<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
ORCAD, INC.
(Name of Subject Company)
CADENCE DESIGN SYSTEMS, INC.
CDSI ACQUISITION CORPORATION
(Bidders)
COMMON STOCK, $.01 PAR VALUE
(Title of Class of Securities)
685568 10 7
(CUSIP Number of class of Securities)
------------------------
R.L. SMITH MCKEITHEN
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
CADENCE DESIGN SYSTEMS, INC.
2655 SEELY AVENUE, BUILDING 5
SAN JOSE, CALIFORNIA 95134
408-943-1234
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidder)
COPIES TO:
ANDREW E. BOGEN
GIBSON, DUNN & CRUTCHER LLP
333 SOUTH GRAND AVENUE
LOS ANGELES, CA 90071
(213) 229-7159
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
TRANSACTION VALUATION AMOUNT OF FILING FEE
<S> <C>
$121,177,095* $24,235
</TABLE>
* For purposes of fee calculation only. The total transaction value is based
on 9,321,315 shares of common stock (the "Shares"), outstanding as of June
14, 1999 multiplied by the offer price of $13.00 per Share.
The amount of the filing fee calculated in accordance with Regulation
240.0-11 of the Securities Exchange Act of 1934 equals 1/50 of 1% of the value
of the Shares to be purchased.
/ / CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY RULES 0-11(A)(2)
AND IDENTIFY THE FILING WITH WHICH THE OFFSETTING FEE WAS PREVIOUSLY PAID.
IDENTIFY THE PREVIOUS FILING BY REGISTRATION STATEMENT NUMBER, OR THE FORM
OR SCHEDULE AND THE DATE OF ITS FILING.
<TABLE>
<S> <C> <C> <C>
Amount previously paid: None Filing party: Not Applicable
Form or registration no.: Not Applicable Date filed: Not Applicable
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CUSIP NO. 685568 10 7 14D-1 Page 2 of 8 Pages
- --------------------------------------------------------------------------------
1. NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Cadence Design Systems, Inc.
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) / /
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS:
WC, BK
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM
2(e) OR 2(f)
/ /
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,621,399 Shares(1)
- --------------------------------------------------------------------------------
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
/ /
- --------------------------------------------------------------------------------
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
38.85%(1)
- --------------------------------------------------------------------------------
10. TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
(1) Cadence Design Systems, Inc. ("Cadence") does not directly own any Shares.
The 3,621,399 Shares are comprised of the following:
(a) 1,758,068 Shares in the aggregate which are the subject of the
Stockholders Agreement dated June 14, 1999 (the "Stockholders Agreement")
which Cadence and CDSI Acquisition Corporation ("Purchaser") have entered
into with the following stockholders of the Company: Wolfram H. Blume,
David Nierenberg, The D3 Family Fund, L.P. and Michael F. Bosworth (the
"Tendering Stockholders"). Pursuant to the Stockholders Agreement, upon
the terms and subject to the conditions therein, each Tendering
Stockholder has agreed to tender to Purchaser all Shares beneficially
owned by such Tendering Stockholder, has granted to Purchaser an option
to purchase such Shares under certain specified circumstances, has agreed
to vote such Shares in favor of approval of the Merger Agreement and the
transactions contemplated thereby and has granted an irrevocable proxy to
Purchaser with respect to such Shares. As a result, Cadence holds voting
power with respect to such shares.
(b) 1,863,331 Shares are the subject of a Stock Option Agreement between
Cadence, the Purchaser and the Company pursuant to which Cadence has the
option to purchase up to 1,863,331 shares of Company Common Stock at an
exercise price of $13.00 per share under certain specified circumstances.
Although not presently exercisable, such option is exercisable upon a
termination of the Merger Agreement in a manner that would entitle
Cadence to receive the Termination Fee (as defined in the Merger
Agreement).
<PAGE>
CUSIP NO. 685568 10 7 14D-1 Page 3 of 8 Pages
- --------------------------------------------------------------------------------
1. NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
CDSI Acquisition Corporation
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) / /
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS:
AF
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM
2(e) OR 2(f)
/ /
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,621,399 Shares(2)
- --------------------------------------------------------------------------------
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
/ /
- --------------------------------------------------------------------------------
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
38.85%(2)
- --------------------------------------------------------------------------------
10. TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
(2) Purchaser does not directly own any Shares. As set forth in footnote 1
above, the 3,621,399 Shares are the subject of the Stockholders Agreement
and the Stock Option Agreement.
<PAGE>
INTRODUCTION
This Tender Offer Statement on Schedule 14D-1 (this "Statement") relates to
the offer by CDSI Acquisition Corporation, a Delaware corporation ("Purchaser"),
and a wholly-owned subsidiary of Cadence Design Systems, Inc., a Delaware
corporation ("Cadence"), to purchase all outstanding shares of common stock,
$.01 par value (the "Shares"), of OrCAD, Inc., a Delaware corporation (the
"Company"), at a price of $13.00 per Share, net to Seller in cash, upon the
terms and subject to the conditions set forth in the Offer to Purchase, dated
June 18, 1999 (the "Offer to Purchase"), and the related Letter of Transmittal
(which together constitute the "Offer"), copies of which are attached hereto as
Exhibits (a)(1) and (a)(2), respectively. The Offer is being made pursuant to an
Agreement and Plan of Merger, dated as of June 14, 1999, by and among Cadence,
Purchaser and the Company (the "Merger Agreement"), which provides, among other
things, that no later than the second business day after the satisfaction or, if
permissible, waiver of the conditions set forth therein (including, without
limitation, the purchase of Shares pursuant to the Offer), Purchaser will be
merged with and into the Company (the "Merger"). The Company will be the
surviving corporation and a wholly-owned subsidiary of Cadence upon completion
of the Merger. Upon consummation of the Merger, each issued Share that is
outstanding immediately prior to the Merger (except for (i) Shares owned by the
Company or Cadence, or by any subsidiary of the Company or Cadence or (ii)
Shares held by a stockholder who has demanded and perfected such stockholder's
demand for appraisal of such stockholder's Shares in accordance with the
Delaware General Corporation Law) will be converted automatically into the right
to receive the amount paid per Share in the Offer, in cash, without interest,
upon surrender of the certificate representing the Share.
The information contained in this Statement concerning the Company,
including, without limitation, information concerning the deliberations,
approvals and recommendations of the Board of Directors of the Company in
connection with the transaction, the opinion of the financial advisor to such
Board of Directors, and the Company's capital structure and financial
information, was supplied by the Company. Neither Purchaser nor Cadence takes
any responsibility for the accuracy of such information.
ITEM 1. ISSUER AND CLASS OF SECURITY SUBJECT TO THE TRANSACTION
(a) The name of the subject company is OrCAD, Inc., which is a Delaware
corporation that has its principal executive offices at 9300 S.W. Nimbus Avenue,
Beaverton, Oregon, 97008.
(b) The class of equity securities being sought is the Company's common
stock. The information set forth in the Offer to Purchase under the caption
"INTRODUCTION" is incorporated herein by reference.
(c) The information concerning the principal market in which the Shares are
traded and certain high and low sales prices for the Shares in such principal
market set forth in the Offer to Purchase under the caption "THE TENDER
OFFER--6. Price Range of the Shares" is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND
(a)--(d) and (g) This Statement is filed by Purchaser and Cadence. The
information concerning the name, state or other place of organization, principal
business and address of the principal office of Purchaser and Cadence, and the
name, age, business address, present principal occupation or employment
(including the name, principal business and address of any corporation or other
organization in which such employment or occupation is conducted), material
occupations, positions, offices or employment during the last five years and
citizenship of each of the executive officers and directors of Purchaser and
Cadence is set forth in the Offer to Purchase under the captions
4
<PAGE>
"INTRODUCTION" and "THE TENDER OFFER--8. Certain Information Concerning Cadence
and Purchaser," and in Schedule I to the Offer to Purchase, is incorporated
herein by reference.
(e) and (f) During the last five years, neither Purchaser, Cadence, nor, to
the knowledge of Purchaser or Cadence, any person listed in Schedule I to the
Offer to Purchase has been (i) convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or (ii) a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting activities subject to,
federal or state securities laws or finding any violations of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS
(a) The information set forth in the Offer to Purchase under the captions
"INTRODUCTION," "THE TENDER OFFER--8. Certain Information Concerning Cadence and
Purchaser," and "THE TENDER OFFER--10. Certain Transactions between Cadence and
the Company" is incorporated herein by reference.
(b) The information set forth in the Offer to Purchase under the captions
"INTRODUCTION," "THE TENDER OFFER--8. Certain Information Concerning Cadence and
Purchaser," "THE TENDER OFFER--10. Certain Transactions between Cadence and the
Company," and "THE TENDER OFFER--11. Contacts with the Company; Background of
the Offer and the Merger" is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
(a) and (b) The information set forth in the Offer to Purchase under the
caption "THE TENDER OFFER--9. Source and Amount of Funds" is incorporated herein
by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSAL OF THE BIDDER
(a)--(e) The information set forth in the Offer to Purchase under the
captions "INTRODUCTION," "THE TENDER OFFER--12. Purpose of the Offer and The
Merger Agreement" and "THE TENDER OFFER--13. The Merger Agreement, the Stock
Option Agreement and the Stockholders Agreement" is incorporated herein by
reference.
(f) and (g) The information set forth in the Offer to Purchase under the
caption "THE TENDER OFFER--17. Effects of the Offer on the Market for Shares;
Nasdaq National Market and Exchange Act Registration" is incorporated herein by
reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
(a) and (b) The information set forth in the Offer to Purchase under the
captions "THE TENDER OFFER--10. Certain Transactions Between Cadence and the
Company," "THE TENDER OFFER--12. Purpose of the Offer and The Merger Agreement"
and "THE TENDER OFFER-- 13. The Merger Agreement, the Stock Option Agreement and
the Stockholders Agreement" is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES
The information set forth in the Offer to Purchase under the captions "THE
TENDER OFFER-- 10. Certain Transactions Between Cadence and the Company," "THE
TENDER OFFER--12. Purpose
5
<PAGE>
of the Offer and The Merger Agreement" and "THE TENDER OFFER--13. The Merger
Agreement, the Stock Option Agreement and the Stockholders Agreement" is
incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The information set forth in the Offer to Purchase under the caption "THE
TENDER OFFER-- 20. Fees and Expenses" is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CADENCE
The information set forth in the Offer to Purchase under the caption "THE
TENDER OFFER-- 8. Certain Information Concerning Cadence and Purchaser" is
incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION
(a) The information set forth in the Offer to Purchase under the caption
"THE TENDER OFFER--12. Purpose of the Offer and The Merger Agreement" and "THE
TENDER OFFER--13. The Merger Agreement, the Stock Option Agreement and the
Stockholders Agreement" is incorporated herein by reference.
(b) and (c) The information set forth in the Offer to Purchase under the
caption "THE TENDER OFFER--19. Certain Legal Matters; Regulatory Approvals" is
incorporated herein by reference.
(d) The information set forth in the Offer to Purchase under the caption
"THE TENDER OFFER--17. Effects of the Offer on the Market for Shares; Nasdaq
National Market and Exchange Act Registration" is incorporated herein by
reference.
(e) The information set forth in the Offer to Purchase under the caption
"THE TENDER OFFER--21. Miscellaneous" is incorporated herein by reference.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, to the extent not otherwise incorporated by reference, is
incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS
(a)(l) Offer to Purchase, dated June 18, 1999
(a)(2) Letter of Transmittal
(a)(3) Notice of Guaranteed Delivery
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9
(a)(7) Form of Summary Advertisement, dated June 18, 1999
(a)(8) Press Release dated June 15, 1999 issued by Cadence
(b)(1) Revolving Credit Agreement, dated September 30, 1998, by and between
ABN-AMBRO Bank and Cadence (incorporated by reference to Exhibit 10.45 from
Cadence's Form 10-Q for the third quarter ended October 3, 1998 (the "1998 Third
Quarter Form 10-Q"))
(b)(2) Amendment, dated October 16, 1998, to the Revolving Credit Agreement,
by and between ABN-AMBRO Bank and Cadence (incorporated by reference to Exhibit
10.46 from the 1998 Third Quarter Form 10-Q)
6
<PAGE>
(c)(1) Agreement and Plan of Merger, dated as of June 14, 1999, by and among
the Company, Purchaser and Cadence
(c)(2) Stock Option Agreement, dated as of June 14, 1999, between the
Company, Purchaser and Cadence
(c)(3) Stockholders Agreement, dated as of June 14, 1999, among the
stockholders of the Company listed on Schedule I thereto, Purchaser and Cadence
(c)(4) Employment Letter, Noncompetition Agreement, and Employee Proprietary
Information and Inventions Agreement between Cadence and Michael F. Bosworth
(incorporated by reference to Exhibit (c)(5) to the Company's Tender Offer
Statement on Schedule 14D-9, dated June 18, 1999).
(c)(5) Employment Letter, Noncompetition Agreement, and Employee Proprietary
Information and Inventions Agreement between Cadence and P. David Bundy
(incorporated by reference to Exhibit (c)(6) to the Company's Tender Offer
Statement on Schedule 14D-9, dated June 18, 1999).
(c)(6) Employment Letter, Noncompetition Agreement, and Employee Proprietary
Information and Inventions Agreement between Cadence and James M. Plymale
(incorporated by reference to Exhibit (c)(7) to the Company's Tender Offer
Statement on Schedule 14D-9, dated June 18, 1999).
(c)(7) Employment Letter, Noncompetition Agreement, and Employee Proprietary
Information and Inventions Agreement between Cadence and William E. Cibulsky
(incorporated by reference to Exhibit (c)(8) to the Company's Tender Offer
Statement on Schedule 14D-9, dated June 18, 1999).
(c)(8) Employment Letter, Noncompetition Agreement, and Employee Proprietary
Information and Inventions Agreement between Cadence and Stuart A. Harrington
(incorporated by reference to Exhibit (c)(9) to the Company's Tender Offer
Statement on Schedule 14D-9, dated June 18, 1999).
(c)(9) Employment Letter, Noncompetition Agreement, and Employee Proprietary
Information and Inventions Agreement between Cadence and Philip J. Kilcoin
(incorporated by reference to Exhibit (c)(10) to the Company's Tender Offer
Statement on Schedule 14D-9, dated June 18, 1999).
(c)(10) Employment Letter, Noncompetition Agreement, and Employee
Proprietary Information and Inventions Agreement between Cadence and Graham K.
Sheldon (incorporated by reference to Exhibit (c)(11) to the Company's Tender
Offer Statement on Schedule 14D-9, dated June 18, 1999).
(c)(11) Employment Letter, Noncompetition Agreement, and Employee
Proprietary Information and Inventions Agreement between Cadence and Donald G.
Tannenbaum (incorporated by reference to Exhibit (c)(12) to the Company's Tender
Offer Statement on Schedule 14D-9, dated June 18, 1999).
(d) None
(e) Not applicable
(f) None
7
<PAGE>
SIGNATURE
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: June 18, 1999 CDSI ACQUISITION CORPORATION
By: /s/ WILLIAM PORTER
-----------------------------------------
William Porter
SENIOR VICE PRESIDENT, CHIEF FINANCIAL
OFFICER
AND ASSISTANT SECRETARY
</TABLE>
SIGNATURE
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: June 18, 1999 CADENCE DESIGN SYSTEMS, INC.
By: /s/ R.L. SMITH MCKEITHEN
-----------------------------------------
R.L. Smith McKeithen
SENIOR VICE PRESIDENT, GENERAL COUNSEL
AND SECRETARY
</TABLE>
8
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT INDEX
- --------- --------------------------------------------------------------------------------------------------------
<C> <S>
(a)(l) Offer to Purchase, dated June 18, 1999
(a)(2) Letter of Transmittal
(a)(3) Notice of Guaranteed Delivery
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees
(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9
(a)(7) Form of Summary Advertisement, dated June 18, 1999
(a)(8) Press Release dated June 15, 1999 issued by Cadence
(b)(1) Revolving Credit Agreement, dated September 30, 1998, by and between ABN-AMBRO Bank and Cadence
(incorporated by reference to Exhibit 10.45 from the 1998 Third Quarter Form 10-Q)
(b)(2) Amendment, dated October 16, 1998, to the Revolving Credit Agreement, by and between ABN-AMBRO Bank and
Cadence (incorporated by reference to Exhibit 10.46 from the 1998 Third Quarter Form 10-Q)
(c)(1) Agreement and Plan of Merger, dated as of June 14, 1999, by and among the Company, Purchaser and Cadence
(c)(2) Stock Option Agreement, dated as of June 14, 1999, between the Company, Purchaser and Cadence
(c)(3) Stockholders Agreement, dated as of June 14, 1999, among the stockholders of the Company listed on
Schedule I thereto, Purchaser and Cadence
(c)(4) Employment Letter, Noncompetition Agreement, and Employee Proprietary Information and Inventions
Agreement between Cadence and Michael F. Bosworth (incorporated by reference to Exhibit (c)(5) to the
Company's Tender Offer Statement on Schedule 14D-9, dated June 18, 1999).
(c)(5) Employment Letter, Noncompetition Agreement, and Employee Proprietary Information and Inventions
Agreement between Cadence and P. David Bundy (incorporated by reference to Exhibit (c)(6) to the
Company's Tender Offer Statement on Schedule 14D-9, dated June 18, 1999).
(c)(6) Employment Letter, Noncompetition Agreement, and Employee Proprietary Information and Inventions
Agreement between Cadence and James M. Plymale (incorporated by reference to Exhibit (c)(7) to the
Company's Tender Offer Statement on Schedule 14D-9, dated June 18, 1999).
(c)(7) Employment Letter, Noncompetition Agreement, and Employee Proprietary Information and Inventions
Agreement between Cadence and William E. Cibulsky (incorporated by reference to Exhibit (c)(8) to the
Company's Tender Offer Statement on Schedule 14D-9, dated June 18, 1999).
(c)(8) Employment Letter, Noncompetition Agreement, and Employee Proprietary Information and Inventions
Agreement between Cadence and Stuart A. Harrington (incorporated by reference to Exhibit (c)(9) to the
Company's Tender Offer Statement on Schedule 14D-9, dated June 18, 1999).
</TABLE>
9
<PAGE>
<TABLE>
<C> <S>
(c)(9) Employment Letter, Noncompetition Agreement, and Employee Proprietary Information and Inventions
Agreement between Cadence and Philip J. Kilcoin (incorporated by reference to Exhibit (c)(10) to the
Company's Tender Offer Statement on Schedule 14D-9, dated June 18, 1999).
(c)(10) Employment Letter, Noncompetition Agreement, and Employee Proprietary Information and Inventions
Agreement between Cadence and Graham K. Sheldon (incorporated by reference to Exhibit (c)(11) to the
Company's Tender Offer Statement on Schedule 14D-9, dated June 18, 1999).
(c)(11) Employment Letter, Noncompetition Agreement, and Employee Proprietary Information and Inventions
Agreement between Cadence and Donald G. Tannenbaum (incorporated by reference to Exhibit (c)(12) to
the Company's Tender Offer Statement on Schedule 14D-9, dated June 18, 1999).
(d) None
(e) Not applicable
(f) None
</TABLE>
10
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ORCAD, INC.
AT
$13.00 NET PER SHARE
BY
CDSI ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY OF
CADENCE DESIGN SYSTEMS, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT MIDNIGHT, NEW YORK CITY TIME,
ON FRIDAY, JULY 16, 1999 (THE "EXPIRATION DATE"), UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED BY THE EXPIRATION DATE AND NOT WITHDRAWN A NUMBER OF SHARES OF THE
COMMON STOCK OF ORCAD, INC., A DELAWARE CORPORATION (THE "COMPANY"),
REPRESENTING AT LEAST SIXTY-SEVEN PERCENT (67%) OF THE AGGREGATE OF (A) THE
NUMBER OF SHARES OF COMMON STOCK OF THE COMPANY THEN OUTSTANDING AND (B) THE
NUMBER OF SHARES OF COMMON STOCK OF THE COMPANY THAT ARE, OR WILL, PRIOR TO THE
SCHEDULED CLOSING OF THE MERGER (AS DEFINED BELOW), BECOME, SUBJECT TO ISSUANCE
UPON THE EXERCISE OF OPTIONS (THE "MINIMUM CONDITION") AND (2) THE SATISFACTION
OR WAIVER OF ALL CONDITIONS TO THE OBLIGATIONS OF CDSI ACQUISITION CORPORATION
(THE "PURCHASER") SET FORTH IN SECTION 18 HEREIN.
THE OFFER IS BEING MADE PURSUANT TO THE TERMS OF THE AGREEMENT AND PLAN OF
MERGER, DATED AS OF JUNE 14, 1999 (THE "MERGER AGREEMENT"), BY AND AMONG THE
COMPANY, PURCHASER AND CADENCE DESIGN SYSTEMS, INC. AMONG OTHER THINGS, THE
MERGER AGREEMENT PROVIDES FOR THE MAKING OF THE OFFER AND THAT, FOLLOWING THE
PURCHASE OF SHARES (AS DEFINED HEREIN) PURSUANT TO THE OFFER AND NO LATER THAN
THE SECOND BUSINESS DAY AFTER THE SATISFACTION OR WAIVER OF CERTAIN OTHER
CONDITIONS, PURCHASER WILL BE MERGED WITH AND INTO THE COMPANY.
------------------------
IMPORTANT
Any stockholder of the Company desiring to tender all or a portion of his
Shares (as defined herein) should either (1) complete and sign the Letter of
Transmittal, or a facsimile copy thereof, in accordance with the instructions in
the Letter of Transmittal, mail or deliver it and any other required documents
to the Depositary (as defined herein) and either deliver the certificates for
such Shares to the Depositary along with the Letter of Transmittal or tender
such Shares pursuant to the procedure for book-entry transfer set forth in this
Offer to Purchase under the caption "THE TENDER OFFER--2. Procedure for
Accepting the Offer and Tendering Shares" or (2) request such stockholder's
broker, dealer, commercial bank, trust company or other nominee to effect the
transaction for the stockholder. Stockholders having Shares 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
they desire to tender their Shares.
A stockholder of the Company who desires to tender Shares and whose
certificates for Shares are not immediately available, or who cannot comply with
the procedures for book-entry transfer described in this Offer to Purchase on a
timely basis, may tender such Shares by following the procedure for guaranteed
delivery set forth in this Offer to Purchase under the caption "THE TENDER
OFFER--2. Procedure for Accepting the Offer and Tendering Shares."
Questions and requests for assistance, or for additional copies of this
Offer to Purchase, the Letter of Transmittal or other tender offer materials,
may be directed to the Information Agent at its address and telephone numbers
set forth on the back cover of this Offer to Purchase. Holders of Shares may
also contact brokers, dealers, commercial banks or trust companies for
assistance concerning the Offer.
------------------------
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED UPON THE FAIRNESS OR MERITS OF THIS TRANSACTION NOR UPON THE
ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL.
------------------------
The Information Agent for the Offer is:
MORROW & CO., INC.
The date of this Offer to Purchase is June 18, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<C> <S> <C>
INTRODUCTION.................................................................................................... 1
THE TENDER OFFER................................................................................................ 3
1. Terms of the Offer; Expiration Date.................................................................. 3
2. Procedure for Accepting the Offer and Tendering Shares............................................... 4
3. Withdrawal Rights.................................................................................... 7
4. Acceptance for Payment and Payment for Shares........................................................ 8
5. Certain Federal Income Tax Consequences.............................................................. 9
6. Price Range of the Shares............................................................................ 10
7. Certain Information Concerning the Company........................................................... 10
8. Certain Information Concerning Cadence and Purchaser................................................. 13
9. Source and Amount of Funds........................................................................... 15
10. Certain Transactions Between Cadence and the Company................................................. 16
11. Contacts with the Company; Background of the Offer and the Merger.................................... 16
12. Purpose of the Offer and The Merger Agreement........................................................ 18
13. The Merger Agreement, the Stock Option Agreement and the Stockholders Agreement...................... 19
14. Interests of Certain Persons in the Merger........................................................... 33
15. Going Private Transactions........................................................................... 33
16. Dividends and Distributions.......................................................................... 33
17. Effects of the Offer on the Market For Shares; Nasdaq National Market and Exchange Act
Registration....................................................................................... 34
18. Certain Conditions of the Offer...................................................................... 35
19. Certain Legal Matters; Regulatory Approvals.......................................................... 37
20. Fees and Expenses.................................................................................... 39
21. Miscellaneous........................................................................................ 40
SCHEDULE I...................................................................................................... 41
</TABLE>
<PAGE>
To the Holders of Common Stock of OrCAD, Inc.:
INTRODUCTION
CDSI Acquisition Corporation, a Delaware corporation ("Purchaser"), which is
a newly formed, wholly-owned subsidiary of Cadence Design Systems, Inc., a
Delaware corporation ("Cadence"), hereby offers to purchase all of the issued
and outstanding shares (the "Shares") of common stock, $.01 par value (the
"Company Common Stock"), of OrCAD, Inc., a Delaware corporation (the "Company"),
upon the terms and subject to the conditions set forth in this Offer to Purchase
and in the related Letter of Transmittal (which together constitute the
"Offer"), at the purchase price of $13.00 per Share (the "Offer Price"), net to
the seller in cash.
The Offer is being made pursuant to the terms of the Agreement and Plan of
Merger, dated as of June 14, 1999 (the "Merger Agreement"), by and among the
Company, Purchaser and Cadence. Among other things, the Merger Agreement
provides for the making of the Offer and that, following the purchase of Shares
pursuant to the Offer and no later than the second business day after the
satisfaction or waiver of certain other conditions, Purchaser will be merged
with and into the Company (the "Merger"). The Company will be the surviving
corporation and a wholly-owned subsidiary of Cadence upon completion of the
Merger (the "Surviving Corporation"). At the effective time of the Merger, each
outstanding Share (except for (i) Shares owned by the Company or Cadence, or by
any subsidiary of the Company or Cadence or (ii) Shares held by a stockholder
who has demanded and perfected such stockholder's demand for appraisal of such
stockholder's Shares in accordance with the Delaware General Corporation Law
(the "DGCL") and as of the effective time has neither effectively withdrawn nor
lost such stockholder's right to such appraisal (collectively, the "Excluded
Shares")) will be converted into the right to receive the Offer Price, net to
the holder in cash, without interest.
AT A MEETING HELD ON JUNE 14, 1999, THE BOARD OF DIRECTORS OF THE COMPANY
(THE "COMPANY BOARD") UNANIMOUSLY (a) DETERMINED THAT THE MERGER AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, ARE
FAIR TO AND IN THE BEST INTERESTS OF THE STOCKHOLDERS OF THE COMPANY, (b)
ADOPTED AND APPROVED THE MERGER AGREEMENT, THE STOCK OPTION AGREEMENT (AS
DEFINED BELOW) AND THE TRANSACTIONS CONTEMPLATED THEREBY, AND AUTHORIZED THE
EXECUTION THEREOF BY THE COMPANY AND (c) DETERMINED TO RECOMMEND THAT THE
STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES HEREUNDER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED BY THE EXPIRATION DATE AND NOT WITHDRAWN A NUMBER OF SHARES
REPRESENTING AT LEAST SIXTY-SEVEN PERCENT (67%) OF THE AGGREGATE OF (a) THE
NUMBER OF SHARES OF COMPANY COMMON STOCK THEN OUTSTANDING AND (b) THE NUMBER OF
SHARES OF COMPANY COMMON STOCK THAT ARE, OR WILL, PRIOR TO THE SCHEDULED CLOSING
OF THE MERGER, BECOME, SUBJECT TO ISSUANCE UPON THE EXERCISE OF OPTIONS (THE
"MINIMUM CONDITION") AND (2) THE SATISFACTION OR WAIVER OF ALL CONDITIONS SET
FORTH IN SECTION 18 HEREIN.
THE OFFER WILL EXPIRE AT MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JULY 16,
1999, UNLESS EXTENDED.
If Purchaser acquires an amount of Shares that satisfies the Minimum
Condition, it will have sufficient voting power to approve and adopt the Merger
Agreement and the Merger without the vote of any other stockholder of the
Company. If Purchaser acquires at least ninety percent (90%) of the outstanding
Shares, Purchaser intends to approve and consummate the Merger without any
action by, or any further prior notice to, the other stockholders of the Company
pursuant to the short-form merger provisions of the DGCL.
Cadence and Purchaser have entered into a stock option agreement with the
Company (the "Stock Option Agreement"), pursuant to which, among other things,
the Company has granted Purchaser an option to purchase, under specified
circumstances, up to 1,863,331 shares of Company Common Stock at $13.00 per
share (the "Company Option"). See "THE TENDER OFFER--13. The Merger Agreement,
the Stock Option Agreement and the Stockholders Agreement."
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Cadence and Purchaser have entered into a Stockholders Agreement (the
"Stockholders Agreement") with Wolfram H. Blume, David Nierenberg, The D3 Family
Fund, L.P. and Michael F. Bosworth (the "Tendering Stockholders"), who
beneficially own, in the aggregate, 1,758,068 Shares, representing approximately
18.9% of the issued and outstanding Shares. Pursuant to the Stockholders
Agreement, upon the terms and subject to the conditions therein, the Tendering
Stockholders have agreed to tender to Purchaser all Shares beneficially owned by
such Tendering Stockholders, have granted to Purchaser an option to purchase
such Shares under specified circumstances, have agreed to vote such Shares in
favor of approval of the Merger Agreement and the transactions contemplated
thereby and have granted an irrevocable proxy to Purchaser with respect to such
Shares.
Each holder (other than holders of Excluded Shares) of a certificate
representing any Shares will, from and after the consummation of the Merger,
cease to have any rights with respect to such Shares, except the right to
receive the Offer Price. From and after the consummation of the Merger, each
Excluded Share will be canceled and extinguished and cease to exist without any
conversion thereof, and no payment will be made with respect thereto.
ALLIANT PARTNERS, FINANCIAL ADVISOR TO THE COMPANY ("ALLIANT"), HAS
DELIVERED A WRITTEN OPINION TO THE COMPANY BOARD, DATED JUNE 14, 1999 (THE
"ALLIANT OPINION"), TO THE EFFECT THAT, AS OF THAT DATE, THE CONSIDERATION TO BE
RECEIVED BY THE STOCKHOLDERS OF THE COMPANY PURSUANT TO THE MERGER AGREEMENT IS
FAIR FROM A FINANCIAL POINT OF VIEW. THE FULL TEXT OF THE ALLIANT OPINION IS
ATTACHED TO THE COMPANY'S SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE
14D-9 WHICH IS BEING MAILED TO STOCKHOLDERS OF THE COMPANY HEREWITH.
STOCKHOLDERS ARE URGED TO READ SUCH OPINION CAREFULLY AND IN ITS ENTIRETY FOR
ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITS OF THE REVIEW OF ALLIANT.
The Company has informed Purchaser that as of June 14, 1999 there were
approximately 9,321,315 Shares issued and outstanding and approximately
3,973,937 Shares were reserved for issuance upon the exercise of outstanding
options. As of the date hereof, Cadence and its affiliates beneficially own no
Shares. The Minimum Condition should therefore be satisfied if at least (i)
approximately 6,245,281 Shares (67% of the issued and outstanding Shares), plus
(ii) sixty-seven percent (67%) of the number of Shares that are, or will, prior
to the scheduled closing of the Merger, become, subject to issuance upon
exercise of options, are validly tendered and not withdrawn prior to the
Expiration Date (1,758,068 Shares will be tendered to Purchaser pursuant to the
Stockholders Agreement).
THE OFFER DOES NOT CONSTITUTE A SOLICITATION OF PROXIES FOR ANY MEETING OF
THE COMPANY'S STOCKHOLDERS. ANY SUCH SOLICITATION WOULD BE MADE ONLY PURSUANT TO
SEPARATE PROXY MATERIALS COMPLYING WITH THE REQUIREMENTS OF SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT").
Tendering stockholders will not be obligated to pay brokerage commissions,
solicitation fees or, subject to Instruction 6 of the Letter of Transmittal,
stock transfer taxes on the sale of Shares pursuant to the Offer. However, any
tendering stockholder or other payee who fails to complete and sign the
Substitute Form W-9 that is included in the Letter of Transmittal may be subject
to a required backup federal income tax withholding of 31% of the gross proceeds
payable to such stockholder or other payee pursuant to the Offer. See "THE
TENDER OFFER--5. Certain Federal Income Tax Consequences." Cadence will pay all
charges and expenses of ChaseMellon Shareholder Services, as Depositary (in such
capacity, the "Depositary"), and Morrow & Co., Inc., as Information Agent (in
such capacity, the "Information Agent"), incurred in connection with the Offer.
For a description of the fees and expenses to be paid by Purchaser, see "THE
TENDER OFFER--20. Fees and Expenses."
The information contained in this Offer to Purchase concerning the Company
was supplied by the Company. Neither Cadence nor Purchaser takes any
responsibility for the completeness or accuracy of such information. The
information contained in this Offer to Purchase concerning the Offer, the
Merger, Cadence and Purchaser was supplied by Cadence and Purchaser. The Company
takes no responsibility for the completeness or accuracy of such information.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER. ALSO SEE "THE TENDER OFFER--21. MISCELLANEOUS" FOR
INFORMATION REGARDING CERTAIN ADDITIONAL DOCUMENTS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION (THE "COMMISSION") IN CONNECTION WITH THE OFFER.
References herein to Cadence will, unless the context indicates otherwise,
include Cadence and all of its subsidiaries, including Purchaser.
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THE TENDER OFFER
1. TERMS OF THE OFFER; EXPIRATION DATE
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 such extension or
amendment), Purchaser will accept for payment and pay for all Shares validly
tendered on or prior to the Expiration Date and not theretofore withdrawn in
accordance with the terms set forth in this Offer to Purchase under the caption
"-- 3. Withdrawal Rights." The term "Expiration Date" means midnight, New York
City time, on Friday, July 16, 1999, unless Purchaser, subject to restrictions
contained in the Merger Agreement, has extended the period of time during which
the Offer is open, in which event the term "Expiration Date" means the latest
time and date at which the Offer, as so extended by Purchaser, will expire.
Purchaser expressly reserves the right to waive any conditions of the Offer
(except as otherwise provided in the Merger Agreement), to increase the Offer
Price or to make any other changes in the terms and conditions of the Offer,
provided that, unless previously approved by the Company in writing, Purchaser
may not (i) decrease the Offer Price or change the form of consideration payable
in the Offer, (ii) decrease the number of Shares sought pursuant to the Offer,
(iii) amend or waive satisfaction of the Minimum Condition to permit the
purchase of Shares constituting less than a majority of the number of Shares
outstanding, (iv) add additional conditions to the Offer, (v) amend the
conditions to the Offer set forth in Annex I to the Merger Agreement to broaden
their scope or (vi) amend any other term of the offer in any manner adverse to
the holders of Shares
If at the expiration date of the Offer, the conditions to the Offer
described in Section 18 hereto shall not have been satisfied or earlier waived,
Purchaser may, from time to time extend the expiration date of the Offer until
the date such conditions are satisfied or earlier waived and Cadence becomes
obligated to accept for payment and pay for Shares tendered pursuant to the
Offer; provided, however, that the expiration date of the Offer may not be
extended beyond September 30, 1999 without the consent of the Company. Purchaser
may also, without the consent of the Company Board, extend the expiration date
of the Offer (as it may be extended) (i) for any period required by applicable
rules and regulations of the Commission in connection with an increase in the
consideration to be paid pursuant to the Offer and (ii) for up to ten business
days, if on such expiration date the conditions for the Offer described on Annex
I to the Merger Agreement shall have been satisfied or earlier waived, but the
number of Shares that have been validly tendered and not withdrawn represents
less than 90 percent of the then issued and outstanding Shares on a fully
diluted basis. If all of the conditions to the Offer are not satisfied on any
scheduled expiration date, then if all such conditions are reasonably capable of
being satisfied prior to September 30, 1999, Purchaser will extend the Offer
from time to time until such conditions are satisfied or waived; provided that
Purchaser is not required to extend the Offer beyond August 30, 1999 if, as of
such date, the Minimum Condition has not been satisfied. As used in this Offer
to Purchase, "business day" means any day, other than a day on which the Nasdaq
National Market is closed.
Subject to the applicable rules and regulations of the Commission, Purchaser
expressly reserves the right, subject to the terms and conditions of the Merger
Agreement, at any time and from time to time, upon the failure to be satisfied
of any of the conditions to the Offer, to (i) terminate or amend the Offer, (ii)
extend the Offer and postpone acceptance for payment of any Shares or (iii)
waive any condition, by giving oral or written notice of such termination,
amendment, extension or waiver to the Depositary. During any such extension, all
Shares previously tendered and not properly withdrawn will remain subject to any
such extension and will remain tendered, subject to the right of a tendering
stockholder to withdraw such stockholder's Shares. The ability of Purchaser to
delay payment for Shares that it has accepted for payment is limited by Rule
14e-1(c) under the Exchange Act, which requires that an offeror either pay the
consideration offered or return the tendered securities promptly after the
termination or withdrawal of a tender offer. If Cadence or Purchaser waives any
of the
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conditions set forth in this Offer to Purchase under the caption "--18. Certain
Conditions of the Offer," the Commission may, if the waiver is deemed to
constitute a material change to the information previously provided to Company
stockholders, require that the Offer remain open for an additional period of
time and/or that Purchaser disseminate information concerning such waiver.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition to the Offer,
Purchaser will disseminate additional tender offer materials (including by
public announcement as set forth below) and extend the Offer to the extent
required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. These
rules generally provide that the minimum period during which a tender offer must
remain open following a material change in the terms of the offer or information
concerning the offer, other than a change in price or a change in percentage of
securities sought, will depend upon the facts and circumstances, including the
relative materiality of the changes in the terms or information. In the
Commission's view, an offer should remain open for a minimum of five business
days from the date a material change is first published, sent or given to
securityholders, and, if material changes are made with respect to information
that approaches the significance of price and share levels, a minimum of ten
business days may be required to allow for adequate dissemination and investor
response. With respect to a change in price or a change in percentage of
securities sought, a minimum ten-business day period is generally required to
allow for adequate dissemination to stockholders and for investor response.
Any extension, amendment or termination of the Offer will be followed as
promptly as practicable by public announcement in accordance with the public
announcement requirements of Rule 14e-l(d) under the Exchange Act. Subject to
applicable law (including Rules 14d-4(c) and 14d-6(d) under the Exchange Act,
which require that any material change in the information published, sent or
given to stockholders in connection with the Offer be promptly disseminated to
them in a manner reasonably designed to inform stockholders of such change), and
without limiting the manner in which Purchaser may choose to make any public
announcement, Purchaser has no obligation to publish, advertise or otherwise
communicate any such public announcement other than by making a release to the
Dow Jones News Service.
The Company has provided Purchaser with the Company stockholder list, a
nonobjecting beneficial owners list and security position listings for the
purpose of disseminating the Offer to holders of Shares. This Offer to Purchase
and the Letter of Transmittal and other relevant materials will be mailed to
record holders of Shares and furnished to brokers, dealers, commercial banks,
trust companies and similar persons whose names, or the names of whose nominees,
appear on the stockholder list or, if applicable, who are listed as participants
in a clearing agency's security position listing, for subsequent transmittal to
beneficial owners of Shares.
2. PROCEDURE FOR ACCEPTING THE OFFER AND TENDERING SHARES
VALID TENDER OF SHARES
For a stockholder to validly tender Shares pursuant to the Offer, either:
(a)(i) a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), together with any required signature guarantees, or an
Agent's Message (as defined herein) in connection with a book-entry delivery of
Shares, and any other required documents, must be received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase, and
(ii) either certificates for tendered Shares ("Share Certificates") must be
received by the Depositary at one of such addresses or such tendered Shares must
be delivered pursuant to the procedure for book-entry transfer described below
(and a Book-Entry Confirmation (as defined herein) received by the Depositary),
in each case prior to the Expiration Date; or (b) the tendering stockholder must
comply with the guaranteed delivery procedures described below.
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<PAGE>
BOOK-ENTRY TRANSFERS
The Depositary will establish an account with respect to the Shares at The
Depository Trust Company (the "Book-Entry Transfer Facility") for purposes of
the Offer within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in the Book-Entry Transfer Facility
may make book-entry delivery of the Shares by causing the book-entry transfer
system to transfer such Shares into the Depositary's account at the Book-Entry
Transfer Facility in accordance with such Book-Entry Transfer Facility's
procedure for such transfer. Although delivery of Shares may be effected through
book-entry transfer at the Book-Entry Transfer Facility, a properly completed
and duly executed Letter of Transmittal (or facsimile thereof), with any
required signature guarantees, or an Agent's Message (as defined herein) in
connection with a book-entry transfer, and any other required documents, must,
in any case, be transmitted to, and received by, the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date, or the tendering stockholder must comply with the guaranteed
delivery procedures described below. The confirmation of a book-entry transfer
of Shares into the Depositary's account at the Book-Entry Transfer Facility as
described above is referred to herein as a "Book-Entry Confirmation." Delivery
of documents to the Book-Entry Transfer Facility in accordance with its
book-entry procedures does not constitute valid delivery to the Depositary.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of the
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares, that such participant has received the
Letter of Transmittal and agrees to be bound by the terms of the Letter of
Transmittal and that Purchaser may enforce such agreement against such
participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE ELECTION AND SOLE RISK OF THE TENDERING
STOCKHOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED AT THE
DEPOSITARY. IF DELIVERY IS BY MAIL, THEN INSURED OR REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.
SIGNATURE GUARANTEES
No signature guarantee on the Letter of Transmittal is required if (i) the
Letter of Transmittal is signed by the registered holder of the Shares (which
term, for purposes of this Section, includes any participant in the Book-Entry
Transfer Facility system whose name appears on a security position listing as
the owner of the Shares) tendered therewith and such registered holder has not
completed either the box entitled "Special Delivery Instructions" or the box
entitled "Special Payment Instructions" on such Letter of Transmittal or (ii)
such Shares are tendered for the account of a bank, broker, dealer, credit
union, savings association or other entity that is a member in good standing of
the Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(each, an "Eligible Institution"). In all other cases, all signatures on the
Letter of Transmittal must be guaranteed by an Eligible Institution. See
Instructions 1 and 5 to the Letter of Transmittal. If the Share Certificates are
registered in the name of a person other than the signer of the Letter of
Transmittal, or if payment is to be made to, or Share Certificates not validly
tendered, not accepted for payment or not purchased are to be issued or returned
to, a person other than the registered holder of the Share Certificates, the
tendered Share Certificates must be endorsed in blank or accompanied by
appropriate stock powers, signed exactly as the name of the registered holder
appears on the Share Certificates with the signature on such Share Certificates
or stock powers guaranteed by an Eligible Institution. See Instructions 1 and 5
to the Letter of Transmittal.
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GUARANTEED DELIVERY
If a stockholder desires to tender Shares pursuant to the Offer and such
stockholder's Share Certificates are not immediately available or the procedures
for book-entry transfer cannot be completed on a timely basis or time will not
permit all required documents to reach the Depositary prior to the Expiration
Date, such Shares may nevertheless be tendered provided that all of the
following guaranteed delivery procedures are duly complied with:
(a) such tender is made by or through an Eligible Institution;
(b) the Depositary receives (by hand, mail, telegram or facsimile
transmission) on or prior to the Expiration Date, a properly completed and
duly executed Notice of Guaranteed Delivery, substantially in the form
provided by Purchaser; and
(c) the Share Certificates representing all tendered Shares, in proper
form for transfer (or Book-Entry Confirmation with respect to such Shares),
together with a properly completed and duly executed Letter of Transmittal
(or facsimile thereof) and any other documents required by the Letter of
Transmittal, are received by the Depositary within three Nasdaq trading days
after the date of such Notice of Guaranteed Delivery. A "Nasdaq trading day"
is any day on which securities are traded on the Nasdaq National Market.
The Notice of Guaranteed Delivery may be delivered by hand, or may be
transmitted by telegram, facsimile transmission or mail, to the Depositary and
must include a guarantee by an Eligible Institution in the form set forth in
such Notice of Guaranteed Delivery.
Notwithstanding anything else described in this Offer to Purchase, payment
for Shares accepted for payment pursuant to the Offer will in all cases be made
only after timely receipt by the Depositary of (i) Share Certificates for (or a
timely Book-Entry Confirmation with respect to) such Shares, (ii) a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) or, in
the case of book-entry transfer, an Agent's Message and (iii) any other
documents required by the Letter of Transmittal. Accordingly, tendering
stockholders may be paid at different times depending upon when Share
Certificates, Book-Entry Confirmations and such other documents are actually
received by the Depositary. Under no circumstances will interest be paid by
Purchaser on the purchase price of the Shares to any tendering stockholders,
regardless of any extension of the Offer or any delay in making such payment.
DETERMINATION OF VALIDITY
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for payment of any tender of Shares will be determined
by Purchaser in its sole discretion, which determination will be final and
binding. Purchaser reserves the absolute right to reject any or all tenders of
Shares that it determines are not in proper form or the acceptance for payment
of or payment for which may, in the opinion of Purchaser's counsel, be unlawful.
Purchaser also reserves the absolute right to waive any of the conditions of the
Offer or any defect or irregularity in the tender of any Shares with respect to
any particular stockholder, whether or not similar defects or irregularities are
waived in the case of other stockholders. Neither Purchaser, Cadence, the
Depositary, the Information Agent nor any other person will be under any duty to
give notice of any defects or irregularities in tenders or incur any liability
for failure to give any such notice. Purchaser's interpretation of the terms and
conditions of the Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding.
OTHER REQUIREMENTS
By executing the Letter of Transmittal, a tendering stockholder irrevocably
appoints designees of Purchaser as such stockholder's proxies, each with full
power of substitution, in the manner set forth in
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the Letter of Transmittal, to the full extent of such stockholder's rights with
respect to the Shares tendered by such stockholder and accepted for payment by
Purchaser (and with respect to any and all other Shares or other securities or
rights issued or issuable in respect of such Shares on or after the Expiration
Date), effective when, if and to the extent that Purchaser accepts such Shares
for payment pursuant to the Offer. All such proxies will be considered coupled
with an interest in the tendered Shares. Upon such acceptance for payment, all
prior proxies given by such stockholder with respect to such Shares accepted for
payment or other securities or rights will, without further action, be revoked,
and no subsequent proxies may be given. Such designees of Purchaser will, with
respect to such Shares for which the appointment is effective, be empowered to
exercise all voting and other rights of such stockholder as they in their sole
discretion may deem proper in respect of any annual or special meeting of the
Company's stockholders or any adjournment or postponement thereof, by written
consent in lieu of any such meeting or otherwise. Purchaser reserves the right
to require that, in order for Shares to be deemed validly tendered, immediately
upon Purchaser's payment for such Shares, Purchaser must be able to exercise
full voting rights with respect to such Shares.
Purchaser's acceptance for payment of Shares tendered pursuant to any of the
procedures described herein will constitute a binding agreement between the
tendering stockholder and Purchaser upon the terms and subject to the conditions
of the Offer.
BACKUP FEDERAL INCOME TAX WITHHOLDING
To prevent backup federal income tax withholding on payments of cash
pursuant to the Offer, a stockholder tendering Shares in the offer must provide
the Depositary with such stockholder's correct taxpayer identification number
("TIN") on a Substitute Form W-9 and certify under penalties of perjury that
such TIN is correct and that such stockholder is not subject to backup
withholding. If a stockholder does not provide its correct TIN or fails to
provide the certification described herein, under federal income tax laws, the
Depositary will be required to withhold 31% of the amount of any payment made to
such stockholder pursuant to the Offer. All stockholders tendering Shares
pursuant to the Offer should complete and sign the Substitute Form W-9 included
as a part of the Letter of
Transmittal to provide the information and certification necessary to avoid
backup withholding. Noncorporate foreign stockholders should complete and sign a
Form W-8, Certificate of Foreign Status, a copy of which may be obtained from
the Depositary, in order to avoid backup withholding. See Instruction 10 to the
Letter of Transmittal.
3. WITHDRAWAL RIGHTS
Tendered Shares may be withdrawn at any time prior to the Expiration Date
only by following the procedures described below.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase. Any
notice of withdrawal must specify the name of the person who tendered the Shares
to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder of the Shares to be withdrawn as set forth on such Share
Certificates if different from the name of the person who tendered such Shares.
If Share Certificates have been delivered or otherwise identified to the
Depositary, then, prior to the physical release of such Share Certificates, the
serial numbers shown on such Share Certificates must be furnished to the
Depositary and, unless such Shares have been tendered by an Eligible
Institution, the signatures on the notice of withdrawal must be guaranteed by an
Eligible Institution. If Shares have been delivered pursuant to the procedures
for book-entry transfer described in Section 2 above, any notice of withdrawal
must specify the name and number of the account at the Book-Entry Transfer
Facility to be credited with such withdrawn Shares and otherwise comply with
such Book-Entry Transfer Facility's procedures for withdrawal, in which case
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a notice of withdrawal will be effective if delivered to the Depositary by any
method of delivery described in the first sentence of this paragraph.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser in its sole discretion,
and its determination will be final and binding. Neither Purchaser, the
Depositary, the Information Agent nor any other person will be obligated to give
notice of any defects or irregularities in any notice of withdrawal, nor will
any of them incur any liability for failure to give any such notice.
