Exhibit 10.07
CADENCE DESIGN SYSTEMS, INC.
EMPLOYEE STOCK PURCHASE PLAN
AS ADOPTED JANUARY 30, 1990
AS AMENDED MAY 7, 1992
AS AMENDED MAY 4, 1993
AS AMENDED MAY 17, 1994
AS AMENDED AUGUST 1, 1996 TO BECOME EFFECTIVE AUGUST 15, 1996
AS AMENDED MARCH, 1997
AS APPROVED BY STOCKHOLDERS , 1997
1. ESTABLISHMENT OF PLAN. Cadence Design Systems, Inc. (the "Company")
proposes to grant options for purchase of the Company's Common Stock to eligible
employees of the Company and Subsidiaries (as hereinafter defined) pursuant to
this Employee Stock Purchase Plan (the "Plan"). For purposes of this Plan,
"parent corporation" and "Subsidiary" (when used in the plural, "Subsidiaries")
shall have the same meaning as "parent corporation" and "subsidiary corporation"
in Sections 424(e) and 424(f), respectively, of the Internal Revenue Code of
1986, as amended (the "Code"). The Company intends that the Plan shall qualify
as an "employee stock purchase plan" under Section 423 of the Code (including
any amendments or replacements of such section), and the Plan shall be so
construed. Any term not expressly defined in the Plan but defined for purposes
of Section 423 of the Code shall have the same definition herein. Subject to
adjustment as provided in Section 14 of the Plan, the aggregate number of shares
of Common Stock which may be purchased under this Plan shall not exceed
8,750,000(1) shares of Common Stock of the Company (including the 2,000,000
shares reserved for issuance in March 1997), which may be treasury shares
reacquired by the Company or authorized and unissued shares, or a combination of
both.
2. PURPOSE. The purpose of the Plan is to provide employees of the Company
and Subsidiaries designated by the Board of Directors as eligible to participate
in the Plan with a convenient means to acquire an equity interest in the Company
through payroll deductions, to enhance such employees' sense of participation in
the affairs of the Company and Subsidiaries, and to provide an incentive for
continued employment.
3. ADMINISTRATION. The Plan is administered by the Board of Directors of
the Company or by a committee of one or more members of the Board of Directors
of the Company designated by the Board of Directors of the Company (in which
event all references herein to the Board of Directors shall be to the
committee). Subject to the provisions of the Plan and the limitations of Section
423 or the Code or any successor provision in the Code, all questions of
interpretation or application of the Plan shall be determined by the Board and
its decisions shall be final and binding upon all participants. Members of the
Board shall receive no compensation for their services in connection with the
administration of the Plan, other than standard fees as established from time to
time by the Board of Directors of the Company for services rendered by Board
members serving on Board committees. All expenses incurred in connection with
the administration of the Plan shall be paid by the Company.
4. ELIGIBILITY. Any employee of the Company or the designated Subsidiaries
is eligible to participate in an Offering Period (as hereinafter defined) under
the Plan except the following:
a) employees who are not employed by the Company or Subsidiaries on the
fifteenth (15th) day of the month before the beginning of such Offering
Period;
- ------------------------
(1) Adjusted to reflect the 3-2 stock splits which occurred in October 1995 and
May 1996.
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b) employees who are customarily employed for less than 20 hours per week;
c) employees who are customarily employed for less than five months in a
calendar year; and
d) employees who, together with any other person whose stock would be
attributed to such employee pursuant to Section 425(d) of the Code, own
stock or hold options to purchase stock or who, as a result of being
granted an option under the Plan with respect to such Offering Period,
would own stock or hold options to purchase stock possessing 5 percent or
more of the total combined voting power or value of all classes of stock
of the Company or any of its Subsidiaries.
5. OFFERING DATES. The Board or the committee shall have the authority to
determine the terms and conditions of each Offering Period in accordance with
the terms of the Plan. The first day of each Offering Period is referred to as
the "Offering Date." The last day of each Offering Period is hereinafter
referred to as the "Purchase Date." An Offering Period shall begin on the first
day of February of each calendar year and shall end on the last day of July of
the same year. An Offering Period shall also begin on the first day of August of
each calendar year and end on the last day of January of the calendar year
immediately following. The Board of Directors or the committee shall have the
power to change the duration of Offering Periods with respect to future
offerings without stockholder approval if such change is announced to eligible
employees at least fifteen (15) days prior to the scheduled beginning of the
first Offering Period to be affected.
