<PAGE>
ZYCAD CORPORATION LOGO
ZYCAD CORPORATION
47100 BAYSIDE PARKWAY
FREMONT, CALIFORNIA 94538
------------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
DECEMBER 5, 1996
------------------------
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of Zycad
Corporation (the "Company"), a Delaware corporation, will be held on Thursday,
December 5, 1996 at 3:30 p.m., Pacific Standard Time, at the Company's principal
executive offices at 47100 Bayside Parkway, Fremont, California, for the
following purposes:
1. To amend the Certificate of Incorporation of the Company to increase the
number of shares of authorized Common Stock from 30,000,000 shares to
40,000,000 shares.
2. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only stockholders of record at the close of the business on October 15, 1996
are entitled to notice of and to vote at the meeting and at any continuation or
adjournment thereof.
All stockholders are cordially invited to attend the meeting in person.
However, to ensure your representation at the meeting, you are urged to vote,
sign, date and return the enclosed proxy as promptly as possible in the
postage-paid envelope enclosed for that purpose.
Any stockholder attending the meeting may vote in person even if he or she
has returned a proxy.
BY ORDER OF THE BOARD OF DIRECTORS
Douglas E. Klint
CORPORATE SECRETARY
Fremont, California
November 8, 1996
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
IN ORDER TO ASSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE REQUESTED TO
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE AND
RETURN IT IN THE ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
<PAGE>
ZYCAD CORPORATION
----------------
PROXY STATEMENT
---------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of Zycad
Corporation, a Delaware corporation ("Zycad" or the "Company"), for use at the
Special Meeting of Stockholders to be held Thursday, December 5, 1996 at 3:30
p.m., Pacific Standard Time, and at any adjournment thereof. The Special Meeting
will be held at Zycad's principal executive offices, 47100 Bayside Parkway,
Fremont, California 94538. The Company's telephone number at this address is
(510) 623-4400.
The Company intends to mail this Proxy Statement to Stockholders on or about
November 8, 1996.
BACKGROUND
The Company currently has 30,000,000 shares of common stock authorized. The
purpose of this Proxy Statement is to request an increase in the number of
authorized shares of common stock to 40,000,000 shares. This action is necessy
for the following reasons: 1) The Company's $10,000,000 debenture financing in
May 1996 (the "Debentures") is convertible into common stock at a discount to
current market price of the Company's common stock ranging from 15% to 20%
depending on the date of the conversion. In the worst case, if the stock is
trading at or below $2.00 per share and the Debentures are converted, the
Company would need at least an additional 2,000,000 shares beyond the 3,027,652
shares that have been currently set aside to avoid a default due to a conversion
deficiency. 2) The Company needs to have sufficient shares available to finance
GateField's working capital needs in early 1997. The Company's preferred method
of financing would be a potential rights offering to existing shareholders in
early 1997. The expected amount of the financing would be between $5 million and
$10 million depending on the progress of GateField business at the end of Fourth
Quarter 1996 and their working capital needs in 1997. 3) Also, additional shares
may be used for other needs of the Company, such as acquisitions and other such
transactions.
It must be emphasized that these additional shares of Common Stock are
required to keep the Company from triggering a default on a potential conversion
deficiency of the Debentures and to fund GateField growth in 1997. Accordingly,
management recommends a vote in favor of increasing the number of shares of
common stock from 30,000,000 to 40,000,000 shares.
RECORD DATE AND SHARES OUTSTANDING
Stockholders of record at the close of business on October 15, 1996 (the
"Record Date") are entitled to notice of and to vote at the meeting. At the
Record Date, 21,459,277 shares of the Company's Common Stock ("Common Stock"),
$.10 par value, were issued and outstanding. The closing price of the Common
Stock on the Record Date, as reported by the NASDAQ National Market, was $2.09
per share.
REVOCABILITY OF PROXIES
Any person giving a proxy in the form accompanying this Proxy Statement has
the power to revoke it any time before it is exercised. It may be revoked by
filing with the Corporate Secretary of the Company at the Company's principal
executive office, 47100 Bayside Parkway, Fremont, California 94538, an
instrument of revocation or a duly executed proxy bearing a later date, or it
may be revoked by attending the meeting and voting in person.
VOTING AND SOLICITATION
On each matter being presented at the Special Meeting, stockholders are
entitled to one vote for each share of Common Stock held.
