<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
SEEQ Technology Incorporated
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(Name of Issuer)
Common Stock, Series B Preferred Stock
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(Title of Class of Securities)
815779-10-3
-----------
(CUSIP Number)
DAVID E. SANDERS, VICE PRESIDENT, GENERAL COUNSEL
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LSI LOGIC CORPORATION
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1551 MCCARTHY BOULEVARD
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MILPITAS, CALIFORNIA 95035
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(408) 433-8000
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
FEBRUARY 21, 1999
-----------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g),
check the following box [ ].
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Section 240.13d-7(b) for
other parties to whom copies are to be sent.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE> 2
SCHEDULE 13D
CUSIP NO. 815779-10-3 PAGE 2 OF 8 PAGES
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
LSI Logic Corporation
I.R.S. Identification No.: 94-2712976
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (A) [ ]
(B) [ ]
N/A
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC, OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
N/A
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
STATE OF DELAWARE
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7 SOLE VOTING POWER
64,183 shares of Series B Preferred Stock (1)
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NUMBER OF
SHARES 8 SHARED VOTING POWER 658,803 shares of
BENEFICIALLY Common Stock (2)
OWNED BY -------------------------------------------------
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 64,183 shares of Series B Preferred Stock (1)
WITH
-------------------------------------------------
10 SHARED DISPOSITIVE POWER
N/A
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
64,183 shares of SEEQ Series B Preferred Stock and 658,803 shares of
SEEQ Common Stock (1) (2)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
100% of the Series B Preferred Stock and 2.0% of the issued and
outstanding SEEQ Common Stock (1) (2)
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14 TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
(1) In the event the Option (discussed in Items 3 and 4 below) becomes
exercisable and is exercised in full LSI Logic Corporation ("LSI") will
have sole voting power with respect to that number of shares of Series B
Preferred Stock that represent 19.9% of the voting power of the issued and
outstanding shares of capital stock of SEEQ Technology Incorporated
("SEEQ") as of the first date, if any, upon which the Option becomes
exercisable, which, based upon the 32,252,752 shares of Common Stock of
SEEQ outstanding as of February 21, 1999 (as represented by SEEQ in the
Merger Agreement discussed in Items 3 and 4) currently equals 64,183 shares
of Series B Preferred Stock. Each share of Series B Preferred Stock is
entitled to 100 votes on all matters submitted to a vote of the
stockholders of SEEQ. In certain circumstances each share of Series B
Preferred Stock is convertible into 100 shares of SEEQ Common Stock. Prior
to the exercise of the Option, LSI is not entitled to any rights as a
stockholder of SEEQ as to the shares of Series B Preferred Stock covered by
the Option. The Option may only be exercised upon the happening of certain
events referred to in Item 4, none of which has occurred as of the date
hereof. LSI expressly disclaims beneficial ownership of any of the shares
of Series B Preferred Stock which are purchaseable by LSI upon exercise of
the Option until such time as LSI purchases any such shares of Series B
Preferred Stock upon any such exercise.
(2) 658,803 shares of SEEQ Common Stock are subject to Voting
Agreements entered into by LSI and certain stockholders of SEEQ (discussed
in Items 3 and 4 below). LSI expressly disclaims beneficial ownership of
any of the shares of SEEQ Common Stock covered by the Voting
<PAGE> 3
SCHEDULE 13D
CUSIP NO. 815779-10-3 PAGE 3 OF 8 PAGES
Agreements. Based on the number of shares of SEEQ Common Stock
outstanding as of February 21, 1999 (as represented by SEEQ in the
Merger Agreement discussed in Items 3 and 4), the number of shares of
SEEQ Common Stock indicated represents approximately 2.0% of the
outstanding SEEQ Common Stock, excluding the shares of outstanding
shares of SEEQ Series B Preferred Stock issuable upon exercise of the
Option.
ITEM 1. SECURITY AND ISSUER.
This statement on Schedule 13D (this "Statement") relates to the
Common Stock and Series B Preferred Stock of SEEQ Technology
Incorporated, a Delaware corporation ("SEEQ" or "Issuer"). The
principal executive offices of SEEQ are located at 47200 Bayside
Parkway, Fremont, California 94538.
ITEM 2. IDENTITY AND BACKGROUND.
The name of the corporation filing this statement is LSI Logic
Corporation, a Delaware corporation ("LSI"). LSI is a leader in the
design, development, manufacture and marketing of high performance
application specific integrated circuits and application specific
standard products. The address of LSI's principal business is 1551
McCarthy Boulevard, Milpitas, California 95035. The address of LSI's
executive offices is the same as the address of its principal
business.
Set forth on Schedule A is the name of each of the directors and
executive officers of LSI, and their present principal occupation or
employment, including the name, principal business and address of any
corporation or other organization in which such employment is
conducted, as of the date hereof to LSI's knowledge.
Neither LSI, nor to LSI's knowledge, any person named on Schedule A
hereto is required to disclose legal proceedings pursuant to Items
2(d) or 2(e). To LSI's knowledge, each of the individuals identified
on Schedule A is a citizen of the United States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Pursuant to an Agreement and Plan of Reorganization and Merger dated
as of February 21, 1999 (the "Merger Agreement"), among LSI, Stealth
Acquisition Corporation, a Delaware corporation and a wholly-owned
subsidiary of LSI ("Merger Sub") and SEEQ, and subject to the
conditions set forth therein (including approval by stockholders of
SEEQ), Merger Sub will merge with and into SEEQ and SEEQ will become a
wholly-owned subsidiary of LSI (such events constituting the
"Merger"). Once the Merger is consummated, Merger Sub will cease to
exist as a corporation and all of the business, assets, liabilities
and obligations of Merger Sub will be merged into SEEQ with SEEQ
remaining as the surviving corporation (the "Surviving Corporation").
<PAGE> 4
SCHEDULE 13D
CUSIP NO. 815779-10-3 PAGE 4 OF 8 PAGES
As an inducement to LSI to enter into the Merger Agreement, LSI and
SEEQ entered into a Stock Option Agreement dated as of February 21,
1999 (the "Stock Option Agreement") pursuant to which SEEQ granted LSI
the right (the "Option"), under certain conditions, to acquire up to
the number of shares of Series B Preferred Stock sufficient to give
LSI ownership of 19.9% of the voting power of SEEQ's issued and
outstanding capital stock. SEEQ's obligation to issue shares pursuant
to the exercise of the Option is subject to the occurrence of certain
events (discussed in Item 4 below), which may not occur. Each share of
Series B Preferred Stock entitles the holder thereof to 100 votes on
all matters submitted to a vote of the stockholders of SEEQ. Each
share of Series B Preferred Stock is convertible in certain
circumstances into 100 shares of SEEQ Common Stock. The granting of
the Option was negotiated as a material term of the Merger
transaction. LSI did not pay additional consideration to SEEQ in
connection with SEEQ entering into the Stock Option Agreement and
granting the Option. In the event the Option becomes exercisable, LSI
anticipates it will use working capital for any exercise of the
Option.
As a further inducement for LSI to enter into the Merger Agreement and
in consideration thereof, certain stockholders of SEEQ (the
"Stockholders") entered into individual voting agreements with LSI
(collectively, the "Voting Agreements") whereby each Stockholder
agreed to vote all of the shares of SEEQ Common Stock beneficially
owned by them in favor of approval and adoption of the Merger
Agreement and approval of the Merger and certain related matters. LSI
did not pay additional consideration to any Stockholder in connection
with the execution and delivery of the Voting Agreements.
References to, and descriptions of, the Merger, the Merger Agreement,
the Stock Option Agreement and the Voting Agreements as set forth
herein are qualified in their entirety by reference to the copies of
the Merger Agreement, the Stock Option Agreement, and the Voting
Agreements, respectively, included as Exhibits 1, 2 and 3,
respectively, to this Schedule 13D, and are incorporated herein in
their entirety where such references and descriptions appear.
ITEM 4. PURPOSE OF TRANSACTION.
