ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") dated as of October 31,
1999 (the "Effective Date"), among VeriBest, Inc., a Delaware Corporation
including its subsidiary companies ("Seller") and Mentor Graphics Corporation,
an Oregon corporation ("Purchaser").
WHEREAS, Seller is a majority owned subsidiary of Intergraph Corporation
("Intergraph") and is engaged in the business of developing and marketing
electronic design automation software tools for use in the design of printed
circuit boards as well as other electronic components; and
WHEREAS, pursuant to, and upon the terms and conditions of, this
Agreement, Seller wishes to sell to Purchaser, and Purchaser wishes to acquire
certain of the assets and assume certain of the liabilities connected with
Seller's business from Seller.
AGREEMENT
NOW, THEREFORE, in consideration of the premises, the respective
covenants, representations and warranties set forth herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties hereto
warrant, represent, covenant and agree as follows:
ARTICLE I. SALE OF ASSETS AND ASSUMPTION OF LIABILITIES
1.1 Assets and Properties to be Sold. Upon the terms and conditions set forth
in this Agreement, Seller agrees to sell to Purchaser, and Purchaser
agrees to purchase from Seller, all of the business, assets, properties
and goodwill of every kind and description (tangible and intangible) of
Seller, to which or in which Seller has any right title or interest prior
to or as of the Closing Date by reason of ownership, use or otherwise,
including without limitation, its computer software technology and other
intangible assets, together with all related patents, patent
applications, copyrights, copyright applications and registrations, trade
secrets, inventions and trademarks, service marks and trademark and
service xxxx registrations, as well as all rights to xxx for past
infringement, but excluding the Excluded Assets (as defined herein). The
foregoing assets, excluding the Excluded Assets, are referred to herein
as the "Acquired Assets."
The term "Excluded Assets" shall mean (i) cash and cash equivalents not
greater than the amounts shown on the September 30, 1999 balance sheet,
(ii) employee benefit plans maintained by Seller or its affiliates, (iii)
Seller's tax returns and reports, general ledgers and any other books,
records, files or correspondence not relating to the Acquired Assets
(however, Seller shall provide Purchaser with copies of any such
documents which it may reasonably request), (iv) all Non-Assignable
Rights (as defined herein),(v) any of the rights of Seller under this
Agreement (or under any side agreement between Seller on the one hand and
Purchaser on the other hand entered into on or after the date of this
Agreement) and (vi) all accounts receivable, including any intercompany
receivables. For purposes hereof, the term "Non-Assignable Rights" shall
mean any contract, agreement, right, license or interest which by its
nature or terms either (A) cannot (without being breached, violated
defaulted or otherwise
impaired) be transferred or assigned by Seller without the consent of a
third party which consent shall not have been obtained at or prior to
Closing, or (B) cannot (without being breached, violated, defaulted or
otherwise impaired) be transferred or assigned by Seller under any
circumstances.
1.2 Assumption of Liabilities. Purchaser will assume all liabilities and
obligations of Seller (whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due),
including, without limitation and for the avoidance of doubt, the accrued
vacation benefits of Seller's employees; provided, however, that
Purchaser shall not assume any liability or obligation under this
Agreement (or under any side agreement between Seller on the one hand and
Purchaser on the other hand entered into on or after the date of this
Agreement) and Purchaser shall not assume those intercompany debts owed
by Seller to Intergraph or its subsidiaries. The liabilities assumed by
Purchaser hereunder are referred to herein as the "Assumed Liabilities."
1.3 Purchase Price and Payment. In consideration for the sale of the Acquired
Assets,
1.3.1 At Closing, Purchaser shall pay to Seller $9,130,000 (the "Closing
Payment" and together with the assumption of the liabilities described in
1.3.2 below, the "Purchase Price");
1.3.2 Purchaser shall assume the Assumed Liabilities;
1.3.3 Purchaser shall deliver to Seller a warrant in the form of Exhibit
1.3.3.
1.4 Closing. The purchase and sale (the "Closing") shall take place at 10:00
a.m. Pacific time on October 31, 1999 at the offices of Purchaser in
Wilsonville, Oregon or at such other place, date and time as the parties
shall mutually agree upon (the "Closing Date").
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser as follows:
2.1 Organization. Seller is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and duly
qualified to do business in all jurisdictions in which the failure to
qualify would have a material adverse effect on its business or financial
condition. Seller has the requisite corporate power and authority
necessary to engage in the business in which it is presently engaged and
to own, lease and operate its properties as now owned, leased and
operated. Seller has all corporate power and authority necessary to enter
into this Agreement and perform its obligations under this Agreement.
2.2 Title; Infringement. Seller owns or holds valid, unrestricted and
enforceable title in, or valid, unrestricted and enforceable rights to
use, sell, license or dispose of, the Acquired Assets, and to Seller's
knowledge, none of the Acquired Assets conflicts with or infringes upon
any patents, copyrights, trade secrets, inventions, trademarks,
tradenames or licenses to use the same or other rights or property of
others. Seller has not received any charge, complaint, claim, demand or
notice alleging any pending interference, infringement, misappropriation
or violation with or of any intellectual property rights of a
Asset Purchase Agreement Page 2
VeriBest/Mentor
third party (including any claims that Seller must license or refrain
from using any intellectual property rights of a third party).
With respect to each item of material intellectual property that is
included in the Acquired Assets that Seller is licensed or authorized to
use, the license, sublicense, agreement or permission covering such item
(I) is legal, valid, binding, enforceable and in full force and effect
and (ii) has not been breached by any party thereto and will be
transferred to Buyer at Closing. The transfer of such intellectual
property to Purchaser will not give any third party any rights under
escrow agreements or otherwise.
2.3 Effectiveness. This Agreement has been duly executed and delivered by
Seller and is binding upon and enforceable against it in accordance with
its terms. The execution, delivery and performance of this Agreement by
Seller has been duly and effectively authorized and approved by its Board
of Directors and shareholders (if necessary) and the requisite corporate
and shareholder action has been taken or shall have been taken prior to
Closing.
2.4 Taxes. Seller has filed all federal, state, local and other tax returns
which it has been required to file which relate to or might in any way
affect the Acquired Assets. Each such return is true and accurate in all
material respects. Seller has paid all taxes shown on such returns and
all assessments that have become due and such returns are not being
contested. There are no agreements for the extension of time for the
payment of any tax or for the waiver of any statute of limitations
therefor. Seller has withheld all employee federal, related state and
local income taxes, FICA, FUTA and other taxes and charges required to be
withheld. Seller is not a party to any current or pending examinations,
audits, actions or proceedings, nor to the best of its knowledge is any
action threatened by any governmental authority for the assessment or
collection of taxes.
2.5 Schedules of Properties, Contracts and Other Data. Attached to and made a
part of this Agreement are the following described schedules of
properties, contracts and other data of or pertaining to Seller (Section
2.5 Schedules):
2.5.1 Schedule 2.5.1 describes all material leases or agreements under
which Seller is lessee of, or holds or operates any interest in
or right of use of real or personal property owned by any third
party.
2.5.2 Schedule 2.5.2 describes all material written or oral licenses,
permits and other instruments under which Seller has acquired or
granted a right to use any business system, name or xxxx, patent,
copyright, technology, know-how, intellectual property, or other
intangible property of any third party related to the Acquired
Assets.
