Document:

exv10w43

 

Exhibit 10.43

CADENCE DESIGN SYSTEMS, INC.

2000 NONSTATUTORY EQUITY INCENTIVE PLAN

     1. Purposes of the Plan. The purposes of the Plan are to attract and retain the best
available personnel for positions of substantial responsibility, to provide additional incentive to
the Employees and Consultants of the Company and its Affiliates, and to promote the success of the
Company’s business.

     2. Definitions. As used herein, the following definitions shall apply:

          (a) “Affiliate” shall mean any parent corporation or subsidiary corporation of the Company,
whether now or hereafter existing, as those terms are defined in Sections 424(e) and (f),
respectively, of the Code.

          (b) “Board” shall mean the Committee, if one has been appointed, or the Board of Directors, if
no Committee is appointed.

          (c) “Board of Directors” shall mean the Board of Directors of the Company.

          (d) “Code” shall mean the Internal Revenue Code of 1986, as amended, and the Treasury
Regulations promulgated thereunder.

          (e) “Committee” shall mean the Committee appointed by the Board of Directors in accordance
with paragraph (a) of Section 4 of the Plan, if one is appointed.

          (f) “Common Stock” shall mean the common stock of the Company.

          (g) “Company” shall mean Cadence Design Systems, Inc., a Delaware corporation.

          (h) “Consultant” shall mean any consultant, independent contractor or adviser rendering
services to the Company or an Affiliate (provided that such person renders bona fide services not
in connection with the offering and sale of securities in capital raising transactions). However,
the term “Consultant” shall not include members of the Board of Directors.

          (i) “Continuous Status as an Employee or Consultant” shall mean the absence of any
interruption or termination of service, whether as an Employee or Consultant. The Board or the
chief executive officer of the Company shall determine whether Continuous Status as an Employee or
Consultant shall be considered interrupted in the case of: (i) any approved leave of absence,
including sick leave, military leave, or any other personal leave; or (ii) transfers between the
Company, Affiliates or their successors. Continuous Status as an Employee or Consultant shall not
be deemed to have terminated merely because of a change in the capacity in which the Participant
renders service to the Company or any Affiliate, provided that there is no interruption or
termination thereof.

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          (j) “Employee” shall mean any person employed by the Company or any Affiliate.

          (k) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder.

          (l) “Fair Market Value” means, with respect to any relevant date prior to January 1, 2007, the
average of the high and low prices of the Common Stock on such date, as reported on the NASDAQ
Global Select Market or such other primary national exchange on which the Common Stock is listed,
and, with respect to any relevant date on or after January 1, 2007, the closing price of the Common
Stock on such date, as reported on the NASDAQ Global Select Market or such other primary national
exchange on which the Common Stock is listed. In the event the Common Stock is not listed on an
exchange as described in the previous sentence, Fair Market Value with respect to any relevant date
shall be determined in good faith by the Board.

          (m) “Incentive Stock” means shares of Common Stock granted to a Participant pursuant to
Section 10 hereof.

          (n) “Incentive Stock Agreement” means a written agreement between the Company and a holder of
an award of Incentive Stock evidencing the terms and conditions of an individual Incentive Stock
grant. Each Incentive Stock Agreement shall be subject to the terms and conditions of the Plan.

          (o) “Nonstatutory Stock Option” shall mean an Option not intended to qualify as an incentive
stock option within the meaning of Section 422 of the Code.

          (p) “Option” shall mean a Nonstatutory Stock Option granted pursuant to the Plan.

          (q) “Optioned Stock” shall mean the Common Stock subject to an Option.

          (r) “Participant” shall mean an Employee or Consultant who receives a Stock Award.

          (s) “Plan” shall mean this 2000 Nonstatutory Equity Incentive Plan, as amended from time to
time.

          (t) “Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

          (u) “Share” shall mean a share of Common Stock, as may be adjusted in accordance with Section
13 of the Plan.

          (v) “Stock Award” shall mean any right granted under the Plan, including an Option, Incentive
Stock, a stock bonus and a right to acquire restricted stock.

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          (w) “Stock Option Agreement” means a written agreement between the Company and a holder of an
Option award evidencing the terms and conditions of an individual Option grant. Each Stock Option
Agreement shall be subject to the terms and conditions of the Plan.

          (x) “Stock Award Agreement” means a written agreement between the Company and a holder of a
Stock Award evidencing the terms and conditions of an individual Stock Award grant. Each Stock
Award Agreement shall be subject to the terms and conditions of the Plan.

     3. Stock Subject to the Plan.

          (a) Share Reserve. Subject to the provisions of Sections 3(b) and 13, the Common Stock that
may be issued pursuant to Stock Awards shall not exceed in the aggregate Fifty Million (50,000,000)
shares of Common Stock.

          (b) Reversion of Shares to the Share Reserve. If any Stock Award shall for any reason expire
or otherwise terminate, in whole or in part, without having vested or been exercised in full, the
shares of Common Stock not acquired under such Stock Award shall revert to and again become
available for issuance under the Plan. If the Company repurchases any unvested shares of Common
Stock acquired pursuant to a Stock Award, such repurchased shares of Common Stock shall revert to
and again become available for issuance under the Plan.

          (c) Source of Shares. The shares of Common Stock subject to the Plan may be unissued shares
or reacquired shares, bought on the market or otherwise.

     4. Administration of the Plan.

          (a) Procedure. The Plan shall be administered by the Board of Directors. The Board of
Directors may appoint a Committee consisting of one or more members of the Board of Directors to
administer the Plan on behalf of the Board of Directors, subject to such terms and conditions as
the Board of Directors may prescribe. In such event, any references in the Plan to the Board of
Directors shall be deemed to refer to the Committee. Once appointed, the Committee shall continue
to serve until otherwise directed by the Board of Directors. From time to time the Board of
Directors may increase or decrease the size of the Committee and appoint additional members
thereof, remove members (with or without cause), and appoint new members in substitution therefor,
fill vacancies however caused and remove all members of the Committee, and thereafter directly
administer the Plan. Notwithstanding anything in this Section 4 to the contrary, at any time the
Board of Directors or the Committee may delegate to a committee of one or more members of the Board
of Directors the authority to grant Stock Awards to all Employees and Consultants or any portion or
class thereof. In addition, the Board of Directors or the Committee may by resolution authorize
one or more officers of the Company to perform any or all tasks that the Board is authorized and
empowered to do or perform under the Plan, and for all purposes under the Plan, such officer or
officers shall be treated as the Board; provided, however, that the resolution so authorizing such
officer or officers shall specify the maximum number of Shares per Stock Award (if any) and the
total number of Shares (if any)

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such officer or officers may award pursuant to such delegated authority, and any such Stock
Award shall be subject to the form of Stock Option Agreement or Incentive Stock Agreement
theretofore approved by the Board of Directors or the Committee. No such officer shall designate
himself or herself as a recipient of any Stock Awards granted under authority delegated to such
officer.

