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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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SCHEDULE 14D-9
(AMENDMENT NO. 4)
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Solicitation/Recommendation Statement Pursuant to
Section 14(d)(4) of the Securities Exchange Act of 1934
QUICKTURN DESIGN SYSTEMS, INC.
(Name of Subject Company)
QUICKTURN DESIGN SYSTEMS, INC.
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $.001 PER SHARE
(including the associated preferred stock purchase rights)
(Title of Class of Securities)
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74838E102
(CUSIP Number of Class of Securities)
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KEITH R. LOBO
PRESIDENT AND CHIEF EXECUTIVE OFFICER
QUICKTURN DESIGN SYSTEMS, INC.
55 W. TRIMBLE ROAD
SAN JOSE, CALIFORNIA 95131
(408) 914-6000
(Name, address and telephone number of person authorized to receive
notice and communications on behalf of person(s) filing statement)
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COPY TO:
LARRY W. SONSINI, ESQ.
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CALIFORNIA 94304-1050
(650) 493-9300
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INTRODUCTION
The Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule
14D-9") originally filed on August 24, 1998, by Quickturn Design Systems,
Inc., a Delaware corporation (the "Company" or "Quickturn"), relates to an
offer by MGZ Corp., a Delaware corporation ("MGZ") and a wholly owned
subsidiary of Mentor Graphics Corporation, an Oregon corporation ("Mentor"),
to purchase all of the outstanding shares of the common stock, par value $.001
per share (including the associated preferred stock purchase rights), of the
Company. All capitalized terms used herein without definition have the
respective meanings set forth in the Schedule 14D-9.
ITEM 3. IDENTITY AND BACKGROUND
The response to Item 3 is hereby amended by adding the following after the
final paragraph of Item 3:
(c) Retention Plans. As a result of the Company's concern about the
disruptive effects of the Offer on the Company's employees, the Company
retained, on August 19, 1998, the independent consulting firm of William M.
Mercer, Incorporated to advise the Board and to evaluate the possibility of
implementing an employee retention program. Meetings of the Board's
Compensation Committee were held on August 20, 1998 and August 27, 1998. At
a Board meeting held on September 2, 1998 and pursuant to a recommendation
from the Board's Compensation Committee, the Board authorized the Company
to implement two separate plans (collectively, the "Plans") to assist the
Company in retaining its employees during times of uncertainty, and to keep
such persons focused on their jobs and the business of the Company during
such times so that the Company can continue to execute its business plan.
William M. Mercer, Incorporated, assisted and advised the Board and its
Compensation Committee in formulating the terms of each Plan. Each Plan is
summarized below. Each of the summaries is qualified in its entirety by
reference to the full text of each of the Plans; a copy of each of the
Management Retention Plan and the Employee Retention Plan, is filed as
Exhibit 19 and 20, respectively, to this statement, and is incorporated by
reference herein.
On September 9, 1998, the Company sent a letter to its employees who are
participating in the Plans. A copy of the form of such letter is filed as
Exhibit 21 to this statement.
Management Retention Plan. The Management Retention Plan (the "Management
Plan") provides retention and severance benefits for designated executive
officers, vice presidents and employees with comparable responsibility to
executive officers or vice presidents. There are three components to the
Management Plan: (i) severance payments, (ii) post-employment coverage
under the Company's group health, dental and life insurance plans, and
(iii) pro-rated bonus payments.
The total potential severance payment is based on a multiple of annual
target bonus and/or annual base salary, with the level of payment related
to the participant's job level. The multiplier ranges from 150% of annual
base salary up to 250% of annual base salary and commission or annual
average bonus. The severance payment will be paid only if the participant
is involuntarily terminated without cause, or is constructively terminated,
within twelve months following a change of control. The severance payment
is offset by any severance cash payments required by law or contract.
In the event of an involuntary termination without cause, or constructive
termination, within twelve months following a change of control, the
participant (and, if covered prior to the change of control, his or her
dependents) receives continued group health, dental and life insurance
coverage. The Company is required to pay the same percentage of the related
insurance premiums as were paid prior to the change of control. The Company
continues to make these premium payments for a period ranging from one and
one-half years to two and one-half years (depending on the participant's
job level), or, if earlier, until the participant becomes covered under
comparable benefit plans of another employer.
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Under the Management Plan, participants are eligible to be paid their
prorated annual target bonus for the year in which the change of control
occurs. This payment is in lieu of any bonus otherwise payable under the
annual incentive plan. The proration is made by multiplying the annual
target bonus by a fraction, the numerator of which is the number of days in
the Company's fiscal year that have elapsed prior to the change of control
and the denominator of which is three hundred and sixty-five. The pro-rated
bonus is paid to those executive officers and vice-presidents who remain
employed until the last day of the fiscal year in which the change of
control occurs or who are involuntarily terminated without cause or are
constructively terminated prior to the end of the fiscal year, but
following a change of control.
Employee Retention Plan. The Employee Retention Plan (the "Employee
Plan") provides severance benefits for employees who are not participants
in the Management Retention Plan. It provides for a severance payment of
two weeks' base salary for each full year of employment with the Company up
to and including the date of a change of control. The severance payment
will be paid only if the participant is involuntarily terminated without
cause within twelve months following a change of control, with a minimum
payment of three months (or six months for director-level employees and up
to approximately 10% of the employee population designated as key
contributors by the chief executive officer). The severance payment is
offset by any severance cash payments required by law or contract.
Golden Parachute Excise Tax And Non-Deductibility. In general, benefits
and payments under the Management Plan and the Employee Plan are subject to
reduction, if, in the opinion of the Company's independent accountants, the
golden parachute excise tax and non-deductibility provisions of the
Internal Revenue Code would otherwise be triggered. In such event, a
participant's benefits may be reduced to the largest amount that would not
trigger the golden parachute excise tax and non-deductibility provisions.
In the case of the Company's chief executive officer and certain other
participants under the Management Plan, benefits under the Management Plan
are only reduced to avoid triggering the golden parachute excise tax and
non-deductibility provisions if so doing would maximize the after-tax
economic benefit to such officers, as determined by the Company's
independent accountants.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
The response to Item 4 is hereby amended by adding the following after the
final paragraph of Item 4:
On September 10, 1998, Mentor announced that the expiration of the Offer
had been extended to October 6, 1998. On September 10, 1998, the Company
issued a press release relating to Mentor's announcement. A copy of this
press release is included as Exhibit 22 hereto and is incorporated herein
by reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
The response to Item 9 is hereby amended by the addition of the following
new exhibits:
Exhibit 19 Management Retention Plan.
