Exhibit 10.02
CADENCE DESIGN SYSTEMS, INC.
1987 STOCK OPTION PLAN
AS ADOPTED APRIL 24, 1987
AS AMENDED MAY 4, 1993
AS AMENDED AUGUST 1, 1996 TO BECOME EFFECTIVE AUGUST 15, 1996
AS AMENDED FEBRUARY 5, 1997
AS APPROVED BY STOCKHOLDERS , 1997
1. PURPOSES OF THE PLAN.
The purposes of this Stock Option Plan are to attract and retain the best
available personnel for positions of substantial responsibility, to provide
additional incentive to the employees of the Company and any parent or
subsidiary corporations, and to promote the success of the Company's business.
Options granted hereunder may be either "incentive stock options," as
defined in Section 422 of the Internal Revenue Code of 1986, as amended, or
"non-statutory stock options," at the discretion of the Board and as reflected
in the terms of the written option agreement.
2. DEFINITIONS.
As used herein, the following definitions shall apply:
A. "BOARD" shall mean the Committee, if one has been appointed, or the
Board of Directors of the Company, if no Committee is appointed.
B. "CODE" shall mean the Internal Revenue Code of 1986, as amended.
C. "COMMON STOCK" shall mean the Common Stock of the Company.
D. "COMPANY" shall mean CADENCE DESIGN SYSTEMS, INC., a Delaware
corporation.
E. "COMMITTEE" shall mean the Committee appointed by the Board of
Directors in accordance with paragraph (a) of Section 4 of the Plan,
if one is appointed.
F. "CONSULTANT" shall mean any consultants, independent contractors or
advisers (provided that such persons render bona fide services not in
connection with the offering and sale of securities in capital
raising transactions) rendering services to the Company or a Parent
or Subsidiary.
G. "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" shall mean the
absence of any interruption of termination of service, whether as an
Employee or Consultant. Continuous Status as an Employee or
Consultant shall not be considered interrupted in the case of sick
leave, military leave, or any other leave of absence.
H. "EMPLOYEE" shall mean any person, including officers and directors,
employed by the Company or any Parent or Subsidiary of the Company.
The payment of a director's fee or other compensation paid solely on
account of service as a director by the Company shall not be
sufficient to constitute "employment" by the Company.
I. "INCENTIVE STOCK OPTION" shall mean an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended.
J. "OPTION" shall mean a stock option granted pursuant to the Plan.
K. "OPTIONED STOCK" shall mean the Common Stock subject to an Option.
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L. "OPTIONEE" shall mean an Employee or Consultant who receives an
Option.
M. "PARENT" shall mean a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Internal Revenue Code
of 1986, as amended.
N. "PLAN" shall mean this 1987 Stock Option Plan.
O. "RULE 16B-3" shall mean Rule 16b-3 of the Securities Exchange Act of
1934, as amended, or any successor to Rule 16b-3, as in effect when
discretion is being exercised with respect to the Plan.
P. "SHARE" shall mean a share of Common Stock, as adjusted in accordance
with Section 11 of the Plan.
Q. "SUBSIDIARY" shall mean a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Internal
Revenue Code of 1986, as amended.
3. STOCK SUBJECT TO THE PLAN.
Subject to the provisions of Section 11 of the Plan, the number of shares
reserved for issuance under the Plan from and after Febraury 5, 1997 is
11,766,689 shares of Common Stock. This share reserve is comprised of: (x)
3,608,025 shares not subject to options which remain available to be optioned
and sold under the Plan as of February 5, 1997, plus (y) 8,158,664 shares
underlying options which have been previously granted under the Plan and which
remain outstanding as of February 5, 1997, reduced (z) on a share-by-share basis
for each share of Common Stock issued upon exercise of an option described in
clause (y) above. Shares issued under the Plan may be authorized, but unissued,
or reacquired Common Stock.
If an Option should expire or become unexercisable for any reason without
having been exercised in full, the unpurchased Shares which were subject thereto
shall, unless the Plan shall have been terminated, become available for future
grant under the Plan.
4. ADMINISTRATION OF THE PLAN.
(A) PROCEDURE. The Plan shall be administered by the Board of Directors
of the Company.
