EXHIBIT (e)(8)
INNOVEDA, INC.
EXECUTIVE INCENTIVE STOCK OPTION AGREEMENT
1. Grant of Option.
This agreement evidences the grant by Innoveda, Inc., a Delaware
corporation (the "Company"), on the effective date set forth in the attached
Notice of Grant of Stock Option and Option Agreement (the "Grant Date") to the
person named in the attached Notice of Grant of Stock Option and Option
Agreement, an employee of the Company (the "Participant"), of an option to
purchase, in whole or in part, on the terms provided herein and in the Company's
________ Stock Incentive Plan (the "Plan"), a total of the number of shares set
forth in the attached Notice of Grant of Stock Option and Option Agreement (the
"Shares") of common stock, $0.01 par value per share, of the Company ("Common
Stock") at the price per Share set forth in the attached Notice of Grant of
Stock Option and Option Agreement. Unless earlier terminated, this option shall
expire on the tenth anniversary of the Grant Date (the "Final Exercise Date").
It is intended that the option evidenced by this agreement shall be an
incentive stock option as defined in Section 422 of the Internal Revenue Code of
1986, as amended and any regulations promulgated thereunder (the "Code"). Except
as otherwise indicated by the context, the term "Participant", as used in this
option, shall be deemed to include any person who acquires the right to exercise
this option validly under its terms.
2. Exercise, Vesting Schedule.
This option shall be exercisable in full or in part at any time and from
time to time after the Grant Date. The right of exercise shall be cumulative so
that to the extent the option is not exercised at any time for the total number
of Shares covered by this option it shall continue to be exercisable, in whole
or in part, with respect to all Shares for which this option has not been
exercised, until the earlier of the Final Exercise Date or the termination of
this option under the Plan or this Section 2. This option shall expire upon, and
will not be exercisable after, the Final Exercise Date.
(a) Form of Exercise. Each election to exercise this option shall be in
writing, signed by the Participant, and received by the Company at its principal
office, accompanied by this agreement, and payment in full in the manner
provided in the Plan. The Participant may purchase less than the number of
Shares covered hereby, provided that no partial exercise of this option may be
for any fractional share or for fewer than ten whole shares.
(b) Continuous Relationship with the Company Required. Except as
otherwise provided in this Section 2, this option may not be exercised unless
the Participant, at the time he or she exercises this option, is, and has been
at all times since the Grant Date, an employee, officer or director of, or
consultant or advisor to, the Company or any parent or subsidiary of the Company
as defined in Section 424(e) or (f) of the Code (an "Eligible Participant").
(c) Termination of Relationship with the Company. If the Participant
ceases to be an Eligible Participant for any reason, then, except as provided in
paragraphs (d) and (e) below, the
right to exercise this option shall terminate three months after such cessation
(but in no event after the Final Exercise Date), provided that this option shall
be exercisable only to the extent that the Shares are not subject to the
Purchase Option set forth in Section 3 below.
(d) Exercise Period Upon Death or Disability. If the Participant dies or
becomes disabled (within the meaning of Section 22(e)(3) of the Code) prior to
the Final Exercise Date while he or she is an Eligible Participant and the
Company has not terminated such relationship for "cause" as specified in
paragraph (e) below, this option shall be exercisable, within the period of one
year following the date of death or disability of the Participant, by the
Participant (or, in the case of death, by an authorized transferee); provided
that (1) this option shall be exercisable only to the extent that this option
was exercisable by the Participant on the date of his or her death or disability
and (2) this option shall be exercisable only to the extent that the Shares are
not subject to the Purchase Option set forth in Section 3 below and (3) this
option shall not be exercisable after the Final Exercise Date.
(e) Discharge for Cause. If the Participant, prior to the Final Exercise
Date, is discharged by the Company for "cause" (as defined in Section 3 below),
the right to exercise this option shall terminate immediately upon the effective
date of such discharge. The Participant shall be considered to have been
discharged for "cause" if the Company determines, within 30 days after the
Participant's resignation, that discharge for cause was warranted.