Exhibit 20 Employee Retention Plan.
Exhibit 21 Letter to Employees Regarding the Retention Plans.
Exhibit 22 Press Release of the Company dated September 10, 1998.
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SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is
true, complete and correct.
Dated: September 10, 1998
QUICKTURN DESIGN SYSTEMS, INC.
By: /s/ Keith R. Lobo
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Keith R. Lobo
President and Chief Executive
Officer
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EXHIBIT 19
QUICKTURN DESIGN SYSTEMS, INC.
MANAGEMENT RETENTION PLAN
Introduction
It is expected that Quickturn Design Systems, Inc. (the "Company") from
time to time will consider the possibility of an acquisition by another company
or other change of control. The Board of Directors of the Company (the "Board")
recognizes that such consideration can be a distraction to key employees and can
cause such employees to consider alternative employment opportunities. The
Board has determined that it is in the best interests of the Company and its
stockholders to assure that the Company will have the continued dedication and
objectivity of these employees, notwithstanding the possibility, threat or
occurrence of a Change of Control (as defined below) of the Company.
The Board believes that it is in the best interests of the Company and its
stockholders to provide these employees with an incentive to continue their
employment and to motivate these employees to maximize the value of the Company
upon a Change of Control for the benefit of its stockholders.
The Board believes that it is imperative to provide these employees with
certain severance benefits upon termination of employment following a Change of
Control. These benefits provide these employees with enhanced financial
security and provide efficient incentive and encouragement to these employees to
remain with the Company notwithstanding the possibility or occurrence of a
Change of Control.
Accordingly, the following plan has been developed and adopted.
1.
ESTABLISHMENT OF PLAN
(a) Establishment of Plan. As of the Effective Date, the Company
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hereby establishes a management retention plan to be known as the "Management
Retention Plan" (the "Plan"), as set forth in this document. The purposes of the
Plan are as set forth in the Introduction.
(b) Contractual Right to Benefits. Subject to the terms of this Plan,
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this Plan establishes and vests in each Participant a contractual right to the
benefits to which he or she is entitled pursuant to the terms thereof,
enforceable by the Participant against the Company.
2.
DEFINITIONS AND CONSTRUCTION
(a) Definitions. Whenever used in the Plan, the following terms shall
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have the meanings set forth below and, when the meaning is intended, the initial
letter of the term is capitalized.
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(i) Annual Compensation. "Annual Compensation" shall mean an amount
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equal to the sum of (i) the Participant's Company annual base salary as in
effect immediately preceding the Change of Control, and (ii) 100% of the
Participant's Average Bonus.
(ii) Average Bonus. "Average Bonus" shall mean the average of the
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annual cash bonuses, if any, received or deferred by the Participant in the
three most recently completed fiscal years of the Company prior to the date of
termination of employment (or, if such bonus has been earned but not yet
received or deferred with respect to the most recently completed fiscal year,
the average of the two prior fiscal years' annual cash bonuses and the annual
cash bonus, if any, to be received or deferred with respect to the most recently
completed fiscal year) under the Company's annual incentive bonus program. If
Participant did not receive an annual cash bonus in respect of any fiscal year
or years required to be averaged for purposes of computing amounts due pursuant
to the preceding sentence by virtue of not being employed with the Company or by
virtue of not yet being eligible to receive an annual cash bonus due to his or
her prior position with the Company, then Participant's annual cash bonus for
such fiscal year or years shall be deemed to be an amount equal to the
annualized annual cash bonus that Participant is then eligible to receive for
the Company's fiscal year in effect on the date of termination (which shall be
calculated by annualizing the objective performance milestones based on any
completed fiscal quarters (following Participant's employment with the Company)
in such fiscal year, and by assuming 100% "on target" satisfaction of any
subjective performance milestones or, if no such fiscal quarters have been
completed, then such bonus shall be equal to Participant's target bonus
compensation at the time of the Change of Control). For all Participants who are
sales vice-presidents, "Average Bonus" shall be determined as set forth above by
substituting the words "variable compensation per commission plan" for the word
"bonus."
(iii) Benefits Continuation Period. "Benefits Continuation Period"
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shall mean two and one half years from the date of termination of employment for
the Chief Executive Officer and President, two years from the date of
termination of employment for all other Level I Participants, and one and one-
half years from the date of termination of employment for all Level II
Participants.
(iv) Cause. "Cause" shall mean (i) any act of personal dishonesty
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taken by the Participant in connection with his responsibilities as an Employee
and intended to result in substantial personal enrichment of the Participant,
(ii) the Participant's conviction of a felony, (iii) a willful act by the
Participant which constitutes gross misconduct and which is injurious to the
Company, or (iv) continued substantial violations by the Participant of the
Participant's employment duties which are demonstrably willful and deliberate on
the Participant's part after there has been delivered to the Participant a
written demand for performance from the Company which specifically sets forth
the factual basis for the Company's belief that the Participant has not
substantially performed his duties.
(v) Change of Control. "Change of Control" shall mean the occurrence
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of any of the following events:
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(1) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing fifty percent (50%) or
more of the total voting power represented by the Company's then outstanding
voting securities; or
(2) A change in the composition of the Board occurring within a
two-year period, as a result of which fewer than a majority of the directors are
Incumbent Directors. "Incumbent Directors" shall mean directors who either (A)
are directors of the Company as of the date hereof, or (B) are elected, or
nominated for election, to the Board with the affirmative votes of at least a
majority of the Incumbent Directors at the time of such election or nomination
(but shall not include an individual whose election or nomination is in
connection with an actual or threatened proxy contest relating to the election
of directors to the Company); or
(3) The consummation of a merger or consolidation of the
Company with any other corporation, other than a merger or consolidation which
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) at least fifty
percent (50%) of the total voting power represented by the voting securities of
the Company or such surviving entity outstanding immediately after such merger
or consolidation; or
(iv) the consummation of the sale or disposition by the Company of all
or substantially all the Company's assets.
(vi) Code. "Code" shall mean the Internal Revenue Code of 1986, as
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amended.
