and confidence between Cadence and
Consultant, and will not contain or disclose
Cadence’s or any third party’s trade secrets.

7.1 Confidential Information.

“Confidential Information” as used herein includes
marketing plans, product plans, business strategies,
financial information, forecasts, personnel
information, customer lists, trade secrets, other
non-public technical or business information or third
party information made available to Consultant,
whether in writing or given to or obtained by
Consultant orally through any means which Consultant
knows or has reason to know Cadence expects
Consultant to treat as confidential for any purpose.

7.2 Standard of Care.

During the Consulting Period, Consultant agrees to (i)
protect the disclosed Confidential Information by
using the same degree of care, but no less than a
reasonable degree of care, as it uses to safeguard its
own confidential or proprietary information of a like
nature from unauthorized use, disclosure, or
dissemination, (ii) not copy, distribute or
disseminate any of the Confidential Information to any
unauthorized persons or entities without Cadence’s
express prior written consent, and (iii) limit access
to the Confidential Information to only those
authorized individuals having a need to know.

7.3 Exemptions.

Consultant’s obligations hereunder will not apply, or
will cease to apply, to that Confidential Information
which Consultant can establish: (i) was in the public
domain by acts not attributable to Consultant or
otherwise available to the public other than by breach
of this Agreement; (ii) was rightfully in possession
of Consultant prior to receiving it
from Cadence; (iii) becomes available to Consultant
from a source other than Cadence who is in rightful
possession with the lawful right to provide it to
Consultant; (iv) is independently developed by
Consultant without use of or reference to the
Confidential Information; or (v) is otherwise agreed
in writing to be no longer considered otherwise
restricted by Cadence.

7.4 Mandatory Disclosure Exemptions.

Nothing herein will restrict Consultant’s right to
disclose the Confidential Information where such
disclosure is required by written order of a judicial,
legislative, or administrative authority of competent
jurisdiction provided, however that, in each case,
Consultant will first notify Cadence of such need or
requirement and cooperate with Cadence in limiting the
scope of the proposed disclosure.

7.5 Return of Materials.

Upon three (3) calendar days after Consultant’s
receipt of Cadence’s request, all of Cadence’s
Confidential Information in Consultant’s possession or
control will be returned to Cadence or destroyed by
Consultant and Consultant will certify the same in
writing.

7.6 Continuing Obligations.

After the Consulting Period, Consultant has a
continuing obligation to maintain the confidentiality
of Cadence’s Confidential Information. In addition,
Sections 6.5, 6.6, 7, 8, 11, 12, 15, 18, and 19 will
survive the termination of the Consulting Period.

7.7 No Rights or Licenses Extended.

No rights or licenses, either express or implied, are
granted hereunder by one to the other as to any
patents or patent applications, copyrights,
trademarks, trade secrets, or other intellectual
property now or hereafter acquired, developed, or
controlled. Cadence retains all rights and remedies
afforded under all U.S. and foreign patent, copyright,
trade secret, and other applicable laws for protecting
confidential, proprietary, or trade secret
information.

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7.8 Transfer Restrictions.

Consultant will not transfer any disclosed
information received hereunder to any country
prohibited from obtaining such data according to any
national export regulation without first obtaining
all valid export licenses and authorizations.

8. Indemnity.

Consultant agrees to defend at its own cost and
expense any claim or action against Cadence, its
directors, officers and/or employees, for actual or
alleged infringement of any patent, copyright or
other property right (including, but not limited to,
misappropriation of trade secrets) based on any
software, program, service and/or other materials
delivered or furnished to Cadence by Consultant.
Consultant further agrees to defend, indemnify and
hold Cadence, its subsidiaries and/or affiliated
companies, and their respective directors, officers
and/or employees, harmless from and against any and
all liabilities, damages, losses, and expenses
associated with such claim or action.

9. Independent Contractor.

Consultant will be an independent contractor with
respect to Cadence and will not be a representative
or agent of Cadence. Consultant agrees that
Consultant is not an employee of Cadence for any
purpose.

10. Intentionally Omitted.

11. Notice.

Any notice to be delivered pursuant to this Agreement
will be in writing and will be deemed delivered upon
service, if served personally, or three days after
deposit in the United States Mail, if mailed by first
class mail, postage prepaid, registered or certified
with return receipt requested, and addressed to the
other party at the following address, or such address
as may be designated in accordance herewith:

To Cadence at:

CADENCE DESIGN SYSTEMS, INC.

