AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF OCTOBER 9, 1996,
AMONG
AVANT! CORPORATION,
DSM ACQUISITION CORPORATION
AND
FRONTLINE DESIGN AUTOMATION, INC.
TABLE OF CONTENTS
PAGE
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ARTICLE I THE MERGER......................................................1
1.1 Merger; Effective Time of the Merger.................................1
1.2 Closing..............................................................1
1.3 Effects of the Merger................................................1
1.4 Tax-Free Reorganization; Pooling of Interests........................2
1.5 Escrow...............................................................2
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES;
SUPPLEMENTARY ACTION............................................2
2.1 Effect on Capital Stock..............................................2
2.2 Exchange of Certificates.............................................5
2.3 Supplementary Action.................................................6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF FRONTLINE.....................7
3.1 Organization, Standing and Power.....................................7
3.2 Capital Structure....................................................7
3.3 Subsidiaries.........................................................8
3.4 Authority............................................................8
3.5 Financial Statements.................................................9
3.6 Payables; Receivables...............................................10
3.7 Compliance with Laws................................................11
3.8 No Defaults.........................................................11
3.9 Litigation..........................................................11
3.10 Conduct in the Ordinary Course......................................11
3.11 Absence of Undisclosed Liabilities..................................13
3.12 Documents and Information Supplied..................................13
3.13 Certain Agreements..................................................14
3.14 Employee Plans......................................................14
3.15 Major Contracts.....................................................15
3.16 Taxes...............................................................16
3.17 Intellectual Property...............................................19
3.18 Employee Agreements.................................................20
3.19 Restrictions on Business Activities.................................20
3.20 Title to Properties; Absence of Liens and
Encumbrances: Condition of Equipment................................20
3.21 Governmental Authorizations and Licenses............................21
3.22 Environmental Matters...............................................22
3.23 Insurance...........................................................24
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3.24 Labor Matters.......................................................25
3.25 Customers; Backlog; Returns and Complaints..........................25
3.26 Personnel...........................................................25
3.27 Questionable Payments...............................................25
3.28 Related Party Transactions..........................................26
3.29 Customers and Suppliers.............................................26
3.30 Bank Accounts and Powers of Attorney................................26
3.31 Products............................................................26
3.32 Brokers or Finders; Professional Fees...............................27
3.33 Permit..............................................................27
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF AVANT! AND SUB...............27
4.1 Organization; Standing and Power....................................27
4.2 Authority...........................................................27
4.3 Valid Issuance of Shares of Avant! Common Stock.....................28
4.4 Avant! Financial Statements.........................................28
4.5 Litigation..........................................................29
4.6 Reports.............................................................29
4.7 Restrictions on Business Activities.................................29
4.8 Brokers or Finders; Professional Fees...............................29
4.9 Conduct in the Ordinary Course......................................29
4.10 Permit..............................................................30
ARTICLE V CONDUCT AND TRANSACTIONS PRIOR TO EFFECTIVE TIME;
ADDITIONAL AGREEMENTS..........................................30
5.1 Conduct of Business of FrontLine....................................30
5.2 Access to Information; Provision of Interim Financial Statements. . 33
5.3 FrontLine Shareholders' Consent.....................................34
5.4 Fairness Hearing and Permit.........................................34
5.5 Exclusivity; Acquisition Proposals..................................34
5.6 Breach of Representations, Warranties, Agreements and Covenants . . 35
5.7 Consents............................................................35
5.8 Best Efforts........................................................35
5.9 Legal Conditions to the Merger......................................36
5.10 Public Announcements................................................36
5.11 Affiliates Agreement and Continuity of Interest Certificate.........37
5.12 Expenses............................................................37
5.13 Information to be Supplied..........................................37
5.14 Registration of Avant! Common Stock Issuable With
Respect to Assumed FrontLine Options................................37
5.15 Reorganization......................................................38
5.16 Schedules...........................................................38
5.17 Certain Benefit Plans...............................................38
5.18 Listing of Shares...................................................38
5.19 Indemnification.....................................................38
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ARTICLE VI CONDITIONS PRECEDENT...........................................39
6.1 Conditions to Each Party's Obligation to Effect the Merger..........39
6.2 Conditions of Obligations of Avant! and Sub.........................39
6.3 Conditions of Obligation of FrontLine...............................41
ARTICLE VII INDEMNITY......................................................41
7.1 Survival of Representations, Warranties, Covenants
and Agreements......................................................41
7.2 Indemnification; Escrow Deposit of Avant! Common Stock..............42
7.3 Termination of Indemnity and Representations and Warranties.........43
7.4 Exclusivity of Remedies.............................................43
ARTICLE VIII TERMINATION....................................................43
8.1 Termination.........................................................43
8.2 Expenses and Termination Fees.......................................44
ARTICLE IX GENERAL PROVISIONS.............................................44
9.1 Amendment...........................................................44
9.2 Extension; Waiver...................................................44
9.3 Notices.............................................................45
9.4 Interpretation......................................................46
9.5 Counterparts........................................................46
9.6 Entire Agreement....................................................46
9.7 No Transfer.........................................................46
9.8 Severability........................................................46
9.9 Other Remedies......................................................46
9.10 Further Assurances..................................................46
9.11 Absence of Third-Party Beneficiary Rights...........................47
9.12 Governing Law.......................................................47
EXHIBITS
1.1 Agreement of Merger
1.3(a) Articles of Incorporation
1.3(b) Bylaws
1.5 Escrow Agreement
5.11(a) Affiliates Agreement
5.11(b) Continuity of Interest Certificate
SCHEDULES
2.1(d) Holders of FrontLine Options Exercisable for Common Stock
2.1(e) Holders of FrontLine Restricted Stock
3.3 List of Subsidiaries
3.6 Receivables
3.7 Exceptions to Compliance with Laws
3.8 List of Defaults
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3.9 Pending Litigation
3.10 Exceptions to Conduct in the Ordinary Course
3.11 Undisclosed Liabilities
3.13 Certain Agreements
3.14 FrontLine Compensation Plans
3.15 Major Contracts
3.17 FrontLine Intellectual Property Rights
3.18 Proprietary Information and Inventions Agreements
3.19 Restrictions on Business Activities
3.20 Real Property Leased; Physical Assets
3.21 Governmental Authorizations and Licenses
3.22 Environmental Matters
3.23 Insurance
3.25 Customers; Backlog; Returns and Complaints
3.26 Personnel
3.28 Related Party Transactions
3.29 Customers and Suppliers
3.30 Bank Accounts and Powers of Attorney
3.32 Brokers or Finders; Professional Fees
5.11 List of Affiliates
iv
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION is dated as of October 9,
1996, by and among Avant! Corporation, a Delaware corporation ("Avant!"), DSM
Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of
Avant! ("Sub") and FrontLine Design Automation, Inc., a California corporation
("FrontLine").
INTENDING TO BE LEGALLY BOUND, and in consideration of the premises
and mutual covenants and agreements contained herein, Avant!, Sub and FrontLine
hereby agree as follows:
ARTICLE I
THE MERGER
1.1 MERGER; EFFECTIVE TIME OF THE MERGER. Subject to the terms and
conditions of this Agreement and Plan of Reorganization (the "Agreement") and as
contemplated by the Agreement of Merger substantially in the form attached
hereto as Exhibit 1.1 (the "Agreement of Merger"), Sub will be merged with and
into FrontLine (the "Merger") in accordance with the applicable provisions of
the corporate laws of the State of Delaware ("Delaware Law") and the State of
California ("California Law"). The Agreement of Merger provides, among other
things, the mode of effecting the Merger and the manner and basis of converting
each issued and outstanding share of capital stock of FrontLine into shares of
Common Stock, par value $.0001 per share, of Avant! ("Avant! Common Stock").
The Agreement of Merger shall be executed by FrontLine, Avant! and Sub prior to
the Effective Date of the Merger (as defined in this Section 1.1).
Subject to the provisions of this Agreement, the Agreement of Merger
shall be filed in accordance with Delaware Law and California Law on the Closing
Date (as defined in Section 1.2). The Merger shall become effective upon such
filing of the Agreement of Merger (the date of such filing being hereinafter
referred to as the "Effective Date of the Merger" and the time of confirmation
of such filing being hereinafter referred to as the "Effective Time of the
Merger") in the State of California, which for purposes of Delaware Law shall
also be the Effective Time of the Merger in Delaware.
1.2 CLOSING. The closing of the Merger (the "Closing") will take
place as soon as practicable on the first business day after satisfaction or
waiver of the conditions precedent set forth in Article VI of this Agreement
(the "Closing Date"), at the offices of Xxxxxxxxx Xxxxxxx Xxxxxx Xxxxxxxxxx
Xxxxxxxx & Xxxxxxxxx, LLP, 000 Xxxxxx Xxx, Xxxx Xxxx, Xxxxxxxxxx, unless a
different date or place is agreed to in writing by Avant!, Sub and FrontLine.
1.3 EFFECTS OF THE MERGER. At the Effective Time of the Merger, (a)
the separate existence of Sub shall cease and Sub shall be merged with and into
FrontLine (Sub and FrontLine are sometimes referred to herein as the
"Constituent Corporations" and FrontLine after
the Merger is sometimes referred to herein as the "Surviving Corporation"), (b)
the Articles of Incorporation of the Surviving Corporation shall be set forth in
EXHIBIT 1.3(a) hereto, (c) the Bylaws of the Surviving Corporation shall be set
forth in EXHIBIT 1.3(b) hereto, (d) the directors of the Surviving Corporation
shall be Xxxxxx X. Xxx and Xxxx X. Xxxxxx, (e) the officers of the Surviving
Corporation shall be Xxxxxx X. Xxx, President and Chief Executive Officer and
Xxxx X. Xxxxxx, Vice President, Chief Financial Officer and Secretary and (f)
the Merger shall, from and after the Effective Time of the Merger, have all the
effects provided by applicable law.
1.4 TAX-FREE REORGANIZATION; POOLING OF INTERESTS. The Merger is
intended to be a Reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code") and to be accounted for
as a pooling of interests.
1.5 ESCROW. Ten percent (10%) of the aggregate number of shares of
Avant! Common Stock issued in connection with the Merger (the "Escrow Shares")
shall be held in escrow as collateral for the indemnification obligations of
FrontLine pursuant to Article VII of this Agreement and the provisions of an
escrow agreement ("Escrow Agreement") substantially in the form attached hereto
as EXHIBIT 1.5. The Escrow Shares shall be withheld pro rata from the shares of
Avant! Common Stock to be received by the shareholders of FrontLine upon
exchange of their shares of FrontLine capital stock for Avant! Common Stock.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF
CERTIFICATES; SUPPLEMENTARY ACTION
2.1 EFFECT ON CAPITAL STOCK. As of the Effective Time of the Merger,
by virtue of the Merger and without any action on the part of the holder of any
shares of capital stock of FrontLine:
(a) CAPITAL STOCK OF SUB. All issued and outstanding shares of
capital stock of Sub shall continue to be issued and outstanding and shall be
converted into 1,000 shares of Common Stock of the Surviving Corporation. Each
stock certificate of Sub evidencing ownership of any such shares shall continue
to evidence ownership of such shares of capital stock of the Surviving
Corporation.
(b) CANCELLATION OF CAPITAL STOCK OF FRONTLINE.
(i) All shares of capital stock of FrontLine that are
owned directly or indirectly by FrontLine or by any entity controlled by
FrontLine shall be canceled and no stock of Avant! or other consideration shall
be delivered in exchange therefor. For this purpose, a controlled entity shall
mean a corporation or other entity whose voting securities are owned or are
otherwise controlled directly or indirectly by a parent corporation or other
intermediary entity in an amount sufficient to elect at least a majority of the
board of directors or other managers of such corporation or other entity.
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(ii) Each holder of a certificate representing any
shares of FrontLine capital stock after the Effective Time of the Merger shall
cease to have any rights with respect to such shares, except the right either to
receive the Merger Consideration Per Share (as defined below) upon surrender of
such certificate, or to exercise such holder's dissenters' rights, if
applicable, as provided in Section 2.1(g) hereof and pursuant to Delaware Law
and California Law.
(c) CONVERSION OF CAPITAL STOCK OF FRONTLINE. Subject to this
subsection 2.1(c), each issued and outstanding share of Common Stock of
FrontLine ("FrontLine Common Stock"), including shares issued or issuable upon
the exercise of any FrontLine Option (as defined in Section 2.1(d) below) prior
to the Effective Time of the Merger, that are issued and outstanding immediately
prior to the Effective Time of the Merger shall automatically be canceled and
extinguished and converted, without any action on the part of the holder
thereof, into the right to receive a fraction of a share of Avant! Common Stock
(the "Merger Consideration Per Share") equal to a fraction, the numerator of
which is 2,222,222 and the denominator of which is the total number of shares of
FrontLine Common Stock outstanding plus the total number of shares of FrontLine
Common Stock issuable upon exercise or conversion of outstanding options,
warrants and any other security convertible or exchangeable for FrontLine Common
Stock, in each case as of the Effective Time of the Merger. The ratio pursuant
to which each share of Common Stock of FrontLine will be exchanged for shares of
Avant! Common Stock, determined in accordance with the foregoing provisions, is
hereinafter referred to as the "Exchange Ratio."
(d) ASSUMPTION OF FRONTLINE OPTIONS.
(i) At the Effective Time of the Merger, each
unexpired and unexercised option to purchase shares of FrontLine Common Stock (a
"FrontLine Option") granted under the stock option plans and agreements of
FrontLine outstanding immediately prior to the Effective Time of the Merger
shall be assumed by Avant! (an "Assumed FrontLine Option"). SCHEDULE 2.1(d)
hereto sets forth a true and complete list as of the date hereof of all holders
of FrontLine Options exercisable to purchase shares of FrontLine Common Stock,
including the number of shares of FrontLine Common Stock subject to such
options, a breakdown as between vested and unvested options, the exercise price
per share and the term of such options and the residence address of each such
holder. Three (3) days prior to the Closing Date, FrontLine shall deliver to
Avant! an updated SCHEDULE 2.1(d) hereto current as of the Closing Date. Each
FrontLine Option so assumed by Avant! will continue to have, and be subject to,
substantially the same terms and conditions set forth in the documents governing
such FrontLine Option immediately prior to the Effective Time of the Merger,
except that (A) such Assumed FrontLine Option will be exercisable for that
number of whole shares of Avant! Common Stock equal to the product of the number
of shares of FrontLine Common Stock that were purchasable under such Assumed
FrontLine Option immediately prior to the Effective Time of the Merger
multiplied by the Exchange Ratio, rounded down to the nearest whole number of
shares of Avant! Common Stock, and (B) the per share exercise price for the
shares of Avant! Common Stock issuable upon exercise of such Assumed FrontLine
Option will be equal to the quotient obtained by dividing the exercise price per
share of FrontLine Common Stock at which
3
such FrontLine Option was exercisable immediately prior to the Effective Time
of the Merger by the Exchange Ratio, rounded up to the nearest whole cent. The
parties intend that the assumption or replacement of the FrontLine Options
hereunder will meet the requirements of Section 424(a) of the Code and this
Section 2.1(d) shall be interpreted consistent with such intention. Consistent
with the terms of the FrontLine Options and the documents governing such
FrontLine Options, except for existing contractual arrangements to the contrary,
the Merger will not terminate or accelerate any Assumed FrontLine Option or any
right of exercise, vesting or repurchase relating thereto with respect to shares
of Avant! Common Stock acquired upon exercise of such FrontLine Option. Holders
of FrontLine Options will not be entitled to acquire FrontLine capital stock
following the Merger.
