<PAGE> 1
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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
------------------------
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
KPE ACQUISITION INC.
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
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
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TRANSACTION VALUATION* AMOUNT OF FILING FEE**
<S> <C>
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$901,355,878 $180,271.18
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</TABLE>
* For purposes of calculating the filing fee only. This calculation assumes
53,020,934 Shares (equal to (A) the sum of (i) 45,701,934 Shares issued and
outstanding as of September 25, 1998, according to VLSI Technology, Inc.
(the "Company") plus (ii) 8,554,000 Shares subject to issuance upon
exercise of options for Shares, according to the Company, less (B)
1,235,000 Shares beneficially owned by KPE Acquisition Inc. and its
affiliates).
** 1/50 of one percent of Transaction Valuation.
[ ] 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.
<TABLE>
<S> <C> <C> <C>
Amount Previously Paid: None Filing Party: N/A
Form of Registration No.: N/A Date filed: N/A
</TABLE>
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<PAGE> 2
SCHEDULE 14D-1
CUSIP NO. 918270109
<TABLE>
<S> <C> <C>
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1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
KONINKLIJKE PHILIPS ELECTRONICS N.V.
(ROYAL PHILIPS ELECTRONICS)
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS
WC; 00
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5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(E) OR 2(F)
[ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
THE NETHERLANDS
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7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,235,000 Shares
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8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES
[ ]
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9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
2.7%
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10. TYPE OF REPORTING PERSON
HC; CO
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</TABLE>
2
<PAGE> 3
SCHEDULE 14D-1
CUSIP NO. 918270109
<TABLE>
<S> <C> <C>
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1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
KPE ACQUISITION INC.
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS
AF
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5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(E) OR 2(F)
[ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
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7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
100 Shares
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8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES [ ]
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9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
Less than .01%
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10. TYPE OF REPORTING PERSON
CO
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</TABLE>
3
<PAGE> 4
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is VLSI Technology, Inc., a Delaware
corporation (the "Company"), and the address of its principal executive offices
is 1109 McKay Drive, San Jose, California 95131.
(b) The class of securities to which this statement relates is the 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 the Company. The information set forth in the
Introductory Section and Section 1 of the Offer to Purchase (the "Offer to
Purchase") annexed hereto as Exhibit (a)(1) is incorporated herein by reference.
(c) The information set forth in Section 6 of the Offer to Purchase is
incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d); (g) The information set forth in Section 9 of the Offer to
Purchase is incorporated herein by reference. The name, business address,
present principal occupation or employment, the material occupations, positions,
offices or employments for the past five years and citizenship of each director
and executive officer of Koninklijke Philips Electronics N.V., a company
incorporated under the laws of The Netherlands ("Royal Philips"), and of KPE
Acquisition Inc., a Delaware corporation (the "Purchaser") and an indirect
wholly owned subsidiary of Royal Philips, and the name, principal business and
address of any corporation or other organization in which such occupations,
positions, offices and employments are or were carried on are set forth in
Schedule A to the Offer to Purchase and are incorporated herein by reference.
(e); (f) During the last five years, neither the Purchaser nor Royal
Philips, nor, to the best of their respective knowledge, any of the directors or
executive officers of the Purchaser or Royal Philips has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
was a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which any such person 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 law.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) The information set forth in the Introductory Section and Sections
10 and 11 of the Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in Section 12 of the Offer to Purchase is
incorporated herein by reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
The information set forth in the Introductory Section and Sections 7 and 11
of the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth in Sections 9 and 10 of the Offer to
Purchase and in Schedule B is incorporated herein by reference.
4
<PAGE> 5
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
Not applicable.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in Section 16 of the Offer to Purchase is
incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The financial statements of Royal Philips and Purchaser are not material to
the investment decision to be made by the holders of Shares.
ITEM 10. ADDITIONAL INFORMATION.
(a) Not applicable.
(b)-(c) The information set forth in Section 15 of the Offer to Purchase is
incorporated herein by reference.
(d) The information set forth in Section 7 of the Offer to Purchase is
incorporated herein by reference.
(e) The information set forth in Section 15 of the Offer to Purchase is
incorporated herein by reference.
(f) The information set forth in the Offer to Purchase and the Letter
of Transmittal is incorporated herein by reference in its
entirety.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<S> <C>
(a)(1) Offer to Purchase, dated March 5, 1999.
(a)(2) Form of Letter of Transmittal with respect to the Shares.
(a)(3) Form of letter, dated March 5, 1999, to brokers, dealers,
commercial banks, trust companies and other nominees.
(a)(4) Form of letter to clients to be used by brokers, dealers,
commercial banks, trust companies and other nominees.
(a)(5)(a) Press Release, dated March 4, 1999.
(a)(5)(b) Press Release, dated March 5, 1999.
(a)(6) Form of newspaper advertisement, dated March 5, 1999.
(a)(7) Notice of Guaranteed Delivery.
(a)(8) IRS Guidelines to Substitute Form W-9.
(a)(9) Complaint, KPE Acquisition Inc. v. VLSI Technology, Inc.
(C.A. 16992-NC), dated March 5, 1999, filed in the Court of
Chancery of the State of Delaware.
(b) None.
(c) None.
(d) None.
(e) Not Applicable.
(f) None.
</TABLE>
5
<PAGE> 6
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: March 5, 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/ WILLIAM E. CURRAN
------------------------------------
Name: William E. Curran
Title: President
6
<PAGE> 7
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
(a)(1) Offer to Purchase, dated March 5, 1999.
(a)(2) Form of Letter of Transmittal with respect to the Shares.
(a)(3) Form of letter, dated March 5, 1999, to brokers, dealers,
commercial banks, trust companies and other nominees.
(a)(4) Form of letter to clients to be used by brokers, dealers,
commercial banks, trust companies and other nominees.
(a)(5)(a) Press Release, dated March 4, 1999.
(a)(5)(b) Press Release, dated March 5, 1999.
(a)(6) Form of newspaper advertisement, dated March 5, 1999.
(a)(7) Notice of Guaranteed Delivery.
(a)(8) IRS Guidelines to Substitute Form W-9.
(a)(9) Complaint, KPE Acquisition Inc. v. VLSI Technology, Inc.
(C.A. 16992-NC), dated March 5, 1999, filed in the Court of
Chancery of the State of Delaware.
(b) None.
(c) None.
(d) None.
(e) Not Applicable.
(f) None.
</TABLE>
7
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OF THE OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE PREFERRED STOCK)
OF
VLSI TECHNOLOGY, INC.
AT
$17.00 NET PER SHARE
BY
KPE ACQUISITION INC.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
KONINKLIJKE PHILIPS ELECTRONICS N.V.
(ROYAL PHILIPS ELECTRONICS)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, APRIL 1, 1999, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED PRIOR TO THE EXPIRATION OF THE OFFER AND NOT WITHDRAWN A NUMBER OF
SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE (INCLUDING THE ASSOCIATED
RIGHTS (THE "RIGHTS") TO PURCHASE PREFERRED STOCK) (COLLECTIVELY, THE "SHARES")
OF VLSI TECHNOLOGY, INC. (THE "COMPANY") WHICH, TOGETHER WITH THE SHARES
BENEFICIALLY OWNED BY THE PURCHASER AND ITS AFFILIATES, WILL CONSTITUTE AT LEAST
A MAJORITY OF THE OUTSTANDING SHARES ON A FULLY DILUTED BASIS (AS DEFINED
HEREIN) AS OF THE DATE THE SHARES ARE ACCEPTED FOR PAYMENT PURSUANT TO THE OFFER
(THE "MINIMUM TENDER CONDITION"); (II) THE RIGHTS HAVING BEEN REDEEMED BY THE
COMPANY'S BOARD OF DIRECTORS, OR THE PURCHASER OTHERWISE BEING SATISFIED IN ITS
SOLE DISCRETION THAT SUCH RIGHTS ARE OTHERWISE INVALID OR INAPPLICABLE TO THE
TRANSACTIONS CONTEMPLATED HEREIN (THE "RIGHTS CONDITION"); (III) THE ACQUISITION
OF SHARES PURSUANT TO THE OFFER BEING APPROVED PURSUANT TO SECTION 203 OF THE
DELAWARE GENERAL CORPORATION LAW OR THE PURCHASER BEING SATISFIED IN ITS SOLE
DISCRETION THAT THE PROVISIONS OF SECTION 203 RESTRICTING CERTAIN BUSINESS
COMBINATIONS ARE INVALID OR INAPPLICABLE TO THE ACQUISITION OF SHARES PURSUANT
TO THE OFFER AND THE PROPOSED MERGER (BY ACTION OF THE COMPANY'S BOARD OF
DIRECTORS, THE ACQUISITION OF A SUFFICIENT NUMBER OF SHARES OR OTHERWISE) (THE
"SECTION 203 CONDITION"); AND (IV) ANY WAITING PERIOD UNDER THE
HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE
REGULATIONS THEREUNDER (THE "HSR ACT") AND ANY LAWS OF FOREIGN JURISDICTIONS AND
UNDER ANY LAWS OF THE EUROPEAN COMMUNITY APPLICABLE TO THE PURCHASE OF SHARES
PURSUANT TO THE OFFER HAVING EXPIRED OR BEEN TERMINATED (THE "ANTITRUST
CONDITION"). THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS DESCRIBED IN
SECTION 13. THE OFFER IS NOT CONDITIONED UPON ROYAL PHILIPS OR THE PURCHASER
OBTAINING FINANCING.
<PAGE> 2
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should (1) complete and sign the Letter of Transmittal or a facsimile
thereof in accordance with the instructions in the Letter of Transmittal,
including any required signature guarantees, and mail or deliver the Letter of
Transmittal or such facsimile with such stockholder's certificate(s) for the
tendered Shares and any other required documents to the Depositary (as defined
herein), (2) follow the procedure for book-entry tender of Shares set forth in
Section 3 or (3) request such stockholder's broker, dealer, commercial bank,
trust company or other nominee to effect the transaction for such stockholder.
Stockholders having Shares 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 they desire to tender
Shares so registered. Unless the context requires otherwise, all references to
Shares herein shall include the associated Rights.
The Rights are presently evidenced by the certificates for the Common Stock
and a tender by a stockholder of such stockholder's shares of Common Stock will
also constitute a tender of the associated Rights. A stockholder who desires to
tender Shares and whose certificates for 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 procedures for guaranteed
delivery set forth in Section 3.
Questions and requests for assistance may be directed to the Information
Agent (as defined herein) or to the Dealer Manager (as defined herein) at their
respective addresses and telephone numbers set forth on the back cover of this
Offer to Purchase. Requests for additional copies of this Offer to Purchase and
the Letter of Transmittal may be directed to the Information Agent, the Dealer
Manager or to brokers, dealers, commercial banks or trust companies.
The Dealer Manager for the Offer is:
[Credit Suisse First Boston logo]
March 5, 1999
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
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<C> <S> <C>
Introduction................................................ 1
1. Terms of the Offer.......................................... 3
2. Acceptance for Payment and Payment for Shares............... 4
3. Procedure for Tendering Shares.............................. 5
4. Rights of Withdrawal........................................ 9
5. Certain Federal Income Tax Consequences of the Offer........ 9
6. Price Range of Shares; Dividends............................ 10
7. Effect of the Offer on the Market for the Shares; Stock
Quotation, Margin Regulations and Exchange Act
Registration................................................ 11
8. Certain Information Concerning the Company.................. 12
9. Certain Information Concerning the Purchaser and Royal
Philips..................................................... 13
10. Background of the Offer; Contacts with the Company.......... 14
11. Purpose of the Offer; Plans for the Company; the Proposed
Merger...................................................... 19
12. Source and Amount of Funds.................................. 22
13. Certain Conditions of the Offer............................. 22
14. Dividends and Distributions................................. 25
15. Certain Legal Matters....................................... 25
16. Fees and Expenses........................................... 28
17. Miscellaneous............................................... 28
Schedule A Information Concerning the Directors and Executive Officers
of Royal Philips and the Purchaser.......................... A-1
Schedule B Acquisition of Shares....................................... B-1
Schedule C Summary of Rights........................................... C-1
</TABLE>
<PAGE> 4
TO THE HOLDERS OF SHARES OF
VLSI TECHNOLOGY, INC.:
INTRODUCTION
KPE Acquisition Inc., a Delaware corporation (the "Purchaser") and an
indirect wholly owned subsidiary of Koninklijke Philips Electronics N.V., a
company organized under the laws of The Netherlands ("Royal Philips"), hereby
offers to purchase all of the outstanding shares of Common Stock, par value $.01
per share (the "Common Stock"), of VLSI Technology, Inc., a Delaware corporation
(the "Company"), including the associated rights to purchase Preferred Stock
(the "Rights") issued pursuant to the First Amended and Restated Rights
Agreement, dated as of August, 12, 1992, as amended as of August 25, 1992 (the
"Rights Agreement"), between the Company and The First National Bank of Boston
(the Common Stock and the Rights together are referred to herein as the
"Shares") at $17.00 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 with any amendments or supplements hereto
or thereto, collectively constitute the "Offer"). Tendering stockholders who
have Shares registered in their own name and who tender directly to the
Depositary will not be obligated to pay brokerage fees or commissions or,
subject to Instruction 6 of the Letter of Transmittal, transfer taxes on the
purchase of Shares by the Purchaser pursuant to the Offer. Stockholders who hold
their Shares through their broker or bank should consult with such institution
as to whether there are any fees applicable to a tender of Shares. The Purchaser
will pay all charges and expenses of The Bank of New York (the "Depositary"),
Credit Suisse First Boston Corporation ("Credit Suisse First Boston") as the
dealer manager (the "Dealer Manager") and Innisfree M&A Incorporated (the
"Information Agent"). Unless the context requires otherwise, all references to
Shares herein shall include the associated Rights, and all references to the
Rights shall include all benefits that may inure to the holders of the Rights
pursuant to the Rights Agreement.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THE MINIMUM TENDER
CONDITION; (II) THE RIGHTS CONDITION; (III) THE SECTION 203 CONDITION; AND (IV)
THE ANTITRUST CONDITION. THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS
DESCRIBED IN SECTION 13. THE OFFER IS NOT CONDITIONED UPON ROYAL PHILIPS OR THE
PURCHASER OBTAINING FINANCING.
Purpose of the Offer; The Proposed Merger. The purpose of the Offer is to
acquire for cash as many outstanding Shares as possible as a first step in
acquiring the entire equity interest in the Company. The Purchaser currently
intends, as soon as practicable upon consummation of the Offer, to propose and
seek to have the Company effect a merger or some similar business combination
(the "Proposed Merger") between the Company and the Purchaser or an affiliate
thereof, pursuant to which each then outstanding Share (other than Shares held
by the Company in treasury, or owned by Royal Philips, the Purchaser or any
other direct or indirect wholly owned subsidiary of Royal Philips or Shares, if
any, that are held by stockholders who are entitled to and who properly exercise
dissenters' rights under Delaware law), would be converted pursuant to the terms
of the Proposed Merger into the right to receive an amount in cash equal to the
per Share price paid pursuant to the Offer, without interest. See Section 11.
Royal Philips and the Purchaser are seeking to negotiate with the Company
with respect to the acquisition of the Company by Royal Philips. The Purchaser
reserves the right to amend the Offer upon entering into a merger agreement with
the Company.
Royal Philips has requested that the Board of Directors of the Company
redeem the Rights or otherwise take action to render the Rights inapplicable to
the Offer and the Proposed Merger. If the Board of Directors does not do so, in
connection with the Offer and the Proposed Merger and in order to satisfy the
Rights Condition, Royal Philips and the Purchaser intend, if necessary, to seek
through the solicitation of proxies from holders of Shares to elect at the
Company's next annual meeting of stockholders (the "Annual Meeting"), or at a
special meeting of stockholders, nominees of the Purchaser as the directors of
the Company. As an alternative to or in addition to the solicitation of proxies,
the Purchaser may solicit written consents from the holders of Shares to remove
the Company's Board of Directors and to elect nominees of the Purchaser as the
directors of the Company. If Royal Philips commences a solicitation of proxies
or consents
<PAGE> 5
from the holders of Shares and Purchaser's nominees are elected to the Board of
Directors of the Company, the Purchaser expects that such nominees will, subject
to their fiduciary duties to stockholders of the Company in light of the
circumstances then existing, take all necessary action to redeem the Rights and
thereby satisfy the Rights Condition, approve the acquisition of Shares pursuant
to the Offer and the Proposed Merger, satisfy the Section 203 Condition and
authorize the Company to enter into a merger agreement with Royal Philips and
the Purchaser to effect the Proposed Merger.
THIS OFFER DOES NOT CONSTITUTE A SOLICITATION OF PROXIES OR CONSENTS. ANY
SUCH SOLICITATION WHICH THE PURCHASER OR ROYAL PHILIPS MIGHT MAKE WILL BE MADE
PURSUANT TO SEPARATE PROXY OR CONSENT SOLICITATION MATERIALS COMPLYING WITH THE
REQUIREMENTS OF SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 AND THE
RULES AND REGULATIONS PROMULGATED THEREUNDER (THE "EXCHANGE ACT").
In the event the Purchaser obtains 90% or more of the outstanding Shares
pursuant to the Offer or otherwise, the Purchaser will effect the Proposed
Merger pursuant to the short-form merger provisions of the Delaware General
Corporation Law (the "DGCL"), without prior notice to, or any action by, any
other stockholder of the Company. See Section 11.
Minimum Tender Condition. THE MINIMUM TENDER CONDITION CONDITIONS THE
OFFER UPON THERE BEING VALIDLY TENDERED PRIOR TO THE EXPIRATION DATE (AS DEFINED
BELOW) AND NOT WITHDRAWN AT LEAST THAT NUMBER OF SHARES (THE "MINIMUM NUMBER OF
SHARES") THAT, TOGETHER WITH THE SHARES BENEFICIALLY OWNED BY THE PURCHASER,
WOULD REPRESENT A MAJORITY OF ALL OUTSTANDING SHARES ON A FULLY DILUTED BASIS ON
THE DATE OF PURCHASE. FOR PURPOSES OF THE OFFER (OTHER THAN IN THE CONTEXT OF
FINANCIAL STATEMENT INFORMATION), ON A "FULLY DILUTED BASIS" MEANS, AS OF ANY
DATE, THE NUMBER OF SHARES OUTSTANDING TOGETHER WITH SHARES THAT THE COMPANY IS
REQUIRED TO ISSUE PURSUANT TO OBLIGATIONS OUTSTANDING AT THAT DATE UNDER
CONVERTIBLE SECURITIES, WARRANTS, STOCK OPTIONS OR OTHERWISE UPON CONVERSION OR
EXERCISE THEREOF (EXCLUDING ANY SHARES THE COMPANY IS OBLIGATED TO ISSUE UPON
CONVERSION OF ITS 8.25% CONVERTIBLE SUBORDINATED NOTES DUE 2005 (THE
"CONVERTIBLE NOTES")). THE PURCHASER RESERVES THE RIGHT (SUBJECT TO THE
APPLICABLE RULES AND REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION (THE
"SEC")) TO WAIVE OR REDUCE THE MINIMUM TENDER CONDITION AND TO ELECT TO
PURCHASE, PURSUANT TO THE OFFER, FEWER THAN THE MINIMUM NUMBER OF SHARES. SEE
SECTIONS 1 AND 14 HEREIN.
According to the Company's Quarterly Report on Form 10-Q for the quarter
ended September 25, 1998 (the "Company 10-Q"), as of September 25, 1998, there
were 45,701,934 Shares issued and outstanding. According to the Company's Annual
Report on Form 10-K for the fiscal year ended December 26, 1997 (the "Company
10-K"), as of December 26, 1997, there were 7,554,000 Shares subject to issuance
upon exercise of outstanding options. According to the Company 10-Q, the Company
and Alfred J. Stein, President and Chief Executive Officer of the Company,
entered into an employment agreement dated August 28, 1998 (the "Employment
Agreement"), pursuant to which the Company committed to grant Mr. Stein, no
later than 90 days from August 28, 1998, an option to acquire 1,000,000 Shares
(the "1998 Stein Options"). As of September 25, 1998 these were approximately
3,000,000 Shares issuable upon conversion of the Convertible Notes; however,
because the conversion price per Share for the Convertible Notes is in excess of
$50.00, for purposes of establishing the Minimum Number of Shares, Royal Philips
does not include Shares issuable upon conversion thereof. Based on the foregoing
and assuming that no options other than the 1998 Stein Options were granted
after December 26, 1997, and no options were exercised, canceled or expired from
December 26, 1997 through September 25, 1998 and assuming no Shares were issued
or reacquired since September 25, 1998, there would be 54,255,934 Shares
outstanding on a Fully Diluted Basis on September 25, 1998 and, given the
Purchaser's and its affiliates' ownership of 1,235,000 Shares, the Minimum
Number of Shares on such date would be 25,892,968. However, the actual Minimum
Number of Shares will depend on the facts as they exist on the date of purchase.
Rights Condition. THE OFFER IS CONDITIONED ON, AMONG OTHER THINGS, THE
RIGHTS CONDITION BEING SATISFIED. See Section 13. Unless the Rights Condition
shall have been satisfied, stockholders will be required
2
<PAGE> 6
to tender one Right for each share of Common Stock tendered in order to effect a
valid tender in accordance with the procedures set forth in Section 2. The
tender of Rights with Common Stock shall not, in itself, however, satisfy the
Rights Condition. Unless separate certificates for the Rights are issued, a
tender of Common Stock will also constitute a tender of the associated Rights.
For a description of the Rights, see Section 1.
On March 5, 1999, Royal Philips and Purchaser commenced a law suit in the
Court of Chancery of the State of Delaware against the Company and its Board of
Directors seeking, among other things, to compel the Board of Directors to
redeem the Rights outstanding under the Rights Agreement or to otherwise take
action to render the rights inapplicable to the Offer and to invalidate the
provision in the Rights Agreement providing that during the 10-day period
following an announcement that a party has triggered the Rights by acquiring 20%
or more of the Shares, the Rights can only be redeemed by the Continuing
Directors (as defined in the Rights Agreement) of the Company.
The Section 203 Condition. THE OFFER IS CONDITIONED ON, AMONG OTHER
THINGS, THE SECTION 203 CONDITION BEING SATISFIED. See Section 13. The Offer is
subject to the condition that the acquisition of Shares pursuant to the Offer
and the Proposed Merger shall have been approved pursuant to Section 203
("Section 203") of the DGCL or that the Purchaser shall be satisfied in its sole
discretion that the provisions of Section 203 restricting certain business
combinations are invalid or inapplicable to the acquisition of Shares pursuant
to the Offer and the Proposed Merger (by action of the Company's Board of
Directors, the acquisition of a sufficient number of Shares or otherwise). The
provisions of Section 203 are described in Section 11 herein.
There can be no assurance that the Board will, pursuant to Section 203,
approve the acquisition of Shares pursuant to the Offer and the Proposed Merger.
Even if such Board approval is not obtained, Section 203 will be inapplicable to
the Offer and the Merger if upon the purchase of Shares pursuant to the Offer,
the Purchaser owns at least 85% of the outstanding Shares, excluding for
purposes of determining the number of Shares outstanding those Shares owned (i)
by persons who are directors and also officers and (ii) employee stock plans in
which employee participants do not have the right to determine confidentially
whether Shares held subject to the plan will be tendered in a tender or exchange
offer.
The Antitrust Condition. THE OFFER IS CONDITIONED ON, AMONG OTHER THINGS,
THE ANTITRUST CONDITION BEING SATISFIED. For a more detailed description of
certain time periods applicable to this condition, see Section 15.
Certain other conditions to the Offer are described in Section 13 herein.
The Purchaser reserves the right (but shall not be obligated) to waive any or
all such conditions. See Sections 1, 11, 13 and 15 herein.
The Offer is not conditioned upon Royal Philips or the Purchaser obtaining
financing.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
1. TERMS OF THE OFFER.
Upon the terms and subject to the conditions set forth in the Offer
(including the terms and conditions set forth in Section 13 (the "Offer
Conditions") and if the Offer is extended or amended, the terms and conditions
of such extension or amendment), the Purchaser will accept for payment, and pay
for, all Shares validly tendered on or prior to the Expiration Date (as defined
herein) and not withdrawn as permitted by Section 4. The term "Expiration Date"
means 12:00 Midnight, New York City time, on April 1, 1999, unless and until the
Purchaser shall, in its sole discretion, have extended the period for which the
Offer is open, in which event the term "Expiration Date" shall mean the latest
time and date on which the Offer, as so extended by the Purchaser, shall expire.
