Exhibit 10.4

 

Notice of Grant of Stock Options and Option Agreement  

Magma Design Automation, Inc.

ID: 77-0454924

5460 Bayfront Plaza

Santa Clara, CA 95054-3600

Name       Option Number:   000XXXX Address 1       Plan:   2001 Address 2      
      City, State, Zip       ID:   xxx-xx-xxxx

 

Effective mm/dd/yyyy, you have been granted a Nonstatutory Stock Option to buy
xxx shares of Magma Design Automation, Inc. (the Company) stock at $xx.xx per
share.

 

The total option price of the shares granted is $xx,xxx.xx.

 

Shares in each period will become fully vested on the date shown.

 

Shares

--------------------------------------------------------------------------------

  

Vest Type

--------------------------------------------------------------------------------

  

Full Vest

--------------------------------------------------------------------------------

  

Expiration

--------------------------------------------------------------------------------

xxx    On Vest Date    mm/dd/yyyy    mm/dd/yyyy x,xxx    Monthly    mm/dd/yyyy
   mm/dd/yyyy

 

By your signature and the Company’s signature below, you and the Company agree
that these options are granted under and governed by the terms and conditions of
the Company’s Stock Option Plan as amended and the Option Agreement, all of
which are attached and made a part of this document.

 

 

--------------------------------------------------------------------------------

     

 

--------------------------------------------------------------------------------

Magma Design Automation, Inc.       Date

 

--------------------------------------------------------------------------------

     

 

--------------------------------------------------------------------------------

Optionee Name       Date

--------------------------------------------------------------------------------

[For Employees residing in China, Israel and Italy]

 

STOCK OPTION AGREEMENT

 

TERMS AND CONDITIONS

 

MAGMA DESIGN AUTOMATION, INC.

 

2001 Stock Incentive Plan

 

THIS STOCK OPTION AGREEMENT TERMS AND CONDITIONS (the “Agreement”), together
with the Notice of Stock Option Grant (the “Notice of Grant”) to which this
Agreement is attached, constitute the Stock Option Agreement referred to in the
Magma Design Automation, Inc. 2001 Stock Incentive Plan (the “Plan”) with
respect to the option granted to you pursuant to the Notice of Grant (the
“Option”). This Option is intended to be a Nonstatutory Stock Option, as
provided in the Notice of Grant.

 

1. Exercise

 

The Option evidenced by this Agreement becomes exercisable [vesting schedule],
as summarized in the Notice of Grant. Your rights to exercise the Option accrue
only for the time period you render Service to the Company following your
vesting commencement date. Your vesting commencement date is [insert].

 

2. Term The Option expires on the date shown in the Notice of Grant, but in no
event later than the fifth anniversary of the Date of Grant set forth in the
Notice of Grant. The Option may expire earlier in connection with the
termination of your Service, as described below.

 

3. Regular Termination If your Service with the Company or a Subsidiary
terminates for any reason excluding death, Total and Permanent Disability or
Cause (as defined below), and whether or not in breach of local labor law, this
Option will expire on the date three months after your Termination Date. Your
“Termination Date” will be the date you are no longer actively providing Service
to the Company (not extended by any notice period mandated under local law).

 

4. Death or Disability If your Service with the Company or a Subsidiary
terminates as a result of your Total and Permanent Disability or death, this
Option will expire on the date six months after your Termination Date.

 

5. Cause If your Service with the Company or a Subsidiary terminates for Cause,
this Option will expire on the date seven days following your Termination Date.
For purposes of this section, “Cause” shall mean (i) continued failure to
perform substantially your duties, which standard of duties shall be referenced
to the standards set by the Company at the date of this Agreement (other than as
a result of sickness, accident or similar cause beyond your reasonable control)
after receipt of a written warning and your being given thirty (30) days to cure
the failure; (ii) willful misconduct or gross negligence, which is demonstrably
injurious to the Company or any of its Subsidiaries, including without
limitation willful or grossly negligent failure to perform your material duties
as an officer or employee of the Company or any of its Subsidiaries or a
material breach of this Agreement, your employment agreement (if any) or your
Proprietary Information and Inventions Agreement with the Company;
(iii) conviction of or plea of nolo contendere to a felony; or (iv) commission
of an act of fraud against, or the misappropriation of property belonging to,
the Company or any affiliated company, employee, customer or supplier of the
Company.

