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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )*
Cooper & Chyan Technology, Inc.
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(Name of Issuer)
Common Stock, $0.01 par value per share
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(Title of Class of Securities)
216624 10 6
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(CUSIP Number)
Paul Lippe, Esq.
Synopsys, Inc.
700 East Middlefield Road, Mountain View, California 94043
(415) 962-5000
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(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
May 6, 1996
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
Check the following box if a fee is being paid with the statement /X/. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of less than five percent of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange of 1934
("Act") or otherwise subject to the liabilities of that section of the Act but
shall be subject to all other provisions of the Act (however, see the Notes).
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SCHEDULE 13D
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CUSIP NO. 216624 10 6 PAGE 2 OF 6 PAGES
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Synopsys, Inc.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(See Instructions) (b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS (See Instructions)
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of Delaware
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7 SOLE VOTING POWER
NUMBER OF 1,206,542
SHARES -----------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH -----------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 1,206,542
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10 SHARED DISPOSITIVE POWER
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,206,542
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See Instructions) / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.9%
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14 TYPE OF REPORTING PERSON (See Instructions)
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
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ITEM 1. SECURITY AND ISSUER.
This statement on Schedule 13D relates to Common Stock, par value $0.01
per share ("Common Shares"), of Cooper & Chyan Technology, Inc., a Delaware
corporation (the "Issuer"). The address of the principal executive office of the
Issuer is 1601 Saratoga-Sunnyvale Road, Cupertino, California 95014.
ITEM 2. IDENTITY AND BACKGROUND.
This statement on Schedule 13D is filed on behalf of Synopsys, Inc., a
Delaware corporation ("Synopsys"). The address of the principal business and
principal office of Synopsys is 700 East Middlefield Road, Mountain View,
California 94043-4033. Synopsys is principally engaged in the development,
marketing and support of high-level design automation models and software for
designers of integrated circuits and electronic systems.
The name, business address, present principal occupation (and the name
and address of any corporation or other organization in which such employment is
conducted) and citizenship of each member of the Board of Directors and
executive officer of Synopsys is as follows:
Name Present Principal Occupation or Employment
and Business Address
Harvey C. Jones, Jr.* Chairman of the Board of Synopsys.
Aart J. de Geus** President and Chief Executive Officer.
William W. Lattin** Executive Vice President.
Deborah Coleman* Chairman and Chief Executive Officer of Merix
Corporation, a manufacturer of printed circuit
boards. Ms. Coleman's business address is
1521 Poplar Lane, Forest Grove, Oregon 97116.
A. Richard Newton* Professor of Electrical Engineering and Computer
Science at the University of California at Berkeley.
Dr. Newton's business address is Electronics
Research Laboratory, Room 512 Cory Hall #1774,
Berkeley, California 94720-1774.
Steven C. Walske* President and Chief Executive Officer and a director
of Parametric Technology Corporation, a supplier of
software products for mechanical computer-aided
engineering. Mr. Walske's business address is
128 Technology Drive, Waltham, Massachusetts 02154.
Prakash Bhalerao*** Senior Vice President, Design Reuse Group.
David C. Bullis*** Senior Vice President, Verification Systems Group.
Chi-Foon Chan*** Senior Vice President, Design Tools Group.
Sally A. DeStefano*** Senior Vice President, Human Resources and
Facilities.
Alain J. P. Labat*** Senior Vice President, Worldwide Field Operations.
A. Brooke Seawell*** Senior Vice President, Finance and Operations; Chief
Financial Officer.
Larry Woodson*** Senior Vice President, Corporate Marketing.
Paul Lippe*** Vice President, Business Development and Legal.
Gregory Walker*** Vice President, Finance.
* Director of Synopsys.
** Director and executive officer of Synopsys.
*** Executive officer of Synopsys.
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Except as otherwise indicated above, each of the persons named above has his or
her business address at 700 East Middlefield Road, Mountain View, California
94043-4033. Each of the persons named above is a citizen of the United States
of America, except for Dr. de Geus, who is a citizen of the Netherlands, and
Mr. Labat, who is a citizen of the Republic of France.
Clauses (d) and (e) of Item 2 of Schedule 13D are not applicable to
Synopsys and, to Synopsys' knowledge, are not applicable to any of the directors
or executive officers of Synopsys named above.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
On May 6, 1996, Synopsys purchased a total of 1,206,542 Common Shares,
of which 160,292 such Common Shares were newly issued by the Company to Synopsys
and the remaining 1,046,250 such Common Shares were purchased from the following
individuals: John F. Cooper (648,250 shares); David Chyan (296,000 shares); John
R. Harding (57,000 shares); William Portelli (22,500 shares); and Robert D.
Selvi (22,500 shares). Synopsys used working capital to purchase the Common
Shares and paid $14.50 per Common Share for an aggregate purchase price of
$17,494,859.
ITEM 4. PURPOSE OF TRANSACTION.
Synopsys purchased the Common Shares for the purpose of investment and
not for the purpose or effect of changing or influencing the control of the
Issuer or in connection with or as a participant in any transaction having such
purpose or effect.
As described in Item 6, Synopsys entered into a Stock Purchase
Agreement (as defined in Item 6) relating to the purchase of the Common Shares
owned by it and an Investor Rights Agreement (as defined in Item 6) providing
Synopsys certain rights and obligations with respect to such Common Shares. The
Investor Rights Agreement provides that Synopsys will have certain rights that
may result in one or more of the events set forth in clauses (a) through (i) of
Item 4. These include, among other things, certain rights (i) to participate
in certain future securities offerings by the Issuer, (ii) to maintain its
percentage ownership of the Issuer's Common Shares, and (iii) in the event of a
change of control of the Issuer. See Item 6. A copy of the Stock Purchase
Agreement is attached hereto as Exhibit 1 and is incorporated herein by
reference. A copy of the Investor Rights Agreement is attached hereto as
Exhibit 2 and is incorporated herein by reference.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) and (b) Synopsys beneficially owns 1,206,542 Common Shares,
constituting approximately 9.9% of the outstanding Common Shares. Synopsys
has sole voting and dispositive power with respect to the 1,206,542 Common
Shares owned by it. To Synopsys' knowledge, none of the persons named in Item 2
above owns any Common Shares.
(c) Except as described in this statement, neither Synopsys nor, to
Synopsys' knowledge, any of the persons named in Item 2 above has effected any
transaction in the Common Shares during the past 60 days.
(d) Not applicable.
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(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
On May 6, 1996, Synopsys, the Issuer and certain individuals entered
into a Stock Purchase Agreement (the "Stock Purchase Agreement") relating to the
purchase of the Common Shares currently owned by Synopsys. A copy of the Stock
Purchase Agreement is attached hereto as Exhibit 1 and is incorporated herein by
reference. On May 6, 1996, Synopsys, the Issuer and such individuals entered
into an Investor Rights Agreement (the "Investor Rights Agreement"). The
Investor Rights Agreement provides that Synopsys will have certain rights, among
other things, (i) to register the Common Shares it owns, (ii) to participate in
certain future securities offerings by the Issuer, (iii) to maintain its
percentage ownership of the Issuer's Common Shares, and (iv) in the event of a
change of control of the Issuer. In addition, the Investor Rights Agreement
provides the Issuer with certain rights of first offer with respect to sales of
Common Shares by Synopsys and, subject to certain limitations, restricts the
amount of voting securities of the Issuer that Synopsys may acquire. A copy of
the Investor Rights Agreement is attached hereto as Exhibit 2 and is
incorporated herein by reference.
Except for the foregoing, there are no contracts, arrangements,
understandings or relationships (legal or otherwise) among the persons named in
Item 2 of this statement and between such persons and any person with respect to
any securities of the Issuer.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1 -- Stock Purchase Agreement dated as of March 6, 1996,
among the Issuer, John F. Cooper, David Chyan, John R.
Harding, William Portelli, Robert D. Selvi, and
Synopsys.
Exhibit 2 -- Investor Rights Agreement dated as of March 6, 1996,
among the Issuer, Synopsys and, solely for purposes of
Sections 7.1, 7.2 and 9 thereof, John F. Cooper, David
Chyan, John R. Harding, William Portelli and Robert D.
Selvi.
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: May 16, 1996 SYNOPSYS, INC.
By: /s/ Paul Lippe
--------------------------
Vice President, Business
Development and Legal
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT is made as of May 6, 1996, by COOPER &
CHYAN TECHNOLOGY, INC., a Delaware corporation (the "Company"), JOHN F. COOPER,
DAVID CHYAN, JOHN R. HARDING, WILLIAM PORTELLI and ROBERT D. SELVI, individuals
(the "Selling Stockholders"), and SYNOPSYS, INC., a Delaware corporation
("Synopsys").
Recitals
A. The Company desires to issue and sell 160,292 shares (the "Company
Shares") of its authorized Common Stock, without par value (the "Common Stock")
to Synopsys at a price of $14.50 per share for an aggregate purchase price of
$2,324,234.00.
B. Each of the Selling Stockholders desires to sell to Synopsys that
number of shares of Common Stock set forth opposite such Selling Stockholder's
name on Exhibit A at a price of $14.50 per share. Collectively, the Selling
Stockholders desire to sell a total of 1,046,250 shares to Synopsys for an
aggregate purchase price of $15,170,625.00.
C. Synopsys desires to purchase the shares of the Company's Common
Stock referred to in Recitals A and B above (collectively, the "Shares") from
the Company and the Selling Stockholders on the terms and subject to the
conditions of this agreement.
D. In connection with the transaction contemplated by this agreement,
(i) counsel to the Company is delivering an opinion in the form of Exhibit B,
and (ii) the Company and Synopsys are entering into an Investor Rights Agreement
(the "Investor Rights Agreement"), a Joint Marketing Agreement (the "JMA"), a
Cooperative Development Agreement (the "Development Agreement"), and a Sematech
Development Subcontract (the "Sematech Agreement"), each dated the date of this
agreement.