Office of the General Counsel

2655 Seely Avenue, Building 5

San Jose, CA 95134

To Consultant at:

     As set forth in the applicable Schedule.

12. Injunctive Relief.

Consultant acknowledges that disclosure or
unauthorized use of any Confidential Information by
Consultant will cause irreparable harm to Cadence,
its subsidiaries and/or affiliated companies.
Accordingly, Cadence or such other party may seek and
obtain injunctive relief against the breach or
threatened breach of the foregoing undertakings, in
addition to any other legal remedies which may be
available. Consultant acknowledges and agrees that
the covenants contained herein are necessary for the
protection of legitimate interests of Cadence.

13. Severability.

If a court finds any provision of this Agreement
invalid or unenforceable as applied to any
circumstance, that provision will be enforced to the
maximum extent permitted by law, and the other
provisions will remain in full force and effect.

14. Binding Effect; No Assignment; Amendment.

This Agreement will be binding upon Consultant, and
except as regards to personal services, upon
Consultant’s successors and assigns, and will inure
to the benefit of Cadence, its successors and
assigns. This Agreement may not be assigned by
Consultant and any attempted assignment by Consultant
will be void. This Agreement may only be modified or
amended by mutual written consent of the parties.

15. Governing Law.

This Agreement will be governed and enforced in
accordance with the laws of the State of California.

16. Waiver.

A failure of either party to exercise any right
provided for herein will not be deemed to be a waiver
of any other right existing hereunder.

17. Conduct Business Fairly. Consultant
agrees to conduct business in a manner that at all
times reflects favorably upon the products and the
good name, goodwill and reputation of Cadence.

18. Entire Agreement.

This instrument and the attached Schedule(s) and
Exhibits contain the entire agreement of the parties
relating to the subject matter hereof, and supersede
all prior and contemporaneous negotiations,
correspondence, understanding and agreements of the
parties relating to the subject matter hereof.

19. Non-Solicitation. Consultant agrees that
it will not, directly or indirectly, solicit any
Cadence employee to leave Cadence’s employ during the
Consulting Period and for two years after the
expiration of the Consulting Period.

— End of Terms —

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     IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date.

	 	 	 	 	 
					
	CONSULTANT:

	 	CADENCE DESIGN SYSTEMS, INC.
	 
	 	 	 	 
	Signature:
	      /s/  Alberto Sangiovanni-Vincentelli
	 	Signature:	    /s/ Lip-Bu Tan
	 	 	 	 	 
	Name: Alberto Sangiovanni-Vincentelli, Ph.D.

	 	Name: Lip-Bu Tan
	 
	 	 	 	 
	 

	 	 	Title: President & Chief Executive Officer
	 
	 	 	 	 
	Date: February 9, 2011

	 	Date: February 9, 2011

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Agreement
No.: MICA-11VINCENT0209

EXHIBIT A

SCHEDULE

ALL ITEMS BELOW MUST BE COMPLETELY FILLED IN. DO NOT LEAVE ANY BLANK.

	1.	 	Name of Consultant: Alberto Sangiovanni-Vincentelli, Ph.D.
	 
	2.	 	Term of Consulting Period for this Schedule:

	 	 	 	 	 

	 

	 	Start Date
	 	End Date
	 

	 	February 9, 2011
	 	December, 31, 2011

	 	 	Either party may terminate this Schedule at any time without cause upon thirty (30) days’ prior
written notice to the other party.
	 
	4.	 	Duties of Consultant:
	 
	 	 	Consultant is to provide technical expertise to Cadence to be discussed and agreed to by the
parties and identified in an Attachment to this Schedule.
	 
	 	 	Consultant will provide quarterly updates and other reports, as applicable and requested by the
Chief Executive Officer of Cadence.
	 
	5.	 	Project Manager to whom Consultant reports:
	 
	 	 	Lip-Bu Tan, President and Chief Executive Officer of Cadence.
	 
	6.	 	Expected days of consulting to be performed per month:
	 
	 	 	Not applicable
	 
	7.	 	Consulting Fees: $50,000, to be invoiced by Consultant in quarterly payments of $12,500 at the
end of each quarter. Consulting fees will not exceed $50,000, not including valid reimbursement for
reasonable and necessary out-of-pocket costs and expenses actually incurred by Consultant in
performance of the Work that conform to the Cadence Directors Travel Policy and Procedures.
	 
