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After negotiating a largely untested foreign corporate governance law, a surprise birth and a stubborn Israeli chief scientist, a cadre of local lawyers last week finally consummated a tech deal worth nearly $300 million. Gibson, Dunn & Crutcher represented Cadence Design Systems Inc., a San Jose-based maker of computer chip design software, in its acquisition of Verisity Ltd. Verisity, a Mountain View-based software firm founded and incorporated in Israel, was represented by Latham & Watkins. Gregory Conklin, the Gibson partner who led a 12-lawyer team in the acquisition, said negotiations were eventful from beginning to end, as his team worked with opposing counsel and Israeli co-counsel to navigate Israel’s new corporate governance law. “It’s not the most well-drafted piece of legislation,” said Conklin, since it fails to address many of the executive compensation issues common in acquisitions. He said the lack of legal opinions on the law forced attorneys to rely on educated guesswork in crafting the deal. “You have to base it on what others have done and not been challenged on,” he said. Conklin said his stress level was eased by associate Sharon Segev, who is fluent in Hebrew and was able to easily converse with Israeli counsel. But she gave birth four days before the deal was closed, when negotiations were at their stickiest point. “It wasn’t her fault the baby came a little bit early,” he said. Latham of counsel Nicholas O’Keefe, who led the representation of Verisity, said that up until the deal closed, most of that stickiness entailed intellectual property claims by Israel’s Office of the Chief Scientist. Since the office funded Verisity’s initial research and development, the Israeli government maintains a right to some of the intellectual property. The issue, O’Keefe said, was how far that right extends. “Cadence just really wanted almost a guarantee that they could do whatever they want with the intellectual property that the OCS has rights in,” he said. But after several months of tense negotiations that ended on the day the deal closed, the companies agreed to finish the acquisition without such assurances. “I think Cadence just accepted it would have to be they’d tidy up after it closed,” said O’Keefe, who was joined on the deal by Latham partner Alan Mendelson. Mendelson, who brought Verisity in as a client, had briefly served as Cadence’s in-house counsel in the 1990s. The Gibson team was rounded out by partner Stewart McDowell, of counsel Trey Nicoud and associates Richard Riecker, Heather Bell and Kendra Kresse in San Francisco and partner David Kennedy in Palo Alto. Justin Scheck FOR THE COMPANY THAT OWNS EVERYTHING Cisco Systems Inc. has been on a shopping spree for so long that its appearance at the check-out counter threatens to become ho-hum. But its acquisition of Airespace Inc., announced last week, has attracted notice as its biggest purchase in two years. Cisco will pay approximately $450 million in stock and assumed options for the San Jose company, which makes switches and other equipment used to build wireless local area networks. The tech press reported the acquisition as a smart move by Cisco, giving the company a more centralized network architecture. Just four years old, San Jose-based Airespace is ranked No. 3 in the wireless local area network gear industry, behind Cisco and Symbol Technologies Inc. Cisco said in a release that the acquisition would allow it “to address a broader set of market segments and integrate advanced capabilities into current Cisco products.” Douglas Cogen, a partner at Fenwick & West, said this was Cisco’s largest deal since its March 2003 acquisition of The Linksys Group Inc. for $500 million in stock. Cogen has worked on all of Cisco’s deals — about 20 of them — since that purchase. Cogen said the two deals were similar and involved similar technology. While Linksys’ equipment was targeted to retail consumers, allowing them to create wireless networks at home, Airespace’s systems are used by commercial enterprises. The Fenwick team also included partners Scott Spector, E.A. Lisa Kenkel, Lawrence Granatelli, Walter Raineri, Mark Ostrau, Stephen Gillespie and Karen Kitterman, of counsel Craig Menden, and associates Devin Gensch, Greg Sato, Blake Martell, Andrew Kim, Christopher Joslyn, Diana Lock, Rochelle Levy, Morgan Fong, Elizabeth Gartland, Ryan Hayes, Matthew Forkner, Adwait Talathi, Gerald Audant, James Lin and Jennifer Hill. Heller Ehrman White & McAuliffe partners Mark Medearis and Steven Tonsfeldt represented Airespace. — Brenda Sandburg

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