Document:

exv10w12

 

Exhibit 10.12

CADENCE DESIGN SYSTEMS, INC.

1993 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.

          (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 1993 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.

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

     3. Stock Subject to the Plan.

          (a) Share Reserve. Subject to the provisions of Sections 3(b) and 12, the Common Stock that
may be issued pursuant to Stock Awards shall not exceed in the aggregate Twenty Four Million Seven
Hundred Fifty Thousand (24,750,000) 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) 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.

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          (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 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.

     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.

     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

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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 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

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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) 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, 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

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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 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.

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     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 Company’s stockholders, of a new director was approved by a vote of at least two-thirds of
the

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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 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

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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.

     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

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          (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.

11exv10w17

 

Exhibit 10.17

AMENDED AND RESTATED RESIDENTIAL LEASE

     This Amended and Restated Residential Lease (“Lease”) is entered in as of March 1, 2007 by and
between 849 COLLEGE AVENUE, INC., a California corporation (“Landlord”), and KEVIN BUSHBY
(“Executive”) and ELIZABETH BUSHBY (collectively, with Executive, “Tenant and replaces in
its entirety the Residential Lease entered into between the parties as of March 1, 2003. Landlord
and Tenant hereby agree as follows:

1. PROPERTY: Landlord rents to Tenant and Tenant rents from Landlord, the real property and
improvements described as:                     
                            
                      
 (“Premises”),
including the following personal property: all stereo and television systems and rack to be
included, large screen TV in family room and all satellite dishes and receivers, all window
coverings, draperies and washer and dryer. Tenant acknowledges that all systems and appliances
will be received in “as is” condition.

2. TERM: The term begins on January 1, 2007 (“Commencement Date”) and shall terminate on
February 29, 2008 at 11:59 p.m., subject to Tenant’s Options to extend set forth in Paragraph 35
hereto. Any holding over after the term of this Lease expires, with Landlord’s consent, shall
create a month-to-month tenancy which either party may terminate by giving written notice to the
other at least thirty (30) days prior to the intended termination date. Such notice may be given
on any date. Notwithstanding the foregoing, the Landlord shall not, however, exercise its right to
terminate the Lease, as long as the Executive is a full-time Executive Vice President in good
standing at Cadence Design Systems, Inc. (“Cadence”), unless Tenant defaults under the Lease. Rent
shall be at a rate equal to rent for the immediately preceding month, unless otherwise notified by
Landlord, payable in advance. All other terms and conditions of this Lease shall remain in full
force and effect during the holdover period.

3. RENT: Tenant agrees to pay rent (“Rent”) at the rate of Seven Thousand Five Hundred
Dollars and 00/100 ($7,500) per month for the initial term of the Lease. Rent shall be payable in
advance no later than the first (1st) day of each calendar month, and is delinquent on the next
day. If the Commencement Date falls on any day other than the first day of the month, rent shall
be prorated based on a 30-day period and paid in advance. If Tenant has paid one full month’s rent
in advance of the Commencement Date, rent for the second calendar month shall be prorated based on
a 30-day period. The rent shall be paid to 849 College Avenue, Inc., at 2655 Seely Avenue,
Building 5, San Jose, California 95134 Attention: Cadence Real Estate, or at any other location
specified by Landlord in writing to Tenant.

4. SECURITY DEPOSIT:

     (a) Tenant has paid Fifteen Thousand Dollars ($15,000) as a security deposit (“Security
Deposit”). All or any portion of the Security Deposit may be used, as reasonably necessary,
to: (1) cure Tenant’s default in payment of Rent, Late Charges, NSF fees, or other sums due; (2)
repair damage, excluding ordinary wear and tear, caused by Tenant or by a guest or licensee of
Tenant; (3) clean the Premises, if necessary, upon termination of tenancy; or (4) replace or return
personal property or appurtenances. Subject to Landlord’s offset for nonpayment, the Security
Deposit shall not be used by Tenant in lieu of payment of last month’s

 

 

rent. If all or any portion of the Security Deposit is used during the tenancy, Tenant agrees
to reinstate the Security Deposit to its full amount within five (5) days after written notice is
delivered to Tenant. Within three (3) weeks after Tenant vacates the Premises, Landlord shall (1)
furnish Tenant an itemized statement indicating the amount of any Security Deposit received and the
basis for its disposition, and (2) return any remaining portion of the Security Deposit to Tenant.
No interest will be paid on the Security Deposit, unless required by local law.

