<PAGE>
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
<TABLE>
<S> <C>
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-12
INNOVEDA, INC.
-----------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
----------------------------------------------------------
(2) Aggregate number of securities to which transaction
applies:
----------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
----------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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</TABLE>
<PAGE>
INNOVEDA, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, JULY 13, 2000
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Innoveda,
Inc., a Delaware corporation (the "Company"), will be held on Thursday, July 13,
2000, at 10:00 a.m., local time, at the offices of Hale and Dorr LLP, 60 State
Street, Boston, Massachusetts (the "Meeting") for the purposes of considering
and voting upon the following matters:
1. To elect one Class III Director for the ensuing three years and until his
successor is duly elected and qualified;
2. To approve an amendment to the Company's Amended and Restated Certificate of
Incorporation, as amended, to increase the authorized number of shares of
Common Stock of the Company from 50,000,000 to 100,000,000;
3. To approve the Company's Amended and Restated 2000 Stock Incentive Plan and
the authorization of an initial 4,500,000 shares of the Company's Common
Stock for issuance under such plan, plus an additional 2,000,000 shares of
the Company's Common Stock each year of the plan term;
4. To approve the Company's 2000 Employee Stock Purchase Plan and the
authorization of 700,000 shares of the Company's Common Stock for issuance
under such plan; and
5. To transact such other business as may properly come before the Meeting and
any adjournment or adjournments thereof.
The Board of Directors has no knowledge of any other business to be
transacted at the Meeting.
The Board of Directors has fixed the close of business on Friday, May 26,
2000 as the record date for the determination of stockholders entitled to notice
of and to vote at the Meeting and at any adjournment or adjournments thereof.
The stock transfer books of the Company remain open.
A copy of the Company's Annual Report for the year ended December 31, 1999,
which contains consolidated financial statements and other information of
interest to stockholders, accompanies this Notice and the enclosed Proxy
Statement.
All stockholders are cordially invited to attend the Meeting.
BY ORDER OF THE BOARD OF DIRECTORS,
<TABLE>
<S> <C>
Peter T. Johnson,
SECRETARY
</TABLE>
Marlboro, Massachusetts
June 9, 2000
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE PROMPTLY COMPLETE,
DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT IN THE ACCOMPANYING ENVELOPE
IN ORDER TO ENSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF
THE PROXY CARD IS MAILED IN THE UNITED STATES.
<PAGE>
INNOVEDA, INC.
293 BOSTON POST ROAD WEST
MARLBORO, MASSACHUSETTS 01752
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON THURSDAY, JULY 13, 2000
This Proxy Statement is furnished in connection with the solicitation of
proxies of the Board of Directors (the "Board of Directors" or the "Board") of
Innoveda, Inc. (the "Company") for use at the Annual Meeting of Stockholders to
be held on Thursday, July 13, 2000 at 10:00 a.m., local time, at the offices of
Hale and Dorr LLP, 60 State Street, Boston, Massachusetts and at any adjournment
or adjournments thereof (the "Meeting"). All proxies will be voted in accordance
with the instructions of the stockholder. If no choice is specified, the proxies
will be voted in favor of the matters set forth in the Notice of Meeting
accompanying this Proxy Statement. Any proxy may be revoked by a stockholder at
any time before its exercise by delivery of a written revocation or a
subsequently dated proxy to the Secretary of the Company or by voting in person
at the Meeting. Attendance at the Meeting will not itself be deemed to revoke a
proxy unless the stockholder gives affirmative notice at the Meeting that the
stockholder intends to revoke the proxy and vote in person.
On May 26, 2000, the record date for determination of stockholders entitled
to vote at the Meeting (the "Record Date"), there were outstanding and entitled
to vote an aggregate of 32,528,321 shares of common stock, $0.01 par value per
share, of the Company ("Common Stock"). Each share entitles the record holder to
one vote on each of the matters to be voted upon at the Meeting.
THE NOTICE OF MEETING, THIS PROXY STATEMENT, THE ENCLOSED PROXY AND THE
COMPANY'S ANNUAL REPORT TO STOCKHOLDERS FOR THE YEAR ENDED DECEMBER 31, 1999 ARE
FIRST BEING SENT OR GIVEN TO STOCKHOLDERS ON OR ABOUT JUNE 9, 2000. INCLUDED IN
THE COMPANY'S ANNUAL REPORT TO STOCKHOLDERS IS A COPY OF ITS ANNUAL REPORT ON
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1999, AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION, WITHOUT EXHIBITS. THE COMPANY WILL, UPON WRITTEN REQUEST OF
ANY STOCKHOLDER, FURNISH UPON PAYMENT OF AN APPROPRIATE PROCESSING FEE COPIES OF
THE EXHIBITS TO ITS ANNUAL REPORT ON FORM 10-K. PLEASE ADDRESS ALL SUCH REQUESTS
TO INNOVEDA, INC., 293 BOSTON POST ROAD WEST, MARLBORO, MASSACHUSETTS 01752,
ATTENTION: PETER T. JOHNSON. EXHIBITS WILL BE PROVIDED UPON WRITTEN REQUEST AND
PAYMENT OF AN APPROPRIATE PROCESSING FEE.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of December 31, 1999 with
respect to the beneficial ownership of the Common Stock by (i) each person or
entity known to the Company to beneficially own more than 5% of the outstanding
shares of the Common Stock, (ii) each director of the Company, (iii) the
Company's Chief Executive Officer as of December 31, 1999, (iv) the Company's
former Chief Executive Officer who was not serving in such capacity as of
December 31, 1999, (v) the Company's other four most highly compensated
executive officers who were serving as executive officers of the
<PAGE>
Company as of December 31, 1999 and (vi) all directors and executive officers of
the Company, as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY OWNED(1) PERCENT OF TOTAL(2)
--------------------- -------------------
<S> <C> <C>
Keith B. Geeslin(3)....................................... 9,509,920 29.6%
The Sprout Group
300 Sand Hill Road
Building 3, Suite 170
Menlo Park, CA 94025
The Sprout Group(4)....................................... 9,509,920 29.6%
300 Sand Hill Road
Building 4, Suite 270
Menlo Park, CA 94025
Synopsys, Inc(5).......................................... 2,694,514 8.4%
700 East Middlefield Road
Mountain View, CA 93404
William J. Herman......................................... 860,046 2.7%
Richard G. Lucier......................................... 679,280 2.1%
Richard Davenport......................................... 376,082 1.2%
Gary L. Kiaski(6)......................................... 180,839 *
Kevin P. O'Brien.......................................... 180,839 *
Peter T. Johnson.......................................... 142,648 *
Guy Moshe(7).............................................. 81,075 *
William Botts(8).......................................... 62,500 *
Eric Benhayoun(9)......................................... 52,445 *
C. Albert Koob(10)........................................ 48,852 *
Paula J. Cassidy.......................................... 45,210 *
Steven P. Erwin(11)....................................... 25,000 *
Lorne J. Cooper........................................... 0 0.0%
Larry J. Gerhard(12)...................................... 0 0.0%
All directors and executive officers as a group 11,767,357 36.3%
(11 persons) (13).......................................
</TABLE>
------------------------
* Less than 1%.
(1) Unless otherwise noted, reflects beneficial ownership as of December 31,
1999. Includes shares of the capital stock of Viewlogic Systems, Inc.,
beneficially owned as of December 31, 1999, based upon a conversion ratio of
0.67928 shares of the Common Stock for each share of Viewlogic's capital
stock. On March 23, 2000, all outstanding shares of Viewlogic capital stock
were converted into shares of Common Stock at such conversion ratio in
connection with the merger of Viewlogic with a wholly owned subsidiary of
the Company. The inclusion herein of any shares of Common Stock deemed
beneficially owned does not constitute an admission of beneficial ownership
of those shares. Unless otherwise indicated, each person listed above has
sole voting and investment power with respect to the shares listed. For
purposes of this table, each person is deemed to beneficially own any shares
subject to stock options, warrants or other securities convertible into
Common Stock, held by such person which are currently exercisable (or
convertible) or exercisable (or convertible) within 60 days after December
31, 1999.
(2) Number of shares deemed outstanding includes 32,095,470 shares issued and
outstanding as of December 31, 1999 (including 16,280,983 shares
representing the outstanding shares of capital stock of Viewlogic Systems,
Inc. on an as converted basis, based upon a conversion ratio of 0.67928
shares of Common Stock for each share of Viewlogic's capital stock) plus any
shares subject to stock options, warrants or other securities convertible
into Common Stock, held by the referenced beneficial owner(s).
2
<PAGE>
(3) Consists of 9,509,920 shares beneficially owned by The Sprout Group, as more
fully described in note (4) below. Mr. Geeslin is a general partner of The
Sprout Group. Mr. Geeslin disclaims beneficial ownership of all shares owned
by The Sprout Group.
(4) Consists of 771,715 shares owned by DLJ ESC II, L.P., 6,440,804 shares owned
by Sprout Capital VIII, L.P., 1,755,195 shares owned by Sprout Growth II,
L.P., 29,273 shares owned by Sprout CEO Fund, L.P., 185,918 shares owned by
DLJ Capital Corp., and 386,448 shares owned by Sprout Venture Capital, L.P.
(5) On March 31, 2000, Synopsys, Inc. filed a Schedule 13G with the Securities
and Exchange Commission reporting beneficial ownership of 2,694,514 shares
of Common Stock. Such information is reported herein in reliance upon such
filing.
(6) Consists of 180,839 shares issuable upon the exercise of stock options held
by Mr. Kiaski which are exercisable within the 60 day period following
December 31, 1999.
(7) Includes 81,075 shares issuable upon the exercise of stock options held by
Mr. Moshe which are exercisable within the 60 day period following December
31, 1999.
(8) Includes 40,000 shares issuable upon the exercise of stock options held by
Mr. Botts which are exercisable within the 60 day period following December
31, 1999.
(9) Includes 49,936 shares issuable upon the exercise of stock options held by
Mr. Benhayoun which are exercisable within the 60 day period following
December 31, 1999.
(10) Consists of 48,852 shares issuable upon the exercise of stock options held
by Mr. Koob which are exercisable within the 60 day period following
December 31, 1999.
(11) Includes 20,000 shares issuable upon the exercise of stock options held by
Mr. Erwin which are exercisable within the 60 day period following December
31, 1999.
(12) As of November 1999.
(13) Includes 321,914 shares issuable upon the exercise of stock options held by
such officers and directors which are exercisable within the 60 day period
following December 31, 1999.
VOTES REQUIRED
The holders of a majority of the shares of Common Stock issued and
outstanding and entitled to vote at the Meeting, shall constitute a quorum for
the transaction of business at the Meeting. Shares of Common Stock present in
person or represented by proxy (including shares which abstain or do not vote
with respect to one or more of the matters presented for stockholder approval)
will be counted for purposes of determining whether a quorum exists at the
Meeting.
The affirmative vote of the holders of a plurality of the votes cast by the
stockholders entitled to vote at the Meeting is required for the election of
directors. The affirmative vote of the holders of a majority of the shares of
Common Stock outstanding on the Record Date is required to approve the amendment
to the Company's Amended and Restated Certificate of Incorporation, as amended.
The affirmative vote of the holders of a majority of the shares of Common Stock
present or represented by proxy and voting on the matter is required to approve
the 2000 Stock Incentive Plan and the 2000 Employee Stock Purchase Plan.
Shares which abstain from voting as to a particular matter, and shares held
in "street name" by brokers or nominees who indicate on their proxies that they
do not have discretionary authority to vote such shares as to a particular
matter, will not be counted as votes in favor of such matter, and will also not
be counted as votes cast or shares voting on such matter. Accordingly,
abstentions and "broker non-votes" will have no effect on the voting of the
election of directors, which requires the affirmative vote of a plurality of the
votes cast or shares voting on a matter. However, because shares which abstain
and shares represented by "broker non-votes" are nonetheless outstanding shares,
abstentions and "broker non-votes" will have the same effect as a vote against
the proposed amendment to the
3
<PAGE>
Company's Amended and Restated Certificate of Incorporation, as amended.
Abstentions and "broker non-votes" will have no effect on the voting on the
approval of the 2000 Stock Incentive Plan and the 2000 Employee Stock Purchase
Plan, each of which requires the affirmative vote of a majority of the votes
cast or shares voting on the matter.
PROPOSAL 1--ELECTION OF DIRECTORS
The Company has a classified Board of Directors consisting of two Class I
directors, two Class II directors and one Class III director. The Class I, Class
II and Class III directors will serve until the annual meeting of stockholders
to be held in 2001, 2002 and 2000, respectively, and until their respective
successors are duly elected and qualified. At each annual meeting of
stockholders, directors are elected for a full term of three years to succeed
those whose terms are expiring. The persons named in the enclosed proxy will
vote to elect, William J. Herman as a Class III director, to serve for the
ensuing three years and until his successor is duly elected and qualified,
unless the proxy is marked otherwise. Mr. Herman is currently a director of the
Company.
The Class III director will be elected to hold office until the 2003 annual
meeting of stockholders and until his successor is duly elected and qualified.
Mr. Herman has indicated his willingness to serve, if elected; however, if Mr.
Herman should be unable to serve, the person acting under the proxy may vote the
proxy for a substitute nominee designated by the Board of Directors. The Board
of Directors has no reason to believe that Mr. Herman will be unable to serve if
elected.
For each member of the Board of Directors, including the nominee for
election as the Class III director, there follows information given by each
concerning his principal occupation and business experience for at least the
past five years, the names of other public reporting companies of which he
serves as a director and his age and length of service as a director of the
Company. There are no family relationships among any of the directors, the
nominee for Class III director and the executive officers of the Company.
NOMINEE FOR CLASS III DIRECTOR
WILLIAM J. HERMAN, 40, has served as the Company's President and Chief
Executive Officer and a director since March 2000. From October 1998 to March
2000, Mr. Herman served as, Director, President and Chief Executive Officer and
a director of Viewlogic Systems, Inc., an electronic design automation company.
From December 1997 to September 1998, Mr. Herman served as President of the
Viewlogic Systems Group of Synopsys, Inc., an electronic design automation
company. From March 1995 to November 1997, Mr. Herman served in various senior
management capacities, most recently as President and Chief Executive Officer,
at the former Viewlogic Systems, Inc., a larger electronic design automation
company which Mr. Herman co-founded in 1984. From 1994 to February 1995, Mr.
Herman served as President of Silerity, Inc., a computer-aided engineering
software company.
THE BOARD OF DIRECTORS BELIEVES THAT THE ELECTION OF WILLIAM J. HERMAN AS A
CLASS III DIRECTOR TO HOLD OFFICE UNTIL THE 2003 ANNUAL MEETING OF STOCKHOLDERS
AND UNTIL HIS SUCCESSOR IS ELECTED AND QUALIFIED, IS IN THE BEST INTERESTS OF
THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE FOR MR. HERMAN AS A
DIRECTOR.
CLASS I DIRECTORS (TERMS EXPIRE AT 2001 ANNUAL MEETING)
LORNE J. COOPER, 42, has served as a director of the Company since March
2000. Mr. Cooper was a director of Viewlogic from December 1999 to March 2000.
Since November 1994, Mr. Cooper has served as the President of Sente, Inc., a
software company that develops and markets tools for electronic design
automation.
STEVEN P. ERWIN, 56, has served as a director of the Company since May 1997.
Mr. Erwin has served as Executive Vice President and Chief Financial Officer of
Foundation Health Systems, Inc., a managed health care company, since
March 1998. From 1994 to July 1997, Mr. Erwin was Executive Vice President and
Chief Financial Officer of U.S. Bancorp, Portland, Oregon.
