<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 13, 1998
REGISTRATION NO. 333-53825
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
POST-EFFECTIVE
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
UNITRODE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
MARYLAND 3674 04-2271186
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
7 CONTINENTAL BOULEVARD
MERRIMACK, NEW HAMPSHIRE 03054
(603) 424-2410
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
ALLAN R. CAMPBELL
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
UNITRODE CORPORATION
7 CONTINENTAL BOULEVARD
MERRIMACK, NEW HAMPSHIRE 03054
(603) 424-2410
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
WITH COPIES TO:
<TABLE>
<S> <C>
MARGARET A. BROWN, ESQ. ROBERT E. CRAWFORD, JR., ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP D. FORREST BRUMBAUGH, ESQ.
ONE BEACON STREET WINSTEAD SECHREST & MINICK P.C.
BOSTON, MASSACHUSETTS 02108-3194 5400 RENAISSANCE TOWER
(617) 573-4800 1201 ELM STREET
DALLAS, TEXAS 75270-2199
(214) 745-5400
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: Upon
consummation of the merger described herein (the "Merger").
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration number of the earlier effective
registration number for the same offering. [ ]________
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier, effective registration statement
for the same offering. [ ]________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
July 13, 1998
[UNITRODE LOGO]
To Our Stockholders:
I am writing to inform you that the annual meeting of the stockholders of
Unitrode Corporation ("Unitrode") held on Monday, June 29, 1998 (the "Unitrode
Annual Meeting") was convened and immediately adjourned until 11:00 a.m., local
time, on Wednesday, July 29, 1998. The adjourned session of the Unitrode Annual
Meeting will be held at Unitrode's offices at 7 Continental Boulevard,
Merrimack, New Hampshire.
At the adjourned session of the Unitrode Annual Meeting you will be asked
to consider and vote upon the proposal to approve the issuance by Unitrode of up
to 8,582,047 shares of common stock, par value $.01 per share, of Unitrode
("Unitrode Common Stock") in connection with the proposed merger (the "Merger")
of Merrimack Corporation, a wholly owned subsidiary of Unitrode ("Sub"), with
and into BENCHMARQ Microelectronics, Inc. ("BENCHMARQ") pursuant to an Agreement
and Plan of Merger, dated as of March 2, 1998 and amended as of June 23, 1998
(the "Merger Agreement"), by and among Unitrode, Sub and BENCHMARQ. Approval of
such issuance by the stockholders of Unitrode is required by the rules of The
New York Stock Exchange, Inc. (the "NYSE") because shares of Unitrode Common
Stock are traded on the NYSE and the number of shares proposed to be issued in
connection with the Merger exceeds 20% of the issued and outstanding shares of
Unitrode Common Stock.
The Unitrode Annual Meeting was adjourned because the Merger Agreement was
recently amended to, among other things, provide that each outstanding share of
common stock, par value $.001 per share, of BENCHMARQ ("BENCHMARQ Common Stock")
will be converted into the right to receive one share of Unitrode Common Stock
(the "Exchange Ratio"). As a result of this amendment, the Exchange Ratio is a
fixed number and will not be adjusted pursuant to the Merger Agreement based on
any increases or decreases in the price of Unitrode Common Stock as the Merger
Agreement previously provided.
Prior to the amendment of the Merger Agreement, the Board of Directors of
Unitrode had determined, based on BENCHMARQ's recent results and certain other
factors, to withdraw its earlier recommendation to the stockholders of Unitrode
to vote in favor of the issuance of Unitrode Common Stock in connection with the
Merger. Subsequently, Unitrode and BENCHMARQ entered into discussions resulting
in the amendment of the Merger Agreement and in connection with its
consideration thereof, the Board of Directors of Unitrode received the opinion
of Adams, Harkness & Hill, Inc., Unitrode's financial advisor in connection with
the Merger, that, as of the date of such opinion and subject to the conditions
set forth in such opinion, the Exchange Ratio is fair, from a financial point of
view, to the stockholders of Unitrode.
AFTER CAREFUL CONSIDERATION OF, AMONG OTHER THINGS, THE AMENDMENT TO THE
MERGER AGREEMENT AND UNITRODE'S FINANCIAL ADVISOR'S OPINION, THE BOARD OF
DIRECTORS OF UNITRODE, WITH ONE DIRECTOR ABSENT, HAS DETERMINED THE ISSUANCE OF
UNITRODE COMMON STOCK IN CONNECTION WITH THE MERGER TO BE FAIR AND IN THE BEST
INTERESTS OF UNITRODE AND ITS STOCKHOLDERS. THE BOARD OF DIRECTORS UNANIMOUSLY,
WITH ONE DIRECTOR ABSENT, RECOMMENDS THAT THE STOCKHOLDERS OF UNITRODE VOTE FOR
APPROVAL OF THE ISSUANCE OF SUCH SHARES.
In addition to the proposal regarding the issuance of shares of Unitrode
Common Stock in connection with the Merger, at the Unitrode Annual Meeting, you
will be asked to consider and vote upon (i) the election of directors and (ii)
the amendment of the Unitrode Corporation 1992 Employee Stock Option Plan to
increase the number of shares which may be granted under such plan.
<PAGE> 3
The Amended Joint Proxy Statement-Prospectus provides you with detailed
information concerning the Merger Agreement and related matters and we urge you
to read it carefully.
All stockholders are invited to attend the Unitrode Annual Meeting in
person. The representation in person or by proxy of at least a majority of the
votes represented by the outstanding shares of Unitrode Common Stock as of April
30, 1998 (the "Unitrode Record Date") is necessary to establish a quorum for the
transaction of business. The approval of the issuance of shares of Unitrode
Common Stock in connection with the Merger requires the affirmative vote of a
majority of the shares voted at the Unitrode Annual Meeting by the holders of
shares of Unitrode Common Stock and that at least a majority of the shares of
Unitrode Common Stock entitled to be voted as of the Unitrode Record Date be
voted at the Unitrode Annual Meeting. The election of directors to be considered
and voted upon at the Unitrode Annual Meeting requires the affirmative vote of
the holders of a majority of the shares entitled to be voted at the Unitrode
Annual Meeting. The amendment of the Unitrode Corporation 1992 Employee Stock
Option Plan requires the affirmative vote of the holders of a majority of the
votes cast at the Unitrode Annual Meeting.
If you have not already returned the proxy previously sent to you, you are
urged to promptly complete, sign, date and return the accompanying proxy in the
enclosed envelope whether or not you plan to attend the Unitrode Annual Meeting.
Unitrode stockholders may revoke any proxy which they have previously given by
returning the enclosed proxy card. Any proxy which has been previously given
which is not revoked will remain in effect. Unitrode stockholders may also vote
in person at the Unitrode Annual Meeting even if they have previously returned a
proxy card.
I look forward to seeing you on Wednesday, July 29, 1998.
Sincerely,
/s/ Robert J. Richardson
Robert J. Richardson
President and Chief Executive Officer
<PAGE> 4
UNITRODE CORPORATION
7 CONTINENTAL BOULEVARD
MERRIMACK, NEW HAMPSHIRE 03054
------------------------
NOTICE OF ADJOURNED ANNUAL MEETING OF UNITRODE STOCKHOLDERS
TO BE HELD WEDNESDAY, JULY 29, 1998
------------------------
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of Unitrode
Corporation ("Unitrode") held on Monday, June 29, 1998 (the "Unitrode Annual
Meeting") was convened and immediately adjourned until 11:00 a.m., local time,
on Wednesday, July 29, 1998. The adjourned session of the Unitrode Annual
Meeting is to be held at Unitrode's offices at 7 Continental Boulevard,
Merrimack, New Hampshire for the following purposes:
1. To consider and vote upon a proposal to approve the issuance of up
to 8,582,047 shares of common stock, par value $.01 per share, of Unitrode
(the "Unitrode Common Stock") in connection with the merger of Merrimack
Corporation, a Delaware corporation and a wholly owned subsidiary of
Unitrode ("Sub"), with and into BENCHMARQ Microelectronics, Inc., a
Delaware corporation ("BENCHMARQ"), pursuant to an Agreement and Plan of
Merger, dated as of March 2, 1998 by and among Unitrode, Sub and BENCHMARQ
and amended as of June 23, 1998.
2. To elect two directors for a three-year term ending in 2001 and one
director for a two-year term ending in 2000.
3. To amend the Unitrode Corporation 1992 Employee Stock Option Plan
to increase the number of shares of Unitrode Common Stock which may be
issued under such Plan from 6,000,000 shares to 7,000,000 shares.
4. To transact such other business as may properly come before the
Unitrode Annual Meeting or at any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on April 30, 1998 as
the record date for determining the stockholders entitled to notice of and to
vote at the Unitrode Annual Meeting.
IF YOU HAVE NOT RETURNED A PROXY, UNITRODE URGES YOU TO PROMPTLY COMPLETE, SIGN,
DATE AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE. NO POSTAGE NEED
BE AFFIXED IF MAILED IN THE UNITED STATES. UNITRODE STOCKHOLDERS MAY REVOKE ANY
PROXY WHICH THEY HAVE PREVIOUSLY GIVEN BY RETURNING THE ENCLOSED PROXY CARD. ANY
PROXY WHICH HAS BEEN PREVIOUSLY GIVEN WHICH IS NOT REVOKED WILL REMAIN IN
EFFECT. UNITRODE STOCKHOLDERS MAY ALSO VOTE IN PERSON AT THE UNITRODE ANNUAL
MEETING EVEN IF THEY HAVE PREVIOUSLY RETURNED A PROXY CARD.
By Order of the Board of Directors,
/s/ Allan R. Campbell
Allan R. Campbell
Senior Vice President, General
Counsel and Secretary
7 Continental Boulevard
Merrimack, New Hampshire
July 13, 1998
<PAGE> 5
[BENCHMARQ LOGO]
July 13, 1998
Dear Stockholder:
The Agreement and Plan of Merger (as amended, the "Merger Agreement"), dated
as of March 2, 1998, by and among Unitrode Corporation, a Maryland corporation
("Unitrode"), BENCHMARQ Microelectronics, Inc., a Delaware corporation
("BENCHMARQ"), and Merrimack Corporation, a Delaware corporation and a wholly
owned subsidiary of Unitrode ("Sub"), was amended on June 23, 1998, in several
respects, including, without limitation, to provide for the exchange (the
"Revised Exchange Ratio") of one share of common stock ("Unitrode Common
Stock"), $.01 per share par value, of Unitrode for each share of common stock
("BENCHMARQ Common Stock"), $.001 per share par value, of BENCHMARQ, pursuant to
the merger (the "Merger") of Sub with and into BENCHMARQ as contemplated by the
Merger Agreement. The amendments made to the Merger Agreement are described in
more detail in the accompanying Amended Joint Proxy Statement-Prospectus. The
Revised Exchange Ratio is a fixed number and will not be adjusted in the event
of any increase or decrease in the price of either the Unitrode Common Stock or
the BENCHMARQ Common Stock. On June 23, 1998, the last business day preceding
the date on which the amendment of the Merger Agreement was publicly announced,
the closing price of Unitrode Common Stock on the New York Stock Exchange was
$11.375 and the closing price of BENCHMARQ Common Stock on the Nasdaq National
Market was $8.6875.
To comply with regulatory requirements regarding the solicitation of
proxies, the special meeting of stockholders of BENCHMARQ held on Monday, June
29, 1998, at 10:00 a.m. local time, at the offices of Winstead Sechrest & Minick
P.C., 5400 Renaissance Tower, 1201 Elm Street, Dallas, Texas was convened at
such time and place and was immediately adjourned until 10:00 a.m., local time,
Wednesday, July 29, 1998. The adjourned meeting (the "Special Meeting") will be
held at the same location described above.
You are cordially invited to attend the adjourned session of the Special
Meeting.
At the Special Meeting, you will be asked to consider and vote upon a
proposal to approve the Merger Agreement. The Amended Joint Proxy
Statement-Prospectus contains additional information regarding the proposed
business combination of BENCHMARQ and Unitrode. Please give this information
your careful attention.
The Merger Agreement and the Merger have been unanimously approved and
adopted by the Board of Directors of BENCHMARQ (with one member absent) and the
Board of Directors of Unitrode (with one member absent), and the Merger
Agreement and the Merger are subject to approval by the holders of the majority
of the outstanding shares of BENCHMARQ Common Stock. BENCHMARQ's Board of
Directors has received an opinion of its financial advisor, Prudential
Securities Incorporated, to the effect that, as of June 23, 1998, and based upon
and subject to certain assumptions, limitations and other matters stated
therein, the Revised Exchange Ratio is fair to the stockholders of BENCHMARQ
from a financial point of view.
AFTER CAREFUL CONSIDERATION, THE BOARD OF DIRECTORS HAS DETERMINED THAT THE
PROPOSED MERGER IS IN THE BEST INTERESTS OF BENCHMARQ AND ITS STOCKHOLDERS, HAS
(SUBJECT TO STOCKHOLDER APPROVAL) UNANIMOUSLY, WITH ONE DIRECTOR ABSENT,
APPROVED AND ADOPTED THE MERGER AGREEMENT AND RECOMMENDS THAT YOU VOTE FOR THE
PROPOSAL TO APPROVE AND ADOPT THE MERGER AGREEMENT AND THE MERGER.
Details of the background and reasons for the proposed Merger appear in and
are explained in the accompanying Amended Joint Proxy Statement-Prospectus.
Additional information regarding BENCHMARQ and Unitrode is also set forth in the
Amended Joint Proxy Statement-Prospectus and incorporated therein by reference
to other documents.
BENCHMARQ stockholders may revoke any proxy which they have previously given
by returning the enclosed proxy card. Any proxy which has been previously given
which is not revoked will remain in effect. BENCHMARQ stockholders may also vote
in person at the BENCHMARQ Special Meeting even if they have previously returned
a proxy card.
Sincerely,
/s/ Alan R. Schuele
Alan R. Schuele
President and Chief Executive Officer
<PAGE> 6
BENCHMARQ MICROELECTRONICS, INC.
17919 WATERVIEW PARKWAY
DALLAS, TEXAS 75252
------------------------
NOTICE OF ADJOURNED SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON WEDNESDAY, JULY 29, 1998
------------------------
Notice is hereby given that a Special Meeting of Stockholders of BENCHMARQ
Microelectronics, Inc. ("BENCHMARQ") was held on Monday, June 29, 1998 at 10:00
a.m., local time, at the offices of Winstead Sechrest & Minick P.C., 5400
Renaissance Tower, 1201 Elm Street, Dallas, Texas 75270 (the "BENCHMARQ Special
Meeting"). The BENCHMARQ Special Meeting was convened at such time and was
immediately adjourned until 10:00 a.m., local time, Wednesday, July 29, 1998.
The adjourned session of the BENCHMARQ Special Meeting is to be held at the same
location described above, for the following purposes:
(1) To consider and vote upon a proposal to approve the Agreement and
Plan of Merger dated as of March 2, 1998, and amended as of June 23, 1998,
by and among Unitrode Corporation ("Unitrode"), BENCHMARQ and Merrimack
Corporation, a wholly owned subsidiary of Unitrode ("Sub") (as amended, the
"Merger Agreement"), and the merger (the "Merger") contemplated thereby,
pursuant to which (i) Sub will be merged with and into BENCHMARQ, with
BENCHMARQ as the surviving entity of the Merger and (ii) each outstanding
share of BENCHMARQ Common Stock, par value $.001 per share, will be
converted into the right to receive one share of Unitrode Common Stock, par
value $.01 per share (and the associated Unitrode Rights, as defined in the
Merger Agreement). The terms of the Merger are described in the
accompanying Amended Joint Proxy Statement-Prospectus; and
(2) To transact such other business incidental to the approval of the
Merger Agreement and the Merger as may properly come before the BENCHMARQ
Special Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on May 14, 1998 as
the record date for the determination of stockholders entitled to receive notice
of and to vote at the BENCHMARQ Special Meeting and at any adjournment thereof.
Your attention is directed to the Amended Joint Proxy Statement-Prospectus
submitted with this Notice.
By Order of the Board of Directors,
/s/ R. Scott Schaefer
R. Scott Schaefer
Chief Financial Officer and Secretary
Dallas, Texas
July 13, 1998
BENCHMARQ STOCKHOLDERS MAY REVOKE ANY PROXY WHICH THEY HAVE PREVIOUSLY
GIVEN BY RETURNING THE ENCLOSED PROXY CARD. ANY PROXY WHICH HAS BEEN PREVIOUSLY
GIVEN WHICH IS NOT REVOKED WILL REMAIN IN EFFECT. BENCHMARQ STOCKHOLDERS MAY
ALSO VOTE IN PERSON AT THE BENCHMARQ SPECIAL MEETING EVEN IF THEY HAVE
PREVIOUSLY RETURNED A PROXY CARD.
<PAGE> 7
UNITRODE CORPORATION
AMENDED PROXY STATEMENT-PROSPECTUS
------------------------
BENCHMARQ MICROELECTRONICS, INC.
AMENDED PROXY STATEMENT
------------------------
AMENDED JOINT PROXY STATEMENT-PROSPECTUS
This Amended Joint Proxy Statement-Prospectus (this "Joint Proxy
Statement-Prospectus") is being furnished to stockholders of Unitrode
Corporation, a Maryland corporation ("Unitrode"), in connection with the
solicitation of proxies by the Board of Directors of Unitrode for use at the
annual meeting of stockholders of Unitrode (the "Unitrode Annual Meeting") held
on Monday, June 29, 1998, which was convened and immediately adjourned until
11:00 a.m., local time, on Wednesday, July 29, 1998. The adjourned session of
the Unitrode Annual Meeting is to be held at Unitrode's offices at 7 Continental
Boulevard, Merrimack, New Hampshire. This Joint Proxy Statement-Prospectus is
also being furnished to stockholders of BENCHMARQ Microelectronics, Inc., a
Delaware corporation ("BENCHMARQ"), in connection with the solicitation of
proxies by the Board of Directors of BENCHMARQ for use at the special meeting of
stockholders of BENCHMARQ (the "BENCHMARQ Special Meeting") held on Monday, June
29, 1998 at 10:00 a.m., local time, at the offices of Winstead Sechrest & Minick
P.C., located at 5400 Renaissance Tower, 1201 Elm Street, Dallas, Texas 75270.
The BENCHMARQ Special Meeting was convened at such time and place and was
immediately adjourned until 10:00 a.m., local time, on Wednesday, July 29, 1998.
The adjourned session of the BENCHMARQ Special Meeting is to be held at the same
location described above.
This Joint Proxy Statement-Prospectus describes the terms of the proposed
merger (the "Merger") of Merrimack Corporation, a Delaware corporation and a
wholly owned subsidiary of Unitrode ("Sub"), with and into BENCHMARQ, pursuant
to the Agreement and Plan of Merger, dated as of March 2, 1998 (the "Original
Merger Agreement"), by and among Unitrode, Sub and BENCHMARQ as amended by the
Amendment to Agreement and Plan of Merger, dated as of June 23, 1998 (the
"Merger Agreement Amendment" and together with the Original Merger Agreement,
the "Merger Agreement"). Prior to the amendment of the Original Merger
Agreement, the Board of Directors of Unitrode had determined, based on
BENCHMARQ's recent results and certain other factors, to withdraw its earlier
recommendation to the stockholders of Unitrode to vote in favor of the issuance
of Unitrode Common Stock in connection with the Merger. Unitrode and BENCHMARQ
subsequently entered into the Merger Agreement Amendment to, among other things,
set the Exchange Ratio (as defined below) at a fixed number as described below.
Upon the terms and subject to the conditions of the Merger Agreement, at
the effective time of the Merger, among other things, (i) each issued and
outstanding share of common stock, par value $.001 per share, of BENCHMARQ
("BENCHMARQ Common Stock") (other than shares to be cancelled in accordance with
clause (ii) below) will be converted into the right to receive one fully paid
and nonassessable share of common stock, par value $.01 per share, of Unitrode
("Unitrode Common Stock") (the "Exchange Ratio"), (ii) all shares of BENCHMARQ
Common Stock held by BENCHMARQ as treasury shares and all shares of BENCHMARQ
Common Stock owned by Unitrode, or by any wholly owned subsidiary of BENCHMARQ
or Unitrode, will be cancelled and retired and shall cease to exist and no stock
of Unitrode or other consideration shall be delivered in exchange therefor and
(iii) Sub will be merged with and into BENCHMARQ, with BENCHMARQ surviving the
Merger as a wholly owned subsidiary of Unitrode. Each share of Unitrode Common
Stock issued in the Merger will include the associated rights (the "Unitrode
Rights") to purchase shares of Series A Junior Participating Preferred Stock,
par value $.01 per share, of Unitrode issued pursuant to the Rights Agreement
between Unitrode and The First National Bank of Boston, dated as of May 2, 1990,
as amended. Cash will be issued in lieu of any fractional share of Unitrode
Common Stock.
(continued on next page)
------------------------
SEE "RISK FACTORS" ON PAGE 16 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED CAREFULLY BY STOCKHOLDERS OF BENCHMARQ IN EVALUATING THE
MERGER.
This Amended Joint Proxy Statement-Prospectus and the accompanying forms of
proxy are first being sent to stockholders of Unitrode and stockholders of
BENCHMARQ on or about July 14, 1998.
THE SECURITIES TO WHICH THIS AMENDED JOINT PROXY STATEMENT-PROSPECTUS RELATES
HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS AMENDED JOINT PROXY STATEMENT-PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Amended Joint Proxy Statement-Prospectus is July 13, 1998.
<PAGE> 8
At the Unitrode Annual Meeting, stockholders of Unitrode will be asked to
consider and vote upon a proposal to approve the issuance of up to 8,582,047
shares of Unitrode Common Stock in connection with the Merger (such number of
shares or any portion thereof are referred to herein as the "Merger Shares").
Approval of such issuance by the stockholders of Unitrode is required by the
rules of The New York Stock Exchange, Inc. (the "NYSE") because shares of
Unitrode Common Stock are traded on the NYSE and the number of shares proposed
to be issued in connection with the Merger exceeds 20% of the issued and
outstanding shares of Unitrode Common Stock. Stockholders of Unitrode are not
voting upon approval of the Merger Agreement because such approval is not
required under Maryland law or the rules of the NYSE. Notwithstanding the
foregoing, the proposal to approve the issuance of the Merger Shares may be
viewed as substantially analogous to a proposal to approve the Merger to the
extent that such approval of the issuance of the Merger Shares is a condition to
the obligations of each of Unitrode and BENCHMARQ to effect the Merger. Unitrode
has not yet made any determination as to whether it would seek to estop any
stockholder from challenging the Merger based upon that stockholder's vote to
approve the issuance of the Merger Shares, but no assurances can be made that
Unitrode would not seek to so estop a stockholder from challenging the Merger.
In addition to the proposal regarding the issuance of the Merger Shares, at the
Unitrode Annual Meeting, stockholders of Unitrode will be asked to consider and
vote upon (i) the election of directors and (ii) the amendment of the Unitrode
Corporation 1992 Employee Stock Option Plan to increase the number of shares
that may be issued thereunder from 6,000,000 to 7,000,000.
At the BENCHMARQ Special Meeting, stockholders of BENCHMARQ will be asked
to consider and vote upon a proposal to approve the Merger Agreement and the
transactions contemplated thereby.
In the event that the stockholders of BENCHMARQ approve the Merger
Agreement and the transactions contemplated thereby and the stockholders of
Unitrode approve the issuance of the Merger Shares, Unitrode and BENCHMARQ
currently anticipate that the closing of the transactions contemplated by the
Merger Agreement will take place within two business days following the Unitrode
Annual Meeting and the BENCHMARQ Special Meeting, provided the other conditions
to closing set forth in the Merger Agreement have been satisfied or waived at or
prior to such time.
This Joint Proxy Statement-Prospectus also serves as a prospectus of
Unitrode under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to certain of the Merger Shares. Unitrode has applied to have the
Merger Shares listed on the NYSE.
(ii)
<PAGE> 9
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
JOINT PROXY STATEMENT-PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS JOINT
PROXY STATEMENT-PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO PURCHASE, THE SECURITIES OFFERED BY THIS JOINT PROXY
STATEMENT-PROSPECTUS, OR THE SOLICITATION OF A PROXY, IN ANY JURISDICTION TO OR
FROM ANY PERSON TO WHOM OR FROM WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER,
SOLICITATION OF AN OFFER OR PROXY SOLICITATION IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS JOINT PROXY STATEMENT-PROSPECTUS NOR ANY DISTRIBUTION OF
SECURITIES PURSUANT TO THIS JOINT PROXY STATEMENT-PROSPECTUS SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
INFORMATION SET FORTH OR INCORPORATED HEREIN BY REFERENCE OR IN THE AFFAIRS OF
UNITRODE OR BENCHMARQ SINCE THE DATE OF THIS JOINT PROXY STATEMENT-PROSPECTUS.
THE INFORMATION CONTAINED HEREIN WITH RESPECT TO UNITRODE AND ITS SUBSIDIARIES
HAS BEEN PROVIDED BY UNITRODE AND THE INFORMATION CONTAINED HEREIN WITH RESPECT
TO BENCHMARQ HAS BEEN PROVIDED BY BENCHMARQ.
AVAILABLE INFORMATION
Unitrode and BENCHMARQ are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, file reports, proxy statements and other information with
the Securities and Exchange Commission (the "SEC"). Copies of such reports,
proxy statements and other information may be inspected and copied at the public
reference facilities maintained by the SEC at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549 and at the following Regional Offices
of the SEC: Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661, and Seven World Trade Center, 13th Floor, New York, New York
10048. Copies of such materials can also be obtained at prescribed rates from
the Public Reference Section of the SEC, 450 Fifth Street, N.W., Washington,
D.C. 20549. The SEC maintains a web site that contains reports, proxy statements
and other information regarding Unitrode and BENCHMARQ. The address of the SEC
web site is http://www.sec.gov. Unitrode Common Stock is traded on the NYSE and
BENCHMARQ Common Stock is traded on the Nasdaq National Market. Reports, proxy
statements and other information regarding Unitrode may be inspected at the
offices of the NYSE, 20 Broad Street, New York, New York 10005. Reports, proxy
statements and other information concerning BENCHMARQ may be inspected at the
offices of the NASD, Reports Section, 1735 K Street, N.W., Washington, D.C.
20006.
Unitrode has filed with the SEC a registration statement on Form S-4
(together with all amendments, supplements and exhibits thereto, the
"Registration Statement") under the Securities Act with respect to the Unitrode
Common Stock to be issued pursuant to the Merger. This Joint Proxy
Statement-Prospectus constitutes the prospectus of Unitrode filed as part of the
Registration Statement. The Joint Proxy Statement-Prospectus does not contain
all of the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the SEC. The
Registration Statement is available for inspection and copying as set forth
above.
INCORPORATION BY REFERENCE
THIS JOINT PROXY STATEMENT-PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE
WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE
AVAILABLE UPON REQUEST FROM UNITRODE AND BENCHMARQ. UNITRODE AND BENCHMARQ
HEREBY UNDERTAKE TO PROVIDE WITHOUT CHARGE TO EACH PERSON, INCLUDING ANY
BENEFICIAL OWNER OF UNITRODE COMMON STOCK OR BENCHMARQ COMMON STOCK,
RESPECTIVELY, TO WHOM A COPY OF THIS JOINT PROXY
(iii)
<PAGE> 10
STATEMENT-PROSPECTUS HAS BEEN DELIVERED, UPON THE WRITTEN OR ORAL REQUEST OF
SUCH PERSON, A COPY OF ANY AND ALL OF THE INFORMATION THAT HAS BEEN INCORPORATED
BY REFERENCE IN THIS JOINT PROXY STATEMENT-PROSPECTUS (NOT INCLUDING EXHIBITS TO
THE INFORMATION UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED HEREIN BY
REFERENCE). REQUESTS FOR SUCH DOCUMENTS SHOULD BE DIRECTED, IN THE CASE OF
DOCUMENTS RELATING TO UNITRODE, TO UNITRODE CORPORATION, 7 CONTINENTAL
BOULEVARD, MERRIMACK, NEW HAMPSHIRE 03054, ATTENTION: SECRETARY (TELEPHONE
NUMBER (603) 424-2410) AND, IN THE CASE OF DOCUMENTS RELATING TO BENCHMARQ, TO
BENCHMARQ MICROELECTRONICS, INC., 17919 WATERVIEW PARKWAY, DALLAS, TEXAS 75252,
ATTENTION: SECRETARY (TELEPHONE NUMBER (972) 437-9195). IN ORDER TO ENSURE
TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY WEDNESDAY, JULY
22, 1998.
The following documents, which have been filed with the SEC, are hereby
incorporated herein by reference:
(a) Unitrode's Annual Report on Form 10-K for the fiscal year ended
January 31, 1998 (SEC file number 001-05609 and filing date of April 30,
1998);
(b) Unitrode's Quarterly Report on Form 10-Q for the quarterly period
ended May 2, 1998 (SEC file number 001-05609 and filing date of June 16,
1998);
(c) Unitrode's Current Report on Form 8-K dated June 23, 1998 (SEC
file number 001-05609 and filing date of June 24, 1998) as amended by
Unitrode's Form 8-K/A dated June 23, 1998 (SEC file number 001-05609 and
filing date of June 25, 1998);
(d) Unitrode's Current Report on Form 8-K dated June 22, 1998 (SEC
file number 001-05609 and filing date of June 22, 1998);
(e) Unitrode's Current Report on Form 8-K dated June 15, 1998 (SEC
file number 001-05609 and filing date of June 15, 1998);
(f) Unitrode's Current Report on Form 8-K dated April 7, 1998 (SEC
file number 001-05609 and filing date of April 8, 1998);
(g) Unitrode's Current Report on Form 8-K dated February 28, 1998 (SEC
file number 001-05609 and filing date of March 4, 1998);
(h) the description of Unitrode Common Stock set forth in Unitrode's
Registration Statement on Form S-8 dated September 13, 1995 (SEC file
number 33-62685 and filing date of September 13, 1995) filed pursuant to
Section 12(g) of the Exchange Act, including any amendment or reports filed
for the purpose of updating such description;
(i) BENCHMARQ's Annual Report on Form 10-K for the year ended December
31, 1997 (SEC file number 000-27232 and filing date of March 31, 1998), as
amended by BENCHMARQ's Form 10-K/A (SEC file number 000-27232 and filing
date of April 24, 1998);
(j) BENCHMARQ's Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 1998 (SEC file number 000-27232 and filing date of May 14,
1998);
(k) BENCHMARQ's Current Report on Form 8-K dated March 2, 1998 (SEC
file number 000-27232 and filing date of March 3, 1998);
(l) BENCHMARQ's Current Report on Form 8-K dated June 24, 1998 (SEC
file number 000-27232 and filing date of June 24, 1998);
(m) BENCHMARQ's Current Report on Form 8-K dated June 22, 1998 (SEC
file number 000-27232 and filing date of June 23, 1998);
(n) BENCHMARQ's Current Report on Form 8-K dated June 15, 1998 (SEC
file number 000-27232 and filing date of June 15, 1998);
(o) the description of BENCHMARQ Common Stock set forth in BENCHMARQ's
Registration Statement on Form S-1, Registration No. 33-96896, filed
September 13, 1995 (SEC file number
(iv)
<PAGE> 11
33-96896), the Amendment No. 1 to Form S-1, filed October 6, 1995 (SEC file
number 33-96896), the Amendment No. 2 to Form S-1, filed November 8, 1995
(SEC file number 33-96896) and Post-Effective Amendment No. 1 to Form S-1,
filed January 11, 1996 (SEC file number 33-96896), and any other amendment
or report filed for the purpose of updating any such description; and
(p) All other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act by Unitrode since January 31, 1998 or by BENCHMARQ since
December 31, 1997.
All documents filed by Unitrode or BENCHMARQ pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to the
date of the Unitrode Annual Meeting, in the case of Unitrode, or the BENCHMARQ
Special Meeting, in the case of BENCHMARQ, shall be deemed to be incorporated
herein by reference and to be a part hereof from the date of filing of such
documents.
Any statement contained in a document incorporated or deemed to be
incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this Joint Proxy Statement-Prospectus to the extent that a
statement contained herein or any other subsequently filed document that is
deemed to be incorporated herein by reference modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Joint Proxy
Statement-Prospectus.
STATEMENTS REGARDING FORWARD-LOOKING INFORMATION
THIS JOINT PROXY STATEMENT-PROSPECTUS CONTAINS CERTAIN FORWARD-LOOKING
STATEMENTS WITH RESPECT TO THE FINANCIAL CONDITION, RESULTS OF OPERATIONS AND
BUSINESS OF UNITRODE AND BENCHMARQ AND THE EXPECTED IMPACT OF THE MERGER ON
UNITRODE'S FINANCIAL PERFORMANCE (SEE "RISK FACTORS -- RECENT DEVELOPMENTS;"
"-- DEPENDENCE ON KEY CUSTOMERS;" "-- FACTORS AFFECTING FUTURE RESULTS;"
"-- INTEGRATION OF ACQUIRED BUSINESSES;" "THE MERGER -- UNITRODE'S REASONS FOR
THE MERGER; RECOMMENDATION OF THE UNITRODE BOARD;" "-- OPINION OF UNITRODE'S
FINANCIAL ADVISOR;" " -- BENCHMARQ'S REASONS FOR THE MERGER; RECOMMENDATION OF
THE BENCHMARQ BOARD;" AND "--OPINION OF BENCHMARQ'S FINANCIAL ADVISOR"). SUCH
FORWARD-LOOKING STATEMENTS INVOLVE CERTAIN RISKS AND UNCERTAINTIES THAT COULD
CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY SUCH
FORWARD-LOOKING STATEMENTS. SUCH RISKS AND UNCERTAINTIES INCLUDE, WITHOUT
LIMITATION: (1) THE POSSIBILITY THAT TECHNOLOGICAL COMPATIBILITY AND RELATED
BENEFITS FROM THE MERGER CANNOT BE FULLY REALIZED; (2) THE POSSIBILITY THAT
COSTS OR DIFFICULTIES RELATED TO THE INTEGRATION OF THE BUSINESSES OF UNITRODE
AND BENCHMARQ ARE GREATER THAN EXPECTED; (3) DEPENDENCE OF UNITRODE AND
BENCHMARQ ON THE TIMELY DEVELOPMENT, INTRODUCTION AND CUSTOMER ACCEPTANCE OF NEW
PRODUCTS; (4) THE IMPACT OF COMPETITION ON REVENUES AND MARGINS; (5) RAPIDLY
CHANGING TECHNOLOGY AND SHIFTING DEMAND REQUIREMENTS; (6) COSTS INCURRED IN
CONNECTION WITH INTELLECTUAL PROPERTY CLAIMS AND ENVIRONMENTAL CLAIMS; AND (7)
OTHER RISKS AND UNCERTAINTIES, INCLUDING DEMAND FOR SEMICONDUCTORS GENERALLY AND
THE SPECIFIC DEMAND FOR UNITRODE'S OR BENCHMARQ'S PRODUCTS, THE TIMELY
INTRODUCTION OF NEW PROCESSES AND PRODUCTS, THE QUALIFICATION AND START-UP OF
UNITRODE'S NEW WAFER FABRICATION FACILITY, THE IMPACT OF COMPETITIVE PRODUCTS
AND PRICES, UNITRODE'S EXITING OF CERTAIN ASPECTS OF THE MANUFACTURE OF CUSTOM
PARTS IN THE HARD DISK DRIVE MARKET AND SUCH OTHER RISK FACTORS AS MAY BE
DETAILED FROM TIME TO TIME IN UNITRODE'S AND/OR BENCHMARQ'S PUBLIC ANNOUNCEMENTS
AND COMMISSION FILINGS.
(v)
<PAGE> 12
TABLE OF CONTENTS
<TABLE>
<S> <C>
AVAILABLE INFORMATION....................................... iii
INCORPORATION BY REFERENCE.................................. iii
STATEMENTS REGARDING FORWARD-LOOKING INFORMATION............ v
TABLE OF CONTENTS........................................... vi
SUMMARY..................................................... 1
The Companies............................................. 1
The Unitrode Annual Meeting............................... 2
The BENCHMARQ Special Meeting............................. 3
The Merger................................................ 4
Selected Consolidated Historical and Unaudited Pro Forma
Combined Financial Data................................ 10
RISK FACTORS................................................ 16
Fixed Exchange Ratio...................................... 16
Recent Developments....................................... 16
Competition............................................... 17
Dependence on Key Customers............................... 17
Factors Affecting Future Results.......................... 18
Integration of Acquired Businesses........................ 19
Protection of Proprietary Rights; Risk of Infringement
Claims................................................. 19
Dependence on Major Suppliers............................. 20
Impact of the Year 2000 Issue............................. 20
THE UNITRODE ANNUAL MEETING................................. 21
Date, Time and Place...................................... 21
Purpose of the Unitrode Annual Meeting.................... 21
Unitrode Record Date...................................... 21
Required Vote............................................. 21
Proxies................................................... 22
Availability of Principal Accountants..................... 23
THE BENCHMARQ SPECIAL MEETING............................... 23
Date, Time and Place...................................... 23
Purpose................................................... 23
BENCHMARQ Record Date..................................... 23
Required Vote............................................. 23
Proxies................................................... 24
Availability of Independent Accountants................... 25
THE MERGER.................................................. 26
Background of the Merger.................................. 26
Unitrode's Reasons for the Merger; Recommendation of the
Unitrode Board......................................... 30
Opinion of Unitrode's Financial Advisor................... 31
BENCHMARQ's Reasons for the Merger; Recommendation of the
BENCHMARQ Board........................................ 36
Opinion of BENCHMARQ's Financial Advisor.................. 38
Closing; Effective Time................................... 41
Form of the Merger; Merger Consideration.................. 42
Exchange of Stock Certificates............................ 42
Interests of Certain Persons in the Merger................ 43
BENCHMARQ Representation on the Unitrode Board............ 44
Certain United States Federal Income Tax Consequences of
the Merger............................................. 44
Accounting Treatment...................................... 46
Regulatory Filings and Approvals.......................... 46
Restrictions on Sale of Shares by Affiliates.............. 47
</TABLE>
(vi)
<PAGE> 13
<TABLE>
<S> <C>
Dissenters' Rights........................................ 47
Delisting and Deregistration of Shares of BENCHMARQ Common
Stock After the Merger................................. 47
The Merger Agreement...................................... 47
RELATED AGREEMENTS.......................................... 55
Stock Option Agreement.................................... 55
Voting Agreement.......................................... 56
Employment Agreements..................................... 57
INFORMATION CONCERNING UNITRODE AND MERRIMACK............... 57
INFORMATION CONCERNING BENCHMARQ............................ 57
COMPARATIVE PER SHARE MARKET PRICE DATA..................... 59
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL
STATEMENTS................................................ 60
COMPARISON OF RIGHTS OF HOLDERS OF UNITRODE COMMON STOCK AND
HOLDERS OF BENCHMARQ COMMON STOCK......................... 68
Introduction.............................................. 68
Authorized Capital Stock.................................. 68
Board or Stockholder Approved Preferred Stock............. 68
Voting Rights............................................. 69
Number of Directors....................................... 69
Election of Board of Directors............................ 70
Executive Committees...................................... 71
Vote on Merger, Consolidation or Sale of Substantially All
Assets................................................. 71
Special Meeting of Stockholders........................... 71
Stockholder Action by Written Consent..................... 71
Amendment of Certificate or Articles of Incorporation..... 72
Amendment of Bylaws....................................... 72
Liability and Indemnification of Officers and Directors... 73
Removal of Officers and Directors......................... 73
Payment of Dividends...................................... 74
Anti-Takeover Protection.................................. 74
Dissenters' Rights........................................ 76
Rights Plans.............................................. 77
ELECTION OF UNITRODE DIRECTORS.............................. 78
UNITRODE BOARD MEETINGS AND COMMITTEES OF THE UNITRODE
BOARD..................................................... 80
UNITRODE DIRECTORS' FEES AND OTHER REMUNERATION............. 80
PRINCIPAL HOLDERS OF UNITRODE VOTING SECURITIES............. 81
EXECUTIVE OFFICERS OF UNITRODE.............................. 82
SECURITIES OWNERSHIP OF DIRECTORS AND MANAGEMENT............ 83
UNITRODE BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION.............................................. 84
Introduction.............................................. 84
Compensation Policy....................................... 84
Relationship of Compensation to Unitrode Performance...... 84
Mr. Gable's and Mr. Richardson's Compensation for the
Fiscal Year Ended January 31, 1998..................... 85
EXECUTIVE COMPENSATION...................................... 87
Summary Compensation...................................... 87
Option Grants............................................. 87
Option Exercises and Year-End Values...................... 88
</TABLE>
(vii)
<PAGE> 14
<TABLE>
<S> <C>
AMENDMENT OF THE UNITRODE CORPORATION 1992 EMPLOYEE STOCK
OPTION PLAN............................................... 89
UNITRODE PERFORMANCE........................................ 92
CHANGE OF CONTROL SEVERANCE AGREEMENTS...................... 92
INDEPENDENT ACCOUNTANTS OF UNITRODE......................... 93
ADVANCE NOTICE BYLAW........................................ 93
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
OF 1934................................................... 93
LEGAL OPINION............................................... 93
EXPERTS..................................................... 93
STOCKHOLDER PROPOSALS FOR THE 1999 ANNUAL MEETING OF
UNITRODE STOCKHOLDERS..................................... 94
STOCKHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING OF
BENCHMARQ STOCKHOLDERS.................................... 94
MANAGEMENT AND ADDITIONAL INFORMATION....................... 94
APPENDIX A -- Agreement and Plan of Merger dated as of March
2, 1998 by and among Unitrode Corporation, Merrimack
Corporation and BENCHMARQ Microelectronics, Inc.
APPENDIX B -- Amendment to Agreement and Plan of Merger
dated as of June 23, 1998 by and among Unitrode
Corporation, Merrimack Corporation and BENCHMARQ
Microelectronics, Inc.
APPENDIX C -- Opinion of Adams, Harkness & Hill, Inc.
APPENDIX D -- Opinion of Prudential Securities Incorporated
APPENDIX E -- Stock Option Agreement dated as of March 2,
1998 by and among Unitrode Corporation and BENCHMARQ
Microelectronics, Inc.
APPENDIX F -- Amendment to Stock Option Agreement dated as
of June 23, 1998 by and among Unitrode Corporation and
BENCHMARQ Microelectronics, Inc.
APPENDIX G -- Voting Agreement dated as of March 2, 1998 by
and among Unitrode Corporation, Alan R. Schuele, Derrell
C. Coker, L.J. Sevin, Harvey B. Cash, Dietrich Erdmann,
Jack Kilby and Charles H. Phipps
APPENDIX H -- Amendment to Voting Agreement dated as of June
23, 1998 by and among Unitrode Corporation, Alan R.
Schuele, Derrell C. Coker, L.J. Sevin, Harvey B. Cash,
Dietrich Erdmann, Jack Kilby and Charles H. Phipps
</TABLE>
(viii)
<PAGE> 15
SUMMARY
The following summary is not intended to be complete and is qualified in
its entirety by more detailed information appearing elsewhere in this Amended
Joint Proxy Statement-Prospectus (this "Joint Proxy Statement-Prospectus"),
including the appendices hereto, or in the documents incorporated herein by
reference. Stockholders of Unitrode Corporation ("Unitrode") and stockholders of
BENCHMARQ Microelectronics, Inc. ("BENCHMARQ") are each urged to read carefully
this Joint Proxy Statement-Prospectus, including the appendices hereto, and the
documents incorporated herein by reference in their entirety. This Joint Proxy
Statement-Prospectus replaces in its entirety the Joint Proxy
Statement-Prospectus dated May 28, 1998, previously delivered to stockholders of
Unitrode and BENCHMARQ (the "May Joint Proxy Statement-Prospectus").
THE COMPANIES
Unitrode Corporation. Unitrode was founded in 1960 and is incorporated
under the laws of Maryland. Since its inception, Unitrode and its subsidiaries
have designed, manufactured, marketed, and sold electronic components and
sub-systems. After divesting various businesses from 1989 through 1994, Unitrode
is now focused on the analog/linear and mixed-signal integrated circuits
business. Unitrode and its subsidiaries operate within a single industry
segment, the manufacture and sale of electronic components, and have various
classes of products within that one segment.
Unitrode currently designs, manufactures, markets and sells a range of
analog/linear and mixed-signal integrated circuits ("ICs"). This business was
founded in 1981. Unitrode's products are principally proprietary and are used in
a variety of applications in electronic data processing/computer,
telecommunications, industrial control and instrumentation, defense/aerospace
and automotive markets. For the most part, the ICs are used either to control
switching power supplies and small electronic motors, or as high-speed interface
and communication circuits between various pieces of electronic equipment.
Merrimack Corporation, a Delaware corporation and wholly owned subsidiary
of Unitrode ("Sub"), was incorporated in February 1998 for purposes of the
transactions contemplated by the Merger Agreement (as defined below) and has
engaged in no other business.
The principal executive offices of Unitrode are located at 7 Continental
Boulevard, Merrimack, New Hampshire 03054, and its telephone number is (603)
424-2410.
BENCHMARQ Microelectronics, Inc. BENCHMARQ, a Delaware corporation
incorporated in 1989, is engaged principally in the design, manufacture, and
marketing of ICs and electronic modules for portable power-sensitive electronic
applications. BENCHMARQ's principal focus is on the development and sale of
battery management products, on which it is concentrating the majority of its
research and development activities. BENCHMARQ's battery management ICs and
modules (collectively, "Battery Management Products") control charging,
conditioning and monitoring of rechargeable batteries, principally for portable
electronic systems, including personal computers, cellular telephones,
camcorders, power tools, personal care devices, electronic games and audio
devices. BENCHMARQ also produces a family of battery-backed static random access
memory ("NVSRAM") modules and controller ICs (collectively, "NVSRAM Products")
that provide non-volatile memory to devices such as telecommunications
equipment, including network routers, hubs and memory boards. Real time clock
("RTC") ICs and battery-backed RTC modules (collectively, "RTC Products") that
provide non-volatile time and date functions to various computers or electronic
systems comprise BENCHMARQ's third product group. (NVSRAM Products and RTC
Products are collectively referred to as "Integrated Battery Products".)
During each of the years 1992 through 1996, BENCHMARQ derived the majority
of its revenues from sales of Integrated Battery Products. In 1997, BENCHMARQ
generated the majority of its revenue from Battery Management Products, its
strategic focus. Although BENCHMARQ expects a material portion of its total net
revenues to come from sales of Integrated Battery Products through at least
1998, long-term growth is not anticipated from these product groups. BENCHMARQ
operates in a single industry segment.
1
<PAGE> 16
The mailing address of the principal executive offices of BENCHMARQ is
17919 Waterview Parkway, Dallas, Texas 75252, and its telephone number is (972)
437-9195.
THE UNITRODE ANNUAL MEETING
Date, Time and Place. The annual meeting of stockholders of Unitrode (the
"Unitrode Annual Meeting") held on Monday, June 29, 1998 was convened and
immediately adjourned until 11:00 a.m., local time, on Wednesday, July 29, 1998.
The adjourned session of the Unitrode Annual Meeting is to be held at Unitrode's
offices at 7 Continental Boulevard, Merrimack, New Hampshire.
Purpose. At the Unitrode Annual Meeting, the stockholders of Unitrode will
be asked to consider and vote upon a proposal to approve the issuance of up to
8,582,047 shares of common stock, par value $.01 per share, of Unitrode
("Unitrode Common Stock") (such number of shares or any portion thereof are
referred to herein as the "Merger Shares") in connection with the Merger (the
"Merger") of Sub with and into BENCHMARQ pursuant to the Agreement and Plan of
Merger, dated as of March 2, 1998, by and among Unitrode, Sub and BENCHMARQ (the
"Original Merger Agreement"), as amended by the Amendment to the Agreement and
Plan of Merger, dated as of June 23, 1998 (the "Merger Agreement Amendment" and
together with the Original Merger Agreement, the "Merger Agreement"). A copy of
the Original Merger Agreement is attached hereto as Appendix A and a copy of the
Merger Agreement Amendment is attached hereto as Appendix B. Approval of such
issuance is required by the rules of The New York Stock Exchange, Inc. (the
"NYSE") because shares of Unitrode Common Stock are traded on the NYSE and the
number of shares proposed to be issued in connection with the Merger exceeds 20%
of the issued and outstanding shares of Unitrode Common Stock. The proposal to
approve the issuance of the Merger Shares may be viewed as substantially
analogous to a proposal to approve the Merger to the extent that the approval by
the stockholders of Unitrode of the issuance of the Merger Shares is a condition
to the obligations of each of Unitrode and BENCHMARQ to effect the Merger.
Unitrode has not yet made any determination as to whether it would seek to estop
any stockholder from challenging the Merger based upon that stockholder's vote
to approve the issuance of the Merger Shares, but no assurances can be made that
Unitrode would not seek to so estop a stockholder from challenging the Merger.
In addition to the proposal regarding the issuance of the Merger Shares, at
the Unitrode Annual Meeting, stockholders of Unitrode will be asked to consider
and vote upon: (i) the election of directors; and (ii) the amendment of the
Unitrode Corporation 1992 Employee Stock Option Plan (the "1992 Unitrode Plan")
to increase the number of shares to be issued thereunder from 6,000,000 to
7,000,000.
Unitrode Record Date. The Board of Directors of Unitrode (the "Unitrode
Board") has fixed the close of business on April 30, 1998 as the record date
(the "Unitrode Record Date") for the determination of the holders of Unitrode
Common Stock entitled to notice of and to vote at the Unitrode Annual Meeting.
As of the Unitrode Record Date, there were issued and outstanding 24,408,257
shares of Unitrode Common Stock entitled to vote at the Unitrode Annual Meeting
held by approximately 516 holders of record.
Required Vote. The representation in person or by proxy of stockholders
entitled to cast at least a majority of the votes represented by the shares of
Unitrode Common Stock issued and outstanding on the Unitrode Record Date is
necessary to establish a quorum for the transaction of business at the Unitrode
Annual Meeting. Abstentions and broker non-votes will be counted as present or
represented for purposes of determining whether a quorum is present on any
matters. The approval of the issuance of the Merger Shares requires: (i) the
affirmative vote of the holders of a majority of the shares of Unitrode Common
Stock voted at the Unitrode Annual Meeting; and (ii) that at least a majority of
shares of Unitrode Common Stock entitled to be voted as of the Unitrode Record
Date be voted at the Unitrode Annual Meeting. The election of directors to be
voted upon at the Unitrode Annual Meeting requires the affirmative vote of the
holders of a majority of the shares of Unitrode Common Stock entitled to be
voted at the Unitrode Annual Meeting. The amendment of the 1992 Unitrode Plan
requires the affirmative vote of the holders of a majority of the shares voted
at the Unitrode Annual Meeting. Abstentions will have the effect of negative
votes on all matters to be voted on by the stockholders of Unitrode, and
failures to vote and broker non-votes will have the effect of negative votes on
the election of directors and will have no effect on all other matters to be
voted on by
2
<PAGE> 17
stockholders of Unitrode. However, failures to vote and broker non-votes will
not be considered votes cast for purposes of determining whether the holders of
at least a majority of the outstanding shares of Unitrode Common Stock entitled
to be voted as of the Unitrode Record Date cast votes on the proposal regarding
the issuance of the Merger Shares.
Each holder of record of Unitrode Common Stock on the Unitrode Record Date
is entitled to cast one vote per share of Unitrode Common Stock held by such
stockholder on each proposal to be presented to stockholders of Unitrode at the
Unitrode Annual Meeting.
As of the Unitrode Record Date, directors and executive officers of
Unitrode and their affiliates had the right to cast votes representing
approximately 2% of all votes represented by the issued and outstanding shares
of Unitrode Common Stock. Such persons have indicated to Unitrode that they
intend to cast all of such votes in favor of each of the proposals listed on the
proxy.
Proxies. All shares of Unitrode Common Stock represented by properly
executed proxies received prior to or at the Unitrode Annual Meeting will,
unless such proxies shall have been revoked, be voted in accordance with the
instructions indicated therein. If no instructions are indicated on a properly
executed proxy, the shares will be voted FOR approval of each of the proposals
listed on such proxy. Unitrode stockholders may revoke any proxy which they have
previously given by returning the enclosed proxy card. Any proxy which has been
previously given which is not revoked will remain in effect. Unitrode
stockholders may also vote in person at the Unitrode Annual Meeting even if they
have previously returned a proxy card. See "The Unitrode Annual
Meeting -- Proxies."
THE BENCHMARQ SPECIAL MEETING
Date, Time and Place. The special meeting of BENCHMARQ stockholders (the
"BENCHMARQ Special Meeting") held on Monday, June 29, 1998 at 10:00 a.m., local
time, at the offices of Winstead Sechrest & Minick P.C., 5400 Renaissance Tower,
1201 Elm Street, Dallas, Texas 75270 was convened and immediately adjourned
until 10:00 a.m., local time, on Wednesday, July 29, 1998, such adjourned
session of the BENCHMARQ Special Meeting to be held at the same location
described above.
Purpose. At the BENCHMARQ Special Meeting, the holders of common stock,
par value $.001 per share, of BENCHMARQ ("BENCHMARQ Common Stock") will be asked
to consider and vote upon a proposal to approve the Merger Agreement and the
transactions contemplated thereby, including the Merger. Upon the terms and
subject to the conditions of the Merger Agreement, at the effective time of the
Merger (the "Effective Time"), among other things: (i) each issued and
outstanding share of BENCHMARQ Common Stock (other than shares to be cancelled
in accordance with clause (ii) below) will be converted into the right to
receive one fully paid and nonassessable share of Unitrode Common Stock (the
"Exchange Ratio"); (ii) all shares of BENCHMARQ Common Stock that are held by
BENCHMARQ as treasury shares and all shares of BENCHMARQ Common Stock owned by
Unitrode, or any wholly owned subsidiary of BENCHMARQ or Unitrode, will be
cancelled and retired and shall cease to exist and no stock of Unitrode or other
consideration shall be delivered in exchange therefor; and (iii) Sub will be
merged with and into BENCHMARQ, with BENCHMARQ surviving the Merger as a wholly
owned subsidiary of Unitrode. Each share of Unitrode Common Stock issued in the
Merger will include the associated rights (the "Unitrode Rights") to purchase
shares of Series A Junior Participating Preferred Stock, par value $.01 per
share, of Unitrode ("Series A Preferred Stock") issued pursuant to the Rights
Agreement between Unitrode and the First National Bank of Boston, dated as of
May 7, 1990, as amended (the "Unitrode Rights Agreement"). Cash will be issued
in lieu of fractional shares of Unitrode Common Stock.
BENCHMARQ Record Date. The Board of Directors of BENCHMARQ (the "BENCHMARQ
Board") has fixed the close of business on May 14, 1998 as the record date (the
"BENCHMARQ Record Date") for the determination of the holders of BENCHMARQ
Common Stock entitled to notice of and to vote at the BENCHMARQ Special Meeting.
On the BENCHMARQ Record Date, there were 7,118,253 shares of BENCHMARQ Common
Stock outstanding and held by approximately 76 holders of record.
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<PAGE> 18
Required Vote. A majority of the outstanding shares of BENCHMARQ Common
Stock as of the BENCHMARQ Record Date must be present, either in person or by
proxy, to constitute a quorum at the BENCHMARQ Special Meeting. Under the
Delaware General Corporation Law (the "DGCL"), the affirmative vote of at least
a majority of the BENCHMARQ Common Stock issued and outstanding as of the
BENCHMARQ Record Date is required to approve the Merger Agreement and the
Merger.
If an executed proxy is returned and the stockholder has abstained from
voting on approval of the Merger Agreement, the BENCHMARQ Common Stock
represented by such proxy will be considered present at the BENCHMARQ Special
Meeting for purposes of determining a quorum and for purposes of calculating the
vote, but will not be considered to have been voted in favor of approval of the
Merger Agreement. Because approval of the Merger Agreement requires the
affirmative vote of at least a majority of the BENCHMARQ Common Stock issued and
outstanding as of the BENCHMARQ Record Date, abstentions, failures to vote and
broker non-votes will have the same effect as a vote against approval of the
Merger Agreement.
As of the BENCHMARQ Record Date, directors and executive officers of
BENCHMARQ and their affiliates had the right to vote approximately 21.9% of all
issued and outstanding shares of BENCHMARQ Common Stock. L.J. Sevin, Jack S.
Kilby, Derrell C. Coker, Dietrich Erdmann, Harvey B. Cash, Charles H. Phipps and
Alan R. Schuele, each of whom is a director of BENCHMARQ (the "Voting Agreement
Stockholders"), and Unitrode entered into a Voting Agreement, dated as of March
2, 1998 (the "Original Voting Agreement"), as amended by the Amendment to Voting
Agreement, dated as of June 23, 1998 (the "Voting Agreement Amendment" and
together with the Original Voting Agreement, the "Voting Agreement"), pursuant
to which the Voting Agreement Stockholders have agreed, subject to the terms and
conditions of the Voting Agreement, to vote the 1,463,609 shares of BENCHMARQ
Common Stock beneficially owned by them (representing approximately 20.7% of the
issued and outstanding shares of BENCHMARQ Common Stock as of the BENCHMARQ
Record Date) in favor of approval of the Merger Agreement and the Merger. The
Original Voting Agreement is attached hereto as Appendix G and the Voting
Agreement Amendment is attached hereto as Appendix H. Each holder of record of
shares of BENCHMARQ Common Stock on the BENCHMARQ Record Date is entitled to one
vote per share of BENCHMARQ Common Stock held by such stockholder on each
proposal to be presented to stockholders at the BENCHMARQ Special Meeting.
Proxies. All shares of BENCHMARQ Common Stock represented by properly
executed proxies received prior to or at the BENCHMARQ Special Meeting and not
revoked will be voted in accordance with the instructions indicated in such
proxies. Properly executed proxies that do not contain voting instructions will
be voted FOR approval of the Merger Agreement. Stockholders are urged to mark
the box on the proxy to indicate how their BENCHMARQ Common Stock is to be
voted. Stockholders may change their votes by, among other ways, granting a
subsequent proxy and delivering it to BENCHMARQ or its proxy solicitor either by
mail or in person and may revoke their proxy by notice thereof to BENCHMARQ or
its proxy solicitor either by mail or in person. See "The BENCHMARQ Special
Meeting -- Proxies." BENCHMARQ stockholders may revoke any proxy which they have
previously given by returning the enclosed proxy card. Any proxy which has been
previously given which is not revoked will remain in effect. BENCHMARQ
stockholders may also vote in person at the BENCHMARQ Special Meeting even if
they have previously returned a proxy card.
BENCHMARQ STOCKHOLDERS SHOULD NOT SEND IN ANY STOCK CERTIFICATES WITH THEIR
PROXIES. A LETTER OF TRANSMITTAL WITH INSTRUCTIONS FOR THE SURRENDER OF STOCK
CERTIFICATES REPRESENTING BENCHMARQ COMMON STOCK WILL BE MAILED AS SOON AS
PRACTICABLE AFTER THE EFFECTIVE TIME.
THE MERGER
Closing; Effective Time. The closing of the transactions contemplated by
the Merger Agreement (the "Closing") will take place on the second business day
following the date on which each of certain conditions to the Merger set forth
in the Merger Agreement is satisfied or waived, or on such other date and at
such other time and place as Unitrode and BENCHMARQ shall agree (the "Closing
Date"). The Merger will become
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<PAGE> 19
effective upon the filing of the Certificate of Merger with the Office of the
Secretary of State of the State of Delaware as required by Delaware law. Such
filing will be made as soon as practicable on or after the Closing Date. See
"The Merger -- Closing; Effective Time" and "The Merger -- The Merger
Agreement -- Conditions to Consummation of the Merger."
Form of the Merger; Merger Consideration. At the Effective Time, among
other things: (i) each issued and outstanding share of BENCHMARQ Common Stock
(other than shares to be cancelled in accordance with clause (ii) below) will be
converted into the right to receive one fully paid and nonassessable share of
Unitrode Common Stock; (ii) all shares of BENCHMARQ Common Stock that are held
by BENCHMARQ as treasury shares and any shares of BENCHMARQ Common Stock owned
by Unitrode, or any wholly owned subsidiary of BENCHMARQ or Unitrode, will be
cancelled and retired and shall cease to exist and no stock of Unitrode or other
consideration shall be delivered in exchange therefor; and (iii) Sub will be
merged with and into BENCHMARQ, with BENCHMARQ surviving the Merger as a wholly
owned subsidiary of Unitrode. Each share of Unitrode Common Stock issued in the
Merger will include the associated Unitrode Rights. Cash will be issued in lieu
of fractional shares of Unitrode Common Stock.
The number of shares of Unitrode Common Stock to be received pursuant to
the Merger is fixed and will not be changed pursuant to the Merger Agreement in
the event of any subsequent increase or decrease in the market price of shares
of Unitrode Common Stock or BENCHMARQ Common Stock. The closing price of
Unitrode Common Stock on the NYSE on June 23, 1998 (the last business day
preceding the date on which the Merger Agreement Amendment was publicly
announced) was $11.38 and the closing price of BENCHMARQ Common Stock on the
Nasdaq National Market (the "NNM") was $8.69. The closing price per share of
Unitrode Common Stock on the NYSE on July 10, 1998 (the last full trading day
for which closing prices were available at the time of the printing of this
Joint Proxy Statement-Prospectus) was $12.00 and the closing price of BENCHMARQ
Common Stock on the NNM was $11.56.
Exchange of Stock Certificates. As soon as practicable after the Effective
Time, BankBoston, N.A. (the "Exchange Agent") will mail transmittal instructions
and a form of letter of transmittal to each person who was, at the Effective
Time, a holder of record of BENCHMARQ Common Stock. The transmittal instructions
will describe the procedures for surrendering certificates that prior to the
Merger represented shares of BENCHMARQ Common Stock ("BENCHMARQ Certificates")
in exchange for certificates representing shares of Unitrode Common Stock
("Unitrode Certificates"). BENCHMARQ STOCKHOLDERS SHOULD NOT SUBMIT THEIR
BENCHMARQ CERTIFICATES FOR EXCHANGE UNLESS AND UNTIL THEY HAVE RECEIVED THE
TRANSMITTAL INSTRUCTIONS AND A FORM OF LETTER OF TRANSMITTAL FROM THE EXCHANGE
AGENT. See "The Merger -- Exchange of Stock Certificates" and "The Merger -- The
Merger Agreement -- Conversion of Shares; Exchange Ratio."
Conditions to the Merger. The respective obligations of Unitrode, Sub and
BENCHMARQ to consummate the Merger are subject to the fulfillment or waiver
(where permissible) of certain conditions set forth in the Merger Agreement
including, among other things: (i) approval of the Merger Agreement and the
transactions contemplated thereby by the stockholders of BENCHMARQ; (ii)
approval by the stockholders of Unitrode of the issuance of the Merger Shares;
(iii) Unitrode having been advised in writing by PricewaterhouseCoopers LLP
("PricewaterhouseCoopers") that such firm concurs with the management of
Unitrode that there is no reason why the Merger cannot be treated as a "pooling
of interests" for financial accounting purposes and BENCHMARQ having been
advised in writing by Ernst & Young LLP ("Ernst & Young") that such firm concurs
with the management of BENCHMARQ that BENCHMARQ is eligible for "pooling of
interests" treatment for financial accounting purposes; (iv) receipt by Unitrode
and BENCHMARQ of legal opinions to the effect that the Merger will qualify as a
tax-free reorganization for United States federal income tax purposes; and (v)
authorization for listing on the NYSE of the Merger Shares, subject to official
notice of issuance. See "The Merger -- The Merger Agreement -- Conditions to
Consummation of the Merger."
Termination and Termination Fee. The Merger Agreement is terminable by
BENCHMARQ if, among other reasons, from and after June 23, 1998, the Unitrode
Board fails to recommend the approval by the stockholders of Unitrode of the
issuance of the Merger Shares or withdraws or materially modifies such
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<PAGE> 20
recommendation in a manner adverse to BENCHMARQ. The Merger Agreement is
terminable by Unitrode if, among other reasons: (i) the BENCHMARQ Board
withdraws or materially modifies its recommendation to the stockholders of
BENCHMARQ to approve the Merger Agreement in a manner adverse to Unitrode; (ii)
the BENCHMARQ Board makes any recommendation with respect to an alternative
acquisition proposal other than to reject such proposal; (iii) the BENCHMARQ
Board negotiates with any other party with respect to an alternative acquisition
proposal; or (iv) BENCHMARQ breaches the non-solicitation provisions of the
Merger Agreement. Subject to certain limitations, the Merger Agreement is also
subject to termination at the option of either Unitrode or BENCHMARQ if the
Effective Time has not occurred by October 31, 1998 or, under certain
circumstances upon a Terminating Breach (as hereinafter defined) by the other
party. BENCHMARQ no longer has the right to terminate the Merger Agreement if
Unitrode's stock price falls below $12.00 per share as was the case pursuant to
the Original Merger Agreement.
In the event that Unitrode terminates the Merger Agreement because: (i) the
BENCHMARQ Board fails to recommend that the stockholders of BENCHMARQ approve
the Merger Agreement or modifies its recommendation or enters into discussions
with a third party concerning an alternative acquisition proposal or takes
certain actions to facilitate or encourage an alternative acquisition proposal;
(ii) the stockholders of BENCHMARQ fail to approve the Merger Agreement and
there shall have been pending at or prior to the BENCHMARQ Special Meeting an
alternative acquisition proposal by a third party; or (iii) BENCHMARQ materially
breaches certain provisions of the Merger Agreement related to obtaining
stockholder approval or satisfying conditions to closing, BENCHMARQ will be
required to pay Unitrode a fee in the amount of $4,528,000. In the event that
BENCHMARQ terminates the Merger Agreement because the Unitrode Board, from and
after June 23, 1998, fails to recommend the approval by the stockholders of
Unitrode of the issuance of the Merger Shares or withdraws or materially
modifies such recommendation in a manner adverse to BENCHMARQ and at the time of
such termination there shall have been an acquisition proposal providing for the
acquisition of Unitrode by a third party and the stockholders of Unitrode shall
have failed to approve the issuance of the Merger Shares, Unitrode will be
required to pay BENCHMARQ a fee in the amount of $2,000,000. In the event that
BENCHMARQ terminates the Merger Agreement because: (i) of a Terminating Breach
by Unitrode related to obtaining stockholder approval or satisfying certain
conditions to the consummation of the Merger; or (ii) the Unitrode Board, from
and after June 23, 1998, fails to recommend the approval by the stockholders of
Unitrode of the issuance of the Merger Shares or withdraws or materially
modifies such recommendation in a manner adverse to BENCHMARQ, Unitrode will be
required to pay BENCHMARQ actual, verifiable expenses in an amount up to
$500,000. In the event that BENCHMARQ terminates the Merger Agreement because
the stockholders of Unitrode fail to approve the issuance of the Merger Shares,
Unitrode will be required to pay BENCHMARQ actual, verifiable expenses in an
amount up to $250,000. See "The Merger -- The Merger Agreement -- Termination
and Termination Fee."
Stock Option Agreement. As an inducement for Unitrode to enter into the
Merger Agreement and in consideration thereof, BENCHMARQ and Unitrode entered
into a Stock Option Agreement, dated as of March 2, 1998 (the "Original Stock
Option Agreement"), as amended by the Amendment to Stock Option Agreement, dated
as of June 23, 1998 (the "Stock Option Agreement Amendment" and together with
the Original Stock Option Agreement, the "Option Agreement"). Pursuant to the
Original Stock Option Agreement which is attached hereto as Appendix E, and the
Stock Option Agreement Amendment, which is attached hereto as Appendix F,
BENCHMARQ granted to Unitrode an option (the "Option") to purchase, under
certain circumstances described therein, up to 955,158 shares of BENCHMARQ
Common Stock at an exercise price per share equal to $11.38, as adjusted as
provided in the Option Agreement (the "Exercise Price"). Based on the number of
shares of BENCHMARQ Common Stock outstanding on March 2, 1998, the Option would
be exercisable for approximately 13.4% of the outstanding shares of BENCHMARQ
Common Stock, or approximately 10% of the shares of BENCHMARQ Common Stock
outstanding on a fully diluted basis after giving effect to the exercise of the
Option. The Option is exercisable, in whole or in part, upon the occurrence of
"triggering events" relating to an "acquisition" of BENCHMARQ by a third party.
None of such events has occurred as of the date of this Joint Proxy
Statement-Prospectus. The Option will terminate upon consummation of the Merger
or upon termination of the Merger Agreement for certain reasons. See "Related
Agreements -- Stock Option Agreement."
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<PAGE> 21
The execution of each of the Original Stock Option Agreement and the Stock
Option Agreement Amendment was required by Unitrode as a prerequisite to its
execution of each of the Original Merger Agreement and the Merger Agreement
Amendment, respectively. The Option is intended to increase the likelihood that
the Merger will be consummated in accordance with the terms set forth in the
Merger Agreement. Consequently, certain aspects of the Option Agreement may have
the effect of discouraging persons who might now or at any time prior to the
Effective Time be interested in acquiring all or a significant interest in
BENCHMARQ and/or its assets. See "Related Agreements -- Stock Option Agreement"
and Appendices E and F hereto.
Voting Agreement. As a further inducement for Unitrode to enter into each
of the Original Merger Agreement and the Merger Agreement Amendment, the Voting
Agreement Stockholders, each a director of BENCHMARQ and who collectively
beneficially own an aggregate of 1,463,609 shares of BENCHMARQ Common Stock or
approximately 20.7% of the outstanding shares of BENCHMARQ Common Stock as of
the BENCHMARQ Record Date, entered into the Original Voting Agreement and the
Voting Agreement Amendment, respectively, with Unitrode. Pursuant to the Voting
Agreement, the Voting Agreement Stockholders agreed to vote all of the shares of
BENCHMARQ Common Stock beneficially owned by them as of the BENCHMARQ Record
Date in favor of certain matters, including without limitation, the approval and
adoption of the Merger Agreement, and against, among other things, any action or
agreement that could reasonably be expected to result, directly or indirectly,
in a breach in any material respect of any covenant, representation or warranty
or any obligation of BENCHMARQ under the Merger Agreement or the Option
Agreement. Unitrode did not pay additional consideration to any Voting Agreement
Stockholder in connection with the execution and delivery of the Voting
Agreement. See "Related Agreements -- Voting Agreement" and Appendices G and H
hereto.
Recommendation of the Unitrode Board. THE UNITRODE BOARD HAS APPROVED,
WITH THE ABSENCE OF ONE DIRECTOR, THE MERGER AGREEMENT, THE MERGER AND THE
ISSUANCE OF THE MERGER SHARES AND UNANIMOUSLY, WITH THE ABSENCE OF ONE DIRECTOR,
RECOMMENDS THAT STOCKHOLDERS OF UNITRODE VOTE FOR APPROVAL OF SUCH ISSUANCE. THE
UNITRODE BOARD'S RECOMMENDATION IS BASED UPON A NUMBER OF FACTORS DESCRIBED IN
THIS JOINT PROXY STATEMENT-PROSPECTUS. See "The Merger -- Unitrode's Reasons for
the Merger; Recommendation of the Unitrode Board."
Opinion of the Financial Advisor to the Unitrode Board. Adams, Harkness &
Hill, Inc. ("Adams, Harkness & Hill"), Unitrode's financial advisor, has
delivered to the Unitrode Board its written opinion, dated June 23, 1998 (the
"Adams, Harkness Opinion"), that, based upon and subject to the various
considerations set forth in such opinion and as of the date thereof, the
Exchange Ratio is fair to Unitrode and its stockholders from a financial point
of view. Copies of the Adams, Harkness Opinion, which sets forth the assumptions
made, procedures followed, matters considered and scope of review, are attached
as Appendix C hereto. Unitrode stockholders are urged to read the Adams,
Harkness Opinion in its entirety.
Certain portions of the fees to be paid to Adams, Harkness & Hill are
contingent upon consummation of the Merger. See "The Merger -- Opinion of
Unitrode's Financial Advisor" and Appendix C hereto.
Recommendation of the BENCHMARQ Board. THE BENCHMARQ BOARD HAS APPROVED,
WITH THE ABSENCE OF ONE DIRECTOR, THE MERGER AGREEMENT AND THE MERGER AND
UNANIMOUSLY, WITH THE ABSENCE OF ONE DIRECTOR, RECOMMENDS THAT STOCKHOLDERS OF
BENCHMARQ VOTE FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND THE MERGER.
THE BENCHMARQ BOARD'S RECOMMENDATION IS BASED UPON A NUMBER OF FACTORS DESCRIBED
IN THIS JOINT PROXY STATEMENT-PROSPECTUS. CERTAIN MEMBERS OF THE BENCHMARQ BOARD
HAVE CERTAIN INTERESTS IN THE MERGER THAT ARE IN ADDITION TO THE INTERESTS OF
BENCHMARQ STOCKHOLDERS. See "The Merger -- BENCHMARQ's Reasons For The Merger;
Recommendation of The BENCHMARQ Board;" "-- Interests of Certain Persons in the
Merger."
Opinion of the Financial Advisor to the BENCHMARQ Board. Prudential
Securities Incorporated, BENCHMARQ's financial advisor ("Prudential
Securities"), has delivered a written opinion to the
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<PAGE> 22
BENCHMARQ Board, dated June 23, 1998 (the "Prudential Opinion"), to the effect
that, based upon and subject to the matters set forth in its opinion, as of such
date, the Exchange Ratio is fair, from a financial point of view, to BENCHMARQ's
stockholders. The full text of the Prudential Opinion, which sets forth the
assumptions made, matters considered and limitations on the reviews undertaken,
is attached as Appendix D hereto. BENCHMARQ stockholders are urged to read the
Prudential Opinion in its entirety. See "The Merger -- Opinion of BENCHMARQ's
Financial Advisor" and Appendix D hereto.
Interests of Certain Persons in the Merger. In considering the
recommendation of the BENCHMARQ Board with respect to the Merger Agreement and
the Merger, BENCHMARQ stockholders should be aware that certain members of
BENCHMARQ management and the BENCHMARQ Board have certain interests in the
Merger that are in addition to the interests of BENCHMARQ stockholders
generally. See "The Merger -- Interests of Certain Persons in the Merger."
BENCHMARQ Representation on the Unitrode Board. Pursuant to the terms of
the Merger Agreement, Unitrode will use its reasonable efforts to cause the
number of directors on the Unitrode Board to be increased to not more than eight
and to cause Dietrich Erdmann, Derrell C. Coker and Alan R. Schuele, each
currently a member of the BENCHMARQ Board (or such other person as BENCHMARQ may
select who is reasonably acceptable to Unitrode), to become members of the
Unitrode Board as of the Effective Time. In addition, Unitrode shall use its
reasonable efforts such that at the annual meeting of stockholders of Unitrode
held in 1999, Mr. Coker shall be a nominee to the Unitrode Board to serve for a
one-year term expiring in 2000 and Mr. Schuele shall be a nominee to the
Unitrode Board to serve for a two-year term expiring in 2001. Unitrode shall
further use its reasonable efforts to solicit, in good faith and with reasonable
diligence, proxies in support of such nominations.
Unitrode also agreed in the Merger Agreement to take all steps necessary to
cause the appointment of Mr. Schuele to the office of President and Chief
Operating Officer of Unitrode as of the Effective Time.
Certain United States Federal Income Tax Consequences of the
Merger. Winstead Sechrest & Minick P.C., tax counsel to BENCHMARQ, and Skadden,
Arps, Slate, Meagher & Flom LLP, tax counsel to Unitrode, each has delivered to
BENCHMARQ and Unitrode, respectively, an opinion substantially to the effect
that, subject to the qualifications set forth therein, and based upon
representation letters, which will be reconfirmed prior to the Closing, and
assuming that the Merger will be consummated in the manner described in this
Joint Proxy Statement-Prospectus and in accordance with the current form of the
Merger Agreement and related agreements: (i) the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code"); (ii) holders of BENCHMARQ Common Stock who
exchange their BENCHMARQ Common Stock for Unitrode Common Stock in the Merger
will not recognize gain or loss for United States federal income tax purposes,
except with respect to cash, if any, that such holders receive in lieu of
fractional shares of Unitrode Common Stock; (iii) each such holder's aggregate
tax basis in the Unitrode Common Stock received in the Merger will equal his or
her aggregate tax basis in the BENCHMARQ Common Stock exchanged therefor,
decreased by the amount of any tax basis allocable to any fractional share
interest for which cash is received; and (iv) the holding period of Unitrode
Common Stock received by such holder in the exchange will include the holding
period of the BENCHMARQ Common Stock surrendered in exchange therefor. In such
representation letters, Unitrode and BENCHMARQ have affirmed their belief that
all of the facts and assumptions upon which such opinions are based are true,
correct and complete and will be true, correct and complete as of the Closing.
