<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
<TABLE>
<S> <C>
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-12
MENTOR GRAPHICS CORPORATION
-----------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
----------------------------------------------------------
(2) Aggregate number of securities to which transaction
applies:
----------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
----------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------
</TABLE>
<PAGE>
[LOGO]
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders of
Mentor Graphics Corporation to be held in Wilsonville, Oregon, on Tuesday,
November 7, 2000. The attached Notice of Special Meeting and Proxy Statement
describe the matters to be acted upon. I urge you to review them carefully.
Please note that the only item on the agenda for this meeting will be voting
on the amendments to the Company's 1989 Employee Stock Purchase Plan described
in more detail elsewhere in the accompanying Proxy Statement. Other than matters
directly relating to this proposal, management will be making no presentations
at the special meeting. We anticipate the meeting will take no longer than ten
minutes. If you decide to attend this special meeting and vote in person, you
will of course have that opportunity.
YOUR VOTE IS IMPORTANT. Whether or not you personally plan to attend,
please take a few minutes now to sign, date and return your proxy in the
enclosed postage-paid envelope. Regardless of the number of Mentor Graphics
shares you own, your presence by proxy is important to establish a quorum and
your vote is important.
Thank you for your continued interest in Mentor Graphics Corporation.
Sincerely,
[SIG]
Walden C. Rhines
PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>
MENTOR GRAPHICS CORPORATION
----------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
NOVEMBER 7, 2000
------------------------
To the Shareholders of Mentor Graphics Corporation:
A Special Meeting of Shareholders of Mentor Graphics Corporation, an Oregon
corporation, will be held on Tuesday, November 7, 2000 at 10:00 a.m., Pacific
Time, at the Company's offices at 8005 S.W. Boeckman Road, Wilsonville, Oregon
97070-7777 ("Special Meeting") for the following purposes, as more fully
described in the accompanying Proxy Statement:
1. To amend the Company's 1989 Employee Stock Purchase Plan to restructure the
plan to provide for overlapping two-year offerings starting every six months
with purchases every six months during those offerings, to increase the
number of shares reserved for issuance under the plan and to make certain
other changes.
2. To transact any other business that may properly come before the meeting or
any adjournment of the meeting.
The above items of business are more fully described in the Proxy Statement
accompanying this Notice.
Only shareholders of record at the close of business on September 25, 2000
are entitled to notice of and to vote at the Special Meeting.
Sincerely,
[SIG]
Dean Freed
VICE PRESIDENT, GENERAL COUNSEL AND
SECRETARY
Wilsonville, Oregon
October 5, 2000
THE COMPANY CORDIALLY INVITES ALL SHAREHOLDERS TO ATTEND THE MEETING IN
PERSON. HOWEVER, TO ENSURE YOUR REPRESENTATION AT THE MEETING, WE URGE YOU TO
VOTE, DATE, SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
<PAGE>
MAILED TO SHAREHOLDERS ON
OR ABOUT OCTOBER 5, 2000
MENTOR GRAPHICS CORPORATION
8005 S.W. BOECKMAN ROAD
WILSONVILLE, OREGON 97070-7777
------------------------
PROXY STATEMENT
---------------------
Mentor Graphics Corporation (Mentor Graphics or Company) is soliciting the
enclosed proxy for use at a Special Meeting of Shareholders to be held Tuesday,
November 7, 2000, at 10:00 a.m., Pacific Time, or at any adjournment of that
meeting ("Special Meeting"). The Company will hold the Special Meeting at 8005
S.W. Boeckman Road, Wilsonville, Oregon 97070-7777.
Mentor Graphics will bear the cost of this solicitation. The Company has
retained MacKenzie Partners, Inc. to assist in soliciting proxies from brokers
and nominees for the Special Meeting at an estimated cost of $6,500 plus
out-of-pocket expenses. In addition, Mentor Graphics may reimburse brokerage
houses and other persons representing beneficial owners of shares for their
expenses in forwarding solicitation material. The Company will furnish copies of
solicitation material to such brokerage houses and other representatives. The
Company will solicit proxies by use of the mails, and officers and employees of
the Company may, without additional compensation, also solicit proxies by
telephone or personal contact.
The mailing address of the Company's principal executive offices is 8005
S.W. Boeckman Road, Wilsonville, Oregon 97070-7777 and its telephone number is
(503) 685-7000.
PROCEDURAL MATTERS
Shareholders of record at the close of business on September 25, 2000 are
entitled to notice of and to vote at the meeting. At the record date,
shares of Mentor Graphics Common Stock were issued and
outstanding. Each share of Common Stock outstanding on the record date is
entitled to one vote per share at the Special Meeting. For information regarding
holders of 5% or more of the outstanding Common Stock, see "Information
Regarding Beneficial Ownership of Principal Shareholders, Directors and
Management."
Shareholders may revoke any proxy given pursuant to this solicitation by
delivering to the Corporate Secretary a written notice of revocation or a duly
executed proxy bearing a later date or by attending the meeting and voting in
person. The designated proxy holders will vote all valid, unrevoked proxies at
the Special Meeting in accordance with the instructions given.
APPROVAL OF AMENDMENTS TO 1989 PLAN
(PROPOSAL NO. 1)
Mentor Graphics' 1989 Employee Stock Purchase Plan (1989 Plan) was adopted
by the Board of Directors and shareholders in 1989. The 1989 Plan is intended to
qualify as an "employee stock purchase plan" under Section 423 of the Internal
Revenue Code. The 1989 Plan permits all regular employees of the Company to
acquire Common Stock through regular payroll deductions of up to 10% of an
employee's salary. An aggregate of 8,400,000 shares of Common Stock has been
reserved for issuance under the 1989 Plan. As of September 1, 2000, shares
of Common Stock were available for purchase under the 1989 Plan.
<PAGE>
AMENDMENTS
The Board of Directors believes that the 1989 Plan has promoted the
interests of the Company and its shareholders by encouraging employees to become
shareholders and therefore promote the Company's growth and success. The Board
also believes that the 1989 Plan is an important factor in the Company's
continuing ability to offer a competitive benefit package to existing and
prospective employees of the Company.
