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Exhibit 10.05
CADENCE DESIGN SYSTEMS, INC.
1995 DIRECTORS STOCK OPTION PLAN
ADOPTED ON OCTOBER 3, 1995,
AMENDED AND RESTATED ON FEBRUARY 9, 1996
SUBJECT TO STOCKHOLDER APPROVAL ON MAY 3, 1996
1. PURPOSE.
(a) The purpose of the 1995 Directors Stock Option Plan (the "Plan") is
to provide a means by which each director of Cadence Design Systems, Inc., a
Delaware corporation (the "Company"), who is not otherwise at the time of grant
an employee of the Company or of any Affiliate of the Company (each such person
being hereafter referred to as a "Non-Employee Director") will be given an
opportunity to purchase stock of the Company through the grant of options.
(b) The word "Affiliate" as used in the Plan means any corporation or
other entity which is controlled by the Company, which controls the Company, or
which is under common control with the Company.
(c) The Company, by means of the Plan, seeks to retain the services of
persons now serving as Non-Employee Directors of the Company, to secure and
retain the services of persons capable of serving in such capacity, and to
provide incentives for such persons to exert maximum efforts for the success of
the Company.
(d) No option granted under the Plan is intended to be an "incentive
stock option" within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code").
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board of Directors of the
Company (the "Board") unless and until the Board delegates administration to a
committee, as provided in section 2(c).
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan, to construe and interpret
the Plan and options granted under the Plan, and to establish, amend and revoke
rules and regulations for its administration. The Board, in the exercise of this
power, may correct any defect, omission or inconsistency in the Plan or in any
option, in a manner and to the extent it shall deem necessary or desirable to
make the Plan fully effective. All decisions of the Board on such matters shall
be final, binding and conclusive on all persons having an interest in such
decision.
(c) The Board may delegate administration of the Plan to a committee
composed of not fewer than two (2) members of the Board (the "Committee"). If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.
3. SHARES SUBJECT TO THE PLAN.
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(a) Subject to the provisions of section 10 relating to adjustments
upon changes in stock, the stock that may be sold pursuant to options granted
under the Plan shall not exceed in the aggregate four hundred fifty thousand
(450,000) shares of the Company's $.01 par value common stock (the "Common
Stock"). If any option granted under the Plan shall for any reason expire or
otherwise terminate without having been exercised in full, the stock not
purchased under such option shall again become available for issuance under the
Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
4. ELIGIBILITY.
Options shall be granted only to Non-Employee Directors of the Company.
5. NON-DISCRETIONARY GRANTS.
(a) Each person who first becomes a Non-Employee Director after October
3, 1995 shall automatically be granted an option to purchase shares of the
Common Stock on the terms and conditions set forth herein. The number of shares
of the Common Stock which shall be subject to an option granted pursuant to this
section 5(a) shall be equal to 2500 multiplied by the number of calendar
quarters occurring between the date on which such person begins serving as a
director of the Company and the first July 1 occurring after the date such
person becomes a director of the Company. If a person becomes a Non-Employee
Director during a calendar quarter, he or she shall be treated as serving as a
director of the Company for the entire such calendar quarter only if he or she
becomes a Non-Employee Director during the first half of such calendar quarter.
(b) On July 1 of each year, commencing with July 1, 1996, each person
who on that date is then a Non-Employee Director shall automatically be granted
an option to purchase ten thousand (10,000) shares of Common Stock on the terms
and conditions set forth herein. If the Non-Employee Director is an "Active
Board Member" on that date but is not then serving as the Chairman of the Board,
then such director shall automatically be granted an option to purchase an
additional five thousand (5,000) shares of Common Stock on the terms and
conditions set forth herein. If the Non-Employee Director is serving as the
Chairman of the Board on that date, then such director shall automatically be
granted an option to purchase an additional ten thousand (10,000) shares of
Common Stock on the terms and conditions set forth herein. An "Active Board
Member" shall be defined as a Non-Employee Director who is the chairman of one
committee of the Board and is serving as a member of at least one additional
committee of the Board.
