<PAGE>
- - - - --------------------------------------------------------------------------------
- - - - --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------
CRAY RESEARCH, INC.
(Name of Subject Company)
C ACQUISITION CORPORATION
SILICON GRAPHICS, INC.
(Bidder)
Common Stock, $1.00 par value
(including Common Stock Purchase Rights
issued with respect thereto)
(Title of Class of Securities)
225224 10 4
(CUSIP Number of Class of Securities)
William M. Kelly
Vice President, General Counsel and Secretary
Silicon Graphics, Inc.
2011 North Shoreline Boulevard
Mountain View, California 94043-1389
Telephone: (415) 933-1440
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of Bidder)
Copy to:
Michael J. Kennedy, Esq.
Shearman & Sterling
555 California Street
San Francisco, California 94104-1522
Telephone: (415) 616-1100
February 29, 1996
------------------------
CALCULATION OF FILING FEE
<TABLE>
<S> <C>
Transaction Value Amount of Filing Fee
$576,562,050(1) $115,313(2)
<FN>
/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: Filing Party:
Form or Registration No.: Date Filed:
</TABLE>
- - - - ------------------------
(1) Calculated by multiplying $30.00, the per share tender offer price, by
19,218,735, the number of shares of Common Stock sought in the Offer.
(2) 1/50 of 1% of Transaction Valuation.
- - - - --------------------------------------------------------------------------------
- - - - --------------------------------------------------------------------------------
<PAGE>
This Tender Offer Statement on Schedule 14D-1 (the "Statement") relates to
the offer by C Acquisition Corporation, a corporation organized and existing
under the laws of the State of Delaware ("Purchaser") and wholly owned
subsidiary of Silicon Graphics, Inc., a Delaware corporation ("Parent"), to
purchase 19,218,735 shares of common stock, par value $1.00 per share (the
"Shares"), of Cray Research, Inc., a corporation organized and existing under
the laws of the State of Delaware (the "Company"), including the associated
Common Share Purchase Rights (the "Rights") issued pursuant to the Rights
Agreement, dated May 15, 1989, between the Company and Norwest Bank Minnesota,
N.A. (the "Rights Agreement"), at a price of $30.00 per Share, net to the seller
in cash, upon the terms and subject to the conditions set forth in Purchaser's
Offer to Purchase dated February 29, 1996 (the "Offer to Purchase") and in the
related Letter of Transmittal (which together constitute the "Offer"), copies of
which are attached hereto as Exhibits (a)(1) and (a)(2), respectively. All
references herein to the Rights include all benefits which may inure to
stockholders of the Company pursuant to the Rights Agreement, and unless the
context requires otherwise, all references herein to Shares include the Rights.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Cray Research, Inc., a corporation
organized and existing under the laws of the State of Delaware, which has its
principal executive offices at 655A Lone Oak Drive, Eagan, Minnesota 55121.
(b) The class of equity securities and number of shares thereof being sought
are the common stock, par value $1.00 per share, of the Company and 19,218,735
shares thereof, including the Rights, respectively. The information set forth in
the Introduction and Section 1 ("Terms of the Offer; Proration; Expiration
Date") of the Offer to Purchase is incorporated herein by reference.
(c) The information concerning the principal market in which the Shares are
traded and certain high and low sales prices for the Shares in such principal
market set forth in Section 6 ("Price Range of Shares; Dividends") of the Offer
to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g) This Statement is filed by Purchaser and Parent. The
information concerning the name, state or other place of organization, principal
business and address of the principal office of each of Purchaser and Parent and
the information concerning the name, business address, present principal
occupation or employment and the name, principal business and address of any
corporation or other organization in which such employment or occupation is
conducted, material occupations, positions, offices or employments during the
last five years and citizenship of each of the executive officers and directors
of Purchaser and Parent are set forth in the Introduction, Section 8 ("Certain
Information Concerning Purchaser and Parent") and Schedule I of the Offer to
Purchase and are incorporated herein by reference.
(e) and (f) During the last five years, none of Purchaser or Parent and, to
the best knowledge of Purchaser and Parent, none of the persons listed in
Schedule I of the Offer to Purchase has been (i) convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or (ii) a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting activities
subject to, federal or state securities laws or finding any violation of such
laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) The information set forth in Section 8 ("Certain Information Concerning
Purchaser and Parent") and Section 10 ("Background of the Offer; Contacts with
the Company; the Merger Agreement") is incorporated herein by reference.
(b) The information set forth in the Introduction, Section 7 ("Certain
Information Concerning the Company"), Section 8 ("Certain Information Concerning
Purchaser and Parent"), Section 10 ("Background of the Offer; Contacts with the
Company; the Merger Agreement") and Section 11 ("Purpose of the Offer; Plans for
the Company After the Offer and the Merger") of the Offer to Purchase is
incorporated herein by reference.
<PAGE>
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(c) The information set forth in Section 9 ("Financing of the Offer and
the Merger") of the Offer to Purchase is incorporated herein by reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in the Introduction, Section 10
("Background of the Offer; Contacts with the Company; the Merger Agreement") and
Section 11 ("Purpose of the Offer; Plans for the Company After the Offer and the
Merger") of the Offer to Purchase is incorporated herein by reference.
(f) and (g) The information set forth in Section 13 ("Effect of the Offer
on the Market for Shares, Exchange Listing and Exchange Act Registration") of
the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) and (b) The information set forth in Section 8 ("Certain Information
Concerning Purchaser and Parent") of the Offer to Purchase is incorporated
herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction, Section 8 ("Certain
Information Concerning Purchaser and Parent"), Section 10 ("Background of the
Offer; Contacts with the Company; the Merger Agreement") and Section 11
("Purpose of the Offer; Plans for the Company After the Offer and the Merger")
of the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction and Section 16 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 8 ("Certain Information Concerning
Purchaser and Parent") of the Offer to Purchase is incorporated herein by
reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) Not applicable.
(b) and (c) The information set forth in Section 15 ("Certain Legal Matters
and Regulatory Approvals") of the Offer to Purchase is incorporated
herein by reference.
(d) Not applicable.
(e) Not applicable.
(f) The information set forth in the Offer to Purchase is incorporated
herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Form of Offer to Purchase dated February 29, 1996
(a)(2) Form of Letter of Transmittal
(a)(3) Form of Notice of Guaranteed Delivery
(a)(4) Form of Letter from Unterberg Harris to Brokers, Dealers, Commercial
Banks, Trust Companies and Nominees
(a)(5) Form of Letter from Brokers, Dealers, Commercial Banks, Trust
Companies and Nominees to Clients
(a)(6) Form of Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9
(a)(7) Summary Advertisement as published in THE WALL STREET JOURNAL on
February 29, 1996
(a)(8) Press Release issued by Parent and the Company on February 26, 1996
<PAGE>
(b) Not applicable
(c) Agreement and Plan of Merger, dated as of January 25, 1996, among
Parent, Purchaser and the Company
(d) None
(e) Not applicable
(f) None
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
<TABLE>
<S> <C>
February 29, 1996 C ACQUISITION CORPORATION
</TABLE>
By /S/ WILLIAM M. KELLY
------------------------------------
William M. Kelly
VICE PRESIDENT
SILICON GRAPHICS, INC.
By /S/ WILLIAM M. KELLY
------------------------------------
William M. Kelly
VICE PRESIDENT, GENERAL COUNSEL AND
SECRETARY
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. ITEM
- - - - ----------- -----------------------------------------------------------------------------------------------
<S> <C>
(a)(1) Form of Offer to Purchase dated February 29, 1996
(a)(2) Form of Letter of Transmittal
(a)(3) Form of Notice of Guaranteed Delivery
(a)(4) Form of Letter from Unterberg Harris to Brokers, Dealers, Commercial Banks, Trust Companies and
Nominees
(a)(5) Form of Letter from Brokers, Dealers, Commercial Banks, Trust Companies and Nominees to Clients
(a)(6) Form of Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9
(a)(7) Summary Advertisement as published in THE WALL STREET JOURNAL on February 29, 1996
(a)(8) Press Release issued by Silicon Graphics, Inc. and Cray Research, Inc. on February 26, 1996
(b) Not applicable
(c) Agreement and Plan of Merger, dated as of February 25, 1996, among Silicon Graphics, Inc., C
Acquisition Corporation and Cray Research, Inc.
(d) None
(e) Not applicable
(f) None
</TABLE>
<PAGE>
OFFER TO PURCHASE FOR CASH
19,218,735 SHARES OF COMMON STOCK
(INCLUDING THE COMMON SHARE PURCHASE RIGHTS)
OF
CRAY RESEARCH, INC.
AT
$30.00 NET PER SHARE
BY
C ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
SILICON GRAPHICS, INC.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, MARCH 27, 1996,
UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST A
MAJORITY OF THE SHARES OUTSTANDING ON A FULLY DILUTED BASIS.
------------------------
THE BOARD OF DIRECTORS OF CRAY RESEARCH, INC. (THE "COMPANY") UNANIMOUSLY
HAS APPROVED AND ADOPTED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING THE OFFER AND THE MERGER, AND UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
------------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
shares of common stock, par value $1.00 per share (the "Shares"), of the Company
should either (i) complete and sign the Letter of Transmittal (or a facsimile
thereof) in accordance with the instructions in the Letter of Transmittal and
mail or deliver it together with the certificate(s) evidencing tendered Shares,
and any other required documents, to the Depositary or tender such Shares
pursuant to the procedure for book-entry transfer set forth in Section 3 or (ii)
request such stockholder's broker, dealer, commercial bank, trust company or
other nominee to effect the transaction for such stockholder. Any stockholder
whose Shares are registered in the name of a broker, dealer, commercial bank,
trust company or other nominee must contact such broker, dealer, commercial
bank, trust company or other nominee if such stockholder desires to tender such
Shares.
A stockholder who desires to tender Shares and whose certificates evidencing
such Shares are not immediately available, or who cannot comply with the
procedure for book-entry transfer on a timely basis, may tender such Shares by
following the procedure for guaranteed delivery set forth in Section 3.
Questions or requests for assistance may be directed to the Information
Agent or to the Dealer Manager at their respective addresses and telephone
numbers set forth on the back cover of this Offer to Purchase. Additional copies
of this Offer to Purchase, the Letter of Transmittal and the Notice of
Guaranteed Delivery may also be obtained from the Information Agent, the Dealer
Manager or from brokers, dealers, commercial banks or trust companies.
------------------------
THE DEALER MANAGER FOR THE OFFER IS:
UNTERBERG HARRIS
February 29, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<C> <S> <C>
INTRODUCTION.................................................................................................. 1
1. Terms of the Offer; Proration; Expiration Date..................................................... 2
2. Acceptance for Payment and Payment for Shares...................................................... 4
3. Procedures for Accepting the Offer and Tendering Shares............................................ 5
4. Withdrawal Rights.................................................................................. 8
5. Certain Federal Income Tax Consequences............................................................ 8
6. Price Range of Shares; Dividends................................................................... 9
7. Certain Information Concerning the Company......................................................... 9
8. Certain Information Concerning Purchaser and Parent................................................ 11
9. Financing of the Offer and the Merger.............................................................. 13
10. Background of the Offer; Contacts with the Company; the Merger Agreement........................... 13
11. Purpose of the Offer; Plans for the Company After the Offer and the Merger......................... 24
12. Dividends and Distributions........................................................................ 26
13. Effect of the Offer on the Market for the Shares, Exchange Listing and Exchange Act Registration... 26
14. Certain Conditions of the Offer.................................................................... 27
15. Certain Legal Matters and Regulatory Approvals..................................................... 29
16. Fees and Expenses.................................................................................. 31
17. Miscellaneous...................................................................................... 32
Schedule Directors and Executive Officers of Parent and Purchaser........................................... I-1
I.
</TABLE>
<PAGE>
To the Holders of Common Stock of
Cray Research, Inc.:
INTRODUCTION
C Acquisition Corporation, a corporation organized and existing under the
laws of the State of Delaware ("Purchaser") and a wholly owned subsidiary of
Silicon Graphics, Inc., a corporation organized and existing under the laws of
the State of Delaware ("Parent"), hereby offers to purchase 19,218,735 shares
(the "Offered Number") of common stock, par value $1.00 per share (the "Company
Common Stock"), of Cray Research, Inc., a corporation organized and existing
under the laws of the State of Delaware (the "Company"), including the Common
Share Purchase Rights (the "Rights") issued pursuant to the Rights Agreement, as
amended, dated May 15, 1989, between the Company and Norwest Bank Minnesota,
N.A. (the "Rights Agreement") at a price of $30.00 per Share, net to the seller
in cash, upon the terms and subject to the conditions set forth in this Offer to
Purchase and in the related Letter of Transmittal (which together constitute the
"Offer"). All references herein to the Rights include all benefits which may
inure to stockholders of the Company pursuant to the Rights Agreement, and
unless the context requires otherwise, shares of Company Common Stock together
with the Rights are herein collectively referred to as the "Shares".
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter of
Transmittal, stock transfer taxes with respect to the purchase of Shares by
Purchaser pursuant to the Offer. Purchaser will pay all charges and expenses of
Unterberg Harris L.P. ("Unterberg Harris"), which is acting as Dealer Manager
for the Offer (in such capacity, the "Dealer Manager"), Citibank, N.A. (the
"Depositary") and Georgeson & Company Inc. (the "Information Agent") incurred in
connection with the Offer. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") UNANIMOUSLY HAS APPROVED
AND ADOPTED THE MERGER AGREEMENT (AS DEFINED BELOW) AND THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, AND UNANIMOUSLY
RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT
TO THE OFFER.
SALOMON BROTHERS INC ("SALOMON BROTHERS") HAS DELIVERED TO THE BOARD ITS
WRITTEN OPINION THAT THE CONSIDERATION TO BE RECEIVED BY THE STOCKHOLDERS OF THE
COMPANY IN THE OFFER AND THE MERGER IS FAIR TO SUCH STOCKHOLDERS FROM A
FINANCIAL POINT OF VIEW. A COPY OF THE OPINION OF SALOMON BROTHERS, WHICH SETS
FORTH THE ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE REVIEW
UNDERTAKEN BY SALOMON BROTHERS, IS CONTAINED IN THE COMPANY'S
SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 (THE "SCHEDULE 14D-9"),
WHICH IS BEING MAILED TO STOCKHOLDERS HEREWITH.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST A
MAJORITY OF THE SHARES THEN OUTSTANDING ON A FULLY DILUTED BASIS (THE "MINIMUM
CONDITION"). SEE SECTION 14, WHICH SETS FORTH IN FULL THE CONDITIONS TO THE
OFFER.
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of February 25, 1996 (the "Merger Agreement"), among Parent, Purchaser and
the Company. The Merger Agreement provides that, among other things, as soon as
practicable after the purchase of Shares pursuant to the Offer and the
satisfaction of the other conditions set forth in the Merger Agreement and in
accordance with the relevant provisions of the General Corporation Law of the
State of Delaware ("Delaware Law"), Purchaser will be merged with and into the
Company (the "Merger"). Following consummation of the Merger, the Company will
continue as the surviving corporation (the "Surviving Corporation") and will
become a wholly owned subsidiary of Parent.
1
<PAGE>
Following completion of the Offer, the remaining Shares are expected to be
converted in the Merger at a one to one ratio into common stock of Parent, par
value $0.001 per share ("Parent Common Stock"). As more completely described
below, if fewer than 19,218,735 of the Shares are purchased in the Offer, the
remaining Company stockholders will receive in the Merger a fraction of a share
of Parent Common Stock and cash for each Share so that the aggregate cash and
stock consideration paid in the Merger is the same as if the Offer had been
fully subscribed. At the effective time of the Merger (the "Effective Time"),
each Share issued and outstanding immediately prior to the Effective Time (other
than Shares held in the treasury of the Company or owned by Purchaser, Parent or
any direct or indirect wholly owned subsidiary of Parent or of the Company
(collectively, "Ineligible Shares"), and other than Shares held by stockholders
who shall have demanded and perfected appraisal rights, if any, under Delaware
Law) will be cancelled and converted automatically into the right to receive (i)
1.00 fully paid and non-assessable share of Parent Common Stock (the "Exchange
Ratio"); PROVIDED, HOWEVER, that if Purchaser accepts for payment and pays for
fewer than 19,218,735 Shares in the Offer (the number of Shares so accepted for
payment and paid for being referred to herein as the "Accepted Share Number"),
then the Exchange Ratio shall be equal to a fraction, (A) the numerator of which
is equal to (x) the number of outstanding Shares immediately prior to the
Effective Time (excluding Ineligible Shares) (the "Final Outstanding Number")
PLUS (y) the Accepted Share Number MINUS (z) the Offered Number and (B) the
denominator of which is the Final Outstanding Number and (ii) if the Exchange
Ratio has been adjusted pursuant to the immediately preceding PROVISO, an amount
in cash equal to a fraction, (A) the numerator of which is the product of the
$30.00 (such amount, or any greater amount per Share paid pursuant to the Offer,
being hereinafter referred to as the "Per Share Amount") and the amount by which
the Offered Number exceeds the Accepted Share Number and (B) the denominator of
which is the Final Outstanding Number. The Merger Agreement is more fully
described in Section 10.
The Merger Agreement provides that, promptly upon the purchase by Purchaser
of Shares pursuant to the Offer and from time to time thereafter, Purchaser
shall be entitled to designate up to such number of directors, rounded up to the
next whole number, on the Board as will give Purchaser representation on the
Board equal to the product of the number of directors on the Board multiplied by
the percentage that the aggregate number of Shares then beneficially owned by
Purchaser and its affiliates following such purchase bears to the total number
of Shares then outstanding. In the Merger Agreement, the Company has agreed to
take all actions necessary to cause Purchaser's designees to be elected as
directors of the Company, including increasing the size of the Board or securing
the resignations of incumbent directors or both.
The consummation of the Merger is subject to the satisfaction or waiver of
certain conditions, including the approval and adoption of the Merger Agreement
by the requisite vote of the stockholders of the Company. See Section 11. A
proxy statement (which will also constitute a prospectus for the Parent Common
Stock issuable in the Merger) containing detailed information concerning the
Merger will be furnished to stockholders of the Company in connection with a
special meeting to be called by the Company to vote on the Merger. Purchaser
will vote all Shares acquired pursuant to the Offer in favor of the Merger.
Under the Company's Certificate of Incorporation and Delaware Law, the
affirmative vote of the holders of a majority of the outstanding Shares is
required to approve and adopt the Merger Agreement and the Merger. Consequently,
if Purchaser acquires (pursuant to the Offer or otherwise) at least a majority
of the outstanding Shares, Purchaser will have sufficient voting power to
approve and adopt the Merger Agreement and the Merger without the vote of any
other stockholder.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
1. TERMS OF THE OFFER; PRORATION; EXPIRATION DATE. Upon the terms and
subject to the conditions of the Offer (including, if the Offer is extended or
amended, the terms and conditions of such extension
2
<PAGE>
or amendment), Purchaser will accept for payment and pay for all Shares validly
tendered prior to the Expiration Date (as hereinafter defined) and not withdrawn
as permitted by Section 4. The term "Expiration Date" means 12:00 midnight, New
York City time, on Wednesday, March 27, 1996; PROVIDED, HOWEVER, that Parent
may, in its sole discretion (but subject to the terms and conditions of the
Merger Agreement), extend the period during which the Offer is open, in which
event the term "Expiration Date" shall mean the latest time and date at which
the Offer, as so extended by Purchaser, shall expire.
If more than 19,218,735 Shares are validly tendered prior to the Expiration
Date and not withdrawn, Purchaser will, upon the terms and subject to the
conditions of the Offer, accept such Shares for payment on a PRO RATA basis,
with adjustments to avoid purchases of fractional Shares, based upon the number
of Shares validly tendered prior to the Expiration Date and not withdrawn.
Because of the difficulty of determining precisely the number of Shares
validly tendered and not withdrawn, if proration is required, Purchaser would
not expect to announce the final results of proration until approximately seven
New York Stock Exchange ("NYSE") trading days after the Expiration Date.
Preliminary results of proration will be announced by press release as promptly
as practicable after the Expiration Date. Holders of Shares may obtain such
preliminary information from the Depositary, and may also be able to obtain such
preliminary information from their brokers. Purchaser will not pay for any
Shares accepted for payment pursuant to the Offer until the final proration
factor is known.
Purchaser expressly reserves the right, in its sole discretion (but subject
to the terms and conditions of the Merger Agreement), at any time and from time
to time, to extend for any reason the period of time during which the Offer is
open, including the occurrence of any of the conditions specified in Section 14,
by giving oral or written notice of such extension to the Depositary. During any
such extension, all Shares previously tendered and not withdrawn will remain
subject to the Offer, subject to the rights of a tendering stockholder to
withdraw his Shares. See Section 4.
Subject to the applicable regulations of the Securities and Exchange
Commission (the "Commission"), Purchaser also expressly reserves the right, in
its sole discretion (but subject to the terms and conditions of the Merger
Agreement), at any time and from time to time, (i) to delay acceptance for
payment of, or, regardless of whether such Shares were theretofore accepted for
payment, payment for, any Shares pending receipt of any regulatory approval
specified in Section 15, (ii) to terminate the Offer and not accept for payment
any Shares upon the occurrence of any of the conditions specified in Section 14
and (iii) to waive any condition or otherwise amend the Offer in any respect, by
giving oral or written notice of such delay, termination, waiver or amendment to
the Depositary and by making a public announcement thereof. The Merger Agreement
provides that, without the consent of the Company, Purchaser will not (i)
decrease the price per Share payable pursuant to the Offer, (ii) change the form
of consideration to be paid in the Offer, (iii) reduce the number of Shares to
be purchased in the Offer, (iv) change or waive the Minimum Condition or (v)
modify the conditions to the Offer set forth in Section 14 or impose conditions
to the Offer in addition to those set forth in Section 14. Purchaser
acknowledges that (i) Rule 14e-1(c) under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), requires Purchaser to pay the consideration
offered or return the Shares tendered promptly after the termination or
withdrawal of the Offer and (ii) Purchaser may not delay acceptance for payment
of, or payment for (except as provided in clause (i) of the first sentence of
this paragraph), any Shares upon the occurrence of any of the conditions
specified in Section 14 without extending the period of time during which the
Offer is open.
Any such extension, delay, termination, waiver or amendment will be followed
as promptly as practicable by public announcement thereof, such announcement in
the case of an extension to be made no later than 9:00 a.m., New York City time,
on the next business day after the previously scheduled Expiration Date. Subject
to applicable law (including Rules 14d-4(c) and 14d-6(d) under the Exchange Act,
which require that material changes be promptly disseminated to stockholders in
a manner reasonably designed to inform them of such changes) and without
limiting the manner in
3
<PAGE>
which Purchaser may choose to make any public announcement, Purchaser shall have
no obligation to publish, advertise or otherwise communicate any such public
announcement other than by issuing a press release to the Dow Jones News
Service.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, Purchaser will extend the Offer to the extent required by Rules 14d-4(c)
and 14d-6(d) under the Exchange Act.
Subject to the terms of the Merger Agreement, if, prior to the Expiration
Date, Purchaser should decide to increase or decrease the number of Shares being
sought or to increase or decrease the consideration being offered in the Offer,
such increase or decrease in the number of Shares being sought or such increase
or decrease in the consideration being offered will be applicable to all
stockholders whose Shares are accepted for payment pursuant to the Offer and, if
at the time notice of any such decrease in the number of Shares being sought or
such increase or decrease in the consideration being offered is first published,
sent or given to holders of such Shares, the Offer is scheduled to expire at any
time earlier than the period ending on the tenth business day from and including
the date that such notice is first so published, sent or given, the Offer will
be extended at least until the expiration of such ten business day period. For
purposes of the Offer, a "business day" means any day other than a Saturday,
Sunday or federal holiday and consists of the time period from 12:01 a.m.
through 12:00 midnight, New York City time.
The Company has provided Purchaser with the Company's stockholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares. This Offer to Purchase and the related Letter of Transmittal will be
mailed to record holders of Shares whose names appear on the Company's
stockholder list and will be furnished, for subsequent transmittal to beneficial
owners of Shares, to brokers, dealers, commercial banks, trust companies and
similar persons whose names, or the names of whose nominees, appear on the
stockholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. Upon the terms and
subject to the conditions of the Offer (including, if the Offer is extended or
amended, the terms and conditions of any such extension or amendment), Purchaser
will accept for payment, and will pay for, all Shares validly tendered prior to
the Expiration Date and not properly withdrawn promptly after the later to occur
of (i) the Expiration Date, (ii) the expiration or termination of any applicable
waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), and (iii) the satisfaction or waiver of the
conditions to the Offer set forth in Section 14. Subject to applicable rules of
the Commission, Purchaser expressly reserves the right to delay acceptance for
payment of, or payment for, Shares pending receipt of any regulatory approvals
specified in Section 15 or in order to comply in whole or in part with any other
applicable law.
Parent intends to file with the Federal Trade Commission (the "FTC") and the
Antitrust Division of the Department of Justice (the "Antitrust Division") a
Premerger Notification and Report Form under the HSR Act with respect to the
Offer. Parent currently intends to file this document by a date that would allow
the applicable HSR waiting period for the Offer to expire on or prior to 11:59
p.m., New York City time, on March 27, 1996. Absent any action by the FTC or the
Antitrust Division, the waiting period under the HSR Act applicable to the Offer
will expire at 11:59 p.m., New York City time, on the 15th day after the date of
this filing. Prior to the expiration or termination of such waiting period, the
FTC or the Antitrust Division may extend such waiting period by requesting
additional information from Parent with respect to the Offer. If such a request
is made with respect to the purchase of Shares in the Offer, the waiting period
will expire at 11:59 p.m., New York City time, on the tenth calendar day after
substantial compliance by Parent with such a request. Thereafter, the waiting
period may only be extended by court order. The waiting period under the HSR Act
may be terminated prior to its expiration by the FTC and the Antitrust Division.
Parent intends to request early termination of the waiting period, although
there can be no assurance that this request will be granted. See Section 15 for
additional information regarding the HSR Act.
4
<PAGE>
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i) the
certificates evidencing such Shares (the "Share Certificates") or timely
confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such
Shares into the Depositary's account at The Depository Trust Company or the
Philadelphia Depository Trust Company (each, a "Book-Entry Transfer Facility"
and, collectively, the "Book-Entry Transfer Facilities") pursuant to the
procedures set forth in Section 3, (ii) the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or an Agent's Message (as defined below) in connection
with a book-entry transfer, and (iii) any other documents required by the Letter
of Transmittal.
The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgement from the participant in such Book-Entry
Transfer Facility tendering the Shares, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that Purchaser
may enforce such agreement against such participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn as, if and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance for payment of such Shares pursuant to the
Offer. Upon the terms and subject to the conditions of the Offer, payment for
Shares accepted for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payments from Purchaser and
transmitting such payments to tendering stockholders whose Shares have been
accepted for payment. Payment for Shares accepted for payment pursuant to the
Offer may be delayed in the event of proration due to the difficulty of
determining the number of shares validly tendered and not withdrawn. See Section
1. Under no circumstances will interest on the purchase price for Shares be
paid, regardless of any delay in making such payment.
If any tendered Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer (including because of proration), Share
Certificates evidencing unpurchased Shares will be returned, without expense to
the tendering stockholder (or, in the case of Shares tendered by book-entry
transfer into the Depositary's account at a Book-Entry Transfer Facility
pursuant to the procedure set forth in Section 3, such Shares will be credited
to an account maintained at such Book-Entry Transfer Facility), as promptly as
practicable following the expiration or termination of the Offer.
Purchaser reserves the right to transfer or assign, in whole or from time to
time in part, to one or more of its affiliates, the right to purchase all or any
portion of the Shares tendered pursuant to the Offer, but any such transfer or
assignment will not relieve Purchaser of its obligations under the Offer and
will in no way prejudice the rights of tendering stockholders to receive payment
for Shares validly tendered and accepted for payment pursuant to the Offer.
3. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES. In order for a
holder of Shares validly to tender Shares pursuant to the Offer, the Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed,
together with any required signature guarantees, or an Agent's Message in
connection with a book-entry delivery of Shares, and any other documents
required by the Letter of Transmittal, must be received by the Depositary at one
of its addresses set forth on the back cover of this Offer to Purchase and
either (i) the Share Certificates evidencing tendered Shares must be received by
the Depositary at such address or such Shares must be tendered pursuant to the
procedure for book-entry transfer described below and a Book-Entry Confirmation
must be received by the Depositary, in each case prior to the Expiration Date,
or (ii) the tendering stockholder must comply with the guaranteed delivery
procedures described below.
5
<PAGE>
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
BOOK-ENTRY TRANSFER. The Depositary will establish accounts with respect to
the Shares at the Book-Entry Transfer Facilities for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in the system of any Book-Entry Transfer
Facility may make a book-entry delivery of Shares by causing such Book-Entry
Transfer Facility to transfer such Shares into the Depositary's account at such
Book-Entry Transfer Facility in accordance with such Book-Entry Transfer
Facility's procedures for such transfer. However, although delivery of Shares
may be effected through book-entry transfer at a Book-Entry Transfer Facility,
the Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, together with any required signature guarantees, or an Agent's Message
in connection with a book-entry transfer, and any other required documents,
must, in any case, be received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration Date,
or the tendering stockholder must comply with the guaranteed delivery procedure
described below. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES
NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
SIGNATURE GUARANTEES. Signatures on all Letters of Transmittal must be
guaranteed by a firm which is a member of the Medallion Signature Guarantee
Program, or by any other "eligible guarantor institution", as such term is
defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended
(each of the foregoing being referred to as an "Eligible Institution"), except
in cases where Shares are tendered (i) by a registered holder of Shares who has
not completed either the box entitled "Special Payment Instructions" or the box
entitled "Special Delivery Instructions" on the Letter of Transmittal or (ii)
for the account of an Eligible Institution. If a Share Certificate is registered
in the name of a person other than the person who or that signs the Letter of
Transmittal, or if payment is to be made, or a Share Certificate not accepted
for payment or not tendered is to be returned, to a person other than the
registered holder(s), then the Share Certificate must be endorsed or accompanied
by appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear on the Share Certificate, with the signature(s) on
such Share Certificate or stock powers guaranteed by an Eligible Institution.
See Instructions 1 and 5 of the Letter of Transmittal.
GUARANTEED DELIVERY. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Share Certificates evidencing such Shares are
not immediately available or such stockholder cannot deliver the Share
Certificates and all other required documents to the Depositary prior to the
Expiration Date, or such stockholder cannot complete the procedure for delivery
by book-entry transfer on a timely basis, such Shares may nevertheless be
tendered, provided that all the following conditions are satisfied:
(i)
such tender is made by or through an Eligible Institution;
(ii)
a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form made available by Purchaser, is received by
the Depositary prior to the Expiration Date as provided below; and
(iii)
the Share Certificates (or a Book-Entry Confirmation) evidencing all
tendered Shares, in proper form for transfer, in each case together
with the Letter of Transmittal (or a facsimile thereof), properly completed
and duly executed, with any required signature guarantees (or, in the case
of a book-entry transfer, an Agent's Message), and any other documents
required by the Letter of Transmittal are received by the Depositary within
three New York Stock Exchange, Inc. ("NYSE") trading days after the date of
execution of such Notice of Guaranteed Delivery.
6
<PAGE>
The Notice of Guaranteed Delivery may be delivered by hand or mail or
transmitted by telegram or facsimile transmission to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in the form
of Notice of Guaranteed Delivery made available by Purchaser.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of the
Share Certificates evidencing such Shares, or a Book-Entry Confirmation of the
delivery of such Shares, and the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature guarantees
(or, in the case of a book-entry transfer, an Agent's Message), and any other
documents required by the Letter of Transmittal.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by Purchaser in its sole discretion, which
determination shall be final and binding on all parties. Purchaser reserves the
absolute right to reject any and all tenders determined by it not to be in
proper form or the acceptance for payment of which may, in the opinion of its
counsel, be unlawful. Purchaser also reserves the absolute right to waive any
condition of the Offer or any defect or irregularity, in the tender of any
Shares of any particular stockholder, whether or not similar defects or
irregularities are waived in the case of other stockholders. No tender of Shares
will be deemed to have been validly made until all defects and irregularities
have been cured or waived. None of Purchaser, Parent, the Dealer Manager, the
Depositary, the Information Agent or any other person will be under any duty to
give notification of any defects or irregularities in tenders or incur any
liability for failure to give any such notification. Purchaser's interpretation
of the terms and conditions of the Offer (including the Letter of Transmittal
and the instructions thereto) will be final and binding.
OTHER REQUIREMENTS. By executing the Letter of Transmittal as set forth
above, a tendering stockholder irrevocably appoints designees of Purchaser as
such stockholder's proxies, each with full power of substitution, in the manner
set forth in the Letter of Transmittal, to the full extent of such stockholder's
rights with respect to the Shares tendered by such stockholder and accepted for
payment by Purchaser (and with respect to any and all other Shares or other
securities issued or issuable in respect of such Shares on or after February 25,
1996). All such proxies shall be considered coupled with an interest in the
tendered Shares. Such appointment will be effective when, and only to the extent
that, Purchaser accepts such Shares for payment. Upon such acceptance for
payment, all prior proxies given by such stockholder with respect to such Shares
(and such other Shares and securities) will be revoked without further action,
and no subsequent proxies may be given nor any subsequent written consent
executed by such stockholder (and, if given or executed, will not be deemed to
be effective) with respect thereto. The designees of Purchaser will, with
respect to the Shares for which the appointment is effective, be empowered to
exercise all voting and other rights of such stockholder as they in their sole
discretion may deem proper at any annual or special meeting of the Company's
stockholders or any adjournment or postponement thereof, by written consent in
lieu of any such meeting or otherwise. Purchaser reserves the right to require
that, in order for Shares to be deemed validly tendered, immediately upon
Purchaser's payment for such Shares, Purchaser must be able to exercise full
voting rights with respect to such Shares.
The acceptance for payment by Purchaser of Shares pursuant to any of the
procedures described above will constitute a binding agreement between the
tendering stockholder and Purchaser upon the terms and subject to the conditions
of the Offer.
7
<PAGE>
UNDER THE FEDERAL INCOME TAX LAWS, THE DEPOSITARY WILL BE REQUIRED TO
WITHHOLD 31 PERCENT OF THE AMOUNT OF ANY PAYMENTS MADE TO CERTAIN STOCKHOLDERS
PURSUANT TO THE OFFER. TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING WITH
RESPECT TO PAYMENT TO CERTAIN STOCKHOLDERS OF THE PURCHASE PRICE OF SHARES
PURCHASED PURSUANT TO THE OFFER, EACH SUCH STOCKHOLDER MUST PROVIDE THE
DEPOSITARY WITH SUCH STOCKHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER AND
CERTIFY THAT SUCH STOCKHOLDER IS NOT SUBJECT TO BACKUP FEDERAL INCOME TAX
WITHHOLDING BY COMPLETING THE SUBSTITUTE FORM W-9 IN THE LETTER OF TRANSMITTAL.
SEE INSTRUCTION 9 OF THE LETTER OF TRANSMITTAL.
4. WITHDRAWAL RIGHTS. Tenders of Shares made pursuant to the Offer are
irrevocable except that such Shares may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment by Purchaser
pursuant to the Offer, may also be withdrawn at any time after April 28, 1996.
If Purchaser extends the Offer, is delayed in its acceptance for payment of
Shares or is unable to accept Shares for payment pursuant to the Offer for any
reason, then, without prejudice to Purchaser's rights under the Offer, the
Depositary may, nevertheless, on behalf of Purchaser, retain tendered Shares,
and such Shares may not be withdrawn except to the extent that tendering
stockholders are entitled to withdrawal rights as described in this Section 4.
Any such delay will be by an extension of the Offer to the extent required by
law.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover page of this Offer to Purchase.
Any such notice of withdrawal must specify the name of the person who tendered
the Shares to be withdrawn, the number of Shares to be withdrawn and the name of
the registered holder of such Shares, if different from that of the person who
tendered such Shares. If Share Certificates evidencing Shares to be withdrawn
have been delivered or otherwise identified to the Depositary, then, prior to
the physical release of such Share Certificates, the serial numbers shown on
such Share Certificates must be submitted to the Depositary and the signature(s)
on the notice of withdrawal must be guaranteed by an Eligible Institution,
unless such Shares have been tendered for the account of an Eligible
Institution. If Shares have been tendered pursuant to the procedure for
book-entry transfer as set forth in Section 3, any notice of withdrawal must
specify the name and number of the account at the Book-Entry Transfer Facility
to be credited with the withdrawn Shares, in which case a notice of withdrawal
will be effective if delivered to the Depositary by any method described in the
first sentence of this paragraph.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by Purchaser, in its sole discretion,
whose determination will be final and binding. None of Purchaser, Parent, the
Dealer Manager, the Depositary, the Information Agent or any other person will
be under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification.
Any Shares properly withdrawn will thereafter be deemed not to have been
validly tendered for purposes of the Offer. However, withdrawn Shares may be
re-tendered at any time prior to the Expiration Date by following one of the
procedures described in Section 3.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The receipt of cash for Shares
pursuant to the Offer and the receipt of Parent Common Stock or a combination of
Parent Common Stock and cash pursuant to the Merger will be a taxable
transaction for federal income tax purposes and may also be a taxable
transaction under applicable state, local or foreign tax laws. This will be the
case whether a stockholder of the Company sells Shares pursuant to the Offer,
the Merger, or both.
A tendering stockholder whose Shares are accepted for sale pursuant to the
Offer generally will recognize gain or loss on the date the Offer is consummated
equal to the difference between such stockholders' tax basis in the Shares
accepted for purchase and the amount of cash received in exchange therefor. A
stockholder who receives Parent Common Stock or a combination of Parent Common
Stock and cash in exchange for Shares pursuant to the Merger will recognize gain
or loss at the Effective Time in an amount equal to the difference between (i)
the sum of the amount of cash and
8
<PAGE>
the fair market value of the Parent Common Stock, if any, received by the
stockholder and (ii) such stockholders' tax basis in the Shares surrendered. The
fair market value of the Parent Common Stock likely will equal the trading value
per share of Parent Common Stock on the date on which the Merger occurs.
Gain or loss will be calculated separately for each block of Shares (i.e.,
Shares purchased at the same time and price) surrendered by a stockholder. Such
gain or loss will be capital gain or loss if the Shares were capital assets in
the hands of the stockholder, and will be long-term capital gain or loss if, at
the time of the exchange, the Shares were held by the stockholder for more than
one year. Under present law, long-term capital gains are generally taxable at a
maximum rate of 28% for individuals and 35% for corporations.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE TO CERTAIN TYPES OF
STOCKHOLDERS, INCLUDING STOCKHOLDERS WHO ACQUIRED SHARES PURSUANT TO THE
EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION, INDIVIDUALS WHO
ARE NOT CITIZENS OR RESIDENTS OF THE UNITED STATES, AND FOREIGN CORPORATIONS.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND IS BASED UPON PRESENT LAW. STOCKHOLDERS ARE URGED TO
CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE
OFFER AND THE MERGER TO THEM, INCLUDING THE APPLICATION AND EFFECT OF THE
ALTERNATIVE MINIMUM TAX, AND STATE, LOCAL AND FOREIGN TAX LAWS.
6. PRICE RANGE OF SHARES; DIVIDENDS. The Shares are listed and principally
traded on the NYSE. The following table sets forth, for the quarters indicated,
the high and low sales prices per Share on the NYSE as reported by the Dow Jones
News Service. The Company has not paid any dividends on the Shares during the
periods set forth below.
<TABLE>
<CAPTION>
HIGH LOW
----------- -----------
<S> <C> <C>
1994
First Quarter.......................................................... $ 33-3/4 $ 25-3/8
Second Quarter......................................................... 29-3/4 19-1/8
Third Quarter.......................................................... 24 20-1/4
Fourth Quarter......................................................... 21-1/2 14-5/8
1995
First Quarter.......................................................... $ 18-5/8 $ 14-5/8
Second Quarter......................................................... 26 18-1/8
Third Quarter.......................................................... 29-1/4 21-3/4
Fourth Quarter......................................................... 24-7/8 20-1/4
1996
First Quarter (through February 28, 1996).............................. $ 28-7/8 $ 24
</TABLE>
On February 23, 1996, the last full trading day prior to the announcement of
the execution of the Merger Agreement and of Purchaser's intention to commence
the Offer, the closing price per Share as reported on the NYSE was $25 1/4. On
February 28, 1996, the last full trading day prior to the date of this Offer to
Purchase, the closing price per Share as reported on the NYSE was $28 5/8.
STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
7. CERTAIN INFORMATION CONCERNING THE COMPANY. Except as otherwise set
forth herein, the information concerning the Company contained in this Offer to
Purchase, including financial information, has been furnished by the Company or
has been taken from or based upon publicly available documents and records on
file with the Commission and other public sources. Neither Purchaser nor Parent
assumes any responsibility for the accuracy or completeness of the information
concerning the Company furnished by the Company or contained in such documents
and records or for any failure by the Company to disclose events which may have
occurred or may affect the significance or accuracy of any such information but
which are unknown to Purchaser or Parent.
9
<PAGE>
GENERAL. The Company is a corporation organized and existing under the laws
of the State of Delaware with its principal executive offices located at 655A
Lone Oak Drive, Eagan, Minnesota, 55121. The Company is principally engaged in
the development, manufacture and sale of high-performance supercomputer systems
that are used primarily by scientists and engineers to perform computational
research. Computational research allows researchers to investigate areas that
are physically impossible or impracticable to study in any other way. The
Company's computational systems are used in many commercial industries including
aerospace, automotive, chemical/pharmaceutical and petroleum, as well as in many
public and private research centers, such as government and environmental
science organizations and universities.
FINANCIAL INFORMATION. Set forth below is certain selected consolidated
financial information relating to the Company and its subsidiaries which has
been excerpted or derived from the audited financial statements contained in the
Company's Current Report on Form 8-K, expected to be filed on February 29, 1996
(the "Form 8-K"), and the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994 (the "Form 10-K"). More comprehensive financial
information is included in the Form 8-K, the Form 10-K, and other documents
filed by the Company with the Commission. The financial information that follows
is qualified in its entirety by reference to such reports and other documents,
including the financial statements and related notes contained therein. Such
reports and other documents may be examined and copies may be obtained from the
offices of the Commission in the manner set forth below.
CRAY RESEARCH, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER 31,
-------------------------------------------
1995 1994 1993
------------- ------------- -------------
<S> <C> <C> <C>
Income Statement Data:
Total revenue...................................................... $ 676,244 $ 921,609 $ 894,857
Operating income (loss)............................................ (238,219) 74,472 87,795
Earnings (Loss) before taxes....................................... (235,796) 77,733 84,443
Net earnings (loss)................................................ $ (226,364) $ 55,696 $ 60,855
------------- ------------- -------------
Earnings (Loss) per common and common equivalent share............. $ (8.95) $ 2.16 $ 2.33
------------- ------------- -------------
Average number of common and common equivalent shares
outstanding....................................................... 25,282 25,845 26,118
------------- ------------- -------------
<CAPTION>
AT DECEMBER 31,
----------------------------
1995 1994
------------- -------------
<S> <C> <C> <C>
Balance Sheet Data:
Current assets..................................................... $ 497,905 $ 534,038
Total assets....................................................... 978,054 1,181,879
Current liabilities................................................ 272,172 237,939
Long term debt, excluding current installments..................... 92,682 97,000
Other long term obligations........................................ 10,772 18,030
Stockholders' equity............................................... 602,428 828,910
</TABLE>
In connection with Parent's review of the Company and in the course of the
negotiations between the Company and Parent described in Section 10, the Company
provided Parent with certain business and financial information which Parent and
Purchaser believe is not publicly available, including, among other things,
financial projections for fiscal 1996 prepared by management of the Company in
order to formulate a business plan for 1996 (the "Projections"). The Projections
do not take into account any of the potential effects of the transactions
contemplated by the Offer and the Merger.
10
<PAGE>
According to the Projections, the Company has estimated that it will have
total revenue of $921,702,000 and net earnings of $36,902,000 for the year
ending December 31, 1996.
PROJECTED INFORMATION OF THIS TYPE IS BASED ON ESTIMATES AND ASSUMPTIONS
THAT ARE INHERENTLY SUBJECT TO SIGNIFICANT ECONOMIC AND COMPETITIVE
UNCERTAINTIES AND CONTINGENCIES, ALL OF WHICH ARE DIFFICULT TO PREDICT AND MANY
OF WHICH ARE BEYOND THE COMPANY'S CONTROL. MOREOVER, THE COMPANY OPERATES IN A
HIGHLY COMPETITIVE ENVIRONMENT THAT IS RAPIDLY CHANGING AND THAT INVOLVES A
NUMBER OF RISKS, MANY OF WHICH ARE BEYOND THE COMPANY'S CONTROL. THESE RISKS,
WHICH COULD SIGNIFICANTLY AFFECT THE PROJECTIONS, INCLUDE CUTBACKS IN GOVERNMENT
SPENDING, IMPLEMENTATION OF PROTECTIONIST TRADE POLICIES IN THE U.S. OR ABROAD
AND THE RISKS ARISING OUT OF THE FACT THAT SINCE A SMALL NUMBER OF LARGE SYSTEM
SALES COMPRISE A SIGNIFICANT PORTION OF THE COMPANY'S SALES REVENUE, THE TIMING
OF EQUIPMENT ACCEPTANCE DATES ON THESE LARGE SYSTEMS CAN SIGNIFICANTLY AFFECT
RESULTS FOR ANY PARTICULAR PERIOD. ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT
THE PROJECTED RESULTS WILL BE REALIZED OR THAT ACTUAL RESULTS WILL NOT BE
SIGNIFICANTLY HIGHER OR LOWER THAN THOSE SET FORTH ABOVE. IN ADDITION, THE
PROJECTIONS WERE NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE OR COMPLIANCE
WITH THE PUBLISHED GUIDELINES OF THE COMMISSION OR THE GUIDELINES ESTABLISHED BY
THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS REGARDING PROJECTIONS AND
FORECASTS AND ARE INCLUDED IN THIS OFFER TO PURCHASE ONLY BECAUSE SUCH
INFORMATION WAS MADE AVAILABLE TO PARENT BY THE COMPANY. NONE OF PARENT,
PURCHASER, THE COMPANY OR ANY OTHER PARTY ASSUMES ANY RESPONSIBILITY FOR THE
ACCURACY OR VALIDITY OF THE FOREGOING PROJECTIONS.
The Company is subject to the informational filing requirements of the
Exchange Act and, in accordance therewith, is required to file periodic reports,
proxy statements and other information with the Commission relating to its
business, financial condition and other matters. Information as of particular
dates concerning the Company's directors and officers, their remuneration, stock
options granted to them, the principal holders of the Company's securities and
any material interest of such persons in transactions with the Company is
required to be disclosed in proxy statements distributed to the Company's
stockholders and filed with the Commission. Such reports, proxy statements and
other information should be available for inspection at the public reference
facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549, and also should be available for
inspection at the Commission's regional offices located at Seven World Trade
Center, 13th Floor, New York, New York 10048 and the Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60604. Copies of such materials
may also be obtained by mail, upon payment of the Commission's customary fees,
by writing to its principal office at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. The information should also be available for inspection
at the NYSE, 20 Broad Street, New York, New York 10005.
8. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT. Purchaser is a
newly incorporated corporation organized and existing under the laws of the
State of Delaware organized in connection with the Offer and the Merger and has
not carried on any activities other than in connection with the Offer and the
Merger. The principal offices of Purchaser are located at 2011 North Shoreline
Boulevard, Mountain View, California 94043. Purchaser is a wholly owned
subsidiary of Parent.
Until immediately prior to the time that Purchaser will purchase Shares
pursuant to the Offer, it is not anticipated that Purchaser will have any
significant assets or liabilities or engage in activities other than those
incident to its formation and capitalization and the transactions contemplated
by the Offer and the Merger. Because Purchaser is newly formed and has minimal
assets and capitalization, no meaningful financial information regarding
Purchaser is available.
Parent is a corporation organized and existing under the laws of the State
of Delaware. Its principal offices are located at 2011 North Shoreline
Boulevard, Mountain View, California 94043. Parent is the leading manufacturer
of high-performance visual computing systems. Parent provides interactive
three-dimensional graphics, digital media and multiprocessing supercomputing
technologies to technical, scientific and creative professionals. Parent's core
technologies -- including interactive three-dimensional graphics, digital media,
RISC microprocessors and symmetric multiprocessing -- combine to provide
customers with an array of desktop graphics workstations, multiprocessing
servers, advanced computing platforms and application software.
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<PAGE>
Parent's core computing systems are complemented by several wholly and
partially owned subsidiaries. MIPS Technologies, Inc. ("MTI") designs and
licenses the MIPS-Registered Trademark- RISC microprocessor family, used in
Parent products and those of other companies for computer, consumer and embedded
control applications. Silicon Studio, Inc. provides software tools, support and
training for application and content developers in the film, video, publishing
and interactive television markets. Alias--Wavefront develops advanced tools for
digital design and content creation. Interactive Digital Solutions, a joint
venture, provides interactive video capabilities to telephone company networks
and cable TV systems.
The name, citizenship, business address, principal occupation or employment,
and five-year employment history for each of the directors and executive
officers of Purchaser and Parent and certain other information are set forth in
Schedule I hereto.
Set forth below are certain selected consolidated financial data relating to
Parent and its subsidiaries for Parent's last three fiscal years, which have
been excerpted or derived from the audited financial statements contained in
Parent's Annual Report on Form 10-K for the fiscal year ended June 30, 1995 and
from the unaudited financial statements contained in Parent's Quarterly Report
on Form 10-Q for the fiscal quarter ended December 31, 1995, in each case filed
by Parent with the Commission. More comprehensive financial information is
included in such reports and other documents filed by Parent with the
Commission, and the following financial data is qualified in its entirety by
reference to such reports and other documents, including the financial
information and related notes contained therein. Such reports and other
documents may be inspected and copies may be obtained from the offices of the
Commission in the same manner as set forth with respect to information about the
Company in Section 7.
SILICON GRAPHICS, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED DECEMBER
FISCAL YEAR ENDED JUNE 30, 31,
------------------------------------------- --------------------------
1995 1994 1993 1995 1994
------------- ------------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Income Statement Data:
Total revenue......................... $ 2,228,268 $ 1,537,766 $ 1,132,869 $ 1,267,012 $ 998,074
Operating income from continuing
operations........................... 307,272 193,829 119,971 142,890 148,413
Income before income taxes............ 316,719 198,608 120,491 155,930 147,369
Net income............................ $ 224,856 $ 141,414 $ 82,803 $ 110,710 $ 104,139
------------- ------------- ------------- ------------- -----------
Common shares and common share
equivalents used in the calculation
of net income per common share....... 175,435 165,149 154,887 178,268 173,155
------------- ------------- ------------- ------------- -----------
Net income per common share from
continuing operations................ $ 1.28 $ 0.86 $ 0.53 $ 0.62 $ 0.60
------------- ------------- ------------- ------------- -----------
</TABLE>
<TABLE>
<CAPTION>
AT JUNE 30,
---------------------------- AT DECEMBER 31,
1995 1994 1995
------------- ------------- ---------------
<S> <C> <C> <C>
Balance Sheet Data:
Current assets.................................................. $ 1,508,873 $ 1,058,033 $ 1,497,280
Total assets.................................................... 2,206,619 1,567,052 2,265,487
Current liabilities............................................. 573,182 377,238 544,628
Long term debt and other........................................ 287,267 252,645 277,575
Stockholders' equity............................................ 1,346,170 937,169 1,443,284
</TABLE>
12
<PAGE>
Except as described in this Offer to Purchase, (i) none of Purchaser, Parent
nor, to the best knowledge of Purchaser and Parent, any of the persons listed in
Schedule I to this Offer to Purchase or any associate or majority-owned
subsidiary of Purchaser, Parent or any of the persons so listed beneficially
owns or has any right to acquire, directly or indirectly, any Shares and (ii)
none of Purchaser, Parent nor, to the best knowledge of Purchaser and Parent,
any of the persons or entities referred to above nor any director, executive
officer or subsidiary of any of the foregoing has effected any transaction in
the Shares during the past 60 days.
Except as provided in the Merger Agreement and as otherwise described in
this Offer to Purchase, none of Purchaser, Parent nor, to the best knowledge of
Purchaser and Parent, any of the persons listed in Schedule I to this Offer to
Purchase, has any contract, arrangement, understanding or relationship with any
other person with respect to any securities of the Company, including, but not
limited to, any contract, arrangement, understanding or relationship concerning
the transfer or voting of such securities, joint ventures, loan or option
arrangements, puts or calls, guaranties of loans, guaranties against loss or the
giving or withholding of proxies. Except as set forth in this Offer to Purchase,
since June 30, 1993, neither Purchaser nor Parent nor, to the best knowledge of
Purchaser and Parent, any of the persons listed on Schedule I hereto, has had
any business relationship or transaction with the Company or any of its
executive officers, directors or affiliates that is required to be reported
under the rules and regulations of the Commission applicable to the Offer.
Except as set forth in this Offer to Purchase, since June 30, 1993, there have
been no contacts, negotiations or transactions between any of Purchaser, Parent,
or any of their respective subsidiaries or, to the best knowledge of Purchaser
and Parent, any of the persons listed in Schedule I to this Offer to Purchase,
on the one hand, and the Company or its affiliates, on the other hand,
concerning a merger, consolidation or acquisition, tender offer or other
acquisition of securities, an election of directors or a sale or other transfer
of a material amount of assets.
9. FINANCING OF THE OFFER AND THE MERGER. The total amount of funds
required by Purchaser to consummate the Offer and the Merger and to pay related
fees and expenses is estimated to be approximately $580,483,050. Purchaser will
obtain all of such funds from Parent or its affiliates. Parent will provide such
funds from cash on hand.
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY; THE MERGER
AGREEMENT.
On October 5, 1995, the Executive Committee of the Board determined that it
would be in the best interests of the Company and its stockholders for the
Company to take an active approach in pursuing opportunities with other
companies.
On November 21, 1995, members of management met with representatives of
Salomon Brothers and analyzed and discussed potential strategic alliances. In
December, the Company communicated to representatives of several companies that
the Company was interested in exploring opportunities for collaboration,
strategic alliance or some form of business combination. Discussions with
certain of these companies followed.
In late 1995, senior executives at the Company approached their counterparts
at Parent to suggest the possibility of a business combination involving the two
companies. A confidentiality agreement with respect to these discussions was
entered into in December 1995, and shortly thereafter a meeting of
representatives of the two companies was held at the Company's headquarters in
Eagan, Minnesota. At that meeting, the parties discussed their respective
product and technology plans and financial outlooks, and how the two companies
might consolidate their operations in the event of a business combination. No
acquisition proposal was made at or following this meeting, but representatives
of the two companies continued to be in communication, and a follow-up meeting,
including each company's financial and legal representatives, was held in
California on January 22, 1996.
13
<PAGE>
On February 3, 1996 representatives of the Company had a discussion with
representatives of Parent in which Parent expressed the interest of its Board of
Directors in a business combination with the Company whereby the Company would
be maintained as a separate operating unit. Parent and the Company discussed the
timetable for a due diligence evaluation of the Company in connection with the
proposed business combination.
On February 5, 1996, a regular meeting of the Board was held to discuss,
among other things, the Company's strategic partnering efforts as well as the
recent communications between representatives of the Company and representatives
of Parent. At this meeting, the Company's management reviewed communications
with Parent, the respective technological abilities of Parent and the Company as
well as the potential synergies of a combination of the Company with Parent and
other matters related thereto. At the conclusion of the meeting, the Board
determined that it would be consistent with the Company's objectives to continue
to investigate a possible business combination with Parent as well as other
possible strategic alternatives for the Company.
On February 13, 1996, at a special meeting of the Board, management reviewed
the status of its continuing discussions. Representatives of Salomon Brothers
then reviewed the environment in which the Company operates, the pressures
facing industry participants, strategies undertaken by other industry
participants, the reaction of the stock market to major industry transactions,
public trading values of Parent and the Company, valuations of the Company and
the methodology by which such valuations were derived.
On February 14, 1996 the parties and their financial and legal
representatives met to discuss whether a business combination could be agreed to
on terms acceptable to both sides. The parties discussed several possible
transaction structures and values. After further discussions and negotiations,
which continued into the following day, the parties agreed to discuss with their
boards of directors a transaction valued at $30 per Share in cash for 75% of the
Shares and one share of Parent Common Stock for each remaining Share.
On February 18, 1996, a special meeting of the Board was held. At the
meeting, the executive officers indicated that the Parent was interested in
acquiring the Company, subject to further due diligence, negotiation of a
satisfactory agreement, approval by its Board of Directors and certain other
conditions, pursuant to a cash tender offer to acquire 75% of the outstanding
shares of common stock of the Company's for $30 per share, net to the seller in
cash, and followed by a merger. At the conclusion of the meeting the Board
determined that the Company should continue to negotiate the terms of a business
combination with the Parent, including but not limited to the terms and
provisions of a merger agreement, which would be subject to final review and
approval by the Board.
During the week of February 19, 1996, the parties conducted due diligence
investigations of each other's businesses, negotiated the terms of a definitive
merger agreement and, beginning in the afternoon of February 23, 1996, had
meetings and telephone calls with certain key customers of the Company to
discuss the potential transaction.
On Tuesday, February 20, 1996, the Board of Directors of Parent met by
telephone conference with Parent's management and financial and legal
representatives to review the results of the negotiations held on February 14,
1996 and to discuss a preliminary draft of the Merger Agreement.
On Sunday, February 25, 1996, the Board of Directors of Parent met by
telephone conference with Parent's management and financial and legal
representatives to review the results of Parent's due diligence investigation of
the Company and the terms of the proposed Merger Agreement, which was
unanimously approved at this meeting.
On February 25, 1996, a special meeting of the Board was held. At such
meeting, the Board reviewed with certain of its executive officers, legal
counsel and financial advisors the discussion and negotiations between the
Company and Parent. Following such discussions, the Board heard presentations by
its legal counsel on the terms and conditions contained in the proposed merger
agreement and by Salomon Brothers on its analysis of the proposed transaction.
Representatives of
14
<PAGE>
Salomon Brothers then discussed matters related to the proposed transaction with
Parent. At the conclusion of their presentation, Salomon Brothers delivered its
oral opinion to the Board (subsequently confirmed by a written opinion) that, as
of such date, the consideration to be received by the holders of Shares in the
Offer and the Merger is fair, from a financial point of view, to the
stockholders of the Company. Thereafter, the Board authorized the Offer, the
Merger and the execution and delivery of the Merger Agreement substantially in
the form presented to it; and recommended that the stockholders of the Company
accept the Offer and tender their shares to Parent and approve and adopt the
Merger Agreement.
The Merger Agreement was executed that evening and announced before the
opening of trading on the NYSE on the following morning.
On February 29, 1996, Purchaser commenced the Offer.
THE MERGER AGREEMENT
The following is a summary of the Merger Agreement, a copy of which is filed
as an Exhibit to the Tender Offer Statement on Schedule 14D-1 (the "Schedule
14D-1") filed by Purchaser and Parent with the Commission in connection with the
Offer. Such summary is qualified in its entirety by reference to the Merger
Agreement.
THE OFFER. The Merger Agreement provides for the commencement of the Offer
as promptly as reasonably practicable, but in no event later than five business
days after the initial public announcement of Purchaser's intention to commence
the Offer. The obligation of Purchaser to accept for payment Shares tendered
pursuant to the Offer is subject to the satisfaction of the Minimum Condition
and certain other conditions that are described in Section 14 hereof. Purchaser
and Parent have agreed that no change in the Offer may be made without the prior
written consent of the Company which decreases the price per Share payable in
the Offer, changes the form of consideration to be paid in the Offer, reduces
the maximum number of Shares to be purchased in the Offer, changes or waives the
Minimum Condition or which imposes conditions to the Offer in addition to those
set forth in Section 14 hereof.
Subject to the terms and conditions of the Offer (including, without
limitation, the Minimum Condition), Purchaser shall, and Parent shall cause
Purchaser to, accept for payment and pay for, as promptly as practicable after
expiration of the Offer, all Shares validly tendered and not withdrawn;
PROVIDED, HOWEVER, that notwithstanding the foregoing Parent may, in its sole
discretion, extend the expiration date of the Offer for up to 15 business days,
and agrees on a one-time basis, if all other conditions to the Offer have been
met, to extend the expiration date for the Offer for 10 business days if on the
relevant date of expiration at least 45% of the then outstanding Shares
(calculated on a fully diluted basis) have been tendered and not withdrawn from
the Offer.
THE MERGER. The Merger Agreement provides that, upon the terms and subject
to the conditions thereof, and in accordance with Delaware Law, at the Effective
Time, Purchaser shall be merged with and into the Company. As a result of the
Merger, the separate corporate existence of Purchaser will cease and the Company
will continue as the Surviving Corporation and will become a wholly owned
subsidiary of Parent. Upon consummation of the Merger, each Share held in the
treasury of the Company and each Ineligible Share shall be cancelled and retired
without payment of any consideration thereof and cease to exist.
Following completion of the Offer, the remaining Shares are expected to be
converted at a one to one ratio into Parent Common Stock. As more completely
described below, if fewer than 19,218,735 of the Shares are purchased in the
Offer, the remaining Company stockholders will receive a fraction of a share of
Parent Common Stock and cash for each Share so that the aggregate cash and stock
consideration paid in the Merger is the same as if the Offer had been fully
subscribed. Subject to adjustment to remove fractional shares, each remaining
outstanding Share (other than Shares held by stockholders who have demanded and
perfected appraisal rights, if any, under Delaware Law) shall be converted into
the right to receive (i) 1.00 fully paid and non-assessable share of Parent's
Common
15
<PAGE>
Stock (the "Exchange Ratio"); PROVIDED, HOWEVER, that if Purchaser accepts for
payment and pays for less than 19,218,735 Shares in the Offer, then the Exchange
Ratio shall be equal to a fraction, (A) the numerator of which is equal to (x)
the Final Outstanding Number PLUS (y) the Accepted Share Number MINUS (z) the
Offered Number and (B) the denominator of which is the Final Outstanding Number
and (ii) if the Exchange Ratio has been adjusted pursuant to the immediately
preceding PROVISO, an amount in cash equal to a fraction, (A) the numerator of
which is the product of the Per Share Amount and the amount by which the Offered
Number exceeds the Accepted Share Number and (B) the denominator of which is the
Final Outstanding Number.
Pursuant to the Merger Agreement, each share of common stock, no par value,
of Purchaser issued and outstanding immediately prior to the Effective Time
shall be converted into and exchanged for one share of common stock, par value
$1.00 per share, of the Surviving Corporation.
Under the Merger Agreement, all options to purchase Company Common Stock
granted under the Cray Research, Inc. 1985 Incentive Stock Option and
Nonstatutory Option Plan (the "1985 Employee Plan"), the Cray Research, Inc.
1989 Employee Benefit Stock Plan (the "Employee Stock Plan") and the Cray
Research, Inc. 1989 Non-Employee Directors' Stock Option Plan (the "Directors'
Plan" and, together with the 1985 Employee Plan and the Employee Stock Plan, the
"Stock Option Plans") or pursuant to any other arrangement adopted by the Board
to provide options to directors, officers or employees of the Company (in any
such case, an "Option") then outstanding shall be assumed by Parent as set forth
below. The above plans, along with all other employee related plans, are herein
collectively referred to as the "Employee Plans."
At the Effective Time, the Company's obligations with respect to each
outstanding Option, whether vested or unvested, shall, by virtue of the Merger
Agreement and without any further action of the Company, Parent or the holder of
any Option, be assumed by Parent. Each Option so assumed by Parent under the
Merger Agreement shall continue to have, and be subject to, the same terms and
conditions set forth in the applicable Stock Option Plan and the applicable
stock option agreement as in effect immediately prior to the Effective Time,
except that (i) such Option will be exercisable for that number of shares of
Parent Common Stock equal to the product of the number of shares of Company
Common Stock that were purchasable under such Option immediately prior to the
Effective Time multiplied by 1.0, subject to adjustment to eliminate fractional
shares, rounded up to the nearest whole number of shares of Parent Common Stock,
and (ii) the per share exercise price for the shares of Parent Common Stock
issuable upon exercise of such assumed Option will be equal to the quotient
determined by dividing the exercise price per share of Company Common Stock at
which such Option was exercisable immediately prior to the Effective Time by
1.0, subject to adjustment to eliminate fractional shares, and rounding the
resulting exercise price up to the nearest whole cent.
Under the Merger Agreement, the Convertible Debentures shall, pursuant to
the terms of the Indenture, dated as of February 1, 1986, between the Company
and Manufacturers Hanover Trust Company, as Trustee (the "Indenture"), become
thereafter convertible only into that number of shares of Parent Common Stock
and cash, if any, that the holder of any such Convertible Debentures would have
received if such holder had converted such Convertible Debentures immediately
prior to the Effective Time as provided in Section 15.06 of the Indenture.
Parent shall execute and deliver a supplemental indenture (the "Supplemental
Indenture"), which shall evidence Parent's assumption of the Convertible
Debentures and provide that the holder of each Convertible Debenture shall have
the right thereafter to convert such Convertible Debenture as described above,
in each case in accordance with the terms of the Indenture.
The Merger Agreement provides that the directors of Purchaser immediately
prior to the Effective Time will be the initial directors of the Surviving
Corporation and that the officers of the Company immediately prior to the
Effective Time will be the initial officers of the Surviving Corporation. The
Merger Agreement provides that, at the Effective Time, unless otherwise
determined by Parent prior to the Effective Time, the Certificate of
Incorporation of Purchaser will be the Certificate of Incorporation of the
Surviving Corporation; provided, however, that, at the Effective Time, Article I
16
<PAGE>
of the Certificate of Incorporation of the Surviving Corporation will be amended
to read as follows: "The name of the corporation is Cray Research, Inc." The
Merger Agreement also provides that the By-laws of Purchaser, as in effect
immediately prior to the Effective Time, will be the By-laws of the Surviving
Corporation.
AGREEMENTS OF PARENT, PURCHASER AND THE COMPANY. Pursuant to the Merger
Agreement, the Company and Parent shall promptly as practicable after the
execution of the Merger Agreement prepare and file with the Commission
preliminary proxy materials which shall constitute the proxy statement relating
to the meeting of the Company's Stockholders (the "Company Stockholders'
Meeting") to be held in connection with the Merger and the Registration
Statement on Form S-4 to be filed with the Commission by Parent relating to the
Parent Common Stock to be issued in connection with the Merger (the
"Registration Statement"). As promptly as practicable after comments are
received from the Commission thereon and after the furnishing by the Company and
Parent of all information required to be contained therein, the Company and
Parent shall file with the Commission a combined proxy and registration
statement on Form S-4 (or on such other form as shall be appropriate) relating
to the approval of the Merger by the stockholders of the Company and shall use
all reasonable efforts to cause the Registration Statement to become effective
as soon thereafter as practicable. The Company has agreed, subject to its
fiduciary duties under applicable law as advised by opinion of counsel, to
include in the Proxy Statement the recommendation of the Board in favor of the
Merger.
The Company shall in accordance with Delaware Law and the Company's
Certificate of Incorporation and By-laws call and hold the Company Stockholders'
Meeting as promptly as practicable for the purpose of voting upon the approval
of the Merger, PROVIDED that the Company shall not be required to call or hold a
stockholders meeting while the Offer remains outstanding. The Company shall use
its reasonable best efforts to hold the Company Stockholders' Meeting as soon as
practicable after the date on which the Registration Statement becomes
effective. Subject to its fiduciary duties under applicable law as advised by
opinion of counsel, the Company shall use its reasonable best efforts to solicit
from its stockholders proxies in favor of the approval of the Merger, and shall
take all other action necessary or advisable to secure the vote or consent of
stockholders required by Delaware Law to obtain such approvals.
Pursuant to the Merger Agreement, the Company has covenanted and agreed
that, subject to certain exceptions, between the date of the Merger Agreement
and continuing until the earlier of the termination of the Merger Agreement or
the Effective Time, unless Parent shall otherwise agree in writing, the Company
shall conduct its business and shall cause the business of its subsidiaries to
be conducted only in, and the Company and its subsidiaries shall not take any
action except in the ordinary course of business and in a manner consistent with
past practice; and the Company shall use reasonable commercial efforts to
preserve substantially intact the business organization of the Company and its
subsidiaries, to keep available the services of the present officers, employees
and consultants of the Company and its subsidiaries, to take all reasonable
action necessary to prevent the loss, cancellation, abandonment, forfeiture or
expiration of all current patents, registered and material unregistered
trademarks and service marks, registered and unregistered copyrights, trade
names and any applications therefor owned by the Company (the "Company
Intellectual Property Rights"), all material third-party patents, trademarks or
copyrights which are incorporated in, are, or form a part of any Company product
(the "Third Party Intellectual Property Rights"), and material contracts of the
Company and to preserve the present relationships of the Company and its
subsidiaries with customers, suppliers and other persons with which the Company
or any of its subsidiaries has significant business relations. The Merger
Agreement provides that, except as contemplated therein, neither the Company nor
any of its Subsidiaries shall, between the date of the Merger Agreement and
continuing until the earlier of the termination of the Merger Agreement or the
Effective Time, directly or indirectly do, or propose to do, any of the
following, without the prior written consent of Parent: (a) amend or otherwise
change its Certificate of Incorporation or By-laws; (b) issue, sell, pledge,
dispose of, encumber, or authorize the issuance, sale, pledge, disposition, or
encumbrance of
17
<PAGE>
any shares of capital stock of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of capital stock,
or any other ownership interest (including, without limitation, any phantom
interest) of the Company, any of its subsidiaries or affiliates (except for the
issuance of shares of the Company Common Stock issuable pursuant to the exercise
of Options under the Stock Option Plans or pursuant to rights to purchase such
shares under the Company's Employee Stock Purchase Plan, which Options or
rights, as the case may be, are outstanding on the date of the Merger Agreement
or with respect to the Convertible Debentures); (c) sell, pledge, dispose of or
encumber any assets of the Company or any of its subsidiaries (except for (i)
sales of assets in the ordinary course of business and in a manner consistent
with past practice which individually and in the aggregate do not exceed
$1,000,000 and (ii) dispositions of obsolete or worthless assets); (d) amend or
change the period (or permit any acceleration, amendment or change) of
exercisability of Options or restricted stock granted under the Stock Option
Plans or authorize cash payments in exchange for any such Options or restricted
stock; (e) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of any of its capital stock, except that a wholly owned subsidiary of
the Company may declare and pay a dividend to its parent, (ii) split, combine or
reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock or (iii) amend the terms of, repurchase, redeem
or otherwise acquire, or permit any subsidiary to repurchase, redeem or
otherwise acquire, any of its securities or any securities of its subsidiaries,
or propose to do any of the foregoing; (f) sell, transfer, license, sublicense
or otherwise dispose of any Company Intellectual Property (other than in the
ordinary course of business, consistent with past practice, in connection with
systems sales and software developer programs), or amend or modify any existing
agreements with respect to any Company Intellectual Property or Third Party
Intellectual Property Rights; (g) (i) acquire (by merger, consolidation, or
acquisition of stock or assets) any corporation, partnership or other business
organization or division thereof; (ii) incur any indebtedness for borrowed money
or issue any debt securities or assume, guarantee or endorse or otherwise as an
accommodation become responsible for, the obligations of any person, or make any
loans or advances, except to employees in the ordinary course consistent with
past practice; (iii) enter into or amend any contract or agreement other than in
the ordinary course of business; (iv) authorize any capital expenditures or
purchase of fixed assets which are, in the aggregate, in excess of the Company's
budgeted capital expenditures for 1996; PROVIDED, HOWEVER, that no more than one
half of such amount shall be made or firmly committed prior to June 30, 1996,
and, PROVIDED, FURTHER that the Company will give Parent prior notice of the
making or the firm commitment of more than $5 million of capital expenditure in
any calendar quarter; (v) terminate any material contract or amend any of its
material terms (other than amendments to existing credit arrangements designed
to remedy defaults thereunder); or (vi) enter into or amend any contract,
agreement, commitment or arrangement to effect any of the matters prohibited by
(i) through (v); (h) increase the compensation payable or to become payable to
its officers or employees, or grant any severance or termination pay to, or
enter into any employment or severance agreement with any director, officer or
other employee of the Company or any of its subsidiaries except in accordance
with the Company's existing severance policy or establish, adopt, enter into or
amend any Employee Plan (other than amendments required in order to effect the
Merger Agreement); (i) take any action, other than as required by GAAP, to
change accounting policies or procedures or cash maintenance policies or
procedures (including, without limitation, procedures with respect to revenue
recognition, capitalization of development costs, payments of accounts payable
and collection of accounts receivable); (j) make any material Tax election
inconsistent with past practices or settle or compromise any material federal,
state, local or foreign tax liability or agree to an extension of a statute of
limitations for any assessment of federal income tax or material state corporate
income or franchise tax, except to the extent the amount of any such settlement
has been reserved for on the Company's most recent report filed with the
Commission; (k) pay, discharge, settle, or satisfy any lawsuits, claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction in
the ordinary course of business and consistent with past practice of liabilities
reflected or reserved against in the financial statements of the Company or
incurred in the ordinary course of business and
18
<PAGE>
consistent with past practice; (l) except as may be required by law, take any
action to terminate or amend any Employee Plan (other than amendments required
in order to effect the Merger Agreement); (m) permit any increase in the number
of employees of the Company employed by the Company on the date of the Merger
Agreement other than pursuant to an employee plan to be agreed to by the Company
and Parent as promptly as practicable after the date of the Merger Agreement,
acting reasonably and in good faith; or (n) take, or agree in writing or
otherwise to take, any of the actions described in sections (a) through (m)
above, or any action which would make any of the representations or warranties
of the Company contained in the Merger Agreement untrue or incorrect or prevent
the Company from performing or cause the Company not to perform its covenants
under the Merger Agreement or result in any of the conditions to the Merger set
forth in the Merger Agreement not being satisfied.
Pursuant to the Merger Agreement, the Company has agreed that it shall not,
directly or indirectly, through any officer, director, employee, representative
or agent of the Company or any of its subsidiaries, solicit or encourage
(including by way of furnishing information) the initiation of any inquiries or
proposals regarding any merger, take-over bid, sale of substantial assets, sale
of shares of capital stock (including without limitation by way of a tender or
exchange offer) or similar transactions involving the Company or any
subsidiaries of the Company (any of the foregoing inquiries or proposals being
referred to herein as an "Acquisition Proposal"); PROVIDED, HOWEVER, that
nothing contained in the Merger Agreement shall prevent the Board from referring
any third party that contacts the Company on an unsolicited basis after the date
of the Merger Agreement concerning an Alternative Transaction (as defined below)
(provided that Parent is concurrently notified of such contact and referral).
The parties have agreed that nothing contained in the Merger Agreement shall
prevent the Board, after receiving an opinion of outside counsel to the effect
that the Board is required to do so in order to discharge properly its fiduciary
duties, from considering, negotiating, approving and recommending to the
stockholders of the Company an unsolicited bona fide written Acquisition
Proposal which the Board of Directors of the Company determines in good faith
(after consultation with its financial advisors) (i) would result in a
transaction more favorable to the Company's stockholders than the transaction
contemplated by the Merger Agreement and (ii) is made by a person financially
capable of consummating such Acquisition Proposal (any such Acquisition Proposal
being referred to herein as a "Superior Proposal"). The Company shall
immediately notify Parent after receipt of any Acquisition Proposal or any
request for nonpublic information relating to the Company or any of its
subsidiaries in connection with an Acquisition Proposal or for access to the
properties, books or records of the Company or any subsidiary by any person or
entity that informs the Board that it is considering making, or has made, an
Acquisition Proposal. Such notice to Parent shall be made orally and in writing
and shall indicate in reasonable detail the identity of the offeror and the
terms and conditions of such proposal, inquiry or contact. If the Board receives
a request for material nonpublic information by a party who makes a bona fide
Acquisition Proposal and the Board determines that such proposal, if consummated
pursuant to its terms is a Superior Proposal, then, and only in such case, the
Company may, subject to the execution of a confidentiality agreement
substantially similar to that then in effect between the Company and Parent,
provide such party with access to information regarding the Company. The Merger
Agreement also provides that the Company shall immediately cease and cause to be
terminated any existing discussions or negotiations with any parties (other than
Parent and Purchaser) conducted heretofore with respect to any of the foregoing.
The Company agrees not to release any third party from any confidentiality or
standstill agreement to which the Company is a party. The Company shall ensure
that the officers, directors and employees of the Company and its subsidiaries
and any investment banker or other advisor or representative retained by the
Company are aware of the restrictions described in this paragraph; and shall be
responsible for any breach of this paragraph by such bankers, advisors and
representatives (PROVIDED, HOWEVER, that the Company shall not be liable for any
consequential damages with respect to such breaches).
For purposes of the Merger Agreement, "Alternative Transaction" means (i) a
transaction pursuant to which any person (or group of persons) other than Parent
or its affiliates (a "Third Party")
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acquires more than 20% of the outstanding Shares, whether from the Company or
pursuant to a tender offer or exchange offer or otherwise, (ii) a merger or
other business combination involving the Company pursuant to which any Third
Party acquires more than 20% of the outstanding equity securities of the Company
or the entity surviving such merger or business combination or (iii) any other
transaction pursuant to which any Third Party acquires control of assets
(including for this purpose the outstanding equity securities of subsidiaries of
the Company, and the entity surviving any merger or business combination
including any of them) of the Company and its subsidiaries having a fair market
value equal to more than 20% of the fair market value of all the assets of the
Company and its subsidiaries, taken as a whole, immediately prior to such
transaction; PROVIDED, HOWEVER, that the term Alternative Transaction shall not
include any acquisition of securities by a broker dealer in connection with a
bona fide public offering of such securities.
The Merger Agreement provides that during the period from the date of the
Merger Agreement and continuing until the earlier of the termination of the
Merger Agreement or the Effective Time, Parent shall, unless the Company shall
otherwise agree in writing, conduct its business, and cause the businesses of
its subsidiaries to be conducted, in the ordinary course of business and
consistent with past practice, other than actions taken by Parent or its
subsidiaries in contemplation of the Merger, and shall not directly or
indirectly do, or propose to do, any of the following without the prior written
consent of the Company: (a) amend or otherwise change Parent's Certificate of
Incorporation (other than with respect to immaterial changes thereto), or amend
the terms of the Parent Common Stock; (b) acquire or agree to acquire, by
merging or consolidating with, by purchasing an equity interest in or a portion
of the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof, or
otherwise acquire or agree to acquire any assets of any other person, which, in
each case, would materially delay or prevent the consummation of the
transactions contemplated by the Merger Agreement; (c) sell, transfer, license,
sublicense or otherwise dispose of any material assets; or (d) take, or agree in
writing or otherwise to take, any of the actions described in this paragraph or
any action which would make any of the representations or warranties of Parent
contained in the Merger Agreement untrue or incorrect or prevent Parent from
performing or cause Parent not to perform its covenants thereunder or would
result in any of the conditions to the merger to be satisfied by Parent not
being satisfied.
The Merger Agreement provides that promptly upon the purchase by Purchaser
of a majority of the outstanding Shares pursuant to the Offer, and from time to
time thereafter as Shares are acquired by Purchaser, Purchaser shall be
entitled, subject to compliance with Section 14(f) of the Exchange Act, to
designate such number of directors, rounded up to the next greatest whole
number, on the Board as will give Purchaser representation on the Board equal to
that number of directors which equals the product of the total number of
directors on the Board (giving effect to the directors appointed or elected
pursuant to this sentence and including current directors serving as officers of
the Company) multiplied by the percentage that the aggregate number of Shares
beneficially owned by Purchaser or any affiliate of Purchaser (including such
Shares as are accepted for payment pursuant to the Offer, but excluding Shares
held by the Company or any of its affiliates) bears to the number of Shares
outstanding. The Merger Agreement also provides that, at such times, the Company
will also cause (i) each committee of the Board of Directors, (ii) if requested
by Purchaser, the board of directors of each of the Company's subsidiaries and
(iii) if requested by Purchaser, each committee of such board to include persons
designated by Purchaser constituting the same percentage of each such committee
or board as Purchaser's designees are of the Board. The Company shall, upon
request by Purchaser, promptly increase the size of the Board or exercise its
best efforts to secure the resignations of such number of directors as is
necessary to enable Purchaser designees to be elected to the Board and shall
cause Purchaser's designees to be so elected.
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The Merger Agreement provides that subject to applicable law, the Company
shall promptly take all action necessary pursuant to the Merger Agreement and
the Exchange Act and Rule 14f-1 promulgated thereunder in order to fulfill its
obligations under the Merger Agreement and shall include in the Schedule 14D-9
mailed to stockholders promptly after the commencement of the Offer (or an
amendment thereof or an information statement pursuant to Rule 14f-1 if
Purchaser has not theretofore designated directors) such information with
respect to the Company and its officers and directors as is required under
Section 14(f) and Rule 14f-1 in order to fulfill its obligations under the
Merger Agreement. Parent and Purchaser will supply the Company and be solely
responsible for any information with respect to itself and its nominees,
officers, directors and affiliates required by Section 14(f) and Rule 14f-1.
