<PAGE>
Exhibit 10.03
CADENCE DESIGN SYSTEMS, INC.
AMENDED AND RESTATED
1997 NONSTATUTORY STOCK OPTION PLAN
EFFECTIVE AS AMENDED NOVEMBER 1, 2000
STOCKHOLDER APPROVAL NOT REQUIRED
TERMINATION DATE: ABOVE
1. PURPOSES OF THE PLAN. The purposes of this Stock Option Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to the Employees and Consultants
(as such terms are defined below) of the Company and its Affiliates, and to
promote the success of the Company's business.
Only "nonstatutory stock options" may be granted hereunder.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "AFFILIATE" shall mean any parent corporation or subsidiary
corporation, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f) respectively, of the Code, or such other parent
corporation or subsidiary corporation designated by the Board.
(b) "BOARD" shall mean the Committee, if one has been appointed,
or the Board of Directors, if no Committee is appointed.
(c) "BOARD OF DIRECTORS" shall mean the Board of Directors of the
Company.
(d) "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
(e) "COMMITTEE" shall mean the Committee appointed by the Board of
Directors in accordance with paragraph (a) of Section 4 of the Plan, if one is
appointed.
(f) "COMMON STOCK" shall mean the Common Stock of the Company.
(g) "COMPANY" shall mean CADENCE DESIGN SYSTEMS, INC., a Delaware
corporation.
(h) "CONSULTANT" shall mean any consultants, independent
contractors or advisers to the Company or an Affiliate (provided that such
persons render bona fide services not in connection with the offering and sale
of securities in capital raising transactions).
<PAGE>
(i) "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" shall mean
the absence of any interruption or termination of service to the Company or an
Affiliate, whether as an Employee or Consultant. The Board or the Chief
Executive Officer of the Company may determine, in that party's sole discretion,
whether Continuous Status as an Employee or Consultant shall be considered
interrupted in the case of: (i) any leave of absence approved by the Board or
the Chief Executive Officer of the Company, including sick leave, military
leave, or any other personal leave; or (ii) transfers between the Company,
Affiliates or their successors.
(j) "EMPLOYEE" shall mean any person employed by the Company or by
any Affiliate.
(k) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended.
(l) "NONSTATUTORY STOCK OPTION" shall mean an Option not intended
to qualify as an incentive stock option within the meaning of Section 422 of the
Code and the regulations promulgated thereunder.
(m) "OPTION" shall mean a nonstatutory stock option granted
pursuant to the Plan.
(n) "OPTION AGREEMENT" shall mean a written agreement between the
Company and an Optionee evidencing the terms and conditions of an individual
Option grant. Each Option Agreement shall be subject to the terms and conditions
of the Plan.
(o) "OPTIONED STOCK" shall mean the Common Stock subject to an
Option.
(p) "OPTIONEE" shall mean an Employee or Consultant who receives
an Option.
(q) "PLAN" shall mean this 1997 Nonstatutory Stock Option Plan.
(r) "SHARE" shall mean a share of Common Stock, as adjusted in
accordance with Section 11 of the Plan.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 11
of the Plan, the maximum aggregate number of Shares which may be optioned and
sold under the Plan is thirty million (30,000,000) shares of Common Stock. The
Shares may be authorized, but unissued, or reacquired Common Stock. If an Option
should expire or become unexercisable for any reason without having been
exercised in full, the unpurchased Shares which were subject thereto shall,
unless the Plan shall have been terminated, become available for future grant
under the Plan.
2
<PAGE>
4. ADMINISTRATION OF THE PLAN.
(a) PROCEDURE. The Plan shall be administered by the Board of
Directors. The Board of Directors may appoint a Committee consisting of not less
than two members of the Board of Directors to administer the Plan on behalf of
the Board of Directors, subject to such terms and conditions as the Board of
Directors may prescribe. Once appointed, the Committee shall continue to serve
until otherwise directed by the Board of Directors. From time to time the Board
of Directors may increase the size of the Committee and appoint additional
members thereof, remove members (with or without cause), and appoint new members
in substitution therefor, fill vacancies however caused and remove all members
of the Committee, and thereafter directly administer the Plan. Notwithstanding
anything in this Section 4 to the contrary, at any time the Board of Directors
or the Committee may delegate to a committee of one or more members of the Board
of Directors the authority to grant Options to all Employees and Consultants or
any portion or class thereof.
