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Exhibit 10.04
CADENCE DESIGN SYSTEMS, INC.
A DELAWARE CORPORATION
1993 DIRECTORS STOCK OPTION PLAN
AS ADOPTED JULY 22, 1993
1. PURPOSE. This Stock Option Plan ("Plan") is established to
provide equity incentives for members of the Board of Directors of Cadence
Design Systems, Inc., a Delaware corporation (the "Company") who are not
employees of the Company, by granting such persons options to purchase shares
of stock of the Company.
2. ADOPTION AND STOCKHOLDER APPROVAL. This Plan shall become
effective on the date that it is adopted by the Board of Directors (the
"Board") of the Company. This Plan shall be approved by the stockholders of
the Company within twelve months before or after the date this Plan is adopted
by the Board.
3. TYPES OF OPTIONS AND SHARES. Options granted under this Plan
(the "Options") shall be nonqualified stock options ("NQSOs"). The shares of
stock that may be purchased upon exercise of Options granted under this Plan
(the "Shares") are shares of the common stock of the Company.
4. NUMBER OF SHARES. The maximum number of Shares that may be
issued pursuant to Options granted under this Plan is 107,223 Shares*, subject
to adjustment as provided in this Plan. If any Option is terminated for any
reason without being exercised in whole or in part, the Shares thereby released
from such Option shall be available for purchase under other Options
subsequently granted under this Plan. At all times during the term of this
Plan, the Company shall reserve and keep available such number of Shares as
shall be required to satisfy the requirements of outstanding Options under this
Plan.
5. ADMINISTRATION. This Plan shall be administered by the Board
or by a committee of not less than two members of the Board appointed to
administer this Plan (the "Committee"). As used in this Plan, references to
the Committee shall mean either such Committee or the Board if no committee has
been established. The interpretation by the Committee of any of the provisions
of this Plan or any Option granted under this Plan shall be final and binding
upon the Company and all persons having an interest in any Option or any Shares
purchased pursuant to an Option.
*Does not include 337,777 Options granted under the predecessor plan (the 1988
Directors Stock Option Plan).
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6. ELIGIBILITY. The Directors Plan provides that options may be
granted only to such directors of the Company (collectively, "Optionees" and
individually "Optionee") as the Committee shall select from time to time;
provided, however, that no director of the Company who is also an employee of
the Company or of any parent or subsidiary of the Company may be granted an
Option. Optionees may be granted more than one Option; provided, however, that
the aggregate number of shares subject to all Options granted to an Optionee
will be as follows: (i) 100,000 shares, in the case of Options granted to the
Chairman of the Board, (ii) 75,000 shares, in the case of Options granted to
the Chairman of the Compensation Committee of the Board, and (iii) 50,000
shares, in the case of Options granted to any other director. Options will be
granted on the date or dates specified in Section 7(d) below. The provisions of
this Section 6 shall not be amended more than once every six months, other than
to comply with changes in the Internal Revenue Code of 1986, as amended or the
rules thereunder.
7. TERMS AND CONDITIONS OF OPTIONS. The Committee shall
determine all terms and conditions of the Option, subject to the following
terms and conditions:
(a) Form of Option Grant. Each Option granted under this
Plan shall be evidenced by a written Stock Option Grant ("Grant") in such form
(which need not be the same for each Optionee) as the Committee shall from time
to time approve, which Grant shall comply with and be subject to the terms and
conditions of this Plan.
(b) Exercise Price. The exercise price of an Option
shall be the fair market value of the Shares, at the time that the Option is
granted, as determined by the Committee in good faith; provided, however, that
where there is a public market for the Company's Common Stock, the fair market
value per Share shall be the average of the high and low closing sales price of
the Company's Common Stock on the date of grant, as quoted on the New York
Stock Exchange.
