-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NyxZ7Qg3ltw+JEEn8YiHUDl8Ng+AWULxecjtBhYQz78YTUXYr5x8DImOxPHbjfwl QjzMFFCkao7rogyRWMyg0g== 0001047469-99-024616.txt : 19990621 0001047469-99-024616.hdr.sgml : 19990621 ACCESSION NUMBER: 0001047469-99-024616 CONFORMED SUBMISSION TYPE: SC 14D1 PUBLIC DOCUMENT COUNT: 12 FILED AS OF DATE: 19990618 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: ORCAD INC CENTRAL INDEX KEY: 0000881411 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-COMPUTER & PERIPHERAL EQUIPMENT & SOFTWARE [5045] IRS NUMBER: 931062832 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 SEC ACT: SEC FILE NUMBER: 005-48801 FILM NUMBER: 99648674 BUSINESS ADDRESS: STREET 1: 9300 SW NIMBUS AVE CITY: BEAVERTON STATE: OR ZIP: 97008 BUSINESS PHONE: 5036719500 MAIL ADDRESS: STREET 1: 9300 SW NIMBUS AVE CITY: BEAVERTON STATE: OR ZIP: 97008 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: CADENCE DESIGN SYSTEMS INC CENTRAL INDEX KEY: 0000813672 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 770148231 STATE OF INCORPORATION: DE FISCAL YEAR END: 0102 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: 2655 SEELY ROAD BLDG 5 CITY: SAN JOSE STATE: CA ZIP: 95134 BUSINESS PHONE: 4089431234 MAIL ADDRESS: STREET 1: 555 RIVER OAKS PARKWAY CITY: SAN JOSE STATE: CA ZIP: 95134 FORMER COMPANY: FORMER CONFORMED NAME: ECAD INC /DE/ DATE OF NAME CHANGE: 19880609 SC 14D1 1 SC 14D1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ SCHEDULE 14D-1 TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 ORCAD, INC. (Name of Subject Company) CADENCE DESIGN SYSTEMS, INC. CDSI ACQUISITION CORPORATION (Bidders) COMMON STOCK, $.01 PAR VALUE (Title of Class of Securities) 685568 10 7 (CUSIP Number of class of Securities) ------------------------ R.L. SMITH MCKEITHEN SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY CADENCE DESIGN SYSTEMS, INC. 2655 SEELY AVENUE, BUILDING 5 SAN JOSE, CALIFORNIA 95134 408-943-1234 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Bidder) COPIES TO: ANDREW E. BOGEN GIBSON, DUNN & CRUTCHER LLP 333 SOUTH GRAND AVENUE LOS ANGELES, CA 90071 (213) 229-7159 CALCULATION OF FILING FEE
TRANSACTION VALUATION AMOUNT OF FILING FEE $121,177,095* $24,235
* For purposes of fee calculation only. The total transaction value is based on 9,321,315 shares of common stock (the "Shares"), outstanding as of June 14, 1999 multiplied by the offer price of $13.00 per Share. The amount of the filing fee calculated in accordance with Regulation 240.0-11 of the Securities Exchange Act of 1934 equals 1/50 of 1% of the value of the Shares to be purchased. / / CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY RULES 0-11(A)(2) AND IDENTIFY THE FILING WITH WHICH THE OFFSETTING FEE WAS PREVIOUSLY PAID. IDENTIFY THE PREVIOUS FILING BY REGISTRATION STATEMENT NUMBER, OR THE FORM OR SCHEDULE AND THE DATE OF ITS FILING. Amount previously paid: None Filing party: Not Applicable Form or registration no.: Not Applicable Date filed: Not Applicable
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CUSIP NO. 685568 10 7 14D-1 Page 2 of 8 Pages - -------------------------------------------------------------------------------- 1. NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Cadence Design Systems, Inc. - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / / (b) / / - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS: WC, BK - -------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(e) OR 2(f) / / - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,621,399 Shares(1) - -------------------------------------------------------------------------------- 8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES / / - -------------------------------------------------------------------------------- 9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) 38.85%(1) - -------------------------------------------------------------------------------- 10. TYPE OF REPORTING PERSON CO - -------------------------------------------------------------------------------- (1) Cadence Design Systems, Inc. ("Cadence") does not directly own any Shares. The 3,621,399 Shares are comprised of the following: (a) 1,758,068 Shares in the aggregate which are the subject of the Stockholders Agreement dated June 14, 1999 (the "Stockholders Agreement") which Cadence and CDSI Acquisition Corporation ("Purchaser") have entered into with the following stockholders of the Company: Wolfram H. Blume, David Nierenberg, The D3 Family Fund, L.P. and Michael F. Bosworth (the "Tendering Stockholders"). Pursuant to the Stockholders Agreement, upon the terms and subject to the conditions therein, each Tendering Stockholder has agreed to tender to Purchaser all Shares beneficially owned by such Tendering Stockholder, has granted to Purchaser an option to purchase such Shares under certain specified circumstances, has agreed to vote such Shares in favor of approval of the Merger Agreement and the transactions contemplated thereby and has granted an irrevocable proxy to Purchaser with respect to such Shares. As a result, Cadence holds voting power with respect to such shares. (b) 1,863,331 Shares are the subject of a Stock Option Agreement between Cadence, the Purchaser and the Company pursuant to which Cadence has the option to purchase up to 1,863,331 shares of Company Common Stock at an exercise price of $13.00 per share under certain specified circumstances. Although not presently exercisable, such option is exercisable upon a termination of the Merger Agreement in a manner that would entitle Cadence to receive the Termination Fee (as defined in the Merger Agreement). CUSIP NO. 685568 10 7 14D-1 Page 3 of 8 Pages - -------------------------------------------------------------------------------- 1. NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) CDSI Acquisition Corporation - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / / (b) / / - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS: AF - -------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(e) OR 2(f) / / - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,621,399 Shares(2) - -------------------------------------------------------------------------------- 8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES / / - -------------------------------------------------------------------------------- 9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) 38.85%(2) - -------------------------------------------------------------------------------- 10. TYPE OF REPORTING PERSON CO - -------------------------------------------------------------------------------- (2) Purchaser does not directly own any Shares. As set forth in footnote 1 above, the 3,621,399 Shares are the subject of the Stockholders Agreement and the Stock Option Agreement. INTRODUCTION This Tender Offer Statement on Schedule 14D-1 (this "Statement") relates to the offer by CDSI Acquisition Corporation, a Delaware corporation ("Purchaser"), and a wholly-owned subsidiary of Cadence Design Systems, Inc., a Delaware corporation ("Cadence"), to purchase all outstanding shares of common stock, $.01 par value (the "Shares"), of OrCAD, Inc., a Delaware corporation (the "Company"), at a price of $13.00 per Share, net to Seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated June 18, 1999 (the "Offer to Purchase"), and the related Letter of Transmittal (which together constitute the "Offer"), copies of which are attached hereto as Exhibits (a)(1) and (a)(2), respectively. The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of June 14, 1999, by and among Cadence, Purchaser and the Company (the "Merger Agreement"), which provides, among other things, that no later than the second business day after the satisfaction or, if permissible, waiver of the conditions set forth therein (including, without limitation, the purchase of Shares pursuant to the Offer), Purchaser will be merged with and into the Company (the "Merger"). The Company will be the surviving corporation and a wholly-owned subsidiary of Cadence upon completion of the Merger. Upon consummation of the Merger, each issued Share that is outstanding immediately prior to the Merger (except for (i) Shares owned by the Company or Cadence, or by any subsidiary of the Company or Cadence or (ii) Shares held by a stockholder who has demanded and perfected such stockholder's demand for appraisal of such stockholder's Shares in accordance with the Delaware General Corporation Law) will be converted automatically into the right to receive the amount paid per Share in the Offer, in cash, without interest, upon surrender of the certificate representing the Share. The information contained in this Statement concerning the Company, including, without limitation, information concerning the deliberations, approvals and recommendations of the Board of Directors of the Company in connection with the transaction, the opinion of the financial advisor to such Board of Directors, and the Company's capital structure and financial information, was supplied by the Company. Neither Purchaser nor Cadence takes any responsibility for the accuracy of such information. ITEM 1. ISSUER AND CLASS OF SECURITY SUBJECT TO THE TRANSACTION (a) The name of the subject company is OrCAD, Inc., which is a Delaware corporation that has its principal executive offices at 9300 S.W. Nimbus Avenue, Beaverton, Oregon, 97008. (b) The class of equity securities being sought is the Company's common stock. The information set forth in the Offer to Purchase under the caption "INTRODUCTION" is incorporated herein by reference. (c) The information concerning the principal market in which the Shares are traded and certain high and low sales prices for the Shares in such principal market set forth in the Offer to Purchase under the caption "THE TENDER OFFER--6. Price Range of the Shares" is incorporated herein by reference. ITEM 2. IDENTITY AND BACKGROUND (a)--(d) and (g) This Statement is filed by Purchaser and Cadence. The information concerning the name, state or other place of organization, principal business and address of the principal office of Purchaser and Cadence, and the name, age, business address, present principal occupation or employment (including the name, principal business and address of any corporation or other organization in which such employment or occupation is conducted), material occupations, positions, offices or employment during the last five years and citizenship of each of the executive officers and directors of Purchaser and Cadence is set forth in the Offer to Purchase under the captions 4 "INTRODUCTION" and "THE TENDER OFFER--8. Certain Information Concerning Cadence and Purchaser," and in Schedule I to the Offer to Purchase, is incorporated herein by reference. (e) and (f) During the last five years, neither Purchaser, Cadence, nor, to the knowledge of Purchaser or Cadence, any person listed in Schedule I to the Offer to Purchase has been (i) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting activities subject to, federal or state securities laws or finding any violations of such laws. ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS (a) The information set forth in the Offer to Purchase under the captions "INTRODUCTION," "THE TENDER OFFER--8. Certain Information Concerning Cadence and Purchaser," and "THE TENDER OFFER--10. Certain Transactions between Cadence and the Company" is incorporated herein by reference. (b) The information set forth in the Offer to Purchase under the captions "INTRODUCTION," "THE TENDER OFFER--8. Certain Information Concerning Cadence and Purchaser," "THE TENDER OFFER--10. Certain Transactions between Cadence and the Company," and "THE TENDER OFFER--11. Contacts with the Company; Background of the Offer and the Merger" is incorporated herein by reference. ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION (a) and (b) The information set forth in the Offer to Purchase under the caption "THE TENDER OFFER--9. Source and Amount of Funds" is incorporated herein by reference. (c) Not applicable. ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSAL OF THE BIDDER (a)--(e) The information set forth in the Offer to Purchase under the captions "INTRODUCTION," "THE TENDER OFFER--12. Purpose of the Offer and The Merger Agreement" and "THE TENDER OFFER--13. The Merger Agreement, the Stock Option Agreement and the Stockholders Agreement" is incorporated herein by reference. (f) and (g) The information set forth in the Offer to Purchase under the caption "THE TENDER OFFER--17. Effects of the Offer on the Market for Shares; Nasdaq National Market and Exchange Act Registration" is incorporated herein by reference. ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY (a) and (b) The information set forth in the Offer to Purchase under the captions "THE TENDER OFFER--10. Certain Transactions Between Cadence and the Company," "THE TENDER OFFER--12. Purpose of the Offer and The Merger Agreement" and "THE TENDER OFFER-- 13. The Merger Agreement, the Stock Option Agreement and the Stockholders Agreement" is incorporated herein by reference. ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO THE SUBJECT COMPANY'S SECURITIES The information set forth in the Offer to Purchase under the captions "THE TENDER OFFER-- 10. Certain Transactions Between Cadence and the Company," "THE TENDER OFFER--12. Purpose 5 of the Offer and The Merger Agreement" and "THE TENDER OFFER--13. The Merger Agreement, the Stock Option Agreement and the Stockholders Agreement" is incorporated herein by reference. ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED The information set forth in the Offer to Purchase under the caption "THE TENDER OFFER-- 20. Fees and Expenses" is incorporated herein by reference. ITEM 9. FINANCIAL STATEMENTS OF CADENCE The information set forth in the Offer to Purchase under the caption "THE TENDER OFFER-- 8. Certain Information Concerning Cadence and Purchaser" is incorporated herein by reference. ITEM 10. ADDITIONAL INFORMATION (a) The information set forth in the Offer to Purchase under the caption "THE TENDER OFFER--12. Purpose of the Offer and The Merger Agreement" and "THE TENDER OFFER--13. The Merger Agreement, the Stock Option Agreement and the Stockholders Agreement" is incorporated herein by reference. (b) and (c) The information set forth in the Offer to Purchase under the caption "THE TENDER OFFER--19. Certain Legal Matters; Regulatory Approvals" is incorporated herein by reference. (d) The information set forth in the Offer to Purchase under the caption "THE TENDER OFFER--17. Effects of the Offer on the Market for Shares; Nasdaq National Market and Exchange Act Registration" is incorporated herein by reference. (e) The information set forth in the Offer to Purchase under the caption "THE TENDER OFFER--21. Miscellaneous" is incorporated herein by reference. (f) The information set forth in the Offer to Purchase and the Letter of Transmittal, to the extent not otherwise incorporated by reference, is incorporated herein by reference. ITEM 11. MATERIAL TO BE FILED AS EXHIBITS (a)(l) Offer to Purchase, dated June 18, 1999 (a)(2) Letter of Transmittal (a)(3) Notice of Guaranteed Delivery (a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees (a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees (a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 (a)(7) Form of Summary Advertisement, dated June 18, 1999 (a)(8) Press Release dated June 15, 1999 issued by Cadence (b)(1) Revolving Credit Agreement, dated September 30, 1998, by and between ABN-AMBRO Bank and Cadence (incorporated by reference to Exhibit 10.45 from Cadence's Form 10-Q for the third quarter ended October 3, 1998 (the "1998 Third Quarter Form 10-Q")) (b)(2) Amendment, dated October 16, 1998, to the Revolving Credit Agreement, by and between ABN-AMBRO Bank and Cadence (incorporated by reference to Exhibit 10.46 from the 1998 Third Quarter Form 10-Q) 6 (c)(1) Agreement and Plan of Merger, dated as of June 14, 1999, by and among the Company, Purchaser and Cadence (c)(2) Stock Option Agreement, dated as of June 14, 1999, between the Company, Purchaser and Cadence (c)(3) Stockholders Agreement, dated as of June 14, 1999, among the stockholders of the Company listed on Schedule I thereto, Purchaser and Cadence (c)(4) Employment Letter, Noncompetition Agreement, and Employee Proprietary Information and Inventions Agreement between Cadence and Michael F. Bosworth (incorporated by reference to Exhibit (c)(5) to the Company's Tender Offer Statement on Schedule 14D-9, dated June 18, 1999). (c)(5) Employment Letter, Noncompetition Agreement, and Employee Proprietary Information and Inventions Agreement between Cadence and P. David Bundy (incorporated by reference to Exhibit (c)(6) to the Company's Tender Offer Statement on Schedule 14D-9, dated June 18, 1999). (c)(6) Employment Letter, Noncompetition Agreement, and Employee Proprietary Information and Inventions Agreement between Cadence and James M. Plymale (incorporated by reference to Exhibit (c)(7) to the Company's Tender Offer Statement on Schedule 14D-9, dated June 18, 1999). (c)(7) Employment Letter, Noncompetition Agreement, and Employee Proprietary Information and Inventions Agreement between Cadence and William E. Cibulsky (incorporated by reference to Exhibit (c)(8) to the Company's Tender Offer Statement on Schedule 14D-9, dated June 18, 1999). (c)(8) Employment Letter, Noncompetition Agreement, and Employee Proprietary Information and Inventions Agreement between Cadence and Stuart A. Harrington (incorporated by reference to Exhibit (c)(9) to the Company's Tender Offer Statement on Schedule 14D-9, dated June 18, 1999). (c)(9) Employment Letter, Noncompetition Agreement, and Employee Proprietary Information and Inventions Agreement between Cadence and Philip J. Kilcoin (incorporated by reference to Exhibit (c)(10) to the Company's Tender Offer Statement on Schedule 14D-9, dated June 18, 1999). (c)(10) Employment Letter, Noncompetition Agreement, and Employee Proprietary Information and Inventions Agreement between Cadence and Graham K. Sheldon (incorporated by reference to Exhibit (c)(11) to the Company's Tender Offer Statement on Schedule 14D-9, dated June 18, 1999). (c)(11) Employment Letter, Noncompetition Agreement, and Employee Proprietary Information and Inventions Agreement between Cadence and Donald G. Tannenbaum (incorporated by reference to Exhibit (c)(12) to the Company's Tender Offer Statement on Schedule 14D-9, dated June 18, 1999). (d) None (e) Not applicable (f) None 7 SIGNATURE After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: June 18, 1999 CDSI ACQUISITION CORPORATION By: /s/ WILLIAM PORTER ----------------------------------------- William Porter SENIOR VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND ASSISTANT SECRETARY
SIGNATURE After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: June 18, 1999 CADENCE DESIGN SYSTEMS, INC. By: /s/ R.L. SMITH MCKEITHEN ----------------------------------------- R.L. Smith McKeithen SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
8 EXHIBIT INDEX
EXHIBIT NUMBER EXHIBIT INDEX - --------- -------------------------------------------------------------------------------------------------------- (a)(l) Offer to Purchase, dated June 18, 1999 (a)(2) Letter of Transmittal (a)(3) Notice of Guaranteed Delivery (a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees (a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees (a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 (a)(7) Form of Summary Advertisement, dated June 18, 1999 (a)(8) Press Release dated June 15, 1999 issued by Cadence (b)(1) Revolving Credit Agreement, dated September 30, 1998, by and between ABN-AMBRO Bank and Cadence (incorporated by reference to Exhibit 10.45 from the 1998 Third Quarter Form 10-Q) (b)(2) Amendment, dated October 16, 1998, to the Revolving Credit Agreement, by and between ABN-AMBRO Bank and Cadence (incorporated by reference to Exhibit 10.46 from the 1998 Third Quarter Form 10-Q) (c)(1) Agreement and Plan of Merger, dated as of June 14, 1999, by and among the Company, Purchaser and Cadence (c)(2) Stock Option Agreement, dated as of June 14, 1999, between the Company, Purchaser and Cadence (c)(3) Stockholders Agreement, dated as of June 14, 1999, among the stockholders of the Company listed on Schedule I thereto, Purchaser and Cadence (c)(4) Employment Letter, Noncompetition Agreement, and Employee Proprietary Information and Inventions Agreement between Cadence and Michael F. Bosworth (incorporated by reference to Exhibit (c)(5) to the Company's Tender Offer Statement on Schedule 14D-9, dated June 18, 1999). (c)(5) Employment Letter, Noncompetition Agreement, and Employee Proprietary Information and Inventions Agreement between Cadence and P. David Bundy (incorporated by reference to Exhibit (c)(6) to the Company's Tender Offer Statement on Schedule 14D-9, dated June 18, 1999). (c)(6) Employment Letter, Noncompetition Agreement, and Employee Proprietary Information and Inventions Agreement between Cadence and James M. Plymale (incorporated by reference to Exhibit (c)(7) to the Company's Tender Offer Statement on Schedule 14D-9, dated June 18, 1999). (c)(7) Employment Letter, Noncompetition Agreement, and Employee Proprietary Information and Inventions Agreement between Cadence and William E. Cibulsky (incorporated by reference to Exhibit (c)(8) to the Company's Tender Offer Statement on Schedule 14D-9, dated June 18, 1999). (c)(8) Employment Letter, Noncompetition Agreement, and Employee Proprietary Information and Inventions Agreement between Cadence and Stuart A. Harrington (incorporated by reference to Exhibit (c)(9) to the Company's Tender Offer Statement on Schedule 14D-9, dated June 18, 1999).
9 (c)(9) Employment Letter, Noncompetition Agreement, and Employee Proprietary Information and Inventions Agreement between Cadence and Philip J. Kilcoin (incorporated by reference to Exhibit (c)(10) to the Company's Tender Offer Statement on Schedule 14D-9, dated June 18, 1999). (c)(10) Employment Letter, Noncompetition Agreement, and Employee Proprietary Information and Inventions Agreement between Cadence and Graham K. Sheldon (incorporated by reference to Exhibit (c)(11) to the Company's Tender Offer Statement on Schedule 14D-9, dated June 18, 1999). (c)(11) Employment Letter, Noncompetition Agreement, and Employee Proprietary Information and Inventions Agreement between Cadence and Donald G. Tannenbaum (incorporated by reference to Exhibit (c)(12) to the Company's Tender Offer Statement on Schedule 14D-9, dated June 18, 1999). (d) None (e) Not applicable (f) None
10 EX-99.A(1) 2 EXHIBIT 99(A)(1) 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 TABLE OF CONTENTS
PAGE --------- 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
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." 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 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 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 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 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 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 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 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 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:
TRADING -------------------- 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
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 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 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)
THREE MONTHS ENDED YEAR ENDED ------------------------ ------------------------------------------- MARCH 31, MARCH 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, 1999 1998 1998 1997 1996 ----------- ----------- ------------- ------------- ------------- (UNAUDITED) 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
12 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 CADENCE DESIGN SYSTEMS, INC. AND SUBSIDIARIES SELECTED CONSOLIDATED FINANCIAL INFORMATION (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED YEAR ENDED -------------------- --------------------------------------- APRIL 3, APRIL 4, JANUARY 2, JANUARY 3, DECEMBER 28, 1999 1998 1999 1998 1996 --------- --------- ----------- ----------- ------------- (UNAUDITED) 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
14 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 10. CERTAIN TRANSACTIONS BETWEEN CADENCE AND THE COMPANY Except as set forth in this Offer to Purchase, since January 1, 1998, none of Cadence or Purchaser or, to the best knowledge of Cadence and Purchaser, any of the persons listed on Schedule I hereto, has engaged in any transaction with the Company or any of its executive officers, directors or affiliates that is required to be reported under the rules and regulations of the Commission applicable to the Offer. Except as set forth in this Offer to Purchase, since January 1, 1998 there have been no contracts, negotiations or transactions between Cadence, or any of its subsidiaries or, to the best knowledge of Cadence and Purchaser, any of the persons listed in Schedule I to this Offer to Purchase, on the one hand, and the Company or any of its affiliates, on the other hand, concerning a merger, consolidation or acquisition; a tender offer for or other acquisition of securities of any class of the Company; an election of directors of the Company; or a sale or other transfer of a material amount of assets of the Company or any of its subsidiaries. On April 21, 1999, Cadence and the Company entered into a Confidentiality Agreement pursuant to which the parties agreed to keep confidential all information exchanged in contemplation of potential merger transactions. 11. CONTACTS WITH THE COMPANY; BACKGROUND OF THE OFFER AND THE MERGER As a result of prior discussions related to the integration of the products of Cadence and the Company, in March 1999, David DeMaria, Vice President of Marketing and Performance Engineering at Cadence, contacted James M. Plymale, Vice President of Marketing at the Company, to review prospects for closer cooperation between the two companies and potential strategic alliances, including the possibility of a merger or acquisition. Through these discussions, the parties gained substantial familiarity with each other's product lines, technical competencies, and relative strengths. On April 8, 1999, at the invitation of Cadence, Michael F. Bosworth, the Company's Chairman of the Board, President and Chief Executive Officer, P. David Bundy, the Company's Chief Financial Officer, Mr. Plymale, and John Savage from Alliant Partners, the Company's financial advisors, met in Palo Alto with H. Raymond Bingham, Cadence's then Executive Vice President and Chief Financial Officer and current Chief Executive Officer and President, Margaret McCarthy, Cadence's Corporate Vice President of Mergers and Acquisitions, and Mr. DeMaria to further explore the parties' interests in a merger or acquisition. On April 21, 1999, the Company and Cadence entered into a letter agreement outlining the respective obligations of each party to maintain information exchanged in confidence, and containing commitments by each party not to solicit each other's employees and not to pursue an acquisition of the other party without such other party's consent for at least six months following that date. On April 29, 1999, Mr. DeMaria and other representatives of Cadence met in Beaverton with Mr. Plymale, Mr. Bundy and Philip F. Kilcoin, the Company's Vice President of Product Operations, to further discuss the strategic implications of an acquisition. On May 13, 1999, Mr. Bosworth, Mr. Plymale, Mr. Bundy and other representatives of the Company met in San Jose with Mr. Bingham, Ms. McCarthy, Mr. DeMaria and other representatives of Cadence and identified areas for further investigation of synergies and the potential for agreement by each party. On May 20, 1999, Mr. DeMaria and other respresentatives of Cadence met in Beaverton with Mr. Bosworth, Mr. Plymale, Mr. Kilcoin and other representatives of the Company to further discuss a potential acquisition. Also in May, Mr. Plymale and Mr. DeMaria continued their discussions from time to time regarding the strategic implications of an acquisition. 16 On May 27, 1999, the parties met again. Mr. Bingham, Mr. DeMaria, Ms. McCarthy, William Porter, Cadence's Chief Financial Officer and Senior Vice President, and Michael Casey, Cadence's Vice President and Associate General Counsel, met at Cadence's offices to conduct due diligence, including discussions of technical products and valuation of the Company, with Mr. Bosworth, Mr. Bundy, Mr. Kilcoin, Mr. Plymale and other representatives of the Company. On May 28, 1999, Mr. Porter, Ms. McCarthy, Mr. DeMaria and Mr. Casey met with Mr. Bundy, Mr. Bosworth and Mr. Savage to discuss the pricing of the transaction. The parties could not come to terms on a price and the negotiations broke off with a decision to continue communications and perhaps re-engage at a later date. Subsequent meetings and discussions occurred on June 2 and 3, 1999 and led to an understanding that Cadence would undertake further due diligence concerning the Company in Beaverton and the parties would begin discussions of the terms of a potential definitive agreement. On June 4, 1999, the Company Board met in Beaverton. The Company's representatives presented a report on the status of discussions with Cadence and the Company Board approved further efforts to proceed to negotiate a definitive agreement, subject to approval of the same by the Company Board. Over the week of June 7, 1999, representatives of Cadence and the Company met from time to time in Beaverton and in Palo Alto to conduct further diligence and to negotiate the terms of a definitive merger agreement. From June 11 through June 14, 1999, representatives of Cadence met with various employees of the Company to discuss possible employment with Cadence in the event of a merger. On June 14, 1999, the Company Board and the Board of Directors of Cadence each approved the transaction and the definitive Merger Agreement, as well as the Stock Option Agreement. On June 15, 1999, the parties issued a joint press release announcing the transaction. 17 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. 18 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 19 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. 20 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 21 - 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. 22 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; 23 - 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. 24 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; 25 - 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. 26 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; 27 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 28 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 29 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 30 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 31 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. 32 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. 33 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 34 "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 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 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 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 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 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 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.
NAME, AGE, CITIZENSHIP AND OTHER MATERIAL POSITIONS CURRENT BUSINESS ADDRESS PRESENT OCCUPATION OR EMPLOYMENT HELD DURING THE PAST FIVE YEARS - ------------------------------------ ------------------------------------ ------------------------------------ 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
41
NAME, AGE, CITIZENSHIP AND OTHER MATERIAL POSITIONS CURRENT BUSINESS ADDRESS PRESENT OCCUPATION OR EMPLOYMENT HELD DURING THE PAST FIVE YEARS - ------------------------------------ ------------------------------------ ------------------------------------ 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.
42
NAME, AGE, CITIZENSHIP AND OTHER MATERIAL POSITIONS CURRENT BUSINESS ADDRESS PRESENT OCCUPATION OR EMPLOYMENT HELD DURING THE PAST FIVE YEARS - ------------------------------------ ------------------------------------ ------------------------------------ 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.
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.
NAME, AGE, CITIZENSHIP AND MATERIAL POSITIONS HELD CURRENT BUSINESS ADDRESS PRESENT OCCUPATION OR EMPLOYMENT DURING THE PAST FIVE YEARS - ------------------------------------ ------------------------------------ ------------------------------------ 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.
