Exhibit 2.2
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is dated as of April 24,
2002, between Cadence Design Systems, Inc., a Delaware corporation ("Grantee"),
and Simplex Solutions, Inc., a Delaware corporation ("Issuer"). For purposes of
this Agreement, terms which are used but not defined herein and which are
defined in the Merger Agreement referred to below shall have the meanings given
to them in the Merger Agreement, unless the content clearly indicates otherwise.
RECITALS
A. Grantee, Zodiac Acquisition, Inc. ("Acquisition") and Issuer are
simultaneously entering into an Agreement and Plan of Merger (the "Merger
Agreement") which provides, among other things, that, upon the terms and subject
to the conditions thereof, Acquisition will be merged with and into Issuer, with
Issuer to be the surviving corporation (the "Merger").
B. As a condition to its willingness to enter into the Merger Agreement,
Grantee has required that Issuer agree, and Issuer has agreed, to enter into
this Agreement, which provides, among other things, that Issuer grant to Grantee
an option to purchase shares of Issuer's common stock, $0.001 par value per
share ("Issuer Common Stock"), upon the terms and subject to the conditions set
forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements contained in this Agreement and the Merger Agreement, the parties
hereto agree as follows:
1. GRANT OF OPTION. Subject to the terms and conditions of this
Agreement, Issuer hereby grants to Grantee an irrevocable option (the "Option")
to purchase a number of shares of Issuer Common Stock equal to 19.9% of the
number of outstanding shares of Issuer Common Stock as of the time at which the
Option shall first become exercisable (the "Option Shares"), in the manner set
forth below, at an exercise price per Option Share of $18.00, payable, at
Grantee's election, in cash or in shares of common stock, par value $0.01 per
share, of Grantee ("Grantee Shares"), or any combination of cash and Grantee
Shares, subject to adjustment as provided below (the "Option Price"). If Grantee
elects to pay all or a portion of the Option Price in Grantee Shares, the number
of Grantee Shares to be delivered for each Option Share shall be equal to $18.00
divided by the Average Stock Price, as determined pursuant to Section 1.8(c) of
the Merger Agreement, provided that if the Company Stockholders Meeting has not
been scheduled at the time of the Closing (as defined below), the Average Stock
Price will equal the Collar Average Stock Price.
2. EXERCISE OF OPTION.
(a) Subject to the satisfaction or waiver of the conditions set
forth in Section 10 of this Agreement, Grantee may exercise the Option,
in whole or in part, at any time or from time to time, on or after the
occurrence of a Triggering Event and prior
to the Expiration Date (as defined in Section 12). The term "Triggering
Event" shall mean the time immediately prior to (x) the occurrence of
any of the events (or series of events) specified in Section 6.1(d)(iii)
of the Merger Agreement giving rise to the obligation of Issuer to pay
the Termination Payment specified in Section 6.3(a)(i) or (y) the
commencement of a tender or exchange offer for any Company Securities by
a Third Party unaffiliated with Issuer, and Issuer shall not have
delivered to its securityholders within ten (10) calendar days
thereafter a statement, pursuant to Rule 14d-9 or 14e-2 under the
Exchange Act, disclosing that Issuer's Board of Directors recommends
that such securityholders reject such tender or exchange offer, and
which shall give rise to the obligation of Issuer to pay the Termination
Payment specified in Section 6.3(a)(i).
