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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-1
(AMENDMENT NO. 6)
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
VLSI TECHNOLOGY, INC.
(NAME OF SUBJECT COMPANY)
KPE ACQUISITION INC.
KONINKLIJKE PHILIPS ELECTRONICS N.V.
(ROYAL PHILIPS ELECTRONICS)
(BIDDERS)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(INCLUDING THE ASSOCIATED RIGHTS)
(TITLE OF CLASS OF SECURITIES)
981270109
(CUSIP NUMBER OF CLASS OF SECURITIES)
WILLIAM E. CURRAN
PRESIDENT
1251 AVENUE OF THE AMERICAS
20TH FLOOR
NEW YORK, NEW YORK 10020
212-536-0500
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSONS AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
COPIES TO:
NEIL T. ANDERSON, ESQ.
SULLIVAN & CROMWELL
125 BROAD STREET
NEW YORK, NEW YORK 10004
(212) 558-4000
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This Amendment No. 6 amends the Tender Offer Statement on Schedule 14D-1
filed on March 5, 1999 (the "Schedule 14D-1") by Koninklijke Philips Electronics
N.V., a company incorporated under the laws of The Netherlands ("Royal
Philips"), and KPE Acquisition Inc. (the "Purchaser"), a Delaware corporation
and an indirect wholly owned subsidiary of Royal Philips, with respect to the
Purchaser's Offer to purchase all outstanding shares of Common Stock, par value
$.01 per share (the "Common Stock"), including the associated rights to purchase
preferred stock (the "Rights" and, together with the Common Stock, the "Shares")
of VLSI Technology, Inc., a Delaware corporation (the "Company"), at $17.00 per
Share net to the seller in cash, on the terms and subject to the conditions set
forth in the Offer to Purchase, dated March 5, 1999 (the "Offer to Purchase"),
and the related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer"), which were filed as
Exhibits (a)(1) and (a)(2) to the Schedule 14D-1, respectively. Unless otherwise
defined herein, all capitalized terms used herein shall have the respective
meanings given such terms in the Offer to Purchase.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
Item 3 is hereby amended to add the following:
On April 7, 1999, Royal Philips and the Company entered into a
Confidentiality/Standstill Agreement (the "Confidentiality/Standstill
Agreement"), pursuant to which the Company agreed that it will provide to
Royal Philips and its affiliates access to the Company's senior
management and certain non-public information concerning the Company and
its affairs. A copy of the Confidentiality/Standstill Agreement is
attached to this Schedule 14D-1 as Exhibit (g)(6), which is incorporated
by reference herein.
According to the terms of the Confidentiality/Standstill
Agreement, representatives of the Company, including officers thereof and
the Company's legal and financial advisors, will conduct due diligence
sessions with representatives of Royal Philips, including officers
thereof, and Royal Philips' legal and financial advisors, on April 8,
1999 and April 9, 1999, with the opportunity for follow-up due diligence
thereafter. As part of this process, Royal Philips, the Company and their
respective advisors may discuss and negotiate the terms of a possible
transaction pursuant to which Royal Philips may acquire the Company; the
Company may request Royal Philips to make a formal proposal for a
strategic transaction with the Company; and Royal Philips could make such
a formal proposal pursuant to the Company's request. No assurance can be
given that any discussion or negotiation will result in a request by the
Company for a submission of a proposal or that any such proposal, if
made, by Royal Philips would result in an agreement pursuant to which
Royal Philips would acquire the Company.
The Confidentiality/Standstill Agreement includes certain
provisions that bear upon the Offer. From April 7, 1999 through May 9,
1999, Royal Philips and its affiliates will, with certain exceptions,
not, among other things, (a) purchase any Shares of the Company, whether
pursuant to the Offer or otherwise, (b) solicit written consents, or (c)
seek to convene a special meeting of the stockholders of the Company.
From April 7, 1999 to 5:00 p.m., New York City time, on May 7, 1999,
neither Philips, its affiliates nor the Company will solicit proxies for
use at the Company's 1999 Annual Meeting or take steps in furtherance
thereof by filing preliminary proxy materials with the Commission. Also,
pursuant to the Confidentiality/Standstill Agreement, the Company will
set June 8, 1999 as the date of its 1999 Annual Meeting and May 10, 1999
as the record date for the Consent Solicitation. Under certain
circumstances specified in the Confidentiality/Standstill Agreement,
including the Company entering into a strategic transaction with a third
party, the foregoing standstill agreements will be terminated.
ITEM 10. ADDITIONAL INFORMATION.
