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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
AMATI COMMUNICATIONS CORPORATION
(Name of Subject Company)
DSL ACQUISITION CORPORATION
(Bidder)
COMMON STOCK, PAR VALUE $.20 PER SHARE
(Title of Class of Securities)
023115 10 8
(CUSIP Number of Class of Securities)
CHARLES D. TOBIN
TEXAS INSTRUMENTS INCORPORATED
7839 CHURCHILL WAY
P.O. BOX 650311, M/S 3995
DALLAS, TEXAS 75265
972-917-3810
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications on Behalf of Bidders)
COPY TO:
R. SCOTT COHEN, ESQ.
WEIL, GOTSHAL & MANGES LLP
100 CRESCENT COURT, SUITE 1300
DALLAS, TEXAS 75201-6950
214-746-7738
CALCULATION OF FILING FEE
TRANSACTION VALUATION* $499,701,060
AMOUNT OF FILING FEE $99,940.21
<PAGE> 2
* Estimated for purposes of calculating the amount of the filing fee
only. The amount assumes the purchase of (i) 19,768,978 shares of
common stock, par value $.20 per share (the "Shares"), of Amati
Communications Corporation (the "Company") at a price per Share of
$20.00 in cash (the "Offer Price"), (ii) the cancellation of and
settlement with respect to (a) 4,885,599 options granted under the
Company's stock option plans and (b) 330,476 warrants. Such number of
Shares, options and warrants represents all of the Shares, options and
warrants outstanding as of October 31, 1997 (except for 300,000
warrants to be cancelled and terminated without payment of any
consideration).
[ ] Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
Amount previously paid: none Form or registration no.: n/a Filing
party: n/a Date filed: n/a
2
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TENDER OFFER
This Tender Offer Statement on Schedule 14D-1 relates to the offer by
DSL Acquisition Corporation, a Delaware corporation (the "Purchaser") and a
direct wholly owned subsidiary of Texas Instruments Incorporated, a Delaware
corporation ("Parent"), to purchase all outstanding shares of common stock, par
value $.20 per share (the "Shares"), of Amati Communications Corporation, a
Delaware corporation, at $20.00 per Share, net to the seller in cash, without
interest, on the terms and subject to the conditions set forth in the Offer to
Purchase dated November 25, 1997 (the "Offer to Purchase") and in the related
Letter of Transmittal, copies of which are attached hereto as Exhibits (a)(1)
and (a)(2), respectively (which, together with any amendments or supplements,
collectively constitute the "Offer"). The item numbers and responses thereto
below are in accordance with the requirements of Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY
(a) The name of the subject company is Amati Communications
Corporation, a Delaware corporation (the "Company"). The address of the
Company's principal executive offices is 2043 Samaritan Drive, San Jose,
California 95124.
(b) The information set forth in the Introduction of the Offer to
Purchase is incorporated herein by reference.
(c) The information set forth in Section 6 -- "Price Range of
Shares; Dividends on the Shares" of the Offer to Purchase is incorporated
herein by reference.
ITEM 2. IDENTITY AND BACKGROUND
(a)-(d), (g) This Statement is filed by the Purchaser and Parent.
The information set forth in the Introduction, in Section 9 -- "Certain
Information Concerning the Purchaser and Parent" and in Schedule I of the Offer
to Purchase is incorporated herein by reference.
(e)-(f) During the last five years, neither the Purchaser nor Parent
nor, to their knowledge, any of the persons listed in Schedule I (Directors and
Executive Officers) to the Offer to Purchase, (i) has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) has been a party to a civil proceeding of a judicial or administrative
body of competent jurisdiction and as a result of such proceeding was or is
subject to a judgment, decree or final order enjoining future violations of, or
prohibiting activities subject to, federal or state securities laws or finding
any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY
(a) Not applicable.
(b) The information set forth in Section 11 -- "Background of the
Offer; Contacts with the Company" and in Section 12 -- "Purpose of the Offer and
the Merger; Plans for the Company; Merger Agreement; Loan Agreement; Retention
Agreements; Consulting Agreement; Confidentiality Agreement; Other Matters" of
the Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
(a) The information set forth in Section 10 -- "Source and Amount
of Funds" of the Offer to Purchase is incorporated herein by reference.
3
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(b) Not applicable.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDERS
(a)-(g) The information set forth in the Introduction, in Section 7
- - -- "Effect of the Offer on the Market for the Shares; NASDAQ Trading; Exchange
Act Registration; Margin Securities" and in Section 12 -- "Purpose of the Offer
and the Merger; Plans for the Company; Merger Agreement; Loan Agreement;
Retention Agreements; Consulting Agreement; Confidentiality Agreement; Other
Matters" of the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
(a)-(b) Not Applicable.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES
The information set forth in the Introduction, in Section 11 --
"Background of the Offer; Contacts with the Company" and in Section 12 --
"Purpose of the Offer and the Merger; Plans for the Company; Merger Agreement;
Loan Agreement; Retention Agreements; Consulting Agreement; Confidentiality
Agreement; Other Matters" of the Offer to Purchase is incorporated herein
by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The information set forth in the Introduction, in Section 16 -- "Fees
and Expenses" and in Section 17 -- "Miscellaneous" of the Offer to Purchase is
incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS
Not applicable.
ITEM 10. ADDITIONAL INFORMATION
(a) The information set forth in the Introduction, in Section 11
- - -- "Background of the Offer; Contacts with the Company" and in Section 12 --
"Purpose of the Offer and the Merger; Plans for the Company; Merger Agreement;
Loan Agreement; Retention Agreements; Consulting Agreement; Confidentiality
Agreement; Other Matters" of the Offer to Purchase is incorporated herein
by reference.
(b)-(c) The information set forth in Section 12 -- "Purpose of the
Offer and the Merger; Plans for the Company; Merger Agreement; Loan Agreement;
Retention Agreements; Consulting Agreement; Confidentiality Agreement; Other
Matters," in Section 15 -- "Certain Legal Matters" and in Section 17 --
"Miscellaneous" of the Offer to Purchase is incorporated herein by reference.
(d) The information set forth in Section 7 -- "Effect of the Offer on
the Market for the Shares; NASDAQ Trading; Exchange Act Registration; Margin
Securities" of the Offer to Purchase is incorporated herein by reference.
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(e) Not applicable.
(f) The information set forth in the Offer to Purchase and the Letter
of Transmittal, copies of which are attached hereto as Exhibits (a)(1) and
(a)(2), respectively, is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS
99(a)(1) Offer to Purchase, dated November 25, 1997.
99(a)(2) Letter of Transmittal.
99(a)(3) Notice of Guaranteed Delivery.
99(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees.
99(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
99(a)(6) Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9.
99(a)(7) Form of Summary Advertisement, dated November 25, 1997.
99(a)(8) Text of Press Release, dated November 19, 1997.
99(c)(1) Agreement and Plan of Merger, dated as of November 19, 1997, by
and among the Company, Parent and the Purchaser.
99(c)(2) Loan and Security Agreement, dated November 19, 1997, by and
between Parent and the Company.
99(c)(3) Confidentiality Agreement, dated as of July 22, 1997, by and
between Parent and the Company.
99(c)(4) Retention Agreement, dated as of November 19, 1997, by and
between Parent and James E. Steenbergen.
99(c)(5) Retention Agreement, dated as of November 19, 1997, by and
between Parent and Ronald Carlini.
99(c)(6) Retention Agreement, dated as of November 19, 1997, by and
between Parent and Dr. John Cioffi.
99(d) None.
99(e) Not applicable.
99(f) None.
5
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SIGNATURES
After due inquiry and to the best of their knowledge and belief, the
undersigned certify that the information set forth in this statement is true,
complete and correct.
Dated: November 25, 1997
DSL ACQUISITION CORPORATION
By: /s/ GEORGE BARBER
-----------------------------------
George Barber, President
TEXAS INSTRUMENTS INCORPORATED
By: /s/ WILLIAM A. AYLESWORTH
-----------------------------------
William A. Aylesworth, Senior
Vice President, Treasurer and
Chief Financial Officer
6
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EXHIBIT INDEX
EXHIBIT
99(a)(1) Offer to Purchase, dated November 25, 1997.
99(a)(2) Letter of Transmittal.
99(a)(3) Notice of Guaranteed Delivery.
99(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
99(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
99(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
99(a)(7) Form of Summary Advertisement, dated November 25, 1997.
99(a)(8) Text of Press Release, dated November 19, 1997.
99(c)(1) Agreement and Plan of Merger, dated as of November 19, 1997, by and
among the Company, Parent, and the Purchaser.
99(c)(2) Loan and Security Agreement, dated November 19, 1997, by and between
Parent and the Company.
99(c)(3) Confidentiality Agreement, dated as of July 22, 1997, by and between
Parent and the Company.
99(c)(4) Retention Agreement, dated as of November 19, 1997, by and between
Parent and James E. Steenbergen.
99(c)(5) Retention Agreement, dated as of November 19, 1997, by and between
Parent and Ronald Carlini.
99(c)(6) Retention Agreement, dated as of November 19, 1997, by and between
Parent and Dr. John Cioffi.
99(d) None.
99(e) Not applicable.
99(f) None.
7
<PAGE> 1
EXHIBIT 99 (a)(1)
Offer to Purchase For Cash
All Outstanding Shares of Common Stock
of
Amati Communications Corporation
at
$20.00 Net Per Share
by
DSL Acquisition Corporation
a direct wholly owned subsidiary
of
Texas Instruments Incorporated
------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, DECEMBER 23, 1997, UNLESS THE
OFFER IS EXTENDED.
------------------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED
AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF SHARES (AS
DEFINED HEREIN) WHICH CONSTITUTES AT LEAST A MAJORITY OF THE SHARES OUTSTANDING
ON A FULLY DILUTED BASIS. THE OFFER IS ALSO SUBJECT TO OTHER TERMS AND
CONDITIONS. SEE SECTIONS 1 AND 14.
------------------------
THE BOARD OF DIRECTORS OF AMATI COMMUNICATIONS CORPORATION (THE "COMPANY") HAS
UNANIMOUSLY APPROVED THE MERGER AGREEMENT, THE OFFER AND THE MERGER (EACH AS
DEFINED HEREIN), AND HAS DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO
AND IN THE BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS, AND UNANIMOUSLY
RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES IN THE OFFER.
------------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of his or her shares
of common stock, par value $.20 per share, of the Company (the "Shares") should
either (a) complete and sign the Letter of Transmittal (or a facsimile thereof)
in accordance with the instructions in the Letter of Transmittal and mail or
deliver it together with the certificate(s) evidencing tendered Shares, and any
other required documents, to the Depositary, or tender such Shares pursuant to
the procedures for book-entry transfer set forth in Section 3, or (b) request
such stockholder's broker, dealer, commercial bank, trust company or other
nominee to effect the transaction for such stockholder. A stockholder whose
Shares are registered in the name of a broker, dealer, commercial bank, trust
company or other nominee must contact such broker, dealer, commercial bank,
trust company or other nominee if such stockholder desires to tender such
Shares.
Any stockholder who desires to tender Shares and whose certificates
evidencing such Shares are not immediately available or who cannot comply with
the procedures for book-entry transfer described in this Offer to Purchase 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 or the Dealer Manager 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, the Letter of Transmittal, the Notice of
Guaranteed Delivery and other tender offer materials may be directed to the
Information Agent. A stockholder may also contact brokers, dealers, commercial
banks, trust companies or other nominees for assistance concerning this Offer.
------------------------
The Dealer Manager for the Offer is:
MORGAN STANLEY DEAN WITTER
------------------------
November 25, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTRODUCTION................................................ 1
1. TERMS OF THE OFFER..................................... 2
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.......... 4
3. PROCEDURES FOR TENDERING SHARES........................ 5
4. WITHDRAWAL RIGHTS...................................... 7
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES................ 8
6. PRICE RANGE OF SHARES; DIVIDENDS ON THE SHARES......... 9
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES;
NASDAQ TRADING; EXCHANGE ACT REGISTRATION; MARGIN
SECURITIES............................................. 9
8. CERTAIN INFORMATION CONCERNING THE COMPANY............. 10
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND
PARENT.................................................... 12
10. SOURCE AND AMOUNT OF FUNDS............................. 13
11. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY..... 13
12. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE
COMPANY; MERGER AGREEMENT; LOAN AGREEMENT; RETENTION
AGREEMENTS; CONSULTING AGREEMENT; CONFIDENTIALITY
AGREEMENT; OTHER MATTERS............................... 15
13. DIVIDENDS AND DISTRIBUTIONS............................ 25
14. CONDITIONS TO THE OFFER................................ 26
15. CERTAIN LEGAL MATTERS.................................. 27
16. FEES AND EXPENSES...................................... 28
17. MISCELLANEOUS.......................................... 29
Schedule I -- Information Concerning Directors and Executive
Officers of Parent
and the Purchaser......................................... I-1
</TABLE>
i
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To the Holders of Common Stock of
Amati Communications Corporation:
INTRODUCTION
DSL Acquisition Corporation, a Delaware corporation (the "Purchaser") and a
direct wholly owned subsidiary of Texas Instruments Incorporated, a Delaware
corporation ("Parent"), hereby offers to purchase all outstanding shares of
common stock, par value $.20 per share (the "Shares"), of Amati Communications
Corporation, a Delaware corporation (the "Company"), at $20.00 per Share (the
"Offer Price"), net to the seller in cash, without interest, 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,
collectively constitute the "Offer").
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by the Purchaser
pursuant to the Offer. Purchaser will pay all reasonable fees and expenses of
Morgan Stanley & Co. Incorporated ("Morgan Stanley"), which is acting as the
dealer manager (in such capacity, the "Dealer Manager"), ChaseMellon Shareholder
Services, L.L.C., which is acting as the depositary (the "Depositary"), and
Georgeson & Company Inc., which is acting as the information agent (the
"Information Agent"), incurred in connection with the Offer. See Section 16.
The Offer is conditioned upon, among other things, there having been
validly tendered and not withdrawn prior to the expiration of the Offer a number
of Shares which, together with any Shares beneficially owned by Parent or the
Purchaser, represent at least a majority of the Shares outstanding on a fully
diluted basis (the "Minimum Condition"). See Section 14.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of November 19, 1997 (the "Merger Agreement"), by and among the Company,
Parent and the Purchaser. The Merger Agreement provides that, among other
things, following the consummation of the Offer and the satisfaction or waiver
of the other conditions set forth in the Merger Agreement, the Purchaser will be
merged with and into the Company (the "Merger"). Following the Merger, the
Company will continue as the surviving corporation and will be a direct wholly
owned subsidiary of Parent. At the effective time of the Merger (the "Effective
Time"), each outstanding Share (other than Shares owned by Parent, the Purchaser
or any other wholly owned subsidiary of Parent and Shares held by stockholders
who have demanded and perfected dissenter's rights under the Delaware General
Corporation Law, as amended (the "DGCL")), will be converted automatically into
the right to receive the per Share price paid in the Offer in cash, without
interest (referred to herein as the "Merger Consideration"). See Section 12.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD") HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT, THE OFFER AND THE MERGER, AND HAS DETERMINED THAT
THE OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY'S
STOCKHOLDERS, AND UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT
THE OFFER AND TENDER THEIR SHARES IN THE OFFER.
Deutsche Morgan Grenfell Inc. ("DMG"), the Company's financial advisor, has
delivered to the Company Board its written opinion, dated November 18, 1997,
that, as of such date and based upon and subject to the matters set forth
therein, the cash consideration to be received by the Company's stockholders
(other than Parent and its affiliates) pursuant to the Offer and Merger is fair,
from a financial point of view, to such stockholders. A copy of the opinion of
DMG is contained in the Company's Solicitation/Recommendation Statement on
Schedule 14D-9 (the "Schedule 14D-9") filed with the Securities and Exchange
Commission (the "Commission") in connection with the Offer. A copy of the
Schedule 14D-9 is being furnished to the Company's stockholders herewith.
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The Merger Agreement provides that promptly upon the purchase of and
payment for Shares by Parent or any of its subsidiaries pursuant to the Offer
that represent at least a majority of the outstanding Shares on a fully diluted
basis, Parent shall be entitled to designate up to such number of directors,
rounded up to the next whole number, on the Company Board as will give Parent
representation on the Company Board equal to the product of the total number of
directors on the Company Board multiplied by the percentage that the aggregate
number of Shares beneficially owned by the Purchaser, Parent and any of their
affiliates (including Shares accepted for payment) bears to the total number of
Shares then outstanding. In the Merger Agreement, the Company has agreed to
either increase the size of the Company Board or secure the resignations of such
number of its incumbent directors as is necessary to enable Parent's designees
to be so elected and shall cause Parent's designees to be elected as directors
of the Company. Notwithstanding the foregoing, Parent and the Purchaser have
agreed that, until the Effective Time, the Company Board shall have at least two
members who were directors on the date of the Merger Agreement.
The consummation of the Merger is subject to the satisfaction or waiver of
certain conditions, including, if required by law and the Company's Certificate
of Incorporation, the adoption of the Merger Agreement by the requisite vote of
the Company's stockholders. See Section 12. Under the DGCL and the Company's
Certificate of Incorporation, the affirmative vote of the holders of a majority
of the outstanding Shares is required to adopt the Merger Agreement.
Consequently, if the Purchaser acquires (pursuant to the Offer or otherwise) at
least a majority of the then outstanding Shares, the Purchaser will have
sufficient voting power to adopt the Merger Agreement without the vote of any
other stockholder. If the Purchaser acquires at least 90% of the outstanding
Shares (pursuant to the Offer or otherwise), the Purchaser will be able to
effect the Merger pursuant to the "short form" merger provisions of Section 253
of the DGCL, without prior notice to, or any action by, any other stockholder.
Parent has agreed to vote, or cause to be voted, all Shares owned by Parent, the
Purchaser or any of its subsidiaries and affiliates in favor of the approval of
the Merger and the adoption of the Merger Agreement.
The Merger Agreement provides that, following the satisfaction or waiver of
the conditions to the Offer, the Purchaser will accept for payment and pay for
all Shares validly tendered pursuant to the Offer as soon as it is legally
permitted to do so under applicable law, which could be as early as immediately
following 12:00 midnight, New York City time, on Tuesday, December 23, 1997;
provided that, if the number of Shares that have been physically tendered and
not withdrawn are more than 80% but less than 90% of the outstanding Shares
determined on a fully diluted basis, the Purchaser may extend the Offer for up
to five business days and thereafter on a day-to-day basis for up to an
additional five business days from the date that all conditions to the Offer
shall first have been satisfied or waived. The Merger Agreement provides that
the Purchaser shall, and Parent shall cause the Purchaser to, extend the Offer
from time to time until February 23, 1998 if, and to the extent that, at the
initial expiration date of the Offer, or any extension thereof, all conditions
to the Offer have not been satisfied or waived. In addition, the Offer Price may
be increased and the Offer may be extended to the extent required by law in
connection with such increase, in each case without the consent of the Company.
The Offer will not remain open following the time Shares are accepted for
payment.
According to the Company, as of October 31, 1997, there were 19,768,978
Shares outstanding, 4,885,599 Shares reserved for issuance upon the exercise of
options granted under the Company's stock option plans and 630,476 Shares
reserved for issuance upon the exercise of warrants. For purposes of the Offer,
"fully diluted basis" assumes that all such options and warrants are exercised
for Shares. Based upon the foregoing information, the Minimum Condition would be
satisfied if 12,642,527 Shares were validly tendered.
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 of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any extension or
amendment), the Purchaser will accept for payment and pay for all Shares which
are validly tendered prior to the Expiration Date and not withdrawn in
accordance with Section 4. The term "Expiration Date" means 12:00 Midnight, New
York City time, on Tuesday,
2
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December 23, 1997, unless and until the Purchaser (subject to the terms of the
Merger Agreement) shall have extended the period of time during which the Offer
is open, in which event the term "Expiration Date" shall mean the latest time
and date at which the Offer, as so extended by the Purchaser, shall expire.
The Offer is conditioned upon, among other things, satisfaction of the
Minimum Condition. See Section 14, which sets forth in full the conditions to
the Offer. If the Minimum Condition is not satisfied or any or all of the other
events set forth in Section 14 shall have occurred or shall be determined by the
Purchaser to have occurred prior to the Expiration Date, the Purchaser reserves
the right (but shall not be obligated) to, subject to the terms of the Merger
Agreement, (i) decline to purchase any of the Shares tendered in the Offer and
terminate the Offer and return all tendered Shares to the tendering
stockholders, (ii) waive any or all conditions to the Offer, to the extent
permitted by applicable law and the provisions of the Merger Agreement, and,
subject to complying with applicable rules and regulations of the Commission,
purchase all Shares validly tendered, (iii) extend the Offer and, subject to the
right of stockholders to withdraw Shares until the Expiration Date, retain the
Shares which have been tendered during the period or periods for which the Offer
is extended or (iv) amend the Offer. The Merger Agreement provides that the
Purchaser will not, without the prior written consent of the Company, decrease
the Offer Price, decrease the number of Shares sought in the Offer, amend or
waive the Minimum Condition, amend any other term or condition of the Offer in
any manner adverse to the holders of Shares or extend the Expiration Date.
Notwithstanding the foregoing, the Purchaser is required to extend the Offer
from time to time until February 23, 1998 if and to the extent that, at the
initial expiration date of the Offer, or any extension thereof, all conditions
to the Offer have not been satisfied or waived. Also, notwithstanding that the
Purchaser has agreed to accept for payment and pay for all Shares validly
tendered pursuant to the Offer as soon as it is legally permitted to do so, if
the number of Shares that have been physically tendered and not withdrawn, are
more than 80% but less than 90% of the outstanding Shares determined on a fully
diluted basis, the Purchaser may extend the Offer for up to five business days
and thereafter on a day-to-day basis for up to an additional five business days
from the date that all conditions to the Offer shall first have been satisfied
or waived.
The Purchaser expressly reserves the right, in its sole discretion, at any
time or from time to time, subject to the terms of the Merger Agreement and
regardless of whether or not any of the events set forth in Section 14 shall
have occurred or shall have been determined by the Purchaser to have occurred,
(i) to extend the period of time during which the Offer is open and thereby
delay acceptance for payment of, and the payment for, any Shares, by giving oral
or written notice of such extension to the Depositary and (ii) to amend the
Offer in any respect by giving oral or written notice of such amendment to the
Depositary. The rights reserved by the Purchaser in this paragraph are in
addition to the Purchaser's rights to terminate the Offer pursuant to Section
14. Any extension, amendment or termination will be followed as promptly as
practicable by public announcement thereof, the 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 in accordance with
Rules 14d-4(c), 14d-6(d) and 14e-1(d) under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"). Without limiting the obligation of the
Purchaser under such rules or the manner in which the Purchaser may choose to
make any public announcement, the Purchaser currently intends to make
announcements by issuing a press release to the Dow Jones News Service.
If the Purchaser extends the Offer, or if the Purchaser (whether before or
after its acceptance for payment of Shares) is delayed in its purchase of or
payment for Shares or is unable to pay for Shares pursuant to the Offer for any
reason, then, without prejudice to the Purchaser's rights under the Offer, the
Depositary may retain tendered Shares on behalf of the Purchaser, and such
Shares may not be withdrawn except to the extent tendering stockholders are
entitled to withdrawal rights as described in Section 4. However, the ability of
the Purchaser to delay the payment for Shares which the Purchaser has accepted
for payment is limited by Rule 14e-1(c) under the Exchange Act, which requires
that a bidder pay the consideration offered or return the securities deposited
by or on behalf of holders of securities promptly after the termination or
withdrawal of the Offer.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer
(including the Minimum Condition, subject to the Merger Agreement), the
Purchaser will disseminate additional tender offer materials and extend the
Offer to the
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extent required by Rules 14d-4(c) and 14d-6(d) under the Exchange Act. The
minimum period during which the Offer must remain open following material
changes in the terms of the Offer or information concerning the Offer, other
than a change in price or a change in percentage of securities sought, will
depend upon the facts and circumstances, including the relative materiality of
the terms or information. With respect to a change in price or a change in
percentage of securities sought, a minimum ten business day period is required
to allow for adequate dissemination to stockholders and investor response. If,
prior to the Expiration Date, the Purchaser should decide to increase the price
per Share being offered in the Offer, such increase will be applicable to all
stockholders whose Shares are accepted for payment pursuant to the Offer. The
Merger Agreement provides that, without the Company's consent, the Purchaser
will not decrease the price or the number of Shares sought in the Offer. As used
in this Offer to Purchase, "business day" has the meaning set forth in Rule
14d-1 under the Exchange Act.
The Company has provided to the Purchaser its list of stockholders and
security position listings for the purpose of disseminating the Offer to holders
of Shares. This Offer to Purchase and the related Letter of Transmittal and
other relevant materials will be mailed to record holders of Shares and
furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the stockholder
list or, if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any extension or
amendment), the Purchaser will purchase, by accepting for payment, and will pay
for, all Shares validly tendered prior to the Expiration Date (and not properly
withdrawn in accordance with Section 4) promptly after the later to occur of (i)
the Expiration Date and (ii) the satisfaction or waiver of the conditions set
forth in Section 14. Subject to the applicable rules of the Commission and the
terms of the Merger Agreement, 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, including the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"). See Sections 14
and 15.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) certificates evidencing
such Shares ("Stock Certificates") or timely confirmation of a book-entry
transfer (a "Book-Entry Confirmation") of such Shares into the Depositary's
account at The Depository Trust Company or the Philadelphia Depository Trust
Company (each, a "Book-Entry Transfer Facility") pursuant to the procedures set
forth in Section 3, (ii) a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) or, in the case of a book-entry transfer, an
Agent's Message (as defined below) and (iii) any other documents required by the
Letter of Transmittal.
The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, tendered Shares if, as and when the
Purchaser gives oral or written notice to the Depositary of the Purchaser's
acceptance of such Shares for payment. In all cases, payment for Shares accepted
pursuant to the Offer will be made by deposit of the purchase price with the
Depositary, which will act as agent for tendering stockholders for the purpose
of receiving payments from the Purchaser and transmitting payments to such
tendering stockholders. If, for any reason, acceptance for payment of any Shares
tendered pursuant to the Offer is delayed, or the Purchaser is unable to accept
for payment Shares tendered pursuant to the Offer, then, without prejudice to
the Purchaser's rights under Section 14, the Depositary may, nevertheless, on
behalf of the Purchaser, retain tendered Shares, and such Shares may not be
withdrawn, except to the extent that the tendering stockholders are entitled to
withdrawal rights as described in Section 4 below and as otherwise
4
<PAGE> 7
required by Rule 14e-1(c) under the Exchange Act. UNDER NO CIRCUMSTANCES WILL
INTEREST ON THE PURCHASE PRICE FOR SHARES BE PAID BY THE PURCHASER, REGARDLESS
OF ANY DELAY IN MAKING SUCH PAYMENT.
Upon the deposit of funds with the Depositary for the purpose of making
payments to tendering stockholders, the Purchaser's obligation to make such
payment shall be satisfied and tendering stockholders must thereafter look
solely to the Depositary for payment of amounts owed to them by reason of the
acceptance for payment of Shares pursuant to the Offer.
If any tendered Shares are not accepted pursuant to the Offer for any
reason, or if Stock Certificates are submitted evidencing more Shares than are
tendered, Stock Certificates evidencing Shares not purchased or tendered will be
returned, without expense to the tendering stockholder (or in the case of Shares
tendered by book-entry transfer into the Depositary's account at a Book-Entry
Transfer Facility pursuant to the procedures set forth in Section 3, such Shares
will be credited to an account maintained at such Book-Entry Transfer Facility),
as promptly as practicable after the expiration, termination or withdrawal of
the Offer.
The Purchaser reserves the right to transfer or assign, in whole at any
time or in part from time to time, to Parent or to one or more of its
affiliates, the right to purchase all or a 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. PROCEDURES FOR TENDERING SHARES
Valid Tender. For Shares to be validly tendered pursuant to the Offer, a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees, or an Agent's Message (in the
case of any book-entry transfer), and any other required documents, must be
received by the Depositary at its address set forth on the back cover of this
Offer to Purchase prior to the Expiration Date. In addition, either (i) the
Stock Certificates evidencing Shares must be received by the Depositary along
with the Letter of Transmittal or Shares must be tendered pursuant to the
procedures for book-entry transfer described below and a Book-Entry Confirmation
must be received by the Depositary, in each case prior to the Expiration Date or
(ii) the tendering stockholder must comply with the guaranteed delivery
procedures described below. No alternative, conditional or contingent tenders
will be accepted.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at each Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase, and any
financial institution that is a participant in any of the Book-Entry Transfer
Facilities' systems may make book-entry delivery of Shares by causing a
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account at a Book-Entry Transfer Facility in accordance with such Book-Entry
Transfer Facility's procedures for transfer. However, although delivery of
Shares may be effected through book-entry transfer at a Book-Entry Transfer
Facility, the Letter of Transmittal (or facsimile thereof), properly completed
and duly executed and with any required signature guarantees, or an Agent's
Message in connection with a book-entry delivery of Shares, and any other
required documents, must, in any case, be transmitted to and received by the
Depositary at its address set forth on the back cover of this Offer to Purchase
prior to the Expiration Date or the tendering stockholder must comply with the
guaranteed delivery procedures described below. DELIVERY OF DOCUMENTS TO A
BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY TRANSFER
FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
Signature Guarantees. Signatures on all Letters 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"), unless the Shares tendered thereby are
tendered (i) by a registered holder of Shares who has not completed either the
box entitled "Special Delivery Instructions" or the box entitled "Special
Payment Instructions" on the Letter of Transmittal, or (ii) for the account of
an Eligible Institution. See Instruction 1 of the Letter of Transmittal.
5
<PAGE> 8
If a Stock Certificate is registered in the name of a person other than the
signer of the Letter of Transmittal, or if payment is to be made, or a Stock
Certificate not accepted for payment or not tendered is to be returned, to a
person other than the registered holder(s), then the Stock Certificate must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear on the Stock
Certificate, with the signature(s) on such Stock Certificate or stock powers
guaranteed as described above. See Instructions 1 and 5 of the Letter of
Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Stock Certificates are not immediately
available or time will not permit all required documents to reach the Depositary
prior to the Expiration Date, or the procedures for book-entry transfer cannot
be completed on a timely basis, such Shares may nevertheless be tendered if all
the following conditions are satisfied:
(i) the 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 herewith, is
received by the Depositary prior to the Expiration Date as provided below;
and
(iii) the Stock Certificates for all tendered Shares, in proper form
for transfer (or a Book-Entry Confirmation), together with 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), and any other documents required by the
Letter of Transmittal, are received by the Depositary within three New York
Stock Exchange ("NYSE") trading days after the date of execution of the
Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand 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 the Notice of
Guaranteed Delivery.
THE METHOD OF DELIVERY OF STOCK CERTIFICATES, THE LETTER OF TRANSMITTAL AND
ANY OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
Notwithstanding any other provision hereof, payment for Shares purchased
pursuant to the Offer will in all cases be made only after timely receipt by the
Depositary of (i) Stock Certificates evidencing such Shares or a Book-Entry
Confirmation of the delivery of such Shares, (ii) 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) and (iii) any other documents required by the Letter of Transmittal.
BACKUP FEDERAL INCOME TAX WITHHOLDING. TO PREVENT BACKUP FEDERAL INCOME TAX
WITHHOLDING WITH RESPECT TO PAYMENT OF THE PURCHASE PRICE FOR SHARES PURCHASED
PURSUANT TO THE OFFER, EACH TENDERING STOCKHOLDER MUST PROVIDE THE DEPOSITARY
WITH SUCH STOCKHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER AND CERTIFY THAT
SUCH STOCKHOLDER IS NOT SUBJECT TO BACKUP FEDERAL INCOME TAX WITHHOLDING BY
COMPLETING THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL. IF
BACKUP WITHHOLDING APPLIES WITH RESPECT TO A STOCKHOLDER, THE DEPOSITARY IS
REQUIRED TO WITHHOLD 31% OF ANY PAYMENTS MADE TO SUCH STOCKHOLDER. SEE
INSTRUCTION 10 OF THE LETTER OF TRANSMITTAL. BACKUP WITHHOLDING IS NOT AN
ADDITIONAL TAX AND MAY BE CLAIMED AS A CREDIT AGAINST THE FEDERAL INCOME TAX
LIABILITY OF A STOCKHOLDER, PROVIDED THE REQUIRED INFORMATION IS FURNISHED TO
THE INTERNAL REVENUE SERVICE.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tendered Shares pursuant to any of the procedures described above will be
determined by the Purchaser, in its sole discretion, whose determination will be
final and binding on all parties. The Purchaser reserves the absolute right to
reject any or all tenders of any Shares determined by it not to be
6
<PAGE> 9
in proper form or if the acceptance for payment of, or payment for, such Shares
may, in the opinion of the Purchaser's counsel, be unlawful. The Purchaser also
reserves the absolute right, in its sole discretion, subject to the Merger
Agreement, to waive any of the conditions of the Offer or any defect or
irregularity in any tender with respect to Shares of any particular stockholder,
and 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. None of the Purchaser, Parent, the Dealer Manager, the Depositary,
the Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or will incur any
liability for failure to give any such notification.
Other Requirements. By executing a Letter of Transmittal as set forth
above, a tendering stockholder irrevocably appoints designees of the Purchaser
as the stockholder's attorneys-in-fact and proxies, in the manner set forth in
the Letter of Transmittal, each with full power of substitution, to the full
extent of the stockholder's rights with respect to the Shares tendered by the
stockholder and accepted for payment by the Purchaser (and any and all other
Shares or other securities or property issued or issuable in respect of such
Shares on or after the date of the Merger Agreement). All such proxies shall be
considered coupled with an interest in the tendered Shares. This appointment
will be effective when, and only to the extent that, the Purchaser accepts
Shares for payment. Upon acceptance for payment, all prior proxies and consents
given by the stockholder with respect to the Shares or other securities will,
without further action, be revoked, and no subsequent proxies may be given nor
any subsequent written consent executed by such stockholder (and if given or
executed, will not be deemed to be effective) with respect thereto. The
designees of the Purchaser will, with respect to the Shares and other
securities, 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 Company's stockholders, by written consent
or otherwise. The Purchaser reserves the right to require that, in order for
Shares to be deemed validly tendered, immediately upon the Purchaser's
acceptance for payment of such Shares, the Purchaser must be able to exercise
full voting and other rights of a record and beneficial holder, including rights
in respect of acting by written consent, with respect to such Shares (including
voting at any meeting of stockholders then scheduled or acting by written
consent without a meeting).
A tender of Shares pursuant to any one of the procedures described above
will constitute the tendering stockholder's acceptance of the terms and
conditions of the Offer. The Purchaser's acceptance for payment of Shares
tendered pursuant to the Offer will constitute a binding agreement between the
tendering stockholder and the Purchaser upon the terms and subject to the
conditions of the Offer.
4. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 4, tenders of Shares made
pursuant to the Offer are irrevocable, provided 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 January 23, 1998, or at such later time as
may apply if the Offer is extended.
If the Purchaser extends the Offer, is delayed in its purchase of or
payment for Shares or is unable to purchase or pay for Shares for any reason,
then, without prejudice to the rights of the Purchaser hereunder, tendered
Shares may be retained by the Depositary on behalf of Purchaser and may not be
withdrawn except to the extent that tendering stockholders are entitled to
withdrawal rights as set forth in Section 4. The reservation by the Purchaser of
the right to delay the acceptance or purchase of or payment for Shares is
subject to the provisions of Rule 14e-1(c) under the Exchange Act, which
requires the Purchaser to pay the consideration offered or return Shares
deposited by or on behalf of stockholders promptly after the termination or
withdrawal of the Offer.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
its address set forth on the back cover of this Offer to Purchase. Any such
notice of withdrawal must specify the name of the person who tendered the Shares
to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder, if different from that of the
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<PAGE> 10
person who tendered such Shares. If Stock Certificates evidencing Shares to be
withdrawn have been delivered or otherwise identified to the Depositary, then
prior to the release of such Stock Certificates, the tendering stockholder must
also submit the serial numbers shown on the particular Stock Certificates
evidencing the Shares to be withdrawn and the signature on the notice of
withdrawal must be guaranteed by an Eligible Institution, except in the case of
Shares tendered for the account of an Eligible Institution. If Shares have been
tendered pursuant to the procedures for book-entry transfer as set forth in
Section 3, the notice of withdrawal must specify the name and number of the
account at the appropriate Book-Entry Transfer Facility to be credited with the
withdrawn Shares.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding. None of the
Purchaser, Parent, the Dealer Manager, the Depositary, the Information Agent or
any other person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification.
ANY SHARES PROPERLY WITHDRAWN WILL BE DEEMED TO NOT HAVE BEEN VALIDLY
TENDERED FOR PURPOSES OF THE OFFER. However, withdrawn Shares may be re-tendered
by following one of the procedures described in Section 3 at any time prior to
the Expiration Date.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material federal income tax consequences
of the Offer and the Merger to stockholders of the Company whose Shares are
purchased pursuant to the Offer or whose Shares are converted into the right to
receive the Merger Consideration in the Merger (including any cash amounts
received by dissenting stockholders pursuant to the exercise of dissenter's
rights). The discussion applies only to stockholders of the Company in whose
hands Shares are capital assets, and may not apply to stockholders who received
their Shares pursuant to the exercise of employee stock options or otherwise as
compensation, or who are not citizens or residents of the United States.
The federal income tax consequences set forth below are included for
general informational purposes only and are based upon present law. Because
individual circumstances may differ, each stockholder should consult such
stockholder's own tax advisor to determine the applicability of the rules
discussed below to such stockholder and the particular tax effects of the Offer
and the Merger, including the application and effect of state, local and foreign
tax laws.
Receipt of the Offer Price or the Merger Consideration. The receipt by a
stockholder of the Offer Price or the Merger Consideration (including any cash
amounts received by dissenting stockholders pursuant to the exercise of
dissenter's rights) in exchange for Shares will be a taxable transaction for
federal income tax purposes. In general, for federal income tax purposes, a
stockholder will recognize gain or loss equal to the difference between such
stockholder's adjusted tax basis in the Shares sold pursuant to the Offer or
converted to cash in the Merger and the amount of cash received therefor. Such
gain or loss will be recognized by a stockholder in the taxable year in which
the stockholder's Shares are accepted for payment by the Purchaser or in which
the Effective Time of the Merger occurs. Gain or loss must be determined
separately for each block of Shares (i.e., Shares acquired at the same cost in a
single transaction) sold pursuant to the Offer or converted to cash in the
Merger. Such gain or loss will be capital gain or loss. In the case of
non-corporate taxpayers, any such capital gain will be long-term capital gain
and subject to a maximum federal income tax rate of 20% if the stockholder's
holding period in the Shares on the date of sale (or, if applicable, the
Effective Time of the Merger) is greater than eighteen months; if such holding
period is more than one year but not more than eighteen months, then any such
capital gain will be mid-term capital gain and will be subject to a maximum
federal income tax rate of 28%.
Backup Withholding. Payments in connection with the Offer or the Merger may
be subject to "backup withholding" at a 31% rate. Backup withholding generally
applies if the stockholder (a) fails to furnish his social security number or
other taxpayer identification number ("TIN"), (b) furnishes an incorrect TIN,
(c) fails properly to report interest or dividends, or (d) under certain
circumstances, fails to provide a certified statement, signed under penalties of
perjury, that the TIN provided is his correct number and that he is not
8
<PAGE> 11
subject to backup withholding. Any amounts withheld from a payment to a
stockholder under the backup withholding rules will be allowed as a credit
against such stockholder's federal income tax liability, provided that the
required information is provided to the Internal Revenue Service. Certain
persons generally are exempt from backup withholding, including corporations and
financial institutions. Certain penalties apply for failure to furnish correct
information and for failure to include the reportable payments in income. Each
stockholder should consult with such stockholder's own tax advisor as to such
stockholder's qualification for exemption from withholding and the procedure for
obtaining such exemption.
6. PRICE RANGE OF SHARES; DIVIDENDS ON THE SHARES
The Shares are traded on the Nasdaq Stock Market's National Market System
("Nasdaq") under the symbol "AMTX." The following table sets forth, for the
quarters indicated, the high and low sales price per Share on Nasdaq. All prices
set forth below are as reported in published financial sources:
<TABLE>
<CAPTION>
MARKET PRICE
------------------
HIGH LOW
------- -------
<S> <C> <C>
1995
Quarter ended December 31, 1995........................... $ 9.125 $ 2.813
1996
Quarter ended March 31, 1996.............................. 9.500 5.125
Quarter ended June 30, 1996............................... 36.500 8.375
Quarter ended September 30, 1996.......................... 25.375 9.375
Quarter ended December 31, 1996........................... 25.125 12.625
1997
Quarter ended March 31, 1997.............................. 16.125 9.375
Quarter ended June 30, 1997............................... 15.500 7.125
Quarter ended September 30, 1997.......................... 19.250 10.250
Quarter ended December 31, 1997 (through November 24,
1997).................................................. 19.813 10.750
</TABLE>
On November 18, 1997, the last full trading day prior to the public
announcement of the terms of the Merger Agreement, the reported closing sales
price per Share on Nasdaq was $15.188. On November 24, 1997, the last full
trading day prior to the commencement of the Offer, the reported closing sales
price per Share on the Nasdaq was $19.75. STOCKHOLDERS ARE URGED TO OBTAIN A
CURRENT MARKET QUOTATION FOR THE SHARES.
The Company has not paid cash dividends on the Shares since its inception.
The Merger Agreement prohibits the Company from declaring or paying any
dividends until such time as the directors designated by Parent have been
elected to, and shall constitute a majority of, the Company Board.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; NASDAQ TRADING;
EXCHANGE ACT REGISTRATION; MARGIN SECURITIES
The purchase of Shares pursuant to the Offer will reduce the number of
holders of Shares and the number of Shares that might otherwise trade publicly
and could adversely affect the liquidity and market value of the remaining
Shares held by the public.
The extent of the public market for the Shares and, according to the
Nasdaq's published guidelines, the continued trading of the Shares on Nasdaq,
after commencement of the Offer will depend upon the number of holders of Shares
remaining at such time, the interest in maintaining a market in such Shares on
the part of securities firms, the possible termination of registration of such
Shares under the Exchange Act, as described below, and other factors.
If, as a result of the purchase of Shares pursuant to the Offer or
otherwise, trading of the Shares on Nasdaq is discontinued, the liquidity of and
market for the Shares could be adversely affected. The Purchaser
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<PAGE> 12
cannot predict whether or to what extent the reduction in the number of Shares
that might otherwise trade publicly would have an adverse or beneficial effect
on the market price for or marketability of the Shares or whether it would cause
future prices to be greater or less than the Offer Price.
The Shares are currently registered under Section 12(g) of the Exchange
Act. Registration of the Shares under the Exchange Act may be terminated upon
application by the Company to the Commission if the Shares are not held by at
least 300 holders of record. Termination of registration of the Shares under the
Exchange Act would substantially reduce the information required to be furnished
by the Company to its stockholders and to the Commission and could make certain
provisions of the Exchange Act no longer applicable to the Company, such as the
short-swing profit recovery provisions of Section 16(b) of the Exchange Act, the
requirement of furnishing a proxy statement pursuant to Section 14(a) of the
Exchange Act in connection with stockholders' meetings and the related
requirement of furnishing an annual report to stockholders and the requirements
of Rule 13e-3 under the Exchange Act with respect to "going private"
transactions. 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 or 144A promulgated under the Securities Act of
1933, as amended, may be impaired or eliminated.