43 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] 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
BY FACSIMILE TRANSMISSION: CONFIRM RECEIPT OF FACSIMILE (For Eligible Institutions Only) by Telephone Only: (201) 296-4293 (201) 296-4860
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 EX-99.A(2) 3 EXHIBIT 99(A)(2) 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] 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
BY FACSIMILE TRANSMISSION: CONFIRM RECEIPT OF FACSIMILE (For Eligible Institutions Only) BY TELEPHONE ONLY: (201) 296-4293 (201) 296-4860
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. / / 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: ___________________________________________________
---------------------------------------------------------------------------------------------------- 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 - ------------------------------------------------------------------------------------------------------ ---------------------------------------------- ---------------------------------------------- ---------------------------------------------- ---------------------------------------------- ---------------------------------------------- ---------------------------------------------- ---------------------------------------------- TOTAL SHARES - ------------------------------------------------------------------------------------------------------
* 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. 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). 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. - ------------------------------------------------ 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) - ----------------------------------------------------- - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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. 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. 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. 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. PAYOR'S NAME: CHASEMELLON SHAREHOLDER SERVICES - --------------------------------------------------------------------------------------------------- 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: -------------------- - ---------------------------------------------------------------------------------------------------
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 EX-99.A(3) 4 EXHIBIT 99(A)(3) NOTICE OF GUARANTEED DELIVERY FOR TENDER OF SHARES OF COMMON STOCK OF ORCAD, INC. TO CDSI ACQUISITION CORPORATION A WHOLLY-OWNED SUBSIDIARY OF CADENCE DESIGN SYSTEMS, INC. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JULY 16, 1999 UNLESS THE OFFER IS EXTENDED. This form, or one substantially equivalent to this form, must be used to accept the Offer (as defined below) if certificates representing shares of common stock, $.01 par value (collectively, the "Shares"), of OrCAD, Inc., a Delaware corporation, are not immediately available, if the procedure for book-entry transfer cannot be completed on a timely basis, or if time will not permit all required documents to reach the Depositary (as defined in the Offer to Purchase) on or prior to the Expiration Date (as defined in the Offer to Purchase). This form may be delivered by hand or transmitted by telegram, facsimile transmission or mail to the Depositary. See Section 2 of the Offer to Purchase. THE DEPOSITARY FOR THE OFFER IS: [LOGO]
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
CONFIRM RECEIPT OF BY FACSIMILE TRANSMISSION: FACSIMILE (For Eligible Institutions Only) by Telephone Only: (201) 296-4293 (201) 296-4860
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN ONE SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER THAN THE FACSIMILE NUMBER SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. 1 Ladies and Gentlemen: The undersigned hereby tenders to CDSI Acquisition Corporation, a Delaware corporation and a wholly-owned subsidiary of Cadence Design Systems, Inc., a Delaware corporation, upon the terms and subject to the conditions set forth in the Offer to Purchase dated June 18, 1999 and the related Letter of Transmittal (which together constitute the "Offer"), receipt of which is hereby acknowledged, the number of Shares indicated below pursuant to the guaranteed delivery procedures set forth in Section 2 of the Offer to Purchase. Certificate No(s). (if available): _____________________________________________ Number of Shares: ______________________________________________________________ [ ] Check if Shares will be tendered by book-entry transfer: ___________________ Account Number: ________________________________________________________________ Dated: ___________________________________________________________________, 1999 Name(s) of Record Holder(s): ___________________________________________________ (PLEASE TYPE OR PRINT) Address(es): ___________________________________________________________________ ZIP CODE Area Code and Tel. No.: ________________________________________________________ Signature(s): __________________________________________________________________ GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, a bank, broker, dealer, credit union, savings association or other entity that is a member in good standing of the Securities Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion Program, (a) represents that the above named person(s) "own(s)" the Shares tendered hereby within the meaning of Rule 14e-4 promulgated under the Securities Exchange Act of 1934, as amended, (b) represents that such tender of Shares complies with Rule 14e-4 under the Exchange Act, and (c) guarantees delivery to the Depositary, at one of its addresses set forth above, of certificates representing the Shares tendered hereby in proper form for transfer, or confirmation of book-entry transfer of such Shares into the Depositary's accounts at The Depository Trust Company, in each case with delivery of a properly completed and duly executed Letter of Transmittal (or facsimile thereof), and any other required documents, within three Nasdaq National Market trading days after the date hereof. 2 Name of Firm: ____________________ __________________________________ Authorized Signature __________________________________ Title Address: _________________________ Name: ____________________________ Please Type or Print ___________________________________ Title: ___________________________ Zip Code Area Code and Telephone Number: ________________ Dated: _____________________, 1999 NOTE: DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE. SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL. 3 EX-99.A(4) 5 EXHIBIT 99(A)(4) EXHIBIT 99(A)(4) MORROW & CO., INC. OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF ORCAD, INC. AT $13.00 NET PER SHARE BY CDSI ACQUISITION CORPORATION A WHOLLY-OWNED SUBSIDIARY OF CADENCE DESIGN SYSTEMS, INC. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JULY 16, 1999 (THE "EXPIRATION DATE"), UNLESS THE OFFER IS EXTENDED. June 18, 1999 To Brokers, Dealers, Commercial Banks, Trust Companies And Other Nominees: We have been engaged to act as Information Agent in connection with the offer by CDSI Acquisition Corporation, a Delaware corporation ("Purchaser") and a wholly-owned subsidiary of Cadence Design Systems, Inc., a Delaware corporation ("Cadence"), to purchase all outstanding shares of common stock, $.01 par value (collectively, the "Shares"), of OrCAD, Inc., a Delaware corporation (the "Company"), at $13.00 per share, net to the seller in cash, upon the terms and subject to the conditions set forth in Purchaser's Offer to Purchase dated June 18, 1999 (the "Offer to Purchase") and the related Letter of Transmittal (which together constitute the "Offer"). THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE SATISFACTION OR WAIVER OF CERTAIN CONDITIONS TO THE OBLIGATIONS OF PURCHASER AND THE COMPANY TO CONSUMMATE THE OFFER, INCLUDING (1) THERE BEING VALIDLY TENDERED BY THE EXPIRATION DATE AND NOT WITHDRAWN A NUMBER OF SHARES WHICH REPRESENTS AT LEAST SIXTY SEVEN PERCENT (67%) OF THE AGGREGATE OF (A) THE NUMBER OF SHARES THEN OUTSTANDING AND (B) THE NUMBER OF SHARES THAT ARE, OR WILL, PRIOR TO THE SCHEDULED CLOSING OF THE MERGER (AS DEFINED IN THE OFFER TO PURCHASE), BECOME, SUBJECT TO ISSUANCE UPON THE EXERCISE OF OPTIONS (THE "MINIMUM CONDITION") AND (2) RECEIPT BY PURCHASER AND THE COMPANY OF CERTAIN GOVERNMENTAL AND REGULATORY APPROVALS. For your information and for forwarding to your clients for whom you hold Shares registered in your name or in the name of your nominee or who hold Shares registered in their own names, we are enclosing the following documents: 1. Offer to Purchase dated June 18, 1999; 2. Letter of Transmittal to tender Shares for your use and for the information of your clients. Facsimile copies of the Letter of Transmittal may be used to tender Shares; 3. Letter to Clients which may be sent to your clients for whose account you hold Shares in your name or in the name of your nominee, with space provided for obtaining such clients' instructions with regard to the Offer; 4. Notice of Guaranteed Delivery to be used to accept the Offer if certificates for Shares are not immediately available or time will not permit all required documents to reach the Depositary on or prior to the Expiration Date (as defined in the Offer to Purchase) or if the procedures for book-entry transfer, as set forth in the Offer to Purchase, cannot be completed on a timely basis; 5. The Letter to Stockholders of the Company from Michael F. Bosworth, the Chairman of the Board, Chief Executive Officer and President of the Company, accompanied by the Company's Solicitation/Recommendation Statement on Schedule 14D-9; and 6. Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. Upon the terms and subject to the satisfaction or waiver (where applicable) of the conditions of the Offer, Purchaser will purchase, by accepting for payment, and will pay for, all Shares validly tendered on or prior to the Expiration Date promptly after the Expiration Date. For purposes of the Offer, Purchaser will be deemed to have accepted for payment, and thereby purchased, tendered Shares if, as and when Purchaser gives oral or written notice to the Depositary of Purchaser's acceptance of such Shares for payment. In all cases, payment for Shares accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates for Shares or timely confirmation of a book-entry transfer of such Shares, if such procedure is available, into the Depositary's account at a Book-Entry Transfer Facility (as defined in the Offer to Purchase) pursuant to the procedures set forth in Section 2 of the Offer to Purchase, (ii) the Letter of Transmittal (or facsimile thereof), properly completed and duly executed, or an Agent's Message (as defined in the Offer to Purchase) and (iii) any other documents required by the Letter of Transmittal. Purchaser will not pay any fees or commissions to any broker or dealer or other person (other than the Depositary and the Information Agent as described in the Offer to Purchase) in connection with the solicitation of tenders of Shares pursuant to the Offer. However, Purchaser will, upon request, reimburse you for customary mailing and handling expenses incurred by you in forwarding the enclosed materials to your clients. Purchaser will pay or cause to be paid any stock transfer taxes payable on the transfer of Shares to it, except as otherwise provided in Instruction 6 of the enclosed Letter of Transmittal. YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JULY 16, 1999, UNLESS THE OFFER IS EXTENDED. In order to take advantage of the Offer, a duly executed and properly completed Letter of Transmittal and any other required documents should be sent to the Depositary and certificates representing the tendered Shares should be delivered, or such Shares should be tendered by book-entry transfer, all in accordance with the instructions set forth in the Letter of Transmittal and the Offer to Purchase. If holders of Shares wish to tender, but it is impracticable for them to forward their certificates or other required documents prior to the expiration of the Offer, a tender may be effected by following the guaranteed delivery procedures specified under Section 2 in the Offer to Purchase. Any inquires you may have with respect to the Offer or requests for additional copies of the enclosed materials should be addressed to the Information Agent at the address and telephone number set forth on the back cover page of the enclosed Offer to Purchase. Very truly yours, Morrow & Co., Inc. Enclosures NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY PERSON AS AN AGENT OF PURCHASER, THE DEPOSITARY OR THE INFORMATION AGENT OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED AND THE STATEMENTS CONTAINED THEREIN. EX-99.A(5) 6 EXHIBIT 99(A)(5) EXHIBIT 99(A)(5) OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF ORCAD, INC. AT $13.00 NET PER SHARE BY CDSI ACQUISITION CORPORATION A WHOLLY-OWNED SUBSIDIARY OF CADENCE DESIGN SYSTEMS, INC. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JULY 16, 1999, UNLESS THE OFFER IS EXTENDED. June 18, 1999 To Our Clients: Enclosed for your consideration is an Offer to Purchase dated June 18, 1999 and the related Letter of Transmittal (which together constitute the "Offer") relating to an offer by CDSI Acquisition Corporation, a Delaware corporation ("Purchaser") and a wholly-owned subsidiary of Cadence Design Systems, Inc., a Delaware corporation ("Cadence"), to purchase all outstanding shares of common stock, $.01 par value (collectively, the "Shares"), of OrCAD, Inc., a Delaware corporation (the "Company"), at a purchase price of $13.00 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer. We are the holder of record of Shares held by us for your account. The Letter of Transmittal is furnished to you for your information only and cannot be used by you to tender Shares. A tender of Shares may be made only by us as the holder of record and pursuant to your instructions. We request instructions as to whether you wish to tender any or all Shares held by us for your account, pursuant to the terms and conditions set forth in the Offer. Your attention is directed to the following: 1. The tender price is $13.00 per Share, net to the seller in cash. 2. The Offer is being made for all outstanding Shares. 3. This Offer is being made pursuant to the terms of an Agreement and Plan of Merger, dated as of June 14, 1999 (the "Merger Agreement"), by and among the Company, Purchaser and Cadence. The Merger Agreement provides, among other things, for the making of the Offer by Purchaser, and further provides that, following the purchase of Shares pursuant to the Offer and promptly after the satisfaction or waiver of certain conditions, Purchaser will be merged with and into the Company (the "Merger"). The Company will continue as the surviving corporation after the Merger and will be a wholly-owned subsidiary of Cadence. 4. The Board of Directors of the Company has approved the Offer, the Merger and the other transactions contemplated by the Merger Agreement, has determined that the Offer, the Merger and the other transactions contemplated by the Merger Agreement are fair to and in the best interests of the Company's stockholders and recommends that stockholders of the Company accept the Offer and tender their Shares. 5. The Offer and withdrawal rights will expire at midnight, New York City time, on Friday, July 16, 1999, unless extended. 6. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE SATISFACTION OR WAIVER OF CERTAIN CONDITIONS TO THE OBLIGATIONS OF PURCHASER AND THE COMPANY TO CONSUMMATE THE OFFER, INCLUDING (1) THERE BEING VALIDLY TENDERED BY THE EXPIRATION DATE AND NOT WITHDRAWN A NUMBER OF SHARES WHICH REPRESENTS AT LEAST SIXTY-SEVEN PERCENT (67%) OF THE AGGREGATE OF (A) THE NUMBER OF SHARES THEN OUTSTANDING AND (B) THE NUMBER OF SHARES THAT ARE, OR WILL, PRIOR TO THE SCHEDULED CLOSING OF THE MERGER, BECOME, SUBJECT TO ISSUANCE UPON THE EXERCISE OF OPTIONS (THE "MINIMUM CONDITION") AND (2) RECEIPT BY PURCHASER AND THE COMPANY OF CERTAIN GOVERNMENTAL AND REGULATORY APPROVALS. 7. Stockholders who tender Shares will not be obligated to pay brokerage commissions or, except as set forth in Instruction 6 of the Letter of Transmittal, transfer taxes on the purchase of Shares by Purchaser pursuant to the Offer. If you wish to have us tender any or all of your Shares, please complete, sign and return the form set forth on the reverse side of this letter. Your instructions to us should be forwarded in ample time to permit us to submit a tender on your behalf prior to the expiration of the Offer. INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF ORCAD, INC. AT $13.00 NET PER SHARE BY CDSI ACQUISITION CORPORATION A WHOLLY-OWNED SUBSIDIARY OF CADENCE DESIGN SYSTEMS, INC. The undersigned acknowledge(s) receipt of your letter enclosing the Offer to Purchase, dated June 18, 1999, of CDSI Acquisition Corporation, a Delaware corporation ("Purchaser") and a wholly-owned subsidiary of Cadence Design Systems, Inc. ("Cadence") and the related Letter of Transmittal, relating to shares of common stock, $.01 par value (collectively, the "Shares"), of OrCAD, Inc., a Delaware corporation. This will instruct you to tender to Purchaser the number of Shares indicated below held by you for the account of the undersigned, on the terms and subject to the conditions set forth in the Offer to Purchase and the Letter of Transmittal. NUMBER OF SHARES TO BE TENDERED: SIGN HERE _____________________ Shares ____________________________________ ____________________________________ SIGNATURE(S) Account Number: ____________________ ____________________________________ PLEASE PRINT NAME(S) AND ADDRESS(ES) HERE ____________________________________ ____________________________________ ____________________________________ Dated: ______________________ , 1999 ____________________________________ TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER - ------------------------ * Unless otherwise indicated, it will be assumed that all of your Shares held by us for your account are to be tendered. EX-99.A(6) 7 EXHIBIT 99(A)(6) EXHIBIT 99(A)(6) GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER. -- Social Security numbers have nine digits separated by two hyphens: i.e. 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: i.e. 00-0000000. The table below will help determine the number to give the payer.
GIVE THE GIVE THE FOR THIS TYPE OF SOCIAL SECURITY EMPLOYER IDENTIFICATION ACCOUNT: NUMBER OF-- FOR THIS TYPE OF ACCOUNT: NUMBER OF-- - ------------------------ --------------------------- --------------------------- --------------------------- 1. An individual's The individual 9. A valid trust, estate, The legal entity (Do not account or pension trust furnish the identifying number of the personal representative or trustee unless the legal entity itself is not designated in the account title.)(5) 2. Two or more The actual owner of the 10. Corporate account The corporation individuals (joint account or, if combined account) funds, the first individual on the account(1) 3. Husband and wife The actual owner of the 11. Religious, charitable, The organizaiton (joint account) account or, if joint funds, or education organization either person(1) 4. Custodian account of The minor(2) 12. Partnership account The partnership a minor (Uniform Gift held in the name of the to Minors Act) business 5. Adult and minor The adult or, if the minor 13. Association, club, or The organization (joint account) is the only contributor, other tax- exempt the minor(1) organization 6. Account in the name The ward, minor, or 14. A broker or registered The broker or nominee of guardian or incompetent person(3) nominee committee for a designated ward, minor, or incompetent person 7. a. The usual The grantor-trustee(1) 15. Account with the The public entity revocable savings The actual owner(1) Department of Agriculture trust account (grantor in the name of a public is also trustee) b. entity (such as a State or So-called trust local government, school account that is not a district, or prison) that legal or valid trust receives agricultural under State law program payments 8. Sole proprietorship The owner(4) account
- ------------------------------ (1) List first and circle the name of the person whose number you furnish. If only one person on a joint account has a social security number, that person's number must be furnished. (2) Circle the minor's name and furnish the minor's social security number. (3) Circle the ward's, minor's or incompetent person's name and furnish such person's social security number. (4) Show the name of the owner. (5) List first and circle the name of the legal trust, estate, or pension trust. Note: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 PAGE 2 OBTAINING A NUMBER If you don't have a taxpayer identification number or you don't know your number, obtain Form SS-5 Application for a Social Security Number Card, or Form SS-4, Application for an Employer Identification Number, at the local office of the Social Security Administration or the Internal Revenue Service and apply for a number. PAYEES EXEMPT FROM BACKUP WITHHOLDING Payees specifically exempted from backup withholding on ALL payments include the following: - - A corporation. - - A financial institution. - - An organization exempt form tax under Section 501(a), or an individual retirement plan. - - The United States or any agency or instrumentality thereof. - - A State, the District of Columbia, a possession of the United States, or any subdivision or instrumentality thereof. - - An international organization or any agency or instrumentality thereof. - - A registered dealer in securities or commodities registered in the United States or a possession of the United States. - - A real estate investment trust. - - A common trust fund operated by a bank under Section 584(a). - - An exempt charitable remainder trust, or a non-exempt trust described in Section 4947(a)(1). - - An entity registered at all times under the Investment Company Act of 1940. - - A foreign central bank of issue. Payments of dividends and patronage dividends not generally subject to backup withholding include the following: - - Payments to nonresident aliens subject to withholding under Section 1441. - - Payments to partnerships not engaged in a trade or business in the United States and which have at least one nonresident alien partner. - - Payments of patronage dividends where the amount received is not paid in money. - - Payments made by certain foreign organizations. - - Payments made to a nominee. Payments of interest not generally subject to backup withholding include the following: - - Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not provided your correct taxpayer identification number to the payer. - - Payments of tax-exempt interest (including exempt-interest dividends under Section 852). - - Payments described in Section 6049(b)(5) to nonresident aliens. - - Payments on tax-free covenant bonds under Section 1451. - - Payments made by certain foreign organizations. - - Payments made to a nominee. Exempt payees described above should file a substitute Form W-9 to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER. WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM. Certain payments, other than interest, dividends, and patronage dividends, that are not subject to information reporting are also not subject to backup withholding. For details, see the regulations under sections 6041, 6041A(a), 6045, and 6050A. PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend, interest, or other payments to give taxpayer identification numbers to payers who must report the payments to IRS. The IRS uses the numbers for identification purposes. Payers must be given the numbers whether or not recipients are required to file tax returns. Payers must generally withhold 31% of taxable interest, dividend, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply. PENALTIES (1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to include any portion of an includable payment for interest, dividends, or patronage dividends in gross income, such failure will be treated as being due to negligence and will be subject to a penalty of 5% on any portion of an underpayment attributable to that failure unless there is clear and convincing evidence to the contrary. (3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500. (4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE. EX-99.A(7) 8 EXHIBIT 99(A)(7) THIS ANNOUNCEMENT IS NEITHER AN OFFER TO PURCHASE NOR A SOLICITATION OF AN OFFER TO SELL SHARES. THE OFFER IS MADE SOLELY BY THE OFFER TO PURCHASE DATED JUNE 18, 1999, AND THE RELATED LETTER OF TRANSMITTAL, AND IS NOT BEING MADE TO (NOR WILL TENDERS BE ACCEPTED FROM OR ON BEHALF OF) HOLDERS OF SHARES IN ANY JURISDICTION IN WHICH THE MAKING OF THE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. NOTICE OF OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF ORCAD, INC. AT $13.00 NET PER SHARE BY CDSI ACQUISITION CORPORATION A WHOLLY-OWNED SUBSIDIARY OF CADENCE DESIGN SYSTEMS, INC. CDSI Acquisition Corporation, a Delaware corporation, ("Purchaser") and a wholly-owned subsidiary of Cadence Design Systems, Inc., a Delaware corporation ("Cadence"), is offering to purchase all outstanding shares of common stock, $.01 par value (the "Shares"), of OrCAD, Inc., a Delaware corporation (the "Company"), at $13.00 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated June 18, 1999 and in the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer"). THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JULY 16, 1999, UNLESS EXTENDED. The Offer is conditioned upon, among other things, the satisfaction or waiver of all conditions to the obligations of Purchaser, Cadence and the Company, including (i) there being validly tendered and not withdrawn prior to the expiration of the Offer such number of Shares that would constitute at least sixty seven percent (67%) of the aggregate of (a) the number of Shares then outstanding and (b) the number of Shares that are, or will, prior to the scheduled closing of the Merger (as defined below), become, subject to issuance upon the exercise of options (the "Minimum Condition") and (ii) the receipt by Purchaser, Cadence and the Company of certain governmental and regulatory approvals. The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of June 14, 1999 (the "Merger Agreement"), among Cadence, Purchaser and the Company pursuant to which, following the consummation of the Offer, Purchaser will be merged with and into the Company and the Company will become a wholly owned subsidiary of Cadence (the "Merger"). On the effective date of the Merger, each outstanding Share (except for (i) Shares owned by the Company or Cadence, or any subsidiary of the Company or Cadence or (ii) Shares held by a stockholder who has demanded and perfected such stockholder's demand for appraisal of such stockholder's Shares in accordance with Delaware law) will be converted into the right to receive $13.00, in cash, without interest. Cadence and Purchaser have entered into a Stockholders Agreement with certain stockholders of the Company (the "Tendering Stockholders") holding in the aggregate approximately 18% of the issued and outstanding Shares. Pursuant to this agreement, each Tendering Stockholder has agreed, upon the terms and subject to the conditions herein, to tender to Purchaser all Shares beneficially owned by such Tendering Stockholder, has granted to Purchaser an option to purchase such Shares under specified circumstances, has agreed to vote such Shares in favor of approval of the Merger Agreement and the transactions contemplated thereby and has granted an irrevocable proxy to Purchaser with respect to such Shares. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER AND THE MERGER AND DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE STOCKHOLDERS OF THE COMPANY, AND UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES. For purposes of the Offer, Purchaser shall be deemed to have accepted for payment, and thereby purchased, Shares properly tendered to Purchaser and not properly withdrawn as, if and when Purchaser gives oral or written notice to ChaseMellon Shareholder Services as Depositary (in such capacity, the "Depositary") of Purchaser's acceptance for payment of such Shares. Upon the terms and subject to the conditions of the Offer, payment for Shares purchased pursuant to the Offer will be made by deposit of the purchase price therefor with the Depositary, which will act as agent for tendering stockholders for the purpose of receiving payment from Purchaser and transmitting payment to tendering stockholders whose Shares have been accepted for payment. In all cases, payment for Shares purchased pursuant to the Offer will be made only after timely receipt by the Depositary of (a) certificates for such Shares or timely confirmation of book-entry transfer of such Shares into the Depositary's account at a Book-Entry Transfer Facility (as defined in the Offer to Purchase) pursuant to the procedures set forth in Section 2 of the Offer to Purchase, (b) a properly completed and duly executed Letter of Transmittal (or facsimile thereof) with any required signature guarantees, or, in the case of a book-entry transfer, an Agent's Message (as defined in the Offer to Purchase) and (c) any other documents required by the Letter of Transmittal. Under no circumstance will interest be paid by Purchaser on the purchase price of the Shares accepted for payment, regardless of any extension of the Offer or any delay in making such payment. The term "Expiration Date" means midnight, New York City time, on Friday, July 16, 1999, unless Purchaser extends the period of time during which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date on which the Offer, as so extended by Purchaser, shall expire. Purchaser expressly reserves the right, subject to the terms of the Merger Agreement, at any time or from time to time and regardless of whether or not any of the events set forth in Section 18 of the Offer to Purchase shall have occurred, (i) to extend the period of time during which the Offer is open and thereby postpone acceptance for payment of any Shares by giving oral or written notice of such extension to the Depositary, and (ii) to amend the Offer in any other respect permitted under the Merger Agreement by giving oral or written notice of such amendment to the Depositary. Purchaser shall not have any obligation to pay interest on the purchase price for tendered Shares, whether or not Purchaser exercises its right to extend the Offer. Any extension of the Offer will be followed by a public announcement thereof no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. During any such extension, all Shares previously tendered and not withdrawn will remain tendered, subject to the right of a tendering stockholder to withdraw such stockholder's Shares. Pursuant to the Merger agreement, Purchaser may make any changes in the terms and conditions of the Offer, provided that, unless previously approved by the Company in writing, Purchaser may not (i) decrease the purchase price, (ii) change the form of consideration payable in the Offer, (iii) decrease the number of Shares sought pursuant to the Offer, (iv) amend or waive satisfaction of the Minimum Condition to permit the purchase of Shares constituting less than a majority of the number of Shares outstanding, (v) add additional conditions to the Offer, (vi) amend the conditions to the Offer to broaden their scope or (vii) amend any other term of the Offer in any manner adverse to the holders of Shares. 2 Shares tendered pursuant to the Offer may be withdrawn at any time on or prior to the Expiration Date. For a withdrawal to be effective, a written, telegraphic or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of the Offer to Purchase and must specify the name of the person having tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder of the Shares to be withdrawn, if different from the name of the person who tendered the Shares. If certificates for Shares have been delivered or otherwise identified to the Depositary, then, prior to the physical release of such certificates, the serial numbers shown on such certificates must be submitted to the Depositary, and, unless Shares have been tendered by an Eligible Institution (as defined in Section 2 of the Offer to Purchase), the signature on the notice of withdrawal must be guaranteed by an Eligible Institution. If Shares have been delivered pursuant to the procedures for book-entry transfer as set forth in Section 2 of the Offer to Purchase, any notice of withdrawal must also specify the name and number of the account at the appropriate Book-Entry Transfer Facility to be credited with the withdrawn Shares and otherwise comply with such Book-Entry Transfer Facility's procedures. Withdrawal of tendered Shares may not be rescinded, and any Shares properly withdrawn will thereafter be deemed not validly tendered for the purposes of the Offer. However, withdrawn Shares may be retendered by again following one of the procedures described in Section 2 of the Offer to Purchase at any time prior to the Expiration Date. All questions as to the form and validity (including time of receipt) of notices of withdrawal will be determined by Purchaser whose determination will be final and binding. The Offer to Purchase and the related Letter of Transmittal and other relevant materials will be mailed to record holders of Shares and furnished to brokers, dealers, banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the Company's stockholder list or, if applicable, who are listed as participants in a clearing agency's security position listing, for subsequent transmittal to beneficial owners of Shares. The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the Securities Exchange Act of 1934, as amended, is contained in the Offer to Purchase and is incorporated herein by reference. THE OFFER TO PURCHASE AND LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. Requests for copies of the Offer to Purchase, the Letter of Transmittal and all other tender offer materials may be directed to the Information Agent, as set forth below, and copies will be furnished promptly at Purchaser's expense. Questions or requests for assistance may be directed to the Information Agent. THE INFORMATION AGENT FOR THE OFFER IS: MORROW & CO., INC. 445 PARK AVENUE, 5TH FLOOR NEW YORK, NEW YORK 10022 BANKS AND BROKERAGE FIRMS CALL: (800) 662-5200 SHAREHOLDERS PLEASE CALL: (800) 566-9061 June 18, 1999 3 EX-99.A(8) 9 EXHIBIT 99(A)(8) [OrCAD LOGO] FOR IMMEDIATE RELEASE For more information, contact: MEDIA CONTACT: INVESTOR CONTACT: Laurie Stanley Bill Porter Cadence Design Systems, Inc. Cadence Design Systems, Inc. (408) 428-5019 (408) 428-5171 las@cadence.com bporter@cadence.com OrCAD MEDIA AND INVESTOR CONTACT: Jean Armstrong Armstrong Kendall, Inc. (503) 672-4680 jean@armstrongkendall.com CADENCE TO ACQUIRE ORCAD WORLDWIDE EDA LEADER AND SHRINK-WRAP PCB MARKET LEADER BUILD EDA POWERHOUSE TO ADDRESS REQUIREMENTS OF ENTIRE PCB INDUSTRY SAN JOSE, Calif. -- June 15, 1999 -- Cadence Design Systems, Inc. (NYSE:CDN), the world's leading provider of electronic design software and services, and OrCAD, Inc. (Nasdaq:OCAD) today announced a definitive agreement under which Cadence will acquire OrCAD in a cash tender offer at $13 per share for a total purchase price of $121 million. Cadence's strength in high-end printed circuit board (PCB) design automation and OrCAD's leadership in the shrink-wrap PCB segment will provide a platform for delivering complete PCB flows to the rapidly growing mainstream segment. Cadence and OrCAD are premier suppliers of computer-aided engineering and computer-aided design tools for PCB electronic design automation (EDA). Cadence estimates the PCB software and services industry to be at least $700 million in 1999. The OrCAD acquisition by Cadence gives the combined company the EDA industry's largest customer base for PCB design software and services - -- spanning the high-end, mainstream, and --MORE-- CADENCE TO ACQUIRE ORCAD Page 2 shrink-wrap segments. OrCAD's recently announced Internet strategy will provide significant benefits to Cadence customers as it is integrated into the Cadence PCB product line. "The acquisition of OrCAD solidifies Cadence's position in the PCB market and provides immediate growth opportunities for our existing software and services businesses. By leveraging OrCAD's highly successful telesales channel, we can bring our Windows NT-based offering of high-speed PCB design and logic simulation products and services to OrCAD's 160,000 users, many of which are moving up into the mainstream market," said Ray Bingham, president and chief executive officer at Cadence. Bingham added, "We think highly of OrCAD's accomplishments and are confident that OrCAD's outstanding management team will add tremendous organizational strength as we combine forces to meet the evolving needs of PCB designers." The entire OrCAD organization will be combined with the Cadence PCB team into a single, focused PCB business group. The PCB group will have a dedicated sales channel, research and development, services, marketing, and customer support functions. OrCAD's chief executive officer, Mike Bosworth, will lead the new PCB group and report directly to Shane Robison, president of the Cadence Design Productivity Group. The Design Productivity Group is responsible for Cadence's EDA products and services. Dave DeMaria will run marketing for the new PCB business group reporting to Bosworth. DeMaria led Cadence's PCB business to market leadership and oversaw the successful integration of Cooper & Chyan Technology, Inc. into the Cadence PCB portfolio. CONVERGING ON MARKET OPPORTUNITIES According to Bosworth, the acquisition by Cadence directly targets the converging requirements of today's three distinct PCB segments: high end, shrink-wrap, and mainstream. Dataquest refers to mainstream as the "ready-to-use" segment and estimates it to be growing at a five-year compound annual rate of approximately 36 percent. --MORE-- CADENCE TO ACQUIRE ORCAD Page 3 OrCAD customers will benefit from Cadence's high-speed interconnect design, high-performance PCB layout, and Verilog/VHDL simulation technologies. Cadence customers will benefit from OrCAD's innovative Internet-based component information solution and access to the OrCAD PSpice analog design tool. Commenting further, Bosworth stated: "OrCAD has built a profitable, growing business that services designers in many different industries. It is this success in the marketplace that attracted Cadence to consider our complementary products, market strengths, and channel strategies. Together, we can provide customers in all segments with access to a complete high-speed, signal integrity-based PCB flow and improved productivity at the enterprise level." PCB MARKET STRATEGY The two companies will rapidly combine their existing products into enhanced PCB flows for the high-end, mainstream and shrink-wrap segments. They will also integrate their technologies over time to develop new, improved products that meet the future needs of their combined customer base. Specifically, Cadence will integrate OrCAD's PCB and field programmable gate array (FPGA) design tools -- which includes OrCAD Capture/CIS, OrCAD PSpice, OrCAD Express, and OrCAD Layout -- with the Cadence Intrica-TRADEMARK- family of PCB tools. The Intrica family includes such familiar Cadence names as the Concept-REGISTERED TRADEMARK- HDL, Allegro-REGISTERED TRADEMARK-, SPECCTRA-REGISTERED TRADEMARK-, and SPECCTRAQuest-TRADEMARK- products. The Cadence Intrica PCB flow with the addition of the OrCAD PSpice tool will be marketed to high-end PCB users. The OrCAD PCB/FPGA product family will be marketed to the shrink-wrap segment. The combined company will address the rapidly growing mainstream, ready-to-use PCB segment, as well as the emerging EDA enterprise market, by combining OrCAD's front-end design tools with the Cadence Affirma-TRADEMARK- family of Verilog and VHDL logic simulation products and the Intrica high-speed PCB tools. --MORE-- CADENCE TO ACQUIRE ORCAD Page 4 The combined offerings will support customers with complete tool suites on the Windows, Windows NT and UNIX-based operating platforms. These will be sold through a combination of Cadence's direct sales and services team focused on large, global accounts; value-added resellers; and OrCAD's well-established telesales and telebusiness channels for the broader customer base. TERMS OF THE AGREEMENT Cadence said the acquisition would be accounted for under the purchase method of accounting. The transaction is structured as a cash tender offer for all OrCAD shares at $13 per share, for a total purchase price of $121 million. Following completion of the tender offer, any shares not tendered will be acquired, at the same price per share, through a merger. The tender offer will commence within five business days, and tendered shares will be purchased at the end of 20 business days thereafter, assuming all conditions to the offer have been met. The acquisition has been approved by the boards of directors of both companies and is subject to certain conditions, including compliance with applicable regulatory requirements and approval by OrCAD's shareholders. Holders of approximately 20 percent of OrCAD's common stock have agreed to tender all of their shares in the offer. ABOUT CADENCE Cadence Design Systems, Inc. is the largest supplier of software products, methodology services, and design services used to accelerate and manage the design of semiconductors, computer systems, networking and telecommunications equipment, consumer electronics, and a variety of other electronics-based products. With more than 4,000 employees and 1998 annual sales of $1.2 billion, Cadence is headquartered in San Jose, Calif. and has sales offices, design centers, and research facilities located around the world. More information about the company, its products and services may be obtained from the World Wide Web at http://www.cadence.com. --MORE-- CADENCE TO ACQUIRE ORCAD Page 5 ABOUT ORCAD Founded in 1985, OrCAD is the leading supplier of Windows EDA software and services to electronics companies worldwide. The company's solutions increase productivity in the management of component data, and in the design of field programmable gate arrays (FPGAs), complex programmable logic devices (CPLDs), analog and mixed analog-digital circuits, and printed circuit boards (PCBs). OrCAD is also leveraging the Internet to provide a connected online electronics design community. The company serves many segments of the worldwide electronics industry, including aerospace, telecom, industrial control, military, medical equipment, semiconductor, computer, and consumer products. OrCAD is headquartered in Beaverton, Oregon, with offices in Irvine, California; Yokohama, Japan; and Basingstoke, England. In other countries worldwide, a network of EDA resellers represents OrCAD. For more information, see www.orcad.com. --END-- THIS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS BASED ON CURRENT EXPECTATIONS OR BELIEFS, AS WELL AS A NUMBER OF ASSUMPTIONS ABOUT FUTURE EVENTS THAT ARE SUBJECT TO FACTORS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE DESCRIBED IN THE FORWARD-LOOKING STATEMENTS. THE READER IS CAUTIONED NOT TO PUT UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH ARE NOT A GUARANTEE OF FUTURE PERFORMANCE AND ARE SUBJECT TO A NUMBER OF UNCERTAINTIES AND OTHER FACTORS, MANY OF WHICH ARE OUTSIDE THE CONTROL OF CADENCE AND ORCAD. THE FORWARD-LOOKING STATEMENTS IN THIS RELEASE ADDRESS A VARIETY OF SUBJECTS INCLUDING, FOR EXAMPLE, THE EXPECTED DATE OF CLOSING OF THE ACQUISITION AND THE POTENTIAL BENEFITS OF THE ACQUISITION. THE FOLLOWING FACTORS, AMONG OTHERS, COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE DESCRIBED IN THESE FORWARD-LOOKING STATEMENTS: THE RISK THAT ORCAD'S BUSINESS WILL NOT BE SUCCESSFULLY INTEGRATED WITH CADENCE'S BUSINESS; COSTS ASSOCIATED WITH THE ACQUISITION; THE INABILITY TO OBTAIN THE APPROVAL OF ORCAD'S SHAREHOLDERS; MATTERS ARISING IN CONNECTION WITH THE PARTIES' EFFORTS TO COMPLY WITH APPLICABLE REGULATORY REQUIREMENTS RELATING TO THE TRANSACTION; AND INCREASED COMPETITION AND TECHNOLOGICAL CHANGES IN THE INDUSTRY IN WHICH CADENCE AND ORCAD COMPETE. FOR A DETAILED DISCUSSION OF THESE AND OTHER CAUTIONARY STATEMENTS, PLEASE REFER TO CADENCE'S AND ORCAD'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THEIR RESPECTIVE ANNUAL REPORTS ON FORM 10-K AND QUARTERLY REPORTS ON FORM 10-Q. FOR CADENCE, REFER TO THE ANNUAL REPORT FOR THE YEAR ENDED JANUARY 2, 1999 AND THE MOST RECENT QUARTERLY REPORT FOR THE QUARTER ENDED APRIL 3, 1999. FOR ORCAD, REFER TO THE ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 1998 AND THE MOST RECENT QUARTERLY REPORT FOR THE QUARTER ENDED MARCH 31, 1999. CADENCE, THE CADENCE LOGO, ALLEGRO, CONCEPT, VERILOG, AND SPECCTRA ARE REGISTERED TRADEMARKS, AND INTRICA, SPECCTRAQUEST, AND AFFIRMA ARE TRADEMARKS OF CADENCE DESIGN SYSTEMS, INC. ORCAD IS A REGISTERED TRADEMARK OF ORCAD, INC. ALL OTHER BRANDS OR PRODUCT NAMES ARE THE PROPERTY OF THEIR RESPECTIVE HOLDERS. EX-99.C(1) 10 EXHIBIT 99(C)(1) - -------------------------------------------------------------------------------- AGREEMENT AND PLAN OF MERGER DATED AS OF JUNE 14, 1999 AMONG CADENCE DESIGN SYSTEMS, INC., ORCAD, INC. AND CDSI ACQUISITION CORPORATION - -------------------------------------------------------------------------------- TABLE OF CONTENTS
