Exhibit 10.08
CADENCE DESIGN SYSTEMS, INC.
1994 DEFERRED COMPENSATION PLAN
AMENDED AND RESTATED
EFFECTIVE JANUARY 1, 2001
CADENCE DESIGN SYSTEMS, INC.
1994 DEFERRED COMPENSATION PLAN
AMENDED AND RESTATED
EFFECTIVE JANUARY 1, 2001
CADENCE DESIGN SYSTEMS, INC., a Delaware Corporation (referred to
hereafter as the "Employer") established effective October 1, 1994 and amended
and restated effective October 1, 1996, this Cadence Design Systems, Inc. 1994
Deferred Compensation Plan (the "Plan"), an unfunded plan for the purpose of
providing deferred compensation for a select group of management and highly
compensated executives. The Employer hereby amends and restates the Plan in its
entirety effective January 1, 2001 to reflect prior and new amendments to the
Plan.
RECITALS
WHEREAS, those employees identified by the Compensation Committee of the
Board of Directors of the Employer or any other committee designated by the
Board of Directors of the Employer to administer this Plan in accordance with
Section 8 hereof (hereinafter referred to as the "Committee") as eligible to
participate in this Plan (each of whom are referred to hereafter as the
"Employee" or collectively as the "Employees") are employed by Employer;
WHEREAS, Employer previously adopted an unfunded deferred compensation
plan and the Employees desire the Employer to continue to pay certain deferred
compensation and/or related benefits to or for the benefit of Employees, or a
designated Beneficiary or both; and
WHEREAS, Employer believes it is in the best interest of Plan
participants and beneficiaries to amend and restate the Plan;
NOW, THEREFORE, the Employer hereby amends and restates the Plan
effective as of January 1, 2001.
SECTION 1
DEFINITIONS
1.1 "Account" shall mean the separate account(s) established under this
Plan and the Trust for each participating Employee. Employer shall furnish each
participant with a statement of his or her account balance at least annually.
1.2 "Beneficiary" shall mean the Beneficiary designated by the Employee
to receive Employee's deferred compensation benefits in the event of his or her
death.
1.3 "Change in Control" shall have the meaning set forth in Section 5.1
of the Plan.
1.4 "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the rules and regulations promulgated thereunder.
1.5 "Committee" shall mean the Compensation Committee of the Board of
Directors of the Employer or any other committee designated by the Board of
Directors of the Employer to administer this Plan in accordance with Section 8
hereof.
1.6 "Compensation" shall, for the period on or before April 1, 1998,
mean the base salary and cash bonuses described in Section 3.1. On or after
April 1, 1998, "Compensation" shall mean the base salary, cash bonuses, and
director fees described in Section 3.1.
1.7 "Effective Date" of the Plan shall mean October 1, 1994, unless
otherwise specified by the Employer in a corporate resolution approving and
adopting this Plan. The effective date of this amendment and restatement shall
be January 1, 2001.
1.8 "Eligible Compensation" shall mean, for the period prior to April 1,
1998, projected annual compensation from the Employer, determined on an annual
basis by the Employer at or before the beginning of the Plan Year, which may
consist of salary, bonus, and/or incentive payments, determined before any
deductions under any qualified plan of the Employer (including a Section 401(k)
plan or a Section 125 plan) and excluding any special or non-recurring
compensatory payments such as moving or relocation bonuses or automobile
allowances. Effective on and after April 1, 1998, the term shall mean projected
annual compensation from the Employer determined on an annual basis by the
Employer at or before the beginning of the Plan, which may consist of salary,
bonus, and, and/or incentive payments, determined before any deductions under
any qualified plan of the Employer (including a Section 401(k) plan or a Section
125 plan) and excluding any special or non-recurring compensatory payments such
as moving or relocation bonuses or automobile allowances.
1.9 "Employee" shall, for the period before April 1, 1998, mean, each
employee of Employer. Effective on or after April 1, 1998, the term shall also
include each Non-Employee Director. The term shall also include reference to an
Employee's Beneficiary where the context so requires.
1.10 "Employer" shall mean Cadence Design Systems, Inc., a Delaware
corporation, and any successor organization thereto, and any Subsidiaries, as
defined in Section 7.3, of the Company.
1.11 "Employer Contributions" shall mean the Employer's discretionary
contribution, if any, pursuant to Section 3.1(b) of the Plan.
1.12 "Hardship" shall have the meaning set forth in Section 3.5 of the
Plan.
1.13 "Non-Employee Director" shall mean a director of the Employer who
is not otherwise an employee of the Employer.
1.14 "Plan Year" shall mean the year beginning each January 1 and ending
December 31; notwithstanding the foregoing, the initial Plan Year shall mean the
period beginning with the Effective Date and ending on December 31, 1994.
1.15 "Plan" shall mean the Cadence Design Systems, Inc. 1994 Deferred
Compensation Plan, including any amendments thereto.