4
<PAGE>
CLASS II DIRECTORS (TERMS EXPIRE AT 2002 ANNUAL MEETING)
WILLIAM V. BOTTS, 64, has served as a director of the Company since May
1997. Mr. Botts served as Interim Chief Executive Officer and Chairman of the
Board of the Company from July 1999 to March 2000. From August 1997 to July
1999, Mr. Botts was the Interim Chief Executive Officer of California
Lifestyles, Inc., a footwear company. From March 1996 to March 1997, Mr. Botts
served as Chief Executive Officer of Hard Candy, Inc., a cosmetics company. From
1993 to March 1996, Mr. Botts was the owner and President of WV Associates, a
consulting firm for business combinations, acquisitions, business turnarounds
and strategic planning.
KEITH B. GEESLIN, 47, has served as a director of the Company since March
2000. Mr. Geeslin was a director of Viewlogic from October 1998 to March 2000.
Since July 1984, Mr. Geeslin has served in various capacities, most recently as
a general partner, of The Sprout Group, a venture capital firm. In addition, Mr.
Geeslin is a general or limited partner in a series of investment funds
associated with The Sprout Group, a division of DLJ Capital Corporation, which
is a subsidiary of Donaldson, Lufkin & Jenrette. Mr. Geeslin is also a director
of GlobeSpan, Inc., Paradyne Corp., Rhythms NetConnections Inc., and SDL, Inc.
BOARD OF DIRECTORS AND COMMITTEE MEETINGS
The Board of Directors met 25 times during 1999. All directors attended at
least 75% of the meetings of the Board of Directors and of the committees on
which they served while serving as a director of the Company.
The Board of Directors has an Audit Committee, which is responsible for (i)
recommending engagement of the Company's independent accountants,
(ii) approving the services performed by such accountants, (iii) consulting with
such accountants and reviewing with them the results of their examinations, (iv)
reviewing and approving any material accounting policy changes affecting the
Company's operating results, (v) reviewing the Company's control procedures and
personnel and (vi) reviewing and evaluating the Company's accounting principles
and its system and internal accounting controls. The Audit Committee held one
meeting during 1999. Currently, the Audit Committee consists of Messrs. Botts
and Erwin. Mr. Erwin and Ms. Barbara Karmel served on the Audit Committee
throughout the fiscal year ended December 31, 1999.
The Board of Directors has a Compensation Committee which is responsible for
(i) recruiting and approving the compensation and benefits for the Company's
officers and directors, (ii) administering the Company's stock option plans and
(iii) making recommendations to the Board of Directors regarding such matters.
The Compensation Committee held six meetings during 1999. Currently, the
Compensation Committee consists of Messrs. Geeslin and Erwin. Amihai Ben-David
served on the Compensation Committee throughout the year ended December 31,
1999. During that year, Mr. Botts also served on the Compensation Committee
until he began serving as the Company's Interim Chief Executive Officer in July
1999.
DIRECTOR COMPENSATION
In 1999, all non-employee directors received $20,000 per year and $1,000 per
meeting (excluding committee meetings) as compensation for their services as
members of the Board of Directors. Members were also reimbursed for all travel
and related expenses incurred in connection with attending Board and committee
meetings. In addition, non-employee directors were eligible to receive option
grants under the Company's 1996 Director Option Plan, under which 150,000 shares
of Common Stock have been reserved for issuance. The Director Plan provides for
an automatic grant of an option to purchase 10,000 shares of Common Stock on the
date on which a person first becomes a non-employee director. Thereafter, he or
she will automatically be granted an additional option to purchase 10,000 shares
on the date of the annual meeting of each subsequent year, provided he or she is
then a non-
5
<PAGE>
employee director and provided further, that on such date he or she has served
on the Board for at least six months. The first option granted to a director
pursuant to the Director Plan vests twelve months after the date of grant,
except for Mr. Erwin's which vests one business day prior to the Company's first
annual meeting after the grant date. All subsequent options vest and become
exercisable on the earlier of (i) 12 months after the date of the grant or
(ii) one business day prior to the date of the Company's first annual meeting
after the grant date. Vesting of the options is subject to the optionee
continuing to serve as a director on the vesting date. Amihai Ben-David, William
V. Botts, Steven P. Erwin and Barbara M. Karmel were each granted 10,000 options
in May 1999 at an exercise price of $2.50 per share. As of the date of such
grants each such individual was a non-employee director of the Company who had
served on the Board for at least six months.
Beginning in March 2000, all non-employee directors will receive
compensation for their services as directors of the Company as follows: (i) an
annual cash retainer of $7,500 and (ii) $1,000 for each day of each meeting of
the Board or any committee thereof. In addition, and in lieu of further grants
of stock options under the Company's 1996 Director Option Plan, Messrs. Botts,
Cooper, Erwin and Geeslin were each granted a stock option in April 2000 to
purchase 50,000 shares of Common Stock at an exercise price of $4.85 per share.
Each new non-employee director will be granted a stock option to purchase 50,000
shares of Common Stock upon first being elected to the Board of Directors. All
of these options vest in equal monthly installments over the 48 month period
succeeding the date of grant. If a director is involuntarily removed from the
Board following a change in control of the Company, the unvested portion of
these options immediately becomes fully vested. Directors continue to be
reimbursed for all reasonable travel expenses related to attending Board and
committee meetings.
EXECUTIVE OFFICERS
For each executive officer of the Company who is not a director of the
Company, there follows information given by each concerning his or her principal
occupation and business experience for at least the last five years and his or
her age and length of service as an executive officer of the Company.
PAULA J. CASSIDY, 31, has served as the Company's Vice President, Human
Resources since March 2000. Ms. Cassidy served as the Vice President, Human
Resources of Viewlogic from October 1998 to March 2000. From December 1997 to
September 1998, Ms. Cassidy served as Vice President of Human Resources of the
Viewlogic Systems Group of Synopsys. From 1989 to November 1997, Ms. Cassidy
served in various capacities, most recently as Manager, Human Resources, at the
former Viewlogic Systems, Inc.
PETER T. JOHNSON, 52, has served as the Company's Vice President, Business
Development, Chief Legal Officer and Secretary since March 2000. Mr. Johnson
served as the Vice President, Business Development and Chief Legal Officer of
Viewlogic from October 1998 to March 2000 and as Secretary from May 1999 to
March 2000. From May 1998 to October 1998, Mr. Johnson served as Vice President,
Chief Legal Officer and Secretary of Avid Technology, Inc., a digital media
software developer. From December 1997 to April 1998, Mr. Johnson served as Vice
President and General Counsel of the Viewlogic Systems Group of Synopsys. From
June 1995 to November 1997, Mr. Johnson served as Vice President, General
Counsel and Secretary of the former Viewlogic Systems, Inc. From 1993 to
February 1995, Mr. Johnson served as General Counsel and Secretary of Phoenix
Technologies Ltd., a software development firm.
GARY L. KIASKI, 45, has served as the Company's Vice President, Worldwide
Sales since March 2000. Mr. Kiaski served as the Vice President, Worldwide Sales
of Viewlogic from October 1998 to March 2000. From December 1997 to September
1998, Mr. Kiaski served as Vice President of Worldwide Sales of the Viewlogic
Systems Group of Synopsys. From 1988 to November 1997, Mr. Kiaski served in
various capacities, most recently as Vice President, Western Region Sales, at
the former Viewlogic Systems, Inc.
6
<PAGE>
RICHARD G. LUCIER, 40, has served as the Company's Executive Vice President
and Chief Operating Officer since March 2000. Mr. Lucier served as the Executive
Vice President and Chief Operating Officer of Viewlogic from October 1998 to
March 2000 and served as a director of Viewlogic from October 1998 to December
1999. From December 1997 to September 1998, Mr. Lucier served as Senior Vice
President of Engineering and Marketing of the Viewlogic Systems Group of
Synopsys. From 1986 to November 1997, Mr. Lucier served in various capacities,
most recently as Group Vice President of the Systems Group, at the former
Viewlogic Systems, Inc.
GUY MOSHE, 42, has served as the Company's Senior Vice President and General
Manager of Innoveda Israel since March 2000. Mr. Moshe served as Chief
Technology Officer and President of Summit Design (EDA), Ltd. from
February 1999 to March 2000 and as Vice President, General Manager and Chief
Operating Officer of the Design Solutions Division of the Company from
September 1997 to March 2000. From May 1996 to September 1997 Mr. Moshe served
as General Manager of Summit Design (EDA) Ltd. Mr. Moshe served as the Vice
President of Product Marketing of the Company from 1994 to May 1996.
KEVIN P. O'BRIEN, 43, has served as the Company's Vice President, Finance
and Chief Financial Officer since March 2000. Mr. O'Brien served as the Vice
President, Finance and Chief Financial Officer of Viewlogic from October 1998 to
March 2000 and as Secretary from October 1998 to May 1999. From April 1998 to
September 1998, Mr. O'Brien served as Vice President of Finance of the Viewlogic
Systems Group of Synopsys. From September 1997 to March 1998, Mr. O'Brien served
as an independent management consultant. From October 1995 to August 1997, Mr.
O'Brien served as Chief Financial Officer at SmarTel Communications, Inc., a
telecommunications company. From 1989 to June 1995 Mr. O'Brien served in various
capacities, most recently as Vice President, Finance and Chief Financial
Officer, at Easel Corporation, a client server software developer. Mr. O'Brien
is a certified public accountant.
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the
compensation of (i) the Company's Chief Executive Officer as of December 31,
1999, (ii) the Company's former Chief Executive Officer who was not serving in
such capacity as of December 31, 1999 and (iii) the Company's other four most
highly compensated executive officers who were serving as executive officers of
the Company as of December 31, 1999 (the "Named Executive Officers"):
7
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM AWARDS
--------------------------------------------- -------------------------------------
OTHER ANNUAL SECURITIES ALL OTHER
NAME AND PRINCIPAL POSITION(1) YEAR SALARY($)(2) BONUS($)(3) COMPENSATION($) UNDERLYING OPTIONS COMPENSATION($)
------------------------------ -------- ------------ ----------- ---------------- ------------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
William V. Botts (4)........... 1999 112,500 60,000 20,000(5) 30,000 --
Chairman of the Board and 1998 -- -- 25,000(5) 10,000 --
Chief Executive Officer 1997 -- -- 15,865(5) 10,000 --
Larry J. Gerhard(6)............ 1999 200,000 -- 12,000(7) -- 200,000(8)
Former President and Chief 1998 400,000 -- 12,000(7) 75,000 4,333(9)
Executive Officer 1997 341,667 160,000 5,000(7) 75,000 3,575(10)
Richard Davenport(11).......... 1999 230,500 -- 9,000(7) -- --
President and 1998 141,000 -- 9,000(7) -- --
Chief-Operating Officer 1997 37,510 -- 2,250(7) -- --
C. Albert Koob(12)............. 1999 160,000 144,500(13) 7,214(7) -- --
Vice President, Finance, 1998 160,000 30,000 7,214(7) 10,000 2,425(14)
Chief Financial Officer 1997 143,333 64,000 3,750(7) 248,000 2,350(14)
and Secretary
Guy Moshe...................... 1999 180,000 -- 12,804(7) 256,681 --
Chief Technology Officer 1998 170,000 30,000 12,804(7) 1,755 --
and President of Summit 1997 113,392 69,810(15) 10,515(7) 34,152 --
Design (EDA), Ltd.
Eric Benhayoun................. 1999 153,860 39,174(16) -- 75,000 --
Vice President, General 1998 154,890 57,109(16) -- -- --
Manager--European Operations 1997 120,252 26,945(16) -- 32,500 --
</TABLE>
------------------------------
(1) Unless otherwise noted, lists the principal position with the Company as of
December 31, 1999.
(2) Amounts shown include cash and noncash compensation earned and received by
executive officers as well as amounts earned but deferred at the election of
those officers.
(3) Consists of annual incentive bonuses.
(4) Mr. Botts served as an executive officer of the Company from July 1999 to
March 2000.
(5) Consists of director's fee.
(6) Mr. Gerhard served as an executive officer of the Company from January 1993
to June 1999.
(7) Consists of car allowance.
(8) Consists of severance payments.
(9) Consists of the Company's matching contribution to Mr. Gerhard's 401(k) plan
in the amount of $2,500 and medical insurance premiums in the amount of
$1,833.
(10) Consists of the Company's matching contribution to Mr. Gerhard's 401(k)
plan in the amount of $2,375 and medical insurance premiums in the amount of
$1,200.
(11) Mr. Davenport served as an executive officer of the Company from September
1997 to February 2000.
(12) Mr. Koob served as an executive officer of the Company from October 1995 to
January 2000.
(13) Consists of a $100,000 retention bonus and a $44,500 annual incentive
bonus.
(14) Consists of the Company's matching contribution to Mr. Koob's 401(k) plan.
(15) Consists of $64,000 of annual incentive bonus and $5,810 of commissions.
(16) Consists of commissions.
8
<PAGE>
OPTION GRANTS, EXERCISES AND YEAR-END VALUES
The following table sets forth the stock option grants made by the Company
to each of the Named Executive Officers during the year ended December 31, 1999:
OPTION GRANTS IN YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT
INDIVIDUAL GRANTS ASSUMED ANNUAL
-------------------------------------------------- RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(4)
OPTIONS EMPLOYEES IN PRICE($/ EXPIRATION ---------------------
GRANTED(1) 1999(2) SHARE)(3) DATE 5%($) 10%($)
---------- ------------ --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
William V. Botts........................ 10,000 0.5 2.50 5/26/09 15,722 39,844
20,000 1.1 2.56 7/26/09 32,199 81,600
Larry J. Gerhard........................ -- -- -- -- -- --
Richard Davenport....................... -- -- -- -- -- --
C. Albert Koob.......................... -- -- -- -- -- --
Guy Moshe............................... 100,000 5.3 3.44 2/25/09 216,340 548,247
2,892 0.2 3.00 4/16/09 5,456 13,827
150,000 8.0 3.00 9/16/09 283,003 717,184
3,789 0.2 2.38 10/15/99 5,671 14,371
Eric Benhayoun.......................... 75,000 4.0 3.44 10/25/09 162,255 411,186
</TABLE>
------------------------
(1) Options granted in 1999 generally vest over four years, with 25% of the
option shares becoming fully vested one year from the grant date and 1/48th
vesting in each successive month, with full vesting occurring on the fourth
anniversary date. Under the terms of the Company's 1994 Stock Plan, the
administrator retains discretion, subject to plan limits, to modify the
terms of outstanding options and to reprice outstanding options. The options
have a term of 10 years, subject to earlier termination in certain
situations related to termination of employment.
(2) Based on a total of 1,879,360 options granted to all employees and
consultants during 1999.
(3) Equal to the per share market value of the underlying shares of Common Stock
on the date of grant.
(4) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on assumed rates of stock appreciation of 5% and 10% compounded
annually from the date the respective options were granted to their
expiration date. Actual gains, if any, on stock option exercises will depend
on the future performance of the Common Stock and the date on which the
options are exercised. No gain to the optionees is possible without an
appreciation in stock price, which will benefit all stockholders
commensurately.
