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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 36
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)
------------------------
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 up
to 2,100,000 shares of Common Stock, par value $.001 per share, of Quickturn
Design Systems, Inc., a Delaware corporation, together with the associated
preferred stock purchase rights, for a purchase price of $15 per share, net to
the seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated August 12, 1998 (the "Offer
to Purchase"), as amended and supplemented by the First Supplement thereto,
dated August 27, 1998 (the "First Supplement"), the Second Supplement thereto,
dated December 28, 1998 (the "Second Supplement") and the Third Supplement
thereto, dated January 7, 1999 (the "Third Supplement") and the related revised
Letter of Transmittal (which, together with the Offer to Purchase, as each may
be amended and supplemented from time to time, constitute the "Offer").
Capitalized terms used herein and not defined have the meanings ascribed to them
in the Schedule 14D-1 or in the Offer to Purchase.
ITEM 1. SECURITY AND SUBJECT COMPANY.
Item 1 is hereby amended and supplemented by the following:
(b) The information set forth in the "INTRODUCTION" and Section 1 to the
Third Supplement is incorporated herein by reference.
(c) The information set forth in Section 2 to the Third Supplement is
incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
Item 2 is hereby amended and supplemented by the following:
(a)-(d) and (g) The information set forth in the "INTRODUCTION" to the Third
Supplement is incorporated herein by reference.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
Item 3 is hereby amended and supplemented by the following:
(a)-(b) The information set forth in the "INTRODUCTION" to the Third
Supplement and in Section 4 to the Third Supplement is incorporated herein by
reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Item 4 is hereby amended and supplemented by the following:
(a)-(c) The information set forth in Section 3 to the Third Supplement is
incorporated herein by reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
Item 5 is hereby amended and supplemented by the following:
(a)-(g) The information set forth in the "INTRODUCTION" to the Third
Supplement and in Section 5 to the Third Supplement is incorporated herein by
reference.
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ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
Item 6 is hereby amended and supplemented by the following:
(a) The information set forth in the "INTRODUCTION" to the Third Supplement
is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
Item 7 is hereby amended and supplemented by the following:
The information set forth in Section 4 to the Third Supplement is
incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION.
Item 10 is hereby amended and supplemented by the following:
(e) The information set forth in Section 7 to the Third Supplement is
incorporated herein by reference.
(f) The information set forth in the entire Third Supplement, a copy of
which is attached hereto as Exhibit (a)(63), is incorporated herein by
reference.
On January 6, 1999, Parent issued a press release, a copy of which is
attached hereto as Exhibit (a)(64) and is incorporated herein by reference.
On January 7, 1999, Parent issued a press release, a copy of which is
attached hereto as Exhibit (a)(65) and is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
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<C> <C> <S>
(a)(63) -- Third Supplement to the Offer to Purchase, dated January 7, 1999.
(a)(64) -- Press Release dated January 6, 1999.
(a)(65) -- Press Release dated January 7, 1999.
</TABLE>
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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: January 7, 1999 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>
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SUPPLEMENT TO THE OFFER TO PURCHASE DATED AUGUST 12, 1998
OFFER TO PURCHASE FOR CASH
MGZ CORP.
A WHOLLY OWNED SUBSIDIARY OF
MENTOR GRAPHICS CORPORATION
HAS AMENDED ITS
OFFER TO PURCHASE FOR CASH
AND IS OFFERING TO PURCHASE UP TO AN AGGREGATE OF
2,100,000 SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
QUICKTURN DESIGN SYSTEMS, INC.
AT
$15 NET PER SHARE
THE OFFER, WITHDRAWAL RIGHTS AND THE PRORATION PERIOD WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, JANUARY 21, 1999 UNLESS THE OFFER IS
EXTENDED.
THE OFFER, AS AMENDED, IS CONDITIONED UPON, AMONG OTHER THINGS, THE ELECTION
OF MENTOR GRAPHICS' NOMINEES (GIDEON ARGOV, SCOTT H. BICE, HARRY L. DEMOREST, C.
SCOTT GIBSON AND MICHAEL J.K. SAVAGE OR, IF ANY OF THEM IS UNABLE TO SERVE, A
SUBSTITUTE NOMINEE) TO THE BOARD OF DIRECTORS OF QUICKTURN DESIGN SYSTEMS, INC.
(THE "COMPANY") AT THE SPECIAL MEETING OF STOCKHOLDERS OF THE COMPANY SCHEDULED
FOR JANUARY 8, 1999, OR AT ANY ADJOURNMENT, POSTPONEMENT OR CONTINUATION THEREOF
(THE "SPECIAL MEETING"). THE OFFER IS ALSO SUBJECT TO THE TERMS AND CONDITIONS
CONTAINED IN SECTION 6 OF THIS THIRD SUPPLEMENT.
THE OFFER, AS AMENDED, IS NOT SUBJECT TO THE MINIMUM CONDITION, THE RIGHTS
CONDITION, THE SECTION 203 CONDITION OR THE HSR CONDITION (EACH AS DEFINED IN
THE OFFER TO PURCHASE, THE FIRST SUPPLEMENT AND/OR THE SECOND SUPPLEMENT).
THE OFFER, AS AMENDED, IS NOT CONDITIONED ON PURCHASER OBTAINING FINANCING.
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should either (1) complete and sign a revised Letter of Transmittal (or a
facsimile thereof) in accordance with the instructions in the revised Letter of
Transmittal and mail or deliver it, together with the certificate(s) evidencing
tendered Shares and, if separate, the certificates representing the Rights, and
any other required documents, to the Depositary or tender such Shares pursuant
to the procedures for book-entry transfer set forth in Section 3 of the Offer to
Purchase and Section 2 of the Second Supplement or (2) request such
stockholder's broker, dealer, commercial bank, trust company or other nominee to
effect the transaction for such stockholder. Any stockholder whose Shares are
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee must contact such broker, dealer, commercial bank, trust company
or other nominee if such stockholder desires to tender such Shares.
STOCKHOLDERS WHO HAVE PREVIOUSLY VALIDLY TENDERED SHARES PURSUANT TO THE
OFFER AND WHO HAVE NOT WITHDRAWN THOSE SHARES NEED NOT TAKE ANY FURTHER ACTION
IN ORDER TO TENDER SHARES PURSUANT TO THE OFFER, AS AMENDED.