6. PARTICIPATION IN THE PLAN. Eligible employees may become participants
in an Offering Period under the Plan on the first Offering Date after satisfying
the eligibility requirements by delivering a subscription agreement authorizing
payroll deductions to the Company or Subsidiary (whichever employs such
employee) not later than the 15th day of the month before such Offering Date
(unless a later time for filing the subscription agreement is set by the Board
for all eligible Employees with respect to a given Offering Period). The form of
subscription agreement and the person or department to which the subscription
agreement must be submitted for processing shall be determined by the Company.
An eligible employee who does not deliver a subscription agreement by such date
after becoming eligible to participate in such Offering Period under the Plan
shall not participate in that Offering Period or any subsequent Offering Period
unless such employee enrolls in the Plan by filing the subscription agreement
not later than the specified date preceding a subsequent Offering Date. Once an
employee becomes a participant in an Offering Period, such employee will
automatically participate in the Offering Period commencing immediately
following the last day of the prior Offering Period unless the employee
withdraws from the Plan or terminates further participation in the Offering
Period as set forth in Section 11 below. Such participant is not required to
file any additional subscription agreements in order to continue participation
in the Plan. Any participant whose option expires and who has not withdrawn from
the Plan pursuant to Section 11 below will automatically be re-enrolled in the
Plan and granted a new option on the Offering Date of the next Offering Period.
7. GRANT OF OPTION ON ENROLLMENT. An eligible employee who enrolls in the
Plan with respect to an Offering Period pursuant to Section 6 hereof, will
receive a grant of an option (as of the Offering Date) to purchase on the
Purchase Date up to that number of shares of Common Stock of the Company
determined by dividing the amount accumulated in such employee's payroll
deduction account during such Offering Period by a lower of (i) eighty-five
percent (85%) of the fair market value of a share of the Company's Common Stock
on the Offering Date (the "Entry Price") or (ii) eighty-five percent (85%) of
the fair market value of a share of the Company's Common Stock on the Purchase
Date; provided, however, that the number of shares of the Company's Common Stock
subject to any option granted pursuant to this Plan shall not exceed the lesser
of (a) the maximum number of shares set by the Board pursuant to Section 10(c)
below with respect to the applicable Offering Period, or (b) 200% of the number
of shares which could be purchased for the Entry Price with the payroll
deductions authorized by a participant and actually withheld with respect to
such Offering Period. Fair market value of a share of the Company's Common Stock
shall be determined as provided in Section 8 hereof.
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8. PURCHASE PRICE. The purchase price per share at which a share of Common
Stock will be sold in Any Offering Period shall be 85% of the lesser of:
a) the fair market value on the Offering Date; or
b) the fair market value on the Purchase Date.
For purposes of the Plan, the term "fair market value" shall mean the
closing price in U.S. dollars of a share of the Company's Common Stock as
reported on the New York Stock Exchange. However, if the Offering Date or
Purchase Date falls on a non-business day then the fair market value of the
Common Stock shall be the closing sales price on the immediately preceding
business day.
9. PAYMENT OF PURCHASE PRICE; CHANGES IN PAYROLL DEDUCTIONS; ISSUANCE OF
SHARES
a) The funds with which participants may purchase shares shall be
accumulated by regular payroll deductions made during each Offering
Period. The deductions are made as a percentage of the employee's
Compensation in one percent increments of not less than two percent (2%)
nor greater than twelve percent (12%). Compensation shall be limited to
base salary or wages, cash incentive compensation (including bonuses),
and commissions, if any, paid; PROVIDED, HOWEVER, that for purposes of
determining a participant's Compensation, any election by such
participant to reduce his or her regular cash remuneration under Sections
125 or 401(k) of the Code shall be treated as if the participant did not
make such election. The Board of Directors or the committee shall have
the power to interpret and/or alter the definition of "Compensation" with
respect to any or all future Offering Periods. Payroll deductions shall
commence on the first payday following the Offering Date and shall
continue to the end of the Offering Period unless sooner altered or
terminated as provided in the Plan.
b) A participant may lower (but not increase) the rate of payroll
deductions during an Offering Period by filing a new authorization for
payroll deductions, in which case the new rate shall become effective:
for the next payroll period commencing more than 15 days after receipt of
the authorization and shall continue for the remainder of the Offering
Period unless changed as described below. Such change in the rate of
payroll deductions may be made at any time during an Offering Period, but
not more than one change may be made effective during any Offering
Period. A participant may increase or lower the rate of payroll
deductions for any subsequent Offering Period by filing a new
authorization for payroll deductions not later than the 15th day of the
month (or other date specified by the Board of Directors or the
committee) before the beginning of such Offering Period.