Withdrawals of tendered Shares may not be rescinded, and any Shares properly
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. However, withdrawn Shares may be retendered by following one of the
procedures described in Section 2 above at any time on or prior to the
Expiration Date.
4. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
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), promptly after the Expiration Date Purchaser will accept for
payment, and will pay for, any and all Shares validly tendered on or prior to
the Expiration Date and not properly withdrawn in accordance with Section 3
above. Subject to applicable rules of the Commission and the terms and
conditions of the Merger Agreement, Purchaser expressly reserves the right, in
its sole discretion, to delay acceptance for payment of, or payment for, Shares
in order to comply in whole or in part with any applicable law or government
regulation.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i) the
Share Certificates for such Shares (or timely Book-Entry Confirmation of the
book-entry transfer of such Shares into the Depositary's account at the
Book-Entry Transfer Facility pursuant to the procedures described in Section 2
above), (ii) the Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, together with any required signature guarantees, or
an Agent's Message in connection with a book-entry transfer and (iii) any other
documents required by the Letter of Transmittal.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered to Purchaser and not
properly withdrawn as, if and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance for payment of such Shares. In all cases,
upon the terms and subject to the conditions of the Offer, payment for Shares so
accepted for payment will be made by the deposit of the purchase price therefor
with the Depositary, which will act as agent for tendering stockholders for the
purpose of receiving payment from Purchaser and transmitting payment to validly
tendering stockholders. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID BY
PURCHASER ON THE PURCHASE PRICE OF SHARES TENDERED PURSUANT TO THE OFFER,
REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
Upon the deposit of funds with the Depositary for the purpose of making payments
to tendering stockholders, Purchaser's obligation to make such payments will be
satisfied and tendering stockholders must thereafter look solely to the
Depositary for payment of amounts owed to them by reason of Purchaser's
acceptance for payment of Shares. Purchaser will pay any stock transfer taxes
with respect to the transfer and sale to it or on its order pursuant to the
Offer, except as otherwise provided in Instruction 6 of the Letter of
Transmittal, as well as any charges and expenses of the Depositary and the
Information Agent.
If Purchaser is delayed in its acceptance for payment of, or payment for,
tendered Shares or is unable to accept for payment or pay for such Shares
pursuant to the Offer for any reason, then, without prejudice to Purchaser's
rights under the Offer (but subject to Purchaser's obligations under Rule
14e-l(c) under the Exchange Act to pay for or return the tendered Shares
promptly after the termination or withdrawal of the Offer), the Depositary may,
nevertheless, retain tendered Shares on
8
<PAGE>
behalf of Purchaser, and such Shares may not be withdrawn except to the extent
tendering stockholders are entitled to exercise, and duly exercise, withdrawal
rights as described under Section 3 above.
If any tendered Shares are not purchased pursuant to the Offer because of an
invalid tender or for any other reason, Share Certificates for any such Shares
will be returned, without expense, to the tendering stockholder (or, in the case
of Shares delivered by book-entry transfer of such Shares into the Depositary's
account at the Book-Entry Transfer Facility pursuant to the procedures described
in Section 2 above, such Shares will be credited to an account maintained at
such Book-Entry Transfer Facility) as promptly as practicable following the
expiration or termination of the Offer.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The summary of federal income tax consequences set forth below is for
general information only and is based on Purchaser's understanding of the law as
currently in effect. The tax consequences to each stockholder will depend in
part upon such stockholder's particular situation. Special tax consequences not
described herein may be applicable to particular classes of taxpayers, such as
financial institutions, broker-dealers, persons who are not citizens or
residents of the United States, tax exempt organizations, persons who acquired
their shares as part of a straddle, hedge or other integrated instrument, and
stockholders who acquired their Shares through the exercise of an employee stock
option or otherwise as compensation. ALL STOCKHOLDERS SHOULD CONSULT WITH THEIR
OWN TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES OF THE OFFER AND THE
MERGER TO THEM, INCLUDING THE APPLICABILITY AND EFFECT OF THE ALTERNATIVE
MINIMUM TAX AND ANY STATE, LOCAL OR FOREIGN INCOME AND OTHER TAX LAWS AND OF
CHANGES IN SUCH TAX LAWS.
The receipt of cash for Shares pursuant to the Offer (or the Merger) will be
a taxable transaction for federal income tax purposes and may also be a taxable
transaction under applicable state, local or foreign tax laws. Generally, a
stockholder who receives cash for Shares pursuant to the Offer (or the Merger)
will recognize gain or loss for federal income tax purposes equal to the
difference between the amount of cash received in exchange for the Shares sold
and such stockholder's adjusted tax basis in such Shares. Provided that the
Shares constitute capital assets in the hands of the stockholder, such gain or
loss will be capital gain or loss, and will be long-term capital gain or loss if
the holder has held the Shares for more than one year at the time of sale. Gain
or loss will be calculated and characterized separately for each block of Shares
(i.e., a group of Shares with the same tax basis and holding period) tendered
pursuant to the Offer. The maximum federal income tax rate applicable to
non-corporate taxpayers on long-term capital gain is 20%, and the use of capital
losses to offset other income is subject to limitations.
A stockholder (other than certain exempt stockholders including, among
others, all corporations and certain foreign individuals and entities) that
tenders Shares may be subject to 31% backup withholding unless the stockholder
provides its TIN and certifies that such number is correct or properly certifies
that it is awaiting a TIN, or unless an exemption applies. A stockholder that
does not furnish its TIN may be subject to a penalty imposed by the Internal
Revenue Service (the "IRS"). See Section 2.
If backup withholding applies to a stockholder, the Depositary is required
to withhold 31% from payments to such stockholder. Backup withholding is not an
additional tax. Rather, the amount of the backup withholding can be credited
against the federal income tax liability of the person subject to the backup
withholding, provided that the required information is given to the IRS on a
timely basis. If backup withholding results in an overpayment of tax, a refund
can be obtained by the stockholder upon filing an appropriate income tax return
on a timely basis.
9
<PAGE>
6. PRICE RANGE OF THE SHARES
The Shares are traded on the Nasdaq National Market under the symbol "OCAD."
The following table sets forth, for the periods indicated, the high and low
sales prices of Company Common Stock as reported on the Nasdaq National Market:
<TABLE>
<CAPTION>
TRADING
--------------------
<S> <C> <C>
HIGH LOW
--------- ---------
Fiscal Year ended December 31, 1997:
First Quarter.............................................................. $ 11.00 $ 6.38
Second Quarter............................................................. $ 11.38 $ 6.13
Third Quarter.............................................................. $ 14.75 $ 10.25
Fourth Quarter............................................................. $ 14.88 $ 7.13
Fiscal Year ended December 31, 1998:
First Quarter.............................................................. $ 9.94 $ 8.00
Second Quarter............................................................. $ 12.25 $ 8.94
Third Quarter.............................................................. $ 10.25 $ 6.63
Fourth Quarter............................................................. $ 9.50 $ 4.00
Fiscal Year ended December 31, 1999:
First Quarter.............................................................. $ 9.22 $ 6.31
Second Quarter (through June 14, 1999)..................................... $ 9.75 $ 6.88
</TABLE>
On June 14, 1999, the last full day of trading prior to the public
announcement of the execution of the Merger Agreement, according to published
sources, the last reported sale price of Company Common Stock on the Nasdaq
National Market was $9.50 per Share. On June 17, 1999, the last full day of
trading before the commencement of the Offer, according to published sources,
the last reported sale price of Company Common Stock on the Nasdaq National
Market was $12.63 per Share. STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET
QUOTATION FOR COMPANY COMMON STOCK.
7. CERTAIN INFORMATION CONCERNING THE COMPANY
GENERAL
The Company is a Delaware corporation with its principal offices located at
9300 S.W. Nimbus Avenue, Beaverton, Oregon 90078.
The Company develops, markets and supports software products that assist
electronics designers in the management of component data and in the design of
field-programmable gate arrays, including complex programmable logic devices,
analog and mixed analog-digital circuits and printed circuit boards. The Company
operates in a single business segment, comprising the electronic design
automation ("EDA") industry and serves most segments of the electronics
industry, including aerospace, telecom, industrial control, military, medical
equipment and consumer products. The Company's products enable electronics
designers to reduce time to market, improve product capability and reduce design
costs. The Company's Windows-based EDA solutions support the design process for
mainstream components, from schematic capture to programmable logic design and
verification to circuit simulation and printed circuit board layout. To date,
over 250,000 products bearing the OrCAD name have been sold worldwide.
AVAILABLE INFORMATION
The Shares are registered under the Exchange Act. Accordingly, the Company
is subject to the informational filing requirements of the Exchange Act and, in
accordance therewith, is required to file
10
<PAGE>
periodic reports, proxy statements and other information with the Commission
relating to its business, financial condition and other matters. Certain
information, as of particular dates, concerning the Company's directors and
officers (including their remuneration, stock options granted to them and shares
held by them), the principal holders of the Company's securities, and any
material interest of such persons in transactions with the Company is required
to be disclosed in proxy statements and annual reports distributed to the
Company's stockholders and filed with the Commission. These reports, proxy
statements and other information are available for inspection and copying at the
public reference facilities of the Commission located in Judiciary Plaza, 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the regional
offices of the Commission located in Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661, and Seven World Trade Center, Suite 1300,
New York, New York 10048. Copies of this material may also be obtained by mail,
upon payment of the Commission's customary fees from the Commission's principal
office at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission also
maintains an Internet site on the World Wide Web at http://www.sec.gov that
contains reports, proxy statements and other information. In addition, such
material should also be available for inspection at The Nasdaq Stock Market,
Inc., 1735 K Street, N.W., Washington, D.C. 20006. Copies of some of the
Company's periodic reports and proxy statements may also be obtained from the
Company's Internet site on the World Wide Web at http://www.orcad.com.
11
<PAGE>
SUMMARY FINANCIAL INFORMATION
Set forth below is certain selected consolidated financial information with
respect to the Company and its consolidated subsidiaries contained in the
Company's 1998 Annual Report on Form 10-K (the "Company 1998 Annual Report") and
the Company's Quarterly Reports on Form 10-Q for the quarters ended March 31,
1999 (the "Company 1999 10-Q") and March 31, 1998 (the "Company First Quarter
1998 10-Q"). More comprehensive financial information is included in the Company
1998 Annual Report, the Company 1999 10-Q and the Company First Quarter 1998
10-Q and other documents filed by the Company with the Commission, and the
following summary is qualified in its entirety by reference to such reports. The
Company 1998 Annual Report, the Company 1999 10-Q and the Company First Quarter
1998 10-Q are available for inspection as described below under "Available
Information."
THE COMPANY AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
------------------------ -------------------------------------------
MARCH 31, MARCH 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1998 1997 1996
----------- ----------- ------------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Statement of Income Data:
Revenue:
Products.................................... $ 7,718 $ 8,806 $ 34,182 $ 35,385 $ 31,169
Service..................................... 3,861 2,835 13,470 8,610 5,865
----------- ----------- ------------- ------------- -------------
Total revenue............................. 11,579 11,641 47,652 43,995 37,034
Costs and Expenses:
Cost of revenue--products................... 938 864 3,114 4,764 4,142
Cost of revenue--service.................... 740 561 2,611 1,692 1,503
Research and development.................... 2,894 3,042 11,508 11,238 9,350
Marketing and sales......................... 4,555 4,655 18,767 15,416 11,877
General and administrative.................. 1,166 1,361 5,365 4,810 4,793
Merger and acquisition related charges...... 995 4,081 4,081 2,203 --
----------- ----------- ------------- ------------- -------------
Total costs and expenses.................. 11,288 14,564 45,446 40,123 31,665
----------- ----------- ------------- ------------- -------------
Income (loss) from operations................. 291 (2,923) 2,206 3,872 5,369
----------- ----------- ------------- ------------- -------------
Other income (expense):
Interest income, net........................ 426 501 1,742 1,858 1,531
Other, net.................................. (6) (7) 13 (17) 65
----------- ----------- ------------- ------------- -------------
Total other income........................ 420 494 1,755 1,841 1,596
----------- ----------- ------------- ------------- -------------
Income (loss) before income taxes............. 711 (2,429) 3,961 5,713 6,965
Income tax (benefit) expense................ 213 (850) 978 1,809 1,699
----------- ----------- ------------- ------------- -------------
Net income (loss)............................. 498 (1,579) 2,983 3,904 5,266
----------- ----------- ------------- ------------- -------------
Basic net income (loss) per share............. 0.05 (0.17) 0.32 0.43 0.61
----------- ----------- ------------- ------------- -------------
Diluted net income (loss) per share........... 0.05 (0.17) 0.31 0.41 0.58
----------- ----------- ------------- ------------- -------------
Shares used in basic net income (loss) per
share calculation........................... 9,349 9,252 9,320 9,165 8,618
Shares used in diluted net income (loss) per
share calculation........................... 9,503 9,252 9,519 9,446 9,046
Balance Sheet Data:
Total assets................................ 61,374 55,205 63,288 56,907 49,734
Total current liabilities................... 12,023 10,731 13,179 10,753 7,842
Stockholders' equity........................ 49,711 44,455 50,109 46,154 41,687
</TABLE>
12
<PAGE>
Except as otherwise noted in this Offer to Purchase, all of the information
with respect to the Company set forth in this Offer to Purchase has been derived
from publicly available information. Although Cadence and Purchaser have no
knowledge that any of such information is untrue, neither Cadence nor Purchaser
takes any responsibility for the accuracy or completeness of information
contained in this Offer to Purchase with respect to the Company or for any
failure by the Company to disclose events which may have occurred or may affect
the significance or accuracy of any such information.
8. CERTAIN INFORMATION CONCERNING CADENCE AND PURCHASER
GENERAL
Cadence is a Delaware corporation with its principal office located at 2655
Seely Avenue, Building 5, San Jose, CA 95134. Cadence provides software
technology and comprehensive design and consulting services and technology for
the product development requirements of the world's leading electronics
companies. Cadence licenses its leading-edge EDA software technology and
provides a range of professional services to companies throughout the world
ranging from consulting services to help optimize performance of the customers'
product to design services to create the actual design of the electronic system
for the customer's product. Cadence is a supplier of "design realization"
solutions, which are used by companies to design and develop complex chips and
electronic systems including semiconductors, computer systems and peripherals,
telecommunications and networking equipment, mobile and wireless devices,
automotive electronics, consumer products and other advanced electronics.
Purchaser is a Delaware corporation with its principal executive offices
located at 2655 Seely Avenue, Building 5, San Jose, CA 95134. Purchaser is a
wholly-owned subsidiary of Cadence which was organized to acquire the Company
and has not conducted any unrelated activities since its organization.
SUMMARY FINANCIAL INFORMATION
Set forth below is certain selected consolidated financial information with
respect to Cadence and its subsidiaries contained in Cadence's 1998 Annual
Report on Form 10-K (the "Cadence 1998 Annual Report") and Cadence's Quarterly
Report on Form 10-Q for the quarter ended April 3, 1999 (the "Cadence 1999
10-Q"). More comprehensive financial information is included in the Cadence 1998
Annual Report, the Cadence 1999 10-Q and other documents filed by Cadence with
the Commission, and the following summary is qualified in its entirety by
reference to such other reports and documents and all the financial information
(including any related notes) contained therein. The Cadence 1998 Annual Report,
the Cadence 1999 10-Q and such other documents are available for inspection as
described below under "Available Information."
13
<PAGE>
CADENCE DESIGN SYSTEMS, INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
-------------------- ---------------------------------------
APRIL 3, APRIL 4, JANUARY 2, JANUARY 3, DECEMBER 28,
1999 1998 1999 1998 1996
--------- --------- ----------- ----------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Statement of Income Data:
Revenue:
Product.......................................... $ 166,095 $ 154,049 $ 695,036 $ 537,490 $ 441,263
Services......................................... 70,560 52,302 255,787 160,890 114,620
Maintenance...................................... 68,579 63,872 265,247 227,989 223,181
--------- --------- ----------- ----------- -------------
Total revenue.................................. 305,234 270,223 1,216,070 926,369 779,064
--------- --------- ----------- ----------- -------------
Costs and Expenses:
Cost of product.................................. 12,971 11,844 51,539 40,064 49,469
Cost of services................................. 46,492 39,601 185,683 114,711 80,963
Cost of maintenance.............................. 10,700 10,343 43,453 27,838 25,067
Amortization of acquired intangibles............. 12,457 546 17,443 1,946 929
Marketing and sales.............................. 70,168 69,245 302,332 263,054 240,740
Research and development......................... 45,201 41,707 179,394 143,746 123,065
General and administrative....................... 16,484 16,521 67,444 58,412 60,049
Unusual items.................................... 14,192 60,857 263,594 44,053 100,543
--------- --------- ----------- ----------- -------------
Total costs and expenses....................... 228,665 250,664 1,110,882 693,824 680,825
--------- --------- ----------- ----------- -------------
Income from operations............................. 76,569 19,559 105,188 232,545 98,239
Other income (expense), net...................... (605) 2,619 7,479 26,215 226
--------- --------- ----------- ----------- -------------
Income before provision for income taxes and
cumulative effect of change in accounting
method........................................... 75,964 22,178 112,667 258,760 98,465
Provision for income taxes....................... 24,186 22,537 80,685 78,384 64,155
--------- --------- ----------- ----------- -------------
Income before cumulative effect of change in
accounting method................................ 51,778 (359) 31,982 180,376 34,310
Cumulative effect of change in accounting method,
net of taxes of $5,261 in 1997................. -- -- -- 12,276 --
--------- --------- ----------- ----------- -------------
Net income (loss).................................. $ 51,778 $ (359) $ 31,982 $ 168,100 $ 34,310
--------- --------- ----------- ----------- -------------
--------- --------- ----------- ----------- -------------
Basic Net Income per Share:
Net income before cumulative effect of change in
accounting method.............................. $ 0.24 $ -- $ 0.15 $ 0.93 $ 0.19
--------- --------- ----------- ----------- -------------
--------- --------- ----------- ----------- -------------
Net income....................................... $ 0.24 $ -- $ 0.15 $ 0.86 $ 0.19
--------- --------- ----------- ----------- -------------
--------- --------- ----------- ----------- -------------
Diluted Net Income Per Share:
Net income before cumulative effect of change in
accounting method.............................. $ 0.22 $ -- $ 0.14 $ 0.82 $ 0.16
--------- --------- ----------- ----------- -------------
--------- --------- ----------- ----------- -------------
Net income....................................... $ 0.22 $ -- $ 0.14 $ 0.77 $ 0.16
--------- --------- ----------- ----------- -------------
--------- --------- ----------- ----------- -------------
Weighted average common shares outstanding......... 217,092 210,014 211,975 194,900 178,399
--------- --------- ----------- ----------- -------------
--------- --------- ----------- ----------- -------------
Weighed average common and potential common shares
outstanding--assuming dilution................... 233,791 210,014 233,647 219,552 208,444
--------- --------- ----------- ----------- -------------
--------- --------- ----------- ----------- -------------
Balance Sheet Data:
Total assets..................................... $1,418,350 $1,059,121 $1,405,958 $1,023,850 $ 769,172
Total current liabilities........................ $ 270,060 $ 247,500 $ 327,912 $ 268,795 $ 243,131
Total liabilities................................ $ 449,786 $ 283,812 $ 548,479 $ 296,753 $ 301,134
Total stockholders' equity....................... $ 968,564 $ 775,309 $ 857,479 $ 727,097 $ 468,038
</TABLE>
14
<PAGE>
AVAILABLE INFORMATION
Cadence is subject to the information reporting requirements of the Exchange
Act and, in accordance therewith, files reports and other information with the
Commission. Information, as of particular dates, concerning Cadence's directors
and officers, their remuneration, stock options and other matters, the principal
holders of Cadence's securities and any material interest of such persons in
transactions with Cadence is required to be disclosed in proxy statements
distributed to Cadence's stockholders and filed with the Commission. These
reports, proxy statements and other information should be available for
inspection at the Commission and copies thereof should be obtainable from the
Commission and from the New York Stock Exchange in the same manner as is
described for the Company in Section 7.
DIRECTORS AND OFFICERS
The name, business address, citizenship, present principal occupation or
employment and five-year employment history of each of the executive officers of
Cadence and Purchaser are set forth in Schedule I hereto.
Except as described in this Offer to Purchase, (i) neither Cadence nor
Purchaser nor, to the best of Cadence's and Purchaser's knowledge, any of the
persons listed in Schedule I hereto, or any associate or subsidiary of Cadence,
beneficially owns or has any right to acquire directly or indirectly any Shares
or has any contract, arrangement, understanding or relationship with any other
person with respect to any Shares, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or the voting
of any Shares, joint ventures, loan or option arrangements, puts or calls,
guaranties of loans, guaranties against loss, or the giving or withholding of
proxies, and (ii) neither Cadence nor Purchaser nor, to the best of Cadence's
and Purchaser's knowledge, any of the other persons referred to above, or any of
the respective directors, executive officers or subsidiaries of any of the
foregoing, has effected any transaction in the Shares during the past 60 days.
Except as set forth in this Offer to Purchase, since June 18, 1994, neither
Cadence, Purchaser nor, to the best of Cadence's and Purchaser's knowledge, any
of the persons listed on Schedule I hereto, has had any transaction with the
Company or any of its executive officers, directors or affiliates that is
required to be reported under the rules and regulations of the Commission
applicable to the Offer. Except as set forth in this Offer to Purchase, since
June 18, 1994 there have been no contracts, negotiations or transactions between
Cadence, any of its subsidiaries or, to the best of Cadence's and Purchaser's
knowledge, any of the persons listed in Schedule I to this Offer to Purchase, on
the one hand, and the Company or its affiliates, on the other hand, concerning a
merger, consolidation or acquisition; a tender offer for or other acquisition of
securities of any class of the Company; an election of directors of the Company;
or a sale or other transfer of a material amount of assets of the Company or any
of its subsidiaries.
9. SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by Purchaser to purchase the Shares will
be approximately $121 million. Purchaser plans to obtain all funds needed for
the Offer through a capital contribution, which will be made by Cadence to
Purchaser at the time the Shares tendered pursuant to the Offer are accepted for
payment. Cadence intends to use its available cash on hand to make this capital
contribution. To the extent necessary, Cadence may borrow a portion of such
funds pursuant to its existing bank line of credit. Neither the Offer nor the
Merger is conditioned on obtaining financing.
15
<PAGE>
10. CERTAIN TRANSACTIONS BETWEEN CADENCE AND THE COMPANY
Except as set forth in this Offer to Purchase, since January 1, 1998, none
of Cadence or Purchaser or, to the best knowledge of Cadence and Purchaser, any
of the persons listed on Schedule I hereto, has engaged in any transaction with
the Company or any of its executive officers, directors or affiliates that is
required to be reported under the rules and regulations of the Commission
applicable to the Offer. Except as set forth in this Offer to Purchase, since
January 1, 1998 there have been no contracts, negotiations or transactions
between Cadence, or any of its subsidiaries or, to the best knowledge of Cadence
and Purchaser, any of the persons listed in Schedule I to this Offer to
Purchase, on the one hand, and the Company or any of its affiliates, on the
other hand, concerning a merger, consolidation or acquisition; a tender offer
for or other acquisition of securities of any class of the Company; an election
of directors of the Company; or a sale or other transfer of a material amount of
assets of the Company or any of its subsidiaries.
On April 21, 1999, Cadence and the Company entered into a Confidentiality
Agreement pursuant to which the parties agreed to keep confidential all
information exchanged in contemplation of potential merger transactions.
11. CONTACTS WITH THE COMPANY; BACKGROUND OF THE OFFER AND THE MERGER
As a result of prior discussions related to the integration of the products
of Cadence and the Company, in March 1999, David DeMaria, Vice President of
Marketing and Performance Engineering at Cadence, contacted James M. Plymale,
Vice President of Marketing at the Company, to review prospects for closer
cooperation between the two companies and potential strategic alliances,
including the possibility of a merger or acquisition. Through these discussions,
the parties gained substantial familiarity with each other's product lines,
technical competencies, and relative strengths.
On April 8, 1999, at the invitation of Cadence, Michael F. Bosworth, the
Company's Chairman of the Board, President and Chief Executive Officer, P. David
Bundy, the Company's Chief Financial Officer, Mr. Plymale, and John Savage from
Alliant Partners, the Company's financial advisors, met in Palo Alto with H.
Raymond Bingham, Cadence's then Executive Vice President and Chief Financial
Officer and current Chief Executive Officer and President, Margaret McCarthy,
Cadence's Corporate Vice President of Mergers and Acquisitions, and Mr. DeMaria
to further explore the parties' interests in a merger or acquisition.
On April 21, 1999, the Company and Cadence entered into a letter agreement
outlining the respective obligations of each party to maintain information
exchanged in confidence, and containing commitments by each party not to solicit
each other's employees and not to pursue an acquisition of the other party
without such other party's consent for at least six months following that date.
On April 29, 1999, Mr. DeMaria and other representatives of Cadence met in
Beaverton with Mr. Plymale, Mr. Bundy and Philip F. Kilcoin, the Company's Vice
President of Product Operations, to further discuss the strategic implications
of an acquisition.
On May 13, 1999, Mr. Bosworth, Mr. Plymale, Mr. Bundy and other
representatives of the Company met in San Jose with Mr. Bingham, Ms. McCarthy,
Mr. DeMaria and other representatives of Cadence and identified areas for
further investigation of synergies and the potential for agreement by each
party.
On May 20, 1999, Mr. DeMaria and other respresentatives of Cadence met in
Beaverton with Mr. Bosworth, Mr. Plymale, Mr. Kilcoin and other representatives
of the Company to further discuss a potential acquisition.
Also in May, Mr. Plymale and Mr. DeMaria continued their discussions from
time to time regarding the strategic implications of an acquisition.
16
<PAGE>
On May 27, 1999, the parties met again. Mr. Bingham, Mr. DeMaria, Ms.
McCarthy, William Porter, Cadence's Chief Financial Officer and Senior Vice
President, and Michael Casey, Cadence's Vice President and Associate General
Counsel, met at Cadence's offices to conduct due diligence, including
discussions of technical products and valuation of the Company, with Mr.
Bosworth, Mr. Bundy, Mr. Kilcoin, Mr. Plymale and other representatives of the
Company.
On May 28, 1999, Mr. Porter, Ms. McCarthy, Mr. DeMaria and Mr. Casey met
with Mr. Bundy, Mr. Bosworth and Mr. Savage to discuss the pricing of the
transaction. The parties could not come to terms on a price and the negotiations
broke off with a decision to continue communications and perhaps re-engage at a
later date.
Subsequent meetings and discussions occurred on June 2 and 3, 1999 and led
to an understanding that Cadence would undertake further due diligence
concerning the Company in Beaverton and the parties would begin discussions of
the terms of a potential definitive agreement.
On June 4, 1999, the Company Board met in Beaverton. The Company's
representatives presented a report on the status of discussions with Cadence and
the Company Board approved further efforts to proceed to negotiate a definitive
agreement, subject to approval of the same by the Company Board.
Over the week of June 7, 1999, representatives of Cadence and the Company
met from time to time in Beaverton and in Palo Alto to conduct further diligence
and to negotiate the terms of a definitive merger agreement.
From June 11 through June 14, 1999, representatives of Cadence met with
various employees of the Company to discuss possible employment with Cadence in
the event of a merger.
On June 14, 1999, the Company Board and the Board of Directors of Cadence
each approved the transaction and the definitive Merger Agreement, as well as
the Stock Option Agreement.
On June 15, 1999, the parties issued a joint press release announcing the
transaction.
17
<PAGE>
12. PURPOSE OF THE OFFER AND THE MERGER AGREEMENT
The purpose of the Offer and the Merger is for Cadence to acquire,
indirectly, the entire equity interest in the Company. Upon consummation of the
Merger, the Company will become a direct, wholly-owned subsidiary of Cadence.
The acquisition of the entire equity interest in the Company has been structured
as a cash tender offer followed by a cash merger in order to provide a prompt
transfer of ownership of the equity interest in the Company from the Company's
stockholders to Cadence and to provide them with cash for all of their Shares.
Under the DGCL and the Company's Certificate of Incorporation, the approval
of the Company Board and, under certain circumstances, the affirmative vote of
the holders of sixty-seven percent (67%) of the Shares present at a duly
constituted meeting are required to approve and adopt the Merger Agreement and
the transactions contemplated thereby. If a vote of the stockholders is
required, the Company has agreed in the Merger Agreement to take all actions
necessary to convene and hold a meeting of its stockholders (the "Stockholders'
Meeting"), as promptly as practicable after the acceptance for payment of Shares
pursuant to the Offer, to consider and vote upon the adoption and approval of
the Merger Agreement and the transactions contemplated thereby. A proxy
statement or information statement concerning the Merger will be furnished to
stockholders of the Company in connection with any Stockholders' Meeting.
Notwithstanding the foregoing, if Cadence, Purchaser and/or any other subsidiary
of Cadence has acquired at least 90% of the outstanding Shares, the parties will
take all necessary and appropriate actions to cause the Merger to become
effective as soon as practicable after the expiration of the Offer without a
Stockholders' Meeting in accordance with Section 253 of the DGCL.
At a meeting held on June 14, 1999, the Company Board unanimously (a)
determined that the Merger Agreement and the transactions contemplated thereby,
including the Offer and the Merger, are fair to and in the best interests of the
Company's stockholders, (b) adopted and approved the Merger Agreement, the Stock
Option Agreement and the transactions contemplated thereby, and authorized the
execution thereof by the Company and (c) determined to recommend that the
Company's stockholders accept the Offer and tender their shares hereunder. As
described above, the only remaining corporate action of the Company that may be
required is the approval and adoption of the Merger Agreement and the
transactions contemplated thereby by the holders of sixty-seven percent (67%) of
the Shares. If the Minimum Condition is satisfied, Cadence will have sufficient
voting power to cause the approval and adoption of the Merger Agreement and the
transactions contemplated thereby without the affirmative vote of any other
stockholder of the Company. Under the Merger Agreement, Cadence has agreed to
vote, or cause to be voted, at any such meeting all Shares owned by it,
Purchaser or any other subsidiary of Cadence in favor of the Merger. If Cadence
acquires at least 90% of the Shares in the Offer, under the DGCL, it will be
able to consummate the Merger without a vote of the Company's stockholders.
Furthermore, pursuant to the Stock Option Agreement, if Purchaser acquires
Shares pursuant to the Offer, Cadence or Purchaser may acquire from the Company
such additional Shares, up to the maximum amount of authorized and unissued
Common Stock, as shall be necessary so that the number of Shares then owned by
Cadence or Purchaser shall equal 90% of the total Shares outstanding. The
purchase of Shares pursuant to its option may allow Cadence to increase its
ownership of Shares above 90% in order to consummate the Merger without a vote
of the stockholders of the Company. See "--13. The Merger Agreement, the Stock
Option Agreement and the Voting Agreements." In addition, Cadence reserves the
right to purchase additional Shares in the open market.
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13. THE MERGER AGREEMENT, THE STOCK OPTION AGREEMENT AND THE STOCKHOLDERS
AGREEMENT
THE MERGER AGREEMENT
The following is a summary of certain provisions of the Merger Agreement. A
copy of the Merger Agreement is filed with the Commission as an exhibit to
Cadence's and Purchaser's Tender Offer Statement on Schedule 14D-l.
THE OFFER. The Merger Agreement provides for the making of the Offer.
Pursuant to the Offer, each tendering stockholder will receive the Offer Price
for each Share tendered in the Offer. Purchaser's obligation to accept for
payment or pay for Shares is subject to the satisfaction of the conditions that
are described in "--18. Certain Conditions of the Offer," including the Minimum
Condition. Pursuant to the Merger Agreement, Purchaser expressly reserves the
right to waive any of the conditions to the Offer (except as otherwise provided
in the Merger Agreement), and to make any change in the terms or conditions of
the Offer; provided that, without the written consent of the Company, Purchaser
may not (i) decrease the Offer Price or change the form of consideration payable
in the Offer, (ii) decrease the number of Shares sought pursuant to the Offer,
(iii) amend or waive satisfaction of the Minimum Condition to permit the
purchase of shares constituting less than a majority of the number of Shares
outstanding, (iv) add additional conditions to the Offer, (v) amend the
conditions to the Offer set forth in Annex I to the Merger Agreement to broaden
their scope or (vi) amend any other term of the offer in any manner adverse to
the holders of Shares.
Notwithstanding the foregoing, Purchaser may, without the consent of the
Company Board, (i) extend the expiration date of the Offer (as it may be
extended) for any period required by applicable rules and regulations of the
Commission in connection with an increase in the consideration to be paid
pursuant to the Offer or any other material development affecting the Offer and
(ii) extend the expiration date of the Offer (as it may be extended) for up to
ten business days, if on such expiration date the conditions for the Offer
described on Annex I to the Merger Agreement shall have been satisfied or
earlier waived, but the number of Shares that have been validly tendered and not
withdrawn represents less than 90 percent of the then issued and outstanding
Shares on a fully diluted basis; provided, however, that the expiration date of
the Offer may not be extended beyond September 30, 1999 without the consent of
the Company. Purchaser will extend the Offer from time to time unless any such
condition is no longer reasonably capable of being satisfied or any such event
has occurred. However, Purchaser is not obligated to extend the Offer beyond
August 30, 1999 if, as of such date, the Minimum Condition has not been
satisfied.
BOARD REPRESENTATION. Promptly upon the purchase by Purchaser of any Shares
pursuant to the Offer, Cadence will be entitled to designate such number of
directors, rounded up to the next whole number, on the Company Board as is equal
to the product of the total number of directors on the Company Board (determined
after giving effect to the directors elected pursuant to this sentence) and the
percentage that the aggregate number of Shares beneficially owned by Cadence or
any affiliate of Cadence (including such Shares as are accepted for payment
pursuant to the Offer, but excluding Shares held by the Company or any of its
Subsidiaries) bears to the total number of Shares then outstanding.
Notwithstanding the foregoing, the Company shall ensure that two of the members
of the Company Board as of June 14, 1999 and who are neither officers of the
Company nor designees, stockholders, affiliates or associates (within the
meaning of the Federal securities laws) of Cadence (the "Independent Directors")
will remain members of the Company Board until the effective time of the Merger
(the "Effective Time"). If at any time fewer than two Independent Directors
remain, the other directors shall elect such number of persons who are neither
officers of the Company nor designees, stockholders, affiliates or associates of
Cadence so that the total of such persons and remaining Independent Directors is
at least two. Any such person so elected will be deemed to be an Independent
Director. Following the time Cadence's designees constitute a majority of the
Company Board and prior to the Effective Time, the affirmative vote of the
Independent Directors is required for any
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amendment of the Merger Agreement or the Stock Option Agreement, any termination
of the Merger Agreement or the Stock Option Agreement by the Company, any
extension by the Company of the time for the performance of any of the
obligations or other acts of Cadence or Purchaser or any waiver of any of the
Company's rights under the Merger Agreement or any other determination with
respect to any action to be taken or not to be taken by the Company relating to
the Merger Agreement. The Company's obligation to appoint designees of Cadence
to the Company Board will be subject to Section 14(f) of the Exchange Act and
Rule 14f-1 thereunder.
THE MERGER. No later than the second business day after the satisfaction or
waiver of the conditions to the Merger, Purchaser will be merged with and into
the Company, as a result of which the separate corporate existence of Purchaser
will cease. The Company will be the Surviving Corporation and a wholly-owned
subsidiary of Cadence and its name will be changed to OrCAD, Inc. The Effective
Time will occur at the date and time that a certificate of merger in such form
as is required by the DGCL (the "Certificate of Merger") is filed with the
Secretary of State of the State of Delaware, or such later time as Cadence and
the Company may agree upon and as may be set forth in the Certificate of Merger.
The directors of Purchaser at the Effective Time will be the directors of the
Surviving Corporation until their successors are duly elected and qualified, and
the officers of Purchaser at the Effective Time will be the officers of the
Surviving Corporation until their successors are duly elected and qualified.
CONSIDERATION TO BE PAID IN THE MERGER. In the Merger, each outstanding
Share (except for (i) Shares owned by the Company or Cadence or by any
subsidiary of the Company or Cadence, which will be canceled and retired and
will cease to exist without any payment with respect thereto and (ii) Shares
held by a stockholder who has demanded and perfected such stockholder's demand
for appraisal of such stockholder's Shares in accordance with the DGCL and as of
the Effective Time has neither effectively withdrawn nor lost such stockholder's
right to such appraisal) will be canceled and extinguished and converted into
the right to receive the Offer Price, without interest thereon (the "Merger
Consideration"). Each share of common stock of Purchaser issued and outstanding
immediately prior to the Effective Time will be converted into one share of
common stock of the Surviving Corporation.
OPTIONS. At the Effective Time, except as provided below with respect to
options granted under the Company's 1995 Stock Option Plan for Nonemployee
Directors (the "Director Option Plan") and the Company's 1991 Non-Qualified
Option Plan (the "1991 Option Plan") each then outstanding option to purchase
Shares (a "General Option") granted under any of the Company's other stock
option plans referred to in Section 3.11(a) of the Merger Agreement, each as
amended (collectively, the "General Option Plans," and, together with the
Director Option Plan and the 1991 Option Plan, the "Option Plans"), and any and
all other outstanding options, stock warrants and stock rights granted pursuant
to such Option Plans or otherwise, and in each case, whether or not then
exercisable or vested, will be deemed to constitute an option to acquire, on the
same terms and conditions as were applicable under such option, a number of
shares of common stock, par value $.01 par value, of Cadence ("Cadence Common
Stock"), with fractions rounded off to the nearest whole number, equal to the
number of Shares subject thereto multiplied by that number of shares, or the
fraction of a share, of Cadence Common Stock having a fair market value,
determined as set forth below, equal to the Offer Price; provided, however, that
in the case of any option to which Section 421 of the Internal Revenue Code of
1986, as amended (the "Code") applies by reason of its qualification under
Section 422 of the Code ("incentive stock options" or "ISOs") the option price,
the number of shares purchasable pursuant to such option and the terms and
conditions of exercise of such option shall be determined in order to comply
with Section 424(a) of the Code. The fair market value of the Cadence Common
Stock shall be the average closing price of one share of Cadence Common Stock
(as reported in the Wall Street Journal) during the five trading days
immediately preceding the closing of the Merger.
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At the Effective Time, each then outstanding option to purchase Shares
granted under the Director Option Plan (a "Director Option"), whether or not
then exercisable or vested, will be canceled and extinguished and converted into
the right to receive, in cash, the product of (i) the number of Shares subject
to such Director Option and (ii) the excess of the Offer Price over the per
share exercise price applicable to such Director Option. In addition, at the
Effective Time, each then outstanding option to purchase Shares granted under
the 1991 Option Plan (a "1991 Option"), whether or not then exercisable or
vested will be deemed to constitute an option to acquire, on the same terms and
conditions as were applicable under such 1991 Option, a number of shares of
Cadence Common Stock, with fractions rounded off to the nearest whole number,
equal to the number of Shares subject thereto multiplied by that number of
shares, or the fraction of a share, of Cadence Common Stock having a fair market
value, determined as set forth above, equal to the Offer Price; provided,
however, that if the holder of any 1991 Option does not consent in writing,
prior to the Effective Time, to the foregoing treatment, then each 1991 Option
held by such holder, whether or not then exercisable or vested, will be canceled
and extinguished and be converted into the right to receive, in cash, the
product of (i) the number of Shares subject to such 1991 Option and (ii) the
excess of the Offer Price over the per share exercise price applicable to such
1991 Option.
STOCK PURCHASE PLAN. Each outstanding and valid option or right to purchase
Shares (a "Right") granted or provided under the Company's 1996 Employee Stock
Purchase Plan (the "Stock Purchase Plan") will be exercised automatically on the
day that is five days prior to the date scheduled for the closing of the Merger
which shall constitute the New Purchase Date for purposes of the Stock Option
Plan.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains
representations and warranties by the Company, on the one hand, and Cadence and
Purchaser, on the other hand. These include representations and warranties as to
the following subjects:
- due organization, existence, good standing and qualification to do
business and, in the case of the Company, its subsidiaries and its equity
investments;
- corporate power and authority to enter into and perform its obligations
under the Merger Agreement and the Stock Option Agreement; proper
execution, delivery and enforceability of the Merger Agreement and the
Stock Option Agreement;
- approval of the Merger, the Merger Agreement and the Stock Option
Agreement by the Company Board, the board of directors of Cadence or the
board of directors of Purchaser, as the case may be;
- filings with the Commission; accuracy of financial statements included
therein;
- accuracy of the information about the Company, Cadence and Purchaser, as
the case may be, in this Offer to Purchase, the Letter of Transmittal, the
Proxy Statement, the Company's Solicitation/Recommendation on Schedule
14D-9, and the other documents related thereto;
- governmental and third-party approvals;
- compliance of the Merger Agreement with each party's charter documents,
material agreements and applicable law;
- absence of existing defaults under its charter documents, material
agreements and applicable law;
- absence of broker's fees arising from the transactions contemplated by the
Merger Agreement; and
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- in the case of Purchaser, that it has neither incurred obligations nor
engaged in any business, except with respect to its incorporation or in
connection with the transactions contemplated by the Merger Agreement.
The Merger Agreement contains additional representations and warranties of
the Company as to the following subjects:
- capitalization of the Company and its subsidiaries;
- absence of undisclosed liabilities of the Company and its subsidiaries and
since December 31, 1998, absence of material changes in the business of
the Company and its subsidiaries;
- material legal proceedings and injunctions;
- compliance with applicable laws;
- employee benefit plans, labor, employment and related matters;
- absence of material environmental liabilities;
- payment of taxes, filing of tax returns and other tax matters;
- intellectual property;
- "Year 2000" compliance;
- material distributor and OEM agreements; absence of agreements restricting
competition and business of the Company;
- insurance policies;
- absence of certain business practices;
- status of product warranties and guaranties;
- current suppliers and customers;
- vote required to approve the Merger Agreement; and
- opinion of financial advisor.
No representations or warranties made by the Company, Cadence or Purchaser
will survive beyond the Effective Time.
CONDUCT OF BUSINESS BEFORE THE MERGER. The Merger Agreement contains
certain covenants pursuant to which each of the Company, Cadence and Purchaser
has agreed to take certain actions prior to the Effective Time of the Merger.
These include covenants of each of the Company and its subsidiaries:
- to conduct its business in the ordinary course;
- to preserve intact its business organization using no less diligence and
effort than would be applied in the absence of the Merger Agreement;
- to keep available the services of its current officers and employees using
no less diligence and effort than would be applied in the absence of the
Merger Agreement; and
- to preserve its relationships with customers, suppliers and others having
business dealings with it using no less diligence and effort than would be
applied in the absence of the Merger Agreement.
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The Merger Agreement contains further covenants pursuant to which Cadence
and the Company have also agreed to:
- cooperate with each other and use all reasonable efforts to make all
filings, and to obtain consents and approvals of all third parties and
governmental authorities, necessary to complete the transactions
contemplated by the Merger Agreement, and to contest any legal proceeding
relating to the Merger Agreement;
- not issue any press release or make any other public statements without
first consulting with the other party; and
- promptly tell the other party about any events or circumstances that would
cause any representations or warranties to not be true or any obligations
not to have been fulfilled.
The Merger Agreement also provides that, subject to certain agreed
exceptions, each of the Company and its subsidiaries will not:
- amend its charter documents;
- issue or agree to issue any stock of any class or any other securities or
equity equivalents, except for shares of the Company's Common Stock issued
under options granted prior to the date of the Merger Agreement and Rights
that are vested in the Stock Purchase Plan on or prior to the New Purchase
Date as provided above;
- split, combine or reclassify any shares of its capital stock, declare, set
aside or pay any dividend or other distribution of any kind in respect of
its capital stock or redeem or otherwise acquire any of its securities;
- adopt a plan of complete or partial liquidation, dissolution, merger or
other reorganization other than the Merger;
- alter any subsidiary's corporate structure or ownership;
- incur or assume any debt, except under existing lines of credit in the
ordinary course of business or materially change the terms of any existing
debt;
- become responsible for the obligations of any other person except for
obligations of the Company's subsidiaries incurred in the ordinary course
of business;
- make any loans to or investments in any other person, except its
subsidiaries or for customary loans or advances to employees in the
ordinary course of business consistent with its past practices;
- pledge or encumber its capital stock;
- mortgage or pledge any of its material assets or create or permit any
material lien on these assets;
- except as required by law, enter into, adopt, modify or terminate any
employee compensation, benefit or similar plan, increase in any
compensation or fringe benefits (except for increases for employees other
than officers, in the ordinary course of business consistent with past
practice, and after having delivered five days prior notice to Cadence)
and hire or retain any new officer or director level employee;
- acquire, sell, license, lease or dispose of any assets in any single
transaction or series of related transactions, except for sales of its
products in the ordinary course of business consistent with its past
practices;
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- except as required as a result of a change in law or in generally accepted
accounting principles, change any of its accounting principles, practices
or methods;
- revalue in any material respect any of its assets, including writing down
the value of inventory or writing-off notes or accounts receivable, other
than in the ordinary course of business;
- acquire any other business or entity;
- enter into any material agreement;
- amend, modify or waive any material right under any material contracts;
- modify its standard product warranty terms or modify any existing product
warranties in any material and adverse manner;
- enter into or amend any agreements pursuant to which any other party is
granted exclusive marketing or distribution rights regarding Company
technology;
- authorize any new or additional capital expenditure(s) in excess of
$25,000 individually or $250,000 in the aggregate;
- authorize any new or additional manufacturing capacity expenditure or
expenditures for any manufacturing capacity contracts or arrangements;
- make any material tax election or settle or compromise any material income
tax liability;
- settle or compromise any legal proceeding that relates to the Merger
Agreement or would otherwise be material to the Company;
- commence a lawsuit other than for routine bill collection, in cases where
failure to commence suit would have a Material Adverse Effect on the
Company or for breach of the Merger Agreement;
- commence any material software development project or terminate any
ongoing material software development project, except pursuant to terms of
existing contracts or as contemplated by the Company's project development
budget; and
- take or agree in writing or otherwise to take any of the actions described
above.
The Merger Agreement also provides additional covenants pursuant to which
the Company has agreed that it will:
- upon consummation of the Offer, as promptly as practicable, prepare and
file a Proxy Statement if required;
- upon consummation of the Offer, promptly convene a meeting of
stockholders, if required, in order to accomplish the Merger, use its
commercially reasonable best efforts to solicit proxies in favor of the
Merger and take all other actions to secure any vote of stockholders
required by law to effect the Merger;
- provide Cadence with reasonable access to the Company's employees, books
and records, offices and facilities;
- provide Cadence with periodic financial information; and
- promptly upon the purchase by Purchaser of Shares pursuant to the Offer,
make such changes in the officers of the subsidiaries of the Company as
Cadence may request.
The Merger Agreement provides that the Surviving Corporation will indemnify
and hold harmless officers and directors of the Company prior to the Effective
Time and maintain directors' and officers' liability insurance for a period of
three years after the Effective Time.
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ACQUISITION PROPOSALS.
The term "Third Party Acquisition" is defined in the Merger Agreement to
mean any of the following:
(i) an acquisition of the Company by anyone other than Cadence, Purchaser or
any of their affiliates;
(ii) the acquisition of any material portion of the assets of the Company
and its subsidiaries, other than the sale of its products in the
ordinary course of business consistent with its past practices;
(iii) an acquisition of 20% or more of the outstanding Shares;
(iv) the Company's adoption of a plan of liquidation or declaration or
payment of an extraordinary dividend;
(v) the Company's or any of its subsidiary's repurchase of more than 10% of
the outstanding Shares; or
(vi) the acquisition by the Company or any of its subsidiaries of any
interest or investment in any business whose annual revenue, net income
or assets is equal to or greater than 10% of the annual revenue, net
income or assets of the Company.
The Merger Agreement provides that the Company will:
- immediately cease any discussions or negotiations with any other persons
with respect to any Third Party Acquisition;
- not encourage, solicit, participate or initiate discussions or
negotiations with, or provide any non-public information to anyone except
Cadence and Purchaser concerning any Third Party Acquisition; provided,
however, that the Merger Agreement does not prohibit the Company Board
from (i) taking and disclosing to Company stockholders a position
contemplated by Rules 14d-9 and 14e-2 under the Exchange Act with regard
to a tender or exchange offer and (ii) conducting such due diligence
inquiries (which shall be in writing to the extent possible) in response
to a Third Party Acquisition as the Company Board determines in good
faith, after consultation with and based upon the advice of legal counsel,
may be required in order to comply with its fiduciary duties;
- notify Cadence if the Company or any of its subsidiaries receives any
proposal or inquiry regarding a Third Party Acquisition, including the
terms and conditions of the proposal and the identity of the party making
the proposal, including the nature and content of due diligence inquiries;
and
- advise Cadence from time to time of the status and any material
developments concerning any Third Party Acquisition.