 

6. Leaves of Absence For purposes of this Option, your Service does not
terminate when you go on a military leave of absence, a sick leave of absence or
another bona fide leave of absence, if the leave of absence was approved by the
Company in writing and if continued crediting of Service is required by the
terms of the leave or by applicable law. Your Service will terminate when the
approved leave of absence ends unless you immediately return to active
employment. Except as provided by applicable law, or unless expressly provided
in writing pursuant to a Company-approved leave of absence, the period of the
approved leave of absence will not be credited as Service to the Company for the
purposes of determining when your Option vests. In accordance with the preceding
sentence, the dates on which the Option would otherwise vest will be postponed
by the number of days of the approved leave of absence.

 

7. Restrictions on Exercise The Company will not permit you to exercise this
Option if the issuance of Shares at that time would violate any law or
regulation. The exercise of this Option and the issuance and immediate sale of
the

--------------------------------------------------------------------------------

Shares upon such exercise is subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required. No Shares will be issued to you under
the Plan unless and until there has been compliance with such applicable laws.

 

8. Notice of Exercise When you wish to exercise this Option you must notify the
Company by completing the Notice of Stock Option Exercise in the form attached
to this Agreement (or such other form approved by the Company) (the “Notice of
Exercise”) and filing it with the Treasury Department of the Company. Because
you will be required to exercise your Option via a cashless exercise through a
securities broker approved by the Company, the Notice of Exercise form must be
filed in advance and approved by the Company prior to placing the order with the
broker. The exercise of your Option will be effective when the Notice of
Exercise and payment of the Exercise Price is received and approved by the
Company. This Notice of Exercise form may be superseded by a Company-sponsored
web-based trading program that includes security measures sufficient to ensure
your identification, such that your entry of a cashless exercise constitutes
your request and authorization to exercise the Option. If someone else wants to
exercise this Option after your death, that person must prove to the Company’s
satisfaction that he or she is entitled to do so.

 

9. Form of Payment Due to local regulatory issues in your country, payment may
be made only by means of by delivering a Committee-approved form of irrevocable
direction to a securities broker approved by the Company to issue to you and
immediately sell all the Shares subject to the Option and to deliver to the
Company from the sale proceeds an amount sufficient to pay the aggregate
Exercise Price and any withholding taxes (including social insurance
contributions and payment on account obligations). The balance of the sale
proceeds will be delivered to you. You will not receive any Shares. The Company
reserves the right to eliminate the requirement to use a cashless exercise
method of exercise and, in its sole discretion, to permit other methods of
exercise and forms of payment should local regulatory requirements change.

 

10. Withholding Taxes and Stock Withholding

 

Regardless of any action the Company or your employer (the “Employer”) takes
with respect to any or all income tax, social insurance, payroll tax, payment on
account or other tax-related withholding (“Tax-Related Items”), you acknowledge
that the ultimate liability for all Tax-Related Items legally due by you is and
remains your responsibility and that the Company and/or the Employer (1) make no
representations or undertakings regarding the treatment of any Tax-Related Items
in connection with any aspect of the Option grant, including the grant, vesting
or exercise of the Option and the immediate sale of Shares acquired pursuant to
such exercise; and (2) do not commit to structure the terms of the grant or any
aspect of the Option to reduce or eliminate your liability for Tax-Related
Items.