(a) - (b) As described in Item 3 above, this statement relates to the
Merger of Merger Sub, a wholly-owned subsidiary of LSI, with and into
SEEQ in a statutory merger pursuant to the Delaware General
Corporation Law. At the effective time of the Merger, the separate
existence of Merger Sub will cease and SEEQ will continue as the
Surviving Corporation and as a wholly-owned subsidiary of LSI. Each
holder of outstanding SEEQ Common Stock will receive, in exchange for
each share of SEEQ Common Stock held by such holder, 0.1095 shares of
LSI Common Stock subject to adjustment as set forth in Section 1.6(a)
of the Merger Agreement. LSI will assume each outstanding option to
purchase SEEQ Common Stock under SEEQ's stock option plans.
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SCHEDULE 13D
CUSIP NO. 815779-10-3 PAGE 5 OF 8 PAGES
Pursuant to the Stock Option Agreement SEEQ granted LSI the Option to
acquire up to the number of shares of SEEQ Series B Preferred Stock
sufficient to give LSI ownership of 19.9% of the voting power of
SEEQ's issued and outstanding capital stock under certain conditions.
SEEQ's obligation to issue shares pursuant to the exercise of the
Stock Option is subject to the occurrence of certain events (each, an
"Exercise Event"), which may not occur. In general, an Exercise Event
may be deemed to occur (a) if the Merger Agreement is terminated by
LSI if (i) the Board of Directors of SEEQ or any committee thereof
shall for any reason have withdrawn or shall have amended or modified
in a manner adverse to LSI its unanimous recommendation in favor of,
the adoption and approval of the Merger Agreement or the approval of
the Merger; (ii) SEEQ shall have failed to include in the
Prospectus/Proxy Statement the unanimous recommendation of the Board
of Directors of SEEQ in favor of the adoption and approval of the
Merger Agreement and the approval of the Merger; (iii) the Board of
Directors of SEEQ fails to reaffirm its unanimous recommendation in
favor of the adoption and approval of the Merger Agreement and the
approval of the Merger within five (5) business days after LSI
requests in writing that such recommendation be reaffirmed at any time
following the announcement of an Acquisition Proposal (as defined in
Section 5.4(a) of the Merger Agreement); (iv) the Board of Directors
of SEEQ or any committee thereof shall have approved or recommended
any Acquisition Proposal; (v) SEEQ shall have entered into any letter
of intent or similar document or any agreement, contract or commitment
accepting any Acquisition Proposal; or (vi) a tender or exchange offer
relating to securities of SEEQ shall have been commenced by a Person
(as defined in Section 8.3(d) of the Merger Agreement) unaffiliated
with LSI and SEEQ shall not have sent to its security holders within
ten business days after such tender or exchange offer is first
published, sent or given, a statement disclosing that SEEQ recommends
rejection of such tender or exchange offer; or (b) if the Merger
Agreement is terminated by either LSI or SEEQ because the Merger shall
not have been consummated by August 27, 1999, or because the SEEQ
stockholders fail to approve the Merger Agreement and the Merger, and
prior to the date of termination of the Merger Agreement a third party
has announced an Acquisition Proposal and (i) within nine months
following the termination of the Merger Agreement acquisition of SEEQ
is consummated or SEEQ enters into an agreement or letter of intent
providing for such an acquisition, or (ii) immediately prior to the
closing of a tender of exchange offer for a Company Acquisition (as
defined in Section 7.3(b)(iii) of the Merger Agreement).
Pursuant to the Voting Agreements, the Stockholders have irrevocably
appointed LSI as their lawful attorney and proxy. Such proxy gives LSI
the limited right to vote each of the 658,803 shares (including
options exercisable within 60 days of February 21, 1999) of SEEQ
Common Stock beneficially owned by the Stockholders in all matters
related to the Merger. In exercising its right to vote the Shares as
lawful attorney and proxy of the Stockholders, LSI (or any nominee of
LSI) will be limited, at every SEEQ stockholders meeting and every
written consent in lieu of such a meeting to vote the Shares in favor
of
<PAGE> 6
SCHEDULE 13D
CUSIP NO. 815779-10-3 PAGE 6 OF 8 PAGES
approval and adoption of the Merger Agreement, in favor of approval of
the Merger and in favor of each matter that could reasonably be
expected to facilitate the Merger. The Stockholders may vote the
Shares on all other matters. The Voting Agreements terminate upon the
earlier to occur of (i) such date and time as the Merger shall become
effective in accordance with the terms and provisions of the Merger
Agreement, and (ii) such date and time as the Merger Agreement shall
have been terminated pursuant to Article VII thereof.
The purpose of the transactions under the Stock Option Agreement and
the Voting Agreements is to enable LSI and SEEQ to consummate the
transactions contemplated under the Merger Agreement.
(c) Not applicable.
(d) It is anticipated that upon consummation of the Merger, the
directors of the Surviving Corporation shall be the current directors
of Merger Sub. It is anticipated that the initial officers of the
Surviving Corporation shall be the current officers of Merger Sub.
(e) Other than as a result of the Merger, not applicable.
(f) Other than as a result of the Merger, not applicable.
(g) Upon consummation of the Merger, the Certificate of Incorporation
of Merger Sub, as in effect immediately prior to the Merger, shall be
the Certificate of Incorporation of the Surviving Corporation until
thereafter amended as provided by Delaware Law and such Certificate of
Incorporation. Upon consummation of the Merger, the Bylaws of Merger
Sub, as in effect immediately prior to the Merger, shall be the Bylaws
of the Surviving Corporation until thereafter amended.
(h) - (i) If the Merger is consummated as planned, the SEEQ Common
Stock will be deregistered under the Act and delisted from The Nasdaq
National Market.
(j) Other than described above, LSI currently has no plan or proposals
which relate to, or may result in, any of the matters listed in Items
4(a) - (i) of Schedule 13D (although LSI reserves the right to develop
such plans).
References to, and descriptions of, the Merger, the Merger Agreement,
the Stock Option Agreement and the Voting Agreements as set forth
above in this Item 4 are qualified in their entirety by reference to
the Merger Agreement, the Stock Option Agreement and the form of
Voting Agreement, included as Exhibits 1, 2 and 3, respectively, to
this Schedule 13D, and are incorporated in this Item 4 in their
entirety where such references and descriptions appear.
<PAGE> 7
SCHEDULE 13D
CUSIP NO. 815779-10-3 PAGE 7 OF 8 PAGES
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) - (b) As a result of the Voting Agreements, LSI may be deemed to
be the beneficial owner of at least 658,803 shares of SEEQ Common
Stock. Such SEEQ Common Stock constitutes approximately 2.0% of the
issued and outstanding shares of SEEQ Common Stock based on the number
of shares of SEEQ Common Stock outstanding as of February 21, 1999 (as
represented by SEEQ in the Merger Agreement discussed in Items 3 and
4). LSI may be deemed to have the shared power to vote the Shares with
respect to those matters described above. However, LSI (i) is not
entitled to any rights as a stockholder of SEEQ as to the Shares and
(ii) disclaims any beneficial ownership of the shares of SEEQ Common
Stock which are covered by the Voting Agreements.
In the event the Option becomes exercisable and is exercised in full,
LSI will have the sole power to vote, and the sole power to dispose
of, that number of shares equal to 19.9% of the voting power of the
then issued and outstanding shares of Series B Preferred Stock, which,
based upon the 32,252,752 shares of SEEQ Common Stock outstanding as
of February 21, 1999 (as represented by SEEQ in the Merger Agreement),
currently equals 64,183 shares of Series B Preferred Stock.
John J. D'Errico, an executive officer of LSI, owns 6,000 shares of
SEEQ Common Stock. To LSI's knowledge, no other person listed on
Schedule A has an ownership interest in SEEQ.
Set forth on Schedule B is the name of those stockholders of SEEQ that
have entered into a Voting Agreement with LSI, and their present
principal occupation or employment, including the name, principal
business and address of any corporation or other organization in which
such employment is conducted, to LSI's knowledge.
(c) To LSI's knowledge, no transactions in the class of securities
reported have been effected during the past sixty days by any person
named pursuant to Item 2.
