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As filed with the Securities and Exchange Commission on May 3, 1999
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SYNOPSYS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 56-1546236
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(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION
NUMBER)
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700 EAST MIDDLEFIELD ROAD
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MOUNTAIN VIEW, CA 94043-4033
(ADDRESS, INCLUDING ZIP CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
1992 STOCK OPTION PLAN
1994 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
1998 NONSTATUTORY STOCK OPTION PLAN
EMPLOYEE STOCK PURCHASE PLAN
INTERNATIONAL EMPLOYEE STOCK PURCHASE PLAN
(FULL TITLES OF THE PLANS)
-----------------------------
AART J. DE GEUS
CHIEF EXECUTIVE OFFICER
SYNOPSYS, INC.
700 EAST MIDDLEFIELD ROAD
MOUNTAIN VIEW, CA 94043-4033
(650) 962-5000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
-----------------------------
Copy to:
THOMAS C. DEFILIPPS, ESQ.
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CALIFORNIA 94303
(650) 493-9300
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CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS AMOUNT OFFERING AGGREGATE AMOUNT OF
OF SECURITIES TO TO BE PRICE OFFERING REGISTRATION
BE REGISTERED REGISTERED (1) PER SHARE PRICE FEE
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Common Stock, $0.01 par value
To be issued under:
1992 Stock Option Plan 2,272,328 $ 46.5938 (2) $105,876,282.75 $ 29,433.61
1994 Non-Employee Directors Stock
Option Plan 100,000 $ 49.9628 (3) $ 4,996,275.57 $ 1,388.96
1998 Nonstatutory Stock Option
Plan 2,550,000 $ 47.7223 (4) $121,691,874.34 $ 33,830.34
Employee Stock Purchase Plan and
International Employee Stock
Purchase Plan 1,500,000 $ 46.5938 (2) $ 69,890,625.00 $ 19,429.59
Totals 6,422,328 shares $302,455,057.66 $ 84,082.50
</TABLE>
(1) For the sole purpose of calculating the registration fee, the number of
shares to be registered under this registration statement has been broken
down into four subtotals.
(2) Computed in accordance with Rule 457(c) of the Securities Act. The $46.5938
per share figure was computed by averaging the high and low prices of shares
of the Company's Common Stock as reported on the Nasdaq National Market on
April 26, 1999.
(3) Computed in accordance with Rule 457(h) and 457(c) of the Securities Act.
Such computation is based on the weighted average exercise price of $50.16
per share covering 95,666 outstanding options under the 1994 Non-Employee
Directors Stock Option Plan and the estimated exercise price of $45.8750 per
share covering 4,334 authorized but unissued shares under the 1994
Non-Employee Directors Stock Option Plan. The estimated exercise price of
$46.5938 per share was computed in accordance with Rule 457(c) by averaging
the high and low prices of shares of the Company's Common Stock as reported
on the Nasdaq National Market on April 26, 1999.
(4) Computed in accordance with Rule 457(h) and 457(c) of the Securities Act.
Such computation is based on the weighted average exercise price of $50.18
per share covering 803,075 outstanding options under the 1998 Nonstatutory
Stock Option Plan and the estimated exercise price of $46.5938 per share
covering 1,746,925 authorized but unissued shares under the 1998
Nonstatutory Stock Option Plan. The estimated exercise price of $46.5938 per
share was computed in accordance with Rule 457(c) by averaging the high and
low prices of shares of the Company's Common Stock as reported on the Nasdaq
National Market on April 26, 1999.
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
Synopsys, Inc. (the "Company") hereby incorporates by reference in this
registration statement the following documents:
(a)The Company's Annual Report on Form 10-K for the fiscal year
ended September 30, 1998 filed pursuant to Section 13 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act").
(b)The Company's Quarterly Report on Form 10-Q for the quarter
ended January 2, 1999, filed pursuant to Section 13 of the Exchange Act.
(c)The Company's Current Report on Form 8-K regarding its
financial results for the quarter ended April 3, 1999, filed on April 23, 1999
pursuant to Section 13 of the Exchange Act.
(d)The Company's Current Report on Form 8-K regarding its
financial results for the quarter ended December 31, 1998, filed on January 25,
1999 pursuant to Section 13 of the Exchange Act.
(e)The description of the Company's Common Stock as set forth in
the Registration Statement filed by the Company on Form 8-A on October 31, 1997
pursuant to Section 12(g) of the Exchange Act and any amendments or reports
filed with the Securities and Exchange Commission for the purpose of updating
such description.
(f)The description of the Company's Common Stock as set forth in
the Registration Statement filed by the Company on Form 8-A on January 24, 1992
pursuant to Section 12(g) of the Exchange Act and any amendments or reports
filed with the Securities and Exchange Commission for the purpose of updating
such description.
(g)All documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c) 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment to this registration statement which indicates that all
securities offered hereby have been sold or which deregisters all securities
remaining unsold, shall be deemed to be incorporated by reference in this
registration statement and to be a part hereof from the date of filing of such
documents.
ITEM 4. DESCRIPTION OF SECURITIES.
The class of securities to be offered is registered under Section 12 of
the Exchange Act.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
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Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Delaware law authorizes corporations to eliminate the personal liability
of directors to corporations and their stockholders for monetary damage for
breach or alleged breach of the directors' "duty of care." While the relevant
statute does not change directors' duty of care, it enables corporations to
limit available relief to equitable remedies such as injunction or rescission.
The statute has no effect on directors' duty of loyalty, acts or omissions not
in good faith or involving intentional misconduct or knowing violations of law,
illegal payment of dividends and approval of any transaction from which a
director derives an improper personal benefit.
The Company has adopted provisions in its Certificate of Incorporation
which eliminate the personal liability of its directors to the Company and its
stockholders for monetary damages for breach or alleged breach of their duty of
care. The Bylaws of the Company provide for indemnification of its directors,
officers, employees and agents to the full extent permitted by the General
Corporation Law of the State of Delaware (the "DGCL"), the Company's state of
incorporation, including those circumstances in which indemnification would
otherwise be discretionary under the DGCL. Section 145 of the DGCL provides for
indemnification in terms sufficiently broad to indemnify such individuals, under
certain circumstances, for liabilities (including reimbursement of expenses
incurred) arising under the Securities Act of 1933.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
See Index to Exhibits.
ITEM 9. UNDERTAKINGS.
(a) Rule 415 Offering. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
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(b) Filing incorporating subsequent Exchange Act documents by reference.
The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Request for acceleration of effective date or filing of
registration statement on Form S-8.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Mountain View, State of California, on May 3, 1999.
SYNOPSYS, INC.
By: /s/ Aart J. de Geus
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Aart J. de Geus
Chief Executive Officer
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POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each such person whose
signature appears below constitutes and appoints Aart J. de Geus and David
Sugishita, and each of them, as his or her true and lawful attorney-in-fact,
with full power of substitution, for him or her in any and all capacities, to
sign any amendments (including post-effective amendments) to this Registration
Statement on Form S-8, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, or any of them, or
their or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
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SIGNATURE TITLE DATE
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/s/ Aart J. de Geus Chief Executive Officer and Chairman May 3, 1999
- ------------------------------------ of the Board of Directors (Principal
Aart J. de Geus Executive Officer)
/s/ Chi-Foon Chan President, Chief Operating Officer and May 3, 1999
- ------------------------------------ Director
Chi-Foon Chan
/s/ William W. Lattin Executive Vice President and Director May 3, 1999
- ------------------------------------
William W. Lattin
/s/ Andy D. Bryant Director May 3, 1999
- ------------------------------------
Andy D. Bryant
/s/ Deborah A. Coleman Director May 3, 1999
- ------------------------------------
Deborah A. Coleman
/s/ Harvey C. Jones, Jr. Director May 3, 1999
- ------------------------------------
Harvey C. Jones, Jr.
/s/ A. Richard Newton Director May 3, 1999
- ------------------------------------
A. Richard Newton
/s/ Sasson Somekh Director May 3, 1999
- ------------------------------------
Sasson Somekh
/s/ Steven C. Walske Director May 3, 1999
- ------------------------------------
Steven C. Walske
/s/ David Sugishita Senior Vice President, Finance and May 3, 1999
- ------------------------------------ Operations, and Chief Financial
David Sugishita Officer (Principal Financial and
Accounting Officer)
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INDEX TO EXHIBITS
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Exhibit
Number Exhibit
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5.1 Opinion of counsel as to legality of securities being registered
10.1 1992 Stock Option Plan
10.2 1994 Non-Employee Directors Stock Option Plan
10.3 1998 Nonstatutory Stock Option Plan
10.4 Employee Stock Purchase Plan
10.5 International Employee Stock Purchase Plan
23.1 Consent of KPMG LLP
23.2 Consent of Deloitte & Touche LLP
23.3 Consent of Counsel (included in Exhibit 5.1)
24.1 Power of Attorney (see page II-5)
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Exhibit 5.1
May 3, 1999
Synopsys, Inc.
700 East Middlefield Road
Mountain View, CA 94043
Re: Registration Statement on Form S-8
Gentlemen:
We have examined the Registration Statement on Form S-8 to be filed by
you with the Securities and Exchange Commission on or about May 3, 1999 (the
"Registration Statement") in connection with the registration under the
Securities Act of 1933, as amended, for an aggregate of 6,422,328 of your Common
Shares under the 1992 Stock Option Plan, the 1994 Non-Employee Director Stock
Option Plan, the 1998 Nonstatutory Stock Option Plan, the Employee Stock
Purchase Plan and the International Employee Stock Purchase Plan. Such shares of
Common Stock are referred to herein as the "Shares", and such plans are referred
to herein as the "Plans". As your counsel in connection with this transaction,
we have examined the proceedings taken and are familiar with the proceedings
proposed to be taken by you in connection with the issuance and sale of the
Shares pursuant to the Plans.
It is our opinion that, when issued and sold in the manner described in
the Plans and pursuant to the agreements which accompany each grant under the
Plans, the Shares will be legally and validly issued, fully-paid and
non-assessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement, and further consent to the use of our name wherever appearing in the
Registration Statement and any amendments thereto.
Very truly yours,
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
/s/ WILSON SONSINI GOODRICH & ROSATI
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EXHIBIT 10.1
SYNOPSYS, INC.
1992 STOCK OPTION PLAN
(AMENDED JULY 29, 1992, OCTOBER 28, 1992, OCTOBER 27, 1993,
OCTOBER 27, 1994, NOVEMBER 1, 1995, MAY 1, 1996, MAY 3, 1996,
OCTOBER 30, 1996)
ARTICLE ONE
GENERAL
I. PURPOSE OF THE PLAN
A. This 1992 Stock Option Plan ("Plan") is intended to promote the
interests of Synopsys, Inc., a Delaware corporation (the "Corporation"), by
providing (i) key employees (including officers and directors) of the
Corporation (or its parent or subsidiary corporations) who are responsible for
the management, growth and financial success of the Corporation (or its parent
or subsidiary corporations) and (ii) consultants and other independent advisors
who provide valuable services to the Corporation (or its parent or subsidiary
corporations) with the opportunity to acquire a proprietary interest, or
otherwise increase their proprietary interest, in the Corporation as an
incentive for them to remain in the service of the Corporation (or its parent or
subsidiary corporations).
B. The Plan shall become effective on the first date on which the
shares of the Corporation's common stock are registered under Section 12(g) of
the Securities Exchange Act of 1934, as amended (the "1934 Act"). Such date is
hereby designated as the Effective Date of the Plan.
C. This Plan shall serve as the successor to the Corporation's 1988
Restricted Stock Plan (the "1988 Plan"), and no further option grants shall be
made under the 1988 Plan from and after the Effective Date of this Plan. All
options outstanding under the 1988 Plan on such Effective Date are hereby
incorporated into this Plan and shall accordingly be treated as outstanding
options under this Plan. However, each outstanding option so incorporated shall
continue to be governed solely by the express terms and conditions of the
instrument evidencing such grant, and no provision of this Plan shall be deemed
to affect or otherwise modify the rights or obligations of the holders of such
incorporated options with respect to their acquisition of shares of the
Corporation's common stock thereunder. All outstanding unvested share issuances
under the 1988 Plan shall continue to be governed solely by the express terms
and conditions of the instruments evidencing such issuances, and no provision of
this Plan shall be deemed to affect or otherwise modify the rights or
obligations of the holders of such unvested shares.
D. For purposes of the Plan, the following provisions shall be
applicable in determining the parent and subsidiary corporations of the
Corporation:
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Any corporation (other than the Corporation) in an unbroken chain of
corporations ending with the Corporation shall be considered to be a parent of
the Corporation, provided each such corporation in the unbroken chain (other
than the Corporation) owns, at the time of the determination, stock possessing
fifty percent (50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
Each corporation (other than the Corporation) in an unbroken chain of
corporations beginning with the Corporation shall be considered to be a
subsidiary of the Corporation, provided each such corporation (other than the
last corporation) in the unbroken chain owns, at the time of the determination,
stock possessing fifty percent (50%) or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.
II. ADMINISTRATION OF THE PLAN
A. Administrator. The Plan shall be administered by the Board of
Directors or a committee that will satisfy Rule 16b-3 of the Securities and
Exchange Commission and Section 162(m) of the Internal Revenue Code, as in
effect with respect to the Company from time to time (in either case, the
"Administrator"). In connection with the administration of the Plan, the
Administrator shall have the powers possessed by the Board. The Administrator
may act only by a majority of its members, except that the Administrator may
authorize any one or more of its members or any officer of the Company to
execute and deliver documents on behalf of the Administrator. For so long as not
otherwise required for the Plan to comply with Rule 16b-3, the Administrator or
the Board may delegate to one or more directors of the Company authority to
grant stock options to persons who are not subject to Section 16 of the Exchange
Act, and may delegate administrative duties to such director(s) and such
employees of the Company as it deems proper. The Board at any time may terminate
the authority delegated to any committee of the Board pursuant to this Section
III(a) and revest in the Board the administration of the Plan.
B. Authority. The Administrator shall grant options and authorize
stock issuances (in either case an "Award") to selected eligible employees and
consultants. In particular and without limitation, the Administrator, subject to
the terms of the Plan, shall:
(i) select the officers, other employees, and consultants to
whom Awards may be granted;
(ii) determine whether and to what extent Awards are to be
granted under the Plan;
(iii) determine the number of shares to be covered by each
Award granted under the Plan; and
(iv) determine the terms and conditions of any Award granted
under the Plan and any related loans to be made by the Company, based
upon factors determined by the Administrator.
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C. Administrator Determinations Binding. The Administrator may
adopt, alter and repeal administrative rules, guidelines and practices governing
the Plan as it from time to time shall deem advisable, may interpret the terms
and provisions of the Plan, any Award and any Award agreement and may otherwise
supervise the administration of the Plan. Any determination made by the
Administrator pursuant to the provisions of the Plan with respect to any Award
shall be made in its sole discretion at the time of the grant of the Award or,
unless in contravention of any express term of the Plan or Award, at any later
time. All decisions made by the Administrator under the Plan shall be binding on
all persons, including the Company and Plan participants. No member of the
Administrator shall be liable for any action that he or she has in good faith
taken or failed to take with respect to this Plan or any Award.
III. ELIGIBILITY
A. The persons eligible to receive option grants ("Optionee") are
as follows:
(i) officers and other key employees of the Corporation (or
its parent or subsidiary corporations) who render services which
contribute to the management, growth and financial success of the
Corporation (or its parent or subsidiary corporations);
(ii) those consultants or other independent advisors who
provide valuable services to the Corporation (or its parent or
subsidiary corporations).
B. Non-employee members of the Board shall not be eligible to
participate in the Plan or in any other stock option, stock purchase, stock
bonus or other stock plan of the Corporation (or its parent or subsidiary
corporations), other than the 1994 Non- Employee Directors Stock Option Plan.
IV. STOCK SUBJECT TO THE PLAN
A. Shares of the Corporation's common stock (the "Common Stock")
shall be available for issuance under the Plan and shall be drawn from either
the Corporation's authorized but unissued shares of Common Stock or from
reacquired shares of Common Stock, including shares repurchased by the
Corporation on the open market. The maximum number of shares of Common Stock
which may be issued over the term of the Plan shall not exceed the sum of (i)
15,348,821 shares plus (ii) an additional number of shares equal to 5% of the
number of shares of Common Stock and Common-Stock equivalents outstanding on the
first day of each of the 1997, 1998 and 1999 fiscal years. Such authorized share
reserve includes the number of shares which remained available for issuance, as
of the Effective Date, under the 1988 Plan as last approved by the Corporation's
stockholders prior to such Effective Date, including the shares subject to the
outstanding options incorporated into this Plan and any other shares available
for future option grant under the 1988 Plan as last approved by the
stockholders, and such reserve shall be adjusted from time to time in accordance
with the provisions of this Section IV. To the extent
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one or more outstanding options under the 1988 Plan which have been incorporated
into this Plan are subsequently exercised, the number of shares issued with
respect to each such option shall reduce, on a share- for-share basis, the
number of shares available for issuance under this Plan.
