SHAREHOLDER AGREEMENT
THIS SHAREHOLDER AGREEMENT is dated as of September 7, 1997, among
Avant! Corporation, a Delaware corporation ("Avant!"), Cardinal Merger
Corporation, a California corporation and a wholly owned subsidiary of Avant!
("Sub"), and the other parties signatory hereto (each, a "Shareholder").
WHEREAS each Shareholder desires that Technology Modeling Associates,
Inc., a California corporation ("TMAI"), Avant! and Sub enter into an Agreement
and Plan of Reorganization dated as of the date hereof (as the same may be
amended or supplemented, the "Reorganization Agreement") with respect to the
merger of Sub with and into TMAI (the "Merger"); and
WHEREAS each Shareholder is executing this Agreement as an inducement
to Avant! to enter into and execute, and to cause Sub to enter into and execute,
the Reorganization Agreement.
NOW, THEREFORE, in consideration of the execution and delivery by
Avant! and Sub of the Reorganization Agreement and the mutual covenants,
conditions and agreements contained herein and therein, the parties agree as
follows:
Section 1. REPRESENTATIONS AND WARRANTIES. Each Shareholder
individually as to itself, and not jointly, represents and warrants to Avant!
and Sub as follows:
(a) Such Shareholder is the record and beneficial owner of
the number of shares of Common Stock, no par value (the "Common Stock" and the
"TMAI Stock") of TMAI set forth opposite such Shareholder's name in Schedule A
hereto (as may be adjusted from time to time pursuant to Section 4, such
Shareholder's "Shares"). Except for such Shareholder's Shares and any other
shares of TMAI Stock subject hereto, such Shareholder is not the record or
beneficial owner of any shares of TMAI Stock.
(b) Such Shareholder has full power and authority to
execute and deliver this Agreement (including, without limitation, full power
and authority to sell the Shares and to receive shares of Avant! Common Stock in
payment of the Per Share Exercise Price hereunder). This Agreement has been
executed and delivered by such Shareholder and constitutes the legal, valid and
binding obligation of such Shareholder, enforceable against such Shareholder in
accordance with its terms. Neither the execution and delivery of this Agreement
nor the consummation by such Shareholder of the transactions contemplated hereby
will result in a violation of, or a default under, or conflict with, any
contract, trust, commitment, agreement, understanding, arrangement or
restriction of any kind to which such Shareholder is a party or bound or to
which such Shareholder's Shares are subject. To the best of such Shareholder's
knowledge, consummation by such Shareholder of the transactions contemplated
hereby will not violate, or require any consent, approval, or notice under, any
provision of any judgment, order, decree, statute, law, rule or regulation
applicable to such Shareholder or such Shareholder's
Shares, except for any necessary filing under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, or state takeover laws.
(c) Such Shareholder's Shares and the certificates
representing such Shares are now and at all times during the term hereof will be
held by such Shareholder, or by a nominee or custodian for the benefit of such
Shareholder, free and clear of all liens, claims, security interests, proxies,
voting trusts or agreements, understandings or arrangements or any other
encumbrances whatsoever, except for any such encumbrances or proxies arising
hereunder.
(d) No broker, investment banker, financial adviser or
other person is entitled to any broker's, finder's, financial adviser's or other
similar fee or commission from Avant!, Sub or TMAI in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
such Shareholder.
(e) Such Shareholder understands and acknowledges that
Avant! is entering into, and causing Sub to enter into, the Reorganization
Agreement in reliance upon such Shareholder's execution and delivery of this
Agreement. Such Shareholder acknowledges that the irrevocable proxy set forth
in Section 3 is granted in consideration for the execution and delivery of the
Reorganization Agreement by Avant! and Sub.
Section 2. COVENANTS. Each Shareholder severally, and not
jointly, agrees with, and covenants to, Avant! and Sub as follows:
(a) Such Shareholder shall not, except as contemplated by
the terms of this Agreement, (i) transfer (which term shall include, without
limitation, for the purposes of this Agreement any sale, gift, pledge or other
disposition), or consent to any transfer of, any or all of such Shareholder's
Shares or any interest therein, (ii) enter into any contract, option or other
agreement or understanding with respect to any transfer of any or all of such
Shares or any interest therein, (iii) grant any proxy, power-of-attorney or
other authorization or consent in or with respect to such Shares, (iv) deposit
such Shares into a voting trust or enter into a voting agreement or arrangement
with respect to such Shares, or (v) take any other action that would in any way
restrict, limit or interfere with the performance of its obligations hereunder
or the transactions contemplated hereby.
