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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 3
TO SCHEDULE 14D-1
TENDER OFFER STATEMENT
(PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)
QUICKTURN DESIGN SYSTEMS, INC.
(Name of Subject Company)
MENTOR GRAPHICS CORPORATION
MGZ CORP.
(Bidders)
COMMON STOCK, PAR VALUE $.001 PER SHARE
(including the Associated Rights)
(Title of Class of Securities)
74838E102
(CUSIP Number of Class of Securities)
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WALDEN C. RHINES
PRESIDENT AND CHIEF EXECUTIVE OFFICER
MENTOR GRAPHICS CORPORATION
8005 S.W. BOECKMAN ROAD
WILSONVILLE, OREGON 97070-7777
(503) 685-1200
(Name, Address and Telephone Number of Persons Authorized
to Receive Notices and Communications on Behalf of Bidders)
COPY TO:
JOHN J. HUBER, ESQ. CHRISTOPHER L. KAUFMAN, ESQ.
LATHAM & WATKINS LATHAM & WATKINS
1001 PENNSYLVANIA AVENUE, N.W. 75 WILLOW ROAD
WASHINGTON, DC 20004 MENLO PARK, CALIFORNIA 94025
(202) 637-2200 (650) 328-4600
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MGZ Corp., a Delaware corporation ("Purchaser"), and Mentor Graphics
Corporation, an Oregon corporation ("Parent"), hereby amend and supplement their
Tender Offer Statement on Schedule 14D-1 filed on August 12, 1998 (the
"Statement"), as amended, with respect to the offer by Purchaser to purchase all
outstanding shares of Common Stock, par value $.001 per share, of Quickturn
Design Systems, Inc., a Delaware corporation, for a purchase price of $12.125
per share, net to the seller in cash, without interest thereon, as set forth in
this Amendment No. 3. Capitalized terms used herein and not defined have the
meanings ascribed to them in the Statement.
ITEM 10. ADDITIONAL INFORMATION.
Item 10(f) of the Statement is hereby amended and supplemented by the
following:
1. On August 25, 1998, Parent and Purchaser filed an Amended Verified
Complaint in the Court of Chancery of the State of Delaware in and for New
Castle County, a copy of which is attached hereto as Exhibit (g)(3) and is
incorporated herein by reference.
2. On August 26, 1998, Parent and Purchaser filed a First Amended Complaint
in the U.S. District Court for the District of Delaware, a copy of which is
attached hereto as Exhibit (g)(4) and is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(g)(3)--Amended Verified Complaint in Mentor Graphics Corporation and MGZ Corp.
v. Quickturn Design Systems, Inc., et. al., filed in the Court of Chancery of
the State of Delaware in and for New Castle County on August 25, 1998
(g)(4)--First Amended Complaint in Mentor Graphics Corporation and MGZ Corp. v.
Quickturn Design Systems, Inc., filed in the District Court for the District of
Delaware on August 26, 1998
2
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SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
<TABLE>
<S> <C> <C>
Dated: August 26, 1998 MENTOR GRAPHICS CORPORATION
By: /s/ Gregory K. Hinckley
Name: Gregory K. Hinckley
Title: Executive Vice President, Chief Operating
Officer and Chief Financial Officer
MGZ CORP.
By: /s/ Gregory K. Hinckley
Name: Gregory K. Hinckley
Title: Secretary and Chief Financial Officer
</TABLE>
3
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IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
MENTOR GRAPHICS CORPORATION, )
an Oregon corporation, and MGZ CORP., a )
Delaware corporation, )
)
Plaintiffs, )
) Civil Action No.16584-NC
v. )
)
QUICKTURN DESIGN SYSTEMS, INC., a )
Delaware corporation, KEITH R. LOBO, )
GLEN M. ANTLE, RICHARD C. )
ALBERDING, MICHAEL R. D'AMOUR, )
YEN-SON (PAUL) HUANG, DR. DAVID )
K. LAM, WILLIAM A. HASLER, and )
CHARLES D. KISSNER, )
)
Defendants. )
VERIFIED AMENDED COMPLAINT FOR
DECLARATORY AND INJUNCTIVE RELIEF
Plaintiffs Mentor Graphics Corporation ("Mentor Graphics") and MGZ
Corp. ("Purchaser") for their amended complaint(1) against defendants Quickturn
Design Systems, Inc. ("Quickturn"), Keith R. Lobo, Glen M. Antle, Richard C.
Alberding, Michael R. D'Amour, Yen-Son (Paul) Huang, Dr. David K. Lam, William
A. Hasler, and Charles D. Kissner ("Director Defendants") allege, upon knowledge
as to themselves and their own acts and upon information and belief as to all
other matters, as follows:
Summary of this Action
1. On August 12, 1998, plaintiff Purchaser commenced a fully-financed,
non-coercive, non-discriminatory, all-cash, all-shares tender offer for
outstanding shares of Quickturn common
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(1)Pursuant to Chancery Court Rule 15(aa), a black-lined copy of the
amended complaint reflecting changes from the complaint filed on August 12, 1998
is attached hereto as Exhibit A.
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stock that are not already owned by Mentor Graphics or Purchaser (the "Tender
Offer"). That same day, Mentor Graphics also filed with the Securities and
Exchange Commission (the "SEC") preliminary materials to solicit agent
designations to call a special meeting of Quickturn's stockholders to replace
the current members of Quickturn's Board of Directors. This action seeks
declaratory and injunctive relief requiring Quickturn to dismantle its takeover
defenses, including its "poison pill," declaring ineffective certain amendments
to Quickturn's by laws and poison pill adopted in response to the Tender Offer,
and enjoining the Quickturn Board from taking any further action to thwart the
stockholder franchise or to frustrate the efforts of Quickturn's stockholders to
call a special meeting and to replace Quickturn's Board of Directors in order to
facilitate the Tender Offer.
2. Quickturn stockholders whose shares are purchased by Purchaser in
the Tender Offer will receive $12.125 per share in cash, representing a 51.6%
premium above the average closing price of Quickturn's stock on the Nasdaq
National Market on August 11, 1998, the last full trading day before the first
public announcement of Purchaser's commencement of the Tender Offer. The Tender
Offer is the initial step in a two-step transaction pursuant to which Purchaser
proposes to acquire all of the outstanding shares of Quickturn stock. If
successful, the Tender Offer will be followed by a merger or similar business
combination with Purchaser or another direct or indirect subsidiary of Mentor
Graphics (the "Proposed Merger," and together with the Tender Offer, the
"Proposed Acquisition"). Pursuant to the Proposed Merger, it is currently
anticipated that each then outstanding share of Quickturn (other than shares
owned by Mentor Graphics or any of its subsidiaries or shares held in the
treasury of Quickturn) would be converted into the right to receive an amount in
cash equal to the price paid in the Tender Offer.
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3. On August 24, 1998, Quickturn announced its rejection of Mentor's
fully-financed all shares premium offer, characterizing the Proposed Acquisition
as an "opportunistic and inadequate" offer, made "at a moment of weakness for
Quickturn's stock price and a moment of desperation for Mentor's design
strategy." 8/24/98 Quickturn Press Release (hereinafter "8/24/98 Press Release")
at 1). Later that day, Quickturn filed its Schedule 14D-9 (the "14D-9") with the
SEC, disclosing the Quickturn Board's rejection of the Proposed Acquisition and
recommending that the Quickturn stockholders not tender shares in the Tender
Offer.
4. In January 1996, the Board of Directors of Quickturn (the "Quickturn
Board") adopted a stockholder rights plan (the "Rights Plan"), commonly known as
a "poison pill," which is designed to thwart any acquisition of Quickturn that
does not have the approval of the Quickturn Board. The Rights Plan provides the
Quickturn Board with the power to prevent summarily the consummation of the
fully-financed, all-cash, all-shares, non-coercive, non-discriminatory Tender
Offer. After Mentor Graphics announced the Proposed Acquisition, on August 21,
1998, the Quickturn Board amended the Rights Plan to prohibit further amendment
of the Rights Plan or redemption of the Rights for a period of 180 days
following any annual or special meeting in which a majority of the Board is
elected, if such amendment or redemption is likely to facilitate a change in
control transaction. The original Rights Plan and the recent amendment were both
adopted without the approval of Quickturn's stockholders and if the Rights Plan,
as amended, remains in effect and applicable to the Tender Offer, it will impede
the right of Quickturn's stockholders to decide whether to accept this premium
offer for their shares and will impose an insurmountable obstacle to Purchaser's
consummation of the Tender Offer long after the stockholders of Quickturn have
expressed their support for the Proposed Acquisition by voting to remove the
current Quickturn Board and elect Mentor Graphics' nominees to the Quickturn
Board. Moreover, the Quickturn
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Board will be able to prevent Mentor Graphics and Purchaser from consummating
the Proposed Merger for at least three years unless the Board exempts the Tender
Offer from restrictions imposed by Section 203 of the Delaware General
Corporation Law ("Section 203").
5. The Tender Offer is conditioned upon, among other things, (i) the
redemption or inapplicability of the Rights Plan; (ii) the exemption of the
Tender Offer from Section 203 and (iii) there being validly tendered and not
withdrawn prior to the expiration of the Tender Offer that number of Quickturn
shares which, when combined with the Quickturn shares owned by Mentor Graphics,
Purchaser and their affiliates, represent a majority of the outstanding
Quickturn shares on a fully diluted basis. By failing to take action to satisfy
the conditions to the Tender Offer, the individual members of the Quickturn
Board have breached their fiduciary duties owed to Quickturn's stockholders
under Delaware law. Quickturn's stockholders, including Mentor Graphics and
Purchaser, will be irreparably harmed absent relief from this Court.