TO BE VALID, A TENDER OF SHARES MUST BE ACCOMPANIED BY CERTIFICATES
REPRESENTING SHARES OR THE BOOK-ENTRY TRANSFER PROCEDURES MUST BE COMPLIED WITH
ON A TIMELY BASIS. SHARES MAY NOT BE TENDERED PURSUANT TO GUARANTEED DELIVERY
PROCEDURES.
In order to acquire Shares in a timely fashion and announce a proration
number, if any, at the earliest practicable date following the Expiration Date
(as defined), guarantees of delivery of Shares will not be accepted pursuant to
the Offer. All stockholders who have previously tendered Shares using guarantee
of delivery procedures have either perfected their tender by delivering their
Shares and any other required documents or have withdrawn their tenders. Parent
understands that no Shares that have been tendered and not withdrawn remain
subject to guarantee of delivery procedures.
Questions or requests for assistance may be directed to the Information
Agent or to the Dealer Manager at their respective addresses and telephone
numbers set forth on the back cover of this Third Supplement. Additional copies
of this Third Supplement, the Second Supplement, the First Supplement, the Offer
to Purchase, the revised Letter of Transmittal and other tender offer materials
may also be obtained from the Information Agent or from brokers, dealers,
commercial banks or trust companies.
THE DEALER MANAGER FOR THE OFFER IS:
SALOMON SMITH BARNEY
January 7, 1999
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TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
INTRODUCTION............................................................................................... 1
1. Terms of the Offer; Proration; Expiration Date........................................................ 3
2. Price Range of Shares................................................................................. 4
3. Source and Amount of Funds............................................................................ 4
4. Background of the Offer............................................................................... 4
5. Purpose of the Offer and the Proposed Merger; Plans for the Company................................... 4
6. Certain Conditions of the Offer....................................................................... 5
7. Legal Proceedings..................................................................................... 8
8. Miscellaneous......................................................................................... 9
</TABLE>
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To the Holders of Common Stock (including the Associated Preferred
Stock Purchase Rights) of Quickturn Design Systems, Inc.:
INTRODUCTION
The following information amends and supplements the Offer to Purchase,
dated August 12, 1998 (the "Offer to Purchase"), as previously amended and
supplemented by the Supplement to the Offer to Purchase, dated August 27, 1998
(the "First Supplement") and the Second Supplement to the Offer to Purchase,
dated December 28, 1998 (the "Second Supplement"), of MGZ Corp. ("Purchaser"), a
Delaware corporation and a wholly owned subsidiary of Mentor Graphics
Corporation, an Oregon corporation ("Parent" or "Mentor Graphics"), pursuant to
which Purchaser is offering to purchase shares of common stock, par value $.001
per share (the "Company Common Stock"), of Quickturn Design Systems, Inc., a
Delaware corporation (the "Company"), together with the associated preferred
share purchase rights (the "Rights" and, together with the Company Common Stock,
the "Shares") issued pursuant to the Rights Agreement, dated as of January 10,
1996, as amended, between the Company and The First National Bank of Boston, as
Rights Agent.
Pursuant to this Third Supplement to the Offer to Purchase (the "Third
Supplement"), Purchaser is increasing the offering price in the tender offer for
2,100,000 Shares of the Company to $15 per Share, net to the seller in cash,
without interest thereon (the "Offer Price"), from $14 cash per Share, all upon
the terms and subject to the conditions set forth in the Offer to Purchase, as
amended and supplemented by the First Supplement, the Second Supplement and this
Third Supplement, and the revised Letter of Transmittal (which, as amended from
time to time, collectively constitute the "Offer").
THE OFFER, AS AMENDED, IS CONDITIONED UPON, AMONG OTHER THINGS, THE ELECTION
OF MENTOR GRAPHICS' NOMINEES (GIDEON ARGOV, SCOTT H. BICE, HARRY L. DEMOREST, C.
SCOTT GIBSON AND MICHAEL J.K. SAVAGE OR, IF ANY OF THEM ARE UNABLE TO SERVE, A
SUBSTITUTE NOMINEE) TO THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY
BOARD") AT THE SPECIAL MEETING. THE OFFER, AS AMENDED, IS NOT SUBJECT TO THE
MINIMUM CONDITION, THE RIGHTS CONDITION, THE SECTION 203 CONDITION OR THE HSR
CONDITION (EACH AS DEFINED IN THE OFFER TO PURCHASE, THE FIRST SUPPLEMENT AND/OR
THE SECOND SUPPLEMENT). See Section 1 of the Offer to Purchase, Sections 1 and 2
of the First Supplement, Section 1 of the Second Supplement and Section 1 of
this Third Supplement.
On January 5, 1999, the Company announced that it had amended its merger
agreement with Cadence Design Systems, Inc. ("Cadence") pursuant to which
Cadence would acquire the Company in a stock merger in which each stockholder
would receive Cadence common stock with a value of $15 per share.
Purchaser and Parent will continue to seek to negotiate a merger agreement
or similar business combination between the Company and Purchaser or another
direct or indirect subsidiary of Parent at the Offer Price (the "Proposed
Merger"). The purpose of the Offer is for Parent, through Purchaser, to increase
its equity interest in the Company as the first step in completing the Proposed
Merger between Purchaser and the Company. The purpose of the Proposed Merger is
to acquire all Shares not purchased pursuant to the Offer. Consummation of the
Proposed Merger at the Offer Price, which is currently $15 per share, is
conditioned upon negotiation of a merger agreement, due diligence and securing
necessary financing. As a result of the increase to the Offer Price, Parent will
no longer pay to stockholders whose Shares are converted pursuant to the
Proposed Merger any portion of the Break-Up Fee in the event such Break-Up Fee
is invalidated.
Parent stands ready to consider increasing the Offer Price and the price to
be paid per Share in the Proposed Merger if negotiation and due diligence
demonstrate greater value of the Company to Parent.
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THE SPECIAL MEETING
A Special Meeting of Stockholders of the Company is scheduled for January 8,
1999 at the time and place designated by the Company in its proxy materials, or
at any adjournment, postponement or continuation thereof. Parent is seeking an
adjournment of the Special Meeting to a date later than January 8, 1999 to allow
stockholders of the Company to consider recent developments.
