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CADENCE DESIGN SYSTEMS, INC.
EMPLOYEE STOCK PURCHASE PLAN
As Adopted January 30, 1990
As Amended May 4, 1993
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 425(e) and 425(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 1,500,000 shares
of Common Stock of the Company, 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
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
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;
(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 Offering Periods of the Plan
(the "Offering Period") shall be of six (6) months duration
commencing January 1 and July 1 of each year and ending on
June 30 and December 31, respectively, during which payroll
deductions of the participant are accumulated under this
Plan. The first Offering Period shall commence on July 1,
1990. 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".
The Board of Directors of the Company shall have the power
to change the duration of Offering Periods with respect to
future offerings without stockholder approval if such change
is announced at least fifteen (15) days prior to the
scheduled beginning of the first Offering Period to be
affected. Effective May 7, 1992, the Board of Directors
amended the Offering Periods as follows: July 1, 1992 -
January 31, 1993; February 1, 1993 - July 31, 1993; August
1, 1993 - January 31, 1994; and thereafter commencing
February 1 and August 1 of each year and ending on July 31
and January 31 of each year.
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 to the Company's or Subsidiary's
(whichever employs such employee) legal department 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 a subscription agreement authorizing
payroll deductions. An eligible employee who does not
deliver a subscription agreement to the legal department 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 with the legal department not later than the 15th
day of the month 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) eight-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 determined by
using 85% of the fair market value of a share of the
Company's Common Stock on the Offering Date as the
denominator. Fair market value of a share of the Company's
Common Stock shall be determined as provided in Section 8
hereof.
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 purchase price of the shares is
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 not less
than two percent (2%) nor greater than ten
percent. (10%) Compensation shall be limited to
base salary or wages 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. 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 with the legal
department 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 the legal
department's 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 with
the legal department a new authorization for
payroll deductions not later than the 15th day of
the month 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 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, 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/her option.
(f) During a participant's lifetime, such
participant's option to purchase shares hereunder
is exercisable only by him or her. 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, 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 determined by using 85% of the fair market
value of a share of the Company's Common Stock on
the Offering Date as the denominator may be
purchased by the participant on any single
Purchase Date.
(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.
11. Withdrawal.
(a) Each participant may withdraw from an
Offering Period under the Plan by signing and
delivering to the legal department notice on a
form provided 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.
(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. 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,
unless the Board determines, in the exercise of its sole
discretion and in lieu of such assumption or substitution,
that the 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, 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.
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
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'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.
If the purchase of shares on a Purchase Date is exempt
from the operation of Section 16(b) of the Exchange Act by
the operation of Rule 16b-6 promulgated under the Exchange
Act, to the extent required by the Exchange Act, shares
purchased by a person subject to the requirements of Section
16(b) of the Exchange Act may not be sold prior to the
expiration of six (6) months from the Purchase Date on which
such shares were purchased (or on such other date as may be
required by Rule 16b-3 or any successor rule).
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, issuance
of all of the shares of Common Stock reserved for issuance
under the Plan, or ten (10) years from the adoption of the
Plan by the Board. 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:
(a) increase the number of shares that may be
issued under the Plan;
(b) change the designation of the employees (or
class of employees) eligible for participation in the Plan;
or
(c) 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.
<PAGE>
CADENCE DESIGN SYSTEMS, INC.
A Delaware Corporation
1993 DIRECTORS STOCK OPTION PLAN
As Adopted July 22, 1993
1. Purpose. This Stock Option Plan ("Plan") is
established to provide equity incentives for members of the
Board of Directors of Cadence Design Systems, Inc., a
Delaware corporation (the "Company") who are not employees of
the Company, by granting such persons options to purchase
shares of stock of the Company.
2. Adoption and Stockholder Approval. This Plan shall
become effective on the date that it is adopted by the Board
of Directors (the "Board") of the Company. This Plan shall
be approved by the stockholders of the Company within twelve
months before or after the date this Plan is adopted by the
Board.
3. Types of Options and Shares. Options granted under
this Plan (the "Options") shall be nonqualified stock
options ("NQSOs"). The shares of stock that may be
purchased upon exercise of Options granted under this Plan
(the "Shares") are shares of the common stock of the Company.