2.5.3 Schedule 2.5.3 describes all material collective bargaining
agreements to which Seller is a party and all other material
agreements and contracts pertaining to terms and conditions of
employment by Seller, either written or oral, including but not
limited to employment agreements, letter offers of employment,
stock option plans, pension or profit sharing plans, bonus plans,
and group health, life and disability plans, to which Seller is a
party or under which the employees of Seller have rights by
virtue of being employees of Seller.
2.5.4 Schedule 2.5.4 describes specifically all patents and patents
pending, trademark registrations, tradenames, and service xxxx
registrations, and copyright registrations, registered in the
name of, or otherwise the property of Seller, except to the
extent disclosed on Schedule 2.5.2.
Asset Purchase Agreement Page 3
VeriBest/Mentor
2.5.5 Schedule 2.5.5 describes all existing instruments, agreements,
mortgages or arrangements pursuant to which Seller has borrowed
any money, incurred any other indebtedness, established any line
of credit or guaranteed the indebtedness or obligation of another
person, corporation or other entity.
2.5.6 Schedule 2.5.6 describes all other contracts, agreements,
commitments and instruments to which Seller is a party which are
not described on any other of the Schedules, either written or
oral, which require payments by Seller, whether singly or in a
series of related transactions, in amounts exceeding $50,000.
2.5.7 Schedule 2.5.7 describes all litigation or proceedings pending or
known by Seller to be threatened and all claims not yet
threatened but known by Seller to be capable of assertion, in
each case which, if asserted would have a material adverse effect
on its business, to which Seller is or could become a party.
2.5.8 Schedule 2.5.8 describes all material consents and approvals
required for the execution and delivery of this Agreement and
consummation of the transactions and assignments contemplated by
this Agreement.
Prior to the Closing, Seller shall make available to Purchaser true and
complete copies of all documents described in the Section 2.5 Schedules.
Except to the extent described in the Section 2.5 Schedules, Seller has
performed all of the obligations required to be performed by it to date
and is not in default under any of the agreements, contracts, instruments
or documents described in the Section 2.5 Schedules, nor to its knowledge
is any other party to such agreements, contracts, instruments or
documents in default.
2.6 Legal Proceedings. Except as set forth in Schedule 2.5.7, there is no
legal, administrative, arbitration or other proceeding pending to which
Seller is a party, known by Seller to be threatened, or not yet
threatened but known by Seller to be capable of assertion, which, in each
case, if asserted, would have a material adverse impact on its business,
nor is Seller subject to any outstanding judgment, order or decree of any
court or administrative agency. To the knowledge of Seller, there are no
governmental investigations pending against Seller or the Acquired
Assets.
2.7 Compliance. The execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement will not:
2.7.1 Violate Seller's Articles of Incorporation or Bylaws, in each case
as amended to the date of this Agreement;2.7.2 Except as described in the
Section 2.5 Schedules, require any consent, approval or notice under,
conflict with, result in the breach of any of the terms or conditions of,
or constitute a default under or violate any material agreement or other
material document or undertaking, oral or written, to which Seller is a
party or by which it is bound or by which it or any of its properties or
assets may be affected;
2.7.3 Require any consent, approval, filing or notice under, or violate
any statute, ordinance, rule, regulation, or order of any court,
administrative agency, or governmental body, except for consents,
approvals, filings or notices, the failure of which to obtain, or
statutes, ordinances, rules, regulations or orders, the violation of
which, would not have a material adverse effect on Seller's business.
2.8 Employees. Except for the agreements listed in Schedule 2.5.3, Seller is
not a party to any agreements with its employees. Seller has taken the
appropriate steps (including, without limitation, entering into
appropriate confidentiality, non-disclosure and non-
Asset Purchase Agreement Page 4
VeriBest/Mentor
competition agreements ("Confidentiality Agreements")) with all of its
employees to safeguard and maintain the secrecy of and confidentiality
of, and Seller's proprietary rights in the Technology. Seller and
Seller's employees have taken all reasonable actions necessary to
transfer to Seller all of the intellectual property rights owned by them
which are necessary, appropriate or desirable for the use of the
intellectual property used in Seller's business. Seller shall assign to
Purchaser the benefits and rights under all such Confidentiality
Agreements between Seller and its employees. There are no material
benefits, including, but not limited to, salary, commissions, bonuses,
accrued vacation, sick pay or other accrued benefits, owed to employees
by Seller payable after the Closing except as are reflected in Seller's
financial statements or as are set forth in Schedule 2.5.3. Purchaser is
assuming all such accrued benefits of Seller's employees.
2.9 Financial Statements. The unaudited financial statements of Seller as of
September 30, 1999 and the unaudited financial statements for the year
ended December 31, 1998 copies of which have been delivered to Purchaser,
are in accordance with Seller's records and are complete and correct,
fairly present the financial position and results of operations of Seller
as of the dates and for the periods indicated, and except for the absence
of notes to the financial statements, have been prepared in conformity
with generally accepted accounting principles applied on a basis
consistent with prior years.
2.10 Undisclosed Liabilities. Except as disclosed on Schedule 2.10, to the
knowledge of Seller's Board of Directors, there are no material
liabilities, debts or obligations of Seller, whether accrued, absolute,
contingent or otherwise, and whether due or to become due, including but
not limited to, liabilities or obligations for taxes, other than (I) as
reflected in the financial statements of Seller as of October 31, 1999,
or (ii) those specified in the Section 2.5 schedules.
2.11 Disclosure. None of the representations or warranties of Seller contain
or will contain any untrue statement of a material fact or omit or will
omit or misstate a material fact necessary in order to make the
statements contained in this Agreement not misleading. Seller does not
know or have reason to believe that there are any facts related to the
Acquired Assets or to the business operations of Seller, which are or
will be adverse to the Acquired Assets, other than the facts disclosed
pursuant to this Agreement.
2.12 No Adverse Change. Except as described in Schedule 2.12, since September
30, 1999, there has been no material adverse change in the condition of
the Acquired Assets.
2.13 Required Assets. The Acquired Assets include all material items required
for the operation and development of Seller's business, including, but
not limited to, intellectual property, computer equipment required to
perform the research and development, testing, maintenance, customer
support and training, and marketing of the material intellectual property
included in the Acquired Assets.
2.14 Representations and Warranties True as of Closing Date. All material
representations and warranties made by Seller in this Agreement shall be
true and correct as of the Closing Date with the same effect as if they
had been made at and as of the Closing Date.
Asset Purchase Agreement Page 5
VeriBest/Mentor
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as follows:
3.1 Organization. Purchaser is a corporation duly organized and validly
existing under the laws of the State of Oregon, and has all corporate
power and authority necessary to engage in the business in which it is
presently engaged. Purchaser has all corporate power and authority
necessary to enter into this Agreement and perform its obligations under
this Agreement.
3.2 Effectiveness. This Agreement has been duly executed and delivered by
Purchaser and is binding upon and enforceable against Purchaser in
accordance with its terms. The execution, delivery and performance of
this Agreement by Purchaser has been duly and effectively authorized by
all necessary corporate action.
3.3 Compliance. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not:
3.3.1 Violate Purchaser's Articles of Incorporation or Bylaws, in each
case as amended to the date hereof;
3.3.2 Conflict with or result in the breach of any of the terms or
conditions of, or constitute a default under or violate, as the
case may be, any material agreement or other document or
undertaking, oral or written, to which Seller is a party or by
which it is bound or by which it or any of its properties or
assets may be affected; or
3.3.3 Violate any statute, ordinance, rule, regulation, or order of any
court, administrative agency, or governmental body.