1.16 "Permanent Disability" shall mean that the Employee is unable to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to result in
death or otherwise meets the definition of
"Permanent Disability" as set forth in the Employer's Long Term Disability Plan.
An Employee will not be considered to have a Permanent Disability unless he or
she furnishes proof of such condition sufficient to satisfy the Employer, in its
sole discretion.
1.17 "Subsidiary" shall mean any corporation (other than the Employer)
in an unbroken chain of corporations or other entities beginning with the
Employer, if each of the entities other than the last entity in the unbroken
chain owns stock, partnership rights or other ownership interest possessing
fifty (50) percent or more of the total combined voting power of all classes of
stock, partnership rights or other ownership interest in one of the other
entities in such chain.
1.18 "Tality" shall mean the entity formed to own and operate Cadence
Design Systems, Inc.'s electronics design services group business under the name
"Tality Corporation" or any other name.
1.19 "Trust" or "Trust Agreement" shall mean the Cadence Design Systems,
Inc. 1994 Deferred Compensation Plan Rabbi Trust Agreement, including any
amendments thereto, entered into between the Employer and the Trustee to carry
out the provisions of the Plan.
1.20 "Trust Fund" shall mean the cash and other assets and/or properties
held and administered by Trustee pursuant to the Trust to carry out the
provisions of the Plan.
1.21 "Trustee" shall mean the designated Trustee acting at any time
under the Trust.
SECTION 2
ELIGIBILITY
2.1 ELIGIBILITY. Eligibility to participate in the Plan shall be limited
to Employees of the Employer who (a) have Eligible Compensation of at least
$150,000 for the Plan Year, (b) are classified as officers, vice-presidents,
directors, or an equivalent title, and (c) have been selected by the Committee
to participate in the Plan. The Committee shall designate Employees who shall be
covered by this Plan in a separate Acknowledgment (in the form attached hereto
as Appendix 1) for each such Employee. Participation in the Plan shall commence
as of the date such Acknowledgment is signed by the Employee and delivered to
the Employer, provided that deferral of compensation under the Plan shall not
commence until the Employee has complied with the election procedures set forth
in Section 3.3. Nothing in the Plan or in the Acknowledgment should be construed
to require any contributions to the Plan on behalf of the Employee by Employer.
Notwithstanding the foregoing, Non-Employee Directors shall be eligible
to participate in the Plan and a Non-Employee Director shall commence
participation in the Plan as of the later of April 1, 1998 or the date the
Non-Employee Director first becomes a Non-Employee Director, provided that
deferral of Compensation under the Plan shall not commence until the
Non-Employee Director has complied with the election procedures set forth in
Section 3.3.
SECTION 3
DEFERRED COMPENSATION
3.1 DEFERRED COMPENSATION.
(a) Each participating Employee may elect, in accordance with
Section 3.3 of this Plan, to defer semi-annually the receipt of a portion of the
Compensation for active service otherwise payable to him or her by Employer
during each semi-annual period or portion of a semi-annual period that the
Employee shall be employed by the Employer. Any Compensation deferred by
Employee pursuant to Section 3.3 shall be recorded by the Employer in an
Account, maintained in the name of the Employee, which Account shall be credited
with a dollar amount equal to the total amount of Compensation deferred during
each semi-annual period under the Plan, together with earnings thereon credited
in accordance with Section 3.7. The amount or percentage of Compensation that
Employee elects to defer under Section 3.3 will remain constant for the
semi-annual period and shall not be subject to change during such semi-annual
period. Effective April 1, 1998, each such deferral election as to "base salary"
or "director's fees" or discontinuance of a deferral election as to "base
salary" or "director's fees" will continue in force for each successive year or
semi-annual period, as appropriate, until or unless suspended or modified by the
filing of a subsequent election with the Employer by the Employee or
Non-Employee Director in accordance with Section 3.3 of the Plan. Each deferral
election as to an Employee's "cash bonus" shall continue in force only for the
single semi-annual period in which it is paid, regardless of the period of time
as to which it is awarded, and shall not apply to any successive semi-annual
periods. Any deferral election with respect to a "cash bonus" must be made prior
to the time the amount of the bonus is determined, prior to the end of the
period of time as to which the bonus is awarded, and at a time that the amount
of any such bonus remains substantially uncertain. All deferrals pursuant to
this Section 3.1 shall be fully vested at all times. Effective April 1, 1998,
deferral elections shall be subject to minimum dollar and maximum percentage
amount limits as follows: (i) the minimum semi-annual deferral amount is $2,500
(prior to July 1, 1998, the minimum annual deferral amount was $5,000), which
shall be withheld from the Employee's or Non-Employee Director's Compensation,
and (ii) the maximum deferral percentage amount is 80% of the Employee's "base
salary," 100% of the Employee's "cash bonus," and 100% of the Non-Employee
Director's "director's fees." For purposes of the Plan, "base salary" for a
given semi-annual period means an "Employee's regular compensation payable
during the semi-annual period, excluding bonuses, commissions, overtime,
incentive payments, non-monetary awards, compensation deferred pursuant to all
Section 125 (cafeteria) or Section 401(k) (savings) plans of the Employer and
other special compensation, and reduced by the tax withholding obligations
imposed on the Employer and any other withholding requirements imposed by law
with respect to such amounts. For purposes of the Plan, "cash bonus" shall mean
amounts (if any) awarded under the bonus policies maintained by the Employer and
any commissions earned on sales. For purposes of the Plan, "director's fees" for
a given semi-annual period means the annual retainer, per meeting fees,
committee meeting fees, and consulting fees payable during the semi-annual
period. Except as otherwise expressly provided herein, this Section 3.1(a) is
effective as of July 1, 1998.