Purchaser intends to seek to cause the Company to terminate the
registration of the Shares under the Exchange Act as soon after the completion
of the Offer as the requirements for such termination are met. If registration
of the Shares is not terminated prior to the Merger, the registration of the
Shares under the Exchange Act will be terminated following consummation of the
Merger.
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
which has the effect, among other things, of allowing brokers to extend credit
on the loan value of the Shares. Depending upon factors similar to those
described above regarding listing and market quotations, it is possible that,
following the Offer, the Shares would no longer constitute "margin securities"
for the purposes of the margin regulations of the Federal Reserve Board and
therefore could no longer be used as collateral for loans made by brokers. If
registration of Shares under the Exchange Act were terminated, the Shares would
no longer be "margin securities" or be eligible for listing on Nasdaq.
8. CERTAIN INFORMATION CONCERNING THE COMPANY
The information concerning the Company contained in this Offer to Purchase,
including financial information (other than projections of the Company's results
of operations provided below), has been taken from or based upon publicly
available documents and records on file with the Commission and other public
sources. Neither Parent nor the Purchaser assumes any responsibility for the
accuracy or completeness of the information concerning the Company 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 Parent or the Purchaser.
General. The Company is a Delaware corporation with its principal executive
offices located at 2043 Samaritan Drive, San Jose, California 95124. The
telephone number of the Company at such offices is 408-879-2000.
The Company is a leading developer of advanced transmission equipment
utilizing Discrete Multi-tone ("DMT") technology for the Asymmetrical Digital
Subscriber Line ("ADSL") and Very high-speed Digital Subscriber Line ("VDSL")
markets. The Company holds DMT, ADSL and VDSL patents and has entered into
agreements covering its technology with companies like Alcatel, Analog Devices,
Inc., Motorola, NEC, Northern Telecom, Siemens and Parent. The Company's
DMT/ADSL products were recently selected by British Columbia Telephone, Canada
for a proposed roll-out of the first standards based commercial ADSL services
for transmitting high-speed data over existing copper phone lines, making
internet access, interactive services, broadcast quality video and
video-on-demand realizable to subscribers. The Company is also a provider of
network connectivity systems for the internetworking and Original Equipment
Manufacturer markets.
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<PAGE> 13
Financial Information. Set forth below is a summary of certain consolidated
financial information with respect to the Company, excerpted or derived from the
information contained in the Company's Annual Report on Form 10-K for the fiscal
year ended August 2, 1997. More comprehensive financial information is included
in such reports and other documents filed by the Company with the Commission,
and the following summary is qualified in its entirety by reference to such
reports and other documents and all of the financial information (including any
related notes) contained therein. Such reports and other documents may be
inspected and copies may be obtained from the offices of the Commission in the
manner set forth below.
AMATI COMMUNICATIONS CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
---------------------------------------------------------
JULY 31, JULY 30, JULY 29, JULY 27, AUGUST 2,
1993 1994 1995 1996 1997
-------- -------- -------- -------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
SELECTED INCOME STATEMENT DATA:
Net Sales.............................. $12,307 $ 8,236 $12,040 $ 12,085 $ 13,200
Income (Loss) before Income Taxes...... $(5,963) $ 530 $ 1,933 $(34,035) $(12,243)
Provision for Income Taxes............. -- 27 97 43 --
------- ------- ------- -------- --------
Net Income (Loss)...................... $(5,963) $ 503 $ 1,836 $(34,078) $(12,243)
Net Income (Loss) Per Share............ (.46) .04 .16 (2.21) (.66)
SELECTED BALANCE SHEET DATA:
Current Assets......................... $11,188 $ 9,463 $ 7,793 $ 5,182 $ 9,282
Current Liabilities.................... 2,598 2,171 1,591 2,467 5,517
Working Capital........................ 8,590 7,292 6,202 2,715 3,765
Total Assets........................... 12,936 11,391 12,111 6,241 15,083
Long-term Liabilities.................. 1,099 428 294 2,094 4,540
Stockholders' Equity................... 9,239 8,792 10,226 1,680 5,026
</TABLE>
Available Information. The Company is subject to the information filing
requirements of the Exchange Act and is required to file reports and other
information with the Commission relating to its business, financial condition
and other matters. Information, as of particular dates, concerning the Company's
directors and officers, their remuneration, options granted to them, the
principal holders of the Company's securities and any material interest of such
persons in transactions with the Company is required to be described in proxy
statements distributed to the Company's stockholders and filed with the
Commission. These reports, proxy statements and other information should be
available for inspection and copying at the Commission's office 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 Commission located at
Seven World Trade Center, New York, New York 10048 and Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
this material may also be obtained by mail, upon payment of the Commission's
customary fees, from the Commission's principal office at 450 Fifth Street,
N.W., Washington, D.C. 20549. The Commission also maintains an internet web site
at http://www.sec.gov that contains reports, proxy statements and other
information.
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained herein has been taken from or based upon
publicly available documents on file with the Commission and other publicly
available information. Although the Purchaser and Parent do not have any
knowledge that any such information is untrue, neither the Purchaser nor Parent
takes any responsibility for the accuracy or completeness of such information or
for any failure by the Company to disclose events that may have occurred and may
affect the significance or accuracy of any such information.
Projections. During the course of the discussions between Parent and the
Company that led to the execution of the Merger Agreement, the Company provided
Parent with certain information about the Company and its financial performance
which is not publicly available. The information provided included projected
financial information for fiscal years ending August 1998 and August 1999 (the
"Projections"). The
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<PAGE> 14
Projections were prepared by the Company's management for internal planning and
budgeting purposes only and not with a view to publication. The Projections
included estimates of (i) net sales of $40.6 million and $113.2 million for the
Company's fiscal years ended August 1998 and August 1999, respectively, and (ii)
a net loss of $8.7 million and net income of $10.5 million for the Company's
fiscal years ended August 1998 and August 1999, respectively. None of the
assumptions underlying the Projections give effect to the Offer, the Merger or
the potential combined operations of the Company and Parent after the
consummation of such transactions.
THE PROJECTIONS WERE NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE OR
COMPLIANCE WITH PUBLISHED GUIDELINES OF THE COMMISSION REGARDING PROJECTIONS OR
THE GUIDELINES ESTABLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC
ACCOUNTANTS AND ARE INCLUDED IN THIS OFFER TO PURCHASE ONLY BECAUSE SUCH
INFORMATION WAS PROVIDED TO PARENT. NONE OF PARENT, THE PURCHASER, THE COMPANY
OR ANY PARTY TO WHOM THE PROJECTIONS WERE PROVIDED ASSUMES ANY RESPONSIBILITY
FOR THE VALIDITY, REASONABLENESS, ACCURACY OR COMPLETENESS OF SUCH INFORMATION.
WHILE PRESENTED WITH NUMERICAL SPECIFICITY, THESE PROJECTIONS ARE BASED UPON
NUMEROUS ASSUMPTIONS RELATING TO COMMERCIAL ACCEPTANCE OF THE COMPANY'S PRODUCTS
AND TECHNOLOGY, INDUSTRY PERFORMANCE, GENERAL BUSINESS AND ECONOMIC CONDITIONS,
THE BUSINESS OF THE COMPANY AND OTHER MATTERS, ALL OF WHICH MAY NOT BE REALIZED
AND ARE SUBJECT TO SIGNIFICANT UNCERTAINTIES AND CONTINGENCIES, MANY OF WHICH
ARE BEYOND THE CONTROL OF THE COMPANY. THERE CAN BE NO ASSURANCE THAT THE
PROJECTIONS WILL BE REALIZED, AND ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE
SHOWN. THE PROJECTIONS HAVE NOT BEEN EXAMINED OR COMPILED BY THE COMPANY'S
INDEPENDENT PUBLIC ACCOUNTANTS. FOR THESE REASONS, AS WELL AS THE BASES ON WHICH
SUCH PROJECTIONS WERE COMPILED, THERE CAN BE NO ASSURANCE THAT SUCH PROJECTIONS
WILL BE REALIZED, OR THAT ACTUAL RESULTS WILL NOT BE MATERIALLY HIGHER OR LOWER
THAN THOSE ESTIMATED. THE INCLUSION OF SUCH PROJECTIONS HEREIN SHOULD NOT BE
REGARDED AS AN INDICATION THAT PARENT, THE PURCHASER, THE COMPANY OR ANY OTHER
PARTY WHO RECEIVED SUCH INFORMATION CONSIDERS IT AN ACCURATE PREDICTION OF
FUTURE EVENTS. PARENT DID AN INDEPENDENT ASSESSMENT OF THE COMPANY'S VALUE AND
DID NOT RELY TO ANY MATERIAL DEGREE UPON THE PROJECTIONS. NONE OF THE COMPANY,
PARENT, THE PURCHASER OR ANY OTHER PARTY INTENDS PUBLICLY TO UPDATE OR OTHERWISE
PUBLICLY REVISE THE PROJECTIONS SET FORTH ABOVE EVEN IF EXPERIENCE OR FUTURE
CHANGES MAKE IT CLEAR THAT THE PROJECTIONS WILL NOT BE REALIZED.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT
General. The Purchaser is a newly incorporated Delaware corporation and a
direct wholly owned subsidiary of Parent. To date the Purchaser has not
conducted any business other than in connection with the Offer and the Merger.
Until immediately prior to the time the Purchaser purchases Shares pursuant to
the Offer, it is not anticipated that the Purchaser will have any significant
assets or liabilities or engage in activities other than those incident to its
formation and capitalization and the transactions contemplated by the Offer and
the Merger. The principal executive offices of the Purchaser are located at
13500 North Central Expressway, P.O. Box 655474, Dallas, Texas 75265-5474.
Parent is a global semiconductor company and the world's leading designer
and supplier of digital signal processing solutions, the engines driving the
digitization of electronics. Headquartered in Dallas, Texas, Parent's businesses
also include calculators, productivity products, controls and sensors,
metallurgical materials and digital light processing technologies. Parent has
manufacturing or sales operations in more than 25 countries. The principal
executive offices of Parent are located at 13500 North Central Expressway, P.O.
Box 655474, Dallas, Texas 75265-5474.
The name, citizenship, business address, present principal occupation or
employment and five-year employment history of each of the directors and
executive officers of the Purchaser and Parent are set forth in Schedule I
hereto.
None of the Purchaser, Parent nor, to the best knowledge of the Purchaser
and Parent, any of the persons listed on Schedule I or any associate or
wholly-owned or majority-owned subsidiary of the Purchaser, Parent or any of the
persons so listed, beneficially owns or has a right to acquire directly or
indirectly any Shares. None of the Purchaser, Parent nor, to the best knowledge
of the Purchaser and Parent, any of the persons or
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<PAGE> 15
entities referred to above, or any of the respective executive officers,
directors or subsidiaries of any of the foregoing, has effected any transactions
in the Shares during the past sixty (60) days.
Except as described in this Offer to Purchase, none of the Purchaser,
Parent or, to the best knowledge of the Purchaser and Parent, any of the persons
listed on Schedule I, has any contract, arrangement, understanding or
relationship with any other person with respect to any securities of the
Company, including but not limited to contracts, arrangements, understandings or
relationships concerning the transfer or voting of such securities, joint
ventures, loan or option arrangements, puts or calls, guarantees of loans,
guarantees against loss or the giving or withholding of proxies. Except as set
forth in this Offer to Purchase, since July 31, 1994, none of the Purchaser,
Parent or, to the best knowledge of the Purchaser and Parent, any of the persons
listed on Schedule I, has had any business relationships or transactions with
the Company or any of its executive officers, directors or affiliates that are
required to be reported under the rules and regulations of the Commission
applicable to the Offer. Except as set forth in this Offer to Purchase, since
July 1, 1994 there have been no contracts, negotiations to transactions between
any of the Purchaser, Parent or, to the best knowledge of the Purchaser and
Parent, any of the persons listed on Schedule I, 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 of other transfer of a material amount of assets.
Available Information. Parent is subject to the informational filing
requirements of the Exchange Act and is required to file reports and other
information with the Commission relating to its business, financial condition
and other matters. Information, as of particular dates, concerning Parent's
directors and officers, their remuneration, options granted to them, the
principal holders of Parent's securities and any material interest of such
persons in transactions with Parent is required to be described in proxy
statements distributed to Parent's stockholders and filed with the Commission.
Such reports, proxy statements and other information may be inspected and copies
may be obtained from the offices of the Commission in the same manner as set
forth with respect to information concerning the Company in Section 8. Such
material should also be available at the offices of the NYSE, 20 Broad Street,
New York, New York 10005.
10. SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by the Purchaser to purchase all of the
Shares pursuant to the Offer and consummate the Merger is approximately $397
million assuming all eligible holders of Company options elect to receive a
Substitute Option (as defined in Section 12) as provided in the Merger
Agreement. Fees and expenses related to the Offer and the Merger, including the
termination fee paid to Westell pursuant to the terms of the Merger agreement
previously executed by the Company and Westell, are estimated to be
approximately $19 million. The Purchaser plans to obtain all funds needed for
the Offer and the Merger and to pay related fees and expenses through a capital
contribution from Parent. Parent plans to obtain such funds from cash on hand.
11. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY
In October 1996, Parent and the Company entered into a Cooperative
Development and Product Sale Agreement pursuant to which the Company agreed to
develop and sell to Parent certain software to be incorporated into Parent's
digital signal processing products. Pursuant to such agreement, the Company
granted to Parent certain licenses to use, copy, sell and manufacture certain of
the Company's intellectual property included in the software to be developed by
the Company. Such agreement was not related to the subsequent contacts between
Parent and the Company in connection with the Offer and the Merger.
Set forth below is a description of the background of the Offer, including
a brief description of the material contacts between Parent and its affiliates
and the Company and its affiliates regarding the transactions described herein.
On July 17, 1997, representatives of DMG contacted Parent's head of
Corporate Development and informed him that the Company had been approached by
several parties interested in a possible business combination with the Company
and that the Company had engaged DMG to assist the Company in evaluating its
strategic alternatives. Parent expressed an interest in evaluating a possible
transaction with the
13
<PAGE> 16
Company and was provided with certain publicly available information and a form
of confidentiality agreement.
Parent's management held several internal meetings during late July to
discuss a possible transaction with the Company. After deciding to proceed,
Parent executed a confidentiality agreement with the Company on August 4, 1997
(which agreement was dated to be effective as of July 22, 1997).
On August 7, management of the Company gave a presentation for certain
management representatives of Parent. On August 13, Parent contacted Morgan
Stanley to engage it as Parent's financial advisor for the purpose of evaluating
a potential transaction with the Company.
From mid-August through mid-September, Parent conducted its due diligence
investigation of the Company and had extensive internal working sessions to
evaluate a possible transaction with the Company. Morgan Stanley and DMG had
numerous discussions during the same period regarding the Company's timetable
and process for exploring a possible transaction and alternatives.
On September 18, 1997, Parent's board was briefed with respect to
management's ongoing evaluation of a possible transaction with the Company. On
September 24, 1997, Parent's management decided to submit a formal bid for a
proposed acquisition of the Company by Parent.
Parent continued its due diligence investigation through late September.
During this period DMG informed Morgan Stanley that in light of the status of
the Company's current discussions with other parties, prompt action by Parent
regarding a proposal was necessary. On September 29, 1997, Parent submitted a
formal bid letter proposing an acquisition of the Company by Parent. On the next
day, however, the Company Board determined to accept a competing bid submitted
by Westell Technologies, Inc. ("Westell"). Parent was notified by DMG of the
Company's decision that same day. On October 1, 1997, the Company and Westell
publicly announced that they had entered into a definitive merger agreement
providing for the acquisition of the Company by Westell.
Throughout the month of October, Parent and its advisors held several
meetings to evaluate Parent's options with respect to the Company, including the
desirability of submitting a competing proposal for the acquisition of the
Company by Parent. On October 29, 1997, Parent's options were presented to and
discussed by Parent's senior management. At the conclusion of this meeting, it
was determined that Parent should proceed with the submission of a competing
proposal for the acquisition of the Company by Parent.
On November 4, 1997, Parent sent an offer letter and a draft merger
agreement to the Company for its review. The offer letter, which was subject to
the approval of Parent's board of directors later that week, proposed a cash
tender offer for all shares of the Company at $18.00 per Share.
On November 7, DMG informed Morgan Stanley that the Company Board had
evaluated Parent's proposal and determined that it was permitted under law and
the terms of its merger agreement with Westell to enter into discussions with
Parent. Parent was informed that its final bid must be submitted by November 12,
1997.
On November 11, 1997, Parent's board of directors was briefed on the recent
developments. At the conclusion of the briefing, Parent's board approved the
proposed transaction and authorized senior management to negotiate and approve
the final terms of the transaction.
On November 12, Parent submitted a proposal to acquire the Company for cash
consideration of $20.00 per Share. During the period from November 7 through
November 12, the Company's and Parent's respective legal counsel negotiated the
terms of the proposed merger agreement and related documentation.
Parent was notified on November 13 that the Company Board had determined to
accept Parent's proposal and to terminate the Company's merger agreement with
Westell. Later that same day, the Company notified Westell of the Company
Board's decision accordance with the terms of its merger agreement with Westell.
On November 18, the Company Board met again to consider and review the
terms of the proposed merger agreement with Parent. At that meeting, DMG made a
presentation to the Company Board and delivered its oral opinion (which opinion
was subsequently confirmed in writing), that the $20.00 per Share
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<PAGE> 17
cash consideration to be received by the Company's stockholders pursuant to the
Offer and the Merger was fair to such stockholders (other than Parent and its
affiliates) from a financial point of view. After its discussion (during which
the Company Board took note of the fact that Westell was not contemplating any
proposal to improve the terms of the Company's merger agreement with Westell),
the Company Board unanimously approved the Merger Agreement and the transactions
contemplated thereby, and unanimously resolved to recommend that the Company's
stockholders accept the Offer and tender their Shares pursuant thereto.
Effective as of November 19, 1997, Parent, the Purchaser and the Company
executed and delivered the Merger Agreement, the Loan Agreement (as defined in
Section 12) and certain related documents. The signing of the Merger Agreement
was publicly announced on the morning of November 19 prior to the open of
trading. Proceeds of the loans under the Loan Agreement were used to pay Westell
the termination fee required pursuant to the terms of Westell's merger agreement
with the Company as well as the outstanding balance of Westell's loans to the
Company.
12. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY; MERGER
AGREEMENT; LOAN AGREEMENT; RETENTION AGREEMENTS; CONSULTING AGREEMENT;
CONFIDENTIALITY AGREEMENT; OTHER MATTERS
PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY
The purpose of the Offer and the Merger is to enable Parent, through the
Purchaser, to acquire in one or more transactions control of the Company Board
and the entire equity interest in the Company. The Offer is intended to increase
the likelihood that the Merger will be completed promptly.
Except as noted in this Offer to Purchase, the Purchaser and Parent have no
present plans or proposal that would result in an extraordinary corporate
transaction, such as a merger, reorganization, liquidation, or sale or transfer
of a material amount of assets, involving the Company or any other material
changes in the Company's capitalization, dividend policy, corporate structure,
business or composition of its management. However, Parent and Westell have
entered into an agreement in principle to outsource to Westell certain of the
Company's manufacturing activities so that the Company, upon consummation of the
Offer and the Merger, can focus on the commercial implementation of its
technologies and research and development activities related thereto.
Notwithstanding the foregoing, from time to time after completion of the Offer,
Parent intends to evaluate and review the Company's assets, operations,
management and personnel and consider what, if any, changes would be desirable
in light of circumstances which then exist. Parent reserves the right to take
such actions or effect such changes as it deems advisable.
MERGER AGREEMENT.
The following is a summary of certain provisions of the Merger Agreement.
The summary is not a complete description of the terms thereof and is qualified
in its entirety by reference to the Merger Agreement, which is incorporated
herein by reference and a copy of which has been filed with the Commission as an
exhibit to Parent's and the Purchaser's Tender Offer Statement on Schedule 14D-1
dated November 25, 1997 (the "Schedule 14D-1") which has been filed with the
Commission. The Merger Agreement may be examined and copies may be obtained at
the places and in the manner set forth in Section 8 of this Offer to Purchase.
The Offer. The Merger Agreement provides for the commencement of the Offer
within five business days of the public announcement of the execution of the
Merger Agreement. The Merger Agreement provides that the Purchaser cannot amend
or waive the Minimum Condition or decrease the Offer Price or the number of
Shares sought, or amend any other term or condition of the Offer in any manner
adverse to the holders of Shares or extend the expiration date of the Offer
without the prior written consent of the Company. Notwithstanding the foregoing,
the Purchaser has agreed to extend the Offer from time to time until February
23, 1998 if, and to the extent that, at the initial expiration date of the
Offer, or any extension thereof, all conditions to the Offer have not been
satisfied or waived. In addition, the Offer Price may be increased and the Offer
may be extended to the extent required by law in connection with such increase,
in each case with or without the consent of the Company.
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<PAGE> 18
The obligation of the Purchaser to accept for payment and pay for Shares
tendered pursuant to the Offer is subject to certain conditions. See Section 14.
Assuming the prior satisfaction or waiver of the conditions to the Offer, the
Purchaser has agreed to accept for payment and pay for any and all Shares
tendered as soon as it is legally permitted to do so under applicable law;
provided that, if the number of Shares that have been physically tendered and
not withdrawn are more than 80% but less than 90% of the outstanding Shares
determined on a fully diluted basis, the Purchaser may extend the Offer for up
to five business days and thereafter on a day-to-day basis for up to an
additional five business days from the date that all conditions to the Offer
shall first have been satisfied or waived.
Directors. The Merger Agreement provides that promptly upon Parent's
purchase of and payment for Shares which represent at least a majority of the
outstanding Shares (on a fully diluted basis), Parent shall be entitled to
designate a number of directors, rounded up to the next whole number, on the
Company Board, subject to compliance with Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder, equal to the product of the total number of
directors on the Company Board (giving effect to the directors elected pursuant
to this sentence) multiplied by the percentage that the aggregate number of
Shares beneficially owned by the Purchaser, Parent and any of their affiliates
(including Shares accepted for payment) bears to the total number of Shares then
outstanding. The Company shall, upon request of the Purchaser, on the date of
such request, either increase the size of the Company Board or secure the
resignations of such number of its incumbent directors as is necessary to enable
Parent's designees to be elected to the Company Board, and shall cause Parent's
designees to be so elected. Notwithstanding the foregoing, until the Effective
Time, the Company shall retain as members of the Company Board at least two
directors who were directors of the Company on the date of the Merger Agreement;
provided, that subsequent to the purchase of and payment for Shares pursuant to
the Offer, Parent shall always have its designees represent at least a majority
of the entire Company Board.
The Merger Agreement also provides that from and after the time, if any,
that Parent's designees constitute a majority of the Company Board, any
amendment of the Merger Agreement, any termination of the Merger Agreement by
the Company, any extension of time for performance of any of the obligations of
Parent or the Purchaser under the Merger Agreement, and any waiver of any
condition or any of the Company's rights under the Merger Agreement or other
action by the Company in connection with the rights of the Company under the
Merger Agreement may be effected only by the action of a majority of the
directors of the Company then in office who were directors on the date of the
Merger Agreement, which action shall be deemed to constitute the action of the
full Company Board; provided, that if there are no such directors, such actions
may be effected by unanimous vote of the entire Company Board.
The Merger. The Merger Agreement provides that, subject to the terms and
conditions thereof, the Purchaser will be merged with and into the Company, with
the Company continuing as the Surviving Corporation (the "Surviving
Corporation") and a direct wholly owned subsidiary of Parent. At the Effective
Time, by virtue of the Merger and without any action on the part of the holders
of any Shares, each issued and outstanding Share (other than Shares owned by
Parent, the Purchaser or any other wholly-owned subsidiary of Parent and Shares
held by stockholders who have demanded and perfected dissenters' rights under
the DGCL) shall be converted into the right to receive the Offer Price, without
interest. Each issued and outstanding share of common stock, par value $.01 per
share, of the Purchaser shall be converted into and become one fully paid and
non-assessable share of common stock of the Surviving Corporation. The Merger
Agreement also provides that (i) the directors of the Purchaser immediately
prior to the Effective Time will be the initial directors of the Surviving
Corporation and the officers of the Company immediately prior to the Effective
Time will be the initial officers of the Surviving Corporation; (ii) the
Certificate of Incorporation of the Company (the "Certificate of Incorporation")
will be the initial Certificate of Incorporation of the Surviving Corporation;
and (iii) the By-laws of the Company (the "By-laws") will be the initial By-laws
of the Surviving Corporation.
Treatment of Options and Warrants. The Merger Agreement provides that the
options (the "Options") to purchase Shares under the Company's 1981 Stock Option
Plan, 1981 Supplemental Stock Option Plan, 1990 Stock Option Plan, Old Amati
1992 Stock Option Plan, 1990 Non-Employee Directors' Stock Option Plan and 1996
Stock Option Plan (the "Option Plans") shall, pursuant to the terms of such
Option Plans, not automatically vest as a consequence of the transactions
contemplated by the Merger Agreement and that the
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<PAGE> 19
Company Board shall not exercise any discretionary authority to vest such
Options in connection with the transactions contemplated by the Merger
Agreement. Notwithstanding the foregoing, Options ("Director Options") granted
to non-employee directors under the 1990 Non-Employee Directors' Stock Option
Plan shall vest immediately prior to the Effective Time pursuant to their terms
and Director Options granted under any of the other Option Plans shall vest
immediately prior to the Effective Time by action of the Company Board. At the
Effective Time, each outstanding Director Option shall be converted into the
right to receive cash in an amount equal to the product of (i) the number of
Shares subject to such Director Option and (ii) the excess of (A) the Merger
Consideration over (B) the per share exercise price of such Director Option.
Holders of outstanding Options (other than Director Options) that are
vested at the Effective Time shall be given the opportunity to make an
irrevocable election, on a grant by grant basis to be effective immediately
following the Effective Time, to receive in exchange for the cancellation of
each such vested Option either (i) cash in an amount equal to the product of (a)
the number of Shares subject to such Option and (b) the excess of (1) the Merger
Consideration over (2) the per share exercise price of such Option or (ii) a
substitute option to purchase Parent common stock (a "Substitute Option") (a)
which will be exercisable for a number of shares of Parent's common stock equal
to (1) the number of Shares subject to the Option multiplied by (2) the ratio
obtained by dividing the Offer Price by the average closing price per share of
Parent's common stock on the New York Stock Exchange for the five consecutive
trading days ending immediately prior to closing date of the Merger (the "Option
Ratio"), rounded down to the next whole number of shares, (b) the exercise price
for which shall equal the exercise price for the Shares otherwise purchasable
pursuant to the Option divided by the Option Ratio, rounded to the nearest
hundredth of a cent, and (c) which shall be subject to substantially the same
terms and conditions as applicable to the Option.
Holders of outstanding Options (other than Director Options) that are not
vested as of the Effective Time shall, at the Effective Time, receive in
substitution and cancellation for each such nonvested Option a Substitute
Option, which Substitute Option shall be subject to the same vesting schedule as
applicable to the Option.
As of the Effective Time, by virtue of the Merger and without any action on
the part of the holders thereof, each unexpired and unexercised warrant
("Warrant") to purchase Shares shall be converted into the right to receive an
amount in cash equal to the product of (i) the number of Shares subject to such
Warrant and (ii) the excess of (a) the Merger Consideration over (b) the per
share exercise price of such Warrant, upon surrender of the certificate
representing such Warrant; provided, that any Warrant as to which the per share
exercise price is equal to or greater than the Merger Consideration shall be
cancelled and terminated as of the Effective Time without payment of any
consideration therefor.
Stockholders' Meeting. Pursuant to the Merger Agreement, if the Company
owns less than 90% of the Shares following the purchase of Shares by the
Purchaser pursuant to the Offer, the Company shall, in accordance with
applicable law, duly call, give notice of, convene and hold a special meeting of
its stockholders as soon as practicable following the acceptance for payment and
purchase of Shares by the Purchaser pursuant to the Offer for the purpose of
considering and taking action upon the Merger Agreement.
The Merger Agreement also provides that the Company shall, in accordance
with applicable law, prepare and file with the Commission a preliminary proxy or
information statement relating to the Merger and the Merger Agreement, obtain
and furnish the information required to be included by the Commission in the
Proxy Statement (as hereinafter defined) and, after consultation with Parent,
respond promptly to any comments made by the Commission with respect to the
preliminary proxy or information statement and cause a definitive proxy or
information statement (the "Proxy Statement") to be mailed to its stockholders
and obtain the necessary adoption of the Merger Agreement by its stockholders.
The Merger Agreement also provides that the Company shall, subject to the
fiduciary obligations of the Company Board under applicable law as advised by
the Company's outside counsel, include in the Proxy Statement the recommendation
of the Company Board that stockholders of the Company vote in favor of the
approval of the adoption of the Merger Agreement. In the event that the
Purchaser shall acquire at least 90% of the outstanding shares of each class of
capital stock of the Company, pursuant to the Offer or otherwise, the parties
shall take all necessary and
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<PAGE> 20
appropriate action to cause the Merger to become effective as soon as
practicable after such acquisition, without a meeting of the Company's
stockholders in accordance with Section 253 of the DGCL.
Representations and Warranties. The Merger Agreement contains
representations and warranties of the Company with respect to, among other
things (i) organization and good standing, certificate of incorporation, bylaws
and minute books, (ii) capitalization (including the ownership of subsidiaries),
(iii) authorization, validity of the Merger Agreement and Company action, (iv)
consents and approvals and absence of violations, (v) Commission reports and
financial statements, (vi) no undisclosed liabilities, (vii) absence of certain
changes (including material adverse changes), (viii) certain contracts
(including material agreements), (ix) employee benefit plans and ERISA, (x)
litigation, (xi) permits, absence of defaults and compliance with applicable
laws, (xii) taxes, (xiii) certain property, (xiv) intellectual property, (xv)
environmental matters, (xvi) employee and labor matters, (xvii) information in
tender offer documents, (xviii) brokers and finders, (xix) insurance and (xx)
opinion of financial advisor.
The Merger Agreement contains joint and several representations and
warranties of Parent and the Purchaser with respect to, among other things (i)
organization and good standing, (ii) authorization, validity of the Merger
Agreement and necessary action, (iii) consents and approvals and absence of
violations, (iv) Commission reports and financial statements, (v) information in
the tender offer documents and the proxy statement pertaining to the Merger,
(vi) sufficiency of funds, (vii) Share ownership and (viii) the Purchaser's
operations.
Interim Operations. In the Merger Agreement, the Company has agreed that,
among other things, between the date of the Merger Agreement and prior to the
time the Purchaser's designees have been elected to, and constitute a majority
of, the Company Board, unless Parent otherwise agrees in writing and except as
otherwise contemplated by the Merger Agreement, (i) the business of the Company
and its subsidiaries shall be conducted only in the ordinary course of business
and, to the extent consistent therewith, each of the Company and its
subsidiaries shall use its reasonable best efforts to preserve in all material
respects its business organization intact and maintain its existing relations
with customers, suppliers, employees and business associates; (ii) neither the
Company nor any of its subsidiaries shall, directly or indirectly, amend its
certificate of incorporation or bylaws or similar organizational documents or
split, combine or reclassify its outstanding capital stock; (iii) neither the
Company nor any of its subsidiaries shall (a) declare, set aside or pay any
dividend or other distribution (whether payable in cash, stock or property) with
respect to its capital stock (other than dividends from any subsidiary of the
Company to the Company or any other subsidiary of the Company); (b) issue or
sell any additional shares of, or securities convertible into or exchangeable
for, or options, warrants, calls, commitments or rights of any kind to acquire,
any shares of capital stock of any class of the Company or its subsidiaries,
other than issuances pursuant to the exercise of Options and Warrants
outstanding on the date of the Merger Agreement; (c) sell, lease or dispose of
any assets or properties, other than in the ordinary course of business; (d)
incur or modify any material debt, other than in the ordinary course of business
consistent with past practice; (e) license or sublicense any asset or property
of the Company or any of its subsidiaries except in the ordinary course of
business consistent with past practice on a basis that results in a positive
current royalty net of any royalties due by the Company or any of its
subsidiaries on account of sales by the licensee or sublicensee; or (f) redeem,
purchase or otherwise acquire, directly or indirectly, any of its or its
subsidiaries' capital stock; (iv) neither the Company nor any of its
subsidiaries shall enter into, adopt or materially amend or terminate any
employee benefit plans, amend any employment or severance agreement or increase
in any manner the compensation or other benefits of its officers or directors or
increase in any manner the compensation of any other employees (except for
normal increases in the ordinary course of business); (v) neither the Company
nor any of its subsidiaries shall (a) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise) for
the material obligations of any other person (other than subsidiaries of the
Company), except pursuant to contractual indemnification agreements entered into
in the ordinary course of business; (b) make any loans, advances or capital
contributions to, or investments in, any other person (other than to
subsidiaries of the Company and payroll, travel and similar advances made in the
ordinary course of business); or (c) make capital expenditures other than
pursuant to the Company's current capital expenditure budget; (vi) neither the
Company nor any of its subsidiaries shall change any of the accounting methods
used by it unless required by generally accepted
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accounting principles or applicable law; (vii) the Company shall not settle or
compromise any claim (including arbitration) or litigation involving payments by
the Company in excess of $250,000 individually which are not subject to
insurance reimbursement without the prior written consent of Parent, which
consent shall not be unreasonably withheld; (viii) the Company shall not amend,
modify or terminate in any material respect or enter into any new agreement
material to the business of the Company without the prior written consent of
Parent, which consent shall not be unreasonably withheld; or (ix) neither the
Company nor any of its subsidiaries shall authorize or enter into an agreement
to do any of the foregoing.
Approvals and Consents; Cooperation; Notification. Parent, the Purchaser
and the Company have agreed to use their respective reasonable best efforts, and
cooperate with each other, to (i) determine as promptly as practicable all
governmental and third party authorizations, approvals, consents or waivers,
including pursuant to the HSR Act, advisable (in Parent's and Purchaser's
discretion) or required in order to consummate the transactions contemplated by
the Merger Agreement, including, the Offer and the Merger and (ii) obtain such
authorizations, approvals, consents or waivers as promptly as practicable. The
Company, Parent and the Purchaser have agreed to take all actions necessary to
file as soon as practicable all notifications, filings and other documents
required to obtain all governmental authorizations, approvals, consents or
waivers, including under the HSR Act, and to respond as promptly as practicable
to any inquiries received from the Federal Trade Commission, the Antitrust
Division of the Department of Justice and any other governmental entity for
additional information or documentation and to respond as promptly as
practicable to all inquiries and requests received from any governmental entity
in connection therewith. The Company is required give prompt notice to Parent of
(i) the occurrence of any event, condition or development material to the
Company and its subsidiaries, taken as a whole, and (ii) any notice from any
Person claiming its consent is required in connection with the transactions
contemplated by this Agreement. Each of the Company and Parent have agreed to
give prompt notice to the other of the occurrence or failure to occur of an
event that would, or, with the lapse of time would cause any condition to the
consummation of the Offer or the Merger not to be satisfied.
Employee Benefits. Parent and the Purchaser have agreed that the Surviving
Corporation and its subsidiaries and successors shall provide those persons who,
immediately prior to the Effective Time, were employees of the Company or its
subsidiaries ("Retained Employees") with employee plans and programs that
provide benefits that are no less favorable in the aggregate than those provided
to such Retained Employees immediately prior to the date hereof. With respect to
such employee programs provided by the Surviving Corporation and its
subsidiaries and successors, service accrued by such Retained Employees during
employment with the Company and its subsidiaries prior to the Effective Time
shall be recognized for all purposes, except to the extent necessary to prevent
duplication of benefits. Parent and the Purchaser have also agreed to honor, and
cause the Surviving Corporation to honor, without modification, all employment
and severance agreements and arrangements, as amended through the date of the
Merger Agreement, with respect to employees and former employees of the Company
disclosed to Parent and the Purchaser pursuant to the Merger Agreement. Parent
and the Company have agreed that prior to the Effective Time, they shall
reasonably cooperate to develop and adopt an employee retention plan for key
employees of the Company, which plan shall be subject to Parent's approval.
No Solicitation. Pursuant to the Merger Agreement, the Company has agreed
that it and its subsidiaries shall not (and shall use their best efforts to
cause their respective officers, directors, employees and investment bankers,
attorneys or other agents retained by or acting on behalf of the Company or any
of its subsidiaries not to), (i) initiate, solicit or encourage, directly or
indirectly, any inquiries or the making of any proposal that constitutes or is
reasonably likely to lead to any Acquisition Proposal (as defined below); (ii)
engage in negotiations or discussions (other than to advise as to the existence
of the restrictions described in this paragraph) with, or furnish any
information or data to, any third party relating to an Acquisition Proposal; or
(iii) enter into any agreement with respect to any Acquisition Proposal or
approve any Acquisition Proposal. Notwithstanding the foregoing or anything to
the contrary in the Merger Agreement, the Company and the Company Board may
participate in discussions or negotiations (including, as a part thereof, making
any counterproposal) with or furnish information to any third party making an
unsolicited Acquisition Proposal (a "Potential Acquiror") or approve an
unsolicited Acquisition Proposal if the Company Board is advised by its
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<PAGE> 22
financial advisor that such Potential Acquiror has the financial wherewithal to
be reasonably capable of consummating such an Acquisition Proposal, and the
Company Board determines in good faith (i) after receiving advice from its
financial advisor, that such third party has submitted to the Company an
Acquisition Proposal which is a Superior Proposal (as defined below), and (ii)
based upon advice of outside legal counsel, that the failure to participate in
such discussions or negotiations or to furnish such information or approve an
Acquisition Proposal would violate the Company Board's fiduciary duties under
applicable law.
"Acquisition Proposal" means any bona fide proposal, whether in writing or
otherwise, made by a third party to acquire beneficial ownership (as defined
under Rule 13d-3 of the Exchange Act) of all or a material portion of the assets
of, or any material equity interest in, the Company or its material subsidiaries
pursuant to a merger, consolidation or other business combination, sale of
shares of capital stock, sale of assets, tender offer or exchange offer or
similar transaction involving the Company or its material subsidiaries including
any single or multi-step transaction or series of related transactions which is
structured to permit such third party to acquire beneficial ownership of any
material portion of the assets of, or any material portion of the equity
interest in, the Company or its material subsidiaries. "Superior Proposal" means
any bona fide proposal to acquire, directly or indirectly, for consideration
consisting of cash and/or securities, more than a majority of the Shares then
outstanding or all or substantially all the assets of the Company, and otherwise
on terms which the Company Board determines in good faith to be more favorable
to the Company and its stockholders than the Offer and the Merger (based on
advice of the Company's financial advisor that the value of the consideration
provided for in such proposal is superior to the value of the consideration
provided for in the Offer and the Merger), for which financing, to the extent
required, is then committed or which, in the good faith reasonable judgment of
the Company Board, after receiving advice from its financial advisor, is
reasonably capable of being financed by such third party.
The Merger Agreement also provides that the Company shall (i) in the event
the Company shall determine to provide any information as described above or
shall receive any Acquisition Proposal, promptly inform Parent in writing as to
the fact that information is to be provided and shall furnish to Parent the
identity of the recipient of such information and/or the Potential Acquiror and
the terms of such Acquisition Proposal and (ii) inform Parent of any material
amendment to the essential terms of any such Acquisition Proposal, except, in
either case, to the extent that the Company Board determines in good faith,
based upon the advice of outside legal counsel that any such action would
violate the Company Board's fiduciary duties under, or otherwise violate,
applicable law. The Company has agreed that any non-public information furnished
to a Potential Acquiror will be pursuant to a confidentiality agreement
containing confidentiality and standstill provisions substantially similar to
the confidentiality and standstill provisions of the confidentiality agreement
entered into between the Company and Parent and described below.
Pursuant to the Merger Agreement, the Company has agreed that the Company
Board shall not (i) withdraw or modify, or propose to withdraw or modify, in any
manner adverse to Parent, its approval or recommendation of the Merger
Agreement, the Offer or the Merger or (ii) approve or recommend, or propose to
approve or recommend, any Acquisition Proposal unless, in each case, the Company
Board determines in good faith, after receiving advice from its financial
advisor, that such Acquisition Proposal is a Superior Proposal and, based upon
advice of its outside legal counsel, that the failure to take such action would
violate its fiduciary duties under applicable law.
Indemnification. The Company shall, and from and after the consummation of
the Offer, Parent and the Surviving Corporation shall jointly and severally,
indemnify, defend and hold harmless the present and former directors and
officers of the Company and its subsidiaries (the "Indemnified Parties") from
and against all losses, expenses, claims, damages or liabilities arising out of
the transactions contemplated by the Merger Agreement to the fullest extent
permitted or required under applicable law. All rights to indemnification
existing in favor of the directors and officers of the Company as provided in
the Company's certificate of incorporation or by-laws, as in effect as of the
date of the Merger Agreement, with respect to matters occurring through the
Effective Time, shall survive the Merger and shall not be amended, repealed or
otherwise modified for a period of six years after the consummation of the Offer
in any manner that would adversely affect the rights of the individuals who at
or prior to the consummation of the Offer were directors or
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<PAGE> 23
officers of the Company with respect to occurrences at or prior to the
consummation of the Offer and Parent shall cause the Surviving Corporation to
honor all such rights to indemnification.
Shareholder Litigation. The Merger Agreement provides that in connection
with any litigation which may be brought against the Company or its directors
relating to the transactions contemplated thereby, the Company will keep Parent,
and any counsel which Parent may retain at its own expense, informed of the
course of such litigation, to the extent Parent is not otherwise a party
thereto. The Company has also agreed that it will consult with Parent prior to
entering into any settlement or compromise of any such shareholder litigation
and will not enter into any such settlement or compromise without Parent's prior
written consent, which consent shall not be unreasonably withheld.
Further Assurances. Pursuant to the Merger Agreement, each of the parties
has agreed to use its respective, reasonable best efforts to take, or cause to
be taken, all action, and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by the Merger Agreement, including the
Offer and the Merger.
Conditions to the Merger. The Merger Agreement provides that the respective
obligations of each party to effect the Merger shall be subject to the
satisfaction, at or prior to the Effective Time, of the following conditions:
(i) the Merger Agreement shall have been adopted by the requisite vote of the
Company's stockholders if required by applicable law and the Company's
certificate of incorporation; (ii) any waiting period applicable to the Merger
under the HSR Act shall have expired or been terminated; (iii) no statute, rule,
regulation, order, decree or injunction shall have been enacted, promulgated or
issued by any Governmental Entity or court which prohibits consummation of the
Merger; and (iv) Parent, the Purchaser or their affiliates shall have purchased
Shares pursuant to the Offer.
The Merger Agreement provides that the obligation of the Company to effect
the Merger is further subject to the conditions that the representations and
warranties of Parent and the Purchaser shall be true and accurate and that each
of Parent and the Purchaser shall have performed in all material respects all of
the respective obligations required under the Merger Agreement to be performed
by Parent or the Purchaser, as the case may be, at or prior to the Effective
Time. The Merger Agreement also provides that the obligations of Parent and the
Purchaser to effect the Merger are further subject to the conditions that the
Company's representations and warranties shall be true and accurate in all
material respects as of the Effective Time as if made at and as of such time,
and that the Company shall have performed in all material respects all of the
respective obligations required under the Merger Agreement to be performed by
the Company at or prior to the Effective Time. The conditions described in the
two preceding sentences shall cease to be conditions if the Purchaser shall have
accepted for payment and paid for Shares validly tendered pursuant to the Offer.