3.4 Warrant Authorization; Reserved Shares, Etc. Purchaser has all corporate
power and authority necessary to execute and deliver the warrant referred
to in Section 1.3.3 (the "Warrant") and the execution and delivery of the
Warrant has been duly and effectively authorized and approved by all
requisite corporate action.
Purchaser has sufficient authorized and unissued shares of its common
stock available to permit it to immediately issue such shares upon
exercise of the Warrant, and such shares, when issued against payment
therefor, shall be duly and validly issued, fully paid and
non-assessable, and shall not be subject to any preemptive or similar
rights of any person.
3.5 Representations and Warranties True as of Closing Date. All material
representations and warranties made by Purchaser in this Agreement shall
be true and correct as of the Closing Date with the same effect as if
they had been made at and as of the Closing Date.
ARTICLE IV. COVENANTS BY SELLER
Seller covenants as follows:
4.1 Conduct of Business. From and after the Effective Date to the Closing,
Seller will carry on its business in a reasonable and prudent manner,
will notify Purchaser of the
Asset Purchase Agreement Page 6
VeriBest/Mentor
occurrence of any event having a material impact upon its business
prospects or financial condition, and will:
4.1.1 Use its reasonable business efforts to maintain, preserve and
protect the Acquired Assets, dispose of none of the Acquired
Assets, and preserve Seller's present relationships with its
customers, suppliers and other persons as those relationships
relate to the Acquired Assets;
4.1.2 Use its reasonable business efforts to comply with all laws and
regulations known to and applicable to it and to the conduct of
its business and perform all of its material obligations without
default;
4.1.3 Not make or grant or enter into an agreement to make or grant any
wage increase, salary increase, bonuses payment or severance
payment to any of its employees; and
4.1.4 Not, without the consent of Purchaser, which consent will not be
unreasonably withheld, engage in any transaction or incur any
liability with respect to the material intellectual property in
the Acquired Assets, except for sales and/or licenses of its
products in the ordinary course of business.
4.2 Breach of Representations and Warranties. Seller will not take any action
which would cause or constitute a breach of any of the material
representations and warranties set forth in Article II or which would
cause any of such material representations and warranties to be
inaccurate. In the event of, and promptly after becoming aware of, the
occurrence of or the pending or threatened occurrence of any event which
would cause or constitute such a breach or inaccuracy, Seller will give
notice to Purchaser and will use its reasonable best business efforts to
prevent or promptly to remedy such breach or inaccuracy.
4.3 Consents. Seller will promptly apply for or otherwise seek, and use its
best efforts to obtain, the consents and approvals described in Schedule
2.5.8.
4.4 Negotiations with Others. From and after the Effective Date to and
including the earlier of the termination of this Agreement or the
Closing, neither Seller nor any of its affiliates will offer or sell all
or any portion of Seller's stock or the Acquired Assets to, or negotiate
for the sale of the Acquired Assets to, any other party.
4.5 News Releases. No party will issue any news release or announcements
concerning the transactions contemplated by this Agreement except with
the prior approval of an authorized representative of the other party,
which consent will not be unreasonably withheld.
4.6 Access. Seller will permit Purchaser and its agents to have reasonable
access to the premises in which it conducts its business and all of its
books, records and personnel, specifically including information relating
to the Acquired Assets. Seller will furnish to Purchaser such financial
data, operating data and other information as Purchaser shall reasonably
request. Specifically, but not by way of limitation, Seller will make
available to Purchaser or its representatives for review its stock book,
minute book, personnel records and copies of all employment agreements,
all leases, all agreements among shareholders, all contracts with
suppliers, all contracts with customers and all other contracts or
documents to which it is a party.
Asset Purchase Agreement Page 7
VeriBest/Mentor
ARTICLE V. COVENANTS BY PURCHASER
Purchaser covenants as follows:
5.1 Breach of Representations and Warranties. Purchaser will not take any
action which would cause or constitute a breach of any of the material
representations and warranties set forth in Article III or which would
cause any of such material representations and warranties to be
inaccurate in any respect. In the event of, and promptly after becoming
aware of, the occurrence of or the pending or threatened occurrence of
any event which would cause or constitute such a breach or inaccuracy,
Purchaser will give notice to Seller and will use its reasonable best
efforts to prevent or promptly to remedy such breach or inaccuracy.
5.2 Options. For those employees of Seller who will not be offered continuing
employment by Purchaser and who are holders of options to purchase shares
of Seller's common stock for $0.50 per share (each such option a "$.50
Option"), Purchaser will cash out all of such options by paying to such
employees a cash payment of $0.20 per share such employees would
otherwise be entitled to purchase at $0.50.
For those employees who continue with Purchaser and who are holders of
$0.50 Options Purchaser will offer such employees an election to either
(i) cash out their $0.50 Options at $0.20 per share or (ii) accept an
award of a number of options for shares of Purchaser at fair market value
as determined by Purchaser's Board of Directors. Employees accepting such
options shall be immediately vested with respect to such options to the
same extent such employees' options for Seller's common stock were vested
immediately prior to Closing. The parties acknowledge that regardless of
continuing or non-continuing status, employees will be required to sign a
release in favor of Purchaser, Seller and Intergraph in exchange for, and
in order to have the right to receive, the cash-out payment or Purchaser
options.
5.3 Employee Severance. Following Closing, Purchaser will offer employees
that it elects not to retain an amount in Severance pursuant to Seller's
current policy, conditioned upon executing a general release in favor of
Purchaser, Seller and Intergraph. For those employees who continue with
Purchaser, Purchaser will offer such employees a total compensation
package, including base salary, incentive pay, stock options and benefits
equivalent to the total compensation package such employee would be able
to attain in the open market in his or her region and in any event at
least as favorable as the total compensation package as such employee
enjoys with Seller immediately prior to Closing.
5.4 Other Employee-Related Matters.
5.4.1 Upon the occurrence of the Closing, all employees of Seller
immediately prior to the Closing shall have coverage pursuant to
Purchaser's welfare and benefit plans such that there will be no
gap or break in such coverage.
5.4.2 Purchaser agrees, and shall take all steps necessary to reflect
in its books and records such agreement, that each employee in
the service of Seller immediately prior to Closing shall be given
credit for his or her time of service with Seller for all
purposes and benefits under Purchaser's welfare and benefit
plans.
5.4.3 For the avoidance of doubt, Purchaser shall assume as of the
Closing all of the obligations of Seller with respect to each
written employment agreement between Seller and its employees
except for that certain employment agreement between Seller and
Xxxxxxx X. Xxxxxxxxx, Xx.
Asset Purchase Agreement Page 8
VeriBest/Mentor
ARTICLE VI. COVENANTS OF SELLER AND PURCHASER
6.1 Xxxx-Xxxxx-Xxxxxx Filings. If required, Purchaser and Seller shall
promptly file with the Federal Trade Commission and the Antitrust
Division of the Department of Justice (the "Governmental Authorities")
the Notification and Report Form required pursuant to Section 7A of the
Xxxxxxx Act, 15 U.S.C. section 18A, and the rules and regulations
promulgated thereunder (the "Xxxx-Xxxxx-Xxxxxx Act"), and shall promptly
and timely furnish such additional information to the Governmental
Authorities as they may reasonably request (the "Xxxx-Xxxxx-Xxxxxx
Review"). They will cooperate with each other as necessary to prepare
their separate filings and to supply any additional information requested
and to request early termination of the waiting period.
