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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
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SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(D)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
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ORCAD, INC.
(NAME OF SUBJECT COMPANY)
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ORCAD, INC.
(NAME OF PERSON FILING STATEMENT)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
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685568 10 7
(CUSIP NUMBER OF CLASS OF SECURITIES)
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MICHAEL F. BOSWORTH
CHAIRMAN OF THE BOARD,
CHIEF EXECUTIVE OFFICER AND PRESIDENT
ORCAD, INC.
9300 S.W. NIMBUS AVENUE
BEAVERTON, OR 97008
(503) 671-9500
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS
ON BEHALF OF THE PERSON FILING THIS STATEMENT)
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COPIES TO:
WILLIAM C. CAMPBELL, ESQ.
BRENDA L. MELTEBEKE, ESQ.
ATER WYNNE LLP
222 S.W. COLUMBIA STREET, SUITE 1800
PORTLAND, OR 97201
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INTRODUCTION
This Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule
14D-9") relates 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 issued and
outstanding Shares (as hereinafter defined) of OrCAD, Inc., a Delaware
corporation (the "Company").
ITEM 1. SECURITY AND SUBJECT COMPANY
The name of the subject company is OrCAD, Inc. The address of the principal
executive office of the Company is 9300 S.W. Nimbus Avenue, Beaverton, OR 97008.
The title of the class of equity securities to which this Schedule 14D-9 relates
is the Company's common stock, par value $0.01 per share.
ITEM 2. TENDER OFFER OF THE BIDDER
This Schedule 14D-9 relates to the tender offer disclosed in the Schedule
14D-1, dated June 18, 1999 (the "Schedule 14D-1"), filed with the Securities and
Exchange Commission (the "Commission") by Cadence and Purchaser, relating to an
offer by Purchaser to purchase all of the issued and outstanding shares (the
"Shares") of common stock, $.01 par value per share of the Company (the "Company
Common Stock"), for an amount equal to $13.00 per Share, net to the seller in
cash, without interest (the "Offer Price"), 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 with the
Offer to Purchase, as amended or supplemented from time to time, constitute the
"Offer"), copies of which are filed as Exhibits (a)(1) and (a)(2) hereto, and
are incorporated herein by reference in their entirety. As set forth in the
Schedule 14D-1, the principal executive office of Cadence and Purchaser is
located at 2655 Seely Road, Building 5, San Jose, CA 95134.
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. At the effective time of the Merger (the "Effective Time"), 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), will be converted into the
right to receive the Offer Price, net to the holder in cash, without interest.
The Offer is conditioned upon, among other things, (1) there being validly
tendered by the Expiration Date (as defined in the Offer to Purchase) 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 the Offer to Purchase under the caption
"THE TENDER OFFER--18. Certain Conditions of the Offer."
The Merger Agreement and the Offer are described in the Offer to Purchase
under the captions "INTRODUCTION," and "THE TENDER OFFER--1. Terms of the Offer;
Expiration Date," "THE TENDER OFFER--4. Acceptance for Payment and Payment for
Shares," "THE TENDER OFFER--
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8. Certain Information Concerning Cadence and Purchaser," "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,"
all of which are incorporated herein by reference.
ITEM 3. IDENTITY AND BACKGROUND
(a) The name and business address of the Company, which is the person filing
this Schedule 14D-9, are set forth in Item 1 of this Schedule 14D-9.
(b) The information contained in the Offer to Purchase under the captions
"INTRODUCTION," "THE TENDER OFFER--1. Terms of the Offer; Expiration Date," "THE
TENDER OFFER--
4. Acceptance for Payment and Payment for Shares," "THE TENDER OFFER--11.
Contacts with the Company; Background of the Offer and the Merger," "THE TENDER
OFFER--8. Certain Information Concerning Cadence and Purchaser," "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.
EMPLOYMENT AGREEMENTS
Certain of the Company's executive officers, including Michael F. Bosworth,
P. David Bundy, James M. Plymale, Philip J. Kilcoin, William E. Cibulsky, Graham
Sheldon, Stuart A. Harrington and Donald G. Tannenbaum, have entered into
agreements with the Company and with Cadence, contingent upon the closing of the
Merger, which agreements will supercede and replace the Employment Agreements
(as defined below). For each such officer, three agreements have been signed: an
employment letter providing for a salary, certain performance-based bonuses,
certain retention-based bonuses, and stock options; a Noncompetition Agreement,
prohibiting solicitation of Cadence's or the Company's employees or customers
and prohibiting competition in the area of field programmable gate array or
printed circuit board design during the term of employment and for a period of
one year afterward; and an Employee Proprietary Information and Inventions
Agreement, providing for protection of Cadence's intellectual property. In
respect of stock options, for each affected officer, 20% of the relevant option
grant vests on the first anniversary of employment with Cadence, and the
remainder vests monthly thereafter over a period of 48 months.
STOCK 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, 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
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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.
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.
COMPANY BOARD MEMBER; FINANCIAL ADVISOR
John C. Savage, a member of the Board of Directors of the Company (the
"Company Board"), is a Managing Director of Alliant Partners ("Alliant"). The
Company retained Alliant to act as financial advisor in the negotiation of the
Merger, the Merger Agreement and the Offer, and in the preparation of the
fairness opinion. The Company agreed to pay Alliant customary fees in connection
with its performance of such services, as well as to reimburse Alliant for its
reasonable expenses and to indemnify Alliant and certain related persons against
certain liabilities arising out of such engagement. Mr. Savage consequently
abstained from voting on any matters connected to the Merger, the Merger
Agreement or the Offer.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
(a) Recommendation of the Board of Directors.
At a meeting held on June 14, 1999, the Company Board unanimously (with Mr.
Savage abstaining) (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 in the Offer to
Purchase) 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 thereunder.
The Board recommends to the Company's stockholders that they accept the
Offer and tender their Shares pursuant to the Offer.
A letter to the Company's stockholders communicating the recommendation of
the Board and a press release announcing the execution of the Merger Agreement
are filed herewith as Exhibits (a)(5) and (a)(3) hereto, are incorporated herein
by reference in their entirety.
(b) Background of the Offer; Reasons for Recommendation.
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BACKGROUND
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 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 3, 1999, the Company Board met telephonically to discuss various
matters, including the status of the discussions between the Company's
management and Cadence's management.
On May 13, 1999, Mr. Bosworth, Mr. Plymale, Mr. Bundy, and William E.
Cibulsky, the Company's Senior Vice President of Worldwide Sales, met in San
Jose with Mr. Bingham, Ms. McCarthy, Mr. DeMaria, John Olsen, Cadence's
President-Design Realization Group and Corporate Development, and Shane Robison,
Cadence's President-Design Productivity Group and identified areas for further
investigation of synergies and the potential for agreement by each party.
On May 20, 1999, Mr. DeMaria and other representatives of Cadence met in
Beaverton with Mr. Bosworth, Mr. Plymale, Mr. Kilcoin, Mr. Cibulsky, Stuart
Harrington, the Company's Vice President, Graham Sheldon, the Company's Vice
President of Operations, and Bill Robertson, the Company's Engineering Manager
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.
On May 24, 1999, Mr. Savage, Mr. Bosworth and Mr. Bundy met in Palo Alto to
discuss the synergies to be expected in a merger; projected market values of the
Company's business; and the projected value of a combined company.
On May 26, 1999, the Company Board met telephonically to be briefed on the
status of the discussions between the Company's management and Cadence's
management; to review the potential for a transaction; and to establish
guidelines for minimum valuations.
On May 27, 1999, the parties met again. Mr. Olsen, Mr. Robison, Mr. Bingham,
Mr. DeMaria, Ms. McCarthy, William Porter, Cadence's Chief Financial Officer and
Senior Vice President, Michael Casey, Cadence's Vice President and Associate
General Counsel, and other representatives of Cadence, 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, Mr. Robertson and Mr. Savage.
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On May 28, 1999, Mr. Olsen, 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.
During the afternoon of May 28, 1999, the Company Board met telephonically
to review the results of the previous day's and the morning's conversations with
representatives of Cadence, and confirmed they were not interested in a
transaction at the price suggested by Cadence.
During the following week, the parties exchanged additional due diligence
information.
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 legal and
accounting due diligence and to negotiate the terms of a definitive merger
agreement. Alliant also prepared analyses underlying its fairness opinion.
From June 11 through June 14, 1999, representatives of Cadence met with
various executives and senior employees of the Company to discuss possible
employment with Cadence in the event of a merger.
On June 14, 1999, the Company Board met telephonically and the proposed
transaction was presented. At the meeting, the Company Board engaged in a
lengthy discussion concerning the structure of the transaction and of the
process involved and of the Company's recent market history, all in the context
of satisfying itself as to whether the proposed transaction represented the best
available price for the Company's stockholders. A detailed presentation was made
to the Company Board, based on briefing materials and analyses circulated ahead
of the meeting, reviewing the substantive terms and conditions of the Merger
Agreement and of the Stock Option Agreement. Members of the Company Board
closely questioned management and the Company Board's financial and legal
advisors concerning the terms and conditions of the Merger Agreement (including
those with respect to the Offer) and the Stock Option Agreement, with particular
focus on the circumstances under which the Company could consider alternative
proposals received after the execution and delivery of the Merger Agreement, as
well as the provisions with respect to the "break-up fee" payable by the Company
to Cadence and the operation of the Stock Option Agreement under those or other
circumstances. In that discussion, the Company Board also heard from two large
stockholders, Wolfram Blume, a member of the Company Board who holds
approximately 13% of the Company Common Stock, and the D3 Family Funds who had
been briefed concerning the transaction under nondisclosure and non-trading
obligations, each of whom expressed their strong support for the transaction and
their willingness to sign the stockholders agreement requested by Cadence.
Alliant made a lengthy presentation to the Company Board, at the conclusion of
which it rendered its opinion that "the cash consideration to be received by the
Company's stockholders pursuant to the Merger Agreement is fair, from a
financial point of view, to the stockholders of the Company." Alliant detailed
for the Company Board the methodologies Alliant had used in arriving at its
opinion, pursuant to which methodologies Alliant did the following:
(1) reviewed the financial statements and other information of the Company;
(2) reviewed certain internal financial statements and other financial and
operating data concerning the Company prepared by the management of the Company;
(3) analyzed certain financial projections prepared by the management of the
Company; (4) discussed the past and current operations, financial condition, and
the prospects of the Company with senior executives of the Company; (5)
discussed with the senior management of the Company the strategic objectives of
the acquisition and the strategic alternatives available to the Company;
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(6) compared the financial performance of the Company with that of certain other
comparable publicly traded companies and the prices paid for securities in those
publicly traded companies; (7) reviewed the financial terms, to the extent
publicly available, of certain comparable acquisition transactions; (8) assessed
the Company's forecast and future cash flows for a discounted cash flow
analysis; (9) reviewed the Merger Agreement, and certain related documents; and
(10) performed such other analyses and considered such other factors as they
deemed appropriate.
The Company Board closely questioned Alliant with respect to the assumptions
on which Alliant's opinion was based. In addition, the Company Board questioned
Alliant concerning its views on strategic alternatives available to the Company,
including remaining independent. Following further discussion, the Company Board
unanimously adopted resolutions approving the Merger, the Merger Agreement and
the Stock Option Agreement, authorizing and directing management to execute and
deliver such agreements and determining to recommend that the Company's
stockholders accept the Offer and tender their shares pursuant to the Offer.
The Company Board also considered a proposal by Cadence that the Company
adopt a stockholder rights plan. Following extensive discussion concerning its
ability to insure the best value available to the Company's stockholders, and
its rights to consider and perform due diligence on any third party offers and
to report on them to the Company's stockholders, and further its belief that no
immediate threat presented itself necessitating the adoption of a stockholder
rights plan, the Company Board determined that it would not be in the best
interests of the stockholders to adopt such a plan, and elected not to do so.
On June 14, 1999, Cadence, Purchaser and the Company entered into the Merger
Agreement and Stock Option Agreement.
On June 15, 1999, the parties issued a joint press release announcing the
transaction.
REASONS FOR THE RECOMMENDATION OF THE COMPANY BOARD; FAIRNESS OF THE OFFER.
On June 14, 1999, the Company Board, by unanimous vote (with Mr. Savage
abstaining), determined that the Merger, the Merger Agreement and the
transactions contemplated thereby, including the Offer, are fair to and in the
best interests of the Company and its stockholders, approved and adopted the
Merger, the Merger Agreement and the transactions contemplated thereby,
including the Offer, and determined to recommend that the Company's stockholders
accept the Offer and tender their Shares. As set forth in the Merger Agreement,
subject to the terms and conditions thereof, Purchaser will purchase all of the
issued and outstanding Shares, either through the Offer or in the subsequently
contemplated Merger, if the conditions to the Offer have been satisfied (or
waived).
In reaching its determination referred to above, the Company Board
considered the following factors, each of which in the view of the Company
Board, supported such determinations:
(i) The historical market prices and trading activity of the Shares over the
preceding several months: the Offer Price of $13.00 per share represents a 62%
premium over the average closing price of the Company Common Stock during the
three calendar months preceding the date of the public announcement of the
Merger Agreement (the "Announcement"), a 45.5% premium over the closing price on
the third trading day prior to the Announcement and a 70.5% premium over the
closing price on the thirtieth trading day prior to the Announcement;
(ii) The history of the negotiations between the Company and its
representatives and Cadence and its representatives, including the Company's
belief that Cadence would not further increase the price of the Offer or improve
the terms of the Offer, and, accordingly $13.00 per Share was, in the opinion of
the Company Board the highest price that could be obtained from Cadence;
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(iii) The lack of other expressions of interest in the Company despite the
fact that the Company had made known its willingness to be acquired through its
proposed transaction with Summit Design, Inc., which had ultimately not closed;
(iv) The opinion of Alliant that, based upon and subject to the various
assumptions and limitations set forth therein, and the analyses presented to the
Company Board in connection therewith, as of the date thereof, the $13.00 per
Share to be received by the stockholders of the Company in the Offer was fair to
the stockholders from a financial point of view. THE FULL TEXT OF ALLIANT'S
OPINION IS ATTACHED AS ANNEX A HERETO AND IS INCORPORATED HEREIN BY REFERENCE.
STOCKHOLDERS ARE URGED TO READ SUCH OPINION IN ITS ENTIRETY.
(v) The possibility that the consideration the Company's stockholders might
obtain in a future transaction or through continued ownership of the capital
stock of an independent OrCAD, Inc., would likely be less advantageous than the
consideration they would receive pursuant to the Offer, because of the recent
relative flatness in the basic EDA market, and the uncertainties surrounding the
Company's new initiatives in on-line enabling of purchases of electronic parts
for printed circuit board designers;
(vi) The effect of the condition in the Merger Agreement that, without the
consent of the Company, no change in the Offer may be made by Cadence or
Purchaser which (i) decreases the $13.00 per Share payable in the Offer, (ii)
reduces the maximum number of Shares to be purchased in the Offer, (iii) imposes
conditions to the Offer in addition to those set forth in the Merger Agreement
or (iv) broadens the scope of such conditions except as expressly provided in
the Merger Agreement;
(vii) The fact that pursuant to the Merger Agreement, the Company may still
receive offers from other interested bidders, if any, and may perform due
diligence thereon sufficient to satisfy its fiduciary obligations to obtain the
best available price for the Company's stockholders; and if it determines such
other offers are superior, may after giving notice to Purchaser and an
opportunity to match or exceed the alternative offer, elect to terminate the
Merger Agreement and pay the break-up fee provided for in the Merger Agreement;
and
(viii) The structure of the transaction, which is designed, among other
things, to result in receipt by the stockholders of the Company at the earliest
practicable time of the consideration to be paid in the Offer.
CONSIDERATIONS OF THE COMPANY BOARD.
The foregoing discussion of the information and factors considered by the
Company Board is not meant to be exhaustive but includes the material factors
considered by the Board in reaching its conclusions and recommendations. The
members of the Company Board evaluated the various factors listed above in light
of their knowledge of the business, financial condition and prospects of the
Company and based upon the advice of financial and legal advisors. In light of
the number and variety of factors that the Company Board considered in
connection with its evaluation of the Merger, the Merger Agreement, the Stock
Option Agreement and the transactions contemplated thereby (including the
Offer), the Company Board did not find it practicable to assign relative weights
to the foregoing factors, and accordingly, the Company Board did not do so. In
addition, individual members of the Company Board may have given different
weights to different factors.
The Company Board determined that the Offer was the result of a process that
was fair to the stockholders of the Company because, among other things, (a) the
management and the Company Board conducted numerous meetings, during which the
management and the Company Board evaluated and analyzed the proposed
transaction, determined the negotiating strategy and reached informed
conclusions based, in part, on the advice of independent financial and legal
advisors, (b) the management and the Company Board deliberated with respect both
to the transactions with Cadence and alternative strategies potentially
available for maximizing stockholder value and (c) the $13.00 per Share price
and the other terms and conditions of the Merger Agreement and the Offer
resulted from active arm's-length bargaining
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between the Company and its representatives, on the one hand, and Cadence and
its representatives, on the other.
IN LIGHT OF ALL THE FACTORS SET FORTH ABOVE, THE COMPANY BOARD HAS
DETERMINED BY THE UNANIMOUS VOTE OF ALL DIRECTORS (WITH MR. SAVAGE ABSTAINING)
THAT THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING
THE OFFER, ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY AND ITS
STOCKHOLDERS, HAS APPROVED AND ADOPTED THE MERGER AGREEMENT, THE STOCK OPTION
AGREEMENT, AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER, AND
RECOMMENDS THAT THE HOLDERS OF THE SHARES ACCEPT THE OFFER AND TENDER THEIR
SHARES THEREUNDER.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The Company retained Alliant as its financial advisor in connection with the
Merger, the Merger Agreement, the Stock Option Agreement, and the Offer. The
Company has agreed to pay customary fees to Alliant in connection with the
rendering of its fairness opinion and the consummation of the transactions.
In addition to the forgoing compensation, the Company has agreed to
reimburse Alliant for its reasonable expenses (including fees and disbursements
of its attorneys) and to indemnify Alliant and certain related persons against
certain liabilities arising out of the engagement and the transactions in
connection therewith, including certain liabilities under the federal securities
laws.
Except as set forth above, neither the Company nor any person acting on its
behalf has or currently intends to employ, retain or compensate any person to
make solicitations or recommendations to the stockholders of the Company on its
behalf with respect to the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES
(a) During the past 60 days, no transactions in Shares have been effected by
the Company or, to the best of the Company's knowledge, by any of its executive
officers, directors, affiliates or subsidiaries, except (i) the Company has
granted an aggregate of 61,700 incentive stock options to non-executive officer
employees pursuant to the Company's 1995 Stock Incentive Plan at exercise prices
ranging from $7.625 to $8.50 per Share, (ii) the Company has granted 10,000
nonqualified options to consultants pursuant to the Company's 1995 Stock
Incentive Plan at an exercise price of $7.375 per Share, (iii) the Company has
granted an aggregate of 25,000 nonqualified options to the nonemployee members
of the Company Board (5,000 options to each such nonemployee director) pursuant
to the Company's 1995 Stock Option Plan for Nonemployee Directors at an exercise
price of $8.50 per Share and (iv) Wolfram Blume, a member of the Company Board,
has sold an aggregate of 139,100 Shares.
(b) To the best of the Company's knowledge, to the extent permitted by
applicable securities laws, rules or regulations, each executive officer,
director and affiliate of the Company presently intends to tender to Purchaser,
pursuant to the Offer, all Shares of which he is the record or beneficial owner.
In connection therewith, effective as of June 14, 1999, Messrs. Blume and
Bosworth each entered into a stockholders agreement with Cadence and Purchaser,
pursuant to which Messrs. Blume and Bosworth have agreed to tender to Purchaser
all Shares beneficially owned by them, 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.
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ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY
(a) Except as set forth herein and in the portions of the Offer to Purchase
incorporated herein by reference, the Company is not engaged in any negotiation
in response to the Offer which relates to or would result in: (1) an
extraordinary transaction, such as a merger or reorganization involving the
Company or any subsidiary thereof; (2) a purchase, sale or transfer of a
material amount of assets by the Company or any subsidiary thereof; (3) a tender
offer for or other acquisition of securities by or of the Company; or (4) any
material change in the present capitalization or dividend policy of the Company.
(b) Except as set forth herein and in the portions of the Offer to Purchase
incorporated therein by reference, there is no transaction, board resolution,
agreement in principle, or signed contract in response to the Offer which
relates to or would result in one or more of the matters referred to in Item
7(a)(1), (2), (3) or (4).
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
The information contained in all of the Exhibits referred to in Item 9 below
is incorporated herein by reference in its entirety.
SHORT FORM MERGER. Pursuant to the short-form merger provisions of the
DGCL, if Purchaser acquires, pursuant to the Offer or otherwise, at least ninety
percent (90%) of the outstanding Shares, Purchaser will be able to approve and
consummate the Merger without any action by, or any further prior notice to, the
other stockholders of the Company. However, if Purchaser does not acquire at
least ninety percent (90%) of the outstanding Shares pursuant to the Offer or
otherwise and a vote of the Company's stockholders is required under the DGCL, a
significantly longer period of time will be required to effect the Merger.
10
<PAGE>
ITEM 9. MATERIALS TO BE FILED AS EXHIBITS
<TABLE>
<C> <S>
(a)(1) Offer to Purchase, dated June 18, 1999.*+
(a)(2) Letter of Transmittal.*+
(a)(3) Press Release dated June 15, 1999 issued by Cadence (incorporated by reference to
Exhibit (a)(8) to Purchaser's Tender Offer Statement on Schedule 14D-1, dated June
18, 1999).
(a)(4) Opinion of Alliant Partners, dated June 14, 1999.*+
(a)(5) Letter to Stockholders, dated June 18, 1999, from the Company's Board of
Directors.*+
(c)(1) Agreement and Plan of Merger, dated as of June 14, 1999, by and among the Company,
Purchaser and Cadence (incorporated by reference to Exhibit (c)(1) to Purchaser's
Tender Offer Statement on Schedule 14D-1, dated June 18, 1999).
(c)(2) Stock Option Agreement, dated as of June 14, 1999, among the Company, Purchaser and
Cadence (incorporated by reference to Exhibit (c)(2) to Purchaser's Tender Offer
Statement on Schedule 14D-1, dated June 18, 1999).
(c)(3) Stockholders Agreement, dated as of June 14, 1999, among the stockholders of the
Company listed on Schedule I thereto, Purchaser and Cadence (incorporated by
reference to Exhibit (c)(3) to Purchaser's Tender Offer Statement on Schedule
14D-1, dated June 18, 1999).
(c)(4) Proxy Statement of the Company, dated as of April 19, 1999, (incorporated by
reference to the Company's Proxy Statement on Schedule 14A, filed with the
Commission on April 16, 1999).
(c)(5) Employment Letter, Noncompetition Agreement, and Employee Proprietary Information
and Inventions Agreement between Cadence and Michael F. Bosworth.+
(c)(6) Employment Letter, Noncompetition Agreement, and Employee Proprietary Information
and Inventions Agreement between Cadence and P. David Bundy.+
(c)(7) Employment Letter, Noncompetition Agreement, and Employee Proprietary Information
and Inventions Agreement between Cadence and James M. Plymale.+
(c)(8) Employment Letter, Noncompetition Agreement, and Employee Proprietary Information
and Inventions Agreement between Cadence and William E. Cibulsky.+
(c)(9) Employment Letter, Noncompetition Agreement, and Employee Proprietary Information
and Inventions Agreement between Cadence and Stuart A. Harrington.+
(c)(10) Employment Letter, Noncompetition Agreement, and Employee Proprietary Information
and Inventions Agreement between Cadence and Philip J. Kilcoin.+
(c)(11) Employment Letter, Noncompetition Agreement, and Employee Proprietary Information
and Inventions Agreement between Cadence and Graham K. Sheldon.+
(c)(12) Employment Letter, Noncompetition Agreement, and Employee Proprietary Information
and Inventions Agreement between Cadence and Donald G. Tannenbaum.+
</TABLE>
- ------------------------
* Included with Schedule 14D-9 mailed to shareholders.
+ Filed herewith.
11
<PAGE>
SIGNATURE
After reasonable 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.
OrCAD, Inc.
By:
[SIGNATURE]
Michael F. Bosworth
CHAIRMAN OF THE BOARD, CHIEF EXECUTIVE
OFFICER
AND PRESIDENT
Dated: June 18, 1999
12
<PAGE>
ANNEX A
ALLIANT PARTNERS
June 14, 1999
Board of Directors
OrCAD, Inc.
9300 S.W. Nimbus Avenue
Beaverton, OR 97008
You have requested our opinion as to the fairness, from a financial point of
view, to the stockholders of OrCAD, Inc. ("OrCAD") for the consideration
received in the acquisition (the "Acquisition") of OrCAD by Cadence Design
Systems, Inc. ("Cadence"). As contemplated by the Agreement and Plan of Merger
(the "Agreement"), dated June 14, 1999, OrCAD will receive $13.00 per share in
Cash, or Total Cash Consideration of approximately $124 million.
For purposes of the opinion set forth herein, we have:
(a) reviewed financial statements and other information of OrCAD;
(b) reviewed certain internal financial statements and other financial and
operating data concerning OrCAD prepared by the management of OrCAD;
(c) analyzed certain financial projections prepared by the management of
OrCAD;
(d) discussed the past and current operations, financial condition, and the
prospects of OrCAD with senior executives of OrCAD;
(e) discussed with the senior management of OrCAD the strategic objectives
of the Acquisition and the strategic alternatives available to OrCAD;
(f) compared the financial performance of OrCAD with that of certain other
comparable publicly-traded companies and the prices paid for securities
in those publicly-traded companies;
(g) reviewed the financial terms, to the extent publicly available, of
certain comparable acquisition transactions;
(h) assessed OrCAD's forecast and future cash flows for a discounted cash
flow analysis;
(i) reviewed the Agreement and Plan of Merger, and certain related
documents; and
(j) performed such other analyses and considered such other factors as we
have deemed appropriate.
We have assumed and relied upon, without independent verification, the accuracy
and completeness of the information reviewed by us for the purposes of this
opinion. With respect to the financial projections of OrCAD, we have assumed
that they have been reasonably prepared on bases reflecting the best currently
available estimates and judgements of the future financial performance of OrCAD.
The financial and other information regarding OrCAD reviewed by Alliant Partners
in connection with the rendering of this opinion was limited to information
provided by OrCAD's management and certain discussions with OrCAD's senior
management regarding OrCAD's financial condition and prospects and their
strategic objectives of the Acquisition as well as the strategic alternatives
available to OrCAD. In addition, we have assumed that the Acquisition will be
consummated in accordance with the terms set forth in the Agreement. We have not
made any independent valuation or appraisal of the assets or liabilities of
OrCAD, nor have we been furnished with any such appraisals. Our opinion is
necessarily based on economic, market and other conditions as in effect on, and
the information made available to us as of the date hereof.
A-1
<PAGE>
Our opinion addresses only the fairness of the transaction, from a financial
point of view, to the stockholders of OrCAD, and we do not express any views on
any other terms of the Agreement or the business bases underlying the Agreement.
Alliant Partners has received fees from OrCAD for previous advisory
engagements as well as a fee for this transaction.
Based upon and subject to the foregoing, and based upon such other matters
as we consider relevant, it is our opinion that, as of the date hereof, the cash
consideration received by the OrCAD stockholders pursuant to the Agreement is
fair, from a financial point of view, to the OrCAD stockholders.
Very truly yours,
Alliant Partners
A-2
<PAGE>
ANNEX B
ORCAD, INC.
9300 S.W. NIMBUS AVENUE,
BEAVERTON, OR 97008
INFORMATION STATEMENT PURSUANT TO SECTION 14(F)
OF THE SECURITIES EXCHANGE ACT OF 1934 AND
RULE 14F-1 THEREUNDER
This Information Statement is being mailed on or about June 18, 1999 as part
of the Solicitation/ Recommendation Statement on Schedule 14D-9 (the "Schedule
14D-9") to holders of shares of common stock, par value $0.01 per share, of
OrCAD, Inc., a Delaware corporation (the "Company"). Capitalized terms used
herein and not otherwise defined herein shall have the meanings set forth in the
Schedule 14D-9. You are receiving this Information Statement in connection with
the designation of persons by CDSI Acquisition Corporation, a Delaware
corporation ("Purchaser"), and a wholly-owned subsidiary of Cadence Design
Systems, Inc. ("Cadence"), to the board of directors of the Company (the
"Company Board"). Such designation is to be made pursuant to a Merger Agreement,
dated as of June 14, 1999 (the "Merger Agreement"), by and among Cadence,
Purchaser and the Company.
This Information Statement is required by Section 14(f) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and Rule 14f-1
thereunder. YOU ARE URGED TO READ THIS INFORMATION STATEMENT CAREFULLY. YOU ARE
NOT, HOWEVER, REQUIRED TO TAKE ANY ACTION.
Pursuant to the Merger Agreement, Purchaser commenced a cash tender offer
(the "Offer") on June 18, 1999 to purchase all of the issued and outstanding
shares (the "Shares") of common stock, $.01 par value per share of the Company
(the "Company Common Stock"), for an amount equal to $13.00 per Share, net to
the seller in cash, without interest, 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. As a result of the
consummation of the Offer, Purchaser will own a majority of the outstanding
Shares and acquire control of the Company. The Offer is scheduled to expire at
Midnight, New York City time, on Friday, July 16, 1999, unless the Offer is
extended.
GENERAL INFORMATION REGARDING THE COMPANY
The Shares are the only class of voting securities of the Company
outstanding. As of June 14, 1999, there were 9,321,315 Shares outstanding.
PROPOSED CHANGES TO THE COMPANY BOARD
Under the Merger Agreement, promptly upon the purchase by Purchaser of any
Shares pursuant to the Offer, and from time to time thereafter as Purchaser
acquires Shares, Cadence will be entitled to designate such number of directors
(the "Cadence Designees"), 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, until the effective time of the
Merger (the "Effective Time") the Company Board shall have at least two
directors who were directors 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"). If at any time fewer than two Independent Directors remain, the
B-1
<PAGE>
other directors shall elect to the Company Board 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 to the Company
Board will be deemed to be an Independent Director. Following the time the
Cadence Designees constitute a majority of the Company Board and prior to the
Effective Time, the affirmative vote of the Independent Directors is required
for (i) any amendment of the Merger Agreement or the Stock Option Agreement,
(ii) any termination of the Merger Agreement or the Stock Option Agreement (as
defined in the Offer to Purchase) by the Company, (iii) any extension by the
Company of the time for the performance of any of the obligations or other acts
of Cadence or Purchaser or (iv) any exercise or waiver of any of the Company's
rights or remedies under the Merger Agreement or the Stock Option 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 or the Stock Option
Agreement. The Company's obligation to appoint Cadence Designees to the Company
Board will be subject to Section 14(f) of the Exchange Act and Rule 14f-1
thereunder.
CADENCE DESIGNEES
Purchaser has informed the Company that Purchaser will choose the Cadence
Designees from the list of persons set forth in the following table. With
respect to the Cadence Designees, the following table, prepared from information
furnished to the Company by Purchaser, sets forth the name, age, citizenship,
present principal occupation or employment and five-year employment history for
each of the persons who may be designated by Purchaser as Cadence Designees.
Except as otherwise indicated, all of the persons listed below are citizens of
the United States of America. If necessary, Purchaser may choose additional or
other Cadence Designees, subject to the requirements of Rule 14f-1. Each
occupation set forth opposite a person's name, unless otherwise indicated,
refers to employment with Cadence. Unless otherwise indicated below, the
business address of each person 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 Executive Vice President and
Officer since April, 1999; Chief Financial Officer from
Director since 1997 1993-April, 1999; Director,
Sunstone Hotel Investors, Inc.,
Integrated Measurement Systems,
Inc., Legato Systems, Inc. and
Onyx Software Corporation.
John F. Olsen, 47............................. President, Design Realization Executive Vice President,
Group and Corporate Development Worldwide Field Operations from
since April, 1999 1998-April, 1999; Senior Vice
President, Field Operations from
1994-1998; Partner, KPMG Peat
Marwick LLP from 1989-1994.
Shane V. Robison, 44.......................... President, Design Productivity Executive Vice President,
Group since April, 1999 Research and Development from
1997-April, 1999; Senior Vice
President, Engineering from
1995-1997; Vice President
</TABLE>
B-2
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE, CITIZENSHIP AND OTHER MATERIAL POSITIONS
CURRENT BUSINESS ADDRESS PRESENT OCCUPATION OR EMPLOYMENT HELD DURING THE PAST FIVE YEARS
- ---------------------------------------------- -------------------------------- --------------------------------
and General Manager of the
Personal Interactive Electronics
Division of Apple Computer, Inc.
from 1988-1995.
<S> <C> <C>
R.L. Smith McKeithen, 55...................... Senior Vice President, General Vice President, General Counsel
Counsel and Secretary since 1998 and 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.
William Porter, 45............................ Senior Vice President and Chief Corporate Vice President from
Financial Officer since May, 1998-May, 1999; Corporate
1999; Assistant Secretary since Controller from 1994-May, 1999;
1994 Vice President from 1994-1998;
Controller, Technical Accounting
and Reporting Manager, Cupertino
Operations with Apple Computer,
Inc. from 1988-1994.
Michael J. Casey, 36.......................... Vice President since April, Partner, Brobeck, Phleger &
1999; Associate General Counsel Harrison LLP from
since 1998 1991-1998.
Margaret McCarthy, 39......................... Corporate Vice President, Vice President, Business
Mergers & Acquisitions since Development from 1997-1998;
1998 Business Development Manager,
Hewlett Packard from 1994-1997.
</TABLE>
Purchaser has advised the Company that to the best knowledge of Purchaser,
none of the Cadence Designees currently is a director of, or holds any position
with, the Company, and except as disclosed in the Offer to Purchase, none of the
Cadence Designees beneficially owns any securities (or rights to acquire any
securities) of the Company or has been involved in any transactions with the
Company or any of its directors, executive officers or affiliates that are
required to be disclosed pursuant to the rules of the Commission. None of the
Cadence Designees has any family relationship with any director or executive
officer of the Company.
Purchaser has advised the Company that each of the Cadence Designees has
consented to act as a director, and that none of such persons has during the
last five years been convicted in a criminal proceeding (excluding traffic
violations and similar misdemeanors) or was 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,
B-3
<PAGE>
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 violation of such laws or is involved in any other legal proceeding which is
required to be disclosed under Item 401(f) of Regulation S-K promulgated by the
Commission.
It is expected that the Cadence Designees may assume office at any time
following the purchase by Purchaser of any Shares pursuant to the Offer, which
cannot be earlier than July 16, 1999, and that, upon assuming office, the
Cadence Designees will thereafter constitute at least a majority of the Company
Board.
THE CURRENT MEMBERS OF THE COMPANY BOARD
The following table sets forth the names of the current members of the
Company Board. Also set forth is certain other information with respect to each
such person's age at March 31, 1999, principal occupation or employment during
the past five years, the periods during which he has served as a director of the
Company and positions currently held with the Company.
<TABLE>
<CAPTION>
POSITIONS HELD
AGE WITH THE COMPANY
--- ------------------------------
<S> <C> <C>
Richard P. Magnuson........................................................ 43 Director
James B. Moon.............................................................. 53 Director
Wolfram H. Blume........................................................... 46 Director
John C. Savage............................................................. 51 Director
Michael F. Bosworth........................................................ 51 President, Chief Executive
Officer and Chairman of the
Board
Stephen W. Director........................................................ 55 Director
</TABLE>
RICHARD P. MAGNUSON. Mr. Magnuson has served as a member of the Company
Board since September 1991. Since 1997, Mr. Magnuson has been a private venture
capitalist. He served as General Partner of Menlo Ventures, a private venture
capital firm, from 1982 to 1996. Mr. Magnuson serves as a director of two other
public companies: Rogue Wave Software, Inc. and California Water Service
Company. He also serves as a director of several privately-held companies.
JAMES B. MOON. Mr. Moon has served as a member of the Company Board since
December 1995. Since February 1, 1999, Mr. Moon has served as an independent
consultant to Protocol Systems, Inc. ("Protocol"). Mr. Moon served as the
Chairman of the Board, President and the Chief Executive Officer of Protocol
from 1987 through February 1998, and served as the President, Chief Technology
Officer and a member of the Board of Directors of Protocol from February 1998
through August 1998. From August 1998 through December 1998, Mr. Moon served as
Senior Vice President, Chief Technology Officer and a member of the Board of
Directors of Protocol.
WOLFRAM H. BLUME. Mr. Blume has served as a member of the Company Board
since February 1998. Since January 1998, he has served as Chief Technical
Advisor to the Company. Mr. Blume served as Chairman of the Board, President,
and Chief Executive Officer of MicroSim Corporation ("MicroSim") from July 1984
until January 1998. Prior to founding MicroSim in 1984, Mr. Blume spent six
years as a member of the technical staff in the Advanced Development Group of
Silicon Systems, Inc.
JOHN C. SAVAGE. Mr. Savage has served as a member of the Company Board since
September 1991. Since July 1998, Mr. Savage has served as Managing Director of
Alliant Partners, an investment banking firm. From June 1990 through July 1998,
Mr. Savage was Managing General Partner of Glenwood Capital Partners, L.P., and
from 1995 through July 1998 was Managing Director of Redwood Partners, LLC; both
B-4
<PAGE>
are affiliated venture capital and investment banking firms. Mr. Savage also
serves as a director of FileNet Corporation and Mattson Technology, Inc.
MICHAEL F. BOSWORTH. Mr. Bosworth was named Chairman of the Company Board in
February 1997 and has served as President, Chief Executive Officer and a member
of the Company Board since October 1991. From April 1986 through September 1991,
he served as President and Chief Executive Officer of Context Corporation,
initially a subsidiary of Mentor Graphics Corporation and later a division of
Mentor Graphics Corporation.
STEPHEN W. DIRECTOR. Dr. Director has served as a member of the Company
Board since January 1991. Dr. Director has served as the Dean of Engineering at
the University of Michigan since July 1996. Dr. Director served as the Dean of
the College of Engineering and U.A., and Helen Whitaker University Professor of
Electrical and Computer Engineering at Carnegie Mellon University from July 1991
through June 1996. In 1982, he founded the SRC-CMU Research Center for
Computer-Aided Design and served as its Director from 1982 to 1989. Dr. Director
also serves on the Technical Advisory Boards of a number of EDA companies.
BOARD OF DIRECTORS COMMITTEES AND NOMINATIONS BY STOCKHOLDERS
The Company Board acts as a nominating committee for selecting nominees for
election as directors. The Company's Bylaws also permit stockholders to make
nominations for the election of directors, if such nominations are made pursuant
to timely notice in writing to the Company's Secretary. To be timely, notice
must be delivered to, or mailed to and received at, the principal executive
offices of the Company not less than 60 days nor more than 90 days prior to the
date of the meeting, provided that at least 60 days' notice or prior public
disclosure of the date of the meeting is given or made to stockholders. If less
than 60 days' notice or prior public disclosure of the date of the meeting is
given or made to stockholders, notice by the stockholder to be timely must be
received by the Company not later than the close of business on the tenth day
following the date on which such notice of the date of the meeting was mailed or
such public disclosure was made. A stockholder's notice of nomination must also
set forth certain information specified in Article II, Section 2.10 of the
Company's Bylaws concerning each person the stockholder proposes to nominate for
election and the nominating stockholder.
During 1998, the Company's Board held ten meetings. Each director attended
more than 75% of (i) the aggregate of the total number of meetings held by the
Company Board and (ii) the total number of meetings held by all committees of
the Company Board on which he served during the period that he served. The
Company Board has a standing Audit Committee which, during the fiscal year ended
December 31, 1998, conducted one meeting. The members of the Audit Committee
currently are Messrs. Savage and Magnuson. The Audit Committee reviews the scope
of the independent annual audit, the independent public accountants' letter to
the Company Board concerning the effectiveness of the Company's internal
financial and accounting controls and the Company Board's response to that
letter, if deemed necessary. The Company Board also has a standing Compensation
Committee which reviews executive compensation and makes recommendations to the
full board regarding changes in compensation, and also administers the Company's
stock option plans.
During the fiscal year ended December 31, 1998, the Compensation Committee
held three meetings. The members of the Compensation Committee currently are
Messrs. Savage and Magnuson. There are no family relationships among any of the
directors or executive officers of the Company.
DIRECTOR COMPENSATION
The nonemployee members of the Company Board received an annual fee of
$5,000 for their service on the Company Board, as well as an additional fee of
$1,000 for each Company Board meeting and $500 for each Company Board Committee
meeting attended, and were reimbursed for out-of-pocket and travel expenses
incurred in attending Company Board and Company Board Committee meetings.
Effective
B-5
<PAGE>
March 1999, the annual fee paid to each nonemployee director for his service on
the Company Board was increased to $10,000. Under the Company's 1995 Stock
Option Plan for Nonemployee Directors, each person who becomes a nonemployee
director automatically receives an initial option to purchase 20,000 shares of
the Company Common Stock at the time such person is first elected to the Company
Board. Each nonemployee director automatically receives additional grants of
options to purchase 5,000 shares after each annual meeting of stockholders,
provided the nonemployee director continues to serve in that capacity. Options
vest and become exercisable on the date of grant.
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth certain information with respect to the
executive officers of the Company. Officers of the Company are elected by the
Company Board and hold office until their successors are duly elected and
qualified.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------ --- -----------------------------------------------------
<S> <C> <C>
Michael F. Bosworth....................... 51 President, Chief Executive Officer and Chairman of
the Board
P. David Bundy............................ 44 Vice President of Finance, Secretary and Chief
Financial Officer
William E. Cibulsky....................... 52 Senior Vice President of Worldwide Sales
Stuart A. Harrington...................... 38 Vice President
Philip J. Kilcoin......................... 42 Vice President of Product Operations
James M. Plymale.......................... 32 Vice President of Marketing
Graham K. Sheldon......................... 35 Vice President of Operations
Donald G. Tannenbaum...................... 50 Vice President of Integration and Development
</TABLE>
Information concerning the principal occupation of Mr. Bosworth is set forth
under the heading "The Current Members of the Company Board". Information
concerning the principal occupation during at least the last five years of the
executive officers of the Company who are not also directors of the Company is
set forth below.
P. DAVID BUNDY. Mr. Bundy has served as the Company's Vice President of
Finance, Secretary and Chief Financial Officer since November 1991. Mr. Bundy
served as Controller upon joining the Company in October 1989. Mr. Bundy also
earlier served as Controller of Cadic, Inc., and in various financial capacities
with Burroughs Corporation.
WILLIAM E. CIBULSKY. Mr. Cibulsky has served as the Company's Senior Vice
President of Worldwide Sales since March 1998. Prior to joining the Company, Mr.
Cibulsky served as the Executive Vice President of Worldwide Sales for Falcon
Systems from December 1996 to March 1998. From May 1994 to December 1996, Mr.
Cibulsky was the Vice President of North American Sales and Vice President of
International Sales for Quickturn Systems. From January 1990 to January 1994,
Mr. Cibulsky was Vice President of Sales for Zycad Corporation.
STUART A. HARRINGTON. Mr. Harrington has served as Vice President of the
Company since December 1995, and has served as President of OrCAD Japan K.K.
since December 1995. Mr. Harrington was a founder of Intelligent Systems, Japan
and served as its President from 1990 through November 1995.
PHILIP J. KILCOIN. Mr. Kilcoin has served as the Company's Vice President of
Product Operations since February 1998. From June 1997 through February 1998, he
served as the Company's Director of Product Marketing. Prior to joining the
Company, Mr. Kilcoin served as a Group Manager at Mentor Graphics
B-6
<PAGE>
Corporation from 1994 through June 1997, and as a Product Marketing Manager at
Mentor Graphics Corporation from 1991 through 1994.