	8.	 	Is this a renewal Schedule from a previous Agreement? YES o NO þ
	 
	9.	 	Cost Center:

	 	 	 	 	 
					
	CONSULTANT:

	 	CADENCE DESIGN SYSTEMS, INC.
	 
	 	 	 	 
	Signature:

	     /s/ Alberto Sangiovanni-Vincentelli	 	Signature:	     /s/ Lip-Bu Tan
	 
	 	 	 	 
	Name: Alberto Sangiovanni-Vincentelli, Ph.D.

	 	Name: Lip-Bu Tan
	 
	 	 	 	 
	 

	 	 	Title: President & Chief Executive Officer
	 
	 	 	 	 
	Date: February 9, 2011

	 	Date: February 9, 2011

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ATTACHMENT A

Consultant is to perform projects identified by the Chief Executive Officer of Cadence, including
but not limited to the following:

	 	•	 	Review and provide guidance and recommendations relating to Cadence’s current and
potential strategic directions and product line plans, based on discussions with
customers, industry and technology trend research and experience in the industry.
	 
	 	•	 	Introduce Cadence to potential partners or customers who are outside of “normal”
interaction sphere.
	 
	 	•	 	Assist Cadence in reviewing and recommending potential partners in product areas
important to Cadence.
	 
	 	•	 	Provide technical discussions or keynote addresses to third parties as a representative
of Cadence in industry, technical and government events, including events with Cadence
employees.

Consultant will provide quarterly updates and other reports, as applicable and requested by the
Chief Executive Officer of Cadence.

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ATTACHMENT B

Cadence acknowledges that Consultant presently serves as a member of the Board of Directors of
Accent International S.A., Advanced Laboratory on Embedded System S.r.l, Sonics, Inc. and UPEK,
Inc., and that continuing in such positions in accordance with Cadence’s Code of Business Conduct,
as it may be amended from time to time, shall not be deemed to violate the covenants set forth
above in Section 5.2 of this Agreement. Furthermore, Consultant’s performance of his academic
duties as a professor of electrical engineering and computer science shall not be deemed to violate
the covenants set forth above in Section 5.2 of this Agreement.

8exv10w02

Exhibit
10.02

 

CADENCE DESIGN SYSTEMS, INC.

DIRECTOR MEDICAL AND PRESCRIPTION BENEFITS COVERAGE

REIMBURSEMENT PLAN

Updated Effective as of February 8, 2011

 

 

 

ARTICLE I

INTRODUCTION

	1.1	 	Name.

     This plan shall be known as the Cadence Design Systems, Inc. Director Medical and Prescription
Benefits Coverage Reimbursement Plan (the “Plan”).

	1.2	 	Effective Date.

     This document reflects the provisions of the Plan in effect as of February 8, 2011. The Plan
covers Eligible Directors and Eligible Dependents (each as hereinafter defined) of Cadence Design
Systems, Inc.

	1.3	 	Purpose.

     The purpose of the Plan is to describe the basis on which reimbursements for certain medical
care and prescription drug coverage premiums are provided to Eligible Directors.

ARTICLE II

DEFINITIONS

	 	 	The capitalized words and phrases in the Plan shall have the meanings set forth below:
	 
	2.1	 	“Board” means the Board of Directors of the Company.
	 
	2.2	 	“Claims Administrator” means the Company’s Benefits Manager appointed in accordance with
Section 6.2.
	 
	2.3	 	“Company” means Cadence Design Systems, Inc., a Delaware corporation.
	 
	2.4	 	“Coverage Period” means the continuous period commencing on the Eligible Director’s
commencement of participation in the Plan pursuant to Section 3.1 and ending on the earlier of
(i) the date that the Eligible Director withdraws from the Plan pursuant to written notice to
the Plan Administrator or (ii) the expiration of the contiguous period following the Eligible
Director’s termination of service on the Board that is equal to the duration of an Eligible
Director’s term of service on the Board so long as the Eligible Director either continues his
or her then-current medical and prescription drug coverage or obtains medical and prescription
drug coverage and provides proof of such coverage within six (6) months following his or her
last day of service on the Board. If an otherwise Eligible Director either (i) fails to
provide proof of such coverage within the six (6) month period following his or her last day
of service on the Board or (ii) does not seek reimbursement under the Plan with respect to any
Plan Year of the applicable Coverage Period in accordance with Section 4.2, the Coverage
Period shall end immediately. For purposes of determining the length of an Eligible
Director’s term of service on the Board, all service shall be included, whether as an employee
or non-employee member of the Board.