The proposals made by Parent to be presented at the Special Meeting are as
follows: (i) to remove all members of the Company Board, (ii) to adopt an
amendment to Section 3.2 of Article III of the Company's Bylaws (the "Company
Bylaws") to reduce the authorized number of Company directors from eight to
five, (iii) to elect Gideon Argov, Scott H. Bice, Harry L. Demorest, C. Scott
Gibson and Michael J.K. Savage (the "Nominees") to fill the five vacancies on
the Company Board resulting from the removal of the incumbent directors, (iv) to
adopt a stockholder resolution repealing each provision of the Company Bylaws or
any amendment thereto adopted by the Company Board subsequent to March 30, 1998
and prior to the effective date of the Proposals, and (v) to take action on any
procedural matter, or any substantive matter that Parent does not know of within
a reasonable time before the Special Meeting, which is properly brought before
the Special Meeting (the "Proposals").
The solicitation of proxies from the Company's stockholders in favor of the
Nominees and the other Proposals is being made pursuant to a separate proxy
solicitation. Stockholders of record at the close of business on November 10,
1998, the record date, will be entitled to notice of, and to vote at, the
Special Meeting and all stockholders may tender all or any portion of such
stockholder's Shares in the Offer.
If elected as directors of the Company, Parent would encourage the Nominees,
subject to their fiduciary duties as directors of the Company under applicable
law and in accordance with the Company's rights and obligations under the merger
agreement with Cadence, to seek to auction the Company to the highest bidder.
Parent would also encourage the Nominees, subject to their fiduciary duties as
directors of the Company under applicable law and in accordance with the
Company's rights and obligations under the merger agreement with Cadence, to
allow any bidder, including Parent, promptly to conduct a due diligence review
of the Company and to seek to execute a merger agreement with the highest
bidder.
Notwithstanding the foregoing, if the Nominees are elected, Parent will not
request the new Board to take any action which would constitute a breach by the
Company of the Company's merger agreement with Cadence, including granting a
request by a third party (including Parent) to conduct due diligence until such
time as such provision in the merger agreement is judicially invalidated, or
giving Cadence the right to terminate the merger agreement except by reason of
the existence of a superior proposal (as defined in such merger agreement).
As of November 30, 1998, there were 18,095,580 Shares outstanding. Parent
currently owns 591,500 Shares, or approximately 3.3% of the outstanding Shares.
Following consummation of the Offer, Parent will own 2,691,500 Shares, or 14.9%
of the outstanding common stock, assuming 2,100,000 Shares are tendered into the
Offer and not withdrawn. To the extent Purchaser determines that, as a result of
the consummation of the Offer, Purchaser would beneficially own such number of
the then outstanding Shares as would result in the occurrence of a Distribution
Date (as defined in the Offer to Purchase) or cause the Purchaser to become an
Acquiring Person (as defined in the Offer to Purchase), Purchaser expressly
reserves the right, at any time and from time to time, to further amend the
Offer to change the number of Shares being sought in the Offer so that the
number of Shares that Purchaser would own upon consummation thereof would
represent such number of Shares then outstanding as would not result in the
occurrence of a Distribution Date, or cause the Purchaser to become an Acquiring
Person, at such time. Any such amendment would be made in compliance with
applicable rules and regulations of the Securities and Exchange Commission (the
"Commission").
THIS THIRD SUPPLEMENT DOES NOT CONSTITUTE A SOLICITATION OF A PROXY,
CONSENT, OR AUTHORIZATION FOR OR WITH RESPECT TO ANY SPECIAL MEETING OF
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THE COMPANY'S STOCKHOLDERS. THE SOLICITATION OF PROXIES TO REMOVE THE COMPANY
BOARD, REDUCE THE AUTHORIZED NUMBER OF DIRECTORS, ELECT THE NOMINEES AND TAKE
OTHER ACTION AT THE SPECIAL MEETING WILL BE MADE ONLY PURSUANT TO SEPARATE
SOLICITATION MATERIALS COMPLYING WITH ALL APPLICABLE REQUIREMENTS OF SECTION
14(a) OF THE EXCHANGE ACT.
THE OFFER TO PURCHASE, THE FIRST SUPPLEMENT, THE SECOND SUPPLEMENT AND THIS
THIRD SUPPLEMENT AND THE REVISED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
This Third Supplement should be read in conjunction with the Offer to
Purchase, the First Supplement and the Second Supplement. Except as set forth in
this Third Supplement the terms and conditions previously set forth in the Offer
to Purchase, the First Supplement, the Second Supplement and the revised Letter
of Transmittal remain applicable in all respects to the Offer. Terms used but
not defined herein have the meanings set forth in the Offer to Purchase, the
First Supplement or the Second Supplement.
1. TERMS OF THE OFFER; PRORATION; EXPIRATION DATE
The discussion set forth in Section 1 of the Offer to Purchase, Section 2 of
the First Supplement and Section 1 of the Second Supplement is hereby amended
and supplemented as follows:
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any extension or
amendment), Purchaser will accept for payment and pay for up to an aggregate of
2,100,000 Shares that are validly tendered prior to the Expiration Date (as
defined herein) and not properly withdrawn in accordance with Section 4 of the
Offer to Purchase. The term "Expiration Date" means 12:00 midnight, New York
City time, on January 21, 1999 unless Purchaser shall have extended the period
of time during which the Offer is open, in which event the term "Expiration
Date" shall mean the latest time and date at which the Offer, as so extended by
Purchaser, will expire.
THE OFFER, AS AMENDED, IS CONDITIONED UPON, AMONG OTHER THINGS, THE ELECTION
OF THE NOMINEES, OR, IF ANY OF THEM IS UNABLE TO SERVE, A SUBSTITUTE NOMINEE, TO
THE COMPANY BOARD AT THE SPECIAL MEETING. THE OFFER IS ALSO SUBJECT TO THE TERMS
AND CONDITIONS SET FORTH IN SECTION 6 OF THIS THIRD SUPPLEMENT.
PURCHASER RESERVES THE RIGHT (SUBJECT TO THE APPLICABLE RULES AND
REGULATIONS OF THE COMMISSION) TO AMEND OR WAIVE ANY TERMS AND CONDITIONS OF THE
OFFER.
If more than 2,100,000 Shares are validly tendered prior to the Expiration
Date and not properly withdrawn, Purchaser will, upon the terms and subject to
the conditions of the Offer, accept for payment and pay for only 2,100,000
Shares, on a pro rata basis, with adjustments to avoid purchases of fractional
Shares, based upon the number of Shares validly tendered prior to the Expiration
Date and not properly withdrawn. Because of the difficulty of determining
precisely the number of Shares validly tendered and not withdrawn, if proration
is required, Purchaser may not be able to announce the final results of
proration or pay for Shares until two business days after the Expiration Date.