Consummation of the Merger is conditioned upon Unitrode's receipt of an opinion
of its tax counsel, Skadden, Arps, Slate, Meagher & Flom LLP, and BENCHMARQ's
receipt of an opinion of its tax counsel, Winstead Sechrest & Minick P.C.,
substantially to the effect that, based upon certain facts, representations and
assumptions, the Merger will constitute a reorganization within the meaning of
Section 368(a) of the Code. The issuance of such opinions is conditioned on,
among other things, such tax counsel's receipt of representation letters from
each of Unitrode, Sub and BENCHMARQ, in each case, in form and substance
reasonably satisfactory to each such tax counsel. Such opinions are not binding
on the Internal Revenue Service (the "IRS"). Unitrode is entitled to waive the
condition to consummation of the Merger that it receive such an opinion from
Skadden, Arps, Slate, Meagher & Flom LLP, and BENCHMARQ is entitled to waive the
condition to consummation of the Merger that it receive such an opinion from
Winstead Sechrest &
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<PAGE> 23
Minick P.C. In the event that BENCHMARQ waives such condition, BENCHMARQ will
recirculate revised proxy materials and resolicit the vote of its stockholders.
BENCHMARQ stockholders are urged to consult their tax advisors as to the
specific tax consequences to them of the Merger. In the event of any change or
development prior to the Closing Date which would materially affect, in
Unitrode's judgment, the disclosure set forth in this Joint Proxy
Statement-Prospectus, Unitrode would consider the facts and circumstances at
such time and make a determination as to whether the recirculation of revised
proxy materials and the resolicitation of the vote of Unitrode stockholders
would be appropriate. See "The Merger -- Certain United States Federal Income
Tax Consequences of the Merger" and "The Merger -- The Merger
Agreement -- Conditions to Consummation of the Merger." No ruling has been (or
will be) sought from the IRS as to the anticipated United States federal income
tax consequences of the Merger.
Accounting Treatment. The Merger is intended to qualify as a "pooling of
interests" for accounting and financial reporting purposes. It is a condition to
closing that Unitrode have been advised by PricewaterhouseCoopers as of the
Effective Time to the effect that PricewaterhouseCoopers concurs with the
management of Unitrode that there is no reason the Merger would not qualify as a
"pooling of interests" for financial accounting purposes and that BENCHMARQ have
been advised by Ernst & Young as of the Effective Time to the effect that Ernst
& Young concurs with the management of BENCHMARQ that there is no reason the
Merger would not qualify as a "pooling of interests" for financial accounting
purposes. Under the "pooling of interests" method of accounting, the historical
recorded assets and liabilities of Unitrode and BENCHMARQ will be carried
forward to the combined company at their recorded amounts, the operating results
of the combined company will include the operating results of Unitrode and
BENCHMARQ for the entire fiscal year in which the combination occurs and the
historical reported operating results of the separate companies for prior
periods will be combined and restated as the operating results of the combined
company. See "The Merger -- Accounting Treatment" and "The Merger -- The Merger
Agreement -- Termination and Termination Fee."
Certain Regulatory Matters. The Merger is subject to the requirements of
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
rules and regulations promulgated thereunder (the "HSR Act"). Unitrode and
BENCHMARQ filed pre-merger Notification and Report Forms and requests for early
termination of the waiting period under the HSR Act on March 13, 1998 and March
16, 1998, respectively. The waiting period under the HSR Act expired on April
15, 1998. However, at any time before or after the Effective Time, the Federal
Trade Commission (the "FTC"), the Antitrust Division of the Department of
Justice (the "Antitrust Division"), any state or a private person or entity
could seek under the antitrust laws, among other things, to enjoin the Merger.
There can be no assurance that a challenge to the Merger will not be made or
that, if such a challenge is made, Unitrode and BENCHMARQ will prevail. See "The
Merger -- Regulatory Filings and Approvals."
Neither Unitrode nor BENCHMARQ is aware of any other material governmental
or regulatory approval required for consummation of the Merger, other than
compliance with applicable securities laws and filings under the DGCL.
Resale Restrictions. All shares of Unitrode Common Stock received in
connection with the Merger by stockholders of BENCHMARQ will be freely
transferable, except that shares of Unitrode Common Stock received by persons
who are deemed to be "affiliates" (as such term is defined for purposes of Rule
145 under the Securities Act of 1933, as amended (the "Securities Act")) of
BENCHMARQ at the time of the BENCHMARQ Special Meeting or who are "affiliates"
of Unitrode at the time of the Unitrode Annual Meeting may be resold by such
persons only in certain permitted circumstances. See "The Merger -- Restrictions
on Sale of Shares by Affiliates."
Dissenters' Rights. Neither the holders of Unitrode Common Stock nor the
holders of BENCHMARQ Common Stock are entitled to exercise appraisal rights or
to demand payment for their shares under the DGCL or the Maryland General
Corporation Law (the "MGCL") as a result of the Merger. See "The
Merger -- Dissenters' Rights."
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<PAGE> 24
SELECTED CONSOLIDATED HISTORICAL AND UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
The following selected consolidated historical financial data of Unitrode
and BENCHMARQ has been derived from their respective historical financial
statements and should be read in conjunction with such consolidated financial
statements and the notes thereto incorporated by reference herein. See
"Available Information" and "Incorporation by Reference." The Unitrode and
BENCHMARQ historical financial statement data as of and for the interim periods
presented below has been prepared on the same basis as the historical data
derived from the audited financial statements and, in the opinion of management
of the respective companies, include all adjustments, consisting only of normal
recurring accruals, necessary for a fair presentation of the financial position
and results of operations of the respective companies as of such dates and for
such periods.
The selected pro forma combined financial data is derived from the
unaudited pro forma combined condensed financial statements appearing elsewhere
herein, which give effect to the Merger as a "pooling of interests," and should
be read in conjunction with such pro forma statements and the notes thereto. For
the purpose of the pro forma combined statement of income data, Unitrode's
historical results of operations for the three months ended May 2, 1998 and May
3, 1997, and for the fiscal years ended January 31, 1998, 1997 and 1996 have
been combined with BENCHMARQ's historical results of operations for the three
months ended March 31, 1998 and 1997 and for the fiscal years ended December 31,
1997, 1996 and 1995, respectively. For the purpose of the pro forma combined
balance sheet, Unitrode's consolidated unaudited balance sheet as of May 2, 1998
has been combined with BENCHMARQ's consolidated unaudited balance sheet as of
March 31, 1998, giving effect to the Merger as if it had occurred on May 2,
1998.
The pro forma combined financial data is presented for illustrative
purposes only and is not necessarily indicative of the operating results or
financial position that would have been achieved if the Merger had been
consummated as of the beginning of the periods presented, nor is it necessarily
indicative of the future operating results or financial position of the combined
company. The pro forma combined financial data does not give effect to any cost
savings that may result from the integration of Unitrode's and BENCHMARQ's
operations. Additionally, the pro forma combined statements of income do not
include the merger-related costs which are currently estimated to be
approximately $3 million on a pre-tax basis. The pro forma combined financial
data does not include adjustments to conform the accounting policies of
BENCHMARQ to those followed by Unitrode. The nature and extent of such
adjustments, if any, will be based upon further analysis. Results for the
interim fiscal periods presented should not be considered indicative of
operating results that can be expected for the full fiscal period.
10
<PAGE> 25
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF UNITRODE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------- YEARS ENDED JANUARY 31,
MAY 2, MAY 3, --------------------------------------------------
1998 1997 1998 1997 1996 1995 1994
-------- -------- -------- -------- -------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING RESULTS:
Net revenues(1).............. $28,019 $40,840 $177,603 $133,526 $116,148 $95,359 $85,994
Income (loss) from
operations(2).............. (2,062) 9,131 41,877 29,087 23,996 9,651 10,949
Net income (loss)(3)......... (2,349) 6,586 30,235 20,677 17,519 9,249 16,448
Basic earnings (loss) per
share(4)................... $ (.10) $ .28 $ 1.27 $ .90 $ .76 $ .39 $ .66
Diluted earnings (loss) per
share(4)................... $ (.10) $ .27 $ 1.21 $ .87 $ .74 $ .37 $ .64
Weighted average shares
outstanding(4)............. 24,336 23,357 23,806 23,061 22,994 23,952 25,024
Weighted average shares
outstanding -- assuming
dilution(4)................ 24,336 24,390 24,957 23,705 23,814 24,721 25,848
</TABLE>
<TABLE>
<CAPTION>
MAY 2, JANUARY 31,
----------- ----------------------------------------------------
1998 1998 1997 1996 1995 1994
----------- -------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET INFORMATION:
Total assets...................... $183,694 $202,039 $142,403 $118,424 $103,304 $101,923
Total stockholders' equity........ $158,383 $159,362 $115,553 $ 92,417 $ 81,591 $ 84,036
</TABLE>
Unitrode has not declared or paid cash dividends during the relevant periods.
- ---------------
(1) Revenues for 1995 and 1994 included $8,128 and $21,392, respectively, for
disposed operations.
(2) Income from operations for 1995 and 1994 included losses of $6,397 and
$1,514, respectively, for disposed operations.
(3) The pre-tax loss for the three months ended May 2, 1998 included special
charges of $7,129. Net income for 1995 and 1994 included losses of $2,977
and $1,055, respectively, for disposed operations. Net income for 1994
included a benefit of $8,100 for the cumulative effect of a change in
accounting for income taxes on adoption of SFAS 109.
(4) On September 29, 1997, the Unitrode stockholders approved a 2-for-1 stock
split of the Unitrode Common Stock effected in the form of a 100% stock
dividend distributed on October 14, 1997 to stockholders of record as of
October 6, 1997. All per share and weighted average shares outstanding data
have been restated to reflect the retroactive effect of the stock split and
the adoption of SFAS 128.
11
<PAGE> 26
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF BENCHMARQ
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, YEARS ENDED DECEMBER 31,
---------------- -----------------------------------------------
1998 1997 1997 1996 1995 1994 1993
------ ------- ------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING RESULTS:
Net revenues..................... $9,310 $11,712 $44,437 $40,153 $29,215 $23,027 $15,061
Income (loss) from operations.... 398 2,437 9,804 6,836 4,015 2,382 (214)
Net income (loss)................ 282 1,643 6,671 7,062 3,802 2,155 (471)
Basic earnings per share(1)...... $ .04 $ .24 $ .97 $ 1.06 $ .70 $ .40
Diluted earnings per share(1).... $ .04 $ .21 $ .86 $ .96 $ .61 $ .35
Weighted average shares
outstanding(1)................. 7,072 6,789 6,867 6,640 5,451 5,323
Weighted average shares
outstanding -- assuming
dilution(1).................... 7,667 7,673 7,752 7,391 6,273 6,094
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
----------- -----------------------------------------------
1998 1997 1996 1995 1994 1993
----------- ------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET INFORMATION:
Total assets........................... $ 41,876 $40,848 $36,809 $23,885 $14,608 $10,296
Total long-term obligations, less
current portion...................... 510 702 1,260 891 2,632 2,402
Total stockholders' equity............. $ 34,839 $34,224 $26,330 $18,255 $ 7,694 $ 5,505
</TABLE>
BENCHMARQ has not declared or paid cash dividends during the relevant periods.
- ---------------
(1) Net loss per share data for the year ended December 31, 1993 has not been
presented as management believes such per share information is not
comparable or meaningful. All per share and weighted average shares
outstanding data have been restated to reflect the adoption of SFAS 128.
12
<PAGE> 27
SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------ YEARS ENDED JANUARY 31,
MAY 2, MAY 3, --------------------------------
1998 1997 1998 1997 1996
------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
UNAUDITED PRO FORMA COMBINED CONDENSED
OPERATING RESULTS(1):
Net revenues.......................... $37,329 $52,552 $222,040 $173,679 $145,363
Income (loss) from operations......... (323) 11,568 51,681 35,923 28,011
Net income (loss)..................... (726) 8,229 36,906 27,739 21,321
Basic earnings (loss) per share....... $ (.02) $ .27 $ 1.20 $ .93 $ .75
Diluted earnings (loss) per share..... $ (.02) $ .26 $ 1.13 $ .89 $ .71
Weighted average shares outstanding... 31,408 30,146 30,673 29,701 28,445
Weighted average shares outstanding --
assuming dilution................... 31,408 32,063 32,709 31,096 30,087
</TABLE>
<TABLE>
<CAPTION>
MAY 2, 1998
-----------
<S> <C>
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
INFORMATION(1):
Total assets................................................ $225,570
Long-term obligations, less current portion................. 510
Total stockholders' equity.................................. $191,522
</TABLE>
- ---------------
(1) See Notes to Unaudited Pro Forma Combined Condensed Financial Statements.
13
<PAGE> 28
COMPARATIVE HISTORICAL AND PRO FORMA COMBINED PER SHARE DATA
The following tables set forth certain unaudited historical per share data
of Unitrode and BENCHMARQ and the combined per share data on an unaudited pro
forma basis after giving effect to the Merger on a "pooling of interests" basis.
This data should be read in conjunction with the selected financial data and the
unaudited pro forma combined condensed financial statements included elsewhere
in this Joint Proxy Statement-Prospectus and the separate historical financial
statements of Unitrode and BENCHMARQ incorporated by reference herein. The pro
forma combined financial data is not necessarily indicative of the operating
results or financial position that would have been achieved if the Merger had
been consummated as of the beginning of the periods presented, nor is it
necessarily indicative of the future operating results or financial position of
the combined company. Since 1990, neither Unitrode nor BENCHMARQ has paid any
cash dividends on their respective shares of common stock.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------ YEARS ENDED JANUARY 31,
MAY 2, MAY 3, ------------------------
1998 1997 1998 1997 1996
------ ------- ------ ----- -----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
HISTORICAL -- UNITRODE:
Basic earnings (loss) per share.................. $(.10) $.28 $1.27 $.90 $.76
Diluted earnings (loss) per share................ $(.10) $.27 $1.21 $.87 $.74
Book value(1).................................... $6.49 $6.56
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
------------------ -------------------------
1998 1997 1997 1996 1995
------ ------- ------ ------ -----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
HISTORICAL -- BENCHMARQ:
Basic earnings per share......................... $ .04 $.24 $ .97 $1.06 $.70
Diluted earnings per share....................... $ .04 $.21 $ .86 $ .96 $.61
Book value(1).................................... $4.90 $4.93
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------ YEARS ENDED JANUARY 31,
MAY 2, MAY 3, ------------------------
1998 1997 1998 1997 1996
------ ------- ------ ----- -----
<S> <C> <C> <C> <C> <C>
UNAUDITED PRO FORMA COMBINED AND EQUIVALENTS:
PER UNITRODE/BENCHMARQ SHARE(3) AND PER BENCHMARQ
SHARE(4)
Basic earnings (loss) per share.................. $(.02) $.27 $1.20 $.93 $.75
Diluted earnings (loss) per share................ $(.02) $.26 $1.13 $.89 $.71
Book value(1)(2)................................. $6.08 $6.19
</TABLE>
- ---------------
(1) Historical book value per share is computed by dividing stockholders' equity
by the number of shares of common stock outstanding at the end of each
period. Pro Forma Combined -- Per Unitrode/ BENCHMARQ share book value is
computed by dividing pro forma stockholders' equity by the pro forma number
of shares of Unitrode Common Stock which would have been outstanding had the
Merger been consummated as of each balance sheet date.
(2) The pro forma combined balance sheet as of May 2, 1998 includes a $1.7
million accrual for merger-related expenses. See Notes to Unaudited Pro
Forma Combined Condensed Financial Statements.
(3) For the purposes of the pro forma combined data, Unitrode's historical
financial data for the three months ended May 2, 1998 and May 3, 1997, and
the fiscal years ended January 31, 1998, 1997 and 1996 has been combined
with BENCHMARQ's historical financial data for the three months ended March
31, 1998 and 1997 and the fiscal years ended December 31, 1997, 1996 and
1995.
(4) The equivalents of BENCHMARQ's pro forma per share amounts are calculated by
multiplying the combined pro forma per share amounts by the Exchange Ratio
of one share of Unitrode Common Stock for each share of BENCHMARQ Common
Stock.
14
<PAGE> 29
COMPARATIVE PER SHARE MARKET PRICE DATA
Unitrode Common Stock is traded on the NYSE under the symbol "UTR."
BENCHMARQ Common Stock is traded on the NNM under the symbol "BMRQ."
The following table sets forth the closing prices per share of Unitrode
Common Stock as reported on the NYSE and per share of BENCHMARQ Common Stock as
reported on the NNM on February 27, 1998 (the business day preceding public
announcement of the Merger) June 23, 1998 (the last full trading day prior to
the announcement of the Merger Agreement Amendment) and July 10, 1998 (the last
full trading day for which closing prices were available at the time of the
printing of this Joint Proxy Statement-Prospectus) and the equivalent per share
prices (as explained below) of shares of BENCHMARQ Common Stock on such dates.
<TABLE>
<CAPTION>
UNITRODE BENCHMARQ EQUIVALENT PER
COMMON STOCK COMMON STOCK SHARE PRICE
--------------- ---------------- --------------
<S> <C> <C> <C>
February 27, 1998............................... $18.8125 $16.2500 $18.8125
June 23, 1998................................... $11.3750 $ 8.6875 $11.3750
July 10, 1998................................... $12.0000 $11.5625 $12.0000
</TABLE>
The equivalent per share price of BENCHMARQ Common Stock represents the
closing price of a share of Unitrode Common Stock on such date multiplied by the
Exchange Ratio therefor of one such share.
Because the market price of Unitrode Common Stock that holders of BENCHMARQ
Common Stock will receive in the Merger may increase or decrease prior to the
Merger, stockholders are urged to obtain current market quotations.
15
<PAGE> 30
RISK FACTORS
As a result of the Merger, stockholders of BENCHMARQ will become
stockholders of Unitrode. In addition to the other information contained in this
Joint Proxy Statement-Prospectus and the appendices hereto, the following risk
factors should be considered carefully in evaluating the Merger.
FIXED EXCHANGE RATIO
Upon consummation of the Merger, each share of BENCHMARQ Common Stock will
be converted into the right to receive one share of Unitrode Common Stock. The
Exchange Ratio is a fixed number and will not be adjusted in the event of any
increases or decreases in the prices of either Unitrode Common Stock or
BENCHMARQ Common Stock. Accordingly, the market value of the consideration to be
received by stockholders of BENCHMARQ upon consummation of the Merger will
depend entirely on the market price of Unitrode Common Stock at the Effective
Time. The closing per share price of Unitrode Common Stock on the NYSE on July
10, 1998 (the last full trading day for which closing prices were available at
the time of the printing of this Joint Proxy Statement-Prospectus) was $12.00.
There can be no assurance that the market price of the Unitrode Common Stock on
and after the Effective Time will not be lower than the price of Unitrode Common
Stock (i) on July 10, 1998, (ii) at the date of the Unitrode Annual Meeting and
the BENCHMARQ Special Meeting or (iii) at the Effective Time. See "The Merger --
The Merger Agreement -- Conversion of Shares; Exchange Ratio" and "Comparative
per Share Market Price Data."
RECENT DEVELOPMENTS
On June 15, 1998, BENCHMARQ announced that it expects a 10 to 15%
sequential decline in net revenues during its second quarter ending June 30,
1998 and that income from operations for the quarter, before certain
non-recurring pre-tax charges consisting primarily of the Merger related and
other legal costs, is expected to decline sequentially and be between $.05 and
$.09 per share due to revenue and margin declines. BENCHMARQ further indicated
that (i) margin declines are attributed mainly to the combined effects of price
pressure, in large part due to the Asian currency devaluation and continued
softness in the semiconductor industry, inventory reserves and reduced factory
utilization, (ii) with the addition of the non-recurring expenses, consisting
primarily of Merger related and other legal costs, BENCHMARQ expects to report a
loss for the second quarter and (iii) if the Merger is not approved, BENCHMARQ
may incur additional pre-tax charges to size the business to the reduced levels
of demand. Previously, BENCHMARQ had reported that its backlog had decreased and
that BENCHMARQ would be more dependent on orders that are received and shipped
in the same quarter. BENCHMARQ also announced that softer than anticipated
market conditions, largely from the erosion of the Asian market and affecting
primarily BENCHMARQ's Battery Management Products, indicate that such orders in
BENCHMARQ's second quarter will be less than previously expected and noted that
the conditions which affected BENCHMARQ's first quarter results had worsened in
BENCHMARQ's second quarter. These factors are continuing to have and adverse
impact on BENCHMARQ and there can be no assurances that these recent
developments will not continue to affect BENCHMARQ or the combined company in
the future.
Unitrode no longer provides any custom analog ICs to Western Digital
Corporation ("Western Digital") (historically Unitrode's largest customer) for
hard disk drives, and has determined not to compete for the next generation of
custom analog ICs for Western Digital's hard disk drives. This determination was
based in part on the uncertainties of successfully competing for the next
generation of custom analog ICs for Western Digital, a desire to reduce reliance
upon, and dedication of key personnel to, a single customer and the historical
volatility of the disk drive market. In the first quarter ended May 2, 1998,
Unitrode aligned its costs with the reduced revenue level and incurred special
charges to take into account this loss of a major portion of its business. As a
result, Unitrode does not expect the loss of this particular portion of the
Western Digital business to have a future material adverse effect on the
business, financial condition of operations of Unitrode. See "-- Dependence on
Key Customers" and "-- Factors Affecting Future Results."
For Unitrode's first quarter ending May 2, 1998, net income, excluding
special charges, was $2.4 million on revenues of $28 million. Including special
charges on a pre-tax basis of $7.1 million, Unitrode reported a
16
<PAGE> 31
net loss of $2.3 million. In last year's first quarter, Unitrode reported net
income of $6.6 million on revenues of $40.8 million. The special charges
included $2.6 million applied against cost of sales to account for a writedown
of inventory, $2.5 million against other income (expense) to account for a
reduction of Unitrode's carrying value of an equity investment in an outside
foundry, and restructuring and merger related costs of $2.0 million for costs
associated with realigning the business to the current level of demand and costs
associated with the Merger. Unitrode's gross margin as a percentage of sales for
the first quarter ended May 2, 1998 was 37.2% compared to 53.1% for the first
quarter of the prior year. Excluding the $2.6 million charge to the cost of
sales, gross margin as a percentage of sales in the first quarter ended May 2,
1998 was 46.5%. The decrease in the gross margin percentage compared to the
prior year, excluding the special charge, was primarily as a result of reduced
factory utilization due to the reduced demand in its served markets. In prior
public announcements, Unitrode noted that weakness in the disk drive markets
continues to negatively impact its business. In addition, Unitrode disclosed
that it is also experiencing weakness in other served markets similar to that
which has been reported by a number of other semiconductor companies. Unitrode
believes that the level of some of its customers' inventories continue to be
high and that customers will work off these inventories before making
significant new purchasing commitments. See "-- Factors Affecting Future
Results" and "-- Dependence on Key Customers." There can be no assurances that
these recent developments will not continue to affect Unitrode or the combined
company in the future.
COMPETITION
Unitrode competes in the high-performance segment of the analog/linear and
mixed-signal IC market, specifically addressing power supply control and
management, motor control, and data transmission/interface applications.
Unitrode has a number of competitors, some of which are substantially larger
than Unitrode, with significantly greater resources. Unitrode would be adversely
affected if its competitors introduced technologically superior products or
offered their products at prices significantly lower than those of Unitrode's
products. The major competitive factors include innovative design, product
performance, price, reliability, quality, customer support and timely delivery.
Unitrode's ability to compete depends in large part upon the timely introduction
of products that are technologically innovative and which provide cost-effective
solutions for its customers.
DEPENDENCE ON KEY CUSTOMERS
Unitrode's customer base is comprised of merchant manufacturers,
electronics distributors, and customers with captive manufacturing operations.
The captive manufacturers use Unitrode's products as integral components of
their equipment and systems. In certain cases, product is sold to a
subcontract-assembly company specified by the captive manufacturer. The merchant
manufacturers typically function as original equipment manufacturers ("OEMs") as
well as suppliers of sub-systems to other OEMs. About 55% of sales are to
customers with applications in the electronic data processing ("EDP") market.
Some segments within this market, such as certain kinds of personal computers,
disk drives, printers, and other peripherals, have been volatile in the past and
may continue to be volatile in the future. In recent periods, the disk drive
market, which has accounted for approximately 35% of Unitrode's sales, has
experienced significant competitive and market pressures and several of
Unitrode's customers in this market, including Western Digital (which accounted
for approximately 21% of Unitrode's sales in the year ended January 31, 1998),
have announced cutbacks, price cuts or excess inventory on hand or in
distribution channels. Weakness in the EDP market, and in the disk-drive market
in particular, has affected and may continue to affect Unitrode's short-term
bookings and the schedule of existing backlog and, together with a slow down in
the personal computer market, has increased price pressure on Unitrode's
commodity products. Such weakness is anticipated to impact Unitrode's revenues
and profits for fiscal year 1999. Revenues from product sales to Western Digital
represented approximately 21%, 31% and 25% of sales in fiscal years 1998, 1997
and 1996, respectively, but less than 5% in the first quarter of fiscal year
1999, and revenues from product sales to IBM Corporation represented
approximately 10%, 8% and 7% of sales in fiscal years 1998, 1997 and 1996,
respectively.
Unitrode no longer provides any custom analog ICs to Western Digital
(historically Unitrode's largest customer) for hard disk drives, and has
determined not to compete for the next generation of custom analog
17
<PAGE> 32
ICs for Western Digital's hard disk drives. This determination was based in part
on the uncertainties of successfully competing for the next generation of custom
analog ICs for Western Digital, a desire to reduce reliance upon, and dedication
of key personnel to, a single customer and the historical volatility of the disk
drive market. In the first quarter ended May 2, 1998, Unitrode aligned its costs
with the reduced revenue level and incurred special charges to take into account
this loss of a major portion of its business. As a result, Unitrode does not
expect the loss of this particular portion of the Western Digital business to
have a future material adverse effect on the business, financial condition of
operations of Unitrode. See "-- Recent Developments" and "-- Factors Affecting
Future Results."
FACTORS AFFECTING FUTURE RESULTS
Unitrode's future operating results, and the future operations of the
combined company, are difficult to predict and may be affected by a number of
factors including the timely ability to develop and market new products,
competitive pricing pressures, fluctuations in manufacturing yields, adequate
availability of wafers and manufacturing and test capacity, excess manufacturing
capacity, changes in product mix and economic conditions in the United States,
Asia and other international markets.
The semiconductor market has historically been cyclical and subject to
significant downturns at various times and orders and backlog may fluctuate
widely from time to time. As a result of these and other factors, there can be
no assurance that Unitrode will not experience material fluctuations in future
operating results on a quarterly or annual basis. The dollar amounts of
Unitrode's backlog for the fiscal years ended January 31, 1998 and January 31,
1997 were $47.6 million and $40.6 million, respectively. In April 1998, Unitrode
announced that weakness in the disk drive market continued to impact its
business and that it was also experiencing weakness in other served markets. In
May 1998, Unitrode announced pre-tax charges of $7.1 million, including $2.6
million applied against cost of sales to account for a writedown of inventory,
$2.5 million against other income (expense) to account for a reduction of
Unitrode's carrying value of an equity investment in an outside foundry, and
restructuring and merger related costs of $2.0 million for costs associated with
realigning the current level of demand and costs associated with the Merger, and
reflecting reduced demand for its products. In March 1998, BENCHMARQ announced
that softer than anticipated market conditions, affecting all product lines, and
price pressure, due in large part to the Asian currency devaluation and reduced
factory utilization, had resulted in sequentially flat first quarter revenues
and that these conditions may continue into the second quarter. On June 15,
1998, BENCHMARQ announced that it expects a 10 to 15% sequential decline in net
revenues during its second quarter ending June 30, 1998 and that income from
operations for the quarter, before certain non-recurring pre-tax charges
consisting primarily of Merger related and other legal costs, is expected to
decline sequentially and be between $.05 and $.09 per share due to revenue and
margin declines. BENCHMARQ further indicated that (i) margin declines are
attributed mainly to the combined effects of price pressure, in large part due
to the Asian currency devaluation and continued softness in the semiconductor
industry, inventory reserves and reduced factory utilization, (ii) with the
addition of the non-recurring expenses, consisting primarily of Merger related
and other legal costs, BENCHMARQ expects to report a loss for the second quarter
and (iii) if the Merger is not approved, BENCHMARQ may incur additional pre-tax
charges to size the business to the reduced levels of demand. Previously,
BENCHMARQ had reported that its backlog had decreased and that BENCHMARQ would
be more dependent on orders that are received and shipped in the same quarter.
BENCHMARQ also announced that softer than anticipated market conditions, largely
from the erosion of the Asian market and affecting primarily BENCHMARQ's Battery
Management Products, indicate that such orders in BENCHMARQ's second quarter
will be less than previously expected and noted that the conditions which
affected BENCHMARQ's first quarter results had worsened in BENCHMARQ's second
quarter. These factors are continuing to have an adverse impact on BENCHMARQ and
there can be no assurances that these recent developments will not continue to
affect BENCHMARQ or the combined company in the future. See "-- Recent
Developments" and "-- Dependence on Key Customers." There can be no assurance
that the factors affecting the results of Unitrode and BENCHMARQ in recent
periods will not continue to affect the operating results of each of them or the
combined company in the future.
Unitrode is currently in the process of qualifying the manufacturing
processes and products of its new 6" BiCMOS wafer fabrication facility in
Merrimack, New Hampshire and anticipates spending a total of
18
<PAGE> 33
approximately $8.0 to $9.0 million in pre-operating costs associated therewith,
$6.3 million of which was recorded in fiscal year 1998. Pre-operating costs,
which are incurred prior to the commencement of production, relate primarily to
the qualification of equipment and manufacturing processes to meet design, test,
and reliability as well as to recruit and train personnel. Delays in
qualification of the new wafer fabrication facility could significantly increase
pre-operating costs. Any constraints in manufacturing and testing capacity could
adversely affect Unitrode's customers and cause them to seek alternative sources
for the products currently being obtained from Unitrode. Once operational,
Unitrode's additional capacity will also result in a significant increase in
operating expenses, such as depreciation, and if revenues do not increase to
offset these additional expenses, Unitrode's future operating results could be
adversely affected. There can be no assurance that the new 6" BiCMOS wafer
fabrication facility will become operational as planned, that added capacity
will match demand for Unitrode's products, that Unitrode's existing 4" bipolar
wafer fabrication facility will be fully utilized or that expansion by Unitrode
and its competitors will not lead to overcapacity in the semiconductor industry,
which could lead to price erosion that could adversely affect Unitrode's
operating results.
In fiscal year 1998, demand for Unitrode's products outpaced Unitrode's
production capabilities and as a result, Unitrode's competitors were able to
introduce competitive products which caused a reduction in Unitrode's market
share. There can be no assurances that Unitrode will be able to regain market
share and failure to do so could have a material adverse affect on Unitrode's
operating results.
Unitrode no longer provides any custom analog ICs to Western Digital
(historically Unitrode's largest customer) for hard disk drives, and has
determined not to compete for the next generation of custom analog ICs for
Western Digital's hard disk drives. This determination was based in part on the
uncertainties of successfully competing for the next generation of custom analog
ICs for Western Digital, a desire to reduce reliance upon, and dedication of key
personnel to, a single customer and the historical volatility of the disk drive
market. In the first quarter ended May 2, 1998, Unitrode aligned its costs with
the reduced revenue level and incurred special charges to take into account this
loss of a major portion of its business. As a result, Unitrode does not expect
the loss of this particular portion of the Western Digital business to have a
future material adverse effect on the business, financial condition of
operations of Unitrode. See "-- Recent Developments" and "-- Dependence on Key
Customers."
INTEGRATION OF ACQUIRED BUSINESSES
The integration of Unitrode's and BENCHMARQ's operations following the
Merger will require the dedication of management resources that will temporarily
detract from attention to the day-to-day business of the combined company. The
combination of the two companies will also require the coordination of the
companies' manufacturing, research and development and sales administration and
marketing efforts. The difficulties of assimilation, in particular, the possible
loss of key personnel, may be increased by the necessity of coordinating
geographically distinct organizations, integrating personnel and combining
different corporate cultures. The process of combining the two organizations may
cause an interruption of, or a loss of momentum in, the activities of either or
both of the companies' businesses, which could have an adverse effect on the
revenues and operating results of the combined company, at least in the near
term. Unitrode is unable to precisely estimate at the present time what the
total cost of integration of Unitrode's and BENCHMARQ's operations will be
following the Merger but currently does not anticipate these costs will have a
material adverse effect on the financial condition of the combined company.
However, there can be no assurance that the combined entity will be able to
retain its key technical and management personnel or that the combined entity
will realize any of the other anticipated benefits of the Merger.
PROTECTION OF PROPRIETARY RIGHTS; RISK OF INFRINGEMENT CLAIMS
The future success of Unitrode will depend in part upon its intellectual
property rights, which Unitrode attempts to protect through patents, trademarks
and a variety of other measures. There can be no assurance, however, that such
measures will be adequate to prevent misappropriation or that others will not
independently develop competitive technologies or products. There can be no
assurances that any patent owned by Unitrode will not be invalidated,
circumvented or challenged, that the rights granted thereunder will provide
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competitive advantages to Unitrode or that the pending or future patent
applications of Unitrode will be issued within the scope of the claims sought by
Unitrode, if at all. Litigation may be necessary to protect the intellectual
property rights and trade secrets of Unitrode and to defend against claims of
infringement or invalidity.
In the past, both Unitrode and BENCHMARQ have received communications from
third parties alleging that they may be in violation of such third parties'
intellectual property rights. BENCHMARQ is currently involved in litigation with
Dallas Semiconductor Corporation ("DSC") in which DSC has alleged, among other
things, the willful and deliberate infringement by BENCHMARQ of certain patents
owned by DSC. DSC is seeking, among other things, an injunction against further
infringement relating to certain products, damages for lost profits (which may
under certain circumstances be trebled), interest and attorney fees. Although
DSC has not specified an amount of monetary damages to which it alleges it is
entitled to date, the allegations relate to significant portions of BENCHMARQ's
business. In the event DSC were successful in prevailing on its claims asserted
against BENCHMARQ, and relief were granted substantially as sought, there could
be a material adverse affect on BENCHMARQ's business, financial condition or
operating results, and if granted after the Effective Time, on the business,
financial condition or operating results of the combined company. However, due
to the uncertainties associated with any litigation, the ultimate outcome cannot
presently be determined.
DEPENDENCE ON MAJOR SUPPLIERS
BENCHMARQ currently obtains substantially all of its semiconductor wafers
for use in its products from Taiwan Semiconductor Manufacturing Company
("TSMC"). BENCHMARQ expects to remain dependent on TSMC for substantially all of
its wafer capacity for the foreseeable future. In May 1996, BENCHMARQ entered
into an Option Agreement with TSMC (the "TSMC Option Agreement"). Pursuant to
the TSMC Option Agreement, BENCHMARQ has committed to purchase and TSMC has
committed to provide specified quantities of wafers at prevailing market prices
during 1997 through 2000. Additionally, BENCHMARQ has an option to purchase and
TSMC has committed to provide certain additional wafers to be purchased during
1997 through 2000. The loss of the TSMC Option Agreement, the failure of TSMC to
honor the TSMC Option Agreement or the failure to utilize option wafers as
specified under the terms of the TSMC Option Agreement could have a material
adverse effect on BENCHMARQ.
Presently, Unitrode is dependent upon GMT Microelectronics Corp. ("GMT"),
an outside foundry, as its sole source of BiCMOS wafers which represented about
40% of Unitrode's fiscal year 1998 revenues. Unitrode's dependence on GMT is
expected to continue until Unitrode's new 6" BiCMOS wafer fabrication facility
becomes operational, currently estimated to occur in July 1998, or until the
qualification of a second foundry source is completed. There can be no assurance
that GMT or third-party foundries will be able to meet Unitrode's future BiCMOS
wafers production requirements or that the new 6" BiCMOS wafer fabrication
facility will become operational as planned. In addition, Unitrode has equity
and fixed income investments in GMT of $1.0 million at May 2, 1998, net of a
$2.5 million valuation allowance. Any material change in Unitrode's foundry
requirements could materially impact GMT's operating results and could adversely
affect the valuation of Unitrode's investment in GMT. See "-- Factors Affecting
Future Results."
IMPACT OF THE YEAR 2000 ISSUE
Unitrode has initiated a complete analysis of all computer-based software
and hardware to ensure Year 2000 compliance. In addition, Unitrode has begun
replacement of certain business process systems with Year 2000 compliant
software in order to improve reporting and productivity. Formal communications
have been established with all significant vendors to determine the extent to
which Unitrode could be impacted by third parties' failure to remediate their
own Year 2000 issues. Unitrode could be negatively impacted if it or a third
party is unsuccessful in properly addressing this issue. The Year 2000 project
expense is not anticipated to be material and is expected to be substantially
completed by the end of 1998.
BENCHMARQ has completed a preliminary assessment and will have to modify or
replace portions of its software so that its computer systems will function
properly with respect to dates in the year 2000 and
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thereafter. The total Year 2000 project cost, however, is not expected to be
material to BENCHMARQ's consolidated results of operations, financial position,
or cash flows.
The project is estimated to be completed not later than June 30, 1999,
which is prior to any anticipated impact on its operating systems. BENCHMARQ
believes that with modifications to existing software and conversions to new
software, the Year 2000 Issue will not pose significant operational problems for
its computer systems. However, if such modifications and conversions are not
made, or are not completed in a timely manner, the Year 2000 Issue could have a
material impact on BENCHMARQ's operations.
THE UNITRODE ANNUAL MEETING
DATE, TIME AND PLACE
The Unitrode Annual Meeting held on Monday, June 29, 1998, was convened and
immediately adjourned until 11:00 a.m., local time, Wednesday, July 29, 1998.
The adjourned session of the Unitrode Annual Meeting is to be held at Unitrode's
offices at 7 Continental Boulevard, Merrimack, New Hampshire.
PURPOSE OF THE UNITRODE ANNUAL MEETING
At the Unitrode Annual Meeting, the stockholders of Unitrode will be asked
to consider and vote upon a proposal to approve the issuance of up to 8,582,047
shares of Unitrode Common Stock in connection with the Merger. A copy of the
Original Merger Agreement is attached as Appendix A hereto and a copy of the
Merger Agreement Amendment is attached as Appendix B hereto. Approval of such
issuance is required by the rules of the NYSE because shares of Unitrode Common
Stock are traded on the NYSE and the number of shares proposed to be issued in
connection with the Merger exceeds 20% of the issued and outstanding shares of
Unitrode Common Stock. The proposal to approve the issuance of the Merger Shares
may be viewed as substantially analogous to a proposal to approve the Merger to
the extent that the approval by the stockholders of Unitrode of the issuance of
the Merger Shares is a condition to the obligations of each of Unitrode and
BENCHMARQ to effect the Merger. Unitrode has not yet made any determination as
to whether it would seek to estop any shareholder from challenging the Merger
based upon that shareholder's vote to approve the issuance of the Merger Shares,
but no assurances can be made that Unitrode would not seek to so estop a
shareholder from challenging the Merger.
In addition to the proposal regarding the issuance of the Merger Shares, at
the Unitrode Annual Meeting, stockholders of Unitrode will be asked to consider
and vote upon: (i) the election of directors; and (ii) the amendment of the 1992
Unitrode Plan to increase the number of shares of Unitrode Common Stock that may
be issued thereunder from 6,000,000 to 7,000,000.
UNITRODE RECORD DATE
The Unitrode Board has fixed the close of business on April 30, 1998 as the
Unitrode Record Date for the determination of holders of Unitrode Common Stock
entitled to notice of and to vote at the Unitrode Annual Meeting. As of the
Unitrode Record Date, there were issued and outstanding 24,408,257 shares of
Unitrode Common Stock entitled to vote at the Unitrode Annual Meeting held by
approximately 516 holders of record.
REQUIRED VOTE
The representation in person or by proxy of stockholders entitled to cast
at least a majority of the votes represented by the shares of Unitrode Common
Stock issued and outstanding on the Unitrode Record Date is necessary to
establish a quorum for the transaction of business at the Unitrode Annual
Meeting. Abstentions and broker non-votes will be counted as present or
represented for purposes of determining whether a quorum is present on any
matters. The approval of the issuance of the Merger Shares requires: (i) the
affirmative vote of the holders of a majority of the shares of Unitrode Common
Stock voted at the Unitrode Annual Meeting; and (ii) that at least a majority of
shares of Unitrode Common Stock entitled to vote as of the Unitrode Record Date
be voted at the Unitrode Annual Meeting. The election of directors to be voted
upon at the
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Unitrode Annual Meeting requires the affirmative vote of the holders of a
majority of the shares of Unitrode Common Stock entitled to be voted at the
Unitrode Annual Meeting. The amendment of the 1992 Unitrode Plan requires the
affirmative vote of the holders of a majority of the shares voted at the
Unitrode Annual Meeting. Abstentions will have the effect of negative votes on
all matters to be voted on by the stockholders of Unitrode, and failures to vote
and broker non-votes will have the effect of negative votes on the election of
directors and will have no effect on all other matters to be voted upon by
stockholders of Unitrode. However, failures to vote and broker non-votes will
not be considered votes cast for purposes of determining whether the holders of
at least a majority of the outstanding shares of Unitrode Common Stock entitled
to be voted as of the Unitrode Record Date cast votes on the proposal regarding
the issuance of the Merger Shares.
Each holder of record of Unitrode Common Stock on the Unitrode Record Date
is entitled to cast one vote per share of Unitrode Common Stock held by such
stockholder on each proposal to be presented to stockholders of Unitrode at the
Unitrode Annual Meeting.
As of the Unitrode Record Date, directors and executive officers of
Unitrode and their affiliates had the right to cast votes representing
approximately 2% of all votes represented by the issued and outstanding shares
of Unitrode Common Stock on the Unitrode Record Date. Such persons have
indicated to Unitrode that they intend to cast all of such votes in favor of
each of the proposals listed on the proxy.
PROXIES
All shares of Unitrode Common Stock represented by properly executed
proxies received prior to or at the Unitrode Annual Meeting will, unless such
proxies shall have been revoked, be voted in accordance with the instructions
indicated therein. If no instructions are indicated on a properly executed
proxy, the shares will be voted FOR approval of each of the proposals listed on
such proxy. Stockholders are urged to mark the boxes on the proxy to indicate
how their shares are to be voted.
If an executed proxy is returned and the stockholder has abstained from
voting on a matter listed on the proxy, the shares of Unitrode Common Stock
represented by such proxy will be considered present at the meeting for purposes
of determining a quorum and for purposes of calculating the vote, and will be
considered to have been voted and have the effect of voting against approval of
such matter. If an executed proxy is returned by a broker holding shares of
Unitrode Common Stock in street name which indicates that the broker does not
have discretionary authority as to certain shares to vote on any matter (a
so-called "broker non-vote"), such shares of Unitrode Common Stock will be
considered present at the meeting for purposes of determining the presence of a
quorum and of calculating the vote, but will not be considered to have been
voted in favor of approval of such matters.
It is not expected that any matter other than those referred to herein will
be brought before the Unitrode Annual Meeting. If, however, other matters are
properly presented, the persons named as proxies will vote in accordance with
their judgment with respect to such matters, unless authority to do so is
withheld in the proxy. Shares represented by proxies which have been voted
AGAINST approval of the issuance of the Merger Shares will not be voted in
respect of any motion made for adjournment of the Unitrode Annual Meeting for
purposes of soliciting additional votes to approve such issuance.
Any Unitrode stockholder who executes and returns a proxy may revoke such
proxy at any time before it is voted by: (i) notifying the Secretary of Unitrode
in writing at 7 Continental Boulevard, Merrimack, New Hampshire 03054; (ii)
granting a subsequent proxy; or (iii) appearing in person and voting at the
Unitrode Annual Meeting. Attendance at the Unitrode Annual Meeting will not in
and of itself constitute revocation of a proxy. Holders of Unitrode Common Stock
are not entitled to exercise appraisal rights as a result of the Merger or to
demand payment for their shares under the MGCL.
UNITRODE STOCKHOLDERS MAY REVOKE ANY PROXY WHICH THEY HAVE PREVIOUSLY GIVEN
BY RETURNING THE ENCLOSED PROXY CARD. ANY PROXY WHICH HAS BEEN PREVIOUSLY GIVEN
WHICH IS NOT REVOKED WILL REMAIN IN EFFECT. UNITRODE STOCKHOLDERS MAY ALSO VOTE
IN PERSON AT THE UNITRODE ANNUAL MEETING EVEN IF THEY HAVE PREVIOUSLY RETURNED A
PROXY CARD.
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Of the expenses incurred in connection with the printing and mailing of
this Joint Proxy Statement-Prospectus, 50% will be borne by Unitrode and 50%
will be borne by BENCHMARQ. Except as set forth in the immediately preceding
sentence, the cost of soliciting proxies will be borne by Unitrode. Unitrode has
retained Georgeson & Company, Inc. ("Georgeson & Company") at an estimated cost
of $13,000.00 plus reimbursement of expenses, to assist in the solicitation of
proxies by telephone, by mail or by any other means. Unitrode and Georgeson &
Company will also request banks, brokers and other intermediaries holding shares
beneficially owned by others to send this Joint Proxy Statement-Prospectus to
and obtain proxies from such beneficial owners and will reimburse such holders
for their reasonable expenses in so doing. Proxies may also be solicited by
Unitrode executive officers, directors and employees without additional
compensation. Proxies may be solicited by personal interview, mail, telephone,
facsimile, or other electronic transmission.
AVAILABILITY OF PRINCIPAL ACCOUNTANTS
Representatives of PricewaterhouseCoopers, principal accountants to
Unitrode, will be present at the Unitrode Annual Meeting, will have the
opportunity to make a statement, should they desire to do so, and are expected
to be available to respond to appropriate questions.
THE BENCHMARQ SPECIAL MEETING
DATE, TIME AND PLACE
The BENCHMARQ Special Meeting held on Monday, June 29, 1998 at 10:00 a.m.,
local time, at the offices of Winstead Sechrest & Minick P.C., at 5400
Renaissance Tower, 1201 Elm Street, Dallas, Texas 75270 was convened and
immediately adjourned until 10:00 a.m., local time, on Wednesday, July 29, 1998.
The adjourned session of the BENCHMARQ Special Meeting is to be held at the same
location originally designated.
PURPOSE
At the BENCHMARQ Special Meeting, the holders of BENCHMARQ Common Stock
will be asked to consider and vote upon a proposal to approve the Merger
Agreement and the transactions contemplated thereby, pursuant to which, among
other things, Sub will merge with and into BENCHMARQ and BENCHMARQ will survive
the Merger as a wholly owned subsidiary of Unitrode. Upon the terms and subject
to the conditions of the Merger Agreement, at the Effective Time, among other
things: (i) each issued and outstanding share of BENCHMARQ Common Stock (other
than shares to be cancelled in accordance with clause (ii) below) will be
converted into the right to receive one fully paid and nonassessable share of
Unitrode Common Stock; (ii) all shares of BENCHMARQ Common Stock that are held
by BENCHMARQ as treasury shares and all shares of BENCHMARQ Common Stock owned
by Unitrode, or any wholly owned subsidiary of BENCHMARQ or Unitrode, will be
cancelled and retired and shall cease to exist and no stock of Unitrode or other
consideration shall be delivered in exchange therefor; and (iii) Sub will be
merged with and into BENCHMARQ, with BENCHMARQ surviving the Merger as a wholly
owned subsidiary of Unitrode. Each Merger Share issued in the Merger will
include the associated Unitrode Rights. Cash will be issued in lieu of
fractional shares of Unitrode Common Stock.
BENCHMARQ RECORD DATE
The BENCHMARQ Board has fixed the close of business on May 14, 1998 as the
BENCHMARQ Record Date for the determination of the holders of BENCHMARQ Common
Stock entitled to notice of and to vote at the BENCHMARQ Special Meeting. On the
BENCHMARQ Record Date, there were 7,118,253 shares of BENCHMARQ Common Stock
outstanding and held by approximately 76 holders of record.
REQUIRED VOTE
A majority of the issued and outstanding shares of BENCHMARQ Common Stock
entitled to vote at the BENCHMARQ Special Meeting must be represented, either in
person or by proxy to constitute a quorum
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at the BENCHMARQ Special Meeting. Under the DGCL, the affirmative vote of at
least a majority of the BENCHMARQ Common Stock outstanding and entitled to vote
thereon at the BENCHMARQ Special Meeting is required to approve the Merger
Agreement and the Merger.
If an executed proxy is returned and the stockholder has abstained from
voting on approval of the Merger Agreement and the Merger, the BENCHMARQ Common
Stock represented by such proxy will be considered present at the BENCHMARQ
Special Meeting for purposes of determining a quorum and for purposes of
calculating the vote, but will not be considered to have been voted in favor of
approval of the Merger Agreement or the Merger. Because approval of the Merger
Agreement requires the affirmative vote of at least a majority of the BENCHMARQ
Common Stock issued and outstanding as of the BENCHMARQ Record Date,
abstentions, failures to vote and broker non-votes will have the same effect as
a vote against approval of the Merger Agreement.
As of the BENCHMARQ Record Date, directors and executive officers of
BENCHMARQ and their affiliates had the right to vote approximately 21.9% of all
outstanding shares of BENCHMARQ Common Stock entitled to vote at the BENCHMARQ
Special Meeting. The Voting Agreement Stockholders, each of whom is a director
of BENCHMARQ, are all parties to the Voting Agreement with Unitrode pursuant to
which the Voting Agreement Stockholders have agreed, subject to the terms and
conditions of the Voting Agreement, to vote the 1,463,609 shares of BENCHMARQ
Common Stock beneficially owned by them (representing approximately 20.7% of the
outstanding shares of BENCHMARQ Common Stock entitled to vote at the BENCHMARQ
Special Meeting) in favor of approval of the Merger Agreement and the Merger.
Each holder of record of shares of BENCHMARQ Common Stock on the BENCHMARQ
Record Date is entitled to one vote per share of BENCHMARQ Common Stock held by
such stockholder on each proposal to be presented to stockholders at the
BENCHMARQ Special Meeting.
PROXIES
All shares of BENCHMARQ Common Stock represented by properly executed
proxies received prior to or at the BENCHMARQ Special Meeting and not revoked
will be voted in accordance with the instructions indicated in such proxies.
Properly executed proxies that do not contain voting instructions will be voted
FOR approval of the Merger Agreement and the Merger. Stockholders are urged to
mark the box on the proxy to indicate how their BENCHMARQ Common Stock is to be
voted.
It is not expected that any matter other than those referred to herein will
be brought before the BENCHMARQ Special Meeting. If, however, other matters are
properly presented, the persons named as proxies will vote in accordance with
their own judgment with respect to such matters, unless authority to do so is
withheld in the proxy. Shares represented by proxies that have been voted
against approval of the Merger Agreement and the Merger will not be voted in
respect of any motion made for adjournment of the BENCHMARQ Special Meeting for
purposes of soliciting additional votes to approve the Merger Agreement and the
Merger.
A duly executed proxy is irrevocable if it states that it is irrevocable
and only as long as it is coupled with an interest sufficient in law to support
an irrevocable power.
BENCHMARQ STOCKHOLDERS MAY REVOKE ANY PROXY WHICH THEY HAVE PREVIOUSLY
GIVEN BY RETURNING THE ENCLOSED PROXY CARD. ANY PROXY WHICH HAS BEEN PREVIOUSLY
GIVEN WHICH IS NOT REVOKED WILL REMAIN IN EFFECT. BENCHMARQ STOCKHOLDERS MAY
ALSO VOTE IN PERSON AT THE BENCHMARQ SPECIAL MEETING EVEN IF THEY HAVE
PREVIOUSLY RETURNED A PROXY CARD.
Any BENCHMARQ stockholder who executes and returns a proxy may revoke such
proxy at any time before it is voted by: (i) notifying the Secretary of
BENCHMARQ in writing at 17919 Waterview Parkway, Dallas, Texas 75252; (ii)
granting a subsequent proxy; or (iii) appearing in person and voting at the
BENCHMARQ Special Meeting. Attendance at the BENCHMARQ Special Meeting will not
in and of itself constitute revocation of a proxy.
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The expenses incurred in connection with the printing and mailing of this
Joint Proxy Statement-Prospectus will be borne 50% by Unitrode and 50% by
BENCHMARQ. BENCHMARQ will request banks, brokers and other intermediaries
holding shares beneficially owned by others to send this Joint Proxy
Statement-Prospectus to and obtain proxies from such beneficial owners and will
reimburse such holders for their reasonable expenses in so doing. BENCHMARQ has
retained Corporate Investors Communications, Inc. to aid in the solicitation of
proxies. It is estimated that the cost of these services will be approximately
$6,000.00 plus expenses. The cost of soliciting proxies will be borne by
BENCHMARQ. Proxies may also be solicited by certain BENCHMARQ executive
officers, directors, employees, without additional compensation. Proxies may be
solicited by personal interview, mail, telephone, facsimile or other electronic
transmission.
Under the DGCL, holders of BENCHMARQ Common Stock are not entitled to
appraisal rights or to demand payment for their shares as a result of the
Merger.
AVAILABILITY OF INDEPENDENT ACCOUNTANTS
Representatives of Ernst & Young, independent accountants to BENCHMARQ,
will be present at the BENCHMARQ Special Meeting, will have the opportunity to
make a statement, should they desire to do so, and are expected to be available
to respond to appropriate questions.
BENCHMARQ STOCKHOLDERS SHOULD NOT SEND IN ANY STOCK CERTIFICATES WITH THEIR
PROXIES. A LETTER OF TRANSMITTAL WITH INSTRUCTIONS FOR THE SURRENDER OF STOCK
CERTIFICATES REPRESENTING BENCHMARQ COMMON STOCK WILL BE MAILED AS SOON AS
PRACTICABLE AFTER THE EFFECTIVE TIME.
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THE MERGER
This section of this Joint Proxy Statement-Prospectus describes certain
aspects of the proposed Merger, including the Merger Agreement. To the extent
that it relates to the Merger Agreement, the following description does not
purport to be complete and is qualified in its entirety by reference to the
Original Merger Agreement and to the Merger Agreement Amendment, which are
attached hereto as Appendices A and B, respectively, and Appendix A and Appendix
B are incorporated herein by reference. While Unitrode and BENCHMARQ believe
that such description covers the material terms of the Merger Agreement, all
stockholders of Unitrode and BENCHMARQ are urged to read the Original Merger
Agreement and the Merger Agreement Amendment in their entirety.
BACKGROUND OF THE MERGER
At an industry conference held November 3-5, 1997, Derrell C. Coker,
Chairman of BENCHMARQ, met Joseph E. Pappalardo, Vice President, Marketing of
Unitrode. At this meeting, Mr. Coker inquired whether Unitrode would have any
interest in collaborating with BENCHMARQ on future projects. Mr. Pappalardo
advised that he would pass Mr. Coker's inquiry to the senior management of
Unitrode.
On November 19, 1997, Mr. Coker received a phone call from Robert L. Gable,
Chairman of Unitrode, in response to his discussion with Mr. Pappalardo. Messrs.
Gable and Coker agreed to exchange general information about the companies and
to explore the possibility of joint projects between the two companies.
On December 5, 1997, Mr. Gable met with Mr. Coker and Alan R. Schuele,
President and Chief Executive Officer of BENCHMARQ, at BENCHMARQ's corporate
headquarters in Dallas, Texas. At this meeting, the three individuals discussed
in general opportunities for joint ventures or projects between the two
companies, including the possibility of a merger, the respective business
strengths and operational strategies of the two companies and the complementary
aspects of their manufacturing operations.
As a result of these preliminary discussions, senior management of both
companies began to consider the possibility of a merger or other business
combination between the two companies. On January 5, 1998, Messrs. Gable and
Schuele had a telephone conference in which they had a further preliminary
discussion as to a possible merger or other business combination between
BENCHMARQ and Unitrode including discussions as to what would represent a
mutually acceptable exchange ratio, assuming resolution of other material terms
of a transaction, completion of satisfactory due diligence and approval of each
company's respective board of directors. In such context, and subject to further
discussions and agreement as to how the exchange ratio would operate and whether
and under what circumstances there would be any adjustments thereto, the parties
discussed the possibility of an exchange ratio which would provide the
stockholders of BENCHMARQ as a result of the Merger with the right to receive
one share of Unitrode Common Stock for each share of BENCHMARQ Common Stock
outstanding.
On January 6, 1998, Mr. Coker and Mr. Schuele contacted Mr. Gable to
confirm BENCHMARQ's interest in pursuing further discussions as to a possible
merger or business combination between BENCHMARQ and Unitrode consistent with
the earlier discussions between the parties.
On January 20, 1998, Mr. Gable and Robert J. Richardson, President and
Chief Executive Officer of Unitrode, met with Messrs. Coker and Schuele at
BENCHMARQ's corporate headquarters to more fully explore the potential benefits
of a merger or other business combination between the parties. At this meeting,
BENCHMARQ and Unitrode entered into a mutual non-disclosure agreement to allow
the companies to exchange limited financial data and other information
concerning their respective businesses.
On January 29, 1998, Mr. Schuele met with Mr. Richardson at Unitrode's
corporate headquarters in Merrimack, New Hampshire. At this meeting Mr. Schuele
and Mr. Richardson continued their discussions regarding a possible combination
of the two companies. The parties agreed to defer any further discussion with
respect to valuation, a possible exchange ratio or the consideration to be paid
in a merger until other threshold issues relating to structural, operational and
management matters were resolved.
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On February 5, 1998, Mr. Richardson met with Mr. Schuele at BENCHMARQ's
corporate offices in Dallas to continue their discussions as to issues presented
by a combination between the companies. At this meeting a more comprehensive
mutual confidentiality and standstill agreement was entered into and the parties
determined to proceed with due diligence reviews for a possible transaction.
Thereafter, each of BENCHMARQ and Unitrode, together with their respective legal
and financial advisors, conducted more extensive due diligence of the other.
On February 17, 1998, legal counsel to BENCHMARQ distributed to Unitrode
the initial draft of a proposed form of the Original Merger Agreement.
On February 20, 1998, the BENCHMARQ Board met informally. Representatives
of BENCHMARQ's legal counsel also participated in the meeting. At this meeting
the BENCHMARQ Board was advised of the status of the proposed business
combination with Unitrode. No action was taken at that meeting.
During the course of negotiations, the BENCHMARQ Board and management
considered the possibility of other strategic alternatives, but BENCHMARQ did
not engage in discussions with any other party.
Unitrode entered into an engagement letter with Adams, Harkness & Hill on
February 20, 1998 pursuant to which Unitrode engaged Adams, Harkness & Hill to
provide investment banking services with respect to a possible business
combination with BENCHMARQ and deliver a fairness opinion with respect to the
fairness of the combination to the stockholders of Unitrode.
On February 20, 1998, BENCHMARQ engaged Prudential Securities to deliver a
fairness opinion with respect to the Exchange Ratio.
On February 21 and 22, 1998, Mr. Schuele and R. Scott Schaefer, the Chief
Financial Officer of BENCHMARQ, along with legal counsel to BENCHMARQ, met with
Mr. Richardson, Cosmo S. Trapani, Executive Vice President and Chief Financial
Officer of Unitrode, Allan R. Campbell, Senior Vice President, General Counsel
and Secretary of Unitrode, and representatives of Unitrode's outside legal
counsel at the offices of Unitrode's outside legal counsel in Boston,
Massachusetts. At this meeting the parties conducted negotiations with respect
to the terms and conditions of the Original Merger Agreement, Original Stock
Option Agreement and Original Voting Agreement. During the following week, the
management of Unitrode and BENCHMARQ and their respective legal counsel
continued to negotiate the terms and conditions of the Original Merger
Agreement, Original Stock Option Agreement and Original Voting Agreement. In
such discussions, the parties continued to consider a possible exchange ratio
which would result in each share of BENCHMARQ Common Stock outstanding
immediately prior to the Effective Time being converted in the Merger into one
share of Unitrode Common Stock; however, the parties were unable to reach
agreement as to the mechanics as to how such an exchange ratio would operate and
whether and under what circumstances it would be adjusted. Throughout the
discussions, Unitrode insisted on a fixed exchange ratio and BENCHMARQ insisted
on a floating exchange ratio. Throughout the course of all negotiations,
Unitrode consistently maintained the position that commitments of each of the
Voting Agreement Stockholders, substantially as set forth in the Original Voting
Agreement, the grant of an option to Unitrode by BENCHMARQ, substantially on the
terms set forth in the Original Stock Option Agreement, and the payment of the
Termination Fee (as hereinafter defined), substantially on the terms set forth
in the Original Merger Agreement, would be a prerequisite to its execution of a
definitive agreement with BENCHMARQ.
At a meeting of the Unitrode Board held on February 25, 1998, the Unitrode
Board considered the proposed terms of the possible transaction as then being
discussed between the parties. Members of Unitrode's senior management, its
legal counsel and representatives of Adams, Harkness & Hill made presentations
to the Unitrode Board and discussed with the Unitrode Board certain financial
and legal analyses of various aspects of the proposed Merger. Subsequently,
Unitrode's legal advisors continued negotiating various terms of the proposed
transaction, including the mechanics of an exchange ratio, with BENCHMARQ's
legal advisors. In addition, Mr. Richardson continued to discuss with Mr.
Schuele the operation of an exchange ratio, including the range of prices of
Unitrode Common Stock over which an exchange ratio would be maintained. In the
course of such negotiations, each of the parties referenced, among other
factors, the historical stock prices of Unitrode Common Stock and BENCHMARQ
Common Stock. As a result of their
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<PAGE> 42
negotiations, Mr. Richardson and Mr. Schuele subsequently agreed upon an
exchange ratio and adjustments thereto, substantially identical to those
included in the Original Merger Agreement. The negotiations between Messrs.
Richardson and Schuele and Unitrode's and BENCHMARQ's respective legal advisors
resulted in a proposed merger agreement, which the parties agreed would be
submitted to the respective Boards of Directors of both companies, containing
terms and provisions, including with respect to a fixed exchange ratio within
ranges and a floating exchange ratio outside of the ranges and the Termination
Fee, substantially identical to those included in the Original Merger Agreement.
On February 28, 1998, the Unitrode Board met to review the terms of the
proposed Original Merger Agreement. Following presentations from Unitrode
management, Unitrode's legal advisors and Adams, Harkness & Hill as to the
proposed terms of the Original Merger Agreement and the transactions
contemplated thereby which had been negotiated and an update of the analyses
presented to the Unitrode Board at the February 25, 1998 meeting, Adams,
Harkness & Hill delivered its opinion to the Unitrode Board that, as of such
date and subject to the assumptions and limitations contained therein, the
exchange ratio, as set forth in the Original Merger Agreement, was fair, from a
financial point of view to Unitrode and its stockholders. The Unitrode Board
then determined by unanimous vote that the transactions contemplated by the
Original Merger Agreement were in the best interests of Unitrode and its
stockholders and unanimously approved the Original Merger Agreement.
On March 1, 1998, the BENCHMARQ Board met with certain of BENCHMARQ's
executive officers, and representatives of Winstead Sechrest & Minick P.C.,
Ernst & Young and Prudential Securities to review the terms and conditions of
the Merger Agreement and Option Agreement and to consider and formally act upon
the Merger. Winstead Sechrest & Minick P.C., BENCHMARQ's legal counsel, advised
the BENCHMARQ Board of its legal duties and presented an analysis of the
Original Merger Agreement, Original Stock Option Agreement and Original Voting
Agreement. Following a presentation by Prudential Securities regarding its
financial analysis of the transaction, Prudential Securities orally delivered to
the BENCHMARQ Board its opinion that, as of that date, and subject to certain
assumptions, the exchange ratio, as set forth in the Original Merger Agreement,
was fair to the stockholders of BENCHMARQ from a financial point of view, which
opinion was subsequently confirmed in writing. Following such presentations and
a discussion by the members of the BENCHMARQ Board, the BENCHMARQ Board
unanimously approved the Merger, the Original Merger Agreement and the ancillary
documents to be executed by BENCHMARQ, including the Employment Agreements (as
hereinafter defined) and recommended that the Original Merger Agreement and the
Merger be submitted to the stockholders of BENCHMARQ for their consideration and
approval.
On March 2, 1998, the Original Merger Agreement and Original Stock Option
Agreement were executed and delivered by BENCHMARQ and Unitrode, and the
Original Voting Agreement was executed and delivered by Unitrode and each of the
Voting Agreement Stockholders.
As a result of the decline in market conditions and information
communicated to Unitrode that BENCHMARQ's results for its second quarter were
likely to be lower than previously anticipated, on June 6, 1998, Mr. Richardson
contacted Mr. Schuele to discuss the continued advisability of proceeding with
the transactions contemplated by the Original Merger Agreement.
On June 10, 1998, Mr. Richardson again contacted Mr. Schuele to state that
there was an increased likelihood that, absent an agreement as to a new exchange
ratio, Unitrode would terminate the Original Merger Agreement or that the
Unitrode Board would withdraw its recommendation that the stockholders of
Unitrode approve the issuance of shares of Unitrode Common Stock in connection
with the transactions contemplated by the Original Merger Agreement. After
consultation with legal and financial advisors and the BENCHMARQ Board, Mr.
Schuele responded that BENCHMARQ believed that under the terms of the Original
Merger Agreement, Unitrode was obligated to expend its reasonable efforts to
consummate the transactions contemplated by the Original Merger Agreement, and
that Unitrode was not entitled to terminate the Original Merger Agreement or
withdraw its recommendation. On the evening of June 11, 1998, the Unitrode Board
met telephonically to evaluate the advisability of proceeding with the Merger
and to consider its alternatives under the Original Merger Agreement. The
Unitrode Board authorized Mr. Richardson to
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<PAGE> 43
convey to BENCHMARQ that unless the exchange ratio, as set forth in the Original
Merger Agreement, was modified, the Unitrode Board was prepared to withdraw its
recommendation previously made to Unitrode stockholders that such stockholders
approve the issuance of shares of Unitrode Common Stock in connection with the
transactions contemplated by the Original Merger Agreement. Mr. Richardson
communicated the Unitrode Board's position to Mr. Schuele later that evening.
The following day, Mr. Schuele, after consultation with the BENCHMARQ Board,
indicated that BENCHMARQ was prepared to discuss amending the Original Merger
Agreement. On the evening of June 12, 1998, Mr. Richardson and Mr. Schuele,
together with Mr. Trapani and legal advisers to BENCHMARQ and Unitrode,
discussed various issues with respect to amending the Original Merger Agreement.
On June 13, 1998, the BENCHMARQ Board met telephonically and decided not to
amend the Original Merger Agreement, and reiterated its position that Unitrode
was obligated to expend reasonable efforts to consummate the transactions
contemplated by the Original Merger Agreement, and that Unitrode was not
entitled to terminate the Original Merger Agreement or withdraw its
recommendation. On June 15, 1998, Unitrode announced that its Board of Directors
was withdrawing its recommendation made to Unitrode stockholders to approve the
issuance of shares of Unitrode Common Stock in connection with the transactions
contemplated by the Original Merger Agreement.
On June 16, 1998, Mr. Richardson contacted Mr. Schuele and inquired whether
there was any basis for continuing the prior discussions related to amending the
Original Merger Agreement. Mr. Schuele indicated that certain of the issues on
which the parties were previously unable to reach agreement would not continue
to be required by BENCHMARQ. Also on June 16, 1998, the Unitrode Board met
telephonically to review the events of the preceding days and to again consider
its alternatives under the Original Merger Agreement. The Unitrode Board
confirmed its earlier determination to withdraw its recommendation to Unitrode
stockholders that such stockholders approve the issuance of shares of Unitrode
Common Stock in connection with the transactions contemplated by the Original
Merger Agreement. However, the Unitrode Board authorized Mr. Richardson to again
pursue discussions with BENCHMARQ as to the possibility of an amended agreement,
provided such agreement could be entered into with BENCHMARQ within a short
period of time and further provided that Unitrode had an opportunity to conduct
further diligence with respect to BENCHMARQ in light of the revised earning
expectations. Following the Unitrode Board meeting, representatives of each of
Unitrode and BENCHMARQ again pursued discussions with respect to an amended
merger agreement.
On June 20, 1998, the BENCHMARQ Board met to review the status of the
negotiations with Unitrode and to discuss the alternatives available to
BENCHMARQ. In those discussions the BENCHMARQ Board received a presentation from
management regarding recent events affecting Unitrode's business, the impact on
BENCHMARQ of continuing to negotiate with Unitrode, the relative merits of
BENCHMARQ being acquired by Unitrode and the options available to BENCHMARQ if
it elected to terminate further discussions with Unitrode. The BENCHMARQ Board
also received a presentation from Winstead Sechrest & Minick P.C. with respect
to the legal significance of the proposed amendments to be made to the Original
Merger Agreement and the Original Stock Option Agreement and the legal
obligations of the BENCHMARQ Board. The BENCHMARQ Board authorized Mr. Schuele
to enter into discussions with Unitrode to determine if the Original Merger
Agreement could be amended on terms and in a time frame acceptable to BENCHMARQ.
On June 23, 1998, the Unitrode Board met to review the results of the
negotiations with BENCHMARQ. All members of the Unitrode Board were present
except James T. Vanderslice. Following presentations from Unitrode management,
Unitrode's legal advisors and Adams, Harkness & Hill as to the proposed terms of
the Merger Agreement Amendment, and an update of the analyses previously
presented to the Unitrode Board, Adams, Harkness & Hill delivered its opinion to
the Unitrode Board that, as of such date and subject to the assumptions and
limitations contained therein, the Exchange Ratio was fair from a financial
point of view to Unitrode and its stockholders. See "-- Opinion of Unitrode's
Financial Advisors." The Unitrode Board then determined by unanimous vote, with
one director absent, that the transactions contemplated by the Merger Agreement
were fair and in the best interest of Unitrode and its stockholders and
unanimously, with Mr. Vanderslice absent, approved the Merger Agreement and
unanimously, with Mr. Vanderslice absent, recommended that the stockholders of
Unitrode vote for approval of the issuance of the Merger Shares.
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<PAGE> 44
On June 23, 1998, the BENCHMARQ Board met telephonically to review the
results of the negotiations with Unitrode. All of the members of the BENCHMARQ
Board were present except Harvey B. Cash. At that meeting, the BENCHMARQ Board
received a presentation from Prudential Securities regarding the fairness of the
Exchange Ratio to the stockholders of BENCHMARQ from a financial point of view
as of such date and subject to the assumptions and limitations contained
therein, a presentation from BENCHMARQ's management regarding various business
considerations related to the Merger and a presentation from Winstead Sechrest &
Minick P.C. regarding the legal issues related to an amendment of each of the
Original Merger Agreement and the Original Stock Option Agreement, including the
legal significance of the various amendments to be made to the Original Merger
Agreement and the Original Stock Option Agreement. See "-- Opinion of
BENCHMARQ's Financial Advisors." The BENCHMARQ Board then determined by
unanimous vote, with Mr. Cash absent, to approve the Merger Agreement Amendment
and Stock Option Agreement Amendment and recommend that the BENCHMARQ
stockholders approve the Merger Agreement and the Merger.
On June 23, 1998 the Merger Agreement Amendment and Stock Option Agreement
Amendment were executed and delivered by BENCHMARQ and Unitrode and the Voting
Agreement Amendment was executed and delivered by Unitrode and each of the
Voting Agreement Stockholders.
UNITRODE'S REASONS FOR THE MERGER; RECOMMENDATION OF THE UNITRODE BOARD
Unitrode believes that the strategic combination of Unitrode and BENCHMARQ
will create a strong market presence in power management and battery management
ICs and modules. Each company has a well-established competence in complementary
technologies which Unitrode anticipates will allow the combined companies to
accelerate the development of proprietary products for the rapidly growing
portable power segment of the computer industry, and communications and consumer
markets. Unitrode believes that the combined company will be able to sell
worldwide to a diversified customer base in computer, industrial,
communications, and consumer markets.
Unitrode also believes that the combination of BENCHMARQ's mixed-signal
CMOS design expertise and customer base for battery management with Unitrode's
management team, its BiCMOS process technology, and expanded manufacturing
capabilities plus the combination of two established sales channels will provide
opportunities for growth. Certain areas of power management, particularly
portable power, and interface applications, are growing and may become an
increasingly larger portion of the combined company. However, both companies
have indicated in previous public statements that the near-term results of each
are constrained by current market conditions. An important benefit of the Merger
is that, over time, it may reduce the historical significance of the disk drive
market and the NVSRAM Products, which are impacting the near-term results of
Unitrode and BENCHMARQ, respectively. See "Risk Factors -- Recent Developments,"
"Risk Factors -- Factors Affecting Future Results" and "Risk
Factors -- Dependence on Key Customers."
THE UNITRODE BOARD, WITH ONE DIRECTOR ABSENT, HAS DETERMINED THE MERGER AND
THE ISSUANCE OF THE MERGER SHARES TO BE FAIR TO AND IN THE BEST INTERESTS OF
UNITRODE AND ITS STOCKHOLDERS. ACCORDINGLY, THE UNITRODE BOARD HAS APPROVED,
WITH ONE DIRECTOR ABSENT, THE MERGER AGREEMENT AND THE ISSUANCE OF SUCH MERGER
SHARES AND UNANIMOUSLY, WITH ONE DIRECTOR ABSENT, RECOMMENDS THAT THE
STOCKHOLDERS OF UNITRODE VOTE FOR APPROVAL OF THE ISSUANCE OF THE MERGER SHARES.
In reaching its determination with respect to the Merger and the issuance
of the Merger Shares, the Unitrode Board, with one director absent, considered,
without assigning any relative or specific weight to, a number of factors. The
material factors considered included the following:
(1) the Unitrode Board's understanding of the present and anticipated
environment in the semiconductor industry and the opportunities for the future
growth of Unitrode;
(2) the Unitrode Board's consideration of information concerning the
financial condition, results of operations, prospects and business of Unitrode
and of the revenues of Unitrode over various periods and BENCHMARQ over various
periods, their complementary businesses, and the ratio of the price of Unitrode
Common Stock to the price of BENCHMARQ Common Stock over various periods;
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<PAGE> 45
(3) the Unitrode Board's consideration of information concerning the
financial condition, including liabilities, contingent and otherwise, results of
operations, prospects and business of BENCHMARQ and information relating to the
current litigation between BENCHMARQ and DSC;
(4) the Unitrode Board's understanding of current industry, economic and
market conditions;
(5) the Unitrode Board's understanding of the financial and business
prospects for the combined company, including general information relating to
possible synergies resulting from utilization of the sales channels of both
BENCHMARQ and Unitrode and the suitability of Unitrode's manufacturing
operations for certain of BENCHMARQ's products; cost reductions from
consolidation of overhead functions and elimination of other redundancies; and
operating efficiencies and consolidations generally;
(6) presentations from, and discussions with, management of Unitrode,
representatives of outside legal counsel and representatives of Adams, Harkness
& Hill regarding the business, financial, accounting and legal due diligence
with respect to BENCHMARQ and the terms and conditions of the Merger Agreement;
(7) the presentation of Adams, Harkness & Hill and its oral opinion of
Adams, Harkness & Hill delivered on June 23, 1998, confirmed by a written
opinion of the same date, that, as of the date of such opinion, the Exchange
Ratio is fair, from a financial point of view, to Unitrode and the stockholders
of Unitrode;
(8) a review with the Unitrode Board's outside counsel of the terms of the
Merger Agreement, the Option Agreement and the Voting Agreement, including the
circumstances in which either Unitrode or BENCHMARQ may terminate the Merger
Agreement (and the fees associated therewith) and the closing conditions to the
Merger contained therein;
(9) the Unitrode Board's understanding of the risks involved in
successfully integrating the businesses and operations of the two companies; and
(10) a review by Unitrode management of BENCHMARQ's business, including its
products, customers, suppliers and employees, and the evaluation of the
potential synergies resulting from the combination of Unitrode and BENCHMARQ.
The above factors were considered collectively by the Unitrode Board, with
one director absent, without giving specific weight to any particular factor and
without specifically characterizing the factors as "positive", "negative" or
"neutral" to its determinations, in connection with its assessment of the
strategic and operational benefits and risks of the Merger. Based on this
analysis and after careful consideration and consultation with its outside
financial and legal advisors, the Unitrode Board unanimously, with one director
absent, concluded that the Merger and the issuance of the Merger Shares is in
the best interests of Unitrode's stockholders.
OPINION OF UNITRODE'S FINANCIAL ADVISOR
Unitrode retained Adams, Harkness & Hill to render an opinion as to the
fairness, from a financial point of view, to Unitrode and its stockholders of
the Exchange Ratio. At a telephonic meeting of the Unitrode Board held on June
23, 1998, Adams, Harkness & Hill delivered to the Unitrode Board the Adams,
Harkness Opinion that, based on matters described therein and as of the date of
the Merger Agreement, the Exchange Ratio is fair, from a financial point of
view, to Unitrode and its stockholders. The complete text of the Adams, Harkness
Opinion, dated June 23, 1998, setting forth the assumptions made, procedures
followed, matters considered and scope of the review undertaken by Adams,
Harkness & Hill in rendering the Adams, Harkness Opinion, is attached hereto as
Appendix C. The opinion of Adams, Harkness & Hill was presented to the Unitrode
Board to assist it in its consideration of the Merger Agreement and the
transactions contemplated thereby. Adams, Harkness & Hill was not requested to
update, has not updated and does not intend to update the Adams, Harkness
Opinion for any period subsequent to June 23, 1998, including to take into
account any subsequent filings or other events since June 23, 1998. Stockholders
are urged to read the Adams, Harkness Opinion in its entirety.
