<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 16, 1997
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
NATIONAL SEMICONDUCTOR CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
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DELAWARE 95-2095071 3674
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER (PRIMARY STANDARD INDUSTRIAL
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) CLASSIFICATION CODE NUMBER)
</TABLE>
2900 SEMICONDUCTOR DRIVE
P.O. BOX 58090
SANTA CLARA, CALIFORNIA 95052-8090
(408) 721-5000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
JOHN M. CLARK III, ESQ.
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
NATIONAL SEMICONDUCTOR CORPORATION
2900 SEMICONDUCTOR DRIVE
P.O. BOX 58090
SANTA CLARA, CALIFORNIA 95052-8090
(408) 721-5000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPY TO:
<TABLE>
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BARRY A. BRYER KEITH FULLENWEIDER
WACHTELL, LIPTON, ROSEN & KATZ VINSON & ELKINS
51 WEST 52ND STREET 2300 FIRST CITY TOWER
NEW YORK, NEW YORK 10019 1001 FANNIN
(212) 403-1000 HOUSTON, TEXAS 77002
(713) 758-2222
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE OF SECURITIES TO THE
PUBLIC: As soon as practicable after the effective date of this Registration
Statement and the effective time of the Merger, as defined and described in the
Agreement and Plan of Merger, dated as of July 28, 1997, by and among Cyrix
Corporation, Nova Acquisition Corp. and the Registrant, attached as Appendix A
to the Proxy Statement-Prospectus forming a part of this Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
============================================================================================================================
PROPOSED MAXIMUM
PROPOSED MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE PRICE(2) FEE(2)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
Common Stock, $0.50 par value
(including the preferred stock purchase rights attached
thereto)(3)............................................. 22,083,332 (4) $858,238,484 $260,073(5)
============================================================================================================================
</TABLE>
(1) This Registration Statement covers the maximum number of shares of common
stock, par value $0.50 ("NSC Common Stock"), of National Semiconductor
Corporation ("NSC") which are issuable in the Merger described herein,
including shares of NSC Common Stock issuable upon conversion of Cyrix
Corporation ("Cyrix") 5 1/2% Convertible Subordinated Notes due June 1,
2001, and shares of NSC Common Stock issuable upon exercise of Cyrix
employee or director stock options or pursuant to Cyrix employee benefit
plans.
(2) Estimated solely for the purpose of calculation of the registration fee.
Pursuant to Rules 457(f)(1) and 457(c), the registration fee is based upon
the average of the high and low sales prices of the securities to be
cancelled in the Merger described herein (26,767,672 shares of common stock,
par value $0.004, of Cyrix ("Cyrix Common Stock") on the National Market
tier of the National Association of Securities Dealers, Inc. Automated
Quotation System Stock Market on October 15, 1997 ($32.0625).
(3) One preferred stock purchase right attaches to and will be distributed
without charge with respect to each share of NSC Common Stock registered
hereby.
(4) Not applicable.
(5) $105,344 of the Registration Fee was previously paid in connection with
Cyrix's Preliminary Proxy Statement filed with the Commission on Schedule
14A on August 21, 1997, and, pursuant to Rule 457(b), is not remitted
herewith.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATES AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2
[CYRIX CORPORATION LOGO]
October 16, 1997
Dear Stockholder:
You are cordially invited to attend a Special Meeting of Stockholders of
Cyrix Corporation ("Cyrix") to be held at 9:00 a.m. C.S.T. on Monday, November
17, 1997, at the Sheraton Park Central Hotel, 12720 Merit Drive, Dallas, Texas
(the "Special Meeting").
At the Special Meeting, you will be asked to approve and adopt an Agreement
and Plan of Merger (the "Merger Agreement"), dated as of July 28, 1997, by and
among National Semiconductor Corporation ("NSC"), Nova Acquisition Corp., a
wholly owned subsidiary of NSC ("Sub"), and Cyrix, and the transactions
contemplated by the Merger Agreement, including the merger of Sub with and into
Cyrix (the "Merger"). Following consummation of the Merger, Cyrix will become a
wholly owned subsidiary of NSC, and each outstanding share of Cyrix common stock
("Cyrix Common Stock") will be converted into the right to receive 0.825 (the
"Exchange Ratio") shares of common stock of NSC ("NSC Common Stock"). One NSC
preferred share purchase right will attach to and be issued with each share of
NSC Common Stock issued in the Merger. The closing sales price of a share of NSC
Common Stock on the New York Stock Exchange Composite Tape on October 15, 1997
was $39.38.
The accompanying Proxy Statement/Prospectus provides detailed information
concerning the proposed Merger and additional information, which we encourage
you to read carefully. A copy of the Merger Agreement is included as Appendix A
to the enclosed Proxy Statement/Prospectus.
FOR THE REASONS SET FORTH IN THE PROXY STATEMENT/PROSPECTUS, YOUR BOARD OF
DIRECTORS BELIEVES THAT THE MERGER IS FAIR TO, AND IN THE BEST INTERESTS OF,
CYRIX AND ITS STOCKHOLDERS. YOUR BOARD HAS UNANIMOUSLY APPROVED AND ADOPTED THE
MERGER AGREEMENT AND THE PERFORMANCE BY CYRIX OF ITS OBLIGATIONS THEREUNDER, AND
RECOMMENDS THAT YOU VOTE TO APPROVE AND ADOPT THE MERGER AND THE MERGER
AGREEMENT.
In connection with its approval of the Merger Agreement, your Board of
Directors received and took into account the oral opinion delivered on July 28,
1997 by Goldman Sachs & Co. ("Goldman Sachs"), an investment banking firm
retained by Cyrix to act as financial advisor to it, that, as of that date, the
Exchange Ratio pursuant to the Merger Agreement is fair to the holders of Cyrix
Common Stock. Goldman Sachs subsequently confirmed its opinion by delivery of
its written opinion, dated the date hereof, that, as of the date hereof, the
Exchange Ratio pursuant to the Merger Agreement is fair to the holders of Cyrix
Common Stock. The full text of the written opinion of Goldman Sachs, which sets
forth the assumptions made, matters considered and limitations on the review
undertaken in connection with the opinion, is included as Appendix B to the
enclosed Proxy Statement/Prospectus.
Approval of the Merger Agreement and the transactions contemplated thereby,
including the Merger, requires the affirmative vote of holders of a majority of
the outstanding shares of Cyrix Common Stock.
BECAUSE OF THE SIGNIFICANCE OF THE PROPOSED MERGER WITH NSC, YOUR
PARTICIPATION IN THE SPECIAL MEETING, IN PERSON OR BY PROXY, IS ESPECIALLY
IMPORTANT. AN ABSTENTION OR FAILURE TO EITHER ATTEND AND VOTE AT THE SPECIAL
MEETING OR TO SUBMIT A PROXY WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE
MERGER AGREEMENT. ACCORDINGLY, PLEASE SIGN, DATE AND MAIL THE ENCLOSED PROXY
PROMPTLY IN THE POSTAGE-PAID ENVELOPE THAT HAS BEEN PROVIDED TO YOU FOR YOUR
CONVENIENCE. IF YOU ATTEND THE SPECIAL MEETING, YOU MAY VOTE IN PERSON IF YOU
WISH, EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
Sincerely yours,
/s/ HARVEY B. CASH
HARVEY B. CASH
Chairman of the Board
<PAGE> 3
CYRIX CORPORATION
2703 NORTH CENTRAL EXPRESSWAY
RICHARDSON, TX 75080
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 17, 1997
To the Stockholders of Cyrix Corporation:
A special meeting (the "Special Meeting") of Stockholders of Cyrix
Corporation, a Delaware corporation ("Cyrix"), will be held at the Sheraton Park
Central Hotel, 12720 Merit Drive, Dallas, Texas, at 9:00 a.m. C.S.T. on Monday,
November 17, 1997, for the following purposes:
1. To consider and vote on a proposal to approve and adopt the Agreement
and Plan of Merger, dated as of July 28, 1997, by and among National
Semiconductor Corporation, a Delaware corporation ("NSC"), Nova
Acquisition Corp., a Delaware corporation and wholly owned subsidiary of
NSC ("Sub"), and Cyrix (the "Merger Agreement"), and the transactions
contemplated thereby. A copy of the Merger Agreement is attached as
Appendix A to the Proxy Statement/Prospectus accompanying this Notice.
Pursuant to the Merger Agreement, (i) Sub will be merged with and into
Cyrix (the "Merger") and the separate corporate existence of Sub will
thereupon cease and (ii) each outstanding share of common stock of
Cyrix, $0.004 par value per share ("Cyrix Common Stock"), will be
converted into the right to receive 0.825 shares of common stock of NSC,
par value $.50 per share ("NSC Common Stock"). One NSC preferred share
purchase right will attach to and be issued with each share of NSC
Common Stock issued in the Merger.
2. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on October 6, 1997
as the record date for the determination of the holders of Cyrix Common Stock
entitled to notice of, and to vote at, the Special Meeting. The affirmative vote
of holders of a majority of the outstanding shares of Cyrix Common Stock is
necessary for approval and adoption of the Merger Agreement and the transactions
contemplated thereby, including the Merger. The Merger and other related matters
are more fully described in the accompanying Proxy Statement/Prospectus, and the
appendices thereto, which form a part of this notice.
ALL STOCKHOLDERS ARE INVITED TO ATTEND THE SPECIAL MEETING. TO ENSURE YOUR
REPRESENTATION AT THE SPECIAL MEETING, HOWEVER, YOU ARE URGED TO COMPLETE, DATE,
SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY. A POSTAGE-PAID ENVELOPE IS ENCLOSED
FOR THAT PURPOSE. ANY STOCKHOLDER ATTENDING THE SPECIAL MEETING MAY VOTE IN
PERSON EVEN IF THAT STOCKHOLDER HAS RETURNED A PROXY.
A holder of Cyrix Common Stock who has given a proxy may revoke it at any
time prior to its exercise by giving written notice thereof to the Secretary of
Cyrix at Cyrix's principal executive offices, by signing and returning a later
dated proxy, or by voting in person at the Special Meeting; however, mere
attendance at the Special Meeting will not in and of itself have the effect of
revoking the proxy.
By Order of the Board of Directors
/s/ JAMES W. SWENT
JAMES W. SWENT, III
Senior Vice President and Secretary
Richardson, Texas
October 16, 1997
PLEASE DO NOT SEND IN ANY CERTIFICATES
FOR YOUR SHARES AT THIS TIME
<PAGE> 4
<TABLE>
<S> <C>
NATIONAL SEMICONDUCTOR CYRIX
CORPORATION CORPORATION
------------------------ ------------------------
PROSPECTUS PROXY STATEMENT
</TABLE>
This Proxy Statement/Prospectus (this "Proxy Statement/Prospectus") is
being furnished in connection with the solicitation of proxies by the Board of
Directors of Cyrix Corporation ("Cyrix") to be used at a special meeting of
stockholders of Cyrix to be held on November 17, 1997, and at any and all
adjournments or postponements thereof (the "Special Meeting"), and relates to
the proposed merger (the "Merger") of Nova Acquisition Corp. ("Sub"), a Delaware
corporation and wholly owned subsidiary of National Semiconductor Corporation, a
Delaware corporation ("NSC"), with and into Cyrix, pursuant to an Agreement and
Plan of Merger (the "Merger Agreement"), dated as of July 28, 1997, by and among
NSC, Sub, and Cyrix.
At the Special Meeting, holders of common stock, par value $0.004 per
share, of Cyrix ("Cyrix Common Stock") will consider and vote upon a proposal to
approve and adopt the Merger Agreement and the transactions contemplated
thereby, including the Merger. Pursuant to the Merger Agreement, each
outstanding share of Cyrix Common Stock (other than shares owned by Cyrix as
treasury stock or by its subsidiaries or by NSC or its subsidiaries, all of
which shall be cancelled) will be converted into the right to receive 0.825 (the
"Exchange Ratio") shares of common stock, par value $.50 per share, of NSC ("NSC
Common Stock"), together with the associated NSC Rights (as defined herein).
This Proxy Statement/Prospectus also constitutes the Prospectus of NSC with
respect to up to 22,083,332 shares of NSC Common Stock (including the associated
NSC Rights) to be issued in connection with the Merger. NSC Common Stock is
traded on the New York Stock Exchange, Inc. (the "NYSE") under the symbol "NSM."
The closing sales price for NSC Common Stock as reported on the NYSE Composite
Tape was $39.38 per share on October 15, 1997, and on July 25, 1997, the last
full trading day preceding public announcement of the proposed Merger, the
closing sales price for NSC Common Stock as reported on the NYSE Composite Tape
was $33.56 per share.
All information contained in this Proxy Statement/Prospectus with respect
to Cyrix has been provided by Cyrix. All information contained in this Proxy
Statement/Prospectus with respect to NSC and Sub has been provided by NSC.
This Proxy Statement/Prospectus and the accompanying form of proxy are
first being mailed to stockholders of Cyrix on or about October 17, 1997. A
stockholder who has given a proxy may revoke it at any time prior to its
exercise. See "THE SPECIAL MEETING -- Record Date; Voting Rights; Proxies."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/ PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Proxy Statement/Prospectus is October 16, 1997.
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
AVAILABLE INFORMATION................................................................. 1
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE....................................... 2
STATEMENTS REGARDING FORWARD-LOOKING INFORMATION...................................... 3
SUMMARY............................................................................... 4
The Companies....................................................................... 4
The Special Meeting................................................................. 4
Surrender of Stock Certificates..................................................... 5
Recommendation of the Cyrix Board................................................... 5
Opinion of Cyrix's Financial Advisor................................................ 5
The Merger.......................................................................... 6
The Stock Option Agreement.......................................................... 7
The Support Agreement............................................................... 7
Interests of Certain Persons in the Merger.......................................... 8
Certain Federal Income Tax Consequences............................................. 8
COMPARATIVE PER SHARE PRICES.......................................................... 9
SELECTED HISTORICAL AND PRO FORMA COMBINED FINANCIAL DATA............................. 11
GENERAL INFORMATION................................................................... 16
THE SPECIAL MEETING................................................................... 16
Purpose of the Special Meeting...................................................... 16
Record Date; Voting Rights; Proxies................................................. 16
Solicitation of Proxies............................................................. 17
Quorum.............................................................................. 17
Required Vote....................................................................... 17
THE MERGER............................................................................ 18
Background of the Merger............................................................ 18
Certain Information Provided........................................................ 19
Recommendation of the Cyrix Board; Cyrix's Reasons for the Merger................... 20
NSC's Reasons for the Merger........................................................ 21
Opinion of Cyrix's Financial Advisor................................................ 22
Interests of Certain Persons in the Merger.......................................... 26
Effects of the Fixed Exchange Ratio................................................. 28
Material Federal Income Tax Consequences............................................ 28
Accounting Treatment................................................................ 29
Effect on Employee Benefit Plans.................................................... 29
Regulatory Approval................................................................. 30
Resales of NSC Capital Stock Received in the Merger................................. 31
Stock Exchange Listing.............................................................. 31
Appraisal Rights.................................................................... 32
THE MERGER AGREEMENT.................................................................. 32
General............................................................................. 32
The Merger.......................................................................... 32
Effective Date...................................................................... 32
</TABLE>
i
<PAGE> 6
<TABLE>
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PAGE
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Conversion of Cyrix Securities...................................................... 32
Fractional Shares................................................................... 33
Surrender and Payment............................................................... 33
Representations and Warranties...................................................... 34
Conduct of Business Pending the Merger.............................................. 34
Other Covenants..................................................................... 35
Employment Arrangements and Benefit Plans........................................... 36
Indemnification..................................................................... 37
No Solicitation..................................................................... 37
Conditions to Consummation of the Merger............................................ 39
Termination; Fees and Expenses...................................................... 39
Amendment; Waiver................................................................... 40
THE STOCK OPTION AGREEMENT............................................................ 40
Certain Repurchases................................................................. 41
Voting.............................................................................. 41
Transfer............................................................................ 42
Registration Rights................................................................. 42
Effect of the Stock Option.......................................................... 42
THE SUPPORT AGREEMENT................................................................. 42
DESCRIPTION OF NSC CAPITAL STOCK...................................................... 43
General............................................................................. 43
Common Stock........................................................................ 43
Preferred Stock..................................................................... 43
NSC Rights Agreement................................................................ 44
COMPARISON OF STOCKHOLDER RIGHTS...................................................... 44
Election of Board of Directors...................................................... 44
Amendments to Governing Documents................................................... 44
Special Meeting of Stockholders; Notice............................................. 45
Action by Written Consent........................................................... 45
Number of Directors................................................................. 45
Resignation and Vacancies........................................................... 45
Removal of Directors................................................................ 46
Loans to Officers................................................................... 46
Indemnification..................................................................... 46
Rights Plans........................................................................ 47
LEGAL MATTERS......................................................................... 48
EXPERTS............................................................................... 48
STOCKHOLDER PROPOSALS................................................................. 48
TRADEMARK MATTERS..................................................................... 49
OTHER MATTERS......................................................................... 49
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS OF NSC AND CYRIX.......... 50
APPENDIX A -- Merger Agreement
APPENDIX B -- Opinion of Goldman, Sachs & Co.
</TABLE>
ii
<PAGE> 7
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION
NOT CONTAINED IN OR INCORPORATED BY REFERENCE IN THE PROXY STATEMENT/PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY NSC OR CYRIX. THIS PROXY STATEMENT/ PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO EXCHANGE OR SELL, OR A SOLICITATION OF AN OFFER
TO EXCHANGE OR PURCHASE, THE SECURITIES OFFERED BY THIS PROXY
STATEMENT/PROSPECTUS, OR THE SOLICITATION OF A PROXY, IN A JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR TO OR FROM ANY PERSON TO WHOM IT
IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. THE INFORMATION CONTAINED IN
THIS PROXY STATEMENT/PROSPECTUS SPEAKS AS OF THE DATE HEREOF UNLESS OTHERWISE
SPECIFICALLY INDICATED, AND THE DELIVERY OF THIS PROXY STATEMENT/ PROSPECTUS
SHALL NOT IMPLY THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION SET FORTH
HEREIN OR IN THE AFFAIRS OF NSC OR CYRIX SINCE THE DATE HEREOF.
AVAILABLE INFORMATION
NSC has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (the "Registration Statement") on Form
S-4 under the Securities Act of 1933, as amended (the "Securities Act"),
relating to the securities to be issued in connection with the Merger. For
further information pertaining to the securities of NSC to which this Proxy
Statement/Prospectus relates, reference is made to the Registration Statement,
including the exhibits and schedules filed as a part thereof. As permitted by
the rules and regulations of the Commission, certain information included in the
Registration Statement is omitted from this Proxy Statement/Prospectus.
NSC and Cyrix are subject to the informational requirements of the
Securities and Exchange Act of 1934, as amended (the "Exchange Act"), and the
rules and regulations thereunder, and in accordance therewith, file certain
reports, proxy statements and other information with the Commission. Such
reports, proxy statements and other information can be inspected and copied at
the public reference room of the Commission, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, and at the following regional offices of the Commission:
Seven World Trade Center, Suite 1300, New York, New York 10048 and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511.
Copies of such materials can be obtained at prescribed rates from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549. Such material may be obtained electronically by visiting
the Commission's web site on the Internet at http://www.sec.gov. Copies of such
materials are available for inspection and reproduction at the public reference
facilities of the Commission at its New York Regional Office. In addition,
reports, proxy statements and other information concerning NSC may be inspected
at the offices of the NYSE, 20 Broad Street, New York, New York 10005 and at the
Pacific Exchange Inc., 301 Pine Street, Eighth Floor, San Francisco, California
94104. See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
<PAGE> 8
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by NSC with the Commission (File
No. 1-6453) are hereby incorporated by reference in this Proxy
Statement/Prospectus:
1. NSC's Annual Report on Form 10-K for the fiscal year ended May 25,
1997;
2. NSC's Quarterly Report on Form 10-Q for the quarter ended August
24, 1997;
3. Amendment No. 1 to NSC's Quarterly Report on Form 10-Q/A for the
quarter ended August 24, 1997, filed October 6, 1997;
4. NSC's Current Report on Form 8-K filed May 30, 1997;
5. The description of NSC Common Stock contained in NSC's Registration
Statement on Form 8-A filed September 8, 1970 and any amendments thereto
filed for the purpose of updating such description; and
6. The description of NSC's Preferred Share Purchase Rights contained
in NSC's Registration Statement on Form 8-A filed August 9, 1988 and any
amendments thereto filed for the purpose of updating such description.
The following documents previously filed by Cyrix with the Commission (File
No. 0-21904) are hereby incorporated by reference in this Proxy/Prospectus:
1. Cyrix's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996;
2. Amendment No. 1 to Cyrix's Annual Report on Form 10-K/A filed May
16, 1997;
3. Cyrix's Quarterly Reports on Form 10-Q for the quarters ended March
30, 1997 and June 30, 1997;
4. Amendment No. 1 to Cyrix's Quarterly Report on Form 10-Q/A for the
quarter ended June 30, 1997, filed October 16, 1997;
5. Cyrix's Current Report on Form 8-K filed August 4, 1997; and
6. The description of Cyrix Common Stock contained in Cyrix's
Registration Statement on Form 8-A filed June 10, 1993 and any amendments
thereto filed for the purpose of updating such description.
In addition, all documents filed by NSC and Cyrix with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date
hereof and prior to the adjournment of the Special Meeting are hereby deemed to
be incorporated by reference herein. Any statements contained in a document
incorporated by reference or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Proxy
Statement/Prospectus to the extent that a statement contained herein or in any
other subsequently filed document that also is or is deemed to be incorporated
by reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Proxy Statement/Prospectus.
NSC has supplied all information contained or incorporated by reference in
this Proxy Statement/Prospectus relating to NSC and Sub, and Cyrix has supplied
all such information relating to Cyrix.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE
WITHOUT CHARGE UPON WRITTEN OR ORAL REQUEST TO THE APPROPRIATE PARTY BELOW:
<TABLE>
<S> <C>
NATIONAL SEMICONDUCTOR CORPORATION CYRIX CORPORATION
2900 SEMICONDUCTOR DRIVE 2703 NORTH CENTRAL EXPRESSWAY
P.O. BOX 58090 RICHARDSON, TEXAS
SANTA CLARA, CALIFORNIA 75080
95052-8090
ATTN: INVESTOR RELATIONS, MAIL STOP 10-397 ATTN: INVESTOR RELATIONS
TEL: 408-721-5000 TEL: 972-968-8387
</TABLE>
NSC OR CYRIX, AS THE CASE MAY BE, WILL SEND THE REQUESTED DOCUMENTS BY
FIRST-CLASS MAIL WITHIN ONE BUSINESS DAY OF THE RECEIPT OF THE REQUEST. IN ORDER
TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY
NOVEMBER 7, 1997.
2
<PAGE> 9
STATEMENTS REGARDING FORWARD-LOOKING INFORMATION
THIS PROXY STATEMENT/PROSPECTUS CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS
WITH RESPECT TO THE FINANCIAL CONDITION, RESULTS OF OPERATIONS AND BUSINESS OF
NSC AND CYRIX, INCLUDING STATEMENTS RELATING TO TECHNOLOGY COMPATIBILITY,
PRODUCTION ENHANCEMENT, MARKETING AND OTHER ADVANTAGES THAT ARE EXPECTED TO BE
REALIZED FROM THE MERGER, AND THE EXPECTED IMPACT OF THE MERGER ON NSC'S
FINANCIAL PERFORMANCE (SEE "THE MERGER -- RECOMMENDATION OF THE CYRIX BOARD;
CYRIX'S REASONS FOR THE MERGER," "-- OPINION OF CYRIX'S FINANCIAL ADVISOR" AND
"-- NSC'S REASONS FOR THE MERGER"). SUCH FORWARD-LOOKING STATEMENTS INVOLVE
CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE CONTEMPLATED BY SUCH FORWARD-LOOKING STATEMENTS. SUCH
RISKS AND UNCERTAINTIES INCLUDE, WITHOUT LIMITATION: (1) THE POSSIBILITY THAT
TECHNOLOGICAL COMPATIBILITY AND RELATED EFFECTS FROM THE MERGER CANNOT BE FULLY
REALIZED; (2) THE POSSIBILITY THAT COSTS OR DIFFICULTIES RELATED TO THE
INTEGRATION OF THE BUSINESSES OF NSC AND CYRIX ARE GREATER THAN EXPECTED; (3)
NSC'S AND CYRIX'S DEPENDENCE ON THE TIMELY DEVELOPMENT, INTRODUCTION AND
CUSTOMER ACCEPTANCE OF NEW PRODUCTS; (4) THE IMPACT OF COMPETITION ON REVENUES
AND MARGINS; (5) RAPIDLY CHANGING TECHNOLOGY AND SHIFTING DEMAND REQUIREMENTS;
AND (6) OTHER RISKS AND UNCERTAINTIES AS MAY BE DETAILED FROM TIME TO TIME IN
NSC'S AND/OR CYRIX'S PUBLIC ANNOUNCEMENTS AND COMMISSION FILINGS.
3
<PAGE> 10
SUMMARY
The following is a brief summary of certain information contained elsewhere
in this Proxy Statement/Prospectus and the Appendices hereto. This summary does
not contain a complete statement of all material information relating to the
Merger Agreement and the Merger and is subject to, and is qualified in its
entirety by, the more detailed information and financial statements contained or
incorporated by reference in this Proxy Statement/Prospectus. Stockholders of
Cyrix should read carefully this Proxy Statement/Prospectus in its entirety.
Certain capitalized terms used in this summary are defined elsewhere in this
Proxy Statement/Prospectus.
THE COMPANIES
Cyrix
Cyrix, founded in 1988 and incorporated under the laws of Delaware,
designs, develops and markets IBM personal computer software-compatible
microprocessors for the personal computer industry. The X86 architecture,
originally developed by Intel Corporation ("Intel"), has been the leading
architecture for IBM compatible personal computer microprocessors. Cyrix seeks
to serve the needs of the personal computer marketplace as a source for X86
microprocessors of original design with competitive price/performance
characteristics.
