REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is made as of the 27th day
of November, 1996, by and between Avant! Corporation, a Delaware corporation
(the "Company"), and Xxxxxxxxx Xxxxxxxx, on behalf of the shareholders and the
holders of warrants listed on Schedule A hereto (collectively, the
"Shareholders" and individually, a "Shareholder") of FrontLine Design
Automation, Inc., a California corporation ("FrontLine").
RECITALS
WHEREAS, the Company and FrontLine are parties to the
Agreement and Plan of Reorganization dated October 9, 1996 (together with all
exhibits, schedules, supplements and any amendments thereto, the "Plan of
Reorganization"), pursuant to which the Company shall acquire all the
outstanding shares of capital stock of FrontLine in exchange for shares of
common stock (the "Common Stock") of the Company (the "Merger");
WHEREAS, the parties to the Plan of Reorganization have
determined that in light of recent federal legislation it is in the best
interests of the parties thereto to grant certain registration rights to the
Shareholders as set forth herein; and
WHEREAS, all terms not otherwise defined herein shall have the
same meanings ascribed to them in the Plan of Reorganization;
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Registration Rights The Company covenants and agrees as
follows:
1.1 Definitions. For purposes of this Section 1:
(a) The term "Act" means the Securities Act of 1933,
as amended.
(b) The term "1934 Act" shall mean the Securities
Exchange Act of 1934, as amended.
(c) The terms "register," "registered," and
"registration" refer to a registration effected by preparing and filing a
registration statement or similar document in compliance with the Act, and the
declaration or ordering of effectiveness of such registration statement or
document.
(d) The term "Registrable Securities" means the
Common Stock of the Company issued to the Shareholders in the Merger and shares
of Common Stock of the Company issuable upon exercise of outstanding warrants,
and any Common Stock of the Company issued as a dividend or other distribution
with respect to such Common Stock.
(e) The term "Rule 144" shall mean Rule 144
promulgated under the Act, as amended, or any similar successor rule thereto
that may be promulgated by the SEC.
(f) The term "SEC" shall mean the Securities and
Exchange Commission.
1.2 Registration.
(a) If by December 16, 1996 the SEC (A) takes a
position in a definitive pronouncement (i.e. a no-action letter or
interpretative release), that (i) a Nasdaq National Market company may not rely
on a fairness hearing pursuant to Section 25142 of the California Corporations
Code to avail itself of an exemption under Section 3(a)(10) of the Act, or (ii)
any securities issued pursuant to such a fairness hearing and in reliance upon
Section 3(a)(10) are deemed to be restricted securities and therefore will not
be freely transferable, or (B) fails to take a position in a definitive
pronouncement with respect to the matters described in clause (A), then Avant!
shall file on that date with the SEC a registration statement covering all of
the Registrable Securities, and shall use its best efforts to have such
registration statement declared effective within two days of the publication
(within the meaning of Accounting Series Release No. 135 as amended, of the SEC)
of financial results covering at least one month of combined operations of the
Company and FrontLine, approximately January 21, 1997.
(b) Notwithstanding the foregoing, if the Company
shall furnish to the Shareholders a certificate signed by the Chief Executive
Officer of the Company stating that in the good faith judgment of the Board of
Directors of the Company, it would be detrimental to the Company and its
stockholders for such registration statement to be filed, and it is therefore
essential to defer the filing of such registration statement, the Company shall
have the right to defer filing the registration statement referred to in Section
1.2(a) until December 26, 1996.
(c) In no event shall the Company's xxxxxxx xxxxxxx
window be opened unless the registration statement has been declared effective
by the SEC.