The Merger Agreement also provides that except as described below, the
Company Board may not withdraw or modify its recommendation of the Offer or the
Merger and also may not approve, recommend or cause the Company to enter into
any agreement with respect to, any Third Party Acquisition. However, if the
Company Board by a majority vote determines in its good faith judgment, after
consultation with and based upon the advice of legal counsel, that its fiduciary
duties require it to do so, the Company Board may withdraw its recommendation of
the Offer or the Merger or approve or recommend any BONA FIDE proposal:
- to acquire, directly or indirectly, for consideration consisting of cash
and/or securities more than 20% of the Shares then outstanding or all or
substantially all of the Company's assets;
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- that is for a consideration higher than the Offer Price; and
- that is on terms that the Company Board by a majority vote determines in
its good faith judgment, based on the written advice of the Company's
financial advisor or another financial advisor of nationally recognized
reputation, to be more favorable to the Company's stockholders than the
Merger.
An offer that has all of these characteristics is sometimes referred to
herein as a "Superior Proposal."
Pursuant to the Merger Agreement the Company Board may only withdraw its
recommendation of the Offer or the Merger or approve or recommend any Superior
Proposal (a) after providing written notice to Cadence advising Cadence that the
Company Board has received a Superior Proposal, specifying the material terms
and conditions and identifying the person making the Superior Proposal, and (b)
if Cadence does not, within five business days of receipt of such proposal, make
an offer that the Company Board by a majority vote determines in good faith,
based on the written advice of a financial advisor of nationally recognized
reputation, to be at least as favorable to the Company stockholders as the
Superior Proposal. The Company may not enter into an agreement with respect to
the Superior Proposal unless and until the Merger Agreement is terminated in
accordance with its terms and the Company has paid all amounts due to Cadence
under the Merger Agreement (as described below under "--Termination" and
"--Liquidated Damages; Fees and Expenses").
CONDITIONS TO THE MERGER. The obligation of each of the Company, Cadence
and Purchaser to consummate the Merger is subject to the satisfaction of each of
the following conditions:
- Purchaser shall have made, or caused to be made, the Offer and shall have
purchased, or caused to be purchased, the Shares pursuant to the Offer;
- the Merger and the Merger Agreement shall have been approved and adopted
by the requisite vote of the Company's stockholders, if such vote is
required by the DGCL;
- no statute, rule, regulation, judgment, writ, decree, order or injunction
shall have been promulgated, enacted, entered or enforced, and no other
action shall have been taken, by any governmental entity that in any of
the foregoing cases has the effect of making illegal or directly or
indirectly restraining, prohibiting or restricting the consummation of the
Merger; and
- any waiting period applicable to the Merger under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), shall have
expired or have been terminated and all approvals of and consents to the
Merger required under applicable foreign antitrust or competition laws
shall have been obtained and be in full force and effect.
The obligation of each of Cadence and Purchaser to consummate the Merger is
also subject to the satisfaction of each of the following conditions:
- the representations and warranties of the Company set forth in the Merger
Agreement shall be true and correct in all material respects, in each case
as if such representations and warranties were made at the Effective Time;
and
- the Company shall have performed in all material respects all obligations
and complied in all material respects with all agreements and covenants of
the Company to be performed or complied with by it under the Merger
Agreement at or prior to the Effective Time.
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The obligation of the Company to consummate the Merger is also subject to
the satisfaction of each of the following conditions:
- the representations and warranties of Cadence and Purchaser set forth in
the Merger Agreement are true and correct in all material respects, in
each case as if such representations and warranties were made at the
Effective Time; and
- Cadence and Purchaser have performed in all material respects all of their
respective obligations and complied in all material respects with all of
their respective agreements and covenants to be performed or complied with
by them under the Merger Agreement at or prior to the Effective Time.
Assurances cannot be given that all of the conditions to completing the
Merger will be satisfied.
TERMINATION. The Merger Agreement may be terminated and the Merger
abandoned at any time prior to the completion of the Merger, before or after it
has been approved by the Company's stockholders, pursuant to the following:
- The Merger Agreement may be terminated if Cadence, Purchaser and the
Company mutually agree to such termination in writing.
- The Merger Agreement may be terminated by Cadence and Purchaser, or the
Company, if:
1. any court of competent jurisdiction in the United States or other
United States federal or state governmental entity shall have issued
a final order, decree or ruling, or taken any other final action,
restraining, enjoining or otherwise prohibiting the Merger and such
order, decree, ruling or other action is or shall have become
nonappealable; or
2. the Merger has not been consummated by October 31, 1999, unless the
failure to complete it by that date is due to the failure of the
party seeking to terminate the Merger Agreement to perform its
agreements in the Merger Agreement.
- The Merger Agreement may be terminated by the Company if:
1. the Company Board has approved a Superior Proposal in compliance with
the Merger Agreement, including the payment of amounts due to
Cadence;
2. Cadence or Purchaser terminates the Offer or the Offer expires
without the purchase of Shares by Cadence or Purchaser;
3. Cadence or Purchaser breaches in any material respect any of its
representations, warranties, covenants or other agreements in the
Merger Agreement, which breach is incapable of being cured or has not
been cured by the earlier of 10 business days after written notice by
the Company thereof and the scheduled expiration of the Offer; or
4. the Offer has not expired or been terminated on or before August 30,
1999;
provided that the Company is not in material breach of the Merger Agreement.
- The Merger Agreement may be terminated by Cadence and Purchaser if:
1. prior to the purchase of Shares pursuant to the Offer, the Company
Board has withdrawn, or modified or changed in an adverse manner
adverse to Cadence its approval or recommendation of the Offer, the
Merger Agreement, the Merger, the Stock Option Agreement or the
Stockholders Agreement;
2. prior to the purchase of Shares pursuant to the Offer, the Company
Board has approved a Third Party Acquisition;
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3. Cadence and Purchaser terminate the Offer or the Offer expires
without the purchase of Shares by Cadence or Purchaser;
4. Cadence and Purchaser have failed to commence the Offer on or prior
to five business days following the date of the initial public
announcement of the Offer due to an occurrence that would have
resulted in a failure to satisfy any of the conditions set forth in
Annex I of the Merger Agreement if it had occurred after the
commencement of the Offer;
5. a Third Party Acquisition has occurred;
6. the Company, or any of the Company's officers, directors, employees,
representatives or agents have encouraged, solicited, participated in
or initiated discussions or negotiations with respect to a Third
Party Acquisition;
7. the Company has breached any of its representations, warranties,
covenants or other agreements in the Merger Agreement which breach is
incapable of being cured or has not been cured by the earlier of 10
business days after written notice by the Company thereof and the
scheduled termination of the Merger Agreement (except to the extent
that the aggregate of all breaches thereof do not constitute a
Material Adverse Effect on the Company and do not otherwise
materially and adversely affect the consideration to be paid by
Purchaser in the Offer or the benefits expected to be received by
Cadence under the Merger Agreement); or
8. the Offer has not expired or been terminated on or before August 30,
1999;
provided that Cadence and Purchaser are not in material breach of the Merger
Agreement.
EFFECT OF TERMINATION. Even after the Merger Agreement has been terminated,
the provisions of the Merger Agreement with respect to confidentiality and fees
and expenses will remain in effect. Also, termination will not relieve either
party from liability for any breach by such party of the Merger Agreement prior
to its termination. However, no representations or warranties made by the
Company, Cadence or Purchaser shall survive beyond a termination of the Merger
Agreement.
LIQUIDATED DAMAGES; FEES AND EXPENSES. The Company has agreed to pay
Cadence $4,000,000 as liquidated damages if the Merger Agreement is terminated
as follows:
- It is terminated by the Company because the Company Board approved a
Superior Proposal in compliance with the Merger Agreement;
- It is terminated by Cadence and Purchaser because the Company Board
withdrew, or modified or changed in a manner adverse to Cadence or
Purchaser its approval or recommendation of the Offer, the Merger
Agreement, the Merger, the Stock Option Agreement or the Stockholders
Agreement;
- It is terminated by Cadence and Purchaser because a Third Party
Acquisition has occurred;
- It is terminated by Cadence and Purchaser because the Company, or any of
the Company's officers, directors, employees, representatives or agents
have encouraged, solicited, participated in or initiated discussions or
negotiations with respect to a Third Party Acquisition in violation of the
Merger Agreement;
- It is terminated by Cadence and Purchaser because the Company has breached
any of its representations, warranties, covenants or other agreements in
the Merger Agreement which breach is incapable of being cured or has not
been cured by the earlier of 10 business days after written notice by the
Company thereof and the scheduled termination of the Merger Agreement
(except to the extent that the aggregate of all breaches thereof do not
constitute a Material
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Adverse Effect on the Company and do not otherwise materially and
adversely affect the consideration to be paid by Purchaser in the Offer or
the benefits expected to be received by Cadence under the Merger
Agreement); or
- It is terminated by the Company or, Cadence and Purchaser because Cadence
and Purchaser terminate the Offer or the Offer expires without the
purchase of Shares by Cadence and Purchaser or because the Offer has not
expired or been terminated on or before August 30, 1999 and at the time of
the termination of the Offer (or August 30, 1999), (i) there is an
outstanding offer with respect to a Third Party Acquisition or a third
party shall have publicly announced (and not withdrawn) a plan or proposal
with respect to a Third Party Acquisition and (ii) within nine months from
the date of such termination, a Third Party Acquisition (provided,
however, that with respect to this clause (ii) a Third Party Acquisition
shall not include the acquisition by the Company or any of its
subsidiaries of any interest or investment in any business whose annual
revenue, net income or assets is equal to or greater than 10% of the
annual revenue, net income or assets of the Company where the composition
of a majority of the Company Board remains the same) shall occur or the
Company shall have entered into a definitive agreement with respect to
such a Third Party Acquisition.
In addition, the Company has agreed to pay Cadence up to $1,000,000 as
reimbursement of documented fees and expenses if the Merger Agreement is
terminated under circumstances in which the liquidated damages described above
are payable to Cadence.
Except as described above, the parties to the Merger Agreement have agreed
to pay their own fees and expenses incurred in connection with the Merger
Agreement.
EXTENSION AND WAIVER. At any time prior to the Merger, Cadence, Purchaser
and the Company may agree to:
- extend the time for the performance of any of the obligations or other
acts of the other party;
- waive any inaccuracies in the other's representations and warranties; or
- waive the other's compliance with any of the agreements or conditions in
the Merger Agreement.
AMENDMENT. The Merger Agreement may be changed by the parties at any time
before or after the Company's stockholders approve the Merger. However, any
change which by law requires the approval of the Company's stockholders will
require their subsequent approval to be effective.
DISSENTERS' RIGHTS IN THE MERGER
No appraisal rights are available in connection with the Offer. However, if
the Merger is consummated, stockholders of the Company would have certain rights
to dissent and demand appraisal of their Shares under Section 262 of the DGCL,
including the right to dissent and demand appraisal of, and to receive payment
in cash of the fair value of, their Shares. Dissenting stockholders who comply
with the requisite statutory procedures under the DGCL would be entitled to a
judicial determination and payment in cash of the "fair value" of their Shares
(exclusive of any element of value arising from the accomplishment or
expectation of the Merger) as of the close of business on the day prior to the
date of stockholder authorization of the Merger, together with interest thereon,
at such rate as the court finds equitable, from the date the Merger is
consummated until the date of payment. Under the DGCL, in fixing the fair value
of the Shares, a court would consider the nature of the transaction giving rise
to the stockholders' right to receive payment for Shares and its effects on the
Company and its stockholders, the concepts and methods then customary in the
relevant securities and financial markets for determining fair value of shares
of a corporation engaging in a similar transaction under comparable
circumstances, and all other relevant factors. The value so determined could be
more or
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less than the price per Share to be paid in the Merger. THE FOREGOING SUMMARY OF
THE RIGHTS OF DISSENTING STOCKHOLDERS UNDER DELAWARE LAW DOES NOT PURPORT TO BE
A COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY STOCKHOLDERS DESIRING
TO EXERCISE ANY APPRAISAL RIGHTS AVAILABLE UNDER DELAWARE LAW. THE PRESERVATION
AND EXERCISE OF APPRAISAL RIGHTS REQUIRE STRICT ADHERENCE TO THE APPLICABLE
PROVISIONS OF DELAWARE LAW.
STOCK OPTION AGREEMENT
The following is a summary of certain provisions of the Stock Option
Agreement. A copy of the Stock Option Agreement is filed with the Commission as
an exhibit to Cadence's and Purchaser's Tender Offer Statement on Schedule
14D-l.
The Stock Option Agreement permits Cadence to purchase up to 1,863,331
shares of Company Common Stock at an exercise price of $13.00 per share (the
"Basic Option"). The total number of shares issuable upon exercise of the Basic
Option represents approximately 19.99% of Company Common Stock outstanding on
June 14, 1999 (and approximately 16.66% of the shares of Company Common Stock
after exercise of such option).
Cadence may exercise the Basic Option, in whole or in part, at any time or
from time to time upon the termination of the Merger Agreement under
circumstances obligating the Company to pay Cadence the $4,000,000 liquidated
damages (see "--Termination" and "--Liquidated Damages; Fees and Expenses").
Such Basic Option expires upon the earlier of (a) the Effective Time and (b) the
one year anniversary of the date on which the Merger Agreement has been
terminated.
If after the Basic Option becomes exercisable and before the Basic Option
expires, any Third Party Acquisition occurs, or the Company enters into a
definitive agreement for a Third Party Acquisition, then Cadence, instead of
exercising the Basic Option, will have the right to receive in cancellation of
the Basic Option, cash in an amount equal to:
(a) the excess over $13.00 of the greater of:
- the average of the last sales prices of a share of Company Common Stock
(as reported in the Wall Street Journal) on the last five trading days
preceding exercise; and
- the highest price per share paid or offered to be paid in connection
with a Third Party Acquisition, or, if such Third Party Acquisition
consists of a purchase and sale of assets, the aggregate net
consideration offered to be paid or paid in a Third Party Acquisition,
after payment of applicable corporate taxes, divided by the number of
Shares then outstanding;
(b) multiplied by the number of shares of Company Common Stock covered by
the Basic Option.
In any event, the payment made to Cadence, when added to any consideration
Cadence receives for transfer of the Basic Option or the Shares received
pursuant to the Basic Option to a third party and any payment received by
Cadence as liquidated damages under the Merger Agreement, shall not exceed
$7,800,000.
Cadence may request that the Company register under the Securities Act of
1933, as amended (the "Securities Act"), the offering and sale of the shares of
Company Common Stock that have been acquired by or are issuable to Cadence upon
exercise of the Basic Option, if requested by Cadence within two years after the
exercise of the Basic Option. Any registration request must be for at least 20%
of the Basic Option shares or, if for less than 20% of the originally issuable
Basic Option shares, all of Cadence's remaining Basic Option shares. Cadence may
make up to two demands for registration. Cadence's registration rights terminate
when Cadence becomes entitled to sell all of its Basic Option shares under Rule
144(k) of the Securities Act. The Company may include any other securities in
any registration demanded by Cadence only with Cadence's prior written consent.
The
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Company will use all reasonable efforts to cause each registration statement to
become effective and remain so for 90 days and to obtain all consents or waivers
required from third parties. The Company's obligation to file a registration
statement and to maintain its effectiveness may be suspended for up to 90 days
if the Company Board determines this registration would seriously and adversely
affect the Company, or financial statements required to be included in the
registration statement are not yet available. If the Company proposes to
register the offering and sale of the Company Common Stock for cash for itself
or any other Company stockholder in an underwriting, it will generally allow
Cadence to participate in the registration so long as Cadence agrees to
participate in the underwriting. The Company may satisfy its obligations with
respect to a request for registration by Cadence by allowing Cadence to include
the Basic Option shares in a registration as described above provided that (i)
all Basic Option shares are registered, (ii) such registration statement is
filed within 60 days of Cadence's request and (iii) Cadence's right to make
subsequent requests is not reduced.
The expenses of preparing and filing any registration statement for these
shares of Company Common Stock and any sale covered by it will generally be paid
by the Company, except for underwriting discounts or commissions or brokers'
fees, and the fees and disbursements of Cadence's counsel.
For each registration of Basic Option shares, the Company and Cadence have
agreed to customary indemnification provisions for losses and liabilities under
the Securities Act and otherwise. However, Cadence will not be required to
indemnify the Company beyond Cadence's proceeds from the offering of its Basic
Option shares.
The Stock Option Agreement also permits Cadence to purchase such number of
shares of Company Common Stock as shall equal the lesser of (i) the number of
shares which, when added to the shares then owned by Cadence or Purchaser, shall
equal 90% of the shares of Common Stock then outstanding, plus one and (ii) the
number of authorized and unissued shares of Common Stock (the "Top-Up Option").
Cadence may exercise the Top-Up Option during the 30 days following the
purchase by Cadence or Purchaser of Shares in the Offer provided that (i) the
number of shares of Company Common Stock then owned by Cadence or Purchaser when
added to the shares Cadence can acquire pursuant to such Top-Up Option shall
equal 90% of the shares of Company Common Stock then outstanding, plus one, and
(ii) Cadence or Purchaser have taken all actions so that the Merger will be
completed immediately following the exercise of the Top-Up Option.
Upon the issuance of option shares, the Company will promptly list the
shares on the Nasdaq National Market or on any other exchange on which the
Company Common Stock is then listed.
Because the rights and obligations of Cadence and the Company under the
Stock Option Agreement are subject to compliance with the HSR Act, Cadence has
included in its merger notifications previously filed with the Department of
Justice and Federal Trade Commission a description of its rights under the Stock
Option Agreement. See "--Certain Legal Matters; Regulatory Approvals."
STOCKHOLDERS AGREEMENT
The following is a summary of certain provisions of the Stockholders
Agreement. A copy of the Stockholders Agreement is filed with the Commission as
an exhibit to Cadence's and Purchaser's Tender Offer Statement on Schedule
14D-1.
TENDER OF SHARES. In connection with the execution of the Merger Agreement,
Cadence and Purchaser have entered into the Stockholders Agreement with Wolfram
H. Blume, David Nierenberg, The D3 Family Fund, L.P. and Michael F. Bosworth
(the "Tendering Stockholders"), who beneficially own in the aggregate 1,758,068
Shares, representing approximately 18.9% of the issued and outstanding Shares.
Pursuant to the Stockholders Agreement, each Tendering Stockholder has agreed to
validly
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tender such Tendering Stockholder's Shares pursuant to the terms of the Offer,
not later than the fifth business day after the date hereof.
VOTING OF SHARES. Each Tendering Stockholder has also agreed to vote all of
the Shares beneficially owned by such Tendering Stockholder in accordance with
the Voting Agreement, including (i) in favor of the Merger and the Merger
Agreement, (ii) against any proposal for a Third Party Acquisition and against
any proposal for action or agreement that would result in a breach of any
covenant, representation or warranty or any other obligation or agreement of the
Company under the Merger Agreement or which is reasonably likely to result in
any of the conditions of the Company's obligations under the Merger Agreement
not being fulfilled, any change in the directors of the Company, any change in
the present capitalization of the Company or any amendment to the Company's
charter documents, any other material change in the Company's corporate
structure or business, or any other action which could reasonably be expected to
adversely affect the Merger and (iii) in favor of any other matter necessary for
consummation of the Merger which is considered at any such meeting of
stockholders.
IRREVOCABLE PROXY. Each Tendering Stockholder has also revoked any and all
prior proxies or powers of attorney in respect of any of such Tendering
Stockholder's Shares and appointed Purchaser and Cadence, or any nominee of
Purchaser and Cadence as its true and lawful attorney and proxy to vote each of
the Shares of the Tendering Stockholder as its Proxy, at meeting of the
stockholders of the Company.
NO INCONSISTENT ARRANGEMENTS. Each Tendering Stockholder has agreed not to:
(i) transfer (including any sale, assignment, gift, pledge, hypothecation or
other disposition), or consent to any transfer of, any or all of the Tendering
Stockholder's Shares or any interest therein, or create or any encumbrance on
such Shares, (ii) enter into any contract, option or other agreement or
understanding with respect to any transfer of any or all of such Shares or any
interest therein, (iii) grant any proxy, power-of-attorney or other
authorization in or with respect to such Shares, (iv) deposit such Shares into a
voting trust or enter into a voting agreement or arrangement with respect to
such Shares or (v) take any other action that would in any way restrict, limit
or interfere with the performance of its obligations under the Stockholders
Agreement or in connection with the Merger.
OTHER POTENTIAL ACQUIRERS. Each Tendering Stockholder has agreed, from and
after the date of the Stockholders Agreement until termination of the Merger
Agreement, in such capacity, directly or indirectly, not to (i) solicit or
initiate, or encourage any inquiries regarding or the submission of any proposal
for a Third Party Acquisition, (ii) participate in any discussions or
negotiations regarding, or furnish to any person any information or data with
respect to, or take any other action to knowingly facilitate a Third Party
Acquisition or (iii) enter into any agreement with respect to any proposal for a
Third Party Acquisition or approve or resolve to approve any proposal for a
Third Party Acquisition. Each Tendering Stockholder has also agreed that it
shall immediately cease any existing activities, discussions or negotiations
with any parties with respect to any Third Party Acquisition.
OPTION. Each Tendering Stockholder has also granted to Cadence and
Purchaser an irrevocable option to purchase all of such Tendering Stockholder's
Shares at a price of the higher of (i) $13.00 and (ii) if the Offer is
consummated, the highest price paid by Purchaser pursuant to the Offer. Such
option is exercisable if (x) the Merger Agreement becomes terminable under
circumstances obligating the Company to pay Cadence the $4,000,000 liquidated
damages or (ii) the Offer is consummated but (due to failure by the Tendering
Stockholder who has granted the option to tender validly and not withdraw)
Purchaser has not accepted for payment or paid for all such Tendering
Stockholder's Shares.
REPRESENTATIONS AND WARRANTIES. The Stockholders Agreement contains certain
customary representations and warranties of the parties thereto, including,
without limitation, representations and warranties by the Tendering Stockholders
as to ownership of Shares and power and authority.
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TERMINATION. The Stockholders Agreement expires upon (a) the mutual written
consent of the parties or (b) upon the Effective Time of the Merger.
14. INTERESTS OF CERTAIN PERSONS IN THE MERGER
EMPLOYMENT AGREEMENTS. In connection with the Merger Agreement, Cadence has
entered into employment agreements with a number of officers and employees of
the Company, including Michael F. Bosworth, the Company's Chairman of the Board,
Chief Executive Officer and President, William E. Cibulsky, the Company's Senior
Vice President of Worldwide Sales, James M. Plymale, the Company's Vice
President of Marketing, Philip S. Kilcoin, the Company's Vice President,
Research and Development and P. David Bundy, Vice President of Finance,
Secretary and Chief Financial Officer. All of these employment agreements, which
are contingent upon the closing of the Merger, provide for annual salaries and
bonuses upon satisfaction of performance targets, noncompetition and
nondisclosure provisions and other general employment terms.
INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. Pursuant to the Merger
Agreement, the Surviving Corporation (or any successor) will, to the fullest
extent permitted by law and to the extent not covered by insurance, indemnify
and hold harmless the present and former officers and directors of the Company
and its subsidiaries who suffer liabilities or losses from any threatened or
actual claim or proceeding based on the fact that the person was a director or
officer of the Company or one of its subsidiaries or based on the Merger
Agreement. The Merger Agreement further provides that Cadence will cause the
Surviving Corporation to fulfill and honor in all respects the obligations of
the Company pursuant to any indemnification agreements between the Company and
its directors and officers as of or prior to June 14, 1999 and any
indemnification provisions under the Company's certificate of incorporation or
bylaws as in effect on June 14, 1999. In addition, for not less than three years
after the Effective Time, Cadence or the Surviving Corporation will maintain the
Company's existing officers' and directors' liability insurance (subject to
certain maximum premium payments) or Cadence may, subject to certain
limitations, cause coverage to be provided under any policy maintained for the
benefit of Cadence or any of its subsidiaries.
15. GOING PRIVATE TRANSACTIONS
The Merger must comply with any applicable Federal law at the time of its
consummation. Rule 13e-3 under the Exchange Act is applicable to certain "going
private" transactions. Cadence and Purchaser do not believe that Rule 13e-3 will
be applicable to the Merger unless the Merger is consummated more than one year
after the Offer. If applicable, Rule 13e-3 requires, among other things, that
certain financial information concerning the Company and certain information
relating to the fairness of the Merger and the consideration offered to minority
stockholders be filed with the Commission and disclosed to minority stockholders
prior to the consummation of the Merger.
16. DIVIDENDS AND DISTRIBUTIONS
According to the Company 1998 Annual Report, the Company has never declared
or paid cash dividends on the Company Common Stock. The Company currently
intends to retain the earnings from operations for use in the operation and
expansion of its business and does not anticipate paying cash dividends with
respect to the Company Common Stock in the foreseeable future. Pursuant to the
terms of the Merger Agreement, the Company is not permitted, without the prior
written consent of Cadence, to split, combine or reclassify the outstanding
Shares or declare, set aside or pay any dividend payable in cash, stock or
property with respect to the Shares, or redeem or otherwise acquire any of the
Shares or any securities of any of its subsidiaries.
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17. EFFECTS OF THE OFFER ON THE MARKET FOR SHARES; NASDAQ NATIONAL MARKET AND
EXCHANGE ACT REGISTRATION
POSSIBLE EFFECTS OF THE OFFER ON THE MARKET FOR THE SHARES
The purchase of Shares by Purchaser pursuant to the Offer will reduce the
number of Shares that might otherwise trade publicly and the number of holders
of Shares, and could thereby adversely affect the liquidity and market value of
the remaining publicly held Shares. It is expected that, following the Offer, a
large percentage of the Shares will be owned by Purchaser. Purchaser cannot
predict whether the reduction in the number of Shares that might otherwise trade
publicly would have an adverse or beneficial effect on the market price for or
marketability of the Shares or whether it would cause future market prices to be
greater or less than the Offer Price therefor.
STOCK QUOTATION
Depending upon the number of Shares purchased pursuant to the offer, the
Shares may no longer meet the requirements of the National Association of
Securities Dealers, Inc. (the "NASD") for continued inclusion on the Nasdaq
National Market. The maintenance for continued inclusion requires the Company to
substantially meet one of two maintenance standards. The Company must have
either (a)(i) at least 750,000 publicly-held shares, (ii) at least 400
stockholders of round lots, (iii) a market value of at least $5 million, (iv) a
minimum bid price per Share of $1.00, (v) at least two registered and active
market makers for its Shares and (vi) net tangible assets of at least $4
million, or (b)(i) at least, 1,100,000 publicly-held shares, (ii) at least 400
stockholders of round lots, (iii) a market value of at least $15 million, and
(v) either (x) a market capitalization of at least $50 million or (y) total
assets and total revenue of at least $50 million each for the most recently
completed fiscal year or two of the last three most recently completed fiscal
years, (v) a minimum bid price per Share of $5.00 and (vi) at least four
registered and active market makers. Shares held directly or indirectly by
directors, officers or beneficial owners or more than 10% of the Shares are not
considered as being publicly held for this purpose.
If, as a result of the purchase of Shares pursuant to the Offer or
otherwise, the Shares no longer meet the requirements of the NASD for continued
inclusion in the Nasdaq National Market or in any other tier of the Nasdaq Stock
Market, and the Shares are, in fact, no longer included in the Nasdaq National
Market or in any other tier of the Nasdaq Stock Market, the market for Shares
could be adversely affected.
In the event that the Shares no longer meet the requirements of the NASD for
continued inclusion in any tier of the Nasdaq Stock Market, it may be possible
that the Shares would continue to trade in the over-the-counter market and that
price quotations would be reported by other sources. The extent of the public
market for the Shares and the availability of such quotations would, however,
depend upon the number of the holders of Shares remaining at such time, the
interest in maintaining a market in Shares on the part of the securities firms,
the possible termination of registration of the Shares under the Exchange Act,
as described below, and other factors.
EXCHANGE ACT REGISTRATION
The Shares are currently registered under the Exchange Act. Registration
under the Exchange Act may be terminated upon application by the Company to the
Commission if the Shares are not listed on a national securities exchange and
there are fewer than 300 record holders. Termination of the Exchange Act
registration of the Shares would substantially reduce the information required
to be furnished by the Company to holders of Shares and to the Commission and
would make certain provisions of the Exchange Act, such as the short-swing
profit recovery provisions of Section 16(b), the requirements of furnishing a
proxy statement in connection with stockholders' meetings and the requirements
of Rule 13e-3 under the Exchange Act with respect to "going private"
transactions, no longer applicable to the Shares. In addition, "affiliates" of
the Company and persons holding
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"restricted securities" of the Company may be deprived of the ability to dispose
of such securities pursuant to Rule 144 promulgated under the Securities Act. If
registration of the Shares under the Exchange Act were terminated, the Shares
would no longer be "margin securities" or be eligible for Nasdaq market
reporting. Cadence currently intends to seek to cause the Company to terminate
the registration of the Shares under the Exchange Act as soon after consummation
of the Offer as the requirements for termination of registration are met.
MARGIN REGULATIONS
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
which has the effect, among other things, of allowing brokers to extend credit
on the collateral of such Shares for the purpose of buying, carrying or trading
in securities ("Purpose Loans"). Depending upon factors similar to those
described above regarding the continued listing, public trading and market
quotations of the Shares, it is possible that, following the purchase of the
Shares pursuant to the Offer, the Shares would no longer constitute "margin
securities" for the purposes of the margin regulations of the Federal Reserve
Board and therefore could no longer be used as collateral for Purpose Loans made
by brokers.
18. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, and subject to any
applicable rules and regulations of the Commission, including Rule 14e-1(c)
relating to Purchaser's obligation to pay for or return tendered Shares after
termination of the Offer, Purchaser will not be required to accept for payment
or pay for any Shares, may delay the acceptance for payment of any Shares and
may amend or terminate the Offer as to any Shares not then paid if (a) the
Minimum Condition is not satisfied by the Expiration Date, (b) any applicable
waiting period under the HSR Act has not expired or terminated prior to the
Expiration Date, (c) approval of all necessary government officials and agencies
under applicable foreign antitrust or competition laws have not been obtained
prior to the Expiration Date, or (d) at any time after June 14, 1999 and before
acceptance for payment of any Shares, any of the following events has occurred
and is continuing:
(a) there is an injunction or other order, decree, judgment or ruling or a
statute, rule, regulation, executive order or other action has been
enacted, promulgated or taken which (i) restrains or prohibits the making
or consummation of the Offer or the consummation of the Merger, (ii)
prohibits or restricts the ownership or operation by Cadence any portion
of its or the Company's business or assets which is material to the
business of all such entities taken as a whole, or compels Cadence to
dispose of or hold separate any portion of its or the Company's business
or assets which is material to the business of all such entities taken as
a whole, (iii) imposes material limitations on the ability of Cadence to
acquire or to hold or to exercise full rights of ownership of the Shares
or (iv) imposes any material limitations on the ability of Cadence to
control in any material respect the business and operations of the
Company;
(b) the Merger Agreement has been terminated by the Company or Cadence in
accordance with its terms or any event has occurred which gives Cadence
or Purchaser the right to terminate the Merger Agreement or not
consummate the Merger;
(c) any event has occurred that, individually or when considered together
with any other matter, has or has had a Material Adverse Effect on the
Company;
(d) the representations and warranties of the Company set forth in the
Merger Agreement are not true and correct in any material respect (except
to the extent that the aggregate of all breaches thereof do not
constitute a Material Adverse Effect on the Company and do not otherwise
materially and adversely affect the consideration to be paid by Purchaser
in the Offer of the benefits expected to be received by Cadence under the
Merger Agreement), in
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each case as if such representations and warranties were made at the time
of such determination;
(e) the Company has failed to perform in any material respect (except to the
extent that the aggregate of all breaches thereof do not constitute a
Material Adverse Effect on the Company and do not otherwise materially
and adversely affect the consideration to be paid by Purchaser in the
Offer of the benefits expected to be received by Cadence under the Merger
Agreement) any obligation or to comply in any material respect with any
agreement or covenant of the Company under the Merger Agreement;
(f) (i) any general suspension of, or limitation on prices for, trading in
securities on any national securities exchange or the over-the-counter
market (other than a shortening of trading hours or any coordinated
trading halt for less than 24 hours triggered solely as a result of a
specified increase or decrease in a market index) has occurred, (ii) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States has occurred, (iii) any material
limitation (whether or not mandatory) by any government on the extension
of credit by banks or other lending institutions has occurred, (iv) a
commencement, or a material acceleration or worsening of a war or armed
hostilities or other national calamity directly involving the United
States and resulting in a significant disruption of world commerce has
occurred or (v) any decline of at least 20 percent in the average of the
closing prices of the Standard & Poor's 500 Index for any twenty (20)
consecutive trading days from the levels as of the last trading day
immediately preceding June 11, 1999 has occurred;
(g) the Company Board (i) has withdrawn, or modified or changed in a manner
adverse to Cadence or Purchaser (including by amendment of the Schedule
14D-9) its approval or recommendation of the Merger Agreement, the Stock
Option Agreement or the Stockholders Agreement or the transactions
contemplated thereby, (ii) has recommended a Third Party Acquisition or
(iii) has adopted any resolution to effect any of the foregoing;
(h) any Person or "group" (as defined in Section 13(d)(3) of the Exchange
Act), other than Cadence, Purchaser or their affiliates or any group of
which any of them is a member has acquired beneficial ownership (as
determined pursuant to Rule 13d-3 promulgated under the Exchange Act) of
20% or more of the Shares;
(i) any party to the Stockholders Agreement other than Purchaser and Cadence
has breached or failed to perform any of its agreements under such
agreement or breached any of its representations and warranties in such
agreement or any such agreement is not valid, binding and enforceable; or
(j) there shall not have occurred or been threatened the loss of one or more
of the employee(s) who are entering into Employment Agreements that would
result in a Material Adverse Effect on the Company, whether pursuant to a
breach or anticipated breach, of any such Employment Agreement, or
otherwise;
which, in the reasonable judgment of Cadence with respect to each and every
matter referred to above and regardless of the circumstances giving rise to any
such condition, makes it inadvisable to proceed with the Offer or with the
acceptance for payment of the Shares or to proceed with the Merger.
The foregoing conditions (the "Offer Conditions") are for the sole benefit
of Cadence and may be asserted by Purchaser regardless of the circumstances
giving rise to such Offer Conditions and may be waived by Purchaser in whole or
in part at any time and from time to time, in each case, in the exercise of the
good faith judgment of Purchaser. The failure by Purchaser at any time to
exercise any of the foregoing rights will not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
36
<PAGE>
19. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS
GENERAL
Except as described below, neither Cadence nor Purchaser is aware of any
license or regulatory permit that appears to be material to the business of the
Company and its subsidiaries, taken as a whole, that might be adversely affected
by the acquisition of Shares pursuant to the Offer, or of any approval or other
action by any governmental, administrative or regulatory agency or authority or
public body, domestic or foreign, that would be required for the acquisition or
ownership of Shares pursuant to the Offer. Should any such approval or other
action be required, it is presently contemplated that such approval or action
would be sought except as described below in this Section under "State
Antitakeover Statutes." While, except as otherwise expressly described herein,
Purchaser does not currently intend to delay acceptance for payment of Shares
tendered pursuant to the Offer pending the outcome of any such matter, there can
be no assurance that any such approval or other action, if needed, would be
obtained without substantial conditions or that adverse consequences might not
result to the Company's business or that certain parts of the Company's business
might not have to be disposed of in the event that such approvals were not
obtained or such other actions were not taken or in order to obtain any such
approval or other action, any of which could cause Cadence to decline to accept
for payment or pay for any Shares tendered. Cadence's obligation under the Offer
to accept for payment and pay for Shares is subject to the Offer Conditions,
including conditions relating to legal matters discussed in this Section 19.
ANTITRUST
Under the HSR Act and the rules that have been promulgated thereunder by the
Federal Trade Commission ("FTC"), certain acquisition transactions may not be
consummated unless certain information has been furnished to the Antitrust
Division of the Department of Justice (the "Antitrust Division") and the FTC and
certain waiting period requirements have been satisfied. The acquisition of
Shares pursuant to the Offer is subject to these requirements.
Cadence filed a Notification and Report Form with respect to the Offer under
the HSR Act on June 16, 1999. The waiting period under the HSR Act with respect
to the Offer will expire at 11:59 p.m., Washington, D.C. time, on July 1, 1999,
unless early termination of the waiting period is granted. In addition, the
Antitrust Division or the FTC may extend such waiting period by requesting
additional information or documentary material from Cadence. If such a request
is made with respect to the Offer, the waiting period related to the Offer will
expire at 11:59 p.m., Washington, D.C. time, on the 10th day after substantial
compliance by Cadence with such request. With respect to each acquisition, the
Antitrust Division or the FTC may issue only one request for additional
information. In practice, complying with a request for additional information or
material can take a significant amount of time. In addition, if the Antitrust
Division or the FTC raises substantive issues in connection with a proposed
transaction, the parties may engage in negotiations with the relevant
governmental agency concerning possible means of addressing those issues and may
agree to delay consummation of the transaction while such negotiations continue.
Expiration or termination of applicable waiting periods under the HSR Act is a
condition to Purchaser's obligation to accept for payment and pay for Shares
tendered pursuant to the Offer.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed purchase of the Shares
pursuant to the Offer. At any time before or after such purchase, the Antitrust
Division or the FTC could take such action under the antitrust laws as it deems
necessary or desirable in the public interest, including seeking to enjoin the
transaction or seeking divestiture of the Shares so acquired or divestiture of
substantial assets of Cadence or the Company. Litigation seeking similar relief
could be brought by private parties.
37
<PAGE>
Cadence does not believe that consummation of the Offer and the other
transactions contemplated by the Merger Agreement will result in the violation
of any applicable antitrust laws. However, there can be no assurance that a
challenge to the Offer and the other transactions contemplated by the Merger
Agreement on antitrust grounds will not be made, or if such a challenge is made,
what the result will be. See Section 18 of this Offer to Purchase for certain
conditions to the purchase of the Shares pursuant to the Offer, including
conditions with respect to litigation and certain governmental actions.
STATE ANTITAKEOVER STATUTES
Section 203 of the DGCL, in general, prohibits a Delaware corporation, such
as the Company, from engaging in a "Business Combination" (defined as a variety
of transactions, including mergers) with an "Interested Stockholder" (defined
generally as a person that is the beneficial owner of 15% or more of the
outstanding voting stock of the subject corporation) for a period of three years
following the date that such person became an Interested Stockholder unless,
prior to the date such person became an Interested Stockholder, the board of
directors of the corporation approved either the Business Combination or the
transaction that resulted in the stockholder becoming an Interested Stockholder.
The provisions of Section 203 of DGCL are not applicable to any of the
transactions contemplated by the Merger Agreement, because the Merger Agreement
and the transactions contemplated thereby were approved by the Company Board
prior to the execution thereof.
A number of states have adopted "takeover" statutes that purport to apply to
attempts to acquire corporations that are incorporated in such states, or whose
business operations have substantial economic effects in such states, or which
have substantial assets, security holders, employees, principal executive
offices or places of business in such states.
In EDGAR V. MITE CORPORATION, the Supreme Court of the United States
invalidated on constitutional grounds the Illinois Business Takeover Act, which,
as a matter of state securities law, made takeovers of corporations meeting
certain requirements more difficult. However, in CTS CORP. V. DYNAMICS CORP. OF
AMERICA, the Supreme Court held that a state may, as a matter of corporate law
and, in particular, those laws concerning corporate governance, constitutionally
disqualify a potential acquirer from voting on the affairs of a target
corporation without prior approval of the remaining stockholders, provided that
such laws were applicable only under certain conditions, in particular, that the
corporation has a substantial number of stockholders in the state and is
incorporated there.
Based on information supplied by the Company, Cadence and Purchaser do not
believe that any state takeover statutes (other than Section 203 of the DGCL)
purport to apply to the Offer or the Merger. Neither Purchaser nor Cadence,
except as set forth above with respect to Section 203 of the DGCL, has currently
complied with any other state takeover statute or regulation. Cadence reserves
the right to challenge the applicability or validity of any other state law
purportedly applicable to the Offer or the Merger and nothing in this Offer to
Purchase or any action taken in connection with the Offer or the Merger is
intended as a waiver of such right. If it is asserted that any other state
takeover statute is applicable to the Offer or the Merger and if an appropriate
court does not determine that it is inapplicable or invalid as applied to the
Offer or the Merger, Cadence might be required to file certain information with,
or to receive approvals from, the relevant state authorities, and Cadence might
be unable to accept for payment or pay for Shares tendered pursuant to the
Offer, or be delayed in consummating the Offer or the Merger. In such case,
Cadence may not be obliged to accept for payment or pay for any shares tendered
pursuant to the Offer.
STOCKHOLDER APPROVAL
Under the DGCL and the Company's Certificate of Incorporation, the approval
of the Board of Directors and the affirmative vote of the holders of sixty-seven
percent (67%) of the outstanding
38
<PAGE>
Shares are required to adopt and approve the Merger Agreement and the
transactions contemplated thereby. The Company has represented in the Merger
Agreement that the execution and delivery of the Merger Agreement, the Stock
Option Agreement and the Stockholders Agreement by the Company and the
consummation by the Company of the Merger have been duly authorized by all
necessary corporate action on the part of the Company, subject to the approval
of the Merger by the Company's stockholders in accordance with Delaware law. In
addition, the Company has represented that the affirmative vote of the holders
of sixty-seven percent (67%) of the outstanding Shares is the only vote of the
holders of any class or series of the Company's capital stock which is necessary
to approve the Merger Agreement and the transactions contemplated thereby,
including the Merger. Therefore, unless the Merger is consummated pursuant to
the short-form merger provisions under the DGCL described below (in which case
no further corporate action by the stockholders of the Company will be required
to complete the Merger), the only remaining required corporate action of the
Company will be the approval of the Merger Agreement and the Merger by the
affirmative vote of the holders of sixty-seven percent (67%) of the Shares. In
the event that Purchaser and its subsidiaries acquire in the aggregate at least
sixty-seven percent (67%) of the Shares entitled to vote on the approval of the
Merger and the Merger Agreement, they would have the ability to effect the
Merger without the affirmative votes of any other stockholders.
SHORT-FORM MERGER
Section 253 of the DGCL provides that, if a corporation owns at least 90% of
the outstanding shares of each class of another corporation, the corporation
holding such stock may merge itself into such corporation without any action or
vote on the part of the board of directors or the stockholders of such other
corporation (a "short-form merger"). In the event that Purchaser and its
subsidiaries acquire in the aggregate at least 90% of the outstanding Shares,
pursuant to the Offer or otherwise, then, at the election of Purchaser, a
short-form merger could be effected without any approval of the Board of
Directors or the stockholders of the Company, subject to compliance with the
provisions of Section 253 of the DGCL. In the Merger Agreement, the Company,
Cadence and Purchaser have agreed that, notwithstanding that all conditions to
the Offer are satisfied or waived as of the scheduled Expiration Date, Purchaser
may extend the expiration date of the Offer (as it may be extended) for up to
ten (10) business days, if on such expiration date the conditions for the Offer
set forth in Section 18 of this Offer to Purchase shall have been satisfied or
earlier waived, but the number of Shares that have been validly tendered and not
withdrawn represents less than 90% of the then issued and outstanding Shares on
a fully diluted basis. If Purchaser does not own 90% of the outstanding Shares
following consummation of the Offer, Purchaser may seek to purchase additional
Shares in the open market or otherwise in order to reach the 90% threshold and
employ a short-form merger. The per share consideration paid for any Shares so
acquired may be greater or less than the Offer Price. Purchaser presently
intends to effect a short-form merger if permitted to do so under Delaware law.
20. FEES AND EXPENSES
Cadence has retained Morrow & Co., Inc. to act as the Information Agent and
ChaseMellon Shareholder Services to serve as the Depositary in connection with
the Offer. The Information Agent and the Depositary each will receive reasonable
and customary compensation for their services and be reimbursed for certain
reasonable out-of-pocket expenses. Cadence has also agreed to indemnify the
Information Agent and the Depositary against certain liabilities and expenses in
connection with the Offer, including certain liabilities under the federal
securities laws.
Cadence will not pay any fees or commissions to any broker or dealer or any
other person for soliciting tenders of Shares pursuant to the Offer (other than
to the Information Agent). Brokers, dealers, commercial banks, trust companies
and other nominees will, upon request, be reimbursed by
39
<PAGE>
Cadence for customary mailing and handling expenses incurred by them in
forwarding offering materials to their customers.
21. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the securities,
blue sky or other laws of such jurisdiction. Purchaser may, in its discretion,
however, take such action as it may deem necessary to make the Offer in any
jurisdiction and extend the Offer to holders of Shares in any such jurisdiction.
Except for the Depositary's authorization to enter into agreements or
arrangements with the Book-Entry Transfer Facility, no person has been
authorized to give any information or to make any representation on behalf of
Purchaser or Cadence not contained herein or in the Letter of Transmittal and,
if given or made, such information or representation must not be relied upon as
having been authorized by Cadence and Purchaser. Neither the delivery of this
Offer to Purchase nor any purchase pursuant to the Offer shall, under any
circumstances, create any implication that there has been no change in the
affairs of Purchaser, Cadence or the Company since the date as of which
information is furnished or the date of this Offer to Purchase.
Purchaser and Cadence have filed with the Commission a Tender Offer
Statement on Schedule 14D-l, together with exhibits, pursuant to Rule 14d-3
under the Exchange Act, furnishing certain additional information with respect
to the Offer. In addition, the Company has filed with the Commission a
Solicitation/Recommendation Statement on Schedule 14D-9, together with exhibits,
pursuant to Rule 14d-9 under the Exchange Act, setting forth the recommendations
of the Company Board with respect to the Offer and the reasons for such
recommendations and furnishing certain additional related information. Such
Schedules and any amendments thereto, including exhibits, may be inspected and
copies may be obtained from the Commission in the manner set forth in Section 7
of this Offer to Purchase (except that they will not be available at the
regional offices of the Commission).
CDSI ACQUISITION CORPORATION
June 18, 1999
40
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF CADENCE AND PURCHASER
The following table sets forth the name, age, business or residence address,
principal occupation or employment at the present time and during the last five
years, and the name of any corporation or other organization in which such
employment is conducted or was conducted of each executive officer or director
of Cadence. Except as otherwise indicated, all of the persons listed below are
citizens of the United States of America. Each occupation set forth opposite a
person's name, unless otherwise indicated, refers to employment with Cadence.
Unless otherwise indicated, the principal business address of each director or
executive officer is Cadence Design Systems, Inc., 2655 Seely Avenue, Building
5, San Jose, California, 95134.
<TABLE>
<CAPTION>
NAME, AGE, CITIZENSHIP AND OTHER MATERIAL POSITIONS
CURRENT BUSINESS ADDRESS PRESENT OCCUPATION OR EMPLOYMENT HELD DURING THE PAST FIVE YEARS
- ------------------------------------ ------------------------------------ ------------------------------------
<S> <C> <C>
H. Raymond Bingham, 53.............. President, Chief Executive Officer Executive Vice President and Chief
since April, 1999; Director since Financial Officer from 1993-April,
1997 1999 Director, Sunstone Hotel
Investors, Inc.; Integrated
Measurement Systems, Inc., Legato
Systems, Inc. and Onyx Software
Corporation
John F. Olsen, 47................... President, Design Realization Group Executive Vice President, Worldwide
and Corporate Development since Field Operations from 1998-April,
April, 1999 1999; Senior Vice President, Field
Operations from 1994-1998; Partner,
KPMG Peat Marwick LLP from
1989-1994.
Shane V. Robison, 44................ President, Design Productivity Group Executive Vice President, Research
since April, 1999 and Development from 1997-April,
1999; Senior Vice President,
Engineering from 1995-1997; Vice
President and General Manager of the
personal Interactive Electronics
Division of Apple Computer, Inc.
from 1988-1995.
R.L. Smith McKeithen, 55............ Senior Vice President, General Vice President, General Counsel and
Counsel and Secretary since 1998 Secretary from 1996-1998; Vice
President, General Counsel and
Secretary, of Strategic Mapping,
Inc. from 1994-1996; Vice President,
General Counsel and Secretary,
Silicon Graphics, Inc. from
1988-1994
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE, CITIZENSHIP AND OTHER MATERIAL POSITIONS
CURRENT BUSINESS ADDRESS PRESENT OCCUPATION OR EMPLOYMENT HELD DURING THE PAST FIVE YEARS
- ------------------------------------ ------------------------------------ ------------------------------------
<S> <C> <C>
William Porter, 45.................. Senior Vice President and Chief Corporate Vice President from
Financial Officer since May, 1999; 1998-May, 1999; Corporate Controller
Assistant Secretary since 1994 from 1994-May, 1999; Vice President
from 1994-1998; Controller,
Technical Accounting and Reporting
Manager, Cupertino Operations with
Apple Computer, Inc. from 1988-1994.
Carol A. Bartz, 50.................. Director since 1994; Chief Executive President, Autodesk, Inc. from
Officer and Chairman, Autodesk, Inc. 1992-1996; Director,
since 1996 AirTouchCommunications, Network
Appliance, Inc., Cisco Systems, Inc.
and BEA Systems, Inc.
Dr. Leonard Y.W. Liu, 57............ Director since 1989; Chairman, Chief Operating Officer, 1993-1995;
President and Chief Executive Director, Advanced Semiconductor
Officer, Walker Interactive Systems, Engineering, Inc.