NOW, THEREFORE, the parties, intending to be legally bound, hereby
agree as follows:
SECTION 1
Sale of Common Stock
1.1 The Company hereby issues and sells to Synopsys, and Synopsys
hereby purchases from the Company, the Company Shares at a price of $14.50 per
share. Synopsys acknowledges receipt of a stock certificate evidencing the
Company Shares, bearing the legend referred to in Section 4.2(a) and standing in
Synopsys' name. The Company acknowledges receipt from Synopsis of $2,324,234.00,
representing payment in full for the Company Shares.
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1.2 Each of the Selling Stockholders hereby sells to Synopsys, and
Synopsys hereby purchases from such Selling Stockholder the number of Shares set
forth opposite such Selling Stockholder's name under the caption "No. of Shares
Sold" on Exhibit A at a price of $14.50 per share. Synopsys acknowledges receipt
from each Selling Stockholder of a stock certificate evidencing the number of
Shares set forth opposite such Selling Stockholder's name on Exhibit A under the
caption "No. of Shares Sold" together with a stock power properly endorsed for
transfer of such certificate to Synopsys. Each Selling Stockholder acknowledges
receipt from Synopsys of the amount set forth opposite such Selling
Stockholder's name on Exhibit A under the caption "Total Purchase Price"
representing payment in full for such Shares.
SECTION 2
Representations and Warranties of the Company and the Selling Stockholders
Each of the Company and the Selling Stockholders, severally and not
jointly, represents and warrants to Synopsys that, except as set forth in the
CCT Disclosure Letter dated the date of this agreement, initialed on behalf of
the Company and Synopsys and delivered to Synopsys, which exceptions shall be
deemed to be representations and warranties as if made hereunder:
2.1 Organization and Standing; Certificate and Bylaws. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority,
and all governmental licenses, authorizations, consents and approvals required,
to carry on its business as now conducted and as proposed to be conducted. The
Company is duly qualified to transact business and is in good standing in each
jurisdiction in which the failure so to qualify, individually or in the
aggregate, would have a material adverse effect on the assets, condition or
prospects of the Company, financial or otherwise (a "Material Adverse Effect").
As of the date of this agreement, the Certificate of Incorporation and the
Bylaws of the Company shall be in the form previously provided to Synopsys or
its counsel.
2.2 Authorization.
(a) The Company has all requisite corporate power and authority to
execute and deliver, and to consummate the transactions contemplated by, this
agreement, the Investor Rights Agreement, the JMA, the Development Agreement and
the Sematech Agreement (collectively with the CCT Disclosure Letter referred to
above, the "Transaction Documents"). All corporate action on the part of the
Company, its officers, directors and stockholders necessary for (i) the
execution and delivery of, and the consummation of the transactions contemplated
by, the Transaction Documents, (ii) the performance of all obligations of the
Company under the Transaction Documents, and (iii) the authorization, issuance
(or reservation for issuance) and delivery of the Company Shares, has been
taken. The Transaction Documents, upon execution and delivery by the Company,
and, to the extent that they are parties thereto, the Selling Stockholders, and
assuming the due and proper execution and delivery by Synopsys, constitute
legal, valid and binding obligations of the Company, enforceable in
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accordance with their respective terms, except as may be limited by (x)
applicable bankruptcy, insolvency, reorganization or other laws of general
application relating to or affecting the enforcement of creditors rights
generally, and (y) the effect of rules of law governing the availability of
equitable remedies.
(b) The Company Shares, when issued and paid for in compliance with
the provisions of this agreement, will be validly issued, fully paid and
nonassessable and will be free of any liens or encumbrances known to, or caused
or created by, the Company or any of the Selling Stockholders.
(c) No entity has any right of first refusal or any preemptive right
in connection with the issuance of the Shares or any future issuances of
securities by the Company, except as set forth in the Transaction Documents.
2.3 Capitalization. The authorized capital stock of the Company
consists of 30,000,000 shares of Common Stock and 5,000,000 shares of Preferred
Stock. As of May 3, 1996, there are issued and outstanding 12,241,929 shares of
Common Stock and no shares of Preferred Stock. There are no outstanding rights,
employee benefit plans, options, warrants, conversion rights or agreements for
the purchase or acquisition from the Company of any shares of its capital stock,
except (i) the 4,184,099 shares of Common Stock reserved for issuance under the
Company's 1989 Stock Option Plan, 1993 Equity Incentive Plan, 1995 Directors
Stock Option Plan and 1995 Employee Stock Purchase Plan and the rights of the
Company under such plans, (ii) the Company Shares reserved for issuance pursuant
to this agreement, and (iii) as set forth in the Transaction Documents.
2.4 Subsidiaries. The Company does not own or control, directly or
indirectly, any equity interest in any other corporation, limited liability
company, partnership, or other entity.
2.5 Consents and Authorizations.
(a) No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority on the part of the Company is
required in connection with the execution, delivery and performance of, and the
consummation of the transactions contemplated by, the Transaction Documents,
except for such filings as may be required to be made with the Securities and
Exchange Commission (the "Commission") and the National Association of
Securities Dealers, Inc. (the "NASD").
(b) No consent, approval, waiver or other action by any entity under
any material contract, agreement, indenture, lease, instrument or other document
to which the Company is a party or by which it is bound is required or necessary
for the execution, delivery and performance of, or the consummation of the
transactions contemplated by, any of the Transaction Documents by the Company.
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2.6 No Conflict. The execution and delivery of the Transaction
Documents do not, and the consummation of the transactions contemplated thereby
will not, (i) conflict with any provision of the Certificate of Incorporation or
Bylaws of the Company, or (ii) result in any violation of, or default under
(with or without notice or lapse of time, or both), or give rise to a right of
termination, cancellation or acceleration of any obligation or to a loss of a
material benefit under, any mortgage, indenture, lease or other agreement or
instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to the Company, its
properties or assets, which, individually or in the aggregate, would have a
Material Adverse Effect on the Company or materially impair or restrict its
power to perform its obligations as contemplated by the Transaction Documents.
2.7 Accuracy of Reports. The Company's Registration Statement on Form
S-1, as amended and declared effective by the Commission on October 30, 1995,
and all reports required to be filed by the Company thereafter to the date of
this agreement under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), copies of which have been furnished to Synopsys or its counsel,
have been duly filed, were in compliance with the requirements of their
respective forms, and contained as of their respective dates no untrue statement
of a material fact nor omitted to state a material fact necessary in order to
make the statements made therein in light of the circumstances in which made not
misleading.
2.8 Financial Statement and Changes. The Company has delivered to
Synopsys the Company's consolidated balance sheets as of December 31, 1993,
1994, and 1995 and the related statements of operations, stockholders' equity
and changes in financial position and notes thereto for the fiscal years ended
on December 31, 1993, 1994, and 1995, all of which (the "Audited Financial
Statements") are accompanied by the related audit opinion(s) of the Company's
independent certified public accountants. The Audited Financial Statements,
including, without limitation, the notes thereto, have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the fiscal years covered by such statements (except as may be
stated in the notes to such statements or the related report(s) of such
accountants). The Company has delivered to Synopsys the Company's unaudited
consolidated balance sheet as of March 31, 1996, and the related statement of
operations for the fiscal quarter ended on March 31, 1996 (the "Unaudited
Financial Statements" and, together with the Audited Financial Statements, the
"Financial Statements"). The Unaudited Financial Statements have been prepared
in accordance with generally accepted accounting principles applied on the same
basis as applied in the Audited Financial Statements, except that the Unaudited
Financial Statements (i) are subject to normal year-end adjustments, which
adjustments will not individually or on the aggregate be material, and (ii) do
not contain all footnotes required under generally accepted accounting
principles. The Financial Statements present fairly the Company's financial
condition, results of operations and changes in financial position as of the
dates and for the periods indicated. Except as otherwise disclosed herein or in
Financial Statements, since March 31, 1996, there has not been:
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(a) any change in the assets, liabilities, financial condition or
operations of the Company from that reflected in the Financial Statements except
changes in the ordinary course of business that have not, individually or in the
aggregate, had a Material Adverse Effect on the Company;
(b) any change, except in the ordinary course of business, in the
contingent obligations of the Company that would be required by generally
accepted accounting principles to be reflected in the Financial Statements if
the Financial Statements were prepared as of and for the period ended on the
date of this agreement;
(c) any damage, destruction or loss, whether or not covered by
insurance, that had a Material Adverse Effect on the Company;
(d) any declaration or payment of any dividend or other distribution
of the assets of the Company;
(e) any labor organization activity; or
(f) to the best of the Company's knowledge, any other events or
conditions of any character that, individually or in the aggregate, have had a
Material Adverse Effect on the Company.
2.9 Litigation. There is no action, suit, proceeding or investigation
pending or, to the best knowledge of the Company and the Selling Stockholders,
currently threatened against (i) the Company or any of its employees or
prospective employees to whom the Company has issued an offer letter that is
outstanding as of the date of this agreement ("Proposed Employees") that
questions the validity of any of the Transaction Documents or the right of the
Company to enter into any of them or to consummate the transactions contemplated
thereby, or (ii) the Company or any of its employees or Proposed Employees that
might result, either individually or in the aggregate, in any Material Adverse
Effect on the Company or any change in the current equity ownership of the
Company, nor, to the best knowledge of the Company and the Selling Stockholders,
is there any valid basis for the foregoing. The foregoing includes, without
limitation, actions pending or threatened (or any valid basis therefor known to
the Company or the Selling Stockholders) involving the prior employment of any
of the Company's employees or Proposed Employees, their use in connection with
the Company's business of any information or techniques allegedly proprietary to
any of their former employers, or their obligations under any agreements with
prior employers. The Company is not a party or subject to the provisions of any
order, writ, injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company currently pending or that the Company currently intends to initiate. To
the best knowledge of the Company and the Selling Stockholders, none of the
employees or Proposed Employees of the Company is obligated under any contract
(including, without limitation, licenses, covenants or commitments of any
nature) or other agreement, or subject to any judgment, decree or order of any
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court or administrative agency, that interferes with the use of his or her best
efforts to promote the interests of the Company, or that conflicts with the
business of the Company as currently conducted and as proposed to be conducted.