The Parties
6. Plaintiff Mentor Graphics is a Oregon corporation with its principal
executive offices in Wilsonville, Oregon. Mentor Graphics manufactures, markets
and supports software and hardware Electronic Design Automation ("EDA") products
and provides related services which enable engineers to design, analyze,
simulate, model, implement and verify the components of electronic systems.
Mentor Graphics is the beneficial owner of approximately three percent of the
outstanding shares of Quickturn common stock.
7. Plaintiff Purchaser is a newly incorporated Delaware corporation and
a wholly-owned subsidiary of Mentor Graphics with its principal executive
offices in Wilsonville, Oregon. Purchaser is the record owner of 100 shares of
Quickturn common stock.
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8. Defendant Quickturn is a Delaware corporation with its principal
executive offices in San Jose, California. According to its most recent Form
10-K, Quickturn "designs, manufactures, sells and supports products that verify
the design of integrated circuits ('ICs') and electronic systems."
9. Defendant Keith R. Lobo has been President, Chief Executive Officer
and a director of Quickturn since November 1992.
10. Defendants Glen M. Antle, Richard C. Alberding, Michael R. D'Amour,
Yen-Son (Paul) Huang, Dr. David K. Lam, William A. Hasler and Charles D. Kissner
are directors of Quickturn. The Director Defendants, as directors of Quickturn,
owe fiduciary duties of loyalty and care to Quickturn's stockholders.
FACTUAL BACKGROUND
A. The Quickturn Rights Plan
11. On or about January 10, 1996, the Quickturn Board approved the
adoption of the Rights Plan and declared a dividend of one Preferred Share
purchase right (a "Right") for each common share of Quickturn stock outstanding
as of the close of business on January 22, 1996. The Rights are distributed and
become exercisable for one one-thousandth share of Quickturn's Series A
Participating Preferred Stock (the "Series A Preferred") at a price of $50 on
the close of business ten days after the earlier of (i) the first date of public
announcement that any person (other than Quickturn, any subsidiary of Quickturn
or any employee benefit plan of Quickturn or any subsidiary of Quickturn) has
acquired or obtained the right to acquire beneficial ownership of 15%
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or more of Quickturn's common stock (the earlier of (i) and (ii) being
referred to as the "Distribution Date"). The Rights expire on
January 10, 2006, unless earlier redeemed or exchanged by Quickturn.
12. The primary purpose of the Rights Plan is not to enable the
purchase of the Series A Preferred at the greatly inflated price of $50 for each
one-thousandth share, but to allow the holder of the Right, under certain
circumstances, to purchase shares of Quickturn's or an acquiror's common stock
at a deep discount. If and when a person becomes an Acquiring Person, all Rights
other than those held by the Acquiring Person "flip-in" and each right becomes
exercisable for shares of Quickturn common stock equivalent in value to twice
the exercise price of the Right. Thus, for the exercise price of $50, the holder
of a Right may purchase Quickturn common stock having a market value of $100. If
and when Quickturn engages in a merger or a sale of 50% or more of its assets,
the Rights "flip-over" and become exercisable for shares of the acquiror's
common stock at the same deep discount price of two for the price of one. Thus,
stockholders have no economic incentive to exercise the Rights until a person
triggers the "flip-in" and/or "flip-over" provisions by becoming an Acquiring
Person.
13. The Rights are not exercisable for shares of Quickturn's common
stock if, prior to any person becoming an Acquiring Person, the Quickturn Board
declares that the tender or exchange offer is a "Permitted Offer." Under the
Rights Plan as originally adopted, a Permitted Offer is a tender or exchange
offer, issued pursuant to Section 14(d) of the Exchange Act, made when
"Continuing Directors" are in office, and determined to be, in the opinion of a
majority of Continuing Directors, "both adequate and otherwise in the best
interests of the Company and its stockholders (taking into account all factors
that such Continuing Directors deem relevant)."
14. Under the original Rights Plan, the Quickturn Board could redeem
the Rights, at a redemption price of $.01 per Right, any time prior to the close
of business on the earlier of (i) the
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tenth day following the date of public announcement of the fact that an
Acquiring Person has become such, or (ii) January 10, 2006; provided, however,
that once a stockholder had become an Acquiring Person, the Rights could be
redeemed by the Quickturn Board only if Continuing Directors remained on the
Board and the redemption was approved by a majority of the Continuing Directors.
Continuing Directors were defined as (i) persons serving on the Quickturn Board
prior to the date of the adoption of the Rights Agreement who are not associated
or affiliated with an Acquiring Person, or (ii) persons nominated or elected to
the Quickturn Board with the approval of the majority of the Continuing
Directors after the date of the adoption of Rights Plan who are not associated
or affiliated with an Acquiring Person.
15. On August 24, 1998, Quickturn announced that the Quickturn Board
had adopted a resolution to amend the Rights Plan to:
(x) delete all provisions requiring the concurrence of a
majority of Continuing Directors for (1) the redemption or
exchange of the Rights at or after the time a person becomes
an Acquiring Person or (2) the amendment of the Rights
Agreement on or after the Distribution Date, (y) add a
requirement that if a majority of the Company's Board is
elected at an annual or special meeting of stockholders, then
for a period of 180 days following such election (1) the
Rights cannot be redeemed or exchanged and (2) the Rights
Agreement cannot be amended, if such redemption, exchange or
amendment is reasonably likely to have the purpose or effect
of facilitating an acquisition of the Company by a person or
entity who proposed, nominated or supported a director of the
Company so elected at the annual or special meeting, and (z)
... add a clause to the definition of Distribution Date
pursuant to which the Board may determine the Distribution
Date applicable to Mentor and MGZ in connection with the Offer
or any amendment to the Offer or any subsequent tender offer
by Mentor or its Affiliates or Associates (each as defined in
the Rights Agreement).
14D-9 at 8. This amendment, if effective, would preclude the Quickturn Board
from redeeming or exchanging the Rights or amending the Rights Plan to
facilitate an acquisition transaction for a
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period of 6 months following any annual or special meeting at which a majority
of the Quickturn Board was replaced.
16. Purchaser's acceptance of shares tendered pursuant to its Tender
Offer will result in it becoming an Acquiring Person, will make the Rights
exercisable for shares of Quickturn's common stock at a discount of 50% of their
market value, will make the Tender Offer economically infeasible for Purchaser
to accomplish, and will deprive Quickturn's stockholders of the ability to
tender their shares unless the Quickturn Board redeems the Rights or exempts
Purchaser's Tender Offer from the triggering provisions of the Rights Plan by
declaring that the Tender Offer is a "Permitted Offer."
B. The Delaware Business Combination Statute
17. Section 203 of the Delaware General Corporation Law, entitled
"Business Combinations with Interested Stockholders," applies to any Delaware
corporation that has not opted out of the statute's coverage. Quickturn has not
opted out of the statute's coverage.
18. Section 203 was designed to impede coercive and inadequate tender
and exchange offers. Section 203 provides that if a person acquires 15% or more
of a corporation's voting stock (thereby becoming an "interested stockholder"),
such interested stockholder may not engage in a "business combination" with the
corporation (defined to include a merger or consolidation) for three years after
becoming an interested stockholder, unless: (i) prior to the 15% acquisition,
the board of directors has approved either the acquisition resulting in the
stockholder becoming an interested stockholder or the business combination; (ii)
the interested stockholder acquires 85% of the corporation's voting stock in the
same transaction in which it crosses the 15% threshold; or (iii) on or
subsequent to the date of the 15% acquisition, the business combination is
approved by the board of directors and authorized at an annual or special
meeting of the stockholders (and not by written
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consent) by the affirmative vote of at least 66 2/3% of the outstanding voting
stock which is not owned by the interested stockholder.
19. Application of Section 203 to the Proposed Acquisition will delay
the Proposed Merger for at least three years. Accordingly, three years of the
substantial benefits of the Proposed Acquisition will be forever lost.
Additionally, any number of events could occur within those three years that
would prevent the Proposed Merger altogether.
C. The "Quasi-California Corporation" Statute
20. Section 2115 ("Section 2115") of the California General Corporation
Law (the "CGCL") provides that if a foreign corporation has (i) more than
one-half of the average of the corporation's property, payroll and sales in
California, and (ii) more than half of its outstanding securities held by
persons with California addresses, then such foreign corporation shall be
subject to certain enumerated provisions of the CGCL, as set forth in Section
2115(b), to the exclusion of the law of the jurisdiction in which the
corporation is incorporated. Corporations with these characteristics and, thus,
subject to the specified provisions of the CGCL, are commonly referred to as
"quasi-California" corporations. For the purpose of determining whether a
foreign corporation is a "quasi-California" corporation, Section 2115(a)
provides that any securities held in the names of broker-dealers, nominees for
broker-dealers, banks, associations, or other entities holding securities in a
nominee name or otherwise on behalf of a beneficial owner shall not be
considered outstanding, unless the foreign corporation requests such nominee
holders to certify the number of shares held by beneficial owners and the
addresses of beneficial owners for whom securities are held.
21. Exempt from classification as a "quasi-California" corporation
pursuant to Section 2115(c) are corporations "with outstanding securities
designated as qualified for trading as a national market security on [NASDAQ] if
the corporation has at least 800 holders of its equity securities as
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of the record date of its most recent annual meeting of shareholders." Upon
information and belief, plaintiffs believe that Quickturn has at least 800
stockholders and, as a corporation with outstanding securities qualified for
trading on NASDAQ as a national market security, would not be a
"quasi-California" corporation and would not be subject to the provisions of the
CGCL identified in Section 2115(b). Such provisions include, but are not limited
to:
1. Section 303, which restricts the ability of stockholders to
remove directors without cause;
2. Section 708, which provides stockholders a right to
cumulative voting in the election of directors;
3. Section 710, which permits supermajority voting
requirements;
4. Section 1101, which imposes limitations on mergers; and
5. Chapter 12, which applies to all transactions termed
"reorganizations" as defined in the CGCL, which includes mergers and/or
acquisitions financed by the exchange of equity securities.