(b) If Grantee wishes to exercise the Option at such time as the
Option is exercisable, Grantee shall deliver written notice (the
"Exercise Notice") to Issuer specifying its intention to exercise the
Option, the total number of Option Shares it wishes to purchase and a
date and time for the closing of such purchase (a "Closing") not less
than three (3) nor more than thirty (30) business days after the later
of (i) the date such Exercise Notice is given and (ii) the expiration or
termination of any applicable waiting period under the HSR Act. If,
prior to the Expiration Date, any person or Group, as defined below
(other than Grantee and its affiliates), shall have acquired fifteen
percent (15%) or more of the then-outstanding shares of Issuer Common
Stock (a "Share Acquisition"), or Issuer shall have entered into a
written agreement with any person or Group (other than Grantee and its
affiliates) providing for a Company Acquisition (as defined below), then
Grantee, in lieu of exercising the Option, shall have the right at any
time thereafter until the Expiration Date to request in writing that
Issuer pay and, promptly (but in any event not more than five (5)
business days) after the giving by Grantee of such request, Issuer shall
pay to Grantee, in cancellation of the Option, an amount in cash (the
"Cancellation Amount") equal to (i) the lesser of
(x) the excess over the Option Price of the greater of (A)
the last sale price of a share of Issuer Common Stock
as reported on the Nasdaq National Market ("Nasdaq")
on the last trading day prior to the date of the
Exercise Notice, and (B) (1) the highest price per
share of Issuer Common Stock offered to be paid or
paid by any such person or Group pursuant to or in
connection with such Share Acquisition or Company
Acquisition or (2) if such Company Acquisition
consists of a purchase and sale of assets, the
aggregate consideration agreed to be paid in such
transaction or proposed transaction, divided by the
number of shares of Issuer Common Stock then
outstanding, and
(y) $15,000,000 divided by the number of Option Shares,
multiplied by (ii) the number of Option Shares then covered by the
Option. If all or a portion of the price per share of Issuer Common
Stock offered, paid or payable, or the aggregate consideration offered,
paid or payable, for the stock or assets of Issuer, each as contemplated
by the preceding sentence, consists of noncash consideration, such price
or aggregate consideration shall be the cash consideration, if any, plus
the fair market value
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of the non-cash consideration as determined jointly by the investment
bankers of Issuer and the investment bankers of Grantee. For purposes
hereof, "Company Acquisition" means the occurrence of any of the
following events: (i) the acquisition of Issuer by merger or otherwise
by any Third Party; (ii) the acquisition by a Third Party of any
material portion of the assets of Issuer and Subsidiaries, taken as a
whole; or (iii) the acquisition by a Third Party of fifteen percent
(15%) or more of the outstanding shares of Issuer Common Stock or any
securities convertible into or exchangeable for such number of shares.
For purposes hereof, the term "Group" means a person as described in
Section 13(d)(3) of the Exchange Act.
(c) Notwithstanding anything to the contrary contained herein,
the economic benefit, if any, which Grantee may derive hereunder shall
be limited as follows: (1) in no event shall the sum of Grantee's Total
Payment and Grantee's Notional Total Payment (each as defined below)
exceed $15,000,000. As used herein, (1) "Total Payment" shall mean (x)
the sum (before taxes) of the following: (i) any Cancellation Amount
received by Grantee pursuant to Section 2(b) hereof; (ii) any amounts
received by Grantee upon transfer of the Option Shares (or any portion
thereof) to any unaffiliated person (including from the Issuer pursuant
to Section 13 hereof); and (iii) the amount actually received by Grantee
pursuant to Section 6.3(a) of the Merger Agreement minus (y) any amounts
paid by Grantee to Issuer pursuant to Section 14 hereof; and (2)
"Notional Total Payment" with respect to any Option Share as to which
Grantee may propose to exercise the Option shall be the difference
between the closing market price for Issuer Common Stock on Nasdaq as of
the last preceding date, less the Option Price.
3. PAYMENT OF OPTION PRICE AND DELIVERY OF CERTIFICATE. Any
Closings under Section 2 of this Agreement shall be held at the principal
executive offices of Issuer, or at such other place as Issuer and Grantee may
agree. At any Closing hereunder,
(a) if and to the extent Grantee has elected to pay the Option
Price in cash, Grantee or its designee will make payment to Issuer of
the aggregate price for the Option Shares being so purchased for cash by
delivery of a certified check, official bank check or wire transfer of
funds pursuant to Issuer's instructions payable to Issuer in an amount
equal to the product obtained by multiplying the Option Price by the
number of Option Shares to be purchased for cash;
(b) if and to the extent Grantee has elected to pay the Option
Price in Grantee Shares, Grantee shall make payment to Issuer of the
aggregate price for the Option Shares being so purchased for Grantee
Shares by delivery of a certificate or certificates evidencing a number
of Grantee Shares determined in accordance with the last sentence of
Section 1, duly executed by authorized officers of Grantee; and
(c) upon receipt of such payment of cash or delivery of Grantee
Shares, Issuer will deliver to Grantee or its designee a certificate or
certificates evidencing the number of Option Shares so purchased, in the
denominations and registered in such names designated to Issuer in
writing by Grantee.
