SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934 (Amendment No.)
Filed by the Registrant ¨
Filed by a Party other than the Registrant x
Check the appropriate box:
| x | Preliminary Proxy Statement |
| ¨ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| ¨ | Definitive Proxy Statement |
| ¨ | Definitive Additional Materials |
| ¨ | Soliciting Material Pursuant to § 240.14a-12 |
MENTOR GRAPHICS CORPORATION
(Name of Registrant as Specified In Its Charter)
HIGH RIVER LIMITED PARTNERSHIP
HOPPER INVESTMENTS LLC
BARBERRY CORP.
ICAHN PARTNERS LP
ICAHN PARTNERS MASTER FUND LP
ICAHN PARTNERS MASTER FUND II LP
ICAHN PARTNERS MASTER FUND III LP
ICAHN ENTERPRISES G.P. INC.
ICAHN ENTERPRISES HOLDINGS L.P.
IPH GP LLC
ICAHN CAPITAL L.P.
ICAHN ONSHORE LP
ICAHN OFFSHORE LP
BECKTON CORP.
MR. JOSÉ MARIA ALAPONT
MR. BRETT ICAHN
MR. CARL C. ICAHN
MR. GARY MEYERS
MR. DAVID SCHECHTER
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[PRELIMINARY COPY, SUBJECT TO COMPLETION]
2011 ANNUAL MEETING OF SHAREHOLDERS
OF
MENTOR GRAPHICS CORPORATION
PROXY STATEMENT
OF
HIGH RIVER LIMITED PARTNERSHIP
HOPPER INVESTMENTS LLC
BARBERRY CORP.
ICAHN PARTNERS LP
ICAHN PARTNERS MASTER FUND LP
ICAHN PARTNERS MASTER FUND II LP
ICAHN PARTNERS MASTER FUND III LP
ICAHN ENTERPRISES G.P. INC.
ICAHN ENTERPRISES HOLDINGS L.P.
IPH GP LLC
ICAHN CAPITAL L.P.
ICAHN ONSHORE LP
ICAHN OFFSHORE LP
BECKTON CORP.
MR. JOSÉ MARIA ALAPONT
MR. BRETT ICAHN
MR. CARL C. ICAHN
MR. GARY MEYERS
MR. DAVID SCHECHTER
To Our Fellow Mentor Graphics Shareholders:
This Proxy Statement and the accompanying GOLD proxy card are being furnished to shareholders ("Shareholders") of Mentor Graphics Corporation, 8005 S.W. Boeckman Road, Wilsonville, OR 97070-7777 ("Mentor Graphics" or the "Company"), in connection with the solicitation of proxies by Carl C. Icahn and the other Participants (as hereinafter defined), to be used at the 2011 Annual Meeting of Shareholders of Mentor Graphics (the "Annual Meeting") which is scheduled to be held at [ ], on Thursday, May 12, 2011, at [ ] p.m., Pacific Daylight Time, and at any adjournments, postponements or continuations thereof. This Proxy Statement and the GOLD proxy card are first being furnished to Shareholders on or about March [ ], 2011.
At the Annual Meeting, the Participants (sometimes referred to herein as "we," "us," or "our") will seek to elect to the Board of Directors (the "Board") of Mentor Graphics the following persons (each a "Nominee" and collectively, the "Nominees"):
Mr. José Maria Alapont
Mr. Gary Meyers
Mr. David Schechter
By letter dated February 22, 2011, Carl C. Icahn informed the Company that he believed it should be put up for sale and he offered that one of the entities affiliated with him would purchase Mentor Graphics in a transaction, the form of which is to be determined, designed to yield the Shareholders $17 per share net in cash. The offer was conditioned on completion of cursory due diligence, and the absence of applicability of certain anti-takeover devices and laws. Mr. Icahn offered not to provide a break-up fee in the transaction so as not to impose a roadblock on others who may want to consider bidding higher than his offer. To date, the Company has not either accepted or rejected Mr. Icahn’s offer and it has not set a timetable for doing so, nor has it offered to commence the due diligence process. We anticipate that, as Board members, the Nominees will, subject to their fiduciary duties, attempt to cause the Company to begin an open and fair auction process at the end of which the best offer will be brought to the Company's shareholders for a vote. However, our three Nominees, if elected, would collectively constitute only minority representation on the Board. Therefore, even if our Nominees choose to act together on certain issues, they will not have the capability on their own to effectuate change without the support of some of the existing Board members.
Mr. Alapont is a highly accomplished executive with more than 30 years of global leadership experience at both vehicle manufacturers and suppliers, with business and operations responsibilities in the Europe, Middle East and Africa, Asia Pacific, and Americas regions. Among other qualifications, Mr. Meyers has extensive experience in the semiconductor industry, in particular a strong systems level background, as well as executive leadership experience. Mr. Schechter has a strong record as a sophisticated investor and has served on a number of public and private boards, which experience has provided him with a broad understanding of the operational, financial and strategic issues facing public and private companies. We believe that these individuals' knowledge of industry, investments and corporate finance will significantly improve the business expertise of the Board of Directors. We also believe that each Nominee is a strong shareholder-oriented individual who will help represent the best interests of the Shareholders.
Each of our Nominees has consented to being named in this Proxy Statement and, if elected, to serve as a director.
Under the proxy rules of the Securities and Exchange Commission ("Commission"), we are required either to solicit proxies only for our Nominees, which would result in limiting the ability of Shareholders to fully exercise their voting rights to vote for a full complement of directors, or, alternatively, to solicit proxies in support of our Nominees and also to seek authority from Shareholders to vote for all of the Mentor Graphics nominees other than those Mentor Graphics nominees we specify, which enables a Shareholder who desires to vote for a full complement of eight director nominees to use the GOLD proxy card to vote for our Nominees as well as for all or some of those of the Mentor Graphics nominees for whom we are seeking authority to vote. We have determined to nominate a slate of three Nominees, Mr. Alapont, Mr. Meyers and Mr. Schechter, and are seeking authority to vote for all of Mentor Graphics' nominees other than Dr. James R. Fiebiger, Ms. Marsha B. Congdon, and Dr. Fontaine K. Richardson, whose longevity on the Board ranges from 17 to 28 years. As a result, should a Shareholder so authorize us, on the GOLD proxy card, we would cast votes for our three Nominees and five Mentor Graphics nominees, which enables a Shareholder to vote for a full complement of eight director nominees. None of the Mentor Graphics nominees for whom we seek authority to vote have agreed to serve with any of our Nominees, if elected, and there is no assurance that any of the Mentor Graphics nominees will serve as directors of Mentor Graphics if any or all of the Nominees are elected to the Board. Additionally, if Mentor Graphics does not nominate the individuals for whom we seek authority to vote, our GOLD proxy card will not allow such Shareholder to utilize the GOLD proxy card to vote for such individual. If such event occurs we reserve our right to amend our proxy materials to allow for the vote for a full complement of eight directors.
THE PARTICIPANTS URGE YOU TO VOTE THE GOLD PROXY CARD FOR MR. JOSÉ MARIA ALAPONT, MR. GARY MEYERS AND MR. DAVID SCHECHTER.
The Nominees and each of the other Participants have no interest in Mentor Graphics other than through the beneficial ownership (if any) of shares of Common Stock, without par value, of Mentor Graphics (the "Common Stock") or other securities (if any) of Mentor Graphics, except as disclosed herein, including the Annexes hereto, and in the case of Mr. Alapont, through an investment in Icahn Partners, and in the case of Mr. Schechter, through his compensation arrangements described herein, and in the case of Messrs. Alapont and Meyers, pursuant to an agreement in which an affiliate of Carl C. Icahn has agreed to indemnify each such Nominee with respect to certain costs incurred by each such Nominee in connection with the proxy contest relating to the Annual Meeting (the "Nominee Agreement").