     (b) Notwithstanding the provisions of this Paragraph 4, in the event that Tenant fails to
timely make any payment of Rent or other monetary payment under this Lease (“Tenant’s Monetary
Default”), Landlord shall immediately offset Tenant’s Monetary Default against the Security
Deposit on the date upon which Tenant’s Monetary Default occurs. If the Security Deposit is
insufficient to offset the amount of Tenant’s Monetary Default, Landlord shall offset from Kevin
Bushby’s earnings from Cadence Design Systems, Inc. (“Cadence”) an amount equal to Tenant’s
Monetary Default, on the date upon which Tenant’s Monetary Default occurs. Furthermore, as a
condition of this Lease, Tenant has or shall execute and deliver to Cadence a Request for Automatic
Payment of Rent Through Payroll Deduction. In the event Kevin Bushby revokes the agreement
authorizing the automatic payment of rent to Landlord via payroll deduction, or in the event that
agreement is otherwise invalidated or rendered unenforceable, Landlord has the right to, and may at
its option, immediately terminate the Lease.

5. PARKING: The right to parking is included in the Rent charged pursuant to Paragraph 3.
Driveways or other exterior areas designed for parking are to be used for parking operable motor
vehicles, except for trailers, boats, campers, buses or trucks (other than pick-up trucks).
Parking areas are to be kept clean. Vehicles leaking oil, gas or other motor vehicle fluids shall
not be parked on the Premises. Mechanical work or storage of inoperable vehicles is not allowed in
parking areas or elsewhere on the Premises.

6. LATE CHARGE/NSF CHECKS: Tenant acknowledges that either late or non-payment of Rent or issuance
of a non-sufficient funds (“NSF”) check may cause Landlord to incur costs and expenses, the
exact amount of which are extremely difficult and impractical to determine. These costs may
include, but are not limited to, processing, enforcement and accounting expenses. If any
installment of Rent due from Tenant is not received by Landlord on the date due, or if a check is
returned NSF, Tenant shall pay to Landlord, respectively, or Landlord may immediately deduct from
the Security Deposit or Tenant’s Cadence earnings an additional sum of $50.00 as a “Late Charge”
and $25.00 as a NSF fee, either or both of which shall be deemed additional Rent. Landlord and
Tenant agree that these charges represent a fair and reasonable estimate of the costs Landlord may
incur by reason of Tenant’s late or NSF payment. Any Late Charge or NSF fee due shall be paid with
the current installment of Rent. Landlord’s acceptance of any Late Charge or NSF fee shall not
constitute a waiver as to any default of Tenant. Landlord’s right to collect a Late Charge or NSF
fee shall not be deemed an extension of the date Rent is due under Paragraph 3, nor prevent
Landlord from exercising any other rights and remedies under this Lease, including, without
limitation, under Paragraph 4(b) hereof, or as otherwise provided by law.

7. CONDITION OF PREMISES: Tenant has examined the Premises, all furniture, furnishings, appliances
and landscaping, if any, and fixtures, including smoke detector(s). Tenant is accepting the
Premises in “as-is” condition.

- 2 -

 

8. NEIGHBORHOOD CONDITIONS: Tenant is advised to satisfy him or herself as to neighborhood or area
conditions, including schools, proximity and adequacy of law enforcement, crime statistics,
registered felons or offenders, fire protection, other governmental services, proximity to
commercial, industrial or agricultural activities, existing and proposed transportation,
construction and development which may affect noise, view, or traffic, airport noise, noise or odor
from any source, wild and domestic animals, other nuisances, hazards, or circumstances, facilities
and condition of common areas, conditions and influences of significance to certain cultures and/or
religions, and personal needs, requirements and preferences of Tenant.

9. UTILITIES: Tenant agrees to pay for all utilities and services for the Premises, except as more
specifically set forth in Section 11.

10. OCCUPANTS: The Premises are for the sole use as a personal residence by the following named
persons only: Kevin Bushby, Elizabeth Bushby and family.