ARTICLE VII. TERMINATION
7.1 In addition to other rights of rescission and abandonment available at
law or equity, Purchaser may terminate this Agreement by notice to Seller
at any time, but not later than the Closing Date, if prior to the Closing
Date, Purchaser, as a result of such investigation as it may reasonably
determine to make, should discover that Seller does not, and will not as
of the Closing, have good title to any of the material assets included in
the Acquired Assets, or any representation or warranty of Seller has been
materially breached or is untrue and will not be cured by the Closing
Date, or any covenant or condition precedent to Purchaser's obligations
to close will not be met by the Closing Date, or Seller is otherwise in
default.
If Purchaser has elected to terminate this Agreement pursuant to this
Section 7.1 because it has discovered the existence of any facts or
circumstances which (i) materially impair the value of the Acquired
Assets, (ii) have been promptly notified in writing to Intergraph and
Seller, and (iii) cannot be cured by Seller on or prior to the Closing
Date, then the advance of $1.5 million held in trust by Seller's outside
counsel pursuant to the terms of the October 27, 1999 Letter of Intent
between Purchaser and Intergraph shall be released to Purchaser to be
used as a set-off against any damages which Purchaser might claim for
Seller's breach of this Agreement.
7.2 Seller may terminate this Agreement by notice to Purchaser at any time,
but not later than the Closing Date, if Seller should discover that any
representation or warranty of Purchaser has been materially breached or
is untrue and will not be cured by the Closing Date or that any covenant
or condition to Seller's obligations will not be met on the Closing Date
and the advance of $1.5 million held in trust by Seller's outside counsel
pursuant to the terms of the October 27, 1999 Letter of Intent between
Purchaser and Intergraph shall be released to Seller to be used as a
set-off against any damages which Seller might claim for Purchaser's
breach of this Agreement.
7.3 In the event of a termination under this Article VII, each party shall
return to the other any documents, information, financial statements and
the like provided to the other in the course of negotiating this
transaction, and all information provided to either party shall be kept
confidential pursuant to the terms of the non-disclosure agreement
between Purchaser and Intergraph and shall not be used to the competitive
advantage of the other.
7.4 Should this Agreement fail to Close by the Closing Date through no fault
of either party, then this Agreement shall terminate and the $1.5 million
fee shall returned to Purchaser.
Asset Purchase Agreement Page 9
VeriBest/Mentor
7.5 No termination under this Article VII or otherwise shall affect any claims
either party has for breach of any provision of this Agreement or affect
Purchaser's rights to enforce any and all obligations of Seller to
Purchaser, nor Seller's rights to enforce any and all obligations of
Purchaser to Seller; otherwise, all other obligations terminate upon
termination.
ARTICLE VIII. CONDITIONS TO OBLIGATION OF PURCHASER
The obligation of Purchaser to close the transactions contemplated by this
Agreement shall be subject to the satisfaction prior to or on the Closing Date
of each of the following conditions, any one or more of which may be waived by
Purchaser:
8.1 Representations and Warranties True. All of the material representations
and warranties of Seller contained in this Agreement and in any written
statement, deed, exhibit, certificate, schedule, or other document
delivered pursuant to this Agreement or in connection with the
transactions contemplated by this Agreement, shall be true and correct as
of the Closing Date as if made on and as of the Closing Date; no such
material representation or warranty shall contain any untrue material
statement, nor omit any material statement necessary in order to make the
statements made not misleading; and Purchaser shall have received a
certificate dated the Closing Date to such effect executed by the
president or vice president and the secretary or assistant secretary of
Seller.
8.2 Covenants Performed. Seller shall have performed and complied with all
material covenants, agreements and conditions required by this Agreement
to be performed or complied with by it prior to or on the Closing Date,
and Purchaser shall have received a certificate dated the Closing Date to
such effect executed by the president or vice president and the secretary
or assistant secretary of Seller.
8.3 No Actions or Suits. No action, suit or proceeding shall have been
instituted before a court or governmental body, or instituted or
threatened by any governmental agency or body (a) to restrain or prevent
the carrying out of the transactions contemplated herein or (b) in which
the plaintiff claims a lien, security interest or any other interest in
the Acquired Assets.
8.4 Patent License. In exchange for the release and disbursement to
Intergraph of the advance of $1.5 million held in trust by Xxxxx &
Xxxxxxx LLP pursuant to the terms of the October 27, 1999 Letter of
Intent between Purchaser and Intergraph, Intergraph shall have executed
and delivered the license in favor of Purchaser substantially in the form
of Exhibit 8.4 hereto.
8.5 Certificate of Resolutions. Seller shall deliver to Purchaser a copy of
the resolutions of Seller's Board of Directors and of Intergraph as
majority shareholder of Seller, duly certified by the secretary or
assistant Secretary of Seller authorizing the transactions provided for
in this Agreement.
8.6 Consents. Seller shall have delivered to Purchaser copies of all material
consents necessary to carry out this Agreement.
Asset Purchase Agreement Page 10
VeriBest/Mentor
ARTICLE IX. CONDITIONS TO OBLIGATIONS OF SELLER
The obligation of Seller to close any of the transactions contemplated by this
Agreement shall be subject to the satisfaction prior to or on the Closing Date
of each of the following conditions, any one or more of which may be waived by
Seller:
9.1 Representations and Warranties True. All of the material representations
and warranties of Purchaser contained in this Agreement and in any
written statement, deed, certificate, schedule or other document
delivered pursuant to this Agreement or in connection with the
transactions contemplated by this Agreement shall be true and correct as
of the Closing Date as if made on and as of the Closing Date; no such
material representation or warranty shall contain any untrue statement
nor omit any statement necessary in order to make the statements made not
misleading; and Seller shall have received a certificate to such effect
executed by the president or any authorized vice president and the
secretary, or an assistant secretary, of Purchaser, dated the Closing
Date.
9.2 Covenants Performed. Purchaser shall have performed and complied with all
material covenants, agreements and conditions required by this Agreement
to be performed or complied with by it prior to or on the Closing Date,
and Seller shall have received a certificate to such effect executed by
the president or any authorized vice president and the secretary, or an
assistant secretary, of Purchaser, dated the Closing Date.
9.3 No Actions or Suits. No action, suit or proceeding shall have been
instituted before a court or governmental body, or instituted or
threatened by any governmental agency or body, to restrain or prevent the
carrying out of the transactions contemplated by this Agreement.
9.4 Consents. Seller and Intergraph shall have received the consents of all
parties whose consent is required for the transfer of the material assets
or contracts included in the Acquired Assets. Specifically, but without
limiting any other requirement of this Agreement, Seller shall have
received the consents listed on Schedule 2.5.9.
9.5 In exchange for the execution and delivery by Intergraph to Purchaser of
the Patent License Agreement substantially in the form of Exhibit 8.4
attached hereto, Purchaser shall have taken all necessary action to
approve the release and disbursement to Intergraph of the advance of $1.5
million held in trust by Xxxxx & Xxxxxxx LLP pursuant to the terms of the
October 27, 1999 Letter of Intent between Purchaser and Intergraph,
including executing and delivering the escrow release letter
substantially in the form of Exhibit 9.5 hereto.
