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EXHIBIT 10.3
SYNOPSYS, INC.
1998 NONSTATUTORY STOCK OPTION PLAN
(AS AMENDED APRIL 27, 1999)
ARTICLE ONE
GENERAL
I. PURPOSE OF THE PLAN
A. This 1998 Nonstatutory Stock Option Plan (the "Plan") is
intended to promote the interests of Synopsys, Inc., a Delaware corporation (the
"Corporation"), by providing (i) key employees (excluding officers and
directors) of the Corporation (or its parent or subsidiary corporations) who
contribute to the management, growth and financial success of the Corporation
(or its parent or subsidiary corporations) and (ii) consultants and other
independent advisors who provide valuable services to the Corporation (or its
parent or subsidiary corporations) with the opportunity to acquire a proprietary
interest, or otherwise increase their proprietary interest, in the Corporation
as an incentive for them to remain in the service of the Corporation (or its
parent or subsidiary corporations).
B. For purposes of the Plan, the following provisions shall be
applicable in determining the parent and subsidiary corporations of the
Corporation:
Any corporation (other than the Corporation) in an unbroken chain of
corporations ending with the Corporation shall be considered to be a parent of
the Corporation, provided each such corporation in the unbroken chain (other
than the Corporation) owns, at the time of the determination, stock possessing
fifty percent (50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
Each corporation (other than the Corporation) in an unbroken chain of
corporations beginning with the Corporation shall be considered to be a
subsidiary of the Corporation, provided each such corporation (other than the
last corporation) in the unbroken chain owns, at the time of the determination,
stock possessing fifty percent (50%) or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.
II. ADMINISTRATION OF THE PLAN
A. Administrator. The Plan shall be administered by (i) the Board
of Directors (the "Board"), or (ii) a committee of Directors appointed by the
Board, which committee shall be constituted to satisfy applicable laws (in
either case, the "Administrator"). The Board at any time may terminate the
authority delegated to any committee of the Board pursuant to this Section II(A)
and revest in the Board the administration of the Plan.
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B. Powers of the Administrator. In particular and without
limitation, the Administrator, subject to the terms of the Plan, shall have the
authority, in its discretion to:
(i) select the employees and consultants to whom Options may
be granted;
(ii) determine whether and to what extent Options are to be
granted under the Plan;
(iii) determine the number of shares to be covered by each
Option granted under the Plan; and
(iv) determine the terms and conditions of any Option granted
under the Plan and any related loans to be made by the Company, based upon
factors determined by the Administrator.
C. Administrator Determinations Binding. The Administrator may
adopt, alter and repeal administrative rules, guidelines and practices governing
the Plan as it from time to time shall deem advisable, may interpret the terms
and provisions of the Plan, any Option and any Option agreement and may
otherwise supervise the administration of the Plan. Any determination made by
the Administrator pursuant to the provisions of the Plan with respect to any
Option shall be made in its sole discretion at the time of the grant of the
Option or, unless in contravention of any express term of the Plan or Option, at
any later time. All decisions made by the Administrator under the Plan shall be
binding on all persons, including the Company and Plan participants. No member
of the Administrator shall be liable for any action that he or she has in good
faith taken or failed to take with respect to this Plan or any Option.
III. ELIGIBILITY
The persons eligible to receive option grants (the "Optionee(s)") are as
follows:
(i) key employees of the Corporation (or its parent or
subsidiary corporations) who render services which contribute to the management,
growth and financial success of the Corporation (or its parent or subsidiary
corporations);
(ii) those consultants or other independent advisors who
provide valuable services to the Corporation (or its parent or subsidiary
corporations.
IV. STOCK SUBJECT TO THE PLAN
A. Shares of the Corporation's common stock (the "Common Stock")
shall be available for issuance under the Plan and shall be drawn from either
the Corporation's authorized but unissued shares of Common Stock or from
reacquired shares of Common Stock, including
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shares repurchased by the Corporation on the open market. The maximum number of
shares of Common Stock which may be issued over the term of the Plan shall not
exceed the sum of 3,116,736 shares.
B. Should one or more outstanding options under this Plan expire or
terminate for any reason prior to exercise in full, then the shares subject to
the portion of each option not so exercised shall be available for subsequent
option grant under the Plan. Shares issued under the Plan shall not be available
for subsequent option grant under the Plan. In addition, should the exercise
price of an outstanding option under the Plan be paid with shares of Common
Stock, then the number of shares of Common Stock available for issuance under
the Plan shall be reduced by the gross number of shares for which the option is
exercised, and not by the net number of shares of Common Stock actually issued
to the holder of such option.
C. In the event any change is made to the Common Stock issuable
under the Plan by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, appropriate adjustments shall be made to the number and/or class
of securities and price per share in effect under each outstanding option under
the Plan. Such adjustments to the outstanding options are to be effected in a
manner which shall preclude the enlargement or dilution of rights and benefits
under such options.
