As filed with the Securities and Exchange Commission on September 17, 2002
Registration No. 333-________
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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)
DELAWARE 56-1546236
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
700 EAST MIDDLEFIELD ROAD,
MOUNTAIN VIEW, CALIFORNIA 94043
(Address of principal executive offices) (Zip Code)
CO-DESIGN AUTOMATION, INC. 1998 STOCK OPTION PLAN
(Full title of the Plan)
AART J. DE GEUS
CHIEF EXECUTIVE OFFICER
SYNOPSYS, INC.
700 EAST MIDDLEFIELD ROAD
MOUNTAIN VIEW, CALIFORNIA 94043
(Name and address of agent for service)
(650) 584-5000
(Telephone Number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
====================================== ===================== ==================
Proposed Maximum Amount of
Title of Securities Amount to be Offering Price per Proposed Maximum Registration
to be Registered Registered(1) Share(2) Aggregate Offering Price(2) Fee(2)(3)
CO-DESIGN AUTOMATION, INC.
1998 STOCK OPTION PLAN
Common Stock, $0.001 par value 30,726 shares $2.24 $68,826.24 $6.33
===================================== ====================== ==================
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the Co-Design Automation, Inc.
1998 Stock Option Plan by reason of any stock dividend, stock split,
recapitalization or other similar transaction effected without the
Registrant's receipt of consideration which results in an increase in
the number of the outstanding shares of Registrant's Common Stock.
(2) Calculated solely for purposes of this offering under Rule 457(h) of
the Securities Act of 1933, as amended, on the basis of the weighted
average exercise price of the outstanding options.
(3) The Registrant filed a registration statement on Form S-4 (Registration
No. 333-75638) on December 21, 2001 (the "Form S-4"), to register
certain shares of its common stock in connection with the transaction
described therein. The filing fee remitted for the S-4 was $209,040.53.
Subsequently, the Commission issued Fee Rate Advisory No. 8 on January
16, 2002, which retroactively reduced Securities Act filing fees. As a
result, the Registrant now has a credit of $128,573 with the
Commission, as reduced by the fees for subsequent filings. The
registration fee for this registration statement is being offset
against such credit.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. INCORPORATION OF DOCUMENTS BY REFERENCE
Synopsys, Inc. (the "Registrant") hereby incorporates by reference into
this Registration Statement the following documents previously filed with the
Securities and Exchange Commission (the "Commission"):
(a) The Registrant's Annual Report on Form 10-K for the fiscal
year ended October 31, 2001 filed with the Commission on
January 25, 2002 (as amended on Form 10-K/A filed with the
Commission on March 1, 2002), pursuant to Section 13 of the
Securities Exchange Act of 1934, as amended (the "1934 Act");
(b) The Registrant's Quarterly Report on Form 10-Q for the periods
ended January 31, 2002, and April 30, 2002, filed with the
Commission on March 18, 2002 and June 17, 2002, respectively;
(c) The Registrant's Current Reports on Form 8-K filed with the
Commission on December 5, 2001, May 7, 2002 and June 6, 2002
(as amended on Form 8-K/A filed with the commission on July
30, 2002);
(d) The Registrant's Registration Statement on Form 8-A, filed
with the Commission on January 24, 1992, pursuant to Section
12(g) of the 1934 Act, in which there is described the terms,
rights and provisions applicable to the Registrant's Common
Stock; and
(e) The Registrant's Registration Statement on Form 8-A, filed
with the Commission on October 31, 1997, pursuant to Section
12(g) of the 1934 Act, and as amended on Form 8-A/A on
December 13, 1999 and April 10, 2000 in which there is
described the terms, rights and provisions applicable to the
Registrant's Preferred Share Purchase Rights.
All reports and definitive proxy or information statements
filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act after the
date of this Registration Statement and prior to the filing of a post-effective
amendment which indicates that all securities offered hereby have been sold or
which de-registers all securities then remaining unsold shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Registration Statement
to the extent that a statement contained herein or in any subsequently filed
document which also is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
Item 4. DESCRIPTION OF SECURITIES
Not applicable.
Item 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law permits a
corporation to include in its charter documents, and in agreements between the
corporation and its directors and officers, provisions expanding the scope of
indemnification beyond that specifically provided by the current law.