Item 10 is hereby amended to add the following:
The Expiration Date of the Offer which was scheduled for 12:00
midnight, New York City time, on Friday, April 16, 1999 has been extended
to 12:00 midnight, New York City time, on Monday, May 10, 1999, unless
the Offer is further extended. Royal Philips reserves the right to change
the Expiration Date to an earlier date if one or more of the standstill
provisions of the Confidentiality/Standstill Agreement terminates prior
to May 9, 1999 in accordance with the terms of the Confidentiality/
Standstill Agreement.
In addition, on April 8, 1999, Royal Philips issued a press
release announcing the execution of the Confidentiality/Standstill
Agreement and the extension of the Expiration Date.
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ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
Item 11 is hereby amended to add the following:
(a)(12) Press release issued by Royal Philips, dated April 8, 1999, announcing
the execution of the Confidentiality/Standstill Agreement and the
extension of the Expiration Date.
(g)(6) Confidentiality/Standstill Agreement, dated April 7, 1999, between
Royal Philips and the Company.
-3-
<PAGE>
SIGNATURES
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.
Dated: April 8, 1999
KONINKLIJKE PHILIPS ELECTRONICS N.V.
By: /s/ GUIDO R.C. DIERICK
--------------------------------
Name: Guido R.C. Dierick
Title: Director and Deputy
Secretary
KPE ACQUISITION INC.
By: /s/ BELINDA CHEW
--------------------------------
Name: Belinda Chew
Title: Vice President
-4-
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
(a)(12) Press release issued by Royal Philips, dated April 8, 1999, announcing
the execution of the Confidentiality/Standstill Agreement and the
extension of the Expiration Date.
(g)(6) Confidentiality/Standstill Agreement, dated April 7, 1999, between
Royal Philips and the Company.
-5-
Exhibit (a)(12)
[PHILIPS LOGO]
FOR IMMEDIATE RELEASE
PHILIPS ELECTRONICS SIGNS CONFIDENTIALITY AND STANDSTILL
AGREEMENT WITH VLSI TECHNOLOGY
EXTENDS $17-PER-SHARE CASH TENDER OFFER TO MAY 10, 1999
--------------------------------------------------------
SUNNYVALE, CA, APRIL 8, 1999 - Royal Philips Electronics (NYSE:PHG) today
announced that it has signed a confidentiality and standstill agreement with
VLSI Technology, Inc. (NASDAQ:VLSI).
Under the terms of the confidentiality and standstill agreement, Philips
and VLSI have agreed that:
o VLSI will provide Philips with prompt access to non-public
information, including access to VLSI management, in due diligence
sessions to take place on April 8 and 9, 1999, with the opportunity to
follow-up thereafter;
o Philips will not, prior to May 10, 1999, purchase any additional VLSI
shares without the approval of the VLSI Board of Directors;
o Philips will not, prior to May 10, 1999, solicit consents to replace
the VLSI Board of Directors or, prior to 5:00 p.m., New York City
(NYC) time, on May 7, 1999, solicit proxies for the election of
alternative directors at VLSI's 1999 Annual Meeting;
o VLSI will hold its 1999 Annual Meeting on June 8, 1999;
o VLSI has agreed that any more favorable standstill provisions accorded
a third party will be offered to Philips;
o During the standstill, if VLSI requests a formal proposal from a third
party for a strategic transaction, VLSI will also request a formal
proposal from Philips; and
o Philips will be immediately released from the standstill agreement if
VLSI signs an agreement with another party with respect to a strategic
transaction or if a party other than Philips makes an unsolicited
offer for VLSI and VLSI's Board of Directors does not recommend that
such offer be rejected by VLSI's stockholders.
The complete text of the confidentiality and standstill agreement will be
filed with the Securities and Exchange Commission.
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2
Philips also announced that in connection with entering into the
confidentiality and standstill agreement it will extend its $17-per-share cash
tender offer to 12:00 midnight, NYC time, on Monday, May 10, 1999. Approximately
238,154 shares of VLSI's common stock have been validly tendered and not
withdrawn pursuant to the tender offer. The tender offer was scheduled to expire
at 12:00 midnight, NYC time, on Thursday, April 16, 1999. Philips has reserved
the right to advance the expiration date if the standstill provisions in the
confidentiality and standstill agreement terminate early.
On March 5, 1999, Philips commenced a tender offer for all outstanding
shares of VLSI at a price of $17.00 per share in cash. The offer represents a
58% premium to VLSI's closing price of $10.75 per share on February 25, the last
trading day prior to disclosure of Philips' letter to the VLSI Board of
Directors offering to acquire VLSI for $17.00 per share.
# # #
Royal Philips Electronics of the Netherlands is one of the world's biggest
electronics companies and Europe's largest, with sales of US$33.9 billion in
1998. It is a global leader in color television sets, lighting, electric
shavers, color picture tubes for televisions and monitors, and one-chip TV
products. Its 233,700 employees in more than 60 countries are active in the
areas of lighting, consumer electronics, domestic appliances, components,
semiconductors, medical systems, business electronics, and IT services (Origin).