(vii) Company. "Company" shall mean Quickturn Design Systems, Inc., any
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subsidiary corporations, any successor entities as provided in Article VIII
hereof, and any parent or subsidiaries of such successor entities.
(viii) Compensation Committee. "Compensation Committee" shall mean the
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compensation committee of the Board.
(ix) Constructive Termination. "Constructive Termination" shall mean
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(i) without the Participant's express written consent, the significant reduction
of the Participant's duties or responsibilities relative to the Participant's
duties or responsibilities in effect immediately prior to such reduction;
provided, however, that a reduction in duties or responsibilities solely by
virtue of the Company being acquired and made part of a larger entity (as, for
example, when the Chief Financial Officer of Quickturn remains as such following
a Change of Control and is not made the Chief Financial Officer of the acquiring
corporation) shall not constitute a "Constructive Termination;" (ii) a reduction
by the Company in the annual base salary or in the maximum dollar amount of
potential annual cash bonuses relative to the annual base salary and maximum
dollar amount of potential annual cash bonuses as in effect immediately prior to
such reduction; (iii) a material reduction by the Company in the kind or level
of employee benefits to which the Participant is entitled immediately prior to
such reduction with the result that the Participant's overall benefits
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package is significantly reduced; (iv) the relocation of the Participant to a
facility or a location more than 35 miles from the Participant's then present
location, without the Participant's express written consent; (v) the failure of
the Company to obtain the assumption of this agreement by any successors
contemplated in Article VIII below, or (vi) any act by the Company which would
constitute "constructive termination" under applicable law.
(x) Disability. "Disability" shall mean that the Participant has
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been unable to perform his duties as an Employee as the result of incapacity due
to physical or mental illness, and such inability, at least 26 weeks after its
commencement, is determined to be total and permanent by a physician selected by
the Company or its insurers and acceptable to the Participant or the
Participant's legal representative (such agreement as to acceptability not to be
unreasonably withheld). Termination resulting from Disability may only be
effected after at least 30 days' written notice by the Company of its intention
to terminate the Participant's employment. In the event that the Participant
resumes the performance of substantially all of his duties hereunder before the
termination of his employment becomes effective, the notice of intent to
terminate shall automatically be deemed to have been revoked.
(xi) Effective Date. "Effective Date" shall mean September 2, 1998.
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(xii) Employee. "Employee" shall mean an individual employed by the
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Company.
(xiii) Level I Participant. "Level I Participant" shall mean the Chief
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Executive Officer and President, the Chief Operating Officer (but only if
designated as such by the Compensation Committee), and all vice-presidents who
report directly to either the Chief Executive Officer and President or the Chief
Operating Officer.
(xiv) Level II Participant. "Level II Participant" shall mean (i)
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the Chief Operating Officer (but only if not designated as a Level I Participant
by the Compensation Committee), (ii) all vice-presidents who do not report
directly to either the Chief Executive Officer and President or the Chief
Operating Officer, and (iii) such other Employees with comparable responsibility
to vice-presidents or above as are recommended by the Chief Executive Officer
and President and approved by the Compensation Committee.
(xv) Participant. "Participant" shall mean an individual who meets the
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eligibility requirements of Article III.
(xvi) Plan. "Plan" shall mean this Quickturn Design Systems, Inc.
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Management Retention Plan.
(xvii) Pro-Rated Bonus Amount. "Pro-Rated Bonus Amount" shall mean a
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Participant's Average Bonus, pro-rated by multiplying such bonus amount by a
fraction, the numerator of which shall be the number of days prior to occurrence
of the Change of Control during such fiscal year, and the denominator of which
shall be three-hundred and sixty-five.
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(xviii) Severance Payment. "Severance Payment" shall mean the
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payment of severance compensation as provided in Article IV hereof.
3.
ELIGIBILITY
Subject to the terms of this Plan, the benefits provided by this Plan shall
be available to (i) the Chief Executive Officer and President, (ii) the Chief
Operating Officer, and (iii) Employees with comparable responsibility to vice-
presidents or above as recommended by the Chief Executive Officer and President
and approved by the Compensation Committee, until this Plan terminates in
accordance with the provisions of Article IX. A Participant shall cease to be a
Participant in the Plan when he or she ceases to be an Employee, unless such
Participant is entitled to benefits hereunder at such time. Notwithstanding the
foregoing, Employees who have tendered their resignation prior to the Change of
Control or who are on probation with the Company immediately prior to a Change
of Control are not eligible to participate in this Plan.
4.
SEVERANCE BENEFITS
(a) Right to Severance Benefits.
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(i) Termination Following A Change of Control. If a
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Participant's employment terminates at any time within twelve months after a
Change of Control, then, subject to Article VI hereof, the Participant shall be
entitled to receive severance benefits as follows:
(1) Severance Pay Upon Involuntary Termination Without
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Cause or Upon Constructive Termination Following a Change of Control. If the
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Participant's employment with the Company terminates as a result of involuntary
termination without Cause or Constructive Termination within twelve months after
a Change of Control, then the Participant shall be entitled to receive a
Severance Payment equal to the sum of:
two hundred and fifty percent (250%) of Annual Compensation, for the Chief
Executive Officer and President only,
two hundred percent (200%) of Annual Compensation, for other Level I
Participants, and
one hundred and fifty percent (150%) of Annual Compensation, for Level II
Participants, plus
if no Pro-Rated Bonus Amount has yet been paid to such Level I or II
Participant pursuant to Article V, the Pro-Rated Bonus Amount.
EXAMPLE: A Change of Control is consummated on June 15, 1999. Quickturn's
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fiscal year is the calendar year. A Level II Participant is involuntarily
terminated other than for Cause on
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July 1, 1999. The Level II Participant's annual base salary on June 14, 1999 is
$120,000. The Participant's Average Bonus is $30,000. Accordingly, the Level II
Participant's Annual Compensation is $150,000. The Level II Participant is
entitled to a Severance Payment equal to (150% x $150,000) plus (ii) (166/365) x
$30,000 = $238,644.