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Article X of the Registrant's Restated Certificate of
Incorporation provides for the indemnification of directors to the fullest
extent permissible under Delaware Law.
Article VII of the Registrant's Bylaws provides for the
indemnification of officers, directors and third parties to the fullest extent
permissible under Delaware Law, which provisions are deemed to be a contract
between the Registrant and each director and officer who serves in such capacity
while such bylaw is in effect.
The Registrant has entered into indemnification agreements
with its directors and executive officers, in addition to the indemnification
provided for in the Registrant's Bylaws, and intends to enter into
indemnification agreements with any new directors and executive officers in the
future. The Registrant has also obtained liability insurance for the benefit of
its directors and officers.
Item 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
Item 8. EXHIBITS
EXHIBIT NUMBER EXHIBIT
4 Instruments Defining the Rights of Stockholders. Reference is
made to Registrant's Registration Statement on Form 8-A, together
with the amendments and exhibits thereto, which are incorporated
herein by reference pursuant to Items 3(d) and 3(e).
5 Opinion and consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of KPMG LLP.
23.3 Consent of BDO Seidman, LLP.
23.4 Consent of KPMG LLP.
23.5 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24 Power of Attorney. Reference is made to page II-5 of this
Registration Statement.
99.1 Co-Design Automation, Inc. 1998 Stock Option Plan.
Item 9. UNDERTAKINGS
A. 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: (i) to include any prospectus required
by Section 10(a)(3) of the 1933 Act, (ii) to reflect in the prospectus any facts
or events arising after the effective date of this Registration Statement (or
the most recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in this
Registration Statement and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such information in this
Registration Statement; provided, however, that clauses (1)(i) and (1)(ii) shall
not apply if the information required to be included in a post-effective
amendment by those clauses is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the 1934 Act that are
incorporated by reference into this Registration Statement; (2) that for the
purpose of determining any liability under the 1933 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; and (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 Co-Design
Automation, Inc. 1998 Stock Option Plan.
B. The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the 1933 Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
1934 Act that is incorporated by reference into this 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.
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C. Insofar as indemnification for liabilities arising under
the 1933 Act may be permitted to directors, officers or controlling persons of
the Registrant pursuant to the indemnification provisions summarized in Item 6
or otherwise, the Registrant has been advised that, in the opinion of the
Commission, such indemnification is against public policy as expressed in the
1933 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 1933 Act and
will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, 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
this 17th day of September, 2002.
SYNOPSYS, INC.
By: /s/ Aart J. de Geus
Aart J. de Geus
Chief Executive Officer
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POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned
officers and directors of Synopsys, Inc., a Delaware corporation, do hereby
constitute and appoint Aart J. de Geus and Robert B. Henske, and each of them,
the lawful attorneys-in-fact and agents with full power and authority to do any
and all acts and things and to execute any and all instruments which said
attorneys and agents, and any one of them, determine may be necessary or
advisable or required to enable said corporation to comply with the Securities
Act of 1933, as amended, and any rules or regulations or requirements of the
Securities and Exchange Commission in connection with this Registration
Statement. Without limiting the generality of the foregoing power and authority,
the powers granted include the power and authority to sign the names of the
undersigned officers and directors in the capacities indicated below to this
Registration Statement, to any and all amendments, both pre-effective and
post-effective, and supplements to this Registration Statement, and to any and
all instruments or documents filed as part of or in conjunction with this
Registration Statement or amendments or supplements thereof, and each of the
undersigned hereby ratifies and confirms that all said attorneys and agents, or
any one of them, shall do or cause to be done by virtue hereof. This Power of
Attorney may be signed in several counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this
Power of Attorney as of the date indicated.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
Signature Title Date
Chief Executive Officer
(Principal Executive
/s/ Aart de Geus Officer) and Chairman September 17, 2002
Aart J. de Geus of the Board of Directors
/s/ Chi-Foon Chan President, Chief Operating September 17, 2002
Chi-Foon Chan Officer and Director
/s/ Robert B. Henske Chief Financial Officer September 17, 2002
Robert B. Henske (Principal Financial Officer)
/s/ Richard Rowley Corporate Controller September 17, 2002
Richard Rowley Principal Accounting Officer)
/s/ Andy D. Bryant Director September 17, 2002
Andy D. Bryant
/s/ Deborah A. Coleman Director September 17, 2002
Deborah A. Coleman
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/s/ Bruce R. Chizen Director September 17, 2002
Bruce R. Chizen
/s/ Richard Newton Director September 17, 2002
A. Richard Newton
/s/ Sasson Somekh Director September 17, 2002
Sasson Somekh
/s/ Steven C. Walske Director September 17, 2002
Steven C. Walske
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
SYNOPSYS, INC.