Adams, Harkness & Hill did not recommend to the Unitrode Board that any
specific amount of consideration constituted the appropriate consideration for
the Merger. No limitations were imposed by the
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Unitrode Board on Adams, Harkness & Hill with respect to the investigations made
or procedures followed by Adams, Harkness & Hill in rendering the Adams,
Harkness Opinion. The Adams, Harkness Opinion addresses only the fairness from a
financial point of view of the Exchange Ratio to Unitrode and its stockholders
and does not constitute a recommendation to any holder of Unitrode Common Stock
as to how such stockholder should vote at the Unitrode Annual Meeting. Adams,
Harkness & Hill expressed no opinion as to the tax consequences of the Merger,
and the Adams, Harkness Opinion does not take into account the particular tax
status or position of any holder of Unitrode Common Stock. In rendering the
Adams, Harkness Opinion, Adams, Harkness & Hill was not engaged as an agent or
fiduciary of Unitrode's stockholders or any other third party. The summary of
the Adams, Harkness Opinion set forth in this Joint Proxy Statement-Prospectus
is qualified in its entirety by reference to the full text of such opinion.
In developing the Adams, Harkness Opinion, Adams, Harkness & Hill: (i)
reviewed Unitrode's Annual Reports, Forms 10-K and related financial information
for the fiscal years ended January 31, 1996, 1997 and 1998 and Unitrode's Form
10-Q and the related unaudited financial information for the three-month period
ending May 2, 1998; (ii) reviewed BENCHMARQ's Annual Reports, Form 10-K and
related financial information for the fiscal years ended December 31, 1995, 1996
and 1997 and BENCHMARQ's Form 10-Q and the related unaudited financial
information for the three-month period ended March 31, 1998; (iii) analyzed
certain internal financial statements and other financial and operating data
concerning Unitrode prepared by the management of Unitrode; (iv) analyzed
certain internal financial statements and other financial and operating data
concerning BENCHMARQ prepared by the management of BENCHMARQ; (v) analyzed the
potential pro forma financial effects of the Merger on Unitrode and BENCHMARQ
and compared the relative financial contributions of Unitrode and BENCHMARQ to
the combined company following consummation of the Merger, each based on both
publicly available estimates from third-party research analysts of the future
financial performance of BENCHMARQ and Unitrode and internal forecasts of such
future performance jointly prepared by management of Unitrode and BENCHMARQ and
internal forecasts of such future performance prepared solely by Unitrode; (vi)
reviewed certain information relating to prior periods concerning the business,
earnings and assets of Unitrode and BENCHMARQ furnished to Adams, Harkness &
Hill by Unitrode and BENCHMARQ; (vii) conducted due diligence discussions with
members of senior management of Unitrode and BENCHMARQ and discussed with
members of senior management of Unitrode and BENCHMARQ their views regarding
future business, financial and operating benefits arising from the Merger (for
the period subsequent to the delivery of the February 28, 1998 Adams, Harkness &
Hill opinion, Adams, Harkness & Hill discussed the foregoing only with senior
management of Unitrode who had discussed the same with the senior management of
BENCHMARQ); (viii) reviewed the historical market prices and trading activity
for Unitrode Common Stock and BENCHMARQ Common Stock and compared them with that
of certain publicly traded companies (the "Peer Group") deemed by Adams,
Harkness & Hill to be relevant and comparable to Unitrode and BENCHMARQ,
respectively; (ix) compared the historical and projected results of operations
of Unitrode and BENCHMARQ with that of the Peer Group; (x) compared the
financial terms of the Merger with the financial terms of certain other mergers
and acquisitions (the "Precedent Mergers and Acquisitions") deemed to be
relevant and comparable to the Merger; (xi) participated in certain discussions
among representatives of Unitrode and its legal advisors and, before the
issuance of the February 28, 1998 Adams, Harkness & Hill opinion, BENCHMARQ and
their financial and legal advisors; (xii) reviewed the Merger Agreement and the
Option Agreement; and (xiii) reviewed such other financial studies and analyses
and performed such other investigations and took into account such other matters
as deemed necessary, including assessment of general economic, market and
monetary conditions.
The following paragraphs, while not a complete description of the analyses
performed by Adams, Harkness & Hill, summarize the material analyses performed
by Adams, Harkness & Hill in arriving at the Adams, Harkness Opinion and
reviewed with the Unitrode Board in connection therewith.
Stock Price Analysis. Adams, Harkness & Hill reviewed the trading
activity, including closing share price and trading volume, of Unitrode Common
Stock and BENCHMARQ Common Stock for the one-year period ended June 22, 1998.
Adams, Harkness & Hill noted that the closing share prices on June 22, 1998 of
Unitrode Common Stock and BENCHMARQ Common Stock were $11.13 and $8.88,
respectively. Adams,
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Harkness & Hill also noted that, for the one year period: (i) the daily closing
share prices of Unitrode Common Stock ranged from a high of $41.81 on September
8, 1997 to a low of $11.13 on June 22, 1998; (ii) the daily closing prices of
BENCHMARQ Common Stock ranged from a high of $34.50 on September 23, 1997, to a
low of $8.56 on June 19, 1998; (iii) the average closing share price, without
consideration for volume weighting, for Unitrode Common Stock was $17.90; and
(iv) the average closing share price, without consideration for volume
weighting, for BENCHMARQ Common Stock was $15.63. Adams, Harkness & Hill
calculated that, based on the June 22, 1998, closing share prices of Unitrode
Common Stock and BENCHMARQ Common Stock, the exchange ratio implied by division
of the closing share price of BENCHMARQ Common Stock by that of Unitrode Common
Stock was 0.798. Adams, Harkness & Hill also calculated that, based on the
average closing share prices for the one-year period of Unitrode Common Stock
and BENCHMARQ Common Stock, without consideration for volume weighting, the
exchange ratio implied by division of the average closing price of BENCHMARQ
Common Stock by that of Unitrode Common Stock was 0.822. The following table
sets forth average closing prices of Unitrode Common Stock and BENCHMARQ Common
Stock, without consideration for volume weighting, and the exchange ratio
implied by division of the respective average closing prices of BENCHMARQ Common
Stock by those of Unitrode Common Stock for the one-year period, as well as for
the 100 trading days, 50 trading days and 20 trading days up to and including
June 22, 1998:
<TABLE>
<CAPTION>
AVERAGE CLOSING PRICE:
----------------------
UNITRODE BENCHMARQ IMPLIED
COMMON COMMON EXCHANGE
STOCK STOCK RATIO(A)
-------- ----------- --------
<S> <C> <C> <C>
One Year (June 21, 1997-June 22, 1998).............. $23.27 $19.13 0.822
100 Trading Days (January 29, 1998-June 22, 1998)... $16.44 $15.19 0.924
50 Trading Days (April 13, 1998-June 22, 1998)...... $14.26 $14.44 1.013
20 Trading Days (May 26, 1998-June 22, 1998)........ $12.16 $12.86 1.058
</TABLE>
- ---------------
(a) Figures shown represent the fractional number of shares of Unitrode Common
Stock per share of BENCHMARQ Common Stock.
Adams, Harkness & Hill compared these implied exchange ratios to the
Exchange Ratio.
In addition, Adams, Harkness & Hill compared the indexed share-price
performance of Unitrode Common Stock for the 200 trading days up to and
including June 22, 1998 to BENCHMARQ Common Stock, a composite index made up of
the Peer Group, and the Nasdaq Composite Index. The companies making up the Peer
Group were: Analog Devices, Inc., DSC, Linear Technology Corp., Maxim Integrated
Products, Inc., Micrel, Inc., National Semiconductor Corp. and Sipex Corp.
Adams, Harkness & Hill noted that the indexed share price performance of
Unitrode Common Stock and BENCHMARQ Common Stock, at 27.3% and 27.7%,
respectively, had underperformed for the period the indexed performance of both
the Peer Group and the Nasdaq Composite Index, at 71.8% and 110.4%,
respectively.
Contribution Analysis. Adams, Harkness & Hill compared the contribution of
Unitrode and BENCHMARQ to historical and projected pro forma combined total
revenue, earnings before interest and taxes ("EBIT"), pre-tax income, and net
income for calendar years 1997, 1998 and 1999. Historical comparisons were based
on actual financial results of Unitrode for fiscal 1998 and actual calendar 1997
results as publicly reported by Unitrode and BENCHMARQ, respectively. Pro forma
comparisons for calendar 1998 and 1999 were based on projected financial results
for Unitrode provided by Unitrode management, adjusted for the calendar year,
and projected financial results for BENCHMARQ provided by BENCHMARQ management.
For such periods and based on such pro forma comparisons, Adams, Harkness & Hill
noted that BENCHMARQ would contribute 20.0% to 22.4% of pro forma combined total
revenue, 11.2% to 22.4% of pro forma combined EBIT, 10.9% to 17.7% of pro forma
combined pre-tax income, and 11.6% to 18.1% of pro forma combined net income.
Adams, Harkness & Hill compared these historical contribution percentages
to 24.0%, the pro forma ownership calculated using the Treasury Stock Method, as
implied by the Exchange Ratio, of the combined company by holders of BENCHMARQ
Common Stock.
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Peer Group Analysis. Adams, Harkness & Hill analyzed, as of June 22, 1998,
historical financial performance data for the fiscal years 1996 and 1997 and the
last twelve months ("LTM") and projected financial performance data for the
calendar years 1998 and 1999 for Unitrode, BENCHMARQ and the Peer Group. Adams,
Harkness & Hill compared ratios and multiples derived from this data and
selected stock market data for BENCHMARQ to similar ratios and multiples for
Unitrode and the Peer Group. Financial performance data compared included equity
value (i.e., the public market value of the common and common equivalent shares
outstanding as calculated using the Treasury Stock Method), enterprise value
(i.e., equity value, less cash and cash equivalents, plus funded debt), revenue,
EBIT and EBIT margin, net income and net margin, historical earnings per share,
estimated earnings per share and estimated earnings per share growth rate as
published by Adams, Harkness & Hill or third parties. Ratios and multiples
compared included enterprise value to revenue, enterprise value to EBIT, and
equity value to net income before non-recurring and extraordinary charges (i.e.,
the price to earnings ratio). Adams, Harkness & Hill noted that, when Unitrode,
BENCHMARQ and the companies of the Peer Group were ranked by historical and
projected financial performance data, as well as these ratios and multiples,
Unitrode and BENCHMARQ underperformed the companies of the Peer Group.
Based on the ratios and multiples for the Peer Group and Unitrode deemed
relevant for comparison purposes, Adams, Harkness & Hill estimated the following
ranges, adjusted as necessary for BENCHMARQ's net cash and cash equivalents of
$20.4 million and funded debt of $0.5 million, of implied value for BENCHMARQ's
equity: based on enterprise value to revenue multiples for projected calendar
1998, BENCHMARQ's implied equity value ranged from approximately $28 million to
approximately $328 million, with an average of approximately $157 million; based
on enterprise value to revenue multiples for projected calendar 1999,
BENCHMARQ's implied equity value ranged from approximately $32 million to
approximately $378 million, with an average of approximately $180 million; based
on enterprise value to EBIT multiples for projected calendar 1998, BENCHMARQ's
implied equity value ranged from approximately $26 million to approximately $163
million, with an average of approximately $79 million; based on enterprise value
to EBIT multiples for projected calendar 1999, BENCHMARQ's implied equity value
ranged from approximately $30 million to approximately $188 million, with an
average of approximately $91 million; based on price to earnings ratios for
projected calendar 1998, BENCHMARQ's public market implied equity value ranged
from approximately $39 million to approximately $83 million, with an average of
approximately $67 million; based on price to earnings ratios for projected
calendar 1999, BENCHMARQ's public market implied equity value ranged from
approximately $37 million to approximately $76 million, with an average of
approximately $60 million.
Adams, Harkness & Hill compared these ranges of implied equity value for
BENCHMARQ to the equity value implied by the Exchange Ratio of approximately
$85.3 million.
Precedent Mergers & Acquisitions Analysis. Adams, Harkness & Hill analyzed
publicly available information for selected completed acquisitions and mergers
since 1992 within various segments of the semiconductor industry. Of the 28
transactions evaluated, filings with the Securities and Exchange Commission (the
"SEC") were available for 16 transactions. In examining these transactions,
Adams, Harkness & Hill analyzed financial performance data and assessed certain
financial characteristics of the acquired companies relative to the
consideration offered and derived relevant ratios and multiples from this data.
Adams, Harkness & Hill then compared these ratios and multiples to historical
and projected financial performance data for BENCHMARQ to derive a range of
implied equity value.
Based on multiples of enterprise value to LTM revenue for the Precedent
Mergers and Acquisitions, Adams, Harkness & Hill estimated BENCHMARQ's implied
equity value (based on BENCHMARQ's revenue for the twelve months ended March 31,
1998 and adjusted as necessary for BENCHMARQ's net cash and cash equivalents of
$20.4 million and funded debt of $0.5 million), to range from approximately $22
million to approximately $172 million, with an average of approximately $88
million. Based on multiples of enterprise value to LTM EBIT for the Precedent
Mergers and Acquisitions, Adams, Harkness & Hill estimated BENCHMARQ's implied
equity value (based on BENCHMARQ's EBIT for the twelve months ended March 31,
1998 and adjusted as necessary for BENCHMARQ's net cash and cash equivalents of
$20.4 million and funded debt of $0.5 million), to range from approximately $51
million to approximately $213
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million, with an average of approximately $141 million. Based on multiples of
equity value to LTM net income for the Precedent Mergers and Acquisitions,
Adams, Harkness & Hill estimated BENCHMARQ's implied equity value (based on
BENCHMARQ's net income for the twelve months ended March 31, 1998), to range
from approximately $56 million to approximately $220 million, with an average of
approximately $122 million.
Adams, Harkness & Hill compared these ranges of implied equity value for
BENCHMARQ to the equity value implied by the Exchange Ratio of approximately
$85.3 million.
In the group of 16 transactions for which SEC filings were available, nine
transactions involved the acquisition of the equity shares of publicly-traded
companies for which share price data was available. Adams, Harkness & Hill
analyzed the premiums paid by the acquiring company relative to the closing
price of the acquired company's shares as of one trading day, one week (i.e.,
five trading days), and four weeks (i.e., 20 trading days) prior to the public
announcement of the Merger Agreement Amendment. The average premiums paid one
day prior to the public announcement of the Merger Agreement Amendment ranged
from approximately 3% to approximately 43%, with an average of approximately
32%. The average premium paid one week prior to the public announcement of the
Merger Agreement Amendment ranged from approximately 12% to approximately 64%,
with an average of approximately 45%. The average premium paid four weeks prior
to the public announcement of the Merger Agreement Amendment ranged from
approximately 11% to approximately 68%, with an average of approximately 43%.
Adams, Harkness & Hill compared these average premiums to the premiums
implied by the Exchange Ratio of 29.8% for one trading day, 26.4% for one week,
and (21.9%) for four weeks.
Discounted Cash Flow Analysis. Adams, Harkness & Hill performed a
discounted cash flow analysis to estimate the present value of the stand-alone
unlevered (before interest expense) after-tax cash flows of BENCHMARQ, based on
a financial forecast for BENCHMARQ prepared by BENCHMARQ management. Adams,
Harkness & Hill first calculated, based on the analysis of the three-year
weighted average cost of capital for BENCHMARQ, Unitrode and the companies of
the Peer Group, a range of rates appropriate for use in discounting BENCHMARQ's
projected, unlevered after-tax cash flows. Adams, Harkness & Hill calculated the
three-year weighted average cost of capital for BENCHMARQ, Unitrode and the
companies of the Peer Group to be within a range of 15.2% and 19.7%, with an
average value, weighted for each company's net enterprise value, of 18.5%. Based
on these calculations, Adams, Harkness & Hill first discounted the projected,
unlevered after-tax cash flows through 2002 using discount rates of 16%, 18% and
20%. BENCHMARQ's unlevered after-tax cash-flows were calculated as the after-tax
operating earnings of BENCHMARQ adjusted for the addition of non-cash expenses
and the deduction of uses of cash not reflected in the income statement. Adams,
Harkness & Hill then added to the present value of the cash flows the terminal
value of BENCHMARQ in the fiscal year 2002, discounted to present value at the
same discount rate. The terminal value was computed by multiplying BENCHMARQ's
projected operating income in the fiscal year 2002 by terminal multiples of 6.0,
10.5, and 15.0. The discounted cash flow valuation indicated implied equity
valuations from approximately $70.6 million to approximately $141.3 million with
an average of approximately $104.0 million.
Adams, Harkness & Hill compared this range of implied equity value for
BENCHMARQ to the equity value implied by the Exchange Ratio of approximately
$85.3 million.
Pro Forma Acquisition Analysis. Adams, Harkness & Hill analyzed the pro
forma annual earnings per share of the combined company based on the Exchange
Ratio, forecasts of BENCHMARQ's financial performance received from BENCHMARQ,
forecasts of Unitrode's financial performance received from Unitrode, and pro
forma forecasts of the combined company received from Unitrode. Such analysis,
which relied primarily upon the pro forma forecasts of the combined company
received from Unitrode, indicated that pro forma earnings per share of the
combined company, compared to Unitrode as a stand-alone entity, would be
decreased by 10.1% in calendar 1998 and decreased by 14.2% in calendar year
1999. Adams, Harkness & Hill relied primarily upon the pro forma forecasts of
the combined company received from Unitrode because such forecasts reflect
certain adjustments to BENCHMARQ's forecasts to take into account decreased
backlog and softer market conditions caused by the erosion of the Asian market.
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The preparation of the Adams, Harkness Opinion involved various
determinations as to the most appropriate and relevant quantitative and
qualitative methods of financial analyses and the application of those methods
to the particular circumstances. Accordingly, such opinion is not readily
susceptible to summary description. In arriving at the Adams, Harkness Opinion,
Adams, Harkness & Hill did not attribute any particular weight to any analysis
or factor considered by it, but rather made qualitative judgments as to the
significance and relevance of each analysis and factor. Accordingly, Adams,
Harkness & Hill believes its analyses must be considered as a whole and that
considering any portion of such analyses and current factors could create a
misleading or incomplete view of the process underlying the preparation of the
Adams, Harkness Opinion. In its analyses, Adams, Harkness & Hill made numerous
assumptions with respect to industry performance, general business and other
conditions and matters, many of which are beyond the control of Unitrode and
BENCHMARQ. Any estimates contained in these analyses are not necessarily
indicative of actual values or predictive of future results or values, which may
be significantly more or less favorable than as set forth therein. In addition,
analyses relating to the value of businesses do not purport to be appraisals or
to reflect the prices at which businesses actually may be sold.
Based on past activities, Adams, Harkness & Hill has a substantial degree
of familiarity with Unitrode. In addition, in the course of its engagement,
Adams, Harkness & Hill conducted further investigation of Unitrode and
BENCHMARQ. In arriving at the Adams, Harkness Opinion, however, Adams, Harkness
& Hill did not independently verify any of the foregoing information and relied
on all such information being complete and accurate in all material respects.
Furthermore, Adams, Harkness & Hill did not obtain nor make any independent
evaluation or appraisal of the properties, assets or liabilities of Unitrode or
BENCHMARQ, nor was Adams, Harkness & Hill furnished any such evaluation or
appraisal. With respect to the financial and operating forecasts (and the
assumptions and bases therefor) that Adams, Harkness & Hill reviewed, Adams,
Harkness & Hill assumed that such forecasts were reasonably prepared in good
faith on the basis of reasonable assumptions and represent the best available
estimates and judgments of the managements of Unitrode and BENCHMARQ as to the
likely future financial performance of such companies. Adams, Harkness & Hill
noted, among other things, that the Adams, Harkness Opinion is necessarily based
upon market, economic and other conditions existing as of the date of the Adams,
Harkness Opinion and information available to Adams, Harkness & Hill as of the
date thereof.
Adams, Harkness & Hill was retained by Unitrode based on its experience as
a financial advisor in connection with mergers and acquisitions and in
securities valuations generally, as well as Unitrode's relationship with Adams,
Harkness & Hill, which has published equity research on Unitrode since January
1997. Robert L. Gable, Chairman of the Board of Unitrode, has acted since June
1997 as an informal, unpaid advisor to the Board of Directors of Adams, Harkness
& Hill.
Unitrode engaged Adams, Harkness & Hill in connection with the Merger by
means of an engagement letter, dated February 19, 1998 and amended on June 15,
1998. Such letter, as amended, provides that, for rendering of the Adams,
Harkness Opinion, Adams, Harkness & Hill is to be paid a cash fee totaling
$300,000, $87,500 of which is payable upon closing of the Merger. Unitrode has
also agreed to indemnify Adams, Harkness & Hill for certain liabilities relating
to or arising out its rendering of the Adams, Harkness Opinion.
BENCHMARQ'S REASONS FOR THE MERGER; RECOMMENDATION OF THE BENCHMARQ BOARD
The BENCHMARQ Board believes that the terms of the Merger Agreement and the
Merger and the other transactions contemplated thereby are fair to, and are in
the best interests of, BENCHMARQ and the BENCHMARQ stockholders. Accordingly,
the BENCHMARQ Board has unanimously approved, with one director absent, the
Merger Agreement and the Merger and recommends approval of the Merger Agreement
and the Merger by the BENCHMARQ stockholders. In considering the recommendation
of the BENCHMARQ Board with respect to the Merger Agreement and the Merger,
BENCHMARQ stockholders should be aware that certain members of BENCHMARQ's
management and the BENCHMARQ Board have certain interests in the Merger that are
in addition to the interests of BENCHMARQ stockholders generally. See
"-- Interests of Certain Persons in the Merger." In reaching its decision, the
BENCHMARQ Board considered numerous factors, consulted with BENCHMARQ's
management, legal counsel and accounting advisors, and was advised by Prudential
Securities. The principal reasons, to which relative weights
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were not assigned, for the BENCHMARQ Board's approval of the Merger Agreement
and its recommendation to the BENCHMARQ stockholders are as follows:
(1) Information and analyses relating to the financial performance,
condition, business operations and prospects of BENCHMARQ and Unitrode, and
current industry, economic and market conditions.
(2) The possibility of strategic alternatives to the Merger for
enhancing long-term stockholder value, including the possibility of
transactions with other potential strategic merger partners or strategic
equity investors.
(3) The economic terms of the Merger Agreement, including the Exchange
Ratio and the 23.4% equity interest in the combined equity to be received
by the BENCHMARQ stockholders. With regard to the Exchange Ratio, the
BENCHMARQ Board considered that: (a) the Exchange Ratio had been determined
through arm's-length negotiations; (b) the Exchange Ratio represented an
implied value to the BENCHMARQ stockholders of $11.38 based upon the
closing price of $11.38 for Unitrode Common Stock on June 19, 1998; and (c)
the likelihood that the Merger would be approved by the holders of Unitrode
Common Stock upon the terms set forth in the Original Merger Agreement. See
"-- Opinion of BENCHMARQ's Financial Advisor."
(4) The fact that the combined companies could offer distributors a
broader line of products, thereby creating greater leverage with
distributors.
(5) The other terms and conditions of the Merger Agreement, including
the ability of the BENCHMARQ Board to designate Messrs. Erdmann, Coker and
Schuele to the Unitrode Board, and the ability of the BENCHMARQ Board to
pursue an unsolicited acquisition proposal should its fiduciary duties so
require. See "-- BENCHMARQ Representation on the Unitrode Board" and
"-- Interests of Certain Persons in the Merger."
(6) The potential synergies resulting from the Merger, including those
that may result from the compatibility of the BENCHMARQ and Unitrode
products and the ability to utilize Unitrode's sales force in Europe and
BENCHMARQ's sales force in Asia.
(7) The structure of the Merger, including the facts that the Merger,
as a "stock-for-stock" rather than a "cash-for-stock" transaction, will
provide an opportunity for the BENCHMARQ stockholders to share in any
future appreciation of the stock price of the combined entity, will be a
tax-free transaction currently and is to be accounted for as a "pooling of
interests."
(8) The financial presentation of Prudential Securities and the June
23, 1998 opinion of Prudential Securities that the Exchange Ratio is fair,
from a financial point of view, to the BENCHMARQ stockholders as of the
date of such opinion and based upon and subject to certain assumptions,
limitations and other matters stated therein.
(9) Presentations from, and discussion with, certain executive
officers of BENCHMARQ, Prudential Securities, Ernst & Young and Winstead,
Sechrest & Minick P.C., outside legal counsel, regarding the business,
financial, accounting and legal due diligence with respect to Unitrode and
the terms and conditions of the Merger Agreement.
(10) The fact that the Merger Agreement, which generally prohibits
BENCHMARQ from soliciting, or engaging in discussions or negotiating with,
any third party regarding any potential acquisition of BENCHMARQ, including
a merger, acquisition or exchange of all or any material portion of the
assets of, or equity interest in, BENCHMARQ, does permit BENCHMARQ to
furnish information to, or negotiate with, any third party that has
submitted a proposal for such an acquisition, provided that certain
conditions are met. See "-- The Merger Agreement -- No Solicitation." The
BENCHMARQ Board believes that these provisions of the Merger Agreement do
not unduly restrict the ability of a third party to make a proposal meeting
the applicable conditions relating to such an acquisition, or the BENCHMARQ
Board's ability to consider and act upon such a proposal if made.
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The BENCHMARQ Board also considered the following potentially negative
factors in its deliberations concerning the Merger:
(1) The fact the Exchange Ratio is fixed and will not change
notwithstanding any subsequent decrease in the market price of shares of
Unitrode Common Stock.
(2) The decline of the market price of shares of Unitrode Common Stock
since the execution of the Original Merger Agreement.
(3) Recent weakness in the disk drive industry, Unitrode's decision
not to compete for certain custom products in this market, and the impact
on Unitrode's operations and financial results as a result thereof.
(4) The granting of the Option pursuant to the Option Agreement would
likely prevent any other acquisition by a third party of BENCHMARQ from
being accounted for as a "pooling of interests."
(5) The significant costs involved in connection with the consummation
of the Merger.
(6) The risk that the anticipated benefits of the Merger may not be
realized.
(7) The requirements by Unitrode of the Voting Agreement, the Option
Agreement and the Termination Fee.
After careful consideration of the foregoing factors and consultation with
its accounting, legal and financial advisors, the BENCHMARQ Board unanimously,
with one director absent, approved the Merger Agreement and the Merger.
THE BENCHMARQ BOARD BELIEVES THAT THE MERGER, INCLUDING THE EXCHANGE RATIO,
IS FAIR AND IN THE BEST INTERESTS OF THE BENCHMARQ STOCKHOLDERS AND HAS
UNANIMOUSLY, WITH ONE DIRECTOR ABSENT, APPROVED THE MERGER AGREEMENT AND THE
MERGER AND RECOMMENDS THAT THE BENCHMARQ STOCKHOLDERS VOTE FOR APPROVAL OF THE
MERGER AGREEMENT AND THE MERGER.
OPINION OF BENCHMARQ'S FINANCIAL ADVISOR
On June 23, 1998, Prudential Securities orally delivered its opinion to the
BENCHMARQ Board to the effect that, as of such date, the Exchange Ratio was
fair, from a financial point of view, to the stockholders of BENCHMARQ.
Prudential Securities made a presentation of the financial analysis underlying
its oral opinion at a telephonic meeting of the BENCHMARQ Board on June 23,
1998. This analysis, as presented to the BENCHMARQ Board, is summarized below.
Prudential Securities confirmed its oral opinion in writing by delivering the
Prudential Opinion on June 23, 1998. All of the members of the BENCHMARQ Board,
except Harvey B. Cash, were present at the meeting, either in person or
telephonically, on June 23, 1998 and had an opportunity to ask questions
regarding Prudential Securities' presentation. Prudential Securities did not
recommend to the BENCHMARQ Board that any specific amount of consideration
constituted appropriate consideration for the Merger.
In requesting the Prudential Opinion, the BENCHMARQ Board did not give any
special instructions to Prudential Securities nor did it impose any limitation
upon the scope of the investigation that Prudential Securities deemed necessary
to enable it to deliver the Prudential Opinion. A copy of the Prudential
Opinion, which sets forth the assumptions made, matters considered and limits on
the review undertaken, is attached as Appendix D hereto and is incorporated
herein by reference. The summary of the Prudential Opinion set forth below is
qualified in its entirety by reference to the full text of the Prudential
Opinion. The BENCHMARQ stockholders are urged to read the Prudential Opinion in
its entirety.
The Prudential Opinion is directed only to the fairness of the Exchange
Ratio to the stockholders of BENCHMARQ from a financial point of view and does
not constitute a recommendation to any stockholder as to how such stockholder
should vote at the BENCHMARQ Special Meeting or as to any other action such
stockholder should take regarding the Merger.
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In conducting its analysis and arriving at the Prudential Opinion dated
June 23, 1998, Prudential Securities reviewed such information and considered
such financial data and other factors as Prudential Securities deemed relevant
under the circumstances, including, among others, the following: (i) the Merger
Agreement, the Option and the Voting Agreement; (ii) certain publicly-available
historical financial and operating data of BENCHMARQ including, but not limited
to, (a) the Annual Report to Stockholders and Annual Report on Form 10-K of
BENCHMARQ for the fiscal year ended December 31, 1997, (b) the Quarterly Report
on Form 10-Q for the three months ended March 31, 1998 and (c) the Proxy
Statements for the Special Meeting of Stockholders dated May 28, 1998 and Annual
Meeting of Stockholders held on April 16, 1997; (iii) certain publicly-available
historical financial and operating data for Unitrode, including, but not limited
to, (a) the Annual Report to Stockholders and Annual Report on Form 10-K of
Unitrode for the fiscal year ended January 31, 1998, (b) the Quarterly Report on
Form 10-Q for the three months ended May 2, 1998 and (c) the Proxy Statement for
the Annual Meeting of Stockholders dated May 28, 1998; (iv) certain information
relating to BENCHMARQ, including projected income statements for the fiscal
years ending December 31, 1998 and 1999, prepared by the management of
BENCHMARQ; (v) certain information relating to Unitrode, including projected
income statements for the fiscal years ending January 31, 1999 and 2000,
prepared by the management of Unitrode; (vi) publicly available financial,
operating and stock market data concerning certain companies engaged in
businesses Prudential Securities deemed comparable to BENCHMARQ and Unitrode,
respectively, or otherwise relevant to Prudential Securities' inquiry; (vii) the
financial terms of certain recent transactions Prudential Securities deemed
relevant to its inquiry; and (viii) such other financial studies, analyses and
investigations that Prudential Securities deemed appropriate.
Prudential Securities discussed with the senior management of BENCHMARQ and
Unitrode: (i) the prospects for their respective businesses; (ii) their
estimates of such businesses' future financial performance; (iii) the financial
impact of the Merger on the respective companies; and (iv) such other matters
that Prudential Securities deemed relevant.
In connection with its review and analysis and in arriving at the
Prudential Opinion, Prudential Securities relied upon the accuracy and
completeness of the financial and other information provided to it by BENCHMARQ
and Unitrode and did not undertake any independent verification of such
information or any independent valuation or appraisal of any of the assets or
liabilities of BENCHMARQ or Unitrode. With respect to certain financial
forecasts, provided to Prudential Securities by BENCHMARQ for BENCHMARQ and
Unitrode for Unitrode, Prudential Securities has assumed that such information
(and the assumptions and bases therefor) represents each respective management's
best currently available estimate as to the future financial performance of
BENCHMARQ and of Unitrode, as applicable. The Prudential Opinion is predicated
on the Merger qualifying: (i) as a reorganization within the meaning of Section
368(a) of the Code; and (ii) for "pooling-of-interests" accounting treatment.
In connection with Prudential Securities' delivery of the Prudential
Opinion, Prudential Securities was not authorized by BENCHMARQ or the BENCHMARQ
Board to solicit, nor has Prudential Securities solicited, indications of
interest from third parties for the acquisition of all or any part of BENCHMARQ.
The Prudential Opinion does not address nor should it be construed to address
the relative merits of the Merger and alternative business strategies that may
be available to BENCHMARQ. In addition, the Prudential Opinion does not in any
manner address the prices at which the Unitrode Common Stock will actually trade
following consummation of the Merger.
In arriving at the Prudential Opinion, Prudential Securities performed a
variety of financial analyses, and all material analyses performed by Prudential
Securities are summarized herein. The summary set forth below of the analyses
presented to the BENCHMARQ Board at its June 23, 1998 meeting does not purport
to be a complete description of the analyses performed. The preparation of a
fairness opinion is a complex process that involves various determinations as to
the most appropriate and relevant methods of financial analyses and the
application of these methods to the particular circumstance and, therefore, such
an opinion is not necessarily susceptible to partial analysis or summary
description. Prudential Securities believes that its analysis must be considered
as a whole and that selecting portions thereof or portions of the factors
considered by it, without considering all analyses and factors, could create an
incomplete view of the evaluation process underlying the Prudential Opinion.
Prudential Securities made numerous assumptions with respect to industry
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performance, general business, economic, market and financial conditions and
other matters, many of which are beyond the control of BENCHMARQ and Unitrode.
Any estimates contained in Prudential Securities' analyses are not necessarily
indicative of actual values or future results, which may be significantly more
or less favorable than suggested by such analyses. Additionally, estimates of
the values of businesses and securities do not purport to be appraisals or
necessarily reflect the prices at which businesses or securities may be sold.
Accordingly, such analyses and estimates are inherently subject to substantial
uncertainty. Subject to the foregoing, the following is a summary of the
material financial analyses presented by Prudential Securities to the BENCHMARQ
Board on June 23, 1998.
Comparable Company Analysis. A comparable company analysis was employed by
Prudential Securities to establish implied ranges for the Exchange Ratio.
Prudential Securities analyzed publicly-available historical and projected
financial results, including multiples of current stock price to LTM earnings
per share ("LTM EPS"), projected calendar year 1998 earnings per share ("CY1998
EPS") and projected calendar year 1999 earnings per share ("CY1999 EPS"), and
unlevered market value (defined as current stock price multiplied by the number
of shares outstanding plus net debt) to LTM EBITDA and LTM revenues of certain
companies considered by Prudential Securities to be reasonably similar to
BENCHMARQ. Prudential Securities reviewed such information for DSC, Exar
Corporation and TelCom Semiconductor, Inc. (the "Comparable Companies"). All of
the trading multiples of the Comparable Companies were based on closing stock
prices on June 19, 1998 (the "June 19th Closing Price") and all of the earnings
per share estimates were published by First Call, an on-line data service
available to subscribers which compiles estimates developed by research
analysts. The estimates published by First Call were not prepared in connection
with the Merger or at the request of Prudential Securities.
The Comparable Companies were found to have a June 19th Closing Price
estimated to be equal to 13.3x to 24.3x LTM EPS, 9.4x to 17.1x CY1998 EPS and
7.0x to 14.0x CY1999 EPS, and an unlevered market value estimated to be within a
range of 3.9x to 11.0x LTM earnings before interest, taxes, depreciation and
amortization ("EBITDA") and 1.0x to 2.6x LTM revenues. Applying such multiples
to BENCHMARQ's LTM EPS ($0.72), CY1998 EPS, CY1999 EPS, LTM EBITDA ($9.9
million) and LTM revenues ($42.0 million) resulted in an implied range for the
Exchange Ratio of 0.6571 to 1.3252. The Exchange Ratio is above the mean and
median of the range of exchange ratios implied by Prudential Securities'
comparable company analysis.
None of the companies utilized in the above analysis for comparative
purposes is, of course, identical to BENCHMARQ. Accordingly, a complete analysis
of the results of the foregoing calculations cannot be limited to a quantitative
review of such results and involves complex considerations and judgments
concerning differences in financial and operating characteristics of the
Comparable Companies and other factors that could affect the public trading
value of the Comparable Companies as well as that of BENCHMARQ.
Comparable Transactions Analysis. Prudential Securities also analyzed the
consideration paid in several recent merger and acquisition transactions deemed
by Prudential Securities to be reasonably similar to the Merger, and considered
the multiple of the purchase price (defined as the purchase price of the
acquired entity's equity) to the acquired entity's LTM net income and the
unlevered purchase price (defined as the purchase price plus the acquired
entity's net indebtedness) to the acquired entity's LTM EBITDA and LTM revenues,
based upon publicly available information for such transactions. The
transactions considered were the combinations of: (i) Zilog Inc. and Texas
Pacific Group; (ii) Chips and Technologies, Inc. and Intel Corporation; (iii)
Raytheon Electronics and Fairchild Semiconductor Corporation; (iv) Cyrix
Corporation and National Semiconductor Corp.; (v) Fairchild Semiconductor
Corporation and Sterling, LLC; (vi) Orbit Semiconductor, Inc. and The DII Group,
Inc.; and (vii) Silicon Systems, Inc. and Texas Instruments Incorporated (the
"Comparable Transactions"). The Comparable Transactions were found to imply for
the acquired entity a purchase price within a range of 11.8x to 26.9x LTM net
income, an unlevered purchase price within a range of 5.0x to 23.4x LTM EBITDA
and 0.8x to 2.2x LTM revenues. Applying such multiples to BENCHMARQ's LTM net
income ($6.7 million), LTM EBITDA ($9.9 million) and LTM revenues ($42.0
million) resulted in an implied range for the Exchange Ratio of 0.6335 to
1.9706. The Exchange Ratio is slightly below the mean and median of the range
for the exchange ratio implied by Prudential Securities' comparable transaction
analysis.
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None of the acquired entities utilized in the above analysis for
comparative purposes is, of course, identical to BENCHMARQ. Accordingly, a
complete analysis of the results of the foregoing calculations cannot be limited
to a quantitative review of such results and involves complex considerations and
judgments concerning differences in financial and operating characteristics of
the acquired entities and other factors that could affect the consideration paid
for each of the acquired entities as well as that paid for BENCHMARQ.
Pro Forma Earnings Per Share. Prudential Securities also analyzed the pro
forma effect of the Merger on Unitrode's estimated calendar year 1998 and
calendar year 1999 earnings per share. An analysis of anticipated future results
based on projections provided by the management of BENCHMARQ for BENCHMARQ and
the management of Unitrode for Unitrode estimated that the Merger would result
in a decrease of 0.3% in Unitrode's pro forma 1998 earnings per share on a
diluted basis, an increase of 2.6% in Unitrode's pro forma 1998 earnings per
share on a diluted basis, adjusted for one-time unusual charges, and an increase
of 29.1% in Unitrode's pro forma 1999 earnings per share on a diluted basis.
Projected financial and other information concerning BENCHMARQ and Unitrode
and the impact of the Merger upon the holders of BENCHMARQ Common Stock are not
necessarily indicative of future results. All projected financial information is
subject to numerous contingencies, many of which are beyond the control of
management of BENCHMARQ and Unitrode.
Contribution Analysis. Prudential Securities examined BENCHMARQ's and
Unitrode's relative contributions of projected calendar year 1998 ("CY1998")
revenue, CY1998 operating income, CY1998 net income, calendar year 1999
("CY1999") net income, LTM net income as of March 31, 1998 and equity market
capitalization as of June 19, 1998 to the combined entity and compared them to
the percentage of post-Merger Unitrode Common Stock that the respective current
BENCHMARQ stockholders and Unitrode stockholders will hold in the combined
entity. In performing such analysis Prudential Securities relied upon projected
stand-alone operating data for both BENCHMARQ and Unitrode, provided by the
management of BENCHMARQ and Unitrode, respectively. Existing BENCHMARQ
stockholders and Unitrode stockholders are estimated to hold 23.4% and 76.6% of
the post-Merger shares of Unitrode Common Stock (on a fully diluted basis),
respectively. Prudential Securities calculated that BENCHMARQ and Unitrode will
contribute 23.7% and 76.3%, respectively, to the pro forma CY1998 revenue of the
combined entity, 24.8% and 75.2%, respectively, to the pro forma CY1998
operating income of the combined entity, 22.6% and 77.4%, respectively, to the
pro forma CY1998 net income of the combined entity, 23.2% and 76.8%,
respectively, to the pro forma CY1999 net income of the combined entity, 18.6%
and 81.4%, respectively, to the LTM net income as of March 31, 1998 of the
combined entity and 18.6% and 81.4%, respectively, to the pro forma equity
market capitalization as of June 19, 1998 of the combined entity.
BENCHMARQ selected Prudential Securities to provide a fairness opinion
because it is a nationally recognized investment banking firm engaged in the
valuation of businesses and their securities in connection with mergers and
acquisitions and for other purposes and has substantial experience in
transactions similar to the Merger. Pursuant to an engagement letter with
Prudential Securities, BENCHMARQ has paid Prudential Securities $350,000 in
connection with its fairness opinion given with respect to the exchange ratio as
set forth in the Original Merger Agreement and an additional $150,000 upon the
delivery of the Prudential Opinion. In addition, the engagement letter with
Prudential Securities provides that BENCHMARQ will reimburse Prudential
Securities for its reasonable out-of-pocket expenses and will indemnify
Prudential Securities and certain related persons against certain liabilities,
including liabilities under securities laws, arising out of the Merger or its
engagement. In the ordinary course of business, Prudential Securities may
actively trade the shares of BENCHMARQ Common Stock and Unitrode Common Stock
for its own account and for the accounts of customers, and accordingly, may at
any time hold a long or short position in such securities.
CLOSING; EFFECTIVE TIME
The Closing will take place on the second business day following the date
on which each of certain conditions to the Merger set forth in the Merger
Agreement is satisfied or waived, or on such other date and at such other time
and place as Unitrode and BENCHMARQ shall agree. Unitrode and BENCHMARQ
currently anticipate that the Closing will take place within two days following
completion of the
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BENCHMARQ Special Meeting and the Unitrode Annual Meeting, provided the other
conditions to closing set forth in the Merger Agreement have been satisfied or
waived at or prior to such time. The Merger will become effective upon the
filing of the Certificate of Merger with the Office of the Secretary of State of
the State of Delaware as required by Delaware law. Such filing will be made as
soon as practicable on or after the Closing Date.
FORM OF THE MERGER; MERGER CONSIDERATION
At the Effective Time, among other things: (i) each issued and outstanding
share of BENCHMARQ Common Stock (other than shares to be cancelled in accordance
with clause (ii) below) will be converted into the right to receive one fully
paid and nonassessable share of Unitrode Common Stock; (ii) all shares of
BENCHMARQ Common Stock that are held by BENCHMARQ as treasury shares and all
shares of BENCHMARQ Common Stock owned by Unitrode, or any wholly owned
subsidiary of BENCHMARQ or Unitrode, will be cancelled and retired and shall
cease to exist and no stock of Unitrode, or other consideration shall be
delivered in exchange therefor; and (iii) Sub will be merged with and into
BENCHMARQ, with BENCHMARQ surviving the Merger as a wholly owned subsidiary of
Unitrode. The number of shares of Unitrode Common Stock to be received pursuant
to the Merger is fixed and will not be changed pursuant to the Merger Agreement
in the event of any subsequent increase or decrease in the market price of
shares of Unitrode Common Stock or BENCHMARQ Common Stock.
No fractional shares of Unitrode Common Stock will be issued in the Merger.
The Merger Agreement provides that, in lieu of any fractional share, Unitrode
will pay to each holder of shares of BENCHMARQ Common Stock who otherwise would
be entitled to receive a fractional share of Unitrode Common Stock an amount of
cash (without interest) determined by multiplying (i) the per share closing
price for Unitrode Common Stock on the NYSE on the day of the Effective Time by
(ii) the fractional share interest of Unitrode Common Stock to which such holder
would otherwise be entitled.
A description of the relative rights, privileges and preferences of the
Unitrode Common Stock, including certain material differences between the rights
of holders of shares of BENCHMARQ Common Stock and Unitrode Common Stock, is set
forth under the caption "Comparison of Rights of Holders of Unitrode Common
Stock and Holders of BENCHMARQ Common Stock."
EXCHANGE OF STOCK CERTIFICATES
As soon as practicable after the Effective Time, the Exchange Agent will
mail transmittal instructions and a form of letter of transmittal to each person
who was, at the Effective Time, a holder of record of shares of BENCHMARQ Common
Stock. The transmittal instructions will describe the procedures for
surrendering BENCHMARQ Certificates in exchange for Unitrode Certificates.
BENCHMARQ STOCKHOLDERS SHOULD NOT SUBMIT THEIR BENCHMARQ CERTIFICATES FOR
EXCHANGE UNLESS AND UNTIL THEY HAVE RECEIVED THE TRANSMITTAL INSTRUCTIONS AND A
FORM OF LETTER OF TRANSMITTAL FROM THE EXCHANGE AGENT.
When a holder of shares of BENCHMARQ Common Stock delivers his or her
BENCHMARQ Certificates to the Exchange Agent along with a properly executed
letter of transmittal and any other required documents, such BENCHMARQ
Certificates will be cancelled and such holder will receive Unitrode
Certificates representing the number of full shares of Unitrode Common Stock to
which such holder is entitled under the Merger Agreement and payment in cash in
lieu of any fractional shares of Unitrode Common Stock which would have been
otherwise issuable to such holder as a result of the Merger. If any Unitrode
Certificate is to be issued in a name other than that in which the corresponding
BENCHMARQ Certificate is registered, it is a condition to the exchange of the
BENCHMARQ Certificate that the holder of such certificate comply with applicable
transfer requirements and pay any applicable transfer or other taxes.
Holders of shares of BENCHMARQ Common Stock will not be entitled to receive
any dividends or other distributions on the Unitrode Common Stock until the
Merger has been consummated and they have surrendered their BENCHMARQ
Certificates in exchange for Unitrode Certificates. Subject to applicable laws,
such dividends and distributions, if any, which have a record date on or after
the Effective Time and a
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payment date prior to surrender will be paid upon surrender of the stockholder's
BENCHMARQ Certificates, and such dividends and distributions, if any, which have
a record date on or after the Effective Time and a payment date subsequent to
such surrender will be paid at the appropriate payment date following surrender
of the holder's BENCHMARQ Certificates.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the BENCHMARQ Board with respect to
the Merger Agreement and the Merger, BENCHMARQ stockholders should be aware that
certain members of BENCHMARQ management and the BENCHMARQ Board have certain
interests in the Merger that are in addition to the interests of BENCHMARQ
stockholders generally. The BENCHMARQ Board was aware of these interests and
considered them, among other matters, in approving the Merger Agreement and the
Merger. As of the date of this Joint Proxy Statement-Prospectus, BENCHMARQ's
executive officers are as follows: Derrell C. Coker (Chairman of the Board),
Alan R. Schuele (President and Chief Executive Officer), R. Scott Schaefer
(Chief Financial Officer and Secretary), William F. Davies, Jr. (Vice
President -- Product and Market Development) and Jimmie C. Vernon (Vice
President -- Sales). As of the date of this Joint Proxy Statement-Prospectus,
the members of the BENCHMARQ Board are as follows: Derrell C. Coker, L.J. Sevin,
Alan R. Schuele, Harvey B. Cash, Dietrich Erdmann, Jack S. Kilby and Charles H.
Phipps.
Stock Options. BENCHMARQ has granted stock options pursuant to the
BENCHMARQ Microelectronics, Inc. 1989 Stock Option Plan and pursuant to the
BENCHMARQ Microelectronics, Inc. 1995 Flexible Stock Option Plan (collectively,
the "BENCHMARQ Plans"). Pursuant to "change in control" provisions contained in
the BENCHMARQ Plans, each unvested stock option granted under the BENCHMARQ
Plans will immediately vest and become fully exercisable upon a "change in
control" (including the Merger). As of the date of this Joint Proxy
Statement-Prospectus, Mr. Coker holds 20,722 unvested options under the
BENCHMARQ Plans at an average per share exercise price of $6.69, Mr. Schuele
holds 230,000 unvested options under the BENCHMARQ Plans at an average per share
exercise price of $14.81, Mr. Schaefer holds 19,742 unvested options under the
BENCHMARQ Plans at an average per share exercise price of $11.68, Mr. Davies
holds 35,867 unvested options under the BENCHMARQ Plans at an average per share
exercise price of $9.72, and Mr. Vernon holds 29,367 unvested options under the
BENCHMARQ Plans at an average per share exercise price of $9.02 at an exchange
ratio of 1:1. If the currently unvested options under the BENCHMARQ Plans have
the same value (calculated by subtracting the exercise price per share from
$12.00 (given the assumptions described above and utilizing the closing price of
Unitrode Common Stock on the NYSE on July 10, 1998, but without considering the
value of the Unitrode Rights), and multiplying such number by the number of
shares subject to the options) on the Closing Date, the value of such unvested
options under the BENCHMARQ Plans held by Messrs. Coker, Schuele, Schaefer,
Davies and Vernon will be $110,110, $0, $30,546, $97,634 and $97,634,
respectively.
Directorships and Offices. Under the terms of the Merger Agreement,
Unitrode will use its best efforts to cause the number of directors on the
Unitrode Board to be increased to not more than eight and to cause Dietrich
Erdmann, Derrell C. Coker and Alan R. Schuele, each currently a member of the
BENCHMARQ Board, to become members of the Unitrode Board as of the Effective
Time. Messrs. Coker and Erdmann will receive certain remuneration as
non-employee directors. See "-- BENCHMARQ Representation on the Unitrode Board."
In addition, under the terms of the Merger Agreement, Mr. Schuele will become
President and Chief Operating Officer of Unitrode.
Indemnification and Insurance. From and after the Effective Time, Unitrode
has agreed to indemnify, to the fullest extent permitted under the DGCL, each
officer, former director, employee and agent of BENCHMARQ, against all losses,
claims, damages, liabilities, costs or expenses (including attorney's fees)
arising out of acts or omissions, or alleged acts or omissions, by them in their
capacities as such. Unitrode has also agreed to maintain directors' and
officers' insurance policy for the directors and officers of BENCHMARQ for six
years.
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Employment Agreements. BENCHMARQ entered into employment agreements with
Alan R. Schuele, R. Scott Schaefer and William F. Davies (the "Executive
Officers") as of March 1, 1998 (the "Employment Agreements"). The Employment
Agreements become effective at the Effective Time and terminate on the first
anniversary of the Merger (the "Term"). Upon the termination of an Executive
Officer's employment without Just Cause (as defined in the Employment
Agreements) during the Term, such Executive Officer will be entitled to receive,
among other things, his base salary through the date of termination of the
Executive Officer's employment.
If, during the Term, an Executive Officer terminates his employment because
of certain specified changes in his employment situation constituting Good
Reason (as defined in the Employment Agreements) or if he is terminated without
Just Cause, he shall be entitled to receive (in addition to salary earned prior
to termination) a single lump sum payment in an amount equal to his annual base
salary and the value of his accrued and special vacation benefits for the year
in which his employment terminates.
Although the Merger Agreement does not provide for the termination of
employment of any of the Executive Officers, if an Executive Officer were
terminated without Just Cause or were to voluntarily terminate his employment
for Good Reason, such Executive Officer would be entitled to a lump sum
severance payment pursuant to his employment agreement. The estimated lump sum
severance amounts payable under the terms of the employment agreements (based
upon termination at the Effective Time and assuming current salaries) would be
as follows: Alan R. Schuele $225,000; R. Scott Schaefer $115,000; and William F.
Davies $164,800. Because the severance payments are based on elements which vary
from year to year, if termination occurs after the Effective Time, such payments
could be more or less than the estimated lump sum payments set forth above.
Continuation of Employee Benefit Plans. Under the Merger Agreement,
Unitrode has agreed to maintain the employee benefit plans of BENCHMARQ until at
least December 31, 1998. As employees of BENCHMARQ, the executive officers of
BENCHMARQ may participate in such plans to the extent permitted under the terms
of such plans and applicable laws and regulations governing such plans.
BENCHMARQ REPRESENTATION ON THE UNITRODE BOARD
Pursuant to the terms of the Merger Agreement, Unitrode will use its best
efforts to cause the number of directors on the Unitrode Board to be increased
to not more than eight and to cause Dietrich Erdmann, Derrell C. Coker and Alan
R. Schuele, each currently a member of the BENCHMARQ Board, to become members of
the Unitrode Board as of the Effective Time. In addition, Unitrode shall use its
best efforts such that at the annual meeting of stockholders of Unitrode held in
1999, Mr. Coker shall be a nominee to the Unitrode Board to serve for a one-year
term expiring in 2000 and Mr. Schuele shall be a nominee to the Unitrode Board
to serve for a two-year term expiring in 2001. Unitrode shall further use its
reasonable efforts to solicit, in good faith and with reasonable diligence,
proxies in support of such nominations.
Unitrode also agreed in the Merger Agreement to take all steps necessary to
cause the appointment as of the Effective Time of Mr. Schuele to the office of
President and Chief Operating Officer of Unitrode.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
THE DISCUSSION OF UNITED STATES FEDERAL INCOME TAX CONSEQUENCES SET FORTH
BELOW IS FOR GENERAL INFORMATION ONLY AND DOES NOT PURPORT TO BE A COMPLETE
ANALYSIS OR LISTING OF ALL POTENTIAL TAX EFFECTS THAT MAY APPLY TO A HOLDER OF
BENCHMARQ COMMON STOCK. STOCKHOLDERS OF BENCHMARQ ARE STRONGLY URGED TO CONSULT
THEIR TAX ADVISORS TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE
MERGER, INCLUDING THE APPLICABILITY AND EFFECT OF FEDERAL, STATE, LOCAL, FOREIGN
AND OTHER TAX LAWS.
In the opinions of Winstead Sechrest & Minick P.C. and Skadden, Arps,
Slate, Meagher & Flom LLP, subject to the qualifications set forth below and
contained herein, the following summary sets forth the principal United States
federal income tax consequences of the Merger to the holders of BENCHMARQ
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Common Stock who exchange such shares for Unitrode Common Stock pursuant to the
Merger. The following disclosure only addresses the United States federal income
tax consequences of such stockholders who hold their BENCHMARQ Common Stock as a
capital asset, and does not address all of the federal income tax consequences
that may be relevant to particular stockholders in light of their individual
circumstances or to stockholders who are subject to special rules, such as
financial institutions, tax-exempt organizations, insurance companies, dealers
in securities, foreign holders or holders who acquired their shares pursuant to
the exercise of employee stock options or otherwise as compensation. The
following disclosure is based upon the Code, laws, regulations, rulings and
decisions in effect as of the date hereof, all of which are subject to change,
possibly with retroactive effect. Tax consequences under state, local and other
foreign laws are not addressed herein. No rulings have been or will be requested
from the IRS with respect to any of the matters discussed herein. There can be
no assurance that future legislation, regulations, administrative rulings or
court decisions would not alter the consequences set forth below.
Winstead Sechrest & Minick P.C., tax counsel to BENCHMARQ, and Skadden,
Arps, Slate, Meagher & Flom LLP, tax counsel to Unitrode, each has delivered to
BENCHMARQ and Unitrode, respectively, an opinion substantially to the effect
that, subject to the qualifications set forth therein, and based upon
representation letters, which will be reconfirmed prior to the Closing of the
Merger, and assuming that the Merger will be consummated in the manner described
in this Joint Proxy Statement-Prospectus and in accordance with the current form
of the Merger Agreement and related agreements: (i) the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Code; (ii) holders of
BENCHMARQ Common Stock who exchange their BENCHMARQ Common Stock for Unitrode
Common Stock in the Merger will not recognize gain or loss for United States
federal income tax purposes, except with respect to cash, if any, that they
receive in lieu of fractional shares of Unitrode Common Stock; (iii) each such
holder's aggregate tax basis in the Unitrode Common Stock received in the Merger
will equal his or her aggregate tax basis in the BENCHMARQ Common Stock
exchanged therefor, decreased by the amount of any tax basis allocable to any
fractional share interest for which cash is received; and (iv) the holding
period of Unitrode Common Stock received by such holder in the exchange will
include the holding period of the BENCHMARQ Common Stock surrendered in exchange
therefor. In such representation letters, Unitrode and BENCHMARQ have affirmed
their belief that all of the facts and assumptions upon which such opinions are
based are true, correct and complete and will be true, correct and complete as
of the Closing. Consummation of the Merger is conditioned upon Unitrode's
receipt of an opinion of its tax counsel, Skadden, Arps, Slate, Meagher & Flom
LLP, and BENCHMARQ's receipt of an opinion of its tax counsel, Winstead Sechrest
& Minick P.C., substantially to the effect that, based upon certain facts,
representations and assumptions, the Merger will constitute a reorganization
within the meaning of Section 368(a) of the Code. The issuance of such opinions
is conditioned on, among other things, such tax counsel's receipt of
representation letters from each of Unitrode, Sub and BENCHMARQ, in each case,
in form and substance reasonably satisfactory to each such tax counsel. Such
opinions are not binding on the IRS. Unitrode is entitled to waive the condition
to consummation of the Merger that it receive such an opinion from Skadden,
Arps, Slate, Meagher & Flom LLP, and BENCHMARQ is entitled to waive the
condition to consummation of the Merger that it receive such an opinion from
Winstead Sechrest & Minick P.C. In the event that BENCHMARQ waives such
condition, BENCHMARQ will recirculate revised proxy materials and resolicit the
vote of its stockholders. BENCHMARQ stockholders are urged to consult their tax
advisors as to the specific tax consequences to them of the Merger. In the event
of any change or development prior to the Closing Date which would materially
affect, in Unitrode's judgment, the disclosure set forth in this Joint Proxy
Statement-Prospectus, Unitrode would consider the facts and circumstances at
such time and make a determination as to whether the recirculation of revised
proxy materials and the resolicitation of the vote of Unitrode stockholders
would be appropriate. As noted above, no rulings have been or will be requested
from the IRS with respect to any of the matters discussed herein and there can
be no assurance that the IRS will not take a position contrary to that described
herein or that future legislation, regulations, administrative rulings, court
decisions, or subsequent facts or developments, including those relating to the
subject matter of representations made by the parties, would not alter the
discussion set forth herein. The following disclosure assumes that the Merger
qualifies as a reorganization within the meaning of Section 368(a) of the Code.
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Based on the above assumptions and qualifications, holders of BENCHMARQ
Common Stock who exchange their BENCHMARQ Common Stock for Unitrode Common Stock
in the Merger will not recognize gain or loss for United States federal income
tax purposes, except with respect to cash, if any, they receive in lieu of
fractional shares of Unitrode Common Stock. Each such holder's aggregate tax
basis in the Unitrode Common Stock received in the Merger will equal his or her
aggregate tax basis in the BENCHMARQ Common Stock exchanged therefor, decreased
by the amount of any tax basis allocable to any fractional share interest for
which cash is received. The holding period of Unitrode Common Stock will include
the holding period of the BENCHMARQ Common Stock surrendered in exchange
therefor. Holders of BENCHMARQ Common Stock who receive cash in lieu of
fractional shares of Unitrode Common Stock in the Merger generally will be
treated as if the fractional shares of Unitrode Common Stock had been
distributed to them as part of the Merger and then redeemed by Unitrode in
exchange for the cash actually distributed in lieu of the fractional shares,
with such redemption qualifying as an exchange under Section 302 of the Code.
Consequently, such holders generally will recognize capital gain or loss with
respect to the cash payments they receive in lieu of fractional shares. Under
current law, the tax rate applicable to capital gains of an individual taxpayer
varies depending on the taxpayer's holding period for the shares. In the case of
an individual stockholder, any such capital gain will be subject to a maximum
federal income tax rate of (i) 20%, if the individual held his or her shares of
BENCHMARQ Common Stock for more than 18 months at the Effective Time and (ii)
28%, if the individual held his or her shares of BENCHMARQ Common Stock for more
than one year but not more than 18 months at the Effective Time. Pending tax
legislation would, if enacted, reduce the maximum federal income tax rate for
any such capital gain to 20%, if the individual held his or her shares of
BENCHMARQ Common Stock for more than one year at the Effective Time. The
deductibility of capital losses is subject to limitations for both individuals
and corporations.
ACCOUNTING TREATMENT
The Merger is intended to qualify as a "pooling of interests" for
accounting and financial reporting purposes. It is a condition to closing that
Unitrode have been advised by PricewaterhouseCoopers as of the Effective Time to
the effect that PricewaterhouseCoopers concurs with the management of Unitrode
that there is no reason the Merger would not qualify as a "pooling of interests"
for financial accounting purposes and that BENCHMARQ have been advised by Ernst
& Young as of the Effective Time to the effect that Ernst & Young concurs with
the management of BENCHMARQ that there is no reason the Merger would not qualify
as a "pooling of interests" for financial accounting purposes. Under the
"pooling of interests" method of accounting, the historical recorded assets and
liabilities of Unitrode and BENCHMARQ will be carried forward to the combined
company at their recorded amounts, the operating results of the combined company
will include the operating results of Unitrode and BENCHMARQ for the entire
fiscal year in which the combination occurs and the historical reported
operating results of the separate companies for prior periods will be combined
and restated as the operating results of the combined company. See "-- The
Merger Agreement -- Termination and Termination Fee."
REGULATORY FILINGS AND APPROVALS
The Merger is subject to the requirements of the HSR Act, which provide
that certain transactions may not be consummated until required information and
materials have been furnished to the Antitrust Division and the FTC and certain
waiting periods have expired or been terminated. On March 13, 1998, Unitrode,
and on March 16, 1998, BENCHMARQ, filed the required information and materials
with the Antitrust Division and the FTC and requested early termination of the
waiting period under the HSR Act. The waiting period under the HSR Act expired
on April 15, 1998. The requirements of the HSR Act will be satisfied if the
Merger is consummated within one year from the expiration of the waiting period.
However, the Antitrust Division or the FTC may challenge the Merger on
antitrust grounds either before or after expiration of the waiting period.
Accordingly, at any time before or after the Effective Time, either the
Antitrust Division or the FTC could take such action under the antitrust laws as
it deems necessary or desirable in the public interest, or certain other persons
could take action under the antitrust laws, including seeking to enjoin the
Merger. Additionally, at any time before or after the Effective Time,
notwithstanding
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that the waiting period under the HSR Act has expired, any state could take such
action under the antitrust laws as it deems necessary or desirable in the public
interest. There can be no assurance that a challenge to the Merger will not be
made or that, if such a challenge is made, Unitrode and BENCHMARQ will prevail.
Neither Unitrode nor BENCHMARQ is aware of any other material governmental
or regulatory approval required for consummation of the Merger, other than
compliance with applicable securities laws and filings under the DGCL.
RESTRICTIONS ON SALE OF SHARES BY AFFILIATES
The shares of Unitrode Common Stock to be issued in connection with the
Merger will be registered under the Securities Act. Such shares will be freely
transferable under the Securities Act, except for shares issued to any person
who is deemed to be an affiliate (as such term is defined for purposes of Rule
145 under the Securities Act, an "Affiliate") of Unitrode or BENCHMARQ at the
time of the Unitrode Annual Meeting and the BENCHMARQ Special Meeting,
respectively. Persons who may be deemed to be Affiliates include individuals or
entities that control, are controlled by, or are under common control of
Unitrode or BENCHMARQ, as the case may be, and may include certain officers and
directors of Unitrode or BENCHMARQ as well as principal stockholders of Unitrode
or BENCHMARQ. Affiliates may not sell their shares of Unitrode Common Stock
acquired in connection with the Merger except pursuant to: (i) an effective
registration statement under the Securities Act covering the resale of such
shares; (ii) paragraph (d) of Rule 145 under the Securities Act; or (iii) any
other applicable exemption under the Securities Act. The Registration Statement
filed by Unitrode under the Securities Act in connection with the Merger
(together with all amendments, supplements and exhibits thereto, the
"Registration Statement"), of which this Joint Proxy Statement-Prospectus forms
a part, does not cover the resale of shares of Unitrode Common Stock to be
received by Affiliates in the Merger.
Pursuant to the Merger Agreement, Unitrode and BENCHMARQ have each
delivered to the other a letter identifying all persons who were, as of the date
thereof, Affiliates of Unitrode and BENCHMARQ. Unitrode and BENCHMARQ are each
obligated under the Merger Agreement to use reasonable best efforts to procure
written agreements from such persons and any person who subsequently becomes an
Affiliate of such company containing appropriate representations and covenants
intended to ensure compliance with the Securities Act and protect the ability of
Unitrode to account for the Merger as a "pooling of interests."
DISSENTERS' RIGHTS
Under the MGCL or the DGCL, as the case may be, neither the holders of
Unitrode Common Stock nor the holders of BENCHMARQ Common Stock are entitled to
exercise appraisal rights or to demand payment for their shares as a result of
the Merger.
DELISTING AND DEREGISTRATION OF SHARES OF BENCHMARQ COMMON STOCK AFTER THE
MERGER
If the Merger is consummated, the shares of BENCHMARQ Common Stock will be
delisted from the NNM and will be deregistered under the Securities Exchange Act
of 1934, as amended (the "Exchange Act").
THE MERGER AGREEMENT
Conversion of Shares; Exchange Ratio. As soon as practicable after the
Effective Time, the Exchange Agent will send a notice and letter of transmittal,
with instructions, to each holder of BENCHMARQ Common Stock of record at the
Effective Time advising such holder of the effectiveness of the Merger and of
the procedure for surrendering to the Exchange Agent BENCHMARQ Certificates in
exchange for: (i) Unitrode Certificates; and (ii) cash in lieu of fractional
shares. BENCHMARQ STOCKHOLDERS SHOULD NOT SEND IN THEIR BENCHMARQ CERTIFICATES
UNTIL THEY RECEIVE THE LETTER OF TRANSMITTAL AND INSTRUCTIONS FROM THE EXCHANGE
AGENT.
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Upon surrender to the Exchange Agent of one or more BENCHMARQ Certificates,
together with a properly completed and signed letter of transmittal, there will
be issued and mailed to the holder thereof a Unitrode Certificate or
Certificates representing the number of whole shares of Unitrode Common Stock to
which such holder is entitled under the Merger Agreement and, where applicable,
a check for the amount of cash payable in lieu of a fractional share of Unitrode
Common Stock (after giving effect to any required tax withholding). Until
surrendered as described above, BENCHMARQ Certificates will, after the Effective
Time, represent only the right to receive, upon such surrender, a Unitrode
Certificate or Certificates and, if applicable, cash in lieu of fractional
shares, as described above. No dividends or distributions that are declared on
shares of Unitrode Common Stock will be paid to persons entitled to receive
certificates representing shares of Unitrode Common Stock until such persons
surrender their BENCHMARQ Certificates.
A Unitrode Certificate or a check in lieu of a fractional share will be
issued in a name other than the name in which the surrendered BENCHMARQ
Certificate was registered only if: (i) the BENCHMARQ Certificate surrendered is
properly endorsed or accompanied by appropriate stock powers and is otherwise in
proper form for transfer; and (ii) the person requesting the issuance of such
certificate or check either pays to the Exchange Agent any transfer or other
taxes required by reason of the issuance of such certificate or check in a name
other than that of the registered holder of the certificate surrendered or
establishes to the satisfaction of the Exchange Agent that such tax has been
paid or is not applicable.
Upon the terms and subject to the conditions of the Merger Agreement, at
the Effective Time, among other things: (i) each issued and outstanding share of
BENCHMARQ Common Stock (other than shares to be cancelled in accordance with
clause (ii) below) will be converted into the right to receive a number of fully
paid and nonassessable shares of Unitrode Common Stock equal to the Exchange
Ratio; (ii) all shares of BENCHMARQ Common Stock that are held by BENCHMARQ as
treasury shares and all shares of BENCHMARQ Common Stock owned by Unitrode, or
any wholly owned subsidiary of BENCHMARQ or Unitrode, will be cancelled and
retired and shall cease to exist and no stock of Unitrode or other consideration
shall be delivered in exchange therefor; and (iii) Sub will be merged with and
into BENCHMARQ, with BENCHMARQ surviving the Merger as a wholly owned subsidiary
of Unitrode. Each share of Unitrode Common Stock issued in the Merger will
include the associated Unitrode Rights. Cash will be issued in lieu of
fractional shares of Unitrode Common Stock.
The number of shares of Unitrode Common Stock to be received pursuant to
the Merger is fixed and will not be changed pursuant to the Merger Agreement
based on any subsequent increase or decrease in the market price of shares of
Unitrode Common Stock or BENCHMARQ Common Stock. See "Risk Factors -- Fixed
Exchange Ratio."
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of Unitrode and BENCHMARQ made to the
other relating to, among other things: (i) each of Unitrode's, Sub's and
BENCHMARQ's respective organizations and similar corporate matters and the
organizations and similar corporate matters regarding the respective
subsidiaries of Unitrode and BENCHMARQ; (ii) each of Unitrode's, Sub's and
BENCHMARQ's respective capital structure; (iii) authorization, execution,
delivery, performance and enforceability of the Merger Agreement and related
matters; (iv) conflicts under articles or certificates of incorporation or
bylaws, required consents or approvals and violations of certain instruments or
law; (v) documents filed with the SEC and the accuracy of the information
contained therein; (vi) absence of certain specified material changes; (vii)
absence of material litigation; (viii) in the case of BENCHMARQ, (A) employee
benefit matters, (B) validity of title to properties, (C) identification of
material contracts, (D) the validity of all required permits and licenses
required for BENCHMARQ to conduct its business and (E) certain intellectual
property, environmental, insurance and tax matters; (ix) compliance with
applicable laws; (x) the accuracy of information supplied by Unitrode and
BENCHMARQ in connection with the preparation of the Registration Statement and
this Joint Proxy Statement-Prospectus; (xi) the receipt of fairness opinions
from their respective financial advisors; (xii) in the case of BENCHMARQ, the
approval of the Merger Agreement by the BENCHMARQ Board and the inapplicability
of the provisions of Section 203 of the DGCL (concerning business combinations
with interested stockholders) to the transactions contemplated thereby; and
(xiii) in the case of Unitrode, the approval of the Merger Agreement and the
issuance of the Merger Shares, the inapplicability of Section 3-601
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et. seq. of the MGCL (concerning business combinations with interested
stockholders) to the transaction contemplated thereby.
Conduct of Business Prior to the Effective Time. Pursuant to the terms of
the Merger Agreement, Unitrode and BENCHMARQ have each agreed to conduct their
respective businesses in the ordinary course consistent with past practice and
to use all reasonable efforts to preserve substantially intact its business
organization.
Pursuant to the Merger Agreement, BENCHMARQ has further agreed that, except
as contemplated by the Merger Agreement, it shall not, among other things, do
any of the following without the prior written consent of Unitrode: (i) make any
change in the compensation payable to or to become payable to any of its
directors, officers or employees, except for changes in the ordinary course of
business and consistent with past practice; (ii) grant any severance or
termination pay (other than pursuant to the normal severance policy of BENCHMARQ
as in effect on March 2, 1998) to, or enter into or amend any employment,
severance, termination, benefit plan, welfare plan or other similar agreement,
with or applicable to any director, officer or employee; (iii) make any loans to
any of its officers, directors or employees; (iv) declare or pay any dividend
on, or make any other distribution in respect of, outstanding shares of capital
stock; (v) redeem, purchase or acquire any shares of capital stock of, or other
equity interests in, BENCHMARQ; (vi) effect any reorganization or
recapitalization; (vii) split, combine, reclassify or issue, offer or sell any
of the capital stock of, or other equity interests in, BENCHMARQ; (viii) grant
any lien with respect to any shares of capital stock of, or other equity
interests in, any subsidiary of BENCHMARQ; (ix) acquire, by merging or
consolidating with or through the acquisition of assets of or otherwise, any
business, corporation, partnership, association or other business organization
or division thereof; (x) sell, lease, exchange or otherwise dispose of, or grant
any lien (other than certain permitted liens) with respect to, any of the assets
of BENCHMARQ, except for dispositions of assets and inventories in the ordinary
course of business and consistent with past practice; (xi) adopt any amendments
to its certificate of incorporation or bylaws or other organizational documents;
(xii) change any of its methods of accounting in effect at December 31, 1996,
except as may be required to comply with generally accepted accounting
principles; (xiii) make or rescind any election relating to taxes (other than
any election that must be made periodically that is made consistent with past
practice); (xiv) settle or compromise any legal or tax claim; (xv) change any of
its methods of reporting income or deductions for United States federal income
tax purposes from those employed in the preparation of the United States federal
income tax returns for the taxable year ending December 31, 1996, except as may
be required by law; (xvi) release any person from its obligations under any
existing standstill agreement relating to a proposal to acquire BENCHMARQ or
otherwise under any confidentiality agreement or similar agreement; (xvii) enter
into any material contract (other than customers and vendors in the ordinary
course of business) which provides for an exclusive arrangement with another
party or is substantially more restrictive on BENCHMARQ than material contracts
existing on March 2, 1998; (xviii) propose, adopt, approve or implement any
stockholder rights plan or similar agreements, which could have the effect of
restricting, prohibiting, impeding or otherwise affecting the consummation of
the transactions contemplated by the Merger Agreement, the Voting Agreement or
the Option Agreement; (xix) incur, guarantee or otherwise become liable for any
obligations for borrowed money or purchase money indebtedness; (xx) knowingly
take or allow to be taken any action which would jeopardize the treatment of
Unitrode's acquisition of BENCHMARQ as a "pooling of interests" for accounting
purposes or knowingly take any action that would jeopardize qualification of the
Merger as a reorganization within the meaning of Section 368(a) of the Code; or
(xxi) agree in writing or otherwise to do any of the foregoing.
Pursuant to the Merger Agreement, Unitrode has agreed that, except as
contemplated by the Merger Agreement, it shall not, among other things, do any
of the following without the prior written consent of BENCHMARQ: (i) declare or
pay any dividend on, or make any other distribution in respect of, outstanding
shares of capital stock; (ii) redeem, purchase or acquire any shares of capital
stock of, or other equity interests in, Unitrode or any of its subsidiaries;
(iii) effect any reorganization or recapitalization; (iv) split, combine,
reclassify or issue, offer or sell any of the capital stock of, or other equity
interests in, Unitrode or any of its subsidiaries; (v) acquire, by merging or
consolidating with or through the acquisition of assets of or otherwise, any
business, corporation, partnership, association or other business organization
or division thereof; (vi) sell,
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lease, exchange or otherwise dispose of, or grant any lien (other than certain
permitted liens) with respect to, any of the assets of Unitrode, except for
dispositions of assets and inventories in the ordinary course of business and
consistent with past practice; (vii) adopt any amendments to its articles or
certificate of incorporation or bylaws or other organizational documents; (viii)
incur, guarantee or otherwise become liable for any obligations for borrowed
money or purchase money indebtedness; (ix) knowingly take or allow to be taken
any action which would jeopardize the treatment of Unitrode's acquisition of
BENCHMARQ as a "pooling of interests" for accounting purposes or knowingly take
any action that would jeopardize qualification of the Merger as a reorganization
within the meaning of Section 368(a) of the Code; or (x) agree in writing or
otherwise to do any of the foregoing.
The Merger Agreement also provides that, from the date thereof until the
Effective Time, Sub will not conduct any business except as contemplated by the
Merger Agreement.
No Solicitation. BENCHMARQ has agreed, pursuant to the terms of the Merger
Agreement, that it shall not, until the Effective Time or the termination of the
Merger Agreement, and will cause its respective officers, directors, employees,
or other agents (including without limitation, investment bankers, attorneys or
accountants) not to, directly or indirectly: (i) take any action to solicit,
initiate, encourage, enter into any agreement relating to or otherwise
facilitate any offer or proposal for, or any indication of interest in an
Acquisition Proposal (as defined below); (ii) waive any provision of any
standstill or similar agreements entered into by BENCHMARQ; or (iii) engage in
or continue discussions or negotiations with or otherwise facilitate any effort
or attempt to make or implement an Acquisition Proposal, or disclose any
nonpublic information relating to BENCHMARQ, or afford access to BENCHMARQ's
properties, books or records, to any person, entity or group that may be
considering making, or has made, an Acquisition Proposal. However, the BENCHMARQ
Board may furnish information to, or enter into discussions or negotiations
with, any person, entity or group in connection with an unsolicited bona fide
proposal in writing by such person, entity or group with respect to an
Acquisition Proposal if, and only to the extent (A) that (1) the BENCHMARQ
Board, after consulting with outside legal counsel, determines in good faith
that such action is required for the BENCHMARQ Board to comply with its
fiduciary duties to stockholders imposed by law and (2) prior to furnishing such
information to, or entering into discussions or negotiations with, such person,
entity or group, BENCHMARQ provides written notice to Unitrode to the effect
that it is furnishing information to, or entering into discussions or
negotiations with, such person, entity or group and BENCHMARQ keeps Unitrode
informed of the status of the principal financial terms of any such negotiations
or discussion; or (B) necessary to comply with Rule 14e-2 promulgated under the
Exchange Act with regard to an Acquisition Proposal.
"Acquisition Proposal" means any offer, proposal or indication of interest
(other than by or with Unitrode or its subsidiaries): (i) by any person, entity
or group to commence (as such term is defined in Rule 14d-2 under the Exchange
Act), or file a registration statement under the Securities Act with respect to,
a tender offer or exchange offer to purchase any shares of BENCHMARQ Common
Stock such that, upon consummation of such offer, such person, entity or group
would own or control more than 15% of the then outstanding BENCHMARQ Common
Stock; or (ii) relating to (a) a merger, reorganization, consolidation, share
exchange or other business combination or similar transaction involving
BENCHMARQ, (b) a sale, lease, exchange, mortgage, pledge, transfer or other
disposition of assets of BENCHMARQ representing 15% or more of BENCHMARQ's
consolidated assets, directly or indirectly, in one or a series of transactions
other than in the ordinary course of business, (c) an issuance, sale or other
acquisition or disposition of (including by way of merger, consolidation, share
exchange or any similar transaction) securities (or options, rights or warrants
to purchase, or securities convertible into or exchangeable for, such
securities) representing 15% or more of the voting power of BENCHMARQ, directly
or indirectly, in one or a series of transactions or (d) a transaction in which
any person, entity or group shall or would acquire beneficial ownership (as such
term is defined in Rule 13d-3 under the Exchange Act), or the right to acquire
beneficial ownership, or has or would have the right to acquire beneficial
ownership, of 15% or more of the outstanding BENCHMARQ Common Stock.