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	2.5	 	“Director” means a member of the Board who is not an employee of the Company or any of its
subsidiaries.
	 
	2.6	 	“Eligible Dependent” means (i) the Eligible Director’s spouse or domestic partner, (ii) any
child of the Eligible Director, and (iii) any other person, in each case who qualifies as a
dependent under the terms of the medical care or prescription drug coverage plan with respect
to which reimbursement is being sought for the premiums paid by or on behalf of the Eligible
Director for coverage under such plan. With respect to the provision of premium reimbursement
for an Eligible Dependent with respect to a medical care or prescription drug coverage plan
for any period after an Eligible Director ceases to be a Director, a person must be covered
under such plan either individually or as an Eligible Dependent of the Eligible Director at
the time that the Eligible Director ceases to be a Director. For avoidance of doubt, the term
“child” includes any natural child, any legally adopted child, any child legally placed for
adoption, any child of a domestic partner, any stepchild who resides in the Eligible
Director’s household and any child under the court-appointed legal guardianship of the
Eligible Director or the Eligible Director’s spouse and who resides in the Eligible Director’s
household.
	 
	2.7	 	“Eligible Director” means any current Director and any former member of the Board, subject to
the coverage limitations set forth herein.
	 
	2.8	 	“Plan” means the Cadence Design Systems, Inc. Director Medical and Prescription Benefits
Coverage Reimbursement Plan as set forth herein.
	 
	2.9	 	“Plan Administrator” means the Company.
	 
	2.10	 	“Plan Year” means the twelve consecutive calendar month period ending on each December 31.

ARTICLE III

PARTICIPATION

	3.1	 	Commencement of Participation.

     In order to be eligible to commence or continue participation in the Plan, the Director must
qualify as an Eligible Director. A Director shall be eligible to participate in the Plan at the
time that the director becomes an Eligible Director. An active Director may defer participation
until he or she is in the position of actually incurring eligible premium expenses. An Eligible
Dependent shall commence participation in the Plan on the later of (1) the date that participation
commences for the Eligible Director of whom the person is an Eligible Dependent or (2) the date
that the person becomes an Eligible Dependent.

	3.2	 	Duration.

     (a) Subject to Sections 3.2(b) and 3.2(c), an Eligible Director’s participation in this
Plan shall cease at the end of his or her Coverage Period. For the avoidance of doubt, the
death of an Eligible Director during his or her Coverage Period shall not affect the
participation of any of his or her Eligible Dependents during such Coverage Period,

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each of whom shall continue to participate in accordance with the terms of this Plan
until the expiration of the Coverage Period.

     (b) As a condition for participation in this Plan, each Eligible Director agrees to
abide by the Company’s Code of Business Conduct as in effect from time to time. In the
event the Plan Administrator determines in good faith in its sole discretion that an
Eligible Director has violated the Code of Business Conduct, such Eligible Director’s
participation in this Plan shall immediately cease.

     (c) Participation in this Plan shall cease immediately upon an Eligible Director
becoming a Competitor Affiliate. For purposes of this Plan, an Eligible Director will be
considered a “Competitor Affiliate” if such Eligible Director, directly or indirectly,
provides services, whether as an employee, consultant, independent contractor, agent, sole
proprietor, partner, joint venture, corporate officer or director, on behalf of any
competitor of the Company or any of its subsidiaries, or becomes a significant investor in
or shareholder of a competitor of the Company or any of its subsidiaries. As a condition
for participation in this Plan, each Eligible Director shall immediately notify the
Company’s Benefits Manager if such Eligible Director becomes a Competitor Affiliate. In the
event the Plan Administrator determines in good faith in its sole discretion that an
Eligible Director has become a Competitor Affiliate, such Eligible Director’s participation
in this Plan shall immediately cease. For purposes of this Section 3.2(c) a “competitor”
includes but is not limited to the competitors that are listed in the Company’s filings with
the Securities and Exchange Commission.

     (d) A spouse who is an Eligible Dependent shall cease participation upon the earliest
of (i) such spouse’s death, (ii) upon such spouse’s divorce or legal separation from the
Eligible Director or (iii) the termination of the Eligible Director’s participation in this
Plan as described above.