JAMES M. PLYMALE. Mr. Plymale has served as the Company's Vice President of
Marketing since October 1995. From June 1993 through October 1995, he served as
the Company's Director of Product Marketing, and from March 1992 through June
1993, he served as the Company's Product Marketing Manager. From 1990 to March
1992, Mr. Plymale served in various capacities at Phase III Logic.
GRAHAM K. SHELDON. Mr. Sheldon has served as the Company's Vice President of
Operations since February 1998. Prior to that, he was the Company's Director of
Operations from October 1991 through February 1998, and from October 1989
through October 1991, he served as the Company's Manager of MIS and Operations.
DONALD G. TANNENBAUM. Mr. Tannenbaum has served as the Company's Vice
President of Integration and Development since September 1997. Prior to joining
the Company, he served as senior consultant and one of three Principals of
LionHeart Consulting, Inc. from 1987 to 1997. In this capacity, Mr. Tannenbaum
specialized in partnering and assisting emerging businesses to develop through
transitions and growth.
EXECUTIVE COMPENSATION
The following table provides certain summary information concerning
compensation of the Company's Chief Executive Officer and each of the four other
most highly compensated executive officers of the Company (the "named executive
officers") for the fiscal years ending December 31, 1996, 1997 and 1998.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
-------------
SECURITIES
ANNUAL COMPENSATION UNDERLYING
-------------------------------- STOCK OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS GRANTED COMPENSATION
- ---------------------------------------------------- --------- ---------- --------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Michael F. Bosworth ................................ 1998 $ 187,022 $ 61,817 35,000 $ 43,933(1)
President, Chief Executive Officer and Chairman of 1997 154,848 63,173 25,000 4,750(2)
the Board 1996 149,972 46,667 -- 5,806(2)
William E. Cibulsky(3) ............................. 1998 105,000 51,959 60,000 34,892(4)
Senior Vice President of Worldwide Sales 1997 -- -- -- --
1996 -- -- -- --
Stuart A. Harrington ............................... 1998 199,250 -- -- 22,714(5)
Vice President 1997 177,968 -- -- 27,695(5)
1996 195,430 -- -- 21,721(5)
James M. Plymale ................................... 1998 136,452 25,672 25,000 33,876(6)
Vice President of Marketing 1997 112,108 24,084 15,000 4,068(7)
1996 104,972 17,065 -- 3,356(7)
Michael U. Wimbrow(8) .............................. 1998 144,686 15,277 40,000 195,431(9)
Vice President of Product Development 1997 -- -- -- --
1996 -- -- -- --
</TABLE>
- ------------------------
(1) Represents matching contribution to the Company's 401(k) Plan of $4,800 on
behalf of named executive officer, together with a one-time payment of
$39,133 for accrued vacation as result of a change in the Company's vacation
policy.
(2) Represents matching contribution to the Company's 401(k) Plan on behalf of
named executive officer.
B-7
<PAGE>
(3) Mr. Cibulsky became Senior Vice President of Worldwide Sales of the Company
in March 1998.
(4) Represents matching contribution to the Company's 401(k) Plan of $3,232 on
behalf of named executive officer, together with $27,420 paid in connection
with certain relocation expenses, and a one-time payment of $4,240 for
accrued vacation as a result of a change in the Company's vacation policy.
(5) Represents rent allowance paid on behalf of named executive officer.
(6) Represents matching contribution to the Company's 401(k) Plan of $4,800 on
behalf of named executive officer, together with a one-time payment of
$29,076 for accrued vacation as a result of a change in the Company's
vacation policy.
(7) Represents matching contribution to the Company's 401(k) Plan on behalf of
named executive officer.
(8) Mr. Wimbrow became Vice President of Product Development of the Company in
January 1998, and Mr. Wimbrow's employment with the Company terminated on
April 16, 1999.
(9) Represents extraordinary compensation to named executive officer of $161,222
as a result of the conversion of MicroSim stock options into shares of
Company Common Stock in connection with the Company's merger with MicroSim
in January 1998, together with a matching contribution to the Company's
401(k) Plan of $4,800 on behalf of named executive officer, and a one-time
payment of $29,409 for accrued vacation comprised of (i) $11,686 as a result
of a change in the Company's vacation policy and (ii) $17,723 as a result of
vacation accrued at MicroSim and paid in connection with the Company's
merger with MicroSim.
STOCK OPTIONS
The following table sets forth information concerning options granted to the
named executive officers during the year ended December 31, 1998 under the
Company's 1995 Stock Incentive Plan.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(2)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION ----------------------
NAME GRANTED(1) 1998 SHARE DATE 5% 10%
- ----------------------------------------- ----------- ------------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Michael F. Bosworth...................... 35,000 5.9% $ 9.31 02/24/08 $ 204,955 $ 519,505
William E. Cibulsky...................... 60,000 10.1 9.50 03/16/08 358,440 908,460
Stuart A. Harrington..................... -- -- -- -- -- --
James M. Plymale......................... 25,000 4.2 9.31 02/24/08 146,425 371,075
Michael U. Wimbrow....................... 40,000 6.7 8.63 01/20/08 216,960 549,840
</TABLE>
- ------------------------
(1) Options granted in 1998 vest ratably over four years.
(2) The amounts shown are hypothetical gains based on the indicated assumed
rates of appreciation of the Company Common Stock compounded annually for a
ten-year period. Actual gains, if any, on stock option exercises are
dependent on the future performance of the Company Common Stock and overall
stock market conditions. There can be no assurance that the Company Common
Stock will appreciate at any particular rate or at all in future years.
B-8
<PAGE>
The following table provides information, with respect to the named
executive officers, concerning the exercise of stock options during the year
ended December 31, 1998, and unexercised options held as of December 31, 1998.
OPTION EXERCISES AND HOLDINGS
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE- MONEY OPTIONS AT
SHARES AT DECEMBER 31, 1998 DECEMBER 31, 1998(2)
ACQUIRED ON VALUE -------------------------- --------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Michael F. Bosworth................ -- -- 138,928 59,634 $ 733,142 $ 73,003
William E. Cibulsky................ -- -- 11,250 48,750 -- --
Stuart A. Harrington............... -- -- -- -- -- --
James M. Plymale................... 2,500 $ 22,813 29,860 30,996 94,217 14,037
Michael U. Wimbrow................. -- -- 9,167 30,833 -- --
</TABLE>
- ------------------------
(1) The value realized is based on the difference between the market price at
the time of exercise of the options and the applicable exercise price.
(2) Represents the total gain which would be realized if all in-the-money
options held at December 31, 1998 were exercised, determined by multiplying
the number of shares underlying the options by the difference between the
per share option exercise price and the fair market value of $7.563 per
share at December 31, 1998. An option is in-the-money if the fair market
value of the underlying shares exceeds the exercise price of the option.
EXECUTIVE EMPLOYMENT AGREEMENTS
Effective September 17, 1998, the Company entered into employment agreements
(the "Employment Agreements") with certain of its executive officers, including
Michael F. Bosworth, William E. Cibulsky, Stuart A. Harrington, and James M.
Plymale. The Employment Agreements provide that if the employee resigns
voluntarily or if the Company terminates such employee's employment for "Cause"
(as defined in the Employment Agreements and described below), then the
employee's salary and benefits will cease as of the effective date of such
resignation or termination for Cause. The Employment Agreements also contain
change of control provisions which provide that if the employee is terminated
without Cause or if the employee resigns following a "Constructive Termination"
(as defined in the Employment Agreements and described below) within a period
beginning one month before the signing of a letter of intent or other definitive
agreement which will result in a "Control Change" (as defined in the Employment
Agreements and described below) of the Company and ending twelve months after
the effective date of the Control Change, such employee will be entitled to (i)
receive all benefits earned; (ii) continuation, for a period of three months for
each year during which the employee has been employed by the Company (including
employment with companies acquired by the Company), of employee's then current
salary plus incentive compensation, up to a maximum of twelve months; and (iii)
acceleration of the vesting of 25% of all stock options granted by the Company
to such employee which are not exercisable as of the date of such termination
for each year during which the employee has been employed by the Company
(including employment with companies acquired by the Company), so that such
options are then immediately exercisable. In addition, the Company will provide
benefits for the salary continuation period. For purposes of the Employment
Agreements, "Constructive Termination" includes (i) reassigning the employee to
duties not reasonably considered of equivalent or greater responsibility, (ii)
changing the employee's title to one not reasonably considered equivalent or
greater, (iii) reducing the employee's overall compensation or (iv) directing
the employee to report to a level of management below the level to which the
employee previously reported, all without the employee's advance written
consent. For purposes
B-9
<PAGE>
of the Employment Agreements, "Control Change" includes (i) sale of
substantially all of the Company's assets to or (ii) acquisition of a majority
of the Company's voting stock or entry into a voting or common control agreement
covering a majority of the Company's voting stock by, an entity(ies) that is not
controlled by or under common control with the entity(ies) who had majority
ownership of the Company's voting stock and/or effective control of the Company
prior to such sale, acquisition or voting agreement. For purposes of the
Employment Agreements, "Cause" includes the employee's (i) conviction of a crime
involving the Company's business, (ii) misappropriation of the Company's monies
or assets, (iii) fraudulent conduct and (iv) grossly negligent performance of,
or willful failure to perform, employment duties.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended December 31, 1998, the Compensation Committee
was comprised of Messrs. Magnuson and Savage. Mr. Savage was a Principal and is
a Managing Director of entities engaged by the Company to perform financial
advisory services. See "Certain Transactions and Relationships." The
Compensation Committee is responsible for establishing the compensation of
Michael F. Bosworth, the Company's President and Chief Executive Officer, who
also serves as the Chairman of the Company Board. Mr. Bosworth is responsible
for reviewing the compensation levels of the Company's other executive officers
and makes recommendations to the Compensation Committee regarding changes in
compensation.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Under rules established by the Commission, the Company is required to
provide certain data and information with regard to the compensation and
benefits provided to the Company's Chief Executive Officer and the four other
most highly compensated executive officers. In fulfillment of this requirement,
the Compensation Committee has prepared the following report.
EXECUTIVE COMPENSATION PHILOSOPHY
The Compensation Committee is composed entirely of nonemployee, outside
directors and is responsible for setting and monitoring policies governing
compensation of executive officers. The Compensation Committee reviews the
performance and compensation levels for executive officers, and sets salary and
bonus levels and option grants under the Company's 1995 Stock Incentive Plan.
The objectives of the Compensation Committee are to correlate executive
compensation with the Company's business objectives and performance and to
enable the Company to attract, retain and reward executive officers who
contribute to the long-term success of the Company.
EXECUTIVE COMPENSATION COMPONENTS
The key components of the Company's compensation program are base salary,
quarterly and annual incentive awards and equity participation. These components
are administered with the goal of providing total compensation that is
competitive in the marketplace, rewards successful financial performance and
aligns executive officers' interests with those of stockholders. The
Compensation Committee reviews each component of executive compensation on an
annual basis.
BASE SALARIES
Base salaries for executive officers are based upon a review of salaries for
similar positions requiring similar qualifications. In determining executive
officer salaries, the Compensation Committee reviews recommendations from
management which include information from salary surveys. Additionally, the
Compensation Committee establishes both financial and operational based
objectives and goals. These goals and objectives include sales and spending
forecasts, along with published executive compensation
B-10
<PAGE>
literature for comparable sized companies. The Compensation Committee considers
not only the performance evaluations of executive officers, but also reviews the
financial condition of the Company in setting salaries. The Compensation
Committee believes that executive officer base salaries for 1998 were reasonable
as compared to amounts paid by companies of similar size in the software
industry and located in the Pacific Northwest.
The Compensation Committee annually assesses the performance and sets the
salary of the Company's Chief Executive Officer, Michael F. Bosworth. Mr.
Bosworth annually assesses the performance of all other executive officers and
recommends salary increases to the Compensation Committee for review and
approval.
BONUS PLAN
The Compensation Committee believes that a significant proportion of total
cash compensation for executive officers should be subject to attainment of
specific Company operating income targets. This approach creates a direct
incentive for executive officers to achieve desired performance goals and places
a significant percentage of certain executive officers' compensation at risk.
Consequently, each year the Compensation Committee establishes potential bonuses
for executive officers based on the Company's achievement of certain operating
income targets. For 1998, annual bonuses equal to 0% to 49% of base salaries
were paid to executive officers based on the Company's achievement of such
predetermined operating income targets.
STOCK OPTIONS
The Compensation Committee believes that employee equity ownership provides
significant motivation to executive officers to maximize value for the Company's
stockholders and, therefore, periodically grants stock options under the
Company's 1995 Stock Incentive Plan. Stock options are granted at the current
market price and will only have value if the Company's stock price increases
over the exercise price. The Compensation Committee determines the size and
frequency of option grants for executive officers, after consideration of
recommendations from the Chief Executive Officer. Recommendations for option
grants are based upon the relative position and responsibilities of each
executive officer, expected contributions of each executive officer to the
Company and previous option grants to such executive officers.
CHIEF EXECUTIVE OFFICER COMPENSATION
Consistent with the executive compensation philosophy and components
described above, the Compensation Committee determined the base salary, bonus
and stock options received by Mr. Bosworth, the Chairman of the Board, President
and Chief Executive Officer of the Company, for services rendered in 1998. The
Compensation Committee approved Mr. Bosworth's 1998 annual base salary of
approximately $187,000, based on the salary survey data referred to above and
compensation levels of President/Chief Executive Officers of comparable size
companies in industries similar to the Company's and located in the Pacific
Northwest. Mr. Bosworth received a bonus of approximately $62,000 based upon the
Company's achievement of certain operating income targets predetermined by the
Compensation Committee. In addition, options to purchase 35,000 shares of the
Company's Common Stock at $9.31 per share were granted to Mr. Bosworth in 1998.
COMPENSATION COMMITTEE
John C. Savage
Richard P. Magnuson
B-11
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
officers, and persons who own more than ten percent (10%) of a registered class
of the Company's equity securities, to file initial reports of ownership and
reports of changes in ownership with the Commission. Such persons also are
required to furnish the Company with copies of all Section 16(a) reports they
file.
Based solely on its review of the copies of such reports received by it with
respect to fiscal 1998, or written representations from certain reporting
persons, the Company believes that except as set forth below all filing
requirements applicable to its directors, officers and persons who own more than
10% of a registered class of the Company's equity securities have been complied
with for fiscal 1998. Jim Moon, a member of the Company Board, failed to timely
file his Form 4 for August 1998, in connection with a purchase of the Company
Common Stock in the open market.
CERTAIN TRANSACTIONS AND RELATIONSHIPS
The following is a description of certain transactions and relationships
entered into or existing since January 1, 1998 between the Company and certain
affiliated parties. The Company believes that the terms of such transactions
were no less favorable to the Company than could have been obtained from an
unaffiliated party.
Alliant acted as the Company's financial advisor with respect to the
Agreement and Plan of Reorganization dated September 20, 1998 (the
"Reorganization Agreement") by and among Summit Design, Inc. ("Summit"), Hood
Acquisition Corp., a wholly-owned subsidiary of Summit, and the Company, and the
proposed merger with Summit. Alliant provided the Company with a written opinion
to the effect that the equity consideration to have been paid to the Company's
stockholders pursuant to the Reorganization Agreement was fair to such
stockholders from a financial point of view. Pursuant to an engagement letter
dated August 13, 1998 with the Company, Alliant received a fee of $100,000 upon
delivery of such written opinion. The Company also reimbursed Alliant for its
out-of-pocket expenses, including reasonable legal and other expenses. In
addition, the Company agreed to indemnify Alliant and any shareholders,
directors, employees or contractors of Alliant, against any claim, liabilities
or expenses relating or arising out of services provided by Alliant as financial
advisor to the Company.
Alliant has also served as the Company's financial advisor with respect to
the Merger Agreement and in connection therewith provided the Company with the
fairness opinion set forth as Annex A to this Schedule 14D-9. Pursuant to an
engagement letter dated April 23, 1999, Alliant will receive $100,000 for
rendering such opinion and an additional success fee equal to one percent (1%)
of the aggregate consideration paid by Cadence for the Shares in the Offer and
the Merger. The Company will reimburse Alliant for its out-of-pocket expenses,
including reasonable legal and other expenses. In addition, the Company agreed
to indemnify Alliant and any shareholders, directors, employees or contractors
of Alliant, against any claim, liabilities or expenses relating or arising out
of services provided by Alliant as financial advisor to the Company.
John C. Savage was a Principal of Redwood Partners, LLC at the time of the
Company's acquisition of MicroSim, and a Managing Director of Alliant at the
time of Alliant's provision of financial advisory services to the Company. Mr.
Savage has served as a member of the Company's Board of Directors since
September 1991 and continues to so serve. As of June 15, 1999, Mr. Savage owned
options to acquire 20,000 shares of the Company Common Stock, and 23,524 shares
of the Company Common Stock.
Effective September 17, 1998, the Company entered into Employment Agreements
with certain of its executive officers, including Michael F. Bosworth, William
E. Cibulsky, Stuart A. Harrington, and James M. Plymale. The Employment
Agreements provide that if the employee resigns voluntarily or if the Company
terminates such employee's employment for "Cause" (as defined in the Employment
Agreements and described below), then the employee's salary and benefits will
cease as of the effective date of
B-12
<PAGE>
such resignation or termination for Cause. The Employment Agreements also
contain change of control provisions which provide that if the employee is
terminated without Cause or if the employee resigns following a "Constructive
Termination" (as defined in the Employment Agreements and described below)
within a period beginning one month before the signing of a letter of intent or
other definitive agreement which will result in a "Control Change" (as defined
in the Employment Agreements and described below) of the Company and ending
twelve months after the effective date of the Control Change, such employee will
be entitled to (i) receive all benefits earned; (ii) continuation, for a period
of three months for each year during which the employee has been employed by the
Company (including employment with companies acquired by the Company), of
employee's then current salary plus incentive compensation, up to a maximum of
twelve months; and (iii) acceleration of the vesting of 25% of all stock options
granted by the Company to such employee which are not exercisable as of the date
of such termination for each year during which the employee has been employed by
the Company (including employment with companies acquired by the Company), so
that such options are then immediately exercisable. In addition, the Company
will provide benefits for the salary continuation period. For purposes of the
Employment Agreements, "Constructive Termination" includes (i) reassigning the
employee to duties not reasonably considered of equivalent or greater
responsibility, (ii) changing the employee's title to one not reasonably
considered equivalent or greater, (iii) reducing the employee's overall
compensation or (iv) directing the employee to report to a level of management
below the level to which the employee previously reported, all without the
employee's advance written consent. For purposes of the Employment Agreements,
"Control Change" includes (i) sale of substantially all of the Company's assets
to or (ii) acquisition of a majority of the Company's voting stock or entry into
a voting or common control agreement covering a majority of the Company's voting
stock by, an entity(ies) that is not controlled by or under common control with
the entity(ies) who had majority ownership of the Company's voting stock and/or
effective control of the Company prior to such sale, acquisition or voting
agreement. For purposes of the Employment Agreements, "Cause" includes the
employee's (i) conviction of a crime involving the Company's business, (ii)
misappropriation of the Company's monies or assets, (iii) fraudulent conduct and
(iv) grossly negligent performance of, or willful failure to perform, employment
duties.
B-13
<PAGE>
STOCK OWNED BY MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the ownership
of the Company Common Stock as of June 15, 1999, with respect to: (i) each
person known by the Company to beneficially own more than 5% of the outstanding
shares of Company Common Stock, (ii) each of the Company's directors, (iii) each
of the Company's named executive officers and (iv) all directors and executive
officers as a group.
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK PERCENT OF
BENEFICIALLY COMMON STOCK
NAME AND BUSINESS ADDRESS OWNED(1) OUTSTANDING
- ------------------------------------------------------------------------------------ -------------- ---------------
<S> <C> <C>
Wolfram H. Blume(2) ................................................................ 1,248,376 13.3%
c/o OrCAD, Inc.
16275 Laguna Canyon Drive
Irvine, CA 92618
Kern Capital Management, LLC(3) .................................................... 531,000 5.7
114 West 47th Street, Suite 1926
New York, NY 10036
The D3 Family Fund, L.P.(2)(4) ..................................................... 471,375 5.1
19605 NE 8th Street
Camas, WA 98607
Dalton, Greiner, Hartman, Maher & Co(5) ............................................ 471,200 5.1
1100 Fifth Avenue South, Suite 301
Naples, FL 34102
FMR Corp.(6) ....................................................................... 468,700 5.0
82 Devonshire Street
Boston, MA 02109
Michael F. Bosworth(2).............................................................. 214,550 2.3
Stephen W. Director................................................................. 35,952 *
William E. Cibulsky................................................................. 24,266 *
Stuart A. Harrington................................................................ 110,784 1.2
Richard P. Magnuson................................................................. 47,454 *
James B. Moon....................................................................... 42,000 *
James M. Plymale.................................................................... 40,397 *
John C. Savage...................................................................... 43,524 *
Executive Officers and Directors as a group (13 persons)............................ 1,896,663 19.4
</TABLE>
- ------------------------
* less than one percent
(1) Beneficial ownership is determined in accordance with rules of the
Commission, and includes voting power and investment power with respect to
Shares. Shares issuable upon the exercise of outstanding stock options that
are currently exercisable or become exercisable within 60 days from June 15,
1999 are considered outstanding for the purpose of calculating the
percentage of Company Common Stock owned by such person, but not for the
purpose of calculating the percentage of Company Common Stock owned by any
other person. The number of shares that are issuable upon the exercise of
options that are currently exercisable or exercisable within 60 days of June
15, 1999, is as follows: Dr. Director--31,139; Mr. Savage--20,000; Mr.
Magnuson--36,894; Mr. Moon--40,000;
B-14
<PAGE>
Mr. Bosworth--146,133; Mr. Cibulsky--23,124; Mr. Plymale--38,486; Mr.
Harrington--4,167; Mr. Blume--30,000; and all directors and officers as a
group--446,344.
(2) Effective as of June 14, 1999, Messrs. Blume and Bosworth and the D3 Family
Fund L.P. (collectively, the "Tendering Stockholders") each entered into a
stockholders agreement with Cadence and Purchaser, pursuant to which such
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.
(3) This information as to beneficial ownership is based on a Schedule 13G filed
by Kern Capital Management, LLC ("KCM"), Robert E. Kern Jr. and David G.
Kern with the Commission on February 12, 1999. The Messrs. Kern are
Principals and controlling members of KCM. The Schedule 13G states that, as
of December 31, 1998, KCM had sole voting and sole dispositive power with
respect to 531,000 shares of Company Common Stock. According to the Schedule
13 G, the Messrs. Kern may be deemed to share voting or dispositive power
with respect to the 531,000 shares of Company Common Stock owned by KCM.
(4) This information as to beneficial ownership is based on a Schedule 13D filed
with the Commission on March 12, 1999 by a group comprised of The D3 Family
Fund, L.P. ("Family Fund"), Haredale, Ltd., Sharptown Limited, James Henry
Hildebrandt, Toxford Corporation, David Nierenberg, and Florence Cies. David
Nierenberg is President of Nierenberg Investment Management Company, the
General Partner of the Family Fund. The Schedule 13D states that as of March
2, 1999, the Family Fund had sole voting and dispositive power with respect
to 406,900 shares of Company Common Stock, and David Nierenberg had sole
voting and dispositive power with respect to an aggregate of 64,475 shares
of Company Common Stock beneficially owned by Haredale, Ltd., Sharptown
Limited, James Henry Hildebrandt, Toxford Corporation, David Nierenberg and
Florence Cies.
(5) This information as to beneficial ownership is based on a Schedule 13G filed
by Dalton, Greiner, Hartman, Maher & Co with the Commission on February 1,
1999. The Schedule 13G states that, as of December 31, 1998, Dalton,
Greiner, Hartman, Maher & Co had sole voting and sole dispositive power with
respect to 471,200 shares of Company Common Stock.
(6) This information as to beneficial ownership is based on a Schedule 13G/A
filed by FMR Corp., Edward C. Johnson 3rd, Chairman of FMR Corp. and Abigail
P. Johnson, a director of FMR Corp. with the Commission on February 12,
1999. The Schedule 13G/A states that, as of December 31, 1998, Fidelity
Management & Research Company ("Fidelity"), a wholly-owned subsidiary of FMR
Corp., was the beneficial owner of 468,700 shares of Company Common Stock
owned by the Fidelity Low-Priced Stock Fund (the "Fund"), an investment
company, as to which Fidelity serves as investment adviser. According to the
Schedule 13G/A, each of Mr. Johnson and FMR Corp. (through its control of
Fidelity), has sole power to dispose of the 468,700 shares of Company Common
Stock owned by the Fund, however, neither Mr. Johnson nor FMR Corp. has sole
power to vote or direct the voting of the 468,700 shares of Company Common
Stock. Voting power resides in the Board of Trustees of Fidelity.
INCORPORATION BY REFERENCE
The information contained in the Proxy Statement of the Company, dated as of
April 19, 1999, relating to 1999 Annual Meeting of Stockholders, attached as
Exhibit (c)(4) to the Company's Schedule 14D-9 is incorporated herein by
reference in its entirety.
B-15
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- -------------------------------------------------------------------------------------------------------
<C> <S>
(a)(1) Offer to Purchase, dated June 18, 1999.*+
(a)(2) Letter of Transmittal.*+
(a)(3) Press Release dated June 15, 1999 issued by Cadence (incorporated by reference to Exhibit (a)(8) to
Purchaser's Tender Offer Statement on Schedule 14D-1, dated June 18, 1999).
(a)(4) Opinion of Alliant Partners, dated June 14, 1999.*+
(a)(5) Letter to Stockholders, dated June 18, 1999, from the Company's Board of Directors.*+
(c)(1) Agreement and Plan of Merger, dated as of June 14, 1999, by and among the Company, Purchaser and
Cadence (incorporated by reference to Exhibit (c)(1) to Purchaser's Tender Offer Statement on Schedule
14D-1, dated June 18, 1999).
(c)(2) Stock Option Agreement, dated as of June 14, 1999, among the Company, Purchaser and Cadence
(incorporated by reference to Exhibit (c)(2) to Purchaser's Tender Offer Statement on Schedule 14D-1,
dated June 18, 1999).
(c)(3) Stockholders Agreement, dated as of June 14, 1999, among the stockholders of the Company listed on
Schedule I thereto, Purchaser and Cadence (incorporated by reference to Exhibit (c)(3) to Purchaser's
Tender Offer Statement on Schedule 14D-1, dated June 18, 1999).
(c)(4) Proxy Statement of the Company, dated as of April 19, 1999, (incorporated by reference to the Company's
Proxy Statement on Schedule 14A, filed with the Commission on April 16, 1999).
(c)(5) Employment Letter, Noncompetition Agreement, and Employee Proprietary Information and Inventions
Agreement between Cadence and Michael F. Bosworth.+
(c)(6) Employment Letter, Noncompetition Agreement, and Employee Proprietary Information and Inventions
Agreement between Cadence and P. David Bundy.+
(c)(7) Employment Letter, Noncompetition Agreement, and Employee Proprietary Information and Inventions
Agreement between Cadence and James M. Plymale.+
(c)(8) Employment Letter, Noncompetition Agreement, and Employee Proprietary Information and Inventions
Agreement between Cadence and William E. Cibulsky.+
(c)(9) Employment Letter, Noncompetition Agreement, and Employee Proprietary Information and Inventions
Agreement between Cadence and Stuart A. Harrington.+
(c)(10) Employment Letter, Noncompetition Agreement, and Employee Proprietary Information and Inventions
Agreement between Cadence and Philip J. Kilcoin.+
(c)(11) Employment Letter, Noncompetition Agreement, and Employee Proprietary Information and Inventions
Agreement between Cadence and Graham K. Sheldon.+
(c)(12) Employment Letter, Noncompetition Agreement, and Employee Proprietary Information and Inventions
Agreement between Cadence and Donald G. Tannenbaum.+
</TABLE>
- ------------------------
* Included with Schedule 14D-9 mailed to shareholders.
+ Filed herewith.
<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."
<PAGE>
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.
2
<PAGE>
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
3
<PAGE>
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.
4
<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.
5
<PAGE>
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
6
<PAGE>
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
7
<PAGE>
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.
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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.
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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
35
<PAGE>
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>
ANNEX A
ALLIANT PARTNERS
June 14, 1999
Board of Directors
OrCAD, Inc.
9300 S.W. Nimbus Avenue
Beaverton, OR 97008
You have requested our opinion as to the fairness, from a financial point of
view, to the stockholders of OrCAD, Inc. ("OrCAD") for the consideration
received in the acquisition (the "Acquisition") of OrCAD by Cadence Design
Systems, Inc. ("Cadence"). As contemplated by the Agreement and Plan of Merger
(the "Agreement"), dated June 14, 1999, OrCAD will receive $13.00 per share in
Cash, or Total Cash Consideration of approximately $124 million.
For purposes of the opinion set forth herein, we have:
(a) reviewed financial statements and other information of OrCAD;
(b) reviewed certain internal financial statements and other financial and
operating data concerning OrCAD prepared by the management of OrCAD;
(c) analyzed certain financial projections prepared by the management of
OrCAD;
(d) discussed the past and current operations, financial condition, and the
prospects of OrCAD with senior executives of OrCAD;
(e) discussed with the senior management of OrCAD the strategic objectives
of the Acquisition and the strategic alternatives available to OrCAD;
(f) compared the financial performance of OrCAD with that of certain other
comparable publicly-traded companies and the prices paid for securities
in those publicly-traded companies;
(g) reviewed the financial terms, to the extent publicly available, of
certain comparable acquisition transactions;
(h) assessed OrCAD's forecast and future cash flows for a discounted cash
flow analysis;
(i) reviewed the Agreement and Plan of Merger, and certain related
documents; and
(j) performed such other analyses and considered such other factors as we
have deemed appropriate.
We have assumed and relied upon, without independent verification, the accuracy
and completeness of the information reviewed by us for the purposes of this
opinion. With respect to the financial projections of OrCAD, we have assumed
that they have been reasonably prepared on bases reflecting the best currently
available estimates and judgements of the future financial performance of OrCAD.
The financial and other information regarding OrCAD reviewed by Alliant Partners
in connection with the rendering of this opinion was limited to information
provided by OrCAD's management and certain discussions with OrCAD's senior
management regarding OrCAD's financial condition and prospects and their
strategic objectives of the Acquisition as well as the strategic alternatives
available to OrCAD. In addition, we have assumed that the Acquisition will be
consummated in accordance with the terms set forth in the Agreement. We have not
made any independent valuation or appraisal of the assets or liabilities of
OrCAD, nor have we been furnished with any such appraisals. Our opinion is
necessarily based on economic, market and other conditions as in effect on, and
the information made available to us as of the date hereof.
A-1
<PAGE>
Our opinion addresses only the fairness of the transaction, from a financial
point of view, to the stockholders of OrCAD, and we do not express any views on
any other terms of the Agreement or the business bases underlying the Agreement.
Alliant Partners has received fees from OrCAD for previous advisory
engagements as well as a fee for this transaction.
Based upon and subject to the foregoing, and based upon such other matters
as we consider relevant, it is our opinion that, as of the date hereof, the cash
consideration received by the OrCAD stockholders pursuant to the Agreement is
fair, from a financial point of view, to the OrCAD stockholders.
Very truly yours,
Alliant Partners
A-2
<PAGE>
[LOGO]
ORCAD, INC.
9300 S.W. NIMBUS AVENUE
BEAVERTON, OR 97008
JUNE 18, 1999
To Our Stockholders:
On behalf of the Board of Directors (the "Board") of OrCAD, Inc., a Delaware
corporation (the "Company"), we are pleased to inform you that on June 14, 1999,
the Company entered into an Agreement and Plan of Merger (the "Merger
Agreement") with Cadence Design Systems, Inc., a Delaware corporation
("Parent"), and its wholly-owned subsidiary, CDSI Acquisition Corporation, a
Delaware corporation ("Purchaser"), pursuant to which Purchaser today has
commenced a cash tender offer (the "Offer") to purchase all of the issued and
outstanding shares (the "Shares") of the Company's common stock, par value $0.01
per share (the "Common Stock"), at a price of $13.00 per Share, net to the
seller in cash, without interest. The Offer is currently scheduled to expire at
Midnight, New York City time, on Friday, July 16, 1999, unless the Offer is
extended.
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 BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE
OFFER, THE MERGER AGREEMENT, AND THE TRANSACTIONS CONTEMPLATED THEREBY, ARE FAIR
TO AND IN THE BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS, HAS UNANIMOUSLY
APPROVED THE OFFER, THE MERGER AGREEMENT, THE STOCK OPTION AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS
ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT THERETO.
In arriving at its recommendation, the Board gave careful consideration to
the factors described in the attached Solicitation/Recommendation Statement on
Schedule 14D-9 (the "Schedule 14D-9") that is being filed today with the
Securities and Exchange Commission. Among other things, the Board considered the
opinion of its financial advisor, Alliant Partners, that the cash consideration
to be received pursuant to the terms of the Merger Agreement is fair, from a
financial point of view, to the stockholders of the Company.
In addition to the attached Schedule 14D-9, enclosed also is the Offer to
Purchase dated June 18, 1999, together with related materials, including a
Letter of Transmittal, to be used for tendering your Shares in the Offer. These
documents state the terms and conditions of the Offer and provide instructions
as to how to tender your Shares. WE URGE YOU TO READ THESE DOCUMENTS CAREFULLY
IN MAKING YOUR DECISION WITH RESPECT TO TENDERING YOUR SHARES PURSUANT TO THE
OFFER.
On behalf of the Board of Directors,
[SIGNATURE]
Michael F. Bosworth
Chairman of the Board, President and
Chief Executive Officer
<PAGE>
EXHIBIT 99(c)(5)
June 11, 1999
Michael F. Bosworth
Orcad, Inc.
9300 S.W. Nimbus
Beaverton, OR 97008
Re: Letter Agreement Regarding Terms of Employment
Dear Mr. Bosworth:
We are very pleased to offer you employment as Senior Vice President of the
Design Productivity Group, and Corporate Vice President with Cadence Design
Systems, Inc. ("Cadence") following the merger of Orcad, Inc. with a wholly
owned subsidiary of Cadence (the "Merger"). In the context of the proposed
purchase of Orcad, Inc. by Cadence, this letter sets forth the terms of our
offer of employment to you as well as other related matters for your approval
and signature. This offer will become effective upon consummation of the
Merger. At that time (assuming you have signed this offer letter), in addition
to becoming an employee of Cadence, you will be exchanging your stock options in
Orcad, Inc. for stock options in Cadence. This offer of employment is
conditioned upon consummation of the Merger.
1. Your base salary as a full-time employee will be $250,000 per year,
paid semi-monthly in accordance with Cadence's normal payroll practices.
2. While a full-time employee, you will be eligible for an annual bonus
of 50% of your annual base salary. Actual payment is based on company
performance and your individual achievements. The bonus payment is paid during
the first 45 days of the first quarter of the fiscal year following the fiscal
year in which the bonus is earned. You must be a full-time employee through the
payout date to be eligible for a pro-rata portion of your annual bonus. Your
eligibility for a bonus will be determined according to the applicable bonus
plan.
3. You will be granted a nonqualified stock option for 100,000 shares of
Cadence Common Stock. This option will vest as to 20% of the shares on the
first anniversary of your employment with Cadence and monthly thereafter for
forty-eight months on the last day of each month during your employment.
Options will be granted by the Compensation Committee shortly after the
consummation of the Merger, at the average of the high and low market price of
Cadence's Common Stock on the date of grant.
4. While you are a full-time employee, you will receive benefits
comparable in the aggregate to the health and other benefits that are generally
available to the rest of Cadence's full-time U.S. based employees (provided, of
course, you meet the standard eligibility requirements for such benefits) for
purposes of benefits, your service date with Cadence will be calculated
<PAGE>
Michael F. Bosworth
June 11, 1999
Page 2
based on your first date of employment with Orcad, Inc. or its predecessor.
Further, if you earned a sabbatical while employed with Orcad, Inc., you will
be provided the opportunity to take that sabbatical while employed by Cadence.
5. As part of this offer of employment, Cadence agrees that if you are
employed by Cadence at the end of the first day following the consummation of
the Merger, you will receive an initial retention bonus of $125,000.00.
Cadence further agrees that if you remain employed by Cadence through the
one-year anniversary of the consummation of the Merger, you will receive an
additional retention bonus in the amount of $375,000.00.
6. Should your employment be terminated without cause at any time
during the one (1) year following the consummation of the Merger (the
"Term"), Cadence will pay you your base salary and target bonus and the
balance of the retention bonus as outlined in paragraph 5 above for the
remaining period of the Term. However, if you are terminated for cause,(1) or
if you resign, the obligation of Cadence to provide you with salary or stock
vesting or bonus shall immediately end. Further, regardless of the reason
for your termination of employment, on the date of your termination, your
other employee benefits will terminate. Your employment relationship with
Cadence will be at-will. That is, Cadence may terminate your employment with
Cadence at any time and you may terminate your employment with Cadence at any
time with or without cause, for any reason or for no reason, with or without
notice. If Cadence terminates your employment without cause after the end of
the Term, you shall be entitled to receive base salary earned but unpaid
through the date of termination. You also have the opportunity to receive
benefits and payments provided by Cadence's Severance Plan in effect at that
time. If your employment is terminated as a result of death or disability,
you will be entitled to receive only base salary earned but unpaid through
the date of termination, and Cadence will be required to make no other
payment by way of salary, bonus or other compensation or damages of any kind.
- -------------------------------------
(1) You shall be considered to have been terminated with "cause" if your
employment is terminated for (a) any gross misconduct or fraud in the
performance of your employment, (b) your conviction or guilty plea with
respect to any felony (except for motor vehicle violations), (c) your
material breach of the Noncompetition Agreement, or the Proprietary
Information and Inventions Agreement, after written notice delivered to you
of such breach and a reasonable opportunity to cure such breach, (d) your
failure to perform your duties satisfactorily after receipt of written
warning and after a reasonable opportunity to cure and after a thorough
review by the Group Director of Human Resources for the Systems Division
and the Sr. Vice President of Employment and Workplace Services, or (e)
engaging in conduct which is injurious to Orcad, Inc. or Cadence.
<PAGE>
Michael F. Bosworth
June 11, 1999
Page 3
7. This agreement supersedes the Employment Agreement between you and
Orcad, Inc., dated September 17, 1998 and, upon your acceptance of this offer
of employment, that Employment Agreement shall be null and void.
8. You must sign an Employee Proprietary Information and Inventions
Agreement, a copy of which is attached for your signature, in order to become
an Employee of Cadence. Additionally, in connection with the acquisition and
as a condition both the acquisition and of this offer of employment, you must
execute the Noncompetition Agreement attached hereto.
9. Payments of salary and other compensations will be subject to
customary withholding and other taxes.
10. In accordance with the Immigration Reform and Control Act of 1986,
you must be a United States citizen, or have authorization to work in the
United States. In either case, verification of your right to work is
required within seventy-two hours of employment.
11. This agreement shall be governed by the laws of the State of
California.
We are excited about the potential represented by the Merger and we are
pleased you will be joining us as a key part of the new team.
Sincerely,
CADENCE DESIGN SYSTEMS, INC.
/s/ Ron Kirchenbauer
Ron Kirchenbauer
Senior Vice President of Employee Workplace
Services
Acknowledged and agreed:
/s/ Michael F. Bosworth
- ----------------------------
Michael F. Bosworth
Date: June 14, 1999
Enclosures
<PAGE>
EXHIBIT 99(c)(5)
NONCOMPETITION AGREEMENT
THIS NONCOMPETTION AGREEMENT is being executed and delivered as of June
14, 1999 by Michael F. Bosworth ("Stockholder") in favor of and for the
benefit of CADENCE DESIGN SYSTEMS, INC., a Delaware corporation ("Parent"),
and ORCAD, INC., a Delaware corporation (the "Corporation").
RECITALS
A. As an employee and stockholder of the Corporation, Stockholder has
obtained and will obtain extensive and valuable knowledge and information
concerning the business of the Corporation (including confidential
information relating to the Corporation and its operations, assets,
contracts, customers, personnel, plans and prospects).
B. Contemporaneously with the execution and delivery of this
Noncompetition Agreement, the Corporation is entering into an Agreement and
Plan of Merger with Parent and a subsidiary of Parent (the "Reorganization
Agreement"), which provides (subject to the conditions set forth therein) for
the merger of Parent's subsidiary into the Corporation with the Corporation
as the surviving corporation (the "Merger"). As a result of the Merger, the
Corporation will become a wholly-owned subsidiary of Parent, and Stockholder
will receive options for shares of common stock of Parent in exchange for
Stockholder's options for shares of common stock of the Corporation.
C. It is also contemplated that, on the date that the Merger becomes
effective (the "Effective Time"), Stockholder will become an employee of
Parent and, as such, will obtain extensive and valuable knowledge and
information concerning the business of Parent (including confidential
information and relating to Parent and its operations, assets, contracts,
customers, personnel, plans and prospects).
In connection with the Merger and as a condition to entering into the
Reorganization Agreement and consummating the Merger, and to more fully
secure unto Parent the benefits of the Merger, Parent has requested that
Stockholder enter into this Noncompetition Agreement; and Stockholder is
entering into this Noncompetition Agreement in order to induce Parent to
enter into the Reorganization Agreement and consummate the Merger.
E. Both Parent and the Corporation have conducted, are conducting and
will continue to conduct their respective businesses on a worldwide basis.
<PAGE>
AGREEMENT
In order to induce Parent to enter into the Reorganization Agreement and
consummate the Merger, and in consideration of the issuance and delivery to
Stockholder of options for shares of common stock of Parent pursuant to the
Reorganization Agreement, Stockholder agrees as follows:
1. ACKNOWLEDGMENTS BY STOCKHOLDER. Stockholder acknowledges that the
promises and restrictive covenants that Stockholder is providing in this
Noncompetition Agreement are reasonable and necessary to the protection of
Parent's business and Parent's legitimate interests in its acquisition of the
Corporation (including the Corporation's goodwill) pursuant to the
Reorganization Agreement. Stockholder acknowledges that, in connection with
the consummation of the Merger, all of Stockholder's options for shares of
common stock of the Corporation will be exchanged for options for shares of
common stock of Parent.
2. NONCOMPETITION. Stockholder agrees that he will not, except with
the express prior written consent of the Parent, during the period from the
date hereof through twelve months following the termination of his
employment, voluntarily or involuntarily, for any reason whatsoever, directly
or indirectly, individually or on behalf of persons not now parties to this
Noncompetition Agreement, or as a partner, stockholder, director, officer,
principal, agent, employee or in any other capacity or relationship, for his
own account or for the benefit of any other person:
(a) engage in software development or services in the areas of FPGA
design and printed circuit board design;
(b) be or become an officer, director, stockholder, owner, affiliate,
salesperson, co-owner, partner, trustee, promoter, technician, engineer,
analyst, employee, agent, representative, supplier, consultant, advisor or
manager of or to, or otherwise acquire or hold any interest in, any person
or entity that engages in software development or services focused
primarily on FPGA design and printed circuit board design; or
(c) provide any service (as an employee, consultant or otherwise),
support, product or technology to any person or entity, if such service,
support, product or technology involves or relates to software development
or services in the areas of FPGA design and printed circuit board design;
or
(d) permit his name to be used in connection with a business that
competes with Parent or Corporation:
PROVIDED, HOWEVER, that nothing in this Section 2 shall prevent Stockholder
from owning as a passive investment less than 5% of the outstanding shares of
the capital stock of a publicly-held corporation if (A) such shares are
actively traded on an established national securities market in the United
States and (B) Stockholder is not otherwise associated directly or indirectly
with such corporation or any affiliate of such corporation. Under this
Noncompetition Agreement,
2
<PAGE>
Stockholder's employment with Parent shall be deemed to terminate at such
time that Stockholder is neither a full-time nor a part-time employee of
Parent.