Philips is quoted on the NYSE, London, Frankfurt, Amsterdam and other stock
exchanges. News from Philips is located at www.news.philips.com.
Contacts:
Jodi Guilbault George Sard/David Reno
Philips Semiconductors Sard Verbinnen & Co
408/991-2332 212/687-8080
[email protected]
www.semiconductors.philips.com
CERTAIN INFORMATION CONCERNING PARTICIPANTS
The entities and individuals named below may be deemed to be participants
in the solicitation of consents by KPE Acquisition Inc. (the "Purchaser"), an
indirect wholly owned subsidiary of Koninklijke Philips Electronics N.V. ("Royal
Philips"), to remove and replace the board of directors of VLSI Technology, Inc.
("VLSI") in connection with the Purchaser's tender offer (the "Offer") for the
shares of common stock (the "VLSI Shares") of VLSI. The participants in this
solicitation may include the Purchaser; the directors of Purchaser (William E.
Curran and Guido R.C. Dierick); the non-director executive officer of Purchaser
(Belinda Chew); Royal Philips; and the directors and executive officers of Royal
Philips: Cor Boonstra (President and Chief Executive Officer and Chairman of the
Board of Management and Group Management Committee), Dudley G. Eustace
(Executive Vice-President and Vice-Chairman of the Board of Management and the
Group Management Committee), Jan H.M. Hommen (Executive Vice-President, Member
of the Board of Management and the Group Management Committee and Chief
Financial Officer), Adri Baan (Executive Vice-President, Member of the Board of
Management and the Group Management Committee and Chairman of the Consumer
Electronics Division), Y.C. Lo (Executive Vice-President and Member of the Board
of Management and the Group Management Committee), Arthur P.M. van der Poel
(Executive Vice-President,
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3
Member of the Board of Management and the Group Management Committee and
Chairman of the Semiconductors Division), John W. Whybrow (Executive
Vice-President, Member of the Board of Management and the Group Management
Committee and Chairman of the Lighting Division), R. Pieper (Executive
Vice-President and Member of the Board of Management and the Group Management
Committee), Ad H.A. Veenhof (Member of the Group Management Committee and
Chairman of the Domestic Appliances and Personal Care Division), Kees Bulthuis
(Member of the Group Management Committee and Senior Managing Director of
Corporate Research), J. M. Barella (Member of the Group Management Committee and
Chairman of the Medical Systems Division), A.B. Bok (Member of the Group
Management Committee and Chairman of the Business Electronics Division ), G.J.
Kleisterlee (Member of the Group Management Committee and Chairman of the
Components Division), J.P. Oosterveld (Member of the Group Management Committee
and Senior Director of Corporate Strategy), A. Westerlaken (Member of the Group
Management Committee, General Secretary, Chief Legal Officer and Secretary to
the Board of Management), N.J. Bruijel (Member of the Group Management Committee
responsible for Corporate Human Resources Management), F.A. Maljers (Chairman of
the Supervisory Board), A. Leysen (Member of the Supervisory Board), W. Hilger
(Member of the Supervisory Board), L.C. van Wachem (Member of the Supervisory
Board), C.J. Oort (Member of the Supervisory Board), L. Schweitzer (Member of
the Supervisory Board), Sir Richard Greenbury (Member of the Supervisory Board)
and W. de Kleuver (Member of the Supervisory Board).
Royal Philips has retained Credit Suisse First Boston Corporation ("CSFB")
to act as its financial advisor in connection with the Offer, for which CSFB
will receive customary fees, as well as reimbursement of reasonable
out-of-pocket expenses. In addition, Royal Philips has agreed to indemnify CSFB
against certain liabilities, including certain liabilities under the federal
securities laws, arising out of its engagement. CSFB is an investment banking
firm that provides a full range of financial services for institutional and
individual clients. CSFB does not admit that it or any of its directors,
officers, employees or affiliates is a "participant," as defined in Schedule 14A
promulgated under the Securities Exchange Act of 1934, as amended, in the
solicitation, or that such Schedule 14A requires the disclosure of certain
information concerning CSFB or such persons. In connection with CSFB's role as
financial advisor to Royal Philips, CSFB and the following investment banking
employees of CSFB may communicate in person by telephone or otherwise with a
limited number of institutions, brokers or other persons who are stockholders of
VLSI: George Boutros (Managing Director) and Jason Dilullo (Vice President).
CSFB engages in a full range of investment banking, securities trading,
market-making and brokerage services for institutional and individual clients.
In the normal course of its business, CSFB may trade securities of VLSI for its
own account and the account of its customers and, accordingly, may at any time
hold a long or short position in such securities. CSFB informed Royal Philips
that as of March 9, 1999, CSFB held a net long position of 1,440 VLSI shares.