BENCHMARQ Stock Options. In the event of the consummation of a "change of
control" (which would include the Merger), all vesting restrictions applicable
to options (the "BENCHMARQ Options")
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granted under the BENCHMARQ Plans are to accelerate and the holders of BENCHMARQ
Options may exercise such options without regard to such vesting restrictions.
Pursuant to the terms of the Merger Agreement, at the Effective Time, each
outstanding BENCHMARQ Option shall become an option to purchase that number of
shares of Unitrode Common Stock (and the associated Unitrode Rights) obtained by
multiplying the number of shares of BENCHMARQ Common Stock issuable upon the
exercise of such option by the Exchange Ratio at an exercise price per share
equal to the per share exercise price of such option divided by the Exchange
Ratio and otherwise upon the same terms and conditions as such outstanding
options to purchase BENCHMARQ Common Stock. In addition, Unitrode has agreed to
take all corporate actions necessary to reserve for issuance of a sufficient
number of shares of Unitrode Common Stock (and the associated Unitrode Rights)
for delivery upon exercise of the BENCHMARQ Options. As promptly as practicable
after the Effective Time, Unitrode shall file one or more registration
statements on Form S-8 with respect to the shares of Unitrode Common Stock (and
the associated Unitrode Rights) subject to the BENCHMARQ Options and shall use
its reasonable efforts to maintain the effectiveness of such registration
statement (and maintain the current status of the prospectus or prospectuses
contained therein) for so long as such options remain outstanding and to comply
with applicable state securities and blue sky laws.
Conditions to Consummation of the Merger. The respective obligations of
Unitrode, Sub and BENCHMARQ, respectively, to effect the Merger and the other
transactions contemplated by the Merger Agreement are subject to the
satisfaction at or prior to the Effective Time of the following conditions, any
or all of which may be waived by the party entitled to the benefit thereof, in
whole or in part, to the extent permitted by applicable law: (i) the
Registration Statement shall have become effective in accordance with the
provisions of the Securities Act and no stop order suspending the effectiveness
of the Registration Statement shall be pending before or threatened and no
proceedings for that purpose shall be in effect by the SEC; (ii) the Merger
Agreement and the Merger shall have been approved and adopted by the requisite
vote of the stockholders of BENCHMARQ in accordance with the DGCL and the
certificate of incorporation and by laws of BENCHMARQ; (iii) the issuance of the
Merger Shares shall have been approved by the requisite vote of the stockholders
of Unitrode in accordance with the requirements of the NYSE and the articles of
incorporation and bylaws of Unitrode; (iv) no court or governmental authority
having jurisdiction over BENCHMARQ or Unitrode shall have enacted any law,
regulation or issued any order (whether temporary, preliminary or permanent)
which is then in effect and which has the effect of making the Merger illegal or
otherwise prohibiting consummation of the Merger; (v) all approvals and consents
of applicable courts or governmental authorities required to consummate the
Merger, the failure to obtain which would have a material adverse effect on
Unitrode or BENCHMARQ, as the surviving corporation, shall have been received,
and all applicable waiting periods, including the waiting period under the HSR
Act, shall have expired or been terminated; (vi) the shares of Unitrode Common
Stock (and the associated Unitrode Rights) to be issued pursuant to the Merger
shall have been approved for listing, subject to official notice of issuance, on
the NYSE; and (vii) Unitrode having been advised in writing by
PricewaterhouseCoopers that such firm concurs with the management of Unitrode
that there is no reason why the Merger cannot be treated as a "pooling of
interests" for financial accounting purposes and BENCHMARQ having been advised
in writing by Ernst & Young that such firm concurs with the management of
BENCHMARQ that there is no reason why the Merger cannot be treated as a "pooling
of interests" for financial accounting purposes. Although certain closing
conditions may be waived by the party entitled to the benefit thereof, as of the
date of this Joint Proxy Statement-Prospectus, neither Unitrode nor BENCHMARQ
expects to waive any closing conditions.
In addition, the obligations of Unitrode and Sub to effect the Merger and
the other transactions contemplated by the Merger Agreement shall be subject to
the satisfaction at or prior to the Effective Time of the following additional
conditions, any or all of which may be waived by Unitrode and Sub, in whole or
in part, to the extent permitted by applicable law: (i) each of the
representations and warranties of BENCHMARQ contained in the Merger Agreement to
the extent it is qualified as to material adverse effect shall be true and
correct and each such representation and warranty to the extent that it is not
so qualified shall be true and correct (without regard to any other materiality
qualification) such that the aggregate effect of any inaccuracies in such
representations and warranties will not have a material adverse effect on
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BENCHMARQ, in each case as of the date thereof and at and as of the Effective
Time as if made at and as of such time, except that those representations and
warranties which address matters only as of a particular date shall remain true
and correct as of such date and Unitrode and Sub shall have received a
certificate of the President and the Chief Financial Officer of BENCHMARQ, dated
the date of the Effective Time, to such effect; (ii) BENCHMARQ shall have
performed or complied in all respects with all agreements and covenants required
by the Merger Agreement to be performed or complied with by it on or prior to
the Effective Time, and Unitrode and Sub shall have received a certificate of
the President and the Chief Financial Officer of BENCHMARQ, dated the date of
the Effective Time, to such effect; and (iii) Unitrode shall have received the
opinion of its tax counsel, Skadden, Arps, Slate, Meagher & Flom LLP, to the
effect that the Merger will qualify as a reorganization within the meaning of
Section 368(a) of the Code.
The obligations of BENCHMARQ to effect the Merger and the other
transactions contemplated by the Merger Agreement shall be subject to the
satisfaction at or prior to the Effective Time of the following additional
conditions, any or all of which may be waived by BENCHMARQ, in whole or in part,
to the extent permitted by applicable law: (i) each of the representations and
warranties of Unitrode and Sub contained in the Merger Agreement to the extent
it is qualified as to material adverse effect shall be true and correct and each
such representation and warranty to the extent that it is not so qualified shall
be true and correct (without regard to any other materiality qualification) such
that the aggregate effect of any inaccuracies in such representations and
warranties will not have a material adverse effect on Unitrode and Sub, in each
case as of the date thereof and at and as of the Effective Time as if made at
and as of such time, except that those representations and warranties which
address matters only as of a particular date shall remain true and correct as of
such date. BENCHMARQ shall have received a certificate of the President and the
Chief Financial Officer of each of Unitrode and Sub, dated the date of the
Effective Time, to such effect; (ii) Unitrode and Sub shall have performed or
complied in all respects with all agreements and covenants required by the
Merger Agreement to be performed or complied with by them on or prior to the
Effective Time, and BENCHMARQ shall have received a certificate of the President
and the Chief Financial Officer of each of Unitrode and Sub, dated the date of
the Effective Time, to such effect; and (iii) BENCHMARQ shall have received the
opinion of its tax counsel, Winstead Sechrest & Minick P.C., to the effect that
the Merger will qualify as a reorganization within the meaning of Section 368(a)
of the Code.
Termination and Termination Fee. The Merger Agreement may be terminated at
any time prior to the Effective Time, whether before or after approval of the
Merger Agreement and the Merger by the stockholders of BENCHMARQ or approval of
the issuance of the Merger Shares by the stockholders of Unitrode: (i) by mutual
consent of Unitrode and BENCHMARQ; (ii) by either Unitrode or BENCHMARQ, upon a
breach of any covenant or agreement on the part of the other party set forth in
the Merger Agreement, or if any representation or warranty of the other party,
to the extent it is qualified as to material adverse effect, shall have become
untrue, or if any such representation and warranty which is not so qualified
(without regard to any other materiality qualification) shall have become untrue
such that the aggregate effect of any inaccuracies in such representations and
warranties will have a material adverse effect on Unitrode or BENCHMARQ, as the
case may be, except that those representations and warranties which address
matters only as of a particular date shall remain true and correct as of such
date (a "Terminating Breach"), provided that, if such Terminating Breach is
curable by the party who is so in breach through the exercise of reasonable
efforts, the Merger Agreement may not be terminated for 20 days unless such
Terminating Breach is not cured within 20 days after written notice of such
breach is given, provided that the party in breach continues to exercise such
reasonable efforts; (iii) by either Unitrode or BENCHMARQ, if there shall be any
order of a court of competent jurisdiction which is final and nonappealable
permanently enjoining, restraining or prohibiting the consummation of the
Merger, unless the party relying on such order has not used all reasonable
efforts to take appropriate action and to do all things necessary, proper and
advisable to consummate the Merger; (iv) by either Unitrode or BENCHMARQ, if the
Merger shall not have been consummated before October 31, 1998, unless the party
seeking to terminate the Merger Agreement has not used all reasonable efforts to
take appropriate action and to do all things necessary, proper and advisable to
consummate the Merger, provided that the party whose failure to fulfill any
obligation under the Merger Agreement has been the cause of, or resulted in, the
failure of the Effective Time to occur on or before October 31, 1998 may not
seek to terminate the Merger Agreement because of the failure of the
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Effective Time to occur on or before October 31, 1998; (v) by either Unitrode or
BENCHMARQ, if the Merger Agreement shall fail to receive the requisite vote for
approval and adoption by the stockholders of BENCHMARQ at the BENCHMARQ Special
Meeting; (vi) by either Unitrode or BENCHMARQ if the issuance of the Merger
Shares shall fail to receive the requisite vote for approval by the stockholders
of Unitrode at the Unitrode Annual Meeting; (vii) by Unitrode, if the BENCHMARQ
Board (a) fails to recommend approval and adoption of the Merger Agreement and
the Merger by the stockholders of BENCHMARQ or withdraws or modifies (or
publicly announces an intention to withdraw or modify) in any adverse manner its
approval or recommendation of the Merger Agreement or the Merger, (b) makes any
recommendation with respect to any Acquisition Proposal other than a
recommendation to reject such Acquisition Proposal, (c) takes any prohibited
action with respect to an Acquisition Proposal, or any action with respect to an
Acquisition Proposal which would be prohibited but for the BENCHMARQ Board's
fiduciary duty to take such action or (d) enters into any agreement relating to
an Acquisition Proposal other than the Merger Agreement or the Option Agreement;
and (viii) by BENCHMARQ, if from and after June 23, 1998, the Unitrode Board
fails to recommend approval of the issuance of the Merger Shares pursuant to the
Merger Agreement by the stockholders of Unitrode or withdraws or modifies (or
publicly announces an intention to withdraw or modify) its approval and
recommendation in a manner materially adverse to BENCHMARQ. The right of any
party hereto to terminate the Merger Agreement will remain operative and in full
force and effect regardless of any investigation made by or on behalf of
Unitrode, Sub, BENCHMARQ or any of their respective officers, directors,
representatives or agents.
In the event of the termination of the Merger Agreement, the Merger
Agreement will become void, and there will be no liability on the part of
Unitrode, Sub or BENCHMARQ or any of their respective officers or directors to
the other and all rights and obligations of any party thereto will cease, except
as otherwise set forth in the Merger Agreement and except that nothing therein
will relieve any party from liability for any breach of the Merger Agreement.
BENCHMARQ has agreed to promptly pay to Unitrode by wire transfer of same
day funds not later than two business days after the date of such termination
the termination fee of $4,528,000 (the "Termination Fee") if the Merger
Agreement is terminated: (i) by Unitrode, because the BENCHMARQ Board fails to
recommend approval and adoption of the Merger Agreement to the stockholders of
BENCHMARQ or BENCHMARQ withdraws or modifies (or publically announces an
intention to withdraw or modify) in any adverse manner its approval or
recommendation of the Merger Agreement or the Merger (except if circumstances
exist that would allow the Company to terminate the Merger Agreement as a result
of a change that would have a material adverse effect on Unitrode); (ii) by
Unitrode, because the BENCHMARQ Board (a) makes any recommendation with respect
to any Acquisition Proposal other than a recommendation to reject such
Acquisition Proposal, (b) takes any prohibited action with respect to an
Acquisition Proposal, or any action with respect to an Acquisition Proposal
which would be prohibited but for the BENCHMARQ Board's fiduciary duty to take
such action or (c) enters into any agreement relating to an Acquisition Proposal
other than the Merger Agreement or the Option Agreement or resolves to do any of
the foregoing; (iii) by Unitrode or BENCHMARQ because of the failure to obtain
the required approval from BENCHMARQ stockholders and at the time of such
termination or prior to the BENCHMARQ Special Meeting there shall have been an
Acquisition Proposal (whether or not such Acquisition Proposal shall have been
rejected or shall have been withdrawn prior to the time of such termination or
of the BENCHMARQ Special Meeting); or (iv) by Unitrode as a result of
BENCHMARQ's material breach of its obligation (a) to use all reasonable efforts
to take appropriate action and to do all things necessary, proper and advisable
to consummate the Merger or (b) to promptly hold the BENCHMARQ Special Meeting
and to recommend the approval and adoption of the Merger Agreement to the
stockholders of BENCHMARQ and to solicit proxies for the BENCHMARQ Special
Meeting, provided, however, that if the Merger Agreement is terminated by
Unitrode or BENCHMARQ because the BENCHMARQ stockholders fail to approve and
adopt the Merger Agreement under circumstances in which the BENCHMARQ Board has
(x) made any recommendation with respect to any Acquisition Proposal other than
a recommendation to reject such Acquisition Proposal, (y) taken any prohibited
action with respect to an Acquisition Proposal, or any action with respect to an
Acquisition Proposal which would have been prohibited but for the BENCHMARQ
Board's fiduciary duty to take such action or (z) entered into any agreement
relating to an Acquisition Proposal other than the Merger
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Agreement or the Option Agreement, and at the time of such termination the
stockholders of Unitrode shall have failed to approve the issuance of the Merger
Shares, Unitrode shall not be entitled to the Termination Fee.
If the Merger Agreement is terminated by BENCHMARQ because the Unitrode
Board, from and after June 23, 1998, fails to recommend approval of the issuance
of the Merger Shares by the stockholders of Unitrode or withdraws or modifies
(or publicly announces an intention to withdraw or modify) in a manner
materially adverse to BENCHMARQ its approval or recommendation of the issuance
of the Merger Shares, and at the time of such termination there shall have been
a Unitrode Acquisition Proposal (as defined below) (whether or not such Unitrode
Acquisition Proposal shall have been rejected or shall have been withdrawn prior
to the time of such termination), and the stockholders of Unitrode shall have
failed to approve the issuance of the Merger Shares, Unitrode shall promptly pay
to BENCHMARQ by wire transfer of same day funds not later than two business days
after the date of such termination a termination fee of $2,000,000. "Unitrode
Acquisition Proposal" means any offer, proposal or indication of interest (other
than by or with BENCHMARQ or its subsidiaries): (i) by any person, entity or
group to commence (as such term is defined in Rule 14d-2 under the Exchange
Act), or file a registration statement under the Securities Act with respect to,
a tender offer or exchange offer to purchase any shares of Unitrode Common Stock
such that, upon consummation of such offer, such person, entity or group would
own or control more than 15% of the then outstanding Unitrode Common Stock; or
(ii) relating to (a) a merger, reorganization, consolidation, share exchange or
other business combination or similar transaction involving Unitrode, (b) a
sale, lease, exchange, mortgage, pledge, transfer or other disposition of assets
of Unitrode representing 15% or more of the consolidated assets of Unitrode,
directly or indirectly, in one or a series of transactions other than in the
ordinary course of business, (c) an issuance, sale or other acquisition or
disposition of (including by way of merger, consolidation, share exchange or any
similar transaction) securities (or options, rights or warrants to purchase, or
securities convertible into or exchangeable for, such securities) representing
15% or more of the voting power of Unitrode, directly or indirectly, in one or a
series of transactions, or (d) a transaction in which any person, entity or
group shall or would acquire beneficial ownership (as such term is defined in
Rule 13d-3 under the Exchange Act), or the right to acquire beneficial
ownership, of 15% or more of the outstanding Unitrode Common Stock. In the event
that BENCHMARQ terminates the Merger Agreement because: (i) Unitrode materially
breaches certain provisions of the Merger Agreement related to obtaining
stockholder approval or satisfying conditions to the consummation of the Merger
or (ii) the Unitrode Board, from and after June 23, 1998, fails to recommend the
approval by the stockholders of Unitrode of the issuance of the Unitrode Common
Stock, Unitrode will be required to pay BENCHMARQ actual, verifiable expenses in
an amount up to $500,000. In the event that BENCHMARQ terminates the Merger
Agreement because the stockholders of Unitrode fail to approve the issuance of
the Merger Shares, Unitrode will be required to pay BENCHMARQ actual, verifiable
expenses in an amount up to $250,000.
Waiver and Amendment. Subject to the requirements of law, the Merger
Agreement may be amended by Unitrode, Sub and BENCHMARQ by action taken by or on
behalf of their respective Boards of Directors at any time prior to the
Effective Time; provided, however, that, after approval of the Merger by the
stockholders of BENCHMARQ, no amendment may be made which would reduce the
amount or change the type of consideration into which each share of BENCHMARQ
Common Stock will be converted pursuant to the Merger Agreement upon
consummation of the Merger. The Merger Agreement may not be amended except by an
instrument in writing signed by the parties thereto.
At any time prior to the Effective Time, Unitrode, Sub or BENCHMARQ may:
(i) extend the time for the performance of any of the obligations or other acts
of the other party to the Merger Agreement; (ii) waive any inaccuracies in the
representations and warranties of the other party contained in the Merger
Agreement or in any document delivered pursuant to the Merger Agreement; and
(iii) waive compliance by the other party with any of the agreements or
conditions contained in the Merger Agreement. Any such extension or waiver will
be valid only if set forth in an instrument in writing signed by the party or
parties to be bound thereby. Although certain closing conditions may be waived
by the party entitled to the benefit thereof, as of the date of this Joint Proxy
Statement-Prospectus, neither Unitrode nor BENCHMARQ expects to waive any
closing conditions.
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RELATED AGREEMENTS
STOCK OPTION AGREEMENT
As an inducement for Unitrode to enter into the Merger Agreement and in
consideration thereof, BENCHMARQ and Unitrode entered into the Original Stock
Option Agreement which is attached hereto as Appendix E, as amended by the Stock
Option Agreement Amendment which is attached hereto as Appendix F whereby
BENCHMARQ granted to Unitrode the Option to purchase under certain circumstances
described therein, up to 955,158 shares of BENCHMARQ Common Stock at an exercise
price per share equal to $11.38, as adjusted as provided therein. Based on the
number of shares of BENCHMARQ Common Stock outstanding on March 2, 1998, the
Option would be exercisable for approximately 13.4% of the outstanding shares of
BENCHMARQ Common Stock, or approximately 10% of the shares of BENCHMARQ Common
Stock outstanding on a fully diluted basis after giving effect to the exercise
of the Option. The Option is exercisable in whole or in part upon the occurrence
of a Triggering Event (as defined below). No Triggering Event has occurred as of
the date of this Joint Proxy Statement-Prospectus. The Option will terminate
upon the occurrence of a Termination Event (as defined below).
The Option is intended to increase the likelihood that the Merger will be
consummated in accordance with the terms set forth in the Merger Agreement.
Consequently, certain aspects of the Option Agreement may have the effect of
discouraging persons who might now or at any time prior to the Effective Time be
interested in acquiring all or a significant interest in BENCHMARQ or its
assets.
Unitrode may exercise the Option, in whole or in part, at any time and from
time to time following the occurrence of certain events (each, a "Triggering
Event"), provided that Unitrode provides notice of such exercise in accordance
with the Option Agreement. A Triggering Event includes the following:
(i) any Person (as defined in the Merger Agreement) (other than
Unitrode or any subsidiary of Unitrode) shall have commenced (as such term
is defined in Rule 14d-2 under the Exchange Act) or shall have filed a
registration statement under the Securities Act, with respect to a tender
offer or exchange offer to purchase any shares of BENCHMARQ Common Stock
such that, upon consummation of such offer, such Person would own or
control 10% or more of the then outstanding BENCHMARQ Common Stock;
(ii) BENCHMARQ or any subsidiary of BENCHMARQ shall have authorized,
recommended, proposed or publicly announced an intention to authorize,
recommend or propose, or entered into, an agreement with any Person (other
than Unitrode or any subsidiary of Unitrode) to (a) effect a merger,
reorganization, consolidation, share exchange or other business combination
or similar transaction involving BENCHMARQ or any of its Significant
Subsidiaries (within the meaning of Rule 1-02 of Regulation S-X of the
SEC), (b) sell, lease or otherwise dispose of assets of BENCHMARQ or its
subsidiaries representing 10% or more of the consolidated assets of
BENCHMARQ other than in the ordinary course of business or (c) issue, sell
or otherwise dispose of (including by way of merger, reorganization,
consolidation, share exchange or other business combination or any similar
transaction) securities (or options, rights or warrants to purchase, or
securities convertible into or exchangeable for, such securities)
representing 10% or more of the voting power of BENCHMARQ or any of its
Significant Subsidiaries; or
(iii) any Person (other than Unitrode or any subsidiary of Unitrode or
BENCHMARQ or, in a fiduciary capacity, any subsidiary of BENCHMARQ) shall
have, subsequent to the date of the Option Agreement, acquired beneficial
ownership (as such term is defined in Rule 13d-3 under the Exchange Act) or
the right to acquire beneficial ownership of, or any "Group" (as such term
is defined under the Exchange Act) shall have been formed which
beneficially owns or has the right to acquire beneficial ownership of, 10%
or more of the then outstanding BENCHMARQ Common Stock;
provided that, the Option will terminate either (a) immediately prior to the
Effective Time; or (b) at the time of termination of the Merger Agreement (A) by
BENCHMARQ or Unitrode if there shall be any order of a court of competent
jurisdiction which is final and nonappealable permanently enjoining, restraining
or
55
<PAGE> 70
prohibiting the consummation of the Merger, unless the party relying on such
order has not used all reasonable efforts to take appropriate action and to do
all things necessary, proper and advisable to consummate the Merger, provided
that the matter giving rise to such order shall not have been initiated by
BENCHMARQ or any person, entity or group who initiates an Acquisition Proposal,
(B) by BENCHMARQ (I) upon an uncured Terminating Breach by Unitrode or (II) if
the Unitrode Board fails to recommend approval of the issuance of the Merger
Shares by the stockholders of Unitrode or withdraws or modifies (or publicly
announces an intention to withdraw or modify) in a manner materially adverse to
BENCHMARQ its approval or recommendation of the issuance of the Merger Shares,
(C) by either BENCHMARQ or Unitrode, because the stockholders of Unitrode fail
to approve the issuance of the Merger Shares, (D) by the mutual consent of both
BENCHMARQ and Unitrode, (E) by BENCHMARQ or Unitrode, if the Merger shall not
have been consummated before October 31, 1998, unless BENCHMARQ seeks to
terminate the Merger Agreement and it has not used all reasonable efforts to
take appropriate action and to do all things necessary, proper and advisable to
consummate the Merger, (F) by Unitrode, because the BENCHMARQ Board fails to
recommend approval and adoption of the Merger Agreement to the stockholders of
BENCHMARQ or BENCHMARQ withdraws or modifies (or publically announces an
intention to withdraw or modify) in any adverse manner its approval or
recommendation of the Merger Agreement or the Merger (if circumstances exist
that would allow BENCHMARQ to terminate the Merger Agreement as a result of a
change that would have a material adverse effect on Unitrode) or (G) by either
party pursuant to any other provision of the Merger Agreement; provided (in the
case of this subsection (G)) such termination occurs prior to the occurrence of
an Acquisition Proposal (each, a "Termination Event").
Upon the occurrence of certain events set forth in the Option Agreement,
BENCHMARQ is required to repurchase the Option (the "Repurchase") or to cause
the Option to be converted into, or exchanged for, an option of another
corporation (the "Substitute Option"). In addition, the Option Agreement grants
certain registration rights (the "Registration Rights") to Unitrode with respect
to the shares of BENCHMARQ Common Stock represented by the Option. Also, under
certain circumstances, BENCHMARQ is entitled to a right of first refusal (the
"Right of First Refusal") if Unitrode desires to sell all or any part of the
Option or shares of BENCHMARQ Common Stock acquired by it pursuant thereto.
Notwithstanding any other provisions of the Option Agreement, the Total Profit
(as defined therein) which Unitrode may realize from the Option and the
Termination Fee may not exceed $7,278,000. The terms of such Repurchase,
Substitute Option, Registration Rights, Right of First Refusal and limitations
on Total Profit are set forth in the Option Agreement.
VOTING AGREEMENT
As a further inducement for Unitrode to enter into the Merger Agreement,
the Voting Agreement Stockholders entered into the Original Voting Agreement,
which is attached hereto as Appendix G, and the Voting Agreement Amendment which
is attached hereto as Appendix H, whereby the Voting Agreement Stockholders
agreed to vote all of the shares of BENCHMARQ Common Stock beneficially owned by
them in favor of certain matters, including without limitation, the approval and
adoption of the Merger Agreement, and against, among other things, any action or
agreement that could reasonably be expected to result, directly or indirectly,
in a breach in any material respect of any covenant, representation or warranty
or any obligation of BENCHMARQ under the Merger Agreement or the Option
Agreement. The Voting Agreement Stockholders beneficially own an aggregate of
1,463,609 shares of BENCHMARQ Common Stock or 20.7% of the outstanding shares of
BENCHMARQ Common Stock as of the BENCHMARQ Record Date. Unitrode did not pay
additional consideration to any Voting Agreement Stockholder in connection with
the execution and delivery of the Voting Agreement.
The Voting Agreement terminates upon the earlier to occur of the Effective
Time or the termination of the Merger Agreement. The name of each Voting
Agreement Stockholder and the number of outstanding shares of BENCHMARQ Common
Stock held by each Voting Agreement Stockholder are set forth on Schedule A to
the Voting Agreement.
56
<PAGE> 71
EMPLOYMENT AGREEMENTS
BENCHMARQ entered into the Employment Agreements with the Executive
Officers as of March 1, 1998. The Employment Agreements become effective at the
Effective Time and terminate on the first anniversary of the Merger. Upon the
termination of an Executive Officer's employment without Just Cause during the
Term, such Executive Officer will be entitled to receive, among other things,
his base salary through the date of termination of the Executive Officer's
employment.
If, during the Term, an Executive Officer terminates his employment because
of certain specified changes in his employment situation constituting Good
Reason or if he is terminated without Just Cause, he shall be entitled to
receive (in addition to salary earned prior to termination) a single lump sum
payment in an amount equal to his annual base salary and the value of his
accrued and special vacation benefits for the year in which his employment
terminates.
Although the Merger Agreement does not provide for the termination of
employment of any of the Executive Officers, if an Executive Officer were
terminated without Just Cause or were to voluntarily terminate his employment
for Good Reason, such Executive Officer would be entitled to a lump sum
severance payment pursuant to his employment agreement. The estimated lump sum
severance amounts payable under the terms of the employment agreements (based
upon termination at the Effective Time and assuming current salaries) would be
as follows: Alan R. Schuele $225,000; R. Scott Schaefer $115,000; and William F.
Davies $164,800. Because the severance payments are based on elements which vary
from year to year, if termination occurs after the Effective Time, such payments
could be more or less than the estimated lump sum payments set forth above.
INFORMATION CONCERNING UNITRODE AND MERRIMACK
Unitrode was founded in 1960 and is incorporated under the laws of
Maryland. Since its inception, Unitrode and its subsidiaries have designed,
manufactured, marketed, and sold electronic components and sub-systems. After
divesting various businesses from 1989 through 1994, Unitrode is now focused on
the analog/linear and mixed-signal integrated circuits business. Unitrode and
its subsidiaries operate within a single industry segment, the manufacture and
sale of electronic components, and have various classes of products within that
one segment.
Unitrode currently designs, manufactures, markets and sells a range of
analog/linear and mixed-signal ICs. This business was founded in 1981.
Unitrode's products are principally proprietary, are used in a variety of
applications in EDP/computer, telecommunications, industrial control and
instrumentation, defense/ aerospace, and automotive markets. For the most part,
the ICs are used either to control switching power supplies and small electronic
motors, or as high-speed interface and communication circuits between various
pieces of electronic equipment.
Sub was incorporated in February 1998 for the purpose of the transactions
contemplated by the Merger Agreement and has engaged in no other business. Sub
is a wholly owned subsidiary of Unitrode.
The principal executive offices of Unitrode are located at 7 Continental
Boulevard, Merrimack, New Hampshire 03054, and its telephone number is (603)
424-2410.
INFORMATION CONCERNING BENCHMARQ
BENCHMARQ, a Delaware corporation incorporated in 1989, is engaged
principally in the design, manufacture and marketing of ICs and electronic
modules for portable power-sensitive electronic applications. BENCHMARQ's
principal focus is on the development and sale of Battery Management Products,
on which it is concentrating the majority of its research and development
activities. BENCHMARQ's Battery Management Products control charging,
conditioning and monitoring of rechargeable batteries, principally for portable
electronic systems, including personal computers, cellular telephones,
camcorders, power tools, personal care devices, electronic games and audio
devices. BENCHMARQ also produces a family of NVSRAM modules and NVSRAM Products
that provide battery-backed memory to devices such as
57
<PAGE> 72
telecommunications equipment, including network routers, hubs and memory boards.
RTC Products that provide non-volatile time and date functions, principally to
personal computers or electronic systems, comprise BENCHMARQ's third product
group.
During each of the years 1992 through 1996, BENCHMARQ derived the majority
of its revenues from sales of Integrated Battery Products. In 1997, BENCHMARQ
generated the majority of its revenues from Battery Management Products, its
strategic focus. Although BENCHMARQ expects a material portion of its total net
revenues to come from sales of Integrated Battery Products through at least
1998, significant long-term growth is not anticipated from these product groups.
BENCHMARQ operates in a single industry segment.
The mailing address of the principal executive offices of BENCHMARQ is
17919 Waterview Parkway, Dallas, Texas 75252, and its telephone number is (972)
437-9195.
58
<PAGE> 73
COMPARATIVE PER SHARE MARKET PRICE DATA
Unitrode Common Stock is traded on the NYSE under the symbol "UTR."
BENCHMARQ Common Stock is traded on the NNM under the symbol "BMRQ."
The following table sets forth, for the calendar quarters indicated, the
high and low sales prices per share of Unitrode Common Stock as reported on the
NYSE (as adjusted for the 2-for-1 stock split of Unitrode Common Stock on
October 6, 1997) and per share of BENCHMARQ Common Stock as quoted on the NNM.
<TABLE>
<CAPTION>
UNITRODE BENCHMARQ
COMMON STOCK COMMON STOCK
-------------- --------------
HIGH LOW HIGH LOW
----- ----- ----- -----
<S> <C> <C> <C> <C>
1996:
First Quarter............................................. 24 3/16 23 3/16 8 5/8 6 1/4
Second Quarter............................................ 15 3/8 9 1/4 16 7
Third Quarter............................................. 11 7/16 7 3/8 12 3/4 6 3/4
Fourth Quarter............................................ 14 11/16 11 1/4 27 10
1997:
First Quarter............................................. 19 7/16 14 7/16 29 7/8 11 1/8
Second Quarter............................................ 26 7/16 15 7/8 22 1/4 12 3/4
Third Quarter............................................. 42 5/16 25 36 1/4 17 1/2
Fourth Quarter............................................ 38 11/16 15 15/16 25 1/4 12
1998:
First Quarter............................................. 22 1/2 16 7/16 18 1/2 10 1/4
Second Quarter............................................ 18 11/16 10 7/16 17 1/2 8 1/4
Third Quarter (through July 10, 1998)..................... 12 3/8 11 3/8 12 10 11/16
</TABLE>
The following table sets forth the closing prices per share of Unitrode
Common Stock as reported on the NYSE and per share of BENCHMARQ Common Stock as
quoted on the NNM on February 27, 1998 (the business day preceding public
announcement of the Merger) June 23, 1998 (the last full trading day prior to
the announcement of the Merger Agreement Amendment) and on July 10, 1998 (the
last full trading day for which closing prices were available at the time of the
printing of this Joint Proxy Statement-Prospectus) and the equivalent per share
prices (as explained below) of shares of BENCHMARQ Common Stock on such dates.
<TABLE>
<CAPTION>
UNITRODE BENCHMARQ EQUIVALENT
COMMON STOCK COMMON STOCK PER SHARE PRICE
------------ ------------ ---------------
<S> <C> <C> <C>
February 27, 1998................................ $18.8125 $16.2500 $18.8125
June 23, 1998.................................... $11.3750 $ 8.6875 $11.3750
July 10, 1998.................................... $12.0000 $11.5625 $12.0000
</TABLE>
The equivalent per share price of a share of BENCHMARQ Common Stock
represents the closing price of a share of Unitrode Common Stock on such date
multiplied by the Exchange Ratio computed as of such date.
Because the market price of Unitrode Common Stock that holders of BENCHMARQ
Common Stock will receive in the Merger may increase or decrease prior to the
Merger, stockholders are urged to obtain current market quotations.
59
<PAGE> 74
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma combined condensed financial statements
assume a business combination between Unitrode and BENCHMARQ accounted for on a
"pooling of interests" basis and are based on the respective historical
financial statements and the notes thereto of Unitrode and BENCHMARQ, which are
incorporated by reference in this Joint Proxy Statement-Prospectus. The
unaudited pro forma combined condensed balance sheet combines Unitrode's May 2,
1998 unaudited consolidated balance sheet with BENCHMARQ's March 31, 1998
unaudited consolidated balance sheet. The unaudited pro forma combined condensed
statements of operations combine Unitrode's historical operating results for the
three months ended May 2, 1998 and May 3, 1997 and the fiscal years ended
January 31, 1998, 1997 and 1996 with the corresponding BENCHMARQ historical
operating results for the three months ended March 31, 1998 and 1997 and for the
fiscal years ended December 31, 1997, 1996 and 1995, respectively.
For purposes of the preparation of the unaudited pro forma combined
condensed balance sheet, merger-related expenses (which the companies anticipate
will be approximately $3 million on a pre-tax basis) were included.
The unaudited pro forma combined condensed financial statements are
presented for illustrative purposes only and are not necessarily indicative of
the operating results or financial position that would have been achieved if the
Merger had been consummated as of the beginning of the periods presented, nor
are they necessarily indicative of the future operating results or financial
position of the combined company. The unaudited pro forma combined condensed
financial statements do not give effect to any cost savings which may result
from the integration of Unitrode's and BENCHMARQ's operations.
These unaudited pro forma combined condensed financial statements are based
on, and should be read in conjunction with, the historical consolidated
financial statements and the related notes thereto of Unitrode and BENCHMARQ,
incorporated by reference in this Joint Proxy Statement-Prospectus. See
"Available Information" and "Incorporation by Reference."
60
<PAGE> 75
UNITRODE AND BENCHMARQ
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
AS OF MAY 2, 1998
<TABLE>
<CAPTION>
PRO FORMA
-----------------------
UNITRODE BENCHMARQ ADJUSTMENTS COMBINED
-------- --------- ----------- --------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents................. $ 57,263 $ 4,091 $ -- $ 61,354
Short-term investments.................... -- 16,290 -- 16,290
Accounts receivable, net.................. 19,011 4,050 -- 23,061
Inventories............................... 14,086 5,454 -- 19,540
Notes receivable.......................... 714 -- -- 714
Deferred income taxes..................... 6,724 858 -- 7,582
Prepaid expenses and other current
assets................................. 2,553 2,166 -- 4,719
-------- ------- ------- --------
Total current assets................... 100,351 32,909 -- 133,260
-------- ------- ------- --------
Property, plant and equipment, net.......... 76,151 3,039 -- 79,190
Equipment under capital lease obligations,
net....................................... -- 2,519 -- 2,519
Other assets and deferred charges........... 1,757 49 -- 1,806
Restricted cash and investments............. 1,172 -- -- 1,172
Notes and other receivables, net............ 2,638 -- -- 2,638
Prepayment of product purchases, less
current................................... -- 3,360 -- 3,360
Excess of cost over net assets acquired,
net....................................... 1,625 -- -- 1,625
-------- ------- ------- --------
Total assets................................ $183,694 $41,876 $ -- $225,570
======== ======= ======= ========
Current liabilities:
Accounts payable.......................... $ 10,383 $ 2,656 $ -- 13,039
Income taxes payable...................... 721 496 -- 1,217
Accrued employee compensation and
benefits............................... 1,994 -- -- 1,994
Accrued distributor liability............. 2,867 101 -- 2,968
Deferred income on shipments to
distributors........................... -- 1,160 -- 1,160
Current obligations under capital
leases................................. -- 1,079 -- 1,079
Other current liabilities................. 6,327 629 1,700 8,656
-------- ------- ------- --------
Total current liabilities.............. 22,292 6,121 1,700 30,113
Obligation under capital leases, less
current................................... -- 510 -- 510
Deferred income taxes....................... 2,119 406 -- 2,525
Other long-term liabilities................. 900 -- -- 900
-------- ------- ------- --------
Total liabilities...................... 25,311 7,037 1,700 34,048
-------- ------- ------- --------
Stockholders' equity:
Common stock.............................. 244 7 64 315
Additional paid-in capital................ 46,326 26,496 (77) 72,745
Retained earnings......................... 112,814 8,345 (1,700) 119,459
Net unrealized gain on short-term
investments............................ -- 4 -- 4
Treasury stock............................ -- (13) 13 --
Deferred compensation..................... (1,001) -- -- (1,001)
-------- ------- ------- --------
Total stockholders' equity............. 158,383 34,839 (1,700) 191,522
-------- ------- ------- --------
Total liabilities and stockholders'
equity.................................... $183,694 $41,876 $ -- $225,570
======== ======= ======= ========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
61
<PAGE> 76
UNITRODE AND BENCHMARQ
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MAY 2, 1998
<TABLE>
<CAPTION>
PRO FORMA
-----------------------
UNITRODE BENCHMARQ ADJUSTMENTS COMBINED
-------- --------- ----------- --------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net revenues.............................. $28,019 $9,310 $ -- $37,329
Cost of revenues.......................... 17,583 4,770 -- 22,353
------- ------ ------- -------
Gross profit............................ 10,436 4,540 -- 14,976
------- ------ ------- -------
Operating expenses:
Research and development................ 3,793 891 -- 4,684
Selling, general and administrative..... 5,563 2,676 -- 8,239
New fab pre-operating expenses.......... 1,109 -- -- 1,109
Restructuring costs..................... 1,267 -- -- 1,267
Merger-related costs.................... 766 575 (1,341) --
------- ------ ------- -------
Total operating expenses............. 12,498 4,142 (1,341) 15,299
------- ------ ------- -------
Income (loss) from operations............. (2,062) 398 1,341 (323)
------- ------ ------- -------
Other income (expense):
Royalty income.......................... 558 -- -- 558
Interest income......................... 835 195 -- 1,030
Interest expense........................ (6) (37) -- (43)
Non-operating income (expense), net..... (2,632) 1 -- (2,631)
------- ------ ------- -------
Total other income (expense)......... (1,245) 159 -- (1,086)
------- ------ ------- -------
Income (loss) before income tax provision
(benefit)............................... (3,307) 557 1,341 (1,409)
Income tax provision (benefit)............ (958) 275 -- (683)
------- ------ ------- -------
Net income (loss)......................... $(2,349) $ 282 $ 1,341 $ (726)
======= ====== ======= =======
Basic earnings (loss) per share........... $ (.10) $ .04 $ (.02)
======= ====== =======
Diluted earnings (loss) per share......... $ (.10) $ .04 $ (.02)
======= ====== =======
Weighted average shares outstanding....... 24,336 7,072 31,408
======= ====== =======
Weighted average shares outstanding --
assuming dilution....................... 24,336 7,667 31,408
======= ====== =======
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
62
<PAGE> 77
UNITRODE AND BENCHMARQ
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MAY 3, 1997
<TABLE>
<CAPTION>
PRO FORMA
UNITRODE BENCHMARQ COMBINED
-------- --------- ---------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Net revenues............................................ $ 40,840 $11,712 $ 52,552
Cost of revenues........................................ 19,146 5,814 24,960
-------- ------- --------
Gross profit.......................................... 21,694 5,898 27,592
-------- ------- --------
Operating expenses:
Research and development.............................. 4,322 815 5,137
Selling, general and administrative................... 6,727 2,646 9,373
New fab pre-operating expenses..................... 1,514 -- 1,514
-------- ------- --------
Total operating expenses........................... 12,563 3,461 16,024
-------- ------- --------
Income from operations.................................. 9,131 2,437 11,568
-------- ------- --------
Other income (expense):
Royalty income........................................ 603 -- 603
Interest income....................................... 634 187 821
Interest expense...................................... (23) (52) (75)
Non-operating income (expense), net................... 175 (5) 170
-------- ------- --------
Total other income................................. 1,389 130 1,519
-------- ------- --------
Income before income tax provision...................... 10,520 2,567 13,087
Income tax provision.................................... 3,934 924 4,858
-------- ------- --------
Net income.............................................. $ 6,586 $ 1,643 $ 8,229
======== ======= ========
Basic earnings per share................................ $ .28 $ .24 $ .27
======== ======= ========
Diluted earnings per share.............................. $ .27 $ .21 $ .26
======== ======= ========
Weighted average shares outstanding..................... 23,357 6,789 30,146
======== ======= ========
Weighted average shares outstanding -- assuming
dilution.............................................. 24,390 7,673 32,063
======== ======= ========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
63
<PAGE> 78
UNITRODE AND BENCHMARQ
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF OPERATIONS
FOR THE FISCAL YEAR ENDED JANUARY 31, 1998
<TABLE>
<CAPTION>
PRO FORMA
UNITRODE BENCHMARQ COMBINED
-------- --------- ---------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Net revenues............................................ $177,603 $44,437 $222,040
Cost of revenues........................................ 83,592 20,740 104,332
-------- ------- --------
Gross profit.......................................... 94,011 23,697 117,708
-------- ------- --------
Operating expenses:
Research and development.............................. 17,096 3,087 20,183
Selling, general and administrative................... 28,749 10,806 39,555
New fab pre-operating expenses........................ 6,289 -- 6,289
-------- ------- --------
Total operating expenses........................... 52,134 13,893 66,027
-------- ------- --------
Income from operations.................................. 41,877 9,804 51,681
-------- ------- --------
Other income (expense):
Royalty income........................................ 2,886 -- 2,886
Interest income....................................... 2,864 672 3,536
Interest expense...................................... (95) (178) (273)
Non-operating income (expense), net................... 279 (32) 247
-------- ------- --------
Total other income................................. 5,934 462 6,396
-------- ------- --------
Income before income tax provision...................... 47,811 10,266 58,077
Income tax provision.................................... 17,576 3,595 21,171
-------- ------- --------
Net income.............................................. $ 30,235 $ 6,671 $ 36,906
======== ======= ========
Basic earnings per share................................ $ 1.27 $ .97 $ 1.20
======== ======= ========
Diluted earnings per share.............................. $ 1.21 $ .86 $ 1.13
======== ======= ========
Weighted average shares outstanding..................... 23,806 6,867 30,673
======== ======= ========
Weighted average shares outstanding -- assuming
dilution.............................................. 24,957 7,752 32,709
======== ======= ========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
64
<PAGE> 79
UNITRODE AND BENCHMARQ
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF OPERATIONS
FOR THE FISCAL YEAR ENDED JANUARY 31, 1997
<TABLE>
<CAPTION>
PRO FORMA
UNITRODE BENCHMARQ COMBINED
-------- --------- ---------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Net revenues............................................ $133,526 $40,153 $173,679
Cost of revenues........................................ 63,028 21,820 84,848
-------- ------- --------
Gross profit.......................................... 70,498 18,333 88,831
-------- ------- --------
Operating expenses:
Research and development.............................. 17,976 2,922 20,898
Selling, general and administrative................... 23,435 8,575 32,010
-------- ------- --------
Total operating expenses........................... 41,411 11,497 52,908
-------- ------- --------
Income from operations.................................. 29,087 6,836 35,923
-------- ------- --------
Other income (expense):
Royalty income........................................ 2,582 -- 2,582
Interest income....................................... 2,081 705 2,786
Interest expense...................................... (96) (210) (306)
Non-operating income (expense), net................... 8 (38) (30)
-------- ------- --------
Total other income................................. 4,575 457 5,032
-------- ------- --------
Income before income tax provision...................... 33,662 7,293 40,955
Income tax provision.................................... 12,985 231 13,216
-------- ------- --------
Net income.............................................. $ 20,677 $ 7,062 $ 27,739
======== ======= ========
Basic earnings per share................................ $ .90 $ 1.06 $ .93
======== ======= ========
Diluted earnings per share.............................. $ .87 $ .96 $ .89
======== ======= ========
Weighted average shares outstanding..................... 23,061 6,640 29,701
======== ======= ========
Weighted average shares outstanding -- assuming
dilution.............................................. 23,705 7,391 31,096
======== ======= ========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
65
<PAGE> 80
UNITRODE AND BENCHMARQ
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF OPERATIONS
FOR THE FISCAL YEAR ENDED JANUARY 31, 1996
<TABLE>
<CAPTION>
PRO FORMA
UNITRODE BENCHMARQ COMBINED
-------- --------- ---------
(AMOUNTS IN THOUSANDS, EXCEPT PER
SHARE DATA)
<S> <C> <C> <C>
Net revenues.......................................... $116,148 $29,215 $145,363
Cost of revenues...................................... 55,165 16,872 72,037
-------- ------- --------
Gross profit........................................ 60,983 12,343 73,326
-------- ------- --------
Operating expenses:
Research and development............................ 14,674 2,238 16,912
Selling, general and administrative................. 22,313 6,090 28,403
-------- ------- --------
Total operating expenses......................... 36,987 8,328 45,315
-------- ------- --------
Income from operations................................ 23,996 4,015 28,011
-------- ------- --------
Other income (expense):
Royalty income...................................... 2,396 -- 2,396
Interest income..................................... 1,682 403 2,085
Interest expense.................................... (85) (340) (425)
Non-operating income (expense), net................. (37) (6) (43)
-------- ------- --------
Total other income............................... 3,956 57 4,013
-------- ------- --------
Income before income tax provision.................... 27,952 4,072 32,024
Income tax provision.................................. 10,433 270 10,703
-------- ------- --------
Net income............................................ $ 17,519 $ 3,802 $ 21,321
======== ======= ========
Basic earnings per share.............................. $ .76 $ .70 $ .75
======== ======= ========
Diluted earnings per share............................ $ .74 $ .61 $ .71
======== ======= ========
Weighted average shares outstanding................... 22,994 5,451 28,445
======== ======= ========
Weighted average shares outstanding -- assuming
dilution............................................ 23,814 6,273 30,087
======== ======= ========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
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<PAGE> 81
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
1. The unaudited pro forma combined condensed financial statements of Unitrode
and BENCHMARQ give retroactive effect to the Merger, which is being accounted
for as a "pooling of interests" and, as a result, such statements are
presented as if the combining companies had been combined for all periods
presented. The unaudited pro forma combined condensed financial statements
reflect the issuance of one share of Unitrode Common Stock for each share of
BENCHMARQ Common Stock in the Merger.
2. The unaudited pro forma combined basic and diluted earnings per share is
based on the combined weighted average number of common shares and common and
dilutive shares of Unitrode Common Stock and BENCHMARQ Common Stock for each
period.
3. On September 29, 1997, the Unitrode stockholders approved a 2-for-1 stock
split of the Unitrode Common Stock effected in the form of a 100% stock
dividend distributed on October 14, 1997 to stockholders of record as of
October 6, 1997. All per share and weighted average shares outstanding data
have been restated to reflect the retroactive effect of the stock split and
the adoption of Statement of Financial Accounting Standards ("SFAS") No. 128.
4. The unaudited pro forma combined condensed financial statements combine
Unitrode's consolidated financial statements as of May 2, 1998, and for the
three months ended May 2, 1998 and May 3, 1997, and the fiscal years ended
January 31, 1998, 1997 and 1996 with BENCHMARQ's consolidated financial
statements as of March 31, 1998, and for the three months ended March 31,
1998 and 1997, and the fiscal years ended December 31, 1997, 1996 and 1995,
respectively.
5. The unaudited pro forma combined condensed financial statements do not
include adjustments to conform the accounting policies of BENCHMARQ to those
followed by Unitrode. The nature and extent of such adjustments, if any, will
be based upon further analysis.
6. Unitrode and BENCHMARQ estimate they will incur merger-related costs of
approximately $3 million, including investment advisory fees, regulatory
filing costs, legal and accounting expenses, and other transaction costs.
Merger-related costs incurred to date and recorded in the historical Unitrode
and BENCHMARQ balance sheets as of May 2, 1998 were $1.3 million. Additional
merger-related costs and expenses have been reflected as a pro forma
adjustment in the pro forma combined condensed balance sheet as of May 2,
1998. These amounts are preliminary estimates and subject to change.
Moreover, additional unanticipated expenses may be incurred in connection
with the integration of the business of the two companies.
7. Certain financial statement balances of BENCHMARQ have been reclassified to
conform with the Unitrode financial statement presentation.
8. Pursuant to "change in control" provisions contained in the BENCHMARQ Plans,
all unvested stock options outstanding will immediately vest upon completion
of the Merger. As a result, for the purposes of the pro forma disclosures
required by SFAS No. 123, "Accounting for Stock-Based Compensation," the
additional pro forma expense for the 1,054,575 unvested options, as of
December 31, 1997, which would immediately vest as a result of the Merger,
would have been approximately $3.8 million. This additional pro forma expense
of $3.8 million under SFAS No. 123 would have reduced the pro forma combined
basic and diluted earnings per share of Unitrode and BENCHMARQ for the fiscal
year ended January 31, 1998 by $0.11 and $0.10, respectively.
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<PAGE> 82
COMPARISON OF RIGHTS OF HOLDERS OF
UNITRODE COMMON STOCK AND HOLDERS OF BENCHMARQ COMMON STOCK
INTRODUCTION
Unitrode is incorporated under the laws of the State of Maryland and
BENCHMARQ is incorporated under the laws of the State of Delaware. If the Merger
is consummated, the holders of shares of BENCHMARQ Common Stock, whose rights as
stockholders are currently governed by the DGCL, BENCHMARQ's Seventh Amended and
Restated Certificate of Incorporation (the "BENCHMARQ Charter") and the Bylaws
of BENCHMARQ (the "BENCHMARQ Bylaws") will, at the Effective Time, become
holders of shares of Unitrode Common Stock and their rights as such will by
governed by the MGCL, the Unitrode Articles of Incorporation (the "Unitrode
Articles") and the Bylaws of Unitrode (the "Unitrode Bylaws"). The material
differences between the rights of holders of shares of BENCHMARQ Common Stock
and the rights of the holders of shares of Unitrode Common Stock, resulting from
the differences in their governing documents and the application of the DGCL or
the MGCL thereto, are summarized below.
The following summary sets forth the material differences in the rights of
stockholders of Unitrode and BENCHMARQ, but does not purport to be a complete
statement of the rights of holders of shares of Unitrode Common Stock under
applicable Maryland laws, the Unitrode Articles and the Unitrode Bylaws or a
comprehensive comparison with the rights of the holders of shares of BENCHMARQ
Common Stock under applicable Delaware laws, the BENCHMARQ Charter and the
BENCHMARQ Bylaws, or a complete description of the specific provisions referred
to herein. The identification of specific differences is not meant to indicate
that other equally or more significant differences do not exist. This summary is
qualified in its entirety by reference to the MGCL and the governing corporate
instruments of Unitrode, to the DGCL and the governing corporate instruments of
BENCHMARQ to which holders of shares of BENCHMARQ Common Stock are referred. For
information as to how such documents may be obtained, see "Incorporation By
Reference."
AUTHORIZED CAPITAL STOCK
Unitrode. The MGCL requires that a corporation's articles of incorporation
set forth the total number of shares of all classes of stock which the
corporation has authority to issue. If the stock of the corporation is divided
into classes, the corporation must set forth a description of each class
including any preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption. Unitrode is authorized to issue 60,000,000 shares of
Unitrode Common Stock, 24,408,257 shares of which were issued and outstanding as
of the Unitrode Record Date. Unitrode is also authorized to issue 1,000,000
shares of preferred stock, par value $.01 per share of Unitrode ("Unitrode
Preferred Stock") of which 300,000 shares have been designated Series A
Preferred Stock of which none were outstanding as of the Unitrode Record Date.
BENCHMARQ. The DGCL requires that a corporation's certificate of
incorporation set forth the total number of shares of all classes of stock which
the corporation has authority to issue and a statement of the designations and
the powers, preferences and rights and the qualifications, limitations or
restrictions thereof. BENCHMARQ is authorized to issue 50,000,000 shares of
BENCHMARQ Common Stock, 7,118,253 shares of which were outstanding as of the
BENCHMARQ Record Date. BENCHMARQ is also authorized to issue 22,000,000 shares
of preferred stock, par value $.01 per share (the "BENCHMARQ Preferred Stock")
of which none were issued and outstanding as of the BENCHMARQ Record Date.
BOARD OR STOCKHOLDER APPROVED PREFERRED STOCK
Unitrode. The Unitrode Articles authorize the Unitrode Board, without
further action by the stockholders of Unitrode, to provide for the issuance of
Unitrode Preferred Stock in one or more series and to fix the voting powers,
designations, preferences, exchange or conversion rights, options, restrictions,
special rights or relations, dividend rights or limitations, qualifications or
terms or conditions of redemption thereof, by adopting a resolution or
resolutions creating and designating such series. The rights of the holders of
Unitrode
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<PAGE> 83
Common Stock are subject to the rights and preferences of the holders of any
Unitrode Preferred Stock or series thereof that the Unitrode Board may issue.
See "-- Anti-Takeover Protection."
BENCHMARQ. The DGCL permits a corporation's certificate of incorporation
to authorize its board of directors to issue, without stockholder approval,
series of preferred or preference stock and to designate their powers,
preferences and rights and their qualifications, limitations or restrictions.
The BENCHMARQ Charter authorizes the BENCHMARQ Board, without stockholder
approval, to provide for the issuance of BENCHMARQ Preferred Stock in one or
more series and to fix the preferences, conversion and other rights, voting
rights, restrictions and limitations as to dividends, qualifications and terms
and conditions of redemption as the BENCHMARQ Board may determine. The rights of
the holders of BENCHMARQ Common Stock could potentially be subject to the rights
and preferences of the holders of any BENCHMARQ Preferred Stock or series
thereof that the BENCHMARQ Board may issue. See "-- Anti-Takeover Protection."
VOTING RIGHTS
Unitrode. The MGCL states that, unless a corporation's articles of
incorporation specify otherwise, (i) each share of its capital stock is entitled
to one vote, (ii) the presence in person or by proxy of stockholders entitled to
cast a majority of all the votes entitled to be cast at a meeting shall
constitute a quorum and (iii) in all matters other than the election of
directors, a majority of all the votes cast at a meeting at which a quorum is
present is sufficient to approve any matter which properly comes before a
stockholder meeting. Each holder of Unitrode Common Stock is entitled to one
vote per share and to the same and identical voting rights as other holders of
Unitrode Common Stock. Except as may otherwise be provided in a designation of a
series of Unitrode Preferred Stock or as otherwise expressly required by law,
holders of Unitrode Preferred Stock do not have any voting rights.
BENCHMARQ. The DGCL states that, unless a corporation's certificate of
incorporation or, with respect to clauses (ii) and (iii) below, the bylaws
specify otherwise, (i) each share of its capital stock is entitled to one vote,
(ii) a majority of voting power of the shares entitled to vote, present in
person or represented by proxy, shall constitute a quorum at a stockholders
meeting and (iii) in all matters other than the election of directors, the
affirmative vote of the majority of the voting power of shares, present in
person or represented by proxy at the meeting and entitled to vote on the
subject matter, shall be the act of the stockholders. Each holder of BENCHMARQ
Common Stock is entitled to one vote per share and to the same and identical
voting rights as other holders of BENCHMARQ Common Stock. Holders of BENCHMARQ
Common Stock do not have cumulative voting rights. Holders of BENCHMARQ
Preferred Stock will have such voting rights, if any, as may be established by
the BENCHMARQ Board in the designation of a series of BENCHMARQ Preferred Stock
or as otherwise expressly required by law.
NUMBER OF DIRECTORS
Unitrode. Under the MGCL, a corporation (except in certain circumstances)
must have at least three directors at all times. Subject to this provision, a
corporation's bylaws may alter the number of directors and authorize a majority
of the entire board of directors to alter within specified limits the number of
directors set by the corporation's articles or its bylaws.
The number of persons currently constituting the Unitrode Board is six. The
Unitrode Bylaws provide that Unitrode shall have between three and fifteen
directors. The directors of Unitrode are divided into three classes, with
approximately one-third of the directors elected by the stockholders annually.
Consequently, members of the Unitrode Board serve staggered three-year terms.
In connection with the Merger, Unitrode intends to increase the number of
persons constituting the Unitrode Board to eight. See "The Merger -- BENCHMARQ
Representation on the Unitrode Board."
BENCHMARQ. Under the DGCL, unless a corporation's certificate of
incorporation specifies the number of directors, such number shall be fixed by,
or in the manner provided in, its bylaws. If a corporation's certificate of
incorporation expressly authorizes its board of directors to amend its bylaws,
its board of directors may change the authorized number of directors by an
amendment to the corporation's bylaws, if fixed therein,
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<PAGE> 84
or in such manner as is provided therein. If such certificate of incorporation
specifies the number of directors, the number of directors can only be changed
by amending the certificate of incorporation. The certificate of incorporation,
initial bylaw or bylaw adopted by stockholder vote may divide the directors into
1, 2 or 3 classes.
The number of persons currently constituting the BENCHMARQ Board is seven.
The BENCHMARQ Bylaws provide that the number of directors may be altered from
time to time by amendment to the BENCHMARQ Bylaws. The BENCHMARQ Board has the
power to amend the BENCHMARQ Bylaws. The directors of BENCHMARQ are not divided
into classes.
ELECTION OF BOARD OF DIRECTORS
Unitrode. The MGCL provides that a corporation's directors shall be
elected by a plurality of the votes cast at a meeting at which a quorum is
present. Under the Unitrode Articles, directors must be elected by the holders
of an absolute majority of shares of Unitrode Common Stock entitled to elect
directors. Under the MGCL, a corporation's articles of incorporation may provide
that stockholders of a corporation can elect directors by cumulative voting.
Neither the Unitrode Articles nor the Unitrode Bylaws grant cumulative voting
rights with respect to the election of directors to holders of Unitrode Common
Stock. The MGCL permits, but does not require, the adoption of a "classified"
board of directors with staggered terms under which part of the board of
directors is elected each year. The MGCL permits the bylaws of the corporation
to provide for the term of office a director may serve, except that (i) the term
of office of a director may not be longer than five years or, except in the case
of an initial or substitute director, shorter than the period between annual
meetings and (ii) the term of office of at least one class shall expire each
year. The Unitrode Bylaws provide for a classified board.
Under the Unitrode Bylaws, vacancies may be filled by the vote of a
majority of the remaining directors and newly created directorships may be
filled by a majority of the entire Unitrode Board. If a director is removed by
the stockholders for cause then the affirmative vote of not less than the
absolute majority of all votes of the holders of capital stock entitled to vote
for the election of such directors shall be necessary to elect a successor. If a
director is removed by the stockholders without cause, then the affirmative vote
of the holders of not less than two-thirds of all shares of capital stock
entitled to vote for the election of such director shall be necessary to elect a
successor. A director may be removed for cause by the affirmative vote of not
less than an absolute majority of all votes entitled to be cast for the election
of such director, and a director may be removed without cause by the affirmative
vote of not less than two-thirds of all votes of the holders of capital stock
entitled to be cast for the election of such director.
Under the Unitrode Bylaws, in order for a stockholder to nominate a
candidate for the election as a director or propose business for consideration
at an annual meeting, the stockholder must give notice to the Unitrode Secretary
not more then 90 days or less than 60 days from the first anniversary of the
last annual meeting. See "Advance Notice Bylaw."
BENCHMARQ. The DGCL provides that a corporation's directors shall be
elected by a plurality of the votes of the shares present in person or
represented by proxy at the meeting and entitled to vote on the election of
directors. Under the DGCL, a corporation's certificate of incorporation may
provide that stockholders of a corporation can elect directors by cumulative
voting. The BENCHMARQ Charter does not permit cumulative voting. See "-- Voting
Rights."
The DGCL permits, but does not require, the adoption of a "classified"
board of directors with staggered terms under which part of the board of
directors is elected each year for a maximum of three years. In general, under
the DGCL, any or all of the directors of a corporation may be removed, with or
without cause, by vote of the holders of a majority of the shares then entitled
to vote at an election of directors. The BENCHMARQ Charter does not provide for
a classified board of directors. See "-- Number of Directors."
Under the BENCHMARQ Bylaws, vacancies and newly created directorships may
be filled by the vote of the majority of directors then in office (even though
less than a quorum remains).
The BENCHMARQ Bylaws do not have an "advance notice provision" similar to
the Unitrode Advance Notice Bylaw (as defined herein).
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EXECUTIVE COMMITTEES
Unitrode. The Unitrode Board has formed an Executive Committee that has
all the powers of the Unitrode Board, except as prohibited by applicable law.
See "Unitrode Board Meetings and Committees of the Unitrode Board."
BENCHMARQ. The BENCHMARQ Bylaws permit the BENCHMARQ Board to form an
executive committee, however, no such committee has been created by the
BENCHMARQ Board.
VOTE ON MERGER, CONSOLIDATION OR SALE OF SUBSTANTIALLY ALL ASSETS
Unitrode. Under the MGCL, the sale, lease, exchange or transfer of all or
substantially all of the assets of a corporation not in the ordinary course of
business conducted by it, as well as any merger, consolidation or share exchange
involving the corporation, requires approval by holders of two-thirds of the
shares of the corporation entitled to vote on such matters. Approval of the
Merger is not required under the MGCL, but stockholder approval of the issuance
of the Merger Shares is required by the rules of the NYSE because shares of
Unitrode Common Stock are traded on the NYSE and the number of shares to be
issued in connection with the Merger will exceed 20% of the issued and
outstanding shares of Unitrode Common Stock.
BENCHMARQ. The DGCL generally requires approval of any merger,
consolidation or sale of substantially all the assets of a corporation at a
meeting of stockholders by vote of the holders of a majority of all outstanding
shares entitled to vote thereon. The certificate of incorporation of a Delaware
corporation may provide for a greater vote. The BENCHMARQ Charter does not
contain such a provision.
SPECIAL MEETING OF STOCKHOLDERS
Unitrode. Under the MGCL, a special meeting of stockholders may be called
by the president, the board of directors or any other person specified in the
corporation's charter or bylaws. Under the Unitrode Bylaws, a special meeting of
the stockholders of Unitrode may be called at any time by (i) the President of
Unitrode, (ii) the Unitrode Board, (iii) the Chairman of the Unitrode Board or
(iv) any executive vice president or senior vice president of Unitrode. The
stockholders of Unitrode may call a special meeting upon the written request of
stockholders entitled to cast at least twenty-five percent of all the votes
entitled to be cast at a special meeting. Such a request must state the purpose
of the meeting and matters proposed to be acted on. The stockholders calling
such a special meeting are required to reimburse Unitrode for the costs of
preparing and mailing a notice of such a meeting to the stockholders. Unless
requested by stockholders entitled to cast a majority of all the votes entitled
to be cast at a special meeting of the stockholders, a special meeting need not
be called to consider any matter which is substantially the same as a matter
voted on at any special meeting of the stockholders held during the preceding
twelve months.
BENCHMARQ. Under the DGCL, special stockholder meetings of a corporation
may be called by its board of directors or by any person or persons authorized
to do so by its certificate of incorporation or bylaws. The BENCHMARQ Charter
does not address procedures for calling a special meeting of stockholders. Under
the BENCHMARQ Bylaws, a special meeting of the stockholders may be called at any
time by the BENCHMARQ Board, the Chairman of the BENCHMARQ Board, the President
of BENCHMARQ or upon the request in writing of stockholders holding at least
twenty-five percent of the number of shares of stock outstanding and entitled to
vote at a meeting. No business may be transacted and no corporate action may be
taken at a special meeting of the stockholders other than that stated in the
notice of the meeting unless all of the stockholders are present in person or by
proxy, in which case any and all business may be transacted at the meeting even
though the meeting is held without notice.
STOCKHOLDER ACTION BY WRITTEN CONSENT
Unitrode. Under the MGCL, any action required or permitted to be taken at
a meeting of stockholders may be taken without a meeting if (i) a unanimous
written consent setting forth the action and signed by each stockholder entitled
to vote on such matters and (ii) a written waiver of any right to dissent signed
by each
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<PAGE> 86
stockholder entitled to notice of the meeting but not entitled to vote at it,
are filed with the records of the stockholders meeting.
BENCHMARQ. Under the DGCL, any action by a corporation's stockholders must
be taken at a meeting of such stockholders, unless a consent in writing setting
forth the action so taken is signed by the stockholders having not less than the
minimum number of votes necessary to authorize or take such action at a meeting
at which all shares entitled to vote thereon were present and voted. Under the
BENCHMARQ Bylaws, any action required to be taken or which may be taken at any
annual or special meeting of the stockholders may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting forth
the action so taken, is signed by the holders of outstanding BENCHMARQ Common
Stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all the shares entitled
to vote thereon were present and voted. Prompt notice of any action taken
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
AMENDMENT OF CERTIFICATE OR ARTICLES OF INCORPORATION
Unitrode. The MGCL allows amendment of a corporation's articles of
incorporation if its board of directors adopts a resolution setting forth the
amendment proposed, declaring its advisability, and the stockholders thereafter
approve such proposed amendment either at a special meeting called by the board
for the purpose of approval of such amendment by the stockholders or, if so
directed by the board, at the next annual stockholders' meeting. At any such
meeting, the proposed amendment must be approved by two-thirds of all votes
entitled to vote on the matter.
BENCHMARQ. The DGCL allows amendment of a corporation's certificate of
incorporation if its board of directors adopts a resolution setting forth the
amendment proposed, declaring its advisability, and the stockholders thereafter
approve such proposed amendment either at a special meeting called by the board
for the purpose of approval of such amendment by the stockholders or, if so
directed by the board, at the next annual stockholders' meeting. At any such
meeting, the proposed amendment generally must be approved by a majority of the
outstanding shares entitled to vote. The holders of the outstanding shares of a
class are entitled to vote as a separate class upon a proposed amendment,
whether or not entitled to vote thereon by the certificate of incorporation, if
the amendment would increase or decrease the aggregate number of authorized
shares of such class, increase or decrease the par value of the shares of such
class or alter or change the powers, preferences, or special rights of one or
more series of any class so as to affect them adversely. If the proposed
amendment does not so affect the entire class, then only the shares of the
series so affected by the amendment will be considered a separate class for the
purposes of a vote on the amendment. Under the DGCL, a corporation's certificate
of incorporation may require, for action by the board of directors or by the
holders of any class or series of voting securities, the vote of a greater
number or proportion than is required by the DGCL and the provision of the
certificate of incorporation requiring such greater vote cannot be altered,
amended or repealed except by such greater vote. The BENCHMARQ Charter does not
contain a provision requiring a vote greater than that specified in the DGCL to
amend the BENCHMARQ Charter.
AMENDMENT OF BYLAWS
Unitrode. Under the MGCL, the exclusive power to change the bylaws may be
left with the stockholders, vested in the directors or shared by both groups.
The Unitrode Bylaws have vested the power to adopt, alter and repeal the
Unitrode Bylaws exclusively in the Unitrode Board. Such power may only be
exercised by a majority of the entire Unitrode Board then in office.
BENCHMARQ. Under the DGCL, the power to adopt, amend or repeal a
corporation's bylaws resides with the stockholders entitled to vote thereon, and
with the directors of such corporation if such power is conferred upon the board
of directors by the certificate of incorporation. The BENCHMARQ Bylaws authorize
the BENCHMARQ Board or stockholders at a meeting to make, alter or repeal the
BENCHMARQ Bylaws.
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LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS
Unitrode. The MGCL requires a corporation (unless its articles of
incorporation provides otherwise, which Unitrode's articles of incorporation do
not) to indemnify a director or officer who has been successful, on the merits
or otherwise, in the defense of any proceeding to which he is made a party by
reason of his service in that capacity. The MGCL permits a corporation to
indemnify its present and former directors and officers, among others, against
judgments, penalties, fines, settlements and reasonable expenses actually
incurred by them in connection with any proceeding to which they may be made a
party by reason of their service in those or other capacities unless it is
established that (a) the act or omission of the director or officer was material
to the matter giving rise to the proceeding and (i) was committed in bad faith
or (ii) was the result of active and deliberate dishonesty, (b) the director or
officer actually received an improper personal benefit in money, property or
services or (c) in the case of any criminal proceeding, the director or officer
had reasonable cause to believe that the act or omission was unlawful. However,
under the MGCL, a Maryland corporation may not indemnify for an adverse judgment
in a suit by or in the right of the corporation. In addition, the MGCL requires
Unitrode, as a condition to advancing expenses, to obtain (a) a written
affirmation by the director or officer of his good faith belief that he has met
the standard of conduct necessary for indemnification by Unitrode as authorized
by the Unitrode Bylaws and (b) a written statement by or on his behalf to repay
the amount paid or reimbursed by Unitrode if it shall ultimately be determined
that the standard of conduct was not met.
BENCHMARQ. The DGCL provides that a corporation may limit or eliminate a
director's personal liability for monetary damages to the corporation or its
stockholders for breach of fiduciary duty as a director, except for liability
(i) for any breach of the director's duty of loyalty to such corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) for paying a
dividend or approving a stock repurchase in violation of Section 174 of the DGCL
or (iv) for any transaction from which the director derived an improper personal
benefit. The BENCHMARQ Charter includes a provision eliminating (to the maximum
extent permitted by the DGCL) a director's personal liability to BENCHMARQ and
requires indemnification of a director to the maximum extent permitted under
Delaware law.
Under the DGCL, directors and officers as well as other employees and
agents of the corporation may be indemnified against expenses (including
attorney's fees), judgments, fines and amounts paid in settlement in connection
with specified actions, suits or proceedings, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
corporation) if they acted in good faith and in a manner they reasonably
believed to be in, or not opposed to, the best interest of the corporation, and,
with respect to any criminal action or proceeding, if they had no reasonable
cause to believe their conduct was unlawful. The BENCHMARQ Charter and the
BENCHMARQ Bylaws provide to directors, officers, employees and agents
indemnification to the full extent provided by law.
BENCHMARQ has entered into indemnification agreements with each of the
directors and certain officers of BENCHMARQ that provide for indemnification of,
and advancement of expenses to, such persons to the fullest extent permitted by
law.
REMOVAL OF OFFICERS AND DIRECTORS
Unitrode. In general, under the MGCL, any or all of the directors of a
corporation may be removed, with or without cause, by vote of the holders of a
majority of the shares then entitled to vote at an election of directors, except
that, unless a corporation's articles of incorporation state otherwise, the MGCL
authorizes removal of a member of a classified board by the stockholders only
for cause. The Unitrode Articles allow for the removal of a director without
cause.
BENCHMARQ. In general, the DGCL provides that, unless the certificate of
incorporation provides otherwise, any or all of the directors of the corporation
may be removed, with or without cause, by vote of the holders of a majority of
the shares then entitled to vote at an election of directors. The BENCHMARQ
Charter does not restrict the removal of BENCHMARQ's directors.
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PAYMENT OF DIVIDENDS
Unitrode. Under the MGCL, a board of directors may authorize a corporation
to make distributions to its stockholders, subject to any restrictions in its
articles of incorporation and as provided under the MGCL. Under the MGCL, no
distribution is permitted, however, if, after giving effect to the distribution,
the corporation would not be able to pay its indebtedness as the indebtedness
becomes due in the usual course of business or the corporation's total assets
would be less than the sum of its total liabilities plus, unless the articles of
incorporation permit otherwise, the amount needed, if the corporation were to be
dissolved at the time of the distribution, to satisfy the preferential rights
upon dissolution of stockholders whose preferential rights on dissolution are
superior to those receiving the distribution.
BENCHMARQ. The DGCL permits the payment of dividends and the redemption of
shares out of a corporation's surplus. Under the DGCL, dividends may in certain
cases also be paid out of its net profits for the fiscal year in which declared
or out of net profits for the preceding fiscal year. The holders of BENCHMARQ
Common Stock are entitled to receive, pursuant to the BENCHMARQ Charter,
dividends as, if and when declared by the BENCHMARQ Board out of any funds
legally available.
ANTI-TAKEOVER PROTECTION
Certain provisions of the MGCL, the DGCL, the Unitrode Articles and the
BENCHMARQ Charter may discourage an attempt to acquire control of Unitrode or
BENCHMARQ, respectively, that a majority of either corporation's stockholders
determined was in their best interests. These provisions also may render the
removal of one or all directors more difficult or deter or delay a change of
control that the Unitrode Board or the BENCHMARQ Board, respectively, did not
approve.
Unitrode.
Authorized Preferred Stock. The rights of holders of Unitrode Common Stock
will be subject to, and may be adversely affected by, the rights of holders of
any shares of Unitrode Preferred Stock that may be issued in the future. Any
such issuance may adversely affect the interests of holders of Unitrode Common
Stock by limiting control that such holders may exert by exercise of their
voting rights, by subordinating their rights in liquidation to the rights of the
holders of such Unitrode Preferred Stock, and otherwise. In addition, the
issuance of Unitrode Preferred Stock, in some circumstances, may deter or
discourage takeover attempts and other changes in control of Unitrode by making
it more difficult for a person who has gained a substantial equity interest in
Unitrode to obtain control or to exercise control effectively. Except as to the
Unitrode Rights Agreement, Unitrode has no current plans or agreements with
respect to the issuance of any Unitrode Preferred Stock.
Maryland Legislation. Under the MGCL, certain business combinations,
including a merger, consolidation, share exchange or, in certain circumstances,
an asset transfer or issuance or reclassification of equity securities, between
a Maryland corporation and an interested stockholder who beneficially owns 10%
or more of the voting power of the corporation's shares or an affiliate of the
corporation who, at any time within the two-year period prior to the date in
question, was the beneficial owner of 10% or more of the voting power of the
then-outstanding voting stock of the corporation or an affiliate thereof are
prohibited for five years after the most recent date on which the interested
stockholder becomes an interested stockholder. Thereafter, any such business
combination must be recommended by the board of directors of the corporation and
approved by the affirmative vote of at least (i) 80% of the votes entitled to be
cast by holders of outstanding voting shares of the corporation and (ii)
two-thirds of the votes entitled to be cast by holders of outstanding voting
shares of the corporation other than shares held by the interested stockholder
with whom (or with whose affiliate) the business combination is to be effected,
unless, among other conditions, the corporation's stockholders receive a minimum
price (as defined in the MGCL) for their shares and the consideration is
received in cash or in the same form as previously paid by the interested
stockholder for its shares. These provisions of Maryland law do not apply,
however, to business combinations that are approved or exempted by the board of
directors of the corporation prior to the time that the interested stockholder
becomes an interested stockholder.
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<PAGE> 89
Stockholder Rights Plan. The Unitrode Board adopted the Unitrode Rights
Agreement on May 2, 1990 and declared a dividend of one Unitrode Right for each
outstanding share of Unitrode Common Stock. Each Unitrode Right entitles the
registered holder to purchase from Unitrode one-hundredth of a share of Series A
Preferred Stock at a price of $30.00 per one-hundredth of a share of Series A
Preferred Stock (the "Purchase Price"), subject to adjustment. The description
and terms of the Unitrode Rights are set forth in the Unitrode Rights Agreement.
The Unitrode Rights Agreement provides that, until the Distribution Date
(as defined in the Unitrode Rights Agreement) (or earlier redemption or
expiration of the Unitrode Rights), the Unitrode Rights will be transferred with
and only with shares of the Unitrode Common Stock.
The Unitrode Rights are not exercisable until the Distribution Date. The
Unitrode Rights will expire on May 13, 2000 (the "Final Expiration Date"),
unless the Final Expiration Date is extended or unless the Unitrode Rights are
earlier redeemed or exchanged by Unitrode, in each case, as described below.
At any time following the Distribution Date, Unitrode Rights (other than
Unitrode Rights owned by an Acquiring Person (as defined in the Unitrode Rights
Agreement) and the Acquiring Person's affiliates and associates, which will have
become void) may be exercised (subject to their earlier termination, expiration
or exchange) to acquire, in lieu of Series A Preferred Stock, at the then
current Purchase Price of the Unitrode Right, that number of shares of Unitrode
Common Stock (or if there are insufficient shares of Unitrode Common Stock,
Series A Preferred Stock or fractions thereof) which at such time will have a
market value of two times the Purchase Price of the Unitrode Right.
The Purchase Price payable, and the number of shares of Series A Preferred
Stock or other securities or property issuable, upon exercise of the Unitrode
Rights, are subject to adjustment from time to time to prevent dilution.