1.3. Company Registration. If (but without any obligation to
do so) the Company proposes to register (including for this purpose a
registration effected by the Company for stockholders other than the
Shareholder) any of its stock or other securities under the Act in connection
with the public offering of such securities solely for cash (other than a
registration relating solely to the sale of securities to participants in a
Company stock plan, a registration on any form which is not available for the
resale of the Registrable Securities, a registration statement on Form S-4 or
any successor form, or a registration in which the only Common Stock being
registered is Common Stock issuable upon conversion of debt securities which are
also being registered), the Company shall, at such time, promptly give the
Shareholders written notice of such registration. Upon the written request of
the Shareholders given within ten (10) days after mailing of such notice by the
Company in accordance with Section 2.5, the Company shall cause to be registered
under the Act all of the Registrable Securities that the Shareholder has
requested to be registered. In connection with any registration pursuant to this
Section 1.3 which involves the underwritten offering of the Company's
securities, the Company shall not be required to include any of the
Shareholder's securities under such registration statement unless
2
the Shareholder agrees to enter into an underwriting agreement in the form
agreed upon between the Company and the underwriters selected by it (or by other
persons entitled to select the underwriters), and then only in such quantity as
the underwriters determine in their sole discretion will not jeopardize the
success of the offering by the Company. Each Shareholder acknowledges and agrees
that at the underwriters' sole discretion the Registrable Securities may be
excluded entirely from such offering. In addition, if a registration is to be
effected pursuant to a request by another holder of Common Stock of the Company,
the Shareholder's right to participate in any such registration shall be subject
to the prior consent of such holder which consent may be withheld in the
holder's sole discretion.
1.4 Obligations of the Company. Whenever required under this
Section 1 to effect the registration of any Registrable Securities, the Company
shall:
(a) Prepare and file with the SEC, a registration
statement with respect to such Registrable Securities and use best efforts to
cause such registration statement to become effective, and, subject to the
provisions below, use best efforts to, keep such registration statement
effective for a period of two years or, if earlier, until the distribution
contemplated in the registration statement has been completed. If at any time
after a registration statement becomes effective, the Company advises the
Shareholders in writing that due to the existence of material information that
has not been disclosed to the public and included in the registration statement
it is thus necessary to amend the registration statement (including by reporting
such information under the 1934 Act), the Shareholders shall suspend any further
sale of Registrable Securities pursuant to the registration statement until the
registration statement has been amended. In such event, the Company shall use
best efforts to amend the registration statement as soon as reasonably
practicable and in no event later than the earlier of (i) 10 days after the
Company has advised Shareholders to suspend sales (which 10 day period may be
extended, one time only, an additional 10 days (the "Additional Suspension") if
the Board of Directors of the Company in its good faith judgment determines that
such disclosure would be substantially detrimental to the Company; provided,
however, that the Company shall only have the right to effect an Additional
Suspension not more than twice in any twelve month period) or (ii) the
commencement of any period in which directors and officers of the Company are
allowed to buy or sell Common Stock of the Company pursuant to the Company's
xxxxxxx xxxxxxx policy. The Company shall not impose a suspension on the sale of
Registrable Securities by the Shareholders unless the Company's xxxxxxx xxxxxxx
window is closed. When selling Registrable Securities, a Shareholder shall
follow the procedures set forth in Section 1.9 and may presume that no
suspension is in effect if a trade is made in the manner described in that
section.
(b) Subject to subsection 1.4(a), prepare and file
with the SEC such amendments and supplements to such registration statement and
the prospectus used in connection with such registration statement as may be
necessary to comply with the provisions of the Act with respect to the
disposition of all securities covered by such registration statement.
(c) Furnish to the Shareholders requesting
registration such numbers of copies of a prospectus, including a preliminary
prospectus, in conformity with the
3
requirements of the Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned by them.
(d) Use best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Shareholders holding a majority of the Registrable Securities; provided that the
Company shall not be required in connection therewith or as a condition thereto
to qualify to do business or to file a general consent to service of process in
any such states or jurisdictions, unless the Company is already subject to
service in such jurisdiction and except as may be required by the Act.
1.5 Information from Shareholders. It shall be a condition
precedent to the obligations of the Company to take any action pursuant to this
Section 1 with respect to the Registrable Securities of a Shareholder that such
Shareholder shall furnish to the Company such information regarding himself or
herself, the Registrable Securities held by him or her, and the intended method
of disposition of such securities as shall be reasonably requested by the
Company and required to effect the registration of the Registrable Securities.