     (e) Any other Eligible Dependent shall cease participation upon the earliest of (i)
such Eligible Dependent’s death, (ii) the date he or she ceases to be an Eligible Dependent
or (iii) the termination of the Eligible Director’s participation in this Plan as described
above.

ARTICLE IV

BENEFITS

	4.1	 	Description of Benefits.

     The Company shall reimburse one hundred percent (100%) of the insurance premiums for medical
care and prescription drug coverage for each Eligible Director and his or her Eligible Dependents
under a group, individual or Medicare plan, up to a maximum of Twenty Thousand Dollars ($20,000)
per Plan Year, prorated for any Plan Years in which an Eligible Director and/or his or her Eligible
Dependent participate for a portion of such Plan Year. The Company may, from time to time in its
sole discretion, adjust the maximum amount reimbursable each Plan Year to reflect changes in
general medical and prescription drug insurance premium costs.

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	4.2	 	Time Period for Reimbursement.

     In order for an eligible expense to be reimbursed, the Eligible Director (or, if applicable,
the Eligible Dependent) must submit a claim for reimbursement within three (3) months following the
end of the applicable Plan Year.

	4.3	 	Ineligible Expenses.

     An Eligible Director shall not be reimbursed either for (1) premiums for dental or vision
coverage or any other expenses associated therewith, or (2) any non-premium expenses associated
with the medical care or prescription drug coverage for such Eligible Director or for an Eligible
Dependent, including, without limitation, co-payments, co-insurance, deductibles, services or
supplies.

ARTICLE V

RECEIPT OF BENEFITS

	5.1	 	Controlling Effect of Plan.

     All claims for reimbursements shall be subject to and governed by the terms and conditions of
the Plan, and the rules, regulations, policies and procedures from time to time adopted by the Plan
Administrator in accordance therewith.

	5.2	 	Claims Procedure.

     (a) As soon as reasonably practicable following receipt of request for reimbursement
and all necessary documents and information, the Claims Administrator shall furnish the
Eligible Director claiming benefits under the Plan (“Claimant”) with notice, either
written or electronic, of the decision rendered with respect to such request for
reimbursement. Should special circumstances require an extension of time for processing the
claim, written notice of the extension shall be furnished to the Claimant prior to the
expiration of the initial 90 day period. The notice shall indicate the special
circumstances requiring an extension of time and the date by which a final decision is
expected to be rendered.

     (b) In the case of a denial of the Claimant’s request for reimbursement, the written
notice of such denial shall set forth (i) the specific reasons for the denial, including
specific reference to those plan provisions on which the denial is based; (ii) a description
of any additional information necessary to complete the claim and an explanation of why such
information is necessary and (iii) an explanation of the steps to be taken to appeal the
adverse determination.

     (c) A Claimant who wishes to contest the denial of his or her request for reimbursement
or to contest the amount of benefits payable shall follow the administrative procedures for
an appeal of benefits as set forth in Section 5.3 below and shall exhaust such
administrative procedures prior to seeking any other form of relief.

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	5.3	 	Appeals.

     (a) If the Claimant’s request for reimbursement is wholly or partially denied, he or
she may submit a request for an appeal within 60 days of receiving notice of the denial.
The Claimant may submit comments, records, documents, or other information supporting his
appeal, regardless of whether such information was considered in the prior benefits
decision. Upon request and free of charge, the Claimant will be provided reasonable access
to and copies of all documents, records and other information relevant to the claim.

     (b) The Claimant may request that his or her request for reimbursement be given full
and fair review by the Claims Administrator. The Claimant also may review all pertinent
documents and submit issues and comments in writing in connection with the appeal. The
decision of the Claims Administrator shall be made not later than 60 days after the Claimant
has completed his or her submission to the Claims Administrator of his or her request for
review and any documentation or other information to be submitted in support of such
request, unless special circumstances require an extension of time for processing, in which
case a decision shall be rendered as soon as reasonably practicable The decision on review
shall be communicated to the Claimant either in writing or electronically and shall include
the following: (i) references to the specific plan provision(s) upon which the decision was
based and (ii) a statement that, upon request and free of charge, he or she will be provided
reasonable access to and copies of all documents, records and other information relevant to
your claim for benefits.