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EXHIBIT INDEX
EXHIBIT NUMBER EXHIBIT
4 Instruments Defining the Rights of Stockholders. Reference
is made to Registrant's Registration Statement on Form 8-A
together with the amendments and exhibits thereto, which
are incorporated herein by reference pursuant to Items
3(d)and 3(e).
5 Opinion and consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of KPMG LLP.
23.3 Consent of BDO Seidman, LLP.
23.4 Consent of KPMG LLP.
23.5 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24 Power of Attorney. Reference is made to page II-5 of this
Registration Statement.
99.1 Co-Design Automation, Inc. 1998 Stock Option Plan.
EXHIBIT 5
OPINION AND CONSENT OF BROBECK, PHLEGER & HARRISON LLP
September 17, 2002
Synopsys, Inc.
700 E. Middlefield Road
Mountain View, California 94043
Re: Synopsys, Inc. - Registration Statement for Offering
of 30,736 SHARES OF COMMON STOCK
Dear Ladies and Gentlemen:
We have acted as counsel to Synopsys, Inc., a Delaware
corporation (the "Company"), in connection with the registration on Form S-8
(the "Registration Statement") under the Securities Act of 1933, as amended, of
30,726 shares of the Company's common stock for issuance under the Co-Design
Automation, Inc. 1998 Stock Option Plan (the "Plan").
This opinion is being furnished in accordance with the requirements of Item
8 of Form S-8 and Item 601(b)(5)(i) of Regulation S-K.
We have reviewed the Company's charter documents and the corporate
proceedings taken by the Company in connection with the assumption of the Plan
and the outstanding options thereunder. Based on such review, we are of the
opinion that if, as and when the shares of the Company's common stock are issued
and sold (and the consideration therefor received) pursuant to the provisions of
option agreements duly authorized under the Plan and the documentation
evidencing the assumption of the option by the Company and in accordance with
the Registration Statement, such shares will be duly authorized, legally issued,
fully paid and nonassessable.
We consent to the filing of this opinion letter as Exhibit 5
to the Registration Statement.
This opinion letter is rendered as of the date first written
above and we disclaim any obligation to advise you of facts, circumstances,
events or developments which hereafter may be brought to our attention and which
may alter, affect or modify the opinion expressed herein. Our opinion is
expressly limited to the matters set forth above and we render no opinion,
whether by implication or otherwise, as to any other matters relating to the
Company, the Plan or the shares of the Company's common stock issuable under
such plan.
Very truly yours,
/s/ BROBECK, PHLEGER & HARRISON LLP
BROBECK, PHLEGER & HARRISON LLP
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of Synopsys, Inc. of our report dated February 6, 2002
relating to the financial statements of Avant! Corporation, which appears in the
Current Report on Form 8-K of Synopsys, Inc., dated July 30, 2002. We also
hereby consent to the incorporation by reference in this Registration Statement
on Form S-8 of Synopsys, Inc. of our report dated January 18, 2002 relating to
the financial statements of Forefront Venture Partners, L.P., which appears in
the Current Report on Form 8-K of Synopsys, Inc., dated July 26, 2002.
/s/ PricewaterhouseCoopers LLP
San Jose, California
September 16, 2002
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
Avant! Corporation:
We consent to the incorporation by reference of our reports dated February
12, 2001, except as to Note 7, which is as of March 23, 2001 included in
Synopsys Inc.'s current report on Form 8-K filed with the Securities and
Exchange Commission on June 6, 2002, as amended on Form 8-K/A filed on July 30,
2002, relating to the consolidated balance sheet of Avant! Corporation and
subsidiaries as of December 31, 2000, and the related consolidated statements of
earnings, stockholders' equity and comprehensive income, and cash flows for each
of the years in the two-year period ended December 31, 2000, and the related
financial statement schedule, which reports appear in the Annual Report on Form
10-K of Avant! Corporation for the year ended December 31, 2001.