3. Purchase Option.
The Participant agrees that the Shares purchased upon the exercise of this
option shall be subject to the Purchase Option set forth in this Section 3 and
the restrictions on transfer set forth in Section 5 of this Agreement.
In the event that the Participant ceases to be an Eligible Participant for
any reason or no reason, with or without cause, prior to January 3, 2005, the
Company shall have the right and option (the "Purchase Option") to purchase from
the Participant, for the same price per share as paid by the Participant for
such Shares (the "Option Price"), some or all of the Unvested Shares (as defined
below). For the purposes of this Agreement, "cause" for termination shall be
deemed to exist upon a reasonable determination by the Company of willful
misconduct by the Participant or willful failure by the Participant to perform
his responsibilities to the Company (including, without limitation, a material
breach by the Participant of any employment, consulting, advisory,
nondisclosure, noncompetition or other similar agreement between the Participant
and the Company). The Participant shall be considered to have been discharged
for "cause" if the Company determines, within 30 days after the Participant's
resignation, that discharge for cause was warranted.
"Unvested Shares" means the total number of Shares multiplied by the
Applicable Percentage at the time the Purchase Option becomes exercisable by the
Company. The "Applicable Percentage" shall be:
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(1) zero percent (0%), if in connection with or within 24 months
subsequent to a change in control (as defined below) the Participant's
employment with the Company is terminated by the Company without cause or
by the Participant for good reason (as defined below), with ten (10) days
prior written notice given by the Participant to the Company in the case
of termination by the Participant for good reason; and
(2) if the Participant ceases to be an Eligible Participant for reasons
other than as applicable under clause 3 (1) above, (i) 100% less 2.08334%
for each full one month of the Participant being an Eligible Participant
from and after January 3, 2001 and less an additional 25% if, after the
Grant Date, the closing price of the Common Stock has been $10 or more (as
quoted on the NASDAQ National Market or on such other exchange or market
on which the Common Stock is then traded, if not traded on the NASDAQ
National Market, and as determined by the Company's Board of Directors, in
their sole discretion, if the Common Stock is not traded on any market or
exchange) for any twenty consecutive trading days and less an additional
25% if, after the Grant Date, the closing price of the Common Stock has
been $20 or more (determined as set forth above) for any twenty
consecutive trading days ; and (ii) 0% on and after January 3, 2005;
For the purposes of this Agreement, "good reason" shall mean the
occurrence, without the Participant's prior written consent, of any of the
events or circumstances set forth in clauses (i) through (vi) below.
Notwithstanding the occurrence of any such event or circumstance, such
occurrence shall not be deemed to constitute good reason if, prior to the date
of termination, such event or circumstance has been fully corrected and the
Participant has been reasonably compensated for any losses or damages resulting
therefrom (provided that such right of correction by the Company shall only
apply to the first notice of termination at the election of the Participant for
good reason).
(i) Any significant diminution in the Participant's duties,
responsibilities or authority in effect immediately prior to the earliest to
occur of (A) the date on which a change in control of the Company occurs, (B)
the date of the execution of an initial written agreement or instrument
providing for a change in control of the Company or (C) the date of the adoption
by the Board of a resolution providing for a change in control of the Company
(with the earliest to occur of such dates referred to herein as the "Measurement
Date").
(ii) Any reduction in the annual base salary as in effect on
the Measurement Date or as the same may be increased from time to time
thereafter.