In the event that Unitrode is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold after a person or group has become an Acquiring Person, proper
provision will be made so that each holder of a Unitrode Right (other than an
Acquiring Person and the affiliates and associates of such Acquiring Person,
whose Unitrode Rights will have become void) will thereafter have the right to
receive, upon the exercise thereof at the then current exercise price of the
Unitrode Right, the number of shares of common stock of the acquiring company
which at the time of such transaction will have a market value of two times the
Purchase Price of the Unitrode Right. In the event that any person or group of
affiliated or associated persons becomes an Acquiring Person, proper provision
shall be made so that each holder of a Unitrode Right, other than the Unitrode
Rights beneficially owned by the Acquiring Person or the affiliates and
associates of such Acquiring Persons (which will thereafter be void), will
thereafter have the right to receive upon exercise that number of shares of
Unitrode Common Stock having a market value of two times the Purchase Price of
the Unitrode Right.
At any time after any person or group becomes an Acquiring Person and prior
to the acquisition by such person or group of 50% or more of the outstanding
shares of Unitrode Common Stock, the Unitrode Board may exchange the Unitrode
Rights (other than any Unitrode Rights owned by such person or group and their
respective affiliates and associates which have become void), in whole or in
part, at an exchange ratio of one share of Unitrode Common Stock, or
one-hundredth of a share of Series A Preferred Stock (or a share of a class or
series of Unitrode's preferred stock having equivalent rights, preferences and
privileges), per Unitrode Right (subject to adjustment).
At any time prior to or within 10 business days following the acquisition
by a person or group of affiliated or associated persons of beneficial ownership
of 20% or more of the outstanding shares of Unitrode Common Stock, the Unitrode
Board may redeem the Unitrode Rights in whole, but not in part, at a price of
$.01 per Unitrode Right (the "Redemption Price"). The redemption of the Unitrode
Rights may be made effective at such time on such basis with such conditions as
the Unitrode Board, in its sole discretion, may establish. Immediately upon any
redemption of the Unitrode Rights, the right to exercise the Unitrode Rights
will terminate and the only right of the holders of Unitrode Rights will be to
receive the Redemption Price.
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<PAGE> 90
BENCHMARQ.
Authorized Preferred Stock. The BENCHMARQ Board may authorize the issuance
of BENCHMARQ Preferred Stock at such times, and for such purposes and for such
consideration as it may deem advisable without further stockholder approval. The
issuance of BENCHMARQ Preferred Stock under certain circumstances may have the
effect of discouraging an attempt by a third party to acquire control of
BENCHMARQ by, for example, authorizing the issuance of a series of BENCHMARQ
Preferred Stock with rights and preferences designed to impede the proposed
transaction or by making it more difficult for a person who has gained a
substantial equity interest in BENCHMARQ to obtain control or to exercise
control effectively.
Delaware Legislation. The DGCL prohibits certain business combinations of
Delaware corporations (without regard to any nexus with Delaware) with
interested stockholders. Under the DGCL, an interested stockholder (a
stockholder whose beneficial ownership in the corporation is at least 15 percent
of the outstanding voting securities) is precluded from entering into certain
business combinations with the corporation for a period of three years following
the date on which the stockholder became an interested stockholder unless, among
other exceptions, prior to such date the board of directors approves either the
business combination or the transaction that resulted in the stockholder
becoming an interested stockholder. The DGCL provides that the business
combination provisions have no effect if (i) the tender offer or other
transaction by which the stockholder became an interested stockholder results in
such stockholder beneficially owning at least 85 percent of the voting
securities of the corporation (exclusive of shares owned by directors who are
also officers and shares owned by certain employee stock option plans) or (ii)
the business combination is approved by the board of directors and two-thirds of
the shares held by stockholders other than the interested stockholder.
DISSENTERS' RIGHTS
Unitrode. Under the MGCL, stockholders of a corporation are entitled to
dissenters' rights of appraisal in certain mergers, consolidations or share
exchanges involving such corporation or upon the disposition of all or
substantially all of its assets, as well as when such corporation amends its
articles of incorporation in a way which alters the contractual rights of any
outstanding shares as expressly set forth in the articles of incorporation and
substantially adversely affects such stockholders' rights if the right to do so
is not reserved in the articles of incorporation. However, except with respect
to certain transactions involving an interested stockholder, stockholders
generally have no dissenter's right of appraisal with respect to their shares if
(i) the shares are listed on a national securities exchange or are designated as
a national market system security on an interdealer quotation system by the
National Association of Securities Dealers, Inc. or (ii) the shares are that of
the successor in the merger, unless (a) the merger alters the contractual rights
of the shares as expressly set forth in the articles of incorporation or
declaration of trust, and the articles of incorporation or declaration of trust
do not reserve the right to do so or (b) the shares are to be changed or
converted in whole or in part in the merger into something other than either
shares in the successor or cash, scrip, or other rights or interests arising out
of provisions for the treatment of fractional shares in the successor.
BENCHMARQ. Under the DGCL, stockholders of a corporation are entitled to
dissenters' rights of appraisal in certain mergers or consolidations. However,
stockholders generally have no dissenter's right of appraisal with respect to
their shares if (i) the shares are listed on a national securities exchange or
designated as a National Market System Security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) the
shares are held of record by more than 2,000 holders. Under the DGCL,
notwithstanding the foregoing exceptions, stockholders of corporations being
acquired pursuant to a merger or consolidation have the right to serve upon the
corporation a written demand for appraisal of their shares when the stockholders
receive any form of consideration for their shares other than (a) shares of the
surviving corporation, (b) shares of any other corporation (i) listed on a
national securities exchange, (ii) designated as a national market system
security on an interdealer quotation system by the National Association of
Securities Dealers, Inc. or (iii) held of record by more than 2,000
stockholders, (c) cash in lieu of fractional shares or (d) any combination of
(a), (b) and (c). Stockholders entitled to appraisal rights who properly perfect
such rights will subsequently receive cash from the corporation equal to the
value of their shares as established by
76
<PAGE> 91
judicial appraisal. A corporation may enlarge these statutory rights by
including in their certificate of incorporation a provision allowing appraisal
rights (i) as a result of any amendment to its certificate of incorporation,
(ii) in any merger or consolidation in which the corporation is a constituent
corporation or (iii) in the sale of substantially all of the corporation's
assets. The BENCHMARQ Charter contains no such provision.
RIGHTS PLANS
Unitrode. On May 2, 1990, Unitrode adopted a Stockholder Rights Plan. For
a description of the Unitrode Rights and the related Unitrode Rights Agreement,
see "-- Anti-Takeover Protection -- Unitrode -- Stockholder Rights Plan."
BENCHMARQ. BENCHMARQ does not have a plan comparable to the Unitrode
Rights Agreement.
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<PAGE> 92
ELECTION OF UNITRODE DIRECTORS
The Unitrode Articles provide that the Unitrode Board shall be divided into
three classes, with each class as equal in number as possible, and that one
class shall be elected each year for a term of three years. Peter A. Brooke and
Robert L. Gable are currently serving in the class of directors of Unitrode
whose term expires at the Unitrode Annual Meeting. Mr. Brooke has determined not
to stand for reelection. It is proposed that Mr. Gable and William W.R. Elder be
elected to serve for three-year terms which will expire in 2001. On November 10,
1997, Edward H. Browder resigned as a director, and Robert J. Richardson was
elected a director by the Unitrode Board to serve until the Unitrode Annual
Meeting to fill the vacancy created by Mr. Browder's resignation. It is proposed
that Mr. Richardson be elected to serve for a two-year term in the class of
directors whose term expires in 2000. If the Merger is consummated, as of the
Effective Time, the number of directors on the Unitrode Board will be increased,
and Alan R. Schuele, Dietrich Erdmann and Derrell C. Coker will be appointed to
the Unitrode Board to serve until the next annual meeting of Unitrode
stockholders. See "The Merger -- BENCHMARQ Representation on the Unitrode
Board."
The persons named in the accompanying proxy will vote, unless authority is
withheld, for the election of the nominees named below, to serve for the
specified term and until their successors shall be duly elected and qualify or
until their earlier resignation or removal. If a nominee should become
unavailable for election, which is not anticipated, the persons named in the
accompanying proxy will vote for such substitute as the Unitrode Board may
propose.
The following table sets forth information concerning the nominees for
election and directors whose terms continue beyond the date of the Unitrode
Annual Meeting. There are no family relationships among these directors nor any
arrangement or understanding between any director and any other person pursuant
to which the director was elected.
<TABLE>
<CAPTION>
YEAR FIRST PRINCIPAL OCCUPATION, OTHER EXPERIENCE DURING
ELECTED THE PREVIOUS FIVE YEARS AND DIRECTORSHIPS IN OTHER
NAME AGE A DIRECTOR PUBLIC COMPANIES
- ---- --- ---------- --------------------------------------------------
<S> <C> <C> <C>
Nominees for term expiring in 2001:
William W.R. Elder.................... 60 -- Chairman, President and Chief Executive Officer of
Genus, Inc., a company engaged in the design and
manufacture of capital equipment for advanced
semiconductor manufacturing.
Robert L. Gable(4).................... 67 1988 Chairman of the Unitrode Board. Chief Executive
Officer of Unitrode until November 11, 1997.
President of Unitrode from 1992 to January 1996.
Director of New England Business Services, Inc.
Nominee for term expiring in 2000:
Robert J. Richardson(4)............... 52 1997 President and Chief Executive Officer of Unitrode
since November 11, 1997. Various senior executive
positions at Silicon Valley Group, Inc. from 1992
to November 1997, most recently as Vice President,
New Business Development and Corporate Marketing.
</TABLE>
78
<PAGE> 93
<TABLE>
<CAPTION>
YEAR FIRST PRINCIPAL OCCUPATION, OTHER EXPERIENCE DURING
ELECTED THE PREVIOUS FIVE YEARS AND DIRECTORSHIPS IN OTHER
NAME AGE A DIRECTOR PUBLIC COMPANIES
- ---- --- ---------- --------------------------------------------------
<S> <C> <C> <C>
Directors whose terms expire in
1999(5):
Louis E. Lataif(1)(4)................. 59 1995 Dean of the School of Management at Boston
University from 1991 to present. From 1981 to
1991, Vice President of Ford Motor Company.
Director of Great Lakes Chemical Company.
James T. Vanderslice(2)............... 57 1995 Vice President of IBM Corporation and Group
Executive for the IBM Data Technology Group.
General Manager of the IBM Corporation Storage
Systems Division from 1995 to 1997. From 1991 to
1995, General Manager of the IBM Corporation
high-end and mid-range system printer business.
Director whose term expires in 2000:
Kenneth Hecht(2)(3)(6)................ 63 1974 Co-Director of California Food Policy Advocates
since October 1992. Attorney and consultant to
public interest organizations prior to October
1992.
</TABLE>
- ---------------
(1) Member of the Audit Committee.
(2) Member of the Executive Compensation Committee.
(3) Member of the Nominating Committee.
(4) Member of the Executive Committee.
(5) If the Merger is consummated, as of the Effective Time, the number of
directors will be increased and Alan R. Schuele, Dietrich Erdmann and
Derrell C. Coker will serve as directors on the Unitrode Board in these
newly created directorships with a term to expire in 1999 in accordance with
the terms of the Merger Agreement. Mr. Schuele, 51, was made the President
and Chief Executive Officer of BENCHMARQ, and also made a director of
BENCHMARQ in May 1997. Prior to joining BENCHMARQ, Mr. Schuele was employed
by Crystal Semiconductor Corporation since 1986, most recently serving as
Vice President and General Manager. Mr. Erdmann, 59, is an active
international marketing consultant and independent investor in several
technology start-up companies and has served as a director of BENCHMARQ
since April 1989. Mr. Coker, 44, was the founder of BENCHMARQ and served as
President, Chief Executive Officer and a director of BENCHMARQ until from
April 1989 to May 1997. Since May 1997, Mr. Coker has served as Chairman of
the Board of BENCHMARQ.
(6) Mr. Hecht has advised Unitrode of his intention to resign as a director of
Unitrode following the Unitrode Annual Meeting.
79
<PAGE> 94
UNITRODE BOARD MEETINGS AND COMMITTEES OF THE UNITRODE BOARD
The Unitrode Board has an Audit Committee, Executive Compensation
Committee, Executive Committee and Nominating Committee.
All members of the Audit Committee are non-employee directors. The
principal functions of the Audit Committee are to review with Unitrode's
independent auditors the scope of the audit for each year, the results of the
audit when completed, the recommendations of the auditors and responses thereto
by management and the auditors' fees for services performed, taking into account
the relationship of audit and non-audit professional fees. The Audit Committee
also reviews with management matters brought to its attention by the auditors
relating to accounting systems, including internal accounting controls and
financial reporting. The Audit Committee met twice during the last fiscal year.
All members of the Executive Compensation Committee are non-employee
directors. The Executive Compensation Committee serves as the administrator of
all of Unitrode's benefit plans other than the Unitrode Corporation Profit
Sharing/401(k) Savings Plan. The Executive Compensation Committee reviews the
compensation of Unitrode's officers and recommends action to the Unitrode Board
with respect to officers' compensation, including salary adjustments and the
award of any cash bonuses. The Executive Compensation Committee also recommends
to the full Unitrode Board awards of restricted stock and grants of stock
options under Unitrode's restricted stock and stock option plans. The Executive
Compensation Committee met on the days of meetings of the Unitrode Board and
performed other functions by unanimous written consent in lieu of a meeting.
The Executive Committee has all of the powers of the Unitrode Board, except
as prohibited by applicable law. Pursuant to the MGCL, the Executive Committee
has all the powers of the Board of Directors, except the power to: (i) declare
dividends or distributions of stock; (ii) issue stock (except in accordance with
a formula or method specified by the full Board of Directors by resolution or by
adoption of a stock option or other plan); (iii) amend the bylaws; (iv)
recommend to the stockholders any action requiring stockholder approval; or (v)
approve any merger or share exchange not requiring stockholder approval. There
were no meetings of the Executive Committee during the last fiscal year.
The Nominating Committee recommends to the Unitrode Board the individuals
to be proposed by the Unitrode Board for election as directors. The Nominating
Committee may also recommend to the Unitrode Board persons to be elected by the
Unitrode Board to key offices and positions in Unitrode. The Nominating
Committee will consider persons recommended by stockholders of Unitrode to be
nominated to stand for election as Directors if the recommendations are
submitted in writing to the Secretary of Unitrode in accordance with the
provisions of Unitrode's Advance Notice Bylaw. See "Advance Notice Bylaw". There
were no meetings of the Nominating Committee during the last fiscal year; its
functions were performed by the full Unitrode Board.
During the fiscal year, there were ten meetings of the Unitrode Board. All
of the Directors attended all of the meetings of the Unitrode Board and of
committees of which they were members, other than Messrs. Brooke and Hecht who
attended more than 80% of the aggregate number of meetings of the Unitrode Board
and committees on which they served.
UNITRODE DIRECTORS' FEES AND OTHER REMUNERATION
Non-employee Directors of Unitrode are paid an annual fee of $17,000, a fee
of $2,500 for each day the Director participates in person in a meeting of the
Unitrode Board and/or of any committee, $500 for participation in any such
meeting by telephone conference call, and reimbursement of expenses for
attendance at meetings. Non-Employee Directors also receive grants of stock
options under Unitrode's Amended and Restated 1986 Non-Employee Directors Stock
Option Plan. Each non-employee Director is automatically granted an option to
acquire 2,000 shares of Unitrode Common Stock on the date of his appointment or
election to the Unitrode Board. Following the initial grant, each then-current
non-employee Director is automatically granted an option for 2,000 shares on the
date of each annual meeting of the stockholders of Unitrode. Options are granted
at fair market value on the date of the grant and become exercisable in six
months from the date of the grant.
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<PAGE> 95
PRINCIPAL HOLDERS OF UNITRODE VOTING SECURITIES
The following table sets forth, as of July 10, 1998, those persons known to
Unitrode who may be deemed to be beneficial owners of more than five percent of
the outstanding shares of Unitrode Common Stock. Unless otherwise indicated, the
persons named below have sole voting and investment power over the shares listed
below:
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP OF CLASS
- ------------------- ----------------------- --------
<S> <C> <C>
Oppenheimer Funds, Inc. ................................. 2,563,100 shares(1) 10.50%
Two World Trade Center, Suite 3400
New York, NY 10048-0203
Oppenheimer Capital...................................... 1,782,000 shares(2) 7.40%
Oppenheimer Tower
World Financial Center
New York, NY 10281
United States Trust Company of New York.................. 1,278,027 shares(3) 5.27%
114 West 47th Street
New York, NY 10036-1532
</TABLE>
- ---------------
(1) Based upon a Schedule 13G filed with the SEC on July 6, 1998 by Oppenheimer
Funds, Inc. on behalf of itself and certain investment management companies
managed by Oppenheimer Funds, Inc., as of July 6, 1998, such entities had
shared voting and disposition powers with respect to these shares.
(2) Based upon a Schedule 13G filed with the SEC on March 16, 1998 by
Oppenheimer Capital and/or certain investment advisory clients or
discretionary accounts of such subsidiaries, which states that, as of
December 31, 1997, such entities had shared voting and disposition powers
with respect to these shares.
(3) Based upon a Schedule 13G filed with the SEC on February 6, 1998 which
states that as of December 31, 1997, U.S. Trust Company had shared voting
and disposition power with respect to these shares via either a
trust/fiduciary capacity and/or a portfolio management/agency relationship.
81
<PAGE> 96
EXECUTIVE OFFICERS OF UNITRODE
Information relating to the executive officers of Unitrode is set forth
below. All officers held their respective offices as of January 31, 1998 and
each officer serves from the time of election until the next annual meeting of
stockholders of Unitrode and until his successor is elected and qualified. There
are no family relationships among these officers nor any arrangement or
understanding between any officer and any other person pursuant to which the
officer was elected.
<TABLE>
<CAPTION>
NAME, AGE AND POSITION BUSINESS EXPERIENCE DURING PAST FIVE YEARS
- ---------------------- ------------------------------------------
<S> <C>
Robert J. Richardson -- 52...................... President and Chief Executive Officer of Unitrode
President, Chief Executive Officer (November 11, 1997 to present); Various senior
and Director(1) executive positions at Silicon Valley Group, Inc.
and most recently as Vice President, New Business
Development and Corporate Marketing (1992 to
November 1997)
Robert L. Gable -- 67........................... Chairman of the Unitrode Board. Chief Executive
Chairman of the Unitrode Board Officer of Unitrode until November 11, 1997.
President of Unitrode from 1992 to January 1996.
Director of New England Business Services, Inc.
Allan R. Campbell -- 56......................... Senior Vice President, General Counsel and
Senior Vice President, General Counsel Secretary of Unitrode (June 1994 to present); Vice
and Secretary President, General Counsel and Secretary of
Unitrode (May 1990 to May 1994)
S. Kelley MacDonald -- 52....................... Vice President, Corporate Communications of
Vice President, Unitrode (June 1992 to present)
Corporate Communications
Patrick J. Moquin -- 49......................... Vice President, Human Resources of Unitrode (August
Vice President, Human Resources 1995 to present); Senior Director, Human Resources,
Worldwide Field Options, Sun Microsystems, Inc.
(May 1994 to July 1995); various senior-level human
resources positions at Sun Microsystems, Inc.
(April 1986 to April 1994)
Cosmo S. Trapani -- 59.......................... Executive Vice President and Chief Financial
Executive Vice President and Officer of Unitrode (July 1994 to present); Vice
Chief Financial Officer President, Chief Financial Officer and Treasurer of
Unitrode (August 1990 to May 1994)
</TABLE>
- ---------------
(1) If the Merger is consummated, Alan R. Schuele, 51, will become President and
Chief Operating Officer of Unitrode with Mr. Richardson to serve as Chairman
of the Board and continuing to serve as Chief Executive Officer. Mr. Gable
will step down from the position of Chairman of the Board but will remain a
director. Mr. Schuele has been President and Chief Executive Officer of
BENCHMARQ since May 1997 and prior to joining BENCHMARQ, Mr. Schuele was
employed by Crystal Semiconductor Corporation since 1986, most recently
serving as Vice President and General Manager.
82
<PAGE> 97
SECURITIES OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following information is furnished as of April 30, 1998 with respect to
shares of Unitrode Common Stock beneficially owned by each director of Unitrode,
each of the named executive officers of Unitrode, and by all directors and
officers of Unitrode as a group. Unless otherwise indicated, the individuals
named had sole voting and investment power over the shares listed.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL
NAME OWNERSHIP(1)(2) PERCENT OF CLASS
- ---- ----------------- ----------------
<S> <C> <C>
Peter A. Brooke........................................ 45,293 *
Robert L. Gable........................................ 389,000(3) 1.60%
Kenneth Hecht.......................................... 106,706 *
Louis E. Lataif........................................ 4,000 *
Robert J. Richardson................................... 50,000(3) *
James T. Vanderslice................................... 12,000 *
Allan R. Campbell...................................... 232,700(3)(4) *
Patrick J. Moquin...................................... 39,700 *
Cosmo S. Trapani....................................... 169,750(3) *
All officers and directors as a group (11 persons)..... 1,140,689 4.70%
</TABLE>
- ---------------
* Percentage is less than 1% of the total number of outstanding shares of
Unitrode Common Stock.
(1) Includes shares of Unitrode Common Stock subject to options exercisable
within 60 days from April 30, 1998 for the purchase of the following numbers
of shares of Unitrode Common Stock: Mr. Richardson, 0 shares; Mr. Brooke,
36,000 shares; Mr. Gable, 204,000 shares; Mr. Hecht, 36,000 shares; Mr.
Lataif, 4,000 shares; Mr. Vanderslice, 12,000 shares; Mr. Campbell, 135,200
shares; Mr. Moquin, 39,700 shares; Mr. Trapani, 96,750 shares; and all
officers and directors as a group, 637,700 shares. Also includes as to all
officers and directors as a group an aggregate of 66,000 shares which are
subject to reconveyance or forfeiture.
(2) If the Merger is consummated, because of their respective stock and option
holdings in BENCHMARQ, Alan R. Schuele will beneficially own 300,000 shares
of Unitrode Common Stock (representing less than one percent of the
outstanding shares of Unitrode Common Stock after giving effect to the
issuance of the Merger Shares), all of which would be subject to options
exercisable within 60 days of May 28, 1998; Dietrich Erdmann will
beneficially own 605,212 shares of Unitrode Common Stock (representing
approximately 1.92% of the outstanding shares of Unitrode Common Stock after
giving effect to the issuance of the Merger Shares); and Derrell C. Coker
will beneficially own 114,705 shares of Unitrode Common Stock (representing
less than one percent of the outstanding shares of Unitrode Common Stock
after giving effect to the issuance of the Merger Shares), of which 41,950
would be subject to options exercisable within 60 days of May 28, 1998.
(3) Includes 10,000 shares of Unitrode Common Stock in the case of Mr. Gable;
50,000 shares in the case of Mr. Richardson; 2,000 shares of Unitrode Common
Stock in the case of Mr. Campbell; and 2,000 shares of Unitrode Common Stock
in the case of Mr. Trapani which are subject to reconveyance or forfeiture.
(4) Includes 1,000 shares of Unitrode Common Stock held by Mr. Campbell's
spouse, as to which Mr. Campbell disclaims beneficial ownership.
83
<PAGE> 98
UNITRODE BOARD COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
INTRODUCTION
The Unitrode Board has an Executive Compensation Committee (the
"Committee") consisting of the directors whose names are set forth below this
report. Each member of the Committee is a "non-employee director" for purposes
of Rule 16b-3 under the Exchange Act. This report, prepared by the Committee,
sets forth Unitrode's compensation policies for the fiscal year ended January
31, 1998 as such policies affected Unitrode's executive officers.
COMPENSATION POLICY
It is the policy of the Committee to link the compensation of Unitrode's
executive officers with the achievement of both corporate performance objectives
and individual objectives related to the executive officers' specific areas of
responsibility. It is also the policy of the Committee to set executive
compensation at levels it believes are consistent and competitive with other
companies in the semiconductor industry and at levels that it believes will
enable Unitrode to attract and retain superior executive talent.
The Committee also believes that ownership of Unitrode's stock by
management is an effective means of aligning the interests of the stockholders
and management in the enhancement of stockholder value. For this reason, the
Committee has used in the past and expects in the future to continue to use
Unitrode's stock option plans and restricted stock grants to encourage equity
ownership by management in Unitrode and to provide added long-term incentive to
management to work for the continued growth and success of Unitrode.
RELATIONSHIP OF COMPENSATION TO UNITRODE PERFORMANCE
The compensation of the executive officers for the fiscal year ended
January 31, 1998 included base salary and annual variable performance incentives
earned under Unitrode's Management Bonus Program (the "Management Bonus
Program"). In addition, Unitrode granted stock options under the 1992 Unitrode
Plan. Unitrode also made a restricted stock grant to Mr. Richardson as a part of
his initial compensation package when he joined Unitrode as President and Chief
Executive Officer. Total annual cash compensation varies each year based upon
achievement of company financial performance goals approved by the Unitrode
Board as part of the Unitrode Board's Annual Operating Plan, achievement of
agreed-upon individual performance goals and changes in base salary.
Base salaries are targeted to be competitive with other companies in
Unitrode's industry. Management examines salary survey data published by the
American Electronics Association, as well as other survey data, for executives
with similar responsibilities in semiconductor companies of a size similar to
Unitrode's and recommendations are made to the Committee and the Unitrode Board.
Individual base salaries are then set or adjusted by the Committee, subject to
ratification by the Unitrode Board, based on experience, sustained performance,
and comparisons to peers inside and outside Unitrode.
The financial performance goal upon which payments under the Management
Bonus Program are based is earnings per share for Unitrode. Subjective
performance criteria, which are also a part of such program, encompass
evaluation of each executive officer's initiative and contribution to overall
corporate performance, managerial ability, performance on special projects
undertaken and performance against previously agreed-upon management objectives.
In order for an executive to be eligible for any payment under the
Management Bonus Program, certain earnings-per-share thresholds must be met.
Payments under the Management Bonus Program to the executive officers for the
fiscal years ended January 31, 1996, 1997 and 1998 were made as indicated in the
Summary Compensation Table included in this Joint Proxy Statement-Prospectus and
were based on the Committee's determination, in February 1996, 1997 and 1998 of
the levels of attainment of the goals described above which had been established
by the Committee in February 1995, 1996 and 1997, respectively.
84
<PAGE> 99
Long-term incentives applicable to the executive officers consist of stock
awards made under Unitrode's 1984 Restricted Stock and Cash Bonus Plan (the
"Restricted Stock Plan"), a restricted stock grant to Mr. Richardson (as
described above) and stock option grants made under Unitrode's 1983 Stock Option
Plan and 1992 Employee Stock Option Plan. The Restricted Stock Plan provides for
the award of so-called "restricted stock" which may not be transferred, with
restrictions on transfer lapsing for 20% of the grant for each year that the
grantee remains employed by Unitrode. Shares of Unitrode Common Stock upon which
restrictions have not lapsed are required to be reconveyed to Unitrode if the
executive's employment with Unitrode is terminated. The Restricted Stock Plan
has expired. Mr. Richardson's grant of restricted stock is subject to conditions
similar to those contained in the Restricted Stock Plan, although the grant was
made outside the Restricted Stock Plan. Stock option grants provide the right to
purchase shares of Unitrode Common Stock at the fair market value of such stock
as of the date of grant. Each stock option becomes exercisable in four equal
installments. The number of options granted is determined at the discretion of
the Committee. Generally, the higher level of the executive officer, the greater
number of options granted. The Committee believes that the number of shares
covered by each grant reflects competitive industry practice, rewards recipients
for contribution to improvements in corporate performance, provides an incentive
for future performance and serves to align the interests of the executive
officers with the interests of all stockholders in the creation of stockholder
value.
Unitrode has adopted the Unitrode Corporation Profit Sharing/401(k) Savings
Plan, which is a broad-based employee benefit plan in which all regular domestic
employees are eligible to participate after three months of employment. Under
the profit-sharing portion of the plan, Unitrode makes an annual contribution to
the plan's trust fund for the account of a participant based upon the profit
performance of Unitrode as determined by the Unitrode Board. Under the 401(k)
portion of the plan, Unitrode matches 50% of an employee's contributions up to 2
percent of the employee's annual eligible compensation as determined in
accordance with the plan. The executive officers participate in certain other
broad-based benefit plans in which benefits are not directly or indirectly tied
to Unitrode performance.
MR. GABLE'S AND MR. RICHARDSON'S COMPENSATION FOR THE FISCAL YEAR ENDED JANUARY
31, 1998
Mr. Gable's base salary is designed to be competitive with base salaries
paid to other chief executive officers of corporations with similar revenues and
scope of operations to Unitrode in the semiconductor industry. Mr. Gable has
received increases in his base salary of 5.5%, 7.7% and 5.0% since his joining
Unitrode as Chief Executive Officer in June 1991. The Committee has established
target payment levels and target performance levels under the Management Bonus
Program for the fiscal year ended January 31, 1998 affecting Mr. Gable.
In February 1998, the Committee recommended that the Unitrode Board award,
and the Unitrode Board awarded, Mr. Gable a payment of $238,524 under the
Management Bonus Program. This amount was 108 percent of his annual base salary
at that time. The factors given most weight by the Committee in recommending
this award were the improvement in earnings per share for Unitrode over the
prior year, Unitrode's improved performance in various financial measures of
Unitrode, and the increase in the market capitalization of Unitrode Common Stock
during Mr. Gable's tenure as Chief Executive Officer. Mr. Gable relinquished the
position of Chief Executive Officer on November 11, 1997.
On November 11, 1997, Mr. Richardson joined Unitrode and was elected
President and Chief Executive Officer and a director. Mr. Richardson's base
salary was set at $360,000 per annum. He was also designated a participant in
the Management Bonus Program for the fiscal year ended January 31, 1998 and was
awarded options to purchase 450,000 shares of Unitrode Common Stock at an
exercise price of $24.09 (the fair market value of Unitrode's stock on the date
of the grant). Mr. Richardson's compensation package also included an award of
50,000 shares of Unitrode Common Stock, with such shares having restrictions on
transfer, with such restrictions lapsing for a portion of the grant over a
four-year period so long as Mr. Richardson remains an employee of Unitrode. In
February 1998, the Committee recommended that the Unitrode Board award, and the
Unitrode Board awarded, Mr. Richardson a payment of $116,000 under the
Management Bonus Program. This amount was 32 percent of his annual base salary
at that time and was based upon the Committee's assessment of the value of Mr.
Richardson's achievements to date as Chief Executive Officer of Unitrode.
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<PAGE> 100
In determining Mr. Richardson's compensation package as Chief Executive
Officer, the Committee considered such factors as comparable compensation of
chief executive officers at similarly-sized semiconductor companies, Mr.
Richardson's skills and experience and compensation necessary to attract an
executive of Mr. Richardson's talent and experience to Unitrode.
Respectfully submitted,
James T. Vanderslice, Chairman
Kenneth Hecht
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<PAGE> 101
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
The following table shows, as to Mr. Richardson and Mr. Gable and each of
the four other most highly compensated executive officers, information
concerning compensation paid for services to Unitrode in all capacities during
the fiscal year ended January 31, 1998, as well as compensation paid to each
such individual for Unitrode's two previous fiscal years:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION AWARDS
------------------------------------- --------------------------------------
NAME AND FY OTHER RESTRICTED
PRINCIPAL ENDED ANNUAL STOCK ALL OTHER
POSITION 1/31/98 SALARY BONUS COMPENSATION(4) AWARDS OPTIONS COMPENSATION(5)
--------- ------- -------- -------- --------------- ---------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert J. Richardson(1)..... 1998 $ 82,500 $116,000 $ -- 50,000 450,000 $ --
President and Chief
Executive Officer
Robert L. Gable(2).......... 1998 $220,000 $238,524 $108,216 -- -- $18,183
Chairman of the 1997 $220,000 $ -- $ 66,710 -- -- $11,113
Unitrode Board 1996 $216,404 $220,000 $129,934 -- 200,000 $16,864
Edward H. Browder(3)........ 1998 $174,167 $238,524 $ -- -- -- $16,917
Former President 1997 $220,000 $ -- $ -- -- -- $10,100
1996 $ 14,244 $ -- $ -- -- 200,000 $ --
Cosmo S. Trapani............ 1998 $207,333 $227,682 $ 10,012 -- 27,000 $17,367
Exec. Vice President and 1997 $199,000 $ -- $ 17,374 -- 40,000 $10,444
Chief Financial Officer 1996 $192,562 $194,000 $ 23,381 -- -- $16,346
Allan R. Campbell........... 1998 $174,667 $191,903 $ 10,012 -- 22,800 $17,077
Senior Vice President, 1997 $167,750 $ -- $ 17,374 -- 40,000 $10,242
General Counsel and 1996 $162,561 $164,000 $ 22,381 -- -- $16,467
Secretary
Patrick J. Moquin........... 1998 $144,200 $158,402 $ -- -- 18,800 $15,445
Vice President, Human 1997 $137,700 $ -- $ -- -- 40,000 $10,035
Resources 1996 $ 67,500 $ 67,500 $ -- -- 50,000 $ --
</TABLE>
- ---------------
(1) Mr. Richardson was elected President and Chief Executive Officer on November
11, 1997.
(2) Mr. Gable was succeeded as Chief Executive Officer by Mr. Richardson on
November 11, 1997.
(3) Mr. Browder joined Unitrode as President on January 8, 1996 and was
succeeded by Mr. Richardson on November 11, 1997.
(4) Amounts paid were bonuses based on taxes incurred on vesting of restricted
stock pursuant to the Restricted Stock Plan.
(5) "All Other Compensation" includes profit sharing and matching contributions
made to Unitrode's Profit Sharing/401(k) Plan.
OPTION GRANTS
Unitrode's 1983 Stock Option Plan and the 1992 Unitrode Plan provide for
the grant of options to officers and key employees of Unitrode. Options granted
under the plans may be either "non-qualified options" or "incentive stock
options". The exercise price is determined by the Committee and may not be less
than 100% of the fair market value of the Unitrode Common Stock on the date of
the grant of the options. The options expire not more than ten years from the
date of the grant, and may be exercised only while the optionee is employed by
Unitrode, or within one year after death or within sixty days after termination
of employment. The Committee may determine when options granted may be
exercisable. Options are normally granted to be exercisable at the rate of
one-quarter of the grant per year, commencing six months or one year from the
date of the grant. In the event of a change of control of Unitrode, the Unitrode
Board may make all options immediately vested and exercisable. As of April 27,
1992, no further options were granted under the 1983 Stock Option Plan.
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<PAGE> 102
The following table shows, as to the individuals named in the Summary
Compensation Table above, information concerning stock options granted during
the fiscal year ended January 31, 1998.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUES
AT ASSUMED ANNUAL RATE OF
STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(1)
------------------------------------------------ ----------------------------
% OF TOTAL
OPTIONS
NO. OF GRANTED TO
OPTIONS EMPLOYEES EXERCISE EXPIRATION
NAME GRANTED IN FISCAL YEAR PRICE DATE 5% 10%
- ---- ------- -------------- -------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Richardson..... 450,000 44% $24.0938 11/11/07 $6,818,608 $17,279,690
Robert L. Gable.......... 0% $ -- $ $
Edward H. Browder........ 0% $ -- $ $
Cosmo S. Trapani......... 27,000 2.6% $24.0625 6/7/07 $ 408,585 $ 1,035,435
Allan R. Campbell........ 22,800 2.2% $24.0625 6/7/07 $ 345,027 $ 874,367
Patrick J. Moquin........ 18,800 1.8% $24.0625 6/7/07 $ 284,496 $ 720,969
</TABLE>
- ---------------
(1) The 5% and the 10% assumed rates of appreciation, using the stock price as
of the date of grant as the basis, are mandated by the rules of the SEC and
do not represent Unitrode's estimate or projection of the future value of
Unitrode Common Stock.
OPTION EXERCISES AND YEAR-END VALUES
The following table shows, as to the individuals named in the Summary
Compensation Table above, information concerning stock options exercised during
the fiscal year ended January 31, 1998.
AGGREGATED OPTION EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
SHARES FISCAL YEAR END(#) AT FISCAL YEAR END
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert J.
Richardson......... -- -- -- 450,000 $ -- $ --
Robert L. Gable...... 100,000 $1,794,191 204,000 -- $ 582,625 $ --
Edward H. Browder.... 40,000 $1,158,099 80,000 100,000 $ 385,000 $481,250
Cosmo S. Trapani..... 20,000 $ 339,062 80,000 57,000 $ 810,939 $115,314
Allan R. Campbell.... 20,000 $ 524,689 120,000 52,800 $1,412,815 $115,314
Patrick J. Moquin.... 10,000 $ 250,825 25,000 73,800 $ 103,126 $283,127
</TABLE>
88
<PAGE> 103
AMENDMENT OF THE UNITRODE CORPORATION 1992 EMPLOYEE STOCK OPTION PLAN
On March 23, 1998, the Unitrode Board adopted, subject to stockholder
approval, an amendment to the 1992 Unitrode Plan to increase the number of
shares of Unitrode Common Stock available for issuance under the 1992 Unitrode
Plan from 6,000,000 shares to 7,000,000 shares. The purpose of the 1992 Unitrode
Plan is to promote the interests of Unitrode by encouraging key employees,
including certain of the current employees of BENCHMARQ, to acquire or increase
their equity interests in Unitrode, thereby giving them an added incentive to
work for Unitrode's continued growth and success. In June, 1995, the Unitrode
Board instituted a program under the 1992 Unitrode Plan entitled the Unishare
Program (the "Unishare Program"). The objective of the Unishare Program was to
enable all full-time employees of Unitrode who had not previously participated
in the 1992 Unitrode Plan to share in the success of Unitrode through the grant
of an option to purchase 100 shares of Unitrode's stock. In June, 1995, 391
employees received Unishare grants, in June, 1996, an additional 116 employees
received Unishare grants and in June, 1997, 542 employees received Unishare
grants. BENCHMARQ has granted stock options to its key employees under its own
stock option plans. Pursuant to "change in control" provisions contained in the
BENCHMARQ Plans, each unvested stock option granted under the BENCHMARQ Plans
will immediately vest and become fully exercisable upon a "change in control"
(including the Merger). It is anticipated that BENCHMARQ employees holding
BENCHMARQ options as of the Effective Time will elect to (i) exercise such
options and sell the BENCHMARQ Common Stock received as a result of the
exercise, (ii) exercise such options and exchange the BENCHMARQ Common Stock
received as a result of the exercise for Unitrode Common Stock in the Merger, or
(iii) receive equivalent options to purchase Unitrode Common Stock in exchange
for BENCHMARQ options. See "The Merger -- The Merger Agreement -- BENCHMARQ
Stock Options." The Unitrode Board currently anticipates that the increase in
shares available for issuance under the 1992 Unitrode Plan from 6,000,000 to
7,000,000 shares will provide sufficient shares for the foreseeable future of
the 1992 Unitrode Plan for grants to key senior management employees, for use in
recruiting additions to senior management of Unitrode, for grants to former
BENCHMARQ employees, to replace BENCHMARQ options that have vested and have been
exercised as a result of the Merger for grants to current and future employees
of Unitrode through the Unishare Program. The following is a summary of certain
provisions of the 1992 Unitrode Plan:
Administration. The 1992 Unitrode Plan provides for administration by a
committee (the "1992 Unitrode Plan Committee") to be comprised of no fewer than
two members of the Unitrode Board, each of whom must be a "non-employee
director" within the meaning of Rule 16b-3 under the Securities Act. The
Unitrode Board has determined that the individuals who serve as the Committee
shall serve as the 1992 Unitrode Plan Committee. See "Unitrode Board
Compensation Committee Report on Executive Compensation." Among the powers
granted to the 1992 Unitrode Plan Committee are the authority to make all
determinations necessary for administration of the 1992 Unitrode Plan, including
selection of employees to whom awards shall be made and the establishment of
terms of specific awards, to interpret the 1992 Unitrode Plan and any awards
granted under the 1992 Unitrode Plan, and to establish rules and regulations to
carry the 1992 Unitrode Plan into effect.
Eligibility for Participation. All key employees of Unitrode or of any of
its subsidiaries are eligible to be selected to participate in the 1992 Unitrode
Plan. The selection of recipients from among key employees is within the
discretion of the 1992 Unitrode Plan Committee. The approximate number of key
employees who presently are eligible to participate in the 1992 Unitrode Plan is
665.
Types of Awards; Available Shares. As more fully described below, the 1992
Unitrode Plan provides for the grant of stock options, including incentive stock
options ("ISOs") and non-qualified stock options ("NQSOs") and stock
appreciation rights ("SARs"). As of March 25, 1998, there were outstanding under
the 1992 Unitrode Plan options to purchase 2,897,700 shares of Unitrode Common
Stock at a weighted average option price of $15.75 per share with expiration
dates ranging from April 27, 2002 to January 22, 2008. As of March 25, 1998,
there were 2,124,458 shares of Unitrode Common Stock available for grant under
the 1992 Unitrode Plan, without giving effect to the increase in shares from
6,000,000 to 7,000,000 shares. On March 25, 1998, the average of the high and
low prices of Unitrode Common Stock was $17.9688.
89
<PAGE> 104
The following table shows as to the executive officers of Unitrode who hold
options under the 1992 Unitrode Plan, as to all current executive officers of
Unitrode as a group and as to all non-executive officer employees of Unitrode as
a group (i) the number of shares covered by options granted between April 27,
1992 and March 25, 1998 and the weighted average per share option price thereof
and (ii) the number of shares acquired during such period upon the exercise of
options and the net value realized upon such exercise:
<TABLE>
<CAPTION>
GRANTED EXERCISED
APRIL 27, 1992 APRIL 27, 1992
TO MARCH 25, 1998 TO MARCH 25, 1998
--------------------------- --------------------------
WEIGHTED
NUMBER OF AVERAGE NUMBER OF AGGREGATE
SHARES OF PER SHARE SHARES OF NET VALUE
COMMON STOCK OPTION PRICE COMMON STOCK REALIZED(1)
------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
Robert J. Richardson................. 450,000 $24.0938 -- $ --
Robert L. Gable...................... 200,000 $15.4688 -- $ --
Edward H. Browder.................... 200,000 $13.2813 20,000 $ 530,874
Cosmo S. Trapani..................... 157,000 $11.3257 20,000 $ 339,062
Allan R. Campbell.................... 152,800 $10.9786 -- $ --
Patrick J. Moquin.................... 108,800 $15.7301 10,000 $ 253,825
All current officers as a group (6
persons)........................... 1,164,800 $14.6836 30,000 $ 592,887
Non-officer employee group (659
persons)........................... 3,004,300 $14.4672 529,092 $5,117,023
</TABLE>
- ---------------
(1) Represents the difference between the option price and the fair market value
of the shares of Unitrode Common Stock acquired as of the date of exercise.
Stock Options and SARs. Each NQSO and ISO shall entitle the holder to
purchase a specified number of shares of common stock as determined by the 1992
Unitrode Plan Committee. The exercise price of each NQSO and ISO granted under
the 1992 Unitrode Plan shall be not less than the fair market value of a share
of common stock on the date on which such NQSO and ISO are granted. The exercise
price shall be paid in cash or, subject to the approval of the 1992 Unitrode
Plan Committee, in shares of common stock valued at their fair market value, or
by any combination of cash and shares of Unitrode Common Stock. An ISO or NQSO
will be exercisable for a term established by the 1992 Unitrode Plan Committee,
but in no event to exceed ten years.
The 1992 Unitrode Plan Committee may grant SARs, which entitle the
recipient to receive a payment equal to the excess of the fair market value on
the date of exercise of a stated number of shares over the exercise price
specified in an option or SAR agreement. The payment may be made in cash or in
shares of Unitrode Common Stock, or partly in cash and partly in shares, at the
discretion of the 1992 Unitrode Plan Committee. SARs may be granted in tandem
with options, in which case the option is canceled to the extent the tandem SAR
is exercised and the tandem SAR is canceled to the extent the related option is
exercised, or as freestanding SARs.
Options and SARs granted under the 1992 Unitrode Plan are not transferable
otherwise than by will or under the laws of descent and distribution. They are
canceled upon termination of employment, except that exercise after termination
is permitted in certain cases, including those instances when employment
terminates because of the recipient's retirement, death or disability.
Certain Federal Income Tax Consequences. A recipient recognizes no taxable
income at the time a stock option is granted under the 1992 Unitrode Plan. With
regard to NQSOs, ordinary income is recognized by the recipient at the time of
his or her exercise of an option. The amount of income recognized is equal to
the excess of the fair market value of the shares on the date of exercise over
the exercise price. Tax withholding is required on such income. When a recipient
disposes of shares acquired upon exercise, the excess will be treated as long-
or short-term capital gain, depending upon the holding period of the shares; and
if the amount received is less than the fair market value of the shares on the
date of exercise, the difference will be treated as long- or short-term capital
loss, depending upon the holding period of the shares.
90
<PAGE> 105
With regard to ISOs, no income is recognized by a recipient upon exercise.
However, the excess of the fair market value of the shares received on exercise
over the exercise price is an adjustment to the recipient's taxable income for
purposes of computing the recipient's alternative minimum taxable income.
Assuming compliance with applicable holding period requirements, a recipient
realizes long-term capital gain or loss when he or she disposes of his or her
shares, measured by the difference between the exercise price and the amount
received for the shares at the time of disposition. If the recipient disposes of
shares acquired by the exercise of the option before the expiration of at least
one year from the date of exercise and two years from the date of grant of the
option, any amount realized from such disqualifying disposition is taxable as
ordinary income in the year of disposition to the extent that the lesser of (i)
fair market value on the date the option was exercised or (ii) the amount
realized upon such disposition exceeds the exercise price. Any amount realized
in excess of fair market value on the date of exercise will be treated as long
or short-term capital gain, depending upon the holding period of the shares. If
the amount realized upon such disposition is less than the exercise price, the
difference is treated as long- or short-term capital loss, depending upon the
holding period of the shares.
Participants who exercise SARs will recognize ordinary income at the time
of exercise equal to the amount of the payment to which they are entitled upon
exercise, regardless of whether such amount is paid in cash or shares.
No deduction is allowed to Unitrode for federal income tax purposes at the
time of grant of a NQSO or at the time of grant or exercise of an ISO. Unitrode
is entitled to a deduction for federal income tax purposes at the same time and
in the same amount as the recipient is considered to have recognized ordinary
income in connection with the exercise of a NQSO or SAR. In the event of a
disqualifying disposition of shares received upon exercise of an ISO, Unitrode
is entitled to a deduction for the amount taxable to the recipient as ordinary
income.
Amendment. The Unitrode Board may amend, suspend or terminate the 1992
Unitrode Plan at any time. However, no such amendment may, without stockholder
approval, increase the maximum number of shares available for issuance under the
1992 Unitrode Plan (except pursuant to the anti-dilution provisions of the 1992
Unitrode Plan), reduce the minimum price at which options or SARs may be
granted, extend the maximum option or SAR exercise period, change the class of
employees eligible to receive awards, or extend the period within which awards
may be granted.
Approval. THE UNITRODE BOARD HAS APPROVED THE AMENDMENT TO THE 1992
UNITRODE PLAN AND UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS OF UNITRODE VOTE
FOR APPROVAL OF SUCH AMENDMENT.
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<PAGE> 106
UNITRODE PERFORMANCE
The following graph shows a five-year comparison of cumulative total
stockholder returns for Unitrode, the Standard & Poor's 500 Stock Index (the
"S&P 500 Index") and the Standard & Poor's Electronics (Semiconductors) Index
(the "S&P Electronics (Semiconductors) Index").
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG UNITRODE CORPORATION, THE S & P 500 INDEX
AND THE S & P ELECTRONICS (SEMICONDUCTORS) INDEX
<TABLE>
<CAPTION>
S&P 500
ELECTRONICS
MEASUREMENT PERIOD (SEMICONDUCTORS)
(FISCAL YEAR COVERED) UNITRODE S&P 500 INDEX INDEX
<S> <C> <C> <C>
JAN '93 100 100 100
JAN '94 125 113 146
JAN '95 157 113 165
JAN '96 221 157 204
JAN '97 309 199 482
JAN '98 308 248 483
</TABLE>
* $100 INVESTED ON 1/31/93 IN STOCK OR INDEX -- INCLUDING REINVESTMENT OF
DIVIDENDS. FISCAL YEAR ENDED JANUARY 31.
CHANGE OF CONTROL SEVERANCE AGREEMENTS
Unitrode has entered into Change of Control Severance Agreements (the
"Unitrode Severance Agreements") with its executive officers. The Unitrode
Severance Agreements provide that if a "Change of Control" (as defined in the
Unitrode Severance Agreements) of Unitrode should occur, and if within two years
thereafter the employment of the executive is terminated for reasons other than
death, disability, retirement or "Cause" (as defined in the Unitrode Severance
Agreements), or the executive voluntarily terminates his or her employment for
"Good Reason" (as defined in the Unitrode Severance Agreements), severance
compensation will be payable. The amount of severance compensation would be
approximately twice the executive's then current annual base salary, plus twice
the largest annual bonus paid to the executive during the five-year period
immediately preceding the change of control. In addition, the executive would be
entitled to continued employee benefits for a period of two years from the date
of termination. Also, to the extent that payments to the executive pursuant to
his or her Unitrode Severance Agreement (together with any other payments or
benefits, such as the accelerated vesting of stock options or restricted stock
awards, received by the executive in connection with a change in control) would
result in the triggering of the provisions of Sections 280G and 4999 of the
Code, the Unitrode Severance Agreement provides for the payment of an additional
amount such that the executive would receive, net of excise taxes, the amount he
or she would have been entitled to receive in the absence of the excise tax
provided in Section 4999 of the Code.
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<PAGE> 107
INDEPENDENT ACCOUNTANTS OF UNITRODE
The Unitrode Board, upon the recommendation of the Audit Committee, has
selected PricewaterhouseCoopers to be the independent accountants for Unitrode
for the fiscal year ending January 31, 1999. Representatives of
PricewaterhouseCoopers will be present at the Unitrode Annual Meeting and will
have the opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions.
ADVANCE NOTICE BYLAW
The Unitrode Bylaws provide that in order for a stockholder to nominate a
candidate for election as a director at an annual meeting of Unitrode
stockholders or propose business for consideration at such meeting, notice must
be given to the Secretary of Unitrode no more than 90 days nor less than 60 days
prior to the first anniversary of the preceding year's annual meeting (the
"Unitrode Advance Notice Bylaw"). The fact that Unitrode may not insist upon
compliance with these requirements should not be construed as a waiver by
Unitrode of its right to do so at any time in the future.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires Unitrode's directors and
executive officers, and persons who own more than ten percent of a registered
class of Unitrode's equity securities to file with the SEC initial reports of
ownership and reports of changes in ownership of Unitrode Common Stock and other
equity securities. Officers, directors and greater than ten percent beneficial
owners of Unitrode Common Stock are required by SEC regulation to furnish
Unitrode with copies of all forms filed by them under Section 16(a) of the
Exchange Act.
To Unitrode's knowledge, based solely on a review of the copies of such
reports furnished to Unitrode for the fiscal year ended January 31, 1998, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with.
LEGAL OPINION
The validity of the shares of Unitrode Common Stock offered hereby will be
passed upon for Unitrode by Ballard Spahr Andrews & Ingersoll LLP.
EXPERTS
The consolidated balance sheets as of January 31, 1998 and 1997 and the
consolidated statements of operations, stockholders' equity, cash flows and the
related financial statement schedule for each of the three years in the period
ended January 31, 1998 of Unitrode, incorporated by reference in this Joint
Proxy Statement-Prospectus, have been incorporated herein in reliance on the
report of PricewaterhouseCoopers, independent accountants, given on the
authority of that firm as experts in accounting and auditing.
The consolidated financial statements of BENCHMARQ appearing in BENCHMARQ's
Annual Report (Form 10-K) for the year ended December 31, 1997 have been audited
by Ernst & Young, independent auditors, as set forth in their report thereon
included therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
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STOCKHOLDER PROPOSALS FOR THE 1999 ANNUAL MEETING
OF UNITRODE STOCKHOLDERS
Under regulations adopted by the SEC, stockholder proposals must be
submitted to the Secretary of Unitrode no later than January 31, 1999, in order
to be considered for inclusion in the proxy materials for the annual meeting to
be held in 1999. The inclusion of any such proposal will be subject to
applicable rules of the SEC and Unitrode's Advance Notice Bylaw.
STOCKHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING
OF BENCHMARQ STOCKHOLDERS
If the Merger is not consummated, it is currently anticipated that the 1998
Annual Meeting of stockholders of BENCHMARQ will be held on or about September
23, 1998 and if such meeting is held, stockholder proposals must be submitted to
the Secretary of BENCHMARQ no later than July 20, 1998, in order to be
considered for inclusion in the proxy materials for such meeting. The inclusion
of any such proposal will be subject to applicable rules of the SEC.
MANAGEMENT AND ADDITIONAL INFORMATION
Certain information relating to the management, executive compensation,
various benefit plans (including stock plans), voting securities and the
principal holders thereof, certain relationships and related transactions and
other related matters as to Unitrode and BENCHMARQ may be set forth in or
incorporated herein by reference to, in the case of Unitrode, its Annual Report
on Form 10-K for the fiscal year ended January 31, 1998 and, in the case of
BENCHMARQ, its Annual Report on Form 10-K for the fiscal year ended December 31,
1997, which are incorporated by reference in this Joint Proxy
Statement-Prospectus. All documents filed by Unitrode or BENCHMARQ pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof and
prior to the date of the Unitrode Annual Meeting and the BENCHMARQ Special
Meeting, shall be deemed to be incorporated herein by reference and to be a part
hereof from the date of filing of such documents. See "Incorporation By
Reference." Unitrode stockholders and BENCHMARQ stockholders who wish to obtain
copies of these documents may contact Unitrode or BENCHMARQ, as applicable, at
its address or telephone number set forth under "Incorporation by Reference."
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APPENDIX A
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
UNITRODE CORPORATION
MERRIMACK CORPORATION
AND
BENCHMARQ MICROELECTRONICS, INC.
MARCH 2, 1998
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TABLE OF CONTENTS
<TABLE>
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ARTICLE I
DEFINITIONS
Section 1.1 Rules of Construction....................................... A-2
Section 1.2 Defined Terms............................................... A-2
ARTICLE II
TERMS OF MERGER
Section 2.1 Statutory Merger............................................ A-9
Section 2.2 Effective Time.............................................. A-9
Section 2.3 Effect of the Merger........................................ A-9
Section 2.4 Certificate of Incorporation; Bylaws........................ A-9
Section 2.5 Directors and Officers...................................... A-9
ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
Section 3.1 Merger Consideration; Conversion and Cancellation of
Securities.................................................. A-9
Section 3.2 Adjustments to the Exchange Ratio........................... A-10
Section 3.3 Exchange of Certificates.................................... A-10
Section 3.4 Closing..................................................... A-12
Section 3.5 Stock Transfer Books........................................ A-12
Section 3.6 No Fractional Shares........................................ A-12
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.1 Organization and Qualification; Subsidiaries................ A-12
Section 4.2 Certificate of Incorporation; Bylaws........................ A-13
Section 4.3 Capitalization.............................................. A-13
Section 4.4 Authorization of Agreement.................................. A-14
Section 4.5 Approvals................................................... A-14
Section 4.6 No Violation................................................ A-14
Section 4.7 Reports..................................................... A-15
Section 4.8 No Material Adverse Effect; Conduct......................... A-15
Section 4.9 Title to Properties......................................... A-15
Section 4.10 Certain Obligations......................................... A-16
Section 4.11 Permits; Compliance......................................... A-16
Section 4.12 Litigation; Compliance with Laws............................ A-16
Section 4.13 Information in Disclosure Documents and Registration
Statement................................................... A-16
Section 4.14 Employee Plans; Collective Bargaining Agreements............ A-17
Section 4.15 Taxes....................................................... A-20
Section 4.16 Environmental Matters....................................... A-20
Section 4.17 Intellectual Property....................................... A-21
Section 4.18 Insurance................................................... A-21
Section 4.19 Pooling; Tax Matters........................................ A-21
Section 4.20 Affiliates.................................................. A-21
Section 4.21 Brokers..................................................... A-21
Section 4.22 Opinion of Financial Advisor................................ A-21
</TABLE>
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<TABLE>
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Section 5.1 Organization and Qualification; Subsidiaries................ A-22
Section 5.2 Articles of Incorporation; Bylaws........................... A-22
Section 5.3 Capitalization.............................................. A-22
Section 5.4 Authorization of Agreement.................................. A-23
Section 5.5 Approvals................................................... A-23
Section 5.6 No Violation................................................ A-23
Section 5.7 Reports..................................................... A-24
Section 5.8 No Material Adverse Effect; Conduct......................... A-24
Section 5.9 Litigation; Compliance with Laws............................ A-25
Section 5.10 Information in Disclosure Documents and Registration
Statement................................................... A-25
Section 5.11 Pooling; Tax Matters........................................ A-25
Section 5.12 Affiliates.................................................. A-25
Section 5.13 Brokers..................................................... A-25
Section 5.14 Opinion of Financial Advisor................................ A-25
Section 5.15 Operations of Newco......................................... A-25
Section 5.16 Proposal to Acquire the Acquiror............................ A-25
ARTICLE VI
COVENANTS
Section 6.1 Affirmative Covenants....................................... A-26
Section 6.2 Negative Covenants.......................................... A-26
Section 6.3 No Solicitation............................................. A-29
Section 6.4 Access and Information...................................... A-30
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Meeting of Stockholders..................................... A-30
Section 7.2 Registration Statement; Proxy Statements.................... A-31
Section 7.3 Appropriate Action; Consents; Filings....................... A-32
Section 7.4 Affiliates; Pooling; Tax Treatment.......................... A-33
Section 7.5 Public Announcements........................................ A-33
Section 7.6 Stock Exchange Listing...................................... A-33
Section 7.7 Employee Benefit Plans...................................... A-33
Section 7.8 Indemnification of Directors and Officers................... A-34
Section 7.9 Newco....................................................... A-35
Section 7.10 Event Notices............................................... A-35
Section 7.11 Assumption of Obligations to Issue Stock.................... A-35
Section 7.12 Real Estate Transfer Tax Returns............................ A-36
Section 7.13 Acquiror's Board of Directors and Officers.................. A-36
ARTICLE VIII
CLOSING CONDITIONS
Section 8.1 Conditions to Obligations of Each Party Under This
Agreement................................................... A-36
Section 8.2 Additional Conditions to Obligations of the Acquiror
Companies................................................... A-37
Section 8.3 Additional Conditions to Obligations of the Company......... A-37
</TABLE>
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ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination................................................. A-38
Section 9.2 Effect of Termination....................................... A-39
Section 9.3 Amendment................................................... A-40
Section 9.4 Waiver...................................................... A-40
Section 9.5 Expenses.................................................... A-40
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Effectiveness of Representations, Warranties and
Agreements.................................................. A-40
Section 10.2 Notices..................................................... A-41
Section 10.3 Headings.................................................... A-41
Section 10.4 Severability................................................ A-41
Section 10.5 Entire Agreement............................................ A-42
Section 10.6 Assignment.................................................. A-42
Section 10.7 Parties in Interest......................................... A-42
Section 10.8 Failure or Indulgence Not Waiver; Remedies Cumulative....... A-42
Section 10.9 Governing Law............................................... A-42
Section 10.10 Counterparts................................................ A-42
</TABLE>
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of March 2, 1998 is by and
among Unitrode Corporation, a Maryland corporation (the "Acquiror"), Merrimack
Corporation, a Delaware corporation and a wholly-owned subsidiary of Acquiror
("Newco"), and BENCHMARQ Microelectronics, Inc., a Delaware corporation (the
"Company"). The Acquiror and Newco are sometimes referred to herein as the
"Acquiror Companies."
RECITALS:
The Board of Directors of the Company has determined that the business
combination to be effected by means of the Merger (as defined herein) is
consistent with and in furtherance of the long-term strategic interests of the
Company and is fair to, and in the best interests of, the Company and its
stockholders and has approved and adopted this Agreement (as defined herein) and
recommends approval and adoption of this Agreement by the stockholders of the
Company.
The Board of Directors of the Acquiror has determined that the business
combination to be effected by means of the Merger is consistent with and in
furtherance of the long-term strategic interests of the Acquiror and in the best
interests of, the Acquiror and its stockholders and has approved this Agreement
and recommends approval by the stockholders of the Acquiror of the issuance of
shares of the common stock, $.01 par value, of the Acquiror (the "Acquiror
Common Stock") contemplated by the Merger.
The Board of Directors of Newco has determined that the business
combination to be effected by means of the Merger is advisable, and in the best
interests of, Newco and its stockholder and has approved and adopted this
Agreement. The stockholder of Newco has approved and adopted this Agreement.
Concurrently with the execution and delivery of this Agreement, as an
essential condition and inducement to the willingness of the Acquiror and Newco
to enter into this Agreement, certain holders of common stock, par value $.001
per share, of the Company ("Company Common Stock") have each entered into a
Voting Agreement (the "Voting Agreement") in the form attached as Annex A dated
as of the date hereof pursuant to which such holders have agreed to vote their
shares of Company Common Stock in the manner set forth therein.
Concurrently with the execution and delivery of this Agreement, as an
essential condition and inducement to the willingness of the Acquiror and Newco
to enter into this Agreement, the Company has entered into a Stock Option
Agreement (the "Option Agreement") in the form attached hereto as Annex B dated
as of the date hereof granting the Acquiror an irrevocable option to purchase up
to 955,158 shares of the Company Common Stock on the terms and subject to the
conditions set forth therein.
Upon the terms and subject to the conditions of this Agreement and in
accordance with the Delaware General Corporation Law (the "DGCL"), Newco will
merge with and into the Company (the "Merger") and the Company will continue as
the surviving corporation (the "Surviving Corporation").
For U.S. federal income tax purposes, it is intended that the Merger will
qualify as a reorganization within the meaning of the provisions of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and that
this Agreement shall be, and is hereby, adopted as a plan of reorganization for
purposes of Section 368(a) of the Code.
The Merger is intended to be treated as a "pooling of interests" for
accounting purposes.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, and intending to be legally bound hereby the parties hereto agree as
follows:
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ARTICLE I
DEFINITIONS
Section 1.1 Rules of Construction. Unless the context otherwise requires,
as used in this Agreement: a term has the meaning ascribed to it; an accounting
term not otherwise defined has the meaning ascribed to it in accordance with
GAAP as in effect from time to time; (c) "or" is not exclusive unless the
context requires otherwise; and (d) "including" means "including without
limitation".
Section 1.2 Defined Terms. For all purposes in this Agreement, the
following terms shall have the respective meanings set forth in this Section 1.2
(such definitions to be equally applicable to both the singular and plural forms
of the terms herein defined).
"Acquiror Rights" will mean rights to purchase shares of the preferred
stock of the Acquiror pursuant to that certain Rights Agreement, between
Acquiror and The First National Bank of Boston dated as of May 2, 1990, and as
amended as of April 30, 1993.
"Acquiror Stock Options" will mean stock options granted pursuant to the
1983 Stock Option Plan, the Amended and Restated 1986 Non-Employee Director
Option Plan and the 1992 Employee Stock Option Plan, as amended.
"Acquiror's Audited Consolidated Financial Statements" will mean the
consolidated balance sheets of the Acquiror and its Subsidiaries and the related
consolidated statements of income, stockholders equity and cash flows, together
with the notes thereto, all as audited by Coopers & Lybrand L.L.P., independent
accountants, under their report with respect thereto dated February 27, 1997 and
included in the Acquiror's Annual Report on Form 10-K for the year ended January
31, 1997 filed with the Commission.
"Acquiror's Consolidated Balance Sheet" will mean the consolidated balance
sheet of the Acquiror as of January 31, 1997, included in the Acquiror's Audited
Consolidated Financial Statements.
"Acquiror's Consolidated Financial Statements" will mean the Acquiror's
Audited Consolidated Financial Statements and the Acquiror's Unaudited
Consolidated Financial Statements.
"Acquiror's Disclosure Letter" will mean a letter of even date herewith
delivered by the Acquiror to the Company with the execution of the Agreement,
which, among other things, will identify exceptions to the Acquiror's
representations and warranties contained in Article V by specific section and
subsection references.
"Acquiror's Stockholders' Meeting" shall have the meaning ascribed to such
term in Subsection 7.1(b) hereof.
"Acquiror's Unaudited Consolidated Financial Statements" will mean the
unaudited consolidated balance sheet of the Acquiror and its Subsidiaries as of
November 1, 1997 and the related consolidated statements of income, stockholders
equity and cash flows for the fiscal quarters ended October 31, 1996 and
November 1, 1997, together with the notes thereto, included in the Acquiror's
Quarterly Report on Form 10-Q for the quarter ended November 1, 1997 filed with
the Commission.
"Acquisition Proposal" will mean any offer, proposal or indication of
interest (other than by or with the Acquiror or any of its Subsidiaries):
(a) by any Person to commence (as such term is defined in Rule 14d-2
under the Exchange Act), or file a registration statement under the
Securities Act with respect to, a tender offer or exchange offer to
purchase any shares of Company Common Stock such that, upon consummation of
such offer, such Person would own or control more than 15% of the then
outstanding Company Common Stock; or
(b) relating to (A) a merger, reorganization, consolidation, share
exchange or other business combination or similar transaction involving the
Company or any of its Significant Subsidiaries, (B) a sale, lease,
exchange, mortgage, pledge, transfer or other disposition of assets of the
Company or its Subsidiaries representing 15% or more of the consolidated
assets of the Company, directly or indirectly, in one or a series of
transactions other than in the ordinary course of business; (C) an
issuance, sale or other acquisition or disposition of (including by way of
merger, consolidation, share exchange or any similar
A-2
<PAGE> 115
transaction) securities (or options, rights or warrants to purchase, or
securities convertible into or exchangeable for, such securities)
representing 15% or more of the voting power of the Company or any of its
Significant Subsidiaries, directly or indirectly, in one or a series of
transactions or (D) a transaction in which any Person shall or would
acquire beneficial ownership (as such term is defined in Rule 13d-3 under
the Exchange Act), or the right to acquire beneficial ownership, or any
"group" (as such term is defined under the Exchange Act) shall have been
formed which beneficially owns or would own or has or would have the right
to acquire beneficial ownership, of 15% or more of the outstanding Company
Common Stock.
"Acquiror Acquisition Proposal" will mean any offer, proposal or indication
of interest (other than by or with the Company or any of its Subsidiaries):
(a) by any Person to commence (as such term is defined in Rule 14d-2
under the Exchange Act), or file a registration statement under the
Securities Act with respect to, a tender offer or exchange offer to
purchase any shares of Acquiror Common Stock such that, upon consummation
of such offer, such Person would own or control more than 15% of the then
outstanding Acquiror Common Stock; or
(b) relating to (A) a merger, reorganization, consolidation, share
exchange or other business combination or similar transaction involving the
Acquiror or any of its Significant Subsidiaries, (B) a sale, lease,
exchange, mortgage, pledge, transfer or other disposition of assets of the
Acquiror or its Subsidiaries representing 15% or more of the consolidated
assets of the Acquiror, directly or indirectly, in one or a series of
transactions other than in the ordinary course of business; (C) an
issuance, sale or other acquisition or disposition of (including by way of
merger, consolidation, share exchange or any similar transaction)
securities (or options, rights or warrants to purchase, or securities
convertible into or exchangeable for, such securities) representing 15% or
more of the voting power of the Acquiror or any of its Significant
Subsidiaries, directly or indirectly, in one or a series of transactions or
(D) a transaction in which any person shall or would acquire beneficial
ownership (as such term is defined in Rule 13d-3 under the Exchange Act),
or the right to acquire beneficial ownership, or any "group" (as such term
is defined under the Exchange Act) shall have been formed which
beneficially owns or would own or has or would have the right to acquire
beneficial ownership, of 15% or more of the outstanding Acquiror Common
Stock.
"Affiliate" will, with respect to any Person, mean any other Person that
controls, is controlled by or is under common control with the former.
"Agreement" will mean this Agreement and Plan of Merger made and entered
into as of March 2, 1998 among Acquiror, Newco and the Company, including any
amendments hereto and each Annex hereto.
"Benefit Arrangement" will mean any employment, consulting, severance or
other similar contract, arrangement or policy and each plan, arrangement
(written or oral), program, agreement or commitment providing for insurance
coverage (including without limitation any self-insured arrangements), workers'
compensation, disability benefits, supplemental unemployment benefits, vacation
benefits, retirement benefits, life, health, disability or accident benefits
(including without limitation any "voluntary employees' beneficiary association"
as defined in section 501(c)(9) of the Code providing for the same or other
benefits) or for deferred compensation, profit-sharing bonuses, stock options,
restricted stock, phantom stock, stock appreciation rights, stock purchases or
other forms of incentive compensation or post-retirement insurance, compensation
or benefits which (i) is not a Welfare Plan, Pension Plan or Multiemployer Plan,
(ii) is entered into, maintained, administered, contributed to or required to be
contributed to, as the case may be, by a specified Person, and (iii) covers any
employee or former employee of such Person.
"Benefit Continuation Period" will have the meaning ascribed to such term
in Subsection 7.7(b) hereof.
"Business Day" will mean any day other than a day on which banks in the
States of New Hampshire or Texas are authorized or obligated to be closed.
"CERCLA" will mean the Comprehensive Environmental, Response, Compensation,
and Liability Act of 1980, as amended.
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<PAGE> 116
"Certificate of Merger" will have the meaning ascribed to such term in
Section 2.2 hereof.
"Closing" will mean a meeting, which will be held in accordance with
Section 3.3, of all Persons interested in the transactions contemplated by the
Agreement at which all documents deemed necessary by the parties to the
Agreement to evidence the fulfillment or waiver of all conditions precedent to
the consummation of the transactions contemplated by the Agreement are executed
and delivered.
"Closing Date" will mean the date of the Closing as determined pursuant to
Section 3.3.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended, and the Regulations promulgated thereunder.
"Commission" will mean the Securities and Exchange Commission.
"Company Option Plans" will mean collectively the 1989 Stock Option Plan
and the 1995 Flexible Stock Option Plan.
"Company Stock Options" will mean options granted pursuant to the Company
Option Plans.
"Company Stockholders' Meeting" will have the meaning ascribed to such term
in Subsection 7.1(a).
"Company's Audited Consolidated Financial Statements" will mean the
consolidated balance sheets of the Company and its Subsidiaries and the related
consolidated statements of income, stockholders equity and cash flows, together
with the notes thereto, all as audited by Ernest & Young L.L.P., independent
accountants, under their report with respect thereto dated February 18, 1997,
and included in the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996 filed with the Commission.
"Company's Consolidated Balance Sheet" will mean the consolidated balance
sheet of the Company as of December 31, 1996, included in the Company's Audited
Consolidated Financial Statements.
"Company's Consolidated Financial Statements" will mean the Company's
Audited Consolidated Financial Statements and the Company's Unaudited
Consolidated Financial Statements.
"Company's Disclosure Letter" will mean a letter of even date herewith
delivered by the Company to the Acquiror Companies concurrently with the
execution of the Agreement, which, among other things, will identify exceptions
to the Company's representations and warranties contained in Article IV by
specific section and subsection references.
"Company's Unaudited Consolidated Financial Statements" will mean the
unaudited consolidated balance sheet of the Company and its Subsidiaries as of
September 30, 1997 and the related consolidated statements of income,
stockholders equity and cash flows for the three month periods and nine month
periods ended September 30, 1996 and September 30, 1997, together with the notes
thereto, included in the Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1997 filed with the Commission.
"control" (including the terms "controlled," "controlled by" and "under
common control with") will mean the possession, directly or indirectly or as
trustee or executor, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership of stock or as
trustee or executor, by contract or credit arrangement or otherwise.
"Court" will mean any court or arbitration tribunal of the United States or
any domestic state, and any political subdivision thereof.
"Effective Time" will mean the date and time at which the Certificate of
Merger is filed with the Secretary of State of the State of Delaware in
accordance with Section 2.2.
"Employee Plans" will mean all Benefit Arrangements, Multiemployer Plans,
Pension Plans and Welfare Plans.
"Environmental Law" will mean any and all Laws of any Governmental
Authority pertaining to human health or the environment currently in effect and
applicable to a specified Person and its Subsidiaries,
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including without limitation the Clean Air Act, as amended, CERCLA, the Federal
Water Pollution Control Act, as amended, the Occupational Safety and Health Act
of 1970, as amended, the RCRA, the Safe Drinking Water Act, as amended, the
Toxic Substances Control Act, as amended, the Emergency Planning and
Right-to-Know Act, as amended, the Hazardous Materials Transportation Act, as
amended, the Oil Pollution Act of 1990, as amended, any state or local Laws
implementing the foregoing federal Laws, and all other Laws pertaining to the
protection of human health and the environment (inclusive, in each case, of all
regulations issued thereunder). For purposes of the Agreement, the terms
"hazardous substance" and "release" have the meanings specified in CERCLA;
provided, however, that, to the extent the Laws of the state or locality in
which the property is located establish a meaning for "hazardous substance" or
"release" that is broader than that specified in CERCLA, such broader meaning
will apply within the jurisdiction of such state or locality, and; provided
further, however, the term "hazardous substance" will include all dehydration
and treating wastes, waste (or spilled) oil, and waste (or spilled) petroleum
products, and (to the extent in excess of background levels) radioactive
material, even if such are specifically exempt from classification as hazardous
substances pursuant to CERCLA or RCRA or the analogous statutes of any
jurisdiction applicable to the specified Person or its Subsidiaries or any of
their respective properties or assets.
"ERISA" will mean the Employee Retirement Income Security Act of 1974, as
amended, and the Regulations promulgated thereunder.
"ERISA Affiliate" will mean any entity which is (or at any relevant time
was) a member of a "controlled group of corporations" with, under "common
control" with, or a member of an "affiliated service group" with a specified
Person, as such terms are defined in section 414(b), (c), (m) or (o) of the
Code.
"Exchange Act" will mean the Securities Exchange Act of 1934, as amended,
and the Regulations promulgated thereunder.
"Exchange Agent" will mean a bank or trust company organized under the Laws
of the United States of America or any of the states thereof and having a net
worth in excess of $100 million designated and appointed to act in the
capacities required thereof under Section 3.2.
"Exchange Fund" will mean the fund of Acquiror Common Stock (and the
associated Acquiror Rights), cash in lieu of fractional share interests and
dividends and distributions, if any, with respect to such shares of Acquiror
Common Stock established at the Exchange Agent pursuant to Section 3.2.
"Exchange Ratio" will mean the ratio of conversion of Company Common Stock
into Acquiror Common Stock pursuant to the Merger as provided in the first
sentence of Subsection 3.1(a) as adjusted by Section 3.2.
"Expenses" will mean all reasonable out-of-pocket expenses (including all
fees and expenses of counsel, accountants, investment bankers, experts and
consultants to a party hereto and its affiliates) incurred by a party or on its
behalf in connection with or related to the authorization, preparation,
negotiation, execution and performance of this Agreement, the preparation,
printing, filing and mailing of the Registration Statement and the Proxy
Statement, the solicitation of stockholder approvals and all other matters
related to the consummation of the transactions contemplated hereby.
"GAAP" will mean generally accepted accounting principles in the United
States consistently applied by a specified Person.
"Governmental Authority" will mean any governmental agency or authority
(other than a Court) of the United States or any domestic state, and any
political subdivision or agency thereof, and will include any authority having
governmental or quasi-governmental powers.
"HSR Act" will mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Indemnification Agreements" will mean the following Indemnification
Agreements: (i) each of the Indemnification Agreements dated April 17, 1991
between the Company and each of (A) Reginald B. McHone, (B) Derrell Coker, (C)
Charles Phipps, (D) L.J. Sevin, (E) Harvey B. Cash, and (F) Dietrich Erdmann;
(ii) the Indemnification Agreement dated December 3, 1997 between the Company
and Alan R. Schuele; (iii) the Indemnification Agreement dated June 30, 1995
between the Company and Jimmie C.
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Vernon; and (iv) each of the Indemnification Agreements dated June 29, 1995
between the Company and (A) William F. Davies, Jr., (B) R. Scott Schaefer, and
(C) Jack Kilby.
"IRS" will mean the Internal Revenue Service.
"Knowledge" will mean, with respect to either the Company or the Acquiror,
the actual knowledge (without duty of inquiry) of any executive officer or any
member of the Board of Directors of such party.
"Law" will mean all laws, statutes, ordinances and Regulations of the
United States, any foreign country, or any domestic or foreign state, and any
political subdivision or agency thereof, including all decisions of Courts
having the effect of Law in each such jurisdiction.
"Lien" will mean any mortgage, pledge, security interest, encumbrance, lien
or charge of any kind (including any agreement to give any of the foregoing),
any conditional sale or other title retention agreement, any lease in the nature
thereof or the filing of or agreement to give any financing statement under the
Uniform Commercial Code of any jurisdiction.
"Material" will mean material to the condition (financial and other),
results of operations or business of a specified Person and its Subsidiaries, if
any, taken as a whole; provided, however, that, as used in this definition the
word "material" will have the meaning accorded thereto in Section 11 of the
Securities Act.