(d) To LSI's knowledge, no other person has the right to receive or
the power to direct the receipt of dividends from, or the proceeds
from the sale of, the securities of SEEQ reported on herein.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDING OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Other than the Merger Agreement and the exhibits thereto, including
the Stock Option Agreement and the Votings Agreements, to the
knowledge of LSI, there are no contracts, arrangements, understandings
or relationships among the persons named in Item 2 and
<PAGE> 8
SCHEDULE 13D
CUSIP NO. 815779-10-3 PAGE 8 OF 8 PAGES
between such persons and any person with respect to any securities of
SEEQ, including but not limited to transfer or voting of any of the
securities, finder's fees, joint ventures, loan or option arrangement,
puts or calls, guarantees of profits, division of profits or loss, or
the giving or withholding of proxies.
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS.
The following documents are filed as exhibits:
1. Agreement and Plan of Reorganization and Merger, dated February
21, 1999 by and among LSI, Merger Sub and SEEQ. (Incorporated by
reference to exhibits to the Report on Form 8-K filed by LSI
Logic Corporation on February 23, 1999 (File No. 99548125).)
2. Stock Option Agreement dated February 21, 1999 by and between LSI
and SEEQ.
3. Form of Voting Agreement by and between LSI and the persons
listed on Schedule B to this Schedule 13D.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: March 3, 1999
LSI LOGIC CORPORATION
By: /s/ David E. Sanders
------------------------------------
David E. Sanders
Vice President, General Counsel and
Secretary
<PAGE> 9
Schedule A
DIRECTORS AND EXECUTIVE OFFICERS OF
LSI LOGIC CORPORATION
The following table sets forth the name, business address and present
principal occupation or employment of each director and executive officer of
LSI. Except as indicated below, the business address of each such person is 1551
McCarthy Boulevard, Milpitas, CA 95035.
<TABLE>
<CAPTION>
Name and Title Present Principal Occupation
- -------------- ----------------------------
<S> <C>
Wilfred J. Corrigan Chairman of the Board of Directors
Chairman of the Board of Directors and Chief Executive Officer of LSI
and Chief Executive Officer
Elias J. Antoun Executive Vice President, Consumer Products of
Executive Vice President, Consumer Products LSI
John P. Daane Executive Vice President, Communications,
Executive Vice President, Communications, Computer and ASIC Products of LSI
Computer and ASIC Products
John J. D'Errico Executive Vice President, Storage Components
Executive Vice President, Storage Components and Colorado Operations of LSI
and Colorado Operations
Thomas Georgens Senior Vice President and General Manager,
Senior Vice President and General Manager, Storage Systems Division of LSI
Storage Systems Division
W. Richard Marz Executive Vice President, Geographic Markets of
Executive Vice President, Geographic Markets LSI
R. Douglas Norby Executive Vice President
Executive Vice President and Chief Financial and Chief Financial Officer of LSI
Officer
David E. Sanders Vice President, General Counsel and Secretary of
Vice President, General Counsel and Secretary LSI
Lewis C. Wallbridge Vice President, Human Resources of LSI
Vice President, Human Resources
Joseph M. Zelayeta Executive Vice President, Worldwide Operations
Executive Vice President, Worldwide Operations of LSI
T.Z. Chu Retired President of Hoefer Pharmacia Biotech,
Director Inc.
Malcolm R. Currie Chief Executive Officer, Currie Technologies,
Director Inc.; Chairman Emeritus, Hughes Aircraft, Inc.
James H. Keyes Chairman and Chief Executive Officer of
Director Johnson Controls, Inc.
</TABLE>
<PAGE> 10
Schedule B
SEEQ TECHNOLOGY INCORPORATED
VOTING AGREEMENT STOCKHOLDERS
The following table sets forth the name and present principal
occupation or employment of each SEEQ stockholder that entered into a voting
agreement with LSI. Except as indicated below, the business address of each such
person is 47200 Bayside Parkway, Fremont, CA 94538.
<TABLE>
<CAPTION>
Voting Agreement Stockholder Shares Beneficially Owned
- ---------------------------- -------------------------
<S> <C>
Gary R. Fish(a) 12,620
Vice President, Finance and Administration,
Chief Financial Officer and Secretary of SEEQ
Christopher E. Mann 100
Vice President, Design Engineering of SEEQ
Phillip J. Salsbury (b) 363,208
Chief Executive Officer and Director of SEEQ
James D. Middleton 3,375
Vice President, Manufacturing Operations of
SEEQ
Alan V. Gregory (c) 248,500
Chairman of the Board of Directors of SEEQ
Charles Giancarlo (d) 20,000
Director of SEEQ
Robert C. Frostholm 11,000
Vice President, Sales and Marketing of SEEQ
Total: 658,803
</TABLE>
(a) Represents 2,000 shares of outstanding SEEQ Common Stock and 10,620
shares subject to options exercisable within 60 days of February 21, 1999.
(b) Represents 28,000 shares of outstanding SEEQ Common Stock and 335,208
shares subject to options exercisable within 60 days of February 21, 1999.
(c) Represents 138,500 shares of outstanding SEEQ Common Stock and 110,000
shares subject to options exercisable within 60 days of February 21, 1999.
(d) Represents 20,000 shares subject to options exercisable within 60
days of February 21, 1999.
<PAGE> 1
Exhibit 2
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is made and entered into
as of February 21, 1999, among LSI Logic Corporation, a Delaware corporation
("Parent"), and SEEQ Technology Incorporated, a Delaware corporation (the
"Company"). Capitalized terms used but not otherwise defined herein will have
the meanings ascribed to them in the Reorganization Agreement (as defined
below).
RECITALS
A. The Company, Merger Sub (as defined below) and Parent have entered
into an Agreement and Plan of Reorganization and Merger (the "Reorganization
Agreement") which provides for the merger (the "Merger") of a wholly-owned
subsidiary of Parent ("Merger Sub") with and into the Company. Pursuant to the
Merger, all outstanding capital stock of the Company will be converted into the
right to receive Common Stock of Parent.
B. As a condition to Parent's willingness to enter into the
Reorganization Agreement, Parent has requested that Company agree, and Company
has so agreed, to grant to Parent an option to acquire shares of Company's
Series B Preferred Stock, par value $0.01 per share (the "Company Preferred
Shares"), upon the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein and in the Reorganization Agreement
and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereto agree as follows:
1. Grant of Option. The Company hereby grants to Parent an irrevocable
option (the "Option") to acquire up to a number of Company Preferred Shares (the
"Option Shares") that represent 19.9% of the voting power of the issued and
outstanding shares of Company's capital stock (and that, if converted into
shares of Company Common Stock, par value $0.01 per share ("Company Common
Stock"), in accordance with its terms would equal 19.9% of the issued and
outstanding Company Common Stock) as of the first date, if any, upon which an
Exercise Event (as defined in Section 2(a) below) will occur, in the manner set
forth below (i) by paying cash at a price of $300 per share (the "Exercise
Price") and/or, at Parent's election, (ii) by exchanging therefor shares of the
Common Stock, $0.01 par value, of Parent ("Parent Shares") at a rate (the
"Exercise Ratio"), for each Option Share, of a number of Parent Shares equal to
the Exercise Price divided by the closing sale price of Parent Shares on the New
York
<PAGE> 2
Stock Exchange for the trading day immediately preceding the date of the Closing
(as defined below) of the particular Option exercise.
2. Exercise of Option; Maximum Proceeds.
(a) The Option may be exercised by Parent, in whole or in part, at
any time or from time to time, (i) upon termination of the Reorganization
Agreement pursuant to Section 7.1(e) thereof, or (ii) if the Reorganization
Agreement is terminated pursuant to Section 7.1(b) or 7.1(d) thereof upon the
earlier of (x) the occurrence of an event causing the Termination Fee to become
payable pursuant to Section 7.3(b)(ii) of the Reorganization Agreement or (y)
immediately prior to the consummation of a tender or exchange offer for a
Company Acquisition (any of the events specified in clauses (i) or (ii), of this
sentence being referred to herein as an "Exercise Event"). In the event Parent
wishes to exercise the Option, Parent will deliver to the Company a written
notice (each an "Exercise Notice") specifying the total number of Option Shares
it wishes to acquire and the form of consideration to be paid. Each closing of a
purchase of Option Shares (a "Closing") will occur on a date and at a time prior
to the termination of the Option designated by Parent in an Exercise Notice
delivered at least two business days prior to the date of such Closing, which
Closing will be held at the principal offices of the Company.