Page ---- ARTICLE 1. THE TENDER OFFER.....................................................................2 Section 1.1. The Offer..................................................................2 Section 1.2. Company Action.............................................................4 Section 1.3. Directors..................................................................5 ARTICLE 2 THE MERGER...........................................................................6 Section 2.1. The Merger.................................................................6 Section 2.2. Effective Time.............................................................6 Section 2.3. Closing of the Merger......................................................7 Section 2.4. Effects of the Merger......................................................7 Section 2.5. Certificate of Incorporation and Bylaws....................................7 Section 2.6. Directors..................................................................7 Section 2.7. Officers...................................................................7 Section 2.8. Conversion of Shares.......................................................7 Section 2.9. Dissent and Appraisal Rights...............................................8 Section 2.10. Exchange of Certificates...................................................9 Section 2.11. Stock Options.............................................................10 Section 2.12. The Stock Purchase Plan...................................................11 ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................................11 Section 3.1. Organization and Qualification; Subsidiaries; Investments.................12 Section 3.2. Capitalization of the Company and its Subsidiaries........................13 Section 3.3. Authority Relative to this Agreement; Recommendation......................14 Section 3.4. SEC Reports; Financial Statements.........................................14 Section 3.5. Offer Documents; Proxy Statement..........................................15 Section 3.6. Consents and Approvals; No Violations.....................................15 Section 3.7. No Default................................................................16 Section 3.8. No Undisclosed Liabilities; Absence of Changes............................16 Section 3.9. Litigation................................................................18 Section 3.10. Compliance with Applicable Law............................................18 Section 3.11. Employee Benefit Plans; Labor Matters.....................................19 Section 3.12. Environmental Laws and Regulations........................................20 Section 3.13. Taxes.....................................................................21 Section 3.14. Intellectual Property.....................................................23 Section 3.15. Certain Contract Matters..................................................28 Section 3.16. Insurance.................................................................28 Section 3.17. Certain Business Practices................................................28 Section 3.18. Product Warranties........................................................29 Section 3.19. Suppliers and Customers...................................................29 Section 3.20. Vote Required.............................................................29 Section 3.21. Opinion of Financial Adviser..............................................29 i Section 3.22. Brokers...................................................................29 Section 3.23. Disclosure................................................................29 ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER..............................30 Section 4.1. Organization..............................................................30 Section 4.2. Authority Relative to this Agreement......................................30 Section 4.3. SEC Reports; Financial Statements.........................................31 Section 4.4. Offer Documents; Proxy Statement..........................................31 Section 4.5. Consents and Approvals; No Violations.....................................32 Section 4.6. Brokers...................................................................32 Section 4.7. No Prior Activities.......................................................32 ARTICLE 5 COVENANTS...........................................................................33 Section 5.1. Conduct of Business of the Company........................................33 Section 5.2. Preparation of the Proxy Statement........................................35 Section 5.3. Other Potential Acquirers.................................................35 Section 5.4. Meeting of Stockholders...................................................37 Section 5.5. Access to Information.....................................................37 Section 5.6. Certain Filings; Reasonable Efforts.......................................38 Section 5.7. Public Announcements......................................................39 Section 5.8. Indemnification and Directors' and Officers' Insurance....................39 Section 5.9. Notification of Certain Matters...........................................40 Section 5.10. Additions to and Modification of Company Disclosure Schedule..............40 Section 5.11. Officers..................................................................40 ARTICLE 6 CONDITIONS TO CONSUMMATION OF THE MERGER............................................41 Section 6.1. Conditions to Each Party's Obligations to Effect the Merger...............41 Section 6.2. Conditions to the Obligations of Parent and Purchaser.....................41 Section 6.3. Conditions to the Obligations of the Company..............................41 ARTICLE 7 TERMINATION; AMENDMENT; WAIVER......................................................42 Section 7.1. Termination...............................................................42 Section 7.2. Effect of Termination.....................................................43 Section 7.3. Fees and Expenses.........................................................43 Section 7.4. Amendment.................................................................44 Section 7.5. Extension; Waiver.........................................................44 ARTICLE 8 MISCELLANEOUS.......................................................................45 Section 8.1. Nonsurvival of Representations and Warranties.............................45 Section 8.2. Entire Agreement; Assignment..............................................45 Section 8.3. Validity..................................................................45 Section 8.4. Notices...................................................................45 Section 8.5. Governing Law.............................................................46 Section 8.6. Descriptive Headings......................................................46 Section 8.7. Parties in Interest.......................................................46 ii Section 8.8. Certain Definitions.......................................................46 Section 8.9. Personal Liability........................................................47 Section 8.10. Specific Performance......................................................47 Section 8.11. Counterparts..............................................................47
iii TABLE OF EXHIBITS Exhibit A..................Form of Certificate of Merger iv TABLE OF DEFINED TERMS
Cross Reference Term in Agreement Page - ---- ---------------- ---- affiliate.........................................................Section 8.8(a)......................46 Agreement ........................................................Preamble.............................1 business day......................................................Section 8.8(b)......................46 Business System...................................................Section 3.14(o)(i)..................27 capital stock.....................................................Section 8.8(c)......................47 Certificate of Merger.............................................Section 2.2..........................6 Certificates......................................................Section 2.10(b)......................9 Closing Date......................................................Section 2.3..........................7 Closing...........................................................Section 2.3..........................7 Company Disclosure Schedule.......................................Section 3...........................12 Company Permits...................................................Section 3.10........................18 Company...........................................................Preamble.............................1 Company SEC Reports...............................................Section 3.4(a)......................14 Company Securities................................................Section 3.2(a)......................13 Company Stock Option Agreement....................................Preamble.............................1 Company Stockholders'Meeting......................................Section 3.5.........................15 Copyrights........................................................Section 3.14(a).....................23 Delaware Law......................................................Preamble.............................1 Dissenting Shares.................................................Section 2.9(a).......................8 Effective Time....................................................Section 2.2..........................7 Employee Plans....................................................Section 3.11(a).....................19 Employment Agreements.............................................Preamble.............................2 Environmental Claim...............................................Section 3.12(a).....................20 Environmental Laws................................................Section 3.12(a).....................20 ERISA Affiliate...................................................Section 3.11(a).....................19 ERISA.............................................................Section 3.11(a).....................19 excess parachute payments.........................................Section 3.13(l).....................22 Exchange Act......................................................Section 1.1(a).......................2 Exchange Agent....................................................Section 2.10(a)......................9 Final Date........................................................Section 7.1.........................42 Financial Advisor.................................................Section 1.2(a).......................4 Governmental Entity...............................................Section 3.6.........................16 HSR Act...........................................................Section 3.6.........................16 Inbound License Agreements........................................Section 3.14(e).....................24 incentive stock options...........................................Section 2.11(a).....................10 include...........................................................Section 8.8(e)......................47 Indemnified Liabilities...........................................Section 5.8(a)......................39 Indemnified Persons...............................................Section 5.8(a)......................39 Independent Directors.............................................Section 1.3..........................6 Insurance Policies................................................Section 3.16........................28 v Cross Reference Term in Agreement Page - ---- ---------------- ---- Insured Parties...................................................Section 5.8(b)......................40 Intellectual Property.............................................Section 3.14(a).....................23 IRS...............................................................Section 3.11(a).....................19 ISO...............................................................Section 2.11(a).....................10 knowledge or known................................................Section 8.8(d)......................47 Lien..............................................................Section 3.2(b)......................13 Material Adverse Effect on Parent.................................Section 4.1(b)......................30 Material Adverse Effect on the Company............................Section 3.1(b)......................12 Merger............................................................Preamble.............................1 Merger............................................................Section 2.1..........................6 Notice of Superior Proposal.......................................Section 5.3(b)......................36 Offer Documents...................................................Section 1.1(c).......................3 Offer.............................................................Preamble.............................1 Offer to Purchase.................................................Section 1.1(c).......................2 Option Plan.......................................................Section 2.11(a).....................10 Options...........................................................Section 2.11(a).....................10 Other Interests...................................................Section 3.1(c)......................12 Outbound License Agreements.......................................Section 3.14(e).....................25 Parent Common Stock...............................................Preamble.............................1 Parent............................................................Preamble.............................1 Parent SEC Reports................................................Section 4.3(a)......................31 Patents...........................................................Section 3.14(a).....................23 Per Share Amount..................................................Preamble.............................1 person............................................................Section 8.8(f)......................47 Proxy Statement...................................................Section 3.5.........................15 Purchaser.........................................................Preamble.............................1 Schedule 14D-1....................................................Section 1.1(c).......................3 Schedule 14D-9....................................................Section 1.2(a).......................4 SEC...............................................................Section 1.1(c).......................3 Securities Act....................................................Section 3.4(a)......................14 Shares............................................................Preamble.............................1 Software..........................................................Section 3.14(l).....................26 Stockholders Agreement............................................Preamble.............................1 subsidiary or subsidiaries........................................Section 8.8(g)......................47 Superior Proposal.................................................Section 5.3(c)......................37 Surviving Corporation.............................................Section 2.1..........................6 Tax or Taxes......................................................Section 3.13(a)(i)..................21 Tax Return........................................................Section 3.13(a)(ii).................21 Third Party Acquisition...........................................Section 5.3(c)......................36 Third Party.......................................................Section 5.3(c)......................37 Trade Secrets.....................................................Section 3.14(a).....................23 Trademarks........................................................Section 3.14(a).....................23 Year 2000 Compliant...............................................Section 3.14(o)(i)..................27
vi AGREEMENT AND PLAN OF MERGER THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of June 14, 1999, is by and among OrCAD, Inc., a Delaware corporation (the "Company"), Cadence Design Systems, Inc., a Delaware corporation ("Parent"), and CDSI Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of Parent ("Purchaser"). WHEREAS, the Boards of Directors of the Company, Parent and Purchaser have each determined that it is in the best interests of their respective stockholders for Purchaser to acquire the Company upon the terms and subject to the conditions set forth herein; and WHEREAS, in furtherance thereof, it is proposed that Purchaser will make a cash tender offer (the "Offer") to acquire all shares of the issued and outstanding common stock, $.01 par value, of the Company (the "Shares"), for Thirteen Dollars ($13.00) per Share or such higher price as may be paid in the Offer (the "Per Share Amount"), net to the seller in cash; and WHEREAS, also in furtherance of such acquisition, the Boards of Directors of the Company, Purchaser and Parent have each approved the merger (the "Merger") of Purchaser with and into the Company following the Offer in accordance with the General Corporation Law of the State of Delaware ("Delaware Law") and upon the terms and subject to the conditions set forth herein; and WHEREAS, it is also proposed in connection with such acquisition that, upon the terms and subject to the conditions set forth herein, upon consummation of the Merger, each then outstanding Option (as defined below) to purchase one share of common stock, $.01 par value, of the Company, unless otherwise provided herein, shall be converted into an option to purchase that number of shares, or fraction of a share, of the common stock, $.01 per share, of Parent ("Parent Common Stock") having a value (determined as provided herein) equal to the Per Share Amount; and WHEREAS, as an inducement and a condition to Parent's and Purchaser's entering into this Agreement, contemporaneously with the execution and delivery of this Agreement, (i) the Company has entered into a stock option agreement with Parent and Purchaser (the "Company Stock Option"), pursuant to which the Company has granted to Parent or Purchaser, as Parent may designate, an option to purchase Shares upon the terms and subject to conditions set forth in the Company Stock Option and (ii) certain stockholders of the Company have entered into a Stockholders Agreement with Parent and Purchaser (the "Stockholders Agreement"), pursuant to which each such stockholder has, among other things, agreed to tender its Shares in the Offer, granted to Parent a proxy with respect to the voting of such Shares and granted to Parent or Purchaser, as Parent may designate, an option to purchase such Shares, in each case upon the terms and subject to the conditions set forth in the Stockholders Agreement; and WHEREAS, as an inducement to Parent's and Purchaser's entering into this Agreement, contemporaneously with the execution and delivery of this Agreement the Company and Parent have entered into employment agreements with certain senior executive officers of the Company (the "Employment Agreements"); and NOW, THEREFORE, in consideration of the foregoing premises and the representations, warranties, covenants and agreements herein contained, and intending to be legally bound hereby, the Company, Parent and Purchaser hereby agree as follows: ARTICLE 1. THE TENDER OFFER Section 1.1. THE OFFER. (a) Provided that this Agreement shall not have been terminated in accordance with Section 7.1 hereof and none of the events set forth in Annex I hereto shall have occurred and be existing, Parent shall cause Purchaser to commence and Purchaser shall commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934 (the "Exchange Act") the Offer as promptly as practicable, but in no event later than five business days following the execution of this Agreement. Upon the satisfaction of the conditions set forth in Annex I hereto, subject to any extension of the Offer permitted by Section 1.1(d) hereof, Parent and Purchaser will be obligated to accept for payment any Shares validly tendered and not withdrawn. Parent expressly reserves the right from time to time, subject to Sections 1.1 (b) and 1.1(d) hereof, to waive any such condition, to increase the Per Share Amount, or to make any other changes in the terms and conditions of the Offer. The Per Share Amount shall be net to the seller in cash, subject to reduction only for any applicable Federal back-up withholding or stock transfer taxes payable by the seller. The Company agrees that no Shares held by the Company or any of its Subsidiaries (as hereinafter defined) will be tendered pursuant to the Offer. (b) Without the prior written consent of the Company, Parent shall not (i) decrease the Per Share Amount or change the form of consideration payable in the Offer, (ii) decrease the number of Shares sought, (iii) amend or waive satisfaction of the Minimum Condition (as defined in Annex I) to permit the purchase of Shares constituting less than a majority of the number of Shares outstanding, (iv) impose additional conditions to the Offer, (v) amend any one or more of the conditions set forth in Annex I to broaden the scope of such condition or conditions or (vi) amend any other term of the Offer in any manner adverse to the holders of Shares. Upon the terms and subject to the conditions of the Offer, Purchaser will accept for payment and purchase, as soon as permitted under the terms of the Offer, all Shares validly tendered and not withdrawn prior to the expiration of the Offer. (c) The Offer shall be made by means of an offer to purchase (the "Offer to Purchase") having only the conditions set forth in Annex I hereto. As soon as practicable on the date the Offer is commenced, Parent and Purchaser shall file with the Securities and 2 Exchange Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 (together with all amendments and supplements thereto, the "Schedule 14D-1") with respect to the Offer that will comply in all material respects with the provisions of such Schedule 14D-1 and all applicable Federal securities laws, and will include or incorporate by reference the Offer to Purchase and forms of the related letter of transmittal and summary advertisement (which documents, together with any supplements or amendments thereto, and any other SEC schedule or form which is filed in connection with the Offer and related transactions, are referred to collectively herein as the "Offer Documents"). Parent and Purchaser agree promptly to correct the Schedule 14D-1 or the Offer Documents if and to the extent that any of them shall have become false or misleading in any material respect (and the Company, with respect to written information supplied by it specifically for use in the Schedule 14D-1 or the Offer Documents, shall promptly notify Parent of any required corrections of such information and shall cooperate with Parent and Purchaser with respect to correcting such information) and to supplement the information provided by it specifically for use in the Schedule 14D-1 or the Offer Documents to include any information that shall become necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, and Parent and Purchaser further agree to take all steps necessary to cause the Schedule 14D-1, as so corrected or supplemented, to be filed with the SEC and the Offer Documents, as so corrected or supplemented, to be disseminated to holders of Shares, in each case as and to the extent required by applicable Federal securities laws. The Company and its counsel shall be given a reasonable opportunity to review and comment on any Offer Documents before they are filed with the SEC. Parent and Purchaser shall provide the Company in writing with any comments Parent, Purchaser or their counsel may receive from the SEC or its staff with respect to the Offer Documents promptly after receipt of such comments. (d) The Offer to Purchase shall provide for an initial expiration date of 20 business days (as defined in Rule 14d-1 under the Exchange Act) from the date of commencement. Purchaser agrees that it shall not terminate or withdraw the Offer or extend the expiration date of the Offer unless at the expiration date of the Offer the conditions to the Offer described in Annex I hereto shall not have been satisfied or earlier waived. If at the expiration date of the Offer, the conditions to the Offer described in Annex I hereto shall not have been satisfied or earlier waived, Parent may, from time to time extend the expiration date of the Offer until the date such conditions are satisfied or earlier waived and Parent becomes obligated to accept for payment and pay for Shares tendered pursuant to the Offer; provided, however, that the expiration date of the Offer may not be extended beyond September 30, 1999 without the consent of the Company. Notwithstanding the foregoing, Purchaser may, without the consent of the Company, (i) extend the expiration date of the Offer (as it may be extended) for any period required by applicable rules and regulations of the SEC in connection with an increase in the consideration to be paid pursuant to the Offer or any other material development affecting the Offer and (ii) extend the expiration date of the Offer (as it may be extended) for up to ten business days, if on such expiration date the conditions for the Offer described on Annex I hereto shall have been satisfied or earlier waived, but the number of Shares that have been validly tendered and not withdrawn represents less than 90 percent of the then issued and outstanding Shares on a fully diluted basis; provided, however, that the 3 expiration date of the Offer may not be extended beyond September 30, 1999 without the consent of the Company. Parent and Purchaser agree that if all of the conditions to the Offer set forth on Annex A are not satisfied on any scheduled expiration date, then if all such conditions are reasonably capable of being satisfied prior to September 30, 1999, Purchaser shall extend the Offer from time to time (each such individual extension not to exceed 10 Business Days after the previously scheduled expiration date) until such conditions are satisfied or waived; provided, however, that Purchaser shall not be required to extend the Offer beyond August 30, 1999 if, as of such date, the Minimum Condition shall not have been satisfied. Section 1.2. COMPANY ACTION. (a) The Company hereby approves of and consents to the Offer and represents and warrants that the Board of Directors of the Company (the "Company Board"), at a meeting duly called and held on June 14, 1999, at which all of the Directors were present, duly and unanimously: (i) approved and adopted this Agreement and the Company Stock Option and the transactions contemplated hereby and thereby, including the Offer, the Merger, the Employment Agreements and Parent's acquisition of Shares pursuant to the Stockholders Agreement; (ii) recommended that the stockholders of the Company accept the Offer, tender their Shares pursuant to the Offer and approve this Agreement and the transactions contemplated hereby, including the Merger; (iii) determined that this Agreement and the transactions contemplated hereby, including the Offer and the Merger, are fair to and in the best interests of the stockholders of the Company; and (iv) took all action necessary to render the limitations on business combinations contained in Section 203 of Delaware Law inapplicable to this Agreement, the Company Stock Option, the Stockholders Agreement and the transactions contemplated hereby and thereby. The Company further represents and warrants that (x) Alliant Partners (the "Financial Advisor") has rendered to the Company Board a written opinion, dated as of June 14, 1999, to the effect that, subject to the assumptions and limitations set forth therein, $13.00 in cash per Share to be received by the stockholders of the Company pursuant to the Offer and the Merger is fair to such stockholders from a financial point of view and (y) a true and correct copy of such opinion has been delivered to Parent. (b) The Company hereby agrees to file with the SEC, as promptly as practicable after the filing by Parent and Purchaser of the Schedule 14D-1 with respect to the Offer, a Tender Offer Solicitation/Recommendation Statement on Schedule 14D-9 (together with any amendments or supplements thereto, the "Schedule 14D-9") that (i) will comply in all material respects with the provisions of all applicable Federal securities laws and (ii) will include the opinion of the Financial Advisor referred to in Section 1.2(a) hereof. The Company agrees to mail such Schedule 14D-9 to the stockholders of the Company along with the Offer Documents promptly after the commencement of the Offer. The Schedule 14D-9 and the Offer Documents shall contain the recommendations of the Company Board described in Section 1.2(a) hereof. The Company agrees promptly to correct the Schedule 14D-9 if and to the extent that it shall become false or misleading in any material respect (and each of Parent and Purchaser, with respect to written information supplied by it specifically for use in 4 the Schedule 14D-9, shall promptly notify the Company of any required corrections of such information and cooperate with the Company with respect to correcting such information) and to supplement the information contained in the Schedule 14D-9 to include any information that shall become necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, and the Company shall take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the SEC and disseminated to the Company's stockholders to the extent required by applicable Federal securities laws. Parent and its counsel shall be given a reasonable opportunity to review and comment on the Schedule 14D-9 before it is filed with the SEC. The Company shall provide Parent and Purchaser in writing with any comments the Company or its counsel may receive from the SEC or its staff with respect to the Schedule 14D-9 promptly after receipt of such comments. (c) In connection with the Offer, the Company shall promptly upon execution of this Agreement furnish Parent with mailing labels containing the names and addresses of all record holders of Shares, non-objecting beneficial owners list and security position listings of Shares held in stock depositories, each as of a recent date, and shall promptly furnish Parent with such additional information, including updated lists of stockholders, mailing labels and security position listings, and such other information and assistance as Parent or its agents may reasonably request for the purpose of communicating the Offer to the record and beneficial holders of Shares. Section 1.3. DIRECTORS. Promptly upon the purchase by Purchaser of any Shares pursuant to the Offer, and from time to time thereafter as Shares are acquired by Purchaser, Parent shall be entitled to designate such number of directors, rounded up to the next whole number, on the Company Board as will give Parent, subject to compliance with Section 14(f) of the Exchange Act, representation on the Company Board equal to at least that number of directors which equals the product of the total number of directors on the Company Board (giving effect to the directors appointed or elected pursuant to this sentence) multiplied by the percentage that the aggregate number of Shares beneficially owned by Parent or any affiliate of Parent (including for purposes of this Section 1.3 such Shares as are accepted for payment pursuant to the Offer, but excluding Shares held by the Company or any of its Subsidiaries) bears to the number of Shares outstanding. At each such time, the Company will also cause (i) each committee of the Company Board, (ii) if requested by Parent, the Company Board of each of the Subsidiaries and (iii) if requested by Parent, each committee of such board to include persons designated by Parent constituting the same percentage of each such committee or board as Parent's designees constitute on the Company Board. The Company shall, upon request by Parent, promptly increase the size of the Company Board or exercise its best efforts to secure the resignations of such number of directors as is necessary to enable Parent's designees to be elected to the Company Board in accordance with the terms of this Section 1.3 and shall cause Parent's designees to be so elected. Notwithstanding the foregoing, until the Effective Time (as defined in Section 2.2 hereof) the Company Board shall have at least two directors who are directors on the date hereof and who are neither officers of the Company nor designees, stockholders, affiliates or associates (within the meaning of the Federal securities laws) of Parent (such directors, the "Independent 5 Directors"); provided further, that if at any time or from time to time fewer than two Independent Directors remain, the other directors shall elect to the Company Board such number of persons who shall be neither officers of the Company nor designees, shareholders, affiliates or associates of Parent so that the total of such persons and remaining Independent Directors serving on the Company Board is at least two. Any such person elected to the Company Board pursuant to the second proviso of the preceding sentence shall be deemed to be an Independent Director for purposes of this Agreement. Subject to applicable law, the Company shall promptly take all action necessary