2.10 Offering. Subject in part to the accuracy of Synopsys'
representations set forth in Section 4, the offer, issuance and sale of the
Shares as contemplated by this agreement is exempt from the registration
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
and the registration, qualification or compliance requirements of any applicable
blue sky or other state securities laws.
2.11 Registration Rights. Other than as granted pursuant to the
Transaction Documents and that certain Rights Agreement dated May 11, 1995,
among the Company and certain investors, the Company has not granted any
currently outstanding rights to register (as that term is defined in the
Investor Rights Agreement), or agreed to grant any rights to register, its
securities to any entity.
2.12 Disclosure. No representation or warranty by the Company in the
Transaction Documents, or in any document or certificate furnished or to be
furnished to Synopsys pursuant thereto or in connection with the transactions
contemplated thereby, when taken together, contains, or in the case of documents
and certificates to be furnished subsequent to the date of this agreement will
contain, any untrue statement of a material fact or omits, or in the case of
documents and certificates to be furnished subsequent to the date of this
agreement will omit to state, a material fact necessary to make the statements
made herein and therein, in the light of the circumstances under which they were
made, not misleading.
SECTION 3
Additional Representations and Warranties of the Selling Stockholders.
Each of the Selling Stockholders, severally and not jointly, represents
and warrants to Synopsys as follows:
3.1 Ownership. Such Selling Stockholder is the owner, beneficially and
of record, of all the Shares to be sold to Synopsys by such Selling Stockholder
pursuant to this agreement and holds such Shares free and clear of any liens,
encumbrances, security agreements, options, claims, charges or restrictions of
any nature whatsoever except for restrictions imposed by state and federal
securities laws.
3.2 Authority. Such Selling Stockholder has the full legal power and
authority to sell and deliver such Selling Stockholder's Shares as provided in
this agreement. The Transaction Documents, upon execution and delivery by the
Company, and, to the extent that they are parties thereto, the Selling
Stockholders, and assuming the due and proper execution and delivery by
Synopsys, constitute legal, valid and binding obligations of such Selling
Stockholder, enforceable in accordance
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with their respective terms, except as may be limited by (x) applicable
bankruptcy, insolvency, reorganization or other laws of general application
relating to or affecting the enforcement of creditors rights generally, and (y)
the effect of rules of law governing the availability of equitable remedies.
3.3 Title. The delivery of the certificates representing such Selling
Stockholder's Shares pursuant to this agreement will convey marketable title to
such shares, free and clear of any security interests, claims, liens, equities
or other encumbrances.
3.4 Investigation; Access to Information. Such Selling Stockholder
acknowledges that he has investigated the business, financial condition and
prospects of the Company and has had access to such information concerning the
Company's business and prospects as he has deemed necessary or desirable to
reach an informed and knowledgeable decision to enter into this agreement and to
sell his Shares in accordance with the terms hereof. Such Selling Stockholder's
decision has not been based upon any representation or warranty made by the
Company or by any officer, director, employee or agent of the Company, with
respect to any matter including, without limitation: (i) any projected or
estimated future financial performance of the Company, or (ii) any estimate of
the current or future value of the Common Stock.
3.5 Disclosure. No representation or warranty by such Selling
Stockholder in the Transaction Documents, or in any document or certificate
furnished or to be furnished to Synopsys pursuant thereto or in connection with
the transactions contemplated thereby, when taken together, contains, or in the
case of documents and certificates to be furnished subsequent to the date of
this agreement will contain, any untrue statement of a material fact or omits,
or in the case of documents and certificates to be furnished subsequent to the
date of this agreement will omit, to state a material fact necessary to make the
statements made herein and therein, in the light of the circumstances under
which they were made, not misleading.
SECTION 4
Representations and Warranties of Synopsys; Legends; Transfer Restrictions
4.1 Representations and Warranties of Synopsys. Synopsys represents and
warrants to the Company and each of the Selling Stockholders as follows:
(a) Synopsys is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware.
(b) Synopsys has all requisite corporate power and authority to
execute and deliver, and to consummate the transactions contemplated by, the
Transaction Documents. All corporate action on the part of Synopsys, its
officers, directors and stockholders necessary for (i) the execution and
delivery of, and the consummation of the transactions contemplated by, the
Transaction
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<PAGE> 13
Documents, and (ii) the performance of all obligations of Synopsys under the
Transaction Documents, has been taken. The Transaction Documents, upon execution
and delivery by Synopsys and assuming the due and proper execution and delivery
by the Company and, to the extent they are parties thereto, the Selling
Stockholders, constitute legal, valid and binding obligations of Synopsys,
enforceable in accordance with their respective terms, except as may be limited
by (i) applicable bankruptcy, insolvency, reorganization or other laws of
general application relating to or affecting the enforcement of creditors rights
generally, and (ii) the effect of rules of law governing the availability of
equitable remedies.
(c) No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority on the part of the Company is
required in connection with the execution, delivery and performance of, and the
consummation of the transactions contemplated by, the Transaction Documents,
except for such filings as may be required to be made with the Commission and
the NASD.
(d) No consent, approval, waiver or other action by any entity under
any material contract, agreement, indenture, lease, instrument or other document
to which Synopsys is a party or by which it is bound is required or necessary
for the execution, delivery and performance of, or the consummation of the
transactions contemplated by, any of the Transaction Documents by Synopsys.
(e) The Shares will be acquired for Synopsys' own account, for
investment and not with a view to, or for resale in connection with, any
distribution or public offering thereof within the meaning of the Securities
Act.
(f) Synopsys understands that the Shares have not been registered
under the Securities Act by reason of their issuance in a transaction exempt
from the registration and prospectus delivery requirements of the Securities Act
pursuant to Section 4(2) thereof, that the Company has no present intention of
registering the Securities, that the Shares must be held by Synopsys
indefinitely, and that Synopsys must therefore bear the economic risk of its
investment indefinitely, unless a subsequent disposition thereof is registered
under the Securities Act or is exempt from registration thereunder.
(g) Synopsys is an "accredited investor", as that term is defined in
Regulation D promulgated under the Securities Act.
(h) Synopsys has received or has had full access to all the
information it considers necessary or appropriate to make an informed investment
decision with respect to the Shares. Synopsys further has had an opportunity to
ask questions and receive answers from the Company regarding the terms and
conditions of the offering of the Shares, and to obtain additional information
(to the extent the Company possessed such information or could acquire it
without unreasonable effort or expense) necessary to verify any information
furnished to Synopsys or to which the Synopsys had access.
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<PAGE> 14
(i) Synopsys (i) has experience as an investor in securities of
companies and acknowledges that it is able to fend for itself, can bear the
economic risk of its investment in the Shares and has such knowledge and
experience in financial or business matters that it is capable of evaluating the
merits and risks of this investment in the Shares and protecting its own
interests in connection with this investment and/or (ii) has a preexisting
personal or business relationship with the Company and certain of its officers,
directors or controlling persons of a nature and duration that enables Synopsys
to be aware of the character, business acumen and financial circumstances of
such persons.
4.2 Legends. Each certificate or instrument representing Shares shall
bear legends in substantially the following forms:
(a) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE 'SECURITIES ACT') AND ARE
'RESTRICTED SECURITIES' AS DEFINED IN RULE 144 PROMULGATED UNDER THE
SECURITIES ACT. THE SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE OR
OTHERWISE DISTRIBUTED EXCEPT (I) IN CONJUNCTION WITH AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT, OR
(II) IN COMPLIANCE WITH RULE 144, OR (III) PURSUANT TO AN OPINION OF
COUNSEL SATISFACTORY TO THE ISSUER OF THESE SECURITIES THAT SUCH
REGISTRATION OR COMPLIANCE IS NOT REQUIRED AS TO SUCH SALE, OFFER OR
DISTRIBUTION."
(b) "THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS SPECIFIED IN A CERTAIN INVESTOR RIGHTS AGREEMENT BETWEEN THE
ISSUER OF THESE SECURITIES AND THE ORIGINAL HOLDER OF SUCH SHARES DATED AS
OF MAY 6, 1996, A COPY OF WHICH IS AVAILABLE FOR EXAMINATION AT THE
ISSUER'S PRINCIPAL OFFICE."
(c) Any other legends required by California law or other applicable
blue sky or state securities laws.
The Company need not register a transfer of any Shares, and may also instruct
its transfer agent not to register a transfer of any Shares, unless the
conditions specified in the foregoing legends are satisfied to the extent
applicable.
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<PAGE> 15
4.3 Removal of Legends and Transfer Restrictions.
(a) Any legend endorsed on a certificate or instrument pursuant to
Section 4.2(a) and the stop transfer instructions with respect to the Shares
evidenced thereby shall be removed and the Company shall issue a certificate or
instrument without such legend to the holder thereof if such Shares are
registered under the Securities Act and a prospectus meeting the requirements of
Section 10 of the Securities Act is available, if such legend may be properly
removed under the terms of Rule 144 promulgated under the Securities Act or if
such holder provides the Company with an opinion of counsel for such holder
reasonably satisfactory to legal counsel for the Company to the effect that a
sale, transfer or assignment of such Shares may be made without registration.
(b) Any legend endorsed on a certificate or instrument pursuant to
Section 4.2(b) and the stop transfer instructions with respect to the Shares
evidenced thereby shall be removed upon the expiration or earlier termination in
accordance with its terms of the Investor Rights Agreement.