/s/ KPMG LLP
Mountain View, California
September 16, 2002
Exhibit 23.3
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Forefront Venture Partners, L.P.
Santa Clara, CA
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of Synopsys, Inc. of our report dated February 9, 2001,
except for Note 4, as to which the date is March 30, 2001, relating to the
financial statements of Forefront Venture Partners, L.P. as of December 31,
2000, and the related statements of operations and changes in partners' capital
for the years ended December 31, 2000 and 1999, appearing in Avant!
Corporation's Annual Report on Form 10-K for the year ended December 31, 2001.
/s/ BDO Seidman, LLP
BDO Seidman, LLP
San Jose, California
September 13, 2002
Exhibit 23.4
CONSENT OF KPMG LLP, INDEPENDENT AUDITORS
The Board of Directors
Synopsys, Inc.:
We consent to incorporation herein of our report dated November 20, 2001,
except as to Notes 9 and 11, which are as of December 20, 2001, relating to the
consolidated balance sheets of Synopsys, Inc. and subsidiaries as of October 31,
2001 and 2000, and the related consolidated statements of operations,
stockholders' equity and comprehensive income, and cash flows for each of the
years in the two-year period ended October 31, 2001, the one-month period ended
October 31, 1999, and the year ended September 30, 1999, and of our related
report dated November 20, 2001, relating to the consolidated financial statement
schedule, which reports appear in the annual report on Form 10-K of Synopsys,
Inc.
/s/ KPMG LLP
Mountain View, California
September 16, 2002
Exhibit 99.1
CO DESIGN AUTOMATION, INC.
1998 STOCK OPTION PLAN
As Adopted September 30,1998
1. PURPOSE. This 1998 Stock Option Plan ("Plan") is established as a
compensatory plan to attract, retain and provide equity incentives to selected
persons to promote the financial success of Co Design Automation, Inc., a
California corporation (the "Company'). Capitalized terms not previously defined
herein are defined in Section 17 of this Plan.
2. TYPES OF OPTIONS AND SHARES. Options granted under this Plan (the
"Options") may be either (a) incentive stock options ("ISOs") within the meaning
of Section 422A of the Internal Revenue Code of 1986, as amended (the "Code"),
or (b) nonqualified stock options ("NQSOs"), as designated at the time of grant.
The shares of stock that may be purchased upon exercise of Options granted under
this Plan (the "Shares") are shares of the Common Stock of the Company.
3. NUMBER OF SHARES. The aggregate number of Shares that may be issued
pursuant to Options granted under this Plan is 1,720,000 Shares, subject to
adjustment as provided in this Plan. If any Option expires or is terminated
without being exercised in whole or in part, the unexercised or released Shares
from such Options will be available for future grant and purchase under this
Plan. At all times during the term of this Plan, the Company will reserve and
keep available such number of Shares as will be required to satisfy the
requirements of outstanding Options under this Plan.
4. ELIGIBILITY. Options may be granted to employees, officers, directors,
consultants, independent contractors and advisors (provided such consultants,
contractors and advisors render bona fide services not in connection with the
offer and sale of securities in a capital-raising transaction) of the Company or
any Parent, Subsidiary or Affiliate of the Company. ISOs may be granted only to
employees (including officers and directors who are also employees) of the
Company or a Parent or Subsidiary of the Company. The Committee (as defined in
Section 14) in its sole discretion will select the recipients of Options
("Optionees"). An Optionee may be granted more than one Option under this Plan.
The Company may also, from time to time, assume outstanding options granted by
another company, whether in connection with an acquisition of such other company
or otherwise, by either (i) granting an option under this Plan in replacement of
the option assumed by the Company, or (ii) treating the assumed option as if it
had been granted under this Plan if the terms of such assumed option could be
applied to an option granted under this Plan. Such assumption will be
permissible if the holder of the assumed option would have been eligible to be
granted an option hereunder if the other company had applied the rules of this
Plan to such grant.
5. TERMS AND CONDITIONS OF OPTIONS. The Committee will determine whether
each Option is to be an ISO or an NQSO, the number of Shares subject to the
Option, the exercise price of the Option, the period during which the Option may
be exercised, and all other terms and conditions of the Option, subject to the
following:
(a) Form of Option Grant. Each Option granted under this Plan will be
evidenced by a written Stock Option Grant (the "Grant") in such form (which need
not be the same for each Optionee) as the Committee will from time to time
approve, which Grant will comply with and be subject to the terms and conditions
of this Plan.