(b) Employer shall not be obligated to make any other contribution
to the Plan on behalf of any Employee at any time. Employer may make Employer
Contributions to the
Plan on behalf of one or more Employees. Employer Contributions, if any, made to
Accounts of Employees shall be determined in the sole and absolute discretion of
the Employer, and may be made without regard to whether the Employee to whose
Account such contribution is credited has made, or is making, contributions
pursuant to Section 3.1(a). The Employer shall not be bound or obligated to
apply any specific formula or basis for calculating the amount of any Employer
Contributions and Employer shall have sole and absolute discretion as to the
allocation of Employer Contributions among participating Employee Accounts. The
use of any particular formula or basis for making an Employer Contribution in
one year shall not bind or obligate the Employer to use such formula or basis in
any other year. Employer Contributions may be subject to a substantial risk of
forfeiture in accordance with the terms of a vesting schedule, which may be
selected by the Employer in its sole and absolute discretion.
(c) Amounts deferred under the Plan shall be calculated and withheld
from the Employee's base salary and/or cash bonus after such compensation has
been reduced to reflect salary reduction contributions to the Employer's Code
Section 125 (cafeteria) and Code Section 401(k) (savings) plans, but before any
reductions for contributions to the Code Section 423 (employee stock purchase)
plan.
(d) Effective April 1, 2000, the Committee in its sole discretion
may direct the Trustee to accept the transfer of funds held in trust under the
Cadence Design Systems, Inc. 1996 Deferred Compensation Venture Investment Trust
Agreement ("Telos Trust"), for a participant in the Cadence Design Systems, Inc.
1996 Deferred Compensation Venture Investment Plan ("Telos Plan"), which is an
unfunded nonqualified deferred compensation plan for a select group of
management and highly compensated executives of the Company, in which case the
transferred funds shall be held by the Trustee under and be subject to the terms
of the Plan and invested and accounted for as directed by the Committee except
as otherwise provided in Section 3.2(e). Such amounts transferred from the Telos
Trust to the Trust ("Transferred Funds") may not be returned to the Telos Plan
or Telos Trust. The transfer of such Transferred Funds shall not cause any of
the participant's rights to a distribution under the Plan or the Telos Plan
(including the Transferred Funds) to be a secured right to a distribution under
either plan.
3.2 PAYMENT OF ACCOUNT BALANCES.
(a) Effective July 1, 1998, the Employee shall elect whether he or
she will receive distribution of his or her entire Account, subject to tax
withholding requirements, (i) upon reaching a specified age, (ii) upon passage
of a specified number of years, (iii) upon termination of employment of Employee
with Employer, (iv) upon the earlier to occur of (A) termination of employment
of Employee with Employer or (B) passage of a specified number of years or
attainment of a specified age, or (v) upon the later to occur of (A) termination
of employment of Employee with Employer or (B) passage of a specified number of
years or attainment of a specified age, as elected by Employee in accordance
with the form established by the Committee. Such form may permit an election
among some or all of the alternatives listed in this Section 3.2(a), as
determined in the Committee's sole discretion. A designation of the time of
distribution shall be required as a condition of participation under this Plan.
The Employee shall also elect to receive all amounts payable to him or her in a
lump sum or in equal monthly installments over a designated period of five or
ten years, pursuant to the provisions of Section 3.2(e). These elections shall
be made in accordance with Section 3.4 of this Plan.
(b) Distributions shall be made to the maximum extent allowable
under the election made by Employee, except that no distribution shall be made
to the extent that the receipt of such distribution, when combined with the
receipt of all other "applicable employee remuneration" (as defined in Code
Section 162(m)(4)) would cause any remuneration received by the Employee to be
nondeductible by the Employer under Code Section 162(m)(1). The portion of any
distributable amount that is not distributed by operation of this Section 3.2(b)
shall be distributed in subsequent years in the manner elected by the Employee
until the Employee's Account has been fully liquidated. The commencement date of
the lump sum payment or the five- or ten-year period (whichever is applicable)
shall be automatically extended, when necessary to satisfy the requirements of
this subsection, for one-year periods until all Account balances have been
distributed in the manner elected by the Employee.