pursuant to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order to fulfill its obligations under this Section 1.3 and shall include in the Schedule 14D-9 mailed to stockholders promptly after the commencement of the Offer (or an amendment thereof or an information statement pursuant to Rule 14f-1 if Parent has not theretofore designated directors) such information with respect to the Company and its officers and directors as is required under Section 14(f) and Rule 14f-1 in order to fulfill its obligations under this Section 1.3. Parent will supply the Company any information with respect to itself and its nominees, officers, directors and affiliates required by Section 14(f) and Rule 14f-1. Notwithstanding anything in this Agreement to the contrary, following the time directors designated by Parent constitute a majority of the Company Board and prior to the Effective Time, the affirmative vote of the Independent Directors shall be required to (i) amend or terminate on behalf of the Company this Agreement or the Company Stock Option Agreement, (ii) exercise or waive any of the Company's rights or remedies hereunder or thereunder, (iii) extend the time for performance of Parent's or Purchaser's obligations hereunder or thereunder or (iv) take any other action required to be taken by the Company Board hereunder or thereunder. ARTICLE 2 THE MERGER Section 2.1. THE MERGER. At the Effective Time (as defined below) and upon the terms and subject to the conditions of this Agreement and in accordance with the Delaware Law, Purchaser shall be merged with and into the Company (the "Merger"). Following the Merger, the Company shall continue as the surviving corporation (the "Surviving Corporation") and the separate corporate existence of Purchaser shall cease. At the election of the parties, the Merger may be structured so that the Company shall be merged with and into Purchaser or Parent with the result that Purchaser or Parent shall become the "Surviving Corporation." Parent, as the sole stockholder of Purchaser, hereby approves the Merger and this Agreement. Section 2.2 EFFECTIVE TIME. Subject to the terms and conditions set forth in this Agreement, on the Closing Date (as defined in Section 2.3), a Certificate of Merger substantially in the form of EXHIBIT A (the "Certificate of Merger") shall be duly executed and acknowledged by Purchaser and the Company and thereafter delivered to the Secretary of State of the State of Delaware for filing pursuant to Section 251 of the Delaware Law. 6 The Merger shall become effective at such time as a properly executed copy of the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware in accordance with Section 251 of the Delaware Law or such later time as Parent and the Company may agree upon and as set forth in the Certificate of Merger (the time the Merger becomes effective being referred to herein as the "Effective Time"). Section 2.3. CLOSING OF THE MERGER. The closing of the Merger (the "Closing") will take place at a time and on a date (the "Closing Date") to be specified by the parties, which shall be no later than the second business day after satisfaction of the latest to occur of the conditions set forth in Article 6, at the offices of Gibson, Dunn & Crutcher LLP, 1530 Page Mill Road, Palo Alto, California, unless another time, date or place is agreed to in writing by the parties hereto. Section 2.4. EFFECTS OF THE MERGER. The Merger shall have the effects set forth in the Delaware Law. Without limiting the generality of the foregoing and subject thereto, at the Effective Time, all the properties, rights, privileges, powers and franchises of the Company and Purchaser shall vest in the Surviving Corporation and all debts, liabilities and duties of the Company and Purchaser shall become the debts, liabilities and duties of the Surviving Corporation. Section 2.5. CERTIFICATE OF INCORPORATION AND BYLAWS. The Certificate of Incorporation of Purchaser in effect at the Effective Time shall be the Certificate of Incorporation of the Surviving Corporation until amended in accordance with applicable law, except that Article 1 shall be amended to read in full as follows: "The name of the Corporation is OrCAD, Inc." The bylaws of Purchaser in effect at the Effective Time shall be the bylaws of the Surviving Corporation until amended in accordance with applicable law. Section 2.6. DIRECTORS. The directors of Purchaser at the Effective Time shall be the initial directors of the Surviving Corporation, each to hold office in accordance with the Certificate of Incorporation and bylaws of the Surviving Corporation until such director's successor is duly elected or appointed and qualified. Section 2.7. OFFICERS. The officers of Purchaser at the Effective Time shall be the initial officers of the Surviving Corporation, each to hold office in accordance with the Certificate of Incorporation and bylaws of the Surviving Corporation until such officer's successor is duly elected or appointed and qualified. Section 2.8. CONVERSION OF SHARES. (a) At the Effective Time, each Share issued and outstanding immediately prior to the Effective Time (other than (i) Shares held in the Company's treasury or by any of the Company's subsidiaries and (ii) Shares held by Parent, Purchaser or any other subsidiary of Parent) shall, by virtue of the Merger and without any action on the part of Purchaser, the 7 Company or the holder thereof, be canceled and extinguished and be converted into the right to receive the Per Share Amount in cash payable to the holder thereof, without interest, upon surrender of the certificate representing such Share. Each holder of a certificate representing any such Shares shall cease to have any rights with respect thereto, except the right to receive the Per Share Amount, without interest, upon the surrender of such certificate in accordance with Section 2.10 hereof. (b) At the Effective Time, each outstanding share of the common stock, $0.01 par value per share, of Purchaser shall be converted into one share of common stock, $0.01 par value per share, of the Surviving Corporation. (c) At the Effective Time, each Share held in the treasury of the Company and each Share held by Parent, Purchaser or any subsidiary of Parent, Purchaser or the Company immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of Purchaser, the Company or the holder thereof, be canceled, retired and cease to exist and no shares of Parent Common Stock shall be delivered with respect thereto. Section 2.9. DISSENTERS AND APPRAISAL RIGHTS. (a) Notwithstanding any provision of this Agreement to the contrary, any Shares held by a holder who has demanded and perfected such holder's demand for appraisal of such holder's Shares in accordance with Delaware Law (including but not limited to Section 262 thereof) and as of the Effective Time has neither effectively withdrawn nor lost his right to such appraisal ("Dissenting Shares"), shall not be converted into or represent a right to receive cash pursuant to Section 2.8(a), but the holder thereof shall be entitled to only such rights as are granted by Delaware Law. (b) Notwithstanding the provisions of subsection (a) of this Section, if any holder of Shares who demands appraisal of such holder's Shares under Delaware Law shall effectively withdraw or lose (through failure to perfect or otherwise) his right to appraisal, then as of the Effective Time or the occurrence of such event, whichever later occurs, such holder's Shares shall automatically be converted into and represent only the right to receive cash as provided in Section 2.8(a), without interest thereon, upon surrender of the certificate or certificates representing such Shares. (c) The Company shall give Parent (i) prompt notice of any written demands for appraisal or payment of the fair value of any Shares, withdrawals of such demands, and any other instruments served pursuant to Delaware Law received by the Company and (ii) the opportunity to direct all negotiations and proceedings with respect to demands for appraisal under Delaware Law. The Company shall not voluntarily make any payment with respect to any demands for appraisal and shall not, except with the prior written consent of Parent, settle or offer to settle any such demands. 8 Section 2.10. EXCHANGE OF CERTIFICATES. (a) From time to time following the Effective Time, as required by subsections (b) and (c) below, Parent shall deliver to a depository or trust institution of recognized standing selected by Parent and Purchaser (the "Exchange Agent"), for the benefit of holders of Shares funds in amounts and at times necessary for the payments under Section 2.8(a) to which such holders shall be entitled. Such funds shall be invested by the Exchange Agent as directed by Parent. Any net profits resulting from, or interest or income produced by, such investments shall be payable to, or as directed by, Parent. (b) As soon as reasonably practicable after the Effective Time, the Exchange Agent shall mail to each holder of record of a certificate or certificates that immediately prior to the Effective Time represented outstanding Shares (the "Certificates") and whose shares were converted into the right to receive cash pursuant to Section 2.8(a): (i) a letter of transmittal (which shall specify that delivery shall be effected and risk of loss and title to the Certificates shall pass only upon delivery of the Certificates to the Exchange Agent and shall be in such form and have such other provisions as Parent and the Company may reasonably specify) and (ii) instructions for use in effecting the surrender of the Certificates pursuant hereto. Upon surrender of a Certificate for cancellation to the Exchange Agent together with such letter of transmittal duly executed, the holder of such Certificate shall be entitled to receive in exchange therefor the Per Share Amount multiplied by the number of Shares evidenced thereby, and the Certificate so surrendered shall forthwith be canceled. In the event of a transfer of ownership of Shares that is not registered in the transfer records of the Company, the Per Share Amount payable in respect thereof may be paid to a transferee if the Certificate representing such Shares is presented to the Exchange Agent accompanied by all documents required to evidence and effect such transfer and by evidence that any applicable stock transfer taxes have been paid. Until surrendered as contemplated by this Section 2.10, each Certificate shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender the Per Share Amount in accordance herewith. (c) In the event that any Certificate for Shares shall have been lost, stolen or destroyed, the Per Share Amount shall be paid in respect of the Shares evidenced thereby upon the making of an affidavit of that fact by the holder thereof and delivery of a suitable bond or indemnity. (d) There shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of the Shares that were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates are presented to the Surviving Corporation for any reason, they shall be canceled and exchanged as provided in this Article 2. (e) Any portion of the Exchange Fund that remains undistributed to the stockholders of the Company upon the expiration of six (6) months after the Effective Time shall be delivered to Parent upon demand and any stockholders of the Company who have not 9 theretofore complied with this Article 2 shall thereafter look only to Parent for payment of their claim for the Per Share Amount payable in respect of the Shares so held. (f) Neither Parent, Purchaser nor the Company shall be liable to any holder of Shares for cash delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. Section 2.11. STOCK OPTIONS. (a) The Company shall take all actions necessary to provide that, except as provided in Sections 2.11(b) and (c) below with respect to options granted under the Company's 1995 Stock Option Plan for Nonemployee Directors (the "Director Option Plan") and the Company's 1991 Non-Qualified Option Plan (the "1991 Option Plan"), upon consummation of the Merger, each then outstanding option to purchase shares of Company common stock (the "General Options") granted under any of the Company's other stock option plans referred to in Section 3.11(a), each as amended (collectively, the "General Option Plans,"" and, together with the Director Option Plan and the 1991 Option Plan, the "Option Plans"), and any and all other outstanding options, stock warrants and stock rights granted pursuant to such stock option plans or otherwise, and in each case, whether or not then exercisable or vested, shall be deemed to constitute an option to acquire, on the same terms and conditions as were applicable under such Company Stock Option, a number of shares of Parent Common Stock, with fractions rounded off to the nearest whole number, equal to the number of Shares subject thereto multiplied by that number of shares, or the fraction of a share, of Parent Common Stock having a fair market value, determined as set forth below, equal to the Per Share Amount; provided, however, that in the case of any option to which Section 421 of the Code applies by reason of its qualification under Section 422 of the Code ("incentive stock options" or "ISOs") the option price, the number of shares purchasable pursuant to such option and the terms and conditions of exercise of such option shall be determined in order to comply with Section 424(a) of the Code. (b) The Company shall take all actions necessary to provide that, upon consummation of the Merger, each then outstanding option (the "Director Options") to purchase shares of Company common stock granted under the Director Option Plan, whether or not then exercisable or vested, shall, by virtue of the Merger and without any action on the part of Purchaser, the Company or the holder thereof, be canceled and be extinguished and be converted into the right to receive, in cash, the product of (i) the number of shares of Company common stock subject to such Director Option and (ii) the excess of the Per Share Amount over the per share exercise price applicable to such Director Option. (c) The Company shall take all actions necessary to provide that, upon consummation of the Merger, each then outstanding option (the "1991 Options") to purchase shares of Company common stock granted under the 1991 Option Plan, whether or not then exercisable or vested, shall be deemed to constitute an option to acquire, on the same terms and conditions as were applicable under such 1991 Option, a number of shares of Parent Common Stock, with fractions rounded off to the nearest whole number, equal to the number 10 of Shares subject thereto multiplied by that number of shares, or the fraction of a share, of Parent Common Stock having a fair market value, determined as set forth below, equal to the Per Share Amount; provided, however, that if the holder of any 1991 Option does not consent in writing, prior to the Effective Time, to the foregoing treatment, then each 1991 Option held by such holder, whether or not then exercisable or vested, shall, by virtue of the Merger and without any action on the part of Purchaser, the Company or the holder thereof, be canceled and be extinguished and be converted into the right to receive in cash, the product of (i) the number of shares of Company common stock subject to such 1991 Option and (ii) the excess of the Per Share Amount over the per share exercise price applicable to such 1991 Option. (d) For purposes of this Section 2.11, the fair market value of the Parent Common Stock shall be the average closing price of one share of Parent Common Stock (as reported in the Wall Street Journal) during the five trading days immediately preceding the Closing of the Merger. (e) The Company represents and warrants that all the Option Plans provide that the Company can take the actions contemplated in this Agreement, including, without limitation, those contemplated in Sections 2.11(a), (b) or (c) without obtaining the consent of any holders of Options or Company common stock and without resulting in the acceleration of the exercisability or vesting provisions in effect with respect to such Options. Section 2.12. THE STOCK PURCHASE PLAN. (a) The Company shall take all actions necessary, including without limitation, the satisfaction of any notice requirements, to provide that each outstanding and valid option or right to purchase shares of Company common stock (the "Rights") granted or provided under the Company's 1996 Employee Stock Purchase Plan (the "Stock Purchase Plan") shall be exercised automatically on the day that is five (5) days prior to the date scheduled for the Closing of the Merger which shall constitute the New Purchase Date for purposes of the Stock Purchase Plan. The Company shall also take all actions necessary to terminate the Stock Purchase Plan effective immediately after such New Purchase Date. (b) The Company represents and warrants that the Stock Purchase Plan provides that the Company can take the actions contemplated in this Agreement, including, without limitation, those contemplated in Section 2.12(a), without obtaining the consent of any holders of Rights or Company common stock and without resulting in the acceleration of the exercisability provisions in effect with respect to such Rights. ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company hereby represents and warrants to each of Parent and Purchaser, subject to the exceptions set forth in the Disclosure Schedule (the "Company Disclosure 11 Schedule") delivered by the Company to Parent (which exceptions shall specifically identify a Section, Subsection or clause of a single Section or Subsection hereof, as applicable, to which such exception relates) that: Section 3.1. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES; INVESTMENTS. (a) Section 3.1(a) of the Company Disclosure Schedule sets forth, as of the date of this Agreement, a true and complete list of all the Company's directly or indirectly owned subsidiaries, together with the jurisdiction of incorporation of each subsidiary and the percentage of each subsidiary's outstanding capital stock or other equity interests owned by the Company or another subsidiary of the Company. Each of the Company and its subsidiaries is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization and has all requisite power and authority to own, lease and operate its properties and to carry on its businesses as now being conducted. The Company has heretofore delivered to Purchaser or Parent accurate and complete copies of the Certificate of Incorporation and bylaws (or similar governing documents), as currently in full force and effect, of the Company and its subsidiaries. Section 3.1(a) of the Company Disclosure Schedule identifies all the material subsidiaries of the Company. The Company has no operating subsidiaries other than those incorporated in a state of the United States. The Company does not directly or indirectly own any equity or similar interest in, or any interest convertible or exchangeable or exercisable for, any equity or similar interest in, any partnership, joint venture, limited liability company or other business association. (b) Each of the Company and its subsidiaries is duly qualified or licensed and in good standing to do business in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except in such jurisdictions where the failure to be so duly qualified or licensed and in good standing would not, individually or in the aggregate, have a Material Adverse Effect (as defined below) on the Company. Section 3.1(b) of the Company Disclosure Schedule sets forth each jurisdiction in which the Company and each of its subsidiaries is so qualified. When used in connection with the Company or its subsidiaries, the term "Material Adverse Effect on the Company" means any circumstance, change in, or effect on (or circumstance, change in, or effect involving a prospective change on) the Company and its subsidiaries, taken as a whole, (a) that is, or is reasonably likely in the future to be, materially adverse to the operations, assets or liabilities (including contingent liabilities), earnings or results of operations, or the business (financial or otherwise) of the Company and its subsidiaries, taken as a whole, or (b) that would reasonably be expected to prevent or materially delay or impair the ability of the Company to consummate the transactions contemplated by this Agreement. (c) Other than the Company's subsidiaries, the Company does not own any equity investment that represents a five percent (5%) or greater ownership interest in the subject of such investment made by the Company or any of its subsidiaries. 12 Section 3.2. CAPITALIZATION OF THE COMPANY AND ITS SUBSIDIARIES. (a) The authorized capital stock of the Company consists of 16,000,000 shares of common stock, $.01 par value per share, of which, as of June 14, 1999, 9,321,315 Shares were issued and outstanding and 2,000,000 shares of preferred stock, $.01 par value per share, no shares of which are outstanding. All of the outstanding Shares have been validly issued and are fully paid, nonassessable and free of preemptive rights. As of June 14, 1999, 3,973,937 shares of common stock were reserved for issuance upon the exercise of outstanding Options issued pursuant to the Option Plans. Between June 5, 1999 and the date hereof, no shares of the Company's capital stock have been issued other than pursuant to Options already in existence on such date, and between June 5, 1999 and the date hereof no Options have been granted. Except as set forth above, as of the date hereof, there are outstanding (i) no shares of capital stock or other voting securities of the Company, (ii) no securities of the Company or any of its subsidiaries convertible into or exchangeable or exercisable for shares of capital stock or voting securities of the Company, (iii) no options or other rights to acquire from the Company or any of its subsidiaries, and, except as described in the Company SEC Reports (as defined below), no obligations of the Company or any of its subsidiaries to issue any capital stock, voting securities or securities convertible into or exchangeable or exercisable for capital stock or voting securities of the Company and (iv) no equity equivalent interests in the ownership or earnings of the Company or its subsidiaries or other similar rights (collectively "Company Securities"). As of the date hereof, there are no outstanding rights or obligations of the Company or any of its subsidiaries to repurchase, redeem or otherwise acquire any Company Securities. There are no stockholder agreements, voting trusts or other agreements or understandings to which the Company is a party or by which it is bound, or, to the knowledge of the Company, to which any stockholder of the Company is a party or is bound, in either case relating to the voting or registration of any shares of capital stock of the Company. (b) All of the outstanding capital stock of the Company's subsidiaries is owned by the Company, directly or indirectly, free and clear of any Lien or any other limitation or restriction (including any restriction on the right to vote or sell the same except as may be provided as a matter of law). There are no (i) securities of the Company or any of its subsidiaries convertible into or exchangeable or exercisable for, (ii) options or (iii) except for the Rights, other rights to acquire from the Company or any of its subsidiaries any capital stock or other ownership interests in or any other securities of any subsidiary of the Company, and there exists no other contract, understanding, arrangement or obligation (whether or not contingent) providing for the issuance or sale, directly or indirectly, of any such capital stock. There are no outstanding contractual obligations of the Company or its subsidiaries to repurchase, redeem or otherwise acquire any outstanding shares of capital stock or other ownership interests in any subsidiary of the Company. For purposes of this Agreement, "Lien" means, with respect to any asset (including any security), any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset; PROVIDED, HOWEVER, that the term "Lien" shall not include (i) statutory liens for Taxes, which are not yet due and payable or are being contested in good faith by appropriate proceedings and disclosed in Section 3.13(d) of the Company Disclosure Schedule or that are otherwise not material, 13 (ii) statutory or common law liens to secure landlords, lessors or renters under leases or rental agreements confined to the premises rented, (iii) deposits or pledges made in connection with, or to secure payment of, workers' compensation, unemployment insurance, old age pension or other social security programs mandated under applicable laws, (iv) statutory or common law liens in favor of carriers, warehousemen, mechanics and materialmen, to secure claims for labor, materials or supplies and other like liens, and (v) restrictions on transfer of securities imposed by applicable state and federal securities laws. (c) The Company's common stock, $.01 par value per share, constitutes the only class of equity securities of the Company or its subsidiaries registered or required to be registered under the Exchange Act. Section 3.3. AUTHORITY RELATIVE TO THIS AGREEMENT; RECOMMENDATION. (a) The Company has all necessary corporate power and authority to execute and deliver this Agreement and the Company Stock Option, to perform its obligations under this Agreement and the Company Stock Option and to consummate the transactions contemplated thereby. The execution and delivery of this Agreement and the Company Stock Option and the consummation of the transactions contemplated thereby have been duly and validly authorized by the Company Board, and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement and the Company Stock Option or to consummate the transactions contemplated thereby except the approval and adoption of this Agreement by the holders of at least 67% of the outstanding Shares. This Agreement and the Company Stock Option has been duly and validly executed and delivered by the Company and constitute, assuming the due authorization, execution and delivery hereof and thereof by Parent and Purchaser, valid, legal and binding agreements of the Company, enforceable against the Company in accordance with its terms, subject to any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect relating to creditors' rights generally or to general principles of equity. Section 3.4. SEC REPORTS; FINANCIAL STATEMENTs. (a) The Company has filed all required forms, reports and documents ("Company SEC Reports") with the SEC since January 1, 1997, each of which complied at the time of filing in all material respects with all applicable requirements of the Securities Act of 1933, as amended (the "Securities Act"), and the Exchange Act, each law as in effect on the dates such forms, reports and documents were filed. None of such Company SEC Reports, including, any financial statements or schedules included or incorporated by reference therein, contained when filed any untrue statement of a material fact or omitted to state a material fact required to be stated or incorporated by reference therein or necessary in order to make the statements therein in light of the circumstances under which they were made not misleading, except to the extent superseded by a Company SEC Report filed subsequently and prior to the date hereof. The audited consolidated financial statements of the Company included in the Company SEC Reports fairly present, in conformity in all material respects with generally accepted accounting principles applied on a consistent basis (except as may be indicated in the 14 notes thereto), the consolidated financial position of the Company and its consolidated subsidiaries as of the dates thereof and their consolidated results of operations and changes in financial position for the periods then ended. (b) All documents required to be filed as exhibits to the Company SEC Reports have been so filed, and all material contracts so filed as exhibits are in full force and effect, except those that have expired in accordance with their terms, and neither the Company nor any of its subsidiaries is in default thereunder, except where any such default has not resulted in and is not reasonably expected to result in any Material Adverse Effect on the Company. (c) The Company has heretofore made available or promptly will make available to Purchaser or Parent a complete and correct copy of any amendments or modifications that are required to be filed with the SEC but have not yet been filed with the SEC to agreements, documents or other instruments that previously had been filed by the Company with the SEC pursuant to the Exchange Act. Section 3.5. OFFER DOCUMENTS; PROXY STATEMENT. The Schedule 14D-9 will comply in all material respects with the Exchange Act and the rules and regulations thereunder. Neither the Schedule 14D-9 nor any of the information relating to the Company or its affiliates provided by or on behalf of the Company specifically for inclusion in the Schedule 14D-1 or the Offer Documents will, at the respective times the Schedule 14D-9, the Schedule 14D-1 and the Offer Documents or any amendments or supplements thereto are filed with the SEC and are first published, sent or given to stockholders of the Company, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The proxy statement to be sent to the stockholders of the Company in connection with the meeting of the Company's stockholders to consider the Merger (the "Company Stockholders' Meeting") or the information statement to be sent to such stockholders, as appropriate (such proxy statement or information statement, as amended or supplemented, is herein referred to as the "Proxy Statement"), will comply in all material respects with the applicable requirements of the Exchange Act and the rules and regulations thereunder. The Proxy Statement will not, at the time the Proxy Statement (or any amendment or supplement thereto) is filed with the SEC or first sent to stockholders, at the time of the Company Stockholders Meeting or at the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Notwithstanding the foregoing, the Company makes no representation, warranty or covenant with respect to any information supplied or required to be supplied by Parent or Purchaser which is contained in or omitted from any of the foregoing documents. Section 3.6. CONSENTS AND APPROVALS; NO VIOLATIONS. Except for filings, permits, authorizations, consents and approvals as may be required under applicable requirements of the Securities Act, the Exchange Act, state securities or blue sky laws, and the 15 Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), any filings under similar merger notification laws or regulations of foreign Governmental Entities and the filing and recordation of the Certificate of Merger as required by the Delaware Law, no filing with or notice to and no permit, authorization, consent or approval of any United States or foreign court or tribunal, or administrative, governmental or regulatory body, agency or authority (a "Governmental Entity") is necessary for the execution and delivery by the Company of this Agreement, the purchase of Shares by Purchaser pursuant to the Offer, the Company Stock Option or the Stockholders Agreement or the consummation by the Company of the transactions contemplated hereby, except where the failure to obtain such permits, authorizations, consents or approvals or to make such filings or give such notice would not, individually or in the aggregate, materially and adversely affect the business operations of the Company or its ability to consummate the Merger. Neither the execution, delivery and performance of this Agreement by the Company, the purchase of Shares by Purchaser pursuant to the Offer, the Company Stock Option or the Stockholders Agreement nor the consummation by the Company of the transactions contemplated hereby will (i) conflict with or result in any breach of any provision of the respective Certificate of Incorporation or bylaws (or similar governing documents) of the Company or any of its subsidiaries, (ii) except as set forth in Section 3.6 of the Company Disclosure Schedule, result in a violation or breach of or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, amendment, cancellation or acceleration or Lien) under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which the Company or any of its subsidiaries is a party or by which any of them or any of their respective properties or assets may be bound or (iii) except as set forth in Section 3.6 of the Company Disclosure Schedule, violate any order, writ, injunction, decree, law, statute, rule or regulation applicable to the Company or any of its subsidiaries or any of their respective properties or assets except, in the case of clause (ii) or (iii), for violations, breaches or defaults that would not, individually, result in cost, loss or damage to the Company in excess of Two Hundred and Fifty Thousand Dollars ($250,000), in any individual case, or have a Material Adverse Effect on the Company in the aggregate. Section 3.7. NO DEFAULT. Except as set forth in Section 3.7 of the Company Disclosure Schedule, neither the Company nor any of its subsidiaries is in breach, default or violation (and no event has occurred that with notice or the lapse of time or both would constitute a breach, default or violation) of any term, condition or provision of (i) its Certificate of Incorporation or bylaws (or similar governing documents), (ii) any note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which the Company or any of its subsidiaries is now a party or by which it or any of its properties or assets may be bound or (iii) any order, writ, injunction, decree, law, statute, rule or regulation applicable to the Company or any of its subsidiaries or any of its properties or assets, except, in the case of clause (ii) or (iii), for violations, breaches or defaults that would not, individually or in the aggregate, have a Material Adverse Effect on the Company. Section 3.8. NO UNDISCLOSED LIABILITIES; ABSENCE OF CHANGES. Except as and to the extent publicly disclosed by the Company in the Company SEC Reports or as set forth 16 in Section 3.8 of the Company Disclosure Schedule, neither the Company nor any of its subsidiaries has any liabilities or obligations of any nature, whether or not accrued, contingent or otherwise, that would be required by generally accepted accounting principles to be reflected on a consolidated balance sheet of the Company (including the notes thereto), other than liabilities and obligations which, individually or in the aggregate, will not have a Material Adverse Effect on the Company. Except as publicly disclosed by the Company in the Company SEC Reports or as set forth in Section 3.8 of the Company Disclosure Schedule, since December 31, 1998, there have been no events, changes or effects with respect to the Company or its subsidiaries that have had or reasonably would be expected to have a Material Adverse Effect on the Company. Without limiting the generality of the foregoing, except as and to the extent publicly disclosed by the Company in the Company SEC Reports or as set forth in Section 3.8 of the Company Disclosure Schedule, since December 31, 1998, the Company and its subsidiaries have conducted their respective businesses in all material respects only in, and have not engaged in any material transaction other than according to, the ordinary and usual course of such businesses consistent with past practices, and there has not been any (i) change in the financial condition, properties, business or results of operations of the Company and its subsidiaries, except for those changes that, individually or in the aggregate, have not had and are not reasonably likely to have a Material Adverse Effect on the Company; (ii) material damage, destruction or other casualty loss with respect to any material asset or property owned, leased or otherwise used by the Company or any of its subsidiaries, not covered by insurance; (iii) declaration, setting aside or payment of any dividend or other distribution in respect of the capital stock of the Company or any of its subsidiaries (other than wholly-owned subsidiaries) or any repurchase, redemption or other purchase by the Company or any of its subsidiaries of any outstanding shares of capital stock or other securities of, or other ownership interests in, the Company or any of its subsidiaries; (iv) amendment of any material term of any outstanding security of the Company or any of its subsidiaries; (v) incurrence, assumption or guarantee by the Company or any of its subsidiaries of any indebtedness for borrowed money other than in the ordinary course of business and in amounts and on terms consistent with past practices; (vi) creation or assumption by the Company or any of its subsidiaries of any Lien on any material asset other than in the ordinary course of business consistent with past practices; (vii) loan, advance or capital contributions made by the Company or any of its subsidiaries to, or investment in, any person other than (x) loans or advances to employees in connection with business-related travel, (y) loans made to employees consistent with past practices that are not in the aggregate in excess of Fifty Thousand Dollars ($50,000), and (z) loans, advances or capital contributions to or investments in wholly-owned subsidiaries, and in each case made in the ordinary course of business consistent with past practices; (viii) transaction or commitment made, or any contract or agreement entered into, by the Company or any of its subsidiaries relating to its assets or business (including the Purchaser or disposition of any assets) or any relinquishment by the Company or any of its subsidiaries of any contract, agreement or other right, in either case, material to the Company and its subsidiaries, taken as a whole, other than transactions and commitments in the ordinary course of business consistent with past practices and those contemplated by this Agreement; (ix) labor dispute, other than routine individual grievances, or any activity or proceeding by a labor union or representative thereof to organize any employees of the Company or any of its subsidiaries, or any lockouts, strikes, slowdowns, 17 work stoppages or threats thereof by or with respect to such employees; or (x) change by the Company or any of its subsidiaries in its accounting principles, practices or methods. Since December 31, 1998, except as disclosed in the Company SEC Reports filed prior to the date hereof or increases in the ordinary course of business consistent with past practices, there has not been any increase in the compensation payable or that could become payable by the Company or any of its subsidiaries, or any grant of stock options, to (a) officers of the Company or any of its subsidiaries or (b) any employee of the Company or any of its Subsidiaries whose annual cash compensation is Fifty Thousand Dollars ($50,000) or more. Section 3.9. LITIGATION. Except as publicly disclosed by the Company in the Company SEC Reports or as set forth in Section 3.9 of the Company Disclosure Schedule, there is no private or government suit, claim, action, proceeding or investigation pending or, to the knowledge of the Company, threatened against the Company, any of its subsidiaries or any of their respective directors or officers, in their capacities as such, or any of their respective properties or assets before any Governmental Entity that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect on the Company or would reasonably be expected to prevent or delay the consummation of the transactions contemplated by this Agreement. Except as publicly disclosed by the Company in the Company SEC Reports, neither the Company nor any of its subsidiaries is subject to any outstanding order, writ, injunction or decree that, insofar as can be reasonably foreseen in the future, would reasonably be expected to have a Material Adverse Effect on the Company or could reasonably be expected to prevent or delay the consummation of the transactions contemplated hereby. Section 3.10. COMPLIANCE WITH APPLICABLE LAW. Except as publicly disclosed by the Company in the Company SEC Reports, the Company and its subsidiaries hold all permits, licenses, variances, exemptions, orders and approvals of all Governmental Entities necessary for the lawful conduct of their respective businesses (the "Company Permits"), except for failures to hold such permits, licenses, variances, exemptions, orders and approvals that would not, individually or in the aggregate, have a Material Adverse Effect on the Company. Except as publicly disclosed by the Company in the Company SEC Reports, the Company and its subsidiaries are in compliance with the terms of the Company Permits, except where the failure so to comply would not, individually or in the aggregate, have a Material Adverse Effect on the Company. Except as publicly disclosed by the Company in the Company SEC Reports, the businesses of the Company and its subsidiaries are not being conducted in violation of any law, ordinance or regulation of the United States or any foreign country or any political subdivision thereof or of any Governmental Entity, except (i) that no representation or warranty is made in this Section 3.10 with respect to Environmental Laws (as defined in Section 3.12) and (ii) for violations or possible violations of any United States or foreign laws, ordinances or regulations that do not and, insofar as reasonably can be foreseen in the future, will not result in any charges, assessments, levies, fines or other liabilities being imposed upon or incurred by the Company that will equal or exceed One Hundred Thousand Dollars ($100,000) for any single violation or Two Hundred Fifty Thousand Dollars ($250,000) in the aggregate. Except as publicly disclosed by the Company in the Company SEC Reports, no investigation or review by any Governmental Entity with 18 respect to the Company or any of its subsidiaries is pending or, to the knowledge of the Company, threatened, nor, to the knowledge of the Company, has any Governmental Entity indicated an intention to conduct the same, other than such investigations or reviews as would not, individually or in the aggregate, have a Material Adverse Effect on the Company. Section 3.11. EMPLOYEE BENEFIT PLANS; LABOR MATTERS. (a) Section 3.11(a) of the Company Disclosure Schedule lists as of the date hereof all employee benefit plans (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")), and all bonus, stock option, stock purchase, incentive, deferred compensation, supplemental retirement, health, life, or disability insurance, dependent care, severance and other similar fringe or employee benefit plans, programs or arrangements and any current or former employment or executive compensation or severance agreements written or otherwise maintained or contributed to for the benefit of or relating to any employee or former employee of the Company, any trade or business (whether or not incorporated) that is a member of a controlled group including the Company or that is under common control with the Company within the meaning of Section 414 of the Code (an "ERISA Affiliate"), as well as each plan with respect to which the Company or an ERISA Affiliate could incur liability under Section 4069 (if such plan has been or were terminated) or Section 4212(c) of ERISA (together the "Employee Plans"), excluding Employee Plans under which the Company has no remaining obligations and any of the foregoing that are required to be maintained by the Company under the laws of any foreign jurisdiction. The Company has made available to Parent a copy of (i) the most recent annual report on Form 5500 filed with the Internal Revenue Service (the "IRS") for each disclosed Employee Plan where such report is required and (ii) the documents and instruments governing each such Employee Plan (other than those referred to in Section 4(b)(4) of ERISA). No event has occurred and, to the knowledge of the Company, there currently exists no condition or set of circumstances in connection with which the Company or any of its subsidiaries could be subject to any liability under the terms of any Employee Plans, ERISA, the Code or any other applicable law, including any liability under Title IV of ERISA, that would have a Material Adverse Effect on the Company. (b) Section 3.11(b) of the Company Disclosure Schedule sets forth a list as of the date hereof of (i) all employment agreements with officers of the Company; (ii) all agreements with consultants who are individuals obligating the Company to make annual cash payments in an amount exceeding Fifty Thousand Dollars ($50,000); (iii) all Options held by consultants; (iv) all severance agreements, programs and policies of the Company with or relating to its employees except such programs and policies required to be maintained by law; and (v) all plans, programs, agreements and other arrangements of the Company with or relating to its employees that contain change in control provisions whether or not listed in other parts of the Company Disclosure Schedule. The Company has made available to Parent copies (or descriptions in detail reasonably satisfactory to Parent) of all such agreements, plans, programs and other arrangements. 