B. In no event may the maximum number of shares which may be issued
pursuant to Incentive Options granted under the Plan on or after the first day
of the 1995 fiscal year (October 2, 1994) exceed 8,000,000 shares, subject to
adjustment from time to time in accordance with the provisions of this Section
IV. The maximum number of shares which may be issued pursuant to Incentive
Options granted under the Plan prior to the first day of the 1995 fiscal year
(October 2, 1994) shall not exceed 5,700,000 shares, subject to adjustment from
time to time in accordance with the provisions of this Section IV.
C. In no event may the aggregate number of shares of Common Stock
for which any one individual participating in the Plan may be granted stock
options and separately-exercisable stock appreciation rights over the remaining
term of the Plan exceed 1,000,000 shares, subject to adjustment from time to
time in accordance with the provisions of this Section IV. For purposes of such
limitation, no stock options or stock appreciation rights granted prior to
January 1, 1994 shall be taken into account.
D. Should one or more outstanding options under this Plan
(including outstanding options under the 1988 Plan incorporated into this Plan)
expire or terminate for any reason prior to exercise in full (including any
option cancelled in accordance with the cancellation-regrant provisions of
Section IV of Article Two of the Plan), then the shares subject to the portion
of each option not so exercised shall be available for subsequent option grant
under the Plan. Shares subject to any option or portion thereof surrendered or
cancelled in accordance with Section V of Article Two and all shares issuances
under the Plan, whether or not the shares are subsequently repurchased by the
Corporation pursuant to its repurchase rights under the Plan, shall not be
available for subsequent option grant under the Plan. In addition, should the
exercise price of an outstanding option under the Plan be paid with shares of
Common Stock, then the number of shares of Common Stock available for issuance
under the Plan shall be reduced by the gross number of shares for which the
option is exercised, and not by the net number of shares of Common Stock
actually issued to the holder of such option.
E. In the event any change is made to the Common Stock issuable
under the Plan by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, appropriate adjustments shall be made to (i) the maximum number
and/or class of securities issuable under the Plan, (ii) the maximum number
and/or class of securities which may be issued pursuant to Incentive Options
granted under the Plan, whether before or after the first day of the 1995 fiscal
year, (iii) the total number and/or class of securities for which stock options
and separately-exercisable stock appreciation rights may be granted to any one
participant in the Plan after December 31, 1993, (iv) the number and/or class of
securities and price per share in effect under each outstanding option under the
Plan and (v) the number and/or class of securities and price per share in effect
under each outstanding option incorporated into this Plan from the 1988 Plan.
Such adjustments to the outstanding options are
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to be effected in a manner which shall preclude the enlargement or dilution of
rights and benefits under such options.
The adjustments determined by the Plan Administrator shall be final,
binding and conclusive.
F. Common Stock issuable under the Plan may be subject to such
restrictions on transfer, repurchase rights or other restrictions determined by
the Plan Administrator.
ARTICLE TWO
OPTION GRANTS
I. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to the Plan shall be authorized by action of
the Plan Administrator and may, at the Plan Administrator's discretion, be
either Incentive Options or non-statutory options. Individuals who are not
Employees of the Corporation or its parent or subsidiary corporations may only
be granted non-statutory options. Each granted option shall be evidenced by one
or more instruments in the form approved by the Plan Administrator; provided,
however, that each such instrument shall comply with the terms and conditions
specified below. Each instrument evidencing an Incentive Option shall, in
addition, be subject to the applicable provisions of Section II of this Article
Two.
A. Option Price.
(1) The option price per share shall be fixed by the Plan
Administrator. In no event, however, shall it be less than one hundred percent
(100%) of the fair market value per share of Common Stock on the date of the
option grant.
(2) The option price shall become immediately due upon
exercise of the option and, subject to the provisions of Article Three, Section
I and the instrument evidencing the grant, shall be payable in one of the
following alternative forms specified below:
- full payment in cash or check drawn to the
Corporation's order;
- full payment in shares of Common Stock held for
at least six (6) months and valued at fair market value on the Exercise
Date (as such term is defined below);
- full payment in a combination of shares of
Common Stock held for at least six (6) months and valued at fair market
value on the Exercise Date and cash or check; or
- full payment through a broker-dealer sale and
remittance procedure pursuant to which the Optionee (I) shall provide
irrevocable written instructions to a
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Corporation-designated brokerage firm to effect the immediate sale of
the purchased shares and remit to the Corporation, out of the sale
proceeds available on the settlement date, sufficient funds to cover the
aggregate option price payable for the purchased shares plus all
applicable Federal and State income and employment taxes required to be
withheld by the Corporation in connection with such purchase and (II)
shall provide written directives to the Corporation to deliver the
certificates for the purchased shares directly to such brokerage firm in
order to complete the sale transaction.
For purposes of this subparagraph (2), the Exercise Date shall
be the date on which written notice of the option exercise is delivered to the
Corporation. Except to the extent the sale and remittance procedure is utilized
in connection with the exercise of the option, payment of the option price for
the purchased shares must accompany such notice.
(3) The fair market value per share of Common Stock on any
relevant date under the Plan shall be determined in accordance with the
following provisions:
- If the Common Stock is not at the time listed or
admitted to trading on any national stock exchange but is traded on the
Nasdaq National Market, the fair market value shall be the closing
selling price per share of Common Stock on the date in question, as such
price is reported by the National Association of Securities Dealers on
the Nasdaq National Market System or any successor system. If there is
no reported closing selling price for the Common Stock on the date in
question, then the closing selling price on the last preceding date for
which such quotation exists shall be determinative of fair market value.
- If the Common Stock is at the time listed or
admitted to trading on any national stock exchange, then the fair market
value shall be the closing selling price per share of Common Stock on
the date in question on the stock exchange determined by the Plan
Administrator to be the primary market for the Common Stock, as such
price is officially quoted in the composite tape of transactions on such
exchange. If there is no reported sale of Common Stock on such exchange
on the date in question, then the fair market value shall be the closing
selling price on the exchange on the last preceding date for which such
quotation exists.
B. Term and Exercise of Options. Each option shall be exercisable
at such time or times and during such period as is determined by the Plan
Administrator and set forth in the stock option agreement evidencing the grant;
provided that at least 75% of the options granted hereunder shall become
exercisable ratably over a four year period from the date of grant, with the
vesting interval (i.e., monthly, quarterly, etc.) and any period prior to the
commencement of vesting determined in each case by the Plan Administrator. No
such option, however, shall have a maximum term in excess of ten (10) years from
the grant date. During the lifetime of the Optionee, the option shall be
exercisable only by the Optionee and shall not be assignable or transferable by
the Optionee otherwise than by will or by the laws of descent and distribution
following the Optionee's death.
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<PAGE> 7
C. Termination of Service.
(1) Except to the extent otherwise provided pursuant to
Section VI of this Article Two, the following provisions shall govern the
exercise period applicable to any outstanding options under the Plan which are
held by the Optionee at the time of his or her cessation of Service or death.
- Should the Optionee cease Service for any reason
(including death or permanent disability as defined in Section 22(e)(3)
of the Internal Revenue Code) while holding one or more outstanding
options under the Plan, then none of those options shall (except to the
extent otherwise provided pursuant to Section VI of this Article Two)
remain exercisable beyond the limited post-Service period designated by
the Plan Administrator at the time of the option grant and set forth in
the option agreement.
- Any option granted to an Optionee under the Plan
and exercisable in whole or in part on the date of the Optionee's death
may be subsequently exercised, by the personal representative of the
Optionee's estate or by the person or persons to whom the option is
transferred pursuant to the Optionee's will or in accordance with the
laws of descent and distribution, provided and only if such exercise
occurs prior to the earlier of (i) the expiration of the period
designated by the Plan Administrator at the time of the option grant and
set forth in the option agreement, which may be any period from one
month to three years measured from the date of the Optionee's death, or
(ii) the specified expiration date of the option term. Upon the
occurrence of the earlier event, the option shall terminate and cease to
be exercisable.
- Under no circumstances, however, shall any such
option be exercisable after the specified expiration date of the option
term.
- During the limited post-Service exercise period,
the option may not be exercised for more than the number of shares for
which the option is exercisable on the date of the Optionee's cessation
of Service. Upon the expiration of such limited exercise period or (if
earlier) upon the expiration of the option term, the option shall
terminate and cease to be exercisable. However, upon the Optionee's
cessation of Service, each outstanding option at the time held by the
Optionee shall immediately terminate and cease to be outstanding with
respect to any shares for which the option is not otherwise at that time
exercisable or in which the Optionee is not otherwise vested.
- Should (i) the Optionee's Service be terminated
for misconduct (including, but not limited to, any act of dishonesty,
willful misconduct, fraud or embezzlement) or (ii) the Optionee make any
unauthorized use or disclosure of confidential information or trade
secrets of the Corporation or its parent or subsidiary corporations,
then in any such event all outstanding options held by the Optionee
under this Article Two shall terminate immediately and cease to be
exercisable.
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<PAGE> 8
(2) The Plan Administrator shall have complete discretion,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to permit one or more options held by the Optionee
under this Article Two to be exercised, during the limited period of
exercisability provided under subparagraph (1) above, not only with respect to
the number of shares for which each such option is exercisable at the time of
the Optionee's cessation of Service but also with respect to one or more
subsequent installments for which the option would otherwise have become
exercisable had such cessation of Service not occurred.
(3) For purposes of the foregoing provisions of this Section
I.C (and for all other purposes under the Plan):
- The Optionee shall (except to the extent
otherwise specifically provided in the applicable option agreement) be
deemed to remain in the Service of the Corporation for so long as such
individual renders services on a periodic basis to the Corporation (or
any parent or subsidiary corporation) in the capacity of an Employee, a
non-employee member of the Board or an independent consultant or
advisor.
- The Optionee shall be considered to be an
Employee for so long as he or she remains in the employ of the
Corporation or one or more parent or subsidiary corporations, subject to
the control and direction of the employer entity not only as to the work
to be performed but also as to the manner and method of performance.
D. Stockholder Rights.
An Optionee shall have no stockholder rights with respect to any shares
covered by the option until such individual shall have exercised the option,
paid the option price for the purchased shares and been issued a stock
certificate for such shares.
E. Repurchase Rights.
The shares of Common Stock acquired upon the exercise of options granted
under this Article Two may be subject to repurchase by the Corporation in
accordance with the following provisions:
(a) The Plan Administrator shall have the discretion to authorize
the issuance of unvested shares of Common Stock under this Article Two. Should
the Optionee cease Service while holding such unvested shares, the Corporation
shall have the right to repurchase any or all of those unvested shares at the
option price paid per share. The terms and conditions upon which such repurchase
right shall be exercisable (including the period and procedure for exercise and
the appropriate vesting schedule for the purchased shares) shall be established
by the Plan Administrator and set forth in the instrument evidencing such
repurchase right.
(b) All of the Corporation's outstanding repurchase rights shall
automatically terminate, and all shares subject to such terminated rights shall
immediately vest in full, upon the
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<PAGE> 9
occurrence of any Corporate Transaction under Section III of this Article Two,
except to the extent:
(i) any such repurchase right is to be assigned to
the successor corporation (or parent thereof) in connection with the
Corporate Transaction or (ii) such termination is precluded by other
limitations imposed by the Plan Administrator at the time the repurchase
right is issued.
(c) The Plan Administrator shall have the discretionary
authority, exercisable either before or after the Optionee's cessation of
Service, to cancel the Corporation's outstanding repurchase rights with respect
to one or more shares purchased or purchasable by the Optionee under this
Article Two and thereby accelerate the vesting of such shares in whole or in
part at any time.
II. INCENTIVE OPTIONS
The terms and conditions specified below shall be applicable to all
Incentive Options granted under the Plan. Incentive Options may only be granted
to individuals who are Employees of the Corporation. Options which are
specifically designated as "non- statutory" options when issued under the Plan
shall not be subject to such terms and conditions.
A. Dollar Limitation. The aggregate fair market value (determined
as of the respective date or dates of grant) of the Common Stock for which one
or more options granted to any Employee after December 31, 1986 under this Plan
(or any other option plan of the Corporation or its parent or subsidiary
corporations) may for the first time become exercisable as incentive stock
options under the Federal tax laws during any one calendar year shall not exceed
the sum of One Hundred Thousand Dollars ($100,000). To the extent the Employee
holds two or more such options which become exercisable for the first time in
the same calendar year, the foregoing limitation on the exercisability of such
options as incentive stock options under the Federal tax laws shall be applied
on the basis of the order in which such options are granted.
B. 10% Stockholder. If any individual to whom an Incentive Option
is granted is the owner of stock (as determined under Section 424(d) of the
Internal Revenue Code) possessing 10% or more of the total combined voting power
of all classes of stock of the Corporation or any one of its parent or
subsidiary corporations, then the option price per share shall not be less than
one hundred and ten percent (110%) of the fair market value per share of Common
Stock on the grant date, and the option term shall not exceed five (5) years,
measured from the grant date.
Except as modified by the preceding provisions of this Section II, the
provisions of Articles One, Two and Three of the Plan shall apply to all
Incentive Options granted hereunder.
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<PAGE> 10
III. CORPORATE TRANSACTIONS/CHANGES IN CONTROL
A. In the event of any of the following stockholder-approved
transactions to which the Corporation is a party (a "Corporate Transaction"):
(i) a merger or consolidation in which the Corporation is not the
surviving entity, except for a transaction the principal purpose of which is to
change the State of the Corporation's incorporation,
(ii) the sale, transfer or other disposition of all or substantially
all of the assets of the Corporation in liquidation or dissolution of the
Corporation, or
(iii) any reverse merger in which the Corporation is the surviving
entity but in which securities possessing more than fifty percent (50%) of the
total combined voting power of the Corporation's outstanding securities are
transferred to holders different from those who held such securities immediately
prior to such merger,
then the exercisability of each option outstanding under the Plan shall
automatically accelerate so that each such option shall, immediately prior to
the specified effective date for the Corporate Transaction, become fully
exercisable with respect to the total number of shares of Common Stock at the
time subject to such option and may be exercised for all or any portion of such
shares. However, an outstanding option under this Article Two shall not so
accelerate if and to the extent: (i) such option is, in connection with the
Corporate Transaction, to be assumed by the successor corporation or parent
thereof or replaced with a comparable option to purchase shares of the capital
stock of the successor corporation or parent thereof, (ii) such option is to be
replaced by a comparable cash incentive program of the successor corporation
based on the option spread at the time of the Corporate Transaction, or (iii)
the acceleration of such option is subject to other limitations imposed by the
Plan Administrator at the time of the option grant. The determination of
comparability under clause (i) or (ii) above shall be made by the Plan
Administrator, and its determination shall be final, binding and conclusive.
B. Immediately after the consummation of the Corporate Transaction,
all outstanding options under the Plan shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation or its
parent company.
C. Each outstanding option under the Plan which is assumed in
connection with the Corporate Transaction or is otherwise to continue in effect
shall be appropriately adjusted, immediately after such Corporate Transaction,
to apply and pertain to the number and class of securities which would have been
issued to the option holder, in consummation of such Corporate Transaction, had
such person exercised the option immediately prior to such Corporate
Transaction. Appropriate adjustments shall also be made to the option price
payable per share, provided the aggregate option price payable for such
securities shall remain the same. In addition, the maximum number and/or class
of securities available for issuance under the Plan, the maximum number and/or
class of securities which may be issued pursuant to Incentive Options granted
under the Plan, whether before or after the first day of the 1995 fiscal year,
and
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<PAGE> 11
the total number and/or class of securities for which stock options and
separately-exercisable stock appreciation rights may be granted to any one
participant in the Plan after December 31, 1993 shall be appropriately adjusted
following the consummation of the Corporate Transaction to reflect the effect of
such transaction upon the Corporation's capital structure.
D. The grant of options under the Plan shall in no way affect the
right of the Corporation to adjust, reclassify, reorganize or otherwise change
its capital or business structure or to merge, consolidate, dissolve, liquidate
or sell or transfer all or any part of its business or assets.
E. The Plan Administrator shall have the discretionary authority,
exercisable at the time the option is granted or at any time while the option
remains outstanding, to provide for the automatic acceleration of one or more
outstanding options under this Article Two (and the termination of one or more
of the Corporation's outstanding repurchase rights under this Article Two) upon
the occurrence of a Change in Control. Alternatively, the Plan Administrator
shall have full power and authority to condition any such option acceleration
(and the termination of any outstanding repurchase rights) upon the subsequent
termination of the Optionee's Service within a specified period following the
Change in Control.
F. For purposes of this Section III, a Change in Control shall be
deemed to occur in the event:
(i) any person or related group of persons (other than the
Corporation or a person that directly or indirectly controls, is controlled by,
or is under common control with, the Corporation) directly or indirectly
acquires beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act)
of securities possessing more than fifty percent (50%) of the total combined
voting power of the Corporation's outstanding securities pursuant to a tender or
exchange offer made directly to the Corporation's stockholders which the Board
does not recommend such stockholders to accept; or
(ii) there is a change in the composition of the Board over a period
of twenty-four (24) consecutive months or less such that a majority of the Board
members ceases, by reason of one or more proxy contests for the election of
Board members, to be comprised of individuals who either (A) have been Board
members continuously since the beginning of such period or (B) have been elected
or nominated for election as Board members during such period by at least a
majority of the Board members described in clause (A) who were still in office
at the time such election or nomination was approved by the Board.