(b) The Option will terminate upon the earliest of (i) the Effective
Time, (ii) nine (9) months following the date on which the Reorganization
Agreement is terminated pursuant to Section 7.1(b) or 7.1(d) thereof, if no
event causing the Termination Fee to become payable pursuant to Section
7.3(b)(ii) of the Reorganization Agreement has occurred, (iii)12 months
following the date on which the Reorganization Agreement is terminated pursuant
to Section 7.1(e) thereof, (iv) in the event the Reorganization Agreement has
been terminated pursuant to Section 7.1(b) or 7.1(d) thereof and the Termination
Fee became payable pursuant to Section 7.3(b)(ii) thereof, 12 months after
payment of the Termination Fee; and (v) the date on which the Reorganization
Agreement is terminated if neither a Triggering Event nor the announcement of an
Acquisition Proposal by a third party will have occurred on or prior to the date
of such termination; provided, however, that if the Option cannot be exercised
by reason of any applicable government order or because the waiting period
related to the issuance of the Option Shares under the HSR Act will not have
expired or been terminated, then the Option will not terminate until the tenth
business day after such impediment to exercise will have been removed or will
have become final and not subject to appeal.
(c) If Parent receives in the aggregate pursuant to Section 7.3(b) of
the Reorganization Agreement together with proceeds in connection with any sales
or other dispositions of Option Shares and any dividends received by Parent
declared on Option Shares, more than the sum of (x) $2,000,000 plus (y) the
Exercise Price multiplied by the number of Company Preferred Shares purchased by
Parent pursuant to the Option, then all proceeds to Parent in excess of such sum
will be remitted by Parent to Company.
<PAGE> 3
3. Conditions to Closing. The obligation of Company to issue Option
Shares to Parent hereunder is subject to the conditions that (a) any waiting
period under the HSR Act applicable to the issuance of the Option Shares
hereunder will have expired or been terminated; (b) all material consents,
approvals, orders or authorizations of, or registrations, declarations or
filings with, any Federal, state or local administrative agency or commission or
other Federal state or local governmental authority or instrumentality, if any,
required in connection with the issuance of the Option Shares hereunder will
have been obtained or made, as the case may be; and (c) no preliminary or
permanent injunction or other order by any court of competent jurisdiction
prohibiting or otherwise restraining such issuance will be in effect. It is
understood and agreed that at any time during which the Option is exercisable,
the parties will use their respective best efforts to satisfy all conditions to
Closing, so that a Closing may take place as promptly as practicable.
4. Closing. At any Closing, (a) the Company will deliver to Parent a
single certificate in definitive form representing the number of Option Shares
designated by Parent in its Exercise Notice, such certificate to be registered
in the name of Parent and to bear the legend set forth in Section 9 hereof,
against delivery of (b) payment by Parent to the Company of the aggregate
purchase price for the Option Shares so designated and being purchased by
delivery of (i) a certified check or bank check and/or, at Parent's election,
(ii) a single certificate in definitive form representing the number of Parent
Shares being issued by Parent in consideration therefor (based on the Exercise
Ratio), such certificate to be registered in the name of the Company and to bear
the legend set forth in Section 9 hereof.
5. Representations and Warranties of the Company. Company represents and
warrants to Parent that (a) Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the corporate power and authority to enter into this Agreement and to carry out
its obligations hereunder; (b) the execution and delivery of this Agreement by
the Company and consummation by the Company of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of the Company and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or any of the transactions contemplated
hereby; (c) this Agreement has been duly executed and delivered by the Company
and constitutes a legal, valid and binding obligation of the Company and,
assuming this Agreement constitutes a legal, valid and binding obligation of
Parent, is enforceable against the Company in accordance with its terms, except
as enforceability may be limited by bankruptcy and other laws affecting the
rights and remedies of creditors generally and general principles of equity; (d)
except for any filings required under the HSR Act, the Company has taken all
necessary corporate and other action to authorize and reserve for issuance and
to permit it to issue upon exercise of the Option, and at all times from the
date hereof until the termination of the Option will have reserved for issuance,
a sufficient number of unissued Company Preferred Shares for Parent to exercise
the Option in full and will take all necessary corporate or other action to
authorize and reserve for issuance all additional Company Preferred Shares,
Company
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<PAGE> 4
Common Stock issuable upon conversion of such Company Preferred Shares or other
securities which may be issuable pursuant to Section 8(a) upon exercise of the
Option, all of which, upon their issuance and delivery in accordance with the
terms of this Agreement, will be validly issued, fully paid and nonassessable;
(e) upon delivery of the Company Preferred Shares and any other securities to
Parent upon exercise of the Option, Parent will acquire such Company Preferred
Shares or other securities free and clear of all material claims, liens,
charges, encumbrances and security interests of any kind or nature whatsoever,
excluding those imposed by Parent; (f) the designations, powers, preferences,
rights, qualifications, limitations and restrictions in respect of the Company
Preferred Shares are as set forth in the Certificate of Designation attached
hereto as Annex 1 (the "Certificate of Designations"); (g) the execution and
delivery of this Agreement by the Company do not, and the performance of this
Agreement by the Company will not, (i) conflict with or violate the Certificate
of Incorporation or Bylaws or equivalent organizational documents of the Company
or any of its subsidiaries, (ii) conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to the Company or any of its
subsidiaries or by which its or any of their respective properties is bound or
affected or (iii) result in any breach of or constitute a default (or an event
that with notice or lapse of time or both would become a default) under, or
impair the Company's or any of its subsidiaries' rights or alter the rights or
obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of the
Company or any of its subsidiaries pursuant to, any material note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries or its or any of
their respective properties are bound or affected; (h) the execution and
delivery of this Agreement by the Company does not, and the performance of this
Agreement by the Company will not, require any consent, approval, authorization
or permit of, or filing with, or notification to, any Governmental Entity except
pursuant to the HSR Act; and (i) any Parent Shares acquired pursuant to this
Agreement will not be acquired by the Company with a view to the public
distribution thereof and the Company will not sell or otherwise dispose of such
shares in violation of applicable law or this Agreement.
6. Certain Rights.
(a) Parent Put. At the request of and upon notice by Parent (the "Put
Notice"), at any time during the period during which the Option is exercisable
pursuant to Section 2 (the "Purchase Period"), the Company (or any successor
entity thereof) will purchase from Parent (in each case as limited by
subparagraph (iii) below): (1) the Option, to the extent not previously
exercised, at the price set forth in subparagraph (i) below; and (2) the Option
Shares, if any, acquired by Parent pursuant thereto, at the price set forth in
subparagraph (ii) below:
(i) The difference between the "Market/Tender Offer Price"
for the Company Common Stock as of the date Parent gives notice
of its intent to
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<PAGE> 5
exercise its rights under this Section 6(a) (defined as the
higher of (A) the highest price per share of Company Common Stock
offered as of such date pursuant to any Acquisition Proposal
which was made prior to such date and (B) the highest closing
sale price of one share of Company Common Stock on the Nasdaq
National Market during the 20 trading days ending on the trading
day immediately preceding such date) and the Equivalent Exercise
Price (as defined below), multiplied by the product of the number
of Company Preferred Shares purchasable pursuant to the Option
multiplied by one hundred, but only if the Market/Tender Offer
Price is greater than the Equivalent Exercise Price (as defined
below). For purposes of this Agreement, "Equivalent Exercise
Price" will mean the price determined by dividing the Exercise
Price by one hundred. For purposes of determining the highest
price offered pursuant to any Acquisition Proposal which involves
consideration other than cash, the value of such consideration
will be equal to the higher of (x) if securities of the same
class of the proponent as such consideration are traded on any
national securities exchange or by any registered securities
association, a value based on the closing sale price or asked
price for such securities on their principal trading market on
such date and (y) the value ascribed to such consideration by the
proponent of such Acquisition Proposal, or if no such value is
ascribed, a value determined in good faith by the Board of
Directors of the Company.