19 (c) Except as disclosed in Section 3.11(c) of the Company Disclosure Schedule, there will be no payment, accrual of additional benefits, acceleration of payments or vesting of any benefit under any Employee Plan or any agreement or arrangement disclosed under this Section 3.11 solely by reason of entering into or in connection with the transactions contemplated by this Agreement. (d) No Employee Plan that is a welfare benefit plan within the meaning of Section 3(1) of ERISA provides benefits to former employees of the Company or its ERISA Affiliates other than pursuant to Section 4980B of the Code or similar state laws. (e) There are no controversies relating to any Employee Plan or other labor matters pending or, to the knowledge of the Company, threatened between the Company or any of its subsidiaries and any of their respective employees, which controversies, individually or in the aggregate, have or would reasonably be expected to have a Material Adverse Effect of the Company. Neither the Company nor any of its subsidiaries is a party to any collective bargaining agreement or other labor union contract applicable to persons employed by the Company or any of its subsidiaries except as disclosed in Section 3.11(e) of the Company Disclosure Schedule, nor does the Company know of any activities or proceedings of any labor union to organize any such employees. The Company has no knowledge of any strikes, slowdowns, work stoppages, lockouts or threats thereof by or with respect to any employees of the Company or any of its subsidiaries. Section 3.12. ENVIRONMENTAL LAWS AND REGULATIONS. (a) Except as publicly disclosed by the Company in the Company SEC Reports, (i) each of the Company and its subsidiaries is in material compliance with all applicable federal, state, local and foreign laws and regulations relating to pollution or protection of human health or the environment (including ambient air, surface water, ground water, land surface or subsurface strata) (collectively "Environmental Laws") except for non-compliances that, individually or in the aggregate, would not have a Material Adverse Effect on the Company, which compliance includes, but is not limited to, the possession by the Company and its subsidiaries of all material permits and other governmental authorizations required under applicable Environmental Laws and compliance with the terms and conditions thereof; (ii) neither the Company nor any of its subsidiaries has received written notice of or, to the knowledge of the Company, is the subject of any action, cause of action, claim, investigation, demand or notice by any person alleging liability under or non-compliance with any Environmental Law (an "Environmental Claim"); and (iii) to the knowledge of the Company, there are no existing facts that are reasonably likely to prevent or interfere with such material compliance in the future. (b) Except as disclosed in the Company SEC Reports, there are no Environmental Claims that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect on the Company that are pending or, to the knowledge of the Company, threatened against the Company or any of its subsidiaries or, to the knowledge of the Company, against any person whose liability for any Environmental Claim the Company 20 or any of its subsidiaries has or may have retained or assumed either contractually or by operation of law. Section 3.13. TAXES. (a) DEFINITIONS. For purposes of this Agreement: (i) the term "Tax" (including "Taxes") means (A) all federal, state, local, foreign and other net income, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, license, lease, service, service use, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, windfall profits, customs, duties or other taxes, fees, assessments or charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts with respect thereto, (B) any liability for payment of amounts described in clause (A) whether as a result of transferee liability, of being a member of an affiliated, consolidated, combined or unitary group for any period, or otherwise through operation of law, and (C) any liability for the payment of amounts described in clauses (A) or (B) as a result of any tax sharing, tax indemnity or tax allocation agreement or any other express or implied agreement to indemnify any other person; and (ii) the term "Tax Return" means any return, declaration, report, statement, information statement and other document required to be filed with respect to Taxes. (b) Except as set forth in Section 3.13(b) of the Company Disclosure Schedule, the Company and its subsidiaries have timely filed all material Tax Returns they are required to have filed; and such Tax Returns are accurate and correct in all material respects and do not contain a disclosure statement under Section 6662 of the Code (or any predecessor provision or comparable provision of state, local or foreign law). (c) The Company and its subsidiaries have paid or adequately provided in the financial statements included in the SEC Reports for all Taxes (whether or not shown on any Tax Return) they are required to have paid or to pay, which amounts are not material either individually or in the aggregate. (d) Except as set forth in Section 3.13(d) of the Company Disclosure Schedule, no material claim for assessment or collection of Taxes is presently being asserted against the Company or its subsidiaries and neither the Company nor any of its subsidiaries is a party to any pending action, proceeding, or investigation by any governmental taxing authority nor does the Company have knowledge of any such threatened action, proceeding or investigation. (e) All amounts that were required to be collected or withheld by or in respect of the Company or any of its subsidiaries in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder or other third party have been 21 duly collected or withheld, and all amounts that were required to be remitted to any Tax authority by or in respect of the Company or its subsidiaries have been duly remitted. (f) Neither the Company nor any of its subsidiaries has requested an extension of time to file any Return not yet filed, nor granted any waiver of any statute of limitations with respect to, or any extension of a period for the assessment of, any Tax. (g) Neither the Company nor any of its subsidiaries has taken any action not in accordance with past practice that would have the effect of deferring any material Tax liability of the Company or its subsidiaries from any taxable period or portion thereof ending on or before or including the Closing Date to any subsequent taxable period. (h) Neither the Company nor any of its subsidiaries has agreed with any Tax authority or filed an election with any Tax authority to pay or be liable for Taxes of another Person, other than by reason of being a member of an affiliated group (as defined in Section 1504 of the Code) with the Company as the common parent corporation. (i) Neither the Company nor any of its subsidiaries is a party to or bound by any Tax sharing agreement, and has no current or contingent contractual obligation to indemnify any other person with respect to Taxes, other than obligations to indemnify a lessor for property Taxes, sales/use Taxes or gross receipts Taxes (but not income or franchise Taxes) imposed on lease payments arising from terms that are customary for leases of similar property. (j) The Company has provided to representatives of the Parent copies of all federal and state income and franchise Returns, and other written correspondence (including requests for extension of time to file Returns), filed or submitted by the Company or any of its subsidiaries with or to the relevant taxing authorities with respect to all periods for which the applicable statutes of limitations remain open, and has produced for Parent's inspection all sales tax, use tax, property tax, and other tax and information returns filed by the Company and any of its subsidiaries. (k) There are no excess loss accounts, deferred inter-company gains or losses, or inter-company items, as such terms are defined in the Treasury Regulations, or other similar amounts that will be required to be recognized or otherwise taken into account as a result of the acquisition of the Shares pursuant to this Agreement. (l) Except as set forth in Section 3.13(l) of the Company Disclosure Schedule, neither the Company nor any of its subsidiaries is a party to any agreement, contract, arrangement or plan that has resulted or would result, individually or in the aggregate, in connection with this Agreement or any change of control of the Company or any of its subsidiaries, in the payment of any "excess parachute payments" within the meaning of Section 28OG of the Code. 22 Section 3.14. INTELLECTUAL PROPERTY. (a) Section 3.14(a) of the Company Disclosure Schedule sets forth, for the Intellectual Property owned, in whole or in part, including jointly with others, by the Company or any of its subsidiaries, a complete and accurate list of all United States and foreign (a) patents and patent applications; (b) Trademark registrations and applications and material unregistered Trademarks; and (c) copyright registrations and applications, indicating for each, the applicable jurisdiction, registration number (or application number), and date issued (or date filed). For purposes of this Agreement, "Intellectual Property" means: trademarks and service marks (whether register or unregistered), trade names, designs and general intangibles of like nature, together with all goodwill related to the foregoing (collectively, "Trademarks"); patents (including any continuations, continuations in part, renewals and applications for any of the foregoing)(collectively "Patents"); copyrights (including any registrations and applications therefor and whether registered or unregistered)(collectively "Copyrights"); computer software; databases; works of authorship; mask works; technology; trade secrets and other confidential information, know-how, proprietary processes, formulae, algorithms, models, user interfaces, customer lists, inventions, discoveries, concepts, ideas, techniques, methods, source codes, object codes, methodologies and, with respect to all of the foregoing, related confidential data or information (collectively, "Trade Secrets"). (b) TRADEMARKS. (i) All Trademark registrations are currently in compliance in all material respects with all legal requirements (including the timely post-registration filing of affidavits of use and incontestability and renewal applications) other than any requirement that, if not satisfied, would not result in a cancellation of any such registration or otherwise materially affect the priority and enforceability of the Trademark in question. (ii) No registered Trademark has been within the last three (3) years or is now involved in any opposition or cancellation proceeding in the United States Patent and Trademark Office. To the Company's knowledge, no such action has been threatened in writing within the one (1)-year period prior to the date of this Agreement. (iii) To the knowledge of the Company and its subsidiaries, there has been no prior use of any material Trademark by any third party which would confer upon said third party superior rights in any such Trademark. (iv) All material Trademarks registered in the United States have been in continuous use by the Company or its subsidiaries. (v) The Company and its subsidiaries have adequately policed the Trademarks against third party infringement; and the material Trademarks registered in the United States have been continuously used in the form appearing in, and in connection with the goods and services listed in, their respective registration certificates. 23 (c) Patents. (i) All Patents are currently in compliance with legal requirements (including payment of filing, examination, and maintenance fees and proofs of working or use) other than any requirement that, if not satisfied, would not result in a revocation or otherwise materially affect the enforceability of the Patent in question. (ii) No Patent has been or is now involved in any interference, reissue, reexamination or opposing proceeding in the United States Patent and Trademark Office. To the Company's knowledge, no such action has been threatened in writing within the one (1)-year period prior to the date of this Agreement. (iii) To the Company's knowledge, there is no patent or patent application of any person that conflicts in any material respect with any Patent. (d) Trade Secrets. (i) The Company has taken reasonable steps in accordance with normal industry practice to protect the Company's rights in confidential information and Trade Secrets of the Company. (ii) Without limiting the generality of Section 3.14(d)(i) and except as would not be materially adverse to the Company or its business, the Company enforces a policy of requiring each relevant employee, consultant and contractor to execute proprietary information, confidentiality and assignment agreements substantially in the Company's standard forms that assign to the Company all rights to any Intellectual Property rights relating to the Company's business and that otherwise appropriately protect the Intellectual Property of the Company, and, except under confidentiality obligations, there has been no disclosure by the Company or any subsidiary of material confidential information or Trade Secrets. (e) LICENSE AGREEMENTS. Section 3.14(e)(1) of the Company Disclosure Schedule sets forth a complete and accurate list of all license agreements granting to the Company or any of its subsidiaries any material right to use or practice any rights under any Intellectual Property other than office automation software used generally in the Company's or any of its subsidiaries' operations and other software that is not used in connection with the design, development, use, maintenance and support, testing, assembly and manufacture of the Company's or any such subsidiary's products and is commercially available on reasonable terms to any person for a license fee of no more than Five Thousand Dollars ($5,000) (collectively, the "Inbound License Agreements"), indicating for each the title and the parties thereto and the amount of any future royalty or license fee payable thereunder. Section 3.14(e)(2) of the Company Disclosure Schedule sets forth a complete and accurate list of all license agreements under which the Company or any of its subsidiaries licenses software or grants other rights in to use or practice any rights under any Intellectual Property, 24 excluding licenses with customers that in the twelve-month period prior to the date hereof have purchased or licensed products for which the total payments to the Company and its subsidiaries did not exceed Seventy-Five Thousand Dollars ($75,000) (collectively, the "Outbound License Agreements"), indicating for each the title and the parties thereto. There is no material outstanding or, to the Company's knowledge, threatened dispute or disagreement with respect to any Inbound License Agreement or any Outbound License Agreement. (f) OWNERSHIP; SUFFICIENCY OF IP ASSETS. The Company or one of its subsidiaries owns or possesses adequate licenses or other rights to use, free and clear of Liens, orders and arbitration awards, all of its Intellectual Property used in its business. The Intellectual Property identified in Section 3.14(a) of the Company Disclosure Schedule, together with the Company's and its subsidiaries' unregistered copyrights and the Company's and such subsidiaries' rights under the licenses granted to the Company or any of its subsidiaries under the Inbound License Agreements, constitute all the material Intellectual Property rights used in the operation of the Company's and its subsidiaries' businesses as they are currently conducted and are all the Intellectual Property rights necessary to operate such businesses after the Effective Time in substantially the same manner as such businesses have been operated by the Company prior thereto. (g) PROTECTION OF IP. The Company has taken reasonable steps to protect the Intellectual Property of the Company and its subsidiaries. The Company has a policy to secure valid written assignments from all consultants and employees who contribute or have contributed to the creation or development of Intellectual Property of the rights to such contributions that the Company does not already own by operation of law. All use, disclosure, or appropriation of Intellectual Property owned by the Company by or to a third party has been pursuant to the terms of a written agreement between the Company and such third party. All use, disclosure or appropriation of Intellectual Property not owned by the Company has been pursuant to the terms of a written agreement between the Company and the owner of such Confidential Information, or is otherwise lawful. (h) NO INFRINGEMENT BY THE COMPANY. The products used, manufactured, marketed, sold or licensed by the Company, and all Intellectual Property used in the conduct of the Company's and its subsidiaries' businesses as currently conducted, do not infringe upon, violate or constitute the unauthorized use of any rights owned or controlled by any third party, including without limitation, any Intellectual Property of any third party. (i) NO PENDING OR THREATENED INFRINGEMENT CLAIMS OR RESTRICTIONS ON USE. Except and to the extent publicly disclosed in the Company SEC Reports, no litigation is now or, within the three (3) years prior to the date of this Agreement, was pending and, to the Company's knowledge, no notice or other claim in writing has been received by the Company within the one (1) year prior to the date of this Agreement, (A) alleging that the Company or any of its subsidiaries has engaged in any activity or conduct that infringes upon, violates, or constitutes the unauthorized use of the Intellectual Property rights of any third party or (B) challenging the ownership, use, validity or enforceability of any Intellectual Property 25 owned or exclusively licensed by the Company. Except as specifically disclosed in one or more Sections of the Company Disclosure Schedules pursuant to this Section 3.14, no Intellectual Property owned or licensed by the Company or any of its subsidiaries is subject to any outstanding order, judgment, decree, stipulation or agreement restricting the use thereof by the Company or any such subsidiary or, in the case of any Intellectual Property licensed to others, restricting the sale, transfer, assignment or licensing thereof by the Company or any of its subsidiaries to any person. Neither the Company nor any of its subsidiaries has entered into any agreement to indemnify any other person against any charge of infringement of any Intellectual Property, other than indemnification provisions contained in purchase orders or customer agreements arising in the ordinary course of business. (j) NO INFRINGEMENT BY THIRD PARTIES. Except as and to the extent publicly disclosed in the Company SEC Reports or as set forth in Section 3.14(j) of the Company Disclosure Schedule, no third party is misappropriating, infringing, diluting, or violating any Intellectual Property owned or exclusively licensed by the Company or any of its subsidiaries, and no such claims have been brought against any third party by the Company or any of its subsidiaries. (k) ASSIGNMENT; CHANGE OF CONTROL. The execution, delivery and performance by the Company of this Agreement, and the consummation of the transactions contemplated hereby, will not result in the loss or impairment of, or give rise to any right of any third party to terminate, any of the Company's or any of its subsidiaries' rights to own any of its Intellectual Property or their respective rights under the License Agreements, nor require the consent of any Governmental Authority or third party in respect of any such Intellectual Property. (l) SOFTWARE. The Software (as defined below) owned or purported to be owned by the Company or any of its subsidiaries, was either (i) developed by employees of Company or any of its subsidiaries within the scope of their employment; (ii) developed by independent contractors who have assigned their rights to the Company or any of its subsidiaries pursuant to written agreements; or (iii) otherwise acquired by the Company or a subsidiary from a third party. Except as set forth in Section 3.14(l) of the Company Disclosure Schedule, the Software does not contain any programming code, documentation or other materials or development environments that embody Intellectual Property rights of any person other than the Company or any of its subsidiaries, except for such materials or development environments obtained by the Company or any of its subsidiaries from other persons who make such materials or development environments generally available to all interested purchasers or end-users on standard commercial terms. For purposes of this Section 3.14(l), "Software" means any and all (i) computer programs, including any and all software implementations of algorithms, models and methodologies, whether in source code or object code, (ii) databases and compilations, including any and all data and collections of data, whether machine readable or otherwise, (iii) descriptions, flow-charts and other work product used to design, plan, organize and develop any of the foregoing, and (iv) all documentation, including user manuals and training materials, relating to any of the foregoing. 26 (m) PERFORMANCE OF EXISTING SOFTWARE PRODUCTS. The Company's and its subsidiaries' existing and currently manufactured and marketed Software products listed and described on Section 3.14(m) of the Company Disclosure Schedule perform in all material respects, free of significant bugs or programming errors, the functions described in any agreed specifications or end user documentation or other information provided to customers of the Company on which such customers relied when licensing or otherwise acquiring such products. (n) DOCUMENTATION. The Company and its subsidiaries have taken all actions customary in the software industry to document the Software and its operation, such that the materials comprising the Software, including the source code and documentation, have been written in a clear and professional manner so that they may be understood, modified and maintained in an efficient manner by reasonably competent programmers. (o) YEAR 2000 COMPLIANCE. (i) Except as set forth in Section 3.14(o) of the Company Disclosure Schedule, all of the Company's and its subsidiaries' material products (including products currently under development) will record, store, process and calculate and present calendar dates falling on and after December 31, 1998, and will calculate any information dependent on or relating to such dates in the same manner and with the same functionality, data integrity and performance as the products record, store, process, calculate and present calendar dates on or before December 31, 1998, or calculate any information dependent on or relating to such dates (collectively "Year 2000 Compliant"). Except as set forth in Section 3.14(o) of the Company Disclosure Schedule, (A) all of the Company's and its subsidiaries' material products will lose no significant functionality with respect to the introduction of records containing dates falling on or after December 31, 1998; (B) all of the Company's and its subsidiaries' internal computer systems comprised of software, hardware, databases or embedded control systems (microprocessor controlled, robotic or other device) related to the Company's and its subsidiaries' businesses (collectively, a "Business System"), that constitutes any material part of, or is used in connection with the use, operation or enjoyment of, any material tangible or intangible asset or real property of the Company and its subsidiaries, including its accounting systems, are Year 2000 Compliant. Except as set forth on Section 3.14(o) of the Company Disclosure Schedule, the current versions of the Company's and its subsidiaries' software and all other Intellectual Property may be used prior to, during and after December 31, 1998, such that such Software and Intellectual Property will operate prior to, during and after such time period without error caused by date data that represents or references different centuries or more than one century. (ii) To the knowledge of the Company, none of the Company's products and the conduct of the Company's business with customers and suppliers will be materially adversely affected by the advent of the year 2000, the advent of the twenty-first century or the transition from the twentieth century through the year 2000 and into the twenty-first century. To the knowledge of the Company and except as set forth on Section 3.14(o) of the Company Disclosure Schedule, neither the Company nor any of its 27 subsidiaries is reasonably likely to incur material expenses arising from or relating to the failure of any of its Business Systems or any products (including all products sold on or prior to the date hereof) as a result of the advent of the year 2000, the advent of the twenty-first century or the transition from the twentieth century through the year 2000. Section 3.15. CERTAIN CONTRACT MATTERS. (a) Section 3.15 (a) of the Company Disclosure Schedule sets forth each oral or written (i) distributor, VAR (value added reseller), sales representative or similar agreement to which the Company is a party, other than any such agreement which is subject to termination by the Company, without penalty or cost (other than the cost of return of unsold products) in excess of $10,000, upon notice of 90 days or less; (ii) OEM agreement to which the Company is a party, and which has a remaining term in excess of 90 days, other than any such agreement referred to in clause (ii) pursuant to which total sales by the Company in the year ended December 31, 1998 were less than $100,000 and anticipated sales during calendar year 1999 are less than such amount; (iii) other contract or commitment in which the Company or any of its subsidiaries has granted or received manufacturing rights, most favored customer pricing provisions or exclusive marketing rights relating to any product or service, any group of products or services or any territory; and (iv) joint venture or partnership contract or agreement or other agreement which has involved or is reasonably expected to involve a sharing of profits or losses with any other party. (b) Except as set forth in Section 3.15(b) of the Company Disclosure Schedule, the Company is not a party to, or bound by, any agreement which restricts its ability to engage in business, or compete with any person, in any product line or line of business in any place in the world. Section 3.16. INSURANCE. Each of the Company and its subsidiaries maintains insurance policies (the "Insurance Policies") against all risks of a character and in such amounts as are usually insured against by similarly situated companies in the same or similar businesses. Each Insurance Policy is in full force and effect and is valid, outstanding and enforceable, and all premiums due thereon have been paid in full. None of the Insurance Policies will terminate or lapse (or be affected in any other materially adverse manner) by reason of the transactions contemplated by this Agreement. Each of the Company and its subsidiaries has complied in all material respects with the provisions of each Insurance Policy under which it is the insured party. No insurer under any Insurance Policy has canceled or generally disclaimed liability under any such policy or, to the Company's knowledge, indicated any intent to do so or not to renew any such policy. All material claims under the Insurance Policies have been filed in a timely fashion. Section 3.17. CERTAIN BUSINESS PRACTICES. None of the Company, any of its subsidiaries or any directors, officers, agents or employees of the Company or any of its subsidiaries has (i) used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to foreign or domestic political parties or 28 campaigns or violated any provision of the Foreign Corrupt Practices Act of 1977, as amended, or (iii) made any other unlawful payment. Section 3.18. PRODUCT WARRANTIES. Section 3.18 of the Company Disclosure Schedule sets forth complete and accurate copies of the written warranties and guaranties by the Company or any of its subsidiaries currently in effect with respect to its products. There have not been any material deviations from such warranties and guaranties, and neither the Company, any of its subsidiaries nor any of their respective salesmen, employees, distributors and agents is authorized to undertake obligations to any customer or to other third parties in excess of such warranties or guaranties. Neither the Company nor any of its subsidiaries has made any oral warranty or guaranty with respect to its products. Section 3.19. SUPPLIERS AND CUSTOMERS. The documents and information supplied by the Company to Parent or any of its representatives in connection with this Agreement with respect to relationships and volumes of business done with its significant suppliers and customers are accurate in all material respects. During the last twelve (12) months, the Company has received no notices of termination or written threats of termination from any of the five (5) largest suppliers or the five (5) largest customers of the Company and its subsidiaries. Section 3.20. VOTE REQUIRED. The affirmative vote of the holders of sixty seven percent (67%) of the outstanding Shares is the only vote of the holders of any class or series of the Company's capital stock necessary to approve and adopt this Agreement. Section 3.21. OPINION OF FINANCIAL ADVISER. The Financial Advisor has delivered to the Company Board its written opinion dated the date of this Agreement to the effect that as of such date the Per Share Amount is fair, from a financial point of view, to the holders of Shares. Section 3.22. BROKERS. No broker, finder or investment banker (other than the Financial Adviser, a true and correct copy of whose engagement agreement has been provided to Purchaser or Parent) is entitled to any brokerage finder's or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company. Section 3.23. DISCLOSURE. None of the representatives or warranties made by the Company herein or in any schedule hereto, including the Company Disclosure Schedule, or in any certificate furnished by the Company pursuant to this Agreement, or in the Company SEC Reports, when all such documents are read together in their entirety, contains or will contain at the Effective Time any untrue statement of a material fact, or omits or will omit at the Effective Time to state any material fact necessary in order to make the statements contained herein or therein, in light of the circumstances under which made, not misleading. 