Termination. The Merger Agreement provides that it may be terminated and
the Merger abandoned at any time prior to the Effective Time: (i) by mutual
consent of Parent, the Purchaser and the Company; (ii) by either the Company, on
the one hand, or Parent and the Purchaser, on the other hand, (a) if the Shares
shall not have been purchased pursuant to the Offer on or prior to February 23,
1998, which date may be extended by Parent, in its sole discretion, for up to an
additional thirty days; provided, however, that a party may not terminate the
Merger Agreement pursuant to this clause (a) if such party's failure to fulfill
any obligation under the Merger Agreement was the cause of, or resulted in, the
failure of Parent or the Purchaser to purchase the Shares on or prior to such
date or (b) if any Governmental Entity shall have issued an order, decree or
ruling or taken any other action permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by the Merger Agreement or prohibiting
Parent to acquire or hold or exercise rights of ownership of the Shares, and
such order, decree, ruling or other action shall have become final and non-
appealable; (iii) by the Company (a) if prior to the purchase of Shares pursuant
to the Offer, either (1) a third party shall have made an Acquisition Proposal
that the Company Board determines in good faith, after consultation with its
financial advisor, is a Superior Proposal and the Company shall have
concurrently executed a definitive agreement with such third party in respect of
such Superior Proposal, or (2) the Company Board shall have withdrawn, or
modified or changed in any manner adverse to Parent or the Purchaser its
approval or recommendation of the Offer, the Merger Agreement or the Merger (or
the Company Board resolves to do any of the foregoing), (b) if Parent or the
Purchaser shall have terminated the
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Offer, or the Offer shall have expired, without Parent or the Purchaser
purchasing any Shares pursuant thereto; provided, that, the Company may not
terminate the Merger Agreement pursuant to the provision described in this
clause (b) if the Company is in willful breach of the Merger Agreement or (c)
if, due to an occurrence that if occurring after the commencement of the Offer
would result in a failure to satisfy any of the conditions to completion of the
Offer, Parent or the Purchaser shall have failed to commence the Offer on or
prior to five business days following the date of the initial public
announcement of the Offer, provided, that, the Company may not terminate the
Merger Agreement pursuant to the provision described in this clause (c) if the
Company is in willful breach of the Merger Agreement; or (iv) by Parent and the
Purchaser (a) if, prior to the purchase of Shares pursuant to the Offer, the
Company Board shall have withdrawn, modified or changed in a manner adverse to
Parent or the Purchaser its approval or recommendation of the Offer, the Merger
Agreement or the Merger or shall have recommended an Acquisition Proposal or
shall have executed an agreement in principle or definitive agreement relating
to an Acquisition Proposal or similar business combination with a person or
entity other than Parent, the Purchaser or their affiliates (or the Company
Board resolves to do any of the foregoing) or (b) if, due to an occurrence that
if occurring after the commencement of the Offer would result in a failure to
satisfy any of the conditions to completion of the Offer, Parent or the
Purchaser shall have failed to commence the Offer on or prior to five business
days following the date of the initial public announcement of the Offer;
provided, that, Parent may not terminate the Merger Agreement pursuant to the
provision described in this clause (b) if Parent or the Purchaser is in willful
breach of the Merger Agreement.
Termination Fee. The Company has agreed to pay to Parent a termination fee
of $8 million if the Merger Agreement is terminated by the Company pursuant to
the provisions described in clause (iii)(a) under "Termination" above, or by
Parent and the Purchaser pursuant to the provisions described above in clause
(iv)(a) under "Termination" above.
Amendment. Subject to applicable law, the Merger Agreement may be amended,
modified and supplemented in any and all respects, whether before or after any
vote of the stockholders of the Company, by written agreement of the parties
thereto, by action taken by their respective Boards of Directors at any time
prior to the date of closing with respect to any of the terms contained therein;
provided, however, that after the approval of the Merger Agreement by the
stockholders of the Company, no such amendment, modification or supplement shall
reduce or change the Merger Consideration or adversely affects the rights of the
Company's stockholders under the Merger Agreement without the approval of such
stockholders.
LOAN AGREEMENT
The following is a summary of the Loan and Security Agreement, dated as of
November 19, 1997, by and between the Company, as Borrower, and Parent, as
Lender (the "Loan Agreement"). This summary is qualified in its entirety by
reference to the Loan Agreement, which is incorporated herein by reference and a
copy of which has been filed with the Commission as an Exhibit to the 14D-1. The
Loan Agreement may be examined and copies may be obtained at the places and in
the manner set forth in Section 8 of this Offer to Purchase.
The Commitments and the Loans. Subject to the terms and conditions of the
Loan Agreement and in reliance on the representations and warranties of the
Company set forth therein, Parent has agreed to make (i) a term loan (the "Term
Loan") to the Company in the amount of $14,774,000 and (ii) revolving loans
(each individually, a "Revolving Loan" and collectively, the "Revolving Loans,"
and together with the Term Loan, the "Loans") to the Company from time to time
in an aggregate amount not to exceed at any time $5,000,000. The Term Loan was
funded on November 19, 1997 in a single advance. All proceeds of the Term Loan
were used to pay to Westell Technologies, Inc. ("Westell") the termination fee
required to be paid to it pursuant to the Agreement and Plan of Merger, dated as
of September 30, 1997, by and among the Company, Westell and Kappa Acquisition
Corp. A Revolving Loan in the amount of $3,989,000 was funded on November 19,
1997. As required pursuant to the Loan Agreement, $3,557,000 of the Revolving
Loan proceeds were used by the Company to pay in full all amounts outstanding
under the Company's Loan and Security Agreement, dated as of September 30, 1997,
between the Company and Westell. The balance of the Revolving Loan proceeds were
used by the Company to pay in full all amounts outstanding to Silicon Valley
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Bank ("SVB") under the Loan and Security Agreement, dated as of April 25, 1997,
between the Company and SVB.
Interest Rate. The interest rate applicable to the Loans is the Prime Rate
(as hereinafter defined) plus two percent (2%). Interest is payable monthly in
arrears. Upon and during the continuance of an event of default under the Loan
Agreement, the Term Loan and the Revolving Loans shall bear interest at a rate
that is three percent (3%) in excess of the rate otherwise applicable at such
time.
Prepayments; Repayments. The Company may prepay the loans in whole or in
part in increments of $100,000 at its option. The Company will be required to
prepay the Loans as follows: (i) in full, immediately upon termination of the
Merger Agreement for any of the reasons described in clauses (iii)(a) or (iv)
under "Merger Agreement -- Termination" above, (ii) in full, within 180 days
after the termination of the Merger Agreement for any of the reasons described
under "Merger Agreement -- Termination" above (other than those described in
clauses (iii)(a) or (iv) of such section) and (iii) if at any time the Revolving
Loans exceed $5,000,000, in an amount equal to the excess. The Loans shall
otherwise be payable in full on September 30, 1999, the termination date of the
Loan Agreement.
Forgiveness. Notwithstanding anything to the contrary in the Loan
Agreement, Parent has agreed to forgive the repayment of the Term Loan in the
event that the Merger Agreement is terminated, except if the Merger Agreement is
terminated (i) for any of the reasons described in clauses (iii)(a) or (iv)(a)
under "Merger Agreement -- Termination" above, (ii) for any of the reasons
described in clauses (ii)(a), (iii)(b), (iii)(c) or (iv)(b) under "Merger
Agreement -- Termination" above and at the time of such termination the Company
is in breach of any the conditions described in paragraphs (b), (c) or (e) in
Section 14 of this Offer to Purchase or (iii) in accordance with its terms and
within six months after such termination, the Company or its stockholders
consummate a transaction or enter into a definitive agreement with respect to an
Acquisition Proposal that was pending at the time of such termination.
Security. The Revolving Loans are secured by liens on and security
interests in substantially all of the Company's personal property, including,
without limitation, its inventory, equipment, accounts receivable, general
intangibles, patents, trademarks, copyrights, computer hardware and software,
and the proceeds thereof. The Term Loan is an unsecured obligation of the
Company.
Representations and Warranties. In addition to the Company's
representations and warranties in the Merger, which are incorporated by
reference into the Loan Agreement, the Company has made representations and
warranties with respect to (i) the location of the collateral securing the
Revolving Loans, (ii) the absence of other liens (other than certain permitted
liens), (iii) the possession and control of its equipment and inventory, (iv)
the delivery of instruments and chattel paper and (v) the absence of defaults or
events of default.
Covenants. So long as any of Parent's lending commitments under the Loan
Agreement remain in effect and until all of the Company's liabilities under the
Loan Agreement have been irrevocably paid in full, the Company will be required
to perform or comply with certain covenants, including, without limitation,
covenants relating to (i) limitations on indebtedness, (ii) limitations on
liens, (iii) notice and information delivery requirements, (iv) the payment of
taxes and claims, (v) the maintenance of assets and properties, (vi) the
maintenance of insurance policies, (vii) compliance with laws and (vii) reports
to other creditors. In addition, certain covenants set forth in the Merger
Agreement are incorporated by referenced into the Loan Agreement.
Events of Default. The Loan Agreement contains customary events of default
including, without limitation, (i) the failure to pay principal or interest on
the Loans when due, (ii) any representation or warranty proving to have been
false when made, the failure to comply with any other term, covenant or
agreement of the Loan Agreement (subject, in certain instances, to a grace
period of ten days), (iv) defaults with respect to certain other indebtedness,
(v) bankruptcy and insolvency and (vi) the failure of the Loan Agreement or any
collateral documents to remain in full force and effect and to create a valid
and perfected first priority security interest in the collateral securing the
Revolving Loans.
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RETENTION AGREEMENTS
The following is a summary of certain provisions of the retention
agreements, each dated as of November 19, 1997, by and between Parent and each
of James E. Steenbergen, the Company's Chief Executive Officer, President and
Chief Financial Officer, Ronald Carlini, the Company's Vice President of
Corporate Development, and James D. Hood, the Company's Vice President of
Engineering (collectively, the "Retention Agreements"). This summary is
qualified in its entirety by reference to the Retention Agreements, each of
which is incorporated herein by reference and copies of which have been filed
with the Commission as exhibits to the Schedule 14D-1. The Retention Agreements
may be examined and copies may be obtained at the places and in the manner set
forth in Section 8 of this Offer to Purchase.
Under the Retention Agreements, Parent has agreed that in the event the
Company or Parent terminates without cause Mr. Steenbergen's, Mr. Carlini's or
Mr. Hood's full-time employment with the Company or Parent following the Merger,
Parent will retain such person as an employee on an approved leave of absence
until such time as all of such person's options to purchase Shares that were
granted prior to the Merger (and which will be converted into Substitute Options
in connection with the Merger) become completely vested. In addition, under the
Retention Agreements, each of Mr. Steenbergen, Mr. Carlini and Mr. Hood has
agreed to certain non-competition and non-solicitation covenants in favor of
Parent.
CONSULTING AGREEMENT
Parent is presently in discussions with Dr. John Cioffi, the Company's
Chief Technical Officer, regarding the terms of a proposed consulting agreement.
There can be no assurance, however, that a definitive agreement will be reached,
or if reached, as to the terms of such agreement. The execution of a consulting
agreement with Dr. Cioffi is not a condition to the Offer or the Merger.
CONFIDENTIALITY AGREEMENT
The following is a summary of certain provisions of the Confidentiality
Agreement, dated as of July 22, 1997, between Parent and the Company (the
"Confidentiality Agreement"). This summary is qualified in its entirety by
reference to the Confidentiality Agreement, which is incorporated herein by
reference and a copy of which has been filed with the Commission as an exhibit
to the Schedule 14D-1. The Confidentiality Agreement may be examined and copies
may be obtained at the places and in the manner set forth in Section 8 of this
Offer to Purchase.
The Confidentiality Agreement contains customary provisions pursuant to
which, among other matters, Parent agreed to keep confidential all nonpublic,
confidential or proprietary information furnished to it by the Company relating
to the Company, subject to certain exceptions (the "Confidential Information"),
and to use the Confidential Information solely in connection a possible
transaction involving the Company and Parent. Parent has agreed in the
Confidentiality Agreement that for a period of two years from the date of the
Confidentiality Agreement, without the prior written consent of the Company,
neither it nor any of its affiliates would, among other things, directly or
indirectly, acquire or offer to acquire any securities of the Company, solicit
proxies with respect to the Company's securities, or propose to enter into any
extraordinary transaction involving the Company. Parent further agreed that, for
a period of two years from the date of the Confidentiality Agreement, neither
Parent nor any of its affiliates would, without the written consent of the
Company, employ or solicit the employment of any employee of the Company or any
of its subsidiaries with whom Parent or its representatives had contact during
the negotiations and investigations in connection with a possible transaction
between Parent and the Company.
OTHER MATTERS
Delaware Law. Under the DGCL, the affirmative vote of holders of a majority
of the outstanding Shares entitled to vote, including any Shares owned by the
Purchaser, would be required to adopt the Merger Agreement. If the Purchaser
acquires, through the Offer or otherwise, voting power with respect to at least
a majority of the outstanding Shares, which would be the case if the Minimum
Condition were satisfied, it
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would have sufficient voting power to effect the Merger without the vote of any
other stockholder of the Company.
Appraisal Rights. No appraisal rights are available to holders of Shares in
connection with the Offer. However, if the Merger is consummated, holders of
Shares will have certain rights under Section 262 of the DGCL to dissent and
demand appraisal of, and payment in cash for the fair value of, their Shares.
Such rights, if the statutory procedures are complied with, could lead to a
judicial determination of the fair value (excluding any element of value arising
from accomplishment or expectation of the Merger) required to be paid in cash to
such dissenting holders for their Shares. Any such judicial determination of the
fair value of Shares could be based upon consideration other than or in addition
to the Offer Price and the market value of the Shares, including asset values
and the investment value of the Shares. The value so determined could be more or
less than the Offer Price or the Merger Consideration.
If any holder of Shares who demands appraisal under Section 262 of the DGCL
fails to perfect, or effectively withdraws or loses, his right to appraisal, as
provided in the DGCL, the Shares of such holder will be converted into the
Merger Consideration in accordance with the Merger Agreement. A stockholder may
withdraw his demand for appraisal by delivery to Parent of a written withdrawal
of his demand for appraisal and acceptance of the Merger.
Failure to follow the steps required by Section 262 of the DGCL for
perfecting appraisal rights may result in the loss of such rights.
Going Private Transactions. The Commission has adopted Rule 13e-3 under the
Exchange Act which is applicable to certain "going private" transactions and
which may under certain circumstances be applicable to the Merger or another
business combination following the purchase of Shares pursuant to the Offer in
which the Purchaser seeks to acquire the remaining Shares not held by it. Rule
13e-3 requires, among other things, that certain financial information
concerning the Company and certain information relating to the fairness of the
proposed transaction and the consideration offered to minority stockholders in
such transaction, be filed with the Commission and disclosed to stockholders
prior to consummation of the transaction. The Purchaser believes, however, that
Rule 13e-3 will not be applicable to the Merger because it is anticipated that
the Merger will be effected within one year following consummation of the Offer.
Acquisition and Disposition of Shares. The Purchaser or an affiliate of the
Purchaser may, following the consummation or termination of the Offer, seek to
acquire additional Shares through open market purchases, privately negotiated
transactions, a tender offer or exchange offer or otherwise, upon such terms and
at such prices as it shall determine, which may be more or less than the price
to be paid pursuant to the Offer. The Purchaser and its affiliates also reserve
the right to dispose of any or all Shares acquired by them, subject to the terms
of the Merger Agreement.
13. DIVIDENDS AND DISTRIBUTIONS
If, on or after the date of the Merger Agreement, the Company should (i)
split, combine or reclassify the outstanding Shares, (ii) redeem, purchase or
otherwise acquire any of its capital stock or (iii) issue or sell any additional
shares of, or securities convertible into or exchangeable for, or options,
warrants, calls, commitments or rights of any kind to acquire, any shares of
capital stock of any class of the Company, other than issuances pursuant to the
exercise of Options and Warrants outstanding on the date of the Merger
Agreement, then, without prejudice to the Purchaser's rights under Sections 1
and 14, the Purchaser, in its sole discretion, may make such adjustments as it
deems appropriate in the Offer Price 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 the Merger Agreement, the Company should
declare, set aside or pay any dividend or other distribution payable in cash,
stock or property with respect to 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, options or
warrants, 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
25
<PAGE> 28
records, then, without prejudice to the Purchaser's rights under Sections 1 and
14, (i) 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 (ii) the whole
of any such noncash 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 dividend, distribution or right and may withhold
the entire purchase price for Shares tendered in the Offer or deduct from the
purchase price the amount or value thereof, as determined by the Purchaser in
its sole discretion.
Pursuant to the Merger Agreement, the Company is prohibited from taking any
of the actions described in the two preceding paragraphs and nothing herein
shall constitute a waiver by the Purchaser or Parent of any of its rights under
the Merger Agreement or a limitation of the remedies available to the Purchaser
or Parent for any breach of the Merger Agreement.
14. CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, subject to the provisions
of the Merger Agreement, the Purchaser will not be required to accept for
payment or, subject to any applicable rules and regulations of the Commission,
including Rule 14e-1(c) under the Exchange Act (relating to the Purchaser's
obligation to pay for or return tendered Shares promptly after termination or
withdrawal of the Offer), pay for, and may delay the acceptance for payment of
or, subject to the restriction referred to above, the payment for, any tendered
Shares, and may terminate the Offer and not accept for payment any tendered
Shares if (i) any applicable waiting period under the HSR Act has not expired or
been terminated prior to the expiration of the Offer, (ii) the Minimum Condition
has not been satisfied, or (iii) at any time on or after November 19, 1997, and
before the time of acceptance of Shares for payment pursuant to the Offer, any
of the following events shall occur:
(a) there shall have been any statute, rule, regulation, judgment,
order or injunction promulgated, entered, enforced, enacted or issued
applicable to the Offer or the Merger by any federal or state governmental
regulatory or administrative agency or authority or court or legislative
body or commission which (1) prohibits the consummation of the Offer or the
Merger, (2) prohibits, or imposes any material limitations on, Parent's or
the Purchaser's ownership or operation of all or a material portion of the
Company's businesses or assets or the Shares, except for such prohibitions
or limitations which would not have a Company Material Adverse Effect (as
defined in the Merger Agreement), (3) prohibits, or makes illegal the
acceptance for payment, payment for or purchase of Shares or the
consummation of the Offer, or (4) renders the Purchaser unable to accept
for payment, pay for or purchase a material portion or all of the Shares;
provided, that the parties shall have used their reasonable best efforts to
cause any such statute, rule, regulation, judgment, order or injunction to
be vacated or lifted;
(b) the representations and warranties of the Company set forth in the
Merger Agreement shall not be true and accurate as of the date of
consummation of the Offer as though made on or as of such date (except for
those representations and warranties that address matters only as of a
particular date or only with respect to a specific period of time which
need only be true and accurate as of such date or with respect to such
period), except where the failure of such representations and warranties to
be true and accurate (without giving effect to any limitation as to
"materiality" or "material adverse effect" set forth therein), do not,
individually or in the aggregate, have a Company Material Adverse Effect;
(c) the Company shall have breached or failed to perform or comply
with, in all material respects, any material obligation, agreement, or
covenant required by the Merger Agreement to be performed or complied with
by it as of the date of consummation of the Offer.
(d) the Merger Agreement shall have been terminated in accordance with
its terms;
26
<PAGE> 29
(e) the Company Board shall have withdrawn, modified or changed in a
manner adverse to Parent or the Purchaser its approval or recommendation of
the Offer, the Merger Agreement or the Merger or shall have recommended an
Acquisition Proposal or shall have executed an agreement in principle or
definitive agreement relating to an Acquisition Proposal or similar
business combination with a person or entity other than Parent, the
Purchaser or their affiliates or the Company Board shall have adopted a
resolution to do any of the foregoing; or
(f) Thirty percent (30%) or more of the key personnel of the Company
and its subsidiaries identified on Schedule A(h) of the Company Disclosure
Letter delivered to Parent and the Purchaser at or prior to the execution
of the Merger Agreement shall no longer be employed by the Company or its
subsidiaries or shall have submitted their resignations.
The foregoing conditions are for the sole benefit of the Purchaser and
Parent and, subject to the Merger Agreement, may be asserted by either of them
or may be waived by Parent or the Purchaser, in whole or in part at any time and
from time to time in the sole discretion of Parent or the Purchaser. The failure
by Parent or the Purchaser at any time to exercise any such rights shall not be
deemed a waiver of any right and each right shall be deemed an ongoing right
which may be asserted at any time and from time to time.
15. CERTAIN LEGAL MATTERS
Except as described in this Section 15, based on a review of publicly
available filings by the Company with the Commission and other publicly
available information concerning the Company, but without any independent
investigation thereof, neither Parent nor the Purchaser is aware of any
regulatory license or permit that appears to be material to the business of the
Company and its subsidiaries, taken as a whole, that might be adversely affected
by the acquisition of Shares by the Purchaser pursuant to the Offer or, except
as set forth below, of any approval or other action by any governmental,
administrative or regulatory agency or authority, domestic or foreign, that
would be required prior to the acquisition of Shares by the Purchaser pursuant
to the Offer. Should any such approval or other action be required, the
Purchaser currently contemplates that it will be sought. Although the Purchaser
does not currently intend to delay the acceptance for payment of Shares tendered
pursuant to the Offer pending the outcome of such matters, there can be no
assurance that any such approval or other action, if needed, would be obtained
or would be obtained without substantial conditions or that adverse consequences
might not result to the Company's business or that certain parts of the
Company's business might not have to be disposed of in the event that such
approvals were not obtained or any other actions were not taken. The Purchaser's
obligation under the Offer to accept for payment and pay for Shares is subject
to certain conditions, including conditions relating to the legal matters
discussed in this Section 15. See Section 14.
United States Antitrust Approvals. The Offer and the Merger are subject to
the HSR Act, which provides that 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 Federal
Trade Commission ("FTC") and certain waiting period requirements have been
satisfied.
Under the provisions of the HSR Act applicable to the Offer, the purchase
of Shares pursuant to the Offer may not be consummated until the expiration of a
15-calendar day waiting period following the filing by Parent of a Pre-Merger
Notification and Report Form with respect to the Offer, unless Parent receives a
request for additional information or documentary material from the Antitrust
Division or the FTC or unless early termination of the waiting period is
granted. If, within such 15-day period, either the Antitrust Division or the FTC
requests additional information or material from Parent concerning the Offer,
the waiting period will be extended and would expire at 11:59 p.m., New York
City time, on the tenth calendar day after the date of substantial compliance by
Parent with such request. Only one extension of the waiting period pursuant to a
request for additional information is authorized by the HSR Act. Thereafter,
such waiting period may be extended only by court order or with the consent of
Parent. The Purchaser will not accept for payment Shares tendered pursuant to
the Offer unless and until the waiting period requirements imposed by the HSR
Act with respect to the Offer have been satisfied. See Section 14.
27
<PAGE> 30
The Merger would not require an additional filing under the HSR Act if the
Purchaser owns 50% or more of the outstanding Shares at the time of the Merger
or if the Merger occurs within one year after the HSR Act waiting period
applicable to the Offer expires or is terminated.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's acquisition of Shares
pursuant to the Offer and the Merger. At any time before or after the
Purchaser's acquisition 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 purchase of Shares pursuant to
the Offer or the consummation of the Merger or seeking divestiture of Shares
acquired by the Purchaser or divestiture of substantial assets of Parent or its
subsidiaries. Private parties and state attorneys general may also bring legal
action under the antitrust laws under certain circumstances. Based upon an
examination of publicly available information relating to the businesses in
which Parent and the Company are engaged, Parent and the Purchaser believe that
the acquisition of Shares by the Purchaser will not violate the antitrust laws.
Nevertheless, there can be no assurance that a challenge to the Offer or other
acquisition of Shares by the Purchaser on antitrust grounds will not be made or,
if such a challenge is made, of the result. See Section 14 for certain
conditions to the Offer, including conditions with respect to certain
governmental actions.
State Takeover Laws. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, stockholders, executive offices or places of business in such states. In
Edgar v. MITE Corp., the Supreme Court of the United States held that the
Illinois Business Takeover Act, which involved state securities laws, that made
the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and therefore was unconstitutional. In CTS Corp.
v. Dynamics Corp. of America, however, the Supreme Court of the United States
held that a state may, as a matter of corporate law and, in particular, those
laws concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without prior
approval of the remaining stockholders, provided that such laws were applicable
only under certain conditions.
Section 203 of the DGCL limits the ability of a Delaware corporation to
engage in business combinations with "interested stockholders" (defined 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 Board's unanimous approval of the Merger Agreement,
the Offer and the Merger constitutes an approval thereof for purposes of Section
203 of the DGCL.
Based on information supplied by the Company and the Company's
representations in the Merger Agreement, the Purchaser does not believe that any
state takeover statutes apply to the Offer or the Merger. Neither the Purchaser
nor Parent has currently complied with any state takeover statute or regulation.
The Purchaser reserves the right to challenge the applicability or validity of
any state law purportedly applicable to the Offer or the Merger and nothing in
this Offer to Purchase or any action taken in connection with the Offer or the
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 Merger and an appropriate
court does not determine that it is inapplicable or invalid as applied to the
Offer or the 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 Merger. In
such case, the Purchaser may not be obligated to accept for payment or pay for
any Shares tendered pursuant to the Offer.
16. FEES AND EXPENSES
Parent has retained Morgan Stanley to act as the Dealer Manager and to
provide certain financial advisory services, Georgeson & Company Inc. to act as
the Information Agent and ChaseMellon Shareholder Services, L.L.C. to act as the
Depositary in connection with the Offer. The Dealer Manager and the Information
Agent may contact holders of Shares by mail, telephone, telex, telegraph and
personal interview
28
<PAGE> 31
and may request brokers, dealers, commercial banks, trust companies and other
nominees to forward the Offer materials to beneficial owners. The Dealer
Manager, the Information Agent and the Depositary each will receive reasonable
and customary compensation for their services, will be reimbursed for certain
reasonable out-of-pocket expenses and will be indemnified against certain
liabilities and expenses in connection therewith, including certain liabilities
under the federal securities laws. None of the Dealer Manager, the Information
Agent or the Depositary has been retained to make solicitations or
recommendations in connection with the Offer. Neither Parent nor the Purchaser
will pay any fees or commissions to any broker or dealer or other person for
soliciting tenders of Shares pursuant to the Offer. Brokers, dealers, commercial
banks and trust companies will be reimbursed by the Purchaser for reasonable
expenses incurred by them in forwarding material to their customers.
17. MISCELLANEOUS
The Purchaser is not aware of any jurisdiction in which the making of the
Offer is not in compliance with applicable law. If the Purchaser becomes aware
of any jurisdiction in which the making of the Offer would not be in compliance
with applicable law, the Purchaser will make a good faith effort to comply with
any such law. If, after such good faith effort, the Purchaser cannot comply with
any such law, the Offer will not be made to (nor will tenders be accepted from
or on behalf of) the holders of Shares residing in such jurisdiction. In those
jurisdictions whose securities or blue sky laws require the Offer to be made by
a licensed broker or dealer, the Offer is being made on behalf of the Purchaser
by the Dealer Manager or one or more registered brokers or dealers which are
licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR PARENT 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.
The Purchaser has filed with the Commission the Schedule 14D-1 pursuant to
Rule 14d-3 under the Exchange Act, furnishing certain additional information
with respect to the Offer, and may file amendments thereto. The Schedule 14D-1
and any amendments thereto, including exhibits, may be inspected and copies may
be obtained at the same places and in the same manner as set forth in Section 8
(except that they will not be available at the regional offices of the
Commission).
DSL ACQUISITION CORPORATION
TEXAS INSTRUMENTS INCORPORATED
November 25, 1997
29
<PAGE> 32
SCHEDULE I
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE
OFFICERS OF PARENT AND THE PURCHASER
1. Directors and Executive Officers of Parent. The following table sets
forth the name and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years of each
director and executive officer of Parent. The business address of each such
person is c/o Parent, 13500 North Central Expressway, P.O. Box 655474, Dallas,
Texas 75265-5474. All directors and officers listed below are citizens of the
United States.
JAMES R. ADAMS Chairman of the Board, Director of Parent
Chairman of the Board of Parent since June 1996. Group President, SBC
Communications Inc. from 1992 until retirement in 1995; President and Chief
Executive Officer of Southwestern Bell Telephone Company, 1988-92.
DAVID L. BOREN Director of Parent
President of the University of Oklahoma since 1994. U.S. Senator, 1979-1994;
Governor of Oklahoma, 1975-1979; Director, AMR Corporation, Phillips Petroleum
Company and Torchmark Corporation; trustee, Yale University.
JAMES B. BUSEY IV Director of Parent
Retired from U.S. Navy as Admiral in 1989. President and Chief Executive
Officer, Armed Forces Communications and Electronics Association, 1992-96;
Deputy Secretary, Department of Transportation, 1991-92; Administrator, Federal
Aviation Administration, 1989-91. Director, Association of Naval Aviation,
Curtiss-Wright Corporation and S.T. Research Corporation; Trustee, MITRE
Corporation.
DANIEL A. CARP Director of Parent
President and Chief Operating Officer of Eastman Kodak Company since January
1997. Joined Eastman Kodak Company in 1970; elected Executive Vice President and
named Assistant Chief Operating Officer effective November 1995.
THOMAS J. ENGIBOUS Director of Parent
President and Chief Executive Officer of Parent since June 1996. Joined Parent
in 1976; elected Executive Vice President in 1993. Member, The Business
Roundtable.
GERALD W. FRONTERHOUSE Director of Parent
Investments. Former Chief Executive Officer (1985-88) of First RepublicBank
Corporation. President and Director, Hoblitzelle Foundation.
WAYNE R. SANDERS Director of Parent
Chairman of the Board of Kimberly-Clark Company since 1992; also Chief Executive
Officer since 1991. Director, Adolph Coors Company, Coors Brewing Company and
Texas Commerce Bank, N.A.; Trustee, Marquette University.
GLORIA M. SHATTO Director of Parent
President of Berry College since 1980. Director, Becton Dickinson and Company,
Georgia Power Company and The Southern Company.
WILLIAM P. WEBER Vice Chairman of the Board, Director of Parent
Vice Chairman of Parent since 1993. Joined the Company in 1962; elected Vice
President in 1979 and Executive Vice President in 1984. Director, Kmart
Corporation and Semiconductor Industry Association.
CLAYTON K. YEUTTER Director of Parent
Of Counsel, Hogan & Hartson. Counsel to President Bush for domestic policy
during 1992; Chairman, Republic National Committee, 1991-92; Secretary,
Department of Agriculture, 1989-91; U.S. Trade Repre-
I-1
<PAGE> 33
sentative, 1985-89. Director, B.A.T. Industries P.L.C., Caterpillar Inc.,
ConAgra, Inc., FMC Corporation, IMC Global Inc. and Oppenheimer Funds.
GARY D. CLUBB
Executive Vice President and President, Digital Imaging Group, of Parent since
August 1996. Joined Parent in 1968; elected Executive Vice President of Parent
in 1989.
DAVID D. MARTIN
Executive Vice President of Parent since 1993. Joined Parent in 1960; elected
Vice President of Parent in the mid-1980s.
RICHARD K. TEMPLETON
Executive Vice President and President, Semiconductor Group, of Parent since
June 1996. Joined Parent in 1980; elected Senior Vice President, Semiconductor
Group, in 1994.
RICHARD J. AGNICH
Senior Vice President, Secretary and General Counsel of Parent since August
1988. Joined Parent in 1973; elected Vice President, Secretary and General
Counsel in 1982. Trustee, Austin College.
WILLIAM A. AYLESWORTH
Senior Vice President, Treasurer and Chief Financial Officer of Parent since
1985. Joined Parent in 1967; elected Vice President and Treasurer in 1982.
CHUCK F. NIELSON
Vice President of Human Resources of Parent since June 1990. Joined Parent in
1965.
ELWIN L. SKILES, JR.
Vice President of Corporate Communications of Parent since January 1992. Joined
Parent in 1976.
2. Directors and Executive Officers of the Purchaser. The following table
sets forth the name and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years of each
director and executive officer of the Purchaser. Each such person is a citizen
of the United States of America and the business address of each such person is
c/o Parent, 13500 North Central Expressway, P.O. Box 655474, Dallas, Texas
75265-5474. All directors and officers are citizens of the United States.
GEORGE BARBER Director of Purchaser
President of the Purchaser since its incorporation in November 1997; Vice
President, Semiconductor Group, of Parent since August 1995. Joined Parent in
1980; appointed Vice President of Parent's Asian operations in 1994.
MARVIN S. SELF Director of Purchaser
Vice President of the Purchaser since its incorporation in November 1997; Senior
Vice President and Chief Financial Officer, Semiconductor Group, of Parent since
August 1996. Joined Parent in 1966; appointed Senior Vice President and Chief
Financial Officer, Defense Systems and Software Businesses, of Parent in 1995.
GREGORY L. WATERS Director of Purchaser
Vice President of the Purchaser since its incorporation in November 1997;
Director of Network Access Products, Semiconductor Group, of Parent since
September 1997. Joined Parent in 1983; appointed Manager of TI Networking
Business, Semiconductor Group, of Parent in 1996.
I-2
<PAGE> 34
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, 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 his broker, dealer, commercial bank or other nominee to the
Depositary at one of its addresses set forth below.
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES
<TABLE>
<C> <C> <C>
By Mail: By Facsimile Transmission: By Hand:
ChaseMellon Shareholder Services (201) 329-8936 ChaseMellon Shareholder Services
Attention: Reorganization (For Eligible Institutions Only) Attention: Reorganization
Department Department
Post Office Box 3301 Confirm Facsimile by Telephone: 120 Broadway, 13th Floor
South Hackensack, New Jersey 07606 (201) 296-4860 New York, New York 10271
(For Confirmation Only) By Overnight Courier:
ChaseMellon Shareholder Services
Attention: Reorganization
Department
85 Challenger Road
Ridgefield Park, New Jersey 07660
</TABLE>
Any questions or requests for assistance may be directed to the Dealer
Manager or the Information Agent at their respective telephone numbers and
locations listed below. Additional copies of this Offer to Purchase, the Letter
of Transmittal and the Notice of Guaranteed Delivery may be obtained from the
Information Agent at its address and telephone numbers set forth below. You may
also contact your broker, dealer, commercial bank or trust company or nominee
for assistance concerning the Offer.
The Information Agent for the Offer is:
Georgeson & Company Inc. logo
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect: (212) 440-9800
Call Toll-Free: (800) 223-2064
The Dealer Manager for the Offer is:
MORGAN STANLEY DEAN WITTER
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
(212) 761-6863
<PAGE> 1
EXHIBIT 99(a)(2)
LETTER OF TRANSMITTAL
To Tender Shares of Common Stock
of
Amati Communications Corporation
at
$20.00 Net Per Share
Pursuant to the Offer to Purchase
Dated November 25, 1997
by
DSL Acquisition Corporation
a direct wholly owned subsidiary
of
Texas Instruments Incorporated
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT NEW YORK CITY
TIME, ON TUESDAY, DECEMBER 23, 1997, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES
<TABLE>
<C> <C> <C>
By Mail: By Facsimile Transmission: By Hand:
ChaseMellon Shareholder Services (201) 329-8936 ChaseMellon Shareholder Services
Attention: Reorganization Department (For Eligible Institutions Attention: Reorganization Department
Post Office Box 3301 Only) 120 Broadway, 13th Floor
South Hackensack, New Jersey 07660 Confirm Facsimile by Telephone: New York, New York 10271
(201) 296-4860 By Overnight Courier:
(For Confirmation Only) ChaseMellon Shareholder Services
Attention: Reorganization Department
85 Challenger Road
Ridgefield Park, New Jersey 07660
</TABLE>
---------------------
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN
AS SET FORTH ABOVE, OR TRANSMISSION VIA A FACSIMILE NUMBER OTHER THAN
AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- - ---------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) STOCK CERTIFICATE(S) AND SHARE(S) TENDERED
APPEAR(S) ON SHARES) (ATTACH ADDITIONAL SIGNED LIST, IF NECESSARY)
- - ---------------------------------------------------------------------------------------------------------------------
STOCK TOTAL NUMBER OF NUMBER OF
CERTIFICATE SHARES REPRESENTED BY SHARES
NUMBER(S) STOCK CERTIFICATE(S)* TENDERED**
-------------------------------------------------------
<S> <C> <C> <C>
-------------------------------------------------------
-------------------------------------------------------
=======================================================
TOTAL SHARES...................
- - ---------------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by Holders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares evidenced
by each Stock Certificate delivered to the Depositary are being tendered
hereby. See Instruction 4.
- - --------------------------------------------------------------------------------
<PAGE> 2
This Letter of Transmittal is to be completed by stockholders if
certificates evidencing Shares ("Stock Certificates") are to be forwarded
herewith or if delivery is to be made by book-entry transfer to the Depositary's
account at The Depository Trust Company ("DTC") or the Philadelphia Depository
Trust Company ("PDTC") (each, a "Book-Entry Transfer Facility" and collectively,
the "Book-Entry Transfer Facilities") pursuant to the procedures set forth in
Section 3 of the Offer to Purchase (as defined below).
Stockholders whose Stock Certificates are not immediately available or who
cannot deliver their Stock Certificates and all other documents required hereby
to the Depositary prior to the Expiration Date (as defined in Section 1 of the
Offer to Purchase) or who cannot comply with the book-entry transfer procedures
on a timely basis must tender their Shares according to the guaranteed delivery
procedures set forth in Section 3 of the Offer to Purchase. See Instruction 2.
DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE
DELIVERY TO THE DEPOSITARY.
- - --------------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution:
---------------------------------------------
Check Box of Applicable Book-Entry Transfer Facility (check one):
DTC [ ] PDTC [ ]
Account Number: Transaction Code Number:
------------ --------------------
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Holder(s):
-------------------------------------------
Window Ticket No. (if any):
------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
------------------------
Name of Institution which Guaranteed Delivery:
-----------------------------
If Delivered by Book-Entry Transfer, Check Box of Applicable Book-Entry
Transfer Facility (check one):
DTC [ ] PDTC [ ]
Account Number: Transaction Code Number:
------------ --------------------
- - --------------------------------------------------------------------------------
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to DSL Acquisition Corporation (the
"Purchaser"), a Delaware corporation and a direct wholly owned subsidiary of
Texas Instruments Incorporated, a Delaware corporation ("Parent"), the above-
described shares of Common Stock, par value $.20 per share (the "Shares"), of
Amati Communications Corporation, a Delaware corporation (the "Company"), at
$20.00 per Share, net to the seller in cash, without interest, upon the terms
and subject to the conditions set forth in the Offer to Purchase dated November
25, 1997 (the "Offer to Purchase"), receipt of which is hereby acknowledged, and
in this Letter of Transmittal (which, together with any amendments and
supplements, collectively constitute the "Offer"). The undersigned understands
that the Purchaser reserves the right to transfer or assign, in whole at any
time or in part from time to time, to Parent or one or more of its affiliates,
the right to purchase Shares tendered pursuant to the Offer.
Subject to and effective upon acceptance for payment of the Shares tendered
herewith in accordance with the terms and subject to the conditions 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 that
are being tendered hereby and all other Shares or other securities or property
issued or issuable in respect thereof on or after November 19, 1997 (such other
Shares, securities or property being referred to herein as the "Other
Securities") and irrevocably appoints the Depositary the true and lawful agent
and attorney-in-fact of the undersigned with respect to such Shares and all
Other Securities with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to (i) deliver
Stock Certificates evidencing such Shares and all Other Securities, or transfer
ownership of such Shares and all Other Securities on the account books
maintained by any of the Book-Entry Transfer Facilities, together, in either
case, with all accompanying evidences of transfer and authenticity, to or upon
the order of the Purchaser, upon receipt by the Depositary, as the undersigned's
agent, of the purchase price (adjusted, if appropriate, as provided in the Offer
to Purchase), (b) present such Shares and all Other Securities for transfer on
the books of the Company, and (c) receive all benefits and otherwise exercise
all rights of beneficial ownership of such Shares and all Other Securities, all
in accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints designees of the Purchaser as
the undersigned's attorneys-in-fact and proxies, each with full power of
substitution, to the full extent of the undersigned's rights with respect to all
of the Shares tendered hereby which have been accepted for payment by the
Purchaser (and any and all Other Securities issued or issuable in respect
thereof on or after November 19, 1997). This proxy and power of attorney is
coupled with an interest in the Shares tendered hereby and is irrevocable and is
granted in consideration of, and is effective upon, the acceptance for payment
of such Shares by the Purchaser in accordance with the terms of the Offer. Such
acceptance for payment shall, without further action, revoke all prior proxies
and consents granted by the undersigned with respect to such Shares (and all
Shares and other securities issued in Other Securities in respect of such
Shares), and no subsequent proxy or power of attorney or written consent shall
be given (and if given or executed, shall be deemed not to be effective) with
respect thereto by the undersigned. The designees of the Purchaser will, with
respect to the Shares and the Other Securities, be empowered to exercise all
voting and other rights of the undersigned as they in their sole discretion may
deem proper at any annual, special or adjourned meeting of the Company's
stockholders, by written consent or otherwise. The Purchaser reserves the right
to require that, in order for Shares to be deemed validly tendered, immediately
upon the Purchaser's acceptance for payment of such Shares, the Purchaser is
able to exercise full voting and other rights with respect to such Shares
(including voting at any meeting of stockholders then scheduled or acting by
written consent without a meeting).
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby and all Other Securities, and that when such Shares 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 that none of such Shares and Other Securities will be
subject to any adverse claim. The undersigned, upon request, shall execute and
deliver any signature guarantees or additional documents deemed by the
Depositary or the Purchaser to be necessary or desirable to complete the sale,
assignment and transfer of the Shares tendered hereby and all Other Securities.
In addition, the undersigned shall promptly remit and transfer to the Depositary
for the account of the Purchaser all Other Securities 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 such Other Securities 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.
<PAGE> 4
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned. Except as stated in
the Offer to Purchase, this tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute 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, the 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 Stock
Certificates evidencing Shares not tendered or not accepted for payment in the
name(s) of the registered holder(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
Stock Certificates evidencing Shares not tendered or accepted for payment (and
accompanying documents, as appropriate) to the address(es) of the registered
holder(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 return any Share
Certificates evidencing Shares not purchased (together with accompanying
documents as appropriate) in the name(s) of, and deliver said check and/or
return such Share Certificates to, the person or persons so indicated.
Stockholders tendering Shares by book-entry transfer may request that any Shares
not accepted for payment be returned by crediting such account maintained at DTC
or PDTC as such stockholder may designate by making an appropriate entry under
"Special Payment Instructions." 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 holder(s) thereof if the Purchaser does
not accept for payment any of the Shares so tendered.
- - --------------------------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6, AND 7)
To be completed ONLY if Stock Certificates 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,
or if Shares delivered by book-entry transfer that are not accepted for payment
are to be returned by credit to an account maintained at a Book-Entry Transfer
Facility, other than to the account indicated above.