Subject to the applicable rules and regulations of the SEC, the Purchaser
expressly reserves the right, in its sole discretion, at any time or from time
to time, to extend the period of time during which the Offer is
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<PAGE> 7
open by giving oral or written notice of such extension to the Depositary and by
making a public announcement thereof. During any such extension, all Shares
previously tendered and not withdrawn will remain subject to the Offer, subject
to the right of a tendering stockholder to withdraw such stockholder's Shares.
See Section 4. Subject to the applicable regulations of the SEC, the Purchaser
also expressly reserves the right, in its sole discretion, at any time or 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 tendered
Shares, or to terminate or amend the Offer as to any Shares not then paid for,
if any of the conditions set forth in Section 13 are not satisfied and (ii) to
waive any condition and to set forth or change any other term or condition of
the Offer, by giving oral or written notice of such delay, termination or
amendment to the Depositary and by making a public announcement thereof. If the
Purchaser accepts any Shares for payment pursuant to the terms of the Offer, it
will accept for payment all Shares validly tendered prior to the Expiration Date
and not withdrawn, and, subject to the terms and conditions of the Offer,
including but not limited to the Offer Conditions, it will accept for payment
and promptly pay for all Shares so accepted for payment. The Purchaser confirms
that its reservation of the right to delay payment for Shares which it has
accepted for payment is limited by Rule 14e-1(c) under the Exchange Act, which
requires that a tender offeror pay the consideration offered or return the
tendered securities promptly after the termination or withdrawal of a tender
offer.
Any extension, delay, termination or amendment of the Offer will be
followed as promptly as practicable by public announcement thereof, such
announcement in the case of an extension to be issued 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), 14d-6(d)
and 14e-1 under the Exchange Act, which require that any material change in the
information published, sent or given to stockholders in connection with the
Offer be promptly disseminated to stockholders in a manner reasonably designed
to inform stockholders of such change) and without limiting the manner in which
the Purchaser may choose to make any public announcement, the Purchaser shall
have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by issuing a press release or other announcement.
The Purchaser confirms that if it 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, the Purchaser will extend the Offer to the extent
required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act.
If, prior to the Expiration Date, the Purchaser, in its sole discretion,
shall decrease the percentage of Shares being sought or increase or decrease the
consideration offered to holders of Shares, such increase or decrease shall be
applicable to all holders whose Shares are accepted for payment pursuant to the
Offer and, if at the time notice of any increase or decrease is first published,
sent or given to holders of Shares, the Offer is scheduled to expire at any time
earlier than the tenth business day from and including the date that such notice
is first so published, sent or given, the Offer will be extended so that it
shall not expire earlier than 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 United States federal holiday and consists of the time period from
12:01 A.M. through 12:00 Midnight, New York City time.
A demand is being made to the Company for the use of the Company's
stockholder list and security position listings for the purpose of, among other
things, disseminating the Offer to stockholders. Upon compliance by the Company
with such demand this Offer to Purchase and the related Letter of Transmittal
will be mailed to record holders of Shares and will be furnished to brokers,
banks 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.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
Upon the terms and subject to the conditions of the Offer (including the
Offer Conditions and, if the Offer is extended or amended, the terms and
conditions of any such extension or amendment), the Purchaser will accept for
payment, and will pay for, Shares validly tendered and not withdrawn as promptly
as
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<PAGE> 8
practicable after the later of (i) the satisfaction of the Antitrust Condition
and the date all required filings or consents, registrations, approvals, permits
or authorizations of any governmental entity shall have been obtained on terms
satisfactory to Purchaser in its sole discretion and (ii) the Expiration Date,
if at the time of the later of the occurrence of (i) and (ii) above, the Offer
Conditions have been satisfied or waived.
In addition, subject to applicable rules of the SEC, the Purchaser
expressly reserves the right to delay acceptance for payment of or payment for
Shares in order to comply, in whole or in part, with any applicable law. See
Section 13. 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 certificates for such Shares (or a confirmation of a book-entry transfer of
such Shares (a "Book-Entry Confirmation") into the Depositary's account at The
Depository Trust Company (the "Book-Entry Transfer Facility")), a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) and any
other required documents.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment Shares validly tendered and not withdrawn as, if and when the
Purchaser gives oral or written notice to the Depositary of its acceptance for
payment of such Shares pursuant to 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 the tendering
stockholders for the purpose of receiving payments from the Purchaser and
transmitting such payments to the tendering stockholders. 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 pursuant to the terms
and conditions of the Offer for any reason, or if certificates are submitted for
more Shares than are tendered, certificates for such unpurchased Shares will be
returned, without expense to the tendering stockholder (or, in the case of
Shares tendered by book-entry transfer of such Shares into the Depositary's
account at the Book-Entry Transfer Facility pursuant to the procedures set forth
in Section 3, such Shares will be credited to an account maintained with the
Book-Entry Transfer Facility), as soon as practicable following expiration or
termination of the Offer.
The Purchaser reserves the right to transfer or assign in whole or in part
from time to time to one or more direct or indirect subsidiaries of Royal
Philips 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 the 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. PROCEDURE FOR TENDERING SHARES.
Valid Tender. To tender Shares pursuant to the Offer, (a) a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof) in
accordance with the instructions of the Letter of Transmittal, with any required
signature guarantees, certificates for Shares to be tendered, and any other
documents required by the Letter of Transmittal, must be received by the
Depositary prior to the Expiration Date at one of its addresses set forth on the
back cover of this Offer to Purchase, (b) such Shares must be delivered pursuant
to the procedures for book-entry transfer described below (and a Book-Entry
Confirmation of such delivery received by the Depositary, including an Agent's
Message (as defined herein) if the tendering stockholder has not delivered a
Letter of Transmittal), prior to the Expiration Date, or (c) the tendering
stockholder must comply with the guaranteed delivery procedures set forth below.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares which are the subject of the Book-Entry
Confirmation, that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that the Purchaser may enforce such
agreement against the participant.
UNLESS THE RIGHTS CONDITION IS SATISFIED, STOCKHOLDERS WILL BE REQUIRED TO
TENDER ONE RIGHT (SUBJECT TO ADJUSTMENT) FOR EACH SHARE TENDERED IN ORDER TO
EFFECT A VALID TENDER OF SHARES. ACCORDINGLY, STOCKHOLDERS WHO SELL THEIR RIGHTS
SEPARATELY FROM THEIR SHARES AND DO NOT OTHERWISE ACQUIRE RIGHTS MAY NOT BE ABLE
TO
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<PAGE> 9
SATISFY THE REQUIREMENTS OF THE OFFER FOR A VALID TENDER OF SHARES. UNLESS
SEPARATE CERTIFICATES REPRESENTING THE RIGHTS ARE ISSUED, A TENDER OF SHARES
WILL ALSO CONSTITUTE A TENDER OF THE ASSOCIATED RIGHTS.
Rights are presently evidenced by the certificates for the Common Stock and
the tender by a stockholder of such stockholder's shares of Common Stock will
also constitute a tender of the associated Rights. However, after a Distribution
Date (as defined in the Rights Agreement), upon request the Rights Agent will
send to each record holder of Shares as of the close of business on the
Distribution Date a Rights certificate evidencing one Right for each share of
Common Stock held. Pursuant to the Offer, no separate payment will be made by
the Purchaser for the Rights. If separate certificates representing the Rights
are issued to holders of Common Stock prior to the time a holder's Shares are
tendered pursuant to the Offer, certificates representing a number of Rights
equal to the number of shares of Common Stock tendered must be delivered to the
Depositary, or, if available, a Book-Entry Confirmation received by the
Depositary with respect thereto, in order for such shares of Common Stock to be
validly tendered. If the Distribution Date occurs and separate certificates
representing the Rights are not distributed prior to the time shares of Common
Stock are tendered pursuant to the Offer, Rights may be tendered prior to a
stockholder receiving the certificates for Rights by use of the guaranteed
delivery procedure described below. A tender of shares of Common Stock
constitutes an agreement by the tendering stockholder to deliver certificates
representing all Rights formerly associated with the number of shares of Common
Stock tendered pursuant to the Offer to the Depositary prior to expiration of
the period permitted by such guaranteed delivery procedures for delivery of
certificates for, or a Book-Entry Confirmation with respect to, Rights (the
"Rights Delivery Period"). However, after expiration of the Rights Delivery
Period, the Purchaser may elect to reject as invalid a tender of shares of
Common Stock with respect to which certificates for, or a Book-Entry
Confirmation with respect to, the number of Rights required to be tendered with
such Common Stock have not been received by the Depositary. Nevertheless, the
Purchaser will be entitled to accept for payment shares of Common Stock tendered
by a stockholder prior to receipt of the certificates for the Rights required to
be tendered with such shares of Common Stock, or a Book-Entry Confirmation with
respect to such Rights, and either (a) subject to complying with applicable
rules and regulations of the SEC, withhold payment for such shares of Common
Stock pending receipt of the certificates for, or a Book-Entry Confirmation with
respect to, such Rights or (b) make payment for shares of Common Stock accepted
for payment pending receipt of the certificates for, or a Book-Entry
Confirmation with respect to, such Rights in reliance upon the agreement of a
tendering stockholder to deliver Rights and such guaranteed delivery procedures.
Any determination by the Purchaser to make payment for shares of Common Stock in
reliance upon such agreement and such guaranteed delivery procedures or, after
expiration of the Rights Delivery Period, to reject a tender as invalid will be
made in the sole and absolute discretion of the Purchaser.
Book-Entry Delivery. The Depositary will establish an account with respect
to the Shares at the Book-Entry Transfer Facility 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 Book-Entry Transfer Facility's system
may make book-entry transfer of Shares by causing the Book-Entry Transfer
Facility to transfer such Shares into the Depositary's account in accordance
with the Book-Entry Transfer Facility's procedures for such transfer. However,
although delivery of Shares may be effected through book-entry transfer, either
the Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, together with any required signature guarantees, or an Agent's Message
in lieu of the Letter of Transmittal, and any other required documents, must, in
any case, be transmitted to and received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase by the
Expiration Date, or the tendering stockholder must comply with the guaranteed
delivery procedures described below. If the Distribution Date occurs, the
Depositary will also make a request to establish an account with respect to the
Rights at the Book-Entry Transfer Facility, but no assurance can be given that
book-entry transfer of Rights will be available. If book-entry transfer of
Rights is available, the foregoing book-entry transfer procedures will also
apply to Rights. If book-entry transfer of Rights is not available and the
Distribution Date occurs, a tendering stockholder will be required to tender
Rights by means of physical delivery of certificates for Rights to the
Depositary (in which event references in this Offer to Purchase to Book-Entry
Confirmations with respect to Rights will be inapplicable). The confirmation of
a book-entry transfer of Shares or Rights into the Depositary's account at the
Book-Entry Transfer Facility as described above is referred to herein as a
"Book-Entry Confirmation." DELIVERY OF
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<PAGE> 10
DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY
TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
THE METHOD OF DELIVERY OF SHARES, RIGHTS, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL
BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN
THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS
BY MAIL, IT IS RECOMMENDED THAT THE STOCKHOLDER USE PROPERLY INSURED REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. Except as otherwise provided below, all signatures
on a Letter of Transmittal must be guaranteed by a financial institution
(including most commercial banks, savings and loan associations and brokerage
houses) that is a participant in the Security Transfer Agents Medallion Program,
the New York Stock Exchange Medallion Signature Guarantee Program or the Stock
Exchange Medallion Program (each, an "Eligible Institution"). Signatures on a
Letter of Transmittal need not be guaranteed (a) if the Letter of Transmittal is
signed by the registered holders (which term, for purposes of this section,
includes any participant in the Book-Entry Transfer Facility's system whose name
appears on a security position listing as the owner of the Shares or Rights) of
Shares and Rights tendered therewith and such registered holder has not
completed the box entitled "Special Payment Instructions" or the box entitled
"Special Delivery Instructions" on the Letter of Transmittal or (b) if such
Shares and Rights are tendered for the account of an Eligible Institution. See
Instructions 1 and 5 of the Letter of Transmittal. If the certificates for
Shares or Rights are registered in the name of a person other than the signer of
the Letter of Transmittal, or if payment is to be made or certificates for
Shares or Rights not tendered or not accepted for payment are to be returned to
a person other than the registered holder of the certificates surrendered, then
the tendered certificates must be endorsed or accompanied by appropriate stock
powers, in either case signed exactly as the name or names of the registered
holders or owners appear on the certificates, with the signatures on the
certificates or stock powers guaranteed as described above. See Instructions 1
and 5 of the Letter of Transmittal.
Guaranteed Delivery. A stockholder who desires to tender Shares (or
Rights, if applicable) pursuant to the Offer and whose certificates for Shares
(or Rights, if applicable) are not immediately available (including because
certificates for Rights have not yet been distributed by the Rights Agent), or
who cannot comply with the procedure for book-entry transfer on a timely basis,
or who cannot deliver all required documents to the Depositary prior to the
Expiration Date, may tender such Shares (and/or Rights, if applicable) by
following all of the procedures set forth below:
(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 provided by the Purchaser, is received
by the Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificates for all tendered Shares and/or Rights, in
proper form for transfer (or a Book-Entry Confirmation with respect to all
such Shares and/or Rights), together with a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees (or, in the case of a book-entry transfer, an Agent's
Message in lieu of the Letter of Transmittal), and any other required
documents, are received by the Depositary within (a) in the case of Shares,
three trading days after the date of execution of such Notice of Guaranteed
Delivery or (b) in the case of Rights, a period ending on the later of (1)
three trading days after the date of execution of such Notice of Guaranteed
Delivery or (2) three trading days after the date certificates for Rights
are distributed to stockholders by the Rights Agent. A "trading day" is any
day on which the New York Stock Exchange, Inc. (the "NYSE") is open for
business.
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The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mail to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such Notice of Guaranteed Delivery.
Other Requirements. Notwithstanding any provision hereof, payment for
Shares accepted for payment pursuant to the Offer will in all cases be made only
after timely receipt by the Depositary of (a) certificates for (or a timely
Book-Entry Confirmation with respect to) such Shares and, if the Distribution
Date occurs, certificates for (or a timely Book-Entry Confirmation, if
available, with respect to) the associated Rights (unless the Purchaser elects
to make payment for such Shares pending receipt of the certificates for, or a
Book-Entry Confirmation with respect to, such Rights as described above), (b) a
Letter of Transmittal (or 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 in lieu of the Letter of Transmittal)
and (c) any other documents required by the Letter of Transmittal. Accordingly,
tendering stockholders may be paid at different times depending upon when
certificates for Shares (or Rights) or Book-Entry Confirmations with respect to
Shares (or Rights, if available) are actually received by the Depositary. UNDER
NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE OF THE SHARES BE PAID BY
THE PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING
SUCH PAYMENT.
If the Rights Condition is satisfied, the guaranteed delivery procedures
with respect to certificates for Rights and the requirement for the tender of
Rights will no longer apply.
Tender Constitutes an Agreement. The valid tender of Shares and, if
applicable, Rights pursuant to one of the procedures described above will
constitute a binding agreement between the tendering stockholder and the
Purchaser upon the terms and subject to the conditions of the Offer.
Appointment. By executing a Letter of Transmittal as set forth above, the
tendering stockholder irrevocably appoints designees of the Purchaser as such
stockholder's proxies, each with full power of substitution, to the full extent
of such stockholder's rights with respect to the Shares tendered by such
stockholder and accepted for payment by the Purchaser and with respect to any
and all cash dividends, distributions, rights, other Shares or other securities
issued or issuable in respect of such Shares on or after March 4, 1999. All such
proxies will be considered coupled with an interest in the tendered Shares and
Rights. Such appointment is effective when, and only to the extent that, the
Purchaser deposits the payment for such Shares with the Depositary. Upon the
effectiveness of such appointment, all prior powers of attorney, proxies and
consents given by such stockholder will be revoked, and no subsequent powers of
attorney, proxies and consents may be given (and, if given, will not be deemed
effective). The Purchaser designees 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, special or adjourned meeting of the stockholders of the Company, by
written consent in lieu of any such meeting or otherwise. The Purchaser reserves
the right to require that, in order for Shares to be deemed validly tendered,
immediately upon the Purchaser's payment for such Shares, the Purchaser must be
able to exercise full voting rights with respect to such Shares.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
or Rights will be determined by the Purchaser in its sole discretion, which
determination will be final and binding. The 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 or payment for which may, in the opinion of the
Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute right
to waive any defect or irregularity in the tender of any Shares or Rights of any
particular stockholder whether or not similar defects or irregularities are
waived in the case of other stockholders. No tender of Shares or Rights will be
deemed to have been validly made until all defects and irregularities relating
thereto have been cured or waived. None of the Purchaser, the Depositary, the
Information Agent, the Dealer Manager 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. The 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.
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<PAGE> 12
Backup Withholding. In order to avoid "backup withholding" of Federal
income tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such stockholder's correct taxpayer identification number ("TIN") on a
Substitute Form W-9 and certify under penalties of perjury that such TIN is
correct and that such stockholder is not subject to backup withholding. If a
stockholder does not provide such stockholder's correct TIN or fails to provide
the certifications described above, the Internal Revenue Service (the "IRS") may
impose a penalty on such stockholder and payment of cash to such stockholder
pursuant to the Offer may be subject to backup withholding of 31%. All
stockholders surrendering Shares pursuant to the Offer should complete and sign
the main signature form and the Substitute Form W-9 included as part of the
Letter of Transmittal to provide the information and certification necessary to
avoid backup withholding (unless an applicable exemption exists and is proved in
a manner satisfactory to the Purchaser and the Depositary). If, however, the
tendering stockholder completes the box entitled "Special Payment Instructions"
on the Letter of Transmittal, the person to whom payment is to be made, rather
than the tendering stockholder, should complete and sign Substitute Form W-9.
Certain stockholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding.
Non-corporate foreign stockholders should complete and sign the main signature
form and a Form W-8, Certificate of Foreign Status, a copy of which may be
obtained from the Depositary, in order to avoid backup withholding. See
Instruction 9 to the Letter of Transmittal.
4. RIGHTS OF WITHDRAWAL.
Tenders of Shares made pursuant to the Offer are irrevocable except that
Shares tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment by the Purchaser
pursuant to the Offer, may also be withdrawn at any time after May 3, 1999.
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 of this Offer to Purchase. Any
such notice of withdrawal must specify the name of the person having tendered
the Shares to be withdrawn, the number of Shares to be withdrawn and the names
in which the certificate(s) evidencing the Shares to be withdrawn are
registered, if different from that of the person who tendered such Shares. 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 any
Eligible Institution. If Shares have been tendered pursuant to the procedures
for book-entry tender 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. If certificates for Shares to be
withdrawn have been delivered or otherwise identified to the Depositary, the
name of the registered holder and the serial numbers of the particular
certificates evidencing the Shares to be withdrawn must also be furnished to the
Depositary as aforesaid prior to the physical release of such certificates. All
questions as to the form and validity (including time of receipt) of any notice
of withdrawal will be determined by the Purchaser, in its sole discretion, which
determination shall be final and binding. None of the Purchaser, Royal Philips,
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 such
notification. Withdrawals of tender for Shares may not be rescinded, and any
Shares properly withdrawn will be deemed not to have been validly tendered for
purposes of the Offer. However, withdrawn Shares may be retendered by following
one of the procedures described in Section 3 at any time prior to the Expiration
Date.
If the Purchaser extends the Offer, is delayed in its acceptance for
payment of Shares, or is unable to accept for payment Shares pursuant to the
Offer, for any reason, then, without prejudice to the Purchaser's rights under
this Offer, the Depositary may, nevertheless, on behalf of the Purchaser, retain
tendered Shares, and such Shares may not be withdrawn except to the extent that
tendering stockholders are entitled to withdrawal rights as set forth in this
Section 4.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER.
Sales of Shares pursuant to the Offer and the exchange of Shares for cash
pursuant to the Proposed Merger will be taxable transactions for federal income
tax purposes and may also be taxable transactions under
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<PAGE> 13
applicable state, local, foreign and other tax laws. The tax consequences of the
receipt of cash in exchange for Shares pursuant to the Offer of the Proposed
Merger may vary depending on, among other things, the particular circumstances
of a stockholder. For federal income tax purposes, a stockholder whose Shares
are purchased pursuant to the Offer or who receives cash as a result of the
Proposed Merger generally will recognize gain or loss equal to the difference
between the adjusted basis of the Shares sold or exchanged and the amount of
cash received therefor. Such gain or loss will be capital gain or loss if the
Shares are held as capital assets by the stockholder and will be long-term
capital gain or loss if the stockholder's holding period in such Shares for
federal income tax purposes is more than one year at the time of the sale or
exchange. Long-term capital gain recognized by a non-corporate stockholder is
generally subject to tax at a maximum rate of 20%. In addition, a stockholder's
ability to use capital losses to offset ordinary income is limited.
A stockholder that tenders Shares pursuant to the Offer or Proposed Merger
may be subject to backup withholding at a rate of 31% unless such stockholder
provides a TIN and certifies under penalties of perjury that such TIN is correct
or properly certifies that such stockholder is awaiting a TIN, or unless an
exemption applies. See "Backup Withholding" under Section 3 hereof and
Instruction 9 in the Letter of Transmittal.
THE INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE TO STOCKHOLDERS IN SPECIAL SITUATIONS
SUCH AS STOCKHOLDERS WHO RECEIVED THEIR SHARES UPON THE EXERCISE OF EMPLOYEE
STOCK OPTIONS OR OTHERWISE AS COMPENSATION AND STOCKHOLDERS WHO ARE NOT UNITED
STATES PERSONS. STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT
TO THE SPECIFIC TAX CONSEQUENCES TO THEM, IN THEIR PARTICULAR CIRCUMSTANCES, OF
THE OFFER AND THE MERGER, INCLUDING THE APPLICATION AND EFFECT OF FEDERAL,
STATE, LOCAL, FOREIGN OR OTHER TAX LAWS.
6. PRICE RANGE OF SHARES; DIVIDENDS.
The Shares are traded on the Nasdaq Stock Market's National Market (the
"Nasdaq National Market") under the symbol "VLSI". The following table sets
forth, for the calendar quarters indicated, the high and low bid quotations for
the Shares on the Nasdaq National Market, based upon published financial
sources:
<TABLE>
<CAPTION>
SALES PRICE
--------------
CALENDAR YEAR HIGH LOW
- ------------- ----- -----
<S> <C> <C>
1997:
First Quarter........................................... $25 3/4 $14 7/8
Second Quarter.......................................... 26 3/8 16 5/8
Third Quarter........................................... 38 11/16 23 5/8
Fourth Quarter.......................................... 37 3/4 18 1/4
1998:
First Quarter........................................... 25 3/4 17 1/16
Second Quarter.......................................... 21 15/16 14 9/16
Third Quarter........................................... 20 35/64 7
Fourth Quarter.......................................... 13 3/4 6
1999:
First Quarter (through March 4, 1999)................... 18 1/2 9 3/4
</TABLE>
The Rights trade together with the Common Stock. On February 25, 1999, the
last full trading day prior to the public disclosure that Royal Philips proposed
to enter into discussions to acquire the Company pursuant to a merger agreement
for $17.00 a share, the reported closing bid price per Share reported on the
Nasdaq National Market was $10 3/4. On March 4, 1999, the last full trading day
prior to commencement of the Offer, the reported closing bid price per Share
reported on the Nasdaq National Market was $18 5/16. STOCKHOLDERS ARE URGED TO
OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
10
<PAGE> 14
According to the Company's filings with the SEC, no dividends have been
declared or paid by the Company on the Shares since inception, and no dividends
are contemplated to be paid by the Company at any time in the foreseeable
future.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK QUOTATION, MARGIN
REGULATIONS AND EXCHANGE ACT REGISTRATION.
Market for Shares. The purchase of Shares by the Purchaser pursuant to the
Offer will reduce the number of Shares that might otherwise trade publicly and
may reduce the number of holders of Shares, which could adversely affect the
liquidity and market value of the remaining Shares held by the public.