As used herein, the term "Cyrix" refers to Cyrix Corporation and its
subsidiaries, unless the context otherwise requires. The principal executive
offices of Cyrix are located at 2703 North Central Expressway, Richardson, TX
75080 and the telephone number at that address is (972) 968-8387.
NSC
NSC designs, develops, manufactures and markets a broad line of analog,
mixed signal and other integrated circuits applications in a variety of markets,
including the personal computing, wireless communications, flat panel and CRT
display, power management, local and wide-area networks, automotive, consumer
and military aerospace markets. NSC was incorporated under the laws of Delaware
in 1959.
As used herein, the term "NSC" refers to National Semiconductor Corporation
and its subsidiaries, unless the context otherwise requires. The principal
executive offices of NSC are located at 2900 Semiconductor Drive, Santa Clara,
California 95052 and the telephone number at that address is (408) 721-5000.
THE SPECIAL MEETING
Time, Place and Date
The Special Meeting of the stockholders of Cyrix will be held at the
Sheraton Park Central Hotel, 12720 Merit Drive, Dallas, Texas on Monday,
November 17, 1997, at 9:00 a.m., C.S.T.
Purpose of the Special Meeting
At the Special Meeting, holders of Cyrix Common Stock will consider and
vote upon a proposal to approve and adopt the Merger Agreement and the
transactions contemplated thereby, including the Merger, and such other matters
as may properly come before the Special Meeting.
Votes Required; Record Date
Approval of the Merger Agreement and the transactions contemplated thereby,
including the Merger, requires the affirmative vote of holders of a majority of
the outstanding shares of Cyrix Common Stock.
4
<PAGE> 11
Approval of the Merger Agreement and the transactions contemplated thereby,
including the Merger, does not require the vote of holders of NSC Common Stock.
Holders of Cyrix Common Stock are each entitled to one vote per share. Only
holders of Cyrix Common Stock who are holders at the close of business on
October 6, 1997 (the "Record Date") will be entitled to notice of and to vote at
the Special Meeting. As of the Record Date, directors and executive officers of
Cyrix and their affiliates were beneficial owners of approximately 5.2% of the
outstanding shares of Cyrix Common Stock. It is currently expected that each
such director and executive officer of Cyrix will vote the shares of Cyrix
Common Stock beneficially owned by him or her for approval and adoption of the
Merger Agreement and the transactions contemplated thereby, including the
Merger. See "THE SPECIAL MEETING."
As of the Record Date, there were 19,908,039 shares of Cyrix Common Stock
outstanding and entitled to vote at the Special Meeting, held by approximately
700 holders of record.
Pursuant to the Support Agreement (as defined herein), an officer and two
directors of Cyrix holding an aggregate of 941,755 shares of Cyrix Common Stock
as of the Record Date, which represents approximately 4.7% of the outstanding
shares of Cyrix Common Stock as of the Record Date, have agreed to vote their
shares of Cyrix Common Stock in favor of the Merger Agreement and the
transactions contemplated thereby, including the Merger. See "-- The Support
Agreement" and "THE SUPPORT AGREEMENT."
SURRENDER OF STOCK CERTIFICATES
As soon as practicable after the effective time and date of the Merger (the
"Effective Date"), Boston EquiServe, L.P., or another person designated by NSC
and reasonably acceptable to Cyrix, in its capacity as exchange agent for the
Merger (the "Exchange Agent"), will send a transmittal letter (the "Transmittal
Letter") to each holder of Cyrix Common Stock. The Transmittal Letter will
contain instructions with respect to the surrender of certificates representing
Cyrix Common Stock ("Cyrix Certificates") to be exchanged for NSC Common Stock.
See "THE MERGER AGREEMENT -- Surrender and Payment."
CYRIX CERTIFICATES SHOULD NOT BE FORWARDED TO THE EXCHANGE AGENT UNLESS AND
UNTIL THE CYRIX STOCKHOLDER RECEIVES A TRANSMITTAL LETTER. CYRIX CERTIFICATES
SHOULD NOT BE RETURNED WITH THE ENCLOSED PROXY.
RECOMMENDATION OF THE CYRIX BOARD
The Board of Directors of Cyrix (the "Cyrix Board") believes that the
Merger is fair to, and in the best interests of, Cyrix and its stockholders and
has unanimously approved and adopted the Merger Agreement and the performance by
Cyrix of its obligations thereunder. THE CYRIX BOARD UNANIMOUSLY RECOMMENDS THAT
CYRIX STOCKHOLDERS APPROVE AND ADOPT THE MERGER AND THE MERGER AGREEMENT. See
"THE MERGER -- Background of the Merger," "-- Recommendation of the Cyrix Board;
Cyrix's Reasons for the Merger," "-- NSC's Reasons for the Merger" and "--
Interests of Certain Persons in the Merger."
OPINION OF CYRIX'S FINANCIAL ADVISOR
On July 28, 1997, Goldman Sachs & Co. ("Goldman Sachs"), Cyrix's financial
advisor, delivered its oral opinion to the Cyrix Board that, as of such date,
the Exchange Ratio pursuant to the Merger Agreement is fair to the holders of
Cyrix Common Stock. Goldman Sachs subsequently confirmed its earlier opinion by
delivery of its written opinion, dated the date hereof, that, as of the date
hereof, the Exchange Ratio pursuant to the Merger Agreement is fair to the
holders of Cyrix Common Stock.
The full text of the written opinion of Goldman Sachs, which sets forth
assumptions made, matters considered and limitations on the review undertaken in
connection with the opinion, is attached as Appendix B hereto and is
incorporated herein by reference. HOLDERS OF CYRIX COMMON STOCK ARE URGED TO,
AND SHOULD, READ SUCH OPINION IN ITS ENTIRETY. See "THE MERGER -- Opinion of
Cyrix's Financial Advisor."
5
<PAGE> 12
THE MERGER
The Merger
At the Effective Date, Sub will be merged with and into Cyrix, with Cyrix
continuing as the surviving corporation (the "Surviving Corporation") in the
Merger. As a result of the Merger, Cyrix will become a wholly owned subsidiary
of NSC.
Merger Consideration
As a result of the Merger, each outstanding share of Cyrix Common Stock
will be converted into the right to receive 0.825 shares of NSC Common Stock.
One preferred share purchase right (an "NSC Right") issuable pursuant to the
Rights Agreement, between NSC and The First National Bank of Boston, as rights
agent, dated as of August 8, 1988, as amended (the "NSC Rights Agreement"), will
be issued together with and will attach to each share of NSC Common Stock issued
in the Merger. See "THE MERGER AGREEMENT -- Conversion of Cyrix Securities."
Since the Exchange Ratio is fixed and will not increase or decrease due to
fluctuations in the market price of either NSC Common Stock or Cyrix Common
Stock, the specific value of the consideration to be received by Cyrix
stockholders in the Merger will depend on the market price of NSC Common Stock
at the Effective Date. See "THE MERGER -- Effects of the Fixed Exchange Ratio."
Treatment of Cyrix Stock Options
As a result of the Merger, each option to purchase Cyrix Common Stock
("Cyrix Stock Option") will be converted into an option to purchase NSC Common
Stock ("NSC Stock Option") for such number of shares of NSC Common Stock equal
to the product of the number of shares of Cyrix Common Stock subject to the
original Cyrix Stock Option multiplied by 0.825 and rounded to the nearest whole
share, and the exercise price per share of NSC Common Stock under the new NSC
Stock Option will be equal to the original exercise price divided by 0.825 and
rounded to the nearest whole cent. As of the Record Date, there were 3,397,847
Cyrix Stock Options outstanding, of which 2,257,009 were unvested. See "THE
MERGER -- Interest of Certain Persons in the Merger," "-- Effect on Employee
Benefit Plans" and "THE MERGER AGREEMENT -- Conversion of Cyrix Securities."
Conditions to the Merger; Termination
The obligations of NSC and Cyrix to consummate the Merger are subject to
various conditions, including, but not limited to: (i) obtaining requisite
stockholder and governmental approvals; (ii) receipt of opinions of counsel at
the closing of the Merger in respect of certain federal income tax consequences
of the Merger; and (iii) receipt of accountants' letters relating to the
availability of pooling of interests accounting treatment. See "THE MERGER
AGREEMENT -- Conditions to Consummation of the Merger."
The Merger Agreement may be terminated at any time prior to the Effective
Date, whether before or after approval of the Merger Agreement and the
transactions contemplated thereby, including the Merger, by the stockholders of
Cyrix, under certain circumstances, including, but not limited to: (i) by either
NSC or Cyrix if the Merger is not consummated on or before April 30, 1998; (ii)
by NSC if (A) the Cyrix Board withdraws, modifies in a manner adverse to NSC, or
refrains from making its favorable recommendation concerning the Merger, or
recommends any Acquisition Proposal (as defined herein), (B) Cyrix enters into
any Acquisition Agreement (as defined herein), or (C) other than in connection
with delivery of a Superior Proposal Notice (as defined herein), the Cyrix Board
discloses its intention to change such recommendation; or (iii) by Cyrix under
certain circumstances if Cyrix has delivered a Superior Proposal Notice,
provided that prior to such termination Cyrix shall have paid to NSC the
Termination Fee and Expenses (both, as defined herein). If the Merger Agreement
is terminated for certain specified reasons, Cyrix would be required to pay
6
<PAGE> 13
NSC the Termination Fee and Expenses. See "THE MERGER AGREEMENT -- Termination;
Fees and Expenses."
Listing
It is a condition to the Merger that the shares of NSC Common Stock to be
issued in the Merger be authorized for listing on the NYSE, subject to official
notice of issuance. See "THE MERGER -- Stock Exchange Listing" and "THE MERGER
AGREEMENT -- Other Covenants" and "-- Conditions to Consummation of the Merger."
Regulatory Approval
The Merger may not be consummated until the expiration or early termination
of the applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"). The waiting period under
the HSR Act expired on September 7, 1997. See "THE MERGER -- Regulatory
Approval" and "THE MERGER AGREEMENT -- Other Covenants" and "-- Conditions to
Consummation of the Merger."
Appraisal Rights
Under the Delaware General Corporation Law ("DGCL"), the holders of Cyrix
Common Stock are not entitled to any appraisal rights with respect to the
Merger. See "THE MERGER -- Appraisal Rights."
Anticipated Accounting Treatment
The Merger is expected to qualify as a pooling of interests for accounting
and financial reporting purposes. It is a condition to the obligation of each of
NSC and Cyrix to consummate the merger that NSC and Cyrix receive a letter from
KPMG Peat Marwick LLP and Ernst & Young LLP, respectively, to the effect that
KPMG Peat Marwick LLP, NSC's auditors, concurs with NSC's management that no
conditions exist that would preclude NSC from accounting for the Merger as a
pooling of interests, and Ernst and Young LLP, Cyrix's auditors, concurs with
Cyrix's management that no conditions exist related to Cyrix that would preclude
NSC from accounting for the Merger as a pooling of interests. See "THE
MERGER -- Accounting Treatment."
THE STOCK OPTION AGREEMENT
Concurrently with the execution of the Merger Agreement, NSC and Cyrix
entered into the Stock Option Agreement (the "Stock Option Agreement"), dated
July 28, 1997, pursuant to which Cyrix granted NSC an irrevocable option (the
"Option") to purchase from Cyrix a number of shares of Cyrix Common Stock equal
to up to 19.9% of the number of shares of Cyrix Common Stock outstanding on the
date of the Stock Option Agreement, at an exercise price per Cyrix share of
$27.59 in cash or 0.825 shares of NSC Common Stock, at NSC's option, subject to
adjustment. NSC may exercise the Option only upon the occurrence of certain
events (none of which has occurred as of the date hereof).
The Stock Option Agreement is intended to increase the likelihood that the
Merger will be consummated in accordance with the terms set forth in the Merger
Agreement. Consequently, certain aspects of the Stock Option Agreement may have
the effect of discouraging persons who might now or at any time prior to the
Effective Date be interested in acquiring all or a significant interest in
Cyrix. See "THE STOCK OPTION AGREEMENT."
THE SUPPORT AGREEMENT
As an inducement to NSC to enter into the Merger Agreement, an officer and
two directors of Cyrix who, as of the Record Date, beneficially own an aggregate
of 941,755 shares (approximately 4.7%) of Cyrix
7
<PAGE> 14
Common Stock entered into an agreement with NSC, dated July 28, 1997, and
amended and restated on August 8, 1997 (as amended and restated, the "Support
Agreement"), that provides that these individuals will vote all of their shares
of Cyrix Common Stock in favor of the Merger Agreement and the transactions
contemplated thereby, including the Merger, and against any action or agreement
that would result in a breach in any material respect of any covenant,
representation or warranty of Cyrix under the Merger Agreement. Pursuant to the
Support Agreement, these individuals also granted NSC a proxy to vote their
shares of Cyrix Common Stock as described in the preceding sentence. See "THE
SUPPORT AGREEMENT."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Cyrix Board with respect to the
Merger and the Merger Agreement, Cyrix stockholders should be aware that certain
executive officers and directors of Cyrix have certain interests in the proposed
Merger that differ from or are in addition to the interests of Cyrix
stockholders generally. These interests arise from, among other things, stock
options held by directors and executive officers of Cyrix, employment
arrangements of certain Cyrix executive officers and indemnification provided to
officers, directors and employees of Cyrix. See "THE MERGER -- Interests of
Certain Persons in the Merger," "-- Effect on Employee Benefit Plans," "THE
MERGER AGREEMENT -- Employment Arrangements and Benefit Plans" and
"-- Indemnification."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Merger is intended to qualify as a reorganization under Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"). Assuming the
Merger so qualifies, no gain or loss will be recognized for federal income tax
purposes by NSC, Cyrix or Sub as a result of the Merger and holders of Cyrix
Common Stock will not recognize any gain or loss as a result of the exchange of
such stock for NSC Common Stock pursuant to the Merger (except to the extent of
cash received, if any, in lieu of fractional shares). For a discussion of these
and other federal income tax consequences in connection with the Merger, see
"THE MERGER -- Material Federal Income Tax Consequences."
8
<PAGE> 15
COMPARATIVE PER SHARE PRICES
NSC Common Stock is listed on the NYSE and traded under the symbol "NSM."
Cyrix Common Stock is listed on the National Market tier of the National
Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ")
Stock Market and traded under the symbol "CYRX." The following table sets forth
the high and low reported closing prices per share of the NSC Common Stock and
Cyrix Common Stock as reported on the NYSE Composite Tape and on NASDAQ,
respectively, for the below quarterly periods, which correspond to the
companies' respective quarterly fiscal periods for financial reporting purposes.
<TABLE>
<CAPTION>
NSC
SALES PRICES
-----------------
HIGH LOW
----- -----
<S> <C> <C>
Year Ended May 28, 1995:
First Quarter............................................................ 20.75 16.00
Second Quarter........................................................... 19.50 14.50
Third Quarter............................................................ 20.00 17.00
Fourth Quarter........................................................... 27.88 16.75
Year Ended May 26, 1996:
First Quarter............................................................ 30.88 24.00
Second Quarter........................................................... 33.00 20.63
Third Quarter............................................................ 23.63 15.50
Fourth Quarter........................................................... 17.00 13.75
Year Ended May 25, 1997:
First Quarter............................................................ 16.50 13.38
Second Quarter........................................................... 23.63 15.50
Third Quarter............................................................ 27.75 22.75
Fourth Quarter........................................................... 30.75 21.75
Year Ended May 31, 1998:
First Quarter............................................................ 36.50 27.00
Second Quarter (through October 15, 1997)................................ 42.38 34.25
</TABLE>
<TABLE>
<CAPTION>
CYRIX
SALES PRICES
-----------------
HIGH LOW
----- -----
<S> <C> <C>
Year Ended December 29, 1995:
First Quarter............................................................ 26.00 17.00
Second Quarter........................................................... 28.00 20.25
Third Quarter............................................................ 48.19 22.25
Fourth Quarter........................................................... 42.50 22.50
Year Ended December 31, 1996:
First Quarter............................................................ 29.13 18.88
Second Quarter........................................................... 36.38 13.94
Third Quarter............................................................ 18.56 12.25
Fourth Quarter........................................................... 22.38 14.88
Year Ended December 31, 1997:
First Quarter............................................................ 29.75 18.56
Second Quarter........................................................... 26.06 17.50
Third Quarter............................................................ 33.50 20.13
Fourth Quarter (through October 15, 1997)................................ 34.56 32.25
</TABLE>
On July 25, 1997, the last full trading day before the public announcement
of the proposed Merger, the high and low sale prices for NSC Common Stock as
reported on the NYSE Composite Tape were $35.06 and
9
<PAGE> 16
$32.94, respectively, and the high and low sale prices for Cyrix Common Stock as
reported on NASDAQ were $21.25 and $20.75, respectively.
The following table sets forth the closing sale price of NSC Common Stock
as reported on the NYSE Composite Tape and Cyrix Common Stock as reported on
NASDAQ, and the equivalent per share price of Cyrix Common Stock giving effect
to the Merger, on July 25, 1997 (the last full trading day prior to the public
announcement of the proposed Merger) and October 15, 1997 (the latest
practicable trading day prior to the printing of this Proxy
Statement/Prospectus).
<TABLE>
<CAPTION>
CLOSING SALES PRICE
----------------------------
CYRIX
NSC CYRIX EQUIVALENT
------ ------ ----------
<S> <C> <C> <C>
Price per share:
July 25, 1997.................................................... $33.56 $21.25 $27.69
October 15, 1997................................................. $39.38 $32.25 $32.48
</TABLE>
Stockholders are advised to obtain a current market quotation for NSC
Common Stock. No assurance can be given as to the market price of NSC Common
Stock at or after the Effective Date. Because the market price of NSC Common
Stock is subject to fluctuation, the value of the shares of NSC Common Stock
that holders of Cyrix Common Stock will receive in the Merger may increase or
decrease prior to and following the Merger.
10
<PAGE> 17
SELECTED HISTORICAL AND PRO FORMA COMBINED FINANCIAL DATA
The following table presents selected historical financial data for NSC and
Cyrix, and selected pro forma combined financial data after giving effect to the
Merger under the pooling of interests method of accounting. NSC's selected
historical consolidated statement of operations data for the three months ended
August 24, 1997 and for each of the years in the three-year period ended May 25,
1997 and the consolidated balance sheet data as of August 24, 1997, May 25, 1997
and May 26, 1996 have been derived from its consolidated financial statements
for such periods incorporated by reference in this Proxy Statement/Prospectus.
The consolidated statement of operations data for the years ended May 29, 1994
and May 30, 1993 and the consolidated balance sheet data as of May 28, 1995, May
29, 1994 and May 30, 1993 are derived from consolidated financial statements not
included herein. Cyrix's selected historical consolidated statement of
operations data for the six months ended June 30, 1997 and for the years ended
December 31, 1996, 1995 and 1994 and the consolidated balance sheet data as of
June 30, 1997, December 31, 1996 and 1995 have been derived from its
consolidated financial statements for such periods incorporated by reference in
this Proxy Statement/Prospectus. The consolidated statement of operations data
for the years ended December 31, 1993 and 1992 and the consolidated balance
sheet data as of December 31, 1994, 1993 and 1992 are derived from consolidated
financial statements not included herein.
The selected unaudited pro forma combined financial data has been derived
from and prepared on a basis consistent with the unaudited pro forma condensed
combined financial statements included elsewhere in this Proxy
Statement/Prospectus. Since the fiscal years for NSC and Cyrix differ, the
financial statements of Cyrix for the most recent fiscal year have been recast
and are presented for the 12-month period ended March 31, 1997. NSC expects that
upon the consummation of the Merger, Cyrix will change its fiscal year end to
coincide with NSC's. The unaudited pro forma condensed combined balance sheet as
of August 24, 1997 and the unaudited pro forma condensed combined statements of
operations for the three months ended August 24, 1997 and for the year ended May
25, 1997 combine NSC's consolidated balance sheet as of August 24, 1997 and
consolidated statements of operations for the three months ended August 24, 1997
and for the year ended May 25, 1997 with Cyrix's consolidated balance sheet as
of June 30, 1997 and consolidated statements of operations for the three months
ended June 30, 1997 and the 12-month period ended March 31, 1997, respectively.
The unaudited pro forma condensed combined statements of operations for the
years ended May 26, 1996 and May 28, 1995 combine NSC's consolidated statements
of operations for the years ended May 26, 1996 and May 28, 1995 with Cyrix's
consolidated statements of operations for the years ended December 31, 1995 and
1994, respectively. The selected pro forma combined balance sheet data as of May
25, 1997, May 26, 1996 and May 28, 1995 have been derived from unaudited pro
forma condensed combined financial statements not included herein. The selected
pro forma combined balance sheet data combines NSC's consolidated balance sheets
as of May 25, 1997, May 26, 1996 and May 28, 1995 with Cyrix's consolidated
balance sheets as of March 31, 1997, December 31, 1995 and 1994, respectively.
The pro forma financial data is presented for illustrative purposes only and is
not necessarily indicative of the operating results or financial position that
would have occurred if the Merger had been consummated or that will occur after
consummation of the Merger.