          (b) Powers of the Board. Subject to the provisions of the Plan, the Board shall have the
authority, in its discretion: (i) to grant Stock Awards under the Plan; (ii) to determine the
exercise, sales or purchase price per share of Stock Awards to be granted, which exercise price
shall be determined in accordance with Sections 8(a), 10(c) and 11(b)(i) of the Plan, as
applicable; (iii) to determine the Employees or Consultants to whom, and the time or times at
which, Stock Awards shall be granted, the number of Shares to be represented by each Stock Award,
and the terms of such Stock Awards; (iv) to interpret the Plan; (v) to prescribe, amend and rescind
rules and regulations relating to the Plan; (vi) to determine the terms and provisions of each
Stock Award granted (which need not be identical) in accordance with the Plan, and, with the
consent of the holder thereof with respect to any adverse change, modify or amend each Stock Award;
(vii) to accelerate or defer (the latter with the consent of the Participant) the exercise date and
vesting of any Stock Award; (viii) to authorize any person to execute on behalf of the Company any
instrument required to effectuate the grant of a Stock Award previously granted by the Board; and
(ix) to make all other determinations deemed necessary or advisable for the administration of the
Plan. The Board, in the exercise of this power, may correct any defect, omission or inconsistency
in the Plan or in any Stock Award Agreement, in a manner and to the extent it shall deem necessary
or expedient to make the Plan fully effective.

          (c) Effect of Board’s Decision. All decisions, determinations and interpretations of the
Board shall be final and binding on all Participants and any other holders of any Stock Awards
granted under the Plan.

     5. Eligibility. Stock Awards may be granted only to Employees or Consultants. An Employee or
Consultant who has been granted a Stock Award may, if he or she is otherwise eligible, be granted
an additional Stock Award. Notwithstanding the foregoing, no Employee or Consultant who is an
executive officer of the Company within the meaning of Section 16 of the Exchange Act, who is a
member of the Board of Directors or who beneficially owns 10% or more of the Company’s Common Stock
shall be entitled to receive the grant of a Stock Award under the Plan unless the Stock Award will
be granted to a person not previously employed by the Company as a material inducement to such
person’s entering into an employment contract with the Company.

          The Plan shall not confer upon any Participant any right with respect to continuation of
employment or consultancy by the Company or any Affiliate, as applicable, nor shall it interfere in
any way with the Participant’s right or the Company’s or any Affiliate’s right to terminate the
Participant’s employment at any time or the Participant’s consultancy pursuant to the terms of the
Consultant’s agreement with the Company or any Affiliate.

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     6. Term of the Plan. The Plan became effective upon its adoption by the Board of Directors.
The Plan shall continue in effect until terminated under Section 15 of the Plan.

     7. Term of Option; Vesting Provisions.

          (a) Option Term. From and after October 1, 2006, the term of each Option shall be seven (7)
years from the date of grant thereof or such shorter term as may be provided in the applicable
Stock Option Agreement. Prior to October 1, 2006, the maximum term for each Option was ten (10)
years from the date of grant thereof or such shorter term as may have been provided in the
applicable Stock Option Agreement.

          (b) Vesting Provisions. The terms on which each Option shall vest shall be determined by the
Board in its discretion, and shall be set forth in the Stock Option Agreement relating to each such
Option. Without limiting the discretion of the Board, vesting provisions may include time-based
vesting or vesting based on achievement of performance or other criteria. The provisions of this
Section 7(b) are subject to any Option provisions governing the minimum number of Shares as to
which an Option may be exercised.

     8. Option Exercise Price and Consideration.

          (a) Exercise Price. The per Share exercise price for the Shares to be issued pursuant to
exercise of an Option shall be no less than 100% of the Fair Market Value per Share on the date of
grant. Notwithstanding the foregoing, an Option may be granted with an exercise price lower than
set forth in the preceding sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner satisfying the provisions of Section 424(a) of the
Code.

          (b) Consideration. Subject to applicable law, the consideration to be paid for the Shares to
be issued upon exercise of an Option, including the method of payment, shall be determined by the
Board and may consist entirely of cash, check, promissory note, shares of Common Stock having a
Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as
to which said Option shall be exercised, or any combination of such methods of payment, or such
other consideration and method of payment for the issuance of Shares as may be determined by the
Board. In making its determination as to the type of consideration to accept, the Board shall
consider if acceptance of such consideration may be reasonably expected to benefit the Company.

     9. Exercise of Options.

          (a) Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder shall be
exercisable at such times and under such conditions as determined by the Board, including
performance criteria with respect to the Company and/or the Participant, and as shall be
permissible under the terms of the Plan.

               An Option may not be exercised for a fraction of a Share.

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               An Option shall be deemed to be exercised when written notice of such exercise has been given
to the Company in accordance with the terms of the Option by the person entitled to exercise the
Option and full payment for the Shares with respect to which the Option is exercised has been
received by the Company. Full payment may, as authorized by the Board, consist of any
consideration and method of payment allowable under Section 8(b) of the Plan. Until the issuance
(as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such Shares, no right to vote or receive
dividends or any other rights as a stockholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. No adjustment will be made for a dividend or other
right for which the record date is prior to the date the stock certificate is issued, except as
provided in Section 13 of the Plan.

               Exercise of an Option in any manner shall result in a decrease in the number of Shares that
thereafter may be available, both for purposes of the Plan and for sale under the Option, by the
number of Shares as to which the Option is exercised.

          (b) Termination of Status as an Employee or Consultant. If a Participant ceases to serve as
an Employee or Consultant for any reason other than death or disability, the Participant may, but
only within such period of time ending on the earlier of (i) three (3) months (or such other period
of time as is determined by the Board) after the date the Participant ceases to be an Employee or
Consultant or (ii) the expiration of the term of the Option, exercise the Option to the extent that
the Participant was entitled to exercise it at the date of such termination. To the extent that
the Participant was not entitled to exercise the Option at the date of such termination, or if the
Participant does not exercise such Option (which the Participant was entitled to exercise) within
the time specified herein, the Option shall terminate.

          (c) Extension of Termination Date. A Participant’s Stock Option Agreement may also provide
that if the exercise of the Option following the termination of the Participant’s Continuous
Service as an Employee or Consultant (other than upon the Participant’s death or disability) would
be prohibited at any time solely because the issuance of Shares would violate the registration
requirements under the Securities Act, then the Option shall terminate on the expiration of a
period of three (3) months after the termination of the Participant’s Continuous Service as an
Employee or Consultant during which the exercise of the Option would not be in violation of such
registration requirements.