(ii) (x) The Exercise Price paid by Parent for the Company
Preferred Shares acquired pursuant to this Option plus (y) (1)
the difference between the Market/Tender Offer Price and the
Equivalent Exercise Price (but only if the Market/Tender Offer
Price is greater than the Equivalent Exercise Price), multiplied
by (2) one hundred, multiplied by (3) the number of Company
Preferred Shares so purchased. If Parent issued Parent Shares in
connection with any exercise of the Option, the Exercise Price
and the Equivalent Exercise Price each will be calculated as set
forth in the last sentence of Section 4 as if Parent had
exercised its right to pay cash instead of issuing Parent Shares.
(iii) Notwithstanding subparagraphs (i) and (ii) above,
pursuant to this Section 6 Company will not be required to pay
Parent in excess of an aggregate of (x) $2,000,000 plus (y) the
Exercise Price paid by Parent for Company Preferred Shares
acquired pursuant to the Option minus (z) any amounts paid to
Parent by the Company pursuant to Section 7.3(b) of the
Reorganization Agreement.
(b) Redelivery of Parent Shares. If Parent has acquired Option
Shares pursuant to exercise of the Option by the issuance and delivery of Parent
Shares, then Company will, if so requested by Parent, in fulfillment of its
obligation pursuant to the first clause of Section 6(a)(ii) with respect to the
Exercise Price paid in the form of Parent Shares only, redeliver the
certificate(s) for such Parent Shares to Parent, free and clear of all claims,
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<PAGE> 6
liens, charges, encumbrances and security interests of any kind or nature
whatsoever, other than those imposed by Parent.
(c) Payment and Redelivery of Option or Shares. In the event
Parent exercises its rights under Sections 6(a) or (b), the Company will, within
ten business days after Parent delivers notice pursuant to Section 6(a), pay the
required amount to Parent in immediately available funds (and Parent Shares, if
applicable) and Parent will surrender to the Company the Option and the
certificates evidencing the Option Shares purchased by Parent pursuant thereto,
and Parent will represent and warrant that such shares are then free and clear
of all claims, liens, charges, encumbrances and security interests of any kind
or nature whatsoever, other than those imposed by the Company.
(d) Restrictions on Transfer. Until the expiration of the
Purchase Period, the Company will not sell, transfer or otherwise dispose of any
Parent Shares acquired by it pursuant to this Agreement.
7. Registration Rights
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<PAGE> 7
(a) Following the termination of the Reorganization Agreement,
Parent (sometimes referred to herein as the "Holder") may by written notice (a
"Registration Notice") to the Company (the "Registrant") request the Registrant
to register under the Securities Act all or any part of the shares acquired by
the Holder pursuant to this Agreement (such shares requested to be registered,
the "Registrable Securities") in order to permit the sale or other disposition
of such shares pursuant to a bona fide firm commitment underwritten public
offering in which the Holder and the underwriters will effect as wide a
distribution of such Registrable Securities as is reasonably practicable and
will use reasonable efforts to prevent any person or group from purchasing
through such offering shares representing more than 2% of the voting power of or
2% of the outstanding shares of Common Stock of the Registrant on a fully
diluted basis (a "Permitted Offering"); provided, however, that any such
Registration Notice must relate to a number of shares equal to at least 2% of
the voting power of or 2% of the outstanding shares of Common Stock of the
Registrant on a fully diluted basis and that any rights to require registration
hereunder will terminate with respect to any shares that may be sold pursuant to
Rule 144(k) under the Securities Act. The Registration Notice will include a
certificate executed by the Holder and its proposed managing underwriter, which
underwriter will be an investment banking firm of nationally recognized standing
(the "Manager"), stating that (i) the Holder and the Manager have a good faith
intention to commence a Permitted Offering and (ii) the Manager in good faith
believes that, based on the then prevailing market conditions, it will be able
to sell the Registrable Securities at a per share price equal to at least 80% of
the per share average of the closing sale prices of the Registrant's Common
Stock on the Nasdaq National Market for the twenty trading days immediately
preceding the date of the Registration Notice. The Registrant will thereupon
have the option exercisable by written notice delivered to the Holder within ten
business days after the receipt of the Registration Notice, irrevocably to agree
to purchase all or any part of the Registrable Securities for cash at a price
(the "Option Price") equal to the product of (i) the number of Registrable
Securities so purchased and (ii) (x) if such Registrable Securities are Company
Common Stock the per share average of the closing sale prices of the
Registrant's Common Stock on the Nasdaq National Market for the twenty trading
days immediately preceding the date of the Registration Notice and (y) if such
shares are Company Series B Preferred Stock at a price equal to one hundred
multiplied by the price obtained in subsection (x). Any such purchase of
Registrable Securities by the Registrant hereunder will take place at a closing
to be held at the principle executive offices of the Registrant or its counsel
at any reasonable date and time designated by the Registrant in such notice
within ten business days after delivery of such notice. The payment for the
shares to be purchased will be made by delivery at the time of such closing of
the Option Price in immediately available funds.
(b) If the Registrant does not elect to exercise its option to
purchase pursuant to Section 7(a) with respect to all Registrable Securities,
the Registrant will use all reasonable efforts to effect, as promptly as
practicable, the registration under the Securities Act and the listing on the
exchange or market where the Company's Common Stock is then trading of the
unpurchased Registrable Securities requested to be registered in the
Registration Notice; provided, however, that (i) the Holder will not be entitled
to more than an aggregate of four
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<PAGE> 8
effective registration statements hereunder and (ii) the Registrant will not be
required to file any such registration statement during any period of time (not
to exceed 40 days after a Registration Notice in the case of clause (A) below or
90 days after a Registration Notice in the case of clauses (B) and (C) below)
when (A) the Registrant is in possession of material non-public information
which it reasonably believes would be detrimental to be disclosed at such time
and, in the opinion of counsel to such Registrant, such information would have
to be disclosed if a registration statement were filed at that time; (B) the
Registrant is required under the Securities Act to include audited financial
statements for any period in such registration statement and such financial
statements are not yet available for inclusion in such registration statement;
or (C) such Registrant determines, in its reasonable judgment, that such
registration would interfere with any financing, acquisition or other material
transaction involving the Registrant. If consummation of the sale of any
Registrable Securities pursuant to a registration hereunder does not occur
within 180 days after the filing with the SEC of the initial registration
statement therefor, the provisions of this Section 7 will again be applicable to
any proposed registration. The Registrant will use all reasonable efforts to
cause any Registrable Securities registered pursuant to this Section 7 to be
qualified for sale under the securities or blue sky laws of such jurisdictions
as the Holder may reasonably request and will continue such registration or
qualification in effect in such jurisdictions; provided, however, that the
Registrant will not be required to qualify to do business in, or consent to
general service of process in, any jurisdiction by reason of this provision.
(c) The registration rights set forth in this Section 7 are
subject to the condition that the Holder will provide the Registrant with such
information with respect to the Holder's Registrable Securities, the plan for
distribution thereof, and such other information with respect to the Holder as,
in the reasonable judgment of counsel for the Registrant, is necessary to enable
the Registrant to include in a registration statement all material facts
required to be disclosed with respect to a registration thereunder.
(d) A registration effected under this Section 7 will be effected
at the Registrant's expense, except for underwriting discounts and commissions
and the fees and expenses of counsel to the Holder, and the Registrant will
provide to the underwriters such documentation (including certificates, opinions
of counsel and "comfort" letters from auditors) as are customary in connection
with underwritten public offerings and as such underwriters may reasonably
require. In connection with any registration, the Holder and the Registrant
agree to enter into an underwriting agreement reasonably acceptable to each such
party, in form and substance customary for transactions of this type with the
underwriters participating in such offering.