Pursuant to the Merger Agreement, the Surviving Corporation and Parent shall
honor the terms and provisions in the Employment Agreement, dated May 27, 1995,
between the Company's chief executive officer, J. Phillip Samper, and the
Company. The Merger Agreement also provides that the Surviving Corporation
shall, subject to certain exceptions set forth in the Merger Agreement, offer
severance benefits to the Company's employees generally consistent with those
given in the Company's most recent reduction in force and, in general, in
accordance with the 1995 Amended and Restated Severance Pay Plan for Cray
Research, Inc.
The Merger Agreement further provides that the Certificate of Incorporation
of the Surviving Corporation shall contain the provisions with respect to
indemnification set forth in the Certificate of Incorporation and By-laws of the
Company, which provisions shall not be amended, repealed or otherwise modified
for a period of six years from the Effective Time in any manner that would
adversely affect the rights thereunder of individuals who at the Effective Time
were directors or officers of the Company, unless such modification is required
by law.
The Merger Agreement also provides that the Company shall, to the fullest
extent permitted under applicable law or under the Company's Certificate of
Incorporation or By-Laws and regardless of whether the Merger becomes effective,
indemnify and hold harmless, and after the Effective Time, the Surviving
Corporation and Parent shall, to the fullest extent permitted under applicable
law or under the Surviving Corporation's and Parent's, as the case may be,
Certificate of Incorporation or By-Laws, indemnify and hold harmless, each
director and officer of the Company or any of its subsidiaries (collectively,
the "Indemnified Parties") against any costs or expenses (including attorneys'
fees), judgments, fines, losses, claims, damages, liabilities and amounts paid
in settlement in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of or pertaining to any action or omission by such director or officer by
virtue of their holding the office of director or officer occurring at or prior
to the Effective Time (including, without limitation, the transactions
contemplated by the Merger Agreement) for a period of six years after the
Effective Time. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i) any
counsel retained by the Indemnified Parties for any period after the Effective
Time shall be reasonably satisfactory to the Surviving Corporation and Parent
and (ii) neither the Surviving Corporation nor Parent shall be liable for any
settlement effected without its written consent (which consent shall not be
unreasonably withheld).
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Pursuant to the Merger Agreement Parent shall use its reasonable best
efforts to cause the shares of Parent Common Stock to be issued in the Merger,
upon exercise of the Options and upon conversion of the Convertible Debentures,
to be approved for listing on the NYSE.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
customary representations and warranties of the parties thereto including
representations by the Company as to the absence of certain changes or events
concerning the Company's business, capitalization, compliance with law, material
contracts, litigation, employee benefit plans, labor matters, Commission
filings, real property and leases, taxes, intellectual property and
environmental matters. In addition to the foregoing, the Merger Agreement also
contains the representations of the Company described below.
The Company has represented that the Board has taken all necessary action to
amend the Rights Agreement, so that (A) none of the execution or delivery of the
Merger Agreement or the making of the Offer will cause (i) the Rights to become
exercisable under the Rights Agreement, (ii) Parent or Purchaser or any of their
affiliates to be deemed an "Acquiring Person" (as defined in the Rights
Agreement) or (iii) the "Shares Acquisition Date" (as defined in the Rights
Agreement) to occur upon any such event, (B) none of the acceptance for payment
or payment for Shares by Purchaser pursuant to the Offer or the consummation of
the Merger will cause (i) the Rights to become exercisable under the Rights
Agreement or (ii) Parent or Purchaser or any of their affiliates to be deemed an
Acquiring Person or (iii) the Shares Acquisition Date to occur upon any such
event, and (C) the "Expiration Date" (as defined in the Rights Agreement) shall
occur no later than immediately prior to the purchase of shares pursuant to the
Offer. The Company has also represented that the "Distribution Date" (as defined
in the Rights Agreement) has not occurred.
The Company has represented that the Board has taken all necessary action to
amend the Cray Research, Inc. Executives Severance Compensation Plan, the Cray
Research, Inc. Key Management/ Professional Severance Compensation Plan and the
Cray Research, Inc. General Employee Severance Compensation Plan (collectively,
the "Parachute Plans") so that none of the execution, delivery or performance of
the Merger Agreement, including, without limitation, consummation of the Offer
and the Merger shall constitute a "Change of Control" for the purposes of such
Parachute Plans.
CONDITIONS TO THE MERGER. Under the Merger Agreement, the respective
obligations of each party to effect the Merger are subject to the satisfaction
at or prior to the Effective Time of the following conditions: (a) the
Registration Statement shall have been declared effective by the Commission
under the Securities Act. No stop order suspending the effectiveness of the
Registration Statement shall have been issued by the Commission and no
proceedings for that purpose and no similar proceeding in respect of the Proxy
Statement shall have been initiated or threatened by the Commission; (b) the
Merger Agreement and the Merger shall have been approved and adopted by the
requisite vote of the stockholders of the Company; (c) the waiting period
applicable to the consummation of the Merger under the HSR Act shall have
expired or been terminated; (d) no temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other similar binding legal restraint or prohibition (an
"Injunction") preventing the consummation of the Merger shall be in effect, nor
shall any proceeding brought by any administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, seeking any of
the foregoing be pending; and there shall not be any action taken, or any
statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger, which makes the consummation of the Merger illegal;
(e) the Parent Common Shares to be issued in the Merger, upon exercise of the
Options and upon conversion of the Convertible Debentures shall have been
approved for listing, subject to notice of issuance, on the NYSE; and (f) Parent
shall have made, or caused to be made, the Offer and shall have purchased, or
caused to be purchased, Shares pursuant to the Offer.
In addition to the foregoing, the obligations of Parent and Purchaser to
effect the Merger are also subject to the following conditions: (a) the
representations and warranties of the Company contained in the Merger Agreement
shall be true and correct in all respects on and as of the Effective Time,
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except for (i) changes contemplated by the Merger Agreement, (ii) those
representations and warranties which address matters only as of a particular
date (which shall remain true and correct as of such date) and (iii) where the
failure to be true and correct would not have a material adverse effect on the
Company, with the same force and effect as if made on and as of the Effective
Time; (b) the Company shall have performed or complied in all material 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; (c) all
material consents, waivers, approvals, authorizations or orders required to be
obtained, and all filings required to be made, by the Company for the
authorization, execution and delivery of the Merger Agreement and the
consummation by it of the transactions contemplated thereby shall have been
obtained and made by the Company; (d) there shall not have been instituted,
pending or threatened any action or proceeding (or any investigation or other
inquiry that might result in such an action or proceeding) by any governmental
authority or administrative agency before any governmental authority,
administrative agency or court of competent jurisdiction, nor shall there be in
effect any judgment, decree or order of any governmental authority,
administrative agency or court of competent jurisdiction, in either case,
seeking to prohibit or limit Parent from exercising all material rights and
privileges pertaining to its ownership of the Surviving Corporation or the
ownership or operation by Parent or any of its subsidiaries of all or a material
portion of the business or assets of Parent or any of its subsidiaries, or
seeking to compel Parent or any of its subsidiaries to dispose of or hold
separate all or any material portion of the business or assets of Parent or any
of its subsidiaries, as a result of the Merger or the transactions contemplated
by the Merger Agreement; (e) since the date of the Merger Agreement, there shall
have been no change, occurrence or circumstance in the business, results of
operations or financial condition of the Company or any subsidiary of the
Company having or reasonably likely to have a material adverse effect; and (f)
Parent shall have received from each officer and director who is identified as
an "affiliate" of the Company an affiliate agreement, and each such affiliate
agreement shall be in full force and effect.
Finally the obligation of the Company to effect the Merger is also subject
to the following conditions: (a) the representations and warranties of Parent
and Purchaser contained in the Merger Agreement shall be true and correct in all
respects on and as of the Effective Time, except for (i) changes contemplated by
the Merger Agreement, (ii) those representations and warranties which address
matters only as of a particular date (which shall remain true and correct as of
such date) and (iii) failures to be true and correct that would not have a
material adverse effect on the Company, with the same force and effect as if
made on and as of the Effective Time; (b) Parent and Purchaser shall have
performed or complied in all material 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; (c) all material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required to be
made, by Parent and Purchaser for the authorization, execution and delivery of
the Merger Agreement and the consummation by them of the transactions
contemplated thereby shall have been obtained and made by Parent and Purchaser;
and (d) since the date of the Merger Agreement, there shall have been no change,
occurrence or circumstance in the business, results of operations or financial
condition of Parent or any subsidiary of Parent having or reasonably likely to
have a material adverse effect.
TERMINATION; FEES AND EXPENSES. The Merger Agreement provides that it may
be terminated at any time prior to the Effective Time, notwithstanding approval
thereof by the stockholders of the Company: (a) by mutual written consent duly
authorized by the boards of directors of Parent and the Company; or (b) by
either Parent or the Company if the Merger shall not have been consummated by
September 30, 1996 (PROVIDED that the right to terminate the Merger Agreement
shall not be available to any party whose failure to fulfill any obligation
under the Merger Agreement has been the cause of or resulted in the failure of
the Merger to occur on or before such date); or (c) by either Parent or the
Company if a court of competent jurisdiction or governmental, regulatory or
administrative agency or commission shall have issued a non-appealable final
order, decree or ruling or taken any other action, in each case having the
effect of permanently restraining, enjoining or otherwise prohibiting the
Merger; or (d) by Parent, if the Offer shall not have been consummated prior to
June 30, 1996
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(PROVIDED that Parent is not then in material breach of the Merger Agreement);
or (e) by Parent, if (i) the Board shall withdraw, modify or change its
recommendation of the Merger Agreement, the Offer or the Merger in a manner
adverse to Parent or shall have resolved to do so; or (ii) the Board shall have
taken a "neutral" position with respect to an Alternative Transaction; or (iii)
any person or "group" (other than Parent or an affiliate of Parent) becomes the
owner of 20% or more of the outstanding shares of Company Common Stock; or (f)
by Parent or the Company, upon a breach of any representation, warranty,
covenant or agreement on the part of the Company or Parent and Purchaser,
respectively, set forth in the Merger Agreement or in certain events where the
representations or warranties of the Company or Parent and Purchaser,
respectively, shall have become untrue, (a "Terminating Breach"), PROVIDED that,
if such Terminating Breach is curable prior to the expiration of 30 days from
its occurrence (but in no event later than September 30, 1996) by Parent or the
Company, as the case may be, through the exercise of its reasonable best efforts
and for so long as Parent or the Company, as the case may be, continues to
exercise such reasonable best efforts, neither the Company nor Parent,
respectively, may terminate the Merger Agreement under this provision until the
expiration of such period without such Terminating Breach having been cured; or
(g) by the Company or Parent, if the Board shall have resolved to accept, or
accepted, a Superior Proposal.
In the event of the termination of the Merger Agreement, the Merger
Agreement provides that it shall forthwith become void and there shall be no
liability thereunder on the part of any party thereto, or any of its affiliates,
directors, officers or stockholders except under the provisions of the Merger
Agreement related to fees and expenses described below and under certain other
provisions of the Merger Agreement which survive termination.
Except as described herein, all fees and expenses incurred in connection
with the Merger Agreement and the transactions contemplated thereby will be paid
by the party incurring such expenses, whether or not the Merger is consummated.
The Company has agreed to pay Parent a fee of $25,000,000 (the "Fee"), plus
actual, documented and reasonable out-of-pocket expenses of Parent, not in
excess of $2,500,000, relating to the transactions contemplated by the Merger
Agreement (including, but not limited to, fees and expenses of Parent's
counsel), if the Merger Agreement is terminated because (i) the Board has
withdrawn or changed its recommendation of the Merger Agreement or the Merger in
a manner adverse to Parent or taken a "neutral" position with respect to an
Alternative Transaction or any person or group (other than Parent or an
affiliate of Parent) becomes the owner of 20% or more of the outstanding shares
of Company Common Stock, or if the Board shall have resolved to accept, or
accepted, a Superior Proposal, (ii) the Company has committed a Terminating
Breach and has failed to cure such breach in the manner set forth above, (iii)
the Offer has not been consummated by June 30, 1996 and an Alternative
Transaction has been publicly announced and not withdrawn or (iv) an Alternative
Transaction is consummated on or prior to December 31, 1996, provided Parent or
Purchaser in each case is not in intentional material breach of its obligations
under the Merger Agreement.
11. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY AFTER THE OFFER AND THE
MERGER.
PURPOSE OF THE OFFER. The purpose of the Offer and the Merger is for Parent
to acquire control of, and the entire equity interest in, the Company. The
purpose of the Merger is for Parent to acquire all Shares not purchased pursuant
to the Offer. Upon consummation of the Merger, the Company will become a wholly
owned subsidiary of Parent. The Offer is being made pursuant to the Merger
Agreement.
Under Delaware Law, the approval of the Board and the affirmative vote of
the holders of a majority of the outstanding Shares is required to approve and
adopt the Merger Agreement and the transactions contemplated thereby, including
the Merger. A proxy statement (which will also constitute a prospectus for the
Parent Common Stock issuable in the Merger) containing detailed information
concerning the Merger will be furnished to stockholders of the Company in
connection with a special meeting to be called by the Company to vote on the
Merger. The Board of Directors of the
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Company has unanimously approved and adopted the Merger Agreement and the
transactions contemplated thereby, and the only remaining required corporate
action of the Company is the approval and adoption of the Merger Agreement and
the transactions contemplated thereby by the affirmative vote of the holders of
a majority of the Shares. Accordingly, if the Minimum Condition is satisfied,
Purchaser will have sufficient voting power to cause the approval and adoption
of the Merger Agreement and the transactions contemplated thereby without the
affirmative vote of any other stockholder.
In the Merger Agreement, the Company has agreed to take all action necessary
to convene a meeting of its stockholders as soon as practicable after the
consummation of the Offer for the purpose of considering and taking action on
the Merger Agreement and the transactions contemplated thereby, if such action
is required by Delaware Law. Parent and Purchaser have agreed that all Shares
owned by them and their subsidiaries will be voted in favor of the Merger
Agreement and the transactions contemplated thereby.
If Purchaser purchases Shares pursuant to the Offer, the Merger Agreement
provides that Purchaser will be entitled to designate representatives to serve
on the Board in proportion to Purchaser's ownership of Shares following such
purchase. See Section 10. Purchaser expects that such representation would
permit Purchaser to exert substantial influence over the Company's conduct of
its business and operations.
No appraisal rights are available in connection with the Offer. However, if
the Merger is consummated, stockholders will have certain rights under Delaware
Law to dissent and demand appraisal of, and to receive payment in cash of the
fair value of, their Shares. Such rights to dissent, if the statutory procedures
are complied with, could lead to a judicial determination of the fair value of
the Shares, as of the day prior to the date on which the stockholders' vote was
taken approving the Merger or similar business combination (excluding any
element of value arising from the accomplishment or expectation of the Merger),
required to be paid in cash to such dissenting holders for their Shares. In
addition, such dissenting stockholders would be entitled to receive payment of a
fair rate of interest from the date of consummation of the Merger on the amount
determined to be the fair value of their Shares. In determining the fair value
of the Shares, the court is required to take into account all relevant factors.
Accordingly, such determination could be based upon considerations other than,
or in addition to, the market value of the Shares, including, among other
things, asset values and earning capacity. In WEINBERGER V. UOP, INC., the
Delaware Supreme Court stated, among other things, that "proof of value by any
techniques or methods which are generally considered acceptable in the financial
community and otherwise admissible in court" should be considered in an
appraisal proceeding. Therefore, the value so determined in any appraisal
proceeding could be the same, more or less than the purchase price per Share in
the Offer.
In addition, several decisions by Delaware courts have held that, in certain
circumstances, a controlling stockholder of a company involved in a merger has a
fiduciary duty to other stockholders which requires that the merger be fair to
such other stockholders. In determining whether a merger is fair to minority
stockholders, Delaware courts have considered, among other things, the type and
amount of consideration to be received by the stockholders and whether there was
fair dealing among the parties. The Delaware Supreme Court stated in WEINBERGER
and RABKIN V. PHILIP A. HUNT CHEMICAL CORP. that the remedy ordinarily available
to minority stockholders in a cash-out merger is the right to appraisal
described above. However, a damages remedy or injunctive relief may be available
if a merger is found to be the product of procedural unfairness, including
fraud, misrepresentation or other misconduct.
The Commission has adopted Rule 13e-3 under the Exchange Act which is
applicable to certain "going private" transactions and which may under certain
circumstances be applicable to the Merger or another business combination
following the purchase of Shares pursuant to the Offer in which Purchaser seeks
to acquire the remaining Shares not held by it. However, Rule 13e-3 will not be
applicable to the Merger or any such other business combination if (i) the
Shares are deregistered
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under the Exchange Act prior to the Merger or other business combination, (ii)
the Merger or other business combination is consummated within one year after
the purchase of the Shares pursuant to the Offer and the value of the
consideration paid per Share in the Merger or other business combination
(measured at the time of consummation of the Merger) is at least equal to the
amount paid per Share in the Offer or (iii) 19,218,735 Shares are purchased in
the Offer. If applicable, Rule 13e-3 requires, among other things, that certain
financial information concerning the Company and certain information relating to
the fairness of the proposed transaction and the consideration offered to
minority stockholders in such transaction be filed with the Commission and
disclosed to stockholders prior to consummation of the transaction.
PLANS FOR THE COMPANY. It is expected that, initially following the Merger,
the business and operations of the Company will, except as set forth in this
Offer to Purchase, be continued by the Company substantially as they are
currently being conducted. Parent will continue to evaluate the business and
operations of the Company during the pendency of the Offer and after the
consummation of the Offer and the Merger, and will take such actions as it deems
appropriate under the circumstances then existing. Parent intends to seek
additional information about the Company during this period. Thereafter, Parent
intends to review such information as part of a comprehensive review of the
Company's business, operations, capitalization and management with a view to
optimizing exploitation of the Company's potential in conjunction with Parent's
businesses.
Except as indicated in this Offer to Purchase, Parent does not have any
present plans or proposals which relate to or would result in an extraordinary
corporate transaction, such as a merger, reorganization or liquidation,
involving the Company or any of its Subsidiaries, a sale or transfer of a
material amount of assets of the Company or any of its subsidiaries or any
material change in the Company's capitalization or dividend policy or any other
material changes in the Company's corporate structure or business.
12. DIVIDENDS AND DISTRIBUTIONS. The Merger Agreement provides that the
Company shall not, between the date of the Merger Agreement until the earlier of
the termination of the Merger Agreement or the Effective Time, without the prior
written consent of Parent, (a) issue, sell, pledge, dispose of or encumber, or
authorize the issuance, sale, pledge, disposition or encumbrance of, any shares
of capital stock of any class, or any options, warrants, convertible securities
or other rights of any kind to acquire any shares of capital stock, or any other
ownership interest (including, without limitation, any phantom interest) of the
Company, any of its subsidiaries or affiliates (except for the issuance of
shares of the Company Common Stock issuable pursuant to the exercise of Options
under the Stock Option Plans or pursuant to rights to purchase such shares under
the Company Stock Purchase Plan, which Options or rights, as the case may be,
are outstanding on the date of the Merger Agreement or with respect to the
Convertible Debentures); or (b) (i) declare, set aside, make or pay any dividend
or other distribution (whether in cash, stock or property or any combination
thereof) in respect of any of its capital stock, except that a wholly owned
subsidiary of the Company may declare and pay a dividend to its parent, (ii)
split, combine or reclassify any of its capital stock or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or (iii) amend the terms of,
repurchase, redeem or otherwise acquire, or permit any subsidiary to repurchase,
redeem or otherwise acquire, any of its securities or any securities of its
subsidiaries, or propose to do any of the foregoing. See Section 10. If,
however, the Company should, during the pendency of the Offer, implement any
stock split, reverse split, stock dividend (including any dividend or
distribution of securities convertible into Company Common Stock),
reorganization, recapitalization or other like change with respect to Company
Common Stock then the Exchange Ratio shall be adjusted to fully reflect such
action.
13. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, EXCHANGE LISTING AND
EXCHANGE ACT REGISTRATION. The purchase of Shares by Purchaser pursuant to the
Offer will reduce the number of Shares that might otherwise trade publicly and
will reduce the number of holders of Shares, which could adversely affect the
liquidity and market value of the remaining Shares held by the public.
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Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of the NYSE for continued listing and
may be delisted from the NYSE. According to the NYSE's published guidelines, the
NYSE would consider delisting the Shares if, among other things, the number of
record holders of at least 100 Shares should fall below 1,200, the number of
publicly held Shares (exclusive of holdings of officers, directors and their
families and other concentrated holdings of 10% or more ("NYSE Excluded
Holdings")) should fall below 600,000 or the aggregate market value of publicly
held Shares (exclusive of NYSE Excluded Holdings) should fall below $5,000,000.
Since Parent is only offering to purchase 19,218,735 Shares (approximately 75%
of the currently outstanding Shares) it is unlikely that any of the foregoing
provisions would be triggered by consummation of the Offer. However, if, as a
result of the purchase of Shares pursuant to the Offer or otherwise, the Shares
no longer meet the requirements of the NYSE for continued listing and the
listing of the Shares is discontinued, the market for the Shares could be
adversely affected.
If the NYSE were to delist the Shares, it is possible that the Shares would
continue to trade on another securities exchange or in the over-the-counter
market and that price or other quotations would be reported by such exchange or
through the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") or other sources. The extent of the public market therefor and
the availability of such quotations would depend, however, upon such factors as
the number of stockholders and/or the aggregate market value of such securities
remaining at such time, the interest in maintaining a market in the Shares on
the part of securities firms, the possible termination of registration under the
Exchange Act as described below, and other factors. Purchaser cannot predict
whether the reduction in the number of Shares that might otherwise trade
publicly would have an adverse or beneficial effect on the market price for or
marketability of the Shares or whether it would cause future market prices to be
greater or less than $30.00 per share.
The Shares are currently "margin securities", as such term is defined under
the rules of the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board"), which has the effect, among other things, of allowing brokers
to extend credit on the collateral of such securities. Depending upon factors
similar to those described above regarding listing and market quotations,
following the Offer it is possible that the Shares might no longer constitute
"margin securities" for purposes of the margin regulations of the Federal
Reserve Board, in which event such Shares could no longer be used as collateral
for loans made by brokers.
The Shares are currently registered under the Exchange Act. Such
registration may be terminated upon application by the Company to the Commission
if the Shares are not listed on a national securities exchange and there are
fewer than 300 record holders. The termination of the registration of the Shares
under the Exchange Act would substantially reduce the information required to be
furnished by the Company to holders of Shares and to the Commission and would
make certain provisions of the Exchange Act, such as the short-swing profit
recovery provisions of Section 16(b), the requirement of furnishing a proxy
statement in connection with stockholders' meetings and the requirements of Rule
13e-3 under the Exchange Act with respect to "going private" transactions, no
longer applicable to the Shares. In addition, "affiliates" of the Company and
persons holding "restricted securities" of the Company may be deprived of the
ability to dispose of such securities pursuant to Rule 144 promulgated under the
Securities Act of 1933, as amended. If registration of the Shares under the
Exchange Act were terminated, the Shares would no longer be "margin securities"
or be eligible for NYSE or NASDAQ reporting. Purchaser currently intends to seek
to cause the Company to terminate the registration of the Shares under the
Exchange Act as soon after consummation of the Offer as the requirements for
termination of registration are met.
14. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provision
of the Offer, subject to the terms of the Merger Agreement, Purchaser shall not
be required to accept for payment or pay for any Shares tendered pursuant to the
Offer, and may terminate or amend the Offer and may postpone the acceptance for
payment of and payment for Shares tendered, if (i) the Minimum Condition shall
27
<PAGE>
not have been satisfied, (ii) any applicable waiting period under the HSR Act
shall not have expired or been terminated prior to the expiration of the Offer,
or (iii) at any time on or after February 25, 1996, and prior to the acceptance
for payment of Shares, any of the following conditions shall exist:
(a) there shall have been instituted or be pending or threatened any
action or proceeding by any governmental or quasi-governmental
authority or agency, domestic or foreign, before any court or governmental,
administrative or regulatory authority or agency of competent jurisdiction,
domestic or foreign, (i) challenging or seeking to make illegal, materially
delay or otherwise directly or indirectly restrain or prohibit or make
materially more costly the making of the Offer, the acceptance for payment
of, or payment for, any Shares by Parent, Purchaser or any other affiliate
of Parent, or the consummation of any other transaction contemplated by the
Merger Agreement (the "Transactions"), or seeking to obtain material damages
in connection with any Transaction; (ii) seeking to prohibit or limit
materially the ownership or operation by the Company, Parent or any of their
subsidiaries of all or any material portion of the business or assets of the
Company, Parent or any of their subsidiaries, or to compel the Company,
Parent or any of their subsidiaries to dispose of or hold separate all or
any material portion of the business or assets of the Company, Parent or any
of their subsidiaries, as a result of the Transactions; (iii) seeking to
impose or confirm material limitations on the ability of Parent, Purchaser
or any other affiliate of Parent to exercise effectively full rights of
ownership of any Shares, including, without limitation, the right to vote
any Shares acquired by Purchaser pursuant to the Offer or otherwise on all
matters properly presented to the Company's stockholders, including, without
limitation, the approval and adoption of the Merger Agreement and the
transactions contemplated thereby; (iv) seeking to require divestiture by
Parent, Purchaser or any other affiliate of Parent of any Shares; or (v)
which otherwise has a material adverse effect or which is reasonably likely
to materially adversely affect the business, operations, properties,
condition (financial or otherwise), assets or liabilities (including,
without limitation, contingent liabilities) or prospects of the Company or
Parent;
(b) there shall have been any action taken, or any statute, rule,
regulation, legislation, interpretation, judgment, order or
injunction enacted, entered, enforced, promulgated, amended, issued or
deemed applicable to (i) Parent, the Company or any subsidiary or affiliate
of Parent or the Company or (ii) any Transaction, by any legislative body,
court, government or governmental, administrative or regulatory authority or
agency, domestic or foreign, other than the routine application of the
waiting period provisions of the HSR Act to the Offer or the Merger, which
is reasonably likely in the good faith judgment of the Parent to result,
directly or indirectly, in any of the consequences referred to in clauses
(i) through (v) of paragraph (a) above;
(c) after February 25, 1996, there shall have occurred any change,
condition, event or development that has a material adverse effect on
the Company;
(d) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on the NYSE, (ii) a
declaration of a banking moratorium or any suspension of payments in respect
of banks in the United States, (iii) a commencement of a war or armed
hostilities or other national or international crisis directly or indirectly
involving the United States or (iv) in the case of any of the foregoing
existing on the date of the Merger Agreement, in the good faith judgment of
the Parent a material acceleration or worsening thereof;
(e) (i) it shall have been publicly disclosed or Purchaser shall have
otherwise learned that beneficial ownership (determined for the
purposes of this paragraph as set forth in Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of the then outstanding Shares has been
acquired by any person, other than Parent or any of its affiliates or (ii)
(A) the Board or any committee thereof shall have withdrawn or modified in a
manner adverse to Parent or Purchaser the approval or recommendation of the
Offer, the Merger or the Merger Agreement, or approved
28
<PAGE>
or recommended any takeover proposal or any other acquisition of Shares
other than the Offer and the Merger or (B) the Board or any committee
thereof shall have resolved to do any of the foregoing;
(f) any representation or warranty of the Company in the Merger Agreement
which is qualified as to materiality shall not be true and correct or
any such representation or warranty that is not so qualified shall not be
true and correct in any material respect, in each case as if such
representation or warranty was made as of such time on or after the date of
the Merger Agreement, except for (i) changes contemplated by the Merger
Agreement, (ii) those representations and warranties which address matters
only as of a particular date (which shall remain true and correct as of such
date) and (iii) where the failure to be true and correct would not have a
material adverse effect on the Company;
(g) the Company shall have failed to perform in any material respect any
obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under the
Merger Agreement;
(h) the Merger Agreement shall have been terminated; or
(i) Purchaser and the Company shall have agreed that Purchaser shall
terminate the Offer or postpone the acceptance for payment of or
payment for Shares thereunder;
which, in the reasonable good faith judgment of Purchaser in any such case, and
regardless of the circumstances (including any action or inaction by Parent or
any of its affiliates) giving rise to any such condition, makes it inadvisable
to proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Purchaser and Parent
and may be asserted by Purchaser or Parent regardless of the circumstances
giving rise to any such condition or may be waived by Purchaser or Parent in
whole or in part at any time and from time to time in their sole discretion. The
failure by Parent or Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right; the waiver of any such
right with respect to particular facts and other circumstances shall not be
deemed a waiver with respect to any other facts and circumstances; and each such
right shall be deemed an ongoing right that may be asserted at any time and from
time to time.
15. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS.
GENERAL. Based upon its examination of publicly available information with
respect to the Company and the review of certain information furnished by the
Company to Parent and discussions of representatives of Parent with
representatives of the Company during Parent's investigation of the Company (see
Section 10), neither Purchaser nor Parent is aware of any license or other
regulatory permit that appears to be material to the business of the Company and
the Subsidiaries, taken as a whole, which might be adversely affected by the
acquisition of Shares by Purchaser pursuant to the Offer or, except as set forth
below, of any approval or other action by any domestic (federal or state) or
foreign governmental, administrative or regulatory authority or agency which
would be required prior to the acquisition of Shares by Purchaser pursuant to
the Offer. Should any such approval or other action be required, it is
Purchaser's present intention to seek such approval or action. There can be no
assurance that any such approval or other action, if needed, would be obtained
without substantial conditions or that adverse consequences might not result to
the business of the Company, Purchaser or Parent or that certain parts of the
businesses of the Company, Purchaser or Parent might not have to be disposed of
or held separate or other substantial conditions complied with in order to
obtain such approval or other action or in the event that such approval was not
obtained or such other action was not taken. Purchaser's obligation under the
Offer to accept for payment and pay for Shares is subject to certain conditions,
including conditions relating to the legal matters discussed in this Section 15.
See Section 14.
29
<PAGE>
STATE TAKEOVER LAWS. The Company is incorporated under the laws of the
State of Delaware. In general, Section 203 of Delaware Law prevents an
"interested stockholder" (generally a person who owns or has the right to
acquire 15% or more of a corporation's outstanding voting stock, or an affiliate
or associate thereof) from engaging in a "business combination" (defined to
include mergers and certain other transactions) with a Delaware corporation for
a period of three years following the date such person became an interested
stockholder unless, among other things, prior to such date the board of
directors of the corporation approved either the business combination or the
transaction in which the interested stockholder became an interested
stockholder. On February 25, 1996, prior to the execution of the Merger
Agreement, the Board of Directors of the Company, by unanimous vote of all
directors present at a meeting held on such date, approved the Merger Agreement
and determined that each of the Offer and the Merger is fair to, and in the best
interest of, the stockholders of the Company. Accordingly, Section 203 is
inapplicable to the Offer and the Merger.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, stockholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects, in such states. In EDGAR V. MITE CORP., the Supreme Court of
the United States invalidated on constitutional grounds the Illinois Business
Takeover Statute, which, as a matter of state securities law, made takeovers of
corporations meeting certain requirements more difficult. However, in 1987 in
CTS CORP. V. DYNAMICS CORP. OF AMERICA, the Supreme Court held that the State of
Indiana may, as a matter of corporate law and, in particular, with respect to
those aspects of corporate law concerning corporate governance, constitutionally
disqualify a potential acquiror from voting on the affairs of a target
corporation without the prior approval of the remaining stockholders. The state
law before the Supreme Court was by its terms applicable only to corporations
that had a substantial number of stockholders in the state and were incorporated
there.
The Company, directly or through subsidiaries, conducts business in a number
of states throughout the United States, some of which have enacted takeover
laws. Purchaser does not know whether any of these laws will, by their terms,
apply to the Offer or the Merger and has not complied with any such laws. Should
any person seek to apply any state takeover law, Purchaser will take such action
as then appears desirable, which may include challenging the validity or
applicability of any such statute in appropriate court proceedings. In the event
it is asserted that one or more state takeover laws is applicable to the Offer
or the Merger, and an appropriate court does not determine that it is
inapplicable or invalid as applied to the Offer, Purchaser might be required to
file certain information with, or receive approvals from, the relevant state
authorities. In addition, if enjoined, Purchaser might be unable to accept for
payment any Shares tendered pursuant to the Offer, or be delayed in continuing
or consummating the Offer, and the Merger. In such case, Purchaser may not be
obligated to accept for payment any Shares tendered. See Section 14.
ANTITRUST. Under the HSR Act and the rules that have been promulgated
thereunder by the FTC, certain acquisition transactions may not be consummated
unless certain information has been furnished to the Antitrust Division and the
FTC and certain waiting period requirements have been satisfied. The acquisition
of Shares by Purchaser pursuant to the Offer is subject to such requirements.
See Section 2.
Pursuant to the HSR Act, Parent intends to file a Premerger Notification and
Report Form (the "HSR Report") in connection with the purchase of Shares
pursuant to the Offer with the Antitrust Division and the FTC. Under the
provisions of the HSR Act applicable to the Offer, the purchase of Shares
pursuant to the Offer may not be consummated until the expiration of a
15-calendar day waiting period following the filing by Parent. Parent intends to
file the HSR Report so as to allow the applicable HSR waiting period for the
Offer to expire on or prior to 11:59 p.m., New York City time, on March 27,
1996. Pursuant to the HSR Act, Parent intends to request early termination of
the waiting period applicable to the Offer. There can be no assurance, however,
that the 15-day HSR Act waiting period will be terminated early. If either the
FTC or the Antitrust Division were to request additional information or
documentary material from Parent with respect to the Offer, the waiting period
with
30
<PAGE>
respect to the Offer would expire at 11:59 p.m., New York City time, on the
tenth calendar day after the date of substantial compliance by Parent with such
request. Thereafter, the waiting period could be extended only by court order.
If the acquisition of Shares is delayed pursuant to a request by the FTC or the
Antitrust Division for additional information or documentary material pursuant
to the HSR Act, the Offer may, but need not, be extended and, in any event, the
purchase of and payment for Shares will be deferred until 10 days after the
request is substantially complied with, unless the extended period expires on or
before the date when the initial 15-day period would otherwise have expired, or
unless the waiting period is sooner terminated by the FTC and the Antitrust
Division. Only one extension of such waiting period pursuant to a request for
additional information is authorized by the HSR Act and the rules promulgated
thereunder, except by court order. Any such extension of the waiting period will
not give rise to any withdrawal rights not otherwise provided for by applicable
law. See Section 4. It is a condition to the Offer that the waiting period
applicable under the HSR Act to the Offer expire or be terminated. See Section 2
and Section 14.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares by
Purchaser pursuant to the Offer. At any time before or after the purchase of
Shares pursuant to the Offer by Purchaser, the FTC or the Antitrust Division
could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the purchase of
Shares pursuant to the Offer or seeking the divestiture of Shares purchased by
Purchaser or the divestiture of substantial assets of Parent, the Company or
their respective subsidiaries. Private parties and state attorneys general may
also bring legal action under federal or state antitrust laws under certain
circumstances. Based upon an examination of information available to Parent
relating to the businesses in which Parent, the Company and their respective
subsidiaries are engaged, Parent and Purchaser believe that the Offer will not
violate the antitrust laws. Nevertheless, there can be no assurance that a
challenge to the Offer on antitrust grounds will not be made or, if such a
challenge is made, what the result would be. See Section 14 for certain
conditions to the Offer, including conditions with respect to litigation.
16. FEES AND EXPENSES. Except as set forth below, Purchaser will not pay
any fees or commissions to any broker, dealer or other person for soliciting
tenders of Shares pursuant to the Offer.
Unterberg Harris is acting as Dealer Manager in connection with the Offer
and has provided certain financial advisory services in connection with the
acquisition of the Company. Parent has agreed to pay Unterberg Harris a fee of
$2,500,000 if the transactions contemplated in the Merger Agreement are
consummated and $1,000,000 if these transactions are not consummated and Parent
receives the termination fee described in Section 10. Parent has also agreed to
reimburse Unterberg Harris for all reasonable out-of-pocket expenses incurred by
Unterberg Harris, including the reasonable fees and expenses of legal counsel,
and to indemnify Unterberg Harris against certain liabilities and expenses in
connection with its engagement, including certain liabilities under the federal
securities laws.
Purchaser and Parent have retained Georgeson & Company Inc., as the
Information Agent, and Citibank, N.A., as the Depositary, in connection with the
Offer. The Information Agent may contact holders of Shares by mail, telephone,
telex, telecopy, telegraph and personal interview and may request banks,
brokers, dealers and other nominee stockholders to forward materials relating to
the Offer to beneficial owners.
As compensation for acting as Information Agent in connection with the
Offer, Georgeson & Company Inc., will be paid a fee of $15,000 and will also be
reimbursed for certain out-of-pocket expenses and may be indemnified against
certain liabilities and expenses in connection with the Offer, including certain
liabilities under the federal securities laws. Purchaser will pay the Depositary
reasonable and customary compensation for its services in connection with the
Offer, plus reimbursement for out-of-pocket expenses, and will indemnify the
Depositary against certain liabilities and
31
<PAGE>
expenses in connection therewith, including under federal securities laws.
Brokers, dealers, commercial banks and trust companies will be reimbursed by
Purchaser for customary handling and mailing expenses incurred by them in
forwarding material to their customers.
17. MISCELLANEOUS. Purchaser is not aware of any jurisdiction where the
making of the Offer is prohibited by any administrative or judicial action
pursuant to any valid state statute. If Purchaser becomes aware of any valid
state statute prohibiting the making of the Offer or the acceptance of Shares
pursuant thereto, Purchaser will make a good faith effort to comply with any
such state statute. If, after such good faith effort, Purchaser cannot comply
with any such state statute, the Offer will not be made to (nor will tenders be
accepted from or on behalf of) the holders of Shares in such state. In any
jurisdiction where the securities, blue sky or other laws require the Offer to
be made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of Purchaser by the Dealer Manager or by one or more registered brokers
or dealers licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER OR THE COMPANY NOT CONTAINED IN THIS OFFER
TO PURCHASE OR IN THE LETTER OF TRANSMITTAL, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, Parent and Purchaser have filed with the Commission the Schedule
14D-1, together with exhibits, furnishing certain additional information with
respect to the Offer. The Schedule 14D-1 and any amendments thereto, including
exhibits, may be inspected at, and copies may be obtained from, the same places
and in the same manner as set forth in Section 7 (except that they will not be
available at the regional offices of the Commission).
C Acquisition Corporation
February 29, 1996
32
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
PARENT AND PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. The following table sets
forth the name, current business address, citizenship and present principal
occupation or employment, and material occupations, positions, offices or
employments and business addresses thereof for the past five years of each
director and executive officer of Parent. Unless otherwise indicated, the
current business address of each person is 2011 North Shoreline Boulevard,
Mountain View, California 94043-1389. Unless otherwise indicated, each such
person is a citizen of the United States of America and has held his or her
present position as set forth below for the past five years. Unless otherwise
indicated, each occupation set forth opposite an individual's name refers to
employment with Parent.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME, CITIZENSHIP AND MATERIAL POSITIONS HELD DURING THE PAST FIVE
CURRENT BUSINESS ADDRESS YEARS AND BUSINESS ADDRESSES THEREOF
- - - - ------------------------------------------- ------------------------------------------------------------------
<S> <C>
Edward R. McCracken Director
Chairman and Chief Executive Officer.
Mr. McCracken became Chairman of Parent in 1994.
Thomas A. Jermoluk Director
President and Chief Operating Officer.
Mr. Jermoluk became an Executive Vice President of Parent in 1991
and was named Chief Operating Officer in 1992, and President in
1994.
Robert R. Bishop Director
AUSTRALIA Chairman, Silicon Graphics World Trade Corporation.
Mr. Bishop, who has been an officer of Parent since 1991 and
President of Silicon Graphics World Trade Corporation since 1986,
was named Chairman of the Board of Silicon Graphics World Trade
Corporation in July of 1995.
Allen F. Jacobson Director
3050 Minnesota World Trade Center Former Chairman of the Board and
30 Seventh Street Chief Executive Officer, 3M Company (3M Center, Saint Paul, MN
East St. Paul, MN 55101 55144).
Mr. Jacobson was the Chairman of the Board and Chief Executive
Officer of 3M Company until he retired on October 31, 1991. Mr.
Jacobson serves on the boards of numerous other public companies.
C. Richard Kramlich Director
2490 Sand Hill Road Managing General Partner
Menlo Park, CA 94025 New Enterprise Associates
Mr. Kramlich also serves on the boards of numerous other public
companies.
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME, CITIZENSHIP AND MATERIAL POSITIONS HELD DURING THE PAST FIVE
CURRENT BUSINESS ADDRESS YEARS AND BUSINESS ADDRESSES THEREOF
- - - - ------------------------------------------- ------------------------------------------------------------------
Robert A. Lutz Director
UNITED STATES AND SWITZERLAND President and Chief Operating Officer
12000 Chrysler Drive Chrysler Corporation
Highland Park, MI 48288-0001 Mr. Lutz was elected President of Chrysler Corporation in February
1991. He has also served as Chief Operating Officer and a member
of the Office of the Chairman since January 1993. Mr. Lutz has
been a member of Chrysler Corporation's Board of Directors since
1986.