ARTICLE X. POST CLOSING CLAIMS
10.1 Seller's Indemnification. Subject to the limitations set forth in
Section 10.4 hereof, Seller shall indemnify Purchaser and hold it
harmless against any and all loss, liability, damage or deficiency
(including interest, penalties, costs and reasonable attorneys' fees)
arising out of or in connection with:
(i) A claim that the intellectual property included in the Acquired
Assets, or any portion of such intellectual property, as of
Closing, in the manifestations developed by Seller and existing
at Closing, or the
Asset Purchase Agreement Page 11
VeriBest/Mentor
commercial use of such intellectual property in that form,
infringes a patent, copyright, trade secret or any other
proprietary right of any third party;
(ii) The breach of any covenant, agreement or obligation of Seller
or inaccuracy of any representation or warranty contained in
this Agreement or in any exhibit or certificate delivered under
this Agreement;
(iii) The obligations and liabilities of Seller not expressly assumed
by Purchaser under this Agreement; and
(iv) All actions, orders, assessments, fees and expenses that result
from relate to or arise in connection with any of the foregoing
or in enforcing this Agreement;
provided, however, that Seller shall have no obligation under this
Section 10.1.1 if Purchaser has failed to comply with the requirements of
Section 10.3 or if Purchaser has failed to make a written claim for
indemnification with respect to a specifically stated event prior to the
expiration of the survival period set forth in Section 11.14.
10.2 Purchaser's Indemnification. Purchaser shall indemnify Seller and
Intergraph and hold them harmless against any loss, liability, damage or
deficiency (including interest, penalties, costs and reasonable
attorneys' fees) arising out of (i) any Assumed Liability or (ii) the
breach of any covenant, agreement or obligation of Purchaser (iii) the
inaccuracy of any representation or warranty contained in this Agreement
or in any exhibit of this Agreement or (iv) all actions, orders,
assessments, fees and expenses that result from relate to or arise in
connection with any of the foregoing or in enforcing this Agreement;
provided, however, that Purchaser shall have no obligation under this
Section 10.2 if Seller has failed to comply with the requirements of
Section 10.3 or if Seller has failed to make a written claim for
indemnification with respect to a specifically stated event prior to the
expiration of the survival period set forth in Section 11.14.
10.3 Notice of Claims. With respect to any claim for indemnification under
Section 10.1 or 10.2 above, the party seeking indemnification shall
promptly notify the other in writing, furnish the indemnifying party with
a copy of each written communication or notice relating to any such claim
and give such indemnifying party authority, information and assistance
necessary to defend any suit or proceeding arising out of such claim.
10.4 Limitations. Notwithstanding the foregoing, liability under this Article
X shall be limited by the following:
10.4.1 Seller shall have no obligation with respect to Purchaser's
losses pursuant to 10.1 unless and until such losses are in
excess of an aggregate of $250,000, and Purchaser shall have no
obligation with respect to Seller's losses pursuant to 10.2
unless and until such losses are in excess of an aggregate of
$250,000; provided, however, that in any event, an indemnifying
party shall be liable only for claims hereunder to the extent
such claims exceed $250,000; and provided, further, however, that
no party shall be entitled to make a claim for indemnification
for individual claims that are less than $100,000 and provided,
further, however, that no party hereto shall be liable for claims
hereunder or under any other document or instrument contemplated
hereby for any aggregate amount
Asset Purchase Agreement Page 12
VeriBest/Mentor
exceeding $14,950,000, and no party shall be liable for indirect,
incidental, consequential, punitive or exemplary damages.
10.4.2 Notwithstanding anything herein to the contrary, the limitations
set forth in Section 10.4.1 with respect to Purchaser's
indemnification obligations shall not apply to any claims for
indemnification by Seller relating to, arising out of or in
connection with (i) Purchaser's obligation to assume and pay the
Assumed Liabilities as recorded on Seller's October 31, 1999
balance sheet or any other liabilities disclosed herein or in the
Schedules hereto, or (ii) Purchaser's obligations set forth in
Section 5.2, Section 5.3 and Section 5.4 .
10.4.3 Seller shall have no liability under 10.1.1(i) if a court of
competent jurisdiction determines the product or software at
issue to be noninfringing;
10.4.4 Nothing in this Agreement shall be construed as limiting in any
way the remedies that may be available to Purchaser or Seller in
the event of willful, common law fraud relating to the
representations, warranties or covenants made by either party.
ARTICLE XI. MISCELLANEOUS
11.1 Absence of Brokerage Fee. Seller agrees that it or its affiliates shall
be responsible for any broker's fees for any brokers that may have been
retained for either Seller or Intergraph in connection with this
transaction. Purchaser represents that it retained no broker in
connection with this transaction.
11.2 Amendment of Agreement. This Agreement may be amended or modified, and
its terms, covenants or conditions may be waived, only by written
agreement of all the parties, or, in the case of a waiver, by a writing
executed by the party waiving compliance.
11.3 Fees and Expenses. All fees and expenses incurred by Seller or its
affiliates in connection with this Agreement shall be borne by Seller or
its affiliates, as appropriate, and all fees and expenses incurred by
Purchaser in connection with this Agreement shall be borne by Purchaser.
11.4 Notices. Any notices or communication given pursuant to this Agreement by
any of the parties to another party shall be in writing and delivered or
mailed by registered or certified mail, postage prepaid (mailed notices
shall be deemed given when duly mailed), as follows:
If to Purchaser: If to Seller:
Mentor Graphics Corporation VeriBest, Inc.
0000 X.X. Xxxxxxxx Xxxx c/o Intergraph Corporation
Xxxxxxxxxxx, Xxxxxx 00000 Xxx Xxxxxxx Xxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxx Xxxxx
General Counsel Attn: General Counsel
or to the attention of such other persons at such other addresses as may
have been furnished by a party to the other parties in writing.
Asset Purchase Agreement Page 13
VeriBest/Mentor
11.5 Interpretation. Except as to its rules concerning choice of law, this
Agreement shall be construed and enforced in accordance with the laws of
the state of Delaware applicable to contracts to be made and executed in,
and entirely to be performed within, such state.
11.6 Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
11.7 Integration. The terms set forth in this Agreement are intended by the
parties as a final, complete and exclusive expression of the terms of
their agreement and may not be contradicted, explained or supplemented by
evidence of any prior written or oral agreement, representation or
warranty or any consistent additional terms.
11.8 Headings. The headings in this Agreement are for reference purposes only
and shall not affect the meaning or interpretation of this Agreement.
11.9 Further Assurances. Seller shall make available to Purchaser any records,
documents and data retained by Seller and Purchaser shall make available
to Seller any documents and data necessary to complete the transactions
contemplated by this Agreement. Both parties shall execute, deliver and
acknowledge all instruments of transfer and conveyance and do and perform
all such other acts and things as either party may reasonably require
more completely to consummate the transactions contemplated by this
Agreement.
In the event any action, suit or proceeding shall have been instituted
seeking to restrain or prevent the consummation of the transactions
contemplated herein, or to impose an obstacle, impediment or burdensome
condition or any of the parties hereto or on the Acquired Assets that
would adversely affect the ability of the parties to consummate the
transactions contemplated herein, the parties agree to cooperate and use
all reasonable efforts (i) to defend against such action, suit or
proceeding and (ii) to resolve or remove any obstacle, impediment or
burdensome condition to the consummation of the transactions herein
contemplated.
11.10 Assignment. This Agreement shall be binding upon and shall inure to the
benefit of the parties and their respective successors and permitted
assigns; provided, that in the event of assignment by Seller, Purchaser
shall be required to make payment under this Agreement to only one agent.