Stock Quotation. The Shares are authorized for quotation on the Nasdaq
National Market. According to published guidelines of the Nasdaq National
Market, the Shares might no longer be eligible for quotation on the Nasdaq
National Market if, among other things, either (i) the number of Shares publicly
held was less than 750,000, there were fewer than 400 holders of round lots, the
aggregate market value of publicly held Shares was less than $5,000,000, net
tangible assets were less than $4,000,000 and there were fewer than two
registered and active market makers for the Shares, or (ii) the number of Shares
publicly held was less 1,100,000, there were fewer than 400 holders of round
lots, the aggregate market value of publicly held Shares was less than
$15,000,000, and either (x) the Company's market capitalization was less than
$50,000,000 or (y) the total assets and total revenue of the Company for the
most recently completed fiscal year or two of the last three most recently
completed fiscal years was less than $50,000,000 and there were fewer than four
registered and active market makers. Shares held directly or indirectly by
directors, officers or beneficial owners of more than 10% of the Shares are not
considered as being publicly held for this purpose. According to the Company
10-K, there were 1,667 stockholders of record.
If the Shares were to cease to be quoted on the Nasdaq National Market, the
market for the Shares could be adversely affected. It is possible that the
Shares would be traded or quoted on other securities exchanges (with trades
published by such exchanges), the Nasdaq Stock Market (with quotations published
in the Nasdaq "additional list" or in one of the "local lists") or in the
over-the-counter market. The extent of the public market for the Shares and the
availability of such quotations would, however, depend upon the number of
stockholders and/or the aggregate market value of the Shares remaining at such
time, the interest in maintaining a market in the Shares on the part of
securities firms, the possible termination of registration of the Shares under
the Exchange Act and other factors.
Margin Regulations. The Shares are presently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve Board (the "Federal
Reserve Board"), which has the effect, among other things, of allowing brokers
to extend credit on the collateral of such Shares. Depending upon factors
similar to those described above regarding listing and market quotations, the
Shares might no longer constitute "margin securities" for the purposes of the
Federal Reserve Board's margin regulations in which event the Shares would be
ineligible as collateral for margin loans made by brokers.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Such registration may be terminated by the Company upon
application to the SEC if the outstanding Shares are not listed on a national
securities exchange and if there are fewer than 300 holders of record of Shares.
Termination of registration of the Shares under the Exchange Act would reduce
the information required to be furnished by the Company to its stockholders and
to the SEC and would make certain provisions of the Exchange Act, such as the
short-swing profit recovery provisions of Section 16(b) and the requirement to
furnish a proxy statement in connection with stockholders' meetings pursuant to
Section 14(a) and the related requirement to furnish an annual report to
stockholders, no longer applicable with respect to the Shares. Furthermore, the
ability of "affiliates" of the Company and persons holding "restricted
securities" of the Company to dispose of such securities pursuant to Rule 144
under the Securities Act of 1933, as amended, may be impaired or eliminated. If
registration of the Shares under the Exchange Act were terminated, the Shares
would no longer be eligible for Nasdaq reporting or for continued inclusion on
the Federal Reserve Board's list of "margin securities". The Purchaser intends
to seek to cause the Company to apply for
11
<PAGE> 15
termination of registration of the Shares under the Exchange Act as soon as
possible after consummation of the Offer if the requirements for termination of
registration are met.
8. CERTAIN INFORMATION CONCERNING THE COMPANY.
The information concerning the Company contained in this Offer to Purchase
has been taken from or based upon publicly available documents and records on
file with the SEC and other public sources and is qualified in its entirety by
reference thereto. None of Royal Philips, the Purchaser, the Information Agent
or the Dealer Manager can take responsibility for the accuracy or completeness
of the information 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 Royal
Philips, the Purchaser, the Information Agent or the Dealer Manager.
The Company is a Delaware corporation with its principal executive offices
located at 1109 McKay Drive, San Jose, California 95131. The Company has
described its business in filings with the SEC as follows:
The Company designs, manufactures and markets custom and semi-custom
integrated circuits targeted at specific areas of the electronics marketplace.
These products address a range of applications in the wireless communications,
networking, consumer digital entertainment and advanced computing markets. The
Company markets its products primarily to original equipment manufacturer
customers in these markets.
The Company has developed significant design expertise in its targeted
markets, establishing a library of proprietary cells and highly integrated
building blocks. The Company's objective is to design and manufacture
highly-integrated, complex custom and semi-custom semiconductor devices that
enable its customers to develop and bring to market higher value-added systems
and products.
Set forth below is certain summary consolidated financial information for
each of the Company's last three fiscal years for the period ended December 26,
1997 as contained in the Company 10-K, which financial information has been
audited, and for the twelve months ended December 26, 1998 as disclosed in the
Company's press release dated January 21, 1999, which financial information has
not been audited. More comprehensive financial information is included in such
reports (including management's discussion and analysis of financial condition
and results of operation) and other documents filed by the Company with the SEC,
and the following summary is qualified in its entirety by reference to such
reports and other documents and all of the financial information and notes
contained therein. Copies of such reports and other documents may be examined at
or obtained from the SEC in the manner set forth below.
12
<PAGE> 16
VLSI TECHNOLOGY, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FISCAL YEARS ENDED DECEMBER 26,
------------------------------------------
UNAUDITED AUDITED AUDITED AUDITED
1998* 1997 1996 1995
--------- -------- -------- --------
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net revenues.......................................... $547,804 $712,653 $669,017 $670,291
Gross profit.......................................... 214,496 307,944 244,730 246,674
Research and development.............................. 111,708 98,434 88,617 70,363
Marketing, general and administrative................. 93,769 114,011 111,167 100,346
Special charge........................................ 7,400 -- 114,364 --
Operating income (loss)............................... 1,619 95,499 (69,418) 75,965
Interest and other income (expense), net.............. 30,562 13,581 12,065 14,046
Income (loss) from continuing operations.............. 32,181 66,645 (45,958) 46,216
Net income (loss)..................................... $ 20,916 $ 71,818 $(49,547) $ 45,968
BALANCE SHEET DATA
Current assets........................................ $482,711 533,877 448,506 598,135
Total assets.......................................... 922,045 922,078 890,942 959,887
Current Liabilities................................... 183,948 186,228 210,490 198,038
Long-term debt, less current maturities............... 164,808 182,039 207,627 215,382
Total liabilities..................................... 366,995 405,683 420,463 429,258
Shareholders' equity.................................. 555,050 516,395 470,479 530,629
</TABLE>
- ---------------
* Source: Press Release of VLSI Technology, Inc., dated January 21, 1999.
Available Information. The Company is subject to the information and
reporting requirements of the Exchange Act and in accordance therewith is
obligated to file reports and other information with the SEC 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, any material interests of such persons in transactions with the
Company and other matters is required to be disclosed in proxy statements
distributed to the Company's stockholders and filed with the SEC. Such reports,
proxy statements and other information should be available for inspection at the
public reference room at the SEC's offices at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and also should be available for inspection and copying
at the regional offices of the SEC located at Seven World Trade Center, 13th
Floor, New York, New York 10048 and Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60611. Copies may be obtained, by mail, upon
payment of the SEC's customary charges, by writing to its principal office at
450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549 and can be
obtained electronically on the SEC's Website at http://www.sec.gov.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND ROYAL PHILIPS.
The Purchaser is a Delaware corporation and to date has engaged in no
activities other than those incident to its formation and the commencement of
the Offer. The Purchaser is an indirect wholly owned subsidiary of Purchaser.
Purchaser owns 100 Shares which were purchased by Neglin Lamp B.V. ("Neglin
Lamp"), a company incorporated under the laws of The Netherlands and a wholly
owned subsidiary of Royal Philips, as described in Section 10 and were
thereafter transferred to Purchaser pursuant to a broker-dealer journal transfer
transaction. The principal executive offices of the Purchaser are located at
1251 Avenue of the Americas, 20th Floor, New York, New York 10020.
Royal Philips is a company incorporated under the laws of The Netherlands
and is the parent company of the Royal Philips Electronics group. Royal Philips'
principal executive offices are located at Rembrandt
13
<PAGE> 17
Tower, Amstelplein 1, 1096 HA Amsterdam, The Netherlands. Royal Philips is one
of the world's biggest electronics companies and Europe's largest, with sales of
US$33.9 billion in 1998. The activities of the Royal Philips group are organized
in product divisions which are responsible for Royal Philips' worldwide business
policy. Royal Philips has manufacturing and sales organizations in over 60
countries. Royal Philips delivers products, systems and services in the fields
of semiconductors, lighting, consumer electronics and communications, domestic
appliances and personal care, components, medical systems, business electronics
and information technology. Royal Philips, through its subsidiaries Neglin Lamp
and the Purchaser, is the indirect owner of 1,235,000 Shares.
Available Information. Additional information concerning Royal Philips is
set forth in Royal Philips' Annual Report on Form 20-F (the "Royal Philips Form
20-F") for the fiscal year ended December 31, 1997, a copy of which may be
obtained from the SEC in the manner set forth with respect to information
concerning the Company in Section 8.
The name, citizenship, business address, present principal occupation, and
material positions held during the past five years of each of the directors and
executive officers of Royal Philips and the Purchaser are set forth in Schedule
A to this Offer to Purchase.
Except as set forth in Section 10 and Schedule B, neither of Royal Philips
or the Purchaser, or, to the best of their knowledge, any of the persons listed
in Schedule A hereto nor any associate or majority-owned subsidiary of either of
the foregoing, beneficially owns or has a right to acquire any equity securities
of the Company. Except as set forth in Section 10 and Schedule B, neither of
Royal Philips or the Purchaser, or, to the best of their knowledge, any of the
persons or entities referred to above, nor any director, executive officer or
subsidiary of either of the foregoing, has effected any transaction in such
equity securities during the past 60 days.
Except as set forth in Sections 10 and 11, neither of Royal Philips or the
Purchaser, or, to the best of their knowledge, any of the persons listed in
Schedule A hereto, 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 the voting of any 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
Sections 10 and 11, there have been no contacts, negotiations or transactions
since January 1, 1996 between Royal Philips or the Purchaser, or, to the best of
their knowledge, any of the persons listed in Schedule A hereto, on the one
hand, and the Company or its affiliates, on the other hand, concerning a merger,
consolidation or acquisition, a tender offer or other acquisition of securities,
an election of directors, or a sale or other transfer of a material amount of
assets. Except as described in Sections 10 and 11, neither of Royal Philips nor
the Purchaser, nor, to the best of their knowledge, any of the persons listed in
Schedule A hereto, has since January 1, 1996 had any transaction with the
Company or any of its executive officers, directors or affiliates that would
require disclosure under the rules and regulations of the SEC applicable to the
Offer.
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY.
In the ordinary course of its business, Royal Philips is engaged in the
ongoing evaluation of potential candidates for acquisitions and strategic
transactions. Through that process, in the summer of 1998 Royal Philips
identified the Company as a candidate with which it might pursue an acquisition
or other strategic transaction.
On September 2, 1998, Arthur van der Poel, Chairman of the Philips
Semiconductors division ("Philips Semiconductors") of Royal Philips, called
Alfred J. Stein, Chairman and Chief Executive Officer of the Company, to
communicate Royal Philips' interest in pursuing a strategic transaction with the
Company, including an acquisition or joint venture arrangement. Mr. Stein
responded that he did not wish to entertain such discussions at that time. It
was suggested by Mr. Stein that in the next few months Mr. Stein and Mr. Van der
Poel should meet at a mutually convenient time in either Europe or the United
States.
In October of 1998, Philips retained Credit Suisse First Boston Corporation
to act as its financial advisor and Sullivan & Cromwell to act as its legal
counsel in connection with its exploration of a possible strategic transaction
with the Company.
14
<PAGE> 18
On November 4, 1998, Mr. Van der Poel called Mr. Stein and set up a meeting
for November 23, 1998 so that the two of them could continue their previous
discussions regarding a possible transaction between Royal Philips and the
Company. On November 20, 1998, Mr. Van der Poel had a conference call with Mr.
Stein and Robert P. Dilworth, a member of the Board of Directors of the Company,
regarding the agenda for the November 23 meeting. Mr. Stein and Mr. Dilworth
asked Mr. Van der Poel to confirm that he would not be bringing a written
proposal to acquire the Company to the November 23 meeting. Mr. Van der Poel
confirmed that he would not bring such a written proposal. On November 23, 1998,
Mr. Van der Poel met with Mr. Stein in San Jose, California and informed Mr.
Stein that Royal Philips wished to conduct a due diligence investigation of the
Company and to commence to attempt to negotiate mutually agreeable terms
pursuant to which Royal Philips would acquire the Company. Mr. Stein reiterated
that he did not believe it was an appropriate time to negotiate the sale of the
Company, and suggested that he and Mr. Van der Poel take up the subject again in
another three to six months. Mr. Stein and Mr. Van der Poel did agree to
consider areas in which the Company and Philips Semiconductors might cooperate.
On December 3, 1998, Mr. Van der Poel sent Mr. Stein a letter to follow-up
on the November 23 meeting. In that letter Mr. Van der Poel outlined three areas
in which he believed Philips Semiconductors and the Company could
cooperate -- manufacturing, technology and cellular telephony
applications -- and suggested that representatives of the two companies should
meet to discuss a possible cooperation arrangement. Responding to Mr. Van der
Poel's proposal, Mr. Stein called and said that he believed cooperation in
manufacturing and technology was worth exploration and agreed that the
appropriate representatives should meet.
Following up on the agreement of Messrs. Stein and Van der Poel, on January
23, 1999, Stuart McIntosh, Chief Operations Officer of Philips Semiconductors,
traveled to the Company's manufacturing facility in San Antonio, Texas, where he
met with David Ledvina, an officer of the Company with responsibility for
manufacturing, and discussed with him ways in which the two companies could
cooperate in terms of manufacturing. On February 16, 1999, Theo Claassen, Chief
Technology Officer of Philips Semiconductors, and Rob Horbach, Strategy Officer
of Philips Semiconductors, met with Rajeeva Lahri, Senior Vice President
Corporate Research and Development, C. Clifford Roe, Vice President Corporate
Strategic Programs, and Bob Payne, Vice President Strategic Technology to
discuss the ways in which the two companies could cooperate in the technology
area.
On February 17, 1999, Mr. Van der Poel contacted Mr. Stein by e-mail
suggesting that they meet on the afternoon of February 25, 1999, when Mr. Van
der Poel planned to be in California. By reply e-mail, Mr. Stein confirmed that
he would be available to meet that afternoon.
On February 25, 1999, Mr. Van der Poel, joined by Cor Boonstra, President
and Chief Executive Officer of Royal Philips, met with Mr. Stein at the offices
of the Company in San Jose, California. At that meeting, Mr. Boonstra and Mr.
Van der Poel informed Mr. Stein of Royal Philips' intention to propose to the
Board of Directors of the Company that the two companies negotiate an agreement
whereby Royal Philips would acquire, in a merger transaction, all the shares of
the Company. Mr. Boonstra and Mr. Van der Poel discussed with Mr. Stein the
business rationale and strategic benefits of such a business combination. Mr.
Stein responded that he understood the strategic rationale of such a business
combination, but did not wish to pursue a combination at this time or within the
next six months. Mr. Boonstra and Mr. Van der Poel reiterated that Royal Philips
aimed at a much faster time schedule. Mr. Stein responded that he would discuss
the matter with the Company's Board of Directors at a regularly scheduled board
meeting on Wednesday March 3, 1998. In conclusion, Mr. Boonstra and Mr. Van der
Poel said that they would confer among themselves regarding what had been
discussed and would get back to Mr. Stein regarding how Royal Philips would
propose to proceed. On February 25, 1999, the closing bid for the Shares on the
Nasdaq National Market was $10 3/4.
15
<PAGE> 19
Later that day, Mr. Van der Poel called Mr. Stein to inform him that they
would be sending him shortly a letter outlining Royal Philips' proposal. Shortly
thereafter, on the evening of February 25, 1999, the following letter was
delivered to Mr. Stein:
Mr. A. J. Stein
Chairman & CEO
VLSI Technology, Inc.
1109 McKay Drive
San Jose, CA 95131
February 25, 1999
Dear Mr. Stein,
Thank you for meeting with Arthur van der Poel and myself to discuss a
possible strategic business combination between our companies. As you know
from our recent conversations, Philips has for some time studied the
possibility of a combination of our Semiconductors division and VLSI.
Those conversations and our meeting today have convinced us that we should
progress with our discussions on a fast time track. We have therefore
summarized our proposal in this letter so that you can discuss it with
your Board of Directors and advisors.
Based upon our work to date, which has been limited to public sources,
Philips would propose to enter into an agreement to acquire VLSI in a
merger transaction in which your stockholders would receive $17 in cash
for each share of VLSI common stock.
We believe our proposal, which represents a premium of approximately 60%
to the closing VLSI market price on February 25th, offers an extremely
attractive opportunity for your stockholders. Philips would propose to
finance the transaction primarily through existing cash balances and thus
would not require any contingency or delay traditionally associated with
raising capital.
As we told you, we have the highest regard for your company and your
employees, as well as your many innovations in the semiconductor field. We
believe that the combined business of VLSI and Philips Semiconductors will
be positioned as a global leader in many of the most exciting
semiconductor growth markets. Furthermore, we are convinced that the
strategic, operational and financial merits of such a combination are
compelling and will provide significant benefits to your shareholders,
employees, customers, and other stakeholders.
We plan to use VLSI as a cornerstone of our growth strategy for Philips
Semiconductors in North America as a platform for further expansion. As a
result, we recognize that VLSI's management and employees are essential to
the success of our proposed business combination. We are therefore very
interested in discussing with you the ways in which we can properly offer
incentives and retain those managers and employees.
As you can appreciate, with a proposal of this type, time is of the
essence, and we are prepared to move accordingly. We would be happy to
meet with you and other members of your Board of Directors, senior
management and with your advisers as soon as practical to discuss our
proposal and to answer any questions you or they may have. We believe it
would be mutually desirable if you would give us the opportunity to
conduct customary due diligence in parallel with the negotiation of a
definitive acquisition agreement.
We realize that your Board of Directors will want to carefully consider
our proposal, but we do ask that you get back to us with a response as
soon as possible, but in no event later than the close of business on
Wednesday, March 3rd.
We have discussed the highly sensitive nature of the market information
contained in this letter with our legal counsel, Sullivan & Cromwell.
Based upon those discussions, we have decided to publicly disclose our
acquisition proposal.
16
<PAGE> 20
I hope that VLSI will respond favorably to this proposal, and that a
combination of our related businesses can be accomplished in an amicable
and mutually beneficial fashion. We look forward to your response.
Sincerely,
Cor Boonstra
President & CEO
Royal Philips Electronics
cc: Board of Directors VLSI Technology, Inc.
Also on the evening of February 25, 1999, Royal Philips issued a press
release, which announced that Royal Philips had made the proposal to Mr. Stein
and the Company's Board of Directors and set forth the foregoing letter.
On February 26, 1999, the Company issued a press release acknowledging
receipt of Royal Philips' proposal and including a statement from Mr. Stein
indicating that the Company's Board of Directors would evaluate the proposal
with the Company's financial and legal advisors.
On March 3, 1999, the Company's Board of Directors convened for a regularly
scheduled meeting. Later that day, the Company issued a press release
indicating, among other things, that the Company had scheduled a special meeting
of its Board of Directors for March 23, 1999, at which it would consider the
results of an evaluation conducted by its advisors of the proposal set forth in
Royal Philips' February 25 letter.
On March 4, 1999, Royal Philips issued a press release indicating that it
would commence the Offer on March 5, 1999. The release stated that Royal Philips
was encouraged that the Company's Board of Directors was considering Royal
Philips' proposal with an open mind. However, Royal Philips explained that given
the compelling nature of the transaction with the Company, Royal Philips desired
to quickly complete a mutually beneficial transaction and therefore took its
offer directly to the Company's shareholders. In doing so, Royal Philips
repeated its preference for a negotiated transaction with the Company.
Also on March 4, 1999, Mr. Boonstra sent the following letter to Mr. Stein.
By Facsimile
Mr. A. J. Stein
Chairman & CEO
VLSI Technology, Inc.
1109 McKay Drive
San Jose, CA 95131
March 4, 1999
Dear Mr. Stein,
We were encouraged to hear that your Board of Directors has an open mind
about Philips' proposal to acquire VLSI in a merger transaction in which
your stockholders would receive $17 in cash for each share of VLSI common
stock.
We have the highest regard for your company and your employees, as well as
your many innovations in the semiconductor field. Combining VLSI with
Philips Semiconductors presents both a compelling strategic and
operational opportunity for our businesses and compelling financial
benefits to your shareholders. The market's response to our proposal
confirms this belief.
17
<PAGE> 21
Given the compelling nature of this transaction, time is of the essence.
Accordingly, to keep this transaction on a fast time track and to
demonstrate that we are committed to pursuing it, we plan to commence
tomorrow a $17 per share tender offer for all the outstanding shares of
VLSI.
As you are aware, the Company's rights plan is at the present time an
impediment to consummation of our offer. Accordingly, in order that your
stockholders can receive the benefits of our offer, we request that the
Board of Directors redeem the rights outstanding pursuant to the rights
plan or otherwise take action to render the rights inapplicable to our
offer. If your Board of Directors does not dismantle the rights plan, in
order to pursue our offer it would be our intention to seek to replace
your Board of Directors with nominees who, subject to their fiduciary
duties, would allow the offer to proceed. This is not our preferred
course, but we are prepared to take it, should it be necessary in order
for us to accept the tenders of the stockholders that respond to our
offer.
We want you, your Board of Directors, your management and your employees
to know that we would prefer to negotiate a definitive acquisition
agreement with you. We and our advisors are prepared to start the process
immediately. In that regard, please contact me or Arthur van der Poel at
any time should you wish to discuss our proposal prior to your scheduled
Board meeting on March 23, 1999.
Sincerely,
Cor Boonstra
President & CEO
Royal Philips Electronics
cc: Board of Directors VLSI Technology, Inc.
On March 5, 1999, Royal Philips and Purchaser commenced the Offer.
As of March 5, 1999, Royal Philips was the indirect beneficial owner of an
aggregate of 1,235,000 Shares or approximately 2.7% of the Shares reported by
the Company to be outstanding as of September 25, 1998. Royal Philips owns all
but 100 of such Shares indirectly through its indirect wholly-owned subsidiary
Neglin Lamp. A broker-dealer purchased such shares in open-market purchases for
the account of Neglin Lamp. Schedule B hereto sets forth with respect to such
Shares (i) each date of purchase, (ii) the number of Shares purchased each such
day and (iii) the average price paid therefor.
The Purchaser is the beneficial owner of 100 Shares. On March 3, 1999,
Royal Philips transferred to the Purchaser 100 Shares through a broker-dealer
journal transfer transaction. Except as described in this Offer to Purchase
(including Schedule I hereto), none of the Purchaser, Royal Philips or, to the
best knowledge of the Purchaser, any of the persons listed in Schedule I hereto,
or any associate or majority owned subsidiary of the Purchaser, Royal Philips or
any of the persons so listed, beneficially owns any equity security of the
Company, and none of the Purchaser, Royal Philips or, to the best knowledge of
the Purchaser, any of the other persons referred to above, or any of the
respective directors, executive officers or subsidiaries of any of the
foregoing, has effected any transaction in any equity security of the Company
during the past 60 days. The Purchaser and Royal Philips disclaim beneficial
ownership of any Shares owned by any pension plan of Royal Philips or any
affiliate of Royal Philips.
Except as described in this Offer to Purchase and other than for ordinary
course intercompany inventory purchases and sales not material to the Company,
Royal Philips or its affiliates, as of the date hereof (a) there have not been
any contacts, transactions or negotiations between the Purchaser or Royal
Philips, any of their respective subsidiaries or, to the best knowledge of the
Purchaser, any of the persons listed in Schedule I hereto, on the one hand, and
the Company or any of its directors, officers or affiliates, on the other hand,
that are required to be disclosed pursuant to the rules and regulations of the
Commission and (b) none of the Purchaser, Royal Philips or, to the best
knowledge of the Purchaser, any of the persons listed in Schedule I hereto has
any contract, arrangement, understanding or relationship with any person with
respect to any
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securities of the Company. During the Offer, the Purchaser and Royal Philips
intend to have ongoing contacts with the Company and its directors, officers and
stockholders.
11. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY; THE PROPOSED MERGER.
Purpose. The purpose of the Offer is to acquire for cash as many
outstanding Shares as possible as a first step in acquiring the entire equity
interest in the Company.
The Purchaser currently intends, as soon as practicable upon consummation
of the Offer, to propose and seek to have the Company effect the Proposed
Merger, pursuant to which each then outstanding Share (other than Shares held by
the Company in treasury, or owned by Royal Philips, the Purchaser or any other
wholly owned subsidiary of Royal Philips or Shares, if any, that are held by
stockholders who are entitled to and who properly exercise dissenters' rights
under Delaware law), would be converted pursuant to the terms of the Proposed
Merger into the right to receive an amount in cash equal to the per Share price
paid pursuant to the Offer, without interest.
No final decisions have been made with respect to Royal Philips' plans for
the Company if the Proposed Merger is consummated. Such decisions, when made,
will be based on Royal Philips' review from time to time of the advisability of
certain actions as well as financial and other economic conditions and may
include, without limitation, the integration of all or some of the Company's
operations with operations conducted by Philips Semiconductors through its
subsidiaries and affiliates. Because there is not significant overlap of the
Company's business and the businesses conducted by Philips Semiconductors, Royal
Philips currently anticipates that substantially all of the Company's businesses
would continue to be conducted following consummation of the Offer and the
Proposed Merger. Because the Company's businesses would be operated as a part of
Philips Semiconductors, there would be changes from the way the Company does
business as a stand-alone entity.
Royal Philips and the Purchaser are seeking to negotiate with the Company
with respect to the acquisition of the Company by Royal Philips through the
Purchaser. Royal Philips and the Purchaser reserve the right to amend the Offer
upon entering into a merger agreement with the Company.
In the event that Royal Philips is unable to negotiate a definitive merger
agreement with the Company and, pursuant to the Offer, Purchaser acquires Shares
which, together with Shares beneficially owned by Purchaser and its affiliates,
constitute at least 90% of the outstanding Shares, Royal Philips currently
intends to transfer (and cause any such affiliates to transfer) the Shares owned
by Royal Philips and any such affiliates to the Purchaser to permit the
Purchaser to consummate a "short-form" merger pursuant to Section 253 of the
DGCL. Section 253 of the DGCL provides that if the Purchaser owns at least 90%
of the outstanding Shares, the Purchaser may merge the Company into itself by
executing, acknowledging and filing, in accordance with Section 103 of the DGCL,
a certificate of such ownership and merger setting forth a copy of the
resolution of the Purchaser's board of directors to so merge (including a
statement of the terms and conditions of the merger and the consideration to be
paid by the Purchaser upon surrender of Shares not owned by the Purchaser) and
the date of its adoption. Under Section 253 of the DGCL, such a merger of the
Company with the Purchaser would not require the approval or any other action on
the part of the Board of Directors or the stockholders of the Company.
Therefore, if at least 90% of the outstanding Shares are acquired pursuant to
the Offer or otherwise, the Purchaser will be able to, and intends to, effect
the Proposed Merger without a meeting of holders of Shares.
If the Purchaser purchases a sufficient number of Shares to satisfy the
Minimum Tender Condition, but does not purchase a sufficient number of Shares to
effect a "short-form" merger, Purchaser would seek to effect a merger of the
Purchaser with the Company pursuant to Section 251 of the DGCL. Under the
Company's Articles of Incorporation and the DGCL, approval of the Board of
Directors of the Company and a vote of at least a majority of the outstanding
Shares of the Company entitled to vote thereon would be required to approve such
a merger. If the Minimum Tender Condition is satisfied Purchaser would have a
sufficient number of votes to effect the shareholder approval of a merger
pursuant to Section 251 of the DGCL, which approval could be effected by a vote
at a meeting of shareholders or by written consent. Approval of such a merger
would nonetheless also require the approval of the Company's Board of Directors.
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Royal Philips has requested that the Board of Directors of the Company
redeem the Rights or otherwise take action to render the Rights inapplicable to
the Offer and the Proposed Merger. If the Board of Directors does not do so, in
connection with the Offer and the Proposed Merger and in order to satisfy the
Rights Condition, Royal Philips and the Purchaser intend, if necessary, to seek
through the solicitation of proxies from holders of Shares to elect at the
Company's next Annual Meeting, or at a special meeting of stockholders, nominees
of the Purchaser as the directors of the Company. As an alternative to or in
addition to the solicitation of proxies, the Purchaser may solicit written
consents from the holders of Shares to remove the Company's Board of Directors
and to elect nominees of the Purchaser as the directors of the Company. If Royal
Philips commences a solicitation of proxies or consents from the holders of
Shares and Purchaser's nominees are elected to the Board of Directors of the
Company, the Purchaser expects that such nominees will, subject to their
fiduciary duties to stockholders of the Company in light of the circumstances
then existing, take all necessary action to redeem the Rights and thereby
satisfy the Rights Condition, approve the acquisition of Shares pursuant to the
Offer and the Proposed Merger, satisfy the Section 203 Condition and authorize
the Company to enter into a merger agreement with Royal Philips and the
Purchaser to effect the Proposed Merger.
THIS OFFER DOES NOT CONSTITUTE A SOLICITATION OF PROXIES OR CONSENTS. ANY
SUCH SOLICITATION WHICH THE PURCHASER OR ROYAL PHILIPS MIGHT MAKE WILL BE MADE
PURSUANT TO SEPARATE PROXY OR CONSENT SOLICITATION MATERIALS COMPLYING WITH THE
REQUIREMENTS OF SECTION 14(a) OF THE EXCHANGE ACT.
Section 203 of the DGCL. In general, Section 203 of the DGCL prevents an
"Interested Stockholder" (defined generally as a person with 15% or more of a
corporation's outstanding voting stock) of a Delaware corporation from engaging
in a "Business Combination" (defined as a variety of transactions, including
mergers, as set forth below) with such corporation for three years following the
date such person became an Interested Stockholder unless (i) before such person
became an Interested Stockholder, the Board of Directors of the corporation
approved the transaction in which the Interested Stockholder became an
Interested Stockholder or approved the Business Combination; (ii) upon
consummation of the transaction which resulted in the Interested Stockholder
becoming an Interested Stockholder, the Interested Stockholder owned at least
85% of the voting stock of the corporation outstanding at the time the
transaction commenced (excluding stock held by directors who are also officers
of the corporation and by employee stock ownership plans that do not provide
employees with the rights to determine confidentially whether shares held
subject to the plan will be tendered in a tender or exchange offer); or (iii)
following the transaction in which such person became an Interested Stockholder,
the Business Combination is approved by the Board of Directors of the
corporation and authorized at a meeting of stockholders by the affirmative vote
of the holders of two-thirds of the outstanding voting stock of the corporation
not owned by the Interested Stockholder.
Section 203 provides that during such three-year period the corporation may
not merge or consolidate with an Interested Stockholder or any affiliate or
associate thereof, and also may not engage in certain other transactions with an
Interested Stockholder or any affiliate or associate thereof, including without
limitation, (i) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of assets (except proportionately as a stockholder of the
corporation) having an aggregate market value equal to 10% or more of the
aggregate market value of all assets of the corporation determined on a
consolidated basis or the aggregate market value of all the outstanding stock of
a corporation; (ii) any transaction which results in the issuance or transfer by
the corporation or by certain subsidiaries thereof of any stock of the
corporation or such subsidiaries to the Interested Stockholder, except pursuant
to a transaction which effects a pro rata distribution to all stockholders of
the corporation; (iii) any transaction involving the corporation or certain
subsidiaries thereof which has the effect of increasing the proportionate share
of the stock of any class or series, or securities convertible into the stock of
any class or series, of the corporation or any such subsidiary which is owned
directly or indirectly by the Interested Stockholder (except as a result of
immaterial changes due to fractional share adjustments); or (iv) any receipt by
the Interested Stockholder of the benefit (except proportionately as a
stockholder of such corporation) of any loans, advances, guarantees, pledges or
other financial benefits provided by or through the corporation.
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<PAGE> 24
There can be no assurance that the Board of Directors of the Company will
approve the acquisition of Shares pursuant to the Offer and the Proposed Merger
for purposes of Section 203.
THE OFFER IS CONDITIONED UPON THE ACQUISITION OF SHARES PURSUANT TO THE
OFFER AND THE PROPOSED MERGER BEING APPROVED PURSUANT TO SECTION 203 OR ROYAL
PHILIPS BEING SATISFIED IN ITS SOLE DISCRETION THAT THE PROVISIONS OF SECTION
203 ARE INVALID OR INAPPLICABLE TO THE ACQUISITION OF SHARES PURSUANT TO THE
OFFER AND THE PROPOSED MERGER.
Appraisal Rights. Holders of Shares do not have appraisal rights as a
result of the Offer. However, if the Proposed Merger is consummated, each holder
of Shares whose shares are to be converted in the Proposed Merger and who has
neither voted in favor of the Proposed Merger nor consented thereto in writing
will be entitled to an appraisal by the Delaware Court of Chancery of the fair
value of such stockholder's Shares, exclusive of any element of value arising
from the accomplishment or expectation of the Merger, together with a fair rate
of interest, if any, to be paid. In determining such fair value, the Court may
consider all relevant factors. The value so determined could be more or less
than the consideration to be paid in the Offer and the Proposed Merger. Any
judicial determination of the fair value 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.
If any holder of Shares who demands appraisal under Section 262 of the DGCL
fails to perfect, or effectively withdraws or loses such stockholder's right to
appraisal as provided in the DGCL, the Shares of such stockholder will be
converted into the right to receive the merger consideration pursuant to the
Proposed Merger.
The foregoing discussion is not a complete statement of law pertaining to
appraisal rights under the DGCL and is qualified in its entirety by the full
text of Section 262 of the DGCL.
FAILURE TO FOLLOW THE STEPS REQUIRED BY SECTION 262 OF THE DGCL FOR
PERFECTING APPRAISAL RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS.
Rule 13e-3. The Proposed Merger would have to comply with any applicable
Federal law operative at the time of its consummation. Rule 13e-3 under the
Exchange Act is applicable to certain "going private" transactions. The
Purchaser does not believe that Rule 13e-3 will be applicable to the Proposed
Merger unless the Proposed Merger is consummated more than one year after the
termination of the Offer. If applicable, Rule 13e-3 would require, among other
things, that certain financial information concerning the Company and certain
information relating to the fairness of the Proposed Merger and the
consideration offered to minority stockholders be filed with the SEC and
disclosed to minority stockholders prior to consummation of the Proposed Merger.
Rights Agreement. Set forth on Schedule C is a summary description of the
Rights as included in the Company's Registration Statement on Form 8-A dated
August 12, 1992.
THE OFFER IS CONDITIONED, AMONG OTHER THINGS, ON THE RIGHTS CONDITION BEING
SATISFIED. See Introduction and Section 13. Royal Philips has requested that
the Company's Board of Directors redeem the Rights or otherwise take action to
render the Rights inapplicable to the Offer and the Proposed Merger, in order to
allow stockholders the opportunity to receive the consideration offered pursuant
to the Offer. As described in Section 15, the Purchaser has commenced litigation
against the Company and its directors seeking, among other things, an order
enjoining those defendants from implementing the Rights Agreement with respect
to the Offer and requiring them to redeem the Rights. Unless the Rights
Condition shall have been satisfied, stockholders will be required to tender all
Rights associated with each share of Common Stock tendered in order to effect a
valid tender of Shares in accordance with the procedures set forth in Section 2.
Unless separate certificates for the Rights are issued, a tender of shares of
Common Stock will also constitute a tender of the associated Rights. See Section
1.
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12. SOURCE AND AMOUNT OF FUNDS.
The Purchaser estimates that the total amount of funds required to purchase
all of the outstanding Shares (other than those already owned by Purchaser) on a
Fully Diluted Basis pursuant to the Offer and the Proposed Merger and to pay
related fees and expenses will be approximately $915,000,000. The Purchaser will
obtain these funds from Royal Philips, which will utilize its internal cash
reserves to finance the Offer and the Proposed Merger.
13. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provision of the Offer, until (i) the
satisfaction of the Antitrust Condition and (ii) all required filings or
consents, registrations, approvals, permits or authorizations of any
governmental entity shall have been obtained on terms satisfactory to Purchaser
in its sole discretion, the Purchaser shall not be required to accept for
payment and, subject to any applicable rules and regulations of the SEC,
including Rule 14e-1(c), the Purchaser shall not be required to pay for any
Shares, may postpone the acceptance for payment of, or payment for, tendered
Shares, and may, in its sole discretion, extend, terminate or amend the Offer as
to any Shares not then accepted for payment if the Minimum Tender Condition, the
Section 203 Condition or the Rights Condition has not been satisfied or, on or
after the date of this Offer to Purchase and at or prior to the Expiration Date,
any of the following events shall occur:
(a) there shall be threatened, instituted or pending any action,
proceeding or application before any court, government or governmental
authority or other regulatory or administrative agency or commission,
domestic or foreign, (i) which challenges the acquisition by the Purchaser
of the Shares, seeks to restrain, delay or prohibit the consummation of the
Offer or the transactions contemplated by the Offer, the Proposed Merger or
other subsequent business combination or, seeks to obtain any material
damages or otherwise directly or indirectly relates to the transactions
contemplated by the Offer, the Proposed Merger or other subsequent business
combination, (ii) which seeks to prohibit or impose material limitations on
Royal Philips' or the Purchaser's acquisition, ownership or operation of
all or any portion of their or the Company's business or assets (including
the business or assets of their respective affiliates and subsidiaries) or
of the Shares (including, without limitation, the right to vote the Shares
purchased by them, on an equal basis with all other Shares, on all matters
presented to the stockholders of the Company), or seeks to compel Royal
Philips or the Purchaser to dispose of or hold separate all or any portion
of their own or the Company's business or assets (including the business or
assets of their respective affiliates and subsidiaries) as a result of the
transactions contemplated by the Offer, the Proposed Merger or other
subsequent business combination, (iii) which might adversely affect the
Company, Royal Philips or the Purchaser, or any of their respective
affiliates or subsidiaries (such an effect, an "Adverse Effect"), or result
in a diminution in the value of the Shares or the benefits expected to be
derived by Royal Philips or the Purchaser as a result of the transactions
contemplated by the Offer and the Proposed Merger (such a diminution, a
"Diminution in Value"); or (iv) which seeks to impose any condition to the
Offer or the Proposed Merger unacceptable to the Royal Philips or the
Purchaser; or
(b) other than the waiting periods that must expire or otherwise
terminate in satisfaction of the Antitrust Condition, any statute, rule,
regulation or order or injunction shall be sought, proposed, enacted,
promulgated, entered, enforced or deemed or become applicable to the Offer,
the Proposed Merger or the transactions contemplated by the Offer or other
subsequent business combination that might, directly or indirectly, result
in any of the consequences referred to in clauses (i) through (iv) of
paragraph (a) above; or
(c) any change (or any condition, event or development involving a
prospective change) shall have occurred or be threatened that has or might
have a materially adverse effect on the business, properties, assets,
liabilities, capitalization, stockholders' equity, financial condition,
operations, licenses or franchises, results of operations or prospects of
the Company or any of its subsidiaries, or Royal Philips or the Purchaser
shall have become aware of any fact that has or might have an Adverse
Effect or results or might result in a Diminution in Value; or
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(d) there shall have occurred (i) any general suspension of, or
limitation on times or prices for, trading in securities on any national
securities exchange or in the over-the-counter market, (ii) a declaration
of a banking moratorium or any suspension of payments in respect of banks
in the United States or the Netherlands, (iii) the outbreak or escalation
of a war, armed hostilities or other international or national calamity
directly or indirectly involving the United States or the Netherlands, (iv)
any limitation (whether or not mandatory) by any governmental authority on,
or any other event which might affect the extension of credit by banks or
other lending institutions, (v) a suspension of or limitation (whether or
not mandatory) on the currency exchange markets or the imposition of, or
material changes in, any currency or exchange control laws in the United
States or abroad, (vi) in the case of any of the foregoing existing at the
time of the commencement of the Offer, a material acceleration or worsening
thereof or (vii) a general decline in the market prices of securities of
publicly-traded United States companies in the semiconductor industry; or
(e) other than the redemption of the Rights, the Company or any
subsidiary of the Company shall have (i) issued, distributed, pledged, sold
or authorized, or proposed the issuance of or sale, distribution or pledge
to any person of (A) any shares of its capital stock other than sales or
issuances pursuant to employee stock options disclosed in the Company's
publicly available filings with the SEC prior to, and outstanding on,
February 25, 1999 (in accordance with the then-existing terms thereof) of
any class (including, without limitation, the Common Stock) or securities
convertible into or exchangeable for any such shares of capital stock, or
any rights, warrants or options to acquire any such shares or convertible
securities or any other securities of the Company, (B) any other securities
in respect of, in lieu of or in substitution for Common Stock outstanding
on February 25, 1999 (in accordance with the then-existing terms thereof)
or (C) any debt securities or any securities convertible into or
exchangeable for debt securities or any rights, warrants or options
entitling the holder thereof to purchase or otherwise acquire any debt
securities, (ii) purchased or otherwise acquired, or proposed or offered to
purchase or otherwise acquire any outstanding shares of Common Stock or
other securities, (iii) proposed, recommended, authorized, declared, issued
or paid any dividend or distribution on any shares of Common Stock or any
other security, whether payable in cash, securities or other property, (iv)
altered or proposed to alter any material term of any outstanding security,
(v) incurred, agreed to incur or announced its intention to incur any debt
other than in the ordinary course of business and consistent with past
practice, (vi) authorized, recommended, proposed or publicly announced its
intent to enter into any merger, consolidation, liquidation, dissolution,
business combination, acquisition or disposition of assets or securities
other than in the ordinary course of business consistent with past
practice, any material change in its capitalization, any release or
relinquishment of any material contractual or other rights or any
comparable event, or taken any action to implement any such transaction
previously authorized, recommended, proposed or publicly announced or (vii)
entered into any other agreement or otherwise effected any other
arrangement with any other party or with its officers or other employees of
the Company that might, individually or in the aggregate, have an Adverse
Effect or result in a Diminution in Value; or
(f) the Company or any of its subsidiaries shall have amended or
proposed or authorized any amendment to its certificate of incorporation or
by-laws or similar organizational documents or the Purchaser shall have
learned that the Company or any of its subsidiaries shall have proposed,
adopted or recommended any such amendment which has not previously been
publicly disclosed by the Company and also set forth in filings with the
SEC; or
(g) a tender or exchange offer for some portion or all of the Shares
shall have been commenced or publicly proposed to be made by another person
(including the Company or its subsidiaries), or it shall have been publicly
disclosed or the Purchaser shall have learned that (i) any person
(including the Company or its subsidiaries), entity or "group" (as defined
in Section 13(d)(3) of the Exchange Act) shall, other than for bona fide
arbitrage purposes, have acquired or proposed to acquire more than five
percent of the outstanding Shares, or shall have been granted any option or
right, conditional or otherwise, to acquire more than five percent of the
outstanding Shares, other than acquisitions by persons or groups who have
publicly disclosed in a Schedule 13D or 13G (or amendments thereto on file
with the
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<PAGE> 27
SEC) such ownership on or prior to February 25, 1999, (ii) any such person,
entity or group who has publicly disclosed any such ownership of more than
five percent of the outstanding Shares prior to such date shall have
acquired or proposed to acquire additional Shares constituting more than
one percent of the outstanding Shares, or shall have been granted any
option or right to acquire more than one percent of the outstanding Shares;
(iii) any new group was, or is, formed which beneficially owns more than
five percent of the outstanding Shares; (iv) any person, entity or group
shall have entered into a definitive agreement or an agreement in principal
or made a proposal with respect to a tender offer or exchange offer for
some portion or all of the outstanding Shares or a merger, consolidation or
other business combination or sale of assets (other than in the ordinary
course of business consistent with past practice) with or involving the
Company or any of its affiliates or subsidiaries; or (v) any person shall
have filed a Notification and Report Form under the HSR Act or made a
public announcement reflecting an intent to acquire the Company or assets
or securities of the Company; or
(h) the Company and Royal Philips or the Purchaser shall have reached
an agreement or understanding that the Offer be terminated or amended or
the Purchaser or Royal Philips (or one of their respective affiliates)
shall have entered into a definitive agreement or an agreement in principle
to acquire the Company by merger or similar business combination, or
purchase of Shares or assets of the Company; or
(i) any change (or any condition, event or development involving a
prospective change) shall have occurred or be threatened in the general
economic, financial, currency exchange or market conditions in the United
States or abroad that has or might have an Adverse Effect or results or
might result in a Diminution in Value; or
(j) the Company or any of its subsidiaries shall have transferred into
trust, escrow or similar arrangement any amounts required to fund any
existing benefit, employment or severance agreements with any of its
employees or shall have entered into or otherwise affected with its
officers or any other employees any additional benefit, employment,
severance or similar agreements, arrangements or plans other than in the
ordinary course of business consistent with past practice or entered into
or amended any agreements, arrangements or plans so as to provide for
increased benefits to such employee or employees as a result of or in
connection with the transactions contemplated by the Offer or the Proposed
Merger; or
(k) any regulatory approvals and consents applicable to this Offer
shall not have been obtained on terms and conditions satisfactory to the
Purchaser or the Purchaser shall have received notice under Section 721 of
Title VII of the United States Defense Production Act of 1950, as amended
by Section 5021 of the Omnibus Trade and Competitiveness Act of 1988 (the
"Exon-Florio Amendment") that the Committee on Foreign Investment in the
United States ("CFIUS") has determined to investigate this Offer or any
related transaction or the time that CFIUS can decide to take such action
has not expired;
which in the sole judgment of Royal Philips and the Purchaser with respect to
each and every matter referred to above makes it inadvisable to proceed with the
Offer or with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Royal Philips and the
Purchaser and may be asserted by Royal Philips or the Purchaser regardless of
the circumstances (including any action or inaction by Royal Philips or the
Purchaser) giving rise to any such conditions or may be waived by Royal Philips
or the Purchaser in whole or in part at any time and from time to time in its
sole discretion. The determination as to whether any condition has occurred
shall be in the sole judgment of Royal Philips and the Purchaser and will be
final and binding on all parties. The failure by Royal Philips or the Purchaser
at any time to exercise any of the foregoing rights shall not be deemed a waiver
of any such right and each such right shall be deemed an ongoing right which may
be asserted at any time and from time to time.
A public announcement shall be made of a material change in, or waiver of,
such conditions, and the Offer may, in certain circumstances, be extended in
connection with any such change or waiver.
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14. DIVIDENDS AND DISTRIBUTIONS.
If, on or after the date of this Offer to Purchase, the Company should (1)
split, combine or otherwise change the Shares or its capitalization, (2) acquire
currently outstanding Shares or otherwise cause a reduction in the number of
outstanding Shares or (3) issue or sell additional Shares, shares of any other
class of capital stock, other voting securities or any securities convertible
into, or rights, warrants or options, to acquire any of the foregoing, other
than Shares issued pursuant to the exercise of stock options outstanding as of
the date of the Offer to Purchase, then, subject to the provisions of Section 13
above, the Purchaser, in its sole discretion, may make such adjustments as it
deems appropriate in the price per Share to be paid pursuant to and other terms
of the Offer, including, without limitation, the number or type of securities
offered to be purchased.
If, on or after the date of this Offer to Purchase, the Company should
declare or pay any cash dividend on the Shares or other distribution on the
Shares, or issue with respect to the Shares any additional Shares, shares of any
other class of capital stock, other voting securities or any securities
convertible into, or rights, warrants or options, conditional or otherwise, to
acquire, any of the foregoing, payable or distributable to stockholders of
record on a date prior to the transfer of the Shares purchased pursuant to the
Offer to the Purchaser or its nominee or transferee on the Company's stock
transfer records, then, subject to the provisions of Section 13 above, (1) the
offer price may, in the sole discretion of the Purchaser, be reduced by the
amount of any such cash dividend or cash distribution and (2) the whole of any
such non-cash dividend, distribution or issuance to be received by the tendering
stockholders will (a) be received and held by the tendering stockholders for the
account of the Purchaser and will be required to be promptly remitted and
transferred by each tendering stockholder to the Depositary for the account of
the Purchaser, accompanied by appropriate documentation of transfer, or (b) at
the direction of the Purchaser, be exercised for the benefit of the Purchaser,
in which case the proceeds of such exercise will promptly be remitted to the
Purchaser. Pending such remittance and subject to applicable law, the Purchaser
will be entitled to all rights and privileges as owner of any such noncash
dividend, distribution, issuance or proceeds and may withhold the entire offer
price or deduct from the offer price the amount or value thereof, as determined
by the Purchaser in its sole discretion.