9
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUE
The following table sets forth, on an aggregated basis, the exercise of
stock options during the year ended December 31, 1999 by each of the Named
Executive Officers and the year-end value of unexercised options held by such
officers:
AGGREGATED OPTION EXERCISES AND OPTION VALUES IN YEAR ENDED
DECEMBER 31, 1999
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISABLE IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT YEAR END YEAR END ($)(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED($)(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William V. Botts............... 0 0 40,000 10,000 18,800 10,000
Larry J. Gerhard............... 0 0 0 0 0 0
Richard Davenport.............. 0 0 0 0 0 0
C. Albert Koob................. 15,000 26,250 47,749 20,251 26,250 0
Guy Moshe...................... 0 0 81,075 225,752 8,190 78,500
Eric Benhayoun................. 0 0 38,436 80,564 1,125 23,500
</TABLE>
------------------------
(1) Represents the difference between the aggregate fair market value of the
underlying shares of Common Stock on the date of exercise and the aggregate
exercise price.
(2) Based on the aggregate fair market value of the underlying shares of Common
Stock on December 31, 1999 ($3.50 per share), less the aggregate option
exercise price.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
GENERAL
The Compensation Committee was established in August 1994 and is responsible
for (i) recruiting and approving the compensation and benefits for the Company's
officers and directors, (ii) administering the Company's stock option plans and
(iii) making recommendations to the Board of Directors regarding such matters.
The Compensation Committee is currently comprised of two directors who are not
employees of the Company. The Committee also administers the Company's stock
plans. Each member of the Compensation Committee is a "non-employee director"
within the meaning of Rule 16b-3 under the Securities and Exchange Act of 1934,
as amended (the "Exchange Act"), and an "outside director" within the meaning of
Section 162(m) ("Section 162(m)") of the Internal Revenue Code of 1986, as
amended (the "Code"). This report addresses the Company's compensation policies
for 1999 and how they affected the Company's former Chief Executive Officers and
the Company's other executive officers, including the Named Executive Officers.
COMPENSATION PHILOSOPHY AND POLICY
The policy of the Committee is to attract and retain executive officers and
employees through the payment of competitive base salaries and to encourage and
reward performance through bonuses and stock ownership. The objectives of the
Compensation Committee are to:
- attract, retain and motivate highly qualified executive officers and
employees who contribute to the long-term success of the Company;
- align the compensation of executive officers with business objectives and
performance; and
- align incentives for executive officers with the interests of stockholders
in maximizing value.
10
<PAGE>
ELEMENTS OF COMPENSATION
The principal components of compensation for the Company's executive
officers are cash components, in the form of salary and variable pay, and
non-cash compensation in the form of equity compensation.
CASH COMPENSATION
Cash compensation consists of (i) base salary which is determined on the
basis of the level of responsibility, expertise and experience of the executive
officer, taking into account competitive conditions in the industry and (ii)
cash bonuses up to an established percentage of base salary, subject to meeting
all or a portion of targeted objectives.
EQUITY COMPENSATION
Ownership of Common Stock is a key element of executive compensation.
Executive officers and other employees of the Company are eligible to
participate in the Company's 1994 Stock Plan and the Company's existing stock
plans, generally, and if each is approved by the stockholders at the Meeting,
will be eligible to participate in the Company's 2000 Stock Incentive Plan and
the Company's 2000 Employee Stock Purchase Plan. The 1994 Stock Plan and 2000
Stock Incentive Plan each permits the Board of Directors or the Compensation
Committee to grant stock options to employees on such terms as the Board of
Directors or the Compensation Committee may determine. The 2000 Stock Incentive
Plan also permits the Board of Directors or the Compensation Committee to grant
restricted stock to employees.
In determining the size of a stock option grant to a new executive officer
or other employee, the Compensation Committee takes into account equity
participation by comparable employees within the Company, external competitive
circumstances and other relevant factors. Additional options may be granted to
current executive officers and employees to reward exceptional performance or to
provide additional unvested equity incentives. These options typically vest over
a four-year period and thus require the employee's continuing service to the
Company. The 1996 Employee Stock Purchase Plan and the 2000 Employee Stock
Purchase Plan each permits employees to acquire Common Stock through payroll
deductions and promotes broad-based equity participation through the Company.
The Committee believes that such stock plans align the interests of the
employees with the long-term interests of the stockholders.
In 1999, the Company granted options to purchase an aggregate of 476,681
shares of Common Stock to eight executive officers.
The Company also maintains a 401(k) Plan to provide retirement benefits
through tax deferred salary deductions for all its employees. In 1999, the
Company contributed to the 401(k) Plan by partially matching the employees'
contribution at a one-to-four ratio; provided, however, that the Company's
matching contribution for any employee can not exceed 1.5% of such employee's
salary.
1999 EXECUTIVE COMPENSATION AND COMPENSATION OF THE FORMER CHIEF EXECUTIVE
OFFICERS
Executive compensation for fiscal 1999 included base salary, cash bonuses
based upon achievement of corporate goals and individual performance goals,
retention bonuses and severance payments. Executive officers, like other
employees, were eligible for option grants under the 1994 Stock Incentive Plan
and to participate in the 1996 Employee Stock Purchase Plan. William V. Botts,
who served as the Company's Chairman of the Board and Chief Executive Officer on
December 31, 1999 received $112,500 as a base salary, $60,000 in the form of a
bonus payment and $20,000 as a director fee. Larry J. Gerhard, who served as the
Company's Chief Executive Officer from January 1999 until June 1999 during
fiscal 1999, received $200,000 as a base salary, $12,000 as a car allowance and
$200,000 in the
11
<PAGE>
form of severance payments during fiscal 1999. Mr. Botts was granted options to
purchase an aggregate of 30,000 shares of Common Stock during fiscal 1999.
Mr. Gerhard was not granted any stock options during fiscal 1999.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Section 162(m) generally disallows a tax deduction to public companies for
compensation in excess of $1 million paid to the Company's chief executive
officer and four other highly most compensated executive officers. Certain
performance-based compensation is excluded from this limitation. The
Compensation Committee periodically reviews the potential consequences of
Section 162(m) and may structure the performance-based portion of its executive
compensation to comply with certain exemptions in Section 162(m). However, the
Compensation Committee reserves the right to use its judgment to authorize
compensation payments that do not comply with the exemptions in Section 162(m)
when the Compensation Committee believes that such payments are appropriate and
in the best interests of the stockholders, after taking into consideration
changing business conditions or the executive officer's performance. In any
event, there can be no assurance that compensation attributable to stock options
and other awards granted under the Company's stock plans will be exempt from
Section 162(m).
William V. Botts
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors has a Compensation Committee which is responsible for
(i) recruiting and approving the compensation and benefits for the Company's
officers and directors, (ii) administering the Company's stock option plans and
(iii) making recommendations to the Board of Directors regarding such matters.
The Compensation Committee held six meetings during 1999. Currently, the
Compensation Committee consists of Messrs. Geeslin and Erwin. Amihai Ben-David
served on the Compensation Committee throughout the year ended December 31,
1999. During that year, Mr. Botts also served on the Compensation Committee
until he began serving as the Company's Interim Chief Executive Officer in July
1999.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Effective January 22, 1999, the Company entered into a severance agreement
with Joseph A, Masarich, former Senior Vice President-Worldwide Marketing and
Sales of the Company, in connection with the termination of his employment.
Pursuant to the agreement, in February 1999 Mr. Masarich began to receive
payments of $13,333.33 per month. The payments continued until January 2000.
The Company entered into a four-year employment agreement with Mr. Moshe on
February 25, 1999, pursuant to which he receives an annual base salary of
721,800 New Israeli Schekels (or approximately $178,222 U.S. Dollars, based on
the exchange rate on February 25, 1999), an annual bonus of up to 25% of his
base salary, and all standard benefits accorded other executives of the Company.
In the event Mr. Moshe is terminated other than for cause, he is entitled to
severance equal to his then monthly base salary plus benefits for a period of
fifteen months. In addition, the unvested portion of the stock option covering
100,000 shares of Common Stock granted to Mr. Moshe on February 25, 1999 shall
become fully exercisable.
The Company entered into an employment agreement with Mr. Davenport on
February 25, 1999 which was amended on October 24, 1999, pursuant to which he
received an annual base salary of $225,000, an annual bonus of up to 25% of his
base salary, and all standard benefits accorded other executives of the Company.
In addition, Mr. Davenport was entitled to an allowance for car expenses of $750
per month. Mr. Davenport also received a retention bonus in the amount of
$150,000 on January 1, 2000. Mr. Davenport resigned from his position as
President and Chief Operating Officer
12
<PAGE>
effective as of February 29, 2000. Upon his resignation from the Company,
Mr. Davenport became entitled to payments of $18,750 per month plus benefits for
twelve months.
The Company entered into a four-year employment agreement with Mr. Benhayoun
on February 25, 1999 pursuant to which he receives an annual base salary of
935,000 French Francs (or approximately $157,407 U.S. Dollars, based on the
exchange rate on February 25, 1999), commissions based on sales revenue
generated, and all standard benefits accorded other executives of the Company.
In the event Mr. Benhayoun is terminated other than for cause, he is entitled to
severance equal to his then monthly base salary plus benefits for a period of
twelve months. In addition, the unvested portion of the stock option covering
75,000 shares of common stock granted to Mr. Benhayoun on February 25, 1999
shall become fully exercisable upon termination of Mr. Benhayoun without cause
or upon a sale of more than 75% of the assets of the Company or if more than 50%
of the outstanding shares of the Company have been acquired by another company.
The Company modified an employment agreement with Mr. Gerhard on February
29, 1999 which was amended April 30, 1999, pursuant to which he received an
annual base salary of $400,000 and all standard benefits accorded other
executives of the Company as well as certain additional medical benefits. In
addition, Mr. Gerhard was entitled to an allowance for car expenses of $1,000
per month. Mr. Gerhard resigned from his position as Chief Executive Officer
effective June 30, 1999. Upon termination of his employment, Mr. Gerhard became
entitled to payments of $33,333.33 per month plus benefits for twenty-four
months.
The Company entered into an employment agreement with Mr. Koob on July 30,
1999, pursuant to which he received an annual base salary of $160,000 and all
standard benefits accorded other executives of the Company. In addition, Mr.
Koob was entitled to an allowance for car expenses of $750 per month. Mr. Koob
also received a retention bonus in the amount of $100,000 on January 2, 2000.
Mr. Koob resigned from his position as Vice President, Finance, Chief Financial
Officer and Secretary of the Company effective January 31, 2000. Upon
termination of his employment, Mr. Koob became entitled to payments of
$13,333.33 per month plus benefits for twelve months.
On March 23, 2000, pursuant to that certain Agreement and Plan of
Reorganization dated as of September 16, 2000 (the "Reorganization Agreement")
by and among the Company, Hood Acquisition Corp., a Delaware corporation and a
wholly owned subsidiary of the Company ("Merger Sub"), and Viewlogic Systems,
Inc., a Delaware corporation ("Viewlogic"), Merger Sub merged with and into
Viewlogic with Viewlogic surviving as a wholly owned subsidiary of the Company
(the "Merger"). In connection with the Merger, the shares of capital stock of
Viewlogic issued and outstanding immediately prior to the effective time of the
Merger (the "Effective Time") were automatically converted into the right to
receive (i) shares of Common Stock based upon an exchange ratio of 0.67928 of a
share of Common Stock for each share of Viewlogic's capital stock (the "Exchange
Ratio"), plus (ii) cash in lieu of any fractional shares of Common Stock, based
on the then-fair market value of the Common Stock. Pursuant to the
Reorganization Agreement, at the Effective Time the outstanding shares of
Viewlogic's capital stock held by the following current executive officers of
the Company were automatically converted into shares of Common Stock as set
forth in the table below:
<TABLE>
<CAPTION>
NUMBER OF SHARES OF COMMON STOCK INTO
NUMBER OF SHARES OF VIEWLOGIC'S WHICH SUCH SHARES OF VIEWLOGIC'S
CAPITAL STOCK HELD IMMEDIATELY PRIOR CAPITAL STOCK WERE CONVERTED AT THE
EXECUTIVE OFFICER TO THE EFFECTIVE TIME EFFECTIVE TIME
----------------- ------------------------------------ -------------------------------------
<S> <C> <C>
William J. Herman.............. 1,266,115 860,046
Paula J. Cassidy............... 66,556 45,210
Peter T. Johnson............... 210,000 142,648
Richard G. Lucier.............. 1,000,000 679,280
Kevin P. O'Brien............... 266,223 180,839
</TABLE>
13
<PAGE>
All of these shares are restricted stock, subject to a repurchase right of
the Company if the executive officer ceases to be an employee, officer or
director of, or a consultant to, the Company. This repurchase right vests over
time. Twenty-five percent of all of these shares vested from the repurchase
right in October 1999. The remaining 75% vest in equal monthly increments over
the succeeding 36 months. If the executive officer ceases to be an employee,
officer or director of, or a consultant to, the Company as a result of the
Company's actions without cause, 50% of the shares become vested shares. If,
within 24 months after a change of control of the Company, the executive officer
ceases to be an employee, officer or director of, or a consultant to, the
Company as a result of termination without cause by the Company or for good
reason by the executive, 100% of the shares become vested shares. The Merger did
not constitute a change of control for purposes of the vesting of the restricted
stock.
In addition, at the Effective Time all options to purchase Viewlogic's
capital stock then outstanding under Viewlogic's stock plans were assumed by the
Company with appropriate adjustments, based upon the Exchange Ratio, to both the
exercise price thereof and the number of shares for which such options are
exercisable. Consequently, at the Effective Time, the outstanding option held by
Gary L. Kiaski to purchase up to 266,223 shares of Viewlogic's capital stock at
a per share purchase price of $0.33 was converted into an option to purchase up
to 180,839 shares of the Company's Common Stock at a per share purchase price of
$0.49 on the same terms and conditions set forth in Mr. Kiaski's stock option
agreement with Viewlogic. Twenty-five percent of the shares subject to this
stock option vested in October 1999. The remaining 75% vest in equal monthly
increments over the succeeding 36 months. Mr. Kiaski has the right to exercise
this option prior to the time it vests. Upon such early exercise, if any, Mr.
Kiaski will receive shares of restricted stock which are subject to the same
vesting schedule as the original option. In the event Mr. Kiaski's employment is
terminated prior to October 2, 2002, the vesting of this stock option will
accelerate (i) as to the first 90,420 shares, if he is terminated without cause,
and (ii) in full, if he is terminated without cause or resigns his employment
for good reason in connection with, or within 24 months subsequent to, a change
of control. The Merger did not constitute a change of control for purposes of
this stock option.
In connection with the Merger, the Company also assumed the employment
agreements of Mr. Herman and Mr. Lucier. Under the terms of Mr. Herman's
employment agreement, Mr. Herman's employment will continue until October 2,
2001 unless Mr. Herman resigns or the Company terminates his employment. Mr.
Herman receives a base salary of $255,000 annually and standard benefits
afforded other employees of the Company. If the Company terminates Mr. Herman's
employment without cause, he will continue to receive his benefits and base
salary for a period of nine months. This agreement includes post-termination
restrictions for a period of one year which restrict Mr. Herman from competing
with the Company and which prohibit him from soliciting the Company's employees
and customers during that period. Mr. Herman's compensation is subject to
adjustment after the first year of employment but his base salary may not be
decreased.
Mr. Lucier's employment agreement provides that Mr. Lucier's employment will
continue until October 2, 2001 unless Mr. Lucier resigns or the Company
terminates his employment. Mr. Lucier receives a base salary of $235,000
annually and standard benefits afforded other employees of the Company. If the
Company terminates Mr. Lucier's employment without cause, he will continue to
receive his benefits and base salary for a period of nine months. This agreement
includes post-termination restrictions for a period of one year which restrict
Mr. Lucier from competing with Viewlogic and which prohibit him from soliciting
the Company's employees and customers during that period. Mr. Lucier's
compensation is subject to adjustment after the first year of employment but his
base salary may not be decreased.
