EXHIBIT 10.1
SYNOPSYS, INC.
1992 STOCK OPTION PLAN
(AMENDED JULY 29, 1992, OCTOBER 28, 1992, OCTOBER 27,
1993, OCTOBER 27, 1994, NOVEMBER 1, 1995, MAY 1, 1996, MAY 3, 1996,
OCTOBER 30, 1996, JANUARY 11, 2000 MARCH 3, 2000 AND MAY 25, 2001)
ARTICLE ONE
GENERAL
I. PURPOSE OF THE PLAN
A. This 1992 Stock Option Plan (Plan) is intended to promote the
interests of Synopsys, Inc., a Delaware corporation (the Corporation), by
providing (i) key employees (including officers and directors) of the
Corporation (or its parent or subsidiary corporations) who are responsible for
the management, growth and financial success of the Corporation (or its parent
or subsidiary corporations) and (ii) consultants and other independent advisors
who provide valuable services to the Corporation (or its parent or subsidiary
corporations) with the opportunity to acquire a proprietary interest, or
otherwise increase their proprietary interest, in the Corporation as an
incentive for them to remain in the service of the Corporation (or its parent or
subsidiary corporations).
B. The Plan shall become effective on the first date on which the shares
of the Corporation's common stock are registered under Section 12(g) of the
Securities Exchange Act of 1934, as amended (the 1934 Act). Such date is hereby
designated as the Effective Date of the Plan.
C. This Plan shall serve as the successor to the Corporation's 1988
Restricted Stock Plan (the 1988 Plan), and no further option grants shall be
made under the 1988 Plan from and after the Effective Date of this Plan. All
options outstanding under the 1988 Plan on such Effective Date are hereby
incorporated into this Plan and shall accordingly be treated as outstanding
options under this Plan. However, each outstanding option so incorporated shall
continue to be governed solely by the express terms and conditions of the
instrument evidencing such grant, and no provision of this Plan shall be deemed
to affect or otherwise modify the rights or obligations of the holders of such
incorporated options with respect to their acquisition of shares of the
Corporation's common stock thereunder. All outstanding unvested share issuances
under the 1988 Plan shall continue to be governed solely by the express terms
and conditions of the instruments evidencing such issuances, and no provision of
this Plan shall be deemed to affect or otherwise modify the rights or
obligations of the holders of such unvested shares.
D. For purposes of the Plan, the following provisions shall be
applicable in determining the parent and subsidiary corporations of the
Corporation:
Any corporation (other than the Corporation) in an unbroken chain of
corporations ending with the Corporation shall be considered to be a parent of
the Corporation, provided each such corporation in the unbroken chain (other
than the Corporation) owns, at the time of the determination, stock possessing
fifty percent (50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
Each corporation (other than the Corporation) in an unbroken chain of
corporations beginning with the Corporation shall be considered to be a
subsidiary of the Corporation, provided each such corporation (other than the
last corporation) in the unbroken chain owns, at the time of the determination,
stock possessing fifty percent (50%) or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.
II. ADMINISTRATION OF THE PLAN
A. Administrator. The Plan shall be administered by the Board of
Directors or a committee that will satisfy Rule 16b-3 of the Securities and
Exchange Commission and Section 162(m) of the Internal Revenue
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Code, as in effect with respect to the Company from time to time (in either
case, the Administrator). In connection with the administration of the Plan, the
Administrator shall have the powers possessed by the Board. The Administrator
may act only by a majority of its members, except that the Administrator may
authorize any one or more of its members or any officer of the Company to
execute and deliver documents on behalf of the Administrator. For so long as not
otherwise required for the Plan to comply with Rule 16b-3, the Administrator or
the Board may delegate to one or more directors of the Company authority to
grant stock options to persons who are not subject to Section 16 of the Exchange
Act, and may delegate administrative duties to such director(s) and such
employees of the Company as it deems proper. The Board at any time may terminate
the authority delegated to any committee of the Board pursuant to this Section
III(a) and revest in the Board the administration of the Plan.
B. Authority. The Administrator shall grant options and authorize stock
issuances (in either case an Award) to selected eligible employees and
consultants. In particular and without limitation, the Administrator, subject to
the terms of the Plan, shall:
(i) select the officers, other employees, and consultants to
whom Awards may be granted;
(ii) determine whether and to what extent Awards are to be
granted under the Plan;
(iii) determine the number of shares to be covered by each Award
granted under the Plan; and
(iv) determine the terms and conditions of any Award granted
under the Plan and any related loans to be made by the Company, based
upon factors determined by the Administrator.