11
<PAGE> 18
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF NSC
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE THREE
MONTHS ENDED FOR THE YEARS ENDED
------------------ ------------------------------------------------
AUG 24, AUG 25, MAY 25, MAY 26, MAY 28, MAY 29, MAY 30,
1997 1996 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING RESULTS
Net sales................................... $ 600.8 $ 566.1 $2,507.3 $2,623.1 $2,379.4 $2,295.4 $2,013.7
======== ======== ======== ======== ======== ======== ========
Operating income (loss)..................... $ 73.8 $ (275.5) $ 32.2 $ 214.1 $ 284.0 $ 274.5 $ 119.9
======== ======== ======== ======== ======== ======== ========
Income (loss) from continuing operations
before cumulative effect of accounting
change.................................... $ 70.1 $ (207.6) $ 27.5 $ 185.4 $ 264.2 $ 259.1 $ 130.3
======== ======== ======== ======== ======== ======== ========
Net income (loss)........................... $ 70.1 $ (207.6) $ 27.5 $ 185.4 $ 264.2 $ 264.0 $ 130.3
======== ======== ======== ======== ======== ======== ========
Net income (loss) used in primary earnings
per common share calculation (reflecting
preferred dividends, if applicable):
Income (loss) from continuing operations
before cumulative effect of accounting
change................................. $ 70.1 $ (207.6) $ 27.5 $ 179.8 $ 253.0 $ 240.4 $ 113.2
======== ======== ======== ======== ======== ======== ========
Net income (loss)......................... $ 70.1 $ (207.6) $ 27.5 $ 179.8 $ 253.0 $ 245.3 $ 113.2
======== ======== ======== ======== ======== ======== ========
Net income (loss) used in fully diluted
earnings per common share calculation
(reflecting adjustment for interest on
convertible notes when dilutive, if
applicable):
Income (loss) from continuing operations
before cumulative effect of accounting
change................................. $ 70.1 $ (207.6) $ 27.5 $ 185.4 $ 264.2 $ 259.1 $ 130.3
======== ======== ======== ======== ======== ======== ========
Net income (loss)......................... $ 70.1 $ (207.6) $ 27.5 $ 185.4 $ 264.2 $ 264.0 $ 130.3
======== ======== ======== ======== ======== ======== ========
Earnings per common share:
Income (loss) from continuing operations
before cumulative effect of accounting
change:
Primary................................ $ 0.47 $ (1.51) $ 0.19 $ 1.36 $ 2.02 $ 1.98 $ 0.98
======== ======== ======== ======== ======== ======== ========
Fully diluted.......................... $ 0.45 $ (1.51) $ 0.19 $ 1.34 $ 1.92 $ 1.83 $ 0.98
======== ======== ======== ======== ======== ======== ========
Net income (loss):
Primary................................ $ 0.47 $ (1.51) $ 0.19 $ 1.36 $ 2.02 $ 2.02 $ 0.98
======== ======== ======== ======== ======== ======== ========
Fully diluted.......................... $ 0.45 $ (1.51) $ 0.19 $ 1.34 $ 1.92 $ 1.87 $ 0.98
======== ======== ======== ======== ======== ======== ========
Weighted average common and common
equivalent shares outstanding:
Primary................................ 149.9 137.7 142.6 132.5 125.2 121.4 115.9
======== ======== ======== ======== ======== ======== ========
Fully diluted.......................... 156.7 137.7 142.9 138.6 137.5 141.4 115.9
======== ======== ======== ======== ======== ======== ========
- ------------------------------------------------------------------------------------------------------------------
FINANCIAL POSITION AT YEAR-END
Working capital............................. $ 706.5 $ 499.2 $ 761.2 $ 579.2 $ 492.4 $ 439.0 $ 336.6
Total assets................................ $2,999.1 $2,418.2 $2,914.1 $2,658.0 $2,235.7 $1,747.7 $1,476.5
Long-term debt.............................. $ 302.6 $ 347.0 $ 324.3 $ 350.5 $ 82.5 $ 14.5 $ 37.3
Total debt.................................. $ 335.4 $ 368.2 $ 336.6 $ 372.0 $ 106.1 $ 30.1 $ 47.9
Shareholders' equity........................ $1,855.0 $1,378.4 $1,748.8 $1,577.2 $1,406.7 $1,105.7 $ 837.4
Book value per common share................. $ 12.63
========
- ------------------------------------------------------------------------------------------------------------------
OTHER DATA
Gross margin percentage..................... 42% 30% 39% 40% 42% 42% 36%
Research and development expense............ $ 101.7 $ 97.4 $ 444.7 $ 361.3 $ 283.1 $ 257.8 $ 229.2
Capital additions........................... $ 196.3 $ 105.2 $ 593.0 $ 628.1 $ 478.0 $ 270.7 $ 235.1
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE> 19
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF CYRIX
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEARS ENDED
------------------ -------------------------------------------
JUNE 30, JUNE 30, DEC 31, DEC 31, DEC 31, DEC 31, DEC 31,
1997 1996 1996 1995 1994 1993 1992
-------- -------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING RESULTS
Net revenues................................. $115.6 $ 78.7 $183.8 $228.0 $246.1 $125.1 $ 72.9
====== ====== ====== ====== ====== ====== ======
Operating income (loss)...................... $ 4.5 $(17.6) $(33.1) $ 17.7 $ 55.7 $ 29.9 $ 13.2
====== ====== ====== ====== ====== ====== ======
Income (loss) from continuing operations
before extraordinary item.................. $ 1.3 $(13.4) $(24.8) $ 15.6 $ 37.6 $ 19.6 $ 8.4
====== ====== ====== ====== ====== ====== ======
Net income (loss)............................ $ 1.3 $(14.5) $(25.9) $ 15.6 $ 37.6 $ 19.6 $ 8.4
====== ====== ====== ====== ====== ====== ======
Net income (loss) used in earnings per common
share calculation:
Income (loss) from continuing operations
before extraordinary item............... $ 1.3 $(13.4) $(24.8) $ 15.6 $ 37.6 $ 19.6 $ 8.4
====== ====== ====== ====== ====== ====== ======
Net income (loss).......................... $ 1.3 $(14.5) $(25.9) $ 15.6 $ 37.6 $ 19.6 $ 8.4
====== ====== ====== ====== ====== ====== ======
Earnings per common share:
Income (loss) from continuing operations
before extraordinary item............... $ 0.07 $(0.69) $(1.27) $ 0.78 $ 1.88 $ 1.06 $ 0.49
====== ====== ====== ====== ====== ====== ======
Extraordinary item......................... -- $(0.06) $(0.06) -- -- -- --
====== ====== ====== ====== ====== ====== ======
Net income (loss).......................... $ 0.07 $(0.75) $(1.33) $ 0.78 $ 1.88 $ 1.06 $ 0.49
====== ====== ====== ====== ====== ====== ======
Weighted average common and common equivalent
shares outstanding......................... 20.3 19.3 19.4 20.0 20.0 18.5 17.2
====== ====== ====== ====== ====== ====== ======
- -------------------------------------------------------------------------------------------------------------
FINANCIAL POSITION AT YEAR-END
Working capital.............................. $166.3 $130.3 $150.3 $ 68.7 $ 80.0 $ 69.1 $ 24.5
Total assets................................. $311.1 $303.5 $299.3 $268.8 $196.1 $114.7 $ 50.3
Long-term debt............................... $134.9 $ 7.5 $136.2 $ 62.3 $ 18.3 $ 6.8 $ 4.8
Total debt................................... $137.7 $ 10.2 $139.2 $ 82.4 $ 22.8 $ 7.8 $ 5.5
Shareholders' equity......................... $126.0 $133.2 $122.9 $146.0 $125.7 $ 84.0 $ 31.5
Book value per common share.................. $ 6.43
======
- -------------------------------------------------------------------------------------------------------------
OTHER DATA
Gross margin percentage...................... 42% 33% 26% 32% 51% 59% 62%
Research and development expense............. $ 20.9 $ 16.5 $ 32.4 $ 29.1 $ 24.8 $ 15.7 $ 8.3
Capital additions............................ $ 5.6 $ 8.2 $ 12.6 $ 79.7 $ 24.0 $ 14.8 $ 6.6
- -------------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE> 20
SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
OF NSC AND CYRIX
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE THREE
MONTHS ENDED FOR THE YEARS ENDED
------------- ----------------------------------
AUG 24, MAY 25, MAY 26, MAY 28,
1997 1997 1996 1995
------------- -------- -------- --------
<S> <C> <C> <C> <C>
PRO FORMA OPERATING RESULTS
Net sales....................................... $ 640.3 $2,710.0 $2,833.4 $2,625.5
======== ======== ======== ========
Operating income................................ $ 66.2 $ 0.9 $ 214.1 $ 339.9
======== ======== ======== ========
Income from continuing operations before
extraordinary item............................ $ 64.8 $ 7.4 $ 201.0 $ 301.8
======== ======== ======== ========
Pro forma net income............................ $ 64.8 $ 6.3 $ 201.0 $ 301.8
======== ======== ======== ========
Net income used in pro forma primary earnings
per common share calculation:
Income from continuing operations before
extraordinary item......................... $ 64.8 $ 7.4 $ 195.4 $ 290.6
======== ======== ======== ========
Pro forma net income.......................... $ 64.8 $ 6.3 $ 195.4 $ 290.6
======== ======== ======== ========
Net income used in pro forma fully diluted
earnings per common share calculation:
Income from continuing operations before
extraordinary item......................... $ 64.8 $ 7.4 $ 201.0 $ 301.8
======== ======== ======== ========
Pro forma net income.......................... $ 64.8 $ 6.3 $ 201.0 $ 301.8
======== ======== ======== ========
Pro forma earnings per common share:
Income from continuing operations before
extraordinary item:
Primary.................................... $ 0.39 $ 0.05 $ 1.31 $ 2.05
======== ======== ======== ========
Fully diluted.............................. $ 0.37 $ 0.05 $ 1.30 $ 1.96
======== ======== ======== ========
Extraordinary item:
Primary.................................... -- $ (0.01) -- --
======== ======== ======== ========
Fully diluted.............................. -- $ (0.01) -- --
======== ======== ======== ========
Pro forma net income:
Primary.................................... $ 0.39 $ 0.04 $ 1.31 $ 2.05
======== ======== ======== ========
Fully diluted.............................. $ 0.37 $ 0.04 $ 1.30 $ 1.96
======== ======== ======== ========
Weighted average common and common equivalent
shares outstanding:
Primary.................................... 166.2 158.7 149.0 141.7
======== ======== ======== ========
Fully diluted.............................. 173.0 159.0 155.1 154.0
======== ======== ======== ========
</TABLE>
14
<PAGE> 21
SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
OF NSC AND CYRIX (CONTINUED)
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE
THREE
MONTHS ENDED FOR THE YEARS ENDED
------------ ----------------------------------
AUG 24, MAY 25, MAY 26, MAY 28,
1997 1997 1996 1995
------------ -------- -------- --------
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
PRO FORMA FINANCIAL POSITION AT YEAR-END
Working capital............................... $ 852.8 $ 904.5 $ 647.9 $ 572.4
Total assets.................................. $3,302.8 $3,232.0 $2,911.3 $2,427.2
Long-term debt................................ $ 437.5 $ 459.7 $ 412.8 $ 100.8
Total debt.................................... $ 473.1 $ 475.1 $ 454.4 $ 128.9
Shareholders' equity.......................... $1,961.0 $1,859.5 $1,723.2 $1,532.4
Pro forma book value per common share......... $ 12.02
========
- ---------------------------------------------------------------------------------------------------
OTHER PRO FORMA DATA
Gross margin percentage....................... 41% 38% 40% 43%
Research and development expense.............. $ 112.5 $ 479.5 $ 390.4 $ 307.9
Capital additions............................. $ 196.5 $ 607.1 $ 707.8 $ 502.0
- ---------------------------------------------------------------------------------------------------
CYRIX PRO FORMA EQUIVALENTS:
Earnings per common share:
Net income:
Primary.................................. $ 0.32 $ 0.03 $ 1.08 $ 1.69
======== ======== ======== ========
Fully diluted............................ $ 0.31 $ 0.03 $ 1.07 $ 1.62
======== ======== ======== ========
Book value per common share................... $ 9.92
========
</TABLE>
15
<PAGE> 22
GENERAL INFORMATION
This Proxy Statement/Prospectus is being furnished to stockholders of Cyrix
in connection with the solicitation of proxies by and on behalf of the Cyrix
Board for use at the Special Meeting. The Special Meeting will be held at the
Sheraton Park Central Hotel, 12720 Merit Drive, Dallas, Texas, at 9:00 a.m.
C.S.T. on November 17, 1997. This Proxy Statement/Prospectus and the related
form of proxy are first being mailed to stockholders on or about October 17,
1997.
THE SPECIAL MEETING
PURPOSE OF THE SPECIAL MEETING
At the Special Meeting, holders of Cyrix Common Stock will consider and
vote upon a proposal to approve and adopt the Merger Agreement and the
transactions contemplated thereby, including the Merger.
THE CYRIX BOARD HAS UNANIMOUSLY APPROVED AND ADOPTED THE MERGER AGREEMENT
AND THE PERFORMANCE BY CYRIX OF ITS OBLIGATIONS THEREUNDER, AND RECOMMENDS A
VOTE FOR APPROVAL AND ADOPTION OF THE MERGER AND THE MERGER AGREEMENT.
RECORD DATE; VOTING RIGHTS; PROXIES
The Cyrix Board has fixed the close of business on October 6, 1997 as the
Record Date for determining holders entitled to notice of and to vote at the
Special Meeting. Only holders of Cyrix Common Stock who are holders of Cyrix
Common Stock at the close of business on the Record Date will be entitled to
notice of, and to vote at, the Special Meeting.
As of the Record Date, there were 19,908,039 shares of Cyrix Common Stock
issued and outstanding, each of which entitles the holder thereof to one vote
per share. Shares of Cyrix Common Stock held in the treasury of Cyrix or any of
its subsidiaries are not considered outstanding. As of the Record Date,
directors and officers of Cyrix beneficially owned approximately 1,034,602
shares of Cyrix Common Stock, representing approximately 5.2% of the Cyrix
Common Stock entitled to vote at the Special Meeting. It is currently expected
that each such director and executive officer of Cyrix will vote the shares of
Cyrix Common Stock beneficially owned by him or her for approval and adoption of
the Merger Agreement and the transactions contemplated thereby, including the
Merger. Pursuant to the Support Agreement, an officer and two directors of Cyrix
holding an aggregate of 941,755 shares of Cyrix Common Stock as of the Record
Date, which represents approximately 4.7% of the outstanding shares of Cyrix
Common Stock as of the Record Date, have agreed to vote their shares of Cyrix
Common Stock for approval and adoption of the Merger Agreement and the
transactions contemplated thereby, including the Merger. See "THE SUPPORT
AGREEMENT."
All shares of Cyrix Common Stock represented by properly executed proxies
will, unless such proxies have been previously revoked, be voted in accordance
with the instructions indicated in such proxies.
IF NO INSTRUCTIONS ARE INDICATED, SUCH SHARES OF CYRIX COMMON STOCK WILL BE
VOTED IN FAVOR OF THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING THE MERGER.
A holder of Cyrix Common Stock who has given a proxy may revoke it at any
time prior to its exercise by giving written notice thereof to the Secretary of
Cyrix at Cyrix's principal executive offices, by signing and returning a later
dated proxy, or by voting in person at the Special Meeting; however, mere
attendance at the Special Meeting will not in and of itself have the effect of
revoking the proxy.
Votes cast by proxy or in person at the Special Meeting will be tabulated
by the election inspectors appointed for the meeting and will determine whether
or not a quorum is present. The election inspectors will treat abstentions as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum but as unvoted for purposes of determining the approval of
any matter submitted to the holders of Cyrix Common Stock for a vote. If a
broker indicates on the proxy that it does not have discretionary authority
16
<PAGE> 23
as to certain shares to vote on a particular matter, those shares will not be
considered as present and entitled to vote with respect to that matter.
SOLICITATION OF PROXIES
Cyrix will bear its own cost of solicitation of proxies. Brokerage houses,
fiduciaries, nominees and others will be reimbursed for their out-of-pocket
expenses in forwarding proxy materials to beneficial owners of stock held in
their names. In addition, Corporate Investor Communications, Inc. has been
engaged by Cyrix to act as proxy solicitors and will receive a fee of
approximately $10,000 plus reimbursement of out-of-pocket expenses and will be
indemnified by Cyrix under certain circumstances for certain liabilities.
QUORUM
The presence in person or by properly executed proxy of holders of a
majority of the issued and outstanding shares of Cyrix Common Stock entitled to
vote at the Special Meeting is necessary to constitute a quorum at the Special
Meeting.
REQUIRED VOTE
Approval of the Merger Agreement and the transactions contemplated thereby,
including the Merger, requires the affirmative vote of the holders of a majority
of the outstanding shares of Cyrix Common Stock. As of the Record Date, a total
of 19,908,039 votes were eligible to be cast at the Special Meeting. If fewer
shares of Cyrix Common Stock are voted in favor of approval and adoption of the
Merger Agreement and the transactions contemplated thereby, including the
Merger, than the number required for such approval and adoption, it is expected
that the Special Meeting will be adjourned or postponed in order to allow
additional time for obtaining additional proxies or votes; provided, however,
that no proxy which is voted "against" the proposal to approve and adopt the
Merger Agreement and the transactions contemplated thereby, including the
Merger, will be voted in favor of any such adjournment or postponement. At any
subsequent reconvening of the Special Meeting, all proxies obtained prior to
such adjournment or postponement will be voted in such manner as such proxies
would have been voted at the original convening of the Special Meeting (except
for any proxies which previously have been effectively revoked or withdrawn),
notwithstanding that they may have been effectively voted on the same or any
other matter at a previous meeting. Because approval of the Merger Agreement and
the transactions contemplated thereby, including the Merger, requires the
affirmative vote of holders of a majority of the outstanding shares of Cyrix
Common Stock, failures to vote and abstentions will have the same effect as a
vote "against" approval of the Merger Agreement and the transactions
contemplated thereby, including the Merger. In addition, under the rules of the
National Association of Securities Dealers, brokers who hold shares in street
name for customers who are the beneficial owners of such shares are prohibited
from giving a proxy to vote shares held for such customers with respect to the
approval and adoption of the Merger Agreement and the transactions contemplated
thereby, including the Merger, without specific instructions from such
customers. The failure of such customers to provide specific instructions with
respect to their shares of Cyrix Common Stock to their broker will have the
effect of a vote "against" the approval of the Merger Agreement.
THE MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING ARE OF GREAT IMPORTANCE
TO THE HOLDERS OF CYRIX COMMON STOCK. ACCORDINGLY, HOLDERS OF CYRIX COMMON STOCK
ARE URGED TO READ AND CAREFULLY CONSIDER THE INFORMATION PRESENTED IN THIS PROXY
STATEMENT/PROSPECTUS, AND TO COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE
ENCLOSED PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
Approval of the Merger Agreement and the transactions contemplated thereby,
including the Merger, does not require the vote of holders of NSC Common Stock.
17
<PAGE> 24
THE MERGER
BACKGROUND OF THE MERGER
Since its founding in 1988, Cyrix has become a leading provider of
innovative PC technologies and platforms. In September 1996, the Cyrix Board
determined that Cyrix's prospects could be greatly enhanced if an alliance could
be formed with a strategic partner who would take a minority equity stake in
Cyrix and offer complementary strategic strengths, including, most importantly,
manufacturing capability and capacity, and access to additional capital. Cyrix
engaged Goldman Sachs in September 1996 to assist Cyrix in locating such a
strategic partner.
Goldman Sachs identified potential strategic partners and met with the
Cyrix Board and management in the fall of 1996 to provide them with advice
regarding potential strategic partners. Thereafter, Goldman Sachs contacted a
number of companies regarding a strategic investment in or partnership with
Cyrix. Of the companies contacted by Goldman Sachs, three expressed an interest
in Cyrix. NSC responded to Goldman Sachs at such time indicating that it had no
interest in pursuing a strategic investment in Cyrix. Cyrix believes that most
of the companies contacted were concerned about Cyrix's financial condition or
were reluctant to enter into a partnership that would compete directly with
Intel. Of the three companies expressing interest initially, none ultimately
chose to pursue a partnership relationship with Cyrix.
As a result of the lack of interest from potential strategic partners, the
Cyrix Board decided to pursue its strategy as an independent entity and asked
Cyrix's management to take steps to improve Cyrix's performance and to develop
strategic alternatives for Cyrix's long-term success. As Cyrix's management
deemed access to complementary technologies to be a vitally important element of
Cyrix's long-term strategy, Cyrix's management initiated discussions with
several companies around the world who possessed relevant technologies,
including NSC.
Following informal discussions in the spring of 1997, Cyrix and NSC
realized that the companies share a similar vision of the future of computing
devices and have complementary products and technologies. NSC also has available
fabricating capacity, including a new state-of-the-art facility dedicated in
June 1997. Additionally, NSC has established relationships with several major PC
manufacturers and a patent cross-license agreement with Intel that gives NSC the
right to manufacture, to have made and to sell products covered by Intel
patents.
In late April 1997, NSC approached Cyrix about the possibility of an
acquisition or merger. After executing a confidentiality agreement, Cyrix and
NSC exchanged more detailed information regarding each other's products and
operations. As each company learned more about the other, the potential rewards
from a merger became more evident.
On June 5, 1997, following separate review and discussion by each of the
NSC Board and the Cyrix Board, preliminary terms were discussed, which included
an exchange ratio of 0.8 shares of NSC Common Stock for each share of Cyrix
Common Stock. Based on the closing price of NSC Common Stock on the NYSE
Composite Tape on June 4, 1997 of $28.38 per share, the 0.8 exchange ratio
reflected a value of approximately $23 per share of Cyrix Common Stock on such
date. This offer was rejected by the Cyrix Board as inadequate. At that point,
discussion of a potential merger with NSC ended, and no further talks were
contemplated by Cyrix.
During the period of June 5 to July 10, 1997, the price of NSC Common Stock
increased from $28.25 per share to $33.69 per share. On or about July 10, 1997,
NSC expressed a desire to continue merger talks at the 0.8 exchange ratio based
on the current market prices of shares of NSC Common Stock and Cyrix Common
Stock.
On July 14, 1997, Cyrix and NSC met with their investment bankers in Menlo
Park, California. On July 15, 1997, NSC increased the exchange ratio included in
its offer to 0.825 shares of NSC Common Stock for each share of Cyrix Common
Stock, reflecting a value of approximately $30 per share for Cyrix Common Stock
on such date.
18
<PAGE> 25
On July 17, 1997, the Cyrix Board met with representatives of NSC in
Albuquerque, New Mexico. The NSC representatives discussed the long-term
strategy of NSC and the importance of Cyrix to NSC's strategy. Both NSC and
Cyrix left the meeting with a better understanding of the strategic benefits of
a merger and decided that discussions should continue.
Between July 17 and 28, 1997, NSC's and Cyrix's attorneys and investment
bankers conferred with representatives of Cyrix and NSC and negotiated the
structure of the transaction and final terms and conditions of the Merger
Agreement and the related Stock Option Agreement and support agreement.
On July 22, 1997, the Cyrix Board met with representatives of Goldman Sachs
and counsel to discuss the terms of the Merger proposal. Goldman Sachs provided
the Cyrix Board and management with certain quantitative analyses of Cyrix, NSC
and the semiconductor and related industries, and representatives of Goldman
Sachs and counsel provided advice on the proposed Merger's structure and terms
and conditions. At the meeting, the Cyrix Board considered the proposed terms of
the draft Merger Agreement and the related Stock Option Agreement and support
agreement.
The Cyrix Board met again telephonically on July 25, 1997, at which meeting
counsel reviewed for the Cyrix Board the status of the continuing negotiations
with NSC and counsel for NSC and the terms and provisions of the draft Merger
Agreement, the Stock Option Agreement and the support agreement as negotiated by
Cyrix's representatives.
At a special meeting held telephonically on July 28, 1997, with
representatives of Goldman Sachs and counsel in attendance, the Cyrix Board
received a presentation from counsel on the terms and provisions of the final
draft of the Merger Agreement, the Stock Option Agreement and the support
agreement. All members of the Cyrix Board except one were present at the
meeting. The Cyrix Board received the oral opinion of Goldman Sachs to the
effect that, as of July 28, 1997, and subject to the assumptions made, matters
considered and limitations on the review undertaken in connection with the
opinion, the Exchange Ratio pursuant to the Merger Agreement is fair to the
holders of Cyrix Common Stock. The Cyrix Board members in attendance at the
meeting then determined that the Merger is fair to, and in the best interests
of, Cyrix and its stockholders, and accordingly, the Cyrix Board members in
attendance at the meeting unanimously approved and adopted the Merger Agreement
and the performance by Cyrix of its obligations thereunder, and resolved to
recommend that the Cyrix stockholders vote for the approval and adoption of the
Merger and the Merger Agreement, at a Special Meeting of Cyrix stockholders to
be held for that purpose. Subsequently, the Cyrix Board member not present at
the special meeting confirmed that he approves the Merger Agreement and the
performance by Cyrix of its obligations thereunder, and recommends the approval
and adoption of the Merger and the Merger Agreement by Cyrix stockholders.
After the special meeting of the Cyrix Board, the Merger Agreement, the
Stock Option Agreement and the support agreement were executed, and the parties
made a public announcement of the proposed Merger between Cyrix and NSC on the
afternoon of July 28, 1997.
CERTAIN INFORMATION PROVIDED
In connection with the discussions between Cyrix and NSC described above,
Cyrix provided to NSC certain financial projections with respect to Cyrix's net
revenue, gross margin, operating expenses, operating income, profit before
taxes, profit after taxes and earnings per share for fiscal years 1997 through
1999. Such financial projections show an increase in net revenue from $298.3
million in 1997 to $511.3 million in 1999, an increase in gross margin from
$108.6 million in 1997 to $184.1 million in 1999, an increase in operating
income from $15.6 million in 1997 to $47.2 million in 1999, an increase in
profit after taxes from $6.4 million in 1997 to $28 million in 1999 and an
increase in earnings per share from $0.32 in 1997 to $1.40 in 1999.
Such financial projections were developed for internal use only, were not
prepared with the intent that they would be publicly disclosed and are included
herein only because such information was provided to NSC. In addition, such
projections were not prepared with a view toward compliance with published
guidelines of the Commission or the guidelines established by the American
Institute of Certified Public Accountants regarding projections and forecasts,
and such projections were not intended to be presented in a manner
19
<PAGE> 26
consistent with financial statements prepared in accordance with generally
accepted accounting principles ("GAAP"). While presented with numerical
specificity, such projections are based upon a variety of general assumptions
with respect to a continued level of industry performance, general business and
economic conditions, taxes and other matters, most of which are beyond the
control of Cyrix and NSC. The presentation of such projections should not be
regarded as a representation by Cyrix, NSC or any other person that such results
will be achieved. Neither Cyrix's independent auditors nor any other independent
accountants have compiled, examined or performed any procedures with respect to
the projected financial information or expressed any assurance on it or its
achievability. In addition, because the projections are based on a number of
assumptions and are subject to significant economic and competitive
uncertainties, which are beyond the control of Cyrix and NSC, there can be no
assurance that these projections will be realized, and actual results may be
higher or lower than those shown, possibly by material amounts. Cyrix does not
intend to update the projections.
The projections should be read together with the information contained in
the consolidated financial statements of Cyrix and its subsidiaries included
elsewhere, or incorporated by reference, in this Proxy Statement/Prospectus.
Statements made under this caption should be regarded as forward-looking
information. For information regarding the factors that could cause actual
results to differ from such forward-looking statements, see "STATEMENTS
REGARDING FORWARD-LOOKING INFORMATION."
RECOMMENDATION OF THE CYRIX BOARD; CYRIX'S REASONS FOR THE MERGER
The Cyrix Board believes that the proposed Merger represents a significant
step forward in Cyrix's strategy to develop a whole new class of integrated
processors that would bring lower cost PCs to the marketplace. The Cyrix Board
believes that the combination of Cyrix's innovative technology and products,
such as the 6X86MX(TM) microprocessor and the MediaGX(TM) processor, with NSC's
manufacturing strength (including the 8-inch state-of-the-art fabrication
facility dedicated in June 1997), strong market position in certain system
components, existing relationships with major PC suppliers, broad product line
and distribution channels, Intel cross-license agreement and financial strength
will benefit Cyrix and its stockholders. While the Cyrix Board evaluated certain
alternatives to the Merger, including the continued operation of Cyrix as an
independent entity, such alternatives are, in the opinion of the Cyrix Board,
less attractive to Cyrix and its stockholders than the Merger, which provides
the opportunity for Cyrix stockholders to continue to share in the future
performance of Cyrix through ownership of NSC Common Stock.
In reaching its decision to approve the Merger Agreement and the Stock
Option Agreement, the Cyrix Board considered a number of factors, including the
following:
(i) The Cyrix Board analyzed information with respect to the financial
condition, results of operations, cash flow, business and prospects of
Cyrix. The Cyrix Board considered that Cyrix had reported losses in five of
the eight quarters preceding the announcement of the Merger and that
Cyrix's access to capital was constrained. The Cyrix Board considered that
Cyrix's lack of fabricating capacity resulted in a competitive disadvantage
and that Cyrix would need access to a wide range of technologies, including
MPEG (Motion Picture Experts Group), 3D graphics, Ethernet(TM), modem,
Super I/O(TM) and BIOS development, in order to continue to advance its
MediaGX(TM) product line. The Cyrix Board considered that Cyrix did not
possess a full semiconductor product line for, and had limited
relationships with, major PC manufacturers. The Cyrix Board also considered
the intense competition in the computer industry and, in its opinion, the
ability of larger industry participants to dictate product pricing.
(ii) The Cyrix Board considered the benefits to Cyrix and its
stockholders that would arise from the Merger as a result of the
complementary nature of the technology and products of Cyrix and NSC and
the financial strength of NSC. The Cyrix Board considered the key strengths
that NSC would provide as a merger partner, including NSC's new
state-of-the-art semiconductor fabrication facility dedicated in June 1997,
its strong market position in complementary technologies such as MPEG, chip
sets, power management, modem, Ethernet(TM) and Super I/O(TM), its strong
customer list of major PC manufacturers such as Compaq Computer
Corporation, Dell Computer Corporation, International Business Machines
20
<PAGE> 27
Corporation, Hewlett-Packard Company, Sony Corporation, NEC Corporation,
Acer Incorporated, Samsung Corporation and Siemens Aktiengesellschaft, its
broad product line and distribution channels for its products and its
cross-license agreement with Intel. The Cyrix Board evaluated the technical
and market synergies that would arise from the Merger and considered that
the breadth of products offered by the merged companies would satisfy the
increasingly expressed desire of customers to purchase a full range of
products from a single vendor.
(iii) The Cyrix Board considered the terms of the Merger Agreement and
the related Stock Option Agreement and support agreement, the consideration
to be received by Cyrix stockholders in the Merger, the treatment of the
Merger as a tax-free exchange and the expected qualification of the Merger
as a pooling of interests for accounting and financial reporting purposes.