(b) Date of Grant. The date of grant of an Option will be the date on which
the Committee makes the determination to grant such Option unless otherwise
specified by the Committee. The Grant representing the Option will be delivered
to the Optionee with a copy of this Plan within a reasonable time after the date
of grant.
(c) Exercise Price. The exercise price of an NQSO will be not less than 85%
of the Fair Market Value of the Shares on the date the Option is granted. The
exercise price of any ISO will be not less than 100% of the Fair Market Value of
the Shares on the date the Option is granted. The exercise price of any Option
granted to a person owning more than 10% of the total combined voting power of
all classes of stock of the Company or any Parent or Subsidiary of the Company
("Ten Percent Shareholder") will not be less than 110% of the Fair Market Value
of the Shares on the date the Option is granted.
(d) Exercise Period. Options will be exercisable within the times or upon
the events determined by the Committee as set forth in the Grant; provided,
however, that no Option will be exercisable after the expiration of ten (10)
years from the date the Option is granted, and provided further that no ISO
granted to a Ten Percent Shareholder will be exercisable after the expiration of
five (5) years from the date the Option is granted.
(e) Limitations on ISOs. The aggregate Fair Market Value (determined as of
the time an Option is granted) of stock with respect to which ISOs are
exercisable for the first time by an Optionee during any calendar year (under
this Plan or under any other incentive stock option plan of the Company or any
Parent or Subsidiary of the Company) will not exceed $100,000. If the Fair
Market Value of stock with respect to which ISOs are exercisable for the first
time by an Optionee during any calendar year exceeds $100,000, the Options for
the first $100,000 worth of Shares to become exercisable in such year will be
ISOs and the Options for the amount in excess of $100,000 that becomes
exercisable in that year will be NQSOs. In the event that the IRC or the
regulations promulgated thereunder are amended after the effective date of this
Plan to provide for a different limit on the Fair Market Value of Shares
permitted to be subject to ISOs, such different limit will be incorporated
herein and will apply to any Options granted after the effective date of such
amendment.
(f) Options Non-Transferable. Options granted under this Plan, and any
interest therein, will not be transferable or assignable by the Optionee, and
may not be made subject to execution, attachment or similar process, otherwise
than by will or by the laws of descent and distribution, and will be exercisable
during the lifetime of the Optionee only by the Optionee.
(g) Assumed Options. In the event the Company assumes an option granted by
another company, the terms and conditions of such option will remain unchanged
(except the exercise price and the number and nature of shares issuable upon
exercise, which will be adjusted appropriately pursuant to Section 425(c) of the
Code.) In the event the Company elects to grant a new option rather than
assuming an existing option (as specified in Section 4), such new option need
not be granted at Fair Market Value on the date of grant and may instead be
granted with a similarly adjusted exercise price.
6. EXERCISE OF OPTIONS.
(a) Notice. Options may be exercised only by delivery to the Company of a
written exercise agreement in a form approved by the Committee (which need not
be the same for each Optionee), stating the number of Shares being purchased,
the restrictions imposed on the Shares, if any, and such representations and
agreements regarding the Optionee's investment intent and access to information,
if any, as may be required by the Company to comply with applicable securities
laws, together with payment in full of the exercise price for the number of
Shares being purchased.