4. Number of Shares. The maximum number of Shares
that may be issued pursuant to Options granted under this
Plan is 107,223 Shares*, subject to adjustment as provided in
this Plan. If any Option is terminated for any reason
without being exercised in whole or in part, the Shares
thereby released from such Option shall be available for
purchase under other Options subsequently granted under this
Plan. At all times during the term of this Plan, the Company
shall reserve and keep available such number of Shares as
shall be required to satisfy the requirements of outstanding
Options under this Plan.
5. Administration. This Plan shall be administered by
the Board or by a committee of not less than two members of
the Board appointed to administer this Plan (the
"Committee"). As used in this Plan, references to the
Committee shall mean either such Committee or the Board if no
committee has been established. The interpretation by the
Committee of any of the provisions of this Plan or any Option
granted under this Plan shall be final and binding upon the
Company and all persons having an interest in any Option or
any Shares purchased pursuant to an Option.
*Does not include 337,777 Options granted under the
predecessor plan (the 1988 Directors Stock Option Plan).
6. Eligibility. The Directors Plan provides that
options may be granted only to such directors of the Company
(collectively, "Optionees" and individually "Optionee") as
the Committee shall select from time to time; provided,
however, that no director of the Company who is also an
employee of the Company or of any parent or subsidiary of the
Company may be granted an Option. Optionees may be granted
more than one Option; provided, however, that the aggregate
number of shares subject to all Options granted to an
Optionee will be as follows: (i) 100,000 shares, in the case
of Options granted to the Chairman of the Board, (ii) 75,000
shares, in the case of Options granted to the Chairman of the
Compensation Committee of the Board, and (iii) 50,000 shares,
in the case of Options granted to any other director.
Options will be granted on the date or dates specified in
Section 7(d) below. The provisions of this Section 6 shall
not be amended more than once every six months, other than to
comply with changes in the Internal Revenue Code of 1986, as
amended or the rules thereunder.
7. Terms and Conditions of Options. The Committee
shall determine all terms and conditions of the Option,
subject to the following terms and conditions:
(a) Form of Option Grant. Each Option granted
under this Plan shall be evidenced by a written Stock Option
Grant ("Grant") in such form (which need not be the same for
each Optionee) as the Committee shall from time to time
approve, which Grant shall comply with and be subject to the
terms and conditions of this Plan.
(b) Exercise Price. The exercise price of an
Option shall be the fair market value of the Shares, at the
time that the Option is granted, as determined by the
Committee in good faith; provided, however, that where there
is a public market for the Company's Common Stock, the fair
market value per Share shall be the average of the high and
low closing sales price of the Company's Common Stock on the
date of grant, as quoted on the New York Stock Exchange.
(c) Exercise Period. Options shall be exercisable
as to 1/3rd of the Shares on the first anniversary of the
Grant Date and as to an additional 1/36th of the Shares for
each full month thereafter, and remain exercisable for a
period of ten years; provided, however, that no Option shall
be exercisable after the expiration of ten years from the
date of grant, and provided further that notwithstanding
anything to the contrary, with respect to the initial grant
of an Option, if an Optionee ceases to serve as Chairman of
the Board or as Chairman of the Compensation Committee of the
Board but continues to serve as a member of the Board, then
Options to purchase in excess of an aggregate of 50,000
shares ("Extra Options") held by such Optionee shall
terminate and may not be exercised, except within the time
periods and to the extent described in the Grant, with the
date of such cessation deemed the Termination Date, and the
fact of such cessation deemed the cessation or termination of
service as a Director, within the meaning of those Sections
with respect only to such Extra Options.
(d) Date of Grant. The initial Option grant to a
director shall be for 20,000 shares and such Option will be
deemed granted on the date of appointment to the position of
director. Subsequent grants in increments of 15,000 shares
up to the maximum of 50,000 shares shall be immediately after
the date on which his or her outstanding options become fully
exercisable. The date of grant of an Extra Option for the
Chairman of the Board and Chairman of the Compensation
Committee shall be immediately upon election to such
position, whichever is later, or upon stockholder approval of
an amendment to the Plan, authorizing such Extra Option. The
Grant representing the Option shall be delivered to the
Optionee within a reasonable time after the granting of the
Option.
8. Exercise of Options.
(a) Notice. Options may be exercised only by
delivery to the Company of written notice and exercise
agreement in a form approved by the Committee, stating the
number of Shares being purchased, the restrictions imposed on
the Shares and such representations and agreements regarding
the Optionee's investment intent and access to information as
may be required by the Company to comply with applicable
securities laws, together with payment in full of the
exercise price for the number of Shares being purchased.