22. If Quickturn were to qualify as a "quasi-California" corporation,
application of the enumerated provisions of the CGCL would hamper and delay the
consummation of the Proposed Acquisition. For example, Section 1101(e) prohibits
a majority stockholder holding more than 50% but less than 90% of the
outstanding shares of a quasi-California corporation from consummating a
cash-out merger.
23. While plaintiffs believe that Quickturn is not currently a
"quasi-California" corporation, the Quickturn Board could undertake one of
several transactions which would increase its percentage of stock held by
California residents and/or decrease its total number of stockholders, thereby
removing Quickturn from the exemption provided by Section 2115(c) and
transforming
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Quickturn into a "quasi-California" corporation. Such actions would interfere
with the consummation of the Proposed Acquisition despite the benefits of the
transactions to the Quickturn stockholders.
D. The Response to the Proposed Acquisition
24. Despite the clear-cut and significant economic benefits for the
Quickturn stockholders, from the start Quickturn and its Board have steadfastly
indicated that Quickturn will not accept the Proposed Acquisition, nor will the
Quickturn Board allow the Quickturn stockholders the opportunity to consider the
Proposed Acquisition for themselves.
25. On August 11, 1998, Dr. Walden C. Rhines ("Rhines"), Mentor
Graphics' Chief Executive Officer, met with the Chairman of the Quickturn Board,
Glen M. Antle ("Antle"). At this meeting, Rhines presented Mentor Graphics'
proposal to acquire Quickturn. Rhines also delivered a letter to Antle outlining
Mentor Graphics' proposal to acquire all outstanding shares of Quickturn common
stock at a price of $12.125 per share in a negotiated transaction. Rhines
further advised Antle that Mentor Graphics' proposal was not subject to any
financing conditions. Rhines also advised Antle that, depending on the results
of Mentor Graphics' due diligence review of Quickturn, Mentor Graphics would
consider offering more value for the outstanding shares of Quickturn. While
Antle stated that he would communicate the offer to the Quickturn Board, he
stated that he was unwilling to accept the offer or to cause Quickturn to remove
its takeover defenses or to cause Quickturn to refrain from taking actions to
prevent the consummation of the Tender Offer.
26. On August 14, 1998, Dr. Rhines telephoned Keith R. Lobo ("Lobo"),
President and Chief Executive Officer and a director of Quickturn to discuss the
Proposed Acquisition. In this conversation, Dr. Rhines emphasized that Mentor
Graphics' interest in the Proposed Acquisition stemmed from the strategic
benefits of the transaction, and was not motivated by a desire to moot
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the pending patent litigation between the companies. Lobo merely stated that he
would communicate Dr. Rhines' position to the Quickturn Board.
27. On August 24, 1998, and without ever meeting with any
representative of Mentor Graphics to discuss the Proposed Acquisition, Quickturn
announced that on August 21, 1998, the Quickturn Board had rejected the Proposed
Acquisition, on the grounds that the Board considered the Tender Offer to be
inadequate, not reflective of the long-term value of Quickturn, and not in the
best interests of Quickturn or its stockholders. 14D-9 at 3. The Board further
announced that it had determined that Quickturn's business plan offered the
potential for obtaining higher long-term benefits for Quickturn's stockholders
than the Tender Offer. 14D-9 at 3. This determination is belied, however, by
both the past performance of Quickturn and by the decision made by the Board in
June 1998 to reprice employee options having original exercise prices of up to
$19.00 per share to the reduced exercise price of $7.438 per share.
28. In addition to its rejection of the Proposed Acquisition, Quickturn
also announced that on August 21, 1998, the Quickturn Board had adopted a number
of defensive measures designed to thwart the Proposed Acquisition.
29. Specifically, the Board announced that it had adopted an amendment
to the Quickturn bylaws specifying procedures for the calling of a special
meeting by stockholders holding at least 10% of the Quickturn shares, which, if
effective, would strip from the shareholders the right to set the date of a
special meeting and would have the effect of inequitably delaying the call of
any special meeting by at least three months. As set forth in Quickturn's 14D-9,
the amended bylaw adopted by the Quickturn Board provides as follows:
A special meeting of the stockholders may be called at any
time by (i) the board of directors, (ii) the chairman of the
board, (iii) the president, (iv) the chief executive officer
or (v) subject to the
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procedures set forth in this Section 2.3, one or more
stockholders holding shares in the aggregate entitled to cast
not less than ten percent (10%) of the votes at that meeting.
Upon request in writing sent by registered mail to the
president or chief executive officer by any stockholder or
stockholders entitled to call a special meeting of
stockholders pursuant to this Section 2.3, the board of
directors shall determine a place and time for such meeting,
which time shall be not less than ninety (90) nor more than
one hundred (100) days after the receipt and determination of
the validity of such request, and a record date for the
determination of stockholders entitled to vote at such meeting
in the manner set forth in Section 2.12 hereof. Following such
receipt and determination, it shall be the duty of the
secretary to cause notice to be given to the stockholders
entitled to vote at such meeting, in the manner set forth in
Section 2.4 hereof, that a meeting will be held at the place
and time so determine.
14D-9 at 8. By contrast, prior to this amendment, Section 2.3 of the Quickturn
bylaws simply provided that a special meeting could be called by "one or more
stockholders holding shares in the aggregate entitled to cast not less than ten
percent (10%) of the votes at that meeting."
30. Additionally, as described above the Quickturn Board also adopted
an amendment to the Rights Plan, which, if effective, would preclude any change
of control for another 6 months following any annual or special meeting,
regardless of the expressed will of the stockholders.
31. Taken together, these two provisions effectively preclude the
Quickturn stockholders from taking action to effect a change in control against
the wishes of management for a minimum of 9 months. Such a delay may preclude a
change in control entirely by putting at risk the ability of a potential
acquiror to obtain financing commitments for such a lengthy period of time,
and/or by virtue of the substantially increased costs associated with such a
lengthy financing commitment.
32. Quickturn's 14D-9 also disclosed that the Quickturn Board's
financial advisor, Hambrecht & Quist, was retained pursuant to a letter
agreement which structures Hambrecht & Quist's fees to create an incentive for
Hambrecht & Quist to opine that the Mentor Graphics' offer
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or any other unsolicited offer is inadequate. Specifically, under the retention
agreement, Hambrecht & Quist is entitled to a fee of 1.0% of the aggregate
consideration to be received in a Consensual Acquisition (defined as an
acquisition approved by the Quickturn Board), but only .75% of the consideration
received in an acquisition not approved in advance by the Quickturn Board.
Notably, although the 14D-9 stated that the Quickturn Board relied upon the
opinion of Hambrecht & Quist in rejecting the Proposed Acquisition, the
Hambrecht & Quist opinion was not filed as an exhibit to the 14D-9.
E. Mentor Graphics' Solicitation Of Agent Designations To Call
A Special Meeting And To Replace Quickturn's Board Of Directors
33. In light of Quickturn's unwillingness to accept or even to discuss
Mentor Graphics' proposal and its recent implementation of additional takeover
defenses, the current Quickturn Board cannot be expected to facilitate the
Proposed Acquisition, but can be expected to maintain and add to Quickturn's
anti-takeover devices and to actively oppose the Proposed Acquisition. Because
Quickturn has declined to accept the substantial benefits of the Proposed
Acquisition, Mentor Graphics has been forced to take its offer directly to the
Quickturn stockholders by soliciting agent designations and by causing Purchaser
to commence the Tender Offer.
34. Mentor Graphics filed with the SEC on August 12, 1998 preliminary
solicitation materials in connection with its solicitation of agent designations
from Quickturn's stockholders to call a special meeting of the Quickturn
stockholders for the purpose of replacing the Director Defendants with
individuals nominated by Mentor Graphics. Definitive agent designation
solicitation materials were filed with the SEC on August 20, 1998 and
immediately mailed to Quickturn's largest stockholders. If elected, the Mentor
Graphics nominees intend, subject to their fiduciary duties and assuming the
invalidity of the August 21, 1998 amendment to the Rights Plan,
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to redeem the Rights (or amend the Rights Plan to make the Rights inapplicable
to the Tender Offer and the Proposed Merger), approve the Tender Offer and the
Proposed Merger under Section 203, and take such other actions as may be
required to facilitate the prompt consummation of the Proposed Acquisition.
35. Upon the commencement of the Tender Offer, Mentor Graphics
announced its intention to solicit and is in the course of soliciting, agent
designations to call a special meeting of Quickturn's stockholders to occur
approximately 45 days after the call of the meeting is delivered to Quickturn
(the "Special Meeting"). At that time, Mentor Graphics expected, and Quickturn's
management must also have known, that sufficient agent designations to call the
meeting would be obtained within days of the mailing of definitive agent
designation materials to the Quickturn stockholders. As of the date of that
Mentor Graphics commenced its solicitation of agent designations, Section 2.3 of
Quickturn's bylaws as publicly-filed provided that "[a] special meeting of the
stockholders may be called at any time by . . . one or more stockholders holding
shares in the aggregate entitled to cast not less than ten percent (10%) of the
votes at that meeting." In accordance with Quickturn's bylaws as in effect when
Mentor Graphics' commenced its solicitation, Mentor Graphics believed that (i) a
special meeting could be called by the holders of not less than 10% of the
Quickturn shares on the date the agent designations are delivered to Quickturn;
(ii) the stockholders calling the meeting, not the Board, had the right to fix
the date and time of the Special Meeting, (iii) agent designations shall remain
in effect until revoked or unless the person executing such agent designation is
not the record holder of Quickturn shares on the date the Special Meeting is
called; and (iv) absent prior action by the Quickturn Board, the record date for
the Special Meeting shall be the date next preceding the date on which the
designated agents give notice of the Special Meeting.