(iii) The failure by the Company to (A) continue in effect any
material compensation or benefit plan or program (each, a "Benefit Plan") in
which the Participant participates or which is applicable to the Participant
immediately prior to the Measurement Date, unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan or reasonable cash
compensation in lieu thereof) has been made with respect to such plan or
program, (B) continue the Participant's participation in a Benefit Plan (or in
such substitute or
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alternative plan or make reasonable cash compensation in lieu thereof) on a
basis not materially less favorable, both in terms of the amount of benefits
provided and the level of the Participant's participation relative to other
participants, than the basis existing immediately prior to the Measurement Date
or (C) award cash bonuses to the Participant in amounts and in a manner
substantially consistent with past practice in light of the Company's financial
performance.
(iv) A change by the Company in the location at which the
Participant performs the Participant's principal duties for the Company to a new
location that is either (A) outside a radius of 35 miles from the Participant's
principal residence immediately prior to the Measurement Date or (B) more than
30 miles from the location at which the Participant performs his or her
principal duties for the Company immediately prior to the Measurement Date and
(C) which results in an increase of at least fifteen miles in the Participant's
daily commuting distance; or a requirement by the Company that the Participant
travel on Company business to a substantially greater extent than required
immediately prior to the Measurement Date.
(v) The failure by the Company to obtain the agreement, in a
form reasonably satisfactory to the Participant, from any successor to the
Company to assume and agree to perform this Agreement to the same extent that
the Company would be required to perform it if no such succession had taken
place.
(vi) Any failure of the Company to pay or provide to the
Participant any portion of the Participant's compensation or benefits due under
any Benefit Plan within seven days of the date such compensation or benefits are
due, or any material breach by the Company of any employment agreement with the
Participant.
For purposes of this Agreement, "change in control" shall mean the
occurrence of any of the events or circumstances set forth in clauses (I)
through (IV) below.
(I) the acquisition by an individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial
ownership of any capital stock of the Company if, after such acquisition, such
Person beneficially owns (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) 50% or more of either (A) the then-outstanding shares of Common
Stock (the "Outstanding Common Stock") or (B) the combined voting power of the
then-outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Voting Securities") provided,
however, that for such purposes, the following acquisitions shall not constitute
a Change in Control: (w) any acquisition directly from the Company, (x) any
acquisition by the Company, (y) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any corporation
controlled by the Company, or (z) any acquisition by any corporation pursuant to
a transaction which complies with all of clauses (A), (B) and (C) of
subparagraph (III) of this Section 3.
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(II) Individuals who, as of the date hereof, constitute the
members of the Board (the "Incumbent Directors") ceasing for any reason to
constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company's stockholders, was approved by a vote of
at least a majority of the Incumbent Directors then in office shall be deemed to
be an Incumbent Director (except that this proviso shall not apply to any
individual whose initial election as a director occurs as a result of an actual
or threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board).
(III) The consummation of a reorganization, recapitalization,
merger or consolidation involving the Company or a sale or other disposition of
all or substantially all of the assets of the Company (a "Business
Combination"), unless, immediately following such Business Combination, each of
the following three conditions is satisfied: (A) all or substantially all of the
individuals and entities who were the beneficial owners of the Outstanding
Common Stock and Outstanding Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more than 50% of
the then-outstanding shares of common stock and the combined voting power of the
then-outstanding voting securities entitled to vote generally in the election of
directors, respectively of the resulting or acquiring corporation in such
Business Combination (which shall include, without limitation, a corporation
which as a result of such transaction owns the Company or substantially all of
the Company's assets either directly or through one or more subsidiaries) (such
resulting or acquiring corporation is referred to herein as the "Acquiring
Corporation") in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the Outstanding Common Stock
and Outstanding Voting Securities, respectively, (B) no Person (excluding the
Acquiring Corporation or any employee benefit plan (or related trust) maintained
or sponsored by the Company or the Acquiring Corporation) beneficially owns,
directly or indirectly, 50% or more of the then outstanding shares of common
stock of the Acquiring Corporation or of the combined voting power of the
then-outstanding voting securities of such corporation (except to the extent
that such ownership existed prior to the Business Combination) and (C) a
majority of the members of the board of directors of the Acquiring Corporation
were Incumbent Directors at the time of the execution of the initial agreement,
or of the action of the Board, providing for such Business Combination.