(2) Continued Employee Benefits Upon Involuntary
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Termination Without Cause or Constructive Termination Following a Change of
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Control. If the Participant's employment with the Company terminates as a
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result of involuntary termination without Cause or Constructive Termination
within twelve months after a Change of Control, then the Participant shall
receive health, dental and life insurance coverage at the same level of coverage
as was provided to such Participant immediately prior to the Change of Control,
with the same percentage of the premiums for such insurance coverage paid for by
the Company as was paid for by the Company on behalf of such Participant
immediately prior to the Change of Control (together with the benefits provided
pursuant to the following sentence, the "Company-Paid Coverage"). If such
coverage included the Participant's dependents immediately prior to the Change
of Control, then such dependents shall also be covered under the same terms as
set forth in the preceding sentence. Company-Paid Coverage shall continue until
the earlier of (i) the Benefits Continuation Period, or (ii) the date that the
Participant and his or her covered dependents become covered under another
employer's health, dental and life insurance plans providing comparable benefits
and levels of coverage. For purposes of Title X of the Consolidated Budget
Reconciliation Act of 1985 ("COBRA"), the date of the "qualifying event" for
Participant and his or her covered dependents shall be the date upon which
Company-Paid Coverage terminates. Company-Paid Coverage shall be provided under
either, at the Company's discretion, (i) the Company's plans, or (ii) no less
favorable plans or arrangements secured by the Company.
(3) Voluntary Resignation; Termination For Cause. If the
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Participant's employment terminates by reason of the Participant's voluntary
resignation (and is not a Constructive Termination), or if the Participant is
terminated involuntarily for Cause, then the Participant shall not be entitled
to receive severance benefits except for those (if any) as may then be
established under the Company's then existing severance and benefits plans and
policies at the time of such termination other than under this Plan or as
specified in any individual written agreements by and between the Company and a
Participant.
(4) Disability; Death. If the Company terminates the
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Participant's employment as a result of the Participant's Disability, or such
Participant's employment is terminated due to the death of the Participant, then
the Participant shall not be entitled to receive severance or other benefits
except for those (if any) as may then be established under the Company's then
existing severance and benefits plans and policies or as specified in any
individual written agreements by and between the Company and a Participant at
the time of such Disability or death.
(ii) Termination Apart from Change of Control. In the event that a
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Participant's employment is terminated for any reason, either prior to the
occurrence of a Change of Control or after the twelve-month period following a
Change of Control, then the Participant shall be entitled to receive severance
benefits only as may then be established under the Company's existing severance
and benefit plans and policies at the time of such termination other than this
Plan or as is specified in any individual written agreements by and between the
Company and a Participant.
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(b) Timing of Severance Payments. Any Severance Payment to which a
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Participant is entitled, including the Pro-Rated Bonus Amount Payment, if any,
shall be paid by the Company in a lump sum within ten (10) business days after
the Participant's termination date.
(c) Severance Payment Offset. The amount of any Severance Payment
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otherwise payable hereunder shall be offset by any severance payment required by
law or contractual cash severance payments paid to a Participant. This offset
shall only apply specifically to cash severance pay, and shall not apply to
other amounts due upon termination of employment, such as accrued paid time off
or expense reimbursements.
5.
PRO-RATED BONUS AMOUNT PAYMENTS
(a) Right to Pro-Rated Bonus Amount Payments. If a Participant
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remains employed by the Company through the last day of Quickturn Design
Systems, Inc.'s fiscal year in which a Change of Control occurs, then, subject
to Article VI hereof, the Participant shall be entitled to receive the Pro-Rated
Bonus Amount.
EXAMPLE: Quickturn's fiscal year is the calendar year. A Change of Control
is consummated on June 15, 1999. Participant remains employed with the Company
through December 31, 1999. Participant's Average Bonus is $30,000. The
Participant is entitled to a Pro-Rated Bonus Amount payment equal to (166/365) x
$30,000 = $13,644.
(b) Timing of Pro-Rated Bonus Amount Payments. Any Pro-Rated Bonus
-----------------------------------------
Amount to which a Participant is entitled under this Article V shall be paid by
the Company in a lump sum within ten (10) business days after the last day of
Quickturn Design Systems, Inc.'s fiscal year in which a Change of Control
occurs.
(c) Pro-Rated Bonus Amount Payments In Lieu of Target Bonus Otherwise
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Payable. The payment of any Pro-Rated Bonus Amount under this Article V or
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as part of a Severance Payment under Article IV shall offset any payment to the
Participant under the Company's annual incentive bonus plan for the year in
which a Change of Control occurs, except with respect to any payments under
bonus plans adopted by the Company following a Change of Control.
6.
GOLDEN PARACHUTE EXCISE TAX AND NON-DEDUCTIBILITY LIMITATIONS
(a) Level I Participants. For all Level I Participants, in the
--------------------
event that the benefits provided for in the Plan, when aggregated with any other
payments or benefits received by such Participants, would (i) constitute
"parachute payments" within the meaning of Section 280G of the Code, and (ii)
would be subject to the excise tax imposed by Section 4999 of the Code (the
"Excise Tax"), then their Plan benefits shall be either
(i) delivered in full, or
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(ii) delivered as to such lesser extent which would result in no
portion of such benefits being subject to the Excise Tax,
whichever of the foregoing amounts, taking into account the applicable
federal, state and local income taxes and the Excise Tax, results in the receipt
by such Participant on an after-tax basis, of the greatest amount of benefits,
notwithstanding that all or some portion of such benefits may be taxable under
Section 4999 of the Code. Unless the Company and the Participant otherwise
agree in writing, any determination required under this VI shall be made in
writing by the same firm of independent public accountants who were employed by
the Company immediately prior to the Change of Control (the "Accountants") whose
determination shall be conclusive and binding upon the Participant and the
Company for all purposes. For purposes of making the calculations required by
this VI, the Accountants may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of Sections 280G and 4999 of the
Code. The Company and the Participant shall furnish to the Accountants such
information and documents as the Accountants may reasonably request in order to
make a determination under this VI.