"Material Adverse Effect" will mean any change or effect that would be
material and adverse to the consolidated business, condition (financial or
other), operations, performance or properties (but excluding any outstanding
capital stock or other securities) of a specified Person and its Subsidiaries,
if any, taken as a whole; provided, however, that, as used in this definition
the word "material" will have the meaning accorded thereto in Section 11 of the
Securities Act.
"Material Contract" will mean each contract, lease, indenture, agreement,
arrangement or understanding, whether written or oral, to which a specified
Person or any of its Subsidiaries is a party or to which any of the assets or
operations of such specified Person or any of its Subsidiaries is subject that
is of a type that would be required to be included as an exhibit to a
registration statement on Form S-1 promulgated under the Securities Act
pursuant, in the case of the Company, to Paragraph (2), (4) or (10) of Item
601(b) of Regulation S-K of the Commission and, in the case of the Acquiror, to
Paragraph (10) (other than clause (iii) thereof) of Item 601(b) of Regulation
S-K of the Commission if such a registration statement were to be filed by such
Person under the Securities Act on the date of determination. Notwithstanding
the foregoing, such term will, in the case of the Company, include any of the
following contracts, agreements or commitments, whether oral or written:
(1) any collective bargaining agreement or other agreement with any
labor union;
(2) any agreement, contract or commitment with any other Person, other
than any agency or representation entered in the ordinary course of
business, containing any covenant limiting the freedom of such specified
Person or any of its Subsidiaries to engage in any line of business or to
compete with any other Person;
(3) any partnership, joint venture or profit sharing agreement with
any Person, which partnership, joint venture or profit sharing agreement
generated revenues during its most recently completed fiscal year of
$100,000 or more;
(4) any employment or consulting agreement, contract or commitment
between the Company or any of its Subsidiaries and any employee, officer or
director thereof (i) having more than one year to run from the date hereof,
(ii) providing for an obligation to pay or accrue compensation of $100,000
or more per annum or (iii) providing for the payment or accrual of any
additional compensation upon a change in control of such Person or any of
its Subsidiaries or upon any termination of such employment or consulting
relationship following a change in control of such Person or any of its
Subsidiaries; and
(5) any agency or representation agreement with any Person which is
not terminable by the Company or one of its Subsidiaries without penalty
upon not more than one year's notice.
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"MGCL" will mean The Maryland General Corporation Law.
"Multiemployer Plan" will mean any "multiemployer plan," as defined in
Section 4001(a)(3) of ERISA, which (i) is (or was within the six (6) years prior
to the date of this Agreement) entered into, maintained, administered,
contributed to or required to be contributed to, as the case may be, by a
specified Person or any ERISA Affiliate of such Person, and (ii) covers any
employee or former employee of such Person or any ERISA Affiliate of such
Person.
"NYSE" will mean The New York Stock Exchange.
"Order" will mean any judgment, writ, injunction, order or decree of any
Court or Governmental Authority, federal, foreign, state or local.
"PBGC" will mean the Pension Benefit Guaranty Corporation.
"Pension Plan" will mean any "employee pension benefit plan" as defined in
Section 3(2) of ERISA (other than a Multiemployer Plan) which (i) is (or was
within the six (6) years prior to the date of this Agreement) entered into,
maintained, administered, contributed to or required to be contributed to, as
the case may be, by a specified Person or any ERISA Affiliate of such Person,
and (ii) covers any employee or former employee of such Person or any ERISA
Affiliate of such Person.
"Permit" will mean any and all permits, licenses, authorizations, orders,
certificates, registrations or other approvals granted by any Governmental
Authority.
"Permitted Encumbrances" will mean the following:
(1) liens for taxes, assessments and other governmental charges not
delinquent or which are currently being contested in good faith by
appropriate proceedings; provided that, in the latter case, the specified
Person or one of its Subsidiaries will have set aside on its books adequate
reserves with respect thereto;
(2) mechanics' and materialmen's liens not filed of record and similar
charges not delinquent or which are filed of record but are being contested
in good faith by appropriate proceedings; provided that, in the latter
case, the specified Person or one of its Subsidiaries will have set aside
on its books adequate reserves with respect thereto;
(3) liens in respect of judgments or awards with respect to which the
specified Person or one of its Subsidiaries is in good faith currently
prosecuting an appeal or other proceeding for review and with respect to
which such Person or such Subsidiary has secured a stay of execution
pending such appeal or such proceeding for review; provided that, such
Person or such Subsidiary has set aside on its books adequate reserves with
respect thereto;
(4) easements, leases, reservations or other rights of others in, or
minor defects and irregularities in title to, property or assets of a
specified Person or any of its Subsidiaries; provided that such easements,
leases, reservations, rights, defects or irregularities do not materially
impair the use of such property or assets for the purposes for which they
are held;
(5) any lien or privilege vested in any lessor or licensor for rent or
other obligations of a specified Person or any of its Subsidiaries
thereunder so long as the payment of such rent or the performance of such
obligations is not delinquent; and
(6) encumbrances which secure deposits of public funds as required by
Law.
"Person" will mean an individual, partnership, limited liability company,
corporation, joint stock company, trust, estate, joint venture, association or
unincorporated organization, or any other form of business or professional
entity, but will not include a Governmental Authority.
"Pre-Closing Average Trading Price" will have the meaning ascribed to such
term in Subsection 3.2(a).
"Proxy Statement" will have the meaning ascribed to such term in Section
4.13 hereof.
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"RCRA" will mean the Resource Conservation and Recovery Act of 1976, as
amended.
"Registration Statement" will have the meaning ascribed to such term in
Section 4.13 hereof.
"Regulation" will mean any rule or regulation of any Governmental Authority
having the effect of Law.
"Reports" will mean, with respect to a specified Person, all reports,
registrations, filings and other documents and instruments required to be filed
by the specified Person or any of its Subsidiaries with any Governmental
Authority (other than the Commission).
"SEC Reports" will mean all Annual Reports on Form 10-K promulgated under
the Exchange Act, all Quarterly Reports on Form 10-Q promulgated under the
Exchange Act, all proxy statements relating to meetings of stockholders (whether
annual or special), all Current Reports on Form 8-K promulgated under the
Exchange Act and all other reports, schedules, registration statements or other
documents required to be filed during a specified period by a Person with the
Commission pursuant to the Securities Act or the Exchange Act.
"Securities Act" will mean the Securities Act of 1933, as amended, and the
Regulations promulgated thereunder.
"Significant Subsidiary" will mean any Subsidiary of the Company or
Acquiror, as the case may be, that would constitute a Significant Subsidiary of
such party within the meaning of Rule 1-02 of Regulation S-X of the Commission.
"Stockholders' Meetings" will have the meaning ascribed to such term in
Subsection 7.1(b) hereof.
A "Subsidiary" of a specified Person will be any corporation, partnership,
limited liability company, joint venture or other legal entity of which the
specified Person (either alone or through or together with any other Subsidiary)
owns, directly or indirectly, fifty percent (50%) or more of the stock or other
equity or partnership interests the holders of which are generally entitled to
vote for the election of the board of directors or other governing body of such
corporation, partnership, limited liability company, joint venture or other
legal entity.
"Surviving Corporation" will mean the Company as the corporation surviving
the Merger.
"Tax Returns" will mean any declaration, return, report, schedule,
certificate, statement or other similar document (including relating or
supporting information) required to be filed with a taxing authority, or where
none is required to be filed with a taxing authority, the statement or other
document issued by a taxing authority in connection with any Tax, including,
without limitation, any information return, claim for refund, amended return or
declaration of estimated Tax.
"Taxes" will mean any and all federal, state, local, foreign, provincial,
territorial or other taxes, imposts, tariffs, fees, levies or other similar
assessments or liabilities and other charges of any kind, including income
taxes, ad valorem taxes, excise taxes, withholding taxes, stamp taxes or other
taxes of or with respect to gross receipts, premiums, real property, personal
property, windfall profits, sales, use, transfers, licensing, employment, social
security, workers' compensation, unemployment, payroll and franchises imposed by
or under any Law; and such terms will include any interest, fines, penalties,
assessments or additions to tax resulting from, attributable to or incurred in
connection with any such tax or any contest or dispute thereof.
"Terminating Acquiror Breach" shall have the meaning ascribed to such term
in Subsection 9.1(c) hereof.
"Terminating Company Breach" shall have the meaning ascribed to such term
in Subsection 9.1(b) hereof.
"Termination Date" shall have the meaning ascribed to such term in
Subsection 9.1(e) hereof.
"Welfare Plan" will mean any "employee welfare benefit plan" as defined in
Section 3(1) of ERISA, which (i) is entered into, maintained, administered,
contributed to or required to be contributed to, as the case may be, by a
specified Person or any ERISA Affiliate of such Person, and (ii) covers any
employee or former employee of such Person.
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ARTICLE II
TERMS OF MERGER
Section 2.1 Statutory Merger. Subject to the terms and conditions and in
reliance upon the representations, warranties, covenants and agreements
contained herein, Newco will merge with and into the Company at the Effective
Time. The terms and conditions of the Merger and the mode of carrying the same
into effect will be as set forth in this Agreement. As a result of the Merger,
the separate corporate existence of Newco will cease and the Company will
continue as the Surviving Corporation and shall succeed to and assume all of the
rights and obligations of Newco in accordance with the DGCL.
Section 2.2 Effective Time. As soon as practicable after the satisfaction
or, if permissible, waiver of the conditions set forth in Article VIII hereof,
the parties hereto will cause the Merger to be consummated by filing a
certificate of merger (the "Certificate of Merger") with the Secretary of State
of the State of Delaware, in such form as required by, and executed in
accordance with the relevant provisions of, the DGCL.
Section 2.3 Effect of the Merger. At the Effective Time, the effect of
the Merger will be as provided in the applicable provisions of the DGCL.
Section 2.4 Certificate of Incorporation; Bylaws. At the Effective Time,
the certificate of incorporation and the bylaws of Newco, as in effect
immediately prior to the Effective Time will be the certificate of incorporation
and the bylaws of the Surviving Corporation, except that from and after the
Effective Time Article I of the certificate of incorporation will be read in its
entirety as follows:
The name of the corporation is "BENCHMARQ Microelectronics, Inc."
Section 2.5 Directors and Officers. The directors of Newco immediately
prior to the Effective Time will be the directors of the Surviving Corporation,
each to hold office in accordance with the certificate of incorporation and
bylaws of the Surviving Corporation, and the officers of the Company immediately
prior to the Effective Time will be the officers of the Surviving Corporation,
in each case until their respective successors are duly elected or appointed and
qualified.
ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
Section 3.1 Merger Consideration; Conversion and Cancellation of
Securities. At the Effective Time, by virtue of the Merger and without any
action on the part of the Acquiror Companies, the Company or the holders of any
of the securities of the Company:
(a) Subject to the provisions of Section 3.2 hereof and the other
provisions of this Article III, each share of Company Common Stock issued
and outstanding immediately prior to the Effective Time (excluding any
Company Common Stock described in Subsection 3.1(c)) will be converted into
the right to receive one (1) share of Acquiror Common Stock (and the
associated Acquiror Right) (as such ratio is adjusted pursuant to Section
3.2, the "Exchange Ratio"). Notwithstanding the foregoing, if between the
date of this Agreement and the Effective Time the outstanding shares of the
Acquiror Common Stock or the Company Common Stock shall have been changed
into a different number of shares or a different class, by reason of any
stock dividend, subdivision, reclassification, recapitalization, split,
conversion, consolidation, combination or exchange of shares, the Common
Stock Exchange Ratio will be correspondingly adjusted to reflect such stock
dividend, subdivision, reclassification, recapitalization, split,
conversion, consolidation, combination or exchange of shares.
(b) Subject to the other provisions of this Article III, all shares
of Company Common Stock will, upon conversion thereof into shares of
Acquiror Common Stock (and the associated Acquiror Rights) at the Effective
Time, cease to be outstanding and will automatically be cancelled and
retired, and each certificate previously evidencing Company Common Stock
outstanding immediately prior to the Effective Time (other than Company
Common Stock described in Subsection 3.1(c)) will thereafter be deemed, for
all purposes other than the payment of dividends or distributions, to
represent that number of shares of
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Acquiror Common Stock (and the associated Acquiror Rights) determined
pursuant to the Common Stock Exchange Ratio. The holders of certificates
previously evidencing Company Common Stock will cease to have any rights
with respect to such Company Common Stock except as otherwise provided
herein or by Law.
(c) Notwithstanding any provision of this Agreement to the contrary,
each share of Company Common Stock held in the treasury of the Company and
each share of Company Common Stock, if any, owned by the Acquiror or any
direct or indirect wholly-owned Subsidiary of the Acquiror or of the
Company immediately prior to the Effective Time will be cancelled.
(d) Each share of common stock, par value $.01 per share, of Newco
issued and outstanding immediately prior to the Effective Time shall be
converted into and become one fully paid and nonassessable share of common
stock, par value $.01 per share, of the Surviving Corporation.
Section 3.2 Adjustments to the Exchange Ratio. The Exchange Ratio shall
be subject to adjustment as follows:
(a) if the average of the mean high and low per share trading prices
on the NYSE of shares of Acquiror Common Stock (as reported for the NYSE
Composite Transactions in the Wall Street Journal) during the 20
consecutive trading days ending on the tenth day prior to the Company
Stockholders' Meeting (the "Pre-Closing Average Price") is less than
$16.00, then the Exchange Ratio shall be adjusted such that each share of
Company Common Stock is converted into the right to receive a number of
shares of Acquiror Common Stock (and the associated Acquiror Rights) equal
to the quotient obtained by dividing (i) $16.00 by (ii) the Pre-Closing
Average Price, provided, however, that, the Exchange Ratio shall in no
event be higher than 1.33; and
(b) if the Pre-Closing Average Price is greater than $24.00, then the
Exchange Ratio shall be adjusted such that each share of Company Common
Stock is converted into the right to receive a number of shares of Acquiror
Common Stock (and the associated Acquiror Rights) equal to the quotient
obtained by dividing (i) $24.00 by (ii) the Pre-Closing Average Price.
Section 3.3 Exchange of Certificates.
(a) Exchange Fund. On the Closing Date, the Acquiror will deposit,
or cause to be deposited, with the Exchange Agent, for the benefit of the
former holders of Company Common Stock, for exchange in accordance with
this Article III, through the Exchange Agent, (i) certificates evidencing a
number of shares of Acquiror Common Stock (and the associated Acquiror
Rights) equal to the product of the Exchange Ratio multiplied by the number
of shares of Company Common Stock issued and outstanding immediately prior
to the Effective Time (exclusive of any such shares to be cancelled
pursuant to Subsection 3.1(c)) and (ii) cash in an amount equal to any
dividends or other distributions declared in respect of such shares of
Acquiror Common Stock and having a record date after the Effective Time.
Thereafter, the Acquiror will deposit, or cause to be deposited, with the
Exchange Agent, for the benefit of any former holders of Company Common
Stock who have not yet surrendered their shares of Company Common Stock for
exchange, at the appropriate payment date, the amount of dividends or other
distributions, with a record date after the Effective Time but prior to
surrender, payable with respect to any shares of Acquiror Common Stock
remaining in the Exchange Fund on such record date. The Exchange Agent
will, pursuant to irrevocable instructions from the Acquiror, deliver
Acquiror Common Stock (and associated Acquiror Rights) and any dividends or
distributions related thereto, in exchange for certificates theretofore
evidencing Company Common Stock surrendered to the Exchange Agent pursuant
to Subsection 3.3(c).
(b) Letter of Transmittal. Promptly after the Effective Time, the
Acquiror will cause the Exchange Agent to mail to each record holder of a
certificate or certificates representing Company Common Stock immediately
prior to the Effective Time (i) a letter of transmittal which shall specify
that delivery shall be effected, and risk of loss and title to the
certificates for Company Common Stock shall pass, only upon delivery of the
certificates for Company Common Stock to the Exchange Agent and shall be in
such form and have such other provisions, including appropriate provisions
with respect to
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back-up withholding, as the Acquiror may reasonably specify, and (ii)
instructions for use in effecting the surrender of the certificates for
Company Common Stock. Upon surrender of a certificate for Company Common
Stock for cancellation to the Exchange Agent, together with such letter of
transmittal, duly executed and completed in accordance with the
instructions thereto, the holder thereof shall be entitled to receive in
exchange therefor that portion of the Exchange Fund which such holder has
the right to receive pursuant to the provisions of this Article III, after
giving effect to any required withholding tax, and the certificate for
Company Common Stock so surrendered shall forthwith be cancelled. No
interest will be paid or accrued on the cash, if any, to be paid which is
in the Exchange Fund as part of the Exchange Ratio.
(c) Exchange Procedures. Promptly after the Effective Time, the
Exchange Agent will distribute to each former holder of Company Common
Stock, upon surrender to the Exchange Agent for cancellation of one or more
certificates, accompanied by a duly executed letter of transmittal that
theretofore evidenced shares of Company Common Stock, certificates
evidencing the appropriate number of shares of Acquiror Common Stock (and
the associated Acquiror Rights) into which such shares of Company Common
Stock were converted pursuant to the Merger and any dividends or
distributions related thereto. If shares of Acquiror Common Stock (and the
associated Acquiror Rights) are to be issued to a Person other than the
Person in whose name the surrendered certificate or certificates are
registered, it will be a condition of issuance of the Acquiror Common Stock
(and the associated Acquiror Rights) that the surrendered certificate or
certificates shall be properly endorsed, with signatures guaranteed by a
member firm of the NYSE or a bank chartered under the Laws of the United
States of America, or otherwise in proper form for transfer and that the
Person requesting such payment shall pay any transfer or other taxes
required by reason of the issuance of Acquiror Common Stock (and the
associated Acquiror Rights) to a Person other than the registered holder of
the surrendered certificate or certificates or such Person shall establish
to the satisfaction of the Acquiror that any such tax has been paid or is
not applicable. Notwithstanding the foregoing, neither the Exchange Agent
nor any party hereto will be liable to any former holder of Company Common
Stock for any Acquiror Common Stock (and the associated Acquiror Rights) or
dividends or distributions thereon delivered to a public official pursuant
to any applicable escheat Law.
(d) Distributions with Respect to Unexchanged Shares of Company
Common Stock. No dividends or other distributions declared or made with
respect to Acquiror Common Stock with a record date on or after the
Effective Time will be paid to the holder of any certificate that
theretofore evidenced shares of Company Common Stock until the holder of
such certificate shall surrender such certificate. Subject to the effect of
any applicable escheat Law, following surrender of any such certificate,
there will be paid from the Exchange Fund to the holder of the certificates
evidencing whole shares of Acquiror Common Stock (and the associated
Acquiror Rights) issued in exchange therefor, without interest, (i)
promptly, the amount of dividends or other distributions with a record date
after the Effective Time theretofore paid with respect to such whole shares
of Acquiror Common Stock, and (ii) at the appropriate payment date, the
amount of dividends or other distributions, with a record date after the
Effective Time but prior to surrender and a payment date occurring after
surrender, payable with respect to such whole shares of Acquiror Common
Stock.
(e) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains unclaimed by the former holders of Company Common Stock for
twelve months after the Effective Time will be delivered to the Acquiror,
upon demand, and any former holders of Company Common Stock who have not
theretofore complied with this Article III will, subject to applicable
abandoned property, escheat and other similar Laws, thereafter look only to
the Acquiror for the Acquiror Common Stock (and associated Acquiror Rights)
and any cash to which they are entitled.
(f) Withholding of Tax. The Acquiror or the Exchange Agent will be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any former holder of Company Common Stock
such amounts as the Acquiror (or any affiliate thereof) or the Exchange
Agent are required to deduct and withhold with respect to the making of
such payment under the Code, or any provision of state, local or foreign
tax Law. To the extent that amounts are so withheld by the Acquiror or
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the Exchange Agent, such withheld amounts will be treated for all purposes
of this Agreement as having been paid to the former holder of Company
Common Stock in respect of which such deduction and withholding were made
by the Acquiror.
(g) Lost Certificates. If any certificate evidencing Company Common
Stock shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the Person claiming such certificate to be lost,
stolen or destroyed and, if required by the Acquiror, the posting by such
Person of a bond, in such reasonable amount as the Acquiror may direct, as
indemnity against claims that may be made against it with respect to such
certificate, the Exchange Agent will issue in exchange for such lost,
stolen or destroyed certificate the Acquiror Common Stock (and associated
Acquiror Rights) to which the holder may be entitled pursuant to this
Article III and any dividends or other distributions to which the holder
thereof may be entitled pursuant to Subsection 3.3(d).
Section 3.4 Closing. The Closing will take place at the offices of
Skadden, Arps, Slate, Meagher & Flom LLP, One Beacon Street, Boston,
Massachusetts 02108, at 10:00 a.m. local time on the second Business Day
following the date on which the conditions to the Closing have been satisfied or
waived or at such other place, time and date as the parties hereto may agree. At
the conclusion of the Closing on the Closing Date, the parties hereto will cause
the Certificate of Merger to be filed with the Secretary of State of the State
of Delaware.
Section 3.5 Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company will be closed and there will be no further
registration of transfers of shares of Company Common Stock thereafter on the
records of the Company. If, after the Effective Time, certificates representing
Company Common Stock are presented to the Surviving Corporation, they shall be
cancelled and upon delivery of a duly executed letter of transmittal exchanged
for certificates representing Acquiror Common Stock (and associated Acquiror
Rights).
Section 3.6 No Fractional Shares. In the event the Exchange Ratio is
modified or changed in a manner that would result in the issuance of fractional
shares of Acquiror Common Stock, the parties nevertheless agree that no
fractional shares of Acquiror Common Stock shall be issued to the holders of
Company Common Stock. In lieu of any such fractional shares, each holder of
record of Company Common Stock at the Effective Time who but for the provisions
of this Section 3.6 would be entitled to receive a fractional share of Acquiror
Common Stock pursuant to the Merger shall be paid cash, without any interest
thereon, in an amount equal to the product of such fraction multiplied by the
closing sale price of one share of Acquiror Common Stock on the NYSE on the day
of the Effective Time, or, if shares of Acquiror Common Stock are not so traded
on such day, the closing sale price of one such share on the next preceding day
on which such share was traded on the NYSE. For this purpose, shares of Company
Common Stock of any holder represented by two or more certificates may be
aggregated, and in no event shall any holder be paid an amount in respect of
more than one share of Acquiror Common Stock.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Acquiror Companies that:
Section 4.1 Organization and Qualification; Subsidiaries. The Company and
each Subsidiary of the Company are legal entities duly organized, validly
existing and in good standing under the Laws of their respective jurisdictions
of incorporation or organization, have all requisite power and authority to own,
lease and operate their respective properties and to carry on their business as
it is now being conducted and are duly qualified and in good standing to do
business in each jurisdiction in which the nature of the business conducted by
them or the ownership or leasing of their respective properties makes such
qualification necessary, other than any matters, including the failure to be so
duly qualified and in good standing, that would not individually or in the
aggregate have a Material Adverse Effect on the Company. Section 4.1 of the
Company's Disclosure Letter sets forth, as of the date of this Agreement, a true
and complete list of all the Company's directly or indirectly owned
Subsidiaries, together with (A) the jurisdiction of incorporation of each
Subsidiary and the
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percentage of each Subsidiary's outstanding capital stock or other equity
interests owned by the Company or another Subsidiary of the Company, and (B) an
indication of whether each such Subsidiary is a Significant Subsidiary. Neither
the Company nor any of its Subsidiaries owns an equity interest in any
partnership or joint venture arrangement or other business entity that is
Material to the Company.
Section 4.2 Certificate of Incorporation; Bylaws. The Company has
heretofore marked for identification and furnished to the Acquiror complete and
correct copies of the certificate of incorporation and the bylaws or the
equivalent organizational documents, in each case as amended or restated to the
date hereof, of the Company and each of its Subsidiaries. Neither the Company
nor any of its Subsidiaries is in violation of any of the provisions of its
certificate of incorporation or bylaws (or equivalent organizational documents).
Section 4.3 Capitalization.
(a) The authorized capital stock of the Company consists of (i)
50,000,000 shares of Company Common Stock of which, as of February 27,
1998, 7,114,939 shares were issued and outstanding, all of which are duly
authorized, validly issued, fully paid and nonassessable and were not
issued in violation of the preemptive or similar rights of any Person and
(ii) 22,000,000 shares of Preferred Stock, par value $.01 per share, of
which none is issued. Since February 27, 1998, the Company has not issued
any shares of the Company Common Stock except pursuant to the exercise of
outstanding Company Stock Options and otherwise to the extent set forth in
Subsection 4.3(a) of the Company's Disclosure Letter. Except as set forth
in Subsection 4.3(a) of the Company's Disclosure Letter, since February 2,
1998, the Company has not granted any options for, or other rights to
purchase, shares of the capital stock of the Company.
(b) Except as set forth in Subsection 4.3(b) of the Company's
Disclosure Letter or in the Company's Consolidated Financial Statements, no
shares of capital stock of the Company are reserved for issuance, and there
are no contracts, agreements, commitments or arrangements obligating the
Company to offer, sell, issue, grant, pledge, dispose of or encumber any
shares of, or any options, warrants or rights of any kind to acquire any
shares of, or any securities that are convertible into or exchangeable for
any shares of, capital stock of the Company, to redeem, purchase or
acquire, or offer to purchase or acquire, any outstanding shares of, or any
outstanding options, warrants or rights of any kind to acquire any shares
of, or any outstanding securities that are convertible into or exchangeable
for any shares of, capital stock of the Company or to grant any Lien on any
shares of capital stock of the Company.
(c) The authorized, issued and outstanding capital stock of, or other
equity interests in, each of the Company's Subsidiaries and the names and
addresses of the holders of record of the capital stock or other equity
interests of each such Subsidiary are set forth in Subsection 4.3(c) of the
Company's Disclosure Letter. Except as set forth in Subsection 4.3(c) of
the Company's Disclosure Letter, (i) the issued and outstanding shares of
capital stock of, or other equity interests in, each of the Subsidiaries of
the Company that are owned by the Company or any of its Subsidiaries have
been duly authorized and are validly issued, and, with respect to capital
stock, are fully paid and nonassessable, and were not issued in violation
of any preemptive or similar rights of any Person; (ii) all such issued and
outstanding shares, or other equity interests, that are indicated as owned
by the Company or one of its Subsidiaries in Subsection 4.3(c) of the
Company's Disclosure Letter are owned (A) beneficially as set forth therein
and (B) free and clear of all Liens; (iii) no shares of capital stock of,
or other equity interests in, any Subsidiary of the Company are reserved
for issuance, and there are no contracts, agreements, commitments or
arrangements obligating the Company or any of its Subsidiaries (A) to
offer, sell, issue, grant, pledge, dispose of or encumber any shares of
capital stock of, or other equity interests in, or any options, warrants or
rights of any kind to acquire any shares of capital stock of, or other
equity interests in, or any securities that are convertible into or
exchangeable for any shares of capital stock of, or other equity interests
in, any of the Subsidiaries of the Company or (B) to redeem, purchase or
acquire, or offer to purchase or acquire, any outstanding shares of capital
stock of, or other equity interests in, or any outstanding options,
warrants or rights of any kind to acquire any shares of capital stock of or
other equity interest in, or any outstanding securities that are
convertible into or exchangeable for, any shares of capital stock of, or
other equity interests in, any of the Subsidiaries of the Company or (C) to
grant any Lien on any outstanding shares of capital stock of, or other
equity interest in, any of the Subsidiaries of
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the Company; except with respect to clause (i), (ii) or (iii) of this
Subsection 4.3(c) for such matters that would not, in the aggregate, have a
Material Adverse Effect on the Company.
(d) Except as set forth in Subsection 4.3(d) of the Company's
Disclosure Letter, there are no voting trusts, proxies or other agreements,
commitments or understandings of any character to which the Company or any
of its Subsidiaries or, to the Knowledge of the Company, any third Person,
is a party or by which the Company or any of its Subsidiaries is bound with
respect to the voting of any shares of capital stock of the Company or any
of its Subsidiaries or with respect to the registration of the offering,
sale or delivery of any shares of capital stock of the Company or any of
its Subsidiaries under the Securities Act.
Section 4.4 Authorization of Agreement. The Company has all requisite
corporate power and authority to execute and deliver this Agreement, the Option
Agreement and each instrument required hereby to be executed and delivered by it
at the Closing, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery by the Company of this Agreement, the Option Agreement and each
instrument required hereby to be executed and delivered by it at the Closing and
the performance of its obligations hereunder and thereunder have been duly and
validly authorized by all requisite corporate action on the part of the Company
(other than, with respect to the Merger, the approval and adoption of this
Agreement by the stockholders of the Company, which approval and adoption in
accordance with the DGCL and the Company's certificate of incorporation shall
require the affirmative vote of the holders of at least a majority of the
outstanding shares of Company Common Stock). This Agreement and the Option
Agreement have been duly executed and delivered by the Company and (assuming due
authorization, execution and delivery hereof by the Acquiror Companies)
constitute legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, subject to bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter in
effect relating to creditors' rights generally or to general principles of
equity.
Section 4.5 Approvals. Except for the applicable requirements, if any, of
(a) the Securities Act, (b) the Exchange Act, (c) state securities or blue sky
Laws, (d) the HSR Act, (e) the filing and recordation of appropriate merger
documents as required by the DGCL and (f) those Laws, Regulations and Orders
noncompliance with which would not have in the aggregate a material adverse
effect on the ability of the Company to perform its obligations under this
Agreement or the Option Agreement or a Material Adverse Effect on the Company,
no filing or registration with, no waiting period imposed by and no Permit,
Order, or consent of, any Court or Governmental Authority is required under any
Law, Regulation or Order applicable to the Company or any of its Subsidiaries to
permit the Company to execute, deliver or perform this Agreement or the Option
Agreement or any instrument required hereby to be executed and delivered by it
at the Closing.
Section 4.6 No Violation. Assuming effectuation of all filings and
registrations with, termination or expiration of any applicable waiting periods
imposed by and receipt of all Permits, Orders and consents of, Courts or
Governmental Authorities indicated as required in Section 4.5 hereof and receipt
of the approval of the Merger by the stockholders of the Company as required by
the DGCL and except as set forth in Section 4.6 of the Company's Disclosure
Letter, neither the execution and delivery by the Company of this Agreement, the
Option Agreement or any instrument required hereby to be executed and delivered
by it at the Closing nor the performance by the Company of its obligations
hereunder or thereunder will (a) violate or breach the terms of or cause a
default under (i) any Law, Regulation or Order applicable to the Company, (ii)
the certificate of incorporation or bylaws of the Company or (iii) any contract,
note, bond, mortgage, indenture, license, agreement or other instrument to which
the Company or any of its Subsidiaries is a party or by which it or any of its
properties or assets is bound, or (b) with the passage of time, the giving of
notice or the taking of any action by a third Person, have any of the effects
set forth in clause (a) of this Section 4.6, except in any such case for any
matters described in this Section 4.6 that would not in the aggregate have a
Material Adverse Effect upon the ability of the Company to perform its
obligations under this Agreement or the Option Agreement or a Material Adverse
Effect on the Company. Prior to the execution of this Agreement, the Board of
Directors of the Company has taken all requisite action to cause this Agreement
and the transactions contemplated hereby to be exempt from the provisions of
Section 203 of the DGCL.
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Section 4.7 Reports.
(a) Since December 31, 1994, the Company and its Subsidiaries have
timely filed (i) all SEC Reports required to be filed with the Commission
and (ii) all other Reports required to be filed with any other Governmental
Authorities, including state securities administrators, except where the
failure to file any such Reports would not in the aggregate have a Material
Adverse Effect on the Company. Such Reports, including all those filed
after the date of this Agreement and prior to the Effective Time, (i) were
prepared in all Material respects in accordance with the requirements of
applicable Law (including, with respect to the SEC Reports of the Company,
the Securities Act and the Exchange Act, as the case may be) and (ii), in
the case of SEC Reports, did not at the time they were filed contain any
untrue statement of a Material fact or omit to state a Material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading.
(b) The Company's Consolidated Financial Statements and any
consolidated financial statements of the Company (including any related
notes thereto) contained in any SEC Reports of the Company filed with the
Commission since December 31, 1994 (i) have been or will have been prepared
in accordance with the published Regulations of the Commission and in
accordance with GAAP consistently applied during the periods involved,
(except (A) to the extent required by changes in GAAP and (B), with respect
to SEC Reports of the Company filed prior to the date of this Agreement, as
may be indicated in the notes thereto) and (ii) fairly present the
consolidated financial position of the Company and its Subsidiaries as of
the respective dates thereof and the consolidated results of their
operations and cash flows for the periods indicated (including, in the case
of any unaudited interim financial statements, reasonable estimates of
normal and recurring year-end adjustments).
(c) Except as set forth in Subsection 4.7(c) of the Company's
Disclosure Letter, there exist no liabilities or obligations of the Company
and its Subsidiaries that are Material to the Company, whether accrued,
absolute, contingent or threatened, which would be required to be
reflected, reserved for or disclosed under GAAP in consolidated financial
statements of the Company (including the notes thereto) as of and for the
period ended on the date of this representation and warranty, other than
(i) liabilities or obligations that are adequately reflected, reserved for
or disclosed in the Company's Consolidated Financial Statements, (ii)
liabilities or obligations incurred in the ordinary course of business of
the Company and its Subsidiaries since September 30, 1997, and (iii)
liabilities or obligations the incurrence of which is not prohibited by
Subsection 6.2(a).
Section 4.8 No Material Adverse Effect; Conduct.
(a) Since December 31, 1996, (i) no event or events (other than any
event that is directly attributable to the prospect of consummation of the
Merger or is of general application to all or a substantial portion of the
Company's industry and other than any event that is expressly subject to
any other representation or warranty contained in this Article IV) have, to
the Knowledge of the Company, occurred that, individually or in the
aggregate, would constitute or cause a Material Adverse Effect on the
Company and (ii) there have not been any change or changes in the business,
condition (financial or other), results of operations, properties, assets
or liabilities of the Company or its Subsidiaries which would have, in the
aggregate, a Material Adverse Effect on the Company.
(b) Except as disclosed in Subsection 4.8(b) of the Company's
Disclosure Letter, during the period from December 31, 1996 to the date of
this Agreement, neither the Company nor any of its Subsidiaries has engaged
in any conduct that is proscribed during the period from the date of this
Agreement to the Effective Time by subsections (i) through (xiii) of
Subsection 6.2(a) or agreed in writing or otherwise during such period
prior to the date of this Agreement to engage in any such conduct.
Section 4.9 Title to Properties. The Company or its Subsidiaries,
individually or together, have good, valid and marketable title to or a valid
leasehold in, all of the properties and assets (real, personal and mixed,
tangible and intangible) that are necessary to the conduct of the business of
the Company as it is currently being conducted including, without limitation,
all of the properties and assets reflected in the Company's
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Consolidated Balance Sheet, other than any properties or assets that (i) have
been sold or otherwise disposed of in the ordinary course of business consistent
with past practice or (ii) are not, individually or in the aggregate, Material
to the Company, free and clear of Liens, other than (x) Liens the existence of
which is reflected in the Company's Consolidated Financial Statements and (y)
Liens that, individually or in the aggregate, are not Material to the Company.
None of such properties are securities pledged for interest rate swap, cap or
floor contracts. The Company or its Subsidiaries, individually or together, hold
under valid lease agreements all real and personal properties being held under
capitalized leases, and all real and personal property that is subject to
operating leases, and enjoy peaceful and undisturbed possession of such
properties under such leases, other than (i) any properties as to which such
leases have expired in accordance with their terms without any liability of any
party thereto and (ii) any properties that, individually or in the aggregate,
are not Material to the Company. Neither the Company nor any of its Subsidiaries
has received any written notice of any adverse claim to the title to any
properties owned by them or with respect to any lease under which any properties
are held by them, other than any claims that, individually or in the aggregate,
would not have a Material Adverse Effect on the Company.
Section 4.10 Certain Obligations. Section 4.10 of the Company's
Disclosure Letter contains a true and complete list of the Material Contracts of
the Company and its Subsidiaries. Except as set forth in Section 4.10 of the
Company's Disclosure Letter, all Material Contracts to which the Company or any
of its Subsidiaries is a party are in full force and effect, the Company or the
Subsidiary of the Company that is a party to or bound by such Material Contract
has performed its obligations thereunder to date and, to the Knowledge of the
Company, each other party thereto has performed its obligations thereunder to
date, other than any failure of any such Material Contract to be in full force
and effect or any nonperformance thereof that would not have a Material Adverse
Effect on the Company.
Section 4.11 Permits; Compliance. The Company and its Subsidiaries have
obtained all Permits that are necessary to carry on their businesses as
currently conducted, except for any such Permits which the failure to possess,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company. Such Permits are in full force and effect, have not been violated
in any respect that would have a Material Adverse Effect on the Company and, to
the Knowledge of the Company, no suspension, revocation or cancellation thereof
has been threatened and there is no action, proceeding or investigation pending
or threatened regarding suspension, revocation or cancellation of any of such
Permits, except where the suspension, revocation or cancellation of such Permits
would not have a Material Adverse Effect on the Company.
Section 4.12 Litigation; Compliance with Laws. There are no actions,
suits, investigations or proceedings (including any proceedings in arbitration)
pending or, to the Knowledge of the Company, threatened against the Company or
any of its Subsidiaries, at law or in equity, in any Court or before or by any
Governmental Authority, except actions, suits or proceedings that (a) are set
forth in Section 4.12 or any other Section of the Company's Disclosure Letter or
(b) in the aggregate, would not have a Material Adverse Effect on the Company.
There are no claims pending or, to the Knowledge of the Company, threatened by
any Persons against the Company or any of its Subsidiaries for indemnification
pursuant to any Law, organizational document, contract or otherwise with respect
to any action, suit, investigation or proceeding pending in any Court or before
or by any Governmental Authority. Except as set forth in Section 4.12 of the
Company's Disclosure Letter, neither the Company nor any of its Subsidiaries is
subject to any written agreement, directive, memorandum of understanding or
Order with or by any Court or Governmental Authority restricting its operation
or requiring any Material actions. Except as set forth in Section 4.12 of the
Company's Disclosure Letter, the Company and its Subsidiaries are in compliance
with all applicable Laws and Regulations and are not in default with respect to
any Order applicable to the Company or any of its Subsidiaries, except such
events of noncompliance or defaults that, individually or in the aggregate,
would not have a Material Adverse Effect on the Company.
Section 4.13 Information in Disclosure Documents and Registration
Statement. None of the information to be supplied by Company for inclusion or
incorporation by reference in the joint proxy statement to be distributed in
connection with the Acquiror and Company's respective meetings of stockholders
to vote upon this Agreement, (the "Proxy Statement") or the registration
statement on Form S-4 (such registration
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statement, together with any amendments thereof or supplements thereto being the
"Registration Statement") to be filed by Acquiror with the SEC will, in the case
of the Registration Statement, at the time it becomes effective and at the
Effective Time, or, in the case of the Proxy Statement or any amendments thereof
or supplements thereto, at the time of the mailing of the Proxy Statement and
any amendments or supplements thereto and at the time of the meetings of
stockholders to be held in connection with the Merger, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The Proxy Statement
will comply as to form in all material respects with the provisions of the
Exchange Act, and the Regulations promulgated thereunder.
Section 4.14 Employee Plans; Collective Bargaining Agreements. Except as
set forth in Section 4.14 of the Company's Disclosure Letter, the Company
represents and warrants as follows:
(a) Pension Plans.
(i) No "accumulated funding deficiency" (for which an excise tax is
due or would be due in the absence of a waiver) as defined in section
412 of the Code or as defined in Section 302(a)(2) of ERISA, whichever
may apply, has been incurred with respect to any Pension Plan of the
Company or any ERISA Affiliate thereof with respect to any plan year,
whether or not waived. Neither the Company nor any ERISA Affiliate
thereof has failed to pay when due any "required installment," within
the meaning of section 412(m) of the Code and Section 302(e) of ERISA,
whichever may apply, with respect to any such Pension Plan. Neither the
Company nor any ERISA Affiliate thereof is subject to any Lien imposed
under section 412(n) of the Code or Section 302(f) or 4068 of ERISA,
whichever may apply, with respect to any such Pension Plan. All "benefit
liabilities" within the meaning of Section 4001(a)(16) of ERISA, are
fully funded as of the Closing Date with respect to each such Pension
Plan as determined on a termination basis using the assumed interest
rate set forth in each Pension Plan.
(ii) Neither the Company nor any ERISA Affiliate thereof is
required to provide security to a Pension Plan under section 401(a)(29)
of the Code.
(iii) Except as otherwise disclosed in Subsection 4.14(a)of the
Company's Disclosure Letter, each Pension Plan of the Company or any
ERISA Affiliate thereof and each related trust agreement, annuity
contract or other funding instrument is qualified and tax exempt under
the provisions of Code sections 401(a) and 501(a), and each has been so
determined by the IRS, or application for such determination has been
made and is currently pending. Any such Pension Plan that has been
terminated has received a favorable determination letter from the IRS
with respect to its termination, or application for such determination
has been made and is currently pending.
(iv) Each Pension Plan of the Company or any ERISA Affiliate
thereof, related trust agreement, annuity contract or other funding
instrument is in Material compliance with its terms and, both as to form
and in operation, with the requirements prescribed by any and all Laws
which are applicable to such Pension Plan, related trust agreement,
annuity contract or other funding instrument, including without
limitation ERISA and the Code.
(v) The Company or an ERISA Affiliate thereof has paid all premiums
(and interest charges and penalties for late payment, if applicable) due
to the PBGC with respect to each Pension Plan of the Company or any
ERISA Affiliate thereof which is covered by Title IV of ERISA for each
plan year thereof for which such premiums are required. Neither the
Company nor any ERISA Affiliate thereof has engaged in, or is a
successor or parent corporation to an entity that has engaged in, a
transaction which is described in Section 4069 of ERISA. There has been
no unreported "reportable event" (as defined in Section 4043(b) of ERISA
and the PBGC regulations under such Section) requiring notice to the
PBGC with respect to any Pension Plan of the Company or any ERISA
Affiliate thereof. No filing has been made by the Company or any ERISA
Affiliate thereof with the PBGC, and no proceeding has been commenced by
the PBGC, to terminate any Pension Plan of the Company or any ERISA
Affiliate thereof. No condition exists and no event has occurred that
could
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constitute grounds for the termination of any Pension Plan of the
Company or any ERISA Affiliate thereof by the PBGC, or which could
reasonably be expected to result in liability of the Company or any
ERISA Affiliate thereof to the PBGC with respect to any such Pension
Plan, other than liabilities for premium payments. Neither the Company
nor any ERISA Affiliate thereof has, at any time, (1) ceased operations
at a facility so as to become subject to the provisions of Section
4062(e) of ERISA, (2) withdrawn as a substantial employer so as to
become subject to the provisions of Section 4063 of ERISA, or (3) ceased
making contributions to any Pension Plan of the Company or any ERISA
Affiliate thereof subject to Section 4064(a) of ERISA to which the
Company or any ERISA Affiliate thereof made contributions during the six
(6) years prior to the date hereof.
(b) Multiemployer Plans. There are no Multiemployer Plans of the
Company or any ERISA Affiliate thereof, and neither the Company nor any
ERISA Affiliate thereof has ever maintained, contributed to, or
participated or agreed to participate in any Multiemployer Plan.
(c) Welfare Plans.
(i) Each Welfare Plan of the Company or any ERISA Affiliate thereof
is in Material compliance with its terms and, both as to form and
operation, with the requirements prescribed by any and all Laws which
are applicable to such Welfare Plan, including without limitation ERISA
and the Code.
(ii) An estimate of the liabilities of the Company and any of its
ERISA Affiliates for providing retiree life and medical benefits
coverage to active and retired employees of the Company and any of its
ERISA Affiliates has been made and is reflected on the appropriate
balance sheet and books and records according to Statement of Financial
Accounting Standards No. 106. The Company or any ERISA Affiliate thereof
has the right to modify or terminate any Welfare Plans of the Company or
any ERISA Affiliate thereof that provide coverage or benefits for either
or both retired and active employees and/or their dependents and
beneficiaries.
(iii) Each Welfare Plan of the Company or any ERISA Affiliate
thereof which is a "group health plan," as defined in Section 607(1) of
ERISA, has been operated in material compliance at all times with the
provisions of Parts 6 and 7 of Title I, Subtitle B of ERISA and sections
4980B and 9801 through 9806 of the Code.
(iv) There are no Welfare Plans of the Company or any ERISA
Affiliate thereof which are self-insured "multiple employer welfare
arrangements" as such term is defined in Section 3(40) of ERISA.
(d) Benefit Arrangements.
(i) Each Benefit Arrangement of the Company or any ERISA Affiliate
thereof is in Material compliance with its terms and with the
requirements prescribed by any and all Laws which are applicable to such
Benefit Arrangement, including without limitation the Code.
(ii) Except as set forth in Subsection 4.14(d)of the Company's
Disclosure Letter, neither the Company nor any ERISA Affiliate thereof
is a party to or is bound by any severance agreement, plan, or program
(other than such an agreement, plan, or program providing for payments
of less than $50,000 in the aggregate to all participants).
(iii) Each outstanding Company Stock Options not vested or
exercisable at the Effective Time shall, as a result of the transactions
contemplated hereby, automatically and without any action by the Company
or the Board of Directors of the Company, become vested and exercisable
at the Effective Time.
(e) Fiduciary Duties and Prohibited Transactions. Neither the Company
nor any ERISA Affiliate thereof has any liability with respect to any
transaction in violation of Sections 404 or 406 of ERISA or any "prohibited
transaction," as defined in section 4975(c)(1) of the Code, for which no
exemption
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exists under Section 408 of ERISA or section 4975(c)(2) or (d) of the Code
to which any Welfare Plan or Pension Plan of the Company or any ERISA
Affiliate thereof is subject. To the Knowledge of the Company, neither the
Company nor any ERISA Affiliate thereof has participated in a violation of
Part 4 of Title I, Subtitle B of ERISA by any plan fiduciary of any Welfare
Plan or Pension Plan of the Company or any ERISA Affiliate thereof or has
any unpaid civil penalty under Section 502(1) of ERISA.
(f) Litigation. There is no Material action, Order or claim, suit,
litigation, proceeding, arbitral action, governmental audit or
investigation relating to or seeking benefits under any Employee Plan of
the Company or any ERISA Affiliate thereof that is pending or, to the
Knowledge of the Company, threatened or anticipated against the Company or
any ERISA Affiliate thereof other than routine claims for benefits.
(g) Unpaid Contributions. Neither the Company nor any ERISA Affiliate
thereof has any liability for unpaid contributions with respect to any
Employee Plan of the Company or any ERISA Affiliate thereof. The Company
and all its ERISA Affiliates have made all required contributions under
each such Employee Plan or proper accruals have been made and are reflected
on the appropriate balance sheet and books and records, including without
limitation, any accruals for vacation or sick leave which may be carried
over from one year to the next.
(h) Change of Control Payments. Except as otherwise disclosed in
Subsection 4.14(h) of the Company's Disclosure Letter, the execution of
this Agreement and the consummation of the transactions contemplated hereby
will not, either alone or in connection with another event, result in any
payment (whether of separation pay or otherwise) becoming due from the
Company or any ERISA Affiliate thereof (under an Employee Plan of the
Company or any ERISA Affiliate thereof or otherwise) to any current or
former employee or consultant of the Company or any ERISA Affiliate
thereof, or result in the vesting, acceleration of payment or increase in
the amount of any benefit payable to or in respect of any such current or
former employee or consultant of the Company or any ERISA Affiliate thereof
(under an Employee Plan of the Company or any ERISA Affiliate thereof or
otherwise).
(i) Material Adverse Effects. With respect to Employee Plans of the
Company or any ERISA Affiliate thereof, no event has occurred and there
exists no condition or set of circumstances in connection with which the
Company or any ERISA Affiliate thereof could be subject to any liability
under the terms of such Employee Plans, ERISA, the Code, or any other
applicable Law, other than any condition or set of circumstances that would
not have a Material Adverse Effect on the Company or any ERISA Affiliate
thereof.
(j) Copies of Documentation. Included in Section 4.14(j) of the
Company Disclosure Letter is a list of all Employee Plans of the Company.
The Company has delivered pursuant to this Agreement a true and complete
set of copies of (i) all Employee Plans of the Company or any ERISA
Affiliate thereof (including without limitation, employment agreements) and
related trust agreements, annuity contracts or other funding instruments as
in effect immediately prior to the date hereof, together with all
amendments thereto which will become effective at a later date; (ii) the
latest IRS determination letter obtained with respect to any such Employee
Plan qualified or exempt under section 401 or 501 of the Code; (iii) Forms
5500 including all schedules, attachments, and certified financial
statements for the most recently completed three fiscal years for each
Employee Plan of the Company or any ERISA Affiliate thereof required to
file such form, together with the most recent actuarial report, if any,
prepared by the such Employee's Plan's enrolled actuary; (iv) all summary
plan descriptions for each Employee Plan of the Company or any ERISA
Affiliate thereof required to prepare, file and distribute summary plan
descriptions; (v) all summaries furnished or made available to employees,
officers and directors of the Company or any ERISA Affiliate thereof of all
incentive compensation, other plans and fringe benefits for which a summary
plan description is not required; (vi) current registration statements on
Form S-8 and amendments thereto with respect to any Employee Plan of the
Company or any ERISA Affiliate thereof; (vii) the notifications to
employees of their rights under COBRA with respect to each
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Welfare Plan of the Company or any ERISA Affiliate thereof subject to
COBRA; and (viii) the Indemnification Agreements.
(k) No collective bargaining agreement to which the Company or any of
its Subsidiaries is a party is currently in effect or is being negotiated
by the Company or any of its Subsidiaries. There is no pending or, to the
Knowledge of the Company, threatened labor dispute, strike or work stoppage
against the Company or any of its Subsidiaries that would have a Material
Adverse Effect on the Company. Neither the Company or any of its
Subsidiaries nor any representative or employee of the Company or any of
its Subsidiaries has in the United States committed any unfair labor
practices in connection with the operation of the business of the Company
and its Subsidiaries, and there is no pending or, to the Knowledge of the
Company, threatened charge or complaint against the Company or any of its
Subsidiaries by the National Labor Relations Board or any comparable agency
of any state of the United States.
Section 4.15 Taxes. Except as set forth in Section 4.15 of the Company's
Disclosure Letter, all Tax Returns required to be filed by or on behalf of the
Company, each of its Subsidiaries, and each affiliated, combined, consolidated
or unitary group of which the Company or any of its Subsidiaries is or has been
a member have been timely filed, and all such Tax Returns are true, complete and
correct except to the extent any failure to file, or any incompletions or
inaccuracies in, filed Tax Returns would not, individually or in the aggregate,
have a Material Adverse Effect on the Company (it being understood that the
representations and warranties made in this Section 4.15, to the extent that
they relate to any group of which the Company or any of its Subsidiaries were
not the common parent, are made to the Knowledge of the Company and its
Subsidiaries). All Taxes due and owing by or with respect to the Company or any
Subsidiary of the Company have been timely paid, or adequately reserved for,
except to the extent any failure to pay or reserve would not, individually or in
the aggregate, have a Material Adverse Effect on the Company. There is no audit,
examination, claimed deficiency, refund litigation, proposed adjustment or
matter in controversy regarding any Taxes due and owing by or with respect to
the Company or any Subsidiary of the Company that would, individually or in the
aggregate, have a Material Adverse Effect on the Company. All assessments for
Taxes due and owing by or with respect to the Company or any Subsidiary of the
Company with respect to completed and settled examinations or concluded
litigation have been paid. Prior to the date of this Agreement, the Company has
provided Acquiror with written schedules setting forth the taxable years of the
Company for which the statutes of limitations with respect to federal and
Material state income taxes have not expired and with respect to federal and
Material state income taxes, those years for which examinations have been
completed, those years for which examinations are presently being conducted, and
those years for which examinations have not yet been initiated. Except as set
forth in Section 4.15 of the Company's Disclosure Letter, none of the Company or
any of its Subsidiaries is a party to any agreement, contract, arrangement or
plan, whether written or oral, that has resulted or would result, individually
or in the aggregate, in the payment of any "excess parachute payments" within
the meaning of Section 280G of the Code. The Company and each of its
Subsidiaries have complied in all material respects with all rules and
Regulations relating to the payment and withholding of Taxes, except to the
extent any such failure to comply would not, individually or in the aggregate,
have a Material Adverse Effect on the Company. Neither the Company nor any of
its Subsidiaries (i) has waived any statutory period of limitations in respect
of its or their Taxes or Tax Returns or (ii) is a party to, bound by, or has any
obligation under any Tax sharing, allocation, indemnity, or similar contract or
arrangement.
Section 4.16 Environmental Matters. Except for matters disclosed in
Section 4.16 of the Company's Disclosure Letter and except for matters that,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company, (a) the properties, operations and activities of the Company and
its Subsidiaries are in compliance with all applicable Environmental Laws; (b)
the Company and its Subsidiaries and the properties and operations of the
Company and its Subsidiaries are not subject to any existing, pending or, to the
Knowledge of the Company, threatened action, suit, investigation, inquiry or
proceeding by or before any Court or Governmental Authority under any
Environmental Law; (c) all Permits, if any, required to be obtained or filed by
the Company or any of its Subsidiaries under any Environmental Law in connection
with the business of the Company and its Subsidiaries have been obtained or
filed and are valid and currently in full
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force and effect; (d) there has been no release of any hazardous substance,
pollutant or contaminant into the environment in violation of applicable
Environmental Laws by the Company or its Subsidiaries or in connection with
their properties or operations; (e) there has been no exposure (attributable to
the action of the Company or its Subsidiaries) of any Person or property to any
hazardous substance, pollutant or contaminant in violation of applicable
Environmental Laws in connection with the properties, operations and activities
of the Company and its Subsidiaries; and (f) the Company and its Subsidiaries
have made available to the Acquiror all internal and external environmental
audits, studies and reports and all correspondence on substantial environmental
matters (in each case relevant to the Company or any of its Subsidiaries) in the
possession of the Company or its Subsidiaries.
Section 4.17 Intellectual Property. The Company or one or more of its
Subsidiaries own, or hold valid licenses under, or otherwise have the right to
use or sublicense, all foreign and domestic patents, trademarks (common law and
registered), trademark registration applications, service marks (common law and
registered), service mark registration applications, trade names and copyrights,
copyright applications, trade secrets, know-how and other proprietary
information as are necessary for the conduct of the business of the Company and
its Subsidiaries as currently conducted except for any such intellectual
property as to which the failure to own or hold licenses would not in the
aggregate have a Material Adverse Effect on the Company. Except as set forth in
Section 4.17 of the Company's Disclosure Letter, neither the Company nor any of
its Subsidiaries is currently in receipt of any notice of infringement or notice
of conflict with the asserted rights of others in any patents, trademarks,
service marks, trade names, trade secrets, copyrights and other proprietary
rights owned or held by other Persons, except, in each case, for matters that
would not in the aggregate have a Material Adverse Effect on the Company.
Neither the execution and delivery of this Agreement nor consummation of the
transactions contemplated hereby will violate or breach the terms of or cause
any cancellation of any Material license held by the Company or any of its
Subsidiaries under any patent, trademark, service mark, trade name, trade secret
or copyright. Except as set forth in Section 4.17, of the Company's Disclosure
Letter, no claim of infringement of any patent, copyright, trade secret, or
other proprietary right is pending against the Company.
Section 4.18 Insurance. The Company and its Subsidiaries own and are
beneficiaries under all such insurance policies/fidelity bonds underwritten by
reputable insurers/sureties that, as to risks insured, coverages and related
limits and deductibles, are customary in the industries in which the Company and
its Subsidiaries operate. To the Knowledge of the Company, all such
policies/bonds are in full force and effect and all premiums due thereon have
been paid. Section 4.18 of the Company's Disclosure Letter sets forth a list,
including the name of the underwriter/surety, the risks insured, coverage and
related limits and deductibles, expiration dates and significant riders, of the
principal insurance policies/fidelity bonds currently maintained by the Company
and its Subsidiaries.
Section 4.19 Pooling; Tax Matters. To the Knowledge of the Company after
due investigation, neither the Company nor any of its Affiliates has taken or
agreed to take any action or failed to take any action that would prevent (a)
the Merger from being treated for financial accounting purposes as a "pooling of
interests" in accordance with GAAP and the Regulations and interpretations of
the Commission or (b) the Merger from constituting a reorganization within the
meaning of Section 368(a) of the Code.
Section 4.20 Affiliates. Section 4.20 of the Company's Disclosure Letter
contains a true and complete list of all Persons who, to the Knowledge of the
Company, may be deemed to be Affiliates of the Company, excluding all its
Subsidiaries but including all directors and executive officers of the Company.
Section 4.21 Brokers. No broker, finder, investment banker or other
Person (other than Prudential Securities, Inc.) is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company. Prior to the date of this Agreement, the Company has made available
to the Acquiror a complete and correct copy of all agreements between the
Company and Prudential Securities, Inc. pursuant to which such firm will be
entitled to any payment relating to the transactions contemplated by this
Agreement.
Section 4.22 Opinion of Financial Advisor. The Board of Directors of the
Company has received the opinion of Prudential Securities, Inc., the Company's
financial advisor, substantially to the effect that the
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consideration to be received by the holders of the Company Common Stock in the
Merger is fair to such holders from a financial point of view, a copy of which
has been provided to the Acquiror.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
The Acquiror Companies hereby represent and warrant to the Company that:
Section 5.1 Organization and Qualification; Subsidiaries. The Acquiror,
Newco and each other Subsidiary of the Acquiror are legal entities duly
organized, validly existing and in good standing under the Laws of their
respective jurisdictions of incorporation or organization, have all requisite
power and authority to own, lease and operate their respective properties and to
carry on their business as it is now being conducted and are duly qualified and
in good standing to do business in each jurisdiction in which the nature of the
business conducted by them or the ownership or leasing of their respective
properties makes such qualification necessary, other than any matters, including
the failure to be so duly qualified and in good standing, that would not
individually or in the aggregate have a Material Adverse Effect on the Acquiror.
Section 5.1 of the Acquiror's Disclosure Letter sets forth, as of the date of
this Agreement, a true and complete list of all Significant Subsidiaries of the
Acquiror, together with the jurisdiction of incorporation of each such
Subsidiary and the percentage of each such Subsidiary's outstanding capital
stock or other equity interests owned by the Acquiror or another Subsidiary of
the Acquiror. Neither the Acquiror, Newco nor any other Subsidiary of the
Acquiror owns an equity interest in any partnership or joint venture arrangement
or other business entity that is Material to the Acquiror.
Section 5.2 Articles of Incorporation; Bylaws. The Acquiror has
heretofore marked for identification and furnished to the Company complete and
correct copies of the articles of incorporation and the bylaws or the equivalent
organizational documents, in each case as amended or restated to the date
hereof, of the Acquiror and each of its Significant Subsidiaries. None of the
Acquiror, Newco or any of the Acquiror's Significant Subsidiaries is in
violation of any of the provisions of its articles of incorporation or bylaws
(or equivalent organizational documents).
Section 5.3 Capitalization.
(a) The authorized capital stock of the Acquiror consists of (i)
60,000,000 shares of Acquiror Common Stock of which as of February 25,
1998, 24,311,832 shares were issued and outstanding, all of which are duly
authorized, validly issued, fully paid and nonassessable and, were not
issued in violation of any preemptive or similar rights of any Person, and
(ii) 1,000,000 shares of Preferred Stock, par value $.01 per share, of
which none is issued. Since February 25, 1998, the Acquiror as not issued
any shares of Acquiror Common Stock, except pursuant to the exercise of
outstanding Acquiror Stock Options and otherwise to the extent set forth in
Subsection 5.3(a) of the Acquiror's Disclosure Letter. Except as set forth
in Subsection 5.3(a) of the Acquiror's Disclosure Letter, since January 22,
1998, the Acquiror has not granted any options for, or other rights to
purchase, shares of the capital stock of the Acquiror.
(b) Except as set forth in Subsection 5.3(b) of the Acquiror's
Disclosure Letter or in the Acquiror's Consolidated Financial Statements,
no shares of capital stock of Acquiror are reserved for issuance, and there
are no contracts, agreements, commitments or arrangements obligating the
Acquiror to offer, sell, issue, grant, pledge, dispose of or encumber any
shares of, or any options, warrants or rights of any kind to acquire any
shares of, or any securities that are convertible into or exchangeable for
any shares of, capital stock of the Acquiror, to redeem, purchase or
acquire, or offer to purchase or acquire, any outstanding shares of, or any
outstanding options, warrants or rights of any kind to acquire any shares
of, or any outstanding securities that are convertible into or exchangeable
for any shares of, capital stock of the Acquiror or to grant any Lien on
any shares of capital stock of the Acquiror.
(c) (i) All the issued and outstanding shares of capital stock of, or
other equity interests in, each Subsidiary of the Acquiror are owned by the
Acquiror or one of its Subsidiaries, have been duly authorized and are
validly issued, and, with respect to capital stock, are fully paid and
nonassessable, and
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were not issued in violation of any preemptive or similar rights of any
Person; (ii) all such issued and outstanding shares, or other equity
interests, that are owned by the Acquiror or one of its Subsidiaries are
owned free and clear of all Liens; (iii) no shares of capital stock of, or
other equity interests in, any Subsidiary of the Acquiror are reserved for
issuance, and there are no contracts, agreements, commitments or
arrangements obligating the Acquiror or any of its Subsidiaries (A) to
offer, sell, issue, grant, pledge, dispose of or encumber any shares of
capital stock of, or other equity interests in, or any options, warrants or
rights of any kind to acquire any shares of capital stock of, or other
equity interests in, or any securities that are convertible into or
exchangeable for any shares of capital stock of, or other equity interests
in, any of the Subsidiaries of the Acquiror or (B) to redeem, purchase or
acquire, or offer to purchase or acquire, any outstanding shares of capital
stock of, or other equity interests in, or any outstanding options,
warrants or rights of any kind to acquire any shares of capital stock of or
other equity interest in, or any outstanding securities that are
convertible into or exchangeable for, any shares of capital stock of, or
other equity interests in, any of the Subsidiaries of the Acquiror or (C)
to grant any Lien on any outstanding shares of capital stock of, or other
equity interest in, any of the Subsidiaries of the Acquiror; except with
respect to clause (i), (ii) or (iii) of this Subsection 5.3(c) for such
matters that would not in the aggregate have a Material Adverse Effect on
the Acquiror.
(d) There are no voting trusts, proxies or other agreements,
commitments or understandings of any character to which the Acquiror or any
of its Significant Subsidiaries or, to the Knowledge of the Acquiror, any
third Person is a party or by which the Acquiror or any of its Significant
Subsidiaries is bound with respect to the voting of any shares of capital
stock of the Acquiror or any of its Significant Subsidiaries.
Section 5.4 Authorization of Agreement. Each of the Acquiror Companies
has all requisite corporate power and authority to execute and deliver this
Agreement and each instrument required hereby to be executed and delivered by it
at the Closing, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery by the Acquiror Companies of this Agreement and each instrument
required hereby to be executed and delivered by the Acquiror Companies at the
Closing and the performance of their respective obligations hereunder and
thereunder have been duly and validly authorized by all requisite corporate
action (including stockholder action) on the part of the Acquiror Companies
(other than approval of the issuance of shares of Acquiror Common Stock pursuant
to this Agreement by the Stockholders of the Acquiror, which approval and
adoption shall require the affirmative vote of the holders of not less than a
majority of the shares of Acquiror Common Stock present or represented at the
Acquiror's Stockholders' Meeting). This Agreement has been duly executed and
delivered by each of the Acquiror Companies and (assuming due authorization,
execution and delivery hereof by the Company) constitutes a legal, valid and
binding obligation of each of the Acquiror Companies, enforceable against each
of the Acquiror Companies in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter in
effect relating to creditors' rights general or to general principles of equity.
Section 5.5 Approvals. Except for the applicable requirements, if any, of
(a) the Securities Act, (b) the Exchange Act, (c) state securities or blue sky
Laws, (d) the HSR Act, (e) the NYSE, (f) the filing and recordation of
appropriate merger documents as required by the DGCL and (g) those Laws,
Regulations and Orders noncompliance with which would not have in the aggregate
a Material Adverse Effect on the ability of the Acquiror or Newco to perform its
obligations under this Agreement or a Material Adverse Effect on the Acquiror,
no filing or registration with, no waiting period imposed by and no Permit,
Order or consent of, any Court or Governmental Authority is required under any
Law, Regulation or Order applicable to the Acquiror or any of its Subsidiaries
to permit the Acquiror or Newco to execute, deliver or perform this Agreement or
any instrument required hereby to be executed and delivered by it at the
Closing.
Section 5.6 No Violation. Assuming effectuation of all filings and
registrations with, termination or expiration of any applicable waiting periods
imposed by and receipt of all Permits, Orders or consents of, Courts or
Governmental Authorities indicated as required in Section 5.5 hereof, neither
the execution and delivery by the Acquiror or Newco of this Agreement or any
instrument required hereby to be executed and delivered by the Acquiror or Newco
at the Closing nor the performance by the Acquiror or Newco of their
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respective obligations hereunder or thereunder will violate or breach the terms
of or cause a default under any Law, Regulation or Order applicable to the
Acquiror or Newco, the articles of incorporation or bylaws of the Acquiror or
Newco or any contract, note, bond, mortgage, indenture, license, agreement or
other instrument to which the Acquiror or any of its Subsidiaries is a party or
by which it or any of its properties or assets is bound, or with the passage of
time, the giving of notice or the taking of any action by a third Person, have
any of the effects set forth in clause (a) of this Section 5.6, except in any
such case for any matters described in this Section 5.6 that would not have in
the aggregate a Material Adverse Effect upon the ability of the Acquiror or
Newco to perform its obligations under this Agreement or a Material Adverse
Effect on the Acquiror. Prior to the execution of this Agreement, the Board of
Directors of the Acquiror has taken all requisite actions to cause the
transactions contemplated by this Agreement to be exempt from the provisions of
Section 3-601 et. seq. of the MGCL and to ensure that the execution, delivery
and performance of this Agreement by the Acquiror will not cause any Acquiror
Rights to become exercisable.
Section 5.7 Reports.
(a) Since January 31, 1994, the Acquiror and its Subsidiaries have
timely filed (i) all SEC Reports required to be filed with the Commission
and (ii) all other Reports required to be filed with any other Governmental
Authorities, including state securities administrators except where the
failure to file any such Reports would not in the aggregate have a Material
Adverse Effect on the Acquiror. The Reports, including those filed after
the date of this Agreement and prior to the Effective Time, (i) were
prepared in all Material respects in accordance with the requirements of
applicable Law (including, with respect to the SEC Reports, the Securities
Act and the Exchange Act, as the case may be and (ii) in the case of SEC
Reports, did not at the time they were filed contain any untrue statement
of a Material fact or omit to state a Material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(b) The Acquiror's Consolidated Financial Statements and any
consolidated financial statements of the Acquiror (including any related
notes thereto) contained in any SEC Reports of the Acquiror filed with the
Commission since January 31, 1994 (i) have been or will have been prepared
in accordance with the published Regulations of the Commission and in
accordance with GAAP consistently applied during the periods involved
(except (A) to the extent required by changes in GAAP and (B), with respect
to SEC Reports of the Acquiror filed prior to the date of this Agreement,
as may be indicated in the notes thereto), and (ii) fairly present the
consolidated financial position of the Acquiror and its Subsidiaries as of
the respective dates thereof and the consolidated results of their
operations and cash flows for the periods indicated (including, in the case
of any unaudited interim financial statements, reasonable estimates of
normal and recurring year-end adjustments).
(c) There exist no liabilities or obligations of the Acquiror and its
Subsidiaries that are Material to the Acquiror, whether accrued, absolute,
contingent or threatened, which would be required to be reflected, reserved
for or disclosed under GAAP in consolidated financial statements of the
Acquiror (including the notes thereto) as of and for the period ended on
the date of this representation and warranty, other than liabilities or
obligations that are adequately reflected, reserved for or disclosed in the
Acquiror's Consolidated Financial Statements, liabilities or obligations
incurred in the ordinary course of business of the Acquiror and its
Subsidiaries since November 1, 1997, and (iii) liabilities or obligations
the incurrence of which are not prohibited by Subsection 6.2(b) hereof.
Section 5.8 No Material Adverse Effect; Conduct.
(a) Since January 31, 1997, (i) no event or events (other than any
event that is directly attributable to the prospect of consummation of the
Merger or is of general application to all or a substantial portion of the
Acquiror's industry and other than any event that is expressly subject to
any other representation or warranty contained in this Article V) have, to
the Knowledge of the Acquiror, occurred that, individually or in the
aggregate, would constitute or cause a Material Adverse Effect on the
Acquiror and (ii) there have not been any change or changes in the business
condition (financial or other), results of operations, properties, assets
or liabilities of the Acquiror or its Subsidiaries which would have in the
aggregate a Material Adverse Effect on the Acquiror.
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(b) During the period from January 31, 1997 to the date of this
Agreement, neither the Acquiror nor any of its Subsidiaries has engaged in
any conduct that is proscribed during the period from the date of this
Agreement to the Effective Time by subsections (i) through (viii) of
Subsection 6.2(b) hereof or agreed in writing or otherwise during such
period prior to the date of this Agreement to engage in any such conduct.
Section 5.9 Litigation; Compliance with Laws. There are no actions,
suits, investigations or proceedings (including any proceedings in arbitration)
pending or, to the Knowledge of the Acquiror, threatened against the Acquiror or
any of its Subsidiaries, at law or in equity, in any Court or before or by any
Governmental Authority, except actions, suits or proceedings that (a) are set
forth in Section 5.9 or any other Section of the Acquiror's Disclosure Letter or
(b) in the aggregate, would not have a Material Adverse Effect on the Acquiror.
Except as set forth in Section 5.9 of the Acquiror's Disclosure Letter, neither
the Acquiror nor any of its Subsidiaries is subject to any written agreement,
directive, memorandum of understanding or Order with or by any Court or
Governmental Authority restricting its operation or requiring any Material
actions. Except as set forth in Section 5.9 of the Acquiror's Disclosure Letter,
the Acquiror and its Subsidiaries are in compliance with all applicable Laws and
Regulations and are not in default with respect to any Order applicable to the
Acquiror or any of its Subsidiaries, except such events of noncompliance or
defaults that, individually or in the aggregate, would not have a Material
Adverse Effect on the Acquiror.
Section 5.10 Information in Disclosure Documents and Registration
Statement. None of the information to be supplied by the Acquiror for inclusion
or incorporation by reference in the Proxy Statement or the Registration
Statement to be filed by Acquiror with the SEC will, in the case of the
Registration Statement, at the time it becomes effective and at the Effective
Time, or, in the case of the Proxy Statement or any amendments thereof or
supplements thereto, at the time of the mailing of the Proxy Statement and any
amendments or supplements thereto and at the time of the meetings of
stockholders to be held in connection with the Merger, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The Proxy Statement
will comply as to form in all material respects with the provisions of the
Exchange Act, and the Regulations promulgated thereunder. The Registration
Statement will comply as to form in all material respects with the provisions of
the Securities Act and the Regulations thereunder.
Section 5.11 Pooling; Tax Matters. To the Knowledge of the Acquiror after
due investigation, neither the Acquiror nor any of its Affiliates has taken or
agreed to take any action or failed to take any action that would prevent (a)
the Merger from being treated for financial accounting purposes as a "pooling of
interests" in accordance with GAAP and the Regulations and interpretations of
the Commission or (b) the Merger from constituting a reorganization within the
meaning of Section 368(a) of the Code.
Section 5.12 Affiliates. Section 5.12 of the Acquiror's Disclosure Letter
contains a true and complete list of all Persons who, to the Knowledge of the
Acquiror, may be deemed to be Affiliates of the Acquiror, excluding all its
Subsidiaries but including all directors and executive officers of the Acquiror.
Section 5.13 Brokers. No broker, finder, investment banker or other
Person (other than Adams, Harkness & Hill, Inc.) is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Acquiror.
Section 5.14 Opinion of Financial Advisor. The Board of Directors of the
Acquiror has received the opinion of Adams, Harkness & Hill, Inc., the
Acquiror's financial advisor, substantially to the effect that the consideration
to be received by the holders of the Company Common Stock in the Merger is fair
to the Acquiror from a financial point of view, a copy of which has been
provided to the Company.
Section 5.15 Operations of Newco. Newco has been formed solely for the
purpose of engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted its operations only as contemplated
hereby.
Section 5.16 Proposal to Acquire the Acquiror. As of the date hereof,
there is not pending any bona fide proposal received by the Acquiror regarding
any merger, consolidation, or reorganization of the Acquiror with
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any other Person as a result of which less than a majority of the combined
voting power of the securities of the Person surviving such transaction would be
held immediately after such transaction by all the holders of Acquiror Common
Stock immediately prior to such transaction.
ARTICLE VI
COVENANTS
Section 6.1 Affirmative Covenants.
(a) Each of the Company and the Acquiror hereby covenants and agrees
that, prior to the Effective Time, unless otherwise expressly contemplated
by this Agreement or consented to in writing by the other, it will and will
cause its Subsidiaries to operate its business in the usual and ordinary
course consistent with past practice and use all reasonable efforts to
preserve substantially intact its business organization, maintain its
rights and franchises, retain the services of its respective key employees
and preserve the goodwill of those having business relationships with it,
including customers and suppliers. The Company further covenants and agrees
that prior to the Effective Time, except as otherwise consented to in
writing by the Acquiror, it will and will cause its Subsidiaries to
maintain and keep its properties and assets in as good repair and condition
as at present, ordinary wear and tear excepted, and use all reasonable
efforts to keep in full force and effect insurance and bonds comparable in
amount and scope of coverage to that currently maintained, except in each
case for any matters that, individually or in the aggregate, would not have
a Material Adverse Effect on the Company.
(b) Each of the Acquiror and Newco hereby covenants and agrees that,
at the Effective Time, the certificate of incorporation and bylaws of Newco
will contain indemnification provisions substantially identical to those
currently contained in Newco's certificate of incorporation and bylaws.
Section 6.2 Negative Covenants.
(a) The Company covenants and agrees that, except as set forth in
Subsection 6.2(a) of the Company's Disclosure Letter or except as expressly
contemplated by this Agreement or otherwise consented to in writing by the
Acquiror, from the date of this Agreement until the Effective Time, it will
not do, and will not permit any of its Subsidiaries to do, any of the
following:
(i) (A) make any change in the compensation payable to or to become
payable to any of its directors, officers or employees, except for
changes in the ordinary course of business and consistent with past
practice; (B) grant any severance or termination pay (other than
pursuant to the normal severance policy of the Company or its
Subsidiaries as in effect on the date of this Agreement) to, or enter
into or amend any employment, severance, termination or other similar
agreement, with, any director, officer or employee, either individually
or as part of a class of similarly situated Persons; (C) establish,
adopt or enter into any Employee Plan; (D) except as may be required by
applicable Law and actions that are not inconsistent with the provisions
of Section 7.8 of this Agreement, amend (including the acceleration of
vesting, waiving of performance criteria or the adjustment of awards or
any other actions permitted upon a change in control of such party or a
filing under Section 13(d) or 14(d) of the Exchange Act with respect to
such party) any of the Employee Plans of such Person; or (E) make any
loans to any of its officers, directors or employees or make any changes
in its existing borrowing or lending arrangements for or on behalf of
any such Persons;
(ii) declare or to pay any dividend on, or to make any other
distribution in respect of, outstanding shares of capital stock, except
for dividends by a wholly-owned Subsidiary of the Company to the Company
or another wholly-owned Subsidiary of the Company.