(c) Any legend endorsed on a certificate or instrument pursuant to
Section 4.2(c) and the stop transfer instructions with respect to the Shares
evidenced thereby shall be removed upon receipt by the Company of an order of
the appropriate state securities authority authorizing such removal, which order
the Company shall seek in a timely manner in those circumstances in which such
order is appropriate in the Company's reasonable opinion.
SECTION 5
Covenants of the Parties
5.1 No Objection. Provided Synopsys is in compliance with and has
performed all covenants, agreements and conditions contained in this agreement
to be performed by Synopsys, the Company shall not interpose any objection or
take any legal action as a plaintiff in connection with the acquisition by
Synopsys of such number of shares of Common Stock as is permitted to be owned by
Synopsys pursuant to the Transaction Documents.
5.2 Sale of Additional Shares. The Company shall take such action as is
reasonably necessary, subject to compliance with applicable law, to issue and
sell to Synopsys any additional shares which Synopsys shall be entitled to
purchase from the Company pursuant to the Transaction Documents.
5.3 Equity Method Accounting. If Synopsys desires at some date to
account for its investment in the Company under the equity method, the Company
will furnish to Synopsys all information that is required by generally accepted
accounting principles to enable Synopsys so to account. To the extent reasonably
requested by Synopsys, the Company shall provide information
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<PAGE> 16
regarding the Company to, and otherwise cooperate with, Synopsys so as to enable
Synopsys to prepare financial statements in accordance with accounting
principles generally accepted in the United States and to comply with its
reporting requirements under applicable United States securities laws and
regulations.
5.4 Publicity. The Company and Synopsys will not, and will not permit
any of their respective affiliates to, issue or cause the issuance of any press
release or other public announcement with respect to the transactions
contemplated by the Transaction Documents without the prior consent of the other
party, except as required to comply with applicable securities laws. None of the
Selling Stockholders will issue or cause the issuance of any such press release
or other public announcement, except in his position as an officer on behalf of
the Company in accordance with the preceding sentence.
5.5 Securities Law Filings. Synopsys will use reasonable commercial
efforts to make all filings regarding its ownership of the Shares as may
required by applicable securities laws. The Company will use reasonable
commercial efforts promptly to make available to Synopsys any information
regarding the Company necessary to make such filings.
5.6 Exemption. None of the parties, directly or through any authorized
agent acting on its behalf, will take any action that would cause the loss of
the exemption from registration referred to in Section 2.10.
SECTION 6
Miscellaneous
6.1 Waivers and Amendments. Neither this agreement nor any provision
hereof may be changed, waived, discharged or terminated orally, but only by a
statement in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought.
6.2 Governing Law. This agreement shall be governed by and construed in
accordance with the laws of the State of California as such laws are applied to
agreements between California residents entered into and to be performed
entirely within California.
6.3 Survival. The representations, warranties, covenants and agreements
made herein shall survive the execution of this agreement and the closing of the
transactions contemplated hereby, except that the representations and warranties
of the Company and the Selling Stockholders made in Section 2, the
representations and warranties of the Selling Stockholders made in Section 3 and
the representation and warranties of Synopsys made in Section 4 shall expire on
the first anniversary of the date of this agreement.
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<PAGE> 17
6.4 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
6.5 Entire Agreement. The Transaction Documents and the other documents
delivered pursuant thereto constitute the full and entire understanding and
agreement between the parties with regard to the subjects thereof.
6.6 Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be sent by facsimile,
overnight courier or mailed by certified or registered mail, postage prepaid,
return receipt requested, to the facsimile number or address as follows:
Company: Cooper & Chyan Technology, Inc.
1601 South De Anza Boulevard
Cupertino, California 95014
Telephone: (408) 342-5518
Facsimile: (408) 342-5650
Attention: Mr. John R. Harding, President
with a copy (which will not constitute notice) to:
Fenwick & West
Two Palo Alto Square, Suite 800
Palo Alto, California 94306
Telephone: (415) 494-0600
Facsimile: (415) 857-0361
Attention: Gordon Davidson, Esq.
Selling c/o Cooper & Chyan Technology, Inc.
Stockholders: 1601 South De Anza Boulevard
Cupertino, California 95014
Telephone: (408) 342-5518
Facsimile: (408) 342-5650
Synopsys: Synopsys, Inc.
700 East Middlefield Road
Mountain View, California 94043-4033
Telephone: (415) 962-5000
Facsimile: (415) 694-4087
Attention: Paul Lippe, Vice President, Legal
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<PAGE> 18
with a copy (which will not constitute notice) to:
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
Telephone: (415) 493-9300
Facsimile: (415) 493-6811
Attention: Thomas C. DeFilipps, Esq.
or to such other facsimile number or address provided to the parties to this
agreement in accordance with this Section 6.6. Such notices or other
communications shall be deemed delivered upon receipt, in the case of overnight
delivery or facsimile transmission (as evidenced by the confirmation thereof),
or 3 days after deposit in the mails (as determined by reference to the
postmark).
6.7 Severability. In case any provision of this agreement shall be
declared invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
6.8 Finder's Fees.
(a) The Company and each of the Selling Stockholders (i) represents
and warrants to Synopsys that none of the Company or the Selling Stockholders
has retained any finder or broker in connection with any of the transactions
contemplated by the Transaction Documents, and (ii) agree to indemnify and to
hold Synopsys harmless of and from any liability for any commission or
compensation in the nature of a finder's fee to any broker or other person or
firm (and the costs and expenses of defending against such liability or asserted
liability) for which the Company, or any of its employees or representatives, or
any of the Selling Stockholders are responsible.
(b) Synopsys (i) represents and warrants to the Company and each of
the Selling Stockholders that it has not retained any finder or broker in
connection with the transactions contem plated by the Transaction Documents, and
(ii) agrees to indemnify and to hold the Company and the Selling Stockholders
harmless of and from any liability for any commission or compensation in the
nature of a finder's fee to any broker or other person or firm (and the costs
and expenses of defending against such liability or asserted liability) for
which it, or any of its employees or representatives, are responsible.
6.9 Expenses. Each party will bear its own expenses with respect to the
origination, negotiation, documentation and consummation of the transactions
contemplated by the Transaction Documents.
6.10 Counterparts. This agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
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<PAGE> 19
6.11 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to a party upon any breach or default of another party
under this agreement shall impair any such right, power or remedy, nor shall it
be construed to be a waiver of any such breach or default, or any acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on a party's part of any breach or
default under this agreement or any waiver on such party's part of any
provisions or conditions of this agreement must be in writing and will be
effective only to the extent specifically set forth in such writing, and all
remedies, either under this agreement, or by law or otherwise afforded to the
parties, will be cumulative and not alternative.
6.12 Limitation of Liability. Notwithstanding anything to the contrary
in this agreement, the liability of a Selling Stockholder for breaches of his
representations and warranties in Sections 2 and 3, other than breaches
resulting from fraud or willful misrepresentation by such Selling Stockholder,
will be limited to the amount set forth opposite such Selling Stockholder's name
under the caption "Total Purchase Price" on Exhibit A.
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<PAGE> 20
IN WITNESS WHEREOF, the parties have executed this Stock Purchase
Agreement as of the date first above written.
COOPER & CHYAN TECHNOLOGY, INC.
By:
----------------------------------
John R. Harding, President
--------------------------------------
John F. Cooper
--------------------------------------
David Chyan
--------------------------------------
John R. Harding
--------------------------------------
William Portelli
--------------------------------------
Robert D. Selvi
SYNOPSYS, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
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<PAGE> 21
INVESTOR RIGHTS AGREEMENT
This INVESTOR RIGHTS AGREEMENT is made as of May 6, 1996, by COOPER &
CHYAN TECHNOLOGY, INC., a Delaware corporation (the "Company"), SYNOPSYS, INC, a
Delaware corporation ("Synopsys"), and, solely for purposes of Sections 7.1, 7.2
and 9, JOHN F. COOPER, DAVID CHYAN, JOHN R. HARDING, WILLIAM PORTELLI and ROBERT
D. SELVI, individuals (the "Selling Stockholders").
Recitals
The Company and the Selling Stockholders propose to sell to Synopsys,
and Synopsys desires to purchase, in aggregate 1,206,542 shares of the Company's
Common Stock pursuant to a Stock Purchase Agreement dated as of even date
herewith, as it may be amended (the "Purchase Agreement") and in connection
therewith desire to enter into this agreement.
NOW, THEREFORE, the parties, intending to be legally bound, hereby
agree as follows:
SECTION 1
Certain Definitions
As used in this agreement:
1.1 "Acquisition" means any of the events set forth in Section 7.1(a)
and (b).
1.2 "Common Stock" means the Common Stock of the Company, par value
$0.01 per share.
1.3 "Dilutive Securities" shall mean any Voting Stock, whether now
authorized or not; provided, however, that the term "Dilutive Securities" does
not include:
(a) any shares of Common Stock issued under the Purchase Agreement;
(b) any securities issued in connection with any stock split, stock
dividend or similar event in which Synopsys is entitled to participate on a pro
rata basis;
(c) any securities for which the issuance gave rise to the Right of
Participation (regardless of whether any such right was exercised); and
(d) any securities issuable upon the exercise, conversion or
exchange of any securities described in Section 1.3(b) or (c) above.
1.4 The terms "Holder" and "Holders" mean any person or persons,
respectively, to whom Registrable Securities have been or will be originally
issued and/or sold and who execute and deliver this agreement and qualifying
transferees under Section 2.8 who hold Registrable Securities. As of the date of
this agreement, Synopsys is a Holder.
<PAGE> 22
1.5 "Initiating Holder(s)" means any Holder or Holders of in aggregate
at least 25% of the Registrable Securities that have not been resold to the
public in a registered public offering, so long as such Holder or Holders hold
in aggregate at least 50,000 Registrable Securities.