Although the 1989 Plan is written to provide flexibility in establishing
offering periods and pricing for offerings to employees, the Company's
consistent practice since inception of the 1989 Plan has been to make quarterly
offerings with the purchase price equal to the lower of 85% of the market price
of the Company's stock on the first day of the offering or the last day of the
offering. The Board of Directors believes that it is desirable and in the best
interests of the Company and its shareholders to provide employees with an
improved and more competitive benefit under the 1989 Plan. Accordingly, at a
meeting held on August 8, 2000, the Board of Directors adopted amendments to the
1989 Plan, subject to shareholder approval, to restructure the 1989 Plan, as
described in more detail below, effective as of January 1, 2001 to provide for
overlapping two-year offerings starting every six months with purchases every
six months during those offerings. The Board of Directors also approved, subject
to shareholder approval, amendments (a) to reserve an additional 2,000,000
shares of Common Stock for issuance under the 1989 Plan, (b) to eliminate a
three-month waiting period for new employee eligibility to participate in the
1989 Plan, and (c) to require shareholder approval in the future only of plan
amendments that would increase the shares available for issuance or decrease the
purchase price for shares issued under the 1989 Plan. A copy of the 1989 Plan,
as proposed to be amended, is attached to this Proxy Statement as Exhibit A.
DESCRIPTION OF THE 1989 PLAN
The essential features of the 1989 Plan are outlined below.
ELIGIBILITY
Except as described below, all regular employees of the Company and
designated subsidiaries, including employees who are officers or directors, are
eligible to participate in the 1989 Plan. Any employee who owns or would be
deemed to own 5 percent or more of the voting power or value of all classes of
stock of the Company is ineligible to participate in the 1989 Plan.
Approximately employees are eligible to participate in the 1989 Plan.
OPTION GRANT AND PURCHASE OF SHARES
Under the 1989 Plan as it has previously existed, options may be granted at
any time by the Compensation Committee to all eligible employees to purchase
shares of the Company's Common Stock. The options are effectively granted on a
day specified by the Committee (Grant Date) and are exercisable on another day
specified by the Committee (Exercise Date), provided that the Exercise Date
cannot be more than 27 months after the Grant Date. The Company's practice under
the 1989 Plan has been to grant options on a quarterly basis with the Grant Date
as the first day of the quarter and the Exercise Date as the last day of the
quarter or the first day of the following quarter. Under the proposed
amendments, the Plan will be changed to provide for overlapping two-year
offerings (Offerings) with a new Offering commencing on January 1 and July 1 of
each year, beginning with January 1, 2001. The first day of each Offering will
be the "Offering Date" for that Offering. Each Offering will be divided into
four six-month purchase periods (Purchase Periods). The last day of each
Purchase Period during an Offering will be a "Purchase Date" for that Offering.
Under the proposed amendments, each eligible employee will be granted an
option on each Offering Date. Options may not permit the purchase of more than
1,600 shares per employee per Purchase Date (increased from 800 shares per
employee per grant under the proposed amendments)
2
<PAGE>
and no option may permit an employee's right to purchase shares under the 1989
Plan to accrue at a rate that exceeds $25,000 of fair market value (determined
at the Offering Date) for each calendar year the option is outstanding. Each
eligible employee may elect to participate in the 1989 Plan by filing a
subscription and payroll deduction authorization. Shares may be purchased under
the 1989 Plan only through payroll deductions of not more than 10% of an
employee's compensation. On each Purchase Date the amounts withheld will be
applied to purchase shares for the employee from the Company at a purchase price
equal to the lesser of 85 percent of the fair market value of the Common Stock
on the Offering Date or on the Purchase Date. If the fair market value of the
Common Stock on any Purchase Date of an Offering is less than it was on the
Offering Date for such Offering, then after the purchase every participant in
that Offering shall automatically be withdrawn from such Offering and re-
enrolled in the new Offering commencing on such Purchase Date.
An employee may terminate participation in the 1989 Plan by written notice
to the Company at least 10 days before the Purchase Date. The employee will then
receive all funds withheld from his or her pay and not yet used to purchase
shares. An employee may not reinstate participation in the 1989 Plan, with
respect to a particular Offering but may participate in subsequent Offerings.
The rights of employees under the 1989 Plan are not transferable.
ADMINISTRATION
The 1989 Plan is administered by the Compensation Committee. The
Compensation Committee may promulgate rules and regulations for the operation of
the 1989 Plan, adopt forms for use in connection with the plan, decide any
question of interpretation of the plan or rights arising thereunder and
generally supervise the administration of the plan. The Company will pay all
expenses of the 1989 Plan.
CUSTODIAN
Under the proposed amendments, independent custodians (each a "Custodian")
will maintain the records and employees' cash accounts under the 1989 Plan.
Shares purchased by employees under the 1989 Plan are delivered to and held by
the Custodians on behalf of the employees. By appropriate instructions from an
employee, all or part of the shares may be sold at the market price at the time
the order is executed. Also by appropriate instructions the employee may
transfer all or part of the shares held by a Custodian for the employee's
account to the employee or to a regular individual brokerage account in the
employee's own name; provided, however, that such transfers may not be made
until two years after the Offering Date or one year after the Purchase Date of
such shares.
AMENDMENTS
The Board of Directors may amend the 1989 Plan, except that without the
approval of the shareholders of the Company, the plan may not be amended to
increase the number of shares reserved for the plan, extend the term of the
plan, decrease the purchase price, materially increase benefits or materially
modify eligibility requirements. Under the proposed amendments, shareholder
approval will only be required for amendments that increase the number of shares
reserved for the plan or decrease the purchase price. The Board of Directors may
terminate the 1989 Plan at any time, except that termination will not affect
outstanding options.