Inc. since 1995
Donald L. Lucas, 69................. Chairman of the Board since 1988; Director, Coulter Pharmaceutical,
Private Venture Capital Investor Inc., Macromedia, Inc., Oracle
Corporation, Transcend Services,
Inc. and Tricord Systems,
Incorporated
Dr. Alberto Sangiovanni-Vincentelli,
51................................ Director since 1992; Chief
Technology Advisor since June, 1999;
Professor of Electrical Engineering
and Computer Sciences, University of
California at Berkeley since 1976.
George M. Scalise, 64............... Director since 1989; President, Executive Vice President and Chief
Semiconductor Industry Association Administrative Officer, Apple
since 1997. Computer, Inc., from 1996-1997;
Senior Vice President of Planning
and Development and Chief
Administrative Officer, National
Semiconductor Corporation from
1991-1996; Director, Network
Equipment Technologies, Inc.
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE, CITIZENSHIP AND OTHER MATERIAL POSITIONS
CURRENT BUSINESS ADDRESS PRESENT OCCUPATION OR EMPLOYMENT HELD DURING THE PAST FIVE YEARS
- ------------------------------------ ------------------------------------ ------------------------------------
<S> <C> <C>
Dr. John B. Shoven, 51.............. Director since 1992; Charles R. Dean of the School of Humanities and
Schwab Professor of Economics, Science, Stanford University,
Stanford University (at Stanford 1993-1998.
University since 1973)
Roger S. Siboni, 44................. Director since January, 1999; Deputy Chairman, Chief Operating
President and Chief Executive Officer and other positions, KPMG
Officer, Epiphany Inc. since 1997 Peat Marwick LLP from 1977-1997;
Director, FileNet, Inc., Macromedia,
Inc. and the Walter A. Haas School
of Business at the University of
California At Berkeley.
</TABLE>
The following table sets forth the name, age business or residence address,
principal occupation or employment at the present time and during the last five
years, and the name of any corporation or other organization in which such
employment is conducted or was conducted of each executive officer or director
of Purchaser. Except as otherwise indicated, all of the person listed below are
citizens of the United States of America. Each occupation set forth opposite a
person's name, unless otherwise indicated, refers to employment with Cadence.
Unless otherwise indicated, the principal business address of each director or
executive officer is Cadence Design Systems, Inc., 2655 Seely Avenue, Building
5, San Jose, California, 95134.
<TABLE>
<CAPTION>
NAME, AGE, CITIZENSHIP AND MATERIAL POSITIONS HELD
CURRENT BUSINESS ADDRESS PRESENT OCCUPATION OR EMPLOYMENT DURING THE PAST FIVE YEARS
- ------------------------------------ ------------------------------------ ------------------------------------
<S> <C> <C>
H. Raymond Bingham, 53.............. President, Chief Executive Officer Executive Vice President and Chief
and Director of Purchaser since Financial Officer since 1993;
incorporation; President, Chief Director, Sunstone Hotel Investors,
Executive Officer since May, 1999; Inc.; Integrated Measurement
Director since 1997 Systems, Inc., Legato Systems, Inc.
and Onyx Software Corporation
R.L. Smith McKeithen, 55............ Secretary, Vice President and Vice President, General Counsel and
Director of Purchaser since Secretary from 1996-1998; Vice
incorporation; Senior Vice President, General Counsel and
President, General Counsel and Secretary, of Strategic Mapping,
Secretary since 1998 Inc. from 1994-1996; Vice President,
General Counsel and Secretary,
Silicon Graphics, Inc. from
1988-1994
William Porter, 45.................. Treasurer, Vice President and Corporate Vice President from
Director of Purchaser since 1998-May, 1999; Corporate Controller
incorporation; Senior Vice President from 1994-May, 1999; Vice President
and Chief Financial Officer since from 1994-1998; Controller,
May, 1999; Assistant Secretary since Technical Accounting and Reporting
1994 Manager, Cupertino Operations with
Apple Computer, Inc. from 1988-1994.
</TABLE>
43
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. Letters of Transmittal and certificates for Shares should be sent or
delivered by each stockholder of the Company or his broker, dealer, commercial
bank or trust company to the Depositary at one of its addresses set forth below:
THE DEPOSITARY FOR THE OFFER IS:
[LOGO]
<TABLE>
<S> <C> <C>
BY MAIL: BY OVERNIGHT COURIER: BY HAND:
Reorganization Department Reorganization Department Reorganization Department
PO Box 3301 85 Challenger Road 120 Broadway
South Hackensack, NJ 07606 Mail Stop--Reorg 13th Floor
Ridgefield Park, NJ 07660 New York, NY 10271
</TABLE>
<TABLE>
<S> <C>
BY FACSIMILE TRANSMISSION: CONFIRM RECEIPT OF FACSIMILE
(For Eligible Institutions Only) by Telephone Only:
(201) 296-4293 (201) 296-4860
</TABLE>
Any questions or requests for assistance may be directed to the Information
Agent at its address and telephone numbers set forth below. Requests for
additional copies of this Offer to Purchase and the Letter of Transmittal may be
directed to the Information Agent or the Depositary. Stockholders may also
contact their brokers, dealers, commercial banks or trust companies for
assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
MORROW & CO., INC.
445 Park Avenue, 5th Floor
New York, New York 10022
Banks and Brokerage Firms Call: (800) 662-5200
Stockholders Please Call: (800) 566-9061
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
ORCAD, INC.
AT
$13.00 NET PER SHARE
PURSUANT TO THE OFFER TO PURCHASE DATED JUNE 18, 1999
OF
CDSI ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY OF
CADENCE DESIGN SYSTEMS, INC.
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT MIDNIGHT, NEW YORK CITY TIME,
ON FRIDAY, JULY 16, 1999, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
THE DEPOSITARY FOR THE OFFER IS:
[LOGO]
<TABLE>
<S> <C> <C>
BY MAIL BY OVERNIGHT COURIER: BY HAND:
Reorganization Department Reorganization Department Reorganization Department
PO Box 3301 85 Challenger Road 120 Broadway
South Hackensack, NJ 07606 Mail Stop--Reorg 13th Floor
Ridgefield Park, NJ 07660 New York, NY 10271
</TABLE>
<TABLE>
<S> <C>
BY FACSIMILE TRANSMISSION: CONFIRM RECEIPT OF FACSIMILE
(For Eligible Institutions Only) BY TELEPHONE ONLY:
(201) 296-4293 (201) 296-4860
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN ONE LISTED
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS
LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE PROVIDED THEREFOR,
WITH SIGNATURE GUARANTEE IF REQUIRED, AND COMPLETE THE
SUBSTITUTE FORM W-9 SET FORTH BELOW. SEE
INSTRUCTION 1.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used either if certificates are to be
forwarded herewith or, unless an Agent's Message (as defined in the Offer to
Purchase) is utilized, if delivery is to be made by book-entry transfer to the
account maintained by the Depositary at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in Section
2 of the Offer to Purchase. Stockholders whose certificates are not immediately
available or who cannot deliver their certificates or deliver confirmation of
the book-entry transfer of their Shares (as defined below) into the Depositary's
account at the Book-Entry Transfer Facility ("Book-Entry Confirmation") and all
other documents required hereby to the Depositary on or prior to the Expiration
Date (as defined in the Offer to Purchase) must tender their Shares according to
the guaranteed delivery procedures set forth in Section 2 of the Offer to
Purchase. See Instruction 2. Delivery of documents to the Book-Entry Transfer
Facility does not constitute delivery to the Depositary.
<PAGE>
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution: _____________________________________________
Account Number: ____________________________________________________________
Transaction Code Number: ___________________________________________________
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s): ____________________________________________
Window Ticket Number (if any): _____________________________________________
Date of Execution of Notice of Guaranteed Delivery: ________________________
Name of Institution that Guaranteed Delivery: ______________________________
Account Number: ____________________________________________________________
Transaction Code Number: ___________________________________________________
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
----------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) SHARE CERTIFICATE(S) AND SHARE(S) TENDERED
(PLEASE FILL IN, IF BLANK) (ATTACH ADDITIONAL LIST IF NECESSARY)
- ------------------------------------------------------------------------------------------------------
TOTAL NUMBER
SHARE OF SHARES NUMBER
CERTIFICATE REPRESENTED BY OF SHARES
NUMBER(S)* CERTIFICATES TENDERED
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
TOTAL SHARES
- ------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by stockholders tendering by book-entry transfer.
Unless otherwise indicated, it will be assumed that all Shares being delivered
to the Depositary are being tendered.
See Instruction 4.
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ CAREFULLY THE ACCOMPANYING INSTRUCTIONS.
Ladies and Gentlemen:
The undersigned hereby tenders to CDSI Acquisition Corporation, a Delaware
corporation ("Purchaser"), which is a wholly-owned subsidiary of Cadence Design
Systems, Inc., a Delaware corporation, the above described shares (the "Shares")
of common stock, $.01 par value (the "Common Stock"), of OrCAD, Inc., a Delaware
corporation (the "Company"), pursuant to Purchaser's offer to purchase all of
the outstanding Shares upon the terms and subject to the conditions set forth in
the Offer to Purchase dated June 18, 1999 (the "Offer to Purchase"), receipt of
which is hereby acknowledged, and in this Letter of Transmittal (which together
constitute the "Offer"), at the purchase price of $13.00 per Share, net to the
seller in cash.
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith in accordance with the terms and subject to the conditions of
the Offer, the undersigned hereby sells, assigns and transfers to, or upon the
order of, Purchaser all right, title and interest in and to all the Shares that
are being tendered hereby (and any and all other Shares or other securities
issued or issuable in respect thereof on or after June 18, 1999) and irrevocably
constitutes and appoints the Depositary the true and lawful agent and
attorney-in-fact of the undersigned with respect to such Shares (and any such
other Shares or securities) with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest), to
(a) deliver certificates for such Shares (and any such other Shares or
securities), or transfer ownership of such Shares (and any such other Shares or
securities) on the account books maintained by the Book-Entry Transfer Facility,
together in either such case with all accompanying evidences of transfer and
authenticity, to or upon the order of Purchaser upon receipt by the Depositary,
as the undersigned's agent, of the purchase price (adjusted, if appropriate, as
provided in the Offer to Purchase), (b) present such Shares (and any such other
Shares or securities) for transfer on the books of the Company and (c) receive
all benefits and otherwise exercise all rights of beneficial ownership of such
Shares (and any such other Shares or securities), all in accordance with the
terms of the Offer.
The undersigned hereby irrevocably appoints each designee of Purchaser as
the attorney-in-fact and proxy of the undersigned, each with full power of
substitution, to vote in such manner as each such attorney and proxy or his
substitute shall in his sole discretion deem proper, and otherwise act
(including pursuant to written consent) with respect to all the Shares tendered
hereby which have been accepted for payment by Purchaser prior to the time of
such vote or action (and any and all other Shares or securities issued or
issuable in respect thereof on or after June 18, 1999), which the undersigned is
entitled to vote at any meeting of stockholders (whether annual or special and
whether or not an adjourned meeting) of the Company, or consent in lieu of any
such meeting, or otherwise. This proxy is coupled with an interest in the
Company and in the Shares and is irrevocable and is granted in consideration of,
and is effective upon, the acceptance for payment by Purchaser of Shares
tendered in accordance with the terms of the Offer. Such acceptance for payment
shall revoke all prior proxies granted by the undersigned at any time with
respect to such Shares (and any such other Shares or other securities) and no
subsequent proxies will be given (and if given will be deemed not to be
effective) with respect thereto by the undersigned.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby (and any and all other Shares or other securities issued or issuable in
respect thereof on or after June 18, 1999) and that, when the same are accepted
for payment by Purchaser, Purchaser will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
the same will not be subject to any adverse claim. The undersigned, upon
request, will execute and deliver any additional documents deemed by the
Depositary or Purchaser to be necessary or desirable to complete the sale,
assignment and transfer of the Shares tendered hereby (and any and all such
other Shares or other securities).
<PAGE>
All authority herein conferred or agreed to be conferred in this Letter of
Transmittal shall not be affected by, and shall survive, the death or incapacity
of the undersigned and any obligation of the undersigned hereunder shall be
binding upon the successors, assigns, heirs, executors, administrators and legal
representatives of the undersigned. Except as stated in the Offer to Purchase,
this tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 2 of the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the undersigned
and Purchaser upon the terms and subject to the conditions of the Offer.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or any certificates for Shares
not tendered or accepted for payment in the name(s) of the undersigned.
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please mail the check for the purchase price and/or return any certificates for
Shares not tendered or accepted for payment (and accompanying documents, as
appropriate) to the undersigned at the address shown below the undersigned's
signature. In the event that both the Special Delivery Instructions and the
Special Payment Instructions are completed, please issue the check for the
purchase price or any certificates for Shares not tendered or accepted for
payment in the name of, and deliver such check or return such certificates to
the person or persons so indicated. Stockholders delivering Shares by book-entry
transfer may request that any Shares not accepted for payment be returned by
crediting such account maintained at the Book-Entry Transfer Facility as such
stockholder may designate by making an appropriate entry under "Special Payment
Instructions." The undersigned recognizes that Purchaser has no obligation
pursuant to the Special Payment Instructions to transfer any Share from the name
of the registered holder thereof if Purchaser does not accept for payment any of
the Shares so tendered.
<PAGE>
- ------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates for Shares not tendered or not
purchased and/or the check for the purchase price of Shares purchased are to
be issued in the name of someone other than the undersigned, or if Shares
delivered by book-entry transfer which are not purchased are to be returned
by credit to an account maintained at the Depositary Trust Company.
Issue check and/or certificate to:
Name _______________________________________________________________________
(PLEASE PRINT)
Address ____________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(INCLUDING ZIP CODE)
__________________________________________________________________________
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)
/ / Credit unpurchased Shares delivered by book-entry transfer to the
Book-Entry Transfer Facility account designated below.
____________________________________________________________________________
(ACCOUNT NUMBER)
- ------------------------------------------------------------
- ------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates for Shares not tendered or not
purchased and/or the check for the purchase price of Shares purchased are to
be sent to someone other than the undersigned, or to the undersigned at an
address other than that shown above.
Issue check and/or certificate to:
Name _______________________________________________________________________
(PLEASE PRINT)
Address ____________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(INCLUDING ZIP CODE)
__________________________________________________________________________
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)
- -----------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
SIGN HERE
(COMPLETE SUBSTITUTE FORM W-9 ON PAGE 12)
X __________________________________________________________________________
X __________________________________________________________________________
(SIGNATURE(S) OF OWNER(S))
Dated: _____________, 1999
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
stock certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, agent, officer of a corporation or other person
acting in a fiduciary or representative capacity, please provide the
following information. See Instructions 1 and 5.)
Name(s) ____________________________________________________________________
____________________________________________________________________________
(PLEASE PRINT)
Capacity (Full Title) ______________________________________________________
(SEE INSTRUCTIONS)
Address ____________________________________________________________________
____________________________________________________________________________
(INCLUDING ZIP CODE)
Area Code and Telephone Number ( )________________________________________
Employer Identification or Social Security Number __________________________
(COMPLETE SUBSTITUTE FORM W-9 ON PAGE 9)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTIONS 1 AND 5)
Authorized Signature _______________________________________________________
Name _______________________________________________________________________
(PLEASE PRINT)
Title ______________________________________________________________________
Name of Firm _______________________________________________________________
Address ____________________________________________________________________
(INCLUDING ZIP CODE)
Area Code and Telephone Number ( )________________________________________
Dated: _____________, 1999
- --------------------------------------------------------------------------------
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURE. No signature guarantee on this Letter of
Transmittal is required (i) if this Letter of Transmittal is signed by the
registered holder of the Shares (which term, for purposes of this document,
shall include any participant in the Book-Entry Transfer Facility whose name
appears on a security position listing as the owner of Shares) tendered
herewith, unless such holder has completed either the box entitled "Special
Payment Instructions" or the box entitled "Special Delivery Instructions"
contained in this Letter of Transmittal, or (ii) if such Shares are tendered for
the account of a bank, broker, dealer, credit union, savings association or
other entity that is a member in good standing of the Securities Transfer Agents
Medallion Program, the New York Stock Exchange Medallion Signature Guarantee
Program or the Stock Exchange Medallion Program (each an "Eligible
Institution"). In all other cases, all signatures on this Letter of Transmittal
must be guaranteed by an Eligible Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of
Transmittal is to be completed by stockholders either if certificates are to be
forwarded herewith or, unless an Agent's Message (as defined in the Offer to
Purchase) is utilized, if tenders of Shares are to be made pursuant to the
procedures for delivery by book-entry transfer set forth in Section 2 of the
Offer to Purchase. Certificates for all physically tendered Shares, or any
Book-Entry Confirmation of Shares, as the case may be, as well as a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), unless
an Agent's Message is utilized, and any other documents required by this Letter
of Transmittal, must be received by the Depositary at one of its addresses set
forth herein on or prior to the Expiration Date (as defined in Section 1 of the
Offer to Purchase). Stockholders whose certificates for Shares are not
immediately available or who cannot deliver their certificates or Book-Entry
Confirmation and all other required documents to the Depositary on or prior to
the Expiration Date may tender their Shares by properly completing and duly
executing the Notice of Guaranteed Delivery pursuant to the guaranteed delivery
procedure set forth in Section 2 of the Offer to Purchase. Pursuant to this
procedure, (i) the tender of Shares must be made by or through an Eligible
Institution, (ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser, must be received by
the Depositary on or prior to the Expiration Date, and (iii) the certificates
for all physically tendered Shares or Book-Entry Confirmations, as the case may
be, together with a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), unless an Agent's Message is utilized, and any other
documents required by this Letter of Transmittal, must be received by the
Depositary within three Nasdaq National Market trading days after the date of
execution of such Notice of Guaranteed Delivery, all as provided in Section 2 of
the Offer to Purchase.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE CERTIFICATES FOR
SHARES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH A BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER AND,
EXCEPT AS OTHERWISE PROVIDED IN THIS INSTRUCTION 2, THE DELIVERY WILL BE DEEMED
MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution of
this Letter of Transmittal (or facsimile thereof), waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
signed schedule attached hereto.
<PAGE>
4. PARTIAL TENDER (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares evidenced by any certificate(s)
submitted are to be tendered, fill in the number of Shares which are to be
tendered in the box entitled "Number of Shares Tendered." In this case, new
certificate(s) for the remainder of the Shares that were evidenced by your old
certificate(s) will be sent to you, unless otherwise provided in the appropriate
box on this Letter of Transmittal, as soon as practicable after the Expiration
Date. All Shares represented by certificates delivered to the Depositary will be
deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond exactly with the name(s) as
they appear on the face of the certificate(s) without alteration, enlargement or
any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all owners must sign this Letter of Transmittal.
If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
If this Letter of Transmittal or any certificates or stock powers are signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory to
Purchaser of such person's authority so to act must be submitted.
When this Letter of Transmittal is signed by the registered owner(s) of the
Shares listed and tendered hereby, no endorsements of certificates or separate
stock powers are required unless payment or certificates for Shares not tendered
or purchased are to be issued to a person other than the registered owner(s).
Signatures on such certificates or stock powers must be guaranteed by an
Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the Shares listed, the certificates must be endorsed or
accompanied by appropriate stock powers, in either case corresponding exactly
with the name(s) of the registered owner(s) appearing on the certificates.
Signatures on such certificates or stock powers must be guaranteed by an
Eligible Institution.
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6,
Purchaser will pay or cause to be paid any stock transfer taxes with respect to
the transfer and sale of purchased Shares to it or its order pursuant to the
Offer. If payment of the purchase price is to be made to, or if certificates for
Shares not tendered or purchased are to be registered in the name of, any person
other than the registered holder, or if tendered certificates are registered in
the name of any person other than the person(s) signing this Letter of
Transmittal, the amount of any stock transfer taxes (whether imposed on the
registered holder or such person) payable on account of the transfer to such
person will be deducted from the purchase price unless satisfactory evidence of
the payment of such taxes or exemption therefrom is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check or certificates
for unpurchased Shares are to be issued in the name of a person other than the
signer of this Letter of Transmittal or if a check is to be sent or such
certificates are to be returned to someone other than the signer of this Letter
of Transmittal or to an address other than that shown above, the appropriate
boxes on this Letter of Transmittal should be completed. A stockholder tendering
Shares by book-entry transfer may request that Shares not purchased be credited
to the account maintained at the Book-Entry Transfer Facility as such
stockholder may designate hereon. If no such instructions are given, such Shares
not purchased will be returned by crediting the account at the Book-Entry
Transfer Facility.
<PAGE>
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance
may be directed to, or additional copies of the Offer to Purchase, this Letter
of Transmittal and the Notice of Guaranteed Delivery may be obtained from, the
Information Agent at its address set forth below or from your broker, dealer,
commercial bank or trust company.
9. WAIVER OF CONDITIONS. Subject to the terms of the Merger Agreement (as
defined in the Offer to Purchase), the conditions of the Offer may be waived by
Purchaser, in whole or in part, at any time and from time to time in Purchaser's
sole discretion, in the case of any Shares tendered.
10. SUBSTITUTE FORM W-9. A tendering stockholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on
Substitute Form W-9 which is provided under "Important Tax Information" below,
and to certify whether the stockholder is subject to backup withholding of
Federal income tax. If a tendering stockholder is subject to backup withholding,
the stockholder must cross out item (2) of the Certification box of the
Substitute Form W-9. Failure to provide the information on the Substitute Form
W-9 may subject the tendering stockholder to Federal income tax withholding of
31% of the payment of the purchase price. If the tendering stockholder has not
been issued a TIN and has applied for a number or intends to apply for a number
in the near future, he or she should write "Applied For" in the space provided
for the TIN in Part I, and sign and date the Substitute Form W-9. If "Applied
For" is written in Part I, the Depositary will withhold 31% on all payments of
the purchase price, but such withholdings will be refunded if the tendering
stockholder provides a TIN within 60 days.
11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the stockholder should
promptly notify the Depositary. The stockholder will then be instructed as to
the steps that must be taken in order to replace the certificate(s). This Letter
of Transmittal and related documents cannot be processed until the procedures
for replacing lost or destroyed certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF), TOGETHER
WITH CERTIFICATES OR BOOK-ENTRY CONFIRMATIONS AND ALL OTHER REQUIRED DOCUMENTS,
MUST BE RECEIVED BY THE DEPOSITARY, OR THE NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under Federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary with such
stockholder's correct TIN on Substitute Form W-9 below. If such stockholder is
an individual, the TIN is his or her social security number. If a tendering
stockholder is subject to backup withholding, he or she must cross out item (2)
of the Certification box on the Substitute Form W-9. If the Depositary is not
provided with the correct TIN, the stockholder may be subject to a $50 penalty
imposed by the Internal Revenue Service. In addition, payments that are made to
such stockholder with respect to Shares purchased pursuant to the Offer may be
subject to backup withholding.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that stockholder must submit a statement, signed under penalties of
perjury, attesting to that individual's exempt status. Such statements may be
obtained from the Depositary. Exempt stockholders, other than foreign
individuals, should furnish their TIN, write "Exempt" on the face of the
Substitute Form W-9 below and sign, date and return the Substitute Form W-9 to
the Depositary. See the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained.
<PAGE>
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of their correct TIN by completing the form
below certifying that the TIN provided on the Substitute Form W-9 is correct (or
that such stockholder is awaiting a TIN).
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record owner of the Shares. If
the Shares are in more than one name or are not in the name of the actual owner,
consult the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional guidelines on which number to
report. If the tendering stockholder has not been issued a TIN and has applied
for a number or intends to apply for a number in the near future, the
stockholder should write "Applied For" in the space provided for the TIN in Part
I, and sign and date the Substitute Form W-9. If "Applied For" is written in
Part I, the Depositary will withhold 31% on all payments of the purchase price,
but such withholdings will be refunded if the tendering stockholder provides a
TIN within 60 days.
<PAGE>
PAYOR'S NAME: CHASEMELLON SHAREHOLDER SERVICES
<TABLE>
<C> <S> <C>
- ---------------------------------------------------------------------------------------------------
SUBSTITUTE PART I--Please provide your TIN ------------------------
FORM W-9 in the box at right and certify Social Security Number
DEPARTMENT OF THE TREASURY by signing and dating below. or Employer Identification
INTERNAL REVENUE SERVICE Number
(if awaiting TIN write "Applied
For")
-----------------------------------------------------------------
PART II--For Payees exempt from backup withholding, see the
attached Guidelines for Certification of Taxpayer Identification
PAYOR'S REQUEST FOR TAXPAYER Number on Substitute Form W-9 and complete as instructed therein.
IDENTIFICATION NUMBER ("TIN")
- -----------------------------------------------------------------
Certification--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number or a Taxpayer
Identification Number has not been issued to me and either (a) I have mailed or delivered an
application to receive a Taxpayer Identification Number to the appropriate Internal Revenue
Service ("IRS") center or Social Security Administration office or (b) I intend to mail or deliver
an application in the near future. (I understand that if I do not provide a Taxpayer
Identification Number to the Depositary, 31% of all reportable payments made to me will be
withheld, but will be refunded if I provide a certified Taxpayer Identification Number within 60
days); and
(2) I am not subject to backup withholding either because I have not been notified by the IRS that
I am subject to backup withholding as a result of a failure to report all interest or dividends,
or the IRS has notified me that I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have been notified by the IRS
that you are subject to backup withholding because of underreporting interest or dividends on your
tax return. However, if after being notified by the IRS that you were subject to backup
withholding you received another notification from the IRS that you are no longer subject to
backup withholding, do not cross out item (2). (Also see instructions in the enclosed Guidelines.)
Signature ----------------------------------------------------------------- Date:
--------------------
- ---------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE
ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
THE INFORMATION AGENT FOR THE OFFER IS:
MORROW & CO., INC.
445 PARK AVENUE, 5TH FLOOR
NEW YORK, NEW YORK 10022
BANKS AND BROKERAGE FIRMS CALL: (800) 662-5200
SHAREHOLDERS PLEASE CALL: (800) 566-9061
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
ORCAD, INC.
TO
CDSI ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY OF
CADENCE DESIGN SYSTEMS, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT MIDNIGHT,
NEW YORK CITY TIME,
ON FRIDAY, JULY 16, 1999 UNLESS THE OFFER IS EXTENDED.
This form, or one substantially equivalent to this form, must be used to
accept the Offer (as defined below) if certificates representing shares of
common stock, $.01 par value (collectively, the "Shares"), of OrCAD, Inc., a
Delaware corporation, are not immediately available, if the procedure for
book-entry transfer cannot be completed on a timely basis, or if time will not
permit all required documents to reach the Depositary (as defined in the Offer
to Purchase) on or prior to the Expiration Date (as defined in the Offer to
Purchase). This form may be delivered by hand or transmitted by telegram,
facsimile transmission or mail to the Depositary. See Section 2 of the Offer to
Purchase.
THE DEPOSITARY FOR THE OFFER IS:
[LOGO]
<TABLE>
<CAPTION>
BY MAIL: BY OVERNIGHT COURIER: BY HAND:
<S> <C> <C>
Reorganization Department Reorganization Department Reorganization Department
PO Box 3301 85 Challenger Road 120 Broadway
South Hackensack, NJ 07606 Mail Stop--Reorg 13th Floor
Ridgefield Park, NJ 07660 New York, NY 10271
</TABLE>
<TABLE>
<S> <C>
CONFIRM RECEIPT OF
BY FACSIMILE TRANSMISSION: FACSIMILE
(For Eligible Institutions
Only) by Telephone Only:
(201) 296-4293 (201) 296-4860
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN ONE
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER
THAN THE FACSIMILE NUMBER SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
1
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to CDSI Acquisition Corporation, a Delaware
corporation and a wholly-owned subsidiary of Cadence Design Systems, Inc., a
Delaware corporation, upon the terms and subject to the conditions set forth in
the Offer to Purchase dated June 18, 1999 and the related Letter of Transmittal
(which together constitute the "Offer"), receipt of which is hereby
acknowledged, the number of Shares indicated below pursuant to the guaranteed
delivery procedures set forth in Section 2 of the Offer to Purchase.
Certificate No(s). (if available): _____________________________________________
Number of Shares: ______________________________________________________________
[ ] Check if Shares will be tendered by book-entry transfer: ___________________
Account Number: ________________________________________________________________
Dated: ___________________________________________________________________, 1999
Name(s) of Record Holder(s): ___________________________________________________
(PLEASE TYPE OR PRINT)
Address(es): ___________________________________________________________________
ZIP CODE
Area Code and Tel. No.: ________________________________________________________
Signature(s): __________________________________________________________________
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a bank, broker, dealer, credit union, savings
association or other entity that is a member in good standing of the
Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion
Program, (a) represents that the above named person(s) "own(s)" the Shares
tendered hereby within the meaning of Rule 14e-4 promulgated under the
Securities Exchange Act of 1934, as amended, (b) represents that such tender
of Shares complies with Rule 14e-4 under the Exchange Act, and (c)
guarantees delivery to the Depositary, at one of its addresses set forth
above, of certificates representing the Shares tendered hereby in proper
form for transfer, or confirmation of book-entry transfer of such Shares
into the Depositary's accounts at The Depository Trust Company, in each case
with delivery of a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), and any other required documents, within
three Nasdaq National Market trading days after the date hereof.
2
<PAGE>
Name of Firm: ____________________ __________________________________
Authorized Signature
__________________________________
Title
Address: _________________________ Name: ____________________________
Please Type or Print
___________________________________ Title: ___________________________
Zip Code
Area Code and
Telephone Number: ________________ Dated: _____________________, 1999
NOTE: DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE.
SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF
TRANSMITTAL.
3
<PAGE>
EXHIBIT 99(A)(4)
MORROW & CO., INC.
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ORCAD, INC.
AT
$13.00 NET PER SHARE
BY
CDSI ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY OF
CADENCE DESIGN SYSTEMS, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, JULY 16, 1999 (THE "EXPIRATION DATE"),
UNLESS THE OFFER IS EXTENDED.
June 18, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies And Other Nominees:
We have been engaged to act as Information Agent in connection with the
offer by CDSI Acquisition Corporation, a Delaware corporation ("Purchaser") and
a wholly-owned subsidiary of Cadence Design Systems, Inc., a Delaware
corporation ("Cadence"), to purchase all outstanding shares of common stock,
$.01 par value (collectively, the "Shares"), of OrCAD, Inc., a Delaware
corporation (the "Company"), at $13.00 per share, net to the seller in cash,
upon the terms and subject to the conditions set forth in Purchaser's Offer to
Purchase dated June 18, 1999 (the "Offer to Purchase") and the related Letter of
Transmittal (which together constitute the "Offer").
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE SATISFACTION OR
WAIVER OF CERTAIN CONDITIONS TO THE OBLIGATIONS OF PURCHASER AND THE COMPANY TO
CONSUMMATE THE OFFER, INCLUDING (1) THERE BEING VALIDLY TENDERED BY THE
EXPIRATION DATE AND NOT WITHDRAWN A NUMBER OF SHARES WHICH REPRESENTS AT LEAST
SIXTY SEVEN PERCENT (67%) OF THE AGGREGATE OF (A) THE NUMBER OF SHARES THEN
OUTSTANDING AND (B) THE NUMBER OF SHARES THAT ARE, OR WILL, PRIOR TO THE
SCHEDULED CLOSING OF THE MERGER (AS DEFINED IN THE OFFER TO PURCHASE), BECOME,
SUBJECT TO ISSUANCE UPON THE EXERCISE OF OPTIONS (THE "MINIMUM CONDITION") AND
(2) RECEIPT BY PURCHASER AND THE COMPANY OF CERTAIN GOVERNMENTAL AND REGULATORY
APPROVALS.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee or who hold Shares
registered in their own names, we are enclosing the following documents:
1. Offer to Purchase dated June 18, 1999;
2. Letter of Transmittal to tender Shares for your use and for the
information of your clients. Facsimile copies of the Letter of Transmittal may
be used to tender Shares;
3. Letter to Clients which may be sent to your clients for whose account
you hold Shares in your name or in the name of your nominee, with space provided
for obtaining such clients' instructions with regard to the Offer;
4. Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares are not immediately available or time will not permit
all required documents to reach the Depositary on or prior to the Expiration
Date (as defined in the Offer to Purchase) or if the procedures for book-entry
transfer, as set forth in the Offer to Purchase, cannot be completed on a timely
basis;
<PAGE>
5. The Letter to Stockholders of the Company from Michael F. Bosworth, the
Chairman of the Board, Chief Executive Officer and President of the Company,
accompanied by the Company's Solicitation/Recommendation Statement on Schedule
14D-9; and
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
Upon the terms and subject to the satisfaction or waiver (where applicable)
of the conditions of the Offer, Purchaser will purchase, by accepting for
payment, and will pay for, all Shares validly tendered on or prior to the
Expiration Date promptly after the Expiration Date. For purposes of the Offer,
Purchaser will be deemed to have accepted for payment, and thereby purchased,
tendered Shares if, as and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance of such Shares for payment. In all cases,
payment for Shares accepted for payment pursuant to the Offer will be made only
after timely receipt by the Depositary of (i) certificates for Shares or timely
confirmation of a book-entry transfer of such Shares, if such procedure is
available, into the Depositary's account at a Book-Entry Transfer Facility (as
defined in the Offer to Purchase) pursuant to the procedures set forth in
Section 2 of the Offer to Purchase, (ii) the Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, or an Agent's Message (as
defined in the Offer to Purchase) and (iii) any other documents required by the
Letter of Transmittal.
Purchaser will not pay any fees or commissions to any broker or dealer or
other person (other than the Depositary and the Information Agent as described
in the Offer to Purchase) in connection with the solicitation of tenders of
Shares pursuant to the Offer. However, Purchaser will, upon request, reimburse
you for customary mailing and handling expenses incurred by you in forwarding
the enclosed materials to your clients.
Purchaser will pay or cause to be paid any stock transfer taxes payable on
the transfer of Shares to it, except as otherwise provided in Instruction 6 of
the enclosed Letter of Transmittal.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, JULY 16, 1999, UNLESS THE OFFER IS EXTENDED.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal and any other required documents should be sent
to the Depositary and certificates representing the tendered Shares should be
delivered, or such Shares should be tendered by book-entry transfer, all in
accordance with the instructions set forth in the Letter of Transmittal and the
Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their certificates or other required documents prior to the expiration
of the Offer, a tender may be effected by following the guaranteed delivery
procedures specified under Section 2 in the Offer to Purchase.
Any inquires you may have with respect to the Offer or requests for
additional copies of the enclosed materials should be addressed to the
Information Agent at the address and telephone number set forth on the back
cover page of the enclosed Offer to Purchase.
Very truly yours,
Morrow & Co., Inc.
Enclosures
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY PERSON AS AN AGENT OF PURCHASER, THE DEPOSITARY OR THE INFORMATION AGENT OR
AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON
BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS
ENCLOSED AND THE STATEMENTS CONTAINED THEREIN.
<PAGE>
EXHIBIT 99(A)(5)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ORCAD, INC.
AT
$13.00 NET PER SHARE
BY
CDSI ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY OF
CADENCE DESIGN SYSTEMS, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, JULY 16, 1999,
UNLESS THE OFFER IS EXTENDED.
June 18, 1999
To Our Clients:
Enclosed for your consideration is an Offer to Purchase dated June 18, 1999
and the related Letter of Transmittal (which together constitute the "Offer")
relating to an offer by CDSI Acquisition Corporation, a Delaware corporation
("Purchaser") and a wholly-owned subsidiary of Cadence Design Systems, Inc., a
Delaware corporation ("Cadence"), to purchase all outstanding shares of common
stock, $.01 par value (collectively, the "Shares"), of OrCAD, Inc., a Delaware
corporation (the "Company"), at a purchase price of $13.00 per Share, net to the
seller in cash, upon the terms and subject to the conditions set forth in the
Offer. We are the holder of record of Shares held by us for your account. The
Letter of Transmittal is furnished to you for your information only and cannot
be used by you to tender Shares. A tender of Shares may be made only by us as
the holder of record and pursuant to your instructions.
We request instructions as to whether you wish to tender any or all Shares
held by us for your account, pursuant to the terms and conditions set forth in
the Offer.
Your attention is directed to the following:
1. The tender price is $13.00 per Share, net to the seller in cash.
2. The Offer is being made for all outstanding Shares.
3. This Offer is being made pursuant to the terms of an Agreement and Plan
of Merger, dated as of June 14, 1999 (the "Merger Agreement"), by and among the
Company, Purchaser and Cadence. The Merger Agreement provides, among other
things, for the making of the Offer by Purchaser, and further provides that,
following the purchase of Shares pursuant to the Offer and promptly after the
satisfaction or waiver of certain conditions, Purchaser will be merged with and
into the Company (the "Merger"). The Company will continue as the surviving
corporation after the Merger and will be a wholly-owned subsidiary of Cadence.
4. The Board of Directors of the Company has approved the Offer, the Merger
and the other transactions contemplated by the Merger Agreement, has determined
that the Offer, the Merger and the other transactions contemplated by the Merger
Agreement are fair to and in the best interests of the Company's stockholders
and recommends that stockholders of the Company accept the Offer and tender
their Shares.
<PAGE>
5. The Offer and withdrawal rights will expire at midnight, New York City
time, on Friday, July 16, 1999, unless extended.
6. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE SATISFACTION OR
WAIVER OF CERTAIN CONDITIONS TO THE OBLIGATIONS OF PURCHASER AND THE COMPANY TO
CONSUMMATE THE OFFER, INCLUDING (1) THERE BEING VALIDLY TENDERED BY THE
EXPIRATION DATE AND NOT WITHDRAWN A NUMBER OF SHARES WHICH REPRESENTS AT LEAST
SIXTY-SEVEN PERCENT (67%) OF THE AGGREGATE OF (A) THE NUMBER OF SHARES THEN
OUTSTANDING AND (B) THE NUMBER OF SHARES THAT ARE, OR WILL, PRIOR TO THE
SCHEDULED CLOSING OF THE MERGER, BECOME, SUBJECT TO ISSUANCE UPON THE EXERCISE
OF OPTIONS (THE "MINIMUM CONDITION") AND (2) RECEIPT BY PURCHASER AND THE
COMPANY OF CERTAIN GOVERNMENTAL AND REGULATORY APPROVALS.
7. Stockholders who tender Shares will not be obligated to pay brokerage
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares by Purchaser pursuant to
the Offer.
If you wish to have us tender any or all of your Shares, please complete,
sign and return the form set forth on the reverse side of this letter. Your
instructions to us should be forwarded in ample time to permit us to submit a
tender on your behalf prior to the expiration of the Offer.
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER
TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF
COMMON STOCK
OF
ORCAD, INC.
AT
$13.00 NET PER SHARE
BY
CDSI ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY OF
CADENCE DESIGN SYSTEMS, INC.
The undersigned acknowledge(s) receipt of your letter enclosing the Offer to
Purchase, dated June 18, 1999, of CDSI Acquisition Corporation, a Delaware
corporation ("Purchaser") and a wholly-owned subsidiary of Cadence Design
Systems, Inc. ("Cadence") and the related Letter of Transmittal, relating to
shares of common stock, $.01 par value (collectively, the "Shares"), of OrCAD,
Inc., a Delaware corporation.
This will instruct you to tender to Purchaser the number of Shares indicated
below held by you for the account of the undersigned, on the terms and subject
to the conditions set forth in the Offer to Purchase and the Letter of
Transmittal.
NUMBER OF SHARES TO BE
TENDERED:
SIGN HERE
_____________________ Shares
____________________________________
____________________________________
SIGNATURE(S)
Account Number: ____________________
____________________________________
PLEASE PRINT NAME(S) AND ADDRESS(ES)
HERE
____________________________________
____________________________________
____________________________________
Dated: ______________________ , 1999
____________________________________
TAX IDENTIFICATION OR SOCIAL
SECURITY NUMBER
- ------------------------
* Unless otherwise indicated, it will be assumed that all of your Shares held
by us for your account are to be tendered.
<PAGE>
EXHIBIT 99(A)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER. -- Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e. 00-0000000. The table below will help determine the number
to give the payer.
<TABLE>
<CAPTION>
GIVE THE GIVE THE
FOR THIS TYPE OF SOCIAL SECURITY EMPLOYER IDENTIFICATION
ACCOUNT: NUMBER OF-- FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- ------------------------ --------------------------- --------------------------- ---------------------------
<S> <C> <C> <C>
1. An individual's The individual 9. A valid trust, estate, The legal entity (Do not
account or pension trust furnish the identifying
number of the personal
representative or trustee
unless the legal entity
itself is not designated in
the account title.)(5)
2. Two or more The actual owner of the 10. Corporate account The corporation
individuals (joint account or, if combined
account) funds, the first individual
on the account(1)
3. Husband and wife The actual owner of the 11. Religious, charitable, The organizaiton
(joint account) account or, if joint funds, or education organization
either person(1)
4. Custodian account of The minor(2) 12. Partnership account The partnership
a minor (Uniform Gift held in the name of the
to Minors Act) business
5. Adult and minor The adult or, if the minor 13. Association, club, or The organization
(joint account) is the only contributor, other tax- exempt
the minor(1) organization
6. Account in the name The ward, minor, or 14. A broker or registered The broker or nominee
of guardian or incompetent person(3) nominee
committee for a
designated ward,
minor, or incompetent
person
7. a. The usual The grantor-trustee(1) 15. Account with the The public entity
revocable savings The actual owner(1) Department of Agriculture
trust account (grantor in the name of a public
is also trustee) b. entity (such as a State or
So-called trust local government, school
account that is not a district, or prison) that
legal or valid trust receives agricultural
under State law program payments
8. Sole proprietorship The owner(4)
account
</TABLE>
- ------------------------------
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a social security number, that
person's number must be furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
Note: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5 Application for a Social Security Number Card, or Form
SS-4, Application for an Employer Identification Number, at the local office of
the Social Security Administration or the Internal Revenue Service and apply for
a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- - A corporation.
- - A financial institution.
- - An organization exempt form tax under Section 501(a), or an individual
retirement plan.
- - The United States or any agency or instrumentality thereof.
- - A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- - An international organization or any agency or instrumentality thereof.
- - A registered dealer in securities or commodities registered in the United
States or a possession of the United States.
- - A real estate investment trust.
- - A common trust fund operated by a bank under Section 584(a).
- - An exempt charitable remainder trust, or a non-exempt trust described in
Section 4947(a)(1).
- - An entity registered at all times under the Investment Company Act of 1940.
- - A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- - Payments to nonresident aliens subject to withholding under Section 1441.
- - Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresident alien partner.
- - Payments of patronage dividends where the amount received is not paid in
money.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- - Payments of interest on obligations issued by individuals.
Note: You may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payer's trade or business and you have
not provided your correct taxpayer identification number to the payer.
- - Payments of tax-exempt interest (including exempt-interest dividends under
Section 852).
- - Payments described in Section 6049(b)(5) to nonresident aliens.
- - Payments on tax-free covenant bonds under Section 1451.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Exempt payees described above should file a substitute Form W-9 to avoid
possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER. WRITE "EXEMPT" ON THE FACE OF THE FORM, AND
RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE
DIVIDENDS, ALSO SIGN AND DATE THE FORM.
Certain payments, other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. The IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish a
taxpayer identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includable payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an
underpayment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
THIS ANNOUNCEMENT IS NEITHER AN OFFER TO PURCHASE NOR A SOLICITATION OF AN OFFER
TO SELL SHARES. THE OFFER IS MADE SOLELY BY THE OFFER TO PURCHASE DATED JUNE
18, 1999, AND THE RELATED LETTER OF TRANSMITTAL, AND IS NOT BEING MADE
TO (NOR WILL TENDERS BE ACCEPTED FROM OR ON BEHALF OF) HOLDERS OF
SHARES IN ANY JURISDICTION IN WHICH THE MAKING OF THE OFFER OR
THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH
THE LAWS OF SUCH JURISDICTION.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ORCAD, INC.
AT
$13.00 NET PER SHARE
BY
CDSI ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY OF
CADENCE DESIGN SYSTEMS, INC.
CDSI Acquisition Corporation, a Delaware corporation, ("Purchaser") and a
wholly-owned subsidiary of Cadence Design Systems, Inc., a Delaware corporation
("Cadence"), is offering to purchase all outstanding shares of common stock,
$.01 par value (the "Shares"), of OrCAD, Inc., a Delaware corporation (the
"Company"), at $13.00 per Share, net to the seller in cash, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated June 18, 1999
and in the related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer").
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, JULY 16, 1999, UNLESS EXTENDED.
The Offer is conditioned upon, among other things, the satisfaction or
waiver of all conditions to the obligations of Purchaser, Cadence and the
Company, including (i) there being validly tendered and not withdrawn prior to
the expiration of the Offer such number of Shares that would constitute at least
sixty seven percent (67%) of the aggregate of (a) the number of Shares then
outstanding and (b) the number of Shares that are, or will, prior to the
scheduled closing of the Merger (as defined below), become, subject to issuance
upon the exercise of options (the "Minimum Condition") and (ii) the receipt by
Purchaser, Cadence and the Company of certain governmental and regulatory
approvals.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of June 14, 1999 (the "Merger Agreement"), among Cadence, Purchaser and the
Company pursuant to which, following the consummation of the Offer, Purchaser
will be merged with and into the Company and the Company will become a wholly
owned subsidiary of Cadence (the "Merger"). On the effective date of the Merger,
each outstanding Share (except for (i) Shares owned by the Company or Cadence,
or any subsidiary of the Company or Cadence or (ii) Shares held by a stockholder
who has demanded and perfected such stockholder's demand for appraisal of such
stockholder's Shares in accordance with Delaware law) will be converted into the
right to receive $13.00, in cash, without interest. Cadence and Purchaser have
entered into a Stockholders Agreement with certain stockholders of the Company
(the "Tendering Stockholders") holding in the aggregate approximately 18% of the
issued and outstanding Shares. Pursuant to this agreement, each Tendering
<PAGE>
Stockholder has agreed, upon the terms and subject to the conditions herein, to
tender to Purchaser all Shares beneficially owned by such Tendering Stockholder,
has granted to Purchaser an option to purchase such Shares under specified
circumstances, has agreed to vote such Shares in favor of approval of the Merger
Agreement and the transactions contemplated thereby and has granted an
irrevocable proxy to Purchaser with respect to such Shares.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER AND
THE MERGER AND DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO
AND IN THE BEST INTERESTS OF THE STOCKHOLDERS OF THE COMPANY, AND UNANIMOUSLY
RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR
SHARES.
For purposes of the Offer, Purchaser shall be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to Purchaser and not
properly withdrawn as, if and when Purchaser gives oral or written notice to
ChaseMellon Shareholder Services as Depositary (in such capacity, the
"Depositary") of Purchaser's acceptance for payment of such Shares. Upon the
terms and subject to the conditions of the Offer, payment for Shares purchased
pursuant to the Offer will be made by deposit of the purchase price therefor
with the Depositary, which will act as agent for tendering stockholders for the
purpose of receiving payment from Purchaser and transmitting payment to
tendering stockholders whose Shares have been accepted for payment. In all
cases, payment for Shares purchased pursuant to the Offer will be made only
after timely receipt by the Depositary of (a) certificates for such Shares or
timely confirmation of book-entry transfer of such Shares into the Depositary's
account at a Book-Entry Transfer Facility (as defined in the Offer to Purchase)
pursuant to the procedures set forth in Section 2 of the Offer to Purchase, (b)
a properly completed and duly executed Letter of Transmittal (or facsimile
thereof) with any required signature guarantees, or, in the case of a book-entry
transfer, an Agent's Message (as defined in the Offer to Purchase) and (c) any
other documents required by the Letter of Transmittal. Under no circumstance
will interest be paid by Purchaser on the purchase price of the Shares accepted
for payment, regardless of any extension of the Offer or any delay in making
such payment.
The term "Expiration Date" means midnight, New York City time, on Friday,
July 16, 1999, unless Purchaser extends the period of time during which the
Offer is open, in which event the term "Expiration Date" shall mean the latest
time and date on which the Offer, as so extended by Purchaser, shall expire.
Purchaser expressly reserves the right, subject to the terms of the Merger
Agreement, at any time or from time to time and regardless of whether or not any
of the events set forth in Section 18 of the Offer to Purchase shall have
occurred, (i) to extend the period of time during which the Offer is open and
thereby postpone acceptance for payment of any Shares by giving oral or written
notice of such extension to the Depositary, and (ii) to amend the Offer in any
other respect permitted under the Merger Agreement by giving oral or written
notice of such amendment to the Depositary. Purchaser shall not have any
obligation to pay interest on the purchase price for tendered Shares, whether or
not Purchaser exercises its right to extend the Offer. Any extension of the
Offer will be followed by a public announcement thereof no later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date. During any such extension, all Shares previously tendered and
not withdrawn will remain tendered, subject to the right of a tendering
stockholder to withdraw such stockholder's Shares.
Pursuant to the Merger agreement, Purchaser may make any changes in the
terms and conditions of the Offer, provided that, unless previously approved by
the Company in writing, Purchaser may not (i) decrease the purchase price, (ii)
change the form of consideration payable in the Offer, (iii) decrease the number
of Shares sought pursuant to the Offer, (iv) amend or waive satisfaction of the
Minimum Condition to permit the purchase of Shares constituting less than a
majority of the number of Shares outstanding, (v) add additional conditions to
the Offer, (vi) amend the conditions to the Offer to broaden their scope or
(vii) amend any other term of the Offer in any manner adverse to the holders of
Shares.