Mr. José Maria Alapont, Mr. Gary Meyers and Mr. David Schechter are committed to acting in the best interest of all shareholders of Mentor Graphics. We urge you to vote your GOLD proxy card for Mr. José Maria Alapont, Mr. Gary Meyers and Mr. David Schechter.
IMPORTANT
We urge you not to sign any white proxy card sent to you by Mentor Graphics. If you have already done so, you may revoke your proxy by delivering a later-dated GOLD proxy card in the enclosed postage-prepaid envelope, executing a vote via Internet or telephone, or by voting in person at the Annual Meeting. See "Proxy Procedures" and "Revocation of Proxies" below.
If you attend the Annual Meeting and you beneficially own shares of Common Stock but are not the record owner, your mere attendance at the Annual Meeting WILL NOT be sufficient to cancel your prior given proxy card. You must have written authority in the form of a legal proxy from the record owner to vote the shares of Common Stock in its name at the meeting. Contact D.F. King & Co., Inc. at the number shown in this Proxy Statement for assistance or if you have any questions.
If you have any questions or require any assistance in executing your proxy, please call:
D.F. King & Co., Inc.
Shareholders call toll-free: (800) 714-3313
Banks and Brokers call collect: (212) 269-5550
The Proxy Statement, as well as other proxy materials distributed by the Participants, are available free of charge online at www.dfking.com/mentor.
VOTING SECURITIES
Only holders of record of Mentor Graphics' Common Stock as of the close of business on March 11, 2011 (the "Record Date") are entitled to notice of, and to attend and to vote at, the Annual Meeting and any adjournments or postponements thereof. According to the [definitive] proxy statement of Mentor Graphics filed with the Commission ("Mentor Graphics' Proxy Statement"), as of the Record Date, there were outstanding 112,354,285 shares of Common Stock. Shareholders of record at the close of business on the Record Date will be entitled to one vote at the Annual Meeting for each share of Common Stock of Mentor Graphics held on the Record Date.
A quorum is the presence by person or by proxy of a majority of the shares of Common Stock issued and outstanding and entitled to vote at the Annual Meeting. The shares of Common Stock represented by a proxy marked "withhold" or "abstain" will be considered present at the Annual Meeting for purposes of determining whether a quorum is present.
As of the Record Date, the Participants and their affiliates beneficially owned an aggregate of 16,120,289 shares of Common Stock, representing approximately 14.35% of the outstanding shares of Common Stock. The Participants and their affiliates intend to vote such shares of Common Stock FOR the election of the Nominees and all of Mentor Graphics' nominees other than Ms. Marsha B. Congdon, Dr. James R. Fiebiger and Dr. Fontaine K. Richardson, FOR Proposal Nos. 2, 5 and 6 in Mentor Graphics' Proxy Statement, for EVERY YEAR on Proposal No. 3, and AGAINST Proposal No. 4.
Vote by using the enclosed GOLD proxy to vote today by telephone, by Internet, or by marking, signing, dating and returning the GOLD proxy card in the postage-paid envelope provided to you.
PARTICIPANTS IN SOLICITATION OF PROXIES
In addition to the Nominees (who are Mr. José Maria Alapont, Mr. Gary Meyers and Mr. David Schechter), the participants (the "Participants") in the solicitation of proxies from Shareholders of Mentor Graphics include the following: High River Limited Partnership, a Delaware limited partnership ("High River"), Hopper Investments LLC, a Delaware limited liability company ("Hopper"), Barberry Corp., a Delaware corporation ("Barberry"), Icahn Partners LP, a Delaware limited partnership ("Icahn Partners"), Icahn Partners Master Fund LP, a Cayman Islands limited partnership ("Icahn Master"), Icahn Partners Master Fund II LP, a Cayman Islands limited partnership ("Icahn Master II"), Icahn Partners Master Fund III LP, a Cayman Islands limited partnership ("Icahn Master III"), Beckton Corp., a Delaware corporation ("Beckton"), Icahn Enterprises G.P. Inc., a Delaware corporation ("Icahn Enterprises GP"), Icahn Enterprises Holdings L.P., a Delaware limited partnership ("Icahn Enterprises Holdings"), IPH GP LLC, a Delaware limited liability company ("IPH"), Icahn Capital LP, a Delaware limited partnership ("Icahn Capital"), Icahn Onshore LP, a Delaware limited partnership ("Icahn Onshore"), Icahn Offshore LP, a Delaware limited partnership ("Icahn Offshore"), Mr. Carl C. Icahn and Mr. Brett Icahn.
Icahn Partners, Icahn Master, Icahn Master II and Icahn Master III (collectively, the "Funds") and High River (together with the Funds, the "Icahn Parties"), are entities controlled by Mr. Carl C. Icahn. Mr. Carl C. Icahn is primarily engaged in serving as (i) Chairman of the Board of Icahn Enterprises GP, the general partner of Icahn Enterprises L.P., a New York Stock Exchange listed diversified holding company engaged in a variety of businesses, including investment management, automotive, gaming, railcar, food packaging, metals, real estate and home fashion ("Icahn Enterprises"), (ii) Chief Executive Officer of Icahn Capital LP, a subsidiary of Icahn Enterprises, through which Mr. Icahn manages various private investment funds, including the Funds, and (iii) Chairman of the Board and a director of Starfire Holding Corporation ("Starfire"), a holding company engaged in the business of investing in and/or holding securities of various entities, and as Chairman of the Board and a director of various of Starfire's subsidiaries. Mr. Brett Icahn is Carl C. Icahn's son and an employee and/or officer and/or director of the Icahn Parties and various other entities controlled by Carl C. Icahn, and who will participate in soliciting proxies from Mentor Graphics Shareholders. Brett Icahn does not own beneficially any interest in securities of Mentor Graphics. Brett Icahn will not receive any special compensation in connection with this solicitation. In connection with his employment by Icahn Capital, Brett Icahn has a participatory interest in the profits derived by its affiliated entities from their investment in certain companies, including Mentor Graphics. The participatory interest of Brett Icahn entitles him to 5.1% of the aggregate profits from such investments after an 8% hurdle rate is achieved.
In consideration of providing certain investment advisory, administrative and back office services to the Funds, Icahn Onshore, the general partner of Icahn Partners, and Icahn Offshore, the general partner of Icahn Master, Icahn Master II and Icahn Master III, (together, the "General Partners"), are allocated from the Funds on an annual basis (i) special profits interest allocations ranging from 1.5% to 2.25% of the balance in each of the Funds' capital accounts attributable to fee-paying investors (but such allocations are made only to the extent that there are sufficient profits to cover such amounts) and (ii) incentive allocations, subject to a "Highwater Mark" (whereby the General Partners do not earn incentive allocations during a particular year even though the fund had a positive return in such year until losses in prior periods are recovered), ranging from 15% to 22% of the net profits generated by fee-paying investors of the Funds. Therefore, the amounts received by the General Partners will be affected by the combination of fee-paying assets under management and the investment performance of the Funds (including any increase or decrease in the value of shares of Mentor Graphics). The General Partners are owned by Icahn Capital, which is a subsidiary of Icahn Enterprises. Carl C. Icahn is the indirect owner of the general partner of Icahn Enterprises and the indirect holder of approximately 92.5% of the outstanding depositary units representing limited partnership interests in Icahn Enterprises.
On March 7, 2011, Carl C. Icahn sent a letter to all investors in the Funds stating that, due to ongoing concerns about the economic outlook and recent political tensions in the Middle East, it had been determined that all fee paying capital, totaling approximately $1.76 billion, would be returned to investors no later within 30 days following completion of the March 31, 2011 audit of the Funds. He further stated that 95% of the March 31 capital balances was expected to be returned by April 30, 2011. As the payments are expected to be funded through cash on hand and borrowings under existing lines of credit, and not through the sale of securities of the companies held by the Funds, there is expected to be no effect on the beneficial ownership of Common Stock by the Funds.