(e) Indemnification.
(i) The Registrant will indemnify the Holder, each of its
directors and officers and each person who controls the Holder within the
meaning of Section 15 of the Securities Act, and each underwriter of the
Registrant's securities, with respect to any
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<PAGE> 9
registration, qualification or compliance which has been effected pursuant to
this Agreement, against all expenses, claims, losses, damages or liabilities (or
actions in respect thereof), including any of the foregoing incurred in
settlement of any litigation, commenced or threatened, arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any registration statement, prospectus, offering circular or other
document, or any amendment or supplement thereto, incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading, or any violation by the Registrant of any rule
or regulation promulgated under the Securities Act applicable to the Registrant
in connection with any such registration, qualification or compliance, and the
Registrant will reimburse the Holder and, each of its directors and officers and
each person who controls the Holder within the meaning of Section 15 of the
Securities Act, and each underwriter for any legal and any other expenses
reasonably incurred in connection with investigating, preparing or defending any
such claim, loss, damage, liability or action; provided, that the Registrant
will not be liable in any such case to the extent that any such claim, loss,
damage, liability or expense arises out of or is based on any untrue statement
or omission or alleged untrue statement or omission, made in reliance upon and
in conformity with written information furnished to the Registrant by such
Holder or director or officer or controlling person or underwriter seeking
indemnification.
(ii) The Holder will indemnify the Registrant, each of its
directors and officers and each underwriter of the Registrant's securities
covered by such registration statement and each person who controls the
Registrant within the meaning of Section 15 of the Securities Act, against all
claims, losses, damages and liabilities (or actions in respect thereof),
including any of the foregoing incurred in settlement of any litigation,
commenced or threatened, arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or any violation by
the Holder of any rule or regulation promulgated under the Securities Act
applicable to the Holder in connection with any such registration, qualification
or compliance, and will reimburse the Registrant, such directors, officers or
control persons or underwriters for any legal or any other expenses reasonably
incurred in connection with investigating, preparing or defending any such
claim, loss, damage, liability or action, in each case to the extent, but only
to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Registrant by the Holder
for use therein; provided, that in no event will any indemnity under this
Section 7(e) exceed the net proceeds of the offering received by the Holder.
(iii) Each party entitled to indemnification under this
Section 7(e) (the "Indemnified Party") will give notice to the party required to
provide indemnification (the
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<PAGE> 10
"Indemnifying Party") promptly after such Indemnified Party has actual knowledge
of any claim as to which indemnity may be sought, and will permit the
Indemnifying Party to assume the defense of any such claim or any litigation
resulting therefrom, provided, that counsel for the Indemnifying Party, who will
conduct the defense of such claim or litigation, will be approved by the
Indemnified Party (whose approval will not unreasonably be withheld), and the
Indemnified Party may participate in such defense at such party's expense;
provided, however, that the Indemnifying Party will pay such expense if
representation of the Indemnified Party by counsel retained by the Indemnifying
Party would be inappropriate due to actual or potential differing interests
between the Indemnified Party and any other party represented by such counsel in
such proceeding, and provided further, however, that the failure of any
Indemnified Party to give notice as provided herein will not relieve the
Indemnifying Party of its obligations under this Section 7(e) unless the failure
to give such notice is materially prejudicial to an Indemnifying Party's ability
to defend such action. No Indemnifying Party, in the defense of any such claim
or litigation will, except with the consent of each Indemnified Party, consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation. No Indemnifying Party will be required to indemnify any Indemnified
Party with respect to any settlement entered into without such Indemnifying
Party's prior consent (which will not be unreasonably withheld).
8. Adjustment Upon Changes in Capitalization; Rights Plans.
(a) In the event of any change in the Company Preferred Shares by
reason of stock dividends, stock splits, reverse stock splits, mergers (other
than the Merger), recapitalizations, combinations, exchanges of shares and the
like (including without limitation any conversion of the Company Preferred
Shares into shares of Company Common Stock), the type and number of shares or
securities subject to the Option, the Exercise Ratio, the Exercise Price and the
other numbers herein requiring adjustment will be adjusted appropriately, and
proper provision will be made in the agreements governing such transaction so
that Parent will receive, upon exercise of the Option, the number and class of
shares or other securities or property that Parent would have received in
respect of the Company Preferred Shares if the Option had been exercised
immediately prior to such event or the record date therefor, as applicable.
(b) At any time during which the Option is exercisable, and at any
time after the Option is exercised (in whole or in part, if at all), the Company
will not amend (nor permit the amendment of) the Company Rights Plan nor adopt
(nor permit the adoption of) a new stockholders rights plan, that contains
provisions for the distribution or exercise of rights thereunder as a result of
Parent or any affiliate or transferee being the beneficial owner of shares of
the Company by virtue of the Option being exercisable or having been exercised
(or as a result of beneficially owning shares issuable in respect of any Option
Shares).
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<PAGE> 11
9. Restrictive Legends. Each certificate representing Option Shares
issued to Parent hereunder, and each certificate representing Parent Shares
delivered to the Company at a Closing, will include a legend in substantially
the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE
REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE. SUCH SECURITIES ARE ALSO SUBJECT TO
ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE STOCK OPTION
AGREEMENT DATED AS OF FEBRUARY 21, 1999, A COPY OF WHICH MAY BE
OBTAINED FROM THE ISSUER.
10. Listing and HSR Filing. The Company, upon the request of Parent,
will promptly file an application to list the Option Shares to be acquired upon
exercise of the Option for quotation on the Nasdaq National Market and will use
its best efforts to obtain approval of such listing as soon as practicable.
Parent, upon the request of the Company, will promptly file an application to
list the Parent Shares issued and delivered to the Company pursuant to Section 4
on the New York Stock Exchange and will use its best efforts to obtain approval
of such listing as soon as practicable. Promptly after the date hereof, each of
the parties hereto will promptly file with the Federal Trade Commission and the
Antitrust Division of the United States Department of Justice all required
premerger notification and report forms and other documents and exhibits
required to be filed under the HSR Act to permit the acquisition of the Option
Shares subject to the Option at the earliest possible date.
11. Binding Effect. This Agreement will be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. Nothing contained in this Agreement, express or implied, is intended to
confer upon any person other than the parties hereto and their respective
successors and permitted assigns any rights or remedies of any nature whatsoever
by reason of this Agreement. Any shares sold by a party in compliance with the
provisions of Section 7 will, upon consummation of such sale, be free of the
restrictions imposed with respect to such shares by this Agreement and any
transferee of such shares will not be entitled to the rights of such party.
Certificates representing shares sold in a registered public offering pursuant
to Section 7 will not be required to bear the legend set forth in Section 9.
12. Specific Performance. The parties hereto recognize and agree that if
for any reason any of the provisions of this Agreement are not performed in
accordance with their specific terms or are otherwise breached, immediate and
irreparable harm or injury would be caused for which money damages would not be
an adequate remedy. Accordingly, each party hereto agrees that in addition to
other remedies the other party hereto will be entitled to an injunction
restraining any violation or threatened violation of the provisions of this
Agreement or the right to enforce any of the covenants or agreements set forth
herein by specific
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<PAGE> 12
performance. In the event that any action will be brought in equity to enforce
the provisions of the Agreement, neither party hereto will allege, and each
party hereto hereby waives the defense, that there is an adequate remedy at law.
13. Entire Agreement. This Agreement and the Reorganization Agreement
(including the appendices thereto) constitute the entire agreement between the
parties hereto with respect to the subject matter hereof and supersede all other
prior agreements and understandings, both written and oral, between the parties
hereto with respect to the subject matter hereof.
14. Further Assurances. Each party hereto will execute and deliver all
such further documents and instruments and take all such further action as may
be necessary in order to consummate the transactions contemplated hereby.
15. Validity. The invalidity or unenforceability of any provision of
this Agreement will not affect the validity or enforceability of the other
provisions of this Agreement, which will remain in full force and effect. In the
event any Governmental Entity of competent jurisdiction holds any provision of
this Agreement to be null, void or unenforceable, the parties hereto will
negotiate in good faith and will execute and deliver an amendment to this
Agreement in order, as nearly as possible, to effectuate, to the extent
permitted by law, the intent of the parties hereto with respect to such
provision.
