OPTION EXCHANGE AGREEMENT
DATED AS OF JUNE 30, 1998
AMONG
SUMMIT DESIGN INC.,
PROSOFT OY,
AND
OPTIONHOLDERS OF PROSOFT OY
CONTENTS
SECTION 1. EXCHANGE OF OPTIONS . . . . . . . . . . . . . . . . . . 1
1.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Tender of Prosoft Options . . . . . . . . . . . . . . . 2
1.3 Issuance of Acquiror Options . . . . . . . . . . . . . 2
1.3.1 Number of Shares . . . . . . . . . . . . . . . . 2
1.3.2 Exercise Price . . . . . . . . . . . . . . . . . 2
1.3.3 Vesting Schedule . . . . . . . . . . . . . . . . 2
1.3.4 Term . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Option Letter Agreements . . . . . . . . . . . . . . . 2
1.5 Registration . . . . . . . . . . . . . . . . . . . . . 3
1.6 Redemption Clause . . . . . . . . . . . . . . . . . . . 3
SECTION 2. OWNERSHIP AND ASSIGNMENT OF INTELLECTUAL PROPERTY . . . 3
SECTION 3. REPRESENTATIONS AND WARRANTIES OF ACQUIROR . . . . . . 4
3.1 Capitalization . . . . . . . . . . . . . . . . . . . . 4
3.2 Authority Relative to this Agreement . . . . . . . . . 4
3.3 SEC Filings; Financial Statements . . . . . . . . . . . 4
SECTION 4. REPRESENTATIONS AND WARRANTIES OF OPTIONHOLDERS . . . . 5
4.1 Authority . . . . . . . . . . . . . . . . . . . . . . . 5
4.2 No Conflict . . . . . . . . . . . . . . . . . . . . . . 5
4.3 Brokers and Finders . . . . . . . . . . . . . . . . . . 5
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4.4 Ownership . . . . . . . . . . . . . . . . . . . . . . . 5
4.5 Investor Suitability . . . . . . . . . . . . . . . . . 6
4.6 Pooling Representation . . . . . . . . . . . . . . . . 6
SECTION 5. CONDITIONS OF CLOSING . . . . . . . . . . . . . . . . . 6
SECTION 6. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . 7
6.1 Severability . . . . . . . . . . . . . . . . . . . . . 7
6.2 Entire Agreement . . . . . . . . . . . . . . . . . . . 7
6.3 Assignment . . . . . . . . . . . . . . . . . . . . . . 7
6.4 Governing Law . . . . . . . . . . . . . . . . . . . . . 7
6.5 Counterparts . . . . . . . . . . . . . . . . . . . . . 7
6.6 Amendment . . . . . . . . . . . . . . . . . . . . . . . 8
6.7 Further Assurances . . . . . . . . . . . . . . . . . . 8
PAGE ii
OPTION EXCHANGE AGREEMENT
THIS OPTION EXCHANGE AGREEMENT (the "Agreement"), is made and entered
into as of June 30, 1998 among SUMMIT DESIGN INC., a Delaware corporation
("Acquiror"), PROSOFT OY, a corporation organized under the laws of Finland
(the "Company") and Jukka-Pekka Ikaheimonen, Xxxxx Xxxxxx, Xxxx Xxxxx, Xxxxx
Xxxxxxxx, Janne-Petteri Xxxxxxxx, and Simo Piiroinen (individually each an
"Optionholder" and collectively the "Optionholders").
RECITALS:
A. Acquiror is acquiring all of the outstanding shares of stock of the
Company pursuant to a Stock Purchase Agreement (the "Stock Purchase
Agreement") dated concurrent herewith.
B. The Optionholders are holders of options (the "Prosoft Options") to
purchase 168 shares of the common stock of the Company ("Company Common
Stock") at an exercise price of 100 Finnish Markka ($19.78 per share based on
the median exchange rate on the Closing Date). The Prosoft Options were
issued pursuant to an agreement between the Optionholders and the Company
dated December 18, 1997 (the "Prosoft Option Agreement").
C. A condition of the Stock Purchase Agreement is that all of the
options to Company Common Stock be exchanged for options to acquire common
stock of Acquiror ("Acquiror Common Stock") such new options ("Acquiror
Options") to have equivalent rights and value as the replaced options.