14
<PAGE>
COMPARATIVE STOCK PERFORMANCE
The following graph compares the cumulative total stockholder return on the
Common Stock with the cumulative return of (i) the Nasdaq Stock Market--U.S.
Index and (ii) the Dow Jones Software Index. The graph assumes the investment of
$100 on October 18, 1996, the date on which the Common Stock was first publicly
traded, in the Common Stock, the Nasdaq Stock Market--U.S. Index and the Dow
Jones Software Index and assumes dividends are reinvested. Measurement points
are the last trading days for the fiscal years ended December 31, 1996, 1997,
1998 and 1999. No dividends have been declared or paid on the Common Stock.
[STOCK PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
COMPANY/MARKET INDEX 10/18/96 1996 1997 1998 1999
-------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Innoveda, Inc...................................... $100.00 $86.32 $87.37 $78.42 $29.47
NASDAQ Stock Market (U.S.)......................... 100.00 103.75 127.12 179.25 332.27
Dow Jones Software................................. 100.00 103.75 137.44 227.54 439.24
</TABLE>
15
<PAGE>
PROPOSAL 2--APPROVAL OF AMENDMENT TO
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION, AS AMENDED
The Company's Amended and Restated Certificate of Incorporation, as amended
(the "Restated Charter"), currently authorizes the issuance of 50,000,000 shares
of Common Stock. In May 2000, the Board of Directors adopted resolutions,
subject to stockholder approval, proposing an amendment to the Restated Charter
providing for an increase in the authorized number of shares of Common Stock
from 50,000,000 to 100,000,000 shares. If approved by the stockholders, such
amendment would become effective upon the filing of a certificate of amendment
to the Restated Charter with the Secretary of State of the State of Delaware. As
of May 26, 2000, the Company had outstanding 32,528,321 shares of Common Stock
and an aggregate of approximately 5.3 million shares of Common Stock reserved
for issuance under the Company's stock incentive and purchase plans.
CHARTER AMENDMENT
The Board of Directors has adopted resolutions setting forth the proposed
amendment to the first paragraph of Article Fourth of the Restated Charter (the
"Charter Amendment"), the advisability of the Charter Amendment, and a call for
submission of the Charter Amendment for approval by the Company's stockholders
at the Meeting. The following is the test of the first of paragraph as proposed
to be amended:
FOURTH. The corporation is authorized to issue two classes of stock to be
designated respectively, "Common Stock" and "Preferred Stock". The total
number of shares that the corporation is authorized to issue is One
Hundred-Five Million (105,000,000) shares, consisting of One Hundred
Million (100,000,000) shares of Common Stock, par value $0.01 per share,
and Five Million (5,000,000) shares of Preferred Stock, par value $0.01
per share.
PURPOSE AND EFFECT OF THE PROPOSED CHARTER AMENDMENT
On June 2, 2000, the Company announced that it had entered into an agreement
to acquire PADS Software, Inc. ("PADS") for a total of approximately 6.5 million
shares of Common Stock and $2 million in cash. The Company has also acquired a
number of other companies in order to augment its technological capabilities and
expand its product offerings. The Company may acquire additional companies for
these and other business reasons. As in the case of the agreement to acquire
PADS, from time to time, the Company uses shares of Common Stock to pay for
acquisitions. The Board believes that the proposed increase in the number of
authorized shares of Common Stock is desirable to maintain the Company's
flexibility in choosing how to pay for acquisitions. While the Company is in
acquisition discussions from time to time with other companies and may consider
issuing shares of Common Stock in the future for such acquisitions, the Company
does not presently have any plans, agreements, understandings or arrangements
that will or could result in the issuance of any shares, other than its
agreement to acquire PADS. The approval of the Charter Amendment by the
Company's stockholders is not a condition to the closing of the Company's
acquisition of PADS.
In addition, the Board believes that the availability of additional shares
of Common Stock will provide the Company with the flexibility to issue shares
for a variety of other purposes that the Board of Directors may deem advisable
without further action by the Company's stockholders, unless required by law,
regulation or stock market rule. These purposes could include, among other
things, the sale of stock to obtain additional capital funds, the purchase of
property, the use of additional shares for various equity compensation and other
employee benefit plans, and other bona fide corporate purposes.
In some situations, the issuance of additional shares of Common Stock could
have a dilutive effect on earnings per share and, for a person who does not
purchase additional shares to maintain his or her pro rata interest, on a
stockholder's percentage voting power in the Company. In addition, depending
upon the nature and terms thereof, such issuances could enable the Board to
render more difficult or
16
<PAGE>
discourage an attempt to obtain a controlling interest in the Company or the
removal of the incumbent Board and may discourage unsolicited takeover attempts
which might be desirable to stockholders. For example, the issuance of shares of
Common Stock in a public or private sale, merger or similar transaction would
increase the number of the Company's outstanding shares, thereby diluting the
interest of a party seeking to take over the Company. Furthermore, many
companies have issued warrants or other rights to acquire additional shares to
the holders of Common Stock to discourage or defeat unsolicited stock
accumulation programs and acquisition proposals. If the Charter Amendment is
adopted, more Common Stock of the Company would be available for such purposes
than is currently available.
The Board of Directors is not proposing the Charter Amendment in response to
any effort to accumulate the Company's stock or to obtain control of the Company
by means of a merger, tender offer or solicitation in opposition to management.
In addition, the Charter Amendment is not part of any plan by management to
recommend a series of similar amendments to the Board of Directors and the
stockholders. Finally, the Board does not currently contemplate recommending the
adoption of any other amendments to the Certificate of Incorporation which could
be construed to affect the ability of third parties to take over or change
control of the Company.
If this proposal is approved by the stockholders at the Meeting, upon the
filing of the Charter Amendment with the Secretary of State of the State of
Delaware, the Company will have approximately 62.0 million authorized but
unreserved shares of Common Stock. The Charter Amendment is not necessary to
provide shares of Common Stock for the proposed approval of the Company's 2000
Stock Incentive Plan or the Company's 2000 Employee Stock Purchase Plan. See
"Proposal 3--Approval of 2000 Stock Incentive Plan" and Proposal 4--Approval of
2000 Employee Stock Purchase Plan".
Holders of Common Stock do not have preemptive rights to subscribe to
additional securities that may be issued by the Company. This means that current
stockholders do not have a prior right to purchase any new issue of Common Stock
of the Company in order to maintain their proportionate ownership interest.
THE BOARD OF DIRECTORS BELIEVES THAT THE CHARTER AMENDMENT IS IN THE BEST
INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE FOR THIS
PROPOSAL.
PROPOSAL 3--APPROVAL OF AMENDED AND RESTATED 2000 STOCK INCENTIVE PLAN
In May 2000, the Board of Directors adopted resolutions, subject to
stockholder approval, to approve the Company's Amended and Restated 2000 Stock
Incentive Plan (the "2000 Stock Plan"). The purpose of the 2000 Stock Plan is to
advance the interests of the Company's stockholders by enhancing the Company's
ability to attract, retain and motivate persons who make (or are expected to
make) important contributions to the Company by providing such persons with
equity ownership opportunities and performance-based incentives and thereby
better aligning the interests of such persons with those of the Company's
stockholders. The Board of Directors believes that continued grants of stock
options, as well as grants of restricted stock, will be an important element in
attracting, retaining motivating persons who make and who are expected to make
contributions to the Company's growth and success. If approved by the
stockholders, 4,500,000 shares of Common Stock will be authorized for issuance
under the 2000 Stock Plan. In addition, on each anniversary of the adoption of
the 2000 Stock Plan by the Board of Directors, the number of shares of Common
Stock authorized for issuance under the 2000 Stock Plan will automatically
increase, without additional Board or stockholder approval, by 2,000,000 shares
of Common Stock. If our acquisition of PADS is completed, we expect that we will
grant awards under the 2000 Stock Plan for an aggregate of approximately
1.0 million shares of Common Stock to attract, motivate and retain the former
employees of PADS. The 2000 Stock Plan also provides that any shares of Common
Stock reserved for issuance under certain other stock plans ("Prior Plans") of
the Company which shares are not issued as awards or which shares are subject to
17
<PAGE>
awards that terminate or are otherwise surrendered, shall be available for
issuance under the 2000 Stock Plan, provided that the maximum number of shares
of Common Stock reserved for issuance under Prior Plans that may be issued under
the 2000 Stock Plan shall be 2,400,000.
THE BOARD OF DIRECTORS BELIEVES THAT THE APPROVAL OF THE 2000 STOCK PLAN AND
AUTHORIZATION OF AN INITIAL 4,500,000 SHARES OF COMMON STOCK FOR ISSUANCE UNDER
SUCH PLAN, PLUS AN ADDITIONAL 2,000,000 SHARES OF COMMON STOCK EACH YEAR OF THE
PLAN TERM, IS IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND
RECOMMENDS A VOTE FOR THIS PROPOSAL.
SUMMARY OF THE 2000 STOCK PLAN
The following is a brief summary of the material provisions of the 2000
Stock Plan. This summary is qualified in all respects by reference to the full
text of the 2000 Stock Plan.
The 2000 Stock Plan provides for the grant of incentive stock options
("incentive stock options") within the meaning of Section 422 of the Code,
options not intended to qualify as incentive stock options ("nonstatutory
options") and restricted stock awards. Generally, awards under the 2000 Stock
Plan are not assignable or transferable except by will or the laws of descent
and distribution.
INCENTIVE STOCK OPTIONS, NONSTATUTORY STOCK OPTIONS AND RESTRICTED STOCK AWARDS
Optionees receive the right to purchase a specified number of shares of
Common Stock at a specified option price and subject to such other terms and
conditions as are specified in connection with the option grant. Subject to the
limitations described below, the exercise price of options shall not be less
than 85% of the fair market value of the Common Stock on the date of grant.
Under present law, however, incentive stock options and options intended to
qualify as performance-based compensation under Section 162(m) of the Code may
not be granted at an exercise price less than the fair market value of the
Common Stock on the date of grant (or less than 110% of the fair market value in
the case of incentive stock options granted to optionees holding more than 10%
of the total combined voting power of the Company or its parent or
subsidiaries). The 2000 Stock Plan permits the Board of Directors to determine
the manner of payment of the exercise price of options, including through
payment by cash, check or in connection with a "cashless exercise" through a
broker, by surrender to the Company of shares of Common Stock, by delivery to
the Company of a promissory note, or by any combination of the permitted forms
of payment. Restricted stock awards entitle recipients to acquire shares of
Common Stock, subject to the Company's right to repurchase all or part of such
shares from the recipient in the event that the conditions specified in the
applicable restricted stock award are not satisfied prior to the end of the
applicable restriction period established for such restricted stock award. The
2000 Stock Plan permits the Board of Directors to determine the purchase price,
if any, for restricted stock awards.
ELIGIBILITY TO RECEIVE AWARDS
Officers, employees, directors, consultants and advisors of the Company and
its subsidiaries are eligible to receive awards under the 2000 Stock Plan. Under
present law, however, incentive stock options may only be granted to employees.
No participant may receive awards for more than 500,000 shares in any calendar
year.
As of April 30, 2000, the Company had approximately 416 employees and four
non-employee directors, all of whom were eligible to participate in the 2000
Stock Plan. The number of individuals receiving awards varies from year to year
depending on various factors, such as the number of promotions and the Company's
hiring needs during the year, and thus the Company cannot now determine award
recipients.
18
<PAGE>
On the Record Date, the closing sale price of the Common Stock on the Nasdaq
National Market was $4.625.
ADMINISTRATION
The Board of Directors and the Compensation Committee administer the 2000
Stock Plan. The Board of Directors has the authority to adopt, amend and repeal
the administrative rules, guidelines and practices relating to the 2000 Stock
Plan and to interpret its provisions. The Board of Directors may delegate
authority under the 2000 Stock Plan to one or more committees of the Board of
Directors. Pursuant to this authority, the Board of Directors has appointed the
Compensation Committee to administer certain aspects of the 2000 Stock Plan.
Subject to any applicable limitations contained in the 2000 Stock Plan, the
Board of Directors or a committee of the Board of Directors to whom the Board of
Directors delegates authority, as the case may be, selects the recipients of
awards and determines:
- the number of shares of Common Stock covered by options and the dates upon
which such options become exercisable;
- the exercise price of options;
- the duration of options; and
- the number of shares of Common Stock subject to any restricted stock award
and the terms and conditions of such award, including the conditions for
repurchase, issue price and repurchase price.
In the event of a merger, liquidation or other reorganization event, the
Board of Directors is authorized to provide for:
- the assumption or substitution of all outstanding options by the acquirer;
- the termination of all unexercised options immediately prior to the
closing of the acquisition event;
- appropriate cash payments to option holders, if the Company's stockholders
would receive cash payments as consideration in the acquisition event; and
- the vesting in full of outstanding options prior to the reorganization
event provided that, to the extent the option was not exercisable for
unrestricted shares prior to the acquisition event, the participant shall
receive upon exercise of the option, shares of common stock subject to
repurchase by the Company in the event that the conditions specified in
the applicable option agreement are not satisfied.
No award may be granted under the 2000 Stock Plan ten years after the
approval and adoption of the 2000 Stock Plan by the Board of Directors and
stockholders, but the vesting and effectiveness of awards previously granted may
extend beyond that date. The Board of Directors may at any time amend, suspend
or terminate the 2000 Stock Plan, except that no award granted after an
amendment of the 2000 Stock Plan and designated as subject to Section 162(m) by
the Board of Directors shall become exercisable, realizable or vested, to the
extent the amendment was required to grant the award, unless and until the
amendment is approved by the Company's stockholders.
FEDERAL INCOME TAX CONSEQUENCES
THE FOLLOWING IS A SUMMARY OF THE UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES THAT GENERALLY WILL ARISE WITH RESPECT TO AWARDS GRANTED UNDER THE
2000 STOCK PLAN AND WITH RESPECT TO THE SALE OF COMMON STOCK ACQUIRED UNDER THE
2000 STOCK PLAN.
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<PAGE>
INCENTIVE STOCK OPTIONS
In general, a participant will not recognize taxable income upon the grant
or exercise of an incentive stock option. Instead, a participant will recognize
taxable income with respect to an incentive stock option only upon the sale of
Common Stock acquired through the exercise of the option ("ISO Stock"). The
exercise of an incentive stock option, however, may subject the participant to
the alternative minimum tax.
Generally, the tax consequences of selling ISO Stock will vary with the
length of time that the participant has owned the ISO Stock at the time it is
sold. If the participant sells ISO Stock after having owned it for at least two
years from the date the option was granted (the "Grant Date") and one year from
the date the option was exercised (the "Exercise Date"), then the participant
will recognize long-term capital gain in an amount equal to the excess of the
sale price of the ISO Stock over the exercise price.
If the participant sells ISO Stock for more than the exercise price prior to
having owned it for at least two years from the Grant Date and one year from the
Exercise Date (a "Disqualifying Disposition"), then all or a portion of the gain
recognized by the participant will be ordinary compensation income and the
remaining gain, if any, will be a capital gain. This capital gain will be a
long-term capital gain if the participant has held the ISO Stock for more than
one year prior to the date of sale.
If a participant sells ISO Stock for less than the exercise price, then the
participant will recognize capital loss equal to the excess of the exercise
price over the sale price of the ISO Stock. This capital loss will be a
long-term capital loss if the participant has held the ISO Stock for more than
one year prior to the date of sale.