          (d) Death of Participant. In the event of the death of a Participant during the term of the
Option who is at the time of the Participant’s death an Employee or Consultant and who shall have
been in Continuous Status as an Employee or Consultant since the date of grant of the Option, the
Option may be exercised at any time within the period of time ending on the earlier of (i) twelve
(12) months (or such other period of time as is determined by the Board) following the date of
death or (ii) the expiration of the term of the Option, by the Participant’s estate or by a person
who acquired the right to exercise the Option by bequest or inheritance, to the extent that the
Participant was entitled to exercise it at the date of such termination. To the extent that the
Participant was not entitled to exercise the Option at the date of such termination,

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or if the Option is not exercised (to the extent the Participant was entitled to exercise)
within the time specified herein, the Option shall terminate.

          (e) Disability of Participant. In the event of the disability of a Participant during the
term of the Option who is at the time of his or her disability an Employee or Consultant and who
shall have been in Continuous Status as an Employee or Consultant since the date of grant of the
Option, the Participant (or the Participant’s legal guardian or conservator) may, but only within
the period of time ending on the earlier of (i) twelve (12) months (or such other period of time as
is determined by the Board) after the date the Participant ceases to be an Employee or Consultant
on account of such disability or (ii) the expiration of the term of the Option, exercise the Option
to the extent that the Participant was entitled to exercise it at the date of such termination. To
the extent that the Participant was not entitled to exercise the Option at the date of such
termination, or if the Participant does not exercise such Option (which the Participant was
entitled to exercise) within the time specified herein, the Option shall terminate.

     10. Incentive Stock.

          (a) General. Incentive Stock is an award or issuance of shares of Common Stock under the Plan
the grant, issuance, retention, vesting and/or transferability of which is subject during specified
periods of time to such conditions (including continued service or performance conditions) and
terms as the Board deems appropriate.

          (b) Incentive Stock Agreement. Each Incentive Stock Agreement shall contain provisions
regarding (i) the number of shares of Common Stock subject to such award or a formula for
determining such number, (ii) the purchase price of the Shares, if any, and the means of payment
for the Shares, (iii) the performance criteria, if any, and level of achievement of these criteria
that shall determine the number of Shares granted, issued, retainable and/or vested, (iv) such
terms and conditions on the grant, issuance, vesting and/or forfeiture of the Shares as may be
determined from time to time by the Board, (v) restrictions on the transferability of the Shares
and (vi) such further terms and conditions in each case not inconsistent with the Plan as may be
determined from time to time by the Board. Shares of Incentive Stock may be issued in the name of
the Participant and held by the Participant or held by the Company, in each case as the Board may
provide.

          (c) Sales Price. Subject to the requirements of applicable law, the Board shall determine the
price, if any, at which shares of Incentive Stock shall be sold or awarded to a Participant, which
price may vary from time to time and among Participants and which may be below the Fair Market
Value of such shares at the date of grant or issuance.

          (d) Share Vesting. The grant, issuance, retention and/or vesting of shares of Incentive Stock
shall be at such time and in such installments as determined by the Board. The Board shall have
the right to make the timing of the grant and/or the issuance, ability to retain and/or vesting of
shares of Incentive Stock subject to continued service, passage of time and/or such performance
criteria as deemed appropriate by the Board. Notwithstanding the foregoing, the Board may
accelerate vesting (in a Stock Award agreement or otherwise) of any Stock

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Award in the event of a Participant’s termination of service as an Employee or Consultant, a
Change in Control or similar event.

          (e) Transferability. Shares of Incentive Stock shall be transferable by the Participant only
upon such terms and conditions as are set forth in the applicable Incentive Stock Agreement, as the
Board shall determine in its discretion, so long as Incentive Stock awarded under the Incentive
Stock Agreement remains subject to the terms of the Incentive Stock Agreement.

          (f) Discretionary Adjustments. Notwithstanding satisfaction of any performance goals, the
number of shares granted, issued, retainable and/or vested under an award of Incentive Stock on
account of either financial performance or personal performance evaluations may be reduced by the
Board on the basis of such further considerations as the Board shall determine.

     11. Provisions of Stock Awards other than Options And Incentive Stock.

          (a) Stock Bonus Awards. Each stock bonus agreement shall be in such form and shall contain
such terms and conditions as the Board shall deem appropriate. The terms and conditions of stock
bonus agreements may change from time to time, and the terms and conditions of separate stock bonus
agreements need not be identical, but each stock bonus agreement shall include (through
incorporation of provisions hereof by reference in the agreement or otherwise) the substance of
each of the following provisions:

               (i) Consideration. A stock bonus may be awarded in consideration for past services actually
rendered to the Company or an Affiliate for its benefit.

               (ii) Vesting. Shares of Common Stock awarded under the stock bonus agreement may, but need
not, be subject to a share repurchase option in favor of the Company in accordance with a vesting
schedule to be determined by the Board.

               (iii) Termination of Participant’s Continuous Service as an Employee or Consultant. In the
event a Participant’s Continuous Service as an Employee or Consultant terminates, the Company may
reacquire any or all of the shares of Common Stock held by the Participant which have not vested as
of the date of termination under the terms of the stock bonus agreement.

               (iv) Transferability. Rights to acquire shares of Common Stock under the stock bonus
agreement shall be transferable by the Participant only upon such terms and conditions as are set
forth in the stock bonus agreement, as the Board shall determine in its discretion, so long as
Common Stock awarded under the stock bonus agreement remains subject to the terms of the stock
bonus agreement.

          (b) Restricted Stock Awards. Each restricted stock purchase agreement shall be in such form
and shall contain such terms and conditions as the Board shall deem appropriate. The terms and
conditions of the restricted stock purchase agreements may change

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from time to time, and the terms and conditions of separate restricted stock purchase
agreements need not be identical, but each restricted stock purchase agreement shall include
(through incorporation of provisions hereof by reference in the agreement or otherwise) the
substance of each of the following provisions:

               (i) Purchase Price. The purchase price under each restricted stock purchase agreement shall
be such amount as the Board shall determine and designate in such restricted stock purchase
agreement. The purchase price shall not be less than one hundred percent (100%) of the Common
Stock’s Fair Market Value on the date such award is made or at the time the purchase is
consummated.

               (ii) Consideration. The purchase price of Common Stock acquired pursuant to the restricted
stock purchase agreement shall be paid either: (i) in cash at the time of purchase; (ii) at the
discretion of the Board, according to a deferred payment or other similar arrangement with the
Participant; or (iii) in any other form of legal consideration that may be acceptable to the Board
in its discretion; provided, however, that at any time that the Company is incorporated in
Delaware, payment of the Common Stock’s “par value,” as defined in the Delaware General Corporation
Law, shall not be made by deferred payment.

               (iii) Vesting. Shares of Common Stock acquired under the restricted stock purchase agreement
may, but need not, be subject to a share repurchase option in favor of the Company in accordance
with a vesting schedule to be determined by the Board.

               (iv) Termination of Participant’s Continuous Service as an Employee or Consultant. In the
event a Participant’s Continuous Service as an Employee or Consultant terminates, the Company may
repurchase or otherwise reacquire any or all of the shares of Common Stock held by the Participant
which have not vested as of the date of termination under the terms of the restricted stock
purchase agreement.