As of the date of this communication, Royal Philips, together with its
subsidiaries, beneficially owns an aggregate of 1,235,000 VLSI Shares, or
approximately 2.7% of the VLSI Shares. Other than as set forth herein, none of
the foregoing participants beneficially owns VLSI Shares.
Except as disclosed above, to the knowledge of Royal Philips, none of
Royal Philips, Purchaser, the directors or executive officers of Royal Philips
or Purchaser, or the employees or other representatives of Royal Philips named
above has any interest, direct or indirect, by security holdings or otherwise,
in VLSI.
# # #
Exhibit (g)(6)
VLSI Technology, Inc.
1109 McKay Drive
San Jose, California 95131
April 7, 1999
Koninklijke Philips Electronics N.V.
Rembrant Tower
Amstelplein 1
1096 HA Amsterdam
The Netherlands
Dear Ladies/Gentlemen:
In connection with the good faith consideration by both parties of a
possible strategic transaction between VLSI Technology, Inc., a Delaware
corporation (the "Company"), and Koninklijke Philips Electronics N.V. or one or
more of its affiliates (collectively, the "Counterparty"), the Company agrees
that on April 8, 1999 and continuing on April 9, 1999 (with reasonable
opportunity for follow-up thereafter) it shall provide the Counterparty with
reasonable access to its senior management and will make available to the
Counterparty non-public information concerning the Company and its business,
financial condition, prospects, operations, assets and liabilities; it being
agreed that such access and information to be provided and made available (i)
shall be the type and kind of access and information that would customarily be
provided to a third party that is exploring a possible strategic transaction
with the Company (including an acquisition transaction) and (ii) shall be no
less favorable than the access and information provided to any third party that
is exploring a possible strategic transaction with the Company. As a condition
to, and in consideration of, such information and access being furnished to the
Counterparty and its directors, officers, employees, subsidiaries, affiliates,
agents, advisors (including, without limitation, attorneys, accountants,
consultants and financial advisors) or financing sources, whether retained
before or after
<PAGE>
April 7, 1999
Page 2
the date hereof (collectively, "Representatives"), the Counterparty agrees to
treat such information (whether prepared by the Company, its Representatives or
otherwise and irrespective of the form of communication) which is furnished to
the Counterparty or its Representatives before or after the date hereof by or on
behalf of the Company (herein collectively referred to as the "Evaluation
Material") in accordance with the provisions of this letter agreement, and to
take or abstain from taking certain other actions as hereinafter set forth.
The term "Evaluation Material" also shall be deemed to include all
notes, analyses, compilations, studies, interpretations or other documents
prepared by the Counterparty or its Representatives which contain, reflect or
are based upon, in whole or in part, the information furnished to the
Counterparty or its Representatives pursuant hereto. The term "Evaluation
Material" does not include information which (i) is or becomes generally
available to the public other than as a result of a disclosure by the
Counterparty or its Representatives, (ii) was within the Counterparty's
possession prior to its being furnished to the Counterparty by or on behalf of
the Company pursuant hereto, provided that the source of such information was
not known by the Counterparty to be bound by a confidentiality agreement with or
other contractual, legal or fiduciary obligation of confidentiality to the
Company or any other party with respect to such information or (iii) becomes
available to the Counterparty on a non-confidential basis from a source other
than the Company or any of its Representatives, provided that to the knowledge
of the Counterparty such source is not bound by a confidentiality agreement with
or other contractual, legal or fiduciary obligation of confidentiality to the
Company or any other party with respect to such information.