Preliminary results of proration will be announced by press release as promptly
as practicable on the next business day after the Expiration Date. Holders of
Shares may obtain such preliminary information from the Information Agent and
also may be able to obtain such preliminary information from their brokers.
In the event the Offer is not consummated, Purchaser currently intends to
explore all options which may be available to it, which may include, without
limitation, seeking to acquire additional Shares through open market purchases
or privately negotiated transactions, which may be at a price more or less than
the Offer Price. Purchaser also reserves the right to dispose of Shares.
3
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2. PRICE RANGE OF SHARES
The discussion set forth in Section 6 of the Offer to Purchase, Section 3 of
the First Supplement and Section 3 of the Second Supplement is hereby amended
and supplemented as follows:
The high and low last sales prices per Share as reported by the Nasdaq
National Market for the first quarter of 1999 (through January 6, 1999) were
$15.25 and $14.296875, respectively. HOLDERS OF SHARES ARE URGED TO OBTAIN
CURRENT MARKET QUOTATIONS FOR THE SHARES.
3. SOURCE AND AMOUNT OF FUNDS
The discussion set forth in Section 9 of the Offer to Purchase, Section 6 of
the First Supplement and Section 6 of the Second Supplement is hereby amended
and supplemented as follows:
Parent and Purchaser estimate that the total amount of funds required to
acquire 2,100,000 Shares pursuant to the Offer (as amended and as described in
this Third Supplement), and to pay all related costs and expenses relating
thereto will be approximately $38 million. Purchaser plans to obtain all such
funds through a capital contribution or a loan from Parent. Parent plans to
provide such funds for such capital contribution or loan from its available cash
and working capital.
4. BACKGROUND OF THE OFFER
The discussion set forth in Section 10 of the Offer to Purchase, Section 7
of the First Supplement and Section 7 of the Second Supplement is hereby amended
and supplemented as follows:
Since December 28, 1998 Parent has sought to negotiate a business
combination with the Company as well as to resolve outstanding issues between
the two companies and between Parent and Cadence.
On January 5, 1999, Cadence announced that it had increased to $15 per share
the price that Cadence is proposing to pay for the Company in a stock merger.
On January 6, 1999, Parent issued a press release announcing the terms of
the Offer, as amended. Also on January 6 and 7, 1999, Parent's representatives
discussed with the Company's representatives a possible adjournment of the
Special Meeting to a date later than January 8, 1999.
5. PURPOSE OF THE OFFER AND THE PROPOSED MERGER; PLANS FOR THE COMPANY
The discussion set forth in Section 11 of the Offer to Purchase, Section 8
of the First Supplement and Section 8 of the Second Supplement is hereby amended
and supplemented as follows:
Purchaser and Parent will continue to seek to negotiate with the Company
regarding the Proposed Merger. The purpose of the Offer is for Parent, through
Purchaser, to increase its equity interest in the Company as the first step in
completing the Proposed Merger between Purchaser and the Company. The purpose of
the Proposed Merger is to acquire all Shares not purchased pursuant to the
Offer. Consummation of the Proposed Merger at the Offer Price, which is
currently $15 per share, is conditioned upon negotiation of a merger agreement,
due diligence and securing necessary financing. As a result of the increase to
the Offer Price, Parent will no longer pay to stockholders whose Shares are
converted pursuant to the Proposed Merger any portion of the Break-Up Fee in the
event such Break-Up Fee is invalidated.
In the event that the Proposed Merger is consummated, Purchaser intends to
obtain all necessary funds through a capital contribution or a loan from Parent.
Parent believes it will be able to confirm with its lenders the availability of
funds for such capital contribution or loan from its available cash and working
capital and pursuant to the Credit Agreement described in the Offer to Purchase.
4
<PAGE>
6. CERTAIN CONDITIONS OF THE OFFER
The discussion set forth in Section 14 of the Offer to Purchase, Section 9
of the First Supplement and Section 9 of the Second Supplement is hereby amended
and supplemented as follows:
Purchaser has eliminated the Minimum Condition, the Section 203 Condition,
the Rights Condition and the HSR Condition to the Offer. However, to the extent
Purchaser determines that, as a result of the consummation of the Offer,
Purchaser would beneficially own such number of the then outstanding Shares as
would result in the occurrence of a Distribution Date, or cause the Purchaser to
become an Acquiring Person, Purchaser expressly reserves the right, at any time
and from time to time, to further amend the Offer to reduce the number of Shares
sought in the Offer so that the number of Shares that Purchaser would own upon
consummation thereof would represent such number of Shares then outstanding as
would not result in the occurrence of a Distribution Date, or cause Purchaser to
become an Acquiring Person, at such time. Such amendment to the Offer could be
required in the event the Company amends the Rights Agreement, changes its
capitalization by way of a recapitalization or takes certain other actions in
respect of the Shares. Any such amendment of the Offer would be made in
compliance with applicable rules and regulations of the Commission.