<S> <C>
James A. McDivitt Director
Former Senior Vice President, Government Operations and
International, Rockwell International Corporation. (1745 Jefferson
Davis Highway, Arlington, VA 22202)
Mr. McDivitt was Senior Vice President, Government Operations and
International, of Rockwell International Corporation until his
retirement in April 1995.
Lucille Shapiro, Ph.D. Director
Stanford University Professor and Chairman of the Department of Developmental Biology,
School of Medicine Stanford University School of Medicine.
Stanford, CA 94305-5427 Dr. Shapiro has been Professor and Chairman of the Department of
Developmental Biology, Stanford University School of Medicine,
since 1989 and Professor of Genetics, Stanford University School
of Medicine since 1990.
Robert B. Shapiro Director
800 North Lindbergh Boulevard Chairman, President and Chief Executive Officer
St. Louis, MO 63167 Monsanto Company.
Mr. Shapiro has been the Chairman, President and Chief Executive
Officer of Monsanto Company since April 1995. Prior to that time,
Mr. Shapiro served as the President and Advisory Director of the
Monsanto Company from 1993 to 1995 and the President of The
Agricultural Group of Monsanto from 1990 to 1993. Mr. Shapiro also
serves on the boards of other public companies.
James G. Treybig Director
Former Chairman of the Board and Chief Executive Officer, Tandem
Computers Incorporated (10435 N. Tantau Avenue, Cupertino, CA
95014).
Mr. Treybig was the Chief Executive Officer of Tandem Computers
Incorporated until he retired on January 8, 1996. Mr. Treybig
remains a director of Tandem Computers Incorporated.
</TABLE>
I-2
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME, CITIZENSHIP AND MATERIAL POSITIONS HELD DURING THE PAST FIVE
CURRENT BUSINESS ADDRESS YEARS AND BUSINESS ADDRESSES THEREOF
- - - - ------------------------------------------- ------------------------------------------------------------------
Gary L. Lauer Executive Vice President, Worldwide Field Operations. President,
Silicon Graphics World Trade Corporation.
Mr. Lauer joined Parent in 1988 as a Vice President, was named
Senior Vice President, North American Field Operations in 1991 and
became Executive Vice President of Parent and President of Silicon
Graphics World Trade Corporation in 1995.
<S> <C>
Javaid Aziz Senior Vice President, Europe.
UNITED KINGDOM Mr. Aziz joined Parent in 1995 as Senior Vice President, Europe.
Prior to joining Parent, Mr. Aziz spent 20 years at IBM
Corporation in technical, marketing and management positions, most
recently as chief executive officer of the United Kingdom
operations. (IBM UK Limited, P.O. Box 41, North Hasboro,
Portsmouth, Hampshire, U.K. PO6 3AU)
Forest Baskett Senior Vice President, Research and Development and Chief
Technology Officer.
Robert K. Burgess Senior Vice President.
CANADA Mr. Burgess joined Parent in 1995 as Senior Vice President and
President of Parent's Alias--Wavefront subsidiary. Prior to
joining Parent, Mr. Burgess served as Alias Research Inc.'s (110
Richmond Street East, Toronto, Ontario M5C 1P1) President and
Chief Operating Officer since 1991 and its Chief Executive Officer
as well as a Director since February 1992.
Kenneth L. Coleman Senior Vice President, Administration.
Stephen Goggiano Senior Vice President, Manufacturing and Customer Service.
Mr. Goggiano was named Vice President/General Manager, Operations
of Parent in 1990 and, in 1993, was named Senior Vice President.
Stanley J. Meresman Senior Vice President, Finance and Chief Financial Officer.
Michael Ramsay Senior Vice President.
UNITED KINGDOM Mr. Ramsay became Senior Vice President/General Manager, Entry
Systems Division of Parent in 1991. In 1992, Mr. Ramsay was named
Senior Vice President, Visual Systems Group, and, in 1994, became
President of Silicon Studio, Inc.
</TABLE>
I-3
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME, CITIZENSHIP AND MATERIAL POSITIONS HELD DURING THE PAST FIVE
CURRENT BUSINESS ADDRESS YEARS AND BUSINESS ADDRESSES THEREOF
- - - - ------------------------------------------- ------------------------------------------------------------------
Teruyasu Sekimoto Senior Vice President, East Asia.
JAPAN Mr. Sekimoto was named Vice President, North Pacific Area of
Parent in 1989 and in 1995 he was named Senior Vice President,
East Asia.
<S> <C>
William M. Kelly Vice President, Business Development, General Counsel and
Secretary.
Mr. Kelly joined Parent in 1994 as Vice President, Business
Development, General Counsel and Secretary. Prior to joining
Parent, Mr. Kelly had practiced law since 1978 with the firm of
Shearman & Sterling, most recently as co-managing partner of that
firm's San Francisco office (555 California Street, Suite 2000,
San Francisco, California 94104).
Dennis P. McBride Vice President, Controller.
Robert W. Saltmarsh Vice President, Treasurer.
Mr. Saltmarsh joined Parent in February 1996 as Vice President,
Treasurer. Between 1994 and 1995, Mr. Saltmarsh served as Chief
Financial Officer of Radius, Inc. (215 Moffett Park Drive,
Sunnyvale, CA 94089) and prior to that spent 12 years with Apple
Computer, Inc. (20525 Mariani Avenue, Cupertino, CA 95014) in
several executive positions, most recently serving as Vice
President of Finance.
</TABLE>
I-4
<PAGE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER. The following table sets
forth the name, current business address, citizenship and present principal
occupation or employment, and material occupations, positions, offices or
employments and business addresses thereof for the past five years of each
director and executive officer of Purchaser. The current business address of
each person is 2011 North Shoreline Boulevard, Mountain View, California
94043-1389. Unless otherwise indicated, each such person is a citizen of the
United States of America, and each occupation set forth opposite an individual's
name refers to employment with Purchaser.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME, CITIZENSHIP AND MATERIAL POSITIONS HELD DURING THE PAST FIVE
CURRENT BUSINESS ADDRESS YEARS AND BUSINESS ADDRESSES THEREOF
- - - - ------------------------------------------- ------------------------------------------------------------------
<S> <C>
Thomas A. Jermoluk President.
Mr. Jermoluk became an Executive Vice President of Parent in 1991
and was named Chief Operating Officer in 1992, and President in
1994.
William M. Kelly Director
Vice President.
Mr. Kelly joined Parent in 1994 as Vice President, Business
Development, General Counsel and Secretary. Prior to joining
Parent, Mr. Kelly had practiced law since 1978 with the firm of
Shearman & Sterling, most recently as co-managing partner of that
firm's San Francisco office (555 California Street, Suite 2000,
San Francisco, California 94104).
Robert W. Saltmarsh Director
Chief Financial Officer.
Mr. Saltmarsh joined Parent in February 1996 as Vice President,
Treasurer. Between 1994 and 1995, Mr. Saltmarsh served as Chief
Financial Officer of Radius, Inc. (215 Moffett Park Drive,
Sunnyvale, CA 94089) and prior to that spent 12 years with Apple
Computer, Inc. (20525 Mariani Avenue, Cupertino, CA 95014) in
several executive positions, most recently serving as Vice
President of Finance.
</TABLE>
I-5
<PAGE>
Facsimiles of the Letter of Transmittal will be accepted. The Letter of
Transmittal, certificates evidencing Shares and any other required documents
should be sent or delivered by each stockholder or his broker, dealer,
commercial bank, trust company or other nominee to the Depositary at one of its
addresses set forth below.
THE DEPOSITARY FOR THE OFFER IS:
CITIBANK, N.A.
<TABLE>
<S> <C> <C>
BY MAIL: BY OVERNIGHT COURIER: BY HAND:
Citibank, N.A. Citibank, N.A. Citibank, N.A.
c/o Citicorp Data c/o Citicorp Data Corporate Trust Window
Distribution, Inc. Distribution, Inc. 111 Wall Street
P.O. Box 1429 404 Sette Drive 5th Floor
Paramus, NJ 07653 Paramus, NJ 07652 New York, NY
BY FACSIMILE:
(For Eligible Institutions Only)
(201) 262-3240
CONFIRM BY TELEPHONE:
(800) 422-2077
</TABLE>
Questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
listed below. Additional copies of this Offer to Purchase, the Letter of
Transmittal and the Notice of Guaranteed Delivery may be obtained from the
Dealer Manager or the Information Agent. A stockholder may also contact brokers,
dealers, commercial banks or trust companies for assistance concerning the
Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
GEORGESON & COMPANY INC.
WALL STREET PLAZA
NEW YORK, NEW YORK 10005
BANKS AND BROKERS CALL COLLECT (212) 440-9800
CALL TOLL FREE: 1-800-223-2064
THE DEALER MANAGER FOR THE OFFER IS:
UNTERBERG HARRIS
275 Battery Street, 29th Floor
San Francisco, California 94111
CALL TOLL FREE: 1-800-622-8448
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE COMMON SHARE PURCHASE RIGHTS)
OF
CRAY RESEARCH, INC.
PURSUANT TO THE OFFER TO PURCHASE DATED FEBRUARY 29, 1996
OF
C ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
SILICON GRAPHICS, INC.
THE OFFER, PRORATION PERIOD, AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON MARCH 27, 1996, UNLESS THE OFFER IS EXTENDED.
THE DEPOSITARY FOR THE OFFER IS:
CITIBANK, N.A.
<TABLE>
<S> <C> <C>
BY MAIL: BY OVERNIGHT COURIER: BY HAND:
Citibank, N.A. Citibank, N.A. Citibank, N.A.
c/o Citicorp Data c/o Citicorp Data Corporate Trust Window
Distribution, Inc. Distribution, Inc. 111 Wall Street
P.O. Box 1429 404 Sette Drive 5th Floor
Paramus, NJ 07653 Paramus, NJ 07652 New York, NY
BY FACSIMILE:
(For Eligible Institutions
Only)
(201) 262-3240
CONFIRM BY TELEPHONE:
(800) 422-2077
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by stockholders either if
certificates evidencing Shares (as defined below) are to be forwarded herewith
or, unless an Agents Message (as defined in the Offer to Purchase) is utilized,
if delivery of Shares is to be made by book-entry transfer to the Depositary's
account at The Depository Trust Company ("DTC") or the Philadelphia Depository
Trust Company ("PDTC") (each a "Book-Entry Transfer Facility" and, collectively,
the "Book-Entry Transfer Facilities") pursuant to the book-entry transfer
procedure described in Section 3 of the Offer to Purchase (as defined below).
DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE
DELIVERY TO THE DEPOSITARY.
Stockholders whose certificates evidencing Shares ("Share Certificates") are
not immediately available or who cannot deliver their Share Certificates and all
other documents required hereby to the Depositary prior to the Expiration Date
(as defined in Section 1 of the Offer to Purchase) or who cannot complete the
procedure for delivery by book-entry transfer on a timely basis and who wish to
tender their Shares must do so pursuant to the guaranteed delivery procedure
described in Section 3 of the Offer to Purchase. See Instruction 2.
<PAGE>
<TABLE>
<S> <C>
/ / CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE DEPOSITARYS
ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
Check Box of Applicable Book-Entry Transfer Facility:
(check one) / / DTC / / PDTC
Account Number:
Transaction Code Number:
/ / CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY
PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s):
Window Ticket No. (if any):
Date of Execution of Notice of Guaranteed Delivery:
Name of Institution which Guaranteed Delivery:
</TABLE>
SPECIAL TENDER INSTRUCTIONS
Shareholders may wish, for tax planning purposes, to designate the specific
order in which they desire their Shares to be accepted for payment in the event
of proration. Each shareholder is urged to consult his own tax advisor with
respect to such considerations.
<TABLE>
<S> <C> <C> <C>
DESCRIPTION OF SHARES TENDERED
<CAPTION>
Name(s) and Address(es) of
Registered Holder(s)
(Please fill in, if blank, exactly
as name(s) Share Certificate(s) and Shares Tendered
appear(s) on Share Certificate(s)) (Attach additional list, if necessary)
<S> <C> <C> <C>
Total Number of
Share Shares Evidenced by
Certificate Share Number of Shares
Number(s)* Certificate(s)* Tendered**
Total Shares:
*Need not be completed by stockholders delivering Shares by book-entry transfer.
**Unless otherwise indicated, it will be assumed that all Shares evidenced by each Share
Certificate delivered to the Depositary are being tendered hereby. See Instruction 4.
</TABLE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to C Acquisition Corporation, a corporation
organized and existing under the laws of the State of Delaware ("Purchaser") and
wholly owned subsidiary of Silicon Graphics, Inc., a Delaware corporation, the
above-described shares of common stock, par value $1.00 per share (the
"Shares"), of Cray Research, Inc., a corporation organized and existing under
the laws of the State of Delaware (the "Company"), pursuant to Purchaser's offer
to purchase 19,218,735 Shares, including the Common Share Purchase Rights (the
"Rights") issued pursuant to the Rights Agreement, dated May 15, 1989, between
the Company and Norwest Bank Minnesota, N.A. (the "Rights Agreement"), at a
price of $30.00 per Share, net to the seller in cash, upon the terms and subject
to the conditions set forth in the Offer to Purchase, dated February 29, 1996
(the "Offer to Purchase"), receipt of which is hereby acknowledged, and in this
Letter of Transmittal (which together constitute the "Offer"). All references
herein to the Rights include all benefits which may inure to stockholders of the
Company pursuant to the Rights Agreement, and unless the context requires
otherwise, all references herein to Shares include the Rights. The undersigned
understands
<PAGE>
that Purchaser reserves the right to transfer or assign, in whole or from time
to time in part, to one or more of its affiliates, the right to purchase all or
any portion of the Shares tendered pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith in accordance with the terms of the Offer, the undersigned
hereby sells, assigns and transfers to, or upon the order of, Purchaser all
right, title and interest in and to all the Shares that are being tendered
hereby and all dividends, distributions (including, without limitation,
distributions of additional Shares) and rights declared, paid or distributed in
respect of such Shares on or after February 25, 1996 (collectively,
"Distributions") and irrevocably appoints the Depositary the true and lawful
agent and attorney-in-fact of the undersigned with respect to such Shares and
all Distributions, with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to (i) deliver
Share Certificates evidencing such Shares and all Distributions, or transfer
ownership of such Shares and all Distributions on the account books maintained
by a Book-Entry Transfer Facility, together, in either case, with all
accompanying evidences of transfer and authenticity, to or upon the order of
Purchaser, (ii) present such Shares and all Distributions for transfer on the
books of the Company and (iii) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Shares and all Distributions, all in
accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints William M. Kelly and Robert W.
Saltmarsh and each of them, as the attorneys and proxies of the undersigned,
each with full power of substitution, to vote in such manner as each such
attorney and proxy or his substitute shall, in his sole discretion, deem proper
and otherwise act (by written consent or otherwise) with respect to all the
Shares tendered hereby which have been accepted for payment by Purchaser prior
to the time of such vote or other action and all Shares and other securities
issued in Distributions in respect of such Shares, which the undersigned is
entitled to vote at any meeting of stockholders of the Company (whether annual
or special and whether or not an adjourned or postponed meeting) or consent in
lieu of any such meeting or otherwise. This proxy and power of attorney is
coupled with an interest in the Shares tendered hereby, is irrevocable and is
granted in consideration of, and is effective upon, the acceptance for payment
of such Shares by Purchaser in accordance with other terms of the Offer. Such
acceptance for payment shall revoke all other proxies and powers of attorney
granted by the undersigned at any time with respect to such Shares (and all
Shares and other securities issued in Distributions in respect of such Shares),
and no subsequent proxy or power of attorney shall be given or written consent
executed (and if given or executed, shall not be effective) by the undersigned
with respect thereto. The undersigned understands that, in order for Shares to
be deemed validly tendered, immediately upon Purchaser's acceptance of such
Shares for payment, Purchaser must be able to exercise full voting and other
rights with respect to such Shares and all Distributions, including, without
limitation, voting at any meeting of the Companys stockholders then scheduled.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and all Distributions, and that when such Shares are accepted for payment
by Purchaser, Purchaser will acquire good, marketable and unencumbered title
thereto and to all Distributions, free and clear of all liens, restrictions,
charges and encumbrances, and that none of such Shares and Distributions will be
subject to any adverse claim. The undersigned, upon request, shall execute and
deliver all additional documents deemed by the Depositary or Purchaser to be
necessary or desirable to complete the sale, assignment and transfer of the
Shares tendered hereby and all Distributions. In addition, the undersigned shall
remit and transfer promptly to the Depositary for the account of Purchaser all
Distributions in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer, and, pending such remittance and transfer
or appropriate assurance thereof, Purchaser shall be entitled to all rights and
privileges as owner of each such Distribution and may withhold the entire
purchase price of the Shares tendered hereby, or deduct from such purchaser
price, the amount or value of such Distribution as determined by Purchaser in
its sole discretion.
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding upon
the heirs, personal representatives, successors and assigns of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute the undersigned's acceptance of the terms
and conditions of the Offer, including the undersigned's representation and
warranty that (i) the undersigned has a net long position in Shares or
equivalent securities at least equal to the Shares tendered within the meaning
of Rule 14e-4 under the Securities Exchange Act of 1934, as amended, and (ii)
such tender of Shares complies with Rule 14e-4. Purchaser's acceptance of such
Shares for payment will constitute a binding agreement between the undersigned
and Purchaser upon the terms and subject to the conditions of the Offer.
<PAGE>
The undersigned understands that if more than 19,218,735 Shares are validly
tendered and not withdrawn in accordance with Section 4 of the Offer to
Purchase, Shares so tendered and not withdrawn will be accepted on a PRO RATA
basis as described in the Offer to Purchase.
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions"', please issue the check for the purchase price of all Shares
purchased, and return all Share Certificates evidencing Shares not purchased or
not tendered in the name(s) of the registered holder(s) appearing above under
"Description of Shares Tendered". Similarly, unless otherwise indicated in the
box entitled "Special Delivery Instructions", please mail the check for the
purchase price of all Shares purchased and all Share Certificates evidencing
Shares not tendered or not purchased (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing above
under "Description of Shares Tendered". In the event that the boxes entitled
"Special Payment Instructions" and "Special Delivery Instructions" are both
completed, please issue the check for the purchase price of all Shares purchased
and return all Share Certificates evidencing Shares not purchased or not
tendered in the name(s) of, and mail such check and Share Certificates to, the
person(s) so indicated. Unless otherwise indicated herein in the box entitled
"Special Payment Instructions", please credit any Shares tendered hereby and
delivered by book-entry transfer, but which are not purchased by crediting the
account at the Book-Entry Transfer Facility designated above. The undersigned
recognizes that Purchaser has no obligation, pursuant to the Special Payment
Instructions, to transfer any Shares from the name of the registered holder(s)
thereof if Purchaser does not purchase any of the Shares tendered hereby.
<TABLE>
<S> <C>
SPECIAL PAYMENT SPECIAL DELIVERY
INSTRUCTIONS INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check To be completed ONLY if the check
for the purchase price of Shares or for the purchase price of Shares
Share Certificates evidencing purchased or Share Certificates
Shares not tendered or not evidencing Shares not tendered or
purchased is to be issued in the not purchased are to be mailed to
name of someone other than the someone other than the undersigned,
undersigned, or if Shares tendered or the undersigned at an address
hereby and delivered by book-entry other than that shown under
transfer which are not purchased "Description of Shares Tendered."
are to be returned by credit to an
account at one of the Book-Entry
Transfer Facilities other than that
designated above.
Issue check and/or certificate(s) Mail check and/or certificate(s)
to: to:
Name: Name:
PLEASE PRINT PLEASE PRINT
Address: Address:
INCLUDE ZIP INCLUDE ZIP CODE
CODE
TAXPAYER IDENTIFICATION OR
SOCIAL SECURITY NUMBER
(SEE SUBSTITUTE FORM W-9 ON
REVERSE SIDE)
/ / Credit Shares delivered by
book-entry transfer and not
purchased to the account set
forth below:
/ / The Depository Trust Company
/ / Philadelphia Depository Trust
Company
ACCOUNT NUMBER
</TABLE>
<PAGE>
IMPORTANT
STOCKHOLDER(S): SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FROM W-9 ON REVERSE)
.........................................................................
.........................................................................
SIGNATURE(S) OF HOLDER(S)
Dated:........................................................., 199
(Must be signed by registered holder(s) exactly as name(s) appear(s) on Share
Certificates or on a security position listing by a person(s) authorized to
become registered holder(s) by certificates and documents transmitted herewith.
If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, please provide the following information and see
Instruction 5).
Name(s): .......................................................................
.................................................................................
PLEASE PRINT
Capacity: ......................................................................
PLEASE PROVIDE FULL TITLE
Address: .......................................................................
.................................................................................
INCLUDE ZIP CODE
Telephone No.: .................................................................
INCLUDE AREA CODE
Taxpayer Identification or
Social Security Number: ........................................................
SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE
GUARANTEE OF SIGNATURES
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
SPACE BELOW IS FOR USE BY FINANCIAL INSTITUTIONS ONLY. FINANCIAL INSTITUTIONS:
PLACE MEDALLION GUARANTEE IN SPACE PROVIDED BELOW.
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer
1. GUARANTEE OF SIGNATURES. All signatures on this Letter of Transmittal
must be medallion guaranteed by a firm which is a member of the Medallion
Signature Guarantee Program, or by any other "eligible guarantor institution",
as such term is defined in Rule 17Ad-15 under the Securities Exchange Act of
1934, as amended (each of the foregoing being referred to as an "Eligible
Institution") unless (i) this Letter of Transmittal is signed by the registered
holder(s) of the Shares (which term, for purposes of this document, shall
include any participant in a Book-Entry Transfer Facility whose name appears on
a security position listing as the owner of Shares) tendered hereby and such
holder(s) has (have) completed neither the box entitled "Special Payment
Instructions" nor the box entitled "Special Delivery Instructions" on the
reverse hereof or (ii) such Shares are tendered for the account of an Eligible
Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARE CERTIFICATES. This Letter
of Transmittal is to be used either if Share Certificates are to be forwarded
herewith or, unless an Agent's Message (as defined in the Offer to Purchase) is
utilized, if Shares are to be delivered by book-entry transfer pursuant to the
procedure set forth in Section 3 of the Offer to Purchase. Share Certificates
evidencing all physically tendered Shares, or a confirmation of a book-entry
transfer into the Depositary's account at a Book-Entry Transfer Facility of all
Shares delivered by book-entry transfer as well as a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or an Agent's Message in the case of a book-entry
delivery, and any other documents required by this Letter of Transmittal, must
be received by the Depositary at one of its addresses set forth on the reverse
hereof prior to the Expiration Date (as defined in Section 1 of the Offer to
Purchase). If Share Certificates are forwarded to the Depositary in multiple
deliveries, a properly completed and duly executed Letter of Transmittal must
accompany each such delivery. Stockholders whose Share Certificates are not
immediately available, who cannot deliver their Share Certificates and all other
required documents to the Depositary prior to the Expiration Date or who cannot
complete the procedure for delivery by book-entry transfer on a timely basis may
tender their Shares pursuant to the guaranteed delivery procedure described in
Section 3 of the Offer to Purchase. Pursuant to such procedure (i) such tender
must be made by or through an Eligible Institution; (ii) a properly completed
and duly executed Notice of Guaranteed Delivery, substantially in the form made
available by Purchaser, must be received by the Depositary prior to the
Expiration Date; and (iii) the Share Certificates evidencing all physically
delivered Shares in proper form for transfer by delivery, or a confirmation of a
book-entry transfer into the Depositary's account at a Book-Entry Transfer
Facility of all Shares delivered by book-entry transfer, in each case together
with a Letter of Transmittal (or a facsimile thereof), properly completed and
duly executed, with any required signature guarantees (or, in the case of
book-entry delivery, an Agent's Message), and any other documents required by
this Letter of Transmittal, must be received by the Depositary within three New
York Stock Exchange, Inc. trading days after the date of execution of such
Notice of Guaranteed Delivery, all as described in Section 3 of the Offer to
Purchase.
The method of delivery of this Letter of Transmittal, Share Certificates and
all other required documents, including delivery through any Book-Entry Transfer
Facility, is at the option and risk of the tendering stockholder, and the
delivery will be deemed made only when actually received by the Depositary. If
delivery is by mail, registered mail with return receipt requested, properly
insured, is recommended. In all cases, sufficient time should be allowed to
ensure timely delivery.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. By execution of this Letter of Transmittal
(or a facsimile hereof), all tendering stockholders waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein under "Description of
Shares Tendered" is inadequate, the Share Certificate numbers, the number of
Shares evidenced by such Share Certificates and the number of Shares tendered
should be listed on a separate schedule and attached hereto.
4. PARTIAL TENDERS (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares evidenced by any Share Certificate
delivered to the Depositary herewith are to be tendered hereby, fill in the
number of Shares which are to be tendered in the box entitled "Number of Shares
Tendered." In such cases, new Share Certificate(s) evidencing the remainder of
the Shares that were evidenced by the Share Certificates delivered to the
Depositary herewith will be sent to the person(s) signing this Letter of
Transmittal, unless otherwise provided in the box entitled "Special Delivery
Instructions" on the reverse hereof, as soon as practicable after the expiration
or termination of the Offer. All Shares evidenced by Share Certificates
delivered to the Depositary will be deemed to have been tendered unless
otherwise indicated.
<PAGE>
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the Share Certificates evidencing such Shares without alteration,
enlargement or any other change whatsoever.
If any Share tendered hereby is owned of record by two or more persons, all
such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in the names of
different holders, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of such
Shares.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of Share Certificates or separate stock
powers are required, unless payment is to be made to, or Share Certificates
evidencing Shares not tendered or not purchased are to be issued in the name of,
a person other than the registered holder(s), in which case the Share
Certificate(s) evidencing the Shares tendered hereby must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear(s) on such Share Certificate(s).
Signatures on such Share Certificate(s) and stock powers must be guaranteed by
an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Share Certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on such Share Certificate(s). Signatures on such
Share Certificate(s) and stock powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any Share Certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to Purchaser of such persons authority so to act must be submitted.
6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction
6, Purchaser will pay all stock transfer taxes with respect to the sale and
transfer of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or Share
Certificate(s) evidencing Shares not tendered or not purchased are to be issued
in the name of, a person other than the registered holder(s), the amount of any
stock transfer taxes (whether imposed on the registered holder(s), such other
person or otherwise) payable on account of the transfer to such other person
will be deducted from the purchase price of such Shares purchased, unless
evidence satisfactory to Purchaser of the payment of such taxes, or exemption
therefrom, is submitted. Except as provided in this Instruction 6, it will not
be necessary for transfer tax stamps to be affixed to the Share Certificates
evidencing the Shares tendered hereby.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares tendered hereby is to be issued, or Share Certificate(s)
evidencing Shares not tendered or not purchased are to be issued, in the name of
a person other than the person(s) signing this Letter of Transmittal or if such
check or any such Share Certificate is to be sent to someone other than the
person(s) signing this Letter of Transmittal or to the person(s) signing this
Letter of Transmittal but at an address other than that shown in the box
entitled "Description of Shares Tendered" on the reverse hereof, the appropriate
boxes on the reverse of this Letter of Transmittal must be completed.
Stockholders delivering Shares tendered hereby by book-entry transfer may
request that Shares not purchased be credited to such account maintained at a
Book-Entry Transfer Facility as such stockholder may designate in the box
entitled "Special Payment Instructions" on the reverse hereof. If no such
instructions are given, all such Shares not purchased will be returned by
crediting the account at the Book-Entry Transfer Facility designated on the
reverse hereof as the account from which such Shares were delivered.
8. QUESTIONS AND REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions
and requests for assistance may be directed to the Information Agent or the
Dealer Manager at their respective addresses or telephone numbers set forth
below. Additional copies of the Offer to Purchase, this Letter of Transmittal
and the Notice of Guaranteed Delivery may be obtained from the Information Agent
or the Dealer Manager or from brokers, dealers, commercial banks or trust
companies.
9. SUBSTITUTE FORM W-9. Each tendering stockholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on the
Substitute Form W-9 which is provided under "Important Tax Information" below,
and to certify whether such stockholder is subject to backup withholding of
federal income tax. If a tendering stockholder has been notified by the Internal
<PAGE>
Revenue Service that such stockholder is subject to backup withholding, such
stockholder must cross out item (2) of the Certification box of the Substitute
Form W-9, unless such stockholder has since been notified by the Internal
Revenue Service that such stockholder is no longer subject to backup
withholding. Failure to provide the information on the Substitute Form W-9 may
subject the tendering stockholder to 31% federal income tax withholding on the
payment of the purchase price of all Shares purchased from such stockholder. If
the tendering stockholder has not been issued a TIN and has applied for one or
intends to apply for one in the near future, such stockholder should write
"Applied For" in the space provided for the TIN in Part I of the Substitute Form
W-9, and sign and date the Substitute Form W-9. If "Applied For" is written in
Part I and the Depositary is not provided with a TIN within 60 days, the
Depositary will withhold 31% on all payments of the purchase price to such
stockholder until a TIN is provided to the Depositary.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF), PROPERLY
COMPLETED AND DULY EXECUTED (TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES, OR
AN AGENT'S MESSAGE IN THE CASE OF BOOK-ENTRY DELIVERY, AND SHARE CERTIFICATES OR
CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS) OR A
PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE (AS DEFINED IN THE OFFER
TO PURCHASE).
IMPORTANT TAX INFORMATION
Under the federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required by law to provide the Depositary (as payer)
with such stockholder's correct TIN on Substitute Form W-9 below. If such
stockholder is an individual, the TIN is such stockholder's social security
number. If the Depositary is not provided with the correct TIN, the stockholder
may be subject to a $500 penalty imposed by the Internal Revenue Service. In
addition, payments that are made to such stockholder with respect to Shares
purchased pursuant to the Offer may be subject to backup withholding.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such individual must submit an Internal Revenue Form W-8, signed
under penalties of perjury, attesting to such individual's exempt status. A Form
W-8 may be obtained from the Depositary. See the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of such stockholder's correct TIN by
completing the form below certifying that the TIN provided on Substitute Form
W-9 is correct (or that such stockholder is awaiting a TIN), and that (i) such
stockholder has not been notified by the Internal Revenue Service that he is
subject to backup withholding as a result of a failure to report all interest or
dividends or (ii) the Internal Revenue Service has notified such stockholder
that such stockholder is no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are in more than one name or are not in the name
of the actual owner, consult the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional guidance on
which number to report. If the tendering stockholder has not been issued a TIN
and has applied for a number or intends to apply for a number in the near
future, the stockholder should write "Applied For" in the space provided for the
TIN in Part I, and sign and date the Substitute Form W-9. If "Applied For" is
written in Part I and the Depositary is not provided with a TIN within 60 days,
the Depositary will withhold 31% of all payments of the purchase price to such
stockholder until a TIN is provided to the Depositary.
<PAGE>
<TABLE>
<S> <C> <C>
PAYERS'S NAME: CITIBANK, N.A.
PART I--Taxpayer Identification
Number--
For all accounts, enter your TIN
in the box at right. (For most
individuals, this is your social
security number. If you do not
have a TIN, see How to Obtain a
TIN in the enclosed GUIDELINES.) SOCIAL SECURITY NUMBER
Certify by signing and dating OR
below. Note: If the account is in
SUBSTITUTE more than one name, see the chart EMPLOYER IDENTIFICATION
Form W-9 in the enclosed GUIDELINES to NUMBER
Department of the Treasury determine which number to give (IF AWAITING TIN WRITE
Internal Revenue Service the payer. APPLIED FOR)
PAYERS REQUEST FOR TAXPAYER PART II--For Payees Exempt From Backup Withholding, see the
IDENTIFICATION NUMBER (TIN) enclosed GUIDELINES and complete as instructed therein.
CERTIFICATION--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or I am
waiting for a number to be issued to me), and
(2) I am not subject to backup withholding either because (a) I am exempt from backup
withholding, (b) I have not been notified by the Internal Revenue Service (the "IRS")
that I am subject to backup withholding as a result of failure to report all interest or
dividends, or (c) the IRS has notified me that I am no longer subject to backup
withholding.
CERTIFICATE INSTRUCTIONS--You must cross out item (2) above if you have been notified by the
IRS that you are subject to backup withholding because of underreporting interest or dividends
on your tax return. However, if after being notified by the IRS that you were subject to
backup withholding you received another notification from the IRS that you are no longer
subject to backup withholding, do not cross out item (2). (Also see instructions in the
enclosed GUIDELINES.)
SIGNATURE DATE, 199
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. FOR ADDITIONAL
DETAILS, PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9.
Facsimiles of the Letter of Transmittal will be accepted. The Letter of
Transmittal and Certificates evidencing Shares and any other required documents
should be sent or delivered by each stockholder or his broker, dealer,
commercial book, trust company or other nominee to the Depositary at one of its
addresses set forth below.
10. ORDER IN WHICH SHARES WILL BE ACCEPTED. (NOT APPLICABLE TO
SHAREHOLDERS WHO TENDER BY BOOK-ENTRY TRANSFER.) In the event of proration, the
Shares listed in the box captioned "Description of Shares Tendered" will be
accepted for payment in the order in which the certificate numbers of such
Shares are listed. Tendering stockholders who wish to have Shares accepted for
payment in a specific order in the event of proration should list the Shares in
that order in the box captioned "Description of Shares Tendered."
THE DEPOSITARY FOR THE OFFER IS:
CITIBANK, N.A.
<TABLE>
<S> <C> <C>
BY MAIL: BY OVERNIGHT COURIER: BY HAND:
Citibank, N.A. Citibank, N.A. Citibank, N.A.
c/o Citicorp Data c/o Citicorp Data Corporate Trust Window
Distribution, Inc. Distribution, Inc. 111 Wall Street
P.O. Box 1429 404 Sette Drive 5th Floor
Paramus, NJ 07653 Paramus, NJ 07652 New York, NY
BY FACSIMILE:
(For Eligible Institutions
Only)
(201) 262-3240
CONFIRM BY TELEPHONE:
(800) 422-2077
</TABLE>
<PAGE>
Questions or requests for assistance may be directed to the Dealer Manager
or Information Agent at their respective addresses and telephone numbers listed
below. Additional copies of the Offer to Purchase, the Letter of Transmittal and
the Notice of Guaranteed Delivery may be obtained from the Information Agent. A
stockholder may also contact brokers, dealers, commercial banks or trust
companies for assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
GEORGESON & COMPANY INC.
WALL STREET PLAZA
NEW YORK, NEW YORK 10005
BANKS AND BROKERS CALL COLLECT (212) 440-9800
CALL TOLL FREE: 1-800-223-2064
THE DEALER MANAGER FOR THE OFFER IS:
UNTERBERG HARRIS
275 Battery Street, 29th Floor
San Francisco, California 94111
CALL TOLL FREE: 1-800-622-8448
<PAGE>
NOTICE OF GUARANTEED DELIVERY
for
Tender of Shares of Common Stock
(Including the Common Share Purchase Rights)
of
CRAY RESEARCH, INC.
(Not to be Used for Signature Guarantees)
This Notice of Guaranteed Delivery, or one substantially in the form hereof,
must be used to accept the Offer (as defined below) (i) if certificates ("Share
Certificates") evidencing shares of common stock, par value $1.00 per share (the
"Shares"), of Cray Research, Inc., a corporation organized and existing under
the laws of the State of Delaware (the "Company"), including the Common Share
Purchase Rights (the "Rights") issued pursuant to the Rights Agreement, dated
May 15, 1989, between the Company and Norwest Bank Minnesota, N.A. (the "Rights
Agreement"), are not immediately available, (ii) if Share Certificates and all
other required documents cannot be delivered to Citibank, N.A., as Depositary
(the "Depositary"), prior to the Expiration Date (as defined in Section 1 of the
Offer to Purchase (as defined below)) or (iii) if the procedure for delivery by
book-entry transfer cannot be completed on a timely basis. This Notice of
Guaranteed Delivery may be delivered by hand or mail or transmitted by telegram
or facsimile transmission to the Depositary. All references herein to the Rights
include all benefits which may inure to stockholders of the Company pursuant to
the Rights Agreement, and unless the context requires otherwise, all references
herein to Shares include the Rights. See Section 3 of the Offer to Purchase.
THE DEPOSITARY FOR THE OFFER IS:
CITIBANK, N.A.
<TABLE>
<S> <C> <C>
BY MAIL: BY OVERNIGHT COURIER: BY HAND:
Citibank, N.A. Citibank, N.A. Citibank, N.A.
c/o Citicorp Data c/o Citicorp Data Corporate Trust Window
Distribution, Inc. Distribution, Inc. 111 Wall Street
P.O. Box 1429 404 Sette Drive 5th Floor
Paramus, NJ 07653 Paramus, NJ 07652 New York, NY
BY FACSIMILE:
(For Eligible Institutions
Only)
(201) 262-3240
CONFIRM BY TELEPHONE:
(800) 422-2077
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to C Acquisition Corporation, a corporation
organized and existing under the laws of the State of Delaware and wholly owned
subsidiary of Silicon Graphics, Inc., a Delaware corporation, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated February 29,
1996 (the "Offer to Purchase"), and the related Letter of Transmittal (which
together constitute the "Offer"), receipt of each of which is hereby
acknowledged, the number of Shares specified below pursuant to the guaranteed
delivery procedure described in Section 3 of the Offer to Purchase.
<TABLE>
<S> <C>
Number of Shares: -------------------------- --------------------------------------------
Certificate Nos. (if available): ---------------- --------------------------------------------
- - - - -------------------------------------------- SIGNATURE(S) OF HOLDER(S)
Check one box if Shares will be delivered by book-entry Dated: ------------------------------, 199 --
transfer: Name(s) of Holder(s):
/ / The Depository Trust Company --------------------------------------------
/ / Philadelphia Depository Trust Company --------------------------------------------
Account No.: ------------------------------- PLEASE TYPE OR PRINT
-------------------------------------------------------
ADDRESS
-------------------------------------------------------
ZIP CODE
-------------------------------------------------------
AREA CODE AND TELEPHONE NO.
</TABLE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.
or which is a commercial bank or trust company having an office or correspondent
in the United States, guarantees to deliver to the Depositary, at one of its
addresses set forth above, Share Certificates evidencing the Shares tendered
hereby, in proper form for transfer, or confirmation of book-entry transfer of
such Shares into the Depositary's account at The Depository Trust Company or the
Philadelphia Depository Trust Company, in each case with delivery of a Letter of
Transmittal (or facsimile thereof) properly completed and duly executed, with
any required signature guarantees or an Agent's Message (as defined in the Offer
to Purchase) in the case of a book-entry delivery, and any other required
documents, all within three New York Stock Exchange, Inc. trading days of the
date hereof.
<TABLE>
<S> <C>
- - - - -------------------------------------------- --------------------------------------------
NAME OF FIRM AUTHORIZED SIGNATURE
- - - - --------------------------------------------- ---------------------------------------------
ADDRESS TITLE
- - - - --------------------------------------------- Name: -------------------------------------
- - - - -------------------------------------------- Dated: ------------------------------, 199 --
AREA CODE AND TELEPHONE NO.
</TABLE>
DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE.
SHARE CERTIFICATES SHOULD BE SENT WITH YOUR
LETTER OF TRANSMITTAL.
<PAGE>
UNTERBERG HARRIS
275 Battery Street, 29th Floor
San Francisco, California 94111
Offer to Purchase for Cash
19,218,735 Shares of Common Stock
(Including the Common Share Purchase Rights)
of
CRAY RESEARCH, INC.
at
$30.00 Net Per Share
by
C ACQUISITION CORPORATION
a wholly owned subsidiary of
SILICON GRAPHICS, INC.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, MARCH 27, 1996,
UNLESS THE OFFER IS EXTENDED.
February 29, 1996
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by C Acquisition Corporation, a corporation organized
and existing under the laws of the State of Delaware ("Purchaser") and wholly
owned subsidiary of Silicon Graphics, Inc., a Delaware corporation ("Parent"),
to act as Dealer Manager in connection with Purchaser's offer to purchase
19,218,735 shares of Common Stock, par value $1.00 per share (the "Shares"), of
Cray Research, Inc., a corporation organized and existing under the laws of the
State of Delaware (the "Company"), including the Common Share Purchase Rights
(the "Rights") issued pursuant to the Rights Agreement, dated May 15, 1989,
between the Company and Norwest Bank Minnesota, N.A. (the "Rights Agreement"),
at a price of $30.00 per Share, net to the seller in cash, upon the terms and
subject to the conditions set forth in Purchaser's Offer to Purchase, dated
February 29, 1996 (the "Offer to Purchase"), and the related Letter of
Transmittal (which together constitute the "Offer") enclosed herewith. All
references herein to the Rights include all benefits which may inure to
stockholders of the Company pursuant to the Rights Agreement, and unless the
context requires otherwise, all references herein to Shares include the Rights.