1.6 "Market Price" means, with respect to any securities of the Company
on a given day, the closing price quoted on the Nasdaq National Market, or, if
the securities are then traded on a national securities exchange, the last sale
price on such day, or, if on such day such security is not quoted on the Nasdaq
National Market or a national securities exchange, the Market Price shall be the
fair value thereof determined jointly by the Company and Synopsys.
1.7 "New Securities" means any Voting Stock, whether now authorized or
not, and rights, options or warrants to purchase such Voting Stock, and
securities of any type whatsoever that are, or may become, convertible or
exchangeable into such Voting Stock; provided, however, that the term "New
Securities" does not include:
(a) any shares of the Company's Common Stock (and/or options or
warrants therefor) issued to employees, officers, directors, contractors,
advisors or consultants of the Company pursuant to incentive agreements or
incentive plans approved by the Board of Directors of the Company;
(b) any shares of Common Stock issued under the Purchase Agreement;
(c) up to 5,409 shares of Common Stock purchased by Synopsys
pursuant to the first Maintenance Notice;
(d) any securities issued in connection with any stock split, stock
dividend or other similar event in which Synopsys is entitled to participate on
a pro rata basis;
(e) any securities issued upon the exercise, conversion or exchange
of any outstanding security, if such outstanding security constituted a New
Security; and
(f) any securities issued pursuant to the acquisition of another
entity by the Company by consolidation, merger, purchase of assets, or other
reorganization in which the Company acquires, in a single transaction or series
of related transactions, substantially all of the assets of such other entity or
50% or more of the voting power of such other entity or 50% or more of the
equity ownership of such other entity.
1.8 "Other Registrable Securities" means all shares that are
Registrable Securities, as that term is defined in that certain Rights Agreement
dated May 11, 1995, among the Company and certain investors.
1.9 Synopsys' "Prior Percentage Interest" means, with respect to a
Maintenance Notice (as defined in Section 5.4), the ratio of:
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<PAGE> 23
(a) (i) the number of shares of Common Stock held by Synopsys as
of the date of such Maintenance Notice that Synopsys purchased pursuant to (x)
the Purchase Agreement, (y) prior exercises of the Right of Participation, or
(z) prior exercises of the Right of Maintenance, plus (ii) with respect to the
first Maintenance Notice only, 5,409 shares of Common Stock, to
(b) the difference between (i) the total number of shares of
Voting Stock outstanding on the date of such Maintenance Notice, and (ii) the
total number of Dilutive Securities issued since the later of the date of this
agreement or, if applicable, the date of the last Maintenance Notice, excluding
any Maintenance Securities, as defined in Section 5.1, issued pursuant to the
last Maintenance Notice.
1.10 "Pro Rata Share" means the ratio of:
(a) (i) the number of shares of Common Stock then held by Synopsys
that Synopsys purchased pursuant to (x) the Purchase Agreement, (y) prior
exercises of the Right of Participation, or (z) prior exercises of the Right of
Maintenance, plus (ii) until the earlier of the date on which Synopsys first
purchases Maintenance Securities or the date 15 days after Synopsys receives its
first Maintenance Notice, 5,409 shares of Common Stock, to
(b) the difference between (i) the total number of shares of
Voting Stock then outstanding (immediately prior to the issuance of New
Securities giving rise to the Right of Participation), and (ii) the number of
Dilutive Securities issued since the date of the last Maintenance Notice,
excluding any Maintenance Securities issued pursuant to the last Maintenance
Notice.
1.11 The terms "register", "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and the declaration or ordering of the
effectiveness of such registration statement.
1.12 "Registrable Securities" means any and all shares of Common Stock
of the Company that have not been resold to the public that are (i) sold to the
Holder by the Company or the Selling Stockholders pursuant to the Purchase
Agreement, (ii) not more than 5,409 shares of Common Stock sold to the Holder by
the Company pursuant to the first Maintenance Notice, (iii) issued or issuable
with respect to or in any exchange for or replacement of securities referred to
in this sentence, or (iv) issued or issuable in respect of securities referred
to in this sentence as a result of a stock split, stock dividend or the like.
1.13 "Securities Act" means the Securities Act of 1933, as amended.
1.14 "Voting Power" of any Voting Stock, as defined below, means the
number of votes such Voting Stock is entitled to cast for the election of
directors of the Company (other than votes that may be cast only upon the
happening of a contingency).
1.15 "Voting Stock" means the Common Stock and any other securities
issued by the Company having the ordinary power to vote in the election of
directors of the Company (other than securities having such power only upon the
happening of a contingency).
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<PAGE> 24
SECTION 2
Registration Rights
2.1 Requested Registration.
(a) Request for Registration. Initiating Holders of Registrable
Securities shall have the right to request an unlimited number of registrations
on Form S-3 (such requests shall be in writing and shall state the number of
Registrable Securities to be disposed of and the intended method of disposition
of such Registrable Securities by such Holder), on the terms and subject to the
conditions of this Section 2. In case the Company shall receive from the
Initiating Holder(s) a written request that the Company effect any registration
with respect to all or a part of the Registrable Securities, the Company will:
(i) within 10 days after the receipt thereof give written
notice of the proposed registration to all other Holders; and
(ii) as soon as practicable, use its best efforts to effect all
such registrations (including, without limitation, the execution of an
undertaking to file post-effective amendments, appropriate qualifications under
the applicable blue sky or other state securities laws and appropriate
compliance with exemptive regulations issued under the Securities Act and any
other governmental requirements or regulations) as may be so requested and as
would permit or facilitate the sale and distribution of all or such portion of
such Holder's or Holders' Registrable Securities as are specified in such
request, together with all or such portion of the Registrable Securities of any
Holder or Holders joining in such request as are specified in a written request
given within 20 days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to take any action to
effect such registration pursuant to this Section 2:
(w) if Form S-3 is not available for such offering by the
Holders(s);
(x) if the Holder or Holders requesting registration propose to
dispose of Registrable Securities having an aggregate disposition price (before
deduction of underwriting discounts and expenses of sale) less than $1,500,000;
(y) with respect to more than two registrations pursuant to
this Section 1.2 in any 12-month period; or
(z) if the Company shall furnish to the Holder(s) a certificate
signed by the President of the Company certifying that, in the good faith
judgment of the Board of Directors of the Company, it would be seriously
detrimental to the Company and its stockholders for such registration on Form
S-3 to be effected at such time, in which event the Company shall have the right
to defer the filing of the Form S-3 registration statement no more than once
during any twelve-month period for a period of not more than 90 days.
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<PAGE> 25
Subject to the foregoing clauses (w), (x), (y) and (z), the Company shall file a
registration statement covering the Registrable Securities so requested to be
registered as soon as practical, but in any event not later than 90 days after
receipt of the request or requests of the Initiating Holder(s).
(b) Underwriting. If the Initiating Holder(s) intend to distribute
the Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
Section 2.1 and the Company shall include such information in the written notice
referred to in Section 2.1(a)(i). In such event, if so requested in writing by
the Company, the Initiating Holder(s) shall negotiate in good faith with an
underwriter or underwriters selected by the Company with regard to the
underwriting of such requested registration; provided, however, that if a
majority in interest of the Initiating Holder(s) have not agreed with such
underwriter or underwriters as to the terms and conditions of such underwriting
within 20 days following commencement of such good faith negotiations, a
majority in interest of the Initiating Holder(s) may select a an underwriter or
underwriters of their choice, at least one of which will be a nationally
recognized underwriter. The right of any Holder to registration pursuant to
Section 1.2 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in interest of the
Initiating Holder(s) and such Holder) to the extent provided herein. The Company
shall (together with all Holders proposing to distribute their securities
through such underwriting) enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for such underwriting.
2.2 Company Registration.
(a) Notice; Inclusion of Registrable Securities. If at any time or
from time to time the Company proposes to register any of its securities, for
its own account or the account of any of its stockholders other than the
Holders, other than a registration relating solely to employee stock option or
purchase plans, or a registration on Form S-4 relating solely to a transaction
under Rule 145 promulgated under the Securities Act, or a registration on any
other form (other than Form S-1, S-2 or S-3, or their successor forms) or any
successor to such forms, which does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of Registrable Securities, the Company will:
(i) promptly give to each Holder written notice thereof (which
shall include a list of the jurisdictions in which the Company intends to
attempt to qualify such securities under the applicable blue sky or other state
securities laws); and
(ii) include in such registration (and any related
qualification under applicable blue sky or other state securities laws, or other
compliance), and in any underwriting involved therein, all the Registrable
Securities specified in a written request or requests, made within 30 days after
receipt of such written notice from the Company, by any Holder or Holders to be
included in any such registration, except as set forth in Section 2.2(b) below.
(b) Underwriting. If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 2.2(a)(i). In such event, the right of any Holder
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<PAGE> 26
to registration pursuant to Section 2.2 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting shall
(together with the Company and the other holders distributing their securities
through such underwriting) enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for such underwriting by the
Company. Notwithstanding any other provision of this Section 2.2, if the
underwriter determines that marketing factors require a limitation of the number
of shares to be underwritten, the underwriter may limit the number of
Registrable Securities to be included in the registration and underwriting. In
the event a cutback of the number of Registrable Securities to be included in
the registration and underwriting is deemed necessary by the underwriter, the
Company shall advise all Holders of Registrable Securities which would otherwise
be registered and underwritten pursuant hereto. The number of Registrable
Securities and Other Registrable Securities that may be included in the
registration and underwriting shall be allocated among all of such Holders and
holders of Other Registrable Securities, in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities and Other
Registrable Securities held by each such Holder or holder and proposed to be
included in the offering. Notwithstanding the foregoing, in no event shall the
amount of securities of the selling Holders and holders of Other Registrable
Securities included in the offering be reduced below 30% of the total amount of
the securities included in such offering. If any Holder disapproves of the terms
of any such underwriting, such Holder may elect to withdraw therefrom by written
notice to the Company and the underwriters. Any Registrable Securities excluded
or withdrawn from such underwriting shall be withdrawn from such registration.