TAX CONSEQUENCES
The 1989 Plan is intended to be treated as a stock option arrangement for
tax purposes and is intended to qualify as an "Employee Stock Purchase Plan"
within the meaning of Section 423 of the Internal Revenue Code. Under the
Internal Revenue Code, employees are not taxed on income or gain with respect to
the 1989 Plan either at the Offering Date or at the Purchase Date. If an
employee disposes of the shares purchased under the 1989 Plan more than two
years after the Offering Date and
3
<PAGE>
more than one year after the Purchase Date, the employee will be required to
report as ordinary compensation income for the taxable year of disposition an
amount equal to the lesser of (1) the excess of the fair market value of the
shares at the time of disposition over the purchase price or (2) the excess of
the fair market value of the shares on the Offering Date over the option price
(determined as if the option had been exercised on the Offering Date). Any gain
on the disposition in excess of the amount treated as ordinary compensation
income will be capital gain. In the case of such a disposition, the Company will
not be entitled to any deduction from income.
If an employee disposes of shares purchased under the 1989 Plan within two
years after the Offering Date or within one year after the Purchase Date, the
employee will be required to report the excess of the fair market value of the
shares on the Purchase Date over the purchase price as ordinary compensation
income for the year of disposition. Any difference between the fair market value
of the shares on the Purchase Date and the disposition price will be capital
gain or loss, either short-term or long-term depending upon the employee's
holding period for the shares. In the event of a disposition within either of
such periods, the Company will be entitled to a deduction from income in the
year of such disposition equal to the amount that the employee is required to
report as ordinary compensation income.
PURCHASES UNDER THE 1989 PLAN
The following table indicates shares purchased under the 1989 Plan during
the last fiscal year by the Named Executive Officers, by all executive officers
as a group and by all employees (excluding executive officers) as a group:
<TABLE>
<CAPTION>
SHARES PURCHASED IN 1999
----------------------------------
NAME DOLLAR VALUE(1) NUMBER OF SHARES
---- --------------- ----------------
<S> <C> <C>
Walden C. Rhines
Gregory K. Hinckley
Anne M. Wagner Sanquini
Walter H. Potts
Donald B. Guiou(2)
G.M. "Ken" Bado(3)
All Executive Officers ( persons)
All Employees, excluding Executive Officers
</TABLE>
------------------------
(1) "Dollar Value" equals the difference between the price paid for shares
purchased under the 1989 Plan and the fair market value of the shares on the
Exercise Date.
(2) Mr. Guiou ceased employment with the Company on March 31, 2000.
(3) Mr. Bado ceased employment with the Company on November 8, 1999.
VOTE REQUIRED
Adoption of Proposal No. 1 will require that the votes cast in favor of
Proposal No. 1 at the Special Meeting exceed the votes cast against Proposal
No. 1. Accordingly, abstentions and broker non-votes will have no effect on the
results of the vote. All valid proxies will be voted FOR Proposal No. 1 unless a
contrary choice is indicated.
THE BOARD HAS UNANIMOUSLY APPROVED PROPOSAL NO. 1. MANAGEMENT AND THE BOARD
RECOMMEND ITS APPROVAL BY THE SHAREHOLDERS.
4
<PAGE>
INFORMATION REGARDING BENEFICIAL OWNERSHIP
OF PRINCIPAL SHAREHOLDERS, DIRECTORS AND MANAGEMENT
The following table shows beneficial ownership of the Company's Common Stock
as of August 31, 2000 by the only shareholders known by the Company to
beneficially own 5% or more of the Common Stock, by each director of the
Company, by each executive officer named in the Summary Compensation Table and
by all directors and executive officers as a group:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) PERCENT
------------------------------------ ----------------------- --------
<S> <C> <C>
State of Wisconsin Investment Board......................... 8,975,000(2) 13.98
121 East Wilson Street
Madison, WI 53707
Private Capital Management, Inc............................. 6,896,282(3) 10.7
3003 Tamiami Trail North
Naples, FL 34103
Merrill Lynch Asset Management.............................. 3,289,350(4) 5.12
800 Scudders Mill Road
Plainsboro, NJ 08536
</TABLE>
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME OF DIRECTOR OR EXECUTIVE OFFICER BENEFICIAL OWNERSHIP PERCENT
------------------------------------- -------------------- --------
<S> <C> <C>
Walden C. Rhines............................................
Marsha B. Congdon........................................... *
James R. Fiebiger........................................... *
David A. Hodges............................................. *
Fontaine K. Richardson...................................... *
Kevin C. McDonough..........................................
Gregory K. Hinckley......................................... *
Anne M. Wagner Sanquini..................................... *
Walter H. Potts.............................................
Donald B. Guiou.............................................
G.M. "Ken" Bado.............................................
All directors and executive officers as a group (10
persons)..................................................
</TABLE>
------------------------
* Less than 1%
(1) Except as otherwise noted, the persons listed in the table have sole voting
and dispositive power with respect to the common stock owned by them.
(2) Information provided as of December 31, 1999 in a Schedule 13G filed by the
shareholder.
(3) Information provided as of December 31, 1999 in a Schedule 13G filed by the
shareholder. Includes shares beneficially owned by Bruce S. Sherman,
President of the Shareholder. Shareholder and Mr. Sherman reported shared
dispositive power by Mr. Sherman and Shareholder over 6,896,282 shares.
(4) Information provided as of December 31, 1999 in a Schedule 13G filed by the
shareholder. The shareholder reported shared voting and dispositive power
over 3,289,350 shares.
5
<PAGE>
INFORMATION REGARDING EXECUTIVE OFFICER AND DIRECTOR COMPENSATION
SUMMARY COMPENSATION TABLE
The following table shows compensation paid by the Company for the last
three fiscal years to the Chief Executive Officer and the four other most highly
compensated executive officers who were serving as executive officers at
December 31, 1999 and one other highly compensated executive officer who ceased
employment prior to December 31, 1999 (Named Executive Officers).