2
<PAGE>
Shares tendered pursuant to the Offer may be withdrawn at any time on or
prior to the Expiration Date. For a withdrawal to be effective, a written,
telegraphic or facsimile transmission notice of withdrawal must be timely
received by the Depositary at one of its addresses set forth on the back cover
of the Offer to Purchase and must specify the name of the person having tendered
the Shares to be withdrawn, the number of Shares to be withdrawn and the name of
the registered holder of the Shares to be withdrawn, if different from the name
of the person who tendered the Shares. If certificates for Shares have been
delivered or otherwise identified to the Depositary, then, prior to the physical
release of such certificates, the serial numbers shown on such certificates must
be submitted to the Depositary, and, unless Shares have been tendered by an
Eligible Institution (as defined in Section 2 of the Offer to Purchase), the
signature on the notice of withdrawal must be guaranteed by an Eligible
Institution. If Shares have been delivered pursuant to the procedures for
book-entry transfer as set forth in Section 2 of the Offer to Purchase, any
notice of withdrawal must also specify the name and number of the account at the
appropriate Book-Entry Transfer Facility to be credited with the withdrawn
Shares and otherwise comply with such Book-Entry Transfer Facility's procedures.
Withdrawal of tendered Shares may not be rescinded, and any Shares properly
withdrawn will thereafter be deemed not validly tendered for the purposes of the
Offer. However, withdrawn Shares may be retendered by again following one of the
procedures described in Section 2 of the Offer to Purchase at any time prior to
the Expiration Date. All questions as to the form and validity (including time
of receipt) of notices of withdrawal will be determined by Purchaser whose
determination will be final and binding.
The Offer to Purchase and the related Letter of Transmittal and other
relevant materials will be mailed to record holders of Shares and furnished to
brokers, dealers, banks, trust companies and similar persons whose names, or the
names of whose nominees, appear on the Company's stockholder list or, if
applicable, who are listed as participants in a clearing agency's security
position listing, for subsequent transmittal to beneficial owners of Shares.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
Securities Exchange Act of 1934, as amended, is contained in the Offer to
Purchase and is incorporated herein by reference.
THE OFFER TO PURCHASE AND LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO THE
OFFER.
Requests for copies of the Offer to Purchase, the Letter of Transmittal and
all other tender offer materials may be directed to the Information Agent, as
set forth below, and copies will be furnished promptly at Purchaser's expense.
Questions or requests for assistance may be directed to the Information Agent.
THE INFORMATION AGENT FOR THE OFFER IS:
MORROW & CO., INC.
445 PARK AVENUE, 5TH FLOOR
NEW YORK, NEW YORK 10022
BANKS AND BROKERAGE FIRMS CALL: (800) 662-5200
SHAREHOLDERS PLEASE CALL: (800) 566-9061
June 18, 1999
3
<PAGE>
[OrCAD LOGO]
FOR IMMEDIATE RELEASE
For more information, contact:
MEDIA CONTACT: INVESTOR CONTACT:
Laurie Stanley Bill Porter
Cadence Design Systems, Inc. Cadence Design Systems, Inc.
(408) 428-5019 (408) 428-5171
[email protected] [email protected]
OrCAD MEDIA AND INVESTOR CONTACT:
Jean Armstrong
Armstrong Kendall, Inc.
(503) 672-4680
[email protected]
CADENCE TO ACQUIRE ORCAD
WORLDWIDE EDA LEADER AND SHRINK-WRAP PCB MARKET LEADER BUILD
EDA POWERHOUSE TO ADDRESS REQUIREMENTS OF ENTIRE PCB INDUSTRY
SAN JOSE, Calif. -- June 15, 1999 -- Cadence Design Systems, Inc.
(NYSE:CDN), the world's leading provider of electronic design software and
services, and OrCAD, Inc. (Nasdaq:OCAD) today announced a definitive
agreement under which Cadence will acquire OrCAD in a cash tender offer at
$13 per share for a total purchase price of $121 million. Cadence's strength
in high-end printed circuit board (PCB) design automation and OrCAD's
leadership in the shrink-wrap PCB segment will provide a platform for
delivering complete PCB flows to the rapidly growing mainstream segment.
Cadence and OrCAD are premier suppliers of computer-aided engineering
and computer-aided design tools for PCB electronic design automation (EDA).
Cadence estimates the PCB software and services industry to be at least $700
million in 1999. The OrCAD acquisition by Cadence gives the combined company
the EDA industry's largest customer base for PCB design software and services
- -- spanning the high-end, mainstream, and
--MORE--
<PAGE>
CADENCE TO ACQUIRE ORCAD Page 2
shrink-wrap segments. OrCAD's recently announced Internet strategy will
provide significant benefits to Cadence customers as it is integrated into
the Cadence PCB product line.
"The acquisition of OrCAD solidifies Cadence's position in the PCB
market and provides immediate growth opportunities for our existing software
and services businesses. By leveraging OrCAD's highly successful telesales
channel, we can bring our Windows NT-based offering of high-speed PCB design
and logic simulation products and services to OrCAD's 160,000 users, many of
which are moving up into the mainstream market," said Ray Bingham, president
and chief executive officer at Cadence.
Bingham added, "We think highly of OrCAD's accomplishments and are
confident that OrCAD's outstanding management team will add tremendous
organizational strength as we combine forces to meet the evolving needs of
PCB designers."
The entire OrCAD organization will be combined with the Cadence PCB team
into a single, focused PCB business group. The PCB group will have a
dedicated sales channel, research and development, services, marketing, and
customer support functions. OrCAD's chief executive officer, Mike Bosworth,
will lead the new PCB group and report directly to Shane Robison, president
of the Cadence Design Productivity Group. The Design Productivity Group is
responsible for Cadence's EDA products and services. Dave DeMaria will run
marketing for the new PCB business group reporting to Bosworth. DeMaria led
Cadence's PCB business to market leadership and oversaw the successful
integration of Cooper & Chyan Technology, Inc. into the Cadence PCB portfolio.
CONVERGING ON MARKET OPPORTUNITIES
According to Bosworth, the acquisition by Cadence directly targets the
converging requirements of today's three distinct PCB segments: high end,
shrink-wrap, and mainstream. Dataquest refers to mainstream as the
"ready-to-use" segment and estimates it to be growing at a five-year compound
annual rate of approximately 36 percent.
--MORE--
<PAGE>
CADENCE TO ACQUIRE ORCAD Page 3
OrCAD customers will benefit from Cadence's high-speed interconnect
design, high-performance PCB layout, and Verilog/VHDL simulation
technologies. Cadence customers will benefit from OrCAD's innovative
Internet-based component information solution and access to the OrCAD PSpice
analog design tool.
Commenting further, Bosworth stated: "OrCAD has built a profitable,
growing business that services designers in many different industries. It is
this success in the marketplace that attracted Cadence to consider our
complementary products, market strengths, and channel strategies. Together,
we can provide customers in all segments with access to a complete
high-speed, signal integrity-based PCB flow and improved productivity at the
enterprise level."
PCB MARKET STRATEGY
The two companies will rapidly combine their existing products into
enhanced PCB flows for the high-end, mainstream and shrink-wrap segments.
They will also integrate their technologies over time to develop new,
improved products that meet the future needs of their combined customer base.
Specifically, Cadence will integrate OrCAD's PCB and field programmable
gate array (FPGA) design tools -- which includes OrCAD Capture/CIS, OrCAD
PSpice, OrCAD Express, and OrCAD Layout -- with the Cadence
Intrica-TRADEMARK- family of PCB tools. The Intrica family includes such
familiar Cadence names as the Concept-REGISTERED TRADEMARK- HDL,
Allegro-REGISTERED TRADEMARK-, SPECCTRA-REGISTERED TRADEMARK-, and
SPECCTRAQuest-TRADEMARK- products. The Cadence Intrica PCB flow with the
addition of the OrCAD PSpice tool will be marketed to high-end PCB users. The
OrCAD PCB/FPGA product family will be marketed to the shrink-wrap segment.
The combined company will address the rapidly growing mainstream,
ready-to-use PCB segment, as well as the emerging EDA enterprise market, by
combining OrCAD's front-end design tools with the Cadence Affirma-TRADEMARK-
family of Verilog and VHDL logic simulation products and the Intrica
high-speed PCB tools.
--MORE--
<PAGE>
CADENCE TO ACQUIRE ORCAD Page 4
The combined offerings will support customers with complete tool suites
on the Windows, Windows NT and UNIX-based operating platforms. These will be
sold through a combination of Cadence's direct sales and services team
focused on large, global accounts; value-added resellers; and OrCAD's
well-established telesales and telebusiness channels for the broader customer
base.
TERMS OF THE AGREEMENT
Cadence said the acquisition would be accounted for under the purchase
method of accounting. The transaction is structured as a cash tender offer
for all OrCAD shares at $13 per share, for a total purchase price of $121
million. Following completion of the tender offer, any shares not tendered
will be acquired, at the same price per share, through a merger. The tender
offer will commence within five business days, and tendered shares will be
purchased at the end of 20 business days thereafter, assuming all conditions
to the offer have been met.
The acquisition has been approved by the boards of directors of both
companies and is subject to certain conditions, including compliance with
applicable regulatory requirements and approval by OrCAD's shareholders.
Holders of approximately 20 percent of OrCAD's common stock have agreed to
tender all of their shares in the offer.
ABOUT CADENCE
Cadence Design Systems, Inc. is the largest supplier of software
products, methodology services, and design services used to accelerate and
manage the design of semiconductors, computer systems, networking and
telecommunications equipment, consumer electronics, and a variety of other
electronics-based products. With more than 4,000 employees and 1998 annual
sales of $1.2 billion, Cadence is headquartered in San Jose, Calif. and has
sales offices, design centers, and research facilities located around the
world. More information about the company, its products and services may be
obtained from the World Wide Web at http://www.cadence.com.
--MORE--
<PAGE>
CADENCE TO ACQUIRE ORCAD Page 5
ABOUT ORCAD
Founded in 1985, OrCAD is the leading supplier of Windows EDA software
and services to electronics companies worldwide. The company's solutions
increase productivity in the management of component data, and in the design
of field programmable gate arrays (FPGAs), complex programmable logic devices
(CPLDs), analog and mixed analog-digital circuits, and printed circuit boards
(PCBs). OrCAD is also leveraging the Internet to provide a connected online
electronics design community. The company serves many segments of the
worldwide electronics industry, including aerospace, telecom, industrial
control, military, medical equipment, semiconductor, computer, and consumer
products.
OrCAD is headquartered in Beaverton, Oregon, with offices in Irvine,
California; Yokohama, Japan; and Basingstoke, England. In other countries
worldwide, a network of EDA resellers represents OrCAD. For more information,
see www.orcad.com.
--END--
THIS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS BASED ON CURRENT
EXPECTATIONS OR BELIEFS, AS WELL AS A NUMBER OF ASSUMPTIONS ABOUT FUTURE
EVENTS THAT ARE SUBJECT TO FACTORS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE DESCRIBED IN THE FORWARD-LOOKING
STATEMENTS. THE READER IS CAUTIONED NOT TO PUT UNDUE RELIANCE ON THESE
FORWARD-LOOKING STATEMENTS, WHICH ARE NOT A GUARANTEE OF FUTURE PERFORMANCE
AND ARE SUBJECT TO A NUMBER OF UNCERTAINTIES AND OTHER FACTORS, MANY OF WHICH
ARE OUTSIDE THE CONTROL OF CADENCE AND ORCAD. THE FORWARD-LOOKING STATEMENTS
IN THIS RELEASE ADDRESS A VARIETY OF SUBJECTS INCLUDING, FOR EXAMPLE, THE
EXPECTED DATE OF CLOSING OF THE ACQUISITION AND THE POTENTIAL BENEFITS OF THE
ACQUISITION. THE FOLLOWING FACTORS, AMONG OTHERS, COULD CAUSE ACTUAL RESULTS
TO DIFFER MATERIALLY FROM THOSE DESCRIBED IN THESE FORWARD-LOOKING
STATEMENTS: THE RISK THAT ORCAD'S BUSINESS WILL NOT BE SUCCESSFULLY
INTEGRATED WITH CADENCE'S BUSINESS; COSTS ASSOCIATED WITH THE ACQUISITION;
THE INABILITY TO OBTAIN THE APPROVAL OF ORCAD'S SHAREHOLDERS; MATTERS ARISING
IN CONNECTION WITH THE PARTIES' EFFORTS TO COMPLY WITH APPLICABLE REGULATORY
REQUIREMENTS RELATING TO THE TRANSACTION; AND INCREASED COMPETITION AND
TECHNOLOGICAL CHANGES IN THE INDUSTRY IN WHICH CADENCE AND ORCAD COMPETE. FOR
A DETAILED DISCUSSION OF THESE AND OTHER CAUTIONARY STATEMENTS, PLEASE REFER
TO CADENCE'S AND ORCAD'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION
FOR THEIR RESPECTIVE ANNUAL REPORTS ON FORM 10-K AND QUARTERLY REPORTS ON
FORM 10-Q. FOR CADENCE, REFER TO THE ANNUAL REPORT FOR THE YEAR ENDED JANUARY
2, 1999 AND THE MOST RECENT QUARTERLY REPORT FOR THE QUARTER ENDED APRIL 3,
1999. FOR ORCAD, REFER TO THE ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31,
1998 AND THE MOST RECENT QUARTERLY REPORT FOR THE QUARTER ENDED MARCH 31,
1999. CADENCE, THE CADENCE LOGO, ALLEGRO, CONCEPT, VERILOG, AND SPECCTRA ARE
REGISTERED TRADEMARKS, AND INTRICA, SPECCTRAQUEST, AND AFFIRMA ARE TRADEMARKS
OF CADENCE DESIGN SYSTEMS, INC. ORCAD IS A REGISTERED TRADEMARK OF ORCAD,
INC. ALL OTHER BRANDS OR PRODUCT NAMES ARE THE PROPERTY OF THEIR RESPECTIVE
HOLDERS.
<PAGE>
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
DATED AS OF JUNE 14, 1999
AMONG
CADENCE DESIGN SYSTEMS, INC.,
ORCAD, INC.
AND
CDSI ACQUISITION CORPORATION
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1. THE TENDER OFFER.....................................................................2
Section 1.1. The Offer..................................................................2
Section 1.2. Company Action.............................................................4
Section 1.3. Directors..................................................................5
ARTICLE 2 THE MERGER...........................................................................6
Section 2.1. The Merger.................................................................6
Section 2.2. Effective Time.............................................................6
Section 2.3. Closing of the Merger......................................................7
Section 2.4. Effects of the Merger......................................................7
Section 2.5. Certificate of Incorporation and Bylaws....................................7
Section 2.6. Directors..................................................................7
Section 2.7. Officers...................................................................7
Section 2.8. Conversion of Shares.......................................................7
Section 2.9. Dissent and Appraisal Rights...............................................8
Section 2.10. Exchange of Certificates...................................................9
Section 2.11. Stock Options.............................................................10
Section 2.12. The Stock Purchase Plan...................................................11
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................................11
Section 3.1. Organization and Qualification; Subsidiaries; Investments.................12
Section 3.2. Capitalization of the Company and its Subsidiaries........................13
Section 3.3. Authority Relative to this Agreement; Recommendation......................14
Section 3.4. SEC Reports; Financial Statements.........................................14
Section 3.5. Offer Documents; Proxy Statement..........................................15
Section 3.6. Consents and Approvals; No Violations.....................................15
Section 3.7. No Default................................................................16
Section 3.8. No Undisclosed Liabilities; Absence of Changes............................16
Section 3.9. Litigation................................................................18
Section 3.10. Compliance with Applicable Law............................................18
Section 3.11. Employee Benefit Plans; Labor Matters.....................................19
Section 3.12. Environmental Laws and Regulations........................................20
Section 3.13. Taxes.....................................................................21
Section 3.14. Intellectual Property.....................................................23
Section 3.15. Certain Contract Matters..................................................28
Section 3.16. Insurance.................................................................28
Section 3.17. Certain Business Practices................................................28
Section 3.18. Product Warranties........................................................29
Section 3.19. Suppliers and Customers...................................................29
Section 3.20. Vote Required.............................................................29
Section 3.21. Opinion of Financial Adviser..............................................29
i
<PAGE>
Section 3.22. Brokers...................................................................29
Section 3.23. Disclosure................................................................29
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER..............................30
Section 4.1. Organization..............................................................30
Section 4.2. Authority Relative to this Agreement......................................30
Section 4.3. SEC Reports; Financial Statements.........................................31
Section 4.4. Offer Documents; Proxy Statement..........................................31
Section 4.5. Consents and Approvals; No Violations.....................................32
Section 4.6. Brokers...................................................................32
Section 4.7. No Prior Activities.......................................................32
ARTICLE 5 COVENANTS...........................................................................33
Section 5.1. Conduct of Business of the Company........................................33
Section 5.2. Preparation of the Proxy Statement........................................35
Section 5.3. Other Potential Acquirers.................................................35
Section 5.4. Meeting of Stockholders...................................................37
Section 5.5. Access to Information.....................................................37
Section 5.6. Certain Filings; Reasonable Efforts.......................................38
Section 5.7. Public Announcements......................................................39
Section 5.8. Indemnification and Directors' and Officers' Insurance....................39
Section 5.9. Notification of Certain Matters...........................................40
Section 5.10. Additions to and Modification of Company Disclosure Schedule..............40
Section 5.11. Officers..................................................................40
ARTICLE 6 CONDITIONS TO CONSUMMATION OF THE MERGER............................................41
Section 6.1. Conditions to Each Party's Obligations to Effect the Merger...............41
Section 6.2. Conditions to the Obligations of Parent and Purchaser.....................41
Section 6.3. Conditions to the Obligations of the Company..............................41
ARTICLE 7 TERMINATION; AMENDMENT; WAIVER......................................................42
Section 7.1. Termination...............................................................42
Section 7.2. Effect of Termination.....................................................43
Section 7.3. Fees and Expenses.........................................................43
Section 7.4. Amendment.................................................................44
Section 7.5. Extension; Waiver.........................................................44
ARTICLE 8 MISCELLANEOUS.......................................................................45
Section 8.1. Nonsurvival of Representations and Warranties.............................45
Section 8.2. Entire Agreement; Assignment..............................................45
Section 8.3. Validity..................................................................45
Section 8.4. Notices...................................................................45
Section 8.5. Governing Law.............................................................46
Section 8.6. Descriptive Headings......................................................46
Section 8.7. Parties in Interest.......................................................46
ii
<PAGE>
Section 8.8. Certain Definitions.......................................................46
Section 8.9. Personal Liability........................................................47
Section 8.10. Specific Performance......................................................47
Section 8.11. Counterparts..............................................................47
</TABLE>
iii
<PAGE>
TABLE OF EXHIBITS
Exhibit A..................Form of Certificate of Merger
iv
<PAGE>
TABLE OF DEFINED TERMS
<TABLE>
<CAPTION>
Cross Reference
Term in Agreement Page
- ---- ---------------- ----
<S> <C> <C>
affiliate.........................................................Section 8.8(a)......................46
Agreement ........................................................Preamble.............................1
business day......................................................Section 8.8(b)......................46
Business System...................................................Section 3.14(o)(i)..................27
capital stock.....................................................Section 8.8(c)......................47
Certificate of Merger.............................................Section 2.2..........................6
Certificates......................................................Section 2.10(b)......................9
Closing Date......................................................Section 2.3..........................7
Closing...........................................................Section 2.3..........................7
Company Disclosure Schedule.......................................Section 3...........................12
Company Permits...................................................Section 3.10........................18
Company...........................................................Preamble.............................1
Company SEC Reports...............................................Section 3.4(a)......................14
Company Securities................................................Section 3.2(a)......................13
Company Stock Option Agreement....................................Preamble.............................1
Company Stockholders'Meeting......................................Section 3.5.........................15
Copyrights........................................................Section 3.14(a).....................23
Delaware Law......................................................Preamble.............................1
Dissenting Shares.................................................Section 2.9(a).......................8
Effective Time....................................................Section 2.2..........................7
Employee Plans....................................................Section 3.11(a).....................19
Employment Agreements.............................................Preamble.............................2
Environmental Claim...............................................Section 3.12(a).....................20
Environmental Laws................................................Section 3.12(a).....................20
ERISA Affiliate...................................................Section 3.11(a).....................19
ERISA.............................................................Section 3.11(a).....................19
excess parachute payments.........................................Section 3.13(l).....................22
Exchange Act......................................................Section 1.1(a).......................2
Exchange Agent....................................................Section 2.10(a)......................9
Final Date........................................................Section 7.1.........................42
Financial Advisor.................................................Section 1.2(a).......................4
Governmental Entity...............................................Section 3.6.........................16
HSR Act...........................................................Section 3.6.........................16
Inbound License Agreements........................................Section 3.14(e).....................24
incentive stock options...........................................Section 2.11(a).....................10
include...........................................................Section 8.8(e)......................47
Indemnified Liabilities...........................................Section 5.8(a)......................39
Indemnified Persons...............................................Section 5.8(a)......................39
Independent Directors.............................................Section 1.3..........................6
Insurance Policies................................................Section 3.16........................28
v
<PAGE>
<CAPTION>
Cross Reference
Term in Agreement Page
- ---- ---------------- ----
<S> <C> <C>
Insured Parties...................................................Section 5.8(b)......................40
Intellectual Property.............................................Section 3.14(a).....................23
IRS...............................................................Section 3.11(a).....................19
ISO...............................................................Section 2.11(a).....................10
knowledge or known................................................Section 8.8(d)......................47
Lien..............................................................Section 3.2(b)......................13
Material Adverse Effect on Parent.................................Section 4.1(b)......................30
Material Adverse Effect on the Company............................Section 3.1(b)......................12
Merger............................................................Preamble.............................1
Merger............................................................Section 2.1..........................6
Notice of Superior Proposal.......................................Section 5.3(b)......................36
Offer Documents...................................................Section 1.1(c).......................3
Offer.............................................................Preamble.............................1
Offer to Purchase.................................................Section 1.1(c).......................2
Option Plan.......................................................Section 2.11(a).....................10
Options...........................................................Section 2.11(a).....................10
Other Interests...................................................Section 3.1(c)......................12
Outbound License Agreements.......................................Section 3.14(e).....................25
Parent Common Stock...............................................Preamble.............................1
Parent............................................................Preamble.............................1
Parent SEC Reports................................................Section 4.3(a)......................31
Patents...........................................................Section 3.14(a).....................23
Per Share Amount..................................................Preamble.............................1
person............................................................Section 8.8(f)......................47
Proxy Statement...................................................Section 3.5.........................15
Purchaser.........................................................Preamble.............................1
Schedule 14D-1....................................................Section 1.1(c).......................3
Schedule 14D-9....................................................Section 1.2(a).......................4
SEC...............................................................Section 1.1(c).......................3
Securities Act....................................................Section 3.4(a)......................14
Shares............................................................Preamble.............................1
Software..........................................................Section 3.14(l).....................26
Stockholders Agreement............................................Preamble.............................1
subsidiary or subsidiaries........................................Section 8.8(g)......................47
Superior Proposal.................................................Section 5.3(c)......................37
Surviving Corporation.............................................Section 2.1..........................6
Tax or Taxes......................................................Section 3.13(a)(i)..................21
Tax Return........................................................Section 3.13(a)(ii).................21
Third Party Acquisition...........................................Section 5.3(c)......................36
Third Party.......................................................Section 5.3(c)......................37
Trade Secrets.....................................................Section 3.14(a).....................23
Trademarks........................................................Section 3.14(a).....................23
Year 2000 Compliant...............................................Section 3.14(o)(i)..................27
</TABLE>
vi
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as
of June 14, 1999, is by and among OrCAD, Inc., a Delaware corporation (the
"Company"), Cadence Design Systems, Inc., a Delaware corporation ("Parent"), and
CDSI Acquisition Corporation, a Delaware corporation and a wholly owned
subsidiary of Parent ("Purchaser").
WHEREAS, the Boards of Directors of the Company, Parent and
Purchaser have each determined that it is in the best interests of their
respective stockholders for Purchaser to acquire the Company upon the terms and
subject to the conditions set forth herein; and
WHEREAS, in furtherance thereof, it is proposed that Purchaser
will make a cash tender offer (the "Offer") to acquire all shares of the issued
and outstanding common stock, $.01 par value, of the Company (the "Shares"), for
Thirteen Dollars ($13.00) per Share or such higher price as may be paid in the
Offer (the "Per Share Amount"), net to the seller in cash; and
WHEREAS, also in furtherance of such acquisition, the Boards
of Directors of the Company, Purchaser and Parent have each approved the merger
(the "Merger") of Purchaser with and into the Company following the Offer in
accordance with the General Corporation Law of the State of Delaware ("Delaware
Law") and upon the terms and subject to the conditions set forth herein; and
WHEREAS, it is also proposed in connection with such
acquisition that, upon the terms and subject to the conditions set forth herein,
upon consummation of the Merger, each then outstanding Option (as defined below)
to purchase one share of common stock, $.01 par value, of the Company, unless
otherwise provided herein, shall be converted into an option to purchase that
number of shares, or fraction of a share, of the common stock, $.01 per share,
of Parent ("Parent Common Stock") having a value (determined as provided herein)
equal to the Per Share Amount; and
WHEREAS, as an inducement and a condition to Parent's and
Purchaser's entering into this Agreement, contemporaneously with the execution
and delivery of this Agreement, (i) the Company has entered into a stock option
agreement with Parent and Purchaser (the "Company Stock Option"), pursuant to
which the Company has granted to Parent or Purchaser, as Parent may designate,
an option to purchase Shares upon the terms and subject to conditions set forth
in the Company Stock Option and (ii) certain stockholders of the Company have
entered into a Stockholders Agreement with Parent and Purchaser (the
"Stockholders Agreement"), pursuant to which each such stockholder has, among
other things, agreed to tender its Shares in the Offer, granted to Parent a
proxy with respect to the voting of such Shares and granted to Parent or
Purchaser, as Parent may designate, an option to purchase such Shares, in each
case upon the terms and subject to the conditions set forth in the Stockholders
Agreement; and
<PAGE>
WHEREAS, as an inducement to Parent's and Purchaser's entering
into this Agreement, contemporaneously with the execution and delivery of this
Agreement the Company and Parent have entered into employment agreements with
certain senior executive officers of the Company (the "Employment Agreements");
and
NOW, THEREFORE, in consideration of the foregoing premises and
the representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, the Company, Parent and Purchaser hereby
agree as follows:
ARTICLE 1.
THE TENDER OFFER
Section 1.1. THE OFFER.
(a) Provided that this Agreement shall not have been
terminated in accordance with Section 7.1 hereof and none of the events set
forth in Annex I hereto shall have occurred and be existing, Parent shall cause
Purchaser to commence and Purchaser shall commence (within the meaning of Rule
14d-2 under the Securities Exchange Act of 1934 (the "Exchange Act") the Offer
as promptly as practicable, but in no event later than five business days
following the execution of this Agreement. Upon the satisfaction of the
conditions set forth in Annex I hereto, subject to any extension of the Offer
permitted by Section 1.1(d) hereof, Parent and Purchaser will be obligated to
accept for payment any Shares validly tendered and not withdrawn. Parent
expressly reserves the right from time to time, subject to Sections 1.1 (b) and
1.1(d) hereof, to waive any such condition, to increase the Per Share Amount, or
to make any other changes in the terms and conditions of the Offer. The Per
Share Amount shall be net to the seller in cash, subject to reduction only for
any applicable Federal back-up withholding or stock transfer taxes payable by
the seller. The Company agrees that no Shares held by the Company or any of its
Subsidiaries (as hereinafter defined) will be tendered pursuant to the Offer.
(b) Without the prior written consent of the Company,
Parent shall not (i) decrease the Per Share Amount or change the form of
consideration payable in the Offer, (ii) decrease the number of Shares sought,
(iii) amend or waive satisfaction of the Minimum Condition (as defined in Annex
I) to permit the purchase of Shares constituting less than a majority of the
number of Shares outstanding, (iv) impose additional conditions to the Offer,
(v) amend any one or more of the conditions set forth in Annex I to broaden the
scope of such condition or conditions or (vi) amend any other term of the Offer
in any manner adverse to the holders of Shares. Upon the terms and subject to
the conditions of the Offer, Purchaser will accept for payment and purchase, as
soon as permitted under the terms of the Offer, all Shares validly tendered and
not withdrawn prior to the expiration of the Offer.
(c) The Offer shall be made by means of an offer to
purchase (the "Offer to Purchase") having only the conditions set forth in Annex
I hereto. As soon as practicable on the date the Offer is commenced, Parent and
Purchaser shall file with the Securities and
2
<PAGE>
Exchange Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1
(together with all amendments and supplements thereto, the "Schedule 14D-1")
with respect to the Offer that will comply in all material respects with the
provisions of such Schedule 14D-1 and all applicable Federal securities laws,
and will include or incorporate by reference the Offer to Purchase and forms
of the related letter of transmittal and summary advertisement (which
documents, together with any supplements or amendments thereto, and any other
SEC schedule or form which is filed in connection with the Offer and related
transactions, are referred to collectively herein as the "Offer Documents").
Parent and Purchaser agree promptly to correct the Schedule 14D-1 or the
Offer Documents if and to the extent that any of them shall have become false
or misleading in any material respect (and the Company, with respect to
written information supplied by it specifically for use in the Schedule 14D-1
or the Offer Documents, shall promptly notify Parent of any required
corrections of such information and shall cooperate with Parent and Purchaser
with respect to correcting such information) and to supplement the
information provided by it specifically for use in the Schedule 14D-1 or the
Offer Documents to include any information that shall become necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading, and Parent and Purchaser further agree
to take all steps necessary to cause the Schedule 14D-1, as so corrected or
supplemented, to be filed with the SEC and the Offer Documents, as so
corrected or supplemented, to be disseminated to holders of Shares, in each
case as and to the extent required by applicable Federal securities laws. The
Company and its counsel shall be given a reasonable opportunity to review and
comment on any Offer Documents before they are filed with the SEC. Parent and
Purchaser shall provide the Company in writing with any comments Parent,
Purchaser or their counsel may receive from the SEC or its staff with respect
to the Offer Documents promptly after receipt of such comments.
(d) The Offer to Purchase shall provide for an initial
expiration date of 20 business days (as defined in Rule 14d-1 under the Exchange
Act) from the date of commencement. Purchaser agrees that it shall not terminate
or withdraw the Offer or extend the expiration date of the Offer unless at the
expiration date of the Offer the conditions to the Offer described in Annex I
hereto shall not have been satisfied or earlier waived. If at the expiration
date of the Offer, the conditions to the Offer described in Annex I hereto shall
not have been satisfied or earlier waived, Parent may, from time to time extend
the expiration date of the Offer until the date such conditions are satisfied or
earlier waived and Parent becomes obligated to accept for payment and pay for
Shares tendered pursuant to the Offer; provided, however, that the expiration
date of the Offer may not be extended beyond September 30, 1999 without the
consent of the Company. Notwithstanding the foregoing, Purchaser may, without
the consent of the Company, (i) extend the expiration date of the Offer (as it
may be extended) for any period required by applicable rules and regulations of
the SEC in connection with an increase in the consideration to be paid pursuant
to the Offer or any other material development affecting the Offer and (ii)
extend the expiration date of the Offer (as it may be extended) for up to ten
business days, if on such expiration date the conditions for the Offer described
on Annex I hereto shall have been satisfied or earlier waived, but the number of
Shares that have been validly tendered and not withdrawn represents less than 90
percent of the then issued and outstanding Shares on a fully diluted basis;
provided, however, that the
3
<PAGE>
expiration date of the Offer may not be extended beyond September 30, 1999
without the consent of the Company. Parent and Purchaser agree that if all of
the conditions to the Offer set forth on Annex A are not satisfied on any
scheduled expiration date, then if all such conditions are reasonably capable
of being satisfied prior to September 30, 1999, Purchaser shall extend the
Offer from time to time (each such individual extension not to exceed 10
Business Days after the previously scheduled expiration date) until such
conditions are satisfied or waived; provided, however, that Purchaser shall
not be required to extend the Offer beyond August 30, 1999 if, as of such
date, the Minimum Condition shall not have been satisfied.
Section 1.2. COMPANY ACTION.
(a) The Company hereby approves of and consents to the
Offer and represents and warrants that the Board of Directors of the Company
(the "Company Board"), at a meeting duly called and held on June 14, 1999, at
which all of the Directors were present, duly and unanimously: (i) approved and
adopted this Agreement and the Company Stock Option and the transactions
contemplated hereby and thereby, including the Offer, the Merger, the Employment
Agreements and Parent's acquisition of Shares pursuant to the Stockholders
Agreement; (ii) recommended that the stockholders of the Company accept the
Offer, tender their Shares pursuant to the Offer and approve this Agreement and
the transactions contemplated hereby, including the Merger; (iii) determined
that this Agreement and the transactions contemplated hereby, including the
Offer and the Merger, are fair to and in the best interests of the stockholders
of the Company; and (iv) took all action necessary to render the limitations on
business combinations contained in Section 203 of Delaware Law inapplicable to
this Agreement, the Company Stock Option, the Stockholders Agreement and the
transactions contemplated hereby and thereby. The Company further represents and
warrants that (x) Alliant Partners (the "Financial Advisor") has rendered to the
Company Board a written opinion, dated as of June 14, 1999, to the effect that,
subject to the assumptions and limitations set forth therein, $13.00 in cash per
Share to be received by the stockholders of the Company pursuant to the Offer
and the Merger is fair to such stockholders from a financial point of view and
(y) a true and correct copy of such opinion has been delivered to Parent.
(b) The Company hereby agrees to file with the SEC, as
promptly as practicable after the filing by Parent and Purchaser of the Schedule
14D-1 with respect to the Offer, a Tender Offer Solicitation/Recommendation
Statement on Schedule 14D-9 (together with any amendments or supplements
thereto, the "Schedule 14D-9") that (i) will comply in all material respects
with the provisions of all applicable Federal securities laws and (ii) will
include the opinion of the Financial Advisor referred to in Section 1.2(a)
hereof. The Company agrees to mail such Schedule 14D-9 to the stockholders of
the Company along with the Offer Documents promptly after the commencement of
the Offer. The Schedule 14D-9 and the Offer Documents shall contain the
recommendations of the Company Board described in Section 1.2(a) hereof. The
Company agrees promptly to correct the Schedule 14D-9 if and to the extent that
it shall become false or misleading in any material respect (and each of Parent
and Purchaser, with respect to written information supplied by it specifically
for use in
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the Schedule 14D-9, shall promptly notify the Company of any required
corrections of such information and cooperate with the Company with respect
to correcting such information) and to supplement the information contained
in the Schedule 14D-9 to include any information that shall become necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading, and the Company shall take all steps
necessary to cause the Schedule 14D-9 as so corrected to be filed with the
SEC and disseminated to the Company's stockholders to the extent required by
applicable Federal securities laws. Parent and its counsel shall be given a
reasonable opportunity to review and comment on the Schedule 14D-9 before it
is filed with the SEC. The Company shall provide Parent and Purchaser in
writing with any comments the Company or its counsel may receive from the SEC
or its staff with respect to the Schedule 14D-9 promptly after receipt of
such comments.
(c) In connection with the Offer, the Company shall
promptly upon execution of this Agreement furnish Parent with mailing labels
containing the names and addresses of all record holders of Shares,
non-objecting beneficial owners list and security position listings of Shares
held in stock depositories, each as of a recent date, and shall promptly furnish
Parent with such additional information, including updated lists of
stockholders, mailing labels and security position listings, and such other
information and assistance as Parent or its agents may reasonably request for
the purpose of communicating the Offer to the record and beneficial holders of
Shares.
Section 1.3. DIRECTORS. Promptly upon the purchase by
Purchaser of any Shares pursuant to the Offer, and from time to time thereafter
as Shares are acquired by Purchaser, Parent shall be entitled to designate such
number of directors, rounded up to the next whole number, on the Company Board
as will give Parent, subject to compliance with Section 14(f) of the Exchange
Act, representation on the Company Board equal to at least that number of
directors which equals the product of the total number of directors on the
Company Board (giving effect to the directors appointed or elected pursuant to
this sentence) multiplied by the percentage that the aggregate number of Shares
beneficially owned by Parent or any affiliate of Parent (including for purposes
of this Section 1.3 such Shares as are accepted for payment pursuant to the
Offer, but excluding Shares held by the Company or any of its Subsidiaries)
bears to the number of Shares outstanding. At each such time, the Company will
also cause (i) each committee of the Company Board, (ii) if requested by Parent,
the Company Board of each of the Subsidiaries and (iii) if requested by Parent,
each committee of such board to include persons designated by Parent
constituting the same percentage of each such committee or board as Parent's
designees constitute on the Company Board. The Company shall, upon request by
Parent, promptly increase the size of the Company Board or exercise its best
efforts to secure the resignations of such number of directors as is necessary
to enable Parent's designees to be elected to the Company Board in accordance
with the terms of this Section 1.3 and shall cause Parent's designees to be so
elected. Notwithstanding the foregoing, until the Effective Time (as defined in
Section 2.2 hereof) the Company Board shall have at least two directors who are
directors on the date hereof and who are neither officers of the Company nor
designees, stockholders, affiliates or associates (within the meaning of the
Federal securities laws) of Parent (such directors, the "Independent
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Directors"); provided further, that if at any time or from time to time fewer
than two Independent Directors remain, the other directors shall elect to the
Company Board such number of persons who shall be neither officers of the
Company nor designees, shareholders, affiliates or associates of Parent so that
the total of such persons and remaining Independent Directors serving on the
Company Board is at least two. Any such person elected to the Company Board
pursuant to the second proviso of the preceding sentence shall be deemed to be
an Independent Director for purposes of this Agreement. Subject to applicable
law, the Company shall promptly take all action necessary pursuant to Section
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order to
fulfill its obligations under this Section 1.3 and shall include in the Schedule
14D-9 mailed to stockholders promptly after the commencement of the Offer (or an
amendment thereof or an information statement pursuant to Rule 14f-1 if Parent
has not theretofore designated directors) such information with respect to the
Company and its officers and directors as is required under Section 14(f) and
Rule 14f-1 in order to fulfill its obligations under this Section 1.3. Parent
will supply the Company any information with respect to itself and its nominees,
officers, directors and affiliates required by Section 14(f) and Rule 14f-1.
Notwithstanding anything in this Agreement to the contrary, following the time
directors designated by Parent constitute a majority of the Company Board and
prior to the Effective Time, the affirmative vote of the Independent Directors
shall be required to (i) amend or terminate on behalf of the Company this
Agreement or the Company Stock Option Agreement, (ii) exercise or waive any of
the Company's rights or remedies hereunder or thereunder, (iii) extend the time
for performance of Parent's or Purchaser's obligations hereunder or thereunder
or (iv) take any other action required to be taken by the Company Board
hereunder or thereunder.
ARTICLE 2
THE MERGER
Section 2.1. THE MERGER. At the Effective Time (as defined
below) and upon the terms and subject to the conditions of this Agreement and in
accordance with the Delaware Law, Purchaser shall be merged with and into the
Company (the "Merger"). Following the Merger, the Company shall continue as the
surviving corporation (the "Surviving Corporation") and the separate corporate
existence of Purchaser shall cease. At the election of the parties, the Merger
may be structured so that the Company shall be merged with and into Purchaser or
Parent with the result that Purchaser or Parent shall become the "Surviving
Corporation." Parent, as the sole stockholder of Purchaser, hereby approves the
Merger and this Agreement.
Section 2.2 EFFECTIVE TIME. Subject to the terms and
conditions set forth in this Agreement, on the Closing Date (as defined in
Section 2.3), a Certificate of Merger substantially in the form of EXHIBIT A
(the "Certificate of Merger") shall be duly executed and acknowledged by
Purchaser and the Company and thereafter delivered to the Secretary of State of
the State of Delaware for filing pursuant to Section 251 of the Delaware Law.
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The Merger shall become effective at such time as a properly executed copy of
the Certificate of Merger is duly filed with the Secretary of State of the State
of Delaware in accordance with Section 251 of the Delaware Law or such later
time as Parent and the Company may agree upon and as set forth in the
Certificate of Merger (the time the Merger becomes effective being referred to
herein as the "Effective Time").
Section 2.3. CLOSING OF THE MERGER. The closing of the Merger
(the "Closing") will take place at a time and on a date (the "Closing Date") to
be specified by the parties, which shall be no later than the second business
day after satisfaction of the latest to occur of the conditions set forth in
Article 6, at the offices of Gibson, Dunn & Crutcher LLP, 1530 Page Mill Road,
Palo Alto, California, unless another time, date or place is agreed to in
writing by the parties hereto.
Section 2.4. EFFECTS OF THE MERGER. The Merger shall have the
effects set forth in the Delaware Law. Without limiting the generality of the
foregoing and subject thereto, at the Effective Time, all the properties,
rights, privileges, powers and franchises of the Company and Purchaser shall
vest in the Surviving Corporation and all debts, liabilities and duties of the
Company and Purchaser shall become the debts, liabilities and duties of the
Surviving Corporation.
Section 2.5. CERTIFICATE OF INCORPORATION AND BYLAWS. The
Certificate of Incorporation of Purchaser in effect at the Effective Time shall
be the Certificate of Incorporation of the Surviving Corporation until amended
in accordance with applicable law, except that Article 1 shall be amended to
read in full as follows:
"The name of the Corporation is OrCAD, Inc."
The bylaws of Purchaser in effect at the Effective Time shall
be the bylaws of the Surviving Corporation until amended in accordance with
applicable law.
Section 2.6. DIRECTORS. The directors of Purchaser at the
Effective Time shall be the initial directors of the Surviving Corporation, each
to hold office in accordance with the Certificate of Incorporation and bylaws of
the Surviving Corporation until such director's successor is duly elected or
appointed and qualified.
Section 2.7. OFFICERS. The officers of Purchaser at the
Effective Time shall be the initial officers of the Surviving Corporation, each
to hold office in accordance with the Certificate of Incorporation and bylaws of
the Surviving Corporation until such officer's successor is duly elected or
appointed and qualified.
Section 2.8. CONVERSION OF SHARES.
(a) At the Effective Time, each Share issued and
outstanding immediately prior to the Effective Time (other than (i) Shares held
in the Company's treasury or by any of the Company's subsidiaries and (ii)
Shares held by Parent, Purchaser or any other subsidiary of Parent) shall, by
virtue of the Merger and without any action on the part of Purchaser, the
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Company or the holder thereof, be canceled and extinguished and be converted
into the right to receive the Per Share Amount in cash payable to the holder
thereof, without interest, upon surrender of the certificate representing such
Share. Each holder of a certificate representing any such Shares shall cease to
have any rights with respect thereto, except the right to receive the Per Share
Amount, without interest, upon the surrender of such certificate in accordance
with Section 2.10 hereof.
(b) At the Effective Time, each outstanding share of the
common stock, $0.01 par value per share, of Purchaser shall be converted into
one share of common stock, $0.01 par value per share, of the Surviving
Corporation.
(c) At the Effective Time, each Share held in the
treasury of the Company and each Share held by Parent, Purchaser or any
subsidiary of Parent, Purchaser or the Company immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the part
of Purchaser, the Company or the holder thereof, be canceled, retired and cease
to exist and no shares of Parent Common Stock shall be delivered with respect
thereto.
Section 2.9. DISSENTERS AND APPRAISAL RIGHTS.
(a) Notwithstanding any provision of this Agreement to
the contrary, any Shares held by a holder who has demanded and perfected such
holder's demand for appraisal of such holder's Shares in accordance with
Delaware Law (including but not limited to Section 262 thereof) and as of the
Effective Time has neither effectively withdrawn nor lost his right to such
appraisal ("Dissenting Shares"), shall not be converted into or represent a
right to receive cash pursuant to Section 2.8(a), but the holder thereof shall
be entitled to only such rights as are granted by Delaware Law.
(b) Notwithstanding the provisions of subsection (a) of
this Section, if any holder of Shares who demands appraisal of such holder's
Shares under Delaware Law shall effectively withdraw or lose (through failure to
perfect or otherwise) his right to appraisal, then as of the Effective Time or
the occurrence of such event, whichever later occurs, such holder's Shares shall
automatically be converted into and represent only the right to receive cash as
provided in Section 2.8(a), without interest thereon, upon surrender of the
certificate or certificates representing such Shares.
(c) The Company shall give Parent (i) prompt notice of
any written demands for appraisal or payment of the fair value of any Shares,
withdrawals of such demands, and any other instruments served pursuant to
Delaware Law received by the Company and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under
Delaware Law. The Company shall not voluntarily make any payment with respect to
any demands for appraisal and shall not, except with the prior written consent
of Parent, settle or offer to settle any such demands.
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Section 2.10. EXCHANGE OF CERTIFICATES.
(a) From time to time following the Effective Time, as
required by subsections (b) and (c) below, Parent shall deliver to a depository
or trust institution of recognized standing selected by Parent and Purchaser
(the "Exchange Agent"), for the benefit of holders of Shares funds in amounts
and at times necessary for the payments under Section 2.8(a) to which such
holders shall be entitled. Such funds shall be invested by the Exchange Agent as
directed by Parent. Any net profits resulting from, or interest or income
produced by, such investments shall be payable to, or as directed by, Parent.
(b) As soon as reasonably practicable after the Effective
Time, the Exchange Agent shall mail to each holder of record of a certificate or
certificates that immediately prior to the Effective Time represented
outstanding Shares (the "Certificates") and whose shares were converted into the
right to receive cash pursuant to Section 2.8(a): (i) a letter of transmittal
(which shall specify that delivery shall be effected and risk of loss and title
to the Certificates shall pass only upon delivery of the Certificates to the
Exchange Agent and shall be in such form and have such other provisions as
Parent and the Company may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates pursuant hereto. Upon surrender of a
Certificate for cancellation to the Exchange Agent together with such letter of
transmittal duly executed, the holder of such Certificate shall be entitled to
receive in exchange therefor the Per Share Amount multiplied by the number of
Shares evidenced thereby, and the Certificate so surrendered shall forthwith be
canceled. In the event of a transfer of ownership of Shares that is not
registered in the transfer records of the Company, the Per Share Amount payable
in respect thereof may be paid to a transferee if the Certificate representing
such Shares is presented to the Exchange Agent accompanied by all documents
required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.10, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive upon such
surrender the Per Share Amount in accordance herewith.
(c) In the event that any Certificate for Shares shall
have been lost, stolen or destroyed, the Per Share Amount shall be paid in
respect of the Shares evidenced thereby upon the making of an affidavit of that
fact by the holder thereof and delivery of a suitable bond or indemnity.
(d) There shall be no further registration of transfers
on the stock transfer books of the Surviving Corporation of the Shares that were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and exchanged as provided in this Article 2.
(e) Any portion of the Exchange Fund that remains
undistributed to the stockholders of the Company upon the expiration of six (6)
months after the Effective Time shall be delivered to Parent upon demand and any
stockholders of the Company who have not
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theretofore complied with this Article 2 shall thereafter look only to Parent
for payment of their claim for the Per Share Amount payable in respect of the
Shares so held.
(f) Neither Parent, Purchaser nor the Company shall be
liable to any holder of Shares for cash delivered to a public official pursuant
to any applicable abandoned property, escheat or similar law.
Section 2.11. STOCK OPTIONS.
(a) The Company shall take all actions necessary to
provide that, except as provided in Sections 2.11(b) and (c) below with respect
to options granted under the Company's 1995 Stock Option Plan for Nonemployee
Directors (the "Director Option Plan") and the Company's 1991 Non-Qualified
Option Plan (the "1991 Option Plan"), upon consummation of the Merger, each then
outstanding option to purchase shares of Company common stock (the "General
Options") granted under any of the Company's other stock option plans referred
to in Section 3.11(a), each as amended (collectively, the "General Option
Plans,"" and, together with the Director Option Plan and the 1991 Option Plan,
the "Option Plans"), and any and all other outstanding options, stock warrants
and stock rights granted pursuant to such stock option plans or otherwise, and
in each case, whether or not then exercisable or vested, shall be deemed to
constitute an option to acquire, on the same terms and conditions as were
applicable under such Company Stock Option, a number of shares of Parent Common
Stock, with fractions rounded off to the nearest whole number, equal to the
number of Shares subject thereto multiplied by that number of shares, or the
fraction of a share, of Parent Common Stock having a fair market value,
determined as set forth below, equal to the Per Share Amount; provided, however,
that in the case of any option to which Section 421 of the Code applies by
reason of its qualification under Section 422 of the Code ("incentive stock
options" or "ISOs") the option price, the number of shares purchasable pursuant
to such option and the terms and conditions of exercise of such option shall be
determined in order to comply with Section 424(a) of the Code.
(b) The Company shall take all actions necessary to
provide that, upon consummation of the Merger, each then outstanding option (the
"Director Options") to purchase shares of Company common stock granted under the
Director Option Plan, whether or not then exercisable or vested, shall, by
virtue of the Merger and without any action on the part of Purchaser, the
Company or the holder thereof, be canceled and be extinguished and be converted
into the right to receive, in cash, the product of (i) the number of shares of
Company common stock subject to such Director Option and (ii) the excess of the
Per Share Amount over the per share exercise price applicable to such Director
Option.