(iii) (A) redeem, purchase or acquire, or offer to purchase or
acquire, any outstanding shares of capital stock of, or other equity
interests in, or any securities that are convertible into or
exchangeable for any shares of capital stock of, or other equity
interests in, or any outstanding options, warrants or rights of any kind
to acquire any shares of capital stock of, or other equity interests in,
the Company or any of its Subsidiaries; (B) effect any reorganization or
recapitalization;
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or (C) split, combine or reclassify any of the capital stock of, or
other equity interests in, the Company or any of its Subsidiaries or
issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for, shares of such capital
stock or such equity interests, other than intercompany transfers among
the Company and its wholly-owned Subsidiaries or among such wholly-owned
Subsidiaries;
(iv) (A) offer, sell, issue or grant, or authorize the offering,
sale, issuance or grant, of any shares of capital stock of, or other
equity interests in, or any securities convertible into or exchangeable
for any shares of capital stock of, or other equity interests in, or any
options, warrants or rights of any kind to acquire any shares of capital
stock of, or other equity interests in, the Company or any of its
Subsidiaries, except for unissued shares reserved for issuance upon the
exercise of outstanding employee stock options; (B) amend or otherwise
modify the terms (as in effect on the date of this Agreement) of any
outstanding options, warrants or rights of any kind to acquire any
shares of capital stock of, or other equity interests in, the Company or
any of its Subsidiaries the effect of which will be to make such terms
more favorable to the holders thereof (except as may be required by
ERISA or other applicable Laws); or (C) grant any Lien with respect to
any shares of capital stock of, or other equity interests in, any
Subsidiary of the Company;
(v) acquire or agree to acquire, by merging or consolidating with,
by purchasing an equity interest in or a portion of the assets of, or in
any other manner, any business or any corporation, partnership,
association or other business organization or division thereof, or
otherwise to acquire any assets of any other Person (other than the
purchase of assets from suppliers or vendors in the ordinary course of
business and consistent with past practice);
(vi) sell, lease, exchange or otherwise dispose of, or to grant any
Lien (other than a Permitted Encumbrance) with respect to, any of the
assets of the Company or any of its Subsidiaries that are Material to
the Company or such Subsidiary, except for dispositions of assets and
inventories in the ordinary course of business and consistent with past
practice and dispositions of assets and incurrence of purchase money
Liens incurred in connection with the original acquisition of assets and
secured by the assets acquired in an amount not to exceed $250,000 in
the aggregate;
(vii) adopt any amendments to its certificate of incorporation or
bylaws or other organizational documents;
(viii) (A) change any of its methods of accounting in effect at
December 31, 1996, except as may be required to comply with GAAP, (B)
make or rescind any election relating to Taxes (other than any election
that must be made periodically that is made consistent with past
practice), (C) settle or compromise any claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or controversy relating to
Taxes (except where the cost to the Company and its Subsidiaries of such
settlements or compromises, individually or in the aggregate, does not
exceed $250,000) or (D) change any of its methods of reporting income or
deductions for U.S. federal income tax purposes from those employed in
the preparation of the U.S. federal income tax returns for the taxable
year ending December 31, 1996, except as may be required by Law;
(ix) incur, assume, guarantee, endorse or otherwise become liable
or responsible (whether directly, contingently or otherwise) for any
obligations for borrowed money or purchase money indebtedness (other
than purchase money indebtedness as to which Liens may be granted as
permitted by Subsection 6.2(a)(vi) hereof) that are Material to the
Company, whether or not evidenced by a note, bond, debenture or similar
instrument, except drawings under credit/lease lines existing at the
date of this Agreement, or otherwise in the ordinary course of business
consistent with past practice (including purchase money indebtedness as
to which Liens may be granted pursuant to Subsection 6.2(a)(vi) hereof);
(x) release any third Person from its obligations under any
existing standstill agreement relating to an Acquisition Proposal (as
defined herein) or otherwise under any confidentiality agreement or
similar agreement;
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(xi) enter into any Material Contract with any third Person (other
than customers and vendors in the ordinary course of business) which
provides for an exclusive arrangement with that third Person or is
substantially more restrictive on the Company or any of its Subsidiaries
or substantially less advantageous to the Company or any of its
Subsidiaries than Material Contracts existing on the date hereof;
(xii) propose, adopt, approve or implement any stockholder rights
plan or similar agreements, which could have the effect of restricting,
prohibiting, impeding or otherwise affecting the consummation of the
transactions contemplated by this Agreement, the Voting Agreement or the
Option Agreement, in each case by the respective parties thereto;
(xiii) knowingly take or allow to be taken any action which would
jeopardize the treatment of the Acquiror's acquisition of the Company as
a pooling of interests for accounting purposes or knowingly take any
action that would jeopardize qualification of the Merger as a
reorganization within the meaning of Section 368(a) of the Code; or
(xiv) agree in writing or otherwise to do any of the foregoing.
(b) The Acquiror covenants and agrees that, except as set forth in
Subsection 6.2(b) of the Acquiror's Disclosure Letter or except as
expressly contemplated by this Agreement or otherwise consented to in
writing by the Company, from the date of this Agreement until the Effective
Time, it will not do, and will not permit any of its Subsidiaries to do,
any of the following:
(i) declare or to pay any dividend on, or to make any other
distribution in respect of, outstanding shares of capital stock, except
for dividends by a wholly-owned Subsidiary of such Person to such Person
or another wholly-owned Subsidiary of such Person;
(ii) (A) redeem, purchase or acquire, or offer to purchase or
acquire, any outstanding shares of capital stock of, or other equity
interests in, or any securities that are convertible into or
exchangeable for any shares of capital stock of, or other equity
interests in, or any outstanding options, warrants or rights of any kind
to acquire any shares of capital stock of, or other equity interests in,
the Acquiror or any of its Subsidiaries (other than (1) any such
acquisition by the Acquiror or any of its wholly-owned Subsidiaries
directly from any wholly-owned Subsidiary of the Acquiror in exchange
for capital contributions or loans to such Subsidiary, (2) any
repurchase, forfeiture or retirement of shares of Acquiror Common Stock
or Acquiror Stock Options occurring pursuant to the terms (as in effect
on the date of this Agreement) of any existing Employee Plan of the
Acquiror or any of its Subsidiaries, (3) any periodic purchase of
Acquiror Common Stock for allocation to employees' accounts occurring
pursuant to the terms (as in effect on the date of this Agreement) of
any existing Employee Plan of the Acquiror or any of its Subsidiaries
and (4) any redemption, purchase or acquisition by a Subsidiary of the
Acquiror that would not have a Material Adverse Effect on the Acquiror)
or (B) effect any reorganization or recapitalization other than any
reorganization or recapitalization that would not have a Material
Adverse Effect on the ability of the Acquiror to perform its obligations
under this Agreement;
(iii) offer, sell, issue or grant, or authorize the offering, sale,
issuance or grant, of any shares of capital stock of, or other equity
interests in, any securities convertible into or exchangeable for any
shares of capital stock of, or other equity interests in, or any
options, warrants or rights of any kind to acquire any shares of capital
stock of, or other equity interests in, the Acquiror or any of its
Subsidiaries, other than issuances of Acquiror Common Stock (A) upon the
exercise of Acquiror Stock Options outstanding at the date of this
Agreement in accordance with the terms thereof (as in effect on the date
of this Agreement), (B) upon the expiration of any restrictions upon
issuance of any grant existing at the date of this Agreement of
restricted stock or stock bonus pursuant to the terms (as in effect on
the date of this Agreement) of any Employee Plan of the Acquiror or any
of its Subsidiaries, or (C) any periodic issuance of shares of Acquiror
Common Stock or Acquiror Stock Options pursuant to the terms (as in
effect on the date of this Agreement) of any Employee Plan of the
Acquiror or any of its Subsidiaries, other than any such offer, sale,
issuance or grant that would
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not have a Material Adverse Effect on the Acquiror or a Material Adverse
Effect on the ability of the Acquiror to perform its obligations under
this Agreement;
(iv) acquire or agree to acquire, by merging or consolidating with,
by purchasing an equity interest in or a portion of the assets of, or in
any other manner, any business or any corporation, partnership,
association or other business organization or division thereof, or
otherwise to acquire any assets of any other Person (other than the
purchase of assets from suppliers or vendors in the ordinary course of
business and consistent with past practice and acquisitions of equity
interests, assets and businesses that would not have a Material Adverse
Effect on the Acquiror or the ability of the Acquiror to perform its
obligations under this Agreement);
(v) sell, lease, exchange or otherwise dispose of, or grant any
Lien (other than a Permitted Encumbrance) with respect to, any of the
assets of the Acquiror or any of its Subsidiaries that are Material to
the Acquiror, except for dispositions of assets in the ordinary course
of business and consistent with past practice and dispositions of assets
and incurrences of Liens that would not have a Material Adverse Effect
on the Acquiror or the ability of the Acquiror to perform its
obligations under this Agreement;
(vi) adopt any amendments to its charter or bylaws or other
organizational documents that would alter the terms of the Acquiror's
Common Stock or would have a Material Adverse Effect on the Acquiror or
the ability of the Acquiror or Newco to perform its obligations under
this Agreement;
(vii) incur, assume, guarantee, endorse or otherwise become liable
or responsible (whether directly, contingently or otherwise) for any
obligations for borrowed money or purchase money indebtedness (other
than purchase money indebtedness as to which Liens may be granted as
permitted by Subsection 6.2(b)(v)) that are Material to the Acquiror,
whether or not evidenced by a note, bond, debenture or similar
instrument, except drawings under credit lines existing at the date of
this Agreement, obligations incurred in the ordinary course of business
consistent with past practice and obligations that would not have a
Material Adverse Effect on the ability of the Acquiror to perform its
obligations under this Agreement;
(viii) knowingly take or allow to be taken any action which would
jeopardize the treatment of the Acquiror's acquisition of the Company as
a pooling of interests for accounting purposes or knowingly take any
action that would jeopardize qualification of the Merger as a
reorganization within the meaning of Section 368(a) of the Code; or
(ix) agree in writing or otherwise to do any of the foregoing.
Section 6.3. No Solicitation. From the date of this Agreement until the
Effective Time or the termination of this Agreement pursuant to Article IX
hereof, the Company agrees that the Company and its Subsidiaries will not, and
will cause their respective officers, directors, employees, other agents
(including, without limitation, investment bankers, attorneys or accountants)
not to, directly or indirectly, (i) take any action to solicit, initiate,
encourage, enter into any agreement relating to or otherwise facilitate any
offer or proposal for, or any indication of interest in an Acquisition Proposal,
(ii) waive any provision of any standstill or similar agreements entered into by
the Company of its Subsidiaries, or (iii) engage in or continue discussions or
negotiations with or otherwise facilitate any effort or attempt to make or
implement an Acquisition Proposal, or disclose any nonpublic information
relating to the Company or its Subsidiaries, respectively, or afford access to
their respective properties, books or records, to any Person that may be
considering making, or has made, an Acquisition Proposal. Notwithstanding the
foregoing, (i) nothing contained in this Section 6.3 will prohibit the Board of
Directors of the Company from (A) furnishing information to, or entering into
discussions or negotiations with, any Person in connection with an unsolicited
bona fide proposal in writing by such Person with respect to an Acquisition
Proposal, if, and only to the extent that (1) the Board of Directors of the
Company, after consulting with outside legal counsel to the Company, determines
in good faith that such action is required for the Board of Directors of the
Company to comply with its fiduciary duties to stockholders imposed by Law and
(2) prior to furnishing such information to, or
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entering into discussions or negotiations with, such Person, the Company
provides written notice to the Acquiror to the effect that it is furnishing
information to, or entering into discussions or negotiations with, such Person
and the Company keeps Acquiror informed of the status of the principal financial
terms of any such negotiations or discussions; or (B) complying with Rule 14e-2
promulgated under the Exchange Act with regard to an Acquisition Proposal and
(ii) taking the actions contemplated by (i) above under the circumstances
described therein will not be deemed to be a breach of this Agreement.
Section 6.4. Access and Information. Each of the parties will, and will
cause its Subsidiaries to, (i) afford to the other party and its officers,
directors, employees, accountants, consultants, legal counsel, agents and other
representatives (collectively, the "Representatives") reasonable access at
reasonable times upon reasonable prior notice to the officers, employees,
agents, properties, offices and other facilities of such party and its
Subsidiaries and to their books and records and (ii) furnish promptly to the
other party and its Representatives such information concerning the business,
properties, contracts, records and personnel of such party and its Subsidiaries
(including financial, operating and other data and information) as may be
reasonably requested, from time to time, by or on behalf of the other party. All
information obtained by the Acquiror or the Company pursuant to this Section 6.4
shall be kept confidential in accordance with the Confidentiality Agreement
dated February 5, 1998, as the same has been amended to date, between the
Acquiror and the Company.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1. Meeting of Stockholders.
(a) The Company, acting through its Board of Directors, shall, in
accordance with the DGCL and its certificate of incorporation and bylaws
promptly and duly call, give notice of, convene and hold on the same date
and at the same time as the Acquiror's Stockholders' Meeting (as defined
herein), a special meeting of the Company's stockholders to consider
approval and adoption of this Agreement and the Merger (the "Company
Stockholders' Meeting"), and the Company shall consult with the Acquiror in
connection therewith. Except as may be otherwise required for the Board of
Directors of the Company to comply with its fiduciary duties to
stockholders imposed by Law as set forth in Section 6.3 hereof, the Board
of Directors of the Company shall recommend approval and adoption of this
Agreement and the transactions contemplated hereby by the stockholders of
the Company and include in the Registration Statement and Proxy Statement a
copy of such recommendations. Except as the Board of Directors of the
Company, after consultation with outside legal counsel, shall determine in
good faith to be required to comply with its fiduciary duty to stockholders
imposed by law as set forth in Section 6.3, the Company shall use all
reasonable efforts to solicit from stockholders of the Company proxies in
favor of the approval and adoption of this Agreement and the Merger and to
secure the vote or consent of stockholders required by the DGCL and its
certificate of incorporation and bylaws to approve and adopt this Agreement
and the Merger.
(b) The Acquiror, acting through its Board of Directors, shall, in
accordance with the MGCL and its articles of incorporation and bylaws
promptly and duly call, give notice of, convene and hold, on the same date
and at the same time as the Company's Stockholders' Meeting, a special
meeting of the Acquiror's stockholders to consider approval of the issuance
of the shares of Acquiror Common Stock contemplated by this Agreement (the
"Acquiror's Stockholders' Meeting", and together, with the Company
Stockholders' Meeting, the "Stockholders' Meetings") and the Acquiror shall
consult with the Company in connection therewith. Except as the Board of
Directors of the Acquiror, after consultation with outside legal counsel,
shall determine in good faith to be required to comply with its fiduciary
duty to stockholders imposed by Law, the Board of Directors of the Acquiror
shall recommend approval and adoption of this Agreement and the
transactions contemplated hereby by the stockholders of the Acquiror and
include in the Registration Statement and Proxy Statement a copy of such
recommendation. Except as the Board of Directors, after consultation with
outside legal counsel, shall determine in good faith to be required to
comply with its fiduciary duty to stockholders imposed by Law, the Acquiror
shall use all
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reasonable efforts to solicit from stockholders of the Acquiror proxies in
favor of the issuance of such shares of Acquiror Common Stock and to secure
the vote or consent of stockholders required by the NYSE and its articles
of incorporation and bylaws to approve such issuance.
Section 7.2 Registration Statement; Proxy Statements.
(a) As promptly as practicable after the execution of this Agreement,
the Acquiror Companies will prepare and file with the Commission the
Registration Statement and Proxy Statement. Each of the Acquiror Companies
and the Company will use all reasonable efforts to have or cause the
Registration Statement to become effective as promptly as practicable, and
will take any action required to be taken under any applicable federal or
state securities Laws in connection with the issuance of shares of Acquiror
Common Stock in the Merger. The Acquiror Companies will use all reasonable
efforts to cause the Registration Statement to remain effective through the
Effective Time. Each of the Acquiror Companies and the Company will furnish
all information concerning it and the holders of its capital stock as the
other may reasonably request in connection with such actions. As promptly
as practicable after the Registration Statement shall have become
effective, the Company and the Acquiror will each mail the Proxy Statement
to its respective stockholders entitled to notice of and to vote at the
Company Stockholders' Meeting or the Acquiror Stockholders' Meeting, as
applicable. Except as the Company's Board of Directors may otherwise
determine in good faith, after consultation with outside counsel, to be
necessary to comply with its fiduciary duty to stockholders as imposed by
Law, the Proxy Statement will include the recommendation of the Company's
Board of Directors in favor of the Merger. Except as the Acquiror's Board
of Directors may otherwise determine in good faith, after consultation with
outside counsel, to be necessary to comply with its fiduciary duty to
stockholders as imposed by Law, the Proxy Statement will include the
recommendation of the Acquiror's Board of Directors in favor of the
issuance of shares of Acquiror Common Stock pursuant to the Merger. Subject
in each case to compliance with their fiduciary duties to their
stockholders, at the other's Stockholders' Meetings, each of the Acquiror
and the Company shall vote in favor of approval and adoption of this
Agreement or the issuance of Acquiror Common Stock in the Merger, as
applicable, all Acquiror Common Stock or Company Common Stock, as the case
may be, as to which it holds proxies at such time.
(b) If at any time prior to the Effective Time any event or
circumstance relating to the Company or any of its Affiliates, or its or
their respective officers or directors, should be discovered by the Company
that should be set forth in an amendment to the Registration Statement or a
supplement to the Proxy Statement, the Company will promptly inform the
Acquiror, and the Company will undertake to amend or supplement the Proxy
Statement accordingly.
(c) If at any time prior to the Effective Time any event or
circumstance relating to the Acquiror or any of its Affiliates, or to their
respective officers or directors, should be discovered by the Acquiror that
should be set forth in an amendment to the Registration Statement or a
supplement to the Proxy Statement, the Acquiror will promptly inform the
Company, and they will undertake to amend or supplement the Registration
Statement, the prospectus contained therein and/or the Proxy Statement
accordingly.
(d) No amendment or supplement to the Registration Statement or the
Proxy Statement will be made by the Acquiror or the Company without prior
consultation with the other party. The Acquiror and the Company each will
advise the other, promptly after it receives notice thereof, of the time
when the Registration Statement has become effective or any supplement or
amendment has been filed, the issuance of any stop order suspending the
effectiveness of the Registration Statement or the solicitation of proxies
pursuant to the Proxy Statement, the suspension of the qualification of the
Acquiror Common Stock issuable in connection with the Merger for offering
or sale in any jurisdiction, any request by the staff of the Commission for
amendment of the Registration Statement or the Proxy Statement, the receipt
from the staff of the Commission of comments thereon or any request by the
staff of the Commission for additional information with respect thereto.
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Section 7.3 Appropriate Action; Consents; Filings.
(a) The Company and the Acquiror will each use all reasonable efforts
(i) to take, or to cause to be taken, all appropriate action, and to do, or
to cause to be done, all things necessary, proper or advisable under
applicable Law or otherwise to consummate and make effective the
transactions contemplated by this Agreement, (ii) to obtain from any
Governmental Authorities any Permits or Orders required to be obtained by
the Acquiror or the Company or any of their Subsidiaries in connection with
the authorization, execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby, including the
Merger, (iii) to make all necessary filings, and thereafter make any other
required submissions, with respect to this Agreement and the Merger
required under (A) the Securities Act and the Exchange Act, and any other
applicable federal or state securities Laws, (B) the HSR Act, and (C) any
other applicable Law; provided that the Acquiror and the Company will
cooperate with each other in connection with the making of all such
filings, including providing copies of all such documents to the nonfiling
party and its advisors prior to filings and, if requested, will accept all
reasonable additions, deletions or changes suggested in connection
therewith. The Company and the Acquiror will furnish all information
required for any application or other filing to be made pursuant to any
applicable Law or any applicable Regulations of any Governmental Authority
(including all information required to be included in the Proxy Statement
or the Registration Statement) in connection with the transactions
contemplated by this Agreement.
(b) Each of the Company and the Acquiror will give prompt notice to
the other of (i) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection with
the Merger, (ii) any notice or other communication from any Governmental
Authority in connection with the Merger, (iii) any actions, suits, claims,
investigations or proceedings commenced or threatened in writing against,
relating to or involving or otherwise affecting the Company, the Acquiror
or their respective Subsidiaries that relate to the consummation of the
Merger; (iv) the occurrence of a default or event that, with notice or
lapse of time or both, will become a default under any Material Contract of
the Acquiror or Material Contract of the Company; and (v) any change that
is reasonably likely to have a Material Adverse Effect on the Company or
the Acquiror or is likely to delay or impede the ability of either the
Acquiror or the Company to consummate the transactions contemplated by this
Agreement or to fulfill their respective obligations set forth herein.
(c) The Acquiror Companies and the Company agree to cooperate and use
all reasonable efforts vigorously to contest and resist any action,
including legislative, administrative or judicial action, and to have
vacated, lifted, reversed or overturned any Order (whether temporary,
preliminary or permanent) of any Court of Governmental Authority that is in
effect and that restricts, prevents or prohibits the consummation of the
Merger or any other transactions contemplated by this Agreement. Each of
the Acquiror Companies and the Company also agree to take any and all
actions, including the disposition of assets or the withdrawal from doing
business in particular jurisdictions, required by any Court or Governmental
Authority as a condition to the granting of any Permit or Order necessary
for the consummation of the Merger or as may be required to avoid, lift,
vacate or reverse any legislative or judicial action which would otherwise
cause any condition to Closing not to be satisfied; provided, however, that
in no event will either party be required to take, any action that would
have an Material Adverse Effect on such party.
(d) (i) Each of the Company and Acquiror will give (or will cause
their respective Subsidiaries to give) any notices to third Persons, and
use, and cause their respective Subsidiaries to use, all reasonable efforts
to obtain any consents from third Persons (A) necessary, proper or
advisable to consummate the transactions contemplated by this Agreement,
(B) otherwise required under any contracts, licenses, leases or other
agreements in connection with the consummation of the transactions
contemplated hereby or (C) required to prevent a Material Adverse Effect on
the Company or the Acquiror from occurring prior to or after the Effective
Time.
(ii) If any party shall fail to obtain any consent from a third Person
described in Subsection 7.3(d)(i) above, such party will use all reasonable
efforts, and will take any such actions reasonably
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requested by the other parties, to limit the adverse effect upon the
Company and Acquiror, their respective Subsidiaries, and their respective
businesses resulting, or which would result after the Effective Time, from
the failure to obtain such consent.
Section 7.4 Affiliates; Pooling; Tax Treatment.
(a) The Company will use all reasonable efforts to obtain an executed
letter agreement substantially in the form of Annex C hereto from (i) each
Person identified in Section 4.20 of the Company's Disclosure Letter within
15 days following the execution and delivery of this Agreement and (ii)
from any Person who may be deemed to have become an Affiliate of the
Company after the date of this Agreement and prior to the Effective Time as
soon as practicable after attaining such status.
(b) The Acquiror will use all reasonable efforts to obtain an executed
letter agreement substantially in the form of Annex D hereto from (i) each
Person identified in Section 5.12 of the Acquiror's Disclosure Letter
within 15 days following the execution and delivery of this Agreement and
(ii) from any Person who may be deemed to have become an Affiliate of the
Acquiror after the date of this Agreement and prior to the Effective Time
as soon as practicable after attaining such status.
(c) The Acquiror Companies will not be required to maintain the
effectiveness of the Registration Statement for the purpose of resale by
stockholders of the Company who may be Affiliates of the Company pursuant
to Rule 145 under the Securities Act.
(d) Each party hereto will use all reasonable efforts to cause the
Merger to be treated for financial accounting purposes as a "pooling of
interests" and will not take, and will use all reasonable efforts to
prevent any Affiliate of such party from taking, any actions which could
prevent the Merger from being treated for financial accounting purposes as
a "pooling of interests" under GAAP.
(e) The parties hereto intend that the Merger will qualify as a
reorganization within the meaning of Section 368(a) of the Code. Each of
the parties hereto shall, and shall cause its respective Subsidiaries to,
and shall use its reasonable best efforts to cause the Merger to so
qualify.
Section 7.5 Public Announcements. The parties will consult with each
other and will mutually agree upon any press release or public announcement
pertaining to the Merger and shall not issue any such press release or make any
such public announcement prior to such consultation and agreement, except as may
be required by applicable law or by obligations pursuant to any listing
agreement with any national securities exchange or national automated quotation
system, in which case the party proposing to issue such press release or make
such public announcement shall use reasonable efforts to consult in good faith
with the other party before issuing any such press release or making any such
public announcement.
Section 7.6 Stock Exchange Listing. The Acquiror will use all reasonable
efforts to cause the shares of Acquiror Common Stock (and the associated
Acquiror Rights) to be issued in the Merger to be approved for listing (subject
to official notice of issuance) on the NYSE prior to the Effective Time. To the
Knowledge of the Acquiror, there are no facts and circumstances that would
preclude the Acquiror Common Stock (and the associated Acquiror Rights) to be
issued in the Merger from being approved for listing on the NYSE.
Section 7.7 Employee Benefit Plans.
(a) Except for obligations of the Company and its ERISA Affiliates
that are in violation of the provisions of Subsection 6.2(a) hereof, the
Acquiror hereby acknowledges and agrees to honor and to cause the Surviving
Corporation and its Subsidiaries to honor and perform all obligations of
the Surviving Corporation and its Subsidiaries (including COBRA
obligations) under all Employee Plans of the Company and its Subsidiaries,
in accordance with their terms, including without limitation, the
Indemnification Agreements set forth in Subsection 4.13 of the Company's
Disclosure Letter.
(b) The Acquiror will cause the Surviving Corporation to maintain
through December 31, 1998 (the "Benefit Continuation Period"), the Employee
Plans of the Company and its Subsidiaries set forth in Subsection 4.14(i)
of the Company's Disclosure Letter, substantially as in effect immediately
prior to the Effective Time.
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(c) From and after the Effective Time, including the Benefit
Continuation Period, the Acquiror will grant to all individuals who are
employed by the Company or its Subsidiaries on the Closing Date credit for
all their service prior to the Effective Time with the Company and its
Subsidiaries (and the respective predecessors of such entities) under all
Employee Plans of the Acquiror and its Subsidiaries in which such employees
will become eligible to participate, as if such service was service with
the Acquiror or any Subsidiary thereof. With respect to individuals who are
employed by the Company or its Subsidiaries as of the Effective Time,
Acquiror will waive all actively-at-work requirements and pre-existing
condition limitations or exclusions under the Welfare Plans of the Acquiror
and its Subsidiaries which provide medical, dental, or vision benefits or
coverage (provided, however, that no such waiver will apply to a pre-
existing condition of any employee of the Company or its Subsidiaries who
was, as of the Effective Time, excluded from participation in a similar
Welfare Plan of the Company or its Subsidiaries due to such pre-existing
condition). Furthermore, any covered expenses incurred on or before the
Effective Time by an employee (or a covered dependent thereof) of the
Company or its Subsidiaries under the Welfare Plans of the Company and its
Subsidiaries which provide medical, dental, or vision benefits or coverage
will be taken into account for purposes of satisfying any applicable
deductible, coinsurance, and out-of-pocket maximum provisions under the
Welfare Plans of the Acquiror and its Subsidiaries.
Section 7.8 Indemnification of Directors and Officers.
(a) Until six (6) years from the Effective Time, the certificate of
incorporation and bylaws of the Surviving Corporation as in effect
immediately after the Effective Time will not be amended to reduce or limit
the rights of indemnity afforded to the present and former directors and
officers of the Company thereunder, to reduce or limit the ability of the
Company to indemnify such Persons, or to hinder, delay or make more
difficult the exercise of such rights of indemnity or the ability to
indemnify. The Surviving Corporation will at all times exercise the powers
granted to it by its certificate of incorporation, its bylaws and
applicable Law to indemnify to the fullest extent possible the present and
former directors, officers, employees and agents of the Company against
claims made against them arising from their service in such capacities
prior to the Effective Time.
(b) If any claim or claims shall, subsequent to the Effective Time and
within six (6) years thereafter, be made against any present or former
director, officer, employee or agent of the Company based on or arising out
of the services of such Person prior to the Effective Time in the capacity
of such Person as a director, officer, employee or agent of the Company,
the provisions of Subsection 7.8(a) hereof respecting the certificate of
incorporation and bylaws of the Surviving Corporation will continue in
effect until the final disposition of all such claims.
(c) The Acquiror hereby agrees after the Effective Time to guarantee
the payment of the Surviving Corporation's indemnification obligations
described in Subsection 7.8(a) hereof.
(d) Notwithstanding subsection (a), (b) or (c) of this Section 7.8,
the Acquiror and the Surviving Corporation will be released from the
obligations imposed by such subsection if the Acquiror will assume the
obligations of the Surviving Corporation thereunder by operation of Law or
otherwise. Notwithstanding anything to the contrary in this Section 7.8,
neither the Acquiror nor the Surviving Corporation will be liable for any
settlement effected without its written consent, which will not be
unreasonably withheld or delayed.
(e) The Acquiror will cause to be maintained in effect until six (6)
years from the Effective Time the current policies of directors' and
officers' liability insurance maintained by the Company (or substitute
policies providing at least the same coverage and limits and containing
terms and conditions that are not materially less advantageous) with
respect to claims arising from facts or events which occurred before the
Effective Time; provided, however, that in no event will the Acquiror or
the Surviving Corporation be required to expend more than two hundred
percent (200%) of the current annual premiums paid by the Company for such
insurance; provided, further, that, if the Acquiror or the Surviving
Corporation is unable to obtain insurance for any period for two hundred
percent (200%) of the current annual premiums, then the obligation of the
Acquiror and the Surviving Corporation pursuant
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hereto will be to obtain the best coverage reasonably available under the
circumstances subject to the foregoing limitations on premiums.
(f) The provisions of this Section 7.8 are intended to be for the
benefit of, and will be enforceable by, each Person entitled to
indemnification hereunder and the heirs and representatives of such Person.
(g) The Acquiror will not, and will not permit the Surviving
Corporation to, merge or consolidate with any other Person unless the
Surviving Corporation will ensure that the surviving or resulting entity
assumes the obligations imposed by subsections (a), (b), (c) and (e) of
this Section 7.8.
Section 7.9 Newco. Prior to the Effective Time, Newco will not conduct
any business or make any investments other than as specifically contemplated by
this Agreement and will not have any assets (other than the minimum amount of
cash required to be paid to Newco for the valid issuance of its stock to the
Acquiror). The Acquiror will take all action necessary to cause Newco to perform
its obligations under this Agreement and to consummate the Merger on the terms
and conditions set forth in this Agreement.
Section 7.10 Event Notices. From and after the date of this Agreement
until the Effective Time, each party hereto will promptly notify the other party
hereto of (i) the occurrence or nonoccurrence of any event the occurrence or
nonoccurrence of which would be likely to cause any condition to the obligations
of such party to effect the Merger and the other transactions contemplated by
this Agreement not to be satisfied and (ii) the failure of such party to comply
with any covenant or agreement to be complied with by it pursuant to this
Agreement which would be likely to result in any condition to the obligations of
such party to effect the Merger and the other transactions contemplated by this
Agreement not to be satisfied. No delivery of any notice pursuant to this
Section 7.10 will cure any breach of any representation or warranty of such
party contained in this Agreement or otherwise limit or affect the remedies
available hereunder to the party receiving such notice.
Section 7.11 Assumption of Obligations to Issue Stock.
(a) At the Effective Time, automatically and without any action on the
part of the holder thereof, each outstanding Company Stock Option shall
become an option to purchase that number of shares of Acquiror Common Stock
(and associated Acquiror Rights) obtained by multiplying the number of
shares of Company Common Stock issuable upon the exercise of such option by
the Exchange Ratio at an exercise price per share equal to the per share
exercise price of such option divided by the Exchange Ratio and otherwise
upon the same terms and conditions as such outstanding options to purchase
Company Common Stock; provided, however, that in the case of any option to
which Section 421 of the Code applies by reason of the qualifications under
Section 422 or 423 of the Code, the exercise price, the number of shares
purchasable pursuant to such option and the terms and conditions of
exercise of such option shall be determined in a manner that complies with
Section 424(a) of the Code.
(b) On or prior to the Effective Time, the Company shall take or cause
to be taken all such actions, reasonably satisfactory to the Acquiror, as
may be necessary or desirable in order to authorize the transactions
contemplated by Subsection 7.11(a) hereof. Except as provided in this
Agreement or pursuant to the provisions of any Company Option Plans or
employee or director stock option agreement as in effect on the date
hereof, from the date hereof the Company will not accelerate the vesting or
exercisability of or otherwise modify the terms and conditions applicable
to the Company Stock Options.
(c) The Acquiror shall take all corporate actions necessary to reserve
for issuance a sufficient number of shares of Acquiror Common Stock (and
associated Acquiror Rights) for delivery upon exercise of the Company Stock
Options.
(d) As promptly as practicable after the Effective Time, the Acquiror
shall file one or more Registration Statements on Form S-8 (or any
successor or other appropriate forms) with respect to the shares of
Acquiror Common Stock (and associated Acquiror Rights) subject to the
Company Stock Options and shall use its reasonable efforts to maintain the
effectiveness of such registration statement or registration statements
(and maintain the current status of the prospectus or prospectuses
contained
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therein) for so long as such options remain outstanding and to comply with
applicable state securities and blue sky laws.
Section 7.12 Real Estate Transfer Tax Returns. The Company shall
cooperate with the Acquiror and Newco in the preparation and filing of any Tax
Return required to be filed with any tax authority with respect to any transfer
or deemed transfer of the beneficial ownership of the Company's real property,
including supplying in a timely manner a complete list of all real property
interests held by the Company and any information with respect to such property
that is reasonably necessary to complete any such Tax Return. The fair market
value of any such real property shall be determined by the Acquiror.
Section 7.13 Acquiror's Board of Directors and Officers. Acquiror shall
take all steps necessary to cause (i) the size of the Acquiror's Board of
Directors to be expanded to a number no larger than eight and (ii) the
appointment as of the Effective Time of L.J. Sevin, Dietrich Erdmann and Alan R.
Schuele to the Board of Directors of Acquiror, or any substitute for such
persons as shall be selected prior to the Effective Time by the Company's Board
of Directors and as shall be reasonably acceptable to Acquiror, Acquiror shall
use its best efforts to cause Messrs. Sevin, Erdmann and Schuele to be nominated
to the Acquiror's Board of Directors at the Acquiror's next annual meeting and
solicit, in good faith and with reasonable diligence, proxies in support of such
nomination. At such annual meeting Mr. Sevin shall be nominated to term of
office expiring at the annual meeting of the Acquiror's stockholders to be held
in 1999. Mr. Erdmann shall be nominated to term of office expiring at the annual
meeting of the Acquiror's stockholders to be held in 2000 and Mr. Schuele shall
be nominated to term of office expiring at the annual meeting of the Acquiror's
stockholders to be held in 2001. Acquiror shall take all steps necessary to
cause the appointment as of the Effective Time of Mr. Schuele to the office of
President and Chief Operating Officer of Acquiror.
ARTICLE VIII
CLOSING CONDITIONS
Section 8.1 Conditions to Obligations of Each Party Under This
Agreement. The respective obligations of each party to effect the Merger and
the other transactions contemplated hereby will be subject to the satisfaction
at or prior to the Effective Time of the following conditions, any or all of
which may be waived by the party entitled to the benefit thereof, in whole or in
part, to the extent permitted by applicable Law:
(a) Effectiveness of the Registration Statement. The Registration
Statement shall have become effective in accordance with the provisions of
the Securities Act and no stop order suspending the effectiveness of the
Registration Statement shall be pending before or threatened and no
proceedings for that purpose shall be in effect by the Commission.
(b) Stockholder Approval. This Agreement and the Merger shall have
been approved and adopted by the requisite vote of the stockholders of the
Company in accordance with the DGCL and the certificate of incorporation
and by-laws of the Company. The issuance of shares of Acquiror Common Stock
pursuant to this Agreement shall have been approved by the requisite vote
of the stockholders of the Acquiror in accordance with the requirements of
the NYSE and the articles of incorporation and bylaws of the Acquiror.
(c) No Order. No Court or Governmental Authority having jurisdiction
over the Company or the Acquiror shall have enacted, issued, promulgated,
enforced or entered any Law, Regulation or Order (whether temporary,
preliminary or permanent) which is then in effect and which has the effect
of making the Merger illegal or otherwise prohibiting consummation of the
Merger.
(d) Regulatory Approvals. All approvals and consents of applicable
Courts or Governmental Authorities required to consummate the Merger which
the failure to obtain would have a Material Adverse Effect on the Acquiror
or the Surviving Corporation shall have been received and all applicable
waiting periods shall have expired or been terminated.
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(e) Stock Exchange Listing. The shares of Acquiror Common Stock (and
the associated Acquiror Rights) to be issued pursuant to the Merger shall
have been approved for listing, subject to official notice of issuance, on
the NYSE.
(f) Pooling of Interests. The Acquiror shall have been advised in
writing by Coopers & Lybrand L.L.P. as of the date upon which the Effective
Time is to occur that such firm concurs with the management of Acquiror
that there is no reason why the Merger cannot be treated for financial
accounting purposes as a "pooling of interests" under GAAP. The Company
shall have been advised in writing by Ernst & Young L.L.P. as of the date
upon which the Effective Time is to occur that such firm concurs with the
management of the Company that there is no reason why the Merger cannot be
treated for financial accounting purposes as a "pooling of interests" under
GAAP.
Section 8.2 Additional Conditions to Obligations of the Acquiror
Companies. The obligations of the Acquiror Companies to effect the Merger and
the other transactions contemplated hereby shall be subject to the satisfaction
at or prior to the Effective Time of the following additional conditions, any or
all of which may be waived by the Acquiror Companies, in whole or in part, to
the extent permitted by applicable Law:
(a) Representations and Warranties. Each of the representations and
warranties of the Company contained in this Agreement to the extent it is
qualified as to Material Adverse Effect shall be true and correct and each
such representation and warranty to the extent that it is not so qualified
shall be true and correct (without regard to any other materiality
qualification) such that the aggregate effect of any inaccuracies in such
representations and warranties will not have a Material Adverse Effect on
the Company, in each case as of the date hereof and at and as of the
Effective Time as if made at and as of such time, except that those
representations and warranties which address matters only as of a
particular date shall remain true and correct as of such date. The Acquiror
Companies shall have received a certificate of the President and the Chief
Financial Officer of the Company, dated the date of the Effective Time, to
such effect.
(b) Agreements and Covenants. The Company shall have performed or
complied in all respects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the
Effective Time. The Acquiror Companies shall have received a certificate of
the President and the Chief Financial Officer of the Company, dated the
date of the Effective Time, to such effect.
(c) Tax Opinion. The Acquiror shall have received the opinion of its
tax counsel, Skadden, Arps, Slate, Meagher & Flom LLP, to the effect that
the Merger will qualify as a reorganization within the meaning of Section
368(a) of the Code. The issuance of such opinion shall be conditioned on
the receipt by such tax counsel of representation letters from each of the
Acquiror, Newco and the Company, in each case, in form and substance
reasonably satisfactory to Skadden, Arps, Slate, Meagher & Flom LLP. The
specific provisions of each such representation letter shall be in form and
substance reasonably satisfactory to such tax counsel, and each such
representation letter shall be dated on or before the date of such opinion
and shall not have been withdrawn or modified in any material respect.
Section 8.3 Additional Conditions to Obligations of the Company. The
obligations of the Company to effect the Merger and the other transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
Effective Time of the following additional conditions, any or all of which may
be waived by the Company, in whole or in part, to the extent permitted by
applicable Law:
(a) Representations and Warranties. Each of the representations and
warranties of the Acquiror Companies contained in this Agreement to the
extent it is qualified as to Material Adverse Effect shall be true and
correct and each such representation and warranty to the extent that it is
not so qualified shall be true and correct (without regard to any other
materiality qualification) such that the aggregate effect of any
inaccuracies in such representations and warranties will not have a
Material Adverse Effect on the Acquiror Companies, in each case as of the
date hereof and at and as of the Effective Time as if made at and as of
such time, except that those representations and warranties which address
matters only as of a particular date shall remain true and correct as of
such date. The Company shall have received a
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certificate of the President and the Chief Financial Officer of each of the
Acquiror Companies, dated the date of the Effective Time, to such effect.
(b) Agreements and Covenants. The Acquiror Companies shall have
performed or complied in all respects with all agreements and covenants
required by this Agreement to be performed or complied with by them on or
prior to the Effective Time. The Company shall have received a certificate
of the President and the Chief Financial Officer of each of the Acquiror
Companies, dated the date of the Effective Time, to such effect.
(c) Tax Opinion. The Company shall have received the opinion of its
tax counsel, Winstead Sechrest & Minick P.C., to the effect that the Merger
will qualify as a reorganization within the meaning of Section 368(a) of
the Code. The issuance of such opinion shall be conditioned on the receipt
by such tax counsel of representation letters from each of the Acquiror,
Newco and the Company, in each case, in form and substance reasonably
satisfactory to Winstead Sechrest & Minick P.C. The specific provisions of
each such representation letter shall be in form and substance reasonably
satisfactory to such tax counsel, and each such representation letter shall
be dated on or before the date of such opinion and shall not have been
withdrawn or modified in any material respect.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of this Agreement
and the Merger by the stockholders of the Company:
(a) by mutual consent of the Acquiror and the Company;
(b) by the Acquiror, upon a breach of any covenant or agreement on the
part of the Company set forth in this Agreement, or if any representation
or warranty of the Company shall have become untrue, in either case such
that the conditions set forth in Subsection 8.2(a) or Subsection 8.2(b)
would not be satisfied (a "Terminating Company Breach"); provided that, if
such Terminating Company Breach is curable by the Company through the
exercise of reasonable efforts, provided the Company continues to exercise
such reasonable efforts, the Acquiror may not terminate this Agreement
under this Subsection 9.1(b) unless such Terminating Company Breach is not
cured within 20 days after written notice of such breach is given by the
Acquiror to the Company;
(c) by the Company, upon breach of any covenant or agreement on the
part of the Acquiror Companies set forth in this Agreement, or if any
representation or warranty of the Acquiror Companies shall have become
untrue, in either case such that the conditions set forth in Subsection
8.3(a) or Subsection 8.3(b) would not be satisfied (a "Terminating Acquiror
Breach"); provided that, if such Terminating Acquiror Breach is curable by
the Acquiror Companies through the exercise of their reasonable efforts,
provided the Acquiror Companies continue to exercise such reasonable
efforts, the Company may not terminate this Agreement under this Subsection
9.1(c) unless such Terminating Acquiror Breach is not cured within 20 days
after written notice of such breach is given by the Company to the
Acquiror;
(d) by either Acquiror or the Company, if there shall be any Order
which is final and nonappealable permanently enjoining, restraining or
prohibiting the consummation of the Merger, unless the party relying on
such Order has not complied with its obligations under Section 7.3 hereof;
(e) by either Acquiror or the Company, if the Merger shall not have
been consummated before October 31, 1998; unless the party seeking to
terminate this Agreement has not complied with its obligations under
Section 7.3 hereof, provided, however, that the right to terminate this
Agreement under this Subsection 9.1(e)shall not be available to any party
whose failure to fulfill any obligation under this Agreement has been the
cause of, or resulted in, the failure of the Effective Time to occur on or
before the Termination Date;
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(f) by either Acquiror or the Company, if this Agreement shall fail to
receive the requisite vote for approval and adoption by the stockholders of
the Company at the Company Stockholders' Meeting;
(g) by either Acquiror or the Company if the issuance of Acquiror
Common Stock pursuant to this Agreement shall fail to receive the requisite
vote for approval by the stockholders of Acquiror at the Acquiror's
Stockholders' Meeting;
(h) by the Company, if the Pre-Closing Average Price is less than
$12.00 per share;
(i) by the Acquiror, if the Board of Directors of the Company (i)
fails to recommend approval and adoption of this Agreement and the Merger
by the stockholders of the Company or withdraws or modifies (or publicly
announces an intention to withdraw or modify) in any adverse manner its
approval or recommendation of this Agreement or the Merger; (ii) makes any
recommendation with respect to any Acquisition Proposal other than a
recommendation to reject such Acquisition Proposal; (iii) takes any action
prohibited by Section 6.3, or which would be prohibited by Section 6.3 but
for the second sentence thereof; (iv) enters into any agreement relating to
an Acquisition Proposal other than this Agreement or the Option Agreement;
or (v) resolves to do any of the foregoing; and
(j) by the Company, if the Board of Directors of the Acquiror fails to
recommend approval of the issuance of shares of Acquiror Common Stock
pursuant to this Agreement by the stockholders of the Acquiror or withdraws
or modifies (or publicly announces an intention to withdraw or modify) its
approval and recommendation in a manner materially adverse to the Company
or shall have resolved to do any of the foregoing;
The right of any party hereto to terminate this Agreement pursuant to this
Section 9.1 hereof will remain operative and in full force and effect regardless
of any investigation made by or on behalf of any party hereto, any Person
controlling any such party or any of their respective officers, directors,
representatives or agents, whether prior to or after the execution of this
Agreement.
Section 9.2 Effect of Termination.
(a) In the event of the termination of this Agreement pursuant to
Section 9.1, this Agreement will forthwith become void, and there will be
no liability on the part of the Acquiror Companies or the Company or any of
their respective officers or directors to the other and all rights and
obligations of any party hereto will cease, except (i) as set forth in this
Section 9.2 and in Section 10.1 hereof and (ii) nothing herein will relieve
any party from liability for any breach of this Agreement.
(b) If this Agreement is terminated (i) by the Acquiror pursuant to
clause (i) of Subsection 9.1(i) hereof (except under circumstances which
would permit the Company to terminate this Agreement under Subsection
9.1(h)); (ii) by the Acquiror pursuant to Subsection 9.1(i) hereof under
any circumstances other than those described in clause (i) of this
Subsection 9.2(b); (iii) by Acquiror or Company pursuant to Subsection
9.1(f) hereof because of the failure to obtain the required approval from
the Company stockholders and at the time of such termination or prior to
the Company Stockholders' Meeting there shall have been an Acquisition
Proposal (whether or not such offer, proposal, announcement or agreement
shall have been rejected or shall have been withdrawn prior to the time of
such termination or of the Company Stockholders' Meeting); or (iv) by
Acquiror as a result of Company's material breach of Section 7.3 or
Subsection 7.1(a) hereof, the Company shall promptly pay to Acquiror or the
Company by wire transfer of same day funds not later than two Business Days
after the date of such termination a termination fee of $4,528,000 (the
"Termination Fee") provided, however, that if this Agreement is terminated
by Acquiror or the Company pursuant to Subsection 9.1(f) hereof under the
circumstances described in Subsection 9.2(b)(ii) hereof, and at the time of
such termination the stockholders of the Acquiror shall have failed to
approve the issuance of Acquiror Common Stock pursuant to this Agreement,
the Acquiror shall not be entitled to the Termination Fee.
(c) If this Agreement is terminated by the Company pursuant to
Subsection 9.1(i) hereof, and at the time of such termination there shall
have been an Acquiror Acquisition Proposal (whether or not such offer,
proposal, announcement or agreement shall have been rejected or shall have
been withdrawn
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prior to the time of such termination), and the stockholders of Acquiror
shall have failed to approve the issuance of Acquiror Common Stock pursuant
this Agreement, the Acquiror shall promptly pay to the Company by wire
transfer of same day funds not later than two Business Days after the date
of such termination a termination fee of $2,000,000.
Section 9.3 Amendment. Subject to the requirements of Law, this Agreement
may be amended by the parties hereto by action taken by or on behalf of their
respective Boards of Directors at any time prior to the Effective Time;
provided, however, that, after approval of the Merger by the stockholders of the
Company, no amendment may be made which would reduce the amount or change the
type of consideration into which each share of Company Common Stock will be
converted pursuant to this Agreement upon consummation of the Merger. This
Agreement may not be amended except by an instrument in writing signed by the
parties hereto.
Section 9.4 Waiver. At any time prior to the Effective Time, any party
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other party hereto, (b) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document delivered pursuant hereto and (c) waive compliance by the other party
with any of the agreements or conditions contained herein. Any such extension or
waiver will be valid only if set forth in an instrument in writing signed by the
party or parties to be bound thereby. For purposes of this Section 9.4, the
Acquiror Companies will be deemed to be one party.
Section 9.5 Expenses. All Expenses incurred by the parties hereto will be
borne solely and entirely by the party which has incurred such Expenses;
provided, however, that the allocable share of the Acquiror Companies as a group
and the Company for all Expenses related to printing, filing and mailing the
Registration Statement and the Proxy Statement and all Commission and other
regulatory filing fees incurred in connection with the Registration Statement
and the Proxy Statement will be one-half each; and provided, further, that the
Acquiror may, at its option, pay any Expenses of the Company that are solely and
directly related to the Merger.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Effectiveness of Representations, Warranties and Agreements.
(a) Except as set forth in Subsection 10.1(b) of this Agreement, the
representations, warranties and agreements of each party hereto will remain
operative and in full force and effect regardless of any investigation made
by or on behalf of any other party hereto, any Person controlling any such
party or any of their officers, directors, representatives or agents
whether prior to or after the execution of this Agreement.
(b) The representations, warranties and agreements in this Agreement
will terminate at the Effective Time or upon the termination of this
Agreement pursuant to Article IX hereof, except that the agreements set
forth in Articles II and III and Sections 7.7, 7.8, 7.11 and 7.13 hereof
will survive the Effective Time and those set forth in Sections 7.5 and 9.2
and Article X hereof will survive termination.
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Section 10.2 Notices. All notices and other communications given or made
pursuant hereto will be in writing and will be deemed to have been duly given
upon receipt, if delivered personally, mailed by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses or sent by electronic transmission to the telecopier number specified
below:
(a) If to any of the Acquiror Companies, to:
Unitrode Corporation
7 Continental Boulevard
Merrimack, New Hampshire 03054-4334
Attention: Allan R. Campbell, Esq.
Telecopier No.: (603) 429-8771
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
One Beacon Street
Boston, Massachusetts 02108
Attention: Margaret A. Brown, Esq.
Telecopier No.: (617) 573-4822
(b) If to the Company, to:
BENCHMARQ Microelectronics, Inc.
17919 Waterview Parkway
Dallas, Texas 75252
Attention: Alan R. Schuele
Telecopier No.: (972) 437-9198
with a copy to:
Winstead Sechrest & Minick P.C
5400 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270
Attention: Robert E. Crawford, Jr., Esq.
Telecopier No.: (214) 745-5390
and
Brobeck Phleger & Harrison LLP
Spear Street Tower 26th Floor
One Market
San Francisco, CA 94105
Attention: Steve L. Camahort, Esq.
Telecopier No.: (415) 442-1010
or to such other address or telecopier number as any party may, from time to
time, designate in a written notice given in a like manner. Notice given by
telecopier will be deemed delivered on the day the sender receives telecopier
confirmation that such notice was received at the telecopier number of the
addressee. Notice given by mail as set out above will be deemed delivered three
days after the date the same is postmarked.
Section 10.3 Headings. The headings contained in this Agreement are for
reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement.
Section 10.4 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement will
nevertheless remain in full force and effect so long as the economic or legal
substance of the
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transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto will
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
Section 10.5 Entire Agreement. This Agreement (together with the Voting
Agreement and Option Agreement) constitutes the entire agreement of the parties,
and supersedes all prior agreements and undertakings (other than that certain
Mutual Confidentiality Agreement, dated as of February 5, 1998, executed by the
Acquiror and the Company), both written and oral, among the parties, with
respect to the subject matter hereof.
Section 10.6 Assignment. This Agreement may not be assigned by operation
of Law or otherwise without the prior written consent of each of the parties
hereto.
Section 10.7 Parties in Interest. This Agreement will be binding upon and
inure solely to the benefit of each party hereto, and, other than pursuant to
Section 7.7, 7.8, 7.11 and 7.13 hereof, nothing in this Agreement, express or
implied, is intended to or will confer upon any other Person any right, benefit
or remedy of any nature whatsoever under or by reason of this Agreement.
Section 10.8 Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder will impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor will any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive to, and not exclusive
of, any rights or remedies otherwise available.
Section 10.9 Governing Law. THIS AGREEMENT AND THE AGREEMENTS,
INSTRUMENTS AND DOCUMENTS CONTEMPLATED HEREBY WILL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE (EXCLUSIVE OF CONFLICTS OF
LAW PRINCIPLES). COURTS WITHIN THE STATE OF DELAWARE WILL HAVE JURISDICTION OVER
ANY AND ALL DISPUTES BETWEEN THE PARTIES HERETO, WHETHER IN LAW OR EQUITY,
ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE AGREEMENTS, INSTRUMENTS AND
DOCUMENTS CONTEMPLATED HEREBY. THE PARTIES CONSENT TO AND AGREE TO SUBMIT TO THE
JURISDICTION OF SUCH COURTS. EACH OF THE PARTIES HEREBY WAIVES, AND AGREES NOT
TO ASSERT IN ANY SUCH DISPUTE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY CLAIM THAT (I) SUCH PARTY IS NOT PERSONALLY SUBJECT TO THE JURISDICTION
OF SUCH COURTS, (II) SUCH PARTY AND SUCH PARTY'S PROPERTY IS IMMUNE FROM ANY
LEGAL PROCESS ISSUED BY SUCH COURTS OR (III) ANY LITIGATION COMMENCED IN SUCH
COURTS IS BROUGHT IN AN INCONVENIENT FORUM.
Section 10.10 Counterparts. This Agreement may be executed in multiple
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed will be deemed to be an original but all of which taken
together will constitute one and the same agreement.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
UNITRODE CORPORATION
By: /s/ ROBERT J. RICHARDSON
------------------------------------
Name: Robert J. Richardson
Title: President and Chief Executive
Officer
MERRIMACK CORPORATION
By: /s/ ROBERT J. RICHARDSON
------------------------------------
Name: Robert J. Richardson
Title: President and Chief Executive
Officer
BENCHMARQ MICROELECTRONICS, INC.
By: /s/ ALAN R. SCHUELE
------------------------------------
Name: Alan R. Schuele
Title: President and Chief Executive
Officer
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APPENDIX B
AMENDMENT TO AGREEMENT AND PLAN OF MERGER
THIS AMENDMENT TO AGREEMENT AND PLAN OF MERGER (this "Amendment") is being
entered into as of June 23, 1998, by and among Unitrode Corporation, a Maryland
corporation (the "Acquiror"), Merrimack Corporation, a Delaware corporation and
a wholly owned subsidiary of the Acquiror ("Newco"), and BENCHMARQ
Microelectronics, Inc., a Delaware corporation (the "Company").
The Acquiror, Newco and the Company are parties to an Agreement and Plan of
Merger, dated as of March 2, 1998 (the "Agreement"), and desire to amend certain
terms and provisions of the Agreement as set forth therein.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
contained herein and the consummation of the transactions contemplated by the
Agreement, the Acquiror, Newco and the Company agree as follows (with
capitalized terms used and not defined herein having their respective meanings
ascribed to them in the Agreement):
1. Defined Terms. (a) The definition of "Acquiror's Disclosure Letter" as
set forth in Section 1.2 of the Agreement is hereby amended to read in its
entirety as follows:
" 'Acquiror's Disclosure Letter' will mean a letter of even date with
the Amendment to this Agreement dated as of June 23, 1998, by and among the
Acquiror, Newco and the Company (the "Amendment") delivered by the Acquiror
to the Company concurrently with the execution of the Amendment, which,
among other things, will identify exceptions to the Acquiror's
representations and warranties contained in Article V by specific section
and subsection references."
(b) The definition of "Company's Disclosure Letter" as set forth in Section
1.2 of the Agreement is hereby amended to read in its entirety as follows:
" 'Company's Disclosure Letter' will mean a letter of even date with
the Amendment delivered by the Company to the Acquiror Companies
concurrently with the execution of the Amendment, which, among other
things, will identify exceptions to the Company's representations and
warranties contained in Article IV by specific section and subsection
references."
(c) The definition of "Exchange Ratio" as set forth in Section 1.2 of the
Agreement is hereby amended to read in its entirety as follows:
" 'Exchange Ratio' will mean the ratio of conversion of Company Common
Stock into Acquiror Common Stock pursuant to the Merger as provided in the
first sentence of Subsection 3.1(a)."
2. Merger Consideration. (a) Section 3.1(a) of the Agreement is hereby
amended to read in its entirety as follows:
"Subject to the other provisions of this Article III, each share of Company
Common Stock issued and outstanding immediately prior to the Effective Time
(excluding any Company Common Stock described in Subsection 3.1(c)) will be
converted into the right to receive one (1) share of Acquiror Common Stock
(and the associated Acquiror Right) (the "Exchange Ratio"). Notwithstanding
the foregoing, if between the date of this Agreement and the Effective Time
the outstanding shares of the Acquiror Common Stock or the Company Common
Stock shall have been changed into a different number of shares or a
different class, by reason of any stock dividend, subdivision,
reclassification, recapitalization, split, conversion, consolidation,
combination or exchange of shares, the Exchange Ratio will be
correspondingly adjusted to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, conversion, consolidation,
combination or exchange of shares."
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(b) Section 3.2 of the Agreement is hereby amended to read in its entirety
as follows:
"[THIS SECTION INTENTIONALLY LEFT BLANK.]"
3. Representations and Warranties.
(a) Section 4.8(a) of the Agreement is hereby amended to read in its
entirety as follows:
"(a) except as set forth in Subsection 4.8(a) of the Company's Disclosure
Letter, since March 31, 1998, (i) no event or events (other than any event
that is directly attributable to the prospect of consummation of the Merger
or is of general application to all or a substantial portion of the
Company's industry and other than any event that is expressly subject to
any other representation or warranty contained in this Article IV) have to
the Knowledge of the Company, occurred that, individually or in the
aggregate, would constitute or cause a Material Adverse Effect on the
Company and (ii) there have not been any change or changes (other than any
change that is directly attributable to the prospect of consummation of the
Merger or is of general application to all or a substantial portion of the
Company's industry and other than any change that is expressly subject to
any other representation or warranty contained in this Article IV) in the
business, condition (financial or other), results of operations,
properties, assets or liabilities of the Company or its Subsidiaries which
would have, in the aggregate, a Material Adverse Effect on the Company."
(b) Section 4.22 of the Agreement is hereby amended to read in its entirety
as follows:
"The Board of Directors of the Company has received the opinion of
Prudential Securities, Inc., the Company's financial advisor, substantially
to the effect that, as of June 23, 1998, the consideration to be received
by the holders of Company Common Stock in the Merger is fair to such
holders from a financial point of view, a copy of which opinion has been
provided to the Acquiror."
(c) Section 5.8(a) of the Agreement is hereby amended to read in its
entirety as follows:
"(a) Except as set forth in Subsection 5.8(a) of the Acquiror's Disclosure
Letter, since May 2, 1998, (i) no event or events (other than any event
that is directly attributable to the prospect of consummation of the Merger
or is of general application to all or a substantial portion of the
Acquiror's industry and other than any event that is expressly subject to
any other representation or warranty continued in this Article V) have to
the Knowledge of the Acquiror, occurred that, individually or in the
aggregate, would constitute or cause a Material Adverse Effect on the
Acquiror and (ii) there have not been any change or changes (other than any
change that is directly attributable to the prospect of consummation of the
Merger or is of general application to all or a substantial portion of the
Acquiror's industry and other than any change that is expressly subject to
any other representation or warranty contained in this Article V) in the
business, condition (financial or other), results of operations,
properties, assets or liabilities of the Acquiror or its Subsidiaries which
would have, in the aggregate, a Material Adverse Effect on the Acquiror."
(d) Section 5.14 of the Agreement is hereby amended to read in its entirety
as follows:
"The Board of Directors of the Acquiror has received the opinion of Adams,
Harkness & Hill, Inc., the Acquiror's financial advisor, substantially to
the effect that, as of June 23, 1998, the consideration to be received by
the holders of Acquiror Common Stock in the Merger is fair to such holders
from a financial point of view, a copy of which opinion has been provided
to the Company."
4. Covenants. Section 6.1 of the Agreement is hereby amended in its
entirety to read:
"(a) Each of the Company and the Acquiror hereby covenants and agrees that,
except as set forth in Section 6.1(a) of the Company's Disclosure Letter or
Section 6.1(a) of the Acquiror's Disclosure Letter, as the case may be,
prior to the Effective Time, unless otherwise expressly contemplated by
this Agreement or consented to in writing by the other, it will and will
cause its Subsidiaries to operate its business in the usual and ordinary
course consistent with past practice and use all reasonable efforts to
preserve substantially intact its business organization, maintain its
rights and franchises, retain the services of its respective key employees
and preserve the goodwill of those having business relationships
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with it, including customers and suppliers. The Company further covenants
and agrees that prior to the Effective Time, except as otherwise consented
to in writing by the Acquiror, it will and will cause its Subsidiaries to
maintain and keep its properties and assets in as good repair and condition
as at present, ordinary wear and tear excepted, and use all reasonable
efforts to keep in full force and effect insurance and bonds comparable in
amount and scope of coverage to that currently maintained, except in each
case for any matters that, individually or in the aggregate, would not have
a Material Adverse Effect on the Company."
5. Termination. (a) Section 9.1(h) of the Agreement is hereby amended to
read in its entirety as follows:
"[THIS SECTION INTENTIONALLY LEFT BLANK.]"
(b) Section 9.1(j) of the Agreement is hereby amended to read in its
entirety as follows:
"(j) by the Company, if from and after the date of the Amendment, the Board
of Directors of the Acquiror fails to recommend approval by the
stockholders of the Acquiror of the issuance of shares of Acquiror Common
Stock pursuant to this Agreement or withdraws or modifies (or publicly
announces an intention to withdraw or modify) its approval and
recommendation in a manner materially adverse to the Company or shall have
resolved to do any of the foregoing;".
6. Termination Fees. (a) Section 9.2(b) of the Agreement is hereby
amended to read in its entirety as follows:
"(b) If this Agreement is terminated: (i) by the Acquiror pursuant to
clause (i) of Subsection 9.1(i)hereof (except if circumstances exist that
would allow the Company to terminate this Agreement pursuant to Subsection
9.1(c) hereof as a result of a Material Adverse Effect on the Acquiror);
(ii) by the Acquiror pursuant to Subsection 9.1(i) hereof under any
circumstances other than those described in clause (i) of this Subsection
9.2(b); (iii) by Acquiror or Company pursuant to Subsection 9.1(f) hereof
because of the failure to obtain the required approval from the Company
stockholders and at the time of such termination or prior to the Company
Stockholders' Meeting there shall have been an Acquisition Proposal
(whether or not such offer, proposal, announcement or agreement shall have
been rejected or shall have been withdrawn prior to the time of such
termination or of the Company Stockholders' Meeting); or (iv) by Acquiror
as a result of Company's material breach of Section 7.3 or Subsection
7.1(a) hereof, the Company shall promptly pay to Acquiror or the Company by
wire transfer of same day funds not later than two Business Days after the
date of such termination a termination fee of $4,528,000 (the "Termination
Fee"), provided, however, that if this Agreement is terminated by Acquiror
or the Company pursuant to Subsection 9.1(f) hereof under the circumstances
described in Subsection 9.2(b)(iii) hereof, and at the time of such
termination the stockholders of the Acquiror shall have failed to approve
the issuance of Acquiror Common Stock pursuant to this Agreement, the
Acquiror shall not be entitled to the Termination Fee."
(b) Section 9.2(c) of the Agreement is hereby amended to read in its
entirety as follows:
"(c) If this Agreement is terminated by the Company pursuant to: (i)
Subsection 9.1(c)hereof as a result of the Acquiror's material breach of
Subsection 7.1(b) or Section 7.3 hereof or (ii) Subsection 9.1(j) hereof
(except in the case of any termination pursuant to Subsection 9.1(j) hereof
described below), the Acquiror shall promptly pay to the Company by wire
transfer of same day funds not later than two Business Days after written
demand therefor, up to $500,000 to reimburse the Company for up to that
amount of the Company's actual, verifiable out-of-pocket expenses incurred
by the Company in connection with the Merger. If this Agreement is
terminated by the Company pursuant to Subsection 9.1(g), the Acquiror shall
promptly pay to the Company by wire transfer of same day funds not later
than two Business Days after written demand therefor, up to $250,000 to
reimburse the Company for up to that amount of the Company's actual,
verifiable out-of-pocket expenses incurred by the Company in connection
with the Merger. If this Agreement is terminated by the Company pursuant to
Subsection 9.1(j) hereof, and at the time of such termination there shall
have been an Acquiror Acquisition Proposal (whether or not such offer,
proposal, announcement or agreement shall have been rejected or
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shall have been withdrawn prior to the time of such termination), and the
stockholders of Acquiror shall have failed to approve the issuance of
Acquiror Common Stock pursuant to this Agreement, the Acquiror shall
promptly pay to the Company by wire transfer of same day funds not later
than two Business Days after the date of such termination fee of
$2,000,000.
7. Agreement in Full Force and Effect.
(a) The Company hereby represents and warrants to the Acquiror Companies
that (i) each of the representations and warranties of the Company contained in
the Agreement, as amended hereby, is true and correct as of the date hereof and
(ii) each of the agreements and covenants of the Company required by the
Agreement, as amended hereby, to have been complied with prior to the date
hereof has been complied with in all respects.
(b) The Acquiror Companies hereby represent and warrant to the Company that
(i) each of the representations and warranties of the Acquiror Companies
contained in the Agreement, as amended hereby, is true and correct as of the
date hereof and (ii) each of the agreements and covenants of the Acquiror
Companies required by the Agreement, as amended hereby, to have been complied
with prior to the date hereof has been complied with in all respects.
(c) The Agreement, as amended by this Amendment, shall remain in full force
and effect.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
signed by their duly authorized officers as of the date first above written.
UNITRODE CORPORATION
By /s/ ROBERT J. RICHARDSON
--------------------------------------
Name: Robert J. Richardson
Title: President and Chief Executive
Officer
MERRIMACK CORPORATION
By /s/ ROBERT J. RICHARDSON
--------------------------------------
Name: Robert J. Richardson
Title: President and Chief Executive
Officer
BENCHMARQ MICROELECTRONICS, INC.
By /s/ ALAN R. SCHUELE
--------------------------------------
Name: Alan R. Schuele
Title: President and Chief Executive
Officer
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APPENDIX C
[ADAMS, HARKNESS & HILL LETTERHEAD]
June 23, 1998
Board of Directors
Unitrode Corporation
Seven Continental Boulevard
Merrimack, NH 03054-4334
Members of the Board:
You have requested our opinion (the "Fairness Opinion"), as investment
bankers, as to the fairness, from a financial point of view, to the shareholders
of Unitrode Corporation (the "Company") of the exchange ratio to be employed in
connection with the proposed merger (the "Merger") of Merrimack Corporation, a
wholly owned subsidiary of the Company ("Merger Sub"), with and into Benchmarq
Microelectronics, Inc. ("Benchmarq"), pursuant to an Agreement and Plan of
Merger dated as of March 2, 1998 which is expected to be amended as of June 24,
1998 (the "Merger Agreement"), by and among Benchmarq, the Merger Sub and the
Company. Adams, Harkness & Hill, Inc., as part of its investment banking
activities, is continually engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, secondary distributions of listed and unlisted securities,
private placements and valuations for corporate and other purposes.
In the Merger, each share of common stock, par value $.001 per share
("Benchmarq Common Stock"), of Benchmarq issued and outstanding immediately
prior to the effective time of the Merger, other than shares held in treasury or
held by the Company or any subsidiary or affiliate of the Company or Benchmarq,
will be canceled and extinguished and be converted into the right to receive
1.00 share (the "Exchange Ratio") of common stock, par value $.01 per share
("Company Common Stock") and associated preferred stock purchase rights of the
Company. In connection with the Merger, the Company and Benchmarq have entered
into a stock option agreement pursuant to which Benchmarq has granted the
Company an unconditional, irrevocable option (the "Option") to acquire a number
of shares of Benchmarq Common Stock representing approximately 10.0% of the
total shares of Benchmarq Common Stock issued and outstanding on a fully-
diluted basis after giving effect to the exercise of the Option as of the date
of the Merger Agreement. We are expressing no opinion as to (i) what the value
of Company Common Stock will be when issued to the stockholders of Benchmarq
pursuant to the Merger, (ii) the value of Benchmarq Common Stock that may be
acquired by the Company upon exercise of the Option, or (iii) the prices at
which Company Common Stock will actually trade at any time. Our Fairness Opinion
as expressed herein is limited to the fairness, from a financial point of view,
of the Exchange Ratio to the stockholders of the Company and does not address
the Company's underlying business decision to engage in the Merger. Our Fairness
Opinion does not constitute a
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recommendation to any shareholder of the Company as to how such shareholder
should vote on the proposed Merger.
In developing our Fairness Opinion, we have, among other things: (i)
reviewed the Company's Annual Reports, Forms 10-K and related financial
information for the three fiscal years ended January 31, 1998, and the Company's
Form 10-Q and the related unaudited financial information for the three month
period ending May 2, 1998; (ii) reviewed Benchmarq's Annual Reports, Forms 10-K
and related financial information for the three fiscal years ended December 31,
1997, and Benchmarq's Form 10-Q and the related unaudited financial information
for the three month period ended March 31, 1998; (iii) analyzed certain internal
financial statements and other financial and operating data concerning the
Company prepared by the management of the Company; (iv) analyzed certain
internal financial statements and other financial and operating data concerning
Benchmarq prepared by the management of Benchmarq; (v) analyzed the potential
pro forma financial effects of the Merger on the Company and Benchmarq and
compared the relative financial contributions of the Company and Benchmarq to
the combined company following consummation of the Merger, each based on both
publicly available estimates from third party research analysts of the future
financial performance of Benchmarq and the Company and internal forecasts of
such future performance jointly prepared by management of the Company and
Benchmarq; (vi) reviewed certain information relating to prior periods
concerning the business, earnings and assets of the Company and Benchmarq
furnished to us by the Company and Benchmarq; (vii) conducted due diligence
discussions with members of senior management of the Company and Benchmarq and
discussed with members of senior management of the Company and Benchmarq their
views regarding future business, financial and operating benefits arising from
the Merger; (viii) reviewed the historical market prices and trading activity
for the Company Common Stock and Benchmarq Common Stock and compared them with
that of certain publicly traded companies we deemed to be relevant and
comparable to the Company and Benchmarq, respectively; (ix) compared the results
of operations of the Company and Benchmarq with that of certain companies we
deemed to be relevant and comparable to the Company and Benchmarq, respectively;
(x) compared the financial terms of the Merger with the financial terms of
certain other mergers and acquisitions we deemed to be relevant and comparable
to the Merger; (xi) participated in certain discussions among representatives of
the Company and Benchmarq and their financial and legal advisors; (xii) reviewed
the Agreement, the Benchmarq Option Agreement; and (xiii) reviewed such other
financial studies and analyses and performed such other investigations and took
into account such other matters as we deemed necessary, including our assessment
of general economic, market and monetary conditions.
In connection with our review and arriving at our Fairness Opinion, we have
not independently verified any information received from the Company, have
relied on such information, and have assumed that all such information is
complete and accurate in all material respects. With respect to any internal
forecasts reviewed relating to the prospects of the Company and Benchmarq, we
have assumed that they have been reasonably prepared on bases reflecting the
best currently available estimates and judgments of the Company's and
Benchmarq's management as to the future financial performance of the Company and
Benchmarq. Our Fairness Opinion is rendered on the basis of securities market
conditions prevailing as of the date hereof and on the conditions and prospects,
financial and otherwise, of the Company and Benchmarq as known to us on the date
hereof. We have not conducted, nor have we received copies of, any independent
valuation or appraisal of any of the assets of the Company and Benchmarq. In
addition, we have assumed, with your consent: (i) the Merger will be accounted
for under the pooling-of-interests method in accordance with generally accepted
accounting principles as described in Accounting Principles Board Opinion Number
16; (ii) the Merger will constitute a tax-free reorganization under sec. 368 of
the Internal Revenue Code of 1986, as amended; (iii) the terms set forth in the
executed Merger Agreement will not differ materially from the proposed terms
provided to us in the June 22, 1998 draft Merger Agreement; and (iv) any
material liabilities (contingent or otherwise, known or unknown) of the Company
and Benchmarq are as set forth in the consolidated financial statements of the
Company and Benchmarq, respectively.
It is understood that this letter is for the information of the Board of
Directors of the Company and may not be used for any other purpose without our
prior written consent, except that this opinion may be included
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in its entirety in any filing made by the Company with the Securities and
Exchange Commission with respect to the transactions contemplated by the Merger
Agreement.
Based upon and subject to the foregoing, it is our opinion that, as of the
date hereof, the Exchange Ratio is fair, from a financial point of view, to the
Company's shareholders.
Sincerely,
ADAMS, HARKNESS & HILL, INC.
/s/ Joseph W. Hammer
Joseph W. Hammer
Managing Director
JWH/tjs
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<PAGE> 164
APPENDIX D
[PRUDENTIAL LETTERHEAD]
PRIVATE AND CONFIDENTIAL
The Board of Directors June 23, 1998
BENCHMARQ Microelectronics, Inc.
17919 Waterview Parkway
Dallas, Texas 75252
Members of the Board:
We understand that BENCHMARQ Microelectronics, Inc., a Delaware corporation
(the "Company"), Unitrode Corporation, a Maryland corporation ("Unitrode"), and
Merrimack Corporation, a Delaware corporation and a wholly-owned subsidiary of
Unitrode (the "Acquisition Sub"), have entered into an amendment dated as of
June 23, 1998 to the Agreement and Plan of Merger dated as of March 2, 1998 (as
so amended, the "Agreement"). Pursuant to the Agreement, the Acquisition Sub
shall merge with and into the Company and the Company shall be the surviving
corporation (the "Merger"). In the Merger each outstanding share of common
stock, par value $0.001 per share, of the Company (the "Company Common Stock")
will be converted into the right to receive one share of common stock (the
"Exchange Ratio"), par value $0.01 per share, of Unitrode (the "Unitrode Common
Stock"). In addition, we understand that the Company and Unitrode have entered
into an agreement dated as of March 2, 1998 and amended as of June 23, 1998 (as
so amended, the "Stock Option Agreement") pursuant to which the Company has
granted Unitrode an option to purchase, under certain circumstances, 955,158
shares of Company Common Stock, equal to approximately ten percent of the number
of shares of Company Common Stock (on a fully diluted basis after giving effect
to the issuance of shares of Company Common Stock pursuant to the Stock Option
Agreement), at a purchase price of $11.38 per share. Furthermore, we understand
that Unitrode and Alan R. Schuele, Derrell C. Coker, L.J. Sevin, Harvey B. Cash,
Dietrich Erdmann, Jack Kilby and Charles H. Phipps (the "Stockholders") have
entered into an agreement dated as of March 2, 1998 and amended as of June 23,
1998 (as so amended, the "Voting Agreement") pursuant to which the Stockholders
have agreed to vote their shares in favor of the Merger.
You have requested our opinion as to the fairness from a financial point of
view of the Exchange Ratio to the stockholders of the Company.
In conducting our analysis and arriving at the opinion expressed herein, we
have reviewed such materials and analyzed such financial and other factors as we
deemed relevant under the circumstances, including:
(i) the Agreement, the Stock Option Agreement and the Voting
Agreement;
(ii) certain publicly-available historical financial and operating
data for the Company including, but not limited to, (a) the Annual Report
to Stockholders and Annual Report on Form 10-K of the Company for the
fiscal year ended December 31, 1997, (b) the Quarterly Report on Form 10-Q
for the three months ended March 31, 1998, and (c) the Proxy Statements for
the Special Meeting of Stockholders dated May 28, 1998 and the Annual
Meeting of Stockholders held on April 16, 1997;
(iii) certain publicly-available historical financial and operating
data for Unitrode including, but not limited to, (a) the Annual Report to
Stockholders and Annual Report on Form 10-K of Unitrode for the fiscal year
ended January 31, 1998, (b) the Quarterly Report on Form 10-Q for the three
months ended May 2, 1998 and (c) the Proxy Statement for the Annual Meeting
of Stockholders dated May 28, 1998;
(iv) certain information relating to the Company, including projected
income statements for the fiscal years ending December 31, 1998 and 1999,
prepared by the management of the Company;
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<PAGE> 165
(v) certain information relating to Unitrode, including projected
income statements for the fiscal years ending January 31, 1999 and 2000,
prepared by the management of Unitrode;
(vi) publicly available financial, operating and stock market data
concerning certain companies engaged in businesses we deemed comparable to
the Company and Unitrode, respectively, or otherwise relevant to our
inquiry;
(vii) the financial terms of certain recent transactions we deemed
relevant to our inquiry; and
(viii) such other financial studies, analyses and investigations that
we deemed appropriate.
We have discussed with the senior management of the Company and Unitrode
(i) the prospects for their respective businesses, (ii) their estimates of such
businesses' future financial performance, (iii) the financial impact of the
Merger on the respective companies and (iv) such other matters that we deemed
relevant.
In connection with our review and analysis and in arriving at our opinion,
we have relied upon the accuracy and completeness of the financial and other
information provided to us by the Company and Unitrode and have not undertaken
any independent verification of such information or any independent valuation or
appraisal of any of the assets or liabilities of the Company or Unitrode. With
respect to certain financial forecasts, provided to us by the Company for the
Company and Unitrode for Unitrode, we have assumed that such information (and
the assumptions and bases therefor) represents each respective management's best
currently available estimate as to the future financial performance of the
Company and of Unitrode. Our opinion is predicated on the Merger qualifying (i)
as a reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended, and (ii) for "pooling-of-interests" accounting
treatment. Further, our opinion is necessarily based on economic, financial and
market conditions as they exist and can only be evaluated as of the date hereof.
In connection with our assignment, we have not been authorized by the
Company or its Board of Directors to solicit, nor have we solicited, indications
of interest from third parties for the acquisition of all or any part of the
Company. Our opinion does not address nor should it be construed to address the
relative merits of the Merger and alternative business strategies that may be
available to the Company. In addition, this opinion does not in any manner
address the prices at which the Unitrode Common Stock will actually trade
following consummation of the Merger.
As you know, we have been retained by the Company to render this opinion in
connection with the Merger and will receive a fee for rendering such services.
In the ordinary course of business we may actively trade shares of the Company
Common Stock and Unitrode Common Stock for our own account and for the accounts
of customers and, accordingly, may at any time hold a long or short position in
such securities.
This letter and the opinion expressed herein are for the use of the Board
of Directors of the Company. This opinion does not constitute a recommendation
to the stockholders of the Company as to how such stockholders should vote or as
to any other action such stockholders should take regarding the Merger. This
opinion may not be summarized, excerpted from or otherwise publicly referred to
in any manner, without our prior written consent; except that the Company may
include this opinion in its entirety in any proxy statement or information
statement relating to the Merger sent to the Company's stockholders.