(iv) The Cyrix Board considered quantitative analyses of Cyrix and NSC
and the opportunity presented to Cyrix stockholders by the Merger. The
Cyrix Board considered current financial conditions, market conditions,
historical market prices, volatility and trading information with respect
to Cyrix's Common Stock and the fact that Cyrix's Common Stock has
under-performed the S&P High Tech Index since 1994 and the S&P 500 since
1995. The Cyrix Board also considered the historical and projected
financial results of Cyrix, the historical performance of both Cyrix Common
Stock and NSC Common Stock individually, in comparison to individual
competitors and in comparison to the industry as a group, commentary and
analyses prepared by the investment community on both Cyrix and NSC and an
analysis of current holders of the common stock of each of Cyrix and NSC.
(v) The Cyrix Board considered the oral opinion of Goldman Sachs to
the effect that, as of July 28, 1997, and subject to the assumptions made,
matters considered and limitations on the review undertaken in connection
with the opinion, the Exchange Ratio pursuant to the Merger Agreement is
fair to the holders of Cyrix Common Stock. The Cyrix Board considered the
analyses performed by Goldman Sachs in connection with the delivery of its
fairness opinion as a whole. See "-- Opinion of Cyrix's Financial Advisor."
The foregoing discussion of the factors considered and given weight by the
Cyrix Board is not intended to be exhaustive but is believed to include all
material factors considered by the Cyrix Board. In view of the variety of
factors considered in connection with its evaluation of the proposed Merger, the
Cyrix Board did not deem it practicable to, and did not, quantify or otherwise
assign relative weights to the specific factors considered in reaching its
determination that the Merger is fair to, and in the best interests of, Cyrix
and its stockholders.
At a special meeting held on July 28, 1997, the Cyrix Board members present
at the meeting unanimously agreed that the Merger is fair to, and in the best
interests of, Cyrix and its stockholders and approved and adopted the Merger
Agreement and the performance by Cyrix of its obligations thereunder.
Subsequently, the sole Cyrix Board member not present at the meeting confirmed
his approval of the Merger Agreement and the performance by Cyrix of its
obligations thereunder. THE CYRIX BOARD UNANIMOUSLY RECOMMENDS THAT CYRIX
STOCKHOLDERS APPROVE AND ADOPT THE MERGER AND THE MERGER AGREEMENT.
In considering the recommendation of the Cyrix Board with respect to the
Merger and the Merger Agreement, Cyrix stockholders should be aware that certain
officers and directors of Cyrix (or their affiliates) have certain interests in
the proposed Merger that are different from and in addition to the interests of
Cyrix stockholders generally. The Cyrix Board was aware of these interests and
considered them in approving the Merger Agreement and the performance by Cyrix
of its obligations thereunder. See "-- Interests of Certain Persons in the
Merger."
NSC'S REASONS FOR THE MERGER
In late May 1997, NSC's management received authorization from the Board of
Directors of NSC ("NSC Board") to pursue negotiations with Cyrix, and in June,
the NSC Board was updated on the status of the discussions between Cyrix and
NSC. On July 28, 1997, the NSC Board met telephonically to consider the
advisability of the proposed Merger, the Merger Agreement, the Stock Option
Agreement and the other legal
21
<PAGE> 28
documentation to be executed in connection therewith. The NSC Board has
concluded that the Merger is advisable and in the best interests of NSC and its
stockholders because the NSC Board believes that the Merger will further NSC's
long-term strategic objectives, which include expanding and developing its
product lines and markets. The NSC Board's conclusions are based on its
expectations that (i) the Merger will likely result in significant new products
and markets resulting from the integration of Cyrix's technology with NSC's
existing technology, (ii) Cyrix's innovative technology will diversify and
strengthen NSC's core product portfolio, and (iii) NSC's production, marketing
and distribution strengths will present opportunities for increased sales of
Cyrix's technology.
In the past year, NSC has adopted a strategy which focuses on analog and
mixed signal technologies and uses such technologies to develop certain highly
integrated, application specific semiconductor products, which NSC calls
"systems-on-a-chip." These systems-on-a-chip products combine analog and mixed
signal cores and put them on a single integrated circuit device with embedded
controllers or processors. The goal is to provide complete system solutions on
one device for information appliances, such as network personal computers, net
browsers and other Internet access products. In furtherance of this strategy,
during fiscal 1997, NSC made acquisitions intended to accelerate its entry into
the market for information appliances for the home and to allow NSC to compete
as a supplier of complete chip sets. The merger of Cyrix with NSC is a further
step in this systems-on-a-chip strategy. Cyrix, a technology leader in high
performance processors, designs and markets IBM personal computer
software-compatible microprocessors that are an alternative source for the Intel
X86 microprocessors. With access to Cyrix's X86 processors, NSC will be able to
combine the processors with its other cores to make systems-on-a-chip products,
providing a complete solution for manufacturers of information appliances. With
complete solutions contained in one device, NSC believes that cost efficiencies
may result in the eventual reduction of the prices for these information
appliance products, resulting in an increase in their availability and expansion
of the related market.
There can be no assurance that any of the expectations set forth in the
preceding paragraphs will be fulfilled or that any of the expected benefits of
the Merger will be realized.
OPINION OF CYRIX'S FINANCIAL ADVISOR
On July 28, 1997, Goldman Sachs delivered its oral opinion to the Cyrix
Board that, as of the date of such opinion, the Exchange Ratio pursuant to the
Merger Agreement is fair to the holders of Cyrix Common Stock. Goldman Sachs
subsequently confirmed its oral opinion by delivery of its written opinion dated
the date hereof, that, as of the date hereof, the Exchange Ratio pursuant to the
Merger Agreement is fair to the holders of Cyrix Common Stock.
THE FULL TEXT OF THE WRITTEN OPINION OF GOLDMAN SACHS DATED THE DATE
HEREOF, WHICH SETS FORTH ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON
THE REVIEW UNDERTAKEN IN CONNECTION WITH THE OPINION, IS ATTACHED HERETO AS
APPENDIX B TO THIS PROXY STATEMENT/PROSPECTUS AND IS INCORPORATED HEREIN BY
REFERENCE. STOCKHOLDERS OF CYRIX ARE URGED TO, AND SHOULD, READ SUCH OPINION IN
ITS ENTIRETY.
In connection with its opinion, Goldman Sachs reviewed, among other things,
(i) the Merger Agreement; (ii) this Proxy Statement/Prospectus; (iii) the Annual
Reports to Stockholders and Annual Reports on Form 10-K of Cyrix for the five
years ended December 31, 1996 and of NSC for the five fiscal years ended May 26,
1996; (iv) certain interim reports to stockholders and Quarterly Reports on Form
10-Q of Cyrix and NSC; (v) certain other communications from Cyrix and NSC to
their respective stockholders; (vi) certain internal financial analyses and
forecasts for Cyrix prepared by its management; and (vii) certain publicly
available research forecasts for NSC.
Goldman Sachs also held discussions with members of the senior management
of Cyrix and NSC regarding the strategic rationale for, and the potential
benefits of, the Merger and the past and current business operations, financial
condition, and future prospects of their respective companies. In addition,
Goldman Sachs reviewed the reported price and trading activity for Cyrix Common
Stock and NSC Common Stock, compared certain financial and stock market
information for Cyrix and NSC with similar information for certain other
companies the securities of which are publicly traded, reviewed the financial
terms of certain
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recent business combinations in the semiconductor industry and performed such
other studies and analyses as it considered appropriate.
Goldman Sachs relied upon the accuracy and completeness of all of the
financial and other information reviewed by it and assumed such accuracy and
completeness for purposes of rendering its opinion. In addition, Goldman Sachs
has not made an independent evaluation or appraisal of the assets and
liabilities of Cyrix or NSC or any of their respective subsidiaries and Goldman
Sachs has not been furnished with any such evaluation or appraisal. Goldman
Sachs also assumed for purposes of rendering its opinion that the Merger will be
accounted for as a pooling of interests under GAAP. The opinion of Goldman Sachs
referred to herein was provided for the information and assistance of the Cyrix
Board in connection with its consideration of the Merger and does not constitute
a recommendation as to how any holder of Cyrix Common Stock should vote with
respect to the Merger.
The following is a summary of all material financial analyses used by
Goldman Sachs in connection with providing its oral opinion to Cyrix's Board of
Directors on July 28, 1997. Goldman Sachs utilized substantially the same
financial analyses in connection with providing the written opinion attached as
Appendix B hereto.
Historical Stock Trading Analysis. Goldman Sachs reviewed the historical
trading prices and volumes for Cyrix Common Stock. In addition, Goldman
Sachs analyzed the consideration to be received by holders of Cyrix Common
Stock pursuant to the Merger Agreement based on the closing market price of
NSC Common Stock on July 25, 1997 of $33.56 in relation to the closing
market price per share of Cyrix Common Stock on July 25, 1997 and the
average closing market prices per share of Cyrix Common Stock for the
latest week, ten days, thirty days, three months, six months and twelve
months. Such analysis indicated that the price per share of Cyrix Common
Stock to be paid pursuant to the Merger Agreement represented a premium of
30.3%, 23.7%, 31.8%, 33.4%, 42.9%, 18.4% and 103.2%, respectively, based on
the closing market price of Cyrix Common Stock on July 25, 1997 of $21.25
and the average closing market prices for the latest week, ten days, thirty
days, three months, six months and twelve months, respectively.
Selected Companies Analysis. Goldman Sachs reviewed and compared certain
financial information relating to Cyrix to corresponding financial
information, ratios and public market multiples for three groups of
publicly traded corporations: Advanced Micro Devices, Inc. and Intel (the
"Microprocessor Companies"), Anadigics, Inc., Analog Devices, Inc., Atmel
Corporaton, Cypress Semiconductor Corporation, Integrated Device
Technology, Inc., LSI Logic Corp., Microchip Technology Incorporated,
Motorola Inc., Rockwell International Corporation, Texas Instruments
Incorporated, Tower Semiconductor, Ltd. and VLSI Technology, Inc. (the "Fab
Semiconductor Companies") and Actel Corporation, Adaptec Inc., Alliance
Semiconductor Corporation, Altera Corporation, C-Cube Microsystems, Inc.,
Cirrus Logic, Inc., Level One Communications, Incorporated, Linear
Technology Corporation, Maxim Integrated Products, Inc., Oak Technology,
Inc., PMC-Sierra, Inc., S3 Incorporated and Xilinx, Inc. (the "Fabless
Semiconductor Companies" and, together with the Microprocessor Companies
and the Fab Semiconductor Companies, the "Selected Companies"). The
Selected Companies were chosen because they are publicly-traded companies
with operations that for purposes of analysis may be considered similar to
Cyrix. Goldman Sachs calculated and compared various financial multiples
and ratios for Cyrix with those of the Selected Companies using the
respective closing price per share for Cyrix and each of the Selected
Companies on July 25, 1997, which in the case of Cyrix was $21.25 per
share. The multiples and ratios for Cyrix and each of the Selected
Companies were based on the most recently publicly available information
and from estimates provided by the Institutional Brokers Estimate System
("IBES").
With respect to the Selected Companies, Goldman Sachs considered
levered market capitalization (i.e., market value of common equity plus
book value of debt and preferred stock less cash) as a multiple of
annualized latest quarterly sales, which ranged from 2.4x to 5.4x, with a
mean of 3.9x and a median of 3.9x for the Microprocessor Companies, from
1.3x to 5.1x, with a mean of 2.4x and a median of 2.0x for the Fab
Semiconductor Companies, and from 1.0x to 12.6x, with a mean of 4.2x and a
median of 2.4x for the Fabless Semiconductor Companies, as compared to 1.4x
for Cyrix. Goldman Sachs also considered
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latest quarterly net margins, which ranged from 2.3% to 30.8%, with a mean
of 16.6% and median of 16.6% for the Microprocessor Companies, from 3.9% to
17.6%, with a mean of 10.0% and a median of 9.8% for the Fab Semiconductor
Companies (data for Integrated Device Tech was not meaningful), and from
8.2% to 35.8%, with a mean of 20.4% and a median of 19.4% for the Fabless
Semiconductor Companies (data for Alliance Semiconductor and Cirrus Logic
was not meaningful), as compared to 8.8% for Cyrix.
Goldman Sachs also considered (A) estimated calendar year 1997 and
1998 price/earnings ratios, which ranged from 22.0x to 33.5x, with a mean
of 27.7x and a median of 27.7x for 1997 and 12.8x to 18.4x, with a mean of
15.6x and a median of 15.6x for 1998 for the Microprocessor Companies, from
15.4x to 38.3x, with a mean of 29.0x and a median of 28.2x for 1997 and
13.1x to 29.3x, with a mean of 19.2x and a median of 18.3x for 1998 for the
Fab Semiconductor Companies, and from 20.9x to 197.9x, with a mean of 42.6x
and a median of 33.0x for 1997 and 13.4x to 34.1x, with a mean of 21.4x and
a median of 20.5x for 1998 for the Fabless Semiconductor Companies, as
compared to 49.4x for 1997 and 17.0x for 1998 for Cyrix, (B) a five-year
earnings per share ("EPS") growth rate (provided by IBES) which ranged from
15.0% to 20.0%, with a mean of 17.5% and a median of 17.5% for the
Microprocessor Companies, from 12.0% to 35.0%, with a mean of 21.0% and a
median of 19.0% for the Fab Semiconductor Companies, and from 10.0% to
30.0%, with a mean of 24.7% and a median of 27.5% for the Fabless
Semiconductor Companies, as compared to 20.0% for Cyrix and (C) 1998
price/earnings ratios as a multiple of five-year EPS growth rate (provided
by IBES), which was 0.9x for each of the Microprocessor Companies, and
which ranged from 0.5x to 1.5x, with a mean of 1.0x and a median of 0.9x
for the Fab Semiconductor Companies, and from 0.5x to 1.6x, with a mean of
0.9x and a median of 0.9x for the Fabless Semiconductor Companies, as
compared to 0.9x for Cyrix.
Present Value of Implied Future Share Prices Analysis. Goldman Sachs
performed an analysis to determine the present value of implied future
Cyrix stock prices based on management's projections of earnings per share
for 1998, 1999 and 2000. Goldman Sachs calculated implied future prices for
shares of Cyrix Common Stock for each of the years 1998, 1999 and 2000
using price to earnings multiples ranging from 16.0x to 20.0x. These
implied future Cyrix share prices were then discounted to present value
using discount rates ranging from 15.0% to 30.0%. Using this analysis, the
present value of the implied future Cyrix share price based on projected
earnings for 1998 ranged from $16.70 to $22.19, based on projected earnings
for 1999 ranged from $15.09 to $22.67 and based on projected earnings for
2000 ranged from $13.93 to $23.66.
Selected Transactions Analysis. Goldman Sachs analyzed certain information
relating to approximately fifty selected transactions in the semiconductor
and semiconductor-related industry since 1986 (the "Selected
Transactions"), including the acquisition of Zilog, Inc. by Texas Pacific
Group, the acquisition of Tencor Instruments by KLA Instruments
Corporation, the acquisition of Lite-On Power Semiconductor Corporation by
Vishay Intertechnology, Inc. and the acquisition of Brooktree Corporation
by Rockwell International Corporation. Such analysis indicated that for the
Selected Transactions (i) levered aggregate consideration as a multiple of
latest twelve month ("LTM") sales ranged from 0.39x to 18.30x, with a mean
of 2.17x and a median of 1.48x, as compared to 2.80x for the consideration
received in the Merger, (ii) aggregate equity consideration as a multiple
of LTM net income ranged from 6.0x to 46.8x, with a mean of 25.5x and a
median of 22.0x (data for Cyrix was not meaningful) and (iii) levered
aggregate consideration as a multiple of LTM earnings before interest and
taxes ("EBIT") ranged from 4.4x to 44.9x, with a mean of 15.8x and median
of 12.5x (data for Cyrix was not meaningful).
Pro Forma Merger Analysis. Goldman Sachs prepared pro forma analyses of
the financial impact of the Merger. Using earnings estimates for Cyrix and
for NSC provided by IBES for the calendar years 1997 and 1998, Goldman
Sachs estimated the EPS of each of Cyrix and NSC, on a standalone basis,
and the EPS of the common stock of the combined companies on a pro forma
basis. Goldman Sachs performed this analysis based on a price of $21.25 per
share of Cyrix Common Stock (the per share price of Cyrix Common Stock on
July 25, 1997) and $33.56 per share of NSC Common Stock (the per share
price of NSC Common Stock on July 25, 1997). Goldman Sachs also performed
an analysis using a sensitivity
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range for EPS for calendar years 1997 and 1998 for Cyrix of 50% to 150% of
Cyrix's projected EPS and for EPS for calendar years 1997 and 1998 for NSC
of 90% to 110% of NSC's projected EPS. Based on such analyses, the proposed
transaction would be accretive to Cyrix's stockholders on an EPS basis in
all of the above scenarios in the calendar years 1997 and 1998.
Contribution Analysis. Goldman Sachs reviewed certain historical and
estimated future operating and financial information (including, among
other things, revenues, gross profit, EBIT and net income) for Cyrix, NSC
and the pro forma combined entity resulting from the Merger based on Cyrix
management's financial forecasts for Cyrix and based on publicly-available
research analyst forecasts for NSC. The analysis indicated that the Cyrix
stockholders would receive 10.4% of the outstanding common equity of the
combined companies after the Merger. Goldman Sachs also analyzed the
relative income statement contribution of Cyrix and NSC to the combined
companies on a pro forma basis before taking into account any of the
possible benefits that may be realized following the Merger based on actual
1996 and estimated years 1997 and 1998, based on financial data provided to
Goldman Sachs by Cyrix's management. This analysis indicated that in 1996,
1997 and 1998, respectively, Cyrix would have contributed 7.2%, 8.0% and
16.6%, respectively, to combined revenues, 6.7%, 7.0% and 11.0%,
respectively to combined gross profit, 1.5%, a not meaningful percentage
and 7.8%, respectively, to combined EBIT and 0.1%, a not meaningful
percentage and 5.0%, respectively, to combined net income.
Goldman Sachs also undertook an analysis of the stock price premiums paid
by acquirors in 72 recent acquisition transactions involving technology
companies. These premiums compare the acquired company's implied stock price
following announcement of an acquisition transaction to the acquired company's
stock price one day, one week, and 30 days before announcement of the
acquisition. However, Goldman Sachs did not consider this analysis to be
material to the overall financial analysis performed by Goldman Sachs in
rendering their fairness opinion because the premium paid in any transaction is
dependent on many variables specific to that transaction.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Selecting
portions of the analyses or of the summary set forth above, without considering
the analyses as a whole, could create an incomplete view of the processes
underlying Goldman Sachs' opinion. In arriving at its fairness determination,
Goldman Sachs considered the results of all such analyses. No company or
transaction used in the above analyses as a comparison is directly comparable to
Cyrix or NSC or the contemplated transaction. The analyses were prepared solely
for purposes of Goldman Sachs' providing its opinion to the Cyrix Board as to
the fairness of the Exchange Ratio pursuant to the Merger Agreement and do not
purport to be appraisals or necessarily reflect the prices at which businesses
or securities actually may be sold. Analyses based upon forecasts of future
results are not necessarily indicative of actual future results, which may be
significantly more or less favorable than suggested by such analyses. Because
such analyses are inherently subject to uncertainty, being based upon numerous
factors or events beyond the control of the parties or their respective
advisors, none of Cyrix, NSC, Goldman Sachs or any other person assumes
responsibility if future results are materially different from those forecast.
As described above, Goldman Sachs' opinion to the Cyrix Board was one of many
factors taken into consideration by the Cyrix Board in making its determination
to approve the Merger Agreement. The foregoing summary does not purport to be a
complete description of the analyses performed by Goldman Sachs and is qualified
by reference to the written opinion of Goldman Sachs set forth as Appendix B
hereto.
Goldman Sachs, as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements,
and valuations for estate, corporate and other purposes. Cyrix selected Goldman
Sachs as its financial advisor on the basis of its reputation as a nationally
recognized investment banking firm, its substantial experience in transactions
similar to the Merger and its familiarity with Cyrix.
Goldman Sachs also has provided certain other investment banking services
to Cyrix from time to time, including acting as managing underwriter of the
public offering of the 5 1/2% Convertible Subordinate Notes of
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Cyrix in May 1996. Goldman Sachs also has provided certain investment banking
services to NSC from time to time, and may provide investment banking services
to NSC in the future.
Pursuant to a letter agreement dated September 13, 1996 (the "Engagement
Letter"), Cyrix engaged Goldman Sachs to act as its financial advisor in
connection with the contemplated transaction. Pursuant to the terms of the
Engagement Letter, Cyrix has agreed to pay Goldman Sachs upon consummation of
the Merger a transaction fee equal to 1.125% of the total consideration paid for
the equity securities of Cyrix (including amounts paid to holders of options,
warrants and convertible securities), plus the principal amount of all
indebtedness for borrowed money as set forth on the most recent consolidated
balance sheet of Cyrix prior to the consummation of the Merger. The value of the
NSC Common Stock to be received by holders of Cyrix Common Stock, for purposes
of calculating the transaction fee, will be determined by the average of the
last sales prices for the NSC Common Stock on the five trading days ending five
days prior to the consummation of the Merger. Cyrix also has agreed to reimburse
Goldman Sachs for its reasonable out-of-pocket expenses, including attorney's
fees, and to indemnify Goldman Sachs against certain liabilities, including
certain liabilities under the federal securities laws.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Cyrix Board with respect to the
Merger and the Merger Agreement, Cyrix stockholders should be aware that certain
executive officers and directors of Cyrix (or their affiliates) have certain
interests in the proposed Merger that differ from or are in addition to the
interests of Cyrix stockholders generally. The Cyrix Board was aware of these
interests and considered them in approving the Merger Agreement and the
performance by Cyrix of its obligations thereunder.
Cyrix Stock Options. As a result of the Merger, each Cyrix Stock Option
granted under any Cyrix benefit plans which is outstanding and unexercised
immediately prior to the Effective Date will cease to represent a right to
acquire shares of Cyrix Common Stock and will be converted into an NSC Stock
Option. The number of shares of NSC Common Stock to be subject to each NSC Stock
Option will be equal to the product of the number of shares of Cyrix Common
Stock subject to the original Cyrix Stock Option multiplied by the Exchange
Ratio and rounded to the nearest whole share, and the exercise price per share
of NSC Common Stock under each NSC Stock Option will be equal to the quotient of
the exercise price per share of Cyrix Common Stock under the original Cyrix
Stock Option divided by the Exchange Ratio and rounded to the nearest whole
cent. The terms and conditions of the NSC Stock Option, including vesting
provisions, will be the same as the original Cyrix Stock Option, except that all
references to Cyrix will be deemed to be references to NSC. The adjustment
provided in the Merger Agreement with respect to any Cyrix Stock Options which
are "incentive stock options" (as defined in Section 422 of the Code) will be
and is intended to be effected in a manner which is consistent with Section
424(a) of the Code. Prior to the Effective Date, NSC and Cyrix will take all
action necessary to permit the adjustment set forth in this paragraph. NSC will
reserve for issuance a sufficient number of shares of NSC Common Stock for
delivery with respect to the converted Cyrix Stock Options. As soon as
practicable after the Effective Date, NSC will file a registration statement on
Form S-8 (or any successor or appropriate form) with respect to the shares of
NSC Common Stock subject to such options. See "THE MERGER
AGREEMENT -- Conversion of Cyrix Securities."
As of the Record Date, 3,397,847 shares of Cyrix Common Stock were issuable
upon the exercise of outstanding Cyrix Stock Options. The average exercise price
per share of all Cyrix Stock Options outstanding as of the Record Date is $20.67
per share. Assuming the exercise of all such options (whether vested or
unvested) immediately after the Effective Date, the holders thereof would hold
approximately 1.9% of all NSC Common Stock issued and outstanding immediately
after the Effective Date (without including any NSC Common Stock otherwise held
by such holders). The executive officers and directors of Cyrix currently hold
an aggregate of 1,352,333 Cyrix Stock Options at an average price per share of
$20.86 per share, which Cyrix Stock Options will be converted on the Effective
Date.
Employment Agreements. In connection with the proposed Merger, NSC has
entered into an employment agreement with James W. Swent, III, Senior Vice
President and acting Chief Executive Officer of Cyrix, dated July 28, 1997 (the
"Swent Employment Agreement"), and has also entered into employment
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agreements with certain other employees of Cyrix to ensure continuity of Cyrix's
management following the Merger and to retain the benefits of such employees'
technological expertise. Under the Swent Employment Agreement, Mr. Swent will be
employed by NSC for the period commencing on the Effective Date through the end
of the 13th month after the Effective Date, and he will receive a base salary at
least equal to the base salary paid by Cyrix immediately preceding the date of
the Swent Employment Agreement and a guaranteed annual bonus, payable on
February 15, 1998, at least equal to the annual target bonus most recently
established by Cyrix prior to the date of the Swent Employment Agreement. If Mr.
Swent remains employed by NSC through the end of the 13th month following the
Effective Date, or if he leaves voluntarily before that time as a result of
being assigned duties and responsibilities not of an executive nature, he will
be paid a bonus equal to 300% of his annual base salary and guaranteed bonus as
of such date. Mr. Swent will be entitled to participate in all NSC benefit plans
and programs generally available for similarly situated employees.
In the event Mr. Swent voluntarily terminates his employment (other than as
a result of being assigned duties and responsibilities not of an executive
nature) or if his employment is terminated for cause (as defined in the Swent
Employment Agreement), he will receive his base salary through the date of
termination and all other benefits to which he is entitled. If Mr. Swent is
terminated by NSC prior to the end of the term (other than for cause) or if his
employment terminates by reason of death or disability, NSC will pay Mr. Swent
(or his estate or beneficiary), in addition to amounts described in the
preceding sentence, (i) a lump sum severance equal to 300% of his annual base
salary and guaranteed annual bonus, less the present value of any other
severance benefits, (ii) continued medical coverage through the end of the term
or until Mr. Swent is employed by another entity providing health coverage and
(iii) any unpaid base salary and guaranteed annual bonus through the remainder
of the term of the Swent Employment Agreement. NSC will also provide Mr. Swent
with reimbursement payments for any California taxes and any excise taxes under
Section 4999 of the Code due in connection with payments made pursuant to the
Swent Employment Agreement.