 

In exercising your Options through the cashless exercise method, you will pay or
make adequate arrangements satisfactory to the Company and/or the Employer to
satisfy all withholding and payment on account obligations for Tax-Related Items
of the Company and/or the Employer. In this regard, you authorize the Company
and/or the Employer to withhold all applicable Tax-Related Items legally payable
by you from your wages or other cash compensation paid to you by the Company
and/or the Employer or from proceeds of the sale of Shares. Finally, you will
pay to the Company or the Employer any amount of Tax-Related Items that the
Company or the Employer may be required to withhold as a result of your
participation in the Plan or your exercise of Options that cannot be satisfied
by the means previously described. The Company may refuse to honor the exercise
of the Option if you fail to comply with your obligations in connection with the
Tax-Related Items as described in this section.

 

11. Transfer of Option

 

Prior to your death, only you can exercise this Option. You cannot sell,
transfer, assign, pledge or otherwise alienate this Option. For instance, you
may not sell this Option or use it as security for a loan. If you attempt to do
any of these things, this Option will immediately become invalid. You may in any
event dispose of this Option in your will. Regardless of any marital property
settlement agreement, the Company is not obligated to honor a notice of exercise
from your former spouse, nor is the Company obligated to recognize your former
spouse’s interest in your Option in any other way.

--------------------------------------------------------------------------------

12. Retention Rights

 

Neither your Option nor this Agreement give you the right to be retained by the
Company or a Subsidiary in any capacity. The Company and its Subsidiaries
reserve the right to terminate your Service at any time, with or without Cause.

 

13. Nature of Grant

 

In accepting the grant, you acknowledge that:

 

  1) the Plan is established voluntarily by the Company, it is discretionary in
nature and it may be modified, amended, suspended or terminated by the Company
at any time, unless otherwise provided in the Plan and this Agreement;

 

  2) the grant of the Option is voluntary and occasional and does not create any
contractual or other right to receive future grants of options, or benefits in
lieu of options, even if options have been granted repeatedly in the past;

 

  3) all decisions with respect to future option grants, if any, will be at the
sole discretion of the Company;

 

  4) you are voluntarily participating in the Plan;

 

  5) the Option is an extraordinary item that does not constitute compensation
of any kind for services of any kind rendered to the Company or the Employer,
and which is outside the scope of your employment contract, if any;

 

  6) the Option is not part of normal or expected compensation or salary for any
purposes, including, but not limited to, calculating any severance, resignation,
termination, redundancy, end of service payments, bonuses, long-service awards,
pension or retirement benefits or similar payments and in no event should be
considered as compensation for, or relating in any way to, past services for the
Company or the Employer;

 

  7) in the event that you are not an employee of the Company, the Option grant
will not be interpreted to form an employment contract or relationship with the
Company; and furthermore, the Option grant will not be interpreted to form an
employment contract with the Employer or any Subsidiary or affiliate of the
Company;

 

  8) the future value of the underlying Shares is unknown and cannot be
predicted with certainty;

 

  9) if the underlying Shares do not increase in value, the Option will have no
value;

 

  10) in consideration of the grant of the Option, no claim or entitlement to
compensation or damages shall arise from termination of the Option or diminution
in value of the Option resulting from termination of your employment by the
Company or the Employer (for any reason whatsoever and whether or not in breach
of local labor laws) and you irrevocably release the Company and the Employer
from any such claim that may arise; if, notwithstanding the foregoing, any such
claim is found by a court of competent jurisdiction to have arisen, then, by
signing this Agreement, you shall be deemed irrevocably to have waived your
entitlement to pursue such claim; and

 

  11) in the event of termination of your employment (whether or not in breach
of local labor laws), your right to receive additional Options and to vest in
the Option under the Plan, if any, will terminate effective as of your
Termination Date (e.g., active employment would not include a period of “garden
leave” or similar period pursuant to local law); the Committee shall have the
exclusive discretion to determine when you are no longer actively employed for
purposes of your Option grant.

