Hu v. Cadence Design Systems, Inc et al

Filing 168

ORDER by Judge Samuel Conti granting (151) Motion for Settlement; granting (163) Motion for Settlement in case 3:08-cv-04966-SC; granting (21) Motion for Settlement; granting (27) Motion for Settlement in case 3:10-cv-03607-SC; granting (28) Motion f or Settlement; granting (34) Motion for Settlement in case 3:10-cv-01849-SC; granting (27) Motion for Settlement; granting (21) Motion for Settlement in case 3:10-cv-03627-SC (Attachments: # 1 Exhibit, # 2 Exhibit) (sclc1, COURT STAFF) (Filed on 11/15/2011)

1 THE WEISER LAW FIRM, P.C.
KATHLEEN A. HERKENHOFF (168562)
2 12707 High Bluff Drive, Suite 200
San Diego, CA 92130
3 Telephone: [phone]
Facsimile: 858/794-1450
4 [e-mail]
5 THE WEISER LAW FIRM, P.C.
ROBERT B. WEISER
6 BRETT D. STECKER
JEFFREY J. CIARLANTO
7 121 N. Wayne Avenue, Suite 100
Wayne, PA 19087
8 Telephone: [phone]
Facsimile: 610/225-2678
9
Attorneys for Plaintiff Walter Hamilton
10
11
UNITED STATES DISTRICT COURT
12
NORTHERN DISTRICT OF CALIFORNIA
13
SAN FRANCISCO DIVISION
14
In re CADENCE DESIGN SYSTEMS, INC.
15 SECURITIES AND DERIVATIVE
LITIGATION
16

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17 This Document Relates To:
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Nos. CV-10-01849-SC, CV-10-03607- )
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SC, and CV-10-03627-SC.
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No. C-08-4966 SC
NOTICE OF SETTLEMENT
EXHIBIT A-1

1

TO:

ALL CURRENT RECORD HOLDERS AND BENEFICIAL OWNERS OF

2 COMMON STOCK OF CADENCE DESIGN SYSTEMS, INC. (“CADENCE” OR THE
3 “COMPANY”) AS OF JUNE 7, 2011 (“CURRENT CADENCE STOCKHOLDERS”).
4 PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY. YOUR RIGHTS
5 MAY BE AFFECTED. THIS NOTICE RELATES TO A PROPOSED SETTLEMENT AND
6 DISMISSAL OF SHAREHOLDER DERIVATIVE LITIGATION AND CONTAINS
7 IMPORTANT INFORMATION REGARDING YOUR RIGHTS. YOUR RIGHTS MAY BE
8 AFFECTED BY LEGAL PROCEEDINGS IN THIS LITIGATION.
9

IF THE COURT APPROVES THE SETTLEMENT AND DISMISSAL OF THE

10 LITIGATION, SHAREHOLDERS OF CADENCE WILL BE FOREVER BARRED FROM
11 CONTESTING THE APPROVAL OF THE PROPOSED SETTLEMENT AND FROM
12 PURSUING THE SETTLED CLAIMS. THIS LITIGATION IS NOT “CLASS ACTION”
13 LITIGATION. THUS, THERE IS NO COMMON FUND UPON WHICH YOU CAN MAKE
14 A CLAIM FOR A MONETARY PAYMENT.
15
16

THE PURPOSE OF THIS NOTICE
The purpose of this Notice is to inform you that a Stipulation of Settlement dated June 7,

17 2011 (the “Stipulation” or “Settlement”) has been entered to resolve all shareholder derivative claims
18 pending on behalf of Nominal Defendant Cadence Design Systems, Inc. in three related shareholder
19 derivative actions currently pending before the United States District Court for the Northern District
20 of California (the “Federal Court”): Hamilton v. Fister, et al., Case No. CV-10-01849-SC (the
21 “Hamilton Action”), Samani v. Fister, et al., Case No. CV-10-03607-SC (the “Samani Action”),
22 and Powers v. Fister, et al., CV-10-03627-SC (the “Powers Action”) (collectively, the “Federal
23 Actions”). The Stipulation also resolves all related shareholder derivative claims pending in the
24 Superior Court of the State of California, Santa Clara County, in the action entitled: In re Cadence
25 Design Systems, Inc. Deriv. Litig., Case No. 1:08-CV-127922 (the “State Action”).
26