NONSTATUTORY STOCK OPTIONS
As in the case of an incentive stock option, a participant will not
recognize taxable income upon the grant of a nonstatutory stock option. Unlike
the case of an incentive stock option, however, a participant who exercises a
nonstatutory stock option generally will recognize ordinary compensation income
in an amount equal to the excess of the fair market value of the Common Stock
acquired through the exercise of the option ("NSO Stock") on the Exercise Date
over the exercise price.
With respect to any NSO Stock, a participant will have a tax basis equal to
the exercise price plus any income recognized upon the exercise of the option.
Upon selling NSO Stock, a participant generally will recognize capital gain or
loss in an amount equal to the excess of the sale price of the NSO Stock over
the participant's tax basis in the NSO Stock. This capital gain or loss will be
a long-term gain or loss if the participant has held the NSO Stock for more than
one year prior to the date of the sale.
RESTRICTED STOCK AWARDS
A participant will not recognize taxable income upon the grant of a
restricted stock award unless the participant makes an election under Section
83(b) of the Code (a "Section 83(b) Election"). If the participant makes a
Section 83(b) Election within 30 days of the date of the grant, then the
participant will recognize ordinary compensation income, for the year in which
the award is granted, in an amount equal to the difference between the fair
market value of the Common Stock at the time the award is granted and the
purchase price paid for the Common Stock. If a Section 83(b) Election is not
made, then the participant will recognize ordinary compensation income, at the
time that the forfeiture provisions or restrictions on transfer lapse, in an
amount equal to the difference between the fair market value of the Common Stock
at the time of such lapse and the original purchase price paid for the Common
Stock. The participant will have a tax basis in the Common Stock acquired equal
to the sum of the price paid and the amount of ordinary compensation income
recognized.
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<PAGE>
Upon the disposition of the Common Stock acquired pursuant to a restricted
stock award, the participant will recognize a capital gain or loss in an amount
equal to the difference between the sale price of the Common Stock and the
participant's tax basis in the Common Stock. This capital gain or loss will be a
long-term capital gain or loss if the shares are held for more than one year.
For this purpose, the holding period shall begin the day after the forfeiture
provisions or restrictions lapse if a Section 83(b) Election is not made, or the
day after the award is granted if a Section 83(b) Election is made.
TAX CONSEQUENCES TO THE COMPANY
The grant of an award under the 2000 Stock Plan will have no tax
consequences to the Company. Moreover, in general, neither the exercise of an
incentive stock option nor the sale of any Common Stock acquired under the 2000
Stock Plan will have any tax consequences to the Company. The Company generally
will be entitled to a business-expense deduction, however, with respect to any
ordinary compensation income recognized by a participant under the 2000 Stock
Plan, including as a result of the exercise of a nonstatutory stock option or a
Disqualifying Disposition. Any such deduction will be subject to the limitations
of Section 162(m) of the Code.
GRANTS AND BENEFITS UNDER THE 2000 STOCK PLAN TO DIRECTORS AND EXECUTIVE
OFFICERS
The stock option grants and the benefits that will be paid under the 2000
Stock Plan to directors, executive officers and all other employees are
currently not determinable.
PROPOSAL 4--APPROVAL OF 2000 EMPLOYEE STOCK PURCHASE PLAN
In May 2000, the Board of Directors adopted resolutions, subject to
stockholder approval, to approve the Company's 2000 Employee Stock Purchase Plan
(the "2000 Purchase Plan"). The purpose of the 2000 Purchase Plan is to provide
eligible employees of the Company with opportunities to purchase shares of
Common Stock. The Board of Directors believes that the 2000 Purchase Plan is an
important factor in attracting, motivating and retaining qualified personnel
essential to the success of the Company.
The 2000 Purchase Plan permits eligible employees to purchase Common Stock
through payroll deductions at a price equal to 85% of the lower of the fair
market value of the Common Stock on the first day of each 24-month offering
period or the last day of the applicable six-month purchase period. The 2000
Purchase Plan is intended to qualify under Section 423 of the Code. The Board
has adopted the 2000 Purchase Plan because the number of shares currently
available under the Company's 1996 Employee Stock Purchase Plan is insufficient
to satisfy the expected employee participation in 2000. If approved by the
stockholders, 700,000 shares of Common Stock will be authorized for issuance
under the 2000 Purchase Plan.
THE BOARD OF DIRECTORS BELIEVES THAT THE APPROVAL OF THE 2000 PURCHASE PLAN
AND THE AUTHORIZATION OF 700,000 SHARES OF COMMON STOCK FOR ISSUANCE UNDER SUCH
PLAN IS IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS
A VOTE FOR THIS PROPOSAL.
SUMMARY OF THE 2000 PURCHASE PLAN
ADMINISTRATION
The 2000 Purchase Plan may be administered by the Board of Directors or a
committee of the Board of Directors (the "Administrator"), which committee is
required to be constituted to comply with Section 16(b) of the Exchange Act, and
applicable laws.
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<PAGE>
ELIGIBILITY; LIMITATIONS
The 2000 Purchase Plan provides that employees are eligible to participate
if they are customarily employed by the Company or any designated subsidiary for
at least 20 hours per week and for more than five months in any calendar year.
As of April 30, 2000, 416 employees of the Company satisfied the eligibility
criteria for participation in the 2000 Purchase Plan.
TERMS AND CONDITIONS OF SUBSCRIPTION
Participation under the 2000 Purchase Plan is evidenced by a written
subscription agreement between the employee and the Company and is subject to
the following terms and conditions:
PURCHASE PRICE AND METHOD. Employees who participate in the 2000
Purchase Plan purchase the Common Stock through payroll deductions of up to
10% of their base salary and shall receive an option to purchase up to a
maximum number of shares per 24-month offering period determined by dividing
$50,000 by the fair market value of a share of Common Stock on the first day
of the offering period (the "Option Shares"). Such option shall be
exercisable as to 25% of the Option Shares at the end of each six-month
purchase period within the offering period. The price of Common Stock
purchased under the 2000 Purchase Plan is 85% of the lower of the fair
market value of the Common Stock on the first day of the offering period and
the last day of the applicable six-month purchase period. To the extent the
fair market value of the Common Stock on the first day of the subsequent
24-month offering period is lower than the fair market value of the Common
Stock on the first day of the current offering period, then all participants
in such current offering period will be automatically withdrawn from the
current offering period immediately after the exercise of their options on
the exercise date and automatically re-enrolled in the subsequent offering
period as of the first day thereof.
OFFERING PERIODS. Offering periods last 24 months and commence on the
first trading day on or after August 1 and February 1 of each year and
terminate on the last trading day in the periods ending 24 months later.
Each 24-month offering period consists of four purchase periods of
approximately six months duration.
WITHDRAWAL; TERMINATION OF EMPLOYMENT. If an employee decides to
terminate his or her participation in the 2000 Purchase Plan, he or she must
withdraw all the payroll deductions credited to his or her purchase account,
and such funds will be returned to him or her. Upon the termination of
employment for any reason, all payroll deductions will likewise be returned
to the (former) employee.
DEATH. A participating employee may designate who is to receive any
shares and cash, if any, from the participant's account under the 2000
Purchase Plan in the event of such participant's death subsequent to
exercising a purchase option but prior to delivery of the share of Common
Stock.
NONTRANSFERABILITY. Rights granted under the 2000 Purchase Plan are not
transferable by a participant other than by will, the laws of descent and
distribution, or as otherwise provided under the plan, and the Company may
treat any prohibited attempt to transfer as an election to withdraw.
OTHER PROVISIONS. The subscription agreement may contain such other
terms, provisions and conditions not inconsistent with the 2000 Purchase
Plan as may be determined by the Administrator.
ADJUSTMENT UPON CHANGES IN CAPITALIZATION; CORPORATE TRANSACTIONS
In the event of changes in the outstanding Common Stock by reason of any
stock splits, reverse stock splits, stock dividends, combinations,
reclassifications or other similar change in the capital structure of the
Company, an appropriate adjustment shall be made by the Administrator in the
following:
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<PAGE>
(i) the number of shares of Common Stock available under the 2000 Purchase Plan
and (ii) the number and class of shares of stock subject to any option
outstanding under the 2000 Purchase Plan. The determination of the Administrator
as to which adjustments shall be made shall be conclusive. In the event of a
proposed dissolution or liquidation of the Company, the offering periods shall
terminate immediately prior to the consummation of such proposed action, unless
otherwise provided by the Board of Directors. Notwithstanding the above, in the
event of a merger of the Company with or into another corporation or the sale of
substantially all of the assets of the Company, unless the acquiring or
succeeding corporation (or an affiliate thereof) agrees to assume or substitute
for, outstanding options under the plan, each purchase period then in progress
shall be shortened by setting a new exercise date and any offering period then
in progress shall end on the new exercise date.
AMENDMENT AND TERMINATION OF THE 2000 PURCHASE PLAN
The Board may at any time amend, alter, suspend or terminate the 2000
Purchase Plan. The Company shall obtain stockholder approval of any amendment to
the 2000 Purchase Plan in such a manner and to such a degree as is necessary and
desirable to comply with Rule 16b-3 under the Exchange Act and 423 of the Code
(or any other applicable law or regulation, including the requirements of any
exchange or quotation system on which the Common Stock is traded). Any amendment
or termination of the 2000 Purchase Plan shall not affect options already
granted and such options shall remain in full force and effect as if the 2000
Purchase Plan had not been amended or terminated, unless mutually agreed
otherwise between the optionee and the Company, which agreement must be in
writing and signed by the participant and the Company. In any event, the
Purchase Plan shall terminate in May 2010.
FEDERAL INCOME TAX CONSEQUENCES
THE FOLLOWING IS A SUMMARY OF THE UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES THAT GENERALLY WILL ARISE WITH RESPECT TO PURCHASES MADE UNDER THE
2000 PURCHASE PLAN AND WITH RESPECT TO THE SALE OF COMMON STOCK ACQUIRED UNDER
THE 2000 PURCHASE PLAN.
TAX CONSEQUENCES TO PARTICIPANTS
In general, a participant will not recognize taxable income upon enrolling
in the 2000 Purchase Plan or upon purchasing shares of Common Stock at the end
of a purchase period. Instead, if a participant sells Common Stock acquired
under the 2000 Purchase Plan at a sale price that exceeds the price at which the
participant purchased the Common Stock, then the participant will recognize
taxable income in an amount equal to the excess of the sale price of the Common
Stock over the price at which the participant purchased the Common Stock. A
portion of that taxable income will be ordinary income, and a portion may be
capital gain.
If the participant sells the Common Stock more than one year after acquiring
it and more than two years after the date on which the offering period commenced
(the "Grant Date"), then the participant will be taxed as follows. If the sale
price of the Common Stock is higher than the price at which the participant
purchased the Common Stock, then the participant will recognize ordinary
compensation income in an amount equal to the lesser of:
- fifteen percent of the fair market value of the Common Stock on the Grant
Date; and
- the excess of the sale price of the Common Stock over the price at which
the participant purchased the Common Stock.
Any further income will be long-term capital gain. If the sale price of the
Common Stock is less than the price at which the participant purchased the
Common Stock, then the participant will recognize long-term capital loss in an
amount equal to the excess of the price at which the participant purchased the
Common Stock over the sale price of the Common Stock.
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<PAGE>
If the participant sells the Common Stock within one year after acquiring it
or within two years after the Grant Date (a "Disqualifying Disposition"), then
the participant will recognize ordinary compensation income in an amount equal
to the excess of the fair market value of the Common Stock on the date that it
was purchased over the price at which the participant purchased the Common
Stock. The participant will also recognize capital gain in an amount equal to
the excess of the sale price of the Common Stock over the fair market value of
the Common Stock on the date that it was purchased, or capital loss in an amount
equal to the excess of the fair market value of the Common Stock on the date
that it was purchased over the sale price of the Common Stock. This capital gain
or loss will be a long-term capital gain or loss if the participant has held the
Common Stock for more than one year prior to the date of the sale and will be a
short-term capital gain or loss if the participant has held the Common Stock for
a shorter period.
TAX CONSEQUENCES TO THE COMPANY
The offering of Common Stock under the 2000 Purchase Plan will have no tax
consequences to the Company. Moreover, in general, neither the purchase nor the
sale of Common Stock acquired under the 2000 Purchase Plan will have any tax
consequences to the Company except that the Company will be entitled to a
business-expense deduction with respect to any ordinary compensation income
recognized by a participant upon making a Disqualifying Disposition. Any such
deduction will be subject to the limitations of Section 162(m).
GRANTS AND BENEFITS UNDER THE 2000 PURCHASE PLAN TO EXECUTIVE OFFICERS
The stock option grants and the benefits that will be paid under the 2000
Purchase Plan to directors, executive officers and all other employees are
currently not determinable. No options have been granted under the 2000 Purchase
Plan.
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP, independent public accountants, audited the
Company's consolidated financial statements for fiscal 1999. The Company has not
yet selected independent public accountants to audit its 2000 consolidated
financial statements. Deloitte & Touche LLP served as Viewlogic's independent
public accountants prior to the Merger. The Company is deciding between
PricewaterhouseCoopers LLP and Deloitte & Touche LLP as its independent public
accountants for the fiscal year 2000. The Company intends to engage its
accountants for such purpose in June 2000. The Company expects that, if it
selects its accountants prior to the Meeting, a representative of such
accountants will be available at the Meeting to respond to appropriate
questions. Such representative will be permitted to make a statement if he
desires to do so.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than ten percent of a registered
class of the Company's equity securities, to file with the Commission initial
reports of ownership and reports of changes in ownership of Common Stock and
other equity securities of the Company. Officers, directors and
greater-than-ten-percent stockholders are required by Commission regulations to
furnish the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based on a review of the copies of such reports
furnished to the Company, during fiscal 1999 all of the Company's officers,
directors and greater-than-ten-percent beneficial owners complied with Section
16(a) filing requirements.
STOCKHOLDER PROPOSALS FOR THE MEETING AND FOR THE 2001 ANNUAL MEETING
Written notice of proposals of stockholders submitted outside the processes
of Rule 14a-8 under the Exchange Act for consideration at the Meeting must have
been received by the Company on or
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<PAGE>
before June 19, 2000, in order to be considered timely for purposes of Rule
14a-4 under the Exchange Act. The persons designated in the Company's proxy card
will be granted discretionary authority with respect to any stockholder proposal
with respect to which the Company does not receive timely notice. Stockholder
proposals submitted pursuant to Rule 14a-8 under the Exchange Act for inclusion
in the Company's proxy materials for its 2001 Annual Meeting of Stockholders
must be received by the Secretary of the Company at the principal offices of the
Company no later than February 9, 2001.
OTHER MATTERS
The Board of Directors knows of no other business which will be presented
for consideration at the Meeting other than that described above. However, if
any other business should come before the Meeting, it is the intention of the
persons named in the enclosed proxy card to vote, or otherwise act, in
accordance with their best judgment on such matters.
The Company will bear the costs of soliciting proxies. In addition to
solicitations by mail, the Company's directors, officers and regular employees
may, without additional remuneration, solicit proxies by telephone, facsimile
and personal interviews. The Company will reimburse such persons for their
reasonable expenses in connection with any such solicitations. In addition, the
Company may retain a proxy solicitation firm for assistance in connection with
the Meeting at an expected cost of no more than $15,000, plus reasonable
expenses. The Company will also request brokerage houses, custodians, nominees
and fiduciaries to forward copies of the proxy materials to those persons for
whom they hold shares and request instructions for voting the proxies. The
Company will reimburse such brokerage houses and other persons for their
reasonable expenses in connection with the distribution.
THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE AND SIGN THE
ENCLOSED PROXY CARD AND RETURN IT IN THE ACCOMPANYING ENVELOPE. PROMPT RESPONSE
WILL GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION IS
APPRECIATED. STOCKHOLDERS WHO ATTEND THE MEETING MAY VOTE THEIR SHARES
PERSONALLY EVEN THOUGH THEY HAVE SENT IN THEIR PROXY CARDS.
BY ORDER OF THE BOARD OF DIRECTORS,
<TABLE>
<S> <C>
Peter T. Johnson,
SECRETARY
</TABLE>
June 9, 2000
25
<PAGE>
Appendix A
DETACH HERE
INNOVEDA, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
2000 ANNUAL MEETING OF STOCKHOLDERS
JULY 13, 2000
The undersigned, revoking all prior proxies, hereby appoints William J.
Herman and Peter T. Johnson, and each of them, with full power of
substitution, as proxies for the undersigned to act and to vote at the Annual
Meeting of Stockholders of Innoveda, Inc. (the "Company") to be held on July
13, 2000 (the "Meeting") and at any adjournment or adjournments thereof as
designated herein upon all matters referred to on the reverse side of this
Proxy and as described in the Proxy Statement for the Meeting and, in their
discretion, upon any other matters that may properly come before the Meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN BY THE
UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THE PROXIES WILL VOTE
FOR THE ELECTION OF THE DIRECTOR NOMINEE AND FOR PROPOSALS 2, 3, AND 4.
PLEASE VOTE, DATE AND SIGN ON THE REVERSE SIDE OF THIS PROXY AND
RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
----------------- -----------------
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
----------------- -----------------
<PAGE>
DETACH HERE
|X| Please mark votes as in this example.
A VOTE FOR THE FOLLOWING PROPOSALS IS RECOMMENDED BY THE BOARD OF DIRECTORS.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C>
1. To elect William J. Herman as a Class III director 2. To approve an amendment to |_| |_| |_|
to serve for the ensuing three years and until the Company's Amended
his successor is duly elected and qualified. and Restated Certificate of
FOR WITHHELD Incorporation, as amended,
|_| |_| to increase the authorized
number of shares of Common
Stock of the Company
from 50,000,000 to
100,000,000.
3. To approve the Company's |_| |_| |_|
Amended and Restated 2000 Stock
Incentive Plan and the
authorization of an initial
4,500,000 shares of Common
Stock of the Company for
issuance under such plan,
plus an additional 2,000,000
shares of Common Stock of the
Company each year of the plan
term.
4. To approve the Company's |_| |_| |_|
2000 Employee Stock Purchase
Plan and the authorization
of 700,000 shares of Common
Stock of the Company for
issuance under such plan.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT |_|
Please sign exactly as name(s) appear(s) heron.
Joint owners should each sign. When signing as
attorney, executor, administrator, trustee or
guardian, please give full title as such. If a
corporation or partnership, please sign by
authorized person.
Signature ___________________________________ Date _____ Signature ___________________________________ Date ______
</TABLE>
<PAGE>
APPENDIX B
INNOVEDA, INC.
Amended and Restated 2000 Stock Incentive Plan
1. PURPOSE
The purpose of this Amended and Restated 2000 Stock Incentive Plan (the
"Plan") of Innoveda, Inc., a Delaware corporation (the "Company"), is to
advance the interests of the Company's stockholders by enhancing the
Company's ability to attract, retain and motivate persons who make (or are
expected to make) important contributions to the Company by providing such
persons with equity ownership opportunities and performance-based incentives
and thereby better aligning the interests of such persons with those of the
Company's stockholders. Except where the context otherwise requires, the term
"Company" shall include any of the Company's present or future subsidiary
corporations as defined in Section 424(f) of the Internal Revenue Code of
1986, as amended, and any regulations promulgated thereunder (the "Code") and
any other business venture (including, without limitation, joint venture or
limited liability company) in which the Company has a significant interest,
as determined by the Board of Directors of the Company (the "Board").
2. ELIGIBILITY
All of the Company's employees, officers, directors, consultants and
advisors (and any individuals who have accepted an offer for employment) are
eligible to be granted options and restricted stock awards (each, an "Award")
under the Plan. Each person who has been granted an Award under the Plan shall
be deemed a "Participant".
3. ADMINISTRATION AND DELEGATION
(a) ADMINISTRATION BY BOARD OF DIRECTORS. The Plan will be administered by
the Board. The Board shall have authority to grant Awards and to adopt, amend
and repeal such administrative rules, guidelines and practices relating to the
Plan as it shall deem advisable. The Board may correct any defect, supply any
omission or reconcile any inconsistency in the Plan or any Award in the manner
and to the extent it shall deem expedient to carry the Plan into effect and it
shall be the sole and final judge of such expediency. All decisions by the Board
shall be made in the Board's sole discretion and shall be final and binding on
all persons having or claiming any interest in the Plan or in any Award. No
director or person acting pursuant to the authority delegated by the Board shall
be liable for any action or determination relating to or under the Plan made in
good faith.
(b) APPOINTMENT OF COMMITTEES. To the extent permitted by applicable law,
the Board may delegate any or all of its powers under the Plan to one or more
committees or subcommittees of the Board (a "Committee"). All references in the
Plan to the "Board" shall mean the Board or a Committee of the Board to the
extent that the Board's powers or authority under the Plan have been delegated
to such Committee.
4. STOCK AVAILABLE FOR AWARDS
(a) NUMBER OF SHARES. Subject to adjustment under Section 7, Awards may be
made under the Plan for a number of shares of common stock, $0.01 par value per
share, of the Company (the "Common Stock") equal to the sum of:
(1) 4,500,000 shares of Common Stock;
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(2) any shares of Common Stock reserved for issuance under each of
(i) the Summit Designs, Inc. 1994 Stock Plan, as amended, (ii) the Summit
Designs 1997 NonStatutory Stock Option Plan, and (iii) the Viewlogic, Inc.
1998 Stock Incentive Plan, as amended (collectively, the "Prior Plans") that
remain available for issuance upon the adoption of this Plan by the Board;
and
(3) any shares of Common Stock subject to awards under the Prior Plans
which awards expire, terminate, or are otherwise surrendered, canceled or
forfeited (subject, however, in the case of Incentive Stock Options (as
hereinafter defined) to any limitations under the Code);
PROVIDED, HOWEVER, that the maximum number of shares of Common Stock reserved
for issuance under the Prior Plans that may be issued under this Plan shall be
2,400,000 (the "Authorized Shares"); and PROVIDED, FURTHER, HOWEVER, that the
number of Authorized Shares shall be increased automatically by 2,000,000 shares
of Common Stock annually on the anniversary of the adoption of this Plan by the
Board until the expiration of the Plan Term. If any Award expires or is
terminated, surrendered or canceled without having been fully exercised or is
forfeited in whole or in part or results in any Common Stock not being issued,
the unused Common Stock covered by such Award shall again be available for the
grant of Awards under the Plan, subject, however, in the case of Incentive Stock
Options (as hereinafter defined), to any limitation required under the Code.
Shares issued under the Plan may consist in whole or in part of authorized but
unissued shares or treasury shares.
(b) PER-PARTICIPANT LIMIT. Subject to adjustment under Section 7, for Awards
granted after the Common Stock is registered under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), the maximum number of shares of Common
Stock with respect to which Awards may be granted to any Participant under the
Plan shall be 500,000 per calendar year. The per-Participant limit described in
this Section 4(b) shall be construed and applied consistently with Section
162(m) of the Code ("Section 162(m)").
5. STOCK OPTIONS
(a) GENERAL. The Board may grant options to purchase Common Stock (each, an
"Option") and determine the number of shares of Common Stock to be covered by
each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option which is not intended to be an Incentive Stock
Option (as hereinafter defined) shall be designated a "Nonstatutory Stock
Option".
(b) INCENTIVE STOCK OPTIONS. An Option that the Board intends to be an
"incentive stock option" as defined in Section 422 of the Code (an "Incentive
Stock Option") shall only be granted to employees of the Company and shall be
subject to and shall be construed consistently with the requirements of Section
422 of the Code. The Company shall have no liability to a Participant, or any
other party, if an Option (or any part thereof) which is intended to be an
Incentive Stock Option is not an Incentive Stock Option.
(c) EXERCISE PRICE. The Board shall establish the exercise price at the time
each Option is granted and specify it in the applicable option agreement
provided, however, that the exercise price shall not be less than 85% of the
fair market value of the Common Stock, as determined by the Board, at the time
the Option is granted.
(d) DURATION OF OPTIONS. Each Option shall be exercisable at such times and
subject to such terms and conditions as the Board may specify in the applicable
option agreement provided, however, that no Option will be granted for a term in
excess of 10 years.
(e) EXERCISE OF OPTION. Options may be exercised by delivery to the Company
of a written notice of exercise signed by the proper person or by any other form
of notice (including electronic notice) approved by the Board together with
payment in full as specified in Section 5(f) for the number of shares for which
the Option is exercised.
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(f) PAYMENT UPON EXERCISE. Common Stock purchased upon the exercise of an
Option granted under the Plan shall be paid for as follows:
(1) in cash or by check, payable to the order of the Company;
(2) except as the Board may, in its sole discretion, otherwise provide
in an option agreement, by (i) delivery of an irrevocable and unconditional
undertaking by a creditworthy broker to deliver promptly to the Company
sufficient funds to pay the exercise price and any required tax withholding
or (ii) delivery by the Participant to the Company of a copy of irrevocable
and unconditional instructions to a creditworthy broker to deliver promptly
to the Company cash or a check sufficient to pay the exercise price and any
required tax withholding;
(3) by delivery of shares of Common Stock owned by the Participant
valued at their fair market value as determined by (or in a manner approved
by) the Board in good faith ("Fair Market Value"), provided (i) such method
of payment is then permitted under applicable law and (ii) such Common Stock
was owned by the Participant at least six months prior to such delivery;
(4) to the extent permitted by the Board, in its sole discretion by
(i) delivery of a promissory note of the Participant to the Company on terms
determined by the Board, or (ii) payment of such other lawful consideration
as the Board may determine; or
(5) by any combination of the above permitted forms of payment.
(g) SUBSTITUTE OPTIONS. In connection with a merger or consolidation of an
entity with the Company or the acquisition by the Company of property or stock
of an entity, the Board may grant Options in substitution for any options or
other stock or stock-based awards granted by such entity or an affiliate
thereof. Substitute Options may be granted on such terms as the Board deems
appropriate in the circumstances, notwithstanding any limitations on Options
contained in the other sections of this Section 5.
6. RESTRICTED STOCK
(a) GRANTS. The Board may grant Awards entitling recipients to acquire
shares of Common Stock, subject to the right of the Company to repurchase all or
part of such shares at their issue price or other stated or formula price (or to
require forfeiture of such shares if issued at no cost) from the recipient in
the event that conditions specified by the Board in the applicable Award are not
satisfied prior to the end of the applicable restriction period or periods
established by the Board for such Award (each, a "Restricted Stock Award").
(b) TERMS AND CONDITIONS. The Board shall determine the terms and conditions
of any such Restricted Stock Award, including the conditions for repurchase (or
forfeiture) and the issue price, if any. Any stock certificates issued in
respect of a Restricted Stock Award shall be registered in the name of the
Participant and, unless otherwise determined by the Board, deposited by the
Participant, together with a stock power endorsed in blank, with the Company (or
its designee). At the expiration of the applicable restriction periods, the
Company (or such designee) shall deliver the certificates no longer subject to
such restrictions to the Participant or if the Participant has died, to the
beneficiary designated, in a manner determined by the Board, by a Participant to
receive amounts due or exercise rights of the Participant in the event of the
Participant's death (the "Designated Beneficiary"). In the absence of an
effective designation by a Participant, Designated Beneficiary shall mean the
Participant's estate.
7. ADJUSTMENTS FOR CHANGES IN COMMON STOCK AND CERTAIN OTHER EVENTS
(a) CHANGES IN CAPITALIZATION. In the event of any stock split, reverse
stock split, stock dividend, recapitalization, combination of shares,
reclassification of shares, spin-off or other similar change in capitalization
or event, or any distribution to holders of Common Stock other than a normal
cash dividend, (i) the number and class of securities available under this Plan,
(ii) the per-Participant limit
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set forth in Section 4(b), (iii) the number and class of securities and exercise
price per share subject to each outstanding Option, (iv) the repurchase price
per share subject to each outstanding Restricted Stock Award, and (v) the terms
of each other outstanding Award shall be appropriately adjusted by the Company
(or substituted Awards may be made, if applicable) to the extent the Board shall
determine, in good faith, that such an adjustment (or substitution) is necessary
and appropriate. If this Section 7(a) applies and Section 7(c) also applies to
any event, Section 7(c) shall be applicable to such event, and this Section
7(a) shall not be applicable.
(b) LIQUIDATION OR DISSOLUTION. In the event of a proposed liquidation or
dissolution of the Company, Options shall be treated as described below in
Section 7(c)(2)(b) as if the liquidation or dissolution of the Company were a
Reorganization Event and the acquiring or succeeding corporation (or an
affiliate thereof) did not agree to assume, or substitute for, the Options. The
Board may specify the effect of a liquidation or dissolution on any Restricted
Stock Award or other Award granted under the Plan at the time of the grant of
such Award.
(c) REORGANIZATION EVENTS
(1) Definition. A "Reorganization Event" shall mean: (a) any merger or
consolidation of the Company with or into another entity as a result of
which the Common Stock is converted into or exchanged for the right to
receive cash, securities or other property or (b) any exchange of shares of
the Company for cash, securities or other property pursuant to a share
exchange transaction.
(2) Consequences of a Reorganization Event on Options.
(a) Upon the occurrence of a Reorganization Event, or the execution
by the Company of any agreement with respect to a Reorganization Event,
the Board shall provide that all outstanding Options shall be assumed, or
equivalent options shall be substituted, by the acquiring or succeeding
corporation (or an affiliate thereof). For purposes hereof, an Option
shall be considered to be assumed if, following consummation of the
Reorganization Event, the Option confers the right to purchase, for each
share of Common Stock subject to the Option immediately prior to the
consummation of the Reorganization Event, the consideration (whether
cash, securities or other property) received as a result of the
Reorganization Event by holders of Common Stock for each share of Common
Stock held immediately prior to the consummation of the Reorganization
Event (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding
shares of Common Stock); provided, however, that if the consideration
received as a result of the Reorganization Event is not solely common
stock of the acquiring or succeeding corporation (or an affiliate
thereof), the Company may, with the consent of the acquiring or
succeeding corporation, provide for the consideration to be received upon
the exercise of Options to consist solely of common stock of the
acquiring or succeeding corporation (or an affiliate thereof) equivalent
in fair market value to the per share consideration received by holders
of outstanding shares of Common Stock as a result of the Reorganization
Event.