(c) Each Non-Employee Director who on October 3, 1995 is serving as a
member of the Venture Committee of the Board shall automatically receive on that
date an option to purchase fifteen thousand (15,000) shares of Common Stock on
the terms and conditions set forth herein. The Non-Employee Director who on
October 3, 1995 is serving as the chairman of the Venture Committee of the Board
shall automatically receive on that date an option to purchase an additional
fifteen thousand (15,000) shares of Common Stock on the terms and conditions set
forth herein. In addition, each Non-Employee Director who is selected for the
first time to serve on the Venture Committee after October 3, 1995 automatically
shall, upon the date of his or her initial selection to serve on the Venture
Committee, be granted an option to purchase fifteen thousand (15,000) shares of
Common Stock on the terms and conditions set forth herein. Each Non-Employee
Director who is selected for the first time to serve as the chairman of the
Venture Committee after October 3, 1995 automatically shall, upon the date of
his or her initial selection to serve as the chairman of the Venture Committee,
be granted an option to purchase an additional fifteen thousand (15,000) shares
of Common Stock on the terms and conditions set forth herein.
(d) On January 30 of each year, commencing with January 30, 1996, each
Non-Employee Director who on that date is then serving as the Chairman of the
Board and has completed five (5) years of service as the Chairman of the Board
shall automatically receive an option to purchase forty five thousand (45,000)
shares of Common Stock on the terms and conditions set forth herein; provided,
however, that no such Non-Employee Director shall receive more than one such
grant under this paragraph 5(d).
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(e) If an option would otherwise automatically be granted on or after
October 3, 1995 to a Non-Employee Director under the terms of the Company's 1993
Directors Option Plan (the "1993 Directors Plan"), but cannot be granted in full
because there are insufficient shares of Common Stock remaining in the share
reserve for the 1993 Directors Plan which neither have been issued nor are then
subject to the term of an outstanding option previously granted under the 1993
Directors Plan, then an option shall automatically be granted on the same date
to such Non-Employee Director on the terms and conditions set forth herein. The
number of shares of Common Stock which shall be subject to such an option shall
be that number of shares which would otherwise have been subject to the option
granted under the 1993 Directors Plan on the same date, but as to which such an
option may not be granted under the 1993 Directors Plan to such Non-Employee
Director solely because of the lack of sufficient uncommitted shares in the
share reserve of the 1993 Directors Plan as described above.
6. OPTION PROVISIONS.
Each option shall be subject to the following terms and conditions:
(a) The term of each option commences on the date it is granted and,
unless sooner terminated as set forth herein, expires on the date ten (10) years
from the date of grant (the "Expiration Date"). In any and all circumstances, an
option may be exercised only as to no more than that number of shares as to
which it is exercisable at the time in question under the provisions of section
6(e).
(b) The exercise price of each option shall be one hundred percent
(100%) of the fair market value of the stock subject to such option on the date
such option is granted. The "fair market value" of the Common Stock shall be the
mean average of the closing price of the Company's common stock for each of the
last twenty trading days prior to the date of the grant of the option on the
national securities exchange, national market system or other trading market on
which the Company's common stock has the highest average trading volume.
(e) The optionee may elect to make payment of the exercise price under
one of the following alternatives:
(i) Payment of the exercise price per share in cash
(by check) at the time of exercise; or
(ii) Provided that at the time of the exercise the
Common Stock is publicly traded and quoted regularly in the Wall Street Journal,
payment by delivery of shares of Common Stock already owned by the optionee,
held for the period required to avoid a charge to the Company's reported
earnings, and owned free and clear of any liens, claims, encumbrances or
security interest, which common stock shall be valued at its fair market value
on the last day on which the Common Stock was actively traded preceding the date
of exercise;
(iii) Payment by the delivery of the optionee's full
recourse promissory note on such terms as may be determined by the Board which
are not inconsistent with the terms of the Plan; or
(iv) Payment by a combination of the methods of
payment specified in subsections 6(c)(i) through 6(c)(iii) above.
For purposes of section 6(c)(ii), the "fair market value" of Common
Stock shall be the closing price of such stock on the last trading day preceding
the date of delivery of such Common Stock to the Company on the national
securities exchange, national market system or other trading market on which the
Common Stock has the highest average trading volume. If the optionee uses a
promissory note as partial payment of the exercise price pursuant to section
6(c)(iii), then such principal amount of such note may not exceed the maximum
amount permitted by law (including but not limited to the limitation under the
Delaware General Corporation Law that the par value of shares of stock may not
be paid with a promissory note) and interest shall be compounded at least
annually and shall be charged at no less than the minimum rate of interest
necessary to avoid the treatment as interest, under any applicable provisions of
the Code, of any amounts other than amounts stated to be interest under the
terms of such promissory note.
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Notwithstanding the foregoing, this option may be exercised pursuant to
a program developed under Regulation T as promulgated by the Federal Reserve
Board which results in the receipt of cash (or check) by the Company either
prior to the issuance of shares of the Company's common stock or pursuant to the
terms of irrevocable instructions issued by the optionee prior to the issuance
of shares of the Company's common stock.