Please furnish copies of the enclosed materials to those of your clients for
whose accounts you hold Shares registered in your name or in the name of your
nominee.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST THE
NUMBER OF SHARES THAT WHEN ADDED TO THE SHARES ALREADY OWNED BY PARENT WILL
CONSTITUTE A MAJORITY OF THE THEN OUTSTANDING SHARES ON A FULLY DILUTED BASIS.
Enclosed for your information and use are copies of the following documents:
1. Offer to Purchase, dated February 29, 1996;
2. Letter of Transmittal to be used by holders of Shares in accepting
the Offer and tendering Shares;
<PAGE>
3. Notice of Guaranteed Delivery to be used to accept the Offer if the
Shares and all other required documents are not immediately available or
cannot be delivered to Citibank, N.A. (the "Depositary") by the Expiration
Date (as defined in the Offer to Purchase) or if the procedure for
book-entry transfer cannot be completed by the Expiration Date;
4. A letter to stockholders of the Company from J. Phillip Samper,
Chairman and Chief Executive Officer of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9 filed with the
Securities and Exchange Commission by the Company;
5. A letter which may be sent to your clients for whose accounts you
hold Shares registered in your name or in the name of your nominee, with
space provided for obtaining such clients instructions with regard to the
Offer;
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. Return envelope addressed to the Depositary.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON WEDNESDAY, MARCH 27, 1996, UNLESS THE OFFER IS EXTENDED.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) certificates
evidencing such Shares (or a confirmation of a book-entry transfer of such
Shares into the Depositary's account at one of the Book-Entry Transfer
Facilities (as defined in the Offer to Purchase)), (ii) a Letter of Transmittal
(or facsimile thereof) properly completed and duly executed, with any required
signature guarantees, or an Agent's Message (as defined in the Offer to
Purchase) in connection with a book-entry delivery of Shares and (iii) and any
other required documents required by the Letter of Transmittal.
If holders of Shares wish to tender Shares, but cannot deliver such holders
certificates or other required documents, or cannot comply with the procedure
for book-entry transfer, prior to the expiration of the Offer, a tender may be
effected by following the guaranteed delivery procedure described in Section 3
of the Offer to Purchase.
Purchaser will not pay any fees or commissions to any broker, dealer or
other person (other than the Dealer Manager, Depositary and Information Agent as
described in the Offer) in connection with the solicitation of tenders of Shares
pursuant to the Offer. However, Purchaser will reimburse you for customary
mailing and handling expenses incurred by you in forwarding any of the enclosed
materials to your clients. Purchaser will pay or cause to be paid any stock
transfer taxes payable with respect to the transfer of Shares to it, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to,
and additional copies of the enclosed materials may be obtained by contacting,
Unterberg Harris L.P., the Dealer Manager, or Georgeson & Company, Inc., the
Information Agent, at their respective addresses and telephone numbers set forth
on the back cover page of the Offer to Purchase.
Additional copies of the enclosed material may be obtained from the
Information Agent at the address and telephone number set forth on the back
cover page of the Offer to Purchase.
Very truly yours,
UNTERBERG HARRIS
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL AUTHORIZE YOU OR
ANY OTHER PERSON TO ACT ON BEHALF OF OR AS THE AGENT OF PARENT, PURCHASER, THE
COMPANY, UNTERBERG HARRIS, THE INFORMATION AGENT OR THE DEPOSITARY, OR OF ANY
AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY
DOCUMENT OR TO MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH
THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED
THEREIN.
<PAGE>
Offer to Purchase for Cash
19,218,735 Shares of Common Stock
(Including the Common Share Purchase Rights)
of
CRAY RESEARCH, INC.
at
$30.00 Net Per Share
by
C ACQUISITION CORPORATION
a wholly owned subsidiary of
SILICON GRAPHICS, INC.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, MARCH 27, 1996,
UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration are an Offer to Purchase, dated February 29,
1996 (the "Offer to Purchase"), and a related Letter of Transmittal in
connection with the offer by C Acquisition Corporation, a corporation organized
and existing under the laws of the State of Delaware ("Purchaser") and wholly
owned subsidiary of Silicon Graphics, Inc., a Delaware corporation ("Parent"),
to purchase 19,218,735 shares of common stock, par value $1.00 per share (the
"Shares"), of Cray Research, a corporation organized and existing under the laws
of the State of Delaware (the "Company"), including the Common Share Purchase
Rights (the "Rights") issued pursuant to the Rights Agreement, dated May 15,
1989, between the Company and Norwest Bank Minnesota, N.A. (the "Rights
Agreement"), at a price of $30.00 per Share, net to the seller in cash, upon the
terms and subject to the conditions set forth in the Offer to Purchase and in
the related Letter of Transmittal (which together constitute the "Offer"). All
references herein to the Rights include all benefits which may inure to
stockholders of the Company pursuant to the Rights Agreement, and unless the
context requires otherwise, all references herein to Shares include the Rights.
We are (or our nominee is) the holder of record of Shares held by us for
your account. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF
RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED
TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD
BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish to have us tender on your
behalf any or all of the Shares held by us for your account, upon the terms and
subject to the conditions set forth in the Offer.
Your attention is invited to the following:
1. The tender price is $30.00 per Share, net to the seller in cash.
2. The Offer is being made for 19,218,735 Shares.
3. The Board of Directors of the Company unanimously has determined
that each of the Offer and the Merger is fair to, and in the best interests
of, the stockholders of the Company, and recommends that stockholders accept
the Offer and tender all of their Shares pursuant to the Offer.
4. The Offer, proration period and withdrawal rights will expire at
12:00 midnight, New York City time, on Wednesday, March 27, 1996, unless the
Offer is extended.
<PAGE>
5. The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn prior to the expiration of the Offer at
least the number of Shares that when added to the Shares already owned by
Parent will constitute a majority of the then outstanding Shares on a fully
diluted basis.
6. Upon the terms and subject to the conditions of the Offer, if more
than 19,218,735 Shares are validly tendered prior to the Expiration Date (as
defined in Section 1 of the Offer to Purchase) and not withdrawn, Shares so
tendered and not withdrawn will be accepted for payment on a PRO RATA basis
as described in the Offer to Purchase.
7. Tendering stockholders will not be obligated to pay brokerage fees
or commissions or, except as otherwise provided in Instruction 6 of the
Letter of Transmittal, stock transfer taxes with respect to the purchase of
Shares by Purchaser pursuant to the Offer.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form contained
in this letter. An envelope in which to return your instructions to us is
enclosed. If you authorize the tender of your Shares, all such Shares will be
tendered unless otherwise specified in your instructions. YOUR INSTRUCTIONS
SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR
BEHALF PRIOR TO THE EXPIRATION OF THE OFFER.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and is being made to all holders of Shares. Purchaser is not aware
of any jurisdiction where the making of the Offer is prohibited by
administrative or judicial action pursuant to any valid state statute. If
Purchaser becomes aware of any valid state statute prohibiting the making of the
Offer or the acceptance of Shares pursuant thereto, Purchaser will make a good
faith effort to comply with such state statute. If, after such good faith
effort, Purchaser cannot comply with such state statute, the Offer will not be
made to (nor will tenders be accepted from or on behalf of) the holders of
Shares in such state. In any jurisdiction where the securities, blue sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of Purchaser by Unterberg Harris L.P.
or one or more registered brokers or dealers licensed under the laws of such
jurisdiction.
<PAGE>
INSTRUCTIONS WITH RESPECT TO
THE OFFER TO PURCHASE FOR CASH
19,218,735 SHARES OF COMMON STOCK
(INCLUDING THE COMMON SHARE PURCHASE RIGHTS)
of
CRAY RESEARCH, INC.
by
C ACQUISITION CORPORATION
a wholly owned subsidiary of
SILICON GRAPHICS, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase, dated February 29, 1996, and the related Letter of Transmittal
(which together constitute the "Offer") in connection with the offer by C
Acquisition Corporation, a corporation organized and existing under the laws of
the State of Delaware and wholly owned subsidiary of Silicon Graphics, Inc., a
Delaware corporation, to purchase 19,218,735 Shares of common stock, par value
$1.00 per share (the "Shares"), of Cray Research, Inc., a corporation organized
and existing under the laws of the State of Delaware, including the Common Share
Purchase Rights (the "Rights") issued pursuant to the Rights Agreement, dated
May 15, 1989, between the Company and Norwest Bank Minnesota, N.A. (the "Rights
Agreement"). All references herein to the Rights include all benefits which may
inure to stockholders of the Company pursuant to the Rights Agreement, and
unless the context requires otherwise, all references herein to Shares include
the Rights.
This will instruct you to tender the number of Shares indicated below (or,
if no number is indicated below, all Shares) that are held by you for the
account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer.
Dated:
- - - - ----------------------------, 199
- - - - -- SIGN HERE
<TABLE>
<S> <C>
Number of
Shares
----------------------------------------
to be
Tendered:
- - - - ----------------------------------------
----------------------------------------
Shares* SIGNATURE(S) OF HOLDER(S)
Name(s) of Holder(s):
----------------------------------------
PLEASE TYPE OR PRINT
----------------------------------------
ADDRESS
----------------------------------------
ZIP CODE
----------------------------------------
AREA CODE AND TELEPHONE NUMBER
----------------------------------------
TAXPAYER IDENTIFICATION OR SOCIAL
SECURITY NUMBER
</TABLE>
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER.
- - - - -- Social Security numbers have nine digits separated by two hyphens, e.g.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen, e.g., 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<C> <S> <C>
- - - - -------------------------------------------------------------
GIVE THE SOCIAL
SECURITY
NUMBER OF --
FOR THIS TYPE OF ACCOUNT:
- - - - -------------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals The actual owner of
(joint account) the account or, if
combined funds, the
first individual on
the account(1)
3. Husband and wife (joint The actual owner of
account) the account or, if
joint funds, either
person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if the
account) minor is the only
contributor, the
minor(1)
6. Account in the name of The ward, minor, or
guardian or committee for a incompetent person(3)
designated ward, minor, or
incompetent person
7. a. A revocable savings The
trust account (in which grantor-trustee(1)
grantor is also trustee)
b. Any "trust" account that The actual owner(1)
is not a legal or valid
trust under State law
- - - - -------------------------------------------------------------
GIVE THE EMPLOYER
IDENTIFICATION NUMBER
OF --
FOR THIS TYPE OF ACCOUNT:
- - - - -------------------------------------------------------------
8. Sole proprietorship account The owner(4)
9. A valid trust, estate, or The legal entity (do
pension trust not furnish the
identifying number of
the personal
representative or
trustee unless the
legal entity itself
is not designated in
the account title)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization
account
12. Partnership account held in The partnership
the name of the business
13. Association, club, or other The organization
tax-exempt organization
14. A broker or registered The broker or nominee
nominee
15. Account with the Department The public entity
of Agriculture in the name
of a public entity (such as
a State or local
government, school
district, or prison) that
receives agricultural
program payments
</TABLE>
<TABLE>
<C> <S> <C>
- - - - -------------------------------------------------------------
- - - - -------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner. If the owner does not have an employer
identification number, furnish the owner's social security number.
(5) List first and circle the name of the legal trust, estate or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number (for
businesses and all other entities), at an office of the Social Security
Administration or the Internal Revenue Service.
To complete Substitute Form W-9, if you do not have a tax-payer identification
number, write "Applied For" in the space for the taxpayer identification number
in Part 1, sign and date the Form, and give it to the requester. Generally, you
will then have 60 days to obtain a taxpayer identification number and furnish it
to the requester. If the requester does not receive your taxpayer identification
number within 60 days, backup withholding, if applicable, will begin and will
continue until you furnish your taxpayer identification number to the requester.
PAYEES EXEMPT FROM BACKUP WITHHOLDING PENALTIES
Payees specifically exempted from backup withholding on ALL payments include the
following:*
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a),
or an individual retirement plan, or a custodial account under section
403(b)(7).
- The United States or any agency or instrumentality
thereof.
- A State, the District of Columbia, a possession of the
United States, or any political subdivision or instrumentality thereof.
- A foreign government or a political subdivision, agency
or instrumentality thereof.
- An international organization or any agency or
instrumentality thereof.
- A registered dealer in securities or commodities
registered in the United States or a possession of the United States.
- A real estate investment trust.
- A common trust fund operated by a bank under section
584(a).
- An entity registered at all times during the tax year under
the Investment Company Act of 1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding
under section 1441.
- Payments to partnerships not engaged in a trade or
business in the United States and which have at least one nonresident
partner.
- Payments of patronage dividends where the amount
received is not paid in money.
- - - - ----------
* Unless otherwise noted herein, all references below to section numbers or to
regulations are references to the Internal Revenue Code and the regulations
promulgated thereunder.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by
individuals. NOTE: You may be subject to backup withholding if (i) this
interest is $600 or more, (ii) the interest is paid in the course of the
payer's trade or business and (iii) you have not provided your correct
taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-
interest dividends under section 852).
- Payments described in section 6049(b)(5) to non-
resident aliens.
- Payments on tax-free covenant bonds under
section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
EXEMPT PAYEES DESCRIBED ABOVE SHOULD FILE A SUBSTITUTE FORM W-9 TO AVOID
POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYER, FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM,
SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
Certain payments other than interest, dividends, and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividends,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes and to help verify the accuracy of your tax return.
Payers must be given the numbers whether or not recipients are required to file
tax returns. Payers must generally withhold 31% of taxable interest, dividends,
and certain other payments to a payee who does not furnish a taxpayer
identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE STATEMENTS WITH RESPECT TO WITHHOLDING.--If you make
a false statement with no reasonable basis which results in no imposition of
backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--If you falsify certifications
or affirmations, you are subject to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION
CONTACT YOUR TAX CONSULTANT OR THE
INTERNAL REVENUE SERVICE
<PAGE>
EXHIBIT (A)(7)
[FORM OF SUMMARY ADVERTISEMENT]
THIS ANNOUNCEMENT IS NEITHER AN OFFER TO PURCHASE NOR A SOLICITATION OF AN
OFFER TO SELL SHARES. THE OFFER IS MADE SOLELY BY THE OFFER TO PURCHASE DATED
FEBRUARY 29, 1996 AND THE RELATED LETTER OF TRANSMITTAL, AND IS BEING MADE TO
ALL HOLDERS OF SHARES. PURCHASER IS NOT AWARE OF ANY STATE WHERE THE MAKING OF
THE OFFER IS PROHIBITED BY ADMINISTRATIVE OR JUDICIAL ACTION PURSUANT TO ANY
VALID STATE STATUTE. IF PURCHASER BECOMES AWARE OF ANY VALID STATE STATUTE
PROHIBITING THE MAKING OF THE OFFER OR THE ACCEPTANCE OF SHARES PURSUANT
THERETO, PURCHASER WILL MAKE A GOOD FAITH EFFORT TO COMPLY WITH SUCH STATE
STATUTE. IF, AFTER SUCH GOOD FAITH EFFORT, PURCHASER CANNOT COMPLY WITH SUCH
STATE STATUTE, THE OFFER WILL NOT BE MADE TO (NOR WILL TENDERS BE ACCEPTED FROM
OR ON BEHALF OF) THE HOLDERS OF SHARES IN SUCH STATE. IN ANY JURISDICTION WHERE
THE SECURITIES, BLUE SKY OR OTHER LAWS REQUIRE THE OFFER TO BE MADE BY A
LICENSED BROKER OR DEALER, THE OFFER SHALL BE DEEMED TO BE MADE ON BEHALF OF
PURCHASER BY UNTERBERG HARRIS OR ONE OR MORE REGISTERED BROKERS OR DEALERS
LICENSED UNDER THE LAWS OF SUCH JURISDICTION.
NOTICE OF OFFER TO PURCHASE FOR CASH
19,218,735 SHARES OF COMMON STOCK
(INCLUDING THE COMMON SHARE PURCHASE RIGHTS)
OF
CRAY RESEARCH, INC.
AT
$30.00 NET PER SHARE
BY
C ACQUISITION CORPORATION
a wholly owned subsidiary of
SILICON GRAPHICS, INC.
C Acquisition Corporation, a corporation organized and existing under the
laws of the State of Delaware ("Purchaser") and wholly owned subsidiary of
Silicon Graphics, Inc., a Delaware corporation ("Parent"), is offering to
purchase 19,218,735 shares (the "Offered Number") of common stock, par value
$1.00 per share (the "Shares"), of Cray Research, Inc. a corporation organized
and existing under the laws of the State of Delaware (the "Company"), including
the Common Share Purchase Rights (the "Rights") issued pursuant to the Rights
Agreement, dated May 15, 1989, between the Company and Norwest Bank Minnesota,
N.A. (the "Rights Agreement"), at a price of $30.00 per Share, net to the seller
in cash, upon the terms and subject to the conditions set forth in the Offer to
Purchase, dated February 29, 1996 (the "Offer to Purchase"), and in the related
Letter of Transmittal (which together constitute the "Offer"). All references
herein to the Rights include all benefits which may inure to stockholders of the
Company pursuant to the Rights Agreement, and unless the context requires
otherwise, all references herein to Shares include the Rights. Following the
Offer, Purchaser intends to effect the Merger (as defined below).
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY,
MARCH 27, 1996, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST THE
NUMBER OF SHARES THAT WHEN ADDED TO THE SHARES ALREADY OWNED BY PARENT WILL
CONSTITUTE A MAJORITY OF THE THEN OUTSTANDING SHARES ON A FULLY DILUTED BASIS.
<PAGE>
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of February 25, 1996 (the "Merger Agreement"), among Parent, Purchaser and
the Company. The Merger Agreement provides that, among other things, as soon as
practicable after the purchase of Shares pursuant to the Offer and the
satisfaction of the other conditions set forth in the Merger Agreement and in
accordance with the relevant provisions of the General Corporation Law of the
State of Delaware ("Delaware Law"), Purchaser will be merged with and into the
Company (the "Merger"). Following consummation of the Merger, the Company will
continue as the surviving corporation (the "Surviving Corporation") and will
become a wholly owned subsidiary of Parent. At the effective time of the Merger
(the "Effective Time"), each Share issued and outstanding immediately prior to
the Effective Time (other than Shares held in the treasury of the Company or
owned by Purchaser, Parent or any direct or indirect wholly owned subsidiary of
Parent or of the Company ("Ineligible Shares"), and other than Shares held by
stockholders who shall have demanded and perfected appraisal rights, if any,
under Delaware Law) will be cancelled and converted automatically into the right
to receive (i) 1.00 fully paid and non-assessable share of Parent's common stock
(the "Exchange Ratio"); provided, however, that if Purchaser accepts for payment
and pays for less than 19,218,735 Shares in the Offer (the number of Shares so
accepted for payment and paid for being referred to herein as the "Accepted
Share Number"), then the Exchange Ratio shall be equal to a fraction (the
"Adjusted Exchange Ratio"), (A) the numerator of which is equal to (x) the
number of outstanding Shares immediately prior to the Effective Time (excluding
Ineligible Shares) (the "Final Outstanding Number") PLUS (y) the Accepted Share
Number MINUS (z) the Offered Number and (B) the denominator of which is the
Final Outstanding Number and (ii) if the Exchange Ratio has been adjusted
pursuant to the immediately preceding PROVISO, an amount in cash equal to a
fraction, (A) the numerator of which is the product of $30 (or any greater
amount per Share paid pursuant to the Offer) and the amount by which the Offered
Number exceeds the Accepted Share Number and (B) the denominator of which is the
Final Outstanding Number.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY HAS DETERMINED THAT EACH
OF THE OFFER AND THE MERGER IS FAIR TO, AND IN THE BEST INTERESTS OF, THE
STOCKHOLDERS OF THE COMPANY, AND RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER
AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not withdrawn as, if
and when Purchaser gives oral or written notice to Citibank, N.A. (the
"Depositary") of Purchaser's acceptance for payment of such Shares pursuant to
the Offer. Upon the terms and subject to the conditions of the Offer, payment
for Shares accepted for payment pursuant to the Offer will be made by deposit of
the purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payments from Purchaser and
transmitting such payments to tendering stockholders whose Shares have been
accepted for payment. Payment for Shares accepted for payment pursuant to the
Offer may be delayed in the event of proration due to the difficulty of
determining the number of shares validly tendered and not withdrawn. Under no
circumstances will interest on the purchase price for Shares be paid, regardless
of any delay in making such payment. In all cases, payment for Shares tendered
and accepted for payment pursuant to the Offer will be made only after timely
receipt by the Depositary of (i) the certificates evidencing such Shares (the
"Share Certificates") or timely confirmation of a book-entry transfer of such
Shares into the Depositary's account at one of the Book-Entry Transfer
Facilities (as defined in Section 2 of the Offer to Purchase) pursuant to the
procedure set forth in Section 3 of the Offer to Purchase, (ii) the Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or an Agent's Message (as defined in Section
2 of the Offer to Purchase) in connection with a book-entry transfer, and (iii)
any other documents required by the Letter of Transmittal.
If more than 19,218,735 Shares are validly tendered prior to the Expiration
Date and not withdrawn, Purchaser will, upon the terms and subject to the
conditions of the Offer, accept such Shares for payment on a PRO RATA basis,
with adjustments to avoid purchases of fractional Shares, based upon the number
of Shares validly tendered prior to the Expiration Date and not withdrawn.
Purchaser expressly reserves the right, in its sole discretion (but subject
to the terms and conditions of the Merger Agreement), at any time and from time
to time, to extend for any reason the period of time during which the Offer is
open, including the occurrence of any condition specified in
<PAGE>
Section 14 of the Offer to Purchase, by giving oral or written notice of such
extension to the Depositary. Any such extension will be followed as promptly as
practicable by public announcement thereof, such announcement to be made no
later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled expiration date of the Offer. During any such extension,
all Shares previously tendered and not withdrawn will remain subject to the
Offer, subject to the rights of a tendering stockholder to withdraw his Shares.
Tenders of Shares made pursuant to the Offer are irrevocable except that
such Shares may be withdrawn at any time prior to 12:00 Midnight, New York City
time, on Wednesday, March 27, 1996 (or the latest time and date at which the
Offer, if extended by Purchaser, shall expire) and, unless theretofore accepted
for payment by Purchaser pursuant to the Offer, may also be withdrawn at any
time after April 28, 1996. For a withdrawal to be effective, a written,
telegraphic or facsimile transmission notice of withdrawal must be timely
received by the Depositary at one of its addresses set forth on the back cover
page of the Offer to Purchase. Any such notice of withdrawal must specify the
name of the person who tendered the Shares to be withdrawn, the number of Shares
to be withdrawn and the name of the registered holder of such Shares, if
different from that of the person who tendered such Shares. If Share
Certificates evidencing Shares to be withdrawn have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such Share
Certificates, the serial numbers shown on such Share Certificates must be
submitted to the Depositary and the signature(s) on the notice of withdrawal
must be guaranteed by an Eligible Institution (as defined in Section 3 of the
Offer to Purchase), unless such Shares have been tendered for the account of an
Eligible Institution. If Shares have been tendered pursuant to the procedure for
book-entry transfer as set forth in Section 3 of the Offer to Purchase, any
notice of withdrawal must specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares. All
questions as to the form and validity (including the time of receipt) of any
notice of withdrawal will be determined by Purchaser, in its sole discretion,
whose determination will be final and binding.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
The Company has provided Purchaser with the Company's stockholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase and the related Letter of Transmittal will be
mailed to record holders of Shares whose names appear on the Company's
stockholder list and will be furnished to brokers, dealers, commercial banks,
trust companies and similar persons whose names, or the names of whose nominees,
appear on the stockholder list or, if applicable, who are listed as participants
in a clearing agency's security position listing for subsequent transmittal to
beneficial owners of Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
Questions and requests for assistance may be directed to the Dealer Manager
or the Information Agent at their respective addresses and telephone numbers set
forth below. Copies of the Offer to Purchase and the related Letter of
Transmittal and other tender offer materials may be obtained from the Dealer
Manager or the Information Agent at their addresses and telephone numbers set
forth below and will be furnished promptly at Purchaser's expense. No fees or
commissions will be paid to brokers, dealers or other persons (other than the
Dealer Manager and Information Agent) for soliciting tenders of Shares pursuant
to the Offer.
<PAGE>
THE INFORMATION AGENT FOR THE OFFER IS:
GEORGESON & COMPANY INC.
WALL STREET PLAZA
NEW YORK, NEW YORK 10005
BANKS AND BROKERS CALL COLLECT (212) 440-9800
CALL TOLL FREE: 1-800-223-2064
THE DEALER MANAGER FOR THE OFFER IS:
UNTERBERG HARRIS
275 Battery Street, 29th Floor
San Francisco, California 94111
CALL TOLL FREE: 1-800-622-8448
February 29, 1996
<PAGE>
EXHIBIT (A)(8)
SILICON GRAPHICS AND CRAY
RESEARCH ANNOUNCE MERGER
AGREEMENT
UNION OF HIGH-END AND DEPLOYABLE SUPERCOMPUTING TECHNOLOGIES ALLOWS
INCREASED FOCUS ON INNOVATION FOR HIGH-VOLUME MARKET OPPORTUNITIES
NEW YORK, NY (Feb. 26, 1996) -- Silicon Graphics, Inc. (NYSE:SGI) and Cray
Research, Inc. (NYSE:CYR) today announced that they have entered into a merger
agreement, pursuant to which Silicon Graphics will acquire the outstanding
shares of Cray Research. The combined organizations will unite Silicon Graphics'
commitment to scalable, deployable supercomputing and 3D visualization with
Cray's global leadership in large-scale supercomputing. The two companies have a
combined revenue run rate of nearly $4 billion.
"The combination of Silicon Graphics and Cray Research will create the
world's leading high-performance computing company," said Edward R. McCracken,
chairman and CEO of Silicon Graphics, Inc. "The two companies share not only a
passion for innovation but also a remarkably similar architectural vision for
the future of high-performance computing. The acquisition of Cray will be
instrumental in expanding our scalable architecture from high-volume, low-cost
desktops to teraflops, while retaining the unequaled brand equity established by
Cray as the worldwide gold standard for supercomputing solutions."
Cray Research is a recognized leader for its technology, its people and its
strong customer base. With the introduction of a string of landmark systems, the
company has created the category of supercomputing, representing the ultimate in
performance for the scientific and engineering community.
Over the past 18 months, Cray Research has structured and refocused its
business on the most demanding segments of the high-performance computing
market. With the introduction of powerful new products like the CRAY T90
parallel vector system and the CRAY T3D and CRAY T3E highly scalable products,
Cray Research returned to profitability in the quarter ending December 31, 1995,
and closed that quarter with an all-time, high year-end backlog of $437 million.
Silicon Graphics is continuing to revolutionize high-performance computing
among systems priced at less than $1 million by leveraging its open CMOS-based
MIPS-Registered Trademark- RISC-Registered Trademark- microprocessor technology
into its POWER CHALLENGE family of shared memory multiprocessor supercomputing
systems.
"Cray's performance portfolio and reputation, combined with Silicon
Graphics' leadership in revolutionizing the entry-level supercomputing market
with deployable solutions, 3D graphics and desktop products, will position the
new organization as the premier supplier of information technology," said J.
Phillip Samper, chairman and CEO of Cray Research, Inc. "The combination of
these two companies will provide not only the world's most powerful computers,
but also the most aggressive price/performance solutions across a broad spectrum
of customer requirements."
The definitive merger agreement has been approved by the Boards of Directors
of Silicon Graphics and Cray Research. Under the terms of the agreement, Silicon
Graphics will make a first step cash tender offer of $30.00 a share for
19,218,735 shares, approximately 75 percent of the outstanding common stock of
Cray Research. The tender offer is expected to commence this week. The offer is
subject to the tender of at least 51 percent of Cray Research's shares on a
fully-diluted basis in the tender offer and to customary conditions, including
required government approvals.
Following completion of the offer, the remaining shares of Cray Research are
expected to be converted at a one to one ratio into Silicon Graphics' stock. If
fewer than 19,218,735 of the shares are purchased in the tender offer, the
remaining Cray Research shareholders will receive a fraction of Silicon Graphics
stock and cash for each share so that the aggregate cash and stock consideration
paid
<PAGE>
in the merger is the same as if the offer had been fully subscribed. The merger
will be accounted for on a purchase accounting basis. The transaction is
expected to be closed in Silicon Graphics' quarter ending in June 1996.
The closing prices for Silicon Graphics and Cray Research common stock on
Friday, February 23, 1996, the last trading day prior to the board meetings to
approve the transaction, were $27.50 and $25.25 respectively.
This news release contains forward looking statements that involve risks and
uncertainties, including the satisfaction of the conditions to the transaction
and the successful integration of Silicon Graphics and Cray Research, and other
risks detailed from time to time in the SEC reports filed by Silicon Graphics
and Cray Research, including the report on Form 10-Q filed by Silicon Graphics
for the quarter ending December 31, 1995, and the report on Form 10-Q filed by
Cray Research for the quarter ended September 30, 1995. Actual results may vary
materially.
Cray Research provides the leading supercomputing tools and services to help
solve customers' most challenging problems. Cray Research, Inc. is headquartered
in Eagan, Minnesota.
Silicon Graphics, Inc. is a leading manufacturer of high-performance and
commercial computing systems. The company delivers interactive three dimensional
graphics, digital media and symmetric multiprocessing supercomputing
technologies to technical and commercial environments through direct and
indirect sales channels. Its subsidiary, MIPS Technologies, Inc. designs and
licenses the industry's leading RISC processor technology for the computer
systems, interactive consumer and embedded control markets. Silicon Graphics,
Inc. has offices worldwide and headquarters in Mountain View, California.
Silicon Graphics and the Silicon Graphics logo are registered trademarks and
POWER CHALLENGE is a trademark of Silicon Graphics, Inc. MIPS and RISC are
registered trademarks of MIPS Technologies, Inc. Cray is a registered trademark
of Cray Research, Inc.
------------------------
Contact:
Jennifer Rothert Piercey (Silicon Graphics, Inc. - Media), 415-933-2019
Marilyn Lattin (Silicon Graphics, Inc. - Financial), 415-933-5070
Steve Conway (Cray Research, Inc. - Media), 612-683-7133
Brad Allen (Cray Research, Inc. - Financial), 612-683-7395
<PAGE>
EXHIBIT (C)
FINAL EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SILICON GRAPHICS, INC.
C ACQUISITION CORPORATION
AND
CRAY RESEARCH, INC.
DATED AS OF FEBRUARY 25, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C> <C>
ARTICLE I
THE OFFER
SECTION 1.01. The Offer................................................................... 1
SECTION 1.02. Company Action.............................................................. 2
SECTION 1.03. Directors................................................................... 3
ARTICLE II
THE MERGER
SECTION 2.01. The Merger.................................................................. 3
SECTION 2.02. Effective Time.............................................................. 4
SECTION 2.03. Effect of the Merger........................................................ 4
SECTION 2.04. Certificate of Incorporation; By-Laws....................................... 4
SECTION 2.05. Directors and Officers...................................................... 4
SECTION 2.06. Effect on Capital Stock..................................................... 4
SECTION 2.07. Exchange of Certificates.................................................... 5
SECTION 2.08. Stock Transfer Books........................................................ 7
SECTION 2.09. Dissenting Shares........................................................... 7
SECTION 2.10. No Further Ownership Rights in Company Common Stock......................... 7
SECTION 2.11. Lost, Stolen or Destroyed Certificates...................................... 7
SECTION 2.12. Taking of Necessary Action; Further Action.................................. 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01. Organization and Qualification; Subsidiaries................................ 8
SECTION 3.02. Certificate of Incorporation and By-Laws.................................... 8
SECTION 3.03. Capitalization.............................................................. 8
SECTION 3.04. Authority Relative to this Agreement........................................ 9
SECTION 3.05. No Conflict; Required Filings and Consents.................................. 10
SECTION 3.06. Compliance; Permits......................................................... 10
SECTION 3.07. SEC Filings; Financial Statements........................................... 11
SECTION 3.08. Absence of Certain Changes or Events........................................ 12
SECTION 3.09. No Undisclosed Liabilities.................................................. 12
SECTION 3.10. Absence of Litigation....................................................... 12
SECTION 3.11. Employee Benefit Plans; Employment Agreements............................... 12
SECTION 3.12. Labor Matters............................................................... 14
SECTION 3.13. Registration Statement; Proxy Statement..................................... 14
SECTION 3.14. Restrictions on Business Activities......................................... 14
SECTION 3.15. Title to Property........................................................... 15
SECTION 3.16. Taxes....................................................................... 15
SECTION 3.17. Environmental Matters....................................................... 16
SECTION 3.18. Brokers..................................................................... 17
SECTION 3.19. Intellectual Property....................................................... 17
SECTION 3.20. Vote Required............................................................... 18
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
-----
SECTION 3.21. Opinion of Financial Advisor................................................ 18
<S> <C> <C>
SECTION 3.22. Full Disclosure............................................................. 18
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
SECTION 4.01. Organization and Qualification.............................................. 18
SECTION 4.02. Authority Relative to This Agreement........................................ 18
SECTION 4.03. No Conflict; Required Filings and Consents.................................. 19
SECTION 4.04. Certificate of Incorporation and By-Laws.................................... 19
SECTION 4.05. Capitalization.............................................................. 19
SECTION 4.06. Compliance; Permits......................................................... 20
SECTION 4.07. SEC Filings; Financial Statements........................................... 20
SECTION 4.08. Absence of Certain Changes or Events........................................ 21
SECTION 4.09. Restrictions on Business Activities......................................... 21
SECTION 4.10. Title to Property........................................................... 21
SECTION 4.11. No Undisclosed Liabilities.................................................. 21
SECTION 4.12. Absence of Litigation....................................................... 21
SECTION 4.13. Registration Statement; Proxy Statement/Prospectus.......................... 21
SECTION 4.14. Brokers..................................................................... 22
SECTION 4.15. No Stockholder Vote......................................................... 22
SECTION 4.16. Financing................................................................... 22
SECTION 4.17. Full Disclosure............................................................. 22
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01. Conduct of Business by the Company Pending the Merger....................... 22
SECTION 5.02. No Solicitation............................................................. 24
SECTION 5.03. Conduct of Business by Parent Pending the Merger............................ 25
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Proxy Statement/Prospectus; Registration Statement.......................... 25
SECTION 6.02. Stockholders' Meeting....................................................... 26
SECTION 6.03. Access to Information; Confidentiality...................................... 26
SECTION 6.04. Consents; Approvals......................................................... 26
SECTION 6.05. Stock Options............................................................... 26
SECTION 6.06. Company Stock Purchase Plan................................................. 27
SECTION 6.07. Employment Matters.......................................................... 27
SECTION 6.08. Agreements of Affiliates.................................................... 27
SECTION 6.09. Indemnification............................................................. 27
SECTION 6.10. Notification of Certain Matters............................................. 28
SECTION 6.11. Further Action.............................................................. 28
SECTION 6.12. Public Announcements........................................................ 28
SECTION 6.13. Listing of Parent Common Shares............................................. 28
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01. Conditions to Obligation of Each Party to Effect the Merger................. 29
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
PAGE
-----
SECTION 7.02. Additional Conditions to Obligations of Parent and Merger Sub............... 29
<S> <C> <C>
SECTION 7.03. Additional Conditions to Obligation of the Company.......................... 30
ARTICLE VIII
TERMINATION
SECTION 8.01. Termination................................................................. 30
SECTION 8.02. Effect of Termination....................................................... 31
SECTION 8.03. Fees and Expenses........................................................... 31
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Effectiveness of Representations, Warranties and Agreements................. 32
SECTION 9.02. Notices..................................................................... 32
SECTION 9.03. Certain Definitions......................................................... 33
SECTION 9.04. Amendment................................................................... 34
SECTION 9.05. Waiver...................................................................... 34
SECTION 9.06. Headings.................................................................... 34
SECTION 9.07. Severability................................................................ 34
SECTION 9.08. Entire Agreement............................................................ 34
SECTION 9.09. Assignment, Merger Sub...................................................... 34
SECTION 9.10. Parties in Interest......................................................... 34
SECTION 9.11. Failure or Indulgence Not Waiver; Remedies Cumulative....................... 35
SECTION 9.12. GOVERNING LAW............................................................... 35
SECTION 9.13. Counterparts................................................................ 35
SECTION 9.14. WAIVER OF JURY TRIAL........................................................ 35
</TABLE>
Annexes:
Annex A: Conditions to the Offer
Annex B: Certain Employee Matters
Annex C: Form of Affiliate Agreement
iv
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of February 25, 1996 (this
"AGREEMENT"), among SILICON GRAPHICS, INC., a Delaware corporation ("PARENT"), C
ACQUISITION CORPORATION, a Delaware corporation and a wholly owned subsidiary of
Parent ("MERGER SUB"), and CRAY RESEARCH, INC., a Delaware corporation (the
"COMPANY"),
W I T N E S S E T H:
WHEREAS, the boards of directors of Parent, Merger Sub and the Company have
each determined that it is advisable and in the best interests of their
respective stockholders for Parent to enter into a business combination with the
Company upon the terms and subject to the conditions set forth herein;
WHEREAS, in furtherance of such combination, it is proposed that Merger Sub
shall make a cash tender offer (the "OFFER") to acquire 19,218,735 of the issued
and outstanding shares of common stock, par value $1.00 per share, of the
Company ("COMPANY COMMON STOCK") and the associated Common Share Purchase Rights
(the "RIGHTS") (shares of Company Common Stock together with the associated
Rights being hereinafter collectively referred to as "SHARES") for $30.00 per
Share (such amount, or any greater amount per Share paid pursuant to the Offer,
being hereinafter referred to as the "PER SHARE AMOUNT") net to the seller in
cash, upon the terms and subject to the conditions of this Agreement and the
Offer;
WHEREAS, the board of directors of the Company (the "BOARD") has approved
the making of the Offer and resolved and agreed to recommend that holders of
Shares tender their Shares pursuant to the Offer;
WHEREAS, also in furtherance of such combination, the boards of directors of
Parent, Merger Sub and the Company have each approved the merger (the "MERGER")
of Merger Sub with and into the Company in accordance with the applicable
provisions of the Delaware General Corporation Law ("DELAWARE LAW"), and upon
the terms and subject to the conditions set forth herein;
WHEREAS, pursuant to the Merger, each outstanding Share shall be converted
into the right to receive the Merger Consideration (as defined in Section
2.07(b)), consisting of shares of common stock, par value $0.001 per share, of
Parent ("PARENT COMMON STOCK") and, if applicable, cash upon the terms and
subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Parent, Merger Sub and the Company hereby agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01. THE OFFER. (a) Provided that this Agreement shall not have
been terminated in accordance with Section 8.01 and none of the events set forth
in ANNEX A shall have occurred or be existing, Merger Sub shall commence the
Offer as promptly as reasonably practicable after the date hereof, but in no
event later than five business days after the initial public announcement of
Merger Sub's intention to commence the Offer. The obligation of Merger Sub to
accept for payment and pay for Shares tendered pursuant to the Offer shall only
be subject to (i) the condition (the "MINIMUM CONDITION") that at least the
number of Shares that when added to the Shares already owned by Parent shall
constitute a majority of the then outstanding Shares on a fully diluted basis
shall have been validly tendered and not withdrawn prior to the expiration of
the Offer and (ii) the satisfaction or waiver of the other conditions set forth
in ANNEX A. Merger Sub expressly reserves the right to waive any such condition
(other than the Minimum Condition), to increase the price per Share payable in
the Offer and to make any other changes in the terms and conditions of the
Offer; PROVIDED, HOWEVER, that unless Parent and Merger Sub shall have obtained
the prior written approval of the Company, no change may be made in the Offer
which (i) decreases the price per Share payable in the Offer, (ii) changes the
form of consideration to be paid in the Offer, (iii) reduces the maximum number
of
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Shares to be purchased in the Offer, (iv) changes or waives the Minimum
Condition, or (v) modifies the conditions to the Offer set forth in ANNEX A or
imposes conditions to the Offer in addition to those set forth in ANNEX A. The
Per Share Amount shall, subject to applicable withholding of taxes, be net to
the seller in cash, upon the terms and subject to the conditions of the Offer.
Subject to the terms and conditions of the Offer (including, without limitation,
the Minimum Condition), Merger Sub shall, and Parent shall cause Merger Sub to,
accept for payment and pay for, as promptly as practicable after expiration of
the Offer, all Shares validly tendered and not withdrawn; PROVIDED, HOWEVER,
that notwithstanding the foregoing Parent may, in its sole discretion, extend
the expiration date of the Offer for up to 15 business days, and agrees on a
one-time basis if all other conditions to the Offer have been met, to extend the
expiration date for the Offer for 10 business days if on the relevant date of
expiration at least 45% of the then outstanding Shares (calculated on a fully
diluted basis) have been tendered and not withdrawn from the Offer.