The adjustments determined by the Administrator shall be final, binding
and conclusive.
D. Common Stock issuable under the Plan may be subject to such
restrictions on transfer, repurchase rights or other restrictions determined by
the Administrator.
ARTICLE TWO
OPTION GRANTS
I. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to the Plan shall be authorized by action of
the Administrator and will be nonstatutory options. Each granted option shall be
evidenced by one or more instruments in the form approved by the Administrator;
provided, however, that each such instrument shall comply with the terms and
conditions specified below.
A. Option Price.
(1) The option price per share shall be fixed by the
Administrator. In no event, however, shall it be less than one hundred percent
(100%) of the fair market value per share of Common Stock on the date of the
option grant.
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(2) The option price shall become immediately due upon
exercise of the option and, subject to the instrument evidencing the grant,
shall be payable in one of the following alternative forms specified below:
(a) full payment in cash or check drawn to the
Corporation's order;
(b) full payment in shares of Common Stock held for
at least six (6) months and valued at fair market value on the Exercise Date (as
such term is defined below);
(c) full payment in a combination of shares of
Common Stock held for at least six (6) months and valued at fair market value on
the Exercise Date and cash or check; or
(d) full payment through a broker-dealer sale and
remittance procedure pursuant to which the Optionee (i) shall provide
irrevocable written instructions to a Corporation-designated brokerage firm to
effect the immediate sale of the purchased shares and remit to the Corporation,
out of the sale proceeds available on the settlement date, sufficient funds to
cover the aggregate option price payable for the purchased shares plus all
applicable Federal and State income and employment taxes required to be withheld
by the Corporation in connection with such purchase and (ii) shall provide
written directives to the Corporation to deliver the certificates for the
purchased shares directly to such brokerage firm in order to complete the sale
transaction.
For purposes of this subparagraph (2), the Exercise Date shall be the
date on which written notice of the option exercise is delivered to the
Corporation. Except to the extent the sale and remittance procedure is utilized
in connection with the exercise of the option, payment of the option price for
the purchased shares must accompany such notice.
(3) The fair market value per share of Common Stock on any
relevant date under the Plan shall be determined in accordance with the
following provisions:
(a) If the Common Stock is not at the time listed or
admitted to trading on any national stock exchange but is traded on the Nasdaq
National Market, the fair market value shall be the closing selling price per
share of Common Stock on the date in question, as such price is reported by the
National Association of Securities Dealers on the Nasdaq National Market System
or any successor system. If there is no reported closing selling price for the
Common Stock on the date in question, then the closing selling price on the last
preceding date for which such quotation exists shall be determinative of fair
market value.
(b) If the Common Stock is at the time listed or
admitted to trading on any national stock exchange, then the fair market value
shall be the closing selling price per share of Common Stock on the date in
question on the stock exchange determined by the Administrator to be the primary
market for the Common Stock, as such price is officially quoted
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in the composite tape of transactions on such exchange. If there is no reported
sale of Common Stock on such exchange on the date in question, then the fair
market value shall be the closing selling price on the exchange on the last
preceding date for which such quotation exists.
B. Term and Exercise of Options. Each option shall be exercisable
at such time or times and during such period as is determined by the
Administrator and set forth in the stock option agreement evidencing the grant;
provided that at least 75% of the options granted hereunder shall become
exercisable ratably over a four year period from the date of grant, with the
vesting interval (i.e., monthly, quarterly, etc.) and any period prior to the
commencement of vesting determined in each case by the Plan Administrator. No
such option, however, shall have a maximum term in excess of ten (10) years from
the grant date. An option may not be exercised for a fraction of a share. During
the lifetime of the Optionee, the option shall be exercisable only by the
Optionee and shall not be assignable or transferable by the Optionee otherwise
than by will or by the laws of descent and distribution following the Optionee's
death.
C. Termination of Service.
(1) Except to the extent otherwise provided pursuant to
Section III of this Article Two, the following provisions shall govern the
exercise period applicable to any outstanding options under the Plan which are
held by the Optionee at the time of his or her cessation of Service or death.
(a) Should the Optionee cease Service for any reason
(including death or permanent disability as defined in Section 22(e)(3) of the
Internal Revenue Code) while holding one or more outstanding options under the
Plan, then none of those options shall (except to the extent otherwise provided
pursuant to Section III of this Article Two) remain exercisable beyond the
limited post-Service period designated by the Administrator at the time of the
option grant and set forth in the option agreement.