G. Any options accelerated in connection with the Change in Control
shall remain fully exercisable until the expiration or sooner termination of the
option term.
H. The exercisability as incentive stock options under the Federal
tax laws of any options accelerated under this Section III in connection with a
Corporate Transaction or Change in Control shall remain subject to the dollar
limitation of Section II of this Article Two.
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<PAGE> 12
IV. [INTENTIONALLY OMITTED.]
V. STOCK APPRECIATION RIGHTS
A. Provided and only if the Plan Administrator determines in its
discretion to implement the stock appreciation right provisions of this Section
V, one or more Optionees may be granted the right, exercisable upon such terms
and conditions as the Plan Administrator may establish, to surrender all or part
of an unexercised option under this Article Two in exchange for a distribution
from the Corporation in an amount equal to the excess of (i) the fair market
value (on the option surrender date) of the number of shares in which the
Optionee is at the time vested under the surrendered option (or surrendered
portion thereof) over (ii) the aggregate option price payable for such vested
shares.
B. No surrender of an option shall be effective hereunder unless it
is approved by the Plan Administrator. If the surrender is so approved, then the
distribution to which the Optionee shall accordingly become entitled under this
Section V may be made in shares of Common Stock valued at fair market value on
the option surrender date, in cash, or partly in shares and partly in cash, as
the Plan Administrator shall in its sole discretion deem appropriate.
C. If the surrender of an option is rejected by the Plan
Administrator, then the Optionee shall retain whatever rights the Optionee had
under the surrendered option (or surrendered portion thereof) on the option
surrender date and may exercise such rights at any time prior to the later of
(i) five (5) business days after the receipt of the rejection notice or (ii) the
last day on which the option is otherwise exercisable in accordance with the
terms of the instrument evidencing such option, but in no event may such rights
be exercised more than ten (10) years after the date of the option grant.
D. One or more officers of the Corporation subject to the
short-swing profit restrictions of the Federal securities laws may, in the Plan
Administrator's sole discretion, be granted limited stock appreciation rights in
tandem with their outstanding options under the Plan. Upon the occurrence of a
Hostile Take-Over effected at any time when the Corporation's outstanding Common
Stock is registered under Section 12(g) of the 1934 Act, each outstanding option
with such a limited stock appreciation right in effect for at least six (6)
months shall automatically be cancelled, to the extent such option is at the
time exercisable for fully-vested shares of Common Stock. The Optionee shall in
return be entitled to a cash distribution from the Corporation in an amount
equal to the excess of (i) the Take-Over Price of the vested shares of Common
Stock at the time subject to the cancelled option (or cancelled portion of such
option) over (ii) the aggregate exercise price payable for such shares. The cash
distribution payable upon such cancellation shall be made within five (5) days
following the consummation of the Hostile Take-Over. Neither the approval of the
Plan Administrator nor the consent of the Board shall be required in connection
with such option cancellation and cash distribution. The uncancelled portion of
the option (if any) shall continue to remain outstanding and become exercisable
in accordance with the terms of the agreement evidencing that grant.
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<PAGE> 13
E. For purposes of Section V.D, the following definitions shall be
in effect:
A Hostile Take-Over shall be deemed to occur in the event (i) any person
or related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common control
with, the Corporation) directly or indirectly acquires beneficial ownership
(within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing more
than fifty percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made directly to
the Corporation's stockholders which the Board does not recommend such
stockholders to accept and (ii) more than fifty percent (50%) of the securities
so acquired in such tender or exchange offer are accepted from holders other
than Corporation officers and directors participating in the Plan.
The Take-Over Price per share shall be deemed to be equal to the greater
of (a) the fair market value per share on the date of cancellation, as
determined pursuant to the valuation provisions of Section I.A. (3) of this
Article Two, or (b) the highest reported price per share of Common Stock paid in
effecting such Hostile Take-Over. However, if the cancelled option is an
Incentive Option, the Take-Over Price shall not exceed the clause (a) price per
share.
F. The shares of Common Stock subject to any option surrendered or
cancelled for an appreciation distribution pursuant to this Section V shall not
be available for subsequent option grant under the Plan.
VI. EXTENSION OF EXERCISE PERIOD
The Plan Administrator shall have full power and authority to extend the
period of time for which any option granted under this Article Two is to remain
exercisable following the Optionee's cessation of Service or death from the
limited period in effect under Section I.C.(1) of this Article Two to such
greater period of time as the Plan Administrator shall deem appropriate;
provided, however, that in no event shall such option be exercisable after the
specified expiration date of the option term.
ARTICLE THREE
MISCELLANEOUS
I. [INTENTIONALLY OMITTED.]
II. AMENDMENT OF THE PLAN AND AWARDS
A. The Board has complete and exclusive power and authority to
amend or modify the Plan in any or all respects whatsoever. However, no such
amendment or
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<PAGE> 14
modification may adversely affect the rights and obligations of an Optionee with
respect to options at the time outstanding under the Plan, unless the Optionee
consents to such amendment. In addition, the Board may not, without the approval
of the Corporation's stockholders, amend the Plan to (i) materially increase the
maximum number of shares issuable under the Plan, the maximum number of shares
issuable pursuant to Incentive Options granted under the Plan on or after the
first day of the 1995 fiscal year or the number of shares for which any one
individual participating in the Plan may be granted stock options and
separately-exercisable stock appreciation rights in the aggregate after December
31, 1993 (except for permissible adjustments under Article One, Section IV) or
(ii) materially modify the eligibility requirements for participation in the
Plan or the benefits accruing to Optionees under the Plan.
B. Options to purchase shares of Common Stock may be granted in
excess of the number of shares then available for issuance under the Plan,
provided any excess shares actually issued are held in escrow until stockholder
approval is obtained for a sufficient increase in the number of shares available
for issuance under the Plan. If such stockholder approval is not obtained within
twelve (12) months after the date the first such excess option grants are made,
then (I) any unexercised excess options shall terminate and cease to be
exercisable and (II) the Corporation shall promptly refund the purchase price
paid for any excess shares actually issued under the Plan and held in escrow,
together with interest (at the applicable Short Term Federal Rate) for the
period the shares were held in escrow.
III. EFFECTIVE DATE AND TERM OF PLAN
A. The Plan was initially adopted by the Board effective February
24, 1992. The Plan was amended by the Board on July 29, 1992, October 28, 1992,
October 27, 1993 and October 27, 1994, subject to subsequent stockholder
approval. The October 27, 1993 amendment increased the number of shares reserved
for issuance under the Plan, changed the name of the Plan from the 1992 Stock
Option/Stock Issuance Plan to the 1992 Stock Option Plan, implemented a
requirement that the grant price of all stock options be not less than 100% of
the fair market value of the Common Stock as of the grant date, and placed
certain restrictions on the Company's ability to reprice options. The October
27, 1993 amendment did not effect options granted prior to the October 27, 1993
amendment. The October 27, 1994 amendment limited (i) the maximum number of
shares for which any one individual may be granted stock options and separately
exercisable stock appreciation rights under the Plan after December 31, 1993 and
(ii) the maximum number of shares which may be issued pursuant to Incentive
Options granted under the Plan on or after the first day of the 1995 fiscal
year.
B. Each option issued and outstanding under the 1988 Plan
immediately prior to the Effective Date of this Plan shall be incorporated into
this Plan and treated as an outstanding option under this Plan, but each such
option shall continue to be governed solely by the terms and conditions of the
instrument evidencing such grant, and nothing in this Plan shall be deemed to
affect or otherwise modify the rights or obligations of the holders of such
options with respect to their acquisition of shares of Common Stock thereunder.
Each unvested share of Common Stock outstanding under the 1988 Plan on the
Effective Date of this Plan shall continue to be
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<PAGE> 15
governed solely by the terms and conditions of the instrument evidencing such
share issuance, and nothing in this Plan shall be deemed to affect or otherwise
modify the rights or obligations of the holder of such unvested shares.
C. The sale and remittance procedure authorized for the exercise of
outstanding options under this Plan shall be available for all options granted
under this Plan on or after the Effective Date and for all non-statutory options
outstanding under the 1988 Plan and incorporated into this Plan. The Plan
Administrator may also allow such procedure to be utilized in connection with
one or more disqualifying dispositions of Incentive Option shares effected after
the Effective Date, whether such Incentive Options were granted under this Plan
or the 1988 Plan.
D. The option/vesting acceleration provisions of Section III of
Article Two relating to Corporate Transactions and Changes in Control may, in
the Plan Administrator's discretion, be extended to one or more stock options
which are outstanding under the 1988 Plan on the Effective Date of this Plan but
which do not otherwise provide for such acceleration.
E. The Plan shall terminate upon the earlier of (i) January 13,
2002 or (ii) the date on which all shares available for issuance under the Plan
shall have been issued or cancelled pursuant to the exercise, surrender or
cash-out of the outstanding options under the Plan. If the date of termination
is determined under clause (i) above, then all option grants outstanding on such
date shall thereafter continue to have force and effect in accordance with the
provisions of the instruments evidencing such grants.
IV. USE OF PROCEEDS
Any cash proceeds received by the Company from the sale of shares under
the Plan shall be used for general corporate purposes.
V. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any option under
the Plan and the issuance of Common Stock upon the exercise or surrender of the
option grants made hereunder shall be subject to the Corporation's procurement
of all approvals and permits required by regulatory authorities having
jurisdiction over the Plan, the options granted under it, and the Common Stock
issued pursuant to it.
B. No shares of Common Stock or other assets shall be issued or
delivered under this Plan unless and until there shall have been compliance with
all applicable requirements of Federal and State securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any securities exchange on which stock of the same class is then listed.
15
<PAGE> 16
VI. NO EMPLOYMENT/SERVICE RIGHTS
Neither the action of the Company in establishing the Plan, nor any
action taken by the Plan Administrator hereunder, nor any provision of the Plan
shall be construed so as to grant any individual the right to remain in the
employ or service of the Corporation (or any parent or subsidiary corporation)
for any period of specific duration, and the Corporation (or any parent or
subsidiary corporation retaining the services of such individual) may terminate
such individual's employment or service at any time and for any reason, with or
without cause.
VII. MISCELLANEOUS PROVISIONS
A. The right to acquire Common Stock or other assets under the Plan
may not be assigned, encumbered or otherwise transferred by any Optionee.
B. The provisions of the Plan shall be governed by the laws of the
State of California, as such laws are applied to contracts entered into and
performed in such State.
C. The provisions of the Plan shall inure to the benefit of, and be
binding upon, the Corporation and its successors or assigns, whether by
Corporate Transaction or otherwise, and the Optionees, the legal representatives
of their respective estates, their respective heirs or legatees and their
permitted assignees.
16
<PAGE> 1
EXHIBIT 10.2
SYNOPSYS, INC.
1994 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
(AS AMENDED THROUGH APRIL 23, 1999)
I. PURPOSE OF THE PLAN
This 1994 Non-Employee Directors Stock Option Plan (the "Plan")
is intended to promote the interests of Synopsys, Inc., a Delaware corporation
(the "Corporation"), by providing the non-employee members of the Board of
Directors with the opportunity to acquire a proprietary interest, or otherwise
increase their proprietary interest, in the Corporation as an incentive for them
to remain in the service of the Corporation.
II. DEFINITIONS
For purposes of the Plan, the following definitions shall be in
effect:
ANNUAL MEETING: the annual meeting of the Corporation's
stockholders.
BOARD: the Corporation's Board of Directors.
CODE: the Internal Revenue Code of 1986, as amended.
COMMON STOCK: shares of the Corporation's common stock.
CHANGE IN CONTROL: a change in ownership or control of the
Corporation effected through either of the following transactions:
a. any person or related group of persons (other
than the Corporation or a person that directly or indirectly controls,
is controlled by, or is under common control with, the Corporation)
directly or indirectly acquires beneficial ownership (within the meaning
of Rule 13d-3 of the Securities Exchange Act of 1934, as amended) of
securities possessing more than fifty percent (50%) of the total
combined voting power of the Corporation's outstanding securities
pursuant to a tender or exchange offer made directly to the
Corporation's stockholders which the Board does not recommend such
stockholders to accept; or
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<PAGE> 2
b. there is a change in the composition of the
Board over a period of twenty-four (24) consecutive months or less such
that a majority of the Board members ceases, by reason of one or more
contested elections for Board membership, to be comprised of individuals
who either (A) have been Board members continuously since the beginning
of such period or (B) have been elected or nominated for election as
Board members during such period by at least a majority of the Board
members described in clause (A) who were still in office at the time
such election or nomination was approved by the Board.
CORPORATE TRANSACTION: any of the following stockholder-approved
transactions to which the Corporation is a party:
a. a merger or consolidation in which the
Corporation is not the surviving entity, except for a transaction the
principal purpose of which is to change the State of the Corporation's
incorporation,
b. the sale, transfer or other disposition of all
or substantially all of the assets of the Corporation in complete
liquidation or dissolution of the Corporation, or
c. any reverse merger in which the Corporation is
the surviving entity but in which securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities are transferred to holders different from those
who held such securities immediately prior to such merger.
EFFECTIVE DATE: October 27, 1994, the date on which the Plan was
adopted by the Board.
FAIR MARKET VALUE: the Fair Market Value per share of Common
Stock determined in accordance with the following provisions:
a. If the Common Stock is not at the time listed or
admitted to trading on any national securities exchange but is traded on
the Nasdaq National Market, the Fair Market Value shall be the closing
selling price per share on the date in question, as such price is
reported by the National Association of Securities Dealers on the Nasdaq
National Market or any successor system. If there is no reported closing
selling price for the Common Stock on the date in question, then the
closing selling price on the last preceding date for which such
quotation exists shall be determinative of Fair Market Value.
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<PAGE> 3
b. If the Common Stock is at the time listed or
admitted to trading on any national securities exchange, then the Fair
Market Value shall be the closing selling price per share on the date in
question on the exchange serving as the primary market for the Common
Stock, as such price is officially quoted in the composite tape of
transactions on such exchange. If there is no reported sale of Common
Stock on such exchange on the date in question, then the Fair Market
Value shall be the closing selling price on the exchange on the last
preceding date for which such quotation exists.
HOSTILE TAKE-OVER: a change in ownership of the Corporation
effected through the following transaction:
a. any person or related group of persons (other
than the Corporation or a person that directly or indirectly controls,
is controlled by, or is under common control with, the Corporation)
directly or indirectly acquires beneficial ownership (within the meaning
of Rule 13d-3 of the Securities Exchange Act of 1934, as amended) of
securities possessing more than fifty percent (50%) of the total
combined voting power of the Corporation's outstanding securities
pursuant to a tender or exchange offer made directly to the
Corporation's stockholders which the Board does not recommend such
stockholders to accept, and
b. more than fifty percent (50%) of the securities
so acquired in such tender or exchange offer are accepted from holders
other than the officers and directors of the Corporation subject to the
short-swing profit restrictions of Section 16 of the 1934 Act.
1934 ACT: the Securities Exchange Act of 1934, as amended.
OPTIONEE: any person to whom an option is granted under the
Plan.
PERMANENT DISABILITY OR PERMANENTLY DISABLED: the inability of
the Optionee to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment expected to result in death
or to be of continuous duration of twelve (12) months or more.
TAKE-OVER PRICE: the greater of (a) the Fair Market Value per
share of Common Stock on the date the option is surrendered to the Corporation
in connection with a Hostile Take-
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<PAGE> 4
Over or (b) the highest reported price per share of Common Stock paid by the
tender offeror in effecting such Hostile Take-Over.
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III. ADMINISTRATION OF THE PLAN
The terms and conditions of each automatic option grant
(including the timing and pricing of the option grant) shall be determined by
the express terms and conditions of the Plan, and neither the Board nor any
committee of the Board shall exercise any discretionary functions with respect
to option grants made pursuant to the Plan.
IV. STOCK SUBJECT TO THE PLAN
A. Shares of the Corporation's Common Stock shall be
available for issuance under the Plan and shall be drawn from either the
Corporation's authorized but unissued shares of Common Stock or from reacquired
shares of Common Stock, including shares repurchased by the Corporation on the
open market. The number of shares of Common Stock reserved for issuance over the
term of the Plan shall initially be fixed at 100,000 shares.
B. The number of shares of Common Stock available for
issuance under the Plan automatically increased on the first trading day of each
calendar year from 1996 through 1999 by an additional 25,000 shares. In
addition, based upon an amendment approved by the Board in January 1999 and
approved by the Corporation's shareholders in March 1999, the number of shares
of Common Stock available for issuance under the Plan shall automatically
increase on the first trading day of each calendar year during the term of the
Plan by an additional 150,000 shares each year beginning with the 2000 calendar
year.