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION AWARDS
-------------------
SECURITIES
ANNUAL COMPENSATION UNDERLYING
--------------------------------- OPTIONS/ ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) SARS(#) COMPENSATION($)(1)
--------------------------- -------- ---------- --------- ------------------- ------------------
<S> <C> <C> <C> <C> <C>
Walden C. Rhines................ 1999 480,000 661,323 240,000 4,800
President and Chief 1998 443,750 394,494 180,000 4,800
Executive Officer 1997 424,999 157,950(2) 250,000 4,750
Gregory K. Hinckley............. 1999 362,750 428,382 132,500 4,800
Executive Vice President, 1998 333,250 253,937 180,000 4,800
Chief Operating Officer and 1997 296,090 0 250,000 3,717
Chief Financial Officer
Anne M. Wagner Sanquini......... 1999 237,215 128,197 35,000 4,800
Vice President and 1998 132,417 84,085 75,000 175,902(4)
General Manager, HDL Design 1997 -- -- -- --
Division(3)
Walter H. Potts................. 1999 203,686 125,000 90,000 107,597(6)
Vice President and 1998 -- -- -- --
General Manager, Board 1997 -- -- -- --
Systems Division(5)
Donald B. Guiou................. 1999 167,200 153,625 25,000 4,800
Vice President and General 1998 157,500 85,688 20,000 4,800
Manager, S/MI Division(7) 1997 146,250 25,357 30,000 4,613
G.M. "Ken" Bado................. 1999 230,076 343,425 35,000 4,800
Former Senior Vice President, 1998 243,441 217,970 45,000 4,800
World Trade(8) 1997 229,999 0 0 4,750
</TABLE>
------------------------
(1) Amounts shown are Company contributions to the Individual Deferred Tax and
Savings Plan pursuant to which the Company's U.S. employees may defer
compensation under Section 401(k) of the Internal Revenue Code. The Company
contributes an amount equal to 50% of the first 6% of salary contributed
under the plan by an eligible employee.
(2) The 1997 bonus paid to Dr. Rhines represents an amount earned under the
Special Incentive Bonus Plan for the Company's 1995 performance that did not
vest until December 31, 1997 and was paid in 1998.
(3) Ms. Wagner became an executive officer of the Company in June 1998.
(4) Amount shown is a one-time hiring and relocation bonus of $175,902.
(5) Mr. Potts became an executive officer of the Company in November 1999.
(6) Amount represents the Company's contribution to Mr. Potts' Individual
Deferred Tax and Savings Plan of $3,264 and a one-time hiring bonus of
$104,333.
(7) Mr. Guiou ceased employment with the Company on March 31, 2000.
(8) Mr. Bado ceased employment with the Company on November 8, 1999.
6
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on option grants for the last
fiscal year to the Named Executive Officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
---------------------------------------- VALUE AT ASSUMED
# OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION FOR
UNDERLYING VESTING GRANTED TO EXERCISE OR OPTION TERM(2)
OPTIONS REFERENCE EMPLOYEES IN BASE PRICE EXPIRATION -----------------------
NAME GRANTED(1) DATE FISCAL YEAR ($/SHARE) DATE 5%($) 10%($)
---- ---------- --------- ------------ ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Walden C. Rhines.......... 160,000(3) 03/17/99 3.28 12.5625 02/28/09 1,256,647 3,180,331
49,612 11/01/99 1.02 8.0625 11/01/09 251,556 637,492
30,388(3) 11/01/99 .62 8.0625 11/01/09 154,081 390,472
Gregory K. Hinckley....... 80,000(3) 03/17/99 1.64 12.5625 02/28/09 628,323 1,590,165
49,612 11/01/99 1.02 8.0625 11/01/09 251,556 637,492
2,888(3) 11/01/99 .06 8.0625 11/01/09 14,644 37,110
Anne M. Wagner Sanquini... 20,000 3/17/99 41 12.5625 02/28/09 157,081 397,541
15,000 11/01/99 .31 8.0625 11/01/09 76,057 192,743
Walter H. Potts........... 75,000 05/11/99 1.54 12.8750 04/30/09 604,965 1,531,774
15,000 8.0625 11/01/09 76,057 192,743
Donald B. Guiou........... 10,000 03/17/99 .21 12.5625 02/28/09 78,540 198,771
15,000 11/01/99 .31 8.0625 11/01/09 76,057 192,743
G.M. "Ken" Bado........... 35,000 03/17/99 .72 12.5625 02/28/09 274,891 695,697
</TABLE>
------------------------
(1) Each option is fully exercisable four years after the Vesting Reference Date
with 25% becoming exercisable on each of the first four anniversaries of
that date. All options become fully exercisable upon a "change in control"
of the Company as defined in the 1982 Stock Option Plan. Unless otherwise
determined by the Compensation Committee before the occurrence of the event,
a "change of control" generally includes the following events: the
acquisition by any person of 20% or more of the Company's Common Stock, the
nomination (and subsequent election) of a majority of the Company's
directors by persons other than the incumbent directors and the approval by
the Company's shareholders of a merger, share exchange, sale of
substantially all of the Company's assets or plan of liquidation.
(2) The 5% and 10% assumed rates of appreciation are required by the Securities
and Exchange Commission and do not represent the Company's estimate or
projection of the future Common Stock price.
(3) All nonqualified options granted to Dr. Rhines and Mr. Hinckley are
transferable by gift to certain of their family members.