(b) As soon as practicable on the date of commencement of the Offer, Merger
Sub shall file with the Securities and Exchange Commission (the "SEC") a Tender
Offer Statement on Schedule 14D-1 (together with all amendments and supplements
thereto, the "SCHEDULE 14D-1") with respect to the Offer. The Schedule 14D-1
shall contain or shall incorporate by reference an offer to purchase (the "OFFER
TO PURCHASE") and forms of the related letter of transmittal and any related
summary advertisement (the Schedule 14D-1, the Offer to Purchase and such other
documents, together with all supplements and amendments thereto, being referred
to herein collectively as the "OFFER DOCUMENTS"). The Offer Documents will
comply in all material respects with the provisions of applicable federal
securities laws. Parent, Merger Sub and the Company agree to correct promptly
any information provided by any of them for use in the Offer Documents which
shall have become false or misleading, and Parent and Merger Sub further agree
to take all steps necessary to cause the Schedule 14D-1 as so corrected to be
filed with the SEC and the other Offer Documents as so corrected to be
disseminated to holders of Shares, in each case as and to the extent required by
applicable federal securities laws. Parent and Merger Sub shall give the Company
and its counsel the opportunity to review and comment upon the Offer Documents
prior to their being filed with, or sent to, the SEC.
SECTION 1.02. COMPANY ACTION. (a) The Company hereby approves of and
consents to the Offer and represents that the Board, at a meeting duly called
and held on February 25, 1996, has (i) unanimously approved and adopted this
Agreement and the transactions contemplated hereby, including the Offer and the
Merger (the "TRANSACTIONS"), and (ii) unanimously recommended that the
stockholders of the Company accept the Offer and approve and adopt this
Agreement and the Transactions. The Company hereby consents to the inclusion in
the Offer Documents of the recommendation of the Board described in the
immediately preceding sentence, subject to the second sentence of Section
5.02(a).
(b) As soon as practicable on the date of commencement of the Offer, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with all amendments and supplements thereto, the
"SCHEDULE 14D-9") containing the recommendation of the Board described in
Section 1.02(a) and shall disseminate the Schedule 14D-9 to the extent required
by Rule 14d-9 promulgated under the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT"), and any other applicable federal securities laws. The
Schedule 14D-9 will comply in all other material respects with the provisions of
applicable federal securities laws. The Company, Parent and Merger Sub agree to
correct promptly any information provided by any of them for use in the Schedule
14D-9 which shall have become false or misleading, and the Company further
agrees to take all steps necessary to cause the Schedule 14D-9 as so corrected
to be filed with the SEC and disseminated to holders of Shares, in each case as
and to the extent required by applicable federal securities laws.
(c) The Company shall promptly furnish Merger Sub with mailing labels
containing the names and addresses of all record holders of Shares and with
security position listings of Shares held in stock depositories, each as of a
recent date, together with all other available listings and computer files
containing names, addresses and security position listings of record holders and
beneficial owners of Shares. The Company shall furnish Merger Sub with such
additional information, including, without
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limitation, updated listings and computer files of stockholders, mailing labels
and security position listings, and such other assistance as Parent, Merger Sub
or their agents may reasonably request. Subject to the requirements of
applicable law, and except for such steps as are necessary to disseminate the
Offer Documents and any other documents necessary to consummate the Offer or the
Merger, Parent and Merger Sub shall, and each of Parent and Merger Sub shall
cause its affiliates, associates, agents and advisors to, (i) hold in confidence
the information contained in such labels, listings and files, (ii) use such
information only in connection with the Offer and the Merger, and (iii) if this
Agreement shall be terminated in accordance with Section 8.01, promptly deliver
to the Company all copies (whether in human or machine readable form) of such
information then in their possession.
SECTION 1.03. DIRECTORS. (a) Promptly upon the purchase by Merger Sub of a
majority of the outstanding Shares pursuant to the Offer, and from time to time
thereafter as Shares are acquired by Merger Sub, Merger Sub shall be entitled,
subject to compliance with Section 14(f) of the Exchange Act, to designate such
number of directors, rounded up to the next greatest whole number, on the Board
as will give Merger Sub representation on the Board equal to that number of
directors which equals the product of the total number of directors on the Board
(giving effect to the directors appointed or elected pursuant to this sentence
and including current directors serving as officers of the Company) multiplied
by the percentage that the aggregate number of Shares beneficially owned by
Merger Sub or any affiliate of Merger Sub (including for purposes of this
Section 1.03 such Shares as are accepted for payment pursuant to the Offer, but
excluding Shares held by the Company or any of its affiliates) bears to the
number of Shares outstanding. At such times, the Company will also cause (i)
each committee of the Board of Directors, (ii) if requested by Merger Sub, the
board of directors of each of the Company's subsidiaries and (iii) if requested
by Merger Sub, each committee of such board to include persons designated by
Merger Sub constituting the same percentage of each such committee or board as
Merger Sub's designees are of the Board. The Company shall, upon request by
Merger Sub, promptly increase the size of the Board or exercise its best efforts
to secure the resignations of such number of directors as is necessary to enable
Merger Sub designees to be elected to the Board and shall cause Merger Sub's
designees to be so elected.
(b) Subject to applicable law, the Company shall promptly take all action
necessary pursuant to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder in order to fulfill its obligations under this Section
1.03 and shall include in the Schedule 14D-9 mailed to stockholders promptly
after the commencement of the Offer (or an amendment thereof or an information
statement pursuant to Rule 14f-1 if Merger Sub has not theretofore designated
directors) such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 in order to fulfill
its obligations under this Section 1.03. Parent and Merger Sub will supply the
Company and be solely responsible for any information with respect to itself and
its nominees, officers, directors and affiliates required by Section 14(f) and
Rule 14f-1.
ARTICLE II
THE MERGER
SECTION 2.01. THE MERGER. (a) Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with Delaware Law, at the
Effective Time (as defined below) Merger Sub shall be merged with and into the
Company. As a result of the Merger, the separate corporate existence of Merger
Sub shall cease and the Company shall continue as the surviving corporation of
the Merger (the "SURVIVING CORPORATION").
(b) Unless this Agreement shall have been terminated and the transactions
herein contemplated shall have been abandoned pursuant to Section 8.01 and
subject to the satisfaction or waiver of the conditions set forth in Article
VII, the consummation of the Merger will take place as promptly as practicable
(and in any event within two business days) after satisfaction or waiver of the
conditions set forth in Article VII, at the offices of Shearman & Sterling, 555
California Street, Suite 2000, San Francisco, California, unless another date,
time or place is agreed to in writing by the parties hereto.
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SECTION 2.02. EFFECTIVE TIME. As promptly as practicable after the
satisfaction or waiver of the conditions set forth in Article VII, the parties
hereto shall cause the Merger to be consummated by filing this Agreement or a
certificate of merger or certificate of ownership and merger (in either case,
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, Delaware Law (the date and time of such filing being the
"EFFECTIVE TIME").
SECTION 2.03. EFFECT OF THE MERGER. At the Effective Time, the effect of
the Merger shall be as provided in this Agreement, the Certificate of Merger and
the applicable provisions of Delaware Law. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time all the property,
rights, privileges, powers and franchises of the Company and Merger Sub shall
vest in the Surviving Corporation, and all debts, liabilities and duties of the
Company and Merger Sub shall become the debts, liabilities and duties of the
Surviving Corporation.
SECTION 2.04. CERTIFICATE OF INCORPORATION; BY-LAWS. (a) CERTIFICATE OF
INCORPORATION. Unless otherwise determined by Parent prior to the Effective
Time, at the Effective Time the Certificate of Incorporation of Merger Sub, as
in effect immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended as provided
by Delaware Law and such Certificate of Incorporation; PROVIDED, HOWEVER, that
Article I of the Certificate of Incorporation of the Surviving Corporation shall
be amended to read as follows: "FIRST: The name of the corporation is Cray
Research, Inc."
(b) BY-LAWS. The By-Laws of Merger Sub, as in effect immediately prior to
the Effective Time, shall be the By-Laws of the Surviving Corporation until
thereafter amended as provided by Delaware Law, the Certificate of Incorporation
of the Surviving Corporation and such By-Laws.
SECTION 2.05. DIRECTORS AND OFFICERS. The directors of Merger Sub
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Articles of
Incorporation and By-Laws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
SECTION 2.06. EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of
the Merger and without any action on the part of Parent, Merger Sub, the Company
or the holders of any of the following securities:
(a) CANCELLATION. Each Share held in the treasury of the Company and each
Share owned by Parent, Merger Sub or any direct or indirect wholly owned
subsidiary of the Company or Parent immediately prior to the Effective Time
("INELIGIBLE SHARES") shall, by virtue of the Merger and without any action on
the part of the holder thereof, cease to be outstanding, be canceled and retired
without payment of any consideration therefor and cease to exist.
(b) CONVERSION OF SECURITIES. Subject to Section 2.06(f), each remaining
outstanding Share (other than Dissenting Shares) shall be converted into the
right to receive (i) 1.00 fully paid and non-assessable share of Parent Common
Stock (the "EXCHANGE RATIO"); provided, however, that if Merger Sub accepts for
payment and pays for less than 19,218,735 (the "OFFERED NUMBER") Shares in the
Offer (the number of Shares so accepted for payment and paid for being referred
to herein as the "ACCEPTED SHARE NUMBER"), then the Exchange Ratio shall be
equal to a fraction (the "ADJUSTED EXCHANGE RATIO"), (A) the numerator of which
is equal to (x) the number of outstanding Shares immediately prior to the
Effective Time (excluding Ineligible Shares) (the "FINAL OUTSTANDING NUMBER")
PLUS (y) the Accepted Share Number MINUS (z) the Offered Number and (B) the
denominator of which is the Final Outstanding Number and (ii) if the Exchange
Ratio has been adjusted pursuant to the immediately preceding PROVISO, an amount
in cash equal to a fraction, (A) the numerator of which is the product of the
Per Share Amount and the amount by which the Offered Number exceeds the Accepted
Share Number and (B) the denominator of which is the Final Outstanding Number.
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(c) ASSUMPTION OF STOCK OPTIONS AND STOCK PURCHASE RIGHTS. All options to
purchase Company Common Stock granted under the Cray Research, Inc. 1985
Incentive Stock Option and Nonstatutory Option Plan (the "1985 EMPLOYEE PLAN"),
the Cray Research, Inc. 1989 Employee Benefit Stock Plan (the "EMPLOYEE STOCK
PLAN") and the Cray Research, Inc. 1989 Non-Employee Directors' Stock Option
Plan (the "DIRECTORS' PLAN" and, together with the 1985 Employee Plan and the
Employee Stock Plan, the "STOCK OPTION PLANS") or pursuant to any other
arrangement adopted by the Board to provide options to directors, officers or
employees of the Company (in any such case, an "OPTION") then outstanding shall
be assumed by Parent in accordance with Section 6.05. Immediately prior to the
Effective Time, all rights to purchase Company Common Stock then outstanding
under the Company's Qualified Stock Purchase Investment Plan (the "COMPANY STOCK
PURCHASE PLAN") shall be converted into shares of Company Common Stock in
accordance with Section 6.06.
(d) CAPITAL STOCK OF MERGER SUB. Each share of common stock, no par value,
of Merger Sub issued and outstanding immediately prior to the Effective Time
shall be converted into and exchanged for one validly issued, fully paid and
nonassessable share of common stock, no par value, of the Surviving Corporation.
Each stock certificate of Merger Sub evidencing ownership of any such shares
shall continue to evidence ownership of such shares of capital stock of the
Surviving Corporation.
(e) ADJUSTMENTS TO EXCHANGE RATIO. The Exchange Ratio shall be adjusted to
reflect fully the effect of any stock split, reverse split, stock dividend
(including any dividend or distribution of securities convertible into Parent
Common Stock or Company Common Stock), reorganization, recapitalization or other
like change with respect to Parent Common Stock or Company Common Stock the
record date for which shall occur after the date hereof and prior to the
Effective Time.
(f) FRACTIONAL SHARES. No fraction of a share of Parent Common Stock will
be issued, but in lieu thereof each holder of Company Common Stock who would
otherwise be entitled to a fraction of a share of Parent Common Stock (after
aggregating all fractional shares of Parent Common Stock to be received by such
holder) shall receive from Parent an amount of cash (rounded to the nearest
whole cent), without interest, equal to the product of (i) such fraction,
multiplied by (ii) the average of the closing price for trades of Parent Common
Stock as of each of the thirty (30) consecutive trading days immediately
preceding the Effective Time as quoted in the Wall Street Journal or other
reliable financial newspaper or publication. For the purposes of the preceding
sentence, a "trading day" means a day on which trading generally takes place on
the New York Stock Exchange (the "NYSE") and on which trading in Parent Common
Stock has occurred.
(g) CONVERTIBLE DEBENTURES. The 6 1/8% Convertible Subordinated Debentures
due 2011 of the Company (the "CONVERTIBLE DEBENTURES") shall, pursuant to the
terms of the Indenture between the Company and Manufacturers Hanover Trust
Company (the "TRUSTEE"), dated as of February 1, 1986 (the "INDENTURE"), become
thereafter convertible only into that number of shares of Parent Common Stock
and cash, if any, that the holder of any such Convertible Debentures would have
received if such holder had converted such Convertible Debentures immediately
prior to the Effective Time as provided in Section 15.06 of the Indenture.
Parent shall execute and deliver a supplemental indenture (the "SUPPLEMENTAL
INDENTURE"), which shall evidence Parent's assumption of the Convertible
Debentures and provide that the holder of each Convertible Debenture shall have
the right thereafter to convert such Convertible Debenture as described above,
in each case in accordance with the terms of the Indenture.
SECTION 2.07. EXCHANGE OF CERTIFICATES. (a) EXCHANGE AGENT. Parent shall
deposit, or shall cause to be deposited, to or for the account of a bank or
trust company designated by Parent (the "EXCHANGE AGENT"), in trust for the
benefit of the holders of Company Common Stock (other than Dissenting Shares),
for exchange in accordance with this Section 2.07, through the Exchange Agent,
certificates evidencing the Parent Common Stock and, if applicable, the cash
portion of the Merger Consideration, issuable pursuant to Section 2.06 in
exchange for outstanding Shares.
(b) EXCHANGE PROCEDURES. As soon as reasonably practicable after the
Effective Time, Parent will instruct the Exchange Agent to mail to each holder
of record of a certificate or certificates which
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immediately prior to the Effective Time evidenced outstanding Shares (other than
Dissenting Shares) (the "CERTIFICATES") (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to the
Exchange Agent and shall be in such form and have such other provisions as
Parent may reasonably specify) and (ii) instructions to effect the surrender of
the Certificates in exchange for the certificates evidencing shares of Parent
Common Stock and, in lieu of any fractional shares thereof, cash, and, if
applicable, the cash portion of the Merger Consideration payable pursuant to
Section 2.06(b). Upon surrender of a Certificate for cancellation to the
Exchange Agent together with such letter of transmittal, duly executed, and such
other customary documents as may be required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in exchange therefor (A)
certificates evidencing that number of whole shares of Parent Common Stock which
such holder has the right to receive in accordance with the Exchange Ratio in
respect of the Shares formerly evidenced by such Certificate, (B) the amount of
cash, if any, payable with respect to such shares pursuant to Section 2.06(b),
(C) any dividends or other distributions to which such holder is entitled
pursuant to Section 2.07(c), and (D) cash in lieu of fractional shares of Parent
Common Stock to which such holder is entitled pursuant to Section 2.06(f) (the
Parent Common Stock, cash, dividends and distributions described in clauses (A),
(B), (C) and (D) being, collectively, the "MERGER CONSIDERATION"), and the
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Shares which is not registered in the transfer records
of the Company as of the Effective Time, the Merger Consideration may be issued
and paid in accordance with this Article II to a transferee if the Certificate
evidencing such Shares is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer pursuant to this Section
2.07(b) and by evidence that any applicable stock transfer taxes have been paid.
Until so surrendered, each outstanding Certificate that, prior to the Effective
Time, represented shares of the Company Common Stock will be deemed from and
after the Effective Time, for all corporate purposes, other than the payment of
dividends, to evidence the ownership of the number of full shares of Parent
Common Stock into which such shares of the Company Common Stock shall have been
so converted, the right to receive the cash portion of the Merger Consideration
payable with respect thereto pursuant to Section 2.06(b) and the right to
receive an amount in cash in lieu of the issuance of any fractional shares in
accordance with Section 2.06(f).
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends or
other distributions declared or made after the Effective Time with respect to
Parent Common Stock with a record date after the Effective Time shall be paid to
the holder of any unsurrendered Certificate until the holder of such Certificate
shall surrender such Certificate. Subject to applicable law, following surrender
of any such Certificate, there shall be paid to the record holder of the
certificates representing whole shares of Parent Common Stock issued in exchange
therefor, without interest, at the time of such surrender, the amount of
dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such whole shares of Parent Common Stock.
(d) TRANSFERS OF OWNERSHIP. If any certificate for shares of Parent Common
Stock is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it will be a condition of the
issuance thereof that the Certificate so surrendered will be properly endorsed
and otherwise in proper form for transfer and that the person requesting such
exchange will have paid to Parent or any person designated by it any transfer or
other taxes required by reason of the issuance of a certificate for shares of
Parent Common Stock in any name other than that of the registered holder of the
certificate surrendered, or established to the satisfaction of Parent or any
agent designated by it that such tax has been paid or is not payable.
(e) NO LIABILITY. Neither Parent, Merger Sub nor the Company shall be
liable to any holder of Company Common Stock for any Merger Consideration (or
dividends or distributions with respect thereto) delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
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(f) WITHHOLDING RIGHTS. Parent, the Surviving Corporation and the Exchange
Agent shall be entitled to deduct and withhold from the Merger Consideration
otherwise payable pursuant to this Agreement to any holder of Company Common
Stock such amounts as Parent, the Surviving Corporation or the Exchange Agent is
required to deduct and withhold with respect to the making of such payment under
the Internal Revenue Code of 1986, as amended (the "CODE") or any provision of
state, local, provincial or foreign tax law. To the extent that amounts are so
withheld, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Shares in respect of which
such deduction and withholding was made.
SECTION 2.08. STOCK TRANSFER BOOKS. At the Effective Time, the stock
transfer books of the Company shall be closed, and there shall be no further
registration of transfers of the Company Common Stock thereafter on the records
of the Company.
SECTION 2.09. DISSENTING SHARES. (a) Notwithstanding any provision of this
Agreement to the contrary, Shares that are outstanding immediately prior to the
Effective Time and which are held by stockholders who shall have not voted in
favor of the Merger or consented thereto in writing and who shall have available
to them and who shall have demanded properly in writing appraisal for such
Shares in accordance with Section 262 of Delaware Law (collectively, the
"DISSENTING SHARES') shall not be converted into or represent the right to
receive the Merger Consideration. Such stockholders shall be entitled to receive
payment of the appraised value of such Shares held by them in accordance with
the provisions of such Section 262, except that all Dissenting Shares held by
stockholders who shall have failed to perfect or who effectively shall have
withdrawn or lost their rights to appraisal of such Shares under such Section
262 shall thereupon be deemed to have been converted into and to have become
exchangeable for, as of the Effective Time, the right to receive the Merger
Consideration, without any interest thereon, upon surrender, in the manner
provided in Section 2.07, of the certificate or certificates that formerly
evidenced such Shares.
(b) The Company shall give Parent (i) prompt notice of any demands for
appraisal received by the Company, withdrawals of such demands, and any other
instruments served pursuant to Delaware Law and received by the Company and (ii)
the opportunity to direct all negotiations and proceedings with respect to
demands for appraisal under Delaware Law. The Company shall not, except with the
prior written consent of Parent, make any payment with respect to any demands
for appraisal or offer to settle or settle any such demands.
SECTION 2.10. NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. The
Merger Consideration delivered upon the surrender for exchange of Shares in
accordance with the terms hereof shall be deemed to have been issued in full
satisfaction of all rights pertaining to such Shares, and there shall be no
further registration of transfers on the records of the Surviving Corporation of
Shares which were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Surviving Corporation for
any reason, they shall be canceled and exchanged as provided in this Article II.
SECTION 2.11. LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, such Merger
Consideration as may be required pursuant to Section 2.06; provided, however,
that Parent may, in its discretion and as a condition precedent to the issuance
and delivery thereof, require the owner of such lost, stolen or destroyed
Certificates to deliver a bond in such sum as it may reasonably direct as
indemnity against any claim that may be made against Parent or the Exchange
Agent with respect to the Certificates alleged to have been lost, stolen or
destroyed.
SECTION 2.12. TAKING OF NECESSARY ACTION; FURTHER ACTION. Each of Parent,
Merger Sub and the Company in good faith will take all such commercially
reasonable and lawful action as may be necessary or appropriate in order to
effectuate the Merger in accordance with this Agreement as promptly as possible.
If, at any time after the Effective Time, any such further action is necessary
or desirable to carry out the purposes of this Agreement and to vest the
Surviving Corporation with full
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right, title and possession to all assets, property, rights, privileges, powers
and franchises of the Company and Merger Sub, the officers and directors of the
Company and Merger Sub are fully authorized in the name of their respective
corporations or otherwise to take, and will take, all such lawful and necessary
action.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub that:
SECTION 3.01. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Each of the
Company and its subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation and
has the requisite corporate power and authority and is in possession of all
franchises, grants, authorizations, licenses, permits, easements, consents,
certificates, approvals and orders ("APPROVALS") necessary to own, lease and
operate the properties it purports to own, operate or lease and to carry on its
business as it is now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power, authority and
Approvals would not have a Material Adverse Effect. Each of the Company and its
subsidiaries is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
its properties owned, leased or operated by it or the nature of its activities
makes such qualification or licensing necessary, except for such failures to be
so duly qualified or licensed and in good standing that would not have a
Material Adverse Effect. A true and complete list of all of the Company's
subsidiaries, together with the jurisdiction of incorporation of each subsidiary
and the percentage of each subsidiary's outstanding capital stock owned by the
Company or another subsidiary, is set forth in Section 3.01 of the written
disclosure schedule previously delivered by the Company to Parent (the "COMPANY
DISCLOSURE SCHEDULE"). Except as set forth in Section 3.01 of the Company
Disclosure Schedule, the Company does not directly or indirectly own any equity
or similar interest in, or any interest convertible into or exchangeable or
exercisable for, any equity or similar interest in, any corporation,
partnership, joint venture or other business association or entity.
SECTION 3.02. CERTIFICATE OF INCORPORATION AND BY-LAWS. The Company has
heretofore furnished to Parent a complete and correct copy of its Certificate of
Incorporation and By-Laws, as amended to date. Within 14 days after the date
hereof, the Company will provide Parent a complete and correct copy of the
equivalent organizational documents of each of its subsidiaries. Such
Certificate of Incorporation, By-Laws and equivalent organizational documents of
each of its subsidiaries are in full force and effect. The Company is not in
violation of any of the provisions of its Certificate of Incorporation or
By-Laws. None of the Company's subsidiaries is in violation of any of the
provisions of its Certificate of Incorporation or By-Laws or equivalent
organizational documents, except for any such violations as would not have a
Material Adverse Effect.
SECTION 3.03. CAPITALIZATION. The authorized capital stock of the Company
consists of 100,000,000 Shares. As of February 22, 1996, (i) 25,624,980 Shares
were issued and outstanding, all of which are validly issued, fully paid and
nonassessable, (ii) 5,886,041 Shares were held in the treasury of the Company,
(iii) 5,530,573 Shares were reserved for future issuance pursuant to outstanding
Options granted under the Employee Stock Plan, (iv) 1,622,638 Shares were
reserved for future issuance pursuant to future option grants under the Employee
Stock Plan, (v) 90,000 Shares were reserved for future issuance pursuant to
outstanding Options granted under the Directors' Plan, (vi) 107,500 Shares were
reserved for future issuance pursuant to future option grants under the
Directors' Plan, (vii) 663,304 Shares were reserved for future issuance pursuant
to option grants under the Company Stock Purchase Plan, (viii) 1,051,282 Shares
were reserved for future issuance with respect to the Convertible Debentures and
(ix) 500,000 Shares were reserved for issuance pursuant to the Company's
Performance Incentive Plan. No change in such capitalization has occurred
between February 22, 1996 and the date hereof other than any change associated
with the
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exercise of vested Options or purchases under the Company Stock Purchase Plan.
Except for the Convertible Debentures and as set forth in this Section 3.03 or
Section 3.11 hereof or in Section 3.03 or Section 3.11 of the Company Disclosure
Schedule, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of the Company or any of its subsidiaries or obligating the
Company or any of its subsidiaries to issue or sell any shares of capital stock
of, or other equity interests in, the Company or any of its subsidiaries. All
Shares subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
shall be duly authorized, validly issued, fully paid and nonassessable. Except
as is set forth in Section 3.03 of the Company Disclosure Schedule, there are no
obligations, contingent or otherwise, of the Company or any of its subsidiaries
to repurchase, redeem or otherwise acquire any shares of Company capital stock
or the capital stock of any subsidiary or to provide funds to or make any
investment (in the form of a loan, capital contribution or otherwise) in any
such subsidiary or any other entity other than guarantees of bank obligations of
subsidiaries entered into in the ordinary course of business. All of the
outstanding shares of capital stock of each of the Company's subsidiaries are
duly authorized, validly issued, fully paid and nonassessable, and, other than
directors' or similar DE MINIMIS statutory qualifying shares, all such shares
are owned by the Company or another subsidiary free and clear of all security
interests, liens, claims, pledges, agreements, limitations in the Company's
voting rights, charges or other encumbrances of any nature whatsoever.
SECTION 3.04. AUTHORITY RELATIVE TO THIS AGREEMENT. (a) The Company has
all necessary corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the transactions so
contemplated (other than the approval and adoption of the Merger by the holders
of at least a majority of the outstanding shares of the Company Common Stock
entitled to vote in accordance with Delaware Law and the Company's Certificate
of Incorporation and By-Laws). The Board of Directors of the Company has
determined that it is advisable and in the best interest of the Company's
stockholders for the Company to enter into a business combination with Parent
upon the terms and subject to the conditions of this Agreement. This Agreement
has been duly and validly executed and delivered by the Company and, assuming
the due authorization, execution and delivery by Parent and Merger Sub, as
applicable, constitutes the legal, valid and binding obligation of the Company.
(b) The Board has taken all necessary action to amend the Rights Agreement,
dated as of May 15, 1989, between the Company and Norwest Bank Minnesota, N.A.,
as Rights Agent (the "RIGHTS AGREEMENT"), so that (A) none of the execution or
delivery of this Agreement or the making of the Offer will cause (i) the Rights
(as defined in the Rights Agreement) to become exercisable under the Rights
Agreement, (ii) Parent or Merger Sub or any of their affiliates to be deemed an
"Acquiring Person" (as defined in the Rights Agreement) or (iii) the "Shares
Acquisition Date" (as defined in the Rights Agreement) to occur upon any such
event, (B) none of the acceptance for payment or payment for Shares by Merger
Sub pursuant to the Offer or the consummation of the Merger will cause (i) the
Rights to become exercisable under the Rights Agreement, (ii) Parent or Merger
Sub or any of their affiliates to be deemed an Acquiring Person or (iii) the
Shares Acquisition Date to occur upon any such event, and (C) the "Expiration
Date" (as defined in the Rights Agreement) shall occur no later than immediately
prior to the purchase of Shares pursuant to the Offer. The "Distribution Date"
(as defined in the Rights Agreement) has not occurred.
(c) As of the date hereof and pursuant to Section 203(a)(1) of the Delaware
Law, the restrictions contained in Section 203 of the Delaware Law are, and at
all times on or prior to the Effective Time such restrictions shall be,
inapplicable to the Offer, the Merger and the transactions contemplated by this
Agreement. The Company has heretofore delivered to Parent a complete and correct
copy of the
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resolutions of the Board of Directors of the Company to the effect that pursuant
to Section 203(a)(1) of the Delaware Law, the restrictions contained in Section
203 of the Delaware Law are and shall be inapplicable to the Offer, the Merger
and the transactions contemplated by this Agreement.
(d) The Board has taken all necessary action to amend the Cray Research,
Inc. Executives Severance Compensation Plan, the Cray Research, Inc. Key
Management/Professional Severance Compensation Plan and the Cray Research, Inc.
General Employee Severance Compensation Plan (collectively, the "PARACHUTE
PLANS") so that none of the execution, delivery or performance of this
Agreement, including, without limitation, consummation of the Offer and the
Merger shall constitute a "Change of Control" for the purposes of such Parachute
Plans.
SECTION 3.05. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) Section
3.05(a) of the Company Disclosure Schedule includes a list as of the date hereof
(i) all contracts of the Company and its subsidiaries the loss of which would
have a Material Adverse Effect on the Company, (ii) all contracts pursuant to
which the Company expects or is scheduled to receive (assuming full performance
by the Company pursuant to the terms thereof) revenue of $5,000,000 or more
during the eighteen (18) month period following the date hereof, and (iii) all
agreements which, as of the date hereof, will be required to be filed, with the
Securities Exchange Commission (the "SEC") pursuant to the requirements of the
Securities Exchange Act of 1934, as amended, and the SEC's rules thereunder
(collectively, the "EXCHANGE ACT") as "material contracts" ((i), (ii) and (iii)
being, collectively, the "MATERIAL CONTRACTS") of the Company and its
subsidiaries).
(b) Except as set forth in Section 3.05(b) of the Company Disclosure
Schedule, the execution and delivery of this Agreement by the Company do not,
and the performance of this Agreement by the Company will not, (i) conflict with
or violate the Certificate of Incorporation or By-Laws or equivalent
organizational documents of the Company or any of its subsidiaries, (ii)
conflict with or violate any law, rule, regulation, order, judgment or decree
applicable to the Company or any of its subsidiaries or by which its or any of
their respective properties is bound or affected, or (iii) 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), or impair the Company's or any of its
subsidiaries' rights or alter the rights or obligations of any third party
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any Material Contract, or result in the creation of a lien or
encumbrance on any of the properties or assets of the Company or any of its
subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or its or any of their respective properties
is bound or affected.
(c) The execution and delivery of this Agreement by the Company does not,
and the performance of this Agreement by the Company will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, domestic or foreign, except (i)
for applicable requirements, if any, of the Securities Act of 1933, as amended
(the "SECURITIES ACT"), the Exchange Act, state securities laws ("BLUE SKY
LAWS"), the pre-merger notification requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), any non-United
States competition, antitrust and investment laws and the filing and recordation
of appropriate merger or other documents as required by Delaware Law and (ii)
where the failure to obtain such consents, approvals, authorizations or permits,
or to make such filings or notifications, would not prevent or delay
consummation of the Merger, or otherwise prevent or delay the Company from
performing its obligations under this Agreement, or would not otherwise have a
Material Adverse Effect.
SECTION 3.06. COMPLIANCE; PERMITS. (a) Except as disclosed in Section
3.06(a) of the Company Disclosure Schedule, neither the Company nor any of its
subsidiaries is in conflict with, or in default or violation of, (i) any law,
rule, regulation, order, judgment or decree applicable to the Company or any of
its subsidiaries or by which its or any of their respective properties is bound
or affected or (ii) any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit,
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franchise or other instrument or obligation to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
its or any of their respective properties is bound or affected, except where
such conflicts, defaults and violations would not have a Material Adverse Effect
on the Company.
(b) The Company and its subsidiaries hold all permits, licenses, easements,
variances, exemptions, consents, certificates, orders and approvals from
governmental authorities which are material to the operation of the business of
the Company and its subsidiaries taken as a whole (collectively, the "COMPANY
PERMITS"). The Company and its subsidiaries are in compliance with the terms of
the Company Permits, except where the failure to so comply would not have a
Material Adverse Effect.
SECTION 3.07. SEC FILINGS; FINANCIAL STATEMENTS. (a) The Company has filed
all forms, reports and documents required to be filed with the SEC since
December 31, 1993 and has made available to Parent (i) its Quarterly Reports on
Form 10-Q for the periods ended June 30 and September 30, 1995, respectively,
(ii) all proxy statements relating to the Company's meetings of stockholders
(whether annual or special) held since December 31, 1993, (iii) all other
reports or registration statements filed by the Company with the SEC (other than
Reports on Form 10-Q, Reports on Forms 3, 4 or 5 and Schedule 13G filed on
behalf of affiliates of the Company) since December 31, 1993, and (iv) all
amendments and supplements to all such reports and registration statements filed
by the Company with the SEC (collectively, the "COMPANY SEC REPORTS"). The
Company SEC Reports (i) were prepared in accordance with the requirements of the
Securities Act or the Exchange Act, as the case may be, and (ii) did not at the
time they were filed (or if amended or superseded by a filing prior to the date
of this Agreement, then on the date of such filing) contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. None of the
Company's subsidiaries is required to file any forms, reports or other documents
with the SEC.
(b) Each of the consolidated financial statements (including, in each case,
any related notes thereto) contained in the Company SEC Reports and contained in
Section 3.09 of the Company Disclosure Schedule was prepared in accordance with
United States Generally Accepted Accounting Principles ("GAAP") applied on a
consistent basis throughout the periods involved (except as may be indicated
therein or in the notes thereto) and each fairly presented the consolidated
financial position of the Company and its subsidiaries as at the respective
dates thereof and the consolidated results of its operations and cash flows for
the periods indicated, except that the unaudited interim financial statements
were or are subject to normal and recurring year-end adjustments which were not
or are not expected to be material in amount.
(c) The Company has heretofore furnished to Parent a complete and correct
copy of any amendments or modifications, which have not yet been filed with the
SEC but which are required to be filed, to agreements, documents or other
instruments which previously had been filed by the Company with the SEC pursuant
to the Securities Act or the Exchange Act.
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SECTION 3.08. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
Section 3.08 of the Company Disclosure Schedule and the Company SEC Reports,
since December 31, 1995, the Company has conducted its business in the ordinary
course and there has not occurred: (i) any amendments or changes in the Articles
of Incorporation or Bylaws of the Company; (ii) any damage to, destruction or
loss of any assets of the Company (whether or not covered by insurance) that had
a Material Adverse Effect; (iii) any change by the Company in its accounting
methods, principles or practices; (iv) any revaluation by the Company of any of
its assets, including, without limitation, writing down the value of capitalized
software or inventory or writing off notes or accounts receivable other than in
the ordinary course of business; (v) any other action or event that would have
required the consent of Parent pursuant to Section 5.01 had such action or event
occurred after the date of this Agreement; or (vi) any sale of a material amount
of assets of the Company, except for the sale of inventory in the ordinary
course of business.
SECTION 3.09. NO UNDISCLOSED LIABILITIES. Except as is disclosed in
Section 3.09 of the Company Disclosure Schedule, neither the Company nor any of
its subsidiaries has any liabilities (absolute, accrued, contingent or
otherwise) which are, in the aggregate, material to the business, operations or
financial condition of the Company and its subsidiaries taken as a whole, except
liabilities (a) adequately provided for in the Company's balance sheet
(including any related notes thereto) for the fiscal year ended December 31,
1995 included in Section 3.09 of the Company Disclosure Schedule (the "1995
BALANCE SHEET"), (b) incurred in the ordinary course of business and not
required under GAAP to be reflected on the 1995 Balance Sheet, or (c) incurred
since December 31, 1995 in the ordinary course of business and consistent with
past practice, and liabilities incurred in connection with this Agreement.
SECTION 3.10. ABSENCE OF LITIGATION. Except for routine litigation that
individually and in the aggregate if determined adversely to the Company would
not result in the Company paying damages net of insurance in excess of $250,000
and except as is set forth in Section 3.10 of the Company Disclosure Schedule or
in the Company SEC Reports filed prior to the date of this Agreement, there are
no claims, actions, suits, proceedings or investigations pending or, to the
knowledge of the Company, threatened against the Company or any of its
subsidiaries, or any properties or rights of the Company or any of its
subsidiaries, before any court, arbitrator or administrative, governmental or
regulatory authority or body, domestic or foreign.
SECTION 3.11. EMPLOYEE BENEFIT PLANS; EMPLOYMENT AGREEMENTS. (a) Section
3.11(a) of the Company Disclosure Schedule lists all employee benefit plans (as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")), all other bonus, stock option, stock purchase, incentive,
deferred compensation, supplemental retirement, severance or termination pay,
medical or life insurance, supplemental unemployment benefits, profit-sharing,
pension or retirement plans, agreements or arrangements and other similar
material fringe or employee benefit plans, programs or arrangements, and any
current or former employment or executive compensation or severance agreements,
regardless of whether ERISA is applicable thereto, for the benefit of, or
relating to, any employee or former employee of the Company or any trade or
business (whether or not incorporated) which is a member of a controlled group
including the Company or which is under common control with the Company (an
"ERISA AFFILIATE") within the meaning of Section 414 of the Code (the "EMPLOYEE
PLANS"), and a copy of each such written Employee Plan has been made available
to Parent (other than Foreign Employee Plans (as defined herein), which shall be
made available to the Parent prior to the Effective Time to the extent
practicable).
(b) Except as set forth in Section 3.11(b) of the Company Disclosure
Schedule, and except as any inaccuracy in the following statements, individually
or in the aggregate, would not have a Material Adverse Effect on the Company,
(i) none of the Employee Plans provides retiree medical or other retiree welfare
benefits to any person and none of the Employee Plans is a "multiemployer plan"
as such term is defined in Section 3(37) of ERISA; (ii) all Employee Plans are
in compliance in all material respects with the requirements prescribed by any
and all applicable statutes, orders, or governmental rules and regulations
currently in effect with respect thereto, and the Company and
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each of its subsidiaries have performed all material obligations required to be
performed by them under, are not in any material respect in default under or
violation of, and have no knowledge of any default or violation by any other
party to, any of the Employee Plans; (iii) each Employee Plan intended to
qualify under Section 401(a) of the Code is the subject of a favorable
determination letter from the IRS, and nothing has occurred which could
reasonably be expected to impair such determination; (iv) all contributions
required to be made to any Employee Plan under the terms of the Employee Plan or
any collective bargaining agreement or as required by law, have been made on or
before their due dates and, to the extent required by GAAP, a reasonable amount
has been accrued for contributions to each Employee Plan for the current plan
years; (v) none of the Employee Plans are, or are expected to become, subject to
the provisions of Title IV of ERISA or Section 412 of the Code and (vi) neither
the Company nor any ERISA Affiliate has incurred, nor reasonably expects to
incur, any liability under Title IV of ERISA (other than liability for premium
payments to the Pension Benefit Guaranty Corporation arising in the ordinary
course).
(c) To the knowledge of the Company, there are no pending material
investigations, litigation or other enforcement actions against the Company with
respect to any of the Employee Plans.
(d) Other than as set forth in Section 3.11(d) of the Company Disclosure
Schedule, there are no material actions, suits or claims pending or, to the best
knowledge of the Company, threatened by former or present employees of the
Company (or their beneficiaries) with respect to Employee Plans or the assets or
fiduciaries thereof (other than routine claims for benefits).
(e) Other than as described in Section 3.11(e) of the Company Disclosure
Schedule, to the knowledge of the Company, no condition or event has occurred
with respect to the Employee Plans which has or could reasonably be expected to
result in a material liability to the Company.
(f) Section 3.11(f)(1) of the Company Disclosure Schedule sets forth a true
and complete list of each current or former employee, officer or director of the
Company or any of its subsidiaries who holds an Option as of the date hereof,
together with the number of shares of Company Common Stock subject to such
Option, the date of grant of such Option, the exercise price of such Option (to
the extent determined as of the date hereof), whether such Option is intended to
qualify as an "incentive stock option" within the meaning of Section 422(b) of
the Code (an "ISO"), and the expiration date of such Option. Section 3.11(f)(2)
of the Company Disclosure Schedule also sets forth the total number of Options.
(g) With respect to each scheme or arrangement mandated by a government
other than the United States (a "FOREIGN GOVERNMENT SCHEME OR ARRANGEMENT") and
with respect to each Employee Plan maintained or contributed to by any
subsidiary of the Company that is not subject to United States law (a "FOREIGN
EMPLOYEE PLAN"), except as any inaccuracy in the following statements,
individually or in the aggregate, would not have a Material Adverse Effect:
(i) Any employer and employee contributions required by law or by the
terms of any Foreign Government Scheme or Arrangement or any Foreign
Employee Plan have been made, or, if applicable, accrued, in accordance with
normal accounting practices.
(ii) Except as disclosed in Section 3.11(g) of the Company Disclosure
Schedule, the fair market value of the assets of each funded Foreign
Employee Plan, the liability of each insurer for any Foreign Employee Plan
funded through insurance or the book reserve established for any Foreign
Employee Plan, together with any accrued contributions, is sufficient to
procure or provide for the accrued benefit obligations, as of the date of
this Agreement, with respect to all current and former participants in such
Foreign Employee Plan according to the actuarial assumptions and valuations
most recently used to determine employer contributions to such Foreign
Employee Plan and no transaction contemplated by this Agreement shall cause
such assets or insurance obligations to be less than such benefit
obligations.