Issue (check appropriate box(es)):
[ ] Check to:
[ ] Certificate to:
Name:
---------------------------------------------------------------------------
(Please Type or Print)
Address:
------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
(Include Zip Code)
- - --------------------------------------------------------------------------------
(Tax Identification or Social Security No.)
(See Substitute Form W-9)
Credit unpurchased Shares delivered by book-entry transfer to the Book-Entry
Transfer Facility account set forth below:
[ ] DTC [ ] PDTC
(check one)
- - --------------------------------------------------------------------------------
(DTC/PDTC Account Number)
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Stock Certificates 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 shown above.
Mail (check appropriate box(es)):
[ ] Check to:
[ ] Certificate to:
Name:
---------------------------------------------------------------------------
(Please Type or Print)
Address:
------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
(Include Zip Code)
- - --------------------------------------------------------------------------------
(Tax Identification or Social Security No.)
(See Substitute Form W-9)
- - --------------------------------------------------------------------------------
<PAGE> 5
SIGN HERE
AND COMPLETE SUBSTITUTE FORM W-9
SIGN SIGN
HERE HERE
----------------------------------------------------------------------
----------------------------------------------------------------------
(Signature(s) of holder(s))
Dated:
--------------------------------------------------------------------,199 _
Must be signed by the registered holder(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 holder(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 provide the following information and See
Instruction 5.
Name(s):
------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
(Please Print)
Capacity (Full Title):
----------------------------------------------------------
Address:
------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number:
-------------------------------------------------
Tax Identification or
Social Security No.:
------------------------------------------------------------
(See Substitute Form W-9)
GUARANTEE OF SIGNATURE(S)
(If Required -- See Instructions 1 and 5)
Authorized Signature:
-----------------------------------------------------------
Name:
---------------------------------------------------------------------------
Name of Firm:
-------------------------------------------------------------------
(Please Print)
Address:
------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number:
-------------------------------------------------
Dated:
--------------------------------------------------------------------,199 _
<PAGE> 6
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. 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) 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"), unless the Shares tendered hereby are
tendered (i) by a registered holder of Shares who has not completed either the
box entitled "Special Delivery Instructions" or the box entitled "Special
Payment Instructions" on this Letter of Transmittal, or (ii) for the account of
an Eligible Institution. See Instruction 5. If the Stock Certificates are
registered in the name of a person other than the signer of this Letter of
Transmittal, or if Stock Certificates evidencing Shares not accepted for payment
or not tendered are to be issued to a person other than the registered holder,
then the Stock Certificates must be endorsed or accompanied by appropriate stock
powers, in either case signed exactly as the name(s) of the registered owner(s)
appear on the Stock Certificates, with the signatures on the Stock Certificates
or stock powers guaranteed by an Eligible Institution as provided herein. See
Instruction 5.
2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed by
stockholders if Stock Certificates are to be forwarded herewith or if delivery
of Shares is to be made pursuant to the procedures for book-entry transfer set
forth under "Procedure for Tendering Shares -- Book-Entry transfer" in Section 3
of the Offer to Purchase. For Shares to be validly tendered pursuant to the
Offer, this Letter of Transmittal (or facsimile thereof), properly completed and
duly executed with all required signature guarantees and all other documents
required hereby, must be received by the Depositary at one of its addresses set
forth on the cover hereof prior to the Expiration Date (as defined in the Offer
to Purchase). In addition, either (i) Stock Certificates evidencing such Shares
must be received by the Depositary along with this Letter of Transmittal or such
Shares must be tendered pursuant to the procedures for book-entry transfer set
forth under "Procedure for Tendering Shares -- Book-Entry Transfer" in Section 3
of the Offer to Purchase and a confirmation of a book-entry transfer (a
"Book-Entry Confirmation") must be received by the Depositary, in each case
prior to the Expiration Date or (ii) the tendering stockholder must comply with
the guaranteed delivery procedures set forth below and under "Procedure for
Tendering Shares -- Guaranteed Delivery" in Section 3 of the Offer to Purchase.
If a stockholder desires to tender Shares pursuant to the Offer and such
stockholder's Stock Certificates are not immediately available or time will not
permit all required documents to reach the Depositary prior to the Expiration
Date, or the procedures for book-entry transfer cannot be completed on a timely
basis, such Shares may nevertheless be tendered if all of the following
conditions are satisfied: (i) the 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 prior to the Expiration Date as provided below and (iii) the
Stock Certificates for all tendered Shares, in proper form for transfer (or a
Book-Entry Confirmation), together with this 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 (as
defined in Section 2 of the Offer to Purchase)) and any other documents required
by this Letter of Transmittal, are received by the Depositary within three New
York Stock Exchange trading days after the date of execution of such Notice of
Guaranteed Delivery.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, STOCK CERTIFICATES
AND ANY OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER AND
THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY.
IF DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT SUCH STOCK CERTIFICATES AND
DOCUMENTS BE SENT BY REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT
REQUESTED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO INSURE TIMELY
DELIVERY.
No alternative, conditional or contingent tenders will be accepted. 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 under "Description of
Shares Tendered" is inadequate, the certificate numbers and/or the number of
Shares tendered should be listed on a separate signed schedule and attached
hereto.
4. PARTIAL TENDERS. If fewer than all the Shares evidenced by any Stock
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 case,
new Stock Certificate(s) evidencing the remainder of the Shares that were
evidenced by the old Stock Certificate(s) will be sent to the registered holder,
unless otherwise provided in the appropriate box on this Letter of Transmittal,
as soon as practicable after the Expiration Date. All Shares evidenced by Stock
Certificates delivered to the Depositary will be deemed to have been tendered
unless otherwise indicated.
<PAGE> 7
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond exactly with the name(s) as
written on the face of the Stock Certificate(s) without alteration, enlargement
or any change whatsoever. If any of the Shares tendered hereby are held of
record by two or more persons, all such persons must sign this Letter of
Transmittal.
If any tendered Shares are registered in different names on several Stock
Certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of such Shares.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares evidenced by Stock Certificates listed and transmitted hereby, no
endorsements of Stock Certificates or separate stock powers are required unless
payment is to be made to or Stock Certificates evidencing Shares not tendered or
purchased are to be issued in the name of a person other than the registered
holder(s), in which case the Stock Certificate(s) evidencing the Shares tendered
hereby must be endorsed or accompanied by appropriate stock powers, in either
case signed exactly as the name(s) of the registered holder(s) appear(s) on such
Stock Certificate(s). Signatures on such Stock Certificates and stock powers
must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Stock Certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name or names of
the registered holder or holders appear on the Stock Certificate(s). Signatures
on such Stock Certificate(s) or stock powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any Stock Certificates or stock powers are
signed by a trustee, executor, administrator, guardian, attorney-in-fact, agent,
officer of a corporation or any person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to the Purchaser of such person's authority to so act must be
submitted.
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, the
Purchaser will pay or cause to be paid 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 if Stock
Certificates evidencing Shares not tendered or purchased are to be registered in
the name of, any person other than the registered holder(s), or if Stock
Certificates evidencing tendered Shares 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 holder(s) or such other
person) payable on account of the transfer to such person will be deducted from
the purchase price unless satisfactory evidence of the payment of such taxes or
exemption therefrom is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE STOCK CERTIFICATE(S) LISTED IN THIS
LETTER OF TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares tendered hereby is to be issued, or Stock Certificate(s)
evidencing Shares not tendered or not purchased are to be issued, in the name of
a person other than the person(s) signing this Letter of Transmittal or if such
check or any such Stock Certificate is to be sent and/or any Stock Certificates
are to be returned to someone other than the signer above, or to the signer
above but at an address other than that shown in the box entitled "Description
of Shares Tendered" on the cover hereof, the appropriate boxes on this Letter of
Transmittal should be completed. Stockholders tendering Shares by book-entry
transfer may request that Shares not purchased be credited to such account
maintained at any of the Book-Entry Transfer Facilities as such stockholder may
designate under "Special Delivery Instructions". If no such instructions are
given, any such Share not purchased will be returned by crediting the account at
the Book-Entry Transfer Facilities designated above.
8. REQUEST FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance may
be directed to, or additional copies of the Offer to Purchase, this Letter of
Transmittal and the Notice of Guaranteed Delivery may be obtained from, the
Information Agent or the Dealer Manager at the telephone numbers and addresses
set forth below. A stockholder may also contact such stockholder's broker,
dealer, commercial bank, trust company or other nominee.
9. WAIVER OF CONDITIONS. Except as otherwise provided in the Offer to
Purchase, the Purchaser reserves the right in its sole discretion to waive in
whole or in part at any time or from time to time any of the specified
conditions of the Offer or any defect or irregularity in tender with regard to
any Shares tendered.
10. SUBSTITUTE FORM W-9. Except in the case of foreign persons, each
tendering stockholder is required to provide the Depositary with a correct
Taxpayer Identification Number ("TIN") on Substitute Form W-9, which is provided
under "Important Tax Information" herein, and to certify that such stockholder
is not subject to backup withholding. Failure to provide the information on the
Substitute Form W-9 may subject the tendering stockholder to 31% federal income
tax backup withholding on the payment of the purchase price for the Shares. The
tendering stockholder should
<PAGE> 8
indicate in the box in Part I of the Substitute Form W-9 if such 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 stockholder has indicated in the box in Part I that a
TIN has been applied for and the Depositary is not provided with a TIN by the
time of payment, the Depositary will withhold 31% of all payments of the
purchase price, if any, made thereafter pursuant to the Offer until a TIN is
provided to the Depositary. A tendering stockholder who is a foreign person
(i.e., who is not a citizen or resident of the United States) should provide the
Depositary with a completed Form W-8. Please contact the Depositary, if
necessary, in order to obtain a copy of Form W-8.
11. LOST OR DESTROYED CERTIFICATES. If any Stock Certificate(s)
representing Shares has been lost or destroyed, the holders should promptly
notify the Depositary. The holders will then be instructed as to the procedure
to be followed in order to replace the Stock Certificate(s). This Letter of
Transmittal and related documents cannot be processed until the procedures for
replacing lost or destroyed Stock Certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF), PROPERLY
COMPLETED AND DULY EXECUTED, MUST BE RECEIVED BY THE DEPOSITARY (TOGETHER WITH
STOCK CERTIFICATES OR A BOOK-ENTRY CONFIRMATION FOR SHARES AND ANY OTHER
REQUIRED DOCUMENTS AND/OR SIGNATURES), OR A NOTICE OF GUARANTEED DELIVERY MUST
BE RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE EXPIRATION DATE.
<PAGE> 9
IMPORTANT TAX INFORMATION
Under federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary (as payor) with such
stockholder's correct TIN on Substitute Form W-9 herein. If such stockholder is
an individual, the TIN is such stockholder's Social Security Number. If the
Depositary is not provided with the correct TIN or an adequate basis for
exemption, the 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 in an amount equal to 31% of the gross proceeds
resulting from the Offer.
Certain stockholders (including, among others, certain corporations and
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 submit an IRS 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. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of his correct TIN by completing the
Substitute Form W-9 contained herein, certifying that the TIN provided on the
Substitute Form W-9 is correct (or that such stockholder is awaiting a TIN) and
that (i) the stockholder is exempt from backup withholding, (ii) the stockholder
has not been notified by the Internal Revenue Service that he is subject to
backup withholding as a result of failure to report all interest or dividends,
or (iii) the Internal Revenue Service has notified the stockholder that such
stockholder is no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record owner of 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.
If the tendering stockholder has not been issued a TIN and has applied for a
number or intends to apply for a number in the near future, he or she should
write "Applied For" in the space provided for the TIN in Part I, sign and date
the Substitute Form W-9 and sign and date the Certificate of Awaiting Taxpayer
Identification Number. If "Applied For" is written in Part I and the Depositary
is not provided with a TIN within 60 days, the Depositary will withhold 31% of
all payments of the purchase price until a TIN is provided to the Depositary.
<PAGE> 10
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------
PAYOR'S NAME: CHASEMELLON SHAREHOLDER SERVICES, L.L.C., AS DEPOSITARY
- - --------------------------------------------------------------------------------------------------------
<S> <C> <C>
SUBSTITUTE PLEASE PROVIDE YOUR TIN IN THE
BOX AT RIGHT AND CERTIFY BY
FORM W-9 SIGNING AND DATING BELOW
PART I -- Social Security Number
DEPARTMENT OF THE TREASURY -------------------------------------- OR Employer Identification Number
INTERNAL REVENUE SERVICE Name --------------------------------
(If awaiting TIN,
PAYOR'S REQUEST FOR -------------------------------------- write "Applied For")
TAXPAYER IDENTIFICATION Business Name ---------------------------------
NUMBER (TIN) PART II -- For Payees exempt from
Please check appropriate box: backup withholding, see the
[ ] Individual/Sole Proprietor enclosed Guidelines for
[ ] Corporation Certification of Taxpayer
[ ] Partnership [ ] Other Identification Number on
--------- Substitute Form W-9, check the
exempt box below, and complete
--------------------------------------- the Form W-9.
Address
Exempt [ ]
---------------------------------------
City, State, Zip Code
- - --------------------------------------------------------------------------------------------------------
</TABLE>
CERTIFICATION. Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number
(or I am waiting for a number to be issued to me), and
(2) I am not subject to backup withholding either because (a) I am exempt from
backup withholding, or (b) I have not been notified by the Internal
Revenue Service ("IRS") that I am subject to backup withholding as a
result of a failure to report all interest or dividends, or (c) the IRS
has notified me that I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS. You must cross out item (2) above if you have been
notified by the IRS that you are subject to backup withholding because of
underreporting interest or dividends on your tax return. However, if after
being notified by the IRS that you were subject to backup withholding, you
received another notification from the IRS that you are no longer subject to
backup withholding, do not cross out item (2). Also see instructions in the
enclosed Guidelines.)
- - --------------------------------------------------------------------------------
SIGNATURE: DATE: _____________________ , 199__
- - --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 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 INSTRUCTIONS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR" IN
THE PART 1 OF SUBSTITUTE FORM W-9.
- - --------------------------------------------------------------------------------
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 (1) 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 (2)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number by the time of payment, 31%
of all payments of the purchase price made to me thereafter will be withheld
until I provide a number.
SIGNATURE: DATE:
------------------------------------ ---------------,199_
- - --------------------------------------------------------------------------------
<PAGE> 11
The Information Agent for the Offer is:
Georgeson & Company Inc. logo
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect: (212) 440-9800
Call Toll-Free: (800) 223-2064
The Dealer Manager for the Offer is:
MORGAN STANLEY DEAN WITTER
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
(212) 761-6863
<PAGE> 1
EXHIBIT 99(a)(3)
NOTICE OF GUARANTEED DELIVERY
for
Tender of Shares of Common Stock
of
Amati Communications Corporation
to
DSL Acquisition Corporation
a direct wholly owned subsidiary
of
Texas Instruments Incorporated
As set forth in Section 3 of the Offer to Purchase (as defined below), this
form, or a form substantially equivalent to this form, must be used to accept
the Offer (as defined below) if the certificates representing shares of common
stock, par value $.20 per share of Amati Communications Corporation (the
"Shares"), are not immediately available or time will not permit all required
documents to reach the Depositary prior to the Expiration Date (as defined in
the Offer to Purchase) or the procedures for book-entry transfer cannot be
completed on a timely basis. Such form may be delivered by hand 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:
CHASEMELLON SHAREHOLDER SERVICES
<TABLE>
<C> <C> <C>
By Mail: By Facsimile Transmission: By Hand:
ChaseMellon Shareholder Services (201) 329-8936 ChaseMellon Shareholder Services
Attention: Reorganization (For Eligible Institutions Attention: Reorganization
Department Only) Department
Post Office Box 3301 120 Broadway, 13th Floor
South Hackensack, New Jersey 07660 Confirm Facsimile by Telephone: New York, New York 10271
(201) 296-4860
(For Confirmation Only) By Overnight Courier:
ChaseMellon Shareholder Services
Attention: Reorganization
Department
85 Challenger Road
Ridgefield Park, New Jersey 07660
</TABLE>
---------------------
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN
AS SET FORTH ABOVE, OR TRANSMISSION VIA A FACSIMILE NUMBER OTHER THAN
AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery 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 DSL Acquisition Corporation, a Delaware
corporation and a direct wholly owned subsidiary of Texas Instruments
Incorporated, a Delaware corporation, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated November 25, 1997 (the
"Offer to Purchase") and the related Letter of Transmittal (which, together with
any amendments and supplements, collectively constitute the "Offer"), receipt of
which is hereby acknowledged, the number of Shares indicated below pursuant to
the guaranteed delivery procedure set forth in Section 3 of the Offer to
Purchase.
Number of Shares:
---------------------------------------------------------------
Stock Certificate Numbers (if available):
---------------------------------------
If Shares will be delivered by book-entry transfer, check one box:
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account Number
------------------------------------------------------------------
Dated:
------------------------, 199_
PLEASE TYPE OR PRINT
Name(s) of Record Holder(s):
----------------------------------------------------
Address(es)
---------------------------------------------------------------------
- - --------------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number:
-------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
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 (each, an "Eligible Institution"), hereby
guarantees that either the certificates representing the Shares tendered hereby
in proper form for transfer, or timely confirmation of a book-entry transfer of
such Shares into the Depositary's account at The Depository Trust Company or the
Philadelphia Depository Trust Company (pursuant to procedures set forth in
Section 3 of the Offer to Purchase), 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 (as defined in the Offer to Purchase)) and any other documents required
by the Letter of Transmittal, will be received by the Depositary at one of its
addresses set forth above within three (3) New York Stock Exchange trading days
after the date of execution hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal,
certificates for Shares and any other required documents to the Depositary
within the time period shown herein. Failure to do so could result in a
financial loss to such Eligible Institution.
Name of Firm:
-------------------------------------------------------------------
Address:
------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
(Include Zip Code)
Area Code and
Telephone Number:
---------------------------------------------------------------
- - --------------------------------------------------------------------------------
AUTHORIZED SIGNATURE
Name:
---------------------------------------------------------------------------
PLEASE TYPE OR PRINT
Title:
--------------------------------------------------------------------------
Dated:
---------------------- , 199_
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED
DELIVERY. CERTIFICATES FOR SHARES ARE TO BE DELIVERED WITH THE LETTER OF
TRANSMITTAL.
<PAGE> 1
EXHIBIT 99(a)(4)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Amati Communications Corporation
at
$20.00 Net Per Share
by
DSL Acquisition Corporation
a direct wholly owned subsidiary
of
Texas Instruments Incorporated
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, DECEMBER 23, 1997, UNLESS THE OFFER IS EXTENDED.
November 25, 1997
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by DSL Acquisition Corporation (the "Purchaser"), a
Delaware corporation and a direct wholly owned subsidiary of Texas Instruments
Incorporated, a Delaware corporation ("Parent"), to act as Dealer Manager in
connection with its offer to purchase all outstanding shares of common stock,
par value $.20 per share (the "Shares"), of Amati Communications Corporation, a
Delaware corporation (the "Company"), at $20.00 per Share, net to the seller in
cash, without interest, upon the terms and subject to the conditions set forth
in the Offer to Purchase dated November 25, 1997 (the "Offer to Purchase") and
in the related Letter of Transmittal (which, together with any amendments and
supplements, collectively constitute the "Offer"), copies of which are enclosed
herewith.
For your information and for forwarding to your clients for whose accounts
you hold Shares registered in your name or in the name of your nominee, we are
enclosing the following documents:
1. Offer to Purchase;
2. Letter of Transmittal for your use and for the information of your
clients, together with Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 providing information relating
to backup federal income tax withholding;
3. Notice of Guaranteed Delivery to be used to accept the Offer if the
Shares and all other required documents cannot be delivered to the
Depositary by the Expiration Date (as defined in the Offer to Purchase);
4. A form of letter which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Offer;
5. Solicitation/Recommendation Statement on Schedule 14D-9 issued by
the Company; and
6. Return envelope addressed to ChaseMellon Shareholder Services,
L.L.C., as the Depositary.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of November 19, 1997 (the "Merger Agreement"), by and among the Company,
Parent and the Purchaser. The Merger Agreement provides that, among other
things, following the consummation of the Offer and the satisfaction or waiver
of the other conditions set forth in the Merger Agreement, the Purchaser will be
merged with and into the Company (the "Merger"). Following the Merger, the
Company will continue as the surviving corporation and
<PAGE> 2
will be a direct wholly owned subsidiary of Parent. At the effective time of the
Merger, each outstanding Share (other than Shares owned by Parent, the Purchaser
or any other wholly owned subsidiary of Parent and Shares held by stockholders
who have demanded and perfected dissenter's rights under Delaware law) will be
converted into the right to receive the per Share price paid in the Offer in
cash, without interest.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT, THE OFFER AND THE MERGER, AND HAS DETERMINED THAT THE OFFER AND THE
MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS AND
UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES IN THE OFFER.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will purchase, by accepting for payment, and will
pay for, all Shares validly tendered and not properly withdrawn prior to the
Expiration Date (as defined in the Offer to Purchase) if, as and when the
Purchaser gives oral or written notice to the Depositary of the Purchaser's
acceptance of the tenders of such Shares for payment pursuant to the Offer.
Payment for Shares purchased pursuant to the Offer will be made only after
timely receipt by the Depositary of (i) certificates evidencing such Shares or
timely confirmation of a book-entry transfer of such Shares into the
Depositary's account at one of the Book-Entry Transfer Facilities (as defined in
the Offer to Purchase), (ii) a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) 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 the Letter of Transmittal.
In order to tender Shares pursuant to the Offer, a properly completed and
duly executed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or an Agent's Message (in the case of any book-entry
transfer), and any other documents required by the Letter of Transmittal, should
be sent to the Depositary, and either certificates representing the tendered
Shares should be delivered or such Shares must be delivered to the Depositary
pursuant to the procedures for book-entry transfers, all in accordance with the
instructions set forth in the Letter of Transmittal and the Offer to Purchase.
If a stockholder desires to tender Shares pursuant to the Offer and such
stockholder's stock certificates are not immediately available or time will not
permit all required documents to reach the Depositary prior to the Expiration
Date, or the procedures for book-entry transfer cannot be completed on a timely
basis, such Shares may nevertheless be tendered by following the guaranteed
delivery procedures specified in Section 3 of the Offer to Purchase.
Neither Parent nor the Purchaser will pay any fees or commissions to any
broker, dealer or other person (other than the Dealer Manager, the Information
Agent and the Depositary as described in the Offer to Purchase) in connection
with the solicitation of tenders of Shares pursuant to the Offer. The Purchaser
will, however, upon request, reimburse brokers, dealers, commercial banks and
trust companies for reasonable expenses incurred by them in forwarding materials
to their customers. The Purchaser will pay all stock transfer taxes applicable
to its purchase of Shares pursuant to the Offer, subject to Instruction 6 of the
Letter of Transmittal.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, DECEMBER 23, 1997, UNLESS THE OFFER IS
EXTENDED.
<PAGE> 3
Any inquiries you may have with respect to the Offer may be addressed to
the Information Agent or the undersigned at the addresses and telephone numbers
set forth on the back cover page of the Offer to Purchase. Requests for
additional copies of the enclosed materials may be directed to the Information
Agent or the Dealer Managers.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR
ANY PERSON THE AGENT OF THE PURCHASER, PARENT, THE COMPANY, ANY AFFILIATE OF THE
COMPANY, THE DEALER MANAGER, THE INFORMATION AGENT OR THE DEPOSITARY, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON
BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS
ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN.
<PAGE> 1
EXHIBIT 99(a)(5)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Amati Communications Corporation
at
$20.00 Net Per Share
by
DSL Acquisition Corporation
a direct wholly owned subsidiary
of
Texas Instruments Incorporated
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, DECEMBER 23, 1997, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration are the Offer to Purchase dated November
25, 1997 (the "Offer to Purchase") and the related Letter of Transmittal (which,
together with any amendments and supplements, collectively constitute the
"Offer") and other materials relating to the Offer by DSL Acquisition
Corporation (the "Purchaser"), a Delaware corporation and a direct wholly owned
subsidiary of Texas Instruments Incorporated, a Delaware corporation ("Parent"),
to purchase all of the outstanding shares of common stock, par value $.20 per
share (the "Shares"), of Amati Communications Corporation, a Delaware
corporation (the "Company"), at $20.00 per Share, net to the seller in cash,
without interest, upon the terms and subject to the conditions set forth in the
Offer. Also enclosed is the letter to stockholders of the Company from the
Chairman of the Board and the President and Chief Executive Officer of the
Company accompanied by the Company's Solicitation/Recommendation Statement on
Schedule 14D-9. This material is being sent to you as the beneficial owner of
Shares held by us for your account but not registered in your name. 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 accompanying this letter is furnished to
you for your information only and cannot be used by you to tender Shares held by
us for your account.
We request instructions as to whether you wish to have us tender any or all
of the Shares held by us for your account, upon the terms and subject to the
conditions set forth in the Offer.
Your attention is directed to the following:
1. The tender price is $20.00 per Share, net to the seller in cash,
without interest, upon the terms and subject to the conditions of the
Offer.
2. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Tuesday, December 23, 1997, unless the Offer is
extended.
3. The Offer is being made pursuant to an Agreement and Plan of
Merger, dated as of November 19, 1997 (the "Merger Agreement"), by and
among the Company, Parent and the Purchaser. The Merger Agreement provides
that, among other things, following the consummation of the Offer and the
satisfaction or waiver of the other conditions set forth in the Merger
Agreement, the Purchaser will be merged with and into the Company (the
"Merger"). Following the Merger, the Company will continue as the surviving
corporation and will be a direct wholly owned subsidiary of Parent. At the
effective time of the Merger, each outstanding Share (other than Shares
owned by Parent, the Purchaser or any other wholly owned subsidiary of
Parent and Shares held by stockholders who have demanded and perfected
<PAGE> 2
dissenter's rights under Delaware law) will be converted into the right to
receive the per Share price paid in the Offer in cash, without interest.
4. The Board of Directors of the Company has unanimously approved the
Merger Agreement, the Offer and the Merger, and has determined that the
Offer and the Merger are fair to and in the best interests of the Company's
stockholders and unanimously recommends that stockholders accept the Offer
and tender their Shares in the Offer.
5. The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn prior to the expiration of the Offer,
that number of Shares which, together with any Shares beneficially owned by
Parent or the Purchaser, represent at least a majority of the Shares
outstanding on a fully diluted basis. Subject to the terms of the Merger
Agreement, the Offer is also subject to other terms and conditions set
forth in the Offer to Purchase. Pursuant to the Merger Agreement, the
Purchaser has agreed to extend the Offer from time to time until February
23, 1998 (as such date may be extended pursuant to the terms of the Merger
Agreement), if at the initial Expiration Date (as defined in the Offer to
Purchase), or any extension thereof, all conditions to the Offer have not
been satisfied or waived. Any or all conditions to the Offer may be waived
by the Purchaser.
6. Any stock transfer taxes applicable to the sale of Shares to the
Purchaser pursuant to the Offer will be paid by the Purchaser, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.
In order to tender Shares pursuant to the Offer, a properly completed and
duly executed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or an Agent's Message (in the case of any book-entry
transfer), and any other documents required by the Letter of Transmittal, should
be sent to the Depositary, and either certificates representing the tendered
Shares should be delivered or such Shares must be delivered to the Depositary
pursuant to the procedures for book-entry transfers, all in accordance with the
instructions set forth in the Letter of Transmittal and the Offer to Purchase.
The Offer 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 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 by Morgan Stanley & Co. Incorporated or one or more registered brokers
or dealers licensed under the laws of such jurisdictions.
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing and returning to us the
instruction form set forth below. Please forward your instructions to us in
ample time to permit us to submit a tender on your behalf prior to the
expiration of the Offer. If you authorize the tender of your Shares, all such
Shares will be tendered unless otherwise specified on the instruction form set
forth below.
<PAGE> 3
Instructions with Respect to
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Amati Communications Corporation
by
DSL Acquisition Corporation
a direct wholly owned subsidiary
of
Texas Instruments Incorporated
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase dated November 25, 1997 and the related Letter of Transmittal,
in connection with the offer by DSL Acquisition Corporation, a Delaware
corporation and a direct wholly owned subsidiary of Texas Instruments
Incorporated, a Delaware corporation, to purchase for cash all outstanding
shares of common stock, par value $.20 per share (the "Shares"), of Amati
Communications Corporation, a Delaware corporation.
This will instruct you to tender the number of Shares indicated below (or
if no number is indicated below, all Shares) that are held by you for the
account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer and the related Letter of Transmittal.
Dated: __________________ , 199 __
NUMBER OF SHARES TO BE TENDERED:
________________ SHARES*
- - --------------------------------------------------------------------------------
Signature(s)
- - --------------------------------------------------------------------------------
Please Print Name(s)
- - --------------------------------------------------------------------------------
Please Print Address(es)
- - --------------------------------------------------------------------------------
Area Code and Telephone Number(s)
- - --------------------------------------------------------------------------------
Tax Identification or Social Security Number(s)
- - ---------------
* I (We) understand that if I (we) sign this instruction form without indicating
a lesser number of Shares in the space above, all Shares held by you for my
(our) account will be tendered.
<PAGE> 1
EXHIBIT 99(a)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER -- Social Security Numbers have nine digits separated by two hyphens:
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 type
of number to give the payer.
==============================================================
<TABLE>
<CAPTION>
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
- - --------------------------------------------------------------
<S> <C> <C>
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of the
account) account or, if combined
funds, any one of the
individuals(1)
3. Husband and wife (joint The actual owner of the
account) account or, if joint
funds, either person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if the
minor is the only
contributor, the
minor(1)
6. Account in the name of guardian The ward, minor, or
or committee for a designated incompetent person(3)
ward, minor, or incompetent
person
7. a. The usual revocable savings The grantor-trustee(1)
trust account (grantor is
also trustee)
b. So-called trust account that The actual owner(1)
is not a legal or valid
trust under State law
8. Sole proprietorship account The owner(4)
</TABLE>
==============================================================
<TABLE>
<CAPTION>
GIVE THE EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
- - --------------------------------------------------------------
<S> <C> <C>
9. A valid trust, estate, or The legal entity (Do not
pension trust furnish the identifying
number of the personal
representative or
trustee unless the legal
entity itself is not
designated in the
account title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization
account
12. Partnership account held in the The partnership
name of the business
13. Association, club, or other The organization
tax-exempt organization
14. A broker or registered nominee The broker or nominee
15. 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) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) You must show your individual name, but you may also enter your business or
"doing business" name. You may use either your Social Security Number or
Employer Identification Number.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER OF 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, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service (the "IRS") and
apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- - - A corporation.
- - - A financial institution.
- - - An organization exempt from tax under section 501(a), or an individual
retirement plan or a custodial account under Section 403(b)(7).
- - - The United States or any agency or instrumentality thereof.
- - - A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- - - A foreign government, a political subdivision of a foreign government, or any
agency or instrumentality thereof.
- - - An international organization or any agency, or instrumentality thereof.
- - - A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- - - A real estate investment trust.
- - - A common trust fund operated by a bank under section 584(a).
- - - An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- - - An entity registered at all times under the Investment Company Act of 1940.
- - - A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- - - Payments to nonresident aliens subject to withholding under section 1441.
- - - Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- - - Payments of patronage dividends where the amount received is not paid in
money.
- - - Payments made by certain foreign organizations.
- - - Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- - - Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
correct taxpayer identification number to the payer.
- - - Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- - - Payments described in section 6049(b)(5) to non-resident aliens.
- - - Payments on tax-free covenant bonds under section 1451.
- - - Payments made by certain foreign organizations.
- - - Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, CHECK "EXEMPT" IN PART II OF THE FORM, SIGN AND DATE THE
FORM AND RETURN IT TO THE PAYER.
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE. -- Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1993, 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) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If you
fail to furnish your taxpayer identification number to a payer, you are subject
to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS -- If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an
under-payment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) 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 a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- 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)(7)
This announcement is neither an offer to purchase nor a solicitation
of an offer to sell Shares. The Offer is made solely by the Offer to Purchase
dated November 25, 1997 and the related Letter of Transmittal, and any
amendments and supplements thereto, and 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 acceptance thereof would not be in compliance
with the laws of such jurisdiction. In those jurisdictions where 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 by
Morgan Stanley & Co. Incorporated or one or more registered brokers or dealers
licensed under the laws of such jurisdictions.
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
AMATI COMMUNICATIONS CORPORATION
at
$20.00 NET PER SHARE
by
DSL ACQUISITION CORPORATION
a direct wholly owned subsidiary of
TEXAS INSTRUMENTS INCORPORATED
DSL Acquisition Corporation (the "Purchaser"), a Delaware corporation
and a direct wholly owned subsidiary of Texas Instruments Incorporated, a
Delaware corporation ("Parent"), is offering to purchase all outstanding shares
of common stock, par value $.20 per share (the "Shares"), of Amati
Communications Corporation, a Delaware corporation (the "Company"), at $20.00
per Share, net to the seller in cash, without interest, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated November 25,
1997 (the "Offer to Purchase") and in the related Letter of Transmittal (which,
together with any amendments or supplements, collectively constitute the
"Offer"). Following the consummation of the Offer, the Purchaser intends to
effect the "Merger" described below.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME,
ON TUESDAY, DECEMBER 23, 1997, UNLESS THE OFFER IS EXTENDED.
<PAGE> 2
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER, THAT NUMBER OF
SHARES WHICH, TOGETHER WITH ANY SHARES BENEFICIALLY OWNED BY PARENT OR THE
PURCHASER, REPRESENT AT LEAST A MAJORITY OF THE SHARES OUTSTANDING ON A FULLY
DILUTED BASIS. THE OFFER IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS SET
FORTH IN THE OFFER TO PURCHASE, INCLUDING, WITHOUT LIMITATION, THE EXPIRATION
OR TERMINATION OF ALL WAITING PERIODS UNDER THE HART-SCOTT-RODINO ANTITRUST
IMPROVEMENTS ACT OF 1976, AS AMENDED.
The Offer is being made pursuant to an Agreement and Plan of Merger,
dated as of November 19, 1997 (the "Merger Agreement"), by and among the
Company, Parent and the Purchaser. The Merger Agreement provides, among other
things, that following the consummation of the Offer and the satisfaction or
waiver of the other conditions set forth in the Merger Agreement, the Purchaser
will be merged with and into the Company (the "Merger"). Following the Merger,
the Company will continue as the surviving corporation and will be a direct
wholly owned subsidiary of Parent. At the effective time of the Merger, each
outstanding Share (other than Shares owned by Parent, the Purchaser or any
other wholly owned subsidiary of Parent and Shares held by stockholders who
have demanded and perfected dissenter's rights under Delaware law) will be
converted automatically into the right to receive the per Share price paid in
the Offer in cash, without interest.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE
MERGER AGREEMENT, THE OFFER AND THE MERGER, HAS DETERMINED THAT THE OFFER AND
THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE STOCKHOLDERS OF THE
COMPANY AND UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND
TENDER THEIR SHARES PURSUANT TO THE OFFER.
For purposes of the Offer, the Purchaser will be deemed to have
accepted for payment, and thereby purchased, tendered Shares if, as and when
the Purchaser gives oral or written notice to the Depositary of its acceptance
of the tenders of such Shares. Payment for Shares accepted for payment pursuant
to the Offer will be made by deposit of the purchase price with ChaseMellon
Shareholder Services, L.L.C. (the "Depositary"), which will act as agent for
tendering stockholders for the purpose of receiving payment from the Purchaser
and transmitting payment to tendering stockholders. In all cases, payment for
Shares purchased pursuant to the Offer will be made only after timely receipt
by the Depositary of (i) certificates evidencing such Shares (or timely
confirmation of a book-entry transfer of such Shares into the Depositary's
account at one of the Book-Entry Transfer Facilities (as defined in the Offer
to Purchase)), (ii) a Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees (or in the
case of a
2
<PAGE> 3
book-entry transfer, an Agent's Message (as defined in the Offer to Purchase)
in lieu of a Letter of Transmittal) and (iii) any other documents required by
the Letter of Transmittal.
The term "Expiration Date" shall mean 12:00 Midnight, New York City
time, on Tuesday, December 23, 1997, unless and until Purchaser, in accordance
with the terms of the Offer and the Merger Agreement, shall have extended the
period of time during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by Purchaser, shall expire.
The Purchaser expressly reserves the right, in its sole discretion, at
any time or from time to time, subject to the terms of the Merger Agreement and
regardless of whether or not any of the events set forth in Section 14 of the
Offer to Purchase shall have occurred or shall have been determined by the
Purchaser to have occurred, (i) to extend the period of time during which the
Offer is open and thereby delay acceptance for payment of, and the payment for,
any Shares, by giving oral or written notice of such extension to the
Depositary and (ii) to amend the Offer in any respect by giving oral or written
notice of such amendment to the Depositary. The rights reserved by the
Purchaser in this paragraph are in addition to the Purchaser's rights to
terminate the Offer pursuant to Section 14 of the Offer to Purchase. Any
extension, amendment or termination will be followed as promptly as practicable
by public announcement thereof, the 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. Without limiting the obligation
of the Purchaser under such rules or the manner in which the Purchaser may
choose to make any public announcement, the Purchaser currently intends to make
announcements by issuing a press release to the Dow Jones News Service.
Tenders of Shares made pursuant to the Offer are irrevocable, except
as other wise provided below. 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, may also be withdrawn at any time after
January 23, 1998. 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 in the Offer to Purchase. Any such
notice of withdrawal must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name of
the registered holder, if different from that of the person who tendered such
Shares. If certificates evidencing Shares have been delivered or otherwise
identified to the Depositary, then prior to the release of such certificates,
the tendering stockholder must also submit the serial numbers shown on the
particular certificates evidencing the Shares to be withdrawn, and the
signature on the notice of withdrawal must be guaranteed by an Eligible
Institution (as defined in Section 3 of the
3
<PAGE> 4
Offer to Purchase), except in the case of Shares tendered for the account of an
Eligible Institution. If Shares have been tendered pursuant to the procedure
for book-entry transfer set forth in Section 3 of the Offer to Purchase, the
notice of withdrawal must specify the name and number of the account at the
applicable Book-Entry Transfer Facility to be credited with the withdrawn
Shares. All questions as to form and validity (including time of receipt) of
notice of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination shall be final and binding on all parties. No
withdrawal of Shares shall be deemed to have been properly made until all
defects and irregularities have been cured or waived. None of the Purchaser,
Parent, the Dealer Manager, the Depositary, the Information Agent or any other
person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failing
to give such notification.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of
the General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
The Company has provided the Purchaser with the Company's stockholder
list and security position listings for the purpose of disseminating the Offer
to holders of Shares. The Offer to Purchase and the related Letter of
Transmittal will be mailed to record holders of Shares 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 RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS
MADE WITH RESPECT TO THE OFFER.
Questions and requests for assistance or for copies of the Offer to
Purchase, the related Letter of Transmittal, the Notice of Guaranteed Delivery
and other Offer materials may be directed to the Information Agent or the
Dealer Manager at their respective telephone number and addresses set forth
below. Holders of Shares may also contact brokers, dealers, commercial banks,
trust companies or other nominees for assistance concerning the Offer. Copies
of the Offer materials will be furnished at the Purchaser's expense. No fees or
commissions will be payable to brokers, dealers or other persons other than the
Dealer Manager and the Information Agent for soliciting tenders of Shares
pursuant to the Offer.
4
<PAGE> 5
The Information Agent for the Offer is:
[Georgeson & Company Inc. logo]
Wall Street Plaza
New York, New York 10005
Bankers and Brokers Call Collect: (212) 440-9800
All Others Call Toll-Free: (800) 223-2064
The Dealer Manager for the Offer is:
[Morgan Stanley Dean Witter logo]
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
(212) 761-6863
5
<PAGE> 1
EXHIBIT (a)(1)
NEWS RELEASE
C-97087
TI TO ACQUIRE AMATI COMMUNICATIONS FOR $395 MILLION
MOVE STRENGTHENS TI POSITION IN EMERGING $6 BILLION MARKET
Dallas (November 19, 1997) -- Texas Instruments (NYSE:TXN, today announced
it has entered into an agreement to acquire Amati Communications Corporation
(NASDAQ:AMTX), further strengthening TI's leadership in providing digital
signal processing solutions for high-speed Internet connectivity. The
agreement provides for an all-cash tender offer for all outstanding shares of
Amati's common stock at $20 per share, or $395 million.
Amati, located in San Jose, California, is a world leader in digital modem
technology, also known as Digital Subscriber Line (xDSL), which lets ordinary
phone lines transmit data as much as 200 times faster than today's typical
analog voiceband modems. Robust implementation of xDSL makes extensive use of
digital signal processing semiconductor technology, an area where TI is the
world leader.
"We are investing in TI's position in the emerging xDSL segment of the
semiconductor market, which we expect to grow rapidly over the next decade to
more than $6 billion," said Rich Templeton, president of TI's semiconductor
group. "Our
-more-
<PAGE> 2
TI to Acquire Amati Communications for $395 million Page 2
vision is to provide digital signal processing solutions across the spectrum of
communications -- from voiceband to broadband."
Digital modems, such as xDSL, will use a digital signal processing
solution at the front and back ends of every connection to the Internet. With
790 million phone lines in use today around the world, that would mean a market
opportunity of more than 1.5 billion sockets, each using a DSP solution.
"The combination of Amati's xDSL technology and TI's digital signal
processing solutions will enable faster, more reliable access to the Internet
and the ability to use a single, existing phone line to simultaneously access
voice, data and video," Templeton said.
For example, home computer users could use the phone lines already in
their homes to log onto network services, send a fax and play an interactive
game on the Internet -- all at the same time. Software and electronic content
companies could leverage the higher bandwidth to distribute their products over
the Internet instead of delivering floppy disks and CD-ROMs through traditional
retail channels.
"The combination of both companies' leadership technologies enables the
large scale deployment of digital modems, and provides a worldwide reach for
the experience and accomplishments of Amati's employees," said Jim Steenbergen,
president and CEO of Amati Communications.
This acquisition broadens the cooperative relationship that TI and Amati
have had during the last year to build an xDSL chipset using TI's TMS320C6x
core DSP technology and precision mixed-signal components, and Amati's leading
discrete multitone (DMT) technology software. This chipset will be the
industry's first fully software-programmable xDSL solution, which will mean that
customers can upgrade their modems through a software download as new standards
become available. Customer samples of this chipset are expected to be
available in the first quarter of 1998.
-more-
<PAGE> 3
TI to Acquire Amati Communications for $395 million Page 3
TI will, subject to satisfaction of certain conditions, commence the
all-cash tender offer on November 25, 1997, and the tender offer is scheduled
to expire at midnight EST, December 23, 1997, unless extended. TI intends to
acquire the Amati common stock through a wholly-owned subsidiary of TI. Any
shares not purchased in the tender offer will be acquired for the tender offer
price in cash in a second-step merger.
The boards of directors of both companies have unanimously approved the
acquisition, and the Amati board of directors has recommended that Amati's
stockholders accept TI's all-cash tender offer. Consummation of the
acquisition is contingent upon the tender of a majority of Amati's outstanding
common stock on a fully-diluted basis, the expiration or termination of the
applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act and other customary requirements.
Concurrently, TI announced that TI and Westell Technologies, Inc. have
entered into a strategic technology development program that will accelerate
the use of TI's DSP-based xDSL technologies into Westell's DSL systems. These
solutions will incorporate Amati's Discrete Multi-Tone software technology.