2.3 Expenses of Registration. All expenses incurred in connection with
any registration, qualification or compliance pursuant to this agreement,
including without limitation, all registration, filing and qualification fees,
printing expenses, fees and disbursements of counsel for the Company and
expenses of any special audits incidental to or required by such registration,
shall be borne by the Company, except as follows:
(a) the Company shall not be required to pay for expenses of any
registration proceeding begun pursuant to Section 2.1, the request for which has
been subsequently withdrawn by the Initiating Holder(s), in which such case such
expenses shall be borne by the Holder(s) requesting such withdrawal; provided,
however, that if at the time of such withdrawal, the Holder(s) have learned of a
material adverse change in the condition, business or prospects of the Company
from that known to the Holder(s) at the time of their request, then the Company
shall be required to pay such expenses and the Holder(s) shall retain their
rights pursuant to Section 2.1; and
(b) the Company shall not be required to pay underwriters' fees,
discounts or commissions relating to Registrable Securities or fees of legal
counsel to any Holder, except for a single counsel acting on behalf of all
selling Holders (which counsel shall be selected by such Holders) with respect
to the first registration effected pursuant to Section 2.1.
2.4 Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this agreement,
the Company will keep each Holder participating therein advised in writing as to
the initiation of each registration, qualification and compliance and as to the
completion thereof. At its expense the Company will:
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(a) keep such registration, qualification or compliance pursuant to
Section 2.1 or 2.2 effective for a period of 45 days or until the Holder or
Holders have completed the distribution described in the registration statement
relating thereto, whichever first occurs;
(b) furnish to the Holder such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of the Registrable Securities owned by them that
are included in such registration;
(c) notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, 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 the light of the circumstances then
existing; and
(d) furnish, at the request of any Holder requesting registration
of Registrable Securities pursuant to this agreement, on the date that such
Registrable Securities are delivered to the underwriters for sale in connection
with a registration pursuant to this agreement, if such securities are being
sold through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) a copy of an opinion, dated such date, of the
counsel representing the Company for the purposes of such registration, in form
and substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and (ii) a copy of a letter
dated such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering, addressed
to the underwriters, if any.
2.5 Indemnification.
(a) The Company will indemnify and hold harmless each Holder of
Registrable Securities, each of its officers, directors, partners, agents and
representatives, and each person controlling such Holder, with respect to which
such registration, qualification or compliance has been effected pursuant to
this agreement, and each underwriter, if any, and each person who controls any
underwriter of the Registrable Securities held by or issuable to such Holder,
against all claims, losses, expenses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any preliminary or final
prospectus, offering circular or other document (including any related
registration statement, notification or the like) incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation or
alleged violation by the Company relating to action or inaction required of the
Company in connection with any rule or regulation promulgated under the
Securities Act or any blue sky or other state securities law applicable to the
Company and will reimburse (promptly after the incurrence of such expense) each
such Holder, each of its officers, directors, partners, agents and
representatives and each person controlling such Holder, each such underwriter
and each person who controls any such underwriter,
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for any reasonable legal and any other expenses incurred in connection with
investigating, defending or settling any such claim, loss, damage, liability or
action; provided, however, that the Company will not be liable in any such case
to the extent that any such claim, loss, damage or liability arises out of or is
based on any untrue statement or omission based upon written information
furnished to the Company by an instrument duly executed by such Holder or
underwriter specifically for use therein; provided further, however, that the
agreement of the Company to indemnify any underwriter and any person who
controls such underwriter contained herein with respect to any such preliminary
prospectus shall not inure to the benefit of any underwriter from whom the
person asserting any such claim, loss, damage, liability or action purchased the
stock which is the subject thereof, if at or prior to the written confirmation
of the sale of such stock, a copy of the prospectus (or the prospectus as
amended or supplemented) was not sent or delivered to such person, excluding the
documents incorporated therein by reference, and the untrue statement or
omission of a material fact contained in such preliminary prospectus was
corrected in the prospectus (or the prospectus as amended or supplemented).
(b) Each Holder will, if Registrable Securities held by or issuable
to such Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify and hold harmless the
Company, each of its directors and officers, agents and representatives, each
underwriter, if any, of the Company's securities covered by such a registration
statement, each person who controls the Company within the meaning of the
Securities Act, and each other such Holder, each of its officers, directors and
partners, agents and representatives, and each person controlling such Holder,
against all claims, losses, expenses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any preliminary or final
prospectus, offering circular or other document (including any related
registration statement, notification or the like) incident to any such
registration, qualification or compliance or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse
(promptly after the incurrence of such expense) the Company, such Holder, such
directors, officers, partners, persons or underwriters for any reasonable legal
or any other expenses incurred in connection with investigating, defending or
settling any such claim, loss, damage, liability or action, in each case to the
extent, but only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon and
in conformity with written information furnished to the Company by an instrument
duly executed by such Holder specifically for use therein; provided, however,
that the agreement of the Holder to indemnify any underwriter and any person who
controls such underwriter contained herein with respect to any such preliminary
prospectus shall not inure to the benefit of any underwriter from whom the
person asserting any such claim, loss, damage, liability or action purchased the
stock which is the subject thereof, if at or prior to the written confirmation
of the sale of such stock, a copy of the prospectus (or the prospectus as
amended or supplemented) was not sent or delivered to such person, excluding the
documents incorporated therein by reference, and the untrue statement or
omission of a material fact contained in such preliminary prospectus was
corrected in the prospectus (or the prospectus as amended or supplemented);
provided further, however, that in no event shall the indemnification provided
by any Holder hereunder exceed the net proceeds received by such Holder for the
sale of such Holder's Registrable Securities pursuant to such registration.
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(c) Each party entitled to indemnification under this Section 2.5
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided, however, that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld), and the Indemnified Party may participate in such
defense at such party's expense; provided further, however, that the failure of
any Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations hereunder, unless such failure is
materially prejudicial to an Indemnifying Party's ability to defend such action.
No Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation.
2.6 Information by Holder. The Holder or Holders of Registrable
Securities included in any registration shall promptly furnish to the Company
such information regarding such Holder or Holders and the distribution proposed
by such Holder or Holders as the Company may request in writing and as shall be
required in connection with any registration, qualification or compliance
referred to herein.
2.7 Rule 144 Reporting. With a view to making available to Holders of
Registrable Securities the benefits of certain rules and regulations of the
Securities and Exchange Commission (the "Commission") that may permit the sale
of the Registrable Securities to the public without registration, the Company
agrees at all times hereafter to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 promulgated under the Securities Act;
(b) file with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Securities Exchange Act of 1934, as amended (the "Exchange Act");
(c) so long as a Holder holds Registrable Securities, furnish to
such Holder copies of all of the Company's periodic and other reports, proxy
materials and other documents made available to the Company's stockholders
generally; and
(d) so long as a Holder owns any Registrable Securities, furnish to
such Holder forthwith upon such Holder's request a written statement by the
Company as to its compliance with the reporting requirements of said Rule 144,
and of the Securities Act and the Exchange Act, and such other reports and
documents filed by the Company as such Holder may reasonably request in availing
itself of any rule or regulation of the Commission allowing such Holder to sell
any such securities without registration.
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2.8 Transfer of Registration Rights. The rights to cause the Company to
register Registrable Securities of a Holder and keep information available,
granted to a Holder by the Company under Sections 2.1, 2.2 and 2.7 may be
assigned by any Holder to a transferee or assignee reasonably acceptable to the
Company representing in aggregate at least 3% of the then-outstanding Common
Stock of the Company; provided, however, that (i) the Company is given written
notice by the Holder at the time of or within a reasonable time after said
transfer, stating the name and address of said transferee or assignee and
identifying the securities with respect to which such registration rights are
being assigned, and (ii) any such transferee or assignee shall agree in writing
to become subject to the obligations of the transferring Holder hereunder.
2.9 Termination. All rights of each Holder under Sections 2.1 and 2.2
will terminate on the earlier of (i) the fifth anniversary of the date of this
agreement, and (ii) with respect to such Holder when such Holder holds
Registrable Securities representing less than 1% of the then-outstanding Common
Stock of the Company and such Holder's Registrable Securities are freely
saleable under Rule 144 promulgated under the Securities Act.
SECTION 3
Company Right of First Refusal as to Sales by Synopsys
3.1 The Right. If at any time Synopsys proposes to offer to sell any
Shares ("Offered Shares") to one or more third parties in a transaction not
registered under the Securities Act in reliance upon a claimed exemption
thereunder (other than a transaction pursuant to Rule 144 promulgated under the
Securities Act) and the Company's Common Stock is then quoted on the Nasdaq
National Market (or any national securities exchange), then Synopsys will (i)
prepare in good faith and deliver to the Company a list of the third party or
parties to whom Synopsys proposes to offer to sell the Offered Shares and the
number of Offered Shares proposed to be offered, and (ii) grant to the Company
the right, on the terms and subject to the conditions of this Section 3, to
purchase up to all of the Offered Shares at a per-share price equal to the
Market Price of the Offered Shares on the date of such notice. The date the
Company is deemed to have received such notice (as determined pursuant to
Section 9.4) is referred to as the "Synopsys Notice Date". Within five business
days after receiving such notice, the Company will notify Synopsys of the number
of Offered Shares, if any, that it wishes to purchase pursuant to this Section
3. If the Company gives Synopsys notice that it desires to purchase a portion of
the Offered Shares, then within 15 business days after the Synopsys Notice Date
Synopsys will sell and deliver such portion of the Offered Shares to the Company
against payment therefor in cash, by check or wire transfer, at a place agreed
upon between the parties and at the time of the scheduled closing therefor.