The Counterparty hereby agrees that it and its Representatives shall
(i) use the Evaluation Material of the Company solely for the purpose of
evaluating a potential strategic transaction involving the Company, including
without limitation the purchase of securities of the Company (a "Transaction"),
(ii) keep the Evaluation Material confidential and (iii) not disclose any of the
Evaluation Material in any manner whatsoever, except as may be required by law
or court order subject to the provisions set forth below; provided, however,
that (x) the Counterparty may make any disclosure of such information to which
the Company gives its prior written consent (y) the Counterparty may disclose
any of such information to its Representatives who need to know such information
for the sole purpose of evaluating a Transaction, provided such Representatives
agree to comply with the terms of this letter agreement applicable to such
Representatives (as to which agreement the Company shall be a third-party
beneficiary) and (z) the Counterparty may make any disclosure of the Evaluation
Material (or summary thereof) to the extent that the Counterparty certifies in
writing to the Company that the Counterparty's legal counsel has rendered a
written legal opinion that such disclosure is required in order for the
Counterparty to comply with the United States securities laws or the rules and
regulations promulgated thereunder ("Securities Laws") in connection with the
tender offer for all the outstanding shares of the Company commenced by the
Counterparty on March 5, 1999 (as amended from time to time, the
<PAGE>
April 7, 1999
Page 3
"Offer") as permitted under this letter agreement or in connection with the
Counterparty's solicitation of written consents as to which the Counterparty
initially filed a preliminary consent solicitation statement on March 12, 1999
(the "Consent Solicitation") as permitted under this letter agreement or proxies
from the stockholders of the Company as permitted under this letter agreement,
whether or not any such solicitation is currently in process or hereafter
commenced, (it being agreed that notwithstanding anything to the contrary in
this letter agreement no disclosure is required prior to 5:00 p.m. New York time
on May 7, 1999 or such earlier time as the Counterparty is no longer subject to
the restrictions set forth in the Standstill Paragraph (as defined below)), and
provided, further, that such information shall not be provided to the
Counterparty's financing sources (if any) without prior notification of their
identities to the Company (which identities the Company shall keep strictly
confidential). The Counterparty shall be responsible for the breach of this
letter agreement by its Representatives (including those who subsequent to the
first date of disclosure of Evaluation Material cease to be a Representative),
and agrees, at its sole expense, to take all reasonable measures (including, but
not limited to, court proceedings) to restrain its Representatives from
prohibited or unauthorized disclosure or use of the Evaluation Material.
The Counterparty hereby acknowledges that it is aware, and that it will
advise such Representatives who are informed as to the matters which are the
subject of this letter agreement, that the Securities Laws prohibit any person
who has received from an issuer material, non-public information concerning the
matters which are the subject of this letter agreement from purchasing or
selling securities of such issuer or from communicating such information to any
other person under circumstances in which it is reasonably foreseeable that such
person is likely to purchase or sell such securities.
In addition, the Counterparty agrees that, except as required by law
(including any Securities Laws that are applicable to the Offer, the Consent
Solicitation or any solicitation of proxies from the stockholders of the Company
that may be undertaken by the Counterparty, all as permitted by this letter
agreement), stock exchange rules or governmental entity or as required to be
disclosed to the works council in The Netherlands (as to which the Counterparty
represents that the works council is required to keep any disclosed Evaluation
Material confidential), without the prior written consent of the Company, the
Counterparty and its Representatives will not disclose to any other person the
fact that the Evaluation Material has been made available to it, that
discussions or negotiations are taking place concerning a possible Transaction
between the parties or any of the terms, conditions or other facts with respect
thereto (including the status thereof). Without limiting the generality of the
foregoing, the Counterparty agrees that during the period the Counterparty is
bound by the provisions of the Standstill Paragraph (as hereinafter defined),
without the prior written consent of the Company, or as otherwise specifically
provided in this letter agreement, it will not, directly or indirectly, enter
into any agreement, arrangement or understanding, or any discussions which might
lead to such an agreement, arrangement or understanding, with any person other
than its Representatives regarding a possible Transaction. The term "person" as
used in this letter
<PAGE>
April 7, 1999
Page 4
agreement shall be broadly interpreted to include the media and any corporation,
partnership, group, individual or other entity.
In the event that the Counterparty or any of its Representatives are
requested or required (by oral questions, interrogatories, requests for
information or documents in legal proceedings, subpoena, civil investigative
demand or other similar process or by applicable statute, rule or regulation or
by governmental regulatory authorities) to disclose any of the Evaluation
Material of the Company, the Counterparty shall provide the Company with prompt
written notice of any such request or requirement and a copy of such request or
requirement so that the Company may seek a protective order or other appropriate
remedy and/or waive compliance with the provisions of this letter agreement. If,
in the absence of a protective order or other remedy or the receipt of a waiver
by the Company, the Counterparty or any of its Representatives are nonetheless,
in the opinion of counsel, legally compelled to disclose Evaluation Material,
the Counterparty or its Representatives may, without liability hereunder,
disclose only that portion of the Evaluation Material which the Counterparty
certifies in writing to the Company that such counsel advises the Counterparty
in writing is legally required to be disclosed, provided that, upon request by
the Company, the Counterparty exercises the Counterparty's reasonable best
efforts to preserve the confidentiality of the Evaluation Material, including,
without limitation, by cooperating with the Company to obtain an appropriate
protective order or other reliable assurance that confidential treatment will be
accorded the Evaluation Material.
At any time upon the request of the Company for any reason or upon the
Company's decision not to proceed with a Transaction, the Counterparty will
promptly deliver to the Company or destroy all Evaluation Material (and all
copies thereof) furnished to it or its Representatives by or on behalf of the
Company pursuant hereto. In the event of such a decision or request, all other
Evaluation Material prepared by the Counterparty or its Representatives shall be
destroyed and no copy thereof shall be retained, unless the Counterparty
certifies in writing to the Company that the Counterparty's counsel has rendered
a written legal opinion that such destruction is prohibited by law. Any
destruction of Evaluation Material pursuant to this paragraph shall be certified
in writing to the Company by an authorized officer supervising such destruction.