(c) Effective July 1, 1998, upon termination of Employee's
employment with Employer by reason of death or Permanent Disability prior to the
time when payment of Account balances otherwise would commence under the
provisions of Section 3.2(a), Employee or Employee's designated Beneficiary will
be entitled to receive all amounts credited to the Account of Employee as of the
date of his or her death or Permanent Disability (notwithstanding any contrary
election to receive distributions under the first sentence of Section 3.2(a)).
Upon termination of Employee's employment with Employer by reason other than
death or Permanent Disability prior to the date when payment of Account balances
otherwise would commence under the provisions of Section 3.2(a), the Employer
may, in the sole discretion of the Committee, distribute to Employee or
Employee's designated Beneficiary all amounts credited to the Employee's Account
as of the date of such termination (notwithstanding any contrary election to
receive distributions under the first sentence of Section 3.2(a)). Said amounts
shall be payable in the form determined pursuant to the provisions of Section
3.2(e).
(d) Upon the death of Employee prior to complete distribution to him
or her of the entire balance of his or her Account (and after the date of
termination of employment with Employer), the balance of his or her Account on
the date of death shall be payable to Employee's designated Beneficiary pursuant
to Section 3.2(e). Effective July 1, 1998, notwithstanding any other provision
of the Plan to the contrary, the Employee's designated Beneficiary may receive
the distribution of the remaining portion of such deceased Employee's Account in
the form of a lump sum if the Beneficiary requests such a distribution and the
Committee, in its sole discretion, consents to such a distribution.
(e) The Employer shall distribute or direct distribution of the
balance of amounts previously credited to Employee's Account, in a lump sum, or
in monthly installments over a period of five (5) years or ten (10) years as
Employee shall designate. A designation of the form of distribution shall be
required as a condition of participation under this Plan. Distribution of the
lump sum or the first installment shall be made or commence within ninety (90)
days following the date specified in the first sentence of Section 3.2(a), or as
otherwise provided in 3.2(c). Subsequent installments, if any, shall be made on
the first day of each month following the last installment as determined by
Employer. The amount of each installment shall be calculated by dividing the
Account balance as of the date of the distribution by the number of installments
remaining pursuant to the Employee's distribution election. Each such
installment, if any, shall take into account earnings credited to the balance of
the Account remaining unpaid. The Employee's distribution election shall be made
on a form provided by Employer.
Notwithstanding any provision herein to the contrary, effective
April 1, 2000, Transferred Funds from the Telos Trust under the Telos Plan to
the Trust for the benefit of a participant in the Telos Plan, shall be
distributable under the Plan according to the terms of the elections permitted
and made by the participant under the Telos Plan unless subsequently modified by
the participant as permitted under this Plan.
(f) Effective April 1, 1998, for purposes of this Section 3.2,
reference to termination of employment shall also include termination of service
as a Non-Employee Director of the Employer (except in the event such termination
is due to becoming an Employee).
3.3 ELECTION TO DEFER COMPENSATION. Each election of an Employee to
defer compensation as provided in Section 3.1 of this Plan shall be in writing,
signed by the Employee, and delivered to Employer, together with all other
documents required under the provisions of this Plan, within such time as
determined by the Committee and communicated to those Employees who are eligible
to participate in the Plan. Such deferral elections must be delivered to
Employer prior to the beginning of the Plan Year with respect to which the
Compensation to be deferred is otherwise payable to Employee. Provided, however,
that effective April 1, 1998, an Employee who is hired or promoted to a position
of eligibility for participation in the Plan during a Plan Year (effective
January 1, 2001, on or before the first business day of a semi-annual period) or
a Non-Employee Director who is elected to become a Non-Employee Director shall
have thirty (30) days from the date of notification of eligibility for
participation in the Plan in which to submit the required election documents for
the then current semi-annual period. Any deferral election made by Employee
shall be irrevocable with respect to any Compensation covered by such election,
including Compensation payable in the semi-annual period in which the election
suspending or modifying the prior deferral election is delivered to Employer.
Notwithstanding the foregoing, with respect to cash bonuses payable to an
Employee for the year ended December 31, 1996, but which will not be paid to the
Employee until after January 1, 1997, the Employee may make a separate deferral
election with respect to, or revise a previous deferral election with respect
to, such cash bonuses until such time on or before December 31, 1996 as
determined by the Committee, so long as at that time the amount of any such
bonus has not yet been determined and remains substantially uncertain. The
Employer shall withhold the amount or percentage of base salary specified to be
deferred in equal amounts for each payroll period and shall withhold the amount
or percentage of each cash bonus specified to be deferred at the time or times
such bonus is or otherwise would be paid to the Employee. The election to defer
Compensation shall be made on the form provided by Employer. Effective April 1,
1998, the Employer shall withhold the amount or percentage of director's fees
specified to be deferred at the time or times such director's fees are or
otherwise would be paid to the Non-Employee Director. Notwithstanding the
foregoing, with respect to Compensation payable to a Non-Employee Director for
the Plan Year ending December 31, 1998, but which will not be paid to the
Non-Employee Director until after March 31, 1998, the Non-Employee Director may
make a deferral election with respect to such Compensation until March 31, 1998.