C. Administrator Determinations Binding. The Administrator may adopt,
alter and repeal administrative rules, guidelines and practices governing the
Plan as it from time to time shall deem advisable, may interpret the terms and
provisions of the Plan, any Award and any Award agreement and may otherwise
supervise the administration of the Plan. Any determination made by the
Administrator pursuant to the provisions of the Plan with respect to any Award
shall be made in its sole discretion at the time of the grant of the Award or,
unless in contravention of any express term of the Plan or Award, at any later
time. All decisions made by the Administrator under the Plan shall be binding on
all persons, including the Company and Plan participants. No member of the
Administrator shall be liable for any action that he or she has in good faith
taken or failed to take with respect to this Plan or any Award.
III. ELIGIBILITY
A. The persons eligible to receive option grants (Optionee) are as
follows:
(i) officers and other key employees of the Corporation (or its
parent or subsidiary corporations) who render services which contribute to
the management, growth and financial success of the Corporation (or its
parent or subsidiary corporations);
(ii) those consultants or other independent advisors who provide
valuable services to the Corporation (or its parent or subsidiary
corporations).
B. Non-employee members of the Board shall not be eligible to
participate in the Plan or in any other stock option, stock purchase, stock
bonus or other stock plan of the Corporation (or its parent or subsidiary
corporations), other than the 1994 Non-Employee Directors Stock Option Plan.
IV. STOCK SUBJECT TO THE PLAN
A. Shares of the Corporation's common stock (the Common Stock) shall be
available for issuance under the Plan and shall be drawn from either the
Corporation's authorized but unissued shares of Common Stock or from reacquired
shares of Common Stock, including shares repurchased by the Corporation on the
open market. The maximum number of shares of Common Stock which may be issued
over the term of the Plan shall not exceed
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the sum of (i) 17,767,142 shares plus (ii) an additional number of shares equal
to 5% of the number of shares of Common Stock and Common Stock equivalents
outstanding on the first day of each of the 1997, 1998 and 1999 fiscal years.
Such authorized share reserve includes the number of shares which remained
available for issuance, as of the Effective Date, under the 1988 Plan as last
approved by the Corporation's stockholders prior to such Effective Date,
including the shares subject to the outstanding options incorporated into this
Plan and any other shares available for future option grant under the 1988 Plan
as last approved by the stockholders, and such reserve shall be adjusted from
time to time in accordance with the provisions of this Section IV. To the extent
one or more outstanding options under the 1988 Plan which have been incorporated
into this Plan are subsequently exercised, the number of shares issued with
respect to each such option shall reduce, on a share-for-share basis, the number
of shares available for issuance under this Plan.
B. In no event may the maximum number of shares which may be issued
pursuant to Incentive Options granted under the Plan on or after the first day
of the 1995 fiscal year (October 2, 1994) exceed 16,000,000 shares, subject to
adjustment from time to time in accordance with the provisions of this Section
IV. The maximum number of shares which may be issued pursuant to Incentive
Options granted under the Plan prior to the first day of the 1995 fiscal year
(October 2, 1994) shall not exceed 11,400,000 shares, subject to adjustment from
time to time in accordance with the provisions of this Section IV.
C. In no event may the aggregate number of shares of Common Stock for
which any one individual participating in the Plan may be granted stock options
and/or separately-exercisable stock appreciation rights during any fiscal year
exceed 750,000 shares, except in the case of an individual's initial employment
with the Company, in which case such individual may be granted stock options
and/or stock appreciation rights for an additional 250,000 shares, subject to
adjustment from time to time in accordance with the provisions of this Section
IV. For purposes of such limitation, no stock options or stock appreciation
rights granted prior to January 1, 1994 shall be taken into account.
D. Should one or more outstanding options under this Plan (including
outstanding options under the 1988 Plan incorporated into this Plan) expire or
terminate for any reason prior to exercise in full (including any option
cancelled in accordance with the cancellation-regrant provisions of Section IV
of Article Two of the Plan), then the shares subject to the portion of each
option not so exercised shall be available for subsequent option grant under the
Plan. Shares subject to any option or portion thereof surrendered or cancelled
in accordance with Section V of Article Two and all shares issuances under the
Plan, whether or not the shares are subsequently repurchased by the Corporation
pursuant to its repurchase rights under the Plan, shall not be available for
subsequent option grant under the Plan. In addition, should the exercise price
of an outstanding option under the Plan be paid with shares of Common Stock,
then the number of shares of Common Stock available for issuance under the Plan
shall be reduced by the gross number of shares for which the option is
exercised, and not by the net number of shares of Common Stock actually issued
to the holder of such option.