Annex A attached hereto sets forth, as to the Nominees and the other Participants, all transactions in securities of Mentor Graphics effected during the past two years and their beneficial ownership of securities of Mentor Graphics.
With respect to each Participant (including the Nominees), except as set forth herein or in any of the Annexes attached hereto, (i) such Participant is not, and was not within the past year, a party to any contract, arrangement or understanding with any person with respect to any securities of Mentor Graphics, including, but not limited to, joint ventures, loan or option arrangements, puts or calls, guarantees against loss or guarantees of profit, division of losses or profits, or the giving or withholding of proxies; and (ii) neither such Participant nor any of such Participant's associates have any arrangement or understanding with any person with respect to (A) any future employment by Mentor Graphics or its affiliates or (B) any future transactions to which Mentor Graphics or any of its affiliates will or may be a party.
PROPOSAL No. 1: Election of Directors
By letter dated February 22, 2011, Carl C. Icahn informed the Company that he believed it should be put up for sale and he offered that one of the entities affiliated with him would purchase Mentor Graphics in a transaction, the form of which is to be determined, designed to yield the Shareholders $17 per share net in cash. The offer was conditioned on completion of cursory due diligence, and the absence of applicability of certain anti-takeover devices and laws. Mr. Icahn offered not to provide a break-up fee in the transaction so as not to impose a roadblock on others who may want to consider bidding higher than his offer. To date, the Company has not either accepted or rejected Mr. Icahn’s offer and it has not set a timetable for doing so, nor has it offered to commence the due diligence process.
The Participants anticipate that, as Board members, the Nominees will, subject to their fiduciary duties, attempt to cause the Company to begin an open and fair auction process at the end of which the best offer will be brought to the Company's shareholders for a vote. However, our three Nominees, if elected, would collectively constitute only minority representation on the Board. Therefore, even if our Nominees choose to act together on certain issues, they will not have the capability on their own to effectuate change without the support of some of the existing Board members. The Nominees are committed to the best interests of all Mentor Graphics Shareholders and, in the absence of a sale of the Company, intend to work to improve shareholder value. The Nominees are unable to fully formulate specific plans with respect to the Company as they are not privy to non-public information regarding Mentor Graphics. We believe that the Nominees, based upon their broad experience as described herein, can help to effect positive change at the Company by working with the other Board members and management to improve shareholder value.
Article I, Section 1.12(a)(1), of Mentor Graphics' Bylaws, effective as of January 1, 2010, as publicly filed with the Commission on December 15, 2009, provides that Shareholder nominations of directors may be made by "…any shareholder of the corporation who was a shareholder of record of the corporation at the time the notice provided for in this Section 1.12 is delivered to the Secretary of the corporation, who is entitled to vote at the meeting and who complies with the notice procedures set forth in subparagraphs (2) and (3) of this paragraph." On February 11, 2011 the Icahn Parties, record holders of Common Stock, delivered timely notice in accordance with the foregoing, notifying Mentor Graphics that the Icahn Parties intend to nominate and will seek to elect at the Annual Meeting Mr. José Maria Alapont, Mr. Gary Meyers and Mr. David Schechter as members of the Board of Mentor Graphics. Each Nominee, if elected, would serve a one-year term and hold office until the 2012 annual meeting of shareholders and until a successor has been duly elected and qualified. Background information about each of the Nominees is set forth below and in Annex A attached hereto.
According to Mentor Graphics' Proxy Statement, the Board of Mentor Graphics intends to nominate eight candidates for election as directors at the Annual Meeting. This Proxy Statement is soliciting proxies to elect José Maria Alapont, Gary Meyers and David Schechter, and to enable Shareholders to vote for the Mentor Graphics nominees other than Dr. James R. Fiebiger, Ms. Marsha B. Congdon, and Dr. Fontaine K. Richardson, whose longevity on the Board ranges from 17 to 28 years. Therefore, should a Shareholder so authorize us, we will cast votes for our three Nominees and five Mentor Graphics nominees. None of the Mentor Graphics nominees for whom we seek authority to vote have agreed to serve with any of our Nominees, if elected.
If elected, the Nominees will be a minority of the directors and will not alone be able to adopt resolutions. However, the Nominees expect to be able to actively engage other Board members in full discussion of the issues facing the Company and resolve them together. By utilizing their respective experiences and working constructively with Board members, the Nominees believe they can effect positive change at the Company.
Mr. Carl C. Icahn has an interest in the election of directors at the Annual Meeting indirectly through the beneficial ownership of securities, as further described in Annex A. Mr. José Maria Alapont and Mr. Gary Meyers are each party to a Nominee Agreement, substantially in the form attached hereto as Annex B, pursuant to which Icahn Capital has agreed to indemnify each such Nominee with respect to certain costs incurred by each such Nominee in connection with the proxy contest relating to the Annual Meeting. Except as disclosed in this Proxy Statement, including the Annexes attached hereto and as provided in the Nominee Agreement, none of the Nominees will receive any compensation from any of the Participants or any of their affiliates in connection with this proxy solicitation. Mr. José Maria Alapont and Mr. Gary Meyers have an interest in the election of directors at the Annual Meeting pursuant to the Nominee Agreement. Mr. Alapont has an interest in the election of directors at the Annual Meeting indirectly through an investment in Icahn Partners. Mr. Schechter has an interest in the election of directors at the Annual Meeting indirectly through his compensation arrangements described below.
The Nominees would not be barred from being considered independent under the independence requirements of The NASDAQ Stock Market, Inc. and the independence standards applicable to Mentor Graphics under paragraph (a)(1) of Item 407 of Regulation S-K under the Securities Exchange Act of 1934, as amended.
JOSÉ MARIA ALAPONT, age 60
José Maria Alapont has been president, chief executive officer and a director of Federal-Mogul Corporation ("Federal-Mogul"), a supplier of automotive products, since March 2005. Mr. Alapont served as chairman of the board of directors of Federal-Mogul from 2005 to 2007. He has more than 35 years of global leadership experience in both vehicle manufacturers and suppliers with business and operations responsibilities in the Americas, Asia Pacific, Europe, Middle East and Africa regions. Mr. Alapont, between 2003 and 2005, was chief executive officer and a member of the board of directors of Fiat IVECO, the manufacturer of light, medium and heavy-duty commercial vehicles, engines, passenger transport, defense and fire-fighting vehicles. He served in various key executive positions at Delphi Corporation, a global automotive supplier, from 1997 to 2003. He began at Delphi as executive director of international operations. In 1999, Mr. Alapont was named president of Delphi Europe, Middle East and Africa and a vice president of Delphi Corporation and also became a member of the Delphi Strategy Board, the company's top policy-making group. In 2003, Mr. Alapont was named president of Delphi's international operations, and vice president of sales and marketing. Mr. Alapont, from 1990 to 1997, served in several executive roles and was a member of the Strategy Board at Valeo, a global automotive supplier. He started at Valeo as managing director of engine cooling systems, Spain. In 1991, Mr. Alapont was named executive director of Valeo's worldwide heavy-duty engine cooling operations. In 1992, he became group vice president of Valeo's worldwide clutch and transmission components division. He was named group vice president of the company's worldwide lighting systems division in 1996. Mr. Alapont began and developed his automotive career from 1974 to 1989 at Ford Motor Company, and over the course of 15 years, starting at Ford of Spain, progressed through different management and executive positions in quality, testing and validation, manufacturing and purchasing positions at Ford of Europe. A native of Spain, Mr. Alapont earned degrees in industrial engineering from the Technical School of Valencia in Spain and in philology from the University of Valencia in Spain. The business address of Mr. Alapont is c/o Federal-Mogul Corporation, 26555 Northwestern Highway, Southfield, Michigan 48033.