This arrangement is contingent on the consummation of TI's acquisition of
Amati.
TI expects to take a one-time charge in the fourth quarter for in-process
research and development. Amati will become a wholly-owned subsidiary of TI
reporting into the Semiconductor Group and will continue to operate from its
facilities in San Jose. Amati had fiscal year sales of $13.2 million for 1997
and has approximately 120 employees.
Amati terminated its merger agreement with Westell Technologies to enter
into the definitive agreement with TI for the acquisition of Amati.
Termination of the Westell merger agreement required the payment of a break-up
fee of $14.8 million to Westell.
TI has made a number of strategic investments in recent months in support
of digital signal processing solutions. Acquisitions have included SSi, Tartan
and Intersect Technologies, which brought TI additional expertise in the areas
of hard-disk drives/mass
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<PAGE> 4
TI to Acquire Amati Communications for $395 million Page 4
storage and DSP software tools. Recently, TI announced a $100 million venture
fund to seed new markets related to digital signal processing, and $25 million
for additional university research in DSP. On September 9, TI formally opened
a $150 million research and development center in Dallas that will serve as the
technology base for the ongoing creation of leading-edge digital signal
processing solutions.
# # #
NOTE TO EDITORS: Texas Instruments Incorporated is a global semiconductor
company and the world's leading designer and supplier of digital signal
processing solutions, the engines driving the digitization of electronics.
Headquartered in Dallas, Texas, the company's businesses also include
calculators, productivity products, controls and sensors, metallurgical
materials and digital light processing technologies. The company has
manufacturing or sales operations in more than 25 countries.
Texas Instruments is traded on the New York Stock Exchange under the symbol
TXN. More information is located on the World Wide Web at http://www.ti.com
Amati is a pioneer and leading developer of advanced transmission equipment
utilizing DMT technology for the Asymmetric Digital Subscriber Line (ADSL),
Very High-Speed Digital Subscriber Line (VDSL) and xDSL markets. Amati is the
holder of the ADSL/DMT patents and has licensed the technology to companies
such as Alcatel, Analog Devices, Inc., Nortel, Pairgain and Motorola. The
ADSL/DMT technology, recently selected by BC TEL, Canada for a proposed rollout
of commercial ADSL services, is an effective means of transmitting high-speed
data over existing copper phone lines, making internet access, interactive
services, broadcast quality video and video-on-demand realizable to many
subscribers.
More information is located on the World Wide Web at http://www.amati.com
<PAGE> 1
EXHIBIT (c)(1)
AGREEMENT AND PLAN OF MERGER
by and among
TEXAS INSTRUMENTS INCORPORATED
DSL ACQUISITION CORPORATION
and
AMATI COMMUNICATIONS CORPORATION
November 19, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
ARTICLE I
THE OFFER AND MERGER
Section 1.1 The Offer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Company Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.3 Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.4 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 1.5 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 1.6 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 1.7 Directors and Officers of the Surviving Corporation . . . . . . . . . . . . . . . . . . . . 5
Section 1.8 Stockholders' Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 1.9 Merger Without Meeting of Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.2 Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.3 Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.4 Company Option Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.5 Company Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Organization; Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.3 Authorization; Validity of Agreement; Company Action . . . . . . . . . . . . . . . . . . . 13
Section 3.4 Consents and Approvals; No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.5 SEC Reports and Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.6 No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.7 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.8 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.9 Employee Benefit Plans; ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.10 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.11 Permits; No Default; Compliance with Applicable Laws . . . . . . . . . . . . . . . . . . . 19
Section 3.12 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.13 Certain Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3.14 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
(i)
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 3.15 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 3.16 Employee and Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 3.17 Information in Offer Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 3.18 Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 3.19 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 3.20 Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
AND THE PURCHASER
Section 4.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.2 Authorization; Validity of Agreement; Necessary Action . . . . . . . . . . . . . . . . . . 25
Section 4.3 Consents and Approvals; No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.4 SEC Reports and Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.5 Information in Offer Documents; Proxy Statement . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.6 Sufficient Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 4.7 Share Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 4.8 Purchaser's Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.2 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 5.3 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 5.4 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 5.5 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 5.6 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 5.7 Approvals and Consents; Cooperation; Notification . . . . . . . . . . . . . . . . . . . . . 31
Section 5.8 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.10 Shareholder Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.11 Loan and Security Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger . . . . . . . . . . . . . . . . 33
Section 6.2 Conditions to the Obligations of the Company to Effect the Merger . . . . . . . . . . . . . 33
Section 6.3 Conditions to the Obligations of Parent and the Purchaser to Effect the Merger . . . . . . 33
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<S> <C> <C>
Section 6.4 Exception . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE VII
TERMINATION
Section 7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 7.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Amendment and Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 8.2 Nonsurvival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . 36
Section 8.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 8.4 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 8.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 8.6 Entire Agreement; Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 8.7 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 8.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 8.9 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 8.10 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 8.11 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 8.12 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 8.13 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 8.14 Disclosure Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ANNEX A
CONDITIONS TO THE OFFER
</TABLE>
(iii)
<PAGE> 5
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of November 19, 1997 (this
"Agreement"), by and among TEXAS INSTRUMENTS INCORPORATED, a Delaware
corporation ("Parent"), DSL ACQUISITION CORPORATION, a Delaware corporation and
a wholly-owned subsidiary of Parent (the "Purchaser"), and AMATI COMMUNICATIONS
CORPORATION, a Delaware corporation (the "Company").
WHEREAS, the Boards of Directors of Parent, the Purchaser and the
Company have approved, and deem it advisable and in the best interests of their
respective stockholders to consummate, the acquisition of the Company by Parent
and the Purchaser upon the terms and subject to the conditions set forth
herein;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
THE OFFER AND MERGER
Section 1.1 The Offer. (a) As promptly as practicable (but in
no event later than five business days from the public announcement of the
execution hereof), the Purchaser shall commence (within the meaning of Rule
14d-2 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), an offer (the "Offer") to purchase for cash any and all of the issued
and outstanding shares of Common Stock, par value $0.20 per share (referred to
herein as either the "Shares" or "Company Common Stock"), of the Company at a
price of $20.00 per Share, net to the seller in cash (such price, or such
higher price per Share as may be paid in the Offer, being referred to herein as
the "Offer Price"). The Purchaser shall, on the terms and subject to the prior
satisfaction or waiver of the conditions of the Offer, accept for payment and
pay for Shares tendered as soon as it is legally permitted to do so under
applicable law; provided that, if the number of Shares that have been
physically tendered and not withdrawn are more than 80% but less than 90% of
the outstanding Shares determined on a fully diluted basis, the Purchaser may
extend the Offer for up to five business days and thereafter on a day-to-day
basis for up to an additional five business days from the date that all
conditions to the Offer shall first have been satisfied or waived. The
obligations of the Purchaser to accept for payment and to pay for any and all
Shares validly tendered on or prior to the expiration of the Offer and not
withdrawn shall be subject only to there being validly tendered and not
withdrawn prior to the expiration of the Offer, that number of Shares which,
together with any Shares beneficially owned by Parent or the Purchaser,
represent at least a
<PAGE> 6
majority of the Shares outstanding on a fully diluted basis (the "Minimum
Condition") and the other conditions set forth in Annex A hereto. The Offer
shall be made by means of an offer to purchase (the "Offer to Purchase")
containing the terms set forth in this Agreement, the Minimum Condition and the
other conditions set forth in Annex A hereto. The Purchaser shall not amend or
waive the Minimum Condition and shall not decrease the Offer Price or decrease
the number of Shares sought, or amend any other term or condition of the Offer
in any manner adverse to the holders of the Shares or extend the expiration
date of the Offer without the prior written consent of the Company (such
consent to be authorized by the Board of Directors of the Company or a duly
authorized committee thereof). Notwithstanding the foregoing, the Purchaser
shall, and Parent agrees to cause the Purchaser to, extend the Offer from time
to time until February 23, 1998 if, and to the extent that, at the initial
expiration date of the Offer, or any extension thereof, all conditions to the
Offer have not been satisfied or waived. In addition, the Offer Price may be
increased and the Offer may be extended to the extent required by law in
connection with such increase, in each case without the consent of the Company.
(b) As soon as practicable on the date the Offer is
commenced, Parent and the Purchaser shall file with the United States
Securities and Exchange Commission (the "SEC") a Tender Offer Statement on
Schedule 14D-1 with respect to the Offer (together with all amendments and
supplements thereto and including the exhibits thereto, the "Schedule 14D-1").
The Schedule 14D-1 will include, as exhibits, the Offer to Purchase and a form
of letter of transmittal and summary advertisement (collectively, together with
any amendments and supplements thereto, the "Offer Documents"). The Offer
Documents will comply in all material respects with the provisions of
applicable federal securities laws and, on the date filed with the SEC and on
the date first published, sent or given to the Company's stockholders, shall
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that no representation is made by Parent or the
Purchaser with respect to information supplied by the Company in writing for
inclusion in the Offer Documents. Each of Parent and the Purchaser further
agrees to take all steps necessary to cause the Offer Documents to be filed
with the SEC and to be disseminated to holders of Shares, in each case as and
to the extent required by applicable federal securities laws. Each of Parent
and the Purchaser, on the one hand, and the Company, on the other hand, agrees
promptly to correct any information provided by it for use in the Offer
Documents if and to the extent that it shall have become false and misleading
in any material respect and the Purchaser further agrees to take all steps
necessary to cause the Offer Documents as so corrected to be filed with the SEC
and to be disseminated to holders of Shares, in each case as and to the extent
required by applicable federal securities laws. The Company and its counsel
shall be given a reasonable opportunity to review the initial Schedule 14D-1
before it is filed with the SEC. In addition, Parent and the Purchaser agree
to provide the Company and its counsel in writing with any comments or other
communications that Parent, the Purchaser or their counsel may receive from
time to time from the SEC or its staff
2
<PAGE> 7
with respect to the Offer Documents promptly after the receipt of such comments
or other communications.
Section 1.2 Company Actions.
(a) The Company hereby approves of and consents to the
Offer and represents that the Board of Directors, at a meeting duly called and
held, has (i) approved this Agreement and the transactions contemplated hereby,
including the Offer and the Merger (as defined in Section 1.4), which approvals
constitute approval of this Agreement, the Offer and the Merger for purposes of
Section 203 of the General Corporation Law of the State of Delaware (the
"DGCL"), and (ii) resolved to recommend that the stockholders of the Company
accept the Offer, tender their Shares thereunder to the Purchaser and approve
and adopt this Agreement and the Merger, which recommendation shall not be
withdrawn, modified or amended except as permitted by Section 5.4(b) hereof.
(b) The Company shall file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto and including the exhibits thereto, the
"Schedule 14D-9") which shall, subject to the fiduciary duties of the Company's
directors under applicable law and to the provisions of this Agreement, contain
the recommendation referred to in clause (ii) of Section 1.2(a) hereof. The
Company will use its reasonable best efforts to cause the Schedule 14D-9 to be
filed on the same date that the Schedule 14D-1 is filed; provided, however,
that in any event the Schedule 14D-9 will be filed no later than ten business
days following the commencement of the Offer. The Schedule 14D-9 will comply
in all material respects with the provisions of applicable federal securities
laws and, on the date filed with the SEC and on the date first published, sent
or given to the Company's shareholders, shall not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation is made by the Company with respect to information supplied by
Parent or the Purchaser in writing for inclusion in the Offer Documents. The
Company further agrees to take all steps necessary to cause the Schedule 14D-9
to be filed with the SEC and to be disseminated to holders of Shares, in each
case as and to the extent required by applicable federal securities laws. Each
of the Company, on the one hand, and Parent and the Purchaser, on the other
hand, agrees promptly to correct any information provided by it for use in the
Schedule 14D-9 if and to the extent that it shall have become false and
misleading in any material respect and the Company further agrees to take all
steps necessary to cause the Schedule 14D-9 as so corrected to be filed with
the SEC and to be disseminated to holders of the Shares, in each case as and to
the extent required by applicable federal securities laws. Parent and its
counsel shall be given a reasonable opportunity to review the initial Schedule
14D-9 before it is filed with the SEC. In addition, the Company agrees to
provide Parent, the Purchaser and their counsel in writing with any comments or
other communications that the Company or its counsel may receive from time to
time from the SEC or its staff with respect to the Schedule 14D-9 promptly
after the receipt of such comments or other communications.
3
<PAGE> 8
(c) In connection with the Offer, the Company will
promptly furnish or cause to be furnished to the Purchaser mailing labels,
security position listings and any available listing or computer file
containing the names and addresses of the record holders of the Shares as of a
recent date (which shall in no event be more than ten days prior to the date
hereof), and shall furnish the Purchaser with such additional information
(including updated lists of holders of Shares and their addresses, mailing
labels and lists of security positions) and such other assistance as the
Purchaser or its agents may reasonably request in communicating the Offer to
the record and beneficial shareholders of the Company. Except for such steps
as are necessary to disseminate the Offer Documents, Parent and the Purchaser
shall hold in confidence the information contained in any of such labels and
lists and the additional information referred to in the preceding sentence,
will use such information only in connection with the Offer, and, if this
Agreement is terminated, will upon request of the Company deliver or cause to
be delivered to the Company all copies of such information then in its
possession or the possession of its agents or representatives.
Section 1.3 Directors.
(a) Promptly upon the purchase of and payment for Shares
by Parent or any of its subsidiaries which represent at least a majority of the
outstanding shares of Company Common Stock (on a fully diluted basis), Parent
shall be entitled to designate such number of directors, rounded up to the next
whole number, on the Board of Directors of the Company as is equal to the
product of the total number of directors on such Board (giving effect to the
directors designated by Parent pursuant to this sentence) multiplied by the
percentage that the aggregate number of Shares beneficially owned by the
Purchaser, Parent and any of their affiliates (including Shares accepted for
payment) bears to the total number of shares of Company Common Stock then
outstanding. The Company shall, upon request of the Purchaser, on the date of
such request, either increase the size of its Board of Directors or secure the
resignations of such number of its incumbent directors as is necessary to
enable Parent's designees to be so elected to the Company's Board, and shall
cause Parent's designees to be so elected as either may be necessary to comply
with the preceding sentence. Notwithstanding the foregoing, until the
Effective Time (as defined in Section 1.5 hereof), the Company shall retain as
members of its Board of Directors at least two directors who are directors of
the Company on the date hereof; provided, that subsequent to the purchase of
and payment for Shares pursuant to the Offer, Parent shall always have its
designees represent at least a majority of the entire Board of Directors. The
Company's obligations under this Section 1.3(a) shall be subject to Section
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. The Company
shall promptly take all actions required pursuant to such Section 14(f) and
Rule 14f-1 in order to fulfill its obligations under this Section 1.3(a),
including mailing to stockholders the information required by such Section
14(f) and Rule 14f-1 as is necessary to enable Parent's designees to be elected
to the Company's Board of Directors. Parent or the Purchaser will supply the
Company any information with respect to either of them and their nominees,
officers, directors and affiliates required by such Section 14(f) and Rule
14f-1.
4
<PAGE> 9
(b) From and after the time, if any, that Parent's
designees constitute a majority of the Company's Board of Directors, any
amendment of this Agreement, any termination of this Agreement by the Company,
any extension of time for performance of any of the obligations of Parent or
the Purchaser hereunder, any waiver of any condition or any of the Company's
rights hereunder or other action by the Company in connection with the rights
of the Company hereunder may be effected only by the action of a majority of
the directors of the Company then in office who were directors of the Company
on the date hereof, which action shall be deemed to constitute the action of
the full Board of Directors; provided, that if there shall be no such
directors, such actions may be effected by unanimous vote of the entire Board
of Directors of the Company.
Section 1.4 The Merger. Subject to the terms and conditions of
this Agreement, at the Effective Time (as defined in Section 1.5 hereof), the
Company and the Purchaser shall consummate a merger (the "Merger") pursuant to
which (a) the Purchaser shall be merged with and into the Company and the
separate corporate existence of the Purchaser shall thereupon cease, (b) the
Company shall be the successor or surviving corporation in the Merger (the
"Surviving Corporation") and shall continue to be organized under the laws of
the State of Delaware, and (c) the separate corporate existence of the Company
with all its rights, privileges, immunities, powers and franchises shall
continue unaffected by the Merger. Pursuant to the Merger, (x) the Certificate
of Incorporation of the Company, as in effect immediately prior to the
Effective Time, shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter amended as provided by law and such Certificate of
Incorporation, and (y) the By-laws of the Company, as in effect immediately
prior to the Effective Time, shall be the By-laws of the Surviving Corporation
until thereafter amended as provided by law, the Certificate of Incorporation
and such Bylaws. The Merger shall have the effects set forth in the DGCL.
Section 1.5 Effective Time. On the date of the Closing (as
defined in Section 1.6 hereof) (or on such other date as the parties may
agree), the parties shall file a certificate of merger or other appropriate
document (in any such case, the "Certificate of Merger") executed in accordance
with the relevant provisions of the DGCL, and shall make all other filings,
recordings and publications required by the DGCL with respect to the Merger.
The Merger shall become effective on the date specified in the Certificate of
Merger (the time the Merger becomes effective is hereinafter referred to as the
"Effective Time").
Section 1.6 Closing. The closing of the Merger (the "Closing")
will take place at 11:00 a.m. on a date to be specified by the parties, which
shall be no later than the second business day after satisfaction or waiver of
all of the conditions set forth in Article VI hereof (the "Closing Date"), at
the offices of Weil, Gotshal & Manges LLP, 100 Crescent Court, Suite 1300,
Dallas, Texas 75201, unless another date or place is agreed to in writing by
the parties hereto.
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<PAGE> 10
Section 1.7 Directors and Officers of the Surviving Corporation.
The directors of the Purchaser immediately prior to the Effective Time shall,
from and after the Effective Time, be the directors of the Surviving
Corporation until their successors shall have been duly elected or appointed or
qualified or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's Certificate of Incorporation and By-laws. The
officers of the Company immediately prior to the Effective Time shall, from and
after the Effective Time, be the officers of the Surviving Corporation until
their successors shall have been duly elected or appointed or qualified or
until their earlier death, resignation or removal in accordance with the
Surviving Corporation's Certificate of Incorporation and By-laws.
Section 1.8 Stockholders' Meeting.
(a) If the Purchaser owns less than 90% of the Shares
following the purchase of Shares by the Purchaser pursuant to the Offer, the
Company, acting through its Board of Directors, shall, in accordance with
applicable law:
(i) duly call, give notice of, convene and hold a
special meeting of its stockholders (the "Special Meeting") as
soon as practicable following the acceptance for payment and
purchase of Shares by the Purchaser pursuant to the Offer for
the purpose of considering and taking action upon this
Agreement;
(ii) prepare and file with the SEC a preliminary
proxy or information statement relating to the Merger and this
Agreement, obtain and furnish the information required to be
included by the SEC in the Proxy Statement (as hereinafter
defined) and, after consultation with Parent, respond promptly
to any comments made by the SEC with respect to the
preliminary proxy or information statement and cause a
definitive proxy or information statement (the "Proxy
Statement") to be mailed to its stockholders and use its best
efforts to obtain the necessary adoption of this Agreement by
its stockholders; and
(iii) subject to the fiduciary obligations of the
Board under applicable law as advised by the Company's outside
counsel, include in the Proxy Statement the recommendation of
the Board that stockholders of the Company vote in favor of
the adoption of this Agreement.
(b) Parent agrees that it will provide the Company with
the information concerning Parent and the Purchaser required to be included in
the Proxy Statement and will vote, or cause to be voted, all of the Shares then
owned by Parent, the Purchaser or any of its other subsidiaries and affiliates
in favor of the approval of the Merger and the adoption of this Agreement.
Section 1.9 Merger Without Meeting of Stockholders.
Notwithstanding Section 1.8 hereof, in the event that the Purchaser shall
acquire at least 90% of the outstanding shares of
6
<PAGE> 11
each class of capital stock of the Company, pursuant to the Offer or otherwise,
the parties hereto agree to take all necessary and appropriate action to cause
the Merger to become effective as soon as practicable after such acquisition,
without a meeting of stockholders of the Company.
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock. As of the Effective
Time, by virtue of the Merger and without any action on the part of the holders
of any shares of Company Common Stock or common stock of the Purchaser (the
"Purchaser Common Stock"):
(a) Each issued and outstanding share of the Purchaser
Common Stock shall be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation.
(b) Any shares of Company Common Stock owned by Parent,
the Purchaser or any other wholly owned Subsidiary (as defined in Section 3.1
hereof) of Parent shall be cancelled and retired and shall cease to exist and
no consideration shall be delivered in exchange therefor.
(c) Each issued and outstanding share of Company Common
Stock (other than Shares to be cancelled in accordance with Section 2.1(b)
hereof and any Dissenting Shares (if applicable and as defined in Section 2.3
hereof)), shall be converted into the right to receive the Offer Price, payable
to the holder thereof, without interest (the "Merger Consideration"), upon
surrender of the certificate formerly representing such share of Company Common
Stock in the manner provided in Section 2.2 hereof. All such shares of Company
Common Stock, when so converted, shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each
holder of a certificate representing any such shares shall cease to have any
rights with respect thereto, except the right to receive the Merger
Consideration therefor upon the surrender of such certificate in accordance
with Section 2.2 hereof, without interest, or to perfect any rights of
appraisal as a holder of Dissenting Shares (as hereinafter defined) that such
holder may have pursuant to Section 262 of the DGCL.
Section 2.2 Exchange of Certificates.
(a) Parent shall designate a bank or trust company, or an
affiliate thereof, of nationally recognized standing to act as agent for the
holders of shares of Company Common Stock in connection with the Merger (the
"Paying Agent") to receive the funds to which holders of shares of Company
Common Stock shall become entitled pursuant to Section 2.1(c) hereof. Prior to
the Effective Time, Parent shall take all steps necessary to deposit or cause
to
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<PAGE> 12
be deposited with the Paying Agent such funds for timely payment hereunder.
Such funds shall be invested by the Paying Agent as directed by Parent or the
Surviving Corporation.
(b) As soon as reasonably practicable after the Effective
Time but in no event more than three business days thereafter, the Paying Agent
shall mail to each holder of record of a certificate or certificates, which
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock (the "Certificates"), whose shares were converted pursuant
to Section 2.1 hereto into the right to receive the Merger Consideration (i) a
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of
the Certificates to the Paying Agent and shall be in such form and have such
other provisions as Parent and the Company may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for payment of the Merger Consideration. Upon surrender of a Certificate for
cancellation to the Paying Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly executed,
the holder of such Certificate shall be entitled to receive in exchange
therefor the Merger Consideration for each share of Company Common Stock
formerly represented by such Certificate and the Certificate so surrendered
shall forthwith be cancelled. If payment of the Merger Consideration is to be
made to a person other than the person in whose name the surrendered
Certificate is registered, it shall be a condition of payment that the
Certificate so surrendered shall be properly endorsed or shall be otherwise in
proper form for transfer and that the person requesting such payment shall have
paid any transfer and other taxes required by reason of the payment of the
Merger Consideration to a person other than the registered holder of the
Certificate surrendered or shall have established to the satisfaction of the
Surviving Corporation that such tax either has been paid or is not applicable.
Until surrendered as contemplated by this Section 2.2, each Certificate shall
be deemed at any time after the Effective Time to represent only the right to
receive the Merger Consideration in cash as contemplated by this Section 2.2.
(c) At the Effective Time, the stock transfer books of
the Company shall be closed and thereafter there shall be no further
registration of transfers of shares of Company Common Stock on the records of
the Company. From and after the Effective Time, the holders of Certificates
evidencing ownership of shares of Company Common Stock outstanding immediately
prior to the Effective Time shall cease to have any rights with respect to such
Shares, except as otherwise provided for herein or by applicable law. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be cancelled and exchanged as provided
in this Article II.
(d) At any time following one year after the Effective
Time, the Surviving Corporation shall be entitled to require the Paying Agent
to deliver to it any funds (including any interest received with respect
thereto) which had been made available to the Paying Agent and which have not
been disbursed to holders of Certificates, and thereafter such holders shall be
entitled to look to the Surviving Corporation (subject to abandoned property,
escheat or other similar laws) only as general creditors thereof with respect
to the Merger Consideration
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<PAGE> 13
payable upon due surrender of their Certificates, without any interest thereon.
Notwithstanding the foregoing, neither the Surviving Corporation nor the Paying
Agent shall be liable to any holder of a Certificate for Merger Consideration
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
Section 2.3 Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, Shares outstanding immediately prior to the
Effective Time and held by a holder who has not voted in favor of the Merger or
consented thereto in writing and who has demanded appraisal for such Shares in
accordance with the DGCL ("Dissenting Shares") shall not be converted into a
right to receive the Merger Consideration, unless and until such holder fails
to perfect or withdraws or otherwise loses his or her right to appraisal. A
holder of Dissenting Shares shall be entitled to receive payment of the
appraised value of such Shares held by him or her in accordance with the
provisions of Section 262 of the DGCL, unless, after the Effective Time, such
holder fails to perfect or withdraws or loses his or her right to appraisal, in
which case such Shares shall be treated as if they had been converted as of the
Effective Time into a right to receive the Merger Consideration, without
interest thereon.
Section 2.4 Company Option Plans.
(a) The options (the "Options") to purchase shares of
Company Common Stock outstanding under the Company's 1981 Stock Option Plan,
1981 Supplemental Stock Option Plan, 1990 Stock Option Plan, Old Amati 1992
Stock Option Plan, 1990 Non-Employee Directors' Stock Option Plan and 1996
Stock Option Plan (the "Option Plans") shall, pursuant to the terms of such
Option Plans, not automatically vest as a consequence of the transactions
contemplated hereby nor shall the Board of Directors of the Company exercise
any discretionary authority to vest such Options in connection with the
transactions contemplated hereby; provided, that notwithstanding the foregoing,
Options (the "Director Options") granted to non-employee directors of the
Company pursuant to any of the Option Plans shall be treated in the manner
contemplated by Section 2.4(d).
(b) The holders of outstanding Options (other than
Director Options) that are vested as of the Effective Time shall be given the
opportunity to make an irrevocable election, on a grant by grant basis to be
effective immediately following the Effective Time, to receive in exchange for
the cancellation of each such vested Option either:
(i) cash in the amount equal to the product of (A) the
number of shares of Company Common Stock subject to
such Option and (B) the excess of (1) the Merger
Consideration over (2) the per share exercise price
of such Option; or
(ii) a substitute option to purchase Parent common stock
(a "Substitute Option") on the following terms:
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<PAGE> 14
(A) the Substitute Option will be exercisable for
a number of shares of Parent common stock
equal to (1) the number of shares of Company
Common Stock subject to the Option multiplied
by (2) the Option Ratio (as defined below),
rounded down to the next whole number of
shares;
(B) the exercise price for the Substitute Option
shall equal the exercise price for the shares
of Company Common Stock otherwise purchasable
pursuant to such Option divided by the Option
Ratio, rounded to the nearest hundredth of a
cent; and
(C) shall otherwise be subject to substantially
the same terms and conditions as applicable
to the Option.
For purposes of this Section 2.4, "Option Ratio"
shall mean the Offer Price divided by the average
closing price per share of Parent common stock on the
New York Stock Exchange for the five consecutive
trading days ending immediately prior to the Closing
Date.
(c) The holders of outstanding Options (other than
Director Options) that are not vested as of the Effective Time shall, at the
Effective Time, receive in substitution and cancellation for each such
nonvested Option a Substitute Option, which Substitute Option shall be subject
to the same vesting schedule as applicable to the Option.
(d) Each of the outstanding Director Options granted
pursuant to (i) the 1990 Non-Employee Directors Stock Option Plan shall, in
accordance with the terms thereof, be vested immediately prior to the Effective
Time and (ii) any other Option Plan shall, in accordance with the discretionary
authority granted to the Board of Directors of the Company under the applicable
Option Plan, be vested immediately prior to the Effective Time by action of the
Board of Directors of the Company. Each outstanding Director Option shall, at
the Effective Time, be converted into the right to receive in cash an amount
equal to the product of (i) the number of shares of Company Common Stock
subject to such Director Option and (ii) the excess of (A) the Merger
Consideration over (B) the per share exercise price of such Director Option.
(e) As soon as practicable after the Effective Time and
in no event more than three (3) business days thereafter, to the extent
necessary to provide for registration of shares of Parent common stock subject
to such Substitute Options, Parent shall file a registration statement on Form
S-8 (or any successor form) with respect to such shares of Parent common stock
and shall use its reasonable best efforts to maintain such registration
statement, including the current status of any related prospectus or
prospectuses, for so long as the Substitute Options remain outstanding.
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<PAGE> 15
Section 2.5 Company Warrants. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holders thereof,
each unexpired and unexercised warrant ("Warrant") to purchase shares of
Company Common Stock shall be converted into the right to receive an amount in
cash equal to the product of (a) the number of shares of Company Common Stock
subject to such Warrant and (b) the excess of the (i) Merger Consideration over
(ii) the per share exercise price of such Warrant, upon surrender of the
certificate formerly representing such Warrant; provided, that any Warrant as
to which the per share exercise price is equal to or greater than the Merger
Consideration shall be cancelled and terminated as of the Effective Time
without payment of any consideration therefor.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as otherwise disclosed to Parent and Purchaser in a letter
delivered to it at or prior to the execution hereof (the "Company Disclosure
Letter"), the Company represents and warrants to Parent and Purchaser as
follows:
Section 3.1 Organization; Subsidiaries. (a) Each of the Company
and its Subsidiaries (as hereinafter defined) is a corporation or other entity
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted, except where failure to be
in good standing would not have a Company Material Adverse Effect (as
hereinafter defined). Each of the Company and its Subsidiaries is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction in which the nature of the business conducted by it makes
such qualification necessary, except where the failure to be so duly qualified
and in good standing would not have a Company Material Adverse Effect. As used
in this Agreement, the word "Subsidiary" means, with respect to any party, any
corporation, partnership or other entity or organization, whether incorporated
or unincorporated, of which (i) such party or any other Subsidiary of such
party is a general partner (excluding such partnerships where such party or any
Subsidiary of such party do not have a majority of the voting interest in such
partnership) or (ii) at least a majority of the securities or other interests
having by their terms ordinary voting power to elect a majority of the Board of
Directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or controlled
by such party or by any one or more of its Subsidiaries, or by such party and
one or more of its Subsidiaries. As used in this Agreement, "Company Material
Adverse Effect" means any change in or effect on the business of the Company
and its Subsidiaries that is materially adverse to the business, financial
condition, assets or results of operations of the Company and its Subsidiaries
taken as a whole except for any events, changes or effects substantially
resulting from (i) any material and adverse change in the financial markets;
(ii) any political, economic or financial conditions affecting the
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<PAGE> 16
industry or business generally; or (iii) the announcement of the transactions
contemplated by this Agreement. Section 3.1 of the Company Disclosure Letter
sets forth a complete and correct list of all of the Company's Subsidiaries and
their respective jurisdictions of incorporation or organization. Except as set
forth in Section 3.1 of the Company Disclosure Letter, neither the Company nor
any Company Subsidiary holds any interest in a partnership or joint venture of
any kind.
(b) The Company has heretofore delivered to Parent a
complete and correct copy of each of its Certificate of Incorporation and
By-Laws, as currently in effect, and has heretofore made available to Parent a
complete and correct copy of the charter and by-laws of each of its
Subsidiaries, as currently in effect. In all material respects, the minute
books of the Company and the Company Subsidiaries through November 1, 1997
contain accurate records of all meetings and accurately reflect all other
actions taken by the stockholders, the Boards of Directors and all committees
of the Boards of Directors of the Company and the Company Subsidiaries since
July 30, 1995. Complete and accurate copies of all such minute books (except
for the portions relating to deliberations regarding the Merger or the proposed
acquisition of the Company by Westell Technologies, Inc. ("Westell"), which
were redacted, or otherwise redacted on the basis of statutory or common law
privilege), and of the stock register of the Company and each Company
Subsidiary have been made available by the Company to Parent.
Section 3.2 Capitalization. (a) As of the date hereof, the
authorized capital stock of the Company consists of 45,000,000 shares of
Company Common Stock and 5,000 shares of preferred stock, par value $100.00 per
share (the "Company Preferred Stock"). As of October 31, 1997, (i) 19,768,978
shares of Company Common Stock were issued and outstanding, (ii) 4,885,599
shares of Company Common Stock were reserved for issuance upon exercise of
Options granted pursuant to the Option Plans, (iii) 630,476 shares of the
Company Common Stock were reserved for issuance upon exercise of the Warrants,
(iv) no shares of Company Common Stock were issued and held in the treasury of
the Company and (v) there were no shares of Company Preferred Stock issued and
outstanding. All the outstanding shares of the Company's capital stock are
duly authorized, validly issued, fully paid, non-assessable and free of
preemptive rights. Since October 31, 1997, no additional shares of capital
stock or securities convertible into or exchangeable for such capital stock,
have been issued other than any shares of Company Common Stock issued upon
exercise of the Warrants or Options granted under the Option Plans, and no
shares of Company Preferred Stock have been issued. Section 3.2 of the Company
Disclosure Letter identifies (i) the holders of each of the Options, (ii) the
number of Options vested for each holder, (iii) the Option Plan under which
each Option was issued, and (iv) the exercise price of each of the Options.
All shares of Company Common Stock subject to issuance as aforesaid, upon
issuance prior to the Effective Time on the terms and conditions specified in
the instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid, nonassessable and free of preemptive rights.
Except as provided in Section 2.4(d), no vesting of the Options or the Warrants
shall accelerate by virtue of the transactions contemplated by this Agreement
and the Board of Directors of the
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Company has not accelerated any of the Options or Warrants. None of the
Options are "incentive stock options" within the meaning of Section 422 of the
Code. Except for shares of Company Common Stock issuable upon exercise of the
Options or the Warrants described in Section 3.2 of the Company Disclosure
Letter or as otherwise set forth in Section 3.2 of the Company Disclosure
Letter, there are no (i) options, warrants, calls, subscriptions or other
rights, convertible securities, agreements or commitments of any character
obligating the Company or any Company Subsidiary to issue, transfer or sell any
shares of capital stock or other equity interest in, the Company or any Company
Subsidiary or securities convertible into or exchangeable for such shares or
equity interests, (ii) outstanding contractual obligations or commitments of
any character of the Company or any Company Subsidiary to repurchase, redeem or
otherwise acquire any capital stock of the Company or any Company Subsidiary,
(iii) outstanding contractual obligations or commitments of any character
restricting the transfer of, or requiring the registration for sale of, any
capital stock of the Company or any Company Subsidiary, (iv) outstanding
contractual obligations or commitments of any character granting any preemptive
or antidilutive right with respect to, any capital stock of the Company or any
Company Subsidiary or (v) voting trusts or similar agreements to which the
Company or any Company Subsidiary is a party with respect to the voting of the
capital stock of the Company or any Company Subsidiary. Except as set forth in
Section 3.3 of the Company Disclosure Letter, there are no outstanding
contractual obligations of the Company or any Company Subsidiary to provide
funds to, or make any investment (in the form of a loan, capital contribution
or otherwise) in, any Company Subsidiary or any other person, other than
guarantees by the Company of any indebtedness of any Company Subsidiary.
(b) Each outstanding share of capital stock of each
Company Subsidiary is duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights. Except as disclosed in Section
3.2(b) of the Company Disclosure Letter, all of the outstanding shares of
capital stock of each of Company Subsidiary are owned of record and
beneficially, directly or indirectly, by the Company, free and clear of all
security interests, liens, claims, pledges, options, rights of first refusal,
agreements, limitations on the Company's or such other Company Subsidiary's
voting rights, charges and other encumbrances of any nature whatsoever, except
where failure to own such shares free and clear would not, individually or in
the aggregate, have a Company Material Adverse Effect.
Section 3.3 Authorization; Validity of Agreement; Company Action.
The Company has full corporate power and authority to execute and deliver this
Agreement and, subject to obtaining the necessary approval of its stockholders,
to consummate the transactions contemplated hereby. The execution, delivery
and performance by the Company of this Agreement, and the consummation by it of
the transactions contemplated hereby, have been duly authorized by its Board of
Directors and, except for those actions contemplated by Section 1.2(a) hereof
and obtaining the approval of its stockholders as contemplated by Section 1.8
hereof, no other corporate action on the part of the Company is necessary to
authorize the execution and delivery by the Company of this Agreement and the
consummation by it of the transactions contemplated hereby. This Agreement has
been duly executed and delivered by
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<PAGE> 18
the Company and, subject to approval and adoption of this Agreement by the
Company's stockholders (and assuming due and valid authorization, execution and
delivery hereof by Parent and the Purchaser) is a valid and binding obligation
of the Company enforceable against the Company in accordance with its terms,
except that (i) such enforcement may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws, now or hereafter
in effect, affecting creditors' rights generally, and (ii) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
Section 3.4 Consents and Approvals; No Violations. Except as
disclosed in Section 3.4 of the Company Disclosure Letter and except for (a)
filings pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), (b) applicable requirements under the Exchange Act,
(c) the filing of the Certificate of Merger, (d) applicable requirements under
"takeover" or "blue sky" laws of various states, or (e) matters specifically
described in this Agreement, neither the execution, delivery or performance of
this Agreement by the Company nor the consummation by the Company of the
transactions contemplated hereby will (i) violate any provision of the
Certificate of Incorporation or By-Laws of the Company or the charter or
by-laws of any of its Subsidiaries, (ii) result in a violation or breach of, or
result in any loss of benefit or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation, acceleration or modification) under, any of the terms, conditions
or provisions of any material note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which the Company or
any of its Subsidiaries is a party or by which any of them or any of their
properties or assets may be bound (the "Material Agreements"), (iii) violate
any order, writ, judgment, injunction or decree applicable to the Company, any
of its Subsidiaries or any of their properties or assets, (iv) violate any law,
statute, rule or regulation applicable to the Company, any of its Subsidiaries
or any of their properties or assets, or (v) require on the part of the Company
or any of its Subsidiaries any filing or registration with, notification to, or
authorization, consent or approval of, any court, legislative, executive or
regulatory authority or agency (a "Governmental Entity"); except in the case of
clauses (ii), (iv) or (v) for such violations, breaches or defaults which, or
filings, registrations, notifications, authorizations, consents or approvals
the failure of which to obtain, would not have a Company Material Adverse
Effect or would not materially adversely affect the ability of the Company to
consummate the transactions contemplated by this Agreement.
Section 3.5 SEC Reports and Financial Statements. The Company
has filed all reports required to be filed by it with the SEC pursuant to the
Exchange Act and the Securities Act of 1933, as amended (the "Securities Act"),
since July 30, 1995 (as such documents have been amended since the date of
their filing, collectively, the "Company SEC Documents"). The Company SEC
Documents (a) were prepared in accordance with the requirements of the
Securities Act or the Exchange Act, as the case may be, and (b) as of their
respective filing dates, or if amended, as of the date of the last such
amendment, did not contain any untrue
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<PAGE> 19
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. Each of the
historical consolidated balance sheets (including the related notes) included
in the Company SEC Documents fairly presents in all material respects the
financial position of the Company and its consolidated Subsidiaries as of the
date thereof, and the other related historical statements (including the
related notes) included in the Company SEC Documents fairly present in all
material respects the results of operations and cash flows of the Company and
its consolidated Subsidiaries for the respective periods or as of the
respective dates set forth therein. Each of the historical consolidated
balance sheets and historical statements of operations and cash flow (including
the related notes) included in the Company SEC Documents has been prepared in
all material respects in accordance with United States generally accepted
accounting principles ("GAAP") applied on a consistent basis during the periods
involved, except as otherwise noted therein and, in the case of unaudited
interim financial statements, subject to normal year-end adjustments and except
as permitted by Form 10-Q of the SEC. The books and records of the Company and
its Subsidiaries have been, and are being, maintained in accordance with GAAP
and any other applicable legal and accounting requirements.
Section 3.6 No Undisclosed Liabilities. Except (a) for
liabilities and obligations incurred in the ordinary course of business
consistent with past practices since August 2, 1997, (b) for liabilities and
obligations disclosed in the Company SEC Documents filed prior to the date
hereof, (c) for liabilities and obligations incurred in connection with the
Offer and the Merger or otherwise as contemplated by this Agreement and (d) as
disclosed in Section 3.6 of the Company Disclosure Letter, since August 2,
1997, neither the Company nor any of its Subsidiaries has incurred any material
liabilities or obligations that would be required to be reflected or reserved
against in a consolidated balance sheet of the Company and its consolidated
Subsidiaries prepared in accordance with GAAP as applied in preparing the
consolidated balance sheet of the Company and its consolidated Subsidiaries as
of August 2, 1997.
Section 3.7 Absence of Certain Changes. Except as (a) disclosed
in the Company SEC Documents filed prior to the date hereof, (b) disclosed in
Section 3.7 of the Company Disclosure Letter, (c) contemplated by this
Agreement or (d) occurring pursuant to the express terms of that certain
Agreement and Plan of Merger dated as of September 30, 1997, among Westell,
Kappa Acquisition Corp., a Delaware corporation, and the Company, since August
2, 1997, the Company has conducted its business in the ordinary and usual
course and there has not been:
(i) any transaction, commitment, dispute or other event
or condition (financial or otherwise) of any character (whether or not
in the ordinary course of business) which, alone or in the aggregate,
has had or would have a Company Material Adverse Effect;
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<PAGE> 20
(ii) any declaration, setting aside or payment of any
dividend or other distribution with respect to any shares of capital
stock of the Company or any repurchase, redemption or other
acquisition by the Company or any of its Subsidiaries of any
outstanding shares of capital stock or other securities of, or other
ownership interests in, the Company or such Subsidiary;
(iii) any amendment of any material term of any outstanding
security of the Company or any of its Subsidiaries;
(iv) any acquisition, sale or transfer of any material
assets of the Company or any of its Subsidiaries;
(v) any material contract entered into by the Company or
any of its Subsidiaries or any material amendment or termination of,
or default under, any Material Agreement;
(vi) any making of any loan, advance or capital
contributions to or investment in any Person other than loans,
advances or capital contributions to or investments in wholly-owned
Subsidiaries of the Company made in the ordinary course of business
and payroll, travel and similar advances made in the ordinary course
of business;
(vii) any change in any method of accounting or accounting
practice by the Company or any of its Subsidiaries, except as required
by GAAP; or
(viii) any entering into of any severance, termination pay,
employment, deferred compensation or other similar agreement (or any
amendment to any such existing agreement) with any director, officer
or employee of the Company or any of its Subsidiaries, increase in
benefits payable under any existing severance or termination pay
policies or employment agreements or increase in compensation, bonus
or other benefits payable to directors, officers or employees of the
Company or any of its Subsidiaries, other than in the ordinary course
of business.