3. NONSOLICITATION. Stockholder further agrees that, during your
employment, and for one year following Stockholder's termination of
employment with Parent, Stockholder will not and Stockholder will not permit
any of his affiliates to:
(a) personally or through others, encourage, induce, attempt to
induce, solicit or attempt to solicit (on Stockholder's own behalf or on
behalf of any other person or entity) anyone who is employed at that time,
or was employed during the previous six (6) months, by the Corporation,
Parent or any of Parent's subsidiaries to leave his or her employment with
the Corporation, Parent or any of Parent's subsidiaries; or
(b) personally or through others, use any trade secret or proprietary
information of Parent or Corporation or any other improper means to
interfere or attempt to interfere with the relationship or prospective
relationship of the Corporation, Parent or any of Parent's subsidiaries
with any person or entity that is, was or is expected to become a customer
or client of the Corporation, Parent or any of Parent's subsidiaries; or
(c) solicit the business of any client or customer of the
Corporation, Parent or any of Parent's subsidiaries (other than on behalf
of the Parent).
4. INDEPENDENCE OF OBLIGATIONS. The covenants and obligations of
Stockholder set forth in this Noncompetition Agreement shall be construed as
independent of any other agreement or arrangement between Stockholder, on the
one hand, and the Corporation or Parent, on the other.
5. SPECIFIC PERFORMANCE. Stockholder agrees that in the event of any
breach or threatened breach by Stockholder of any covenant, obligation or
other provision contained in this Noncompetition Agreement, Parent and the
Corporation shall be entitled (in addition to any other remedy that may be
available by law to them) to the extent permitted by applicable law (a) a
decree or order of specific performance to enforce the observance and
performance of such covenant, obligation or other provision, and (b) an
injunction restraining such breach or threatened breach. Stockholder further
agrees that neither Parent nor any other person or entity shall be required
to provide any bond or other security in connection with any such decree,
order or injunction or in connection with any related action or proceeding.
6. NON-EXCLUSIVITY. The rights and remedies of Parent and the
Corporation hereunder are not exclusive of or limited by any other rights or
remedies which Parent or the Corporation may have, whether at law, in equity,
by contract or otherwise, all of which shall be cumulative (and not
alternative). Without limiting the generality of the foregoing, the rights
and remedies of Parent and the Corporation hereunder, and the obligations and
liabilities of Stockholder hereunder, are in addition to their respective
rights, remedies, obligations and liabilities under the law of unfair
competition, misappropriation of trade secrets and the like. This
Noncompetition Agreement does not limit Stockholder's obligations or the
rights of Parent or the Corporation (or any affiliate of Parent or the
Corporation) under the terms of (a) the
3
<PAGE>
Employment Agreement of even date herewith between Stockholder and Parent;
(b) the Proprietary Information and Inventions Agreement between Stockholder
and the Parent; (c) the Reorganization Agreement; or (d) the terms of any
other agreement between Stockholder and Parent or the Corporation or any
affiliate of Parent or the Corporation.
7. NOTICES. Any notice or other communication required or permitted to
be delivered to Stockholder, the Corporation or Parent under this Noncompetition
Agreement shall be in writing and shall be deemed properly delivered, given and
received when delivered (by hand, by registered mail, by courier or express
delivery service or by facsimile) to the address or facsimile telephone number
set forth beneath the name of such party below (or to such other address or
facsimile telephone number as such party shall have specified in a written
notice delivered in accordance with this Section 7):
IF TO THE CORPORATION: Orcad, Inc.
9300 S.W. Nimbus
Beaverton, OR 97008
IF TO PARENT: Cadence Design Systems, Inc.,
2655 Seely Road
San Jose, CA 95134
Attention:
Facsimile No.:
IF TO STOCKHOLDER: Michael F. Bosworth
118 North Shore Circle
Lake Oswego, OR 97034
8. SEVERABILITY. If any provision of the Noncompetition Agreement or
any part of any such provision is held under any circumstances to be invalid
or unenforceable in any jurisdiction, then (a) such provision or part thereof
shall, with respect to such circumstances and in such jurisdiction, be deemed
amended to conform to applicable laws so as to be valid and enforceable to
the fullest possible extent, (b) the invalidity or unenforceability or such
provision or part thereof under such circumstances and in such jurisdiction
shall not affect the validity or enforceability of such provision or part
thereof under any other circumstances or in any other jurisdiction, and (c)
such invalidity or enforceability of such provision or part thereof shall not
affect the validity or enforceability of the remainder of such provision or
the validity or enforceability of any other provision of this Noncompetition
Agreement is separable from every other part of such provision.
9. GOVERNING LAW. This Noncompetition Agreement shall be construed in
accordance with, and governed in all respects by, the laws of the State of
California (without giving effect to principles of conflicts of laws).
4
<PAGE>
10. WAIVER. No failure on the part of Parent or the Corporation to
exercise any power, right, privilege or remedy under this Noncompetition
Agreement, and no delay on the part of Parent or the Corporation in
exercising any power, right, privilege or remedy under this Noncompetition
Agreement, shall operate as a waiver of such power, right, privilege or
remedy; and no single or partial exercise of any such power, right, privilege
or remedy shall preclude any other or further exercise thereof or of any
other power, right, privilege or remedy. Neither Parent nor the Corporation
shall be deemed to have waived any claim arising out of this Noncompetition
Agreement, or any power, right, privilege or remedy under this Noncompetition
Agreement, unless the waiver of such claim, power, right, privilege or remedy
is expressly set forth in a written instrument duly executed and delivered on
behalf of such party; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
11. CAPTIONS. The captions contained in this Noncompetition Agreement
are for convenience of reference only, shall not be deemed to be a part of
this Noncompetition Agreement and shall not be referred to in connection with
the construction or interpretation of this Noncompetition Agreement.
12. FURTHER ASSURANCES. Stockholder shall execute and/or cause to be
delivered to the Corporation and Parent such instruments and other documents
and shall take such other actions as Corporation and Parent may reasonably
request to effectuate the intent and purposes of this Noncompetition
Agreement.
13. ENTIRE AGREEMENT. This Noncompetition Agreement, the Stockholder's
offer letter and the Employee Proprietary Information and Inventions
Agreement, and the other agreements referred to herein set forth the entire
understanding of Stockholder, the Corporation and Parent relating to the
subject matter hereof and thereof and supersede all prior agreements and
understandings between any of such parties relating to the subject matter
hereof and thereof.
14. AMENDMENTS. This Noncompetition Agreement may not be amended,
modified, altered, or supplemented other than by means of a written
instrument duly executed and delivered on behalf of Parent and Stockholder.
15. ASSIGNMENT. This Noncompetition Agreement and all obligations
hereunder are personal to Stockholder and may not be transferred or assigned
by Stockholder at any time. Either Parent or the Corporation may assign its
rights under this Noncompetition Agreement in whole or in part, without the
consent or approval of the Stockholder or any other person or entity, in
connection with (A) the sale of Parent or the Corporation, or (B) the sale or
other transfer of all or a substantial part of the assets or business of the
Parent or the Corporation.
16. ATTORNEYS' FEES. If any legal action or other legal proceeding
relating to this Noncompetition Agreement or the enforcement of any provision
of this Noncompetition Agreement is brought against any party to this
Noncompetition Agreement, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
5
<PAGE>
17. EFFECTIVE DATE. This Noncompetition Agreement shall become
effective upon the effective time of the merger contemplated by the
Reorganization Agreement (the "Effective Time").
18. BINDING NATURE. Subject to Section 16, this Noncompetition
Agreement will be binding upon Stockholder and Stockholder's representatives,
executors, administrators, estate, heirs, successors and assigns, and will
inure to the benefit of Parent and the Corporation and their respective
successors and assigns.
IN WITNESS WHEREOF, the undersigned has executed this Noncompetition
Agreement as of the date first above written.
/s/ Michael F. Bosworth
-----------------------------------------------
Michael F. Bosworth
6
<PAGE>
FORM OF:
CADENCE DESIGN SYSTEMS, INC.
EMPLOYEE PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
(to be signed in conjunction with Non Competition Agreement and Offer Letter)
In consideration of my employment or continued employment by Cadence
Design Systems, Inc. (the "Company"), and the compensation now and hereafter
paid to me, I hereby agree as follows:
1. NONDISCLOSURE
1.1 RECOGNITION OF COMPANY'S RIGHTS; NONDISCLOSURE. At all times
during my employment and thereafter, I will hold in strictest confidence and
will not disclose, use, lecture upon or publish any of the Company's
Proprietary Information (defined below), except as such disclosure, use or
publication may be required in connection with my work for the Company, or
unless an officer of the Company expressly authorizes such in writing. I
will obtain Company's written approval before publishing or submitting for
publication any material (written, verbal, or otherwise) that relates to my
work at Company and/or incorporates any Proprietary Information. I hereby
assign to the Company any rights I may have or acquire in such Proprietary
Information and recognize that all Proprietary Information shall be the sole
property of the Company and its assigns.
1.2 PROPRIETARY INFORMATION. The term "Proprietary Information" shall
mean any and all confidential and/or proprietary knowledge, data or
information of, or acquired by, the Company. By way of illustration but not
limitation, "Proprietary Information" includes (a) information relating to
products, processes, know-how, designs, drawings, concepts, test data,
formulas, methods, compositions, ideas, algorithms, techniques, developmental
or experimental work, improvements and discoveries, (hereinafter collectively
referred to as "Inventions"); (b) information regarding plans for research,
development, new products, marketing and selling, business plans, budgets and
unpublished financial statements, licenses, prices and costs, suppliers and
customers; and (c) information regarding the skills and compensation of other
employees of the Company. Notwithstanding the foregoing, it is understood
that, at all such times, I am free to use information which is generally
known in the trade or industry, which is not gained as result of a breach of
this Agreement, and my own, skill, knowledge, know-how and experience to
whatever extent and in whichever way I wish.
1.3 THIRD PARTY INFORMATION. I understand, in addition, that the
Company has received and in the future will receive from third parties
confidential or proprietary information ("Third Party Information") subject
to a duty on the Company's part to maintain the confidentiality of such
information and to use it only for certain limited purposes. During the term
of my employment and thereafter, I will hold Third Party Information in the
strictest confidence and will not disclose to anyone (other than Company
personnel who need to know such information in connection with their work for
the Company) or use, except in connection with my work for the Company, Third
Party Information unless expressly authorized by an officer of the Company in
writing.
<PAGE>
1.4 NO IMPROPER USE OF INFORMATION OF PRIOR EMPLOYERS AND OTHERS.
During my employment by the Company I will not improperly use or disclose any
confidential information or trade secrets, if any, of any former employer or
any other person to whom I have an obligation of confidentiality, and I will
not bring onto the premises of the Company any unpublished documents or any
property belonging to my former employer or any other person to whom I have
an obligation of confidentiality unless consented to in writing by that
former employer or person. I will use in the performance of my duties only
information which is generally known and used by persons with training and
experience comparable to my own, which is common knowledge in the industry or
otherwise legally in the public domain, or which is otherwise provided or
developed by the Company.
2. ASSIGNMENT OF INVENTIONS
2.1 PROPRIETARY RIGHTS. The term "Proprietary Rights" shall mean all
trade secret, patent, copyright, mask work and other intellectual property
rights throughout the world.
2.2 PRIOR INVENTIONS. Inventions, if any, patented or unpatented,
which I made prior to the commencement of my employment with the Company are
excluded from the scope of this Agreement. To preclude any possible
uncertainty, I have set forth on Exhibit B (Previous Inventions) attached
hereto a complete list of all inventions that I have, alone or jointly with
others, conceived, developed or reduced to practice or caused to be
conceived, developed or reduced to practice prior to the commencement of my
employment with the Company, that I consider to be my property or the
property of third parties and that I wish to have excluded from the scope of
this Agreement (collectively referred to as "Prior Inventions"). If
disclosure of any such Prior Invention(s) would cause me to violate any prior
confidentiality agreement, I understand that I am not to list such Prior
Invention(s) in Exhibit B, but am only to disclose a cursory name for each
such invention, a listing of the party(ies) to whom it belongs and the fact
that full disclosure as to such inventions has not been made for that reason.
A space is provided on Exhibit B for such purpose. If no such disclosure is
attached, I represent that there are no Prior Inventions. If, in the course
of my employment with the Company, I incorporate a Prior Invention into a
Company product, process or machine, the Company is hereby granted and shall
have a nonexclusive, royalty-free, irrevocable, perpetual, worldwide license
(with rights to sublicense through multiple tiers of sublicensees) to make,
have made, modify, use and sell such Prior Invention. Notwithstanding the
foregoing, I agree that I will not incorporate, or permit to be incorporated,
Prior Inventions in any Company Inventions without the Company's prior
written consent.
2.3 ASSIGNMENT OF INVENTIONS. Subject to Sections 2.4, and 2.6, I
hereby assign and agree to assign in the future (when any such Inventions or
Proprietary Rights are first reduced to practice or first fixed in a tangible
medium, as applicable) to the Company all my right, title and interest in and
to any and all Inventions (and all Proprietary Rights with respect thereto)
whether or not patentable or registrable under copyright or similar statutes,
made or conceived or reduced to practice or learned by me, either alone or
jointly with others, during the period of my employment with the Company.
Inventions assigned to the Company, or to a third party as
2
<PAGE>
directed by the Company pursuant to this Section 2, are hereinafter referred
to as "Company Inventions."
2.4 NONASSIGNABLE INVENTIONS. This Agreement does not apply to an
Invention which qualifies fully as a nonassignable Invention under Section
2870 of the California Labor Code (hereinafter "Section 2870"). I have
reviewed the notification on Exhibit A (Limited Exclusion Notification) and
agree that my signature acknowledges receipt of the notification.
2.5 OBLIGATION TO KEEP COMPANY INFORMED. During the period of my
employment and for one (1) year after termination of my employment with the
company, I will promptly disclose to the Company fully and in writing all
Inventions authored, conceived or reduced to practice by me, either alone or
jointly with others, particularly if I leave the Company and become employed
by a competitor of the Company, or if I commercialize an idea that the
Company decided not to pursue. In addition, I will promptly disclose to the
Company all patent applications filed by me or on my behalf during my
employment or within a year after termination of employment. At the time of
each such disclosure, I will advise the Company in writing of any Inventions
that I believe fully qualify for protection under Section 2870; and I will at
that time provide to the Company in writing all evidence necessary to
substantiate that belief. The Company will keep in confidence and will not
use for any purpose or disclose to third parties without my consent any
confidential information disclosed in writing to the Company pursuant to this
Agreement relating to Inventions that qualify fully for protection under the
provisions of Section 2870. I will preserve the confidentiality of any
Invention that does not fully qualify for protection under Section 2870. For
one (1) year following my termination of employment any and all patent
applications filed by me or by a third party based on my work will be
presumed to be owned by the Company. I can rebut this presumption by
providing evidence sufficient to establish ownership by the party applying
for the patent.
2.6 GOVERNMENT OR THIRD PARTY. I also agree to assign all my right,
title and interest in and to any particular Invention to a third party,
including without limitation the United States, as directed by the Company.
2.7 WORKS FOR HIRE. I acknowledge that all original works of
authorship which are made by me (solely or jointly with others) within the
scope of my employment and which are protectable by copyright are "works made
for hire," pursuant to United States Copyright Act (17 U.S.C. Section 101).
2.8 ENFORCEMENT OF PROPRIETARY RIGHTS. During and after my employment
with the Company, I will assist the Company in every proper way to obtain,
and from time to time enforce, United States and foreign Proprietary Rights
relating to Company Inventions in any and all countries. To that end I will
execute, verify and deliver such documents and perform such other acts
(including appearances as a witness) as the Company may reasonably request
for use in applying for, obtaining, perfecting, evidencing, sustaining and
enforcing such Proprietary Rights and the assignment thereof. In addition, I
will execute, verify and deliver assignments of such Proprietary Rights to
the Company or its designee. My obligation to assist the Company with
respect to Proprietary Rights relating to such Company Inventions in any and
all countries
3
<PAGE>
shall continue beyond the termination of my employment, but the Company shall
compensate me at a reasonable rate after my termination for the time actually
spent by me at the Company's request on such assistance.
In the event the Company is unable for any reason, after reasonable
effort to secure my signature on any document needed in connection with the
actions specified in the preceding paragraph, I hereby irrevocably designate
and appoint the Company and its duly authorized officers and agents as my
agent and attorney in fact, which appointment is coupled with an interest, to
act for and in my behalf to execute, verify and file any such documents and
to do all other lawfully permitted acts to further the purposes of the
preceding paragraph with the same legal force and effect as if executed by
me. I hereby waive and quitclaim to the Company any and all claims, of any
nature whatsoever, which I now or may hereafter have for infringement of any
Proprietary Rights assigned hereunder to the Company.
3. RECORDS. I agree to keep and maintain adequate and current records (in
the form of notes, sketches, drawings and in any other form that may be
required by the Company) of all Proprietary Information developed by me and
all Inventions made by me during the period of my employment at the Company,
which records shall be available to and remain the sole property of the
Company at all times.
4. ADDITIONAL ACTIVITIES. I agree that during the period of my employment
by the Company I will not, without the Company's express written consent,
engage in any employment or business activity which is competitive with, or
would otherwise conflict with, my employment by the Company.
5. AT-WILL EMPLOYMENT. I agree and understand that nothing in this
Agreement shall confer any right with respect to continuation of employment
by the Company, nor shall it interfere in any way with my right or the
Company's right to terminate the employment relationship at any time, for any
reason, with or without cause, and with or without notice. I understand
that, other than the Company's Senior Vice President of Human Resources, no
manager, supervisor, employee or any other representative or agent of the
Company has the authority to enter into an agreement to the contrary. I
further understand that an agreement to the contrary by the Senior Vice
President of Human Resources is not valid unless it is in writing.
6. NO CONFLICTING OBLIGATION. I represent that my performance of all the
terms of this Agreement, and of my duties as an employee of the Company, does
not and will not breach any agreement to keep in confidence information
acquired by me in confidence or in trust prior to my employment by the
Company. I have not entered into, and I agree I will not enter into, any
agreement either written or oral in conflict herewith.
7. RETURN OF COMPANY DOCUMENTS AND PROPERTY. When I leave the employ of
the Company, I will deliver to the Company any and all drawings, notebooks,
notes, memoranda, source code, specifications, devices, formulas, records,
manuals, reports and documents, together with all copies thereof, and any
other material containing or disclosing any Company Inventions, Third Party
Information or Proprietary Information of the Company, that is within my
possession, custody or control. Further, upon termination of employment I
also will
4
<PAGE>
return any and all Company property or equipment in my possession, custody or
control. Prior to leaving, I will cooperate with the Company in completing
and signing the Company's agreement regarding termination.
8. NON-PRIVATE NATURE OF COMPANY PROPERTY. I understand that I have no
expectation of privacy in the voicemail and electronic mail provided to me by
the Company or in any property situated on the Company's premises and/or
owned by the Company, including disks and other storage media, filing
cabinets or other work areas. I further understand that such property,
including voicemail and electronic mail, is subject to inspection by Company
personnel at any time.
9. NOTICES. Any notices required or permitted hereunder shall be given to
the appropriate party at the address specified below or at such other address
as the party shall specify in writing. Such notice shall be deemed given
upon personal delivery to the appropriate address or if sent by certified or
registered mail, three (3) days after the date of mailing.
10. NOTIFICATION OF NEW EMPLOYER. In the event that I leave the employ of
the Company, I hereby consent to the notification of my new employer of my
rights and obligations under this Agreement.
11. GENERAL PROVISIONS.
11.1 GOVERNING LAWS, CONSENT TO PERSONAL JURISDICTION. This Agreement
will be governed by and construed according to the laws of the State of
California, as such laws are applied to agreements entered into and to be
performed entirely within California between California residents. I hereby
expressly consent to the personal jurisdiction of the state and federal
courts located in Santa Clara County, California for any lawsuit filed there
against me by Company arising from or related to this Agreement.
11.2 SEVERABILITY. In the event any one or more of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect the other provisions of this Agreement, and
this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein. If, moreover, any
one or more of the provisions contained in this Agreement shall for any
reason be held to be excessively broad as to duration, geographical scope,
activity or subject, it shall be construed by limiting and reducing it, so as
to be enforceable to the extent compatible with the applicable law as it
shall then appear.
11.3 SURVIVAL. The provisions of this Agreement shall survive the
termination of my employment and the assignment of this Agreement by the
Company to any successor in interest or other assignee.
11.4 WAIVER. No waiver by the Company of any breach of this Agreement
shall be a waiver of any preceding or succeeding breach. No waiver by the
Company of any right under this Agreement shall be construed as a wavier of
any other right. The Company shall not be required to give notice to enforce
strict adherence to all terms of this Agreement.
5
<PAGE>
11.5 ENTIRE AGREEMENT. The obligations pursuant to Sections 1 and 2 of
this Agreement shall apply to any time during which I was previously
employed, or am in the future employed, by the Company as a consultant if no
other agreement governs nondisclosure and assignment of inventions during
such period. This Agreement is the final, complete and exclusive agreement of
the parties with respect to the subject matter hereof and supersedes all
prior discussions between us, except that the Noncompetition Agreement,
Cadence Code of Conduct, and my offer letter, all of which I signed, are
incorporated herein. No modification of or amendment to this Agreement, nor
any waiver of any rights under this Agreement, will be effective unless in
writing and signed by the party to be charged. Any subsequent change or
changes in my duties, salary or compensation will not affect the validity or
scope of this Agreement.
This Agreement shall be effective as of the first day of my employment
with the Company, namely: _____________, 19___.
I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS. I HAVE
COMPLETELY FILLED OUT EXHIBIT B TO THIS AGREEMENT.
Dated:
---------------------------------------------
Signature
- ---------------------------------------------------
(Printed Name)
ACCEPTED AND AGREED TO:
CADENCE DESIGN SYSTEMS, INC.
By:
-----------------------------------------------
Title:
--------------------------------------------
Date:
---------------------------------------------
6
<PAGE>
EXHIBIT A
LIMITED EXCLUSION NOTIFICATION
THIS IS TO NOTIFY you in accordance with Section 2872 of the California
Labor Code that the foregoing Agreement between you and the Company does not
require you to assign or offer to assign to the Company any invention that
you developed entirely on your own time without using the Company's
equipment, supplies, facilities or trade secret information except for those
inventions that either:
(1) Relate at the time of conception or reduction to practice of the
invention to the Company's business, or actual or demonstrably anticipated
research or development of the Company;
(2) Result from any work performed by you for the Company.
To the extent a provision in the foregoing Agreement purports to require
you to assign an invention otherwise excluded from the preceding paragraph,
the provision is against the public policy of this state and is unenforceable.
This limited exclusion does not apply to any patent or invention covered
by a contract between the Company and the United States or any of its
agencies requiring full title to such patent or invention to be in the United
States.
I ACKNOWLEDGE RECEIPT of a copy of this notification.
By:
------------------------------------
(printed name of employee)
Date:
------------------------------------
WITNESSED BY:
- ------------------------------------------
(printed name of representative)
Dated:
-----------------------------------
A-1
<PAGE>
EXHIBIT B
TO: Cadence Design Systems, Inc.
FROM:
----------------------------------------------
DATE:
----------------------------------------------
SUBJECT: Previous Inventions
1. Except as listed in Section 2 below, the following is a complete
list of all inventions or improvements relevant to the subject matter of my
employment by Cadence Design Systems, Inc. (the "Company") that have been
made or conceived or first reduced to practice by me alone or jointly with
others prior to my engagement by the Company:
/ / No inventions or improvements.
/ / See below:
____________________________________________________________
____________________________________________________________
____________________________________________________________
/ / Additional sheets attached.
2. Due to a prior confidentiality agreement, I cannot complete the
disclosure under Section 1 above with respect to inventions or improvements
generally listed below, the proprietary rights and duty of confidentiality with
respect to which I owe to the following party(ies);
<TABLE>
<CAPTION>
Invention or Improvement Party(ies) Relationship
<S> <C> <C>
1. ________________________ ____________ ______________________
2. ________________________ ____________ ______________________
3. ________________________ ____________ ______________________
</TABLE>
/ / Additional sheets attached.
B-1
<PAGE>
EXHIBIT 99(c)(6)
June 11, 1999
P. David Bundy
Orcad, Inc.
9300 S.W. Nimbus
Beaverton, OR 97008
Dear Mr. Bundy:
We are very pleased to offer you employment as Vice President of Finance
with Cadence Design Systems, Inc. ("Cadence") following the merger of Orcad,
Inc. with a wholly owned subsidiary of Cadence (the "Merger"). In the context
of the proposed purchase of Orcad, Inc. by Cadence, this letter sets forth the
terms of our offer of employment to you as well as other related matters for
your approval and signature. This offer will become effective upon consummation
of the Merger. At that time (assuming you have signed this offer letter), in
addition to becoming an employee of Cadence, you will be exchanging your stock
options in Orcad, Inc. for stock options in Cadence. This offer of employment
is conditioned upon consummation of the Merger.
1. Your base salary as a full-time employee will be $185,000 per year,
paid semi-monthly in accordance with Cadence's normal payroll practices.
2. While a full-time employee, you will be eligible for an annual bonus
of 30% of your annual base salary. Actual payment is based on company
performance and your individual achievements. The bonus payment is paid during
the first 45 days of the first quarter of the fiscal year following the fiscal
year in which the bonus is earned. You must be a full-time employee through the
payout date to be eligible for a pro-rata portion of your annual bonus. Your
eligibility for a bonus will be determined according to the applicable bonus
plan.
3. You will be granted a nonqualified stock option for 50,000 shares of
Cadence Common Stock. This option will vest as to 20% of the shares on the
first anniversary of your employment with Cadence and monthly thereafter for
forty-eight months on the last day of each month during your employment.
Options are granted by the Compensation Committee shortly after the consummation
of the Merger, at the average of the high and low market price of Cadence's
Common Stock on the date of grant.
4. While you are a full-time employee, you will receive benefits
comparable in the aggregate to the health and other benefits that are generally
available to the rest of Cadence's full-time U.S. based employees (provided, of
course, you meet the standard eligibility requirements for such benefits) for
purposes of benefits, your service date with Cadence will be calculated based on
your first date of employment with Orcad, Inc. or its predecessor. Further, if
you earned a sabbatical while employed with Orcad, Inc., you will be provided
the opportunity to take that sabbatical while employed by Cadence.
<PAGE>
P. David Bundy
June 11, 1999
Page 2
5. As part of this offer of employment, Cadence agrees that if you are
employed by Cadence at the end of the first day following the consummation of
the Merger, you will receive an initial retention bonus of $62,500.00. Cadence
further agrees that if you remain employed by Cadence through the one-year
anniversary of the consummation of the Merger, you will receive an additional
retention bonus in the amount of $187,500.00.
6. Should your employment be terminated without cause at any time during
the one (1) year following the consummation of the Merger (the "Term"), Cadence
will pay you your base salary and target bonus and the balance of the retention
bonus as outlined in PARA 5 above for the remaining period of the Term.
However, if you are terminated for cause(1), or if you resign, the obligation of
Cadence to provide you with salary or stock vesting or bonus shall immediately
end. Further, regardless of the reason for your termination of employment, on
the date of your termination, your other employee benefits will terminate. Your
employment relationship with Cadence will be at-will. That is, Cadence may
terminate your employment with Cadence at any time and you may terminate your
employment with Cadence at any time with or without cause, for any reason or for
no reason, with or without notice. If Cadence terminates your employment
without cause after the end of the Term, you shall be entitled to receive base
salary earned but unpaid through the date of termination. You also have the
opportunity to receive benefits and payments provided by Cadence's Severance
Plan in effect at that time. If your employment is terminated as a result of
death or disability, you will be entitled to receive only base salary earned but
unpaid through the date of termination, and Cadence will be required to make no
other payment by way of salary, bonus or other compensation or damages of any
kind.
7. This agreement supersedes the Employment Agreement between you and
Orcad, Inc., dated September 17, 1998 and, upon your acceptance of this offer of
employment, that Employment Agreement shall be null and void.
8. You must sign an Employee Proprietary Information and Inventions
Agreement, a copy of which is attached for your signature, in order to become an
Employee of Cadence.
- --------------------------------
(1) You shall be considered to have been terminated with "cause" if your
employment is terminated for (a) any gross misconduct or fraud in the
performance of your employment, (b) your conviction or guilty plea with
respect to any felony (except for motor vehicle violations), (c) your
material breach of the Noncompetition Agreement, or the Proprietary
Information and Inventions Agreement, after written notice delivered to you
of such breach and a reasonable opportunity to cure such breach, (d) your
failure to perform your duties satisfactorily after receipt of written
warning and after a reasonable opportunity to cure and after a thorough
review by the Group Director of Human Resources for the Systems Division
and the Sr. Vice President of Employment and Workplace Services, or (e)
engaging in conduct which is injurious to Orcad, Inc. or Cadence.
<PAGE>
P. David Bundy
June 11, 1999
Page 3
Additionally, in connection with the acquisition and as a condition both the
acquisition and of this offer of employment, you must execute the Noncompetition
Agreement attached hereto.
9. Payments of salary and other compensations will be subject to
customary withholding and other taxes.
10. In accordance with the Immigration Reform and Control Act of 1986, you
must be a United States citizen, or have authorization to work in the United
States. In either case, verification of your right to work is required within
seventy-two hours of employment.
11. This agreement shall be governed by the laws of the State of
California.
We are excited about the potential represented by the Merger and we are
pleased you will be joining us as a key part of the new team.
Sincerely,
CADENCE DESIGN SYSTEMS, INC.
/s/ Ron Kirchenbauer
Ron Kirchenbauer
Senior Vice President of Employee Workplace
Services
Acknowledged and agreed:
/s/ P. David Bundy
- ----------------------------------
P. David Bundy
Date: June 14, 1999
Enclosures
<PAGE>
EXHIBIT 99(c)(6)
NONCOMPETITION AGREEMENT
THIS NONCOMPETTION AGREEMENT is being executed and delivered as of June
14, 1999 by P. David Bundy ("Stockholder") in favor of and for the benefit of
CADENCE DESIGN SYSTEMS, INC., a Delaware corporation ("Parent"), and ORCAD,
INC., a Delaware corporation (the "Corporation").
RECITALS
A. As an employee and stockholder of the Corporation, Stockholder has
obtained and will obtain extensive and valuable knowledge and information
concerning the business of the Corporation (including confidential
information relating to the Corporation and its operations, assets,
contracts, customers, personnel, plans and prospects).
B. Contemporaneously with the execution and delivery of this
Noncompetition Agreement, the Corporation is entering into an Agreement and
Plan of Merger with Parent and a subsidiary of Parent (the "Reorganization
Agreement"), which provides (subject to the conditions set forth therein) for
the merger of Parent's subsidiary into the Corporation with the Corporation
as the surviving corporation (the "Merger"). As a result of the Merger, the
Corporation will become a wholly-owned subsidiary of Parent, and Stockholder
will receive options for shares of common stock of Parent in exchange for
Stockholder's options for shares of common stock of the Corporation.
C. It is also contemplated that, on the date that the Merger becomes
effective (the "Effective Time"), Stockholder will become an employee of
Parent and, as such, will obtain extensive and valuable knowledge and
information concerning the business of Parent (including confidential
information and relating to Parent and its operations, assets, contracts,
customers, personnel, plans and prospects).
In connection with the Merger and as a condition to entering into the
Reorganization Agreement and consummating the Merger, and to more fully
secure unto Parent the benefits of the Merger, Parent has requested that
Stockholder enter into this Noncompetition Agreement; and Stockholder is
entering into this Noncompetition Agreement in order to induce Parent to
enter into the Reorganization Agreement and consummate the Merger.
E. Both Parent and the Corporation have conducted, are conducting and
will continue to conduct their respective businesses on a worldwide basis.
<PAGE>
AGREEMENT
In order to induce Parent to enter into the Reorganization Agreement and
consummate the Merger, and in consideration of the issuance and delivery to
Stockholder of options for shares of common stock of Parent pursuant to the
Reorganization Agreement, Stockholder agrees as follows:
1. ACKNOWLEDGMENTS BY STOCKHOLDER. Stockholder acknowledges that the
promises and restrictive covenants that Stockholder is providing in this
Noncompetition Agreement are reasonable and necessary to the protection of
Parent's business and Parent's legitimate interests in its acquisition of the
Corporation (including the Corporation's goodwill) pursuant to the
Reorganization Agreement. Stockholder acknowledges that, in connection with
the consummation of the Merger, all of Stockholder's options for shares of
common stock of the Corporation will be exchanged for options for shares of
common stock of Parent.
2. NONCOMPETITION. Stockholder agrees that he will not, except with
the express prior written consent of the Parent, during the period from the
date hereof through twelve months following the termination of his
employment, voluntarily or involuntarily, for any reason whatsoever, directly
or indirectly, individually or on behalf of persons not now parties to this
Noncompetition Agreement, or as a partner, stockholder, director, officer,
principal, agent, employee or in any other capacity or relationship, for his
own account or for the benefit of any other person:
(a) engage in software development or services in the areas of FPGA
design and printed circuit board design;
(b) be or become an officer, director, stockholder, owner, affiliate,
salesperson, co-owner, partner, trustee, promoter, technician, engineer,
analyst, employee, agent, representative, supplier, consultant, advisor or
manager of or to, or otherwise acquire or hold any interest in, any person
or entity that engages in software development or services focused
primarily on FPGA design and printed circuit board design; or
(c) provide any service (as an employee, consultant or otherwise),
support, product or technology to any person or entity, if such service,
support, product or technology involves or relates to software development
or services in the areas of FPGA design and printed circuit board design;
or
(d) permit his name to be used in connection with a business that
competes with Parent or Corporation:
PROVIDED, HOWEVER, that nothing in this Section 2 shall prevent Stockholder
from owning as a passive investment less than 5% of the outstanding shares of
the capital stock of a publicly-held corporation if (A) such shares are
actively traded on an established national securities market in the United
States and (B) Stockholder is not otherwise associated directly or indirectly
with such corporation or any affiliate of such corporation. Under this
Noncompetition Agreement,
2
<PAGE>
Stockholder's employment with Parent shall be deemed to terminate at such
time that Stockholder is neither a full-time nor a part-time employee of
Parent.
3. NONSOLICITATION. Stockholder further agrees that, during your
employment, and for one year following Stockholder's termination of employment
with Parent, Stockholder will not and Stockholder will not permit any of his
affiliates to:
(a) personally or through others, encourage, induce, attempt to
induce, solicit or attempt to solicit (on Stockholder's own behalf or on
behalf of any other person or entity) anyone who is employed at that time,
or was employed during the previous six (6) months, by the Corporation,
Parent or any of Parent's subsidiaries to leave his or her employment with
the Corporation, Parent or any of Parent's subsidiaries; or
(b) personally or through others, use any trade secret or proprietary
information of Parent or Corporation or any other improper means to
interfere or attempt to interfere with the relationship or prospective
relationship of the Corporation, Parent or any of Parent's subsidiaries
with any person or entity that is, was or is expected to become a customer
or client of the Corporation, Parent or any of Parent's subsidiaries; or
(c) solicit the business of any client or customer of the
Corporation, Parent or any of Parent's subsidiaries (other than on behalf
of the Parent).
4. INDEPENDENCE OF OBLIGATIONS. The covenants and obligations of
Stockholder set forth in this Noncompetition Agreement shall be construed as
independent of any other agreement or arrangement between Stockholder, on the
one hand, and the Corporation or Parent, on the other.
5. SPECIFIC PERFORMANCE. Stockholder agrees that in the event of any
breach or threatened breach by Stockholder of any covenant, obligation or
other provision contained in this Noncompetition Agreement, Parent and the
Corporation shall be entitled (in addition to any other remedy that may be
available by law to them) to the extent permitted by applicable law (a) a
decree or order of specific performance to enforce the observance and
performance of such covenant, obligation or other provision, and (b) an
injunction restraining such breach or threatened breach. Stockholder further
agrees that neither Parent nor any other person or entity shall be required
to provide any bond or other security in connection with any such decree,
order or injunction or in connection with any related action or proceeding.
6. NON-EXCLUSIVITY. The rights and remedies of Parent and the
Corporation hereunder are not exclusive of or limited by any other rights or
remedies which Parent or the Corporation may have, whether at law, in equity,
by contract or otherwise, all of which shall be cumulative (and not
alternative). Without limiting the generality of the foregoing, the rights
and remedies of Parent and the Corporation hereunder, and the obligations and
liabilities of Stockholder hereunder, are in addition to their respective
rights, remedies, obligations and liabilities under the law of unfair
competition, misappropriation of trade secrets and the like. This
Noncompetition Agreement does not limit Stockholder's obligations or the
rights of Parent or the Corporation (or any affiliate of Parent or the
Corporation) under the terms of (a) the
3
<PAGE>
Employment Agreement of even date herewith between Stockholder and Parent;
(b) the Proprietary Information and Inventions Agreement between Stockholder
and the Parent; (c) the Reorganization Agreement; or (d) the terms of any
other agreement between Stockholder and Parent or the Corporation or any
affiliate of Parent or the Corporation.
7. NOTICES. Any notice or other communication required or permitted
to be delivered to Stockholder, the Corporation or Parent under this
Noncompetition Agreement shall be in writing and shall be deemed properly
delivered, given and received when delivered (by hand, by registered mail, by
courier or express delivery service or by facsimile) to the address or
facsimile telephone number set forth beneath the name of such party below (or
to such other address or facsimile telephone number as such party shall have
specified in a written notice delivered in accordance with this Section 7):
IF TO THE CORPORATION: Orcad, Inc.
9300 S.W. Nimbus
Beaverton, OR 97008
IF TO PARENT: Cadence Design Systems, Inc.,
2655 Seely Road
San Jose, CA 95134
Attention:
Facsimile No.:
IF TO STOCKHOLDER: P. David Bundy
4735 SW Chunut
Tualatin, OR 97062
8. SEVERABILITY. If any provision of the Noncompetition Agreement or
any part of any such provision is held under any circumstances to be invalid
or unenforceable in any jurisdiction, then (a) such provision or part thereof
shall, with respect to such circumstances and in such jurisdiction, be deemed
amended to conform to applicable laws so as to be valid and enforceable to
the fullest possible extent, (b) the invalidity or unenforceability or such
provision or part thereof under such circumstances and in such jurisdiction
shall not affect the validity or enforceability of such provision or part
thereof under any other circumstances or in any other jurisdiction, and (c)
such invalidity or enforceability of such provision or part thereof shall not
affect the validity or enforceability of the remainder of such provision or
the validity or enforceability of any other provision of this Noncompetition
Agreement is separable from every other part of such provision.
9. GOVERNING LAW. This Noncompetition Agreement shall be construed in
accordance with, and governed in all respects by, the laws of the State of
California (without giving effect to principles of conflicts of laws).
4
<PAGE>
10. WAIVER. No failure on the part of Parent or the Corporation to
exercise any power, right, privilege or remedy under this Noncompetition
Agreement, and no delay on the part of Parent or the Corporation in
exercising any power, right, privilege or remedy under this Noncompetition
Agreement, shall operate as a waiver of such power, right, privilege or
remedy; and no single or partial exercise of any such power, right, privilege
or remedy shall preclude any other or further exercise thereof or of any
other power, right, privilege or remedy. Neither Parent nor the Corporation
shall be deemed to have waived any claim arising out of this Noncompetition
Agreement, or any power, right, privilege or remedy under this Noncompetition
Agreement, unless the waiver of such claim, power, right, privilege or remedy
is expressly set forth in a written instrument duly executed and delivered on
behalf of such party; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
11. CAPTIONS. The captions contained in this Noncompetition Agreement
are for convenience of reference only, shall not be deemed to be a part of
this Noncompetition Agreement and shall not be referred to in connection with
the construction or interpretation of this Noncompetition Agreement.
12. FURTHER ASSURANCES. Stockholder shall execute and/or cause to be
delivered to the Corporation and Parent such instruments and other documents
and shall take such other actions as Corporation and Parent may reasonably
request to effectuate the intent and purposes of this Noncompetition
Agreement.
13. ENTIRE AGREEMENT. This Noncompetition Agreement, the Stockholder's
offer letter and the Employee Proprietary Information and Inventions
Agreement, and the other agreements referred to herein set forth the entire
understanding of Stockholder, the Corporation and Parent relating to the
subject matter hereof and thereof and supersede all prior agreements and
understandings between any of such parties relating to the subject matter
hereof and thereof.
14. AMENDMENTS. This Noncompetition Agreement may not be amended,
modified, altered, or supplemented other than by means of a written
instrument duly executed and delivered on behalf of Parent and Stockholder.
15. ASSIGNMENT. This Noncompetition Agreement and all obligations
hereunder are personal to Stockholder and may not be transferred or assigned
by Stockholder at any time. Either Parent or the Corporation may assign its
rights under this Noncompetition Agreement in whole or in part, without the
consent or approval of the Stockholder or any other person or entity, in
connection with (A) the sale of Parent or the Corporation, or (B) the sale or
other transfer of all or a substantial part of the assets or business of the
Parent or the Corporation.
16. ATTORNEYS' FEES. If any legal action or other legal proceeding
relating to this Noncompetition Agreement or the enforcement of any provision
of this Noncompetition Agreement is brought against any party to this
Noncompetition Agreement, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
5
<PAGE>
17. EFFECTIVE DATE. This Noncompetition Agreement shall become
effective upon the effective time of the merger contemplated by the
Reorganization Agreement (the "Effective Time").
18. BINDING NATURE. Subject to Section 16, this Noncompetition
Agreement will be binding upon Stockholder and Stockholder's representatives,
executors, administrators, estate, heirs, successors and assigns, and will
inure to the benefit of Parent and the Corporation and their respective
successors and assigns.
IN WITNESS WHEREOF, the undersigned has executed this Noncompetition
Agreement as of the date first above written.
/s/ P. David Bundy
----------------------------------------
P. David Bundy
6
<PAGE>
FORM OF:
CADENCE DESIGN SYSTEMS, INC.
EMPLOYEE PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
(to be signed in conjunction with Non Competition Agreement and Offer Letter)
In consideration of my employment or continued employment by Cadence
Design Systems, Inc. (the "Company"), and the compensation now and hereafter
paid to me, I hereby agree as follows:
1. NONDISCLOSURE
1.1 RECOGNITION OF COMPANY'S RIGHTS; NONDISCLOSURE. At all times
during my employment and thereafter, I will hold in strictest confidence and
will not disclose, use, lecture upon or publish any of the Company's
Proprietary Information (defined below), except as such disclosure, use or
publication may be required in connection with my work for the Company, or
unless an officer of the Company expressly authorizes such in writing. I
will obtain Company's written approval before publishing or submitting for
publication any material (written, verbal, or otherwise) that relates to my
work at Company and/or incorporates any Proprietary Information. I hereby
assign to the Company any rights I may have or acquire in such Proprietary
Information and recognize that all Proprietary Information shall be the sole
property of the Company and its assigns.
1.2 PROPRIETARY INFORMATION. The term "Proprietary Information" shall
mean any and all confidential and/or proprietary knowledge, data or
information of, or acquired by, the Company. By way of illustration but not
limitation, "Proprietary Information" includes (a) information relating to
products, processes, know-how, designs, drawings, concepts, test data,
formulas, methods, compositions, ideas, algorithms, techniques, developmental
or experimental work, improvements and discoveries, (hereinafter collectively
referred to as "Inventions"); (b) information regarding plans for research,
development, new products, marketing and selling, business plans, budgets and
unpublished financial statements, licenses, prices and costs, suppliers and
customers; and (c) information regarding the skills and compensation of other
employees of the Company. Notwithstanding the foregoing, it is understood
that, at all such times, I am free to use information which is generally
known in the trade or industry, which is not gained as result of a breach of
this Agreement, and my own, skill, knowledge, know-how and experience to
whatever extent and in whichever way I wish.
1.3 THIRD PARTY INFORMATION. I understand, in addition, that the
Company has received and in the future will receive from third parties
confidential or proprietary information ("Third Party Information") subject
to a duty on the Company's part to maintain the confidentiality of such
information and to use it only for certain limited purposes. During the term
of my employment and thereafter, I will hold Third Party Information in the
strictest confidence and will not disclose to anyone (other than Company
personnel who need to know such information in connection with their work for
the Company) or use, except in connection with my work for the Company, Third
Party Information unless expressly authorized by an officer of the Company in
writing.