(c) Exercise Period. Options shall be exercisable as to
1/3rd of the Shares on the first anniversary of the Grant Date and as to an
additional 1/36th of the Shares for each full month thereafter, and remain
exercisable for a period of ten years; provided, however, that no Option shall
be exercisable after the expiration of ten years from the date of grant, and
provided further that notwithstanding anything to the contrary, with respect to
the initial grant of an Option, if an Optionee ceases to serve as Chairman of
the Board or as Chairman of the Compensation Committee of the Board but
continues to serve as a member of the Board, then Options to purchase in excess
of an aggregate of 50,000 shares ("Extra Options") held by such Optionee shall
terminate and may not be exercised, except within the time periods and to the
extent described in the Grant, with the date of such cessation deemed the
Termination Date, and the fact of such cessation deemed the cessation or
termination of service as a Director, within the meaning of those Sections with
respect only to such Extra Options.
(d) Date of Grant. The initial Option grant to a
director shall be for 20,000 shares and such Option will be deemed granted on
the date of appointment to the position of director. Subsequent grants in
increments of 15,000 shares up to the maximum of 50,000 shares shall be
immediately after the date on which his or her outstanding options become fully
exercisable. The date of grant of an Extra Option for the Chairman of the
Board and Chairman of the Compensation Committee shall be immediately upon
election to such position, whichever is later, or upon stockholder approval of
an amendment to the Plan, authorizing such Extra Option. The Grant representing
the Option shall be delivered to the Optionee within a reasonable time after
the granting of the Option.
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8. EXERCISE OF OPTIONS.
(a) Notice. Options may be exercised only by delivery to
the Company of written notice and exercise agreement in a form approved by the
Committee, stating the number of Shares being purchased, the restrictions
imposed on the Shares and such representations and agreements regarding the
Optionee's investment intent and access to information as may be required by
the Company to comply with applicable securities laws, together with payment in
full of the exercise price for the number of Shares being purchased.
(b) Payment. Payment for the Shares may be made (i) in
cash (by check), (ii) by surrender of shares of common stock of the Company
having a fair market value equal to the exercise price of the Option: (iii)
where permitted by applicable law, by tender of a full recourse promissory note
having such terms as may be approved by the Committee; or (iv) by any
combination of the foregoing.
(c) Withholding Taxes. Prior to issuance of the Shares
upon exercise of an Option, the Optionee shall pay or make adequate provision
for federal or state withholding obligations of the Company, if applicable.
(d) Limitations on Exercise. Notwithstanding the
exercise periods set forth in the Grant, exercise of an Option shall always by
subject to the following limitations:
(i) An Option shall not be exercisable unless
such exercise is in compliance with the Securities Act of 1933, as amended, and
all applicable state securities laws, as they are in effect on the date of
exercise.
(ii) An Option shall not be exercisable until this Plan has been approved by
the stockholders of the Company.
(iii) The Committee may specify a reasonable
minimum number of Shares that may be purchased on any exercise of an Option,
provided that such minimum number will not prevent the Optionee from exercising
the full number of Shares as to which the Option is then exercisable.
9. NONTRANSFERABILITY OF OPTIONS. During the lifetime of the
Optionee, an Option shall be exercisable only by the Optionee. No Option may
be sold, pledged, assigned, hypothecated, transferred or disposed of in any
manner other than by will or by the laws of descent and distribution.
10. PRIVILEGES OF STOCK OWNERSHIP. No Optionee shall have any of
the rights of a stockholder with respect to any Shares subject to an Option
until the Option has been validly exercised. No adjustment shall be made for
dividends or distributions or other rights for which the record date is prior
to the date of exercise, except as provided in this Plan. The Company shall
provide to each Optionee a copy of the annual financial statements of the
Company, at such time after the close of each fiscal year of the Company as
they are released by the Company to its stockholders.
11. ADJUSTMENT OF OPTION SHARES. In the event that the number of
outstanding shares of common stock of the Company is changed by a stock
dividend, stock split, reverse stock split, combination, reclassification or
similar change in the capital structure of the Company without consideration,
the number of Shares available under this Plan and the number of Shares subject
to outstanding Options and the exercise price per
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share of such Options shall be proportionately adjusted, subject to any
required action by the Board or stockholders of the Company and compliance with
applicable securities laws; provided, however, that no certificate or scrip
representing fractional shares shall be issued upon exercise of any Option and
any resulting fractions of a Share shall be ignored.