(b) Payment. Payment for the Shares may be made in cash (by check) or,
where approved by the Committee in its sole discretion at the time of grant and
where permitted by law: (i) by cancellation of indebtedness of the Company to
the Optionee; (ii) by surrender of shares of Common Stock of the Company that
have been owned by the Optionee for more than six (6) months (and which have
been paid for within the meaning of the Securities and Exchange Commission
("SEC") Rule 144 and, if such Shares were purchased from the Company by use of a
promissory note, such note has been fully paid with respect to such shares) or
were obtained by the Optionee in the open public market having a Fair Market
Value equal to the exercise price of the Option; (iii) by tender of a full
recourse promissory note having such terms as may be approved by the Committee
and bearing interest at a rate sufficient to avoid imputation of income under
Sections 483 and 1274 of the Code, (iv) by waiver of compensation due to accrued
to Optionee for services rendered; (v) provided that a public market for the
Company's stock exists, through a "same day sale commitment from the Optionee
and a broker-dealer that is a member of the National Association of Securities
Dealers (an "NASD Dealer") whereby the Optionee irrevocably elects to exercise
the Option and to sell a portion of the Shares so purchased to pay for the
exercise price and whereby the NASD Dealer irrevocably commits upon receipt of
such Shares to forward the exercise price directly to the Company; (vi) provided
that a public market for the Company's stock exists, through a margin
commitmentfrom the Optionee and an NASD Dealer whereby the Optionee irrevocably
elects to exercise the Option and to pledge the Shares so purchase to the NASD
Dealer in a margin account as security for a loan from the NASD Dealer in the
amount of the exercise price, and whereby the NASD Dealer irrevocably commits
upon receipt of such Shares to forward the exercise price directly to the
Company; or (vii) by any combination of the foregoing. Optionees who are not
employees or directors of the Company will not be entitled to purchase Shares
with a promissory note unless the note is adequately secured by collateral other
than the Shares.
(c) Withholding Taxes. Prior to issuance of the Shares upon exercise of an
Option, the Optionee will pay or make adequate provision for any federal or
state withholding obligations of the Company, if applicable.
(d) Limitations on Exercise. Notwithstanding the exercise periods set forth
in the Grant, exercise of an Option will always be subject to the following:
(i) If an Optionee ceases to be employed by the Company or any Parent,
Subsidiary or Affiliate of the Company for any reason except death or
disability, Optionee may exercise such Optionee's ISOs to the extent (and only
to the extent) that it would have been exercisable upon the date of termination,
within three (3) months after the date of termination, or such shorter time
period as may be specified in the Grant, provided that such period will in no
event be less than one (1) month or later than the date of expiration of the
ISOs;
(ii) If Optionee is an Insider and the Company is subject to Section 16(b)
of the Exchange Act, Optionee's Option will be exercisable for a period of time
sufficient to allow Optionee from having a matching purchase and sale under
Section 16(b), with any extension beyond three (3) months from termination of
employment deemed to be as an NQSO, and provided further that in no event may an
Option be exercisable later than the expiration date of the Option;
(iii) If Optionee's employment with the Company or any Parent, Subsidiary
or Affiliate of the Company is terminated because of the death of Optionee or
disability of Optionee, Optionee's ISOs may be exercised to the extent (and only
to the extent) that it would have been exercisable by Optionee on the date of
termination, by Optionee (or Optionee's legal representative) within twelve (12)
months after the date of termination, or such shorter time period as may be
specified in the Grant, provided that such period will in no event be less than
six (6) months or later than the expiration date of the ISOs;
(iv) The Committee will have discretion to determine whether the Optionee
has ceased to be employed by the Company or any Parent, Subsidiary or Affiliate
of the Company and the effective date on which such employment terminated;
(v) In the case of an Optionee who is a director, independent consultant,
contractor or advisor, the Committee will have the discretion to determine
whether the Optionee is employed by the Company or any Parent, Subsidiary or
Affiliate of the Company pursuant to the foregoing Sections; and
(vi) The Committee may specify a reasonable minimum number of Shares that
may be purchased on any exercise of an Option, provided that such minimum number
will not prevent Optionee from exercising the full number of Shares as to which
the Option is then exercisable.
(vii) An Option will not be exercisable unless such exercise is in
compliance with the Securities Act of 1933, as amended (the "1933 Act"), all
applicable state securities laws and the requirements of any stock exchange or
national market system upon which the Shares may then be listed, as they are in
effect on the date of exercise. The Company will be under no obligation to
register the Shares with the Securities and Exchange Commission ("SEC") or to
effect compliance with the registration, qualification or listing requirements
of any state securities laws or stock exchange, and the Company will have no
liability for any inability or failure to do so.
7. RESTRICTIONS ON SHARES. At the discretion of the Committee, the Company
may reserve to itself and/or its assignee(s) in the Grant (a) a right of first
refusal to purchase all Shares that an Optionee (or a subsequent transferee) may
propose to transfer to a third party and/or (b) a right to repurchase a portion
of or all Shares held by an Optionee upon Optionee's termination of employment
or service with the Company or its Parent, Subsidiary or Affiliate of the
Company for any reason within a specified time as determined by the Committee at
the time of grant at (1) Optionee's original purchase price, (ii) the Fair
Market Value of such Shares or (iii) a price determined by a formula or other
provision set forth in the Grant.
8. MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. The Committee will have
the power to modify, extend or renew outstanding Options and to authorize the
grant of new Options in substitution therefor, provided that any such action may
not, without the written consent of Optionee, impair any rights under any Option
previously granted. Any outstanding ISO that is modified, . extended, renewed or
otherwise altered will be treated in accordance with Section 425(h) of the Code.
The Committee will have the power to reduce the exercise price of outstanding
Options without the consent of Optionees by a written notice to the Optionees
affected; provided, however, that the exercise price per share may not be
reduced below the minimum exercise price that would be permitted under Section
5(c) of this Plan for Options granted on the date the action is taken to reduce
the exercise price.
9. PRIVILEGES OF STOCK OWNERSHIP. No Optionee will have any of the rights
of a shareholder with respect to any Shares subject to an Option until such
Option is properly exercised. No adjustment will be made for dividends or
distributions or other rights for which the record date is prior to such date,
except as provided in this Plan. The Company will provide to each Optionee and
person owning shares purchased through this Plan with financial statements at
least annually, unless the Optionee or shareholder is an employee whose duties
in connection with the Company assure access to equivalent information.
10. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Option granted
under this Plan will confer on any Optionee any right to continue in the employ
of, or other relationship with, the Company or any Parent, Subsidiary or
Affiliate of the Company or limit in any way the right of the Company or any
Parent, Subsidiary or Affiliate of the Company to terminate the Optionee's
employment or other relationship at any time, with or without cause.
11. ADJUSTMENT OF OPTION SHARES. In the event that the number of
outstanding shares of Common Stock of the Company is changed by a stock
dividend, stock split, reverse stock split, combination, reclassification or
similar change in the capital structure of the Company without consideration,
then the number of Shares available under this Plan and the number of Shares
subject to outstanding Options and the exercise price per share of such Options
will be proportionately adjusted, subject to any required action by the Board of
Directors (the "Board") or shareholders of the Company and compliance with
applicable securities laws; provided, however, that a fractional share will not
be issued upon exercise of any Option and any fractions of a Share that would
have resulted will either be cashed out at Fair Market Value or the number of
shares issuable under the Option will be rounded up to the nearest whole number,
as determined by the Committee; and provided further that the exercise price may
not be decreased to below the par value, if any, for the Shares.
12. ASSUMPTION OF OPTIONS BY SUCCESSORS.
(a) In the event of (1) a merger or consolidation in which the Company is
not the surviving corporation (other than a merger or consolidation with a
wholly owned subsidiary, a reincorporation, or other transaction in which there
is no substantial change in the shareholders of the corporation and the Options
granted under this Plan are assumed by the successor corporation, which
assumption will be binding on all Optionees), (ii) a dissolution or liquidation
of the Company, (iii) the sale of all or substantially all of the assets of the
Company, or (iv) any other transaction which qualifies as a "corporate
transaction" under Section 425(a) of the Code wherein the shareholders of the
Company give up all of their equity interest in the Company (except for the
acquisition of all or substantially all of the outstanding shares of the
Company), any or all outstanding Options may be assumed by the successor
corporation, which assumption will be binding on all Optionees. In the
alternative, the successor corporation may substitute an equivalent option or
provide substantially similar consideration to Optionees as was provided to
shareholders (after taking into account the existing provisions of Optionee's
options, such as the exercise price and the vesting schedule). The successor
corporation may also issue, in place of outstanding shares of the Company held
by Optionee as a result of the exercise of an Option that is subject to
repurchase, substantially similar shares or other property subject to similar
repurchase restrictions no less favorable to Optionee.
(b) In the event such successor corporation, if any, refuses to assume or
substitute Options, as provided above, pursuant to a transaction described in
Subsections 12(a)(ii), (iii) or (iv) above, or there is no successor
corporation, and if the Company is ceasing to exist as a separate corporate
entity, the Options will, notwithstanding any contrary terms in the Grant,
expire on a date at least 20 days after the Board gives written notice to
Optionees specifying the terms and conditions of such termination.