(ii) Holders of vested FrontLine Options may elect to
exercise such options prior to the Effective Time of the Merger and receive the
Merger Consideration Per Share by providing notice of such exercise and payment
of the exercise price thereof to FrontLine at any time prior to the Effective
Time of the Merger. In the event that any holder of vested FrontLine Options
does not exercise such FrontLine options prior to the Effective Time of the
Merger, such FrontLine Options shall become Assumed FrontLine Options.
(iii) As soon as practicable after the Effective Time
of the Merger, Avant! shall issue to each holder of an Assumed FrontLine
Option a document evidencing the stock option assumption by Avant!. The
right to receive an Assumed FrontLine Option may not be assigned or
transferred. Any attempted assignment contrary to this Section 2.1(d) shall
be null and void.
(e) FRONTLINE CAPITAL STOCK SUBJECT TO REPURCHASE. All shares
of Avant! Common Stock that are received in the Merger in exchange for shares of
FrontLine Common Stock that, under applicable stock purchase, stock restriction
or similar agreements with FrontLine, are unvested or subject to a repurchase
option or other condition of forfeiture that by its terms does not terminate due
to the Merger ("FrontLine Restricted Stock") will also be unvested or subject to
the same repurchase option or other condition, as the case may be, and the
certificates evidencing such shares will be marked with appropriate legends.
SCHEDULE 2.1(e) hereto sets forth a true and complete list of all holders of
FrontLine Restricted Stock, including the number of shares of FrontLine
Restricted Stock held and a breakdown as between vested and unvested shares. On
the Closing Date, FrontLine shall deliver to Avant! an updated SCHEDULE 2.1(e)
hereto current as of the Closing Date.
(f) ADJUSTMENT OF EXCHANGE RATIO. If, between the date of this
Agreement and the Effective Time of the Merger, the outstanding shares of Avant!
Common Stock shall have been changed into a different number of shares or a
different class by reason of any reclassification, recapitalization, split-up,
stock dividend, stock combination, exchange of shares or readjustment, the
Exchange Ratio shall be correspondingly adjusted.
(g) DISSENTERS' RIGHTS. If, as of the Effective Time of the
Merger, holders of the issued and outstanding FrontLine Common Stock are
entitled to dissenters' rights under California Law and have properly exercised
and not lost such dissenters' rights
4
("Dissenting Shares") in connection with the Merger, such shares of FrontLine
Common Stock shall not be converted into Avant! Common Stock but shall be
converted into the right to receive such consideration as may be determined to
be due with respect to such Dissenting Shares.
(h) FRACTIONAL SHARES. No fractional shares of Avant! Common
Stock shall be issued, but in lieu thereof each holder of shares of FrontLine
Common Stock who would otherwise be entitled to receive a fraction of a share of
Avant! Common Stock shall receive from Avant! an amount of cash equal to the
Average Nasdaq Per Share Price multiplied by the fraction of a share of Avant!
Common Stock to which such holder would otherwise be entitled. The fractional
share interests of each FrontLine shareholder shall be aggregated, so that no
FrontLine shareholder shall receive cash in an amount greater than the value of
one (1) full share of Avant! Common Stock. The "Average Nasdaq Per Share Price"
equals the average closing sales price of Avant! Common Stock as quoted on the
Nasdaq National Market for the five (5) consecutive trading days ending three
(3) business days prior to the Closing Date.
2.2 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. Prior to the Closing Date, Avant! shall
appoint Xxxxxx Trust Company to act as exchange agent (the "Exchange Agent") in
the Merger.
(b) AVANT! TO PROVIDE COMMON STOCK. Promptly after the
Effective Time of the Merger (but in no event later than five (5) business days
thereafter), Avant! shall make available for exchange in accordance with this
Article II, through such reasonable procedures as Avant! may adopt, the shares
of Avant! Common Stock issuable pursuant to Section 2.1 in exchange for
outstanding shares of capital stock of FrontLine.
(c) EXCHANGE PROCEDURES. Within five (5) business days after
the Effective Time of the Merger, the Exchange Agent shall mail to each holder
of record of a certificate or certificates that immediately prior to the
Effective Time of the Merger represented outstanding shares of FrontLine Common
Stock (the "Certificates") whose shares are being converted into Avant! Common
Stock pursuant to Section 2.1 hereof (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent and shall be in such form and have such other provisions as Avant! may
reasonably specify including appointment of the Shareholders' Representative (as
defined in the Escrow Agreement) as attorney-in-fact for shareholders of
FrontLine with respect to certain matters) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for Avant! Common Stock.
Upon surrender of a Certificate for cancellation to the Exchange Agent or to
such other agent or agents as may be appointed by Avant!, together with such
letter of transmittal, duly executed and completed in accordance with the
instructions thereto, the holder of such Certificate shall be entitled to
receive in exchange therefor the number of shares of Avant! Common Stock to
which the holder of FrontLine capital stock is entitled pursuant to Section 2.1
hereof. The Certificate so surrendered shall forthwith be canceled. In the event
of a transfer of ownership of FrontLine capital stock that is not registered on
the transfer records of FrontLine, the appropriate number of shares of Avant!
Common Stock may be delivered to a transferee if the Certificate representing
such FrontLine
5
capital stock is presented to the Exchange Agent and accompanied by all
documents required to evidence and effect such transfer and to evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.2, each Certificate shall be deemed at all times
after the Effective Time of the Merger to represent the right to receive upon
such surrender the number of shares of Avant! Common Stock as provided by this
Article II and the provisions of Delaware Law and California Law but shall have
no other right; provided, however, that customary and appropriate
certifications, indemnities and bonds allowing exchange against lost or
destroyed certificates shall be provided; and provided further that nothing in
this Section 2.2(c) shall require Avant! to exchange its Common Stock to any
holder of FrontLine capital stock who shall fail to surrender a certificate
representing such shares or the certification, indemnities and bonds relating to
a lost certificate. Notwithstanding the foregoing, neither the Exchange Agent
nor any party hereto shall be liable to a holder of shares of FrontLine capital
stock for any Avant! Common Stock delivered to a public official pursuant to
applicable abandoned property, escheat and similar laws. Promptly following the
date that is six (6) months after the Effective Date of the Merger, the Exchange
Agent shall return to the Surviving Corporation all shares of Avant! Common
Stock in its possession relating to the transactions described in this
Agreement, and the Exchange Agent's duties shall terminate. Thereafter, each
holder of a Certificate may surrender such Certificate to the Surviving
Corporation and (subject to applicable abandoned property, escheat and similar
laws) receive in exchange therefor the shares of Avant! Common Stock to which
such holder is entitled pursuant hereto.
(d) NO FURTHER OWNERSHIP RIGHTS IN CAPITAL STOCK OF FRONTLINE.
All Avant! Common Stock delivered upon the surrender for exchange of shares of
capital stock of FrontLine in accordance with the terms hereof shall be deemed
to have been delivered in full satisfaction of all rights pertaining to such
shares of capital stock of FrontLine. There shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the shares
of capital stock of FrontLine that were outstanding immediately prior to the
Effective Time of the Merger. If, after the Effective Time of the Merger,
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Article II.
2.3 SUPPLEMENTARY ACTION. at any time after the Effective Time of
the Merger, any further assignments or assurances in law or any other things are
necessary or desirable to vest or to perfect or confirm of record in the
Surviving Corporation the title to any property or rights of either FrontLine or
Sub or otherwise to carry out the provisions of this Agreement, the officers and
directors of the Surviving Corporation are hereby authorized and empowered, in
the name of and on behalf of FrontLine and Sub, to execute and deliver any and
all things necessary or proper to vest or to perfect or confirm title to such
property or rights in the Surviving Corporation, and otherwise to carry out the
purposes and provisions of this Agreement.
6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FRONTLINE
FrontLine represents and warrants to Avant! and Sub that the
representations and warranties set forth below shall be true and correct as of
the date hereof, except as disclosed in documents delivered by FrontLine to
Avant! prior to the execution of this Agreement (the "FrontLine Disclosure
Schedules") or as supplemented pursuant to Section 5.16. As used in this
Agreement, (a) "Business Condition" with respect to FrontLine shall refer to
FrontLine's financial condition, business as presently conducted (including
products currently under development), property, results of operations and
assets; and (b) a disclosure or result will be deemed "material and adverse"
only if, individually or when aggregated with other similar or related
disclosures or results, it gives rise to a substantial diminution in the value
of FrontLine.
3.1 ORGANIZATION, STANDING AND POWER. FrontLine is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California and has all requisite corporate power and authority to own,
operate and lease its properties and to carry on its business as now being
conducted. FrontLine is duly qualified as a foreign corporation and is in good
standing in each jurisdiction in which the failure to so qualify would have a
material and adverse effect on FrontLine's Business Condition. FrontLine has
delivered or made available to Avant! complete and correct copies of its current
Articles of Incorporation ("Articles") and Bylaws, and has delivered minutes of
all directors' and shareholders' meetings, complete and accurate as of the date
hereof, and stock certificate books of FrontLine, that correctly set forth the
record ownership of all outstanding shares of capital stock of FrontLine and the
addresses of each of its security holders.
3.2 CAPITAL STRUCTURE.
(a) The authorized capital stock of FrontLine consists of
7,000,000 shares of Common Stock, no par value and 3,000,000 shares of Preferred
Stock, no par value, all of which have been designated Series A Preferred Stock.
As of the date of this Agreement, there were issued and outstanding 2,700,610
shares of FrontLine Common Stock and 2,536,088 shares of Series A Preferred
Stock. As of the date of this Agreement, there were an aggregate of
1,088,500 shares of Common Stock reserved for issuance upon the exercise of
outstanding FrontLine Options. There are no outstanding shares of FrontLine
capital stock or any other equity securities or rights to purchase equity
securities of FrontLine (collectively with FrontLine Common Stock, FrontLine
Preferred Stock and FrontLine Options, "FrontLine Capital Stock"), other than
shares of FrontLine Common Stock, FrontLine Preferred Stock and FrontLine
Options as described in the preceding sentence.
(b) All outstanding shares of FrontLine Common Stock and
FrontLine Preferred Stock are, and any shares of FrontLine Common Stock issued
upon exercise of any FrontLine Option will be, duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive rights created by
statute, FrontLine's Articles or Bylaws or any agreement to which FrontLine is a
party or by which FrontLine may be bound. All outstanding FrontLine
7
Capital Stock have been issued in compliance with applicable securities laws.
There are no options, warrants, calls, conversion rights, commitments or
agreements of any character to which FrontLine is a party or by which FrontLine
may be bound that do or may obligate FrontLine to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of FrontLine Capital
Stock or that do or may obligate FrontLine to grant, extend or enter into any
such option, warrant, call conversion right, commitment or agreement.
(c) None of the issued and outstanding shares of FrontLine
Capital Stock is subject to repurchase or redemption. All FrontLine Options have
been issued in accordance with FrontLine's stock option plans and all applicable
securities laws, including pursuant to valid permits or exemptions therefrom.
The FrontLine stock option plans and all amendments thereto have been approved
by all requisite FrontLine shareholder action. FrontLine does not have in effect
any stock appreciation rights plan and no stock appreciation rights are
currently outstanding. The consummation of the Merger shall not cause an
acceleration in the vesting of any of FrontLine's Capital Stock.
(d) Except for any restrictions imposed by applicable securities
laws, there is no right of first refusal, co-sale right, right of participation,
right of first offer, option or other restriction on transfer applicable to any
shares of FrontLine Capital Stock.
(e) FrontLine is not a party or subject to any agreement or
understanding, and there is no agreement or understanding between or among any
persons that affects or relates to the voting or giving of written consent with
respect to any outstanding security of FrontLine.
3.3 SUBSIDIARIES. FrontLine does not own or control, directly or
indirectly, any corporation, partnership, business, trust or other entity.
SCHEDULE 3.3 sets forth a true and complete list of all jurisdictions in which
FrontLine and its subsidiaries are qualified to do business or own or lease
property or have employees. All of the shares of capital stock of each such
subsidiary are owned free and clear of all liens by FrontLine.
3.4 AUTHORITY.
(a) FrontLine has all requisite corporate power and authority to
enter into this Agreement, the Agreement of Merger and the Escrow Agreement
(collectively, the "Related Agreements") and, subject to approval of this
Agreement and the Agreement of Merger by the shareholders of FrontLine, to
execute, deliver and perform its obligations hereunder and thereunder, and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Related Agreements, the performance by
FrontLine of its obligations hereunder and thereunder and the consummation of
the transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action on the part of FrontLine, including
approval by its Board of Directors, other than approval of the FrontLine
shareholders. Each of this Agreement and the Related Agreements is a legal,
valid and binding obligation of FrontLine enforceable against FrontLine in
accordance with its respective terms, except as enforcement may be limited by
bankruptcy, insolvency, or other similar laws
8
affecting the enforcement of creditors' rights generally and except that the
availability of equitable remedies is subject to the discretion of the court
before which any proceeding therefor may be brought.
(b) Subject to satisfaction of the conditions set forth in
Article VI hereto, the execution and delivery of this Agreement and the Related
Agreements do not and the performance and consummation of the transactions
contemplated hereby and thereby will not, conflict with, or result in any
conflict with, breach or violation of any statute, law, rule, regulation,
judgment, order, decree, or ordinance applicable to FrontLine or its properties
or assets, or conflict with, or result in any conflict with, breach or violation
of or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation, forfeiture or acceleration of any
obligation or the loss of a benefit under, or result in the creation of a lien
or encumbrance on any of the properties or assets of FrontLine pursuant to (i)
any provision of the current Articles or Bylaws of FrontLine, or (ii) any
agreement, contract, note, mortgage, indenture, lease, instrument, permit,
concession, franchise or license to which FrontLine is a party or by which
FrontLine or any of its property or assets may be bound or affected, other than
any such conflict, breach, violation or default which would not have a material
and adverse effect on the Business Condition of FrontLine or which would arise
from a general restriction on assignments or changes in control.
(c) No consent, approval, order or authorization of, or
registration, declaration of, or qualification or filing with, any court,
administrative agency, commission, regulatory authority or other governmental or
administrative body or instrumentality, whether domestic or foreign (a
"Governmental Entity"), is required by or with respect to FrontLine in
connection with the execution and delivery of this Agreement and the Related
Agreements by FrontLine or the consummation by FrontLine of the transactions
contemplated hereby or thereby, except for filing of the Agreement of Merger as
required under Delaware Law and California Law and appropriate documents with
the relevant authorities of other jurisdictions in which FrontLine is qualified
to do business.
3.5 FINANCIAL STATEMENTS.
(a) FINANCIAL STATEMENTS PREVIOUSLY DELIVERED. FrontLine has
delivered to Avant! a complete and accurate copy of its balance sheet at
December 31, 1993, 1994, and 1995, and June 30, 1996, and its statement of
operations, statement of cash flows and statement of shareholders' equity,
including notes thereto, for each of the three years ended December 31, 1993,
1994 and 1995, and the six months ended June 30, 1996, and will deliver such
financial statements as of and for the period ending September 30, 1996 on or
prior to October 25, 1996 (collectively, "the FrontLine Unaudited Financial
Statements"). The FrontLine Unaudited Financial Statements have been prepared
in accordance with generally accepted accounting principles ("GAAP") applied on
a consistent basis throughout the periods indicated and with each other except
that such financial statements will not contain any footnotes required by GAAP.
The FrontLine Unaudited Financial Statements fairly present the financial
position and operating results of FrontLine as of the dates, and for the
periods, indicated therein.