(b) Any option granted to an Optionee under the Plan
and exercisable in whole or in part on the date of the Optionee's death may be
subsequently exercised, by the personal representative of the Optionee's estate
or by the person or persons to whom the option is transferred pursuant to the
Optionee's will or in accordance with the laws of descent and distribution,
provided and only if such exercise occurs prior to the earlier of (i) the
expiration of the period designated by the Administrator at the time of the
option grant and set forth in the option agreement, which may be any period from
one month to three years measured from the date of the Optionee's death, or (ii)
the specified expiration date of the option term. Upon the occurrence of the
earlier event, the option shall terminate and cease to be exercisable.
(c) Under no circumstances, however, shall any such
option be exercisable after the specified expiration date of the option term.
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(d) During the limited post-Service exercise period,
the option may not be exercised for more than the number of shares for which the
option is exercisable on the date of the Optionee's cessation of Service. Upon
the expiration of such limited exercise period or (if earlier) upon the
expiration of the option term, the option shall terminate and cease to be
exercisable. However, upon the Optionee's cessation of Service, each outstanding
option at the time held by the Optionee shall immediately terminate and cease to
be outstanding with respect to any shares for which the option is not otherwise
at that time exercisable or in which the Optionee is not otherwise vested.
(e) Should (i) the Optionee's Service be terminated
for misconduct (including, but not limited to, any act of dishonesty, willful
misconduct, fraud or embezzlement) or (ii) the Optionee make any unauthorized
use or disclosure of confidential information or trade secrets of the
Corporation or its parent or subsidiary corporations, then in any such event all
outstanding options held by the Optionee under this Article Two shall terminate
immediately and cease to be exercisable.
(2) The Administrator shall have complete discretion,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to permit one or more options held by the Optionee
under this Article Two to be exercised, during the limited period of
exercisability provided under subparagraph (1) above, not only with respect to
the number of shares for which each such option is exercisable at the time of
the Optionee's cessation of Service but also with respect to one or more
subsequent installments for which the option would otherwise have become
exercisable had such cessation of Service not occurred.
(3) For purposes of the foregoing provisions of this Section
I (and for all other purposes under the Plan):
(a) The Optionee shall (except to the extent
otherwise specifically provided in the applicable option agreement) be deemed to
remain in the Service of the Corporation for so long as such individual renders
services on a periodic basis to the Corporation (or any parent or subsidiary
corporation) in the capacity of an Employee, a non-employee member of the Board
or an independent consultant or advisor.
(b) The Optionee shall be considered to be an
Employee for so long as he or she remains in the employ of the Corporation or
one or more parent or subsidiary corporations, subject to the control and
direction of the employer entity not only as to the work to be performed but
also as to the manner and method of performance.
D. Stockholder Rights. An Optionee shall have no stockholder rights
with respect to any shares covered by the option until such individual shall
have exercised the option, paid the option price for the purchased shares and
been issued a stock certificate for such shares.
V. CORPORATE TRANSACTIONS/CHANGES IN CONTROL
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A. In the event of any of the following stockholder-approved
transactions to which the Corporation is a party (a "Corporate Transaction"):
(i) a merger or consolidation in which the Corporation is
not the surviving entity, except for a transaction the principal purpose of
which is to change the State of the Corporation's incorporation,
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Corporation in liquidation or dissolution
of the Corporation, or
(iii) any reverse merger in which the Corporation is the
surviving entity but in which securities possessing more than fifty percent
(50%) of the total combined voting power of the Corporation's outstanding
securities are transferred to holders different from those who held such
securities immediately prior to such merger, then the exercisability of each
option outstanding under the Plan shall automatically accelerate so that each
such option shall, immediately prior to the specified effective date for the
Corporate Transaction, become fully exercisable with respect to the total number
of shares of Common Stock at the time subject to such option and may be
exercised for all or any portion of such shares. However, an outstanding option
under this Article Two shall not so accelerate if and to the extent: (i) such
option is, in connection with the Corporate Transaction, to be assumed by the
successor corporation or parent thereof or replaced with a comparable option to
purchase shares of the capital stock of the successor corporation or parent
thereof, (ii) such option is to be replaced by a comparable cash incentive
program of the successor corporation based on the option spread at the time of
the Corporate Transaction, or (iii) the acceleration of such option is subject
to other limitations imposed by the Administrator at the time of the option
grant. The determination of comparability under clause (i) or (ii) above shall
be made by the Administrator, and its determination shall be final, binding and
conclusive.
B. Immediately after the consummation of the Corporate Transaction,
all outstanding options under the Plan shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation or its
parent company.