Notwithstanding any other provision of the Plan to the contrary, with respect to
base salary and cash bonuses payable to an Employee for the six-month period
from July 1, 1998 through December 31, 1998, prior to July 1, 1998, the Employee
may revise a previous deferral election with respect to such base salary to
increase (but not decrease) the amount or percentage of base salary to be
deferred. Except as otherwise expressly provided herein, this Section 3.3 is
effective as of July 1, 1998.
3.4 DISTRIBUTION ELECTION. The initial distribution election of an
Employee as provided in Section 3.2 of this Plan shall be in writing, signed by
the Employee, and delivered to Employer, together with all other documents
required under the provisions of this Plan, within such period of time
determined by the Committee and communicated to those Employees who are eligible
to participate in the Plan. Such deferral elections must be delivered to the
Employer prior to the beginning of the first Plan Year in which Employee is
eligible to participate in the Plan. Provided however, that effective April 1,
1998, an Employee who is hired or promoted to a position of eligibility for
participation in the Plan or a Non-Employee Director who is elected to become a
Non-Employee Director during a Plan Year shall have thirty (30) days from the
date of notification of eligibility for participation in the Plan in which to
submit the required distribution election documents. If permitted by the
Committee, an Employee may change the terms of his or her initial distribution
election by making a new election, and any such new election will be effective
as of the later of the date that is (a) six (6) months following the date the
new election is made or (b) the first day of the Plan Year following the Plan
Year in which the new election is made and such new election will apply to the
Employee's entire account. An Employee may not make a new election once
distributions from the Plan have commenced or which would first become effective
at a time when distributions from the Plan have commenced. Employee's
distribution election shall be in the form established by the Committee in
accordance with the terms of the Plan.
3.5 PAYMENT UPON CHANGE IN CONTROL. Notwithstanding any other provisions
of this Plan (including without limitation Section 3.2), the aggregate balance
credited to and held in the Employees' Accounts shall be distributed to
Employees in a lump sum on the thirtieth day following a Change in Control
(except that distribution shall be on the sixtieth day in the case of a Change
in Control under Section 5.1(a)), as defined in Section 5.1, unless the
Committee, the Board of Directors of the Employer, or the 401(k)/NQDC
Administrative Committee of the Employer (as each is composed immediately prior
to such Change in Control), in the sole discretion of any of the foregoing,
decides prior to that date that Employees' Accounts shall remain in the Plan.
3.6 HARDSHIP.
(a) An Employee may apply for distributions from his or her Account
to the extent that the Employee demonstrates to the reasonable satisfaction of
the Committee that he or she needs the funds due to Hardship. For purposes of
this Section 3.6, a distribution is made on account of Hardship only if the
distribution is made on account of an unforeseeable immediate and heavy
emergency financial need of the Employee and is necessary to satisfy that
emergency financial need. Whether an Employee has an immediate and heavy
emergency financial need shall be determined by the Committee based on all
relevant facts and circumstances, and shall include, but not be limited to: the
need to pay funeral expenses of a family member; the need to pay expenses for
medical care for Employee, the Employee's spouse or any dependent of Employee
resulting from sudden unexpected illness or accident; payments necessary to
prevent the eviction of Employee from Employee's principal residence or
foreclosure on the mortgage on that residence; or other similar extraordinary
and unforeseeable circumstances arising as a result of events beyond the control
of Employee. A Hardship distribution shall not exceed the amount required to
relieve the financial need of the Employee, nor shall a Hardship distribution be
made if the need may be satisfied from other resources reasonably available to
the Employee. For
purposes of this paragraph, an Employee's resources shall be deemed to include
those assets of the Employee's spouse and minor children that are reasonably
available to the Employee. Prior to approving a Hardship distribution, Employer
shall require the Employee to certify in writing that the Employee's financial
need cannot reasonably be relieved:
(i) through reimbursement or compensation by insurance or
otherwise; or
(ii) by other distributions or nontaxable (at the time of the
loan) from plans maintained by the Employer or by any other employer, or by
borrowing from commercial sources on reasonable commercial terms, in an amount
sufficient to satisfy the need.
(b) Any Employee receiving a Hardship distribution under this
section shall be ineligible to defer any additional compensation under the Plan
until the first day of the Plan Year following the second anniversary of the
date of the distribution. In addition, a new Election of Deferral must be
submitted to the Employer as a condition of participation in the Plan.
3.7 EMPLOYEE'S RIGHT UNSECURED. The right of the Employee or his or her
designated Beneficiary to receive a distribution hereunder shall be an unsecured
claim against the general assets of the Employer, and neither the Employee nor
his or her designated Beneficiary shall have any rights in or against any amount
credited to his or her Account or any other specific assets of the Employer,
except as otherwise provided in the Trust. Nothing contained in this Plan, and
no action taken pursuant to its provisions, shall create or be construed to
create a trust of any kind or a fiduciary relationship between the Plan and the
Employer or any other person.