Under the Swent Employment Agreement, Mr. Swent is subject to (i) a
covenant to keep confidential certain information obtained in the course of his
employment, (ii) a covenant not to compete with NSC or Cyrix for one year after
the later of the end of his employment with NSC or the end of the 13th month
following the Effective Date and (iii) a covenant not to solicit employees of
Cyrix, NSC or their subsidiaries or interfere with the employment relationship
between Cyrix or NSC and any such employee or interfere in any business
relationship of Cyrix or NSC for one year following the end of his employment
with NSC.
NSC has entered into employment agreements with Cyrix executive officers
Mark Bluhm, Vice President of Strategic Planning and Business Development, Nancy
Dechaud, Vice President of Operations, and Kevin McDonough, Senior Vice
President of Engineering, pursuant to which such officers will be employed by
NSC for the period commencing on the Effective Date through the 18th month
following the Effective Date, and will receive base salaries at least equal to
the base salaries paid to such officers by Cyrix immediately preceding July 25,
1997. If Ms. Dechaud or Mr. McDonough remains employed by NSC through the end of
the 18-month term, such officer will be paid a retention bonus equal to 400% of
the officer's annual base salary and bonus as of such date. Mr. Bluhm would
receive a retention bonus equal to 400% of his base salary if he remains
employed through the end of the term. Half of such retention bonus payments
would be paid at the end of the employment term and half would be paid 12 months
later. If, prior to the end of the 18-month term, such officer voluntarily
terminates employment, or if such officer's employment is terminated by NSC for
cause (as defined in the applicable employment agreement) or as a result of
death or disability, such officer will receive base salary through the date of
termination and all other benefits to which the officer is entitled. If such
officer is terminated by NSC prior to the end of the 18-month term (other than
for cause, death or disability), NSC will pay such officer, in addition to the
amounts described in the preceding sentence, (i) severance equal to 400% of such
officer's annual base salary and target bonus for the year in which termination
occurs, less the present value of any other severance benefits, and (ii)
continued medical coverage through the end of the 18-month term or until such
officer is employed by another entity providing health coverage. The severance
benefits will be paid in two parts, half to be paid at termination and half to
be paid 12 months later. If any payments or benefits provided to such officer
would be subject to the excise tax under Section 4999 of the Code, then the
amounts payable to such officer shall be reduced to the maximum amount payable
without resulting in such excise tax ("Excise Tax Cap"). Under the employment
agreements, such
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officers are subject to (i) a covenant to keep confidential certain information
obtained in the course of their employment, (ii) a covenant not to compete with
NSC or Cyrix for 12 months after the end of employment with NSC and (iii) a
covenant not to solicit or assist in the soliciting of employees of Cyrix or NSC
or interfere in any business relationship of NSC or Cyrix for 12 months
following termination of employment (the "Employee Covenants").
NSC has also entered into employment agreements with Robert Maher, III,
Vice President of Engineering, and Kenneth Edoff, Senior Vice President of
Sales. Mr. Maher's agreement covers employment for the 18 months following the
Effective Date and provides for a retention bonus equal to 200% of annual base
salary at the end of the 18th month following the Effective Date and for
severance benefits equal to (i) 200% of annual base salary and target bonus,
less the present value of any other severance benefits, and (ii) continued
medical coverage through the earlier of the end of the 18-month term or until
Mr. Maher is employed by another entity providing health coverage if Mr. Maher's
employment is terminated by NSC. Mr. Maher's bonus and severance payments will
be subject to an Excise Tax Cap, if applicable, and he is subject to the
Employee Covenants. Mr. Edoff's agreement covers employment until February 3,
1998 and provides for a retention bonus equal to 50% of annual base salary if
certain performance quotas are achieved or if Mr. Edoff is terminated by NSC
other than for cause. Mr Edoff's agreement provides for certain relocation
payments should he relocate to California by June 30, 1998 and subjects Mr.
Edoff to the Employee Covenants other than the covenant not to compete with NSC
following termination of employment.
Indemnification. The Merger Agreement provides for indemnification of
officers, directors and employees of Cyrix and its subsidiaries with respect to
the Merger and related transactions and other matters occurring through the
Effective Date. See "THE MERGER AGREEMENT -- Indemnification."
EFFECTS OF THE FIXED EXCHANGE RATIO
As a result of the Merger, each outstanding share of Cyrix Common Stock
will be converted into 0.825 fully paid and nonassessable shares of NSC Common
Stock. See "THE MERGER AGREEMENT -- Conversion of Cyrix Securities." Because the
Exchange Ratio is fixed and will not increase or decrease due to fluctuations in
the market price of either NSC Common Stock or Cyrix Common Stock, the specific
value of the consideration to be received by Cyrix stockholders in the Merger
will depend on the market price of NSC Common Stock at the Effective Date. In
the event that the market price of NSC Common Stock decreases or increases prior
to the Effective Date, the market value at the Effective Date of NSC Common
Stock to be received by Cyrix stockholders in the Merger would correspondingly
decrease or increase. The market prices of NSC Common Stock and Cyrix Common
Stock as of a recent date are set forth herein under "COMPARATIVE PER SHARE
PRICES." Cyrix stockholders are advised to obtain recent market quotations for
NSC Common Stock and Cyrix Common Stock. No assurance can be given as to the
market prices of NSC Common Stock or Cyrix Common Stock at any time before the
Effective Date or as to the market price of NSC Common Stock at any time
thereafter. See "COMPARATIVE PER SHARE PRICES."
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
General. The following is a summary description of the material federal
income tax consequences of the Merger. This summary is not a complete
description of all of the consequences of the Merger and, in particular, does
not address all federal income tax consequences of the Merger that may be
relevant to particular holders of Cyrix Common Stock in light of their
particular circumstances, including holders that are subject to special tax
rules such as dealers in securities, foreign persons, mutual funds, insurance
companies, tax-exempt entities and holders who do not hold their Cyrix Common
Stock as capital assets or who acquired their Cyrix Common Stock pursuant to an
employee stock option or otherwise as compensation. In addition, no information
is provided herein with respect to the tax consequences of the Merger under
applicable foreign, state or local laws. The following discussion is based on
the current provisions of the Code, existing regulations thereunder, current
administrative rulings of the Internal Revenue Service and court decisions,
without consideration of the particular facts or circumstances of any holder of
Cyrix Common Stock. CONSEQUENTLY,
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EACH HOLDER OF CYRIX COMMON STOCK IS ADVISED TO CONSULT HIS OR HER TAX ADVISOR
AS TO THE SPECIFIC TAX CONSEQUENCES TO HIM OR HER OF THE MERGER.
The Merger. The obligation of NSC and Cyrix to effect the Merger is
conditioned upon the delivery of an opinion to NSC from Wachtell, Lipton, Rosen
& Katz, its counsel, and an opinion to Cyrix from Vinson & Elkins, L.L.P., its
counsel, each dated as of the Effective Date, based upon certain customary
representations and assumptions, substantially to the effect that for federal
income tax purposes the Merger constitutes a reorganization within the meaning
of Section 368(a) of the Code. In addition, Wachtell, Lipton, Rosen & Katz and
Vinson & Elkins, L.L.P. have delivered opinions to NSC and Cyrix, respectively,
dated the date of this Proxy Statement/Prospectus, to the effect that, except as
otherwise indicated and absent any change in the facts or representations
material to these opinions, the discussion set forth under the caption "THE
MERGER -- Material Federal Income Tax Consequences" represents such firms'
opinions as to the material federal income tax consequences of the Merger under
currently applicable law.
Assuming the Merger qualifies as a reorganization under Section 368(a) of
the Code, the following federal income tax consequences of the Merger will
result:
(i) no gain or loss will be recognized by NSC or by Cyrix as a result
of the Merger;
(ii) no gain or loss will be recognized by Cyrix stockholders upon
their exchange of Cyrix Common Stock for NSC Common Stock, except that a
Cyrix stockholder who receives cash proceeds in lieu of a fractional share
interest in NSC Common Stock will recognize a gain or loss equal to the
difference between the cash received and the tax basis allocated to the
fractional share interest;
(iii) the tax basis of the NSC Common Stock received by a Cyrix
stockholder in exchange for his or her Cyrix Common Stock will be the same
as such stockholder's tax basis in the Cyrix Common Stock surrendered in
such exchange therefor (reduced by any tax basis allocable to a fractional
share interest for which cash is received); and
(iv) the holding period of the NSC Common Stock received by a Cyrix
stockholder will include the period during which the Cyrix Common Stock
surrendered in exchange therefor was held (provided that such Cyrix Common
Stock was held by such Cyrix stockholder as a capital asset at the
Effective Date).
ACCOUNTING TREATMENT
It is anticipated that the Merger will be accounted for as a pooling of
interests in conformity with GAAP. Under such method of accounting, holders of
Cyrix Common Stock will be deemed to have combined their existing voting common
stock interest with that of holders of NSC Common Stock by exchanging their
shares for shares of NSC Common Stock. Accordingly, the book value of the
assets, liabilities and stockholders' equity of Cyrix, as reported on its
consolidated balance sheet, will be carried over to the consolidated balance
sheet of NSC and no goodwill will be recorded. NSC will be able to include in
its consolidated income the consolidated income of both companies for the entire
fiscal year in which the Merger occurs; however, certain expenses incurred to
effect the Merger must be recorded as current charges in the statement of
operations of the combined enterprise.
The unaudited pro forma financial information contained in this Proxy
Statement/Prospectus has been prepared using the pooling of interests accounting
method to account for the Merger. See "SELECTED HISTORICAL AND PRO FORMA
COMBINED FINANCIAL DATA" and "UNAUDITED PRO FORMA COMBINED FINANCIAL
STATEMENTS."
EFFECT ON EMPLOYEE BENEFIT PLANS
The Merger Agreement provides that all employment, severance, consulting
and other compensation contracts between Cyrix or any of its subsidiaries and
any current or former director, officer or employee, and all provisions for
vested benefits or other vested amounts earned or accrued through the Effective
Date under Cyrix's benefit plans, each as of the date of the Merger Agreement,
will be honored in accordance with their
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respective terms except for changes which are permitted by the Merger Agreement
or are otherwise agreed to by the parties thereto.
For a period of twelve months after the Merger, NSC will cause officers and
employees of Cyrix and its subsidiaries to be provided, generally, with employee
benefits, including, without limitation, pension benefits, health and welfare
benefits, and severance arrangements, on terms and conditions in the aggregate
that are no less favorable than those provided under the benefit plans
maintained by Cyrix as of the date of the Merger Agreement. Pursuant to the
Merger Agreement, officers and employees of Cyrix and its subsidiaries will be
credited with their service with Cyrix and its subsidiaries for purposes of
eligibility to participate and vesting with respect to employee benefit plans of
NSC and the Surviving Corporation. Individual eligibility for participation in
the medical plans of NSC or the Surviving Corporation will not be subject to any
exclusions for preexisting conditions other than any such exclusions provided in
the medical plans of Cyrix or its subsidiaries, and amounts paid before the
Effective Date by directors, officers and employees under medical plans of Cyrix
and its subsidiaries will be taken into account after the Effective Date in
applying deductible and out-of-pocket limits applicable under the medical plans
of NSC and the Surviving Corporation to the same extent as if such amounts had
been paid under the medical plans of NSC and the Surviving Corporation.
NSC has set forth its intent in the Merger Agreement to permit employees of
Cyrix and its subsidiaries to participate in the incentive and compensation
plans of NSC on a basis equivalent to similarly situated employees of NSC.
If the Effective Date occurs subsequent to December 31, 1997, Cyrix has
agreed to terminate the Cyrix Employee Stock Purchase Plan by having its Board
of Directors amend the stock purchase plan to terminate at the earlier of (i)
the end of the current stock offering period under the stock purchase plan or
(ii) immediately prior to the Effective Date. If the Effective Date occurs on or
prior to December 31, 1997, the current stock offering period shall continue
through December 31, 1997, and any options issued under the stock purchase plan
which are outstanding and unexercised immediately prior to the Effective Date
shall be converted into options to purchase the number of shares of NSC Common
Stock in the same manner as the other Cyrix stock options. See "THE MERGER
AGREEMENT -- Employment Arrangements and Benefit Plans" and "-- Conversion of
Cyrix Securities."
REGULATORY APPROVAL
Antitrust. Pursuant to the requirements of the HSR Act, on August 8, 1997,
Cyrix and NSC each filed a Notification and Report Form for review under the HSR
Act with the Federal Trade Commission (the "FTC") and the Antitrust Division of
the Department of Justice (the "Antitrust Division"). The waiting period under
the HSR Act with respect to such filing expired on September 7, 1997.
NSC and Cyrix do not believe that any additional governmental filings in
the United States, other than the Certificate of Merger, are required with
respect to the consummation of the Merger. Even after the HSR Act waiting period
has expired, the FTC or the Antitrust Division or certain private parties could
take such action under the antitrust laws as they deem necessary or desirable,
including seeking divestiture of substantial assets of Cyrix or NSC.
Consummation of the Merger is conditioned upon, among other things, the absence
of any preliminary or permanent injunction or other order issued by any court or
other judicial or administrative body of competent jurisdiction which prohibits
or prevents the consummation of the Merger.
NSC and Cyrix do not believe that consummation of the Merger will result in
a violation of any applicable antitrust laws. However, there can be no assurance
that a challenge to the Merger on antitrust grounds will not be made or, if such
a challenge is made, of the result.
Foreign Approvals. NSC and Cyrix conduct operations in a number of foreign
countries where regulatory filings or approvals may be required in connection
with the consummation of the Merger. NSC and Cyrix believe that all such
material filings and approvals have been made or obtained, or will be made or
obtained, as the case may be.
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RESALES OF NSC CAPITAL STOCK RECEIVED IN THE MERGER
The NSC Common Stock issued pursuant to the Merger will be freely
transferable under the Securities Act, except for shares issued to any holder of
Cyrix Common Stock who may be deemed to be an affiliate of NSC for purposes of
Rule 144 promulgated under the Securities Act ("Rule 144") or an affiliate of
Cyrix for purposes of Rule 145 promulgated under the Securities Act ("Rule 145")
(each an "Affiliate"). Affiliates will include persons (generally executive
officers, directors and 10% stockholders) who control, are controlled by, or are
under common control with (i) NSC or Cyrix at the time of the Special Meeting or
(ii) NSC at or after the Effective Date.
Rules 144 and 145 will restrict the sale of NSC Common Stock received in
the Merger by Affiliates and certain of their family members and related
entities. Generally, for one year following the Effective Date, those persons
who are Affiliates of Cyrix at the time of the Special Meeting, provided they
are not Affiliates of NSC at or following the Effective Date, may publicly
resell any NSC Common Stock received by them in the Merger, subject to certain
limitations as to, among other things, the amount of NSC Common Stock sold by
them in any three-month period and as to the manner of sale. After the one-year
period, such Affiliates may resell their shares without such restrictions so
long as there is adequate current public information with respect to NSC as
required by Rule 144. Persons who become Affiliates of NSC prior to, at or after
the Effective Date, may publicly resell the NSC Common Stock received by them in
the Merger subject to similar limitations and subject to certain filing
requirements specified in Rule 144.
The ability of Affiliates to resell shares of NSC Common Stock received in
the Merger under Rule 144 or 145 as summarized herein generally will be subject
to NSC's having satisfied its reporting requirements under the Exchange Act for
specified periods prior to the time of sale. Affiliates also would be permitted
to resell NSC Common Stock received in the Merger pursuant to an effective
registration statement under the Securities Act or available exemption from the
Securities Act registration requirements.
This Proxy Statement/Prospectus does not cover any resales of NSC Common
Stock received by persons who may be deemed to be Affiliates of NSC or Cyrix in
the Merger.
Commission guidelines regarding qualifying for the pooling of interests
method of accounting also limit sales of shares of the acquiring and acquired
company by affiliates of either company in a business combination. Commission
guidelines indicate further that the pooling of interests method of accounting
will generally not be challenged on the basis of sales by affiliates of the
acquiring or acquired company if they do not dispose of any of the shares of the
acquired company they own or shares of the acquired company they receive in
connection with a merger during the period beginning 30 days before the merger
and ending when financial results covering at least 30 days of post-merger
operations of the combined entity have been published. Cyrix has agreed in the
Merger Agreement to identify each person who is an Affiliate (for purposes of
Rule 145 and for purposes of qualifying the Merger for pooling of interests
accounting treatment) of Cyrix and to use its best efforts to obtain and deliver
to NSC a written agreement from each such Affiliate intended to ensure
compliance with the Securities Act and preserve the ability to treat the Merger
as a pooling of interests. See "THE MERGER AGREEMENT -- Other Covenants."
NSC has agreed in the Merger Agreement that if the Effective Date of the
Merger is less than 30 days prior to the end of NSC's fiscal quarter, it will
use reasonable efforts to prepare and publicly release as soon as practicable
following the end of the first month ending at least 30 days after the Effective
Date, a report including at least 30 days of combined operations of NSC and
Cyrix; provided, however, that NSC need not prepare and release such results if,
in its good faith judgment, it determines that such release would not be in the
best interests of NSC.
STOCK EXCHANGE LISTING
It is a condition to consummation of the Merger that the shares of NSC
Common Stock to be issued in connection with the Merger be authorized for
listing on the NYSE, subject to official notice of issuance.
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APPRAISAL RIGHTS
Under the DGCL, the holders of Cyrix Common Stock are not entitled to any
appraisal rights with respect to the Merger.
THE MERGER AGREEMENT
GENERAL
The following is a description of the material terms of the Merger
Agreement. Such description does not, however, purport to be complete and is
qualified in its entirety by reference to the Merger Agreement, a copy of which
is attached hereto as Appendix A and incorporated herein by reference.
Stockholders of Cyrix are urged to read the Merger Agreement in its entirety.
THE MERGER
The Merger Agreement provides that, subject to the requisite approval of
the Merger by holders of Cyrix Common Stock and the satisfaction or waiver of
the other conditions to the Merger, Sub will be merged into Cyrix, whereupon the
separate existence of Sub will cease and Cyrix will continue as the Surviving
Corporation under the name "Cyrix Corporation." The Certificate of Incorporation
and By-laws of Sub in effect immediately prior to the Effective Date will be the
Certificate of Incorporation and By-laws of the Surviving Corporation. The Board
of Directors of Sub will be the Board of Directors of the Surviving Corporation.
The officers of Cyrix will be the officers of the Surviving Corporation.
EFFECTIVE DATE
The Merger will become effective when a properly executed Certificate of
Merger is duly filed with the Secretary of State of Delaware, or at such later
date and time as may be specified therein. The filing of the Certificate of
Merger will be made as soon as practicable after the closing of the transactions
contemplated by the Merger Agreement.
CONVERSION OF CYRIX SECURITIES
As of the Effective Date:
(i) each share of capital stock of Cyrix held by Cyrix or any
subsidiary of Cyrix as treasury stock or owned by NSC, Sub or any other
subsidiary of NSC will be cancelled;
(ii) each remaining outstanding share of Cyrix Common Stock will be
converted into 0.825 shares of NSC Common Stock, and one NSC Right will be
issued together with and will attach to each share of NSC Common Stock
issued in the Merger; and
(iii) each outstanding share of capital stock of Sub will be converted
into one share of common stock, $0.01 par value, of the Surviving
Corporation.
Each Cyrix Stock Option granted under any Cyrix benefit plans which is
outstanding and unexercised immediately prior to the Effective Date will cease
to represent a right to acquire shares of Cyrix Common Stock and will be
converted into an NSC Stock Option. The number of shares of NSC Common Stock to
be subject to each NSC Stock Option will be equal to the product of the number
of shares of Cyrix Common Stock subject to the original Cyrix Stock Option
multiplied by the Exchange Ratio and rounded to the nearest whole share, and the
exercise price per share of NSC Common Stock under each NSC Stock Option will be
equal to the quotient of the exercise price per share of Cyrix Common Stock
under the original Cyrix Stock Option divided by the Exchange Ratio and rounded
to the nearest whole cent. The terms and conditions of the NSC Stock Option,
including vesting provisions, will be the same as the original Cyrix Stock
Option, except that all references to Cyrix will be deemed to be references to
NSC. The adjustment provided in the Merger Agreement with respect to any Cyrix
Stock Options which are "incentive stock options" (as defined in Section 422 of
the Code) will be and is intended to be effected in a manner which is consistent
with Section 424(a) of the Code. Prior to the Effective Date, NSC and Cyrix will
take all action necessary to permit the adjustment set forth in this paragraph.
NSC will reserve for issuance a sufficient number of shares
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of NSC Common Stock for delivery with respect to the converted Cyrix Stock
Options. As soon as practicable after the Effective Date, NSC will file a
registration statement on Form S-8 (or any successor or appropriate form) with
respect to the shares of NSC Common Stock subject to such options.
Cyrix's 5 1/2% Convertible Subordinated Notes due June 1, 2001 (the "Cyrix
Notes") outstanding immediately prior to the Effective Date will be assumed by
NSC and remain outstanding thereafter as an obligation of NSC and the Surviving
Corporation as co-obligors, and, from and after the Effective Date, the holders
of the Cyrix Notes will have the right to convert such Cyrix Notes into the
number of shares of NSC Common Stock receivable in the Merger by a holder of the
number of shares of Cyrix Common Stock into which such Cyrix Notes could have
been converted immediately prior to the Merger. NSC will enter into a
supplemental indenture with respect to such obligations in accordance with the
terms of the indenture pursuant to which the Cyrix Notes were issued.
See "COMPARISON OF STOCKHOLDER RIGHTS."
FRACTIONAL SHARES
No fractional shares of NSC Common Stock will be issued in connection with
the Merger. In lieu of any such fractional share, each Cyrix stockholder who
would otherwise have been entitled to a fraction of a share of NSC Common Stock
upon surrender of Cyrix Certificates for exchange will be paid upon such
surrender cash (without interest) in an amount equal to the product of the
closing price of NSC Common Stock on the NYSE Composite Tape on the Effective
Date multiplied by the fractional interest such Cyrix stockholder would
otherwise be entitled to receive. For purposes of paying such cash in lieu of
fractional shares, all Cyrix Certificates surrendered for exchange on the same
Transmittal Letter will be aggregated, with the holder thereof receiving the
aggregate whole number of shares of NSC Common Stock, and no Cyrix stockholder
will receive cash in lieu of fractional shares in an amount equal to or greater
than the value of one full share of NSC Common Stock with respect to such
surrendered Cyrix Certificates.
SURRENDER AND PAYMENT
The Merger Agreement provides that prior to the Effective Date, NSC will
select Boston EquiServe L.P., or such other person reasonably satisfactory to
Cyrix, to act as the Exchange Agent for the Merger. As soon as practicable after
the Effective Date, NSC will make available, and each holder of Cyrix Common
Stock will be entitled to receive, upon surrender to the Exchange Agent of Cyrix
Certificates, certificates representing the number of shares of NSC Common Stock
into which such shares of Cyrix Common Stock are converted in the Merger, and
cash in consideration of fractional shares, as described above. Such shares of
NSC Common Stock issued in the Merger shall be deemed to have been issued at the
Effective Date.
No dividends or other distributions that are declared or made on NSC Common
Stock will be paid to persons entitled to receive certificates representing NSC
Common Stock until such persons surrender their Cyrix Certificates. Upon such
surrender, there will be paid to the person in whose name the certificates
representing such NSC Common Stock will be issued any dividends or other
distributions which will have become payable with respect to such NSC Common
Stock in respect of a record date after the Effective Date. In no event will the
person entitled to receive such dividends be entitled to receive interest on
such dividends. In the event that any certificates representing shares of NSC
Common Stock are to be issued in a name other than that in which the Cyrix
Certificates surrendered in exchange therefor are registered, it will be a
condition of such exchange that the person requesting such exchange pay to the
Exchange Agent any transfer or other taxes required by reason of the issuance of
certificates for such shares of NSC Common Stock in a name other than that of
the registered holder of the Certificate surrendered, or will establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
applicable. Notwithstanding the foregoing, none of the Exchange Agent, NSC,
Cyrix or Sub will be liable to any Cyrix stockholder for any shares of NSC
Common Stock or dividends thereon delivered to a public official pursuant to any
applicable escheat laws.
DETAILED INSTRUCTIONS, INCLUDING A TRANSMITTAL LETTER, WILL BE MAILED TO
HOLDERS OF CYRIX COMMON STOCK PROMPTLY FOLLOWING THE EFFECTIVE DATE AS TO THE
METHOD OF EXCHANGING CYRIX CERTIFICATES FORMERLY REPRESENTING SHARES OF CYRIX
COMMON STOCK FOR CERTIFICATES REPRESENTING SHARES OF NSC COMMON STOCK.
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HOLDERS OF CYRIX COMMON STOCK SHOULD NOT SEND CYRIX CERTIFICATES REPRESENTING
THEIR SHARES TO CYRIX OR TO THE EXCHANGE AGENT PRIOR TO RECEIPT OF THE
TRANSMITTAL LETTER.
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains various representations and warranties of
NSC, Sub and Cyrix relating to, among other things: (i) organization, corporate
power and good standing and similar corporate matters; (ii) capitalization;
(iii) subsidiaries; (iv) authorization, execution, delivery, performance and
enforceability of the Merger Agreement and the transactions contemplated
thereby, including the Merger; (v) reports filed with the Commission and
financial statements; (vi) absence of certain changes or events; (vii)
litigation; (viii) statements in the Registration Statement and this Proxy
Statement/Prospectus; (ix) certain actions with regard to state laws; (x)
compliance with applicable laws; and (xi) tax and accounting matters. NSC and
Sub have made an additional representation and warranty relating to NSC's
license with Intel. Cyrix has made additional representations and warranties
relating to, among other things: (i) labor matters; (ii) employee benefit plans;
(iii) certain provisions of the DGCL; (iv) receipt of a fairness opinion; (v)
its financial advisor; (vi) liabilities; (vii) taxes; (viii) certain agreements;
(ix) inventory; (x) intellectual property; (xi) product liability claims; (xii)
environmental laws; and (xiii) authorized stock.