               (v) Transferability. Rights to acquire shares of Common Stock under the restricted stock
purchase agreement shall be transferable by the Participant only upon such terms and conditions as
are set forth in the restricted stock purchase agreement, as the Board shall determine in its
discretion, so long as Common Stock awarded under the restricted stock purchase agreement remains
subject to the terms of the restricted stock purchase agreement.

     12. Non-Transferability of Stock Awards. Except as otherwise expressly provided in the terms
of the applicable Stock Option Agreement or Incentive Stock Agreement, a Stock Award may not be
sold, pledged, assigned, hypothecated, transferred or otherwise disposed of in any manner other
than by will or by the laws of descent or distribution and may be exercised, during the lifetime of
the Participant, only by the Participant or the Participant’s legal representative.
Notwithstanding the foregoing, the Participant may, by delivering written notice to the Company, in
a form satisfactory to the Company, designate a third party who, in the event of the death of the
Participant, shall thereafter be entitled to exercise the Stock Award.

     13. Adjustments upon Changes in Capitalization or Change in Control. The number of Shares
covered by each outstanding Stock Award, and the number of Shares which

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have been authorized for issuance under the Plan but as to which no Stock Awards have yet been
granted or which have been returned to the Plan upon cancellation, expiration, forfeiture or other
termination of a Stock Award, as well as the price per Share covered by each such outstanding Stock
Award, shall be equitably adjusted for any increase or decrease in the number of issued shares of
Common Stock resulting from a stock split or the payment of a stock dividend with respect to the
Common Stock or any other increase or decrease in the number of issued shares of Common Stock
effected without receipt of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been “effected without receipt of
consideration”. Such adjustments shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number
or price of shares of Common Stock subject to a Stock Award.

     For purposes of the Plan, a “Change in Control” shall be deemed to occur upon the consummation
of any one of the following events: (a) a sale of all or substantially all of the assets of the
Company; (b) a merger or consolidation in which the Company is not the surviving corporation (other
than a transaction the principal purpose of which is to change the state of the Company’s
incorporation or a transaction in which the voting securities of the Company are exchanged for
beneficial ownership of at least 50% of the voting securities of the controlling acquiring
corporation); (c) a merger or consolidation in which the Company is the surviving corporation and
less than 50% of the voting securities of the Company that are outstanding immediately after the
consummation of such transaction are beneficially owned, directly or indirectly, by the persons who
owned such voting securities immediately prior to such transaction; (d) any transaction or series
of related transactions after which any person (as such term is defined in Section 13(d)(3) of the
Exchange Act), other than any employee benefit plan (or related trust) sponsored or maintained by
the Company or any subsidiary of the Company, becomes the beneficial owner of voting securities of
the Company representing 40% or more of the combined voting power of all of the voting securities
of the Company; (e) during any period of two consecutive years, individuals who at the beginning of
such period constitute the membership of the Company’s Board of Directors (“Incumbent Directors”)
cease for any reason to have authority to cast at least a majority of the votes which all directors
on the Board of Directors are entitled to cast, unless the election, or the nomination for election
by the Company’s stockholders, of a new director was approved by a vote of at least two-thirds of
the votes entitled to be cast by the Incumbent Directors, in which case such director shall also be
treated as an Incumbent Director in the future; or (f) the liquidation or dissolution of the
Company.

     In the event of a Change in Control, then: (a) any surviving or acquiring corporation shall
assume Stock Awards outstanding under the Plan or shall substitute similar awards (including an
option to acquire the same consideration paid to stockholders in the transaction described in this
Section 13 for those outstanding Options under the Plan), or (b) in the event any surviving or
acquiring corporation refuses to assume such Stock Awards or to substitute similar awards for those
outstanding under the Plan, (i) with respect to Stock Awards held by persons then

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performing services as Employees or Consultants, the vesting of such Stock Awards and the time
during which such Stock Awards may be exercised shall be accelerated prior to such event and the
Stock Awards terminated if not exercised after such acceleration and at or prior to such event, and
(ii) with respect to any other Options outstanding under the Plan, such Options shall be terminated
if not exercised prior to such event.

     14. Miscellaneous.

          (a) Acceleration of Exercisability and Vesting. The Board shall have the power to accelerate
the time at which a Stock Award may first be exercised or the time during which a Stock Award or
any part thereof will vest in accordance with the Plan, notwithstanding the provisions in the Stock
Award stating the time at which it may first be exercised or the time during which it will vest.

          (b) Additional Restrictions on Stock Awards. Either at the time a Stock Award is granted or
by subsequent action, the Board may, but need not, impose such restrictions, conditions or
limitations as it determines appropriate as to the timing and manner of any resales by a
Participant or other subsequent transfers by an Participant of any Shares issued under a Stock
Award, including without limitation (i) restrictions under an insider trading policy, (ii)
restrictions designed to delay and/or coordinate the timing and manner of sales by Participants,
and (iii) restrictions as to the use of a specified brokerage firm for such resales or other
transfers.

          (c) Stockholder Rights. No Participant shall be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares of Common Stock subject to such Option unless
and until such Participant has satisfied all requirements for exercise of the Option pursuant to
its terms.

          (d) Investment Assurances. The Company may require a Participant, as a condition to
exercising or acquiring Common Stock under any Stock Award, (i) to give written assurances
satisfactory to the Company as to the Participant’s knowledge and experience in financial and
business matters and/or to employ a purchaser representative reasonably satisfactory to the Company
who is knowledgeable and experienced in financial and business matters and that he or she is
capable of evaluating, alone or together with the purchaser representative, the merits and risks of
the Stock Award; and (ii) to give written assurances satisfactory to the Company stating that the
Participant is acquiring Common Stock subject to the Stock Award for the Participant’s own account
and not with any present intention of selling or otherwise distributing the Common Stock. The
foregoing requirements, and any assurances given pursuant to such requirements, shall be
inoperative if (1) the issuance of the shares of Common Stock upon exercise of the Option or
acquisition of Common Stock under the Plan has been registered under a then currently effective
registration statement under the Securities Act or (2) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not be met in the
circumstances under the then applicable securities laws. The Company may, upon advice of counsel
to the Company, place legends on stock certificates issued under the Plan as such counsel deems
necessary or appropriate in order to comply with

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applicable securities laws, including, but not
limited to, legends restricting the transfer of the Common Stock represented thereby.

          (e) Withholding Obligations. To the extent provided by the terms of a Stock Award Agreement,
the Participant may satisfy any federal, state or local tax withholding obligation relating to a
Stock Award by any of the following means (in addition to the Company’s right to withhold from any
compensation paid to the Participant by the Company) or by a combination of such means: (i)
tendering a cash payment; (ii) authorizing the Company to withhold shares of Common Stock from the
shares of Common Stock otherwise issuable to the Participant as a result of the Stock Award,
provided, however, that no shares of Common Stock are withheld with a value exceeding the minimum
amount of tax required to be withheld by law; or (iii) delivering to the Company owned and
unencumbered shares of Common Stock.