(b) If the holders of a majority of TMAI Stock approve the
Reorganization Agreement, such Shareholder's Shares shall be exchanged, pursuant
to the terms of the Reorganization Agreement, for the consideration provided in
the Reorganization Agreement. Such Shareholder, as a result of having agreed to
vote in favor of the Merger, hereby waives any rights of appraisal, or rights to
dissent from the Merger, that such Shareholder may otherwise have.
Section 3. GRANT OF IRREVOCABLE PROXY; APPOINTMENT OF PROXY.
(a) Each Shareholder hereby irrevocably grants to, and appoints, Avant!,
Xxxxxx X. Xxx and Xxxx X. Xxxxxx and any other individual who shall hereafter be
designated by Avant!, such Shareholder's proxy and attorney-in-fact (with full
power of substitution), for and in the name, place and stead of such
Shareholder, to vote such Shareholder's Shares, or grant a consent or approval
in respect
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of such Shares, at any meeting of shareholders of TMAI or at any adjournment
thereof or in any other circumstances upon which their vote, consent or other
approval is sought in favor of the Merger, the execution and delivery of the
Reorganization Agreement and approval of the terms thereof and each of the other
transactions contemplated by the Reorganization Agreement and the other
Documents.
(b) Such Shareholder represents that any proxies heretofore
given in respect of such Shareholder's Shares are not irrevocable, and that any
such proxies are hereby revoked.
(c) Such Shareholder hereby affirms that the irrevocable
proxy set forth in this Section 3 is given in connection with the execution of
the Reorganization Agreement, and that such irrevocable proxy is given to secure
the performance of the duties of the Shareholder under this Agreement. Such
Shareholder hereby further affirms that the irrevocable proxy is coupled with an
interest and may under no circumstances be revoked. Such Shareholder hereby
ratifies and confirms all that such irrevocable proxy may lawfully do or cause
to be done by virtue hereof. Such irrevocable proxy is executed and intended to
be irrevocable in accordance with the provisions of Section 705(e) of the
California General Corporation Law (the "CGCL").
Section 4. GRANT OF OPTION. (a) Each Shareholder grants to
Avant!, with TMAI's consent, an exclusive and irrevocable option (the "Option")
to purchase, subject to the conditions to exercise during the period specified
in subsection (c) of Section 4 and subject to the conditions to closing set
forth in subsection (d) of Section 4, all of the Shares held by such Shareholder
at the exercise price specified in subsection (b) of Section 4.
(b) EXERCISE PRICE; PAYMENT. The exercise price of the
Option may be paid, in the absolute discretion of Avant!, either: (i) in cash
(by check or wire transfer) at a price of $17.00 per Share; or (ii) by issuing
to each Shareholder the number of fully paid and nonassessable shares of Avant!
Common Stock that otherwise would have been issued to each Shareholder at the
Effective Time of the Merger pursuant to the Reorganization Agreement had the
Merger occurred without exercise of the Option (rounded up or down, as the case
may require, to avoid the issuance of fractional shares of Avant! Common Stock).
The exercise price set forth in this subsection (b) of Section 4 shall be
referred to as the "Exercise Price."
(c) EXERCISE OF OPTION; DURATION; CLOSINGS.
(i) Subject to the conditions to closing set forth in
subsection (d) of Section 4, the Option may be exercised at any time after the
occurrence of an Exercise Event (as defined below) and prior to the Expiration
Date (as defined below); provided, that the Option must be exercised in whole
with respect to all Shares, and not in part.
(ii) An "Exercise Event" shall occur for purposes of
this Agreement upon the occurrence of (A) any event or circumstance which,
pursuant to the terms of Section 7.1(c) of the Reorganization Agreement, would
entitle Avant! to terminate the Reorganization Agreement (regardless of whether
the Reorganization Agreement has actually
3
been terminated as a result of such event or circumstance); or (B)(1) an offer,
including an exchange offer, for at least 20% of the outstanding shares of TMAI
capital stock other than by Avant! or any of its affiliates that has been
accepted by holders of at least 20% of the outstanding shares of TMAI capital
stock, (2) an acquisition of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), by any person, other than Avant! or any of its affiliates
or by an existing shareholder of TMAI holding 5% or more of the outstanding
stock of TMAI as of the date of this Agreement (a "Controlling Shareholder"), of
at least 20% of the outstanding shares of TMAI capital stock, except for between
shareholders or between shareholders and their affiliates, or (3) an agreement
by TMAI with any person, other than Avant! or any of its affiliates, to acquire
TMAI or a controlling interest in TMAI by merger, consolidation, purchase of
substantially all of TMAI's assets, purchase of stock or other business
combination.