C. Should one or more outstanding options under this Plan
expire or terminate for any reason prior to exercise in full, then the shares
subject to the portion of each option not so exercised shall be available for
subsequent option grant under the Plan. Shares subject to any option or portion
thereof surrendered in accordance with Article VII and all share issuances under
the Plan, whether or not the shares are subsequently repurchased by the
Corporation pursuant to its repurchase rights under the Plan, shall reduce on a
share-for-share basis the number of shares of Common Stock available for
subsequent option grant under the Plan. In addition, should the exercise price
of an outstanding option under the Plan be paid with shares of Common Stock,
then the number of shares of Common Stock available for issuance under the Plan
shall be reduced by the gross number of shares for which the option is
exercised, and not by the net number of shares of Common Stock actually issued
to the holder of such option.
D. Should any change be made to the Common Stock issuable
under the Plan by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, then appropriate adjustments shall be made to (i) the
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maximum number and/or class of securities issuable under the Plan, (ii) the
number and/or class of securities by which the share reserve is to increase
automatically each calendar year, (iii) the number and/or class of securities
for which automatic option grants are to be subsequently made to each
newly-elected or continuing non-employee Board member under the Plan, and (iv)
the number and/or class of securities and price per share in effect under each
option outstanding under the Plan. The adjustments to the outstanding options
shall be made by the Board in a manner which shall preclude the enlargement or
dilution of rights and benefits under such options and shall be final, binding
and conclusive.
V. ELIGIBILITY
A. Eligible Optionees. The individuals eligible to receive
automatic option grants pursuant to the provisions of this Plan shall be limited
to (i) those individuals serving as non-employee Board members on the Effective
Date who have indicated their intention to stand for re-election to the Board at
the 1995 Annual Meeting and who have not otherwise previously received a stock
option grant from the Corporation, (ii) those individuals who are first elected
or appointed as non-employee Board members after the Effective Date, whether
through appointment by the Board or election by the Corporation's stockholders,
and (iii) those individuals who are re-elected as non-employee Board members at
one or more Annual Meetings held after the Effective Date. A non-employee Board
member shall not be eligible to receive the initial automatic option grant under
clause (i) or clause (ii) if such individual has previously been in the employ
of the Corporation (or any parent or subsidiary). However, a non-employee Board
member shall be eligible to receive one or more clause (iii) option grants,
whether or not he or she has previously been in the employ of the Corporation
(or any parent or subsidiary). Each non-employee Board member eligible to
participate in the Plan pursuant to the foregoing criteria is hereby designated
an Eligible Director.
B. Limitation. Except for the grants to be made pursuant to
this Plan, non-employee Board members shall not be eligible to receive any stock
options, stock appreciation rights, direct stock issuances or other stock awards
under this Plan or any other stock plan of the Corporation or any parent or
subsidiary.
VI. TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS
A. Grant Date. Option grants shall be made on the dates
specified below:
- Each individual serving as an Eligible Director on the
Effective Date who has indicated his or her intention to stand for
re-election to the Board at the 1995 Annual Meeting and who has not
otherwise previously received a stock
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option grant from the Corporation year shall automatically be granted at
that time a non-statutory stock option to purchase 20,000 shares of
Common Stock.
- Initial Grants. Each individual who first becomes an
Eligible Director after the Effective Date, whether through election by
the Corporation's stockholders or appointment by the Board, shall
automatically be granted, at the time of such initial election or
appointment, a non-statutory option to purchase 20,000 shares of Common
Stock.
- Annual Grants. On the date of each Annual Meeting each
Eligible Director who is re-elected to the Board at that Annual Meeting
shall automatically be granted a non-statutory option to purchase an
additional 10,000 shares of Common Stock (an "annual option grant"). On
the date on which an individual first becomes an Eligible Director by
election or appointment by the Board, such Eligible Director shall
automatically be granted, at the time of such appointment, a
non-statutory option to purchase 10,000 shares of Common Stock, reduced,
in the case of Eligible Directors appointed to the Board, by one twelfth
for each whole month that has elapsed since the most recent Annual
Meeting (also an "annual option grant"). There shall be no limit on the
number of annual option grants any one Eligible Director may receive
over his or her period of continued Board service.
- Committee Service Grants. Each Eligible Director who
serves on the Audit Committee, Compensation (or comparable) Committee or
other eligible committee as determined by the Board (each such committee
a "grant-eligible committee") shall automatically be granted a
non-statutory option to purchase 5,000 shares of Common Stock for
service on such a grant-eligible committee (a "committee-service option
grant"). Such grants shall be awarded on the date of each Annual Meeting
to Eligible Directors serving on such committees as of such date and
re-elected to the Board at such Annual Meeting, and otherwise upon
appointment to a grant-eligible committee. The number of option shares
granted to Eligible Directors who are appointed to a grant-eligible
committee between Annual Meetings shall be reduced by one twelfth for
each whole month that has elapsed from the Annual Meeting until the date
of appointment, except with respect to Eligible Directors who are first
elected to the Board at the Annual Meeting and elected to serve on a
grant-eligible committee at the first meeting of the Board following the
Annual Meeting. There shall be no limit on the number of such annual
5,000-share committee-service option grants any one Eligible Director
may receive over his or her period of continued Board service, except
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that no Eligible Director shall receive more than two committee service
grants in any year (with such year being measured from one annual
meeting to the next).
B. Exercise Price. The exercise price per share of Common
Stock subject to each automatic option grant shall be equal to one hundred
percent (100%) of the Fair Market Value per share of Common Stock on the
automatic grant date.
C. Payment.
The exercise price shall become immediately due upon exercise of
the option and shall be payable in one of the alternative forms specified below:
(i) full payment in cash or check made payable to
the Corporation's order; or
(ii) full payment in shares of Common Stock held for
the requisite period necessary to avoid a charge to the Corporation's
earnings for financial-reporting purposes and valued at Fair Market
Value on the Exercise Date (as such term is defined below); or
(iii) full payment in a combination of shares of
Common Stock held for the requisite period necessary to avoid a charge
to the Corporation's earnings for financial-reporting purposes and
valued at Fair Market Value on the Exercise Date and cash or check
payable to the Corporation's order; or
(iv) to the extent the option is exercised for vested
shares, full payment through a broker-dealer sale and remittance
procedure pursuant to which the non-employee Board member (I) shall
provide irrevocable written instructions to a Corporation-designated
brokerage firm to effect the immediate sale of the purchased shares and
remit to the Corporation, out of the sale proceeds available on the
settlement date, sufficient funds to cover the aggregate exercise price
payable for the purchased shares and (II) shall concurrently provide
written directives to the Corporation to deliver the certificates for
the purchased shares directly to such brokerage firm in order to
complete the sale transaction.
For purposes of this Section VI.C, the Exercise Date shall be
the date on which written notice of the option exercise is delivered to the
Corporation. Except to the extent the sale and remittance procedure specified
above is utilized in connection with the exercise of the option for vested
shares, payment of the exercise price for the purchased shares must accompany
the
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exercise notice. However, if the option is exercised for any unvested shares,
then the Optionee must also execute and deliver to the Corporation a stock
purchase agreement for those unvested shares which provides the Corporation with
the right to repurchase, at the exercise price paid per share, any unvested
shares held by the Optionee at the time of his or her cessation of Board service
and which precludes the sale, transfer or other disposition of any shares
purchased under the option, to the extent those shares are at the time subject
to the Corporation's repurchase right.
D. Exercisability/Vesting. Each automatic grant shall be
immediately exercisable for any or all of the option shares. Any shares
purchased under the option shall be subject to repurchase by the Corporation, at
the exercise price paid per share, upon the Optionee's cessation of Board
service prior to vesting in those shares in accordance with the applicable
schedule below.
- The initial automatic grant for 20,000 shares made to
each Eligible Director shall vest, and the Corporation's repurchase
right shall lapse, in a series of four (4) successive equal installments
as such individual continues in Board service through the date
immediately preceding each of the first four (4) Annual Meetings
following the grant date of that option.
- Each annual option grant made to an Eligible Director
(and each prorated grant issued pursuant to the third paragraph of
Section VI.A.) shall vest in full, and the Corporation's repurchase
right shall lapse in its entirety, on the date immediately prior to the
Annual Meeting following the grant date of that option, provided the
Optionee continues in Board service through that vesting date.
- Each committee-service option grant made to an Eligible
Director shall vest in full, and the Corporation's repurchase right
shall lapse in its entirety, on the date immediately prior to the Annual
Meeting following the grant date of that option, provided the Optionee
continues in Board service and remains a member of the committee with
respect to which the grant was awarded through that vesting date.
Vesting of the option shares shall be subject to acceleration as
provided in Section VI.G and Article VII. In no event, however, shall any
additional option shares vest after the Optionee's cessation of Board service.
E. Option Term. Each automatic grant under the Plan shall
have a maximum term of ten (10) years measured from the automatic grant date.
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F. Non-Transferability. During the lifetime of the
Optionee, each automatic option grant, together with the limited stock
appreciation right pertaining to such option, shall be exercisable only by the
Optionee and shall not be assignable or transferable by the Optionee other than
a transfer of the option effected by will or by the laws of descent and
distribution following Optionee's death.
G. Effect of Termination of Board Service.
1. Should the Optionee cease to serve as a Board
member for any reason (other than death or Permanent Disability) while holding
one or more option grants issued under the Plan, then such individual shall have
a six (6)-month period following the date of such cessation of Board service in
which to exercise each such option for any or all of the option shares in which
the Optionee is vested at the time of his or her cessation of Board service.
Each such option shall immediately terminate and cease to be outstanding, at the
time of such cessation of Board service, with respect to any option shares in
which the Optionee is not otherwise at that time vested.
2. Should the Optionee die within six (6) months
after cessation of Board service, then any option grant issued under the Plan
held by the Optionee at the time of death may subsequently be exercised, for any
or all of the option shares in which the Optionee is vested at the time of his
or her cessation of Board service (less any option shares subsequently purchased
by the Optionee prior to death), by the personal representative of the
Optionee's estate or by the person or persons to whom the option is transferred
pursuant to the Optionee's will or in accordance with the laws of descent and
distribution. The right to exercise each such option shall lapse upon the
expiration of the twelve (12)-month period measured from the date of the
Optionee's death.
3. Should the Optionee die or become Permanently
Disabled while serving as a Board member, then any option grant issued under the
Plan held by the Optionee at the time of his or her death or Permanent
Disability may subsequently be exercised for any or all of the option shares in
which the Optionee is vested at that time plus an additional number of option
shares equal to the number of option shares (if any) in which the Optionee would
have vested had he or she continued in Board service until the next Annual
Meeting. The Optionee (or the personal representative of the Optionee's estate
or the person or persons to whom the option is transferred upon the Optionee's
death) shall have the right to exercise the option for such number of option
shares at any time prior to the expiration of the twelve (12)-month period
measured from the date of the Optionee's death or Permanent Disability.
4. In no event shall any option grant under this
Plan remain exercisable after the expiration date of the maximum ten (10)-year
option term. Upon the
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expiration of the applicable post-service exercise period under subparagraphs 1
through 3 above or (if earlier) upon the expiration of the maximum ten (10)-year
option term, the grant shall terminate and cease to be outstanding for any
option shares in which the Optionee was vested at the time of his or her
cessation of Board service but for which such option was not otherwise
exercised.
H. Stockholder Rights. The holder of an option grant issued
under the Plan shall have none of the rights of a stockholder with respect to
any shares subject to such option until such individual shall have exercised the
option and paid the exercise price for the purchased shares.
I. Remaining Terms. The remaining terms and conditions of
each option grant issued under the Plan shall be as set forth in the form Stock
Option Agreement attached as Exhibit A.
VII. SPECIAL ACCELERATION EVENTS
A. In the event of any Corporate Transaction, the shares of
Common Stock at the time subject to each outstanding option issued under the
Plan but not otherwise vested shall automatically vest in full so that each such
option shall, immediately prior to the specified effective date for the
Corporate Transaction, become fully exercisable for all of the shares of Common
Stock at the time subject to that option and may be exercised for all or any
portion of such shares as fully-vested shares of Common Stock. Immediately
following the consummation of the Corporate Transaction, each option grant
issued under the Plan shall terminate and cease to be outstanding, except to the
extent assumed by the successor corporation or its parent company.
B. In connection with any Change in Control of the
Corporation, the shares of Common Stock at the time subject to each outstanding
option issued under the Plan but not otherwise vested shall automatically vest
in full so that each such option shall, immediately prior to the specified
effective date for the Change in Control, become fully exercisable for all of
the shares of Common Stock at the time subject to that option and may be
exercised for all or any portion of such shares as fully-vested shares of Common
Stock. Each such option shall remain exercisable for such fully-vested option
shares until the expiration or sooner termination of the option term or the
cash-out of the option in accordance with Section VII.C.
C. Upon the occurrence of a Hostile Take-Over, the Optionee
shall have a thirty (30)-day period in which to surrender to the Corporation
each option grant issued under the Plan held by him or her for a period of at
least six (6) months. The Optionee shall in return be entitled to a cash
distribution from the Corporation in an amount equal to the excess of (i) the
Take-Over Price of the shares of Common Stock at the time subject to the
surrendered option
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(whether or not the Optionee is otherwise at the time vested in those shares)
over (ii) the aggregate exercise price payable for such shares. Such cash
distribution shall be paid within five (5) days following the surrender of the
option to the Corporation. No approval or consent of the Board shall be required
in connection with such option surrender and cash distribution.
D. The shares of Common Stock subject to each option
surrendered in connection with the Hostile Take-Over shall NOT be available for
subsequent option grant under this Plan.
E. The automatic option grants outstanding under the Plan
shall in no way affect the right of the Corporation to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.
VIII. AMENDMENT OF THE PLAN AND AWARDS
The Board has complete and exclusive power and authority to
amend or modify the Plan (or any component thereof) in any or all respects
whatsoever. However, (i) the Plan, together with the option grants outstanding
under the Plan, may not be amended at intervals more frequently than once every
six (6) months, other than to the extent necessary to comply with applicable
Federal income tax laws and regulations, and (ii) no such amendment or
modification shall adversely affect rights and obligations with respect to
options at the time outstanding under the Plan, unless the affected Optionees
consent to such amendment. In addition, the Board may not, without the approval
of the Corporation's stockholders, amend the Plan to (i) materially increase the
maximum number of shares issuable under the Plan or the number of shares
issuable per newly-elected or continuing Eligible Director, except for
permissible adjustments under Section IV.B., (ii) materially modify the
eligibility requirements for participation in the Plan or (iii) materially
increase the benefits accruing to participants in the Plan.
IX. EFFECTIVE DATE AND TERM OF PLAN
A. The Plan became effective immediately upon adoption by
the Board on the Effective Date, and one or more automatic option grants may be
made under the Plan at any time on or after such Effective Date. However, no
options granted under the Plan shall become exercisable in whole or in part
prior to approval of the Plan by the Corporation's stockholders at the 1995
Annual Meeting. If such approval is not obtained, then all options previously
granted under the Plan shall terminate and cease to be outstanding, and no
further option grants shall be made under the Plan.
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B. The Plan shall terminate upon the earlier of (i) October 26,
2004 or (ii) the date on which all shares available for issuance under the Plan
shall have been issued or canceled pursuant to the exercise or cash-out of the
options granted under the Plan. If the date of termination is determined under
clause (i) above, then all option grants and unvested stock issuances
outstanding on such date shall thereafter continue to have force and effect in
accordance with the provisions of the agreements evidencing those option grants
or stock issuances.
X. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of
shares pursuant to option grants or share issuances under the Plan shall be used
for general corporate purposes.
XI. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any
option under the Plan and the issuance of Common Stock upon the exercise of the
option grants made hereunder shall be subject to the Corporation's procurement
of all approvals and permits required by regulatory authorities having
jurisdiction over the Plan, the options granted under it, and the Common Stock
issued pursuant to it.
B. No shares of Common Stock or other assets shall be
issued or delivered under this Plan unless and until there shall have been
compliance with all applicable requirements of Federal and state securities
laws, including the filing and effectiveness of the Form S-8 registration
statement for the shares of Common Stock issuable under the Plan, and all
applicable listing requirements of any securities exchange on which the Common
Stock is then listed for trading.
XII. NO IMPAIRMENT OF RIGHTS
Neither the action of the Corporation in establishing the Plan
nor any provision of the Plan shall be construed or interpreted so as to affect
adversely or otherwise impair the right of the Corporation or the stockholders
to remove any individual from the Board at any time in accordance with the
provisions of applicable law.
XIII. MISCELLANEOUS PROVISIONS
A. The right to acquire Common Stock or other assets under
the Plan may not be assigned, encumbered or otherwise transferred by any
Optionee.
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B. The provisions of the Plan relating to the exercise of
options and the vesting of shares shall be governed by the laws of the State of
California, as such laws are applied to contracts entered into and performed in
such State.
C. The provisions of the Plan shall inure to the benefit
of, and be binding upon, the Corporation and its successors or assigns, whether
by Corporate Transaction or otherwise, and the Optionees, the legal
representatives of their respective estates, their respective heirs or legatees
and their permitted assignees.
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EXHIBIT 10.3
SYNOPSYS, INC.