16. Notices. All notices and other communications hereunder will be in
writing and will be deemed given if delivered personally or by commercial
delivery service, or sent via telecopy (receipt confirmed) to the parties at the
following addresses or telecopy numbers (or at such other address or telecopy
numbers for a party as will be specified by like notice):
(1) if to Parent, to:
LSI Logic Corporation
1551 McCarthy Boulevard
Milpitas, California 95035
Attention: Vice President and General Counsel
Telephone No.: (408) 433-7189
Telecopy No.: (408) 433-6896
with a copy to:
Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, California 94304-1050
Attention: Larry W. Sonsini, Esq.
Daniel R. Mitz, Esq.
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<PAGE> 13
Telephone No.: (650) 493-9300
Telecopy No.: (650) 493-6811
(2) if to the Company, to:
SEEQ Technology Incorporated
47200 Bayside Parkway
Fremont, California 94538
Attention: President
Telephone No.: (510) 226-2900
Telecopy No.: (510) 657-2837
with a copy to:
Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP
155 Constitution Drive
Menlo Park, California 94025
Attention: Jay K. Hachigian, Esq.
Telephone No.: (650) 321-2400
Telecopy No.: (650) 321-2800
17. Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of Delaware applicable to agreements made
and to be performed entirely within such State.
18. Expenses. Except as otherwise expressly provided herein or in the
Reorganization Agreement, all costs and expenses incurred in connection with the
transactions contemplated by this Agreement will be paid by the party incurring
such expenses.
19. Amendments; Waiver. This Agreement may be amended by the parties
hereto and the terms and conditions hereof may be waived only by an instrument
in writing signed on behalf of each of the parties hereto, or, in the case of a
waiver, by an instrument signed on behalf of the party waiving compliance.
20. Assignment. Neither of the parties hereto may sell, transfer, assign
or otherwise dispose of any of its rights or obligations under this Agreement or
the Option created hereunder to any other person, without the express written
consent of the other party, except that the rights and obligations hereunder
will inure to the benefit of and be binding upon any successor of a party
hereto.
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<PAGE> 14
21. Counterparts. This Agreement may be executed in counterparts, each
of which will be deemed to be an original, but both of which, taken together,
will constitute one and the same instrument.
22. Company Covenant. Promptly upon the request of Parent, Company will
take all action necessary in accordance with Delaware Law and its Certificate of
Incorporation and Bylaws to convene a meeting of its stockholders to be held as
promptly as practicable after the date of such request, for the purpose of
considering a proposal to increase the authorized capital stock of the Company
sufficient to allow the Company to reserve for issuance a sufficient number of
shares of its Common Stock to permit the conversion in full of the Company
Preferred Shares into Common Stock as provided for in the Certificate of
Designations. The Board of Directors of the Company will recommend that the
stockholders of the Company vote in favor of such proposal. Until the earlier of
such time as Parent has fully exercised this Option or the termination of this
Option in accordance with its terms, Company will not amend the Certificate of
Designations without the prior written consent of Parent.
23. Parent Covenant. Parent hereby covenants and agrees that at any
meeting of stockholders held to consider a proposal to increase the authorized
capital stock of the Company (or any written consent solicited therefor), Parent
will vote all of the Company's shares held by it in favor of such proposal if
the Company's board of directors recommends that stockholders vote in favor of
such proposal.
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<PAGE> 15
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective duly authorized officers as of the date first
above written.
LSI LOGIC CORPORATION
By: /s/ John P. Daane
----------------------------------------
Name: John P. Daane
--------------------------------------
Title: Executive Vice President
------------------------------------
SEEQ TECHNOLOGY INCORPORATED
By: /s/ Phillip J. Salsbury
----------------------------------------
Name: Phillip J. Salsbury
--------------------------------------
Title: President and Chief Executive Officer
-------------------------------------
[SIGNATURE PAGE TO STOCK OPTION AGREEMENT]
<PAGE> 1
Exhibit 3
VOTING AGREEMENT
THIS VOTING AGREEMENT (this "Agreement") is made and entered into as of
February 21, 1999, among LSI Logic Corporation, a Delaware corporation
("Parent"), and the undersigned stockholder and/or option holder (the
"Stockholder") of SEEQ Technology Incorporated, a Delaware corporation (the
"Company").
RECITALS
A. The Company, Merger Sub (as defined below) and Parent have entered
into an Agreement and Plan of Reorganization and Merger (the "Reorganization
Agreement"), which provides for the merger (the "Merger") of a wholly-owned
subsidiary of Parent ("Merger Sub") with and into the Company. Pursuant to the
Merger, all outstanding capital stock of the Company shall be converted into the
right to receive common stock of Parent, as set forth in the Reorganization
Agreement;
B. Stockholder is the beneficial owner (as defined in Rule 13d-3 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of such
number of shares of the outstanding capital stock of the Company and shares
subject to outstanding options and warrants as is indicated on the signature
page of this Agreement; and
C. In consideration of the execution of the Reorganization Agreement by
Parent, Stockholder agrees to vote the Shares (as defined below) and other such
shares of capital stock of the Company over which Stockholder has voting power
so as to facilitate consummation of the Merger.
NOW, THEREFORE, intending to be legally bound, the parties hereto agree
as follows:
1. Certain Definitions. Capitalized terms not defined herein shall have
the meanings ascribed to them in the Reorganization Agreement. For purposes of
this Agreement:
(a) "Expiration Date" shall mean the earlier to occur of (i) such
date and time as the Reorganization Agreement shall have been terminated
pursuant to Article VII thereof, or (ii) such date and time as the Merger shall
become effective in accordance with the terms and provisions of the
Reorganization Agreement.
(b) "Person" shall mean any (i) individual, (ii) corporation, limited
liability company, partnership or other entity, or (iii) governmental authority.
(c) "Shares" shall mean: (i) all securities of the Company (including
all shares of Company Common Stock and all options, warrants and other rights to
acquire shares of Company Common Stock) owned by Stockholder as of the date of
this Agreement; and (ii) all additional securities of the Company (including all
additional shares of Company Common Stock and all additional options, warrants
and other rights to acquire shares of Company Common Stock) of which Stockholder
acquires ownership during the period from the date of this Agreement through the
Expiration Date.
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(d) Transfer. A Person shall be deemed to have effected a "Transfer"
of a security if such person directly or indirectly: (i) sells, pledges,
encumbers, grants an option with respect to, transfers or disposes of such
security or any interest in such security; or (ii) enters into an agreement or
commitment providing for the sale of, pledge of, encumbrance of, grant of an
option with respect to, transfer of or disposition of such security or any
interest therein.
2. Transfer of Shares.
(a) Transferee of Shares to be Bound by this Agreement. Stockholder
agrees that, during the period from the date of this Agreement through the
Expiration Date, Stockholder shall not cause or permit any Transfer of any of
the Shares to be effected unless such Transfer is in accordance with any
affiliate agreement between Stockholder and Parent contemplated by the
Reorganization Agreement and each Person to which any of such Shares, or any
interest in any of such Shares, is or may be transferred shall have: (a)
executed a counterpart of this Agreement and a proxy in the form attached hereto
as Exhibit A (with such modifications as Parent may reasonably request); and (b)
agreed in writing to hold such Shares (or interest in such Shares) subject to
all of the terms and provisions of this Agreement.
(b) Transfer of Voting Rights. Stockholder agrees that, during the
period from the date of this Agreement through the Expiration Date, Stockholder
shall not deposit (or permit the deposit of) any Shares in a voting trust or
grant any proxy or enter into any voting agreement or similar agreement in
contravention of the obligations of Stockholder under this Agreement with
respect to any of the Shares.
3. Agreement to Vote Shares. At every meeting of the stockholders of the
Company called, and at every adjournment thereof, and on every action or
approval by written consent of the stockholders of the Company, Stockholder
shall cause the Shares to be voted in favor of approval of the Reorganization
Agreement and the Merger and in favor of any matter that could reasonably be
expected to facilitate the Merger.