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1.4 NO IMPROPER USE OF INFORMATION OF PRIOR EMPLOYERS AND OTHERS.
During my employment by the Company I will not improperly use or disclose any
confidential information or trade secrets, if any, of any former employer or
any other person to whom I have an obligation of confidentiality, and I will
not bring onto the premises of the Company any unpublished documents or any
property belonging to my former employer or any other person to whom I have
an obligation of confidentiality unless consented to in writing by that
former employer or person. I will use in the performance of my duties only
information which is generally known and used by persons with training and
experience comparable to my own, which is common knowledge in the industry or
otherwise legally in the public domain, or which is otherwise provided or
developed by the Company.
2. ASSIGNMENT OF INVENTIONS
2.1 PROPRIETARY RIGHTS. The term "Proprietary Rights" shall mean all
trade secret, patent, copyright, mask work and other intellectual property
rights throughout the world.
2.2 PRIOR INVENTIONS. Inventions, if any, patented or unpatented,
which I made prior to the commencement of my employment with the Company are
excluded from the scope of this Agreement. To preclude any possible
uncertainty, I have set forth on Exhibit B (Previous Inventions) attached
hereto a complete list of all inventions that I have, alone or jointly with
others, conceived, developed or reduced to practice or caused to be
conceived, developed or reduced to practice prior to the commencement of my
employment with the Company, that I consider to be my property or the
property of third parties and that I wish to have excluded from the scope of
this Agreement (collectively referred to as "Prior Inventions"). If
disclosure of any such Prior Invention(s) would cause me to violate any prior
confidentiality agreement, I understand that I am not to list such Prior
Invention(s) in Exhibit B, but am only to disclose a cursory name for each
such invention, a listing of the party(ies) to whom it belongs and the fact
that full disclosure as to such inventions has not been made for that reason.
A space is provided on Exhibit B for such purpose. If no such disclosure is
attached, I represent that there are no Prior Inventions. If, in the course
of my employment with the Company, I incorporate a Prior Invention into a
Company product, process or machine, the Company is hereby granted and shall
have a nonexclusive, royalty-free, irrevocable, perpetual, worldwide license
(with rights to sublicense through multiple tiers of sublicensees) to make,
have made, modify, use and sell such Prior Invention. Notwithstanding the
foregoing, I agree that I will not incorporate, or permit to be incorporated,
Prior Inventions in any Company Inventions without the Company's prior
written consent.
2.3 ASSIGNMENT OF INVENTIONS. Subject to Sections 2.4, and 2.6, I
hereby assign and agree to assign in the future (when any such Inventions or
Proprietary Rights are first reduced to practice or first fixed in a tangible
medium, as applicable) to the Company all my right, title and interest in and
to any and all Inventions (and all Proprietary Rights with respect thereto)
whether or not patentable or registrable under copyright or similar statutes,
made or conceived or reduced to practice or learned by me, either alone or
jointly with others, during the period of my employment with the Company.
Inventions assigned to the Company, or to a third party as
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directed by the Company pursuant to this Section 2, are hereinafter referred
to as "Company Inventions."
2.4 NONASSIGNABLE INVENTIONS. This Agreement does not apply to an
Invention which qualifies fully as a nonassignable Invention under Section
2870 of the California Labor Code (hereinafter "Section 2870"). I have
reviewed the notification on Exhibit A (Limited Exclusion Notification) and
agree that my signature acknowledges receipt of the notification.
2.5 OBLIGATION TO KEEP COMPANY INFORMED. During the period of my
employment and for one (1) year after termination of my employment with the
company, I will promptly disclose to the Company fully and in writing all
Inventions authored, conceived or reduced to practice by me, either alone or
jointly with others, particularly if I leave the Company and become employed
by a competitor of the Company, or if I commercialize an idea that the
Company decided not to pursue. In addition, I will promptly disclose to the
Company all patent applications filed by me or on my behalf during my
employment or within a year after termination of employment. At the time of
each such disclosure, I will advise the Company in writing of any Inventions
that I believe fully qualify for protection under Section 2870; and I will at
that time provide to the Company in writing all evidence necessary to
substantiate that belief. The Company will keep in confidence and will not
use for any purpose or disclose to third parties without my consent any
confidential information disclosed in writing to the Company pursuant to this
Agreement relating to Inventions that qualify fully for protection under the
provisions of Section 2870. I will preserve the confidentiality of any
Invention that does not fully qualify for protection under Section 2870. For
one (1) year following my termination of employment any and all patent
applications filed by me or by a third party based on my work will be
presumed to be owned by the Company. I can rebut this presumption by
providing evidence sufficient to establish ownership by the party applying
for the patent.
2.6 GOVERNMENT OR THIRD PARTY. I also agree to assign all my right,
title and interest in and to any particular Invention to a third party,
including without limitation the United States, as directed by the Company.
2.7 WORKS FOR HIRE. I acknowledge that all original works of
authorship which are made by me (solely or jointly with others) within the
scope of my employment and which are protectable by copyright are "works made
for hire," pursuant to United States Copyright Act (17 U.S.C. Section 101).
2.8 ENFORCEMENT OF PROPRIETARY RIGHTS. During and after my employment
with the Company, I will assist the Company in every proper way to obtain,
and from time to time enforce, United States and foreign Proprietary Rights
relating to Company Inventions in any and all countries. To that end I will
execute, verify and deliver such documents and perform such other acts
(including appearances as a witness) as the Company may reasonably request
for use in applying for, obtaining, perfecting, evidencing, sustaining and
enforcing such Proprietary Rights and the assignment thereof. In addition, I
will execute, verify and deliver assignments of such Proprietary Rights to
the Company or its designee. My obligation to assist the Company with
respect to Proprietary Rights relating to such Company Inventions in any and
all countries
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shall continue beyond the termination of my employment, but the Company shall
compensate me at a reasonable rate after my termination for the time actually
spent by me at the Company's request on such assistance.
In the event the Company is unable for any reason, after reasonable
effort to secure my signature on any document needed in connection with the
actions specified in the preceding paragraph, I hereby irrevocably designate
and appoint the Company and its duly authorized officers and agents as my
agent and attorney in fact, which appointment is coupled with an interest, to
act for and in my behalf to execute, verify and file any such documents and
to do all other lawfully permitted acts to further the purposes of the
preceding paragraph with the same legal force and effect as if executed by
me. I hereby waive and quitclaim to the Company any and all claims, of any
nature whatsoever, which I now or may hereafter have for infringement of any
Proprietary Rights assigned hereunder to the Company.
3. RECORDS. I agree to keep and maintain adequate and current records (in
the form of notes, sketches, drawings and in any other form that may be
required by the Company) of all Proprietary Information developed by me and
all Inventions made by me during the period of my employment at the Company,
which records shall be available to and remain the sole property of the
Company at all times.
4. ADDITIONAL ACTIVITIES. I agree that during the period of my employment
by the Company I will not, without the Company's express written consent,
engage in any employment or business activity which is competitive with, or
would otherwise conflict with, my employment by the Company.
5. AT-WILL EMPLOYMENT. I agree and understand that nothing in this
Agreement shall confer any right with respect to continuation of employment
by the Company, nor shall it interfere in any way with my right or the
Company's right to terminate the employment relationship at any time, for any
reason, with or without cause, and with or without notice. I understand
that, other than the Company's Senior Vice President of Human Resources, no
manager, supervisor, employee or any other representative or agent of the
Company has the authority to enter into an agreement to the contrary. I
further understand that an agreement to the contrary by the Senior Vice
President of Human Resources is not valid unless it is in writing.
6. NO CONFLICTING OBLIGATION. I represent that my performance of all the
terms of this Agreement, and of my duties as an employee of the Company, does
not and will not breach any agreement to keep in confidence information
acquired by me in confidence or in trust prior to my employment by the
Company. I have not entered into, and I agree I will not enter into, any
agreement either written or oral in conflict herewith.
7. RETURN OF COMPANY DOCUMENTS AND PROPERTY. When I leave the employ of
the Company, I will deliver to the Company any and all drawings, notebooks,
notes, memoranda, source code, specifications, devices, formulas, records,
manuals, reports and documents, together with all copies thereof, and any
other material containing or disclosing any Company Inventions, Third Party
Information or Proprietary Information of the Company, that is within my
possession, custody or control. Further, upon termination of employment I
also will
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return any and all Company property or equipment in my possession, custody or
control. Prior to leaving, I will cooperate with the Company in completing
and signing the Company's agreement regarding termination.
8. NON-PRIVATE NATURE OF COMPANY PROPERTY. I understand that I have no
expectation of privacy in the voicemail and electronic mail provided to me by
the Company or in any property situated on the Company's premises and/or
owned by the Company, including disks and other storage media, filing
cabinets or other work areas. I further understand that such property,
including voicemail and electronic mail, is subject to inspection by Company
personnel at any time.
9. NOTICES. Any notices required or permitted hereunder shall be given to
the appropriate party at the address specified below or at such other address
as the party shall specify in writing. Such notice shall be deemed given
upon personal delivery to the appropriate address or if sent by certified or
registered mail, three (3) days after the date of mailing.
10. NOTIFICATION OF NEW EMPLOYER. In the event that I leave the employ of
the Company, I hereby consent to the notification of my new employer of my
rights and obligations under this Agreement.
11. GENERAL PROVISIONS.
11.1 GOVERNING LAWS, CONSENT TO PERSONAL JURISDICTION. This Agreement
will be governed by and construed according to the laws of the State of
California, as such laws are applied to agreements entered into and to be
performed entirely within California between California residents. I hereby
expressly consent to the personal jurisdiction of the state and federal
courts located in Santa Clara County, California for any lawsuit filed there
against me by Company arising from or related to this Agreement.
11.2 SEVERABILITY. In the event any one or more of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect the other provisions of this Agreement, and
this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein. If, moreover, any
one or more of the provisions contained in this Agreement shall for any
reason be held to be excessively broad as to duration, geographical scope,
activity or subject, it shall be construed by limiting and reducing it, so as
to be enforceable to the extent compatible with the applicable law as it
shall then appear.
11.3 SURVIVAL. The provisions of this Agreement shall survive the
termination of my employment and the assignment of this Agreement by the
Company to any successor in interest or other assignee.
11.4 WAIVER. No waiver by the Company of any breach of this Agreement
shall be a waiver of any preceding or succeeding breach. No waiver by the
Company of any right under this Agreement shall be construed as a wavier of
any other right. The Company shall not be required to give notice to enforce
strict adherence to all terms of this Agreement.
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11.5 ENTIRE AGREEMENT. The obligations pursuant to Sections 1 and 2 of
this Agreement shall apply to any time during which I was previously
employed, or am in the future employed, by the Company as a consultant if no
other agreement governs nondisclosure and assignment of inventions during
such period. This Agreement is the final, complete and exclusive agreement of
the parties with respect to the subject matter hereof and supersedes all
prior discussions between us, except that the Noncompetition Agreement,
Cadence Code of Conduct, and my offer letter, all of which I signed, are
incorporated herein. No modification of or amendment to this Agreement, nor
any waiver of any rights under this Agreement, will be effective unless in
writing and signed by the party to be charged. Any subsequent change or
changes in my duties, salary or compensation will not affect the validity or
scope of this Agreement.
This Agreement shall be effective as of the first day of my employment
with the Company, namely: _____________, 19___.
I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS. I HAVE
COMPLETELY FILLED OUT EXHIBIT B TO THIS AGREEMENT.
Dated:
---------------------------------------------
- ---------------------------------------------------
Signature
- ---------------------------------------------------
(Printed Name)
ACCEPTED AND AGREED TO:
CADENCE DESIGN SYSTEMS, INC.
By:
-----------------------------------------------
Title:
--------------------------------------------
Date:
---------------------------------------------
6
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EXHIBIT A
LIMITED EXCLUSION NOTIFICATION
THIS IS TO NOTIFY you in accordance with Section 2872 of the California
Labor Code that the foregoing Agreement between you and the Company does not
require you to assign or offer to assign to the Company any invention that you
developed entirely on your own time without using the Company's equipment,
supplies, facilities or trade secret information except for those inventions
that either:
(1) Relate at the time of conception or reduction to practice of the
invention to the Company's business, or actual or demonstrably anticipated
research or development of the Company;
(2) Result from any work performed by you for the Company.
To the extent a provision in the foregoing Agreement purports to require
you to assign an invention otherwise excluded from the preceding paragraph, the
provision is against the public policy of this state and is unenforceable.
This limited exclusion does not apply to any patent or invention covered by
a contract between the Company and the United States or any of its agencies
requiring full title to such patent or invention to be in the United States.
I ACKNOWLEDGE RECEIPT of a copy of this notification.
By:
------------------------------------
(printed name of employee)
Date:
------------------------------------
WITNESSED BY:
- ------------------------------------------
(printed name of representative)
Dated:
-----------------------------------
A-1
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EXHIBIT B
TO: Cadence Design Systems, Inc.
FROM:
----------------------------------------------
DATE:
----------------------------------------------
SUBJECT: Previous Inventions
1. Except as listed in Section 2 below, the following is a complete list
of all inventions or improvements relevant to the subject matter of my
employment by Cadence Design Systems, Inc. (the "Company") that have been made
or conceived or first reduced to practice by me alone or jointly with others
prior to my engagement by the Company:
/ / No inventions or improvements.
/ / See below:
____________________________________________________________
____________________________________________________________
____________________________________________________________
/ / Additional sheets attached.
2. Due to a prior confidentiality agreement, I cannot complete the
disclosure under Section 1 above with respect to inventions or improvements
generally listed below, the proprietary rights and duty of confidentiality with
respect to which I owe to the following party(ies);
<TABLE>
<CAPTION>
Invention or Improvement Party(ies) Relationship
<S> <C> <C>
1. ________________________ ____________ ______________________
2. ________________________ ____________ ______________________
3. ________________________ ____________ ______________________
</TABLE>
/ / Additional sheets attached.
B-1
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EXHIBIT 99(c)(7)
June 11, 1999
James M. Plymale
Orcad, Inc.
9300 S.W. Nimbus
Beaverton, OR 97008
Dear Mr. Plymale:
We are very pleased to offer you employment as Vice President of
Marketing with Cadence Design Systems, Inc. ("Cadence") following the merger
of Orcad, Inc. with a wholly owned subsidiary of Cadence (the "Merger"). In
the context of the proposed purchase of Orcad, Inc. by Cadence, this letter
sets forth the terms of our offer of employment to you as well as other
related matters for your approval and signature. This offer will become
effective upon consummation of the Merger. At that time (assuming you have
signed this offer letter), in addition to becoming an employee of Cadence,
you will be exchanging your stock options in Orcad, Inc. for stock options in
Cadence. This offer of employment is conditioned upon consummation of the
Merger.
1. Your base salary as a full-time employee will be $185,000 per year,
paid semi-monthly in accordance with Cadence's normal payroll practices.
2. While a full-time employee, you will be eligible for an annual
bonus of 30% of your annual base salary. Actual payment is based on company
performance and your individual achievements. The bonus payment is paid
during the first 45 days of the first quarter of the fiscal year following
the fiscal year in which the bonus is earned. You must be a full-time
employee through the payout date to be eligible for a pro-rata portion of
your annual bonus. Your eligibility for a bonus will be determined according
to the applicable bonus plan.
3. You will be granted a nonqualified stock option for 50,000 shares
of Cadence Common Stock. This option will vest as to 20% of the shares on
the first anniversary of your employment with Cadence and monthly thereafter
for forty-eight months on the last day of each month during your employment.
You will also be granted a nonqualified stock option for 30,000 shares of
Cadence Common Stock with a one year cliff vesting tied to objectives to be
set by Cadence. Options are granted by the Compensation Committee shortly
after the consummation of the Merger, at the average of the high and low
market price of Cadence's Common Stock on the date of grant.
4. While you are a full-time employee, you will receive benefits
comparable in the aggregate to the health and other benefits that are
generally available to the rest of Cadence's full-time U.S. based employees
(provided, of course, you meet the standard eligibility requirements for such
benefits) for purposes of benefits, your service date with Cadence will be
calculated
<PAGE>
James M. Plymale
June 11, 1999
Page 2
based on your first date of employment with Orcad, Inc. or its
predecessor. Further, if you earned a sabbatical while employed with Orcad,
Inc., you will be provided the opportunity to take that sabbatical while
employed by Cadence.
5. As part of this offer of employment, Cadence agrees that if you are
employed by Cadence at the end of the first day following the consummation of
the Merger, you will receive an initial retention bonus of $62,500.00.
Cadence further agrees that if you remain employed by Cadence through the
one-year anniversary of the consummation of the Merger, you will receive an
additional retention bonus in the amount of $187,500.00.
6. Should your employment be terminated without cause at any time
during the one (1) year following the consummation of the Merger (the
"Term"), Cadence will pay you your base salary and target bonus and the
balance of the retention bonus as outlined in paragraph 5 above for the
remaining period of the Term. However, if you are terminated for cause,(1) or
if you resign, the obligation of Cadence to provide you with salary or stock
vesting or bonus shall immediately end. Further, regardless of the reason
for your termination of employment, on the date of your termination, your
other employee benefits will terminate. Your employment relationship with
Cadence will be at-will. That is, Cadence may terminate your employment with
Cadence at any time and you may terminate your employment with Cadence at any
time with or without cause, for any reason or for no reason, with or without
notice. If Cadence terminates your employment without cause after the end of
the Term, you shall be entitled to receive base salary earned but unpaid
through the date of termination. You also have the opportunity to receive
benefits and payments provided by Cadence's Severance Plan in effect at that
time. If your employment is terminated as a result of death or disability,
you will be entitled to receive only base salary earned but unpaid through
the date of termination, and Cadence will be required to make no other
payment by way of salary, bonus or other compensation or damages of any kind.
- -----------------------------------
(1) You shall be considered to have been terminated with "cause" if your
employment is terminated for (a) any gross misconduct or fraud in the
performance of your employment, (b) your conviction or guilty plea with
respect to any felony (except for motor vehicle violations), (c) your
material breach of the Noncompetition Agreement, or the Proprietary
Information and Inventions Agreement, after written notice delivered to you
of such breach and a reasonable opportunity to cure such breach, (d) your
failure to perform your duties satisfactorily after receipt of written
warning and after a reasonable opportunity to cure and after a thorough
review by the Group Director of Human Resources for the Systems Division
and the Sr. Vice President of Employment and Workplace Services, or (e)
engaging in conduct which is injurious to Orcad, Inc. or Cadence.
<PAGE>
James M. Plymale
June 11, 1999
Page 3
7. This agreement supersedes the Employment Agreement between you and
Orcad, Inc., dated September 17, 1998 and, upon your acceptance of this offer
of employment, that Employment Agreement shall be null and void.
8. You must sign an Employee Proprietary Information and Inventions
Agreement, a copy of which is attached for your signature, in order to become
an Employee of Cadence. Additionally, in connection with the acquisition and
as a condition both the acquisition and of this offer of employment, you must
execute the Noncompetition Agreement attached hereto.
9. Payments of salary and other compensations will be subject to
customary withholding and other taxes.
10. In accordance with the Immigration Reform and Control Act of 1986,
you must be a United States citizen, or have authorization to work in the
United States. In either case, verification of your right to work is
required within seventy-two hours of employment.
11. This agreement shall be governed by the laws of the State of
California.
We are excited about the potential represented by the Merger and we are
pleased you will be joining us as a key part of the new team.
Sincerely,
CADENCE DESIGN SYSTEMS, INC.
/s/ Ron Kirchenbauer
Ron Kirchenbauer
Senior Vice President of Employee Workplace
Services
Acknowledged and agreed:
/s/ James M. Plymale
- ---------------------------------------
James M. Plymale
Date: June 14, 1999
Enclosures
<PAGE>
EXHIBIT 99(c)(7)
NONCOMPETITION AGREEMENT
THIS NONCOMPETTION AGREEMENT is being executed and delivered as of June
14, 1999 by James M. Plymale ("Stockholder") in favor of and for the benefit
of CADENCE DESIGN SYSTEMS, INC., a Delaware corporation ("Parent"), and
ORCAD, INC., a Delaware corporation (the "Corporation").
RECITALS
A. As an employee and stockholder of the Corporation, Stockholder has
obtained and will obtain extensive and valuable knowledge and information
concerning the business of the Corporation (including confidential
information relating to the Corporation and its operations, assets,
contracts, customers, personnel, plans and prospects).
B. Contemporaneously with the execution and delivery of this
Noncompetition Agreement, the Corporation is entering into an Agreement and
Plan of Merger with Parent and a subsidiary of Parent (the "Reorganization
Agreement"), which provides (subject to the conditions set forth therein) for
the merger of Parent's subsidiary into the Corporation with the Corporation
as the surviving corporation (the "Merger"). As a result of the Merger, the
Corporation will become a wholly-owned subsidiary of Parent, and Stockholder
will receive options for shares of common stock of Parent in exchange for
Stockholder's options for shares of common stock of the Corporation.
C. It is also contemplated that, on the date that the Merger becomes
effective (the "Effective Time"), Stockholder will become an employee of
Parent and, as such, will obtain extensive and valuable knowledge and
information concerning the business of Parent (including confidential
information and relating to Parent and its operations, assets, contracts,
customers, personnel, plans and prospects).
In connection with the Merger and as a condition to entering into the
Reorganization Agreement and consummating the Merger, and to more fully
secure unto Parent the benefits of the Merger, Parent has requested that
Stockholder enter into this Noncompetition Agreement; and Stockholder is
entering into this Noncompetition Agreement in order to induce Parent to
enter into the Reorganization Agreement and consummate the Merger.
E. Both Parent and the Corporation have conducted, are conducting and
will continue to conduct their respective businesses on a worldwide basis.
<PAGE>
AGREEMENT
In order to induce Parent to enter into the Reorganization Agreement and
consummate the Merger, and in consideration of the issuance and delivery to
Stockholder of options for shares of common stock of Parent pursuant to the
Reorganization Agreement, Stockholder agrees as follows:
1. ACKNOWLEDGMENTS BY STOCKHOLDER. Stockholder acknowledges that the
promises and restrictive covenants that Stockholder is providing in this
Noncompetition Agreement are reasonable and necessary to the protection of
Parent's business and Parent's legitimate interests in its acquisition of the
Corporation (including the Corporation's goodwill) pursuant to the
Reorganization Agreement. Stockholder acknowledges that, in connection with
the consummation of the Merger, all of Stockholder's options for shares of
common stock of the Corporation will be exchanged for options for shares of
common stock of Parent.
2. NONCOMPETITION. Stockholder agrees that he will not, except with
the express prior written consent of the Parent, during the period from the
date hereof through twelve months following the termination of his
employment, voluntarily or involuntarily, for any reason whatsoever, directly
or indirectly, individually or on behalf of persons not now parties to this
Noncompetition Agreement, or as a partner, stockholder, director, officer,
principal, agent, employee or in any other capacity or relationship, for his
own account or for the benefit of any other person:
(a) engage in software development or services in the areas of FPGA
design and printed circuit board design;
(b) be or become an officer, director, stockholder, owner, affiliate,
salesperson, co-owner, partner, trustee, promoter, technician, engineer,
analyst, employee, agent, representative, supplier, consultant, advisor or
manager of or to, or otherwise acquire or hold any interest in, any person
or entity that engages in software development or services focused
primarily on FPGA design and printed circuit board design; or
(c) provide any service (as an employee, consultant or otherwise),
support, product or technology to any person or entity, if such service,
support, product or technology involves or relates to software development
or services in the areas of FPGA design and printed circuit board design;
or
(d) permit his name to be used in connection with a business that
competes with Parent or Corporation:
PROVIDED, HOWEVER, that nothing in this Section 2 shall prevent Stockholder
from owning as a passive investment less than 5% of the outstanding shares of
the capital stock of a publicly-held corporation if (A) such shares are
actively traded on an established national securities market in the United
States and (B) Stockholder is not otherwise associated directly or indirectly
with such corporation or any affiliate of such corporation. Under this
Noncompetition Agreement,
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Stockholder's employment with Parent shall be deemed to terminate at such
time that Stockholder is neither a full-time nor a part-time employee of
Parent.
3. NONSOLICITATION. Stockholder further agrees that, during your
employment, and for one year following Stockholder's termination of
employment with Parent, Stockholder will not and Stockholder will not permit
any of his affiliates to:
(a) personally or through others, encourage, induce, attempt to
induce, solicit or attempt to solicit (on Stockholder's own behalf or on
behalf of any other person or entity) anyone who is employed at that time,
or was employed during the previous six (6) months, by the Corporation,
Parent or any of Parent's subsidiaries to leave his or her employment with
the Corporation, Parent or any of Parent's subsidiaries; or
(b) personally or through others, use any trade secret or proprietary
information of Parent or Corporation or any other improper means to
interfere or attempt to interfere with the relationship or prospective
relationship of the Corporation, Parent or any of Parent's subsidiaries
with any person or entity that is, was or is expected to become a customer
or client of the Corporation, Parent or any of Parent's subsidiaries; or
(c) solicit the business of any client or customer of the
Corporation, Parent or any of Parent's subsidiaries (other than on behalf
of the Parent).
4. INDEPENDENCE OF OBLIGATIONS. The covenants and obligations of
Stockholder set forth in this Noncompetition Agreement shall be construed as
independent of any other agreement or arrangement between Stockholder, on the
one hand, and the Corporation or Parent, on the other.
5. SPECIFIC PERFORMANCE. Stockholder agrees that in the event of any
breach or threatened breach by Stockholder of any covenant, obligation or
other provision contained in this Noncompetition Agreement, Parent and the
Corporation shall be entitled (in addition to any other remedy that may be
available by law to them) to the extent permitted by applicable law (a) a
decree or order of specific performance to enforce the observance and
performance of such covenant, obligation or other provision, and (b) an
injunction restraining such breach or threatened breach. Stockholder further
agrees that neither Parent nor any other person or entity shall be required
to provide any bond or other security in connection with any such decree,
order or injunction or in connection with any related action or proceeding.
6. NON-EXCLUSIVITY. The rights and remedies of Parent and the
Corporation hereunder are not exclusive of or limited by any other rights or
remedies which Parent or the Corporation may have, whether at law, in equity,
by contract or otherwise, all of which shall be cumulative (and not
alternative). Without limiting the generality of the foregoing, the rights
and remedies of Parent and the Corporation hereunder, and the obligations and
liabilities of Stockholder hereunder, are in addition to their respective
rights, remedies, obligations and liabilities under the law of unfair
competition, misappropriation of trade secrets and the like. This
Noncompetition Agreement does not limit Stockholder's obligations or the
rights of Parent or the Corporation (or any affiliate of Parent or the
Corporation) under the terms of (a) the
3
<PAGE>
Employment Agreement of even date herewith between Stockholder and Parent;
(b) the Proprietary Information and Inventions Agreement between Stockholder
and the Parent; (c) the Reorganization Agreement; or (d) the terms of any
other agreement between Stockholder and Parent or the Corporation or any
affiliate of Parent or the Corporation.
7. NOTICES. Any notice or other communication required or permitted
to be delivered to Stockholder, the Corporation or Parent under this
Noncompetition Agreement shall be in writing and shall be deemed properly
delivered, given and received when delivered (by hand, by registered mail, by
courier or express delivery service or by facsimile) to the address or
facsimile telephone number set forth beneath the name of such party below (or
to such other address or facsimile telephone number as such party shall have
specified in a written notice delivered in accordance with this Section 7):
IF TO THE CORPORATION: Orcad, Inc.
9300 S.W. Nimbus
Beaverton, OR 97008
IF TO PARENT: Cadence Design Systems, Inc.,
2655 Seely Road
San Jose, CA 95134
Attention:
Facsimile No.:
IF TO STOCKHOLDER: James M. Plymale
10145 SW Redwing Terrace
Beaverton, OR 97007
8. SEVERABILITY. If any provision of the Noncompetition Agreement or
any part of any such provision is held under any circumstances to be invalid
or unenforceable in any jurisdiction, then (a) such provision or part thereof
shall, with respect to such circumstances and in such jurisdiction, be deemed
amended to conform to applicable laws so as to be valid and enforceable to
the fullest possible extent, (b) the invalidity or unenforceability or such
provision or part thereof under such circumstances and in such jurisdiction
shall not affect the validity or enforceability of such provision or part
thereof under any other circumstances or in any other jurisdiction, and (c)
such invalidity or enforceability of such provision or part thereof shall not
affect the validity or enforceability of the remainder of such provision or
the validity or enforceability of any other provision of this Noncompetition
Agreement is separable from every other part of such provision.
9. GOVERNING LAW. This Noncompetition Agreement shall be construed in
accordance with, and governed in all respects by, the laws of the State of
California (without giving effect to principles of conflicts of laws).
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<PAGE>
10. WAIVER. No failure on the part of Parent or the Corporation to
exercise any power, right, privilege or remedy under this Noncompetition
Agreement, and no delay on the part of Parent or the Corporation in
exercising any power, right, privilege or remedy under this Noncompetition
Agreement, shall operate as a waiver of such power, right, privilege or
remedy; and no single or partial exercise of any such power, right, privilege
or remedy shall preclude any other or further exercise thereof or of any
other power, right, privilege or remedy. Neither Parent nor the Corporation
shall be deemed to have waived any claim arising out of this Noncompetition
Agreement, or any power, right, privilege or remedy under this Noncompetition
Agreement, unless the waiver of such claim, power, right, privilege or remedy
is expressly set forth in a written instrument duly executed and delivered on
behalf of such party; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
11. CAPTIONS. The captions contained in this Noncompetition Agreement
are for convenience of reference only, shall not be deemed to be a part of
this Noncompetition Agreement and shall not be referred to in connection with
the construction or interpretation of this Noncompetition Agreement.
12. FURTHER ASSURANCES. Stockholder shall execute and/or cause to be
delivered to the Corporation and Parent such instruments and other documents
and shall take such other actions as Corporation and Parent may reasonably
request to effectuate the intent and purposes of this Noncompetition
Agreement.
13. ENTIRE AGREEMENT. This Noncompetition Agreement, the Stockholder's
offer letter and the Employee Proprietary Information and Inventions
Agreement, and the other agreements referred to herein set forth the entire
understanding of Stockholder, the Corporation and Parent relating to the
subject matter hereof and thereof and supersede all prior agreements and
understandings between any of such parties relating to the subject matter
hereof and thereof.
14. AMENDMENTS. This Noncompetition Agreement may not be amended,
modified, altered, or supplemented other than by means of a written
instrument duly executed and delivered on behalf of Parent and Stockholder.
15. ASSIGNMENT. This Noncompetition Agreement and all obligations
hereunder are personal to Stockholder and may not be transferred or assigned
by Stockholder at any time. Either Parent or the Corporation may assign its
rights under this Noncompetition Agreement in whole or in part, without the
consent or approval of the Stockholder or any other person or entity, in
connection with (A) the sale of Parent or the Corporation, or (B) the sale or
other transfer of all or a substantial part of the assets or business of the
Parent or the Corporation.
16. ATTORNEYS' FEES. If any legal action or other legal proceeding
relating to this Noncompetition Agreement or the enforcement of any provision
of this Noncompetition Agreement is brought against any party to this
Noncompetition Agreement, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
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<PAGE>
17. EFFECTIVE DATE. This Noncompetition Agreement shall become
effective upon the effective time of the merger contemplated by the
Reorganization Agreement (the "Effective Time").
18. BINDING NATURE. Subject to Section 16, this Noncompetition
Agreement will be binding upon Stockholder and Stockholder's representatives,
executors, administrators, estate, heirs, successors and assigns, and will
inure to the benefit of Parent and the Corporation and their respective
successors and assigns.
IN WITNESS WHEREOF, the undersigned has executed this Noncompetition
Agreement as of the date first above written.
/s/ James M. Plymale
----------------------------------
James M. Plymale
6
<PAGE>
FORM OF:
CADENCE DESIGN SYSTEMS, INC.
EMPLOYEE PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
(to be signed in conjunction with Non Competition Agreement and Offer Letter)
In consideration of my employment or continued employment by Cadence Design
Systems, Inc. (the "Company"), and the compensation now and hereafter paid to
me, I hereby agree as follows:
1. NONDISCLOSURE
1.1 RECOGNITION OF COMPANY'S RIGHTS; NONDISCLOSURE. At all times during
my employment and thereafter, I will hold in strictest confidence and will not
disclose, use, lecture upon or publish any of the Company's Proprietary
Information (defined below), except as such disclosure, use or publication may
be required in connection with my work for the Company, or unless an officer of
the Company expressly authorizes such in writing. I will obtain Company's
written approval before publishing or submitting for publication any material
(written, verbal, or otherwise) that relates to my work at Company and/or
incorporates any Proprietary Information. I hereby assign to the Company any
rights I may have or acquire in such Proprietary Information and recognize that
all Proprietary Information shall be the sole property of the Company and its
assigns.
1.2 PROPRIETARY INFORMATION. The term "Proprietary Information" shall
mean any and all confidential and/or proprietary knowledge, data or information
of, or acquired by, the Company. By way of illustration but not limitation,
"Proprietary Information" includes (a) information relating to products,
processes, know-how, designs, drawings, concepts, test data, formulas, methods,
compositions, ideas, algorithms, techniques, developmental or experimental work,
improvements and discoveries, (hereinafter collectively referred to as
"Inventions"); (b) information regarding plans for research, development, new
products, marketing and selling, business plans, budgets and unpublished
financial statements, licenses, prices and costs, suppliers and customers; and
(c) information regarding the skills and compensation of other employees of the
Company. Notwithstanding the foregoing, it is understood that, at all such
times, I am free to use information which is generally known in the trade or
industry, which is not gained as result of a breach of this Agreement, and my
own, skill, knowledge, know-how and experience to whatever extent and in
whichever way I wish.
1.3 THIRD PARTY INFORMATION. I understand, in addition, that the Company
has received and in the future will receive from third parties confidential or
proprietary information ("Third Party Information") subject to a duty on the
Company's part to maintain the confidentiality of such information and to use it
only for certain limited purposes. During the term of my employment and
thereafter, I will hold Third Party Information in the strictest confidence and
will not disclose to anyone (other than Company personnel who need to know such
information in connection with their work for the Company) or use, except in
connection with my work for the Company, Third Party Information unless
expressly authorized by an officer of the Company in writing.
<PAGE>
1.4 NO IMPROPER USE OF INFORMATION OF PRIOR EMPLOYERS AND OTHERS. During
my employment by the Company I will not improperly use or disclose any
confidential information or trade secrets, if any, of any former employer or any
other person to whom I have an obligation of confidentiality, and I will not
bring onto the premises of the Company any unpublished documents or any property
belonging to my former employer or any other person to whom I have an obligation
of confidentiality unless consented to in writing by that former employer or
person. I will use in the performance of my duties only information which is
generally known and used by persons with training and experience comparable to
my own, which is common knowledge in the industry or otherwise legally in the
public domain, or which is otherwise provided or developed by the Company.
2. ASSIGNMENT OF INVENTIONS
2.1 PROPRIETARY RIGHTS. The term "Proprietary Rights" shall mean all
trade secret, patent, copyright, mask work and other intellectual property
rights throughout the world.
2.2 PRIOR INVENTIONS. Inventions, if any, patented or unpatented, which I
made prior to the commencement of my employment with the Company are excluded
from the scope of this Agreement. To preclude any possible uncertainty, I have
set forth on Exhibit B (Previous Inventions) attached hereto a complete list of
all inventions that I have, alone or jointly with others, conceived, developed
or reduced to practice or caused to be conceived, developed or reduced to
practice prior to the commencement of my employment with the Company, that I
consider to be my property or the property of third parties and that I wish to
have excluded from the scope of this Agreement (collectively referred to as
"Prior Inventions"). If disclosure of any such Prior Invention(s) would cause
me to violate any prior confidentiality agreement, I understand that I am not to
list such Prior Invention(s) in Exhibit B, but am only to disclose a cursory
name for each such invention, a listing of the party(ies) to whom it belongs and
the fact that full disclosure as to such inventions has not been made for that
reason. A space is provided on Exhibit B for such purpose. If no such
disclosure is attached, I represent that there are no Prior Inventions. If, in
the course of my employment with the Company, I incorporate a Prior Invention
into a Company product, process or machine, the Company is hereby granted and
shall have a nonexclusive, royalty-free, irrevocable, perpetual, worldwide
license (with rights to sublicense through multiple tiers of sublicensees) to
make, have made, modify, use and sell such Prior Invention. Notwithstanding the
foregoing, I agree that I will not incorporate, or permit to be incorporated,
Prior Inventions in any Company Inventions without the Company's prior written
consent.
2.3 ASSIGNMENT OF INVENTIONS. Subject to Sections 2.4, and 2.6, I hereby
assign and agree to assign in the future (when any such Inventions or
Proprietary Rights are first reduced to practice or first fixed in a tangible
medium, as applicable) to the Company all my right, title and interest in and to
any and all Inventions (and all Proprietary Rights with respect thereto) whether
or not patentable or registrable under copyright or similar statutes, made or
conceived or reduced to practice or learned by me, either alone or jointly with
others, during the period of my employment with the Company. Inventions
assigned to the Company, or to a third party as
2
<PAGE>
directed by the Company pursuant to this Section 2, are hereinafter referred
to as "Company Inventions."
2.4 NONASSIGNABLE INVENTIONS. This Agreement does not apply to an
Invention which qualifies fully as a nonassignable Invention under Section 2870
of the California Labor Code (hereinafter "Section 2870"). I have reviewed the
notification on Exhibit A (Limited Exclusion Notification) and agree that my
signature acknowledges receipt of the notification.
2.5 OBLIGATION TO KEEP COMPANY INFORMED. During the period of my
employment and for one (1) year after termination of my employment with the
company, I will promptly disclose to the Company fully and in writing all
Inventions authored, conceived or reduced to practice by me, either alone or
jointly with others, particularly if I leave the Company and become employed by
a competitor of the Company, or if I commercialize an idea that the Company
decided not to pursue. In addition, I will promptly disclose to the Company all
patent applications filed by me or on my behalf during my employment or within a
year after termination of employment. At the time of each such disclosure, I
will advise the Company in writing of any Inventions that I believe fully
qualify for protection under Section 2870; and I will at that time provide to
the Company in writing all evidence necessary to substantiate that belief. The
Company will keep in confidence and will not use for any purpose or disclose to
third parties without my consent any confidential information disclosed in
writing to the Company pursuant to this Agreement relating to Inventions that
qualify fully for protection under the provisions of Section 2870. I will
preserve the confidentiality of any Invention that does not fully qualify for
protection under Section 2870. For one (1) year following my termination of
employment any and all patent applications filed by me or by a third party based
on my work will be presumed to be owned by the Company. I can rebut this
presumption by providing evidence sufficient to establish ownership by the party
applying for the patent.
2.6 GOVERNMENT OR THIRD PARTY. I also agree to assign all my right, title
and interest in and to any particular Invention to a third party, including
without limitation the United States, as directed by the Company.
2.7 WORKS FOR HIRE. I acknowledge that all original works of authorship
which are made by me (solely or jointly with others) within the scope of my
employment and which are protectable by copyright are "works made for hire,"
pursuant to United States Copyright Act (17 U.S.C. Section 101).
2.8 ENFORCEMENT OF PROPRIETARY RIGHTS. During and after my employment
with the Company, I will assist the Company in every proper way to obtain, and
from time to time enforce, United States and foreign Proprietary Rights relating
to Company Inventions in any and all countries. To that end I will execute,
verify and deliver such documents and perform such other acts (including
appearances as a witness) as the Company may reasonably request for use in
applying for, obtaining, perfecting, evidencing, sustaining and enforcing such
Proprietary Rights and the assignment thereof. In addition, I will execute,
verify and deliver assignments of such Proprietary Rights to the Company or its
designee. My obligation to assist the Company with respect to Proprietary
Rights relating to such Company Inventions in any and all countries
3
<PAGE>
shall continue beyond the termination of my employment, but the Company shall
compensate me at a reasonable rate after my termination for the time actually
spent by me at the Company's request on such assistance.
In the event the Company is unable for any reason, after reasonable
effort to secure my signature on any document needed in connection with the
actions specified in the preceding paragraph, I hereby irrevocably designate
and appoint the Company and its duly authorized officers and agents as my
agent and attorney in fact, which appointment is coupled with an interest, to
act for and in my behalf to execute, verify and file any such documents and
to do all other lawfully permitted acts to further the purposes of the
preceding paragraph with the same legal force and effect as if executed by
me. I hereby waive and quitclaim to the Company any and all claims, of any
nature whatsoever, which I now or may hereafter have for infringement of any
Proprietary Rights assigned hereunder to the Company.
3. RECORDS. I agree to keep and maintain adequate and current records (in
the form of notes, sketches, drawings and in any other form that may be
required by the Company) of all Proprietary Information developed by me and
all Inventions made by me during the period of my employment at the Company,
which records shall be available to and remain the sole property of the
Company at all times.
4. ADDITIONAL ACTIVITIES. I agree that during the period of my employment
by the Company I will not, without the Company's express written consent,
engage in any employment or business activity which is competitive with, or
would otherwise conflict with, my employment by the Company.
5. AT-WILL EMPLOYMENT. I agree and understand that nothing in this
Agreement shall confer any right with respect to continuation of employment
by the Company, nor shall it interfere in any way with my right or the
Company's right to terminate the employment relationship at any time, for any
reason, with or without cause, and with or without notice. I understand
that, other than the Company's Senior Vice President of Human Resources, no
manager, supervisor, employee or any other representative or agent of the
Company has the authority to enter into an agreement to the contrary. I
further understand that an agreement to the contrary by the Senior Vice
President of Human Resources is not valid unless it is in writing.
6. NO CONFLICTING OBLIGATION. I represent that my performance of all the
terms of this Agreement, and of my duties as an employee of the Company, does
not and will not breach any agreement to keep in confidence information
acquired by me in confidence or in trust prior to my employment by the
Company. I have not entered into, and I agree I will not enter into, any
agreement either written or oral in conflict herewith.
7. RETURN OF COMPANY DOCUMENTS AND PROPERTY. When I leave the employ of
the Company, I will deliver to the Company any and all drawings, notebooks,
notes, memoranda, source code, specifications, devices, formulas, records,
manuals, reports and documents, together with all copies thereof, and any
other material containing or disclosing any Company Inventions, Third Party
Information or Proprietary Information of the Company, that is within my
possession, custody or control. Further, upon termination of employment I
also will
4
<PAGE>
return any and all Company property or equipment in my possession, custody or
control. Prior to leaving, I will cooperate with the Company in completing
and signing the Company's agreement regarding termination.
8. NON-PRIVATE NATURE OF COMPANY PROPERTY. I understand that I have no
expectation of privacy in the voicemail and electronic mail provided to me by
the Company or in any property situated on the Company's premises and/or
owned by the Company, including disks and other storage media, filing
cabinets or other work areas. I further understand that such property,
including voicemail and electronic mail, is subject to inspection by Company
personnel at any time.
9. NOTICES. Any notices required or permitted hereunder shall be given to
the appropriate party at the address specified below or at such other address
as the party shall specify in writing. Such notice shall be deemed given
upon personal delivery to the appropriate address or if sent by certified or
registered mail, three (3) days after the date of mailing.
10. NOTIFICATION OF NEW EMPLOYER. In the event that I leave the employ of
the Company, I hereby consent to the notification of my new employer of my
rights and obligations under this Agreement.
11. GENERAL PROVISIONS.
11.1 GOVERNING LAWS, CONSENT TO PERSONAL JURISDICTION. This Agreement
will be governed by and construed according to the laws of the State of
California, as such laws are applied to agreements entered into and to be
performed entirely within California between California residents. I hereby
expressly consent to the personal jurisdiction of the state and federal
courts located in Santa Clara County, California for any lawsuit filed there
against me by Company arising from or related to this Agreement.