D. In order to induce Acquiror to enter into the Stock Purchase
Agreement, the Optionholders, being the holders of all options to acquire
Company Common Stock, have agreed to exchange the Prosoft Options for
Acquiror Options, pursuant to the terms stated herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Acquiror and the Company hereby agree as follows:
SECTION 1. EXCHANGE OF OPTIONS
1.1 CLOSING
The closing of this Option Exchange Agreement (the "Closing") will take
place at 10:00 a.m., P.D.T. on June 30, 1998 (the "Closing Date" or
"Effective Time"), at
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the offices of Xxxxxxx Coie LLP, 0000 X.X. Xxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxxx, Xxxxxx, XXX.
1.2 TENDER OF PROSOFT OPTIONS
Each Optionholder hereby tenders for exchange to Acquiror all of his
right, title and interest in the Prosoft Options.
1.3 ISSUANCE OF ACQUIROR OPTIONS
Acquiror hereby grants to each Optionholder an Acquiror Option, such
option to have the characteristics stated in this Section 1.3.
1.3.1 NUMBER OF SHARES
Each Optionholder shall receive an option to purchase the number of
shares of Acquiror Common Stock set forth opposite such Optionholder's name
in Exhibit A, hereto, such number being calculated as the whole number of
shares (after rounding) equal to the product of the number of shares of
Company Common Stock which the Optionholder could have purchased upon
exercise of such Optionholder's options under the Prosoft Option Agreement
and the Exchange Rate (such "Exchange Rate" being defined as to 136.59736).
1.3.2 EXERCISE PRICE
The exercise price for the Acquiror Options shall be $0.14 per share,
such number being calculated as the amount (after rounding) equal to the
quotient calculated by dividing the exercise price for the Prosoft Options by
the Exchange Rate.
1.3.3 VESTING SCHEDULE
The Acquiror Options shall become exercisable in accordance with the
schedule set forth in the Prosoft Option Agreement.
1.3.4 TERM
The Acquiror Options shall expire in accordance with the terms set forth
in the Prosoft Option Agreement.
1.4 OPTION LETTER AGREEMENTS
So long as (i) the terms of the options set forth in Section 3 of this
Agreement are not inconsistent with the requirements of Acquiror's 1994 Stock
Option Plan (the
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"Plan"), and (ii) the options granted in this Agreement may be granted under
the Plan without violating applicable law, the options granted hereunder
shall be options granted under the Plan and shall be subject to the terms
thereof (except as provided in Section 1.3), and Acquiror shall deliver to
each Optionholder an Option Letter Agreement setting forth the terms and
conditions of the option, which each such Optionholder shall acknowledge and
accept.
1.5 REGISTRATION
AT THE PRESENT TIME, ACQUIROR HAS AN EFFECTIVE REGISTRATION STATEMENT
WITH RESPECT TO SHARES OF COMMON STOCK GRANTED UNDER THE PLAN. ACQUIROR
INTENDS TO MAINTAIN THIS REGISTRATION. IN THE EVENT THAT SUCH REGISTRATION
IS NO LONGER EFFECTIVE, THE OPTIONHOLDERS MIGHT NOT BE ABLE TO EXERCISE THEIR
OPTIONS UNLESS EXEMPTIONS FROM REGISTRATION UNDER FEDERAL AND STATE
SECURITIES LAWS IN THE UNITED STATES ARE AVAILABLE.
1.6 REDEMPTION CLAUSE
To the extent the redemption clause in the Company's Articles of
Association grants any rights to the Optionholders, the Optionholders hereby
waive such rights.
SECTION 2. OWNERSHIP AND ASSIGNMENT OF INTELLECTUAL PROPERTY
All patents, trademarks, trade names, internet domain names, service
marks, maskworks, copyrights, and any applications for any of the foregoing,
inventions, net lists, schematics, technology, know-how, microcode, computer
software programs or applications and tangible or intangible proprietary
information or material that in any material respect, prepared by each
Optionholder during the course of such Optionholder's employment with or
consulting services to the Company, or which were prepared with the use of
Company resources, or which are used or proposed to be used in the business
of the Company as currently conducted (together, the foregoing, the "Company
Technology"), are the sole and exclusive property of the Company, and are
hereby irrevocably assigned by each Company Shareholder to the Company. To
the extent such assignment is invalid under applicable law, each Optionholder
hereby grants the Company an exclusive, worldwide, royalty-free, assignable,
and sublicensable license to the Company Technology. Each Optionholder
agrees to assist Acquiror and/or the Company in every proper way to obtain
and enforce patents, mask work rights, trade secret rights and other legal
protections for the Company Technology in any and all countries.