7
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table provides information on option exercises for the last
fiscal year by the Named Executive Officers and the value of such officers'
unexercised options as of December 31, 1999.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FY-END (#) AT FY-END ($)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Walden C. Rhines........ 0 0 879,998 690,002 2,422,177 2,539,073
Gregory K. Hinckley..... 0 0 170,000 392,500 522,813 1,081,406
Anne M. Wagner
Sanquini.............. 0 0 18,750 91,250 103,125 392,188
Walter H. Potts......... 0 0 0 90,000 0 83,438
Donald B. Guiou......... 0 0 27,589 59,411 115,843 205,658
G.M. "Ken" Bado......... 0 0 158,349 24,167 839,617 70,314
</TABLE>
EXECUTIVE SEVERANCE AGREEMENTS
The Board of Directors has approved the Company's entry into severance
agreements with certain employees of the Company, including certain current
executive officers. These agreements generally provide for the payment, upon the
termination of the employee's employment by the Company without cause or by the
employee for "good reason" (as defined in the severance agreement) within in
some cases one year, and in other cases two years, following a change of control
of the Company, of an amount equal to either 1.5 or two times the sum of the
employee's annual salary and target bonus, and also provide for accelerated
vesting of all options and either eighteen-month or two-year continuation of
various employee benefits including life, disability and health insurance
benefits and relocation and outplacement benefits. Payments to the employee are
capped as necessary to prevent any portion of the payments from being subject to
the excise tax on "parachute payments" but only if the effect would be to
increase the employee's after-tax net benefit.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company are paid an annual fee of
$20,000 and are reimbursed for expenses incurred in attending Board and Board
committee meetings. Any Non-Employee Director who also serves as Chairman of the
Board is paid an additional annual fee of $10,000.
1987 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
The 1987 Non-Employee Directors' Stock Option Plan (1987 Plan) was adopted
in 1987 and amended in 1994 by the Board of Directors and the shareholders. An
aggregate of 1,100,000 shares of Common Stock has been reserved for issuance
under the 1987 Plan. On the date of each Annual Meeting of shareholders, each
Non-Employee Director elected is automatically granted an option to purchase
10,000 shares of Common Stock and any Non-Employee Director elected Chairman of
the Board is automatically granted an additional option to purchase 2,500
shares. Options under the 1987 Plan are granted at exercise prices equal to the
fair market value of the Common Stock on the grant date. On the date of the 1999
Annual Meeting, Directors Congdon, Fiebiger, Hodges and Richardson were
automatically granted an option for 10,000 shares each at an exercise price of
$12.875. Upon his initial election to the Board in November 1999, Mr. McDonough
was granted an option to purchase 30,000 shares at an exercise price of $8.625
per share. All options have a ten year term from the date of grant and are
exercisable for 20 percent of the number of shares covered by the option at the
end of each of the first five years following grant. The 1987 Plan is
administered by the Compensation Committee. No director exercised options in
1999.
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DISCRETIONARY AUTHORITY
While the Notice of Special Meeting of Shareholders provides for transaction
of such other business as may properly come before the meeting, the Board of
Directors has no knowledge of any matters to be presented at the meeting other
than those referred to in this Proxy Statement. However, the enclosed proxy
gives discretionary authority in the event any other matters should be
presented.
SHAREHOLDER PROPOSALS
The Company's bylaws require shareholders to give the Company advance notice
of any proposal or director nomination to be submitted at any meeting of
shareholders. The bylaws prescribe the information to be contained in any such
notice. For any shareholder proposal or nomination to be considered at the 2001
Annual Meeting of Shareholders, the shareholder's notice must be received at the
Company's principal executive office no later than February 10, 2001. In
addition, SEC rules require that any shareholder proposal to be considered for
inclusion in the Company's proxy statement for the 2001 Annual Meeting of
Shareholders must be received at the Company's principal executive office no
later than December 4, 2000.
By Order of the Board of Directors
[LOGO]
Dean Freed
VICE PRESIDENT, GENERAL COUNSEL
AND SECRETARY
October 5, 2000
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EXHIBIT A
MENTOR GRAPHICS CORPORATION
1989 EMPLOYEE STOCK PURCHASE PLAN*
1. PURPOSE OF THE PLAN. Mentor Graphics Corporation (Company) believes
that ownership of shares of its common stock by its employees, and by the
employees of any participating subsidiary (hereinafter defined), is desirable as
an incentive to better performance and improvement of profits, and as a means by
which employees may share in the Company's growth and success. The purpose of
the Company's 1989 Employee Stock Purchase Plan (Plan) is to provide a
convenient means by which employees of the Company and subsidiaries may purchase
the Company's shares and a method by which the Company may assist and encourage
employees to become shareholders.
2. SHARES RESERVED FOR THE PLAN. There are 10,400,000 [8,400,000] shares
of the Company's authorized but unissued or reacquired Common Stock, no par
value (Common Stock), reserved for the Plan. The number of shares reserved is
subject to adjustment in the event of stock dividends, stock splits,
combinations of shares, recapitalizations or other changes in the outstanding
Common Stock. The determination of whether an adjustment shall be made and the
manner of any adjustment shall be made by a compensation committee (Committee)
appointed by the Board of Directors of the Company without any further approval
from the shareholders, which determination shall be conclusive.
3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the
Committee. The Committee may promulgate rules and regulations for the operation
of the Plan, adopt forms for use in connection with the Plan, and decide any
question of interpretation of the Plan or rights arising thereunder. All
determinations and decisions of the Committee shall be conclusive.
4. ELIGIBLE EMPLOYEES. Except as provided below, all regular employees of
the Company and all regular employees of each of the Company's subsidiary
corporations that is designated by the Committee as a participant in the Plan
(Participating Subsidiary) are eligible to participate in the Plan. Any employee
who would after an offering pursuant to the Plan own or be deemed (under section
424(d) of the Internal Revenue Code of 1986, as amended (IRC)) to own stock
(including stock that may be purchased under any outstanding options) possessing
5 percent or more of the total combined voting power or value of all classes of
stock of the Company or, if applicable, its parent or subsidiaries, shall be
ineligible to participate in the Plan. A regular employee is one [WHO HAS BEEN
EMPLOYED BY THE COMPANY OR ANY OF ITS SUBSIDIARIES FOR AT LEAST THREE MONTHS
AND] who is in the active service of the Company or any PARTICIPATING SUBSIDIARY
[SUBSIDIARY CORPORATION OF THE COMPANY] on the APPLICABLE SUBSCRIPTION DEADLINE
(AS DEFINED BELOW) [DATE AN OFFERING IS MADE UNDER THE PLAN], excluding,
however, any employee whose customary employment is 20 or fewer hours per week
or whose customary employment is for not more than five months per calendar
year.