The Stipulation sets forth the terms and conditions for the Settlement, including but not

27 limited to: (i) a proposed Settlement and dismissal of the Federal Actions and State Action
28 (collectively, the “Actions”) with prejudice as to the Released Persons; (ii) an award of attorneys’
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1 fees and expenses to Plaintiffs’ Counsel in the Actions, upon the terms and conditions set forth in the
2 Stipulation (the “Fee Award”); and (iii) awards in the amount of $2,500 to each of the Plaintiffs (the
3 “Special Awards”) to be paid from the Fee Award prior to its distribution among Plaintiffs’ Counsel.
4

On ________________________, 2011, at __:00 _.m., a hearing (the “Settlement Hearing”)

5 will be held before the Honorable Samuel Conti of the United States District Court for the Northern
6 District of California, located at 450 Golden Gate Avenue, Courtroom 1, San Francisco, California,
7 to determine: (1) whether the terms of the Settlement, including the Fee Award and Special Awards
8 should be approved as fair, reasonable, and adequate; and (2) whether the Actions should be
9 dismissed on the merits and with prejudice.
10

This Notice summarizes, and is controlled by, the terms of the Settlement, which is contained

11 in a Stipulation of Settlement. You can view and obtain the Stipulation from the “Investor
12 Relations” section of Cadence's website (http://www.cadence.com), which contains a hyperlink to
13 the Stipulation. All capitalized terms in this Notice, if not defined in this Notice itself, are defined in
14 the Stipulation of Settlement, and their meaning in this Notice is the same as in the Stipulation. The
15 same hyperlink will connect you to related documents that are discussed in this Notice.
16

THE COURT HAS MADE NO FINDINGS OR DETERMINATIONS RESPECTING

17 THE MERITS OF THE LITIGATION. THE RECITATION OF THE BACKGROUND AND
18 CIRCUMSTANCES OF THE SETTLEMENT CONTAINED HEREIN DOES NOT
19 CONSTITUTE THE FINDINGS OF THE COURT. IT IS BASED ON REPRESENTATIONS
20 MADE TO THE COURT BY COUNSEL FOR THE PARTIES.
21
22

BACKGROUND AND DESCRIPTION OF THE ACTIONS
The Actions are brought on behalf of Nominal Defendant Cadence, a Delaware corporation

23 headquartered in San Jose, California. Cadence customers use Cadence software, hardware, IP and
24 services to design and verify advanced semiconductors, consumer electronics, networking and
25 telecommunications equipment, and computer systems.
26

On October 22, 2008, Cadence announced that it was reviewing the recognition of revenue

27 related to customer contracts signed during the first quarter of 2008. The Company also announced
28
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1 that it expected to restate its financial statements for the first quarter of 2008 and the first half of
2 2008 to correct the revenue recognition with respect to certain contracts.
3

On November 18, 2008 and December 1, 2008, respectively, Ury Priel (“Priel”) and Mark

4 Levine (“Levine”) filed shareholder derivative complaints against the Individual Defendants on
5 behalf of Cadence in the State Court. On January 20, 2009, the Court consolidated the actions filed
6 by Priel and Levine, thus forming the State Action.1
7

The State Action alleges that certain present and former directors and officers of Cadence