c) All payroll deductions made for a participant are credited to his or her
account under the Plan and are deposited with the general funds of the
Company; no interest accrues on the payroll deductions. All payroll
deductions received or held by the Company may be used by the Company for
any corporate purpose, and the Company shall not be obligated to
segregate such payroll deductions.
d) On each Purchase Date, so long as the Plan remains in effect and the
participant remains eligible to participate in the Plan, and provided
that the participant has not submitted a signed and completed withdrawal
form before that date which notifies the Company that the participant
wishes to withdraw from that Offering Period under the Plan and have all
payroll deductions accumulated in the account maintained on behalf of the
participant as of that date returned to the participant, the Company
shall apply the funds then in the participant's account to the purchase
of whole shares of Common Stock reserved under the option granted to such
participant with respect to the Offering Period to the extent that such
option is exercisable on the Purchase Date. The purchase price per share
shall be as specified in Section 8 of the Plan. Any cash remaining in a
participant's account after such purchase of shares by reason of any
limitation on the number of shares that may be purchased under the Plan
as set forth in Section 10 hereof
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which is sufficient to purchase a whole share of the Company's Common
Stock, shall be refunded to such participant in cash; PROVIDED, HOWEVER,
that any amount remaining in such participant's account on a Purchase
Date which is less than the amount necessary to purchase a full share of
Common Stock of the Company shall be carried forward, without interest,
into the next Offering Period. In the event that the Plan has been
oversubscribed, all funds not used to purchase shares on the Purchase
Date shall be returned to the participant. No Common Stock shall be
purchased on a Purchase Date on behalf of any employee whose
participation in the Plan has terminated prior to such Purchase Date.
e) As promptly as practicable after the Purchase Date, the Company shall
arrange the delivery to each participant, as appropriate, of a
certificate representing the shares purchased upon exercise of his or her
option.
f) During a participant's lifetime, such participant's option to purchase
shares hereunder is exercisable only by him or her. In the event of the
participant's death, the rights of such participant's heirs or
beneficiaries shall be determined under Section 12 of the Plan. The
participant will have no interest or voting right in shares covered by
his or her option until such option has been exercised. Shares to be
delivered to a participant under the Plan will be registered in the name
of the participant or in the name of the participant and his or her
spouse.
10. LIMITATIONS ON SHARES TO BE PURCHASED.
a) No employee shall be entitled to purchase stock under the Plan at a rate
which, when aggregated with his or her rights to purchase stock under all
other employee stock purchase plans of the Company or any Subsidiary
which are intended to satisfy the requirements of Section 423 of the
Code, exceeds $25,000 in fair market value, determined as of the Offering
Date (or such other limit as may be imposed by the Code) for each
calendar year in which the employee participates in the Plan.
b) No more than 200% of the number of shares which could be purchased for
the Entry Price with the payroll deductions authorized by a participant
and actually withheld with respect to a given single Offering Period may
be purchased by the participant at the end of such Offering Period.
c) No employee shall be entitled to purchase more than the Maximum Share
Amount (as defined below) on any single Purchase Date. Not less than
thirty days prior to the commencement of any Offering Period, the Board
may, in its sole discretion, set a maximum number of shares which may be
purchased by any employee at any single Purchase Date (hereinafter the
"Maximum Share Amount"). In no event shall the Maximum Share Amount
exceed the amounts permitted under Section 10(b) above. If a new Maximum
Share Amount is set, then all participants must be notified of such
Maximum Share Amount not less than fifteen days prior to the commencement
of the next Offering Period. Once the Maximum Share Amount is set, it
shall continue to apply in respect of all succeeding Purchase Dates and
Offering Periods unless revised by the Board as set forth above.
d) If the number of shares to be purchased on a Purchase Date by all
employees participating in the Plan exceeds the number of shares then
available for issuance under the Plan, the Company will make a pro rata
allocation of the remaining shares in as uniform a manner as shall be
practicable and as the Board shall determine to be equitable. In such
event, the Company shall give written notice of such reduction of the
number of shares to be purchased under a participant's option to each
employee affected thereby.
e) Any payroll deductions accumulated in a participant's account which are
not used to purchase stock due to the limitations in this Section 10
shall be returned to the participant as soon as practicable after the end
of the Offering Period.