(IV) Approval by the stockholders of the Company of a
complete liquidation or dissolution of the Company.
4. Exercise of Purchase Option and Closing.
(a) The Company may exercise the Purchase Option by delivering or
mailing to the Participant (or his estate), within 60 days after the Participant
ceases to be an Eligible Participant, a written notice of exercise of the
Purchase Option (the "Notice of Exercise"). The Notice of Exercise shall specify
the number of Shares to be purchased. If and to the extent the Purchase
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Option is not so exercised by the giving of the Notice of Exercise within such
60-day period, the Purchase Option shall automatically expire and terminate
effective upon the expiration of such 60-day period.
(b) Within 10 days after receipt by the Participant of the Notice of
Exercise, the Participant (or his estate) shall tender to the Company at its
principal offices the certificate or certificates representing the Shares which
the Company has elected to purchase in accordance with the terms of this
Agreement, duly endorsed in blank or with duly endorsed stock powers attached
thereto, all in form suitable for the transfer of such Shares to the Company.
Immediately upon receipt of such certificate or certificates, the Company shall
(i) pay to the Participant the aggregate Option Price for such Shares and (ii)
issue to the Participant one or more certificates registered in the name of the
Participant for that number of Shares not purchased by the Company pursuant to
such Notice of Exercise.
(c) The Option Price may be payable, at the option of the Company, in
cancellation of all or a portion of any outstanding indebtedness of the
Participant to the Company or in cash (by certified check) or both.
(d) The Company shall not purchase any fraction of a Share upon exercise
of the Purchase Option, and any fraction of a Share resulting from a computation
made pursuant to Section 3 of this Agreement shall be rounded to the nearest
whole Share (with any one-half Share being rounded upward).
5. Restrictions on Transfer.
The Participant shall not sell, assign, transfer, pledge, hypothecate or
otherwise dispose of, by operation of law or otherwise, (collectively
"transfer") any Shares, or any interest therein, that are subject to the
Purchase Option or with respect to which the Purchase Option may become
exercisable, except that the Participant may transfer such Shares to or for the
benefit of any spouse, child or grandchild, or to a trust for any of their
benefit, provided that such Shares shall remain subject to this Agreement
(including, without limitation, the restrictions on transfer set forth in this
Section 5 and the Purchase Option) and such permitted transferee shall, as a
condition to such transfer, deliver to the Company a written instrument
confirming that such transferee shall be bound by all of the terms and
conditions of this Agreement.
6. Withholding.
No Shares will be issued pursuant to the exercise of this option unless
and until the Participant pays to the Company, or makes provision satisfactory
to the Company for payment of, any federal, state or local withholding taxes
required by law to be withheld in respect of this option.
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The Participant acknowledges that he has been informed of the availability
of making an election in accordance with Section 83(b) of the Internal Revenue
Code of 1986, as amended; that such election must be filed with the Internal
Revenue Service within 30 days of the transfer of shares to the Participant; and
that the Participant is solely responsible for making such election.
7. Nontransferability of Option.
This option may not be sold, assigned, transferred, pledged or otherwise
encumbered by the Participant, either voluntarily or by operation of law, except
by will or the laws of descent and distribution, and, during the lifetime of the
Participant, this option shall be exercisable only by the Participant.
8. Disqualifying Disposition.
If the Participant disposes of Shares acquired upon exercise of this
option within two years from the Grant Date or one year after such Shares were
acquired pursuant to exercise of this option, the Participant shall notify the
Company in writing of such disposition.
9. Effect of Prohibited Transfer.
The Company shall not be required (a) to transfer on its books any of the
Shares which shall have been sold or transferred in violation of any of the
provisions set forth in this Agreement, or (b) to treat as owner of such Shares,
or to pay dividends to, any transferee to whom any such Shares shall have been
sold or transferred in violation of any of the provisions set forth in this
Agreement.