9
(b) FINANCIAL STATEMENTS TO BE DELIVERED. As soon as available,
but no later than the Closing Date, FrontLine shall deliver to Avant! a complete
and accurate copy of its balance sheet at December 31, 1993, 1994, and 1995, and
its statement of operations, statement of cash flows and statement of
shareholders' equity, including notes, for each of the three years ended
December 31, 1993, 1994 and 1995 (collectively, "the FrontLine Audited Financial
Statements", collectively with the FrontLine Unaudited Financial Statements, the
"FrontLine Financial Statements"). The FrontLine Audited Financial Statements
will have been prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
indicated and with each other and will have been audited and certified by
independent public accountants of nationally recognized standing. The FrontLine
Audited Financial Statements will fairly present the financial position and
operating results of FrontLine as of the dates and for the periods indicated
therein. The notes to the FrontLine Audited Financial Statements as at and for
each such period will set forth in reasonable detail FrontLine's accounting
policies, principles and methods.
3.6 PAYABLES; RECEIVABLES.
(a) All accounts payable and notes payable by FrontLine to third
parties as of September 30, 1996 arose in the ordinary course of business.
(b) All of the accounts receivable and notes receivable owing to
FrontLine as of September 30, 1996 are set forth in SCHEDULE 3.6 and constitute
valid and enforceable claims arising from bona fide transactions in the ordinary
course of business, and, to FrontLine's knowledge, there are no contingent or
asserted claims, refusals to pay, rights of return, or other rights of set-off
against any thereof. As of September 30, 1996, there was no account receivable
or note receivable that is pledged to any third party by FrontLine.
(c) As of September 30, 1996, there were no debts, liabilities
or claims against FrontLine that are not reflected in the FrontLine Unaudited
Financial Statements, as applicable, contingent or otherwise, that are or would
be of a nature required to be reflected in a balance sheet prepared in
accordance with GAAP and that, individually exceed $10,000, or in the aggregate,
exceed $25,000. As of September 30, 1996, FrontLine has no debts, liabilities,
or claims other than those specifically set forth in the FrontLine Unaudited
Financial Statements. FrontLine's revenue recognition policies with respect to
FrontLine Financial Statements have been made in accordance with GAAP. FrontLine
maintains a standard system of accounting in accordance with GAAP. All of
FrontLine's general ledgers, books and records have been made available to
Avant!. FrontLine does not have any of its records, systems, controls, data or
information recorded, stored, maintained, operated or otherwise wholly or partly
dependent upon or held by any means (including any electronic, mechanical or
photographic process, whether computerized or not) that (including all means of
access thereto and therefrom) are not under the exclusive ownership and direct
control of FrontLine. FrontLine's financial reserves in the FrontLine Unaudited
Financial Statements are adequate to cover claims already incurred. The
provision for taxes of FrontLine as set forth in the FrontLine Unaudited
Financial Statements is adequate and accurate for taxes due or accrued as of
such date.
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3.7 COMPLIANCE WITH LAWS. Except as set forth in SCHEDULE 3.7,
FrontLine is in compliance and has conducted its business and operations so as
to comply with all laws, ordinances, rules and regulations, judgments, decrees
or orders of any Governmental Entity, except to the extent that failure to
comply would not have a material and adverse effect on FrontLine's Business
Condition. There are no judgments or orders, injunctions, decrees, stipulations
or awards (whether rendered by a court or administrative agency or by
arbitration) against FrontLine or against any of its properties or businesses,
and none are pending or, to FrontLine's knowledge, threatened. FrontLine has
not during the past four (4) years received any governmental notice from any
Governmental Entity for any violation of applicable laws or regulations.
FrontLine has all valid and current permits, licenses, orders, authorizations,
registrations, approvals and other instruments (each of which is in full force
and effect) and FrontLine has made all filings and registrations and the like
necessary or required by law to conduct its business, except in each case where
its failure to do so would not have a material and adverse effect on FrontLine's
Business Condition.
3.8 NO DEFAULTS. Except as set forth in SCHEDULE 3.8, FrontLine is
not, and it has not received notice that it is or would be with the passage of
time, in violation of any provision of its current Articles or Bylaws or in
default or violation of any term, condition or provision of (a) any judgment,
decree, order, injunction or stipulation applicable to FrontLine, or (b) any
agreement, note, mortgage, indenture, law, statute, rule, regulation, contract,
lease, instrument, permit, concession, franchise or license to which FrontLine
is a party or by which FrontLine or its properties or assets may be bound, other
than any such conflict, breach, violation or default which would not have a
material and adverse effect on the Business Condition of FrontLine.
3.9 LITIGATION. Except as set forth in SCHEDULE 3.9, there is no
action, suit, proceeding, claim, arbitration or investigation pending or, to
FrontLine's knowledge, threatened against FrontLine or, to FrontLine's
knowledge, any of its officers or directors, nor is there any reasonable basis
therefor known to FrontLine. There is no action, suit, proceeding or
investigation by FrontLine currently pending or which it intends to initiate.
The Company is not a party to or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or Governmental Entity. FrontLine
has delivered to Avant! correct and complete copies of all correspondence
prepared by its counsel for FrontLine's independent public accountants in
connection with the last completed audit of the FrontLine Financial Statements,
any such correspondence since the date of the last such audit and any such
correspondence in connection with the audit proposed pursuant to Section 3.5(b)
herein.
3.10 CONDUCT IN THE ORDINARY COURSE. Except as set forth in SCHEDULE
3.10, since September 30, 1996, FrontLine has conducted its business in the
ordinary course and there has not occurred:
(a) Any change in the assets, liabilities, business condition or
operating results from that reflected in the FrontLine Financial Statements and
that is material and adverse to the Business Condition of FrontLine;
11
(b) Any amendments or changes in the Articles or Bylaws of
FrontLine;
(c) Any damage, destruction or loss, whether covered by
insurance or not, materially and adversely affecting the Business Condition of
FrontLine;
(d) Any issuance, redemption, repurchase or other acquisition of
FrontLine Capital Stock (other than issuances pursuant to exercise of FrontLine
Options or repurchases of Common Stock at cost in the ordinary course under the
terms of agreements relating to FrontLine Restricted Stock), or any declaration,
setting aside or payment of any dividend or other distribution (whether in cash,
stock or property) with respect to FrontLine Capital Stock;
(e) Any increase in or modification of the compensation or
benefits payable or to become payable by FrontLine to any of its service
providers or changes pursuant to employment agreements currently in effect or
changes in position;
(f) Any increase in or modification of any bonus, pension,
insurance or other employee benefit plan, payment or arrangement (including,
without limitation, the granting of stock options, restricted stock awards or
stock appreciation rights) made to, for or with any of its service providers;
(g) Any (i) sale of the property or assets of FrontLine
individually in excess of $10,000 or in the aggregate in excess of $25,000 other
than inventory sales or nonexclusive end user license grants in the ordinary
course of business consistent with past practice or (ii) mortgage, pledge,
transfer of a security interest in, or lien created by FrontLine, with respect
to any of its properties or assets, except liens for taxes not yet due or
payable (other than liens arising under existing lease financing arrangements,
liens arising in the ordinary course of FrontLine's business that in the
aggregate are not material and liens for Taxes not yet due and payable);
(h) Any alteration in any term of any outstanding security of
FrontLine;
(i) Any (i) incurrence, assumption or guarantee by FrontLine of
any debt for borrowed money other than trade indebtedness incurred in the
ordinary course of business consistent with past practice; (ii) waiver or
compromise by FrontLine of a valuable right or of a debt owed to it; (iii)
satisfaction or discharge of any lien, claim, or encumbrance or payment of any
obligation by it, except that which is not material to its Business Condition;
(iv) issuance or sale of any securities convertible into or exchangeable for
debt securities of FrontLine; or (v) issuance or sale of options or other rights
to acquire from FrontLine, directly or indirectly, debt securities of FrontLine
or any securities convertible into or exchangeable for any such debt securities;
(j) Any creation or assumption by FrontLine of any mortgage,
pledge, security interest or lien or other encumbrance on any asset (other than
liens arising under existing
12
lease financing arrangements, liens arising in the ordinary course of
FrontLine's business that in the aggregate are not material and liens for Taxes
not yet due and payable);
(k) Any making of any loan, advance or capital contribution to,
or investment in, any person other than advances made in the ordinary course of
business of FrontLine;
(l) Any entry into, amendment of, relinquishment, termination or
nonrenewal by FrontLine of any contract, lease, commitment or other right or
obligation other than in the ordinary course of business consistent with past
practice;
(m) Any transfer or grant of a right under the FrontLine
Intellectual Property Rights (as defined in Section 3.17) other than those
transferred or granted in the ordinary course of business consistent with past
practice;
(n) Any labor dispute, other than routine individual grievances,
or any activity or proceeding by a labor union or representative thereof to
organize any employees of FrontLine;
(o) Any resignation or termination of employment of any of its
key employees; and FrontLine does not know of the impending resignation or
termination of employment of any such employee; or
(p) Any agreement or arrangement made by FrontLine to take any
action that, if taken prior to the date hereof, would have made any
representation or warranty set forth in this Section 3.10 untrue or incorrect as
of the date when made.
3.11 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in
SCHEDULE 3.11, FrontLine has no liabilities or obligations (whether absolute,
accrued or contingent, and whether or not determined or determinable) of a
character that should be, and are, accrued, shown, disclosed, reserved or
indicated in the FrontLine Financial Statements (including the footnotes
thereto).
3.12 DOCUMENTS AND INFORMATION SUPPLIED. The copies of all
instruments, agreements, other documents and information delivered or
communicated by FrontLine, its shareholders and professional advisors to Avant!
and Sub or their counsel and accountants are and will be complete, accurate and
correct in all respects. No representations or warranties made by FrontLine in
this Agreement, nor any document, information, statement, financial statement,
communication, letter, certificate or exhibit prepared and furnished or to be
prepared and furnished by FrontLine or its representatives to Avant! or Sub
pursuant hereto or in connection with the transactions contemplated hereby
contain or will contain any untrue statement of a material fact, or omit or will
omit to state a material fact necessary to make the statements or facts
contained herein or therein not misleading. FrontLine's management is not aware
of any event, fact or condition that it reasonably expects will have a material
and adverse effect upon the Business Condition of FrontLine that has not been
set forth in this Agreement or the schedules hereto or otherwise disclosed by
FrontLine to Avant! and Sub in writing.
13
3.13 CERTAIN AGREEMENTS. Except as set forth in SCHEDULE 3.13,
neither the execution and delivery of this Agreement or any of the Related
Agreements nor the consummation of the transactions contemplated hereby or
thereby will (a) result in any payment (including, without limitation,
severance, unemployment compensation, golden parachute, bonus or otherwise)
becoming due to any service provider of FrontLine under any Plan (as defined in
Section 3.14 below) or otherwise, (b) materially increase any benefits otherwise
payable under any Plan, or (c) result in the acceleration of the time of payment
or vesting of any such benefits.
3.14 EMPLOYEE PLANS.
(a) FrontLine has not failed to comply in any respect with
Title VII of the Civil Rights Act of 1964, as amended, the Fair Labor Standards
Act, as amended, the Occupational Safety and Health Act of 1970, as amended, the
Safe Drinking Water and Toxic Enforcement Act of 1986, as amended, all
applicable federal, state, and local laws, rules, and regulations relating to
employment, and all applicable laws, rules, and regulations governing payment of
minimum wages and overtime rates, and the withholding and payment of
compensation of employees, where the failure to so comply could have a material
and adverse effect on FrontLine's Business Condition.
(b) FrontLine is not a party to, nor has made any contribution
to or otherwise incurred any obligation under, any "multiemployer plan" as
defined in Section 3(37) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA").
(c) All plans, programs, policies, commitments or other
arrangements (whether or not set forth in a written document) maintained by or
on behalf of FrontLine that provide deferred or incentive compensation, stock
options or other stock purchase rights, severance or termination pay, medical
dental, life, disability or accident benefits (whether or not insured),
collective bargaining agreements, or pension, profit sharing, savings or
retirement benefits to, or for the benefit of, any active, former or retired
service provider of FrontLine or their spouses or dependents are set forth in
SCHEDULE 3.14 (each a "Plan" and collectively, the "Plans").
(d) FrontLine has furnished to Avant! or their counsel complete
and accurate copies of each Plan. FrontLine has prepared in good faith and
timely filed all requisite governmental reports and has properly and timely
posted, or distributed all notices and reports to employees required to be
filed, posted, or distributed with respect to each Plan. Each Plan has at all
times been operated and administered in all material respects in accordance with
its terms and all applicable laws currently in effect, including ERISA and the
Code, and including but not limited to, amendments to Section 401(a) of the Code
enacted by the Tax Reform Act of 1986, the Omnibus Budget Reconciliation Act of
1986, the Omnibus Budget Reconciliation Act of 1987, the Technical and
Miscellaneous Revenue Act of 1988, and the Omnibus Budget Reconciliation Act of
1989.
14
(e) FrontLine has not violated any of the health care
continuation coverage requirements of the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA") applicable to its employees prior to the
Closing Date.
(f) There are no "reportable events" under Section 4043 of ERISA
with respect to any pension benefit plan within the meaning of Section 3(2) of
ERISA, subject to Title IV of ERISA, and FrontLine has not incurred any
liability under Title IV of ERISA in connection with the termination of any
pension benefit plan or the complete or partial withdrawal from any
multiemployer plan within the meaning of Section 3(37) of ERISA.
3.15 MAJOR CONTRACTS. Except as set forth in SCHEDULE 3.15, FrontLine
is not a party to or subject to:
(a) Any union contract or any employment or consulting contract
or arrangement other than stock option or stock purchase agreements or
proprietary information agreements, written or oral, with any director, officer
or affiliate;
(b) Any original equipment manufacturer agreement, distribution
agreement, volume or quantity purchase agreement or other similar agreement, or
joint venture contract or arrangement or any other agreement that has involved
or is expected to involve a sharing of profits with other persons or provides
for payments of more than $10,000 per annum;
(c) Any lease for real or personal property involving payments
of more than $10,000 per annum;
(d) Any instrument evidencing or related in any way to
indebtedness incurred in the acquisition of companies or other entities or
indebtedness for borrowed money by way of direct loan, sale of debt securities,
purchase money obligation, conditional sale, guarantee, leasehold obligations or
otherwise;
(e) Any material license agreement, either as licensor or
licensee;
(f) Any contract containing covenants purporting to limit the
freedom of FrontLine to compete in any line of business in any geographic area;
(g) Any agreement of indemnification, except indemnification
provided in the ordinary course of business for officers and directors pursuant
to applicable corporate law;
(h) Any agreement, contract or commitment relating to capital
expenditures involving payments of more than $25,000 per annum;
(i) Any agreement, contract or commitment relating to the
disposition or acquisition by FrontLine of any assets or any FrontLine
Intellectual Property Rights (as defined in Section 3.17 below), other than
nonexclusive end user license grants in the ordinary course of business;
15
(j) Any agreement providing for minimum payment or resale
obligations, ongoing support or research and development obligations, or
warranty obligations on the part of FrontLine, except arrangements entered into
in the ordinary course of business;
(k) Any agreement for the provision of products or securities to
any Governmental Entity, except customer agreements entered into in the ordinary
course of business;
(l) Any agreement requiring a commitment of FrontLine resources
or personnel to market, distribute or license products or technology, whether on
a best-efforts basis or otherwise, except customer agreements entered into in
the ordinary course of business;
(m) Any other agreement, contract, letter of intent, memorandum
of understanding or commitment that is material to FrontLine;
(n) Material service contracts for products and contracts
relating to material amounts of deferred revenues; or
(o) Any sole or limited source supplier agreements (written or
oral).
