Notice of Grant of Stock Options and Stock Option Agreement



 Exhibit 10.5 
  

							
	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 the United Kingdom] 
  
 STOCK OPTION AGREEMENT 
  
 For U.K. EMPLOYEES 
  
 TERMS AND CONDITIONS 
  
 MAGMA DESIGN AUTOMATION, INC. 
  
 2001 Stock Incentive Plan 
  
 THIS U.K. 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 with respect to
[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 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 or delivered 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. The exercise of your Option will be effective when
the Notice of Exercise and payment of the Exercise Price is received by the Company. In the case of 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. 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
web-based exercise or 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. Payment may be made
(i) by personal check, a cashier’s check or a money order, or (ii) by delivering a Committee-approved form of irrevocable direction to a securities broker approved by the Company to sell all or part of 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). In the case of a cashless
exercise, the balance of the sale proceeds will be delivered to you and you will not receive any Shares. In the case of any other exercise method described herein, as soon as practicable after the date you exercise your Option, the Company shall
issue to you the purchased Shares, (as evidenced by the appropriate entry in the books of the Company or a duly authorized transfer agent of the Company). Notwithstanding the foregoing, a form of payment will not be available if the Committee
determines, in its sole and absolute discretion, that such form of payment could violate any law or regulation. 
  
 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 including primary and secondary Class 1 National Insurance Contributions, payroll tax, payment on account or other tax-related withholding (“Tax-Related Items”), you acknowledge that the ultimate liability
for all Tax-Related Items 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, the subsequent sale of Shares acquired pursuant to such exercise and the receipt of any dividends; 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. 
  
 Prior to exercise of the Option, 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 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.
Alternatively, or in addition, if permissible under local law, the Company may (1) sell or arrange for the sale of Shares that you acquire to meet the withholding obligation for Tax-Related Items, and/or (2) withhold in Shares, provided
that the Company only withholds the amount of Shares necessary to satisfy the minimum withholding amount. 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 purchase of Shares that cannot be satisfied by the means previously described. The Company may refuse to honor the exercise and refuse to deliver the Shares if you fail to comply with
your obligations in connection with the Tax-Related Items as described in this section. 
  
 11. Joint Election. You consent and agree to satisfy any liability for any Secondary Class 1 National Insurance Contribution (“Employer NICs”) that may be payable by the Company and/or the Employer in connection with
the Option, including on the exercise, assignment or release of the Option, the acquisition of Shares pursuant to the exercise of the Option, and the receipt of any other benefit in money or money’s worth in connection with the Option. You
further consent and agree that the vesting of the Option is conditional on you entering into a joint election with the Company and/or the Employer (the “Election”), the form of such Election being formally approved 







 by HM Revenue and Customs and such approval remaining in force to provide for the transfer of Employer NICs. You also
agree that the Company and/or the Employer may collect the Employer NICs from you by any of the means set forth in section 10 above. You agree that if any other consents or elections are required by the Company and/or the Employer to accomplish the
above, you will provide them promptly upon request. 
  
 12. Restrictions on
Resale. By entering into this Agreement, you agree not to sell any Shares at a time when applicable laws or Company policies prohibit a sale. This restriction will apply as long as you are providing Service to the Company or a Subsidiary.

  
 13. 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. 
  
 14. 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. 
  
 15. 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)	if you exercise your Option and obtain Shares, the value of those Shares acquired upon exercise may increase or decrease in value, even below the exercise price;


  

	 	11)	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 or
Shares purchased through exercise 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 
  

	 	12)	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. 

  
 16. 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. No adjustments are made
for dividends or other rights if the applicable record date occurs before you exercise this Option, except as described in the Plan. 
  
 17. 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. 
  
 18.
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). 
  
 19. 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 (including outside the European Economic Area), 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 with whom you may elect to deposit any Shares acquired
upon exercise of the Option. 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. 
  
 20. 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. 
  
 21.
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. 







 22. 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. 
  
 23. 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 







 Appendix A 
  
 MAGMA DESIGN AUTOMATION, INC. 
 2001 STOCK INCENTIVE PLAN 
  
 Election to Transfer the Employer’s National Insurance Liability to the Employee  
  

	1.	Parties  

  
 This Election is between: 
  

	 	(A)	[INSERT NAME OF EMPLOYEE] (the “Employee”), who is eligible to receive options (“Options”) granted by Magma Design Automation, Inc., 5460 Bayfront Plaza,
Santa Clara, California, CA 95054 (the “Company”) pursuant to the Magma Design Automation, Inc., 2001 Stock Incentive Plan (the “Plan”), and  

  

	 	(B)	[Magma Design Automation Ltd. (insert address) (insert registration number)] (the “Employer”), which employs the Employee.  

  

	2.	Purpose of Election  

  

	2.1	This Election relates to the employer’s secondary Class 1 National Insurance Contributions (the “Employer’s Liability”) which may arise on:


  

	 	(i)	the acquisition of securities pursuant to the Options; and/or  

  

	 	(ii)	the assignment (if applicable) or release of the Options in return for consideration; and/or  

  

	 	(iii)	the receipt of any other benefit in money or money’s worth in connection with the Options,  

  
 (each, a “Taxable Event”) pursuant to section 4(4)(a) of the Social Security Contributions and Benefits Act
1992. 
  

	2.2	This Election applies to all Options granted to the Employee under the Plan on or after 1 August, 2005 up to 1 August, [insert year]. 

  

	3.	The Election  

  
 The Employee and the Employer jointly elect that the entire liability of the Employer to pay the Employer’s Liability on the Taxable Event is
hereby transferred to the Employee. The Employee understands that by signing this Election he or she will become personally liable for the Employer’s Liability covered by this Election. 
  

	4.	Payment of the Employer’s Liability  

  

	4.1	The Employee hereby authorises the Company and/or the Employer to collect the Employer’s Liability from the Employee at any time after the Taxable Event:


  

	 	(i)	by deduction from salary or any other payment payable to the Employee at any time on or after the date of the Taxable Event; and/or  

  

	 	(ii)	directly from the Employee by payment in cash or cleared funds; and/or  

  

	 	(iii)	by arranging, on behalf of the Employee, for the sale of some of the securities which the Employee acquires following the exercise of the Option(s). 


  

	4.2	The Employer hereby reserves for itself and the Company the right to withhold the transfer of any securities to the Employee until full payment of the Employer’s Liability
is received. 

  

	4.3	The Employer agrees to remit the Employer’s Liability to the Inland Revenue on behalf of the Employee within 14 days after the end of the UK tax month during which the
Taxable Event occurs. 









	5.	Duration of Election  

  

	5.1	The Employee and the Employer agree to be bound by the terms of this Election regardless of whether the Employee is transferred abroad or is not employed by the Employer on the
date on which the Employer’s Liability becomes due. 

  

	5.2	This Election will continue in effect until the earliest of the following: 

  

	 	(i)	the Employee and the Employer agree in writing that it should cease to have effect;  

  

	 	(ii)	on the date the Employer serves written notice on the Employee terminating its effect;  

  

	 	(iii)	on the date the Inland Revenue withdraws approval of this Election; or  

  

	 	(iv)	after due payment of the Employer’s Liability in respect of the entirety of the Options to which this Election relates, such the Election ceases to have effect in accordance
with its terms.  

  
 Signed by [INSERT NAME OF EMPLOYEE]

  

					
	The Employee	 	  

	 	 
	Date	 	  

	 	 

  
 Signed for and on behalf of [Magma
Design Automation Ltd.] 
  

					
	BY [INSERT NAME OF DIRECTOR]	 	  

	 	 
	Position	 	  

	 	 
	Date