(d) An option shall not be transferable except by will or by the laws
of descent and distribution or pursuant to a qualified domestic relations order
satisfying the requirements of Rule 16b-3 and the rules thereunder ("QDRO"), and
shall be exercisable during the lifetime of the person to whom the option is
granted only by such person, by his guardian or legal representative, or by any
transferee pursuant to a QDRO. The person to whom the Option is granted may, by
delivering written notice to the Company, in a form satisfactory to the Company,
designate a third party who, in the event of the death of the optionee, shall
thereafter be entitled to exercise the option.
(e) (i) An option granted pursuant to section 5(a) or 5(b) shall
vest and become exercisable in full on the first June 30 following the grant of
such option; provided, however, the optionee has continuously served in the same
capacity which entitled him or her to the grant of such option from the date of
grant until and including the next following June 30.
(ii) An option granted pursuant to section 5(c), 5(d) or 5(e)
shall become exercisable in installments over a period of three years from the
date of grant at the rate of one-third (1/3rd) of the total number of shares
subject to such option upon the first anniversary of the date of grant and
subsequently at the rate of one thirty-sixth (1/36th) of the total number of
shares subject to the option a month, in twenty-four (24) equal monthly
installments; provided, however, that the optionee has, during the entire period
from the grant date to such vesting date, continuously served in the same
capacity which entitled him or her to the grant of such option, whereupon such
option shall become fully exercisable in accordance with its terms with respect
to that portion of the shares represented by that installment.
(f) The Company may require any optionee, or any person to whom an
option is transferred under section 6(d), as a condition of exercising any such
option: (i) to give written assurances satisfactory to the Company as to the
optionee's knowledge and experience in financial and business matters; and (ii)
to give written assurances satisfactory to the Company stating that such person
is acquiring the stock subject to the option for such person's own account and
not with any present intention of selling or otherwise distributing the stock.
These requirements, and any assurances given pursuant to such requirements,
shall be inoperative if (i) the issuance of the shares upon the exercise of the
option has been registered under a then-currently effective registration
statement under the Securities Act of 1933, as amended (the "Securities Act"),
or (ii), as to any particular requirement, a determination is made by counsel
for the Company that such requirement need not be met in the circumstances under
the then applicable securities laws. The Company may require any optionee to
provide such other representations, written assurances or information which the
Company shall determine is necessary, desirable or appropriate to comply with
applicable securities laws as a condition of granting an option to the optionee
or permitting the optionee to exercise the option. The Company may, upon advice
of counsel to the Company, place legends on stock certificates issued under the
Plan as such counsel deems necessary or appropriate in order to comply with
applicable securities laws, including, but not limited to, legends restricting
the transfer of the stock.
(g) Notwithstanding anything to the contrary contained herein, an
option may not be exercised unless the shares issuable upon exercise of such
option are then registered under the Securities Act or, if such shares are not
then so registered, the Company has determined that such exercise and issuance
would be exempt from the registration requirements of the Securities Act.
7. COVENANTS OF THE COMPANY.
(a) During the terms of the options granted under the Plan, the Company
shall keep available at all times the number of shares of the Common Stock
required to satisfy such options.
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(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of Common Stock upon exercise of the options granted under
the Plan; provided, however, that this undertaking shall not require the Company
to register under the Securities Act either the Plan, any option granted under
the Plan, or any stock issued or issuable pursuant to any such option. If, after
reasonable efforts, the Company is unable to obtain from any such regulatory
commission or agency the authority which counsel for the Company deems necessary
for the lawful issuance and sale of stock under the Plan, the Company shall be
relieved from any liability for failure to issue and sell stock upon exercise of
such options.
8. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of Common Stock pursuant to options granted
under the Plan shall constitute general funds of the Company.
9. MISCELLANEOUS.
(a) Neither an optionee nor any person to whom an option is transferred
under section 6(d) shall be deemed to be the holder of, or to have any of the
rights of a holder with respect to, any shares subject to such option unless and
until such person has satisfied all requirements for exercise of the option
pursuant to its terms.
(b) Throughout the term of any option granted pursuant to the Plan, the
Company shall make available to the holder of such option, not later than one
hundred twenty (120) days after the close of each of the Company's fiscal years
during the option term, upon request, such financial and other information
regarding the Company as comprises the annual report to the stockholders of the
Company provided for in the Bylaws of the Company and such other information
regarding the Company as the holder of such option may request under applicable
law.