<PAGE>
The Company will bear the entire cost of solicitation, including
preparation, assembly, printing and mailing of this Proxy Statement, the proxy
card and any additional material furnished to stockholders. The solicitation of
proxies by mail may be supplemented by telephone, telegram, video or personal
solicitation by directors, officers or employees of the Company. No additional
compensation will be paid to these persons for any such services. In addition,
The Company has retained the services of Beacon Hill Partners, Inc. as a paid
solicitor to solicit proxies for an estimated fee of $3,500 plus out-of-pocket
expenses. The Company may reimburse brokerage firms and other persons
representing beneficial owners of shares for their expenses in forwarding
solicitation material to such beneficial owners. Except as described above, the
Company does not intend to solicit proxies other than by mail.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The required quorum for the transaction of business at the Special Meeting
is a majority of the shares of Common Stock issued and outstanding on the Record
Date (excluding treasury stock). Shares that are voted "FOR", "AGAINST" or
"WITHHELD FROM" a matter are treated as being present at the meeting for
purposes of establishing a quorum and are also treated as votes eligible to cast
by the Common Stock present in person or represented by proxy at the Special
Meeting and "entitled to vote on the subject matter" (the "Votes Cast") with
respect to such matter.
While there is no definitive statutory or case law authority in Delaware as
to the proper treatment of abstentions, the Company believes that abstentions
should be counted for purposes of determining both the presence or absence of a
quorum for the transaction of business and the total number of Votes Cast with
respect to a particular matter. In the absence of controlling precedent to the
contrary, the Company intends to treat abstentions in this manner. Accordingly,
an abstention has the same effect as a vote against a proposal. In a 1988
Delaware case, BERLIN V. EMERALD PARTNERS, the Delaware Supreme Court held that,
while broker non-votes should be counted for purposes of determining the
presence or absence of a quorum for the transaction of business, broker
non-votes with respect to proposals such as those set forth in this Proxy
Statement should not be considered "Votes Cast" and, accordingly, will not
affect the determination as to whether the requisite majority of Votes Cast has
been obtained with respect to a particular matter other than the amendment of
the Certificate of Incorporation.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company that are intended to be included in
the proxy statement relating to the Company's 1997 Annual Meeting of
Stockholders must be received by the Company no later than December 29, 1996 in
order that they may be considered for possible inclusion in the proxy statement
and form of proxy relating to that meeting.
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of the Record Date (I) by each person
known by the Company to own beneficially more than five percent (5%) of the
Company's Common Stock, (ii) by each of the Company's directors, (ii) by each of
the executive officers named in the Summary Compensation Table, and (iv) by all
executive officers and directors of the Company as a group.
SHARES OF COMMON STOCK BENEFICIALLY OWNED
<TABLE>
<CAPTION>
APPROXIMATE
AMOUNT PERCENT
NAME OWNED OWNED
- ----------------------------------------------------------------- ------- -----------
<S> <C> <C>
Phillips W. Smith................................................ 508,293 2.4%
James Fiebiger................................................... 20,000 (1) *
Benjamin Huberman................................................ 110,000(2) *
Douglas E. Klint................................................. 6,043 (3) *
Charles R. Olson (4)............................................. -- *
Horst G. Sandfort................................................ 60,000 (5) *
All directors and executive officers as a group (6 persons)...... 704,336(6) 3.3%
</TABLE>
- ------------------------
* Less than (1) percent.
(1) Represents 20,000 shares subject to warrants held by Dr. Fiebiger that are
exercisable within 60 days of the Record Date.
(2) Includes 80,000 shares subject to warrants held by Mr. Huberman that are
exercisable within 60 days of the Record Date.
(3) Represents 6,042 shares subject to options held by Mr. Klint that are
exercisable within 60 days of the Record Date.
(4) Mr. Olson has resigned from the Company.
(5) Represents 60,000 shares subject to options held by Mr. Sandfort that are
exercisable within 60 days of the Record Date.
(6) Includes 166,042 share subject to options and warrants held by four persons
that are exercisable within 60 days of the Record Date.
DIRECTOR COMPENSATION
Members of the Board of Directors who are not employees of the Company
receive a retainer of $2,500 per quarter plus a fee of $1,000 for attendance at
each Board and Board Committee meeting and are reimbursed for their expenses in
attending meetings of the Board of Directors. On September 10, 1990, Mr.
Huberman received warrants from the Company entitling him to purchase 50,000
shares of the Company's Common Stock at an exercise price of $1.00 per share,
the then market value. The warrants granted on September 10, 1990, did not
become exercisable until six months from the issue date (sixth month anniversary
date), at which time these warrants became exercisable for 16.6% of such shares
and became exercisable cumulatively as to 2.78% of such shares on the seventh
month anniversary date and on each monthly anniversary date thereafter. On
August 16, 1993, Mr. Huberman received additional warrants from the Company
entitling him to purchase 30,000 shares of the Company's Common Stock at an
exercise price of $2.06 per share, the then market value. These warrants become
exercisable cumulatively for 10,000 shares on each yearly anniversary date. On
February 4, 1994, Dr. Fiebiger received warrants from the Company entitling him
to purchase 50,000 shares of the Company's Common Stock at an exercise price of
$3.63 per share, the then market value. These warrants become exercisable for
10,000
3
<PAGE>
shares on each yearly anniversary date. All warrants expire eight years after
their respective issue dates or 90 days after resignation from the Board of
Directors, whichever occurs first.