8 (the “Individual Defendants”) caused Cadence to report materially false and misleading financial
9 statements for the first two quarters of fiscal year 2008 by, inter alia, prematurely recognizing
10 revenue on customer contracts in violation of GAAP. The complaints in the Actions allege claims
11 for breach of fiduciary duty, abuse of control, gross mismanagement, waste of corporate assets, and
12 unjust enrichment, and Plaintiffs alleged that the Individual Defendants’ conduct damaged Cadence.
13 To learn more about the specific allegations and claimed damages in the Actions (and the allegations
14 and claimed damages in a related shareholder class action (the “Class Action”)), you can inspect the
15 complaints on file with the Court or at the website www.weiserlawfirm.com. The parties in the
16 Class Action (captioned and numbered In re Cadence Design Systems, Inc. Securities Litigation, No.
17 3:08-cv-04966-SC) have reached an agreement-in-principle to settle that case, and the same Court
18 that will consider final approval of the Actions, will also consider final settlement approval of the
19 Class Action. A copy of that proposed settlement in the stockholder class action and of the related
20 notice may be obtained through the Clerk of the Court or via hyperlinks provided in the from the
21 “Investor Relations” section of Cadence’s website (http://www.cadence.com).
22

On December 10, 2008, the Company announced that the Audit Committee of its Board of

23 Directors, with the assistance of special counsel Wilson, Sonsini, Goodrich & Rosati, completed an
24 investigation of, among other things, the recognition of revenue related to customer contracts (the
25
26

1

On May 25, 2011, Levine filed a Request for Dismissal With Prejudice with the State Court,
seeking leave to dismiss with prejudice the shareholder derivative action that he filed on December
27 1, 2008.
28
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1 “Investigation”), and that as a result of the Investigation, the Company would restate its quarterly
2 financial statements for the first two quarters of 2008. The restatement resulted in the adjustment of
3 $24.8 million of product revenue recognized in the first quarter of 2008, and $12 million of product
4 revenue recognized in the second quarter of 2008. The Company also announced that the Audit
5 Committee had concluded that the circumstances that led to the restatement were not the result of
6 illegal conduct on the part of any of Cadence’s directors, officers or other employees. As a result of
7 the Investigation, however, the Company identified a material weakness relating to the insufficient
8 design and ineffective operation of certain internal controls over the recognition of revenue from
9 customer contracts.
10

On April 28, 2010, plaintiff Walter Hamilton initiated the Hamilton Action in the Federal

11 Court. On August 16, 2010, plaintiff Arash Samani initiated the Samani Action in the Federal Court.
12 On August 17, 2010, plaintiff George Powers initiated the Powers Action in the Federal Court. The
13 Federal Actions allege shareholder derivative claims on behalf of Cadence that are similar to the
14 State Action. The Federal Actions also allege that the Individual Defendants caused the Company to
15 report materially overstated revenues and earnings by, inter alia, prematurely recognizing revenue
16 on customer contracts in violation of Generally Accepted Accounting Principles.
17

After exchanging certain information, on August 25, 2010, the Settling Parties participated in

18 a formal joint mediation before JAMS mediator the Hon. (Ret.) Edward A. Infante (“Judge Infante”)
19 in San Francisco, California. Although the Settling Parties made some progress at the mediation, the
20 Actions did not settle at that time. The mediation, however, resulted in continued settlement
21 discussions which occurred throughout the fall and winter of 2010. Ultimately, the Settling Parties
22 engaged in a final mediation before Judge Infante on February 8, 2011 in San Francisco, California.
23 With the substantial assistance of Judge Infante (including a “mediator’s proposal” to settle the
24 Actions when the Settling Parties appeared deadlocked), the Settling Parties were able to reach an
25 agreement-in-principle on the settlement terms herein, which ultimately culminated in the proposed
26 Settlement reflected in the Stipulation.
27
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1
2

REASONS FOR THE SETTLEMENT
Plaintiffs’ Counsel has conducted an extensive investigation during the development and