11. MAINTENANCE: Tenant shall properly use, operate, and safeguard the Premises, including if
applicable, the swimming pool, any landscaping, furniture, furnishings, and appliances, and all
mechanical, electrical, gas and plumbing fixtures, and keep them clean and sanitary. Landlord, at
all times during the term shall keep the Premises and every part thereof in good condition and
repair. Landlord shall also maintain the garden, landscaping, trees, and shrubs. Notwithstanding
the foregoing, any and all costs incurred by Landlord with regard to maintenance of the Premises
caused by the negligence or willful acts of Tenant shall be debited from the Tenant’s Security
Deposit as more specifically set forth in Section 4(a) of this Lease. Tenant shall be responsible
for all costs and expenses related to utilities (not including water, trash and recycling),
cleaning of the house and maintenance of the swimming pool at the Premises. Tenant shall have an
obligation to promptly inform Landlord of any issue with regard to the Premises that has led or
will lead to damage to the Premises.

12. ALTERATIONS: Tenant shall not make any alterations in or about the Premises without Landlord’s
prior written consent, including: painting, wallpapering, adding or changing locks, installing
antenna or satellite dish. Notwithstanding the foregoing, Tenant, at Tenant’s sole cost and
expense, shall be permitted to make cosmetic alterations costing less than Ten Thousand Dollars
($10,000) per year without Landlord’s prior consent.

13. KEYS/LOCKS: Tenant will receive prior to the Commencement Date key(s) to the Premises and
remote control device(s) for garage door/gate opener(s), if applicable. If Tenant re-keys existing
locks or opening devices, Tenant shall immediately deliver copies of all keys to Landlord. Tenant
shall pay all costs and charges related to loss of any keys or opening devices. Tenant may not
remove locks, even if installed by Tenant.

14. ENTRY: Tenant shall make the Premises available to Landlord or its representative for the
purpose of entering to make necessary or agreed repairs, decorations, alterations, or improvements,
or to supply necessary or agreed services, or to show the Premises to prospective or actual
purchasers, tenants, mortgagees, lenders, appraisers, or contractors. Landlord and Tenant agree
that twenty-four (24) hours notice (oral or written) shall be reasonable and

- 3 -

 

sufficient notice. In an emergency, Landlord or its representative may enter the Premises at any
time without prior notice.

15. SIGNS: Tenant authorizes Landlord to place For Sale/Lease signs on the Premises during the
final sixty (60) days of the term of this Lease.

16. ASSIGNMENT/SUBLETTING: Tenant shall not sublet all or any part of the Premises, or assign or
transfer this Lease or any interest in it, without the prior written consent of Landlord, which
consent shall not be unreasonably withheld. Unless such consent is obtained, any assignment,
transfer or subletting of the Premises or this Lease or tenancy, by voluntary act of Tenant,
operation of law, or otherwise, shall be null and void, and, at the option of Landlord, terminate
this Lease. In the instance of any sublet, assignment or transfer pursuant to this Section 16
approved by Landlord, Tenant shall continue to be liable for all obligations set forth in this
Lease. Any proposed assignee, transferee or sublessee shall submit to Landlord an application and
credit information for Landlord’s approval, and, if approved, sign a separate written agreement
with Landlord and Tenant. Landlord’s consent to any one assignment, transfer, or sublease, shall
not be construed as consent to any subsequent assignment, transfer or sublease, and does not
release Tenant of Tenant’s obligation under this Lease.

17. POSSESSION: If Landlord is unable to deliver possession of the Premises on Commencement Date,
such Date shall be extended to date on which possession is made available to Tenant.

18. TENANT’S OBLIGATIONS UPON VACATING PREMISES: Upon termination of this Lease, Tenant shall: (a)
give Landlord all copies of all keys or opening devices to the Premises; (b) vacate the Premises
and surrender it to Landlord empty of all persons; (c) vacate any/all parking and/or storage space;
(d) deliver the Premises to Landlord in the same condition as received on the Commencement Date,
ordinary wear and tear and permitted alterations excepted; (e) clean the Premises; (f) give written
notice to Landlord of Tenant’s forwarding address, and (g) repair any damage to the Premises caused
by removal of Tenants’ fixtures and fittings. All improvements installed by Tenant, with or
without Landlord’s consent, shall become the property of Landlord upon termination.