11.11 Risk of Loss. Risk of loss, damage or destruction to any of the Acquired
Assets to be conveyed to Purchaser under this Agreement shall be borne by
Seller until the Closing is completed on the Closing Date. In the event
of such loss, damage or destruction, Purchaser may rescind this Agreement
in its discretion unless arrangements for repair or price modifications
satisfactory to both parties are made prior to the Closing.
11.12 Severability. If any term of this Agreement or its application in any
circumstance is held invalid or unenforceable, the invalidity or
unenforceability will not affect any other terms of this Agreement which
can be given effect without the invalid or unenforceable term nor the
applicability of that term in any other circumstance.
11.13 Entire Agreement. This Agreement represents the parties' entire agreement
concerning the subject matter hereof and, excepting the non-disclosure
agreement previously executed by Purchaser and Intergraph, supersedes any
other agreement concerning the subject matter hereof, whether written or
oral, including the October 27, 1999 Letter of Intent.
Asset Purchase Agreement Page 14
VeriBest/Mentor
11.14 The representations and warranties set forth herein shall survive the
Closing (unless Purchaser knew or had reason to know of any
misrepresentation or breach of warranty at the time of Closing); provided
that the representations and warranties set forth in Sections 2.4 to 2.14
shall not survive the first anniversary of the Closing Date.
11.15 Bulk Transfer Laws. Purchaser acknowledges that Seller has made no
efforts to comply with the provisions of any bulk transfer laws of any
jurisdiction in connection with the transactions contemplated herein.
11.16 No Third Party Beneficiaries. This Agreement shall not confer any rights
or remedies upon any person or entity other than the parties hereto and
Intergraph, and their respective successors and permitted assigns.
IN WITNESS WHEREOF, VeriBest, Inc. and Mentor Graphics Corporation have
duly executed and delivered this Agreement as of the day and year first above
written.
VERIBEST, INC. MENTOR GRAPHICS CORPORATION
XXXX X. XXXXXXXX XXXXXX XXXXXX
-------------------------------- --------------------------------
By: Xxxx X. Xxxxxxxx By: Xxxxxx Xxxxxx
Its: Vice President Its: Treasurer
Asset Purchase Agreement Page 15
VeriBest/Mentor
EXHIBIT 1.3.3
THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE HEREOF ARE NOT
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY APPLICABLE STATE SECURITIES
LAW. THEY MAY NOT BE EXERCISED, SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THESE
SECURITIES UNDER SUCH ACT OR LAWS, OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS
SOLD PURSUANT TO RULE 144 OF SUCH ACT.
No. W-1 WARRANT TO PURCHASE
500,000 SHARES
OF COMMON STOCK
WARRANT
TO PURCHASE SHARES OF COMMON STOCK OF
MENTOR GRAPHICS CORPORATION
MENTOR GRAPHICS CORPORATION, an Oregon corporation (the "Company"), grants
to VeriBest, Inc. (the "Initial Holder"), the right, subject to the terms of
this Warrant, to purchase until the Expiration Date, as defined below, at $15.00
per share (the "Basic Exercise Price"), 500,000 shares of fully paid and
nonassessable shares of Common Stock of the Company. This Warrant is granted by
Holder in exchange for the going concern value and goodwill of Holder.
Section 1. Definitions.
As used in this Warrant, unless the context otherwise requires:
1.1 "Basic Exercise Price" means the price at which each Warrant Share
may be purchased upon exercise of this Warrant as stated in the first sentence
of this Warrant.
1.2 "Common Stock" means shares of the class designated as Common
Stock of the Company at the date of issue of this Warrant.
1.3 "Exercise Date" means the date when this Warrant is exercised, in
whole or in part, in the manner indicated in Section 2.1.
1.4 "Exercise Price" means the Basic Exercise Price; provided,
however, that if an adjustment is required under Section 7 of this Warrant, then
the "Exercise Price" means, after each such adjustment, the price at which each
Warrant Share may be purchased upon exercise of this Warrant immediately after
the last such adjustment.
1.5 "Expiration Date" means the earlier of (i) October 31, 2002, or
(ii) the date on which this Warrant becomes null and void pursuant to Section
10.2.
1.6 "Holder" means the Initial Holder or, upon transfer of this
Warrant by the Initial Holder (or a subsequent Holder) in accordance with the
limitations set forth in Section 8 of this Warrant, a permitted transferee.
1.7 "Securities Act" means the U.S. Securities Act of 1933, as amended
from time to time, and all rules and regulations promulgated thereunder, or any
act, rules or regulations which replace the Securities Act or any such rules and
regulations.
1
1.8 "Warrant" means this Warrant and each previously executed and
canceled Warrant, if any, for which this Warrant has been exchanged.
1.9 "Warrant Shares" means any shares of Common Stock issued or
subject to issuance upon exercise of this Warrant or upon exchange of a Warrant
Share for Warrant Shares of different denominations (and any shares received in
respect of such shares as a result of a corporate stock split, stock dividend or
other similar corporate recapitalization).
Section 2. Duration and Exercise of Warrant.
2.1 Method of Exercise. This Warrant may be exercised by the Holder,
in whole or in part, at any time on or after October 31, 2001, by (i)
surrendering to the Company payment in full by wire transfer or certified check
of the Exercise Price for the Warrant Shares, and (ii) executing and delivering
to the Secretary of the Company the attached Exercise Form. Upon compliance with
this Section 2.1, the Holder shall be deemed to be the holder of record of the
Warrant Shares. In the event of an exercise of this Warrant for less than all of
the shares available for purchase, the Company shall cancel the Warrant and
execute and deliver a new warrant of like tenor and date for the balance of the
shares purchasable.
2.2 Certificates. The Company shall use its best efforts to deliver
the certificates for the Warrant Shares within three (3) business days after
exercise, but in no event shall such certificates be delivered to the Holder
later than 7 days after the date of exercise of the Warrant.
2.3 Securities Act Compliance. Unless the Warrant Shares shall have
been registered under the Securities Act, as a condition of its delivery of
certificates for the Warrant Shares, the Company may require the Holder to
deliver to the Company, in writing, representations regarding the Holder's
sophistication, investment intent, acquisition for Holder's own account and such
other matters as are reasonable and customary for purchasers of securities in an
unregistered private offering. The Company may place conspicuously upon each
certificate representing the Warrant Shares a legend substantially in the
following form, the terms of which are hereby agreed to by the Holder (including
any transferee):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR APPLICABLE STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THE SECURITIES UNDER SUCH ACT OR LAWS OR AN OPINION OF
COUNSEL FOR THE HOLDER REASONABLY SATISFACTORY TO THE ISSUER STATING THAT
SUCH REGISTRATION IS NOT REQUIRED.
2.4 Taxes. The Company shall not be required to pay any taxes that may
be payable in respect of the issuance of the Warrant Shares.
Section 3. Validity and Reservation of Warrant Shares.
The Company covenants that all shares of Common Stock issued upon exercise
of this Warrant will be validly issued, fully paid and nonassessable. The
Company agrees that, as long as this Warrant may be exercised, the Company will
have authorized and reserved for issuance upon exercise of this Warrant a
sufficient number of Warrant Shares to provide for exercise in full of this
Warrant.
Section 4. Fractional Shares.
No fractional Warrant Shares shall be issued upon the exercise of this
Warrant. With respect to any fraction of a Warrant Share otherwise issuable upon
any such exercise, the Company shall pay to the Holder an amount in cash equal
to such fraction multiplied by the Exercise Price as then in effect.