15. CERTAIN LEGAL MATTERS.
General. Except as otherwise disclosed herein, based upon an examination
of publicly available filings with respect to the Company, Royal Philips and the
Purchaser are not aware of any licenses or other regulatory permits which appear
to be material to the business of the Company and which might be adversely
affected by the acquisition of Shares by the Purchaser pursuant to the Offer or
of any approval or other action by any governmental, administrative or
regulatory agency or authority which would be required for the acquisition or
ownership of Shares by the Purchaser pursuant to the Offer. Should any such
approval or other action be required, it is currently contemplated that such
approval or action would be sought or taken. There can be no assurance that any
such approval or action, if needed, would be obtained or, if obtained, that it
will be obtained without substantial conditions or that adverse consequences
might not result to the Company's or Royal Philips' business or that certain
parts of the Company's or Royal Philips' business might not have to be disposed
of in the event that such approvals were not obtained or such other actions were
not taken, any of which could cause the Purchaser to elect to terminate the
Offer without the purchase of the Shares thereunder. The Purchaser's obligation
under the Offer to accept for payment and pay for Shares is subject to certain
conditions. See Section 13.
Antitrust Compliance. Under the HSR Act and the rules that have been
promulgated thereunder by the Federal Trade Commission ("FTC"), certain
acquisition transactions may not be consummated unless certain information has
been furnished to the Antitrust Division of the Department of Justice (the
"Antitrust Division") and the FTC and certain waiting period requirements have
been satisfied. The acquisition of Shares by the Purchaser is subject to these
requirements. See Section 2 of this Offer to Purchase as to the effect of the
HSR Act on the timing of the Purchaser's obligation to accept Shares for
payment.
Pursuant to the HSR Act, Royal Philips expects to file a Notification and
Report Form with respect to the acquisition of Shares pursuant to the Offer and
the Proposed Merger with the Antitrust Division and the
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FTC on March 8, 1999. Under the provisions of the HSR Act applicable to the
purchase of Shares pursuant to the Offer, such purchases may not be made until
the expiration of a 15-calendar day waiting period following the filing by Royal
Philips. Accordingly, the waiting period under the HSR Act is expected to expire
at 11:59 p.m., New York City time, on March 23, 1999, unless early termination
of the waiting period is granted or Royal Philips receives a request for
additional information or documentary material prior thereto. Pursuant to the
HSR Act, Royal Philips has requested early termination of the waiting period
applicable to the Offer. There can be no assurances given, 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 Royal Philips, the waiting period would expire at 11:59 p.m., New
York City time, on the tenth calendar day after the date of substantial
compliance by Royal Philips with such request unless the waiting period is
sooner terminated by the FTC or the Antitrust Division. Thereafter, the waiting
period could be extended only by agreement or by court order. See Section 2.
Only one extension of such waiting period pursuant to a request for additional
information is authorized by the rules promulgated under the HSR Act, except by
agreement or 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. Although the Company is required to file certain information and
documentary material with the Antitrust Division and the FTC in connection with
the Offer, neither the Company's failure to make such filings nor a request from
the Antitrust Division or the FTC for additional information or documentary
material made to the Company will extend the waiting period.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares by
the Purchaser pursuant to the Offer. At any time before or after the Purchaser's
purchase of Shares, the Antitrust Division or the FTC could take such action
under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the acquisition of Shares pursuant to the
Offer or seeking divestiture of Shares acquired by the Purchaser or the
divestiture of substantial assets of Royal Philips, the Company or any of their
respective subsidiaries. Private parties may also bring legal action under the
antitrust laws under certain circumstances. There can be no assurance that a
challenge to the Offer on antitrust grounds will not be made or, if a challenge
is made, what the result will be. See Section 13 of this Offer to Purchase for
certain conditions to the Offer that could become applicable in the event of
such a challenge.
The acquisition of Shares by the Purchaser pursuant to the Offer may be
subject to antitrust laws or regulations in one or more foreign jurisdictions.
Such laws or regulations may require notification with respect to the Offer and
impose a mandatory waiting period similar to the requirements of the HSR Act.
Foreign Approvals. The Company owns property or conducts business in
various foreign countries and jurisdictions. In connection with the acquisition
of the Shares pursuant to the Offer, the laws of certain of those foreign
countries and jurisdictions may require the filing of information with, or the
obtaining of the approval of, governmental authorities in such countries and
jurisdictions. The governments in such countries and jurisdictions might attempt
to impose additional conditions on the Company's operations conducted in such
countries and jurisdictions as a result of the acquisition of the Shares
pursuant to the Offer. There can be no assurance that Royal Philips will be able
to cause the Company or its subsidiaries to satisfy or comply with such laws or
that compliance or non-compliance will not have a material adverse effect on the
financial condition, properties, business, results of operations or prospects of
the Company and its subsidiaries taken as a whole or impair Royal Philips,
Purchaser or the Company or any of their respective affiliates, following
consummation of the Offer or Proposed Merger, to conduct any material business
or operations in any jurisdiction where they are now being conducted. See
Section 13 of this Offer to Purchase for certain conditions to the Offer that
could become applicable in the event that any such foreign approvals give rise
to the above described effects.
State Takeover Laws. A number of states have adopted laws and regulations
applicable to offers to acquire securities of corporations which are
incorporated in such states and/or which have substantial assets, stockholders,
principal executive offices or principal places of business therein. In Edgar v.
MITE Corporation, the Supreme Court of the United States held that the Illinois
Business Takeover Statute, which made the takeover of certain corporations more
difficult, imposed a substantial burden on interstate commerce and was therefore
unconstitutional. In CTS Corporation v. Dynamics Corporation of America, the
Supreme Court held that as a matter of corporate law, and in particular, those
laws concerning corporate governance, a state may
26
<PAGE> 30
constitutionally disqualify an acquiror of "Control Shares" (ones representing
ownership in excess of certain voting power thresholds: e.g., 20%, 33% or 50%)
of a corporation incorporated in its state and meeting certain other
jurisdictional requirements from exercising voting power with respect to those
shares without the approval of a majority of the disinterested stockholders.
Section 203 of the DGCL limits the ability of a Delaware corporation to
engage in business combinations with "interested stockholders" (defined
generally as any beneficial owner of 15% or more of the outstanding voting stock
of the corporation) unless, among other things, the corporation's board of
directors has given its prior approval to either the business combination or the
transaction which resulted in the stockholder becoming an "interested
stockholder." The Company's Board of Directors has not approved the acquisition
of Shares by Royal Philips or Purchaser pursuant to the Offer or the Proposed
Merger and, therefore, Section 203 of the DGCL is applicable to the Offer and
the Proposed Merger. See Section 11.
The Purchaser reserves the right to challenge the applicability or validity
of any state law purportedly applicable to the Offer or the Proposed Merger and
nothing in this Offer to Purchase or any action taken in connection with the
Offer or the Proposed Merger is intended as a waiver of such right. If it is
asserted that any state takeover statute is applicable to the Offer or the
Proposed Merger and if an appropriate court does not determine that it is
inapplicable or invalid as applied to the Offer or the Proposed Merger, the
Purchaser might be required to file certain information with, or to receive
approvals from, the relevant state authorities, and the Purchaser might be
unable to accept for payment or pay for Shares tendered pursuant to the Offer,
or be delayed in consummating the Offer or the Proposed Merger. In such case,
the Purchaser may not be obliged to accept for payment or pay for any Shares
tendered pursuant to the Offer.
If it is asserted that one or more state takeover laws applies to the Offer
and it is not determined by an appropriate court that such act or acts do not
apply or are invalid as applied to the Offer, the Purchaser might be required to
file certain information with, or receive approvals from, the relevant state
authorities. In addition, if enjoined, the Purchaser might be unable to accept
for payment any Shares tendered pursuant to the Offer, or be delayed in
consummating the Offer. In such case, the Purchaser may not be obligated to
accept for payment any Shares tendered. See Section 13.
Exon-Florio. Under the Exon-Florio Amendment, the President of the United
States is authorized to prohibit or suspend acquisitions, mergers or takeovers
by foreign persons of persons engaged in interstate commerce in the United
States if the President determines, after investigation, that such foreign
persons in exercising control of such acquired persons might take action that
threatens to impair the national security of the United States and that other
provisions of existing law do not provide adequate authority to protect national
security. Pursuant to the Exon-Florio Amendment, notice of an acquisition by a
foreign person is to be made to the CFIUS, either voluntarily by the parties to
such proposed acquisition, merger or takeover or by any member of CFIUS. CFIUS
is comprised of representatives of the Departments of the Treasury, State,
Commerce, Defense and Justice, the Office of Management and Budget, the United
States Trade Representative's Office and the Council of Economic Advisors. The
President selects CFIUS to administer the Exon-Florio Amendment.
A determination that an investigation is called for must be made within 30
days after notification of a proposed acquisition, merger or takeover is first
filed with CFIUS. Any such investigation must be completed within 45 days of
such determination. Any decision by the President to take action must be
announced within 15 days of the completion of the investigation. Although the
Exon-Florio Amendment does not require the filing of a notification, nor does it
prohibit the consummation of an acquisition, merger or takeover if notification
is not made, such an acquisition, merger or takeover thereafter remains
indefinitely subject to divestment should the President subsequently determine
that the national security of the United States has been threatened or impaired.
The Purchaser and Royal Philips do not believe that the Offer or the Proposed
Merger threatens to impair the national security of the United States,
nevertheless, Purchaser and Royal Philips do intend to notify CFIUS of the
proposed transaction.
Delaware Chancery Court Litigation. On March 5, 1999, Royal Philips and
Purchaser commenced a law suit in the Court of Chancery of the State of Delaware
against the Company and its Board of Directors seeking, among other things, to
compel the Board of Directors to redeem the Rights outstanding under the Rights
Agreement or to otherwise take action to render the Rights inapplicable to the
Offer and to invalidate
27
<PAGE> 31
the provision in the Rights Agreement providing that during the 10-day period
following an announcement that a party has triggered the Rights by acquiring 20%
or more of the Shares, the Rights can only be redeemed by the Continuing
Directors of the Company.
16. FEES AND EXPENSES.
Credit Suisse First Boston is acting as Dealer Manager in connection with
the Offer and has provided certain financial advisory services to the Purchaser
and Royal Philips in connection therewith. Royal Philips and Purchaser have
agreed to pay Credit Suisse First Boston as compensation for its services as
Dealer Manager and as financial advisor in connection with the Offer as follows:
a financial advisory fee of $80,000 per month for a maximum of three months,
fully creditable against the transaction fee; an announcement fee of $1,000,000
payable upon the public announcement by Royal Philips of a firm bid, fully
creditable against the transaction fee; a transaction fee of $4,500,000 payable
upon the completion of an acquisition. Royal Philips has agreed to consider, at
its sole discretion, increasing such transaction fee. Royal Philips and
Purchaser have agreed to reimburse Credit Suisse First Boston for its reasonable
out-of-pocket expenses, including the fees and expenses of its counsel, in
connection with the Offer, and have agreed to indemnify Credit Suisse First
Boston against certain liabilities and expenses in connection with the Offer and
the Proposed Merger, including liabilities under the federal securities laws.
The Purchaser has also retained Innisfree M&A Incorporated to act as the
Information Agent in connection with the Offer. The Information Agent may
contact holders of Shares by mail, telephone, telex, telegraph and personal
interviews and may request brokers, dealers and other nominee stockholders to
forward materials relating to the Offer to beneficial owners of Shares. The
Information Agent will receive reasonable and customary compensation for such
services, plus reimbursement of out-of-pocket expenses. The Purchaser will also
indemnify the Information Agent against certain liabilities and expenses in
connection with the Offer, including liabilities under the federal securities
laws.
The 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 expenses in connection therewith, including liabilities under
the federal securities laws. Brokers, dealers, commercial banks and trust
companies will be reimbursed by the Purchaser for customary mailing and handling
expenses incurred by them in forwarding material to their customers.
17. MISCELLANEOUS.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. However, the Purchaser may, in its sole discretion, take such
action as it may deem necessary to make the Offer in any such jurisdiction and
extend the Offer to holders of Shares in such jurisdiction.
Neither the Purchaser nor Royal Philips is aware of any jurisdiction in
which the making of the Offer or the acceptance of Shares in connection
therewith would not be in compliance with the laws of such jurisdiction.
The Purchaser and Royal Philips have filed with the SEC a Statement on
Schedule l4D-1 pursuant to Rule l4d-3 of the General Rules and Regulations under
the Exchange Act, furnishing certain additional information with respect to the
Offer, and may file amendments thereto. Such Statement and any amendments
thereto, including exhibits, may be examined and copies may be obtained from the
principal office of the SEC in Washington, D.C. in the manner set forth in
Section 9.
No person has been authorized to give any information or make any
representation on behalf of Royal Philips or the Purchaser 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.
KPE ACQUISITION INC.
March 5, 1999
28
<PAGE> 32
SCHEDULE A
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF
ROYAL PHILIPS AND THE PURCHASER
The following tables set forth the name, business address, present
principal occupation and material positions held within the past five years of
each director and executive officer of Royal Philips and the Purchaser. Each
person has a business address at Rembrandt Tower, Amstelplein 1, 1096 HA
Amsterdam, The Netherlands and is a citizen of The Netherlands, unless a
different business address and/or citizenship is indicated under his or her
name.
DIRECTORS AND EXECUTIVE OFFICERS OF KONINKLIJKE PHILIPS ELECTRONICS N.V.
(ROYAL PHILIPS ELECTRONICS)
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME AND CITIZENSHIP OFFICE(S) FIVE-YEAR EMPLOYMENT HISTORY
- -------------------- ------------------------------------- ----------------------------------------------
<S> <C> <C>
Cor Boonstra President; Chairman of the Board of President, Chairman of the Board of Management
Management and Group Management and the Group Management Committee of Royal
Committee Philips Electronics. Prior to 1993, President
and Chief Operating Officer of Sara Lee
Corporation. Chairman of Philips Lighting
Division from 1994 until 1995. Prior to 1999,
Member of the Supervisory Board of PolyGram
N.V. Member of the Supervisory Board of Sara
Lee DE N.V., Hunter Douglas International
N.V., Technical University Eindhoven. Member
of the Board of Directors of The Seagram
Company Ltd.
Dudley G. Eustace Executive Vice-President; Vice- Executive Vice-President, Vice Chairman of the
United Kingdom Chairman of the Board of Management Board of Management and the Group Management
and Canada and the Group Management Committee Committee of Royal Philips Electronics. Prior
to 1997, Chief Financial Officer of Royal
Philips Electronics.
Jan H.M. Hommen Executive Vice-President; Member of Executive Vice-President, Member of the Board
the Board of Management and the Group of Management and the Group Management
Management Committee; Chief Financial Committee and Chief Financial Officer of Royal
Officer Philips Electronics. Prior to 1997, Chief
Financial Officer of Alcoa International
Holdings Co. Member of the Supervisory Board
of PolyGram N.V. since 1997.
Adri Baan Executive Vice-President; Member of Executive Vice-President, Member of the Board
the Board of Management and the Group of Management, the Group Management Committee,
Management Committee; Chairman of the and Chairman of the Consumer Electronics
Consumer Electronics Division Division of Royal Philips Electronics. Prior
to 1998, Chairman of the Philips Business
Electronics Division of Royal Philips
Electronics.
</TABLE>
A-1
<PAGE> 33
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME AND CITIZENSHIP OFFICE(S) FIVE-YEAR EMPLOYMENT HISTORY
- -------------------- ------------------------------------- ----------------------------------------------
<S> <C> <C>
Y.C. Lo Executive Vice-President; Member of Executive Vice-President, Member of the Board
Republic of China the Board of Management and the Group of Management and Member of the Group
Management Committee Management Committee and, prior to 1999,
Chairman of the Components Division, of Royal
Philips Electronics. Prior to 1996, Chairman
of the Board of Directors of Philips Taiwan
Ltd and Member of the Board of Directors of
Taiwan Semiconductor Manufacturing Company
Ltd.
Arthur P.M. van der Executive Vice-President; Member of Executive Vice-President, Member of the Board
Poel the Board of Management and the Group of Management, Member of the Group Management
Management Committee; Chairman of the Committee and, Chairman of the Semiconductors
Semiconductors Division Division of Royal Philips Electronics. Member
of the Board of Directors of Taiwan
Semiconductor Manufacturing Company Ltd.
John W. Whybrow Executive Vice-President; Member of Executive Vice-President, Member of the Board
United Kingdom the Board of Management and the Group of Management, Member of the Group Management
Management Committee; Chairman of the Committee and Chairman of the Lighting
Lighting Division Division of Royal Philips Electronics. Since
1997, Director of Wolseley PLC.
R. Pieper Executive Vice-President; Member of Executive Vice-President, Member of the Board
the Board of Management and the Group of Management and Member of the Group
Management Committee Management Committee. Chief Executive Office
of Tandem Computers from 1996 to 1997 and
Chief Executive Officer of Ungermaan-Bass from
1993 to 1995.
Ad H.A. Veenhof Member of the Group Management Member of the Group Management Committee,
Committee; Chairman of the Domestic Chairman of the Domestic Appliances and
Appliances and Personal Care Division Personal Care Division of Royal Philips
Electronics. Prior to 1996, Member of
Management of Philips Consumer Electronics.
Kees Bulthuis Member of the Group Management Member of the Group Management Committee and
Committee; Senior Managing Director Senior Managing Director of Corporate Research
of Corporate Research of Royal Philips Electronics.
J. M. Barella Member of the Group Management Member of the Group Management Committee of
Committee; Chairman of the Medical Royal Philips Electronics. Chairman and Member
Systems Division of the Management Committee of the Medical
Systems Division of Royal Philips Electronics.
</TABLE>
A-2
<PAGE> 34
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME AND CITIZENSHIP OFFICE(S) FIVE-YEAR EMPLOYMENT HISTORY
- -------------------- ------------------------------------- ----------------------------------------------
<S> <C> <C>
A.B. Bok Member of the Group Management Member of the Group Management Committee and
Committee; Chairman of the Business Chairman of the Business Electronics Division
Electronics Division of Royal Philips Electronics. Member of the
Supervisory Board of Toolex International B.V.
Prior to April 1998, Chairman of the Philips
Industrial Electronics Division.
G.J. Kleisterlee Member of the Group Management Member of the Group Management Committee and
Committee; Chairman of the Components Chairman of the Components Division of Royal
Division Philips Electronics. Member of the Board of
Directors of Taiwan Semiconductor
Manufacturing Company Ltd. Prior to January
1999, Chairman of Philips Taiwan Ltd.
J.P. Oosterveld Member of the Group Management Member of the Group Management Committee and
Committee; Senior Director of Senior Director of Corporate Strategy of Royal
Corporate Strategy Philips Electronics. Prior to 1997, Management
of Philips Key Modules.
A. Westerlaken Member of the Group Management Member of the Group Management Committee,
Committee; General Secretary; Chief General Secretary, Chief Legal Officer and
Legal Officer; Secretary to the Board Secretary to the Board of Management of Royal
of Management Philips Electronics. Member of the Supervisory
Board of ASM Lithography Holding N.V. and of
Nederlandsche Financicerings-Maatschappij Voor
Ontwikkelingslanden N.V. From 1990 to 1994,
Chief Legal Officer of DAF N.V.
N.J. Bruijel Member of the Group Management Member of the Group Management Committee
Committee responsible for Corporate responsible for Corporate Human Resources
Human Resources Management Management of Royal Philips Electronics.
Member of the Supervisory Board of Business
Creation Europe B.V. Prior to July 1998,
General Management of Philips Japan. Prior to
1996, Management of Philips Lighting Division.
</TABLE>
A-3
<PAGE> 35
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME AND CITIZENSHIP OFFICE(S) FIVE-YEAR EMPLOYMENT HISTORY
- -------------------- ------------------------------------- ----------------------------------------------
<S> <C> <C>
F.A. Maljers Chairman of the Supervisory Board Retired. Chairman of the Supervisory Board of
Royal Philips Electronics since 1993. Prior to
1994, Chairman and Chief Executive Officer of
Unilever N.V. Currently, Vice-Chairman of the
Supervisory Board of KLM Royal Dutch Airlines,
Member of the Supervisory Board of SHV
Holdings N.V., Non-Executive Director of Amoco
Petroleum and Diageo PLC, Member of the
Advisory Committee of KPMG Holding N.V. and
Professor of Strategic Management at Erasmus
University Rotterdam.
A. Leysen Member of the Supervisory Board Retired. Member of the Supervisory Board of
Belgium Royal Philips Electronics since 1983. Chairman
of the Supervisory Boards of Agfa-Gevaert
Group, Gevaert N.V., Hapag-Lloyd AG (from 1990
to 1997) and SHV Holdings N.V. Prior to 1998,
Vice-Chairman of the Supervisory Board of BMW
AG. Currently, Member of the Supervisory
Boards of Bayer AG, VEBA AG, Deutsche Telekom
AG.
W. Hilger Member of the Supervisory Board Retired. Member of the Supervisory Board of
Germany Royal Philips Electronics since 1990. Prior to
1994, Chairman of the Board of Management of
Hoechst A.G. Currently, Member of the
Supervisory Boards of Dresdner Bank A.G.,
Mannesmann AG, Alusuisse Lonza, Huls AG, IBM
Deutschland GmbH; Chairman of the Supervisory
Boards of Victoria Versicherung AG and
Victoria Lebensversicherung AG.
L.C. van Wachem Member of the Supervisory Board Retired. Member of the Supervisory Board of
Royal Philips Electronics since 1993. Member
of the Supervisory Boards of N.V. Koninklijke
Nederlandsche Petroleum Maatschappij, ABB Asea
Brown Boveri Ltd., Akzo Nobel N.V., Bayer AG,
BMW AG, and Zurich Versicherungs-Gruppe ;
Member of the Board of Directors of IBM
Corporation, ATCO Ltd, and Credit Suisse
Holding.
</TABLE>
A-4
<PAGE> 36
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME AND CITIZENSHIP OFFICE(S) FIVE-YEAR EMPLOYMENT HISTORY
- -------------------- ------------------------------------- ----------------------------------------------
<S> <C> <C>
C.J. Oort Member of the Supervisory Board Retired. Member of the Supervisory Board of
Royal Philips Electronics since 1995. Chairman
of the Supervisory Boards of Royal Dutch
Airlines KLM and the Robeco group; Member of
the Supervisory Boards of KPN Koninklijke PTT
Nederland (KPN and TPG since June 26, 1998),
Northern Telecom International Finance, BCE
Telecom International Holdings, BCE
Tele-Direct Publications International,
Hoogenbosch Retail Group; Member of the Board
of Stichting HBG, Stichting Koninklijke
Nedlloyd, Stichting Koninklijke van Ommeren;
Advisory Board Member of Price Waterhouse (the
Netherlands). Prior to 1995, Professor of
Economics, University of Maastricht.
L. Schweitzer Member of the Supervisory Board Member of the Supervisory Board of Royal
34 Quai du Point Philips Electronics since 1997. Chairman and
du Jour Chief Executive Officer of La Regie Nationale
BP 103 92109 des Usines Renault; Member of the Boards of
Boulogne Bilancourt Pechiney, Banque Nationale de Paris, Credit
Cedex, France National, and I.F.R.I.
France
Sir Richard Greenbury Member of the Supervisory Board Member of the Supervisory Board of Philips
United Kingdom Royal Electronics since 1998. Chairman and CEO
of Marks & Spencer plc and former
non-executive member of the Board of Directors
of Lloyds TSB, ICI and Zeneca.
W. de Kleuver Member of the Supervisory Board Member of the Supervisory Board of Philips
Royal Electronics since 1998. Prior to
September 1998, Executive Vice President,
Member of the Board of Management and the
Group Management Committee of Royal Philips
Electronics. Prior to 1996, member of the
Group Management Committee and Chairman of the
Components Division of Royal Philips
Electronics.