3 prosecution of the Actions, which included, inter alia: (i) inspecting, reviewing and analyzing the
4 Company’s public filings; (ii) preparing detailed complaints; (iii) researching the applicable law with
5 respect to the claims asserted in the Actions and the potential defenses thereto; (iv) interviewing
6 several confidential witnesses; (v) reviewing certain of the Company’s internal documents; (vi)
7 reviewing and analyzing the extensive record in the Securities Action; (vii) researching various
8 corporate governance issues; (viii) preparing multiple mediation briefs; (ix) participating in
9 numerous telephonic conferences with Judge Infante, Cadence's and the Individual Defendants'
10 counsel; and (x) attending two formal mediations with Cadence's and the Individual Defendants’
11 counsel and Judge Infante.
12

Based upon their investigation, Plaintiffs’ Counsel believes that the claims in the Federal

13 Actions have merit and were brought in good faith. Nevertheless, without conceding the merit of
14 any of the Individual Defendants’ defenses or the lack of merit of any of their allegations, and solely
15 in order to avoid the potentially protracted time, expense, and uncertainty associated with continued
16 litigation, including potential trial and appeals, Plaintiffs have concluded that it is desirable that the
17 Actions be fully and finally settled in the manner and upon the terms and conditions set forth in the
18 Stipulation. Based on these considerations, among others, Plaintiffs believe that the terms of the
19 Settlement are fair, reasonable, and adequate to Cadence and its stockholders, and that the Settlement
20 has conferred or will confer substantial benefits upon and is in the best interests of Cadence and
21 Current Cadence Stockholders.
22

The Individual Defendants have denied and continue to deny each and all of the claims and

23 contentions alleged by the Plaintiffs in the Actions. The Individual Defendants expressly have
24 denied and continue to deny all charges of wrongdoing and liability against them arising out of any
25 of the conduct, statements, acts or omissions alleged, or that could have been alleged, in the Actions.
26 Each of the Individual Defendants denies the allegations concerning any alleged breach of fiduciary
27 duty. The Individual Defendants assert that at all relevant times, they acted in good faith and in a
28 manner they reasonably believed to be in the best interests of the Company and its stockholders.
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1 The Individual Defendants deny the allegations that the Plaintiffs, Cadence, or its shareholders have
2 suffered damages, or that the Plaintiffs, Cadence or its shareholders were harmed by the conduct
3 alleged in the Actions.
4

Nonetheless, Cadence and the Individual Defendants have agreed to settle the Actions on the

5 terms in the Stipulation. Without conceding merit of any of Plaintiffs’ allegations, or lack of merit
6 of any of the Individual Defendants’ defenses, and solely in order to avoid the potentially protracted
7 time, expense, and uncertainty associated with continued litigation, Cadence and the Individual
8 Defendants have concluded that it is desirable that the Actions be fully and finally settled in the
9 manner and upon the terms and conditions set forth in the Stipulation.
10
11

SUMMARY OF THE SETTLEMENT TERMS
As detailed in the Stipulation, the Settlement includes the adoption, implementation, and/or

12 maintenance of a variety of corporate governance reforms (“Corporate Governance Enhancements”),
13 including measures that Plaintiffs believe address the underlying issues in the Actions, including, but
14 not limited to, improved procedures, oversight and training concerning revenue recognition
15 practices, increased communication between the Company’s outside independent auditor and the
16 Company’s Board of Directors (the “Board”), provisions requiring Board members to attend annual
17 training in areas, including, but not limited to, revenue recognition and internal controls over
18 financial reporting, as well as other enhanced internal control procedures. These Corporate
19 Governance Enhancements, documented in the Stipulation, specifically include:
20

1.

21

Corporate Governance Enhancements
a.

22

Revenue Recognition
(1)

The Company’s management and Board will institute a process to

23 review, on at least an annual basis, the Company’s revenue recognition policies and analyze, in
24 consultation with the Company’s independent outside auditor, whether changes to those policies are
25 appropriate.
26

(i)

The Company’s Chief Financial Officer (“CFO”) and

27 Controller will, on at least an annual basis, meet with the Company’s Revenue Accounting
28 Department and the Company’s independent outside auditor, for the purpose of reviewing the
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1 Company’s revenue recognition policies. At least the following matters will be reviewed at this
2 meeting:
3

1.