(c) The Company shall take all actions necessary to
provide that, upon consummation of the Merger, each then outstanding option (the
"1991 Options") to purchase shares of Company common stock granted under the
1991 Option Plan, whether or not then exercisable or vested, shall be deemed to
constitute an option to acquire, on the same terms and conditions as were
applicable under such 1991 Option, a number of shares of Parent Common Stock,
with fractions rounded off to the nearest whole number, equal to the number
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of Shares subject thereto multiplied by that number of shares, or the
fraction of a share, of Parent Common Stock having a fair market value,
determined as set forth below, equal to the Per Share Amount; provided,
however, that if the holder of any 1991 Option does not consent in writing,
prior to the Effective Time, to the foregoing treatment, then each 1991
Option held by such holder, whether or not then exercisable or vested, shall,
by virtue of the Merger and without any action on the part of Purchaser, the
Company or the holder thereof, be canceled and be extinguished and be
converted into the right to receive in cash, the product of (i) the number of
shares of Company common stock subject to such 1991 Option and (ii) the
excess of the Per Share Amount over the per share exercise price applicable
to such 1991 Option.
(d) For purposes of this Section 2.11, the fair market
value of the Parent Common Stock shall be the average closing price of one share
of Parent Common Stock (as reported in the Wall Street Journal) during the five
trading days immediately preceding the Closing of the Merger.
(e) The Company represents and warrants that all the
Option Plans provide that the Company can take the actions contemplated in this
Agreement, including, without limitation, those contemplated in Sections
2.11(a), (b) or (c) without obtaining the consent of any holders of Options or
Company common stock and without resulting in the acceleration of the
exercisability or vesting provisions in effect with respect to such Options.
Section 2.12. THE STOCK PURCHASE PLAN.
(a) The Company shall take all actions necessary,
including without limitation, the satisfaction of any notice requirements, to
provide that each outstanding and valid option or right to purchase shares of
Company common stock (the "Rights") granted or provided under the Company's 1996
Employee Stock Purchase Plan (the "Stock Purchase Plan") shall be exercised
automatically on the day that is five (5) days prior to the date scheduled for
the Closing of the Merger which shall constitute the New Purchase Date for
purposes of the Stock Purchase Plan. The Company shall also take all actions
necessary to terminate the Stock Purchase Plan effective immediately after such
New Purchase Date.
(b) The Company represents and warrants that the Stock
Purchase Plan provides that the Company can take the actions contemplated in
this Agreement, including, without limitation, those contemplated in Section
2.12(a), without obtaining the consent of any holders of Rights or Company
common stock and without resulting in the acceleration of the exercisability
provisions in effect with respect to such Rights.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each of Parent
and Purchaser, subject to the exceptions set forth in the Disclosure Schedule
(the "Company Disclosure
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Schedule") delivered by the Company to Parent (which exceptions shall
specifically identify a Section, Subsection or clause of a single Section or
Subsection hereof, as applicable, to which such exception relates) that:
Section 3.1. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES;
INVESTMENTS.
(a) Section 3.1(a) of the Company Disclosure Schedule
sets forth, as of the date of this Agreement, a true and complete list of all
the Company's directly or indirectly owned subsidiaries, together with the
jurisdiction of incorporation of each subsidiary and the percentage of each
subsidiary's outstanding capital stock or other equity interests owned by the
Company or another subsidiary of the Company. Each of the Company and its
subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization and has all
requisite power and authority to own, lease and operate its properties and to
carry on its businesses as now being conducted. The Company has heretofore
delivered to Purchaser or Parent accurate and complete copies of the Certificate
of Incorporation and bylaws (or similar governing documents), as currently in
full force and effect, of the Company and its subsidiaries. Section 3.1(a) of
the Company Disclosure Schedule identifies all the material subsidiaries of the
Company. The Company has no operating subsidiaries other than those incorporated
in a state of the United States. The Company does not directly or indirectly own
any equity or similar interest in, or any interest convertible or exchangeable
or exercisable for, any equity or similar interest in, any partnership, joint
venture, limited liability company or other business association.
(b) Each of the Company and its subsidiaries is duly
qualified or licensed and in good standing to do business in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification or licensing necessary, except
in such jurisdictions where the failure to be so duly qualified or licensed and
in good standing would not, individually or in the aggregate, have a Material
Adverse Effect (as defined below) on the Company. Section 3.1(b) of the Company
Disclosure Schedule sets forth each jurisdiction in which the Company and each
of its subsidiaries is so qualified. When used in connection with the Company or
its subsidiaries, the term "Material Adverse Effect on the Company" means any
circumstance, change in, or effect on (or circumstance, change in, or effect
involving a prospective change on) the Company and its subsidiaries, taken as a
whole, (a) that is, or is reasonably likely in the future to be, materially
adverse to the operations, assets or liabilities (including contingent
liabilities), earnings or results of operations, or the business (financial or
otherwise) of the Company and its subsidiaries, taken as a whole, or (b) that
would reasonably be expected to prevent or materially delay or impair the
ability of the Company to consummate the transactions contemplated by this
Agreement.
(c) Other than the Company's subsidiaries, the Company
does not own any equity investment that represents a five percent (5%) or
greater ownership interest in the subject of such investment made by the Company
or any of its subsidiaries.
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Section 3.2. CAPITALIZATION OF THE COMPANY AND ITS
SUBSIDIARIES.
(a) The authorized capital stock of the Company consists
of 16,000,000 shares of common stock, $.01 par value per share, of which, as of
June 14, 1999, 9,321,315 Shares were issued and outstanding and 2,000,000 shares
of preferred stock, $.01 par value per share, no shares of which are
outstanding. All of the outstanding Shares have been validly issued and are
fully paid, nonassessable and free of preemptive rights. As of June 14, 1999,
3,973,937 shares of common stock were reserved for issuance upon the exercise of
outstanding Options issued pursuant to the Option Plans. Between June 5, 1999
and the date hereof, no shares of the Company's capital stock have been issued
other than pursuant to Options already in existence on such date, and between
June 5, 1999 and the date hereof no Options have been granted. Except as set
forth above, as of the date hereof, there are outstanding (i) no shares of
capital stock or other voting securities of the Company, (ii) no securities of
the Company or any of its subsidiaries convertible into or exchangeable or
exercisable for shares of capital stock or voting securities of the Company,
(iii) no options or other rights to acquire from the Company or any of its
subsidiaries, and, except as described in the Company SEC Reports (as defined
below), no obligations of the Company or any of its subsidiaries to issue any
capital stock, voting securities or securities convertible into or exchangeable
or exercisable for capital stock or voting securities of the Company and (iv) no
equity equivalent interests in the ownership or earnings of the Company or its
subsidiaries or other similar rights (collectively "Company Securities"). As of
the date hereof, there are no outstanding rights or obligations of the Company
or any of its subsidiaries to repurchase, redeem or otherwise acquire any
Company Securities. There are no stockholder agreements, voting trusts or other
agreements or understandings to which the Company is a party or by which it is
bound, or, to the knowledge of the Company, to which any stockholder of the
Company is a party or is bound, in either case relating to the voting or
registration of any shares of capital stock of the Company.
(b) All of the outstanding capital stock of the Company's
subsidiaries is owned by the Company, directly or indirectly, free and clear of
any Lien or any other limitation or restriction (including any restriction on
the right to vote or sell the same except as may be provided as a matter of
law). There are no (i) securities of the Company or any of its subsidiaries
convertible into or exchangeable or exercisable for, (ii) options or (iii)
except for the Rights, other rights to acquire from the Company or any of its
subsidiaries any capital stock or other ownership interests in or any other
securities of any subsidiary of the Company, and there exists no other contract,
understanding, arrangement or obligation (whether or not contingent) providing
for the issuance or sale, directly or indirectly, of any such capital stock.
There are no outstanding contractual obligations of the Company or its
subsidiaries to repurchase, redeem or otherwise acquire any outstanding shares
of capital stock or other ownership interests in any subsidiary of the Company.
For purposes of this Agreement, "Lien" means, with respect to any asset
(including any security), any mortgage, lien, pledge, charge, security interest
or encumbrance of any kind in respect of such asset; PROVIDED, HOWEVER, that the
term "Lien" shall not include (i) statutory liens for Taxes, which are not yet
due and payable or are being contested in good faith by appropriate proceedings
and disclosed in Section 3.13(d) of the Company Disclosure Schedule or that are
otherwise not material,
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(ii) statutory or common law liens to secure landlords, lessors or renters
under leases or rental agreements confined to the premises rented, (iii)
deposits or pledges made in connection with, or to secure payment of,
workers' compensation, unemployment insurance, old age pension or other
social security programs mandated under applicable laws, (iv) statutory or
common law liens in favor of carriers, warehousemen, mechanics and
materialmen, to secure claims for labor, materials or supplies and other like
liens, and (v) restrictions on transfer of securities imposed by applicable
state and federal securities laws.
(c) The Company's common stock, $.01 par value per share,
constitutes the only class of equity securities of the Company or its
subsidiaries registered or required to be registered under the Exchange Act.
Section 3.3. AUTHORITY RELATIVE TO THIS AGREEMENT;
RECOMMENDATION.
(a) The Company has all necessary corporate power and
authority to execute and deliver this Agreement and the Company Stock Option, to
perform its obligations under this Agreement and the Company Stock Option and to
consummate the transactions contemplated thereby. The execution and delivery of
this Agreement and the Company Stock Option and the consummation of the
transactions contemplated thereby have been duly and validly authorized by the
Company Board, and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement and the Company Stock Option or to
consummate the transactions contemplated thereby except the approval and
adoption of this Agreement by the holders of at least 67% of the outstanding
Shares. This Agreement and the Company Stock Option has been duly and validly
executed and delivered by the Company and constitute, assuming the due
authorization, execution and delivery hereof and thereof by Parent and
Purchaser, valid, legal and binding agreements of the Company, enforceable
against the Company in accordance with its terms, subject to any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to creditors' rights generally or to general
principles of equity.
Section 3.4. SEC REPORTS; FINANCIAL STATEMENTs.
(a) The Company has filed all required forms, reports and
documents ("Company SEC Reports") with the SEC since January 1, 1997, each of
which complied at the time of filing in all material respects with all
applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the Exchange Act, each law as in effect on the dates such
forms, reports and documents were filed. None of such Company SEC Reports,
including, any financial statements or schedules included or incorporated by
reference therein, contained when filed any untrue statement of a material fact
or omitted to state a material fact required to be stated or incorporated by
reference therein or necessary in order to make the statements therein in light
of the circumstances under which they were made not misleading, except to the
extent superseded by a Company SEC Report filed subsequently and prior to the
date hereof. The audited consolidated financial statements of the Company
included in the Company SEC Reports fairly present, in conformity in all
material respects with generally accepted accounting principles applied on a
consistent basis (except as may be indicated in the
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notes thereto), the consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and their consolidated
results of operations and changes in financial position for the periods then
ended.
(b) All documents required to be filed as exhibits to the
Company SEC Reports have been so filed, and all material contracts so filed as
exhibits are in full force and effect, except those that have expired in
accordance with their terms, and neither the Company nor any of its subsidiaries
is in default thereunder, except where any such default has not resulted in and
is not reasonably expected to result in any Material Adverse Effect on the
Company.
(c) The Company has heretofore made available or promptly
will make available to Purchaser or Parent a complete and correct copy of any
amendments or modifications that are required to be filed with the SEC but have
not yet been filed with the SEC to agreements, documents or other instruments
that previously had been filed by the Company with the SEC pursuant to the
Exchange Act.
Section 3.5. OFFER DOCUMENTS; PROXY STATEMENT. The Schedule
14D-9 will comply in all material respects with the Exchange Act and the rules
and regulations thereunder. Neither the Schedule 14D-9 nor any of the
information relating to the Company or its affiliates provided by or on behalf
of the Company specifically for inclusion in the Schedule 14D-1 or the Offer
Documents will, at the respective times the Schedule 14D-9, the Schedule 14D-1
and the Offer Documents or any amendments or supplements thereto are filed with
the SEC and are first published, sent or given to stockholders of the Company,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading. The proxy statement to be sent to the stockholders of the Company in
connection with the meeting of the Company's stockholders to consider the Merger
(the "Company Stockholders' Meeting") or the information statement to be sent to
such stockholders, as appropriate (such proxy statement or information
statement, as amended or supplemented, is herein referred to as the "Proxy
Statement"), will comply in all material respects with the applicable
requirements of the Exchange Act and the rules and regulations thereunder. The
Proxy Statement will not, at the time the Proxy Statement (or any amendment or
supplement thereto) is filed with the SEC or first sent to stockholders, at the
time of the Company Stockholders Meeting or at the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
Notwithstanding the foregoing, the Company makes no representation, warranty or
covenant with respect to any information supplied or required to be supplied by
Parent or Purchaser which is contained in or omitted from any of the foregoing
documents.
Section 3.6. CONSENTS AND APPROVALS; NO VIOLATIONS. Except for
filings, permits, authorizations, consents and approvals as may be required
under applicable requirements of the Securities Act, the Exchange Act, state
securities or blue sky laws, and the
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Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), any filings under similar merger notification laws or regulations of
foreign Governmental Entities and the filing and recordation of the
Certificate of Merger as required by the Delaware Law, no filing with or
notice to and no permit, authorization, consent or approval of any United
States or foreign court or tribunal, or administrative, governmental or
regulatory body, agency or authority (a "Governmental Entity") is necessary
for the execution and delivery by the Company of this Agreement, the purchase
of Shares by Purchaser pursuant to the Offer, the Company Stock Option or the
Stockholders Agreement or the consummation by the Company of the transactions
contemplated hereby, except where the failure to obtain such permits,
authorizations, consents or approvals or to make such filings or give such
notice would not, individually or in the aggregate, materially and adversely
affect the business operations of the Company or its ability to consummate
the Merger. Neither the execution, delivery and performance of this Agreement
by the Company, the purchase of Shares by Purchaser pursuant to the Offer,
the Company Stock Option or the Stockholders Agreement nor the consummation
by the Company of the transactions contemplated hereby will (i) conflict with
or result in any breach of any provision of the respective Certificate of
Incorporation or bylaws (or similar governing documents) of the Company or
any of its subsidiaries, (ii) except as set forth in Section 3.6 of the
Company Disclosure Schedule, result in a violation or breach of or constitute
(with or without due notice or lapse of time or both) a default (or give rise
to any right of termination, amendment, cancellation or acceleration or Lien)
under any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or
obligation to which the Company or any of its subsidiaries is a party or by
which any of them or any of their respective properties or assets may be
bound or (iii) except as set forth in Section 3.6 of the Company Disclosure
Schedule, violate any order, writ, injunction, decree, law, statute, rule or
regulation applicable to the Company or any of its subsidiaries or any of
their respective properties or assets except, in the case of clause (ii) or
(iii), for violations, breaches or defaults that would not, individually,
result in cost, loss or damage to the Company in excess of Two Hundred and
Fifty Thousand Dollars ($250,000), in any individual case, or have a Material
Adverse Effect on the Company in the aggregate.
Section 3.7. NO DEFAULT. Except as set forth in Section 3.7 of
the Company Disclosure Schedule, neither the Company nor any of its subsidiaries
is in breach, default or violation (and no event has occurred that with notice
or the lapse of time or both would constitute a breach, default or violation) of
any term, condition or provision of (i) its Certificate of Incorporation or
bylaws (or similar governing documents), (ii) any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which the Company or any of its subsidiaries is now a party or by which it or
any of its properties or assets may be bound or (iii) any order, writ,
injunction, decree, law, statute, rule or regulation applicable to the Company
or any of its subsidiaries or any of its properties or assets, except, in the
case of clause (ii) or (iii), for violations, breaches or defaults that would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company.
Section 3.8. NO UNDISCLOSED LIABILITIES; ABSENCE OF CHANGES.
Except as and to the extent publicly disclosed by the Company in the Company SEC
Reports or as set forth
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in Section 3.8 of the Company Disclosure Schedule, neither the Company nor
any of its subsidiaries has any liabilities or obligations of any nature,
whether or not accrued, contingent or otherwise, that would be required by
generally accepted accounting principles to be reflected on a consolidated
balance sheet of the Company (including the notes thereto), other than
liabilities and obligations which, individually or in the aggregate, will not
have a Material Adverse Effect on the Company. Except as publicly disclosed
by the Company in the Company SEC Reports or as set forth in Section 3.8 of
the Company Disclosure Schedule, since December 31, 1998, there have been no
events, changes or effects with respect to the Company or its subsidiaries
that have had or reasonably would be expected to have a Material Adverse
Effect on the Company. Without limiting the generality of the foregoing,
except as and to the extent publicly disclosed by the Company in the Company
SEC Reports or as set forth in Section 3.8 of the Company Disclosure
Schedule, since December 31, 1998, the Company and its subsidiaries have
conducted their respective businesses in all material respects only in, and
have not engaged in any material transaction other than according to, the
ordinary and usual course of such businesses consistent with past practices,
and there has not been any (i) change in the financial condition, properties,
business or results of operations of the Company and its subsidiaries, except
for those changes that, individually or in the aggregate, have not had and
are not reasonably likely to have a Material Adverse Effect on the Company;
(ii) material damage, destruction or other casualty loss with respect to any
material asset or property owned, leased or otherwise used by the Company or
any of its subsidiaries, not covered by insurance; (iii) declaration, setting
aside or payment of any dividend or other distribution in respect of the
capital stock of the Company or any of its subsidiaries (other than
wholly-owned subsidiaries) or any repurchase, redemption or other purchase by
the Company or any of its subsidiaries of any outstanding shares of capital
stock or other securities of, or other ownership interests in, the Company or
any of its subsidiaries; (iv) amendment of any material term of any
outstanding security of the Company or any of its subsidiaries; (v)
incurrence, assumption or guarantee by the Company or any of its subsidiaries
of any indebtedness for borrowed money other than in the ordinary course of
business and in amounts and on terms consistent with past practices; (vi)
creation or assumption by the Company or any of its subsidiaries of any Lien
on any material asset other than in the ordinary course of business
consistent with past practices; (vii) loan, advance or capital contributions
made by the Company or any of its subsidiaries to, or investment in, any
person other than (x) loans or advances to employees in connection with
business-related travel, (y) loans made to employees consistent with past
practices that are not in the aggregate in excess of Fifty Thousand Dollars
($50,000), and (z) loans, advances or capital contributions to or investments
in wholly-owned subsidiaries, and in each case made in the ordinary course of
business consistent with past practices; (viii) transaction or commitment
made, or any contract or agreement entered into, by the Company or any of its
subsidiaries relating to its assets or business (including the Purchaser or
disposition of any assets) or any relinquishment by the Company or any of its
subsidiaries of any contract, agreement or other right, in either case,
material to the Company and its subsidiaries, taken as a whole, other than
transactions and commitments in the ordinary course of business consistent
with past practices and those contemplated by this Agreement; (ix) labor
dispute, other than routine individual grievances, or any activity or
proceeding by a labor union or representative thereof to organize any
employees of the Company or any of its subsidiaries, or any lockouts,
strikes, slowdowns,
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work stoppages or threats thereof by or with respect to such employees; or
(x) change by the Company or any of its subsidiaries in its accounting
principles, practices or methods. Since December 31, 1998, except as
disclosed in the Company SEC Reports filed prior to the date hereof or
increases in the ordinary course of business consistent with past practices,
there has not been any increase in the compensation payable or that could
become payable by the Company or any of its subsidiaries, or any grant of
stock options, to (a) officers of the Company or any of its subsidiaries or
(b) any employee of the Company or any of its Subsidiaries whose annual cash
compensation is Fifty Thousand Dollars ($50,000) or more.
Section 3.9. LITIGATION. Except as publicly disclosed by the
Company in the Company SEC Reports or as set forth in Section 3.9 of the Company
Disclosure Schedule, there is no private or government suit, claim, action,
proceeding or investigation pending or, to the knowledge of the Company,
threatened against the Company, any of its subsidiaries or any of their
respective directors or officers, in their capacities as such, or any of their
respective properties or assets before any Governmental Entity that,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on the Company or would reasonably be expected to
prevent or delay the consummation of the transactions contemplated by this
Agreement. Except as publicly disclosed by the Company in the Company SEC
Reports, neither the Company nor any of its subsidiaries is subject to any
outstanding order, writ, injunction or decree that, insofar as can be reasonably
foreseen in the future, would reasonably be expected to have a Material Adverse
Effect on the Company or could reasonably be expected to prevent or delay the
consummation of the transactions contemplated hereby.
Section 3.10. COMPLIANCE WITH APPLICABLE LAW. Except as
publicly disclosed by the Company in the Company SEC Reports, the Company and
its subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities necessary for the lawful conduct of their
respective businesses (the "Company Permits"), except for failures to hold such
permits, licenses, variances, exemptions, orders and approvals that would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
Except as publicly disclosed by the Company in the Company SEC Reports, the
Company and its subsidiaries are in compliance with the terms of the Company
Permits, except where the failure so to comply would not, individually or in the
aggregate, have a Material Adverse Effect on the Company. Except as publicly
disclosed by the Company in the Company SEC Reports, the businesses of the
Company and its subsidiaries are not being conducted in violation of any law,
ordinance or regulation of the United States or any foreign country or any
political subdivision thereof or of any Governmental Entity, except (i) that no
representation or warranty is made in this Section 3.10 with respect to
Environmental Laws (as defined in Section 3.12) and (ii) for violations or
possible violations of any United States or foreign laws, ordinances or
regulations that do not and, insofar as reasonably can be foreseen in the
future, will not result in any charges, assessments, levies, fines or other
liabilities being imposed upon or incurred by the Company that will equal or
exceed One Hundred Thousand Dollars ($100,000) for any single violation or Two
Hundred Fifty Thousand Dollars ($250,000) in the aggregate. Except as publicly
disclosed by the Company in the Company SEC Reports, no investigation or review
by any Governmental Entity with
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respect to the Company or any of its subsidiaries is pending or, to the
knowledge of the Company, threatened, nor, to the knowledge of the Company,
has any Governmental Entity indicated an intention to conduct the same, other
than such investigations or reviews as would not, individually or in the
aggregate, have a Material Adverse Effect on the Company.
Section 3.11. EMPLOYEE BENEFIT PLANS; LABOR MATTERS.
(a) Section 3.11(a) of the Company Disclosure Schedule
lists as of the date hereof all employee benefit plans (as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), and all bonus, stock option, stock purchase, incentive, deferred
compensation, supplemental retirement, health, life, or disability insurance,
dependent care, severance and other similar fringe or employee benefit plans,
programs or arrangements and any current or former employment or executive
compensation or severance agreements written or otherwise maintained or
contributed to for the benefit of or relating to any employee or former employee
of the Company, any trade or business (whether or not incorporated) that is a
member of a controlled group including the Company or that is under common
control with the Company within the meaning of Section 414 of the Code (an
"ERISA Affiliate"), as well as each plan with respect to which the Company or an
ERISA Affiliate could incur liability under Section 4069 (if such plan has been
or were terminated) or Section 4212(c) of ERISA (together the "Employee Plans"),
excluding Employee Plans under which the Company has no remaining obligations
and any of the foregoing that are required to be maintained by the Company under
the laws of any foreign jurisdiction. The Company has made available to Parent a
copy of (i) the most recent annual report on Form 5500 filed with the Internal
Revenue Service (the "IRS") for each disclosed Employee Plan where such report
is required and (ii) the documents and instruments governing each such Employee
Plan (other than those referred to in Section 4(b)(4) of ERISA). No event has
occurred and, to the knowledge of the Company, there currently exists no
condition or set of circumstances in connection with which the Company or any of
its subsidiaries could be subject to any liability under the terms of any
Employee Plans, ERISA, the Code or any other applicable law, including any
liability under Title IV of ERISA, that would have a Material Adverse Effect on
the Company.
(b) Section 3.11(b) of the Company Disclosure Schedule
sets forth a list as of the date hereof of (i) all employment agreements with
officers of the Company; (ii) all agreements with consultants who are
individuals obligating the Company to make annual cash payments in an amount
exceeding Fifty Thousand Dollars ($50,000); (iii) all Options held by
consultants; (iv) all severance agreements, programs and policies of the Company
with or relating to its employees except such programs and policies required to
be maintained by law; and (v) all plans, programs, agreements and other
arrangements of the Company with or relating to its employees that contain
change in control provisions whether or not listed in other parts of the Company
Disclosure Schedule. The Company has made available to Parent copies (or
descriptions in detail reasonably satisfactory to Parent) of all such
agreements, plans, programs and other arrangements.
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(c) Except as disclosed in Section 3.11(c) of the Company
Disclosure Schedule, there will be no payment, accrual of additional benefits,
acceleration of payments or vesting of any benefit under any Employee Plan or
any agreement or arrangement disclosed under this Section 3.11 solely by reason
of entering into or in connection with the transactions contemplated by this
Agreement.
(d) No Employee Plan that is a welfare benefit plan
within the meaning of Section 3(1) of ERISA provides benefits to former
employees of the Company or its ERISA Affiliates other than pursuant to Section
4980B of the Code or similar state laws.
(e) There are no controversies relating to any Employee
Plan or other labor matters pending or, to the knowledge of the Company,
threatened between the Company or any of its subsidiaries and any of their
respective employees, which controversies, individually or in the aggregate,
have or would reasonably be expected to have a Material Adverse Effect of the
Company. Neither the Company nor any of its subsidiaries is a party to any
collective bargaining agreement or other labor union contract applicable to
persons employed by the Company or any of its subsidiaries except as disclosed
in Section 3.11(e) of the Company Disclosure Schedule, nor does the Company know
of any activities or proceedings of any labor union to organize any such
employees. The Company has no knowledge of any strikes, slowdowns, work
stoppages, lockouts or threats thereof by or with respect to any employees of
the Company or any of its subsidiaries.
Section 3.12. ENVIRONMENTAL LAWS AND REGULATIONS.
(a) Except as publicly disclosed by the Company in the
Company SEC Reports, (i) each of the Company and its subsidiaries is in material
compliance with all applicable federal, state, local and foreign laws and
regulations relating to pollution or protection of human health or the
environment (including ambient air, surface water, ground water, land surface or
subsurface strata) (collectively "Environmental Laws") except for
non-compliances that, individually or in the aggregate, would not have a
Material Adverse Effect on the Company, which compliance includes, but is not
limited to, the possession by the Company and its subsidiaries of all material
permits and other governmental authorizations required under applicable
Environmental Laws and compliance with the terms and conditions thereof; (ii)
neither the Company nor any of its subsidiaries has received written notice of
or, to the knowledge of the Company, is the subject of any action, cause of
action, claim, investigation, demand or notice by any person alleging liability
under or non-compliance with any Environmental Law (an "Environmental Claim");
and (iii) to the knowledge of the Company, there are no existing facts that are
reasonably likely to prevent or interfere with such material compliance in the
future.
(b) Except as disclosed in the Company SEC Reports, there
are no Environmental Claims that, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect on the Company that are
pending or, to the knowledge of the Company, threatened against the Company or
any of its subsidiaries or, to the knowledge of the Company, against any person
whose liability for any Environmental Claim the Company
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or any of its subsidiaries has or may have retained or assumed either
contractually or by operation of law.
Section 3.13. TAXES.
(a) DEFINITIONS. For purposes of this Agreement:
(i) the term "Tax" (including "Taxes") means (A)
all federal, state, local, foreign and other net income, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits, license, lease,
service, service use, withholding, payroll, employment, excise, severance,
stamp, occupation, premium, property, windfall profits, customs, duties or other
taxes, fees, assessments or charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts with respect
thereto, (B) any liability for payment of amounts described in clause (A)
whether as a result of transferee liability, of being a member of an affiliated,
consolidated, combined or unitary group for any period, or otherwise through
operation of law, and (C) any liability for the payment of amounts described in
clauses (A) or (B) as a result of any tax sharing, tax indemnity or tax
allocation agreement or any other express or implied agreement to indemnify any
other person; and
(ii) the term "Tax Return" means any return,
declaration, report, statement, information statement and other document
required to be filed with respect to Taxes.
(b) Except as set forth in Section 3.13(b) of the Company
Disclosure Schedule, the Company and its subsidiaries have timely filed all
material Tax Returns they are required to have filed; and such Tax Returns are
accurate and correct in all material respects and do not contain a disclosure
statement under Section 6662 of the Code (or any predecessor provision or
comparable provision of state, local or foreign law).
(c) The Company and its subsidiaries have paid or
adequately provided in the financial statements included in the SEC Reports
for all Taxes (whether or not shown on any Tax Return) they are required to
have paid or to pay, which amounts are not material either individually or in
the aggregate.
(d) Except as set forth in Section 3.13(d) of the Company
Disclosure Schedule, no material claim for assessment or collection of Taxes is
presently being asserted against the Company or its subsidiaries and neither the
Company nor any of its subsidiaries is a party to any pending action,
proceeding, or investigation by any governmental taxing authority nor does the
Company have knowledge of any such threatened action, proceeding or
investigation.
(e) All amounts that were required to be collected or
withheld by or in respect of the Company or any of its subsidiaries in
connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other third party have been
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duly collected or withheld, and all amounts that were required to be remitted
to any Tax authority by or in respect of the Company or its subsidiaries have
been duly remitted.
(f) Neither the Company nor any of its subsidiaries has
requested an extension of time to file any Return not yet filed, nor granted any
waiver of any statute of limitations with respect to, or any extension of a
period for the assessment of, any Tax.
(g) Neither the Company nor any of its subsidiaries has
taken any action not in accordance with past practice that would have the effect
of deferring any material Tax liability of the Company or its subsidiaries from
any taxable period or portion thereof ending on or before or including the
Closing Date to any subsequent taxable period.
(h) Neither the Company nor any of its subsidiaries has
agreed with any Tax authority or filed an election with any Tax authority to pay
or be liable for Taxes of another Person, other than by reason of being a member
of an affiliated group (as defined in Section 1504 of the Code) with the Company
as the common parent corporation.
(i) Neither the Company nor any of its subsidiaries is a
party to or bound by any Tax sharing agreement, and has no current or contingent
contractual obligation to indemnify any other person with respect to Taxes,
other than obligations to indemnify a lessor for property Taxes, sales/use Taxes
or gross receipts Taxes (but not income or franchise Taxes) imposed on lease
payments arising from terms that are customary for leases of similar property.
(j) The Company has provided to representatives of the
Parent copies of all federal and state income and franchise Returns, and other
written correspondence (including requests for extension of time to file
Returns), filed or submitted by the Company or any of its subsidiaries with or
to the relevant taxing authorities with respect to all periods for which the
applicable statutes of limitations remain open, and has produced for Parent's
inspection all sales tax, use tax, property tax, and other tax and information
returns filed by the Company and any of its subsidiaries.
(k) There are no excess loss accounts, deferred
inter-company gains or losses, or inter-company items, as such terms are defined
in the Treasury Regulations, or other similar amounts that will be required to
be recognized or otherwise taken into account as a result of the acquisition of
the Shares pursuant to this Agreement.
(l) Except as set forth in Section 3.13(l) of the Company
Disclosure Schedule, neither the Company nor any of its subsidiaries is a party
to any agreement, contract, arrangement or plan that has resulted or would
result, individually or in the aggregate, in connection with this Agreement or
any change of control of the Company or any of its subsidiaries, in the payment
of any "excess parachute payments" within the meaning of Section 28OG of the
Code.
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Section 3.14. INTELLECTUAL PROPERTY.
(a) Section 3.14(a) of the Company Disclosure Schedule
sets forth, for the Intellectual Property owned, in whole or in part, including
jointly with others, by the Company or any of its subsidiaries, a complete and
accurate list of all United States and foreign (a) patents and patent
applications; (b) Trademark registrations and applications and material
unregistered Trademarks; and (c) copyright registrations and applications,
indicating for each, the applicable jurisdiction, registration number (or
application number), and date issued (or date filed). For purposes of this
Agreement, "Intellectual Property" means: trademarks and service marks (whether
register or unregistered), trade names, designs and general intangibles of like
nature, together with all goodwill related to the foregoing (collectively,
"Trademarks"); patents (including any continuations, continuations in part,
renewals and applications for any of the foregoing)(collectively "Patents");
copyrights (including any registrations and applications therefor and whether
registered or unregistered)(collectively "Copyrights"); computer software;
databases; works of authorship; mask works; technology; trade secrets and other
confidential information, know-how, proprietary processes, formulae, algorithms,
models, user interfaces, customer lists, inventions, discoveries, concepts,
ideas, techniques, methods, source codes, object codes, methodologies and, with
respect to all of the foregoing, related confidential data or information
(collectively, "Trade Secrets").
(b) TRADEMARKS.
(i) All Trademark registrations are currently
in compliance in all material respects with all legal requirements (including
the timely post-registration filing of affidavits of use and incontestability
and renewal applications) other than any requirement that, if not satisfied,
would not result in a cancellation of any such registration or otherwise
materially affect the priority and enforceability of the Trademark in question.
(ii) No registered Trademark has been within the
last three (3) years or is now involved in any opposition or cancellation
proceeding in the United States Patent and Trademark Office. To the Company's
knowledge, no such action has been threatened in writing within the one (1)-year
period prior to the date of this Agreement.
(iii) To the knowledge of the Company and its
subsidiaries, there has been no prior use of any material Trademark by any
third party which would confer upon said third party superior rights in any
such Trademark.
(iv) All material Trademarks registered in the
United States have been in continuous use by the Company or its subsidiaries.
(v) The Company and its subsidiaries have
adequately policed the Trademarks against third party infringement; and the
material Trademarks registered in the United States have been continuously used
in the form appearing in, and in connection with the goods and services listed
in, their respective registration certificates.
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(c) Patents.
(i) All Patents are currently in compliance
with legal requirements (including payment of filing, examination, and
maintenance fees and proofs of working or use) other than any requirement that,
if not satisfied, would not result in a revocation or otherwise materially
affect the enforceability of the Patent in question.
(ii) No Patent has been or is now involved in
any interference, reissue, reexamination or opposing proceeding in the
United States Patent and Trademark Office. To the Company's knowledge, no such
action has been threatened in writing within the one (1)-year period prior to
the date of this Agreement.
(iii) To the Company's knowledge, there is no
patent or patent application of any person that conflicts in any material
respect with any Patent.
(d) Trade Secrets.
(i) The Company has taken reasonable steps in
accordance with normal industry practice to protect the Company's rights in
confidential information and Trade Secrets of the Company.
(ii) Without limiting the generality of Section
3.14(d)(i) and except as would not be materially adverse to the Company or its
business, the Company enforces a policy of requiring each relevant employee,
consultant and contractor to execute proprietary information, confidentiality
and assignment agreements substantially in the Company's standard forms that
assign to the Company all rights to any Intellectual Property rights relating to
the Company's business and that otherwise appropriately protect the Intellectual
Property of the Company, and, except under confidentiality obligations, there
has been no disclosure by the Company or any subsidiary of material confidential
information or Trade Secrets.
(e) LICENSE AGREEMENTS.
Section 3.14(e)(1) of the Company Disclosure
Schedule sets forth a complete and accurate list of all license agreements
granting to the Company or any of its subsidiaries any material right to use or
practice any rights under any Intellectual Property other than office automation
software used generally in the Company's or any of its subsidiaries' operations
and other software that is not used in connection with the design, development,
use, maintenance and support, testing, assembly and manufacture of the Company's
or any such subsidiary's products and is commercially available on reasonable
terms to any person for a license fee of no more than Five Thousand Dollars
($5,000) (collectively, the "Inbound License Agreements"), indicating for each
the title and the parties thereto and the amount of any future royalty or
license fee payable thereunder. Section 3.14(e)(2) of the Company Disclosure
Schedule sets forth a complete and accurate list of all license agreements under
which the Company or any of its subsidiaries licenses software or grants other
rights in to use or practice any rights under any Intellectual Property,
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excluding licenses with customers that in the twelve-month period prior to the
date hereof have purchased or licensed products for which the total payments to
the Company and its subsidiaries did not exceed Seventy-Five Thousand Dollars
($75,000) (collectively, the "Outbound License Agreements"), indicating for each
the title and the parties thereto. There is no material outstanding or, to the
Company's knowledge, threatened dispute or disagreement with respect to any
Inbound License Agreement or any Outbound License Agreement.
(f) OWNERSHIP; SUFFICIENCY OF IP ASSETS. The Company or
one of its subsidiaries owns or possesses adequate licenses or other rights to
use, free and clear of Liens, orders and arbitration awards, all of its
Intellectual Property used in its business. The Intellectual Property identified
in Section 3.14(a) of the Company Disclosure Schedule, together with the
Company's and its subsidiaries' unregistered copyrights and the Company's and
such subsidiaries' rights under the licenses granted to the Company or any of
its subsidiaries under the Inbound License Agreements, constitute all the
material Intellectual Property rights used in the operation of the Company's and
its subsidiaries' businesses as they are currently conducted and are all the
Intellectual Property rights necessary to operate such businesses after the
Effective Time in substantially the same manner as such businesses have been
operated by the Company prior thereto.
(g) PROTECTION OF IP. The Company has taken reasonable
steps to protect the Intellectual Property of the Company and its subsidiaries.
The Company has a policy to secure valid written assignments from all
consultants and employees who contribute or have contributed to the creation or
development of Intellectual Property of the rights to such contributions that
the Company does not already own by operation of law. All use, disclosure, or
appropriation of Intellectual Property owned by the Company by or to a third
party has been pursuant to the terms of a written agreement between the Company
and such third party. All use, disclosure or appropriation of Intellectual
Property not owned by the Company has been pursuant to the terms of a written
agreement between the Company and the owner of such Confidential Information, or
is otherwise lawful.
(h) NO INFRINGEMENT BY THE COMPANY. The products used,
manufactured, marketed, sold or licensed by the Company, and all Intellectual
Property used in the conduct of the Company's and its subsidiaries' businesses
as currently conducted, do not infringe upon, violate or constitute the
unauthorized use of any rights owned or controlled by any third party, including
without limitation, any Intellectual Property of any third party.
(i) NO PENDING OR THREATENED INFRINGEMENT CLAIMS OR
RESTRICTIONS ON USE. Except and to the extent publicly disclosed in the Company
SEC Reports, no litigation is now or, within the three (3) years prior to the
date of this Agreement, was pending and, to the Company's knowledge, no notice
or other claim in writing has been received by the Company within the one (1)
year prior to the date of this Agreement, (A) alleging that the Company or any
of its subsidiaries has engaged in any activity or conduct that infringes upon,
violates, or constitutes the unauthorized use of the Intellectual Property
rights of any third party or (B) challenging the ownership, use, validity or
enforceability of any Intellectual Property
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owned or exclusively licensed by the Company. Except as specifically
disclosed in one or more Sections of the Company Disclosure Schedules
pursuant to this Section 3.14, no Intellectual Property owned or licensed by
the Company or any of its subsidiaries is subject to any outstanding order,
judgment, decree, stipulation or agreement restricting the use thereof by the
Company or any such subsidiary or, in the case of any Intellectual Property
licensed to others, restricting the sale, transfer, assignment or licensing
thereof by the Company or any of its subsidiaries to any person. Neither the
Company nor any of its subsidiaries has entered into any agreement to
indemnify any other person against any charge of infringement of any
Intellectual Property, other than indemnification provisions contained in
purchase orders or customer agreements arising in the ordinary course of
business.
(j) NO INFRINGEMENT BY THIRD PARTIES. Except as and to
the extent publicly disclosed in the Company SEC Reports or as set forth in
Section 3.14(j) of the Company Disclosure Schedule, no third party is
misappropriating, infringing, diluting, or violating any Intellectual Property
owned or exclusively licensed by the Company or any of its subsidiaries, and no
such claims have been brought against any third party by the Company or any of
its subsidiaries.
(k) ASSIGNMENT; CHANGE OF CONTROL. The execution,
delivery and performance by the Company of this Agreement, and the consummation
of the transactions contemplated hereby, will not result in the loss or
impairment of, or give rise to any right of any third party to terminate, any of
the Company's or any of its subsidiaries' rights to own any of its Intellectual
Property or their respective rights under the License Agreements, nor require
the consent of any Governmental Authority or third party in respect of any such
Intellectual Property.
(l) SOFTWARE. The Software (as defined below) owned or
purported to be owned by the Company or any of its subsidiaries, was either (i)
developed by employees of Company or any of its subsidiaries within the scope of
their employment; (ii) developed by independent contractors who have assigned
their rights to the Company or any of its subsidiaries pursuant to written
agreements; or (iii) otherwise acquired by the Company or a subsidiary from a
third party. Except as set forth in Section 3.14(l) of the Company Disclosure
Schedule, the Software does not contain any programming code, documentation or
other materials or development environments that embody Intellectual Property
rights of any person other than the Company or any of its subsidiaries, except
for such materials or development environments obtained by the Company or any of
its subsidiaries from other persons who make such materials or development
environments generally available to all interested purchasers or end-users on
standard commercial terms. For purposes of this Section 3.14(l), "Software"
means any and all (i) computer programs, including any and all software
implementations of algorithms, models and methodologies, whether in source code
or object code, (ii) databases and compilations, including any and all data and
collections of data, whether machine readable or otherwise, (iii) descriptions,
flow-charts and other work product used to design, plan, organize and develop
any of the foregoing, and (iv) all documentation, including user manuals and
training materials, relating to any of the foregoing.
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(m) PERFORMANCE OF EXISTING SOFTWARE PRODUCTS. The
Company's and its subsidiaries' existing and currently manufactured and marketed
Software products listed and described on Section 3.14(m) of the Company
Disclosure Schedule perform in all material respects, free of significant bugs
or programming errors, the functions described in any agreed specifications or
end user documentation or other information provided to customers of the Company
on which such customers relied when licensing or otherwise acquiring such
products.
(n) DOCUMENTATION. The Company and its subsidiaries have
taken all actions customary in the software industry to document the Software
and its operation, such that the materials comprising the Software, including
the source code and documentation, have been written in a clear and professional
manner so that they may be understood, modified and maintained in an efficient
manner by reasonably competent programmers.
(o) YEAR 2000 COMPLIANCE.
(i) Except as set forth in Section 3.14(o) of
the Company Disclosure Schedule, all of the Company's and its subsidiaries'
material products (including products currently under development) will record,
store, process and calculate and present calendar dates falling on and after
December 31, 1998, and will calculate any information dependent on or relating
to such dates in the same manner and with the same functionality, data integrity
and performance as the products record, store, process, calculate and present
calendar dates on or before December 31, 1998, or calculate any information
dependent on or relating to such dates (collectively "Year 2000 Compliant").
Except as set forth in Section 3.14(o) of the Company Disclosure Schedule, (A)
all of the Company's and its subsidiaries' material products will lose no
significant functionality with respect to the introduction of records containing
dates falling on or after December 31, 1998; (B) all of the Company's and its
subsidiaries' internal computer systems comprised of software, hardware,
databases or embedded control systems (microprocessor controlled, robotic or
other device) related to the Company's and its subsidiaries' businesses
(collectively, a "Business System"), that constitutes any material part of, or
is used in connection with the use, operation or enjoyment of, any material
tangible or intangible asset or real property of the Company and its
subsidiaries, including its accounting systems, are Year 2000 Compliant. Except
as set forth on Section 3.14(o) of the Company Disclosure Schedule, the current
versions of the Company's and its subsidiaries' software and all other
Intellectual Property may be used prior to, during and after December 31, 1998,
such that such Software and Intellectual Property will operate prior to, during
and after such time period without error caused by date data that represents or
references different centuries or more than one century.
(ii) To the knowledge of the Company, none of
the Company's products and the conduct of the Company's business with customers
and suppliers will be materially adversely affected by the advent of the year
2000, the advent of the twenty-first century or the transition from the
twentieth century through the year 2000 and into the twenty-first century. To
the knowledge of the Company and except as set forth on Section 3.14(o) of the
Company Disclosure Schedule, neither the Company nor any of its
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subsidiaries is reasonably likely to incur material expenses arising from or
relating to the failure of any of its Business Systems or any products
(including all products sold on or prior to the date hereof) as a result of
the advent of the year 2000, the advent of the twenty-first century or the
transition from the twentieth century through the year 2000.
Section 3.15. CERTAIN CONTRACT MATTERS.
(a) Section 3.15 (a) of the Company Disclosure Schedule
sets forth each oral or written (i) distributor, VAR (value added reseller),
sales representative or similar agreement to which the Company is a party, other
than any such agreement which is subject to termination by the Company, without
penalty or cost (other than the cost of return of unsold products) in excess of
$10,000, upon notice of 90 days or less; (ii) OEM agreement to which the Company
is a party, and which has a remaining term in excess of 90 days, other than any
such agreement referred to in clause (ii) pursuant to which total sales by the
Company in the year ended December 31, 1998 were less than $100,000 and
anticipated sales during calendar year 1999 are less than such amount; (iii)
other contract or commitment in which the Company or any of its subsidiaries has
granted or received manufacturing rights, most favored customer pricing
provisions or exclusive marketing rights relating to any product or service, any
group of products or services or any territory; and (iv) joint venture or
partnership contract or agreement or other agreement which has involved or is
reasonably expected to involve a sharing of profits or losses with any other
party.
(b) Except as set forth in Section 3.15(b) of the Company
Disclosure Schedule, the Company is not a party to, or bound by, any agreement
which restricts its ability to engage in business, or compete with any person,
in any product line or line of business in any place in the world.
Section 3.16. INSURANCE. Each of the Company and its
subsidiaries maintains insurance policies (the "Insurance Policies") against all
risks of a character and in such amounts as are usually insured against by
similarly situated companies in the same or similar businesses. Each Insurance
Policy is in full force and effect and is valid, outstanding and enforceable,
and all premiums due thereon have been paid in full. None of the Insurance
Policies will terminate or lapse (or be affected in any other materially adverse
manner) by reason of the transactions contemplated by this Agreement. Each of
the Company and its subsidiaries has complied in all material respects with the
provisions of each Insurance Policy under which it is the insured party. No
insurer under any Insurance Policy has canceled or generally disclaimed
liability under any such policy or, to the Company's knowledge, indicated any
intent to do so or not to renew any such policy. All material claims under the
Insurance Policies have been filed in a timely fashion.
Section 3.17. CERTAIN BUSINESS PRACTICES. None of the Company,
any of its subsidiaries or any directors, officers, agents or employees of the
Company or any of its subsidiaries has (i) used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
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campaigns or violated any provision of the Foreign Corrupt Practices Act of
1977, as amended, or (iii) made any other unlawful payment.
Section 3.18. PRODUCT WARRANTIES. Section 3.18 of the Company
Disclosure Schedule sets forth complete and accurate copies of the written
warranties and guaranties by the Company or any of its subsidiaries currently in
effect with respect to its products. There have not been any material deviations
from such warranties and guaranties, and neither the Company, any of its
subsidiaries nor any of their respective salesmen, employees, distributors and
agents is authorized to undertake obligations to any customer or to other third
parties in excess of such warranties or guaranties. Neither the Company nor any
of its subsidiaries has made any oral warranty or guaranty with respect to its
products.
Section 3.19. SUPPLIERS AND CUSTOMERS. The documents and
information supplied by the Company to Parent or any of its representatives in
connection with this Agreement with respect to relationships and volumes of
business done with its significant suppliers and customers are accurate in all
material respects. During the last twelve (12) months, the Company has received
no notices of termination or written threats of termination from any of the five
(5) largest suppliers or the five (5) largest customers of the Company and its
subsidiaries.
Section 3.20. VOTE REQUIRED. The affirmative vote of the
holders of sixty seven percent (67%) of the outstanding Shares is the only vote
of the holders of any class or series of the Company's capital stock necessary
to approve and adopt this Agreement.
Section 3.21. OPINION OF FINANCIAL ADVISER. The Financial
Advisor has delivered to the Company Board its written opinion dated the date of
this Agreement to the effect that as of such date the Per Share Amount is fair,
from a financial point of view, to the holders of Shares.
Section 3.22. BROKERS. No broker, finder or investment banker
(other than the Financial Adviser, a true and correct copy of whose engagement
agreement has been provided to Purchaser or Parent) is entitled to any brokerage
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company.
Section 3.23. DISCLOSURE. None of the representatives or
warranties made by the Company herein or in any schedule hereto, including the
Company Disclosure Schedule, or in any certificate furnished by the Company
pursuant to this Agreement, or in the Company SEC Reports, when all such
documents are read together in their entirety, contains or will contain at the
Effective Time any untrue statement of a material fact, or omits or will omit at
the Effective Time to state any material fact necessary in order to make the
statements contained herein or therein, in light of the circumstances under
which made, not misleading.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
PARENT AND PURCHASER
Parent and Purchaser hereby represent and warrant to the
Company as follows:
Section 4.1. ORGANIZATION.
(a) Each of Parent and Purchaser is duly organized,
validly existing and in good standing under the laws of the State of Delaware,
respectively, and has all requisite power and authority to own, lease and
operate its properties and to carry on its businesses as now being conducted.
Parent has heretofore made available to the Company accurate and complete copies
of the Certificate of Incorporation and bylaws as currently in full force and
effect, of Parent and Purchaser.