Section 3.8 Contracts. Except as disclosed in or attached as
exhibits to the Company SEC Documents or as disclosed in Section 3.8 of the
Company Disclosure Letter, neither the Company nor any of the Company
Subsidiaries is a party to or bound by any contract, arrangement, commitment or
understanding (whether written or oral) (i) as of the date hereof, which
requires expenditures in excess of $1,000,000 or which requires annual
expenditures in excess of $500,000 and is not cancelable within one year by the
Company, that has not been filed or incorporated by reference in the Company
SEC Documents, (ii) which contains any material non-compete provisions with
respect to any line of business or geographic area in which business is
conducted with respect to the Company or any of the Company
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<PAGE> 21
Subsidiaries or which restricts the conduct of any line of business by the
Company or any of the Company Subsidiaries or any geographic area in which the
Company or any of the Company Subsidiaries may conduct business, in each case
in any material respect, (iii) which are terminable by the other party thereto
which if so terminated would result in a Company Material Adverse Effect, or
(iv) which would prohibit or materially delay the consummation of the
transactions contemplated by this Agreement. The Company has previously made
available to Parent true and correct copies of all such agreements and of all
employment and deferred compensation agreements with directors, officers and
employees, and material agreements with consultants, which are in writing and
to which the Company or any of the Company Subsidiaries is a party. Each
Material Agreement is valid and binding on the Company or any of the Company
Subsidiaries, as applicable, and in full force and effect, and the Company and
each of the Company Subsidiaries have in all material respects performed all
obligations required to be performed by them to date under each Material
Agreement, except where such noncompliance, individually or in the aggregate,
would not have a Company Material Adverse Effect. Neither the Company nor any
Company Subsidiary knows of, or has received notice of, any violation or
default under (nor does there exist any condition which with the passage of
time or the giving of notice would cause such a violation of or default under)
any Material Agreement or any other loan or credit agreement, note, bond,
mortgage, indenture or lease, or any other contract, agreement, arrangement or
understanding to which it is a party or by which it or any of its properties or
assets is bound, except for violations or defaults that would not, individually
or in the aggregate, result in a Company Material Adverse Effect. Set forth in
Section 3.8 of the Company Disclosure Letter is a description, including
amounts as of the date hereof, of all indebtedness of the Company and the
Company Subsidiaries other than trade payables and accruals. Section 3.8 of
the Company Disclosure Letter sets forth a list of each contract, agreement or
other instrument or obligation between the Company or any of its affiliates, on
the one hand, and Westell or any of its affiliates, on the other hand. Section
3.8 of the Company Disclosure Letter also sets forth a summary of all DMT
licenses in which the Company is a licensee identifying (i) the parties, (ii)
the royalties and basis thereof receivable by the Company as a licensor, (iii)
the royalties and basis thereof payable by the Company to third parties in
respect of any sales by the licensee, (iv) whether for each license, on a
current basis, the amounts receivable by the Company under (ii) above exceed
the amounts payable by the Company under subsection (iii) above and (v) amounts
which would be owing to licensors with respect to a sale by the Company of
products incorporating licensed products purchased from sublicensees.
Section 3.9 Employee Benefit Plans; ERISA.
(a) Section 3.9(a) of the Company Disclosure Letter lists
(i) all "employee benefit plans", as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and all stock
option, stock award, stock purchase or other equity-based compensation, bonus
or other incentive compensation, severance, tuition assistance, salary
continuation, and vacation plans, policies or agreements, written or unwritten,
under which the Company or any of its Subsidiaries has any obligation or
liability (collectively, "Benefit Plans") and (ii) all employment and
consulting agreements with current
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<PAGE> 22
or former officers, employers, consultants, advisors or directors of the
Company or any of its Subsidiaries (collectively, "Benefit Arrangements").
(b) With respect to each Benefit Plan and Benefit
Arrangement, a complete and correct copy of each of the following documents (if
applicable) has been made available to Purchaser: (i) the most recent plan and
related trust documents, and all amendments thereto; (ii) the most recent
summary plan description, and all related summaries of material modifications;
(iii) the most recent Form 5500 (including schedules); (iv) the most recent IRS
determination letter; and (v) the most recent actuarial reports (including for
purposes of Financial Accounting Standards Board report nos. 87, 106 and 112).
(c) Except as set forth in Section 3.9(c) of the Company
Disclosure Letter, with respect to each Benefit Plan: (i) if intended to
qualify under section 401(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), and the rules and regulations promulgated thereunder, such plan
has received a determination letter from the Internal Revenue Service stating
that it so qualifies and that its trust is exempt from taxation under section
501(a) of the Code and nothing has occurred to the knowledge of the Company
since the date of such determination that could adversely affect such
qualification or exempt status; (ii) such plan has been administered in
accordance with its terms and applicable law, except for such non-compliance
which would not have, individually or in the aggregate, a Company Material
Adverse Effect; (iii) no disputes are pending, or, to the knowledge of the
Company, threatened that, individually or in the aggregate, would have a
Company Material Adverse Effect; and (iv) all contributions required to be made
to such plan as of the date hereof (taking into account any extensions for the
making of such contributions) have been made in full.
(d) No Benefit Plan is subject to Title IV of ERISA or
section 412 of the Code. None of the Benefit Plans is a plan described in
Section 3(37), 4063 or 4064 of ERISA.
(e) Except as set forth in Section 3.9(e) of the Company
Disclosure Letter, no liability relating to any Benefit Plan has been or is
expected to be incurred by the Company or any Subsidiary of the Company (either
directly or indirectly, including as a result of an indemnification obligation)
under or pursuant to Part 4 of Title I of ERISA or Title IV of ERISA or the
penalty or the excise tax provisions of the Code, which would have a Company
Material Adverse Effect.
(f) Except as set forth in Section 3.9(f) of the Company
Disclosure Letter, no employee or former employee of the Company or any of its
Subsidiaries will become entitled to any bonus, retirement, severance, job
security or similar or enhanced benefit (including acceleration of vesting,
time of payment, or exercise of a stock option or an incentive award) as a
result of the transactions contemplated hereby.
Section 3.10 Litigation. Except as disclosed in Section 3.10 of
the Company Disclosure Letter or as disclosed in the Company SEC Documents
filed prior to the date
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hereof, there is no action, suit, proceeding, audit or investigation pending
or, to the best knowledge of the Company, action, suit, proceeding, audit or
investigation threatened, involving the Company or any of its Subsidiaries, by
or before any court, governmental or regulatory authority or by any third party
that could prevent, enjoin, or materially alter or delay any of the
transactions contemplated by this Agreement or that, if adversely determined,
would have a Company Material Adverse Effect. Except as disclosed in Section
3.10 of the Company Disclosure Letter or as disclosed in the Company SEC
Documents filed prior to the date hereof, neither the Company nor any of its
Subsidiaries is subject to any outstanding order, writ, injunction or decree
which has had or, insofar as can be reasonably foreseen, individually or in the
aggregate, would have a Company Material Adverse Effect.
Section 3.11 Permits; No Default; Compliance with Applicable Laws.
Each of the Company and the Company Subsidiaries is in possession of all
franchises, grants, authorizations, licenses, permits, easements, variances,
exceptions, consents, certificates, approvals, clearances and orders of any
Governmental Entity necessary for the Company or any Company Subsidiary to own,
lease and operate its properties or to carry on their respective businesses
substantially in the manner described in the Company SEC Documents and as it is
now being conducted (the "Company Permit"), and all such Company Permits are
valid, and in full force and effect, except where the failure to have, or the
suspension or cancellation of, any of the Company Permits would neither,
individually or in the aggregate, (a) have a Company Material Adverse Effect
nor (b) materially adversely affect the ability of the Company to consummate
the transactions contemplated by this Agreement, and no suspension or
cancellation of any of the Company Permits is pending or, to the knowledge of
the Company, threatened, except where the failure to have, or the suspension or
cancellation of, any of the Company Permits would neither, individually or in
the aggregate, (x) have a Company Material Adverse Effect nor (y) materially
adversely affect the ability of the Company to consummate the transactions
contemplated by this Agreement. The business of the Company and each of its
Subsidiaries is not in default or violation of any term, condition or provision
of (i) its respective certificate of incorporation or by-laws, (ii) any
Material Agreement or (iii) any statute, law, rule, regulation, judgment,
decree, order, permit, license or other governmental authorization or approval
(including any Company Permit) applicable to the Company or any of its
Subsidiaries or by which any property, asset or operation of the Company or any
of its Subsidiaries is bound or affected, including, laws, rules and
regulations relating to the environment, occupational health and safety,
employee benefits, wages, workplace safety, equal employment opportunity and
race, religious or sex discrimination, excluding from clauses (ii) and (iii)
defaults or violations which would not have a Company Material Adverse Effect.
Section 3.12 Taxes. Except as disclosed in Section 3.12 of the
Company Disclosure Letter:
(a) All material Tax Returns required to be filed by or
with respect to the Company and each of its Subsidiaries have been filed. The
Company and each of its
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Subsidiaries has paid (or there has been paid on its behalf) all material Taxes
that are due, except for Taxes being contested in good faith by appropriate
proceedings and for which adequate reserves have been established in the
Company's financial statements (as of the date thereof).
(b) There are no outstanding agreements or waivers
extending the statutory period of limitation applicable to the collection or
assessment of material Taxes due from the Company or any of its Subsidiaries
for any taxable period. No audit or other proceeding by any court,
governmental or regulatory authority, or similar person is pending or, to the
knowledge of the Company, threatened in regard to any material Taxes due from
or with respect to the Company or any of the Subsidiaries. Neither the Company
nor any Subsidiary of the Company has received written notice that any
assessment of material Taxes is proposed against the Company or any of its
Subsidiaries.
(c) There is no contract, agreement, plan or arrangement
covering any person that, individually or collectively, could give rise to the
payment of any amount that would not be deductible by the Company or any of its
Subsidiaries by reason of Section 280G of the Code in connection with the
transactions contemplated by this Agreement.
(d) There are no Tax liens upon any property or assets of
the Company or any of the Company Subsidiaries except liens for current Taxes
not yet due and except for liens which have not had and are not reasonably
likely to have a Company Material Adverse Effect.
(e) Neither the Company nor any of its Subsidiaries has
been required to include in income any adjustment pursuant to Section 481 of
the Code by reason of a voluntary change in accounting method initiated by the
Company or any of its Subsidiaries, and the IRS has not initiated or proposed
any such adjustment or change in accounting method, in either case which
adjustment or change has had or is reasonably likely to have a Company Material
Adverse Effect.
(f) Except as set forth in the financial statements
described in Section 3.5, neither the Company nor any of its Subsidiaries has
entered into a transaction which is being accounted for under the installment
method of Section 453 of the Code, which would be reasonably likely to have a
Company Material Adverse Effect. No compensation paid or payable by the
Company is subject to Section 162(m) of the Code.
(g) The term "Taxes" shall mean all taxes, charges, fees,
levies, or other similar assessments or liabilities imposed by the United
States of America, or by any state, local, or foreign government, or any
subdivision, agency, or other similar person of the United States or any such
government, including without limitation (i) income, gross receipts, ad
valorem, premium, excise, real property, personal property, sales, use,
transfer, withholding, employment, payroll, and franchise taxes; and (ii) any
interest, penalties or additions to taxes resulting from, attributable to, or
incurred in connection with any Tax or any contest, dispute,
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or refund thereof. The term "Tax Returns" shall mean any report, return, or
statement required to be supplied to a taxing authority in connection with
Taxes.
Section 3.13 Certain Property. The Company and its Subsidiaries,
as the case may be, have good and marketable title in fee simple to all of
their respective real property and good title to all of their respective
leasehold interests and other properties, as reflected in the most recent
balance sheet included in the Company SEC Documents, except for properties and
assets that have been disposed of in the ordinary course of business since the
date of such balance sheet, free and clear of all mortgages, liens, pledges,
charges or encumbrances of any nature whatsoever, except (i) the lien for
current taxes, payments of which are not yet delinquent, (ii) such
imperfections in title and easements and encumbrances, if any, as are not
substantial in character, amount or extent and do not materially detract from
the value, or interfere with the present use of the property subject thereto or
affected thereby, or otherwise materially impair the Company's business
operations (in the manner presently carried on by the Company) or (iii) as
disclosed in the Company SEC Documents, and except for such matters, which
individually or in the aggregate, could not reasonably be expected to have a
Company Material Adverse Effect. All leases under which the Company leases any
real or personal property are in good standing, valid and effective in
accordance with their respective terms, and there is not, under any of such
leases, any existing default or event which with notice or lapse of time or
both would become a default which could reasonably be expected to have a
Company Material Adverse Effect. Section 3.13 of the Company Disclosure Letter
sets forth all liens and security interests granted by the Company or any of
the Company Subsidiaries to third parties.
Section 3.14 Intellectual Property.
(a) The Company has previously given to Parent detailed
information (including, where applicable, federal registration numbers and
dates of registrations or applications for registration) concerning the
following: (i) all of the Company's and the Company Subsidiaries' trademarks,
trademark rights, service marks, trade names, and other trade rights,
indicating which are registered and which are not, including all pending
applications for any registrations thereof, and all patents, patent rights and
copyrights used or proposed to be used by the Company in its business and all
pending applications therefore; (ii) all computer software presently used by
the Company which has been purchased or licensed from outside parties with a
purchase price or license fee in excess of $5,000; and (iii) all other trade
secrets, mailing lists, know-how, designs, plans, specifications and other
intellectual property rights of the Company (whether or not registered or
registrable) (collectively, "Intellectual Property"). Section 3.14 of the
Company Disclosure Letter identifies (i) each patent or registration which has
been issued (and which has not expired or lapsed) to the Company or any of the
Company
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Subsidiaries with respect to any Intellectual Property, (ii) each pending
patent application or application for registration which the Company or any of
the Company Subsidiaries has made with respect to any Intellectual Property,
and (iii) any Intellectual Property that any third party owns and that the
Company or any of the Company Subsidiaries use or propose to use in its
business (including any marketing rights granted to the Company or any of the
Company Subsidiaries under patents owned or licensed by third parties). Except
as set forth in Section 3.14 of the Company Disclosure Letter, (i) the Company
or one of the Company Subsidiaries solely owns or is in sole and exclusive
possession of adequate licenses or other legal rights to use all Intellectual
Property now used or held for use in connection with the business as currently
conducted or as contemplated to be conducted and (ii) neither the Company nor
any of the Company Subsidiaries has disclosed any of the Intellectual Property
other than in a manner reasonably necessary for the operation of their
business. None of the Company or any of the Company Subsidiaries have granted
any licenses of or other rights to use any of the Intellectual Property to any
third party. The Intellectual Property comprises all of the intellectual
property rights that are in the aggregate necessary in any material respect for
the operation of its business as it is presently conducted.
(b) To the Company's knowledge, there is no unauthorized
use, disclosure, infringement or misappropriation of any Intellectual Property
rights of the Company or any of its Subsidiaries, or any Intellectual Property
right of any third party to the extent licensed by or through the Company or
any of its Subsidiaries, by any third party, including any employee or former
employee of the Company or any of its Subsidiaries. Neither the Company nor
any of its Subsidiaries has entered into any agreement to indemnify any other
person against any charge of infringement of any Intellectual Property.
(c) The Company is not, nor will it be as a result of the
execution and delivery of this Agreement or the performance of its obligations
under this Agreement, in breach of any license, sublicense or other agreement
relating to the Intellectual Property.
(d) All patents, registered trademarks, service marks and
copyrights held by the Company are valid and subsisting. The Company (i) has
not been sued in any suit, action or proceeding which involves a claim of
infringement of any patents, trademarks, service marks, copyrights or violation
of any trade secret or other proprietary right of any third party; (ii) has no
knowledge that the manufacturing, marketing, licensing or sale of its products
infringes any patent, trademark, service mark, copyright, trade secret or other
proprietary right of any third party; and (iii) has not brought any action,
suit or proceeding for infringement of Intellectual Property or breach of any
license or agreement involving Intellectual Property against any third party.
(e) The Company has secured valid written assignments
from all consultants and employees who contributed to the creation or
development of Intellectual Property of the rights to such contributions that
the Company does not already own by operation of law.
(f) The Company has taken all necessary and appropriate
steps to protect and preserve the confidentiality of all Intellectual Property
not otherwise protected by patents, patent applications or copyright
("Confidential Information"). All use, disclosure or appropriation of
Confidential Information owned by the Company by or to a third party has
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been pursuant to the terms of a written agreement between the Company and such
third party. All use, disclosure or appropriation of Confidential Information
not owned by the Company has been pursuant to the terms of a written agreement
between the Company and the owner of such Confidential Information, or is
otherwise lawful.
Section 3.15 Environmental Matters. Except as disclosed in
Section 3.15 of the Company Disclosure Letter or as disclosed in the Company
SEC Documents:
(a) no notice, request for information, order, complaint
or penalty has been received relating to, and there are no judicial,
administrative or other actions, suits or proceedings pending or, to the
knowledge of the Company, threatened which allege a violation of, any law,
regulation, rule or governmental restriction relating to the environment or to
pollutants, contaminants or wastes, in each case relating to the current or
prior business of the Company or any of its Subsidiaries which, individually or
in the aggregate, would have a Company Material Adverse Effect; and
(b) there has been no environmental assessment,
investigation or audit conducted of which the Company has knowledge in relation
to the current or prior business of the Company or any of its Subsidiaries or
any property or facility now or previously owned, leased or operated by the
Company or any of its Subsidiaries which has not been made available to the
Parent.
Section 3.16 Employee and Labor Matters. Except as set forth in
Section 3.16 of the Company Disclosure Letter and except to the extent that the
failure of any of the following representations to be accurate would not have a
Company Material Adverse Effect: (i) since January 1, 1996 there has been no
labor strike or work stoppage against, or lockout by, the Company or any of its
Subsidiaries, (ii) there is no unfair labor practice charge or complaint
against the Company or any of its Subsidiaries pending before, or, to the
knowledge of the Company or any of its Subsidiaries, threatened by, the
National Labor Relations Board, and (iii) there is no pending or, to the
knowledge of the Company or any of its Subsidiaries, threatened union grievance
against the Company or any of its Subsidiaries.
Section 3.17 Information in Offer Documents. None of the
information supplied or to be supplied by the Company or any of its or agents
for inclusion or incorporation by reference in the Offer Documents or the
Schedule 14D-9, including any amendments or supplements thereto, will at the
respective times the Offer Documents and the Schedule 14D-9 are filed with the
SEC or first published, sent or given to the Company's shareholders, contain
any statement which, at such time and in light of the circumstances under which
it is made, is false or misleading with respect to any material fact, or omit
to state any material fact necessary in order to make the statements therein
not false or misleading. Notwithstanding the foregoing, the Company does not
make any representation or warranty with respect to the information that has
been or will be supplied by Parent or the Purchaser or their officers,
directors, employees, representatives Subsidiaries, or any of their officers,
directors, employees, representatives
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or agents for inclusion or incorporation by reference in any of the foregoing
documents. The Schedule 14D-9 and any amendments or supplements thereto will
comply in all material respects with the applicable provisions of the Exchange
Act and the rules and regulations thereunder.
Section 3.18 Brokers or Finders. The Company represents, as to
itself, its Subsidiaries and its affiliates, that no agent, broker, investment
banker, financial advisor or other firm or person is or will be entitled to any
brokers' or finder's fee or any other commission or similar fee in connection
with any of the transactions contemplated by this Agreement, except Deutsche
Morgan Grenfell ("DMG"), the fees and expenses of which will be paid by the
Company in accordance with the Company's agreement with such firm, a true and
complete copy of which has heretofore been furnished to Parent. The Company
has no obligations or commitments to any investment banker or financial advisor
in connection with any future transactions that may be considered or entered
into by the Company after the Effective Time.
Section 3.19 Insurance. The Company maintains insurance coverage
with reputable insurers in such amounts and covering such risks as are in
accordance with normal industry practice for companies engaged in businesses
similar to that of the Company (taking into account the cost and availability
of such insurance).
Section 3.20 Opinion of Financial Advisor. The Company has
received the opinion of DMG to the effect that, as of the date hereof, the
consideration to be received by the stockholders of the Company in the Offer
and the Merger is fair from a financial point of view.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
AND THE PURCHASER
Parent and the Purchaser jointly and severally represent and warrant
to the Company as follows:
Section 4.1 Organization. Each of Parent and the Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite corporate
power and authority to own, lease and operate its properties and to carry on
its business as now being conducted. Parent and each of its Subsidiaries is
duly qualified to do business and in good standing in each jurisdiction in
which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary, except where the
failure to be so duly qualified and in good standing would not have a material
adverse effect on the consummation of the transactions contemplated hereby.
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Section 4.2 Authorization; Validity of Agreement; Necessary
Action. Each of Parent and the Purchaser has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance by
Parent and the Purchaser of this Agreement, and the consummation of the
transactions contemplated hereby, have been duly authorized by their Boards of
Directors and no other corporate action on the part of Parent and the Purchaser
is necessary to authorize the execution and delivery by Parent and the
Purchaser of this Agreement and the consummation by them of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Parent and the Purchaser, as the case may be and (assuming due and valid
authorization, execution and delivery hereof by the Company) is a valid and
binding obligation of each of Parent and the Purchaser, as the case may be,
enforceable against them in accordance with its terms, except that (i) such
enforcement may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws, now or hereafter in effect,
affecting creditors' rights generally, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject
to equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
Section 4.3 Consents and Approvals; No Violations. Except for
(a) filings pursuant to the HSR Act, (b) applicable requirements under the
Exchange Act, (c) the filing of the Certificate of Merger, (d) applicable
requirements under "takeover" or "blue sky" laws of various states, or (e) as
described in this Agreement, neither the execution, delivery or performance of
this Agreement by Parent and the Purchaser nor the consummation by Parent and
the Purchaser of the transactions contemplated hereby will (i) violate any
provision of the charter or by-laws or other comparable constituent documents
of Parent or the Purchaser, (ii) result in a violation or breach of, or result
in any loss of benefit or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination,
cancellation, acceleration or modification) under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which Parent or any of its
Subsidiaries is a party or by which any of them or any of their properties or
assets may be bound, (iii) violate any order, writ, judgment, injunction or
decree applicable to Parent, any of its Subsidiaries or any of their properties
or assets, (iv) violate any law, statute, rule or regulation applicable to
Parent, any of its Subsidiaries or any of their properties or assets, or (v)
require on the part of Parent or the Purchaser any filing or registration with,
notification to, or authorization, consent or approval of, any Governmental
Entity, except in the case of clauses (ii), (iv) or (v) for such violations,
breaches or defaults which, or filings, registrations, notifications,
authorizations, consents or approvals the failure of which to obtain, would not
materially adversely affect the ability of Parent and the Purchaser to
consummate the transactions contemplated by this Agreement.
Section 4.4 SEC Reports and Financial Statements. Parent has
filed all reports required to be filed by it with the SEC pursuant to the
Exchange Act and the Securities Act since July 30, 1995 (as such documents have
been amended since the date of their filing, collectively, the "Parent SEC
Documents"). The Parent SEC Documents (a) were prepared in
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accordance with the requirements of the Securities Act or the Exchange Act, as
the case may be, and (b) as of their respective filing dates, or if amended, as
of the date of the last such amendment, did not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of the
historical consolidated balance sheets (including the related notes) included
in the Parent SEC Documents fairly presents in all material respects the
financial position of the Parent and its consolidated Subsidiaries as of the
date thereof, and the other related historical statements (including the
related notes) included in the Parent SEC Documents fairly present in all
material respects the results of operations and cash flows of Parent and its
consolidated Subsidiaries for the respective periods or as of the respective
dates set forth therein. Each of the historical consolidated balance sheets
and historical statements of operations and cash flow (including the related
notes) included in the Parent SEC Documents has been prepared in all material
respects in accordance with GAAP applied on a consistent basis during the
periods involved, except as otherwise noted therein and, in the case of
unaudited interim financial statements, subject to normal year-end adjustments
and except as permitted by Form 10-Q of the SEC. The books and records of
Parent and its Subsidiaries have been, and are being, maintained in accordance
with GAAP and any other applicable legal and accounting requirements.
Section 4.5 Information in Offer Documents; Proxy Statement.
None of the information supplied or to be supplied by Parent or the Purchaser,
or any of their officers, directors, employees, representatives or agents for
inclusion or incorporation by reference in the Offer Documents, the Schedule
14D-9 or the Proxy Statement, including any amendments or supplements thereto,
will, in the case of the Offer Documents and the Schedule 14D-9, at the
respective times the Offer Documents and the Schedule 14D-9 are filed with the
SEC or first published, sent or given to the Company's stockholders, or, in the
case of the Proxy Statement, at the date the Proxy Statement is first mailed to
the Company's stockholders or at the time of the Special Meeting, contain any
statement which, at such time and in light of the circumstances under which it
is made, is false or misleading with respect to any material fact, or omit to
state any material fact necessary in order to make the statements therein not
false or misleading. Notwithstanding the foregoing, Parent and the Purchaser
do not make any representation or warranty with respect to the information that
has been supplied by the Company or any of its Subsidiaries or their officers,
directors, employees, representatives or agents for inclusion or incorporation
by reference in any of the foregoing documents. The Offer Documents and the
Proxy Statement and any amendments or supplements thereto will comply in all
material respects with the applicable provisions of the Exchange Act and the
rules and regulations thereunder.
Section 4.6 Sufficient Funds. Either Parent or the Purchaser has
sufficient funds available to purchase all of the Shares outstanding on a fully
diluted basis and to pay all fees and expenses related to the transactions
contemplated by this Agreement.
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Section 4.7 Share Ownership. None of Parent, the Purchaser or
any of their respective affiliates beneficially owns any Shares.
Section 4.8 Purchaser's Operations. The Purchaser was formed
solely for the purpose of engaging in the transactions contemplated hereby and
has not engaged in any business activities or conducted any operations other
than in connection with the transactions contemplated hereby.
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company. The Company
covenants and agrees that, except (i) as contemplated by this Agreement, (ii)
as disclosed in Section 5.1 of the Company Disclosure Letter or (iii) as agreed
in writing by Parent, after the date hereof, and prior to the time the
directors of the Purchaser have been elected to, and shall constitute a
majority of, the Board of Directors of the Company pursuant to Section 1.3:
(a) the business of the Company and its Subsidiaries
shall be conducted only in the ordinary course of business and, to the extent
consistent therewith, each of the Company and its Subsidiaries shall use its
reasonable best efforts to preserve in all material respects its business
organization intact and maintain its existing relations with customers,
suppliers, employees and business associates;
(b) each of the Company and its Subsidiaries will not,
directly or indirectly, (i) amend its Certificate of Incorporation or By-laws
or similar organizational documents or (ii) split, combine or reclassify its
outstanding capital stock;
(c) neither the Company nor any of its Subsidiaries
shall: (i) declare, set aside or pay any dividend or other distribution
(whether payable in cash, stock or property) with respect to its capital stock
(other than dividends from any Subsidiary of the Company to the Company or any
other Subsidiary of the Company); (ii) issue or sell any additional shares of,
or securities convertible into or exchangeable for, or options, warrants,
calls, commitments or rights of any kind to acquire, any shares of capital
stock of any class of the Company or its Subsidiaries, other than issuances
pursuant to the exercise of Options outstanding on the date hereof; (iii) sell,
lease, license or dispose of any assets or properties, other than in the
ordinary course of business; (iv) incur or modify any material debt, other than
in the ordinary course of business consistent with past practice; (v) license
or sublicense any asset or property of the Company or any Company Subsidiary
except in the ordinary course of business consistent with past practice on a
basis that results in a positive current royalty net of any royalties due by
the Company or any Company Subsidiary on account of sales by the licensee or
sublicensee; or
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(vi) redeem, purchase or otherwise acquire, directly or indirectly, any of its
or its Subsidiaries' capital stock;
(d) neither the Company nor any of its Subsidiaries
shall, except as may be required or contemplated by this Agreement or by
applicable law, (i) enter into, adopt, materially amend or terminate any
employee benefit plans, (ii) amend any employment or severance agreement, (iii)
increase in any manner the compensation or other benefits of its officers or
directors or (iv) increase in any manner the compensation of any other
employees (except, in the case of this clause (iv), for normal increases in the
ordinary course of business);
(e) neither the Company nor any of its Subsidiaries
shall: (i) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the material obligations of
any other person (other than Subsidiaries of the Company), except pursuant to
contractual indemnification agreements entered into in the ordinary course of
business; (ii) make any loans, advances or capital contributions to, or
investments in, any other person (other than to Subsidiaries of the Company and
payroll, travel and similar advances made in the ordinary course of business);
or (iii) make capital expenditures other than pursuant to the Company's current
capital expenditure budget, a copy of which has been provided to Parent;
(f) neither the Company nor any of its Subsidiaries shall
change any of the accounting methods used by it unless required by GAAP or
applicable law;
(g) the Company will not settle or compromise any claim
(including arbitration) or litigation involving payments by the Company in
excess of $250,000 individually which are not subject to insurance
reimbursement without the prior written consent of Parent, which consent will
not be unreasonably withheld;
(h) the Company will not amend, modify or terminate in
any material respect any Material Agreement or enter into any new agreement
material to the business of the Company without the prior written consent of
Parent, which consent shall not be unreasonably withheld; and
(i) neither the Company nor any of its Subsidiaries will
authorize or enter into an agreement to do any of the foregoing.
Section 5.2 Access to Information. Upon reasonable notice, the
Company shall (and shall cause each of its Subsidiaries to) afford to the
officers, employees, accountants, counsel, financing sources and other
representatives of Parent, access, during normal business hours during the
period prior to the Closing Date, to all its properties, books, contracts,
commitments and records and, during such period, the Company shall (and shall
cause each of its Subsidiaries to) furnish promptly to Parent (a) a copy of
each report, schedule, registration statement and other document filed or
received by it during such period pursuant to the
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requirements of federal securities laws or regulatory boards or agencies and
(b) all other information concerning its business, properties and personnel as
Parent may reasonably request. Unless otherwise required by law and until the
Closing Date, Parent will hold any such information which is nonpublic in
confidence in accordance with the provisions of the Confidentiality Agreement
between the Company and Parent, dated as of July 22, 1997 (the "Confidentiality
Agreement").
Section 5.3 Employee Benefits.
(a) Parent and the Purchaser agree that the Surviving
Corporation and its Subsidiaries and successors shall provide those persons
who, immediately prior to the Effective Time, were employees of the Company or
its Subsidiaries ("Retained Employees") with employee plans and programs that
provide benefits that are no less favorable in the aggregate to those provided
to such Retained Employees immediately prior to the date hereof. With respect
to such employee plans and programs provided by the Surviving Corporation and
its Subsidiaries and successors, service accrued by such Retained Employees
during employment with the Company and its Subsidiaries prior to the Effective
Time shall be recognized for all purposes, except to the extent necessary to
prevent duplication of benefits.
(b) Parent and the Purchaser agree to honor, and cause
the Surviving Corporation to honor, without modification, all employment and
severance agreements and arrangements, as amended through the date hereof, with
respect to employees and former employees of the Company that are listed in
Section 3.8 of the Company Disclosure Letter (collectively, the "Severance
Agreements").
(c) After the date hereof and prior to the Effective
Time, Parent and the Company shall reasonably cooperate to develop and adopt an
employee retention plan for key employees of the Company, which shall be
subject to Parent approval.
Section 5.4 No Solicitation. (a) The Company and its
Subsidiaries will not, and will use their best efforts to cause their
respective officers, directors, employees and investment bankers, attorneys or
other agents retained by or acting on behalf of the Company or any of its
Subsidiaries not to, (i) initiate, solicit or encourage, directly or
indirectly, any inquiries or the making of any proposal that constitutes or is
reasonably likely to lead to any Acquisition Proposal (as defined in Section
5.4(c) hereof), (ii) engage in negotiations or discussions (other than to
advise as to the existence of the restrictions set forth in this Section 5.4)
with, or furnish any information or data to, any third party relating to an
Acquisition Proposal, or (iii) enter into any agreement with respect to any
Acquisition Proposal or approve any Acquisition Proposal. Notwithstanding
anything to the contrary contained in this Section 5.4 or in any other
provision of this Agreement, the Company and its Board of Directors (i) may
participate in discussions or negotiations (including, as a part thereof,
making any counterproposal) with or furnish information to any third party
making an unsolicited Acquisition Proposal (a "Potential Acquiror") or approve
an unsolicited Acquisition Proposal if the Company's Board
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of Directors is advised by its financial advisor that such Potential Acquiror
has the financial wherewithal to be reasonably capable of consummating such an
Acquisition Proposal, and the Board determines in good faith (A) after
receiving advice from its financial advisor, that such third party has
submitted to the Company an Acquisition Proposal which is a Superior Proposal
(as defined in Section 5.4(d) hereof), and (B) based upon advice of outside
legal counsel, that the failure to participate in such discussions or
negotiations or to furnish such information or approve an Acquisition Proposal
would violate the Board's fiduciary duties under applicable law. The Company
agrees that any non-public information furnished to a Potential Acquiror will
be pursuant to a confidentiality agreement containing confidentiality and
standstill provisions substantially similar to the confidentiality and
standstill provisions of the Confidentiality Agreement. In the event that the
Company shall determine to provide any information as described above, or shall
receive any Acquisition Proposal, it shall promptly inform Parent in writing as
to the fact that information is to be provided and shall furnish to Parent the
identity of the recipient of such information and/or the Potential Acquiror and
the terms of such Acquisition Proposal, except to the extent that the Board
determines in good faith, based upon advice of its outside legal counsel, that
any such action described in this sentence would violate such Board's fiduciary
duties under, or otherwise violate, applicable law. The Company will inform
Parent of any material amendment to the essential terms of any such Acquisition
Proposal except to the extent that the Board determines in good faith, based
upon advice of outside legal counsel, that any such action would violate such
Board's fiduciary duties under, or otherwise violate, applicable law.
(b) The Board of Directors of the Company shall not (i)
withdraw or modify or propose to withdraw or modify, in any manner adverse to
Parent, the approval or recommendation of such Board of Directors of this
Agreement, the Offer or the Merger or (ii) approve or recommend, or propose to
approve or recommend, any Acquisition Proposal unless, in each case, the Board
determines in good faith (A) after receiving advice from its financial advisor,
that such Acquisition Proposal is a Superior Proposal and (B) based upon advice
of outside legal counsel, that the failure to take such action would violate
the Board's fiduciary duties under applicable law.
(c) For purposes of this Agreement, "Acquisition
Proposal" shall mean any bona fide proposal, whether in writing or otherwise,
made by a third party to acquire beneficial ownership (as defined under Rule
13d-3 of the Exchange Act) of all or a material portion of the assets of, or
any material equity interest in, the Company or its material Subsidiaries
pursuant to a merger, consolidation or other business combination, sale of
shares of capital stock, sale of assets, tender offer or exchange offer or
similar transaction involving the Company or its material Subsidiaries
including any single or multi-step transaction or series of related
transactions which is structured to permit such third party to acquire
beneficial ownership of any material portion of the assets of, or any material
portion of the equity interest in, the Company or its material Subsidiaries
(other than the transactions contemplated by this Agreement).
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(d) The term "Superior Proposal" means any bona fide
proposal to acquire, directly or indirectly, for consideration consisting of
cash and/or securities, more than a majority of the Shares then outstanding or
all or substantially all the assets of the Company, and otherwise on terms
which the Board of Directors of the Company determines in good faith to be more
favorable to the Company and its stockholders than the Offer and the Merger
(based on advice of the Company's financial advisor that the value of the
consideration provided for in such proposal is superior to the value of the
consideration provided for in the Offer and the Merger), for which financing,
to the extent required, is then committed or which, in the good faith
reasonable judgment of the Board of Directors, after receiving advice from its
financial advisor, is reasonably capable of being financed by such third party.
Section 5.5 Publicity. The initial press releases with respect
to the execution of this Agreement shall be acceptable to Parent and the
Company and shall be in the form of Annex B hereto. Thereafter, so long as
this Agreement is in effect, neither the Company, Parent nor any of their
respective affiliates shall issue or cause the publication of any press release
with respect to the Merger, this Agreement or the other transactions
contemplated hereby without prior consultation with the other party, except as
may be required by law or by any listing agreement with a national securities
exchange or national securities quotation system.
Section 5.6 Indemnification. The Company shall, and from and
after the consummation of the Offer, Parent and the Surviving Corporation shall
jointly and severally, indemnify, defend and hold harmless the present and
former directors and officers of the Company and its Subsidiaries (the
"Indemnified Parties") from and against all losses, expenses, claims, damages
or liabilities arising out of the transactions contemplated by this Agreement
to the fullest extent permitted or required under applicable law. All rights
to indemnification existing in favor of the directors and officers of the
Company as provided in the Company's Certificate of Incorporation or By-laws,
as in effect as of the date hereof, with respect to matters occurring through
the Effective Time, shall survive the Merger and shall not be amended, repealed
or otherwise modified for a period of six years after the consummation of the
Offer in any manner that would adversely affect the rights of the individuals
who at or prior to the consummation of the Offer were directors or officers of
the Company with respect to occurrences at or prior to the consummation of the
Offer and Parent shall cause the Surviving Corporation to honor all such rights
to indemnification.
Section 5.7 Approvals and Consents; Cooperation; Notification.
(a) The parties hereto shall use their respective reasonable best efforts, and
cooperate with each other, to (i) determine as promptly as practicable all
governmental and third party authorizations, approvals, consents or waivers,
including, pursuant to the HSR Act, advisable (in Parent's and Purchaser's
discretion) or required in order to consummate the transactions contemplated by
this Agreement, including, the Offer and the Merger and (ii) obtain such
authorizations, approvals, consents or waivers as promptly as practicable.
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(b) The Company, Parent and the Purchaser shall take all
actions necessary to file as soon as practicable all notifications, filings and
other documents required to obtain all governmental authorizations, approvals,
consents or waivers, including, under the HSR Act, and to respond as promptly
as practicable to any inquiries received from the Federal Trade Commission, the
Antitrust Division of the Department of Justice and any other Governmental
Entity for additional information or documentation and to respond as promptly
as practicable to all inquiries and requests received from any Governmental
Entity in connection therewith.
(c) The Company shall give prompt notice to Parent of (i)
the occurrence of any event, condition or development material to the Company
and its Subsidiaries, taken as a whole, and (ii) any notice from any Person
claiming its consent is required in connection with the transactions
contemplated by this Agreement. Each of the Company and Parent shall give
prompt notice to the other of the occurrence or failure to occur of an event
that would, or, with the lapse of time would cause any condition to the
consummation of the Offer or the Merger not to be satisfied.
Section 5.8 Further Assurances. Each of the parties hereto
agrees to use its respective reasonable best efforts to take, or cause to be
taken, all action, and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, including, the Offer
and the Merger.
Section 5.9 Taxes. With respect to any Taxes, the Company shall
not (i) make any material tax election or (ii) settle or compromise any
material income tax liability (whether with respect to amount or timing), in
each case without the prior written consent of Parent which consent shall not
be unreasonably withheld.
Section 5.10 Shareholder Litigation. The Company and Parent agree
that in connection with any litigation which may be brought against the Company
or its directors relating to the transactions contemplated hereby, the Company
will keep Parent, and any counsel which Parent may retain at its own expense,
informed of the course of such litigation, to the extent Parent is not
otherwise a party thereto, and the Company agrees that it will consult with
Parent prior to entering into any settlement or compromise of any such
shareholder litigation; provided, that, no such settlement or compromise will
be entered into without Parent's prior written consent, which consent shall not
be unreasonably withheld.
Section 5.11 Loan and Security Agreement. Concurrently with the
execution and delivery of this Agreement, the Company and Parent shall execute
and deliver the Loan and Security Agreement in the form of Annex C attached
hereto.
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ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) this Agreement shall have been adopted by the
requisite vote of the holders of Company Common Stock, if required by
applicable law and the Certificate of Incorporation (provided that Parent shall
comply with its obligations in respect of the voting of Shares set forth in
Section 1.8(b));
(b) any waiting period applicable to the Merger under the
HSR Act shall have expired or been terminated;
(c) no statute, rule, regulation, order, decree or
injunction shall have been enacted, promulgated or issued by any Governmental
Entity or court which prohibits the consummation of the Merger; and
(d) Parent, the Purchaser or their affiliates shall have
purchased shares of Company Common Stock pursuant to the Offer.
Section 6.2 Conditions to the Obligations of the Company to
Effect the Merger. The obligation of the Company to effect the Merger shall be
further subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) the representations and warranties of Parent and the
Purchaser shall be true and accurate in all material respects as of the
Effective Time as if made at and as of such time (except for those
representations and warranties that address matters only as of a particular
date or only with respect to a specific period of time which need only be true
and accurate as of such date or with respect to such period); and
(b) each of Parent and the Purchaser shall have performed
in all material respects all of the respective obligations hereunder required
to be performed by Parent or the Purchaser, as the case may be, at or prior to
the Effective Time.
Section 6.3 Conditions to the Obligations of Parent and the
Purchaser to Effect the Merger. The obligations of Parent and the Purchaser to
effect the Merger shall be further subject to the satisfaction at or prior to
the Effective Time of the following conditions:
(a) the representations and warranties of the Company
shall be true and accurate in all material respects as of the Effective Time as
if made at and as of such time
33
<PAGE> 38
(except for those representations and warranties that address matters only as
of a particular date or only with respect to a specific period of time which
need only be true and accurate as of such date or with respect to such period);
and
(b) the Company shall have performed in all material
respects all of the respective obligations hereunder required to be performed
by the Company, at or prior to the Effective Time.
Section 6.4 Exception. The conditions set forth in Section 6.2
and 6.3 hereof shall cease to be conditions to the obligations of the parties
if the Purchaser shall have accepted for payment and paid for Shares validly
tendered pursuant to the Offer.
ARTICLE VII
TERMINATION
Section 7.1 Termination. This Agreement may be terminated and
the Merger contemplated herein may be abandoned at any time prior to the
Effective Time, whether before or after stockholder approval thereof:
(a) By the mutual consent of Parent, the Purchaser and
the Company.
(b) By either of the Company, on the one hand, or Parent
and the Purchaser, on the other hand:
(i) if shares of Company Common Stock shall not
have been purchased pursuant to the Offer on or prior to
February 23, 1998, which date may be extended by Parent, in
its sole discretion, for up to an additional 30 days; provided
further, however, that the right to terminate this Agreement
under this Section 7.1(b)(i) shall not be available to any
party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure
of Parent or the Purchaser, as the case may be, to purchase
shares of Company Common Stock pursuant to the Offer on or
prior to such date; or
(ii) if any Governmental Entity shall have issued
an order, decree or ruling or taken any other action (which
order, decree, ruling or other action the parties hereto shall
use their respective reasonable best efforts to lift), in each
case permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement or
prohibiting Parent to acquire or hold or exercise rights of
ownership of the Shares, and such order, decree, ruling or
other action shall have become final and non-appealable.
34
<PAGE> 39
(c) By the Company:
(i) if, prior to the purchase of shares of
Company Common Stock pursuant to the Offer, either (A) a third
party shall have made an Acquisition Proposal that the Board
of Directors of the Company determines in good faith, after
consultation with its financial advisor, is a Superior
Proposal and the Company shall have concurrently executed a
definitive agreement with such third party in respect of such
Superior Proposal, or (B) the Board of Directors of the
Company shall have withdrawn, or modified or changed in any
manner adverse to Parent or the Purchaser its approval or
recommendation of the Offer, this Agreement or the Merger (or
the Board of Directors of the Company resolves to do any of
the foregoing); or
(ii) if Parent or the Purchaser shall have
terminated the Offer, or the Offer shall have expired, without
Parent or the Purchaser, as the case may be, purchasing any
shares of Company Common Stock pursuant thereto; provided that
the Company may not terminate this Agreement pursuant to this
Section 7.1(c)(ii) if the Company is in willful breach of this
Agreement; or
(iii) if, due to an occurrence that if occurring
after the commencement of the Offer would result in a failure
to satisfy any of the conditions set forth in Annex A hereto,
Parent or the Purchaser shall have failed to commence the
Offer on or prior to five business days following the date of
the initial public announcement of the Offer; provided, that
the Company may not terminate this Agreement pursuant to this
Section 7.1(c)(iii) if the Company is in willful breach of
this Agreement.