The Board of Directors may appoint a Committee consisting of not less than
two members of the Board of Directors to administer the Plan on behalf of the
Board of Directors, subject to such terms and conditions as the Board of
Directors may prescribe. One or more of these members may be "Non-Employee
Directors" (a director who is receiving no compensation from the Company other
than for service on the Board of Directors or who does not receive such
additional compensation which exceeds the limits specified in the definition of
such term under Rule 16b-3) or "Outside Directors" (a director who is not either
a current or former officer of the Company nor a current employee of the
Company, and who is receiving no compensation from the Company other than for
service on the Board of Directors or who does not receive such additional
compensation which exceeds the limits specified in the definition of such term
under Section 162(m) of the Code). Once appointed, the Committee shall continue
to serve until otherwise directed by the Board of Directors. From time to time
the Board of Directors may increase the size of the Committee and appoint
additional members thereof, remove members (with or without cause), and appoint
new members in substitution therefor, fill vacancies however caused and remove
all members of the Committee, and thereafter directly administer the Plan.
Notwithstanding anything in this Section 4 to the contrary, at any time the
Board or the Committee may delegate to a committee of one or more members of the
Board of Directors the authority to grant Options to all Employees and
Consultants or any portion or class thereof.
Members of the Board who are either eligible for Options or have been
granted Options may vote on any matters affecting the administration of the Plan
or grant of any Options pursuant to the Plan, except that no such member shall
act upon the granting of an Option to himself, but any such member may be
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counted in determining the existence of a quorum at any meeting of the Board
during which action is taken with respect to the granting of Options to him.
(B) POWERS OF THE BOARD. Subject to the provisions of the Plan, the Board
shall have the authority, in its discretion: (i) to grant Incentive Stock
Options, in accordance with Section 422 of the Internal Revenue Code of 1986, as
amended, or "non-statutory stock options"; (ii) to determine, upon review of
relevant information and in accordance with Section 8(b) of the Plan, the fair
market value of the Common Stock; (iii) to determine the exercise price per
share of Options to be granted, which exercise price shall be determined in
accordance with Section 8(a) of the Plan; (iv) to determine the Employees or
Consultants to whom, and the time or times at which, Options shall be granted
and the number of shares to be represented by each Option; (v) to interpret the
Plan; (vi) to prescribe, amend and rescind rules and regulations relating to the
Plan; (vii) to determine the terms and provisions of each Option granted (which
need not be identical) in accordance with the Plan, and, with the consent of the
holder thereof with respect to any adverse change, modify or amend each Option;
(viii) to accelerate or defer (the latter with the consent of the Optionee) the
exercise date of any Option; (ix) to authorize any person to execute on behalf
of the Company any instrument required to effectuate the grant of an Option
previously granted by the Board; and (x) to make all other determinations deemed
necessary or advisable for the administration of the Plan.
(C) EFFECT OF BOARD'S DECISION. All decisions, determinations and
interpretations of the Board shall be final and binding on all Optionees and any
other holders of any Options granted under the Plan.
5. ELIGIBILITY.
Options may be granted only to Employees or Consultants as defined in
Section 2 hereof. An Employee or Consultant who has been granted an Option may,
if he is otherwise eligible, be granted an additional Option or Options.
Incentive Stock Options may only be granted to Employees. The aggregate fair
market value (determined at the time the Option is granted) of the stock with
respect to which Incentive Stock Options are exercisable for the first time by
such individual during any calendar year (under this Plan or under any other
incentive stock option plan of the Company or any Parent or Subsidiary of the
Company) shall not exceed $100,000. To the extent that the grant of an Option
exceeds this limit, the portion of the Option which exceeds such limit shall be
treated as a non-statutory stock option.
The Plan shall not confer upon any Optionee any right with respect to
continuation of employment or consultancy by the Company, nor shall it interfere
in any way with his right or the Company's right to terminate his employment at
any time or his consultancy pursuant to the terms of the Consultant's agreement
with the Company.
No person shall be eligible to be granted Options covering more than
1,330,021 shares of Common Stock in any calendar year (such number representing
1.5% of the issued and outstanding Common Stock of the Company entitled to vote
as of the record date for the 1997 Annual Meeting of Stockholders). The
foregoing limit shall be adjusted pursuant to the provisions of Section 11.
6. TERM OF THE PLAN.
The Plan became effective upon its adoption by the Board of Directors.