 

14. Stockholder Rights

 

You have no rights as a stockholder of the Company until you have exercised this
Option by giving the required Notice of Exercise to the Company and paying the
Exercise Price.

--------------------------------------------------------------------------------

15. Adjustments

 

In the event of a stock split, a stock dividend or a similar change in Company
Stock, the number of Shares subject to this Option and the Exercise Price per
share may be adjusted pursuant to the Plan.

 

16. Applicable Law

 

This Option grant and the provisions of this Agreement will be interpreted and
enforced under the laws of the State of California (without regard to
choice-of-law provisions).

 

17. Data Privacy.

 

You hereby explicitly and unambiguously consent to the collection, use and
transfer, in electronic or other form, of your personal data as described in
this document by and among, as applicable, the Employer, and the Company and its
Subsidiaries for the exclusive purpose of implementing, administering and
managing your participation in the Plan.

 

You understand that the Company and the Employer may hold certain personal
information about you, including, but not limited to, your name, home address
and telephone number, date of birth, social insurance number or other
identification number, salary, nationality, job title, any shares of stock or
directorships held in the Company, details of all options or any other
entitlement to shares awarded, canceled, exercised, vested, unvested or
outstanding in your favor, for the purpose of implementing, administering and
managing the Plan (“Data”). You understand that Data may be transferred to any
third parties assisting in the implementation, administration and management of
the Plan, that these recipients may be located in your country or elsewhere, and
that the recipients’ country may have different data privacy laws and
protections than your country. You understand that you may request a list with
the names and addresses of any potential recipients of the Data by contacting
your local human resources representative. You authorize the recipients to
receive, possess, use, retain and transfer the Data, in electronic or other
form, for the sole purpose of implementing, administering and managing your
participation in the Plan, including any requisite transfer of such Data as may
be required to a broker or other third party. You understand that Data will be
held only as long as is necessary to implement, administer and manage your
participation in the Plan. You understand that you may, at any time, view Data,
request additional information about the storage and processing of Data, require
any necessary amendments to Data or refuse or withdraw the consents herein, in
any case without cost, by contacting in writing your local human resources
representative. You understand, however, that refusing or withdrawing your
consent may affect your ability to participate in the Plan. For more information
on the consequences of your refusal to consent or withdrawal of consent, you
understand that you may contact your local human resources representative.

 

18. The Plan and Other Agreements The text of the Plan is incorporated in this
Agreement by reference. Capitalized terms used herein and not defined shall have
the meanings set forth in the Plan. This Agreement, the Notice of Grant, the
Notice of Exercise and the Plan constitute the entire understanding between you
and the Company regarding this Option. Any prior agreements, commitments or
negotiations concerning the Option are superseded. This Agreement, the Notice of
Grant and the Notice of Exercise may be amended only by another written
agreement, signed by both you and the Company.

 

19. Severability

 

The provisions of this Agreement are severable and if any one or more provisions
are determined to be illegal or otherwise unenforceable, in whole or in part,
the remaining provisions shall nevertheless be binding and enforceable.

 

20. Language

 

If you have received this Agreement or any other document related to the Plan
translated into a language other than English and if the translated version is
different than the English version, the English version will control.

 

21. Electronic Delivery

 

The Company may, in its sole discretion, decide to deliver any documents related
to the Option granted under the Plan or future Options that may be granted under
the Plan by electronic means or to request your consent to participate in the
Plan by electronic means. You hereby consent to receive such documents by
electronic delivery and, if requested, to agree to participate in the Plan
through an on-line or electronic system established and maintained by the
Company or another third party designated by the Company.

 

BY SIGNING THE NOTICE OF GRANT, YOU AGREE TO ALL OF THE

TERMS AND CONDITIONS DESCRIBED IN THE NOTICE OF GRANT, THE

AGREEMENT, THE NOTICE OF EXERCISE AND THE PLAN, AND ACKNOWLEDGE

RECEIPT OF A COPY OF THE PLAN