(d) By Parent and the Purchaser:
(i) if, prior to the purchase of shares of
Company Common Stock pursuant to the Offer, the Board of
Directors of the Company shall have withdrawn, modified or
changed in a manner adverse to Parent or the Purchaser its
approval or recommendation of the Offer, this Agreement or the
Merger or shall have recommended an Acquisition Proposal or
shall have executed an agreement in principle or definitive
agreement relating to an Acquisition Proposal or similar
business combination with a person or entity other than
Parent, the Purchaser or their affiliates (or the Board of
Directors of the Company resolves to do any of the foregoing);
or
(ii) if, due to an occurrence that if occurring
after the commencement of the Offer would result in a failure
to satisfy any of the conditions set forth in Annex A hereto,
Parent or the Purchaser shall have failed to commence the
Offer on or prior to five business days following the date of
the initial public
35
<PAGE> 40
announcement of the Offer; provided that Parent may not
terminate this Agreement pursuant to this Section 7.1(d)(ii)
if Parent or the Purchaser is in willful breach of this
Agreement.
Section 7.2 Effect of Termination.
(a) In the event of the termination of this Agreement as
provided in Section 7.1, written notice thereof shall forthwith be given to the
other party or parties specifying the provision hereof pursuant to which such
termination is made, and this Agreement shall forthwith become null and void,
and there shall be no liability on the part of Parent, the Purchaser or the
Company or their respective directors, officers, employees, shareholders,
representatives, agents or advisors other than, with respect to Parent, the
Purchaser and the Company, the obligations pursuant to this Section 7.2,
Sections 8.1, 8.2, 8.3, 8.4, 8.5, 8.6, 8.7, 8.8, 8.10, 8.11, 8.12, 8.13 and the
last sentence of Section 5.2. Nothing contained in this Section 7.2 shall
relieve Parent, the Purchaser or the Company from liability for willful breach
of this Agreement.
(b) In the event that this Agreement is terminated by the
Company pursuant to Section 7.1(c)(i) hereof or by Parent and the Purchaser
pursuant to Section 7.1(d)(i) hereof, the Company shall pay to Parent by
certified check or wire transfer to an account designated by Parent immediately
following receipt of a request therefor, an amount equal to $8 million (the
"Termination Fee").
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Amendment and Modification. Subject to applicable
law, this Agreement may be amended, modified and supplemented in any and all
respects, whether before or after any vote of the stockholders of the Company
contemplated hereby, by written agreement of the parties hereto, by action
taken by their respective Boards of Directors (which in the case of the Company
shall include approvals as contemplated in Section 1.3(b)), at any time prior
to the Closing Date with respect to any of the terms contained herein;
provided, however, that after the approval of this Agreement by the
stockholders of the Company, no such amendment, modification or supplement
shall reduce or change the Merger Consideration or adversely affect the rights
of the Company's stockholders hereunder without the approval of such
stockholders.
Section 8.2 Nonsurvival of Representations and Warranties. None
of the representations and warranties in this Agreement or in any schedule,
instrument or other document delivered pursuant to this Agreement shall survive
the Effective Time. This Section
36
<PAGE> 41
8.2 shall not limit any covenant or agreement contained in this Agreement which
by its terms contemplates performance after the Effective Time.
Section 8.3 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered
personally, telecopied (which is confirmed) or sent by an overnight courier
service, such as Federal Express, with delivery by such service confirmed, to
the parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to Parent or the Purchaser, to:
Texas Instruments Incorporated
7839 Churchill Way
P.O. Box 650311, M/S 3995
Dallas, Texas 75265
Telephone: (972) 917-3810
Telecopy: (972) 917-3804
Attention: Charles D. Tobin
with copies to:
Texas Instruments Incorporated
P.O. Box 655474, M/S 241
Dallas, Texas 75265
Telephone: (972) 995-2551
Telecopy: (972) 995-9133
Attention: Richard J. Aqnich, Esq.
and
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201-6950
Telephone: (214) 746-7738
Telecopy: (214) 746-7777
Attention: R. Scott Cohen, Esq.
(b) if to the Company, to:
Amati Communications Corporation
2043 Samaritan Drive
San Jose, California 95124
Telephone: (408) 879-2000
37
<PAGE> 42
Telecopy: (408) 879-2900
Attention: James Steenbergen
with a copy to:
Heller Ehrman White & McAuliffe
525 University Avenue
Palo Alto, California 94301-1900
Telephone: (650) 324-7025
Telecopy: (650) 324-0638
Attention: Richard A. Peers, Esq.
Any notice which is not sent to the party's counsel in the manner and at the
address or telecopy number set forth above within 24 hours following the time
such notice is given to such party shall be deemed not to be validly delivered
to such party.
Section 8.4 Interpretation. The words "hereof", "herein" and
"herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole and not to any particular
provision of this Agreement, and article, section, paragraph, exhibit and
schedule references are to the articles, sections, paragraphs, exhibits and
schedules of this Agreement unless otherwise specified. Whenever the words
"include", "includes" or "including" are used in this Agreement they shall be
deemed to be followed by the words "without limitation". The words describing
the singular number shall include the plural and vice versa, and words denoting
any gender shall include all genders and words denoting natural persons shall
include corporations and partnerships and vice versa. The phrase "to the best
knowledge of" or any similar phrase shall mean such facts and other information
which as of the date of determination are actually known to any vice president,
chief financial officer, general counsel, chief compliance officer, controller,
and any officer superior to any of the foregoing, of the referenced party after
the conduct of a reasonable investigation under the circumstances by such
officer. The phrases "the date of this Agreement", "the date hereof" and terms
of similar import, unless the context otherwise requires, shall be deemed to
refer to November 19, 1997. As used in this Agreement, the term "affiliate(s)"
shall have the meaning set forth in Rule 12b-2 of the Exchange Act. The
parties have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties
and no presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any provisions of this Agreement.
Section 8.5 Counterparts. This Agreement may be executed in two
or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have been
signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
38
<PAGE> 43
Section 8.6 Entire Agreement; Third Party Beneficiaries. This
Agreement and the Confidentiality Agreement (including the documents and the
instruments referred to herein and therein) (a) constitutes the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof, and (b)
except as provided in Sections 5.3 and 5.6, are not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
Section 8.7 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions of
this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
Section 8.8 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware without giving
effect to the principles of conflicts of law thereof or of any other
jurisdiction.
Section 8.9 Specific Performance. Each of the parties hereto
acknowledges and agrees that in the event of any breach of this Agreement, each
non-breaching party would be irreparably and immediately harmed and could not
be made whole by monetary damages. It is accordingly agreed that the parties
hereto (a) will waive, in any action for specific performance, the defense of
adequacy of a remedy at law and (b) shall be entitled, in addition to any other
remedy to which they may be entitled at law or in equity, to compel specific
performance of this Agreement in any action instituted in a court of competent
jurisdiction.
Section 8.10 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective permitted successors and assigns.
Section 8.11 Expenses. Except as set forth in Section 7.2 hereof,
all costs and expenses incurred in connection with the Offer, the Merger, this
Agreement and the consummation of the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses, whether or not the Offer
or the Merger is consummated.
Section 8.12 Headings. Headings of the Articles and Sections of
this Agreement are for convenience of the parties only, and shall be given no
substantive or interpretative effect whatsoever.
Section 8.13 Waivers. Except as otherwise provided in this
Agreement, any failure of any of the parties to comply with any obligation,
covenant, agreement or condition herein may be waived by the party or parties
entitled to the benefits thereof only by a written instrument
39
<PAGE> 44
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, covenant, agreement or condition
shall not operate as a waiver of, or estoppel with respect to, any subsequent
or other failure.
Section 8.14 Disclosure Letter. The Company Disclosure Letter
shall be construed with and as an integral part of this Agreement to the same
extent as if the same had been set forth verbatim herein. Any matter disclosed
pursuant to the Company Disclosure Letter shall be deemed to be disclosed for
all purposes under this Agreement but such disclosure shall not be deemed to be
an admission or representation as to the materiality of the item so disclosed.
40
<PAGE> 45
IN WITNESS WHEREOF, Parent, the Purchaser and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
TEXAS INSTRUMENTS INCORPORATED
By: /s/ RICHARD K. TEMPLETON
-------------------------------------
Name: Richard K. Templeton
Title: President, Semiconductor Group
DSL ACQUISITION CORPORATION
By: /s/ GEORGE BARBER
-------------------------------------
Name: George Barber
Title: President
AMATI COMMUNICATIONS CORPORATION
By: /s/ JAMES STEENBERGEN
-------------------------------------
Name: James Steenbergen
Title: President and Chief Executive
Officer
41
<PAGE> 46
ANNEX A
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, subject to the
provisions of the Merger Agreement, the Purchaser shall not be required to
accept for payment or, subject to any applicable rules and regulations of the
SEC, including Rule 14e-1(c) under the Exchange Act (relating to the
Purchaser's obligation to pay for or return tendered Shares promptly after
termination or withdrawal of the Offer), pay for, and may delay the acceptance
for payment of or, subject to the restriction referred to above, the payment
for, any tendered Shares, and may terminate the Offer and not accept for
payment any tendered Shares if (i) any applicable waiting period under the HSR
Act has not expired or been terminated prior to the expiration of the Offer,
(ii) the Minimum Condition has not been satisfied, or (iii) at any time on or
after November 19, 1997, and before the time of acceptance of Shares for
payment pursuant to the Offer, any of the following events shall occur:
(a) there shall have been any statute, rule, regulation,
judgment, order or injunction promulgated, entered, enforced, enacted or issued
applicable to the Offer or the Merger by any federal or state governmental
regulatory or administrative agency or authority or court or legislative body
or commission which (1) prohibits the consummation of the Offer or the Merger,
(2) prohibits, or imposes any material limitations on, Parent's or the
Purchaser's ownership or operation of all or a material portion of the
Company's businesses or assets or the Shares, except for such prohibitions or
limitations which would not have a Company Material Adverse Effect, (3)
prohibits, or makes illegal the acceptance for payment, payment for or purchase
of Shares or the consummation of the Offer, or (4) renders the Purchaser unable
to accept for payment, pay for or purchase a material portion or all of the
Shares; provided, that the parties shall have used their reasonable best
efforts to cause any such statute, rule, regulation, judgment, order or
injunction to be vacated or lifted;
(b) the representations and warranties of the Company set
forth in the Merger Agreement shall not be true and accurate as of the date of
consummation of the Offer as though made on or as of such date (except for
those representations and warranties that address matters only as of a
particular date or only with respect to a specific period of time which need
only be true and accurate as of such date or with respect to such period),
except where the failure of such representations and warranties to be true and
accurate (without giving effect to any limitation as to "materiality" or
"material adverse effect" set forth therein), do not, individually or in the
aggregate, have a Company Material Adverse Effect;
(c) the Company shall have breached or failed to perform
or comply with, in all material respects, any material obligation, agreement or
covenant required by the Merger Agreement to be performed or complied with by
it as of the date of consummation of the Offer
A-1
<PAGE> 47
(d) the Merger Agreement shall have been terminated in
accordance with its terms;
(e) the Board of Directors of the Company shall have
withdrawn, modified or changed in a manner adverse to Parent or the Purchaser
its approval or recommendation of the Offer, the Merger Agreement or the Merger
or shall have recommended an Acquisition Proposal or shall have executed an
agreement in principle or definitive agreement relating to an Acquisition
Proposal or similar business combination with a person or entity other than
Parent, the Purchaser or their affiliates or the Board of Directors of the
Company shall have adopted a resolution to do any of the foregoing;
(f) Thirty percent (30%) or more of the key personnel of
the Company and its Subsidiaries identified on Schedule A(h) of the Company
Disclosure Letter shall no longer be employed by the Company or its
Subsidiaries or shall have submitted their resignations.
The foregoing conditions are for the sole benefit of the Purchaser and
Parent and, subject to the Merger Agreement, may be asserted by either of them
or may be waived by Parent or the Purchaser, in whole or in part at any time
and from time to time in the sole discretion of Parent or the Purchaser. The
failure by Parent or the Purchaser at any time to exercise any such rights
shall not be deemed a waiver of any right and each right shall be deemed an
ongoing right which may be asserted at any time and from time to time.
A-2
<PAGE> 1
EXHIBIT (c)(2)
$19,774,000
LOAN AND SECURITY AGREEMENT
dated as of November 19, 1997
between
AMATI COMMUNICATIONS
CORPORATION
as Borrower
and
TEXAS INSTRUMENTS
INCORPORATED
as Lender
<PAGE> 2
THE FOLLOWING TABLE OF CONTENTS HAS BEEN INSERTED FOR CONVENIENCE ONLY AND
DOES NOT CONSTITUTE A PART OF THIS AGREEMENT.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1 Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 1.3 Accounting and Financial Determinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE II
THE LOAN COMMITMENTS
SECTION 2.1 Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.2 Borrowing Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.3 Repayment of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III
NOTES EVIDENCING LOANS
SECTION 3.1 Term Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.2 Revolving Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.3 Recordation of Loans and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE IV
INTEREST, ETC.
SECTION 4.1 Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.2 Interest Payment Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.3 Default Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.4 Computation of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE V
PAYMENTS AND PREPAYMENTS
SECTION 5.1 Voluntary Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 5.2 Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
SECTION 5.3 Making of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.4 Due Date Extension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.5 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.6 Forgiveness of Term Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE VI
SECURITY
SECTION 6.1 Grant of Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 6.2 Security for Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 6.3 Continuing Security Interest; Transfer of Note . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 6.4 Borrower Remains Liable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
SECTION 7.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7.1.1 Location of Collateral, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7.1.2 Ownership, No Liens, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7.1.3 Possession and Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7.1.4 Negotiable Documents, Instruments and Chattel Paper . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7.1.5 No Default or Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 7.1.6 Incorporation by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VIII
CONDITIONS PRECEDENT
SECTION 8.1 Condition Precedent to Initial Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 8.2 Conditions Precedent to All Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE IX
COVENANTS AND OTHER AGREEMENTS
SECTION 9.1 Limit on Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 9.2 Prohibition on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 9.3 Notice of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 9.4 Notice of Defaults and Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 9.5 ERISA Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 9.6 SEC Filings and Press Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 9.7 Payment of Taxes and Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 9.8 Maintenance of Assets and Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 9.9 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
SECTION 9.10 Compliance with Laws, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 9.11 Reports to Other Creditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 9.12 Incorporation by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 9.13 General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE X
EVENTS OF DEFAULT
SECTION 10.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 10.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 11.2 Notices, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 11.3 No Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 11.4 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 11.6 Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 11.7 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 11.8 Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 11.9 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 11.10 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 11.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
</TABLE>
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<PAGE> 5
EXHIBITS AND SCHEDULES
EXHIBITS
EXHIBIT A Form of Copyright Security Agreement
EXHIBIT B Form of Patent Security Agreement
EXHIBIT C Form of Trademark Security Agreement
EXHIBIT D Form of Term Note
EXHIBIT E Form of Revolving Note
EXHIBIT F Form of Opinion of Borrower's Counsel
SCHEDULES
SCHEDULE I Copyright Collateral
SCHEDULE II Patent Collateral
SCHEDULE III Permitted Liens
SCHEDULE IV Trademark Collateral
SCHEDULE V Collateral Locations
SCHEDULE VI Permitted Indebtedness
iv
<PAGE> 6
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT, dated as of November 19,
1997, is made by and between AMATI COMMUNICATIONS CORPORATION, a Delaware
corporation (the "Borrower"), and TEXAS INSTRUMENTS INCORPORATED, a Delaware
corporation (together with its successors and assigns, the "Lender").
Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings provided in the Merger Agreement (as hereinafter defined).
RECITALS
WHEREAS, the Borrower desires that the Lender extend financing
to the Borrower pursuant to the terms of this Agreement;
WHEREAS, the Lender is willing to extend financing to the
Borrower pursuant to the terms of this Agreement for the purposes specified
herein; and
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition precedent thereto, the Borrower, the Lender and
DSL Acquisition Corporation ("Merger Sub") have entered into that certain
Agreement and Plan of Merger of even date herewith (the "Merger Agreement"),
pursuant to which the Merger Sub will commence a tender offer for all
outstanding shares of common stock, par value $.20 per share, of the Borrower
and, subject to the consummation of such tender offer, Merger Sub will be
merged with and into the Borrower with the Borrower continuing as the surviving
corporation and a wholly-owned subsidiary of the Lender;
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, and subject to the terms and conditions hereof, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1 Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings (such meanings
to be equally applicable to both the singular and plural forms of the terms
defined):
"Agreement" means this Loan and Security Agreement, as
hereafter amended, modified, restated, refinanced, refunded or renewed from
time to time in whole or in part.
<PAGE> 7
"Authorized Officer" means any one of the following officers
of the Borrower: the Chief Executive Officer, the Chief Financial Officer or
the Vice President, Business Development.
"Borrower" - see Preamble.
"Business Day" means any day excluding Saturday, Sunday and
any day which is a legal holiday under the laws of the State of Texas or is a
day on which banking institutions located in such state are authorized or
required by law or other governmental action to close.
"Code" means the Internal Revenue Code of 1986, as amended,
and all rules and regulations thereunder.
"Collateral" - see Section 6.1.
"Commitments" means the commitments of the Lender to make the
Term Loan and the Revolving Loans pursuant to Sections 2.1(a) and 2.1(b),
respectively.
"Computer Hardware and Software" shall mean (a) all computer
and other electronic data processing hardware, integrated computer systems,
central processing units, memory units, display terminals, printers, features,
computer elements, card readers, tape drives, hard and soft disk drives,
cables, electrical supply hardware, generators, power equalizers, accessories
and all peripheral devices and other related computer hardware, whether now
owned, licensed or leased or hereafter acquired by the Borrower; (b) all
software programs, including source code and object code whether now owned,
licensed or leased or hereafter acquired by the Borrower, designed for use on
the computers and electronic data processing hardware described in clause (a)
above; (c) all firmware associated therewith, whether now owned, licensed or
leased or hereafter acquired by the Borrower; and (d) all documentation for
such hardware, software and firmware described in the preceding clauses (a),
(b) and (c), whether now owned, licensed or leased or hereafter acquired by the
Borrower.
"Controlled Group" means all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with the
Borrower, are treated as a single employer under section 414(b) or section
414(c) of the Code or section 4001 of ERISA.
"Copyright Collateral" shall mean all of the Borrower's right,
title and interest in and to registered and unregistered copyrights (including,
without limitation, copyrights for
2
<PAGE> 8
any of the Computer Hardware and Software), copyright registrations and
copyright applications, which, in the case of registrations and applications,
have been or are hereafter issued by or filed with the CRO or any similar
office or agency of any other countries, including, without limitation, the
copyrighted works, copyright registrations and copyright applications listed on
Schedule I attached hereto and made a part hereof.
"Copyright Security Agreement" means a Copyright Security
Agreement in substantially the form attached hereto as Exhibit A.
"CRO" shall mean the United States Copyright Office.
"Default" means any event which if it continues uncured would,
with lapse of time or notice, or both, constitute an Event of Default.
"Dollars" and the sign "$" means lawful money of the United
States of America.
"Equipment" - see Section 6.1.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Event of Default" means any of the events described in
Section 10.1.
"GAAP" - see Section 1.3.
"Indebtedness", as applied to any Person, means (i) all
indebtedness for borrowed money, (ii) all notes payable and drafts accepted
representing extensions of credit whether or not representing obligations for
borrowed money, (iii) any obligation owed for all or any part of the deferred
purchase price of property or services (excluding obligations incurred under
ERISA) which purchase price is (x) due more than six months from the date of
incurrence of the obligation in respect thereof or (y) evidenced by a note or
similar written instrument, (iv) all indebtedness secured by any Lien on any
property or asset owned or held by that Person regardless of whether the
indebtedness secured thereby shall have been assumed by that Person or is
nonrecourse to the credit of that Person and (v) that portion of obligations
with respect to capital leases that is properly classified as a liability on a
balance sheet in conformity with GAAP.
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<PAGE> 9
"Intellectual Property Collateral" shall mean (i) the
Trademark Collateral, Copyright Collateral and Patent Collateral; (ii) all
reissues, divisions, continuations, renewals, extensions and
continuations-in-part of any of the foregoing; (iii) all license agreements
related to any of the foregoing set forth in this definition; (iv) all income,
royalties, damages and payments now and hereafter due or payable with respect
thereto, including without limitation, payments, under all licenses entered
into in connection therewith and damages, settlements and payments for past or
future infringements thereof; (v) all books, records, writings, computer tapes
or disks, flow diagrams, specification sheets, source codes, object codes and
other physical manifestations, embodiments or incorporation of the foregoing
set forth in this definition; and (vi) the right to sue for all past, present
and future infringements of any of the foregoing set forth in this definition.
"Inventory" - see Section 6.1.
"Lender" - see Preamble.
"Liabilities" means all obligations of the Borrower to the
Lender howsoever created, arising or evidenced, whether direct or indirect,
joint or several, absolute or contingent, or now or hereafter existing, or due
or to become due, which arise out of or in connection with this Agreement, the
Notes or any other Related Document.
"Lien" means any security interest, mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), claim, charge or other priority or preferential arrangement of any kind
or nature whatsoever.
"Loan(s)" - see Section 2.1.
"Material Adverse Effect" means any material adverse effect on
the business, assets, liabilities, financial condition or results of operations
of the Borrower and its Subsidiaries taken as a whole.
"Merger Agreement" - see third recital.
"Notes" means, collectively, the Term Note and the Revolving
Note.
"Payment Date" - see Section 4.2.
4
<PAGE> 10
"Patent Collateral" shall mean all of the Borrower's right,
title and interest in and to patents, patent applications, inventions, trade
secrets, know-how and proprietary information, which, in the case of patents or
patent applications, have been or are hereafter issued by or filed with the PTO
or any similar office or agency of any other countries, including, without
limitation, the patents and patent applications listed on Schedule II attached
hereto and made part thereof.
"Patent Security Agreement" means a Patent Security Agreement
in substantially the form attached hereto as Exhibit B.
"PBGC" means the Pension Benefit Guaranty Corporation and any
entity succeeding to any or all of its functions under ERISA.
"Pension Plan" means a "pension plan," as such term is defined
in section 3(2) of ERISA (including a multi-employer plan as defined in section
4001 (a) (3) of ERISA), to which the Borrower or any corporation, trade or
business that is, along with the Borrower, a member of a Controlled Group, may
have liability, including any liability by reason of having been a substantial
employer within the meaning of section 4063 of ERISA at any time during the
preceding five years, or by reason of being deemed to be a contributing sponsor
under section 4069 of ERISA.
"Permitted Liens" shall mean the Liens described on Schedule
III attached hereto.
"Person" means any natural person, corporation, limited
partnership, general partnership, limited liability company, limited liability
partnership, joint stock company, joint venture, association, company, trust,
bank, trust company, land trust, business trust or other organization, whether
or not a legal entity, or any government, agency or other administrative or
regulatory body.
"Prime Rate" means the rate that NationsBank announces as its
prime lending rate, as in effect from time to time.
"PTO" shall mean the United States Patent and Trademark
Office.
"Receivables" - see Section 6.1.
"Related Contracts" - see Section 6.1.
5
<PAGE> 11
"Related Documents" shall mean the Term Note, the Revolving
Note, the Copyright Security Agreement, the Patent Security Agreement and the
Trademark Security Agreement.
"Reportable Event" shall have the meaning assigned to such
term in ERISA.
"Revolving Loan Commitment" means the commitment of the Lender
to make the Revolving Loans pursuant to Section 2.1(b).
"Revolving Loan Commitment Termination Date" - see Section
2.1(b).
"Subsidiary" means, with respect to any party, any
corporation, partnership or other entity or organization, whether incorporated
or unincorporated, of which (i) such party or any other Subsidiary of such
party is a general partner (excluding such partnerships where such party or any
Subsidiary of such party do not have a majority of the voting interest in such
partnership) or (ii) at least a majority of the securities or other interests
having by their terms ordinary voting powers to elect a majority of the board
of directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or controlled
by such party or by any one or more of its Subsidiaries, or by such party and
one or more of its Subsidiaries.
"SVB" means Silicon Valley Bank.
"SVB Loan Agreement" means the Loan and Security Agreement
dated as of April 25, 1997 between Borrower and SVB.
"Termination Date" means September 30, 1999.
"Trademark Collateral" shall mean all of the Borrower's right,
title and interest in and to registered and unregistered trademarks, service
marks, trade names, designs, logos, indicia, and/or other source and/or
business identifiers and the goodwill of the business relating to any and all
of the foregoing and any registrations or applications therefor, which, in the
case of applications or registrations, have been or are hereafter issued by or
filed with the PTO, with any similar office or agency of any state, territory
or possession of the United States or any similar office or agency of any other
countries or, if not so filed, are otherwise used in the United States, any
state, territory or possession thereof or any other country, including, without
limitation, the marks, names, logos, indicia, trademark registrations and
trademark applications listed on Schedule IV attached hereto and made a part
hereof.
6
<PAGE> 12
"Trademark Security Agreement" means a Trademark Security
Agreement in substantially the form attached hereto as Exhibit C.
"U.C.C." shall mean the Uniform Commercial Code or comparable
statute or any successor statute thereto, as in effect from time to time in the
relevant jurisdiction.
SECTION 1.2 Other Definitional Provisions.
(a) All terms defined in this Agreement shall have the
above-defined meanings when used in any certificate, report or other
document made or delivered pursuant to this Agreement, unless the
context therein shall clearly otherwise require.
(b) The words "hereof," "herein," "hereunder" and similar
terms when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.
(c) The words "amended or modified" when used in this
Agreement shall mean with respect to this Agreement or any Related
Document, this Agreement or Related Document as from time to time, in
whole or in part, amended, modified, supplemented, restated,
refinanced, refunded or renewed.
(d) In the computation of periods of time in this
Agreement from a specified date to a later specified date, the word
"from" means "from and including" and the words "to" and "until" each
means "to but excluding."
SECTION 1.3 Accounting and Financial Determinations. For
purposes of this Agreement, unless otherwise specified, all accounting terms
used herein shall be interpreted, all accounting determinations and
computations hereunder shall be made, and all financial statements required to
be delivered hereunder shall be prepared in accordance with, those generally
accepted accounting principles ("GAAP") applied in the preparation of the
financial statements referred to in Section 3.5 of the Merger Agreement.
ARTICLE II
THE LOAN COMMITMENTS
SECTION 2.1 Commitments. Subject to the terms and conditions
hereof and in reliance upon the representations and warranties of Company
herein set forth, Lender agrees to
7
<PAGE> 13
make the loans described in subsections 2.1(a) and 2.1(b) (each referred to
herein individually, as a "Loan", and collectively, as the "Loans").
(a) Term Loan. Lender agrees to make a loan (the "Term
Loan) to Borrower on the date hereof in a single advance in the amount
of $14,774,000. Amounts borrowed pursuant to this subsection 2.1(a)
and subsequently repaid or prepaid may not be reborrowed.
(b) Revolving Loans. Lender agrees to make loans (each
referred to herein individually, as a "Revolving Loan," and
collectively, as "Revolving Loans") to Borrower from time to time
during the period from the date hereof to the earlier of (i) the
Effective Time and (ii) the termination of the Merger Agreement (the
"Revolving Loan Commitment Termination Date") in an aggregate amount
not to exceed at any time $5,000,000 (the "Maximum Revolver Amount").
Amounts borrowed pursuant to this subsection 2.1(b) may be repaid and,
subject to the Maximum Revolver Amount and the other terms and
conditions herein, reborrowed.
SECTION 2.2 Borrowing Procedures. Any Authorized Officer of
the Borrower may request a Loan on any Business Day prior to the Revolving Loan
Commitment Termination Date (provided, however, that the Term Loan shall be
made only on the date hereof) by giving the Lender telephonic or facsimile
notice (which notice shall be irrevocable once given and shall be promptly
confirmed in writing if given telephonically). Each request for a Loan must be
received by the Lender prior to 12:00 noon, Dallas time, on the proposed date
of borrowing (which must be a Business Day) and shall specify (a) the principal
amount of such borrowing and (b) the proposed date of such borrowing. Each
Revolving Loan shall be in a principal amount of $100,000 or an integral
multiple of $100,000 in excess thereof. Subject to satisfaction of the
applicable conditions precedent set forth in Section 8 hereof and the
requirements as to the use of proceeds set forth in Section 5.5 hereof, the
Lender shall make the proceeds of each Loan available to the Borrower by
causing an amount of same day funds equal to the principal amount of the Loan
to be credited to the account of the Borrower at a bank designated by the
Borrower.
SECTION 2.3 Repayment of Loans. Subject to the provisions of
Sections 5.2, 5.6 and 10.2, the Loans shall be payable (and the Borrower agrees
to pay such Loans) in full in immediately available funds on the Termination
Date.
8
<PAGE> 14
ARTICLE III
NOTES EVIDENCING LOANS
SECTION 3.1 Term Note. The Term Loan shall be evidenced by a
promissory note (the "Term Note") substantially in the form attached hereto as
Exhibit D, with appropriate insertions, in a principal amount equal to the
amount of the Term Loan.
SECTION 3.2 Revolving Note. The Revolving Loans shall be
evidenced by a promissory note (the "Revolving Note") substantially in the form
attached hereto as Exhibit E, with appropriate insertions, in the principal
amount of $5,000,000.
SECTION 3.3 Recordation of Loans and Payments. The date and
amount of each Loan made by the Lender and of each repayment of principal
thereon received by the Lender shall be recorded by the Lender in its records,
or at its option, on a schedule attached to the Term Note or the Revolving
Note, as the case may be. The aggregate unpaid principal amount so recorded
shall be rebuttable presumptive evidence of the principal amount owing and
unpaid on such Note in the absence of manifest error. The failure to so record
or any error in so recording any such amount shall not, however, limit or
otherwise affect the obligations of the Borrower hereunder or under the Notes
to repay the principal amount of the Loans together with all interest accrued
thereon.
ARTICLE IV
INTEREST, ETC.
SECTION 4.1 Interest Rate. Subject to Section 4.3, the Term
Loan and each Revolving Loan shall bear interest on the unpaid principal amount
thereof from the date made through maturity (whether by acceleration, required
prepayment or otherwise) a rate per annum equal to the Prime Rate plus two
percent (2.0%).
SECTION 4.2 Interest Payment Dates. Subject to Section 4.3,
accrued interest on the Loans shall be payable monthly in arrears on the first
Business Day of each month and at maturity (each a "Payment Date"), commencing
with the first of such dates to occur after the date hereof.
SECTION 4.3 Default Interest Rate. Upon and during the
continuance of an Event of Default (as defined in Section 10.1), the
outstanding principal amount of all Loans, and, to the extent permitted by
applicable law, any interest payments thereon not paid when
9
<PAGE> 15
due and any fees and other amounts then due and payable under this Agreement,
shall bear interest (including post-petition interest in any proceeding under
Title 11 of the United States Code, as now and hereinafter in effect, or any
successor statute (the "Bankruptcy Code") or any other applicable bankruptcy
laws) payable on demand at a rate that is three percent (3.0%) per annum in
excess of the interest rate otherwise payable under this Agreement. Payment or
acceptance of the increased rates of interest provided for in this Section 4.3
is not a permitted alternative to timely payment and shall not constitute a
waiver of any Event of Default or otherwise prejudice or limit any rights or
remedies of the Lender.
SECTION 4.4 Computation of Interest. All interest on the
Loans shall be computed for the actual number of days elapsed on the basis of a
360-day year.
ARTICLE V
PAYMENTS AND PREPAYMENTS
SECTION 5.1 Voluntary Prepayments. The Borrower may from
time to time prepay the Loans in whole or in part, provided that (a) each
partial prepayment of a Loan shall be in a principal amount of $100,000 or an
integral multiple thereof, and (b) any prepayment of the entire principal
amount of all Loans shall include accrued interest to the date of prepayment.
SECTION 5.2 Mandatory Prepayments. Subject to Section 5.6,
the Borrower shall make mandatory repayments of the Loans as follows:
(a) If the Merger Agreement shall be terminated by the
Borrower pursuant to Section 7.1(c)(i) of the Merger Agreement or by
Parent and Purchaser pursuant to Section 7.1(d)(i) or (ii) of the
Merger Agreement, the Borrower shall, immediately on demand, repay the
Loans (including interest accrued thereon) and any other Liabilities
in full in immediately available funds.
(b) If the Merger Agreement shall be terminated for any
reason under Section 7.1 of the Merger Agreement (other than pursuant
to Sections 7.1(c)(i) or 7.1(d)(i) or (ii), Borrower shall, within 180
days of demand, repay the Loans (including interest accrued thereon)
and any other Liabilities in full in immediately available funds.
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<PAGE> 16
(c) If at any time the amount of Revolving Loans
outstanding shall exceed the Maximum Revolver Amount, the Borrower
shall immediately repay the Revolving Loans in an amount equal to such
excess.
SECTION 5.3 Making of Payments. Except as otherwise
provided, all payments in respect of the Loans shall be made by the Borrower to
the Lender in immediately available funds. All such payments shall be made to
the Lender at its account at NationsBank or as otherwise directed by Lender,
not later than 12:30 P.M., Dallas time, on the date due. Funds received after
such time shall be deemed to have been received by the Lender on the next
following Business Day.
SECTION 5.4 Due Date Extension. If any Payment Date falls on
a day which is not a Business Day, then such Payment Date shall be extended to
the next following Business Day (except as provided in Section 4.3), and
additional interest shall accrue and be payable for the period of such
extension.
SECTION 5.5 Use of Proceeds. The proceeds of the Term Loan
shall be used by the Borrower solely for the purpose of paying to Westell
Technologies, Inc. the fee required to be paid to it pursuant to Section 8.1(e)
of the Agreement and Plan of Merger dated September 30, 1997 by and among
Westell Technologies, Inc. ("Westell"), Kappa Acquisition Corp. and Borrower.
The proceeds of the Revolving Loans shall be used by the Borrower (i) to repay
in full on the date hereof (x) all amounts owing to Westell under the Loan and
Security, dated as of September 30, 1997, between Westell and the Borrower (the
"Westell Loan Agreement") and (y) all amounts owing to SVB under the SVB Loan
Agreement and (ii) subsequent to such repayments, for general working capital
purposes to the extent permitted by the Merger Agreement. The Borrower will
not, directly or indirectly, use any part of such proceeds for the purpose of
purchasing or carrying any margin stock within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System or to extend credit to any
Person for the purpose of purchasing or carrying any such margin stock.
SECTION 5.6 Forgiveness of Term Loan. Notwithstanding
anything to the contrary contained herein, the Lender agrees to forgive the
outstanding principal amount of the Term Loan in the event that the Merger
Agreement is terminated, except in the following circumstances:
(a) the Merger Agreement is terminated by the Borrower
pursuant to Section 7.1(c)(i) of the Merger Agreement;
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<PAGE> 17
(b) the Merger Agreement is terminated by the Lender and
Merger Sub pursuant to Section 7.1(d)(i) of the Merger Agreement;
(c) the Merger Agreement is terminated either by the
Borrower pursuant to Section 7.1(b)(i), (c)(ii) or (c)(iii) or by the
Lender and Merger Sub pursuant to Section 7.1(b)(i) or (d)(ii), and at
the time of such termination any of the events specified in clauses
(b), (c) or (e) of Annex A to the Merger Agreement shall have occurred
and be continuing; and
(d) the Merger Agreement is terminated in accordance with
its terms and, within six months after such termination, the Borrower
or its stockholders consummate a transaction or enter into a
definitive agreement with respect to an Acquisition Proposal (as
defined in the Merger Agreement) pending at the time of such
termination.
In connection with clause (d) above, the Lender and the Borrower agree
that notwithstanding anything to the contrary contained herein, during the six
month period specified in such clause (d), the Term Loan shall remain
outstanding and the Lender shall forebear from enforcing its right to repayment
of the Term Loan. If at the conclusion of such six month period no event
described in clause (d) has occurred, the outstanding principal amount of the
Term Loan shall be forgiven. If prior to the conclusion of such six month
period an event described in clause (d) has occurred, the outstanding principal
amount of the Term Loan shall thereupon become immediately due and payable.
ARTICLE VI
SECURITY
SECTION 6.1 Grant of Security. The Borrower hereby assigns,
pledges and grants to the Lender a security interest in all of the Borrower's
right, title and interest in and to the following, whether now or hereafter
existing, acquired or created (the "Collateral"):
(a) As such terms are defined in the U.C.C., all
"equipment", in all of its forms, wherever located and all fixtures
and all parts thereof and all accessions, additions, attachments,
improvements, substitutions and replacements thereto and therefore,
including, but not limited to, Computer Hardware and Software (any and
all of the foregoing being the "Equipment");
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<PAGE> 18
(b) As such terms are defined in the U.C.C., all
"inventory", in all of its forms, wherever located including, without
limitation, (i) all raw materials and work in process therefor,
finished goods thereof and materials used or consumed in the
manufacture or production thereof, (ii) all goods in which the
Borrower has an interest in mass or a joint or other interest or right
of any kind (including, without limitation, goods in which the
Borrower has an interest or right as consignee), and (iii) all goods
which are returned to or repossessed by the Borrower, and all
accessions thereto and products thereof and documents therefor,
including Computer Hardware and Software (any and all of the foregoing
being the "Inventory");
(c) As such terms are defined in the U.C.C., all
"accounts" (including, without limitation, any intercompany accounts),
"contracts", "contract rights", "chattel paper", "documents",
"instruments", "deposit accounts" and "general intangibles", and other
obligations of any kind whether or not arising out of or in connection
with the sale or lease of goods or the rendering of services, and all
rights now or hereafter existing in and to all security agreements,
guarantees, leases and other contracts securing or otherwise relating
to any such accounts, contracts, contract rights, chattel paper,
documents, instruments, deposit accounts, general intangibles and
other obligations including, without limitation, to the extent
applicable, the Material Contracts (as defined in the Merger
Agreement), and all payments under contract rights constituting
Collateral (any and all of the foregoing being the "Receivables," and
any and all documents and written instruments related thereto being
the "Related Contracts");
(d) All Intellectual Property Collateral;
(e) All Computer Hardware and Software;
(f) All books, records, writings, data bases, information
and other property relating to, used or useful in connection with,
evidencing, embodying, incorporating or referring to, any of the
foregoing in this Section 6.1;
(g) All of the Borrower's other personal property and
rights of every kind and description and interests therein, including,
but not limited to, Computer Hardware and Software;
(h) All products, rents, issues, profits, returns, income
and proceeds of and from and claims relating to any and all of the
foregoing Collateral (including, without
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limitation, proceeds which constitute property of the types described
in clauses (a) through (g) of this Section 6.1), and, to the extent
not otherwise included, all (i) payments under insurance (whether or
not the Lender is the loss payee thereof), or any indemnity, warranty
or guaranty, payable by reason of loss or damage to or otherwise with
respect to any of the foregoing Collateral, and (ii) cash.
SECTION 6.2 Security for Liabilities. The security interests
granted pursuant to Section 6.1 secure the prompt payment in full when due,
whether at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise (including the payment of amounts that would become due but
for the operation of the automatic stay under Section 362(a) of the Bankruptcy
Code), of all of the Liabilities in respect of the Revolving Loans now or
hereafter existing, whether for principal, interest, fees, expenses or
otherwise (the "Secured Liabilities"). Liabilities in respect of the Term Loan
shall be unsecured obligations of the Borrower.
SECTION 6.3 Continuing Security Interest; Transfer of Note.
This Agreement shall create a continuing security interest in the Collateral,
which security interest shall:
(a) remain in full force and effect until the irrevocable
payment in full of all Secured Liabilities and the termination of the
Revolving Loan Commitment;
(b) be binding upon the Borrower, its successors,
transferees and assigns; and
(c) inure to the benefit of the Lender, its successors,
transferees and assigns.
Without limiting the generality of the foregoing clause (c), the Lender may
assign or otherwise transfer (in whole or in part) the Loans or the
Commitments, or any portion thereof, to any other Person or entity, and such
other Person or entity shall thereupon become vested with all the rights and
benefits in respect the security interest granted to the Lender under this
Agreement or any Related Document or otherwise. Upon the payment in full of
all Secured Liabilities and the termination of the Revolving Loan Commitment,
the security interest granted herein shall terminate and all rights to the
Collateral shall revert to the Borrower. Upon any such termination, the Lender
will, at the Borrower's sole expense, execute and deliver to the Borrower such
documents as the Borrower shall reasonably request to evidence such
termination.
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SECTION 6.4 Borrower Remains Liable. Anything herein to the
contrary notwithstanding:
(a) Borrower shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein,
and shall perform all of its duties and obligations thereunder to the
same extent as if this Agreement had not been executed;
(b) the exercise by the Lender of any of its rights
hereunder shall not release the Borrower from any of its duties or
obligations under the contracts or agreements included in the
Collateral; and
(c) the Lender shall not have any obligation or liability
under such contracts or agreements included in the Collateral by
reason of this Agreement, nor shall the Lender be obligated to perform
any of the obligations or duties of the Borrower thereunder or to take
any action to collect or enforce any claim for payment assigned
hereunder.
SECTION 6.5 Further Assurances.
(a) The Borrower agrees that from time to time, at the
expense of the Borrower, the Borrower will promptly execute and
deliver all further instruments and documents, and take all further
action, that may be necessary or desirable, or that the Lender may
request, in order to perfect and protect any security interest granted
or purported to be granted hereby or to enable the Lender to exercise
and enforce its rights and remedies hereunder with respect to any
Collateral. Without limiting the generality of the foregoing, the
Borrower will: (i) mark conspicuously each item of chattel paper
included in the Receivables and, at the request of the Lender, each of
its records pertaining to the Collateral, with a legend, in form and
substance satisfactory to the Lender, indicating that such Collateral
is subject to the security interest granted hereby, (ii) at the
request of the Lender, deliver and pledge to the Lender hereunder all
promissory notes and other instruments (including checks) and all
original counterparts of chattel paper constituting Collateral, duly
endorsed and accompanied by duly executed instruments of transfer or
assignment, all in form and substance satisfactory to the Lender,
(iii) execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may be
necessary or desirable, or as the Lender may request, in order to
perfect and preserve the security interests granted or purported to be
granted hereby, (iv) promptly after the acquisition
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by the Borrower of any item of Equipment which is covered by a
certificate of title under a statute of any jurisdiction under the law
of which indication of a security interest on such certificate is
required as a condition of perfection thereof, execute and file with
the registrar of motor vehicles or other appropriate authority in such
jurisdiction an application or other document requesting the notation
or other indication of the security interest created hereunder on such
certificate of title, (v) within thirty (30) days after the end of
each calendar quarter, deliver to the Lender copies of all such
applications or other documents filed during such calendar quarter
indicating and copies of all such certificates of title issued during
such calendar quarter indicating the security interest created
hereunder in the items of Equipment covered thereby, (vi) at any
reasonable time, upon request by the Lender, exhibit the Collateral to
and allow inspection of the Collateral by the Lender, or persons
designated by the Lender, and (vii) at the Lender's request, appear in
and defend any action or proceeding that may affect the Borrower's
title to or the Lender's security interest in all or any part of the
Collateral.