12. NO OBLIGATION TO RETAIN. Nothing in this Plan or any Option
granted under this Plan shall confer to any Optionee any right to continue as a
Director of the Company.
13. COMPLIANCE WITH LAWS. The grant of Options and the issuance
of Shares upon exercise of any Options shall be subject to and conditioned upon
compliance with all applicable requirements of law, including without
limitation compliance with the Securities Act of 1933, as amended, any required
approval by the Commissioner of Corporations of the State of California,
compliance with all other applicable state securities laws and compliance with
the requirements of any stock exchange on which the Shares may be listed. The
Company shall be under no obligation to register the Shares with the Securities
and Exchange Commission or to effect compliance with the registration or
qualification requirement of any state securities laws or stock exchange.
14. ACCELERATION OF OPTIONS ON ACQUISITION. In the event of a
dissolution or liquidation of the Company, a merger in which the Company is not
the surviving corporation, or the sale of substantially all of the assets of
the Company, any or all outstanding Options shall, notwithstanding any contrary
terms of the Grant, accelerate and become exercisable in full prior to the
consummation of such dissolution, liquidation, merger or sale of assets.
15. AMENDMENT OR TERMINATION OF PLAN. Subject to the limitations
set forth in Section 6 above, the Committee may at any time terminate or amend
this Plan in any respect (including, but not limited to, any form of Grant,
agreement or instrument to be executed pursuant to this Plan); provided,
however, that the Committee shall not, without the approval of the stockholders
of the Company, increase the total number of Shares available under this Plan
(except by operation of the provisions of this Plan) or change the class of
persons eligible to receive Options. In any case, no amendment of this Plan
may adversely affect any then outstanding Options or any unexercised portions
thereof without the written consent of the Optionee.
16. TERM OF PLAN. Options may be granted pursuant to this Plan
from time to time within a period of ten years from the date this Plan is
adopted by the Board of Directors.
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CADENCE DESIGN SYSTEMS, INC.
STOCK OPTION GRANT AGREEMENT
1993 DIRECTORS STOCK OPTION PLAN
OPTIONEE:___________________________________________________
ADDRESS: ___________________________________________________
TOTAL OPTIONS GRANTED: ___________________________________
EXERCISE PRICE PER SHARE: _________________________________
DATE OF GRANT: _____________________________________________
EXPIRATION DATE: ___________________________________________
TYPE OF STOCK OPTION: NONQUALIFIED
1. GRANT OF OPTION. Cadence Design Systems, Inc., a Delaware
corporation (the "Company"), hereby grants to the optionee named above
("Optionee") an option (this "Option") to purchase the total number of shares
of common stock of the Company set forth above (the "Shares") at the exercise
price per share set forth above (the "Exercise Price:), subject to all of the
terms and conditions of this Grant and the Company's 1988 Directors Stock
Option Plan as adopted July 22, 1993 (the "Plan").
2. EXERCISE PERIOD OF OPTION. Subject to the terms and
conditions of the Plan and this Grant, this Option shall become exercisable as
to portions of the Shares as follows: this Option shall vest over a three-year
period, becoming exercisable as to 1/3rd of the Shares on the first anniversary
of the Grant Date and as to an additional 1/36th of the Shares for each full
month thereafter, with the number of Shares as to which this Option may be
exercised at a given time being rounded to the nearest whole number, not to
exceed the total number of Shares; provided, however, that this Option shall
expire on the Expiration Date set forth above and must be exercised, if at all,
on or before the Expiration Date.
3. RESTRICTIONS ON EXERCISE. Exercise of this Option is subject
to the following limitations:
(a) This Option may not be exercised unless such exercise
is in compliance with the Securities Act of 1933, as amended, and all
applicable state securities laws, as they are in effect on the date of
exercise.
(b) This Option may not be exercised as to fewer than 100
Shares unless it is exercised as to all Shares as to which this Option is then
exercisable.
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4. TERMINATION OF OPTION. Except as provided below in this
Section, this Option shall terminate and may not be exercised if Optionee
ceases to serve as a Director of the Company. The Board of Directors of the
Company shall have discretion to determine whether Optionee has ceased to serve
as a Director of the Company and the effective date on which such service
terminated (the "Termination Date").