3.2 Failure to Exercise. If the Company has not elected to purchase all
of the Offered Shares or if the Company has failed to close the purchase of any
Offered Shares that it has elected to purchase within 15 business days of the
Synopsys Notice Date through no fault of Synopsys, then Synopsys may thereafter
sell or enter into a binding agreement to sell any remaining Offered Shares to
one or more of the third parties named in the foregoing list within 90 days of
the Synopsys Notice
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Date. In the event that Synopsys has not sold such Offered Shares or entered
into a binding agreement to sell such Offered Shares within 90 days of the
Synopsys Notice Date, Synopsys may not thereafter sell such Offered Shares
without again first offering such Offered Shares to the Company in accordance
with this Section 3.
SECTION 4
Right of Participation
4.1 The Right. Synopsys has the right of first refusal to purchase up
to Synopsys' Pro Rata Share of any New Securities that the Company may from time
to time issue after the date of this agreement (the "Right of Participation");
provided, however, that Synopsys shall not have the Right of Participation with
respect to any issuance of New Securities that, when cumulated with all prior
issuances of New Securities as to which Synopsys would have had a Right of
Participation but for this proviso, would result in less than a 10% reduction in
Synopsys' Pro Rata Share.
4.2 Procedures. In the event that the Company proposes to undertake an
issuance of New Securities (in a single transaction or a series of related
transactions) that would result in a 10% or greater reduction in Synopsys' Pro
Rata Share, the Company will give to Synopsys written notice of its intention to
issue New Securities (the "Participation Notice"), describing the amount and the
type of New Securities and the price and the general terms upon which the
Company proposes to issue such New Securities. Synopsys will have five business
days from the date of receipt of any such Participation Notice to agree in
writing to purchase Synopsys' Pro Rata Share of such New Securities upon the
terms and subject to the conditions specified in the Participation Notice by
giving written notice to the Company and stating therein the quantity of New
Securities to be purchased (not to exceed Synopsys' Pro Rata Share); provided,
however, that the per share purchase price for such New Securities will not
exceed $15.00 (as adjusted for stock splits, stock dividends and the like)
during the period from the date of this agreement until the earlier of (i) the
first anniversary of the date of this agreement, and (ii) such time as the total
number of shares of Common Stock purchased by Synopsys (as adjusted for stock
splits, stock dividends and the like) pursuant to the Right of Participation and
the Right of Maintenance exceeds 242,390. If Synopsys fails to so agree in
writing within such five-business-day period to purchase Synopsys' full Pro Rata
Share of an offering of New Securities, then Synopsys shall forfeit the right
under this Section 4 to purchase that part of its Pro Rata Share of such New
Securities that it did not so agree to purchase. Synopsys shall purchase the
portion elected by Synopsys concurrently with the closing of the transaction
triggering the Right of Participation.
4.3 Failure to Exercise. Upon the expiration of such five-business-day
period, the Company will have 120 days thereafter to sell the New Securities
described in the Participation Notice (with respect to which Synopsys' right of
first refusal hereunder was not exercised) at the same or higher price and upon
non-price terms not materially more favorable to the purchasers thereof than
specified in the Participation Notice. In the event that the Company has not
issued and sold such New Securities within such 120-day period, then the Company
shall not thereafter issue or sell any New Securities without again first
offering such New Securities to Synopsys pursuant to this Section 4.
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SECTION 5
Right of Maintenance
5.1 General. Synopsys will, on the terms and subject to the conditions
of this Section 5, have the right to purchase shares of Voting Stock
("Maintenance Securities") from the Company at the per share Purchase Price (as
defined in Section 5.2) following the issuance by the Company of Dilutive
Securities after the date of this agreement, solely in order to maintain
Synopsys' Prior Percentage Interest in the Company (the "Right of Maintenance").
Each right to purchase Maintenance Securities pursuant to this Section 5 shall
be on the same terms (other than price to the extent provided in Section 5.2
below) as the issuance of the Dilutive Securities that gave rise to the right to
purchase such Maintenance Securities.
5.2 Purchase Price.
(a) Employee Stock. To the extent that the Right of Maintenance
arises out of the issuance of Dilutive Securities to employees, officers,
directors, contractors, advisors or consultants of the Company pursuant to
incentive agreements or incentive plans approved by the Board of Directors of
the Company ("Employee Stock"), the per share "Purchase Price" of the
Maintenance Securities shall equal the Market Price of such Maintenance
Securities on the date on which Synopsys purchases such Maintenance Securities.
(b) Other Dilutive Securities. To the extent that the Right of
Maintenance arises out of any issuance of Dilutive Securities other than
Employee Stock, the per share "Purchase Price" of the Maintenance Securities
shall equal the per share price at which such Dilutive Securities were issued,
unless the issuance of such other Dilutive Securities occurred upon the
exercise, conversion or exchange of other securities ("Exchangeable
Securities"), in which case, the per share "Purchase Price" of the Maintenance
Securities shall equal the sum of (i) the per share amounts paid upon each such
exercise, conversion or exchange, and (ii) the per share amount previously paid
for the Exchangeable Securities (adjusted for any stock split, stock dividends
or other similar events).
(c) Consideration Other than Cash. In the event that Dilutive
Securities or Exchangeable Securities were issued for consideration other than
cash, the per share amounts paid for such Dilutive Securities or Exchangeable
Securities shall be determined jointly by the Company and Synopsys.
(d) Appraiser. If the Company and Synopsys are unable to reach
agreement within a reasonable period of time with respect to (i) the Market
Price of Maintenance Securities not quoted on the Nasdaq National Market (or, if
applicable, a national securities exchange), or (ii) the per share amounts paid
for Dilutive Securities or Exchangeable Securities issued for consideration
other than cash, such Market Price or per share amounts paid, as the case may
be, shall be determined by an appraiser jointly selected by the Company and
Synopsys. The fees and expenses of such appraiser shall be paid for by the
Company, provided that such fees and expenses shall be paid for by Synopsys
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in the event that the appraiser's determination of the Market Price or the per
share amounts paid, as the case may be, is higher than, or not more that 5%
lower than, the last amount previously offered by the Company.
(e) Purchase Price Cap. Notwithstanding the foregoing, the per
share Purchase Price will not exceed $15.00 per share (as adjusted for any stock
splits, stock dividends or other similar events) during the period from the
Closing until the earlier of (i) the first anniversary of the Closing Date, and
(ii) such time as the total number of shares of Common Stock purchased by
Synopsys (as adjusted for stock splits, stock dividends and the like) pursuant
to the Right of Participation and the Right of Maintenance exceeds 242,390.
5.3 Maintenance Amount. Synopsys' "Maintenance Amount" with respect to
any Maintenance Notice shall equal such number of Maintenance Securities as is
obtained by multiplying the number of Dilutive Securities specified in such
Maintenance Notice by Synopsys' Prior Percentage Interest, rounded to the
nearest whole share, plus, with respect to the first Maintenance Notice only,
5,409 shares of Common Stock.
5.4 Notice of Issuance. Within 15 business days of (x) March 24, 1997,
(y) the end of each of the Company's fiscal years commencing with its 1997
fiscal year, and (z) any of the Company's fiscal quarters in which there was an
issuance of Dilutive Securities which when cumulated with all prior issuance of
Dilutive Securities since the later of (i) the date of this agreement, or (ii)
the date of the last Maintenance Notice (subsequent to which Synopsys has had an
opportunity to purchase Maintenance Securities), results in a 10% reduction in
Synopsys' Prior Percentage Interest, the Company shall give to Synopsys written
notice (the "Maintenance Notice") describing the number of Dilutive Securities
issued since the date of the prior Maintenance Notice and the non-price terms
upon which the Company issued such Dilutive Securities, and the Maintenance
Amount of Maintenance Securities that Synopsys is entitled to purchase.
5.5 Purchase of Maintenance Securities. Synopsys will have 15 business
days from the receipt of a Maintenance Notice to elect to purchase up to
Synopsys' Maintenance Amount of such Maintenance Securities at the Purchase
Price and upon the terms and subject to the conditions specified in the
Maintenance Notice. The closing of such purchase shall occur within five
business days after such election to purchase or at such later date as the
parties may agree. If Synopsys fails to elect to purchase Synopsys' full
Maintenance Amount of Maintenance Securities within such 15-business-day period,
then Synopsys shall forfeit the right under this Section 5 to purchase that part
of Synopsys' Maintenance Amount that it did not so elect to purchase.
SECTION 6
Standstill Agreement
6.1 Prohibition. Synopsys (which, for purposes of this Section 6
includes Synopsys and all of its subsidiaries) will not, directly or indirectly,
acquire, or enter into discussions, negotiations, arrangements or understandings
with any third party to acquire prior to the expiration of this Section 6
(including, without limitation, the lapse of the negative covenants of this
Section 6.1 upon
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the occurrence of any of the events described in Section 6.1(a) through (c)),
beneficial ownership of any Voting Stock, any securities convertible into or
exchangeable for Voting Stock, or any other right to acquire Voting Stock
(except, in any case, by way of stock dividends or other distributions or
offerings made available to the holders of Voting Stock generally) without the
written consent of the Company, if the effect of such acquisition would be to
increase the Voting Power of all Voting Stock then owned by Synopsys or which
Synopsys has a right to acquire to more than 9.9% of the total Voting Power of
all Voting Stock then outstanding; provided, however, that Synopsys may acquire
Voting Stock without regard to the foregoing limitation:
(a) if any person or group (other than Messrs. Cooper and Chyan and
their family members) not affiliated with Synopsys and then owning Voting Stock
representing at least 5% of the Voting Power of all Voting Stock then
outstanding provides written notice to the Company or files any document with
the Commission that contains terms that put the Company reasonably on notice of
the likelihood that such person or group has acquired or is proposing to acquire
any shares of Voting Stock or the right to acquire shares of Voting Stock having
aggregate Voting Power of more than 50% of the total Voting Power of all shares
of Voting Stock then outstanding and, in the case of a proposal to acquire such
shares, the proposal and any related offers to purchase shares are not withdrawn
or terminated prior to Synopsys making an offer to acquire Voting Stock or
acquiring Voting Stock in response thereto; provided, however, that the negative
covenants of this Section 6.1 will resume following the withdrawal of any
proposal or offer to purchase shares made in accordance with this Section
6.1(a);
(b) if it is publicly disclosed or Synopsys otherwise learns that
the Company has entered into any letter of intent or agreement with a person or
group that, if consummated, would result in such person or group owning or
having the right to acquire shares of Voting Stock having aggregate Voting Power
of more than 50% of the total Voting Power of all shares of Voting Stock then
outstanding;
(c) after the fifth anniversary of the date of this agreement.