E. In the event any change is made to the Common Stock issuable under
the Plan by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, appropriate adjustments shall be made to (i) the maximum number
and/or class of securities issuable under the Plan, (ii) the maximum number
and/or class of securities which may be issued pursuant to Incentive Options
granted under the Plan, whether before or after the first day of the 1995 fiscal
year, (iii) the total number and/or class of securities for which stock options
and separately-exercisable stock appreciation rights may be granted to any one
participant in the Plan after December 31, 1993, (iv) the number and/or class of
securities and price per share in effect under each outstanding option under the
Plan and (v) the number and/or class of securities and price per share in effect
under each outstanding option incorporated into this Plan from the 1988 Plan.
Such adjustments to the outstanding options are to be effected in a manner which
shall preclude the enlargement or dilution of rights and benefits under such
options.
The adjustments determined by the Plan Administrator shall be final,
binding and conclusive.
F. Common Stock issuable under the Plan may be subject to such
restrictions on transfer, repurchase rights or other restrictions determined by
the Plan Administrator.
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ARTICLE TWO
OPTION GRANTS
I. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to the Plan shall be authorized by action of
the Plan Administrator and may, at the Plan Administrator's discretion, be
either Incentive Options or non-statutory options. Individuals who are not
Employees of the Corporation or its parent or subsidiary corporations may only
be granted non-statutory options. Each granted option shall be evidenced by one
or more instruments in the form approved by the Plan Administrator; provided,
however, that each such instrument shall comply with the terms and conditions
specified below. Each instrument evidencing an Incentive Option shall, in
addition, be subject to the applicable provisions of Section II of this Article
Two.
A. Option Price.
(1) The option price per share shall be fixed by the Plan Administrator.
In no event, however, shall it be less than one hundred percent (100%) of the
fair market value per share of Common Stock on the date of the option grant.
(2) The option price shall become immediately due upon exercise of the
option and, subject to the provisions of Article Three, Section I and the
instrument evidencing the grant, shall be payable in one of the following
alternative forms specified below:
- full payment in cash or check drawn to the Corporation's order;
- full payment in shares of Common Stock held for at least six (6)
months and valued at fair market value on the Exercise Date (as such term
is defined below);
- full payment in a combination of shares of Common Stock held for
at least six (6) months and valued at fair market value on the Exercise
Date and cash or check; or
- full payment through a broker-dealer sale and remittance procedure
pursuant to which the Optionee (I) shall provide irrevocable written
instructions to a Corporation-designated brokerage firm to effect the
immediate sale of the purchased shares and remit to the Corporation, out
of the sale proceeds available on the settlement date, sufficient funds to
cover the aggregate option price payable for the purchased shares plus all
applicable Federal and State income and employment taxes required to be
withheld by the Corporation in connection with such purchase and (II)
shall provide written directives to the Corporation to deliver the
certificates for the purchased shares directly to such brokerage firm in
order to complete the sale transaction.
For purposes of this subparagraph (2), the Exercise Date shall be the
date on which written notice of the option exercise is delivered to the
Corporation. Except to the extent the sale and remittance procedure is utilized
in connection with the exercise of the option, payment of the option price for
the purchased shares must accompany such notice.
(3) The fair market value per share of Common Stock on any relevant date
under the Plan shall be determined in accordance with the following provisions:
- If the Common Stock is not at the time listed or admitted to
trading on any national stock exchange but is traded on the Nasdaq
National Market, the fair market value shall be the closing selling price
per share of Common Stock on the date in question, as such price is
reported by the National Association of Securities Dealers on the Nasdaq
National Market System or any successor system. If there is no reported
closing selling price for the Common Stock on the date in question, then
the closing selling price on the last preceding date for which such
quotation exists shall be determinative of fair market value.