(b) Notwithstanding the foregoing, if the acquiring or succeeding
corporation (or an affiliate thereof) does not not agree to assume, or
substitute for, such Options, then the Board shall provide that (I) each
Option shall become exercisable in full as of a specified time prior to
the Reorganization Event, as determined by the Board; provided, however,
that upon exercise of such Option (x) to the extent the Option would have
been exercisable prior to the Reorganization Event absent this Section
7(c)(2)(b)(I) for shares not subject to restrictions or conditions, the
Participant shall receive shares free from all conditions or restrictions
upon the exercise of such Option, and (y) to the extent that the Option
would not have been exercisable absent this Section 7(c)(2)(b)(I), the
Participant shall receive shares subject to the Company's right to
repurchase such shares at the Option exercise price with such repurchase
right lapsing at the same rate as the Option would have become
exercisable under the applicable
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Option agreement; and (II) each Option that was exercisable prior to the
Reorganization Event for shares subject to the Company's right to
repurchase such shares, shall remain exercisable for shares subject to
the Company's right to repurchase such shares at the Option exercise
prices, with such repurchase right lapsing at the same rate as set forth
in the applicable Option agreement; provided, however, that all Options
will terminate immediately prior to the consummation of such
Reorganization Event, except to the extent exercised by the Participants
before the consummation of such Reorganization Event; and provided,
further, however, that in the event of a Reorganization Event under the
terms of which holders of Common Stock will receive upon consummation
thereof a cash payment for each share of Common Stock surrendered
pursuant to such Reorganization Event (the "Acquisition Price"), then the
Board may instead provide that all outstanding Options shall terminate
upon consummation of such Reorganization Event and that each Participant
shall receive, in exchange therefor, a cash payment equal to the amount
(if any) by which (A) the Acquisition Price multiplied by the number of
shares of Common Stock subject to such outstanding Options (whether or
not then exercisable), exceeds (B) the aggregate exercise price of such
Options.
(3) Consequences of a Reorganization Event on Restricted Stock Awards.
Upon the occurrence of a Reorganization Event, the repurchase and other
rights of the Company under each outstanding Restricted Stock Award shall
inure to the benefit of the Company's successor and shall apply to the cash,
securities or other property which the Common Stock was converted into or
exchanged for pursuant to such Reorganization Event in the same manner and
to the same extent as they applied to the Common Stock subject to such
Restricted Stock Award.
8. GENERAL PROVISIONS APPLICABLE TO AWARDS
(a) TRANSFERABILITY OF AWARDS. Except as the Board may otherwise determine
or provide in an Award, Awards shall not be sold, assigned, transferred, pledged
or otherwise encumbered by the person to whom they are granted, either
voluntarily or by operation of law, except by will or the laws of descent and
distribution, and, during the life of the Participant, shall be exercisable only
by the Participant. References to a Participant, to the extent relevant in the
context, shall include references to authorized transferees.
(b) DOCUMENTATION. Each Award shall be evidenced by a written instrument in
such form as the Board shall determine. Each Award may contain terms and
conditions in addition to those set forth in the Plan.
(c) BOARD DISCRETION. Except as otherwise provided by the Plan, each Award
may be made alone or in addition or in relation to any other Award. The terms of
each Award need not be identical, and the Board need not treat Participants
uniformly.
(d) TERMINATION OF STATUS. The Board shall determine the effect on an Award
of the disability, death, retirement, authorized leave of absence or other
change in the employment or other status of a Participant and the extent to
which, and the period during which, the Participant, the Participant's legal
representative, conservator, guardian or Designated Beneficiary may exercise
rights under the Award.
(e) WITHHOLDING. Each Participant shall pay to the Company, or make
provision satisfactory to the Board for payment of, any taxes required by law to
be withheld in connection with Awards to such Participant no later than the date
of the event creating the tax liability. Except as the Board may otherwise
provide in an Award, when the Common Stock is registered under the Exchange Act,
Participants may, to the extent then permitted under applicable law, satisfy
such tax obligations in whole or in part by delivery of shares of Common Stock,
including shares retained from the Award creating the tax obligation, valued at
their Fair Market Value. The Company may, to the extent permitted by law, deduct
any such tax obligations from any payment of any kind otherwise due to a
Participant.
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(f) AMENDMENT OF AWARD. The Board may amend, modify or terminate any
outstanding Award, including but not limited to, substituting therefor another
Award of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the Participant's consent to such action shall be required
unless the Board determines that the action, taking into account any related
action, would not materially and adversely affect the Participant.
(g) CONDITIONS ON DELIVERY OF STOCK. The Company will not be obligated to
deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (i) all
conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied,
including any applicable securities laws and any applicable stock exchange or
stock market rules and regulations, and (iii) the Participant has executed and
delivered to the Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any applicable laws, rules
or regulations.
(h) ACCELERATION. The Board may at any time provide that any Options shall
become immediately exercisable in full or in part, that any shares of Common
Stock acquired upon exercise of an Option which shares are subject to the
Company's repurchase right shall be free of restrictions in full or in part, and
that any Restricted Stock Awards shall be free of restrictions in full or in
part.
9. MISCELLANEOUS
(a) NO RIGHT TO EMPLOYMENT OR OTHER STATUS. No person shall have any claim
or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company. The Company expressly reserves the right at any
time to dismiss or otherwise terminate its relationship with a Participant free
from any liability or claim under the Plan, except as expressly provided in the
applicable Award.
(b) NO RIGHTS AS STOCKHOLDER. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed with
respect to an Award until becoming the record holder of such shares.
Notwithstanding the foregoing, in the event the Company effects a split of the
Common Stock by means of a stock dividend and the exercise price of and the
number of shares subject to such Option are adjusted as of the date of the
distribution of the dividend (rather than as of the record date for such
dividend), then an optionee who exercises an Option between the record date and
the distribution date for such stock dividend shall be entitled to receive, on
the distribution date, the stock dividend with respect to the shares of Common
Stock acquired upon such Option exercise, notwithstanding the fact that such
shares were not outstanding as of the close of business on the record date for
such stock dividend.
(c) EFFECTIVE DATE AND TERM OF PLAN. The Plan shall become effective on the
date on which it is adopted by the Board, but no Award granted to a Participant
that is intended to comply with Section 162(m) shall become exercisable, vested
or realizable, as applicable to such Award, unless and until the Plan has been
approved by the Company's stockholders to the extent stockholder approval is
required by Section 162(m) in the manner required under Section 162(m)
(including the vote required under Section 162(m)). No Awards shall be granted
under the Plan after the completion of ten years from the earlier of (i) the
date on which the Plan was adopted by the Board or (ii) the date the Plan was
approved by the Company's stockholders, but Awards previously granted may extend
beyond that date (the "Plan Term").
(d) AMENDMENT OF PLAN. The Board may amend, suspend or terminate the Plan
or any portion thereof at any time, provided that to the extent required by
Section 162(m), no Award granted to a Participant that is intended to comply
with Section 162(m) after the date of such amendment shall become
exercisable, realizable or vested, as applicable to such Award, unless and
until such amendment shall have been approved by the Company's stockholders
as required by Section 162(m) (including the vote required under Section
162(m)).
(e) GOVERNING LAW. The provisions of the Plan and all Awards made hereunder
shall be governed by and interpreted in accordance with the laws of the State of
Delaware, without regard to any applicable conflicts of law.
Adopted by the Board of Directors
on May 31, 2000
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APPENDIX C
INNOVEDA, INC.
2000 EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the 2000 Employee Stock Purchase
Plan of Innoveda, Inc.
1. PURPOSE. The purpose of the Plan is to provide employees of the Company
and its Designated Subsidiaries with an opportunity to purchase Common Stock of
the Company through accumulated payroll deductions. It is the intention of the
Company to have the Plan qualify as an "Employee Stock Purchase Plan" under
Section 423 of the Code. The provisions of the Plan, accordingly, shall be
construed so as to extend and limit participation in a manner consistent with
the requirements of that section of the Code.
2. DEFINITIONS.
(a) "BOARD" shall mean the Board of Directors of the Company.
(b) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(c) "COMMON STOCK" shall mean the Common Stock of the Company.
(d) "COMPANY" shall mean Innoveda, Inc. and any Designated Subsidiary of the
Company.
(e) "COMPENSATION" shall mean the amount of money reportable on an
Employee's Federal income Tax Withholding Statement (Form W-2) before any
withholdings for health insurance or under a Section 401(k), 125, 129 or similar
plan, including without limitation, salary, wages, and sales commissions, but
excluding overtime, shift premium, bonuses and incentive compensation other than
sales commissions, third party sick or disability pay, allowances or
reimbursements for expenses such as relocation allowances or travel expenses,
whether specifically designated as such or designated as signing bonuses, income
or gains attributable to restricted stock, stock options, stock appreciation
rights or other similar equity-based compensation, imputed income or non-cash
items, such as life insurance premiums, and similar items, whether or not
specifically itemized on the Form W-2.
(f) "DESIGNATED SUBSIDIARIES" shall mean the Subsidiaries which have been
designated by the Board from time to time in its sole discretion as eligible to
participate in the Plan.
(g) "EMPLOYEE" shall mean any individual who is an Employee of the Company
for tax purposes whose customary employment with the Company is at least twenty
(20) hours per week and more than five (5) months in any calendar year.
(h) "ENROLLMENT DATE" shall mean the first day of each Offering Period.
(i) "EXERCISE DATE" shall mean the last day of each Purchase Period.
(j) "FAIR MARKET VALUE" shall mean, as of any date, the value of Common
Stock determined as follows:
(1) If the Common Stock is listed on any established stock exchange or a
national market system, including without limitation the Nasdaq National
Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair
Market Value shall be the closing sales price for such stock (or the closing
bid, if no sales were reported) as quoted on such exchange or system for the
last
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market trading day prior to the time of determination, as reported in The
Wall Street Journal or such other source as the Board deems reliable, or;
(2) If the Common Stock is regularly quoted by a recognized securities
dealer but selling prices are not reported, its Fair Market Value shall be
the mean of the closing bid and asked prices for the Common Stock on the
date of such determination, as reported in The Wall Street Journal or such
other source as the Board deems reliable, or;
(3) In the absence of an established market for the Common Stock, the
Fair Market Value thereof shall be determined in good faith by the Board.
(k) "OFFERING PERIODS" shall mean the periods of approximately twenty-four
(24) months during which an option granted pursuant to the Plan may be
exercised, commencing on the first Trading Day on or after August 1 and February
1 of each year and terminating on the last Trading Day in the periods ending
twenty-four months later. The duration and timing of Offering Periods may be
changed pursuant to Section 4 of this Plan.
(l) "PLAN" shall mean this 2000 Employee Stock Purchase Plan.
(m) "PURCHASE PERIOD" shall mean the period commencing the day after an
Exercise Date and ending on the Trading Day closest to the day that is six
months after the preceding Exercise Date, except that the first Purchase Period
of any Offering Period shall commence on the Enrollment Date and end with the
Trading Day that is six months after the Enrollment Date. The duration and
timing of Purchase Periods may be changed pursuant to Section 4 of the Plan.
(n) "PURCHASE PRICE" shall mean an amount equal to 85% of the Fair Market
Value of a share of Common Stock on the Enrollment Date or on the Exercise Date,
whichever is lower.
(o) "RESERVES" shall mean the number of shares of Common Stock covered by
each option under the Plan which have not yet been exercised and the number of
shares of Common Stock which have been authorized for issuance under the Plan
but not yet placed under option.
(p) "SUBSIDIARY" shall mean any present or future subsidiary corporation as
defined in Section 424(f) of the Code.
(q) "TRADING DAY" shall mean a day on which national stock exchanges and the
Nasdaq System are open for trading.
3. ELIGIBILITY.
(a) Any Employee (as defined in Section 2(g)), who shall be employed by the
Company on a given Enrollment Date shall be eligible to participate in the Plan;
provided, however, that an Employee may not participate in more than one
Offering Period at the same time.
(b) Any provisions of the Plan to the contrary notwithstanding, no Employee
shall be granted an option under the Plan (i) to the extent that, immediately
after the grant, such Employee (or any other person whose stock would be
attributed to such Employee pursuant to Section 424(d) of the Code) would own
capital stock of the Company or of any Subsidiary and/or hold outstanding
options to purchase such stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of the capital stock of the
Company or of any Subsidiary, or (ii) to the extent that his or her rights to
purchase stock under all employee stock purchase plans of the Company and its
Subsidiaries accrues at a rate which exceeds Twenty-Five Thousand Dollars
($25,000) worth of stock (determined at the Fair Market Value of the shares at
the time such option is granted) for each calendar year in which such option is
outstanding at any time. In the event that an Employee may not be granted an
option under the Plan because of the foregoing restrictions, the Employee shall
be granted an option to purchase the maximum number of shares that would not
violate the foregoing restrictions.
4. OFFERING PERIODS. The Plan shall be implemented by consecutive,
overlapping Offering Periods with a new Offering Period commencing on the first
Trading Day on or after August 1 and February 1
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each year, or on such other date as the Board shall determine, and continuing
thereafter until terminated in accordance with Section 19 hereof. The Board
shall have the power to change the duration of Offering Periods and Purchase
Periods (including the commencement dates thereof) with respect to future
offerings without stockholder approval.
5. PARTICIPATION.
(a) An eligible Employee may become a participant in the Plan by completing
a subscription agreement authorizing payroll deductions in the form of Exhibit A
to this Plan and filing it on or prior to the applicable Enrollment Date with
the Company's payroll office or such other office as the Company may direct.
(b) Payroll deductions for a participant shall commence on the first payroll
following the Enrollment Date and shall end on the last payroll in the Offering
Period to which such authorization is applicable, unless sooner terminated by
the participant as provided in Section 10 hereof.
6. PAYROLL DEDUCTIONS.
(a) At the time a participant files his or her subscription agreement, he or
she shall elect to have payroll deductions made on each pay day during the
Offering Period in an amount not exceeding ten percent (10%) of the Compensation
which he or she receives on each pay day during the Offering Period. Such
payroll deductions shall be in whole percentages only.
(b) All payroll deductions made for a participant shall be credited to his
or her account under the Plan. A participant may not make any additional
payments into such account.
(c) A participant may discontinue his or her participation in the Plan as
provided in Section 10 hereof, or may increase or decrease the rate of his or
her payroll deductions during the Offering Period by completing and filing with
the Company a new subscription agreement authorizing a change in payroll
deduction rate. The Board may, in its discretion, limit the number of
participation rate changes during any Offering Period. The change in payroll
deduction rate shall be effective with the first full payroll period following
ten (10) business days after the Company's receipt of the new subscription
agreement. A participant's subscription agreement shall remain in effect for
successive Offering Periods unless terminated as provided in Section 10 hereof.
(d) At the time the option is exercised, in whole or in part, or at the time
any of the Company's Common Stock issued under the Plan is disposed of, the
participant must make adequate provision for the Company's federal, state, or
other tax withholding obligations, if any, which arise upon the exercise of the
option or the disposition of the Common Stock. At any time, the Company may, but
shall not be obligated to, withhold from the participant's compensation the
amount necessary for the Company to meet applicable withholding obligations,
including any withholding required to make available to the Company any tax
deductions or benefits attributable to sale or early disposition of Common Stock
by the Employee.
7. GRANT OF OPTION. On the Enrollment Date of each Offering Period, each
eligible Employee participating in such Offering Period shall be granted an
option to purchase (at the applicable Purchase Price) up to a whole number of
shares of the Company's Common Stock the ("Option Shares") determined by
dividing $50,000 by the Fair Market Value of a share of Common Stock on the
Enrollment Date (subject to any adjustment pursuant to Section 18), and provided
that such purchase shall be subject to the limitations set forth in Sections
3(b) and 12 hereof. The option shall be exercisable as to 25% of the Option
Shares on each Exercise Date during the Offering Period. Exercise of the option
shall occur as provided in Section 8 hereof, unless the participant has
withdrawn pursuant to Section 10 hereof. The option shall expire on the last day
of the Offering Period.