CONDUCT OF BUSINESS PENDING THE MERGER
The Merger Agreement provides that, prior to the Effective Date, unless NSC
otherwise agrees in writing, Cyrix will, and will cause its subsidiaries to,
carry on their respective businesses in the usual, regular and ordinary course
in substantially the same manner as previously conducted, and will, and will
cause its subsidiaries to, use their diligent efforts to preserve intact their
present business organizations, keep available the services of their present
officers and employees and preserve their relationships with customers,
suppliers and others having business dealings with them to the end that their
goodwill and ongoing businesses will be unimpaired at the Effective Date. Cyrix
will, and will cause its subsidiaries to: (i) maintain insurance coverages and
their books, accounts and records in the usual manner consistent with prior
practices; (ii) comply in all material respects with all laws, ordinances and
regulations of governmental entities applicable to Cyrix and its subsidiaries;
(iii) maintain and keep its properties and equipment in good repair, working
order and condition, ordinary wear and tear excepted; and (iv) perform in all
material respects its obligations under all contracts and commitments to which
it is a party or by which it is bound, in each case other than where the failure
to so maintain, comply or perform, either individually or in the aggregate,
would not have a Material Adverse Effect (as defined herein) on Cyrix. As used
herein, "Material Adverse Effect" means a material adverse effect on the
business, assets, liabilities, financial condition or results of operations of a
company and its subsidiaries, taken as a whole, subject to certain specified
exceptions (which may differ depending upon the company).
Except as required or permitted by the Merger Agreement, Cyrix will not and
will not propose to: (i) sell or pledge or agree to sell or pledge any capital
stock owned by it in any of its subsidiaries; (ii) amend its certificate of
incorporation or by-laws; (iii) split, combine or reclassify its outstanding
capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of Cyrix
capital stock, or declare, set aside or pay any dividend or other distribution
payable in cash, stock or property; or (iv) directly or indirectly redeem,
purchase or otherwise acquire or agree to redeem, purchase or otherwise acquire
any shares of Cyrix capital stock.
Cyrix will not and will not permit its subsidiaries to: (i) except as
permitted by the Merger Agreement or previously disclosed to NSC, issue, deliver
or sell or agree to issue, deliver or sell any additional shares of, or rights
of any kind to acquire any shares of, its capital stock of any class, any
Indebtedness (as defined in the Merger Agreement) or any options, rights or
warrants to acquire, or securities convertible into, shares of capital stock
other than issuances of Cyrix Common Stock pursuant to the exercise of Cyrix
Stock Options or the conversion of Cyrix Notes outstanding on the date of the
Merger Agreement; (ii) acquire, lease or dispose of, or agree to acquire, lease
or dispose of, any capital assets or any other assets other than in the ordinary
course of business; (iii) except as previously disclosed to NSC, incur
additional Indebtedness or encumber or
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grant a security interest in any asset or enter into any other material
transaction other than in each case in the ordinary course of business; (iv)
acquire or agree to acquire by merging or consolidating with, by purchasing a
substantial equity interest in, or by any other manner, any business or any
corporation, partnership, association or other business organization or division
thereof, in each case in this clause (iv) which are material, individually or in
the aggregate, to Cyrix and its subsidiaries, taken as a whole; or (v) enter
into any contract, agreement, commitment or arrangement with respect to any of
the foregoing.
Except as required to comply with applicable law or as provided in the
Merger Agreement, Cyrix will not and will not permit its subsidiaries to: (i)
adopt, enter into, terminate or amend any benefit plans, agreements or other
arrangements for the benefit or welfare of any current or former director,
officer, employee or independent contractor; (ii) increase in any manner the
compensation or fringe benefit of any director, officer, employee or independent
contractor (other than in the ordinary course of business consistent with past
practice, but in no event in excess of 3%); (iii) except as previously disclosed
to NSC, pay any benefit not provided under any existing plan or arrangement;
(iv) except as previously disclosed to NSC, grant any awards under any
compensation plan or arrangement or benefit plan (other than payments of bonuses
in the ordinary course pursuant to Cyrix's Management-By-Objective bonus plan or
arrangement); (v) take any action to fund or in any other way secure the payment
of compensation or benefits under any benefit plan, agreement or arrangement; or
(vi) adopt, enter into, amend or terminate any contract, agreement, commitment,
or arrangement to do any of the foregoing.
Cyrix will not, nor will it permit any of its subsidiaries to: (i) make any
investments in non-investment grade securities; provided, however, that Cyrix
will be permitted to create new wholly owned subsidiaries in the ordinary course
of business; (ii) take any action, whether before or after the Effective Date,
which would disqualify the Merger as a pooling of interests for accounting
purposes or as a "reorganization" within the meaning of Section 368(a) of the
Code; or (iii) except as required by law or GAAP, change any of its significant
accounting policies or make or rescind any express or deemed election relating
to taxes, settle or compromise any claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to taxes, or change
any of its methods of reporting income or deductions for federal income tax
purposes from those employed in the preparation of the federal income tax
returns for the last taxable year.
Prior to the Effective Date, unless Cyrix otherwise agrees in writing: (i)
NSC will, and will cause its subsidiaries to, carry on their respective
businesses in the usual, regular and ordinary course in substantially the same
manner as conducted prior to the date of the Merger Agreement, and will, and
will cause its significant subsidiaries to, use their diligent efforts to
preserve intact their present business organizations, keep available the
services of their present officers and employees and preserve their
relationships with customers, suppliers and others having business dealings with
them to the end that their goodwill and ongoing businesses will be unimpaired at
the Effective Date; provided, however, that nothing contained in the Merger
Agreement will prevent NSC from creating new wholly owned subsidiaries in the
ordinary course of business, as long as the creation of such subsidiaries
(either alone or in the aggregate) will not have a Material Adverse Effect on
NSC; and (ii) NSC will not take or cause to be taken any action, whether before
or after the Effective Date, which would disqualify the Merger as a pooling of
interests for accounting purposes or as a "reorganization" within the meaning of
Section 368(a) of the Code.
During the period from the date of the Merger Agreement to the Effective
Date, Sub will not engage in any activities of any nature except as provided in
or contemplated by the Merger Agreement.
OTHER COVENANTS
Subject to the limitations imposed by third party confidentiality
agreements, each of Cyrix and NSC and their respective subsidiaries will give
the other access to information and personnel and will prepare and file all
necessary filings with respect to the Merger Agreement and the transactions
contemplated thereby (including the Merger), including Commission, HSR Act and
state securities law filings.
Prior to the Effective Date, Cyrix agrees to cause to be delivered to NSC
an opinion (satisfactory to counsel for NSC) of the general counsel of Cyrix or
such law firm as may be satisfactory to NSC, identifying all persons who were,
in his or her opinion, at the time of the Special Meeting, Affiliates of Cyrix.
Cyrix agrees
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to use its best efforts to obtain a written agreement from each person who is
identified as a possible Affiliate that such Affiliate will not (i) offer to
sell, sell or otherwise dispose of any of the capital stock of NSC issued to
such Affiliate pursuant to the Merger, except in compliance with Rule 145 or
another exemption from the registration requirements of the Securities Act and
(ii) except to the extent and under the conditions permitted therein, during the
period commencing 30 days prior to the Merger and ending at the time of
publication of financial results (including combined sales and net income)
covering at least 30 days of post-Merger operations, sell or in any way reduce
such Affiliate's risk relative to any NSC Common Stock received in the Merger
(within the meaning of the Commission's Financial Reporting Release No. 1,
"Codification of Financing Reporting Policies," 201.01 (47 F.R. 21030) (April
15, 1982)). Cyrix agrees to deliver such written agreements to NSC on or prior
to the earlier of the mailing of this Proxy Statement/Prospectus or the
thirtieth day prior to the Effective Date.
If the Effective Date is less than 30 days prior to the end of NSC's fiscal
quarter, NSC agrees to use reasonable efforts to prepare and publicly release as
soon as practicable following the end of the first month ending at least 30 days
after the Effective Date, a public filing, statement or announcement which
includes the combined financial results (including combined sales and net
income) of NSC and Cyrix for a period of at least 30 days of combined operations
of NSC and Cyrix following the Effective Date; provided that NSC need not
prepare and release such results if, in its good faith judgment, it determines
that such release would not be in the best interests of NSC.
NSC agrees to use its best efforts to list on the NYSE, upon official
notice of issuance, the shares of NSC Common Stock to be issued pursuant to the
Merger.
In the Merger Agreement, NSC and Cyrix have agreed to respond as promptly
as practicable to any inquiries received from the FTC and the Antitrust Division
for information or documentation in addition to filings made under the HSR Act
and to respond as promptly as practicable to all inquiries and requests received
from any State Attorney General or other governmental authority in connection
with antitrust matters.
Subject to the other terms and conditions of the Merger Agreement, NSC, Sub
and Cyrix have agreed to use all reasonable efforts to take, or cause to be
taken, all actions 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. Notwithstanding
the foregoing, neither NSC nor any of its subsidiaries will be required to take
any action, and without NSC's prior written consent neither Cyrix nor any of its
subsidiaries will agree to take any action, that would in any way restrict or
limit the conduct of business from and after the Effective Date by NSC, Cyrix or
any subsidiary of either.
EMPLOYMENT ARRANGEMENTS AND BENEFIT PLANS
The Merger Agreement provides that, if the Effective Date occurs subsequent
to December 31, 1997, Cyrix will terminate the Cyrix Employee Stock Purchase
Plan by having its Board of Directors amend the plan to terminate at the earlier
of (i) the end of the current stock offering period under the plan or (ii)
immediately prior to the Effective Date. If the Effective Date occurs on or
prior to December 31, 1997, the current stock offering period will continue
through December 31, 1997, and any options issued under the Plan which are
outstanding and unexercised immediately prior to the Effective Date will be
converted into options to purchase a number of shares of NSC Common Stock
pursuant to the option conversion provisions of the Merger Agreement. See "THE
MERGER AGREEMENT -- Conversion of Cyrix Securities."
The Merger Agreement provides that, after the Effective Date, NSC will, or
will cause the Surviving Corporation to, honor in accordance with their terms,
all employment, severance, consulting and other compensation contracts between
Cyrix or any of its subsidiaries and any current or former director, officer or
employee thereof, and all provisions for vested benefits or other vested amounts
earned or accrued through the Effective Date under any Cyrix employee benefit
plan, each as of the date of the Merger Agreement except for changes that are
permitted by the Merger Agreement, or are otherwise agreed to by the parties
thereto.
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For a period of 12 months after the Effective Date, NSC will provide, or
will cause the Surviving Corporation to provide generally to the officers and
employees of the Surviving Corporation and its subsidiaries, employee benefits,
including, without limitation, pension benefits, health and welfare benefits,
and severance arrangements, on terms and conditions in the aggregate that are no
less favorable than those provided under Cyrix benefit plans as of the date
hereof. NSC will, or will cause the Surviving Corporation to, credit officers
and employees of Cyrix and its subsidiaries with their service with Cyrix and
its subsidiaries for purposes of eligibility to participate in vesting with
respect to employee benefit plans of NSC and the Surviving Corporation.
Individual eligibility for participation in the medical plans of NSC or the
Surviving Corporation will not be subject to any exclusions for preexisting
conditions other than any such exclusions provided in the medical plans of Cyrix
or its subsidiaries. Amounts paid before the Effective Date by directors,
officers and employees under medical plans of Cyrix and its subsidiaries will be
taken into account after the Effective Date in applying deductible and
out-of-pocket limits applicable under the medical plans of NSC and the Surviving
Corporation to the same extent as if such amounts had been paid under the
medical plans of NSC and the Surviving Corporation.
The Merger Agreement provides that Cyrix will make all reasonable efforts
to cause certain officers of Cyrix to execute, at or prior to the Effective
Date, certain agreements relating to employment.
After the Effective Date, NSC intends to permit employees of Cyrix and its
subsidiaries to participate in the incentive and compensation plans of NSC on a
basis equivalent to similarly situated employees of NSC.
INDEMNIFICATION
The Merger Agreement provides that, from and after the Effective Date, NSC
will indemnify, defend and hold harmless the officers, directors and employees
of Cyrix 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, officers or employees of Cyrix as provided
in the Cyrix Certificate of Incorporation (the "Cyrix Charter") or Cyrix
By-laws, in effect on the date of the Merger Agreement, with respect to matters
occurring through the Effective Date, will survive the Merger and will continue
in full force and effect for a period of not less than six years from the
Effective Date. NSC agrees to maintain or to cause the Surviving Corporation to
maintain in effect for not less than six years after the Effective Date policies
of directors' and officers' liability insurance equivalent to those maintained
by Cyrix with respect to matters occurring on or prior to the Effective Date;
provided, however, that the Surviving Corporation will not be required to pay an
aggregate premium for such insurance in excess of $1.2 million, but in such case
will purchase as much coverage as possible for such amount.
The Merger Agreement specifies that the provisions of the Certificate of
Incorporation and By-laws of the Surviving Corporation pertaining to
indemnification of current and former directors, officers and employees will not
be amended, repealed or otherwise modified for a period of six years after the
Effective Date (or, in the case of matters which are pending but which have not
been resolved prior to the sixth anniversary of the Effective Date, until such
matters are finally resolved), in any manner that would adversely affect the
rights thereunder of individuals who at any time on or prior to the Effective
Date were directors, officers or employees of Cyrix in respect of actions or
omissions occurring on or prior to the Effective Date.
NO SOLICITATION
The Merger Agreement provides that neither Cyrix nor any of its
subsidiaries will, nor will Cyrix authorize or permit its subsidiaries,
officers, directors, employees, representatives, investment bankers, attorneys,
accountants or other agents or affiliates to, take any action to (i) solicit,
initiate or encourage (including by way of furnishing information) the
submission of any Acquisition Proposal or (ii) participate in any discussions or
negotiations with, or furnish any information to, any person in connection with,
or take any other action to facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to any
Acquisition Proposal; provided, however, that if, at any time prior to the
obtaining of Cyrix stockholder approval, the Cyrix Board determines in good
faith by a majority vote, based on the advice
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of outside counsel, that it is necessary to do so to avoid a breach of its
fiduciary duties to stockholders under applicable law, Cyrix may, in response to
a written Acquisition Proposal which the Cyrix Board determines in good faith by
a majority vote, based on the opinion of a financial advisor of nationally
recognized reputation, to be more favorable from a financial point of view to
Cyrix's stockholders than the Merger Agreement, the Merger and the transactions
contemplated thereby, and which proposal was not solicited by Cyrix or otherwise
the result of a breach of the no solicitation provisions of the Merger
Agreement, and subject to Cyrix's compliance with those provisions, (i) furnish
information with respect to it and its subsidiaries to any person pursuant to a
customary confidentiality agreement containing terms at least as favorable to
Cyrix as those contained in the confidentiality agreements in place between
Cyrix and NSC and (ii) participate in discussions or negotiations with respect
to such Acquisition Proposal.
As used herein, the term "Acquisition Proposal" means any proposed (i)
merger, consolidation or similar transaction involving Cyrix, (ii) sale, lease
or other disposition directly or indirectly by merger, consolidation, share
exchange or otherwise of assets of Cyrix or its subsidiaries representing 30% or
more of the consolidated assets of Cyrix and its subsidiaries in one transaction
or a series of transactions, (iii) issue, sale, or other acquisition or
disposition of (including by way of merger, consolidation, share exchange or any
similar transaction) securities (or options, rights or warrants to purchase, or
securities convertible into, such securities) representing 20% or more of the
voting power of Cyrix or (iv) transaction in which any person shall or would
acquire beneficial ownership (as such term is defined in Rule 13d-3 under the
Exchange Act), or the right to acquire beneficial ownership, or any "group" (as
such term is defined under the Exchange Act) will have been formed which
beneficially owns or would own or has or would have the right to acquire
beneficial ownership of 20% or more of the outstanding Cyrix Common Stock, other
than transactions contemplated by the Merger Agreement or the Stock Option
Agreement.
Except as expressly permitted by the Merger Agreement, neither the Cyrix
Board, nor any committee thereof, will (i) withdraw or modify, or propose
publicly to withdraw or modify, in a manner adverse to NSC, the approval or
recommendation by the Cyrix Board or a committee thereof of the adoption and
approval of the matters to be considered at the Special Meeting, (ii) approve or
recommend, or propose publicly to approve or recommend, any Acquisition
Proposal, or (iii) cause Cyrix to enter into any letter of intent, agreement in
principle, acquisition agreement or other similar agreement or understanding
(written or otherwise) related to any Acquisition Proposal (each, an
"Acquisition Agreement"). Notwithstanding the foregoing, in the event that prior
to the obtaining of Cyrix stockholder approval, there exists a Superior Proposal
(as defined herein), the Cyrix Board may, if it determines in good faith by a
majority vote, based on the advice of outside counsel, that it is necessary to
do so to avoid a breach of its fiduciary duties to Cyrix's stockholders under
applicable law, approve or recommend such Superior Proposal and terminate the
Merger Agreement, provided (i) Cyrix gives NSC written notice (a "Superior
Proposal Notice") at least five business days prior to such termination advising
NSC that the Cyrix Board has received a Superior Proposal which the Cyrix Board
has authorized and intends to effect, specifying the material terms and
conditions of such Superior Proposal and identifying the person making such
Superior Proposal, (ii) Cyrix is otherwise in compliance with its obligations
under the Merger Agreement and the Stock Option Agreement and (iii) Cyrix pays,
or causes to be paid, to NSC the Termination Fee and Expenses.
As used herein, a "Superior Proposal" means any written proposal made by a
third party to acquire, directly or indirectly, more than 50% of the equity
securities of Cyrix entitled to vote generally in the election of directors or
all or substantially all of the assets of Cyrix, and otherwise on terms which
the Cyrix Board determines in its good faith judgment, based on the opinion of a
financial advisor of nationally recognized reputation, to be more favorable from
a financial point of view to Cyrix's stockholders than the Merger Agreement, the
Merger and the transactions contemplated hereby and for which financing, to the
extent required, is then committed.
Cyrix has agreed in the Merger Agreement to promptly communicate to NSC in
writing any solicitation received, directly or indirectly, by Cyrix and to
furnish to NSC a copy of any such solicitation or proposal, if it is in writing,
or a written summary of the terms of such proposal or inquiry if it is not in
writing, including the identity of the person and its affiliates making the
same, that it may receive in respect of any such transaction, or of any such
information requested from it or of any such negotiations or discussions being
sought to be
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initiated with it. Cyrix has agreed to promptly advise NSC of any development
relating to such proposal, including the results of any discussions or
negotiations with respect thereto.
CONDITIONS TO CONSUMMATION OF THE MERGER
The obligations of Cyrix, NSC and Sub to consummate the Merger are subject
to the satisfaction of certain conditions, including: (i) the approval and
adoption of the Merger Agreement and the transactions contemplated thereby,
including the Merger, by the requisite vote of the holders of Cyrix Common
Stock; (ii) the authorization for listing on the NYSE, upon official notice of
issuance, of the NSC Common Stock issuable in the Merger; (iii) the expiration
or termination of the waiting period applicable to the consummation of the
Merger under the HSR Act; (iv) the effectiveness of the Registration Statement
in accordance with the provisions of the Securities Act, and the absence of any
stop order in effect suspending effectiveness of the Registration Statement
issued by the Commission; (v) the absence of any temporary restraining order or
preliminary or permanent injunction or other order by any court or other
judicial or administrative body of competent jurisdiction which prohibits or
prevents the consummation of the Merger (each party agreeing to use its best
efforts to have any such injunction lifted) or any action taken or any statute,
rule, regulation or order enacted, entered or enforced which makes the
consummation of the Merger illegal or prevents or prohibits the Merger; and (vi)
the receipt by NSC and Cyrix of letters from KPMG Peat Marwick LLP and Ernst &
Young LLP, respectively, to the effect that KPMG Peat Marwick LLP, NSC's
auditors, concurs with NSC's management that no conditions exist that would
preclude NSC from accounting for the Merger as a pooling of interests, and Ernst
and Young LLP, Cyrix's auditors, concurs with Cyrix management that no
conditions exist related to Cyrix that would preclude NSC from accounting for
the Merger as a pooling of interests.
The obligation of Cyrix to consummate the Merger is also subject to the
satisfaction of the following further conditions (unless waived by Cyrix): (i)
except as otherwise permitted or qualified, NSC and Sub have performed in all
material respects their agreements contained in the Merger Agreement required to
be performed by them on or prior to the Effective Date, and the representations
and warranties of NSC and Sub contained in the Merger Agreement are true in all
material respects, and Cyrix has received a certificate of the President or
Chief Executive Officer or a Vice President of NSC to that effect; and (ii)
Cyrix has received the opinion of Vinson & Elkins, L.L.P., counsel to Cyrix, to
the effect that as of the Effective Date of the Merger, the Merger will
constitute a "reorganization" for federal income tax purposes within the meaning
of Section 368(a) of the Code.
The obligations of NSC and Sub to consummate the Merger are also subject to
the satisfaction of the following further conditions (unless waived by NSC): (i)
except as otherwise permitted, qualified or previously disclosed, Cyrix has
performed in all material respects its agreements contained in the Merger
Agreement required to be performed by it prior to the Effective Date, and the
representations and warranties of Cyrix contained in the Merger Agreement are
true in all material respects, and NSC and Sub have received a certificate of
the President or Chief Executive Officer or a Vice President of Cyrix to that
effect; (ii) NSC has received the opinion of Wachtell, Lipton, Rosen & Katz,
counsel to NSC, to the effect that the Merger will be treated for federal income
tax purposes as a "reorganization" within the meaning of Section 368(a) of the
Code; and (iii) Cyrix has received all consents, approvals, releases or
authorizations from, and the making of all filings and registrations to or with,
any governmental entity necessary to be obtained or made in order to consummate
the transactions contemplated by the Merger Agreement.
TERMINATION; FEES AND EXPENSES
The Merger Agreement may be terminated at any time prior to the Effective
Date, whether before or after approval by the stockholders of Cyrix: (i) by
mutual consent of the Boards of Directors of NSC and Cyrix; (ii) by either NSC
or Cyrix if the Merger is not consummated on or before April 30, 1998, provided
that this termination right is not available to any party whose failure to
perform in any material respect any covenant under the Merger Agreement has
resulted in the failure of the Merger to be consummated before such date; (iii)
by either NSC or Cyrix if there is any order which is final and nonappealable
preventing the consummation of the Merger; (iv) by either NSC or Cyrix if the
Merger Agreement and the transactions
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contemplated thereby, including the Merger, fail to receive the requisite vote
for approval and adoption by the stockholders of Cyrix at the Special Meeting,
or by NSC if the Merger Agreement and the transactions contemplated thereby,
including the Merger, have not received the requisite vote for approval and
adoption at the Special Meeting prior to February 28, 1998; (v) by NSC, if the
Cyrix Board withdraws, modifies in a manner adverse to NSC, or refrains from
making its required recommendation concerning the Merger, or, other than in
connection with Cyrix's delivery of a Superior Proposal Notice, discloses its
intention to change such recommendation, or the Cyrix Board recommends to the
stockholders of Cyrix any Acquisition Proposal or Cyrix has entered into an
Acquisition Agreement, or, other than in connection with Cyrix's delivery of a
Superior Proposal Notice, the Cyrix Board resolves to do any of the foregoing;
or (vi) by Cyrix, if, pursuant to the no solicitation provisions of the Merger
Agreement, the Cyrix Board has delivered to NSC a Superior Proposal Notice,
Cyrix has paid the Termination Fee and Expenses, and five business days have
passed since NSC received the Superior Proposal Notice. See "-- No
Solicitation."
The Merger Agreement specifies that Cyrix will pay to NSC the Termination
Fee and up to $2 million of the out-of-pocket expenses of NSC and Sub incurred
in connection with the Merger Agreement and the transactions contemplated
thereby ("Expenses"), if: (i) NSC terminates the Merger Agreement pursuant to
the provisions described in (v) of the preceding paragraph; (ii) Cyrix
terminates the Merger Agreement pursuant to the provisions described in clause
(vi) of the preceding paragraph; or (iii) Cyrix or NSC terminates the Agreement
pursuant to the provisions described in clause (iv) of the preceding paragraph,
and within twelve months after such termination Cyrix enters into an Acquisition
Agreement or any Acquisition Proposal is consummated with respect to Cyrix.
The "Termination Fee" is equal to $25 million, less the Aggregate Spread
(as defined herein) on the date of issuance of shares of Cyrix Common Stock
theretofore issued to NSC pursuant to the Stock Option Agreement; provided,
however, that the Termination Fee will not be reduced by the Aggregate Spread if
NSC has theretofore exercised its right under the Stock Option Agreement to put
all of the Option Shares (as defined herein) to Cyrix in exchange for a payment
equal only to the aggregate Exercise Price (as defined herein).
Except as specified above, the Merger Agreement provides that all costs and
expenses incurred in connection with the Merger are to be paid by the party
incurring such expense, except that NSC and Cyrix have agreed to each pay 50% of
all printing expenses incurred by the parties hereto.
AMENDMENT; WAIVER
The Merger Agreement provides that it may be amended by the parties
thereto, by or pursuant to action taken by the respective Boards of Directors,
at any time before or after approval thereof by the stockholders of Cyrix, but,
after such approval, no amendment will be made which changes the ratio at which
Cyrix Common Stock is to be converted into NSC Common Stock or which in any way
materially adversely affects the rights of such stockholders, without the
further approval of such stockholders.
At any time prior to the Effective Date, the parties to the Merger
Agreement, by or pursuant to action taken by their respective Boards of
Directors, may: (i) extend the time for the performance of any of the
obligations or other acts of the other parties thereto; (ii) waive any
inaccuracies in the representations and warranties contained in the Merger
Agreement or in any documents delivered pursuant to the Merger Agreement; and
(iii) waive compliance with any of the agreements or conditions contained in the
Merger Agreement, provided, however, that no such waiver will materially
adversely affect the rights of stockholders of NSC or Cyrix.