     15. Amendment and Termination of the Plan.

          (a) Amendment and Termination. The Board may at any time terminate the Plan or amend the Plan
from time to time in such respects as the Board may deem advisable.

          (b) Effect of Amendment or Termination. Any such amendment or termination of the Plan shall
not adversely affect Stock Awards already granted and such Stock Awards shall remain in full force
and effect as if the Plan had not been amended or terminated, unless mutually agreed otherwise
between the Participant and the Board, which agreement must be in writing and signed by the
Participant and the Company.

     16. Conditions Upon Issuance of Shares. Shares shall not be issued pursuant to a Stock Award
unless the exercise of the Option, if applicable, and the issuance and delivery of such Shares
pursuant the Stock Award shall comply with all relevant provisions of the law, including without
limitation, the Securities Act, the Exchange Act and the requirements of any stock exchange or
national market system upon which the Shares may then be listed, and shall be further subject to
the approval of counsel for the Company with respect to such compliance.

     17. Liability of Company. The Company and any Affiliate which is in existence or hereafter
comes into existence shall not be liable to a Participant or other persons as to:

          (a) The non-issuance or sale of Shares as to which the Company has been unable to obtain from
any regulatory body having jurisdiction the authority deemed by the Company’s counsel to be
necessary to the lawful issuance and sale of any Shares hereunder; or

          (b) Any tax consequence expected, but not realized, by any Participant or other person due to
the receipt, exercise or settlement of any Stock Award granted hereunder.

     18. Reservation of Shares. The Company, during the term of the Plan, will at all times
reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements
of the Plan. The Company’s inability to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company’s counsel to be necessary for the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any liability in

12

 

respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been
obtained.

     19. Stock Award Agreement. All Stock Awards shall be evidenced by written award agreements in
such form as the Board shall approve.

     20. Choice of Law. The law of the State of Delaware, without regard to its conflict of laws
rules, shall govern all questions concerning the construction, validity and interpretation of the
Plan.

13exv10w47

 

Exhibit 10.47

CADENCE DESIGN SYSTEMS, INC.

1997 NONSTATUTORY STOCK INCENTIVE PLAN

     1. Purposes of the Plan. The purposes of the Plan are to attract and retain the best
available personnel for positions of substantial responsibility, to provide additional incentive to
the Employees and Consultants of the Company and its Affiliates, and to promote the success of the
Company’s business.

     2. Definitions. As used herein, the following definitions shall apply:

          (a) “Affiliate” shall mean any parent corporation or subsidiary corporation of the Company,
whether now or hereafter existing, as those terms are defined in Sections 424(e) and (f),
respectively, of the Code, or such other parent corporation or subsidiary corporation designated by
the Board.

          (b) “Board” shall mean the Committee, if one has been appointed, or the Board of Directors, if
no Committee is appointed.

          (c) “Board of Directors” shall mean the Board of Directors of the Company.

          (d) “Code” shall mean the Internal Revenue Code of 1986, as amended, and the Treasury
Regulations promulgated thereunder.

          (e) “Committee” shall mean the Committee appointed by the Board of Directors in accordance
with paragraph (a) of Section 4 of the Plan, if one is appointed.

          (f) “Common Stock” shall mean the common stock of the Company.

          (g) “Company” shall mean Cadence Design Systems, Inc., a Delaware corporation.

          (h) “Consultant” shall mean any consultant, independent contractor or adviser rendering
services to the Company or an Affiliate (provided that such person renders bona fide services not
in connection with the offering and sale of securities in capital raising transactions). However,
the term “Consultant” shall not include members of the Board of Directors.

          (i) “Continuous Status as an Employee or Consultant” shall mean the absence of any
interruption or termination of service, whether as an Employee or Consultant. The Board or the
chief executive officer of the Company shall determine whether Continuous Status as an Employee or
Consultant shall be considered interrupted in the case of: (i) any approved leave of absence,
including sick leave, military leave, or any other personal leave; or (ii) transfers between the
Company, Affiliates or their successors. Continuous Status as an Employee or Consultant shall not
be deemed to have terminated merely because of a change in

 

 

the capacity in which the Participant renders service to the Company or any Affiliate,
provided that there is no interruption or termination thereof.

          (j) “Employee” shall mean any person employed by the Company or any Affiliate.

          (k) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder.

          (l) “Fair Market Value” means, with respect to any relevant date prior to January 1, 2007, the
average of the high and low prices of the Common Stock on such date, as reported on the NASDAQ
Global Select Market or such other primary national exchange on which the Common Stock is listed,
and, with respect to any relevant date on or after January 1, 2007, the closing price of the Common
Stock on such date, as reported on the NASDAQ Global Select Market or such other primary national
exchange on which the Common Stock is listed. In the event the Common Stock is not listed on an
exchange as described in the previous sentence, Fair Market Value with respect to any relevant date
shall be determined in good faith by the Board.

          (m) “Incentive Stock” means shares of Common Stock granted to a Participant pursuant to
Section 10 hereof.

          (n) “Incentive Stock Agreement” means a written agreement between the Company and a holder of
an award of Incentive Stock evidencing the terms and conditions of an individual Incentive Stock
grant. Each Incentive Stock Agreement shall be subject to the terms and conditions of the Plan.

          (o) “Nonstatutory Stock Option” shall mean an Option not intended to qualify as an incentive
stock option within the meaning of Section 422 of the Code.

          (p) “Option” shall mean a Nonstatutory Stock Option granted pursuant to the Plan.

          (q) “Optioned Stock” shall mean the Common Stock subject to an Option.

          (r) “Participant” shall mean an Employee or Consultant who receives a Stock Award.

          (s) “Plan” shall mean this 1997 Nonstatutory Stock Incentive Plan, as amended from time to
time.

          (t) “Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

          (u) “Share” shall mean a share of Common Stock, as may be adjusted in accordance with Section
12 of the Plan.

2

 

          (v) “Stock Award” shall mean any right granted under the Plan, including an Option or
Incentive Stock.

          (w) “Stock Option Agreement” means a written agreement between the Company and a holder of an
Option award evidencing the terms and conditions of an individual Option grant. Each Stock Option
Agreement shall be subject to the terms and conditions of the Plan.

     3. Stock Subject to the Plan.

          (a) Share Reserve. Subject to the provisions of Sections 3(b) and 12, the maximum aggregate
number of Shares which may be issued pursuant to the Plan is thirty million (30,000,000) shares of
Common Stock. 