Subsequently amended, the Plan shall continue in effect until January 31, 2002
unless sooner terminated under Section 13 of the Plan.
7. TERM OF OPTION.
The term of each Option shall be ten (10) years from the date of grant
thereof or such shorter term as may be provided in the Stock Option Agreement.
However, in the case of an Incentive Stock Option granted to an Employee who
immediately before the Incentive Stock Option is granted, owns stock
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representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the term of the Incentive
Stock Option shall be five (5) years from the date of grant thereof or such
shorter time as may be provided in the Stock Option Agreement.
8. EXERCISE PRICE AND CONSIDERATION.
(a) The per Share exercise price for the Shares to be issued pursuant to
exercise of an Option shall be such price as is determined by the Board, but
shall be subject to the following:
(i) In the case of an Incentive Stock Option:
(A) Granted to an Employee who, immediately before the grant of such
Incentive Stock Option, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or
any Parent or Subsidiary, the per Share exercise price shall be no
less than 110% of the fair market value per Share on the date of
grant.
(B) Granted to any Employee, the per Share exercise price shall be no
less than 100% of the fair market value per Share on the date of
grant.
(ii) In the case of an Option granted on or after the effective date of
registration of any class of equity security of the Company pursuant to
Section 12 of the Exchange Act and prior to six months after the
termination of such registration, the per Share exercise price shall be
not less than 100% of the fair market value per Share on the date of
grant.
(iii) Notwithstanding the foregoing, an Option (whether an Incentive Stock
Option or non-statutory stock option) may be granted with an exercise
price lower than set forth in the preceding paragraphs if such Option
is granted pursuant to an assumption or substitution for another option
in a manner satisfying the provisions of Section 424(a) of the Code.
(b) The fair market value shall be determined by the Board in its
discretion: PROVIDED HOWEVER, that where there is a public market for the Common
Stock, the fair market value per Share shall be the average of the high and low
prices of the Common Stock on the date of grant, as reported on the New York
Stock Exchange.
(c) The consideration to be paid for the Shares to be issued upon exercise
of an Option, including the method of payment, shall be determined by the Board
and may consist entirely of cash, check, promissory note, other Shares of Common
Stock having a fair market value on the date of surrender equal to the aggregate
exercise price of the Shares as to which said option shall be exercised, or any
combination of such methods of payment, or such other consideration and method
of payment for the issuance of Shares to the extent permitted under applicable
law. In making its determination as to the type of consideration to accept, the
Board shall consider if acceptance of such consideration may be reasonably
expected to benefit the Company.
9. EXERCISE OF OPTION.
(A) PROCEDURE FOR EXERCISE RIGHTS AS A SHAREHOLDER. Any Option granted
hereunder shall be exercisable at such times and under such conditions as
determined by the board, including performance criteria with respect to the
Company and/or the Optionee, and as shall be permissible under the terms of the
Plan.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Board, consist of any
consideration and method of payment allowable under Section 8(c) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the
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books of the Company or of a duly authorized transfer agent of the Company) of
the stock certificate evidencing such Shares, no right to vote or receive
dividends or any other rights as a shareholder shall exist with respect to the
Optioned Stock, notwithstanding the exercise of the Option. No adjustment will
be made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 11 of the
Plan.
Exercise of an Option in any manner shall result in a decrease in the number
of Shares which thereafter may be available, both for purposes of the Plan and
for sale under the Option, by the number of Shares as to which the Option is
exercised.
(B) TERMINATION OF STATUS AS AN EMPLOYEE OR CONSULTANT. If an employee
ceases to serve as an Employee or Consultant, he may, but only within thirty
(30) days (or such other period of time not exceeding three (3) months as is
determined by the Board) after the date he ceases to be an Employee or
Consultant of the Company, exercise his Option to the extent that he was
entitled to exercise it at the date of such termination. To the extent that he
was not entitled to exercise the Option at the date of such termination, or if
he does not exercise such Option (which he was entitled to exercise) within the
time specified herein, the Option shall terminate.