5. OFFERINGS. [PARTICIPATION IN THE PLAN. FROM TIME TO TIME, UNTIL THE
SUPPLY OF SHARES RESERVED UNDER SECTION 2 OF THE PLAN IS EXHAUSTED, THE
COMMITTEE MAY GRANT OPTIONS UNDER THE PLAN TO ALL, BUT NOT LESS THAN ALL,
ELIGIBLE EMPLOYEES (OPTIONEES). EACH OPTION SHALL GIVE THE OPTIONEE THE RIGHT TO
PURCHASE UP TO 800 SHARES OF COMMON STOCK AND SHALL BE EFFECTIVELY GRANTED ON
THE DAY SPECIFIED BY THE COMMITTEE (DATE OF GRANT) AND SHALL BE EXERCISABLE ON
THE DAY SPECIFIED BY THE COMMITTEE (EXERCISE DATE); PROVIDED, HOWEVER, THAT NO
OPTION SHALL BE EXERCISABLE AFTER THE EXPIRATION OF 27 MONTHS FROM THE DATE OF
GRANT.]
(A) OFFERINGS AND PURCHASE PERIODS. THE PLAN SHALL BE IMPLEMENTED BY A
SERIES OF OVERLAPPING TWO-YEAR OFFERINGS (OFFERINGS) WITH A NEW OFFERING
COMMENCING ON JANUARY 1 AND JULY 1 OF EACH YEAR BEGINNING WITH JANUARY 1,
2001. ACCORDINGLY, UP TO FOUR SEPARATE OFFERINGS MAY BE IN PROCESS AT ANY
TIME, BUT AN EMPLOYEE MAY ONLY PARTICIPATE IN ONE OFFERING AT A TIME. THE
FIRST DAY OF EACH OFFERING IS THE "OFFERING DATE" FOR THAT OFFERING AND EACH
OFFERING SHALL
------------------------
* BOLD AND UNDERLINED matter is new; matter in [BRACKETS AND ITALICS] is
proposed to be deleted.
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END ON THE SECOND ANNIVERSARY OF ITS OFFERING DATE. EACH OFFERING SHALL BE
DIVIDED INTO FOUR SIX-MONTH PURCHASE PERIODS (PURCHASE PERIODS), ONE OF
WHICH SHALL END ON EACH JANUARY 1 AND JULY 1 DURING THE TERM OF THE
OFFERING. THE LAST DAY OF EACH PURCHASE PERIOD IS A "PURCHASE DATE" FOR THE
APPLICABLE OFFERING.
(b) GRANTS; LIMITATIONS. ON EACH OFFERING DATE, EACH ELIGIBLE EMPLOYEE
(OPTIONEE) SHALL BE GRANTED AN OPTION UNDER THE PLAN TO PURCHASE SHARES OF
COMMON STOCK ON THE PURCHASE DATES FOR THE OFFERING FOR THE PRICE DETERMINED
UNDER PARAGRAPH 8 OF THE PLAN EXCLUSIVELY THROUGH PAYROLL DEDUCTIONS
AUTHORIZED UNDER PARAGRAPH 6 OF THE PLAN; PROVIDED, HOWEVER, THAT (A) NO
OPTION SHALL PERMIT THE PURCHASE OF MORE THAN 1,600 SHARES ON ANY PURCHASE
DATE, AND (B) no option may be granted pursuant to the Plan that would allow
an Optionee's right to purchase shares under all stock purchase plans of the
Company and its parent and subsidiaries to which IRC Section 423 applies to
accrue at a rate that exceeds $25,000 of fair market value of shares
(determined at the date of grant) for each calendar year in which such
option is outstanding. For this purpose, the right to purchase shares
pursuant to a subscription accrues on the PURCHASE DATE [EXERCISE DATE].
6. PARTICIPATION IN THE PLAN. Optionees may participate in AN OFFERING
UNDER the Plan [WITH RESPECT TO ALL OR A PORTION OF THE SHARES COVERED BY THE
OPTION] by filing with the Company, on forms supplied by the Company, a
subscription and a payroll deduction authorization. THE SUBSCRIPTION AND PAYROLL
DEDUCTION AUTHORIZATION MUST BE FILED NO LATER THAN 10 DAYS PRIOR TO THE
OFFERING DATE (SUBSCRIPTION DEADLINE). ONCE FILED, A SUBSCRIPTION AND PAYROLL
DEDUCTION AUTHORIZATION SHALL REMAIN IN EFFECT UNLESS AMENDED OR TERMINATED, AND
UPON THE EXPIRATION OF AN OFFERING THE PARTICIPANTS IN THAT OFFERING WILL BE
AUTOMATICALLY ENROLLED IN THE NEW OFFERING STARTING THE SAME DAY. The payroll
deduction authorization will authorize the employing corporation to deduct a
specific amount from each of the Optionee's regular PAYCHECKS DURING THE
OFFERING OTHER THAN A PAYCHECK ISSUED ON THE OFFERING DATE [BEGINNING WITH THE
FIRST PAYCHECK FOLLOWING THE FILING OF THE PAYROLL DEDUCTION AUTHORIZATION AND
CONTINUING FOR SO LONG AS THE COMMITTEE CONTINUES TO GRANT NEW OPTIONS EFFECTIVE
PRIOR TO OR WITHIN SEVEN DAYS AFTER EACH EXERCISE DATE AND UNTIL THE OPTIONEE
AMENDS OR TERMINATES THE PAYROLL DEDUCTION AUTHORIZATION]. The Optionee may not
specify a payroll deduction amount that is less than $10 or greater than 10
percent of the gross amount of the Optionee's base salary, hourly compensation,
including overtime pay, and commission earnings, for each payroll period. If
payroll deductions are made by a Participating Subsidiary, that corporation will
promptly remit the amount of the deduction to the Company. After an Optionee has
begun participating in the Plan by initiating payroll deductions, the Optionee
may not amend the payroll deduction authorization except for an amendment
effective for the first paycheck following A PURCHASE DATE [AN EXERCISE DATE],
but may terminate participation in the Plan any time prior to the tenth day
before A PURCHASE DATE [AN EXERCISE DATE] by written notice to the Company.