          (b) Reversion of Shares to the Share Reserve. If a Stock Award should expire, become
unexercisable or otherwise terminate for any reason without having vested or been exercised in
full, the unpurchased Shares which were subject thereto shall, unless the Plan shall have been
terminated, become available for future grant under the Plan.

          (c) Source of Shares. Shares issued under the Plan may be authorized, but unissued, or
reacquired Common Stock.

     4. Administration of the Plan.

          (a) Procedure. The Plan shall be administered by the Board of Directors. The Board of
Directors may appoint a Committee consisting of one or more members of the Board of Directors to
administer the Plan on behalf of the Board of Directors, subject to such terms and conditions as
the Board of Directors may prescribe. In such event, any references in the Plan to the Board of
Directors shall be deemed to refer to the Committee. Once appointed, the Committee shall continue
to serve until otherwise directed by the Board of Directors. From time to time the Board of
Directors may increase or decrease the size of the Committee and appoint additional members
thereof, remove members (with or without cause), and appoint new members in substitution therefor,
fill vacancies however caused and remove all members of the Committee, and thereafter directly
administer the Plan. Notwithstanding anything in this Section 4 to the contrary, at any time the
Board of Directors or the Committee may delegate to a committee of one or more members of the Board
of Directors the authority to grant Stock Awards to all Employees and Consultants or any portion or
class thereof. In addition, the Board of Directors or the Committee may by resolution authorize
one or more officers of the Company to perform any or all tasks that the Board is authorized and
empowered to do or perform under the Plan, and for all purposes under the Plan, such officer or
officers shall be treated as the Board; provided, however, that the resolution so authorizing such
officer or officers shall specify the maximum number of Shares per Stock Award (if any) and the
total number of Shares (if any) such officer or officers may award pursuant to such delegated
authority, and any such Stock Award shall be subject to the form of Stock Option Agreement or
Incentive Stock Agreement theretofore approved by the Board of Directors or the Committee. No such
officer shall

3

 

designate himself or herself as a recipient of any Stock Awards granted under authority
delegated to such officer.

          (b) Powers of the Board. Subject to the provisions of the Plan, the Board shall have the
authority, in its discretion: (i) to grant Stock Awards under the Plan; (ii) to determine the
exercise or sales price per share of Stock Awards to be granted, which exercise price shall be
determined in accordance with Sections 8(a) and 10(c) of the Plan, as applicable; (iii) to
determine the Employees or Consultants to whom, and the time or times at which, Stock Awards shall
be granted, the number of Shares to be represented by each Stock Award, and the terms of such Stock
Awards; (iv) to interpret the Plan; (v) to prescribe, amend and rescind rules and regulations
relating to the Plan; (vi) to determine the terms and provisions of each Stock Award granted (which
need not be identical) in accordance with the Plan, and, with the consent of the holder thereof
with respect to any adverse change, modify or amend each Stock Award; (vii) to accelerate or defer
(the latter with the consent of the Participant) the exercise date and vesting of any Stock Award;
(viii) to authorize any person to execute on behalf of the Company any instrument required to
effectuate the grant of a Stock Award previously granted by the Board; and (ix) to make all other
determinations deemed necessary or advisable for the administration of the Plan. The Board, in the
exercise of this power, may correct any defect, omission or inconsistency in the Plan or in any
Stock Option Agreement or Incentive Stock Agreement, in a manner and to the extent it shall deem
necessary or expedient to make the Plan fully effective.

          (c) Effect of Board’s Decision. All decisions, determinations and interpretations of the
Board shall be final and binding on all Participants and any other holders of any Stock Awards
granted under the Plan.

     5. Eligibility. Stock Awards may be granted only to Employees or Consultants. An Employee or
Consultant who has been granted a Stock Award may, if he or she is otherwise eligible, be granted
an additional Stock Award. Notwithstanding the foregoing, no Employee or Consultant who is an
executive officer of the Company within the meaning of Section 16 of the Exchange Act, who is a
member of the Board of Directors or who beneficially owns 10% or more of the Company’s Common Stock
shall be entitled to receive the grant of a Stock Award under the Plan.

          The Plan shall not confer upon any Participant any right with respect to continuation of
employment or consultancy by the Company or any Affiliate, as applicable, nor shall it interfere in
any way with the Participant’s right or the Company’s or any Affiliate’s right to terminate the
Participant’s employment at any time or the Participant’s consultancy pursuant to the terms of the
Consultant’s agreement with the Company or any Affiliate.

     6. Term of the Plan. The Plan became effective upon its adoption by the Board of Directors.
The Plan shall continue in effect until terminated under Section 14 of the Plan.

4

 

     7. Term of Option; Vesting Provisions.

          (a) Option Term. From and after October 1, 2006, the term of each Option shall be seven (7)
years from the date of grant thereof or such shorter term as may be provided in the applicable
Stock Option Agreement. Prior to October 1, 2006, the maximum term for each Option was ten (10)
years from the date of grant thereof or such shorter term as may have been provided in the
applicable Stock Option Agreement.

          (b) Vesting Provisions. The terms on which each Option shall vest shall be determined by the
Board in its discretion, and shall be set forth in the Stock Option Agreement relating to each such
Option. Without limiting the discretion of the Board, vesting provisions may include time-based
vesting or vesting based on achievement of performance or other criteria. The provisions of this
Section 7(b) are subject to any Option provisions governing the minimum number of Shares as to
which an Option may be exercised.

     8. Option Exercise Price and Consideration.

          (a) Exercise Price. The per Share exercise price for the Shares to be issued pursuant to
exercise of an Option shall be no less than 100% of the Fair Market Value per Share on the date of
grant. Notwithstanding the foregoing, an Option may be granted with an exercise price lower than
set forth in the preceding sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner satisfying the provisions of Section 424(a) of the
Code.

          (b) Consideration. Subject to applicable law, the consideration to be paid for the Shares to
be issued upon exercise of an Option, including the method of payment, shall be determined by the
Board and may consist entirely of cash, check, promissory note, shares of Common Stock having a
Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as
to which said Option shall be exercised, or any combination of such methods of payment, or such
other consideration and method of payment for the issuance of Shares as may be determined by the
Board. In making its determination as to the type of consideration to accept, the Board shall
consider if acceptance of such consideration may be reasonably expected to benefit the Company.

     9. Exercise of Options.

          (a) Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder shall be
exercisable at such times and under such conditions as determined by the Board, including
performance criteria with respect to the Company and/or the Participant, and as shall be
permissible under the terms of the Plan.

               An Option may not be exercised for a fraction of a Share.

               An Option shall be deemed to be exercised when written notice of such exercise has been given
to the Company in accordance with the terms of the Option by the person entitled to exercise the
Option and full payment for the Shares with respect to which the

5

 

Option is exercised has been received by the Company. Full payment may, as authorized by the
Board, consist of any consideration and method of payment allowable under Section 8(b) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate evidencing such Shares, no right
to vote or receive dividends or any other rights as a stockholder shall exist with respect to the
Optioned Stock, notwithstanding the exercise of the Option. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the stock certificate is
issued, except as provided in Section 12 of the Plan.