Mr. Alapont is a highly accomplished executive with more than 30 years of global leadership experience at both vehicle manufacturers and suppliers, with business and operations responsibilities in the Europe, Middle East and Africa, Asia Pacific, and Americas regions. Based upon Mr. Alapont's experience, the Icahn Parties believe that Mr. Alapont has the requisite set of skills to serve as a Board member of Mentor Graphics.
MR. GARY MEYERS, age 46
Mr. Gary Meyers has been a director of Exar Corporation, a public semiconductor company serving the datacom, storage, consumer and industrial markets, since May 2008. Mr. Meyers also currently sits on the board of directors of Oasys Design Systems, a private EDA tool supplier. Mr. Meyers served as Vice President and General Manager, Synplicity Business Group of Synopsys, Inc., a leading supplier of electronic design automation software, from May 2008 through April 2010. Prior to its acquisition by Synopsys in May 2008, Mr. Meyers served as President and Chief Executive Officer of Synplicity, Inc. ("Synplicity"), a public supplier of EDA tools serving the programmable logic market, since October 2004, and as a member of the board of directors of Synplicity since January 2005. From August 2004 to October 2004, he served as Synplicity's President and Chief Operating Officer, and from November 1999 to August 2004, Mr. Meyers served as Synplicity's Vice President of Worldwide Sales. Mr. Meyers served on the board of directors of SpiraTech Limited, a UK-based EDA tool supplier, prior to its acquisition by Mentor Graphics. He also held a number of different executive management positions at LSI Corporation, a provider of silicon, systems and software technologies. Mr. Meyers has an MBA from UCLA, and he received his BSEE from the University of Maryland. The business address of Mr. Meyers is 3171 Mackall Way, Palo Alto, CA 94306.
Among other qualifications, Mr. Meyers has extensive experience in the semiconductor industry, in particular a strong systems level background, as well as executive leadership experience. Based upon Mr. Meyers' experience, the Icahn Parties believe that Mr. Meyers has the requisite set of skills to serve as a Board member of Mentor Graphics.
MR. DAVID SCHECHTER, age 35
Mr. Schechter currently is responsible for co-executing a small/mid cap investment strategy across all industries as a Portfolio Manager of the Sargon Portfolio for Icahn Capital LP, the entity through which Carl C. Icahn manages third party investment funds. Prior to April 2010, Mr. Schechter served as a Managing Director for Icahn Capital LP and in a variety of investment advisory roles for Mr. Icahn since 2004, providing investment and strategic advice across multiple industries, asset classes, and geographies. Mr. Schechter serves on the board of directors of The Hain Celestial Group, Inc, a natural and organic food and personal care products company, Federal-Mogul Corporation, an automotive parts supplier, WestPoint International, Inc., a manufacturer of bed and bath home fashion products, and XO Holdings, Inc., a telecommunications services provider. With respect to each company mentioned above, Carl C. Icahn, directly or indirectly, either (i) controls such company or (ii) has an interest in such company through the ownership of securities. Mr. Schechter previously served as a director of WCI Communities, Inc., a homebuilding company, and BKF Capital Group, Inc., an investment advisory business. Prior to joining Mr. Icahn in January 2004, Mr. Schechter served as a Vice President of Global Special Situations at Citigroup, a unit responsible for making proprietary investments in distressed situations. Mr. Schechter received a B.S. in Economics, cum laude, from the Wharton School at the University of Pennsylvania in May 1997. The business address of Mr. Schechter is c/o Icahn Capital LP, 767 Fifth Avenue, Suite 4700, New York, NY 10153.
Mr. Schechter has a strong record as a sophisticated investor and has served on a number of public and private boards, providing him with a broad understanding of the operational, financial and strategic issues facing public and private companies. Based upon Mr. Schechter's experience, the Icahn Parties believe that Mr. Schechter has the requisite set of skills to serve as a Board member of Mentor Graphics.
In connection with his employment by Icahn Capital LP, Mr. Schechter has a participatory interest in the profits derived by its affiliated entities from their investment in certain companies, including Mentor Graphics. The participatory interest of Mr. Schechter entitles him to 5.1% of the aggregate profits from such investments after an 8% hurdle rate is achieved. Other than in respect of such participatory interest (to the extent applicable), Mr. Schechter does not, and his associates do not, own, beneficially or of record, any shares of capital stock of Mentor Graphics.
Neither the Icahn Parties nor Carl C. Icahn, Brett Icahn or David Schechter has any prior relationship with Mr. Gary Meyers.
Mr. José Maria Alapont is the president, chief executive officer and a director of Federal-Mogul Corporation, a NASDAQ listed auto parts supplier ("Federal-Mogul"). Icahn Enterprises is the owner of approximately 76% of the outstanding shares of common stock of Federal-Mogul. Carl C. Icahn is: (i) the chairman of the board of directors of Federal-Mogul; and (ii) the indirect owner of the general partner of Icahn Enterprises and the indirect holder of approximately 92.5% of the outstanding depositary units representing limited partnership interests in Icahn Enterprises.
According to Mentor Graphics' Proxy Statement and applicable law, if a quorum is present at the Annual Meeting, the eight nominees for election as directors who receive the greatest number of eligible votes cast will be elected directors. Consequently, any shares of Common Stock not voted (whether by abstention, broker nonvote or otherwise) have no impact in the election of directors.
We strongly urge you to vote for the election of Mr. José Maria Alapont, Mr. Gary Meyers and Mr. David Schechter by marking, signing, dating and returning the enclosed GOLD proxy card in the postage paid envelope provided to you with this Proxy Statement or by using the GOLD proxy card to vote by telephone or Internet.
If you have signed the GOLD proxy card and no marking is made, you will be deemed to have given a direction to vote all the shares of Common Stock represented by the GOLD proxy card for the election of Mr. José Maria Alapont, Mr. Gary Meyers and Mr. David Schechter and the Mentor Graphics nominees other than Dr. James R. Fiebiger, Ms. Marsha B. Congdon, and Dr. Fontaine K. Richardson, whose longevity on the Board ranges from 17 to 28 years.
OTHER MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
According to Mentor Graphics' Proxy Statement, Mentor Graphics is soliciting proxies with respect to five other proposals. Please refer to Mentor Graphics' Proxy Statement for a detailed discussion of these proposals, including various arguments in favor of and against such proposals. These proposals are outlined below. If you have signed the GOLD proxy card and no marking is made, you will be deemed to have given a direction to vote all of the shares of Common Stock represented by your GOLD proxy card FOR Proposal Nos. 2, 5 and 6 listed below and in Mentor Graphics' Proxy Statement, for EVERY YEAR on Proposal No. 3, and AGAINST Proposal No. 4.
PROPOSAL No. 2: Shareholder Advisory Vote on Executive Compensation
As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") enacted in July 2010, the Company is submitting to Shareholders a nonbinding advisory resolution to approve the compensation of certain executive officers as follows:
"RESOLVED, that the compensation of the Company's Named Executive Officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission under the headings "Compensation Discussion and Analysis" and "Information Regarding Executive Officer Compensation" in the Proxy Statement for the Company's 2011 Annual Meeting of Shareholders, is approved."
Mentor Graphics' Proxy Statement states that adoption of Proposal No. 2 will require that the votes cast in favor of Proposal No. 2 at the Annual Meeting exceed the votes cast against Proposal No. 2. Abstentions and broker non-votes will be counted to determine whether a quorum exists at the Annual Meeting but are not counted for, and will have no effect on, the results of the vote on Proposal No. 2. Because the shareholder vote on the above resolution is advisory, it will not be binding on the Company, the Board or the Board's Compensation Committee.