(p) Except as set forth on SCHEDULE 3.15, each agreement,
contract, mortgage, indenture, plan, lease, instrument, permit, concession,
franchise, arrangement, license and commitment to which FrontLine is a party or
by which it is bound as set forth in SCHEDULE 3.15 (or required to be set forth
in SCHEDULE 3.15) (i) is valid and binding on FrontLine, (ii) is in full force
and effect, (iii) has not been breached by FrontLine or any other party thereto
in a manner that is material and adverse to the Business Condition of FrontLine,
and (iv) contains no liquidated damages, indemnification obligation, penalty or
similar provision that, if triggered, would have a material and adverse effect
upon the Business Condition of FrontLine. To FrontLine's knowledge, no party to
any such contract, agreement or instrument intends to cancel, withdraw, modify
or amend such contract, agreement or arrangement. FrontLine is not aware of any
facts from which it should reasonably conclude that it will not be able to
perform in all material respects the obligations required to be performed by it
subsequent to the date hereof under each such agreement.
3.16 TAXES.
(a) All Tax returns, statements, reports, declarations and other
forms and documents (including without limitation estimated Tax returns and
reports and material information returns and reports) required to be filed with
any Tax authority with respect to any Taxable period ending on or before the
Closing, by or on behalf of FrontLine (collectively, "Tax Returns" and
individually a "Tax Return"), have been or will be completed and filed when due
(including any extensions of such due date), all such Tax Returns were or will
be complete and accurate as filed, and all amounts shown due on such Tax Returns
on or before the Effective Time of the Merger have been or will be paid on or
before such date. The FrontLine Financial Statements (i) fully accrue all
actual and contingent liabilities for Taxes with respect to all periods through
September 30, 1996 and FrontLine has not and will not incur any Tax liability in
16
excess of the amount reflected on its September 30, 1996 balance sheet included
in the FrontLine Financial Statements with respect to such periods, other than
Taxes incurred in the ordinary course of its business following September 30,
1996, and (ii) properly accrues in accordance with GAAP all material liabilities
for Taxes payable after September 30, 1996 with respect to all transactions and
events occurring on or prior to such date. All information set forth in the
notes to the FrontLine Financial Statements relating to Tax matters is true,
complete and accurate in all material respects. No material Tax liability since
September 30, 1996 has been incurred by FrontLine other than in the ordinary
course of business and adequate provision has been made by FrontLine for all
Taxes since that date in accordance with GAAP on at least a quarterly basis.
FrontLine has withheld and paid to the applicable financial institution or Tax
authority all amounts required to be withheld. To the best knowledge of
FrontLine, no Tax Returns filed with respect to Taxable years of FrontLine
through the Taxable year ended December 31, 1995 in the case of the United
States, have been examined and closed. FrontLine (or any member of any
affiliated or combined group of which FrontLine has been a member) has not
granted any extension or waiver of the limitation period applicable to any Tax
Returns that is still in effect. There is no material claim, audit, action,
suit, proceeding, or (to the best knowledge of FrontLine) investigation now
pending or (to the best knowledge of FrontLine) threatened against or with
respect to FrontLine in respect of any Tax or assessment. No notice of
deficiency or similar document of any Tax authority has been received by
FrontLine, and there are no liabilities for Taxes (including liabilities for
interest, additions to Tax and penalties thereon and related expenses) with
respect to the issues that have been raised (and are currently pending) by any
Tax authority that could, if determined adversely to FrontLine, materially and
adversely affect the liability of FrontLine for Taxes. There are no liens for
Taxes (other than for current Taxes not yet due and payable) upon the assets of
FrontLine. FrontLine has never been a member of an affiliated group of
corporations, within the meaning of Section 1504 of the Code. FrontLine is in
full compliance with all the terms and conditions of any Tax exemptions or other
Tax-sharing agreement or order of a foreign government and the consummation of
the Merger will not have any adverse effect on the continued validity and
effectiveness of any such Tax exemption or other Tax-sharing agreement or order.
Neither FrontLine nor any person on behalf of FrontLine has entered into or will
enter into any agreement or consent pursuant to the collapsible corporation
provisions of Section 341(f) of the Code (or any corresponding provision of
state, local or foreign income tax law) or agreed to have Section 341(f)(2) of
the Code (or any corresponding provision of state, local or foreign income tax
law) apply to any disposition of any asset owned by FrontLine. None of the
assets of FrontLine is property that FrontLine is required to treat as being
owned by any other person pursuant to the so-called "safe harbor lease"
provisions of former Section 168(f)(8) of the Code. None of the assets of
FrontLine directly or indirectly secures any debt the interest on which is tax
exempt under Section 103(a) of the Code. None of the assets of FrontLine is
"tax-exempt use property" within the meaning of Section 168(h) of the Code.
FrontLine has not made and will not make a deemed dividend election under Treas.
Reg. Section 1.1502-32(f)(2) or a consent dividend election under Section 565 of
the Code. FrontLine has not participated in (and will not participate in) an
international boycott within the meaning of Section 999 of the Code. No
FrontLine shareholder is other than a United States person within the meaning of
the Code. FrontLine does not have and has not had a permanent establishment in
any foreign country, as defined in any applicable tax treaty or
17
convention between the United States of America and such foreign country and
FrontLine has not engaged in a trade or business within any foreign country.
All material elections with respect to FrontLine's Taxes made during the fiscal
years ended, December 31, 1993, 1994 and 1995 are reflected on the FrontLine Tax
Returns for such periods, copies of which have been provided or made available
to Avant!. After the date of this Agreement, no material election with respect
to Taxes will be made without the prior written consent of Avant!, which consent
will not be unreasonably withheld or delayed. FrontLine is not party to any
joint venture, partnership, or other arrangement or contract which could be
treated as a partnership for federal income tax purposes. FrontLine is not
currently and never has been subject to the reporting requirements of Section
6038A of the Code. There is no agreement, contract or arrangement to which
FrontLine is a party that could, individually or collectively, result in the
payment of any amount that would not be deductible by reason of Sections 280G
(as determined without regard to Section 280G(b)(4), 162 (other than 162(a)) or
404 of the Code, other than any agreements entered into in connection with the
Merger. FrontLine is not a party to or bound by any Tax indemnity, Tax sharing
or Tax allocation agreement (whether written or unwritten or arising under
operation of federal law as a result of being a member of a group filing
consolidated Tax returns, under operation of certain state laws as a result of
being a member of a unitary group, or under comparable laws of other states or
foreign jurisdictions) which includes a party other than FrontLine nor does
FrontLine owe any amount under any such Agreement. FrontLine has previously
provided or made available to Avant! true and correct copies of all income,
franchise, and sales Tax Returns, and, as reasonably requested by Avant!, prior
to or following the date hereof, presently existing information statements and
reports. FrontLine is not, and has not been, a United States real property
holding corporation (as defined in Section 897(c)(2) of the Code) during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code. FrontLine
has not been and will not be required to include any material adjustment in
Taxable income for any Tax period (or portion thereof) pursuant to Section 481
or 263A of the Code or any comparable provision under state or foreign Tax laws
as a result of transactions, events or accounting methods employed prior to the
Merger. For purposes of this Agreement, the following terms have the following
meanings: "Tax" (and, with correlative meaning, "Taxes" and "Taxable") means any
and all taxes including, without limitation, (i) any net income, alternative or
add-on minimum tax, gross income, gross receipts, sales, use, ad valorem,
transfer, franchise, profits, value added, net worth, license, withholding,
payroll, employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom, duty or other tax governmental fee
or other like assessment or charge of any kind whatsoever, together with any
interest or any penalty, addition to tax or additional amount imposed by any
Governmental Entity (a "Tax authority") responsible for the imposition of any
such tax (domestic or foreign), (ii) any liability for the payment of any
amounts of the type described in (i) as a result of being a member of an
affiliated, consolidated, combined or unitary group for any Taxable period or as
the result of being a transferee or successor thereof and (iii) any liability
for the payment of any amounts of the type described in (i) or (ii) as a result
of any express or implied obligation to indemnify any other person. As used in
this Section 3.16, the term "FrontLine" means FrontLine and any entity included
in, or required under GAAP to be included in, any of the FrontLine Financial
Statements.
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3.17 INTELLECTUAL PROPERTY.
(a) FrontLine owns, or is licensed or otherwise entitled to
exercise, without restriction, all rights to all patents, trademarks, trade
names, service marks, copyrights, mask work rights, trade secret rights and
other intellectual property rights, and any applications or registrations
therefor, and all mask works, net lists, schematics, technology, source code,
know-how, computer software programs and all other tangible and intangible
information or material used, usable or proposed to be used in the business of
FrontLine as currently conducted or as proposed to be conducted without any
conflict or infringement of the rights of others (collectively, the "FrontLine
Intellectual Property Rights"). All of such FrontLine Intellectual Property
Rights are set forth in SCHEDULE 3.17.
(b) SCHEDULE 3.17 also lists (i) all patents and patent
applications and all registered copyrights, trade dress, trade names,
trademarks, service marks and other company, product or service identifiers and
mask work rights included in the FrontLine Intellectual Property Rights, and
specifies the jurisdictions in which each such FrontLine Intellectual Property
Right has been registered, including the respective registration numbers; and
(ii) other than end user licenses entered into in the ordinary course of
business, all licenses, sublicenses and other agreements as to which FrontLine
is a party and pursuant to which FrontLine or any other person is authorized to
use any FrontLine Intellectual Property Right. Copies of all licenses,
sublicenses, and other agreements identified pursuant to clause (ii) above have
been delivered by FrontLine to Avant!.
(c) FrontLine is not in violation in any material respect,
except with respect to such violations arising out of a general restriction on
assignments or changes in control, of any license, sublicense or agreement
described in SCHEDULE 3.17. As a result of the execution and delivery of this
Agreement or the performance of FrontLine's obligations hereunder, FrontLine
will not be in violation in any material respect of any license, sublicense or
agreement described in SCHEDULE 3.17, or lose or in any way impair any rights
pursuant thereto.
(d) FrontLine is the absolute owner or licensee of, with all
necessary right, title and interest in and to (free and clear of any liens,
encumbrances or security interests), the FrontLine Intellectual Property Rights
and has rights to the use, sale, license or disposal thereof and the material
covered thereby in connection with the services or products in respect of which
the FrontLine Intellectual Property Rights are being used or proposed to be
used. FrontLine has taken all actions and made all applications and filings
pursuant to applicable laws to perfect or protect its interests in such
FrontLine Intellectual Property Rights.
(e) No claims with respect to the FrontLine Intellectual
Property Rights have been asserted to FrontLine, or to FrontLine's knowledge,
are threatened by any person, and FrontLine knows of no claims (i) to the effect
that FrontLine infringes any copyright, patent, trade secret, or other
intellectual property right of any third party or violates any license or
agreement with any third party, (ii) contesting the right of FrontLine to use,
sell, license or dispose of any FrontLine Intellectual Property Rights, or (iii)
challenging the ownership, validity or effectiveness of any of the FrontLine
Intellectual Property Rights.
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(f) All patents and registered trademarks, service marks, and
other company, product or service identifiers and registered copyrights held by
FrontLine are valid and subsisting.
(g) There has not been and there is not now any unauthorized
use, infringement or misappropriation of any of the FrontLine Intellectual
Property Rights by any third party, including, without limitation, any service
provider of FrontLine; FrontLine has not been sued or charged as a defendant in
any claim, suit, action or proceeding that involves a claim of infringement of
any patents, trademarks, service marks, copyrights or other intellectual
property rights; and FrontLine does not have any infringement liability with
respect to any patent, trademark, service xxxx, copyright or other intellectual
property right of another.
(h) No FrontLine Intellectual Property Right is subject to any
outstanding order, judgment, decree, stipulation or agreement restricting in any
manner the licensing thereof by FrontLine. FrontLine has not entered into any
agreement to indemnify any other person against any charge of infringement of
any FrontLine Intellectual Property Right, except in the ordinary course of
business. FrontLine has not entered into any agreement granting any third party
the right to bring infringement actions with respect to, or otherwise to enforce
rights with respect to, any FrontLine Intellectual Property Right. FrontLine
has the exclusive right to file, prosecute and maintain all applications and
registrations with respect to the FrontLine Intellectual Property Rights.
3.18 EMPLOYEE AGREEMENTS. To FrontLine's knowledge, no service
provider of FrontLine is in violation of any term of any judgment, decree or
order, or any term of an employment contract (whether written or oral), patent
or trademark disclosure agreement or any other contract or agreement relating to
the relationship of any such service provider with FrontLine or any other party
(including prior employers), because of the nature of the business now conducted
by FrontLine. Each current and former service provider of FrontLine has
executed a proprietary information and inventions agreement (or similar
agreement) with FrontLine in the form then being used by FrontLine, all of which
forms have been attached to SCHEDULE 3.18.
3.19 RESTRICTIONS ON BUSINESS ACTIVITIES. Except as set forth in
SCHEDULE 3.19, there is no agreement, judgment, injunction, order or decree
binding upon FrontLine or which has or could reasonably be expected to have the
effect of prohibiting or significantly impairing any business practice of
FrontLine, any acquisition of property by FrontLine, or the continuation of the
business of FrontLine as currently conducted.
3.20 TITLE TO PROPERTIES; ABSENCE OF LIENS AND ENCUMBRANCES: CONDITION
OF EQUIPMENT.
(a) FrontLine does not own any real property.
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(b) All of the existing FrontLine real property leases have been
previously delivered to Avant!. SCHEDULE 3.20 sets forth a complete and
accurate list of all real property leased by FrontLine.
(c) FrontLine owns or has valid leasehold interests in all of
its tangible properties and assets, real, personal and mixed, used in its
business, free and clear of any liens (other than liens for Taxes that are not
yet delinquent), charges, pledges, security interests or other encumbrances,
except as reflected in the FrontLine Financial Statements and except for such
imperfections of title and encumbrances, if any, that are not substantial in
character, amount or extent, and that do not and are not reasonably likely to
materially detract from the value, or interfere with the present use, of the
property subject thereto or affected thereby. FrontLine will deliver within
ten (10) days of the date hereof to Avant! correct and complete copies of each
lease identified in SCHEDULE 3.20 and such lease(s) are valid and enforceable by
FrontLine in accordance with their terms. FrontLine has received no notice
that, and no circumstance exists which, with the passage of time or the giving
of notice could constitute a default under, any such lease(s).
(d) Each item of machinery and equipment (the "Equipment") owned
or leased by FrontLine is listed in SCHEDULE 3.20, except such Equipment which
individually has a net book value of less than $5,000. The Equipment is (i)
adequate for the conduct of the business of FrontLine consistent with its past
practice, (ii) suitable for the uses to which it is currently employed, (in) in
good operating condition, (iv) regularly and properly maintained, and (v) not
obsolete, dangerous or in need of renewal or replacement, except for renewal or
replacement in the ordinary course of business.
(e) Since September 30, 1996, there has not occurred any
transfer of title other than in the ordinary course of business, any material
abandonment, or any material pilferage or any other material loss with respect
to, any of its property or Equipment.
(f) SCHEDULE 3.20 also contains a true and correct list of all
of the physical assets (including fixed assets) having a net book value in
excess of $5,000 owned or leased by FrontLine or on consignment. All
improvements on leased property used in the business of FrontLine and the
present use thereof are performed in all material respects in accordance with
all applicable laws. The net book value of any fixed assets used in FrontLine's
business has not been written up or down, other than pursuant to depreciation or
amortization expense in accordance with its historical practice.
