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Entrepreneurship, Second Edition by Andrew Zacharakis, William Bygrave

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13.16. CASE: Cadence Design Systems and Avant! (B)

13.16.1. Avant! Pays Fines and Legal Costs of Six Current and Former Employees, August 2001

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[] Excerpted from Synopsys 10K filing with the SEC. www.synopsys.com/corporate/invest/final8-K-73002.pdf.

In connection with the plea agreement, Avant! agreed to pay a fine of $27.0 million and to pay restitution in an amount to be determined by the court. On July 25, 2001, the court fixed the total restitution amount to be paid to Cadence at $195.4 million, any unpaid portion of which accrued interest at the statutory rate of 10% beginning July 25, 2001. Avant! recognized the resulting expense of $222.4 million in the second quarter of2001. During the third quarter of 2001, Avant! paid the $27.0 million fine and made restitution payments to Cadence totaling $170.0 million. Avant! made a final payment of $26.5 million to Cadence on October 3, 2001, to conclude payment of the restitution owed to Cadence. These payments included $1.1 million of interest.

As part of the settlement, Avant! agreed to indemnify all of the current and former Avant! employees named in Exhibit 13.1, with the exception of Mr. Cheng, for the fines assessed against them, and indemnify them for the taxes levied as a result of this indemnification. Avant! recognized the resulting expense of $14.1 million in the second quarter of2001. Under the applicable law, Avant! was authorized to pay the defense expenses and fines of its officers, directors, and employees if the ...

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