29 ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER Parent and Purchaser hereby represent and warrant to the Company as follows: Section 4.1. ORGANIZATION. (a) Each of Parent and Purchaser is duly organized, validly existing and in good standing under the laws of the State of Delaware, respectively, and has all requisite power and authority to own, lease and operate its properties and to carry on its businesses as now being conducted. Parent has heretofore made available to the Company accurate and complete copies of the Certificate of Incorporation and bylaws as currently in full force and effect, of Parent and Purchaser. (b) Each of Parent and Purchaser is duly qualified or licensed and in good standing to do business in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except in such jurisdictions where the failure to be so duly qualified or licensed and in good standing would not have a Material Adverse Effect on Parent. When used in connection with Parent or Purchaser the term "Material Adverse Effect on Parent" means any circumstance, change in, or effect on (or circumstance, change in, or effect involving a prospective change on) Parent and its subsidiaries, taken as a whole, (a) that is, or is reasonably likely in the future to be, materially adverse to the operations, assets or liabilities (including contingent liabilities), earnings or results of operations, or the business (financial or otherwise) of Parent and its subsidiaries, taken as a whole, excluding from the foregoing the effect, if any, of (i) changes in general economic conditions or changes affecting the industry in which Parent operates, (ii) stockholder class action litigation arising from allegations of a breach of fiduciary duty relating to this Agreement, (iii) the public announcement or pendency of the transactions contemplated hereby on current or prospective customers or revenues of the Parent (provided that such effect is direct and that Parent shall have the burden of proving such direct effect), or (iv) any action or inaction required of Parent by the Company under this Agreement, or (b) that would reasonably be expected to prevent or materially delay or impair the ability of Parent and Purchaser to consummate the transactions contemplated by this Agreement. Section 4.2. AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent and Purchaser has all necessary corporate power and authority to execute and deliver this Agreement and the Company Stock Option, to perform its obligations under this Agreement and the Company Stock Option and to consummate the transactions contemplated thereby. The execution and delivery of this Agreement and the Company Stock Option and the consummation of the transactions contemplated thereby have been duly and validly authorized 30 by the boards of directors of Parent and Purchaser and by Parent as the sole stockholder of Purchaser and no other corporate proceedings on the part of Parent or Purchaser are necessary to authorize this Agreement and the Company Stock Option or to consummate the transactions contemplated hereby. This Agreement and the Company Stock Option have been duly and validly executed and delivered by each of Parent and Purchaser and constitute, assuming the due authorization, execution and delivery hereof and thereof by the Company, valid, legal and binding agreements of each of Parent and Purchaser enforceable against each of Parent and Purchaser in accordance with their terms, subject to any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect relating to creditors' rights generally or to general principles of equity. Section 4.3. SEC REPORTS; FINANCIAL STATEMENTS. (a) Parent has filed all required forms, reports and documents ("Parent SEC Reports") with the SEC since December 31, 1997, each of which, complied at the time of filing in all material respects with all applicable requirements of the Securities Act and the Exchange Act, each law as in effect on the dates such forms reports and documents were filed. None of such Parent SEC Reports, including any financial statements or schedules included or incorporated by reference therein, contained when filed any untrue statement of a material fact or omitted to state a material fact required to be stated or incorporated by reference therein or necessary in order to make the statements therein in light of the circumstances under which they were made not misleading, except to the extent superseded by a Parent SEC Report filed subsequently and prior to the date hereof. The audited consolidated financial statements of Parent included in the Parent SEC Reports fairly present in conformity in all material respects with generally accepted accounting principles applied on a consistent basis (except as may be indicated in the notes thereto) the consolidated financial position of Parent and its consolidated subsidiaries as of the dates thereof and their consolidated results of operations and changes in financial position for the periods then ended. (b) Parent has heretofore made available or promptly will make available to the Company a complete and correct copy of any amendments or modifications that are required to be filed with the SEC but have not yet been filed with the SEC to agreements documents or other instruments that previously had been filed by Parent with the SEC pursuant to the Exchange Act. Section 4.4. OFFER DOCUMENTS; PROXY STATEMENT. None of the information supplied by Parent or Purchaser, its officers, directors, representatives, agents or employees, for inclusion in the Proxy Statement, or in any amendments thereof or supplements thereto, will, on the date the Proxy Statement is first mailed to stockholders, at the time of the Company Stockholders' Meeting or at the Effective Time, contain any statement which, at such time and in light of the circumstances under which it will be made, will be false or misleading with respect to any material fact, or will omit to state any material fact necessary order to make the statements therein not false or misleading or necessary to correct any statement in any earlier communication with respect to the solicitation of proxies for the Company Stockholders' Meeting which has become false or misleading. Neither the Offer 31 Documents nor any amendments thereof or supplements thereto will, at any time the Offer Documents or any such amendments or supplements are filed with the SEC or first published, sent or given to the Company's stockholders, contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Notwithstanding the foregoing, Parent and Purchaser do not make any representation or warranty with respect to any information that has been supplied by the Company or its accountants, counsel or other authorized representatives for use in any of the foregoing documents. The Offer Documents and any amendments or supplements thereto will comply as to form in all material respects with the provisions of the Exchange Act and the rules and regulations thereunder. Section 4.5. CONSENTS AND APPROVALS; NO VIOLATIONS. Except for filings, permits, authorizations, consents, and approvals as may be required under and other applicable requirements of the Securities Act, the Exchange Act, state securities or blue sky laws, the HSR Act, and any filings under similar merger notification laws or regulations of foreign Governmental Entities and the filing and recordation of the Certificate of Merger as required by the Delaware Law, no filing with or notice to, and no permit authorization consent or approval of any Governmental Entity is necessary for the execution and delivery by Parent or Purchaser of this Agreement or the Company Stock Option or the consummation by Parent or Purchaser of the transactions contemplated hereby or thereby, except where the failure to obtain such permits, authorizations, consents or approvals or to make such filings or give such notice would not, individually or in the aggregate, have a Material Adverse Effect on Parent. Neither the execution, delivery and performance of this Agreement or the Company Stock Option by Parent or Purchaser nor the consummation by Parent or Purchaser of the transactions contemplated hereby or thereby will (i) conflict with or result in any breach of any provision of the respective Certificate of Incorporation or bylaws of Parent or Purchaser, (ii) result in a violation or breach of or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, amendment, cancellation or acceleration or Lien) under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which Parent or Purchaser or any of Parent's other subsidiaries is a party or by which any of them or any of their respective properties or assets may be bound or (iii) violate any order, writ, injunction, decree, law, statute, rule or regulation applicable to Parent or Purchaser or any of Parent's other subsidiaries or any of their respective properties or assets except, in the case of (ii) or (iii), for violations, breaches or defaults that would not, individually or in the aggregate, have a Material Adverse Effect on Parent. Section 4.6. BROKERS. No broker finder or investment banker is entitled to any brokerage finder's or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Parent or Purchaser. Section 4.7. NO PRIOR ACTIVITIES. Except for obligations incurred in connection with its incorporation or organization or the negotiation and consummation of this Agreement and the transactions contemplated hereby, Purchaser has neither incurred any obligation or 32 liability nor engaged in any business or activity of any type or kind whatsoever or entered into any agreement or arrangement with any person. ARTICLE 5 COVENANTS Section 5.1. CONDUCT OF BUSINESS OF THE COMPANY. Except as contemplated by this Agreement or as described in Section 5.1 of the Company Disclosure Schedule, during the period from the date hereof to the Effective Time, the Company will and will cause each of its subsidiaries to conduct its operations in the ordinary course of business consistent with past practice and, to the extent consistent therewith, with no less diligence and effort than would be applied in the absence of this Agreement seek, to preserve intact its current business organizations, keep available the service of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it with the intention that its goodwill and ongoing businesses shall be unimpaired at the Effective Time. Without limiting the generality of the foregoing, except as otherwise expressly provided in this Agreement or as described in Section 5.1 of the Company Disclosure Schedule, prior to the Effective Time, neither the Company nor any of its subsidiaries will, without the prior written consent of Parent and Purchaser: (a) amend its Certificate or Articles of Incorporation or bylaws (or other similar governing instrument); (b) authorize for issuance, issue, sell, deliver or agree or commit to issue sell or deliver (whether through the issuance or granting of options, warrants, commitments, subscriptions, rights to purchase or otherwise) any stock of any class or any other securities (except bank loans) or equity equivalents (including any stock options or stock appreciation rights) except for the issuance and sale of Shares pursuant to options granted under the Option Plans prior to the date hereof and Rights that are vested in the Stock Purchase Plan on or prior to the New Purchase Date (as set forth in Section 2.12); (c) split, combine or reclassify any shares of its capital stock, declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of its capital stock, make any other actual, constructive or deemed distribution in respect of its capital stock or otherwise make any payments to stockholders in their capacity as such, or redeem or otherwise acquire any of its securities or any securities of any of its subsidiaries; (d) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its subsidiaries (other than the Merger); 33 (e) alter through merger, liquidation, reorganization, restructuring or any other fashion the corporate structure of ownership of any subsidiary; (f) (i) incur or assume any long-term or short-term debt or issue any debt securities except for borrowings under existing lines of credit in the ordinary course of business; (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other person except for obligations of subsidiaries of the Company incurred in the ordinary course of business; (iii) make any loans, advances or capital contributions to or investments in any other person (other than to subsidiaries of the Company or customary loans or advances to employees in each case in the ordinary course of business consistent with past practice); (iv) pledge or otherwise encumber shares of capital stock of the Company or any of its subsidiaries; or (v) mortgage or pledge any of its material assets, tangible or intangible, or create or suffer to exist any material Lien thereupon; (g) except as may be required by law, (i) enter into, adopt or amend or terminate any bonus, profit sharing, compensation, severance, termination, stock option, stock appreciation right, restricted stock, performance unit, stock equivalent, stock purchase agreement, pension, retirement, deferred compensation, employment, health, life, or disability insurance, dependent care, severance or other employee benefit plan agreement, trust, fund or other arrangement for the benefit or welfare of any director, officer or employee in any manner, (ii) except for increases for employees other than officers of the Company, in the ordinary course of business consistent with past practice, and after having delivered five days prior notice thereof to Parent, increase in any manner the compensation or fringe benefits of any director, officer or employee or pay any benefit not required by any plan and arrangement as in effect as of the date hereof (including the granting of stock appreciation rights or performance units), or (iii) hire or retain any new officer or director level employee; (h) acquire, sell, license, lease or dispose of any assets in any single transaction or series of related transactions, other than sales of its products in the ordinary course of business consistent with past practices; (i) except as may be required as a result of a change in law or in generally accepted accounting principles, change any of the accounting principles, practices or methods used by it; (j) revalue in any material respect any of its assets, including writing down the value of inventory or writing-off notes or accounts receivable, other than in the ordinary course of business; (k)(i) acquire (by merger, consolidation or purchaser of stock or assets) any corporation, partnership or other business organization or division thereof or any equity interest therein; (ii) enter into any contract or agreement other than in the ordinary course of business consistent with past practice that would be material to the Company and its subsidiaries, taken as a whole; (iii) amend, modify or waive any right under any material contract of the Company or any of its subsidiaries; (iv) modify its standard warranty terms for 34 its products or amend or modify any product warranties in effect as of the date hereof in any material manner that is adverse to the Company or any of its subsidiaries; (v) enter into or amend any agreements pursuant to which any other party is granted exclusive marketing or distribution rights with respect to any of the products or technology of the Company or any of its subsidiaries; or (vi) authorize any new capital expenditure or expenditures that individually is in excess of Twenty-Five Thousand Dollars ($25,000) or in the aggregate are in excess of Two Hundred Fifty Thousand Dollars ($250,000); PROVIDED that nothing in the foregoing clause (vi) shall limit any capital expenditure required pursuant to existing customer contracts; (l) make any tax election or settle or compromise any income tax liability material to the Company and its subsidiaries taken as a whole; (m) commence a lawsuit other than (i) for the routine collection of bills, (ii) in such cases where the Company in good faith, after consultation with Parent prior to such commencement, determines that failure to commence suit would have a Material Adverse Effect on the Company, or (iii) for a breach of this Agreement; (n) settle or compromise any pending or threatened suit, action or claim that (i) relates to the transactions contemplated hereby or (ii) the settlement or compromise of which would have a Material Adverse Effect on the Company; (o) commence any material software development project or terminate any material software development project that is currently ongoing, in either case except pursuant to the terms of existing contracts with customers or except as contemplated by the Company's project development budget previously provided to Parent; or (p) take or agree in writing or otherwise to take any of the actions described in Sections 5.1(a) through 5.1(o) (and it shall use all reasonable efforts not to take any action that would make any of the representations or warranties of the Company contained in this Agreement untrue or incorrect). Section 5.2. PREPARATION OF PROXY STATEMENT. As promptly as practicable after the consummation of the Offer, and if required by the Exchange Act or Delaware Law, the Company shall prepare and file with the SEC, and shall use all reasonable efforts to have cleared by the SEC, and promptly thereafter shall mail to stockholders, the Proxy Statement. The Proxy Statement shall contain the recommendation of the Company Board that the Company's stockholders approve this Agreement and the Merger. Section 5.3. OTHER POTENTIAL ACQUIRERS. (a) The Company, its affiliates (as reasonably determined by the Company) and their respective officers and other employees with managerial responsibilities, directors, representatives and agents shall immediately cease any discussions or negotiations with any parties with respect to any Third Party Acquisition (as defined below). Neither the Company nor any of its affiliates (as reasonably determined by the Company) shall, nor shall the Company authorize or permit any of its or their respective officers, directors, employees 35 representatives or agents to, directly or indirectly, encourage, solicit, participate in or initiate discussions or negotiations with or provide any non-public information to any person or group (other than Parent and Purchaser or any designees of Parent and Purchaser) concerning any Third Party Acquisition; PROVIDED, HOWEVER, that nothing herein shall prevent the Company Board from (i) taking and disclosing to the Company's stockholders a position contemplated by Rules 14d-9 and 14e-2 promulgated under the Exchange Act with regard to any tender or exchange offer; and (ii) conducting such "due diligence" inquiries (which shall be in writing to the extent possible) in response to any Third Party Acquisition proposal as the Company Board determines in its good faith judgment, after consultation with and based upon the advice of legal counsel, may be required in order to comply with its fiduciary duties. The Company shall promptly notify the Parent in the event it receives any proposal or inquiry concerning a Third Party Acquisition, including the terms and conditions thereof and the identity of the party submitting such proposal, and shall advise Parent from time to time of the status and any material developments concerning the same, including the nature and content of any "due diligence" inquiries made by it concerning any such proposal and furnishing copies of any such written inquiries. (b) Except as set forth in this Section 5.3(b), the Company Board shall not withdraw its recommendation of the transactions contemplated hereby or approve or recommend, or cause the Company to enter into any agreement with respect to, any Third Party Acquisition. Notwithstanding the foregoing, if the Company Board by a majority vote determines in its good faith judgment, after consultation with and based upon the advice of legal counsel, that it is required to do so in order to comply with its fiduciary duties, the Company Board may withdraw its recommendation of the transactions contemplated hereby or approve or recommend a Superior Proposal (as defined in subsection (c) below), but in each case only (i) after providing written notice to Parent (a "Notice of Superior Proposal") advising Parent that the Company Board has received a Superior Proposal, specifying the material terms and conditions of such Superior Proposal and identifying the person making such Superior Proposal and (ii) if Parent does not, within five (5) business days of Parent's receipt of the Notice of Superior Proposal, make an offer that the Company Board by a majority vote determines in its good faith judgment (based on the written advice of a financial adviser of nationally recognized reputation) to be at least as favorable to the Company's stockholders as such Superior Proposal; PROVIDED, HOWEVER, that the Company shall not be entitled to enter into any agreement with respect to a Superior Proposal unless and until this Agreement is terminated by its terms pursuant to Section 7.1 and the Company has paid all amounts due to Parent pursuant to Section 7.3. Any disclosure that the Company Board may be compelled to make with respect to the receipt of a proposal for a Third Party Acquisition or otherwise in order to comply with its fiduciary duties or Rule 14d-9 or 14e-2 will not constitute a violation of this Agreement, PROVIDED that such disclosure states that no action will be taken by the Company Board in violation of this Section 5.3(b). (c) For the purposes of this Agreement, "Third Party Acquisition" means the occurrence of any of the following events: (i) the acquisition of the Company by merger or otherwise by any person (which includes a "person" as such term is defined in Section 13(d)(3) of the Exchange Act) other than Parent, Purchaser or any affiliate thereof (a 36 "Third Party"); (ii) the acquisition by a Third Party of any material portion of the assets of the Company and its subsidiaries taken as a whole, other than the sale of its products in the ordinary course of business consistent with past practices; (iii) the acquisition by a Third Party of twenty percent (20%) or more of the outstanding Shares; (iv) the adoption by the Company of a plan of liquidation or the declaration or payment of an extraordinary dividend; (v) the repurchase by the Company or any of its subsidiaries of more than ten percent (10%) of the outstanding Shares; or (vi) the acquisition by the Company or any of its subsidiaries by merger, purchase of stock or assets, joint venture or otherwise of a direct or indirect ownership interest or investment in any business whose annual revenues, net income or assets is equal or greater than ten percent (10%) of the annual revenues, net income or assets of the Company. For purposes of this Agreement, a "Superior Proposal" means any bona fide proposal to acquire directly or indirectly for consideration consisting of cash and/or securities more than 20% of the Shares then outstanding or all or substantially all the assets of the Company and otherwise for a consideration higher than the Per Share Amount and on terms that the Company Board by a majority vote determines in its good faith judgment (based on the written advice of the Financial Advisor or another financial advisor of nationally recognized reputation) to be more favorable to the Company's stockholders than the Merger. Section 5.4. MEETING OF STOCKHOLDERS. Following the consummation of the Offer, the Company shall promptly take all action necessary in accordance with Delaware Law and the Restated Certificate and By-Laws to convene a meeting of the stockholders of the Company, if such meeting is required in order to accomplish the Merger. The stockholder vote required for approval of the Merger will be sixty seven percent (67%) of the outstanding shares of common stock of the Company. The Company shall use its commercially reasonable best efforts to solicit from stockholders of the Company proxies in favor of the Merger and shall take all other action necessary or, in the reasonable opinion of Parent, advisable to secure any vote of stockholders required by Delaware Law to effect the Merger. Notwithstanding the foregoing, if Purchaser or any other subsidiary of Parent shall acquire at least 90 percent of the outstanding common stock of the Company, and provided that the conditions set forth in Article 6 shall have been satisfied or waived, the Company shall, at the request of Parent, take all necessary and appropriate action to cause the Merger to become effective as soon as practicable after such acquisition, without the approval of the stockholders of the Company, in accordance with Section 253 of Delaware Law. Section 5.5. ACCESS TO INFORMATION. (a) Between the date hereof and the Effective Time, the Company will give Parent and its authorized representatives reasonable access to all employees, plants, offices, warehouses and other facilities and to all books and records of the Company and its subsidiaries as Parent may reasonably require, and will cause its officers and those of its subsidiaries to furnish Parent with such financial and operating data and other information with respect to the business and properties of the Company and its subsidiaries as Parent may from time to time reasonably request. 37 (b) Between the date hereof and the Effective Time, the Company shall furnish to Parent (1) within two (2) business days following preparation thereof (and in any event within twenty (20) business days after the end of each calendar month, commencing with June 1999), an unaudited balance sheet as of the end of such month and the related statements of earnings, stockholders' equity (deficit) and cash flows, and (2) within two (2) business days following preparation thereof (and in any event within twenty (20) business days after the end of each fiscal quarter) an unaudited balance sheet as of the end of such quarter and the related statements of earnings, stockholders' equity (deficit) and cash flows for the quarter then ended, all of such financial statements referred to in clauses (1) and (2) to prepared in accordance with generally accepted accounting principles in conformity with the practices consistently applied by the Company with respect to such financial statements. All the foregoing shall be in accordance with the books and records of the Company and shall fairly present its financial position (taking into account the differences between the monthly, quarterly and annual financial statements prepared by the Company in conformity with its past practices) as of the last day of the period then ended. (c) Each of the parties hereto will hold, and will cause its consultants and advisers to hold, in confidence all documents and information furnished to it by or on behalf of another party to this Agreement in connection with the transactions contemplated by this Agreement pursuant to the terms of that certain Confidentiality Agreement entered into between the Company and Parent dated April 21, 1999. Section 5.6. CERTAIN FILINGS; REASONABLE EFFORTS. (a) Subject to the terms and conditions herein provided, each of the parties hereto agrees to use all reasonable efforts to take or cause to be taken all action and to do or cause to be done all things reasonably necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement, including using all reasonable efforts to do the following, (i) cooperate in the preparation and filing of any filings that may be required under the HSR Act and any filings under similar merger notification laws or regulations of foreign Governmental Entities; (ii) obtain consents of all third parties (including those consents identified on Schedule 3.6 of the Company Disclosure Schedule) and Governmental Entities necessary, proper or advisable for the consummation of the transactions contemplated by this Agreement; (iii) contest any legal proceeding relating to the Merger; and (iv) execute any additional instruments necessary to consummate the transactions contemplated hereby. If at any time after the Effective Time any further action is necessary to carry out the purposes of this Agreement the proper officers and directors of each party hereto shall take all such necessary action. (b) Parent and the Company will consult and cooperate with one another, and consider in good faith the views of one another, in connection with any analyses, appearances, presentations, letters, white papers, memoranda, briefs, arguments, opinions or proposals made or submitted by or on behalf of any party hereto in connection with proceedings under or relating to the HSR Act or any other foreign, federal, or state antitrust, competition, or fair trade law. In this regard but without limitation, each party hereto shall 38 promptly inform the other of any material communication between such party and the Federal Trade Commission, the Antitrust Division of the United States Department of Justice, or any other federal, foreign or state antitrust or competition Governmental Entity regarding the transactions contemplated herein. Section 5.7. PUBLIC ANNOUNCEMENTS. Parent, Purchaser and the Company, as the case may be, will consult with one another before issuing any press release or otherwise making any public statements with respect to the transactions contemplated by this Agreement, including the Merger, and shall not issue any such press release or make any such public statement prior to such consultation except (i) as may be required by applicable law, or by the rules and regulations of, or pursuant to any listing agreement with, the NYSE or the Nasdaq National Market, as determined by Parent, Purchaser or the Company, as the case may be, or (ii) following a change, if any, of the Company Board's recommendation of the Merger (in accordance with Section 5.3(b)), after which event no such consultation shall be required. Notwithstanding the preceding sentence, the first public announcement of this Agreement and the Merger shall be a joint press release agreed upon by Parent and the Company. Section 5.8. INDEMNIFICATION AND DIRECTORS' AND OFFICERS' INSURANCE. (a) After the Effective Time, the Surviving Corporation shall indemnify and hold harmless (and shall also advance expenses as incurred in accordance with the terms and provisions of the bylaws, restated certificate of incorporation and any applicable indemnification agreement, all as in effect on the date hereof), to the extent not covered by insurance, each person who is now or has been prior to the date hereof or who becomes prior to the Effective Time an officer or director of the Company or any of the Company's subsidiaries (the "Indemnified Persons") against (i) all losses, claims, damages, costs, expenses (including counsel fees and expenses), settlement, payments or liabilities arising out of or in connection with any claim, demand, action, suit, proceeding or investigation based in whole or in part on or arising in whole or in part out of the fact that such person is or was an officer or director of the Company or any of its subsidiaries, whether or not pertaining to any matter existing or occurring at or prior to the Effective Time and whether or not asserted or claimed prior to or at or after the Effective Time ("Indemnified Liabilities"); and (ii) all Indemnified Liabilities based in whole or in part on or arising in whole or in part out of or pertaining to this Agreement or the transactions contemplated hereby, in each case to the fullest extent required or permitted under applicable law. Nothing contained herein shall make Parent, Purchaser, the Company or the Surviving Corporation, an insurer, a co-insurer or an excess insurer in respect of any insurance policies which may provide coverage for Indemnified Liabilities, nor shall this Section 5.8 relieve the obligations of any insurer in respect thereto. The parties hereto intend, to the extent not prohibited by applicable law, that the indemnification provided for in this Section 5.8 shall apply without limitation to negligent acts or omissions by an Indemnified Person. Each Indemnified Person is intended to be a third party beneficiary of this Section 5.8 and may specifically enforce its terms. This Section 5.8 shall not limit or otherwise adversely affect any rights any Indemnified Person may have under any agreement with the Company or under the Company's Certificate of Incorporation or bylaws as presently in effect. 39 (b) For a period of three years after the Effective Time, Parent will maintain or cause the Surviving Corporation to maintain in effect, if available, directors' and officers' liability insurance covering those persons who, as of immediately prior to the Effective Time, are covered by the Company's directors' and officers' liability insurance policy (the "Insured Parties") on terms no less favorable to the Insured Parties than those of the Company's present directors' and officers' liability insurance policy; PROVIDED, HOWEVER, that in no event will Parent or the Surviving Corporation be required to expend in excess of 150% of the annual premium currently paid by the Company for such coverage (or such coverage as is available for 150% of such annual premium); PROVIDED FURTHER, that, in lieu of maintaining such existing insurance as provided above, Parent may cause coverage to be provided under any policy maintained for the benefit of Parent or any of its subsidiaries, so long as the terms are not materially less advantageous to the intended beneficiaries thereof than such existing insurance. (c) The provisions of this Section 5.8 are intended to be for the benefit of, and will be enforceable by, each person entitled to indemnification hereunder and the heirs and representatives of such person. Parent will not permit the Surviving Corporation to merge or consolidate with any other Person unless the Surviving Corporation will ensure that the surviving or resulting entity assumes the obligations imposed by this Section 5.8. Section 5.9. NOTIFICATION OF CERTAIN MATTERS. The Company shall give prompt notice to Parent and Purchaser, and Parent and Purchaser shall give prompt notice to the Company, of (i) the occurrence or nonoccurrence of any event the occurrence or nonoccurrence of which has caused or would be likely to cause any representation or warranty contained in this Agreement to be untrue or inaccurate in any material respect at or prior to the Effective Time and (ii) any material failure of the Company, Parent or Purchaser, as the case may be, to comply with or satisfy in any material respect any covenant condition or agreement to be complied with or satisfied by it hereunder; PROVIDED, HOWEVER, that the delivery of any notice pursuant to this Section 5.9 shall not cure such breach or non-compliance or limit or otherwise affect the remedies available hereunder to the party receiving such notice. Section 5.10. ADDITIONS TO AND MODIFICATION OF COMPANY DISCLOSURE SCHEDULE. Concurrently with the execution and delivery of this Agreement, the Company has delivered a Company Disclosure Schedule that includes all of the information required by the relevant provisions of this Agreement. In addition, the Company shall deliver to Parent and Purchaser such additions to or modifications of any Sections of the Company Disclosure Schedule necessary to make the information set forth therein true, accurate and complete in all material respects as soon as practicable after such information is available to the Company after the date of execution and delivery of this Agreement; PROVIDED, HOWEVER, that such disclosure shall not be deemed to constitute an exception to its representations and warranties under Article 3, nor limit the rights and remedies of Parent and Purchaser under this Agreement for any breach by the Company of such representation and warranties. 5.11 OFFICERS. Promptly upon the purchase by Purchaser of Shares pursuant to the Offer representing at least a majority of the outstanding Shares, the Company shall 40 make, or cause to be made, such changes in the officers of the subsidiaries of the Company as may be requested by the Parent. ARTICLE 6 CONDITIONS TO CONSUMMATION OF THE MERGER Section 6.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE MERGER. The respective obligations of each party hereto to effect the Merger are subject to the satisfaction at or prior to the Effective Time of the following conditions: (a) Purchaser shall have made, or caused to be made, the Offer and shall have purchased, or caused to be purchased, the Shares pursuant to the Offer; (b) The Merger and this Agreement shall have been approved and adopted by the requisite vote of the stockholders of the Company, if required by Delaware Law; and (c) No statute, rule, regulation, judgment, writ, decree, order or injunction shall have been promulgated, enacted, entered or enforced, and no other action shall have been taken, by any Governmental Entity that in any of the foregoing cases has the effect of making illegal or directly or indirectly restraining, prohibiting or restricting the consummation of the Merger. (d) Any waiting period applicable to the Merger under the HSR Act shall have expired or have been terminated and all approvals of and consents to the Merger required under applicable foreign antitrust or competition laws shall have been obtained and be in full force and effect. Section 6.2. CONDITIONS TO THE OBLIGATIONS OF PARENT AND PURCHASER. The respective obligations of Parent and Purchaser to effect the Merger are subject to the satisfaction at or prior to the Effective Time of the following conditions: (a) The representations and warranties of the Company set forth herein shall be true and correct in all material respects, in each case as if such representations and warranties were made at the Effective Time; and (b) The Company shall have performed in all material respects all obligations and complied in all material respects with all agreements and covenants of the Company to be performed or complied with by it under this Agreement at or prior to the Effective Time. Section 6.3. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligations of the Company to effect the Merger are subject to the satisfaction at or prior to the Effective Time of the following conditions: 41 (a) The representations and warranties of Parent and Purchaser set forth herein shall be true and correct in all material respects, in each case as if such representations and warranties were made at the Effective Time; and (b) Parent and Purchaser shall have performed in all material respects all of their respective obligations and complied in all material respects with all of their respective agreements and covenants to be performed or complied with by them under this Agreement at or prior to the Effective Time. ARTICLE 7 TERMINATION; AMENDMENT; WAIVER Section 7.1. TERMINATION. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time whether before or after approval and adoption of this Agreement by the Company's stockholders: (a) by mutual written consent of Parent, Purchaser and the Company; (b) by Parent and Purchaser or the Company if (i) any court of competent jurisdiction in the United States or other United States federal or state Governmental Entity shall have issued a final order, decree or ruling, or taken any other final action, restraining, enjoining or otherwise prohibiting the Merger and such order, decree, ruling or other action is or shall have become nonappealable or (ii) the Merger has not been consummated by October 31, 1999 (the "Final Date"); PROVIDED that no party may terminate this Agreement pursuant to this clause (ii) if such party's failure to fulfill any of its obligations under this Agreement shall have been the reason that the Effective Time shall not have occurred on or before said date; (c) by the Company (i) if the Company has approved a Superior Proposal in accordance with Section 5.3(b), provided the Company has complied with all provisions thereof, including the notice provisions therein, and that it makes simultaneous payment of the Expenses and the Termination Fee (as defined below); or (ii) if Parent or Purchaser shall have terminated the Offer or the Offer expires without Parent or Purchaser, as the case may be, purchasing any Shares pursuant thereto; or (iii) if Parent or Purchaser shall have breached in any material respect any of its representations, warranties, covenants or other agreements contained in this Agreement which breach or failure to perform is incapable of being cured or has not been cured by the earlier of (x) ten business days following written notice thereof to Parent from the Company and (y) the scheduled expiration of the Offer; or (iv) if the Offer shall not have expired or been terminated on or before August 30, 1999; provided that the Company may not terminate this Agreement pursuant to this Section 7.1(c) if the Company is in material breach of this Agreement. (d) by Parent and Purchaser: (i) if prior to the purchase of the Shares pursuant to the Offer, the Company Board shall have withdrawn, or modified or changed in a 42 manner adverse to Parent or Purchaser its approval or recommendation of the Offer, this Agreement, the Merger, the Company Stock Option or the Stockholders Agreement or shall have approved a Third Party Acquisition; provided, that neither Parent nor Purchaser shall be entitled to terminate this Agreement pursuant to this Section 7.1(d) solely as a result of the Company or the Company Board making such disclosure to the Company's stockholders as, in good faith judgment of the Company Board, after receiving advice from outside counsel, is required under applicable law; or (ii) if Parent or Purchaser shall have terminated the Offer without Parent or Purchaser purchasing any Shares thereunder, or (iii) if, due to an occurrence that if occurring after the commencement of the Offer would result in a failure to satisfy any of the conditions set forth in Annex I hereto, Parent, Purchaser, or any of their affiliates shall have failed to commence the Offer on or prior to five business days following the date of the initial public announcement of the Offer; or (iv) if there shall have occurred a Third Party Acquisition; or (v) if the Company, or any of the Company's officers, directors, employees, representatives or agents, shall take any of the actions described in the second sentence of Section 5.3(a) hereof, other than the proviso thereto; or (vi) if the Company shall have breached any of its representations, warranties, covenants or other agreements contained in this Agreement which breach or failure to perform is incapable of being cured or has not been cured by the earlier of (x) ten business days following written notice thereof to the Company from Parent and (y) the scheduled termination of the Merger Agreement (except to the extent that the aggregate of all breaches thereof do not constitute a Material Adverse Effect on the Company and do not otherwise materially and adversely affect the consideration to be paid by Purchaser in the Offer or the benefits expected to be received by Parent under this Agreement); or (vii) if the Offer shall not have expired or been terminated on or before August 30, 1999; provided that Parent or Purchaser may not terminate this Agreement pursuant to clause (ii) or (vii) of this Section 7.1(d) if the Parent or Purchaser is in material breach of this Agreement. Section 7.2. EFFECT OF TERMINATION. In the event of the termination and abandonment of this Agreement pursuant to Section 7.1, this Agreement shall forthwith become void and have no effect without any liability on the part of any party hereto or its affiliates, directors, officers or stockholders other than the provisions of this Section 7.2 and Sections 5.5(c) and 7.3 hereof. Nothing contained in this Section 7.2 shall relieve any party from liability for any breach of this Agreement prior to such termination. Section 7.3. FEES AND EXPENSES. (a) In the event that this Agreement shall be terminated pursuant to: (i) Section 7.1(c)(i) or 7.1(d)(i), (iv), (v) or (vi); (ii) Section 7.1(c)(ii) or (iv) or 7.1(d)(ii) or (vii) and each of the following shall exist or occur, as the case may be, (y) at the time of termination of the Offer or (in the case of Section 7.1(d)(vii)) August 30, 1999 there shall be outstanding an offer by a Third Party to consummate, or a third party shall have publicly announced (and not 43 withdrawn) a plan or proposal with respect to, a Third Party Acquisition and (z) within nine (9) months from the date of such termination, a Third Party Acquisition (provided, however, that for purposes of this Section 7.3(a)(ii)(z) only, clause (vi) of the definition of the term Third Party Acquisition shall not apply to a transaction in which the composition of a majority of the Company Board remains unchanged) shall occur or the Company shall have entered into a definitive agreement with respect to such a Third Party Acquisition; Parent and Purchaser would suffer direct and substantial damages, which damages cannot be determined with reasonable certainty. To compensate Parent and Purchaser for such damages the Company shall pay to Parent the amount of Four Million Dollars ($4,000,000) as liquidated damages immediately upon the occurrence of the event described in this Section 7.3(a) giving rise to such damages (the "Termination Fee"). It is specifically agreed that the amount to be paid pursuant to this Section 7.3(a) represents liquidated damages and not a penalty. The Company hereby waives any right to set-off or counterclaim against such amount. (b) Upon the termination of this Agreement under circumstances in which the Termination Fee is payable to Purchaser pursuant to Section 7.3(a), in addition to any other remedies that Parent, Purchaser or their affiliates may have as a result of such termination, the Company shall reimburse (up to an aggregate maximum of One Million Dollars ($1,000,000) Purchaser and Parent, upon submission of one or more statements therefor, accompanied by reasonable supporting documentation, for the amount of all documented costs, fees and expenses reasonably incurred by any of them or on their behalf in connection with this Agreement, the Merger and the consummation of all transactions contemplated by this Agreement (including filing fees, and fees payable to printers, counsel and accountants) (the "Expenses"). (c) Except as specifically provided in this Section 7.3, each party shall bear its own expenses in connection with this Agreement and the transactions contemplated hereby. Section 7.4. AMENDMENT. This Agreement may be amended by action taken by the Company, Parent and Purchaser at any time before or after approval of the Merger by the stockholders of the Company but after any such approval no amendment shall be made that requires the approval of such stockholders under applicable law without such approval. This Agreement may be amended only by an instrument in writing signed on behalf of the parties hereto. Section 7.5. EXTENSION; WAIVER. At any time prior to the Effective Time, each party hereto may (i) extend the time for the performance of any of the obligations or other acts of the other party, (ii) waive any inaccuracies in the representations and warranties of the other party contained herein or in any document certificate or writing delivered pursuant hereto or (iii) waive compliance by the other party with any of the agreements or conditions 44 contained herein. Any agreement on the part of any party hereto to any such extension or waiver shall be valid only if set forth in an instrument, in writing, signed on behalf of such party. The failure of any party hereto to assert any of its rights hereunder shall not constitute a waiver of such rights. ARTICLE 8 MISCELLANEOUS Section 8.1. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and warranties made herein shall not survive beyond the Effective Time or a termination of this Agreement. This Section 8.1 shall not limit any covenant or agreement of the parties hereto that by its terms requires performance after the Effective Time. Section 8.2. ENTIRE AGREEMENT; ASSIGNMENT. This Agreement (including the Company Disclosure Schedule and the Letter), (a) constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all other prior agreements and understandings both written and oral between the parties with respect to the subject matter hereof and (b) shall not be assigned by operation of law or otherwise; PROVIDED, HOWEVER, that Purchaser may assign any or all of its rights and obligations under this Agreement to any wholly owned subsidiary of Parent, but no such assignment shall relieve Purchaser of its obligations hereunder if such assignee does not perform such obligations. Section 8.3. VALIDITY. If any provision of this Agreement or the application thereof to any person or circumstance is held invalid or unenforceable, the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected thereby and to such end the provisions of this Agreement are agreed to be severable. Section 8.4. NOTICES. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by facsimile or by registered or certified mail (postage prepaid, return receipt requested) to each other party as follows: if to Parent or Purchaser: Cadence Design Systems, Inc. 2655 Seely Road, Bldg. 5 San Jose, CA 95134 Telecopier: 408-944-6855 Attention: General Counsel 45 with a copy to: Gibson, Dunn & Crutcher LLP 333 South Grand Avenue Los Angeles, CA 90071 Telecopier: 213-229-6159 Attention: Andrew E. Bogen if to the Company to: OrCAD, Inc. 9300 SW Nimbus Avenue Beaverton, OR 97008 Telecopier: 503-671-9502 Attention: President with a copy to: Ater Wynne LLP 222 S.W. Columbia Street, Suite 1800 Portland, OR 97201 Telecopier: 503-226-0079 Attention: William C. Campbell or to such other address as the person to whom notice is given may have previously furnished to the others in writing in the manner set forth above. Section 8.5. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without regard to the principles of conflicts of law thereof. Section 8.6. DESCRIPTIVE HEADINGS. The descriptive headings herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. Section 8.7. PARTIES IN INTEREST. This Agreement shall be binding upon and inure solely to the benefit of each party hereto and its successors and permitted assigns and, except as expressly provided herein, including in Sections 5.8 and 7.2, nothing in this Agreement is intended to or shall confer upon any other person any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement. Section 8.8. CERTAIN DEFINITIONS. For the purposes of this Agreement the term: (a) "affiliate" means (except as otherwise provided herein) a person that, directly or indirectly, through one or more intermediaries controls, is controlled by or is under common control with the first-mentioned person; (b) "business day" means any day other than a day on which the NYSE is closed; 46 (c) "capital stock" means common stock, preferred stock, partnership interests, limited liability company interests or other ownership interests entitling the holder thereof to vote with respect to matters involving the issuer thereof; (d) "knowledge" or "known" means, with respect to any matter in question, the actual knowledge of such matter of any executive officer of the Company or Parent, as the case may be; (e) "include" or "including" means "include, without limitation" or "including, without limitation," as the case may be, and the language following "include" or "including" shall not be deemed to set forth an exhaustive list. (f) "person" means an individual, corporation, partnership, limited liability company, association, trust, unincorporated organization or other legal entity including any Governmental Entity; and (g) "subsidiary" or "subsidiaries" of the Company, Parent, the Surviving Corporation or any other person means any corporation, partnership, limited liability company, association, trust, unincorporated association or other legal entity of which the Company, Parent, the Surviving Corporation or any such other person, as the case may be (either alone or through or together with any other subsidiary), owns, directly or indirectly, 50% or more of the capital stock the holders of which are generally entitled to vote for the election of the Company Board or other governing body of such corporation or other legal entity. Section 8.9. PERSONAL LIABILITY. This Agreement shall not create or be deemed to create or permit any personal liability or obligation on the part of any direct or indirect stockholder of the Company or Parent or Purchaser or any officer, director, employee, agent, representative or investor of any party hereto. Section 8.10. SPECIFIC PERFORMANCE. The parties hereby acknowledge and agree that the failure of any party to perform its agreements and covenants hereunder, including its failure to take all actions as are necessary on its part to the consummation of the Merger, will cause irreparable injury to the other parties, for which damages, even if available, will not be an adequate remedy. Accordingly, each party hereby consents to the issuance of injunctive relief by any court of competent jurisdiction to compel performance of such party's obligations and to the granting by any court of the remedy of specific performance of its obligations hereunder; PROVIDED, HOWEVER, that if a party hereto is entitled to receive any payment or reimbursement of expenses pursuant to Section 7.3(a), (b) or (c) it shall not be entitled to specific performance to compel the consummation of the Merger. Section 8.11. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which shall constitute one and the same agreement. 47 IN WITNESS WHEREOF, each of the parties has caused this Agreement to be duly executed on its behalf as of the day and year first above written. CADENCE DESIGN SYSTEMS, INC. By: /s/ H. Raymond Bingham -------------------------------- Name: H. Raymond Bingham Title: President & CEO ORCAD, INC. By: /s/ Michael F. Bosworth -------------------------------- Name: Michael F. Bosworth Title: President & CEO CDSI ACQUISITION CORPORATION By: /s/ H. Raymond Bingham -------------------------------- Name: H. Raymond Bingham Title: President & CEO ANNEX I Conditions to the Offer. Notwithstanding any other provision of the Offer, Purchaser shall not be required to accept for payment or, subject to any applicable rules and regulations of the SEC, including Rule 14e-1(c) promulgated under the Exchange Act (relating to Parent's obligation to pay for or return tendered Shares promptly after termination or withdrawal of the Offer), pay for, and (subject to any such rules or regulations) may delay the acceptance for payment of any tendered Shares and (except as provided in this Agreement) amend or terminate the Offer as to any Shares not then paid for if (i) there shall not have been validly tendered and not withdrawn prior to the expiration of the Offer a number of shares of Company common stock which represents at least sixty seven percent (67%) of the aggregate of (i) the number of shares of Company common stock then outstanding and (ii) the number of shares of Company common stock that are, or will, prior to the scheduled closing of the Merger, become, subject to issuance upon the exercise of options (the "Minimum Condition") or (ii) any applicable waiting period under the HSR Act shall not have expired or been terminated prior to the expiration of the Offer or all approvals of and consents to this Agreement, the Company Stock Option Agreement and the Stockholders Agreement and the transactions contemplated hereby and thereby that are required under applicable foreign antitrust or competition laws shall not have been obtained prior to the expiration of the Offer or be in full force and effect at such expiration or (iii) at any time after the date of this Agreement and before the time of payment for any such Shares (whether or not any Shares have theretofore been accepted for payment or paid for pursuant to the Offer), any of the following events shall occur and be continuing or conditions exists: (a) there shall be an injunction or other order, decree, judgment or ruling issued by a Governmental Entity of competent jurisdiction or a statute, rule, regulation, executive order or other action shall have been enacted, promulgated or taken by a Governmental Entity of competent jurisdiction which in any such case (i) restrains or prohibits the making or consummation of the Offer or the consummation of the Merger or the performance of the other transactions contemplated by this Agreement, the Company Stock Option or the Stockholders Agreement, (ii) prohibits or restricts the ownership or operation by Parent (or any of its affiliates or subsidiaries) of any portion of its or the Company's business or assets which is material to the business of all such entities taken as a whole, or compels Parent (or any of its affiliates or subsidiaries) to dispose of or hold separate any portion of its or the Company's business or assets which is material to the business of all such entities taken as a whole, (iii) imposes material limitations on the ability of Parent effectively to acquire or to hold or to exercise full rights of ownership of the Shares, including, without limitation, the right to vote the Shares purchased by Parent on all matters properly presented to the stockholders of the Company or (iv) imposes any material limitations on the ability of Parent or any of their respective affiliates or subsidiaries effectively to control in any material respect the business and operations of the Company and its subsidiaries; or 2 (b) this Agreement shall have been terminated by the Company or Parent in accordance with its terms or any event shall have occurred which gives Parent or Purchaser the right to terminate this Agreement or not consummate the Merger; or (c) there shall have occurred any event that, individually or when considered together with any other matter, has or has had a Material Adverse Effect on the Company; or (d) the representations and warranties of the Company set forth in this Agreement shall not be true and correct (except to the extent that the aggregate of all breaches thereof do not constitute a Material Adverse Effect on the Company and do not otherwise materially and adversely affect the consideration to be paid by Purchaser in the Offer or the benefits expected to be received by Parent under this Agreement) in each case as if such representations and warranties were made at the time of such determination; or (e) the Company shall have failed to perform in any material respect any obligation or to comply (except to the extent that the aggregate of all breaches thereof do not constitute a Material Adverse Effect on the Company and do not otherwise materially and adversely affect the consideration to be paid by Purchaser in the Offer or the benefits expected to be received by Parent under this Agreement) with any agreement or covenant of the Company to be performed or complied with by it under this Agreement; or (f) there shall have occurred (i) any general suspension of, or limitation on prices for, trading in securities on any national securities exchange or the over-the-counter market (other than a shortening of trading hours or any coordinated trading halt for less than 24 hours triggered solely as a result of a specified increase or decrease in a market index), (ii) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, (iii) any material limitation (whether or not mandatory) by an government or Governmental Entity, on the extension of credit by banks or other lending institutions, (iv) a commencement, or a material acceleration or worsening, of a war or armed hostilities or other national calamity directly involving the United States and resulting in a significant disruption of world commerce, or (v) the average of the closing prices of the Standard & Poor's 500 Index for any twenty (20) consecutive trading days shall be twenty (20%) percent or more below the closing price of such index as of the last trading day immediately preceding the date of this Agreement; or (g) the Company Board (i) shall have withdrawn, or modified or changed in a manner adverse to Parent or Purchaser (including by amendment of the Schedule 14D-9) its approval or recommendation of this Agreement, the Company Stock Option Agreement or the Stockholders Agreement or the transactions contemplated hereby or thereby, including the Offer or the Merger, (ii) recommended a Third Party Acquisition or (iii) shall have adopted any resolution to effect any of the foregoing; provided, that the foregoing shall not apply solely as a result of the Company or the Company Board making such disclosure to the Company's stockholders as, in good faith judgment of the Company Board, after receiving advice from outside counsel, is required under applicable law; or 3 (h) any Person or Group (as defined in Section 13(d)(3) of the Exchange Act), other than Parent, Purchaser or their affiliates or any group of which any of them is a member, shall have acquired beneficial ownership of twenty percent (20%) or more of the outstanding Company common stock; or (i) any party to the Stockholders Agreement other than the Purchaser and Parent shall have breached or failed to perform any of its agreements under such agreement or breached any of its representations and warranties in such agreement or any such agreement shall not be valid, binding and enforceable, except for such breaches or failures or failures to be valid, binding and enforceable that do not materially and adversely affect the benefits expected to be received by Parent and Purchaser under this Agreement or the Stockholders Agreement; which, in the reasonable judgment of Parent with respect to each and every matter referred to above and regardless of the circumstances giving rise to any such condition, makes it inadvisable to proceed with the Offer or with such acceptance for payment of or payment for Shares or to proceed with the Merger; or (j) there shall not have occurred or been threatened the loss of one or more of the employee(s) who, substantially concurrently herewith, are entering into Employment Agreements that would result in a Material Adverse Effect on the Company, whether pursuant to a breach or anticipated breach, of any such Employment Agreement, or otherwise. The foregoing conditions are for the sole benefit of Parent and may be asserted by Purchaser regardless of the circumstances giving rise to any such conditions and, subject to the terms of the Merger Agreement, may be waived by Purchaser in whole or in part at any time and from time to time, in each case, in the exercise of the good faith judgment of Purchaser and subject to the terms of this Agreement. The failure by Purchaser at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time. 4 EX-99.C(2) 11 EXHIBIT (C)(2) STOCK OPTION AGREEMENT THIS STOCK OPTION AGREEMENT is dated as of June 14, 1999, between Cadence Design Systems, Inc., a Delaware corporation ("Parent"), CDSI Acquisition Corporation ("Purchaser") and OrCAD, Inc., a Delaware corporation (the "Company"). Terms which are capitalized herein, and which are defined in the Merger Agreement, shall have the meanings therein set forth. RECITALS WHEREAS, contemporaneously with the execution and delivery of this Agreement, Parent, Purchaser and the Company are entering into an Agreement and Plan of Merger, dated as of the date hereof (the "Merger Agreement"), which provides for, upon the terms and subject to the conditions set forth therein, (i) the commencement by Purchaser of a tender offer (the "Offer") for all of the issued and outstanding shares of common stock, par value $.01 per share, of the Company (the "Common Stock"), at a price of $13.00 per share, net to the seller in cash, and (ii) the subsequent merger of Purchaser with and into the Company (the "Merger"). As a condition to their willingness to enter into the Merger Agreement, Parent and Purchaser have required that the Company agree, and the Company has agreed, to enter into this Stock Option Agreement, pursuant to which Parent or Purchaser, as Parent may designate, shall have the option to purchase shares of the Common Stock, upon the terms and subject to the conditions provided for herein. NOW, THEREFORE, in consideration of the premises and mutual covenants and agreements contained in this Stock Option Agreement and the Merger Agreement, the parties agree as follows: 1. GRANT OF OPTION. Subject to the terms and conditions of this Stock Option Agreement, the Company hereby grants to Parent or Purchaser, as Parent may designate, an irrevocable option (the "Option") to purchase: (a) pursuant to the "Basic Option" referred to herein, 1,863,331 shares of Common Stock (the "Basic Option Shares"), in the manner set forth below, at an exercise price of $13.00 per share of Common Stock, subject to adjustment as provided below (the "Option Price"); and (b) pursuant to the "Top-Up Option" referred to herein, such number of shares of Common Stock ("the "Top-Up Option Shares"), as shall equal the lesser of (i) the number of shares which, when added to the shares then owned by Parent or Purchaser, shall equal 90% of the shares of Common Stock then outstanding, plus one; and (ii) the number of authorized and unissued shares of Common Stock. The Top-Up Option shall be exercisable only upon the condition 1 set forth in Section 10(d) following the purchase by Parent or Purchaser of Shares in the Offer. 2. EXERCISE OF BASIC OPTION. (a) Subject to the satisfaction or waiver of the conditions set forth in Section 9 of this Stock Option Agreement, prior to the termination of this Stock Option Agreement in accordance with its terms, Parent or Purchaser, as Parent may designate, may exercise the Basic Option, in whole or in part, at any time or from time to time if the Merger Agreement becomes terminable under circumstances that would entitle Parent to receive the Termination Fee pursuant to Section 7.3(a) thereof. (b) In the event Parent or Purchaser wishes to exercise the Basic Option, it shall deliver written notice (the "Exercise Notice") to the Company specifying its intention to exercise the Basic Option, the total number of Shares it wishes to purchase and a date and time for the closing of such purchase (a "Closing") not less than one (1) nor more than thirty (30) business days after the later of (i) the date such Exercise Notice is given and (ii) the expiration or termination of any applicable waiting period under the HSR Act. (c) If prior to the Expiration Date (as defined in Section 12 below) there shall occur a Third Party Acquisition, or the Company shall have entered into a definitive agreement with any Third Party for a Third Party Acquisition, then Parent, in lieu of exercising the Basic Option, shall have the right at any time thereafter (for so long as the Basic Option is exercisable under Section 2(a) hereof) to request in writing that the Company pay, and promptly (but in any event not more than five (5) business days) after the giving by Parent of such request, the Company shall pay to Parent, in cancellation of the Basic Option, an amount in cash (the "Cancellation Amount") equal to (i) the excess over the Option Price of the greater of (A) the average of the last sales prices of a share of Common Stock on the Nasdaq National Market System (as reported by the Wall Street Journal) on the five trading days prior to the date of the Exercise Notice, and (B) (1) the highest price per share of Common Stock offered to be paid or paid by any such Third Party pursuant to or in connection with such Third Party Acquisition or (2) if such Third Party Acquisition consists of a purchase and sale of assets, the aggregate net consideration offered to be paid or paid in any such transaction or proposed transaction, after payment of applicable corporate taxes, divided by the number of shares of Common Stock then outstanding, multiplied by (ii) the number of Basic Option Shares then covered by the Basic Option. If all or a portion of the price per share of Common Stock offered, paid or payable or the aggregate consideration offered, paid or payable for the stock or assets of the Company, each as contemplated by the preceding sentence, consists of noncash consideration, such price or aggregate consideration shall be the cash consideration, if any, plus the fair market value of the non-cash consideration as 2 determined by the investment bankers of the Company and the investment bankers of Parent. (d) Notwithstanding anything to the contrary contained herein, the economic benefit, if any, which Parent may derive hereunder shall be limited as follows: (1) in no event shall Parent's Total Payment (as defined below) exceed seven million eight hundred thousand dollars ($7,800,000) and Parent shall pay any excess over such amount to the Company, and (2) the Basic Option may not be exercised for a number of Basic Option Shares as would, as of the date of exercise, result in a Notional Total Payment (as defined below), together with the actual Total Payment immediately preceding such exercise, exceeding seven million eight hundred thousand dollars ($7,800,000). As used herein, (1) "Total Payment" shall mean the sum (before taxes) of the following: (i) any Cancellation Amount received by Parent pursuant to Section 2(c) hereof, (ii) (x) the net cash amounts received by Parent pursuant to the sale, within twelve (12) months following exercise of the Basic Option, of Basic Option Shares (or any other securities into which such Basic Option Shares shall be converted or exchanged) to any unaffiliated party, less (y) the aggregate Basic Option Price for such shares, (iii) any amounts received by Parent upon transfer of the Option (or any portion thereof) to any unaffiliated party, and (iv) the amount actually received by Parent pursuant to Section 7.3(a) of the Merger Agreement; and (2) "Notional Total Payment" with respect to any number of Option Shares as to which Parent may propose to exercise the Option shall be the Total Payment determined as of the date of such proposed exercise assuming that the Basic Option were exercised on such date for such number of shares and assuming further that such shares, together with all other Basic Option Shares held by Parent as of such date, were sold for cash at the closing market price for the Common Stock as of the close of business on the preceding trading day (less customary brokerage commissions). For purposes of this Section 2, references to Parent shall be deemed to include references to Purchaser or any other affiliate of Parent. 3. EXERCISE OF TOP-UP OPTION. (a) Subject to the satisfaction or waiver of the conditions set forth in Section 10 of this Stock Option Agreement, during the period of 30 days following the purchase by Purchaser or Parent of Shares pursuant to the Offer, Parent or Purchaser, as Parent may designate, may exercise the Top-Up Option. (b) In the event Parent or Purchaser wishes to exercise the Top-Up Option, it shall deliver written Notice to the Company, containing the information and in the manner provided in Section 4 (b). 4. PAYMENT OF OPTION PRICE AND DELIVERY OF CERTIFICATE. Any Closings under Section 2 or 3 of this Stock Option Agreement shall be held at the principal executive offices of the Parent, or at such other place as the Company and Parent may 3 agree. At any Closing hereunder, (a) Parent or Purchaser will make payment to the Company of the aggregate price for the Basic Option Shares being so purchased by delivery of a certified check, official bank check or wire transfer of funds pursuant to the Company's instructions payable to the Company in an amount equal to the product obtained by multiplying the Option Price by the number of Basic Option Shares to be purchased, (b) Parent or Purchaser will make payment to the Company of the aggregate price for the Top-Up Option Shares being so purchased by delivery of Parent's promissory note, payable in thirty days, with interest at a rate equal to 6% per annum, and otherwise in form and substance reasonably satisfactory to the Company, and (c) upon receipt of such payment the Company will deliver to Parent or its designee a certificate or certificates representing the number of validly issued, fully paid and non-assessable Basic Option or Top-Up Option Shares so purchased, in the denominations and registered in such names designated to the Company in writing by Parent. 5. REGISTRATION AND LISTING OF BASIC OPTION SHARES. (a) The Company will, if requested by Parent at any time or from time to time within two (2) years following the exercise of the Basic Option (the "Registration Period"), in order to permit the sale or other disposition of the Basic Option Shares that have been acquired by or are issuable to Parent or Purchaser upon exercise of the Option ("Registrable Securities"), register under the Securities Act of 1933, as amended (the "Act"), the offering, sale and delivery, or other disposition, of the Registrable Securities. Any such Registration Notice must relate to a number of Registrable Securities equal to at least twenty percent (20%) of the Basic Option Shares, unless the remaining number of Registrable Securities is less than such amount, in which case Parent shall be entitled to exercise its rights hereunder but only for all of the remaining Registrable Securities (a "Permitted Offering"). The rights of Parent and Purchaser hereunder shall terminate at such time as Parent shall be entitled to sell all of the remaining Registrable Securities pursuant to Rule 144(k) under the Act. The Company will use all reasonable efforts to qualify any Registrable Securities Parent desires to sell or otherwise dispose of under applicable state securities or "blue sky" laws; provided, however, that the Company shall not be required to qualify to do business, or consent to general service of process, in any jurisdiction by reason of this provision. Without Parent's prior written consent, no other securities may be included in any such registration. The Company will use all reasonable efforts to cause each such registration statement to become effective, to obtain all consents or waivers of other parties that are required therefor and to keep such registration statement effective for a period of ninety (90) days from the day such registration statement first becomes effective. The obligations of the Company hereunder to file a registration statement and to maintain its effectiveness may be suspended for one or more periods not exeeding ninety (90) days in the aggregate if the Board of Directors of the Company shall have determined in good faith that the filing of such registration statement or the maintenance of its effectiveness would require disclosure of nonpublic information that would materially and adversely affect the 4 Company, or the Company is required under the Act to include audited financial statements for any period in such registration statement and such financial statements are not yet available for inclusion in such registration statement. In addition, the Company may satisfy its obligations with respect to a request hereunder by affording Parent the opportunity to include the Basic Option Shares subject to such request in a registration statement referred to in section 5(b) below, provided that: (i) all such Basic Option Shares are registered thereby; (ii) such registration statement is filed within sixty (60) days following Parent's request; and (iii) Parent's right to subsequently request registration of Basic Option Shares hereunder shall not be reduced as the result of any such registration. Parent shall be entitled to make up to two (2) requests under this Section 5(a). For purposes of determining whether the two (2) requests have been made under this Section 5(a), only requests relating to a registration statement that has become effective under the Act will be counted. (b) If, during the Registration Period, the Company shall propose to register under the Act the offering, sale and delivery of the Common Stock for cash for its own account or for any other stockholder of the Company pursuant to a firm underwriting, it will, in addition to the Company's other obligations under this Section 5, allow Parent or Purchaser, as the case may be, the right to participate in such registration provided that Parent or Purchaser participates in such underwriting; provided, however, that, (i) if the managing underwriter of such offering advises the Company in writing that in its opinion the number of shares of the Common Stock requested to be included in such registration exceeds the number that it would be in the best interests of the Company to sell in such offering, the Company will, after fully including therein all shares of Common Stock to be sold by the Company, include the shares of Common Stock requested to be included therein by Parent or Purchaser pro rata (based on the number of shares of Common Stock requested to be included therein) with the shares of Common Stock requested to be included therein by persons other than the Company and persons to whom the Company owes a contractual obligation (other than any director, officer or employee of the Company to the extent any such person is not currently owed such contractual obligation); and (ii) if the managing underwriter requires that persons participating in such underwriting accept "standstill" limitations, prohibiting sales of Common Stock by such persons for up to 180 days, Parent or Purchaser, as the case may be, shall be required to agree to such limitations on the same basis as others participating in such underwriting. (c) The expenses associated with the preparation and filing of any registration statement pursuant to this Section 5 and any sale covered thereby (including any fees related to blue sky qualifications and filing fees in respect of SEC or the National Association of Securities Dealers, Inc.) ("Registration Expenses") will be paid by the Company, except for underwriting discounts or commissions or brokers' fees in respect of shares of the Common Stock to be sold by Parent or Purchaser and the fees and disbursements of counsel to Parent or 5 Purchaser; provided, however, that the Company will not be required to pay for any Registration Expenses with respect to such registration if the registration request is subsequently withdrawn at the request of Parent or Purchaser unless Parent or Purchaser agrees to forfeit its right to request one registration; provided further, however, that, if at the time of such withdrawal Parent or Purchaser has learned of a material adverse change in the results of operations, condition, business or prospects of the Company not known to Parent or Purchaser at the time of the request and has withdrawn the request within a reasonable period of time following disclosure by the Company to Parent or Purchaser of such material adverse change, then Parent or Purchaser shall not be required to pay any of such expenses and will retain all remaining rights to request registration. Parent or Purchaser will provide all information reasonably requested by the Company for inclusion in any registration statement to filed hereunder. (d) The registration rights granted under this Section 5 are subject to and are limited by any registration rights previously granted by the Company, and Parent or Purchaser acknowledges that the registration rights granted under this Section 5 shall be subject to any such limitations. (e) In connection with each registration under this Section 5, the Company shall indemnify and hold each holder of Basic Option Shares participating in such offering (a "Holder"), its underwriters and each of their respective affiliates harmless against any and all losses, claims, damage, liabilities and expenses (including, without limitation, investigation expenses and fees and disbursements of counsel and accountants), joint or several, to which such Holder, its underwriters and each of their respective affiliates may become subject, under the Act or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any registration statement (including any prospectus therein), or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, other than such losses, claims, damages, liabilities or expenses (or actions in respect thereof) which arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in written information furnished by a Holder to the Company expressly for use in such registration statement. (f) In connection with any registration statement pursuant to this Section 5, each Holder agrees to furnish the Company with such information concerning itself and the proposed sale or distribution as shall reasonably be required in order to ensure compliance with the requirements of the Act and shall provide representations and warranties customary for selling shareholders who are unaffiliated with the Company. In addition, Parent or Purchaser and each Holder shall indemnify and hold the Company, its underwriters and each of their 6 respective affiliates harmless against any and all losses, claims, damages, liabilities and expenses (including, without limitation, investigation expenses and fees and disbursement of counsel and accountants), joint or several, to which the Company, its underwriters and each of their respective affiliates may become subject under the Act or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in written information furnished by any Holder to the Company expressly for use in such registration statement; PROVIDED, HOWEVER, that in no event shall any indemnification amount contributed by a Holder hereunder exceed the proceeds of the offering received by such Holder. (g) Upon the issuance of Basic Option Shares hereunder, the Company will promptly list such Basic Option Shares with the Nasdaq National Market System or on such national or other exchange on which the shares of Common Stock are at the time listed. 