Notwithstanding the return or destruction of the Evaluation Material, the
Counterparty and its Representatives will continue to be bound by their
respective obligations of confidentiality and other obligations hereunder.
The Counterparty understands and acknowledges that neither the Company
nor any of its Representatives (including, without limitation, any of its
directors, officers, employees, agents or stockholders) makes any representation
or warranty, express or implied, as to the accuracy or completeness of the
Evaluation Material. Each party agrees that neither the other party nor any of
its Representatives (including, without limitation, any of its directors,
officers, employees, agents or stockholders) shall have any liability to such
party or to any of its Representatives relating to or resulting from the use of
the Evaluation Material or any errors therein or
<PAGE>
April 7, 1999
Page 5
omissions therefrom. Only those representations or warranties which are made in
a final definitive agreement regarding any Transaction, when, as and if
executed, and subject to such limitations and restrictions as may be specified
therein, will have any legal effect.
The Counterparty agrees that, for the period beginning on the date of
this letter agreement and ending at 11:59 p.m. New York time on May 9, 1999 (the
"Standstill Period"), unless the Counterparty shall have been specifically
invited in writing by the Board of Directors of the Company, neither the
Counterparty nor any of its affiliates (as such term is defined under the
Securities Exchange Act of 1934, as amended (the "1934 Act")) or Representatives
will in any manner, directly or indirectly, (a) effect or seek, offer or propose
(whether publicly or otherwise) to effect, or cause or participate in or in any
way assist any other person to effect or seek, offer or propose (whether
publicly or otherwise) to effect or participate in (i) any acquisition of any
securities (or beneficial ownership thereof) or assets (other than non-material
assets) of the other party; (ii) any tender or exchange offer, merger,
consolidation or other business combination involving the Company; (iii) any
recapitalization, restructuring, liquidation, dissolution or other extraordinary
transaction with respect to the Company or any material portion of the Company's
business; or (iv) file new or amended solicitation materials or mail or
disseminate any solicitation materials to, or otherwise attempt to solicit, the
Company's stockholders with respect to any consent or proxy as such terms are
used in the proxy rules of the Securities and Exchange Commission (the "SEC")
(it being agreed that in the case of this clause (iv), to the extent it relates
to solicitation materials soliciting proxies for use at the Company's next
annual meeting, the Standstill Period shall terminate at 5:00 p.m. New York time
on Friday, May 7, 1999); (b) form, join or in any way participate in a "group"
(as defined under the 1934 Act) with respect to the securities of the Company,
except as previously discussed with the Company; (c) otherwise act, alone or in
concert with others, to nominate directors for election at any meeting of the
Company's stockholders or to seek to control, replace the management, Board of
Directors or policies of the Company or propose any matter for submission to a
vote of stockholders of the Company; (d) take any action which to the knowledge
of such party requires the other party to make a public announcement regarding
any of the types of matters set forth in (a) above; (e) accept for payment or
pay for pursuant to the Offer, or otherwise acquire, any shares of the Company;
(f) seek to convene a special meeting of the stockholders of the Company; (g)
amend the Offer other than to extend the Offer until a date after the expiration
of the Standstill Period and to disclose the existence of this letter agreement;
(h) solicit proxies from record or beneficial stockholders of the Company for
use at the Company's next annual meeting or take action in furtherance thereof
by filing preliminary proxy materials with the SEC (it being agreed that in the
case of this clause (h) the Standstill Period shall terminate at 5:00 p.m. New
York time on Friday, May 7, 1999); or (i) enter into any discussions or
arrangements with any third party with respect to any of the foregoing or
advise, assist, encourage, finance or seek to persuade others to take any action
with respect to the foregoing; provided, however, that, subject to the
foregoing, this paragraph shall not require the Counterparty to terminate the
Offer or to withdraw the preliminary consent statement that is currently on file
with the
<PAGE>
April 7, 1999
Page 6
SEC with respect to the Consent Solicitation. Notwithstanding anything to the
contrary in this paragraph, the Counterparty shall not be bound by the foregoing
restrictions in the event that (i) the Company has entered into an agreement
with a third party involving any tender or exchange offer, merger, consolidation
or other business combination involving the Company or any sale of common stock
or assets of the Company that requires approval of the Company's stockholders or
(ii) an independent third party makes a bonafide tender offer for more than 50%
of the Company's common stock and the Company files a Schedule 14D-9 with
respect to such offer that does not recommend that the Company's stockholders
reject such offer. Each party also agrees during such period not to request the
other party (or its directors, officers, employees or agents), directly or
indirectly, to amend or waive any provision of this paragraph (including this
sentence). Neither the Company nor its Representatives shall, during the
Standstill Period, request a formal proposal for a Transaction from any party
unless the Company or its Representatives also request such a formal proposal
from the Counterparty. This paragraph together with the sentence "Without
limiting the generality of the foregoing, the Counterparty agrees that, without
the prior written consent of the Company, or as otherwise specifically provided
in this letter agreement, it will not, directly or indirectly, enter into any
agreement, arrangement or understanding, or any discussions which might lead to
such an agreement, arrangement or understanding, with any person other than its
Representatives regarding a possible Transaction" set forth earlier in this
letter agreement shall be referred to as the "Standstill Paragraph."