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- If the Common Stock is at the time listed or admitted to trading
on any national stock exchange, then the fair market value shall be the
closing selling price per share of Common Stock on the date in question on
the stock exchange determined by the Plan Administrator to be the primary
market for the Common Stock, as such price is officially quoted in the
composite tape of transactions on such exchange. If there is no reported
sale of Common Stock on such exchange on the date in question, then the
fair market value shall be the closing selling price on the exchange on
the last preceding date for which such quotation exists.
B. Term and Exercise of Options. Each option shall be exercisable at
such time or times and during such period as is determined by the Plan
Administrator and set forth in the stock option agreement evidencing the grant;
provided that at least 75% of the options granted hereunder shall become
exercisable ratably over a four year period from the date of grant, with the
vesting interval (i.e., monthly, quarterly, etc.) and any period prior to the
commencement of vesting determined in each case by the Plan Administrator. No
such option, however, shall have a maximum term in excess of ten (10) years from
the grant date. During the lifetime of the Optionee, the option shall be
exercisable only by the Optionee and shall not be assignable or transferable by
the Optionee otherwise than by will or by the laws of descent and distribution
following the Optionee's death.
C. Termination of Service.
(1) Except to the extent otherwise provided pursuant to Section VI of
this Article Two, the following provisions shall govern the exercise period
applicable to any outstanding options under the Plan which are held by the
Optionee at the time of his or her cessation of Service or death.
- Should the Optionee cease Service for any reason (including death
or permanent disability as defined in Section 22(e)(3) of the Internal
Revenue Code) while holding one or more outstanding options under the
Plan, then none of those options shall (except to the extent otherwise
provided pursuant to Section VI of this Article Two) remain exercisable
beyond the limited post-Service period designated by the Plan
Administrator at the time of the option grant and set forth in the option
agreement.
- Any option granted to an Optionee under the Plan and exercisable
in whole or in part on the date of the Optionee's death may be
subsequently exercised, by the personal representative of the Optionee's
estate or by the person or persons to whom the option is transferred
pursuant to the Optionee's will or in accordance with the laws of descent
and distribution, provided and only if such exercise occurs prior to the
earlier of (i) the expiration of the period designated by the Plan
Administrator at the time of the option grant and set forth in the option
agreement, which may be any period from one month to three years measured
from the date of the Optionee's death, or (ii) the specified expiration
date of the option term. Upon the occurrence of the earlier event, the
option shall terminate and cease to be exercisable.
- Under no circumstances, however, shall any such option be
exercisable after the specified expiration date of the option term.
- During the limited post-Service exercise period, the option may
not be exercised for more than the number of shares for which the option
is exercisable on the date of the Optionee's cessation of Service. Upon
the expiration of such limited exercise period or (if earlier) upon the
expiration of the option term, the option shall terminate and cease to be
exercisable. However, upon the Optionee's cessation of Service, each
outstanding option at the time held by the Optionee shall immediately
terminate and cease to be outstanding with respect to any shares for which
the option is not otherwise at that time exercisable or in which the
Optionee is not otherwise vested.
- Should (i) the Optionee's Service be terminated for misconduct
(including, but not limited to, any act of dishonesty, willful misconduct,
fraud or embezzlement) or (ii) the Optionee make any unauthorized use or
disclosure of confidential information or trade secrets of the Corporation
or its parent or subsidiary corporations, then in any such event all
outstanding options held by the Optionee under this Article Two shall
terminate immediately and cease to be exercisable.
(2) The Plan Administrator shall have complete discretion, exercisable
either at the time the option is granted or at any time while the option remains
outstanding, to permit one or more options held by the
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Optionee under this Article Two to be exercised, during the limited period of
exercisability provided under subparagraph (1) above, not only with respect to
the number of shares for which each such option is exercisable at the time of
the Optionee's cessation of Service but also with respect to one or more
subsequent installments for which the option would otherwise have become
exercisable had such cessation of Service not occurred.
(3) For purposes of the foregoing provisions of this Section I.C (and
for all other purposes under the Plan):
- The Optionee shall (except to the extent otherwise specifically
provided in the applicable option agreement) be deemed to remain in the
Service of the Corporation for so long as such individual renders services
on a periodic basis to the Corporation (or any parent or subsidiary
corporation) in the capacity of an Employee, a non-employee member of the
Board or an independent consultant or advisor.
- The Optionee shall be considered to be an Employee for so long as
he or she remains in the employ of the Corporation or one or more parent
or subsidiary corporations, subject to the control and direction of the
employer entity not only as to the work to be performed but also as to the
manner and method of performance.