19. BREACH OF CONTRACT/EARLY TERMINATION: In addition to any obligations established by Paragraph
18, in event of termination by Tenant prior to completion of the original term of this Lease,
Tenant shall also be responsible for the immediate payment of lost rent, rental commissions,
advertising expenses, and painting costs necessary to ready Premises for re-rental by offset
against the Security Deposit or Tenant’s Cadence earnings, if not paid in advance by Tenant. This
Paragraph 19 shall not apply to an early termination election pursuant to Paragraph 34.

20. TEMPORARY RELOCATION: Tenant agrees, upon demand of Landlord, to temporarily vacate the
Premises for a reasonable period, to allow for fumigation, or other methods, to control wood
destroying pests or organisms, or other repairs to the Premises. Tenant agrees to comply with all
instructions and requirements necessary to prepare the Premises to accommodate pest control,
fumigation or other work, including bagging or storage of food and medicine, and

- 4 -

 

removal of perishables and valuables. Tenant shall only be entitled to a credit of rent equal to
the per diem rent for the period of time Tenant is required to vacate the Premises.

21. DAMAGE TO PREMISES: If, by no fault of Tenant, the Premises are totally or partially damaged
or destroyed by fire, earthquake, accident or other casualty, which render the Premises
uninhabitable, either Landlord or Tenant may terminate this Lease by giving the other written
notice. Rent shall be abated as of date of damage. The abated amount shall be the current monthly
rent prorated on a 30-day basis. If this Lease is not terminated, Landlord shall promptly repair
the damage, and rent shall be reduced based on the extent to which the damage interferes with
Tenant’s reasonable use of the Premises. If damage occurs as a result of an act of Tenant or
Tenant’s guests, only Landlord shall have the right of termination, and no reduction in rent shall
be made.

22. INSURANCE: Tenant’s personal property and vehicles are not insured by Landlord or, if
applicable, owner’s association, against loss or damage due to fire, theft, vandalism, rain, water,
criminal or negligent acts of others, or any other cause. Tenant is to carry Tenant’s own
insurance (Renter’s Insurance) to protect Tenant from any such loss.

23. WATERBEDS: Tenant shall not use or have waterbeds on the Premises unless: (a) Tenant obtains a
valid waterbed insurance policy; (b) Tenant increases the security deposit in an amount equal to
one-half of one month’s rent; and (c) the bed conforms to the floor load capacity of the Premises.

24. WAIVER: The waiver of any breach or default shall not be construed as a continuing waiver of
the same or any subsequent breach or default.

25. NOTICE: Notices may be served by hand, by regular, certified or registered mail with postage
prepaid at the following address, or at any other location subsequently designated:

	 	 	 	 	 
	 
	 	Landlord:	 	Tenant:
	 
	 	 	 	 
	 
	 	849 College Avenue, Inc.	 	                                            
	 
	 	2655 Seely Avenue	 	                                            
	 
	 	San Jose, CA 95134,	 	 
	 
	 	Attn: Cadence Real Estate	 	 

26. TENANT ESTOPPEL CERTIFICATE: Tenant shall execute and return a tenant estoppel certificate
delivered to Tenant by Landlord or Landlord’s agent within three (3) days after its receipt. The
tenant estoppel certificate shall be in reasonable form and shall acknowledge, among other things,
that this Lease is unmodified and in full force, or in full force as modified, and state, among
other things, the modifications. Failure to comply with this requirement shall be deemed Tenant’s
acknowledgment that the tenant estoppel certificate is true and correct, and may be relied upon by
a lender or purchaser.

27. JOINT AND INDIVIDUAL OBLIGATIONS: If there is more than one Tenant, each one shall be
individually and completely responsible for the performance of all obligations of Tenant under this
Lease, jointly with every other Tenant, and individually, whether or not in possession.

- 5 -

 

28. DATA BASE DISCLOSURE: NOTICE: The California Department of Justice, sheriff’s departments,
police departments serving jurisdictions of 200,000 or more, and many other local law enforcement
authorities maintain for public access a data base of the locations of persons required to register
pursuant to paragraph (1) of subdivision (a) of Section 290.4 of the Penal Code. The data base is
updated on a quarterly basis and a source of information about the presence of these individuals in
any neighborhood. The Department of Justice also maintains a Sex Offender Identification Line
through which inquiries about individuals may be made. This is a “900” telephone service. Callers
must have specific information about individuals they are checking. Information regarding
neighborhoods is not available through the “900” telephone service.