2
Section 5. Limited Rights of Warrant Holder.
The Holder shall not, solely by virtue of being the Holder of this Warrant,
have any of the rights of a holder of Common Stock of the Company, either at law
or equity, until such Warrant shall have been exercised and the Holder shall be
deemed to be the holder of record of the Warrant Shares as provided in this
Warrant, at which time the person or persons in whose name or names the
certificate or certificates for Warrant Shares being purchased are to be issued
shall be deemed the holder or holders of record of such shares for all purposes.
Section 6. Loss of Warrant.
Upon receipt by the Company of satisfactory evidence of the loss, theft,
destruction or mutilation of this Warrant and either (in the case of loss, theft
or destruction) reasonable indemnification and, if reasonably requested by the
Company, a bond satisfactory to the Company, or (in the case of mutilation) the
surrender of this Warrant for cancellation, the Company will execute and deliver
to the Holder, without charge, a replacement Warrant.
Section 7. Adjustments of Exercise Price; Additional Consideration.
7.1 Stock Splits, Etc. In case the Company effects a subdivision,
split, combination, reclassification or other recapitalization of Common Stock
into a greater or lesser number of shares of Common Stock, the Exercise Price in
effect immediately after such subdivision, split, combination, reclassification
or other recapitalization shall be proportionately decreased or increased, as
the case may be.
7.2 Number of Warrant Shares Adjusted. After any adjustment of the
Exercise Price pursuant to Section 7.1, the number of Warrant Shares issuable at
the new Exercise Price shall be adjusted to the number obtained by (i)
multiplying the number of Warrant Shares issuable upon exercise of the Warrant
immediately before such adjustment by the Exercise Price in effect immediately
before such adjustment and (ii) dividing the product so obtained by the new
Exercise Price.
7.3 Notice of Adjustment. Whenever events occur requiring the Exercise
Price to be adjusted, the Company shall provide, by notice, to the Holder a
certificate signed by its president or chief financial officer showing the
adjusted Exercise Price, setting forth in reasonable detail the acts requiring
such adjustment, and stating such other facts as shall be necessary to show the
manner and figures used to compute such adjustment.
7.4 Additional Consideration. If at any time after the Exercise Date
but before expiration of this Warrant the average trading price of the Common
Stock for 10 consecutive trading days is less than $1.00 per share, the Initial
Holder may require the Company to purchase any unissued Warrant Shares at a
price of $3.00 per share in cash. If at any time after the exercise date but
before expiration of this Warrant the average trading price of the Common Stock
for 10 consecutive trading days is greater than $60.00 per share, the Company
will grant to the Initial Holder an additional 100,000 Warrant Shares on terms
identical to those granted under this Agreement.
Section 8. Transfer Restriction.
This Warrant may not be assigned, transferred, hypothecated or otherwise
disposed of except that the Warrant may be transferred (i) to a 100% owned
subsidiary corporation of the Holder, or (ii) to Intergraph Corporation or
Intergraph Corporation's primary lender, (iii) to one or more other persons or
entities that the Company reasonably determines is not engaged in a business
that, directly or indirectly, competes with the Company and provided that the
Company receives an opinion of counsel, furnished at Holder's expense and
reasonably acceptable to the Company, to the effect that the Warrant may be
transferred without registration under the Securities Act and applicable state
securities laws.
Section 9. Registration Rights.
3
The Holder shall have registration rights with respect to the Warrant
Shares as described in Exhibit "A" which is attached hereto and incorporated
herein.
Section 10. Miscellaneous.
10.1 Notice. Notice or demand pursuant to this Warrant to be given or
made by the Holder, to or on the Company, shall be sufficiently given, made or
served, if in writing and delivered personally or by telecopier (except for
legal process) or if sent by certified or registered mail, or overnight delivery
service, postage prepaid, addressed, until another address is designated in
writing by the Company, as follows:
Mentor Graphics Corporation
0000 XX Xxxxxxxx Xx.
Xxxxxxxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxx, General Counsel and
Corporate Secretary
Any notice or demand authorized pursuant to this Warrant to be given or made by
the Company to or on the Holder shall be given to the Holder by certified or
registered mail, or overnight delivery service, postage prepaid, addressed to
its last known address as it shall appear on the books of the Company, until
another address is designated in writing.
10.2 Merger or Consolidation-Change in Control. In case of any merger,
consolidation or reorganization of the Company with or into one or more other
corporations, which results in the holders of the Company's voting securities
immediately prior to such event owning less than a majority interest of the
voting securities of the surviving corporation immediately following such event,
or in the case of any other transaction or series of related transactions in
which more than 50% of the voting power of the corporation is disposed, or in
case of any sale, lease, transfer or conveyance to another corporation of all or
substantially all of the assets of the Company or proposed liquidation of the
Company, then in any such event, the Holder shall be given notice of such
proposed action at approximately the same time and in substantially the same
manner as the holders of the Company's Common Stock. In the event that at the
time of such notice the average trading price of the Common Stock for the prior
10 trading days is less than $15.00 per share (as such price per share may be
proportionately decreased or increased to give effect to any stock event
described in Section 7.1 hereof), the Exercise Price shall be immediately
reduced to such average trading price. If the proposed action is approved
according to applicable law, the Holder shall be so notified in writing by the
Company by registered or certified mail, or by overnight delivery service, and
thereupon, this Warrant, to the extent not then exercised, shall automatically
become null and void on or before 5:00 p.m., Portland, Oregon time, on the tenth
business day following the delivery of such approval notice.
10.3 Applicable Law. The validity, interpretation and performance of
this Warrant shall be governed by the laws of the State of Oregon.
10.4 Headings. The Section headings herein are for convenience only
and are not part of this Warrant and shall not affect the interpretation
thereof.
Dated: October 31, 1999
MENTOR GRAPHICS CORPORATION
By:
-------------------------------------
Name:
Title:
4
EXERCISE FORM
(To Be Executed by the Warrant Holder)
To: MENTOR GRAPHICS CORPORATION
The undersigned hereby irrevocably elects to exercise the right of purchase
represented by the attached warrant (the "Warrant") for, and to purchase
thereunder, ________ shares of Common Stock provided for therein and tenders
payment herewith to the order of Mentor Graphics Corporation in the amount of $
per share for a total of $________.
Name: ________________________________________________
Address: _____________________________________________
Deliver to: __________________________________________
Address: _____________________________________________
DATED: ______________ Signature: _____________________
By: _________________________________________
Name:
Title:
5
EXHIBIT "A"
Registration Rights
Capitalized terms used but not defined herein shall have the respective meanings
ascribed to such terms in the Warrant to which this Exhibit A is attached.