(b) POWERS OF THE BOARD. Subject to the provisions of the Plan,
the Board shall have such authority with regard to the Plan and the options as
determined by the Board of Directors, including the authority, in its
discretion: (i) to grant options under the Plan, provided, however, that only
nonstatutory options may be granted under the Plan; (ii) to determine, upon
review of relevant information and in accordance with Section 8(c) of the Plan,
the fair market value of the Common Stock; (iii) to determine the exercise price
per share of Options to be granted, which exercise price shall be determined in
accordance with Section 8(a) of the Plan; (iv) to determine the Employees or
Consultants to whom, and the time or times at which, Options shall be granted
and the number of Shares to be represented by each Option, provided that no
Options may be granted to persons who are neither Employees nor Consultants; (v)
to interpret the Plan; (vi) to prescribe, amend and rescind rules and
regulations relating to the Plan; (vii) to determine the terms and provisions of
each Option granted (which need not be identical) in accordance with the Plan,
and, with the consent of the holder thereof with respect to any adverse change,
modify or amend each Option; (viii) to accelerate or defer (the latter with the
consent of the Optionee) the exercise date and vesting of any Option; (ix) to
authorize any person to execute on behalf of the Company any instrument required
to effectuate the grant of an Option previously granted by the Board; and (x) to
make all other determinations deemed necessary or advisable for the
administration of the Plan.
(c) EFFECT OF BOARD'S DECISION. All decisions, determinations and
interpretations of the Board shall be final and binding on all Optionees and any
other holders of any Options granted under the Plan.
5. ELIGIBILITY. Options may be granted only to Employees or Consultants
as defined in Section 2 hereof. An Employee or Consultant who has been granted
an Option may, if he or she is otherwise eligible, be granted an additional
Option or Options. Notwithstanding the foregoing, no Employee or Consultant who
is an executive officer of the Company within the meaning of Section 16 of the
Exchange Act, who is a member of the Board of Directors or who beneficially owns
10% or more of the Company's Common Stock shall be entitled to receive the grant
of an Option under the Plan.
3
<PAGE>
The Plan shall not confer upon any Optionee any right with respect
to continuation of employment or consultancy by the Company, nor shall it
interfere in any way with the Optionee's right or the Company's right to
terminate the Optionee's employment at any time or the Optionee's consultancy
pursuant to the terms of the Consultant's agreement with the Company.
6. TERM OF THE PLAN. The Plan shall become effective upon its adoption
by the Board of Directors. It shall continue in effect until terminated under
Section 13 of the Plan.
7. TERM OF OPTION. The term of each Option shall be ten (10) years from
the date of grant thereof or such shorter term as may be provided in the Option
Agreement.
8. EXERCISE PRICE, CONSIDERATION AND VESTING.
(a) EXERCISE PRICE. The per Share exercise price for the Shares to
be issued pursuant to exercise of an Option shall be no less than 100% of the
fair market value per Share on the date of grant. Notwithstanding the foregoing,
an Option may be granted with an exercise price lower than set forth above if
such Option is granted pursuant to an assumption or substitution for another
option in a manner which substantially satisfies the provisions of Section
424(a) of the Code.
(b) FAIR MARKET VALUE. The fair market value shall be determined
by the Board in its discretion; provided however, that where there is a public
market for the Common Stock, the fair market value per Share shall be the
average of the high and low prices of the Common Stock on the date of grant, as
reported on the New York Stock Exchange.
(c) CONSIDERATION. The consideration to be paid for the Shares to
be issued upon exercise of an Option, including the method of payment, shall be
determined by the Board and may consist entirely of (i) cash or check; (ii)
promissory note (except that payment of the common stock's "par value", as
defined in the Delaware General Corporation Law, shall not be made by deferred
payment); (iii) other shares of the Common Stock of the Company having a fair
market value on the date of surrender equal to the aggregate exercise price of
the Shares as to which the Option shall be exercised, including by delivering to
the Company an attestation of ownership of owned and unencumbered shares of the
Common Stock of the Company in a form approved by the Company; (iv) payment
pursuant to a program developed under Regulation T as promulgated by the Federal
Reserve Board which, prior to the issuance of Common Stock, results in either
the receipt of cash (or check) by the Company or the receipt of irrevocable
instructions to pay the aggregate exercise price to the Company from the sales
proceeds; (v) any combination of such methods of payment; or (vi) such other
consideration and method of payment for the issuance of Shares to the extent
permitted under applicable law. In making its determination as to the type of
consideration to accept, the Board shall consider if acceptance of such
consideration may be reasonably expected to benefit the Company.
(d) VESTING. The total number of Shares subject to an Option may,
but need not, be allotted in periodic installments (which may, but need not, be
equal). The Option Agreement may provide that, from time to time during each of
such installment periods, the
4
<PAGE>
Option may become exercisable ("vest") with respect to some or all of the Shares
allotted to that period, and may be exercised with respect to some or all of the
Shares allotted to such period and/or any prior period as to which the Option
became vested but was not fully exercised. The Option may be subject to such
other terms and conditions on the time or times when it may be exercised (which
may be based on performance or other criteria) as the Board may deem
appropriate. The provisions of this Section 8(d) are subject to any Option
provisions governing the minimum number of Shares as to which an Option may be
exercised.
9. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER. Any Option
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Board, including performance criteria with respect to the
Company and/or the Optionee, and as shall be permissible under the terms of the
Plan.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice
of such exercise has been given to the Company in accordance with the terms of
the Option by the person entitled to exercise the Option and full payment for
the Shares with respect to which the Option is exercised has been received by
the Company. Full payment may, as authorized by the Board, consist of any
consideration and method of payment allowable under Section 8(c) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a stockholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the stock
certificate is issued, except as provided in Section 11 of the Plan.
Exercise of an Option in any manner shall result in a
decrease in the number of Shares which thereafter may be available, both for
purposes of the Plan and for sale under the Option, by the number of Shares as
to which the Option is exercised.
The Option may, but need not, include a provision whereby the
Optionee may elect at any time while an Employee or Consultant (or while an
officer or director of the Company) to exercise the Option as to any part or all
of the shares subject to the Option, subject to a repurchase right in favor of
the Company on such terms as the Board shall establish.
(b) TERMINATION OF STATUS AS AN EMPLOYEE OR CONSULTANT. If an
Optionee ceases to serve as an Employee or Consultant for any reason other than
death or disability, the Optionee may, but only within three (3) months (or such
other period of time as is determined by the Board) after the date the Optionee
ceases to be an Employee or Consultant, exercise the Option to the extent that
the Optionee was entitled to exercise it at the date of such termination. To the
extent that the Optionee was not entitled to exercise the Option at the date of
such termination, or if the Optionee does not exercise such Option (which the
Optionee was entitled to exercise) within the time specified herein, the Option
shall terminate.
5
<PAGE>
(c) DEATH OF OPTIONEE. In the event of the death of an Optionee
during the term of the Option who is at the time of his or her death an Employee
or Consultant and who shall have been in Continuous Status as an Employee or
Consultant since the date of grant of the Option, the Option may be exercised at
any time within twelve (12) months (or such other period of time as is
determined by the Board) following the date of death, by the Optionee's estate
or by a person who acquired the right to exercise the Option by bequest or
inheritance, to the extent that the Optionee was entitled to exercise it at the
date of such termination. To the extent that the Optionee was not entitled to
exercise the Option at the date of such termination, or if the Option is not
exercised (to the extent the Optionee was entitled to exercise) within the time
specified herein, the Option shall terminate.
(d) DISABILITY OF OPTIONEE. In the event of the disability of an
Optionee during the term of the Option who is at the time of his or her
disability an Employee or Consultant and who shall have been in Continuous
Status as an Employee or Consultant since the date of grant of the Option, the
Optionee (or the Optionee's legal guardian or conservator) may, but only within
twelve (12) months (or such other period of time as is determined by the Board)
after the date the Optionee ceases to be an Employee or Consultant on account of
such disability, exercise the Option to the extent that the Optionee was
entitled to exercise it at the date of such termination. To the extent that the
Optionee was not entitled to exercise the Option at the date of such
termination, or if the Optionee does not exercise such Option (which the
Optionee was entitled to exercise) within the time specified herein, the Option
shall terminate.
(e) WITHHOLDING. To the extent provided by the terms of the Option
Agreement, the Optionee may satisfy any federal, state or local tax withholding
obligation relating to the exercise of such Option by any of the following means
or by a combination of such means: (i) tendering a cash payment; (ii)
authorizing the Company to withhold Shares from the Shares otherwise issuable to
the Optionee as a result of the exercise of the Option; or (iii) delivering to
the Company owned and unencumbered shares of the common stock of the Company.
10. TRANSFERABILITY OF OPTIONS. Except as otherwise expressly provided
in the terms of the Option Agreement, the Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee. Notwithstanding the foregoing,
the Optionee may, by delivering written notice to the Company, in a form
satisfactory to the Company, designate a third party who, in the event of the
death of the Optionee, shall thereafter be entitled to exercise the Option.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER. The number of
Shares covered by each outstanding Option, and the number of Shares which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per Share covered by each such
outstanding Option, shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock resulting from a stock
split or the payment of a stock dividend with respect to the Common Stock or any
other increase
6
<PAGE>
or decrease in the number of issued 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 adjustments shall be made by
the Board, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an Option.