29. DEFAULT. The occurrence of any one or more of the following events shall constitute a default
of the Lease by Tenant:

     (a) The vacation or abandonment of the Premises by Tenant.

     (b) The failure by Tenant to make any payment of Rent or any other payment required to be made
by Tenant under this Lease, as and when due.

     (c) The failure by Tenant to observe or perform any of the covenants, conditions or provisions
of this Lease to be observed or performed by Tenant other than monetary obligations referred to in
subparagraph (b), above, where such failure shall continue for a period of fifteen (15) days after
written notice thereof from Landlord to Tenant; provided, however, that if the nature of Tenant’s
noncompliance is such that more than fifteen (15) days are reasonably required for its cure, then
Tenant shall not be deemed to be in default if Tenant commenced such cure within said fifteen (15)
day period and thereafter diligently pursues such cure to completion. To the extent permitted by
law, such fifteen (15) day notice shall constitute the sole and exclusive notice required to be
given to Tenant under applicable unlawful detainer statutes.

30. LANDLORD’S REMEDIES. In the event of any default or breach of this Lease by Tenant, Landlord
may at any time thereafter, without notice or demand and without limiting Landlord in the exercise
of any right or remedy which Landlord may have by reason of such default:

     (a) Terminate Tenant’s right to possession of the Premises by any lawful means, in which case
this Lease and the term hereof shall terminate and Tenant shall immediately surrender possession of
the Premises to Landlord. In such event Landlord shall be entitled to recover by immediate offset
against the Security Deposit or Tenant’s Cadence earnings from Tenant all damages incurred by
Landlord by reason of Tenant’s default including, but not limited to, the cost of recovering
possession of the Premises; expenses of reletting, including necessary renovation and alteration of
the Premises, reasonable attorneys’ fees, and any real estate commission actually paid; the worth
at the time of award by the court having jurisdiction thereof of the amount by which the unpaid
Rent for the balance of the term after the time of such award exceeds the amount of such rental
loss for the same period that Tenant proves could be reasonably avoided.

     (b) Maintain Tenant’s right to possession in which case this Lease shall continue in effect
whether or not Tenant shall have vacated or abandoned the Premises. In such event

- 6 -

 

Landlord shall be entitled to enforce all of Landlord’s rights and remedies under this Lease,
including the right to recover the rent as it becomes due hereunder. The Landlord has the remedy
described in California Civil Code Section 1951.4.

     (c) Pursue any other remedy now or hereafter available to Landlord under the laws of the State
of California. Unpaid installments of rent and other unpaid monetary obligations of Tenant under
the terms of this Lease shall bear interest from the date due at the maximum rate then allowable by
law.

31. ATTORNEY’S FEES: In any action or proceeding arising out of this Lease, the prevailing party
between Landlord and Tenant shall be entitled to reasonable attorney’s fees and costs.

32. ENTIRE CONTRACT: Time is of the essence. All prior agreements between Landlord and Tenant are
incorporated in this Lease which constitutes the entire contract. It is intended as a final
expression of the parties’ agreement, and may not be contradicted by evidence of any prior
agreement or contemporaneous oral agreement. The parties further intend that this Lease
constitutes the complete and exclusive statement of its terms, and that no extrinsic evidence
whatsoever may be introduced in any judicial or other proceeding, if any, involving this Lease.
Any provision of this Lease which is held to be invalid shall not affect the validity or
enforceability of any other provision in this Lease.

33. AGENCY. There are no agency relationship(s) for this transaction.

34. OPTION TO TERMINATE. Landlord or Tenant, upon one hundred eighty (180) days prior written
notice to the other, may terminate this Lease for any or no reason in such party’s sole discretion
and upon the expiration of said one hundred eighty (180) day period, all of Tenant’s right, title
and interest in and to the Premises shall forever cease (including, without limitation, Tenant’s
rights under Paragraph 35 hereof). Upon such termination, the provisions of Paragraph 18 of the
Lease shall apply. Landlord will not, however, exercise its right to terminate the Lease, except
upon Executive’s default thereunder, during Executive’s full-time employment as an Executive Vice
President in good standing with Cadence.