Please refer to Mentor Graphics' Proxy Statement for additional discussion of Proposal No. 2. The Participants intend to vote, and recommend that you vote, FOR this proposal.
PROPOSAL No. 3: Shareholder Advisory Vote on Frequency of Future Votes on Executive Compensation
The Dodd-Frank Act also requires that the Company submit to Shareholders for an advisory vote the question of whether the resolution in Proposal No. 2 should be submitted to a shareholder vote every year, every two years or every three years. Proposal No. 3 in Mentor Graphics' Proxy Statement submits this question to a vote of the Shareholders at the Annual Meeting.
The option of one year, two years or three years that receives the highest number of votes cast by Shareholders will be the frequency approved by the Shareholders on an advisory basis. Abstentions and broker non-votes are counted to determine whether a quorum exists at the Annual Meeting but are not counted for, and have no effect on, the results of the vote on Proposal No. 3. Because the shareholder vote on this question is advisory, it will not be binding on the Company or the Board. The Company has recommended that the Shareholders vote for an annual frequency.
Please refer to Mentor Graphics' Proxy Statement for additional discussion of Proposal No. 3. The Participants intend to vote, and recommend that you vote, for EVERY YEAR on this proposal.
PROPOSAL No. 4: Approval of Amendments to 1989 Employee Stock Purchase Plan and Foreign Subsidiary Employee Stock Purchase Plan
Mentor Graphics' Proxy Statement includes a proposal to amend its 1989 Employee Stock Purchase Plan ("1989 Plan") and Foreign Subsidiary Employee Stock Purchase Plan ("Foreign Sub Plan") to reserve an additional 3,000,000 shares of Common Stock for issuance under the 1989 Plan and an additional 1,000,000 shares of Common Stock for issuance under the Foreign Sub Plan. The Shareholders were last asked to, and did, approve increases in the pool of shares of Common Stock available under the plans just two years ago, by 5,000,000 shares for the 1989 Plan and 1,000,000 shares for the Foreign Sub Plan. The Participants believe that increasing the number of shares available for issuance under these plans is dilutive to the Shareholders, particularly as the purchase price is equal to 85% of fair market value based on the per share trading price of the Common Stock on the offering date or the purchase date two years later, whichever is lower. Accordingly, the Participants recommend that Shareholders vote AGAINST Proposal No. 4.
Adoption of Proposal No. 4 will require that the votes cast in favor of Proposal No. 4 at the Annual Meeting exceed the votes cast against Proposal No. 4. Abstentions and broker non-votes are counted to determine whether a quorum exists at the Annual Meeting but are not counted for, and have no effect on, the results of the vote on Proposal No. 4.
Please refer to Mentor Graphics' Proxy Statement for additional discussion of Proposal No. 4. The Participants intend to vote, and recommend that you vote, AGAINST this proposal.
PROPOSAL No. 5: Ratification of Appointment of Independent Public Accounting Firm
According to Mentor Graphics' Proxy Statement, the Company will also solicit proxies to ratify the appointment of KPMG LLP to serve as the Company's independent public accounting firm for its fiscal year ending January 31, 2012.
Adoption of Proposal No. 5 will require that the votes cast in favor of Proposal No. 5 at the Annual Meeting exceed the votes cast against Proposal No 5. Abstentions and broker non-votes are counted to determine whether a quorum exists at the Annual Meeting but are not counted for, and have no effect on, the results of the vote on Proposal No. 5.
Please refer to Mentor Graphics' Proxy Statement for additional discussion of Proposal No. 5. The Participants intend to vote, and recommend that you vote, FOR this proposal.
PROPOSAL No. 6: The Business Combination Statute Proposal
On February 11, 2011, the Participants submitted a proposal to the Company to amend its Bylaws to opt out of certain provisions relating to business combination transactions with interested shareholders (the "Oregon Business Combination Statute") because we believed that the Shareholders should be given the opportunity to cause Mentor Graphics not to be subject to these statutory provisions. In Mentor Graphics' Proxy Statement, the Company stated that the Board agrees that the Oregon Business Combination Statute may be perceived by Shareholders as an anti-takeover measure that imposes costs and other obstacles on a potential bidder for the Company and may deprive Shareholders of opportunities to realize takeover premiums for their shares, and therefore had determined to include a proposal in the proxy statement that would allow Shareholders to opt out of the Oregon Business Combination Statute through an amendment to the Company's Bylaws.
The Oregon Business Combination Statute, codified at Sections 825 through 845 of the Oregon Business Corporation Act, imposes restrictions on certain business combination transactions between a corporation and "interested shareholders," which generally include owners of 15% or more of the corporation's voting securities. The transactions that may be restricted include a merger, share exchange, transaction involving significant assets of the corporation, and stock issuances, among others. For a period of three years following the date on which the shareholder becomes an interested shareholder, the corporation cannot engage in specified transactions with an interested shareholder unless (a) the business combination transaction or the transaction by which the shareholder became an interested shareholder was approved by the board before the person became an interested shareholder, (b) upon consummation of the transaction that resulted in the person becoming an interested shareholder, that person owns 85% or more of the corporation's voting stock (excluding certain insiders), or (c) after the person becomes an interested shareholder, the business combination is approved by the board and by holders of 66-2/3% of the corporation's voting stock excluding shares owned by the interested shareholder. See Mentor Graphics' Proxy Statement for additional discussion of Proposal No. 6.
In light of Carl C. Icahn's February 22, 2011 offer to purchase the Company at a price designed to yield the Shareholders $17 per share net in cash (see "Proposal 1: Election of Directors" above), the Icahn Parties and their affiliates, including the Participants other than Messrs. Alapont and Meyers, have an interest in the approval of Proposal No. 6, as approval will remove an impediment to completion of the purchase of Mentor Graphics by an affiliate of Mr. Icahn or a third party beginning one year after the Annual Meeting. Mr. Icahn's offer is conditioned on the waiver of anti-takeover devices and laws, including the Oregon Business Combination Statute.
It should be noted that Mr. Icahn's offer is also conditioned upon the termination of the shareholder rights plan (commonly known as a "poison pill") adopted by Mentor Graphics in June 2010. The rights under the rights plan would become exercisable if a person or group ("acquiring person"), without the approval of Mentor Graphics' Board, acquires 15% or more of the Common Stock or announces a tender offer for 15% or more of the Common Stock. The rights held by the acquiring person would be void. The rights will expire on December 31, 2011, subject to Mentor Graphics' right to extend such date, unless earlier redeemed or exchanged by Mentor Graphics or terminated. Consequently, even if Proposal No. 6 is approved, it is unlikely that a purchase transaction involving Mentor Graphics will occur until the rights plan expires or is terminated.
The text of the proposed resolution to amend the Bylaws is as follows:
"RESOLVED, that a new Article XI be added to the Corporation's Bylaws as follows:
ARTICLE XI
BUSINESS COMBINATION STATUTE
The corporation shall not be governed by Oregon statutes relating to business combinations with interested shareholders, ORS 60.825 to 60.845. Notwithstanding any other provisions of these bylaws, this Article XI may only be amended or repealed by a vote of the corporation's shareholders in accordance with the Oregon Business Corporation Act, and not by the Board of Directors."
Pursuant to the Oregon Business Combination Statute, if Proposal No. 6 is approved by the Shareholders, the amendment to the Bylaws will not be effective until 12 months after the date of such approval and will not apply to any business combination between the Company and any person who became an "interested shareholder" of the Company prior to the approval of the amendment.
Adoption of Proposal No. 6 will require the affirmative vote of a majority of the shares entitled to vote at the Annual Meeting. Abstentions and broker non-votes will have the same effect as votes against Proposal No. 6.