PROPOSAL ONE
AMENDMENT TO CERTIFICATE OF INCORPORATION
The Certificate of Incorporation of the Company, as currently in effect,
provides that authorized capital stock shall consist of 30,000,000 shares of
Common Stock, $0.10 par value, and 2,000,000 shares of Preferred Stock. The
proposed amendment would increase the number of shares of Common Stock
authorized for issuance by 10,000,000 to a total of 40,000,000 shares. As more
fully described below, the proposed amendment is intended to provide the Company
with enough shares to avoid a default under its Debentures due to any potential
conversion deficiency and the flexibility to meet its future needs for
unreserved Common Stock.
The stockholders are being asked to approve such amendment to the
Certificate of Incorporation. The proposed amendment would give the Board the
authority to issue additional shares of Common Stock without requiring future
stockholder approval of such issuance's, except as may otherwise be required by
applicable law.
REASONS FOR THE PROPOSED AMENDMENT
The Company's number of authorized shares of Common Stock is 30,000,000. As
of October 15, 1996, 21,459,277 shares of the Common Stock were issued and
outstanding; 135,000 shares were reserved for issuance upon exercise of certain
stock warrants; 3,488,646 shares were reserved for issuance under the Company's
employee stock option plans; 200,000 shares were reserved for issuance under the
1995 Directors Plan; 3,027,652 shares were reserved for conversion of the
balance of the Company's outstanding Debentures and accompanying Stock Warrants;
and 188,253 shares were reserved for issuance under the Company's Employee Stock
Purchase Plan; leaving only 1,501,172 shares of Common Stock available for
future issuance. The number of shares remaining available is not considered
adequate for the Company's future possible requirements.
The Company's Board of Directors believes that it is necessary to increase
the number of authorized shares of Common Stock to the proposed level in order
to provide a reserve of shares available for issuance in the event the Company's
outstanding Debentures convert into Common Stock at a conversion price less than
$2.58. The Company's Board of Directors also believes that the increased number
of shares will be needed in 1997 to provide financing for Gatefield and also
provide the flexibility to effect other possible actions such as financings,
corporate mergers, acquisitions, and for other general corporate purposes.
Having such additional authorized Common Stock available for issuance in the
future would allow the Board of Directors to issue shares of Common Stock
without the delay and expense associated with seeking stockholder approval.
Elimination of such delays and expense occasioned by the necessity of obtaining
stockholder approval will better enable the Company, among other things, to
engage in financing transactions and acquisitions as well as to take advantage
of changing market and financial conditions on a more competitive basis as
determined by the Board of Directors.
POSSIBLE EFFECTS OF THE AMENDMENT
If the proposed amendment is approved, the Board of Directors may cause the
issuance of additional shares of Common Stock without further vote of
stockholders of the Company, except as provided under applicable law. Current
holders of Common Stock have no preemptive or similar rights, which means that
current stockholders do not have a prior right to purchase any new issue of
capital stock of the Company in order to maintain their proportionate ownership
thereof.
The increase in authorized Common Stock will not have any immediate effect
on the rights of existing stockholders. To the extent that the additional
authorized shares are issued in the future, they will decrease
4
<PAGE>
the existing stockholders' percentage equity ownership and, depending on the
price at which they are issued, could be dilutive to the existing stockholders.
In addition, the Board of Directors could use authorized but unissued shares
to create impediments to a takeover or a transfer of control of the Company.
Accordingly, an effect of the increase in the number of authorized shares of
Common Stock may be to deter a future takeover attempt, which holders of Common
Stock may deem to be in their best interest or in which holders of Common Stock
may be offered a premium for their shares over the market price.
The Board of Directors is not currently aware of any attempt to take over or
acquire the Company. While it may be deemed to have potential anti-takeover
effects, the proposed amendment to increase the authorized Common Stock is not
prompted by any specific effort or takeover threat currently perceived by
management. Moreover, management does not currently intend to propose
anti-takeover measures in the foreseeable future.