Notwithstanding any other provision of the Offer, and in addition to (and
not in limitation of) Purchaser's rights to extend and amend the Offer at any
time, in its reasonable discretion, Purchaser shall not be required to accept
for payment or pay for any Shares tendered pursuant to the Offer, and may
terminate or amend the Offer and may postpone the acceptance for payment of and
payment for, Shares tendered, if (i) the Nominees (or, if any of them is unable
to serve, a substitute nominee) have not been elected at the Special Meeting or
(ii) at any time on or after August 12, 1998, and prior to the Expiration Date,
any of the following conditions shall exist:
(a) there shall have been threatened, instituted or be pending an action or
proceeding before any court or governmental, administrative or regulatory
authority or agency, domestic or foreign (each, a "Governmental Entity"), or by
any other person, domestic or foreign, before any court or Governmental Entity,
(i) challenging or seeking to, or which is reasonably likely to, make illegal,
materially delay or otherwise directly or indirectly restrain or prohibit or
seeking to, or which is reasonably likely to, impose voting, procedural, price
or other requirements, including any such requirements under California law, in
addition to those required by federal securities laws and the DGCL (each as in
effect on the date of the Offer to Purchase), in connection with the making of
the Offer, the acceptance for payment of, or payment for, any Shares by
Purchaser or any other affiliate of Parent or the consummation by Purchaser or
any other affiliate of Parent of the Proposed Merger or other business
combination with the Company, or seeking to obtain material damages in
connection therewith; (ii) seeking to prohibit or limit materially the ownership
or operation by the Company, Parent or any of their respective subsidiaries of
all or any material portion of the business or assets of the Company, Parent or
any of their respective subsidiaries, or to compel the Company, Parent or any of
their respective subsidiaries to dispose of or hold separate all or any material
portion of the business or assets of the Company, Parent or any of their
respective subsidiaries; (iii) seeking to impose or confirm limitations on the
ability of Parent and its subsidiaries, including Purchaser, to exercise
effectively full rights of ownership of any Shares (including the Rights
associated with Shares), including, without limitation, the right to vote any
Shares acquired by Purchaser pursuant to the Offer or otherwise on all matters
properly presented to the Company's stockholders; (iv) seeking to require
divestiture by Parent and its subsidiaries, including Purchaser, of any Shares;
(v) seeking any material diminution in the benefits expected to be derived by
Parent, Purchaser or any other affiliate of Parent as a result of the
transactions contemplated by the Offer or the Proposed Merger or any other
similar business combination with the Company; (vi) otherwise directly or
indirectly relating to the Offer or which otherwise, in the reasonable judgment
of Purchaser, might materially adversely affect the Company or Purchaser or any
other affiliate of Parent or the value of the Shares; or (vii) which otherwise,
in the reasonable judgment of Purchaser, is likely to materially adversely
affect the business, operations (including, without limitation, results of
operations), properties (including, without limitation,
5
<PAGE>
intangible properties), condition (financial or otherwise), assets or
liabilities (including, without limitation, contingent liabilities) or prospects
of either the Company or any of its subsidiaries or Parent or any of its
subsidiaries, including Purchaser;
(b) there shall have been any action taken, or any statute, rule,
regulation, legislation, interpretation, judgment, order or injunction enacted,
entered, enforced, promulgated, amended, issued or deemed applicable to (i)
Parent, Purchaser, the Company or any subsidiary or affiliate of Parent or the
Company or (ii) the Offer or the Proposed Merger or other business combination
by Purchaser or Parent or any affiliate of Parent with the Company, by any
legislative body, court, government or governmental, administrative or
regulatory authority or agency, domestic or foreign, other than the routine
application of the waiting period provisions of the HSR Act to the Offer or the
Proposed Merger, which, in the reasonable judgment of Purchaser, is likely to
result, directly or indirectly, in any of the consequences referred to in
clauses (i) through (vii) of paragraph (a) above;
(c) there shall have occurred any change, condition, event or development
that, in the reasonable judgment of Purchaser, (i) is or is likely to be
materially adverse to the business, operations (including, without limitation,
results of operations), properties (including, without limitation, intangible
properties), condition (financial or otherwise), assets or liabilities
(including, without limitation, contingent liabilities) or prospects of the
Company or any of its subsidiaries or (ii) might materially adversely affect the
Company or Purchaser or any other affiliate of Parent or the value of the
Shares;
(d) there shall have occurred (i) any general suspension of, or limitation
on prices for, trading in securities on the Nasdaq National Market, (ii) any
decline, measured from the close of business on August 11, 1998, in the Standard
& Poor's 500 Index by an amount in excess of 15%, (iii) any material adverse
change in United States currency exchange rates or a suspension of, or
limitation on, currency exchange markets, (iv) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States, (v) any limitation (whether or not mandatory) by any government or
governmental, administrative or regulatory authority or agency, domestic or
foreign, on, or other event that, in the reasonable judgment of Purchaser, might
affect the extension of credit by banks or other lending institutions, (vi) a
commencement of a war or armed hostilities or other national or international
calamity directly or indirectly involving the United States or (vii) in the case
of any of the foregoing existing on August 11, 1998, a material acceleration or
worsening thereof;
(e) other than the redemption of the Rights at the redemption price thereof
in accordance with their terms as such terms have been publicly disclosed prior
to the date of the Offer to Purchase, the Company or any of its subsidiaries,
joint ventures or partners or other affiliates shall have, directly or
indirectly, (i) split, combined or otherwise changed, or authorized or proposed
a split, combination or other change of, the Shares or its capitalization, (ii)
acquired or otherwise caused a reduction in the number of, or authorized or
proposed the acquisition or other reduction in the number of, outstanding Shares
or other securities, (iii) issued or sold, or authorized or proposed the
issuance, distribution or sale of, additional Shares (other than the issuance of
Shares under option prior to the date of the Offer to Purchase, in accordance
with the terms of such options as such terms have been publicly disclosed prior
to the date of the Offer to Purchase), shares of any other class of capital
stock, other voting securities or any securities convertible into, or rights,
warrants or options, conditional or otherwise, to acquire, any of the foregoing,
(iv) declared or paid, or proposed to declare or pay, any dividend or other
distribution, whether payable in cash, securities or other property, on or with
respect to any shares of capital stock of the Company, (v) altered or proposed
to alter any material term of any outstanding security (including the Rights)
other than to amend the Rights Agreement to make the Rights inapplicable to the
Offer and the Proposed Merger, (vi) incurred any debt other than in the ordinary
course of business or any debt containing burdensome covenants, (vii)
authorized, recommended, proposed or entered into an agreement, agreement in
principle or arrangement or understanding with respect to any merger,
consolidation, liquidation, dissolution, business combination, acquisition of
assets, disposition of assets, release or relinquishment of any material
contractual or other right of the Company or any of its subsidiaries or any
comparable event
6
<PAGE>
not in the ordinary course of business, (viii) authorized, recommended, proposed
or entered into, or announced its intention to authorize, recommend, propose or
enter into, any agreement, arrangement or understanding with any person or group
that, in the reasonable judgment of Purchaser, could adversely affect either the