C. Each outstanding option under the Plan which is assumed in
connection with the Corporate Transaction or is otherwise to continue in effect
shall be appropriately adjusted, immediately after such Corporate Transaction,
to apply and pertain to the number and class of securities which would have been
issued to the option holder, in consummation of such Corporate Transaction, had
such person exercised the option immediately prior to such Corporate
Transaction. Appropriate adjustments shall also be made to the option price
payable per share, provided the aggregate option price payable for such
securities shall remain the same. In addition, the maximum number and/or class
of securities available for issuance under the Plan and the total number and/or
class of securities for which stock options may be granted to any one
participant in the Plan shall be appropriately adjusted following the
consummation of the
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Corporate Transaction to reflect the effect of such transaction upon the
Corporation's capital structure.
D. The grant of options under the Plan shall in no way affect the
right of the Corporation to adjust, reclassify, reorganize or otherwise change
its capital or business structure or to merge, consolidate, dissolve, liquidate
or sell or transfer all or any part of its business or assets.
E. The Administrator shall have the discretionary authority,
exercisable at the time the option is granted or at any time while the option
remains outstanding, to provide for the automatic acceleration of one or more
outstanding options under this Article Two upon the occurrence of a Change in
Control. Alternatively, the Administrator shall have full power and authority to
condition any such option acceleration upon the subsequent termination of the
Optionee's Service within a specified period following the Change in Control.
F. For purposes of this Section II, a Change in Control shall be
deemed to occur in the event:
(i) any person or related group of persons (other than the
Corporation or a person that directly or indirectly controls, is controlled by,
or is under common control with, the Corporation) directly or indirectly
acquires beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act)
of securities possessing more than fifty percent (50%) of the total combined
voting power of the Corporation's outstanding securities pursuant to a tender or
exchange offer made directly to the Corporation's stockholders which the Board
does not recommend such stockholders to accept; or
(ii) there is a change in the composition of the Board over a
period of twenty-four (24) consecutive months or less such that a majority of
the Board members ceases, by reason of one or more proxy contests for the
election of Board members, to be comprised of individuals who either (A) have
been Board members continuously since the beginning of such period or (B) have
been elected or nominated for election as Board members during such period by at
least a majority of the Board members described in clause (A) who were still in
office at the time such election or nomination was approved by the Board.
G. Any options accelerated in connection with the Change in Control
shall remain fully exercisable until the expiration or sooner termination of the
option term.
VI. EXTENSION OF EXERCISE PERIOD
The Administrator shall have full power and authority to extend the
period of time for which any option granted under this Article Two is to remain
exercisable following the Optionee's cessation of Service or death from the
limited period in effect under Section I of this Article Two to such greater
period of time as the Administrator shall deem appropriate; provided,
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however, that in no event shall such option be exercisable after the specified
expiration date of the option term.
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ARTICLE THREE
MISCELLANEOUS
I. [INTENTIONALLY OMITTED.]
II. AMENDMENT OF THE PLAN AND OPTIONS
A. The Board has complete and exclusive power and authority to
amend or modify the Plan in any or all respects whatsoever. However, no such
amendment or modification may adversely affect the rights and obligations of an
Optionee with respect to options at the time outstanding under the Plan, unless
the Optionee consents to such amendment.
III. TERM OF PLAN
The Plan shall become effective upon its adoption by the Board. It shall
continue in effect for ten (10) years, unless sooner terminated under Article
Two of the Plan.
IV. USE OF PROCEEDS
Any cash proceeds received by the Company from the sale of shares under
the Plan shall be used for general corporate purposes.
V. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any option under
the Plan and the issuance of Common Stock upon the exercise or surrender of the
option grants made hereunder shall be subject to the Corporation's procurement
of all approvals and permits required by regulatory authorities having
jurisdiction over the Plan, the options granted under it, and the Common Stock
issued pursuant to it.
B. No shares of Common Stock or other assets shall be issued or
delivered under this Plan unless and until there shall have been compliance with
all applicable requirements of Federal and State securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any securities exchange on which stock of the same class is then listed.
VI. NO EMPLOYMENT/SERVICE RIGHTS
Neither the action of the Company in establishing the Plan, nor any
action taken by the Administrator hereunder, nor any provision of the Plan shall
be construed so as to grant any individual the right to remain in the employ or
service of the Corporation (or any parent or
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subsidiary corporation) for any period of specific duration, and the Corporation
(or any parent or subsidiary corporation retaining the services of such
individual) may terminate such individual's employment or service at any time
and for any reason, with or without cause.
VII. MISCELLANEOUS PROVISIONS
A. The right to acquire Common Stock or other assets under the Plan
may not be assigned, encumbered or otherwise transferred by any Optionee.
B. The provisions of the Plan shall be governed by the laws of the
State of California, as such laws are applied to contracts entered into and
performed in such State.
C. The provisions of the Plan shall inure to the benefit of, and be
binding upon, the Corporation and its successors or assigns, whether by
Corporate Transaction or otherwise, and the Optionees, the legal representatives
of their respective estates, their respective heirs or legatees and their
permitted assignees.
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