11.2 SEVERABILITY. In the event any one or more of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect the other provisions of this Agreement, and
this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein. If, moreover, any
one or more of the provisions contained in this Agreement shall for any
reason be held to be excessively broad as to duration, geographical scope,
activity or subject, it shall be construed by limiting and reducing it, so as
to be enforceable to the extent compatible with the applicable law as it
shall then appear.
11.3 SURVIVAL. The provisions of this Agreement shall survive the
termination of my employment and the assignment of this Agreement by the
Company to any successor in interest or other assignee.
11.4 WAIVER. No waiver by the Company of any breach of this Agreement
shall be a waiver of any preceding or succeeding breach. No waiver by the
Company of any right under this Agreement shall be construed as a wavier of
any other right. The Company shall not be required to give notice to enforce
strict adherence to all terms of this Agreement.
5
<PAGE>
11.5 ENTIRE AGREEMENT. The obligations pursuant to Sections 1 and 2 of
this Agreement shall apply to any time during which I was previously
employed, or am in the future employed, by the Company as a consultant if no
other agreement governs nondisclosure and assignment of inventions during
such period. This Agreement is the final, complete and exclusive agreement of
the parties with respect to the subject matter hereof and supersedes all
prior discussions between us, except that the Noncompetition Agreement,
Cadence Code of Conduct, and my offer letter, all of which I signed, are
incorporated herein. No modification of or amendment to this Agreement, nor
any waiver of any rights under this Agreement, will be effective unless in
writing and signed by the party to be charged. Any subsequent change or
changes in my duties, salary or compensation will not affect the validity or
scope of this Agreement.
This Agreement shall be effective as of the first day of my employment with
the Company, namely: _____________, 19___.
I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS. I HAVE
COMPLETELY FILLED OUT EXHIBIT B TO THIS AGREEMENT.
Dated:
---------------------------------------------
- ---------------------------------------------------
Signature
- ---------------------------------------------------
(Printed Name)
ACCEPTED AND AGREED TO:
CADENCE DESIGN SYSTEMS, INC.
By:
-----------------------------------------------
Title:
--------------------------------------------
Date:
---------------------------------------------
6
<PAGE>
EXHIBIT A
LIMITED EXCLUSION NOTIFICATION
THIS IS TO NOTIFY you in accordance with Section 2872 of the California
Labor Code that the foregoing Agreement between you and the Company does not
require you to assign or offer to assign to the Company any invention that you
developed entirely on your own time without using the Company's equipment,
supplies, facilities or trade secret information except for those inventions
that either:
(1) Relate at the time of conception or reduction to practice of the
invention to the Company's business, or actual or demonstrably anticipated
research or development of the Company;
(2) Result from any work performed by you for the Company.
To the extent a provision in the foregoing Agreement purports to require
you to assign an invention otherwise excluded from the preceding paragraph, the
provision is against the public policy of this state and is unenforceable.
This limited exclusion does not apply to any patent or invention covered by
a contract between the Company and the United States or any of its agencies
requiring full title to such patent or invention to be in the United States.
I ACKNOWLEDGE RECEIPT of a copy of this notification.
By:
------------------------------------
(printed name of employee)
Date:
------------------------------------
WITNESSED BY:
- ------------------------------------------
(printed name of representative)
Dated:
-----------------------------------
A-1
<PAGE>
EXHIBIT B
TO: Cadence Design Systems, Inc.
FROM:
----------------------------------------------
DATE:
----------------------------------------------
SUBJECT: Previous Inventions
1. Except as listed in Section 2 below, the following is a complete list
of all inventions or improvements relevant to the subject matter of my
employment by Cadence Design Systems, Inc. (the "Company") that have been made
or conceived or first reduced to practice by me alone or jointly with others
prior to my engagement by the Company:
/ / No inventions or improvements.
/ / See below:
____________________________________________________________
____________________________________________________________
____________________________________________________________
/ / Additional sheets attached.
2. Due to a prior confidentiality agreement, I cannot complete the
disclosure under Section 1 above with respect to inventions or improvements
generally listed below, the proprietary rights and duty of confidentiality with
respect to which I owe to the following party(ies);
<TABLE>
<CAPTION>
Invention or Improvement Party(ies) Relationship
<S> <C> <C>
1. ________________________ ____________ ______________________
2. ________________________ ____________ ______________________
3. ________________________ ____________ ______________________
</TABLE>
/ / Additional sheets attached.
B-1
<PAGE>
EXHIBIT 99(c)(8)
June 11, 1999
William E. Cibulsky
Orcad, Inc.
9300 S.W. Nimbus
Beaverton, OR 97008
Dear Mr. Cibulsky:
We are very pleased to offer you employment as Vice President of Sales with
Cadence Design Systems, Inc. ("Cadence") following the merger of Orcad, Inc.
with a wholly owned subsidiary of Cadence (the "Merger"). In the context of the
proposed purchase of Orcad, Inc. by Cadence, this letter sets forth the terms of
our offer of employment to you as well as other related matters for your
approval and signature. This offer will become effective upon consummation of
the Merger. At that time (assuming you have signed this offer letter), in
addition to becoming an employee of Cadence, you will be exchanging your stock
options in Orcad, Inc. for stock options in Cadence. This offer of employment
is conditioned upon consummation of the Merger.
1. Your base salary as a full-time employee will be $160,000 per year,
paid semi-monthly in accordance with Cadence's normal payroll practices.
2. In your role as Vice President of Sales, your annual target incentive
is $140,000. Actual payment is based upon achievement of revenue objectives as
determined by Cadence. This incentive will be paid on a quarterly basis based
on achievement of quarterly objectives.
3. You will be granted a nonqualified stock option for 50,000 shares of
Cadence Common Stock. This option will vest as to 20% of the shares on the
first anniversary of your employment with Cadence and monthly thereafter for
forty-eight months on the last day of each month during your employment.
Options are granted by the Compensation Committee shortly after the consummation
of the Merger, at the average of the high and low market price of Cadence's
Common Stock on the date of grant.
4. While you are a full-time employee, you will receive benefits
comparable in the aggregate to the health and other benefits that are generally
available to the rest of Cadence's full-time U.S. based employees (provided, of
course, you meet the standard eligibility requirements for such benefits) for
purposes of benefits, your service date with Cadence will be calculated based on
your first date of employment with Orcad, Inc. or its predecessor. Further, if
you earned a sabbatical while employed with Orcad, Inc., you will be provided
the opportunity to take that sabbatical while employed by Cadence.
5. As part of this offer of employment, Cadence agrees that if you are
employed by Cadence at the end of the first day following the consummation of
the Merger, you will receive
<PAGE>
William E. Cibulsky
June 11, 1999
Page 2
an initial retention bonus of $125,000.00. Cadence further agrees that if
you remain employed by Cadence through the one-year anniversary of the
consummation of the Merger, you will receive an additional retention bonus in
the amount of $125,000.00.
6. Should your employment be terminated without cause at any time
during the one (1) year following the consummation of the Merger (the
"Term"), Cadence will pay you your base salary and target bonus and the
balance of the retention bonus as outlined in PARA 5 above for the remaining
period of the Term. However, if you are terminated for cause(1), or if you
resign, the obligation of Cadence to provide you with salary or stock vesting
or bonus shall immediately end. Further, regardless of the reason for your
termination of employment, on the date of your termination, your other
employee benefits will terminate. Your employment relationship with Cadence
will be at-will. That is, Cadence may terminate your employment with Cadence
at any time and you may terminate your employment with Cadence at any time
with or without cause, for any reason or for no reason, with or without
notice. If Cadence terminates your employment without cause after the end of
the Term, you shall be entitled to receive base salary earned but unpaid
through the date of termination. You also have the opportunity to receive
benefits and payments provided by Cadence's Severance Plan in effect at that
time. If your employment is terminated as a result of death or disability,
you will be entitled to receive only base salary earned but unpaid through
the date of termination, and Cadence will be required to make no other
payment by way of salary, bonus or other compensation or damages of any kind.
7. This agreement supersedes the Employment Agreement between you and
Orcad, Inc., dated September 17, 1998 and, upon your acceptance of this offer
of employment, that Employment Agreement shall be null and void.
8. You must sign an Employee Proprietary Information and Inventions
Agreement, a copy of which is attached for your signature, in order to become
an Employee of Cadence. Additionally, in connection with the acquisition and
as a condition both the acquisition and of this offer of employment, you must
execute the Noncompetition Agreement attached hereto.
- --------------------------------
(1) You shall be considered to have been terminated with "cause" if your
employment is terminated for (a) any gross misconduct or fraud in the
performance of your employment, (b) your conviction or guilty plea with
respect to any felony (except for motor vehicle violations), (c) your
material breach of the Noncompetition Agreement, or the Proprietary
Information and Inventions Agreement, after written notice delivered to you
of such breach and a reasonable opportunity to cure such breach, (d) your
failure to perform your duties satisfactorily after receipt of written
warning and after a reasonable opportunity to cure and after a thorough
review by the Group Director of Human Resources for the Systems Division
and the Sr. Vice President of Employment and Workplace Services, or (e)
engaging in conduct which is injurious to Orcad, Inc. or Cadence.
<PAGE>
William E. Cibulsky
June 11, 1999
Page 3
9. Payments of salary and other compensations will be subject to
customary withholding and other taxes.
10. In accordance with the Immigration Reform and Control Act of 1986,
you must be a United States citizen, or have authorization to work in the
United States. In either case, verification of your right to work is
required within seventy-two hours of employment.
11. This agreement shall be governed by the laws of the State of
California.
We are excited about the potential represented by the Merger and we are
pleased you will be joining us as a key part of the new team.
Sincerely,
CADENCE DESIGN SYSTEMS, INC.
/s/ Ron Kirchenbauer
Ron Kirchenbauer
Senior Vice President of Employee Workplace
Services
Acknowledged and agreed:
/s/ William E. Cibulsky
- ---------------------------------------
William E. Cibulsky
Date: June 14, 1999
Enclosures
<PAGE>
EXHIBIT 99(c)(8)
NONCOMPETITION AGREEMENT
THIS NONCOMPETTION AGREEMENT is being executed and delivered as of June
14, 1999 by William E. Cibulsky ("Stockholder") in favor of and for the
benefit of CADENCE DESIGN SYSTEMS, INC., a Delaware corporation ("Parent"),
and ORCAD, INC., a Delaware corporation (the "Corporation").
RECITALS
A. As an employee and stockholder of the Corporation, Stockholder has
obtained and will obtain extensive and valuable knowledge and information
concerning the business of the Corporation (including confidential
information relating to the Corporation and its operations, assets,
contracts, customers, personnel, plans and prospects).
B. Contemporaneously with the execution and delivery of this
Noncompetition Agreement, the Corporation is entering into an Agreement and
Plan of Merger with Parent and a subsidiary of Parent (the "Reorganization
Agreement"), which provides (subject to the conditions set forth therein) for
the merger of Parent's subsidiary into the Corporation with the Corporation
as the surviving corporation (the "Merger"). As a result of the Merger, the
Corporation will become a wholly-owned subsidiary of Parent, and Stockholder
will receive options for shares of common stock of Parent in exchange for
Stockholder's options for shares of common stock of the Corporation.
C. It is also contemplated that, on the date that the Merger becomes
effective (the "Effective Time"), Stockholder will become an employee of
Parent and, as such, will obtain extensive and valuable knowledge and
information concerning the business of Parent (including confidential
information and relating to Parent and its operations, assets, contracts,
customers, personnel, plans and prospects).
In connection with the Merger and as a condition to entering into the
Reorganization Agreement and consummating the Merger, and to more fully
secure unto Parent the benefits of the Merger, Parent has requested that
Stockholder enter into this Noncompetition Agreement; and Stockholder is
entering into this Noncompetition Agreement in order to induce Parent to
enter into the Reorganization Agreement and consummate the Merger.
E. Both Parent and the Corporation have conducted, are conducting and
will continue to conduct their respective businesses on a worldwide basis.
<PAGE>
AGREEMENT
In order to induce Parent to enter into the Reorganization Agreement and
consummate the Merger, and in consideration of the issuance and delivery to
Stockholder of options for shares of common stock of Parent pursuant to the
Reorganization Agreement, Stockholder agrees as follows:
1. ACKNOWLEDGMENTS BY STOCKHOLDER. Stockholder acknowledges that the
promises and restrictive covenants that Stockholder is providing in this
Noncompetition Agreement are reasonable and necessary to the protection of
Parent's business and Parent's legitimate interests in its acquisition of the
Corporation (including the Corporation's goodwill) pursuant to the
Reorganization Agreement. Stockholder acknowledges that, in connection with
the consummation of the Merger, all of Stockholder's options for shares of
common stock of the Corporation will be exchanged for options for shares of
common stock of Parent.
2. NONCOMPETITION. Stockholder agrees that he will not, except with
the express prior written consent of the Parent, during the period from the
date hereof through twelve months following the termination of his
employment, voluntarily or involuntarily, for any reason whatsoever, directly
or indirectly, individually or on behalf of persons not now parties to this
Noncompetition Agreement, or as a partner, stockholder, director, officer,
principal, agent, employee or in any other capacity or relationship, for his
own account or for the benefit of any other person:
(a) engage in software development or services in the areas of FPGA
design and printed circuit board design;
(b) be or become an officer, director, stockholder, owner, affiliate,
salesperson, co-owner, partner, trustee, promoter, technician, engineer,
analyst, employee, agent, representative, supplier, consultant, advisor or
manager of or to, or otherwise acquire or hold any interest in, any person
or entity that engages in software development or services focused
primarily on FPGA design and printed circuit board design; or
(c) provide any service (as an employee, consultant or otherwise),
support, product or technology to any person or entity, if such service,
support, product or technology involves or relates to software development
or services in the areas of FPGA design and printed circuit board design;
or
(d) permit his name to be used in connection with a business that
competes with Parent or Corporation:
PROVIDED, HOWEVER, that nothing in this Section 2 shall prevent Stockholder
from owning as a passive investment less than 5% of the outstanding shares of
the capital stock of a publicly-held corporation if (A) such shares are
actively traded on an established national securities market in the United
States and (B) Stockholder is not otherwise associated directly or indirectly
with such corporation or any affiliate of such corporation. Under this
Noncompetition Agreement,
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Stockholder's employment with Parent shall be deemed to terminate at such
time that Stockholder is neither a full-time nor a part-time employee of
Parent.
3. NONSOLICITATION. Stockholder further agrees that, during your
employment, and for one year following Stockholder's termination of
employment with Parent, Stockholder will not and Stockholder will not permit
any of his affiliates to:
(a) personally or through others, encourage, induce, attempt to
induce, solicit or attempt to solicit (on Stockholder's own behalf or on
behalf of any other person or entity) anyone who is employed at that time,
or was employed during the previous six (6) months, by the Corporation,
Parent or any of Parent's subsidiaries to leave his or her employment with
the Corporation, Parent or any of Parent's subsidiaries; or
(b) personally or through others, use any trade secret or proprietary
information of Parent or Corporation or any other improper means to
interfere or attempt to interfere with the relationship or prospective
relationship of the Corporation, Parent or any of Parent's subsidiaries
with any person or entity that is, was or is expected to become a customer
or client of the Corporation, Parent or any of Parent's subsidiaries; or
(c) solicit the business of any client or customer of the
Corporation, Parent or any of Parent's subsidiaries (other than on behalf
of the Parent).
4. INDEPENDENCE OF OBLIGATIONS. The covenants and obligations of
Stockholder set forth in this Noncompetition Agreement shall be construed as
independent of any other agreement or arrangement between Stockholder, on the
one hand, and the Corporation or Parent, on the other.
5. SPECIFIC PERFORMANCE. Stockholder agrees that in the event of any
breach or threatened breach by Stockholder of any covenant, obligation or
other provision contained in this Noncompetition Agreement, Parent and the
Corporation shall be entitled (in addition to any other remedy that may be
available by law to them) to the extent permitted by applicable law (a) a
decree or order of specific performance to enforce the observance and
performance of such covenant, obligation or other provision, and (b) an
injunction restraining such breach or threatened breach. Stockholder further
agrees that neither Parent nor any other person or entity shall be required
to provide any bond or other security in connection with any such decree,
order or injunction or in connection with any related action or proceeding.
6. NON-EXCLUSIVITY. The rights and remedies of Parent and the
Corporation hereunder are not exclusive of or limited by any other rights or
remedies which Parent or the Corporation may have, whether at law, in equity,
by contract or otherwise, all of which shall be cumulative (and not
alternative). Without limiting the generality of the foregoing, the rights
and remedies of Parent and the Corporation hereunder, and the obligations and
liabilities of Stockholder hereunder, are in addition to their respective
rights, remedies, obligations and liabilities under the law of unfair
competition, misappropriation of trade secrets and the like. This
Noncompetition Agreement does not limit Stockholder's obligations or the
rights of Parent or the Corporation (or any affiliate of Parent or the
Corporation) under the terms of (a) the
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<PAGE>
Employment Agreement of even date herewith between Stockholder and Parent;
(b) the Proprietary Information and Inventions Agreement between Stockholder
and the Parent; (c) the Reorganization Agreement; or (d) the terms of any
other agreement between Stockholder and Parent or the Corporation or any
affiliate of Parent or the Corporation.
7. NOTICES. Any notice or other communication required or permitted
to be delivered to Stockholder, the Corporation or Parent under this
Noncompetition Agreement shall be in writing and shall be deemed properly
delivered, given and received when delivered (by hand, by registered mail, by
courier or express delivery service or by facsimile) to the address or
facsimile telephone number set forth beneath the name of such party below (or
to such other address or facsimile telephone number as such party shall have
specified in a written notice delivered in accordance with this Section 7):
IF TO THE CORPORATION: Orcad, Inc.
9300 S.W. Nimbus
Beaverton, OR 97008
IF TO PARENT: Cadence Design Systems, Inc.,
2655 Seely Road
San Jose, CA 95134
Attention:
Facsimile No.:
IF TO STOCKHOLDER: William E. Cibulsky
17501 SW Cardinal Drive
Lake Oswego, OR 97034
8. SEVERABILITY. If any provision of the Noncompetition Agreement or
any part of any such provision is held under any circumstances to be invalid
or unenforceable in any jurisdiction, then (a) such provision or part thereof
shall, with respect to such circumstances and in such jurisdiction, be deemed
amended to conform to applicable laws so as to be valid and enforceable to
the fullest possible extent, (b) the invalidity or unenforceability or such
provision or part thereof under such circumstances and in such jurisdiction
shall not affect the validity or enforceability of such provision or part
thereof under any other circumstances or in any other jurisdiction, and (c)
such invalidity or enforceability of such provision or part thereof shall not
affect the validity or enforceability of the remainder of such provision or
the validity or enforceability of any other provision of this Noncompetition
Agreement is separable from every other part of such provision.
9. GOVERNING LAW. This Noncompetition Agreement shall be construed in
accordance with, and governed in all respects by, the laws of the State of
California (without giving effect to principles of conflicts of laws).
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<PAGE>
10. WAIVER. No failure on the part of Parent or the Corporation to
exercise any power, right, privilege or remedy under this Noncompetition
Agreement, and no delay on the part of Parent or the Corporation in
exercising any power, right, privilege or remedy under this Noncompetition
Agreement, shall operate as a waiver of such power, right, privilege or
remedy; and no single or partial exercise of any such power, right, privilege
or remedy shall preclude any other or further exercise thereof or of any
other power, right, privilege or remedy. Neither Parent nor the Corporation
shall be deemed to have waived any claim arising out of this Noncompetition
Agreement, or any power, right, privilege or remedy under this Noncompetition
Agreement, unless the waiver of such claim, power, right, privilege or remedy
is expressly set forth in a written instrument duly executed and delivered on
behalf of such party; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
11. CAPTIONS. The captions contained in this Noncompetition Agreement
are for convenience of reference only, shall not be deemed to be a part of
this Noncompetition Agreement and shall not be referred to in connection with
the construction or interpretation of this Noncompetition Agreement.
12. FURTHER ASSURANCES. Stockholder shall execute and/or cause to be
delivered to the Corporation and Parent such instruments and other documents
and shall take such other actions as Corporation and Parent may reasonably
request to effectuate the intent and purposes of this Noncompetition
Agreement.
13. ENTIRE AGREEMENT. This Noncompetition Agreement, the Stockholder's
offer letter and the Employee Proprietary Information and Inventions
Agreement, and the other agreements referred to herein set forth the entire
understanding of Stockholder, the Corporation and Parent relating to the
subject matter hereof and thereof and supersede all prior agreements and
understandings between any of such parties relating to the subject matter
hereof and thereof.
14. AMENDMENTS. This Noncompetition Agreement may not be amended,
modified, altered, or supplemented other than by means of a written
instrument duly executed and delivered on behalf of Parent and Stockholder.
15. ASSIGNMENT. This Noncompetition Agreement and all obligations
hereunder are personal to Stockholder and may not be transferred or assigned
by Stockholder at any time. Either Parent or the Corporation may assign its
rights under this Noncompetition Agreement in whole or in part, without the
consent or approval of the Stockholder or any other person or entity, in
connection with (A) the sale of Parent or the Corporation, or (B) the sale or
other transfer of all or a substantial part of the assets or business of the
Parent or the Corporation.
16. ATTORNEYS' FEES. If any legal action or other legal proceeding
relating to this Noncompetition Agreement or the enforcement of any provision
of this Noncompetition Agreement is brought against any party to this
Noncompetition Agreement, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
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17. EFFECTIVE DATE. This Noncompetition Agreement shall become
effective upon the effective time of the merger contemplated by the
Reorganization Agreement (the "Effective Time").
18. BINDING NATURE. Subject to Section 16, this Noncompetition
Agreement will be binding upon Stockholder and Stockholder's representatives,
executors, administrators, estate, heirs, successors and assigns, and will
inure to the benefit of Parent and the Corporation and their respective
successors and assigns.
IN WITNESS WHEREOF, the undersigned has executed this Noncompetition
Agreement as of the date first above written.
/s/ William E. Cibulsky
------------------------------------------
William E. Cibulsky
6
<PAGE>
FORM OF:
CADENCE DESIGN SYSTEMS, INC.
EMPLOYEE PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
(to be signed in conjunction with Non Competition Agreement and Offer Letter)
In consideration of my employment or continued employment by Cadence
Design Systems, Inc. (the "Company"), and the compensation now and hereafter
paid to me, I hereby agree as follows:
1. NONDISCLOSURE
1.1 RECOGNITION OF COMPANY'S RIGHTS; NONDISCLOSURE. At all times
during my employment and thereafter, I will hold in strictest confidence and
will not disclose, use, lecture upon or publish any of the Company's
Proprietary Information (defined below), except as such disclosure, use or
publication may be required in connection with my work for the Company, or
unless an officer of the Company expressly authorizes such in writing. I
will obtain Company's written approval before publishing or submitting for
publication any material (written, verbal, or otherwise) that relates to my
work at Company and/or incorporates any Proprietary Information. I hereby
assign to the Company any rights I may have or acquire in such Proprietary
Information and recognize that all Proprietary Information shall be the sole
property of the Company and its assigns.
1.2 PROPRIETARY INFORMATION. The term "Proprietary Information" shall
mean any and all confidential and/or proprietary knowledge, data or
information of, or acquired by, the Company. By way of illustration but not
limitation, "Proprietary Information" includes (a) information relating to
products, processes, know-how, designs, drawings, concepts, test data,
formulas, methods, compositions, ideas, algorithms, techniques, developmental
or experimental work, improvements and discoveries, (hereinafter collectively
referred to as "Inventions"); (b) information regarding plans for research,
development, new products, marketing and selling, business plans, budgets and
unpublished financial statements, licenses, prices and costs, suppliers and
customers; and (c) information regarding the skills and compensation of other
employees of the Company. Notwithstanding the foregoing, it is understood
that, at all such times, I am free to use information which is generally
known in the trade or industry, which is not gained as result of a breach of
this Agreement, and my own, skill, knowledge, know-how and experience to
whatever extent and in whichever way I wish.
1.3 THIRD PARTY INFORMATION. I understand, in addition, that the
Company has received and in the future will receive from third parties
confidential or proprietary information ("Third Party Information") subject
to a duty on the Company's part to maintain the confidentiality of such
information and to use it only for certain limited purposes. During the term
of my employment and thereafter, I will hold Third Party Information in the
strictest confidence and will not disclose to anyone (other than Company
personnel who need to know such information in connection with their work for
the Company) or use, except in connection with my work for the Company, Third
Party Information unless expressly authorized by an officer of the Company in
writing.
<PAGE>
1.4 NO IMPROPER USE OF INFORMATION OF PRIOR EMPLOYERS AND OTHERS.
During my employment by the Company I will not improperly use or disclose any
confidential information or trade secrets, if any, of any former employer or
any other person to whom I have an obligation of confidentiality, and I will
not bring onto the premises of the Company any unpublished documents or any
property belonging to my former employer or any other person to whom I have
an obligation of confidentiality unless consented to in writing by that
former employer or person. I will use in the performance of my duties only
information which is generally known and used by persons with training and
experience comparable to my own, which is common knowledge in the industry or
otherwise legally in the public domain, or which is otherwise provided or
developed by the Company.
2. ASSIGNMENT OF INVENTIONS
2.1 PROPRIETARY RIGHTS. The term "Proprietary Rights" shall mean all
trade secret, patent, copyright, mask work and other intellectual property
rights throughout the world.
2.2 PRIOR INVENTIONS. Inventions, if any, patented or unpatented,
which I made prior to the commencement of my employment with the Company are
excluded from the scope of this Agreement. To preclude any possible
uncertainty, I have set forth on Exhibit B (Previous Inventions) attached
hereto a complete list of all inventions that I have, alone or jointly with
others, conceived, developed or reduced to practice or caused to be
conceived, developed or reduced to practice prior to the commencement of my
employment with the Company, that I consider to be my property or the
property of third parties and that I wish to have excluded from the scope of
this Agreement (collectively referred to as "Prior Inventions"). If
disclosure of any such Prior Invention(s) would cause me to violate any prior
confidentiality agreement, I understand that I am not to list such Prior
Invention(s) in Exhibit B, but am only to disclose a cursory name for each
such invention, a listing of the party(ies) to whom it belongs and the fact
that full disclosure as to such inventions has not been made for that reason.
A space is provided on Exhibit B for such purpose. If no such disclosure is
attached, I represent that there are no Prior Inventions. If, in the course
of my employment with the Company, I incorporate a Prior Invention into a
Company product, process or machine, the Company is hereby granted and shall
have a nonexclusive, royalty-free, irrevocable, perpetual, worldwide license
(with rights to sublicense through multiple tiers of sublicensees) to make,
have made, modify, use and sell such Prior Invention. Notwithstanding the
foregoing, I agree that I will not incorporate, or permit to be incorporated,
Prior Inventions in any Company Inventions without the Company's prior
written consent.
2.3 ASSIGNMENT OF INVENTIONS. Subject to Sections 2.4, and 2.6, I
hereby assign and agree to assign in the future (when any such Inventions or
Proprietary Rights are first reduced to practice or first fixed in a tangible
medium, as applicable) to the Company all my right, title and interest in and
to any and all Inventions (and all Proprietary Rights with respect thereto)
whether or not patentable or registrable under copyright or similar statutes,
made or conceived or reduced to practice or learned by me, either alone or
jointly with others, during the period of my employment with the Company.
Inventions assigned to the Company, or to a third party as
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directed by the Company pursuant to this Section 2, are hereinafter referred
to as "Company Inventions."
2.4 NONASSIGNABLE INVENTIONS. This Agreement does not apply to an
Invention which qualifies fully as a nonassignable Invention under Section
2870 of the California Labor Code (hereinafter "Section 2870"). I have
reviewed the notification on Exhibit A (Limited Exclusion Notification) and
agree that my signature acknowledges receipt of the notification.
2.5 OBLIGATION TO KEEP COMPANY INFORMED. During the period of my
employment and for one (1) year after termination of my employment with the
company, I will promptly disclose to the Company fully and in writing all
Inventions authored, conceived or reduced to practice by me, either alone or
jointly with others, particularly if I leave the Company and become employed
by a competitor of the Company, or if I commercialize an idea that the
Company decided not to pursue. In addition, I will promptly disclose to the
Company all patent applications filed by me or on my behalf during my
employment or within a year after termination of employment. At the time of
each such disclosure, I will advise the Company in writing of any Inventions
that I believe fully qualify for protection under Section 2870; and I will at
that time provide to the Company in writing all evidence necessary to
substantiate that belief. The Company will keep in confidence and will not
use for any purpose or disclose to third parties without my consent any
confidential information disclosed in writing to the Company pursuant to this
Agreement relating to Inventions that qualify fully for protection under the
provisions of Section 2870. I will preserve the confidentiality of any
Invention that does not fully qualify for protection under Section 2870. For
one (1) year following my termination of employment any and all patent
applications filed by me or by a third party based on my work will be
presumed to be owned by the Company. I can rebut this presumption by
providing evidence sufficient to establish ownership by the party applying
for the patent.
2.6 GOVERNMENT OR THIRD PARTY. I also agree to assign all my right,
title and interest in and to any particular Invention to a third party,
including without limitation the United States, as directed by the Company.
2.7 WORKS FOR HIRE. I acknowledge that all original works of
authorship which are made by me (solely or jointly with others) within the
scope of my employment and which are protectable by copyright are "works made
for hire," pursuant to United States Copyright Act (17 U.S.C. Section 101).
2.8 ENFORCEMENT OF PROPRIETARY RIGHTS. During and after my employment
with the Company, I will assist the Company in every proper way to obtain,
and from time to time enforce, United States and foreign Proprietary Rights
relating to Company Inventions in any and all countries. To that end I will
execute, verify and deliver such documents and perform such other acts
(including appearances as a witness) as the Company may reasonably request
for use in applying for, obtaining, perfecting, evidencing, sustaining and
enforcing such Proprietary Rights and the assignment thereof. In addition, I
will execute, verify and deliver assignments of such Proprietary Rights to
the Company or its designee. My obligation to assist the Company with
respect to Proprietary Rights relating to such Company Inventions in any and
all countries
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shall continue beyond the termination of my employment, but the Company shall
compensate me at a reasonable rate after my termination for the time actually
spent by me at the Company's request on such assistance.
In the event the Company is unable for any reason, after reasonable
effort to secure my signature on any document needed in connection with the
actions specified in the preceding paragraph, I hereby irrevocably designate
and appoint the Company and its duly authorized officers and agents as my
agent and attorney in fact, which appointment is coupled with an interest, to
act for and in my behalf to execute, verify and file any such documents and
to do all other lawfully permitted acts to further the purposes of the
preceding paragraph with the same legal force and effect as if executed by
me. I hereby waive and quitclaim to the Company any and all claims, of any
nature whatsoever, which I now or may hereafter have for infringement of any
Proprietary Rights assigned hereunder to the Company.
3. RECORDS. I agree to keep and maintain adequate and current records (in
the form of notes, sketches, drawings and in any other form that may be
required by the Company) of all Proprietary Information developed by me and
all Inventions made by me during the period of my employment at the Company,
which records shall be available to and remain the sole property of the
Company at all times.
4. ADDITIONAL ACTIVITIES. I agree that during the period of my employment
by the Company I will not, without the Company's express written consent,
engage in any employment or business activity which is competitive with, or
would otherwise conflict with, my employment by the Company.
5. AT-WILL EMPLOYMENT. I agree and understand that nothing in this
Agreement shall confer any right with respect to continuation of employment
by the Company, nor shall it interfere in any way with my right or the
Company's right to terminate the employment relationship at any time, for any
reason, with or without cause, and with or without notice. I understand
that, other than the Company's Senior Vice President of Human Resources, no
manager, supervisor, employee or any other representative or agent of the
Company has the authority to enter into an agreement to the contrary. I
further understand that an agreement to the contrary by the Senior Vice
President of Human Resources is not valid unless it is in writing.
6. NO CONFLICTING OBLIGATION. I represent that my performance of all the
terms of this Agreement, and of my duties as an employee of the Company, does
not and will not breach any agreement to keep in confidence information
acquired by me in confidence or in trust prior to my employment by the
Company. I have not entered into, and I agree I will not enter into, any
agreement either written or oral in conflict herewith.
7. RETURN OF COMPANY DOCUMENTS AND PROPERTY. When I leave the employ of
the Company, I will deliver to the Company any and all drawings, notebooks,
notes, memoranda, source code, specifications, devices, formulas, records,
manuals, reports and documents, together with all copies thereof, and any
other material containing or disclosing any Company Inventions, Third Party
Information or Proprietary Information of the Company, that is within my
possession, custody or control. Further, upon termination of employment I
also will
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return any and all Company property or equipment in my possession, custody or
control. Prior to leaving, I will cooperate with the Company in completing
and signing the Company's agreement regarding termination.
8. NON-PRIVATE NATURE OF COMPANY PROPERTY. I understand that I have no
expectation of privacy in the voicemail and electronic mail provided to me by
the Company or in any property situated on the Company's premises and/or
owned by the Company, including disks and other storage media, filing
cabinets or other work areas. I further understand that such property,
including voicemail and electronic mail, is subject to inspection by Company
personnel at any time.
9. NOTICES. Any notices required or permitted hereunder shall be given to
the appropriate party at the address specified below or at such other address
as the party shall specify in writing. Such notice shall be deemed given
upon personal delivery to the appropriate address or if sent by certified or
registered mail, three (3) days after the date of mailing.
10. NOTIFICATION OF NEW EMPLOYER. In the event that I leave the employ of
the Company, I hereby consent to the notification of my new employer of my
rights and obligations under this Agreement.
11. GENERAL PROVISIONS.
11.1 GOVERNING LAWS, CONSENT TO PERSONAL JURISDICTION. This Agreement
will be governed by and construed according to the laws of the State of
California, as such laws are applied to agreements entered into and to be
performed entirely within California between California residents. I hereby
expressly consent to the personal jurisdiction of the state and federal
courts located in Santa Clara County, California for any lawsuit filed there
against me by Company arising from or related to this Agreement.
11.2 SEVERABILITY. In the event any one or more of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect the other provisions of this Agreement, and
this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein. If, moreover, any
one or more of the provisions contained in this Agreement shall for any
reason be held to be excessively broad as to duration, geographical scope,
activity or subject, it shall be construed by limiting and reducing it, so as
to be enforceable to the extent compatible with the applicable law as it
shall then appear.
11.3 SURVIVAL. The provisions of this Agreement shall survive the
termination of my employment and the assignment of this Agreement by the
Company to any successor in interest or other assignee.
11.4 WAIVER. No waiver by the Company of any breach of this Agreement
shall be a waiver of any preceding or succeeding breach. No waiver by the
Company of any right under this Agreement shall be construed as a wavier of
any other right. The Company shall not be required to give notice to enforce
strict adherence to all terms of this Agreement.
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11.5 ENTIRE AGREEMENT. The obligations pursuant to Sections 1 and 2 of
this Agreement shall apply to any time during which I was previously
employed, or am in the future employed, by the Company as a consultant if no
other agreement governs nondisclosure and assignment of inventions during
such period. This Agreement is the final, complete and exclusive agreement of
the parties with respect to the subject matter hereof and supersedes all
prior discussions between us, except that the Noncompetition Agreement,
Cadence Code of Conduct, and my offer letter, all of which I signed, are
incorporated herein. No modification of or amendment to this Agreement, nor
any waiver of any rights under this Agreement, will be effective unless in
writing and signed by the party to be charged. Any subsequent change or
changes in my duties, salary or compensation will not affect the validity or
scope of this Agreement.
This Agreement shall be effective as of the first day of my employment
with the Company, namely: _____________, 19___.
I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS. I HAVE
COMPLETELY FILLED OUT EXHIBIT B TO THIS AGREEMENT.
Dated:
---------------------------------------------
- ---------------------------------------------------
Signature
- ---------------------------------------------------
(Printed Name)
ACCEPTED AND AGREED TO:
CADENCE DESIGN SYSTEMS, INC.
By:
-----------------------------------------------
Title:
--------------------------------------------
Date:
---------------------------------------------
6
<PAGE>
EXHIBIT A
LIMITED EXCLUSION NOTIFICATION
THIS IS TO NOTIFY you in accordance with Section 2872 of the California
Labor Code that the foregoing Agreement between you and the Company does not
require you to assign or offer to assign to the Company any invention that you
developed entirely on your own time without using the Company's equipment,
supplies, facilities or trade secret information except for those inventions
that either:
(1) Relate at the time of conception or reduction to practice of the
invention to the Company's business, or actual or demonstrably anticipated
research or development of the Company;
(2) Result from any work performed by you for the Company.
To the extent a provision in the foregoing Agreement purports to require
you to assign an invention otherwise excluded from the preceding paragraph, the
provision is against the public policy of this state and is unenforceable.
This limited exclusion does not apply to any patent or invention covered by
a contract between the Company and the United States or any of its agencies
requiring full title to such patent or invention to be in the United States.
I ACKNOWLEDGE RECEIPT of a copy of this notification.
By:
------------------------------------
(printed name of employee)
Date:
------------------------------------
WITNESSED BY:
- ------------------------------------------
(printed name of representative)
Dated:
-----------------------------------
A-1
<PAGE>
EXHIBIT B
TO: Cadence Design Systems, Inc.
FROM:
----------------------------------------------
DATE:
----------------------------------------------
SUBJECT: Previous Inventions
1. Except as listed in Section 2 below, the following is a complete list
of all inventions or improvements relevant to the subject matter of my
employment by Cadence Design Systems, Inc. (the "Company") that have been made
or conceived or first reduced to practice by me alone or jointly with others
prior to my engagement by the Company:
/ / No inventions or improvements.
/ / See below:
____________________________________________________________
____________________________________________________________
____________________________________________________________
/ / Additional sheets attached.
2. Due to a prior confidentiality agreement, I cannot complete the
disclosure under Section 1 above with respect to inventions or improvements
generally listed below, the proprietary rights and duty of confidentiality with
respect to which I owe to the following party(ies);
<TABLE>
<CAPTION>
Invention or Improvement Party(ies) Relationship
<S> <C> <C>
1. ________________________ ____________ ______________________
2. ________________________ ____________ ______________________
3. ________________________ ____________ ______________________
</TABLE>
/ / Additional sheets attached.
B-1
<PAGE>
EXHIBIT 99(c)(9)
June 11, 1999
Stuart A. Harrington
Orcad, Inc.
9300 S.W. Nimbus
Beaverton, OR 97008
Dear Mr. Harrington:
We are very pleased to offer you employment as Vice President and
General Manager with Cadence Design Systems, Inc. ("Cadence") following the
merger of Orcad, Inc. with a wholly owned subsidiary of Cadence (the
"Merger"). In the context of the proposed purchase of Orcad, Inc. by
Cadence, this letter sets forth the terms of our offer of employment to you
as well as other related matters for your approval and signature. This offer
will become effective upon consummation of the Merger. At that time
(assuming you have signed this offer letter), in addition to becoming an
employee of Cadence, you will be exchanging your stock options in Orcad, Inc.
for stock options in Cadence This offer of employment is conditioned upon
consummation of the Merger.
1. Your base salary as a full-time employee will be 24 million Yen per
year, paid in accordance with normal payroll practices in Japan. Your annual
COLA allowance will be 6 million Yen; housing allowance will be 6 million
Yen; home leave allowance will be 1.5 million Yen; and car allowance 1.8
million Yen.
2. While a full-time employee, you will be eligible for an annual
bonus of 30% of your annual base salary. Actual payment is based on company
performance and your individual achievements. The bonus payment is paid
during the first 45 days of the first quarter of the fiscal year following
the fiscal year in which the bonus is earned. You must be a full-time
employee through the payout date to be eligible for a pro-rata portion of
your annual bonus. Your eligibility for a bonus will be determined according
to the applicable bonus plan.
3. You will be granted a nonqualified stock option for 50,000 shares
of Cadence Common Stock. This option will vest as to 20% of the shares on
the first anniversary of your employment with Cadence and monthly thereafter
for forty-eight months on the last day of each month during your employment.
Options are granted by the Compensation Committee shortly after the
consummation of the Merger, at the average of the high and low market price
of Cadence's Common Stock on the date of grant.
4. While you are a full-time employee, you will receive benefits
comparable in the aggregate to the health and other benefits that are
generally available to the rest of Cadence's full-time U.S. based employees
(provided, of course, you meet the standard eligibility requirements for such
benefits) for purposes of benefits, your service date with Cadence will be
calculated
<PAGE>
Stuart A. Harrington
June 11, 1999
Page 2
based on your first date of employment with Orcad, Inc. or its predecessor.
Further, if you earned a sabbatical while employed with Orcad, Inc., you will
be provided the opportunity to take that sabbatical while employed by Cadence.
5. As part of this offer of employment, Cadence agrees that if you are
employed by Cadence at the end of the first day following the consummation of
the Merger, you will receive an initial retention bonus of 7.5 million Yen.
Cadence further agrees that if you remain employed by Cadence through the
one-year anniversary of the consummation of the Merger, you will receive an
additional retention bonus in the amount of 22.5 million Yen.
6. Should your employment be terminated without cause at any time
during the one (1) year following the consummation of the Merger (the
"Term"), Cadence will pay you your base salary and target bonus and the
balance of the retention bonus as outlined in paragraph 5 above for the
remaining period of the Term. However, if you are terminated for cause,(1) or
if you resign, the obligation of Cadence to provide you with salary or stock
vesting or bonus shall immediately end. Further, regardless of the reason
for your termination of employment, on the date of your termination, your
other employee benefits will terminate. Your employment relationship with
Cadence will be at-will. That is, Cadence may terminate your employment with
Cadence at any time and you may terminate your employment with Cadence at any
time with or without cause, for any reason or for no reason, with or without
notice. If Cadence terminates your employment without cause after the end of
the Term, you shall be entitled to receive base salary earned but unpaid
through the date of termination. You also have the opportunity to receive
benefits and payments provided by Cadence's Severance Plan in effect at that
time, if any. If your employment is terminated as a result of death or
disability, you will be entitled to receive only base salary earned but
unpaid through the date of termination, and Cadence will be required to make
no other payment by way of salary, bonus or other compensation or damages of
any kind.
- ----------------------------------
(1) You shall be considered to have been terminated with "cause" if your
employment is terminated for (a) any gross misconduct or fraud in the
performance of your employment, (b) your conviction or guilty plea with
respect to any felony (except for motor vehicle violations), (c) your
material breach of the Noncompetition Agreement, or the Proprietary
Information and Inventions Agreement, after written notice delivered to you
of such breach and a reasonable opportunity to cure such breach, (d) your
failure to perform your duties satisfactorily after receipt of written
warning and after a reasonable opportunity to cure and after a thorough
review by the Group Director of Human Resources for the Systems Division
and the Sr. Vice President of Employment and Workplace Services, or (e)
engaging in conduct which is injurious to Orcad, Inc. or Cadence.
<PAGE>
Stuart A. Harrington
June 11, 1999
Page 3
7. This agreement supersedes the Employment Agreement between you and
Orcad, Inc., dated September 16, 1998 and, upon your acceptance of this offer
of employment, that Employment Agreement shall be null and void.
8. You must sign an Employee Proprietary Information and Inventions
Agreement, a copy of which is attached for your signature, in order to become
an Employee of Cadence. Additionally, in connection with the acquisition and
as a condition both the acquisition and of this offer of employment, you must
execute the Noncompetition Agreement attached hereto.
9. Payments of salary and other compensations will be subject to
customary withholding and other taxes.
10. In accordance with the Immigration Reform and Control Act of 1986,
you must be a United States citizen, or have authorization to work in the
United States. In either case, verification of your right to work is
required within seventy-two hours of employment.
11. This agreement shall be governed by the laws of the State of
California.
We are excited about the potential represented by the Merger and we are
pleased you will be joining us as a key part of the new team.
Sincerely,
CADENCE DESIGN SYSTEMS, INC.