4. Irrevocable Proxy. Concurrently with the execution of this Agreement,
Stockholder agrees to deliver to Parent a proxy in the form attached hereto as
Exhibit A (the "Proxy"), which shall be irrevocable to the fullest extent
permissible by law, with respect to the Shares.
5. Representations and Warranties of the Stockholder. Stockholder (i) is
the beneficial owner of the shares of Common Stock of the Company, Preferred
Stock of the Company and the options and warrants to purchase shares of Common
Stock of the Company indicated on the final page of this Agreement, free and
clear of any liens, claims, options, rights of first refusal, co-sale rights,
charges or other encumbrances; (ii) does not beneficially own any securities of
the Company other than the shares of Common Stock of the Company, Preferred
Stock of the Company and options and warrants to purchase shares of Common Stock
of the Company indicated on the final page of this Agreement; and (iii) has full
power and authority to make, enter into and carry out the terms of this
Agreement and the Proxy.
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6. Additional Documents. Stockholder hereby covenants and agrees to
execute and deliver any additional documents necessary or desirable, in the
reasonable opinion of Parent, to carry out the intent of this Agreement.
7. Consent and Waiver. Stockholder (not in his capacity as a director or
officer of the Company) hereby gives any consents or waivers that are reasonably
required for the consummation of the Merger under the terms of any agreements to
which Stockholder is a party or pursuant to any rights Stockholder may have.
8. Legending of Shares. If so requested by Parent, Stockholder agrees
that the Shares shall bear a legend stating that they are subject to this
Agreement and to an irrevocable proxy. Subject to the terms of Section 2 hereof,
Stockholder agrees that Stockholder shall not Transfer the Shares without first
having the aforementioned legend affixed to the certificates representing the
Shares.
9. Termination. This Agreement shall terminate and shall have no further
force or effect as of the Expiration Date.
10. Miscellaneous.
(a) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, then 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.
(b) Binding Effect and Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, but, except as
otherwise specifically provided herein, neither this Agreement nor any of the
rights, interests or obligations of the parties hereto may be assigned by either
of the parties without prior written consent of the other.
(c) Amendments and Modification. This Agreement may not be modified,
amended, altered or supplemented except upon the execution and delivery of a
written agreement executed by the parties hereto.
(d) Specific Performance; Injunctive Relief. The parties hereto
acknowledge that Parent shall be irreparably harmed and that there shall be no
adequate remedy at law for a violation of any of the covenants or agreements of
Stockholder set forth herein. Therefore, it is agreed that, in addition to any
other remedies that may be available to Parent upon any such violation, Parent
shall have the right to enforce such covenants and agreements by specific
performance, injunctive relief or by any other means available to Parent at law
or in equity.
(e) Notices. All notices and other communications pursuant to this
Agreement shall be in writing and deemed to be sufficient if contained in a
written instrument and shall be deemed given if delivered personally,
telecopied, sent by nationally-recognized overnight courier or mailed by
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registered or certified mail (return receipt requested), postage prepaid, to the
parties at the following address (or at such other address for a party as shall
be specified by like notice):
If to Parent: LSI Logic Corporation
1551 McCarthy Boulevard
Milpitas, California 95035
Attention: Vice President and General Counsel
Telephone: (408) 433-7189
Facsimile: (408) 433-6896
With a copy to: Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, California 94304
Attention: Larry W. Sonsini, Esq.
Daniel R. Mitz, Esq.
Telephone: (650) 493-9300
Facsimile: (650) 493-6811
If to Stockholder: To the address for notice set forth on the
signature page hereof.
(f) Governing Law. This Agreement shall be governed by the laws of
the State of Delaware, without reference to rules of conflicts of law.
(g) Entire Agreement. This Agreement and the Proxy contain the entire
understanding of the parties in respect of the subject matter hereof, and
supersede all prior negotiations and understandings between the parties with
respect to such subject matter.
(h) Effect of Headings. The section headings are for convenience only
and shall not affect the construction or interpretation of this Agreement.
(i) Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
[The remainder of this page has been intentionally left blank.]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the day and year first above written.
LSI LOGIC CORPORATION STOCKHOLDER
By:____________________________________ By:_________________________________
Signature of Authorized Signatory Signature
Name:__________________________________ Name:_______________________________
Title:_________________________________ Title:______________________________
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Print Address
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Telephone
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Facsimile No.
Share beneficially owned:
___________ shares of Company Common
Stock
___________ shares of Company
Preferred Stock
___________ shares of Company Common
Stock issuable upon exercise of
outstanding options or warrants
[SIGNATURE PAGE TO VOTING AGREEMENT]
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EXHIBIT A
IRREVOCABLE PROXY
The undersigned stockholder of SEEQ Technology Incorporated, a Delaware
corporation (the "Company"), hereby irrevocably (to the fullest extent permitted
by law) appoints the directors on the Board of Directors of LSI Logic
Corporation, a Delaware corporation ("Parent"), and each of them, as the sole
and exclusive attorneys and proxies of the undersigned, with full power of
substitution and resubstitution, to vote and exercise all voting and related
rights (to the full extent that the undersigned is entitled to do so) with
respect to all of the shares of capital stock of the Company that now are or
hereafter may be beneficially owned by the undersigned, and any and all other
shares or securities of the Company issued or issuable in respect thereof on or
after the date hereof (collectively, the "Shares") in accordance with the terms
of this Proxy. The Shares beneficially owned by the undersigned stockholder of
the Company as of the date of this Proxy are listed on the final page of this
Proxy. Upon the undersigned's execution of this Proxy, any and all prior proxies
given by the undersigned with respect to any Shares are hereby revoked and the
undersigned agrees not to grant any subsequent proxies with respect to the
Shares until after the Expiration Date (as defined below).
This Proxy is irrevocable (to the fullest extent permitted by law), is
coupled with an interest and is granted pursuant to that certain Voting
Agreement of even date herewith by and among Parent and the undersigned
stockholder (the "Voting Agreement"), and is granted in consideration of Parent
entering into that certain Agreement and Plan of Reorganization and Merger (the
"Reorganization Agreement"), among Parent, Stealth Acquisition Corporation, a
Delaware corporation and a wholly-owned subsidiary of Parent ("Merger Sub"), and
the Company. The Reorganization Agreement provides for the merger of Merger Sub
with and into the Company in accordance with its terms (the "Merger"). As used
herein, the term "Expiration Date" shall mean the earlier to occur of (i) such
date and time as the Reorganization Agreement shall have been validly terminated
pursuant to Article VIII thereof or (ii) such date and time as the Merger shall
become effective in accordance with the terms and provisions of the
Reorganization Agreement.
The attorneys and proxies named above, and each of them, are hereby
authorized and empowered by the undersigned, at any time prior to the Expiration
Date, to act as the undersigned's attorney and proxy to vote the Shares, and to
exercise all voting, consent and similar rights of the undersigned with respect
to the Shares (including, without limitation, the power to execute and deliver
written consents) at every annual, special or adjourned meeting of stockholders
of the Company and in every written consent in lieu of such meeting in favor of
approval of the Merger, the execution and delivery by the Company of the
Reorganization Agreement and the adoption and approval of the terms thereof and
in favor of each of the other actions contemplated by the Reorganization
Agreement and any action required in furtherance hereof and thereof.
The attorneys and proxies named above may not exercise this Proxy on any
other matter except as provided above. The undersigned stockholder may vote the
Shares on all other matters.
Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.
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This Proxy is irrevocable (to the fullest extent permitted by law). This
Proxy shall terminate, and be of no further force and effect, automatically upon
the Expiration Date.
Dated:__________________________, 1999
Signature of Stockholder:_______________________
Print Name of Stockholder:______________________
Shares beneficially owned:
_________ shares of the Company Common Stock
_________ shares of Company Preferred Stock
_________ shares of the Company Common Stock
issuable upon exercise of outstanding
options or warrants
[SIGNATURE PAGE TO IRREVOCABLE PROXY]