3.21 GOVERNMENTAL AUTHORIZATIONS AND LICENSES. SCHEDULE 3.21 sets
forth all of FrontLine's licenses, authorizations, permits, concessions,
certificates and other franchises of any Governmental Entity required to operate
its business (collectively, the "Government Licenses"). FrontLine is in
compliance in all material respects with the terms, conditions, limitations,
restrictions, standards, prohibitions, requirements and obligations of such
Government Licenses. The Government Licenses are in full force and effect. There
is not now pending, nor, to FrontLine's knowledge, is there threatened, any
action, suit, investigation or proceeding against FrontLine before any
Governmental Entity with respect to the Government
21
Licenses, nor is there any issued or outstanding notice, order or complaint with
respect to the violation by FrontLine of the terms of any Government License or
any rule or regulation applicable thereto.
3.22 ENVIRONMENTAL MATTERS.
(a) For purposes of this Section 3.22, the following terms shall
have the following meanings:
"Court Order" shall mean any judgment, order, award or decree of any
foreign, federal, provincial, state, local or other court or tribunal, or any
Governmental Entity, and any award in any arbitration proceeding.
"Disposal Site" shall mean landfill, disposal agent, waste hauler or
recycler of Hazardous Materials.
"Environmental Encumbrance" shall mean any lien, claim, charge,
security interest, mortgage, pledge, easement, conditional sale or other title
retention agreement, defect in title, covenant or other restrictions of any kind
in favor of any Governmental Entity for (i) any liability under any
Environmental Law or (ii) damages arising from, or costs incurred by such
Governmental Entity in response to, a Release or threatened Release of a
Hazardous Material into the environment.
"Environmental Laws" shall mean all Requirements of Laws that relate
to any Hazardous Material, any Hazardous Materials Activities or the use,
handling, transportation, production, spin, lead pumping, injection, deposit,
disposal discharge, Release, threatened Release, migration, emission, sale or
storage of, or the exposure of any person to, a Hazardous Material
"Governmental Permits" shall mean all licenses, franchises, permits,
privileges, immunities, approvals and other authorizations from a Governmental
Entity.
"Hazardous Material" shall mean any material or substance that is
prohibited or regulated by any Requirement of Law or that is designated by any
Governmental Entity to be radioactive, toxic, hazardous or otherwise a danger to
health, reproduction or the environment.
"Hazardous Materials Activities" shall mean the use, handling,
transportation, distribution, sale, Release or threatened Release of, or
Remedial Action concerning any Hazardous Material, performed in connection with
FrontLine's business or the Real Property.
"Real Property" shall mean real property now or at any time in the
past owned or leased by FrontLine or any predecessors.
"Release" shall mean release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration of a
Hazardous Material in, on, under or through the Real Property or the air, soil,
surface water, ground water or improvements thereof.
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"Remedial Action" shall mean any reporting, investigation,
characterization, feasibility study, health assessment, risk assessment,
remediation, treatment, recycling, removal, transport, monitoring, maintenance
or any other activity incident to the Release, threatened Release,
investigation, remediation or removal of a Hazardous Material existing on the
Real Property or in, on, under or through the air, soil, ground water, surface
water or improvements thereof. "Requirements of Laws" shall mean any laws,
statutes, regulations, rules, guidelines, codes, ordinances, judgments,
injunctions' decrees, orders, permits, approvals, treaties or protocols enacted,
adopted, issued or promulgated by any Governmental Entity (including, without
limitation, those pertaining to electrical building, zoning, environmental and
occupational safety and health requirements) or common law in effect on the date
hereof.
(b) Except as set forth in SCHEDULE 3.22,
(i) FrontLine complies in all material respects with
all applicable Environmental Laws;
(ii) FrontLine has obtained all material environmental
health and safety Governmental Permits necessary for its operation or required
by any Environmental Laws, all such Governmental Permits are in good standing,
and FrontLine is in compliance in all material respects with all terms and
conditions of such permits;
(iii) to FrontLine's knowledge, none of FrontLine nor
any of the Real Property or present or past FrontLine operations is subject to
any pending or ongoing investigation by notice or order from or agreement with
any person (including, without limitation, any prior owner or operator of the
Real Property) with respect to (A) any claim of Environmental Law, (B) any
Remedial Action or (C) any claim of losses and expenses arising from the Release
or threatened Release of a Hazardous Material;
(iv) FrontLine is not subject to any pending or
existing judicial or administrative proceeding, Court Order or settlement
alleging or addressing a violation of or liability under any Environmental Law;
(v) FrontLine has not filed, and FrontLine does not
intend to file any notice or report under any Environmental Law reporting a
violation of any Environmental Law;
(vi) to FrontLine's knowledge, there is not now, and
there has never been, on or under any Real Property; (A) any underground storage
tank or surface impoundment; or (B) any landfill or waste pile that either is or
was used to dispose or store any Hazardous Material or contains or contained of
Hazardous Material;
(vii) FrontLine has not received any notice of claim to
the effect that it is or may be liable to any person as a result of the Release
or threatened Release of a Hazardous Material into the environment or any
Hazardous Materials Activities from or on any Real Property;
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(viii) FrontLine is not aware of any Environmental
Encumbrance on any Real Property;
(ix) to FrontLine's knowledge, any asbestos-containing
material that is on or part of any Real Property is in good repair according to
the current standards and practices governing such material, and its presence or
condition does not violate any currently applicable Environmental Law;
(x) none of the products FrontLine manufactures,
distributes or sells or has manufactured, distributed or sold in the past,
contains substantial amounts of asbestos containing material;
(xi) to FrontLine's knowledge, no Hazardous Material is
present on Real Property, and no reasonable likelihood exists that any Hazardous
Material present on other property will come to be present on the Real Property;
(xii) Hazardous Materials Activities (A) have been
conducted in compliance with applicable Environmental Laws, and (B) have not
resulted in the exposure of any person to a Hazardous Material in a manner that
has or will cause an adverse health effect to such person;
(xiii) no Court Order, action, proceeding, liability or
claim exists or, to FrontLine's knowledge, is threatened, against any Disposal
Site or against FrontLine with respect to any transfer or release of Hazardous
Materials by FrontLine to a Disposal Site, and there is no valid basis for such
claim;
(xiv) FrontLine is not aware of any fact or circumstance
that is reasonably expected to involve FrontLine in any environmental litigation
or impose upon FrontLine any environmental liability that would have a material
and adverse effect on the Business Condition of FrontLine; and
(xv) FrontLine has no records pertaining to
environmental audits or environmental assessments of any Real Property.
3.23 INSURANCE. SCHEDULE 3.23 lists all insurance policies and
fidelity bonds covering the assets, business, equipment, properties, operations,
employees, officers and directors of FrontLine, and the amounts of coverage
under each such policy and bond of FrontLine. FrontLine has not been refused
any requested coverage and no claim made by FrontLine has been denied by the
underwriters of such policies or bonds. All premiums payable under all such
policies and bonds have been paid, and FrontLine is otherwise in full compliance
with the terms of such policies and bonds (or other policies and bonds providing
substantially similar insurance coverage). FrontLine is in compliance in all
material respects with each of such policies. FrontLine does not know of any
threatened termination of, the invalidation of any coverage of or premium
increase with respect to, any of such policies.
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3.24 LABOR MATTERS. FrontLine is in compliance in all material
respects with all currently applicable laws and regulations respecting
employment, discrimination in employment, terms and conditions of employment and
wages and hours and occupational safety and health and employment practices, and
FrontLine is not engaged in any unfair labor practice. FrontLine has not
received any notice from any Governmental Entity; and, to FrontLine's knowledge,
there has not been asserted before any Governmental Entity, any claim action or
proceeding to which FrontLine is a party or involving FrontLine, and there is
neither pending nor, to FrontLine's knowledge, threatened any investigation or
hearing concerning FrontLine arising out of or based upon any such laws,
regulations or practices. There are no strikes or labor disputes pending or
threatened by or any attempts at union organization of any FrontLine employees.
No employee or group of employees whose continued services are material to
FrontLine business as presently conducted and as intended to be conducted has
terminated employment and, to FrontLine's knowledge, there is none that intends
to do so.
3.25 CUSTOMERS; BACKLOG; RETURNS AND COMPLAINTS. The aggregate amount
of FrontLine's backlog (orders scheduled for shipment within twelve (12) months)
as of September 30, 1996 is set forth in SCHEDULE 3.25 and no material amount of
the purchase orders which constitute that backlog will be withdrawn or delayed.
SCHEDULE 3.25 sets forth a complete list of customers on the backlog and their
respective orders as of September 30, 1996. Except as set forth in SCHEDULE
3.25, FrontLine has received no customer complaints concerning its products
and/or services, and it has not had any of its products returned by a purchaser
thereof except for normal warranty returns consistent with past history, which
complaints and returns in the aggregate would have a material and adverse effect
upon the Business Condition of FrontLine.
3.26 PERSONNEL. Set forth on SCHEDULE 3.26 is a true and complete
list identifying all current directors, officers, regular and temporary
employees, independent contractors and consultants of FrontLine, including,
without limitation, all officers of FrontLine, setting forth the job title of,
and salary (including bonuses and commissions) payable to each such person. None
of such service providers whose annual base compensation exceeds $50,000 has
indicated to FrontLine a present intention to resign or retire. The employment
of each of FrontLine's employees is at-will employment. FrontLine does not have
any obligation (i) to provide any particular form or period of notice prior to
termination or (ii) to pay any of such employees any severance benefits in
connection with their termination of employment or service. In addition, no
severance pay will become due to any FrontLine employees or other service
providers in connection with the Merger, as a result of any FrontLine agreement,
plan or program. FrontLine has not entered into any consulting agreements with
any service provider who owes services to or are owed compensation by FrontLine
for services provided.
3.27 QUESTIONABLE PAYMENTS. Neither FrontLine nor any director,
officer or other employee, agent or representative of FrontLine has (a) made any
payments or provided services or other favors in the United States or in any
foreign country in order to obtain preferential treatment or consideration by
any Governmental Entity with respect to any aspect of the business of FrontLine;
or (b) made any political contributions that would not be lawful under the laws
of the United States or the foreign country in which such payments were made.
Neither FrontLine nor any director, officer or other employee, agent or
representative of FrontLine or any
25
customer or supplier of any of them has been the subject of any inquiry or
investigation by any Governmental Entity in connection with payments or benefits
or other favors to or for the benefit of any governmental or armed services
official, agent, representative or employee with respect to any aspect of the
business of FrontLine or with respect to any political contribution.
3.28 RELATED PARTY TRANSACTIONS. Except as set forth in SCHEDULE
3.28, no employee, officer or director of FrontLine or member of his or her
immediate family is indebted to FrontLine, nor is FrontLine indebted (or
committed to make loans or extend or guarantee credit) to or subject to a
guarantee from any of them. None of such persons has any direct or indirect
ownership interest in any firm or corporation with which FrontLine is affiliated
or with which FrontLine has a business relationship, or any firm or corporation
that competes with FrontLine, except that the employees, officers or directors
of FrontLine and members of their immediate families may own stock in publicly
traded companies that may compete with FrontLine. No member of the immediate
family of any officer or director of FrontLine is directly interested in any
contract with FrontLine.
3.29 CUSTOMERS AND SUPPLIERS. SCHEDULE 3.29 sets forth a list of the
names of the ten (10) largest customers and the ten (10) largest suppliers of
FrontLine during the past twelve (12) months (determined on the basis of
revenues and expenses, respectively, during such period). FrontLine has not
been informed by any of such customers or suppliers that such customer or
supplier has terminated, or intends to reduce or terminate during the next
twelve (12) months, the amount of business conducted with FrontLine.
3.30 BANK ACCOUNTS AND POWERS OF ATTORNEY. Set forth in SCHEDULE 3.30
is an accurate and complete list showing (a) the name and address of each bank
in which FrontLine has an account or safe deposit box, the number of any such
account or any such box and the names of all persons authorized to draw thereon
or to have access thereto and (b) the names of all persons, if any, holding
powers of attorney from FrontLine and a summary statement of the terms thereof.
3.31 PRODUCTS. There are no known defects in the design or technology
embodied in any product which FrontLine markets or has marketed in the past that
impair or are likely to impair the intended use of the product or injure any
consumer of the product or third party, except that warranty claims may arise in
the normal course of business for products shipped prior to the Closing Date in
an aggregate amount of no more than the warranty reserves established on the
most recent balance sheet of FrontLine provided to Avant!. FrontLine has
delivered to Avant! copies of its warranty policies and all outstanding
warranties or guarantees relating to any of FrontLine's products other than
warranties or guarantees implied by law. FrontLine is not aware of any claim
asserting (a) any damage, loss or injury caused by any product, or (b) any
breach of any express or implied product warranty or any other similar claim
with respect to any product other than standard warranty obligations (to
replace, repair or refund) made by FrontLine in the ordinary course of business,
except for those claims that, if adversely determined against FrontLine, would
not have a material and adverse effect on FrontLine's Business Condition.
26
3.32 BROKERS OR FINDERS; PROFESSIONAL FEES. Except as set forth in
SCHEDULE 3.32, no third party shall be entitled to receive any brokerage
commissions, finder's fees, fees for financial advisory services or similar
compensation in connection with the transactions contemplated by this Agreement
based on any arrangement or agreement made by or on behalf of FrontLine.
3.33 PERMIT. The information provided by FrontLine in connection with
the preparation of the Hearing Documents (as defined below) by Avant! or
Avant!'s legal counsel shall be true and correct and shall not state or omit to
state a material fact required to be stated therein.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF AVANT! AND SUB
Avant! and Sub represent and warrant to FrontLine that the
representations and warranties set forth below shall be true and correct as of
the date hereof. As used in this Agreement, (a) Business Condition with respect
to Avant! shall refer to Avant! and all of its subsidiaries taken as a whole and
shall mean the financial condition, business as presently conducted, results of
operations and assets of Avant! and all of its subsidiaries taken as a whole;
and (b) a disclosure or result will be deemed "material and adverse" only if,
individually or when aggregated with other disclosures or results, it gives rise
to a substantial diminution in the value of Avant! and its subsidiaries taken as
a whole.
4.1 ORGANIZATION; STANDING AND POWER. Each of Avant! and Sub is a
corporation duly organized, validly existing and in good standing under the laws
of its respective state or province of incorporation and has all requisite
corporate power and authority to own, operate and lease its properties and to
carry on its business as now being conducted. Avant! is duly qualified as a
foreign corporation and is in good standing in each jurisdiction in which the
failure to so qualify would have a material adverse effect on Avant!'s Business
Condition.
4.2 AUTHORITY.
(a) Avant! and Sub have all requisite corporate power and
authority to enter into this Agreement and the Related Agreements, to execute,
deliver and perform their respective obligations hereunder and thereunder, and
to consummate the transactions contemplated hereby and thereby. The execution
and delivery of this Agreement and the Related Agreements, the performance by
Avant! and Sub of their respective obligations hereunder and thereunder and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized by all necessary corporate action on the part of Avant!
and Sub, including approval by their respective Boards of Directors and
stockholders of Sub. Each of this Agreement and the Related Agreements is a
legal, valid and binding obligation of Avant! and Sub enforceable against Avant!
and Sub in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors'
27
rights generally and except that the availability of equitable remedies is
subject to the discretion of the court before which any proceeding therefor may
be brought.