We believe that the Oregon Business Combination Statute may discourage acquisitions of the Common Stock, hinder attempts to acquire control of the Company, discourage or prevent a business combination with the Company, and have a negative effect on shareholder value. Accordingly, we recommend that you vote FOR Proposal No. 6. If you sign and return the GOLD proxy card and do not mark instructions as to Proposal No. 6, you will be deemed to have given a direction to vote all of the shares of Common Stock represented by your GOLD proxy card FOR Proposal No. 6.
OTHER PROPOSALS
The Participants and their affiliates know of no other business to be presented at the Annual Meeting. If any other matters should properly come before the Annual Meeting, it is intended that the persons named on the enclosed GOLD proxy card will vote that proxy on such other matters in accordance with their judgment.
BROKER NON-VOTES
If you hold your shares of Common Stock through a bank, broker or other nominee and do not provide voting instructions to the record holder of the shares of Common Stock, your shares of Common Stock will not be voted on any proposal on which your broker or nominee does not have discretionary authority to vote. In this case, a "broker non-vote" occurs. Shares of Common Stock constituting broker non-votes are not counted or deemed to be present or represented for the purpose of determining whether shareholders have approved a matter, but they are counted as present for the purpose of determining a quorum at the Annual Meeting.
The election of directors and Proposal Nos. 2, 3, 4 and 6 are each "non-routine matters" and brokers do not have discretionary authority to vote your shares of Common Stock on "non-routine matters." Therefore, unless you provide specific voting instructions to your broker, your broker will not have discretionary authority to vote your shares of Common Stock on any of the items on the agenda for the Annual Meeting except Proposal No. 5. If your shares of Common Stock are held in street name, your broker or nominee has enclosed a voting instruction card with this Proxy Statement. We strongly encourage you to vote your shares of Common Stock by following the instructions provided on the voting instruction card.
VOTING PROCEDURES
As explained in the detailed instructions on your GOLD proxy card, there are four ways you may vote. You may:
| | 1. | Sign, date and return the enclosed GOLD proxy card in the enclosed postage-paid envelope. We recommend that you vote on the GOLD proxy card even if you plan to attend the Annual Meeting; |
| | 2. | Vote via the Internet by following the voting instructions on the GOLD proxy card or the voting instructions provided by your broker, bank or other holder of record. |
| | 3. | Vote by telephone by following the voting instructions on the GOLD proxy card or the instructions provided by your broker, bank or other holder of record; or |
| | 4. | Vote in person by attending the Annual Meeting. Written ballots will be distributed to Shareholders who wish to vote in person at the Annual Meeting. If you hold your shares of Common Stock through a bank, broker or other custodian, you must obtain a legal proxy from such custodian in order to vote in person at the meeting. |
To submit a proxy with voting instructions by telephone please follow the instructions on the GOLD proxy card. Proxies may also be submitted over the Internet. Please refer to the GOLD proxy card for the website information. In each case Shareholders will be required to provide the unique control number which has been printed on each Shareholder's GOLD proxy card. In addition to the instructions that appear on the GOLD proxy card, step-by-step instructions will be provided at the designated website for those Shareholders submitting proxies over the Internet. Shareholders submitting their proxies with voting instructions over the Internet may provide an email address for confirmation that their vote by Internet was successfully submitted.
Whether or not you are able to attend the Annual Meeting, you are urged to complete the enclosed GOLD proxy and return it in the enclosed self-addressed, prepaid envelope. All valid proxies received prior to the meeting will be voted. If you specify a choice with respect to any item by marking the appropriate box on the proxy, your shares of Common Stock will be voted in accordance with that specification. If no specification is made, your shares of Common Stock will be voted: (i) FOR Mr. José Maria Alapont for director; (ii) FOR Mr. Gary Meyers for director; (iii) FOR Mr. David Schechter for director; (iv) FOR the persons who have been nominated by Mentor Graphics to serve as directors, other than Ms. Marsha B. Congdon, Dr. James R. Fiebiger and Dr. Fontaine K. Richardson; (v) FOR the advisory vote on executive compensation (Proposal No. 2); (vi) for EVERY YEAR on the advisory vote on the frequency of the vote on executive compensation (Proposal No. 3); (vii) AGAINST amendment of the Company's employee stock purchase plans (Proposal No. 4); (viii) FOR the ratification of the appointment of KPMG LLP as the Company's independent public accounting firm (Proposal No. 5); (ix) FOR opting out of the Oregon Business Combination Statute (Proposal No. 6); and (x) in the proxy holders' discretion as to other matters that may properly come before the Annual Meeting.
If you have any questions or require any assistance in executing your proxy, please call:
D.F. King & Co., Inc.
Shareholders call toll-free: (800) 714-3313
Banks and Brokerage Firms call: (212) 269-5550
PROXY PROCEDURES
In order for your views to be represented at the Annual Meeting, please mark, sign, date and return the enclosed GOLD proxy card in the enclosed postage-prepaid envelope or use the GOLD proxy card to vote by telephone or Internet.
The accompanying GOLD proxy card will be voted at the Annual Meeting in accordance with your instructions on such card.
Only holders of record as of the close of business on the Record Date will be entitled to vote. If you were a Shareholder of record on the Record Date, you will retain your voting rights at the Annual Meeting even if you sell such shares of Common Stock after the Record Date. Accordingly, it is important that you vote the shares of Common Stock held by you on the Record Date, or grant a proxy to vote such shares of Common Stock on the GOLD proxy card, even if you sell such shares of Common Stock after the Record Date.
If your shares of Common Stock are held in the name of a brokerage firm, bank, bank nominee or other institution on the record date, only it can vote such shares of Common Stock and only upon receipt of your specific instructions. Accordingly, please contact the person responsible for your account and instruct that person to execute on your behalf the GOLD proxy card as soon as possible.
REVOCATION OF PROXIES
Any Shareholder of record may revoke or change his or her proxy instructions at any time prior to the vote at the Annual Meeting by:
| | • | submitting a properly executed, subsequently dated GOLD proxy card that will revoke all prior proxy cards, including any WHITE proxy cards which you may have submitted to Mentor Graphics; |
| | • | instructing the Icahn Parties by telephone or via the Internet as to how you would like your shares of Common Stock voted (instructions are on your GOLD proxy card); |
| | • | attending the Annual Meeting and withdrawing your proxy by voting in person (although attendance at the Annual Meeting will not in and of itself constitute revocation of a proxy); or |
| | • | delivering written notice of revocation either to the Icahn Parties c/o D.F. King & Co., Inc., 48 Wall Street, New York, NY 10005, or the Corporate Secretary of Mentor Graphics. |
Although a revocation is effective if delivered to Mentor Graphics, the Icahn Parties request that either the original or a copy of any revocation be mailed to the Icahn Parties c/o D.F. King & Co., Inc., 48 Wall Street, New York, NY 10005, so that the Icahn Parties will be aware of all revocations.
If you previously signed and returned a white proxy card to Mentor Graphics, we urge you to revoke it by (1) marking, signing, dating and returning the GOLD proxy card, (2) instructing us by telephone or via the Internet as to how you would like your shares of Common Stock voted with respect to the GOLD proxy card, (3) attending the Annual Meeting and voting in person or (4) delivering a written notice of revocation to the Icahn Parties or to the Corporate Secretary of the Company.
COST AND METHOD OF SOLICITATION
Solicitation of proxies will be made by Mr. Carl C. Icahn, Mr. Brett Icahn, Mr. David Schechter, Mr. José Maria Alapont and Mr. Gary Meyers. The Participants intend to deliver a Proxy Statement and a form of proxy to Shareholders who collectively hold at least a majority of the outstanding shares of Common Stock as of the Record Date.