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4. REGISTRATION AND LISTING OF OPTION SHARES.
(a) Issuer shall, if requested by Grantee at any time or from
time to time within two (2) years following a Triggering Event (the
"Registration Period"), in order to permit the sale or other disposition
of the Option Shares that have been acquired by or are issuable to
Grantee upon exercise of the Option (collectively, the "Registrable
Securities"), register under the Securities Act of 1933, as amended (the
"Act"), the offer, sale and delivery, or other disposition, of the
Registrable Securities. Any such request shall be made by notice in
writing to Grantee (a "Registration Notice"), which notice shall set
forth the number of shares proposed to be registered and the proposed
method of sale. Any such Registration Notice must relate to a number of
Registrable Securities equal to at least twenty percent (20%) of the
Option Shares acquired by Grantee, unless the remaining number of
Registrable Securities is less than such amount, in which case Grantee
shall be entitled to exercise its rights hereunder but only for all of
the remaining Registrable Securities (a "Permitted Offering"). Grantee's
rights hereunder shall terminate at such time as Grantee shall be
entitled to sell all of the remaining Registrable Securities pursuant to
Rule 144(k) under the Act or at such time as Grantee shall be entitled
to sell or otherwise transfer all remaining Registrable Securities
within any (3) month period pursuant to Rule 144 under the Act. Issuer
will use all reasonable efforts to qualify any Registrable Securities
Grantee desires to sell or otherwise dispose of under applicable state
securities or "blue sky" laws; provided, however, that Issuer shall not
be required to qualify to do business, or consent to general service of
process, in any jurisdiction by reason of this provision. Without
Grantee's prior written consent, no other securities may be included in
any such registration. Issuer will use all reasonable efforts to cause
each such registration statement to become effective, to obtain all
consents or waivers of other parties that are required therefor and to
keep such registration statement effective for a period of ninety (90)
days from the day such registration statement first becomes effective.
The obligations of Issuer hereunder to file a registration statement and
to maintain its effectiveness may be suspended for one or more periods
not exceeding ninety (90) days in the aggregate if the Board of
Directors of Issuer shall have determined in good faith that the filing
of such registration statement or the maintenance of its effectiveness
would require disclosure of nonpublic information that would materially
and adversely affect Issuer, or Issuer is required under the Act to
include audited financial statements for any period in such registration
statement and such financial statements are not yet available for
inclusion in such registration statement. Grantee shall be entitled to
make up to two (2) requests under this Section 4(a). For purposes of
determining whether the two (2) requests have been made under this
Section 4(a), only requests relating to a registration statement that
has become effective under the Act will be counted.
(b) If, during the Registration Period, Issuer shall propose to
register under the Act the offering, sale and delivery, or other
disposition, of Issuer's Common Stock for cash for its own account or
for any other stockholder of Issuer pursuant to a firm underwriting, it
will, in addition to Issuer's other obligations under this Section 4,
allow Grantee the right to participate in such registration provided
that Grantee participates in such underwriting; provided, however, that,
if the managing underwriter of such offering
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advises Issuer in writing that in the managing underwriter's opinion,
the number of shares of Issuer's Common Stock requested to be included
in such registration exceeds the number that it would be in the best
interests of Issuer to sell in such offering, Issuer shall, after fully
including therein all shares of Issuer Common Stock to be sold by
Issuer, include the shares of Issuer Common Stock requested to be
included therein by Grantee pro rata (based on the number of shares of
Issuer Common Stock requested to be included therein) with the shares of
Issuer Common Stock requested to be included therein by persons other
than Issuer and persons to whom Issuer owes a contractual obligation
(other than any director, officer or employee of Issuer to the extent
any such person is not currently owed such contractual obligation).