(a) Piggy-Back Registration Rights. If at any time commencing after
October 31, 1999 until the expiration of the Warrant (the "Registration
Period"), Mentor Graphics Corporation (the "Company") proposes to register any
of securities under the Securities Act (other than registration of a stock
option, stock purchase or compensation or incentive plan or of stock issued or
issuable pursuant to any such plan, or dividend investment plan, a registration
of stock proposed to be issued in exchange for securities or assets of, or in
connection with the merger or consolidation with, another person or entity , or
a registration of stock proposed to be issued in exchange for securities of such
other person or entity), the Company shall give prompt written notice thereof to
the Holder and, upon the written request made within ten (10) days after the
Holder and, upon receipt of such notice, the Company shall use its best efforts
to effect as part of such registration the registration under the Securities Act
of that number of the Warrant Shares which the Holder requests the Company to
register, provided that if the registration relates to a firm commitment,
underwritten public offering, the managing underwriter of the Company's public
offering, if any, shall be of the opinion that the inclusion in such
registration of such number of Warrant Shares will not interfere with the
successful marketing of all of the Company's securities being registered. If the
managing underwriter, if any, reasonably requests the Holder to reduce in whole
or in part the number of Warrant Shares sought or be registered by the Holder,
the Holder shall comply with the request of the managing underwriter. In any
underwritten offering, the Holder shall sell the Warrant Shares registered as
part of such underwritten offering to the underwriters of such offering on the
same terms and conditions as apply to the Company. In connection with any
registration pursuant to this Section (a), the Holder shall provide the Company
with such information regarding the Holder and the distribution of the Warrant
Shares as the Company and the managing underwriter shall reasonably request for
use in the registration statement relating to such offering. The Company shall
pay all costs and expenses of the Holder. The Company shall not be obliged to
effect registration under the Securities Act pursuant to this Section (a) on
more than one occasion; provided, however, that this limitation shall not apply
if the number of shares requested to be registered by the Holder shall have been
reduced pursuant to the second sentence of this Section (a) unless and until the
occurrence of an occasion on which the shares requested by the Holder to be
registered have not been so reduced.
(b) Demand Registration Rights. During the Registration Period, the Holder
shall have the following demand registration rights, subject to the conditions
herein:
(i) Registration Request. At any time during the Registration Period
and within 45 days of receipt by the Company of the written request of the
Holder, the Company shall diligently proceed to file with the Securities
Exchange Commission (the "SEC") a registration statement under the Securities
Act, on Form S-3 (or any successor form), or if the Company is not eligible for
Form S-3, on such other appropriate form as the Company shall select, covering
such number of Warrant Shares as the Holder shall notify the Company in writing.
The Company will use its best efforts to cause such registration statement to
become effective as soon as practicable following such request; provided,
however, that the Company will not be required to file a registration statement
on more than one occasion.
(ii) Information and Costs. The Holder shall provide the Company with
such information for use in the registration statement relating to such offering
with respect to the Warrant Shares to be sold, the plans for the proposed
disposition thereof, and such other information as shall in the opinion of
counsel for the Company be necessary to enable the Company to include in such
registration statement (or any amendment or supplement thereto) all material
facts required to be disclosed with respect to the Holder. The Company shall
bear the cost of such registration, including, but not limited to, all
registration and filing fees, and printing expenses.
(iii) Obligation of the Company. If and when the Company shall be
required to prepare a registration statement pursuant to this Section (b), the
Company will:
1) use its best efforts to effect and to keep effective the
necessary registrations or qualifications under the securities or Blue Sky laws
of such jurisdictions within the United States as the Holder may reasonably
request so as to permit the sale, transfer or other disposition of the Warrant
1
Shares being registered; provided, that the Company shall not be required in
connection therewith or a condition thereto to qualify to do business or file a
general consent to service of process in any such jurisdictions;
2) furnish to the Holder such number of prospectuses (and each
amendment and supplement thereto) conforming to the requirements of the
Securities Act, and the rules and regulations thereunder, and such number of
preliminary prospectuses (containing substantially the information required to
be provided in such prospectuses) as the Holder or its underwriters may from
time to time reasonably request.
3) promptly notify the Holder of the happening of any event as a
result of which any preliminary prospectus or prospectus included in any
registration statement hereunder includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing; and
4) register the Warrant Shares to be sold on the securities
exchange on which the common stock of the Company may be listed so that they may
be freely transferable without restriction on such exchange.
5) keep such registration effective until the earlier of (a)
twelve (12) months after the effective date of the registration period, (b) the
date all the Warrant Shares have been sold or (c) the Expiration Date.
(c) General Conditions. In connection with each registration effected
pursuant to Section (a) or Section (b), the Company and the Holder agree as
follows:
(i) Indemnification of Holder. The Company shall indemnify and hold
harmless the Holder against any and all losses, claims, damages, or liabilities
to which the Holder may become subject under the Securities Act, or any other
statute or common law, including any amount paid in settlement of any
litigation, commenced or threatened, if such settlement is effected with the
written consent of the Company, and to reimburse them for any legal or other
expenses incurred by them in connection with investigating any claims and
defending any action insofar as any such losses, claim, damages, liabilities or
actions arise out of or are based upon 1) any untrue statement or alleged untrue
statement of a material fact, contained in the registration statement relating
to the sale of the Warrant Shares, or any post-effective amendment thereof, or
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, 2)
any untrue statement or alleged untrue statement of a material fact, contained
in a preliminary prospectus, if used prior to the effective date of such
registration statement, or contained in the prospectus (as amended or
supplemented, if the Company shall have filed with the SEC any amendment thereof
or supplement thereto), if used within the period during which the Company is
required to keep the registration statement to which the prospectus relates
current pursuant to the terms hereof, or the omission or alleged omission to
state therein (if so used) the material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The indemnification agreement contained in this agreement,
however, shall not: 1) apply to such losses, claims, damages, liabilities, or
actions arising out of, or based upon, any such untrue statement or alleged
omission, if such statement or omission was in reliance upon and in conformity
with the information furnished in writing to the Company by the Holder for use
in the registration statement or any preliminary prospectus or prospectus
contained in the registration statement or any amendment thereof or supplement
thereto, or 2) inure to the benefit of any underwriter from whom the person
asserting any such losses, claims, damages, expenses or liabilities purchased
the securities which are the subject thereof (or to the benefit of any person
controlling such underwriter), if such underwriter failed to send or give a copy
of the prospectus to such person at or prior to the written confirmation of the
sale of such securities to such person.
(ii) Indemnification of the Company. The Holder and each underwriter
of the Warrant Shares to be registered (such party and such underwriters being
referred to severally in this subparagraph as the "Indemnifying Party") shall
agree, in the same manner and to the same extent as set forth in the preceding
paragraph, to indemnify and hold harmless the Company and each person, if any,
who controls the Company within the meaning of Section 15 of the Securities Act,
its directors and those officers of the Company who shall have signed such
registration statement, with respect to any statement in or omission from such
registration statement or any post-effective amendment thereof or any
preliminary prospectus (as amended or supplemented, if amended or supplemented
as aforesaid) contained in such registration statement, if such statement or
omission was made in reliance upon and in conformity with information furnished
in writing to the
2
Company by such Indemnifying Party for use in such registration statement or any
preliminary prospectus or prospectus contained in such registration statement or
any amendment thereof or supplement thereto.
(iii) Notice of Indemnifiable Action. Each indemnified party will,
promptly after the receipt of notice of the commencement of any action against
such indemnified party in respect of which indemnity may be sought from a party
hereto on account of an indemnity agreement contained in this Section, notify
the indemnifying party in writing of the commencement thereof. The omission of
any indemnified party so to notify an indemnifying party of any such action
shall relieve the indemnifying party from any liability in respect of such
action which it may have to such indemnified party on account of the indemnity
agreement contained in this Section, but shall not relieve the indemnifying
party from any other liability which it may have to such indemnified party.
(iv) Termination of Obligation. The Company shall not be required to
file a registration statement or to keep a registration statement effective if
the Warrant Shares could be publicly sold with registration under the Securities
Act.
3