4

The accounting standards and guidance relevant to revenue
recognition;

5

2.

Any new accounting standards or guidance relevant to

6

Cadence (including any proposed changes to standards or

7

guidance);

8

3.

9

Any areas related to revenue recognition where significant
judgment is required for application of Cadence’s revenue

10

recognition policies;

11

4.

12

The adequacy of Cadence’s internal controls over financial
reporting related to revenue recognition.

13

(ii)

The Company’s CFO will present the conclusions of these

14 meetings to the Audit Committee of the Board within thirty (30) days after their conclusion, and
15 shall discuss with the Audit Committee whether any changes to the Company’s policies should be
16 adopted. The Company will request that its independent outside auditor be present at this meeting
17 and available to answer questions.
18

(2)

The Company will require that its independent outside auditor report

19 in writing to the Audit Committee at least annually regarding: (i) whether it recommends any
20 changes to the Company’s revenue recognition policies or (ii) its internal controls over financial
21 reporting related to revenue recognition. The Company will require that its independent outside
22 auditor also meet privately, at least annually, with the Audit Committee to discuss the Company’s
23 revenue recognition policies, guidelines, procedures, and the adequacy of its internal controls over
24 financial reporting.
25

(3)

The Company’s Internal Auditor will report to the Board at least

26 annually regarding the Company’s compliance with its revenue recognition policies, and the
27 adequacy of the Company’s internal controls related to financial reporting. If the Company’s Internal
28 Auditor becomes aware of any significant issue(s) (or potentially significant issue(s)) regarding the
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1 Company’s compliance with its revenue recognition policies or the adequacy of Cadence’s internal
2 controls over financial reporting relating to revenue recognition, or any other matter, the Internal
3 Auditor will report the issue in writing promptly to the Company’s General Counsel and Audit
4 Committee.
5

(4)

The Audit Committee will meet at least annually with the Company’s

6 CFO and the independent outside auditor to review the Company’s disclosure process used in
7 preparing and reviewing draft financial statements. This meeting will, at minimum, address whether
8 the Company’s disclosures related to revenue recognition and internal controls over financial
9 reporting are appropriate, and whether the Company’s processes related to those disclosures are
10 appropriate.
11

(5)

All sales finance personnel will receive, at least annually, instruction

12 on the Company’s revenue recognition policies, and will be asked to certify, in writing, annually that
13 they have a sufficient understanding of the policies to recognize how their activities can impact
14 revenue recognition. If any significant changes are made to the Company’s revenue recognition
15 policies that relate to or concern the responsibilities of sales finance personnel, they will promptly
16 participate in training regarding these changes, and certify, in writing, their understanding of these
17 changes.
18

b.

19

Foreign Operations
(1)

The senior employee at each foreign operation or sales team with

20 foreign customers will certify, in writing, to the Company’s CFO on a quarterly basis that, after
21 reasonable inquiry, he or she can state that there are no agreements or understandings with the
22 Company’s customers relevant to revenue recognition which have not been fully disclosed to the
23 Company’s auditors.
24
25

c.

Board Policies
(1)

The Board will solicit bids from audit firms and consider whether it is

26 appropriate to recommend to stockholders a ratification of a change in audit firms.
27

(2)

The Board will participate in training on relevant topics, including but

28 not limited to, internal controls, SEC and Sarbanes-Oxley Act of 2002 compliance, executive
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1 compensation, revenue recognition, and internal controls over financial reporting, provided by a
2 qualified third party (such as a reputable “Director College” or an internationally-recognized law or
3 accounting firm), on at least an annual basis.
4

(3)

The chair of each committee of the Board shall rotate at least once

5 every seven years (the first such rotation to occur no later than 2018), subject to the discretion of a
6 majority of the independent directors of the Board to allow an individual to remain as chair of a
7 particular committee for such longer time as it determines to be in the best interests of Cadence and
8 its shareholders.
9