For purposes of the Plan, a "Change in Control" shall be deemed to
occur upon the consummation of any one of the following events: (a) a sale of
all or substantially all of the assets of the Company; (b) a merger or
consolidation in which the Company is not the surviving corporation (other than
a transaction the principal purpose of which is to change the state of the
Company's incorporation or a transaction in which the voting securities of the
Company are exchanged for beneficial ownership of at least 50% of the voting
securities of the controlling acquiring corporation); (c) a merger or
consolidation in which the Company is the surviving corporation and less than
50% of the voting securities of the Company which are outstanding immediately
after the consummation of such transaction are beneficially owned, directly or
indirectly, by the persons who owned such voting securities immediately prior to
such transaction; (d) any transaction or series of related transactions after
which any person (as such term is used in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended), other than any employee benefit plan (or
related trust) sponsored or maintained by the Company or any subsidiary of the
Company, becomes the beneficial owner of voting securities of the Company
representing 40% or more of the combined voting power of all of the voting
securities of the Company; (e) during any period of two consecutive years,
individuals who at the beginning of such period constitute the membership of the
Company's Board of Directors ("Incumbent Directors") cease for any reason to
have authority to cast at least a majority of the votes which all directors on
the Board of Directors are entitled to cast, unless the election, or the
nomination for election by the Company's stockholders, of a new director was
approved by a vote of at least two-thirds of the votes entitled to be cast by
the Incumbent Directors, in which case such director shall also be treated as an
Incumbent Director in the future; or (f) the liquidation or dissolution of the
Company.
In the event of a Change in Control, then: (a) any surviving or
acquiring corporation shall assume Options outstanding under the Plan or shall
substitute similar options (including an option to acquire the same
consideration paid to stockholders in the transaction described in this Section
11 for those outstanding under the Plan, or (b) in the event any surviving or
acquiring corporation refuses to assume such Options or to substitute similar
options for those outstanding under the Plan, (i) with respect to Options held
by persons then performing services as Employees or Consultants, the vesting of
such Options and the time during which such Options may be exercised shall be
accelerated prior to such event and the Options terminated if not exercised
after such acceleration and at or prior to such event, and (ii) with respect to
any other Options outstanding under the Plan, such Options shall be terminated
if not exercised prior to such event.
7
<PAGE>
Notwithstanding the foregoing, the Board shall at all times have the
complete and sole discretion to accelerate the vesting and exercisability of
some or all of the shares of Common Stock subject to any or all of then
outstanding Options granted under the Plan and to establish the date as of which
any such Option shall terminate (and all other terms and conditions relating to
such termination.)
12. TIME OF GRANTING OPTIONS. The date of grant of an Option shall, for
all purposes, be the date on which the Board makes the determination granting
such Option. Notice of the determination shall be given to each Employee or
Consultant to whom an Option is so granted within a reasonable time after the
date of such grant.
13. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may amend or terminate
the Plan from time to time in such respects as the Board may deem advisable.
(b) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or
termination of the Plan shall not affect Options already granted, and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated unless mutually agreed otherwise between the Optionee and
the Board, which agreement must be in writing and signed by the Optionee and the
Company.
14. CONDITIONS UPON ISSUANCE OF SHARES. The Company may require any
Optionee, or any person to whom an Option is transferred under Section 10, as a
condition of exercising any such Option, (i) to give written assurances
satisfactory to the Company as to the Optionee's knowledge and experience in
financial and business matters and/or to employ a purchaser representative
reasonably satisfactory to the Company who is knowledgeable and experienced in
financial and business matters, and that he or she is capable of evaluating,
alone or together with the purchaser representative, the merits and risks of
exercising the Option; and (ii) to give written assurances satisfactory to the
Company stating that such person is acquiring the Shares subject to the Option
for such person's own account and not with any present intention of selling or
otherwise distributing the Shares. The foregoing requirements, and any
assurances given pursuant to such requirements, shall be inoperative if (1) the
issuance of the Shares upon the exercise of the Option has been registered under
a then currently effective registration statement under the Securities Act of
1933, as amended, or (2) as to any particular requirement, a determination is
made by counsel for the Company that such requirement need not be met in the
circumstances under the then applicable securities laws. The Company may require
the Optionee to provide such other representations, written assurances or
information which the Company shall determine is necessary, desirable or
appropriate to comply with applicable securities and other laws as a condition
of granting an Option to such Optionee or permitting the Optionee to exercise
such Option. The Company may, upon advice of counsel to the Company, place
legends on stock certificates issued under the Plan as such counsel deems
necessary or appropriate in order to comply with applicable securities laws,
including, but not limited to, legends restricting the transfer of the shares.
8
<PAGE>
15. RESERVATION OF SHARES. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
Inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Shares hereunder,
shall relieve the Company of any liability in respect of the failure to issue or
sell such Shares as to which such requisite authority shall not have been
obtained.
16. OPTION AGREEMENT. Options shall be evidenced by written Option
Agreements in such form or forms as the Board or the Committee shall approve.
17. EFFECTIVE DATE. The Plan initially became effective on May 1, 1997.
The Plan, as amended and restated, shall become effective on November 1, 2000.
9