(iii) The "Expiration Date" shall be the date of the
earliest to occur of (A) the Effective Time (as defined in the Reorganization
Agreement), or (B) the termination of the Merger Agreement pursuant to
Section 7.1 of the Merger Agreement, if an Exercise Event shall not have
occurred on or prior to such termination date; PROVIDED that, if Avant! has sent
a Notice of Exercise prior to the Expiration Date, the Expiration Date shall be
extended during the pendency of any legal action or proceeding or any other
activity the resolution of which would, or which is reasonably intended to,
satisfy the condition set forth in subsection (d)(i) of Section 4 and if such
condition is thereafter satisfied, for a period of 15 days after the date such
conditions are satisfied.
(iv) To exercise the Option, Avant! shall, prior to the
Expiration Date, send a written notice (a "Notice of Exercise") to the
Shareholder specifying (A) the location, date and time for the closing (a
"Closing") of the purchase (which date shall be no later than five calendar days
and no earlier than the next day after the date such notice is mailed, but in no
event earlier than the date on or by which the condition specified in
subsection (d)(i) of Section 4 has been satisfied); and (B) the form(s) in which
the Exercise Price is to be paid with respect to the Option. If the Closing is
to occur sooner than three calendar days from the date on which a Notice of
Exercise is sent, notice shall also be given to each Shareholder by confirmed
facsimile, at the time the Notice of Exercise is sent, of the information
contained in such Notice of Exercise.
(v) AT THE CLOSING:
(A) Avant! shall: (1) if it has elected to pay
the Exercise Price of the Option (with respect to all or any Shares) in cash,
deliver to each Shareholder by check or wire transfer an amount calculated by
multiplying the number of Shares with respect to which such election has been
made by $17.00; and/or (2) if it has elected to pay the Exercise Price of the
Option in shares of Avant! Common Stock, (a) deliver to each Shareholder one or
more certificates, registered in the Shareholder's name, representing a number
of fully paid and nonassessable shares of Avant! Common Stock equal to the
number of fully paid and nonassessable shares of Avant! Common Stock that
otherwise would have been issued to each Shareholder at the Effective Time of
the Merger pursuant to the Reorganization Agreement had
4
the Merger occurred without exercise of the Option (rounded up or down, as the
case may require, to avoid the issuance of fractional shares of Avant! Common
Stock), and (b) agree with each Shareholder to file a registration statement on
Form S-3 with the Securities and Exchange Commission within ten (10) days of
such delivery of shares to register the resale of the Avant! Common Stock so
delivered to such Shareholder pursuant to this subsection (c)(v) of Section 3.
(B) Each Shareholder shall deliver to Avant!
one or more certificates registered in the name of Avant!, representing the
Shares subject to such Option exercise.
(d) CONDITION TO CLOSING.
(i) CONDITIONS TO CLOSING OBLIGATIONS OF AVANT! AND THE
SHAREHOLDER. The respective obligations of Avant! and each Shareholder to
proceed with the Closing shall be subject to the satisfaction prior to the
Closing, of the condition that no order, statute, rule, regulation, executive
order, stay, decree, judgment or injunction shall have been enacted, entered,
issued, promulgated or enforced by any court or governmental authority,
subsequent to the date of this Agreement, that prohibits or restricts the
effectuation of any of the transactions contemplated by this Agreement or the
Reorganization Agreement.
(ii) ADDITIONAL CONDITIONS TO AVANT!'S CLOSING
OBLIGATIONS. In addition to the condition specified in subsection (d)(i) of
Section 4, the obligation of Avant! to proceed with the Closing shall also be
subject to the satisfaction of the following conditions (except to the extent
waived by Avant!, in its sole discretion), notwithstanding the prior giving of
Notice of Exercise providing for the Closing;
(A) Each Shareholder and TMAI shall have
performed and complied in all material respects with the agreements and
obligations contained in this Agreement that are required to be performed and
complied with by it at or prior to the date of the Closing; and
(B) The representations and warranties of each
Shareholder contained in this Agreement shall be true and correct in all
material respects as of the date of this Agreement, and shall be deemed to have
been made again at and as of the Closing and shall then be true and correct in
all material respects.