               Exercise of an Option in any manner shall result in a decrease in the number of Shares that
thereafter may be available, both for purposes of the Plan and for sale under the Option, by the
number of Shares as to which the Option is exercised.

          (b) Termination of Status as an Employee or Consultant. If a Participant ceases to serve as
an Employee or Consultant for any reason other than death or disability, the Participant may, but
only within such period of time ending on the earlier of (i) three (3) months (or such other period
of time as is determined by the Board) after the date the Participant ceases to be an Employee or
Consultant or (ii) the expiration of the term of the Option, exercise the Option to the extent that
the Participant was entitled to exercise it at the date of such termination. To the extent that
the Participant was not entitled to exercise the Option at the date of such termination, or if the
Participant does not exercise such Option (which the Participant was entitled to exercise) within
the time specified herein, the Option shall terminate.

          (c) Death of Participant. In the event of the death of a Participant during the term of the
Option who is at the time of the Participant’s death an Employee or Consultant and who shall have
been in Continuous Status as an Employee or Consultant since the date of grant of the Option, the
Option may be exercised at any time within twelve (12) months (or such other period of time as is
determined by the Board) following the date of death, by the Participant’s estate or by a person
who acquired the right to exercise the Option by bequest or inheritance, to the extent that the
Participant was entitled to exercise it at the date of such termination. To the extent that the
Participant was not entitled to exercise the Option at the date of such termination, or if the
Option is not exercised (to the extent the Participant was entitled to exercise) within the time
specified herein, the Option shall terminate.

          (d) Disability of Participant. In the event of the disability of a Participant during the
term of the Option who is at the time of his or her disability an Employee or Consultant and who
shall have been in Continuous Status as an Employee or Consultant since the date of grant of the
Option, the Participant (or the Participant’s legal guardian or conservator) may, but only within
twelve (12) months (or such other period of time as is determined by the Board) after the date the
Participant ceases to be an Employee or Consultant on account of such disability, exercise the
Option to the extent that the Participant was entitled to exercise it at the date of such
termination. To the extent that the Participant was not entitled to exercise the Option at the
date of such termination, or if the Participant does not exercise such Option (which the
Participant was entitled to exercise) within the time specified herein, the Option shall terminate.

6

 

     10. Incentive Stock.

          (a) General. Incentive Stock is an award or issuance of shares of Common Stock under the Plan
the grant, issuance, retention, vesting and/or transferability of which is subject during specified
periods of time to such conditions (including continued service or performance conditions) and
terms as the Board deems appropriate.

          (b) Incentive Stock Agreement. Each Incentive Stock Agreement shall contain provisions
regarding (i) the number of shares of Common Stock subject to such award or a formula for
determining such number, (ii) the purchase price of the Shares, if any, and the means of payment
for the Shares, (iii) the performance criteria, if any, and level of achievement of these criteria
that shall determine the number of Shares granted, issued, retainable and/or vested, (iv) such
terms and conditions on the grant, issuance, vesting and/or forfeiture of the Shares as may be
determined from time to time by the Board, (v) restrictions on the transferability of the Shares
and (vi) such further terms and conditions in each case not inconsistent with the Plan as may be
determined from time to time by the Board. Shares of Incentive Stock may be issued in the name of
the Participant and held by the Participant or held by the Company, in each case as the Board may
provide.

          (c) Sales Price. Subject to the requirements of applicable law, the Board shall determine the
price, if any, at which shares of Incentive Stock shall be sold or awarded to a Participant, which
may price vary from time to time and among Participants and which may be below the Fair Market
Value of such shares at the date of grant or issuance.

          (d) Share Vesting. The grant, issuance, retention and/or vesting of shares of Incentive Stock
shall be at such time and in such installments as determined by the Board. The Board shall have
the right to make the timing of the grant and/or the issuance, ability to retain and/or vesting of
shares of Incentive Stock subject to continued service, passage of time and/or such performance
criteria as deemed appropriate by the Board. Notwithstanding the foregoing, the Board may
accelerate vesting (in a Stock Award agreement or otherwise) of any Stock Award in the event of a
Participant’s termination of service as an Employee or Consultant, a Change in Control or similar
event.

          (e) Transferability. Shares of Incentive Stock shall be transferable by the Participant only
upon such terms and conditions as are set forth in the applicable Incentive Stock Agreement, as the
Board shall determine in its discretion, so long as Incentive Stock awarded under the Incentive
Stock Agreement remains subject to the terms of the Incentive Stock Agreement.

          (f) Discretionary Adjustments. Notwithstanding satisfaction of any performance goals, the
number of shares granted, issued, retainable and/or vested under an award of Incentive Stock on
account of either financial performance or personal performance evaluations may be reduced by the
Board on the basis of such further considerations as the Board shall determine.

7

 

     11. Non-Transferability of Stock Awards. Except as otherwise expressly provided in the terms
of the applicable Stock Option Agreement or Incentive Stock Agreement, a Stock Award may not be
sold, pledged, assigned, hypothecated, transferred or otherwise disposed of in any manner other
than by will or by the laws of descent or distribution and may be exercised, during the lifetime of
the Participant, only by the Participant or the Participant’s legal representative.
Notwithstanding the foregoing, the Participant may, by delivering written notice to the Company, in
a form satisfactory to the Company, designate a third party who, in the event of the death of the
Participant, shall thereafter be entitled to exercise the Stock Award.

     12. Adjustments upon Changes in Capitalization or Change in Control. The number of Shares
covered by each outstanding Stock Award, and the number of Shares which have been authorized for
issuance under the Plan but as to which no Stock Awards have yet been granted or which have been
returned to the Plan upon cancellation, expiration, forfeiture or other termination of a Stock
Award, as well as the price per Share covered by each such outstanding Stock Award, shall be
equitably adjusted for any increase or decrease in the number of issued shares of Common Stock
resulting from a stock split or the payment of a stock dividend with respect to the Common Stock or
any other increase or decrease in the number of issued shares of Common Stock effected without
receipt of consideration by the Company; provided, however, that conversion of any convertible
securities of the Company shall not be deemed to have been “effected without receipt of
consideration”. Such adjustments shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number
or price of shares of Common Stock subject to a Stock Award.