REQUIRED VOTE; RECOMMENDATION OF THE BOARD OF DIRECTORS
The affirmative vote of a majority of the shares of Common Stock issued and
outstanding on the Record Date will be required to approve the amendment to the
Certificate of Incorporation. The effect of an abstention is the same as that of
a vote against the proposal. If the proposed amendment to the Certificate of
Incorporation is approved by the stockholders, such amendment will become
effective upon filing an amendment to the Certificate of Incorporation with the
Delaware Secretary of State. If the amendment is authorized, the text of the
first paragraph of Article 4 of the Company's Certificate of Incorporation will
be amended to read as follows:
"The corporation is authorized to issue a total of 42,000,000 shares of all
classes of stock, of which, 40,000,000 shall be shares of Common Stock with a
par value of $0.10 per share and 2,000,000 shall be shares of series Preferred
Stock with a par value of $0.10 per share."
If the proposed amendment to the Certificate of Incorporation is not so
approved, the Company's authorized capital stock will not change.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO
THE COMPANY'S CERTIFICATE OF INCORPORATION.
CERTAIN TRANSACTIONS
The following table sets forth information with respect to all executive
officers of the Company who had indebtedness in excess of $60,000 outstanding
during the past fiscal year.
<TABLE>
<CAPTION>
LARGEST
PRINCIPAL PRINCIPAL
AMOUNT BALANCE AT
OUTSTANDING DECEMBER 31,
NAME/PRINCIPAL POSITION LOANS LOAN DATE INTEREST RATE MATURITY DATE DURING 1995 1995
- ------------------------- --------- ------------------- ----------------- ------------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Phillips W. Smith ....... $1,500,000 August 27, 1992 one percent August 27, 1995 1,500,000 0
President & CEO for $600,000 and over Prime for $600,000 and
September 1, 1993 rate adjusted September 1, 1995
for $900,000 quarterly for $900,000
</TABLE>
THESE LOANS WERE PAID IN FULL IN AUGUST AND SEPTEMBER, 1995. These loans
were made in connection with the purchase and financing of real property by Dr.
Smith and in connection with the exercise of stock options by Dr. Smith. Both
loans are documented with full recourse Promissory Notes signed by Dr. Smith.
These loans were secured by certain real property including Dr. Smith's personal
residence; as well as 1,200,000 shares of Common Stock of the Company owned by
Dr. Smith of which 900,000 shares were issued pursuant to the exercise of his
stock options and 300,000 shares were previously purchased by him in the open
market.
5
<PAGE>
OTHER BUSINESS
The Board of Directors knows of no other business that will be presented for
consideration at the meeting. If other matters are properly brought before the
meeting, however, it is the intention of the persons named in the accompanying
proxy to vote the shares of represented thereby on such matters in accordance
with their best judgment.
BY ORDER OF THE BOARD OF DIRECTORS
Douglas E. Klint
SECRETARY
FREMONT, CALIFORNIA
November 8, 1996
6
<PAGE>
ZYCAD CORPORATION
47100 BAYSIDE PARKWAY
FREMONT, CA 94538
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The Undersigned stockholder of Zycad Corporation, A Delaware corporation
(the "Company"), hereby acknowledges receipt of the Notice of Special Meeting of
Stockholders and Proxy Statement, each dated November 8, 1996, and hereby
appoints Phillips W. Smith and Douglas E. Klint, and each of them, proxies and
attorneys-in-fact, with full power to represent the undersigned at the 1996
special Meeting of Stockholders of Zycad Corporation to be held on Thursday,
December 5, 1996 at 3:30 p.m., local time, at the Company's Headquarters, 47100
Bayside Parkway, Fremont, California, and at any adjournment thereof, and to
vote all shares of Common Stock which the undersigned would be entitled to vote
if then and there personally present, on the matters set forth on the reverse
side. Either of such attorneys or substitutes shall have and may exercise all of
the powers of said attorneys-in-fact hereunder.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE ELECTION OF DIRECTORS, AND FOR APPOINTMENT OF
DELOITTE AND TOUCHE LLP AS INDEPENDENT PUBLIC ACCOUNTANTS, AND AS SAID PROXIES
DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
1. Proposal to amend the Certificate of Incorporation of the Company to
increase the number of shares of authorized Common Stock from 30,000,000
shares to 40,000,000 shares.
/ / FOR / / AGAINST / / ABSTAIN
/ / Mark here for address change and note below
And upon such other matter or matters which may properly comes before the
meeting and any adjournment thereof.
This proxy should be dated, signed by the stockholder exactly as his or her
name appears herein, and returned promptly in the enclosed envelope. Persons
signing in a fiduciary capacity should so indicate. If proxies are held by joint
tenants or as community property, both should sign.
Signature: ------------------------------------- Date: ------------------
Signature: ------------------------------------- Date: ------------------