1998 NONSTATUTORY STOCK OPTION PLAN
(AS AMENDED APRIL 27, 1999)
ARTICLE ONE
GENERAL
I. PURPOSE OF THE PLAN
A. This 1998 Nonstatutory Stock Option Plan (the "Plan") is
intended to promote the interests of Synopsys, Inc., a Delaware corporation (the
"Corporation"), by providing (i) key employees (excluding officers and
directors) of the Corporation (or its parent or subsidiary corporations) who
contribute to the management, growth and financial success of the Corporation
(or its parent or subsidiary corporations) and (ii) consultants and other
independent advisors who provide valuable services to the Corporation (or its
parent or subsidiary corporations) with the opportunity to acquire a proprietary
interest, or otherwise increase their proprietary interest, in the Corporation
as an incentive for them to remain in the service of the Corporation (or its
parent or subsidiary corporations).
B. For purposes of the Plan, the following provisions shall be
applicable in determining the parent and subsidiary corporations of the
Corporation:
Any corporation (other than the Corporation) in an unbroken chain of
corporations ending with the Corporation shall be considered to be a parent of
the Corporation, provided each such corporation in the unbroken chain (other
than the Corporation) owns, at the time of the determination, stock possessing
fifty percent (50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
Each corporation (other than the Corporation) in an unbroken chain of
corporations beginning with the Corporation shall be considered to be a
subsidiary of the Corporation, provided each such corporation (other than the
last corporation) in the unbroken chain owns, at the time of the determination,
stock possessing fifty percent (50%) or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.
II. ADMINISTRATION OF THE PLAN
A. Administrator. The Plan shall be administered by (i) the Board
of Directors (the "Board"), or (ii) a committee of Directors appointed by the
Board, which committee shall be constituted to satisfy applicable laws (in
either case, the "Administrator"). The Board at any time may terminate the
authority delegated to any committee of the Board pursuant to this Section II(A)
and revest in the Board the administration of the Plan.
<PAGE> 2
B. Powers of the Administrator. In particular and without
limitation, the Administrator, subject to the terms of the Plan, shall have the
authority, in its discretion to:
(i) select the employees and consultants to whom Options may
be granted;
(ii) determine whether and to what extent Options are to be
granted under the Plan;
(iii) determine the number of shares to be covered by each
Option granted under the Plan; and
(iv) determine the terms and conditions of any Option granted
under the Plan and any related loans to be made by the Company, based upon
factors determined by the Administrator.
C. Administrator Determinations Binding. The Administrator may
adopt, alter and repeal administrative rules, guidelines and practices governing
the Plan as it from time to time shall deem advisable, may interpret the terms
and provisions of the Plan, any Option and any Option agreement and may
otherwise supervise the administration of the Plan. Any determination made by
the Administrator pursuant to the provisions of the Plan with respect to any
Option shall be made in its sole discretion at the time of the grant of the
Option or, unless in contravention of any express term of the Plan or Option, at
any later time. All decisions made by the Administrator under the Plan shall be
binding on all persons, including the Company and Plan participants. No member
of the Administrator shall be liable for any action that he or she has in good
faith taken or failed to take with respect to this Plan or any Option.
III. ELIGIBILITY
The persons eligible to receive option grants (the "Optionee(s)") are as
follows:
(i) key employees of the Corporation (or its parent or
subsidiary corporations) who render services which contribute to the management,
growth and financial success of the Corporation (or its parent or subsidiary
corporations);
(ii) those consultants or other independent advisors who
provide valuable services to the Corporation (or its parent or subsidiary
corporations.
IV. STOCK SUBJECT TO THE PLAN
A. Shares of the Corporation's common stock (the "Common Stock")
shall be available for issuance under the Plan and shall be drawn from either
the Corporation's authorized but unissued shares of Common Stock or from
reacquired shares of Common Stock, including
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<PAGE> 3
shares repurchased by the Corporation on the open market. The maximum number of
shares of Common Stock which may be issued over the term of the Plan shall not
exceed the sum of 3,116,736 shares.
B. Should one or more outstanding options under this Plan expire or
terminate for any reason prior to exercise in full, then the shares subject to
the portion of each option not so exercised shall be available for subsequent
option grant under the Plan. Shares issued under the Plan shall not be available
for subsequent option grant under the Plan. In addition, should the exercise
price of an outstanding option under the Plan be paid with shares of Common
Stock, then the number of shares of Common Stock available for issuance under
the Plan shall be reduced by the gross number of shares for which the option is
exercised, and not by the net number of shares of Common Stock actually issued
to the holder of such option.
C. In the event any change is made to the Common Stock issuable
under the Plan by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, appropriate adjustments shall be made to the number and/or class
of securities and price per share in effect under each outstanding option under
the Plan. Such adjustments to the outstanding options are to be effected in a
manner which shall preclude the enlargement or dilution of rights and benefits
under such options.
The adjustments determined by the Administrator shall be final, binding
and conclusive.
D. Common Stock issuable under the Plan may be subject to such
restrictions on transfer, repurchase rights or other restrictions determined by
the Administrator.
ARTICLE TWO
OPTION GRANTS
I. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to the Plan shall be authorized by action of
the Administrator and will be nonstatutory options. Each granted option shall be
evidenced by one or more instruments in the form approved by the Administrator;
provided, however, that each such instrument shall comply with the terms and
conditions specified below.
A. Option Price.
(1) The option price per share shall be fixed by the
Administrator. In no event, however, shall it be less than one hundred percent
(100%) of the fair market value per share of Common Stock on the date of the
option grant.
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(2) The option price shall become immediately due upon
exercise of the option and, subject to the instrument evidencing the grant,
shall be payable in one of the following alternative forms specified below:
(a) full payment in cash or check drawn to the
Corporation's order;
(b) full payment in shares of Common Stock held for
at least six (6) months and valued at fair market value on the Exercise Date (as
such term is defined below);
(c) full payment in a combination of shares of
Common Stock held for at least six (6) months and valued at fair market value on
the Exercise Date and cash or check; or
(d) full payment through a broker-dealer sale and
remittance procedure pursuant to which the Optionee (i) shall provide
irrevocable written instructions to a Corporation-designated brokerage firm to
effect the immediate sale of the purchased shares and remit to the Corporation,
out of the sale proceeds available on the settlement date, sufficient funds to
cover the aggregate option price payable for the purchased shares plus all
applicable Federal and State income and employment taxes required to be withheld
by the Corporation in connection with such purchase and (ii) shall provide
written directives to the Corporation to deliver the certificates for the
purchased shares directly to such brokerage firm in order to complete the sale
transaction.
For purposes of this subparagraph (2), the Exercise Date shall be the
date on which written notice of the option exercise is delivered to the
Corporation. Except to the extent the sale and remittance procedure is utilized
in connection with the exercise of the option, payment of the option price for
the purchased shares must accompany such notice.
(3) The fair market value per share of Common Stock on any
relevant date under the Plan shall be determined in accordance with the
following provisions:
(a) If the Common Stock is not at the time listed or
admitted to trading on any national stock exchange but is traded on the Nasdaq
National Market, the fair market value shall be the closing selling price per
share of Common Stock on the date in question, as such price is reported by the
National Association of Securities Dealers on the Nasdaq National Market System
or any successor system. If there is no reported closing selling price for the
Common Stock on the date in question, then the closing selling price on the last
preceding date for which such quotation exists shall be determinative of fair
market value.
(b) If the Common Stock is at the time listed or
admitted to trading on any national stock exchange, then the fair market value
shall be the closing selling price per share of Common Stock on the date in
question on the stock exchange determined by the Administrator to be the primary
market for the Common Stock, as such price is officially quoted
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in the composite tape of transactions on such exchange. If there is no reported
sale of Common Stock on such exchange on the date in question, then the fair
market value shall be the closing selling price on the exchange on the last
preceding date for which such quotation exists.
B. Term and Exercise of Options. Each option shall be exercisable
at such time or times and during such period as is determined by the
Administrator and set forth in the stock option agreement evidencing the grant;
provided that at least 75% of the options granted hereunder shall become
exercisable ratably over a four year period from the date of grant, with the
vesting interval (i.e., monthly, quarterly, etc.) and any period prior to the
commencement of vesting determined in each case by the Plan Administrator. No
such option, however, shall have a maximum term in excess of ten (10) years from
the grant date. An option may not be exercised for a fraction of a share. During
the lifetime of the Optionee, the option shall be exercisable only by the
Optionee and shall not be assignable or transferable by the Optionee otherwise
than by will or by the laws of descent and distribution following the Optionee's
death.
C. Termination of Service.
(1) Except to the extent otherwise provided pursuant to
Section III of this Article Two, the following provisions shall govern the
exercise period applicable to any outstanding options under the Plan which are
held by the Optionee at the time of his or her cessation of Service or death.
(a) Should the Optionee cease Service for any reason
(including death or permanent disability as defined in Section 22(e)(3) of the
Internal Revenue Code) while holding one or more outstanding options under the
Plan, then none of those options shall (except to the extent otherwise provided
pursuant to Section III of this Article Two) remain exercisable beyond the
limited post-Service period designated by the Administrator at the time of the
option grant and set forth in the option agreement.
(b) Any option granted to an Optionee under the Plan
and exercisable in whole or in part on the date of the Optionee's death may be
subsequently exercised, by the personal representative of the Optionee's estate
or by the person or persons to whom the option is transferred pursuant to the
Optionee's will or in accordance with the laws of descent and distribution,
provided and only if such exercise occurs prior to the earlier of (i) the
expiration of the period designated by the Administrator at the time of the
option grant and set forth in the option agreement, which may be any period from
one month to three years measured from the date of the Optionee's death, or (ii)
the specified expiration date of the option term. Upon the occurrence of the
earlier event, the option shall terminate and cease to be exercisable.
(c) Under no circumstances, however, shall any such
option be exercisable after the specified expiration date of the option term.
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(d) During the limited post-Service exercise period,
the option may not be exercised for more than the number of shares for which the
option is exercisable on the date of the Optionee's cessation of Service. Upon
the expiration of such limited exercise period or (if earlier) upon the
expiration of the option term, the option shall terminate and cease to be
exercisable. However, upon the Optionee's cessation of Service, each outstanding
option at the time held by the Optionee shall immediately terminate and cease to
be outstanding with respect to any shares for which the option is not otherwise
at that time exercisable or in which the Optionee is not otherwise vested.
(e) Should (i) the Optionee's Service be terminated
for misconduct (including, but not limited to, any act of dishonesty, willful
misconduct, fraud or embezzlement) or (ii) the Optionee make any unauthorized
use or disclosure of confidential information or trade secrets of the
Corporation or its parent or subsidiary corporations, then in any such event all
outstanding options held by the Optionee under this Article Two shall terminate
immediately and cease to be exercisable.
(2) The Administrator shall have complete discretion,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to permit one or more options held by the Optionee
under this Article Two to be exercised, during the limited period of
exercisability provided under subparagraph (1) above, not only with respect to
the number of shares for which each such option is exercisable at the time of
the Optionee's cessation of Service but also with respect to one or more
subsequent installments for which the option would otherwise have become
exercisable had such cessation of Service not occurred.
(3) For purposes of the foregoing provisions of this Section
I (and for all other purposes under the Plan):
(a) The Optionee shall (except to the extent
otherwise specifically provided in the applicable option agreement) be deemed to
remain in the Service of the Corporation for so long as such individual renders
services on a periodic basis to the Corporation (or any parent or subsidiary
corporation) in the capacity of an Employee, a non-employee member of the Board
or an independent consultant or advisor.
(b) The Optionee shall be considered to be an
Employee for so long as he or she remains in the employ of the Corporation or
one or more parent or subsidiary corporations, subject to the control and
direction of the employer entity not only as to the work to be performed but
also as to the manner and method of performance.
D. Stockholder Rights. An Optionee shall have no stockholder rights
with respect to any shares covered by the option until such individual shall
have exercised the option, paid the option price for the purchased shares and
been issued a stock certificate for such shares.
V. CORPORATE TRANSACTIONS/CHANGES IN CONTROL
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A. In the event of any of the following stockholder-approved
transactions to which the Corporation is a party (a "Corporate Transaction"):
(i) a merger or consolidation in which the Corporation is
not the surviving entity, except for a transaction the principal purpose of
which is to change the State of the Corporation's incorporation,
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Corporation in liquidation or dissolution
of the Corporation, or
(iii) any reverse merger in which the Corporation is the
surviving entity but in which securities possessing more than fifty percent
(50%) of the total combined voting power of the Corporation's outstanding
securities are transferred to holders different from those who held such
securities immediately prior to such merger, then the exercisability of each
option outstanding under the Plan shall automatically accelerate so that each
such option shall, immediately prior to the specified effective date for the
Corporate Transaction, become fully exercisable with respect to the total number
of shares of Common Stock at the time subject to such option and may be
exercised for all or any portion of such shares. However, an outstanding option
under this Article Two shall not so accelerate if and to the extent: (i) such
option is, in connection with the Corporate Transaction, to be assumed by the
successor corporation or parent thereof or replaced with a comparable option to
purchase shares of the capital stock of the successor corporation or parent
thereof, (ii) such option is to be replaced by a comparable cash incentive
program of the successor corporation based on the option spread at the time of
the Corporate Transaction, or (iii) the acceleration of such option is subject
to other limitations imposed by the Administrator at the time of the option
grant. The determination of comparability under clause (i) or (ii) above shall
be made by the Administrator, and its determination shall be final, binding and
conclusive.
B. Immediately after the consummation of the Corporate Transaction,
all outstanding options under the Plan shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation or its
parent company.
C. Each outstanding option under the Plan which is assumed in
connection with the Corporate Transaction or is otherwise to continue in effect
shall be appropriately adjusted, immediately after such Corporate Transaction,
to apply and pertain to the number and class of securities which would have been
issued to the option holder, in consummation of such Corporate Transaction, had
such person exercised the option immediately prior to such Corporate
Transaction. Appropriate adjustments shall also be made to the option price
payable per share, provided the aggregate option price payable for such
securities shall remain the same. In addition, the maximum number and/or class
of securities available for issuance under the Plan and the total number and/or
class of securities for which stock options may be granted to any one
participant in the Plan shall be appropriately adjusted following the
consummation of the
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Corporate Transaction to reflect the effect of such transaction upon the
Corporation's capital structure.
D. The grant of options under the Plan shall in no way affect the
right of the Corporation to adjust, reclassify, reorganize or otherwise change
its capital or business structure or to merge, consolidate, dissolve, liquidate
or sell or transfer all or any part of its business or assets.
E. The Administrator shall have the discretionary authority,
exercisable at the time the option is granted or at any time while the option
remains outstanding, to provide for the automatic acceleration of one or more
outstanding options under this Article Two upon the occurrence of a Change in
Control. Alternatively, the Administrator shall have full power and authority to
condition any such option acceleration upon the subsequent termination of the
Optionee's Service within a specified period following the Change in Control.
F. For purposes of this Section II, a Change in Control shall be
deemed to occur in the event:
(i) any person or related group of persons (other than the
Corporation or a person that directly or indirectly controls, is controlled by,
or is under common control with, the Corporation) directly or indirectly
acquires beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act)
of securities possessing more than fifty percent (50%) of the total combined
voting power of the Corporation's outstanding securities pursuant to a tender or
exchange offer made directly to the Corporation's stockholders which the Board
does not recommend such stockholders to accept; or
(ii) there is a change in the composition of the Board over a
period of twenty-four (24) consecutive months or less such that a majority of
the Board members ceases, by reason of one or more proxy contests for the
election of Board members, to be comprised of individuals who either (A) have
been Board members continuously since the beginning of such period or (B) have
been elected or nominated for election as Board members during such period by at
least a majority of the Board members described in clause (A) who were still in
office at the time such election or nomination was approved by the Board.
G. Any options accelerated in connection with the Change in Control
shall remain fully exercisable until the expiration or sooner termination of the
option term.
VI. EXTENSION OF EXERCISE PERIOD
The Administrator shall have full power and authority to extend the
period of time for which any option granted under this Article Two is to remain
exercisable following the Optionee's cessation of Service or death from the
limited period in effect under Section I of this Article Two to such greater
period of time as the Administrator shall deem appropriate; provided,
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<PAGE> 9
however, that in no event shall such option be exercisable after the specified
expiration date of the option term.
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<PAGE> 10
ARTICLE THREE
MISCELLANEOUS
I. [INTENTIONALLY OMITTED.]
II. AMENDMENT OF THE PLAN AND OPTIONS
A. The Board has complete and exclusive power and authority to
amend or modify the Plan in any or all respects whatsoever. However, no such
amendment or modification may adversely affect the rights and obligations of an
Optionee with respect to options at the time outstanding under the Plan, unless
the Optionee consents to such amendment.
III. TERM OF PLAN
The Plan shall become effective upon its adoption by the Board. It shall
continue in effect for ten (10) years, unless sooner terminated under Article
Two of the Plan.
IV. USE OF PROCEEDS
Any cash proceeds received by the Company from the sale of shares under
the Plan shall be used for general corporate purposes.
V. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any option under
the Plan and the issuance of Common Stock upon the exercise or surrender of the
option grants made hereunder shall be subject to the Corporation's procurement
of all approvals and permits required by regulatory authorities having
jurisdiction over the Plan, the options granted under it, and the Common Stock
issued pursuant to it.