(c) The expenses associated with the preparation and filing of
any registration statement pursuant to this Section 4, and any sale
covered thereby (including any fees related to blue sky qualifications
and filing fees in respect of SEC or the National Association of
Securities Dealers, Inc.) (collectively, "Registration Expenses"), will
be paid by Issuer, except for underwriting discounts or commissions or
brokers' fees in respect of shares of Issuer's Common Stock to be sold
by Grantee and the fees and disbursements of Grantee's counsel;
provided, however, that Issuer will not be required to pay for any
Registration Expenses with respect to such registration if the
registration request is subsequently withdrawn at the request of Grantee
unless Grantee agrees to forfeit its right to request one registration;
provided further, that, if at the time of such withdrawal Grantee has
learned of a material adverse change in the results of operations,
condition, business or prospects of Issuer not known to Grantee at the
time of the request and has withdrawn the request within a reasonable
period of time following disclosure by Issuer to Grantee of such
material adverse change, then Grantee shall not be required to pay any
of such expenses and will retain all remaining rights to request
registration.
(d) The registration rights granted under this Section 4 are
subject to and are limited by any registration rights previously granted
by Issuer and still in effect, and Grantee acknowledges that the
registration rights granted under this Section 4 shall be subject to any
such limitations.
(e) In connection with each registration under this Section 4,
Issuer shall indemnify and hold each holder of Registrable Securities
participating in such offering (a "Holder"), its underwriters and each
of their respective affiliates harmless against any and all losses,
claims, damages, liabilities and expenses (including, without
limitation, investigation expenses and fees and disbursements of counsel
and accountants), joint or several, to which such Holder, its
underwriters and each of their respective affiliates may become subject,
under the Act or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of a
material fact contained in any registration statement (including any
prospectus therein), or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, other than such losses,
claims, damages, liabilities or expenses (or actions in respect thereof)
which arise out of or are based upon an untrue
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statement or alleged untrue statement of a material fact contained in
written information furnished by a Holder to Issuer expressly for use in
such registration statement.
(f) In addition, Grantee and each Holder shall indemnify and
hold Issuer, its underwriters and each of their respective affiliates
harmless against any and all losses, claims, damages, liabilities and
expenses (including, without limitation, investigation expenses and fees
and disbursement of counsel and accountants), joint or several, to which
Issuer, its underwriters and each of their respective affiliates may
become subject under the Act or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in written information furnished
by any Holder to Issuer expressly for use in such registration
statement; provided, however, that in no event shall any indemnification
amount contributed by a Holder hereunder exceed the proceeds of the
offering received by such Holder.
(g) Upon the issuance of Option Shares hereunder, Issuer will
promptly take such action as is necessary to list such Option Shares
with Nasdaq or on such national or other exchange on which the shares of
Issuer Common Stock are at the time listed.
(h) In connection with any registration statement pursuant to
this Section 4, each Holder agrees to furnish Issuer with such
information concerning itself and the proposed sale or distribution as
shall reasonably be required in order to ensure compliance with the
requirements of the Act and shall provide representations and warranties
customary for selling stockholders who are unaffiliated with the issuer.
5. REGISTRATION AND LISTING OF GRANTEE SHARES. Grantee shall, if
requested by Issuer at any time or from time to time within two (2) years
following the date of any Closing at which Grantee Shares are issued to Issuer,
in order to permit the sale or other disposition of such shares by Issuer,
register under the Act the offer, sale and delivery, or other disposition, of
such shares. Issuer's registration rights (and obligations) with respect to any
such Grantee Shares shall be the same as the registration rights granted to
Grantee pursuant to Section 4 hereof. In applying the provisions of Section 4
hereof to this Section 5, however, the term "Grantee" shall be substituted for
the term "Issuer" and the term "Issuer" shall be substituted for the term
"Grantee" in each place such terms appear in Section 4 hereof, and "Registrable
Securities" shall mean the Grantee Shares.
6. REPRESENTATIONS AND WARRANTIES OF ISSUER. Issuer hereby
represents and warrants to Grantee as follows:
(a) Issuer is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has all
requisite power and authority to own, lease and operate its properties
and to carry on its businesses as now being conducted.