THE STOCK OPTION AGREEMENT
In connection with and concurrent with the execution of the Merger
Agreement, NSC and Cyrix entered into the Stock Option Agreement. The Stock
Option Agreement provides for the grant by Cyrix to NSC of the Option to
purchase from Cyrix upon original issue a number of shares of Cyrix Common Stock
equal to up to 19.9% of the number of shares of Cyrix Common Stock outstanding
on the date of the Stock Option
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Agreement ("Option Shares") in the manner set forth below at an exercise price
per Option Share of $27.59 in cash or 0.825 shares of NSC Common Stock, at NSC's
option, subject to adjustment (the "Exercise Price"). In no event will the
number of shares for which the Option is exercisable exceed 19.9% of the number
of issued and outstanding shares of Cyrix Common Stock.
The Stock Option Agreement provides that the Option may be exercised by
NSC, in whole or in part, at any time or from time to time after the earliest
of: (i) the Merger Agreement becoming terminable by NSC due to any change or
disclosure of an intention to change or adoption of a resolution to change the
recommendation concerning the Merger by the Cyrix Board, (ii) an Acquisition
Proposal becoming publicly announced or disclosed prior to the approval of the
Merger at the Special Meeting or (iii) the receipt by NSC of a Superior Proposal
Notice, any such event(s) being referred to as a "Trigger Event."
The Option will terminate, unless NSC has theretofore delivered a written
notice exercising the Option, upon the earlier of (i) the Effective Date or (ii)
termination of the Merger Agreement in accordance with its terms.
Notwithstanding the foregoing, the Option may not be exercised if NSC is in
material breach of any of its material representations or warranties, or in
material breach of any of its material covenants or agreements, contained in the
Stock Option Agreement or in the Merger Agreement.
The Aggregate Spread relating to the exercise of the Option will not exceed
$27 million less any amount theretofore paid to NSC with respect to the
Termination Fee and Expenses in accordance with the Merger Agreement (the
"Maximum Value"). The sum of (i) the Aggregate Spread relating to Option Shares
issued to NSC with respect to which NSC has not theretofore exercised its right
to require Cyrix to repurchase such Option Shares in accordance with the terms
of the Stock Option Agreement described in " -- Certain Repurchases" and (ii)
any Termination Fee and Expenses paid to NSC will not exceed an aggregate of $27
million. If any exercise of the Option would result in an Aggregate Spread
(including the Aggregate Spread in connection with any prior exercises of the
Option) in excess of the Maximum Value, the Exercise Price will be increased
such that the Aggregate Spread (including the Aggregate Spread in connection
with any prior exercises of the Option) will equal the Maximum Value. As used
herein, the "Fair Market Value" of any share is the daily closing sales price
for such share as reported on the NYSE Composite Tape or on NASDAQ, as the case
may be, on the trading day immediately prior to the date such price is to be
determined (unless the Option is exercised on the date an Acquisition Proposal
is first publicly announced, in which event the closing sales price on the date
such Option is exercised will be used to determine "Fair Market Value") and (ii)
the "Aggregate Spread" is the product of (i) the difference between (A) the Fair
Market Value of a share of Cyrix Common Stock on the date NSC exercises the
Option and (B) $27.59 (or if the Exercise Price is increased pursuant to this
paragraph, such Exercise Price) multiplied by (ii) the number of Option Shares
with respect to such exercise.
CERTAIN REPURCHASES
Upon the written request of NSC at any time after the exercise of the
Option and prior to the one-year anniversary of the first closing of the Option
(the "Repurchase Period"), Cyrix (or any successor entity thereof) will
repurchase from NSC all or any portion of Option Shares purchased by NSC
pursuant to the Option, at the price equal to the sum of the aggregate Exercise
Price paid by NSC for Option Shares acquired pursuant to the Option (payable by
delivery of the kind (i.e., cash or shares of NSC Common Stock) and amount of
consideration paid by NSC to exercise the Option) plus, if any event has
occurred which would have entitled NSC to receive the Termination Fee, the
Aggregate Spread at the time of the exercises of the Option.
VOTING
Prior to the fifth anniversary of the date of the Stock Option Agreement,
on each matter submitted to a vote of stockholders of Cyrix, NSC will vote any
Option Shares or shares of Cyrix capital stock otherwise beneficially owned by
NSC for and against such matter in the same proportion as the votes of all other
stockholders of the Company are voted, except that NSC may vote its shares in
its sole discretion with respect
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to any transactions contemplated by the Merger Agreement or any matters
described in Item 14 of Schedule 14A adopted by the Commission under the
Exchange Act.
TRANSFER
Prior to the fifth anniversary of the date of the Stock Option Agreement,
NSC will not sell, assign, pledge or otherwise dispose of or transfer any Option
Shares beneficially owned by NSC, except as provided in (i) "-- Certain
Repurchases" described above, (ii) the following paragraph or (iii) "--
Registration Rights" described below. Prior to the one-year anniversary of the
first issuance of Option Shares, Cyrix will not sell, assign, pledge or
otherwise dispose of or transfer any shares of NSC Common Stock received by
Cyrix upon exercise of the Option, except as provided in (i) "-- Certain
Repurchases" described above, (ii) the following paragraph or (iii) "--
Registration Rights" described below.
Following the termination of the Merger Agreement, NSC may sell any
Restricted Shares beneficially owned by it pursuant to the Stock Option
Agreement and Cyrix may sell any shares of NSC Common Stock beneficially owned
by it, if such sale is made pursuant to a tender or exchange offer that has been
approved or recommended, or otherwise determined to be fair and in the best
interests of the stockholders of Cyrix or NSC, as the case may be, by a majority
of the Cyrix Board or the NSC Board, as the case may be, which majority includes
a majority of directors who were directors prior to the announcement of such
tender or exchange offer, or in any merger, consolidation or other business
combination involving Cyrix or NSC, as the case may be.
REGISTRATION RIGHTS
The Stock Option Agreement provides that following the termination of the
Merger Agreement and subject to certain conditions, NSC may by written notice to
Cyrix request Cyrix to register under the Securities Act all or any part of the
Option Shares beneficially owned by NSC (the "Registrable Securities") pursuant
to a bona fide firm commitment underwritten public offering in which NSC and the
underwriters will effect as wide a distribution of such Registrable Securities
as is reasonably practicable.
Cyrix (and/or any person designated by Cyrix) will thereupon have the
option, exercisable within ten business days, to require NSC to sell all or any
part of the Registrable Securities to Cyrix for cash at a price equal to the
product of (i) the number of Registrable Securities and (ii) the then Fair
Market Value of such shares.
The Stock Option Agreement also provides for certain registration rights
for Cyrix to sell shares of NSC Common Stock received upon exercise of the
Option (where NSC elects to pay for the Option Shares using NSC Common Stock) at
any time after the earlier of (i) one year after the first issuance of Option
Shares or (ii) such time as NSC owns less than 50% of the Option Shares paid for
with shares of NSC Common Stock. If Cyrix gives notice to NSC of its request to
register shares of NSC Common Stock, NSC has the option to acquire such shares
of NSC Common Stock for cash at their then Fair Market Value.
EFFECT OF THE STOCK OPTION
The Stock Option Agreement is intended to increase the likelihood that the
Merger will be consummated in accordance with the terms of the Merger Agreement.
Consequently, certain aspects of the Stock Option Agreement may have the effect
of discouraging persons who might now or at any other time prior to the
Effective Date be interested in acquiring all of or a significant interest in
Cyrix from considering or proposing such an acquisition as such proposal could
cause the Option to be exercisable.
THE SUPPORT AGREEMENT
In connection with, and as a condition to NSC's willingness to enter into,
the Merger Agreement, NSC entered into the Support Agreement with an officer and
two directors of Cyrix. The Support Agreement provides that Harvey B. Cash,
Kevin C. McDonough and L.J. Sevin (each, a "Supporting Stockholder"), each agree
to attend, in person or by proxy, any meeting of the stockholders of Cyrix, and
to vote his shares of
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Cyrix Common Stock and any voting securities of Cyrix issued in exchange
therefor or in respect thereof or otherwise acquired by such Supporting
Stockholder after the date of the Support Agreement (i) in favor of the approval
of the Merger and each of the other transactions contemplated by the Merger
Agreement and in favor of the approval and adoption of the Merger Agreement, and
any actions required in furtherance of the Support Agreement and the Merger
Agreement and (ii) against any action or agreement that would, directly or
indirectly, result in a breach in any material respect of any covenant,
representation or warranty or any other obligation or agreement of Cyrix under
the Merger Agreement.
Pursuant to the Support Agreement, each Supporting Stockholder granted NSC
a proxy to vote such Supporting Stockholder's shares of Cyrix Common Stock as
described above at any meeting of the stockholders of Cyrix or any
adjournment(s) thereof held in connection with the Merger Agreement and related
transaction agreements. The proxy remains effective until the earlier of the
consummation of the Merger and the transactions contemplated by the Merger
Agreement or the termination of the Merger Agreement in accordance with its
terms.
As of the Record Date, the Supporting Stockholders beneficially own an
aggregate of 941,755 shares of Cyrix Common Stock, which represents
approximately 4.7% of the total number of shares of Cyrix Common Stock
outstanding.
DESCRIPTION OF NSC CAPITAL STOCK
The following summary of certain provisions of the NSC Second Restated
Certificate of Incorporation (the "NSC Charter"), the NSC By-laws and the DGCL
does not purport to be complete and is qualified by reference to the NSC Charter
and NSC By-laws, copies of which are on file with the Commission, and to the
provisions of the DGCL. For further information on the rights of holders of NSC
Common Stock, see "COMPARISON OF STOCKHOLDER RIGHTS."
GENERAL
NSC's authorized capital stock as of the date of this Proxy
Statement/Prospectus consists of 300,000,000 shares of NSC Common Stock, $0.50
par value, and 1,000,000 shares of preferred stock, $0.50 par value ("NSC
Preferred Stock"). As of September 21, 1997, there were 147,256,412 shares of
NSC Common Stock issued and outstanding. Each outstanding share of NSC Common
Stock is accompanied by an NSC Right. The issued and outstanding shares of NSC
Common Stock are duly authorized, validly issued, fully paid and nonassessable.
The registrar and transfer agent for NSC Common Stock is Bank Boston N.A.
No shares of NSC Preferred Stock are presently outstanding. Except as noted
above, NSC does not presently have outstanding, and the NSC Charter does not
authorize, any other classes of capital stock.
COMMON STOCK
Voting. Each holder of NSC Common Stock is entitled to one vote per share
of NSC Common Stock held of record on all matters submitted to a vote of
stockholders, including the election of directors.
Dividends. The holders of NSC Common Stock are entitled to receive
dividends when and as declared by the NSC Board out of funds legally available
therefor.
Other Provisions. Holders of shares of NSC Common Stock have no
preemptive, redemption or conversion rights.
PREFERRED STOCK
The NSC Board has the power, without further vote of shareholders, to
authorize the issuance of up to 1,000,000 shares of NSC Preferred Stock and to
fix and determine the terms, limitations and relative rights and preferences of
any shares of preferred or preference stock that it causes to be issued. This
power includes the authority to establish voting, dividend, redemption,
conversion, liquidation and other rights of any such
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shares. Although NSC has issued two different series of preferred stock in the
past, no shares of preferred or preference stock are now outstanding, and NSC
has no current plans to issue any such shares.
NSC RIGHTS AGREEMENT
Each NSC Right entitles the record holder to purchase from NSC one
one-thousandth of a share of NSC Series A Junior Participating Preferred Stock,
par value $0.50 per share (the "Preferred Shares"), at a price of $60.00 per one
one-thousandth of a share, subject to certain adjustments. The NSC Rights are
not exercisable or transferable apart from the NSC Common Stock until after the
earlier of (i) 10 days following a public announcement that a person or group of
affiliated or associated persons (an "Acquiring Person") has acquired beneficial
ownership of 20% or more of the outstanding shares of NSC Common Stock or (ii)
10 business days (or such later date as may be determined by action of the NSC
Board prior to such time as any person becomes an Acquiring Person) following
the commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 20% or more of such outstanding shares of NSC
Common Stock.
In the event that NSC is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning power are sold
and such transaction has not been approved by the NSC Board, proper provision
will be made so that each holder of an NSC Right will thereafter have the right
to receive, upon the exercise thereof at the then current exercise price of the
NSC Right, that number of shares of common stock of the acquiring company which
at the time of such transaction will have a market value of two times the
exercise price of the NSC Right. At any time after the acquisition by a person
or group of affiliated or associated persons of beneficial ownership of 20% or
more of the outstanding shares of NSC Common Stock and prior to the acquisition
by such person or group of 50% or more of the outstanding shares of NSC Common
Stock, the NSC Board may exchange the NSC Rights (other than the NSC Rights
owned by such person or group which have become void), in whole or in part, at
an exchange ratio of one share of NSC Common Stock, or one one-thousandth of a
Preferred Share (or of a share of a class or series of NSC's preferred stock
having equivalent rights, preferences, and privileges), per NSC Right (subject
to adjustment). See "COMPARISON OF STOCKHOLDER RIGHTS -- Rights Plans."
COMPARISON OF STOCKHOLDER RIGHTS
Both Cyrix and NSC are Delaware corporations and are governed by the DGCL.
The rights of Cyrix stockholders are also currently governed by the Cyrix
Charter and the Cyrix By-laws, and the rights of NSC stockholders are governed
by the NSC Charter and the NSC By-laws. After the Effective Date, the rights of
Cyrix stockholders who become stockholders of NSC will be governed by the NSC
Charter, the NSC By-laws and the DGCL. In most respects, the rights of Cyrix
stockholders are similar to those of NSC stockholders. The following is a
summary of the material differences between the rights of Cyrix stockholders
under the Cyrix Charter and the Cyrix By-laws (the "Cyrix Governing Documents"),
on the one hand, and the rights of NSC stockholders under the NSC Charter and
the NSC By-laws (the "NSC Governing Documents"), on the other. This summary does
not purport to be a complete discussion of, and is qualified in its entirety by
reference to, the Cyrix Charter, the Cyrix By-laws, the NSC Charter and the NSC
By-laws, copies of which are on file with the Commission, and provisions of the
DGCL.
ELECTION OF BOARD OF DIRECTORS
The Cyrix and NSC By-laws both provide that directors will be elected for
one-year terms. Neither the Cyrix Governing Documents nor the NSC Governing
Documents provide for classification of the board of directors or for cumulative
voting of shares for election of directors.
AMENDMENTS TO GOVERNING DOCUMENTS
The Cyrix By-laws provide that the Cyrix By-laws may be amended or repealed
by the stockholders entitled to vote; provided, however, that Cyrix may, in the
Cyrix Charter, confer the power to adopt, amend or repeal the Cyrix By-laws upon
the directors upon such terms as are contained in the Cyrix Charter.
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<PAGE> 51
The NSC By-laws provide that the NSC By-laws may be amended by the NSC
stockholders or by the NSC Board.
Both the NSC Charter and the Cyrix Charter preserve the company's right to
amend the document in the manner prescribed by the DGCL.
SPECIAL MEETING OF STOCKHOLDERS; NOTICE
The Cyrix By-laws provide that special meetings of Cyrix stockholders may
be called by the Cyrix Board, by the chairman of the Cyrix Board, by the
president, or by one or more Cyrix stockholders holding shares of Cyrix Common
Stock in the aggregate entitled to cast not less than 10% of the votes at that
meeting. The Cyrix By-laws provide that if a special meeting is called by any
person or persons other than the Cyrix Board or the president or the chairman of
the Cyrix Board, then the request must be in writing, specifying the time of
such meeting and the general nature of the business proposed to be transacted,
and must be delivered personally or sent to the chairman of the Cyrix Board, the
president, and vice president or secretary of Cyrix. The officer receiving the
request will cause notice to be promptly given to the Cyrix stockholders
entitled to vote, that a meeting will be held at the time requested, so long as
that time is not less than 35 nor more than 60 days after the receipt of the
request. The Cyrix By-laws provide that all notices of meetings of Cyrix
stockholders must be in writing and must be sent or mailed not less than 10 nor
more than 60 days before the date of the meeting. Notices must specify the time
and place of the meeting, and in the case of a special meeting, the purpose for
which the meeting is called.
The NSC By-laws provide that special meetings of NSC stockholders may be
called by the chairman of the NSC Board, the president, the majority of the NSC
Board, or by the secretary at the request in writing of NSC stockholders owning
at least 50% in interest of the capital stock of NSC issued and outstanding and
entitled to vote at such meeting. The NSC By-laws specify that the secretary of
NSC will serve personally or send a written notice of annual or special meetings
of NSC stockholders, stating the time and place of the meeting, not less than 10
nor more than 60 days before the date of the meeting, except that a special
meeting may be called on five days' notice. Any business can be transacted at
such special meeting.
ACTION BY WRITTEN CONSENT
Both the NSC and Cyrix By-laws allow stockholder action by written consent,
without prior notice and without a vote, if such consent is signed by at least
the minimum number of votes necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
NUMBER OF DIRECTORS
The Cyrix By-laws specify that the number of directors will be not less
than three and not more than ten. The exact number of directors, within these
limits, will be determined from time to time by resolution of the Cyrix Board.
The NSC By-laws specify that the board of directors will consist of eight
directors, subject to such automatic increases as may be required by the NSC
Charter. The board may enlarge or reduce the size of the NSC Board in a vote of
the majority of the directors in office.
RESIGNATION AND VACANCIES
In the case of vacancy by resignation, the Cyrix By-laws specify that a
majority of the directors in office, including those who have resigned, will
have power to fill such vacancy or vacancies. The Cyrix By-laws provide that
vacancies and newly created directorships resulting from any increase in the
authorized number of directors elected by all Cyrix stockholders voting as a
single class may be filled by a majority of directors then in office, although
less than a quorum, or by a sole remaining director. If, at the time of filling
any vacancy or newly created directorship, the directors then in office
constitute less than a majority of the whole board, then upon application of any
Cyrix stockholder(s) holding at least 10 percent of the total number of shares
outstanding having the right to vote for such directors, the Delaware Court of
Chancery may summarily order
45
<PAGE> 52
an election to fill such vacancies or newly created directorships, or to replace
the directors chosen by the directors then in office.
The NSC By-laws provide that any vacancy in the NSC Board or any newly
created directorship may be filled by a majority of the directors then in
office, though less than a quorum, or by a sole remaining director, or may also
be filled by a plurality vote of the NSC stockholders unless such vacancy will
have been previously filled by the NSC Board.
REMOVAL OF DIRECTORS
The Cyrix By-laws provide that any director or the entire Cyrix Board may
be removed, with or without cause, by the holders of a majority of the shares
then entitled to vote at an election of directors.
The NSC By-laws provide that a director may be removed for cause by the
vote of a majority of the NSC stockholders at a special or annual meeting after
the director has been given reasonable notice and opportunity to be heard before
the NSC stockholders.
LOANS TO OFFICERS
The Cyrix By-laws provide that Cyrix may lend money to, or guarantee any
obligation of, or otherwise assist any officer or other employee of Cyrix or any
of its subsidiaries, including any officer or employee who is a director of
Cyrix or any of its subsidiaries, whenever, in the judgment of the directors,
such loan, guaranty or assistance may reasonably be expected to benefit Cyrix.
The loan, guaranty or other assistance may be with or without interest and may
be unsecured, or secured in such manner as the Cyrix Board will approve,
including, without limitation, a pledge of shares of stock of Cyrix.
The NSC By-laws have no such provision authorizing loans to officers.
INDEMNIFICATION
The Cyrix By-laws allow a director, officer, employee, or agent to contest
any determination that the director, officer, employee, or agent has not met the
applicable standard of conduct to warrant indemnification. The NSC By-laws have
no such provision.
With respect to third-party actions, both the Cyrix By-laws and the NSC
By-laws provide for indemnification of amounts paid in settlement, but the Cyrix
By-laws require that such settlement be approved in advance by Cyrix, which
approval shall not be unreasonably withheld. The NSC By-laws have no such
requirement.
With respect to actions by or in the right of the corporation, the Cyrix
By-laws provide for indemnification of amounts paid in settlement if such
settlement is approved in advance by Cyrix, which approval shall not be
unreasonably withheld. The NSC By-laws do not provide for such indemnification.
The Cyrix By-laws prohibit indemnification for any expenses or amounts paid
in settlement with respect to any action to recover short-swing profits under
Section 16(b) of the Exchange Act. With respect to third-party actions and
actions by or in the right of the corporation, the Cyrix By-laws provide that a
director, officer, employee or agent that is successful on the merits or
otherwise in defense of any action, suit or proceeding, or in defense of any
claim, issue or matter therein, shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith. The NSC By-laws do not contain either of these provisions.
The Cyrix By-laws provide that expenses incurred in defending a civil,
criminal, administrative or investigative action, suit or proceeding by an
individual who may be entitled to indemnification will be paid by Cyrix in
advance of the final disposition, upon receipt of an undertaking by or on behalf
of the director, officer, employee or agent to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by Cyrix. The
NSC By-laws provide that expenses incurred in defending a civil or criminal
action, suit or proceeding may be paid in advance by NSC upon receipt of such an
undertaking.
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<PAGE> 53
RIGHTS PLANS
NSC has entered into the NSC Rights Agreement with The First National Bank
of Boston as rights agent. The NSC Rights Agreement evidences a rights plan
adopted by the NSC Board in August 1988 and amended in October 1995 and December
1996.
The NSC Rights only become exercisable and transferable apart from the NSC
Common Stock after the earlier of (i) 10 days following a public announcement
that an Acquiring Person has acquired beneficial ownership of 20% or more of the
outstanding shares of NSC Common Stock or (ii) 10 business days (or such later
date as may be determined by action of the Board of Directors prior to such time
as any Person becomes an Acquiring Person) following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 20% or more of such outstanding shares of NSC Common Stock. If the NSC
Board determines in good faith that a person who would otherwise be an Acquiring
Person has become such inadvertently, and such person divests as promptly as
practicable a sufficient number of shares of NSC Common Stock so that such
person would no longer be an Acquiring Person, then such person is not deemed an
Acquiring Person for purposes of the NSC Rights Agreement.
When exercised, each NSC Right entitles the registered holder to purchase
from NSC one one-thousandth of a share of the Preferred Shares of NSC at a price
of $60.00 per one one-thousandth of a Preferred Share, subject to adjustments.
In the event that NSC is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning power are sold
and such transaction has not been approved by the NSC Board, proper provision
will be made so that each holder of an NSC Right will thereafter have the right
to receive, upon the exercise thereof at the then current exercise price of the
NSC Right, that number of shares of common stock of the acquiring company which
at the time of such transaction will have a market value of two times the
exercise price of the NSC Right. In the event that (i) any person or group of
affiliated or associated persons becomes the beneficial owner of 20% or more of
the outstanding shares of NSC Common Stock or (ii) during such time as there is
an Acquiring Person, there shall be a reclassification of securities or a
recapitalization or reorganization of NSC or other transaction or series of
transactions involving NSC which has the effect of increasing by more than 1%
the proportionate share of the outstanding shares of any class of equity
securities of NSC or any of its subsidiaries beneficially owned by the Acquiring
Person, proper provision shall be made so that each holder of an NSC Right,
other than NSC Rights beneficially owned by the Acquiring Person (which will
thereafter be void), will thereafter have the right to receive upon exercise
that number of shares of NSC Common Stock having a market value of two times the
exercise price of the NSC Right.
At any time after the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 20% or more of the outstanding
shares of NSC Common Stock and prior to the acquisition by such person or group
of 50% or more of the outstanding shares of NSC Common Stock, the NSC Board may
exchange the NSC Rights (other than the NSC Rights owned by such person or group
which have become void), in whole or in part, at an exchange ratio of one share
of NSC Common Stock, or one one-thousandth of a Preferred Share (or of a share
of a class or series of NSC's preferred stock having equivalent rights,
preferences, and privileges), per NSC Right (subject to adjustment).
Preferred Shares purchasable upon exercise of the NSC Rights are not
redeemable. Each Preferred Share is entitled to a minimum preferential quarterly
dividend payment of $10 per share but will be entitled to an aggregate dividend
of 1,000 times the dividend declared per shares of NSC Common Stock. Each
Preferred Share has 1,000 votes, voting together with NSC Common Stock. In the
event of any merger, consolidation, or other transaction in which NSC Common
Stock is exchanged, each Preferred Share is entitled to receive 1,000 times the
amount received per share of NSC Common Stock. These rights are protected by
customary anti-dilution provisions.
At any time prior to the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 20% or more of the outstanding
shares of NSC Common Stock, the NSC Board may redeem the
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<PAGE> 54
NSC Rights in whole, but not in part, at a price of $0.01 per NSC Right, subject
to adjustment (the "Redemption Price"). The redemption of the NSC Rights may be
made effective at such time on such basis and with such conditions as the Board
of Directors in its sole discretion may establish. Immediately upon any
redemption of the NSC Rights, the right to exercise the NSC Rights will
terminate and the only right of the holders of NSC Rights will be to receive the
Redemption Price.
The NSC Rights will expire on August 8, 2006 (the "Final Expiration Date"),
unless the Final Expiration Date is extended or unless the NSC Rights are
earlier redeemed or exchanged by NSC.
The terms of the NSC Rights may be amended by the NSC Board without the
consent of the holders of the NSC Rights, including an amendment to lower
certain thresholds described above to not less than the greater of (i) any
percentage greater than the largest percentage of the outstanding NSC Common
Stock then known to NSC to be beneficially owned by any person or group of
affiliated or associated persons and (ii) 15%, except that from and after such
time as any person becomes an Acquiring Person no such amendment may adversely
affect the interests of the holders of the NSC Rights. See "DESCRIPTION OF NSC
CAPITAL STOCK" and "AVAILABLE INFORMATION."
Cyrix does not have a stockholder rights plan.
LEGAL MATTERS
The validity of the shares of NSC Common Stock to be issued in the Merger
is being passed upon for NSC by John M. Clark, III, Esq., Senior Vice President,
General Counsel and Secretary of NSC. As of the date of this Proxy
Statement/Prospectus, Mr. Clark beneficially owns 15,875 shares of NSC Common
Stock and options to purchase 101,000 additional shares of NSC Common Stock.