(b) Subject to satisfaction of the conditions set forth in
Article VI hereto, the execution and delivery of this Agreement and the Related
Agreements do not and the performance and consummation of the transactions
contemplated hereby and thereby will not conflict with or result in any
violation of any statute, law, rule, regulation, judgment, order, decree, or
ordinance applicable to Avant! or Sub or their respective properties or assets,
or conflict with or result in any conflict with, breach or violation or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation, forfeiture or acceleration of any obligation
or the loss of a benefit under, or result in the creation of a lien or
encumbrance on any of the properties or assets of Avant! or Sub pursuant to (i)
any provision of their respective Certificates of Incorporation or Bylaws, or
(ii) any agreement, contract, note, mortgage, indenture, lease, instrument,
permit, concession, franchise or license to which Avant! or Sub is a party or by
which Avant! or Sub or any of their respective property or assets may be bound
or affected.
(c) No consent, approval, order or authorization of, or
registration, declaration, qualification, or filing of or with, any Governmental
Entity is required by or with respect to the Company or Sub in connection with
the execution and delivery of this Agreement or the Related Agreements or the
consummation by Avant! and Sub of the transactions contemplated hereby, except
for (i) the filing of documents with, and the obtaining of orders from, the
various securities or "blue sky" authorities, (ii) the making of such reports
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
are required in connection with the transactions contemplated by this Agreement,
(iii) the filing of the Agreement of Merger with the appropriate documents with
the relevant governmental authorities, (iv) the filing of an application with
the California Department of Corporations for a permit under Section 25121 of
the California Corporate Securities Law of 1968, as amended, and the issuance of
such permit, covering the issuance of the Avant! Common Stock and (v) the
registration pursuant to the Securities Act of 1933, as amended (the "Securities
Act"), of shares of Avant! Common Stock issuable pursuant to Section 2.1(d)
above with respect to the Assumed FrontLine Options.
4.3 VALID ISSUANCE OF SHARES OF AVANT! COMMON STOCK . The shares of
Avant! Common Stock, when issued, sold and delivered to the shareholders of
FrontLine in accordance with the terms hereof for the consideration described
herein, will be duly and validly issued, fully paid and non-assessable and will
be issued in compliance with all applicable securities laws.
4.4 AVANT! FINANCIAL STATEMENTS. The financial statements of Avant!
included in the Registration Statement on Form S-1, as amended, and the annual,
quarterly or other reports filed on or prior to the date hereof by Avant! with
the Securities and Exchange Commission (the "SEC") (the "Avant! Financial
Statements") comply as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance with United States GAAP
consistently applied (except as may be indicated in the notes thereto or, in the
case of unaudited statements as
28
permitted by published rules and regulations of the SEC) and fairly present the
consolidated financial position of Avant! and its consolidated subsidiaries at
the dates thereof and the consolidated results of their operations and changes
in financial position for the periods then ended (subject, in the case of
unaudited statements, to normal recurring audit adjustments). There has been no
change in Avant!'s accounting policies or estimates, except as described in the
notes to the Avant! Financial Statements. There has been no material and
adverse change in Avant!'s Business Condition subsequent to June 30, 1996.
4.5 LITIGATION. There is no action, suit, proceeding, arbitration or
investigation or claim pending, or to the knowledge of Avant!, threatened,
against Avant! that in any manner challenges or seeks to prevent, enjoin, alter
or delay any of the transactions contemplated hereby. Except as set forth in the
Avant! Reports (as defined below) or in SCHEDULE 4.5, Avant! is not aware of any
other pending or threatened action, suit, proceeding, investigation or claim, or
any reasonable basis therefor, that individually or in the aggregate would
reasonably be expected to have a material and adverse effect on Avant!'s
Business Condition.
4.6 REPORTS. Avant! has previously furnished or made available to
FrontLine complete and accurate copies, as amended or supplemented, of (i) its
Registration Statement on Form S-1, as amended, filed with the SEC, (ii) its
Registrations Statement on Form S-4, as amended, filed with the SEC, (iii) its
Quarterly Reports on Form 10-Q filed with the SEC since Avant! became obligated
to file such reports and (iv) all reports and filings made with the SEC since
Avant! became obligated to file such reports (such reports and other filings,
together with any amendments or supplements thereto, are collectively referred
to herein as the "Avant! Reports"). As of their respective dates, the Avant!
Reports did not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The Avant! Reports comply in all material respects with the
rules and regulations promulgated by the SEC. Avant! has made all filings
required under the rules and regulations promulgated by the SEC.
4.7 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no agreement,
judgment, injunction, order or decree binding upon Avant! that has or could
reasonably have the effect of prohibiting or significantly impairing any
business practice of Avant!, any acquisition of property by Avant!, or the
continuation of the business of Avant! as currently conducted or as currently
proposed to be conducted.
4.8 BROKERS OR FINDERS; PROFESSIONAL FEES. No third party shall be
entitled to receive any brokerage commissions, finder's fees, or similar
compensation in connection with the transactions contemplated by this Agreement
based on any arrangement or agreement made by or on behalf of Avant! or Sub.
4.9 CONDUCT IN THE ORDINARY COURSE. Since September 30, 1996, there
has not occurred any amendments or changes in the Certificate of Incorporation
or Bylaws of Avant! or any agreement or arrangement made by Avant! to do the
same.
29
4.10 PERMIT. The Hearing Documents, as defined in SECTION 5.4 of this
Agreement, as of the date they are filed, will not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements, in light of the circumstances under
which they were made, not misleading. The Hearing Documents will comply in all
material respects with the rules and regulations pursuant to Section 25121 of
the California Corporate Securities Law of 1968, as amended; provided, however,
the representations and warranties set forth in this SECTION 4.10 do not apply
to statements or omissions in the Hearing Documents based upon information
furnished to Avant! or Avant!'s legal counsel by FrontLine or FrontLine's legal
counsel for use in such Hearing Documents.
ARTICLE V
CONDUCT AND TRANSACTIONS PRIOR TO EFFECTIVE
TIME; ADDITIONAL AGREEMENTS
5.1 CONDUCT OF BUSINESS OF FRONTLINE. During the period from the
date hereof and continuing until the earlier of the termination of this
Agreement or the Effective Time of the Merger, FrontLine shall carry on its
business in the usual, regular and ordinary course in substantially the same
manner as conducted prior to the date of this Agreement and, to the extent
consistent with such business, use its best efforts to preserve intact its
present business organizations, keep available the services of its present
service providers and preserve its relationships with customers, suppliers,
distributors, licensers, licensees, and others with whom it has business
dealings, to the end that its goodwill and ongoing businesses shall not be
adversely affected prior to the Effective Time of the Merger. No action with
respect to the amendment of the BNR Agreement (as defined in the FrontLine
Disclosure Schedules) will be required by the foregoing sentence other than as
specifically directed by Avant!. FrontLine shall promptly notify Avant! of any
material event or occurrence not in the ordinary course of business of
FrontLine, and any event that could have a material and adverse effect on the
Business Condition of FrontLine. Except as expressly contemplated by this
Agreement, FrontLine, without the prior written consent of Avant! or Sub shall
not:
(a) Accelerate, amend or change the period of exercisability of
options, warrants, stock or purchase rights or authorize cash payments in
exchange therefor or perform any actions that could prohibit the pooling of
interests accounting treatment;
(b) Enter into any commitment or transaction not in the ordinary
course of business to be performed over a period longer than six (6) months in
duration, or, except as in accordance with its existing capital budget
previously disclosed to Avant!, to purchase fixed assets with an aggregate
purchase price exceeding $10,000;
(c) Grant any severance or termination pay to any service
provider, except in the ordinary course of business consistent with past
practice or mandatory payments made pursuant to standard written agreements
outstanding on the date hereof (with any such agreement or arrangement to be
disclosed in SCHEDULE 3.18);
30
(d) Transfer to any person or entity any rights to the FrontLine
Intellectual Property Rights, except licenses of Intellectual Property Rights in
connection with the sale of FrontLine products in the ordinary course of
business consistent with past practice;
(e) Enter into or amend any agreements pursuant to which any
other party is granted marketing or other similar rights of any type or scope
with respect to any products of FrontLine;
(f) Except in the ordinary course of business, amend or
otherwise modify, or without prior notice to Avant!, violate in any material
respect, the terms of any contract listed in SCHEDULE 3.15;
Except with prior consultation with Avant!, commence a lawsuit
other than for the routine collection of bills;
(h) Declare or pay any dividends on or make any other
distributions (whether in cash, stock or property) in respect of any FrontLine
Capital Stock other than distributions in amounts sufficient to pay income taxes
due from the shareholders with respect to FrontLine income for 1995 and the
period beginning January 1, 1996, and ending the Closing Date as reasonably
determined by FrontLine's accountants, which amounts are set forth on SCHEDULE
5.1, or split, combine or reclassify any of its Common Stock or issue or
authorize the issuance of other securities in respect of, in lieu of, or in
substitution for shares of FrontLine Common Stock, or repurchase or otherwise
acquire, directly or indirectly, any shares of FrontLine Common Stock except as
set forth in the FrontLine Disclosure Schedules, pursuant to the exercise of
outstanding FrontLine Options or pursuant to repurchases of Common Stock at cost
from former service providers in accordance with the terms of agreements
providing for the repurchase of shares in connection with any termination of
service to FrontLine;
(i) Issue, deliver or sell or authorize or propose the issuance,
delivery or sale of or authorization of, the purchase of any shares of FrontLine
Capital Stock or securities convertible into, or subscriptions, rights, warrants
or options to acquire, or other agreements or commitments of any character
obligating it to issue any such shares or other convertible securities, other
than (i) the issuance of shares of FrontLine Common Stock upon the exercise of
FrontLine Options and (ii) the issuance to employees and contractors of
FrontLine of options exercisable for an aggregate of not more than 100,000
shares of FrontLine Common Stock, such options to have an exercise price equal
to the fair market value of FrontLine Common Stock on the date of grant of such
options, as determined in good faith by the Board of Directors of FrontLine in
consultation with Avant!;
(j) Cause or permit any amendments to FrontLine's Articles or
Bylaws, or take any action or make any filings with any federal or state
regulatory agency or department that would modify or alter FrontLine's
corporate, legal or regulatory status in any material respect;
31
(k) Acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquire or agree to
acquire any assets that are material, individually or in the aggregate, to the
Business Condition of FrontLine, except as in accordance with its existing
capital budget previously disclosed to Avant!, to purchase fixed assets with an
aggregate purchase price exceeding $10,000;
(l) Sell, lease, license or otherwise dispose of any of its
properties or assets except in the ordinary course of business;
(m) Incur any indebtedness for borrowed money or guarantee any
such indebtedness or issue or sell any debt securities or guarantee any debt
securities of others;
(n) Adopt or amend any plan, or enter into any employment
contract, pay any special bonus or special remuneration to any service provider,
or increase the salaries or wage rates of its employees other than pursuant to
scheduled employee reviews under normal employee review cycles or pursuant to
FrontLine's existing bonus plans, as the case may be, or in connection with the
hiring of employees other than officers in the ordinary course of business, in
all cases consistent with past practice, or otherwise increase or modify the
compensation or benefits payable or to become payable by FrontLine to any of its
service providers, except in the ordinary course of business, consistent with
past practice, or for changes pursuant to employment agreements in effect as of
the date hereof or changes in position;
(o) Re-value in any material respect any of its assets,
including, without limitation, writing down the value of inventory or accounts
receivable;
(p) Pay, discharge or satisfy in an amount in excess of $10,000
in any one case any claim, liability or obligation (absolute, accrued, asserted
or unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction in the ordinary course of business consistent with past practice of
liabilities reflected or reserved against in the FrontLine Financial Statements;
(q) Make any material tax election other than in the ordinary
course of business and consistent with past practice, change any material tax
election, adopt any tax accounting method other than in the ordinary course of
business and consistent with past practice, change any tax accounting method,
file any tax return (other than any estimated tax returns, immaterial
information returns, payroll tax returns or sales tax returns) or any amendment
to a tax return, enter into any closing agreement, settle any Tax claim or
assessment or consent to any Tax claim or assessment provided that Avant! shall
not unreasonably withhold or delay approval of any of the foregoing actions;
(r) Engage in any activities or transactions that are outside
the ordinary course of its business consistent with past practice, including the
forming, financing or contributing any property to any business entity;
32
(s) Fail to pay or otherwise satisfy its monetary obligations as
they become due or consistent with past practice, except such as are being
contested in good faith;
(t) Waive or commit to waive any rights of substantial value;
(u) Cancel, amend or, other than in the ordinary course upon
expiration of a policy term, renew any insurance policy;
(v) Alter, or enter into any commitment to alter, in any
material respect its interest in any corporation, association, joint venture,
partnership or business entity in which FrontLine directly or indirectly holds
any interest on the date hereof;
(w) Pay its employees bonuses, other than in the ordinary course
of business, or any other extraordinary payments to its employees or
shareholders, including, without limitation, dividends or other distributions
with respect to its outstanding capital stock;
(x) Take, or agree (in writing or otherwise) to take, any of the
actions described in this Section 5.1 or any action that would make any of the
representations or warranties or covenants of FrontLine contained in this
Agreement untrue or incorrect.
5.2 ACCESS TO INFORMATION; PROVISION OF INTERIM FINANCIAL STATEMENTS.
(a) FrontLine shall afford Avant! and its accountants, counsel
and other representatives, reasonable access during normal business hours during
the period from the date of this Agreement until the earlier of the Effective
Time of the Merger or the termination of this Agreement to (i) all properties,
books, contracts, commitments and records, and (ii) all other information
concerning the business, properties and personnel as may reasonably be
requested, provided that any information provided pursuant hereto or any
investigation by each party hereto shall not affect such party's right to rely
on the representations, warranties, agreements and covenants made by the other
party herein. FrontLine shall cause FrontLine's accountants to cooperate with
Avant! in auditing the financial statements of FrontLine's business, including
but not limited to, executing any and all representation or other letters or
agreements reasonably required by Avant!'s accountants. FrontLine shall cause
FrontLine's accountants to consent in writing or agree to consent in writing on
a timely basis to the inclusion of FrontLine's financial statements in any
registration statement or in any report to be filed with the SEC.
(b) FrontLine shall provide Avant! with an unaudited monthly
balance sheet, income statement and statement of cash flows within fifteen (15)
days of each month-end prior to the Effective Time of the Merger as well as
copies of such other internal financial statements as may be requested by
Avant!.
(c) FrontLine shall provide Avant! with all information
necessary for the preparation of any documents or filings prepared by Avant! to
be filed with the SEC and any applicable securities or blue sky commissions.
33
(d) Each party shall use its respective best efforts to not take
any actions that would hinder Avant! from being able to account for the Merger
on a pooling of interests basis.
5.3 FRONTLINE SHAREHOLDERS' CONSENT. Except as permitted by
Section 5.5(d), FrontLine shall solicit the consent of its shareholders as
promptly as practicable after the date hereof for the purpose of obtaining the
shareholder approval required in connection with the transactions contemplated
hereby, and shall use its best efforts to obtain such approval.
5.4 FAIRNESS HEARING AND PERMIT. Avant! and FrontLine shall prepare
an Application for Qualification of Securities by Permit under Section 25121 of
the California Corporate Securities Law of 1968, as amended, a related Notice of
Hearing and a proxy statement and other disclosure materials (the "Disclosure
Document") to be supplied to the shareholders of FrontLine in connection with
the transactions contemplated hereby (collectively, the "Hearing Documents").
Avant! and FrontLine will file the Hearing Documents as promptly as practicable
with the California Department of Corporations and request a hearing on the
fairness of the Merger pursuant to Section 25142 of such California Corporate
Securities Law. Avant! and FrontLine will thereafter endeavor in good faith to
obtain a finding of fairness and the issuance of a permit to such effect by the
California Department of Corporations as a result of such hearing, but they
shall in no event be required to alter the terms of the Merger in order to
obtain such finding and issuance.