Based upon and subject to the foregoing, we are of the opinion that, as of
the date hereof, the Exchange Ratio is fair to the stockholders of the Company
from a financial point of view.
Very truly yours,
PRUDENTIAL SECURITIES INCORPORATED
/s/ Prudential Securities Incorporated
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APPENDIX E
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT (this "Agreement"), dated as of March 2, 1998,
between Unitrode Corporation, a Maryland corporation ("Grantee"), and BENCHMARQ
Microelectronics, Inc., a Delaware corporation (the "Company").
WHEREAS, the Company, Grantee and Merrimack Corporation, a Delaware
corporation and a wholly owned subsidiary of Grantee ("Newco"), have
contemporaneously with the execution of this Agreement, entered into an
Agreement and Plan of Merger dated March 2, 1998 (the "Merger Agreement") which
provides, among other things, that Newco shall be merged with and into the
Company pursuant to the terms and conditions thereof; and
WHEREAS, as an essential condition and inducement to Grantee's entering
into the Merger Agreement and in consideration therefor, the Company has agreed
to grant Grantee the Option (as hereinafter defined);
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein and in the Merger Agreement, and intending to be
legally bound hereby, the parties hereby agree as follows:
1. GRANT OF OPTION. The Company hereby grants to Grantee an
unconditional, irrevocable option (the "Option") to purchase, subject to the
terms hereof, 955,158 shares (such shares being referred to herein as the
"Option Shares") of fully paid and nonassessable common stock, par value $.001
per share, of the Company ("Company Common Stock"), equal to approximately ten
percent (10%) of the number of shares of Company Common Stock issued and
outstanding (on a fully diluted basis after giving effect to the exercise of the
Option) as of the date hereof at a purchase price of $17.53 per share of Company
Common Stock, as adjusted in accordance with the provisions of Section 8 (such
price, as adjusted if applicable, the "Option Price").
2. (a) EXERCISE OF OPTION. Grantee may exercise the Option, in whole or
part, and from time to time, if, but only if, a Triggering Event (as hereinafter
defined) shall have occurred prior to the occurrence of an Option Termination
Event (as hereinafter defined), provided that Grantee shall have sent the
written notice of such exercise (as provided in Subsection 2(e) on or prior to
the last date of the one (1) year period following such Triggering Event (the
"Option Expiration Date").
(b) OPTION TERMINATION EVENTS. The term "Option Termination Event" shall
mean any of the following events:
(i) the Effective Time (as defined in the Merger Agreement); or
(ii) termination of the Merger Agreement (A) by either party pursuant
to Subsection 9.1(d) of the Merger Agreement, provided that the matter
giving rise to the Order (as defined in the Merger Agreement) providing the
basis for termination under Subsection 9.1(d) of the Merger Agreement shall
not have been initiated by the Company or any Person who initiates an
Acquisition Proposal (as such item is defined in the Merger Agreement), (B)
by the Company pursuant to Subsection 9.1(c), Subsection 9.1(h) or
Subsection 9.1(j) of the Merger Agreement, (C) by either the Company or the
Grantee pursuant to Subsection 9.1(g) of the Merger Agreement, (D) by both
parties pursuant to Subsection 9.1(a) of the Merger Agreement, (E) by the
Company or the Grantee pursuant to Subsection 9.1(e) of the Merger
Agreement (if there then exists circumstances that would permit termination
of the Merger Agreement by the Company pursuant to Subsection 9.1(e) of the
Merger Agreement), (F) by the Acquiror pursuant to Subsection 9.1(i)(i) (if
circumstances exist that would allow the Company to terminate the Merger
Agreement pursuant to Subsection 9.1(h) of the Merger Agreement) or (G) by
either party pursuant to any other provision of the Merger Agreement;
provided (in the case of this Subsection 2(b)(ii)(G)) such termination
occurs prior to the occurrence of an Acquisition Proposal.
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(c) TRIGGERING EVENTS. The term "Triggering Event" shall mean the
occurrence (after the date hereof) of any of the following events:
(i) any Person (other than the Grantee or any Subsidiary of the
Grantee) shall have commenced (as such term is defined in Rule 14d-2 under
the Exchange Act) or shall have filed a registration statement under the
Securities Act with respect to a tender offer or exchange offer to purchase
any shares of Company Common Stock such that, upon consummation of such
offer, such Person would own or control 10% or more of the then outstanding
Company Common Stock;
(ii) the Company or any Subsidiary of the Company shall have
authorized, recommended, proposed or publicly announced an intention to
authorize, recommend or propose, or entered into, an agreement with any
Person (other than the Grantee or any Subsidiary of the Grantee) to (A)
effect a merger, reorganization, consolidation, share exchange or other
business combination or similar transaction involving the Company or any of
its Significant Subsidiaries, (B) sell, lease or otherwise dispose of
assets of the Company or its Subsidiaries representing 10% or more of the
consolidated assets of the Company other than in the ordinary course of
business or (C) issue, sell or otherwise dispose of (including by way of
merger, reorganization, consolidation, share exchange or other business
combination or any similar transaction) securities (or options, rights or
warrants to purchase, or securities convertible into or exchangeable for,
such securities) representing 10% or more of the voting power of the
Company or any of its Significant Subsidiaries; or
(iii) any Person (other than the Grantee or any Subsidiary of the
Grantee or the Company or, in a fiduciary capacity, any Subsidiary of the
Company) shall have, subsequent to the date of this Agreement, acquired
beneficial ownership (as such term is defined in Rule 13d-3 under the
Exchange Act) or the right to acquire beneficial ownership of, or any
"Group" (as such term is defined under the Exchange Act) shall have been
formed which beneficially owns or has the right to acquire beneficial
ownership of, 10% or more of the then outstanding Company Common Stock.
(d) NOTICE OF TRIGGERING EVENT. The Company shall notify Grantee in
writing as promptly as practicable, and in any event within 24 hours, of the
occurrence of any Triggering Event, it being understood that the giving of such
notice by the Company shall not be a condition to the right of Grantee to
exercise the Option or for a Triggering Event to have occurred.
(e) NOTICE OF EXERCISE; CLOSING. In the event that Grantee is entitled to
and wishes to exercise the Option, it shall send to the Company a written notice
(such notice being herein referred to as an "Exercise Notice" and the date of
issuance of an Exercise Notice being herein referred to as the "Notice Date")
specifying (i) the total number of shares (or other Option Securities (as
hereinafter defined)) it will purchase pursuant to such exercise and (ii) a
place and date not earlier than three (3) Business Days nor later than forty
(40) Business Days from the Notice Date for the closing of such purchase (the
"Option Closing Date"); provided, that if the closing of the purchase and sale
pursuant to the Option (the "Option Closing") cannot be consummated, by reason
of any applicable Order, the period of time that otherwise would run pursuant to
this sentence shall run instead from the date on which such restriction on
consummation has expired or been terminated; and provided further, without
limiting the foregoing, that if, in the reasonable opinion of Grantee, prior
notification to or approval of any regulatory agency is required in connection
with such purchase, the Company or Grantee, as the case may be, shall promptly
file the required notice or application for approval and shall expeditiously
process the same and the period of time that otherwise would run pursuant to
this sentence shall run instead from the date on which any required notification
periods have expired or been terminated or such approvals have been obtained and
any requisite waiting period or periods shall have passed. In the event that (x)
Grantee receives official notice that an approval of any regulatory authority
required for the purchase of Option Shares (or other Option Securities) would
not be issued or granted or (y) an Option Closing Date shall not have occurred
within one (1) year after the related Notice Date due to the failure to obtain
any such required approval, Grantee shall, to the extent permitted by applicable
Law, nevertheless be entitled to exercise its rights as set forth herein,
including without limitation the rights set forth in Subsection 8(a) and Grantee
shall be entitled to exercise the Option (or Substitute Option (as defined
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herein)) in connection with the resale of the Company Common Stock or other
Option Securities pursuant to a registration statement as provided in Section 9.
(f) PURCHASE PRICE. At the Option Closing, Grantee shall pay to the
Company the aggregate Option Price in immediately available funds by wire
transfer to a bank account designated by the Company, provided that failure or
refusal of the Company to designate such a bank account shall not preclude
Grantee from exercising the Option.
(g) ISSUANCE OF COMPANY COMMON STOCK. At the Option Closing,
simultaneously with the delivery of immediately available funds as provided in
Subsection 2(f), the Company shall deliver to Grantee a certificate or
certificates representing the number of shares of Company Common Stock (or other
Option Securities) purchased by Grantee and, if the Option should be exercised
in part only, a new Option evidencing the rights of Grantee thereof to purchase
the balance of the shares (or other Option Securities) purchasable hereunder. If
at the time of issuance of any Option Shares pursuant to an exercise of all or
part of the Option hereunder, the Company shall have issued any rights or other
securities which are attached to or otherwise associated with the Company Common
Stock, then each Option Share issued pursuant to such exercise shall also
represent such rights or other securities with terms substantially the same as
and at least as favorable to Grantee as are provided under any shareholder
rights agreement or similar agreement of the Company then in effect.
(h) LEGEND. Certificates for Company Common Stock (or other Option
Securities) delivered at a closing hereunder may be endorsed with a restrictive
legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is subject
to resale restrictions arising under the Securities Act of 1933, as
amended."
It is understood and agreed that the reference to the resale restrictions of the
Securities Act of 1933, as amended (the "Securities Act"), in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if Grantee shall have delivered to the Company a copy of a letter from the staff
of the SEC, or an opinion of counsel, reasonably satisfactory to the Company, to
the effect that such legend is not required for purposes of the Securities Act.
In addition, such certificates shall bear any other legend as may be required by
Law.
(i) RECORD GRANTEE; EXPENSES. Upon the delivery by Grantee to the Company
of the Exercise Notice and the tender of the applicable Option Price in
immediately available funds, Grantee shall be deemed to be the holder of record
of the shares of Company Common Stock (or other Option Securities) issuable upon
such exercise, notwithstanding that the stock transfer books of the Company
shall then be closed or that certificates representing such shares of Company
Common Stock (or other Option Securities) shall not then be actually delivered
to Grantee or the Company shall have failed or refused to designate the bank
account described in Subsection 2(f). The Company shall pay all expenses, and
any and all United States federal, state and local taxes and other charges that
may be payable in connection with the preparation, issuance and delivery of
stock certificates under this Section 2 in the name of Grantee. The Grantee
shall pay all expenses and any and all United States federal, state, local or
other taxes or charges that may be payable in connection with the issuance and
delivery of stock certificates or a substitute option agreement in the name of
any assignee, transferee or designee of Grantee.
3. EVALUATION OF INVESTMENTS. Grantee, by reason of its knowledge and
experience in financial and business matters, believes itself capable of
evaluating the merits and risks of an investment in the Option and the
securities to be purchased/sold pursuant to this Agreement (collectively the
"Option Securities.")
4. DOCUMENTS DELIVERED. Grantee acknowledges receipt of copies of the
following documents:
(a) The Company's Annual Report on Form 10-K for the year ended
December 31, 1996;
(b) The Company's Proxy Statement for the meeting of the Company's
stockholder held April 16, 1997; and
(c) The Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997.
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5. INVESTMENT INTENT. Grantee represents and warrants that it is entering
into this Agreement and is acquiring and/or will acquire the Option Securities
for its own account and not with a view to resale or distribution of all or any
part of the Option Securities in violation of applicable Law.
6. RESERVATION OF SHARES. The Company agrees (i) that it shall at all
times maintain, free from preemptive rights, sufficient authorized but unissued
or treasury shares of Company Common Stock (and other Option Securities)
issuable pursuant to this Agreement so that the Option may be exercised without
additional authorization of Company Common Stock (or such other Option
Securities) after giving effect to all other options, warrants, convertible
securities and other rights to purchase Company Common Stock (or such other
Option Securities); (ii) that it will not, by charter amendment or through
reorganization, consolidation, merger, dissolution or sale of assets, or by any
other voluntary act, avoid or seek to avoid the observance or performance of any
of the covenants, stipulations or conditions to be observed or performed
hereunder by the Company; (iii) promptly to take all action as may from time to
time be required in order to permit Grantee to exercise the Option and the
Company to duly and effectively issue shares of Company Common Stock (or other
Option Securities) pursuant hereto; and (iv) (to the extent agreed to herein)
promptly to take all action provided herein to protect the rights of Grantee
against dilution.
7. DIVISION OF OPTION; LOST OPTIONS. This Agreement (and the Option
granted hereby) are exchangeable, without expense, at the option of Grantee,
upon presentation and surrender of this Agreement at the principal office of the
Company, for other Agreements providing for Options of different denominations
entitling the holder thereof to purchase, on the same terms and subject to the
same conditions as are set forth herein, in the aggregate the same number of
shares of Company Common Stock purchasable hereunder. The terms "Agreement" and
"Option" as used herein include any Stock Option Agreements and related Options
for which this Agreement (and the Option granted hereby) may be exchanged. Upon
receipt by the Company of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of this Agreement, and (in the case of loss,
theft or destruction) of reasonably satisfactory indemnification, and upon
surrender and cancellation of this Agreement, if mutilated, the Company will
execute and deliver a new Agreement of like tenor and date.
8. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. The number of shares of
Company Common Stock purchasable upon the exercise of the Option shall be
subject to adjustment from time to time as provided in this Section 8.
(a) ADDITIONAL SHARES ADJUSTMENT. Excluding issuances contemplated by
Subsection 8(b), in the event that any additional shares of Company Common
Stock, or any rights, options, warrants, subscriptions, calls, convertible
securities or other agreements or commitments obligating the Company to issue
any shares of Company Common Stock, are issued or otherwise become outstanding
after the date hereof (an "Increase"), the number of shares of Company Common
Stock subject to the Option shall be increased by a number of shares equal to
the product of (A) a fraction, the numerator of which is the number of shares of
Company Common Stock for which the Option was exercisable immediately prior to
the Increase and the denominator of which is the number of shares of Company
Common Stock specified in Section 1 and (B) the product of (i) ten percent (10%)
and (ii) the number of shares of Company Common Stock issued and outstanding on
a fully diluted basis immediately after the Increase minus the number of shares
of Company Common Stock issued and outstanding on a fully diluted basis
immediately prior to the Increase; provided that the number of shares of Company
Common Stock subject to the Option shall in no event exceed ten percent (10%) of
the issued and outstanding shares of Company Common Stock on a fully diluted
basis immediately prior to exercise.
(b) TRANSACTION ADJUSTMENT. In the event of any change in Company Common
Stock by reason of stock dividends, splits, mergers, recapitalization,
combinations, subdivisions, conversions, exchanges of shares or other similar
transactions then, the type and number of shares of Company Common Stock
purchasable upon exercise hereof shall be appropriately adjusted so that Grantee
shall receive upon exercise of the Option and payment of the aggregate Option
Price hereunder the number and class of shares or other securities or property
that Grantee would have received in respect of Company Common Stock if the
Option had been exercised in full immediately prior to such event, or the record
date therefor, as applicable.
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(c) OPTION PRICE ADJUSTMENT. Whenever the number of shares of Company
Common Stock subject to this Option are adjusted pursuant to Subsection 8(a) or
8(b) the Option Price shall be adjusted by multiplying the Option Price by a
fraction, the numerator of which shall be equal to the aggregate number of
shares of Company Common Stock purchasable under the Option prior to the
adjustment and the denominator of which shall be equal to the aggregate number
of shares of Company Common Stock purchasable under the Option immediately after
the adjustment.
9. REGISTRATION RIGHTS. The Company will, if requested by the Grantee at
any time and from time to time within two (2) years of a Triggering Event (the
"Registration Period"), as expeditiously as practicable prepare, file and cause
to be made effective up to two registration statements under the Securities Act
if such registration is necessary or desirable in order to permit the offering,
sale and delivery of any or all shares of Company Common Stock (or other Option
Securities) that have been acquired by or are issuable to the Grantee upon
exercise of the Option in accordance with the intended method of sale or other
disposition stated by the Grantee, including, at the sole discretion of the
Company, a "shelf" registration statement under Rule 415 under the Securities
Act or any successor provision, and the Company will use all reasonable efforts
to qualify such shares or other Option Securities under any applicable state
securities laws. Without the Grantee's prior written consent, no other
securities may be included in any such registration. The Grantee agrees to use
all reasonable efforts to cause, and to cause any underwriters of any sale or
other disposition to cause, any sale or other disposition pursuant to such
registration statement to be effected on a widely distributed basis so that upon
consummation thereof no purchaser or transferee will own beneficially more than
5% of the then outstanding voting power of the Company. The Company will use all
reasonable efforts to cause each such registration statement to become
effective, to obtain all consents or waivers of other parties which are required
therefor and to keep such registration statement effective for such period not
in excess of 180 days from the day such registration statement first becomes
effective as may be reasonably necessary to effect such sale or other
disposition. The obligations of the Company hereunder to file a registration
statement and to maintain its effectiveness may be suspended for one or more
periods of time not exceeding ninety (90) days in the aggregate if the Board of
Directors of the Company shall have determined in good faith that the filing of
such registration or the maintenance of its effectiveness would require
disclosure of nonpublic information that would materially and adversely affect
the Company. The expenses associated with the preparation and filing of any such
registration statement pursuant to this Section 9 and any sale covered thereby
(including any fees related to blue sky qualifications and filing fees in
respect of the Securities and Exchange Commission or the National Association of
Securities Dealers, Inc.) ("Registration Expenses") will be for the account of
the Company except for underwriting discounts or commissions or brokers' fees in
respect to shares of Company Common Stock (or other Option Securities) to be
sold by the Grantee and the fees and disbursements of the Grantee's counsel;
provided, however, that the Company will not be required to pay for any
Registration Expenses with respect to such registration if the registration
request is subsequently withdrawn at the request of the Grantee unless the
Grantee agrees to forfeit its right to request one registration; provided
further, however, that, if at the time of such withdrawal the Grantee has
learned of a material adverse change in the results of operations, condition,
business or prospects of the Company from that known to the Grantee at the time
of its request and has withdrawn the request with reasonable promptness
following disclosure by the Company of such material adverse change, then the
Grantee will not be required to pay any of such expenses and will retain all
remaining rights to request registration. The Grantee will provide all
information reasonably requested by the Company for inclusion in any
registration statement to be filed hereunder. If during the Registration Period
the Company shall propose to register under the Securities Act the offering,
sale and delivery of Company Common Stock for cash for its own account or for
any other stockholder of the Company pursuant to a firm underwriting, it will,
in addition to the Company's other obligations under this Section 9, allow the
Grantee the right to participate in such registration provided that the Grantee
participates in the underwriting; provided, however, that, if the managing
underwriter of such offering advises the Company in writing that in its opinion
the number of shares of Company Common Stock (or other Option Securities)
requested to be included in such registration exceeds the number which can be
sold in such offering, the Company will, after fully including therein all
shares of Company Common Stock and/or Option Securities to be sold by the
Company, include the shares of Company Common Stock (or other Option Securities)
requested to be included therein by Grantee pro rata
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(based on the number of shares of Company Common Stock or other Option
Securities intended to be included therein) with the shares of Company Common
Stock or other Option Securities intended to be included therein by Persons
other than the Company. In connection with any offering, sale and delivery of
Company Common Stock pursuant to a registration statement effected pursuant to
this Section 9, the Company and the Grantee will provide each other and each
underwriter of the offering with customary representations, warranties and
covenants, including covenants of indemnification and contribution. For purposes
of determining whether two requests have been made under this Section 9, only
requests relating to a registration statement that has become effective under
the Securities Act and pursuant to which the Grantee has disposed of all shares
of Company Common Stock covered thereby in the manner contemplated therein will
be counted. The registration rights granted under this Section 9 are subject to
and are limited by any registration rights previously granted by the Company and
the Grantee acknowledges the registration rights granted under this Section 9
shall be construed subject to any such limitations.
10. REPURCHASE OF OPTION AND OPTION SHARES. (a) Within ten (10) Business
Days following the occurrence of a Repurchase Event (as defined herein), the
Company shall (i) deliver an offer (an "Option Repurchase Offer") to repurchase
the Option from Grantee at a price (the "Option Repurchase Price") equal to the
amount by which (A) the Competing Transaction Price (as defined below) exceeds
(B) the Option Price, multiplied by the maximum number of shares for which the
Option may then be exercised by the Grantee, and (ii) deliver an offer (an
"Option Share Repurchase Offer") to repurchase the Option Shares from each owner
of Option Shares from time to time (each, an "Owner") at a price (the "Option
Share Repurchase Price") equal to the amount by which (A) the Competing
Transaction Price exceeds (B) the Option Price, multiplied by the number of
Option Shares then held by such Owner. The term "Competing Transaction Price"
shall mean, as of any date for the determination thereof, the price per share of
Common Stock paid pursuant to the consummation of any Acquisition Proposal (such
consummated Acquisition Proposal being referred to herein as a "Competing
Transaction") or, in the event of a sale of assets of the Company, the last
per-share sale price of Company Common Stock on the fourth trading day following
the announcement of such sale. If the consideration paid or received in the
Competing Transaction shall be other than in cash, the per share value of such
consideration (on a fully diluted basis) shall be determined by a nationally
recognized investment banking firm selected by Grantee and reasonably acceptable
to the Company, which determination shall be conclusive for all purposes of this
Agreement.
(b) REPURCHASE REQUEST. Upon the occurrence of a Repurchase Event and
whether or not the Company shall have made an Option Repurchase Offer or Option
Share Repurchase Offer under Section 10(a), (i) at the request (the date of such
request being the "Option Repurchase Request Date") of Grantee delivered prior
to the Option Termination Date, the Company shall repurchase the Option from
Grantee at the Option Repurchase Price and (ii) at the request (the date of such
request being the "Option Share Repurchase Request Date") of any Owner delivered
prior to the Option Termination Date, the Company shall repurchase such number
of the Option Shares (to the extent clearly identifiable as such) from the Owner
as the Owner shall designate at the Option Share Repurchase Price.
(c) REPURCHASE PROCEDURES. Grantee or the Owner, as the case may be, may
(i) accept the Company's Option Repurchase Offer or Option Share Repurchase
Offer under Subsection 10(a) or (ii) exercise its right to require the Company
to repurchase the Option or any Option Shares, as the case may be, pursuant to
Subsection 10(b) by a written notice or notices stating that Grantee or the
Owner, as the case may be, elects to accept such offer or to require the Company
to repurchase the Option or the Option Shares in accordance with the provisions
of this Section 10. As promptly as practicable, and in any event within five (5)
Business Days, after the surrender to the Company of this Agreement or
Certificates for Option Shares, as applicable, following receipt of a notice
under this Subsection 10(c), the Company shall deliver or cause to be delivered
to Grantee the Option Repurchase Price or to the Owner the Option Share
Repurchase Price, as the case may be.
(d) REGULATORY APPROVALS. The Company hereby undertakes to use its best
efforts to obtain all required regulatory and legal approvals and to file any
required notices as promptly as practicable in order to accomplish any
repurchase contemplated by this Section 10. Nonetheless, to the extent that the
Company is prohibited under applicable Law from repurchasing the Option or any
Option Shares in full, the Company
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shall immediately so notify Grantee or the Owner and thereafter deliver or cause
to be delivered, from time to time, to Grantee or the Owner, as appropriate, the
portion of the Option Repurchase Price and the Option Share Repurchase Price,
respectively, that it is no longer prohibited from delivering, within five (5)
Business Days after the date on which the Company is no longer so prohibited;
provided, however, that if the Company at any time after delivery of a notice of
repurchase pursuant to Section 10(b) hereof is prohibited under applicable Law,
from delivering to Grantee or the Owner, as appropriate, the Option Repurchase
Price or the Option Share Repurchase Price, respectively, in full, Grantee or
the Owner, as appropriate, may revoke its notice of repurchase of the Option or
the Option Shares, respectively, either in whole or in part whereupon, in the
case of a revocation in part, the Company shall promptly (i) deliver to Grantee
or the Owner, as appropriate, that portion of the Option Repurchase Price or the
Option Share Repurchase Price that the Company is not prohibited from delivering
after taking into account any such revocation and (ii) deliver, as appropriate,
either (A) to Grantee, a new Agreement evidencing the right of Grantee to
purchase that number of shares of Company Common Stock equal to the number of
shares of Company Common Stock purchasable immediately prior to the delivery of
the notice of repurchase less the number of shares of Company Common Stock
covered by the portion of the Option repurchased or (B) to the Owner, a
certificate for the number of Option Shares covered by the revocation. If an
Option Termination Event shall have occurred prior to the date of the notice by
the Company described in the first sentence of this Subsection 10(d), or shall
be scheduled to occur at any time before the expiration of a period ending on
the thirtieth day after such date, Grantee shall nonetheless have the right to
exercise the Option until the expiration of such thirty (30) day period.
(e) DEFINITION. The term "Repurchase Event" shall mean a Triggering Event
followed by the consummation of any transaction included in the definition of
Competing Transaction.
(f) COMPETING TRANSACTION. Notwithstanding anything to the contrary in
Subsections 2(a), the delivery of a notice by Grantee or an Owner under
Subsection 10(b) hereof specifying that such notice is based on the Company's
public announcement of the execution of an agreement providing for a Competing
Transaction shall be deemed to constitute an election to exercise the Option, as
to the number of Option Shares not heretofore purchased pursuant to one or more
prior exercises of the Option, on the fifth Business Day following the public
announcement of the consummation of the transaction contemplated by such
agreement, in which event a closing shall occur with respect to such unpurchased
Option Shares in accordance with Subsection 2(e).
(g) REPRESENTATIONS. In connection with any purchase/sale of the Option
or the Option Shares pursuant to this Section 10, the Grantee and/or the Owner,
as applicable, will be required to represent and warrant to the Company that
such Person is the owner of the Option/Option Shares being purchased, free and
clear of all adverse claims and that such Person will deliver good title to such
Option/Option Shares to the Company, free and clear of all adverse claims, upon
consummation of any purchase/sale pursuant to this Section 10.
11. SUBSTITUTE OPTION IN THE EVENT OF CORPORATE CHANGE. (a) In the event
that prior to an Option Termination Event, the Company shall enter into an
agreement (i) to consolidate with or merge into any person, other than Grantee
or one of its Subsidiaries, and shall not be the continuing or surviving
corporation of such consolidation or merger, (ii) to permit any person, other
than Grantee or one of its Subsidiaries, to merge into the Company and the
Company shall be the continuing or surviving corporation, but, in connection
with such merger, the then outstanding shares of Company Common Stock shall be
changed into or exchanged for stock or other securities of any other person or
cash or any other property or the then outstanding shares of Company Common
Stock shall after such merger represent less than 50% of the outstanding shares
and share equivalents of the merged company, or (iii) to sell or otherwise
transfer all or substantially all of its assets to any person, other than
Grantee or one of its Subsidiaries, then, and in each such case, the agreement
governing such transaction shall make proper provision so that the Option shall,
upon the consummation of any such transaction and upon the terms and conditions
set forth herein, be converted into, or exchanged for, an option (the
"Substitute Option"), at the election of Grantee, of either (x) the Acquiring
Corporation (as hereinafter defined) or (y) any person that controls the
Acquiring Corporation subsequent to the consolidation, merger or sale in
question.
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(b) DEFINITIONS. The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the continuing or surviving
corporation of a consolidation or merger with the Company (if other than
the Company), (ii) the Company in a merger in which the Company is the
continuing or surviving person, and (iii) the transferee of all or
substantially all of the Company's assets.
(2) "Substitute Common Stock" shall mean the common stock issued by
the Company upon exercise of the Substitute Option.
(3) "Assigned Value" shall mean the Competing Transaction Price, as
defined in Section 10.
(4) "Average Price" shall mean the average closing price of a share of
the Substitute Common Stock for the ninety (90) days immediately preceding
the consolidation, merger or sale in question; provided that if the Company
is the issuer of the Substitute Option, the Average Price shall be computed
with respect to a share of common stock issued by the Company, the Person
merging into the Company or by any company which controls or is controlled
by such Person subsequent to the consideration merger or sale in question,
as Grantee may elect.
(c) TERMS OF THE SUBSTITUTE OPTION. The Substitute Option shall have the
same terms as the Option; provided that if the terms of the Substitute Option
cannot, for legal reasons, be the same as the Option, such terms shall be as
similar as possible and in no event less advantageous to Grantee. The issuer of
the Substitute Option shall also enter into an agreement with Grantee in
substantially the same form as this Agreement, which agreement shall be
applicable to the Substitute Option.
(d) SUBSTITUTE COMMON STOCK. The Substitute Option shall be exercisable
for such number of shares of Substitute Common Stock as is equal to the Assigned
Value multiplied by the number of shares of Company Common Stock for which the
Option is then exercisable, divided by the Average Price. The exercise price of
the Substitute Option per share of Substitute Common Stock shall then be equal
to the Option Price multiplied by a fraction, the numerator of which shall be
the number of shares of Company Common Stock for which the Option is then
exercisable and the denominator of which shall be the number of shares of
Substitute Common Stock for which the Substitute Option is exercisable.
(e) LIMITATION. In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for more than ten percent (10%) of
the shares of Substitute Common Stock issued and outstanding prior to exercise
of the Substitute Option.
(f) ASSUMPTION OF OBLIGATION. The Company shall not enter into any
transaction described in Subsection 11(a) unless the Acquiring Corporation and
any person that controls the Acquiring Corporation assume in writing all the
obligations of the Company hereunder.
12. EXTENSION OF TIME FOR REGULATORY APPROVALS. The periods related to
exercise of the Option and the other rights of Grantee hereunder shall be
extended (i) to the extent necessary to obtain all regulatory approvals for the
exercise of such rights, and for the expiration of all statutory waiting periods
and (ii) to the extent necessary to avoid liability under Section 10(b) of the
Exchange Act by reason of such exercise.
13. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to Grantee as follows:
(a) AUTHORITY. The Company has full corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of the Company and no other
corporate proceedings on the part of the Company are necessary to authorize
this Agreement or to consummate the transactions so contemplated. This
Agreement has been duly and validly executed and delivered by the Company.
This Agreement is the valid and legally binding obligation of the Company,
enforceable against the Company in accordance with its terms subject to
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to creditors' rights generally or to general
principles of equity.
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(b) CORPORATE ACTION. The Company has taken all necessary corporate
action to authorize and reserve and to permit it to issue, and at all times
from the date hereof through the termination of this Agreement in
accordance with its terms will have reserved for issuance upon the exercise
of the Option, that number of shares of Company Common Stock equal to the
maximum number of shares of Company Common Stock at any time and from time
to time issuable hereunder, and all such shares of Company Common Stock,
upon issuance pursuant hereto, will be duly authorized, validly issued,
fully paid, nonassessable, and will be delivered free and clear of all
Liens and not subject to any preemptive rights.
(c) NO CONFLICT. The execution and delivery of this Agreement does
not, and the consummation of the transactions contemplated hereby will not,
conflict with, or result in any violation pursuant to any provisions of the
Certificate of Incorporation or by-laws of the Company or any Subsidiary of
the Company, subject to obtaining any approvals or consents contemplated
hereby, result in any violation of any loan or credit agreement, note,
mortgage, indenture, lease, plan or other agreement, obligation,
instrument, permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to the
Company or any Subsidiary of the Company or their respective properties or
assets.
(d) ANTI-TAKEOVER STATUTES. The provisions of Section 203 of the
General Corporation Law of the State of Delaware will not, prior to the
termination of this Agreement, apply to this Agreement or the transactions
contemplated hereby and thereby. The Company has taken, and will in the
future take, all steps necessary to irrevocably exempt the transactions
contemplated by this Agreement from any other applicable state takeover law
and from any applicable charter or contractual provision containing change
of control or anti-takeover provisions.
14. ASSIGNMENT. The Company may not assign any of its rights or
obligations under this Agreement or the Option created hereunder to any other
Person, without the express written consent of Grantee. Grantee may not assign
any of its rights or obligations under this Agreement or the Option created
hereunder to any other Person without the consent of the Company (which consent
will not be unreasonably withheld).
15. APPLICATION FOR REGULATORY APPROVAL. Each of Grantee and the Company
will use its best efforts to make all filings with, and to obtain consents of,
all third parties and governmental authorities necessary to the consummation of
the transactions contemplated by this Agreement, including without limitation
making application to list the shares of Company Common Stock issuable hereunder
on the Nasdaq National Market of The Nasdaq Stock Market, Inc. upon official
notice of issuance.
16. SPECIFIC PERFORMANCE. The parties hereto acknowledge that damages
would be an inadequate remedy for a breach of this Agreement by either party
hereto and that the obligations of the parties hereto shall be enforceable by
either party hereto through injunctive or other equitable relief.
17. SEPARABILITY OF PROVISIONS. If any term, provision, covenant or
restriction contained in this Agreement is held by a court or a federal or state
regulatory agency of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions and covenants and
restrictions contained in this Agreement shall remain in full force and effect,
and shall in no way be affected, impaired or invalidated.
18. NOTICES. All notices, claims, demands and other communications
hereunder shall be deemed to have been duly given or made when delivered in
person, by registered or certified mail (postage prepaid, return receipt
requested), by overnight courier or by facsimile at the respective addresses of
the parties set forth in the Merger Agreement.
19. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
20. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which will be deemed to be an original, but all of which
shall constitute one and the same agreement.
21. DEFINITIONS. Capitalized terms used and not defined herein shall have
the meanings set forth in the Merger Agreement.
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22. EXPENSES. Except as otherwise expressly provided herein or in the
Merger Agreement, each of the parties hereto shall bear and pay all costs and
expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants and counsel.
23. ENTIRE AGREEMENT. Except as otherwise expressly provided herein or in
the Merger Agreement, this Agreement contains the entire agreement between the
parties with respect to the transactions contemplated hereunder and supersedes
all prior arrangements or understandings with respect thereof, written or oral.
The terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assigns. Nothing in this Agreement, expressed or implied, is intended to confer
upon any party, other than the parties hereto, and their respective successors
and permitted assigns, any rights, remedies, obligations or liabilities under or
by reason of this Agreement, except as expressly provided herein. Any provision
of this Agreement may be waived only in writing at any time by the party that is
entitled to the benefits of such provision. This Agreement may not be modified,
amended, altered or supplemented except upon the execution and delivery of a
written agreement executed by the parties hereto.
24. FIRST REFUSAL. If the Grantee shall desire to sell, assign, transfer
or otherwise dispose of all or any of the shares of Company Common Stock or
other Option Securities acquired by it pursuant to the Option, it will give the
Company written notice of the proposed transaction (an "Offeror's Notice"),
identifying the proposed transferee, accompanied by a copy of a binding to
purchase such shares of Company Common Stock, Options or other Option Securities
signed by such transferee and setting forth the terms of the proposed
transaction. An Offeror's Notice will be deemed an offer by the Grantee to the
Company, which may be accepted, in whole but not in part, within ten (10)
Business Days of the receipt of such Offeror's Notice, on the same terms and
conditions and at the same price at which the Grantee is proposing to transfer
such shares of Company Common Stock, Options or other Option Securities to such
transferee. The purchase of any such shares of Company Common Stock, Options or
other Option Securities by the Company will be settled within ten (10) Business
Days of the date of the acceptance of the offer and the purchase price will be
paid to the Grantee in immediately available funds. In the event of the failure
or refusal of the Company to purchase all the shares of Company Common Stock,
Options or other Option Securities covered by an Offeror's Notice, the Grantee
may, within sixty (60) days from the date of the Offeror's Notice, sell all, but
not less than all, of such shares of Company Common Stock, Options or other
Option Securities to the proposed transferee at no less than the price specified
and on terms no more favorable than those set forth in the Offeror's Notice;
provided, however, that the provisions of this sentence will not limit the
rights the Grantee may otherwise have if the Company has accepted the offer
contained in the Offeror's Notice and wrongfully refuses to purchase the shares
of Company Common Stock, Options or other Option Securities subject thereto. The
requirements of this Section 24 will not apply to (a) any disposition as a
result of which the proposed transferee would own beneficially not more than 2%
of the outstanding voting power of the Company, (b) any disposition of Company
Common Stock or other Option Securities by a Person to whom the Grantee has
assigned its rights under the Option with the consent of the Company, (c) any
sale by means of a public offering registered under the Securities Act or (d)
any transfer to a wholly-owned Subsidiary of the Grantee which agrees in writing
to be bound by the terms hereof.
25. LIMITATION OF GRANTEE PROFIT. (a) Notwithstanding any other provision
of this Agreement, in no event shall Grantee's Total Profit (as hereinafter
defined) exceed in the aggregate $7,278,000 and, if it otherwise would exceed
such amount, Grantee, at its sole election, shall either (i) reduce the number
of shares of Company Common Stock subject to this Option, (ii) deliver to the
Company for cancellation Option Shares previously purchased by Grantee, (iii)
pay cash to the Company, or (iv) any combination thereof, so that Grantee's
actually realized Total Profit shall not exceed in the aggregate $7,278,000
after taking into account the foregoing actions.
(b) As used herein, the term "Total Profit" shall mean the sum of (i) (x)
the amount (before taxes but net of reasonable and customary commissions paid or
payable in connection with such transaction) received or receivable by the
Grantee pursuant to the sale of Option Shares (or any other securities or
property into which such Option Shares are converted or exchanged) to any
unaffiliated Person(s) or to the Company with respect
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to such Option Shares (or any other securities or property into which such
Option Shares are converted or exchanged), less (y) Grantee's purchase price for
such Option Shares (or any other securities or property into which such Option
Shares are converted or exchanged), (ii) any amounts (before taxes but net of
reasonable and customary commissions paid or payable in connection with such
transaction) received or receivable by the Grantee on the transfer of the Option
(or any portion thereof) to any unaffiliated Person(s) (if permitted hereunder)
or to the Company, (iii) any equivalent amount(s) with respect to the Substitute
Option, and (iv) the amount received by the Grantee pursuant to Subsection
9.2(b) of the Merger Agreement.
26. FURTHER ASSURANCES. In the event of any exercise of the Option by
Grantee, the Company and Grantee shall execute and deliver all other documents
and instruments and take all other action that may be reasonably necessary in
order to consummate the transactions provided for by such exercise. Nothing
contained in this Agreement shall be deemed to authorize the Company or Grantee
to breach any provision of the Merger Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
UNITRODE CORPORATION
By: /s/ ROBERT J. RICHARDSON
------------------------------------
Name: Robert J. Richardson
Title: President and Chief Executive
Officer
BENCHMARQ MICROELECTRONICS, INC.
By: /s/ ALAN R. SCHUELE
------------------------------------
Name: Alan R. Schuele
Title: President and Chief Executive
Officer
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APPENDIX F
AMENDMENT TO STOCK OPTION AGREEMENT
THIS AMENDMENT TO STOCK OPTION AGREEMENT (this "Amendment") is being
entered into as of June 23, 1998, by and between Unitrode Corporation, a
Maryland corporation ("Grantee"), and BENCHMARQ Microelectronics, Inc., a
Delaware corporation (the "Company").
WHEREAS, the Company, Grantee and Merrimack Corporation, a Delaware
corporation and a wholly owned subsidiary of Grantee ("Newco"), entered into an
Agreement and Plan of Merger dated as of March 2, 1998 (the "Original
Agreement"), which provides, among other things, that Newco shall be merged with
and into the Company pursuant to the terms and conditions thereof; and
WHEREAS, as an essential condition and inducement to Grantee to enter into
the Original Agreement and in consideration therefor, the Company entered into a
Stock Option Agreement as of March 2, 1998 (the "Stock Option Agreement"); and
WHEREAS, the Company, Grantee and Newco are contemporaneously with the
execution of this Amendment entering into an Amendment to the Original Agreement
amending certain provisions of the Original Agreement (as so amended, the
"Amended Agreement"); and
WHEREAS, as an essential condition and inducement to Grantee to enter into
the Amended Agreement and in consideration therefor, the Company has agreed to
enter into this Amendment;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein and in the Amended Agreement, and intending to
be legally bound hereby, the parties hereto hereby agree as follows (with
capitalized terms used and not defined herein having their respective meanings
ascribed to them in the Amended Agreement):
1. References to the Merger Agreement. All references to the Merger
Agreement in the Stock Option Agreement are hereby amended to refer to the
Amended Agreement.
2. Grant of Option. Section 1 of the Stock Option Agreement is
amended in its entirety to read as follows:
"The Company hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, 955,158
shares (such shares being referred to herein as the "Option Shares") of
fully paid and nonassessable common stock, par value $.001 per share, of
the Company ("Company Common Stock"), equal to approximately ten percent
(10%) of the number of shares of Company Common Stock issued and
outstanding (on a fully diluted basis after giving effect to the
exercise of the Option) as of March 2, 1998 at a purchase price of
$11.38 per share of Company Common Stock, as adjusted in accordance with
the provisions of Section 8 (such price, as adjusted if applicable, the
"Option Price")."
3. Option Termination Events. Section 2(b)(ii) of the Stock Option
Agreement is amended in its entirety to read as follows:
"(ii) termination of the Merger Agreement (A) by either party
pursuant to Subsection 9.1(d) of the Merger Agreement, provided that the
matter giving rise to the Order (as defined in the Merger Agreement)
providing the basis for termination under Subsection 9.1(d) of the
Merger Agreement shall not have been initiated by the Company or any
Person who initiates an Acquisition Proposal (as such term is defined in
the Merger Agreement), (B) by the Company pursuant to Subsection 9.1(c)
or Subsection 9.1(j) of the Merger Agreement, (C) by either the Company
or the Grantee pursuant to Subsection 9.1(g) of the Merger Agreement,
(D) by both parties pursuant to Subsection 9.1(a) of the Merger
Agreement, (E) by the Company or the Grantee pursuant to Subsection
9.1(e) of the Merger Agreement (if there exists circumstances that would
permit termination of the Merger Agreement by the Company pursuant to
Subsection 9.1(e) of the Merger Agreement), (F) by the Grantee pursuant
to Subsection 9.1(i)(i) of the Merger Agreement (if
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circumstances exist that would allow the Company to terminate the Merger
Agreement pursuant to Subsection 9.1(c) of the Merger Agreement as a
result of a change that would have a Material Adverse Effect with
respect to Grantee) or (G) by either party pursuant to any other
provision of the Merger Agreement; provided (in the case of Subsection
2(b)(ii)(G) hereof) such termination occurs prior to the occurrence of
an Acquisition Proposal."
4. Stock Option Agreement in Full Force and Effect. The Stock Option
Agreement, as amended by this Amendment, shall continue in full force and
effect.
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IN WITNESS WHEREOF, each of the parties hereto have caused this Amendment
to be duly executed as of the date first written above.
BENCHMARQ MICROELECTRONICS, INC.
By: /s/ ALAN R. SCHUELE
------------------------------------
Name: Alan R. Schuele
Title: President and Chief Executive
Officer
UNITRODE CORPORATION
By: /s/ ROBERT J. RICHARDSON
------------------------------------
Name: Robert J. Richardson
Title: President and Chief Executive
Officer
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APPENDIX G
VOTING AGREEMENT
VOTING AGREEMENT, dated as of March 2, 1998 (this "Voting Agreement") by
and among Alan R. Schuele, Derrell C. Coker, L.J. Sevin, Harvey B. Cash,
Dietrich Erdmann, Jack Kilby and Charles H. Phipps (the "Stockholders"), and
Unitrode Corporation, a Maryland corporation ("Acquiror").
WHEREAS, BENCHMARQ Microelectronics, Inc., a Delaware corporation, Acquiror
and Merrimack Corporation, a Delaware corporation and a wholly owned subsidiary
of Acquiror ("Newco"), have contemporaneously with the execution of this Voting
Agreement, entered into an Agreement and Plan of Merger dated March 2, 1998 (the
"Merger Agreement") which provides, among other things, that Newco shall be
merged (the "Merger")with and into the Company pursuant to the terms and
conditions thereof;
WHEREAS, as an essential condition and inducement to Acquiror to enter into
the Merger Agreement and in consideration therefor, the undersigned Stockholders
have agreed to enter into this Voting Agreement; and
WHEREAS, as of the date hereof, the Stockholders own of record and
beneficially the shares of common stock, par value $.001 per share, of the
Company (the "Company Common Stock") set forth opposite their respective names
on Schedule A hereto and wish to enter into this Agreement with respect to such
shares of Company Common Stock and the options to purchase shares of Company
Common Stock ("Options");
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein and in the Merger Agreement, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
ARTICLE I
VOTING OF SHARES
Section 1.1 Voting Agreement. Each Stockholder hereby agrees to: (a)
appear, or cause the holder of record on the applicable record date (the "Record
Holder") to appear for the purpose of obtaining a quorum at any annual or
special meeting of stockholders of the Company and at any adjournment thereof;
(b) vote, or cause the Record Holder to vote, in person or by proxy, at every
meeting of the stockholders of the Company at which such matters are considered
and at every adjournment thereof, all of the shares of the Company Common Stock
owned or with respect to which such Stockholder has or shares voting power or
control and all of the shares of Company Common Stock which shall, or with
respect to which voting power or control shall, hereafter be acquired by such
Stockholder (collectively, the "Shares") in favor the Merger, the Merger
Agreement and the transactions contemplated by the Merger Agreement; and (c)
vote, or cause the Record Holder to vote, in person or by proxy, at every
meeting of the stockholders of the Company at which such matters are considered
and at every adjournment thereof, such Stockholder's Shares against any action,
proposal or agreement that could reasonably be expected to result, directly or
indirectly, in a breach in any material respect of any covenant, representation
or warranty or any other obligation of the Company under the Merger Agreement or
the Stock Option Agreement dated March 2, 1998 between the Company and Acquiror
(the "Option Agreement"), or which could reasonably be expected to result in any
of the conditions to the Company's obligations under the Merger Agreement or the
Option Agreement not being fulfilled.
Section 1.2 No Ownership Interest. Nothing contained in this Voting
Agreement shall be deemed to vest in Acquiror any direct or indirect ownership
or incidence of ownership of or with respect to any Shares. All rights,
ownership, and economic benefits of and relating to the Shares or Options shall
remain and belong to the Stockholders, and Acquiror shall have no authority to
manage, direct, superintend, restrict, regulate, govern, or administer any of
the policies or operations of the Company or exercise any power or authority to
direct the Stockholders in the voting of any of the Shares, except as otherwise
provided herein, or the performance of the Stockholders' duties or
responsibilities as stockholders of the Company.
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Section 1.3 Evaluation of Investment. Each Stockholder, by reason of its
knowledge and experience in financial and business matters, believes itself
capable of evaluating the merits and risks of the investment in shares of common
stock, par value $.01 per share, of Acquiror ("Acquiror Common Stock"),
contemplated by the Merger Agreement.
Section 1.4 Documents Delivered. Each Stockholder acknowledges receipt of
copies of the following documents:
(a) the Merger Agreement and all Annexes thereto;
(b) the Option Agreement;
(c) Acquiror's 1996 Annual Report (including Annual Report on Form
10-K for the year ended January 31, 1996);
(d) Acquiror's Proxy Statement dated for the stockholders meeting
dated June 2, 1997; and
(e) Acquiror's Quarterly Report for the quarter ended November 1, 1997
(including Report on Form 10-Q).
Section 1.5 No Inconsistent Agreements. Each Stockholder hereby covenants
and agrees that, except as contemplated by this Voting Agreement and the Merger
Agreement, the Stockholder (a) has not entered, and shall not enter at any time
while this Voting Agreement remains in effect into any voting agreement and (b)
has not granted, and shall not grant at any time while this Voting Agreement
remains in effect, a proxy or power of attorney, in either case which is
inconsistent with this Agreement.
ARTICLE II
RESTRICTIONS ON TRANSFER
Section 2.1 Transfer of Title.
(a) Each Stockholder hereby covenants and agrees that such Stockholder
will not, prior to the termination of this Voting Agreement, either
directly or indirectly, offer or otherwise agree to sell, assign, pledge,
hypothecate, transfer, exchange, or dispose of any Shares or Options or any
other securities or rights convertible into or exchangeable for shares of
Company Common Stock, owned either directly or indirectly by such
Stockholder or with respect to which such Stockholder has the power of
disposition, whether now or hereafter acquired, without the prior written
consent of Acquiror (provided nothing contained herein will be deemed to
restrict the exercise of Options).
(b) Each Stockholder hereby agrees and consents to the entry of stop
transfer instructions with the Company against the transfer of any Shares
consistent with the terms of Section 2.1(a) hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDERS
Each Stockholder hereby severally represents and warrants to Acquiror as
follows:
Section 3.1 Authority Relative to This Agreement. Such Stockholder is
competent to execute and deliver this Voting Agreement, to perform it
obligations hereunder and to consummate the transactions contemplated hereby.
This Voting Agreement has been duly and validly executed and delivered by such
Stockholder and, assuming the due authorization, execution and delivery by
Acquiror, constitutes a legal, valid and binding obligation of such Stockholder,
enforceable against such Stockholder in accordance with its terms except that
(i) the enforceability thereof may be subject to applicable bankruptcy,
insolvency or other similar laws, now or hereinafter in effect affecting
creditors' rights generally and (ii) the availability of the remedy of specific
performance or injunctive or other forms of equitable relief may be subject to
equitable defenses and would be subject to the discretion of the court before
which any proceeding therefor may be brought.
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Section 3.2 No Conflict. The execution and delivery of this Voting
Agreement by such Stockholder does not, and the performance of this Voting
Agreement by such Stockholder shall not result in any breach of or constitute a
default (or an event that with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or
encumbrance, on any of the Shares or Options pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which such Stockholder is a party or by which
such Stockholder or the Shares or Options are bound or affected.
Section 3.3 Title to the Shares. The Shares and Options held by such
Stockholder are owned free and clear of all security interests, liens, claims,
pledges, options, rights of first refusal, agreements, limitations on such
Stockholder's voting rights, charges and other encumbrances of any nature
whatsoever and such Stockholder has not appointed or granted any proxy, which
appointment or grant is still effective, with respect to the Shares.
ARTICLE IV
MISCELLANEOUS
Section 4.1 Termination. This Agreement shall terminate upon the earliest
to occur of (a) the termination of the Merger Agreement in accordance with its
terms or (b) the Effective Time (as defined in the Merger Agreement). Upon such
termination, no party shall have any further obligations or liabilities
hereunder, provided that no such termination shall relieve any party from
liability for any breach of this Agreement prior to such termination.
Section 4.2 Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Voting Agreement were not performance in accordance with its specified terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Voting
Agreement and to specific performance of the terms and provisions hereof in
addition to any other remedy to which they are entitled at law or in equity.
Section 4.3 Successors and Affiliates. This Voting Agreement shall inure
to the benefit of and shall be binding upon the parties hereto and their
respective heirs, legal representatives and assigns. If any Stockholder shall at
any time hereafter acquire ownership of, or voting power with respect to, any
additional Shares in any manner, whether by the exercise of any Options or any
securities or rights convertible into or exchangeable for shares of Company
Common Stock, operation of law or otherwise, such Shares shall be held subject
to all of the terms and provisions of this Voting Agreement. Without limiting
the foregoing, each Stockholder specifically agrees that the obligations of such
Stockholder hereunder shall not be terminated by operation of law, whether by
death or incapacity of the Stockholder or otherwise.
Section 4.4 Entire Agreement. This Voting Agreement constitutes the
entire agreement among Acquiror and the Stockholders with respect to the subject
matter hereof and supersedes all prior agreements and understandings, both
written and oral, among Acquiror and the Stockholders with respect to the
subject matter hereof.
Section 4.5 Captions and Counterparts. The captions in this Voting
Agreement are for convenience only and shall not be considered a part of or
affect the construction of interpretation of any provision of this Voting
Agreement. This Voting Agreement may be executed in several counterparts, each
of which shall constitute one in the same instrument.
Section 4.6 Amendment. This Voting Agreement may not be amended except by
an instrument in writing signed by the parties hereto.
Section 4.7 Waivers. Except as provided in this Voting Agreement, no
action taken pursuant to this Voting Agreement, including without limitation any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representations,
warranties, covenants or agreements contained in this Voting Agreement. The
wavier by any party hereto of a
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breach of any provision hereunder shall not operate or be construed as a wavier
of any prior or subsequent breach of the same or any other provision hereunder.
Section 4.8 Severability. If any term of other provision of this Voting
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Voting Agreement
shall nevertheless remain in full force and effect. Upon such determination that
any term or other provision is invalid, illegal or incapable of being enforced,
the parties hereto shall negotiate in good faith to modify this Voting Agreement
so as to effect the original intent of the parties as closely as possible to the
fullest extent permitted by applicable law in a mutually acceptable manner in
order that the terms of this Voting Agreement remain as originally contemplated
to the fullest extent possible.
Section 4.9 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made and shall be effective upon receipt, if delivered personally, mailed by
registered or certified mail (postage prepaid, return receipt requested) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like changes of address) or sent by electronic
transmission (provided that a confirmation copy is sent by another approved
means) to the telecopier number specified below:
If to a Stockholder:
c/o Benchmarq Microelctronics, Inc.
17919 Waterview Parkway
Dallas, Texas 75252
Fax: (972) 437-9198
If to Acquiror:
Unitrode Corporation
7 Continental Boulevard
Merrimack, New Hampshire 03054
Attention: Allan R. Campbell
Fax: (603) 429-8771
with a copy to:
Margaret A. Brown, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
One Beacon Street
31st Floor
Boston, Massachusetts 02108
Telephone: (617) 573-4800
Fax: (617) 573-4822
Section 4.10 Governing Law. This Voting Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware regardless
of the laws that might otherwise govern under applicable principles of conflicts
of law.
Section 4.11 Definitions. Capitalized terms used and not defined herein
shall have the meaning set forth in the Merger Agreement.
Section 4.12 Obligations of Stockholders. The obligations of the
Stockholders hereunder shall be "several" and not (i) "joint" or (ii) "joint and
several." Without limiting the generality of the foregoing, under no
circumstances will any Stockholder have any liability or obligation with respect
to any misrepresentation or breach of covenant of any other Stockholder.
Section 4.13 Officers and Directors. No person who is or becomes (during
the term hereof) a director or officer of the Company makes any agreement or
understanding herein in his or her capacity as such director or officer, and
nothing herein will limit or affect any actions taken by any Stockholder in his
or her capacity as an officer or director of the Company in exercising its
rights under the Merger Agreement.
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IN WITNESS WHEREOF, each of the parties hereto have caused this Voting
Agreement to be duly executed as of the date first written above.
By: /s/ ALAN R. SCHUELE
------------------------------------
Name: Alan R. Schuele
By: /s/ DERRELL C. COKER
------------------------------------
Name: Derrell C. Coker
By: /s/ L.J. SEVIN
------------------------------------
Name: L.J. Sevin
By: /s/ HARVEY B. CASH
------------------------------------
Name: Harvey B. Cash
By: /s/ DIETRICH ERDMANN
------------------------------------
Name: Dietrich Erdmann
By: /s/ JACK KILBY
------------------------------------
Name: Jack Kilby
By: /s/ CHARLES H. PHIPPS
------------------------------------
Name: Charles H. Phipps
UNITRODE CORPORATION
By: /s/ ROBERT J. RICHARDSON
------------------------------------
Name: Robert J. Richardson
Title: President and Chief Executive
Officer
G-5
<PAGE> 185
VOTING AGREEMENT
SCHEDULE A
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMPANY COMMON STOCK
STOCKHOLDER: OWNED BY STOCKHOLDER:
- ------------ -----------------------
<S> <C>
L.J. Sevin............................ 695,120
Jack Kilby............................ 6,250
Derrell C. Coker...................... 72,755
Dietrich Erdmann...................... 602,212
Harvey B. Cash........................ 43,850
Charles H. Phipps..................... 40,422
Alan R. Schuele....................... 0
</TABLE>
G-6
<PAGE> 186
APPENDIX H
AMENDMENT TO VOTING AGREEMENT
THIS AMENDMENT TO VOTING AGREEMENT (this "Amendment") is being entered into
as of June 23, 1998, by and among Alan R. Schuele, Derrell C. Coker, L.J. Sevin,
Harvey B. Cash, Dietrich Erdmann, Jack Kilby and Charles H. Phipps (the
"Stockholders"), and Unitrode Corporation, a Maryland corporation ("Unitrode").
WHEREAS, BENCHMARQ Microelectronics, Inc., a Delaware corporation (the
"Company"), Unitrode and Merrimack Corporation, a Delaware corporation and a
wholly owned subsidiary of Unitrode, entered into an Agreement and Plan Merger
dated as of March 2, 1998 (the "Original Agreement"), which provides, among
other things, that Newco shall be merged with and into the Company pursuant to
the terms and conditions thereof; and
WHEREAS, as an essential condition and inducement to Unitrode to enter into
the Original Agreement and in consideration therefor, the Stockholders entered
into a Voting Agreement dated as of March 2, 1998 (the "Voting Agreement"); and
WHEREAS, the Company, Unitrode and Newco are contemporaneously with the
execution of this Amendment entering into an Amendment to the Original Agreement
amending certain terms and provisions of the Original Agreement (as so amended,
the "Amended Agreement"); and
WHEREAS, as an essential condition and inducement to Unitrode to enter into
the Amended Agreement and in consideration therefor, the Stockholders have
agreed to enter into this Amendment; and
WHEREAS, as of the date hereof, the Stockholders own of record and
beneficially the shares of common stock, par value $.001 per share, of the
Company (the "Company Common Stock") set forth opposite their respective names
on Schedule A hereto and wish to enter into this Amendment with respect to such
shares of Company Common Stock and options to purchase shares of Company Common
Stock;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein and in the Amended Agreement, and intending to
be legally bound hereby, the parties hereto hereby agree as follows (with
capitalized terms used and not defined herein having their respective meanings
ascribed to them in the Amended Agreement):
1. References to the Merger Agreement. All references to the Merger
Agreement in the Voting Agreement are hereby amended to refer to the
Amended Agreement.
2. Voting Agreement in Full Force and Effect. The Voting Agreement,
as amended by this Amendment, shall continue in full force and effect.
H-1
<PAGE> 187
IN WITNESS WHEREOF, each of the parties hereto have caused this Amendment
to be duly executed as of the date first written above.
/s/ ALAN R. SCHUELE
--------------------------------------
Alan R. Schuele
/s/ DERRELL C. COKER
--------------------------------------
Derrell C. Coker
/s/ L.J. SEVIN
--------------------------------------
L.J. Sevin
/s/ HARVEY B. CASH
--------------------------------------
Harvey B. Cash
/s/ DIETRICH ERDMANN
--------------------------------------
Dietrich Erdmann
/s/ JACK KILBY
--------------------------------------
Jack Kilby
/s/ CHARLES H. PHIPPS
--------------------------------------
Charles H. Phipps
UNITRODE CORPORATION
By: /s/ ROBERT J. RICHARDSON
--------------------------------------
Name: Robert J. Richardson
Title: President and Chief Executive
Officer
H-2
<PAGE> 188
VOTING AGREEMENT
SCHEDULE A
<TABLE>
<CAPTION>
NUMBER OF SHARES OF COMPANY COMMON
STOCKHOLDER: STOCK OWNED BY STOCKHOLDER:
- ------------ ----------------------------------
<S> <C>
L.J. Sevin................................. 695,120
Jack Kilby................................. 6,250
Derrell C. Coker........................... 72,755
Dietrich Erdmann........................... 605,212
Harvey B. Cash............................. 43,850
Charles H. Phipps.......................... 40,422
Alan R. Schuele............................ 0
</TABLE>
H-3
<PAGE> 189
0936-RPS-98
<PAGE> 190
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. LIMITATION OF LIABILITY AND INDEMNIFICATION OF DIRECTORS
The MGCL, as amended from time to time, permits a Maryland corporation to
include in its articles of incorporation a provision limiting the liability of
its directors and officers to the corporation and its stockholders for money
damages except for liability resulting from (a) actual receipt of an improper
benefit or profit in money, property or services or (b) active and deliberate
dishonesty established by a final judgment as being material to the cause of
action. The Unitrode Articles contain such a provision which eliminates such
liability except (a) to the extent that it is proved that the person actually
received an improper benefit or profit in money, property or services, for the
amount of the benefit or profit in money, property or services actually received
or (b) to the extent that a judgment or other final adjudication adverse to the
person is entered in a proceeding based on a finding in the proceeding that the
person's action, or failure to act, was the result of active and deliberate
dishonesty and was material to the cause adjudicated in the proceeding.
The Unitrode Bylaws obligate it, to the maximum extent permitted by
Maryland law, to indemnify and to pay or reimburse reasonable expenses in
advance of final disposition of a proceeding to (a) any present or former
director or officer who is made a party to the proceeding by reason of his
service in that capacity or (b) any individual who, while a director of Unitrode
and at the request of Unitrode, serves or has served another corporation,
partnership, joint venture, trust, employee benefit plan or any other enterprise
as a director, officer, partner or trustee of such corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise and who is made
a party to the proceeding by reason of his service in that capacity. The
Unitrode Bylaws also permit Unitrode to indemnify and advance expenses to any
person who served a predecessor of Unitrode in any of the capacities described
above and to any employee or agent of Unitrode or a predecessor of Unitrode.
The MGCL requires a corporation (unless its articles of incorporation
provide otherwise, which the Unitrode Articles do not) to indemnify a director
or officer who has been successful, on the merits or otherwise, in the defense
of any proceeding to which he is made a party by reason of his service in that
capacity. The MGCL permits a corporation to indemnify its present and former
directors and officers, among others, against judgments, penalties, fines,
settlements and reasonable expenses actually incurred by them in connection with
any proceeding to which they may be made a party by reason of their service in
those or other capacities unless it is established that (a) the act or omission
of the director or officer was material to the matter giving rise to the
proceeding and (i) was committed in bad faith or (ii) was the result of active
and deliberate dishonesty, (b) the director or officer actually received an
improper personal benefit in money, property or services or (c) in the case of
any criminal proceeding, the director or officer had reasonable cause to believe
that the act or omission was unlawful. However, under the MGCL, a Maryland
corporation may not indemnify for an adverse judgment in a suit by or in the
right of the corporation. In addition, the MGCL requires Unitrode, as a
condition to advancing expenses, to obtain (a) a written affirmation by the
director or officer of his good faith belief that he has met the standard of
conduct necessary for indemnification by Unitrode as authorized by the Unitrode
Bylaws and (b) a written statement by or on his behalf to repay the amount paid
or reimbursed by Unitrode if it shall ultimately be determined that the standard
of conduct was not met.
Unitrode's officers and directors are insured against certain liabilities
under a policy maintained by Unitrode with aggregate coverage of $10,000,000.
II-1
<PAGE> 191
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<C> <S>
2.1 Agreement and Plan of Merger, dated as of March 2, 1998, by
and among Unitrode Corporation, Merrimack Corporation and
BENCHMARQ Microelectronic, Inc. (attached as Appendix A to
the Joint Proxy Statement-Prospectus forming a part of this
Registration Statement).
2.2 Amendment to Agreement and Plan of Merger, dated as of June
23, 1998, by and among Unitrode Corporation, Merrimack
Corporation and BENCHMARQ Microelectronics, Inc. (attached
as Appendix B to the Joint Proxy Statement-Prospectus
forming a part of this Registration Statement).
3.1 Articles of Incorporation of Unitrode Corporation
(incorporated by reference to Exhibit 3(A) of Unitrode's
Form 10-K for the fiscal year ended January 31, 1989).
3.2 Articles Supplementary to the Articles of Incorporation of
Unitrode Corporation (incorporated by reference to Exhibits
3(A)(1) and (6) of Unitrode's Form 8-K filed May 4, 1990).
3.3 Articles of Amendment to the Articles of Incorporation of
Unitrode Corporation (incorporated by reference to Exhibit
3(B) of Unitrode's Form 10-K for the fiscal year ended
January 31, 1992).
3.4 Bylaws of Unitrode Corporation (incorporated by reference to
Exhibit 3.2 to Unitrode's Form 10-K for the fiscal year
ended January 31, 1992).
5.1 Opinion of Ballard Spahr Andrews & Ingersoll LLP regarding
validity of securities being registered.*
8.1 Opinion of Winstead Sechrest & Minick P.C. regarding certain
tax aspects of the Merger.*
8.2 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
regarding certain tax aspects of the Merger.*
23.1 Consent of Ballard Spahr Andrews & Ingersoll LLP (included
as part of its opinion filed as Exhibit 5.1).
23.2 Consent of PricewaterhouseCoopers LLP
23.3 Consent of Ernst & Young LLP
23.4 Consent of Winstead Sechrest & Minick P.C. (included as part
of its opinion filed as Exhibit 8.1).
23.5 Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included as part of its opinion filed as Exhibit 8.2).
23.6 Consent of Adams, Harkness & Hill, Inc. (included as part of
its opinion filed as Exhibit 99.1).
23.7 Consent of Prudential Securities Incorporated (included as
part of its opinion filed as Exhibit 99.2).
23.8 Consent of William W.R. Elder.*
23.9 Consent of Dietrich Erdmann.*
23.10 Consent of Derrell C. Coker.*
23.11 Consent of Alan R. Schuele.*
24.1 Power of Attorney.*
99.1 Opinion of Adams, Harkness & Hill, Inc. (included as
Appendix C to the Joint Proxy Statement-Prospectus forming a
part of this Registration Statement).
99.2 Opinion of Prudential Securities Incorporated (included as
Appendix D to the Joint Proxy Statement-Prospectus forming a
part of this Registration Statement).
</TABLE>
- ---------------
* previously filed
II-2
<PAGE> 192
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Merrimack, State of New
Hampshire, on July 13, 1998.
UNITRODE CORPORATION
By: /s/ ALLAN R. CAMPBELL
--------------------------------------
Name: Allan R. Campbell
Title: Senior Vice President,
General Counsel and
Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* President, Chief Executive July 13, 1998
- --------------------------------------------------- Officer and Director
Robert J. Richardson (principal executive
officer)
* Executive Vice President and July 13, 1998
- --------------------------------------------------- Chief Financial Officer
Cosmo S. Trapani (principal financial and
accounting officer)
* Director July 13, 1998
- ---------------------------------------------------
Robert L. Gable
* Director July 13, 1998
- ---------------------------------------------------
Peter A. Brooke
* Director July 13, 1998
- ---------------------------------------------------
Kenneth Hecht
* Director July 13, 1998
- ---------------------------------------------------
Louis E. Lataif
* Director July 13, 1998
- ---------------------------------------------------
James T. Vanderslice
</TABLE>
*By: /s/ ALLAN R. CAMPBELL
------------------------------
Allan R. Campbell
Attorney-in-Fact
II-3
<PAGE> 193
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<C> <S>
2.1 Agreement and Plan of Merger, dated as of March 2, 1998, by
and among Unitrode Corporation, Merrimack Corporation and
BENCHMARQ Microelectronic, Inc. (attached as Appendix A to
the Joint Proxy Statement-Prospectus forming a part of this
Registration Statement).
2.2 Amendment to Agreement and Plan of Merger, dated as of June
23, 1998, by and among Unitrode Corporation, Merrimack
Corporation and BENCHMARQ Microelectronics, Inc. (attached
as Appendix B to the Joint Proxy Statement-Prospectus
forming a part of this Registration Statement).
3.1 Articles of Incorporation of Unitrode Corporation
(incorporated by reference to Exhibit 3.1 of Unitrode's Form
10-K for the fiscal year ended January 31, 1989).
3.2 Articles Supplementary to the Articles of Incorporation of
Unitrode Corporation (incorporated by reference to Exhibits
3(A)(1) and (6) of Unitrode's Form 8-K filed May 4, 1990).
3.3 Articles of Amendment to the Articles of Incorporation of
Unitrode Corporation (incorporated by reference to Exhibit
3(B) of Unitrode's Form 10-K for the fiscal year ended
January 31, 1992).
3.4 Bylaws of Unitrode Corporation (incorporated by reference to
Exhibit 3.2 to Unitrode's Form 10-K for the fiscal year
ended January 31, 1992).
5.1 Opinion of Ballard Spahr Andrews & Ingersoll LLP regarding
validity of securities being registered.*
8.1 Opinion of Winstead Sechrest & Minick P.C. regarding certain
tax aspects of the Merger.*
8.2 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
regarding certain tax aspects of the Merger.*
23.1 Consent of Ballard Spahr Andrews & Ingersoll, LLP (included
as part of its opinion filed as Exhibit 5.1).
23.2 Consent of PricewaterhouseCoopers LLP
23.3 Consent of Ernst & Young LLP
23.4 Consent of Winstead Sechrest & Minick P.C. (included as part
of its opinion filed as Exhibit 8.1).
23.5 Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included as part of its opinion filed as Exhibit 8.2).
23.6 Consent of Adams, Harkness & Hill, Inc. (included as part of
its opinion filed as Exhibit 99.1).
23.7 Consent of Prudential Securities Incorporated (included as
part of its opinion filed as Exhibit 99.1).
23.8 Consent of William W.R. Elder.*
23.9 Consent of Dietrich Erdmann.*
23.10 Consent of Derrell C. Coker.*
23.11 Consent of Alan R. Schuele.*
24.1 Power of Attorney.*
99.1 Opinion of Adams, Harkness & Hill, Inc. (included as
Appendix C to the Joint Proxy Statement-Prospectus forming a
part of this Registration Statement).
99.2 Opinion of Prudential Securities Incorporated (included as
Appendix D to the Joint Proxy Statement-Prospectus forming a
part of this Registration Statement).
</TABLE>
- ---------------
* Previously filed
II-4
<PAGE> 194
- --------------------------------------------------------------------------------
UTR22 F DETACH HERE
PROXY
UNITRODE CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ADJOURNED SESSION OF THE ANNUAL MEETING OF STOCKHOLDERS
ON JULY 29, 1998
The undersigned, revoking any proxy heretofore given with respect to the
matters addressed herein, hereby appoints Robert J. Richardson and Allan R.
Campbell proxies, each of them with full power of substitution and
resubstitution, for and in the name of the undersigned, to vote all shares of
common stock of Unitrode Corporation ("Unitrode") which the undersigned would be
entitled to vote if personally present at the Adjourned Session of the Annual
Meeting of Stockholders to be held on Wednesday, July 29, 1998, at 11:00 a.m.,
local time, at Unitrode's offices at 7 Continental Boulevard, Merrimack, New
Hampshire or at any adjournment thereof, upon the matters described in the
accompanying Notice of Adjourned Annual Meeting of Stockholders and Amended
Joint Proxy Statement-Prospectus, receipt of which is hereby acknowledged, and
upon any other business that may properly come before the Annual Meeting of
Stockholders or any adjournment thereof. Said proxy is directed to vote on the
matters described in the Notice of Adjourned Annual Meeting of Stockholders and
Amended Joint Proxy Statement-Prospectus as follows, and otherwise in their
discretion upon such other business as may properly come before the Adjourned
Session of the Annual Meeting of Stockholders or any adjournment thereof.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
- ----------- -----------
SEE REVERSE SEE REVERSE
SIDE SIDE
- ----------- -----------
<PAGE> 195
- --------------------------------------------------------------------------------
UTR22 F DETACH HERE
----- Please mark
/ X / votes as in
----- this example.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO DIRECTION IS INDICATED, THIS
PROXY WILL BE VOTED FOR THE PROPOSALS STATED BELOW.
1. To approve the issuance of up to 8,582,047 shares of common stock, par
value $.01 per share, of Unitrode (the "Unitrode Common Stock") in
connection with the merger of Merrimack Corporation, a Delaware
corporation and a wholly owned subsidiary of Unitrode ("Sub"), with and
into BENCHMARQ Microelectronics, Inc., a Delaware corporation
("BENCHMARQ"), pursuant to an Agreement and Plan of Merger, dated as of
March 2, 1998, by and among Unitrode, Sub and BENCHMARQ and amended as of
June 23, 1998.
----- ----- -----
/ / FOR / / AGAINST / / ABSTAIN
----- ----- -----
2. To elect William W.R. Elder and Robert L. Gable as directors for
three-year terms and Robert J. Richardson for a two-year term.
----- ----- -----
/ / FOR / / AGAINST / / ABSTAIN
----- ----- -----
-----
/ / ____________ FOR, EXCEPT WITHHELD FROM THE NOMINEES AS NOTED ABOVE
-----
3. To amend the Unitrode Corporation 1992 Employee Stock Option Plan to
increase the number of shares of Unitrode Common Stock which may be issued
under such Plan from 6,000,000 shares to 7,000,000 shares.
----- ----- -----
/ / FOR / / AGAINST / / ABSTAIN
----- ----- -----
-----
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT / /
-----
Please sign exactly as your name or names
appear hereon. For more than one owner as
shown above, each should sign. When signing
in a fiduciary or representative capacity,
please give full title. If this proxy is
submitted by a corporation, it should be
executed in the full corporate name by a
duly authorized officer, if a partnership,
please sign in the partnership name by an
authorized person.
PLEASE COMPLETE, DATE AND SIGN THIS PROXY
AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND
THE ADJOURNED SESSION OF THE ANNUAL MEETING
ON JULY 29, 1998. IF YOU ATTEND THE
ADJOURNED SESSION OF THE ANNUAL MEETING, YOU
MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU
HAVE PREVIOUSLY RETURNED YOUR PROXY.
Signature:______________ Date:________ Signature:______________ Date:________
<PAGE> 196
- --------------------------------------------------------------------------------
BMQ30 2 DETACH HERE
PROXY
BENCHMARQ MICROELECTRONICS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ADJOURNED SESSION OF THE SPECIAL MEETING OF STOCKHOLDERS
ON JULY 29, 1998
The undersigned, revoking any proxy heretofore given with respect to the
matters addressed herein, hereby appoints Alan R. Schuele and R. Scott Schaefer
proxies, each of them with full power of substitution and resubstitution, for
and in the name of the undersigned, to vote all shares of common stock of
BENCHMARQ Microelectronics, Inc. ("BENCHMARQ") which the undersigned would be
entitled to vote if personally present at the Adjourned Session of the Special
Meeting of Stockholders to be held on Wednesday, July 29, 1998, at 10:00 a.m.,
local time, at the offices of Winstead Sechrest & Minick P.C. at 5400
Renaissance Tower, 1201 Elm Street, Dallas, Texas 75270 or at any adjournment
thereof, upon the matters described in the accompanying Notice of Adjourned
Special Meeting of Stockholders and Amended Joint Proxy Statement-Prospectus,
receipt of which is hereby acknowledged, and upon any other business that may
properly come before the Adjourned Session of the Special Meeting of
Stockholders or any adjournment thereof. Said proxy is directed to vote on the
matters described in the Notice of Adjourned Special Meeting of Stockholders and
Amended Joint Proxy Statement-Prospectus as follows, and otherwise in their
discretion upon such other business as may properly come before the Adjourned
Session of the Special Meeting of Stockholders or any adjournment thereof.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
- ----------- -----------
SEE REVERSE SEE REVERSE
SIDE SIDE
- ----------- -----------
<PAGE> 197
- --------------------------------------------------------------------------------
BMQ30 3 DETACH HERE
-----
/ x / Please mark
----- votes as in
this example.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO DIRECTION IS INDICATED, THIS
PROXY WILL BE VOTED FOR THE PROPOSAL STATED BELOW.
1. To approve and adopt the Agreement and Plan of Merger dated as of March 2,
1998, as amended June 23, 1998 by and among Unitrode Corporation,
Merrimack Corporation and BENCHMARQ and the merger contemplated thereby.
----- ----- -----
/ / FOR / / AGAINST / / ABSTAIN
----- ----- -----
MARK HERE FOR ADDRESS CHANGE -----
AND NOTE AT LEFT / /
-----
Please sign exactly as your name or names
appear hereon. For more than one owner as
shown above, each should sign. When signing
in a fiduciary or representative capacity,
please give full title. If this proxy is
submitted by a corporation, it should be
executed in the full corporate name by a
duly authorized officer, if a partnership,
please sign in the partnership name by an
authorized person.
PLEASE COMPLETE, DATE AND SIGN THIS PROXY
AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND
THE ADJOURNED SESSION OF THE SPECIAL MEETING
ON JULY 29, 1998. IF YOU ATTEND THE
ADJOURNED SESSION OF THE SPECIAL MEETING,
YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF
YOU HAVE PREVIOUSLY RETURNED YOUR PROXY.
Signature: Date: Signature: Date:
----------------- -------- ------------------ ------
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Amendment No. 1 to the
Registration Statement of Unitrode Corporation on Form S-4 (File No. 333-53825)
of our report dated March 2, 1998, except for Note P, as to which the date is
April 7, 1998, on our audits of the consolidated financial statements and
financial statement schedule of Unitrode Corporation and Consolidated
Subsidiaries as of January 31, 1998 and 1997, and for each of the three years in
the period ended January 31, 1998, which report is included in the Annual Report
on Form 10-K of Unitrode Corporation for the year ended January 31, 1998. We
also consent to the reference to our firm under the caption "Experts".
/s/ PricewaterhouseCoopers LLP
------------------------------
PricewaterhouseCoopers LLP
Boston, Massachusetts
July 10, 1998
<PAGE> 1
Exhibit 23.3
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related Prospectus of Unitrode
Corporation for the registration of 8,582,047 shares of its common stock and to
the incorporation by reference therein of our report dated January 26, 1998,
except for Notes 11 and 12, as to which the date is March 2, 1998, with respect
to the consolidated financial statements and schedule of BENCHMARQ
Microelectronics, Inc., included in the annual report on Form 10-K for the year
ended December 31, 1997, filed with the Securities and Exchange Commission.
Ernst & Young LLP
Dallas Texas
July 9, 1998