(a) If Optionee ceases to serve as a Director of the
Company for any reason except death or disability, this Option, to the extent
(and only to the extent) that it would have been exercisable by Optionee on the
Termination Date, may be exercised by Optionee within seven months after the
Termination Date, but in any event no later than the Expiration Date.
(b) If Optionee's service as a Director of the Company is
terminated because of the death of Optionee or disability of Optionee within
the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, this
Option, to the extent that it is exercisable by Optionee on the Termination
Date, may be exercised by Optionee (or Optionee's legal representative) within
twelve months after the Termination Date but in any event no later than the
Expiration Date.
Nothing in the Plan or this Grant shall confer on Optionee any
right to continue to serve as a Director of the Company.
5. MANNER OF EXERCISE.
(a) This Option shall be exercisable by delivery to the
Company of an executed written Notice and Agreement in the form attached hereto
as Exhibit A, or in such other form as may be approved by the Company, which
shall set forth Optionee's election to exercise this Option, the number of
Shares being purchased, any restrictions imposed on the Shares and such other
representations and agreements regarding Optionee's investment intent and
access to information as may be required by the Company to comply with
applicable securities laws.
(b) Such notice shall be accompanied by full payment of the
exercise Price for the Shares being purchased (i) in cash (by check); (ii) by
surrender of Shares of Common Stock of the Company having a fair market value
equal to the Exercise Price; (iii) where permitted by applicable law, by tender
of a full recourse promissory note having such terms as the Board of Directors
or the committee thereof that administers the Plan may approve; or (iv) by any
combination thereof.
(c) Prior to the issuance of the Shares upon exercise of this Option,
Optionee must pay or make adequate provision for any applicable federal or
state withholding obligations of the Company.
(d) Provided that such notice and payment are in form and substance
satisfactory to counsel for the Company, the Company shall issue the Shares
registered in the name of Optionee or Optionee's legal representative.
6. COMPLIANCE WITH LAWS AND REGULATIONS. The issuance and
transfer of Shares shall be subject to compliance by the Company and the
Optionee with all applicable requirements of federal and state securities laws
and with all applicable requirements of any stock exchange on which the
Company's Common Stock may be listed at the time of such issuance or transfer.
Optionee understands that the Company is under no obligation to register or
qualify the Shares with the Securities and Exchange
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Commission, any state securities commission or any stock exchange to effect
such compliance.
7. NON TRANSFERABILITY OF OPTION. This Option may not be
transferred in any manner other than by will or by the laws of descent and
distribution and may be exercised during the lifetime of the Optionee only by
the Optionee. The terms of this Option shall be binding upon the executors,
administrators, successors and assigns of the Optionee.
8. TAX CONSEQUENCES. Set forth below is a brief summary as of
the date of this Option of some of the federal and California tax consequences
of exercise of this Option and disposition of the Shares. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR
DISPOSING OF THE SHARES.
There may be a regular federal income tax liability and a
California income tax liability upon the exercise of the Option. The Optionee
will be treated as having received compensation income (taxable at ordinary
income tax rates) equal to the excess, of any, of the fair market value of the
Shares on the date of exercise over the Exercise Price. The Company may be
required to withhold from Optionee's compensation or collect from Optionee and
pay to the applicable taxing authorities an amount equal to a percentage of
this compensation income at the time of exercise. Any gain on sale of the
Shares will be taxed as capital gain.
9. INTERPRETATION. Any dispute regarding the interpretation of
this Grant shall be submitted by Optionee or the Company forthwith to the
Company's Board of Directors or the committee thereof that administers the
Plan, which shall review such dispute at its next regular meeting. The
resolution of such a dispute by the Board or committee shall be final and
binding on the Company and on Optionee.
ACCEPTANCE
Optionee hereby acknowledges receipt of a copy of the Plan, represents
that Optionee has read and understands the terms and provisions thereof, and
accepts this Option subject to all the terms and provisions of the Plan and
this Grant. Optionee acknowledges that there may be adverse tax consequences
upon exercise of this Option or disposition of the Shares and that Optionee
should consult a tax adviser prior to such exercise or disposition.
____________________________________
Optionee
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