5.5 EXCLUSIVITY; ACQUISITION PROPOSALS. Until the earlier of (i) the
Closing Date or (ii) the termination of this Agreement:
(a) FrontLine shall not knowingly, and shall not knowingly cause
or permit, directly or indirectly, through any officer, director, agent or
representative (including, without limitation, investment bankers, attorneys,
accountants and consultants), or otherwise:
(i) Solicit, initiate or further the submission of
proposals or offers from, or enter into any agreement with, any firm,
corporation, partnership, association, group (as defined in Section 13(d)(3) of
the Exchange Act) or other person or entity, individually or collectively
(including, without limitation, any managers or other employees of FrontLine or
any affiliates), other than Avant! and Sub (a "Third Party"), relating to any
acquisition or purchase of all or any substantial portion of the assets of, or
any equity interest in, FrontLine or any merger, consolidation or business
combination with FrontLine;
(ii) Participate in any discussions or negotiations
regarding, or furnish to any Third Party any confidential information with
respect to FrontLine in connection with any acquisition or purchase of all or
any substantial portion of the assets of, or any equity interest in, FrontLine
or any merger, consolidation or business combination with FrontLine; or
(iii) Otherwise knowingly cooperate in any way with, or
assist or participate in, facilitate or encourage, any effort or attempt by any
Third Party to undertake or
34
seek to undertake any acquisition or purchase of all or any portion of the
assets of, or any equity interest in, FrontLine, or any merger, consolidation or
business combination with FrontLine.
(b) In the event FrontLine receives prior to termination of this
Agreement any offer or indication of interest from any Third Party relating to
any acquisition or purchase of all or any portion of the assets of, or any
equity interest in, FrontLine or any merger, consolidation or business
combination with FrontLine, FrontLine shall promptly notify Avant! and Sub in
writing, and shall in any such notice, set forth in reasonable detail the
identity of the Third Party, the terms and conditions of any proposal and any
other information requested of it by the Third Party or in connection therewith.
(c) FrontLine shall immediately cease and cause to be terminated
any existing activities, discussions or negotiations with any Third Party
conducted prior to the date of this Agreement with respect to any of the
foregoing.
(d) Notwithstanding the foregoing, in the event that FrontLine
receives an unsolicited offer for the acquisition of FrontLine, the terms of
which are, in the judgment of such board of directors, superior to the terms of
the transaction contemplated hereby, FrontLine shall be entitled to the extent
advised by counsel that such steps are necessary to fulfill the fiduciary duty
of the board of directors to FrontLine's shareholders, to: (i) transmit the
terms of the offer to FrontLine's shareholders, and (ii) not recommend or
withdraw a recommendation of the transaction contemplated hereby.
5.6 BREACH OF REPRESENTATIONS, WARRANTIES, AGREEMENTS AND COVENANTS.
Each of Avant!, Sub, and FrontLine shall use its respective best efforts to not
take, or fail to take, any action that from the date hereof through the Closing
Date would cause or constitute a breach of any of its respective
representations, warranties, agreements and covenants set forth in this
Agreement. In the event of, and promptly after becoming aware of, the actual,
pending or threatened occurrence of any event that would cause or constitute
such a breach or inaccuracy, each party shall give detailed notice thereof to
the other parties and shall use its best efforts to prevent or promptly remedy
such breach or inaccuracy.
5.7 CONSENTS. Each of Avant! and FrontLine shall promptly apply for
or otherwise seek and use its best efforts to obtain, all consents and approvals
required to be obtained by it for the consummation of the Merger, and FrontLine
shall use its best efforts to obtain all necessary consents, waivers and
approvals under any of FrontLine's agreements, contracts, licenses or leases in
connection with the Merger, except such consents and approvals which are not
material to the Business Condition of FrontLine (the existence of which
FrontLine shall have notified Avant! of) or which Avant! and FrontLine agree
FrontLine shall not seek to obtain.
5.8 BEST EFFORTS. If applicable, each of Avant! and FrontLine shall
use best efforts to effectuate the transactions contemplated hereby and to
fulfill and cause to be fulfilled the conditions to closing under this
Agreement.
35
5.9 LEGAL CONDITIONS TO THE MERGER.
(a) FrontLine shall take all reasonable actions necessary to
comply promptly with all legal requirements that may be imposed on FrontLine
with respect to the Merger and will promptly cooperate with and furnish
information to Avant! in connection with any such requirements imposed upon
Avant! or Sub in connection with the Merger. FrontLine shall take all
reasonable actions to obtain (and to cooperate with Avant! and Sub in obtaining)
any consent, authorization, order or approval of, or any exemption by, any
Governmental Entity required to be obtained or made by FrontLine (or by Avant!
or Sub) in connection with the Merger or the taking of any action contemplated
thereby or by this Agreement, and to defend such lawsuits or other legal
proceedings challenging this Agreement or the consummation of the transactions
contemplated hereby as FrontLine deems advisable in good faith, to lift or
rescind any injunction or restraining order or other order adversely affecting
the ability of the parties to consummate the transactions contemplated hereby as
FrontLine deems advisable in good faith, and to effect all necessary
registrations and filings and submissions of information as FrontLine deems
advisable in good faith required by any Governmental Entity, and to fulfill all
conditions to this Agreement.
(b) Each of Avant! and Sub shall take all reasonable actions
necessary to comply promptly with all legal requirements that may be imposed on
them with respect to the Merger and will promptly cooperate with and furnish
information to FrontLine in connection with any such requirement imposed upon
FrontLine or any subsidiary of FrontLine in connection with the Merger. Avant!
and Sub shall take all reasonable actions to obtain (and to cooperate with
FrontLine in obtaining) any consent, authorization order or approval of, or
exemption by, any Governmental Entity required to be obtained or made by Avant!
or Sub (or by FrontLine or any of its subsidiaries) in connection with the
Merger or the taking of any action contemplated thereby or by this Agreement,
and to defend such lawsuits or other legal proceedings challenging this
Agreement or the consummation of the transactions contemplated hereby as Avant!
and Sub deem advisable in good faith, to lift or rescind any injunction or
restraining order or other order adversely affecting the ability of the parties
to consummate the transactions contemplated hereby as Avant! and Sub deem
advisable in good faith, and to effect all necessary registrations and filings
and submissions of information as Avant! and Sub deem advisable in good faith,
required by any Governmental Entity, and to fulfill all conditions to this
Agreement.
5.10 PUBLIC ANNOUNCEMENTS. Avant! and FrontLine will make joint
announcements to employees and the public after the execution of this Agreement.
Each party will consult in advance with the other concerning the timing and
content of any announcements, press releases or public statements concerning the
Merger and will not make any such announcement, release or statement to any
party who is not entitled to have knowledge of the Merger without the other's
prior written consent (which consent shall not be unreasonably withheld);
provided, however, that Avant! may make any public statement concerning the
Merger without FrontLine's consent, after it has used reasonable efforts to
obtain FrontLine's consent, and in the opinion of counsel for Avant!, such
statement or announcement is required or advisable to comply with applicable
law.
36
5.11 AFFILIATES AGREEMENT AND CONTINUITY OF INTEREST CERTIFICATE. The
shareholders of FrontLine listed on SCHEDULE 5.11 are, in FrontLine's reasonable
judgment, the only "affiliates" of FrontLine within the meaning of Rule 145
(each such person, together with the persons identified below, an "Affiliate")
promulgated under the Securities Act ("Rule 145"). FrontLine shall use its best
efforts to deliver or cause to be delivered to Avant!, concurrently with the
execution of this Agreement from each of the Affiliates of FrontLine identified
in the foregoing list who are directors or officers of FrontLine, and
concurrently with or promptly following execution of this Agreement from each
other Affiliate, an Affiliates Agreement and Continuity of Interest Certificate
in the forms attached hereto as Exhibit 5.11(a) and 5.11(b), respectively. In
addition, each of the principal shareholders of FrontLine, pursuant to the
Affiliates Agreement and Continuity of Interest Certificate, acknowledge that
they (i) have no current plan or intent to engage in a sale, exchange, transfer,
pledge, disposition or any other transaction that results in a reduction in the
risk of ownership with respect to a mutually agreed-upon percentage of the
shares of Avant! Common Stock to be issued in the Merger to all FrontLine
shareholders, and that they know of no such plan or intent on the part of any
other FrontLine shareholder or group thereof and (ii) will not sell such stock
in violation of the pooling of interests accounting rules. Avant! and Sub shall
be entitled to place appropriate legends on the certificates evidencing any
Avant! Common Stock to be received by such Affiliates pursuant to the terms of
this Agreement and the Agreement of Merger, and to issue appropriate stop
transfer instructions to the transfer agent for Avant! Common Stock, consistent
with the terms of such Affiliates Agreement and Continuity of Interest
Certificate.
5.12 EXPENSES. All costs and expenses incurred in connection with
this Agreement and the Related Agreements and the transactions contemplated
hereby and thereby, including fees of any finders or brokers or investment
bankers, attorneys and accountants retained by such party, shall be paid by the
party incurring such expense. All parties to this Agreement acknowledge and
agree that the legal fees of counsel to FrontLine in connection with the
transactions contemplated hereby are being performed as counsel to FrontLine and
FrontLine shall be responsible for payment of such fees.
5.13 INFORMATION TO BE SUPPLIED. All information supplied by
FrontLine, Avant! and Sub for inclusion in the FrontLine shareholder
solicitation materials, the Hearing Documents, and any other solicitation
materials relating to the Merger or relating to any offering of securities by
Avant! shall not contain any untrue statement of material fact and shall not
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they are
made, not misleading.
5.14 REGISTRATION OF AVANT! COMMON STOCK ISSUABLE WITH RESPECT TO
ASSUMED FRONTLINE OPTIONS. As soon as practicable after the Effective Time of
the Merger (but in any event within two (2) business days thereof), but in
accordance with the other provisions of this Agreement, Avant! shall cause the
shares of Avant! Common Stock issuable pursuant to Section 2.1(d) above with
respect to the Assumed FrontLine Options to be registered pursuant to the
Securities Act and such registration shall remain effective for so long as
Avant! has other effective registrations or is required to file reports with the
SEC under the Exchange Act.
37
5.15 REORGANIZATION. Neither FrontLine prior to the Merger nor Avant!
following the Merger shall take any action (or cause FrontLine to take any
action) which would cause the Merger to fail to qualify as a reorganization
under Section 368(a) of the Code.
5.16 SCHEDULES. FrontLine shall deliver to Avant! on or before
October 25, 1996 revised FrontLine Disclosure Schedules, which shall be deemed
to be delivered as of the date hereof. Except as set forth in the sentence
immediately following, for purposes of determining the accuracy of the
respective representations and warranties contained in Articles III and IV, and
in order to determine the fulfillment of the conditions set forth in Section
6.2(a), and for the purpose of determining the availability of rights to
indemnification under Article II below or otherwise, such revised FrontLine
Disclosure Schedules, as the case may be, shall be deemed to include all
information contained in such revised FrontLine Disclosure Schedules.
Notwithstanding the foregoing, any information contained in the FrontLine
Disclosure Schedules, as supplemented as of October 25, 1996, shall not (i) give
rise to any rights to indemnification under Article VII below or (ii) be
asserted as a basis for failure to fulfill the conditions set forth in
Section 6.2(a) unless (x) such items result in liability in excess of $3,250,000
or (y) evidence of fraud is found on the part of FrontLine in connection with
the entering into of this Agreement.
5.17 CERTAIN BENEFIT PLANS. Subject to compliance with pooling of
interest accounting treatment of the Merger, Avant! shall take such reasonable
actions as are necessary to allow eligible employees of FrontLine to participate
in the benefit programs of Avant!, or alternative benefits programs
substantially comparable to those applicable to employees of Avant! on similar
terms, as soon as practicable after the Effective Time of the Merger including
the Avant! stock option and employee stock purchase plans. For purposes of
satisfying the terms and conditions of such programs, Avant! shall give full
credit for eligibility, vesting or benefit accrual for each participant's period
of service with FrontLine.
5.18 LISTING OF SHARES. Upon Closing, Avant! will amend its listing
application with the Nasdaq National Market to include the Avant! Common Stock
issued under this Agreement.
5.19 INDEMNIFICATION.
Avant! shall indemnify, defend and hold harmless each person who is
now, or has been at any time prior to the date of this Agreement or who becomes
prior to the Effective Time of the Merger, a director of FrontLine (the
"Indemnified Parties") against any loss, claim, damage, liability or expense (as
such expenses are incurred) insofar as such loss, claim, damage, liability or
expense arises out of any claim brought by FrontLine shareholders (including,
without limitation, derivative suits and suits against an Indemnified Party in
his capacity as a shareholder) relating to acts or omissions occurring on or
prior to the Effective Time of the Merger relating to the transactions
contemplated by this Agreement. The provisions of this Section 5.19 are
intended to be for the benefit of, and shall be enforceable by, each Indemnified
Party, his or her heirs and representatives.
38
ARTICLE VI
CONDITIONS PRECEDENT
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger shall be subject to
the satisfaction prior to the Closing of the following conditions:
(a) APPROVALS. All authorizations, consents, orders or
approvals of, or declarations or filings with or expiration of waiting periods
imposed by, any Governmental Entity necessary for the consummation of the
transactions contemplated by this Agreement shall have been filed, occurred or
been obtained.
(b) ISSUANCE OF PERMIT. The California Department of
Corporations shall have issued a permit under Section 25121 of the California
Corporate Securities Law of 1968, as amended, covering the issuance of the
Avant! Common Stock and the assumption of securities following a hearing as to
the fairness of the Merger conducted pursuant to Section 25142 of the California
Corporate Securities Law.
(c) LEGAL ACTION. No temporary restraining order, preliminary
injunction or permanent injunction or other order preventing the consummation of
the Merger shall have been issued by any Governmental Entity and remain in
effect, and no litigation shall be pending the ultimate resolution of which may
in Avant!'s opinion (i) result in the issuance of such an order or injunction,
or the imposition against FrontLine or Avant! of substantial damages if the
Merger is consummated, or (ii) render Avant!, Sub or FrontLine unable to
consummate the Merger. In the event any such order or injunction shall have been
issued, each party agrees to use its best efforts to have any such injunction
lifted.
(d) STATUTES. No action shall have been taken, and no statute,
rule, regulation or order shall have been enacted, promulgated or issued or
deemed applicable to the Merger by any Governmental Entity that would (i) make
the consummation of the Merger illegal or (ii) render Avant!, Sub or FrontLine
unable to consummate the Merger, except for any waiting period provisions.
6.2 CONDITIONS OF OBLIGATIONS OF AVANT! AND SUB. The obligations of
Avant! and Sub to effect the Merger are also subject to the satisfaction of the
following conditions, unless waived by Avant! and Sub:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of FrontLine set forth in this Agreement shall be true and correct in
all material respects as of the date of this Agreement.
(b) PERFORMANCE OF OBLIGATIONS OF FRONTLINE. FrontLine shall
have performed in all material respects all obligations and covenants required
to be performed by it under this Agreement prior to the Closing Date, and Avant!
shall have received a certificate on
39
behalf of FrontLine signed by the chief executive officer and the chief
financial officer of FrontLine to such effect.
(c) AFFILIATES AGREEMENT AND CONTINUITY OF INTEREST CERTIFICATE.
Avant! shall have received from each shareholder of FrontLine listed on SCHEDULE
5.11, a duly executed Affiliates Agreement and Continuity of Interest
Certificate, substantially in the forms attached hereto and approved by Avant!'s
and FrontLine's respective counsel.