(b) The Borrower hereby authorizes the Lender to file one
or more financing or continuation statements, and amendments thereto,
relative to all or any part of the Collateral without the signature of
the Borrower. The Borrower agrees that a carbon, photographic or
other reproduction of this Agreement or of a financing statement
signed by the Borrower shall be sufficient as a financing statement
and may be filed as a financing statement in any and all
jurisdictions.
(c) The Borrower will furnish to the Lender from to time
to time statements and schedules further identifying and describing
the Collateral and such other reports in connection with the
Collateral as the Lender may reasonably request, all in reasonable
detail.
SECTION 6.6 Notice Requirements. The Borrower shall notify
the Lender of any change in the Borrower's name, identity or corporate
structure within fifteen (15) days of such change and shall give the Lender
thirty (30) days' prior written notice of any change in the Borrower's chief
place of business, chief executive office or residence or the office where the
Borrower keeps its records regarding the Receivables and all originals of all
chattel paper that evidence Receivables.
SECTION 6.7 The Lender May Perform. If the Borrower fails to
perform any agreement contained herein, the Lender may itself perform, or cause
performance of, such
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agreement, and the expenses of the Lender incurred in connection therewith
shall be payable by the Borrower under Section 11.5.
SECTION 6.8 Standard of Care. The powers conferred on the
Lender hereunder are solely to protect its interest in the Collateral and shall
not impose any duty upon it to exercise any such powers. Except for the
exercise of reasonable care in the custody of any Collateral in its possession
and the accounting for moneys actually received by it hereunder, the Lender
shall have no duty as to any Collateral or as to the taking of any necessary
steps to preserve rights against prior parties or any other rights pertaining
to any Collateral. The Lender shall be deemed to have exercised reasonable
care in the custody and preservation of Collateral in its possession if such
Collateral is accorded treatment substantially equal to that which the Lender
accords its own property.
SECTION 6.9 Remedies. If any Event of Default shall have
occurred and be continuing, the Lender may exercise in respect of the
Collateral, in addition to all other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party on
default under the U.C.C. (whether or not the U.C.C. applies to the affected
Collateral), and also may (a) require the Borrower to, and Borrower hereby
agrees that it will at its expense and upon request of the Lender forthwith,
assemble all or part of the Collateral as directed by the Lender and make it
available to the Lender at a place to be designated by the Lender that is
reasonably convenient to both parties, (b) enter onto the property where any
Collateral is located and take possession thereof with or without judicial
process, (c) prior to the disposition of the Collateral, store, process, repair
or recondition the Collateral or otherwise prepare the Collateral for
disposition in any manner to the extent the Lender deems appropriate, and (d)
without notice except as specified below, sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any of the
Lender's offices or elsewhere, for cash, on credit or for future delivery, at
such time or times and at such price or prices and upon such other terms as the
Lender may deem commercially reasonable. The Lender may be the purchaser of
any or all of the Collateral at any such sale and the Lender shall be entitled,
for the purpose of bidding and making settlement or payment of the purchase
price for all or any portion of the Collateral sold at any public sale, to use
and apply any of the Liabilities as a credit on account of the purchase price
for any Collateral payable by the Lender at such sale. Each purchaser at any
such sale shall hold the property sold absolutely free from any claim or right
on the part of the Borrower, and the Borrower hereby waives (to the extent
permitted by applicable law) all rights of redemption, stay and/or appraisal
which it now has or may at any time in the future have under any rule or law or
statute now existing or hereafter enacted. The Borrower agrees that, to the
extent notice of sale shall be required by law, at least ten (10) days' notice
to the Borrower of the time and place of any public sale or the time
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after which any private sale is to be made shall constitute reasonable
notification. The Lender shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Lender may adjourn any
public or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned. The Borrower hereby waives any claims
against the Lender arising by reason of the fact that the price at which any
Collateral may have been sold at such a private sale was less than the price
which might have been obtained at a public sale, even if the Lender accepts the
first offer received and does not offer such Collateral to more than one
offeree. If the proceeds of any sale or other disposition of the Collateral
are insufficient to pay all the Liabilities, the Borrower shall be liable for
the deficiency and the fees of any attorneys employed by the Lender to collect
such deficiency.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
SECTION 7.1 Representations and Warranties. The Borrower
represents and warrants to the Lender as set forth in this Section 7.
SECTION 7.1.1 Location of Collateral, etc. All of
the Equipment and Inventory is located at the places specified in Item A and
Item B, respectively, of Schedule V hereto. The chief place of business and
chief executive office of the Borrower and the office where Borrower keeps its
records concerning the Receivables, and all originals of all chattel paper that
evidence Receivables, and the original copies of the contracts, are located at
its address specified in Item C of Schedule V hereto. The Borrower has not
been known by any legal name different from the one set forth on the signature
page hereto, nor has the Borrower been the subject of any merger or other
corporate reorganization (other than as contemplated by the Merger Agreement).
None of the Receivables is evidenced by a promissory note or other instrument.
SECTION 7.1.2 Ownership, No Liens, etc. The
Borrower is the legal and beneficial owner of the Collateral free and clear of
any Lien except for the security interest created by this Agreement and
Permitted Liens. No effective financing statement or other document similar in
effect covering all or any part of the Collateral is on file in any recording
office, except such as may have been filed by or with respect to the Borrower
relating to this Agreement and Permitted Liens.
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SECTION 7.1.3 Possession and Control. The Borrower
has exclusive possession and control of the Equipment and Inventory.
SECTION 7.1.4 Negotiable Documents, Instruments and
Chattel Paper. The Borrower has, contemporaneously herewith, delivered to the
Lender possession of all originals of all negotiable documents (other than
checks received by the Borrower in the ordinary course of business),
instruments and chattel paper currently owned or held by the Borrower (duly
endorsed in blank, if requested by the Lender).
SECTION 7.1.5 No Default or Event of Default. No
Default or Event of Default has occurred and is continuing with respect to the
Borrower and no violation or breach of any provision has occurred and is
continuing under the Merger Agreement.
SECTION 7.1.6 Incorporation by Reference. The
Borrower agrees that the representations and warranties of the Borrower set
forth in Article III of the Merger Agreement shall be incorporated by reference
in this Agreement in their entirety as if fully set forth herein with the same
effect as if applied to this Agreement. All capitalized terms set forth in
Article III of the Merger Agreement shall have the meanings provided in the
Merger Agreement; provided that for purposes of this Agreement, to the extent
set forth in the Merger Agreement, the term "Company" shall be deemed to refer
to the Borrower. Such representations and warranties shall not be affected in
any manner by the termination of the Merger Agreement.
ARTICLE VIII
CONDITIONS PRECEDENT
SECTION 8.1 Condition Precedent to Initial Loans. The
obligation of the Lender to make the initial Loans to the Borrower is subject
to the condition precedent that the Borrower shall have delivered or caused to
be delivered to Lender on or before the day of such Loans each of the
following, in form and substance satisfactory to the Lender and its counsel:
(a) Notes. The Term Note and the Revolving Note, each
duly executed by the Borrower;
(b) Intellectual Property Security Documents. The
Copyright Security Agreement, the Patent Security Agreement and the
Trademark Security Agreement, each duly executed by the Borrower;
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(c) Financing Statements. (i) financing statements
(UCC-1), in form and substance satisfactory to the Lender, for filing
in all jurisdictions necessary or, in the opinion of the Lender or its
counsel, desirable to perfect the security interests created by this
Agreement; and (ii) certified copies of Requests for Information (Form
UCC-11) identifying all of the financing statements on file with
respect to the Borrower in all jurisdictions referred to under clause
(i) herein, indicating that the Collateral is free of all Liens,
except for Permitted Liens;
(d) Insurance. Evidence of the existence of insurance on
the property of the Borrower, together with evidence establishing the
Lender as a loss payee and/or additional insured on all related
insurance policies;
(e) Certificate of the Borrower. A certificate (dated as
of the date of this Agreement) of the Secretary of the Borrower
certifying: (i) a copy of the certificate of incorporation of the
Borrower as theretofore amended; (ii) a copy of the bylaws of the
Borrower, as theretofore amended; (iii) copies of all corporate action
taken by the Borrower, including resolutions of its Board of
Directors, authorizing the execution, delivery, and performance of
this Agreement and the Related Documents by the Borrower and each
other document to be delivered pursuant to this Agreement and
authorizing borrowings by each of the Authorized Officers; and (iv)
the names and true signatures of the officers of the Borrower
authorized to sign this Agreement, the Related Documents and the other
documents and instruments to be delivered by the Borrower under this
Agreement;
(f) Certified Charter and Good Standing. A certificate
of the due formation, valid existence and good standing of the
Borrower in its state of incorporation, issued by the appropriate
authorities of such jurisdictions, and certificates of the Borrower's
good standing and due qualification to do business, issued by
appropriate officials in any states in which Borrower owns Collateral
subject to this Agreement;
(g) Opinion of counsel for the Borrower. A favorable
opinion of Heller Ehrman White & McAuliffe, counsel for the Borrower,
in substantially the form of Exhibit F and as to such other matters as
the Lender may reasonably request;
(h) Merger Agreement. The Borrower, the Lender and the
Merger Sub shall have executed and delivered the Merger Agreement on
terms and conditions satisfactory to the Lender;
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(i) SVB Lien Releases. All termination statements, lien
releases or similar documents or instruments duly executed by SVB for
filing in all applicable jurisdictions as may be necessary to
terminate all of SVB's Liens against the Collateral; and
(j) Other Matters. The Lender shall have received such
other approvals, opinions, or documents as the Lender may reasonably
request.
SECTION 8.2 Conditions Precedent to All Loans. The
obligation of the Lender to make each Loan (including the initial Loan) shall
be subject to the further conditions precedent that on the date of such Loan:
(a) The following statements shall be true and correct
and the Lender shall have received a certificate signed by an
Authorized Officer of the Borrower, dated the date of such Loan,
stating that:
(i) The representations and warranties contained
in Article 7 of this Agreement and Article III of the Merger
Agreement are true and correct on and as of the date of such
Loan as though made on and as of such date;
(ii) No Default or Event of Default has occurred
and is continuing, or would result from the borrowing of such
Loan; and
(iii) No Material Adverse Effect has occurred since
the date of the most recent financial statements delivered or
required to be delivered pursuant to the Merger Agreement.
(b) The Lender shall have received such other approvals,
opinions, or documents as the Lender may reasonably request.
ARTICLE IX
COVENANTS AND OTHER AGREEMENTS
The Borrower covenants and agrees that, so long as either of
the Commitments hereunder shall remain in effect and until all Liabilities have
been irrevocably paid in full, the Borrower shall perform all covenants in this
Article IX:
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SECTION 9.1 Limit on Indebtedness. The Borrower shall not, and shall
not permit any of its Subsidiaries to, directly or indirectly, create, incur,
assume or guaranty, or otherwise become or remain directly or indirectly liable
with respect to, any Indebtedness other than the Liabilities and the
Indebtedness described on Schedule VI to this Agreement.
SECTION 9.2 Prohibition on Liens. Except to the extent permitted in
the following sentence, the Borrower shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or permit to
exist any Lien on or with respect to the Collateral, whether now owned or
hereafter acquired, or any income or profits therefrom, or file or permit the
filing the filing of, or permit to remain in effect, any financing statement or
other similar notice of any Lien with respect to the Collateral under the
U.C.C. of any state or under any similar recording or notice statute,
including, without limitation, any filings made with the CRO or the PTO, except
for Permitted Liens. Notwithstanding the foregoing, the Borrower may permit to
exist the Liens held by Westell pursuant to the Westell Loan Agreement;
provided, however, that the Borrower shall use its best efforts to obtain
within twenty (20) days after the date hereof all termination statements, lien
releases or similar documents or instruments duly executed by Westell for
filing in all applicable jurisdictions as may be necessary to terminate all of
Westell's Liens against the Collateral.
SECTION 9.3 Notice of Litigation. Promptly after the commencement
thereof, the Borrower shall notify the Lender of all actions, suits, and
proceedings before any court or governmental department, commission, board,
bureau, agency, or instrumentality, domestic or foreign, affecting the Borrower
or any of its Subsidiaries, which, if determined adversely to the Borrower or
such Subsidiary, could have a Material Adverse Effect.
SECTION 9.4 Notice of Defaults and Events of Default. As soon as
possible and in any event within five (5) days after the occurrence of each
Default or Event of Default, the Borrower shall deliver to the Lender a written
notice setting forth the details of such Default or Event of Default and the
action which is proposed to be taken by the Borrower with respect thereto.
SECTION 9.5 ERISA Reports. Promptly after the filing or receiving
thereof, the Borrower shall deliver to the Lender copies of all reports,
including annual reports, and notices which the Borrower or any of its
Subsidiaries files with or receives from the PBGC or the U.S. Department of
Labor under ERISA. As soon as possible, and in
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any event within ten (10) days after the Borrower or any of its Subsidiaries
knows or has reason to know that any Reportable Event has occurred with respect
to any Pension Plan or that the PBGC or the Borrower or any of its Subsidiaries
has instituted or will institute proceedings under Title IV of ERISA to
terminate any Pension Plan, the Borrower shall deliver to the Lender a
certificate of the chief financial officer of the Borrower setting forth
details as to such Reportable Event or Pension Plan termination and the action
the Borrower has taken or proposes to take with respect thereto.
SECTION 9.6 SEC Filings and Press Releases. The Borrower shall
deliver to the Lender, promptly upon their becoming available, copies of all
(i) financial statements, reports, notices and proxy statements sent or made
available generally by the Borrower to its security holders, (ii) all regular
and periodic reports and all registration statements and prospectuses, if any,
filed by the Borrower or any of its Subsidiaries with any securities exchange,
the United States Securities and Exchange Commission or any governmental or
private regulatory authority and (iii) all press releases and other statements
made available generally by the Borrower or any of its Subsidiaries to the
public concerning material developments in the business of the Borrower or any
of its Subsidiaries.
SECTION 9.7 Payment of Taxes and Claims. The Borrower shall, and
shall cause each of its Subsidiaries to, pay all taxes, assessments and other
governmental charges imposed upon it or any of its properties or assets or in
respect of any of its income, businesses or franchises before any penalty
accrues thereon, and all claims (including, without limitation, claims for
labor, services, materials and supplies) for sums that have become due and
payable and that by law have or may become a Lien upon any of its properties or
assets, prior to the time when any penalty or fine shall be incurred with
respect thereto; provided, however, that no such charge or claim need be paid
if it is being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted, so long as (i) such reserve or other
appropriate provision, if any, as shall be required in accordance with GAAP
shall have been made therefor and (ii) in the case of a charge or claim which
has or may become a Lien against any of the Collateral, such contest
proceedings conclusively operate to stay the sale of any portion of the
Collateral to satisfy such charge or claim.
SECTION 9.8 Maintenance of Assets and Properties. The Borrower
shall, and shall cause each of its Subsidiaries to maintain or cause to be
maintained in good repair, working order and condition, ordinary wear tear
excepted, all material assets and properties used or useful in the business of
the Borrower and its Subsidiaries
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(including, without limitation, the Collateral) and from time to time make or
cause to be made all appropriate repairs, renewals and replacements thereof.
SECTION 9.9 Insurance. The Borrower shall maintain or cause
maintained, with financially sound and reputable insurers, such public
liability insurance, third party property damage insurance, business
interruption insurance and casualty insurance with respect to liabilities,
losses or damage in respect of the assets, properties and business of the
Borrower and its Subsidiaries as may customarily be carried or maintained under
similar circumstances by corporations of established reputation engaged in
similar businesses, in each case in such amounts (giving effect to any
self-insurance), with such deductibles, covering such risks and otherwise on
such terms and conditions as shall be customary for corporations similarly
situated in the Borrower's industry.
SECTION 9.10 Compliance with Laws, Etc. The Borrower shall comply,
and shall cause each of its Subsidiaries to comply, with the requirements of
all applicable laws, rules, regulations and orders of any governmental
authority, noncompliance with which could cause, individually or in the
aggregate, a Material Adverse Effect.
SECTION 9.11 Reports to Other Creditors. Promptly after the
furnishing thereof, the Borrower shall deliver to the Lender copies of any
statement or report furnished to any other party pursuant to the terms of any
indenture, loan, or credit or similar agreement (including, without limitation,
the SVB Loan Agreement) and not otherwise required to be furnished to the
Lender pursuant to Article IX.
SECTION 9.12 Incorporation by Reference. The Borrower shall comply
with the covenants and other agreements set forth in Sections 5.1, 5.2, 5.3,
5.7, 5.8 and 5.9 of the Merger Agreement and the terms and provisions set forth
therein shall be incorporated by reference in this Agreement in their entirety
as if fully set forth herein with the same effect as if applied to this
Agreement. All capitalized terms set forth in Sections 5.1, 5.2, 5.3, 5.7,
5.8, and 5.9 of the Merger Agreement shall have the meanings provided in the
Merger Agreement; provided, however, that for purposes of this Agreement, to
the extent set forth in the Merger Agreement, the term "Company" shall be
deemed to refer to the Borrower. Such covenants and agreements shall not be
affected in any manner by the termination of the Merger Agreement.
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SECTION 9.13 General Information. Such other information respecting
the condition or operations, financial or otherwise, of the Borrower or any of
its Subsidiaries as the Lender may from time to time reasonably request.
ARTICLE X
EVENTS OF DEFAULT
SECTION 10.1 Events of Default. Each of the following events
shall constitute an "Event of Default" under this Agreement:
(a) The Borrower shall fail to pay the principal of, or
interest on, the Notes or any of the other Liabilities as and when due
and payable (whether at stated maturity, by acceleration, by mandatory
prepayment or otherwise);
(b) Any representation or warranty made or deemed made by
the Borrower in this Agreement or any Related Document or which is
contained in any certificate, document, opinion, or financial or other
statement furnished at any time under or in connection with this
Agreement or any Related Document shall prove to have been incorrect
in any material respect on the date made;
(c) The Borrower shall fail to perform or comply with any
term, covenant or agreement contained in Article IX of this Agreement;
(d) The Borrower shall fail to perform or comply with any
other term, covenant, or agreement contained in this Agreement or any
Related Document (other than any such term, covenant or agreement
referred to in any other subsection of this Section 10.1) on its part
to be performed or complied with, which failure is not cured within
ten (10) days;
(e) The Borrower or any of its Subsidiaries shall fail to
(i) pay when due and payable any principal of or interest on or any
other amount payable in respect of one or more items of Indebtedness
(other than Indebtedness referred to in Section 10.1(a)) in an
individual amount of $500,000 or more or with an aggregate principal
amount of $1,000,000 or more, in each case beyond the end of any grace
period provided therefor, or (ii) perform or comply with the any other
term of (x) one or more items of Indebtedness in the individual or
aggregate principal amounts set forth on clause (i) above or (y) any
loan agreement, mortgage, indenture or other agreement relating to
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such items of Indebtedness, if the effect of such failure is to cause,
or to permit the holder or holders of that Indebtedness (or a trustee
on behalf of such holder or holders) to cause, that Indebtedness to
become or be declared due and payable prior to its stated maturity or
the stated maturity of any underlying obligation, as the case may
be(upon the giving of notice, lapse of time or both);
(f) The Borrower or any of its Subsidiaries (i) shall
generally not, or shall be unable to, or shall admit in writing its
inability to pay its debts as such debts become due; or (ii) shall
make an assignment for the benefits of creditors, petition or apply to
any tribunal for the appointment of a custodian, receiver, or trustee
for it or a substantial part of its assets; or (iii) shall commence
any proceeding under any bankruptcy, reorganization, arrangements,
readjustment of debt, dissolution, or liquidation law or statute of
any jurisdiction, whether now or hereafter in effect; or (iv) shall
have any such petition or application filed or any such proceeding
commenced against it in which an order for relief is entered or
adjudication or appointment is made and which remains undismissed for
a period of sixty (60) days or more; or (v) by any act or omission
shall indicate its consent to, approval of, or acquiescence in any
such petition, application, or proceeding, or order for relief, or the
appointment of a custodian, receiver, or trustee for all or any
substantial part of its properties; or (vi) shall suffer any such
custodianship, receivership, or trusteeship to continue undischarged
for a period of sixty (60) days or more; and
(g) This Agreement, the Copyright Security Agreement, the
Patent Security Agreement or the Trademark Security Agreement shall at
any time after their execution and delivery for any reason cease: (i)
to create a valid and perfected first priority security interest in
and to the Collateral covered thereby or (ii) to be in full force and
effect or shall be declared null and void, or the validity or
enforceability thereof shall be contested by the Borrower, or the
Borrower shall deny it has any further liability or obligation under
or shall fail to perform any of its obligations under any of the
foregoing.
SECTION 10.2 Remedies. If any Event of Default described in
Section 10(f) shall occur and be continuing, the Commitments shall immediately
terminate and all Liabilities of the Borrower shall become immediately due and
payable, all without presentment, demand, protest or notice of
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any kind. If any other Event of Default shall occur and be continuing, the
Lender may declare the Commitments to be terminated and all Liabilities to be
due and payable, whereupon the Commitments shall immediately terminate and all
Liabilities shall become immediately due and payable, all without presentment,
demand, protest or notice of any kind. The Lender shall promptly advise the
Borrower of any such declaration, but failure to do so shall not impair the
effect of such declaration. Notwithstanding anything to the contrary contained
herein, the Lender hereby agrees that it shall not declare the Liabilities due
and payable unless and until such time as the Merger Agreement shall have been
terminated.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Amendments, Etc. No amendment, modification,
termination, or waiver of any provision of this Agreement, nor consent to any
departure by the Borrower from this Agreement, shall in any event be effective
unless the same shall be in writing and signed by the Lender, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.
SECTION 11.2 Notices, Etc. All notices and other
communications provided for under this Agreement shall be in writing (including
telegraphic or facsimile communication) and mailed or telecommunicated or
delivered, if to the Borrower or Lender at the addresses set forth in the
Merger Agreement, or, as to each party, at such other address as shall be
designated by such party in a written notice to the other party complying as to
delivery with the terms of this Section 11.2. All such notices and
communications shall, when mailed or telecommunicated, be effective when
deposited in the mails, transmitted by facsimile or delivered to the telegraph
company, respectively, addressed as aforesaid, except that notices to the
Lender pursuant to the provisions of Section 2.2 shall not be effective until
received by the Lender.
SECTION 11.3 No Waiver; Remedies. No failure on the part of
the Lender to exercise, and no delay in exercising, any right, power, or remedy
under this Agreement shall operate as a waiver thereof; nor shall any single or
partial exercise of any right under this Agreement preclude any other or
further exercise thereof or the exercise of any other right. The remedies
provided in this Agreement are cumulative and not exclusive of any remedies
provided by law.
SECTION 11.4 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the Borrower and the Lender and their
respective successors and assigns, except that the Borrower may not assign or
transfer any of its rights under this Agreement without the prior written
consent of the Lender.
27
<PAGE> 33
SECTION 11.5 Indemnity and Expenses.
(a) The Borrower agrees to indemnify the Lender from and
against any and all claims, losses and liabilities in any way relating
to, growing out of or resulting from this Agreement and the
transactions contemplated hereby (including, without limitation,
enforcement of this Agreement), except to the extent such claims,
losses or liabilities result solely from the Lender's gross negligence
or willful misconduct as finally determined by a court of competent
jurisdiction.
(b) The Borrower shall pay to the Lender upon demand the
amount of any and all costs and expenses, including the reasonable
fees and expenses of its counsel and of any experts and agents, that
the Lender may incur in connection with (i) the administration of this
Agreement, (ii) the custody, preservation, use or operation of, or the
sale of, collection from, or other realization upon, any of the
Collateral, (iii) the exercise or enforcement of any of the rights of
the Lender hereunder, or (iv) the failure by the Borrower to perform
or observe any of the provisions hereof.
SECTION 11.6 Right of Setoff. Upon the occurrence of any
Event of Default, the Lender is hereby authorized at any time and from time to
time, without notice to the Borrower (any such notice being expressly waived by
the Borrower), to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness
at any time owing by the Lender to or for the credit or the account of the
Borrower against any and all of the obligations of the Borrower now or
hereafter existing under this Agreement, the Notes or any other Related
Document, irrespective of whether or not the Lender shall have made any demand
under this Agreement, the Notes or such other Related Document and although
such obligations may be unmatured. The Lender agrees promptly to notify the
Borrower after any such setoff and application, provided that the failure to
give such notice shall not affect the validity of such setoff and application.
The rights of the Lender under this Section 11.6 are in addition to other
rights and remedies (including, without limitation, other rights of setoff)
which the Lender may have.
SECTION 11.7 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA (INCLUDING WITHOUT LIMITATION SECTION 1646.5 OF THE CIVIL CODE OF
THE STATE OF CALIFORNIA), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES,
EXCEPT TO THE EXTENT THAT THE U.C.C. PROVIDES THAT THE
28
<PAGE> 34
PERFECTION OF THE SECURITY INTERESTS HEREUNDER, OR REMEDIES HEREUNDER, IN
RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION
OTHER THAN THE STATE OF CALIFORNIA. Unless otherwise defined herein, terms
used in Article 9 of the U.C.C. in the State of California are used herein as
therein defined.
SECTION 11.8 Severability of Provisions. Any provision of
this Agreement which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this
Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction.
SECTION 11.9 Headings. Section headings in this Agreement
are included in this Agreement for the convenience of reference only and shall
not constitute a part of this Agreement or for any other purpose.
SECTION 11.10 WAIVER OF JURY TRIAL. THE BORROWER AND THE
LENDER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO A
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS
UNDER THIS AGREEMENT, ANY RELATED DOCUMENT OR UNDER ANY OTHER DOCUMENT OR
AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
HEREWITH OR THEREWITH, OR ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN
CONNECTION WITH THIS AGREEMENT, AND AGREE THAT ANY SUCH ACTION, PROCEEDING OR
COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY; THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER ENTERING INTO THIS AGREEMENT.
SECTION 11.11 Counterparts. This Agreement may be executed
in one or more counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document.
29
<PAGE> 35
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
BORROWER:
AMATI COMMUNICATIONS CORPORATION
By: /s/ JAMES STEENBERGEN
------------------------------------
Name: James Steenbergen
----------------------------------
Title: President and Chief Executive
Officer
---------------------------------
LENDER:
TEXAS INSTRUMENTS INCORPORATED
By: /s/ RICHARD K. TEMPLETON
------------------------------------
Name: Richard K. Templeton
----------------------------------
Title: President, Semiconductor Group
---------------------------------
30
<PAGE> 1
EXHIBIT (c)(3)
[AMATI LETTERHEAD]
Texas Instruments Inc. July 22, 1997
7829 Churchill Way
Mail Station 3995
Dallas, TX 75261
CONFIDENTIALITY AGREEMENT
-------------------------
Ladies and Gentlemen:
In connection with your possible interest in an acquisition or other business
combination (the "Transaction") involving Amati Communications Corporation
("Amati" or the "Company"), you have requested that we or our representatives
furnish you or your representatives with certain information relating to the
Company or the Transaction. All such information (whether written or oral)
furnished (whether before or after the date hereof) by us or our directors,
officers, employees, affiliates, representatives (including, without
limitation, financial advisors, attorneys and accountants) or agents
(collectively, "our Representatives") to you or your directors, officers,
employees, affiliates, representatives (including, without limitation, financial
advisors, attorneys and accountants) or agents of your potential sources of
financing for the Transaction (collectively "your Representatives") and all
analysis, compilations, forecasts, studies or other documents prepared by you
or your Representatives in connection with your or their review of, or your
interest in, the Transaction which contain or reflect any such information is
hereinafter referred to as the "Information". The term information will not,
however, include information which (i) is or becomes publicly available other
than as a result of a disclosure by you or your Representatives or (ii) is or
becomes available to you on a nonconfidential basis from a source (other than
us or our Representatives) which, to the best of your knowledge after due
inquiry, is not prohibited from disclosing such information to you by a legal,
contractual or fiduciary obligation to us.
Accordingly, you hereby agree that:
1. You and your Representatives (i) will keep the information
confidential and will not (except as permitted by paragraph 3 below),
without our prior written consent, disclose any information in any
manner whatsoever, and (ii) will not use any information other than
in connection with the Transaction; provided, however, that you may
reveal the information to your Representatives (a) who need to know
this information for the purpose of evaluating the Transaction, (b)
who are informed by you of the confidential nature of the information
and (c)
<PAGE> 2
Texas Instruments Inc.
July 22, 1997
Page 2
who agree to act in accordance with the terms of this letter
agreement. You will cause your Representatives to observe the terms of
this letter agreement, and you will be responsible for any breach of
this letter agreement by any of your Representatives.
2. You and your Representatives will not (except as permitted by
paragraph 3 below), without our prior written consent, disclose to any
person the fact that the information exists or has been made
available, that you are considering the Transaction or any transaction
involving the Company, or that discussions or negotiations are taking
or have taken place concerning the Transaction or involving the
Company or any term, condition or other fact relating to the
Transaction or such discussions or negotiations, including, without
limitation, the status thereof.
3. In the event that you or any of your Representatives are requested
pursuant to, or required by, applicable law, regulation or legal
process to disclose any of the information, you will notify us
promptly so that we may seek a protective order or other appropriate
remedy or, in our sole discretion, waive compliance with the terms of
this letter agreement. In the event that no such protective order or
other remedy is obtained, or that the Company waives compliance with
the terms of the letter agreement, you will furnish only that portion
of the information which you are advised by counsel is legally
required and will exercise all reasonable efforts to obtain reliable
assurance that confidential treatment will be accorded the
information.
4. At any time upon the request of the Company or any of our
Representatives, and in any event upon your decision not to proceed
with a Transaction, you will either (i) promptly destroy all copies
of the written information in your or your Representatives'
possession and confirm such destruction to us in writing, or (ii)
promptly deliver to the Company at your own expense all copies of the
written information in you or your Representatives' possession. Any
oral information will continue to be subject to the terms of this
letter agreement.
5. You acknowledge that neither we, nor DMG or its affiliates, nor our
other Representatives, nor any of our or their respective officers,
directors, employees, agents or controlling persons within the
meaning of Section 20 of the Securities Exchange Act of 1934, as
amended, makes any express or implied representation or warranty as
to the accuracy or completeness of the information, and you agree
that no such person will have any liability relating to the
information or for any errors therein or omissions therefrom. You
further agree that you are not entitled to rely on the accuracy or
completeness of the information and that you will be entitled to rely
solely on such representations and warranties as may be included in
any definitive agreement with respect to the Transaction, subject to
such limitations and restrictions as may be contained therein.
6. You agree that, for a period of two years from the date of this
letter agreement, you will not, directly or indirectly, solicit for
employment or hire any employee of the Company or any of its
subsidiaries with whom you have had contact or who became known to
you in connection with your consideration of the Transaction;
provided, however, that the foregoing provision will not prevent you
from employing any such person who contacts you on his or her
<PAGE> 3
Texas Instruments Inc.
July 22, 1997
Page 3
own initiative without any direct or indirect solicitation by or
encouragement from you (excluding generalized solicitation by
advertisement or other method).
7. You agree that, for a period of two years from the date of this
Confidentiality Agreement, neither you nor any of your affiliates will,
without the prior written consent of the Company or the Company's Board of
Directors: (i) acquire, offer to acquire, or agree to acquire, directly or
indirectly, by purchase or otherwise, any voting securities or direct or
indirect rights to acquire any voting securities of the Company or any
subsidiary thereof, or of any successor corporation; (ii) make, or in any
way participate in, directly or indirectly, any "solicitation" of
"proxies" (as such terms are used in the Rules of the Securities Exchange
Commission) to vote, or seek to advise or influence any person or entity
with respect to the voting of, any voting securities of the Company; (iii)
make any public announcement with respect to, or submit a proposal for, or
offer of any extraordinary transaction involving the Company or its
securities or assets; (iv) form, join or in any way participate in a
"group" (as defined in Section 13(d)(3) of the Securities Exchange Act of
1934, as amended) in connection with any of the foregoing; or (v) request
the Company or any of the Company's Representatives to amend or waive any
provision of this paragraph 7; provided that the foregoing provisions shall
not preclude you from submitting any offer to acquire the Company or voting
securities thereof in response to any publicly announced transaction or
proposed acquisition of the Company by a third party. You will promptly
advise the Company of any inquiry or proposal made to it with respect to
any of the foregoing.
8. You acknowledge that remedies at law may be inadequate to protect us
against any actual or threatened breach of this letter agreement by you or
by your Representatives. In the event of litigation relating to this
letter agreement, if a court of competent jurisdiction determines in a
final, nonappealable order that this letter agreement has been breached by
your or by your Representatives, then you will reimburse the company for its
legal expenses incurred in connection with all such litigation.
9. You agree that no failure or delay by us in exercising any right, power or
privilege hereunder will operate as a waiver thereof, nor will any single
or partial exercise thereof preclude any other or further exercise thereof
or the exercise of any right, power or privilege hereunder.
10.This letter agreement will by governed by and construed in accordance with
the laws of the State of California applicable to contracts between
residents of that State and executed in and to be performed in that State.
11.This letter agreement contains the entire agreement between you and us
concerning the confidentiality of the Information, and no modifications of
this letter agreement or waiver of the terms and conditions hereof will be
binding upon you or us, unless approved in writing by each of you and us.
12.This letter agreement shall terminate on the earlier of the consummation of
the Transaction by you or your affiliates or the second anniversary of
the date hereof.
<PAGE> 4
Texas Instruments Inc.
July 22, 1997
Page 4
Please confirm your agreement with the foregoing by signing and returning to
the undersigned the duplicate copy of this letter enclosed herewith.
Sincerely,
Amati Communications Corporation
By: /s/ JAMES STEENBERGEN
--------------------------------
Name: James Steenbergen
------------------------------
Title: President & CEO
-----------------------------
Accepted and Agreed as of the date
first written above:
Texas Instruments Inc.
- - ----------------------------------------
By: /s/ CHARLES D. TOBIN
-------------------------------------
Name: Charles D. Tobin
-----------------------------------
Title: Vice President Corporate Staff,
----------------------------------
Manager, Corporate Development
<PAGE> 1
EXHIBIT (c)(4)
TEXAS INSTRUMENTS INCORPORATED
November 19, 1997
Mr. James Steenbergen
President, CEO and CFO
Amati Communications Corporation
2043 Samaritan Drive
San Jose, California 95124
Dear Mr. Steenbergen:
It is our understanding that you were granted an option to
purchase 500,000 shares of Amati Communications Corporation ("Amati") common
stock on November 27, 1995 at an exercise price of $4.25. It is also our
understanding that your right to exercise the option vested with respect to 25%
of these shares, or 125,000 shares six months after at grant, and that the
remaining 375,000 shares would vest in three equal annual installments on May
27, 1997, 1998 and 1999.
In connection with the acquisition of Amati by Texas
Instruments Incorporated ("TI"), your Amati options will be converted on the
closing date into options on TI common stock. The number of shares covered by
the TI options will be determined by the exchange ratio contained in the merger
agreement and the per share option price shall be adjusted so that the
aggregate option price for the TI shares will be equal to the aggregate option
price of the Amati shares subject to your existing option. The TI options
shall be subject to the same vesting schedule and other terms and conditions as
now exist in your outstanding Amati options. In the event Amati or its
successor terminates your full-time employment with Amati and its affiliates
without cause following the acquisition, you will be retained as an employee on
an approved leave of absence until the date on which your TI converted options
are completely vested.
In consideration of the conversion of the Amati options into
TI options and the acquisition of the common stock of Amati by TI, you agree to
abide by the following non-competition and non-solicitation covenants through
the term of your employment with Amati or its successor and for a period of one
year following the termination of your full-time employment with Amati or its
successors for any reason.
<PAGE> 2
Mr. James Steenbergen
November 19, 1997
Page 2
You shall not own, directly or indirectly, a debt or equity
interest in or provide any labor or services (whether as an employee,
consultant, partner, joint venturer, director, agent, trustee or otherwise) to
any person or entity that is engaged in the business of developing, designing,
manufacturing, marketing or selling digital signal processing solutions and/or
physical layer coding attributes of high speed digital lines ("Competing
Business"); provided, however, that the Employee shall be permitted to own 5%
or less of a Competing Business which is publicly- traded entity or is a
non-publicly traded entity (but the fair market value of such interest in the
non-publicly-traded entity is $50,000 or less). You shall not directly or
indirectly solicit, on behalf of yourself or any person other than Amati or its
successors, any customer of Amati or its successors to purchase, lease, license
or otherwise exploit any goods or services that are similar to or competitive
with any goods or services offered (or then under active development) by Amati
or its successor. You shall not directly or indirectly solicit, on behalf of
yourself or any person other than Amati or its successors, or assist any such
person to solicit any employee of Amati or its successors to terminate such
employee's employment relationship with Amati and its successors or provide any
labor or services to any person or entity other than Amati or its successors.
Please indicate your agreement with the terms and conditions
of the conversion of your options by affixing your signature to the enclosed
copy of this letter and returning the same to the undersigned as soon as
possible.
Very truly yours,
TEXAS INSTRUMENTS INCORPORATED
By: /s/ BARBARA GIBBS
--------------------------------
Barbara Gibbs,
Vice President, Corporate Staff
I agree to the foregoing
terms and conditions:
/s/ JAMES STEENBERGEN
11-19-97 --------------------------------
- - ---------------------- James Steenbergen
Date
<PAGE> 1
EXHIBIT (c)(5)
TEXAS INSTRUMENTS INCORPORATED
November 19, 1997
Mr. Ronald Carlini
V.P. Business Development
Amati Communications Corporation
2043 Samaritan Drive
San Jose, California 95124
Dear Mr. Carlini:
It is our understanding that you were granted options to
purchase an aggregate of 190,000 shares of Amati Communications Corporation
("Amati") common stock on various dates at exercise prices ranging from $1.19
to $10.75. It is also our understanding that all of such options would become
fully vested no later than July 27, 2000.
In connection with the acquisition of Amati by Texas
Instruments Incorporated ("TI"), your Amati options will be converted on the
closing date into options on TI common stock. The number of shares covered by
the TI options will be determined by the exchange ratio contained in the merger
agreement and the per share option price shall be adjusted so that the
aggregate option price for the TI shares will be equal to the aggregate option
price of the Amati shares subject to your existing option. The TI options
shall be subject to the same vesting schedule and other terms and conditions as
now exist in your outstanding Amati options. In the event Amati or its
successor terminates your full-time employment with Amati and its affiliates
without cause following the acquisition, you will be retained as an employee on
an approved leave of absence until the date on which your TI converted options
are completely vested.
In consideration of the conversion of the Amati options into
TI options and the acquisition of the common stock of Amati by TI, you agree to
abide by the following non-competition and non-solicitation covenants through
the term of your employment with Amati or its successor and for a period of one
year following the termination of your full-time employment with Amati or its
successors for any reason.
You shall not own, directly or indirectly, a debt or equity
interest in or provide any labor or services (whether
<PAGE> 2
Mr. Ronald Carlini
November 19, 1997
Page 2
as an employee, consultant, partner, joint venturer, director, agent, trustee
or otherwise) to any person or entity that is engaged in the business of
developing, designing, manufacturing, marketing or selling digital signal
processing solutions and/or physical layer coding attributes of high speed
digital lines ("Competing Business"); provided, however, that the Employee
shall be permitted to own 5% or less of a Competing Business which is
publicly-traded entity or is a non-publicly traded entity (but the fair market
value of such interest in the non-publicly-traded entity is $50,000 or less).
You shall not directly or indirectly solicit, on behalf of yourself or any
person other than Amati or its successors, any customer of Amati or its
successors to purchase, lease, license or otherwise exploit any goods or
services that are similar to or competitive with any goods or services offered
(or then under active development) by Amati or its successor. You shall not
directly or indirectly solicit, on behalf of yourself or any person other than
Amati or its successors, or assist any such person to solicit any employee of
Amati or its successors to terminate such employee's employment relationship
with Amati and its successors or provide any labor or services to any person or
entity other than Amati or its successors.
Please indicate your agreement with the terms and conditions
of the conversion of your options by affixing your signature to the enclosed
copy of this letter and returning the same to the undersigned as soon as
possible.
Very truly yours,
TEXAS INSTRUMENTS INCORPORATED
By: /s/ BARBARA GIBBS
--------------------------------
Barbara Gibbs,
Vice President, Corporate Staff
I agree to the foregoing
terms and conditions:
/s/ RONALD CARLINI
11/19/97 --------------------------------
- - -------------------------- Ronald Carlini
Date
<PAGE> 1
EXHIBIT (c)(6)
TEXAS INSTRUMENTS INCORPORATED
November 19, 1997
Mr. James D. Hood
V.P. Engineering
Amati Communications Corporation
2043 Samaritan Drive
San Jose, California 95124
Dear Mr. Hood:
It is our understanding that you were granted options to
purchase an aggregate of 180,000 shares of Amati Communications Corporation
("Amati") common stock at an exercise prices of $8.13. It is also our
understanding that all of such options would become fully vested no later than
July 2, 1999.
In connection with the acquisition of Amati by Texas
Instruments Incorporated ("TI"), your Amati options will be converted on the
closing date into options on TI common stock. The number of shares covered by
the TI options will be determined by the exchange ratio contained in the merger
agreement and the per share option price shall be adjusted so that the
aggregate option price for the TI shares will be equal to the aggregate option
price of the Amati shares subject to your existing option. The TI options
shall be subject to the same vesting schedule and other terms and conditions as
now exist in your outstanding Amati options. In the event Amati or its
successor terminates your full-time employment with Amati and its affiliates
without cause following the acquisition, you will be retained as an employee on
an approved leave of absence until the date on which your TI converted options
are completely vested.
In consideration of the conversion of the Amati options into TI
options and the acquisition of the common stock of Amati by TI, you agree to
abide by the following non-competition and non-solicitation covenants through
the term of your employment with Amati or its successor and for a period of one
year following the termination of your full-time employment with Amati or its
successors for any reason.
You shall not own, directly or indirectly, a debt or equity
interest in or provide any labor or services (whether
<PAGE> 2
Mr. James D. Hood
November 19, 1997
Page 2
as an employee, consultant, partner, joint venturer, director, agent, trustee or
otherwise) to any person or entity that is engaged in the business of
developing, designing, manufacturing, marketing or selling digital signal
processing solutions and/or physical layer coding attributes of high speed
digital lines ("Competing Business"); provided, however, that the Employee shall
be permitted to own 5% or less of a Competing Business which is publicly-traded
entity or is a non-publicly traded entity (but the fair market value of such
interest in the non-publicly-traded entity is $50,000 or less). You shall not
directly or indirectly solicit, on behalf of yourself or any person other than
Amati or its successors, any customer of Amati or its successors to purchase,
lease, license or otherwise exploit any goods or services that are similar to or
competitive with any goods or services offered (or then under active
development) by Amati or its successor. You shall not directly or indirectly
solicit, on behalf of yourself or any person other than Amati or its successors,
or assist any such person to solicit any employee of Amati or its successors to
terminate such employee's employment relationship with Amati and its successors
or provide any labor or services to any person or entity other than Amati or its
successors.
Please indicate your agreement with the terms and conditions
of the conversion of your options by affixing your signature to the enclosed
copy of this letter and returning the same to the undersigned as soon as
possible.
Very truly yours,
TEXAS INSTRUMENTS INCORPORATED
By: /s/ BARBARA GIBBS
--------------------------------
Barbara Gibbs,
Vice President, Corporate Staff
I agree to the foregoing
terms and conditions:
/s/ JAMES D. HOOD
11/18/97 --------------------------------
- - ------------------------- James D. Hood
Date