</TABLE>
A-5
<PAGE> 37
DIRECTORS AND EXECUTIVE OFFICERS OF KPE ACQUISITION INC.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR EMPLOYMENT
NAME AND CITIZENSHIP OFFICE(S) HISTORY
- -------------------- ------------------------------ -----------------------------------
<S> <C> <C>
William E. Curran President; Chief Executive Senior Vice President and Chief
1251 Avenue of the Americas Officer; Director Financial Officer of Philips
New York, NY 10020 Electronics North America
United States Corporation since February, 1996.
Prior to that time, Vice President,
Chief Operating Officer and Chief
Financial Officer of Philips
Medical Systems.
Guido R.C. Dierick Vice President; Treasurer; Director and Deputy Secretary of
Director Royal Philips Electronics since
April 1998. Prior to that time,
Deputy Director of the Mergers and
Acquisitions Department of Royal
Philips Electronics. Prior to
October 1995, Deputy Director of
Legal Department of Philips
Semiconductors.
Belinda Chew Vice President; Secretary Senior Vice President and General
1251 Avenue of the Americas Counsel of Philips Electronics
New York, NY 10020 North America Corporation since
United States January, 1999. Prior to that time,
General Counsel of Philips Consumer
Communications L.P. Prior to
October 1997, Counsel of Philips
Electronics North America
Corporation.
</TABLE>
A-6
<PAGE> 38
SCHEDULE B
ACQUISITIONS OF SHARES
<TABLE>
<CAPTION>
DATE OF PURCHASE NO. OF SHARES AVERAGE PRICE PER SHARE
- ---------------- ------------- -----------------------
<S> <C> <C>
February 17, 1999......................................... 40,000 $10.15
February 18, 1999......................................... 235,000 $10.07
February 19, 1999......................................... 575,000 $10.01
February 22, 1999......................................... 25,000 $ 9.96
February 26, 1999......................................... 360,000 $15.34
</TABLE>
B-1
<PAGE> 39
SCHEDULE C
VLSI TECHNOLOGY INC.
FIRST AMENDED AND RESTATED STOCKHOLDER RIGHTS PLAN
SUMMARY OF RIGHTS
DATE OF BOARD ADOPTION OF
ORIGINAL PLAN: November 6, 1989 (the "Adoption Date").
ORIGINAL AGREEMENT DATE: November 7, 1989 (the "Agreement Date").
RECORD DATE: December 8, 1989 (the "Record Date").
DATE OF BOARD APPROVAL OF
AMENDED PLAN: August 12, 1992 (the "Amendment Date").
DISTRIBUTION AND TRANSFER OF
RIGHTS; RIGHTS CERTIFICATE: On the Adoption Date, the Board of Directors
declared a dividend of one right for each share
of the Company's Common Stock outstanding at
the close of business on the Record Date. On
the Amendment Date, The Board of Directors
amended all outstanding rights. The terms of
such amended Rights are summarized herein.
Prior to the Distribution Date referred to
below, the Rights will be evidenced by and
trade with the certificates for the Common
Stock. After the Distribution Date, the Company
will mail Rights certificates to the Company's
stockholders and the Rights will become
transferable apart from the Common Stock.
DISTRIBUTION DATE: Rights will separate from the Common Stock and
become exercisable following the tenth day (or
such later date as may be determined by a
majority of the directors of the Company not
affiliated with the acquiring person or group
(the "Continuing Directors")) after a person or
group (a) acquires beneficial ownership of 20%
or more of the Company's Common Stock or (b)
announces a tender or exchange offer, the
consummation of which would result in ownership
by a person or group of 20% or more of the
Company's Common Stock.
PREFERRED STOCK PURCHASABLE
UPON EXERCISE OF RIGHTS: After the Distribution Date, each Right will
entitle the holder to purchase, for $45.00, a
fraction (one one-thousandth) of a share of the
Company's Series A Participating Preferred
Stock (the "Preferred Stock") with economic
terms similar to that of one share of the
Company's Common Stock.
FLIP-IN: If an acquiror (an "Acquiring Person") obtains
20% or more of the Company's Common Stock
(other than pursuant to a tender offer deemed
fair by the Board of Directors (a "Permitted
Offer")), then each Right (other than Rights
owned by an Acquiring Person or its affiliates)
will entitle the holder thereof to purchase,
for the exercise price, stock of the Company
having a then current market value of twice the
exercise price.
FLIP-OVER: If, after the Shares Acquisition Date (defined
below), (a) the Company merges into another
entity, (b) an acquiring entity
C-1
<PAGE> 40
merges into the Company or (c) the Company
sells more than 50% of the Company's assets or
earning power, then each Right (other than
Rights owned by an Acquiring Person or its
affiliates) will entitle the holder thereof to
purchase, for the exercise price, a number of
shares of Common Stock of the person engaging
in the transaction having a then current market
value of twice the exercise price (unless the
transaction satisfies certain conditions and is
consummated with a person who acquired shares
pursuant to a Permitted Offer, in which case
the Rights will expire).
EXCHANGE PROVISION: At any time after an event triggering the
flip-in or flip-over rights and prior to the
acquisition by the Acquiring Person of 50% or
more of the outstanding Common Stock, the Board
of Directors of the Company may exchange the
Rights (other than Rights owned by the
Acquiring Person or its affiliates), in whole
or in part, at an exchange ratio of one
one-thousandth of a share of Preferred Stock,
or one share of Common Stock, per Right
(subject to adjustment).
REDEMPTION OF THE RIGHTS: Rights will be redeemable at the Company's
option for $.01 per Right at any time on or
prior to the tenth day (or such later date as
may be determined by a majority of the
Continuing Directors) after public announcement
that a person has acquired beneficial ownership
of 20% or more of the Company's Common Stock
(the "Shares Acquisition Date").
EXPIRATION OF THE RIGHTS: The Rights will expire on the earliest to occur
of (a) November 7, 1999, ten years after the
Agreement Date, (b) exchange or redemption of
the Rights as described above, or (c)
consummation of a merger or consolidation
resulting in expiration of the Rights as
described above.
AMENDMENT OF TERMS OF RIGHTS: The terms of the Rights and the Rights
Agreement may be amended in any respect without
the consent of the Rights holders on or prior
to the Distribution Date; thereafter, the terms
of the Rights and the Rights Agreement may be
amended without the consent of the Rights
holders in order to cure any ambiguities or to
make changes which do not adversely affect the
interests of Rights holders (other than the
Acquiring Person).
VOTING RIGHTS: Rights do not entitle the holders thereof to
any voting rights.
ANTI-DILUTION PROVISIONS: Rights will have the benefit of certain
customary anti-dilution provisions.
TAXES: The Rights distribution and the subsequent
amendment of the Rights should not be taxable
for federal income tax purposes. However,
following an event which renders the Rights
exercisable or upon redemption of the Rights,
stockholders may recognize taxable income.
The foregoing is a summary of certain principal terms of the Company's
stockholder rights plan only and is qualified in its entirety by reference to
the detailed terms of the Rights Agreement. The foregoing is based upon the
Company's public filings.
C-2
<PAGE> 41
Manually signed facsimile copies of the Letter of Transmittal, properly
completed and duly signed, will be accepted. The Letter of Transmittal,
certificates for the Shares and any other required documents should be sent by
each stockholder of the Company or such stockholder's broker-dealer, commercial
bank, trust company or other nominee to the Depositary as follows:
The Depositary for the Offer is:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
BY MAIL: FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT COURIER:
Tender & Exchange Department (for Eligible Institutions Tender & Exchange Department
P.O. Box 11248 Only) 101 Barclay Street
Church Street Station (212) 815-6213 Receive and Deliver Window
New York, New York 10286-1248 New York, New York 10286
FOR CONFIRMATION TELEPHONE:
(800) 507-9357
</TABLE>
Any questions and requests for assistance or additional copies of the Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may
be directed to the Information Agent or the Dealer Manager at their respective
telephone numbers and locations listed below. You may also contact your broker,
dealer, commercial bank or trust company or other nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
INNISFREE M&A INCORPORATED
501 MADISON AVE., 20TH FLOOR
NEW YORK, NEW YORK 10022
BANKS AND BROKERS CALL COLLECT: (212) 750-5833
ALL OTHERS CALL TOLL FREE: (888) 750-5834
The Dealer Manager for the Offer is:
CREDIT SUISSE FIRST BOSTON CORPORATION
ELEVEN MADISON AVENUE
NEW YORK, NEW YORK 10010-3629
CALL TOLL FREE (800) 646-4543
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS
TO PURCHASE PREFERRED STOCK)
OF
VLSI TECHNOLOGY, INC.
AT
$17.00 NET PER SHARE
BY
KPE ACQUISITION INC.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
KONINKLIJKE PHILIPS ELECTRONICS N.V.
(ROYAL PHILIPS ELECTRONICS)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, APRIL 1, 1999, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: Facsimile Transmission: By Hand or Overnight Courier:
Tender & Exchange Department (for Eligible Institutions Only) Tender & Exchange Department
P.O. Box 11248 (212) 815-6213 101 Barclay Street
Church Street Station Receive and Deliver Window
New York, New York 10286-1248 New York, New York 10286
For Confirmation Telephone:
(800) 507-9357
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE DOES 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 used either if certificates are to be
forwarded herewith or, unless an Agent's Message (as defined in Section 3 of the
Offer to Purchase (as defined below)) is utilized, if delivery is to be made by
book-entry transfer to the Depositary's account at The Depository Trust Company
(the "Book-Entry Transfer Facility"), pursuant to the procedures set forth in
Section 3 of the Offer to Purchase. Stockholders who deliver Shares by
book-entry transfer are referred to herein as "Book-Entry Stockholders" and
other stockholders are referred to herein as "Certificate Stockholders."
Stockholders whose certificates for Shares are not immediately available or who
cannot comply with the procedure for book-entry transfer on a timely basis, or
who cannot deliver all required documents to the Depositary prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase), may tender
their Shares in accordance with the guaranteed delivery procedure set forth in
Section 3 of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO
THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
<PAGE> 2
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED OWNER(S)
(PLEASE FILL IN IF BLANK, EXACTLY AS NAME(S) SHARES TENDERED
APPEAR(S) ON CERTIFICATE(S)) (ATTACH ADDITIONAL LIST IF NECESSARY)
- ------------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES NUMBER
CERTIFICATE REPRESENTED BY OF SHARES
NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
<S> <C> <C> <C>
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
Total Shares
- ------------------------------------------------------------------------------------------------------------------------
(1) Need not be completed by Book-Entry Stockholders.
(2) Unless otherwise indicated, it will be assumed that all Shares described above are being tendered. See Instruction
4.
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 3
[ ] CHECK HERE IF CERTIFICATE HAS BEEN LOST OR MUTILATED. SEE SECTION 11.
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING (ONLY FINANCIAL INSTITUTIONS THAT ARE
PARTICIPANTS IN THE SYSTEM OF ANY BOOK-ENTRY TRANSFER FACILITY MAY DELIVER
SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution
- --------------------------------------------------------------------------------
If delivered by book-entry transfer, check box: [ ]
Account Number
- --------------------------------------------------------------------------------
Transaction Code Number
- --------------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY, ENCLOSE A PHOTOCOPY
OF SUCH NOTICE OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Owner(s)
- --------------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
---------------------------------------------------------------
Name of Institution which Guaranteed Delivery
--------------------------------------------------------------------
If delivered by book-entry transfer, check box: [ ]
Account Number
- --------------------------------------------------------------------------------
Transaction Code Number
- --------------------------------------------------------------------------------
3
<PAGE> 4
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to KPE Acquisition Inc., a Delaware
corporation (the "Purchaser") and an indirect wholly owned subsidiary of
Koninklijke Philips Electronics N.V., a company incorporated under the laws of
The Netherlands ("Royal Philips"), the above-described shares, 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"),
pursuant to the Offer to Purchase, dated March 5, 1999 (the "Offer to
Purchase"), all of the outstanding Shares at a price of $17.00 per Share, net to
the seller in cash, upon the terms and subject to the conditions set forth in
the Offer to Purchase, receipt of which is hereby acknowledged, and in this
Letter of Transmittal (which, together with the Offer to Purchase, constitute
the "Offer"). The undersigned understands that the Purchaser reserves the right
to transfer or assign, from time to time, in whole or in part, to one or more of
its affiliates, the right to purchase the Shares tendered herewith.
On the terms and subject to the conditions of the Offer (including the
conditions set forth in Section 13 of the Offer to Purchase and together with,
if the Offer is extended or amended, the terms and conditions of such extension
or amendment), subject to, and effective upon, acceptance for payment of, and
payment for, 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, the Purchaser, all right, title and interest in and to all of the Shares
being tendered hereby and any and all cash dividends, distributions, rights,
other Shares or other securities issued or issuable in respect of such Shares on
or after March 4, 1999 (collectively, "Distributions"), and appoints The Bank of
New York (the "Depositary") the true and lawful agent and attorney-in-fact of
the undersigned with respect to such Shares (and any Distributions) with full
power of substitution (such power of attorney being deemed to be an irrevocable
power coupled with an interest) to the fullest extent of such stockholder's
rights with respect to such Shares (and any Distributions) (a) to deliver such
Share Certificates (as defined herein) (and any Distributions) or transfer
ownership of such Shares (and any Distributions) on the account books maintained
by the Book-Entry Transfer Facility, together in either such case with all
accompanying evidences of transfer and authenticity, to or upon the order of the
Purchaser, (b) to present such Shares (and any Distributions) for transfer on
the books of the Company and (c) to receive all benefits and otherwise exercise
all rights of beneficial ownership of such Shares (and any Distributions), all
in accordance with the terms and the conditions of the Offer.
The undersigned hereby irrevocably appoints the designees of the Purchaser,
and each of them, the attorneys-in-fact and proxies of the undersigned, each
with full power of substitution, to the full extent of such stockholder's rights
with respect to the Shares tendered hereby which have been accepted for payment
by the Purchaser and with respect to any Distributions. The designees of the
Purchaser will, with respect to the Shares (and any associated Distributions)
for which the appointment is effective, be empowered to exercise all voting and
any other rights of such stockholder, as they, in their sole discretion, may
deem proper at any annual, special or adjourned meeting of the Company's
stockholders, by written consent in lieu of any such meeting or otherwise. This
proxy and power of attorney shall be irrevocable and coupled with an interest in
the tendered Shares. Such appointment is effective when, and only to the extent
that, the Purchaser deposits the payment for such Shares with the Depositary.
Upon the effectiveness of such appointment, without further action, all prior
powers of attorney, proxies and consents given by the undersigned with respect
to such Shares (and any associated Distributions) will be revoked, and no
subsequent powers of attorney, proxies, consents or revocations may be given
(and, if given, will not be deemed effective). The Purchaser reserves the right
to require that, in order for Shares to be deemed validly tendered, immediately
upon the Purchaser's payment for such Shares, the Purchaser must be able to
exercise full voting rights with respect to such Shares (and any associated
Distributions), including voting at any meeting of stockholders.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares (and
any Distributions) tendered hereby and, when the same are accepted for payment
by the Purchaser, the Purchaser will acquire good, marketable and unencumbered
title thereto, free and clear of all liens, restrictions, charges and
encumbrances, and the same will not be subject to any adverse claim. The
undersigned will, upon request, execute and deliver any additional documents
deemed by the Depositary or
4
<PAGE> 5
the Purchaser to be necessary or desirable to complete the sale, assignment and
transfer of the Shares (and any Distributions) tendered hereby. In addition, the
undersigned shall promptly remit and transfer to the Depositary for the account
of the Purchaser any and all Distributions in respect of the Shares tendered
hereby, accompanied by appropriate documentation of transfer; and, pending such
remittance or appropriate assurance thereof, the Purchaser shall be entitled to
all rights and privileges as owner of any such Distributions and may withhold
the entire purchase price or deduct from the purchase price the amount or value
thereof, as determined by the Purchaser in its sole discretion.
All authority conferred or agreed to be conferred pursuant to this Letter
of Transmittal shall not be affected by, and shall survive, the death or
incapacity of the undersigned and any obligation 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 the valid tender of Shares pursuant to one
of the procedures described in Section 3 of the Offer to Purchase will
constitute a binding agreement between the undersigned and the Purchaser upon
the terms and subject to the conditions of the Offer. The undersigned recognizes
that under certain circumstances set forth in the Offer to Purchase, Purchaser
may not be required to accept for payment any of the Shares tendered hereby.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any certificates for
Shares not tendered or accepted for payment in the name(s) of the registered
owner(s) appearing under "Description of Shares Tendered." Similarly, unless
otherwise indicated under "Special Delivery Instructions," please mail the check
for the purchase price and/or return any certificates for Shares not tendered or
accepted for payment (and accompanying documents, as appropriate) to the
address(es) of the registered owner(s) appearing under "Description of Shares
Tendered." In the event that both the Special Delivery Instructions and the
Special Payment Instructions are completed, please issue the check for the
purchase price and/or issue any certificates for Shares not tendered or accepted
for payment (and any accompanying documents, as appropriate) in the name of, and
deliver such check and/or return such certificates (and any accompanying
documents, as appropriate) to, the person or persons so indicated. The
undersigned recognizes that the Purchaser has no obligation pursuant to the
Special Payment Instructions to transfer any Shares from the name of the
registered owner thereof if the Purchaser does not accept for payment any of the
Shares so tendered.
5
<PAGE> 6
------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificate(s) for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment are to be issued in the name of someone other than
the undersigned.
Issue: [ ] Check [ ] Certificate(s) to:
Name:
--------------------------------------------------
(Please Print)
Address:
-----------------------------------------------
------------------------------------------------------------
(Include Zip Code)
------------------------------------------------------------
(Tax Identification or Social Security No.)
------------------------------------------------------------
------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5 AND 7)
To be completed ONLY if certificate(s) for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment are to be sent to someone other than the undersigned,
or to the undersigned at an address other than that above.
Deliver: [ ] Check [ ] Certificate(s) to:
Name:
--------------------------------------------------
(Please Print)
Address:
-----------------------------------------------
----------------------------------------------------------
(Include Zip Code)
------------------------------------------------------------
6
<PAGE> 7
IMPORTANT
SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
(Signature(s) of Holder(s))
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dated:
- --------------------------- , 1999
(Must be signed by registered owner(s) exactly as name(s) appear(s) on stock
certificate(s) or on a security position listing or by person(s) authorized to
become registered owner(s) by certificates and documents transmitted herewith.
If signature is by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, please set forth full title and see Instruction 5.)
Name(s)
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Capacity (Full Title)
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDING ZIP CODE)
<TABLE>
<S> <C>
- ---------------------------------------------------------- ----------------------------------------------------------
(AREA CODE AND TELEPHONE NO.) (TAX IDENTIFICATION OR SOCIAL SECURITY NO.)
</TABLE>
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature
- --------------------------------------------------------------------------------
Name
- --------------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Address
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Full Title and Name of Firm
- --------------------------------------------------------------------------------
Dated:
- --------------------------- , 1999
7
<PAGE> 8
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a financial
institution (including most commercial banks, savings and loan associations and
brokerage houses) which is a participant in the Securities Transfer Agents
Medallion Program, the New York Stock Exchange Medallion Signature Guarantee
Program or the Stock Exchange Medallion Program (an "Eligible Institution").
Signatures on this Letter of Transmittal need not be guaranteed (a) if this
Letter of Transmittal is signed by the registered owners (which term, for
purposes of this document, includes any participant in the Book-Entry Transfer
Facility's system whose name appears on a security position listing as the owner
of the Shares) of Shares tendered herewith and such registered owner has not
completed the box entitled "Special Payment Instructions" or the box entitled
"Special Delivery Instructions" on this Letter of Transmittal or (b) if such
Shares are tendered for the account of an Eligible Institution. See Instruction
5 of this Letter of Transmittal.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES OR BOOK-ENTRY
CONFIRMATIONS. This Letter of Transmittal is to be used either if certificates
are to be forwarded herewith or if tenders are to be made pursuant to the
procedures for tender by book-entry transfer set forth in Section 3 of the Offer
to Purchase. Certificates for all physically tendered Shares ("Share
Certificates"), or confirmation of any book-entry transfer into the Depositary's
account at the Book-Entry Transfer Facility of Shares tendered by book-entry
transfer, as well as this Letter of Transmittal properly completed and duly
executed with any required signature guarantees, and any other documents
required by this Letter of Transmittal, must be received by the Depositary at
one of its addresses set forth herein on or prior to the Expiration Date (as
defined in the Offer to Purchase).
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver all other required documents to the Depositary on or prior to
the Expiration Date or who cannot comply with the procedures for book-entry
transfer on a timely basis may nevertheless tender their Shares by properly
completing and duly executing a Notice of Guaranteed Delivery pursuant to the
guaranteed delivery procedure set forth 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 provided by the Purchaser must be
received by the Depositary prior to the Expiration Date; and (iii) Share
Certificates or confirmation of any book-entry transfer into the Depositary's
account at a Depository Institution of Shares tendered by book-entry transfer,
as well as a Letter of Transmittal, properly completed and duly executed with
any required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message), and all other documents required by this Letter of
Transmittal, must be received by the Depositary within three New York Stock
Exchange trading days after the date of execution of such Notice of Guaranteed
Delivery.
If Share Certificates are forwarded separately to the Depositary, a
properly completed and duly executed Letter of Transmittal must accompany each
such delivery.
The method of delivery of Share Certificates and all other required
documents, including delivery through any Book-Entry Transfer Facility, is at
the election and risk of the tendering stockholder. The delivery will be deemed
made only when actually received by the depositary (including, in the case of a
Book-Entry Transfer, by Book-Entry confirmation). If such delivery is by mail,
it is recommended that such certificates and documents be sent by registered
mail, properly insured, with return receipt requested. In all cases, sufficient
time should be allowed to assure timely delivery.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution of
this Letter of Transmittal (or facsimile thereof), waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
schedule attached hereto.
8
<PAGE> 9
4. PARTIAL TENDERS (APPLICABLE TO CERTIFICATE STOCKHOLDERS ONLY). If fewer
than all the Shares evidenced by any certificate submitted are to be tendered,
fill in the number of Shares which are to be tendered in the box entitled
"Number of Shares Tendered." In such cases, new certificate(s) for the remainder
of the Shares that were evidenced by the old certificate(s) will be sent to the
registered owner, unless otherwise provided in the appropriate box on this
Letter of Transmittal, as soon as practicable after the Expiration Date. All
Shares represented by certificates delivered to the Depositary will be deemed to
have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered owners of the Shares
tendered hereby, the signature must correspond with the names as written on the
face of the certificates without alteration, enlargement or any other change
whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
If this Letter of Transmittal or any certificates or stock powers are
signed by trustees, executors, administrators, guardians, attorneys-at-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and proper evidence
satisfactory to the Parent of their authority so to act must be submitted.
If this Letter of Transmittal is signed by the registered owner(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made to, or
certificates for Shares not tendered or accepted for payment are to be issued in
the name of, a person other than the registered owner(s). Signatures on such
certificates or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner of the certificates(s) listed, the certificate(s) must be
endorsed or accompanied by the appropriate stock powers, in either case signed
exactly as the name or names of the registered owner or holders appears on the
certificate(s). Signatures on such certificates or stock powers must be
guaranteed by an Eligible Institution.
6. STOCK TRANSFER TAXES. The Purchaser will pay any stock transfer taxes
with respect to the transfer and sale of Shares to it or its order pursuant to
the Offer. If, however, payment of the purchase price is to be made to, or (in
the circumstances permitted hereby) if certificates for Shares not tendered or
accepted for payment are to be registered in the name of, any person other than
the registered owner, or if tendered certificates are registered in the name of
any person other than the person(s) signing this Letter of Transmittal, the
amount of any stock transfer taxes (whether imposed on the registered owner or
such person) payable on account of the transfer to such person will be deducted
from the purchase price if satisfactory evidence of the payment of such taxes,
or exemption therefrom, is not submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued
in the name of, and/or certificates for Shares not tendered or accepted for
payment are to be issued or returned to, a person other than the signer of this
Letter of Transmittal or if a check and/or such certificates are to be mailed to
a person other than the signer of this Letter of Transmittal or to an address
other than that shown above, the appropriate boxes on this Letter of Transmittal
should be completed.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance or for additional copies of the Offer to Purchase, the Letter of
Transmittal and the Notice of Guaranteed Delivery, may be directed to the
Information Agent or the Dealer Manager at their respective telephone numbers
and locations set forth below. You may also contact your broker, dealer,
commercial bank, trust company or other nominee for assistance concerning the
Offer.