1.6 Expenses of Registration. All expenses of the
Shareholders, except commissions, including (without limitation) all
registration, filing and qualification fees, printers' and accounting fees, fees
and disbursements of counsel for the Company shall be borne by the Company;
provided, however, that the Company shall not be required to pay any
professional fees of the Shareholders other than the fees of a special counsel
to the Shareholders (not to exceed $15,000).
1.7 No Assignment of Registration Rights. The registration
rights provided hereunder are not assignable, except to a transferee upon the
death of a Shareholder, a personal legal representative in the event of
incapacity of the Shareholder or otherwise by operation of law. Notwithstanding
the foregoing, the registration rights provided hereunder may be assigned by a
Shareholder to a transferee or assignee of such securities who shall, upon such
transfer or assignment, be deemed a "Shareholder" under this Agreement; provided
that the Company is, within a reasonable period of time after such transfer,
furnished with written notice of the name and address of such transferee or
assignee and the Registrable Securities with respect to such registration rights
are being assigned; provided, further, that such assignment shall be effective
only if immediately following such transfer (A) the further disposition of such
securities by the transferee or assignee is restricted under the Act, (B) that
such transferee or assignee is a member of the immediate family of the
Shareholder or a trust for the benefit of any Shareholder that is an individual
(or for the benefit of an immediate family member of such Shareholder), and (C)
that such transfer or assignment consists of at least 25,000 shares of the
Registrable Securities or all of the Registrable Securities held by such
Shareholder.
1.8 Indemnification. In the event any Registrable Securities
are included in a registration statement under this Section 1:
(a) The Company will indemnify and hold harmless
each Shareholder and any controlling person of such Shareholder against any
losses, claims, damages, or liabilities
4
(joint or several) to which he may become subject under the Act, the 1934 Act,
or other federal or State laws, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations (collectively a
"Violation"): (i) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, (ii) 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 (iii) any violation or alleged violation by the
Company of the Act, the 1934 Act, or any rule or regulation promulgated under
the Act, or the 1934 Act or other federal or State law; and the Company will pay
to Shareholder, as incurred, any legal or other expenses reasonably incurred by
him in connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this subsection 1.8 (a) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability, or action if such settlement is effected
without the consent of the Company, which consent shall not be unreasonably
withheld, nor shall the Company be liable in any such case for any such loss,
claim, damage, liability, or action to the extent that it arises out of or is
based upon a Violation which occurs in reliance upon and in conformity with
information furnished expressly for use in connection with such registration by
Shareholder. In addition, the Company shall not be liable for any untrue
statement or omission in any prospectus if a supplement or amendment thereto
correcting such untrue statement or omission was delivered to Shareholder prior
to the pertinent sale or sales by Shareholder.
(b) Each Shareholder will indemnify and hold
harmless the Company, each of its directors, each of its officers who has signed
the registration statement, each person, if any, who controls the Company within
the meaning of the Act, any other Shareholder selling securities in such
registration statement and any controlling person of any such Shareholder,
against any losses, claims, damages, or liabilities (joint or several) to which
any of the foregoing persons may become subject, under the Act, or the 1934 Act
or other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by Shareholder expressly for use in connection with such registration;
and Shareholder will pay, as incurred, any legal or other expenses reasonably
incurred by any person intended to be indemnified pursuant to this subsection
1.8(b), in connection with investigating or defending any such loss, claim,
damage, liability, or action; provided, however, that the indemnity agreement
contained in this subsection 1.8(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of Shareholder, which consent shall
not be unreasonably withheld; provided, that, in no event shall any indemnity
under this subsection 1.8(b) exceed the gross proceeds from the offering
received by Shareholder.