B. No shares of Common Stock or other assets shall be issued or
delivered under this Plan unless and until there shall have been compliance with
all applicable requirements of Federal and State securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any securities exchange on which stock of the same class is then listed.
VI. NO EMPLOYMENT/SERVICE RIGHTS
Neither the action of the Company in establishing the Plan, nor any
action taken by the Administrator hereunder, nor any provision of the Plan shall
be construed so as to grant any individual the right to remain in the employ or
service of the Corporation (or any parent or
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subsidiary corporation) for any period of specific duration, and the Corporation
(or any parent or subsidiary corporation retaining the services of such
individual) may terminate such individual's employment or service at any time
and for any reason, with or without cause.
VII. MISCELLANEOUS PROVISIONS
A. The right to acquire Common Stock or other assets under the Plan
may not be assigned, encumbered or otherwise transferred by any Optionee.
B. The provisions of the Plan shall be governed by the laws of the
State of California, as such laws are applied to contracts entered into and
performed in such State.
C. The provisions of the Plan shall inure to the benefit of, and be
binding upon, the Corporation and its successors or assigns, whether by
Corporate Transaction or otherwise, and the Optionees, the legal representatives
of their respective estates, their respective heirs or legatees and their
permitted assignees.
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EXHIBIT 10.4
SYNOPSYS, INC.
EMPLOYEE STOCK PURCHASE PLAN
(As Amended through April 23, 1999)
I. PURPOSE
The Synopsys, Inc. Employee Stock Purchase Plan (the "Plan") is intended
to provide eligible employees of the Company and one or more of its Corporate
Affiliates with the opportunity to acquire a proprietary interest in the Company
through the periodic application of their payroll deductions to the purchase of
shares of the Company's common stock.
II. DEFINITIONS
For purposes of plan administration, the following terms shall have the
meanings indicated.
Base Salary means all compensation paid as wages, salaries, commissions,
overtime, and bonuses, but excluding all of the following items (even if
included in taxable income): reimbursements, car allowances or other expense
allowances, severance pay, fringe benefits (cash and noncash), moving expenses,
deferred compensation, income attributable to stock options, restricted stock
grants, SARs and other equity-related incentive programs, and welfare benefits.
Code means the Internal Revenue Code of 1986, as amended from time to
time.
Company means Synopsys, Inc., a Delaware corporation, and any corporate
successor to all or substantially all of the assets or voting stock of Synopsys,
Inc. which shall by appropriate action adopt the Plan.
Common Stock means shares of the Company's common stock.
Corporate Stock means shares of the Company's common stock.
Corporate Affiliate means any company which is a parent or subsidiary
corporation of the Company (as determined in accordance with Code Section 424),
including any parent or subsidiary corporation which becomes such after the
Effective Date.
Effective Date means the first day of the initial offering period
scheduled to commence upon the later of (i) February 1, 1992 or (ii) the
effective date of the S-8 Registration Statement covering the share of Common
Stock issuable under the Plan. However, for any Corporate Affiliate which
becomes a participating Company in the Plan after the first day of the initial
offering period, a subsequent Effective Date shall be
<PAGE> 2
designated with respect to participation by its Eligible Employees.
Eligible Employee means any person who is engaged, on a
regularly-scheduled basis of more than twenty (20) hours per week and more than
five (5) months per calendar year, in the rendition of personal services to the
Company or any other Participating Company for earnings considered wages under
Section 3121(a) of the Code.
Enrollment Date has the meaning ascribed to it in Section V.A.
Participant means any Eligible Employee of a Participating Company who
is actively participating in the Plan.
Participating Company means the Company and such Corporate Affiliate or
Affiliates as may be designated from time to time by the Board.
Semi-Annual Entry Date means the first business day of May and the first
business day of November during each calendar year within an offering period in
effect under the Plan. The earliest Semi-Annual Entry Date under the Plan shall
be November 2, 1992.
Semi-Annual Period of Participation means each semi-annual period for
which the Participant actually participates in an offering period in effect
under the Plan. There shall be a maximum of four (4) semi-annual periods of
participation within each offering period. Except as otherwise designated by the
Plan Administrator, each such semi-annual period shall be measured from the
applicable Semi-Annual Entry Date.
Semi-Annual Purchase Date means the last business day of April and
October each year on which shares of Common Stock are automatically purchased
for Participants under the Plan.
III. ADMINISTRATION
The Plan shall be administered by the Board of Directors of the Company
or a committee that will satisfy Rule 16b-3 of the Securities and Exchange
Commission, as in effect with respect to the Company from time to time (in
either case, the "Board"). The Board may from time to time select a committee or
persons (the "Plan Administrator") to be responsible for any transactions not
subject to Rule 16b-3. Subject to the express provisions of the Plan, to the
overall supervision of the Board, and to the limitations of Section 423 of the
Code, the Plan Administrator may administer and interpret the Plan in any manner
it believes to be desirable (including the designation of a brokerage firm at
which accounts for the holding of shares purchased under the Plan must be
established by each employee desiring to participate in the Plan), and any such
interpretation shall be final and binding
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on all parties who have an interest in the Plan.
IV. OFFERING PERIODS
The Plan shall be implemented in a series of offering periods. Each
offering period shall be of a duration of twenty-four (24) months or less as
designated by the Plan Administrator prior to the start date of any offering
period. Within each offering period, there shall be a maximum of four (4)
Semi-Annual Periods of Participation.
V. ELIGIBILITY AND PARTICIPATION
A. Each Eligible Employee will be automatically enrolled in the
Plan in the offering period that begins on the first Semi-Annual Entry Date
following the commencement of employment; thereafter, any Eligible Employee may
enroll or re-enroll in the Plan in the offering period that begins as of any
Semi-Annual Entry Date, or such other days as may be established by the Board
from time to time (each, an "Enrollment Date"). To participate, an Eligible
Employee must complete, sign, and submit to the Company an enrollment form
prescribed by the Plan Administrator. Any enrollment form received by the
Company by the 15th day of the month preceding an Enrollment Date (or by the
Enrollment Date in the case of employees hired after such 15th day), or such
other date established by the Plan Administrator from time to time, will be
effective on that Enrollment Date. Enrollment or re-enrollment by a Participant
in the Plan on an Enrollment Date will constitute the grant by the Company to
the Participant of an option to purchase shares of Common Stock from the Company
under the Plan. At the end of each offering period, each Participant who has not
withdrawn from the Plan will automatically be re-enrolled in the Plan in the
offering period that begins on the Enrollment Date immediately following the
date on which the option expires. Furthermore, except as may otherwise be
determined by the Plan Administrator, each Participant who has not withdrawn
from the Plan will automatically be re-enrolled in the Plan in each offering
period that begins on an Enrollment Date on which the fair market value per
share of the Company's Common Stock is lower than the fair market value per
share of the Company's Common Stock on the Enrollment Date for the offering
period in which the Participant is then enrolled. Notwithstanding anything in
the Plan to the contrary, if the fair market value (the "Authorization Date
FVM") on the date (the "Authorization Date") on which additional shares of
Common Stock are authorized for issuance hereunder by the Company's shareholders
is higher than the fair market value at the beginning of any Offering Period
that commenced prior to the Authorization Date, then, with respect to any of
such authorized shares available to be issued on Purchase Dates relating to such
Offering Period, the Authorization Date FMV shall be used instead of the fair
market value on the Enrollment Date for the purposes of the preceding sentence,
provided that the Plan Administrator, in its
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discretion, may waive application of this sentence with respect to the first
Purchase Date occurring after the Authorization Date.
B. The payroll deduction authorized by the Participant for purposes
of acquiring shares of Common Stock under the Plan may be zero percent (0%) or
any whole multiple of one percent (1%) of the Base Salary paid to the
Participant during each Semi-Annual Period of Participation within the offering
period, up to a maximum of ten percent (10%). The deduction rate so authorized
shall continue in effect for the entire Semi-Annual Period of Participation and
for each successive Semi-Annual Period of Participation unless (i) the
Participant shall change the rate for a subsequent Semi-Annual Period of
Participation by filing the appropriate form with the Plan Administrator prior
to the commencement of that Semi-Annual Period of Participation or (ii) the
Participant shall change the rate within a Semi-Annual Period of Participation
by filing the appropriate form with the Plan Administrator. The new rate shall
become effective as soon as practicable following the filing of such form. A
Participant may not increase or decrease the deduction rate more than once per
Semi-Annual Period of Participation in addition to fixing the rate at the
beginning of the Semi-Annual Period of Participation. Payroll deductions,
however, will automatically cease upon the termination of the Participant's
purchase right in accordance with Article VII below.
C. In no event may any Participant's payroll deductions for any one
Semi-Annual Period of Participation exceed Seven Thousand Five Hundred Dollars
($7,500.00).
VI. STOCK SUBJECT TO PLAN
A. The Common Stock purchasable by Participants under the Plan
shall, solely in the discretion of the Plan Administrator, be made available
from either authorized but unissued shares of the Common Stock or from shares of
Common Stock reacquired by the Company, including shares of Common Stock
purchased on the open market. The total number of shares which may be issued
under the Plan shall not exceed 5,050,000 shares, less any shares sold under the
Synopsys, Inc. International Employee Stock Purchase Plan (subject to adjustment
under Section VI.B below). Such share reserve includes the increase of 1,500,000
shares approved by the Board in January 1999 and by the stockholders in March
1999.
B. In the event any change is made to the Company's outstanding
Common Stock by reason of any stock dividend, stock split, combination of shares
or other change affecting such outstanding Common Stock as a class without
receipt of consideration, then appropriate adjustments shall be made by the Plan
Administrator to (i) the class and maximum number of shares issuable over the
term of the Plan, (ii) the class and maximum
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number of shares purchasable per Participant during each Semi-Annual Period of
Participation, (iii) the class and maximum number of shares purchasable in the
aggregate by all Participants on any one purchase date under the Plan and (iv)
the class and number of shares and the price per share of the Common Stock
subject to each purchase right at the time outstanding under the Plan. Such
adjustments shall be designed to preclude the dilution or enlargement of rights
and benefits under the Plan.
VII. PURCHASE RIGHTS
An Employee who participates in the Plan for a particular offering
period shall have the right to purchase shares of Common Stock, in a series of
successive semi-annual installments during such offering period, upon the terms
and conditions set forth below and shall execute a purchase agreement embodying
such terms and conditions and such other provisions (not inconsistent with the
Plan) as the Plan Administrator may deem advisable.
Purchase Price. Common Stock shall be issuable on each Semi-Annual
Purchase Date at a purchase price equal to 85 percent of the lower of (i) the
fair market value per share on the Participant's Enrollment Date or (ii) the
fair market value per share on the Semi-Annual Purchase Date. Notwithstanding
anything in the Plan to the contrary, if the Authorization Date FVM is higher
than the fair market value at the beginning of any Offering Period that
commenced prior to the Authorization Date, then, with respect to any of such
authorized shares available to be issued on Purchase Dates relating to such
Offering Period, the Authorization Date FMV shall be used instead of the fair
market value on the Enrollment Date for the purposes of clause (i) of the
preceding sentence, provided that the Plan Administrator, in its discretion, may
waive application of this sentence with respect to the first Purchase Date
occurring after the Authorization Date.
Valuation. For purposes of determining the fair market value per share
of Common Stock on any relevant date, the following procedures shall be in
effect:
(i) If such fair market value is to be determined on any
date on or after the date the Common Stock is first registered under
Section 12(g) of the Securities Exchange Act of 1934, then the fair
market value shall be the closing selling price on that date, as
officially quoted on the Nasdaq National Market System. If there is no
quoted selling price for such date, then the closing selling price on
the next preceding day for which there does exist such a quotation shall
be determinative of fair market value.
(ii) If such fair market value is to be determined on any
date prior to the time of such Section 12(g)
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registration of the Common Stock, then the fair market value of the
Common Stock on such date shall be determined by the Plan Administrator,
after taking into account such factors as the Plan Administrator deems
appropriate.
Number of Purchasable Shares. The number of shares purchasable per
Participant on each Semi-Annual Purchase Date shall be the number of whole
shares obtained by dividing the amount collected from the Participant through
payroll deductions during the corresponding Semi-Annual Period of Participation
by the purchase price in effect for the Semi-Annual Purchase Date. However, no
Participant may, during any Semi-Annual Purchase Period, purchase more than
2,000 shares of Common Stock, subject to periodic adjustment under Section VI.B.
Under no circumstances shall purchase rights be granted under the Plan
to any Eligible Employee if such individual would, immediately after the grant,
own (within the meaning of Code Section 424(d)) or hold outstanding options or
other rights to purchase, stock possessing five percent (5%) or more of the
total combined voting power or value of all classes of stock of the Company or
any of its Corporate Affiliates.
Payment. Payment for the Common Stock purchased under the Plan shall be
effected by means of the Participant's authorized payroll deductions. Such
deductions shall begin on the first pay day coincident with or immediately
following the Participant's Enrollment Date and shall (unless sooner terminated
by the Participant) continue through the pay day ending with or immediately
prior to the last day of the offering period.
The amounts so collected shall be credited to the Participant's book
account under the Plan, but no interest shall be paid on the balance from time
to time outstanding in such account. The amounts collected from a Participant
may be commingled with the general assets of the Company and may be used for
general corporate purposes.
Termination of Purchase Right. The following provisions shall govern the
termination of outstanding purchase rights:
(i) A Participant may, at any time prior to the last five
(5) business days of the Semi-Annual Period of Participation, terminate
his/her outstanding purchase right under the Plan by filing the
prescribed notification form with the Plan Administrator. No further
payroll deductions shall be collected from the Participant with respect
to the terminated purchase right, and any payroll deductions collected
for the Semi-Annual Period of Participation in which such termination
occurs shall, at the Participant's election, be immediately refunded or
held for the
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purchase of shares on the next Semi-Annual Purchase Date. If no such
election is made, then such funds shall be refunded as soon as possible
after the close of such Semi-Annual Period of Participation.
(ii) The termination of such purchase right shall be
irrevocable, and the Participant may not subsequently rejoin the
offering period for which such terminated purchase right was granted. In
order to resume participation in any subsequent offering period, such
individual must re-enroll in the Plan in accordance with Section V.A.
(iii) Should a Participant cease to remain an Eligible
Employee while his/her purchase right remains outstanding or should
there otherwise occur a change in such individual's employee status so
that he/she is no longer an Eligible Employee while holding such
purchase right, then such purchase right shall immediately terminate
upon such termination of service or change in status and all sums
previously collected from the Participant during the Semi-Annual Period
of Participation in which the purchase right so terminates shall be
promptly refunded to the Participant. However, should the Participant
die or become permanently disabled while in service or should the
Participant cease employment by reason of a leave of absence, then the
Participant (or the person or persons to whom the rights of the deceased
Participant under the Plan are transferred by will or the laws of
inheritance) shall have the election, exercisable up until the end of
the Semi-Annual Period of Participation in which the Participant dies or
becomes permanently disabled or in which the leave of absence commences,
to (i) withdraw all the funds credited to the Participant's account at
the time of his/her cessation of service or at the commencement of such
leave or (ii) have such funds held for the purchase of shares of Common
Stock at the next Semi-Annual Purchase Date. If no such election is
made, then such funds shall automatically be held for the purchase of
shares of Common Stock at the next Semi-Annual Purchase Date. In no
event, however, shall any further payroll deductions be added to the
Participant's account following his/her cessation of service or the
commencement of such leave. Should the Participant return to active
service following a leave of absence, then his/her payroll deductions
under the Plan shall automatically resume at the rate in effect at the
time the leave began, provided such return to service occurs prior to
the end of the offering period in which such leave began. For purpose of
the Plan: (i) the Participant shall be considered to remain in service
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for so long as such Participant remains in the active employ of the
Company or one or more other Participating Companies and (ii) the
Participant shall be deemed to be permanently disabled if he/she is
unable to engage in any substantial gainful employment, by reason of any
medically determinable physical or mental impairment expected to result
in death or to be of continuous duration of at least twelve (12) months.
Stock Purchase. Shares of Common Stock shall automatically be purchased
on behalf of each Participant (other than Participants whose payroll deductions
have previously been refunded or set aside for refund in accordance with the
"Termination of Purchase Right" provisions above) on each Semi-Annual Purchase
Date. The purchase shall be effected by applying each Participant's payroll
deductions for the Semi-Annual Period of Participation ending on such
Semi-Annual Purchase Date (together with any carryover deductions from the
preceding Semi-Annual Period of Participation) to the purchase of whole shares
of Common Stock (subject to the limitation on the maximum number of purchasable
shares set forth above) at the purchase price in effect for such Semi-Annual
Period of Participation. Any payroll deductions not applied to such purchase
because they are not sufficient to purchase a whole share shall be held for the
purchase of Common Stock in the next Semi-Annual Period of Participation.
However, any payroll deductions not applied to the purchase of Common Stock by
reason of the limitation on the maximum number of shares purchasable by the
Participant for that Semi-Annual Period of Participation shall be promptly
refunded to the Participant.