9
<PAGE> 10
9. SUBSTITUTE FORM W-9. Each tendering stockholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN"), generally
the stockholder's social security or federal employer identification number, on
Substitute Form W-9 below. Failure to provide the information on the form may
subject the tendering stockholder to 31% federal income tax backup withholding
on the payment of the purchase price. The box in Part 3 of the form may be
checked if the tendering stockholder has not been issued a TIN and has applied
for a TIN or intends to apply for a TIN in the near future. If the box in Part 3
is checked and the Depositary is not provided with a TIN within 60 days, the
Depositary will withhold 31% of all payments of the purchase price thereafter
until a TIN is provided to the Depositary.
10. WAIVER OF CONDITIONS. The conditions of the Offer may be waived by
the Purchaser (subject to certain limitations), in whole or in part, at any time
or from time to time, in the Purchaser's sole discretion.
11. LOST OR DESTROYED CERTIFICATES. If any Certificate(s) representing
Shares has been lost or destroyed, the holders should promptly notify the
Company's Transfer Agent. The holders will then be instructed as to the
procedure to be followed in order to replace the Certificate(s). This Letter of
Transmittal and related documents cannot be processed until the procedures for
replacing lost or destroyed Certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE
THEREOF (TOGETHER WITH SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER
AND ALL OTHER REQUIRED DOCUMENTS) OR THE NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under the federal income tax law, a stockholder whose tendered Shares are
accepted for purchase is required by law to provide the Depositary (as payer)
with such stockholder's correct TIN on Substitute Form W-9 below and to certify
that such TIN is correct (or that such stockholder is awaiting a TIN) or
otherwise establish a basis for exemption from backup withholding. If such
stockholder is an individual, the TIN is his or her social security number. If a
stockholder fails to provide a TIN to the Depositary, such stockholder may be
subject to a $50 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 of 31% (see below).
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, that stockholder must generally submit a Form W-8, signed under
penalties of perjury, attesting to that individual's exempt status. A Form W-8
can 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 or payee. 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.
The box in Part 3 of the Substitute Form W-9 may be checked if the
tendering stockholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part 3 is checked,
the stockholder or other payee must also complete the Certification of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding. If a
stockholder's TIN is provided to the Depositary within 60 days of the date of
the Substitute Form W-9, payment will be made to such stockholder without the
imposition of backup withholding. If a stockholder's TIN is not provided to the
Depositary within such 60-day period, the Depositary will make such payment,
subject to backup withholding.
10
<PAGE> 11
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments made to a stockholder whose
tendered Shares are accepted for purchase, the stockholder is required to notify
the Depositary of its correct TIN by completing Substitute Form W-9 certifying
that the TIN provided on such Form is correct (or that such stockholder is
awaiting a TIN, in which case the stockholder should check the box in Part 3 of
the Substitute Form W-9) and that (A) such stockholder is exempt from backup
withholding, (B) such stockholder has not been notified by the Internal Revenue
Service that such stockholder is subject to backup withholding as a result of
failure to report all interest or dividends or (C) the Internal Revenue Service
has notified the stockholder that the stockholder is no longer subject to backup
withholding. The stockholder must sign and date the Substitute Form W-9 where
indicated, certifying that the information on such Form is correct.
Alternatively, a stockholder that qualifies as an exempt recipient (other
than a stockholder required to complete Form W-8 as described above) should
write "Exempt" in Part 1 of the Substitute Form W-9, enter its correct TIN and
sign and date such Form where indicated.
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 owner of the Shares or of
the last transferee appearing on the transfers attached to, or endorsed on, the
Shares. 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.
11
<PAGE> 12
TO BE COMPLETED BY ALL TENDERING STOCKHOLDERS
(SEE INSTRUCTION 9)
PAYER: THE BANK OF NEW YORK
<TABLE>
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT ----------------------------
FORM W-9 AND CERTIFY BY SIGNING AND DATING BELOW Social security number OR
----------------------------
Employer identification
number
----------------------------------------------------------------------------------------
DEPARTMENT OF THE TREASURY PART 2--CERTIFICATION--UNDER PENALTIES OF PERJURY, I CERTIFY THAT:
INTERNAL REVENUE SERVICE (1) The number shown on this form is my correct Taxpayer Identification Number (or
PAYOR'S REQUEST FOR I am waiting for a number to be issued to me); and
TAXPAYER
IDENTIFICATION (2) I am not subject to backup withholding either because (i) I am exempt from
NUMBER (TIN) backup withholding, (ii) I have not been notified by the Internal Revenue
Service (the "IRS") that I am subject to backup withholding as a result of a
failure to report all interest or dividends, or (iii) the IRS has notified me
that I am no longer subject to backup withholding.
----------------------------------------------------------------------------------------
Certification Instructions--You must cross out item PART 3-
(2) in Part 2 above if you have been notified by the AWAITING TIN [ ]
IRS that you are subject to backup withholding
because of under-reporting 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
stating that you are no longer subject to backup
withholding, do not cross out item (2).
SIGNATURE ---------------------------- DATE ------------
NAME (Please Print)
----------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
</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. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL INFORMATION.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 3 OF SUBSTITUTE FORM W-9.
12
<PAGE> 13
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (i) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office, or
(ii) I intend to mail or deliver an application in the near future. I understand
that if I do not provide a taxpayer identification number within 60 days, 31% of
all reportable payments made to me thereafter will be withheld until I provide a
taxpayer identification number to the Depositary.
_____________________________________________
Signature Date
_________________________________________
Name
(Please
Print)
13
<PAGE> 14
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Shares and any other
required documents should be sent or delivered by each stockholder of the
Company or such stockholder's 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:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
BY MAIL: FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT COURIER:
(for Eligible Institutions
Tender & Exchange Department Only) Tender & Exchange Department
P.O. Box 11248 (212) 815-6213 101 Barclay Street
Church Street Station Receive and Deliver Window
New York, New York 10286-1248 New York, New York 10286
FOR CONFIRMATION TELEPHONE:
(800) 507-9357
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TO A NUMBER OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be directed to the Information Agent or the Dealer Manager at their
respective telephone numbers and locations listed below. You may also contact
your broker, dealer, commercial bank, trust company or other nominee for
assistance concerning the Offer.
The Information Agent for the Offer is:
INNISFREE M&A INCORPORATED
501 Madison Avenue, 20th Floor
New York, New York 10022
Banks and Brokers Call Collect: (212) 750-5833
ALL OTHERS CALL TOLL FREE: (888) 750-5834
The Dealer Manager for the Offer is:
CREDIT SUISSE FIRST BOSTON CORPORATION
Eleven Madison Avenue
New York, New York 10010-3629
Call Toll Free (800) 848-4543
14
<PAGE> 1
<TABLE>
<S> <C>
CREDIT FIRST
SUISSE BOSTON
</TABLE>
CREDIT SUISSE FIRST BOSTON CORPORATION
Eleven Madison Avenue Telephone 212 325 2000
New York, NY 10010-3629
OFFER TO PURCHASE FOR CASH
ALL OF THE OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE PREFERRED STOCK)
OF
VLSI TECHNOLOGY, INC.
AT
$17.00 NET PER SHARE
BY
KPE ACQUISITION INC.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
KONINKLIJKE PHILIPS ELECTRONICS N.V.
(ROYAL PHILIPS ELECTRONICS)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, APRIL 1, 1999, UNLESS THE OFFER IS EXTENDED.
March 5, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been engaged by KPE Acquisition Inc., a Delaware corporation (the
"Purchaser") and an indirect wholly owned subsidiary of Koninklijke Philips
Electronics N.V., a company incorporated under the laws of the Netherlands
("Royal Philips"), to act as Dealer Manager in connection with 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, and the
related Letter of Transmittal (which together with any amendments or supplements
thereto, collectively constitute the "Offer"). Please furnish copies of the
enclosed materials to those of your clients for whom you hold Shares registered
in your name or in the name of your nominee.
Enclosed herewith are the following documents:
1. Offer to Purchase, dated March 5, 1999;
2. Letter of Transmittal to be used by stockholders of the Company in
accepting the Offer;
3. A printed form of letter that may be sent to your clients for whose
account you hold Shares in your name or in the name of your nominee,
with space provided for obtaining such clients' instructions with regard
to the Offer;
<PAGE> 2
4. Notice of Guaranteed Delivery;
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
6. Return envelope addressed to The Bank of New York, the Depositary.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED PRIOR TO THE EXPIRATION OF THE OFFER AND NOT WITHDRAWN A NUMBER OF
SHARES WHICH, TOGETHER WITH THE SHARES BENEFICIALLY OWNED BY THE PURCHASER AND
ITS AFFILIATES, WILL CONSTITUTE AT LEAST A MAJORITY OF THE OUTSTANDING SHARES ON
A FULLY DILUTED BASIS AS OF THE DATE THE SHARES ARE ACCEPTED FOR PAYMENT
PURSUANT TO THE OFFER (THE "MINIMUM TENDER CONDITION"); (II) THE RIGHTS HAVING
BEEN REDEEMED BY THE COMPANY'S BOARD OF DIRECTORS, OR THE PURCHASER OTHERWISE
BEING SATISFIED IN ITS SOLE DISCRETION THAT SUCH RIGHTS ARE OTHERWISE INVALID OR
INAPPLICABLE TO THE TRANSACTIONS CONTEMPLATED HEREIN (THE "RIGHTS CONDITION");
(III) THE ACQUISITION OF SHARES PURSUANT TO THE OFFER BEING APPROVED PURSUANT TO
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW OR THE PURCHASER BEING
SATISFIED IN ITS SOLE DISCRETION THAT THE PROVISIONS OF SECTION 203 RESTRICTING
CERTAIN BUSINESS COMBINATIONS ARE INVALID OR INAPPLICABLE TO THE ACQUISITION OF
SHARES PURSUANT TO THE OFFER AND THE PROPOSED MERGER (BY ACTION OF THE COMPANY'S
BOARD OF DIRECTORS, THE ACQUISITION OF A SUFFICIENT NUMBER OF SHARES OR
OTHERWISE) (THE "SECTION 203 CONDITION"); AND (IV) ANY WAITING PERIOD UNDER THE
HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE
REGULATIONS THEREUNDER AND UNDER THE LAWS OF THE EUROPEAN COMMUNITY AND ANY LAWS
OF FOREIGN JURISDICTIONS THAT ARE APPLICABLE TO THE PURCHASE OF SHARES PURSUANT
TO THE OFFER HAVING EXPIRED OR BEEN TERMINATED. THE OFFER IS ALSO SUBJECT TO
CERTAIN OTHER CONDITIONS DESCRIBED IN SECTION 13 OF THE OFFER TO PURCHASE. THE
OFFER IS NOT CONDITIONED UPON ROYAL PHILIPS OR THE PURCHASER OBTAINING
FINANCING.
We urge you to contact your clients promptly. Please note that the Offer
and withdrawal rights will expire at 12:00 Midnight, New York City time, on
Thursday, April 1, 1999, 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 for
such Shares or timely confirmation of the book-entry transfer of such Shares
into the Depositary's account at the Book-Entry Transfer Facility (as defined in
the Offer to Purchase) pursuant to the procedures set forth in Section 3 of the
Offer to Purchase, (ii) the Letter of Transmittal (or a manually signed
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 (as defined in the Offer to Purchase)) and (iii) any other documents
required by such Letter of Transmittal. UNDER NO CIRCUMSTANCES WILL INTEREST BE
PAID ON THE PURCHASE PRICE FOR SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER
OR ANY DELAY IN MAKING SUCH PAYMENT PURSUANT TO THE OFFER.
Neither Royal Philips nor the Purchaser will pay any fees or commissions to
any broker or dealer or other person (other than the Depositary, the Information
Agent and the Dealer Manager, as disclosed in the Offer to Purchase) in
connection with the solicitation of tenders of Shares pursuant to the Offer. You
will be reimbursed upon request for customary mailing and handling expenses
incurred by you in forwarding the enclosed offering materials to your clients.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
set forth on the back cover of the enclosed Offer to Purchase. Requests for
additional copies of the enclosed materials may be directed to
2
<PAGE> 3
the Information Agent or the Dealer Manager or to brokers, dealers, commercial
banks or trust companies.
Very truly yours,
CREDIT SUISSE FIRST BOSTON CORPORATION
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR
ANY OTHER PERSON, THE AGENT OF ROYAL PHILIPS, THE PURCHASER, THE DEALER MANAGER,
THE DEPOSITARY OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THEM, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO GIVE ANY INFORMATION OR USE ANY DOCUMENT OR
MAKE ANY REPRESENTATION ON BEHALF OF ANY OF THEM WITH RESPECT TO THE OFFER NOT
CONTAINED IN THE OFFER TO PURCHASE OR THE LETTER OF TRANSMITTAL.
3
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OF THE OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE PREFERRED STOCK)
OF
VLSI TECHNOLOGY, INC.
AT
$17.00 NET PER SHARE
BY
KPE ACQUISITION INC.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
KONINKLIJKE PHILIPS ELECTRONICS N.V.
(ROYAL PHILIPS ELECTRONICS)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, APRIL 1, 1999, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration is an 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")
relating to the offer by KPE Acquisition Inc., a Delaware corporation (the
"Purchaser") and an indirect wholly owned subsidiary of Koninklijke Philips
Electronics N.V., a corporation incorporated under the laws of The Netherlands
("Royal Philips"), to purchase for cash, all of the outstanding shares of Common
Stock, par value $.01 per share (the "Common Stock"), including the associated
rights to purchase preferred stock (the "Rights"), of VLSI Technology, Inc., a
Delaware corporation (the "Company") (the Common Stock and the Rights together
are referred to herein as the "Shares"), on the terms and subject to the
conditions set forth in the Offer.
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 TO TENDER SHARES HELD BY US
FOR YOUR ACCOUNT.
We request instructions as to whether you wish to tender any of or all the
Shares held by us for your account, pursuant to the terms and conditions set
forth in the Offer.
Your attention is directed to the following:
1. The Offer price is $17.00 per Share, net to the Seller in cash, without
interest thereon, upon the terms and subject to the conditions of the
Offer.
2. The Offer is being made for all of the outstanding Shares.
3. The Offer is conditioned upon, among other things, (i) there being
validly tendered prior to the expiration of the Offer a number of Shares
which, together with the Shares beneficially owned by the Purchaser and
its affiliates, will constitute at least a majority of the outstanding
Shares on a fully diluted basis as of the date the Shares are accepted
for payment pursuant to the Offer (the "Minimum Tender Condition"); (ii)
the Rights having been redeemed by the Company's Board of Directors, or
the Purchaser otherwise being satisfied in its sole discretion that such
Rights are otherwise invalid or inapplicable to the transactions
contemplated herein (the "Rights Condition"); (iii) the acquisition of
Shares pursuant to the Offer being approved pursuant to Section 203 of
the Delaware General Corporation Law or the Purchaser being satisfied in
its sole discretion that the provisions of Section 203 restricting
certain business combinations are invalid or inapplicable to the
acquisition of Shares pursuant to the Offer and the Proposed Merger (by
action of the
<PAGE> 2
Company's Board of Directors, the acquisition of a sufficient number of Shares
or otherwise) (the "Section 203 Condition"); and (iv) any waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
regulations thereunder and under any laws of The European Community
applicable to the purchase of Shares pursuant to the Offer having expired
or been terminated. The Offer is also subject to certain other conditions
described in Section 13 of the Offer to Purchase. The Offer is not
conditioned upon Royal Philips or the Purchaser obtaining financing.
4. THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, APRIL 1, UNLESS THE OFFER IS EXTENDED BY THE PURCHASER
(THE "EXPIRATION DATE").
5. Any stock transfer taxes applicable to a sale of Shares to the Purchaser
will be borne by the Purchaser, except as otherwise provided in
Instruction 6 of the Letter of Transmittal.
6. Tendering Shareholders will not be obligated to pay brokerage fees or
commissions to the Dealer Manager, the Depositary, or the Information
Agent or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares by Purchaser
pursuant to the Offer. However, federal income tax backup withholding at
a rate of 31% may be required, unless an exemption in provided or unless
the required taxpayer identification information is provided. See
Instruction 9 of the Letter of Transmittal.
Your instructions to us should be forwarded promptly to permit us to submit
a tender on your behalf prior to the Expiration Date.
If you wish to have us tender any of or all of the Shares held by us for
your account, please so instruct us by completing, executing, detaching and
returning to us the instruction form on the detachable part hereof. Your
instructions should be forwarded to us in ample time to permit us to submit a
tender on your behalf prior to the Expiration Date.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by The Bank of New York (the
"Depositary"), of (a) certificates for (or a timely Book-Entry Confirmation (as
defined in the Offer to Purchase) with respect to) such Shares, (b) a Letter of
Transmittal, properly completed and duly executed, with any required signature
guarantees, or, in the case of a book-entry transfer effected pursuant to the
procedure set forth in Section 3 of the Offer to Purchase, an Agent's Message,
and (c) any other documents required by the Letter of Transmittal. Accordingly,
tendering stockholders may be paid at different times depending upon when
certificates for Shares or Book-Entry Confirmations with respect to Shares are
actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE
PAID ON THE PURCHASE PRICE FOR SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER
OR ANY DELAY IN MAKING PAYMENT PURSUANT TO THE OFFER.
The Offer is not being made to, nor will tenders be accepted from, or on
behalf of, holders of Shares in any jurisdiction in which the making or
acceptance of the Offer would not be in compliance with the laws of such
jurisdiction. In any jurisdiction where the securities or blue sky laws require
the Offer to be made by a licensed broker or dealer, the Offer will be deemed
made on behalf of the Purchaser by Credit Suisse First Boston Corporation, the
Dealer Manager for the Offer, or one or more registered brokers or dealers that
are licensed under the laws of such jurisdiction. An envelope in which to return
your instructions to us is enclosed. If you authorize tender of your Shares, all
such Shares will be tendered unless otherwise indicated in such instruction
form. Please forward your instructions to us as soon as possible to allow us
ample time to tender Shares on your behalf prior to the expiration of the Offer.
2
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
ALL OF THE OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE PREFERRED STOCK)
OF
VLSI TECHNOLOGY, INC.
The undersigned acknowledge(s) receipt of your letter, the Offer to
Purchase, dated March 5, 1999 (the "Offer to Purchase"), and the related Letter
of Transmittal relating to the offer by KPE Acquisition Inc., a Delaware
corporation and an indirect wholly owned subsidiary of Koninklijke Philips
Electronics N.V., a company incorporated under the laws of The Netherlands, to
purchase for $17.00 net to the seller in cash all outstanding shares of Common
Stock, par value $.01 per share (the "Common Stock"), including the associated
rights to purchase preferred stock (the "Rights"), of VLSI Technology, Inc., a
Delaware corporation. The Common Stock and the Rights together are referred to
herein as the "Shares."
This will instruct you to tender the number of Shares indicated below held
by you for the account of the undersigned, on the terms and subject to the
conditions set forth in the Offer to Purchase and the related Letter of
Transmittal.
<TABLE>
<S> <C>
Number of Shares to be Tendered:* SIGN HERE
-------------------Shares
-----------------------------------------------------
Daytime Area Code
and Tel. No.
- -------------------------------------------
-----------------------------------------------------
Signature(s)
Taxpayer Identification
No. or Social Security No.
- ----------------------------- -----------------------------------------------------
Dated: ---------------------------------------- ,
1999
-----------------------------------------------------
(Please print name(s) and address(es))
</TABLE>
- ---------------
* Unless otherwise indicated, it will be assumed that all your Shares are to be
tendered.
3
<PAGE> 1
Exhibit (a)(5)(a)
[PHILIPS LOGO]
FOR IMMEDIATE RELEASE
PHILIPS ELECTRONICS TO COMMENCE CASH TENDER OFFER
FOR ALL SHARES OF VLSI FOR $17 PER SHARE
- -------------------------------------------------------------------------------
SUNNYVALE, CA, MARCH 4, 1999 -- Royal Philips Electronics (NYSE:PHG) today
announced it will commence a cash tender offer for all outstanding shares of
VLSI Technology, Inc. (Nasdaq:VLSI) at a price of $17.00 per share. 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 in cash.
The tender offer, which will begin tomorrow, will expire at 12:00 midnight,
New York City time, on Thursday, April 1, 1999, unless extended.
Philips said it continues to have the highest regard for VLSI and its
employees and was encouraged by VLSI's statement that its Board of Directors has
an open mind concerning the Philips offer. However, given the compelling nature
of the offer and Philips' desire to quickly complete such a mutually beneficial
transaction, Philips has decided to take its offer directly to VLSI
shareholders. Philips remains hopeful that VLSI will decide to negotiate a
transaction soon.
In order for VLSI shareholders to receive the benefits of the offer,
Philips intends to request that the VLSI Board of Directors redeem the VLSI
rights plan or otherwise take action to render the plan inapplicable to Philips'
offer. In the event the VLSI board does not dismantle the rights plan, Philips
intends to take the necessary steps to replace the VLSI board with nominees who,
subject to their fiduciary duties, would allow the Philips offer to proceed.
# # #
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
Jodi [email protected]
www.semiconductors.philips.com
<PAGE> 1
EXHIBIT (a)(5)(b)
[PHILIPS LOGO]
FOR IMMEDIATE RELEASE
ROYAL PHILIPS ELECTRONICS COMMENCES TENDER OFFER FOR
VLSI TECHNOLOGY, INC.
- --------------------------------------------------------------------------------
SUNNYVALE, CA, March 5, 1999 - Royal Philips Electronics (NYSE: PHG)
announced that it has commenced today a cash offer to acquire all of the
outstanding common shares of VLSI Technology, Inc. (Nasdaq: VLSI) at a price of
$17 per share, net to the seller in cash. The tender offer is scheduled to
expire at midnight, New York City time, on Thursday, April 1, 1999, unless
extended.
The complete terms and conditions of the offer are set forth in the Offer
to Purchase, copies of which are available by contacting the information agent,
Innisfree M&A Incorporated, at 1-888-750-5834.
Philips also said it will file shortly a Premerger Notification and Report
Form with the Federal Trade Commission and the Antitrust Division of the
Department of Justice under the Hart-Scott-Rodino Antitrust Improvements Act.
Credit Suisse First Boston Corporation is the Dealer Manager for the Offer.
###
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
Jodi [email protected]
www.semiconductors.philips.com
<PAGE> 1
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares (as defined below). The Offer (as defined below) is made solely
by the Offer to Purchase dated March 5, 1999 and the related Letter of
Transmittal and any amendments or supplements thereto, and is being made to all
holders of Shares. The Offer is not being made to (nor will tenders be accepted
from or on behalf of) holders of Shares in any jurisdiction in which the making
of the Offer or the acceptance thereof would not be in compliance with the laws
of such jurisdiction. 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 the Purchaser (as defined below)
by Credit Suisse First Boston Corporation ("Credit Suisse First Boston") or one
or more registered brokers or dealers that are licensed under the laws of such
jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OF THE OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE PREFERRED STOCK)
OF
VLSI TECHNOLOGY, INC.
AT
$17.00 NET PER SHARE
BY
KPE ACQUISITION INC.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
KONINKLIJKE PHILIPS ELECTRONICS N.V.
(ROYAL PHILIPS ELECTRONICS)
KPE Acquisition Inc., a Delaware corporation (the "Purchaser") and an
indirect wholly owned subsidiary of Koninklijke Philips Electronics N.V., a
company incorporated under the laws of The Netherlands ("Royal Philips"), is
offering to purchase all of the outstanding shares of Common Stock, par value
$.01 per share (the "Common Stock"), of VLSI Technology, Inc., a Delaware
corporation (the "Company"), including the associated rights to purchase
preferred stock (the "Rights") issued pursuant to the First Amended and Restated
Rights Agreement, dated as of August 12, 1992 (as amended, the "Rights
Agreement"), between the Company and The First National Bank of Boston (the
Common Stock and the Rights together are referred to herein as the "Shares") at
$17.00 per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated March 5, 1999 (the "Offer to
Purchase"), and in the related Letter of Transmittal (which together with any
amendments or supplements thereto, collectively constitute the "Offer").