value of the Company or any of its subsidiaries, joint ventures or partnerships
or the value of the Shares to Parent or Purchaser, (ix) entered into or amended
any employment, change in control, severance, executive compensation or similar
agreement, arrangement or plan with or for the benefit of any of its employees,
consultants or directors, or made grants or awards thereunder, other than in the
ordinary course of business or entered into or amended any agreements,
arrangements or plans so as to provide for increased or accelerated benefits to
any such persons, (x) except as may be required by law, taken any action to
terminate or amend any employee benefit plan (as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended) of the Company or
any of its subsidiaries, or Purchaser shall have become aware of any such action
that was not disclosed in publicly available filings prior to the date of the
Offer to Purchase, or (xi) amended or authorized or proposed any amendment to
the Company's Articles of Incorporation or Bylaws, or Purchaser shall have
become aware that the Company or any of its subsidiaries shall have proposed or
adopted any such amendment that was not disclosed in publicly available filings
prior to the date of the Offer to Purchase;
(f) a tender or exchange offer for any Shares shall have been made or
publicly proposed to be made by any other person (including the Company or any
of its subsidiaries or affiliates), or it shall have been publicly disclosed or
Purchaser shall have otherwise learned that (i) any person, entity (including
the Company or any of its subsidiaries) or "group" (within the meaning of
Section 13(d)(3) of the Exchange Act) shall have acquired or proposed to acquire
beneficial ownership of more than 5% of any class or series of capital stock of
the Company (including the Shares), through the acquisition of stock, the
formation of a group or otherwise, or shall have been granted any right, option
or warrant, conditional or otherwise, to acquire beneficial ownership of more
than 5% of any class or series of capital stock of the Company (including the
Shares), other than acquisitions for bona fide arbitrage purposes only and other
than as disclosed in a Schedule 13G on file with the Commission prior to the
date of this Offer Purchase, (ii) any such person, entity or group that prior to
the date of the Offer to Purchase had filed such a Schedule 13G with the
Commission has acquired or proposes to acquire, through the acquisition of
stock, the formation of a group or otherwise, beneficial ownership of 1% or more
of any class or series of capital stock of the Company (including the Shares),
or shall have been granted any right, option or warrant, conditional or
otherwise, to acquire beneficial ownership of 1% or more of any class or series
of capital stock of the Company (including the Shares), other than for bona fide
arbitrage purposes, (iii) any person or group shall have entered into or amended
a definitive agreement or an agreement in principle or made a proposal with
respect to a tender offer or exchange offer or a merger, consolidation or other
business combination with or involving the Company or (iv) any person shall have
filed a Notification and Report Form under the HSR Act (or amended a prior
filing to increase the applicable filing threshold set forth therein) or made a
public announcement reflecting an intent to acquire the Company or any
subsidiary or significant assets of the Company;
(g) any required waiver, approval, permit, extension, authorization or
consent of any governmental authority or agency (including those described or
referred to in Section 15 of the Offer to Purchase) shall not have been obtained
on terms satisfactory to Purchaser in its reasonable discretion;
(h) Parent or Purchaser shall have reached an agreement or understanding
with the Company providing for termination of the Offer, or Parent, Purchaser or
any other affiliate of Parent shall have entered into a definitive agreement or
announced an agreement in principle with the Company providing for a merger or
other business combination with the Company or the purchase of stock or assets
of the Company;
(i) (x) any material contractual right of the Company or any of its
subsidiaries or affiliates shall be impaired or otherwise adversely affected or
any material amount of indebtedness of the Company or any of its subsidiaries,
joint ventures or partnerships shall become accelerated or otherwise become due
before
7
<PAGE>
its stated due date, in either case, with or without notice or the lapse of time
or both, as a result of the transactions contemplated by the Offer or the
Proposed Merger, (y) any covenant, term or condition in any of the Company's or
any of its subsidiaries', joint ventures' or partnerships' instruments,
licenses, or agreements is or may be materially adverse to the value of the
Shares in the hands of Purchaser (including, but not limited to, any event of
default that may ensue as a result of the consummation of the Offer or the
Proposed Merger or the acquisition by Parent of control of the Company) or (z)
other than amendments publicly announced by the Company prior to December 23,
1998, the Rights Agreement shall have been amended in any material respect; or
(j) Purchaser shall have determined in its reasonable discretion that
Section 2115 of the California General Corporation Law (the "CGCL") applies to
the Offer or the Proposed Merger;
which, in the reasonable judgment of Parent or Purchaser in any such case, and
regardless of the circumstances (including any action or inaction by Parent or
Purchaser or any of their affiliates) giving rise to any such condition, makes
it inadvisable to proceed with such acceptance for payment.
The foregoing conditions are for the sole benefit of Parent and Purchaser
and may be asserted by Parent or Purchaser regardless of the circumstances
giving rise to any such condition or may be waived by Parent or Purchaser in
whole or in part at any time and from time to time in their reasonable
discretion. The failure by Parent or Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right; the waiver
of any such right with respect to particular facts and other circumstances shall
not be deemed a waiver with respect to any other facts and circumstances; and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time. Any determination by Parent or Purchaser concerning
any condition or event described in this Section 9 shall be final and binding on
all parties.
7. LEGAL PROCEEDINGS
The discussion set forth in Section 17 of the Offer to Purchase, Section 10
of the First Supplement and Section 10 of the Second Supplement is hereby
amended and supplemented as follows:
COURT OF CHANCERY OF THE STATE OF DELAWARE
On December 31, 1998, the Delaware Supreme Court issued a written opinion
affirming on alternative legal grounds the Delaware Court of Chancery's final
order invalidating the Rights Agreement Amendment. The Delaware Supreme Court
held the Rights Agreement Amendment invalid under Section 141(a) of the DGCL
because it "impermissibly circumscribes the board's statutory power" and the
power of the Company Board to redeem the Rights in order to facilitate a
transaction that would serve the stockholders' best interests.
On January 7, 1999, Parent filed an amended complaint in its lawsuit in the
Delaware Court of Chancery against the Company, the Company Board and Cadence
(the "Amended Complaint"). The Amended Complaint alleges that the members of the
Company Board, aided and abetted by Cadence, continue to breach their fiduciary
duties in excluding Parent from the process of selling the Company and failing
to maximize shareholder value. The Amended Complaint seeks: (i) to enjoin
consummation of the proposed Cadence merger; (ii) to invalidate the Termination
Fee, the Reimbursement Fee and the Lock-up Option; (iii) to require the Company
to postpone the Special Meeting to enable the dissemination of new information
regarding the Offer and the Proposed Merger to stockholders; (iv) to declare
that all proxies received prior to November 10, 1998 shall remain valid and be
voted unless subsequently amended by the record owner of the shares; and (v) to
require the Company to vote all proxies received in favor of the Proposals in
accordance with their terms.
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PATENT LITIGATION
On January 6, 1999, Parent filed its motion for summary judgment with the
Special Master regarding the Company's claims for damages caused by Parent's
alleged infringement. Pre-trial conferences are scheduled with the Oregon
District Court for January 13 and 14, 1999.