(4)

The Audit Committee will, at least annually, formally review

10 Cadence’s policies related to revenue recognition and the adequacy of its internal controls over
11 financial reporting with the Company’s CFO and independent outside auditor, as well as the relevant
12 internal controls over financial reporting that the Company has in place regarding revenue
13 recognition. This review will take into account at least the following matters:
14

(i)

Any relevant changes to revenue recognition accounting

15 standards, internal controls or guidance; and
16

(ii)

Whether the Company should make any changes to its internal

17 controls related to revenue recognition and/or financial reporting.
18

(5)

Cadence will continue to maintain director and officer stock ownership

(6)

The Compensation Committee of the Board will meet at least three

19 guidelines.
20

21 times per year. The subjects of these meetings will include at least the following:
22

(i)

Whether the Company’s corporate goals and objectives related

23 to compensation of its senior management are appropriate.
24

(ii)

Evaluation of the performance of the Company’s senior

25 management relative to the corporate goals and objectives related to compensation of senior
26 management.
27

(iii)

Review and evaluation of the Company’s “Compensation

28 Discussion and Analysis” and related disclosures.
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1

(iv)

Consider and be responsible for approving or denying any

2 severance payments to Named Executive Officers if the employee was terminated or resigned.
3

(7)

The Compensation Committee of the Board will retain an independent

4 consultant at least once every three years to conduct a study of Cadence’s executive compensation
5 policies, relative to its peer companies. The results of each such study will be promptly presented to
6 the Compensation Committee and the full Board.
7

2.

8

Earlier Corporate Governance Enhancement
a.

In addition to the above terms, Cadence previously adopted the following

9 corporate governance enhancement (the “Earlier Corporate Governance Enhancement”) after the
10 filing of one or more of the Actions: Cadence adopted a “clawback” policy relating to the effect of
11 restating financial statements on compensation (see Proxy Statement for the 2010 Annual Meeting of
12 Stockholders), which shall be maintained consistent with then-applicable law. In adopting the
13 Earlier Corporate Governance Enhancement, Cadence considered the allegations of wrongdoing
14 made in the Actions. The Earlier Corporate Governance Enhancement was made at least in part in
15 recognition of the Actions.
16

b.

Separate from the Earlier Corporate Governance Enhancement, Cadence

17 added a new independent director to its Board in 2011. Cadence will not dispute that the Actions
18 were considered in connection with addition of this new independent director to the Board in 2011.
19

3.

Cadence agrees that these policies will remain in effect and be adhered to for a period

20 of at least three (3) calendar years from the date of the final approval of the settlement, unless any of
21 these measures would conflict with a change in relevant law or listing standards (the “Effective
22 Period”).
23
24

RELEASE OF CLAIMS
Upon the Effective Date, as defined in ¶1.7 of the Stipulation, (i) Plaintiffs and Plaintiffs’

25 Counsel, on their own behalf and derivatively on behalf of Cadence (as nominal defendant), (ii)
26 Cadence and (iii) Current Cadence Stockholders shall be deemed to have, and by operation of the
27 Final Judgment and Order shall have, fully, finally and forever released, relinquished, extinguished
28 and discharged all Released Claims (including Unknown Claims as defined in ¶1.24 of the
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1 Stipulation) against each and all of the Released Persons and shall be permanently barred and
2 enjoined from instituting, commencing or prosecuting or asserting any Released Claim against any
3 of the Released Persons; provided, however, that nothing shall prevent any of the Plaintiffs from
4 submitting a claim (i.e. Proof of Claim) or receiving any monetary or other distribution from any
5 settlement of the Securities Action.
6

Upon the Effective Date, as defined in ¶1.7 of the Stipulation, Cadence and each of the