Pursuant to an Agreement dated [ ], 2011, Icahn Capital has retained D.F. King & Co., Inc. ("D.F. King") to conduct the solicitation, for which D.F. King is to receive a fee of up to $[ ]. Icahn Capital has agreed to indemnify D.F. King against certain liabilities and expenses, including certain liabilities under the federal securities laws. Insofar as indemnification for liabilities arising under the federal securities laws may be permitted to D.F. King pursuant to the foregoing provisions, we have been informed that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy and is therefore unenforceable. Proxies may be solicited by mail, courier services, Internet, advertising, telephone or telecopier or in person. It is anticipated that D.F. King will employ up to 100 persons to solicit proxies from Mentor Graphics Shareholders for the Annual Meeting. The total expenditures in furtherance of, or in connection with, the solicitation of proxies is approximately $[ ] to date, and is estimated to be $[ ] in total.
The Icahn Parties will pay all costs associated with this solicitation. The Icahn Parties do not intend to seek reimbursement for the costs and expenses associated with the proxy solicitation in the event that any of the Nominees are elected to the Board of Directors of Mentor Graphics.
ADDITIONAL INFORMATION
Certain information regarding the securities of Mentor Graphics held by Mentor Graphics' directors, management and 5% Shareholders is contained in Mentor Graphics' Proxy Statement. Information concerning the date by which proposals of security holders intended to be presented at the next annual meeting of Shareholders of Mentor Graphics must be received by Mentor Graphics for inclusion in Mentor Graphics' Proxy Statement and form of proxy for that meeting is also contained in Mentor Graphics' Proxy Statement. This information is expected to be contained in Mentor Graphics' public filings. The Participants take no responsibility for the accuracy or completeness of such information contained in Mentor Graphics' public filings.
Date: March [ ], 2011
| | HIGH RIVER LIMITED PARTNERSHIP |
| | HOPPER INVESTMENTS LLC |
| | BARBERRY CORP. |
| | ICAHN PARTNERS LP |
| | ICAHN PARTNERS MASTER FUND LP |
| | ICAHN PARTNERS MASTER FUND II LP |
| | ICAHN PARTNERS MASTER FUND III LP |
| | ICAHN ENTERPRISES G.P. INC. |
| | ICAHN ENTERPRISES HOLDINGS L.P. |
| | IPH GP LLC |
| | ICAHN CAPITAL L.P. |
| | ICAHN ONSHORE LP |
| | ICAHN OFFSHORE LP |
| | BECKTON CORP. |
| | MR. JOSÉ MARIA ALAPONT |
| | MR. BRETT ICAHN |
| | MR. CARL C. ICAHN |
| | MR. GARY MEYERS |
| | MR. DAVID SCHECHTER |
ANNEX A
SECURITY OWNERSHIP OF THE PARTICIPANTS
| (1) Title of Class | | (2) Name of Beneficial Owner1 | | (3) Amount of Beneficial Ownership | | | (4) Percent of Class2 | |
| Common Stock, without par value ("Shares") | | High River | | | 3,224,057 | | | | 2.87 | % |
| Shares | | Icahn Partners | | | 4,908,189 | | | | 4.37 | % |
| Shares | | Icahn Master | | | 5,568,678 | | | | 4.96 | % |
| Shares | | Icahn Master II | | | 1,632,955 | | | | 1.45 | % |
| Shares | | Icahn Master III | | | 786,410 | | | | 0.70 | % |
Description of Beneficial Ownership and Beneficial Owners
Barberry Corp., a Delaware corporation ("Barberry"), is the sole member of Hopper Investments LLC, a Delaware limited liability company ("Hopper"), which is the general partner of High River. Beckton Corp., a Delaware corporation ("Beckton") is the sole stockholder of Icahn Enterprises G.P. Inc., a Delaware corporation ("Icahn Enterprises GP"), which is the general partner of Icahn Enterprises Holdings L.P., a Delaware limited partnership ("Icahn Holdings"). Icahn Holdings is the sole member of IPH GP LLC, a Delaware limited liability company ("IPH"), which is the general partner of Icahn Capital L.P., a Delaware limited partnership ("Icahn Capital"). Icahn Capital is the general partner of each of Icahn Onshore LP, a Delaware limited partnership ("Icahn Onshore") and Icahn Offshore LP, a Delaware limited partnership ("Icahn Offshore"). Icahn Onshore is the general partner of Icahn Partners. Icahn Offshore is the general partner of each of Icahn Master, Icahn Master II and Icahn Master III. Each of Barberry and Beckton is 100 percent owned by Carl C. Icahn ("Mr. Icahn," and collectively with Barberry, Hopper, Beckton, Icahn Enterprises GP, Icahn Holdings, IPH, Icahn Capital, Icahn Onshore, Icahn Offshore, the "Beneficial Owners" and each of them a "Beneficial Owner." As such, Mr. Icahn is in a position indirectly to determine the investment and voting decisions made by each of the Icahn Parties.
1 Please note that each record holder listed in this table is, as of the date of this filing, the direct beneficial owner of the Shares set forth under the heading “(3) Amount of Beneficial Ownership” and that indirect beneficial ownership of Shares is described below in the text of this Annex A under the heading “Description of Beneficial Ownership.”
2 Please note that percentages of ownership set forth in this column were calculated based on the 112,354,285 Shares stated to be outstanding as of the Record Date, March 11, 2011, in Mentor Graphics' Proxy Statement.
The principal business address of each of (i) Icahn Offshore, Icahn Onshore, Icahn Capital, IPH, Icahn Holdings, Icahn Enterprises GP and Beckton is White Plains Plaza, 445 Hamilton Avenue Suite 1210, White Plains, NY 10601 and (ii) Barberry and Hopper is c/o Icahn Capital LP, 767 Fifth Avenue, 47th Floor, New York, NY 10153. The address of Icahn Partners is 767 Fifth Avenue, 47th Floor, New York, NY 10153. The address of Icahn Master is c/o Walkers SPV Limited, P.O. Box 908GT, 87 Mary Street, George Town, Grand Cayman, Cayman Islands. The address of Icahn Master II is c/o Walkers SPV Limited, Walker House, 87 Mary Street, George Town, Grand Cayman KY1-9002, Cayman Islands. The address of Icahn Master III is c/o Walkers SPV Limited, Walker House, 87 Mary Street, George Town, Grand Cayman KY1-9002, Cayman Islands. The address of High River is 767 Fifth Avenue, 47th Floor, New York, NY 10153.
Barberry is primarily engaged in the business of serving as the sole member of Hopper and investing in securities. Hopper is primarily engaged in the business of serving as the general partner of High River and investing in securities. Icahn Offshore is primarily engaged in the business of serving as the general partner of each of Icahn Master, Icahn Master II and Icahn Master III. Icahn Onshore is primarily engaged in the business of serving as the general partner of Icahn Partners. Icahn Capital is primarily engaged in the business of serving as the general partner of each of Icahn Offshore and Icahn Onshore. IPH is primarily engaged in the business of serving as the general partner of Icahn Capital. Icahn Holdings is primarily engaged in the business of holding direct or indirect interests in various operating businesses. Icahn Enterprises GP is primarily engaged in the business of serving as the general partner of each of Icahn Enterprises and Icahn Holdings. Beckton is primarily engaged in the business of holding the capital stock of Icahn Enterprises GP. Each of High River, Icahn Master, Icahn Master II, Icahn Master III, Icahn Partners and High River are primarily engaged in the business of investing in securities. Mr. Carl C. Icahn is primarily engaged in serving as (i) Chief Executive Officer of Icahn Capital LP, a wholly owned subsidiary of Icahn Enterprises, through which Mr. Icahn manages various private investment funds, including Icahn Partners, Icahn Master, Icahn Master II and Icahn Master III, (ii) Chairman of the Board of Icahn Enterprises GP, the general partner of Icahn Enterprises, a New York Stock Exchange listed diversified holding company engaged in a variety of businesses, including investment management, automotive, gaming, railcar, food packaging, metals, real estate and home fashion, and (iii) Chairman of the Board and a director of Starfire Holding Corporation ("Starfire"), a holding company engaged in the business of investing in and/or holding securities of various entities, and as Chairman of the Board and a director of various of Starfire's subsidiaries.