However, an Optionee may not reinstate participation in the Plan with respect to
a particular OFFERING [GRANT] after once terminating participation in the Plan
with respect to that OFFERING [GRANT]. Upon receipt of a notice of termination,
the Company will pay to the Optionee all amounts deducted from the Optionee's
pay and not yet delivered to the Custodian (hereinafter defined).
7[6]. PURCHASE OF SHARES. All amounts withheld from the pay of an Optionee
shall be credited to the Optionee's account under the Plan by the Custodian
appointed under paragraph 10[8]. The amounts withheld may be accumulated by the
Company and paid to the Custodian at any time prior to the PURCHASE DATE
[EXERCISE DATE]. No interest will be paid on the amounts accumulated by the
Company or the amounts held in any account maintained by the Custodian. On EACH
PURCHASE DATE [THE EXERCISE DATE], the amount of the account of each Optionee
will be applied to purchase of shares by that Optionee from the Company.
Although an Optionee's account may reflect a fraction of a share, no fractional
shares will be sold by the Company or delivered pursuant to paragraph 10[8]. Any
cash balance remaining in an Optionee's account after A PURCHASE DATE [THE
EXERCISE DATE] because it was less than the amount required to purchase a full
share shall be retained in the Optionee's account for purchase of shares ON THE
NEXT PURCHASE DATE [PURSUANT TO SUBSEQUENTLY GRANTED OPTIONS, IF ANY]; any
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excess amount shall be refunded to the Optionee. Any cash balance remaining in
an Optionee's account upon termination of participation shall be refunded to the
Optionee.
8[7]. OPTION PRICE. The price at which Common Stock SHALL [MAY] be
purchased ON ANY PURCHASE DATE IN AN OFFERING [UPON EXERCISE OF OPTIONS GRANTED
PURSUANT TO THE PLAN] shall be [DETERMINED BY THE COMMITTEE AT THE TIME OF
GRANT; PROVIDED, HOWEVER, THAT (A) THE OPTION PRICE FOR A PARTICULAR GRANT SHALL
BE THE SAME FOR ALL OPTIONEES, AND (B) THE OPTION PRICE PER SHARE SHALL IN NO
EVENT BE LESS THAN] the lesser of (i) 85 percent of the fair market value of a
share of Common Stock on the OFFERING DATE OF THE OFFERING [DATE OF GRANT], or
(ii) [AN AMOUNT THAT PURSUANT TO THE TERMS OF THE OPTION MAY NOT BE LESS THAN]
85 percent of the fair market value of a share of Common Stock on the PURCHASE
DATE [EXERCISE DATE]. THE FAIR MARKET VALUE OF A SHARE OF COMMON STOCK ON ANY
DATE SHALL BE THE CLOSING PRICE ON THE IMMEDIATELY PRECEDING TRADING DAY AS
REPORTED BY THE NASDAQ NATIONAL MARKET OR, IF THE COMMON STOCK IS NOT REPORTED
ON THE NASDAQ NATIONAL MARKET, SUCH OTHER REPORTED VALUE OF THE COMMON STOCK AS
SHALL BE SPECIFIED BY THE BOARD OF DIRECTORS.
9. AUTOMATIC WITHDRAWAL AND RE-ENROLLMENT. IF THE FAIR MARKET VALUE OF A
SHARE OF COMMON STOCK ON ANY PURCHASE DATE OF AN OFFERING IS LESS THAN THE FAIR
MARKET VALUE OF A SHARE OF COMMON STOCK WAS ON THE OFFERING DATE FOR SUCH
OFFERING, THEN EVERY PARTICIPANT IN THAT OFFERING SHALL AUTOMATICALLY (A) BE
WITHDRAWN FROM SUCH OFFERING AFTER THE ACQUISITION OF THE SHARES OF COMMON STOCK
ON SUCH PURCHASE DATE, AND (B) BE ENROLLED IN THE NEW OFFERING COMMENCING ON
SUCH PURCHASE DATE.
10[8]. DELIVERY AND CUSTODY OF SHARES. Shares purchased by Optionees
pursuant to the Plan shall be delivered to and held in the custody of such
investment or financial firmS (EACH A Custodian) as shall be appointed by the
Committee. BY APPROPRIATE INSTRUCTIONS TO THE CUSTODIAN ON FORMS TO BE PROVIDED
FOR THAT PURPOSE, AN OPTIONEE MAY FROM TIME TO TIME SELL ALL OR PART OF THE
SHARES HELD BY THE CUSTODIAN FOR THE OPTIONEE'S ACCOUNT AT THE MARKET PRICE AT
THE TIME THE ORDER IS EXECUTED. By appropriate instructions to the Custodian on
forms to be provided for that purpose, an Optionee may obtain (A) transfer into
the Optionee's own name of all or part of the shares held by the Custodian for
the Optionee's account and delivery of such shares to the Optionee, OR (B)
TRANSFER OF ALL OR PART OF THE SHARES HELD FOR THE OPTIONEE'S ACCOUNT BY THE
CUSTODIAN TO A REGULAR INDIVIDUAL BROKERAGE ACCOUNT IN THE OPTIONEE'S OWN NAME,
EITHER WITH THE FIRM THEN ACTING AS CUSTODIAN OR WITH ANOTHER FIRM; PROVIDED,
HOWEVER, THAT NO SHARES MAY BE TRANSFERRED UNDER (A) OR (B) UNTIL TWO YEARS
AFTER THE OFFERING DATE OF THE OFFERING IN WHICH THE SHARES WERE PURCHASED AND
ONE YEAR AFTER THE PURCHASE DATE ON WHICH THE SHARES WERE PURCHASED.
11[9]. RECORDS AND STATEMENTS. The Custodian will maintain the records of
the Plan. As soon as practicable after EACH PURCHASE DATE [THE EXERCISE DATE]
each Optionee shall receive a statement showing the activity of the Optionee's
account since the LAST PURCHASE DATE [DATE OF GRANT] and the balance on the
PURCHASE DATE [EXERCISE DATE] as to both cash and shares. Optionees will be
furnished such other reports and statements, and at such intervals, as the
Committee shall determine from time to time.