8. MISCELLANEOUS
The discussion set forth in Section 18 of the Offer to Purchase, Section 12
of the First Supplement and Section 12 of the Second Supplement is hereby
amended and supplemented as follows:
Pursuant to Rule 14d-3 of Regulation 14D under the Exchange Act, Parent and
Purchaser have filed with the Commission amendments to the Schedule 14D-1,
together with exhibits, furnishing certain additional information with respect
to the Offer. The Schedule 14D-1, and any amendments thereto, including
exhibits, may be inspected at, and copies may be obtained from the same places
and in the same manner as set forth in Section 7 of the Offer to Purchase except
that they will not be available at the regional offices of the Commission.
January 7, 1999 MGZ Corp.
9
<PAGE>
Facsimile copies (with manual signatures) of the revised Letter of
Transmittal will be accepted. The revised Letter of Transmittal and certificates
for Shares and any other required documents should be sent or delivered by each
stockholder of the Company or such stockholder's broker, dealer, commercial
bank, trust company or other nominee to the Depositary at one of the addresses
set forth below
THE DEPOSITARY FOR THE OFFER IS:
IBJ WHITEHALL BANK & TRUST COMPANY
<TABLE>
<S> <C> <C>
BY MAIL: BY FACSIMILE: BY HAND OR OVERNIGHT
P.O. Box 84 Bowling Green (212) 858-2611 DELIVERY:
Station New York, New York Attn: Reorganization Dept. One State Street
10274-0084 New York, New York 10004
Attn: Reorganization Dept. Attn: Reorganization Dept.
Securities Processing Window
SC-1
CONFIRM RECEIPT OF FACSIMILE
BY TELEPHONE:
(212) 858-2103
</TABLE>
Any questions or requests for assistance or additional copies of the Offer
to Purchase, the First Supplement, this Second Supplement and the revised Letter
of Transmittal, and other tender offer materials, may be directed to the Dealer
Manager or the Information Agent at their respective addresses and telephone
numbers listed below. Stockholders may also contact their broker, dealer,
commercial bank, trust company or other nominee for assistance concerning the
Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
156 FIFTH AVENUE NEW YORK,
NEW YORK 10010
(212) 929-5500 (CALL COLLECT)
OR
CALL TOLL-FREE (800) 322-2885
THE DEALER MANAGER FOR THE OFFER IS:
SALOMON SMITH BARNEY
Seven World Trade Center
New York, New York 10048
<PAGE>
Exhibit (a)(64)
MENTOR GRAPHICS INCREASES OFFER TO $15.00 CASH PER SHARE
-- MENTOR PROPOSES MERGER AGREEMENT TO ACQUIRE
REMAINING QUICKTURN SHARES AT SAME PRICE --
WILSONVILLE, OREGON, JANUARY 6, 1999 -- Mentor Graphics Corporation (Nasdaq:
MENT) today increased the price in its tender offer for 2,100,000 shares of
Quickturn Design Systems, Inc. (Nasdaq: QKTN) to $15.00 cash per share from
$14.00 cash per share. Those shares, together with the 591,500 shares of
Quickturn stock Mentor already owns, would result in Mentor owning a total of
14.9% of Quickturn's outstanding stock, the maximum amount that can be acquired
without triggering Quickturn's poison pill.
Mentor said that if more than 2,100,000 shares are validly tendered, Mentor's
purchases pursuant to the tender offer will be made as nearly as practicable on
a pro rata basis. The tender offer will also be subject to satisfaction of
certain conditions, including a new condition that the independent nominees
proposed by Mentor be elected at the special meeting. The Mentor offer and the
revised proposed second-step $15.00 per share cash merger are not conditioned on
the invalidation of any provision of the Cadence merger agreement.
The amended offer is scheduled to expire at 12:00 midnight, New York City time,
on Thursday, January 21, 1999, unless extended. Mentor said it intends to use
available cash and working capital to consummate the revised $15.00 tender
offer.
Mentor remains committed to seeking to negotiate a merger agreement with
Quickturn to acquire the balance of the shares at the same cash price paid in
the tender offer. The proposed second-step merger would be subject to certain
conditions, including negotiation of a merger agreement, due diligence and
securing necessary financing. Mentor believes it will be able to confirm with
its lenders that existing bank financing commitments, together with other
available funds, are sufficient to allow it to complete the proposed $15.00 cash
per share second-step merger with Quickturn. (Mentor's banks recently confirmed
that under its existing credit arrangements all such funds were available to
finance the $14.00 cash per share merger proposal.)
Mentor President and Chief Executive Officer Dr. Walden C. Rhines said: "Our
increased offer allows Quickturn stockholders to receive $15 per share for part
of
<PAGE>
their shares shortly after the election of our independent nominees. We will
continue to seek to invalidate the egregious break-up fees, lock-up options and
no-shop provisions in the Cadence merger agreement to enable the newly elected
board to freely conduct an auction of Quickturn to the highest bidder."
Dr. Rhines added: "We fully recognize the critical importance of being
successful in invalidating the restrictive provisions of the Cadence agreement
in the Delaware courts. To maximize value, the new board cannot be bound by
these provisions, particularly the no-shop provision that would trigger the
payment of breakup fees and severely limit the Quickturn board's ability to
permit Mentor to perform due diligence to see if Quickturn is worth more than
$15 per share. We believe that, following a favorable ruling in the litigation,
the new board would then have the best opportunity to conduct an auction to
maximize the sale price for the benefit of all Quickturn stockholders. Mentor
stands ready to consider increasing its offer price and the price to be paid per
share in a negotiated merger transaction if negotiation and due diligence
demonstrate greater value of Quickturn to Mentor.
"Quickturn stockholders will clearly benefit by being able to choose $15 per
share in immediate cash in our tender offer. Our proposed $15 per share
negotiated merger, and the Cadence deal, together would serve as a floor for the
new directors to work to maximize values. Since the election of Mentor's slate
of independent nominees to the Quickturn board would not in any way give Cadence
or Quickturn a right to terminate their agreement, stockholders have nothing to
lose and everything to gain by replacing the incumbent Quickturn board with new
independent nominees," Dr. Rhines concluded.
In order to acquire shares in a timely fashion and announce a proration number,
if any, at the earliest practicable date following completion of the tender
offer, guarantees of delivery of shares will not be accepted pursuant to the
offer.