7 Individual Defendants shall be deemed to have, and by operation of the Final Judgment and Order
8 shall have, fully, finally, and forever released, relinquished, extinguished and discharged Plaintiffs
9 and Plaintiffs’ Counsel from all claims (including Unknown Claims as defined in ¶1.24 of the
10 Stipulation) arising out of, relating to or in connection with the institution, prosecution, assertion,
11 Settlement or resolution of the Actions or the Released Claims; provided, however, that nothing shall
12 in any way impair or restrict the rights of Cadence or any Released Person to enforce the terms of the
13 Stipulation.
14
15

TEMPORARY BAR AND INJUNCTION
Pending final determination by the Court of whether the Settlement should be approved,

16 Plaintiffs, Cadence, and all Current Cadence Stockholders are barred and enjoined from instituting,
17 commencing or prosecuting any Released Claims as against the Released Persons. In addition, all
18 proceedings in the Actions, other than such proceedings as may be necessary to carry out the terms
19 and conditions of the Settlement, have been stayed and suspended until further order of the Court.
20

APPLICATION FOR ATTORNEYS’ FEES AND EXPENSES AND SPECIAL AWARDS

21

Cadence, through its Board exercising its independent business judgment, has agreed, in light

22 of the substantial benefits that the Settlement has created or will create for Cadence and Current
23 Cadence Stockholders, to cause Plaintiffs’ Counsel attorneys’ fees to be paid and their expenses
24 reimbursed in the amount of $1.75 million. Accordingly, concurrent with seeking final approval of
25 the Settlement, Plaintiffs’ Counsel will apply to the Court for the Fee Award. Any disapproval or
26 modification of the Fee Award by the Court shall not affect the enforceability of this Settlement or
27 provide any of the Settling Parties with the right to terminate the Settlement as set forth in the
28 Stipulation.
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1

Based on the benefits that Plaintiffs’ Counsel believes that Plaintiffs have achieved through

2 the prosecution of the Actions, Plaintiffs’ Counsel also will seek Court approval for Special Awards
3 in the amount of $2,500 for each of the Plaintiffs. The Individual Defendants and Cadence will not
4 object to a request for Court approval of the Special Awards. The Special Awards shall be funded
5 by the Fee Award to the extent approved in whole or part.
6

The Court may consider and rule upon the fairness, reasonableness and adequacy of the

7 Settlement independently of the Fee Award or Special Awards.
8

RIGHT TO APPEAR AND OBJECT

9 IF YOU ARE A CURRENT CADENCE STOCKHOLDER, YOUR RIGHTS MAY BE
10 AFFECTED BY PROCEEDINGS IN THE LITIGATION.
11

Any Current Cadence Stockholder objecting to the Settlement of the Actions, including the

12 Fee Award and/or the Special Awards, shall have a right to appear and to be heard at the Settlement
13 Hearing, provided that he or she was a shareholder of record or beneficial owner as of June 7, 2011.
14 Any Current Cadence Stockholder who satisfies this requirement may enter an appearance through
15 counsel of such shareholder’s own choosing and at such member’s own expense or may appear on
16 his or her own. However, no Current Cadence Stockholder shall be heard at the Settlement Hearing
17 unless no later than twenty-one (21) days prior to the date of the Settlement Hearing, such
18 shareholder has filed with the Court and delivered to Plaintiffs’ Counsel, and Cadence’s counsel, a
19 written notice of objection, their ground for opposing the Settlement, and proof of both their status as
20 a shareholder and the dates of stock ownership in Cadence. Only Current Cadence Shareholders
21 who have filed and delivered valid and timely written notices of objection will be entitled to be heard
22 at the Settlement Hearing unless the Court orders otherwise.
23

If you wish to object to the Settlement, you must file a written objection setting forth the

24 grounds for such an objection with the Court on or before ______, 2011 with service on the
25 following parties:
26
27
28
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1