(C) DEATH OF OPTIONEE. In the event of the death of an Optionee:
(i) during the term of the Option who is at the time of his death an
Employee or Consultant of the Company and who shall have been in
Continuous Status as an Employee or Consultant since the date of
grant of the Option, the Option may be exercised at any time within
three (3) months following the date of death, by the Optionee's
estate or by a person who acquired the right to exercise the Option
by bequest or inheritance, but only to the extent of the right to
exercise that would have accrued had the Optionee continued living
three (3) months after the date of death; or
(ii) within one (1) month after the termination of Continuous Status as
an Employee or Consultant, the Option may be exercised, at any time
within three (3) months following the date of death, by the
Optionee's estate or by a person who acquired the right to exercise
the Option by bequest or inheritance, but only to the extent of the
right to exercise that had accrued at the date of termination.
10. NON-TRANSFERABILITY OF OPTIONS.
Except as otherwise expressly provided in the terms of an individual Option
which is a non-statutory stock option, the Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee. Notwithstanding the foregoing,
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.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
Subject to any required action by the shareholders of the Company, the
number of shares of Common Stock covered by each outstanding Option, and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but as to which no Options have yet been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, as well as
the price per share of Common Stock covered by each such outstanding Option,
shall be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split or the payment of a
stock dividend with respect to the Common Stock or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company;
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PROVIDED, HOWEVER, that conversion of any convertible securities of the Company
shall not be deemed to have been "effected without receipt of consideration."
Such adjustments shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
of Common Stock subject to an Option.
In the event of the proposed dissolution or liquidation of the Company, or
in the event of a proposed sale of all or substantially all of the assets of the
Company, or the merger of the Company with or into another corporation, the
Option will terminate immediately prior to the consummation of such proposed
action, unless otherwise provided by the Board. The Board may, in the exercise
of its sole discretion in such instances, declare that any Option shall
terminate as of a date fixed by the Board and give each Optionee the right to
exercise his Option as to all or any part of the Optioned Stock, including
Shares as to which the Option would not otherwise be exercisable. If the Board,
at its sole discretion, permits acceleration as to all or any part of the
Optioned Stock, the aggregate fair market value (determined at the time an
Option is granted) of stock with respect to which Incentive Stock Options first
become exercisable in the year of such dissolution, liquidation, sale of assets
or merger cannot exceed $100,000. Any remaining accelerated Incentive Stock
Options shall be treated as non-statutory stock options.
12. TIME OF GRANTING OPTIONS.
The date of grant of an Option shall, for all purposes, be the date on which
the Board makes the determination granting such Option. Notice of the
determination shall be given to each Employee or Consultant to whom an Option is
so granted within a reasonable time after the date of such grant.
13. AMENDMENT AND TERMINATION OF THE PLAN.
(A) AMENDMENT AND TERMINATION. The Board may amend or terminate the Plan
from time to time in such respects as the Board may deem advisable; provided
that, no amendment shall be effective unless approved by the stockholders of the
Company to the extent stockholder approval is necessary for the Plan to satisfy
the requirements of Section 422 of the Code, Rule 16b-3 or any listing
requirements of any securities exchange or national market system on which the
Common Stock is traded.
(B) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or termination
of the Plan shall not adversely affect Options already granted and such Options
shall remain in full force and effect as if this Plan had not been amended or
terminated, unless mutually agreed otherwise between the Optionee and the Board,
which agreement must be in writing and signed by the Optionee and the Company.
14. CONDITIONS UPON ISSUANCE OF SHARES.
Shares shall not be issued pursuant to the exercise of an Option unless the
exercise of such Option and the issuance and delivery of such Shares pursuant
thereto shall comply with all relevant provisions of the law, including without
limitation, the Securities Act of 1933, as amended; the Securities Exchange Act
of 1934, as amended; the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the Shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance.
As a condition to the exercise of an Option, the Company may require the
person exercising such Option to represent and warrant at time of any such
exercise that the Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares if, in the opinion of
counsel for the Company. Such a representation is required by any of the
aforementioned relevant provisions of law.
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15. RESERVATION OF SHARES.
The Company, during the term of this Plan, will at all times reserve and
keep available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.
Inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company's counsel to be necessary
to the lawful issuance and sale of any Shares hereunder, shall relieve the
Company of any liability in respect of the failure to issue or sell such Shares
as to which such requisite authority shall not have been obtained.
16. OPTION AGREEMENT.
Options shall be evidenced by written option agreements in such form as the
Board shall approve.
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