The Icahn Parties and Carl C. Icahn may be deemed to beneficially own, in the aggregate, 16,120,289 Shares, representing approximately 14.35% of the Corporation's outstanding Shares (based upon the 112,354,285 Shares outstanding as of the Record Date, as stated in Mentor Graphics' Proxy Statement) .
High River has sole voting power and sole dispositive power with regard to 3,224,057 Shares. Each of Hopper, Barberry and Mr. Icahn has shared voting power and shared dispositive power with regard to such Shares. Icahn Partners has sole voting power and sole dispositive power with regard to 4,908,189 Shares. Each of Icahn Onshore, Icahn Capital, IPH, Icahn Holdings, Icahn Enterprises GP, Beckton and Mr. Icahn has shared voting power and shared dispositive power with regard to such Shares. Icahn Master has sole voting power and sole dispositive power with regard to 5,568,678 Shares. Each of Icahn Offshore, Icahn Capital, IPH, Icahn Holdings, Icahn Enterprises GP, Beckton and Mr. Icahn has shared voting power and shared dispositive power with regard to such Shares. Icahn Master II has sole voting power and sole dispositive power with regard to 1,632,955 Shares. Each of Icahn Offshore, Icahn Capital, IPH, Icahn Holdings, Icahn Enterprises GP, Beckton and Mr. Icahn has shared voting power and shared dispositive power with regard to such Shares. Icahn Master III has sole voting power and sole dispositive power with regard to 786,410 Shares. Each of Icahn Offshore, Icahn Capital, IPH, Icahn Holdings, Icahn Enterprises GP, Beckton and Mr. Icahn has shared voting power and shared dispositive power with regard to such Shares.
Each of Hopper, Barberry and Mr. Icahn, by virtue of their relationships to High River, may be deemed to indirectly beneficially own the 3,224,057 Shares which High River directly beneficially owns. Each of Icahn Onshore, Icahn Capital, IPH, Icahn Holdings, Icahn Enterprises GP, Beckton and Mr. Icahn, by virtue of their relationships to Icahn Partners, may be deemed to indirectly beneficially own the 4,908,189 Shares which Icahn Partners directly beneficially owns. Each of Icahn Offshore, Icahn Capital, IPH, Icahn Holdings, Icahn Enterprises GP, Beckton and Mr. Icahn, by virtue of their relationships to Icahn Master, Icahn Master II and Icahn Master III, may be deemed to indirectly beneficially own the 7,988,043 Shares which Icahn Master, Icahn Master II and Icahn Master III directly beneficially own.
On January 5, 2001, Reliance Group Holdings, Inc. ("Reliance") commenced an action in the United States District Court for the Southern District of New York against Mr. Icahn, Icahn Associates Corp. and High River alleging that High River's tender offer for Reliance 9% senior notes violated Section 14(e) of the Exchange Act. Reliance sought a temporary restraining order and preliminary and permanent injunctive relief to prevent defendants from purchasing the notes. The Court initially imposed a temporary restraining order. Defendants then supplemented the tender offer disclosures. The Court conducted a hearing on the disclosures and other matters raised by Reliance. It then denied plaintiff's motion for a preliminary injunction and ordered dissolution of its temporary restraining order following dissemination of the supplement. Reliance took an immediate appeal to the United States Court of Appeals for the Second Circuit and sought a stay to restrain defendants from purchasing notes during the pendency of the appeal. On January 30, 2001, the Court of Appeals denied plaintiff's stay application. On January 30, Reliance also sought a further temporary restraining order from the District Court. The Court considered the matter and reimposed its original restraint until noon the next day, at which time the restraint was dissolved. The appeal was argued on March 9 and denied on March 22, 2001.
Shares purchased by each of the record holders are maintained in margin accounts that include positions in securities in addition to the Shares. As of March 16, 2011, the indebtedness of (i) High River's margin account was approximately $796,885,449, (ii) Icahn Partners' margin account was approximately $664,751,591, (iii) Icahn Master's margin account was approximately $857,196,294, (iv) Icahn Master II's margin account was approximately $312,694,888, and (v) Icahn Master III's margin account was approximately $81,907,289.
The following are American call options purchased by the record holders, which were written by UBS AG with a $5.65 strike price and an expiration date of June 7, 2012, and which provided for physical settlement. These are further described in the chart set forth below. On August 24, 2010, the record holders exercised all of their respective call options.
The following are European put options which were written by the record holders to UBS AG and had a $5.65 strike price and an expiration date of June 7, 2012, and provided for cash settlement only and are further described in the chart set forth below. On August 24, 2010, the record holders exercised all of the call options described in Annex A Attachment 1-A, and upon exercise of the call options, all of the put options described below expired pursuant to their terms.
Dear Mr. ___________________:
D.F. King & Co., Inc.
PROVIDED ONLY IF YOU ARE VOTING BY MAIL.
Mr. Carl C. Icahn, Mr. Brett Icahn, Mr. David Schechter, Mr. Gary Meyers, Mr. José Maria Alapont, High River Limited Partnership, Hopper Investments LLC, Barberry Corp., Icahn Partners LP, Icahn Partners Master Fund LP, Icahn Partners Master Fund II LP, Icahn Partners Master Fund III LP, Icahn Enterprises G.P. Inc., Icahn Enterprises Holdings L.P., IPH GP LLC, Icahn Capital L.P., Icahn Onshore LP, Icahn Offshore LP and Beckton Corp. (the "Participants")
The undersigned hereby appoints and constitutes each of Mr. David Schechter and Mr. Jesse A. Lynn, Assistant General Counsel of Icahn Enterprises L.P. (acting alone or together), or instead of the foregoing, _______________ as proxies, with full power of substitution in each, to represent the undersigned at the Annual Meeting of Shareholders of Mentor Graphics Corporation ("Mentor Graphics" or the "Company") to be held at [__________], on Thursday, May 12, 2011 at [______] p.m., Pacific Daylight Time, and at any adjournments, postponements or continuations thereof (the "Annual Meeting"), hereby revoking any proxies previously given, to vote all shares of Common Stock of Mentor Graphics held or owned by the undersigned as directed below, and in their discretion on any amendments or variations to matters identified in the notice of meeting or upon such other matters as may come before the meeting (provided, however, that the persons named above will be permitted to use such discretionary authority only for matters which they do not know, a reasonable time before the solicitation, are to be presented at the meeting).
unless you have voted by Internet or telephone.
THE PARTICIPANTS RECOMMEND A VOTE "FOR" THE ELECTION OF THE NOMINEES LISTED IN PROPOSAL 1 BELOW.
PLUS the persons who have been nominated by Mentor Graphics to serve as directors, other than Marsha B. Congdon, James R. Fiebiger and Fontaine K. Richardson.
The Participants are NOT seeking authority to vote for and WILL NOT exercise any authority to vote for Marsha B. Congdon, James R. Fiebiger and Fontaine K. Richardson. There is no assurance that any of the Mentor Graphics nominees will serve as directors if any or all of the Icahn Parties' Nominees are elected to the Board. You should refer to the proxy statement and form of proxy distributed by Mentor Graphics for the names, background, qualifications and other information concerning the Mentor Graphics nominees.
Please be sure to sign and date this Proxy.