(iii) Each Foreign Employee Plan required to be registered has been
registered and has been maintained in good standing with applicable
regulatory authorities.
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(h) Section 3.11(h) of the Company Disclosure Schedule sets forth the wage
review and compensation guidelines for employees adopted by the Company in 1996.
(i) The Company has made available to Parent (i) copies of all employment
agreements with officers of the Company; (ii) copies of all agreements with
consultants who are individuals obligating the Company to make annual cash
payments in an amount exceeding $100,000 and which are not terminable on less
than 60 days' notice without penalty; (iii) copies of all plans, programs,
agreements and other arrangements of the Company with or relating to its
employees which contain change in control provisions; and (iv) the various forms
of employment agreement, if any, of the Company for its non-executive employees.
SECTION 3.12. LABOR MATTERS. (i) There are no controversies pending or, to
the knowledge of the Company or any of its subsidiaries, threatened, between the
Company or any of its subsidiaries and any of their respective employees, which
controversies are reasonably likely to have a Material Adverse Effect; (ii)
neither the Company nor any of its subsidiaries is a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by the Company or its subsidiaries nor does the Company or any of its
subsidiaries know of any activities or proceedings of any labor union to
organize any such employees; and (iii) neither the Company nor any of its
subsidiaries has any knowledge of any strikes, slowdowns, work stoppages,
lockouts, or threats thereof, by or with respect to any employees of the Company
or any of its subsidiaries.
SECTION 3.13. REGISTRATION STATEMENT; PROXY STATEMENT. Neither the
Schedule 14D-9 nor any of the information supplied or to be supplied by the
Company in writing for inclusion or incorporation by reference in (i) the Offer
Documents, (ii) the Registration Statement on Form S-4 to be filed with the SEC
by Parent in connection with the issuance of Parent Common Stock in the Merger
(together with any amendments thereof or supplements thereto, the "REGISTRATION
STATEMENT") or (iii) the proxy and/or information statement relating to the
meeting of the Company's stockholders (the "COMPANY STOCKHOLDERS' MEETING") to
be held in connection with the Merger (the "PROXY STATEMENT" and, together with
the Registration Statement, the "PROXY STATEMENT/PROSPECTUS") will, at the
respective times filed with the SEC or other regulatory agency and, in addition,
(A) in the case of the Offer Documents, at the date they or any amendments or
supplements thereto are mailed to Stockholders, (B) in the case of the Proxy
Statement/Prospectus, at the date it or any amendments or supplements thereto
are mailed to stockholders, at the time of the Company Stockholders' Meeting and
at the Effective Time and (C) in the case of the Registration Statement, when it
becomes effective under the Securities Act and at the Effective Time, 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 and Schedule 14D-9 will comply as to form in all
material respects with the applicable provisions of the Exchange Act and the
rules and regulations thereunder. If at any time prior to the Effective Time any
event relating to the Company or any of its respective affiliates, officers or
directors should be discovered by the Company which should be set forth in an
amendment or supplement to the Registration Statement, Offer Documents or the
Proxy Statement/Prospectus, the Company shall promptly inform Parent and Merger
Sub. Notwithstanding the foregoing, the Company makes no representation or
warranty with respect to any information supplied by Parent or Merger Sub which
is contained in any of the foregoing documents.
SECTION 3.14. RESTRICTIONS ON BUSINESS ACTIVITIES. Except for this
Agreement, there is no material agreement, judgment, injunction, order or decree
binding upon the Company or any of its subsidiaries which has or could
reasonably be expected to have (after giving effect to the consummation of the
Offer and the Merger) the effect of prohibiting or impairing any material
business operations of the Company or any of its subsidiaries, acquisition of
property by the Company or any of its subsidiaries or the conduct of business by
the Company or any of its subsidiaries as currently conducted or as proposed to
be conducted by the Company.
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SECTION 3.15. TITLE TO PROPERTY. The Company and each of its subsidiaries
have good, marketable and defensible title to all of their properties and
assets, free and clear of all liens, charges and encumbrances except liens for
taxes not yet due and payable and such liens or other imperfections of title, if
any, as do not materially detract from the value of or interfere with the
present use of the property affected thereby or which would not have a Material
Adverse Effect on the Company.
SECTION 3.16. TAXES. (a) For purposes of this Agreement, "TAX" or "TAXES"
shall mean taxes, fees, levies, duties, tariffs, imposts and governmental
impositions or charges of any kind in the nature of (or similar to) taxes,
payable to any federal, state, provincial, local or foreign taxing authority,
including (without limitation) (i) income, franchise, profits, gross receipts,
AD VALOREM, net worth, value added, sales, use, service, real or personal
property, special assessments, capital stock, license, payroll, withholding,
employment, social security, workers' compensation, unemployment compensation,
utility, severance, production, excise, stamp, occupation, premiums, windfall
profits, transfer and gains taxes and (ii) interest, penalties, additional taxes
and additions to tax imposed with respect thereto; and "TAX RETURNS" shall mean
returns, reports and information statements with respect to Taxes required to be
filed with the United States Internal Revenue Service (the "IRS") or any other
taxing authority, domestic or foreign, including, without limitation,
consolidated, combined and unitary tax returns.
(b) Other than as disclosed on Section 3.16(b) of the Company Disclosure
Schedule, the Company and each of its subsidiaries, and any consolidated,
combined, unitary or aggregate group for Tax purposes of which the Company or
any of its subsidiaries is or has been a member, have filed all United States
federal income Tax Returns and all other material Tax Returns required to be
filed by them or any of them, and have paid and discharged all Taxes shown
therein to be due and there are no other Taxes that would be due if asserted by
a taxing authority, except such as are being contested in good faith by
appropriate proceedings (to the extent that any such proceedings are required)
or with respect to which the Company is maintaining reserves in accordance with
GAAP in its financial statements to the extent currently required in all
material respects adequate for their payment, except, in each instance, to the
extent the failure to do so would not have a Material Adverse Effect. To the
best of the Company's knowledge, the Company and each of its subsidiaries have
disclosed to the relevant taxing authority any position taken where the failure
to make such disclosure would enable the taxing authority to subject such person
to penalties or additions to Tax that would have a Material Adverse Effect.
Neither the IRS nor any other taxing authority or agency is now asserting or, to
the best of the Company's knowledge, threatening to assert against the Company
or any of its subsidiaries any deficiency or claim for additional Taxes other
than additional Taxes with respect to which the Company is maintaining reserves
in accordance with GAAP in its financial statements which are in all material
respects adequate for their payment. There are no requests for information from
the IRS or any other taxing authority or agency currently outstanding that could
have a Material Adverse Effect imposed on the Company or any subsidiaries.
Except as disclosed in Section 3.16(b) of the Company Disclosure Schedule, no
material Tax Return of either the Company or any of its subsidiaries is
currently being audited by any taxing authority. No material tax claim has
become a lien on any assets of the Company or any subsidiary thereof and neither
the Company nor any of its subsidiaries has granted any waiver of any statute of
limitations with respect to, or any extension of a period for the assessment of,
any federal income tax (except as disclosed in Section 3.16(b) of the Company
Disclosure Schedule) or material state corporate income or franchise tax (except
as the Company has advised Parent's representatives). Neither the Company nor
any of its subsidiaries is required to include in income (i) any material items
in respect of any change in accounting principles or any deferred intercompany
transactions, or (ii) any installment sale gain, where the inclusion in income
would result in a tax liability materially in excess of the reserves therefor.
(c) The Company on behalf of itself and all its subsidiaries hereby
represents that, other than as disclosed on Section 3.16(c) of the Company
Disclosure Schedule, and other than with respect to items the inaccuracy of
which would not have a Material Adverse Effect: (i) to the best of the Company's
knowledge, neither the Company nor any of its subsidiaries is a party to any
agreement, contract or
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arrangement, or maintains or sponsors any Employee Plans, that will reasonably
be expected to result, separately or in the aggregate, in the payment of any
"excess parachute payment" within the meaning of Section 280G(b)(1) of the Code,
determined without regard to Section 280G(b)(4) of the Code; (ii) since January
1, 1989, neither the Company nor any of its subsidiaries has been subject or is
likely to be subject to any accumulated earnings tax or personal holding company
tax; (iii) except for its subsidiaries organized in Germany, France and the
Netherlands, none of the Company's foreign subsidiaries have material "excess
passive assets" as defined in section 956A(c) of the Code; (iv) neither the
Company nor any of its subsidiaries is obligated under any agreement with
respect to industrial development bonds or other obligations with respect to
which the excludability from gross income of the holder for United States
federal or state income tax purposes could be affected by the transactions
contemplated hereunder; (v) neither the Company nor any of its subsidiaries has
entered into any deferred intercompany transaction within the meaning of section
1.1502-13(a)(2) of the United States Treasury Regulations as to which material
items of deferred gain or loss has not been restored; and (vi) no material
excess loss account within the meaning of section 1.1502-31T(a)(2)(v) of the
United States Treasury Regulations exists with respect to the stock of any of
its subsidiaries.
(d) Except as set forth in Section 3.16(d) of the Company Disclosure
Schedule, no power of attorney has been granted by the Company or any of its
subsidiaries with respect to any material matter relating to Taxes which is
currently in force.
(e) Neither the Company nor any of its subsidiaries is a party to any
material agreement or arrangement (written or oral) providing for the allocation
or sharing of Taxes.
(f) The Company and each of its subsidiaries have withheld from each payment
made to any of their respective past or present employees, officers or directors
the amount of all Taxes and other deductions required to be withheld therefrom
and paid the same to the proper tax or other receiving officers within the time
required by law, except where the failure to do so would not have a Material
Adverse Effect.
SECTION 3.17. ENVIRONMENTAL MATTERS. Except as set forth in Section 3.17
of the Company Disclosure Schedule, and except in all cases, in the aggregate,
as have not had and would not reasonably be expected to have a Material Adverse
Effect, the Company and each of its subsidiaries (i) have obtained all
applicable permits, licenses and other authorization which are required under
federal, state or local laws relating to pollution or protection of the
environment, including laws relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants or hazardous or toxic materials
or wastes into ambient air, surface water, ground water or land or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants or hazardous or
toxic materials or wastes by the Company or its subsidiaries (or their
respective agents) (the "ENVIRONMENTAL LAWS"); (ii) are in compliance with all
terms and conditions of such required permits, licenses and authorization, and
also are in compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in the Environmental Laws or contained in any regulation, code, plan,
order, decree, judgment, notice or demand letter issued, entered, promulgated or
approved thereunder; (iii) as of the date hereof, are not aware of nor have
received notice of any event, condition, circumstance, activity, practice,
incident, action or plan which is reasonably likely to interfere with the
Company's operations, or prevent continued compliance with the Environmental
Laws, or which would reasonably be likely to give rise to any common law or
statutory liability of, or otherwise form the basis of any claim, action, suit
or proceeding against, the Company or any of its subsidiaries (or any of their
respective agent's) based on or resulting from the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling, or the
emission, discharge or release into the environment, of any pollutant,
contaminant or hazardous or toxic material or waste; and (iv) have taken all
actions necessary under applicable requirements of federal, state or local laws,
rules or regulations to register any products or materials required to be
registered by the Company or its subsidiaries (or any of their respective
agents) thereunder.
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SECTION 3.18. BROKERS. No broker, finder or investment banker (other than
Salomon Brothers 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. The Company has
heretofore furnished to Parent a complete and correct copy of all agreements
between the Company and Salomon Brothers Inc pursuant to which such firm would
be entitled to any payment relating to the transactions contemplated hereunder.
SECTION 3.19. INTELLECTUAL PROPERTY. (a) The Company owns, or is licensed
or otherwise possesses legally enforceable rights to use, all patents,
trademarks, trade names, service marks, copyrights and any applications
therefor, technology, know-how, computer software programs or applications (in
both source code and object code form) and tangible or intangible proprietary
information or material that are used or proposed to be used in the business of
the Company, each of which, where applicable, is to the Company's knowledge
valid and subsisting. Section 3.19(a) of the Company Disclosure Schedule lists
all current patents, registered and material unregistered trademarks and service
marks, registered and material unregistered copyrights, trade names and any
applications therefor owned by the Company (the "COMPANY INTELLECTUAL PROPERTY
RIGHTS"), and specifies the jurisdictions in which each such Company
Intellectual Property Right has been issued or registered or in which an
application for such issuance and registration has been filed, including the
respective registration or application numbers and the names of all registered
owners, together with a list of all of the Company's currently marketed software
products and an indication as to which, if any, of such software products have
been registered for copyright protection with the United States Copyright Office
and any foreign offices and by whom such items have been registered. Section
3.19(a) of the Company Disclosure Schedule (as supplemented during the 14 day
period following the date hereof) includes and specifically identifies all
material third-party patents, trademarks or copyrights (the "THIRD PARTY
INTELLECTUAL PROPERTY RIGHTS"), to the knowledge of the Company, which are
incorporated in, are, or form a part of, any Company product. Section 3.19(a) of
the Company Disclosure Schedule (as supplemented during the 14 day period
following the date hereof (in the case of clause (iii))) lists (i) any requests
the Company has received since December 31, 1993 to make any such registration,
including the identity of the requestor and the item requested to be so
registered, and the jurisdiction for which such request has been made; (ii)
except for object code and source code license agreements for the Company's
products executed in the ordinary course of business and in accordance with the
Company's past practices, all material licenses, sublicenses and other
agreements as to which the Company is a party and pursuant to which any person
is authorized to use any Company Intellectual Property Right, or any trade
secret material to the Company; and (iii) all material licenses, sublicenses and
other agreements as to which the Company is a party and pursuant to which the
Company is authorized to use any Third Party Intellectual Property Rights, or
other trade secret of a third party in or as any product, and includes the
identity of all parties thereto, a description of the nature and subject matter
thereof, the applicable royalty and the term thereof.
(b) Except as set forth in Section 3.19(b) of the Company Disclosure
Schedule, the Company is not, nor will it be as a result of the execution and
delivery of this Agreement or the performance of its obligations hereunder, in
violation of any Third Party Intellectual Property Rights license, sublicense or
agreement described in Section 3.19(a) of the Company Disclosure Schedule. No
claims with respect to the Company Intellectual Property Rights, any trade
secret material to the Company, or Third Party Intellectual Property Rights to
the extent arising out of any use, reproduction or distribution of such Third
Party Intellectual Property Rights by or through the Company, are currently
pending or, to the knowledge of the Company, are threatened by any person, nor,
to the Company's knowledge, do any valid grounds for any bona fide claims exist
(i) to the effect that the manufacture, sale, licensing or use of any product as
now used, sold or licensed or proposed for use, sale or license by the Company
infringes on any copyright, patent, trademark, service mark or trade secret;
(ii) against the use by the Company of any trademarks, trade names, trade
secrets, copyrights, patents, technology, know-how or computer software programs
and applications used in the Company's business as currently conducted or as
proposed to be conducted by the Company; (iii) challenging the ownership,
validity or effectiveness of any of the Company Intellectual Property Rights or
other trade secret material to the
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Company; or (iv) challenging the Company's license or legally enforceable right
to use of the Third Party Intellectual Rights. Except as set forth in Section
3.19(b) of the Company Disclosure Schedule, to the Company's knowledge, there is
no material unauthorized use, infringement or misappropriation of any of the
Company Intellectual Property by any third party. Except as set forth in Section
3.19(b) of the Company Disclosure Schedule, neither the Company nor any of its
subsidiaries (i) has been sued or charged in writing as a defendant in any
claim, suit, action or proceeding which involves a claim or infringement of
trade secrets, any patents, trademarks, service marks, maskworks or copyrights
and which has not been finally terminated prior to the date hereof or been
informed or notified by any third party that the Company may be engaged in such
infringement or (ii) has knowledge of any infringement liability with respect
to, or infringement by, the Company or any of its subsidiaries of any trade
secret, patent, trademark, service mark, maskwork or copyright of another.
(c) Substantially all employees of the Company have executed a
confidentiality and invention agreement containing terms substantially similar
to the form previously delivered to Parent.
SECTION 3.20. VOTE REQUIRED. The affirmative vote of the holders of at
least a majority of the outstanding shares of the Company Common Stock is the
only vote of the holders of any class or series of the Company's capital stock
necessary to approve the Merger.
SECTION 3.21. OPINION OF FINANCIAL ADVISOR. The Company has been advised
by its financial advisor, Salomon Brothers Inc, that in its opinion, as of the
date hereof, the consideration to be received by holders of the Company Common
Stock in the Offer and the Merger is fair from a financial point of view to such
holders, and has delivered a written copy of such opinion to Parent.
SECTION 3.22. FULL DISCLOSURE. No statement contained in any certificate
or schedule furnished or to be furnished by the Company or its subsidiaries to
Parent or Merger Sub in, or pursuant to the provisions of, this Agreement
contains or shall contain any untrue statement of a material fact or omits or
will omit to state any material fact necessary, in the light of the
circumstances under which it was made, to make the statements herein or therein
not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby, jointly and severally, represent and warrant
to the Company that:
SECTION 4.01. ORGANIZATION AND QUALIFICATION. Each of Parent and each of
its subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has the
requisite corporate power and authority and is in possession of all Approvals
necessary to own, lease and operate the properties it purports to own, operate
or lease and to carry on its business as it is now being conducted, except where
the failure to be so organized, existing and in good standing or to have such
power, authority and Approvals would not have a Material Adverse Effect. Each of
Parent and each of its subsidiaries is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of its properties owned, leased or operated by it or the nature of
its activities makes such qualification or licensing necessary, except for such
failures to be so duly qualified or licensed and in good standing that would not
have a Material Adverse Effect.
SECTION 4.02. AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent and
Merger Sub has all necessary corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Parent and Merger Sub and the consummation by Parent and
Merger Sub of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of Parent and Merger
Sub, and no other corporate proceedings on the part of Parent or Merger Sub are
necessary to authorize this Agreement or to consummate the transactions so
contemplated. The Boards of Directors of Parent and Merger Sub have determined
that it is advisable and in the best interest of their respective stockholders
for each to enter into a business
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combination with the Company upon the terms and subject to the conditions of
this Agreement. This Agreement has been duly and validly executed and delivered
by Parent and Merger Sub and, assuming the due authorization, execution and
delivery by the Company, constitutes a legal, valid and binding obligation of
Parent and Merger Sub.
SECTION 4.03. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) Section
4.03(a) of the written disclosure schedule previously delivered by Parent and
Merger Sub to the Company (the "PARENT DISCLOSURE SCHEDULE") includes a list of
all contracts material to the business of Parent and its subsidiaries taken on a
whole ("PARENT MATERIAL CONTRACT").
(b) Except as set forth in Section 4.03(b) of the Parent Disclosure
Schedule, the execution and delivery of this Agreement by Parent and Merger Sub
do not, and the performance of this Agreement by Parent and Merger Sub shall
not, (i) conflict with or violate the Certificate of Incorporation or By-Laws of
Parent or the Articles of Incorporation or By-Laws of Merger Sub, (ii) conflict
with or violate any law, rule, regulation, order, judgment or decree applicable
to Parent or any of it subsidiaries or by which its or their respective
properties are bound or affected, or (iii) result in any breach of or constitute
a default (or an event which with notice or lapse of time or both would become a
default) under, or impair Parent's or any of its subsidiaries' rights or alter
the rights or obligations of any third party under, or give to others any rights
of termination, amendment, acceleration or cancellation of, any Parent Material
Contract or result in the creation of a lien or encumbrance on any of the
properties or assets of Parent or any of it subsidiaries pursuant to, any
material note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Parent or any of
its subsidiaries is a party or by which Parent or any of its subsidiaries or its
or any of their respective properties are bound or affected, except in any such
case for any such breaches, defaults or other occurrences that would not have a
Material Adverse Effect.
(c) The execution and delivery of this Agreement by Parent and Merger Sub
will not require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental or regulatory authority, domestic or
foreign, except (i) for applicable requirements, if any, of the Securities Act,
the Exchange Act, the Blue Sky Laws and the pre-merger notification requirements
of the HSR Act, and (ii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
prevent or delay consummation of the Merger, or otherwise prevent Parent or
Merger Sub from performing their respective obligations under this Agreement,
and would not have a Material Adverse Effect.
SECTION 4.04. CERTIFICATE OF INCORPORATION AND BY-LAWS. Parent has
heretofore furnished to the Company a complete and correct copy of its
Certificate of Incorporation and the By-Laws, as amended to date. Such
Certificate of Incorporation and By-Laws are in full force and effect. Neither
Parent nor Merger Sub is in violation of any of the provisions of its
Certificate of Incorporation or By-Laws.
SECTION 4.05. CAPITALIZATION. As of January 31, 1996, the authorized
capital stock of Parent consisted of (i) 500,000,000 shares of Parent Common
Stock of which: 162,025,947 shares were issued and outstanding, 342,489 shares
were held by subsidiaries of the Company or in its treasury, 38,459,745 shares
were reserved for issuance pursuant to option grants under Parent's stock option
plans, 1,774,574 were reserved for future issuance pursuant to option grants
under Parent's employee stock purchase plan, 589,266 were reserved for future
issue on exchange of shares issued by a subsidiary, 619,469 shares were reserved
for future issuance with respect to Parent's outstanding Series A Convertible
Preferred Stock, 7,402,395 shares were reserved for issuance with respect to
Zero Coupon Convertible Subordinated Debentures due 2013 and 49,659 shares were
reserved for issuance with respect to a convertible debenture due November 11,
1997; and (ii) 2,000,000 shares of Preferred Stock, no par value ("PARENT
PREFERRED STOCK"), of which: 17,500 shares of Series A Convertible Preferred
Stock and one share of Series E Preferred Stock were issued and outstanding. No
material change in such capitalization has occurred between January 31, 1996 and
the date hereof. The authorized capital stock of Merger Sub consists of 1,000
shares of common stock, no par value, 100
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shares of which, as of the date hereof, are issued and outstanding. All of the
outstanding shares of Parent's and Merger Sub's respective capital stock have
been duly authorized and validly issued and are fully paid and nonassessable.
The issuance of shares of Parent Common Stock in connection with the Merger,
upon exercise of Options assumed and upon conversion of the Convertible
Debentures have been duly authorized, and, when issued in connection with the
Merger or upon such exercise or conversion, will be validly issued, fully paid
and nonassessable.
SECTION 4.06. COMPLIANCE; PERMITS. (a) Neither Parent, nor any of its
subsidiaries is in conflict with, or in default or violation of, (i) any law,
rule, regulation, order, judgment or decree applicable to Parent or any of its
subsidiaries or by which its or any of their respective properties is bound or
affected or (ii) any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which
Parent or any of its subsidiaries is a party or by which Parent or any of its
subsidiaries or is or any of their respective properties is bound or affected,
except for any such conflicts, defaults or violations which would not have a
Material Adverse Effect.
(b) Parent and its subsidiaries hold all permits, licenses, easements,
variances, exemptions, consents, certificates, orders and approvals from
governmental authorities which are material to the operation of the business of
the Company and its subsidiaries taken as a whole as it is now being conducted
(collectively, the "PARENT PERMITS"). Parent and its subsidiaries are in
compliance with the terms of the Parent Permits, except where the failure to so
comply would not have a Material Adverse Effect.
SECTION 4.07. SEC FILINGS; FINANCIAL STATEMENTS. (a) Parent has filed all
forms, reports and documents required to be filed with the SEC since June 30,
1993, and has heretofore delivered to the Company, in the form filed with the
SEC, (i) its Annual Report on Form 10-K for the fiscal year ended June 30, 1995
and its Quarterly Reports on Form 10-Q for the fiscal quarters ended September
30, 1995 and December 31, 1995, (ii) all proxy statements relating to Parent's
meetings of stockholders (whether annual or special) held since June 30, 1995,
(iii) all other reports or registration statements (other than Reports on Form
10-Q and Reports on Form 3, 4 or 5 filed on behalf of affiliates of the Parent)
filed by Parent with the SEC since June 30, 1995 and (iv) all amendments and
supplements to all such reports and registration statements filed by Parent with
the SEC (collectively, the "PARENT SEC REPORTS"). The Parent SEC Reports (i)
were prepared in accordance with the requirements of the Securities Act or the
Exchange Act, as the case may be, and (ii) did not at the time they were filed
(or if amended or superseded by a filing prior to the date of this Agreement,
then on the date of such filing) contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. None of Parent's subsidiaries is required
to file any forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each case,
any related notes thereto) contained in the Parent SEC Reports has been prepared
in accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto) and each fairly
presents the consolidated financial position of Parent and its subsidiaries as
at the respective dates thereof and the consolidated results of its operations
and cash flows for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in amount.
(c) Parent has heretofore furnished to the Company a complete and correct
copy of any amendments or modifications, which have not yet been filed with the
SEC but which are required to be filed, to agreements, documents or other
instruments which previously had been filed by Parent with the SEC pursuant to
the Securities Act or the Exchange Act.
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SECTION 4.08. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth on
Section 4.08 of the Parent Disclosure Schedule or the Parent SEC Reports, since
June 30, 1995, Parent has conducted its business in the ordinary course and
there has not occurred: (i) any Material Adverse Effect; (ii) any amendments or
changes in the Certificate of Incorporation or By-Laws of Parent; (iii) any
damage to, destruction or loss of any assets of the Parent (whether or not
covered by insurance) that could have a Material Adverse Effect; (iv) any
revaluation by Parent of any of its assets, including, without limitation,
writing down the value of capitalized software or inventory or writing off notes
or accounts receivable other than in the ordinary course of business; (v) except
as disclosed in Section 4.08 of the Parent Disclosure Schedule, any other action
or event that would have required the consent of the Company pursuant to Section
5.03 had such action or event occurred after the date of this Agreement; or (vi)
any sale of a material amount of assets of Parent, except in the ordinary course
of business.
SECTION 4.09. RESTRICTIONS ON BUSINESS ACTIVITIES. Except for this
Agreement, there is no material agreement, judgment, injunction, order or decree
binding upon Parent or any of its subsidiaries which has or could reasonably be
expected to have the effect of prohibiting or materially impairing any business
practice of Parent or any of its subsidiaries, any acquisition of property by
Parent or any of its subsidiaries or the conduct of business by Parent or any of
its subsidiaries as currently conducted or as proposed to be conducted by
Parent.
SECTION 4.10. TITLE TO PROPERTY. Except as is disclosed in the Parent SEC
Reports, Parent and each of its subsidiaries have good, marketable and
defensible title to all of their properties and assets, free and clear of all
liens, charges and encumbrances except liens for taxes not yet due and payable
and such liens or other imperfections of title, if any, as do not materially
detract from the value of or interfere with the present use of the property
affected thereby or which would not have a Material Adverse Effect. Except as is
disclosed in the Parent SEC Reports, Parent owns, or is licensed or otherwise
possesses legally enforceable rights to use, all patents, trademarks, trade
names, service marks, copyrights and any applications therefor, technology,
know-how, computer software programs or applications (in both source code and
object code form) and tangible or intangible proprietary information or material
that are used or proposed to be used in the business of Parent, each of which,
where applicable, is to Parent's knowledge valid and subsisting.
SECTION 4.11. NO UNDISCLOSED LIABILITIES. Except as is disclosed in
Section 4.11 of the Parent Disclosure Schedule or the Parent SEC Reports,
neither Parent nor any of its subsidiaries has any liabilities (absolute,
accrued, contingent or otherwise) which are, in the aggregate, material to the
business, operations or financial condition of Parent and its subsidiaries taken
as a whole, except liabilities (a) adequately provided for in Parent's balance
sheet (including any related notes thereto) as of June 30, 1995 included in the
Parent SEC Reports (the "JUNE 30 BALANCE SHEET"), (b) incurred in the ordinary
course of business and not required under GAAP to be reflected on the June 30
Balance Sheet, or (c) incurred since June 30, 1995 in the ordinary course of
business and consistent with past practice, and liabilities incurred in
connection with this Agreement.
SECTION 4.12. ABSENCE OF LITIGATION. Except as set forth in Section 4.12
of the Parent Disclosure Schedule or as reflected in the Parent SEC Reports,
there are no claims, actions, suits, proceedings or investigations pending or,
to the knowledge of Parent, threatened against Parent or any of its
subsidiaries, or any properties or rights of Parent or any of its subsidiaries,
before any court, arbitrator or administrative, governmental or regulatory
authority or body, domestic or foreign, that could have a Material Adverse
Effect.
SECTION 4.13. REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS. Subject
to the accuracy of the representations of the Company in Section 3.13, neither
(i) the Offer Documents, at the time the Offer Documents are filed with the SEC
or are first published, sent or given to stockholders of the Company, as the
case may be, nor (ii) the Registration Statement pursuant to which the Parent
Common Shares to be issued in the Merger will be registered with the SEC, at the
time the Registration Statement (including any amendments or supplements
thereto) is declared effective by the SEC, shall contain any untrue statement of
a material fact or omit to state any material fact necessary in
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order to make the statements included therein, in light of the circumstances
under which they were made, not misleading. Subject to the accuracy of the
representations of the Company in Section 3.13, the information supplied by
Parent for inclusion in the Proxy Statement/Prospectus will not, on the date the
Proxy Statement/Prospectus is first mailed to stockholders, at the time of the
Company Stockholders' Meeting and at the Effective Time, contain any statement
which, at such time and in light of the circumstances under which it shall be
made, is false or misleading with respect to any material fact, or will omit to
state any material fact necessary in order to make the statements therein not
false or misleading. If at any time prior to the Effective Time any event
relating to Parent, Merger Sub or any of their respective affiliates, officers
or directors should be discovered by Parent or Merger Sub which should be set
forth in an amendment to the Registration Statement or a supplement to the Proxy
Statement/Prospectus, Parent or Merger Sub will promptly inform the Company.
Notwithstanding the foregoing, Parent makes no representation or warranty with
respect to any information supplied by the Company which is contained in, or
furnished in connection with the preparation of, any of the foregoing. The Offer
Documents and the Registration Statement shall comply in all material respects
as to form with the requirements of the Exchange Act and the Securities Act,
respectively, and the rules and regulations thereunder.
SECTION 4.14. BROKERS. No broker, finder or investment banker (other than
Unterberg Harris L.P.) 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 Parent or Merger Sub.
SECTION 4.15. NO STOCKHOLDER VOTE. No vote of the stockholders of Parent
is necessary to approve the Offer or the Merger or the issuance of Parent Common
Shares therein.
SECTION 4.16. FINANCING. Parent has, or will have, sufficient funds to
permit Merger Sub to acquire Shares pursuant to the Offer and the Merger.
SECTION 4.17. FULL DISCLOSURE. No statement contained in any certificate
or schedule furnished or to be furnished by Parent or Merger Sub to the Company
in, or pursuant to the provisions of, this Agreement contains or will contain
any untrue statement of a material fact or omits or shall omit to state any
material fact necessary, in the light of the circumstances under which it was
made, to make the statements herein or therein not misleading.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01. CONDUCT OF BUSINESS BY THE COMPANY PENDING THE
MERGER. Except as may be otherwise expressly indicated as permitted in Section
5.01 of the Company Disclosure Schedule, during the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time, the Company covenants and agrees that, unless Parent
shall otherwise agree in writing, the Company shall conduct its business and
shall cause the businesses of its subsidiaries to be conducted only in, and the
Company and its subsidiaries shall not take any action except in the ordinary
course of business and in a manner consistent with past practice; and the
Company shall use reasonable commercial efforts to preserve substantially intact
the business organization of the Company and its subsidiaries, to keep available
the services of the present officers, employees and consultants of the Company
and its subsidiaries, to take all reasonable action necessary to prevent the
loss, cancellation, abandonment, forfeiture or expiration of any Company
Intellectual Property, Third Party Intellectual Property Rights, and Material
Contracts and to preserve the present relationships of the Company and its
subsidiaries with customers, suppliers and other persons with which the Company
or any of its subsidiaries has significant business relations. By way of
amplification and not limitation, except as contemplated by this Agreement and
Section 5.01 of the Company Disclosure Schedule, neither the Company nor any of
its subsidiaries shall, during the
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period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, directly or indirectly do,
or propose to do, any of the following without the prior written consent of
Parent:
(a) amend or otherwise change the Company's Certificate of Incorporation
or By-Laws;
(b) issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any shares of capital
stock of any class, or any options, warrants, convertible securities or
other rights of any kind to acquire any shares of capital stock, or any
other ownership interest (including, without limitation, any phantom
interest) of the Company, any of its subsidiaries or affiliates (except for
the issuance of shares of the Company Common Stock issuable pursuant to the
exercise of Options under the Stock Option Plans (as defined in Section
2.06(c)) or pursuant to rights to purchase such shares under the Company
Stock Purchase Plan (as defined in Section 2.06(c)), which Options or
rights, as the case may be, are outstanding on the date hereof or with
respect to the Convertible Debentures);
(c) sell, pledge, dispose of or encumber any assets of the Company or
any of its subsidiaries (except for (i) sales of assets in the ordinary
course of business and in a manner consistent with past practice on which
individually and in the aggregate do not exceed $1,000,000 and (ii)
dispositions of obsolete or worthless assets);
(d) amend or change the period (or permit any acceleration, amendment or
change) of exercisability of Options or restricted stock granted under the
Stock Option Plans or authorize cash payments in exchange for any such
Options or restricted stock;
(e) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof)
in respect of any of its capital stock, except that a wholly owned
subsidiary of the Company may declare and pay a dividend to its parent, (ii)
split, combine or reclassify any of its capital stock or issue or authorize
or propose the issuance of any other securities in respect of, in lieu of or
in substitution for shares of its capital stock or (iii) amend the terms of,
repurchase, redeem or otherwise acquire, or permit any subsidiary to
repurchase, redeem or otherwise acquire, any of its securities or any
securities of its subsidiaries, or propose to do any of the foregoing;
(f) sell, transfer, license, sublicense or otherwise dispose of any
Company Intellectual Property (other than in the ordinary course of
business, consistent with past practice, in connection with systems sales
and software developer programs), or amend or modify any existing agreements
with respect to any Company Intellectual Property or Third Party
Intellectual Property Rights;
(g) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof; (ii) incur any indebtedness for borrowed money or issue
any debt securities or assume, guarantee or endorse or otherwise as an
accommodation become responsible for, the obligations of any person, or make
any loans or advances except to employees in the ordinary course consistent
with past practice; (iii) enter into or amend any contract or agreement
other than in the ordinary course of business; (iv) authorize or make any
capital expenditures or purchase of fixed assets which are, in the
aggregate, in excess of the amount specified in Section 3.08(g) of the
Company Disclosure Schedule for the Company and its subsidiaries, taken as a
whole; PROVIDED, HOWEVER, that no more than one half of such amount shall be
made or firmly committed prior to June 30, 1996, and, PROVIDED, FURTHER that
the Company will give Parent prior notice of the making or the firm
commitment of more than $5 million of capital expenditure in any calendar
quarter; (v) terminate any Material Contract or amend any of its material
terms (other than amendments to existing credit arrangements designed to
remedy defaults thereunder); or (vi) enter into or amend any contract,
agreement, commitment or arrangement to effect any of the matters prohibited
by this Section 5.01(g);
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(h) increase the compensation payable or to become payable to its
officers or employees, or grant any severance or termination pay to, or
enter into any employment or severance agreement with any director, officer
or other employee of the Company or any of its subsidiaries except in
accordance with the policies and procedures described in ANNEX B, or
establish, adopt, enter into or amend any Employee Plan (other than
amendments required pursuant to Section 6.06);
(i) take any action, other than as required by GAAP, to change
accounting policies or procedures or cash maintenance policies or procedures
(including, without limitation, procedures with respect to revenue
recognition, capitalization of development costs, payments of accounts
payable and collection of accounts receivable);
(j) make any material Tax election inconsistent with past practices or
settle or compromise any material federal, state, local or foreign tax
liability or agree to an extension of a statute of limitations for any
assessment of federal income tax or material state corporate income or
franchise tax, except to the extent the amount of any such settlement has
been reserved for on the Company's most recent SEC Report;
(k) pay, discharge, settle, or satisfy any lawsuits, claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business and consistent with past practice of liabilities
reflected or reserved against in the financial statements of the Company or
incurred in the ordinary course of business and consistent with past
practice;
(l) except as may be required by law, take any action to terminate or
amend any Employee Plan (other than amendments required pursuant to Section
6.06);
(m) permit any increase in the number of employees of the Company
employed by the Company on the date hereof other than pursuant to an
employee plan to be agreed to by the Company and Parent as promptly as
practicable after the date hereof acting reasonably and in good faith; or
(n) take, or agree in writing or otherwise to take, any of the actions
described in Sections 5.01(a) through (m) above, or any action which would
make any of the representations or warranties of the Company contained in
this Agreement untrue or incorrect or prevent the Company from performing or
cause the Company not to perform its covenants hereunder or result in any of
the conditions to the Merger set forth herein not being satisfied.
SECTION 5.02. NO SOLICITATION. (a) The Company shall not, directly or
indirectly, through any officer, director, employee, representative or agent of
the Company or any of its subsidiaries, solicit or encourage (including by way
of furnishing information) the initiation of any inquiries or proposals
regarding any merger, take-over bid, sale of substantial assets, sale of shares
of capital stock (including without limitation by way of a tender or exchange
offer) or similar transactions involving the Company or any subsidiaries of the
Company (any of the foregoing inquiries or proposals being referred to herein as
an "ACQUISITION PROPOSAL"); PROVIDED, HOWEVER, that nothing contained in this
Agreement shall prevent the Board from referring any third party that contacts
the Company on an unsolicited basis after the date hereof concerning an
Alternative Transaction (as defined in Section 8.03(c)) to this Section 5.02(a)
(provided that Parent is concurrently notified of such contact and referral).
Nothing contained in this Section 5.02(a) or any other provision of this
Agreement shall prevent the Board, after receiving an opinion of outside counsel
to the effect that the Board is required to do so in order to discharge properly
its fiduciary duties, from considering, negotiating, approving and recommending
to the stockholders of the Company an unsolicited bona fide written Acquisition
Proposal which the Board of Directors of the Company determines in good faith
(after consultation with its financial advisors) (i) would result in a
transaction more favorable to the Company's stockholders than the transaction
contemplated by this Agreement and (ii) is made by a person financially capable
of consummating such Acquisition Proposal (any such Acquisition Proposal being
referred to herein as a "SUPERIOR PROPOSAL").
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(b) The Company shall immediately notify Parent after receipt of any
Acquisition Proposal or any request for nonpublic information relating to the
Company or any of its subsidiaries in connection with an Acquisition Proposal or
for access to the properties, books or records of the Company or any subsidiary
by any person or entity that informs the Board that it is considering making, or
has made, an Acquisition Proposal. Such notice to Parent shall be made orally
and in writing and shall indicate in reasonable detail the identity of the
offeror and the terms and conditions of such proposal, inquiry or contact.
(c) If the Board receives a request for material nonpublic information by a
party who makes a bone fide Acquisition Proposal and the Board determines that
such proposal, if consummated pursuant to its terms is a Superior Proposal,
then, and only in such case, the Company may, subject to the execution of a
confidentiality agreement substantially similar to that then in effect between
the Company and Parent, provide such party with access to information regarding
the Company.
(d) The Company shall immediately cease and cause to be terminated any
existing discussions or negotiations with any parties (other than Parent and
Merger Sub) conducted heretofore with respect to any of the foregoing. The
Company agrees not to release any third party from any confidentiality or
standstill agreement to which the Company is a party.
(e) The Company shall ensure that the officers, directors and employees of
the Company and its subsidiaries and any investment banker or other advisor or
representative retained by the Company are aware of the restrictions described
in this Section; and shall be responsible for any breach of this Section 5.02 by
such bankers, advisors and representatives (PROVIDED, HOWEVER, that the Company
shall not be liable for any consequential damages with respect to such
breaches).