(b) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of Issuer, and no other
corporate proceedings on the part of Issuer are
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necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. The Board of Directors of Issuer has duly approved
and authorized the issuance and sale of the Option Shares, upon the
terms and subject to the conditions contained in this Agreement, and the
consummation of the other transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Issuer
and, assuming this Agreement has been duly and validly authorized,
executed and delivered by Grantee, constitutes a valid and binding
obligation of Issuer, enforceable against Issuer in accordance with its
terms, subject to bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting or relating to creditors' rights generally;
the availability of injunctive relief and other equitable remedies; and
limitations imposed by law on indemnification for liability under
federal securities laws.
(c) Issuer has taken all necessary action to reserve for
issuance and to permit it to issue, and at all times from the date of
this Agreement through the Expiration Date will have reserved for
issuance upon exercise of the Option, a sufficient number of authorized
shares of Issuer Common Stock for issuance upon exercise in full of the
Option, each of which shares, upon issuance pursuant to this Agreement
and when paid for as provided herein, will be validly issued, fully paid
and nonassessable, and shall be free and clear of all claims, liens,
charges, encumbrances and security interests (other than those imposed
by applicable law).
(d) The execution, delivery and performance of this Agreement by
Issuer and the consummation by it of the transactions contemplated
hereby, except as required by the HSR Act and any material foreign
competition authorities (if applicable), and, with respect to Section 4
hereof, compliance with the provisions of the Act and any applicable
state securities laws, do not require the consent, waiver, approval,
license or authorization of or result in the acceleration of any
obligation under, or constitute a default under, any term, condition or
provision of any charter or bylaw, or any indenture, mortgage, lien,
lease, agreement, contract, instrument, order, judgment, ordinance,
regulation or decree or any restriction to which Issuer or any of its
subsidiaries or any property of Issuer or any of its subsidiaries is
subject or bound, except where the failure to obtain such permits,
authorizations, consents or approvals or to make such filings or give
such notice would not, individually or in the aggregate, have a Material
Adverse Effect on the Company.
7. REPRESENTATIONS AND WARRANTIES OF GRANTEE. Grantee hereby
represents and warrants to Issuer that:
(a) Grantee is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has all
requisite power and authority to own, lease and operate its properties
and to carry on its businesses as now being conducted.
(b) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of Grantee, and no other
corporate proceedings on the part of Grantee are necessary to authorize
this Agreement or to consummate the transactions contemplated
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hereby. This Agreement has been duly and validly executed and delivered
by Grantee and, assuming this Agreement has been duly executed and
delivered by Issuer, constitutes a valid and binding obligation of
Grantee, enforceable against Grantee in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting or relating to creditors' rights generally; the
availability of injunctive relief and other equitable remedies; and
limitations imposed by law on indemnification for liability under
federal securities laws.
(c) Grantee is acquiring the Option and it will acquire the
Option Shares issuable upon the exercise thereof for its own account and
not with a view to the distribution or resale thereof in any manner not
in accordance with applicable law. Grantee is an "accredited investor"
as defined in Rule 501 under the Act.
(d) Any Grantee Shares issued to Issuer as payment of the
aggregate price for any Option Shares will, upon receipt by Grantee of
such Option Shares, be validly issued, fully paid and nonassessable, and
shall be free and clear of all claims, liens, charges, encumbrances and
security interests (other than those imposed by applicable law).
8. COVENANTS OF GRANTEE AND ISSUER.
(a) Each of Grantee and Issuer agrees not to sell, transfer or
otherwise dispose of the Option, except that Grantee may transfer or
dispose of the Option to Acquisition or any other subsidiary of Grantee
pursuant to Section 15(d) hereof. Each of Grantee and Issuer may sell,
transfer or otherwise dispose of the Option Shares or the Grantee
Shares, as the case may be, so long as such transaction is in compliance
with the Act and any applicable state securities laws. Each of Grantee
and Issuer further agrees to the placement of the following legend on
the certificates evidencing the Option Shares or Grantee Shares, as the
case may be (in addition to any legend required under applicable state
securities laws):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER EITHER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR ANY APPLICABLE STATE LAW GOVERNING THE OFFER AND
SALE OF SECURITIES. NO TRANSFER OR OTHER DISPOSITION OF THESE
SHARES, OR OF ANY INTEREST THEREIN, MAY BE MADE EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND SUCH
OTHER STATE LAWS OR PURSUANT TO EXEMPTIONS FROM REGISTRATION
UNDER THE ACT, SUCH OTHER STATE LAWS, AND THE RULES AND
REGULATIONS PROMULGATED THEREUNDER."