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36. The Bylaw amendments adopted by Quickturn on August 21, 1998 are
targeted to derail Mentor Graphics' previously-announced plans to call a special
meeting on a date to be set by the stockholders calling the meeting, such date
to be within 45 days of receipt of sufficient agent designations to call the
special meeting.
37. In furtherance of the solicitation of agent designations to call
the Special Meeting, Purchaser demanded on August 12, 1998 that Quickturn
produce a list of its stockholders and related stock list materials. Quickturn
responded to Purchaser's demand on August 19, 1998, stating that the stock list
materials would be made available beginning at 12:00 noon on August 25, 1998.
Given the timing of Quickturn's rejection of the Proposed Acquisition and the
amendment of the bylaws regarding the call of a special meeting, Quickturn's
refusal to make the stock list available immediately constitutes improper
maneuvering to ensure that Mentor Graphics would not be able to mail its agent
designation solicitation materials to all of Quickturn's stockholders or to call
the special meeting before Quickturn's Board adopted its new defensive measures.
38. The efforts by Mentor Graphics and Purchaser to convene the Special
Meeting of Quickturn's stockholders comply with Delaware law and Quickturn's
bylaws as they existed at the time Mentor Graphics' commenced its acquisition
bid. These bylaw provisions, with which Mentor Graphics has complied fully and
with which it will continue to comply, authorize the holders of ten percent of
Quickturn's common stock to call a special meeting, without undue delay, at a
time and place designated by the stockholders calling the meeting.
39. Mentor Graphics believes that under the bylaws as they existed
prior to the recent amendment (i) the date for determining stockholders entitled
to call the Special Meeting and to submit agent designations in connection
therewith shall be the date that the Special Meeting is actually called, and
(ii) the stockholders, not the Company Board, have the right to fix the date and
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time of the Special Meeting and give notice thereof. Therefore, following
receipt of the requisite number of agent designations, the designated agents
intend to, and if the bylaw amendment is deemed ineffective, will call the
Special Meeting, fix the date and time of the Special Meeting and give notice of
the Special Meeting.
40. Mentor Graphics intends also to solicit proxies for the Special
Meeting so that, upon proposals by Mentor Graphics, the Director Defendants may
be removed from the Quickturn Board, the authorized number of Quickturn
directors may be reduced from eight to five, and five individuals nominated by
Mentor Graphics may be elected to the Quickturn board of directors. At the
Special Meeting, Quickturn's stockholders also will be presented with a proposal
by Mentor Graphics to repeal bylaws adopted subsequent to March 30, 1998 -- the
last bylaws filed as an exhibit to Quickturn's Form 10-K for the year ended
December 31, 1997, filed with the Securities and Exchange Commission on March
30, 1998 and prior to the adoption of any bylaw proposals presented at the
Special Meeting, including, without limitation the bylaw amendment purportedly
adopted on August 21, 1998.
41. Mentor Graphics believes that, in the absence of inequitable
conduct by Quickturn, Quickturn's stockholders will act to call the Special
Meeting and, at such meeting, will replace Quickturn's current directors with
Mentor Graphics' nominees and, if necessary, will take other actions designed to
negate inequitable conduct by the Quickturn Board undertaken to impede the
Proposed Acquisition.
42. Because Mentor Graphics' solicitation of agent designations and
solicitation of proxies in reliance on Quickturn's current bylaws threaten the
incumbency of Quickturn's Board of Directors, Mentor Graphics believed,
correctly, that Quickturn would seek to impose a constrained interpretation of
the current bylaws and purport to amend the bylaws in order to delay the Special
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Meeting and frustrate the ability of Quickturn's stockholders to exercise their
voting rights. Any determinations by Quickturn that Mentor Graphics failed to
comply with Quickturn's then-existing bylaws would lack a good faith basis. The
amendments to Quickturn's bylaws or other manipulations of corporate machinery
having the effect of hindering the ability of Quickturn's stockholders to
exercise their rights as they currently exist serve no legitimate purpose and
constitute inequitable manipulation and unlawful entrenchment by the Director
Defendants in violation of their fiduciary duties under Delaware law.
IRREPARABLE INJURY
43. The unlawful actions of Quickturn, including its failure
to accept the Proposed Acquisition, its failure to redeem the Rights Plan, its
failure to exempt the Tender Offer from Section 203, and its adoption of
additional, unreasonable defensive measures are preventing its stockholders from
receiving the benefits of the Proposed Acquisition and are thereby causing and
will cause Quickturn's stockholders irreparable harm. Unless the Quickturn Board
is restrained by this Court, the substantial benefits of the Proposed
Acquisition may be forever lost. The injury to Mentor Graphics and Purchaser
will not be compensable in money damages and plaintiffs have no adequate remedy
at law.
COUNT I
(Breach of Fiduciary Duty: The Rights Plan)
44. Plaintiffs repeat and reallege each and every allegation set forth
in paragraphs 1 through 43 as if fully set forth herein.
45. The Director Defendants owe Quickturn's stockholders the highest
duties of care, loyalty and good faith.
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46. In light of the superior value offered to Quickturn stockholders by
the Proposed Acquisition, there is no legitimate reason for the Quickturn Board
to retain the Rights Plan. The Director Defendants' failure to redeem the Rights
or to render the Rights Plan inapplicable to the Proposed Acquisition deprives
Quickturn's stockholders of the right to maximize their wealth by selling their
Quickturn shares at the premium price offered by the Proposed Acquisition.
47. The Director Defendants' failure to redeem the Rights or to render
the Rights Plan inapplicable to the Proposed Acquisition has no economic
justification, serves no legitimate purpose, and is not a reasonable response to
the Tender Offer and/or the Proposed Merger, which pose no threat to the
interests of Quickturn's stockholders or to Quickturn's corporate policy and
effectiveness. As such, the actions of the Director Defendants are in breach of
the fiduciary duties the Director Defendants owe to Quickturn's stockholders
under applicable Delaware law.
48. Moreover, the Quickturn Board's amendment of the Rights Plan, which
if effective, would preclude the stockholders from effectively utilizing the
stockholder franchise to facilitate an offer which they believe to be in their
best interests by disabling the Quickturn Board from approving any acquisition
for 6 months after the election of new directors, serves no legitimate corporate
interest, has no economic justification and is an unreasonable response to the
Proposed Acquisition. As such, the amendment to the Rights Plan constitutes a
breach of the fiduciary duties the Director Defendants owe to Quickturn's
stockholders under applicable law.
49. Further, because the amendment to the Rights Plan permits the
stockholders to effect a change of the composition of the Quickturn Board only
at the cost of restricting the ability of the Quickturn Board to approve an
acquisition transaction, the amendment constitutes an improper infringement upon
the voting rights of the stockholders without compelling justification. As such,
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the amendment to the Rights Plan constitutes a breach of the fiduciary duties
the Director Defendants owe to Quickturn's stockholders under applicable law.
50. Mentor Graphics and Purchaser have no adequate remedy at law.
COUNT II
(Breach of Fiduciary Duty: Section 203)
51. Plaintiffs repeat and reallege each and every allegation set forth
in paragraphs 1 through 50 as if fully set forth herein.
52. The Director Defendants owe Quickturn's stockholders the highest
duties of care, loyalty and good faith.
53. The Board of Directors of Quickturn is empowered by Section 203 to
render the statute inapplicable to the Proposed Acquisition by approving the
Tender Offer.
54. In light of the superior value offered to Quickturn stockholders by
the Proposed Acquisition, there is no legitimate reason for the Quickturn Board
of Directors' to fail to approve the Tender Offer or to fail to take any other
steps necessary to render Section 203 inapplicable to the Proposed Acquisition.
Such failures only have the effect of withholding from Quickturn stockholders
the right to maximize their wealth by selling their Quickturn shares at the
premium price offered by the Proposed Acquisition.
55. The Director Defendants' failure to approve the Tender Offer or
otherwise render Section 203 inapplicable to the Proposed Acquisition have no
economic justification, serve no legitimate purpose, and are not reasonable
responses to the Proposed Acquisition, which poses no threat to the interests of
Quickturn's stockholders or to Quickturn's corporate policy and effectiveness.
As such, the actions of the Director Defendants are in breach of the fiduciary
duties the Director Defendants owe to Quickturn's stockholders under applicable
Delaware law.
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56. Mentor Graphics and Purchaser have no adequate remedy at law.
COUNT III
(Declaratory and Injunctive Relief: Section 2115 of the California General
Corporation Law)
57. Plaintiffs repeat and reallege each and every allegation set forth
in paragraphs 1 through 56 as if fully set forth herein.
58. The Director Defendants owe Quickturn's stockholders the highest
duties of care, loyalty and good faith.
59. The Tender Offer is non-coercive and non-discriminatory, it is fair
to Quickturn stockholders, it poses no threat to Quickturn's corporate policy
and effectiveness, and it represents a substantial premium over the market price
of Quickturn common stock prior to the public announcement of the Tender Offer.
60. Any action which would bring Quickturn within the provisions of
Section 2115 of the California General Corporation Law and thereby hinder and/or
delay the consummation of the Proposed Acquisition would be a breach of the
Director Defendants' fiduciary duties to Quickturn's stockholders.
61. Mentor Graphics and Purchaser have no adequate remedy at law.
COUNT IV
(Declaratory and Injunctive Relief: Anti-Takeover Devices)
62. Plaintiffs repeat and reallege each and every allegation set forth
in paragraphs 1 through 61 as if fully set forth herein.
63. The Director Defendants owe Quickturn's stockholders the highest
duties of care, loyalty and good faith.