6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby represents and warrants to Parent and Purchaser as follows: (a) The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has requisite power and authority to enter into and perform its obligations under this Stock Option Agreement. (b) The execution and delivery of this Stock Option Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by the Board of Directors of the Company and no other corporate proceedings on the part of the Company are necessary to authorized this Stock Option Agreement or to consummate the transactions contemplated hereby. The Board of Directors of the Company has duly approved the issuance and sale of the Basic Option Shares and Top-Up Option Shares, upon the terms and subject to the conditions contained in this Stock Option Agreement, and the consummation of the transactions contemplated hereby. This Stock Option Agreement has been duly and validly executed and delivered by the Company and, assuming this Stock Option Agreement has been duly and validly authorized, executed and delivered by Parent and Purchaser, constitutes a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or relating to creditors' rights generally; the availability of injunctive relief and other equitable remedies; and limitations imposed by law on indemnification for liability under federal securities laws. (c) The Company has taken all necessary action to authorize and reserve for issuance and to permit it to issue, and at all times from the date of this 7 Stock Option Agreement through the date of expiration of the Option will have reserved for issuance upon exercise of the Option, a sufficient number of authorized shares of Common Stock for issuance upon exercise of the Option, each of which, upon issuance pursuant to this Stock Option Agreement and when paid for as provided herein, will be validly issued, fully paid and nonassessable, and shall be delivered free and clear of all claims, liens, charges, encumbrances and security interests (other than those imposed by Parent, Purchaser, its affiliates or by applicable law). (d) The execution, delivery and performance of this Stock Option Agreement by the Company and the consummation by it of the transactions contemplated hereby except as required by the HSR Act and any material foreign competition authorities (if applicable), and, with respect to Section 5 hereof, compliance with the provisions of the Act and any applicable state securities laws, do not require the consent, waiver, approval, license or authorization of or result in the acceleration of any obligation under, or constitute a default under, any term, condition or provision of any charter or bylaw, or any indenture, mortgage, lien, lease, agreement, contract, instrument, order, judgment, ordinance, regulation or decree or any restriction to which the Company or any property of the Company or its subsidiaries is bound, except where failure to obtain such consents, waivers, approvals, licenses or authorizations or where such acceleration or defaults could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company. 7. REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER. Parent and Purchaser hereby represents and warrants to the Company that: (a) Each of Parent and Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and has requisite power and authority to enter into and perform its obligations under this Stock Option Agreement. (b) The execution and delivery of this Stock Option Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by the Board of Directors of Parent and Purchaser and no other corporate proceedings on the part of Parent or Purchaser are necessary to authorize this Stock Option Agreement or to consummate the transactions contemplated hereby. This Stock Option Agreement has been duly and validly executed and delivered by Parent and Purchaser and, assuming this Stock Option Agreement has been duly executed and delivered by the Company, constitutes a valid and binding obligation of Parent and Purchaser enforceable against it in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or relating to creditors' rights generally; the availability of injunctive relief and other equitable remedies; and 8 limitations imposed by law on indemnification for liability under federal securities laws. (c) Each of Parent and Purchaser is acquiring the Option and will acquire the Basic Option Shares and the Top-Up Option Shares issuable upon the exercise thereof for its own account and not with a view to the distribution or resale thereof in any manner not in accordance with applicable law. 8. COVENANTS OF PARENT AND PURCHASER. Parent and Purchaser each agrees not to transfer or otherwise dispose of the Option or the Basic Option or Top-Up Option Shares, or any interest therein, except that Parent or Purchaser may transfer or dispose of the Basic Option or Top-Up Option Shares so long as such transaction is in compliance with the Act and any applicable state securities law. Parent and Purchaser further agrees to the placement of the following legend on the certificates) representing the Basic Option or Top-Up Option Shares (in addition to any legend required under applicable state securities laws): "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER EITHER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY APPLICABLE STATE LAW GOVERNING THE OFFER AND SALE OF SECURITIES. NO TRANSFER OR OTHER DISPOSITION OF THESE SHARES, OR OF ANY INTEREST THEREIN, MAY BE MADE EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND SUCH OTHER STATE LAWS OR PURSUANT TO EXEMPTIONS FROM REGISTRATION UNDER THE ACT, SUCH OTHER STATE LAWS, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER." 9. HSR COMPLIANCE EFFORTS. Parent and the Company shall take, or cause to be taken, all reasonable action to consummate and make effective the transactions contemplated by this Stock Option Agreement, including, without limitation, reasonable efforts to obtain any necessary consents of third parties and governmental agencies and the filing by Parent and the Company promptly after the date hereof of any required HSR Act notification forms and the documents required to comply with the HSR Act. 10. CERTAIN CONDITIONS. The obligation of the Company to issue Basic Option Shares and Top-Up Option Shares under this Stock Option Agreement upon exercise of the Option shall be subject to the satisfaction or waiver of the following conditions: (a) Any waiting periods applicable to the Purchaser of the Basic Option or Top-Up Option Shares by Parent or the Purchaser pursuant to this Stock Option Agreement under the HSR Act and any material foreign competition laws shall have expired or been terminated; 9 (b) The representations and warranties of Parent and Purchaser made in Section 7 of this Stock Option Agreement shall be true and correct in all material respects as of the date of the Closing for the issuance of such Option Shares; and (c) No statute, rule or regulation shall be in effect, and no order, decree or injunction entered by any court of competent jurisdiction or governmental, regulatory or administrative agency or commission in the United States shall be in effect which prohibits the exercise of the Option by Parent or Purchaser or issuance of shares of Common Stock pursuant to this Stock Option Agreement. (d) In the case of the Top-Up Option Shares only, (i) Parent or Purchaser shall have purchased Shares pursuant to the Offer, (ii) the number of shares of Common Stock then owned by Parent or Purchaser, when added to the Top-Up Option Shares, shall equal 90% of the shares of Common Stock then outstanding, plus one, and (iii) Parent or Purchaser shall have taken all such action as shall be required so that the Merger will be completed immediately following exercise of the Top-Up Option and issuance of the Top-Up Option Shares hereunder. 11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of any change in the number of issued and outstanding shares of Common Stock by reason of any stock dividend, stock split, recapitalization, merger, rights offering, share exchange or other change in the corporate or capital structure of the Company, Parent or Purchaser shall receive, upon exercise of the Basic Option, the stock or other securities, cash or property to which it would have been entitled if it had exercised the Basic Option and had been a holder of record of shares of Common Stock on the record date fixed for determination of holders of shares of Common Stock entitled to receive such stock or other securities, cash or property at the same aggregate price as the aggregate Option Price of the Basic Option Shares. 12. EXPIRATION. The Option shall expire at the earlier of (i) the Effective Time (as defined in the Merger Agreement) and (ii) 5:00 p.m., California time, on the day that is the twelve (12) month anniversary of the date on which the Merger Agreement has been terminated in accordance with the terms thereof (such expiration date is referred to as the "Expiration Date"). 13. GENERAL PROVISIONS. (a) Survival. All of the representations, warranties and covenants contained herein shall survive a Closing and shall be deemed to have been made as of the date hereof and as of the date of each Closing. (b) FURTHER ASSURANCES. If Parent or Purchaser exercises the Option, or any portion thereof, in accordance with the terms of this Stock Option Agreement, 10 the Company and Parent or Purchaser, as the case may be, will execute and deliver all such further documents and instruments and use all reasonable efforts to take all such further action as may be necessary in order to consummate the transactions contemplated thereby. (c) SEVERABILITY. It is the desire and intent of the parties that the provisions of this Stock Option Agreement be enforced to the fullest extent permissible under the law and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, in the event that any provision of this Stock Option Agreement would be held in any jurisdiction to be invalid, prohibited or unenforceable for any reason, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Stock Option Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Stock Option Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. (d) ASSIGNMENT; TRANSFER OF STOCK OPTION. This Stock Option Agreement shall be binding on and inure to the benefit of the parties hereto and their respective successors and permitted assigns; PROVIDED, HOWEVER, that the Company, Parent and Purchaser, without the prior written consent of the other party, shall not be entitled to assign or otherwise transfer any of its rights or obligations hereunder and any such attempted assignment or transfer shall be void; provided, further, that Parent shall be entitled to assign or transfer this Stock Option Agreement or any rights hereunder to any wholly-owned subsidiary of Parent so long as such wholly-owned subsidiary agrees in writing to be bound by the terms and provisions hereof. (e) SPECIFIC PERFORMANCE. The parties agree and acknowledge that in the event of a breach of any provision of this Stock Option Agreement, the aggrieved party would be without an adequate remedy at law. The parties therefore agree that in the event of a breach of any provision of this Stock Option Agreement, the aggrieved party may elect to institute and prosecute proceedings in any court of competent jurisdiction to enforce specific performance or to enjoin the continuing breach of such provisions, as well as to obtain damages for breach of this Stock Option Agreement. By seeking or obtaining any such relief, the aggrieved party will not be precluded from seeking or obtaining any other relief to which it may be entitled. (f) AMENDMENTS. This Stock Option Agreement may not be modified, amended, altered or supplemented except upon the execution and delivery of a written agreement executed by Parent, the Company and Purchaser. 11 (g) NOTICES. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed to be sufficient if contained in a written instrument and shall be deemed given if delivered personally, telecopied, sent by nationally-recognized, overnight courier or mailed by registered or certified mail (return receipt requested), postage prepaid, to the other party at the following addresses (or such other address for a party as shall be specified by like notice): if to Parent or Purchaser: Cadence Design Systems, Inc. 2655 Seely Road, Bldg. 5 San Jose, CA 95134 Telecopier: 408-944-6855 Attention: General Counsel with a copy to: Gibson, Dunn & Crutcher LLP 333 South Grand Avenue Los Angeles, CA 90071 Telecopier: 213-229-6159 Attention: Andrew E. Bogen if to the Company to: OrCAD, Inc. 9300 SW Nimbus Avenue Beaverton, OR 97008 Telecopier: 503-671-9502 Attention: President with a copy to: Ater & Wynne LLP 222 S.W. Columbia Street, Suite 1800 Portland, OR 97201 Telecopier: 503-226-0079 Attention: William C. Campbell (h) HEADINGS. The headings contained in this Stock Option Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Stock Option Agreement. (i) COUNTERPARTS. This Stock Option Agreement may be executed in one or more counterparts, each of which shall be an original, but all of which together shall constitute one and the same agreement. (j) GOVERNING LAW. This Stock Option Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without regard to the principles of conflicts of law thereof. (k) ENTIRE AGREEMENT. This Stock Option Agreement and the Merger Agreement, and any documents and instruments referred to herein and therein, 12 constitute the entire agreement between the parties hereto and thereto with respect to the subject matter hereof and thereof and supersede all other prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof and thereof. Nothing in this Stock Option Agreement shall be construed to give any person other than the parties to this Stock Option Agreement or their respective successors or permitted assigns any legal or equitable right, remedy or claim under or in respect of this Stock Option Agreement or any provision contained herein. (m) EXPENSES. Except as otherwise provided in this Stock Option Agreement, each party shall pay its own expenses incurred in connection with this Stock Option Agreement and the transactions contemplated hereby. 13 IN WITNESS WHEREOF, the parties have caused this Stock Option Agreement to be signed by their respective officers thereunto duly authorized as of the date first written above. CADENCE DESIGN SYSTEMS, INC. By: /s/ H. Raymond Bingham ----------------------------------------- Name: H. Raymond Bingham --------------------------------------- Title: President & CEO -------------------------------------- CDSI ACQUISITION CORPORATION By: /s/ H. Raymond Bingham ----------------------------------------- Name: H. Raymond Bingham --------------------------------------- Title: President & CEO -------------------------------------- OrCAD, INC. By: /s/ Michael F. Bosworth ----------------------------------------- Name: Michael F. Bosworth --------------------------------------- Title: President & CEO -------------------------------------- 14 EX-99.C(3) 12 EXHIBIT (C)(3) STOCKHOLDERS AGREEMENT THIS STOCKHOLDERS AGREEMENT, dated as of June 14, 1999 (the "Agreement"), among Cadence Design Systems, Inc., a Delaware corporation ("Parent"), CDSI Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of Parent ("Purchaser"), and the stockholders of OrCAD, Inc., a Delaware corporation (the "Company"), whose names appear on Schedule I hereto (collectively, the "Stockholders"). Terms which are capitalized herein, and which are defined in the Merger Agreement, shall have the meanings therein set forth. W I T N E S S E T H: WHEREAS, contemporaneously with the execution and delivery of this Agreement, Parent, Purchaser and the Company are entering into an Agreement and Plan of Merger, dated as of the date hereof (the "Merger Agreement"), which provides for, upon the terms and subject to the conditions set forth therein, (i) the commencement by Purchaser of a tender offer (the "Offer") for all of the issued and outstanding shares of common stock, par value $.01 per share, of the Company (the "Shares"), at a price of $13.00 per share, net to the seller in cash, and (ii) the subsequent merger of Purchaser with and into the Company (the "Merger"); WHEREAS, as of the date hereof, each Stockholder owns (beneficially and of record) the number of Shares set forth opposite such Stockholder's name on Schedule I hereto (all Shares so owned and which may hereafter be acquired by such Stockholder prior to the termination of this Agreement, whether upon the exercise of options or by means of purchase, dividend, distribution or otherwise, being referred to herein as such Stockholder's "Owned Shares"); WHEREAS, as a condition to their willingness to enter into the Merger Agreement, Parent and Purchaser have required that the Stockholders enter into this Agreement; and WHEREAS, in order to induce Parent and Purchaser to enter into the Merger Agreement, the Stockholders are willing to enter into this Agreement. NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, Parent, Purchaser and each of the Stockholders, severally and not jointly, hereby agree as follows: ARTICLE I. TRANSFER AND VOTING OF SHARES; AND OTHER COVENANTS OF THE STOCKHOLDERS SECTION 1.1. VOTING OF SHARES. From the date hereof until the earliest to occur of (x) termination of this Agreement pursuant to Section 6.2 hereof, (y) the expiration of the Stock Option with respect to such Stockholder's Owned Shares and (z) the closing of any exercise of such Stock Option (the "Term"), at any meeting of the stockholders of the Company, however called, and in any action by consent of the stockholders of the Company, each Stockholder shall vote its Owned Shares (i) in favor of the Merger and the Merger Agreement (as amended from time to time), (ii) against any proposal for a Third Party Acquisition and against any proposal for action or agreement that would result in a breach of any covenant, representation or warranty or any other obligation or agreement of the Company under the Merger Agreement or which is reasonably likely to result in any of the conditions of the Company's obligations under the Merger Agreement not being fulfilled, any change in the directors of the Company, any change in the present capitalization of the Company or any amendment to the Company's Restated Certificate of Incorporation or By-Laws, any other material change in the Company's corporate structure or business, or any other action which could reasonably be expected to impede, interfere with, delay, postpone or materially adversely affect the transactions contemplated by the Merger Agreement or the likelihood of such transactions being consummated and (iii) in favor of any other matter necessary for consummation of the transactions contemplated by the Merger Agreement which is considered at any such meeting of stockholders and in connection therewith to execute any documents which are necessary or appropriate in order to effectuate the foregoing, including the ability for Purchaser or its nominees to vote such Owned Shares directly. SECTION 1.2. NO INCONSISTENT ARRANGEMENTS. Except as contemplated by this Agreement and the Merger Agreement, each Stockholder shall not during the Term (i) transfer (which term shall include, without limitation, any sale, assignment, gift, pledge, hypothecation or other disposition), or consent to any transfer of, any or all of such Stockholder's Owned Shares or any interest therein, or create or, except as set forth on Schedule 1.2 hereto, permit to exist any Encumbrance (as defined below) on such Owned Shares, (ii) enter into any contract, option or other agreement or understanding with respect to any transfer of any or all of such Owned Shares or any interest therein, (iii) grant any proxy, power-of- attorney or other authorization in or with respect to such Owned Shares, (iv) deposit such Owned Shares into a voting trust or enter into a voting agreement or arrangement with respect to such Owned Shares, or (v) take any other action that would in any way restrict, limit or interfere with the performance of its obligations hereunder or the transactions contemplated hereby or by the Merger Agreement. SECTION 1.3. PROXY. Each Stockholder hereby revokes any and all prior proxies or powers of attorney in respect of any of such Stockholder's Owned Shares and constitutes and appoints Purchaser and Parent, or any nominee of Purchaser and Parent, with full power of substitution and resubstitution, at any time during the Term, as its true and lawful attorney and proxy (its "Proxy"), for and in its name, place and stead, to demand that the Secretary of the 2 Company call a special meeting of the stockholders of the Company for the purpose of considering any matter referred to in Section 1.1 (if permitted under the Company's Restated Certificate of Incorporation or By-Laws) and to vote each of such Owned Shares as its Proxy, at every annual, special, adjourned or postponed meeting of the stockholders of the Company, including the right to sign its name (as stockholder) to any consent, certificate or other document relating to the Company that Delaware Law may permit or require as provided in Section 1.1. THE FOREGOING PROXY AND POWER OF ATTORNEY ARE IRREVOCABLE AND COUPLED WITH AN INTEREST THROUGHOUT THE TERM. SECTION 1.4. WAIVER OF APPRAISAL RIGHTS. Each Stockholder hereby waives any rights of appraisal or rights to dissent from the Merger. SECTION 1.5. STOP TRANSFER. Each Stockholder shall not request that the Company register the transfer (book-entry or otherwise) of any certificate or uncertificated interest representing any of such Stockholder's Owned Shares, unless such transfer is made in compliance with this Agreement (including the provisions of Article III hereof). SECTION 1.6. NO SOLICITATION. During the Term, each Stockholder shall not, nor shall it permit or authorize any of its officers, directors, employees, agents or representatives (collectively, the "Representatives") to, (i) solicit or initiate, or encourage, directly or indirectly, any inquiries regarding or the submission of, any proposal for a Third Party Acquisition, (ii) participate in any discussions or negotiations regarding, or furnish to any Person any information or data with respect to, or take any other action to knowingly facilitate the making of any proposal that constitutes, or may reasonably be expected to lead to, any proposal for a Third Party Acquisition or (iii) enter into any agreement with respect to any proposal for a Third Party Acquisition or approve or resolve to approve any proposal for a Third Party Acquisition. Upon execution of this Agreement, each Stockholder shall, and it shall cause its Representatives to, immediately cease any existing activities, discussions or negotiations with any parties conducted heretofore with respect to any of the foregoing. Each Stockholder will promptly notify Parent of the existence of any proposal, discussion, negotiation or inquiry received by such Stockholder, and each Stockholder will immediately communicate to Parent the terms of any proposal, discussion, negotiation or inquiry which it may receive (and will promptly provide to Parent copies of any written materials received by it in connection with such proposal, discussion, negotiation or inquiry) and the identity of the Person making such proposal or inquiry or engaging in such discussion or negotiation. ARTICLE II. TENDER OF SHARES SECTION 2.1. TENDER. Each Stockholder shall validly tender (or cause the record owner of such shares to validly tender) such Stockholder's Owned Shares pursuant to and in accordance with the terms of the Offer, not later than the fifth business day after commencement of the Offer pursuant to Section 1.1 of the Merger Agreement and Rule 14d-2 under the Exchange Act, and not thereafter withdraw such tender. Each Stockholder hereby 3 acknowledges and agrees that Parent's and Purchaser's obligation to accept for payment and pay for such Stockholder's Owned Shares in the Offer is subject to the terms and conditions of the Offer. For all its Shares validly tendered in the Offer and not withdrawn, each Stockholder will be entitled to receive the highest price paid by Purchaser pursuant to the Offer. SECTION 2.2. CERTAIN WARRANTIES. Without limiting the generality or effect of any other term or condition of the Offer, the transfer by Stockholder of the Owned Shares to Purchaser in the Offer shall pass to and unconditionally vest in Purchaser good and valid title to the Owned Shares, free and clear of all Encumbrances whatsoever. SECTION 2.3. DISCLOSURE. Each Stockholder hereby authorizes Parent and Purchaser to publish and disclose in the Offer Documents and, if approval of the Company's stockholders is required under applicable law, the Proxy Statement (including all documents and schedules filed with the SEC), its identity and ownership of the Shares and the nature of its commitments, arrangements and understandings under this Agreement. ARTICLE III OPTION SECTION 3.1. GRANT OF OPTION. In order to induce Parent and Purchaser to enter into the Merger Agreement, each Stockholder hereby grants to Parent or Purchaser, as Parent may designate (the "Optionee"), an irrevocable option (each such option, a "Stock Option") to purchase all, but not less than all, of such Stockholder's Owned Shares at a purchase price per share equal to the higher of (i) $13.00, and (ii) if the Offer is consummated, the highest price paid by Purchaser pursuant to the Offer (the "Exercise Price"). SECTION 3.2. RIGHT TO EXERCISE. Each Stock Option may be exercised by the Optionee if (i) the Merger Agreement becomes terminable under circumstances that would entitle Parent to receive the Termination Fee pursuant to Section 7.3(a) of the Merger Agreement, or (ii) the Offer is consummated but (due to failure by the Stockholder who has granted such Stock Option to tender validly and not withdraw) Purchaser has not accepted for payment or paid for all such Stockholder's Owned Shares. SECTION 3.3. CONDITIONS. Each Stock Option (i) shall become exercisable, in whole but not in part, on the date on which the first event referred to in Section 3.2 shall occur or, if later, the date on which (A) all waiting periods under the HSR Act required for the purchase of the Owned Shares upon such exercise shall have expired or been waived and all approvals of and consents to such purchase required under applicable foreign antitrust and competition laws shall have been obtained and be in full force and effect and (B) there shall not be in effect any preliminary or final injunction or other order issued by any court or governmental, administrative or regulatory agency or authority prohibiting the exercise of such Stock Option pursuant to this Agreement, and (ii) shall remain exercisable until the date which is ninety (90) days following the first such date on which such Stock Option becomes exercisable. 4 SECTION 3.4. PAYMENT AND DELIVERY. If the Optionee wishes to exercise a Stock Option it shall, prior to the expiration thereof, send a written notice to Stockholder identifying the time and place for the closing of such purchase at least three but not more than 10 business days prior to such closing. On the date of such closing, Parent shall deliver the Exercise Price multiplied by the total number of Owned Shares being acquired against delivery by Stockholders of all certificates representing such Owned Shares, duly endorsed or accompanied by appropriate instruments of transfer. Upon such delivery by the Stockholders, good and valid title to such Owned Shares shall pass to and unconditionally vest in Purchaser, free and clear of all Encumbrances whatsoever. ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS Each Stockholder hereby represents and warrants to Parent and Purchaser as follows: SECTION 4.1. DUE AUTHORIZATION, ETC. Such Stockholder has all requisite power and authority to execute, deliver and perform this Agreement, to appoint Purchaser and Parent as its Proxy and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement, the appointment of Purchaser and Parent as Stockholder's Proxy and the consummation of the transactions contemplated hereby have been duly authorized by all necessary action on the part of Stockholder. This Agreement has been duly executed and delivered by or on behalf of such Stockholder and constitutes a legal, valid and binding obligation of such Stockholder, enforceable against such Stockholder in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, moratorium or other similar laws and except that the availability of equitable remedies, including specific performance, is subject to the discretion of the court before which any proceeding for such remedy may be brought. There is no beneficiary or holder of a voting trust certificate or other interest of any trust of which such Stockholder is trustee whose consent is required for the execution and delivery of this Agreement of the consummation by such Stockholder of the transactions contemplated hereby. SECTION 4.2. NO CONFLICTS; REQUIRED FILINGS AND CONSENTS. (a) The execution and delivery of this Agreement by such Stockholder does not, and the performance of this Agreement by such Stockholder will not, (i) conflict with or violate any trust agreement or other similar documents relating to any trust of which such Stockholder is trustee, (ii) conflict with or violate any law applicable to such Stockholder or by which such Stockholder or any of such Stockholder's properties is bound or affected or (iii) result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, acceleration or cancellation of, or result in the creation of a lien or encumbrance on any assets of such Stockholder, including, without limitation, such Stockholder's Owned Shares, pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which such Stockholder is a party or by which such Stockholder or 5 any of such Stockholder's assets is bound or affected, except, in the case of clauses (ii) and (iii), for any such breaches, defaults or other occurrences that would not prevent or delay the performance by such Stockholder of such Stockholder's obligations under this Agreement. (b) The execution and delivery of this Agreement by such Stockholder does not, and the performance of this Agreement by such Stockholder will not, require any consent, approval, authorization or permit of, or filing with or notification to, any governmental or regulatory authority (other than any necessary filing under the HSR Act or approvals or consents required under applicable foreign antitrust or competition laws or the Exchange Act), domestic or foreign, except where the failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, would not prevent or delay the performance by such Stockholder of such Stockholder's obligations under this Agreement. SECTION 4.3. TITLE TO SHARES. Such Stockholder is the sole record and beneficial owner of its Owned Shares, free and clear of any pledge, lien, security interest, mortgage, charge, claim, equity, option, proxy, voting restriction, voting trust or agreement, understanding, arrangement, right of first refusal, limitation on disposition, adverse claim of ownership or use or encumbrance of any kind ("Encumbrances"), other than as set forth on Schedule 1.2 hereto and other than restrictions imposed by the securities laws or pursuant to this Agreement and the Merger Agreement. SECTION 4.4. NO FINDER'S FEES. No broker, investment banker, financial advisor or other person is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of such Stockholder. Such Stockholder, on behalf of itself and its affiliates, hereby acknowledges that it is not entitled to receive any broker's, finder's, financial advisor's or other similar fee or commission in connection with the transactions contemplated hereby or by the Merger Agreement. ARTICLE V. REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER Parent and Purchaser hereby, jointly and severally, represent and warrant to the Stockholders as follows: SECTION 5.1. DUE ORGANIZATION, AUTHORIZATION, ETC. Purchaser and Parent are duly organized, validly existing and in good standing under the laws of their jurisdiction of incorporation. Purchaser and Parent have all requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby by each of Purchaser and Parent have been duly authorized by all necessary corporate action on the part of Purchaser and Parent, respectively. This Agreement has been duly executed and delivered by each of Purchaser and Parent and constitutes a legal, valid and binding obligation of each of Purchaser and Parent, enforceable against Purchaser and Parent in 6 accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, moratorium or other similar laws and except that the availability of equitable remedies, including specific performance, is subject to the discretion of the court before which any proceeding for such remedy may be brought. SECTION 5.2. INVESTMENT INTENT. The Optionee is acquiring each Stock Option and, if and when it exercises such Stock Option, will be acquiring the Owned Shares purchased upon the exercise thereof for its own account and not with a view to distribution or resale in any manner which would be in violation of the Securities Act. ARTICLE VI. MISCELLANEOUS SECTION 6.1. DEFINITIONS. Terms used but not otherwise defined in this Agreement have the meanings ascribed to such terms in the Merger Agreement. SECTION 6.2. TERMINATION. This Agreement shall terminate and be of no further force and effect (i) by the written mutual consent of the parties hereto or (ii) automatically and without any required action of the parties hereto upon the Effective Time. No such termination of this Agreement shall relieve any party hereto from any liability for any breach of this Agreement prior to termination. SECTION 6.3. FURTHER ASSURANCE. From time to time, at another party's request and without consideration, each party hereto shall execute and deliver such additional documents and take all such further action as may be necessary or desirable to consummate and make effective, in the most expeditious manner practicable, the transaction contemplated by this Agreement. SECTION 6.4. CERTAIN EVENTS. Each Stockholder agrees that this Agreement and such Stockholder's obligations hereunder shall attach to such Stockholder's Owned Shares and shall be binding upon any person or entity to which legal or beneficial ownership of such Owned Shares shall pass, whether by operation of law or otherwise, including, without limitation, such Stockholder's heirs, guardians, administrators, or successors. Notwithstanding any transfer of Owned Shares, the transferor shall remain liable for the performance of all its obligations under this Agreement. SECTION 6.5. NO WAIVER. The failure of any party hereto to exercise any right, power, or remedy provided under this agreement or otherwise available in respect hereof at law or in equity, or to insist upon compliance by any other party hereto with its obligations hereunder, any custom or practice of the parties at variance with the terms hereof shall not constitute a waiver by such party of its right to exercise any such or other right, power or remedy or to demand such compliance. SECTION 6.6. SPECIFIC PERFORMANCE. Each Stockholder acknowledges that if such Stockholder fails to perform any of its obligations under this Agreement immediate and 7 irreparable harm or injury would be caused to Parent and Purchaser for which money damages would not be an adequate remedy. In such event, each Stockholder agrees that each of Parent and Purchaser shall have the right, in addition to any other rights it may have, to specific performance of this Agreement. Accordingly, if Parent or Purchaser should institute an action or proceeding seeking specific enforcement of the provisions hereof, each Stockholder hereby waives the claim or defense that Parent or Purchaser, as the case may be, has an adequate remedy at law and hereby agrees not to assert in any such action or proceeding the claim or defense that such a remedy at law exists. Each Stockholder further agrees to waive any requirements for the securing or posting of any bond in connection with obtaining any such equitable relief. SECTION 6.7. NOTICE. All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed to have been duly given or made (i) as of the date delivered or sent by facsimile if delivered personally or by facsimile, and (ii) on the third business day after deposit in the U.S. mail, if mailed by registered or certified mail (postage prepaid, return receipt requested), in each case to the parties at the following addresses (or at such other address for a party as shall be specified by like notice, except that notices of changes of address shall be effective upon receipt): (a) If to Parent or Purchaser: Cadence Design Systems, Inc. 2655 Seely Road, Bldg. 5 San Jose, CA 95134 Telecopier: 408-944-6855 Attention: General Counsel with a copy to: Gibson, Dunn & Crutcher LLP 333 South Grand Avenue Los Angeles, CA 90071 Telecopier: 213-229-6159 Attention: Andrew E. Bogen (b) If to a Stockholder, at the address set forth below such Stockholder's name on Schedule I hereto. SECTION 6.8. EXPENSES. Except as otherwise expressly set forth herein, all fees, costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such fees, costs and expenses. SECTION 6.9. HEADINGS. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. SECTION 6.10. SEVERABILITY. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party. Upon such determination that any term or other provision is 8 invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the maximum extent possible. SECTION 6.11. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This Agreement constitutes the entire agreement and supersede any and all other prior agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof, and this Agreement is not intended to confer upon any other person any rights or remedies hereunder. SECTION 6.12. ASSIGNMENT. This Agreement shall not be assigned by operation of law or otherwise. SECTION 6.13. GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware applicable to contracts executed in and to be performed entirely within that State. SECTION 6.14. AMENDMENT. This Agreement may not be amended except by an instrument in writing signed by the parties hereto. SECTION 6.15. WAIVER. Any party hereto may (a) extend the time for the performance of any of the obligations or other acts of the other parties hereto, (b) waive any inaccuracies in the representations and warranties of the other parties hereto contained herein or in any document delivered pursuant hereto and (c) waive compliance by the other parties hereto with any of their agreements or conditions contained herein. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only as against such party and only if set forth in an instrument in writing signed by such party. The failure of any party hereto to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of those rights. SECTION 6.16. COUNTERPARTS. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which shall constitute one and the same agreement. 9 IN WITNESS WHEREOF, Parent, Purchaser and the Stockholders have caused this Agreement to be executed as of the date first written above. CADENCE DESIGN SYSTEMS, INC. By: /s/ H. Raymond Bingham ------------------------------- Name: H. Raymond Bingham ----------------------------- Title: President & CEO ---------------------------- CDSI ACQUISITION CORPORATION By: /s/ H. Raymond Bingham ------------------------------- Name: H. Raymond Bingham ----------------------------- Title: President & CEO ---------------------------- /s/ Wolfram H. Blume ------------------------- Wolfram H. Blume /s/ David Nierenberg -------------------------- David Nierenberg, an individual THE D3 FAMILY FUND, L.P. By: Nierenberg Investment Management Company, Inc., as Its General Partner By: /s/ David Nierenberg ---------------------------- Name: David Nierenberg Title: President /s/ Michael F. Bosworth ------------------------------ Michael F. Bosworth 10 Schedule I
NAME AND ADDRESS OF STOCKHOLDER NUMBER OF SHARES OWNED Wolfram H. Blume 15 Bawley Street 1,218,276 Laguna Niguel, CA 92677 David Nierenberg 64,475 19605 N.E. 8th Street Camas, Washington 98607 The D3 Family Fund, L.P. 406,900 19605 N.E. 8th Street Camas, Washington 98607 Michael F. Bosworth OrCAD, Inc. 68,417 9300 S.W. Nimbus Avenue Beaverton, OR 97008 Total 1,758,068
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