(iii) ADDITIONAL CONDITION TO EACH SHAREHOLDER'S CLOSING
OBLIGATIONS. In addition to the condition specified in subsection (d)(i) of
Section 4, the obligation of each Shareholder to proceed with any Closing shall
also be subject to the satisfaction (except to the extent waived by each
Shareholder, in such Shareholder's sole discretion), of the following condition:
(A) Avant! shall have performed and complied in
all material respects with the agreements and obligations contained in this
Agreement that are required to be performed and complied with by it at or prior
to the date of the Closing.
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(e) COVENANT BY EACH SHAREHOLDER AND TMAI. Each
Shareholder and TMAI shall at no time prior to the Expiration Date take, or
refrain from taking, any action where the effect of so doing would be to
(i) prevent or disable the Shareholder from delivering the Shares to Avant! upon
exercise of the Option, (ii) prevent or disable the Shareholder or TMAI from
performing any of its other obligations under this Agreement, or (iii) prevent
or disable Avant! from exercising any of its rights under this Agreement;
including the exercise by TMAI of any right of TMAI or either Shareholder to
repurchase or restrict the transfer of the Shares.
Section 5. CERTAIN EVENTS. Each Shareholder agrees that this
Agreement and the obligations hereunder shall attach to such Shareholder's
Shares and shall be binding upon any person or entity to which legal or
beneficial ownership of such Shares shall pass, whether by operation of law or
otherwise, including without limitation such Shareholder's heirs, guardians,
administrators or successors. In the event of any stock split, stock dividend,
merger, reorganization, recapitalization or other change in the capital
structure of TMAI affecting TMAI Stock, or the conversion of any Shares that are
Preferred Stock into Common Stock, or the acquisition of additional shares of
TMAI Stock or other securities or rights of TMAI by any Shareholder, the number
of Shares listed on SCHEDULE A beside the name of such Shareholder shall be
adjusted appropriately and this Agreement and the obligations hereunder shall
attach to any additional shares of TMAI Stock or other securities or rights of
TMAI issued to or acquired by such Shareholder.
Section 6. STOP TRANSFER; LEGEND. TMAI agrees with, and covenants
to, Avant! that TMAI shall not register the transfer of any certificate
representing any Shareholder's Shares, unless such transfer is made in
compliance with this Agreement. Each Shareholder agrees that such Shareholder
will tender to TMAI, within five business days after the date hereof, any and
all certificates representing such Shareholder's Shares and TMAI will inscribe
upon such certificates the following legend: "The shares of Common Stock, par
value $0.001 per share, of Technology Modeling Associates, Inc. represented by
this certificate are subject to a Shareholder Agreement dated as of September 7,
1997, and may not be sold or otherwise transferred, except in accordance
therewith. Copies of such Agreement may be obtained at the principal executive
offices of Technology Modeling Associates, Inc."
Section 7. SHAREHOLDER CAPACITY. No person executing this
Agreement who is or becomes during the term hereof a director or officer of TMAI
makes any agreement or understanding herein in his or her capacity as such
director or officer. Each Shareholder signs solely in his or her capacity as
the record holder and beneficial owner of such Shareholder's Shares and nothing
herein shall limit or affect any actions taken by a Shareholder in its capacity
as an officer or director of TMAI to the extent specifically permitted by the
Reorganization Agreement.
Section 8. FURTHER ASSURANCES. Each Shareholder shall, upon
request of Avant! or Sub, execute and deliver any additional documents and take
such further actions as may reasonably be deemed by Avant! or Sub to be
necessary or desirable to carry out the provisions hereof and to vest the power
to vote such Shareholder's Shares as contemplated by Section 3 in Avant! and the
other irrevocable proxies described therein.
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Section 9. TERMINATION. This Agreement, and all rights and
obligations of the parties hereunder, shall terminate upon the earlier of
(a) the date upon which the Reorganization Agreement is terminated in accordance
with its terms or (b) the Effective Time (as defined in the Reorganization
Agreement).
Section 10. PUBLIC ANNOUNCEMENTS. Each Shareholder will consult
with Avant! before issuing, and provide Avant! with the opportunity to review
and comment upon, any press release or other public statements with respect to
the transactions contemplated by this Agreement and the Reorganization
Agreement, and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by applicable
law, court process or by obligations pursuant to any listing agreement with any
national securities exchange.