D. Stockholder Rights.
An Optionee shall have no stockholder rights with respect to any shares
covered by the option until such individual shall have exercised the option,
paid the option price for the purchased shares and been issued a stock
certificate for such shares.
E. Repurchase Rights.
The shares of Common Stock acquired upon the exercise of options granted
under this Article Two may be subject to repurchase by the Corporation in
accordance with the following provisions:
(a) The Plan Administrator shall have the discretion to authorize the
issuance of unvested shares of Common Stock under this Article Two. Should the
Optionee cease Service while holding such unvested shares, the Corporation shall
have the right to repurchase any or all of those unvested shares at the option
price paid per share. The terms and conditions upon which such repurchase right
shall be exercisable (including the period and procedure for exercise and the
appropriate vesting schedule for the purchased shares) shall be established by
the Plan Administrator and set forth in the instrument evidencing such
repurchase right.
(b) All of the Corporation's outstanding repurchase rights shall
automatically terminate, and all shares subject to such terminated rights shall
immediately vest in full, upon the occurrence of any Corporate Transaction under
Section III of this Article Two, except to the extent:
(i) any such repurchase right is to be assigned to the successor
corporation (or parent thereof) in connection with the Corporate
Transaction or (ii) such termination is precluded by other limitations
imposed by the Plan Administrator at the time the repurchase right is
issued.
(c) The Plan Administrator shall have the discretionary authority,
exercisable either before or after the Optionee's cessation of Service, to
cancel the Corporation's outstanding repurchase rights with respect to one or
more shares purchased or purchasable by the Optionee under this Article Two and
thereby accelerate the vesting of such shares in whole or in part at any time.
II. INCENTIVE OPTIONS
The terms and conditions specified below shall be applicable to all
Incentive Options granted under the Plan. Incentive Options may only be granted
to individuals who are Employees of the Corporation. Options which are
specifically designated as "non-statutory" options when issued under the Plan
shall not be subject to such terms and conditions.
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A. Dollar Limitation. The aggregate fair market value (determined as of
the respective date or dates of grant) of the Common Stock for which one or more
options granted to any Employee after December 31, 1986 under this Plan (or any
other option plan of the Corporation or its parent or subsidiary corporations)
may for the first time become exercisable as incentive stock options under the
Federal tax laws during any one calendar year shall not exceed the sum of One
Hundred Thousand Dollars ($100,000). To the extent the Employee holds two or
more such options which become exercisable for the first time in the same
calendar year, the foregoing limitation on the exercisability of such options as
incentive stock options under the Federal tax laws shall be applied on the basis
of the order in which such options are granted.
B. 10% Stockholder. If any individual to whom an Incentive Option is
granted is the owner of stock (as determined under Section 424(d) of the
Internal Revenue Code) possessing 10% or more of the total combined voting power
of all classes of stock of the Corporation or any one of its parent or
subsidiary corporations, then the option price per share shall not be less than
one hundred and ten percent (110%) of the fair market value per share of Common
Stock on the grant date, and the option term shall not exceed five (5) years,
measured from the grant date.
Except as modified by the preceding provisions of this Section II, the
provisions of Articles One, Two and Three of the Plan shall apply to all
Incentive Options granted hereunder.
III. CORPORATE TRANSACTIONS/CHANGES IN CONTROL
A. In the event of any of the following stockholder-approved
transactions to which the Corporation is a party (a Corporate Transaction):
(i) a merger or consolidation in which the Corporation is not the
surviving entity, except for a transaction the principal purpose of which is to
change the State of the Corporation's incorporation,
(ii) the sale, transfer or other disposition of all or substantially all
of the assets of the Corporation in liquidation or dissolution of the
Corporation, or
(iii) any reverse merger in which the Corporation is the surviving
entity but in which securities possessing more than fifty percent (50%) of the
total combined voting power of the Corporation's outstanding securities are
transferred to holders different from those who held such securities immediately
prior to such merger,
then the exercisability of each option outstanding under the Plan shall
automatically accelerate so that each such option shall, immediately prior to
the specified effective date for the Corporate Transaction, become fully
exercisable with respect to the total number of shares of Common Stock at the
time subject to such option and may be exercised for all or any portion of such
shares. However, an outstanding option under this Article Two shall not so
accelerate if and to the extent: (i) such option is, in connection with the
Corporate Transaction, to be assumed by the successor corporation or parent
thereof or replaced with a comparable option to purchase shares of the capital
stock of the successor corporation or parent thereof, (ii) such option is to be
replaced by a comparable cash incentive program of the successor corporation
based on the option spread at the time of the Corporate Transaction, or (iii)
the acceleration of such option is subject to other limitations imposed by the
Plan Administrator at the time of the option grant. The determination of
comparability under clause (i) or (ii) above shall be made by the Plan
Administrator, and its determination shall be final, binding and conclusive.