10. Restrictive Legends.
All certificates representing Shares shall have affixed thereto legends in
substantially the following form, in addition to any other legends that may be
required under federal or state securities laws:
"The shares of stock represented by this certificate are subject to
restrictions on transfer and an option to purchase set forth in a
certain Executive Incentive Stock Option Agreement between the
corporation and the registered owner of these shares (or his
predecessor in interest), and such Agreement is available for
inspection without charge at the office of the Secretary of the
corporation."
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11. Severability.
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, and each other provision of this Agreement shall be severable and
enforceable to the extent permitted by law.
12. Waiver.
Any provision for the benefit of the Company contained in this Agreement
may be waived, either generally or in any particular instance, by the Board.
13. Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the
Company and the Participant and their respective heirs, executors,
administrators, legal representatives, successors and assigns, subject to the
restrictions on transfer and Purchase Option set forth in Sections 5 and 3,
respectively, of this Agreement.
14. Notice.
All notices required or permitted hereunder shall be in writing and deemed
effectively given upon personal delivery or five days after deposit in the
United States Post Office, by registered or certified mail, postage prepaid,
addressed to the other party hereto at the address shown beneath his or its
respective signature to this Agreement, or at such other address or addresses as
either party shall designate to the other in accordance with this Section 14.
15. Pronouns.
Whenever the context may require, any pronouns used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns and pronouns shall include the plural, and vice versa.
16. Entire Agreement.
This Agreement and the Plan constitute the entire agreement between the
parties, and supersede all prior agreements and understandings, relating to the
subject matter of this Agreement.
17. Amendment.
This Agreement may be amended or modified only by a written instrument
executed by both the Company and the Participant.
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18. Governing Law.
This Agreement shall be construed, interpreted and enforced in accordance
with the internal laws of the State of Delaware without regard to any applicable
conflicts of laws.
19. Provisions of the Plan.
This option is subject to the provisions of the Plan, a copy of which is
furnished to the Participant with this option.
IN WITNESS WHEREOF, the Company has caused this option to be executed
under its corporate seal by its duly authorized officer. This option shall take
effect as a sealed instrument.
INNOVEDA, INC.
Dated: By:
-------------------------------
Name:
Title:
Address: 000 Xxxxxx Xxxx Xxxx Xxxx
Xxxxxxxx, XX 00000
PARTICIPANT'S ACCEPTANCE
The undersigned hereby accepts the foregoing option and agrees to the
terms and conditions thereof. The undersigned hereby acknowledges receipt of a
copy of the Company's Stock Incentive Plan.
Option Grant Date:
Number of Shares: See the attached Notice of Grant of Stock Option and Option
Agreement
Option Exercise Price: See the attached Notice of Grant of Stock Option and
Option Agreement
PARTICIPANT
--------------------------------
(Signature)
--------------------------------
(Print Name)
Address:
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SUMMARY OF OPTION GRANTS
TO CURRENT EXECUTIVE OFFICERS OF THE COMPANY
UTILIZING THE FORM OF EXECUTIVE STOCK OPTION AGREEMENT
Name of Executive Number of
Officer Stock Plan Date of Grant Option Shares Exercise Price
----------------- --------------- ------------- ------------- --------------
Xxxxxxx X. Xxxxxx 1998 Stock 11/23/1998 860,046 $0.49
Incentive Plan
Xxxxxxx X. Xxxxxx 1998 Stock 11/23/1998 679,280 $0.49
Incentive Plan
Xxxxx X. Xxxxxxx 1998 Stock 11/23/1998 45,210 $0.49
Incentive Plan
Xxxxx X. Xxxxxxx 1998 Stock 11/23/1998 142,649 $0.49
Incentive Plan
Xxxxx X. X'Xxxxx 1998 Stock 11/23/1998 180,840 $0.49
Incentive Plan
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