Section 11. MISCELLANEOUS. (a) Capitalized terms used and not
otherwise defined in this Agreement shall have the respective meanings assigned
to such terms in the Reorganization Agreement.
(b) All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally or sent by overnight courier (providing proof of
delivery) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice): (i) if to Avant! or Sub, to
the address set forth in Section 8.2 of the Reorganization Agreement; and
(ii) if to a Shareholder, to the address set forth on SCHEDULE A hereto, or such
other address as may be specified in writing by such Shareholder.
(c) The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(d) This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective (even without the signature of any other Shareholder) as
to any Shareholder when one or more counterparts have been signed by each of
Avant!, Sub and such Shareholder and delivered to Avant!, Sub and such
Shareholder.
(e) This Agreement (including the documents and instruments
referred to herein) constitutes the entire agreement, and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof.
(f) This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California, regardless of the laws
that might otherwise govern under applicable principles of conflicts of laws
thereof.
(g) Neither this Agreement nor any of the rights, interests
or obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or
7
otherwise, by any of the parties without the prior written consent of the other
parties, except by laws of descent. Any assignment in violation of the
foregoing shall be void.
(h) If any term, provision, covenant or restriction herein,
or the application thereof to any circumstance, shall, to any event, be held by
a court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions herein and the
application thereof to any other circumstances, shall remain in full force and
effect, shall not in any way be affected, impaired or invalidated, and shall be
enforced to the fullest extent permitted by law.
(i) Each Shareholder agrees that irreparable damage would
occur and that Avant! and Sub would not have any adequate remedy at law in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that Avant! and Sub shall be entitled to an injunction or
injunctions to prevent breaches by any Shareholder of this Agreement and to
enforce specifically the terms and provisions of this Agreement in any court of
the United States located in the State of California or in California state
court, this being in addition to any other remedy to which Avant! and Sub are
entitled at law or in equity. In addition, each of the parties hereto
(i) consents to submit such party to the personal jurisdiction of any Federal
court located in the State of California or any California state court in the
event any dispute arises out of this Agreement or any of the transactions
contemplated hereby, (ii) agrees that such party will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court and (iii) agrees that such party will not bring any action relating
to this Agreement or any of the transactions contemplated hereby in any court
other than a Federal court located in the State of California or a California
state court.
(j) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATED TO THIS AGREEMENT.
(k) No amendment, modification or waiver in respect of this
Agreement shall be effective against any party unless it shall be in writing and
signed by such party.
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IN WITNESS WHEREOF, Avant!, Cardinal Merger Corporation and the
Shareholders have caused this Agreement to be duly executed and delivered as of
the date first written above.
AVANT! CORPORATION
By: /s/ Xxxxxx X. Xxx
--------------------------------
Xxxxxx X. Xxx
Chairman of the Board,
Chief Executive Officer and President
CARDINAL MERGER CORPORATION
By: /s/ Xxxxxx X. Xxx
--------------------------------
Xxxxxx X. Xxx
President
/s/ Xxx X. Xxxxxx
-----------------------------------
Xxx X. Xxxxxx
/s/ Xxxxxx X. Xxxxxxxxx
-----------------------------------
Xxxxxx X. Xxxxxxxxx
/s/ Jue-Xxxxx Xxxxx
-----------------------------------
Jue-Xxxxx Xxxxx
/s/ Lung Chu
-----------------------------------
Lung Chu
/s/ Xxxxx X. Xxx
-----------------------------------
Xxxxx X. Xxx
/s/ Xxxxx X. Xxxxxx
-----------------------------------
Xxxxx X. Xxxxxx
/s/ Xxxxx X. Xxxxxxxxx
-----------------------------------
Xxxxx X. Xxxxxxxxx
/s/ Xxxxxx X. Xxxxxx
-----------------------------------
Xxxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxx
/s/ Xxxxxx X. Xxxxxx
-----------------------------------
Xxxxxx X. Xxxxxx
ACKNOWLEDGED AND AGREED
TO AS TO SECTIONS 4 AND 6:
TECHNOLOGY MODELING ASSOCIATES, INC.
By: /s/ Xxx X. Xxxxxx
---------------------------
Print Name: Xxx X. Xxxxxx
-------------------
Title: Chairman of the Board, Chief Executive
Officer and President
-----------------------------------------