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11. WITHDRAWAL.
(a) Each participant may withdraw from an Offering Period under the Plan by
signing and delivering notice on a form provided by the Company for such
purpose. Such withdrawal may be elected at any time prior to the 15th day
of the month in which an Offering Period ends (or other date specified by
the Board or committee).
(b) Upon withdrawal from the Plan, the accumulated payroll deductions shall
be returned to the withdrawn employee and his or her interest in the Plan
shall terminate. In the event an employee voluntarily elects to withdraw
from the Plan, he or she may not resume his or her participation in the
Plan during the same Offering Period, but he or she may participate in
any Offering Period under the Plan which commences on a date subsequent
to such withdrawal by filing a new authorization for payroll deductions
in the same manner as set forth above for initial participation in the
Plan.
12. TERMINATION OF EMPLOYMENT. Termination of a participant's employment
for any reason, including retirement or death or the failure of a participant to
remain an eligible employee, terminates his or her participation in the Plan
immediately. In such event, the payroll deductions credited to the participant's
account will be returned to him or her or, in the case of his or her death, to
his or her legal representative (including a beneficiary designated as permitted
under Section 22). For this purpose, an employee will not be deemed to have
terminated employment or failed to remain in the continuous employ of the
Company in the case of sick leave, military leave, or any other leave of absence
approved by the Board of Directors of the Company; provided that such leave is
for a period of not more than ninety (90) days or reemployment upon the
expiration of such leave is guaranteed by contract or statute.
13. RETURN OF PAYROLL DEDUCTIONS. In the event an employee's interest in
the Plan is terminated by withdrawal, termination of employment or otherwise, or
in the event the Plan is terminated by the Board, the Company shall promptly
deliver to the employee all payroll deductions credited to his account. No
interest shall accrue on the payroll deductions of a participant in the Plan.
14. CAPITAL CHANGES. Subject to any required action by the stockholders of
the Company, the number of shares of Common Stock covered by each option under
the Plan which has not yet been exercised and the number of shares of Common
Stock which have been authorized for issuance under the Plan but have not yet
been placed under option (collectively, the "Reserves"), as well as the price
per share of Common Stock covered by each option under the Plan which has not
yet been exercised, 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 stock dividend (but only on the Common Stock) or any
other increase or decrease in the number of shares of Common Stock effected
without receipt of consideration by the Company; PROVIDED, HOWEVER, that
conversion of any convertible securities of the Company shall not be deemed to
have been "effected without receipt of consideration." Such adjustment shall be
made by the Board, whose determination in that respect shall be final, binding
and conclusive. Except as expressly provided herein, no issue 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, the
Offering Period 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 the options
under the Plan shall terminate as of a date fixed by the Board and give each
participant the right to exercise his or her option as to all of the optioned
stock, including shares which would not otherwise be exercisable. 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 or a parent or
subsidiary of such successor corporation, the Offering Period 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
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such instances, and in lieu of assumption or substitution of the option, provide
that each participant shall have the right to exercise the option as to all of
the optioned stock. If the Board makes an option exercisable in lieu of
assumption or substitution in the event of a merger or sale of assets, the Board
shall notify the participant that the option shall be fully exercisable for a
period of twenty (20) days from the date of such notice (or such other period of
time as the Board shall determine), and the option will terminate upon the
expiration of such period.
The Board may, if it so determines in the exercise of its sole discretion,
also make provision for adjusting the Reserves, as well as the price per share
of Common Stock covered by each outstanding option, in the event that the
Company effects one or more reorganizations, recapitalizations, rights offering,
or other increases or reductions of shares of its outstanding Common Stock, and
in the event of the Company being consolidated with or merged into any other
corporation.
15. NONASSIGNABILITY. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 22 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect.
16. REPORTS. Individual accounts will be maintained for each participant
in the Plan. Each participant shall receive promptly after the end of each
Offering Period a report of his account setting forth the total payroll
deductions accumulated, the number of shares purchased, the per share price
thereof and the remaining cash balance, if any, carried forward to the next
Offering Period or returned to the participant.
17. NOTICE OF DISPOSITION. Each participant shall notify the Company if
the participant disposes of any of the shares purchased in any Offering Period
pursuant to this Plan if such disposition occurs within two years from the
Offering Date or within twelve months from the Purchase Date on which such
shares were purchased (the "Notice Period"). Unless such participant is
disposing of any of such shares during the Notice Period, such participant shall
keep the certificates representing such shares in his or her name (and not in
the name of a nominee) during the Notice Period. The Company may, at any time
during the Notice Period, place a legend or legends on any certificate
representing shares acquired pursuant to the Plan requesting the Company's
transfer agent to notify the Company of any transfer of the shares. The
obligation of the participant to provide such notice shall continue
notwithstanding the placement of such legend on certificates.