35. OPTION(S) TO EXTEND.

     (a) So long as no default exists under the terms of this Lease, Landlord hereby grants to
Tenant the option to extend the term of this Lease for one (1) additional twelve (12) month periods
(each, an “Option”, collectively, the “Options”) commencing when the applicable
prior term expires upon each and all of the following terms and conditions:

          (i) To exercise an Option, Tenant must give written notice of such election to Landlord at
least one hundred twenty (120) days prior to the date that the Option period would commence (the
“Option Notice”). If the Option Notice is not delivered in accordance with the terms of
this Lease, the Option shall automatically expire. Each Option may only be exercised
consecutively.

          (ii) Any extension of the term pursuant to an Option (“Option Term”) shall be under
the same terms and conditions as provided in this Lease except for the provisions of this Lease
granting the Options and adjustment to the Rent.

- 7 -

 

          (iii) The Options are personal to the original Tenant, and cannot be assigned or exercised by
anyone other than said original Tenant and only while the original Tenant is in full possession of
the Premises.

          (iv) The monthly Rent of an Option Term shall be calculated using the method set forth in
subparagraph (b) below.

     (b) If the Lease expires during Executive’s employment as an Executive Vice President in good
standing with Cadence, Landlord will negotiate in good faith to extend the term of the Lease. In
the event Executive’s employment as an Executive Vice PresidentCadence is terminated other than for
Cause (as defined in Section 4.2 of Executive’s Employment Agreement, executed on May 26, 2004) or
if Executive resigns his employment as an Executive Vice President as a result of an event
constituting Constructive Termination (as defined in Section 4.3 of Executive’s Employment
Agreement, executed on May 26, 2004), the Landlord will not exercise its right to terminate the
Lease, except upon Executive’s default thereunder, such that Executive will remain a tenant until
12 months following the date upon which Executive’s employment as an Executive Vice President with
Cadence is terminated other than for Cause or as a result of a Constructive Termination.

     (c) Market Rental Value Adjustments.

     (i) On the commencement date of each Option Term, the Rent shall be adjusted to the
Market Rental Value (“MRV”) of the Premises. Within fifteen (15) days of receipt by
Landlord of Tenant’s Option Notice, Landlord shall select an appraiser (“Appraiser”)
with at least ten (10) years of current experience in the appraisal of similar real property
in Santa Clara County, California. The Appraiser shall hold an MAI designation (or such
other designation as may be the pre-eminent appraisal designation) and shall not have had,
within the last five (5) years previous to such appointment, a legal, business, financial,
professional or personal relationship with either Landlord or Tenant, except in relation to
the determination of prior MRV for this Lease. The Appraiser shall determine the MRV within
thirty (30) days of the date of Tenant’s Option Notice. In determining the MRV, the
Appraiser shall be guided by the following principles: the MRV shall be determined by
reference to residential properties in the Santa Clara County area most comparable to the
Premises and shall take into account, but not be limited to, the size, age and quality of
the improvements. The MRV determined by the Appraiser shall be in writing and shall become
the Rent for the succeeding option term; provided that the new monthly MRV-based Rent shall
not be less than the Rent payable for the month immediately preceding the rent adjustment.
If Tenant is unwilling to pay the Rent as adjusted by the MRV (or if no adjustment is made
in accordance with the immediately preceding sentence), Tenant shall so notify Landlord
within ten (10) days of receipt of the written determination of the new Rent and the Option
(and all future Option(s)) shall automatically terminate with no further rights and
obligations on either party with respect to the same, and this Lease shall terminate on the
scheduled expiration date. The Landlord shall pay all costs and expenses of the Appraiser.

- 8 -

 

36. OPTION TO PURCHASE.

     (a) Grant. Landlord grants to Tenant an option to purchase the Premises (the
“Purchase Option”) on the terms and conditions set forth in this Paragraph 36.

     (b) Purchase Notice. To exercise the Purchase Option, Tenant must give Landlord
written notice exercising the Purchase Option (the “Purchase Notice”) at least one hundred
twenty-one (121) days prior to the expiration of the Term (as the Term may be extended pursuant to
Section 35 above). Tenant’s delivery to Landlord of the Purchase Notice shall form an agreement to
purchase and sell the Premises (the “Agreement to Purchase”), which shall consist of the
terms and conditions in this Paragraph 36, as supplemented at Landlord’s option by a standard
realtor association form purchase and sale agreement to be mutually acceptable to the parties, as
reasonably modified to acknowledge the use and occupancy of the Premises by Tenant since the
Commencement Date (the “Purchase and Sale Agreement”).