(b) Level II Participants. For all Level II Participants, in the
---------------------
event that the benefits under this Plan, when aggregated with any other payments
or benefits received by a Participant, would (i) constitute "parachute payments"
within the meaning of Section 280G of the Code and (ii) but for this Article VI,
would be subject to the excise tax imposed by Section 4999 of the Code, then the
Participant's Plan benefits shall be reduced to such lesser amount or degree as
would result in no portion of such benefits being subject to excise tax under
Section 4999 of the Code. Unless the Company and the Participant otherwise agree
in writing, any determination required under this Article VI shall be made in
writing by the Accountants, whose determination shall be conclusive and binding
upon the Participant and the Company for all purposes. For purposes of making
the calculations required by this Article VI, the Accountants may make
reasonable assumptions and approximations concerning applicable taxes and may
rely on reasonable, good faith interpretations concerning the application of
Sections 280G and 4999 of the Code. The Company and the Participant shall
furnish to the Accountants such information and documents as the Accountants may
reasonably request in order to make a determination under this Article VI.
3.Costs. The Company shall bear all costs the Accountants incur in
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connection with any calculations contemplated by this VI.
7.
EMPLOYMENT STATUS; WITHHOLDING
(a) Employment Status. This Plan does not constitute a contract of
-----------------
employment or impose on the Participant or the Company any obligation to retain
the Participant as an Employee, to change the status of the Participant's
employment, or to change the Company's policies regarding termination of
employment. The Participant's employment is and shall continue to be at-will, as
defined under applicable law. If the Participant's employment with the Company
or a successor entity terminates for any reason, including (without limitation)
any termination prior to a Change of Control, the Participant shall not be
entitled to any payments, benefits, damages, awards or
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compensation other than as provided by this Plan, or as may otherwise be
available in accordance with the Company's established employee plans and
practices or other written agreements with the Company at the time of
termination.
(b) Taxation of Plan Payments. All amounts paid pursuant to this
-------------------------
Plan shall be subject to regular payroll and withholding taxes.
8.
SUCCESSORS TO COMPANY AND PARTICIPANTS
(a) Company's Successors. Any successor to the Company (whether
--------------------
direct or indirect and whether by purchase, lease, merger, consolidation,
liquidation or otherwise) to all or substantially all of the Company's business
and/or assets shall assume the obligations under this Plan and agree expressly
to perform the obligations under this Plan by executing a written agreement. For
all purposes under this Plan, the term "Company" shall include any successor to
the Company's business and/or assets which executes and delivers the assumption
agreement described in this subsection or which becomes bound by the terms of
this Plan by operation of law.
(b) Participant's Successors. All rights of the Participant
------------------------
hereunder shall inure to the benefit of, and be enforceable by, the
Participant's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
9.
DURATION, AMENDMENT AND TERMINATION
(a) Duration. This Plan shall terminate on September 2, 1999 unless
--------
(i) extended by the Board, or (ii) a Change of Control occurs prior to September
2, 1999. If a Change of Control occurs prior to September 2, 1999, then this
Plan shall terminate upon the later of (i) the date that all obligations of the
Company or successor entities hereunder have been satisfied, or (ii) twelve (12)
months after a Change of Control, unless sooner terminated as provided in this
Article. A termination of this Plan pursuant to the preceding sentences shall be
effective for all purposes, except that such termination shall not affect the
payment or provision of compensation or benefits earned by a Participant prior
to the termination of this Plan.
(b) Amendment or Termination. Except with respect to amendments that
------------------------
are not adverse to Participants, the Plan is not subject to any amendment,
change, substitution, deletion, revocation or termination in any respect
whatsoever prior to the Plan's expiration.
10.
NOTICE
(a) General. Notices and all other communications contemplated by
-------
this Plan shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. In the case of the Participant, mailed
notices shall be addressed to him or her at the home address which he or
-9-
<PAGE>
she most recently communicated to the Company in writing. In the case of the
Company, mailed notices shall be addressed to its corporate headquarters, and
all notices shall be directed to the attention of its General Counsel.
(b) Notice of Termination by the Company. Any termination by the
------------------------------------
Company of the Participant's employment with the Company at any time within
twelve (12) months following a Change of Control shall be communicated by a
notice of termination to the Participant at least five (5) days prior to the
date of such termination (or at least thirty (30) days prior to the date of a
termination by reason of the Participant's Disability). Such notice shall
indicate the specific termination provision or provisions in this Plan relied
upon (if any), shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination under the provision or provisions so
indicated, and shall specify the termination date.
(c) Notice by the Participant of Constructive Termination by the
------------------------------------------------------------
Company. In the event that the Participant determines that an Constructive
- --------
Termination has occurred at any time within twelve (12) months following a
Change of Control, the Participant shall give written notice that such
Constructive Termination has occurred. Such notice shall be delivered by the
Participant to the Company within ninety (90) days following the date on which
such Constructive Termination occurred, shall indicate the specific provision or
provisions in this Plan upon which the Participant relied to make such
determination and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for such determination. The failure by
the Participant to include in the notice any fact or circumstance which
contributes to a showing of Constructive Termination shall not waive any right
of the Participant hereunder or preclude the Participant from asserting such
fact or circumstance in enforcing his or her rights hereunder.
11.
MISCELLANEOUS PROVISIONS
(a) No Duty to Mitigate. Other than offsets specifically provided
-------------------
for herein, the Participant shall not be required to mitigate the amount of any
payment contemplated by this Plan, nor shall any such payment be reduced by any
earnings that the Participant may receive from any other source.
(b) Severability. The invalidity or unenforceability of any
------------
provision or provisions of this Plan shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
and effect.
(c) No Assignment of Benefits. The rights of any person to payments or
-------------------------
benefits under this Plan shall not be made subject to option or assignment,
either by voluntary or involuntary assignment or by operation of law, including
(without limitation) bankruptcy, garnishment, attachment or other creditor's
process, and any action in violation of this subsection shall be void.
(d) Assignment by Company. The Company may assign its rights under
---------------------
this Plan to an affiliate, and an affiliate may assign its rights under this
Plan to another affiliate of the Company or to the Company; provided, however,
that no assignment shall be made if the net worth of the assignee is less than
the net worth of the Company at the time of assignment; provided, further, that
the Company shall guarantee all benefits payable hereunder. In the case of any
such
-10-
<PAGE>
assignment, the term "Company" when used in this Plan shall mean the corporation
that actually employs the Participant.
-11-
<PAGE>
EXHIBIT 20
QUICKTURN DESIGN SYSTEMS, INC.