18. NO RIGHTS TO CONTINUED EMPLOYMENT. Neither this Plan nor the grant of
any option hereunder shall confer any right on any employee to remain in the
employ of the Company or any Subsidiary or restrict the right of the Company or
any Subsidiary to terminate such employee's employment.
19. EQUAL RIGHTS AND PRIVILEGES. All eligible employees shall have equal
rights and privileges with respect to the Plan so that the Plan qualifies as an
"employee stock purchase plan" within the meaning of Section 423 or any
successor provision of the Code and the related regulations. Any provision of
the Plan which is inconsistent with Section 423 or any successor provision of
the Code shall without further act or amendment by the Company or the Board be
reformed to comply with the requirements of Section 423. This Section 19 shall
take precedence over all other provisions in the Plan.
20. NOTICES. All notices or other communications by a participant to the
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.
21. STOCKHOLDER APPROVAL OF AMENDMENTS. Any required approval of the
stockholders of the Company shall be solicited substantially in accordance with
Section 14(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations promulgated thereunder. Such approval of an
amendment shall be solicited at or prior to the first annual meeting of
stockholders held subsequent to the grant to an officer or director of the
Company of an option under the Plan as then
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amended. If such stockholder approval is obtained at a duly held stockholders'
meeting, it must be obtained by the affirmative vote of the holders of a
majority of the outstanding shares of the Company, or if such stockholder
approval is obtained by written consent, it must be obtained by a majority of
the outstanding shares of the Company; PROVIDED, HOWEVER, that approval at a
meeting or by written consent may be obtained by a lesser degree of stockholder
approval if the Board determines, in its discretion after consultation with the
Company's legal counsel, that such lesser degree of stockholder approval will
comply with all applicable laws and will not adversely affect the qualification
of the Plan under Section 423 of the Code or Rule 16b-3 promulgated under the
Exchange Act ("Rule 16b-3").
22. DESIGNATION OF BENEFICIARY.
a) A participant may file a written designation of a beneficiary who is to
receive any shares and cash, if any, from the participant's account under
the Plan in the event of such participant's death subsequent to the end
of an Offering Period but prior to delivery to him of such shares and
cash. In addition, a participant may file a written designation of a
beneficiary who is to receive any cash from the participant's account
under the Plan in the event of such participant's death prior to a
Purchase Date.
b) Such designation of beneficiary may be changed by the participant at any
time by written notice. In the event of the death of a participant and in
the absence of a beneficiary validly designated under the Plan who is
living at the time of such participant's death, the Company shall deliver
such shares or cash to the executor or administrator of the estate of the
participant, or if no such executor or administrator has been appointed
(to the knowledge of the Company), the Company, in its discretion, may
deliver such shares or cash to the spouse or to any one or more
dependents or relatives of the participant, or if no spouse, dependent or
relative is known to the Company, then to such other person as the
Company may designate.
23. CONDITIONS UPON ISSUANCE OF SHARES; LIMITATIONS ON SALE OF
SHARES. Shares shall not be issued with respect to an option unless the
exercise of such option and the issuance and delivery of such shares pursuant
thereto shall comply with all applicable provisions of law, domestic or foreign,
including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, 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.
24. APPLICABLE LAW. The Plan shall be governed by the substantive laws
(excluding the conflict of laws rules) of the State of Delaware.
25. AMENDMENT OR TERMINATION OF THE PLAN. This Plan shall be effective
July 1, 1990, and shall continue until the earlier to occur of termination by
the Board or issuance of all of the shares of Common Stock reserved for issuance
under the Plan. The Board of Directors of the Company may at any time amend or
terminate the Plan, except that any such termination cannot affect options
previously granted under the Plan, nor may any amendment make any change in an
option previously granted which would adversely affect the right of any
participant, nor may any amendment be made without approval of the stockholders
of the Company obtained in accordance with Section 21 hereof within 12 months of
the adoption of such amendment (or earlier if required by Section 21) if such
amendment would constitute an amendment for which stockholder approval is
required in order to comply with Rule 16b-3 (or any successor rule) of the
Exchange Act or Nasdaq or any securities exchange listing requirements.
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