Tendering stockholders who have Shares registered in their name and who tender
directly will not be charged brokerage fees or commissions or, subject to
Instruction 6 of the Letter of Transmittal, transfer taxes on the purchase of
Shares pursuant to the Offer.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, APRIL 1, 1999, UNLESS THE OFFER IS EXTENDED.
The purpose of the Offer is to acquire for cash as many outstanding Shares as
possible as a first step in acquiring the entire equity interest in the Company.
The Purchaser currently intends, as soon as practicable upon consummation of the
Offer, to propose and seek to have the Company effect a merger or some similar
business combination (the "Proposed Merger") between the Company and the
Purchaser or an affiliate thereof, pursuant to which each then outstanding Share
(other than Shares held by the Company in treasury, or owned by Royal Philips,
the Purchaser or any other direct or indirect wholly owned subsidiary of Royal
Philips or Shares, if any, that are held by stockholders who are entitled to and
who properly exercise dissenters' rights under Delaware law), would be converted
pursuant to the terms of the Proposed Merger into the right to receive an amount
in cash equal to the per Share price paid pursuant to the Offer, without
interest. Royal Philips and the Purchaser are seeking to negotiate with the
Company with respect to the acquisition of the Company by Royal Philips. The
Purchaser reserves the right to amend the Offer upon entering into a merger
agreement with the Company.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (i) THERE BEING VALIDLY
TENDERED PRIOR TO THE EXPIRATION OF THE OFFER AND NOT WITHDRAWN A NUMBER OF
SHARES WHICH, TOGETHER WITH THE SHARES BENEFICIALLY OWNED BY THE PURCHASER AND
ITS AFFILIATES, WILL CONSTITUTE AT LEAST A MAJORITY OF THE OUTSTANDING SHARES ON
A FULLY DILUTED BASIS AS OF THE DATE THE SHARES ARE ACCEPTED FOR PAYMENT
PURSUANT TO THE OFFER; (ii) THE RIGHTS HAVING BEEN REDEEMED BY THE COMPANY'S
BOARD OF DIRECTORS, OR THE PURCHASER OTHERWISE BEING SATISFIED IN ITS SOLE
DISCRETION THAT SUCH RIGHTS ARE OTHERWISE INVALID OR INAPPLICABLE TO THE
TRANSACTIONS CONTEMPLATED HEREIN; (iii) THE ACQUISITION OF SHARES PURSUANT TO
THE OFFER BEING APPROVED PURSUANT TO SECTION 203 OF THE DELAWARE GENERAL
CORPORATION LAW OR THE PURCHASER BEING SATISFIED IN ITS SOLE DISCRETION THAT THE
PROVISIONS OF SECTION 203 RESTRICTING CERTAIN BUSINESS COMBINATIONS ARE INVALID
OR INAPPLICABLE TO THE ACQUISITION OF SHARES PURSUANT TO THE OFFER AND THE
PROPOSED MERGER (BY ACTION OF THE COMPANY'S BOARD OF DIRECTORS, THE ACQUISITION
OF A SUFFICIENT NUMBER OF SHARES OR OTHERWISE); AND (iv) ANY WAITING PERIOD
UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND
THE REGULATIONS THEREUNDER AND ANY SIMILAR WAITING PERIODS UNDER FOREIGN
STATUTES OR REGULATIONS THAT ARE APPLICABLE TO THE PURCHASE OF SHARES PURSUANT
TO THE OFFER HAVING EXPIRED OR BEEN TERMINATED. THE OFFER IS ALSO SUBJECT TO
CERTAIN OTHER CONDITIONS DESCRIBED IN SECTION 13 OF THE OFFER TO PURCHASE. THE
OFFER IS NOT CONDITIONED UPON ROYAL PHILIPS OR THE PURCHASER OBTAINING
FINANCING.
<PAGE> 2
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment Shares validly tendered and not withdrawn as, if and when the Purchaser
gives oral or written notice to The Bank of New York (the "Depositary") of its
acceptance for payment of such Shares pursuant to 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 the
tendering stockholders for the purpose of receiving payments from the Purchaser
and transmitting such payments to the tendering stockholders. 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 accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (a) certificates for
(or a timely Book-Entry Confirmation with respect to) such Shares and, if the
Distribution Date occurs, certificates for (or a timely Book-Entry Confirmation,
if available, with respect to) the associated Rights (unless the Purchaser
elects to make payment for such Shares pending receipt of the certificates for,
or a Book-Entry Confirmation with respect to, such Rights as described above),
(b) a Letter of Transmittal (or 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 in lieu of the Letter of Transmittal)
and (c) any other documents required by the Letter of Transmittal. Accordingly,
tendering stockholders may be paid at different times depending upon when
certificates for Shares (or Rights) or Book-Entry Confirmations with respect to
Shares (or Rights, if available) are actually received by the Depositary.
Subject to the applicable rules and regulations of the Securities and
Exchange Commission, the Purchaser expressly reserves the right, in its sole
discretion, at any time or from time to time, to extend the period of time
during which the Offer is open by giving oral or written notice of such
extension to the Depositary and by making a public announcement thereof, During
any such extension, all Shares previously tendered and not withdrawn will remain
subject to the Offer, subject to the right of a tendering stockholder to
withdraw such stockholder's Shares.
Tenders of Shares made pursuant to the Offer are irrevocable except that
Shares tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date (as defined in the Offer to Purchase) and, unless theretofore
accepted for payment by the Purchaser pursuant to the Offer, my also be
withdrawn at any time after May 3, 1999.
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 of the Offer to Purchase. Any
such notice of withdrawal must specify the name of the person having tendered
the Shares to be withdrawn, the number of Shares to be withdrawn and the names
in which the certificate(s) evidencing the Shares to be withdrawn are
registered, if different from that of the person who tendered such Shares. The
signatures(s) on the notice of withdrawal must be guaranteed by an Eligible
Institution, unless such Shares have been tendered for the account of any
Eligible Institution. If Shares have been tendered pursuant to the procedures
for book-entry tender 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. If
certificates for Shares to be withdrawn have been delivered or otherwise
identified to the Depositary, the name of the registered holder and the serial
numbers of the particular certificates evidencing the Shares to be withdrawn
must also be furnished to the Depositary as aforesaid prior to the physical
release of such certificates. None of the Purchaser, Royal Philips, 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 such
notification. Withdrawals of tender for Shares may not be rescinded, and any
Shares properly withdrawn will be deemed not to have been validly tendered for
purposes of the Offer. However, withdrawn Shares may be retendered by following
one of the procedures described in Section 3 of the Offer to Purchase at any
time prior to the Expiration Date.
The information required to be disclosed by paragraph (e)(l)(vii) of Rule
14d-6 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.
A demand is being made to the Company for the use of the Company's
stockholder list and security position listings for the purpose of disseminating
the Offer to stockholders. Upon compliance by the Company with such request, the
Offer to Purchase and the related Letter of Transmittal will be mailed to record
holders of Shares and will be furnished to brokers, banks 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 LETTER OF THE TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
Questions and requests for assistance may be directed to the Information
agent or to the Dealer Manager at their respective addresses and telephone
numbers set forth below. Requests for additional copies of the Offer to
Purchase, the related Letter of Transmittal and other tender offer materials may
be directed to the Information Agent or Dealer Manager. Such additional copies
will be furnished at the Purchaser's expense. All questions as to the form and
validity (including time of receipt) of any notice of withdrawal will be
determined by the Purchaser, in its sole discretion, which determination shall
be final and binding. The Purchaser will not pay any fees or commissions to any
broker or dealer or any other person (other than the Dealer Manager) for
soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
[Innisfree Logo]
501 Madison Avenue, 20th Floor
New York, New York 10022
Banks and Brokers Call Collect (212) 750-5833
All Others Call Toll Free (888) 750-5834
The Dealer Manager for the Offer is:
[CSFB Logo]
Eleven Madison Avenue
New York, New York 10010-3629
Call Toll Free (800) 646-4543
March 5, 1999
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE PREFERRED STOCK)
OF
VLSI TECHNOLOGY, INC.
PURSUANT TO THE OFFER TO PURCHASE DATED MARCH 5, 1999
BY
KPE ACQUISITION INC.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
KONINKLIJKE PHILIPS ELECTRONICS N.V.
(ROYAL PHILIPS ELECTRONICS)
As set forth in Section 3 of the Offer to Purchase (as defined below), this
form or one substantially equivalent may be used to accept the Offer (as defined
below) if certificates for shares of Common Stock, par value $.01 per share (the
"Common Stock"), including the associated rights to purchase Preferred Stock
(the "Rights" and, collectively with the Common Stock, the "Shares"), of VLSI
Technology, Inc., a Delaware corporation (the "Company"), are not immediately
available, or if the procedure for book-entry transfer cannot be complied with
on a timely basis, or all required documents cannot be delivered to the
Depositary prior to the Expiration Date (as defined in Section 1 of the Offer to
Purchase). This form may be delivered by hand to the Depositary or transmitted
by telegram, facsimile transmission or mail to the Depositary and must include a
guarantee by an Eligible Institution (as defined in Section 3 of the Offer to
Purchase). See Section 3 of the Offer to Purchase.
The Depositary for the Offer is:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: Facsimile Transmission: By Hand or Overnight Courier:
(for Eligible Institutions Only)
(212) 815-6213
Tender & Exchange Department Tender & Exchange Department
P.O. Box 11248 101 Barclay Street
Church Street Station Receive and Deliver Window
New York, New York 10286-1248 New York, New York 10286
For Confirmation Telephone:
(800) 507-9357
</TABLE>
------------------------
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TO A NUMBER
OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE
DEPOSITARY.
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> 2
Ladies and Gentlemen:
The undersigned hereby tenders to KPE Acquisition Inc., a Delaware
corporation (the "Purchaser") and an indirect wholly owned subsidiary of
Koninklijke Philips Electronics N.V., a company incorporated under the laws of
The Netherlands, 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, as amended or supplemented from time to
time, together constitute the "Offer"), receipt of which is hereby acknowledged,
the number of Shares set forth below, all pursuant to the guaranteed delivery
procedures set forth in Section 3 of the Offer to Purchase.
Number of Shares:
- ---------------------------------
Certificate Nos.
(if available):
- ---------------------------------------
- ------------------------------------------------------
CHECK BOX IF SHARES
WILL BE TENDERED BY BOOK-ENTRY TRANSFER [ ]
Account Number:
- -----------------------------------
Dated:
- ----------------------------------------------
Name(s) of Record Holder(s):
- -----------------------
- ------------------------------------------------------
- ------------------------------------------------------
Please Print
Address(es):
- ----------------------------------------
- ------------------------------------------------------
Zip Code
Daytime Area Code
and Tel. No.:
- ---------------------------------------
Signature(s):
- ----------------------------------------
- ------------------------------------------------------
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a participant in the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program, hereby guarantees to deliver to the
Depositary either the certificates representing the Shares tendered hereby, in
proper form for transfer, or a Book-Entry Confirmation (as defined in the Offer
to Purchase) with respect to such Shares, in any such case together with a
properly completed and duly executed Letter of Transmittal, with any required
signature guarantees, or an Agent's Message (as defined in the Offer to
Purchase), and any other required documents, within THREE trading days after the
date hereof.
The Eligible Institution that completes this form must communicate this
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.
<TABLE>
<S> <C>
Name of Firm:
-------------------------------------
--------------------------------------------
(Authorized Signature)
Address:
------------------------------------------- Name:
--------------------------------------------
(Please Print)
Title:
- -------------------------------------------- --------------------------------------------
(Zip Code)
Area Code and
Tel No.: Dated:
- -------------------------------------------- --------------------------------------------
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES
FOR SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER NAME AND IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the name and
number to give the payer.
<TABLE>
<C> <S> <C>
- ------------------------------------------------------------
GIVE THE NAME AND
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT NUMBER OF--
- ------------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of
account) the account or, if
combined funds, any
one of the
individuals(1)
3. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
4. a. The usual revocable savings The grantor-
trust account (grantor is also trustee(1)
trustee)
b. So-called trust account that is The actual owner(1)
not a legal or valid trust
under State law
5. Sole proprietorship account The owner(3)
- ------------------------------------------------------------
- ------------------------------------------------------------
GIVE THE NAME AND
EMPLOYER
FOR THIS TYPE OF ACCOUNT IDENTIFICATION
NUMBER OF--
- ------------------------------------------------------------
6. Sole proprietorship account The owner(3)
7. A valid trust, estate, or pension Legal entity(4)
trust
8. Corporate account The corporation
9. Association, club, religious, The organization
charitable, educational or other
tax-exempt organization account
10. Partnership The partnership
11. A broker or registered nominee The broker or
nominee
12. Account with the Department of The public entity
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>
(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) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your Social Security Number or
Employer Identification Number.
(4) List first and circle the name of the legal trust, estate, or pension trust.
(Do not furnish the identifying number of the personal representative or
trustee unless the legal entity itself is not designated in the account
title.)
NOTE: If no name is circled when more than one name is listed, the number will
be considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't 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 the local office of the Social Security
Administration or the Internal Revenue Service and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
The following is a list of payees specifically exempt from backup withholding
depending upon the type of payment (see below):
(1) A corporation.
(2) An organization exempt from tax under section 501(a), or an IRA or a
custodial account under section 403(b)(7).
(3) The United States or any agency or instrumentality thereof.
(4) A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
(5) A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
(6) An international organization or any agency or instrumentality thereof.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the U.S. or
a possession of the U.S.
(9) A futures commission merchant registered with the Commodity Futures
Trading Commission.
(10) A real estate investment trust.
(11) An entity registered at all times during the tax year under the
Investment Company Act of 1940.
(12) A common trust fund operated by a bank under section 584(a).
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or listed in
the most recent publication of the American Society of Corporate
Securities, Inc., Nominee List.
(15) A trust exempt from tax under section 664 or described in section 4947.
For interest and dividends, all listed payees are exempt except item (9). For
broker transactions, payees listed in items (1) through (13) and a person
registered under the Investment Advisers Act of 1940 who regularly acts as a
broker are exempt.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" IN PART 1 OF THE FORM, AND RETURN IT TO
THE PAYER. If you are a nonresident alien or a foreign entity not subject to
backup withholding, give the payer a completed Form W-8, Certificate of Foreign
Status.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. The IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividend, 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) FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail to furnish
your correct 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 INFORMATION 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 penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE> 1
EXHIBIT A-9
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
KPE ACQUISITION INC., )
a Delaware corporation, )
)
Plaintiff, )
)
v. ) C.A. No. 16992-NC
)
VLSI TECHNOLOGY, INC., )
a Delaware corporation, )
ALFRED J. STEIN, PIERRE )
BONELLI, ROBERT P. )
DILWORTH, WILLIAM G. )
HOWARD, JR., PAUL R. LOW )
and HORACE TSIANG, )
)
Defendants. )
COMPLAINT
KPE Acquisition Inc. ("KPE") by its undersigned attorneys, alleges for
its complaint herein as follows:
NATURE OF THE ACTION
1. KPE brings this action for declaratory and injunctive relief to
prevent VLSI Technology, Inc. ("VLSI") from using a shareholder rights plan (the
"Poison Pill" or "Pill") to impede KPE's acquisition of VLSI common stock in an
all-cash tender offer.
<PAGE> 2
2. As is typical of such a rights plan, the Poison Pill prohibits the
consummation of a tender offer for VLSI by rendering such an acquisition
prohibitively expensive. The VLSI Board has refused to redeem the Pill despite
the attractiveness of KPE's offer, thereby delaying VLSI's shareholders' ability
to receive the consideration that KPE is offering until KPE can replace the
Board with new members who might be more amenable to KPE's offer (consistent
with their fiduciary duties to VLSI and all of its shareholders) than the
current Board. By this action, KPE seeks to avoid this needless delay so that
shareholders can promptly receive the benefits of its offer and KPE can commence
the process of incorporating VLSI's business into its own.
3. Moreover, the Pill has a "dead hand" feature that, under certain
circumstances and for a limited period of time, prevents a duly-elected board
from carrying out their fiduciary duties and redeeming the Pill. This provision
is in violation of Delaware law and the Board's fiduciary duties and should be
declared invalid.
THE PARTIES
4. Plaintiff KPE is a Delaware corporation with its principal place of
business in New York, New York. It is a wholly-owned subsidiary of Royal Philips
Electronics NV ("Philips") and was incorporated for the purpose of acquiring
VLSI. KPE is an owner of shares of common stock of VLSI.
5. Defendant VLSI is a Delaware corporation with its principal place of
business in San Jose, California. VLSI manufactures and markets electronic
semiconductors, including integrated circuits for wireless communications and
customized chips for the networking, digital entertainment and advanced computer
markets.
2
<PAGE> 3
6. Defendants Alfred J. Stein, Pierre Bonelli, Robert P. Dilworth,
William G. Howard, Jr., Paul R. Low and Horace Tsiang are members of the board
of directors of VLSI (the "Directors").
FACTUAL BACKGROUND
THE OFFER.
7. On February 26, 1999, Royal Philips Electronics NV ("Philips")
delivered a letter to VLSI in which Philips offered $17 in cash for each of
VLSI's outstanding shares and requested a response by March 3, 1999. Based on
the closing price of VLSI's common stock on February 25, 1995, the offer
represented a 58% premium over the market value of VLSI's common stock at the
time of the letter.
8. On March 3, 1999, rather than embracing the immediate premium to its
stockholders created by the Initial Offer, VLSI responded through its chairman
and chief executive, Alfred Stein, by stating that although the Board had "an
open mind" toward the Initial Offer, it would not consider it until a special
Board meeting twenty days later on March 23, 1999. The Poison Pill was kept in
place by the VLSI Board.
9. On March 4, 1999, Philips wrote to VLSI stating that it intended to
go directly to VLSI's shareholders under its $17 cash offer by commencing a
tender offer on March 5, 1999, for all of VLSI's outstanding shares (the "Tender
Offer"). The letter went on to request that VLSI redeem its Poison Pill or
otherwise take action to render the plan inapplicable to the KPE offer so that
the offer could be consummated expeditiously. The letter explained that "time is
of the essence" because the business combination is a
3
<PAGE> 4
"compelling strategic and operational opportunity" for KPE and provides
"compelling financial benefits" to VLSI's shareholders.
VLSI'S POISON PILL.
10. On November 6, 1989, VLSI adopted the Poison Pill and distributed
rights (the "Rights") pursuant to it. The Poison Pill, which contains typical
"flip in" and "flip over" provisions, is designed to prevent the consummation of
any tender offer -- even one providing substantial benefits to VLSI's
stockholders -- without the current Board's approval.
11. Unless the Tender Offer is declared by VLSI's Board to be a
"Permitted Offer" under the Poison Pill -- that is, an offer that is in the
Board's view adequate and otherwise in the best interests of VLSI and its
stockholders -- or the Pill is otherwise made inapplicable to the Tender Offer,
the Rights would be triggered if KPE were to purchase 20% or more of the
outstanding shares of VLSI's common stock pursuant to the Tender Offer.
12. Once triggered, the Rights entitle the holder to purchase, in
essence, $90 worth of VLSI common stock for $45 for each share owned. Given this
favorable price, it is expected that holders of the Rights will exercise them
once triggered thereby diluting the economic and voting value of the shares
purchased by KPE in the Tender Offer and making any back-end merger
prohibitively expensive.
13. The Rights can be redeemed by the Board at any point up to ten days
after an announcement that a party has acquired 20% or more of VLSI's shares at
a redemption price of $0.01 per Right. However, pursuant to a "dead hand
provision," during
4
<PAGE> 5
the 10-day period after the triggering of the Rights, the Pill can only be
redeemed by the "Continuing Directors," defined as the current members of the
Board who are not affiliated with an "acquiring person" (KPE would qualify as
such an acquiring person) or any person whose nomination or election to the
Board was recommended or approved by a majority of the Continuing Directors.
14. In light of the nature and value of KPE's Tender Offer, VLSI's
Board should declare that the Offer is "Permitted," redeem the Rights under the
Poison Pill, or amend it to make it inapplicable to KPE's Tender Offer.
Considering the fair, non-coercive nature of the Tender Offer, the Pill serves
no legitimate purpose and only delays the benefits of the offer. Forcing KPE to
conduct a proxy campaign to replace the Board is needless and wasteful and will
harm KPE's and VLSI's shareholders.
DECLARATORY RELIEF
15. The Court may grant the declaratory relief sought herein pursuant
to 10 Del. C. Section 6501. In light of VLSI's refusal to redeem the Pill in the
context of KPE's Tender Offer, there is a real and actual controversy between
the parties. Moreover, the dead hand feature of the Pill is invalid as a matter
of law and constitutes a breach of the Board's fiduciary duties. The adverse
legal interests of the parties are real and immediate because the VLSI's Board's
unreasonable use of the poison pill will interfere with KPE's Tender Offer.
5
<PAGE> 6
IRREPARABLE INJURY
16. VLSI's use of and reliance upon its Poison Pill to
obstruct KPE's Tender Offer will delay KPE from acquiring VLSI and prevent
VLSI's shareholders from promptly obtaining the benefits of the offer. KPE's
resulting injury will not be compensable in money damages and KPE has no
adequate remedy at law.
COUNT I
(Declaratory and Injunctive Relief against VLSI and
the Defendant Directors to Prevent a Breach of
Fiduciary Duty)
17. Plaintiff repeats and realleges each and every allegation
set forth in paragraphs 1 through 16 hereof.
18. KPE's Tender Offer is non-coercive and non-discriminatory;
it is fair to VLSI's stockholders; and it represents a substantial premium over
the market price of VLSI's shares prior to the public announcement of the
Philips February 26 letter.
19. The VLSI Board's use of the Poison Pill is not
proportionate to any threat posed by, or within the range of reasonable
responses to, the Tender Offer.
20. Thus, the VLSI Board's refusal to redeem the Pill or
otherwise render it inapplicable to the Tender Offer is a breach of fiduciary
duty.
21. KPE has no adequate remedy at law.
6
<PAGE> 7
COUNT II
(To declare invalid the dead hand feature of VLSI's Poison Pill)
22. KPE repeats and realleges each and every allegation set
forth in paragraphs 1 through 21 hereof.
23. Once triggered, the Poison Pill can only be redeemed by
the Continuing Director defendants or their hand-picked successors. This
provision prevents a new board from redeeming the Pill after it has been
triggered.
24. The "dead hand" provision is a violation of the Board's
fiduciary duties and Delaware statutory law, in particular 8 Del. C. Section
141(a), which states that "[t]he business and affairs of every
corporation...should be managed by or under the direction of a board of
directors...."
25. The "dead hand" feature of the Poison Pill should
therefore be declared invalid.
26. KPE has no adequate remedy at law.
WHEREFORE, plaintiff prays for an order:
(a) declaring that the failure of VLSI and the Directors to
declare KPE's Tender Offer to be a "Permitted Offer" or to redeem the Rights
under the Poison Pill or otherwise to amend the Poison Pill to make it
inapplicable to both the Tender Offer and any follow-on merger constitutes a
breach of the Directors' fiduciary duty to the stockholders;
(b) granting injunctive relief compelling VLSI and the
Directors to declare VLSI's Tender Offer to be a "Permitted Offer", or to redeem
the Rights under the
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Poison Pill, or to otherwise amend the Poison Pill to make it inapplicable to
both the Tender Offer and any follow-on merger;
(c) declaring the "dead hand" features of the Poison Pill
invalid; and
(d) granting plaintiff such other and further relief as the
Court deems just and proper.
POTTER ANDERSON & CORROON LLP
By /s/ Stephen C. Norman
---------------------------
James F. Burnett
Richard L. Horwitz
Stephen C. Norman
P.O. Box 951
1313 N. Market Street
Wilmington, Delaware 19801
(302) 984-6000
OF COUNSEL: Attorneys for Plaintiff
KPE Acquisition Inc.
John L. Hardiman
Edward A. Harris
SULLIVAN & CROMWELL
125 Broad Street
New York, New York 10004
(212) 558-4000
Dated: March 5, 1999
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