(b) Payment. Payment for the Shares may be made
(i) in cash (by check), (ii) by surrender of shares of common
stock of the Company having a fair market value equal to the
exercise price of the Option: (iii) where permitted by
applicable law, by tender of a full recourse promissory note
having such terms as may be approved by the Committee; or
(iv) by any combination of the foregoing.
(c) Withholding Taxes. Prior to issuance of the
Shares upon exercise of an Option, the Optionee shall pay or
make adequate provision for federal or state withholding
obligations of the Company, if applicable.
(d) Limitations on Exercise. Notwithstanding the
exercise periods set forth in the Grant, exercise of an
Option shall always by subject to the following limitations:
(i) An Option shall not be exercisable unless
such exercise is in compliance with the Securities Act of
1933, as amended, and all applicable state securities laws,
as they are in effect on the date of exercise.
(ii) An Option shall not be exercisable until
this Plan has been approved by the stockholders of the
Company.
(iii) The Committee may specify a
reasonable minimum number of Shares that may be purchased on
any exercise of an Option, provided that such minimum number
will not prevent the Optionee from exercising the full number
of Shares as to which the Option is then exercisable.
9. Nontransferability of Options. During the lifetime
of the Optionee, an Option shall be exercisable only by the
Optionee. No Option may be sold, pledged, assigned,
hypothecated, transferred or disposed of in any manner other
than by will or by the laws of descent and distribution.
10. Privileges of Stock Ownership. No Optionee shall
have any of the rights of a stockholder with respect to any
Shares subject to an Option until the Option has been validly
exercised. No adjustment shall be made for dividends or
distributions or other rights for which the record date is
prior to the date of exercise, except as provided in this
Plan. The Company shall provide to each Optionee a copy of
the annual financial statements of the Company, at such time
after the close of each fiscal year of the Company as they
are released by the Company to its stockholders.
11. Adjustment of Option Shares. In the event that the
number of outstanding shares of common stock of the Company
is changed by a stock dividend, stock split, reverse stock
split, combination, reclassification or similar change in the
capital structure of the Company without consideration, the
number of Shares available under this Plan and the number of
Shares subject to outstanding Options and the exercise price
per share of such Options shall be proportionately adjusted,
subject to any required action by the Board or stockholders
of the Company and compliance with applicable securities
laws; provided, however, that no certificate or scrip
representing fractional shares shall be issued upon exercise
of any Option and any resulting fractions of a Share shall be
ignored.
12. No Obligation to Retain. Nothing in this Plan or
any Option granted under this Plan shall confer to any
Optionee any right to continue as a Director of the Company.
13. Compliance with Laws. The grant of Options and the
issuance of Shares upon exercise of any Options shall be
subject to and conditioned upon compliance with all
applicable requirements of law, including without limitation
compliance with the Securities Act of 1933, as amended, any
required approval by the Commissioner of Corporations of the
State of California, compliance with all other applicable
state securities laws and compliance with the requirements of
any stock exchange on which the Shares may be listed. The
Company shall be under no obligation to register the Shares
with the Securities and Exchange Commission or to effect
compliance with the registration or qualification requirement
of any state securities laws or stock exchange.
14. Acceleration of Options on Acquisition. In the
event of a dissolution or liquidation of the Company, a
merger in which the Company is not the surviving corporation,
or the sale of substantially all of the assets of the
Company, any or all outstanding Options shall,
notwithstanding any contrary terms of the Grant, accelerate
and become exercisable in full prior to the consummation of
such dissolution, liquidation, merger or sale of assets.
15. Amendment or Termination of Plan. Subject to the
limitations set forth in Section 6 above, the Committee may
at any time terminate or amend this Plan in any respect
(including, but not limited to, any form of Grant, agreement
or instrument to be executed pursuant to this Plan);
provided, however, that the Committee shall not, without the
approval of the stockholders of the Company, increase the
total number of Shares available under this Plan (except by
operation of the provisions of this Plan) or change the class
of persons eligible to receive Options. In any case, no
amendment of this Plan may adversely affect any then
outstanding Options or any unexercised portions thereof
without the written consent of the Optionee.
16. Term of Plan. Options may be granted pursuant to
this Plan from time to time within a period of ten years from
the date this Plan is adopted by the Board of Directors.
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