B. Immediately after the consummation of the Corporate Transaction, all
outstanding options under the Plan shall terminate and cease to be outstanding,
except to the extent assumed by the successor corporation or its parent company.
C. Each outstanding option under the Plan which is assumed in connection
with the Corporate Transaction or is otherwise to continue in effect shall be
appropriately adjusted, immediately after such Corporate Transaction, to apply
and pertain to the number and class of securities which would have been issued
to the option holder, in consummation of such Corporate Transaction, had such
person exercised the option immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to the option price payable per
share, provided the aggregate option price payable for such securities shall
remain the same. In addition, the maximum number and/or class of securities
available for issuance under the Plan, the maximum number and/or class of
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securities which may be issued pursuant to Incentive Options granted under the
Plan, whether before or after the first day of the 1995 fiscal year, and the
total number and/or class of securities for which stock options and
separately-exercisable stock appreciation rights may be granted to any one
participant in the Plan after December 31, 1993 shall be appropriately adjusted
following the consummation of the Corporate Transaction to reflect the effect of
such transaction upon the Corporation's capital structure.
D. The grant of options under the Plan shall in no way affect the right
of the Corporation to adjust, reclassify, reorganize or otherwise change its
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.
E. The Plan Administrator shall have the discretionary authority,
exercisable at the time the option is granted or at any time while the option
remains outstanding, to provide for the automatic acceleration of one or more
outstanding options under this Article Two (and the termination of one or more
of the Corporation's outstanding repurchase rights under this Article Two) upon
the occurrence of a Change in Control. Alternatively, the Plan Administrator
shall have full power and authority to condition any such option acceleration
(and the termination of any outstanding repurchase rights) upon the subsequent
termination of the Optionee's Service within a specified period following the
Change in Control.
F. For purposes of this Section III, a Change in Control shall be deemed
to occur in the event:
(i) any person or related group of persons (other than the Corporation
or a person that directly or indirectly controls, is controlled by, or is under
common control with, the Corporation) directly or indirectly acquires beneficial
ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities
possessing more than fifty percent (50%) of the total combined voting power of
the Corporation's outstanding securities pursuant to a tender or exchange offer
made directly to the Corporation's stockholders which the Board does not
recommend such stockholders to accept; or
(ii) there is a change in the composition of the Board over a period of
twenty-four (24) consecutive months or less such that a majority of the Board
members ceases, by reason of one or more proxy contests for the election of
Board members, to be comprised of individuals who either (A) have been Board
members continuously since the beginning of such period or (B) have been elected
or nominated for election as Board members during such period by at least a
majority of the Board members described in clause (A) who were still in office
at the time such election or nomination was approved by the Board.
G. Any options accelerated in connection with the Change in Control
shall remain fully exercisable until the expiration or sooner termination of the
option term.
H. The exercisability as incentive stock options under the Federal tax
laws of any options accelerated under this Section III in connection with a
Corporate Transaction or Change in Control shall remain subject to the dollar
limitation of Section II of this Article Two.
IV. [INTENTIONALLY OMITTED.]
V. STOCK APPRECIATION RIGHTS
A. Provided and only if the Plan Administrator determines in its
discretion to implement the stock appreciation right provisions of this Section
V, one or more Optionees may be granted the right, exercisable upon such terms
and conditions as the Plan Administrator may establish, to surrender all or part
of an unexercised option under this Article Two in exchange for a distribution
from the Corporation in an amount equal to the excess of (i) the fair market
value (on the option surrender date) of the number of shares in which the
Optionee is at the time vested under the surrendered option (or surrendered
portion thereof) over (ii) the aggregate option price payable for such vested
shares.
B. No surrender of an option shall be effective hereunder unless it is
approved by the Plan Administrator. If the surrender is so approved, then the
distribution to which the Optionee shall accordingly become entitled under this
Section V may be made in shares of Common Stock valued at fair market value on
the option
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surrender date, in cash, or partly in shares and partly in cash, as the Plan
Administrator shall in its sole discretion deem appropriate.