Counsel for Plaintiff Walter Hamilton in the
Federal Actions

2
3
4
5
6
7
8
9
10
11

Kathleen A. Herkenhoff
THE WEISER LAW FIRM, P.C.
12707 High Bluff Drive, Suite 200
San Diego, CA 92130
Robert B. Weiser
Brett D. Stecker
Jeffrey J. Ciarlanto
THE WEISER LAW FIRM, P.C.
121 North Wayne Avenue, Suite 100
Wayne, PA 19087
Kip B. Shuman
Rusty E. Glenn
THE SHUMAN LAW FIRM
885 Arapahoe Ave.
Boulder, CO 80302

12
13
14
15
16
17
18
19
20
21
22

Counsel for Plaintiff Ury Priel in the State
Action
William B. Federman
FEDERMAN & SHERWOOD
10205 N. Pennsylvania Avenue
Oklahoma, OK 73120
Counsel for Cadence
Ethan D. Dettmer
Matthew S. Kahn
GIBSON, DUNN & CRUTCHER LLP
555 Mission Street, Suite 3000
San Francisco, CA 94105
Any Current Cadence Stockholder who fails to object in the manner and within the time

23 prescribed above shall be deemed to have waived the right to object (including the right to appeal)
24 and forever shall be barred, in this proceeding or in any other proceeding, from raising such
25 objection and will be barred for all time by the Order and Final Judgment of the Court. Current
26 Cadence Stockholders who have no objection to the Settlement do not need to appear at the
27 Settlement Hearing or take any other action.
28
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1
2

THE ORDER AND FINAL JUDGMENT OF THE COURT
If the Court determines that the Settlement, as provided for in the Stipulation, is fair,

3 reasonable, adequate and in the best interests of Cadence and Current Cadence Stockholders, the
4 parties to the Actions will ask the Court to enter the Order and Final Judgment, which will, among
5 other things:
6

(a)

approve the Settlement as fair, reasonable, adequate and in the best interests of

7 Cadence and Current Cadence Stockholders and direct consummation of the Settlement in
8 accordance with its terms and conditions;
9

(b)

issue the Fee Award and Special Awards;

10

(c)

dismiss the Actions with prejudice on the merits and release all Released

11 Claims as against Cadence and the Individual Defendants;
12

(d)

permanently bar and enjoin Plaintiffs, Cadence and Current Cadence

13 Stockholders from instituting, commencing or prosecuting the Released Claims as against Cadence
14 and the Individual Defendants in any court or tribunal of this or any other jurisdiction; and
15

(e)

retain jurisdiction over all matters relating to the consummation of the

16 Settlement provided for herein.
17

In the event the Settlement is not approved, or such approval does not become Final, then the

18 Settlement shall be of no further force and effect and each party then shall be returned to his, her or
19 its respective position immediately prior to the Settlement without prejudice and as if the Settlement
20 had not been entered into.
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SCOPE OF THIS NOTICE AND FURTHER INFORMATION
The foregoing description of the Settlement Hearing, the Actions, the terms of the proposed

23 Settlement and other matters described herein does not purport to be comprehensive. Accordingly,
24 Current Cadence Stockholders are referred to the documents filed with the Court in the Actions, and
25 the Current Report on SEC Form 8-K, which is available on the “Investor Relations” section of
26 Cadence’s website (http://www.cadence.com) and provides hyperlinks to the Stipulation. In
27 addition, complaints in the derivative suits and the class action can be obtained on the website
28 www.weiserlawfirm.com.
NOTICE OF SETTLEMENT - C-08-4966 SC

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1

PLEASE DO NOT CONTACT THE COURT REGARDING THIS NOTICE.

2

Inquiries regarding the Settlement may be made to Counsel for Plaintiff Walter Hamilton in

3 the Federal Actions: Robert B. Weiser, The Weiser Law Firm, P.C., 121 North Wayne Avenue, Suite
4 100, Wayne, PA 19087; telephone: [phone].
5 DATED __________________, 2011
6

BY ORDER OF THE COURT
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA

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NOTICE OF SETTLEMENT - C-08-4966 SC

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