(d) ESCROW AGREEMENT. The Escrow Agreement shall be executed by
all appropriate parties.
(e) OPINION OF FRONTLINE'S COUNSEL. Avant! shall have received
an opinion dated the Closing Date of counsel to FrontLine, in form and substance
reasonably satisfactory to Avant!.
(f) DISSENTING SHARES. Dissenting Shares shall consist of no
more than ten percent (10%) of the then outstanding shares of FrontLine's Common
Stock.
(g) POOLING OF INTERESTS TRANSACTION. Avant! shall have
received an opinion from KPMG Peat Marwick ("KPMG"), in form and substance
satisfactory to Avant!, that the Merger will qualify as a pooling of interests
transaction for financial reporting purposes. KPMG shall have received an
opinion from Ernst & Young, in form and substance satisfactory to KPMG that the
Merger will qualify as a pooling of interests.
(h) FRONTLINE FINANCIAL STATEMENTS. Avant! shall have received
a true and correct copy of the FrontLine Audited Financial Statements, prepared
in accordance with GAAP, at or prior to the date of the Closing.
(i) FIRPTA. FrontLine shall, prior to the Closing Date, provide
Avant! with a properly executed Foreign Investment and Real Property Tax Act of
1980 ("FIRPTA") Notification Letter, in form and substance satisfactory to
Avant!, which states that shares of capital stock of FrontLine do not constitute
"United States real property interests" under Section 897(c) of the Code, for
purposes of satisfying Avant!'s obligations under Treasury Regulation
Section 1.1445-2(c)(3). In addition, simultaneously with delivery of such
Notification Letter, FrontLine shall have provided to Avant!, as agent for
FrontLine, a form of notice to the Internal Revenue Service in accordance with
the requirements of Treasury Regulation Section 1.897-2(h)(2) along with written
authorization for Avant! to deliver such notice form to the Internal Revenue
Service on behalf of FrontLine upon the Closing of the Merger.
(j) TAX-FREE REORGANIZATION. Avant! shall have received a
written opinion from its counsel to the effect that the Merger will constitute a
reorganization within the meaning of Section 368 of the Code. In preparing such
tax opinion, counsel may rely on reasonable assumptions and may also rely on
(and to the extent reasonably required, the parties and Avant's shareholders
shall make) reasonable representations related thereto.
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6.3 CONDITIONS OF OBLIGATION OF FRONTLINE. The obligation of
FrontLine to effect the Merger is also subject to the satisfaction of the
following conditions unless waived by FrontLine:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Avant! and Sub set forth in this Agreement shall be true and
correct as of the date hereof.
(b) PERFORMANCE OF OBLIGATIONS OF AVANT! AND SUB. Avant! and
Sub shall have performed in all material respects all obligations and covenants
required to be performed by them under this Agreement and the Agreement of
Merger prior to the Closing Date.
(c) NO STOP ORDER. The SEC shall not have issued any stop order
preventing the sale of any Avant! Common Stock.
(d) OPINION OF AVANT!'S COUNSEL. FrontLine shall have received
an opinion dated the Closing Date of Xxxxxxxxx Xxxxxxx Xxxxxx Xxxxxxxxxx
Xxxxxxxx & Xxxxxxxxx, LLP, counsel to Avant!, in form and substance reasonably
satisfactory to FrontLine.
(e) TAX-FREE REORGANIZATION. FrontLine! shall have received a
written opinion from its counsel to the effect that the Merger will constitute a
reorganization within the meaning of Section 368 of the Code. In preparing such
tax opinion, counsel may rely on reasonable assumptions and may also rely on
(and to the extent reasonably required, the parties and FrontLine's shareholders
shall make) reasonable representations related thereto.
ARTICLE VII
INDEMNITY
7.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS.
(a) Notwithstanding any investigation conducted at any time with
regard thereto by or on behalf of any party to this Agreement, all
representations, warranties, covenants and agreements of the parties hereto
shall survive the execution, delivery, and performance of this Agreement in
accordance with Section 7.3 of this Agreement. No investigation made by or on
behalf of a party hereto with respect to another party shall be deemed to affect
the party's reliance on the representations, warranties, covenants and
agreements made by the other party contained in this Agreement and shall not be
a waiver of Avant!'s or Sub's rights to indemnity as herein provided for the
breach or inaccuracy of or failure to perform or comply with any of FrontLine's
representations, warranties, covenants or agreements under this Agreement or the
Escrow Agreement. All representations and warranties of each party set forth in
this Agreement shall be deemed to have been made again by such party at and as
of the Closing Date.
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(b) As used in this Article VII, any reference to a
representation, warranty, agreement or covenant contained in any section of this
Agreement shall include the schedule attached hereto.
(c) Nothing in this Agreement shall be construed as limiting in
any way the remedies that may be available to a party in the event of fraud
relating to the representations, warranties, agreements or covenants made by
any other party in this Agreement.
(d) The FrontLine Shareholders (as defined below) shall have
liabilities and obligations for Damages (as defined below) under this Agreement
only with respect to claims submitted or notice of claims provided during the
time period of survivability of the specific representation, warranty, covenant
or agreement as set forth in SECTION 7.3. Notwithstanding the expiration date of
the representations, warranties, covenants and agreements set forth herein, if
Avant! or FrontLine shall notify the Shareholders' Representative with respect
to the submission of a claim during the time period of survivability of such
representation, warranty, covenant or agreement, each FrontLine Shareholder's
liability or obligation for Damages shall continue in full force and effect
until settled with respect to those claims timely made.
(e) Subject to the limitations set forth in Section 7.4, Avant!
shall be entitled to use the Escrow Shares as collateral for the obligations of
the FrontLine Shareholders pursuant to this Article VII of this Agreement.
7.2 INDEMNIFICATION; ESCROW DEPOSIT OF AVANT! COMMON STOCK. Subject
to the limitations set forth in this Article VII, by approval of this Agreement
and the Merger at the special shareholders' meeting of FrontLine, the
shareholders of FrontLine (such shareholders are referred to in this Article VII
as the "FrontLine Shareholders") hereby agree to indemnify, reimburse, defend
and hold harmless Avant!, FrontLine and Sub and each of their respective
affiliates (other than the FrontLine Shareholders) against any and all losses,
liabilities, damages, demands, claims, suits, actions, judgments, and causes of
action, assessments, costs, and expenses, including, without limitation,
interest, penalties, attorneys' fees, any and all expenses incurred in
investigating, preparing, and defending against any litigation, commenced or
threatened, and any claim whatsoever, and any and all amounts paid in settlement
of any claim or litigation (collectively, "Damages"), asserted against,
resulting from, imposed upon, or incurred or suffered, directly or indirectly,
by Avant!, FrontLine or Sub and each of their respective affiliates (other than
the FrontLine Shareholders), directly or indirectly, as a result of or arising
from or in connection with any inaccuracy in or breach or nonfulfillment of or
noncompliance with any of the representations, warranties, covenants, or
agreements made by FrontLine in this Agreement (including any exhibit, letter,
schedule, certificate or document delivered pursuant hereto or other instrument
referred to herein) or the Escrow Agreement or any facts or circumstances
constituting such an inaccuracy, breach, nonfulfillment or noncompliance (all of
which shall also be referred to as "Indemnifiable Claims").
Avant! and Sub shall be entitled to make claims under this Article VII
only to the extent that Damages exceed $250,000 in the aggregate and only to the
extent of such excess.
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7.3 TERMINATION OF INDEMNITY AND REPRESENTATIONS AND WARRANTIES. The
Indemnity obligations of the FrontLine Shareholders pursuant to this Article VII
for a breach or inaccuracy of or a failure to perform or comply with any or all
of FrontLine's representations, warranties, covenants and agreements, and the
representations and warranties of Avant!, FrontLine and the FrontLine
Shareholders shall terminate upon the earlier to occur of: (i) one (1) year
after the Effective Time of the Merger, or (ii) the date of the issuance of the
first audited financial statements that contain the combined actual results of
Avant!, Sub and FrontLine. For purposes of the indemnification set forth
herein, the fair market value of one share of Avant! Common Stock shall equal
the Average Nasdaq Per Share Price.
7.4 EXCLUSIVITY OF REMEDIES. Subject to the terms of this Agreement
(including, without limitation, Section 7.1(c)), the total liability of any
FrontLine Shareholder under or in connection with this Agreement shall be
limited to the Escrow Shares of such shareholder, and Avant! (and the other
persons indemnified hereunder) may look solely and exclusively to such Escrow
Shares for the satisfaction of any claims against the FrontLine Shareholders
under or in connection with this Agreement.
ARTICLE VIII
TERMINATION
8.1 TERMINATION.
(a) This Agreement may be terminated at any time prior to the
Effective Time of the Merger, whether before or after approval of the Merger by
the shareholders of FrontLine:
(i) by mutual agreement of the Boards of Directors of
Avant! and FrontLine;
(ii) by Avant!, if there has been a breach by FrontLine
of any representation, warranty, covenant or agreement set forth in this
Agreement;
(iii) by FrontLine, if there has been a breach by Avant!
or Sub of any representation, warranty, covenant or agreement set forth in this
Agreement;
(iv) by FrontLine or Avant!, if any permanent
injunction or other order of a court preventing the Merger shall have become
final and nonappealable or shall render unlikely within a reasonable period of
time the consummation of the Merger on the terms contemplated hereby; or
(v) by either Avant! or FrontLine, if at the FrontLine
shareholders meeting (including any adjournment or postponement thereof) the
requisite vote of
43
shareholders of FrontLine required by California law and the Articles of
FrontLine shall not have been obtained.
(b) Where action is taken to terminate this Agreement pursuant
to this Section 8.1, it shall be sufficient authorization for such action to be
authorized by the Board of Directors of the party taking such action.
(c) In the event of termination of this Agreement as provided in
this Section 8.1 or a failure to meet all of the closing conditions prior to
December 31, 1996, this Agreement shall forthwith become null and void;
provided, however, that the agreements contained or referred to in Sections 5.5,
5.12 and 5.19 shall survive and be legally enforceable.
(d) If the Effective Date of the Merger shall not have occurred
on or before December 31, 1996, this Agreement may be terminated by Avant! or
FrontLine with prior written notice to the other party.
8.2 EXPENSES AND TERMINATION FEES.
(a) Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby (including, without limitation, the fees and expenses of its
advisers, accountants and legal counsel) shall be paid by the party incurring
such expense.
(b) In the event that this Agreement is terminated pursuant to
Section 8.1(a)(v) or FrontLine fails to consummate the transactions contemplated
hereby in breach of this Agreement, then FrontLine shall promptly pay to Avant!
the sum of $35,000,000.
(c) In the event that Avant! fails to consummate this
transaction (i) in breach of this Agreement or (ii) in reliance upon Section 6.2
(f) or 6.2 (g), then Avant! shall promptly pay to FrontLine the sum of
$35,000,000.
ARTICLE IX
GENERAL PROVISIONS
9.1 AMENDMENT. This Agreement may be amended by the parties hereto
at any time before or after approval of the Merger by the shareholders of
FrontLine; provided, however, that following approval of the Merger by the
shareholders of FrontLine, no amendment shall be made that by law requires the
further approval of such shareholders without obtaining such further approval.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
9.2 EXTENSION; WAIVER. At any time prior to the Effective Time of
the Merger, each of FrontLine and Avant!, to the extent legally allowed, (a) may
extend the time for the performance of any of the obligations or other acts of
the other, (b) may waive any inaccuracies
44
in the representations and warranties made to it contained herein or in any
document delivered pursuant hereto, and (c) may waive compliance with any of the
agreements or conditions for the benefit of it contained herein. Any agreement
on the part of a party hereto to any such extension or waiver shall be valid
only if set forth in an instrument in writing signed on behalf of such party.
9.3 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given (a) on the same day if delivered
personally, (b) three (3) business days after being mailed by registered or
certified mail (return receipt requested), or (c) on the same day if sent by
facsimile, confirmation received, to the parties at the following addresses and
facsimile numbers (or at such other address or number for a party as shall be
specified by like notice):
If to Avant! or Sub, to:
Avant! Corporation
0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: President
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with copy to:
Xxxxxxxxx Xxxxxxx Xxxxxx Xxxxxxxxxx
Xxxxxxxx & Xxxxxxxxx, LLP
000 Xxxxxx Xxx, Xxxxxx Xxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
If to FrontLine:
FrontLine Design Automation, Inc.
0000 Xxxxxx Xxxx, Xxxxx 000
Xxx Xxxx, Xxxxxxxxxx 00000
Attn: President
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with copy to:
Xxxxxx Xxxxxx White & XxXxxxxxx
000 Xxxxxxxxxx Xxxxxx
00
Xxxx Xxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx Xxxxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
9.4 INTERPRETATION. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such references shall be to a Section, Exhibit
or Schedule to this Agreement unless otherwise indicated. The words "include,"
"includes" and "including" when used herein shall be deemed in each case to be
followed by the words "without limitation."
9.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party.
9.6 ENTIRE AGREEMENT. This Agreement and the documents and
instruments and other agreements among the parties delivered pursuant hereto
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof
and are not intended to confer upon any other person any rights or remedies
hereunder except as otherwise expressly provided herein.
9.7 NO TRANSFER. This Agreement and the rights and obligations set
forth herein may not be transferred or assigned by operation of law or otherwise
without the consent of each party hereto. This Agreement is binding upon and
will inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
9.8 SEVERABILITY. If any provision of this Agreement, or the
application thereof, will for any reason and to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances will be interpreted so as reasonably to effect
the intent of the parties hereto. The parties further agree to replace such void
or unenforceable provision of this Agreement with a valid and enforceable
provision that will achieve, to the extent possible, the economic, business and
other purposes of the void or unenforceable provision.
9.9 OTHER REMEDIES. Any and all remedies set forth in this Agreement
and in the Related Agreements expressly conferred upon a party will be deemed
cumulative with and not exclusive of any other remedy conferred hereby or by law
or equity on such party; and the exercise of any one remedy will not preclude
the exercise of any other.
9.10 FURTHER ASSURANCES. Each party agrees to cooperate fully with
the other parties and to execute such further instruments, documents and
agreements and to give such further written assurances as may be reasonably
requested by any other party to evidence and reflect the transactions described
herein and contemplated hereby and to carry into effect the intents and purposes
of this Agreement.
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9.11 ABSENCE OF THIRD-PARTY BENEFICIARY RIGHTS. No provision of this
Agreement is intended, or will be interpreted, to provide to or create for any
third-party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, shareholder, employee, partner or any party hereto or any
other person or entity, and all provisions hereof will be personal solely
between the parties to this Agreement.
9.12 GOVERNING LAW. This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State of
California (without giving effect to its choice of law principles).
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
and Plan of Reorganization as of the date first above written.
AVANT! CORPORATION
By: /s/ Xxxxxx X. Xxx
------------------------------------
Xxxxxx X. Xxx
President and Chief Executive
Officer
FRONTLINE DESIGN AUTOMATION, INC.
By:
------------------------------------
DSM ACQUISITION CORPORATION
By: /s/ Xxxxxx X. Xxx
------------------------------------
Xxxxxx X. Xxx
President
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
and Plan of Reorganization as of the date first above written.
AVANT! CORPORATION
By:
------------------------------------
Xxxxxx X. Xxx
President and Chief Executive
Officer
FRONTLINE DESIGN AUTOMATION, INC.
By: /s/ Xxxxxxxxx Xxxxxxxx
------------------------------------
Xxxxxxxxx Xxxxxxxx
President and Chief Executive
Officer
DSM ACQUISITION CORPORATION
By:
------------------------------------
Xxxxxx X. Xxx
President