Proration of Purchase Rights. Not more than 500,000 shares of Common
Stock, subject to periodic adjustment under Section VI.B, may be purchased in
the aggregate by all Participants on any one Semi-Annual Purchase Date. Should
the total number of shares of Common Stock which are to be purchased pursuant to
outstanding purchase rights on any particular date exceed either (i) the maximum
limitation on the number of shares purchasable in the aggregate on such date or
(ii) the number of shares then available for issuance under the Plan, the Plan
Administrator shall make a pro-rata allocation of the available shares on a
uniform and non-discriminatory basis, and the payroll deductions for each
Participant, to the extent in excess of the aggregate purchase price payable for
the Common Stock pro-rated to such individual, shall be refunded to such
Participant.
Rights as Stockholder. A Participant shall have no stockholder rights
with respect to the shares subject to his/her outstanding purchase right until
the shares are actually purchased on the Participant's behalf in accordance with
the applicable provisions of the Plan. No adjustments shall be made for
dividends, distributions or other rights for which the record date is prior to
the date of such purchase.
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Assignability. No purchase right granted under the Plan shall be
assignable or transferable by the Participant other than by will or by the laws
of descent and distribution following the participant's death, and during the
Participant's lifetime the purchase right shall be exercisable only by the
Participant.
Change in Ownership. Should the Company or its stockholders enter into
an agreement to dispose of all or substantially all of the assets or outstanding
capital stock of the Company by means of:
(i) a sale, merger or other reorganization in which the
Company will not be the surviving corporation (other than a
reorganization effected primarily to change the State in which the
Company is incorporated), or
(ii) a reverse merger in which the Company is the surviving
corporation but in which more than fifty percent (50%) of the Company's
outstanding voting stock is transferred to holders different from those
who held the stock immediately prior to the reverse merger, then all
outstanding purchase rights under the Plan shall automatically be
exercised immediately prior to the consummation of such sale, merger,
reorganization or reverse merger by applying the payroll deductions of
each Participant for the Semi-Annual Period of participation in which
such transaction occurs to the purchase of whole shares of Common Stock
at eighty-five percent (85%) of the lower of (i) the fair market value
of the Common Stock on the Participant's Enrollment Date for the
offering period in which such transaction occurs or (ii) the fair market
value of the Common Stock immediately prior to the consummation of such
transaction. However, the applicable share limitations of Articles VII
and VIII shall continue to apply to any such purchase, and the clause
(i) amount above shall not, for any Participant whose Enrollment Date
for the offering period is other than the start date of such offering
period, be less than the fair market value of the Common Stock on such
start date.
The Company shall use its best efforts to provide at least ten (10)
days' advance written notice of the occurrence of any such sale, merger,
reorganization or reverse merger, and Participants shall, following the receipt
of such notice, have the right to terminate their outstanding purchase rights in
accordance with the applicable provisions of this Article VII.
VIII. ACCRUAL LIMITATIONS
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A. No Participant shall be entitled to accrue rights to acquire
Common Stock pursuant to any purchase right outstanding under this Plan if and
to the extent such accrual, when aggregated with (I) rights to purchase Common
Stock accrued under any other purchase right outstanding under this Plan and
(II) similar rights accrued under other employee stock purchase plans (within
the meaning of Section 423 of the Code) of the Company or its Corporate
Affiliates, would otherwise permit such Participant to purchase more than
$25,000 worth of stock of the Company or any Corporate Affiliate (determined on
the basis of the fair market value of such stock on the date or dates such
rights are granted to the Participant) for each calendar year such rights are at
any time outstanding.
B. For purposes of applying such accrual limitations, the right to
acquire Common Stock pursuant to each purchase right outstanding under the Plan
shall accrue as follows:
(i) The right to acquire Common Stock under each such
purchase right shall accrue in a series of successive semi-annual
installments as and when the purchase right first becomes exercisable
for each semi-annual installment on the last business day of each
Semi-Annual Period of Participation for which the right remains
outstanding.
(ii) No right to acquire Common Stock under any outstanding
purchase right shall accrue to the extent the Participant has already
accrued in the same calendar year the right to acquire $25,000 worth of
Common Stock (determined on the basis of the fair market value on the
date or dates of grant) pursuant to one or more purchase rights held by
the Participant during such calendar year.
(iii) If by reason of such accrual limitations, any purchase
right of a Participant does not accrue for a particular Semi-Annual
Period of Participation, then the payroll deductions which the
Participant made during that Semi-Annual Period of Participation with
respect to such purchase right shall be promptly refunded.
C. In the event there is any conflict between the provisions of
this Article VIII and one or more provisions of the Plan or any
instrument issued thereunder, the provisions of this Article VIII shall
be controlling.
IX. STATUS OF PLAN UNDER FEDERAL TAX LAWS
The Plan is designed to qualify as an employee stock purchase plan under
Code Section 423.
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X. AMENDMENT AND TERMINATION
A. The Board may amend, alter, suspend, discontinue, or terminate
the Plan at any time, including amendments to outstanding options/purchase
rights. However, the Board may not, without the approval of the Company's
stockholders:
(i) increase the number of shares issuable under the Plan or
the maximum number of shares which may be purchased per Participant or
in the aggregate during any one Semi-Annual Period of Participation
under the Plan, except that the Plan Administrator shall have the
authority, exercisable without such stockholder approval, to effect
adjustments to the extent necessary to reflect changes in the Company's
capital structure pursuant to Section VI.B;
(ii) alter the purchase price formula so as to reduce the
purchase price payable for the shares issuable under the Plan; or
(iii) materially increase the benefits accruing to
Participants under the Plan or materially modify the requirements for
eligibility to participate in the Plan.
B. The Board may elect to terminate any or all outstanding purchase
rights at any time. In the event the Plan is terminated, the Board may also
elect to terminate outstanding purchase rights either immediately or upon
completion of the purchase of shares on the next Semi-Annual Purchase Date, or
may elect to permit purchase rights to expire in accordance with their terms
(and participation to continue through such expiration dates). If purchase
rights are terminated prior to expiration, all funds contributed to the Plan
that have not been used to purchase shares shall be returned to the Participants
as soon as administratively feasible.
IX. GENERAL PROVISIONS
A. The Plan shall become effective on the designated Effective
Date, provided that no offering period shall commence, and no shares of Common
Stock shall be issued hereunder, until (i) the Plan shall have been approved by
the stockholders and (ii) the Company shall have complied with all applicable
requirements of the Securities Act of 1933 (as amended), all applicable listing
requirements of any securities exchange on which shares of the Common Stock are
listed and all other applicable requirements established by law or regulation.
In the event such stockholder approval is not obtained, or such Company
compliance is not effected, within twelve (12) months after the date on which
the Plan is adopted by the Board, the Plan shall
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terminate and have no further force of effect.
B. All costs and expenses incurred in the administration of the
Plan shall be paid by the Company.
C. Neither the action of the Company in establishing the Plan, nor
any action taken under the Plan by the Board or the Plan Administrator, nor any
provision of the Plan itself shall be construed so as to grant any person the
right to remain in the employ of the Company or any of its Corporate Affiliates
for any period of specific duration, and such person's employment may be
terminated at any time, with or without cause.
D. The provisions of the Plan shall be governed by the laws of the
State of California without resort to that State's conflict-of-laws rules.
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EXHIBIT 10.5
SYNOPSYS, INC.
INTERNATIONAL EMPLOYEE STOCK PURCHASE PLAN
(As Amended through April 23, 1999)
I. PURPOSE
The Synopsys, Inc. International Employee Stock Purchase Plan
(the "Plan") is intended to provide eligible employees of designated
subsidiaries of the Company with the opportunity to acquire a proprietary
interest in the Company through the periodic application of their payroll
deductions to the purchase of shares of the Company's common stock.
II. DEFINITIONS
For purposes of plan administration, the following terms shall
have the meanings indicated:
Base Salary means all compensation paid as wages, salaries,
commissions, overtime, and bonuses, but excluding all of the following items
(even if included in taxable income): reimbursements, car allowances or other
expense allowances, severance pay, fringe benefits (cash and noncash), moving
expenses, deferred compensation, income attributable to stock options,
restricted stock grants, SARs and other equity-related incentive programs, and
welfare benefits.
Code means the Internal Revenue Code of 1986, as amended from
time to time.
Company means Synopsys, Inc., a Delaware corporation, and any
corporate successor to all or substantially all of the assets or voting stock of
Synopsys, Inc. which shall by appropriate action adopt the Plan.
Common Stock means shares of the Company's common stock.
Corporate Affiliate means any company which is a parent or
subsidiary corporation of the Company (as determined in accordance with Code
Section 424), including any parent or subsidiary corporation which becomes such
after the Effective Date.
Effective Date means the first day of the initial offering
period scheduled to commence on May 3, 1993. However, for any Subsidiary which
becomes a Participating Subsidiary in the Plan after the first day of the
initial offering period, a subsequent Effective Date shall be designated with
respect to participation by its Eligible Employees.
Eligible Employee means any person who is engaged, on a
regularly-scheduled basis of more than twenty (20) hours per week
<PAGE> 2
and more than five (5) months per calendar year, in the rendition of personal
services to any Participating Subsidiary for earnings considered wages under
Section 3121(a) of the Code, but shall not include persons prohibited by the
laws of the nation of their residence or employment from participating in the
Plan.
Enrollment Date has the meaning ascribed to it in Section V.A.
Participant means any Eligible Employee of a Participating
Subsidiary who is actively participating in the Plan.
Participating Subsidiary means a Subsidiary of the Company that
has been designated as a Participating Subsidiary by the Board.
Semi-Annual Entry Date means the first business day of May and
the first business day of November during each calendar year within an offering
period in effect under the Plan. The earliest Semi-Annual Entry Date under the
Plan shall be May 3, 1993.
Semi-Annual Period of Participation means each semi-annual
period for which the Participant actually participates in an offering period in
effect under the Plan. There shall be a maximum of four (4) semi-annual periods
of participation within each offering period. Except as otherwise designated by
the Plan Administrator, each such semi-annual period shall be measured from the
applicable Semi-Annual Entry Date.
Semi-Annual Purchase Date means the last business day of April
and October each year on which shares of Common Stock are automatically
purchased for Participants under the Plan.
Subsidiary shall mean any corporation described in Section
425(e) or (f) of the Code.
III. ADMINISTRATION
The Plan shall be administered by the Board of Directors or a
committee that will satisfy Rule 16b-3 of the Securities and Exchange
Commission, as in effect with respect to the Company from time to time (in
either case, the "Board"). The Board may from time to time select a committee or
persons (the "Plan Administrator") to be responsible for any transactions.
IV. OFFERING PERIODS
The Plan shall be implemented in a series of offering periods.
Each offering period shall be of a duration of twenty-four (24) months or less
as designated by the Plan Administrator prior to the start date of any offering
period. Within each offering period, there shall be a maximum of four (4)
Semi-Annual Periods of Participation.
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V. ELIGIBILITY AND PARTICIPATION
A. Each Eligible Employee of a Participating Subsidiary
shall be eligible to participate in the Plan in accordance with the following
provisions:
- The Board may at any time designate one or more
Subsidiaries as participating in the Plan. The names of all
Participating Subsidiaries shall be shown on Exhibit A to the
Plan, which shall be amended from time to time to reflect
additions and deletions of Participating Subsidiaries; failure
to show a Participating Subsidiary on Exhibit A shall not,
however, prevent otherwise eligible employees of that Subsidiary
from participating in the Plan. No Subsidiary participating in
the Company's Employee Stock Purchase Plan effective May 3, 1993
may be designated for participation in the Plan.
- Each Eligible Employee will be automatically enrolled in
the Plan in the offering period that begins on the first Semi-Annual
Entry Date following the commencement of employment; thereafter, any
Eligible Employee may enroll or re-enroll in the Plan in the offering
period that begins as of any Semi-Annual Entry Date, or such other days
as may be established by the Board from time to time (each, an
"Enrollment Date"). To participate, an Eligible Employee must complete,
sign, and submit to the Company an enrollment form prescribed by the
Plan Administrator. Any enrollment form received by the Company by the
15th day of the month preceding an Enrollment Date (or by the Enrollment
Date in the case of employees hired after such 15th day), or such other
date established by the Plan Administrator from time to time, will be
effective on that Enrollment Date. Enrollment or re-enrollment by a
Participant in the Plan on an Enrollment Date will constitute the grant
by the Company to the Participant of an option to purchase shares of
Common Stock from the Company under the Plan. At the end of each
offering period, each Participant who has not withdrawn from the Plan
will automatically be re-enrolled in the Plan in the offering period
that begins on the Enrollment Date immediately following the date on
which the option expires. Furthermore, except as may otherwise be
determined by the Plan Administrator, each Participant who has not
withdrawn from the Plan will automatically be re-enrolled in the Plan in
each offering period that begins on an Enrollment Date on which the fair
market value per share of the Company's Common Stock is lower than the
fair market value per share of the Company's Common Stock on the
Enrollment Date for the offering period in which the Participant is then
enrolled. Notwithstanding anything in the Plan to the
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<PAGE> 4
contrary, if the fair market value (the "Authorization Date FVM") on the
date (the "Authorization Date") on which additional shares of Common
Stock are authorized for issuance hereunder by the Company's
shareholders is higher than the fair market value at the beginning of
any Offering Period that commenced prior to the Authorization Date,
then, with respect to any of such authorized shares available to be
issued on Purchase Dates relating to such Offering Period, the
Authorization Date FMV shall be used instead of the fair market value on
the Enrollment Date for the purposes of the preceding sentence, provided
that the Plan Administrator, in its discretion, may waive application of
this sentence with respect to the first Purchase Date occurring after
the Authorization Date.
- An individual who becomes an Eligible Employee
immediately following termination of such employee's
participation in the Synopsys, Inc. Employee Stock Purchase Plan
shall, for purposes of participation in the Plan, have a deemed
Enrollment Date corresponding to such employee's most recent
Enrollment Date under the Synopsys, Inc. Employee Stock Purchase
Plan.
B. The payroll deduction authorized by the Participant for
purposes of acquiring shares of Common Stock under the Plan may be zero percent
(0%) or any whole multiple of one percent (1%) of the Base Salary paid to the
Participant during each Semi-Annual Period of Participation within the offering
period, up to a maximum of ten percent (10%). The deduction rate so authorized
shall continue in effect for the entire Semi-Annual Period of Participation and
for each successive Semi-Annual Period of Participation unless (i) the
Participant shall change the rate for a subsequent Semi-Annual Period of
Participation by filing the appropriate form with the Plan Administrator prior
to the commencement of that Semi-Annual Period of Participation or (ii) the
Participant shall change the rate within a Semi-Annual Period of Participation
by filing the appropriate form with the Plan Administrator. The new rate shall
become effective as soon as practicable following the filing of such form. A
Participant may not increase or decrease the deduction rate more than once per
Semi-Annual Period of Participation in addition to fixing the rate at the
beginning of the Semi-Annual Period of Participation. Payroll deductions,
however, will automatically cease upon the termination of the Participant's
purchase right in accordance with Article VII below.
C. In no event may any Participant's payroll deductions for
any one Semi-Annual Period of Participation exceed Seven Thousand Five Hundred
Dollars ($7,500.00) calculated on the Purchase Date following conversion of
accumulated withholdings into U.S. Dollars.
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<PAGE> 5
D. It is intended that all eligible employees shall have
substantially equivalent rights and privileges with respect to the Plan;
notwithstanding any other provision of the Plan, however, the Plan Administrator
may make such changes in the terms of eligibility and participation from
Subsidiary to Subsidiary that it determines, in its discretion, to be necessary
or desirable to reflect or comply with local laws or conditions.
VI. STOCK SUBJECT TO PLAN
A. The Common Stock purchasable by Participants under the
Plan shall, solely in the discretion of the Plan Administrator, be made
available from either authorized but unissued shares of the Common Stock or from
shares of Common Stock reacquired by the Company, including shares of Common
Stock purchased on the open market. The total number of shares which may be
issued under the Plan shall not exceed 5,050,000 shares, less any shares sold
under the Synopsys, Inc. Employee Stock Purchase Plan (subject to adjustment
under Section VI.B below). Such share reserve includes the increase of 1,500,000
shares approved by the Board in January 1999 and by shareholders in March 1999.
B. In the event any change is made to the Company's
outstanding Common Stock by reason of any stock dividend, stock split,
combination of shares or other change affecting such outstanding Common Stock as
a class without receipt of consideration, then appropriate adjustments shall be
made by the Plan Administrator to (i) the class and maximum number of shares
issuable over the term of the Plan, (ii) the class and maximum number of shares
purchasable per Participant during each Semi-Annual Period of Participation,
(iii) the class and maximum number of shares purchasable in the aggregate by all
Participants on any one purchase date under the Plan and (iv) the class and
number of shares and the price per share of the Common Stock subject to each
purchase right at the time outstanding under the Plan. Such adjustments shall be
designed to preclude the dilution or enlargement of rights and benefits under
the Plan.
