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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, Calif.-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.

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