(c) 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 Company or any Affiliate in any capacity or shall affect any right of the
Company, its Board or stockholders or any Affiliate to remove any Non-Employee
Director pursuant to the Company's Bylaws and the provisions of the Delaware
General Corporation Law (or the laws of the Company's state of incorporation
should that change in the future).
(d) No Non-Employee Director, individually or as a member of a group,
and no beneficiary or other person claiming under or through him, shall have any
right, title or interest in or to any option reserved for the purposes of the
Plan except as to such shares of common stock, if any, as shall have been
reserved for him pursuant to an option granted to him.
(e) In connection with each option made pursuant to the Plan, it shall
be a condition precedent to the Company's obligation to issue or transfer shares
to a Non-Employee Director, or to evidence the removal of any restrictions on
transfer, that such Non-Employee Director make arrangements satisfactory to the
Company to insure that the amount of any federal or other withholding tax
required to be withheld with respect to such sale or transfer, or such removal
or lapse, is made available to the Company for timely payment of such tax.
(f) The size of the Plan's share reserve set forth in section 3, the
size of individual option grants described in section 5, and all other
references in the Plan to specific numbers of shares of the Common Stock reflect
and have taken into account the Company's three-for-two (3:2) stock dividend
effective as of October 31, 1995, including all options granted under the Plan
prior to October 31, 1995.
10. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the Common Stock subject to the Plan, or
subject to any option granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the
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Company), the Plan and outstanding options will be appropriately adjusted in the
class(es) and maximum number of shares subject to the Plan and the class(es) and
number of shares and exercise price per share of stock subject to outstanding
options. Such adjustments shall be made by the Board, the determination of which
shall be final, binding, and conclusive. (The conversion of any convertible
securities of the Company shall not be treated as a "transaction not involving
the receipt of consideration by the Company.") No adjustment shall result in the
creation of a fractional share of stock or in an exercise price per share of
stock expressed in units of less than one cent ($.01).
(b) In the event of: (1) a dissolution, liquidation, or sale of all or
substantially all of the assets of the Company; (2) a merger or consolidation in
which the Company is not the surviving corporation; (3) a reverse merger in
which the Company is the surviving corporation but the shares of the Company's
common stock outstanding immediately preceding the merger are converted by
virtue of the merger into other property, whether in the form of securities,
cash or otherwise; or (4) the acquisition by any person, entity or groups within
the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or any comparable successor provisions (excluding
any employee benefit plan, or related trust, approved or maintained by the
Company or any Affiliate of the Company) of the beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act, or comparable
successor rule) of securities of the Company representing at least fifty percent
(50%) of the combined voting power entitled to vote in the election of
directors, then to the extent not prohibited by applicable law, the time during
which options outstanding under the Plan may be exercised shall be accelerated
prior to such event and the options terminated if not exercised after such
acceleration and at or prior to such event.
11. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the Plan
and/or some or all outstanding options granted under the Plan, provided,
however, that the Board shall not amend the Plan more than once every six (6)
months, with respect to the provisions of the Plan which relate to the amount,
price and timing of grants, other than to comport with changes in the Code, the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or the
rules thereunder. Except as provided in section 10 relating to adjustments upon
changes in stock, no amendment shall be effective unless approved by the
stockholders of the Company within twelve (12) months before or after the
adoption of the amendment, where the amendment would:
(i) Increase the number of shares which may be issued
under the Plan;
(ii) Modify the requirements as to eligibility for
participation in the Plan (to the extent such modification requires stockholder
approval in order for the Plan to comply with the requirements of Rule 16b-3);
or
(iii) Modify the Plan in any other way if such
modification requires stockholder approval in order for the Plan to comply with
the requirements of Rule 16b-3.
(b) Rights and obligations under any option granted before any
amendment of the Plan shall not be impaired by such amendment unless (i) the
Company requests the consent of the person to whom the option was granted and
(ii) such person consents in writing.
12. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate on the date that all of the shares
of the Company's Common Stock have been issued. No options may be granted under
the Plan while the Plan is suspended or after it is terminated.
(b) Rights and obligations under any option granted while the Plan is
in effect shall not be altered or impaired by suspension or termination of the
Plan, except with the consent of the person to whom the option was granted.
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13. EFFECTIVE DATE OF PLAN; CONDITIONS OF EXERCISE.
(a) The Plan shall become effective upon adoption by the Board of
Directors on October 3, 1995, subject to the condition subsequent that the Plan
is approved by the stockholders of the Company.
(b) No option granted under the Plan shall be exercised or exercisable
unless and until the Plan has been approved by the Company's stockholders.
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