/s/ Ron Kirchenbauer
Ron Kirchenbauer
Senior Vice President of Employee Workplace
Services
Acknowledged and agreed:
/s/ Stuart A. Harrington
- ---------------------------------
Stuart A. Harrington
Date: June 14, 1999
Enclosures
<PAGE>
EXHIBIT 99(c)(9)
NONCOMPETITION AGREEMENT
THIS NONCOMPETTION AGREEMENT is being executed and delivered as of June
14, 1999 by Stuart A. Harrington ("Stockholder") in favor of and for the
benefit of CADENCE DESIGN SYSTEMS, INC., a Delaware corporation ("Parent"),
and ORCAD, INC., a Delaware corporation (the "Corporation").
RECITALS
A. As an employee and stockholder of the Corporation, Stockholder has
obtained and will obtain extensive and valuable knowledge and information
concerning the business of the Corporation (including confidential
information relating to the Corporation and its operations, assets,
contracts, customers, personnel, plans and prospects).
B. Contemporaneously with the execution and delivery of this
Noncompetition Agreement, the Corporation is entering into an Agreement and
Plan of Merger with Parent and a subsidiary of Parent (the "Reorganization
Agreement"), which provides (subject to the conditions set forth therein) for
the merger of Parent's subsidiary into the Corporation with the Corporation
as the surviving corporation (the "Merger"). As a result of the Merger, the
Corporation will become a wholly-owned subsidiary of Parent, and Stockholder
will receive options for shares of common stock of Parent in exchange for
Stockholder's options for shares of common stock of the Corporation.
C. It is also contemplated that, on the date that the Merger becomes
effective (the "Effective Time"), Stockholder will become an employee of
Parent and, as such, will obtain extensive and valuable knowledge and
information concerning the business of Parent (including confidential
information and relating to Parent and its operations, assets, contracts,
customers, personnel, plans and prospects).
In connection with the Merger and as a condition to entering into the
Reorganization Agreement and consummating the Merger, and to more fully
secure unto Parent the benefits of the Merger, Parent has requested that
Stockholder enter into this Noncompetition Agreement; and Stockholder is
entering into this Noncompetition Agreement in order to induce Parent to
enter into the Reorganization Agreement and consummate the Merger.
E. Both Parent and the Corporation have conducted, are conducting and
will continue to conduct their respective businesses on a worldwide basis.
<PAGE>
AGREEMENT
In order to induce Parent to enter into the Reorganization Agreement and
consummate the Merger, and in consideration of the issuance and delivery to
Stockholder of options for shares of common stock of Parent pursuant to the
Reorganization Agreement, Stockholder agrees as follows:
1. ACKNOWLEDGMENTS BY STOCKHOLDER. Stockholder acknowledges that the
promises and restrictive covenants that Stockholder is providing in this
Noncompetition Agreement are reasonable and necessary to the protection of
Parent's business and Parent's legitimate interests in its acquisition of the
Corporation (including the Corporation's goodwill) pursuant to the
Reorganization Agreement. Stockholder acknowledges that, in connection with
the consummation of the Merger, all of Stockholder's options for shares of
common stock of the Corporation will be exchanged for options for shares of
common stock of Parent.
2. NONCOMPETITION. Stockholder agrees that he will not, except with
the express prior written consent of the Parent, during the period from the
date hereof through twelve months following the termination of his
employment, voluntarily or involuntarily, for any reason whatsoever, directly
or indirectly, individually or on behalf of persons not now parties to this
Noncompetition Agreement, or as a partner, stockholder, director, officer,
principal, agent, employee or in any other capacity or relationship, for his
own account or for the benefit of any other person:
(a) engage in software development or services in the areas of FPGA
design and printed circuit board design;
(b) be or become an officer, director, stockholder, owner, affiliate,
salesperson, co-owner, partner, trustee, promoter, technician, engineer,
analyst, employee, agent, representative, supplier, consultant, advisor or
manager of or to, or otherwise acquire or hold any interest in, any person
or entity that engages in software development or services focused
primarily on FPGA design and printed circuit board design; or
(c) provide any service (as an employee, consultant or otherwise),
support, product or technology to any person or entity, if such service,
support, product or technology involves or relates to software development
or services in the areas of FPGA design and printed circuit board design;
or
(d) permit his name to be used in connection with a business that
competes with Parent or Corporation:
PROVIDED, HOWEVER, that nothing in this Section 2 shall prevent Stockholder
from owning as a passive investment less than 5% of the outstanding shares of
the capital stock of a publicly-held corporation if (A) such shares are
actively traded on an established national securities market in the United
States and (B) Stockholder is not otherwise associated directly or indirectly
with such corporation or any affiliate of such corporation. Under this
Noncompetition Agreement,
2
<PAGE>
Stockholder's employment with Parent shall be deemed to terminate at such
time that Stockholder is neither a full-time nor a part-time employee of
Parent.
3. NONSOLICITATION. Stockholder further agrees that, during your
employment, and for one year following Stockholder's termination of employment
with Parent, Stockholder will not and Stockholder will not permit any of his
affiliates to:
(a) personally or through others, encourage, induce, attempt to
induce, solicit or attempt to solicit (on Stockholder's own behalf or on
behalf of any other person or entity) anyone who is employed at that time,
or was employed during the previous six (6) months, by the Corporation,
Parent or any of Parent's subsidiaries to leave his or her employment with
the Corporation, Parent or any of Parent's subsidiaries; or
(b) personally or through others, use any trade secret or proprietary
information of Parent or Corporation or any other improper means to
interfere or attempt to interfere with the relationship or prospective
relationship of the Corporation, Parent or any of Parent's subsidiaries
with any person or entity that is, was or is expected to become a customer
or client of the Corporation, Parent or any of Parent's subsidiaries; or
(c) solicit the business of any client or customer of the
Corporation, Parent or any of Parent's subsidiaries (other than on behalf
of the Parent).
4. INDEPENDENCE OF OBLIGATIONS. The covenants and obligations of
Stockholder set forth in this Noncompetition Agreement shall be construed as
independent of any other agreement or arrangement between Stockholder, on the
one hand, and the Corporation or Parent, on the other.
5. SPECIFIC PERFORMANCE. Stockholder agrees that in the event of any
breach or threatened breach by Stockholder of any covenant, obligation or
other provision contained in this Noncompetition Agreement, Parent and the
Corporation shall be entitled (in addition to any other remedy that may be
available by law to them) to the extent permitted by applicable law (a) a
decree or order of specific performance to enforce the observance and
performance of such covenant, obligation or other provision, and (b) an
injunction restraining such breach or threatened breach. Stockholder further
agrees that neither Parent nor any other person or entity shall be required
to provide any bond or other security in connection with any such decree,
order or injunction or in connection with any related action or proceeding.
6. NON-EXCLUSIVITY. The rights and remedies of Parent and the
Corporation hereunder are not exclusive of or limited by any other rights or
remedies which Parent or the Corporation may have, whether at law, in equity,
by contract or otherwise, all of which shall be cumulative (and not
alternative). Without limiting the generality of the foregoing, the rights
and remedies of Parent and the Corporation hereunder, and the obligations and
liabilities of Stockholder hereunder, are in addition to their respective
rights, remedies, obligations and liabilities under the law of unfair
competition, misappropriation of trade secrets and the like. This
Noncompetition Agreement does not limit Stockholder's obligations or the
rights of Parent or the Corporation (or any affiliate of Parent or the
Corporation) under the terms of (a) the
3
<PAGE>
Employment Agreement of even date herewith between Stockholder and Parent;
(b) the Proprietary Information and Inventions Agreement between Stockholder
and the Parent; (c) the Reorganization Agreement; or (d) the terms of any
other agreement between Stockholder and Parent or the Corporation or any
affiliate of Parent or the Corporation.
7. NOTICES. Any notice or other communication required or permitted
to be delivered to Stockholder, the Corporation or Parent under this
Noncompetition Agreement shall be in writing and shall be deemed properly
delivered, given and received when delivered (by hand, by registered mail, by
courier or express delivery service or by facsimile) to the address or
facsimile telephone number set forth beneath the name of such party below (or
to such other address or facsimile telephone number as such party shall have
specified in a written notice delivered in accordance with this Section 7):
IF TO THE CORPORATION: Orcad, Inc.
9300 S.W. Nimbus
Beaverton, OR 97008
IF TO PARENT: Cadence Design Systems, Inc.,
2655 Seely Road
San Jose, CA 95134
Attention:
Facsimile No.:
IF TO STOCKHOLDER: Stuart A. Harrington
104-B
Yamate-cho, Naka-ku
Yokohama 231-0862
Japan
8. SEVERABILITY. If any provision of the Noncompetition Agreement or
any part of any such provision is held under any circumstances to be invalid
or unenforceable in any jurisdiction, then (a) such provision or part thereof
shall, with respect to such circumstances and in such jurisdiction, be deemed
amended to conform to applicable laws so as to be valid and enforceable to
the fullest possible extent, (b) the invalidity or unenforceability or such
provision or part thereof under such circumstances and in such jurisdiction
shall not affect the validity or enforceability of such provision or part
thereof under any other circumstances or in any other jurisdiction, and (c)
such invalidity or enforceability of such provision or part thereof shall not
affect the validity or enforceability of the remainder of such provision or
the validity or enforceability of any other provision of this Noncompetition
Agreement is separable from every other part of such provision.
9. GOVERNING LAW. This Noncompetition Agreement shall be construed in
accordance with, and governed in all respects by, the laws of the State of
California (without giving effect to principles of conflicts of laws).
4
<PAGE>
10. WAIVER. No failure on the part of Parent or the Corporation to
exercise any power, right, privilege or remedy under this Noncompetition
Agreement, and no delay on the part of Parent or the Corporation in
exercising any power, right, privilege or remedy under this Noncompetition
Agreement, shall operate as a waiver of such power, right, privilege or
remedy; and no single or partial exercise of any such power, right, privilege
or remedy shall preclude any other or further exercise thereof or of any
other power, right, privilege or remedy. Neither Parent nor the Corporation
shall be deemed to have waived any claim arising out of this Noncompetition
Agreement, or any power, right, privilege or remedy under this Noncompetition
Agreement, unless the waiver of such claim, power, right, privilege or remedy
is expressly set forth in a written instrument duly executed and delivered on
behalf of such party; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
11. CAPTIONS. The captions contained in this Noncompetition Agreement
are for convenience of reference only, shall not be deemed to be a part of
this Noncompetition Agreement and shall not be referred to in connection with
the construction or interpretation of this Noncompetition Agreement.
12. FURTHER ASSURANCES. Stockholder shall execute and/or cause to be
delivered to the Corporation and Parent such instruments and other documents
and shall take such other actions as Corporation and Parent may reasonably
request to effectuate the intent and purposes of this Noncompetition
Agreement.
13. ENTIRE AGREEMENT. This Noncompetition Agreement, the Stockholder's
offer letter and the Employee Proprietary Information and Inventions
Agreement, and the other agreements referred to herein set forth the entire
understanding of Stockholder, the Corporation and Parent relating to the
subject matter hereof and thereof and supersede all prior agreements and
understandings between any of such parties relating to the subject matter
hereof and thereof.
14. AMENDMENTS. This Noncompetition Agreement may not be amended,
modified, altered, or supplemented other than by means of a written
instrument duly executed and delivered on behalf of Parent and Stockholder.
15. ASSIGNMENT. This Noncompetition Agreement and all obligations
hereunder are personal to Stockholder and may not be transferred or assigned
by Stockholder at any time. Either Parent or the Corporation may assign its
rights under this Noncompetition Agreement in whole or in part, without the
consent or approval of the Stockholder or any other person or entity, in
connection with (A) the sale of Parent or the Corporation, or (B) the sale or
other transfer of all or a substantial part of the assets or business of the
Parent or the Corporation.
16. ATTORNEYS' FEES. If any legal action or other legal proceeding
relating to this Noncompetition Agreement or the enforcement of any provision
of this Noncompetition Agreement is brought against any party to this
Noncompetition Agreement, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
5
<PAGE>
17. EFFECTIVE DATE. This Noncompetition Agreement shall become
effective upon the effective time of the merger contemplated by the
Reorganization Agreement (the "Effective Time").
18. BINDING NATURE. Subject to Section 16, this Noncompetition
Agreement will be binding upon Stockholder and Stockholder's representatives,
executors, administrators, estate, heirs, successors and assigns, and will
inure to the benefit of Parent and the Corporation and their respective
successors and assigns.
IN WITNESS WHEREOF, the undersigned has executed this Noncompetition
Agreement as of the date first above written.
/s/ Stuart A. Harrington
-----------------------------------------
Stuart A. Harrington
6
<PAGE>
FORM OF:
CADENCE DESIGN SYSTEMS, INC.
EMPLOYEE PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
(to be signed in conjunction with Non Competition Agreement and Offer Letter)
In consideration of my employment or continued employment by Cadence
Design Systems, Inc. (the "Company"), and the compensation now and hereafter
paid to me, I hereby agree as follows:
1. NONDISCLOSURE
1.1 RECOGNITION OF COMPANY'S RIGHTS; NONDISCLOSURE. At all times
during my employment and thereafter, I will hold in strictest confidence and
will not disclose, use, lecture upon or publish any of the Company's
Proprietary Information (defined below), except as such disclosure, use or
publication may be required in connection with my work for the Company, or
unless an officer of the Company expressly authorizes such in writing. I
will obtain Company's written approval before publishing or submitting for
publication any material (written, verbal, or otherwise) that relates to my
work at Company and/or incorporates any Proprietary Information. I hereby
assign to the Company any rights I may have or acquire in such Proprietary
Information and recognize that all Proprietary Information shall be the sole
property of the Company and its assigns.
1.2 PROPRIETARY INFORMATION. The term "Proprietary Information" shall
mean any and all confidential and/or proprietary knowledge, data or
information of, or acquired by, the Company. By way of illustration but not
limitation, "Proprietary Information" includes (a) information relating to
products, processes, know-how, designs, drawings, concepts, test data,
formulas, methods, compositions, ideas, algorithms, techniques, developmental
or experimental work, improvements and discoveries, (hereinafter collectively
referred to as "Inventions"); (b) information regarding plans for research,
development, new products, marketing and selling, business plans, budgets and
unpublished financial statements, licenses, prices and costs, suppliers and
customers; and (c) information regarding the skills and compensation of other
employees of the Company. Notwithstanding the foregoing, it is understood
that, at all such times, I am free to use information which is generally
known in the trade or industry, which is not gained as result of a breach of
this Agreement, and my own, skill, knowledge, know-how and experience to
whatever extent and in whichever way I wish.
1.3 THIRD PARTY INFORMATION. I understand, in addition, that the
Company has received and in the future will receive from third parties
confidential or proprietary information ("Third Party Information") subject
to a duty on the Company's part to maintain the confidentiality of such
information and to use it only for certain limited purposes. During the term
of my employment and thereafter, I will hold Third Party Information in the
strictest confidence and will not disclose to anyone (other than Company
personnel who need to know such information in connection with their work for
the Company) or use, except in connection with my work for the Company, Third
Party Information unless expressly authorized by an officer of the Company in
writing.
<PAGE>
1.4 NO IMPROPER USE OF INFORMATION OF PRIOR EMPLOYERS AND OTHERS.
During my employment by the Company I will not improperly use or disclose any
confidential information or trade secrets, if any, of any former employer or
any other person to whom I have an obligation of confidentiality, and I will
not bring onto the premises of the Company any unpublished documents or any
property belonging to my former employer or any other person to whom I have
an obligation of confidentiality unless consented to in writing by that
former employer or person. I will use in the performance of my duties only
information which is generally known and used by persons with training and
experience comparable to my own, which is common knowledge in the industry or
otherwise legally in the public domain, or which is otherwise provided or
developed by the Company.
2. ASSIGNMENT OF INVENTIONS
2.1 PROPRIETARY RIGHTS. The term "Proprietary Rights" shall mean all
trade secret, patent, copyright, mask work and other intellectual property
rights throughout the world.
2.2 PRIOR INVENTIONS. Inventions, if any, patented or unpatented,
which I made prior to the commencement of my employment with the Company are
excluded from the scope of this Agreement. To preclude any possible
uncertainty, I have set forth on Exhibit B (Previous Inventions) attached
hereto a complete list of all inventions that I have, alone or jointly with
others, conceived, developed or reduced to practice or caused to be
conceived, developed or reduced to practice prior to the commencement of my
employment with the Company, that I consider to be my property or the
property of third parties and that I wish to have excluded from the scope of
this Agreement (collectively referred to as "Prior Inventions"). If
disclosure of any such Prior Invention(s) would cause me to violate any prior
confidentiality agreement, I understand that I am not to list such Prior
Invention(s) in Exhibit B, but am only to disclose a cursory name for each
such invention, a listing of the party(ies) to whom it belongs and the fact
that full disclosure as to such inventions has not been made for that reason.
A space is provided on Exhibit B for such purpose. If no such disclosure is
attached, I represent that there are no Prior Inventions. If, in the course
of my employment with the Company, I incorporate a Prior Invention into a
Company product, process or machine, the Company is hereby granted and shall
have a nonexclusive, royalty-free, irrevocable, perpetual, worldwide license
(with rights to sublicense through multiple tiers of sublicensees) to make,
have made, modify, use and sell such Prior Invention. Notwithstanding the
foregoing, I agree that I will not incorporate, or permit to be incorporated,
Prior Inventions in any Company Inventions without the Company's prior
written consent.
2.3 ASSIGNMENT OF INVENTIONS. Subject to Sections 2.4, and 2.6, I
hereby assign and agree to assign in the future (when any such Inventions or
Proprietary Rights are first reduced to practice or first fixed in a tangible
medium, as applicable) to the Company all my right, title and interest in and
to any and all Inventions (and all Proprietary Rights with respect thereto)
whether or not patentable or registrable under copyright or similar statutes,
made or conceived or reduced to practice or learned by me, either alone or
jointly with others, during the period of my employment with the Company.
Inventions assigned to the Company, or to a third party as
2
<PAGE>
directed by the Company pursuant to this Section 2, are hereinafter referred
to as "Company Inventions."
2.4 NONASSIGNABLE INVENTIONS. This Agreement does not apply to an
Invention which qualifies fully as a nonassignable Invention under Section
2870 of the California Labor Code (hereinafter "Section 2870"). I have
reviewed the notification on Exhibit A (Limited Exclusion Notification) and
agree that my signature acknowledges receipt of the notification.
2.5 OBLIGATION TO KEEP COMPANY INFORMED. During the period of my
employment and for one (1) year after termination of my employment with the
company, I will promptly disclose to the Company fully and in writing all
Inventions authored, conceived or reduced to practice by me, either alone or
jointly with others, particularly if I leave the Company and become employed
by a competitor of the Company, or if I commercialize an idea that the
Company decided not to pursue. In addition, I will promptly disclose to the
Company all patent applications filed by me or on my behalf during my
employment or within a year after termination of employment. At the time of
each such disclosure, I will advise the Company in writing of any Inventions
that I believe fully qualify for protection under Section 2870; and I will at
that time provide to the Company in writing all evidence necessary to
substantiate that belief. The Company will keep in confidence and will not
use for any purpose or disclose to third parties without my consent any
confidential information disclosed in writing to the Company pursuant to this
Agreement relating to Inventions that qualify fully for protection under the
provisions of Section 2870. I will preserve the confidentiality of any
Invention that does not fully qualify for protection under Section 2870. For
one (1) year following my termination of employment any and all patent
applications filed by me or by a third party based on my work will be
presumed to be owned by the Company. I can rebut this presumption by
providing evidence sufficient to establish ownership by the party applying
for the patent.
2.6 GOVERNMENT OR THIRD PARTY. I also agree to assign all my right,
title and interest in and to any particular Invention to a third party,
including without limitation the United States, as directed by the Company.
2.7 WORKS FOR HIRE. I acknowledge that all original works of
authorship which are made by me (solely or jointly with others) within the
scope of my employment and which are protectable by copyright are "works made
for hire," pursuant to United States Copyright Act (17 U.S.C. Section 101).
2.8 ENFORCEMENT OF PROPRIETARY RIGHTS. During and after my employment
with the Company, I will assist the Company in every proper way to obtain,
and from time to time enforce, United States and foreign Proprietary Rights
relating to Company Inventions in any and all countries. To that end I will
execute, verify and deliver such documents and perform such other acts
(including appearances as a witness) as the Company may reasonably request
for use in applying for, obtaining, perfecting, evidencing, sustaining and
enforcing such Proprietary Rights and the assignment thereof. In addition, I
will execute, verify and deliver assignments of such Proprietary Rights to
the Company or its designee. My obligation to assist the Company with
respect to Proprietary Rights relating to such Company Inventions in any and
all countries
3
<PAGE>
shall continue beyond the termination of my employment, but the Company shall
compensate me at a reasonable rate after my termination for the time actually
spent by me at the Company's request on such assistance.
In the event the Company is unable for any reason, after reasonable
effort to secure my signature on any document needed in connection with the
actions specified in the preceding paragraph, I hereby irrevocably designate
and appoint the Company and its duly authorized officers and agents as my
agent and attorney in fact, which appointment is coupled with an interest, to
act for and in my behalf to execute, verify and file any such documents and
to do all other lawfully permitted acts to further the purposes of the
preceding paragraph with the same legal force and effect as if executed by
me. I hereby waive and quitclaim to the Company any and all claims, of any
nature whatsoever, which I now or may hereafter have for infringement of any
Proprietary Rights assigned hereunder to the Company.
3. RECORDS. I agree to keep and maintain adequate and current records (in
the form of notes, sketches, drawings and in any other form that may be
required by the Company) of all Proprietary Information developed by me and
all Inventions made by me during the period of my employment at the Company,
which records shall be available to and remain the sole property of the
Company at all times.
4. ADDITIONAL ACTIVITIES. I agree that during the period of my employment
by the Company I will not, without the Company's express written consent,
engage in any employment or business activity which is competitive with, or
would otherwise conflict with, my employment by the Company.
5. AT-WILL EMPLOYMENT. I agree and understand that nothing in this
Agreement shall confer any right with respect to continuation of employment
by the Company, nor shall it interfere in any way with my right or the
Company's right to terminate the employment relationship at any time, for any
reason, with or without cause, and with or without notice. I understand
that, other than the Company's Senior Vice President of Human Resources, no
manager, supervisor, employee or any other representative or agent of the
Company has the authority to enter into an agreement to the contrary. I
further understand that an agreement to the contrary by the Senior Vice
President of Human Resources is not valid unless it is in writing.
6. NO CONFLICTING OBLIGATION. I represent that my performance of all the
terms of this Agreement, and of my duties as an employee of the Company, does
not and will not breach any agreement to keep in confidence information
acquired by me in confidence or in trust prior to my employment by the
Company. I have not entered into, and I agree I will not enter into, any
agreement either written or oral in conflict herewith.
7. RETURN OF COMPANY DOCUMENTS AND PROPERTY. When I leave the employ of
the Company, I will deliver to the Company any and all drawings, notebooks,
notes, memoranda, source code, specifications, devices, formulas, records,
manuals, reports and documents, together with all copies thereof, and any
other material containing or disclosing any Company Inventions, Third Party
Information or Proprietary Information of the Company, that is within my
possession, custody or control. Further, upon termination of employment I
also will
4
<PAGE>
return any and all Company property or equipment in my possession, custody or
control. Prior to leaving, I will cooperate with the Company in completing
and signing the Company's agreement regarding termination.
8. NON-PRIVATE NATURE OF COMPANY PROPERTY. I understand that I have no
expectation of privacy in the voicemail and electronic mail provided to me by
the Company or in any property situated on the Company's premises and/or
owned by the Company, including disks and other storage media, filing
cabinets or other work areas. I further understand that such property,
including voicemail and electronic mail, is subject to inspection by Company
personnel at any time.
9. NOTICES. Any notices required or permitted hereunder shall be given to
the appropriate party at the address specified below or at such other address
as the party shall specify in writing. Such notice shall be deemed given
upon personal delivery to the appropriate address or if sent by certified or
registered mail, three (3) days after the date of mailing.
10. NOTIFICATION OF NEW EMPLOYER. In the event that I leave the employ of
the Company, I hereby consent to the notification of my new employer of my
rights and obligations under this Agreement.
11. GENERAL PROVISIONS.
11.1 GOVERNING LAWS, CONSENT TO PERSONAL JURISDICTION. This Agreement
will be governed by and construed according to the laws of the State of
California, as such laws are applied to agreements entered into and to be
performed entirely within California between California residents. I hereby
expressly consent to the personal jurisdiction of the state and federal
courts located in Santa Clara County, California for any lawsuit filed there
against me by Company arising from or related to this Agreement.
11.2 SEVERABILITY. In the event any one or more of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect the other provisions of this Agreement, and
this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein. If, moreover, any
one or more of the provisions contained in this Agreement shall for any
reason be held to be excessively broad as to duration, geographical scope,
activity or subject, it shall be construed by limiting and reducing it, so as
to be enforceable to the extent compatible with the applicable law as it
shall then appear.
11.3 SURVIVAL. The provisions of this Agreement shall survive the
termination of my employment and the assignment of this Agreement by the
Company to any successor in interest or other assignee.
11.4 WAIVER. No waiver by the Company of any breach of this Agreement
shall be a waiver of any preceding or succeeding breach. No waiver by the
Company of any right under this Agreement shall be construed as a wavier of
any other right. The Company shall not be required to give notice to enforce
strict adherence to all terms of this Agreement.
5
<PAGE>
11.5 ENTIRE AGREEMENT. The obligations pursuant to Sections 1 and 2 of
this Agreement shall apply to any time during which I was previously
employed, or am in the future employed, by the Company as a consultant if no
other agreement governs nondisclosure and assignment of inventions during
such period. This Agreement is the final, complete and exclusive agreement of
the parties with respect to the subject matter hereof and supersedes all
prior discussions between us, except that the Noncompetition Agreement,
Cadence Code of Conduct, and my offer letter, all of which I signed, are
incorporated herein. No modification of or amendment to this Agreement, nor
any waiver of any rights under this Agreement, will be effective unless in
writing and signed by the party to be charged. Any subsequent change or
changes in my duties, salary or compensation will not affect the validity or
scope of this Agreement.
This Agreement shall be effective as of the first day of my employment
with the Company, namely: _____________, 19___.
I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS. I HAVE
COMPLETELY FILLED OUT EXHIBIT B TO THIS AGREEMENT.
Dated:
---------------------------------------------
Signature
- ---------------------------------------------------
(Printed Name)
ACCEPTED AND AGREED TO:
CADENCE DESIGN SYSTEMS, INC.
By:
-----------------------------------------------
Title:
--------------------------------------------
Date:
---------------------------------------------
6
<PAGE>
EXHIBIT A
LIMITED EXCLUSION NOTIFICATION
THIS IS TO NOTIFY you in accordance with Section 2872 of the California
Labor Code that the foregoing Agreement between you and the Company does not
require you to assign or offer to assign to the Company any invention that
you developed entirely on your own time without using the Company's
equipment, supplies, facilities or trade secret information except for those
inventions that either:
(1) Relate at the time of conception or reduction to practice of the
invention to the Company's business, or actual or demonstrably anticipated
research or development of the Company;
(2) Result from any work performed by you for the Company.
To the extent a provision in the foregoing Agreement purports to require
you to assign an invention otherwise excluded from the preceding paragraph, the
provision is against the public policy of this state and is unenforceable.
This limited exclusion does not apply to any patent or invention covered
by a contract between the Company and the United States or any of its
agencies requiring full title to such patent or invention to be in the United
States.
I ACKNOWLEDGE RECEIPT of a copy of this notification.
By:
------------------------------------
(printed name of employee)
Date:
------------------------------------
WITNESSED BY:
- ------------------------------------------
(printed name of representative)
Dated:
-----------------------------------
A-1
<PAGE>
EXHIBIT B
TO: Cadence Design Systems, Inc.
FROM:
----------------------------------------------
DATE:
----------------------------------------------
SUBJECT: Previous Inventions
1. Except as listed in Section 2 below, the following is a complete list
of all inventions or improvements relevant to the subject matter of my
employment by Cadence Design Systems, Inc. (the "Company") that have been made
or conceived or first reduced to practice by me alone or jointly with others
prior to my engagement by the Company:
/ / No inventions or improvements.
/ / See below:
____________________________________________________________
____________________________________________________________
____________________________________________________________
/ / Additional sheets attached.
2. Due to a prior confidentiality agreement, I cannot complete the
disclosure under Section 1 above with respect to inventions or improvements
generally listed below, the proprietary rights and duty of confidentiality with
respect to which I owe to the following party(ies);
<TABLE>
<CAPTION>
Invention or Improvement Party(ies) Relationship
<S> <C> <C>
1. ________________________ ____________ ______________________
2. ________________________ ____________ ______________________
3. ________________________ ____________ ______________________
</TABLE>
/ / Additional sheets attached.
B-1
<PAGE>
EXHIBIT 99(c)(10)
June 11, 1999
Philip J. Kilcoin
Orcad, Inc.
9300 S.W. Nimbus
Beaverton, OR 97008
Dear Mr. Kilcoin:
We are very pleased to offer you employment as Vice President, Research and
Development/Operations with Cadence Design Systems, Inc. ("Cadence") following
the merger of Orcad, Inc. with a wholly owned subsidiary of Cadence (the
"Merger"). In the context of the proposed purchase of Orcad, Inc. by Cadence,
this letter sets forth the terms of our offer of employment to you as well as
other related matters for your approval and signature. This offer will become
effective upon consummation of the Merger. At that time (assuming you have
signed this offer letter), in addition to becoming an employee of Cadence, you
will be exchanging your stock options in Orcad, Inc. for stock options in
Cadence. This offer of employment is conditioned upon consummation of the
Merger.
1. Your base salary as a full-time employee will be $170,000 per year,
paid semi-monthly in accordance with Cadence's normal payroll practices.
2. While a full-time employee, you will be eligible for an annual bonus
of 30% of your annual base salary. Actual payment is based on company
performance and your individual achievements. The bonus payment is paid during
the first 45 days of the first quarter of the fiscal year following the fiscal
year in which the bonus is earned. You must be a full-time employee through the
payout date to be eligible for a pro-rata portion of your annual bonus. Your
eligibility for a bonus will be determined according to the applicable bonus
plan.
3. You will be granted a nonqualified stock option for 30,000 shares of
Cadence Common Stock. This option will vest as to 20% of the shares on the
first anniversary of your employment with Cadence and monthly thereafter for
forty-eight months on the last day of each month during your employment. You
will also be granted a nonqualified stock option for 30,000 shares of Cadence
Common Stock with a one year cliff vesting tied to objectives to be set by
Cadence. Options are granted by the Compensation Committee shortly after the
consummation of the Merger, at the average of the high and low market price of
Cadence's Common Stock on the date of grant.
4. While you are a full-time employee, you will receive benefits
comparable in the aggregate to the health and other benefits that are generally
available to the rest of Cadence's full-time U.S. based employees (provided, of
course, you meet the standard eligibility requirements for such benefits) for
purposes of benefits, your service date with Cadence will be calculated
<PAGE>
Philip J. Kilcoin
June 11, 1999
Page 2
based on your first date of employment with Orcad, Inc. or its predecessor.
Further, if you earned a sabbatical while employed with Orcad, Inc., you will
be provided the opportunity to take that sabbatical while employed by Cadence.
5. As part of this offer of employment, Cadence agrees that if you are
employed by Cadence at the end of the first day following the consummation of
the Merger, you will receive an initial retention bonus of $62,500.00. Cadence
further agrees that if you remain employed by Cadence through the one-year
anniversary of the consummation of the Merger, you will receive an additional
retention bonus in the amount of $187,500.00.
6. Should your employment be terminated without cause at any time during
the one (1) year following the consummation of the Merger (the "Term"), Cadence
will pay you your base salary and target bonus and the balance of the retention
bonus as outlined in paragraph 5 above for the remaining period of the Term.
However, if you are terminated for cause,(1) or if you resign, the obligation of
Cadence to provide you with salary or stock vesting or bonus shall immediately
end. Further, regardless of the reason for your termination of employment, on
the date of your termination, your other employee benefits will terminate. Your
employment relationship with Cadence will be at-will. That is, Cadence may
terminate your employment with Cadence at any time and you may terminate your
employment with Cadence at any time with or without cause, for any reason or for
no reason, with or without notice. If Cadence terminates your employment
without cause after the end of the Term, you shall be entitled to receive base
salary earned but unpaid through the date of termination. You also have the
opportunity to receive benefits and payments provided by Cadence's Severance
Plan in effect at that time. If your employment is terminated as a result of
death or disability, you will be entitled to receive only base salary earned but
unpaid through the date of termination, and Cadence will be required to make no
other payment by way of salary, bonus or other compensation or damages of any
kind.
- -----------------------------------
(1) You shall be considered to have been terminated with "cause" if your
employment is terminated for (a) any gross misconduct or fraud in the
performance of your employment, (b) your conviction or guilty plea with
respect to any felony (except for motor vehicle violations), (c) your
material breach of the Noncompetition Agreement, or the Proprietary
Information and Inventions Agreement, after written notice delivered to you
of such breach and a reasonable opportunity to cure such breach, (d) your
failure to perform your duties satisfactorily after receipt of written
warning and after a reasonable opportunity to cure and after a thorough
review by the Group Director of Human Resources for the Systems Division
and the Sr. Vice President of Employment and Workplace Services, or (e)
engaging in conduct which is injurious to Orcad, Inc. or Cadence.
<PAGE>
Philip J. Kilcoin
June 11, 1999
Page 3
7. This agreement supersedes the Employment Agreement between you and
Orcad, Inc., dated September 17, 1998 and, upon your acceptance of this offer
of employment, that Employment Agreement shall be null and void.
8. You must sign an Employee Proprietary Information and Inventions
Agreement, a copy of which is attached for your signature, in order to become
an Employee of Cadence. Additionally, in connection with the acquisition and
as a condition both the acquisition and of this offer of employment, you must
execute the Noncompetition Agreement attached hereto.
9. Payments of salary and other compensations will be subject to
customary withholding and other taxes.
10. In accordance with the Immigration Reform and Control Act of 1986,
you must be a United States citizen, or have authorization to work in the
United States. In either case, verification of your right to work is
required within seventy-two hours of employment.
11. This agreement shall be governed by the laws of the State of
California.
We are excited about the potential represented by the Merger and we are
pleased you will be joining us as a key part of the new team.
Sincerely,
CADENCE DESIGN SYSTEMS, INC.
/s/ Ron Kirchenbauer
Ron Kirchenbauer
Senior Vice President of Employee Workplace
Services
Acknowledged and agreed:
/s/ Philip J. Kilcoin
- -----------------------------
Philip J. Kilcoin
Date: June 14, 1999
Enclosures
<PAGE>
EXHIBIT 99(c)(10)
NONCOMPETITION AGREEMENT
THIS NONCOMPETTION AGREEMENT is being executed and delivered as of
June 14, 1999 by Philip J. Kilcoin ("Stockholder") in favor of and
for the benefit of CADENCE DESIGN SYSTEMS, INC., a Delaware corporation
("Parent"), and ORCAD, INC., a Delaware corporation (the "Corporation").
RECITALS
A. As an employee and stockholder of the Corporation, Stockholder has
obtained and will obtain extensive and valuable knowledge and information
concerning the business of the Corporation (including confidential
information relating to the Corporation and its operations, assets,
contracts, customers, personnel, plans and prospects).
B. Contemporaneously with the execution and delivery of this
Noncompetition Agreement, the Corporation is entering into an Agreement and
Plan of Merger with Parent and a subsidiary of Parent (the "Reorganization
Agreement"), which provides (subject to the conditions set forth therein) for
the merger of Parent's subsidiary into the Corporation with the Corporation
as the surviving corporation (the "Merger"). As a result of the Merger, the
Corporation will become a wholly-owned subsidiary of Parent, and Stockholder
will receive options for shares of common stock of Parent in exchange for
Stockholder's options for shares of common stock of the Corporation.
C. It is also contemplated that, on the date that the Merger becomes
effective (the "Effective Time"), Stockholder will become an employee of
Parent and, as such, will obtain extensive and valuable knowledge and
information concerning the business of Parent (including confidential
information and relating to Parent and its operations, assets, contracts,
customers, personnel, plans and prospects).
In connection with the Merger and as a condition to entering into the
Reorganization Agreement and consummating the Merger, and to more fully
secure unto Parent the benefits of the Merger, Parent has requested that
Stockholder enter into this Noncompetition Agreement; and Stockholder is
entering into this Noncompetition Agreement in order to induce Parent to
enter into the Reorganization Agreement and consummate the Merger.
E. Both Parent and the Corporation have conducted, are conducting and
will continue to conduct their respective businesses on a worldwide basis.
<PAGE>
AGREEMENT
In order to induce Parent to enter into the Reorganization Agreement and
consummate the Merger, and in consideration of the issuance and delivery to
Stockholder of options for shares of common stock of Parent pursuant to the
Reorganization Agreement, Stockholder agrees as follows:
1. ACKNOWLEDGMENTS BY STOCKHOLDER. Stockholder acknowledges that the
promises and restrictive covenants that Stockholder is providing in this
Noncompetition Agreement are reasonable and necessary to the protection of
Parent's business and Parent's legitimate interests in its acquisition of the
Corporation (including the Corporation's goodwill) pursuant to the
Reorganization Agreement. Stockholder acknowledges that, in connection with
the consummation of the Merger, all of Stockholder's options for shares of
common stock of the Corporation will be exchanged for options for shares of
common stock of Parent.
2. NONCOMPETITION. Stockholder agrees that he will not, except with
the express prior written consent of the Parent, during the period from the
date hereof through twelve months following the termination of his
employment, voluntarily or involuntarily, for any reason whatsoever, directly
or indirectly, individually or on behalf of persons not now parties to this
Noncompetition Agreement, or as a partner, stockholder, director, officer,
principal, agent, employee or in any other capacity or relationship, for his
own account or for the benefit of any other person:
(a) engage in software development or services in the areas of FPGA
design and printed circuit board design;
(b) be or become an officer, director, stockholder, owner, affiliate,
salesperson, co-owner, partner, trustee, promoter, technician, engineer,
analyst, employee, agent, representative, supplier, consultant, advisor or
manager of or to, or otherwise acquire or hold any interest in, any person
or entity that engages in software development or services focused
primarily on FPGA design and printed circuit board design; or
(c) provide any service (as an employee, consultant or otherwise),
support, product or technology to any person or entity, if such service,
support, product or technology involves or relates to software development
or services in the areas of FPGA design and printed circuit board design;
or
(d) permit his name to be used in connection with a business that
competes with Parent or Corporation:
PROVIDED, HOWEVER, that nothing in this Section 2 shall prevent Stockholder
from owning as a passive investment less than 5% of the outstanding shares of
the capital stock of a publicly-held corporation if (A) such shares are
actively traded on an established national securities market in the United
States and (B) Stockholder is not otherwise associated directly or indirectly
with such corporation or any affiliate of such corporation. Under this
Noncompetition Agreement,
2
<PAGE>
Stockholder's employment with Parent shall be deemed to terminate at such
time that Stockholder is neither a full-time nor a part-time employee of
Parent.
3. NONSOLICITATION. Stockholder further agrees that, during your
employment, and for one year following Stockholder's termination of
employment with Parent, Stockholder will not and Stockholder will not permit
any of his affiliates to:
(a) personally or through others, encourage, induce, attempt to
induce, solicit or attempt to solicit (on Stockholder's own behalf or on
behalf of any other person or entity) anyone who is employed at that time,
or was employed during the previous six (6) months, by the Corporation,
Parent or any of Parent's subsidiaries to leave his or her employment with
the Corporation, Parent or any of Parent's subsidiaries; or
(b) personally or through others, use any trade secret or proprietary
information of Parent or Corporation or any other improper means to
interfere or attempt to interfere with the relationship or prospective
relationship of the Corporation, Parent or any of Parent's subsidiaries
with any person or entity that is, was or is expected to become a customer
or client of the Corporation, Parent or any of Parent's subsidiaries; or
(c) solicit the business of any client or customer of the
Corporation, Parent or any of Parent's subsidiaries (other than on behalf
of the Parent).
4. INDEPENDENCE OF OBLIGATIONS. The covenants and obligations of
Stockholder set forth in this Noncompetition Agreement shall be construed as
independent of any other agreement or arrangement between Stockholder, on the
one hand, and the Corporation or Parent, on the other.
5. SPECIFIC PERFORMANCE. Stockholder agrees that in the event of any
breach or threatened breach by Stockholder of any covenant, obligation or
other provision contained in this Noncompetition Agreement, Parent and the
Corporation shall be entitled (in addition to any other remedy that may be
available by law to them) to the extent permitted by applicable law (a) a
decree or order of specific performance to enforce the observance and
performance of such covenant, obligation or other provision, and (b) an
injunction restraining such breach or threatened breach. Stockholder further
agrees that neither Parent nor any other person or entity shall be required
to provide any bond or other security in connection with any such decree,
order or injunction or in connection with any related action or proceeding.
6. NON-EXCLUSIVITY. The rights and remedies of Parent and the
Corporation hereunder are not exclusive of or limited by any other rights or
remedies which Parent or the Corporation may have, whether at law, in equity,
by contract or otherwise, all of which shall be cumulative (and not
alternative). Without limiting the generality of the foregoing, the rights
and remedies of Parent and the Corporation hereunder, and the obligations and
liabilities of Stockholder hereunder, are in addition to their respective
rights, remedies, obligations and liabilities under the law of unfair
competition, misappropriation of trade secrets and the like. This
Noncompetition Agreement does not limit Stockholder's obligations or the
rights of Parent or the Corporation (or any affiliate of Parent or the
Corporation) under the terms of (a) the
3
<PAGE>
Employment Agreement of even date herewith between Stockholder and Parent;
(b) the Proprietary Information and Inventions Agreement between Stockholder
and the Parent; (c) the Reorganization Agreement; or (d) the terms of any
other agreement between Stockholder and Parent or the Corporation or any
affiliate of Parent or the Corporation.
7. NOTICES. Any notice or other communication required or permitted to
be delivered to Stockholder, the Corporation or Parent under this Noncompetition
Agreement shall be in writing and shall be deemed properly delivered, given and
received when delivered (by hand, by registered mail, by courier or express
delivery service or by facsimile) to the address or facsimile telephone number
set forth beneath the name of such party below (or to such other address or
facsimile telephone number as such party shall have specified in a written
notice delivered in accordance with this Section 7):
IF TO THE CORPORATION: Orcad, Inc.
9300 S.W. Nimbus
Beaverton, OR 97008
IF TO PARENT: Cadence Design Systems, Inc.,
2655 Seely Road
San Jose, CA 95134
Attention:
Facsimile No.:
IF TO STOCKHOLDER: Philip J. Kilcoin
12890 SW Carr Street
Beaverton, OR 97008
8. SEVERABILITY. If any provision of the Noncompetition Agreement or
any part of any such provision is held under any circumstances to be invalid
or unenforceable in any jurisdiction, then (a) such provision or part thereof
shall, with respect to such circumstances and in such jurisdiction, be deemed
amended to conform to applicable laws so as to be valid and enforceable to
the fullest possible extent, (b) the invalidity or unenforceability or such
provision or part thereof under such circumstances and in such jurisdiction
shall not affect the validity or enforceability of such provision or part
thereof under any other circumstances or in any other jurisdiction, and (c)
such invalidity or enforceability of such provision or part thereof shall not
affect the validity or enforceability of the remainder of such provision or
the validity or enforceability of any other provision of this Noncompetition
Agreement is separable from every other part of such provision.
9. GOVERNING LAW. This Noncompetition Agreement shall be construed in
accordance with, and governed in all respects by, the laws of the State of
California (without giving effect to principles of conflicts of laws).