3.8 INVESTMENT OF CONTRIBUTION.
(a) The investment options available to each Employee shall be
determined by the Employer and set forth in a separate written document, a copy
of which shall be attached hereto and by this reference is incorporated herein.
Each Employee shall have the sole and exclusive right to direct the Trustee as
to the investment of his or her Accounts in accordance with policies and
procedures implemented by the Trustee. The right of an Employee to direct the
investment of his or her Account into one or more of the available investment
options shall not in any way be considered to alter the fact that an Account is
a bookkeeping account only that measures the Employer's obligation to pay
benefits hereunder, that the assets being invested at the direction of an
Employee are assets of the Employer and that the Employee's rights under the
Plan remain those of an unsecured, general creditor of the Employer.
Employer shall not be liable for any investment decision made by any
Employee while such funds are held by the Trustee.
(b) Accounts shall be credited with the actual financial performance
or earnings generated by such investments directed by the Employee and made by
the Trustee, until the Account has been fully distributed to the Employee or to
the Employee's designated Beneficiary.
(c) Notwithstanding any other provision in this Section 3.8 to the
contrary, the Committee may determine not to take account of Employee's
designated investments and determine to have the Employee's Account invested in
any other manner as the Committee shall determine.
SECTION 4
DESIGNATION OF BENEFICIARY
4.1 DESIGNATION OF BENEFICIARY. Employee may designate a Beneficiary or
Beneficiaries to receive any amount due hereunder by Employee by written notice
thereof to Employer at any time prior to Employee's death and may revoke or
change the Beneficiary designated therein without the Beneficiary's consent by
written notice delivered to Employer at any time and from time to time prior to
Employee's death. If Employee is married and a resident of a community property
state, one half of any amount due hereunder which is the result of an amount
contributed to the Plan during such marriage is the community property of the
Employee's spouse and Employee may designate a Beneficiary or Beneficiaries to
receive only the Employee's one-half interest. If Employee shall have failed to
designate a Beneficiary, or if no such Beneficiary shall survive him or her,
then such amount shall be paid to his or her estate. Designations of
Beneficiaries shall be made on the form provided by Employer.
SECTION 5
CHANGE IN CONTROL
5.1 CHANGE IN CONTROL. For the purposes of this Plan, "Change in
Control" means, the happening of any of the following:
(a) The first public announcement or public acknowledgment
(including without limitation, a report filed pursuant to Section 13(d) of the
Securities Exchange Act of 1934 as amended (the "Exchange Act")) by the Employer
that a "person," as such term is used in Sections 13(d) and 14(d) of the
Exchange Act (other than the Employer, a Subsidiary or an employee benefit plan
of the Employer or a Subsidiary, or other controlled affiliate of the Employer,
including any trustee of such plan acting as trustee), is or has become the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act or
comparable successor rule), directly or indirectly, of securities of the
Employer representing fifty percent (50%) or more of the combined voting power
of the Employer's then outstanding Common Stock entitled to vote in the election
of directors, where such person's beneficial ownership of the Employer's Common
Stock was not initiated by the Employer or approved by the Employer's Board of
Directors;
(b) The sale, lease or other disposition of all or substantially all
of the assets of the Employer (but, effective September 15, 2000, not including
the formation or any public offering (including but not limited to the initial
or any subsequent public offering) of the common stock of Tality;
(c) The merger or consolidation of the Employer with or into another
corporation not initiated by the Employer, in which the Employer is not the
surviving
corporation and the stockholders of the Employer immediately prior to the merger
or consolidation fail to possess direct or indirect beneficial ownership of more
than eighty percent (80%) of the voting power of the securities of the surviving
corporation (or if the surviving corporation is a controlled affiliate of
another entity, then the required beneficial ownership shall be determined with
respect to the securities of that entity which controls the surviving
corporation and is not itself a controlled affiliate of any other entity)
immediately following such transaction, or a reverse merger not initiated by the
Employer, in which the Employer is the surviving corporation and the
stockholders of the Employer immediately prior to the reverse merger fail to
possess direct or indirect beneficial ownership of more than eighty percent
(80%) of the securities of the Employer (or if the Employer is a controlled
affiliate of another entity, then the required beneficial ownership shall be
determined with respect to the securities of that entity which controls the
Employer and is not itself a controlled affiliate of any other entity)
immediately following the reverse merger. For purposes of this Section 5.1(c),
any person who acquired securities of the Employer prior to the occurrence of a
merger, reverse merger, or consolidation in contemplation of such transaction
and who after such transaction possesses direct or indirect beneficial ownership
of at least ten percent (10%) of the Common Stock of the Employer or the
surviving corporation (or if the Employer or the surviving corporation is a
controlled affiliate, then of the appropriate entity as determined above)
immediately following such transaction shall not be included in the group of
stockholders of the Employer immediately prior to such transaction;
(d) A change in the composition of the Board of Directors of the
Employer, as a result of which fewer than a majority of the directors are
Incumbent Directors. "Incumbent Directors" shall mean directors who either (i)
are directors of the Employer as of the date hereof, or (ii) are elected, or
nominated for election, to the Board of Directors of the Employer with the
affirmative votes of at least a majority of the Incumbent Directors at the time
of such election or nomination (but shall not include an individual whose
election or nomination is in connection with an actual or threatened proxy
contest relating to the election of directors to the Employer); or
(e) Any liquidation or dissolution of the Employer.