     For purposes of the Plan, a “Change in Control” shall be deemed to occur upon the consummation
of any one of the following events: (a) a sale of all or substantially all of the assets of the
Company; (b) a merger or consolidation in which the Company is not the surviving corporation (other
than a transaction the principal purpose of which is to change the state of the Company’s
incorporation or a transaction in which the voting securities of the Company are exchanged for
beneficial ownership of at least 50% of the voting securities of the controlling acquiring
corporation); (c) a merger or consolidation in which the Company is the surviving corporation and
less than 50% of the voting securities of the Company that are outstanding immediately after the
consummation of such transaction are beneficially owned, directly or indirectly, by the persons who
owned such voting securities immediately prior to such transaction; (d) any transaction or series
of related transactions after which any person (as such term is defined in Section 13(d)(3) of the
Exchange Act), other than any employee benefit plan (or related trust) sponsored or maintained by
the Company or any subsidiary of the Company, becomes the beneficial owner of voting securities of
the Company representing 40% or more of the combined voting power of all of the voting securities
of the Company; (e) during any period of two consecutive years, individuals who at the beginning of
such period constitute the membership of the Company’s Board of Directors (“Incumbent Directors”)
cease for any reason to have authority to cast at least a majority of the votes which all directors
on the Board of Directors are entitled to cast, unless the election, or the nomination for election
by the

8

 

Company’s stockholders, of a new director was approved by a vote of at least two-thirds of the
votes entitled to be cast by the Incumbent Directors, in which case such director shall also be
treated as an Incumbent Director in the future; or (f) the liquidation or dissolution of the
Company.

     In the event of a Change in Control, then: (a) any surviving or acquiring corporation shall
assume Stock Awards outstanding under the Plan or shall substitute similar awards (including an
option to acquire the same consideration paid to stockholders in the transaction described in this
Section 12 for those outstanding Options under the Plan), or (b) in the event any surviving or
acquiring corporation refuses to assume such Stock Awards or to substitute similar awards for those
outstanding under the Plan, (i) with respect to Stock Awards held by persons then performing
services as Employees or Consultants, the vesting of such Stock Awards and the time during which
such Stock Awards may be exercised shall be accelerated prior to such event and the Stock Awards
terminated if not exercised after such acceleration and at or prior to such event, and (ii) with
respect to any other Options outstanding under the Plan, such Options shall be terminated if not
exercised prior to such event.

     13. Miscellaneous.

          (a) Acceleration of Exercisability and Vesting. The Board shall have the power to accelerate
the time at which a Stock Award may first be exercised or the time during which a Stock Award or
any part thereof will vest in accordance with the Plan, notwithstanding the provisions in the Stock
Award stating the time at which it may first be exercised or the time during which it will vest.

          (b) Additional Restrictions on Stock Awards. Either at the time a Stock Award is granted or
by subsequent action, the Board may, but need not, impose such restrictions, conditions or
limitations as it determines appropriate as to the timing and manner of any resales by a
Participant or other subsequent transfers by an Participant of any Shares issued under a Stock
Award, including without limitation (i) restrictions under an insider trading policy, (ii)
restrictions designed to delay and/or coordinate the timing and manner of sales by Participants,
and (iii) restrictions as to the use of a specified brokerage firm for such resales or other
transfers.

          (c) Stockholder Rights. No Participant shall be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares of Common Stock subject to such Option unless
and until such Participant has satisfied all requirements for exercise of the Option pursuant to
its terms.

          (d) Investment Assurances. The Company may require a Participant, as a condition to
exercising or acquiring Common Stock under any Stock Award, (i) to give written assurances
satisfactory to the Company as to the Participant’s knowledge and experience in financial and
business matters and/or to employ a purchaser representative reasonably satisfactory to the Company
who is knowledgeable and experienced in financial and business matters and that he or she is
capable of evaluating, alone or together with the purchaser representative, the merits and risks of
the Stock Award; and (ii) to give written assurances

9

 

satisfactory to the Company stating that the Participant is acquiring Common Stock subject to the
Stock Award for the Participant’s own account and not with any present intention of selling or
otherwise distributing the Common Stock. The foregoing requirements, and any assurances given
pursuant to such requirements, shall be inoperative if (1) the issuance of the shares of Common
Stock upon exercise of the Option or acquisition of Common Stock under the Plan has been registered
under a then currently effective registration statement under the Securities Act or (2) as to any
particular requirement, a determination is made by counsel for the Company that such requirement
need not be met in the circumstances under the then applicable securities laws. The Company may,
upon advice of counsel to the Company, place legends on stock certificates issued under the Plan as
such counsel deems necessary or appropriate in order to comply with applicable securities laws,
including, but not limited to, legends restricting the transfer of the Common Stock represented
thereby.

          (e) Withholding Obligations. To the extent provided by the terms of a Stock Option Agreement
or Incentive Stock Agreement, the Participant may satisfy any federal, state or local tax
withholding obligation relating to a Stock Award by any of the following means (in addition to the
Company’s right to withhold from any compensation paid to the Participant by the Company) or by a
combination of such means: (i) tendering a cash payment; (ii) authorizing the Company to withhold
shares of Common Stock from the shares of Common Stock otherwise issuable to the Participant as a
result of the Stock Award, provided, however, that no shares of Common Stock are withheld with a
value exceeding the minimum amount of tax required to be withheld by law; or (iii) delivering to
the Company owned and unencumbered shares of Common Stock.

     14. Amendment and Termination of the Plan.

          (a) Amendment and Termination. The Board may at any time terminate the Plan or amend the Plan
from time to time in such respects as the Board may deem advisable.

          (b) Effect of Amendment or Termination. Any such amendment or termination of the Plan shall
not adversely affect Stock Awards already granted and such Stock Awards shall remain in full force
and effect as if the Plan had not been amended or terminated, unless mutually agreed otherwise
between the Participant and the Board, which agreement must be in writing and signed by the
Participant and the Company.

     15. Conditions Upon Issuance of Shares. Shares shall not be issued pursuant to a Stock Award
unless the exercise of the Option, if applicable, and the issuance and delivery of such Shares
pursuant the Stock Award shall comply with all relevant provisions of the law, including without
limitation, the Securities Act, the Exchange Act and the requirements of any stock exchange or
national market system upon which the Shares may then be listed, and shall be further subject to
the approval of counsel for the Company with respect to such compliance.

10

 

     16. Liability of Company. The Company and any Affiliate which is in existence or hereafter
comes into existence shall not be liable to a Participant or other persons as to:

          (a) The non-issuance or sale of Shares as to which the Company has been unable to obtain from
any regulatory body having jurisdiction the authority deemed by the Company’s counsel to be
necessary to the lawful issuance and sale of any Shares hereunder; or

          (b) Any tax consequence expected, but not realized, by any Participant or other person due to
the receipt, exercise or settlement of any Stock Award granted hereunder.

     17. Reservation of Shares. The Company, during the term of the Plan, will at all times
reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements
of the Plan. The Company’s inability to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company’s counsel to be necessary for the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of
the failure to issue or sell such Shares as to which such requisite authority shall not have been
obtained.

     18. Stock Award Agreement. All Stock Awards shall be evidenced by written award agreements in
such form as the Board shall approve.

     19. Choice of Law. The law of the State of Delaware, without regard to its conflict of laws
rules, shall govern all questions concerning the construction, validity and interpretation of the
Plan.

11

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