(b) Each of Parent and Purchaser is duly qualified or
licensed and in good standing to do business in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and in good
standing would not have a Material Adverse Effect on Parent. When used in
connection with Parent or Purchaser the term "Material Adverse Effect on Parent"
means any circumstance, change in, or effect on (or circumstance, change in, or
effect involving a prospective change on) Parent and its subsidiaries, taken as
a whole, (a) that is, or is reasonably likely in the future to be, materially
adverse to the operations, assets or liabilities (including contingent
liabilities), earnings or results of operations, or the business (financial or
otherwise) of Parent and its subsidiaries, taken as a whole, excluding from the
foregoing the effect, if any, of (i) changes in general economic conditions or
changes affecting the industry in which Parent operates, (ii) stockholder class
action litigation arising from allegations of a breach of fiduciary duty
relating to this Agreement, (iii) the public announcement or pendency of the
transactions contemplated hereby on current or prospective customers or revenues
of the Parent (provided that such effect is direct and that Parent shall have
the burden of proving such direct effect), or (iv) any action or inaction
required of Parent by the Company under this Agreement, or (b) that would
reasonably be expected to prevent or materially delay or impair the ability of
Parent and Purchaser to consummate the transactions contemplated by this
Agreement.
Section 4.2. AUTHORITY RELATIVE TO THIS AGREEMENT. Each of
Parent and Purchaser has all necessary corporate power and authority to execute
and deliver this Agreement and the Company Stock Option, to perform its
obligations under this Agreement and the Company Stock Option and to consummate
the transactions contemplated thereby. The execution and delivery of this
Agreement and the Company Stock Option and the consummation of the transactions
contemplated thereby have been duly and validly authorized
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by the boards of directors of Parent and Purchaser and by Parent as the sole
stockholder of Purchaser and no other corporate proceedings on the part of
Parent or Purchaser are necessary to authorize this Agreement and the Company
Stock Option or to consummate the transactions contemplated hereby. This
Agreement and the Company Stock Option have been duly and validly executed
and delivered by each of Parent and Purchaser and constitute, assuming the
due authorization, execution and delivery hereof and thereof by the Company,
valid, legal and binding agreements of each of Parent and Purchaser
enforceable against each of Parent and Purchaser in accordance with their
terms, subject to any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereafter in effect relating to creditors'
rights generally or to general principles of equity.
Section 4.3. SEC REPORTS; FINANCIAL STATEMENTS.
(a) Parent has filed all required forms, reports and
documents ("Parent SEC Reports") with the SEC since December 31, 1997, each of
which, complied at the time of filing in all material respects with all
applicable requirements of the Securities Act and the Exchange Act, each law as
in effect on the dates such forms reports and documents were filed. None of such
Parent SEC Reports, including any financial statements or schedules included or
incorporated by reference therein, contained when filed any untrue statement of
a material fact or omitted to state a material fact required to be stated or
incorporated by reference therein or necessary in order to make the statements
therein in light of the circumstances under which they were made not misleading,
except to the extent superseded by a Parent SEC Report filed subsequently and
prior to the date hereof. The audited consolidated financial statements of
Parent included in the Parent SEC Reports fairly present in conformity in all
material respects with generally accepted accounting principles applied on a
consistent basis (except as may be indicated in the notes thereto) the
consolidated financial position of Parent and its consolidated subsidiaries as
of the dates thereof and their consolidated results of operations and changes in
financial position for the periods then ended.
(b) Parent has heretofore made available or promptly will
make available to the Company a complete and correct copy of any amendments or
modifications that are required to be filed with the SEC but have not yet been
filed with the SEC to agreements documents or other instruments that previously
had been filed by Parent with the SEC pursuant to the Exchange Act.
Section 4.4. OFFER DOCUMENTS; PROXY STATEMENT. None of the
information supplied by Parent or Purchaser, its officers, directors,
representatives, agents or employees, for inclusion in the Proxy Statement, or
in any amendments thereof or supplements thereto, will, on the date the Proxy
Statement is first mailed to stockholders, at the time of the Company
Stockholders' Meeting or at the Effective Time, contain any statement which, at
such time and in light of the circumstances under which it will be made, will be
false or misleading with respect to any material fact, or will omit to state any
material fact necessary 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 proxies for the Company Stockholders'
Meeting which has become false or misleading. Neither the Offer
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Documents nor any amendments thereof or supplements thereto will, at any time
the Offer Documents or any such amendments or supplements are filed with the
SEC or first published, sent or given to the Company's stockholders, contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Notwithstanding the
foregoing, Parent and Purchaser do not make any representation or warranty
with respect to any information that has been supplied by the Company or its
accountants, counsel or other authorized representatives for use in any of
the foregoing documents. The Offer Documents and any amendments or
supplements thereto will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder.
Section 4.5. CONSENTS AND APPROVALS; NO VIOLATIONS. Except for
filings, permits, authorizations, consents, and approvals as may be required
under and other applicable requirements of the Securities Act, the Exchange Act,
state securities or blue sky laws, the HSR Act, and any filings under similar
merger notification laws or regulations of foreign Governmental Entities and the
filing and recordation of the Certificate of Merger as required by the Delaware
Law, no filing with or notice to, and no permit authorization consent or
approval of any Governmental Entity is necessary for the execution and delivery
by Parent or Purchaser of this Agreement or the Company Stock Option or the
consummation by Parent or Purchaser of the transactions contemplated hereby or
thereby, except where the failure to obtain such permits, authorizations,
consents or approvals or to make such filings or give such notice would not,
individually or in the aggregate, have a Material Adverse Effect on Parent.
Neither the execution, delivery and performance of this Agreement or the Company
Stock Option by Parent or Purchaser nor the consummation by Parent or Purchaser
of the transactions contemplated hereby or thereby will (i) conflict with or
result in any breach of any provision of the respective Certificate of
Incorporation or bylaws of Parent or Purchaser, (ii) result in a violation or
breach of or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, amendment, cancellation or
acceleration or Lien) under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which Parent or Purchaser or any of Parent's other
subsidiaries is a party or by which any of them or any of their respective
properties or assets may be bound or (iii) violate any order, writ, injunction,
decree, law, statute, rule or regulation applicable to Parent or Purchaser or
any of Parent's other subsidiaries or any of their respective properties or
assets except, in the case of (ii) or (iii), for violations, breaches or
defaults that would not, individually or in the aggregate, have a Material
Adverse Effect on Parent.
Section 4.6. BROKERS. No broker finder or investment banker is
entitled to any brokerage finder's or other fee or commission in connection with
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Parent or Purchaser.
Section 4.7. NO PRIOR ACTIVITIES. Except for obligations
incurred in connection with its incorporation or organization or the negotiation
and consummation of this Agreement and the transactions contemplated hereby,
Purchaser has neither incurred any obligation or
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liability nor engaged in any business or activity of any type or kind
whatsoever or entered into any agreement or arrangement with any person.
ARTICLE 5
COVENANTS
Section 5.1. CONDUCT OF BUSINESS OF THE COMPANY. Except as
contemplated by this Agreement or as described in Section 5.1 of the Company
Disclosure Schedule, during the period from the date hereof to the Effective
Time, the Company will and will cause each of its subsidiaries to conduct its
operations in the ordinary course of business consistent with past practice
and, to the extent consistent therewith, with no less diligence and effort
than would be applied in the absence of this Agreement seek, to preserve
intact its current business organizations, keep available the service of its
current officers and employees and preserve its relationships with customers,
suppliers and others having business dealings with it with the intention that
its goodwill and ongoing businesses shall be unimpaired at the Effective
Time. Without limiting the generality of the foregoing, except as otherwise
expressly provided in this Agreement or as described in Section 5.1 of the
Company Disclosure Schedule, prior to the Effective Time, neither the Company
nor any of its subsidiaries will, without the prior written consent of Parent
and Purchaser:
(a) amend its Certificate or Articles of Incorporation
or bylaws (or other similar governing instrument);
(b) authorize for issuance, issue, sell, deliver or
agree or commit to issue sell or deliver (whether through the issuance or
granting of options, warrants, commitments, subscriptions, rights to purchase
or otherwise) any stock of any class or any other securities (except bank
loans) or equity equivalents (including any stock options or stock
appreciation rights) except for the issuance and sale of Shares pursuant to
options granted under the Option Plans prior to the date hereof and Rights
that are vested in the Stock Purchase Plan on or prior to the New Purchase
Date (as set forth in Section 2.12);
(c) split, combine or reclassify any shares of its
capital stock, declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
its capital stock, make any other actual, constructive or deemed distribution
in respect of its capital stock or otherwise make any payments to
stockholders in their capacity as such, or redeem or otherwise acquire any of
its securities or any securities of any of its subsidiaries;
(d) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its subsidiaries (other than the
Merger);
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(e) alter through merger, liquidation, reorganization,
restructuring or any other fashion the corporate structure of ownership of
any subsidiary;
(f) (i) incur or assume any long-term or short-term debt
or issue any debt securities except for borrowings under existing lines of
credit in the ordinary course of business; (ii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person except for obligations of
subsidiaries of the Company incurred in the ordinary course of business; (iii)
make any loans, advances or capital contributions to or investments in any other
person (other than to subsidiaries of the Company or customary loans or advances
to employees in each case in the ordinary course of business consistent with
past practice); (iv) pledge or otherwise encumber shares of capital stock of the
Company or any of its subsidiaries; or (v) mortgage or pledge any of its
material assets, tangible or intangible, or create or suffer to exist any
material Lien thereupon;
(g) except as may be required by law, (i) enter into,
adopt or amend or terminate any bonus, profit sharing, compensation, severance,
termination, stock option, stock appreciation right, restricted stock,
performance unit, stock equivalent, stock purchase agreement, pension,
retirement, deferred compensation, employment, health, life, or disability
insurance, dependent care, severance or other employee benefit plan agreement,
trust, fund or other arrangement for the benefit or welfare of any director,
officer or employee in any manner, (ii) except for increases for employees other
than officers of the Company, in the ordinary course of business consistent with
past practice, and after having delivered five days prior notice thereof to
Parent, increase in any manner the compensation or fringe benefits of any
director, officer or employee or pay any benefit not required by any plan and
arrangement as in effect as of the date hereof (including the granting of stock
appreciation rights or performance units), or (iii) hire or retain any new
officer or director level employee;
(h) acquire, sell, license, lease or dispose of any
assets in any single transaction or series of related transactions, other than
sales of its products in the ordinary course of business consistent with past
practices;
(i) except as may be required as a result of a change in
law or in generally accepted accounting principles, change any of the accounting
principles, practices or methods used by it;
(j) revalue in any material respect any of its assets,
including writing down the value of inventory or writing-off notes or accounts
receivable, other than in the ordinary course of business;
(k)(i) acquire (by merger, consolidation or purchaser of
stock or assets) any corporation, partnership or other business organization or
division thereof or any equity interest therein; (ii) enter into any contract or
agreement other than in the ordinary course of business consistent with past
practice that would be material to the Company and its subsidiaries, taken as a
whole; (iii) amend, modify or waive any right under any material contract of the
Company or any of its subsidiaries; (iv) modify its standard warranty terms for
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its products or amend or modify any product warranties in effect as of the date
hereof in any material manner that is adverse to the Company or any of its
subsidiaries; (v) enter into or amend any agreements pursuant to which any other
party is granted exclusive marketing or distribution rights with respect to any
of the products or technology of the Company or any of its subsidiaries; or (vi)
authorize any new capital expenditure or expenditures that individually is in
excess of Twenty-Five Thousand Dollars ($25,000) or in the aggregate are in
excess of Two Hundred Fifty Thousand Dollars ($250,000); PROVIDED that nothing
in the foregoing clause (vi) shall limit any capital expenditure required
pursuant to existing customer contracts;
(l) make any tax election or settle or compromise any
income tax liability material to the Company and its subsidiaries taken as a
whole;
(m) commence a lawsuit other than (i) for the routine
collection of bills, (ii) in such cases where the Company in good faith, after
consultation with Parent prior to such commencement, determines that failure to
commence suit would have a Material Adverse Effect on the Company, or (iii) for
a breach of this Agreement;
(n) settle or compromise any pending or threatened
suit, action or claim that (i) relates to the transactions contemplated hereby
or (ii) the settlement or compromise of which would have a Material Adverse
Effect on the Company;
(o) commence any material software development project or
terminate any material software development project that is currently ongoing,
in either case except pursuant to the terms of existing contracts with customers
or except as contemplated by the Company's project development budget previously
provided to Parent; or
(p) take or agree in writing or otherwise to take any of
the actions described in Sections 5.1(a) through 5.1(o) (and it shall use all
reasonable efforts not to take any action that would make any of the
representations or warranties of the Company contained in this Agreement untrue
or incorrect).
Section 5.2. PREPARATION OF PROXY STATEMENT. As promptly as
practicable after the consummation of the Offer, and if required by the Exchange
Act or Delaware Law, the Company shall prepare and file with the SEC, and shall
use all reasonable efforts to have cleared by the SEC, and promptly thereafter
shall mail to stockholders, the Proxy Statement. The Proxy Statement shall
contain the recommendation of the Company Board that the Company's stockholders
approve this Agreement and the Merger.
Section 5.3. OTHER POTENTIAL ACQUIRERS.
(a) The Company, its affiliates (as reasonably determined
by the Company) and their respective officers and other employees with
managerial responsibilities, directors, representatives and agents shall
immediately cease any discussions or negotiations with any parties with respect
to any Third Party Acquisition (as defined below). Neither the Company nor any
of its affiliates (as reasonably determined by the Company) shall, nor shall the
Company authorize or permit any of its or their respective officers, directors,
employees
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representatives or agents to, directly or indirectly, encourage,
solicit, participate in or initiate discussions or negotiations with or provide
any non-public information to any person or group (other than Parent and
Purchaser or any designees of Parent and Purchaser) concerning any Third Party
Acquisition; PROVIDED, HOWEVER, that nothing herein shall prevent the Company
Board from (i) taking and disclosing to the Company's stockholders a position
contemplated by Rules 14d-9 and 14e-2 promulgated under the Exchange Act with
regard to any tender or exchange offer; and (ii) conducting such "due diligence"
inquiries (which shall be in writing to the extent possible) in response to any
Third Party Acquisition proposal as the Company Board determines in its good
faith judgment, after consultation with and based upon the advice of legal
counsel, may be required in order to comply with its fiduciary duties. The
Company shall promptly notify the Parent in the event it receives any proposal
or inquiry concerning a Third Party Acquisition, including the terms and
conditions thereof and the identity of the party submitting such proposal, and
shall advise Parent from time to time of the status and any material
developments concerning the same, including the nature and content of any "due
diligence" inquiries made by it concerning any such proposal and furnishing
copies of any such written inquiries.
(b) Except as set forth in this Section 5.3(b), the
Company Board shall not withdraw its recommendation of the transactions
contemplated hereby or approve or recommend, or cause the Company to enter into
any agreement with respect to, any Third Party Acquisition. Notwithstanding the
foregoing, if the Company Board by a majority vote determines in its good faith
judgment, after consultation with and based upon the advice of legal counsel,
that it is required to do so in order to comply with its fiduciary duties, the
Company Board may withdraw its recommendation of the transactions contemplated
hereby or approve or recommend a Superior Proposal (as defined in subsection (c)
below), but in each case only (i) after providing written notice to Parent (a
"Notice of Superior Proposal") advising Parent that the Company Board has
received a Superior Proposal, specifying the material terms and conditions of
such Superior Proposal and identifying the person making such Superior Proposal
and (ii) if Parent does not, within five (5) business days of Parent's receipt
of the Notice of Superior Proposal, make an offer that the Company Board by a
majority vote determines in its good faith judgment (based on the written advice
of a financial adviser of nationally recognized reputation) to be at least as
favorable to the Company's stockholders as such Superior Proposal; PROVIDED,
HOWEVER, that the Company shall not be entitled to enter into any agreement with
respect to a Superior Proposal unless and until this Agreement is terminated by
its terms pursuant to Section 7.1 and the Company has paid all amounts due to
Parent pursuant to Section 7.3. Any disclosure that the Company Board may be
compelled to make with respect to the receipt of a proposal for a Third Party
Acquisition or otherwise in order to comply with its fiduciary duties or Rule
14d-9 or 14e-2 will not constitute a violation of this Agreement, PROVIDED that
such disclosure states that no action will be taken by the Company Board in
violation of this Section 5.3(b).
(c) For the purposes of this Agreement, "Third Party
Acquisition" means the occurrence of any of the following events: (i) the
acquisition of the Company by merger or otherwise by any person (which includes
a "person" as such term is defined in Section 13(d)(3) of the Exchange Act)
other than Parent, Purchaser or any affiliate thereof (a
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"Third Party"); (ii) the acquisition by a Third Party of any material portion
of the assets of the Company and its subsidiaries taken as a whole, other
than the sale of its products in the ordinary course of business consistent
with past practices; (iii) the acquisition by a Third Party of twenty percent
(20%) or more of the outstanding Shares; (iv) the adoption by the Company of
a plan of liquidation or the declaration or payment of an extraordinary
dividend; (v) the repurchase by the Company or any of its subsidiaries of
more than ten percent (10%) of the outstanding Shares; or (vi) the
acquisition by the Company or any of its subsidiaries by merger, purchase of
stock or assets, joint venture or otherwise of a direct or indirect ownership
interest or investment in any business whose annual revenues, net income or
assets is equal or greater than ten percent (10%) of the annual revenues, net
income or assets of the Company. For purposes of this Agreement, a "Superior
Proposal" means any bona fide proposal to acquire directly or indirectly for
consideration consisting of cash and/or securities more than 20% of the
Shares then outstanding or all or substantially all the assets of the Company
and otherwise for a consideration higher than the Per Share Amount and on
terms that the Company Board by a majority vote determines in its good faith
judgment (based on the written advice of the Financial Advisor or another
financial advisor of nationally recognized reputation) to be more favorable
to the Company's stockholders than the Merger.
Section 5.4. MEETING OF STOCKHOLDERS. Following the
consummation of the Offer, the Company shall promptly take all action necessary
in accordance with Delaware Law and the Restated Certificate and By-Laws to
convene a meeting of the stockholders of the Company, if such meeting is
required in order to accomplish the Merger. The stockholder vote required for
approval of the Merger will be sixty seven percent (67%) of the outstanding
shares of common stock of the Company. The Company shall use its commercially
reasonable best efforts to solicit from stockholders of the Company proxies in
favor of the Merger and shall take all other action necessary or, in the
reasonable opinion of Parent, advisable to secure any vote of stockholders
required by Delaware Law to effect the Merger. Notwithstanding the foregoing, if
Purchaser or any other subsidiary of Parent shall acquire at least 90 percent of
the outstanding common stock of the Company, and provided that the conditions
set forth in Article 6 shall have been satisfied or waived, the Company shall,
at the request of Parent, take all necessary and appropriate action to cause the
Merger to become effective as soon as practicable after such acquisition,
without the approval of the stockholders of the Company, in accordance with
Section 253 of Delaware Law.
Section 5.5. ACCESS TO INFORMATION.
(a) Between the date hereof and the Effective Time, the
Company will give Parent and its authorized representatives reasonable access to
all employees, plants, offices, warehouses and other facilities and to all books
and records of the Company and its subsidiaries as Parent may reasonably
require, and will cause its officers and those of its subsidiaries to furnish
Parent with such financial and operating data and other information with respect
to the business and properties of the Company and its subsidiaries as Parent may
from time to time reasonably request.
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(b) Between the date hereof and the Effective Time, the
Company shall furnish to Parent (1) within two (2) business days following
preparation thereof (and in any event within twenty (20) business days after the
end of each calendar month, commencing with June 1999), an unaudited balance
sheet as of the end of such month and the related statements of earnings,
stockholders' equity (deficit) and cash flows, and (2) within two (2) business
days following preparation thereof (and in any event within twenty (20) business
days after the end of each fiscal quarter) an unaudited balance sheet as of the
end of such quarter and the related statements of earnings, stockholders' equity
(deficit) and cash flows for the quarter then ended, all of such financial
statements referred to in clauses (1) and (2) to prepared in accordance with
generally accepted accounting principles in conformity with the practices
consistently applied by the Company with respect to such financial statements.
All the foregoing shall be in accordance with the books and records of the
Company and shall fairly present its financial position (taking into account the
differences between the monthly, quarterly and annual financial statements
prepared by the Company in conformity with its past practices) as of the last
day of the period then ended.
(c) Each of the parties hereto will hold, and will cause
its consultants and advisers to hold, in confidence all documents and
information furnished to it by or on behalf of another party to this Agreement
in connection with the transactions contemplated by this Agreement pursuant to
the terms of that certain Confidentiality Agreement entered into between the
Company and Parent dated April 21, 1999.
Section 5.6. CERTAIN FILINGS; REASONABLE EFFORTS.
(a) Subject to the terms and conditions herein provided,
each of the parties hereto agrees to use all reasonable efforts to take or cause
to be taken all action and to do or cause to be done all things reasonably
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including using all reasonable efforts to do the following, (i) cooperate in the
preparation and filing of any filings that may be required under the HSR Act and
any filings under similar merger notification laws or regulations of foreign
Governmental Entities; (ii) obtain consents of all third parties (including
those consents identified on Schedule 3.6 of the Company Disclosure Schedule)
and Governmental Entities necessary, proper or advisable for the consummation of
the transactions contemplated by this Agreement; (iii) contest any legal
proceeding relating to the Merger; and (iv) execute any additional instruments
necessary to consummate the transactions contemplated hereby. If at any time
after the Effective Time any further action is necessary to carry out the
purposes of this Agreement the proper officers and directors of each party
hereto shall take all such necessary action.
(b) Parent and the Company will consult and cooperate
with one another, and consider in good faith the views of one another, in
connection with any analyses, appearances, presentations, letters, white papers,
memoranda, briefs, arguments, opinions or proposals made or submitted by or on
behalf of any party hereto in connection with proceedings under or relating to
the HSR Act or any other foreign, federal, or state antitrust, competition, or
fair trade law. In this regard but without limitation, each party hereto shall
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promptly inform the other of any material communication between such party and
the Federal Trade Commission, the Antitrust Division of the United States
Department of Justice, or any other federal, foreign or state antitrust or
competition Governmental Entity regarding the transactions contemplated herein.
Section 5.7. PUBLIC ANNOUNCEMENTS. Parent, Purchaser and the
Company, as the case may be, will consult with one another before issuing any
press release or otherwise making any public statements with respect to the
transactions contemplated by this Agreement, including the Merger, and shall not
issue any such press release or make any such public statement prior to such
consultation except (i) as may be required by applicable law, or by the rules
and regulations of, or pursuant to any listing agreement with, the NYSE or the
Nasdaq National Market, as determined by Parent, Purchaser or the Company, as
the case may be, or (ii) following a change, if any, of the Company Board's
recommendation of the Merger (in accordance with Section 5.3(b)), after which
event no such consultation shall be required. Notwithstanding the preceding
sentence, the first public announcement of this Agreement and the Merger shall
be a joint press release agreed upon by Parent and the Company.
Section 5.8. INDEMNIFICATION AND DIRECTORS' AND OFFICERS'
INSURANCE.
(a) After the Effective Time, the Surviving Corporation
shall indemnify and hold harmless (and shall also advance expenses as incurred
in accordance with the terms and provisions of the bylaws, restated certificate
of incorporation and any applicable indemnification agreement, all as in effect
on the date hereof), to the extent not covered by insurance, each person who is
now or has been prior to the date hereof or who becomes prior to the Effective
Time an officer or director of the Company or any of the Company's subsidiaries
(the "Indemnified Persons") against (i) all losses, claims, damages, costs,
expenses (including counsel fees and expenses), settlement, payments or
liabilities arising out of or in connection with any claim, demand, action,
suit, proceeding or investigation based in whole or in part on or arising in
whole or in part out of the fact that such person is or was an officer or
director of the Company or any of its subsidiaries, whether or not pertaining to
any matter existing or occurring at or prior to the Effective Time and whether
or not asserted or claimed prior to or at or after the Effective Time
("Indemnified Liabilities"); and (ii) all Indemnified Liabilities based in whole
or in part on or arising in whole or in part out of or pertaining to this
Agreement or the transactions contemplated hereby, in each case to the fullest
extent required or permitted under applicable law. Nothing contained herein
shall make Parent, Purchaser, the Company or the Surviving Corporation, an
insurer, a co-insurer or an excess insurer in respect of any insurance policies
which may provide coverage for Indemnified Liabilities, nor shall this Section
5.8 relieve the obligations of any insurer in respect thereto. The parties
hereto intend, to the extent not prohibited by applicable law, that the
indemnification provided for in this Section 5.8 shall apply without limitation
to negligent acts or omissions by an Indemnified Person. Each Indemnified Person
is intended to be a third party beneficiary of this Section 5.8 and may
specifically enforce its terms. This Section 5.8 shall not limit or otherwise
adversely affect any rights any Indemnified Person may have under any agreement
with the Company or under the Company's Certificate of Incorporation or bylaws
as presently in effect.
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(b) For a period of three years after the Effective Time,
Parent will maintain or cause the Surviving Corporation to maintain in effect,
if available, directors' and officers' liability insurance covering those
persons who, as of immediately prior to the Effective Time, are covered by the
Company's directors' and officers' liability insurance policy (the "Insured
Parties") on terms no less favorable to the Insured Parties than those of the
Company's present directors' and officers' liability insurance policy; PROVIDED,
HOWEVER, that in no event will Parent or the Surviving Corporation be required
to expend in excess of 150% of the annual premium currently paid by the Company
for such coverage (or such coverage as is available for 150% of such annual
premium); PROVIDED FURTHER, that, in lieu of maintaining such existing insurance
as provided above, Parent may cause coverage to be provided under any policy
maintained for the benefit of Parent or any of its subsidiaries, so long as the
terms are not materially less advantageous to the intended beneficiaries thereof
than such existing insurance.
(c) The provisions of this Section 5.8 are intended to be
for the benefit of, and will be enforceable by, each person entitled to
indemnification hereunder and the heirs and representatives of such person.
Parent will not permit the Surviving Corporation to merge or consolidate with
any other Person unless the Surviving Corporation will ensure that the surviving
or resulting entity assumes the obligations imposed by this Section 5.8.
Section 5.9. NOTIFICATION OF CERTAIN MATTERS. The Company
shall give prompt notice to Parent and Purchaser, and Parent and Purchaser shall
give prompt notice to the Company, of (i) the occurrence or nonoccurrence of any
event the occurrence or nonoccurrence of which has caused or would be likely to
cause any representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at or prior to the Effective Time and (ii)
any material failure of the Company, Parent or Purchaser, as the case may be, to
comply with or satisfy in any material respect any covenant condition or
agreement to be complied with or satisfied by it hereunder; PROVIDED, HOWEVER,
that the delivery of any notice pursuant to this Section 5.9 shall not cure such
breach or non-compliance or limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
Section 5.10. ADDITIONS TO AND MODIFICATION OF COMPANY
DISCLOSURE SCHEDULE. Concurrently with the execution and delivery of this
Agreement, the Company has delivered a Company Disclosure Schedule that includes
all of the information required by the relevant provisions of this Agreement. In
addition, the Company shall deliver to Parent and Purchaser such additions to or
modifications of any Sections of the Company Disclosure Schedule necessary to
make the information set forth therein true, accurate and complete in all
material respects as soon as practicable after such information is available to
the Company after the date of execution and delivery of this Agreement;
PROVIDED, HOWEVER, that such disclosure shall not be deemed to constitute an
exception to its representations and warranties under Article 3, nor limit the
rights and remedies of Parent and Purchaser under this Agreement for any breach
by the Company of such representation and warranties.
5.11 OFFICERS. Promptly upon the purchase by Purchaser of
Shares pursuant to the Offer representing at least a majority of the outstanding
Shares, the Company shall
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make, or cause to be made, such changes in the officers of the subsidiaries
of the Company as may be requested by the Parent.
ARTICLE 6
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 6.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT
THE MERGER. The respective obligations of each party hereto to effect the Merger
are subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) Purchaser shall have made, or caused to be made, the
Offer and shall have purchased, or caused to be purchased, the Shares pursuant
to the Offer;
(b) The Merger and this Agreement shall have been
approved and adopted by the requisite vote of the stockholders of the Company,
if required by Delaware Law; and
(c) No statute, rule, regulation, judgment, writ, decree,
order or injunction shall have been promulgated, enacted, entered or enforced,
and no other action shall have been taken, by any Governmental Entity that in
any of the foregoing cases has the effect of making illegal or directly or
indirectly restraining, prohibiting or restricting the consummation of the
Merger.
(d) Any waiting period applicable to the Merger under the
HSR Act shall have expired or have been terminated and all approvals of and
consents to the Merger required under applicable foreign antitrust or
competition laws shall have been obtained and be in full force and effect.
Section 6.2. CONDITIONS TO THE OBLIGATIONS OF PARENT AND
PURCHASER. The respective obligations of Parent and Purchaser to effect the
Merger are subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) The representations and warranties of the Company set
forth herein shall be true and correct in all material respects, in each case as
if such representations and warranties were made at the Effective Time; and
(b) The Company shall have performed in all material
respects all obligations and complied in all material respects with all
agreements and covenants of the Company to be performed or complied with by it
under this Agreement at or prior to the Effective Time.
Section 6.3. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The
obligations of the Company to effect the Merger are subject to the satisfaction
at or prior to the Effective Time of the following conditions:
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(a) The representations and warranties of Parent and
Purchaser set forth herein shall be true and correct in all material respects,
in each case as if such representations and warranties were made at the
Effective Time; and
(b) Parent and Purchaser shall have performed in all
material respects all of their respective obligations and complied in all
material respects with all of their respective agreements and covenants to be
performed or complied with by them under this Agreement at or prior to the
Effective Time.
ARTICLE 7
TERMINATION; AMENDMENT; WAIVER
Section 7.1. TERMINATION. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time whether
before or after approval and adoption of this Agreement by the Company's
stockholders:
(a) by mutual written consent of Parent, Purchaser and
the Company;
(b) by Parent and Purchaser or the Company if (i) any
court of competent jurisdiction in the United States or other United States
federal or state Governmental Entity shall have issued a final order, decree or
ruling, or taken any other final action, restraining, enjoining or otherwise
prohibiting the Merger and such order, decree, ruling or other action is or
shall have become nonappealable or (ii) the Merger has not been consummated by
October 31, 1999 (the "Final Date"); PROVIDED that no party may terminate this
Agreement pursuant to this clause (ii) if such party's failure to fulfill any of
its obligations under this Agreement shall have been the reason that the
Effective Time shall not have occurred on or before said date;
(c) by the Company (i) if the Company has approved a
Superior Proposal in accordance with Section 5.3(b), provided the Company has
complied with all provisions thereof, including the notice provisions therein,
and that it makes simultaneous payment of the Expenses and the Termination Fee
(as defined below); or (ii) if Parent or Purchaser shall have terminated the
Offer or the Offer expires without Parent or Purchaser, as the case may be,
purchasing any Shares pursuant thereto; or (iii) if Parent or Purchaser shall
have breached in any material respect any of its representations, warranties,
covenants or other agreements contained in this Agreement which breach or
failure to perform is incapable of being cured or has not been cured by the
earlier of (x) ten business days following written notice thereof to Parent from
the Company and (y) the scheduled expiration of the Offer; or (iv) if the Offer
shall not have expired or been terminated on or before August 30, 1999; provided
that the Company may not terminate this Agreement pursuant to this Section
7.1(c) if the Company is in material breach of this Agreement.
(d) by Parent and Purchaser: (i) if prior to the purchase
of the Shares pursuant to the Offer, the Company Board shall have withdrawn, or
modified or changed in a
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manner adverse to Parent or Purchaser its approval or recommendation of the
Offer, this Agreement, the Merger, the Company Stock Option or the
Stockholders Agreement or shall have approved a Third Party Acquisition;
provided, that neither Parent nor Purchaser shall be entitled to terminate
this Agreement pursuant to this Section 7.1(d) solely as a result of the
Company or the Company Board making such disclosure to the Company's
stockholders as, in good faith judgment of the Company Board, after receiving
advice from outside counsel, is required under applicable law; or (ii) if
Parent or Purchaser shall have terminated the Offer without Parent or
Purchaser purchasing any Shares thereunder, or (iii) if, due to an occurrence
that if occurring after the commencement of the Offer would result in a
failure to satisfy any of the conditions set forth in Annex I hereto, Parent,
Purchaser, or any of their affiliates shall have failed to commence the Offer
on or prior to five business days following the date of the initial public
announcement of the Offer; or (iv) if there shall have occurred a Third Party
Acquisition; or (v) if the Company, or any of the Company's officers,
directors, employees, representatives or agents, shall take any of the
actions described in the second sentence of Section 5.3(a) hereof, other than
the proviso thereto; or (vi) if the Company shall have breached any of its
representations, warranties, covenants or other agreements contained in this
Agreement which breach or failure to perform is incapable of being cured or
has not been cured by the earlier of (x) ten business days following written
notice thereof to the Company from Parent and (y) the scheduled termination
of the Merger Agreement (except to the extent that the aggregate of all
breaches thereof do not constitute a Material Adverse Effect on the Company
and do not otherwise materially and adversely affect the consideration to be
paid by Purchaser in the Offer or the benefits expected to be received by
Parent under this Agreement); or (vii) if the Offer shall not have expired or
been terminated on or before August 30, 1999; provided that Parent or
Purchaser may not terminate this Agreement pursuant to clause (ii) or (vii)
of this Section 7.1(d) if the Parent or Purchaser is in material breach of
this Agreement.
Section 7.2. EFFECT OF TERMINATION. In the event of the
termination and abandonment of this Agreement pursuant to Section 7.1, this
Agreement shall forthwith become void and have no effect without any liability
on the part of any party hereto or its affiliates, directors, officers or
stockholders other than the provisions of this Section 7.2 and Sections 5.5(c)
and 7.3 hereof. Nothing contained in this Section 7.2 shall relieve any party
from liability for any breach of this Agreement prior to such termination.
Section 7.3. FEES AND EXPENSES.
(a) In the event that this Agreement shall be terminated
pursuant to:
(i) Section 7.1(c)(i) or 7.1(d)(i), (iv), (v)
or (vi);
(ii) Section 7.1(c)(ii) or (iv) or 7.1(d)(ii) or
(vii) and each of the following shall exist or occur,
as the case may be, (y) at the time of termination of
the Offer or (in the case of Section 7.1(d)(vii))
August 30, 1999 there shall be outstanding an offer
by a Third Party to consummate, or a third party
shall have publicly announced (and not
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withdrawn) a plan or proposal with respect to, a
Third Party Acquisition and (z) within nine (9)
months from the date of such termination, a Third
Party Acquisition (provided, however, that for
purposes of this Section 7.3(a)(ii)(z) only,
clause (vi) of the definition of the term Third
Party Acquisition shall not apply to a transaction
in which the composition of a majority of the
Company Board remains unchanged) shall occur or
the Company shall have entered into a definitive
agreement with respect to such a Third Party
Acquisition;
Parent and Purchaser would suffer direct and substantial damages, which damages
cannot be determined with reasonable certainty. To compensate Parent and
Purchaser for such damages the Company shall pay to Parent the amount of Four
Million Dollars ($4,000,000) as liquidated damages immediately upon the
occurrence of the event described in this Section 7.3(a) giving rise to such
damages (the "Termination Fee"). It is specifically agreed that the amount to be
paid pursuant to this Section 7.3(a) represents liquidated damages and not a
penalty. The Company hereby waives any right to set-off or counterclaim against
such amount.
(b) Upon the termination of this Agreement under
circumstances in which the Termination Fee is payable to Purchaser pursuant to
Section 7.3(a), in addition to any other remedies that Parent, Purchaser or
their affiliates may have as a result of such termination, the Company shall
reimburse (up to an aggregate maximum of One Million Dollars ($1,000,000)
Purchaser and Parent, upon submission of one or more statements therefor,
accompanied by reasonable supporting documentation, for the amount of all
documented costs, fees and expenses reasonably incurred by any of them or on
their behalf in connection with this Agreement, the Merger and the consummation
of all transactions contemplated by this Agreement (including filing fees, and
fees payable to printers, counsel and accountants) (the "Expenses").
(c) Except as specifically provided in this Section
7.3, each party shall bear its own expenses in connection with this Agreement
and the transactions contemplated hereby.
Section 7.4. AMENDMENT. This Agreement may be amended by
action taken by the Company, Parent and Purchaser at any time before or after
approval of the Merger by the stockholders of the Company but after any such
approval no amendment shall be made that requires the approval of such
stockholders under applicable law without such approval. This Agreement may be
amended only by an instrument in writing signed on behalf of the parties hereto.
Section 7.5. EXTENSION; WAIVER. At any time prior to the
Effective Time, each party hereto may (i) extend the time for the performance of
any of the obligations or other acts of the other party, (ii) waive any
inaccuracies in the representations and warranties of the other party contained
herein or in any document certificate or writing delivered pursuant hereto or
(iii) waive compliance by the other party with any of the agreements or
conditions
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contained herein. Any agreement on the part of any party hereto to any such
extension or waiver shall be valid only if set forth in an instrument, in
writing, signed on behalf of such party. The failure of any party hereto to
assert any of its rights hereunder shall not constitute a waiver of such
rights.
ARTICLE 8
MISCELLANEOUS
Section 8.1. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES.
The representations and warranties made herein shall not survive beyond the
Effective Time or a termination of this Agreement. This Section 8.1 shall not
limit any covenant or agreement of the parties hereto that by its terms requires
performance after the Effective Time.
Section 8.2. ENTIRE AGREEMENT; ASSIGNMENT. This Agreement
(including the Company Disclosure Schedule and the Letter), (a) constitutes the
entire agreement between the parties hereto with respect to the subject matter
hereof and supersedes all other prior agreements and understandings both written
and oral between the parties with respect to the subject matter hereof and (b)
shall not be assigned by operation of law or otherwise; PROVIDED, HOWEVER, that
Purchaser may assign any or all of its rights and obligations under this
Agreement to any wholly owned subsidiary of Parent, but no such assignment shall
relieve Purchaser of its obligations hereunder if such assignee does not perform
such obligations.
Section 8.3. VALIDITY. If any provision of this Agreement or
the application thereof to any person or circumstance is held invalid or
unenforceable, the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected thereby and to
such end the provisions of this Agreement are agreed to be severable.
Section 8.4. NOTICES. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person, by
facsimile or by registered or certified mail (postage prepaid, return receipt
requested) to each other party as follows:
if to Parent or Purchaser: Cadence Design Systems, Inc.
2655 Seely Road, Bldg. 5
San Jose, CA 95134
Telecopier: 408-944-6855
Attention: General Counsel
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with a copy to: Gibson, Dunn & Crutcher LLP
333 South Grand Avenue
Los Angeles, CA 90071
Telecopier: 213-229-6159
Attention: Andrew E. Bogen
if to the Company to: OrCAD, Inc.
9300 SW Nimbus Avenue
Beaverton, OR 97008
Telecopier: 503-671-9502
Attention: President
with a copy to: Ater Wynne LLP
222 S.W. Columbia Street, Suite 1800
Portland, OR 97201
Telecopier: 503-226-0079
Attention: William C. Campbell
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
Section 8.5. GOVERNING LAW. This Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware
without regard to the principles of conflicts of law thereof.
Section 8.6. DESCRIPTIVE HEADINGS. The descriptive headings
herein are inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.
Section 8.7. PARTIES IN INTEREST. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto and its
successors and permitted assigns and, except as expressly provided herein,
including in Sections 5.8 and 7.2, nothing in this Agreement is intended to or
shall confer upon any other person any rights, benefits or remedies of any
nature whatsoever under or by reason of this Agreement.
Section 8.8. CERTAIN DEFINITIONS. For the purposes of this
Agreement the term:
(a) "affiliate" means (except as otherwise provided
herein) a person that, directly or indirectly, through one or more
intermediaries controls, is controlled by or is under common control with the
first-mentioned person;
(b) "business day" means any day other than a day on
which the NYSE is closed;
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(c) "capital stock" means common stock, preferred stock,
partnership interests, limited liability company interests or other ownership
interests entitling the holder thereof to vote with respect to matters involving
the issuer thereof;
(d) "knowledge" or "known" means, with respect to any
matter in question, the actual knowledge of such matter of any executive
officer of the Company or Parent, as the case may be;
(e) "include" or "including" means "include, without
limitation" or "including, without limitation," as the case may be, and the
language following "include" or "including" shall not be deemed to set forth an
exhaustive list.
(f) "person" means an individual, corporation,
partnership, limited liability company, association, trust, unincorporated
organization or other legal entity including any Governmental Entity; and
(g) "subsidiary" or "subsidiaries" of the Company,
Parent, the Surviving Corporation or any other person means any corporation,
partnership, limited liability company, association, trust, unincorporated
association or other legal entity of which the Company, Parent, the Surviving
Corporation or any such other person, as the case may be (either alone or
through or together with any other subsidiary), owns, directly or indirectly,
50% or more of the capital stock the holders of which are generally entitled to
vote for the election of the Company Board or other governing body of such
corporation or other legal entity.
Section 8.9. PERSONAL LIABILITY. This Agreement shall not
create or be deemed to create or permit any personal liability or obligation on
the part of any direct or indirect stockholder of the Company or Parent or
Purchaser or any officer, director, employee, agent, representative or investor
of any party hereto.
Section 8.10. SPECIFIC PERFORMANCE. The parties hereby
acknowledge and agree that the failure of any party to perform its agreements
and covenants hereunder, including its failure to take all actions as are
necessary on its part to the consummation of the Merger, will cause irreparable
injury to the other parties, for which damages, even if available, will not be
an adequate remedy. Accordingly, each party hereby consents to the issuance of
injunctive relief by any court of competent jurisdiction to compel performance
of such party's obligations and to the granting by any court of the remedy of
specific performance of its obligations hereunder; PROVIDED, HOWEVER, that if a
party hereto is entitled to receive any payment or reimbursement of expenses
pursuant to Section 7.3(a), (b) or (c) it shall not be entitled to specific
performance to compel the consummation of the Merger.
Section 8.11. COUNTERPARTS. This Agreement may be executed
in one or more counterparts, each of which shall be deemed to be an original but
all of which shall constitute one and the same agreement.
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IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be duly executed on its behalf as of the day and year first above
written.
CADENCE DESIGN SYSTEMS, INC.
By: /s/ H. Raymond Bingham
--------------------------------
Name: H. Raymond Bingham
Title: President & CEO
ORCAD, INC.
By: /s/ Michael F. Bosworth
--------------------------------
Name: Michael F. Bosworth
Title: President & CEO
CDSI ACQUISITION CORPORATION
By: /s/ H. Raymond Bingham
--------------------------------
Name: H. Raymond Bingham
Title: President & CEO
<PAGE>
ANNEX I
Conditions to the Offer.
Notwithstanding any other provision of the Offer, Purchaser
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-1(c) promulgated under the
Exchange Act (relating to Parent's obligation to pay for or return tendered
Shares promptly after termination or withdrawal of the Offer), pay for, and
(subject to any such rules or regulations) may delay the acceptance for payment
of any tendered Shares and (except as provided in this Agreement) amend or
terminate the Offer as to any Shares not then paid for if (i) there shall not
have been validly tendered and not withdrawn prior to the expiration of the
Offer a number of shares of Company common stock which represents at least sixty
seven percent (67%) of the aggregate of (i) the number of shares of Company
common stock then outstanding and (ii) the number of shares of Company common
stock that are, or will, prior to the scheduled closing of the Merger, become,
subject to issuance upon the exercise of options (the "Minimum Condition") or
(ii) any applicable waiting period under the HSR Act shall not have expired or
been terminated prior to the expiration of the Offer or all approvals of and
consents to this Agreement, the Company Stock Option Agreement and the
Stockholders Agreement and the transactions contemplated hereby and thereby that
are required under applicable foreign antitrust or competition laws shall not
have been obtained prior to the expiration of the Offer or be in full force and
effect at such expiration or (iii) at any time after the date of this Agreement
and before the time of payment for any such Shares (whether or not any Shares
have theretofore been accepted for payment or paid for pursuant to the Offer),
any of the following events shall occur and be continuing or conditions exists:
(a) there shall be an injunction or other order, decree,
judgment or ruling issued by a Governmental Entity of competent jurisdiction or
a statute, rule, regulation, executive order or other action shall have been
enacted, promulgated or taken by a Governmental Entity of competent jurisdiction
which in any such case (i) restrains or prohibits the making or consummation of
the Offer or the consummation of the Merger or the performance of the other
transactions contemplated by this Agreement, the Company Stock Option or the
Stockholders Agreement, (ii) prohibits or restricts the ownership or operation
by Parent (or any of its affiliates or subsidiaries) of any portion of its or
the Company's business or assets which is material to the business of all such
entities taken as a whole, or compels Parent (or any of its affiliates or
subsidiaries) to dispose of or hold separate any portion of its or the Company's
business or assets which is material to the business of all such entities taken
as a whole, (iii) imposes material limitations on the ability of Parent
effectively to acquire or to hold or to exercise full rights of ownership of the
Shares, including, without limitation, the right to vote the Shares purchased by
Parent on all matters properly presented to the stockholders of the Company or
(iv) imposes any material limitations on the ability of Parent or any of their
respective affiliates or subsidiaries effectively to control in any material
respect the business and operations of the Company and its subsidiaries; or
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(b) this Agreement shall have been terminated by the
Company or Parent in accordance with its terms or any event shall have occurred
which gives Parent or Purchaser the right to terminate this Agreement or not
consummate the Merger; or
(c) there shall have occurred any event that,
individually or when considered together with any other matter, has or has had a
Material Adverse Effect on the Company; or
(d) the representations and warranties of the Company set
forth in this Agreement shall not be true and correct (except to the extent that
the aggregate of all breaches thereof do not constitute a Material Adverse
Effect on the Company and do not otherwise materially and adversely affect the
consideration to be paid by Purchaser in the Offer or the benefits expected to
be received by Parent under this Agreement) in each case as if such
representations and warranties were made at the time of such determination; or
(e) the Company shall have failed to perform in any
material respect any obligation or to comply (except to the extent that the
aggregate of all breaches thereof do not constitute a Material Adverse Effect on
the Company and do not otherwise materially and adversely affect the
consideration to be paid by Purchaser in the Offer or the benefits expected to
be received by Parent under this Agreement) with any agreement or covenant of
the Company to be performed or complied with by it under this Agreement; or
(f) there shall have occurred (i) any general suspension
of, or limitation on prices for, trading in securities on any national
securities exchange or the over-the-counter market (other than a shortening of
trading hours or any coordinated trading halt for less than 24 hours triggered
solely as a result of a specified increase or decrease in a market index), (ii)
a declaration of a banking moratorium or any suspension of payments in respect
of banks in the United States, (iii) any material limitation (whether or not
mandatory) by an government or Governmental Entity, on the extension of credit
by banks or other lending institutions, (iv) a commencement, or a material
acceleration or worsening, of a war or armed hostilities or other national
calamity directly involving the United States and resulting in a significant
disruption of world commerce, or (v) the average of the closing prices of the
Standard & Poor's 500 Index for any twenty (20) consecutive trading days shall
be twenty (20%) percent or more below the closing price of such index as of the
last trading day immediately preceding the date of this Agreement; or
(g) the Company Board (i) shall have withdrawn, or
modified or changed in a manner adverse to Parent or Purchaser (including by
amendment of the Schedule 14D-9) its approval or recommendation of this
Agreement, the Company Stock Option Agreement or the Stockholders Agreement or
the transactions contemplated hereby or thereby, including the Offer or the
Merger, (ii) recommended a Third Party Acquisition or (iii) shall have adopted
any resolution to effect any of the foregoing; provided, that the foregoing
shall not apply solely as a result of the Company or the Company Board making
such disclosure to the Company's stockholders as, in good faith judgment of the
Company Board, after receiving advice from outside counsel, is required under
applicable law; or
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(h) any Person or Group (as defined in Section 13(d)(3)
of the Exchange Act), other than Parent, Purchaser or their affiliates or any
group of which any of them is a member, shall have acquired beneficial ownership
of twenty percent (20%) or more of the outstanding Company common stock; or
(i) any party to the Stockholders Agreement other than
the Purchaser and Parent shall have breached or failed to perform any of its
agreements under such agreement or breached any of its representations and
warranties in such agreement or any such agreement shall not be valid, binding
and enforceable, except for such breaches or failures or failures to be valid,
binding and enforceable that do not materially and adversely affect the benefits
expected to be received by Parent and Purchaser under this Agreement or the
Stockholders Agreement; which, in the reasonable judgment of Parent with respect
to each and every matter referred to above and regardless of the circumstances
giving rise to any such condition, makes it inadvisable to proceed with the
Offer or with such acceptance for payment of or payment for Shares or to proceed
with the Merger; or
(j) there shall not have occurred or been threatened the
loss of one or more of the employee(s) who, substantially concurrently herewith,
are entering into Employment Agreements that would result in a Material Adverse
Effect on the Company, whether pursuant to a breach or anticipated breach, of
any such Employment Agreement, or otherwise.