(c) Subject to the foregoing provisions of this Section 12, in the event of
the occurrence of any transaction described in Section 12(a), any outstanding
Option will be treated as provided in the applicable agreement or plan of
merger, consolidation, dissolution, liquidation, sale of assets or other
"corporate transaction".
13. ADOPTION AND SHAREHOLDER APPROVAL. This Plan will become effective on
the date that it is adopted by the Board of the Company. This Plan will be
approved by the shareholders of the Company, in any manner permitted by
applicable corporate law, within twelve months before or after the date this
Plan is adopted by the Board. Upon the effective date of the Plan, the Board may
grant Options pursuant to this Plan; provided that, in the event that
shareholder approval is not obtained within the time period provided herein, all
Options granted hereunder will terminate. No Option that is issued as a result
of any increase in the number of shares authorized to be issued under this Plan
will be exercised prior to the time such increase has been approved by the
shareholders of the Company and all such Options granted pursuant to such
increase will similarly terminate if such Shareholder approval is not obtained.
After the Company becomes subject to Section 16(b) of the Exchange Act, the
Company will comply with the requirements of Rule 16b-3 with respect to
shareholder approval.
14. ADMINISTRATION. This Plan may be administered by the Board or a
Committee appointed by the Board (the "Committee"). If the Board is not
comprised entirely of Disinterested Persons, the Company will take appropriate
steps to comply with the disinterested director requirements of Section 16(b) of
the Exchange Act, which may consist of the appointment by the Board of a
Committee consisting of not less than two persons (who are members of the
Board), each of whom is a Disinterested Person. As used in this Plan, references
to the "Committee" will mean either the committee appointed by the Board to
administer this Plan or the Board if no committee has been established. The
interpretation by the Committee of any of the provisions of this Plan or any
Option granted under this Plan will be final and binding upon the Company and
all persons having an interest in any Option or any Shares purchased pursuant to
an Option. The Committee may delegate the authority to grant Options under this
Plan to Optionees who are not Insiders of the Company to officers of the
Company.
15. TERM OF PLAN. Options may be granted pursuant to this Plan from time to
time within a period of ten (10) years from the date on which this Plan is
adopted by the Board.
16. AMENDMENT OR TERMINATION OF PLAN. The Committee may at any time
terminate or amend this Plan in any respect including (but not limited to)
amendment of any form of Grant, exercise agreement or instrument to be executed
pursuant to this Plan; provided, however, that the Committee will not, without
the approval of the holders of a majority of the outstanding voting shares of
the Company, amend this Plan in any manner that requires such shareholder
approval pursuant to the Code or the regulations promulgated thereunder as such
provisions apply to ISO plans or pursuant to the Exchange Act or Rule 16b-3 (or
its successor) promulgated thereunder.
17. CERTAIN DEFINITIONS. As used in this Plan, the following terms will
have the following meanings:
(a) "Parent" means any corporation (other than the Company) in an unbroken
chain of corporations ending with the Company if, at the time of the granting of
the Option, each of such corporations other than the Company owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
(b) "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the time of
granting of the Option, each of the corporations other than the last corporation
in the unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.
(c) "Affiliate" means any corporation that directly, or indirectly through
one or more intermediaries, controls or is controlled by, or is under common
control with, another corporation, where "control" (including the terms
"controlled by" and "under common control with") means the possession, direct or
indirect, of the power to cause the direction of the management and policies of
the corporation, whether through the ownership of voting securities, by contract
or otherwise.
(d) "Disinterested Person" will have the meaning set forth in Rule 16b-3(d)
(3) as promulgated by the SEC under Section 16(b) of the Exchange Act, as such
rule is amended from time to time and as interpreted by the SEC.
(e) "Fair Market Value" will mean the fair market value of the Shares as
determined by the Committee from time to time in good faith. If a public market
exists for the Shares, the Fair Market Value will be the average of the last
reported bid and asked prices for Common Stock of the Company on the last
trading day prior to the date of determination (or the average closing price
over the number of consecutive working days preceding the date of determination
as the Committee will deem appropriate) or, in the event the Common Stock of the
Company is listed on a stock exchange or on the NASDAQ National Market System,
the Fair Market Value will be the closing price on such exchange or quotation
system on the last trading day prior to the date of determination (or the
average closing price over the number of consecutive working days preceding the
date of determination as the Committee will deem appropriate).