As of the close of business on Tuesday, January 5, 1999, 4,530,875 shares of
Quickturn common stock had been validly tendered in the offer, which, together
with the 591,500 shares already owned by Mentor, represent approximately 28.3%
of Quickturn's outstanding common stock (based upon 18,095,580 shares
outstanding as of November 30, 1998). The shares tendered represent 25% of the
outstanding common stock.
<PAGE>
Mentor's Offer to Purchase, proxy solicitation materials and related documents
are available on a Mentor World Wide Web site at http://www.mentorg.com/file.
The Dealer Manager for the offer is Salomon Smith Barney. The Information Agent
for the Offer is MacKenzie Partners, Inc., which can be reached toll-free at
800-322-2885 or by collect call at 212-929-5500.
Contacts: Anne M. Wagner/Ry Schwark Todd Fogarty/Roy Winnick
Mentor Graphics Corporation Kekst and Company
503/685-1462 212/521-4800
# # #
<PAGE>
MENTOR GRAPHICS URGES REJECTION OF QUICKTURN'S INTIMIDATION
TACTICS - CALLS THEM MISLEADING AND SELF-SERVING
-- MENTOR CHALLENGES CADENCE TO ALLOW BEST BID
TO WIN IN LIMITED DURATION AUCTION --
WILSONVILLE, OREGON, JANUARY 7, 1999 -- Mentor Graphics Corporation (Nasdaq:
MENT) stated today that it believes that the intimidation tactics being used by
the board and management of Quickturn Design Systems, Inc. (Nasdaq: QKTN)
against their own stockholders to protect their deal with Cadence Design
Systems, Inc. (NYSE: CDN), their preferred suitor, are misleading and
self-serving and should be rejected by Quickturn stockholders.
Mentor believes the choice for Quickturn stockholders is clear. Having been
found to have breached their fiduciary duties in adopting an illegal
anti-takeover entrenchment device and having been proved to have left money on
the table once already, the Quickturn directors have shown they cannot be
trusted to maximize values for Quickturn stockholders.
Mentor President and Chief Executive Officer Dr. Walden C. Rhines said: "Our
motives have been consistent from day one. Mentor's emulation business fits with
Quickturn's and offers synergies that cannot be even approached by any other
bidder -- especially Cadence."
Dr. Rhines emphasized: "We are not seeking to knock out the Cadence deal -- only
a fair opportunity to top it. We will not take any action to prevent the Cadence
deal from meeting the conditions for a pooling-of-interests transaction, if it
currently would otherwise qualify.
"We will continue to seek to invalidate the egregious break-up fees, lock-up
options and no-shop provisions in the Cadence merger agreement to enable the
newly elected board to freely conduct an auction of Quickturn to the highest
bidder. Until there is a judicial determination that these provisions are
invalid, in whole or in part, we will not request that the new board permit us
to conduct due diligence unless we have made a clearly superior proposal."
Mentor believes that should the Delaware court invalidate the provisions of the
no-shop condition restricting the Quickturn board's ability to permit Mentor to
conduct due diligence (and likewise invalidate the other offensive Cadence
merger provisions), thereby providing a level playing field for the two
announced
<PAGE>
bidders, Mentor would be able to determine promptly if it is prepared to make a
superior proposal.
Dr. Rhines also challenged Cadence to participate in an immediate auction,
stating: "Mentor is prepared to bring this matter to a quick resolution and let
the highest bid win. Mentor proposes that our third-party advisors (who will
sign a confidentiality agreement protecting Quickturn from its unjustified
concerns about sharing such information with its `fiercest competitor')
undertake appropriate due diligence of limited duration. The Quickturn board
could then fulfill its fiduciary duties and let the highest bid win. With no
limitation on the amount of stock it can pay, why is Cadence afraid of a prompt
auction?"
Dr. Rhines concluded: "Quickturn stockholders have only one good choice to
maximize value. They should vote the gold-striped proxy to elect an independent
board of directors who may be able to get stockholders a higher offer in an
auction following judicial relief from the incumbent board's egregious merger
agreement provisions. Stockholders have nothing to lose, since Mentor will take
no action to give Cadence a right to walk from their binding contract with
Quickturn unless we put a superior proposal on the table."
Mentor repeated that it fully recognizes the critical importance of being
successful in invalidating the provisions of the Cadence agreement in the
Delaware courts. To maximize values for Quickturn stockholders, the new board
cannot be bound by these provisions, particularly the no-shop provision that
would trigger the payment of break-up fees that severely limit the board's
ability to permit Mentor to perform due diligence to see if Quickturn is worth
more than $15.00 per share. Following a favorable ruling in the litigation,
Mentor believes that the new board would then have the best opportunity to
conduct an auction to maximize the sale price for the benefit of all Quickturn
stockholders. Mentor understands that it must be ready to consider increasing
its offer price and the price to be paid per share in a negotiated merger
transaction if it is successful in the litigation and if due diligence
demonstrates greater value of Quickturn to Mentor.
Mentor said that Quickturn's and Cadence's criticism of Mentor's transaction
structure and financing status is self-serving. Both companies know full well
that the only reason for the back-end merger structure rather than a tender
offer for 100% of the company is Cadence's 19.9% lock-up option and Synopsys's
warrants (which together equate to 4,619,100 shares). Moreover, Mentor will
<PAGE>
commit to drop its bid, if it is not once again able to have its banks confirm
within ten business days that the funds to be provided under its credit
agreement are available for its $15.00 back-end negotiated merger. Mentor does
not believe Quickturn's and Cadence's criticisms of Mentor's financing abilities
is anything more than a red herring. As previously announced, Mentor's banks had
confirmed that under its existing arrangement all such funds were available to
finance the prior $14.00 merger proposal.
As announced yesterday, Mentor increased its tender offer for 2.1 million shares
to $15 and stated that it was prepared to acquire the balance of Quickturn in a
negotiated merger for the same price, subject to completion of satisfactory due
diligence and negotiation and execution of a definitive merger agreement.
Mentor's Offer to Purchase, proxy solicitation materials and related documents
are available on a Mentor World Wide Web site at http://www.mentorg.com/file.
The Dealer Manager for the offer is Salomon Smith Barney. The Information Agent
for the Offer is MacKenzie Partners, Inc., which can be reached toll-free at
800-322-2885 or by collect call at 212-929-5500.
Contacts: Anne M. Wagner/Ry Schwark Todd Fogarty/Roy Winnick
Mentor Graphics Corporation Kekst and Company
503/685-1462 212/521-4800