The foregoing conditions are for the sole benefit of Parent
and may be asserted by Purchaser regardless of the circumstances giving rise to
any such conditions and, subject to the terms of the Merger Agreement, may be
waived by Purchaser in whole or in part at any time and from time to time, in
each case, in the exercise of the good faith judgment of Purchaser and subject
to the terms of this Agreement. The failure by Purchaser at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any such right and
each such right shall be deemed an ongoing right which may be asserted at any
time and from time to time.
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STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT is dated as of June 14, 1999, between Cadence
Design Systems, Inc., a Delaware corporation ("Parent"), CDSI Acquisition
Corporation ("Purchaser") and OrCAD, Inc., a Delaware corporation (the
"Company"). Terms which are capitalized herein, and which are defined in the
Merger Agreement, shall have the meanings therein set forth.
RECITALS
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, Parent, Purchaser and the Company are entering into an Agreement and
Plan of Merger, dated as of the date hereof (the "Merger Agreement"), which
provides for, upon the terms and subject to the conditions set forth therein,
(i) the commencement by Purchaser of a tender offer (the "Offer") for all of the
issued and outstanding shares of common stock, par value $.01 per share, of the
Company (the "Common Stock"), at a price of $13.00 per share, net to the seller
in cash, and (ii) the subsequent merger of Purchaser with and into the Company
(the "Merger").
As a condition to their willingness to enter into the Merger Agreement,
Parent and Purchaser have required that the Company agree, and the Company has
agreed, to enter into this Stock Option Agreement, pursuant to which Parent or
Purchaser, as Parent may designate, shall have the option to purchase shares of
the Common Stock, upon the terms and subject to the conditions provided for
herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements contained in this Stock Option Agreement and the Merger Agreement,
the parties agree as follows:
1. GRANT OF OPTION. Subject to the terms and conditions of this Stock
Option Agreement, the Company hereby grants to Parent or Purchaser, as Parent
may designate, an irrevocable option (the "Option") to purchase:
(a) pursuant to the "Basic Option" referred to herein, 1,863,331
shares of Common Stock (the "Basic Option Shares"), in the manner set forth
below, at an exercise price of $13.00 per share of Common Stock, subject to
adjustment as provided below (the "Option Price"); and
(b) pursuant to the "Top-Up Option" referred to herein, such number
of shares of Common Stock ("the "Top-Up Option Shares"), as shall equal the
lesser of (i) the number of shares which, when added to the shares then
owned by Parent or Purchaser, shall equal 90% of the shares of Common Stock
then outstanding, plus one; and (ii) the number of authorized and unissued
shares of Common Stock. The Top-Up Option shall be exercisable only upon
the condition
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set forth in Section 10(d) following the purchase by Parent or Purchaser
of Shares in the Offer.
2. EXERCISE OF BASIC OPTION.
(a) Subject to the satisfaction or waiver of the conditions set forth
in Section 9 of this Stock Option Agreement, prior to the termination of
this Stock Option Agreement in accordance with its terms, Parent or
Purchaser, as Parent may designate, may exercise the Basic Option, in whole
or in part, at any time or from time to time if the Merger Agreement
becomes terminable under circumstances that would entitle Parent to receive
the Termination Fee pursuant to Section 7.3(a) thereof.
(b) In the event Parent or Purchaser wishes to exercise the Basic
Option, it shall deliver written notice (the "Exercise Notice") to the
Company specifying its intention to exercise the Basic Option, the total
number of Shares it wishes to purchase and a date and time for the closing
of such purchase (a "Closing") not less than one (1) nor more than thirty
(30) business days after the later of (i) the date such Exercise Notice is
given and (ii) the expiration or termination of any applicable waiting
period under the HSR Act.
(c) If prior to the Expiration Date (as defined in Section 12 below)
there shall occur a Third Party Acquisition, or the Company shall have
entered into a definitive agreement with any Third Party for a Third Party
Acquisition, then Parent, in lieu of exercising the Basic Option, shall
have the right at any time thereafter (for so long as the Basic Option is
exercisable under Section 2(a) hereof) to request in writing that the
Company pay, and promptly (but in any event not more than five (5) business
days) after the giving by Parent of such request, the Company shall pay to
Parent, in cancellation of the Basic Option, an amount in cash (the
"Cancellation Amount") equal to (i) the excess over the Option Price of the
greater of (A) the average of the last sales prices of a share of Common
Stock on the Nasdaq National Market System (as reported by the Wall Street
Journal) on the five trading days prior to the date of the Exercise Notice,
and (B) (1) the highest price per share of Common Stock offered to be paid
or paid by any such Third Party pursuant to or in connection with such
Third Party Acquisition or (2) if such Third Party Acquisition consists of
a purchase and sale of assets, the aggregate net consideration offered to
be paid or paid in any such transaction or proposed transaction, after
payment of applicable corporate taxes, divided by the number of shares of
Common Stock then outstanding, multiplied by (ii) the number of Basic
Option Shares then covered by the Basic Option. If all or a portion of the
price per share of Common Stock offered, paid or payable or the aggregate
consideration offered, paid or payable for the stock or assets of the
Company, each as contemplated by the preceding sentence, consists of
noncash consideration, such price or aggregate consideration shall be the
cash consideration, if any, plus the fair market value of the non-cash
consideration as
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determined by the investment bankers of the Company and the investment
bankers of Parent.
(d) Notwithstanding anything to the contrary contained herein, the
economic benefit, if any, which Parent may derive hereunder shall be
limited as follows: (1) in no event shall Parent's Total Payment (as
defined below) exceed seven million eight hundred thousand dollars
($7,800,000) and Parent shall pay any excess over such amount to the
Company, and (2) the Basic Option may not be exercised for a number of
Basic Option Shares as would, as of the date of exercise, result in a
Notional Total Payment (as defined below), together with the actual Total
Payment immediately preceding such exercise, exceeding seven million eight
hundred thousand dollars ($7,800,000). As used herein, (1) "Total Payment"
shall mean the sum (before taxes) of the following: (i) any Cancellation
Amount received by Parent pursuant to Section 2(c) hereof, (ii) (x) the net
cash amounts received by Parent pursuant to the sale, within twelve (12)
months following exercise of the Basic Option, of Basic Option Shares (or
any other securities into which such Basic Option Shares shall be converted
or exchanged) to any unaffiliated party, less (y) the aggregate Basic
Option Price for such shares, (iii) any amounts received by Parent upon
transfer of the Option (or any portion thereof) to any unaffiliated party,
and (iv) the amount actually received by Parent pursuant to Section 7.3(a)
of the Merger Agreement; and (2) "Notional Total Payment" with respect to
any number of Option Shares as to which Parent may propose to exercise the
Option shall be the Total Payment determined as of the date of such
proposed exercise assuming that the Basic Option were exercised on such
date for such number of shares and assuming further that such shares,
together with all other Basic Option Shares held by Parent as of such date,
were sold for cash at the closing market price for the Common Stock as of
the close of business on the preceding trading day (less customary
brokerage commissions). For purposes of this Section 2, references to
Parent shall be deemed to include references to Purchaser or any other
affiliate of Parent.
3. EXERCISE OF TOP-UP OPTION.
(a) Subject to the satisfaction or waiver of the conditions set forth
in Section 10 of this Stock Option Agreement, during the period of 30 days
following the purchase by Purchaser or Parent of Shares pursuant to the
Offer, Parent or Purchaser, as Parent may designate, may exercise the
Top-Up Option.
(b) In the event Parent or Purchaser wishes to exercise the Top-Up
Option, it shall deliver written Notice to the Company, containing the
information and in the manner provided in Section 4 (b).
4. PAYMENT OF OPTION PRICE AND DELIVERY OF CERTIFICATE. Any Closings
under Section 2 or 3 of this Stock Option Agreement shall be held at the
principal executive offices of the Parent, or at such other place as the Company
and Parent may
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agree. At any Closing hereunder, (a) Parent or Purchaser will make payment
to the Company of the aggregate price for the Basic Option Shares being so
purchased by delivery of a certified check, official bank check or wire
transfer of funds pursuant to the Company's instructions payable to the
Company in an amount equal to the product obtained by multiplying the Option
Price by the number of Basic Option Shares to be purchased, (b) Parent or
Purchaser will make payment to the Company of the aggregate price for the
Top-Up Option Shares being so purchased by delivery of Parent's promissory
note, payable in thirty days, with interest at a rate equal to 6% per annum,
and otherwise in form and substance reasonably satisfactory to the Company,
and (c) upon receipt of such payment the Company will deliver to Parent or
its designee a certificate or certificates representing the number of validly
issued, fully paid and non-assessable Basic Option or Top-Up Option Shares so
purchased, in the denominations and registered in such names designated to
the Company in writing by Parent.
5. REGISTRATION AND LISTING OF BASIC OPTION SHARES.
(a) The Company will, if requested by Parent at any time or from time
to time within two (2) years following the exercise of the Basic Option
(the "Registration Period"), in order to permit the sale or other
disposition of the Basic Option Shares that have been acquired by or are
issuable to Parent or Purchaser upon exercise of the Option ("Registrable
Securities"), register under the Securities Act of 1933, as amended (the
"Act"), the offering, sale and delivery, or other disposition, of the
Registrable Securities. Any such Registration Notice must relate to a
number of Registrable Securities equal to at least twenty percent (20%) of
the Basic Option Shares, unless the remaining number of Registrable
Securities is less than such amount, in which case Parent shall be entitled
to exercise its rights hereunder but only for all of the remaining
Registrable Securities (a "Permitted Offering"). The rights of Parent and
Purchaser hereunder shall terminate at such time as Parent shall be
entitled to sell all of the remaining Registrable Securities pursuant to
Rule 144(k) under the Act. The Company will use all reasonable efforts to
qualify any Registrable Securities Parent desires to sell or otherwise
dispose of under applicable state securities or "blue sky" laws; provided,
however, that the Company shall not be required to qualify to do business,
or consent to general service of process, in any jurisdiction by reason of
this provision. Without Parent's prior written consent, no other
securities may be included in any such registration. The Company will use
all reasonable efforts to cause each such registration statement to become
effective, to obtain all consents or waivers of other parties that are
required therefor and to keep such registration statement effective for a
period of ninety (90) days from the day such registration statement first
becomes effective. The obligations of the Company hereunder to file a
registration statement and to maintain its effectiveness may be suspended
for one or more periods not exeeding ninety (90) days in the aggregate if
the Board of Directors of the Company shall have determined in good faith
that the filing of such registration statement or the maintenance of its
effectiveness would require disclosure of nonpublic information that would
materially and adversely affect the
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Company, or the Company is required under the Act to include audited
financial statements for any period in such registration statement and
such financial statements are not yet available for inclusion in such
registration statement. In addition, the Company may satisfy its
obligations with respect to a request hereunder by affording Parent the
opportunity to include the Basic Option Shares subject to such request
in a registration statement referred to in section 5(b) below, provided
that: (i) all such Basic Option Shares are registered thereby; (ii)
such registration statement is filed within sixty (60) days following
Parent's request; and (iii) Parent's right to subsequently request
registration of Basic Option Shares hereunder shall not be reduced as
the result of any such registration. Parent shall be entitled to make
up to two (2) requests under this Section 5(a). For purposes of
determining whether the two (2) requests have been made under this
Section 5(a), only requests relating to a registration statement that
has become effective under the Act will be counted.
(b) If, during the Registration Period, the Company shall propose to
register under the Act the offering, sale and delivery of the Common Stock
for cash for its own account or for any other stockholder of the Company
pursuant to a firm underwriting, it will, in addition to the Company's
other obligations under this Section 5, allow Parent or Purchaser, as the
case may be, the right to participate in such registration provided that
Parent or Purchaser participates in such underwriting; provided, however,
that, (i) if the managing underwriter of such offering advises the Company
in writing that in its opinion the number of shares of the Common Stock
requested to be included in such registration exceeds the number that it
would be in the best interests of the Company to sell in such offering, the
Company will, after fully including therein all shares of Common Stock to
be sold by the Company, include the shares of Common Stock requested to be
included therein by Parent or Purchaser pro rata (based on the number of
shares of Common Stock requested to be included therein) with the shares of
Common Stock requested to be included therein by persons other than the
Company and persons to whom the Company owes a contractual obligation
(other than any director, officer or employee of the Company to the extent
any such person is not currently owed such contractual obligation); and
(ii) if the managing underwriter requires that persons participating in
such underwriting accept "standstill" limitations, prohibiting sales of
Common Stock by such persons for up to 180 days, Parent or Purchaser, as
the case may be, shall be required to agree to such limitations on the same
basis as others participating in such underwriting.
(c) The expenses associated with the preparation and filing of any
registration statement pursuant to this Section 5 and any sale covered
thereby (including any fees related to blue sky qualifications and filing
fees in respect of SEC or the National Association of Securities Dealers,
Inc.) ("Registration Expenses") will be paid by the Company, except for
underwriting discounts or commissions or brokers' fees in respect of shares
of the Common Stock to be sold by Parent or Purchaser and the fees and
disbursements of counsel to Parent or
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Purchaser; provided, however, that the Company will not be required to
pay for any Registration Expenses with respect to such registration if
the registration request is subsequently withdrawn at the request of
Parent or Purchaser unless Parent or Purchaser agrees to forfeit its
right to request one registration; provided further, however, that, if
at the time of such withdrawal Parent or Purchaser has learned of a
material adverse change in the results of operations, condition,
business or prospects of the Company not known to Parent or Purchaser at
the time of the request and has withdrawn the request within a
reasonable period of time following disclosure by the Company to Parent
or Purchaser of such material adverse change, then Parent or Purchaser
shall not be required to pay any of such expenses and will retain all
remaining rights to request registration. Parent or Purchaser will
provide all information reasonably requested by the Company for
inclusion in any registration statement to filed hereunder.
(d) The registration rights granted under this Section 5 are subject
to and are limited by any registration rights previously granted by the
Company, and Parent or Purchaser acknowledges that the registration rights
granted under this Section 5 shall be subject to any such limitations.
(e) In connection with each registration under this Section 5, the
Company shall indemnify and hold each holder of Basic Option Shares
participating in such offering (a "Holder"), its underwriters and each of
their respective affiliates harmless against any and all losses, claims,
damage, liabilities and expenses (including, without limitation,
investigation expenses and fees and disbursements of counsel and
accountants), joint or several, to which such Holder, its underwriters and
each of their respective affiliates may become subject, under the Act or
otherwise, insofar as such losses, claims, damages, liabilities or expenses
(or actions in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in any
registration statement (including any prospectus therein), or any amendment
or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, other
than such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) which arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in written
information furnished by a Holder to the Company expressly for use in such
registration statement.
(f) In connection with any registration statement pursuant to this
Section 5, each Holder agrees to furnish the Company with such information
concerning itself and the proposed sale or distribution as shall reasonably
be required in order to ensure compliance with the requirements of the Act
and shall provide representations and warranties customary for selling
shareholders who are unaffiliated with the Company. In addition, Parent or
Purchaser and each Holder shall indemnify and hold the Company, its
underwriters and each of their
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respective affiliates harmless against any and all losses, claims,
damages, liabilities and expenses (including, without limitation,
investigation expenses and fees and disbursement of counsel and
accountants), joint or several, to which the Company, its underwriters
and each of their respective affiliates may become subject under the Act
or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) arise out of or are based upon
an untrue statement or alleged untrue statement of a material fact
contained in written information furnished by any Holder to the Company
expressly for use in such registration statement; PROVIDED, HOWEVER,
that in no event shall any indemnification amount contributed by a
Holder hereunder exceed the proceeds of the offering received by such
Holder.
(g) Upon the issuance of Basic Option Shares hereunder, the Company
will promptly list such Basic Option Shares with the Nasdaq National Market
System or on such national or other exchange on which the shares of Common
Stock are at the time listed.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to Parent and Purchaser as follows:
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has requisite
power and authority to enter into and perform its obligations under this
Stock Option Agreement.
(b) The execution and delivery of this Stock Option Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of the Company and no other
corporate proceedings on the part of the Company are necessary to
authorized this Stock Option Agreement or to consummate the transactions
contemplated hereby. The Board of Directors of the Company has duly
approved the issuance and sale of the Basic Option Shares and Top-Up Option
Shares, upon the terms and subject to the conditions contained in this
Stock Option Agreement, and the consummation of the transactions
contemplated hereby. This Stock Option Agreement has been duly and validly
executed and delivered by the Company and, assuming this Stock Option
Agreement has been duly and validly authorized, executed and delivered by
Parent and Purchaser, constitutes a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting or relating to creditors' rights generally; the
availability of injunctive relief and other equitable remedies; and
limitations imposed by law on indemnification for liability under federal
securities laws.
(c) The Company has taken all necessary action to authorize and
reserve for issuance and to permit it to issue, and at all times from the
date of this
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Stock Option Agreement through the date of expiration of the Option will
have reserved for issuance upon exercise of the Option, a sufficient
number of authorized shares of Common Stock for issuance upon exercise
of the Option, each of which, upon issuance pursuant to this Stock
Option Agreement and when paid for as provided herein, will be validly
issued, fully paid and nonassessable, and shall be delivered free and
clear of all claims, liens, charges, encumbrances and security interests
(other than those imposed by Parent, Purchaser, its affiliates or by
applicable law).
(d) The execution, delivery and performance of this Stock Option
Agreement by the Company and the consummation by it of the transactions
contemplated hereby except as required by the HSR Act and any material
foreign competition authorities (if applicable), and, with respect to
Section 5 hereof, compliance with the provisions of the Act and any
applicable state securities laws, do not require the consent, waiver,
approval, license or authorization of or result in the acceleration of any
obligation under, or constitute a default under, any term, condition or
provision of any charter or bylaw, or any indenture, mortgage, lien, lease,
agreement, contract, instrument, order, judgment, ordinance, regulation or
decree or any restriction to which the Company or any property of the
Company or its subsidiaries is bound, except where failure to obtain such
consents, waivers, approvals, licenses or authorizations or where such
acceleration or defaults could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company.
7. REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER. Parent and
Purchaser hereby represents and warrants to the Company that:
(a) Each of Parent and Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware, and has requisite power and authority to enter into and perform
its obligations under this Stock Option Agreement.
(b) The execution and delivery of this Stock Option Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of Parent and Purchaser and no
other corporate proceedings on the part of Parent or Purchaser are
necessary to authorize this Stock Option Agreement or to consummate the
transactions contemplated hereby. This Stock Option Agreement has been
duly and validly executed and delivered by Parent and Purchaser and,
assuming this Stock Option Agreement has been duly executed and delivered
by the Company, constitutes a valid and binding obligation of Parent and
Purchaser enforceable against it in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to creditors' rights generally; the availability of
injunctive relief and other equitable remedies; and
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limitations imposed by law on indemnification for liability under
federal securities laws.
(c) Each of Parent and Purchaser is acquiring the Option and will
acquire the Basic Option Shares and the Top-Up Option Shares issuable upon
the exercise thereof for its own account and not with a view to the
distribution or resale thereof in any manner not in accordance with
applicable law.
8. COVENANTS OF PARENT AND PURCHASER. Parent and Purchaser each agrees
not to transfer or otherwise dispose of the Option or the Basic Option or Top-Up
Option Shares, or any interest therein, except that Parent or Purchaser may
transfer or dispose of the Basic Option or Top-Up Option Shares so long as such
transaction is in compliance with the Act and any applicable state securities
law. Parent and Purchaser further agrees to the placement of the following
legend on the certificates) representing the Basic Option or Top-Up Option
Shares (in addition to any legend required under applicable state securities
laws):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
EITHER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY APPLICABLE
STATE LAW GOVERNING THE OFFER AND SALE OF SECURITIES. NO TRANSFER OR OTHER
DISPOSITION OF THESE SHARES, OR OF ANY INTEREST THEREIN, MAY BE MADE EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND SUCH OTHER
STATE LAWS OR PURSUANT TO EXEMPTIONS FROM REGISTRATION UNDER THE ACT, SUCH OTHER
STATE LAWS, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER."
9. HSR COMPLIANCE EFFORTS. Parent and the Company shall take, or cause
to be taken, all reasonable action to consummate and make effective the
transactions contemplated by this Stock Option Agreement, including, without
limitation, reasonable efforts to obtain any necessary consents of third parties
and governmental agencies and the filing by Parent and the Company promptly
after the date hereof of any required HSR Act notification forms and the
documents required to comply with the HSR Act.
10. CERTAIN CONDITIONS. The obligation of the Company to issue Basic
Option Shares and Top-Up Option Shares under this Stock Option Agreement upon
exercise of the Option shall be subject to the satisfaction or waiver of the
following conditions:
(a) Any waiting periods applicable to the Purchaser of the Basic
Option or Top-Up Option Shares by Parent or the Purchaser pursuant to this
Stock Option Agreement under the HSR Act and any material foreign
competition laws shall have expired or been terminated;
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(b) The representations and warranties of Parent and Purchaser made
in Section 7 of this Stock Option Agreement shall be true and correct in
all material respects as of the date of the Closing for the issuance of
such Option Shares; and
(c) No statute, rule or regulation shall be in effect, and no order,
decree or injunction entered by any court of competent jurisdiction or
governmental, regulatory or administrative agency or commission in the
United States shall be in effect which prohibits the exercise of the Option
by Parent or Purchaser or issuance of shares of Common Stock pursuant to
this Stock Option Agreement.
(d) In the case of the Top-Up Option Shares only, (i) Parent or
Purchaser shall have purchased Shares pursuant to the Offer, (ii) the
number of shares of Common Stock then owned by Parent or Purchaser, when
added to the Top-Up Option Shares, shall equal 90% of the shares of Common
Stock then outstanding, plus one, and (iii) Parent or Purchaser shall have
taken all such action as shall be required so that the Merger will be
completed immediately following exercise of the Top-Up Option and issuance
of the Top-Up Option Shares hereunder.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of any
change in the number of issued and outstanding shares of Common Stock by reason
of any stock dividend, stock split, recapitalization, merger, rights offering,
share exchange or other change in the corporate or capital structure of the
Company, Parent or Purchaser shall receive, upon exercise of the Basic Option,
the stock or other securities, cash or property to which it would have been
entitled if it had exercised the Basic Option and had been a holder of record of
shares of Common Stock on the record date fixed for determination of holders of
shares of Common Stock entitled to receive such stock or other securities, cash
or property at the same aggregate price as the aggregate Option Price of the
Basic Option Shares.
12. EXPIRATION. The Option shall expire at the earlier of (i) the
Effective Time (as defined in the Merger Agreement) and (ii) 5:00 p.m.,
California time, on the day that is the twelve (12) month anniversary of the
date on which the Merger Agreement has been terminated in accordance with the
terms thereof (such expiration date is referred to as the "Expiration Date").
13. GENERAL PROVISIONS.
(a) Survival. All of the representations, warranties and covenants
contained herein shall survive a Closing and shall be deemed to have been
made as of the date hereof and as of the date of each Closing.
(b) FURTHER ASSURANCES. If Parent or Purchaser exercises the Option,
or any portion thereof, in accordance with the terms of this Stock Option
Agreement,
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the Company and Parent or Purchaser, as the case may be, will execute
and deliver all such further documents and instruments and use all
reasonable efforts to take all such further action as may be necessary
in order to consummate the transactions contemplated thereby.
(c) SEVERABILITY. It is the desire and intent of the parties that
the provisions of this Stock Option Agreement be enforced to the fullest
extent permissible under the law and public policies applied in each
jurisdiction in which enforcement is sought. Accordingly, in the event
that any provision of this Stock Option Agreement would be held in any
jurisdiction to be invalid, prohibited or unenforceable for any reason,
such provision, as to such jurisdiction, shall be ineffective, without
invalidating the remaining provisions of this Stock Option Agreement or
affecting the validity or enforceability of such provision in any other
jurisdiction. Notwithstanding the foregoing, if such provision could be
more narrowly drawn so as not be invalid, prohibited or unenforceable in
such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn,
without invalidating the remaining provisions of this Stock Option
Agreement or affecting the validity or enforceability of such provision in
any other jurisdiction.
(d) ASSIGNMENT; TRANSFER OF STOCK OPTION. This Stock Option
Agreement shall be binding on and inure to the benefit of the parties
hereto and their respective successors and permitted assigns; PROVIDED,
HOWEVER, that the Company, Parent and Purchaser, without the prior
written consent of the other party, shall not be entitled to assign or
otherwise transfer any of its rights or obligations hereunder and any
such attempted assignment or transfer shall be void; provided, further,
that Parent shall be entitled to assign or transfer this Stock Option
Agreement or any rights hereunder to any wholly-owned subsidiary of
Parent so long as such wholly-owned subsidiary agrees in writing to be
bound by the terms and provisions hereof.
(e) SPECIFIC PERFORMANCE. The parties agree and acknowledge that in
the event of a breach of any provision of this Stock Option Agreement, the
aggrieved party would be without an adequate remedy at law. The parties
therefore agree that in the event of a breach of any provision of this
Stock Option Agreement, the aggrieved party may elect to institute and
prosecute proceedings in any court of competent jurisdiction to enforce
specific performance or to enjoin the continuing breach of such provisions,
as well as to obtain damages for breach of this Stock Option Agreement. By
seeking or obtaining any such relief, the aggrieved party will not be
precluded from seeking or obtaining any other relief to which it may be
entitled.
(f) AMENDMENTS. This Stock Option Agreement may not be modified,
amended, altered or supplemented except upon the execution and delivery of
a written agreement executed by Parent, the Company and Purchaser.
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(g) NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to be
sufficient if contained in a written instrument and shall be deemed given
if delivered personally, telecopied, sent by nationally-recognized,
overnight courier or mailed by registered or certified mail (return receipt
requested), postage prepaid, to the other party at the following addresses
(or such other address for a party as shall be specified by like notice):
if to Parent or Purchaser: Cadence Design Systems, Inc.
2655 Seely Road, Bldg. 5
San Jose, CA 95134
Telecopier: 408-944-6855
Attention: General Counsel
with a copy to: Gibson, Dunn & Crutcher LLP
333 South Grand Avenue
Los Angeles, CA 90071
Telecopier: 213-229-6159
Attention: Andrew E. Bogen
if to the Company to: OrCAD, Inc.
9300 SW Nimbus Avenue
Beaverton, OR 97008
Telecopier: 503-671-9502
Attention: President
with a copy to: Ater & Wynne LLP
222 S.W. Columbia Street, Suite 1800
Portland, OR 97201
Telecopier: 503-226-0079
Attention: William C. Campbell
(h) HEADINGS. The headings contained in this Stock Option Agreement
are for reference purposes only and shall not affect in any way the meaning
or interpretation of this Stock Option Agreement.
(i) COUNTERPARTS. This Stock Option Agreement may be executed in one
or more counterparts, each of which shall be an original, but all of which
together shall constitute one and the same agreement.
(j) GOVERNING LAW. This Stock Option Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware without
regard to the principles of conflicts of law thereof.
(k) ENTIRE AGREEMENT. This Stock Option Agreement and the Merger
Agreement, and any documents and instruments referred to herein and
therein,
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constitute the entire agreement between the parties hereto and thereto
with respect to the subject matter hereof and thereof and supersede all
other prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof and
thereof. Nothing in this Stock Option Agreement shall be construed to
give any person other than the parties to this Stock Option Agreement or
their respective successors or permitted assigns any legal or equitable
right, remedy or claim under or in respect of this Stock Option
Agreement or any provision contained herein.
(m) EXPENSES. Except as otherwise provided in this Stock Option
Agreement, each party shall pay its own expenses incurred in connection
with this Stock Option Agreement and the transactions contemplated hereby.
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IN WITNESS WHEREOF, the parties have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
CADENCE DESIGN SYSTEMS, INC.
By: /s/ H. Raymond Bingham
-----------------------------------------
Name: H. Raymond Bingham
---------------------------------------
Title: President & CEO
--------------------------------------
CDSI ACQUISITION CORPORATION
By: /s/ H. Raymond Bingham
-----------------------------------------
Name: H. Raymond Bingham
---------------------------------------
Title: President & CEO
--------------------------------------
OrCAD, INC.
By: /s/ Michael F. Bosworth
-----------------------------------------
Name: Michael F. Bosworth
---------------------------------------
Title: President & CEO
--------------------------------------
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STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT, dated as of June 14, 1999 (the
"Agreement"), among Cadence Design Systems, Inc., a Delaware corporation
("Parent"), CDSI Acquisition Corporation, a Delaware corporation and a wholly
owned subsidiary of Parent ("Purchaser"), and the stockholders of OrCAD, Inc., a
Delaware corporation (the "Company"), whose names appear on Schedule I hereto
(collectively, the "Stockholders"). Terms which are capitalized herein, and
which are defined in the Merger Agreement, shall have the meanings therein set
forth.
W I T N E S S E T H:
WHEREAS, contemporaneously with the execution and delivery of
this Agreement, Parent, Purchaser and the Company are entering into an Agreement
and Plan of Merger, dated as of the date hereof (the "Merger Agreement"), which
provides for, upon the terms and subject to the conditions set forth therein,
(i) the commencement by Purchaser of a tender offer (the "Offer") for all of the
issued and outstanding shares of common stock, par value $.01 per share, of the
Company (the "Shares"), at a price of $13.00 per share, net to the seller in
cash, and (ii) the subsequent merger of Purchaser with and into the Company (the
"Merger");
WHEREAS, as of the date hereof, each Stockholder owns
(beneficially and of record) the number of Shares set forth opposite such
Stockholder's name on Schedule I hereto (all Shares so owned and which may
hereafter be acquired by such Stockholder prior to the termination of this
Agreement, whether upon the exercise of options or by means of purchase,
dividend, distribution or otherwise, being referred to herein as such
Stockholder's "Owned Shares");
WHEREAS, as a condition to their willingness to enter into the
Merger Agreement, Parent and Purchaser have required that the Stockholders enter
into this Agreement; and
WHEREAS, in order to induce Parent and Purchaser to enter into
the Merger Agreement, the Stockholders are willing to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, Parent, Purchaser and each of the Stockholders, severally and not
jointly, hereby agree as follows:
<PAGE>
ARTICLE I.
TRANSFER AND VOTING OF SHARES;
AND OTHER COVENANTS OF THE STOCKHOLDERS
SECTION 1.1. VOTING OF SHARES. From the date hereof until the
earliest to occur of (x) termination of this Agreement pursuant to Section 6.2
hereof, (y) the expiration of the Stock Option with respect to such
Stockholder's Owned Shares and (z) the closing of any exercise of such Stock
Option (the "Term"), at any meeting of the stockholders of the Company, however
called, and in any action by consent of the stockholders of the Company, each
Stockholder shall vote its Owned Shares (i) in favor of the Merger and the
Merger Agreement (as amended from time to time), (ii) against any proposal for a
Third Party Acquisition and against any proposal for action or agreement that
would result in a breach of any covenant, representation or warranty or any
other obligation or agreement of the Company under the Merger Agreement or which
is reasonably likely to result in any of the conditions of the Company's
obligations under the Merger Agreement not being fulfilled, any change in the
directors of the Company, any change in the present capitalization of the
Company or any amendment to the Company's Restated Certificate of Incorporation
or By-Laws, any other material change in the Company's corporate structure or
business, or any other action which could reasonably be expected to impede,
interfere with, delay, postpone or materially adversely affect the transactions
contemplated by the Merger Agreement or the likelihood of such transactions
being consummated and (iii) in favor of any other matter necessary for
consummation of the transactions contemplated by the Merger Agreement which is
considered at any such meeting of stockholders and in connection therewith to
execute any documents which are necessary or appropriate in order to effectuate
the foregoing, including the ability for Purchaser or its nominees to vote such
Owned Shares directly.
SECTION 1.2. NO INCONSISTENT ARRANGEMENTS. Except as
contemplated by this Agreement and the Merger Agreement, each Stockholder shall
not during the Term (i) transfer (which term shall include, without limitation,
any sale, assignment, gift, pledge, hypothecation or other disposition), or
consent to any transfer of, any or all of such Stockholder's Owned Shares or any
interest therein, or create or, except as set forth on Schedule 1.2 hereto,
permit to exist any Encumbrance (as defined below) on such Owned Shares, (ii)
enter into any contract, option or other agreement or understanding with respect
to any transfer of any or all of such Owned Shares or any interest therein,
(iii) grant any proxy, power-of- attorney or other authorization in or with
respect to such Owned Shares, (iv) deposit such Owned Shares into a voting trust
or enter into a voting agreement or arrangement with respect to such Owned
Shares, or (v) take any other action that would in any way restrict, limit or
interfere with the performance of its obligations hereunder or the transactions
contemplated hereby or by the Merger Agreement.
SECTION 1.3. PROXY. Each Stockholder hereby revokes any and
all prior proxies or powers of attorney in respect of any of such Stockholder's
Owned Shares and constitutes and appoints Purchaser and Parent, or any nominee
of Purchaser and Parent, with full power of substitution and resubstitution, at
any time during the Term, as its true and lawful attorney and proxy (its
"Proxy"), for and in its name, place and stead, to demand that the Secretary of
the
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Company call a special meeting of the stockholders of the Company for the
purpose of considering any matter referred to in Section 1.1 (if permitted
under the Company's Restated Certificate of Incorporation or By-Laws) and to
vote each of such Owned Shares as its Proxy, at every annual, special,
adjourned or postponed meeting of the stockholders of the Company, including
the right to sign its name (as stockholder) to any consent, certificate or
other document relating to the Company that Delaware Law may permit or
require as provided in Section 1.1.
THE FOREGOING PROXY AND POWER OF ATTORNEY ARE IRREVOCABLE AND
COUPLED WITH AN INTEREST THROUGHOUT THE TERM.
SECTION 1.4. WAIVER OF APPRAISAL RIGHTS. Each Stockholder
hereby waives any rights of appraisal or rights to dissent from the Merger.
SECTION 1.5. STOP TRANSFER. Each Stockholder shall not request
that the Company register the transfer (book-entry or otherwise) of any
certificate or uncertificated interest representing any of such Stockholder's
Owned Shares, unless such transfer is made in compliance with this Agreement
(including the provisions of Article III hereof).
SECTION 1.6. NO SOLICITATION. During the Term, each
Stockholder shall not, nor shall it permit or authorize any of its officers,
directors, employees, agents or representatives (collectively, the
"Representatives") to, (i) solicit or initiate, or encourage, directly or
indirectly, any inquiries regarding or the submission of, any proposal for a
Third Party Acquisition, (ii) participate in any discussions or negotiations
regarding, or furnish to any Person any information or data with respect to, or
take any other action to knowingly facilitate the making of any proposal that
constitutes, or may reasonably be expected to lead to, any proposal for a Third
Party Acquisition or (iii) enter into any agreement with respect to any proposal
for a Third Party Acquisition or approve or resolve to approve any proposal for
a Third Party Acquisition. Upon execution of this Agreement, each Stockholder
shall, and it shall cause its Representatives to, immediately cease any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing. Each Stockholder will promptly notify
Parent of the existence of any proposal, discussion, negotiation or inquiry
received by such Stockholder, and each Stockholder will immediately communicate
to Parent the terms of any proposal, discussion, negotiation or inquiry which it
may receive (and will promptly provide to Parent copies of any written materials
received by it in connection with such proposal, discussion, negotiation or
inquiry) and the identity of the Person making such proposal or inquiry or
engaging in such discussion or negotiation.
ARTICLE II.
TENDER OF SHARES
SECTION 2.1. TENDER. Each Stockholder shall validly tender (or
cause the record owner of such shares to validly tender) such Stockholder's
Owned Shares pursuant to and in accordance with the terms of the Offer, not
later than the fifth business day after commencement of the Offer pursuant to
Section 1.1 of the Merger Agreement and Rule 14d-2 under the Exchange Act, and
not thereafter withdraw such tender. Each Stockholder hereby
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acknowledges and agrees that Parent's and Purchaser's obligation to accept
for payment and pay for such Stockholder's Owned Shares in the Offer is
subject to the terms and conditions of the Offer. For all its Shares validly
tendered in the Offer and not withdrawn, each Stockholder will be entitled to
receive the highest price paid by Purchaser pursuant to the Offer.
SECTION 2.2. CERTAIN WARRANTIES. Without limiting the
generality or effect of any other term or condition of the Offer, the transfer
by Stockholder of the Owned Shares to Purchaser in the Offer shall pass to and
unconditionally vest in Purchaser good and valid title to the Owned Shares, free
and clear of all Encumbrances whatsoever.
SECTION 2.3. DISCLOSURE. Each Stockholder hereby authorizes
Parent and Purchaser to publish and disclose in the Offer Documents and, if
approval of the Company's stockholders is required under applicable law, the
Proxy Statement (including all documents and schedules filed with the SEC), its
identity and ownership of the Shares and the nature of its commitments,
arrangements and understandings under this Agreement.
ARTICLE III
OPTION
SECTION 3.1. GRANT OF OPTION. In order to induce Parent and
Purchaser to enter into the Merger Agreement, each Stockholder hereby grants to
Parent or Purchaser, as Parent may designate (the "Optionee"), an irrevocable
option (each such option, a "Stock Option") to purchase all, but not less than
all, of such Stockholder's Owned Shares at a purchase price per share equal to
the higher of (i) $13.00, and (ii) if the Offer is consummated, the highest
price paid by Purchaser pursuant to the Offer (the "Exercise Price").
SECTION 3.2. RIGHT TO EXERCISE. Each Stock Option may be
exercised by the Optionee if (i) the Merger Agreement becomes terminable under
circumstances that would entitle Parent to receive the Termination Fee pursuant
to Section 7.3(a) of the Merger Agreement, or (ii) the Offer is consummated but
(due to failure by the Stockholder who has granted such Stock Option to tender
validly and not withdraw) Purchaser has not accepted for payment or paid for all
such Stockholder's Owned Shares.
SECTION 3.3. CONDITIONS. Each Stock Option (i) shall become
exercisable, in whole but not in part, on the date on which the first event
referred to in Section 3.2 shall occur or, if later, the date on which (A) all
waiting periods under the HSR Act required for the purchase of the Owned Shares
upon such exercise shall have expired or been waived and all approvals of and
consents to such purchase required under applicable foreign antitrust and
competition laws shall have been obtained and be in full force and effect and
(B) there shall not be in effect any preliminary or final injunction or other
order issued by any court or governmental, administrative or regulatory agency
or authority prohibiting the exercise of such Stock Option pursuant to this
Agreement, and (ii) shall remain exercisable until the date which is ninety (90)
days following the first such date on which such Stock Option becomes
exercisable.
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SECTION 3.4. PAYMENT AND DELIVERY. If the Optionee wishes to
exercise a Stock Option it shall, prior to the expiration thereof, send a
written notice to Stockholder identifying the time and place for the closing of
such purchase at least three but not more than 10 business days prior to such
closing. On the date of such closing, Parent shall deliver the Exercise Price
multiplied by the total number of Owned Shares being acquired against delivery
by Stockholders of all certificates representing such Owned Shares, duly
endorsed or accompanied by appropriate instruments of transfer. Upon such
delivery by the Stockholders, good and valid title to such Owned Shares shall
pass to and unconditionally vest in Purchaser, free and clear of all
Encumbrances whatsoever.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each Stockholder hereby represents and warrants to Parent and
Purchaser as follows:
SECTION 4.1. DUE AUTHORIZATION, ETC. Such Stockholder has all
requisite power and authority to execute, deliver and perform this Agreement, to
appoint Purchaser and Parent as its Proxy and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement,
the appointment of Purchaser and Parent as Stockholder's Proxy and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary action on the part of Stockholder. This Agreement has been duly
executed and delivered by or on behalf of such Stockholder and constitutes a
legal, valid and binding obligation of such Stockholder, enforceable against
such Stockholder in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, moratorium or other similar laws and except
that the availability of equitable remedies, including specific performance, is
subject to the discretion of the court before which any proceeding for such
remedy may be brought. There is no beneficiary or holder of a voting trust
certificate or other interest of any trust of which such Stockholder is trustee
whose consent is required for the execution and delivery of this Agreement of
the consummation by such Stockholder of the transactions contemplated hereby.
SECTION 4.2. NO CONFLICTS; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by such
Stockholder does not, and the performance of this Agreement by such Stockholder
will not, (i) conflict with or violate any trust agreement or other similar
documents relating to any trust of which such Stockholder is trustee, (ii)
conflict with or violate any law applicable to such Stockholder or by which such
Stockholder or any of such Stockholder's properties is bound or affected or
(iii) result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any assets of such Stockholder, including,
without limitation, such Stockholder's Owned Shares, pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which such Stockholder is a party
or by which such Stockholder or
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any of such Stockholder's assets is bound or affected, except, in the case of
clauses (ii) and (iii), for any such breaches, defaults or other occurrences
that would not prevent or delay the performance by such Stockholder of such
Stockholder's obligations under this Agreement.
(b) The execution and delivery of this Agreement by such
Stockholder does not, and the performance of this Agreement by such Stockholder
will not, require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental or regulatory authority (other than
any necessary filing under the HSR Act or approvals or consents required under
applicable foreign antitrust or competition laws or the Exchange Act), domestic
or foreign, except where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
prevent or delay the performance by such Stockholder of such Stockholder's
obligations under this Agreement.
SECTION 4.3. TITLE TO SHARES. Such Stockholder is the sole
record and beneficial owner of its Owned Shares, free and clear of any pledge,
lien, security interest, mortgage, charge, claim, equity, option, proxy, voting
restriction, voting trust or agreement, understanding, arrangement, right of
first refusal, limitation on disposition, adverse claim of ownership or use or
encumbrance of any kind ("Encumbrances"), other than as set forth on Schedule
1.2 hereto and other than restrictions imposed by the securities laws or
pursuant to this Agreement and the Merger Agreement.
SECTION 4.4. NO FINDER'S FEES. No broker, investment banker,
financial advisor or other person is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
such Stockholder. Such Stockholder, on behalf of itself and its affiliates,
hereby acknowledges that it is not entitled to receive any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated hereby or by the Merger Agreement.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF
PARENT AND PURCHASER
Parent and Purchaser hereby, jointly and severally, represent
and warrant to the Stockholders as follows:
SECTION 5.1. DUE ORGANIZATION, AUTHORIZATION, ETC. Purchaser
and Parent are duly organized, validly existing and in good standing under the
laws of their jurisdiction of incorporation. Purchaser and Parent have all
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby by each of Purchaser and Parent have been duly authorized by all
necessary corporate action on the part of Purchaser and Parent, respectively.
This Agreement has been duly executed and delivered by each of Purchaser and
Parent and constitutes a legal, valid and binding obligation of each of
Purchaser and Parent, enforceable against Purchaser and Parent in
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accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, moratorium or other similar laws and except that the
availability of equitable remedies, including specific performance, is
subject to the discretion of the court before which any proceeding for such
remedy may be brought.
SECTION 5.2. INVESTMENT INTENT. The Optionee is acquiring each
Stock Option and, if and when it exercises such Stock Option, will be acquiring
the Owned Shares purchased upon the exercise thereof for its own account and not
with a view to distribution or resale in any manner which would be in violation
of the Securities Act.
ARTICLE VI.
MISCELLANEOUS
SECTION 6.1. DEFINITIONS. Terms used but not otherwise
defined in this Agreement have the meanings ascribed to such terms in the Merger
Agreement.
SECTION 6.2. TERMINATION. This Agreement shall terminate and
be of no further force and effect (i) by the written mutual consent of the
parties hereto or (ii) automatically and without any required action of the
parties hereto upon the Effective Time. No such termination of this Agreement
shall relieve any party hereto from any liability for any breach of this
Agreement prior to termination.
SECTION 6.3. FURTHER ASSURANCE. From time to time, at another
party's request and without consideration, each party hereto shall execute and
deliver such additional documents and take all such further action as may be
necessary or desirable to consummate and make effective, in the most expeditious
manner practicable, the transaction contemplated by this Agreement.
SECTION 6.4. CERTAIN EVENTS. Each Stockholder agrees that this
Agreement and such Stockholder's obligations hereunder shall attach to such
Stockholder's Owned Shares and shall be binding upon any person or entity to
which legal or beneficial ownership of such Owned Shares shall pass, whether by
operation of law or otherwise, including, without limitation, such Stockholder's
heirs, guardians, administrators, or successors. Notwithstanding any transfer of
Owned Shares, the transferor shall remain liable for the performance of all its
obligations under this Agreement.
SECTION 6.5. NO WAIVER. The failure of any party hereto to
exercise any right, power, or remedy provided under this agreement or otherwise
available in respect hereof at law or in equity, or to insist upon compliance by
any other party hereto with its obligations hereunder, any custom or practice of
the parties at variance with the terms hereof shall not constitute a waiver by
such party of its right to exercise any such or other right, power or remedy or
to demand such compliance.
SECTION 6.6. SPECIFIC PERFORMANCE. Each Stockholder
acknowledges that if such Stockholder fails to perform any of its obligations
under this Agreement immediate and
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irreparable harm or injury would be caused to Parent and Purchaser for which
money damages would not be an adequate remedy. In such event, each
Stockholder agrees that each of Parent and Purchaser shall have the right, in
addition to any other rights it may have, to specific performance of this
Agreement. Accordingly, if Parent or Purchaser should institute an action or
proceeding seeking specific enforcement of the provisions hereof, each
Stockholder hereby waives the claim or defense that Parent or Purchaser, as
the case may be, has an adequate remedy at law and hereby agrees not to
assert in any such action or proceeding the claim or defense that such a
remedy at law exists. Each Stockholder further agrees to waive any
requirements for the securing or posting of any bond in connection with
obtaining any such equitable relief.
SECTION 6.7. NOTICE. All notices and other communications
given or made pursuant hereto shall be in writing and shall be deemed to have
been duly given or made (i) as of the date delivered or sent by facsimile if
delivered personally or by facsimile, and (ii) on the third business day after
deposit in the U.S. mail, if mailed by registered or certified mail (postage
prepaid, return receipt requested), in each case to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice, except that notices of changes of address shall be effective upon
receipt):
(a) If to Parent or Purchaser: Cadence Design Systems, Inc.
2655 Seely Road, Bldg. 5
San Jose, CA 95134
Telecopier: 408-944-6855
Attention: General Counsel
with a copy to: Gibson, Dunn & Crutcher LLP
333 South Grand Avenue
Los Angeles, CA 90071
Telecopier: 213-229-6159
Attention: Andrew E. Bogen
(b) If to a Stockholder, at the address set forth below
such Stockholder's name on Schedule I hereto.
SECTION 6.8. EXPENSES. Except as otherwise expressly set forth
herein, all fees, costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such fees, costs and expenses.
SECTION 6.9. HEADINGS. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
SECTION 6.10. SEVERABILITY. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner adverse to any party. Upon such determination that any term or other
provision is
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invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the
end that transactions contemplated hereby are fulfilled to the maximum extent
possible.
SECTION 6.11. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES.
This Agreement constitutes the entire agreement and supersede any and all other
prior agreements and undertakings, both written and oral, among the parties, or
any of them, with respect to the subject matter hereof, and this Agreement is
not intended to confer upon any other person any rights or remedies hereunder.
SECTION 6.12. ASSIGNMENT. This Agreement shall not be
assigned by operation of law or otherwise.
SECTION 6.13. GOVERNING LAW. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Delaware
applicable to contracts executed in and to be performed entirely within that
State.
SECTION 6.14. AMENDMENT. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
SECTION 6.15. WAIVER. Any party hereto may (a) extend the
time for the performance of any of the obligations or other acts of the other
parties hereto, (b) waive any inaccuracies in the representations and warranties
of the other parties hereto contained herein or in any document delivered
pursuant hereto and (c) waive compliance by the other parties hereto with any of
their agreements or conditions contained herein. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only as against such
party and only if set forth in an instrument in writing signed by such party.
The failure of any party hereto to assert any of its rights under this Agreement
or otherwise shall not constitute a waiver of those rights.
SECTION 6.16. COUNTERPARTS. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which shall constitute one and the same agreement.
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IN WITNESS WHEREOF, Parent, Purchaser and the Stockholders
have caused this Agreement to be executed as of the date first written above.
CADENCE DESIGN SYSTEMS, INC.
By: /s/ H. Raymond Bingham
-------------------------------
Name: H. Raymond Bingham
-----------------------------
Title: President & CEO
----------------------------
CDSI ACQUISITION CORPORATION
By: /s/ H. Raymond Bingham
-------------------------------
Name: H. Raymond Bingham
-----------------------------
Title: President & CEO
----------------------------
/s/ Wolfram H. Blume
-------------------------
Wolfram H. Blume
/s/ David Nierenberg
--------------------------
David Nierenberg, an individual
THE D3 FAMILY FUND, L.P.
By: Nierenberg Investment Management
Company, Inc., as Its General
Partner
By: /s/ David Nierenberg
----------------------------
Name: David Nierenberg
Title: President
/s/ Michael F. Bosworth
------------------------------
Michael F. Bosworth
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Schedule I
<TABLE>
<CAPTION>
NAME AND ADDRESS OF STOCKHOLDER NUMBER OF SHARES OWNED
<S> <C>
Wolfram H. Blume
15 Bawley Street 1,218,276
Laguna Niguel, CA 92677
David Nierenberg 64,475
19605 N.E. 8th Street
Camas, Washington 98607
The D3 Family Fund, L.P. 406,900
19605 N.E. 8th Street
Camas, Washington 98607
Michael F. Bosworth
OrCAD, Inc. 68,417
9300 S.W. Nimbus Avenue
Beaverton, OR 97008
Total 1,758,068
</TABLE>