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64. The Tender Offer is non-coercive and non-discriminatory, it is fair
to Quickturn's stockholders, it poses no threat to Quickturn's corporate policy
and effectiveness, and it represents a substantial premium over the market price
of Quickturn common stock prior to the public announcement of the Tender Offer.
65. Adoption of any defensive measures against the Tender Offer, the
Proposed Merger, Mentor Graphics' solicitation of agent designations, Mentor
Graphics' solicitation of proxies, or that would prevent a future board of
directors from exercising its fiduciary duties -- including, but not limited to,
amendments to the Rights Plan, amendments to Quickturn's bylaws, pursuit of
alternative transactions with substantial break-up fees and/or lock-ups, "White
Knight" stock issuances, changes to licensing agreements, or executive
compensation arrangements with substantial payments triggered by a change in
control -- would itself be a breach of the Director Defendants' fiduciary duties
to Quickturn's stockholders.
66. Specifically, the adoption by the Board of the amendment to Section
2.3 of the Quickturn bylaws, which has the effect of (1) removing from the
stockholders the right to determine the date and place of, and to give notice
of, a special meeting and (2) unreasonably delaying the call of a special
meeting, serves no legitimate corporate purpose and is an unreasonable response
to Mentor Graphics' agent designation solicitation and non-coercive,
fully-financed, premium Tender Offer. Moreover, the amendment to the Quickturn
bylaws constitutes an inequitable manipulation of the corporate franchise
designed for, and with the primary effect of, entrenchment of management.
67. Further, the amendment to the Rights Plan in concert with the
amendments to the bylaws would preclude the stockholders from utilizing the
stockholder franchise to facilitate an offer which they believe to be in their
best interests for a period of more than 9 months, and are clearly intended to
coerce stockholders into voting against Mentor Graphics' nominees by threatening
the
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stockholders with a 6-month standstill should they vote to remove the incumbent
board. As such, the amendments serve no legitimate corporate interest and are an
unreasonable response to the Proposed Acquisition, and are therefore a breach of
the Director Defendants' fiduciary duties to Quickturn's stockholders. Further,
such amendments will delay or thwart the exercise of the corporate franchise
without compelling justification and thereby cause irreparable harm.
68. Mentor Graphics and Purchaser have no adequate remedy at law.
COUNT V
(Declaratory and Injunctive Relief: The Call of Special Meeting)
69. Plaintiffs repeat and reallege each and every allegation set forth
in paragraphs 1 through 68 as if fully set forth herein.
70. The Director Defendants owe Quickturn's stockholders the highest
duties of care, loyalty and good faith.
71. Mentor Graphics' solicitation of agent designations to call the
Special Meeting complied and will continue to comply with Quickturn's bylaws in
effect at the time the agent designation solicitation was commenced. Mentor
Graphics' disclosures regarding the agent designations, which were filed on
August 12, 1998 with the SEC, are complete and accurate.
72. Quickturn's actions to hinder the procedure for or ability of its
stockholders to call the Special Meeting, and to dispute Mentor Graphics' method
of determining whether it has obtained sufficient unrevoked agent designations
to call the Special Meeting, and to affect the selected date of the call, and to
refuse to recognize the date of the call, the stockholders' ability to fix the
date and time of the Special Meeting set forth in the call, and to interfere
with Mentor Graphics giving notice of the Special Meeting, and to impede
consideration by Quickturn's stockholders at the Special Meeting of Mentor
Graphics' proposals impermissibly impede and delay Quickturn's stockholders
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from exercising their rights. Specifically, the August 21, 1998 amendments to
the Quickturn bylaws and the Rights Plan impermissibly interfere with the
ability of Quickturn's stockholders to utilize the corporate franchise. As such,
these actions, including the bylaw Rights Plan amendments delay and/or thwart
the exercise of stockholder voting rights without compelling justification and
thereby cause irreparable harm.
73. Mentor Graphics and Purchaser have no adequate remedy at law.
COUNT VI
(Declaratory and Injunctive Relief: Nomination of Directors)
74. Plaintiffs repeat and reallege each and every allegation set forth
in paragraphs 1 through 73 as if fully set forth herein.
75. The Director Defendants owe Quickturn's stockholders the highest
duties of care, loyalty and good faith.
76. Mentor Graphics' actions to provide proper notice of its intent to
nominate directors for election at the Special Meeting called by Quickturn's
stockholders and Mentor Graphics' solicitation of proxies in connection with
such election will comply with Quickturn's bylaws as currently enacted. Any
action by Quickturn to hinder the ability of Mentor Graphics to propose its
nominees at the Special Meeting, including, but not limited to, any actions to
amend the notification procedures, would impermissibly impede and/or delay
Quickturn's stockholders from exercising their rights. Moreover, any action to
negate the effectiveness of Mentor Graphics' upcoming properly delivered
notification of its stockholder proposals and its director nominees would
eviscerate the ability of Quickturn's stockholders to change the composition of
the Quickturn Board at the Special Meeting. There cannot possibly be compelling
justification for any such action which would guarantee that the incumbent Board
could always and continuously frustrate the purposes of
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and/or delay a special meeting with the effect of preventing the election of
stockholder-nominated directors. Any such action would delay and/or thwart the
exercise of stockholder voting rights without compelling justification and would
thereby cause irreparable harm.
77. Mentor Graphics and Purchaser have no adequate remedy at law.
WHEREFORE, plaintiffs respectfully request that this Court:
1. declare that the Director Defendants have breached their
fiduciary obligations to Quickturn stockholders under Delaware law by failing to
redeem the Rights in response to the Tender Offer;
2. compel Quickturn and its Director Defendants to redeem the
Rights or to render the Rights Plan inapplicable to the Proposed Acquisition;
3. declare that the Director Defendants have breached their
fiduciary obligations to Quickturn stockholders under Delaware law by failing to
render Section 203 inapplicable to the Proposed Acquisition;
4. compel the Director Defendants to approve the Proposed
Acquisition for purposes of Section 203 and enjoin them from taking any action
to enforce or apply Section 203 that would impede, thwart, frustrate or
interfere with the Proposed Acquisition;
5. temporarily, preliminarily and permanently enjoin
Quickturn, its employees, agents and all persons acting on its behalf or in
concert with it from taking any action with respect to the Rights Plan, except
to redeem the Rights or render the Rights Plan inapplicable to the Tender Offer,
and from adopting any other Rights Plan or other measures, or taking any other
action designed to impede, or which has the effect of impeding, the Tender Offer
or the efforts of Mentor Graphics to acquire control of Quickturn;
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6. declare that the taking of any action to bring Quickturn
within the provisions of Section 2115 of the California General Corporation Law,
thereby impeding, thwarting, frustrating or interfering with the Proposed
Acquisition, constitutes a breach of the Director Defendants' fiduciary duties;
7. enjoin Quickturn and the Director Defendants from taking
any action which would bring Quickturn within the provisions of Section 2115 of
the California General Corporation Law and thereby have the effect of impeding,
thwarting, frustrating or interfering with the Proposed Acquisition;
8. declare that the August 21, 1998 amendments to the
Quickturn bylaws and the Rights Plan are ineffective and that the adoption
thereof constituted a breach of fiduciary duty by the Director Defendants, and
enjoin Quickturn from enforcing the amendments to the bylaws and/or Rights Plan.
9. temporarily, preliminarily and permanently enjoin
defendants, their affiliates, subsidiaries, officers, directors and all others
acting in concert with them or on their behalf from bringing any action
concerning the Rights Plan, Section 203, or Section 2115 in any other court;
10. declare that the adoption of any further measure that has
the effect of impeding, thwarting, frustrating or interfering with the Tender
Offer, the Proposed Merger, Mentor Graphics' solicitation of agent designations,
Mentor Graphics' call of the Special Meeting, Mentor Graphics' notice of the
Special Meeting, Mentor Graphics' notification of its director nominees, or
Mentor Graphics' solicitation of proxies, or Mentor Graphics' nomination of
directors or presentation of proposals at the Special Meeting constitutes a
breach of the Director Defendants' fiduciary duties;
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11. enjoin Quickturn and the Director Defendants from adopting
any further measure that has the effect of impeding, thwarting, frustrating or
interfering with the Tender Offer, the Proposed Merger, Mentor Graphics'
solicitation of agent designations, Mentor Graphics' call of the Special
Meeting, Mentor Graphics' notice of the Special Meeting, Mentor Graphics'
notification of its director nominees, Mentor Graphics' solicitation of proxies,
or Mentor Graphics' nomination of directors or presentation of Proposals at the
Special Meeting;
l2. enjoin Quickturn and the Director Defendants from taking
any action to delay, impede, postpone or thwart the voting or other rights of
Quickturn's stockholders in connection with the Special Meeting or otherwise;
13. compel Quickturn and the Director Defendants to recognize
the ability of Quickturn's stockholders, holding on the date of the call of the
Special Meeting shares entitled to cast not less than ten percent of votes at
such Special Meeting, to call and provide notice of a Special Meeting at the
date and time set forth in the call and for the purposes set forth in the call
and notice of the Special Meeting;
14. declare that the date for determining stockholders
entitled to call the Special Meeting and to submit Agent Designations in
connection therewith shall be the date that the Special Meeting is actually
called and that agent designations shall remain valid until revoked upon notice
to Mentor Graphics or unless the person executing the agent designation is not
the holder of Quickturn common shares on the date the Special Meeting is called;
15. declare that Mentor Graphics' and Purchaser's disclosures
in connection with its solicitation of agency designations and proxies for the
Special Meeting are complete and accurate;
16. award plaintiffs their costs and disbursements in this
action, including reasonable attorneys' and experts' fees; and
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17. grant plaintiffs such other and further relief as this
Court may deem just and proper.