C. If the surrender of an option is rejected by the Plan Administrator,
then the Optionee shall retain whatever rights the Optionee had under the
surrendered option (or surrendered portion thereof) on the option surrender date
and may exercise such rights at any time prior to the later of (i) five (5)
business days after the receipt of the rejection notice or (ii) the last day on
which the option is otherwise exercisable in accordance with the terms of the
instrument evidencing such option, but in no event may such rights be exercised
more than ten (10) years after the date of the option grant.
D. One or more officers of the Corporation subject to the short-swing
profit restrictions of the Federal securities laws may, in the Plan
Administrator's sole discretion, be granted limited stock appreciation rights in
tandem with their outstanding options under the Plan. Upon the occurrence of a
Hostile Take-Over effected at any time when the Corporation's outstanding Common
Stock is registered under Section 12(g) of the 1934 Act, each outstanding option
with such a limited stock appreciation right in effect for at least six (6)
months shall automatically be cancelled, to the extent such option is at the
time exercisable for fully-vested shares of Common Stock. The Optionee shall in
return be entitled to a cash distribution from the Corporation in an amount
equal to the excess of (i) the Take-Over Price of the vested shares of Common
Stock at the time subject to the cancelled option (or cancelled portion of such
option) over (ii) the aggregate exercise price payable for such shares. The cash
distribution payable upon such cancellation shall be made within five (5) days
following the consummation of the Hostile Take-Over. Neither the approval of the
Plan Administrator nor the consent of the Board shall be required in connection
with such option cancellation and cash distribution. The uncancelled portion of
the option (if any) shall continue to remain outstanding and become exercisable
in accordance with the terms of the agreement evidencing that grant.
E. For purposes of Section V.D, the following definitions shall be in
effect:
A Hostile Take-Over shall be deemed to occur in the event (i) any person
or related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common control
with, the Corporation) directly or indirectly acquires beneficial ownership
(within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing more
than fifty percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made directly to
the Corporation's stockholders which the Board does not recommend such
stockholders to accept and (ii) more than fifty percent (50%) of the securities
so acquired in such tender or exchange offer are accepted from holders other
than Corporation officers and directors participating in the Plan.
The Take-Over Price per share shall be deemed to be equal to the greater
of (a) the fair market value per share on the date of cancellation, as
determined pursuant to the valuation provisions of Section I.A. (3) of this
Article Two, or (b) the highest reported price per share of Common Stock paid in
effecting such Hostile Take-Over. However, if the cancelled option is an
Incentive Option, the Take-Over Price shall not exceed the clause (a) price per
share.
F. The shares of Common Stock subject to any option surrendered or
cancelled for an appreciation distribution pursuant to this Section V shall not
be available for subsequent option grant under the Plan.
VI. EXTENSION OF EXERCISE PERIOD
The Plan Administrator shall have full power and authority to extend the
period of time for which any option granted under this Article Two is to remain
exercisable following the Optionee's cessation of Service or death from the
limited period in effect under Section I.C.(1) of this Article Two to such
greater period of time as the Plan Administrator shall deem appropriate;
provided, however, that in no event shall such option be exercisable after the
specified expiration date of the option term.
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ARTICLE THREE
MISCELLANEOUS
I. [INTENTIONALLY OMITTED.]
II. AMENDMENT OF THE PLAN AND AWARDS
A. The Board has complete and exclusive power and authority to amend or
modify the Plan in any or all respects whatsoever. However, no such amendment or
modification may adversely affect the rights and obligations of an Optionee with
respect to options at the time outstanding under the Plan, unless the Optionee
consents to such amendment. In addition, the Board may not, without the approval
of the Corporation's stockholders, amend the Plan to (i) materially increase the
maximum number of shares issuable under the Plan, the maximum number of shares
issuable pursuant to Incentive Options granted under the Plan on or after the
first day of the 1995 fiscal year or the number of shares for which any one
individual participating in the Plan may be granted stock options and
separately-exercisable stock appreciation rights in the aggregate after December
31, 1993 (except for permissible adjustments under Article One, Section IV) or
(ii) materially modify the eligibility requirements for participation in the
Plan or the benefits accruing to Optionees under the Plan.