	5.4	 	Exclusive Procedures; Time for Filing Suit.

     (a) The procedures under Sections 5.2 and 5.3 shall be the exclusive procedures for
claiming benefits under this Plan. Benefits under this Plan will be paid only if the Claims
Administrator decides in its discretion that the Claimant is entitled to them. Subject to
Sections 5.4(b) and (c), any action by the Claims Administrator in the exercise of authority
conferred upon it by this Plan shall be conclusive and binding upon the Claimants and any
other Eligible Directors, Eligible Dependents and their beneficiaries and dependents.

     (b) No legal or equitable action for benefits under the Plan shall be brought unless
and until the Claimant (1) has submitted a request for reimbursement in accordance with
Section 5.2, (2) has been notified by the Claims Administrator that the request for
reimbursement is denied, (3) has filed a written request for a review of the request for
reimbursement in accordance with Subsection 5.3(a), and (4) has been notified in writing
that the Claims Administrator has affirmed the denial of the request for reimbursement;
provided that legal action may be brought after the Claims Administrator has failed to take
any action on the claim within the time prescribed in Section 5.3(b).

     (c) In no event may any legal or equitable action for benefits under the Plan be
brought in a court of law or equity with respect to any claim for benefits more than one (1)
year after the final denial (or deemed final denial) of the claim by the Claims
Administrator.

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ARTICLE VI

ADMINISTRATIVE PROVISIONS

	6.1	 	Plan Administrator’s Duties and Powers.

     Authority to control and manage the operation and administration of the Plan shall be vested
in the Plan Administrator. The Plan Administrator shall have all discretionary powers necessary to
supervise the administration of the Plan and control its operations. In addition to any powers and
authority conferred on the Plan Administrator elsewhere in this Plan, the Plan Administrator shall
have, by way of illustration and not by way of limitation, the following powers and authority which
it shall exercise in its sole discretion:

     (a) To construe and interpret this Plan, and to decide all questions of eligibility and
participation in this Plan.

     (b) To prescribe rules and procedures to be followed by Eligible Directors and/or
Eligible Dependents in making reimbursement requests under this Plan, and to establish such
other rules and procedures from time to time for the efficient administration and
effectuation of this Plan (including the establishment of any claims procedure that may be
required by applicable law).

     (c) To prepare and distribute information explaining this Plan in such manner as the
Plan Administrator determines to be appropriate.

     (d) To request and receive from all Eligible Directors and/or Eligible Dependents such
information as the Plan Administrator shall from time to time determine to be necessary for
the proper administration of this Plan.

     (e) To furnish each Eligible Directors and/or Eligible Dependent with such reports with
respect to the administration of this Plan as the Plan Administrator determines to be
reasonable and appropriate.

     (f) To receive, review and keep on file such reports and information concerning the
Plan as the Plan Administrator shall determine from time to time to be necessary and proper.

     (g) To appoint or employ such individuals or entities to assist in administration of
this Plan as it determines to be necessary or advisable, including legal counsel and benefit
consultants.

     (h) To allocate and delegate its responsibilities under the Plan, and to designate
other persons to carry out any of its responsibilities under the Plan.

     (i) To perform any and all other acts necessary or appropriate for the proper
management and administration of the Plan.

Subject to Sections 5.4(b) and (c), any action taken by the Plan Administrator in the exercise of
authority conferred upon it by this Plan shall be conclusive and binding upon the Eligible

6

 

Directors, Eligible Dependents and their beneficiaries and dependents. All discretionary powers
conferred upon the Plan Administrator shall be absolute, provided, however, all such discretionary
powers shall be exercised in a uniform and nondiscriminatory manner.

	6.2	 	Claims Administrator.

     The Plan Administrator shall appoint a Claims Administrator to process claims and to make
determinations with respect to such claims in accordance this Plan, which such determinations shall
be conclusive and binding upon the Eligible Directors, Eligible Dependents and their beneficiaries.

	6.3	 	Records.

     The Plan Administrator shall cause to be kept all books, accounts, records or other data as
may be necessary or advisable in its judgment for the administration of the Plan and properly to
reflect the affairs thereof. The Plan Administrator will make available to each Eligible Director
and Eligible Dependent such records under the Plan as pertain to such person for examination at
reasonable times during normal business hours.

	6.4	 	Indemnification.

     To the extent permitted by law, the Company shall indemnify each employee with duties under
the Plan (including the Company’s Benefits Manager) against expenses (including any amount paid in
settlement) reasonably incurred by him or her in connection with any claims against him or her by
reason of his or her conduct in the performance of his or her duties under the Plan, except in
relation to matters resulting from willful misconduct, breach of good faith, or gross negligence in
the performance of those duties. The preceding right of indemnification shall be in addition to
any other right to which any such employee may be entitled as a matter of law or otherwise.