[10. 1984 PLAN PARTICIPANTS. ALL VALID SUBSCRIPTION AND PAYROLL DEDUCTION
AUTHORIZATIONS EXECUTED BY OPTIONEES PARTICIPATING IN THE COMPANY'S 1984
EMPLOYEE STOCK PURCHASE PLAN (1984 PLAN) AT THE TERMINATION OF THE 1984 PLAN
SHALL BE VALID FOR ALL PURPOSES UNDER THE PLAN WITHOUT FURTHER ACTION BY SUCH
OPTIONEES. THE CUSTODIAN IS AUTHORIZED TO CONTINUE WITHOUT INTERRUPTION UNDER
THE PLAN ALL ACCOUNTS MAINTAINED UNDER THE 1984 PLAN AND IN EXISTENCE AT ITS
TERMINATION, TOGETHER WITH ALL ACCOUNT BALANCES CONTAINED THEREIN, WITHOUT
FURTHER ACTION BY OPTIONEES UNDER THE 1984 PLAN.]
12[11]. EXPENSES OF THE PLAN. The Company will pay all expenses incident
to operation of the Plan, including costs of recordkeeping, accounting fees,
legal fees, commissions and issue or transfer taxes on purchases pursuant to the
Plan.
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13[12]. RIGHTS NOT TRANSFERABLE. The right to purchase shares under this
Plan is not transferable by an Optionee and is exercisable during the Optionee's
lifetime only by the Optionee.
14[13]. DIVIDENDS AND OTHER DISTRIBUTIONS. Cash dividends and other cash
distributions, if any, on shares held by the Custodian will be paid currently to
the Optionees entitled thereto unless the Company subsequently adopts a dividend
reinvestment plan and the Optionee directs that cash dividends be invested in
accordance with such plan. Stock dividends and other distributions in shares of
the Company on shares held by the Custodian shall be issued to the Custodian and
held by it for the account of the respective Optionees entitled thereto.
15[14]. VOTING AND SHAREHOLDER COMMUNICATIONS. In connection with voting
on any matter submitted to the shareholders of the Company, the Custodian will
cause the shares held by the Custodian for each Optionee's account to be voted
in accordance with instructions from the Optionee or, if requested by an
Optionee, will furnish to the Optionee a proxy authorizing the Optionee to vote
the shares held by the Custodian for the Optionee's account. Copies of all
general communications to shareholders of the Company will be sent to Optionees
participating in the Plan.
16. TAX WITHHOLDING. EACH OPTIONEE WHO HAS PURCHASED SHARES UNDER THE PLAN
SHALL IMMEDIATELY UPON NOTIFICATION OF THE AMOUNT DUE, IF ANY, PAY TO THE
COMPANY IN CASH AMOUNTS NECESSARY TO SATISFY ANY APPLICABLE FEDERAL, STATE AND
LOCAL TAX WITHHOLDING DETERMINED BY THE COMPANY TO BE REQUIRED. IF THE COMPANY
DETERMINES THAT ADDITIONAL WITHHOLDING IS REQUIRED BEYOND ANY AMOUNT DEPOSITED
AT THE TIME OF PURCHASE, THE OPTIONEE SHALL PAY SUCH AMOUNT TO THE COMPANY ON
DEMAND. IF THE OPTIONEE FAILS TO PAY THE AMOUNT DEMANDED, THE COMPANY MAY
WITHHOLD THAT AMOUNT FROM OTHER AMOUNTS PAYABLE BY THE COMPANY TO THE OPTIONEE,
INCLUDING SALARY, SUBJECT TO APPLICABLE LAW.
17[15]. RESPONSIBILITY. Neither the Company, its Board of Directors, the
Committee, any Participating Subsidiary, nor any officer or employee of any of
them shall be liable to any Optionee under the Plan for any mistake of judgment
or for any omission or wrongful act unless resulting from willful misconduct or
intentional misfeasance.
18[16]. CONDITIONS AND APPROVALS. The obligations of the Company under the
Plan shall be subject to compliance with all applicable state and federal laws
and regulations, the rules of any stock exchange on which the Company's
securities may be listed, and the approval of federal and state authorities or
agencies with jurisdiction in the matter. The Company will use its best efforts
to comply with such laws, regulations and rules to obtain required approvals.
19[17]. AMENDMENT OF THE PLAN. The Board of Directors may from time to
time amend the Plan in any and all respects, except that without approval of the
shareholders of the Company, the Board of Directors may not [(A)] increase the
number of shares reserved for the Plan[, (B) EXTEND THE TERM OF THE PLAN, (C)]
OR decrease the purchase price of shares offered pursuant to the Plan[, (D)
MATERIALLY INCREASE BENEFITS ACCRUING TO THE OPTIONEES UNDER THE PLAN, OR (E)
MATERIALLY MODIFY ELIGIBILITY REQUIREMENTS UNDER THE PLAN].
20[18]. TERMINATION OF THE PLAN. The Plan shall terminate when all of the
shares reserved for purposes of the Plan have been purchased, provided that the
Board of Directors in its sole discretion may at any time terminate the Plan
without any obligation on account of such termination, except that such
termination shall not affect previously granted options still outstanding.
21[19]. EFFECTIVE DATE OF THE PLAN AMENDMENTS. The Plan AMENDMENTS
APPROVED BY THE BOARD OF DIRECTORS IN AUGUST 2000 shall not become effective
until [IT HAS BEEN] approved by the [AFFIRMATIVE VOTE OF THE] SHAREholders [OF A
MAJORITY OF THE OUTSTANDING SHARES] of the Company [REPRESENTED AT A MEETING OF
SHAREHOLDERS IN PERSON OR BY PROXY]. Following such approval, the Plan
AMENDMENTS shall become effective ON JANUARY 1, 2001 [IMMEDIATELY UPON
TERMINATION OF THE 1984 PLAN].
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