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SECTION 3. REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Acquiror hereby represents and warrants to the Company that the
statements contained in this Section 3 are true and correct.
3.1 CAPITALIZATION
The shares of Acquiror Common Stock to be issued upon exercise of the
options granted pursuant to this Agreement will be duly authorized, validly
issued, fully paid and nonassessable and will be free of any liens or
encumbrances.
3.2 AUTHORITY RELATIVE TO THIS AGREEMENT
Acquiror has all necessary corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by Acquiror and the consummation by Acquiror of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of Acquiror and no other corporate
proceedings on the part of Acquiror are necessary to authorize this Agreement
or to consummate the transactions so contemplated. This Agreement when duly
and validly executed and delivered by Acquiror will constitute a legal, valid
and binding obligation of Acquiror.
3.3 SEC FILINGS; FINANCIAL STATEMENTS
Acquiror has filed all forms, reports and documents required to be filed
with the SEC since October 17, 1996, and has heretofore made available to
each Optionholder, in the form filed with the SEC, (i) its Annual Reports on
Form 10-K for the fiscal year ended 1997, (ii) its Quarterly Report on Form
10-Q for the period ended Xxxxx 00, 0000, (xxx) all proxy statements relating
to Acquiror's meetings of shareholders (whether annual or special) held since
December 31, 1997, (iv) all other reports or registration statements (other
than Reports on Form 10-Q not referred to in clause (ii) above) filed by
Acquiror with the SEC since December 31, 1997, (v) its registration of the
Plan on Form S-8, dated December 17, 1996, and (v) all amendments and
supplements to all such reports and registration statements filed by Acquiror
with the SEC (collectively, the "Acquiror SEC Reports"). The Acquiror SEC
Reports (i) were prepared in accordance with the requirements of the
Securities Act or the Exchange Act as the case may be, and (ii) did not at
the time they were filed (or if amended or superseded by a filing prior to
the date of this Agreement, then on the date of such filing) contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the
PAGE 4
statements therein, in the light of the circumstances under which they were
made, not misleading.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF OPTIONHOLDERS
Each Optionholder, severally represents and warrants to Acquiror that
with respect to himself, the statements contained in this Section 4 are true
and correct.
4.1 AUTHORITY
Each Optionholder has the power, authority, and capacity to execute and
deliver this Agreement and to consummate the transaction contemplated hereby.
This Agreement constitutes the valid and binding obligation of each
Optionholder enforceable against him in accordance with its terms, except as
that enforceability may be limited by the effect of bankruptcy or other
similar laws relating to the rights of creditors generally.
4.2 NO CONFLICT
Neither the execution and delivery by each Optionholder of this Agreement
nor the consummation by each Optionholder of the transactions contemplated
hereby will conflict with, violate, result in a breach of, or constitute (with
or without notice or lapse of time, or both) a default (or give rise to a right
of termination, cancellation or acceleration of any obligation or loss of any
benefit) under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, lease, contract or other agreement, instrument or
obligation to which each Optionholder is a party or by which each Optionholder
or any of his or her properties or assets may be bound, or conflict or violate
any permit, concession, franchise, license, judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to each Optionholder or any of his
properties or assets.
4.3 BROKERS AND FINDERS
Each Optionholder has not employed any broker, finder or investment banker,
or incurred any liability for any brokerage or investment banking fees,
commissions, or finder's fees in connection with the transactions contemplated
by this Agreement.
4.4 OWNERSHIP
Each Optionholder is the sole, true and lawful owner of an option to
purchase that number of shares of Company Common Stock set forth opposite his
name on
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Exhibit A, free and clear of all liens, charges and encumbrances of any
nature whatsoever.