---------------------------------
OF COUNSEL: Kevin G. Abrams
Thomas A. Beck
Christopher L. Kaufman Catherine G. Dearlove
David A. York Holly June Stiefel
Latham & Watkins Thad J. Bracegirdle
75 Willow Road Richards, Layton & Finger
Menlo Park, CA 94025 One Rodney Square
(650) 328-4600 P. O. Box 551
Wilmington, DE 19899
Fredric J. Zepp (302) 658-6541
Latham & Watkins Attorneys for Plaintiffs
505 Montgomery Street
San Francisco, CA 94111
(415) 391-0600
H. Steven Wilson
Latham & Watkins
2100, 701 B Street
San Diego, CA 92101-8197
(619) 236-1234
Dated: August 24, 1998
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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
MENTOR GRAPHICS CORPORATION and MGZ CORP., )
)
Plaintiffs, )
)
v. ) No. 98-473 RRM
)
QUICKTURN DESIGN SYSTEMS, INC., )
)
Defendant. )
)
FIRST AMENDED COMPLAINT
Pursuant to Rule 15(a) of the Federal Rules of Civil Procedure,
plaintiffs Mentor Graphics Corporation ("Mentor Graphics") and MGZ Corp.
("Purchaser") file this First Amended Complaint seeking declaratory and
injunctive relief arising out of Purchaser's offer to purchase shares of stock
of defendant Quickturn Design Systems, Inc. ("Quickturn").
JURISDICTION AND VENUE
1. This Court has jurisdiction over this action pursuant to 15 U.S.C.
ss. 78aa, 28 U.S.C. ss. 1331(a) and 28 U.S.C. ss. 1337(a).
2. Venue in this Court is proper pursuant to 15 U.S.C.ss. 78aa and 28
U.S.C.ss.1391(b).
THE PARTIES
3. Plaintiff Mentor Graphics is a corporation incorporated under the
laws of the State of Oregon having its principal executive offices in
Wilsonville, Oregon. Mentor Graphics manufactures, markets and supports software
and hardware Electronic Design Automation ("EDA") products and provides related
services which enable engineers to design, analyze, simulate, model,
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implement and verify the components of electronic systems. Purchaser, a
wholly-owned subsidiary of Mentor Graphics and a Delaware corporation, was
formed to acquire all of the outstanding shares of Quickturn through the tender
offer and merger proposal described below. Mentor Graphics is the beneficial
owner of more than three percent of the outstanding shares of Quickturn common
stock and Purchaser is the record owner of 100 shares of Quickturn common stock.
4. Defendant Quickturn is a corporation incorporated under the laws of
the State of Delaware having its principal executive offices in San Jose,
California. According to its most recent Form 10-K, Quickturn "designs,
manufactures, sells and supports products that verify the design of integrated
circuits ('ICs') and electronic systems."
5. Quickturn's common stock is registered pursuant to Section 12(b)
of the Securities Exchange Act of 1934 (the "Exchange Act"), 15 U.S.C.
Section 78l(b), and is listed and traded on the Nasdaq National Market.
THE TENDER OFFER
6. On August 12, 1998, Purchaser commenced a fully-financed,
non-coercive, non-discriminatory, all-cash, all-shares tender offer for
outstanding shares of Quickturn common stock that are not already owned by
Mentor Graphics or Purchaser (the "Tender Offer"). In connection with the
commencement of the Tender Offer, Mentor Graphics issued on August 12, 1998 a
press release summarizing the terms of the Tender Offer (the "Press Release"),
and a summary advertisement of the Tender Offer was published in the August 12,
1998 national edition of The Wall Street Journal (the "Summary Advertisement").
7. Quickturn stockholders whose shares are purchased by Purchaser in
the Tender Offer will receive $12.125 per share in cash, representing a 51.6%
premium above the average closing
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price of Quickturn's stock on the Nasdaq National Market on August 11, 1998, the
last full trading day before the first public announcement of Mentor Graphics'
commencement of the Tender Offer. The Tender Offer is conditioned upon, among
other things, (i) the redemption or inapplicability of Quickturn's stockholder
rights plan, (ii) the exemption of the Tender Offer from Section 203 of the
Delaware General Corporation Law ("Section 203"), and (iii) the tender and
purchase of sufficient Quickturn shares to give Mentor Graphics and Purchaser a
majority of the outstanding Quickturn shares on a fully diluted basis.
8. The Tender Offer is the initial step in a two-step transaction
pursuant to which Mentor Graphics proposes to acquire all of the outstanding
shares of Quickturn stock. If successful, the Tender Offer will be followed by a
merger or similar business combination with Purchaser or a direct or indirect
subsidiary of Mentor Graphics (the "Proposed Merger," and together with the
Tender Offer, the "Proposed Acquisition"). Pursuant to the Proposed Merger, it
is currently anticipated that each then outstanding share of Quickturn (other
than shares owned by Mentor Graphics or any of its subsidiaries or shares held
in the treasury of Quickturn) would be converted into the right to receive an
amount in cash equal to the price paid in the Tender Offer.
9. In January 1996, the Board of Directors of Quickturn adopted a
stockholder rights plan (the "Rights Plan"), commonly known as a "poison pill,"
which is designed to thwart any acquisition of Quickturn that does not have the
approval of Quickturn's Board. The Rights Plan provides the Quickturn Board with
the power to prevent summarily the consummation of even an all-cash, all-shares,
non-coercive, non-discriminatory tender offer by imposing a severe economic
penalty (in the form of massive dilution) on a potential acquiror. After Mentor
Graphics announced the Proposed Acquisition, the Quickturn Board amended the
Rights Plan to prohibit further
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amendment or redemption of the Rights for a period of 180 days following any
annual or special meeting in which a majority of the Board is elected, if such
amendment is likely to facilitate certain change in control transactions. The
original Rights Plan and the recent amendment were both adopted without approval
of Quickturn's stockholders and, if the Rights Plan as amended remains in effect
and applicable to the Tender Offer, it will restrict the right of Quickturn's
stockholders to decide whether to accept Purchaser's premium offer for their
shares.
10. Moreover, Quickturn's Board may be able to prevent Mentor Graphics
from consummating the Proposed Merger for at least three years unless the Board
exempts the Tender Offer from restrictions imposed by Section 203, Delaware's
Business Combination Statute. Section 203, which applies to any Delaware
corporation that has not opted out of its coverage, provides that if a person
acquires 15% or more of a corporation's voting stock (thereby becoming an
"interested stockholder"), such interested stockholder may not engage in a
"business combination" with the corporation (defined to include a merger or
consolidation) for three years after becoming an interested stockholder, unless:
(i) prior to the 15% acquisition, the board of directors has approved either the
acquisition resulting in the stockholder becoming an interested stockholder or
the business combination; (ii) the interested stockholder acquires 85% of the
corporation's voting stock in the same transaction in which it crosses the 15%
threshold; or (iii) on or subsequent to the date of the 15% acquisition, the
business combination is approved by the board of directors and authorized at an
annual or special meeting of the stockholders (and not by written consent) by
the affirmative vote of at least 662/3% of the outstanding voting stock which is
not owned by the interested stockholder. Quickturn is subject to Section 203 and
has chosen not to opt-out of the statute's coverage.
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11. The Tender Offer is, and will continue to be, in full compliance
with all applicable federal laws and regulations governing tender offers,
i.e., the provisions of the Williams Act, embodied in Sections 14(d) and
14(e) of the Exchange Act, 15 U.S.C. Sections 78n(d) and (e), and the rules
and regulations promulgated thereunder by the Securities and Exchange
Commission ("SEC"). In accordance with the Exchange Act and the rules and
regulations promulgated thereunder by the SEC, Purchaser commenced the Tender
Offer by the publication of the Summary Advertisement in the August 12, 1998
Wall Street Journal. In connection with the Tender Offer and in accordance
with the Exchange Act and the rules and regulations promulgated thereunder by
the SEC, Purchaser filed on August 12, 1998 a Schedule 14D-1 with the SEC
pursuant to Section 14(d)(1) of the Exchange Act and Rule 14d-3 promulgated
thereunder, 17 C.F.R. Section 240.14d-3.
12. On August 20, 1998, Mentor Graphics and Purchaser amended the
Schedule 14D-1 filed on August 12, 1998 to conform to comments from the SEC and
to disclose a press release issued by Mentor Graphics on August 12, 1998. On
August 25, 1998, Mentor Graphics and Purchaser further amended the Schedule
14D-1 filed on August 12, 1998 (as amended, the "Schedule 14D-1") to disclose
the existence of (i) a warrant to purchase shares of Quickturn common stock
granted by Quickturn to Mentor Graphics in connection with a 1992 asset purchase
agreement between the two companies pursuant to which Quickturn acquired certain
assets from Mentor Graphics; and (ii) an outstanding promissory note payable to
Mentor Graphics by Quickturn issued in 1993. A true and complete copy of the
Schedule 14D-1, with amendments, is attached hereto as Exhibit A.
13. Section 14(d) of the Exchange Act, 15 U.S.C. Section 78n(d), and
the rules and regulations promulgated thereunder by the SEC, require that any
person or entity making a tender offer for
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beneficial ownership of more than five percent of a class of registered equity
securities file and disclose certain specified information with respect to the
tender offer. Any such bidder must disclose, among other things, its identity
and background, past contacts, transactions or negotiations between the bidder
and the company in whom the bidder seeks to acquire stock, the source and amount
of funds needed for the tender offer, and any plans the bidder may have to
change the capitalization, corporate structure or business of the company whose
stock it seeks to acquire.
14. In addition, Section 14(e) of the Exchange Act, 15 U.S.C. Section
78n(e), makes it "unlawful for any person to make any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statement made, in light of the circumstances under which they are made, not
misleading, or to engage in any fraudulent, deceptive, or manipulative acts or
practice in connection with any tender offer." Purchaser has complied fully with
the Exchange Act and all rules and regulations promulgated thereunder.