6.2 Exceptions. Synopsys will not be obligated to dispose of Voting
Stock if the aggregate percentage of the total Voting Power of all Voting Stock
then outstanding represented by Voting Stock owned by Synopsys or which Synopsys
has the right to acquire is increased as a result of a recapitalization of the
Company, a repurchase of securities by the Company or any other action taken by
the Company or any of its affiliates, and, in any of such events, the percentage
set forth in the first paragraph of Section 6.1 thereafter will be deemed
increased to the percentage of Voting Stock owned by Synopsys immediately
following such event.
6.3 Percentage Adjustment. In the event Synopsys purchases or otherwise
acquires any shares of Voting Stock in a transaction permitted by Section 6.1(a)
before the resumption of the negative covenants of Section 6.1, the percentage
set forth in the first paragraph of Section 6.1 thereafter will be deemed
increased to the percentage of Voting Stock owned by Synopsys after such
purchase or acquisition.
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6.4 Excluded Shares. For purposes of this agreement, Synopsys will not
be deemed to have beneficial ownership of any Voting Stock held by a Synopsys
pension plan or other employee benefit program if Synopsys does not have the
power to control the investment decisions of such plan or program.
SECTION 7
Change of Control
7.1 Notice of Acquisition Offer. The Company or the Selling
Stockholders shall give Synopsys at least five business days' notice prior to:
(a) the Company or any of the Selling Stockholders accepting any
offer from any entity or group to acquire any shares of Voting Stock which would
result in such person or group owning or having the right to acquire (i) more
than 50% of the Voting Stock of the Company then outstanding, or (ii) all or
substantially all of the assets of the Company; or
(b) the Company's board of directors approving any merger or
consolidation of the Company with or into any other entity in which the
Company's stockholder's prior to any such transaction do not hold more than 50%
of the voting power in the surviving entity.
7.2 Notice of Counterproposal. If within such five-day period following
the notice referred to above, Synopsys shall make a counterproposal and such
proposal results in a further proposal from any party, then the Company or the
Selling Stockholder, as the case may be, will give Synopsys at least three
business days' notice of such further proposal prior to accepting the same.
7.3 Reduction of Notice Period. The notice periods referred to in this
Section 7 may be reduced or eliminated by resolution of the Company's Board of
Directors to the extent (and only to the extent) that it specifically
determines, based upon the advice of counsel, that providing such notice would
constitute a violation of its fiduciary obligations.
SECTION 8
Additional Rights; Termination of Certain Rights
8.1 Pro Rata Repurchase. In the event that the Company repurchases
shares of its Voting Stock from a third party, the Company will make lawful
provision to offer to, and have the legal right to, repurchase shares of Voting
Stock from Synopsys to the extent necessary so that the Voting Power of all
Voting Stock then owned by Synopsys or which Synopsys then has a right to
acquire does not exceed 10% of the total Voting Power of all Voting Stock then
outstanding.
8.2 Limitation on Sale of Shares. Prior to the first date on which
Synopsys may exercise its registration rights under Section 2, none of the
Selling Stockholders may sell (including, without limitation, any short sale),
offer to sell, contract to sell, pledge or otherwise dispose of any of the
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Common Stock, or any options or warrants to purchase any of the Common Stock, or
any securities convertible into or exchangeable for any of the Common Stock,
owned directly by such Selling Stockholder, or with respect to which such
Selling Stockholder has the power of disposition, in any such case whether now
owned or hereafter acquired; provided, however, that a Selling Stockholder may
sell or transfer such securities (i) to members of such Selling Stockholder's
family, and (ii) in a registered public offering with respect to which Synopsys
has registration rights pursuant to Section 2.2.
8.3 Termination of Certain Rights. The rights and obligations of the
parties under Sections 3, 4, 5, 6 and 7 will terminate upon the earlier to occur
of (i) the fifth anniversary of the Closing Date, (ii) the first date that
Synopsys holds less than 50% of the number of Shares purchased by Synopsys at
the Closing pursuant to the Purchase Agreement (such number to be
proportionately adjusted for stock splits, stock dividends and similar events),
(iii) the expiration of or any termination of either the Joint Marketing
Agreement or the Cooperative Development Agreement, each dated the date of this
agreement between the Company and Synopsys (collectively, the "Ancillary
Agreements"), in accordance with their respective terms for any reason (except,
at Synopsys' option, for a termination by Synopsys due to an uncured breach by
the Company of one of the Company's material obligations under either of such
agreements), (iv) at the option of the Company, upon any failure by Synopsys to
perform its Golden Flow Obligations, as such term is defined in the Ancillary
Agreements, under either of the Ancillary Agreements permitting the Company to
terminate either of the Ancillary Agreements in accordance with its respective
terms, (v) at Synopsys' option, upon any failure by the Company to perform its
Golden Flow Obligations under either of the Ancillary Agreements permitting
Synopsys to terminate either of the Ancillary Agreements in accordance with its
respective terms, or (vi) immediately prior to the closing of any Acquisition.
SECTION 9
Miscellaneous
9.1 Amendment and Waiver. Any term of this agreement may be amended and
the observance of any such term may be waived (either generally or in a
particular instance and either retroactively or prospectively) with the written
consent of the Company and Holders holding at least a majority of the
outstanding Registrable Securities.
9.2 Governing Law. This agreement shall be governed in all respects by
the laws of the State of California, as such laws are applied to agreements
among California residents entered into and to be performed entirely within
California.
9.3 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
9.4 Entire Agreement. The Transaction Documents (as defined in the
Purchase Agreement) and the other documents delivered pursuant thereto
constitute the full and entire understanding and agreement between the parties
with respect to the subjects thereof.
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9.5 Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be sent by facsimile,
overnight courier or mailed by certified or registered mail, postage prepaid,
return receipt requested, to the facsimile number or address as follows:
Company: Cooper & Chyan Technology, Inc.
1601 South De Anza Boulevard
Cupertino, California 95014
Telephone: (408) 342-5518
Facsimile: (408) 342-5650
Attention: Mr. John R. Harding, President
with a copy (which will not constitute notice) to:
Fenwick & West
Two Palo Alto Square, Suite 800
Palo Alto, California 94306
Telephone: (415) 494-0600
Facsimile: (415) 857-0361
Attention: Gordon Davidson, Esq.
Synopsys: Synopsys, Inc.
700 East Middlefield Road
Mountain View, California 94043-4033
Telephone: (415) 962-5000
Facsimile: (415) 694-4087
Attention: Paul Lippe, Vice President, Legal
with a copy (which will not constitute notice) to:
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
Telephone: (415) 493-9300
Facsimile: (415) 493-6811
Attention: Thomas C. DeFilipps, Esq.
Selling c/o Cooper & Chyan Technology, Inc.
Stockholders: 1601 South De Anza Boulevard
Cupertino, California 95014
Telephone: (408) 342-5518
Facsimile: (408) 342-5650
or to such other facsimile number or address provided to the parties to this
agreement in accordance with this Section 9.5. Such notices or other
communications shall be deemed delivered upon receipt, in the case of overnight
delivery or facsimile transmission (as evidenced by the confirmation thereof),
or 3 days after deposit in the mails (as determined by reference to the
postmark).
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<PAGE> 38
9.6 Assignment. Rights under Section 2 may be assigned only in
accordance with the provisions of Section 2.8. Rights of Synopsys under Sections
4, 5, and 7 may not be assigned (whether by operation of law or otherwise)
without the prior written consent of the Company; provided, however, that, in
the event Synopsys is acquired by consolidation, merger, purchase of assets, or
other reorganization in which such third party acquires, in a single transaction
or series of related transactions, substantially all of Synopsys' assets or 50%
or more of the voting power of Synopsys or 50% or more of the equity ownership
of Synopsys, such consent will not be unreasonably withheld. Rights of the
Company under Section 3 may not be assigned (whether by operation of law or
otherwise) without the prior written consent of Synopsys; provided, however,
that, in the event of an Acquisition, such consent will not be unreasonably
withheld.
9.7 Severability. In case any provision of this agreement shall be
declared invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
9.8 Counterparts. This agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
9.9 Delays or Omissions. No delay or omission to exercise any remedy
accruing to a party upon any breach or default of another party under this
agreement shall impair any such remedy, nor shall it be construed to be a waiver
of any such breach or default, or any acquiescence therein, or of or in any
similar breach or default thereafter occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on a party's part of any breach or default under this
agreement or any waiver on such party's part of any provisions or conditions of
this agreement must be in writing and will be effective only to the extent
specifically set forth in such writing, and all remedies, either under this
agreement, or by law or otherwise afforded to the parties, will be cumulative
and not alternative.
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<PAGE> 39
IN WITNESS WHEREOF, the parties have executed this Investor Rights
Agreement as of the date first above written.
COOPER & CHYAN TECHNOLOGY, INC.
By: ______________________________
Name:
Title:
SYNOPSYS, INC.
By: ______________________________
Name:
Title:
Executed Solely for Purposes
of Sections 7.1, 7.2 and 9:
_______________________________________
John F. Cooper
_______________________________________
David Chyan
_______________________________________
John R. Harding
_______________________________________
William Portelli
_______________________________________
Robert D. Selvi
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