EMPLOYEE RETENTION PLAN
Introduction
It is expected that Quickturn Design Systems, Inc. (the "Company") from
time to time will consider the possibility of an acquisition by another company
or other change of control. The Board of Directors of the Company (the "Board")
recognizes that such consideration can be a distraction to employees and can
cause such employees to consider alternative employment opportunities. The
Board has determined that it is in the best interests of the Company and its
stockholders to assure that the Company will have the continued dedication and
objectivity of these employees, notwithstanding the possibility, threat or
occurrence of a Change of Control (as defined below) of the Company.
The Board believes that it is in the best interests of the Company and
its stockholders to provide these employees with an incentive to continue their
employment and to motivate these employees to maximize the value of the Company
upon a Change of Control for the benefit of its stockholders.
The Board believes that it is imperative to provide these employees with
certain severance benefits upon termination of employment following a Change of
Control. These benefits provide these employees with enhanced financial
security and provide efficient incentive and encouragement to these employees to
remain with the Company notwithstanding the possibility or occurrence of a
Change of Control.
Accordingly, the following plan has been developed and adopted.
1.
ESTABLISHMENT OF PLAN
(a) Establishment of Plan. As of the Effective Date, the Company
---------------------
hereby establishes a retention plan to be known as the "Employee Retention Plan"
(the "Plan"), as set forth in this document. The purposes of the Plan are as set
forth in the Introduction.
(b) Contractual Right to Benefits. Subject to the terms of this
-----------------------------
Plan, this Plan establishes and vests in each Participant a contractual right to
the benefits to which he or she is entitled pursuant to the terms thereof,
enforceable by the Participant against the Company.
2.
DEFINITIONS AND CONSTRUCTION
(a) Definitions. Whenever used in the Plan, the following terms
-----------
shall have the meanings set forth below and, when the meaning is intended, the
initial letter of the term is capitalized.
<PAGE>
(i) Base Salary. "Base Salary" shall mean the
-----------
Participant's Company annual base salary as in effect immediately preceding the
Change of Control, plus, for Employees subject to commission plans only, 100% of
their annual variable compensation per their commission plan at quota as in
effect immediately preceding the Change of Control.
(ii) Cause. "Cause" shall mean (i) any act of personal
-----
dishonesty taken by the Participant in connection with his responsibilities as
an Employee and intended to result in substantial personal enrichment of the
Participant, (ii) the Participant's conviction of a felony, (iii) a willful act
by the Participant which constitutes gross misconduct and which is injurious to
the Company, or (iv) continued substantial violations by the Participant of the
Participant's employment duties which are demonstrably willful and deliberate on
the Participant's part after there has been delivered to the Participant a
written demand for performance from the Company which specifically sets forth
the factual basis for the Company's belief that the Participant has not
substantially performed his duties.
(iii) Change of Control. "Change of Control" shall mean
-----------------
the occurrence of any of the following events:
(1) Any "person" (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended)
becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of the Company representing fifty percent
(50%) or more of the total voting power represented by the Company's then
outstanding voting securities; or
(2) A change in the composition of the Board
occurring within a two-year period, as a result of which fewer than a majority
of the directors are Incumbent Directors. "Incumbent Directors" shall mean
directors who either (A) are directors of the Company as of the date hereof, or
(B) are elected, or nominated for election, to the Board with the affirmative
votes of at least a majority of the Incumbent Directors at the time of such
election or nomination (but shall not include an individual whose election or
nomination is in connection with an actual or threatened proxy contest relating
to the election of directors to the Company); or
(3) The consummation of a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation; or
(iv) the consummation of the sale or disposition by the Company of all
or substantially all the Company's assets.
(iv) Code. "Code" shall mean the Internal Revenue Code
----
of 1986, as amended.
-2-
<PAGE>
(v) Company. "Company" shall mean Quickturn Design
-------
Systems, Inc., any subsidiary corporations, any successor entities as provided
in Article VIII hereof, and any parent or subsidiaries of such successor
entities.
(vi) Disability. "Disability" shall mean that the
----------
Participant has been unable to perform his duties as an Employee as the result
of incapacity due to physical or mental illness, and such inability, at least 26
weeks after its commencement, is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to the
Participant or the Participant's legal representative (such agreement as to
acceptability not to be unreasonably withheld). Termination resulting from
Disability may only be effected after at least 30 days' written notice by the
Company of its intention to terminate the Participant's employment. In the event
that the Participant resumes the performance of substantially all of his duties
hereunder before the termination of his employment becomes effective, the notice
of intent to terminate shall automatically be deemed to have been revoked.
(vii) Effective Date. "Effective Date" shall mean
--------------
September 2, 1998.
(viii) Employee. "Employee" shall mean an individual
--------
employed by the Company.
(ix) Key Contributor. "Key Contributor" shall mean an
---------------
Employee designated by the Chief Executive Officer and President who is not a
participant in the Management Retention Plan. Key Contributors shall be limited
to approximately ten percent of all Employees.
(x) Participant. "Participant" shall mean an individual
-----------
who meets the eligibility requirements of Article III.
(xi) Plan. "Plan" shall mean this Quickturn Design
----
Systems, Inc. Employee Retention Plan.
(xii) Severance Payment. "Severance Payment" shall mean
-----------------
the payment of severance compensation as provided in Article IV hereof.
3.
ELIGIBILITY
Subject to the terms of this Plan, the benefits provided by this Plan
shall be available to all Employees who are not participants in the Management
Retention Plan until this Plan terminates in accordance with the provisions of
Article IX. A Participant shall cease to be a Participant in the Plan when he or
she ceases to be an Employee, unless such Participant is entitled to benefits
hereunder at such time. Notwithstanding the foregoing, Employees who have
tendered their resignation prior to the Change of Control or who are on
probation with the Company immediately prior to a Change of Control are not
eligible to participate in this Plan.
4.
-3-
<PAGE>
SEVERANCE BENEFITS
(a) Right to Severance Benefits.
---------------------------
(i) Termination Following A Change of Control. If a
-----------------------------------------
Participant's employment terminates at any time within twelve months after a
Change of Control, then, subject to Article VI hereof, the Participant shall be
entitled to receive severance benefits as follows:
(1) Severance Pay Upon Involuntary Termination
------------------------------------------
Without Cause Following a Change of Control. If the Participant's employment
- -------------------------------------------
with the Company terminates as a result of involuntary termination without Cause
within twelve months after a Change of Control, then the Participant shall be
entitled to receive a Severance Payment equal to the sum of two weeks of Base
Salary for each full year of completed service with the Company, with a minimum
payout of three months of Base Salary (increased to six months of Base Salary
for Employees with a job title of Director and for Key Contributors).