(b) In connection with any sale, transfer or other disposition
of Option Shares, Grantee shall use all commercially reasonable efforts
to prevent any person or Group from acquiring a number of such shares
that exceeds five percent (5%) of the aggregate outstanding shares of
Issuer Common Stock on a fully-diluted basis at the time of such sale,
transfer or other disposition.
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9. HSR COMPLIANCE EFFORTS. Grantee and Issuer shall take, or cause
to be taken, all reasonable action to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation,
reasonable efforts to obtain any necessary consents of third parties and
Governmental Entities and the filing by Grantee and Issuer promptly after the
date hereof of any required HSR Act notification forms and the documents
required to comply with the HSR Act.
10. CERTAIN CONDITIONS. The obligation of Issuer to issue Option
Shares to Grantee and of Grantee to issue Grantee Shares to Issuer under this
Agreement upon exercise of the Option shall be subject to the satisfaction or
waiver of the following conditions:
(a) any waiting periods applicable to the acquisition of the
Option Shares by Grantee pursuant to this Agreement under the HSR Act
and any material foreign competition laws shall have expired or been
terminated;
(b) the representation and warranty of Grantee made in Section
7(c) of this Agreement shall be true and correct in all material
respects as of the date of the Closing for the issuance of such Option
Shares and, if Grantee Shares are to be issued to Issuer in such
Closing, the representations and warranties of Grantee made in Sections
7(a) and (d) of this Agreement shall be true and correct in all material
respects as of the date of such Closing; and
(c) no statute, rule or regulation shall be in effect, and no
order, decree or injunction entered by any court of competent
jurisdiction or governmental, regulatory or administrative agency or
commission in the United States shall be in effect, which prohibits the
exercise of the Option or acquisition or issuance of Option Shares or,
if Grantee Shares are to be issued to Issuer, such Grantee Shares
pursuant to this Agreement.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
(a) In the event of any change in the number of issued and
outstanding shares of Issuer Common Stock by reason of any stock
dividend, stock split, recapitalization, merger, rights offering, share
exchange or other change in the corporate or capital structure of
Issuer, Grantee shall receive, upon exercise of the Option, the stock or
other securities, cash or property to which Grantee would have been
entitled if Grantee had exercised the Option and had been a holder of
record of shares of Issuer Common Stock on the record date fixed for
determination of holders of shares of Issuer Common Stock entitled to
receive such stock or other securities, cash or property at the same
aggregate price as the aggregate Option Price of the Option Shares.
(b) In the event of any change in the number of issued and
outstanding Grantee Shares by reason of any stock dividend, stock split,
recapitalization, merger, rights offering, share exchange or other
change in the corporate or capital structure of Grantee, Issuer shall
receive, upon Grantee's exercise of the Option and election to pay the
Option Price in Grantee Shares, the stock or other securities, cash or
property to which Issuer would have been entitled if Grantee had
exercised the Option and had been a holder of
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record of Grantee Shares on the record date fixed for determination of
holders of Grantee Shares entitled to receive such stock or other
securities, cash or property at the same aggregate price as the
aggregate Option Price of the Option Shares for which Grantee has
elected to pay with Grantee Shares.
12. EXPIRATION. The Option shall expire at the earlier of (x) the
Effective Time and (y) 5:00 p.m., California time, on the day that is the twelve
(12) month anniversary of the date on which the Merger Agreement has been
terminated in accordance with the terms thereof (such expiration date is
referred to as the "Expiration Date").