SECTION 6
TRUST PROVISIONS
6.1 TRUST AGREEMENT. The Employer may establish the Trust for the
purpose of retaining assets set aside by Employer pursuant to the Trust
Agreement for payment of all or a portion of the amounts payable pursuant to the
Plan. Any benefits not paid from the Trust shall be paid solely from Employer's
general funds, and any benefits paid from the Trust shall be credited against
and reduce by a corresponding amount the Employer's liability to Employees under
the Plan. No special or separate fund, other than the Trust Agreement, shall be
established and no other segregation of assets shall be made to assure the
payment of any benefits hereunder. All Trust Funds shall be subject to the
claims of general creditors of the Employer in the event the Employer is
Insolvent as defined in Section 3 of the Trust Agreement. The obligations of the
Employer to pay benefits under the Plan constitute an unfunded, unsecured
promise to pay and Employees shall have no greater rights than general creditors
of the Employer.
SECTION 7
AMENDMENT, TERMINATION AND TRANSFERS BY COMMITTEE
7.1 AMENDMENT. The Committee shall have the right to amend this Plan at
any time and from time to time, including a retroactive amendment. Any such
amendment shall come effective upon the date stated therein, and shall be
binding on all Employees, except as otherwise provided in such amendment;
provided, however, that said amendment shall not affect adversely benefits
payable to an affected Employee without the Employee's written approval.
7.2 TERMINATION. The Committee shall have the right to terminate this
Plan at any time and direct the lump sum payments of all assets held by the
Trust if the Employer is not Insolvent (as defined in Article 3 of the Trust
Agreement) at that time.
7.3 TRANSFERS BY COMMITTEE.
(a) In the event that an Employee transfers employment from the
Employer to a Subsidiary, the Committee shall have the right, but no obligation,
to direct the Trustee to transfer funds in an amount equal to the amount
credited to such Employee's Account (the "Transferred Account") to a trust
established under a Transferee Plan maintained by such Subsidiary. The Committee
shall determine, in its sole discretion, whether such transfer shall be made and
the timing of such transfer. Such transfer shall be made only if, and to the
extent, approval of such transfer is obtained from the Trustee. No transfer
shall be made unless the Subsidiary meets the requirements of subsection
7.3(b)(i) as of the date of the transfer.
(b) DEFINITIONS.
(i) For purposes of this Section 7.3, "Subsidiary" shall mean
any corporation (other than the Employer) in an unbroken chain of corporations
beginning with the Employer, if each of the corporations other than the last
corporation in the unbroken chain owns stock possessing fifty (50) percent or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
(ii) For purposes of this Section 7.3, "Transferee Plan" shall
mean an unfunded, nonqualified deferred compensation plan described in Section
201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act
of 1974 ("ERISA").
(c) No transfer shall be made under this Section 7.3 unless the
Employee for whose benefit the Transferred Account is held executes a written
waiver of all of such Employee's rights and benefits under this Plan in such
form as shall be acceptable to the Committee.
SECTION 8
ADMINISTRATION
8.1 ADMINISTRATION. The Committee shall administer and interpret this
Plan in accordance with the provisions of the Plan and the Trust Agreement. Any
determination or decision by the Committee shall be conclusive and binding on
all persons who at any time have or claim to have any interest whatever under
this Plan. The Committee may employ legal counsel, consultants, actuaries and
agents as it may deem desirable in the administration of the Plan and may rely
on the opinion of such counsel or the computations of such consultant or other
agent. The Committee shall have the authority to delegate some or all of the
powers and responsibilities under the Plan and the Trust Agreement to such
person or persons as it shall deem necessary, desirable or appropriate for
administration of the Plan.
8.2 LIABILITY OF COMMITTEE; INDEMNIFICATION. To the maximum extent not
prohibited by law, no member of the Committee shall be liable to any person and
in any event shall be indemnified by the Employer for any action taken or
omitted in connection with the interpretation and administration of this Plan
unless attributable to his or her own bad faith or willful misconduct.
8.3 EXPENSES. The costs of the establishment of the Plan and the
adoption of the Plan by Employer, including but not limited to legal and
accounting fees, shall be borne by Employer. The expenses of administering the
Plan and the Trust shall be borne by the Trust unless the Employer elects in its
sole discretion to pay some or all of those expenses; provided, however, that
Employer shall bear, and shall not be reimbursed by, the Trust for any tax
liability of Employer associated with the investment of assets by the Trust.