(2) Voluntary Resignation; Termination For
--------------------------------------
Cause. If the Participant's employment terminates by reason of the Participant's
- -----
voluntary resignation , or if the Participant is terminated involuntarily for
Cause, then the Participant shall not be entitled to receive severance benefits
except for those (if any) as may then be established under the Company's then
existing severance and benefits plans and policies at the time of such
termination other than under this Plan.
(3) Disability; Death. If the Company terminates
-----------------
the Participant's employment as a result of the Participant's Disability, or
such Participant's employment is terminated due to the death of the Participant,
then the Participant shall not be entitled to receive severance or other
benefits except for those (if any) as may then be established under the
Company's then existing severance and benefits plans and policies.
(ii) Termination Apart from Change of Control. In the
----------------------------------------
event that a Participant's employment is terminated for any reason, either prior
to the occurrence of a Change of Control or after the twelve-month period
following a Change of Control, then the Participant shall be entitled to receive
severance benefits only as may then be established under the Company's existing
severance and benefit plans and policies at the time of such termination other
than this Plan.
(b) Timing of Severance Payments. Any Severance Payment to which
----------------------------
a Participant is entitled shall be paid by the Company in a lump sum within ten
(10) business days after the Participant's termination date.
(c) Severance Payment Offset. The amount of any Severance
------------------------
Payment otherwise payable hereunder shall be offset by any severance payment
required by law or contractual cash severance payments paid to a Participant.
This offset shall only apply specifically to cash severance pay, and shall not
apply to other amounts due upon termination of employment, such as accrued paid
time off or expense reimbursements.
5.
-4-
<PAGE>
GOLDEN PARACHUTE EXCISE TAX AND NON-DEDUCTIBILITY LIMITATIONS
In the event that the benefits under this Plan, when aggregated with any
other payments or benefits received by a Participant, would (i) constitute
"parachute payments" within the meaning of Section 280G of the Code and (ii) but
for this Article V, would be subject to the excise tax imposed by Section 4999
of the Code, then the Participant's Plan benefits shall be reduced to such
lesser amount or degree as would result in no portion of such benefits being
subject to excise tax under Section 4999 of the Code. Unless the Company and
the Participant otherwise agree in writing, any determination required under
this Article V shall be made in writing by the same firm of independent public
accountants who were employed by the Company immediately prior to the Change of
Control (the "Accountants"), whose determination shall be conclusive and binding
upon the Participant and the Company for all purposes. For purposes of making
the calculations required by this Article V, the Accountants may make reasonable
assumptions and approximations concerning applicable taxes and may rely on
reasonable, good faith interpretations concerning the application of Sections
280G and 4999 of the Code. The Company and the Participant shall furnish to the
Accountants such information and documents as the Accountants may reasonably
request in order to make a determination under this Article V. The Company
shall bear all costs the Accountants incur in connection with any calculations
contemplated by this Article V.
6.
EMPLOYMENT STATUS; WITHHOLDING
(a) Employment Status. This Plan does not constitute a contract
-----------------
of employment or impose on the Participant or the Company any obligation to
retain the Participant as an Employee, to change the status of the Participant's
employment, or to change the Company's policies regarding termination of
employment. The Participant's employment is and shall continue to be at-will, as
defined under applicable law. If the Participant's employment with the Company
or a successor entity terminates for any reason, including (without limitation)
any termination prior to a Change of Control, the Participant shall not be
entitled to any payments, benefits, damages, awards or compensation other than
as provided by this Plan, or as may otherwise be available in accordance with
the Company's established employee plans and practices at the time of
termination.
(b) Taxation of Plan Payments. All amounts paid pursuant to this
-------------------------
Plan shall be subject to regular payroll and withholding taxes.
7.
SUCCESSORS TO COMPANY AND PARTICIPANTS
(a) Company's Successors. Any successor to the Company (whether
--------------------
direct or indirect and whether by purchase, lease, merger, consolidation,
liquidation or otherwise) to all or substantially all of the Company's business
and/or assets shall assume the obligations under this Plan and agree expressly
to perform the obligations under this Plan. For all purposes under this Plan,
the term "Company" shall include any successor to the Company's business and/or
assets which executes
-5-
<PAGE>
and delivers the assumption agreement described in this subsection or which
becomes bound by the terms of this Plan by operation of law.
(b) Participant's Successors. All rights of the Participant
------------------------
hereunder shall inure to the benefit of, and be enforceable by, the
Participant's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
8.
DURATION, AMENDMENT AND TERMINATION
(a) Duration. This Plan shall terminate on September 2, 1999
--------
unless (i) extended by the Board, or (ii) a Change of Control occurs prior to
September 2, 1999. If a Change of Control occurs prior to September 2, 1999,
then this Plan shall terminate upon the later of (i) the date that all
obligations of the Company or successor entities hereunder have been satisfied,
or (ii) twelve (12) months after a Change of Control, unless sooner terminated
as provided in this Article. A termination of this Plan pursuant to the
preceding sentences shall be effective for all purposes, except that such
termination shall not affect the payment or provision of compensation or
benefits earned by a Participant prior to the termination of this Plan.
(b) Amendment or Termination. Except with respect to amendments
------------------------
that are not adverse to Participants, the Plan is not subject to any amendment,
change, substitution, deletion, revocation or termination in any respect
whatsoever prior to the Plan's expiration.
9.
NOTICE
(a) General. Notices and all other communications contemplated
-------
by this Plan shall be in writing and shall be deemed to have been duly given
when personally delivered or when mailed by U.S. registered or certified mail,
return receipt requested and postage prepaid. In the case of the Participant,
mailed notices shall be addressed to him or her at the home address which he or
she most recently communicated to the Company in writing. In the case of the
Company, mailed notices shall be addressed to its corporate headquarters, and
all notices shall be directed to the attention of its Chief Financial Officer.
(b) Notice of Termination by the Company. Any termination by the
------------------------------------
Company of the Participant's employment with the Company at any time within
twelve (12) months following a Change of Control shall be communicated by a
notice of termination to the Participant at least five (5) days prior to the
date of such termination (or at least thirty (30) days prior to the date of a
termination by reason of the Participant's Disability). Such notice shall
indicate the specific termination provision or provisions in this Plan relied
upon (if any), shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination under the provision or provisions so
indicated, and shall specify the termination date.