13. ISSUER CALL. If Grantee has acquired Option Shares pursuant to
exercise of the Option (the date of any Closing relating to any such exercise
herein referred to as a "Closing Date"), then, at any time after the one year
anniversary of such Closing Date and prior to the date that is eighteen months
following such Closing Date (the "Purchase Period"), Issuer may require Grantee,
upon delivery to Grantee of written notice, to sell to Issuer all, but not less
than all, Option Shares (and all other Issuer securities, if any, issued in
respect of or in exchange for such Option Shares) acquired by Grantee pursuant
to exercise of the Option in connection with such Closing Date. The per share
purchase price for such sale (the "Issuer Call Price") shall be equal to the
higher of (i) the Option Price, less any dividends paid on the Option Shares to
be purchased by Issuer pursuant to this Section 13, plus an amount equal to a
return at the rate of fifteen percent (15%) of the Option Price per year from
the Closing Date and (ii) an amount equal to the average of the high and low
trading prices per share of Issuer Common Stock for the thirty (30) trading day
period ending one day prior to the delivery of Issuer's notice exercising its
call rights pursuant to this Section 13. The closing of any sale of Option
Shares pursuant to this Section 13 shall take place at the principal offices of
Issuer at a time and on a date designated by Issuer in the aforementioned notice
to Grantee, which date shall be no more than thirty (30) and no less than twelve
(12) business days from the date of such notice. The Issuer Call Price shall be
paid in immediately available federal funds by wire transfer.
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14. GRANTEE CALL. If Issuer has acquired Grantee Shares pursuant to
Grantee's exercise of the Option, then, at any time during the Purchase Period,
Grantee may require Issuer, upon delivery to Issuer of written notice, to sell
to Grantee all, but not less than all, Grantee Shares (and all other Grantee
securities, if any, issued in respect of or in exchange for such Grantee Shares)
acquired by Issuer pursuant to exercise of the Option by Grantee in connection
with such Closing Date. The per share purchase price for such sale (the "Grantee
Call Price") shall be equal to the higher of (i) the Average Stock Price, as
determined pursuant to Section 1 hereof, less any dividends paid on the Grantee
Shares to be purchased by Grantee pursuant to this Section 14, plus an amount
equal to a return at the rate of fifteen percent (15%) of such Average Stock
Price per year from the Closing Date and (ii) an amount equal to the average of
the high and low trading prices per share of Grantee Common Stock for the thirty
(30) trading day period ending one day prior to the delivery of Grantee's notice
exercising its call rights pursuant to this Section 14. The closing of any sale
of Grantee Shares pursuant to this Section 14 shall take place at the principal
offices of Grantee at a time and on a date designated by Grantee in the
aforementioned notice to Issuer, which date shall be no more than thirty (30)
and no less than twelve (12) business days from the date of such notice. The
Grantee Call Price shall be paid in immediately available federal funds by wire
transfer.
15. GENERAL PROVISIONS.
(a) Survival. All of the representations, warranties and
covenants contained herein shall survive a Closing and shall be deemed
to have been made as of the date hereof and as of the date of each
Closing.
(b) Further Assurances. If Grantee exercises the Option, or any
portion thereof, in accordance with the terms of this Agreement, Issuer
and Grantee will execute and deliver all such further documents and
instruments and use all reasonable efforts to take all such further
action as may be necessary in order to consummate the transactions
contemplated thereby.
(c) Severability. It is the desire and intent of the parties
that the provisions of this Agreement be enforced to the fullest extent
permissible under the law and public policies applied in each
jurisdiction in which enforcement is sought. Accordingly, in the event
that any provision of this Agreement would be held in any jurisdiction
to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
Notwithstanding the foregoing, if such provision could be more narrowly
drawn so as not be invalid, prohibited or unenforceable in such
jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn,
without invalidating the remaining provisions of this Agreement or
affecting the validity or enforceability of such provision in any other
jurisdiction.
(d) Assignment; Transfer of Stock Option. This Agreement shall
be binding on and inure to the benefit of the parties hereto and their
respective successors and permitted assigns; provided, however, that
Issuer and Grantee, without the prior written consent of the other
party, shall not be entitled to assign or otherwise transfer any of its
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rights or obligations hereunder and any such attempted assignment or
transfer shall be void; provided further, that Grantee shall be entitled
to assign or transfer this Agreement or any rights hereunder to any
wholly-owned subsidiary of Grantee so long as such wholly-owned
subsidiary agrees in writing to be bound by the terms and provisions
hereof.