SECTION 9
GENERAL AND MISCELLANEOUS
9.1 RIGHTS AGAINST EMPLOYER. Except as expressly provided by the Plan,
the establishment of this Plan shall not be construed as giving to any Employee
or to any person whomsoever, any legal, equitable or other rights against the
Employer, or against its officers, directors, agents or shareholders, or as
giving to any Employee or Beneficiary any equity or other interest in the
assets, business or shares of Employer stock or giving any Employee the right to
be retained in the employment of the Employer. Neither this plan nor any action
taken hereunder shall be construed as giving to any Employee the right to be
retained in the employ of the Employer or as affecting the right of the Employer
to dismiss any Employee. Any benefit payable under the Plan shall not be deemed
salary or other compensation for the purpose of computing benefits under any
employee benefit plan or other arrangement of the Employer for the benefit of
its Employees. Nothing in the Plan or in any instrument executed pursuant
thereto shall confer upon any Non-Employee Director any right to continue in the
service of the Employer in any capacity or shall affect any right of the
Employer, its Board of Directors or stockholders to remove any Non-Employee
Director pursuant to the Employer's By-Laws and the provisions of the Delaware
General Corporation Law.
9.2 ASSIGNMENT OR TRANSFER. No right, title or interest of any kind in
the Plan shall be transferable or assignable by any Employee or Beneficiary or
be subject to alienation, anticipation, encumbrance, garnishment, attachment,
execution or levy of any kind, whether voluntary or involuntary, nor subject to
the debts, contracts, liabilities, engagements, or torts of
the Employee or Beneficiary. Any attempt to alienate, anticipate, encumber,
sell, transfer, assign, pledge, garnish, attach or otherwise subject to legal or
equitable process or encumber or dispose of any interest in the Plan shall be
void.
9.3 SEVERABILITY. If any provision of this Plan shall be declared
illegal or invalid for any reason, said illegality or invalidity shall not
affect the remaining provisions of this Plan but shall be fully severable, and
this Plan shall be construed and enforced as if said illegal or invalid
provision had never been inserted herein.
9.4 CONSTRUCTION. The article and section headings and numbers are
included only for convenience of reference and are not to be taken as limiting
or extending the meaning of any of the terms and provisions of this Plan.
Whenever appropriate, words used in the singular shall include the plural or the
plural may be read as the singular. When used herein, the masculine gender
includes the feminine gender.
9.5 GOVERNING LAW. The validity and effect of this Plan and the rights
and obligations of all persons affected hereby shall be construed and determined
in accordance with the laws of the State of California unless superseded by
federal law.
9.6 PAYMENT DUE TO INCOMPETENCE. If the Committee receives evidence that
an Employee or Beneficiary entitled to receive any payment under the Plan is
physically or mentally incompetent to receive such payment, the Committee may,
in its sole and absolute discretion, direct the payment to any other person or
Trust which has been legally appointed by the courts or to any other person
determined by the Employer to be a proper recipient on behalf of such person
otherwise entitled to payment, or any of them, in such manner and proportion as
the Employer may deem proper. Any such payment shall be in complete discharge of
the Employer's obligations under this Plan.
9.7 TAX. The Employer may withhold from any benefits payable under this
Plan, all federal, state, city or other taxes as shall be required pursuant to
any law or governmental regulation or ruling.
9.8 ATTORNEY'S FEES. Employer shall pay the reasonable attorney's fees
incurred by any Employee in an action brought against Employer to enforce
Employee's rights under the Plan, provided that such fees shall only be payable
in the event that the Employee prevails in. such action.
9.9 PLAN BINDING ON SUCCESSORS/ASSIGNEES. This Plan shall be binding
upon and inure to the benefit of the Employer and its successor and assigns and
the Employee and the Employee's designee and estate.
The Employer has caused its authorized officer to execute this amended
and restated Plan this ____ day of ________________, 2001.
CADENCE DESIGN SYSTEMS, INC.
By: ___________________________
__________________
APPENDIX 1
ACKNOWLEDGMENT
The undersigned Employee hereby acknowledges that Employer has selected
him or her as a participant in the Cadence Design Systems, Inc. 1994 Deferred
Compensation Plan, subject to all terms and conditions of the Plan, a copy of
which has been received, read, and understood by the Employee in conjunction
with executing this Acknowledgment. Employee acknowledges that he or she has had
satisfactory opportunity to ask questions regarding his or her participation in
the Plan and has received satisfactory answers to any questions asked. Employee
also acknowledges that he or she has sufficient knowledge and experience in
financial and business matters to be capable of evaluating the merits and risks
of participation in the Plan. Employee understands that his or her participation
in the Plan shall not begin until this Acknowledgment has been signed by
Employee and returned to Employer.
Dated:
-------------------------------------
Signed:
-------------------------------------
Employee
Dated:
-------------------------------------
CADENCE DESIGN SYSTEMS, INC.
Signed:
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[Officer]