15. In connection with the Tender Offer, Purchaser is in the process of
disseminating to Quickturn's stockholders an offer to purchase containing all
material information required by applicable law to be disclosed (the "Offer to
Purchase"). A true and correct copy of the Offer to Purchase is attached hereto
as Exhibit B. Among other matters, the Offer to Purchase discloses:
1. the solicitation of agent designations being undertaken by
Mentor Graphics to call a special meeting of Quickturn stockholders, as more
fully described below;
2. the matters to be considered at the special meeting,
including the removal of all current members of the Quickturn Board of
Directors, an amendment of the Quickturn bylaws to reduce the size of the
Quickturn Board to five directors, and the election of five persons nominated by
Mentor Graphics to the Quickturn Board, as more fully described below; and
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3. pending patent litigation between Mentor Graphics and
Quickturn, and information regarding the potential damages Quickturn may recover
from such litigation.
16. Despite the significant benefits of the Tender Offer for the
Quickturn stockholders, Quickturn has refused to accept the Mentor Graphics
offer. Quickturn's efforts will, in all likelihood, also include the
commencement of baseless litigation against plaintiffs under the provisions of
the federal securities laws regulating the solicitation of agency designations,
the solicitation of proxies, tender offers and acquisition efforts.
QUICKTURN REJECTS THE MENTOR GRAPHICS OFFER
17. On August 11, 1998, Dr. Walden C. Rhines ("Rhines"), Mentor
Graphics' Chief Executive Officer and President, met with Glen M. Antle
("Antle"), the Chairman of the Quickturn Board. At this meeting, Rhines
presented Mentor Graphics' proposal to acquire Quickturn. Rhines delivered a
letter to Antle outlining Mentor Graphics' proposal to acquire all outstanding
shares of Quickturn common stock at a price of $12.125 per share in a negotiated
transaction. Rhines further advised Antle that Mentor Graphics' proposal was not
subject to any financing conditions. Rhines also advised Antle that, depending
on the results of Mentor Graphics' due diligence review of Quickturn, Mentor
Graphics would consider offering more value for the outstanding shares of
Quickturn. While Antle stated that he would communicate the proposal to the
Quickturn Board, he stated that he was unwilling to accept the offer or to cause
Quickturn to remove its takeover defenses or to cause Quickturn to refrain from
taking actions to prevent the consummation of the Tender Offer.
18. On August 14, 1998, Rhines telephoned Keith R. Lobo ("Lobo"),
President and Chief Executive Officer and a director of Quickturn, to discuss
the Proposed Acquisition. Rhines
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emphasized to Lobo that Mentor Graphics' interest in the Proposed Acquisition
stemmed from the strategic benefits of the transaction, and was not motivated by
a desire to moot the pending patent litigation between the companies. Lobo
merely stated that he would communicate Rhines' position to the Quickturn Board.
19. On August 24, 1998, and without ever contacting or meeting with any
representative of Mentor Graphics to discuss Mentor Graphics' Proposed
Acquisition, Quickturn announced that on August 21, 1998, the Quickturn Board
had rejected the Proposed Acquisition, on the grounds that the Board considered
the Tender Offer to be inadequate, not reflective of the long-term value of
Quickturn and not in the best interests of Quickturn or its stockholders. The
Board further announced that it had determined that Quickturn's business plan
offered the potential for obtaining higher long-term benefits for Quickturn's
stockholders than the Tender Offer.
20. In light of Quickturn's failure to accept or even discuss Mentor
Graphics' acquisition proposal, the current Quickturn Board cannot be expected
to facilitate the Proposed Acquisition, but instead can be expected to maintain
Quickturn's anti-takeover devices and to actively oppose the Proposed
Acquisition. Because Quickturn failed to accept the substantial benefits of the
Proposed Acquisition, Mentor Graphics is taking its offer directly to the
Quickturn stockholders.
THE AGENT SOLICITATION
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21. In furtherance of the Proposed Acquisition, Mentor Graphics
publicly disclosed on August 12, 1998 its intention to solicit agent
designations from Quickturn's stockholders to appoint designated agents with the
power to call a special meeting of the Quickturn stockholders (the "Agent
Solicitation"). Section 2.3 of Quickturn's bylaws provides that "[a] special
meeting of the stockholders may be called at any time by . . . one or more
stockholders holding shares in the aggregate entitled to cast not less than ten
percent (10%) of the votes at that meeting." The purpose of the Agent
Solicitation to call a special meeting of the Quickturn stockholders (the
"Special Meeting") is to allow the Quickturn stockholders to remove all current
members of Quickturn's Board of Directors, to reduce the authorized number of
Quickturn directors to five, to elect to the Quickturn Board five individuals
nominated by Mentor Graphics, and to repeal any recent or subsequent amendments
to the Quickturn bylaws. If elected, Mentor Graphics' nominees intend to,
subject to their fiduciary duties, (i) redeem the Rights Plan (or amend the
Rights Plan to make it inapplicable to the Proposed Acquisition), (ii) approve
the Tender Offer under Section 203, and (iii) take such other actions as may be
required to expedite the prompt consummation of the Proposed Acquisition.
22. Section 14(a) of the Exchange Act, 15 U.S.C. Section 78n(a), and
the rules and regulations promulgated thereunder by the SEC, require that a
person soliciting an authorization with respect to any registered security
file and disclose certain specific information with respect to the
solicitation. Any such solicitor must disclose, among other things, its
identity, the date, time and place of the meeting at which the proposed
action will be taken, and any substantial interest of the solicitor in the
matters to be acted upon. In addition, Rule 14a-9, 17 C.F.R. Section
240.14a-9, promulgated by the SEC under Section 14(a) of the Exchange Act,
provides that "[n]o solicitation
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subject to this regulation shall be made . . . containing any statement of
which, at the time and in the light of the circumstances under which it is made,
is false or misleading with respect to any material fact, or which omits to
state any material fact necessary in order to make the statements therein not
false or misleading or necessary to correct any statement in any earlier
communication with respect to the solicitation of a proxy for the same meeting
or subject matter which has become false or misleading."
23. Mentor Graphics' preliminary agent solicitation materials relating
to the call of the Special Meeting were filed on August 12, 1998 with the SEC.
On August 20, 1998, Mentor Graphics filed with the SEC definitive agent
solicitation materials relating to the call of the Special Meeting (the "Agent
Solicitation Materials"). A true and correct copy of the Agent Solicitation
Materials is attached hereto as Exhibit C. Mentor Graphics believes the Agent
Solicitation Materials are in full compliance with Section 14(a) of the Exchange
Act and the rules and regulations promulgated thereunder by the SEC, including
Rule 14a-9. Mentor Graphics is in the process of disseminating to Quickturn's
stockholders the Agent Solicitation Materials containing all material
information required by applicable law to be disclosed. The Agent Solicitation
Materials disclose, among other things:
1. the requirement that, for the Special Meeting to be held,
agent designations in favor of calling the Special Meeting must be executed by
the holders of not less than 10% of all the shares entitled to vote at such
meeting;
2. Mentor Graphics' belief that (i) a special meeting may be
called by the holders of not less than 10% of the Quickturn shares on the date
the agent designations are delivered to Quickturn, (ii) the stockholders calling
the Special Meeting, not the Quickturn Board, have the
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right to fix the date and time of the Special Meeting, (iii) agent designations
shall remain in effect until revoked or unless the person executing such agent
designation is not the record holder of Quickturn shares on the date the Special
Meeting is called, and (iv) absent prior action by the Quickturn Board, the
record date for the Special Meeting shall be the date next preceding the date on
which the designated agents give notice of the Special Meeting;
3. Mentor Graphics' intent, upon receipt of the requisite
number of agent designations, to call the Special Meeting, fix the date and time
of the Special Meeting, and give notice of the Special Meeting;
4. the belief of Mentor Graphics that its efforts to convene
the Special Meeting comply with Delaware law and Quickturn's bylaws as they
presently exist; and
5. Mentor Graphics' intent, if the Special Meeting is called
and held, to ask Quickturn stockholders to (i) remove the current members of the
Board of Directors of Quickturn, (ii) amend Quickturn's bylaws to reduce the
authorized number of directors to five, (iii) elect Mentor Graphics' five
nominees to the Quickturn Board, and (iv) repeal any provisions of the Quickturn
bylaws adopted by the incumbent Quickturn Board subsequent to the last public
filing of the bylaws.
24. In furtherance of Mentor Graphics' solicitation of agent
designations, Purchaser is demanding that Quickturn produce a list of its
stockholders and related stocklist materials. Quickturn responded to Purchaser's
demand on August 19, 1998, stating that the stocklist materials would be made
available beginning at 12:00 noon on August 25, 1998.
QUICKTURN RESPONDS TO THE TENDER OFFER
25. Section 14(d) of the Exchange Act and Rule 14d-9 promulgated
thereunder, 17 C.F.R. Section 240.14d-9, regulate solicitations or
recommendations made by "subject" or "target"
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companies in response to a tender offer. Under Rule 14d-9, no such solicitation
or recommendation is permitted unless prior thereto the target company has filed
with the SEC and delivered to the offeror a Schedule 14D-9 containing certain
specified information including, among other things, the nature of the
solicitation or recommendation, particularized reasons for the solicitation or
recommendation, and recent transactions in respect of the target company's
securities by the target company or its officers or directors.
26. On August 24, 1998, Quickturn filed a Schedule 14D-9 with the SEC
in response to the Tender Offer (the "Schedule 14D-9"). A true and correct copy
of the Schedule 14D-9 is attached hereto as Exhibit D. The Schedule 14D-9, which
contains a list of purported justifications for the Quickturn Board's
recommendation that Quickturn stockholders reject the Tender Offer, is
materially false and/or misleading in numerous respects.