SECTION 5.03. CONDUCT OF BUSINESS BY PARENT PENDING THE MERGER. During the
period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, Parent covenants and agrees
that, unless the Company shall otherwise agree in writing, Parent shall conduct
its business, and cause the businesses of its subsidiaries to be conducted, in
the ordinary course of business and consistent with past practice, other than
actions taken by Parent or its subsidiaries in contemplation of the Merger, and
shall not directly or indirectly do, or propose to do, any of the following
without the prior written consent of the Company:
(a) amend or otherwise change Parent's Certificate of Incorporation
(other than with respect to immaterial changes thereto), or amend the terms
of the Parent Common Stock;
(b) acquire or agree to acquire, by merging or consolidating with, by
purchasing an equity interest in or a portion of the assets of, or by any
other manner, any business or any corporation, partnership, association or
other business organization or division thereof, or otherwise acquire or
agree to acquire any assets of any other person, which, in each case, would
materially delay or prevent the consummation of the transactions
contemplated by this Agreement;
(c) sell, transfer, license, sublicense or otherwise dispose of any
material assets; or
(d) take, or agree in writing or otherwise to take, any of the actions
described in Section 5.03(a) through (c) above, or any action which would
make any of the representations or warranties of Parent contained in this
Agreement untrue or incorrect or prevent Parent from performing or cause
Parent not to perform its covenants hereunder or would result in any of the
conditions to the Merger to be satisfied by Parent not being satisfied.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT. As
promptly as practicable after the execution of this Agreement, the Company and
Parent shall prepare and file with the SEC preliminary proxy materials which
shall constitute the Proxy Statement of the Company and the
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prospectus of Parent with respect to the Parent Common Stock to be issued in
connection with the Merger. As promptly as practicable after comments are
received from the SEC thereon and after the furnishing by the Company and Parent
of all information required to be contained therein, the Company and Parent
shall file with the SEC a combined proxy and registration statement on Form S-4
(or on such other form as shall be appropriate) relating to the approval of the
Merger by the stockholders of the Company and shall use all reasonable efforts
to cause the Registration Statement to become effective as soon thereafter as
practicable. The Proxy Statement shall include the recommendation of the Board
in favor of the Merger, subject to the second sentence of Section 5.02(a).
SECTION 6.02. STOCKHOLDERS' MEETING. The Company shall in accordance with
Delaware Law and the Company's Certificate of Incorporation and Bylaws call and
hold the Company Stockholders' Meeting as promptly as practicable for the
purpose of voting upon the approval of the Merger, PROVIDED that the Company
shall not be required to call or hold a stockholders meeting while the Offer
remains outstanding. The Company shall use its reasonable best efforts to hold
the Company Stockholders' Meeting as soon as practicable after the date on which
the Registration Statement becomes effective. Subject to the second sentence of
Section 5.02(a), the Company shall use its reasonable best efforts to solicit
from its stockholders proxies in favor of the approval of the Merger, and shall
take all other action necessary or advisable to secure the vote or consent of
stockholders required by Delaware Law to obtain such approvals.
SECTION 6.03. ACCESS TO INFORMATION; CONFIDENTIALITY. Upon reasonable
notice and subject to restrictions contained in confidentiality agreements to
which such party is subject, the Company and Parent shall each (and shall cause
each of their subsidiaries to) afford to the officers, employees, accountants,
counsel and other representatives of the other, reasonable access, during the
period prior to the Effective Time, to all its properties, books, contracts,
commitments and records and, during such period, the Company and Parent each
shall (and shall cause each of their subsidiaries to) furnish promptly to the
other all information concerning its business, properties and personnel as such
other party may reasonably request, and each shall make available to the other
the appropriate individuals (including attorneys, accountants and other
professionals) for discussion of the other's business, properties and personnel
as either party may reasonably request. Each party shall keep such information
confidential in accordance with the terms of the confidentiality agreement dated
December 15, 1996 (the "CONFIDENTIALITY AGREEMENT") between Parent and the
Company.
SECTION 6.04. CONSENTS; APPROVALS. The Company and Parent shall each use
their best efforts to obtain all consents, waivers, approvals, authorizations or
orders (including, without limitation, all United States and foreign
governmental and regulatory rulings and approvals), and the Company and Parent
shall make all filings (including, without limitation, all filings with United
States and foreign governmental or regulatory agencies) required in connection
with the authorization, execution and delivery of this Agreement by the Company
and Parent and the consummation by them of the transactions contemplated hereby.
SECTION 6.05. STOCK OPTIONS. At the Effective Time, the Company's
obligations with respect to each outstanding Option, whether vested or unvested,
shall, by virtue of this Agreement and without any further action of the
Company, Parent or the holder of any Option, be assumed by Parent. Unless
otherwise elected by Parent prior to the Effective Time, Parent shall make such
assumption in such manner that Parent (i) is a corporation "assuming a stock
option in a transaction to which Section 424(a) applies" within the meaning of
Section 424 of the Code or (ii) to the extent that Section 424 of the Code does
not apply to such Option, would be such a corporation were Section 424 of the
Code applicable to such Option; and, if not so otherwise elected, after the
Effective Time, all references to the Company in the Stock Option Plans and the
applicable stock option agreements shall be deemed to refer to Parent, which
shall have assumed the Stock Option Plans as of the Effective Time by virtue of
this Agreement and without any further action. Each Option so assumed by Parent
under this Agreement shall continue to have, and be subject to, the same terms
and conditions set forth in the applicable Stock Option Plan and the applicable
stock option agreement as in effect immediately prior to the Effective Time,
except that (i) such Option will be exercisable for that number of shares of
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Parent Common Stock equal to the product of the number of shares of Company
Common Stock that were purchasable under such Option immediately prior to the
Effective Time multiplied by 1.0, subject to adjustment in the manner provided
for in Section 2.06(e), rounded up to the nearest whole number of shares of
Parent Common Stock, and (ii) the per share exercise price for the shares of
Parent Common Stock issuable upon exercise of such assumed Option will be equal
to the quotient determined by dividing the exercise price per share of Company
Common Stock at which such Option was exercisable immediately prior to the
Effective Time by 1.0, subject to adjustment in the manner provided for in
Section 2.06(e), and rounding the resulting exercise price up to the nearest
whole cent. Parent shall use its best efforts to ensure, that Options intended
to qualify as incentive stock options under Section 422 of the Code prior to the
Effective Time continue to so qualify after the Effective Time.
SECTION 6.06. COMPANY STOCK PURCHASE PLAN. (a) The Company shall take such
actions as are necessary to cause the "exercise date" (referred to as the last
day of the "Purchase Period", as such term is used in the Company Stock Purchase
Plan) applicable to the then current Purchase Period to be the last trading day
on which the Company Common Stock is traded on the New York Stock Exchange
immediately prior to the Effective Time (the "FINAL COMPANY PURCHASE DATE");
PROVIDED, THAT, such change in the "exercise date" shall be conditioned upon the
consummation of the Merger. On the Final Company Purchase Date, the Company
shall apply the funds credited as of such date under the Company Stock Purchase
Plan within each participant's payroll withholdings account to the purchase of
whole shares of Company Common Stock in accordance with the terms of the Company
Stock Purchase Plan. The cost to each participant in the Company Stock Purchase
Plan for shares of Company Common Stock shall be the lower of 85% of the closing
sale price of Company Common Stock, as reported on the New York Stock Exchange
composite tape (as published in THE WALL STREET JOURNAL) on (i) the first day of
the then current Purchase Period or (ii) the last trading day on or prior to the
Final Company Purchase Date.
(b) Employees of the Company as of the Effective Time shall be permitted to
participate in Parent's Employee Stock Purchase Plan commencing on the first
enrollment date following the Effective Time, subject to compliance with the
eligibility provisions of such plan (with employees receiving credit, for
purposes of such eligibility provisions, for service with the Company).
SECTION 6.07. EMPLOYMENT MATTERS. (a) The Surviving Corporation and Parent
shall honor the terms and provisions in the Employment Agreement, dated May 27,
1995, between J. Phillip Samper and the Company.
(b) As contemplated by Section 3.04(d), the Parachute Plans shall not be
applicable to the Surviving Corporation or Parent after consummation of the
transactions contemplated hereby. Parent currently intends to employ,
immediately after the Offer, a substantial portion of the employees of the
Company. Parent, Merger Sub and the Company agree that the policies and
procedures specified on Annex B shall apply for the twelve-month period
following the closing of the Offer.
SECTION 6.08. AGREEMENTS OF AFFILIATES. The Company shall deliver to
Parent, prior to the date the Registration Statement becomes effective under the
Securities Act, a letter (the "AFFILIATE LETTER") identifying all persons who
are, or may be deemed to be, at the time of the Company Stockholders' Meetings,
"affiliates" of the Company for purposes of Rule 145 under the Securities Act.
The Company shall use its best efforts to cause each person who is identified as
an "affiliate" in the Affiliate Letter to deliver to Parent, prior to the
Effective Time, a written agreement (an "AFFILIATE AGREEMENT") in substantially
the form of Annex C hereto.
SECTION 6.09. INDEMNIFICATION. (a) The Certificate of Incorporation of the
Surviving Corporation shall contain the provisions with respect to
indemnification set forth in the Certificate of Incorporation and By-Laws of the
Company, which provisions shall not be amended, repealed or otherwise modified
for a period of six years from the Effective Time in any manner that would
adversely affect the rights thereunder of individuals who at the Effective Time
were directors or officers of the Company, unless such modification is required
by law.
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(b) The Company shall, to the fullest extent permitted under applicable law
or under the Company's Certificate of Incorporation or By-Laws and regardless of
whether the Merger becomes effective, indemnify and hold harmless, and after the
Effective Time, the Surviving Corporation and Parent shall, to the fullest
extent permitted under applicable law or under the Surviving Corporation's and
Parent's, as the case may be, Certificate of Incorporation or By-Laws, indemnify
and hold harmless, each director and officer of the Company or any of its
subsidiaries (collectively, the "INDEMNIFIED PARTIES") against any costs or
expenses (including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to any action or omission by such
director or officer by virtue of their holding the office of director or officer
occurring at or prior to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement) for a period of six years after the
Effective Time. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i) any
counsel retained by the Indemnified Parties for any period after the Effective
Time shall be reasonably satisfactory to the Surviving Corporation and Parent
and (ii) neither the Surviving Corporation nor Parent shall be liable for any
settlement effected without its written consent (which consent shall not be
unreasonably withheld).
SECTION 6.10. NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
(i) the occurrence, or non-occurrence, of any event the occurrence, or
non-occurrence, of which would be likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate and (ii) any failure of
the Company, Parent or Merger Sub, as the case may be, materially to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder; PROVIDED, HOWEVER, that the delivery of any notice pursuant to
this Section shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice; and PROVIDED, FURTHER that failure
to give such notice shall not be treated as a breach of covenant for the
purposes of Sections 7.02(a) and 7.03(a) unless the failure to give such notice
results in material prejudice to the other party.
SECTION 6.11. FURTHER ACTION. Upon the terms and subject to the conditions
hereof, each of the parties hereto in good faith shall use all commercially
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all other things necessary, proper or advisable to consummate
and make effective as promptly as practicable the transactions contemplated by
this Agreement, to obtain in a timely manner all necessary waivers, consents and
approvals and to effect all necessary registrations and filings, and to
otherwise satisfy or cause to be satisfied all conditions precedent to its
obligations under this Agreement.
SECTION 6.12. PUBLIC ANNOUNCEMENTS. Parent and the Company shall consult
with each other before issuing any press release or otherwise making any public
statements with respect to the Merger or this Agreement and shall not issue any
such press release or make any such public statement without the prior consent
of the other party, which shall not be unreasonably withheld; PROVIDED, HOWEVER,
that a party may, without the prior consent of the other party, issue such press
release or make such public statement as may upon the advice of counsel be
required by law or the NYSE if it has used all reasonable efforts to consult
with the other party.
SECTION 6.13. LISTING OF PARENT COMMON SHARES. Parent shall use its
reasonable best efforts to cause the shares of Parent Common Stock to be issued
in the Merger, upon exercise of the Options and upon conversion of the
Convertible Debentures,to be approved for listing on the NYSE.
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ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01. CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) EFFECTIVENESS OF THE REGISTRATION STATEMENT. The Registration
Statement shall have been declared effective by the SEC under the Securities
Act. No stop order suspending the effectiveness of the Registration
Statement shall have been issued by the SEC and no proceedings for that
purpose and no similar proceeding in respect of the Proxy Statement shall
have been initiated or threatened by the SEC;
(b) STOCKHOLDER APPROVAL. This Agreement and the Merger shall have
been approved and adopted by the requisite vote of the stockholders of the
Company;
(c) HSR ACT. The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated;
(d) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary restraining
order, preliminary or permanent injunction or other order issued by any
court of competent jurisdiction or other similar binding legal restraint or
prohibition (an "INJUNCTION") preventing the consummation of the Merger
shall be in effect, nor shall any proceeding brought by any administrative
agency or commission or other governmental authority or instrumentality,
domestic or foreign, seeking any of the foregoing be pending; and there
shall not be any action taken, or any statute, rule, regulation or order
enacted, entered, enforced or deemed applicable to the Merger, which makes
the consummation of the Merger illegal;
(e) NYSE LISTING. The Parent Common Shares to be issued in the Merger,
upon exercise of the Options and upon conversion of the Convertible
Debentures shall have been approved for listing, subject to notice of
issuance, on the NYSE; and
(f) OFFER. Parent shall have made, or caused to be made, the Offer and
shall have purchased, or caused to be purchased, Shares pursuant to the
Offer.
SECTION 7.02. ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER
SUB. The obligations of Parent and Merger Sub to effect the Merger are also
subject to the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Company contained in this Agreement shall be true and correct in all
respects on and as of the Effective Time, except for (i) changes
contemplated by this Agreement, (ii) those representations and warranties
which address matters only as of a particular date (which shall remain true
and correct as of such date) and (iii) where the failure to be true and
correct would not have a Material Adverse Effect on the Company, with the
same force and effect as if made on and as of the Effective Time;
(b) AGREEMENTS AND COVENANTS. The Company shall have performed or
complied in all material 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;
(c) CONSENTS OBTAINED. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required
to be made, by the Company for the authorization, execution and delivery of
this Agreement and the consummation by it of the transactions contemplated
hereby shall have been obtained and made by the Company;
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(d) GOVERNMENTAL ACTIONS. There shall not have been instituted,
pending or threatened any action or proceeding (or any investigation or
other inquiry that might result in such an action or proceeding) by any
governmental authority or administrative agency before any governmental
authority, administrative agency or court of competent jurisdiction, nor
shall there be in effect any judgment, decree or order of any governmental
authority, administrative agency or court of competent jurisdiction, in
either case, seeking to prohibit or limit Parent from exercising all
material rights and privileges pertaining to its ownership of the Surviving
Corporation or the ownership or operation by Parent or any of its
subsidiaries of all or a material portion of the business or assets of
Parent or any of its subsidiaries, or seeking to compel Parent or any of its
subsidiaries to dispose of or hold separate all or any material portion of
the business or assets of Parent or any of its subsidiaries, as a result of
the Merger or the transactions contemplated by this Agreement;
(e) MATERIAL ADVERSE CHANGE. Since the date of this Agreement, there
shall have been no change, occurrence or circumstance in the business,
results of operations or financial condition of the Company or any
subsidiary of the Company having or reasonably likely to have a Material
Adverse Effect; and
(f) AFFILIATE AGREEMENTS. Parent shall have received from each officer
and director person who is identified in the Affiliate Letter as an
"affiliate" of the Company an Affiliate Agreement, and each such Affiliate
Agreement shall be in full force and effect.
SECTION 7.03. ADDITIONAL CONDITIONS TO OBLIGATION OF THE COMPANY. The
obligation of the Company to effect the Merger is also subject to the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Parent and Merger Sub contained in this Agreement shall be true and
correct in all respects on and as of the Effective Time, except for (i)
changes contemplated by this Agreement, (ii) those representations and
warranties which address matters only as of a particular date (which shall
remain true and correct as of such date) and (iii) failures to be true and
correct that would not have a Material Adverse Effect on the Company, with
the same force and effect as if made on and as of the Effective Time;
(b) AGREEMENTS AND COVENANTS. Parent and Merger Sub shall have
performed or complied in all material 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;
(c) CONSENTS OBTAINED. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required
to be made, by Parent and Merger Sub for the authorization, execution and
delivery of this Agreement and the consummation by them of the transactions
contemplated hereby shall have been obtained and made by Parent and Merger
Sub; and
(d) MATERIAL ADVERSE CHANGE. Since the date of this Agreement, there
shall have been no change, occurrence or circumstance in the business,
results of operations or financial condition of Parent or any subsidiary of
Parent having or reasonably likely to have a Material Adverse Effect.
ARTICLE VIII
TERMINATION
SECTION 8.01. TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, notwithstanding approval thereof by the
stockholders of the Company:
(a) by mutual written consent duly authorized by the boards of directors
of Parent and the Company; or
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(b) by either Parent or the Company if the Merger shall not have been
consummated by September 30, 1996 (PROVIDED that the right to terminate this
Agreement under this Section 8.01(b) 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 Merger to occur on or before such
date); or
(c) by either Parent or the Company if a court of competent jurisdiction
or governmental, regulatory or administrative agency or commission shall
have issued a non-appealable final order, decree or ruling or taken any
other action, in each case having the effect of permanently restraining,
enjoining or otherwise prohibiting the Merger; or
(d) by Parent, if the Offer shall not have been consummated prior to
June 30, 1996 (PROVIDED that Parent is not then in material breach hereof);
or
(e) by Parent, if (i) the Board shall withdraw, modify or change its
recommendation of this Agreement, the Offer or the Merger in a manner
adverse to Parent or shall have resolved to do so; or (ii) the Board shall
have taken a "neutral" position with respect to an Alternative Transaction
(as defined in Section 8.03(c)); or (iii) any person or "group" (other than
Parent or an affiliate of Parent) becomes the owner of 20% or more of the
outstanding shares of Company Common Stock; or
(f) by Parent or the Company, upon a breach of any representation,
warranty, covenant or agreement on the part of the Company or Parent and
Merger Sub, respectively, set forth in this Agreement or if any
representation or warranty of the Company or Parent and Merger Sub,
respectively, shall have become untrue, in either case, such that the
conditions set forth in Section 7.02(a) or 7.02(b), or Section 7.03(a) or
7.03(b), would not be satisfied (a "TERMINATING BREACH"), PROVIDED that, if
such Terminating Breach is curable prior to the expiration of 30 days from
its occurrence (but in no event later than September 30, 1996) by Parent or
the Company, as the case may be, through the exercise of its reasonable best
efforts and for so long as Parent or the Company, as the case may be,
continues to exercise such reasonable best efforts, neither the Company nor
Parent, respectively, may terminate this Agreement under this Section
8.01(f) until the expiration of such period without such Terminating Breach
having been cured; or
(g) by the Company or Parent, if the Board shall have resolved to
accept, or accepted, a Superior Proposal.
SECTION 8.02. EFFECT OF TERMINATION. In the event of the termination of
this Agreement pursuant to Section 8.01, this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto or any of
its affiliates, directors, officers or stockholders except (i) as set forth in
Section 8.03 and Section 9.01 hereof, and (ii) nothing herein shall relieve any
party from liability for any willful breach hereof.
SECTION 8.03. FEES AND EXPENSES. (a) Except as set forth in this Section
8.03, all fees and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses, whether or not the Merger is consummated.
(b) The Company shall pay Parent a fee of $25,000,000 (the "FEE"), plus
actual, documented and reasonable out-of-pocket expenses of Parent, not in
excess of $2,500,000, relating to the transactions contemplated by this
Agreement (including, but not limited to, fees and expenses of Parent's
counsel), upon the earliest to occur of the following events:
(i) the termination of this Agreement by Parent pursuant to Section
8.01(e), or by Parent or the Company pursuant to Section 8.01(g); or
(ii) the termination of this Agreement by Parent pursuant to Section
8.01(f) after a willful breach by the Company of this Agreement; or
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(iii) the termination of this Agreement by Parent pursuant to Section
8.01(d), if, at the time of termination there has been publicly announced
and not withdrawn an Alternative Transaction (as defined in Section
8.03(c));
(iv) the consummation of an Alternative Transaction on or prior to
December 31, 1996.
PROVIDED, HOWEVER, that no Fee or expense reimbursement shall be payable
pursuant to this Section 8.03(b) if Parent or Merger Sub shall then be in
intentional material breach of its obligations hereunder.
(c) As used herein, "ALTERNATIVE TRANSACTION" means (i) a transaction
pursuant to which any person (or group of persons) other than Parent or its
affiliates (a "THIRD PARTY") acquires more than 20% of the outstanding Shares,
whether from the Company or pursuant to a tender offer or exchange offer or
otherwise, (ii) a merger or other business combination involving the Company
pursuant to which any Third Party acquires more than 20% of the outstanding
equity securities of the Company or the entity surviving such merger or business
combination or (iii) any other transaction pursuant to which any Third Party
acquires control of assets (including for this purpose the outstanding equity
securities of subsidiaries of the Company, and the entity surviving any merger
or business combination including any of them) of the Company and its
subsidiaries having a fair market value equal to more than 20% of the fair
market value of all the assets of the Company and its subsidiaries, taken as a
whole, immediately prior to such transaction; PROVIDED, HOWEVER, that the term
Alternative Transaction shall not include any acquisition of securities by a
broker dealer in connection with a bona fide public offering of such securities.
(d) The Fee payable pursuant to Section 8.03(b) shall be paid within one
business day after the first to occur of the events described in Section
8.03(b)(i), (ii), (iii) and (iv).
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. Except as otherwise provided in this Section 9.01, the
representations, warranties and agreements of each party hereto shall 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 or directors, whether prior to or after the execution of
this Agreement. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 8.01, as the case may be, except that the agreements set
forth in Section 6.08 shall survive the Effective Time indefinitely and those
set forth in Section 8.03 shall survive termination indefinitely. The
Confidentiality Agreement shall survive termination of this Agreement as
provided therein.
SECTION 9.02. 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 as of the date delivered or mailed if delivered personally or 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 shall be effective upon receipt)
or sent by electronic transmission, with confirmation received, to the telecopy
number specified below:
(a) If to Parent or Merger Sub:
Silicon Graphics, Inc.
2011 North Shoreline Boulevard
Mail Stop 710
Mountain View, California 94043-1389
Telecopier No.: (415) 965-1586
Attention: Legal Services
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With a copy to:
Shearman & Sterling
555 California Street, Suite 2000
San Francisco, CA 94104
Telecopier No.: (415) 616-1199
Attention: Michael J. Kennedy, Esq.
(b) If to the Company:
Cray Research, Inc.
Cray Research Park
665A Lone Oak Drive
Eagan, Minnesota 55121
Telecopier No.: (612) 683-7199
Attention: General Counsel
With a copy to:
Proskauer Rose Goetz & Mendelsohn LLP
1585 Broadway
New York, NY 10036
Telecopier No.: (212) 969-2900
Attention: Daniel R. Kaplan, Esq.
SECTION 9.03. CERTAIN DEFINITIONS. For purposes of this Agreement, the
term:
(a) "AFFILIATES" means a person that directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with, the first mentioned person; including, without limitation, any
partnership or joint venture in which the first mentioned person (either
alone, or through or together with any other subsidiary) has, directly or
indirectly, an interest of 10 percent or more;
(b) "BENEFICIAL OWNER" with respect to any shares of Company Common
Stock, means a person who shall be deemed to be the beneficial owner of such
shares (i) which such person or any of its affiliates or associates
beneficially owns, directly or indirectly, (ii) which such person or any of
its affiliates or associates (as such term is defined in Rule 12b-2 of the
Exchange Act) has, directly or indirectly, (A) the right to acquire (whether
such right is exercisable immediately or subject only to the passage of
time), pursuant to any agreement, arrangement or understanding or upon the
exercise of consideration rights, exchange rights, warrants or options, or
otherwise, or (B) the right to vote pursuant to any agreement, arrangement
or understanding or (iii) which are beneficially owned, directly or
indirectly, by any other persons with whom such person or any of its
affiliates or person with whom such person or any of its affiliates or
associates has any agreement, arrangement or understanding for the purpose
of acquiring, holding, voting or disposing of any shares;
(c) "BUSINESS DAY" means any day other than a day on which banks in San
Francisco are required or authorized to be closed;
(d) "CONTROL" (including the terms "CONTROLLED BY" and "UNDER COMMON
CONTROL WITH") means 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, as trustee or
executor, by contract or credit arrangement or otherwise;
(e) when used in connection with the Company or any of its
subsidiaries, or Parent or any of its subsidiaries, as the case may be, the
term "MATERIAL ADVERSE EFFECT" means any change or effect that, individually
or when taken together with all other such changes or effects that have
33
<PAGE>
occurred prior to the date of determination of the occurrence of the
Material Adverse Effect, is or is reasonably likely to be materially adverse
to the business, operations, condition (financial or otherwise), assets
(including intangible assets) or liabilities (including, without limitation,
contingent liabilities) or prospects of the Company and its subsidiaries or
Parent and its subsidiaries, as the case may be, in each case taken as a
whole;
(f) "PERSON" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d)(3) of the Exchange Act); and
(g) "SUBSIDIARY" or "SUBSIDIARIES" of the Company, the Surviving
Corporation, Parent or any other person means any corporation, partnership,
joint venture or other legal entity of which the Company, the Surviving
Corporation, Parent or such other person, as the case may be (either alone
or through or together with any other subsidiary), owns, directly or
indirectly, more than 50% of the stock or other equity 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 or other legal entity.
SECTION 9.04. AMENDMENT. 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
by law requires further approval by such stockholders without such further
approval. This Agreement may not be amended except by an instrument in writing
signed by the parties hereto.
SECTION 9.05. WAIVER. At any time prior to the Effective Time, any party
hereto may with respect to any other party hereto (a) extend the time for the
performance of any of the obligations or other acts, (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid if set
forth in an instrument in writing signed by the party or parties to be bound
thereby.
SECTION 9.06. HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 9.07. 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 shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. 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 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 9.08. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and supersedes all prior agreements and undertakings (other than the
Confidentiality Agreement), both written and oral, among the parties, or any of
them, with respect to the subject matter hereof and, except as otherwise
expressly provided herein, are not intended to confer upon any other person any
rights or remedies hereunder.
SECTION 9.09. ASSIGNMENT, MERGER SUB. This Agreement shall not be assigned
by operation of law or otherwise, except that Parent and Merger Sub may assign
all or any of their rights hereunder to any affiliate provided that no such
assignment shall relieve the assigning party of its obligations hereunder.
SECTION 9.10. PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied (including, without limitation, Section 6.07
hereof), is intended to or shall confer upon any other person any right, benefit
34
<PAGE>
or remedy of any nature whatsoever under or by reason of this Agreement, other
than Section 6.08 (which is intended to be for the benefit of the Indemnified
Parties and may be enforced by such Indemnified Parties).
SECTION 9.11. 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 shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall 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 of, any rights or
remedies otherwise available.
SECTION 9.12. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF DELAWARE.
SECTION 9.13. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 9.14. WAIVER OF JURY TRIAL. EACH OF PARENT, MERGER SUB AND THE
COMPANY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL
RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED
UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
SILICON GRAPHICS, INC.
By /s/ Thomas A. Jermoluk
-----------------------------------
Name: Thomas A. Jermoluk
Title: President and Chief
Operating Officer
C ACQUISITION CORPORATION
By /s/ Thomas A. Jermoluk
-----------------------------------
Name: Thomas A. Jermoluk
Title: President
CRAY RESEARCH, INC.
By /s/ J. Phillip Samper
-----------------------------------
Name: J. Phillip Samper
Title: Chairman and Chief
Executive Officer
35
<PAGE>
ANNEX A
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, subject to the terms of
the Merger Agreement, Merger Sub shall not be required to accept for payment or
pay for any Shares tendered pursuant to the Offer, and may terminate or amend
the Offer and may postpone the acceptance for payment of and payment for Shares
tendered, if (i) the Minimum Condition shall not have been satisfied, (ii) any
applicable waiting period under the HSR Act shall not have expired or been
terminated prior to the expiration of the Offer, or (iii) at any time on or
after the date of this Agreement, and prior to the acceptance for payment of
Shares, any of the following conditions shall exist:
(a) there shall have been instituted or be pending or threatened any
action or proceeding by any governmental or quasi-governmental authority or
agency, domestic or foreign, before any court or governmental,
administrative or regulatory authority or agency, of competent jurisdiction,
domestic or foreign, (i) challenging or seeking to make illegal, materially
delay or otherwise directly or indirectly restrain or prohibit or make
materially more costly the making of the Offer, the acceptance for payment
of, or payment for, any Shares by Parent, Merger Sub or any other affiliate
of Parent, or the consummation of any other Transaction, or seeking to
obtain material damages in connection with any Transaction; (ii) seeking to
prohibit or limit materially the ownership or operation by the Company,
Parent or any of their subsidiaries of all or any material portion of the
business or assets of the Company, Parent or any of their subsidiaries, or
to compel the Company, Parent or any of their subsidiaries to dispose of or
hold separate all or any material portion of the business or assets of the
Company, Parent or any of their subsidiaries, as a result of the
Transactions; (iii) seeking to impose or confirm material limitations on the
ability of Parent, Merger Sub or any other affiliate of Parent to exercise
effectively full rights of ownership of any Shares, including, without
limitation, the right to vote any Shares acquired by Merger Sub pursuant to
the Offer or otherwise on all matters properly presented to the Company's
stockholders, including, without limitation, the approval and adoption of
this Agreement and the transactions contemplated hereby; (iv) seeking to
require divestiture by Parent, Merger Sub or any other affiliate of Parent
of any Shares; or (v) which otherwise has a Material Adverse Effect or which
is reasonably likely to materially adversely affect the business,
operations, properties, condition (financial or otherwise), assets or
liabilities (including, without limitation, contingent liabilities) or
prospects of the Company or Parent;
(b) there shall have been any action taken, or any statute, rule,
regulation, legislation, interpretation, judgment, order or injunction
enacted, entered, enforced, promulgated, amended, issued or deemed
applicable to (i) Parent, the Company or any subsidiary or affiliate of
Parent or the Company or (ii) any Transaction, by any legislative body,
court, government or governmental, administrative or regulatory authority or
agency, domestic or foreign, other than the routine application of the
waiting period provisions of the HSR Act to the Offer or the Merger, which
is reasonably likely in the good faith judgment of the Parent to result,
directly or indirectly, in any of the consequences referred to in clauses
(i) through (v) of paragraph (a) above;
(c) after February 25, 1996, there shall have occurred any change,
condition, event or development that has a Material Adverse Effect on the
Company;
(d) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on the NYSE, (ii) a
declaration of a banking moratorium or any suspension of payments in respect
of banks in the United States, (iii) a commencement of a war or armed
hostilities or other national or international crisis directly or indirectly
involving the United States or (iv) in the case of any of the foregoing
existing on the date hereof, in the good faith judgment of the Parent a
material acceleration or worsening thereof;
A-1
<PAGE>
(e) (i) it shall have been publicly disclosed or Merger Sub shall have
otherwise learned that beneficial ownership (determined for the purposes of
this paragraph as set forth in Rule 13d-3 promulgated under the Exchange
Act) of 20% or more of the then outstanding Shares has been acquired by any
person, other than Parent or any of its affiliates or (ii) (A) the Board or
any committee thereof shall have withdrawn or modified in a manner adverse
to Parent or Merger Sub the approval or recommendation of the Offer, the
Merger or the Merger Agreement, or approved or recommended any takeover
proposal or any other acquisition of Shares other than the Offer and the
Merger or (B) the Board or any committee thereof shall have resolved to do
any of the foregoing;
(f) any representation or warranty of the Company in the Merger
Agreement which is qualified as to materiality shall not be true and correct
or any such representation or warranty that is not so qualified shall not be
true and correct in any material respect, in each case as if such
representation or warranty was made as of such time on or after the date of
the Merger Agreement, except for (i) changes contemplated by the Merger
Agreement, (ii) those representations and warranties which address matters
only as of a particular date (which shall remain true and correct as of such
date) and (iii) where the failure to be true and correct would not have a
Material Adverse Effect on the Company;
(g) the Company shall have failed to perform in any material respect any
obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under the
Merger Agreement;
(h) the Merger Agreement shall have been terminated; or
(i) Merger Sub and the Company shall have agreed that Merger Sub shall
terminate the Offer or postpone the acceptance for payment of or payment for
Shares thereunder;
which, in the reasonable good faith judgment of Merger Sub in any such case, and
regardless of the circumstances (including any action or inaction by Parent or
any of its affiliates) giving rise to any such condition, makes it inadvisable
to proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Merger Sub and Parent
and may be asserted by Merger Sub or Parent regardless of the circumstances
giving rise to any such condition or may be waived by Merger Sub or Parent in
whole or in part at any time and from time to time in their sole discretion. The
failure by Parent or Merger Sub at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right; the waiver of any such
right with respect to particular facts and other circumstances shall not be
deemed a waiver with respect to any other facts and circumstances; and each such
right shall be deemed an ongoing right that may be asserted at any time and from
time to time.
A-2
<PAGE>
ANNEX B
CERTAIN EMPLOYEE MATTERS
POLICIES AND PROCEDURES
<TABLE>
<S> <C> <C>
I. GENERAL: In general, the Surviving Corporation shall offer severance
benefits as provided in the Cray Research, Inc. 1995 Amended
and Restated Severance Pay Plan for Cray Research, Inc. (the
"EXISTING PLAN").
II. BASE PAYMENTS: Employees whose employment is terminated for one of the
reasons described in Section III (ii) below shall be entitled
to the following payments:
(i) EXECUTIVE OFFICERS (defined as Robert H. Ewald, Laurence
L. Betterley, Irene M. Qualters and Michael R. Dungworth)
shall be entitled to a lump sum cash payment equal to two
times such Executive Officer's Base Pay;
(ii) OFFICERS AND OFFICER EQUIVALENTS (defined consistent
with the Company's existing internal designation consisting of
approximately 50 people) shall be entitled to a lump sum
cash payment equal to one times such Officer's and
Officer Equivalent's Base Pay; and
(iii) ALL OTHER EMPLOYEES (including part-time employees)
shall be entitled to a lump sum cash payment calculated and
payable pursuant to Section C of the Existing Plan
plus, to the extent consistent with the Company's most
recent reduction in force, an additional per individual
payment not to exceed two months' Base Pay agreed upon
by Parent and the Company acting reasonably and in good
faith.
III. OTHER BENEFITS: Other severance benefits shall be offered as provided in the
Existing Plan (including, without limitation, payment for
accrued and unused personal time), subject to the following:
(i) in all cases where relevant, the provision of health,
life, disability and COBRA benefits (provided that, for the
purposes of COBRA, Parent shall pay for three months of
the employee's portion of the cost of such terminated
employee's medical insurance prior to the date of such
employee's termination) as offered by Parent to its
employees shall be deemed to satisfy the requirements of
the Existing Plan; and
(ii) termination shall mean elimination of a person's job,
termination without cause and resignation for "good
reason," which shall include only the following: (i) 15%
or more reduction in a person's Base Pay or (ii)
relocation more than 35 miles from a person's then
current work location.
IV. PERFORMANCE These policies and procedures shall not apply to terminations
EVALUATIONS: in connection with normal cause performance evaluations.
</TABLE>
B-1
<PAGE>
<TABLE>
<S> <C> <C>
V. BASE PAY: Means all regular straight time earnings, exclusive of payment
for overtime, shift premiums, incentive compensation,
incentive payments, bonuses, commissions or other
compensation.
VI. COMMUNICATIONS: Between the date hereof and consummation of the Offer, Parent
and Company shall co-ordinate communications regarding these
policies and procedures to Company employees
</TABLE>
B-2
<PAGE>
ANNEX C
FORM OF AFFILIATE AGREEMENT
, 1996
Silicon Graphics, Inc.
2011 N. Shoreline Blvd.
Mail Stop 710
Mountain View, CA 94043-1389
Attention: Legal Services
Ladies and Gentlemen:
Pursuant to the terms of the Agreement and Plan of Merger dated as of
February 25, 1996 (the "AGREEMENT"), among Silicon Graphics, Inc., a Delaware
corporation ("PARENT"), C Acquisition Corporation, a Delaware corporation and
wholly owned subsidiary of Parent ("MERGER SUB"), and Cray Research, Inc., a
Delaware corporation (the "COMPANY"), Parent will acquire the Company through
the merger of Merger Sub with and into the Company (the "MERGER"). Subject to
the terms and conditions of the Agreement, at the Effective Time (as defined in
the Agreement), outstanding shares of the common stock, par value $1.00 per
share, of the Company ("COMPANY COMMON STOCK") will be converted into the right
to receive shares of the common stock, par value $0.001 per share, of Parent
("PARENT COMMON STOCK"), and, in certain events, cash on the basis described in
the Agreement.
The undersigned has been advised that as of the date hereof he, she or it
may be deemed to be an "affiliate" of the Company, as the term "affiliate" is
defined for purposes of paragraphs (c) and (d) of Rule 145 of the Rules and
Regulations (the "RULES AND REGULATIONS") of the Securities and Exchange
Commission (the "COMMISSION") under the Securities Act of 1933, as amended (the
"ACT").
The undersigned understands that the representations, warranties and
covenants set forth herein will be relied upon by Parent, stockholders of
Parent, the Company, other stockholders of the Company and their respective
counsel and accountants.
The undersigned represents and warrants to and agrees with Parent that:
1. The undersigned has full power to execute and deliver this Affiliate
Agreement and to make the representations and warranties herein and to perform
its obligations hereunder.
2. The undersigned has carefully read this letter and the Agreement and
discussed its requirements and other applicable limitations upon his, her or its
ability to sell, transfer or otherwise dispose of Parent Common Stock to the
extent the undersigned felt necessary, with his, her or its counsel or counsel
for the Company.
3. The undersigned shall not make any sale, transfer or other disposition
of Parent Common Stock in violation of the Act or the Rules and Regulations.
4. The undersigned has been advised that the issuance of shares of Parent
Common Stock to the undersigned in connection with the Merger has been or will
be registered with the Commission under the Act on a Registration Statement on
Form S-4. However, the undersigned has also been advised that, since at the time
the Merger was or will be submitted for a vote of the stockholders of the
Company the undersigned may be deemed to have been an affiliate of the Company
and the distribution by the undersigned of any Parent Common Stock has not been
registered under the Act, the undersigned may not sell, transfer or otherwise
dispose of Parent Common Stock issued to the undersigned in the Merger unless
(i) such sale, transfer or other disposition has been registered under the Act,
(ii) such sale, transfer or other disposition is made in conformity with the
requirements of Rule 145 promulgated by the Commission under the Act, or (iii)
in the opinion of counsel reasonably acceptable to Parent, such sale, transfer
or other disposition is otherwise exempt from registration under the Act.
C-1
<PAGE>
5. Parent is under no obligation to register the sale, transfer or other
disposition of Parent Common Stock by the undersigned or on his, her or its
behalf under the Act or to take any other action necessary in order to make
compliance with an exemption from such registration available.
6. Stop transfer instructions will be given to Parent's transfer agent with
respect to the Parent Common Stock and that there will be placed on the
certificates for the Parent Common Stock issued to the undersigned, or any
substitutions therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A TRANSACTION
TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933 APPLIES. THE
SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE TRANSFERRED IN ACCORDANCE
WITH THE TERMS OF AN AGREEMENT DATED FEBRUARY 25, 1996 BETWEEN THE
REGISTERED HOLDER HEREOF AND SILICON GRAPHICS, INC., A COPY OF WHICH
AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF SILICON GRAPHICS, INC."
7. Unless the transfer by the undersigned of his, her or its Parent Common
Stock has been registered under the Act or is a sale made in conformity with the
provisions of Rule 145, Parent reserves the right to put the following legend on
the certificates issued to any transferee of the undersigned:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A PERSON WHO
RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER
THE SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE BEEN ACQUIRED BY THE
HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY
DISTRIBUTION THEREOF WITHIN THE MEANING OF THE SECURITIES ACT OF 1933 AND
MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933."
8. The legends set forth in paragraphs 6 and 7 above shall be removed by
delivery of substitute certificates without such legend if the undersigned shall
have delivered to Parent a copy of a letter from the staff of the Commission, or
an opinion of counsel in form and substance reasonably satisfactory to Parent,
to the effect that such legend is not required for purposes of the Act.
9. The undersigned is the beneficial owner of (i.e., has sole or shared
voting or investment power with respect to) all the shares of Company Common
Stock and options to purchase Company Common Stock indicated on the last page
hereof (the "Company Securities"). Except for the Company Securities, the
undersigned does not beneficially own any shares of Company Common Stock or any
other equity securities of the Company or any options, warrants or other rights
to acquire any equity securities of the Company.
10. The undersigned intends to vote all Company Common Stock held by him or
her on the record date for the stockholders' meeting to be held to consider the
Merger in favor of the Merger.
11. The undersigned will not exercise dissenters' rights in connection with
the Merger.
C-2
<PAGE>
NUMBER OF SHARES OF COMPANY COMMON STOCK
BENEFICIALLY OWNED BY THE UNDERSIGNED:
------------------------
NUMBER OF SHARES OF COMPANY COMMON STOCK
SUBJECT TO OPTIONS, OR ISSUABLE UPON CONVERSION OF
CONVERTIBLE DEBENTURES, BENEFICIALLY OWNED BY THE UNDERSIGNED:
------------------------
Very truly yours,
--------------------------------------
(print name of stockholder)
By:
--------------------------------------
Name:
Title:
(if applicable)
Accepted this day of
, 1996, by
SILICON GRAPHICS, INC.
By:
- - - - ------------------------------------------
Name:
Title:
C-3