In consideration of the Counterparty's entering into the Standstill
Paragraph, the Company hereby agrees that between this date and the earlier of
(i) 5:00 p.m. New York time on May 7, 1999 and (ii) the date on which the
Counterparty shall no longer be bound by the provisions set forth in the
Standstill Paragraph, neither the Company nor its Representatives shall call or
cause to be called a special meeting of stockholders or solicit proxies from any
record or beneficial stockholders of the Company for use at the Company's next
annual meeting or take action in furtherance thereof by filing preliminary proxy
materials with the SEC.
In consideration of the Counterparty's entering into the Standstill
Paragraph, the Company and the Counterparty hereby agree:
(I) The Company shall set June 8, 1999 as the date of its 1999 Annual
Meeting of Stockholders (the "Annual Meeting"), and shall take no action to
adjourn, postpone or otherwise delay the Annual Meeting. The close of business
on May 10, 1999 shall be the record date for the Annual Meeting.
(II) The Board of Directors of the Company shall withdraw April 1, 1999
as the record date for the Consent Solicitation and the Company agrees that the
Board of Directors of the Company shall set a new record date for any consent
solicitation to be conducted by the Counterparty or any of its affiliates which
date shall be (x) within three business days of receipt of a written request
from the Counterparty that a record date be set, in the event that the
Counterparty shall not be bound by the Standstill Paragraph prior
<PAGE>
April 7, 1999
Page 7
to the end of the Standstill Period or (y) the close of business on May 10, 1999
in the event that the Counterparty is bound by the Standstill Paragraph through
the end of the Standstill Period.
In consideration of the Evaluation Material being furnished hereunder,
each party agrees that, for the period beginning on the date of this letter
agreement and ending at the close of business on March 31, 2000, neither such
party nor any of such party's affiliates (as such term in defined under the 1934
Act) will solicit to employ any of the officers or key employees of the other
party so long as they are employed by the other party, without obtaining the
prior written consent of the other party, (it being understood that any
newspaper or other general solicitation not directed specifically to such person
shall not be deemed to be a solicitation for purposes of this provision),
provided that this paragraph shall not prohibit such party or such party's
affiliates from discussing employment opportunities with, or hiring, any officer
or key employee of the other party who initiates such discussions with such
party or such party's affiliate.
The Company agrees that: (i) it has not entered into, and during the
Standstill Period will not enter into, a standstill paragraph with a third party
that has provisions more favorable to such third party than those set forth in
the Standstill Paragraph; (ii) it has not waived, and during the Standstill
Period will not waive, any provisions of any standstill paragraph with a third
party that would make the remaining provisions of the standstill paragraph more
favorable to a third party than those set forth in the Standstill Paragraph; and
(iii) it has not entered into, and during the Standstill Period will not enter
into, an agreement similar to this letter agreement which contains no standstill
paragraph unless the Company also promptly offers the Counterparty substantially
similar such provisions, waivers or no Standstill Paragraph, as the case may be.
Each party understands and agrees that no contract or agreement
providing for any Transaction shall be deemed to exist between the parties
unless and until a final definitive agreement has been executed and delivered.
Each party also agrees that unless and until a final definitive agreement
regarding a Transaction has been executed and delivered, neither party will be
under any legal obligation of any kind whatsoever to enter into or consummate a
Transaction by virtue of this letter agreement except for the matters
specifically agreed to herein. The parties further acknowledge and agree that
until such definitive documents are entered into the Company reserves the right,
in its sole discretion to reject any and all proposals made by the Counterparty
or any of its Representatives with regard to a Transaction, and to terminate
discussions and negotiations with the Counterparty at any time. The Counterparty
further understands that the Company and its Representatives shall be free to
conduct any process for any transaction involving the Company, if and as they in
their sole discretion shall determine (including, without limitation,
negotiating with any other interested parties and entering into a definitive
agreement without prior notice to the Counterparty or any other person) and that
any procedures relating to such process or transaction may be changed at any
time without notice to the Counterparty or any other person. Following the
execution of
<PAGE>
April 7, 1999
Page 8
this letter agreement, the Counterparty shall promptly file an amendment to its
Schedule 14D-1 that is currently on file with the SEC, which shall be the sole
amendment to such Schedule 14D-1 filed by the Counterparty with respect to its
execution of this letter agreement. Following the execution of this letter
agreement, the Company shall promptly file an amendment to its Schedule 14D-9
that is currently on file with the SEC, which shall be the sole amendment to
such Schedule 14D-9 filed by the Company with respect to its execution of this
letter agreement.