4
<PAGE>
10. WAIVER. No failure on the part of Parent or the Corporation to
exercise any power, right, privilege or remedy under this Noncompetition
Agreement, and no delay on the part of Parent or the Corporation in
exercising any power, right, privilege or remedy under this Noncompetition
Agreement, shall operate as a waiver of such power, right, privilege or
remedy; and no single or partial exercise of any such power, right, privilege
or remedy shall preclude any other or further exercise thereof or of any
other power, right, privilege or remedy. Neither Parent nor the Corporation
shall be deemed to have waived any claim arising out of this Noncompetition
Agreement, or any power, right, privilege or remedy under this Noncompetition
Agreement, unless the waiver of such claim, power, right, privilege or remedy
is expressly set forth in a written instrument duly executed and delivered on
behalf of such party; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
11. CAPTIONS. The captions contained in this Noncompetition Agreement
are for convenience of reference only, shall not be deemed to be a part of
this Noncompetition Agreement and shall not be referred to in connection with
the construction or interpretation of this Noncompetition Agreement.
12. FURTHER ASSURANCES. Stockholder shall execute and/or cause to be
delivered to the Corporation and Parent such instruments and other documents
and shall take such other actions as Corporation and Parent may reasonably
request to effectuate the intent and purposes of this Noncompetition
Agreement.
13. ENTIRE AGREEMENT. This Noncompetition Agreement, the Stockholder's
offer letter and the Employee Proprietary Information and Inventions
Agreement, and the other agreements referred to herein set forth the entire
understanding of Stockholder, the Corporation and Parent relating to the
subject matter hereof and thereof and supersede all prior agreements and
understandings between any of such parties relating to the subject matter
hereof and thereof.
14. AMENDMENTS. This Noncompetition Agreement may not be amended,
modified, altered, or supplemented other than by means of a written
instrument duly executed and delivered on behalf of Parent and Stockholder.
15. ASSIGNMENT. This Noncompetition Agreement and all obligations
hereunder are personal to Stockholder and may not be transferred or assigned
by Stockholder at any time. Either Parent or the Corporation may assign its
rights under this Noncompetition Agreement in whole or in part, without the
consent or approval of the Stockholder or any other person or entity, in
connection with (A) the sale of Parent or the Corporation, or (B) the sale or
other transfer of all or a substantial part of the assets or business of the
Parent or the Corporation.
16. ATTORNEYS' FEES. If any legal action or other legal proceeding
relating to this Noncompetition Agreement or the enforcement of any provision
of this Noncompetition Agreement is brought against any party to this
Noncompetition Agreement, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
5
<PAGE>
17. EFFECTIVE DATE. This Noncompetition Agreement shall become
effective upon the effective time of the merger contemplated by the
Reorganization Agreement (the "Effective Time").
18. BINDING NATURE. Subject to Section 16, this Noncompetition
Agreement will be binding upon Stockholder and Stockholder's representatives,
executors, administrators, estate, heirs, successors and assigns, and will
inure to the benefit of Parent and the Corporation and their respective
successors and assigns.
IN WITNESS WHEREOF, the undersigned has executed this Noncompetition
Agreement as of the date first above written.
/s/ Philip J. Kilcoin
----------------------------------------
Philip J. Kilcoin
6
<PAGE>
FORM OF:
CADENCE DESIGN SYSTEMS, INC.
EMPLOYEE PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
(to be signed in conjunction with Non Competition Agreement and Offer Letter)
In consideration of my employment or continued employment by Cadence
Design Systems, Inc. (the "Company"), and the compensation now and hereafter
paid to me, I hereby agree as follows:
1. NONDISCLOSURE
1.1 RECOGNITION OF COMPANY'S RIGHTS; NONDISCLOSURE. At all times
during my employment and thereafter, I will hold in strictest confidence and
will not disclose, use, lecture upon or publish any of the Company's
Proprietary Information (defined below), except as such disclosure, use or
publication may be required in connection with my work for the Company, or
unless an officer of the Company expressly authorizes such in writing. I
will obtain Company's written approval before publishing or submitting for
publication any material (written, verbal, or otherwise) that relates to my
work at Company and/or incorporates any Proprietary Information. I hereby
assign to the Company any rights I may have or acquire in such Proprietary
Information and recognize that all Proprietary Information shall be the sole
property of the Company and its assigns.
1.2 PROPRIETARY INFORMATION. The term "Proprietary Information" shall
mean any and all confidential and/or proprietary knowledge, data or
information of, or acquired by, the Company. By way of illustration but not
limitation, "Proprietary Information" includes (a) information relating to
products, processes, know-how, designs, drawings, concepts, test data,
formulas, methods, compositions, ideas, algorithms, techniques, developmental
or experimental work, improvements and discoveries, (hereinafter collectively
referred to as "Inventions"); (b) information regarding plans for research,
development, new products, marketing and selling, business plans, budgets and
unpublished financial statements, licenses, prices and costs, suppliers and
customers; and (c) information regarding the skills and compensation of other
employees of the Company. Notwithstanding the foregoing, it is understood
that, at all such times, I am free to use information which is generally
known in the trade or industry, which is not gained as result of a breach of
this Agreement, and my own, skill, knowledge, know-how and experience to
whatever extent and in whichever way I wish.
1.3 THIRD PARTY INFORMATION. I understand, in addition, that the
Company has received and in the future will receive from third parties
confidential or proprietary information ("Third Party Information") subject
to a duty on the Company's part to maintain the confidentiality of such
information and to use it only for certain limited purposes. During the term
of my employment and thereafter, I will hold Third Party Information in the
strictest confidence and will not disclose to anyone (other than Company
personnel who need to know such information in connection with their work for
the Company) or use, except in connection with my work for the Company, Third
Party Information unless expressly authorized by an officer of the Company in
writing.
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1.4 NO IMPROPER USE OF INFORMATION OF PRIOR EMPLOYERS AND OTHERS.
During my employment by the Company I will not improperly use or disclose any
confidential information or trade secrets, if any, of any former employer or
any other person to whom I have an obligation of confidentiality, and I will
not bring onto the premises of the Company any unpublished documents or any
property belonging to my former employer or any other person to whom I have
an obligation of confidentiality unless consented to in writing by that
former employer or person. I will use in the performance of my duties only
information which is generally known and used by persons with training and
experience comparable to my own, which is common knowledge in the industry or
otherwise legally in the public domain, or which is otherwise provided or
developed by the Company.
2. ASSIGNMENT OF INVENTIONS
2.1 PROPRIETARY RIGHTS. The term "Proprietary Rights" shall mean all
trade secret, patent, copyright, mask work and other intellectual property
rights throughout the world.
2.2 PRIOR INVENTIONS. Inventions, if any, patented or unpatented,
which I made prior to the commencement of my employment with the Company are
excluded from the scope of this Agreement. To preclude any possible
uncertainty, I have set forth on Exhibit B (Previous Inventions) attached
hereto a complete list of all inventions that I have, alone or jointly with
others, conceived, developed or reduced to practice or caused to be
conceived, developed or reduced to practice prior to the commencement of my
employment with the Company, that I consider to be my property or the
property of third parties and that I wish to have excluded from the scope of
this Agreement (collectively referred to as "Prior Inventions"). If
disclosure of any such Prior Invention(s) would cause me to violate any prior
confidentiality agreement, I understand that I am not to list such Prior
Invention(s) in Exhibit B, but am only to disclose a cursory name for each
such invention, a listing of the party(ies) to whom it belongs and the fact
that full disclosure as to such inventions has not been made for that reason.
A space is provided on Exhibit B for such purpose. If no such disclosure is
attached, I represent that there are no Prior Inventions. If, in the course
of my employment with the Company, I incorporate a Prior Invention into a
Company product, process or machine, the Company is hereby granted and shall
have a nonexclusive, royalty-free, irrevocable, perpetual, worldwide license
(with rights to sublicense through multiple tiers of sublicensees) to make,
have made, modify, use and sell such Prior Invention. Notwithstanding the
foregoing, I agree that I will not incorporate, or permit to be incorporated,
Prior Inventions in any Company Inventions without the Company's prior
written consent.
2.3 ASSIGNMENT OF INVENTIONS. Subject to Sections 2.4, and 2.6, I
hereby assign and agree to assign in the future (when any such Inventions or
Proprietary Rights are first reduced to practice or first fixed in a tangible
medium, as applicable) to the Company all my right, title and interest in and
to any and all Inventions (and all Proprietary Rights with respect thereto)
whether or not patentable or registrable under copyright or similar statutes,
made or conceived or reduced to practice or learned by me, either alone or
jointly with others, during the period of my employment with the Company.
Inventions assigned to the Company, or to a third party as
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directed by the Company pursuant to this Section 2, are hereinafter referred
to as "Company Inventions."
2.4 NONASSIGNABLE INVENTIONS. This Agreement does not apply to an
Invention which qualifies fully as a nonassignable Invention under Section
2870 of the California Labor Code (hereinafter "Section 2870"). I have
reviewed the notification on Exhibit A (Limited Exclusion Notification) and
agree that my signature acknowledges receipt of the notification.
2.5 OBLIGATION TO KEEP COMPANY INFORMED. During the period of my
employment and for one (1) year after termination of my employment with the
company, I will promptly disclose to the Company fully and in writing all
Inventions authored, conceived or reduced to practice by me, either alone or
jointly with others, particularly if I leave the Company and become employed
by a competitor of the Company, or if I commercialize an idea that the
Company decided not to pursue. In addition, I will promptly disclose to the
Company all patent applications filed by me or on my behalf during my
employment or within a year after termination of employment. At the time of
each such disclosure, I will advise the Company in writing of any Inventions
that I believe fully qualify for protection under Section 2870; and I will at
that time provide to the Company in writing all evidence necessary to
substantiate that belief. The Company will keep in confidence and will not
use for any purpose or disclose to third parties without my consent any
confidential information disclosed in writing to the Company pursuant to this
Agreement relating to Inventions that qualify fully for protection under the
provisions of Section 2870. I will preserve the confidentiality of any
Invention that does not fully qualify for protection under Section 2870. For
one (1) year following my termination of employment any and all patent
applications filed by me or by a third party based on my work will be
presumed to be owned by the Company. I can rebut this presumption by
providing evidence sufficient to establish ownership by the party applying
for the patent.
2.6 GOVERNMENT OR THIRD PARTY. I also agree to assign all my right,
title and interest in and to any particular Invention to a third party,
including without limitation the United States, as directed by the Company.
2.7 WORKS FOR HIRE. I acknowledge that all original works of
authorship which are made by me (solely or jointly with others) within the
scope of my employment and which are protectable by copyright are "works made
for hire," pursuant to United States Copyright Act (17 U.S.C. Section 101).
2.8 ENFORCEMENT OF PROPRIETARY RIGHTS. During and after my employment
with the Company, I will assist the Company in every proper way to obtain,
and from time to time enforce, United States and foreign Proprietary Rights
relating to Company Inventions in any and all countries. To that end I will
execute, verify and deliver such documents and perform such other acts
(including appearances as a witness) as the Company may reasonably request
for use in applying for, obtaining, perfecting, evidencing, sustaining and
enforcing such Proprietary Rights and the assignment thereof. In addition, I
will execute, verify and deliver assignments of such Proprietary Rights to
the Company or its designee. My obligation to assist the Company with
respect to Proprietary Rights relating to such Company Inventions in any and
all countries
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shall continue beyond the termination of my employment, but the Company shall
compensate me at a reasonable rate after my termination for the time actually
spent by me at the Company's request on such assistance.
In the event the Company is unable for any reason, after reasonable
effort to secure my signature on any document needed in connection with the
actions specified in the preceding paragraph, I hereby irrevocably designate
and appoint the Company and its duly authorized officers and agents as my
agent and attorney in fact, which appointment is coupled with an interest, to
act for and in my behalf to execute, verify and file any such documents and
to do all other lawfully permitted acts to further the purposes of the
preceding paragraph with the same legal force and effect as if executed by
me. I hereby waive and quitclaim to the Company any and all claims, of any
nature whatsoever, which I now or may hereafter have for infringement of any
Proprietary Rights assigned hereunder to the Company.
3. RECORDS. I agree to keep and maintain adequate and current records (in
the form of notes, sketches, drawings and in any other form that may be
required by the Company) of all Proprietary Information developed by me and
all Inventions made by me during the period of my employment at the Company,
which records shall be available to and remain the sole property of the
Company at all times.
4. ADDITIONAL ACTIVITIES. I agree that during the period of my employment
by the Company I will not, without the Company's express written consent,
engage in any employment or business activity which is competitive with, or
would otherwise conflict with, my employment by the Company.
5. AT-WILL EMPLOYMENT. I agree and understand that nothing in this
Agreement shall confer any right with respect to continuation of employment
by the Company, nor shall it interfere in any way with my right or the
Company's right to terminate the employment relationship at any time, for any
reason, with or without cause, and with or without notice. I understand
that, other than the Company's Senior Vice President of Human Resources, no
manager, supervisor, employee or any other representative or agent of the
Company has the authority to enter into an agreement to the contrary. I
further understand that an agreement to the contrary by the Senior Vice
President of Human Resources is not valid unless it is in writing.
6. NO CONFLICTING OBLIGATION. I represent that my performance of all the
terms of this Agreement, and of my duties as an employee of the Company, does
not and will not breach any agreement to keep in confidence information
acquired by me in confidence or in trust prior to my employment by the
Company. I have not entered into, and I agree I will not enter into, any
agreement either written or oral in conflict herewith.
7. RETURN OF COMPANY DOCUMENTS AND PROPERTY. When I leave the employ of
the Company, I will deliver to the Company any and all drawings, notebooks,
notes, memoranda, source code, specifications, devices, formulas, records,
manuals, reports and documents, together with all copies thereof, and any
other material containing or disclosing any Company Inventions, Third Party
Information or Proprietary Information of the Company, that is within my
possession, custody or control. Further, upon termination of employment I
also will
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return any and all Company property or equipment in my possession, custody or
control. Prior to leaving, I will cooperate with the Company in completing
and signing the Company's agreement regarding termination.
8. NON-PRIVATE NATURE OF COMPANY PROPERTY. I understand that I have no
expectation of privacy in the voicemail and electronic mail provided to me by
the Company or in any property situated on the Company's premises and/or
owned by the Company, including disks and other storage media, filing
cabinets or other work areas. I further understand that such property,
including voicemail and electronic mail, is subject to inspection by Company
personnel at any time.
9. NOTICES. Any notices required or permitted hereunder shall be given to
the appropriate party at the address specified below or at such other address
as the party shall specify in writing. Such notice shall be deemed given
upon personal delivery to the appropriate address or if sent by certified or
registered mail, three (3) days after the date of mailing.
10. NOTIFICATION OF NEW EMPLOYER. In the event that I leave the employ of
the Company, I hereby consent to the notification of my new employer of my
rights and obligations under this Agreement.
11. GENERAL PROVISIONS.
11.1 GOVERNING LAWS, CONSENT TO PERSONAL JURISDICTION. This Agreement
will be governed by and construed according to the laws of the State of
California, as such laws are applied to agreements entered into and to be
performed entirely within California between California residents. I hereby
expressly consent to the personal jurisdiction of the state and federal
courts located in Santa Clara County, California for any lawsuit filed there
against me by Company arising from or related to this Agreement.
11.2 SEVERABILITY. In the event any one or more of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect the other provisions of this Agreement, and
this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein. If, moreover, any
one or more of the provisions contained in this Agreement shall for any
reason be held to be excessively broad as to duration, geographical scope,
activity or subject, it shall be construed by limiting and reducing it, so as
to be enforceable to the extent compatible with the applicable law as it
shall then appear.
11.3 SURVIVAL. The provisions of this Agreement shall survive the
termination of my employment and the assignment of this Agreement by the
Company to any successor in interest or other assignee.
11.4 WAIVER. No waiver by the Company of any breach of this Agreement
shall be a waiver of any preceding or succeeding breach. No waiver by the
Company of any right under this Agreement shall be construed as a wavier of
any other right. The Company shall not be required to give notice to enforce
strict adherence to all terms of this Agreement.
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11.5 ENTIRE AGREEMENT. The obligations pursuant to Sections 1 and 2 of
this Agreement shall apply to any time during which I was previously
employed, or am in the future employed, by the Company as a consultant if no
other agreement governs nondisclosure and assignment of inventions during
such period. This Agreement is the final, complete and exclusive agreement of
the parties with respect to the subject matter hereof and supersedes all
prior discussions between us, except that the Noncompetition Agreement,
Cadence Code of Conduct, and my offer letter, all of which I signed, are
incorporated herein. No modification of or amendment to this Agreement, nor
any waiver of any rights under this Agreement, will be effective unless in
writing and signed by the party to be charged. Any subsequent change or
changes in my duties, salary or compensation will not affect the validity or
scope of this Agreement.
This Agreement shall be effective as of the first day of my employment with
the Company, namely: _____________, 19___.
I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS. I HAVE
COMPLETELY FILLED OUT EXHIBIT B TO THIS AGREEMENT.
Dated:
---------------------------------------------
Signature
- ---------------------------------------------------
(Printed Name)
ACCEPTED AND AGREED TO:
CADENCE DESIGN SYSTEMS, INC.
By:
-----------------------------------------------
Title:
--------------------------------------------
Date:
---------------------------------------------
6
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EXHIBIT A
LIMITED EXCLUSION NOTIFICATION
THIS IS TO NOTIFY you in accordance with Section 2872 of the California
Labor Code that the foregoing Agreement between you and the Company does not
require you to assign or offer to assign to the Company any invention that you
developed entirely on your own time without using the Company's equipment,
supplies, facilities or trade secret information except for those inventions
that either:
(1) Relate at the time of conception or reduction to practice of the
invention to the Company's business, or actual or demonstrably anticipated
research or development of the Company;
(2) Result from any work performed by you for the Company.
To the extent a provision in the foregoing Agreement purports to require
you to assign an invention otherwise excluded from the preceding paragraph, the
provision is against the public policy of this state and is unenforceable.
This limited exclusion does not apply to any patent or invention covered by
a contract between the Company and the United States or any of its agencies
requiring full title to such patent or invention to be in the United States.
I ACKNOWLEDGE RECEIPT of a copy of this notification.
By:
------------------------------------
(printed name of employee)
Date:
------------------------------------
WITNESSED BY:
- ------------------------------------------
(printed name of representative)
Dated:
-----------------------------------
A-1
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EXHIBIT B
TO: Cadence Design Systems, Inc.
FROM:
----------------------------------------------
DATE:
----------------------------------------------
SUBJECT: Previous Inventions
1. Except as listed in Section 2 below, the following is a complete list
of all inventions or improvements relevant to the subject matter of my
employment by Cadence Design Systems, Inc. (the "Company") that have been made
or conceived or first reduced to practice by me alone or jointly with others
prior to my engagement by the Company:
/ / No inventions or improvements.
/ / See below:
____________________________________________________________
____________________________________________________________
____________________________________________________________
/ / Additional sheets attached.
2. Due to a prior confidentiality agreement, I cannot complete the
disclosure under Section 1 above with respect to inventions or improvements
generally listed below, the proprietary rights and duty of confidentiality with
respect to which I owe to the following party(ies);
<TABLE>
<CAPTION>
Invention or Improvement Party(ies) Relationship
<S> <C> <C>
1. ________________________ ____________ ______________________
2. ________________________ ____________ ______________________
3. ________________________ ____________ ______________________
</TABLE>
/ / Additional sheets attached.
B-1
<PAGE>
EXHIBIT 99(c)(11)
June 11, 1999
Graham K. Sheldon
Orcad, Inc.
9300 S.W. Nimbus
Beaverton, OR 97008
Dear Mr. Sheldon:
We are very pleased to offer you employment as Group Director, Workplace
Services with Cadence Design Systems, Inc. ("Cadence") following the merger of
Orcad, Inc. with a wholly owned subsidiary of Cadence (the "Merger"). In the
context of the proposed purchase of Orcad, Inc. by Cadence, this letter sets
forth the terms of our offer of employment to you as well as other related
matters for your approval and signature. This offer will become effective upon
consummation of the Merger. At that time (assuming you have signed this offer
letter), in addition to becoming an employee of Cadence, you will be exchanging
your stock options in Orcad, Inc. for stock options in Cadence. This offer of
employment is conditioned upon consummation of the Merger.
1. Your base salary as a full-time employee will be $135,000 per year,
paid semi-monthly in accordance with Cadence's normal payroll practices.
2. While a full-time employee, you will be eligible for a bonus of 20% of
your annual base salary. Actual payment is based on company performance and
your individual achievements. The bonus payment is divided into two payments,
one for each half fiscal year. The bonus payments are paid during the first 45
days of the fiscal quarter following the fiscal half in which the bonus is
earned. You will not be eligible for a bonus for the first half of 1999 because
you were not a full-time employee on or before April 1, 1999. You must be a
full-time employee on or before October 1, 1999 and through the payout date of
February 15, 2000 to be eligible for a pro-rate portion of a second half of the
year bonus. Thereafter your eligibility for a bonus will be determined
according to the applicable bonus plan.
3. You will be granted a nonqualified stock option for 25,000 shares of
Cadence Common Stock. This option will vest as to 20% of the shares on the
first anniversary of your employment with Cadence and monthly thereafter for
forty-eight months on the last day of each month during your employment.
Options are granted by the Compensation Committee shortly after the consummation
of the Merger, at the average of the high and low market price of Cadence's
Common Stock on the date of grant.
4. While you are a full-time employee, you will receive benefits
comparable in the aggregate to the health and other benefits that are generally
available to the rest of Cadence's full-time U.S. based employees (provided, of
course, you meet the standard eligibility requirements
<PAGE>
Graham K. Sheldon
June 11, 1999
Page 2
for such benefits) for purposes of benefits, your service date with Cadence
will be calculated based on your first date of employment with Orcad, Inc. or
its predecessor. Further, if you earned a sabbatical while employed with
Orcad, Inc., you will be provided the opportunity to take that sabbatical
while employed by Cadence.
5. As part of this offer of employment, Cadence agrees that if you are
employed by Cadence at the end of the first day following the consummation of
the Merger, you will receive an initial retention bonus of $43,750.00.
Cadence further agrees that if you remain employed by Cadence through the
one-year anniversary of the consummation of the Merger, you will receive an
additional retention bonus in the amount of $131,250.00.
6. Should your employment be terminated without cause at any time
during the one (1) year following the consummation of the Merger (the
"Term"), Cadence will pay you your base salary and target bonus and the
balance of the retention bonus as outlined in paragraph 5 above for the
remaining period of the Term. However, if you are terminated for cause(1), or
if you resign, the obligation of Cadence to provide you with salary or stock
vesting or bonus shall immediately end. Further, regardless of the reason
for your termination of employment, on the date of your termination, your
other employee benefits will terminate. Your employment relationship with
Cadence will be at-will. That is, Cadence may terminate your employment with
Cadence at any time and you may terminate your employment with Cadence at any
time with or without cause, for any reason or for no reason, with or without
notice. If Cadence terminates your employment without cause after the end of
the Term, you shall be entitled to receive base salary earned but unpaid
through the date of termination. You also have the opportunity to receive
benefits and payments provided by Cadence's Severance Plan in effect at that
time. If your employment is terminated as a result of death or disability,
you will be entitled to receive only base salary earned but unpaid through
the date of termination, and Cadence will be required to make no other
payment by way of salary, bonus or other compensation or damages of any kind.
- --------------------------------
(1) You shall be considered to have been terminated with "cause" if your
employment is terminated for (a) any gross misconduct or fraud in the
performance of your employment, (b) your conviction or guilty plea with
respect to any felony (except for motor vehicle violations), (c) your
material breach of the Noncompetition Agreement, or the Proprietary
Information and Inventions Agreement, after written notice delivered to you
of such breach and a reasonable opportunity to cure such breach, (d) your
failure to perform your duties satisfactorily after receipt of written
warning and after a reasonable opportunity to cure and after a thorough
review by the Group Director of Human Resources for the Systems Division
and the Sr. Vice President of Employment and Workplace Services, or (e)
engaging in conduct which is injurious to Orcad, Inc. or Cadence.
<PAGE>
Graham K. Sheldon
June 11, 1999
Page 3
7. This agreement supersedes the Employment Agreement between you and
Orcad, Inc., dated September 17, 1998 and, upon your acceptance of this offer
of employment, that Employment Agreement shall be null and void.
8. You must sign an Employee Proprietary Information and Inventions
Agreement, a copy of which is attached for your signature, in order to become
an Employee of Cadence. Additionally, in connection with the acquisition and
as a condition both the acquisition and of this offer of employment, you must
execute the Noncompetition Agreement attached hereto.
9. Payments of salary and other compensations will be subject to
customary withholding and other taxes.
10. In accordance with the Immigration Reform and Control Act of 1986,
you must be a United States citizen, or have authorization to work in the
United States. In either case, verification of your right to work is
required within seventy-two hours of employment.
11. This agreement shall be governed by the laws of the State of
California.
We are excited about the potential represented by the Merger and we are
pleased you will be joining us as a key part of the new team.
Sincerely,
CADENCE DESIGN SYSTEMS, INC.
/s/ Ron Kirchenbauer
Ron Kirchenbauer
Senior Vice President of Employee Workplace
Services
Acknowledged and agreed:
/s/ Graham K. Sheldon
- ------------------------------------
Graham K. Sheldon
Date: June 14, 1999
Enclosures
<PAGE>
Exhibit 99(c)(11)
NONCOMPETITION AGREEMENT
THIS NONCOMPETTION AGREEMENT is being executed and delivered as of June
14, 1999 by Graham K. Sheldon ("Stockholder") in favor of and for the benefit
of CADENCE DESIGN SYSTEMS, INC., a Delaware corporation ("Parent"), and
ORCAD, INC., a Delaware corporation (the "Corporation").
RECITALS
A. As an employee and stockholder of the Corporation, Stockholder has
obtained and will obtain extensive and valuable knowledge and information
concerning the business of the Corporation (including confidential information
relating to the Corporation and its operations, assets, contracts, customers,
personnel, plans and prospects).
B. Contemporaneously with the execution and delivery of this
Noncompetition Agreement, the Corporation is entering into an Agreement and
Plan of Merger with Parent and a subsidiary of Parent (the "Reorganization
Agreement"), which provides (subject to the conditions set forth therein) for
the merger of Parent's subsidiary into the Corporation with the Corporation
as the surviving corporation (the "Merger"). As a result of the Merger, the
Corporation will become a wholly-owned subsidiary of Parent, and Stockholder
will receive options for shares of common stock of Parent in exchange for
Stockholder's options for shares of common stock of the Corporation.
C. It is also contemplated that, on the date that the Merger becomes
effective (the "Effective Time"), Stockholder will become an employee of
Parent and, as such, will obtain extensive and valuable knowledge and
information concerning the business of Parent (including confidential
information and relating to Parent and its operations, assets, contracts,
customers, personnel, plans and prospects).
In connection with the Merger and as a condition to entering into the
Reorganization Agreement and consummating the Merger, and to more fully
secure unto Parent the benefits of the Merger, Parent has requested that
Stockholder enter into this Noncompetition Agreement; and Stockholder is
entering into this Noncompetition Agreement in order to induce Parent to
enter into the Reorganization Agreement and consummate the Merger.
E. Both Parent and the Corporation have conducted, are conducting and
will continue to conduct their respective businesses on a worldwide basis.
<PAGE>
AGREEMENT
In order to induce Parent to enter into the Reorganization Agreement and
consummate the Merger, and in consideration of the issuance and delivery to
Stockholder of options for shares of common stock of Parent pursuant to the
Reorganization Agreement, Stockholder agrees as follows:
1. ACKNOWLEDGMENTS BY STOCKHOLDER. Stockholder acknowledges that the
promises and restrictive covenants that Stockholder is providing in this
Noncompetition Agreement are reasonable and necessary to the protection of
Parent's business and Parent's legitimate interests in its acquisition of the
Corporation (including the Corporation's goodwill) pursuant to the
Reorganization Agreement. Stockholder acknowledges that, in connection with
the consummation of the Merger, all of Stockholder's options for shares of
common stock of the Corporation will be exchanged for options for shares of
common stock of Parent.
2. NONCOMPETITION. Stockholder agrees that he will not, except with
the express prior written consent of the Parent, during the period from the
date hereof through twelve months following the termination of his
employment, voluntarily or involuntarily, for any reason whatsoever, directly
or indirectly, individually or on behalf of persons not now parties to this
Noncompetition Agreement, or as a partner, stockholder, director, officer,
principal, agent, employee or in any other capacity or relationship, for his
own account or for the benefit of any other person:
(a) engage in software development or services in the areas of FPGA
design and printed circuit board design;
(b) be or become an officer, director, stockholder, owner, affiliate,
salesperson, co-owner, partner, trustee, promoter, technician, engineer,
analyst, employee, agent, representative, supplier, consultant, advisor or
manager of or to, or otherwise acquire or hold any interest in, any person
or entity that engages in software development or services focused
primarily on FPGA design and printed circuit board design; or
(c) provide any service (as an employee, consultant or otherwise),
support, product or technology to any person or entity, if such service,
support, product or technology involves or relates to software development
or services in the areas of FPGA design and printed circuit board design;
or
(d) permit his name to be used in connection with a business that
competes with Parent or Corporation:
PROVIDED, HOWEVER, that nothing in this Section 2 shall prevent Stockholder
from owning as a passive investment less than 5% of the outstanding shares of
the capital stock of a publicly-held corporation if (A) such shares are
actively traded on an established national securities market in the United
States and (B) Stockholder is not otherwise associated directly or indirectly
with such corporation or any affiliate of such corporation. Under this
Noncompetition Agreement,
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Stockholder's employment with Parent shall be deemed to terminate at such
time that Stockholder is neither a full-time nor a part-time employee of
Parent.
3. NONSOLICITATION. Stockholder further agrees that, during your
employment, and for one year following Stockholder's termination of
employment with Parent, Stockholder will not and Stockholder will not permit
any of his affiliates to:
(a) personally or through others, encourage, induce, attempt to
induce, solicit or attempt to solicit (on Stockholder's own behalf or on
behalf of any other person or entity) anyone who is employed at that time,
or was employed during the previous six (6) months, by the Corporation,
Parent or any of Parent's subsidiaries to leave his or her employment with
the Corporation, Parent or any of Parent's subsidiaries; or
(b) personally or through others, use any trade secret or proprietary
information of Parent or Corporation or any other improper means to
interfere or attempt to interfere with the relationship or prospective
relationship of the Corporation, Parent or any of Parent's subsidiaries
with any person or entity that is, was or is expected to become a customer
or client of the Corporation, Parent or any of Parent's subsidiaries; or
(c) solicit the business of any client or customer of the
Corporation, Parent or any of Parent's subsidiaries (other than on behalf
of the Parent).
4. INDEPENDENCE OF OBLIGATIONS. The covenants and obligations of
Stockholder set forth in this Noncompetition Agreement shall be construed as
independent of any other agreement or arrangement between Stockholder, on the
one hand, and the Corporation or Parent, on the other.
5. SPECIFIC PERFORMANCE. Stockholder agrees that in the event of any
breach or threatened breach by Stockholder of any covenant, obligation or
other provision contained in this Noncompetition Agreement, Parent and the
Corporation shall be entitled (in addition to any other remedy that may be
available by law to them) to the extent permitted by applicable law (a) a
decree or order of specific performance to enforce the observance and
performance of such covenant, obligation or other provision, and (b) an
injunction restraining such breach or threatened breach. Stockholder further
agrees that neither Parent nor any other person or entity shall be required
to provide any bond or other security in connection with any such decree,
order or injunction or in connection with any related action or proceeding.
6. NON-EXCLUSIVITY. The rights and remedies of Parent and the
Corporation hereunder are not exclusive of or limited by any other rights or
remedies which Parent or the Corporation may have, whether at law, in equity,
by contract or otherwise, all of which shall be cumulative (and not
alternative). Without limiting the generality of the foregoing, the rights
and remedies of Parent and the Corporation hereunder, and the obligations and
liabilities of Stockholder hereunder, are in addition to their respective
rights, remedies, obligations and liabilities under the law of unfair
competition, misappropriation of trade secrets and the like. This
Noncompetition Agreement does not limit Stockholder's obligations or the
rights of Parent or the Corporation (or any affiliate of Parent or the
Corporation) under the terms of (a) the
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Employment Agreement of even date herewith between Stockholder and Parent;
(b) the Proprietary Information and Inventions Agreement between Stockholder
and the Parent; (c) the Reorganization Agreement; or (d) the terms of any
other agreement between Stockholder and Parent or the Corporation or any
affiliate of Parent or the Corporation.
7. NOTICES. Any notice or other communication required or permitted
to be delivered to Stockholder, the Corporation or Parent under this
Noncompetition Agreement shall be in writing and shall be deemed properly
delivered, given and received when delivered (by hand, by registered mail, by
courier or express delivery service or by facsimile) to the address or
facsimile telephone number set forth beneath the name of such party below (or
to such other address or facsimile telephone number as such party shall have
specified in a written notice delivered in accordance with this Section 7):
IF TO THE CORPORATION: Orcad, Inc.
9300 S.W. Nimbus
Beaverton, OR 97008
IF TO PARENT: Cadence Design Systems, Inc.,
2655 Seely Road
San Jose, CA 95134
Attention:
Facsimile No.:
IF TO STOCKHOLDER: Graham K. Sheldon
2314 NE Flanders
Portland, OR 97232
8. SEVERABILITY. If any provision of the Noncompetition Agreement or
any part of any such provision is held under any circumstances to be invalid
or unenforceable in any jurisdiction, then (a) such provision or part thereof
shall, with respect to such circumstances and in such jurisdiction, be deemed
amended to conform to applicable laws so as to be valid and enforceable to
the fullest possible extent, (b) the invalidity or unenforceability or such
provision or part thereof under such circumstances and in such jurisdiction
shall not affect the validity or enforceability of such provision or part
thereof under any other circumstances or in any other jurisdiction, and (c)
such invalidity or enforceability of such provision or part thereof shall not
affect the validity or enforceability of the remainder of such provision or
the validity or enforceability of any other provision of this Noncompetition
Agreement is separable from every other part of such provision.
9. GOVERNING LAW. This Noncompetition Agreement shall be construed in
accordance with, and governed in all respects by, the laws of the State of
California (without giving effect to principles of conflicts of laws).
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<PAGE>
10. WAIVER. No failure on the part of Parent or the Corporation to
exercise any power, right, privilege or remedy under this Noncompetition
Agreement, and no delay on the part of Parent or the Corporation in
exercising any power, right, privilege or remedy under this Noncompetition
Agreement, shall operate as a waiver of such power, right, privilege or
remedy; and no single or partial exercise of any such power, right, privilege
or remedy shall preclude any other or further exercise thereof or of any
other power, right, privilege or remedy. Neither Parent nor the Corporation
shall be deemed to have waived any claim arising out of this Noncompetition
Agreement, or any power, right, privilege or remedy under this Noncompetition
Agreement, unless the waiver of such claim, power, right, privilege or remedy
is expressly set forth in a written instrument duly executed and delivered on
behalf of such party; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
11. CAPTIONS. The captions contained in this Noncompetition Agreement
are for convenience of reference only, shall not be deemed to be a part of
this Noncompetition Agreement and shall not be referred to in connection with
the construction or interpretation of this Noncompetition Agreement.
12. FURTHER ASSURANCES. Stockholder shall execute and/or cause to be
delivered to the Corporation and Parent such instruments and other documents
and shall take such other actions as Corporation and Parent may reasonably
request to effectuate the intent and purposes of this Noncompetition
Agreement.
13. ENTIRE AGREEMENT. This Noncompetition Agreement, the Stockholder's
offer letter and the Employee Proprietary Information and Inventions
Agreement, and the other agreements referred to herein set forth the entire
understanding of Stockholder, the Corporation and Parent relating to the
subject matter hereof and thereof and supersede all prior agreements and
understandings between any of such parties relating to the subject matter
hereof and thereof.
14. AMENDMENTS. This Noncompetition Agreement may not be amended,
modified, altered, or supplemented other than by means of a written
instrument duly executed and delivered on behalf of Parent and Stockholder.
15. ASSIGNMENT. This Noncompetition Agreement and all obligations
hereunder are personal to Stockholder and may not be transferred or assigned
by Stockholder at any time. Either Parent or the Corporation may assign its
rights under this Noncompetition Agreement in whole or in part, without the
consent or approval of the Stockholder or any other person or entity, in
connection with (A) the sale of Parent or the Corporation, or (B) the sale or
other transfer of all or a substantial part of the assets or business of the
Parent or the Corporation.
16. ATTORNEYS' FEES. If any legal action or other legal proceeding
relating to this Noncompetition Agreement or the enforcement of any provision
of this Noncompetition Agreement is brought against any party to this
Noncompetition Agreement, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
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17. EFFECTIVE DATE. This Noncompetition Agreement shall become
effective upon the effective time of the merger contemplated by the
Reorganization Agreement (the "Effective Time").
18. BINDING NATURE. Subject to Section 16, this Noncompetition
Agreement will be binding upon Stockholder and Stockholder's representatives,
executors, administrators, estate, heirs, successors and assigns, and will
inure to the benefit of Parent and the Corporation and their respective
successors and assigns.
IN WITNESS WHEREOF, the undersigned has executed this Noncompetition
Agreement as of the date first above written.
/s/ Graham K. Sheldon
-------------------------------------
Graham K. Sheldon
6
<PAGE>
FORM OF:
CADENCE DESIGN SYSTEMS, INC.
EMPLOYEE PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
(to be signed in conjunction with Non Competition Agreement and Offer Letter)
In consideration of my employment or continued employment by Cadence
Design Systems, Inc. (the "Company"), and the compensation now and hereafter
paid to me, I hereby agree as follows:
1. NONDISCLOSURE
1.1 RECOGNITION OF COMPANY'S RIGHTS; NONDISCLOSURE. At all times
during my employment and thereafter, I will hold in strictest confidence and
will not disclose, use, lecture upon or publish any of the Company's
Proprietary Information (defined below), except as such disclosure, use or
publication may be required in connection with my work for the Company, or
unless an officer of the Company expressly authorizes such in writing. I
will obtain Company's written approval before publishing or submitting for
publication any material (written, verbal, or otherwise) that relates to my
work at Company and/or incorporates any Proprietary Information. I hereby
assign to the Company any rights I may have or acquire in such Proprietary
Information and recognize that all Proprietary Information shall be the sole
property of the Company and its assigns.
1.2 PROPRIETARY INFORMATION. The term "Proprietary Information" shall
mean any and all confidential and/or proprietary knowledge, data or
information of, or acquired by, the Company. By way of illustration but not
limitation, "Proprietary Information" includes (a) information relating to
products, processes, know-how, designs, drawings, concepts, test data,
formulas, methods, compositions, ideas, algorithms, techniques, developmental
or experimental work, improvements and discoveries, (hereinafter collectively
referred to as "Inventions"); (b) information regarding plans for research,
development, new products, marketing and selling, business plans, budgets and
unpublished financial statements, licenses, prices and costs, suppliers and
customers; and (c) information regarding the skills and compensation of other
employees of the Company. Notwithstanding the foregoing, it is understood
that, at all such times, I am free to use information which is generally
known in the trade or industry, which is not gained as result of a breach of
this Agreement, and my own, skill, knowledge, know-how and experience to
whatever extent and in whichever way I wish.
1.3 THIRD PARTY INFORMATION. I understand, in addition, that the
Company has received and in the future will receive from third parties
confidential or proprietary information ("Third Party Information") subject
to a duty on the Company's part to maintain the confidentiality of such
information and to use it only for certain limited purposes. During the term
of my employment and thereafter, I will hold Third Party Information in the
strictest confidence and will not disclose to anyone (other than Company
personnel who need to know such information in connection with their work for
the Company) or use, except in connection with my work for the Company, Third
Party Information unless expressly authorized by an officer of the Company in
writing.
<PAGE>
1.4 NO IMPROPER USE OF INFORMATION OF PRIOR EMPLOYERS AND OTHERS.
During my employment by the Company I will not improperly use or disclose any
confidential information or trade secrets, if any, of any former employer or
any other person to whom I have an obligation of confidentiality, and I will
not bring onto the premises of the Company any unpublished documents or any
property belonging to my former employer or any other person to whom I have
an obligation of confidentiality unless consented to in writing by that
former employer or person. I will use in the performance of my duties only
information which is generally known and used by persons with training and
experience comparable to my own, which is common knowledge in the industry or
otherwise legally in the public domain, or which is otherwise provided or
developed by the Company.
2. ASSIGNMENT OF INVENTIONS
2.1 PROPRIETARY RIGHTS. The term "Proprietary Rights" shall mean all
trade secret, patent, copyright, mask work and other intellectual property
rights throughout the world.
2.2 PRIOR INVENTIONS. Inventions, if any, patented or unpatented,
which I made prior to the commencement of my employment with the Company are
excluded from the scope of this Agreement. To preclude any possible
uncertainty, I have set forth on Exhibit B (Previous Inventions) attached
hereto a complete list of all inventions that I have, alone or jointly with
others, conceived, developed or reduced to practice or caused to be
conceived, developed or reduced to practice prior to the commencement of my
employment with the Company, that I consider to be my property or the
property of third parties and that I wish to have excluded from the scope of
this Agreement (collectively referred to as "Prior Inventions"). If
disclosure of any such Prior Invention(s) would cause me to violate any prior
confidentiality agreement, I understand that I am not to list such Prior
Invention(s) in Exhibit B, but am only to disclose a cursory name for each
such invention, a listing of the party(ies) to whom it belongs and the fact
that full disclosure as to such inventions has not been made for that reason.
A space is provided on Exhibit B for such purpose. If no such disclosure is
attached, I represent that there are no Prior Inventions. If, in the course
of my employment with the Company, I incorporate a Prior Invention into a
Company product, process or machine, the Company is hereby granted and shall
have a nonexclusive, royalty-free, irrevocable, perpetual, worldwide license
(with rights to sublicense through multiple tiers of sublicensees) to make,
have made, modify, use and sell such Prior Invention. Notwithstanding the
foregoing, I agree that I will not incorporate, or permit to be incorporated,
Prior Inventions in any Company Inventions without the Company's prior
written consent.
2.3 ASSIGNMENT OF INVENTIONS. Subject to Sections 2.4, and 2.6, I
hereby assign and agree to assign in the future (when any such Inventions or
Proprietary Rights are first reduced to practice or first fixed in a tangible
medium, as applicable) to the Company all my right, title and interest in and
to any and all Inventions (and all Proprietary Rights with respect thereto)
whether or not patentable or registrable under copyright or similar statutes,
made or conceived or reduced to practice or learned by me, either alone or
jointly with others, during the period of my employment with the Company.
Inventions assigned to the Company, or to a third party as
2
<PAGE>
directed by the Company pursuant to this Section 2, are hereinafter referred
to as "Company Inventions."
2.4 NONASSIGNABLE INVENTIONS. This Agreement does not apply to an
Invention which qualifies fully as a nonassignable Invention under Section
2870 of the California Labor Code (hereinafter "Section 2870"). I have
reviewed the notification on Exhibit A (Limited Exclusion Notification) and
agree that my signature acknowledges receipt of the notification.
2.5 OBLIGATION TO KEEP COMPANY INFORMED. During the period of my
employment and for one (1) year after termination of my employment with the
company, I will promptly disclose to the Company fully and in writing all
Inventions authored, conceived or reduced to practice by me, either alone or
jointly with others, particularly if I leave the Company and become employed
by a competitor of the Company, or if I commercialize an idea that the
Company decided not to pursue. In addition, I will promptly disclose to the
Company all patent applications filed by me or on my behalf during my
employment or within a year after termination of employment. At the time of
each such disclosure, I will advise the Company in writing of any Inventions
that I believe fully qualify for protection under Section 2870; and I will at
that time provide to the Company in writing all evidence necessary to
substantiate that belief. The Company will keep in confidence and will not
use for any purpose or disclose to third parties without my consent any
confidential information disclosed in writing to the Company pursuant to this
Agreement relating to Inventions that qualify fully for protection under the
provisions of Section 2870. I will preserve the confidentiality of any
Invention that does not fully qualify for protection under Section 2870. For
one (1) year following my termination of employment any and all patent
applications filed by me or by a third party based on my work will be
presumed to be owned by the Company. I can rebut this presumption by
providing evidence sufficient to establish ownership by the party applying
for the patent.