ARTICLE VII

AMENDMENT OR TERMINATION OF PLAN

	7.1	 	Amendment of Plan.

     The Company reserves the power at any time or times to amend the provisions of the Plan to any
extent and in any manner that it may deem advisable, by action of the Board or the Compensation
Committee of the Board. No person or entity other than the Company shall have any right or
authority to amend the provisions of this Plan. No Eligible Director or Eligible Dependent shall
have any right to continued coverage under this Plan that shall impose any limitations on the
ability of the Company to amend the Plan pursuant to this Section 7.1.

	7.2	 	Termination of Plan.

     The Company has established the Plan hereunder with the intention and expectation that it will
be continued indefinitely, but the Company will have no obligation whatsoever to maintain the Plan
for any given length of time and may discontinue or terminate the Plan at any time with respect to
all or any group of persons without liability. Any such discontinuance or

7

 

termination shall be by a written instrument executed by action of the Board or the
Compensation Committee of the Board. A termination may affect all or any Eligible Directors and
Eligible Dependents. Upon termination or discontinuance of the Plan, all participation shall end,
and except as determined to the contrary by the Company, no further payments need be made under the
Plan except with respect to previously incurred expenses or previously made claims, in either case
incurred or submitted prior to the date of discontinuance or termination of the Plan.

	7.3	 	Change in Control.

     In the event of a Change in Control (as defined in the Company’s 1987 Stock Incentive Plan, as
amended), any surviving or acquiring corporation shall assume the Plan and the obligations to
provide benefits to Eligible Directors hereunder unless the Board, by majority vote of its
then-current directors, elects to terminate the Plan prior to or in connection with such Change in
Control. If the Plan is not terminated in accordance with this Section 7.3, then following a
Change in Control, the Plan shall not be terminated, discontinued or amended in any manner that
would materially adversely affect the interests of any Eligible Director without the written
consent of the Eligible Director or Eligible Directors so affected notwithstanding anything to the
contrary set forth in Sections 7.1 or 7.2 above.

ARTICLE VIII

MISCELLANEOUS

	8.1	 	Communication to Eligible Directors.

     The Plan Administrator will notify all Eligible Directors in writing of the availability,
terms and conditions of this Plan.

	8.2	 	Funding Policy and Method.

     The benefits provided hereunder are payable exclusively from the general assets of the
Company, except as expressly required by law, and nothing in this Plan shall require the Company or
the Plan Administrator to maintain any fund or segregate any amount from the general assets of the
Company, to purchase insurance or arrange other contracts to guarantee the delivery of benefits
provided under the Plan or to provide any level of funding to assure payment of the Plan’s
benefits, and no Eligible Director or other person shall have any claim against, right to, or
security or other interest in, any fund, account or asset of the Company from which any payment
under the Plan may be made.

	8.3	 	Nonassignability of Rights.

     The right of any Eligible Director to receive any benefit under the Plan shall not be
alienable by the Eligible Director by assignment or any other method, and will not be subject to
claims of his creditors by any process whatsoever, and any attempt to cause such right to be so
subject will not be recognized, except to the extent as may be required by law.

8

 

	8.4	 	No Guarantee of Tax Consequences.

     Neither the Plan Administrator nor the Company makes any commitment or guarantee that any
amounts paid to or for the benefit of a Eligible Director or other person under Article IV
will be excludable from the gross income of any person for federal or state tax purposes, or that
any other federal or state tax treatment will apply to or be available to any Eligible Director or
other person. It shall be the obligation of each Eligible Director to determine whether each
payment under Article IV is excludable from gross income for federal and state income tax
purposes.

	8.5	 	Interpretation.

     Article and Section headings are for convenient reference only and shall not be deemed to be
part of the substance of this instrument or in any way to enlarge or limit the contents of any
Article or Section. Unless the context clearly indicates otherwise, the masculine gender shall
include the feminine, the singular shall include the plural, and the plural shall include the
singular.

	8.6	 	Successors and Assigns.

     This Plan shall inure to the benefit of, and be binding upon, the parties hereto and their
successors and assigns.

	8.7	 	Governing Law.

     To the extent federal law is inapplicable, the Plan will be construed, administered and
enforced according to the laws of California.

9

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