10.
MISCELLANEOUS PROVISIONS
-6-
<PAGE>
(a) No Duty to Mitigate. Other than offsets specifically
-------------------
provided for herein, the Participant shall not be required to mitigate the
amount of any payment contemplated by this Plan, nor shall any such payment be
reduced by any earnings that the Participant may receive from any other source.
(b) Severability. The invalidity or unenforceability of any
------------
provision or provisions of this Plan shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
and effect.
(c) No Assignment of Benefits. The rights of any person to
-------------------------
payments or benefits under this Plan shall not be made subject to option or
assignment, either by voluntary or involuntary assignment or by operation of
law, including (without limitation) bankruptcy, garnishment, attachment or other
creditor's process, and any action in violation of this subsection shall be
void.
(d) Assignment by Company. The Company may assign its rights
---------------------
under this Plan to an affiliate, and an affiliate may assign its rights under
this Plan to another affiliate of the Company or to the Company; provided,
however, that no assignment shall be made if the net worth of the assignee is
less than the net worth of the Company at the time of assignment; provided,
further, that the Company shall guarantee all benefits payable hereunder. In the
case of any such assignment, the term "Company" when used in this Plan shall
mean the corporation that actually employs the Participant.
-7-
<PAGE>
EXHIBIT 21
QUICKTURN ANNOUNCES EMPLOYEE PROTECTION PROGRAM
As you know, Quickturn's Board of Directors recently recommended to its
stockholders not to accept Mentor Graphics' unsolicited offer to buy Quickturn.
However, the fact that there is a hostile offer on the table may cause some
uncertainty with respect to the future prospects of Quickturn and our employees.
This is why your Board has taken actions designated to mitigate the uncertainty
caused by Mentor's hostile offer for the Company. This Board decision is
designed to protect Quickturn's most important resource --- our people.
Your Board has instituted an Employee Protection Program that will protect our
employees in the event there is both a change of control of the Company and you
---- ---
lose your job within a year following that change. Under those circumstances,
the Employee Protection Program will provide a minimum of three months of pay
for the affected employees. The Program will cover current employees as well as
future employees and is effective immediately for a change of control occurring
during the next year. If no change of control occurs and as a result no jobs
are eliminated, this Program is not activated. The Program provides six months
pay for affected employees at the director level as well as for certain key
employees and additional pay for officers.
For certain international employees, their local governments may provide
calculated severance amounts for affected employees. The amount under this
Employee Protection Program will be offset by any statutory amounts directed by
local governments or required by contract.
The next employee meeting is scheduled for 11:30 a.m., California time on
Thursday, September 10, 1998. you can ask any questions you might have
regarding this Program at the meeting.
<PAGE>
[LETTERHEAD OF QUICKTURN DESIGN SYSTEMS, INC. APPEARS HERE]
CONTACTS:
QUICKTURN DESIGN SYSTEMS, INC. ABERNATHY MACGREGOR FRANK
Joan Powell Pauline Yoshihashi / Matt Sherman
Director, Marketing Communications (213) 630-6550 / (212) 371-5999
(408) 914-6701
[email protected]
FOR IMMEDIATE RELEASE
QUICKTURN RESPONDS TO MENTOR GRAPHICS' EXTENSION OF ITS
UNSOLICITED TENDER OFFER
SAN JOSE, CALIF. (September 10, 1998) - Quickturn Design Systems, Inc.
(Nasdaq:QKTN) today responded to Mentor Graphics Corporation's (Nasdaq:MENT)
extension of its tender offer, which was scheduled to expire September 9, 1998,
but was extended by Mentor without its purchasing any shares tendered. Mentor
continues to own only 591,500 shares of Quickturn stock.
Keith R. Lobo, president and chief executive officer of Quickturn Design
Systems, Inc., said, "It is clear that a majority of Quickturn's stockholders do
not support Mentor's inadequate offer. Quickturn is the acknowledged emulation
technology and implementation leader in the design verification business and
Mentor is trying to acquire an industry leader at a bargain price. We continue
to urge Quickturn stockholders not to tender their shares.
"Mentor understands the forces that will drive demand for our premier
products as the industry transitions to deep submicron design with increasing
chip complexity. With the validity of our patents having been upheld in the
courts, Mentor understands the scarcity value of Quickturn's position in the
industry. We have the patents, we have the customers, we have the R&D, and we
have the people. Others have tried to beat us; they've failed. We believe
Quickturn stockholders will find the superior potential of this Company amply
demonstrated in 1999 and 2000," Mr. Lobo concluded.
- more -
<PAGE>
- 2 -
On August 24, 1998, the Quickturn board of directors rejected Mentor's
unsolicited tender offer. The board determined that the Mentor offer is
inadequate, does not reflect the inherent value of the Company, and is not in
the best interests of Quickturn or its stockholders. The Quickturn board
continues to recommend Quickturn stockholders not tender their shares to Mentor
pursuant to its offer.
Quickturn also noted that hearing dates have been set in various lawsuits
relating to Mentor's tender offer. The federal district court in Delaware set
an October 6, 1998 hearing date on cross-motions for preliminary injunction,
including Quickturn's request for injunctive relief based on a claim that
Mentor's tender offer and proxy solicitation materials violate the federal
securities laws. The Delaware Chancery Court scheduled an October 7, 1998
hearing on Quickturn's anticipated motion for summary judgment, which would
dispose of Mentor's challenge to certain provisions in Quickturn's Bylaws and
Preferred Shares Rights Agreement. If summary judgment is not granted, a trial
in Delaware Chancery Court is scheduled for the week of October 19, 1998.
Quickturn Design Systems, Inc. is the leading provider of verification
products and time-to-market engineering (TtME(TM)) services for the design of
complex ICs and electronic systems. The company's products are used worldwide
by developers of high-performance computing, multimedia, graphics and
communications systems. Quickturn is headquartered at 55 W. Trimble Road, San
Jose, CA 95131-1013; Telephone: 408/914-6000. For more information, visit the
Quickturn Web site at www.quickturn.com or send e-mail to [email protected].
# # #