B. Options to purchase shares of Common Stock may be granted in excess
of the number of shares then available for issuance under the Plan, provided any
excess shares actually issued are held in escrow until stockholder approval is
obtained for a sufficient increase in the number of shares available for
issuance under the Plan. If such stockholder approval is not obtained within
twelve (12) months after the date the first such excess option grants are made,
then (I) any unexercised excess options shall terminate and cease to be
exercisable and (II) the Corporation shall promptly refund the purchase price
paid for any excess shares actually issued under the Plan and held in escrow,
together with interest (at the applicable Short Term Federal Rate) for the
period the shares were held in escrow.
III. EFFECTIVE DATE AND TERM OF PLAN
A. The Plan was initially adopted by the Board effective February 24,
1992. The Plan was amended by the Board on July 29, 1992, October 28, 1992,
October 27, 1993, October 27, 1994, November 1, 1995, May 1, 1996, May 3, 1996,
October 30, 1996 and January 11, 2000.
B. Each option issued and outstanding under the 1988 Plan immediately
prior to the Effective Date of this Plan shall be incorporated into this Plan
and treated as an outstanding option under this Plan, but each such option shall
continue to be governed solely by the terms and conditions of the instrument
evidencing such grant, and nothing in this Plan shall be deemed to affect or
otherwise modify the rights or obligations of the holders of such options with
respect to their acquisition of shares of Common Stock thereunder. Each unvested
share of Common Stock outstanding under the 1988 Plan on the Effective Date of
this Plan shall continue to be governed solely by the terms and conditions of
the instrument evidencing such share issuance, and nothing in this Plan shall be
deemed to affect or otherwise modify the rights or obligations of the holder of
such unvested shares.
C. The sale and remittance procedure authorized for the exercise of
outstanding options under this Plan shall be available for all options granted
under this Plan on or after the Effective Date and for all non-statutory options
outstanding under the 1988 Plan and incorporated into this Plan. The Plan
Administrator may also allow such procedure to be utilized in connection with
one or more disqualifying dispositions of Incentive Option shares effected after
the Effective Date, whether such Incentive Options were granted under this Plan
or the 1988 Plan.
D. The option/vesting acceleration provisions of Section III of Article
Two relating to Corporate Transactions and Changes in Control may, in the Plan
Administrator's discretion, be extended to one or more stock options which are
outstanding under the 1988 Plan on the Effective Date of this Plan but which do
not otherwise provide for such acceleration.
E. The Plan shall terminate upon the earlier of (i) January 13, 2002 or
(ii) the date on which all shares available for issuance under the Plan shall
have been issued or cancelled pursuant to the exercise, surrender or cash-out of
the outstanding options under the Plan. If the date of termination is determined
under clause (i) above, then all option grants outstanding on such date shall
thereafter continue to have force and effect in accordance with the provisions
of the instruments evidencing such grants.
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IV. USE OF PROCEEDS
Any cash proceeds received by the Company from the sale of shares under
the Plan shall be used for general corporate purposes.
V. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any option under the
Plan and the issuance of Common Stock upon the exercise or surrender of the
option grants made hereunder shall be subject to the Corporation's procurement
of all approvals and permits required by regulatory authorities having
jurisdiction over the Plan, the options granted under it, and the Common Stock
issued pursuant to it.
B. No shares of Common Stock or other assets shall be issued or
delivered under this Plan unless and until there shall have been compliance with
all applicable requirements of Federal and State securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any securities exchange on which stock of the same class is then listed.
VI. NO EMPLOYMENT/SERVICE RIGHTS
Neither the action of the Company in establishing the Plan, nor any
action taken by the Plan Administrator hereunder, nor any provision of the Plan
shall be construed so as to grant any individual the right to remain in the
employ or service of the Corporation (or any parent or subsidiary corporation)
for any period of specific duration, and the Corporation (or any parent or
subsidiary corporation retaining the services of such individual) may terminate
such individual's employment or service at any time and for any reason, with or
without cause.
VII. MISCELLANEOUS PROVISIONS
A. The right to acquire Common Stock or other assets under the Plan may
not be assigned, encumbered or otherwise transferred by any Optionee.
B. The provisions of the Plan shall be governed by the laws of the State
of California, as such laws are applied to contracts entered into and performed
in such State.
C. The provisions of the Plan shall inure to the benefit of, and be
binding upon, the Corporation and its successors or assigns, whether by
Corporate Transaction or otherwise, and the Optionees, the legal representatives
of their respective estates, their respective heirs or legatees and their
permitted assignees.
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