27. Specifically, the Schedule 14D-9 contains the following materially
false and/or misleading statements and omissions:
1. Although the Schedule 14D-9 states that the Quickturn Board
concluded that the Tender Offer does not fully reflect the "long-term value" of
Quickturn, the Schedule 14D-9 fails to disclose any amount or range of any such
values or when such values can be expected to be realized by Quickturn
stockholders.
2. Although the Schedule 14D-9 refers to the Quickturn Board's
consideration of presentations by Quickturn senior management and Quickturn's
financial advisors on Quickturn's financial performance, business strategy and
business plan, the Schedule 14D-9 fails to disclose any specific or meaningful
information concerning these issues.
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3. Although the Schedule 14D-9 states that the Quickturn Board
determined that Quickturn's business plan "offered the potential for obtaining
higher long-term benefits" for Quickturn stockholders than the Tender Offer, the
Schedule 14D-9 fails to disclose any meaningful information concerning such
benefits, including the amount thereof and when any such benefits can be
expected to be realized by Quickturn stockholders.
4. The Schedule 14D-9 fails to disclose whether the
determination by the Quickturn Board to reject the Tender Offer was unanimous
and, if the determination was not unanimous, any objections or abstentions by
any Quickturn directors with respect to such determination.
5. Although the Schedule 14D-9 refers to "the disruptive
effect" of the Tender Offer on Quickturn's sales efforts and relationships with
its suppliers and employees, it fails to disclose the nature and amount of, or
reason for, any such disruptive effect.
6. Although the Schedule 14D-9 states that "[n]o negotiation
is underway or is being undertaken by [Quickturn] in response to the [Tender]
Offer which relates to or would result in (1) an extraordinary transaction, such
as a merger or reorganization, involving [Quickturn] or any of its subsidiaries;
(2) a purchase, sale or transfer of a material amount of assets by [Quickturn]
or any of its subsidiaries; (3) a tender offer for or other acquisition of
securities by or of [Quickturn]; or (4) any material change in the current
capitalization or dividend policy of [Quickturn]," the Schedule 14D-9 fails to
disclose whether Quickturn has made any contacts with third parties in
anticipation of future negotiations.
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28. In addition, the press release issued by Quickturn on August 24,
1998, attached as Exhibit 6 to the Schedule 14D-9 (the "Quickturn Press
Release"), contains the following materially false and/or misleading statements
and omissions:
1. While the Quickturn Press Release claims that the Tender
Offer "comes at a moment of weakness for Quickturn's stock price," it fails to
disclose that the price of Quickturn common stock has been declining for a
period of 6 months, since February 1998.
2. The Quickturn Press Release makes the misleading statement
that Quickturn's stock price is depressed "because of the economic downturn in
the Asia/Pacific region and the corresponding slowdown int he region's new
electronics product design," when in actuality the decrease in Quickturn's stock
price can be attributed to the failure of Quickturn management to develop and
execute a value-enhancing business plan.
3. The Quickturn Press Release misleadingly states projections
of future growth in the emulation and high performance simulation industries,
falsely implying that Quickturn's financial performance will similarly improve.
COUNT I
(For Declaratory Relief)
29. Plaintiffs repeat and reallege the above paragraphs as if set forth
herein.
30. The Declaratory Judgment Act, 28 U.S.C. Section 2201, provides
that "[i]n a case of actual controversy within its jurisdiction, . . . any
court of the United States, upon the filing of an appropriate pleading, may
declare the rights and other legal relations of any interested party seeking
such declaration." Plaintiffs are entitled to a declaratory judgment that the
Schedule 14D-1 and all
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exhibits thereto, and the Agent Solicitation Materials, are proper and comply
with all applicable securities laws, rules and regulations.
31. Although the Proposed Acquisition is fairly and attractively
priced, Plaintiffs reasonably expect that Quickturn will thwart or delay
plaintiffs' lawful attempts to consummate the Tender Offer. Plaintiffs believe
Quickturn will seek to delay and defeat the Tender Offer through efforts
including the filing of a meritless suit claiming that public disclosures and
filings made by plaintiffs in conjunction with the Tender Offer and the Agent
Solicitation violate applicable federal securities laws and regulations. Thus,
there is a substantial controversy between parties having adverse interests
which is of sufficient immediacy and reality to warrant the issuance of a
declaratory judgment.
32. In the absence of declaratory relief, plaintiffs will suffer
irreparable harm. As evidenced by the course of action that Quickturn has
pursued to date and the actions taken generally by companies that receive
unsolicited acquisition proposals, Quickturn will likely defend against the
Proposed Acquisition and the Agent Solicitation by, among other things, filing
false claims designed to delay or defeat the Proposed Acquisition and the Agent
Solicitation. A declaratory judgment that the disclosures in the Schedule 14D-1,
the Offer to Purchase and the Agent Solicitation Materials comply with all
applicable federal laws will serve the purpose of adjudicating the interests of
the parties, resolving any complaints concerning the propriety of the Tender
Offer or the Agent Solicitation under federal law, and permitting an otherwise
lawful transaction to proceed.
33. Plaintiffs therefore request pursuant to the Declaratory
Judgment Act, 28 U.S.C. Sections 2201 and 2202, that this Court enter a
declaratory judgment that the public disclosures and documents filed with the
SEC by plaintiffs and which are being disseminated to Quickturn stockholders
in connection with the Tender Offer and the Agent Solicitation comply fully
with all applicable provisions of law.
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COUNT II
(For Violation of Section 14(d) of the Exchange Act and Rule 14d-9 promulgated
thereunder)
34. Plaintiffs repeat and reallege the above paragraphs as if set forth
herein.
35. Rule 14d-9, 17 C.F.R. Section 240.14d-9, promulgated by the SEC
pursuant to Section 14(d) of the Exchange Act, requires the target company to
file with the SEC a Schedule 14D-9 containing certain information, including,
among other things, the nature of the target company's solicitation or
recommendation in response to a tender offer, particularized reasons for the
solicitation or recommendation, and recent transactions in respect of the
target company's securities by the target company or by its officers and
directors.
36. In violation of Section 14(d) of the Exchange Act and Rule 14d-9
promulgated thereunder, the Schedule 14D-9 filed by Quickturn with the SEC
contains material misstatements and omissions as set forth in paragraphs 27 and
28.
37. By reason of the foregoing, plaintiffs, Quickturn stockholders and
the investing public have been and are being irreparably harmed in that they are
being deprived of, and/or misled as to, important information required to be
publicly, accurately and fully disclosed by Quickturn under applicable law, and
Quickturn stockholders and the investing public are being misled by materially
false information disseminated by Quickturn.
38. Plaintiffs have no adequate remedy at law.
COUNT III
(For Violation of Section 14(e) of the Exchange Act)
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39. Plaintiffs repeat and reallege the above paragraphs as if set forth
herein.
40. Section 14(e) of the Exchange Act, 15 U.S.C. Section 78n(e),
makes it "unlawful for any person to make any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statement made, in light of the circumstances under which they are made, not
misleading, or to engage in any fraudulent, deceptive, or manipulative acts
or practice in connection with any tender offer."
41. In violation of Section 14(e) of the Exchange Act, the Schedule
14D-9 filed by Quickturn with the SEC contains material misstatements and
omissions as set forth in paragraphs 27 and 28.
42. By reason of the foregoing, plaintiffs, Quickturn stockholders and
the investing public have been and are being irreparably harmed in that they are
being deprived of, and/or misled as to, important information required to be
publicly, accurately and fully disclosed by Quickturn under applicable law, and
Quickturn stockholders and the investing public are being misled by materially
false information disseminated by Quickturn.
43. Plaintiffs have no adequate remedy at law.
WHEREFORE, plaintiffs respectfully request that this Court:
1. declare that plaintiffs have disclosed all information
required by, and are otherwise in all respects in compliance with, all
applicable laws and other obligations, including, without limitation, Sections
14(a), 14(d) and 14(e) of the Exchange Act and any other federal securities
laws, rules or regulations deemed or claimed to be applicable to the Schedule
14D-1, the Tender Offer, the Agent Solicitation or the Agent Solicitation
Materials;
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2. declare that Quickturn has violated Sections 14(d) and
14(e) of the Exchange Act and Rule 14d-9;
3. compel Quickturn to comply with the requirements of the
Exchange Act and the rules promulgated thereunder, and compel Quickturn to file
immediately an amended Schedule 14D-9 which is complete and accurate and which
corrects the misleading and untrue statements in its Schedule 14D-9;
4. preliminarily and permanently enjoin Quickturn, its agents,
employees and anyone acting on its behalf, from making any false or misleading
statements with respect to the Tender Offer;
5. award plaintiffs their costs and disbursements in this
action, including reasonable attorneys' fees; and
6. grant plaintiffs such other and further relief as this
Court may deem just and proper.
Of Counsel: H. Steven Wilson
Latham & Watkins
Christopher L. Kaufman 2100, 701 B Street
David A. York San Diego, CA 92101-8197
Latham & Watkins (619) 236-1234
75 Willow Road
Menlo Park, CA 94025
(650) 328-4600
Fredric J. Zepp
Latham & Watkins
505 Montgomery Street
San Francisco, CA 94111
(415) 391-0600
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Kevin G. Abrams (ID #2375)
Thomas A. Beck (ID #2086)
Catherine G. Dearlove (ID #3328)
Holly June Stiefel (ID #3594)
Thad J. Bracegirdle (ID #3691)
Richards, Layton & Finger
One Rodney Square
P. O. Box 551
Wilmington, DE 19899
(302) 658-6541
Attorneys for Plaintiffs
Dated: August 25, 1998
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