     (c) Appraisal; Fair Market Rent. The purchase price (the “Purchase Price”) to
be paid by Tenant to Landlord for the Premises shall be the greater of (i) $5,500,000, or (ii) the
then fair market value (the “Fair Market Value”) of the Premises. The Fair Market Value of
the Premises will be determined as follows. Within fifteen (15) days following the date of
Tenant’s Purchase Notice, Landlord and Tenant each shall select an appraiser with the
qualifications set forth in Paragraph 35. The two appraisers appointed hereunder shall timely meet
to determine the Fair Market Value of the Premises based on the most probable price which the
Premises should bring in a competitive and open market in an arms-length transaction with reference
to comparable residential properties in the Santa Clara County area most comparable to the Premises
and taking into account, without limitation, the size, age and quality of the improvements of the
Premises. The two appraisers shall deliver a written appraisal to the parties within thirty (30)
days following the appointment of the second appraiser. If the two appraisers are unable to reach
agreement during said 30-day period, the two appraisers shall appoint a third appraiser within ten
(10) days. Within fifteen (15) days following the appointment of the third appraiser, the
appraisers shall deliver a written appraisal to the parties, which appraisal shall be based on the
majority opinion of the three appraisers. All appraisers appointed pursuant to this Paragraph 36
shall have the qualifications set forth in Paragraph 35 above. Each party shall be responsible for
the cost of the appraiser it appoints and one-half of the cost of the third appraiser (if one is
appointed), except as provided in Paragraph 36(d) below.

     (d) Purchase Price. If the Fair Market Value contained in the appraisal delivered
hereunder is greater than $5,500,000, the Fair Market Value shall be the Purchase Price of the
Premises. In such event and only in such event, Tenant may elect not to proceed with the purchase
of the Premises by giving written notice to Landlord within fifteen (15) days of receipt of the
appraisal. Upon delivery of such notice, the Purchase Option shall automatically terminate with no
further rights and obligation on either party with respect to the same, other than Tenant’s
obligation to reimburse Landlord for Landlord’s appraiser costs, which reimbursable appraiser costs
shall constitute additional Rent under this Lease.

     (e) Close of Purchase Transaction; Payment of Purchase Price. Unless Tenant elects to
cancel the purchase of the Premises pursuant to Paragraph 36(d) above, the close of the purchase
transaction shall occur through an escrow established by the parties no later than

- 9 -

 

forty-five (45) days following delivery of the appraisal, unless Landlord and Tenant agree to
another closing date. The Purchase Price for the Premises shall be paid to the appointed escrow
holder all in cash on the close of escrow and shall be reduced by the cost of any cosmetic or
capital improvements made to the Premises by Tenant in accordance with the terms of this Lease or
otherwise approved by the Landlord. This Lease shall continue in full force and effect up to the
close of escrow.

     (f) Personal Nature. The Purchase Option is personal to Tenant and may not be
transferred to, or exercised for the benefit of, any third party. If this Lease is terminated as a
result of a breach or default by Tenant, or if Tenant transfers this Lease with or without
Landlord’s written consent, the Purchase Option shall expire and be of no further force or effect.
If Tenant is in breach or default under this Lease (i) on the date the Purchase Notice is given, or
(ii) on the Closing Date, the same shall constitute a breach or default under the Agreement to
Purchase and, at Landlord’s election, Landlord may terminate the sale of the Premises.

[Remainder of page intentionally left blank]

- 10 -

 

The parties have executed this Lease as of the date first written above.

	 	 	 	 	 
	TENANT:	 	LANDLORD:
	 
	 	 	 	 
	 	 	849 COLLEGE AVENUE, INC.
	/s/ Kevin Bushby 
	 	 	 	 
	/s/ 

KEVIN BUSHBY, an individual
	 	 	 	 
	 
	 	By:	 	/s/ R.L. Smith McKeithen 
	 
	 	 	 	 
	 
	 	Name:	 	R.L. Smith McKeithen 
	 
	 	 	 	 
	/s/ Elizabeth Bushby
	 	Its:	 	Secretary 
	 
	 	 	 	 
	ELIZABETH BUSHBY, an individual
	 	 	 	 

- 11 -

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