VII. PURCHASE RIGHTS
An Employee who participates in the Plan for a particular
offering period shall have the right to purchase shares of Common Stock, in a
series of successive semi-annual installments during such offering period, upon
the terms and conditions set forth below and shall execute such agreements and
documents embodying such terms and conditions and such other provisions (not
inconsistent with the Plan) as the Plan Administrator may deem advisable.
Purchase Price. Common Stock shall be issuable on each
Semi-Annual Purchase Date at a purchase price equal to eighty-five
percent (85%) of the lower of (i) the fair market value per share on the
Participant's Enrollment Date or (ii) the fair
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<PAGE> 6
market value per share on the Semi-Annual Purchase Date. Notwithstanding
anything in the Plan to the contrary, if the Authorization Date FVM is
higher than the fair market value at the beginning of any Offering
Period that commenced prior to the Authorization Date, then, with
respect to any of such authorized shares available to be issued on
Purchase Dates relating to such Offering Period, the Authorization Date
FMV shall be used instead of the fair market value on the Enrollment
Date for the purposes of clause (i) of the preceding sentence, provided
that the Plan Administrator, in its discretion, may waive application of
this sentence with respect to the first Purchase Date occurring after
the Authorization Date.
Valuation. The fair market value per share of Common Stock on
any relevant date shall be the closing selling price of the Common Stock on that
date, as officially quoted on the Nasdaq National Market System. If there is no
quoted selling price for such date, then the closing selling price on the next
preceding day for which there does exist such a quotation shall be determinative
of fair market value.
Number of Purchasable Shares. The number of shares purchasable
per Participant on each Semi-Annual Purchase Date shall be the number of whole
shares obtained by dividing the amount collected, after conversion into U.S.
Dollars on the Purchase Date, from the Participant through payroll deductions
during the corresponding Semi-Annual Period of Participation by the purchase
price in effect for the Semi-Annual Purchase Date. However, no Participant may,
during any one Semi-Annual Purchase Period, purchase more than 2,000 shares of
Common Stock, subject to periodic adjustment under Section VI.B.
Under no circumstances shall purchase rights be granted under
the Plan to any Eligible Employee if such individual would, immediately after
the grant, own (within the meaning of Code Section 424(d)) or hold outstanding
options or other rights to purchase, stock possessing five percent (5%) or more
of the total combined voting power or value of all classes of stock of the
Company or any of its Corporate Affiliates.
Payment; Withholding. Payment for the Common Stock purchased
under the Plan shall be effected by means of the Participant's authorized
payroll deductions. Such deductions shall begin on the first pay day coincident
with or immediately following the Participant's Enrollment Date into the
offering period and shall (unless sooner terminated by the Participant) continue
through the pay day ending with or immediately prior to the last day of the
offering period. The amounts so collected shall be credited to the Participant's
book account under the Plan in local currency, but no interest shall be paid on
the balance from time to time outstanding in such account. The amounts collected
from a Participant may be commingled with the general assets of the Company
and/or any Participating Subsidiary
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<PAGE> 7
and may be used for general corporate purposes. Upon disposition of shares
acquired by exercise of purchase right, the Participant shall pay, or make
provision adequate to the Company and the Participating Subsidiary for payment
of, all federal, state, and other tax (and similar) withholdings that the
Company or the Participating Subsidiary determines, in its discretion, are
required due to the disposition, including any such withholding that the Company
or the Participating Subsidiary determines, in its discretion, is necessary to
allow the Company or the Participating Subsidiary to claim tax deductions or
other benefits in connection with the disposition. A Participant shall make such
similar provisions for payment that the Company or the Participating Subsidiary
determines, in its discretion, are required due to the exercise of purchase
right, including such provisions as are necessary to allow the Company or the
Participating Subsidiary to claim tax deductions or other benefits in connection
with the exercise of purchase right.
Termination of Purchase Right. The following provisions shall
govern the termination of outstanding purchase rights:
(i) A Participant may, at any time prior to the last
five (5) business days of the Semi-Annual Period of
Participation, terminate his/her outstanding purchase right
under the Plan by filing the prescribed notification form with
the Plan Administrator. No further payroll deductions shall be
collected from the Participant with respect to the terminated
purchase right, and any payroll deductions collected for the
Semi-Annual Period of Participation in which such termination
occurs shall, at the Participant's election, be immediately
refunded or held for the purchase of shares on the next
Semi-Annual Purchase Date. If no such election is made, then
such funds shall be refunded as soon as possible after the close
of such Semi-Annual Period of Participation.
(ii) The termination of such purchase right shall be
irrevocable, and the Participant may not subsequently rejoin the
offering period for which such terminated purchase right was
granted. In order to resume participation in any subsequent
offering period, such individual must enroll in the Plan in
accordance with Section V.A.
(iii) Should a Participant cease to remain an Eligible
Employee while his/her purchase right remains outstanding or
should there otherwise occur a change in such individual's
employee status so that he/she is no longer an Eligible Employee
while holding such purchase right, then such purchase right
shall immediately terminate upon such termination of service or
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<PAGE> 8
change in status and all sums previously collected from the
Participant during the Semi-Annual Period of Participation in
which the purchase right so terminates shall be promptly
refunded to the Participant. However, should the Participant die
or become permanently disabled while in service or should the
Participant cease employment by reason of a leave of absence,
then the Participant (or the person or persons to whom the
rights of the deceased Participant under the Plan are
transferred by will or the laws of inheritance) shall have the
election, exercisable up until the end of the Semi-Annual Period
of Participation in which the Participant dies or becomes
permanently disabled or in which the leave of absence commences,
to (i) withdraw all the funds credited to the Participant's
account at the time of his/her cessation of service or at the
commencement of such leave or (ii) have such funds held for the
purchase of shares of Common Stock at the next Semi-Annual
Purchase Date. If no such election is made, then such funds
shall automatically be held for the purchase of shares of Common
Stock at the next Semi-Annual Purchase Date. In no event,
however, shall any further payroll deductions be added to the
Participant's account following his/her cessation of service or
the commencement of such leave; provided, however, that if a
Participant's employment is terminated because of a transfer of
employment to the Company or any subsidiary of the Company other
than a Participating Subsidiary, any outstanding purchase right
shall not terminate until the occurrence of the earlier of (x)
the last Semi-Annual Purchase Date in the offering period or (y)
enrollment of the Participant in the Company's Employee Stock
Purchase Plan. While a purchase right remains outstanding, the
Company or other subsidiary to which the participant is
transferred shall effect payroll deductions authorized by the
Participant and shall remit them to the Participating Subsidiary
that employed the Participant at the time of the transfer for
purposes of acquiring shares of Common Stock under the Plan.
Following approval by the Company and the Participating
Subsidiary, the Participant may, in lieu of payroll deduction,
pay a corresponding amount to the Participating Subsidiary if
such amount is received on or before the relevant Purchase Date.
Should the Participant return to active service following a
leave of absence, then his/her payroll deductions under the Plan
shall automatically resume at the rate in effect at the time the
leave began, provided such return to service occurs prior to the
end of the offering period in which such leave began. For
purpose of the Plan: (i)
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<PAGE> 9
the Participant shall be considered to remain in service for so
long as such Participant remains in the active employ of the
Company or one or more other Participating Subsidiaries and (ii)
the Participant shall be deemed to be permanently disabled if
he/she is unable to engage in any substantial gainful
employment, by reason of any medically determinable physical or
mental impairment expected to result in death or to be of
continuous duration of at least twelve (12) months.
Stock Purchase. Shares of Common Stock shall automatically be
purchased on behalf of each Participant (other than Participants whose payroll
deductions have previously been refunded or set aside for refund in accordance
with the Termination of Purchase Right provisions above) on each Semi-Annual
Purchase Date. The purchase shall be effected by applying each Participant's
payroll deductions after conversion to U.S. Dollars for the Semi-Annual Period
of Participation ending on such semiannual Purchase Date (together with any
carryover deductions from the preceding Semi-Annual Period of Participation) to
the purchase of whole shares of Common Stock (subject to the limitation on the
maximum number of purchasable shares as set forth above) at the purchase price
in effect for such Semi-Annual Period of Participation. Any payroll deductions
not applied to such purchase because they are not sufficient to purchase a whole
share shall be held in local currency for the purchase of Common Stock in the
next Semi-Annual Period of Participation. However, any payroll deductions not
applied to the purchase of Common Stock by reason of the limitation on the
maximum number of shares purchasable by the Participant for that Semi-Annual
Period of Participation shall be promptly refunded to the Participant.
Proration of Purchase Rights. Not more than 500,000 shares of
Common Stock, subject to periodic adjustment under Section VI.B, may be
purchased in the aggregate by all participants under the Plan and under the
Synopsys, Inc. Employee Stock Purchase Plan on any one Semi-Annual Purchase
Date. Should the total number of shares of Common Stock which are to be
purchased pursuant to outstanding purchase rights on any particular date exceed
either (i) the maximum limitation on the number of shares purchasable in the
aggregate on such date or (ii) the number of shares then available for issuance
under the Plan and the Synopsys, Inc. Employee Stock Purchase Plan, the Plan
Administrator shall make a pro-rata allocation of the available shares on a
uniform and non-discriminatory basis (including, to the extent practicable vis a
vis participants in the Synopsys, Inc. Employee Stock Purchase Plan) and the
payroll deductions for each Participant, to the extent in excess of the
aggregate purchase price payable for the Common Stock pro-rated to such
individual, shall be refunded to such Participant.
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Rights as Stockholder. A Participant shall have no stockholder
rights with respect to the shares subject to his/her outstanding purchase right
until the shares are actually purchased on the Participant's behalf in
accordance; with the applicable provisions of the Plan. No adjustments shall be
made for dividends, distributions, or other rights for which the record date is
prior to the date of such purchase.
Assignability. No purchase right granted under the Plan shall be
assignable or transferable by the Participant other than by will or by the laws
of descent and distribution following the Participant's death, and during the
Participant's lifetime the purchase right shall be exercisable only by the
Participant.
Change in Ownership. Should the Company or its stockholders
enter into an agreement to dispose of all or substantially all of the assets or
outstanding capital stock of the Company by means of:
(i) a sale, merger or other reorganization in which
the Company will not be the surviving corporation (other than a
reorganization effected primarily to change the State in which
the Company is incorporated), or
(ii) a reverse merger in which the Company is the
surviving corporation but in which more than fifty percent (50%)
of the Company's outstanding voting stock is transferred to
holders different from those who held the stock immediately
prior to the reverse merger,
then all outstanding purchase rights under the Plan shall
automatically be exercised immediately prior to the consummation of such sale,
merger, reorganization or reverse merger by applying the payroll deductions of
each Participant, after conversion into U.S. Dollars on the date of purchase,
for the Semi-Annual Period of Participation in which such transaction occurs to
the purchase of whole shares of Common Stock at eighty-five percent (85%) of the
lower of (i) the fair market value of the Common Stock on the Participant's
Enrollment Date into the offering period in which such transaction occurs or
(ii) the fair market value of the Common Stock immediately prior to the
consummation of such transaction. However, the applicable share limitations of
Sections VII and VIII shall continue to apply to any such purchase, and the
clause (i) amount above shall not, for any Participant whose Enrollment Date for
the offering period is other than the start date of such offering period, be
less than the fair market value of the Common Stock on such start date.
The Company shall use its best efforts to provide at least ten
(10) days' advance written notice of the occurrence of any such sale, merger,
reorganization or reverse merger, and Participants shall, following the receipt
of such notice, have the right to terminate their outstanding purchase rights in
accordance with the applicable provisions of this Article VII.
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VIII. ACCRUAL LIMITATIONS
A. No Participant shall be entitled to accrue rights to
acquire Common Stock pursuant to any purchase right outstanding under this Plan
if and to the extent such accrual, when aggregated with (i) rights to purchase
Common Stock accrued under any other purchase right outstanding under this Plan
and (ii) similar rights accrued under other employee stock purchase plans
(within the meaning of Section 423 of the Code) of the Company and its Corporate
Affiliates would otherwise permit such Participant to purchase more than $25,000
worth of stock of the Company or any Corporate Affiliate (determined on the
basis of the fair market value of such stock on the date or dates such rights
are granted to the Participant) for each calendar year such rights are at any
time outstanding.
B. For purposes of applying such accrual limitations, the
right to acquire Common Stock pursuant to each purchase right outstanding under
the Plan shall accrue as follows:
(i) The right to acquire Common Stock under each
such purchase right shall accrue in a series of successive
semi-annual installments as and when the purchase right first
becomes exercisable for each semi-annual installment on the last
business day of each Semi-Annual Period of Participation for
which the right remains outstanding.
(ii) No right to acquire Common Stock under any
outstanding purchase right shall accrue to the extent the
Participant has already accrued in the same calendar year the
right to acquire $25,000 worth of Common Stock (determined on
the basis of the fair market value on the date or dates of
grant) pursuant to one or more purchase rights held by the
Participant during such calendar year.
(iii) If by reason of such accrual limitations, any
purchase right of a Participant does not accrue for a particular
Semi-Annual Period of Participation, then the payroll deductions
which the Participant made during that Semi-Annual Period of
Participation with respect to such purchase right shall be
promptly refunded.
C. In the event there is any conflict between the
provisions of this Section VIII and one or more provisions of the Plan or any
instrument issued thereunder, the provisions of this Section VIII shall be
controlling.
IX. AMENDMENT AND TERMINATION
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A. The Board may amend, alter, suspend, discontinue, or
terminate the Plan at any time, including amendments to outstanding
options/purchase rights. However, the Board may not, without the approval of the
Company's stockholders:
(i) increase the number of shares issuable under the
Plan or the maximum number of shares which may be purchased per
Participant or in the aggregate during any one Semi-Annual
Period of Participation under the Plan, except that the Plan
Administrator shall have the authority, exercisable without such
stockholder approval, to effect adjustments to the extent
necessary to reflect changes in the Company's capital structure
pursuant to Section VI.B;
(ii) alter the purchase price formula so as to reduce
the purchase price payable for the shares issuable under the
Plan; or
(iii) materially increase the benefits accruing to
Participants under the Plan or materially modify the
requirements for eligibility to participate in the Plan.
B. The Board may elect to terminate any or all outstanding
purchase rights at any time. In the event the Plan is terminated, the Board may
also elect to terminate outstanding purchase rights either immediately or upon
completion of the purchase of shares on the next Semi-Annual Purchase Date, or
may elect to permit purchase rights to expire in accordance with their terms
(and participation to continue through such expiration dates). If purchase
rights are terminated prior to expiration, all funds contributed to the Plan
that have not been used to purchase shares shall be returned to the Participants
as soon as administratively feasible.
X. GENERAL PROVISIONS
A. The Plan shall become effective on the date on which it
is adopted by the Board, provided the Company has complied with all applicable
requirements established by law or regulation.
B. All costs and expenses incurred in the administration of
the Plan shall be paid by the Company.
C. Neither the action of the Company in establishing the
Plan, nor any action taken under the Plan by the Board or the Plan
Administrator, nor any provision of the Plan itself shall be construed so as to
grant any person the right to remain in the employ of the Company or any of its
Corporate Affiliates for any period of specific duration, and such person's
employment may be terminated at any time, with or without cause.
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D. The provisions of the Plan shall be governed by the laws
of the State of California without resort to that State's conflict-of-laws
rules.
E. If the Plan Administrator in its discretion so elects,
it may retain a brokerage firm, bank, or other financial institution to assist
in the purchase of shares, delivery of reports, or other administrative aspects
of the Plan. If the Plan Administrator so elects, each Participant shall (unless
prohibited by the laws of the nation of his or her employment or residence) be
deemed upon enrollment in the Plan to have authorized the establishment of an
account on his or her behalf at such institution. Shares purchased by a
Participant under the Plan shall be held in the account in the name in which the
share certificate would otherwise be issued pursuant to Section VII.
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Schedule A
Companies Participating in
International Employee Stock Purchase
Plan As of the Effective Date
German Subsidiary: Synopsys GmbH
French Subsidiary: Synopsys SARL
UK Subsidiary: Synopsys (Northern Europe) Limited
Japan Subsidiary: Nihon Synopsys K.K.
Korea Subsidiary: Synopsys Korea, Inc.
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Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Synopsys, Inc.:
We consent to incorporation herein by reference of our reports dated October 26,
1998, relating to the consolidated balance sheets of Synopsys, Inc. and
subsidiaries as of September 30, 1997 and 1998, and the related consolidated
statements of income, stockholders' equity and cash flows for each of the years
in the three-year period ended September 30, 1998, and the related schedule,
which reports appear in the September 30, 1998, annual report on Form 10-K of
Synopsys, Inc.
/s/ KPMG LLP
Mountain View, California
April 29, 1999
<PAGE> 1
Exhibit 23.2
CONSENT OF DELOITTE & TOUCHE LLP
We consent to the incorporation by reference in this Registration Statement of
Synopsys, Inc. on Form S-8 of our report dated October 11, 1996 (relating to the
consolidated financial statements of EPIC Design Technology, Inc. not presented
separately therein), appearing in and incorporated by reference in the Annual
Report on Form 10-K of Synopsys, Inc. for the year ended September 30, 1998.
/s/ Deloitte & Touche LLP
San Jose, California
April 29, 1999