2.6 GOVERNMENT OR THIRD PARTY. I also agree to assign all my right,
title and interest in and to any particular Invention to a third party,
including without limitation the United States, as directed by the Company.
2.7 WORKS FOR HIRE. I acknowledge that all original works of
authorship which are made by me (solely or jointly with others) within the
scope of my employment and which are protectable by copyright are "works made
for hire," pursuant to United States Copyright Act (17 U.S.C. Section 101).
2.8 ENFORCEMENT OF PROPRIETARY RIGHTS. During and after my employment
with the Company, I will assist the Company in every proper way to obtain,
and from time to time enforce, United States and foreign Proprietary Rights
relating to Company Inventions in any and all countries. To that end I will
execute, verify and deliver such documents and perform such other acts
(including appearances as a witness) as the Company may reasonably request
for use in applying for, obtaining, perfecting, evidencing, sustaining and
enforcing such Proprietary Rights and the assignment thereof. In addition, I
will execute, verify and deliver assignments of such Proprietary Rights to
the Company or its designee. My obligation to assist the Company with
respect to Proprietary Rights relating to such Company Inventions in any and
all countries
3
<PAGE>
shall continue beyond the termination of my employment, but the Company shall
compensate me at a reasonable rate after my termination for the time actually
spent by me at the Company's request on such assistance.
In the event the Company is unable for any reason, after reasonable
effort to secure my signature on any document needed in connection with the
actions specified in the preceding paragraph, I hereby irrevocably designate
and appoint the Company and its duly authorized officers and agents as my
agent and attorney in fact, which appointment is coupled with an interest, to
act for and in my behalf to execute, verify and file any such documents and
to do all other lawfully permitted acts to further the purposes of the
preceding paragraph with the same legal force and effect as if executed by
me. I hereby waive and quitclaim to the Company any and all claims, of any
nature whatsoever, which I now or may hereafter have for infringement of any
Proprietary Rights assigned hereunder to the Company.
3. RECORDS. I agree to keep and maintain adequate and current records (in
the form of notes, sketches, drawings and in any other form that may be
required by the Company) of all Proprietary Information developed by me and
all Inventions made by me during the period of my employment at the Company,
which records shall be available to and remain the sole property of the
Company at all times.
4. ADDITIONAL ACTIVITIES. I agree that during the period of my employment
by the Company I will not, without the Company's express written consent,
engage in any employment or business activity which is competitive with, or
would otherwise conflict with, my employment by the Company.
5. AT-WILL EMPLOYMENT. I agree and understand that nothing in this
Agreement shall confer any right with respect to continuation of employment
by the Company, nor shall it interfere in any way with my right or the
Company's right to terminate the employment relationship at any time, for any
reason, with or without cause, and with or without notice. I understand
that, other than the Company's Senior Vice President of Human Resources, no
manager, supervisor, employee or any other representative or agent of the
Company has the authority to enter into an agreement to the contrary. I
further understand that an agreement to the contrary by the Senior Vice
President of Human Resources is not valid unless it is in writing.
6. NO CONFLICTING OBLIGATION. I represent that my performance of all the
terms of this Agreement, and of my duties as an employee of the Company, does
not and will not breach any agreement to keep in confidence information
acquired by me in confidence or in trust prior to my employment by the
Company. I have not entered into, and I agree I will not enter into, any
agreement either written or oral in conflict herewith.
7. RETURN OF COMPANY DOCUMENTS AND PROPERTY. When I leave the employ of
the Company, I will deliver to the Company any and all drawings, notebooks,
notes, memoranda, source code, specifications, devices, formulas, records,
manuals, reports and documents, together with all copies thereof, and any
other material containing or disclosing any Company Inventions, Third Party
Information or Proprietary Information of the Company, that is within my
possession, custody or control. Further, upon termination of employment I
also will
4
<PAGE>
return any and all Company property or equipment in my possession, custody or
control. Prior to leaving, I will cooperate with the Company in completing
and signing the Company's agreement regarding termination.
8. NON-PRIVATE NATURE OF COMPANY PROPERTY. I understand that I have no
expectation of privacy in the voicemail and electronic mail provided to me by
the Company or in any property situated on the Company's premises and/or
owned by the Company, including disks and other storage media, filing
cabinets or other work areas. I further understand that such property,
including voicemail and electronic mail, is subject to inspection by Company
personnel at any time.
9. NOTICES. Any notices required or permitted hereunder shall be given to
the appropriate party at the address specified below or at such other address
as the party shall specify in writing. Such notice shall be deemed given
upon personal delivery to the appropriate address or if sent by certified or
registered mail, three (3) days after the date of mailing.
10. NOTIFICATION OF NEW EMPLOYER. In the event that I leave the employ of
the Company, I hereby consent to the notification of my new employer of my
rights and obligations under this Agreement.
11. GENERAL PROVISIONS.
11.1 GOVERNING LAWS, CONSENT TO PERSONAL JURISDICTION. This Agreement
will be governed by and construed according to the laws of the State of
California, as such laws are applied to agreements entered into and to be
performed entirely within California between California residents. I hereby
expressly consent to the personal jurisdiction of the state and federal
courts located in Santa Clara County, California for any lawsuit filed there
against me by Company arising from or related to this Agreement.
11.2 SEVERABILITY. In the event any one or more of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect the other provisions of this Agreement, and
this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein. If, moreover, any
one or more of the provisions contained in this Agreement shall for any
reason be held to be excessively broad as to duration, geographical scope,
activity or subject, it shall be construed by limiting and reducing it, so as
to be enforceable to the extent compatible with the applicable law as it
shall then appear.
11.3 SURVIVAL. The provisions of this Agreement shall survive the
termination of my employment and the assignment of this Agreement by the
Company to any successor in interest or other assignee.
11.4 WAIVER. No waiver by the Company of any breach of this Agreement
shall be a waiver of any preceding or succeeding breach. No waiver by the
Company of any right under this Agreement shall be construed as a wavier of
any other right. The Company shall not be required to give notice to enforce
strict adherence to all terms of this Agreement.
5
<PAGE>
11.5 ENTIRE AGREEMENT. The obligations pursuant to Sections 1 and 2 of
this Agreement shall apply to any time during which I was previously
employed, or am in the future employed, by the Company as a consultant if no
other agreement governs nondisclosure and assignment of inventions during
such period. This Agreement is the final, complete and exclusive agreement of
the parties with respect to the subject matter hereof and supersedes all
prior discussions between us, except that the Noncompetition Agreement,
Cadence Code of Conduct, and my offer letter, all of which I signed, are
incorporated herein. No modification of or amendment to this Agreement, nor
any waiver of any rights under this Agreement, will be effective unless in
writing and signed by the party to be charged. Any subsequent change or
changes in my duties, salary or compensation will not affect the validity or
scope of this Agreement.
This Agreement shall be effective as of the first day of my employment with
the Company, namely: _____________, 19___.
I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS. I HAVE
COMPLETELY FILLED OUT EXHIBIT B TO THIS AGREEMENT.
Dated:
---------------------------------------------
- ---------------------------------------------------
Signature
- ---------------------------------------------------
(Printed Name)
ACCEPTED AND AGREED TO:
CADENCE DESIGN SYSTEMS, INC.
By:
-----------------------------------------------
Title:
--------------------------------------------
Date:
---------------------------------------------
6
<PAGE>
EXHIBIT A
LIMITED EXCLUSION NOTIFICATION
THIS IS TO NOTIFY you in accordance with Section 2872 of the California
Labor Code that the foregoing Agreement between you and the Company does not
require you to assign or offer to assign to the Company any invention that you
developed entirely on your own time without using the Company's equipment,
supplies, facilities or trade secret information except for those inventions
that either:
(1) Relate at the time of conception or reduction to practice of the
invention to the Company's business, or actual or demonstrably anticipated
research or development of the Company;
(2) Result from any work performed by you for the Company.
To the extent a provision in the foregoing Agreement purports to require
you to assign an invention otherwise excluded from the preceding paragraph, the
provision is against the public policy of this state and is unenforceable.
This limited exclusion does not apply to any patent or invention covered by
a contract between the Company and the United States or any of its agencies
requiring full title to such patent or invention to be in the United States.
I ACKNOWLEDGE RECEIPT of a copy of this notification.
By:
------------------------------------
(printed name of employee)
Date:
------------------------------------
WITNESSED BY:
- ------------------------------------------
(printed name of representative)
Dated:
-----------------------------------
A-1
<PAGE>
EXHIBIT B
TO: Cadence Design Systems, Inc.
FROM:
----------------------------------------------
DATE:
----------------------------------------------
SUBJECT: Previous Inventions
1. Except as listed in Section 2 below, the following is a complete list
of all inventions or improvements relevant to the subject matter of my
employment by Cadence Design Systems, Inc. (the "Company") that have been made
or conceived or first reduced to practice by me alone or jointly with others
prior to my engagement by the Company:
/ / No inventions or improvements.
/ / See below:
____________________________________________________________
____________________________________________________________
____________________________________________________________
/ / Additional sheets attached.
2. Due to a prior confidentiality agreement, I cannot complete the
disclosure under Section 1 above with respect to inventions or improvements
generally listed below, the proprietary rights and duty of confidentiality with
respect to which I owe to the following party(ies);
<TABLE>
<CAPTION>
Invention or Improvement Party(ies) Relationship
<S> <C> <C>
1. ________________________ ____________ ______________________
2. ________________________ ____________ ______________________
3. ________________________ ____________ ______________________
</TABLE>
/ / Additional sheets attached.
B-1
<PAGE>
EXHIBIT 99(c)(12)
June 11, 1999
Donald G. Tannenbaum
Orcad, Inc.
9300 S.W. Nimbus
Beaverton, OR 97008
Dear Mr. Tannenbaum:
We are very pleased to offer you employment as Group Director with Cadence
Design Systems, Inc. ("Cadence") following the merger of Orcad, Inc. with a
wholly owned subsidiary of Cadence (the "Merger"). In the context of the
proposed purchase of Orcad, Inc. by Cadence, this letter sets forth the terms of
our offer of employment to you as well as other related matters for your
approval and signature. This offer will become effective upon consummation of
the Merger. At that time (assuming you have signed this offer letter), in
addition to becoming an employee of Cadence, you will be exchanging your stock
options in Orcad, Inc. for stock options in Cadence. This offer of employment
is conditioned upon consummation of the Merger.
1. Your base salary as a full-time employee will be $150,000 per year,
paid semi-monthly in accordance with Cadence's normal payroll practices.
2. While a full-time employee, you will be eligible for a bonus of 20% of
your annual base salary. Actual payment is based on company performance and
your individual achievements. The bonus payment is divided into two payments,
one for each half fiscal year. The bonus payments are paid during the first 45
days of the fiscal quarter following the fiscal half in which the bonus is
earned. You will not be eligible for a bonus for the first half of 1999 because
you were not a full-time employee on or before April 1, 1999. You must be a
full-time employee on or before October 1, 1999 and through the payout date of
February 15, 2000 to be eligible for a pro-rata portion of a second half of the
year bonus. Thereafter your eligibility for a bonus will be determined
according to the applicable bonus plan.
3. You will be granted a nonqualified stock option for 20,000 shares of
Cadence Common Stock. This option will vest as to 20% of the shares on the
first anniversary of your employment with Cadence and monthly thereafter for
forty-eight months on the last day of each month during your employment.
Options are granted by the Compensation Committee shortly after the consummation
of the Merger, at the average of the high and low market price of Cadence's
Common Stock on the date of grant. This option will vest as to 20% of the
shares on the first anniversary of your employment with Cadence and monthly
thereafter for forty-eight months on the last day of each month during your
employment.
4. While you are a full-time employee, you will receive benefits
comparable in the aggregate to the health and other benefits that are generally
available to the rest of Cadence's full-
<PAGE>
Donald G. Tannenbaum
June 11, 1999
Page 2
time U.S. based employees (provided, of course, you meet the standard
eligibility requirements for such benefits) for purposes of benefits, your
service date with Cadence will be calculated based on your first date of
employment with Orcad, Inc. or its predecessor. Further, if you earned a
sabbatical while employed with Orcad, Inc., you will be provided the
opportunity to take that sabbatical while employed by Cadence.
5. As part of this offer of employment, Cadence agrees that if you are
employed by Cadence at the end of the first day following the consummation of
the Merger, you will receive an initial retention bonus of $43,750.00.
Cadence further agrees that if you remain employed by Cadence through the
one-year anniversary of the consummation of the Merger, you will receive an
additional retention bonus in the amount of $131,250.00.
6. Should your employment be terminated without cause at any time
during the one (1) year following the consummation of the Merger (the
"Term"), Cadence will pay you your base salary and target bonus and the
balance of the retention bonus as outlined in PARA 5 above for the remaining
period of the Term. However, if you are terminated for cause,(1) or if you
resign, the obligation of Cadence to provide you with salary or stock vesting
or bonus shall immediately end. Further, regardless of the reason for your
termination of employment, on the date of your termination, your other
employee benefits will terminate. Your employment relationship with Cadence
will be at-will. That is, Cadence may terminate your employment with Cadence
at any time and you may terminate your employment with Cadence at any time
with or without cause, for any reason or for no reason, with or without
notice. If Cadence terminates your employment without cause after the end of
the Term, you shall be entitled to receive base salary earned but unpaid
through the date of termination. You also have the opportunity to receive
benefits and payments provided by Cadence's Severance Plan in effect at that
time. If your employment is terminated as a result of death or disability,
you will be entitled to receive only base salary earned but unpaid through
the date of termination, and Cadence will be required to make no other
payment by way of salary, bonus or other compensation or damages of any kind.
- ----------------------------------
(1) You shall be considered to have been terminated with "cause" if your
employment is terminated for (a) any gross misconduct or fraud in the
performance of your employment, (b) your conviction or guilty plea with
respect to any felony (except for motor vehicle violations), (c) your
material breach of the Noncompetition Agreement, or the Proprietary
Information and Inventions Agreement, after written notice delivered to you
of such breach and a reasonable opportunity to cure such breach, (d) your
failure to perform your duties satisfactorily after receipt of written
warning and after a reasonable opportunity to cure and after a thorough
review by the Group Director of Human Resources for the Systems Division
and the Sr. Vice President of Employment and Workplace Services, or (e)
engaging in conduct which is injurious to Orcad, Inc. or Cadence.
<PAGE>
Donald G. Tannenbaum
June 11, 1999
Page 3
7. This agreement supersedes the Employment Agreement between you and
Orcad, Inc., dated September 17, 1998 and, upon your acceptance of this offer
of employment, that Employment Agreement shall be null and void.
8. You must sign an Employee Proprietary Information and Inventions
Agreement, a copy of which is attached for your signature, in order to become
an Employee of Cadence. Additionally, in connection with the acquisition and
as a condition both the acquisition and of this offer of employment, you must
execute the Noncompetition Agreement attached hereto.
9. Payments of salary and other compensations will be subject to
customary withholding and other taxes.
10. In accordance with the Immigration Reform and Control Act of 1986,
you must be a United States citizen, or have authorization to work in the
United States. In either case, verification of your right to work is
required within seventy-two hours of employment.
11. This agreement shall be governed by the laws of the State of
California.
We are excited about the potential represented by the Merger and we are
pleased you will be joining us as a key part of the new team.
Sincerely,
CADENCE DESIGN SYSTEMS, INC.
/s/ Ron Kirchenbauer
Ron Kirchenbauer
Senior Vice President of Employee Workplace
Services
Acknowledged and agreed:
/s/ Donald G. Tannenbaum
- ----------------------------------
Donald G. Tannenbaum
Date: June 14, 1999
Enclosures
<PAGE>
EXHIBIT 99(c)(12)
NONCOMPETITION AGREEMENT
THIS NONCOMPETTION AGREEMENT is being executed and delivered as of
June 14, 1999 by Donald G. Tannenbaum ("Stockholder") in favor of and
for the benefit of CADENCE DESIGN SYSTEMS, INC., a Delaware corporation
("Parent"), and ORCAD, INC., a Delaware corporation (the "Corporation").
RECITALS
A. As an employee and stockholder of the Corporation, Stockholder has
obtained and will obtain extensive and valuable knowledge and information
concerning the business of the Corporation (including confidential
information relating to the Corporation and its operations, assets,
contracts, customers, personnel, plans and prospects).
B. Contemporaneously with the execution and delivery of this
Noncompetition Agreement, the Corporation is entering into an Agreement and
Plan of Merger with Parent and a subsidiary of Parent (the "Reorganization
Agreement"), which provides (subject to the conditions set forth therein) for
the merger of Parent's subsidiary into the Corporation with the Corporation
as the surviving corporation (the "Merger"). As a result of the Merger, the
Corporation will become a wholly-owned subsidiary of Parent, and Stockholder
will receive options for shares of common stock of Parent in exchange for
Stockholder's options for shares of common stock of the Corporation.
C. It is also contemplated that, on the date that the Merger becomes
effective (the "Effective Time"), Stockholder will become an employee of
Parent and, as such, will obtain extensive and valuable knowledge and
information concerning the business of Parent (including confidential
information and relating to Parent and its operations, assets, contracts,
customers, personnel, plans and prospects).
In connection with the Merger and as a condition to entering into the
Reorganization Agreement and consummating the Merger, and to more fully
secure unto Parent the benefits of the Merger, Parent has requested that
Stockholder enter into this Noncompetition Agreement; and Stockholder is
entering into this Noncompetition Agreement in order to induce Parent to
enter into the Reorganization Agreement and consummate the Merger.
E. Both Parent and the Corporation have conducted, are conducting and
will continue to conduct their respective businesses on a worldwide basis.
<PAGE>
AGREEMENT
In order to induce Parent to enter into the Reorganization Agreement and
consummate the Merger, and in consideration of the issuance and delivery to
Stockholder of options for shares of common stock of Parent pursuant to the
Reorganization Agreement, Stockholder agrees as follows:
1. ACKNOWLEDGMENTS BY STOCKHOLDER. Stockholder acknowledges that the
promises and restrictive covenants that Stockholder is providing in this
Noncompetition Agreement are reasonable and necessary to the protection of
Parent's business and Parent's legitimate interests in its acquisition of the
Corporation (including the Corporation's goodwill) pursuant to the
Reorganization Agreement. Stockholder acknowledges that, in connection with
the consummation of the Merger, all of Stockholder's options for shares of
common stock of the Corporation will be exchanged for options for shares of
common stock of Parent.
2. NONCOMPETITION. Stockholder agrees that he will not, except with
the express prior written consent of the Parent, during the period from the
date hereof through twelve months following the termination of his
employment, voluntarily or involuntarily, for any reason whatsoever, directly
or indirectly, individually or on behalf of persons not now parties to this
Noncompetition Agreement, or as a partner, stockholder, director, officer,
principal, agent, employee or in any other capacity or relationship, for his
own account or for the benefit of any other person:
(a) engage in software development or services in the areas of FPGA
design and printed circuit board design;
(b) be or become an officer, director, stockholder, owner, affiliate,
salesperson, co-owner, partner, trustee, promoter, technician, engineer,
analyst, employee, agent, representative, supplier, consultant, advisor or
manager of or to, or otherwise acquire or hold any interest in, any person
or entity that engages in software development or services focused
primarily on FPGA design and printed circuit board design; or
(c) provide any service (as an employee, consultant or otherwise),
support, product or technology to any person or entity, if such service,
support, product or technology involves or relates to software development
or services in the areas of FPGA design and printed circuit board design;
or
(d) permit his name to be used in connection with a business that
competes with Parent or Corporation:
PROVIDED, HOWEVER, that nothing in this Section 2 shall prevent Stockholder
from owning as a passive investment less than 5% of the outstanding shares of
the capital stock of a publicly-held corporation if (A) such shares are
actively traded on an established national securities market in the United
States and (B) Stockholder is not otherwise associated directly or indirectly
with such corporation or any affiliate of such corporation. Under this
Noncompetition Agreement,
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Stockholder's employment with Parent shall be deemed to terminate at such
time that Stockholder is neither a full-time nor a part-time employee of
Parent.
3. NONSOLICITATION. Stockholder further agrees that, during your
employment, and for one year following Stockholder's termination of employment
with Parent, Stockholder will not and Stockholder will not permit any of his
affiliates to:
(a) personally or through others, encourage, induce, attempt to
induce, solicit or attempt to solicit (on Stockholder's own behalf or on
behalf of any other person or entity) anyone who is employed at that time,
or was employed during the previous six (6) months, by the Corporation,
Parent or any of Parent's subsidiaries to leave his or her employment with
the Corporation, Parent or any of Parent's subsidiaries; or
(b) personally or through others, use any trade secret or proprietary
information of Parent or Corporation or any other improper means to
interfere or attempt to interfere with the relationship or prospective
relationship of the Corporation, Parent or any of Parent's subsidiaries
with any person or entity that is, was or is expected to become a customer
or client of the Corporation, Parent or any of Parent's subsidiaries; or
(c) solicit the business of any client or customer of the
Corporation, Parent or any of Parent's subsidiaries (other than on behalf
of the Parent).
4. INDEPENDENCE OF OBLIGATIONS. The covenants and obligations of
Stockholder set forth in this Noncompetition Agreement shall be construed as
independent of any other agreement or arrangement between Stockholder, on the
one hand, and the Corporation or Parent, on the other.
5. SPECIFIC PERFORMANCE. Stockholder agrees that in the event of any
breach or threatened breach by Stockholder of any covenant, obligation or
other provision contained in this Noncompetition Agreement, Parent and the
Corporation shall be entitled (in addition to any other remedy that may be
available by law to them) to the extent permitted by applicable law (a) a
decree or order of specific performance to enforce the observance and
performance of such covenant, obligation or other provision, and (b) an
injunction restraining such breach or threatened breach. Stockholder further
agrees that neither Parent nor any other person or entity shall be required
to provide any bond or other security in connection with any such decree,
order or injunction or in connection with any related action or proceeding.
6. NON-EXCLUSIVITY. The rights and remedies of Parent and the
Corporation hereunder are not exclusive of or limited by any other rights or
remedies which Parent or the Corporation may have, whether at law, in equity,
by contract or otherwise, all of which shall be cumulative (and not
alternative). Without limiting the generality of the foregoing, the rights
and remedies of Parent and the Corporation hereunder, and the obligations and
liabilities of Stockholder hereunder, are in addition to their respective
rights, remedies, obligations and liabilities under the law of unfair
competition, misappropriation of trade secrets and the like. This
Noncompetition Agreement does not limit Stockholder's obligations or the
rights of Parent or the Corporation (or any affiliate of Parent or the
Corporation) under the terms of (a) the
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Employment Agreement of even date herewith between Stockholder and Parent;
(b) the Proprietary Information and Inventions Agreement between Stockholder
and the Parent; (c) the Reorganization Agreement; or (d) the terms of any
other agreement between Stockholder and Parent or the Corporation or any
affiliate of Parent or the Corporation.
7. NOTICES. Any notice or other communication required or permitted
to be delivered to Stockholder, the Corporation or Parent under this
Noncompetition Agreement shall be in writing and shall be deemed properly
delivered, given and received when delivered (by hand, by registered mail, by
courier or express delivery service or by facsimile) to the address or
facsimile telephone number set forth beneath the name of such party below (or
to such other address or facsimile telephone number as such party shall have
specified in a written notice delivered in accordance with this Section 7):
IF TO THE CORPORATION: Orcad, Inc.
9300 S.W. Nimbus
Beaverton, OR 97008
IF TO PARENT: Cadence Design Systems, Inc.,
2655 Seely Road
San Jose, CA 95134
Attention:
Facsimile No.:
IF TO STOCKHOLDER: Donald G. Tannenbaum
2646 SE 73rd Avenue
Portland, OR 97206
8. SEVERABILITY. If any provision of the Noncompetition Agreement or
any part of any such provision is held under any circumstances to be invalid
or unenforceable in any jurisdiction, then (a) such provision or part thereof
shall, with respect to such circumstances and in such jurisdiction, be deemed
amended to conform to applicable laws so as to be valid and enforceable to
the fullest possible extent, (b) the invalidity or unenforceability or such
provision or part thereof under such circumstances and in such jurisdiction
shall not affect the validity or enforceability of such provision or part
thereof under any other circumstances or in any other jurisdiction, and (c)
such invalidity or enforceability of such provision or part thereof shall not
affect the validity or enforceability of the remainder of such provision or
the validity or enforceability of any other provision of this Noncompetition
Agreement is separable from every other part of such provision.
9. GOVERNING LAW. This Noncompetition Agreement shall be construed in
accordance with, and governed in all respects by, the laws of the State of
California (without giving effect to principles of conflicts of laws).
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<PAGE>
10. WAIVER. No failure on the part of Parent or the Corporation to
exercise any power, right, privilege or remedy under this Noncompetition
Agreement, and no delay on the part of Parent or the Corporation in
exercising any power, right, privilege or remedy under this Noncompetition
Agreement, shall operate as a waiver of such power, right, privilege or
remedy; and no single or partial exercise of any such power, right, privilege
or remedy shall preclude any other or further exercise thereof or of any
other power, right, privilege or remedy. Neither Parent nor the Corporation
shall be deemed to have waived any claim arising out of this Noncompetition
Agreement, or any power, right, privilege or remedy under this Noncompetition
Agreement, unless the waiver of such claim, power, right, privilege or remedy
is expressly set forth in a written instrument duly executed and delivered on
behalf of such party; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
11. CAPTIONS. The captions contained in this Noncompetition Agreement
are for convenience of reference only, shall not be deemed to be a part of
this Noncompetition Agreement and shall not be referred to in connection with
the construction or interpretation of this Noncompetition Agreement.
12. FURTHER ASSURANCES. Stockholder shall execute and/or cause to be
delivered to the Corporation and Parent such instruments and other documents
and shall take such other actions as Corporation and Parent may reasonably
request to effectuate the intent and purposes of this Noncompetition
Agreement.
13. ENTIRE AGREEMENT. This Noncompetition Agreement, the Stockholder's
offer letter and the Employee Proprietary Information and Inventions
Agreement, and the other agreements referred to herein set forth the entire
understanding of Stockholder, the Corporation and Parent relating to the
subject matter hereof and thereof and supersede all prior agreements and
understandings between any of such parties relating to the subject matter
hereof and thereof.
14. AMENDMENTS. This Noncompetition Agreement may not be amended,
modified, altered, or supplemented other than by means of a written
instrument duly executed and delivered on behalf of Parent and Stockholder.
15. ASSIGNMENT. This Noncompetition Agreement and all obligations
hereunder are personal to Stockholder and may not be transferred or assigned
by Stockholder at any time. Either Parent or the Corporation may assign its
rights under this Noncompetition Agreement in whole or in part, without the
consent or approval of the Stockholder or any other person or entity, in
connection with (A) the sale of Parent or the Corporation, or (B) the sale or
other transfer of all or a substantial part of the assets or business of the
Parent or the Corporation.
16. ATTORNEYS' FEES. If any legal action or other legal proceeding
relating to this Noncompetition Agreement or the enforcement of any provision
of this Noncompetition Agreement is brought against any party to this
Noncompetition Agreement, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
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17. EFFECTIVE DATE. This Noncompetition Agreement shall become
effective upon the effective time of the merger contemplated by the
Reorganization Agreement (the "Effective Time").
18. BINDING NATURE. Subject to Section 16, this Noncompetition
Agreement will be binding upon Stockholder and Stockholder's representatives,
executors, administrators, estate, heirs, successors and assigns, and will
inure to the benefit of Parent and the Corporation and their respective
successors and assigns.
IN WITNESS WHEREOF, the undersigned has executed this Noncompetition
Agreement as of the date first above written.
/s/ Donald G. Tannenbaum
---------------------------------------
Donald G. Tannenbaum
6
<PAGE>
FORM OF:
CADENCE DESIGN SYSTEMS, INC.
EMPLOYEE PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
(to be signed in conjunction with Non Competition Agreement and Offer Letter)
In consideration of my employment or continued employment by Cadence
Design Systems, Inc. (the "Company"), and the compensation now and hereafter
paid to me, I hereby agree as follows:
1. NONDISCLOSURE
1.1 RECOGNITION OF COMPANY'S RIGHTS; NONDISCLOSURE. At all times
during my employment and thereafter, I will hold in strictest confidence and
will not disclose, use, lecture upon or publish any of the Company's
Proprietary Information (defined below), except as such disclosure, use or
publication may be required in connection with my work for the Company, or
unless an officer of the Company expressly authorizes such in writing. I
will obtain Company's written approval before publishing or submitting for
publication any material (written, verbal, or otherwise) that relates to my
work at Company and/or incorporates any Proprietary Information. I hereby
assign to the Company any rights I may have or acquire in such Proprietary
Information and recognize that all Proprietary Information shall be the sole
property of the Company and its assigns.
1.2 PROPRIETARY INFORMATION. The term "Proprietary Information" shall
mean any and all confidential and/or proprietary knowledge, data or
information of, or acquired by, the Company. By way of illustration but not
limitation, "Proprietary Information" includes (a) information relating to
products, processes, know-how, designs, drawings, concepts, test data,
formulas, methods, compositions, ideas, algorithms, techniques, developmental
or experimental work, improvements and discoveries, (hereinafter collectively
referred to as "Inventions"); (b) information regarding plans for research,
development, new products, marketing and selling, business plans, budgets and
unpublished financial statements, licenses, prices and costs, suppliers and
customers; and (c) information regarding the skills and compensation of other
employees of the Company. Notwithstanding the foregoing, it is understood
that, at all such times, I am free to use information which is generally
known in the trade or industry, which is not gained as result of a breach of
this Agreement, and my own, skill, knowledge, know-how and experience to
whatever extent and in whichever way I wish.
1.3 THIRD PARTY INFORMATION. I understand, in addition, that the
Company has received and in the future will receive from third parties
confidential or proprietary information ("Third Party Information") subject
to a duty on the Company's part to maintain the confidentiality of such
information and to use it only for certain limited purposes. During the term
of my employment and thereafter, I will hold Third Party Information in the
strictest confidence and will not disclose to anyone (other than Company
personnel who need to know such information in connection with their work for
the Company) or use, except in connection with my work for the Company, Third
Party Information unless expressly authorized by an officer of the Company in
writing.
<PAGE>
1.4 NO IMPROPER USE OF INFORMATION OF PRIOR EMPLOYERS AND OTHERS.
During my employment by the Company I will not improperly use or disclose any
confidential information or trade secrets, if any, of any former employer or
any other person to whom I have an obligation of confidentiality, and I will
not bring onto the premises of the Company any unpublished documents or any
property belonging to my former employer or any other person to whom I have
an obligation of confidentiality unless consented to in writing by that
former employer or person. I will use in the performance of my duties only
information which is generally known and used by persons with training and
experience comparable to my own, which is common knowledge in the industry or
otherwise legally in the public domain, or which is otherwise provided or
developed by the Company.
2. ASSIGNMENT OF INVENTIONS
2.1 PROPRIETARY RIGHTS. The term "Proprietary Rights" shall mean all
trade secret, patent, copyright, mask work and other intellectual property
rights throughout the world.
2.2 PRIOR INVENTIONS. Inventions, if any, patented or unpatented,
which I made prior to the commencement of my employment with the Company are
excluded from the scope of this Agreement. To preclude any possible
uncertainty, I have set forth on Exhibit B (Previous Inventions) attached
hereto a complete list of all inventions that I have, alone or jointly with
others, conceived, developed or reduced to practice or caused to be
conceived, developed or reduced to practice prior to the commencement of my
employment with the Company, that I consider to be my property or the
property of third parties and that I wish to have excluded from the scope of
this Agreement (collectively referred to as "Prior Inventions"). If
disclosure of any such Prior Invention(s) would cause me to violate any prior
confidentiality agreement, I understand that I am not to list such Prior
Invention(s) in Exhibit B, but am only to disclose a cursory name for each
such invention, a listing of the party(ies) to whom it belongs and the fact
that full disclosure as to such inventions has not been made for that reason.
A space is provided on Exhibit B for such purpose. If no such disclosure is
attached, I represent that there are no Prior Inventions. If, in the course
of my employment with the Company, I incorporate a Prior Invention into a
Company product, process or machine, the Company is hereby granted and shall
have a nonexclusive, royalty-free, irrevocable, perpetual, worldwide license
(with rights to sublicense through multiple tiers of sublicensees) to make,
have made, modify, use and sell such Prior Invention. Notwithstanding the
foregoing, I agree that I will not incorporate, or permit to be incorporated,
Prior Inventions in any Company Inventions without the Company's prior
written consent.
2.3 ASSIGNMENT OF INVENTIONS. Subject to Sections 2.4, and 2.6, I
hereby assign and agree to assign in the future (when any such Inventions or
Proprietary Rights are first reduced to practice or first fixed in a tangible
medium, as applicable) to the Company all my right, title and interest in and
to any and all Inventions (and all Proprietary Rights with respect thereto)
whether or not patentable or registrable under copyright or similar statutes,
made or conceived or reduced to practice or learned by me, either alone or
jointly with others, during the period of my employment with the Company.
Inventions assigned to the Company, or to a third party as
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directed by the Company pursuant to this Section 2, are hereinafter referred
to as "Company Inventions."
2.4 NONASSIGNABLE INVENTIONS. This Agreement does not apply to an
Invention which qualifies fully as a nonassignable Invention under Section
2870 of the California Labor Code (hereinafter "Section 2870"). I have
reviewed the notification on Exhibit A (Limited Exclusion Notification) and
agree that my signature acknowledges receipt of the notification.
2.5 OBLIGATION TO KEEP COMPANY INFORMED. During the period of my
employment and for one (1) year after termination of my employment with the
company, I will promptly disclose to the Company fully and in writing all
Inventions authored, conceived or reduced to practice by me, either alone or
jointly with others, particularly if I leave the Company and become employed
by a competitor of the Company, or if I commercialize an idea that the
Company decided not to pursue. In addition, I will promptly disclose to the
Company all patent applications filed by me or on my behalf during my
employment or within a year after termination of employment. At the time of
each such disclosure, I will advise the Company in writing of any Inventions
that I believe fully qualify for protection under Section 2870; and I will at
that time provide to the Company in writing all evidence necessary to
substantiate that belief. The Company will keep in confidence and will not
use for any purpose or disclose to third parties without my consent any
confidential information disclosed in writing to the Company pursuant to this
Agreement relating to Inventions that qualify fully for protection under the
provisions of Section 2870. I will preserve the confidentiality of any
Invention that does not fully qualify for protection under Section 2870. For
one (1) year following my termination of employment any and all patent
applications filed by me or by a third party based on my work will be
presumed to be owned by the Company. I can rebut this presumption by
providing evidence sufficient to establish ownership by the party applying
for the patent.
2.6 GOVERNMENT OR THIRD PARTY. I also agree to assign all my right,
title and interest in and to any particular Invention to a third party,
including without limitation the United States, as directed by the Company.
2.7 WORKS FOR HIRE. I acknowledge that all original works of
authorship which are made by me (solely or jointly with others) within the
scope of my employment and which are protectable by copyright are "works made
for hire," pursuant to United States Copyright Act (17 U.S.C. Section 101).
2.8 ENFORCEMENT OF PROPRIETARY RIGHTS. During and after my employment
with the Company, I will assist the Company in every proper way to obtain,
and from time to time enforce, United States and foreign Proprietary Rights
relating to Company Inventions in any and all countries. To that end I will
execute, verify and deliver such documents and perform such other acts
(including appearances as a witness) as the Company may reasonably request
for use in applying for, obtaining, perfecting, evidencing, sustaining and
enforcing such Proprietary Rights and the assignment thereof. In addition, I
will execute, verify and deliver assignments of such Proprietary Rights to
the Company or its designee. My obligation to assist the Company with
respect to Proprietary Rights relating to such Company Inventions in any and
all countries
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shall continue beyond the termination of my employment, but the Company shall
compensate me at a reasonable rate after my termination for the time actually
spent by me at the Company's request on such assistance.
In the event the Company is unable for any reason, after reasonable
effort to secure my signature on any document needed in connection with the
actions specified in the preceding paragraph, I hereby irrevocably designate
and appoint the Company and its duly authorized officers and agents as my
agent and attorney in fact, which appointment is coupled with an interest, to
act for and in my behalf to execute, verify and file any such documents and
to do all other lawfully permitted acts to further the purposes of the
preceding paragraph with the same legal force and effect as if executed by
me. I hereby waive and quitclaim to the Company any and all claims, of any
nature whatsoever, which I now or may hereafter have for infringement of any
Proprietary Rights assigned hereunder to the Company.
3. RECORDS. I agree to keep and maintain adequate and current records (in
the form of notes, sketches, drawings and in any other form that may be
required by the Company) of all Proprietary Information developed by me and
all Inventions made by me during the period of my employment at the Company,
which records shall be available to and remain the sole property of the
Company at all times.
4. ADDITIONAL ACTIVITIES. I agree that during the period of my employment
by the Company I will not, without the Company's express written consent,
engage in any employment or business activity which is competitive with, or
would otherwise conflict with, my employment by the Company.
5. AT-WILL EMPLOYMENT. I agree and understand that nothing in this
Agreement shall confer any right with respect to continuation of employment
by the Company, nor shall it interfere in any way with my right or the
Company's right to terminate the employment relationship at any time, for any
reason, with or without cause, and with or without notice. I understand
that, other than the Company's Senior Vice President of Human Resources, no
manager, supervisor, employee or any other representative or agent of the
Company has the authority to enter into an agreement to the contrary. I
further understand that an agreement to the contrary by the Senior Vice
President of Human Resources is not valid unless it is in writing.
6. NO CONFLICTING OBLIGATION. I represent that my performance of all the
terms of this Agreement, and of my duties as an employee of the Company, does
not and will not breach any agreement to keep in confidence information
acquired by me in confidence or in trust prior to my employment by the
Company. I have not entered into, and I agree I will not enter into, any
agreement either written or oral in conflict herewith.
7. RETURN OF COMPANY DOCUMENTS AND PROPERTY. When I leave the employ of
the Company, I will deliver to the Company any and all drawings, notebooks,
notes, memoranda, source code, specifications, devices, formulas, records,
manuals, reports and documents, together with all copies thereof, and any
other material containing or disclosing any Company Inventions, Third Party
Information or Proprietary Information of the Company, that is within my
possession, custody or control. Further, upon termination of employment I
also will
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return any and all Company property or equipment in my possession, custody or
control. Prior to leaving, I will cooperate with the Company in completing
and signing the Company's agreement regarding termination.
8. NON-PRIVATE NATURE OF COMPANY PROPERTY. I understand that I have no
expectation of privacy in the voicemail and electronic mail provided to me by
the Company or in any property situated on the Company's premises and/or
owned by the Company, including disks and other storage media, filing
cabinets or other work areas. I further understand that such property,
including voicemail and electronic mail, is subject to inspection by Company
personnel at any time.
9. NOTICES. Any notices required or permitted hereunder shall be given to
the appropriate party at the address specified below or at such other address
as the party shall specify in writing. Such notice shall be deemed given
upon personal delivery to the appropriate address or if sent by certified or
registered mail, three (3) days after the date of mailing.
10. NOTIFICATION OF NEW EMPLOYER. In the event that I leave the employ of
the Company, I hereby consent to the notification of my new employer of my
rights and obligations under this Agreement.
11. GENERAL PROVISIONS.
11.1 GOVERNING LAWS, CONSENT TO PERSONAL JURISDICTION. This Agreement
will be governed by and construed according to the laws of the State of
California, as such laws are applied to agreements entered into and to be
performed entirely within California between California residents. I hereby
expressly consent to the personal jurisdiction of the state and federal
courts located in Santa Clara County, California for any lawsuit filed there
against me by Company arising from or related to this Agreement.
11.2 SEVERABILITY. In the event any one or more of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect the other provisions of this Agreement, and
this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein. If, moreover, any
one or more of the provisions contained in this Agreement shall for any
reason be held to be excessively broad as to duration, geographical scope,
activity or subject, it shall be construed by limiting and reducing it, so as
to be enforceable to the extent compatible with the applicable law as it
shall then appear.
11.3 SURVIVAL. The provisions of this Agreement shall survive the
termination of my employment and the assignment of this Agreement by the
Company to any successor in interest or other assignee.
11.4 WAIVER. No waiver by the Company of any breach of this Agreement
shall be a waiver of any preceding or succeeding breach. No waiver by the
Company of any right under this Agreement shall be construed as a wavier of
any other right. The Company shall not be required to give notice to enforce
strict adherence to all terms of this Agreement.
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11.5 ENTIRE AGREEMENT. The obligations pursuant to Sections 1 and 2 of
this Agreement shall apply to any time during which I was previously
employed, or am in the future employed, by the Company as a consultant if no
other agreement governs nondisclosure and assignment of inventions during
such period. This Agreement is the final, complete and exclusive agreement of
the parties with respect to the subject matter hereof and supersedes all
prior discussions between us, except that the Noncompetition Agreement,
Cadence Code of Conduct, and my offer letter, all of which I signed, are
incorporated herein. No modification of or amendment to this Agreement, nor
any waiver of any rights under this Agreement, will be effective unless in
writing and signed by the party to be charged. Any subsequent change or
changes in my duties, salary or compensation will not affect the validity or
scope of this Agreement.
This Agreement shall be effective as of the first day of my employment
with the Company, namely: _____________, 19___.
I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS. I HAVE
COMPLETELY FILLED OUT EXHIBIT B TO THIS AGREEMENT.
Dated:
---------------------------------------------
- ---------------------------------------------------
Signature
- ---------------------------------------------------
(Printed Name)
ACCEPTED AND AGREED TO:
CADENCE DESIGN SYSTEMS, INC.
By:
-----------------------------------------------
Title:
--------------------------------------------
Date:
---------------------------------------------
6
<PAGE>
EXHIBIT A
LIMITED EXCLUSION NOTIFICATION
THIS IS TO NOTIFY you in accordance with Section 2872 of the California
Labor Code that the foregoing Agreement between you and the Company does not
require you to assign or offer to assign to the Company any invention that you
developed entirely on your own time without using the Company's equipment,
supplies, facilities or trade secret information except for those inventions
that either:
(1) Relate at the time of conception or reduction to practice of the
invention to the Company's business, or actual or demonstrably anticipated
research or development of the Company;
(2) Result from any work performed by you for the Company.
To the extent a provision in the foregoing Agreement purports to require
you to assign an invention otherwise excluded from the preceding paragraph, the
provision is against the public policy of this state and is unenforceable.
This limited exclusion does not apply to any patent or invention covered by
a contract between the Company and the United States or any of its agencies
requiring full title to such patent or invention to be in the United States.
I ACKNOWLEDGE RECEIPT of a copy of this notification.
By:
------------------------------------
(printed name of employee)
Date:
------------------------------------
WITNESSED BY:
- ------------------------------------------
(printed name of representative)
Dated:
-----------------------------------
A-1
<PAGE>
EXHIBIT B
TO: Cadence Design Systems, Inc.
FROM:
----------------------------------------------
DATE:
----------------------------------------------
SUBJECT: Previous Inventions
1. Except as listed in Section 2 below, the following is a complete list
of all inventions or improvements relevant to the subject matter of my
employment by Cadence Design Systems, Inc. (the "Company") that have been made
or conceived or first reduced to practice by me alone or jointly with others
prior to my engagement by the Company:
/ / No inventions or improvements.
/ / See below:
____________________________________________________________
____________________________________________________________
____________________________________________________________
/ / Additional sheets attached.
2. Due to a prior confidentiality agreement, I cannot complete the
disclosure under Section 1 above with respect to inventions or improvements
generally listed below, the proprietary rights and duty of confidentiality with
respect to which I owe to the following party(ies);
<TABLE>
<CAPTION>
Invention or Improvement Party(ies) Relationship
<S> <C> <C>
1. ________________________ ____________ ______________________
2. ________________________ ____________ ______________________
3. ________________________ ____________ ______________________
</TABLE>
/ / Additional sheets attached.
B-1