8. EXERCISE OF OPTION. Unless a participant withdraws from the Plan as
provided in Section 10 hereof, his or her option for the purchase of shares
shall be exercised automatically on each Exercise Date during the Offering
Period, and a number of full shares not exceeding the number of shares as to
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which such participant's option is exercisable on such Exercise Date shall be
purchased for such participant at the applicable Purchase Price with the
accumulated payroll deductions in his or her account. No fractional shares shall
be purchased. Any payroll deductions accumulated in a participant's account
which are not sufficient to purchase a full share of Common Stock shall be
retained in the participant's account for the subsequent Purchase Period or
Offering Period, subject to earlier withdrawal by the participant as provided in
Section 10 hereof. Any other monies left over in a participant's account after
the Exercise Date shall be returned to the participant. During a participant's
lifetime, a participant's option to purchase shares hereunder is exercisable
only by him or her.
9. DELIVERY. As promptly as practicable after each Exercise Date on which a
purchase of shares occurs, the Company shall arrange the delivery to each
participant or to his or her designee, as appropriate, of a certificate
representing the shares purchased upon exercise of his or her option. The
Company may, in its sole discretion and in compliance with applicable laws,
authorize the use of book entry registration of shares in lieu of issuing
certificates.
10. WITHDRAWAL; TERMINATION OF EMPLOYMENT.
(a) A participant may withdraw all but not less than all the payroll
deductions credited to his or her account and not yet used to exercise his or
her option under the Plan at any time by giving written notice to the Company in
the form of Exhibit B to this Plan. All of the participant's payroll deductions
credited to his or her account shall be paid to such participant promptly after
receipt of notice of withdrawal and such participant's option for the Offering
Period shall be automatically terminated, and no further payroll deductions for
the purchase of shares shall be made for such Offering Period. If a participant
withdraws from an Offering Period, payroll deductions shall not resume at the
beginning of the succeeding Offering Period unless the participant delivers to
the Company a new subscription agreement.
(b) Upon a participant's ceasing to be an Employee (as defined in Section
2(g) hereof), for any reason, he or she shall be deemed to have elected to
withdraw from the Plan and the payroll deductions credited to such participant's
account during the Offering Period but not yet used to exercise the option shall
be returned to such participant or, in the case of his or her death, to the
person or persons entitled thereto under Section 14 hereof, and such
participant's option shall be automatically terminated. If, prior to the last
day of the Offering Period, the Designated Subsidiary by which the Employee is
employed shall cease to be a Subsidiary of the Company, or if the Employee is
transferred to a Subsidiary of the Company that is not a Designated Subsidiary,
the Employee shall be deemed to have terminated employment for purposes of this
Plan.
(c) A participant's withdrawal from an Offering Period shall not have any
effect upon his or her eligibility to participate in any similar plan which may
hereafter be adopted by the Company or in succeeding Offering Periods.
11. INTEREST. No interest shall accrue on the payroll deductions of a
participant in the Plan.
12. STOCK.
(a) The maximum number of shares of the Company's Common Stock which shall
be made available for sale under the Plan shall be 700,000 shares, subject to
adjustment as provided in Section 18(a) hereof. If, on a given Exercise Date,
the number of shares with respect to which options are to be exercised exceeds
the number of shares then available under the Plan, the Company shall make a pro
rata allocation of the shares remaining available for purchase in as uniform a
manner as shall be practicable and as it shall determine to be equitable.
(b) The participant shall have no interest or voting right in shares covered
by his option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan shall be
registered in the name of the participant or in the name of the participant and
his or her spouse.
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13. ADMINISTRATION. The Plan shall be administered by the Board or a
committee of members of the Board appointed by the Board. The Board or its
committee shall have full and exclusive discretionary authority to construe,
INTERPRET and apply the terms of the Plan, to determine eligibility and to
adjudicate all disputed claims filed under the Plan. Every finding, decision and
determination made by the Board or its committee shall, to the full extent
permitted by law, be final and binding upon all parties.
14. DESIGNATION OF BENEFICIARY.
(a) A participant may file a written designation of a beneficiary who is to
receive any shares and cash, if any, from the participant's account under the
Plan in the event of such participant's death subsequent to an Exercise Date on
which the option is exercised but prior to delivery to such participant of such
shares and cash. In addition, a participant may file a written designation of a
beneficiary who is to receive any cash from the participant's account under the
Plan in the event of such participant's death prior to exercise of the option.
If a participant is married and the designated beneficiary is not the spouse,
spousal consent shall be required for such designation to be effective.
(b) Such designation of beneficiary may be changed by the participant at any
time by written notice. In the event of the death of a participant and in the
absence of a beneficiary validly designated under the Plan who is living at the
time of such participant's death, the Company shall deliver such shares and/or
cash to the executor or administrator of the estate of the participant, or if no
such executor or administrator has been appointed (to the knowledge of the
Company), the Company, in its discretion, may deliver such shares and/or cash to
the spouse or to any one or more dependents or relatives of the participant, or
if no spouse, dependent or relative is known to the Company, then to such other
person as the Company may designate.
15. TRANSFERABILITY. Neither payroll deductions credited to a participant's
account nor any rights with regard to the exercise of an option or to receive
shares under the Plan may be assigned, transferred, pledged or otherwise
disposed of in any way (other than by will, the laws of descent and distribution
or as provided in Section 14 hereof) by the participant. Any such attempt at
assignment, transfer, pledge or other disposition shall be without effect,
except that the Company may treat such act as an election to withdraw funds from
an Offering Period in accordance with Section 10 hereof.
16. USE OF FUNDS. All payroll deductions received or held by the Company
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions.
17. REPORTS. Individual accounts shall be maintained for each participant in
the Plan. Statements of account shall be given to participating Employees at
least annually, which statements shall set forth the amounts of payroll
deductions, the Purchase Price, the number of shares purchased and the remaining
cash balance, if any.
18. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, LIQUIDATION,
MERGER OR ASSET SALE.
(A) CHANGES IN CAPITALIZATION. The maximum number of shares of Common Stock
available for sale under the Plan, the Reserves, the maximum number of shares
each participant may purchase during each Purchase Period (pursuant to Section
7), as well as the Purchase Price per share and the number of shares of Common
Stock covered by each option under the Plan which has not yet been exercised,
shall be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split, reverse stock split,
stock dividend, combination or reclassification of the Common Stock, or any
other increase or decrease in the number of 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 adjustment 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,
5
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and no adjustment by reason thereof shall be made with respect to, the number or
price of shares of Common Stock subject to an option granted hereunder.
(B) DISSOLUTION OR LIQUIDATION. In the event of the proposed dissolution or
liquidation of the Company, the Offering Periods shall terminate immediately
prior to the consummation of such proposed action, unless otherwise provided by
the Board.
(C) REORGANIZATION EVENTS.
(1) DEFINITION. A "Reorganization Event" shall mean: (a) any merger or
consolidation of the Company with or into another entity as a result of
which the Common Stock is converted into or exchanged for the right to
receive cash, securities or other property, (b) any exchange of shares of
the Company for cash, securities or other property pursuant to a share
exchange transaction, or (c) any sale of all or substantially all of the
assets of the Company, each while unexercised options remain outstanding
under the Plan.
(2) CONSEQUENCES OF A REORGANIZATION EVENT ON OPTIONS. Upon the
occurrence of a Reorganization Event, or the execution by the Company of any
agreement with respect to a Reorganization Event, the Board shall provide
that all outstanding options shall be assumed, or equivalent options shall
be substituted, by the acquiring or succeeding corporation (or an affiliate
thereof). For purposes hereof, an option shall be considered to be assumed
if, following consummation of the Reorganization Event, the option confers
the right to purchase, for each share of Common Stock subject to the option
immediately prior to the consummation of the Reorganization Event, the
consideration (whether cash, securities or other property) received as a
result of the Reorganization Event by holders of Common Stock for each share
of Common Stock held immediately prior to the consummation of the
Reorganization Event (and if holders were offered a choice of consideration,
the type of consideration chosen by the holders of a majority of the
outstanding shares of Common Stock); provided, however, that if the
consideration received as a result of the Reorganization Event is not solely
common stock of the acquiring or succeeding corporation (or an affiliate
thereof), the Company may, with the consent of the acquiring or succeeding
corporation, provide for the consideration to be received upon the exercise
of options to consist solely of common stock of the acquiring or succeeding
corporation (or an affiliate thereof) equivalent in fair market value to the
per share consideration received by holders of outstanding shares of Common
Stock as a result of the Reorganization Event.
Notwithstanding the foregoing, in the event that the acquiring or succeeding
corporation refuses to assume, or substitute for, the options, any Offering
Periods then in progress shall be shortened by setting a new Exercise Date (the
"New Exercise Date"), determined by the Board. The New Exercise Date shall be
before the date of the proposed Reorganization Event. The Board shall notify
each participant in writing at least ten (10) business days prior to the New
Exercise Date that the Exercise Date for the participant's option has been
changed to the New Exercise Date and that the participant's option shall be
exercised automatically on the New Exercise Date, unless prior to such date the
participant has withdrawn from the Offering Period as provided in Section 10
hereof.
19. AMENDMENT OR TERMINATION.
(a) The Board of Directors of the Company may at any time and for any reason
terminate or amend the Plan. Except as provided in Section 18 hereof, no such
termination can affect options previously granted, provided that an Offering
Period may be terminated by the Board on any Exercise Date if the Board
determines that the termination of the Plan is in the best interests of the
Company and its stockholders. Except as provided in Section 18 hereof, no
amendment may make any change in any option theretofore granted which adversely
affects the rights of any participant. To the extent necessary to comply with
Section 423 of the Code (or any successor rule or provision or any other
applicable law or regulation), the Company shall obtain stockholder approval in
such a manner and to such a degree as required.
6
<PAGE>
(b) Without stockholder consent and without regard to whether any
participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the Offering Periods, limit
the frequency and/or number of changes in the amount withheld during an Offering
Period, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, permit payroll withholding in excess of the
amount designated by a participant in order to adjust for delays or mistakes in
the Company's processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the
participant's Compensation and establish such other limitations or procedures as
the Board (or its committee) determines in its sole discretion advisable which
are consistent with the Plan.
20. NOTICES. All notices or other communications by a participant to the
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.
21. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
SECURITIES Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange 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.
As a condition to the exercise of an option, the Company may require the
person exercising such option to represent and warrant at the time of any such
exercise that the shares are being purchased only for investment and without any
present intention to sell or distribute such shares if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned applicable provisions of law.
22. TERM OF PLAN. The Plan shall become effective upon the earlier to occur
of its adoption by the Board of Directors or its approval by the stockholders of
the Company. It shall continue in effect for a term of ten (10) years unless
sooner terminated under Section 19 hereof.
23. AUTOMATIC TRANSFER TO LOW PRICE OFFERING PERIOD. To the extent permitted
by any applicable laws, regulations, or rules of the established stock exchange,
national market system, or over-the-counter market on which the Common Stock
trades, if the Fair Market Value of the Common Stock on the Enrollment Date of
the next Offering Period is lower than the Fair Market Value of the Common Stock
on the Enrollment Date of the current Offering Period, then all participants in
the current Offering Period shall be automatically withdrawn from such Offering
Period immediately after the exercise of their option on the Exercise Date and
shall be automatically re-enrolled in the next Offering Period as of the first
day thereof.
24. GOVERNMENTAL REGULATIONS. The Company's obligation to sell and deliver
Common Stock under this Plan is subject to listing on an established stock
exchange or quotation on a national market system or an over the counter market
(to the extent the Common Stock is then so listed or quoted) and the approval of
all governmental authorities required in connection with the authorization,
issuance, or sale of such stock.
25. GOVERNING LAW. The Plan SHALL be governed by Delaware law except to the
extent that such law is preempted by federal law.
26. SOURCE OF SHARES. Shares may be issued upon exercise of an option from
authorized but unissued Common Stock, from shares held in the treasury of the
Company, or from any other proper source.
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27. NOTIFICATION UPON SALE OF SHARES. Each employee agrees, by participating
in the Plan, to promptly give notice to the Company of any disposition of shares
purchased under the Plan where such disposition occurs within two years after
the date of the grant of the option pursuant to which such shares were purchased
or within one year of the date of exercise of such option pursuant to which such
shares were purchased.
Adopted by the Board of Directors
on May 16, 2000
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EXHIBIT A
INNOVEDA, INC.
2000 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
____Original Application Enrollment Date: ________
____Change in Payroll Deduction Rate
____Change of Beneficiary(ies)
____Decline Participation
1. hereby elects to participate in the Innoveda, Inc. 2000
Employee Stock Purchase Plan (the "Employee Stock Purchase Plan") and subscribes
to purchase shares of the Company's Common Stock in accordance with this
Subscription Agreement and the Employee Stock Purchase Plan.
2. I hereby authorize payroll deductions from each paycheck in the amount of
% of my Compensation on each payday (from 1 to 10%) during the Offering
Period in accordance with the Employee Stock Purchase Plan. (Please note that no
fractional percentages are permitted.)
3. I understand that said payroll deductions shall be accumulated for the
purchase of shares of Common Stock at the applicable Purchase Price determined
in accordance with the Employee Stock Purchase Plan. I understand that if I do
not withdraw from an Offering Period, any accumulated payroll deductions will be
used to automatically exercise my option on each Exercise Date.
4. I have received a copy of the complete Employee Stock Purchase Plan. I
understand that my participation in the Employee Stock Purchase Plan is in all
respects subject to the terms of the Plan.
5. Shares purchased for me under the Employee Stock Purchase Plan should be
issued in the name(s) of (Employee or Employee and Spouse only): .
6. I hereby agree that if I dispose of any shares received by me pursuant to the
Plan within 2 years after the Enrollment Date (the first day of the Offering
Period during which I purchased such shares) or one year after the Exercise Date
on which I purchased such shares, I will notify the Company in writing within 30
days after the date of any disposition of my shares.
7. I hereby agree to be bound by the terms of the Employee Stock Purchase Plan.
The effectiveness of this Subscription Agreement is dependent upon my
eligibility to participate in the Employee Stock Purchase Plan.
A-1
<PAGE>
8. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the Employee
Stock Purchase Plan:
BENEFICIARY:
NAME:
(Please print) _________________________________________________________________
(First) (Middle) (Last)
________________________________________________________________________________
Relationship
____________________________
Address
Employee's Social
Security Number:
______________________________________________________________________________
Employee's Address:
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.
Dated: ____________________________
____________________________
Signature of Employee
____________________________________
Spouse's Signature (If beneficiary other than spouse)
A-2
<PAGE>
EXHIBIT B
INNOVEDA, INC.
2000 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
The undersigned participant in the Offering Period of the Innoveda, Inc.
2000 Employee Stock Purchase Plan which began on , 2000 (the
"Enrollment Date") hereby notifies the Company that he or she hereby withdraws
from the Offering Period. He or she hereby directs the Company to pay to the
undersigned as promptly as practicable all the payroll deductions credited to
his or her account with respect to such Offering Period. The undersigned
understands and agrees that his or her option for such Offering Period will be
automatically terminated. The undersigned understands further that no further
payroll deductions will be made for the purchase of shares in the current
Offering Period and the undersigned shall be eligible to participate in
succeeding Offering Periods only by delivering to the Company a new Subscription
Agreement.
Name and Address of Participant:
--------------------------------------------
--------------------------------------------
--------------------------------------------
Signature:
--------------------------------------------
Date:
--------------------------------------
B-1