(c) Promptly after receipt by an indemnified party
under this Section 1.8 of notice of the commencement of any action (including
any governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 1.8,
deliver to the indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate in, and, to
5
the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with counsel
mutually satisfactory to the parties; provided, however, that an indemnified
party (together with all other indemnified parties which may be represented
without conflict by one counsel) shall have the right to retain one separate
counsel, with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
1.8, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 1.8.
(d) If the indemnification provided for in this
Section 1.8 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage, or expense
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability, claim, damage, or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) The obligations of the Company and Shareholder
under this Section 1.8 shall survive the completion of any offering of
Registrable Securities in a registration statement under this Section 1, and
otherwise.
(f) Notwithstanding the foregoing, to the extent
that the provisions on indemnification and contribution contained in the
underwriting agreement entered into in connection with the underwritten public
offering are in conflict with the foregoing provisions, the provisions in the
underwriting agreement shall control.
1.9 Termination of Registration Rights. The registration rights
provided in this Section 1 shall terminate with respect to a particular
Shareholder if: (A) the Registrable Securities owned by such Shareholder have
been held for the necessary holding period under Rule 144 and all shares of
Registrable Securities held by such Shareholder may be sold pursuant to Rule 144
in any three (3) month period, or (B) the SEC takes a position in a definitive
pronouncement after the date hereof that (i) a Nasdaq National Market company
may rely on a fairness hearing pursuant to Section 25142 of the California
Corporations Code to avail itself of an exemption under Section 3(a)(10) of the
Act, or (ii) any securities issued pursuant to such a
6
fairness hearing and in reliance upon Section 3(a)(10) are not deemed to be
restricted securities and therefore will be freely transferable. Upon the
termination of registration rights pursuant to Section 1.9 (B), the Company
shall have the right to withdraw the registration statement, or any portion
thereof, covering the Registrable Securities.
1.10 Notice by Selling Shareholders. Each Shareholder who
intends to sell any or all of his shares of Registrable Securities pursuant to
the provisions of this Section 1 shall give advance telephonic notice to Xxxx
Xxxxxx, the Company's Chief Financial Officer (408-738-8881), of such intention
and shall be free to sell any or all of his shares of Registrable Securities if
such Shareholder has not received notice to the contrary within three (3)
business hours of such telephonic notice.
2. Miscellaneous.
2.1 General. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
2.2 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely within
California.
2.3 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
2.4 Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
2.5 Notices. Unless otherwise provided, any notice required
or permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon facsimile (with confirmed receipt), or personal delivery
to the party to be notified at the address indicated for such party on the
signature page hereof, or at such other address as such party may designate by
ten (10) days' advance written notice to the other parties.
2.6 Expenses. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled.
2.7 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the
Shareholders holding a majority of the Registrable Securities.
7
2.8 Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
2.9 Entire Agreement. This Agreement constitutes the full and
entire understanding and agreement between the parties with regard to the
subject hereof.
2.10 Removal of Restrictive Legends. In the event that the
registration rights terminate in accordance with Section 1.8(B), then the
Company shall remove any restrictive legends on certificates evidencing the
Registrable Securities except for such legends relating to restrictions under
applicable affiliates agreements.
8
IN WITNESS WHEREOF, the parties have executed this
Registration Rights Agreement as of the date first above written.
AVANT! CORPORATION
By: /s/ XXXX X. XXXXXX
--------------------------------------------------
Xxxx X. Xxxxxx, Chief Financial Officer and
Vice President of Financial and Administrative
Services, and Treasurer
Address:
Avant! Corporation
0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
XXXXXXXXX XXXXXXXX, ON BEHALF OF
FRONTLINE SHAREHOLDERS
Signature /S/ XXXXXXXXX XXXXXXXX
-------------------------------
Address: 00000 Xxxxxxxxx Xxxxx
--------------------------------
Xxxxxxx, XX 00000
----------------------------------------
Copy to: Heller, Erhman, White & XxXxxxxxx
000 Xxxxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Facsimile 000-000-0000
Attention: Xxxxxxx Xxxxxxxx