(e) Specific Performance. The parties agree and acknowledge that
in the event of a breach of any provision of this Agreement, the
aggrieved party would be without an adequate remedy at law. The parties
therefore agree that in the event of a breach of any provision of this
Agreement, the aggrieved party may elect to institute and prosecute
proceedings in any court of competent jurisdiction to enforce specific
performance or to enjoin the continuing breach of such provisions, as
well as to obtain damages for breach of this Agreement. By seeking or
obtaining any such relief, the aggrieved party will not be precluded
from seeking or obtaining any other relief to which it may be entitled.
(f) Amendments. This Agreement may not be modified, amended,
altered or supplemented except upon the execution and delivery of a
written agreement executed by Grantee and Issuer.
(g) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to be
sufficient if contained in a written instrument and shall be deemed
given if delivered personally, telecopied, sent by
nationally-recognized, overnight courier or mailed by registered or
certified mail (return receipt requested), postage prepaid, to the other
party at the following addresses (or such other address for a party as
shall be specified by like notice):
if to Grantee: Cadence Design Systems, Inc.
2655 Seely Avenue
San Jose, CA 95134
Telecopier: (408) 944-6855
Attention: General Counsel
with a copy to: Gibson, Dunn & Crutcher LLP
One Montgomery Street
San Francisco, CA 94104
Telecopier: (415) 986-5309
Attention: Gregory J. Conklin, Esq.
if to Issuer: Simplex Solutions, Inc.
521 Almanor Avenue
Sunnyvale, CA 94086
Telecopier: (408) 744-0285
Attention: Chief Executive Officer
12
with a copy to: Wilson, Sonsini, Goodrich & Rosati LLP
650 Page Mill Road
Palo Alto, CA 94304
Telecopier: (650) 493-6811
Attention: Larry W. Sonsini
Martin W. Korman
Wilson, Sonsini, Goodrich & Rosati LLP
Lancaster Building WestPark
7927 Jones Branch Drive #400
McLean, VA 22102
Telecopier: 703-734-3199
Attention: Robert Sanchez
(h) Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(i) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original, but all of which
together shall constitute one and the same agreement.
(j) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without
regard to the principles of conflicts of law thereof.
(k) Jurisdiction and Venue; Waiver of Jury Trial. Each of Issuer
and Grantee hereby agrees that any proceeding relating to this Agreement
shall be brought solely in a court in the State of Delaware. Each of
Issuer and Grantee hereby consents to personal jurisdiction in any such
action brought in any such Delaware court, consents to service of
process by registered mail made upon such party and such party's agent
and waives any objection to venue in any such Delaware court or to any
claim that any such Delaware court is an inconvenient forum.
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH
MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH SUCH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii)
EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY
HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS,
THE WAIVERS AND CERTIFICATIONS IN THIS SECTION 15(k).
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(l) Entire Agreement. This Agreement and the Merger Agreement,
and any documents and instruments referred to herein and therein,
constitute the entire agreement between the parties hereto and thereto
with respect to the subject matter hereof and thereof and supersede all
other prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof and
thereof. Nothing in this Agreement shall be construed to give any person
other than the parties to this Agreement or their respective successors
or permitted assigns any legal or equitable right, remedy or claim under
or in respect of this Agreement or any provision contained herein.
(m) Expenses. Except as otherwise provided in this Agreement,
each party shall pay its own expenses incurred in connection with this
Agreement and the transactions contemplated hereby.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
by their respective officers thereunto duly authorized as of the date first
written above.
CADENCE DESIGN SYSTEMS, INC.
By: /s/ WILLIAM PORTER
-------------------------------------
Name: William Porter
Title: SR, VP & CFO
SIMPLEX SOLUTIONS, INC.
By: /s/ PENNY HERSCHER
-------------------------------------
Name: Penelope A. Herscher
Title: Chief Executive Officer