The provisions of this letter agreement cannot be amended or waived
except with the written consent of each of the parties hereto. It is understood
and agreed that no failure or delay by a party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude any other or future exercise thereof or the
exercise of any other right, power or privilege hereunder.
It is further understood and agreed that money damages would not be a
sufficient remedy for any breach of this letter agreement by a party or any of
its Representatives and that a party shall be entitled to equitable relief,
including injunctive relief to prevent breaches of the provisions of this letter
agreement by the other party, without the necessity of proving actual damages or
of posting any bond, and specific performance, as a remedy for any such breach .
Such remedies shall not be deemed to be the exclusive remedies for a breach of
this letter agreement but shall be in addition to all other remedies available
by law or equity. In the event of litigation relating to this letter agreement,
if a court of competent jurisdiction determines that a party or any of its
Representatives have breached this letter agreement, then such party shall be
liable and pay to the other party the reasonable legal fees and costs incurred
by the other party in connection with such litigation, including any appeal
therefrom.
If any term, provision, covenant or restriction of this letter
agreement is held by a court of competent jurisdiction to be invalid, void, or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this letter shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
Except as specified elsewhere herein, the terms of this letter
agreement will remain in force until the date that is two years from the date
hereof; provided, however, that the confidentiality provisions of this letter
agreement relating to Evaluation Material shall remain effective so long as such
material constitutes Evaluation Material.
In the event of any alleged breach of this agreement by a party, the
other party shall given written notice of such alleged breach to the such
allegedly breaching party and one business day for such allegedly breaching
party to cure such breach.
This letter agreement may be executed in two or more counterparts, each
of which shall be deemed to be an original, but all of which shall constitute
the same agreement and shall become a binding agreement when a counterpart has
been signed by
<PAGE>
April 7, 1999
Page 9
each party and delivered to the other party, thereby constituting the entire
agreement among the parties pertaining to the subject matter hereof. This letter
agreement supersedes all prior and contemporaneous agreements, understandings
and representations, whether oral or written, of the parties in connection
herewith. No covenant or condition or representation not expressed in this
letter agreement shall affect or be effective to interpret, change or restrict
this letter agreement. No prior drafts of this letter agreement and no words or
phrases from any such prior drafts shall be admissible into evidence in any
action, suit or other proceeding involving this letter agreement. This letter
agreement may not be changed or terminated orally, nor shall any change,
termination or attempted waiver of any of the provisions of this letter
agreement be binding on any party unless in writing signed by the parties
hereto. No modification, waiver, termination, rescission, discharge or
cancellation of this letter agreement and no waiver of any provision of or
default under this letter agreement shall affect the right of any party
thereafter to enforce any other provision or to exercise any right or remedy in
the event of any other default, whether or not similar.
This letter agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns.
This letter agreement shall be governed by and construed in accordance
with the laws of the State of Delaware (without giving effect to any choice or
conflict of law provision). The parties agree that any suit for the enforcement
of this letter agreement may be brought in the courts of the state of Delaware
or any federal court sitting therein, and each party consents to the exclusive
jurisdiction of such courts and service of process in any such suit being made
upon Latham & Watkins, 135 Commonwealth Drive, Menlo Park, California 94025,
attention: Christopher L. Kaufman, in the case of the Company, or upon Sullivan
& Cromwell, 125 Broad Street, New York, New York 10004, attention: Neil T.
Anderson, in the case of the Counterparty. Each party hereby waives any
objection that it may now or hereafter have to the venue of any such suit or any
such court or that such suit is brought in an inconvenient venue, court or
jurisdiction.
Please confirm your agreement with the foregoing by signing and
returning one copy of this letter to the undersigned, whereupon this letter
agreement shall become a binding agreement between you and the Company.
Very truly yours,
VLSI Technology, Inc.
a Delaware corporation
By: /s/ Thomas C. Tokos
---------------------------
Name: Thomas C. Tokos
Title: Vice President
<PAGE>
April 7, 1999
Page 10
Accepted and agreed as of
the date first written above:
Koninklijke Philips Electronics N.V.
A company incorporated under the laws of The Netherlands
By: /s/ Jan C. Lobbezoo
---------------------------------
Name: Jan C. Lobbezoo
Title: Chief Financial Officer,
Philips Semiconductors and
Authorized Representative