4.5 INVESTOR SUITABILITY
(a) Each Optionholder is capable of evaluating the merits and
risks of its investment in the option to purchase Acquiror Common Stock and
has the capacity to protect his own interests in connection with the
acquisition of the option to purchase Acquiror Common Stock hereunder. Each
Optionholder, either individually or with the assistance of advisors, has
such knowledge and experience in financial and business matters that he is
capable of evaluating the merits and risks of the transactions contemplated
by this Agreement. Each Optionholder is taking the option to purchase
Acquiror Common Stock for his own account and not with a view to or for sale
in connection with any distribution of such securities. Each Optionholder,
either individually or with the assistance of advisors, has reviewed the
Acquiror SEC Reports. Each Optionholder is familiar with the business and
financial condition, properties, operations and prospects of Acquiror and has
had an opportunity to discuss Acquiror's business and financial condition,
properties, operations and prospects with Acquiror's management. Each
Optionholder has also had an opportunity to ask questions of officers of
Acquiror, which questions, if any, were answered to his satisfaction.
(b) Each Optionholder understands that the option to purchase
Acquiror Common Stock is not transferable.
4.6 POOLING REPRESENTATION
(a) Each Optionholder has had no investment in Acquiror at any
time prior to the Closing.
(b) Each Optionholder has not engaged in a sale of any shares of
Company Common Stock since January 1, 1995.
SECTION 5. CONDITIONS OF CLOSING
The respective obligations of each party to effect the Closing shall be
subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) STOCK PURCHASE AGREEMENT. Acquiror and the shareholders of
the Company shall, simultaneous with the Closing, have entered into a Stock
Purchase Agreement pursuant to which Acquiror acquired all of the Company
Common Stock.
PAGE 6
(b) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary
restraining order, preliminary or permanent injunction or other order issued
by any court of competent jurisdiction or other legal restraint or
prohibition (an "Injunction") preventing the consummation of the Agreement
shall be in effect, nor shall any proceeding brought by any administrative
agency or commission or other governmental authority or instrumentality,
domestic or foreign, seeking any of the foregoing be pending. There shall
not be any action taken, or any statute, rule, regulation or order enacted,
entered, enforced or deemed applicable to the Agreement, which makes the
consummation of the Agreement illegal; and
SECTION 6. GENERAL PROVISIONS
6.1 SEVERABILITY
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of
the parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
6.2 ENTIRE AGREEMENT
This Agreement, together with the exhibits hereto, constitutes the
entire agreement and supersedes all prior agreements and undertakings, both
written and oral, among the parties, or any of them, with respect to the
subject matter hereof and, except as otherwise expressly provided herein, are
not intended to confer upon any other person any rights or remedies hereunder.
6.3 ASSIGNMENT
The Optionholders shall not assign this agreement without the prior
written consent of Acquiror.
6.4 GOVERNING LAW
This Agreement shall governed by, and construed In accordance with, the
laws of the State of Oregon.
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6.5 COUNTERPARTS
This Agreement may be executed in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement.
6.6 AMENDMENT
This Agreement may not be amended except by an instrument in writing
signed by the parties hereto.
6.7 FURTHER ASSURANCES
Any further action necessary or desirable to carry out the purposes of
this Agreement shall be taken by the parties to this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first written above.
SUMMIT DESIGN INC.
By: /s/ XXXXX X. XXXXXXX
-----------------------------
Name: Xxxxx X. Xxxxxxx
Title: President and CEO
PROSOFT OY
By: /s/ XXXXX XXXXXX
----------------------------
Name: Xxxxx Xxxxxx
Title: President
By: /s/ XXXXX XXXXXX
----------------------------
XXXXX XXXXXX
By: /s/ XXXX XXXXX
----------------------------
XXXX XXXXX
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By: /s/ JUKKA-PEKKA IKAHEIMONEN
----------------------------
JUKKA-PEKKA IKAHEIMONEN
By: /s/ XXXXX XXXXXXXX
----------------------------
XXXXX XXXXXXXX
By: /s/ JANNE-PETTERI XXXXXXXX
----------------------------
JANNE-PETTERI XXXXXXXX
By: /s/ SIMO PIIROINEN
----------------------------
SIMO PIIROINEN
PAGE 9
EXHIBIT A
NUMBER OF COMPANY
SHARES SUBJECT TO NUMBER OF ACQUIROR SHARES
OPTIONHOLDER PROSOFT OPTION SUBJECT TO ACQUIROR OPTION
Xxxxx Xxxxxx 56 7,649
Xxxx Xxxxx 00 7,649
Jukka-Pekka Ikaheimonen 40 5,464
Xxxxx Xxxxxxxx 8 1,094
Xxxxx-Xxxxxxx Xxxxxxxx 0 546
Simo Piiroinen 4 546
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