The federal income tax consequences of the Merger will be passed upon for
NSC by Wachtell, Lipton, Rosen & Katz and for Cyrix by Vinson & Elkins, L.L.P.
EXPERTS
The consolidated financial statements of NSC as of May 25, 1997 and May 26,
1996 and for each of the years in the three-year period ended May 25, 1997
included in its annual report on Form 10-K for the year ended May 25, 1997, have
been incorporated by reference herein and in the registration statement in
reliance upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated herein, and upon the authority of said firm as experts
in accounting and auditing. The report of KPMG Peat Marwick LLP covering the May
26, 1996 financial statements refers to a change in method of accounting for
depreciation.
The consolidated financial statements of Cyrix as of December 31, 1996 and
December 31, 1995, and for each of the three years in the period ended December
31, 1996, included in its annual report on Form 10-K have been audited by Ernst
& Young LLP, independent auditors, as set forth in their report thereon included
therein and incorporated herein by reference. Such consolidated financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing. A
representative of Ernst & Young LLP will be at the Special Meeting to respond to
appropriate questions and will have the opportunity to make a statement if he or
she so desires.
STOCKHOLDER PROPOSALS
Any Cyrix stockholder who wishes to submit a proposal for presentation to
Cyrix's 1998 Annual Meeting of Stockholders (if the Merger has not been
consummated prior to the date the meeting is to be held) must submit the
proposal to Cyrix Corporation, 2703 North Central Expressway, Richardson, Texas
75080, Attention: Secretary. Such proposal must be received by Cyrix not later
than November 20, 1997 for inclusion, if appropriate, in Cyrix's proxy statement
and form of proxy relating to its 1998 Annual Meeting.
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<PAGE> 55
TRADEMARK MATTERS
The trademarks 6X86MX(TM) and Media GX(TM) are United States trademarks
owned by Cyrix. The trademark Super I/O(TM) is a United States trademark owned
by NSC. The trademark Ethernet(TM) is a United States trademark owned by Xerox
Corporation.
OTHER MATTERS
It is not expected that any matters other than those described in this
Proxy Statement/Prospectus will be brought before the Special Meeting. If any
other matters are presented, however, it is the intention of the persons named
in the proxy to vote the proxy in accordance with the discretion of such
persons.
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<PAGE> 56
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
OF NSC AND CYRIX
The following unaudited pro forma condensed combined financial statements
give effect to the Merger of NSC and Cyrix under the pooling of interests method
of accounting. The unaudited pro forma condensed combined financial statements
are based upon the respective historical financial statements of NSC and Cyrix
and should be read in conjunction with such historical financial statements and
the notes thereto, which are incorporated by reference in this Proxy
Statement/Prospectus. Since the fiscal years for NSC and Cyrix differ, the
financial statements of Cyrix for the most recent fiscal year have been recast
and are presented for the 12-month period ended March 31, 1997. NSC expects that
upon the consummation of the Merger, Cyrix will change its fiscal year-end to
coincide with NSC's. The unaudited pro forma condensed combined balance sheet as
of August 24, 1997 and the unaudited pro forma condensed combined statements of
operations for the three months ended August 24, 1997 and for the year ended May
25, 1997 combine NSC's consolidated balance sheet as of August 24, 1997 and
consolidated statements of operations for the three months ended August 24, 1997
and for the year ended May 25, 1997 with Cyrix's consolidated balance sheet as
of June 30, 1997 and consolidated statements of operations for the three months
ended June 30, 1997 and for the 12-month period ended March 31, 1997,
respectively. The unaudited pro forma condensed combined statements of
operations for the years ended May 26, 1996 and May 28, 1995 combine NSC's
consolidated statements of operations for the years ended May 26, 1996 and May
28, 1995 with Cyrix's consolidated statements of operations for the years ended
December 31, 1995 and 1994, respectively.
The pro forma information is presented for illustrative purposes only and
is not necessarily indicative of the operating results or financial position
that would have occurred if the Merger had been consummated as presented in the
accompanying unaudited pro forma combined financial information, nor is it
necessarily indicative of future operating results or financial position.
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<PAGE> 57
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
OF NSC AND CYRIX
(IN MILLIONS)
<TABLE>
<CAPTION>
HISTORICAL
-------------------
NSC CYRIX PRO FORMA
AUG 24, JUNE 30, ------------------------
1997 1997 ADJUSTMENTS COMBINED
-------- -------- ----------- --------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.......................... $ 659.6 $ 82.3 -- $ 741.9
Short-term marketable investments.................. 119.1 23.5 -- 142.6
Receivables, net................................... 301.8 35.3 $(7.4)(c) 329.7
Inventories........................................ 193.9 40.4 -- 234.3
Deferred tax assets................................ 168.5 8.1 -- 176.6
Other current assets............................... 51.9 24.1 -- 76.0
-------- ------ ----- --------
Total current assets....................... 1,494.8 213.7 (7.4) 1,701.1
Property, plant and equipment, net................... 1,405.9 77.6 -- 1,483.5
Long-term marketable investments..................... 5.4 -- -- 5.4
Other assets......................................... 93.0 19.8 -- 112.8
-------- ------ ----- --------
Total assets............................... $2,999.1 $311.1 $(7.4) $3,302.8
======== ====== ===== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt.................. $ 32.8 $ 2.8 -- $ 35.6
Accounts payable................................... 248.2 23.4 -- 271.6
Accrued expenses................................... 270.7 13.1 $20.0(b) 303.8
Income taxes payable............................... 236.6 0.7 -- 237.3
Deferred income and distributor reserves........... -- 7.4 (7.4)(c) --
-------- ------ ----- --------
Total current liabilities.................. 788.3 47.4 12.6 848.3
Long-term debt....................................... 302.6 134.9 -- 437.5
Deferred income taxes................................ 7.8 2.8 -- 10.6
Other noncurrent liabilities......................... 45.4 -- -- 45.4
-------- ------ ----- --------
Total liabilities.......................... 1,144.1 185.1 12.6 1,341.8
Shareholders' equity:
Common stock......................................... 73.4 0.1 8.0(a) 81.6
Additional paid-in capital........................... 1,147.0 50.7 (8.0)(a) 1,189.7
Retained earnings.................................... 672.9 75.2 (20.0)(b) 728.0
Unearned compensation................................ (38.3) -- -- (38.3)
-------- ------ ----- --------
Total shareholders' equity................. 1,855.0 126.0 (20.0) 1,961.0
-------- ------ ----- --------
Total liabilities and shareholders'
equity................................... $2,999.1 $311.1 $(7.4) $3,302.8
======== ====== ===== ========
</TABLE>
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<PAGE> 58
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
OF NSC AND CYRIX
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL
---------------------------
FOR THE
THREE MONTHS ENDED
---------------------------
NSC CYRIX PRO FORMA
AUG 24, JUNE 30, --------------------------
1997 1997 ADJUSTMENTS COMBINED
----------- ----------- ----------- --------
<S> <C> <C> <C> <C>
NET SALES:
Net product sales....................... $ 600.8 $39.5 -- $640.3
Royalty revenue......................... -- 0.5 $(0.5)(d) --
-------- ------ ---- -------
Net sales................................. 600.8 40.0 (0.5) 640.3
OPERATING COSTS AND EXPENSES:
Costs of sales.......................... 351.4 25.1 -- 376.5
Research and development................ 101.7 10.8 -- 112.5
Selling, general and administrative..... 73.9 11.2 -- 85.1
-------- ------ ---- -------
Total operating costs and expenses........ 527.0 47.1 -- 574.1
-------- ------ ---- -------
OPERATING INCOME (LOSS)................... 73.8 (7.1) (0.5) 66.2
Interest income (expense), net............ 12.7 (0.9) -- 11.8
Other income, net......................... 7.0 -- 0.5(d) 7.5
-------- ------ ---- -------
Income (loss) before income taxes......... 93.5 (8.0) -- 85.5
Income taxes (benefit).................... 23.4 (2.7) -- 20.7
-------- ------ ---- -------
NET INCOME................................ $ 70.1 $(5.3) -- $ 64.8
======== ====== ==== =======
Earnings per common share(e):
Net income:
Primary............................................................................. $ 0.39
Fully diluted....................................................................... $ 0.37
Weighted average common and common
equivalent shares outstanding:
Primary.............................. 149.9 19.7 -- 166.2
Fully diluted........................ 156.7 19.7 -- 173.0
</TABLE>
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<PAGE> 59
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
OF NSC AND CYRIX
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL
--------------------
FOR THE YEAR ENDED
--------------------
NSC CYRIX PRO FORMA
MAY 25, MAR 31, --------------------------
1997 1997 ADJUSTMENTS COMBINED
-------- ------- ----------- --------
<S> <C> <C> <C> <C>
NET SALES:
Net product sales............................. $2,507.3 $202.7 -- $2,710.0
Royalty revenue............................... -- 5.1 $(5.1)(d) --
-------- ------ ---- --------
Net sales....................................... 2,507.3 207.8 (5.1) 2,710.0
OPERATING COSTS AND EXPENSES:
Costs of sales................................ 1,541.1 147.3 -- 1,688.4
Research and development...................... 372.1 34.8 -- 406.9
Selling, general and administrative........... 395.7 51.8 0.1(d) 447.6
Special items:
Restructuring of operations................ 134.2 -- -- 134.2
Gain on sale of Fairchild.................. (40.6) -- -- (40.6)
In-process R&D charge...................... 72.6 -- -- 72.6
-------- ------ ---- --------
Total operating costs and expenses.............. 2,475.1 233.9 0.1 2,709.1
-------- ------ ---- --------
OPERATING INCOME (LOSS)......................... 32.2 (26.1) (5.2) 0.9
Interest income (expense), net.................. 15.1 (7.3) 0.1(d) 7.9
Income from litigation.......................... -- 2.0 (2.0)(d) --
Other income, net............................... 10.0 -- 7.1(d) 17.1
-------- ------ ---- --------
Income (loss) before income taxes............... 57.3 (31.4) -- 25.9
Income taxes (benefit).......................... 29.8 (11.3) -- 18.5
-------- ------ ---- --------
Income (loss) before extraordinary item......... 27.5 (20.1) -- 7.4
Extraordinary item.............................. -- (1.1) -- (1.1)
-------- ------ ---- --------
NET INCOME...................................... $ 27.5 $(21.2) -- $ 6.3
======== ====== ==== ========
Earnings per common share(e):
From income before extraordinary item:
Primary.......................................................................... $ 0.05
Fully diluted.................................................................... $ 0.05
Extraordinary item:
Primary.......................................................................... $(0.01)
Fully diluted.................................................................... $(0.01)
Net income:
Primary.......................................................................... $ 0.04
Fully diluted.................................................................... $ 0.04
Weighted average common and common equivalent
shares outstanding:
Primary.................................... 142.6 19.5 -- 158.7
Fully diluted.............................. 142.9 19.5 -- 159.0
</TABLE>
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<PAGE> 60
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
OF NSC AND CYRIX
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL
--------------------
FOR THE YEAR ENDED
--------------------
NSC CYRIX PRO FORMA
MAY 26, DEC 31, --------------------------
1996 1995 ADJUSTMENTS COMBINED
-------- ------- ----------- --------
<S> <C> <C> <C> <C>
NET SALES:
Net product sales............................. $2,623.1 $ 210.3 -- $2,833.4
Royalty revenue............................... -- 17.7 $ (17.7)(d) --
-------- ------ ----- --------
Net sales....................................... 2,623.1 228.0 (17.7) 2,833.4
OPERATING COSTS AND EXPENSES:
Costs of sales................................ 1,560.9 142.1 -- 1,703.0
Research and development...................... 349.9 29.1 -- 379.0
Selling, general and administrative........... 486.8 39.1 -- 525.9
Special item:
In-process R&D charge...................... 11.4 -- -- 11.4
-------- ------ ----- --------
Total operating costs and expenses.............. 2,409.0 210.3 -- 2,619.3
-------- ------ ----- --------
OPERATING INCOME................................ 214.1 17.7 (17.7) 214.1
Interest income (expense), net.................. 13.3 (3.9) -- 9.4
Income from litigation.......................... -- 10.0 (10.0)(d) --
Other income, net............................... 19.8 -- 27.7(d) 47.5
-------- ------ ----- --------
Income before income taxes...................... 247.2 23.8 -- 271.0
Income taxes.................................... 61.8 8.2 -- 70.0
-------- ------ ----- --------
NET INCOME...................................... $ 185.4 $ 15.6 -- $ 201.0
======== ====== ===== ========
Earnings per common share(e):
Net income:
Primary.......................................................................... $1.31
Fully diluted.................................................................... $1.30
Weighted average common and common equivalent
shares outstanding:
Primary.................................... 132.5 20.0 -- 149.0
Fully diluted.............................. 138.6 20.0 -- 155.1
</TABLE>
54
<PAGE> 61
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
OF NSC AND CYRIX
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL
--------------------
FOR THE YEAR ENDED
--------------------
NSC CYRIX PRO FORMA
MAY 28, DEC 31, --------------------------
1995 1994 ADJUSTMENTS COMBINED
-------- ------- ----------- --------
<S> <C> <C> <C> <C>
NET SALES:
Net product sales............................. $2,379.4 $246.1 -- $2,625.5
Royalty revenue............................... -- -- -- --
-------- ------ ---- --------
Net sales....................................... 2,379.4 246.1 -- 2,625.5
OPERATING COSTS AND EXPENSES:
Costs of sales................................ 1,384.5 120.7 -- 1,505.2
Research and development...................... 281.6 24.8 -- 306.4
Selling, general and administrative........... 433.3 44.9 $(0.2)(d) 478.0
Special items:
Restructuring of operations................ (5.5) -- -- (5.5)
In-process R&D charge...................... 1.5 -- -- 1.5
-------- ------ ---- --------
Total operating costs and expenses.............. 2,095.4 190.4 (0.2) 2,285.6
-------- ------ ---- --------
OPERATING INCOME................................ 284.0 55.7 0.2 339.9
Interest income, net............................ 14.6 1.2 (0.4)(d) 15.4
Income from litigation.......................... -- 0.5 (0.5)(d) --
Other income, net............................... 30.6 -- 0.7(d) 31.3
-------- ------ ---- --------
Income before income taxes...................... 329.2 57.4 -- 386.6
Income taxes.................................... 65.0 19.8 -- 84.8
-------- ------ ---- --------
NET INCOME...................................... $ 264.2 $ 37.6 -- $ 301.8
======== ====== ==== ========
Earnings per common share(e):
Net income:
Primary.......................................................................... $2.05
Fully diluted.................................................................... $1.96
Weighted average common and common equivalent
shares outstanding:
Primary.................................... 125.2 20.0 -- 141.7
Fully diluted.............................. 137.5 20.0 -- 154.0
</TABLE>
55
<PAGE> 62
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
OF NSC AND CYRIX
(a) On July 28, 1997, NSC entered into the Merger Agreement with Sub and Cyrix.
Under the terms of the Merger Agreement, each share of Cyrix Common Stock
will be exchanged for 0.825 shares of NSC Common Stock. Based on the
exchange ratio, the pro forma adjustment reflects the issuance of 16.2
million shares of NSC Common Stock with a par value of $0.50, as if the
Merger occurred on August 24, 1997. The actual number of shares of NSC
Common Stock to be issued will be determined at the Effective Date of the
Merger based on the actual number of shares of Cyrix Common Stock
outstanding at such date.
(b) Since the Merger has not been completed, costs of the Merger can only be
estimated at this time. NSC and Cyrix estimate they will incur certain
direct transaction costs of approximately $20.0 million associated with the
Merger consisting of transaction fees for investment bankers, attorneys,
accountants, financial printing and other related charges. The pro forma
condensed combined balance sheet as of August 24, 1997 includes the effect
of these costs as if the Merger occurred on August 24, 1997 and the pro
forma condensed combined statement of operations for the three months ended
August 24, 1997 excludes the effect of these costs.
In addition, it is expected that as a result of the Merger, the combined
entity may incur certain costs associated with such actions as the
elimination of duplicate facilities and operations; costs associated with
anticipated internal and customer-related integration activities; and
cancellation and continuation of certain contractual obligations. These
costs, if any, cannot be estimated at this time and have not been reflected
in the pro forma condensed combined balance sheet and statement of
operations as presented.
No adjustments are necessary to conform the accounting policies of the combining
companies. Certain amounts for Cyrix have been reclassified to conform with the
financial statement classifications followed by NSC. The following is a summary
of those reclassifications:
(c) The pro forma adjustment to the condensed combined balance sheet as of
August 24, 1997 reflects the reclassification of distributor reserves to
accounts receivable to conform with NSC's classification to record
provisions for estimated returns from distributors as a reduction of
accounts receivable.
(d) The pro forma adjustments to the condensed combined statements of operations
for the three months ended August 24, 1997 and for the years ended May 25,
1997, May 26, 1996 and May 28, 1995 reflect certain financial statement
reclassifications for royalty revenue, dividend income, foreign currency
exchange gains and losses, and gains and losses on the sale of fixed assets
to conform to NSC's financial statement presentation.
(e) The unaudited pro forma combined earnings per share is based on the combined
weighted-average number of common and common equivalent shares of NSC Common
Stock and Cyrix Common Stock for each period using the exchange ratio of
0.825 of a share of NSC Common Stock for each share of Cyrix Common Stock.
56
<PAGE> 63
APPENDIX A
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
NATIONAL SEMICONDUCTOR CORPORATION,
NOVA ACQUISITION CORP.
AND
CYRIX CORPORATION
DATED AS OF JULY 28, 1997
<PAGE> 64
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C> <C>
ARTICLE I
THE MERGER
Section 1.1 The Merger............................................................. A-1
Section 1.2 Effective Date of the Merger........................................... A-1
Section 1.3 Effects of the Merger.................................................. A-2
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1 Certificate of Incorporation........................................... A-2
Section 2.2 By-laws................................................................ A-2
Section 2.3 Board of Directors; Officers........................................... A-2
ARTICLE III
CONVERSION OF SECURITIES
Section 3.1 Exchange Ratio......................................................... A-2
Section 3.2 Parent to Make Certificates Available.................................. A-3
Section 3.3 Dividends; Transfer Taxes.............................................. A-3
Section 3.4 No Fractional Shares................................................... A-4
Section 3.5 Company Shareholders' Meeting.......................................... A-4
Section 3.6 Closing of the Company's Transfer Books................................ A-4
Section 3.7 Assistance in Consummation of the Merger............................... A-4
Section 3.8 Closing................................................................ A-4
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Section 4.1 Organization and Qualification......................................... A-4
Section 4.2 Capitalization......................................................... A-5
Section 4.3 Subsidiaries........................................................... A-5
Section 4.4 Authority Relative to This Merger Agreement............................ A-5
Section 4.5 Reports and Financial Statements....................................... A-6
Section 4.6 Absence of Certain Changes or Events................................... A-6
Section 4.7 Litigation............................................................. A-6
Section 4.8 Information in Disclosure Documents, Registration Statements, Etc. .... A-7
Section 4.9 Parent Action.......................................................... A-7
Section 4.10 Compliance With Applicable Laws........................................ A-7
Section 4.11 Tax and Accounting Matters............................................. A-7
Section 4.12 Intel License.......................................................... A-7
</TABLE>
i
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<TABLE>
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<S> <C> <C>
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 5.1 Organization and Qualification......................................... A-8
Section 5.2 Capitalization......................................................... A-8
Section 5.3 Subsidiaries........................................................... A-8
Section 5.4 Authority Relative to This Merger Agreement............................ A-9
Section 5.5 Reports and Financial Statements....................................... A-9
Section 5.6 Absence of Certain Changes or Events................................... A-10
Section 5.7 Litigation............................................................. A-10
Section 5.8 Information in Disclosure Documents.................................... A-10
Section 5.9 Labor Matters.......................................................... A-10
Section 5.10 Employee Benefit Plans; ERISA.......................................... A-10
Section 5.11 Takeover Provisions Inapplicable....................................... A-12
Section 5.12 Company Action......................................................... A-12
Section 5.13 Fairness Opinion....................................................... A-12
Section 5.14 Financial Advisor...................................................... A-12
Section 5.15 Compliance With Applicable Laws........................................ A-12
Section 5.16 Liabilities............................................................ A-13
Section 5.17 Taxes.................................................................. A-13
Section 5.18 Certain Agreements..................................................... A-13
Section 5.19 Inventory.............................................................. A-14
Section 5.20 Patents, Trademarks, Etc. ............................................. A-14
Section 5.21 Product Liability...................................................... A-15
Section 5.22 Environment............................................................ A-15
Section 5.23 Tax and Accounting Matters............................................. A-15
Section 5.24 Authorized Stock....................................................... A-16
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Conduct of Business by the Company Pending the Merger.................. A-16
Section 6.2 Conduct of Business by Parent and Sub Pending the Merger............... A-17
Section 6.3 Notice of Breach....................................................... A-18
</TABLE>
ii
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<TABLE>
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<S> <C> <C>
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access and Information................................................. A-18
Section 7.2 Registration Statement/Proxy Statement................................. A-18
Section 7.3 Affiliates; Publication of Combined Financial Results.................. A-18
Section 7.4 Stock Exchange Listing................................................. A-19
Section 7.5 Employment Arrangements................................................ A-19
Section 7.6 Indemnification........................................................ A-19
Section 7.7 HSR Act................................................................ A-20
Section 7.8 Additional Agreements.................................................. A-20
Section 7.9 No Solicitation........................................................ A-20
Section 7.10 Employee Agreements.................................................... A-22
Section 7.11 Company Stock Plans.................................................... A-22
Section 7.12 Independent Auditors................................................... A-22
ARTICLE VIII
CONDITIONS PRECEDENT
Section 8.1 Conditions to Each Party's Obligation to Effect the Merger............. A-22
Section 8.2 Conditions to Obligation of the Company to Effect the Merger........... A-23
Section 8.3 Conditions to Obligations of Parent and Sub to Effect the Merger....... A-23
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination............................................................ A-24
Section 9.2 Effect of Termination; Fees............................................ A-24
Section 9.3 Amendment.............................................................. A-25
Section 9.4 Waiver................................................................. A-25
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-Survival of Representations, Warranties and Agreements............. A-25
Section 10.2 Notices................................................................ A-26
Section 10.3 Expenses............................................................... A-26
Section 10.4 Publicity.............................................................. A-26
Section 10.5 Specific Performance................................................... A-26
Section 10.6 Interpretation......................................................... A-27
Section 10.7 Miscellaneous.......................................................... A-27
</TABLE>
iii
<PAGE> 67
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Merger Agreement"), dated as of
July 28, 1997, by and among National Semiconductor Corporation, a Delaware
corporation ("Parent"), Nova Acquisition Corp., a Delaware corporation and a
wholly owned subsidiary of Parent ("Sub"), and Cyrix Corporation, a Delaware
corporation (the "Company"):
W I T N E S S E T H:
WHEREAS, the Board of Directors of Parent has determined that a combination
with the Company is in the long-term strategic best interests of its
stockholders;
WHEREAS, the Board of Directors of the Company has determined that the
Merger Agreement is consistent with and in furtherance of the long-term business
strategy of the Company, and the Company desires to combine its business of
designing, developing and marketing microprocessors for the personal computer
industry with the semiconductor operations of Parent and for the Company's
stockholders to have a continuing equity interest in the combined businesses;
WHEREAS, the Boards of Directors of Parent, Sub and the Company have
approved the merger of Sub into the Company (the "Merger"), upon the terms and
subject to the conditions set forth herein;
WHEREAS, concurrently with the execution and delivery of this Merger
Agreement, as a condition and inducement to Parent's willingness to enter into
this Merger Agreement, Parent and the Company have entered into a Stock Option
Agreement dated as of the date hereof in the form of Exhibit A (the "Stock
Option Agreement"), pursuant to which the Company has granted to Parent an
option (the "Option") to purchase shares of Company Common Stock (as defined
below);
WHEREAS, immediately prior to the execution and delivery of this Merger
Agreement, as a condition and inducement to Parent's willingness to enter into
this Merger Agreement, certain stockholders of the Company have executed and
delivered to Parent a Support Agreement dated as of the date hereof in the form
of Exhibit B (the "Support Agreement"), pursuant to which such stockholders have
agreed to vote in favor of the Merger;
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a "reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, for accounting purposes, it is intended that the Merger shall be
accounted for as a "pooling of interests";
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and agreements contained herein, the parties hereto
agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions
hereof, on the Effective Date (as defined below in Section 1.2), Sub shall be
merged into the Company and the separate existence of Sub shall thereupon cease,
and the name of the Company, as the surviving corporation in the Merger (the
"Surviving Corporation"), shall by virtue of the Merger remain "Cyrix
Corporation."
Section 1.2 Effective Date of the Merger. The Merger shall become
effective when a properly executed Certificate of Merger is duly filed with the
Secretary of State of the State of Delaware, or at such later date and time as
may be specified therein, which filing shall be made as soon as practicable
after the closing of the transactions contemplated by this Merger Agreement in
accordance with Section 3.8. When used in this Merger Agreement, the term
"Effective Date" shall mean the date and time at which such filing shall have
been made or such later date and time as may be specified in such filing.
A-1
<PAGE> 68
Section 1.3 Effects of the Merger. The Merger shall have the effects set
forth in the applicable provisions of the Delaware General Corporation Law (the
"DGCL"). Without limiting the generality of the foregoing, and subject thereto,
at the Effective Date, except as otherwise provided herein, all of the property,
rights, privileges, powers and franchises of Sub and the Company shall vest in
the Surviving Corporation, and all debts, liabilities and duties of Sub and the
Company shall become the debts, liabilities and duties of the Surviving
Corporation.
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1 Certificate of Incorporation. The Certificate of
Incorporation of Sub as in effect immediately prior to the Effective Date shall
be the Certificate of Incorporation of the Surviving Corporation after the
Effective Date except that Article I thereof shall be amended to read "The name
of the corporation is Cyrix Corporation," and subject to Section 7.6(c),
thereafter may be amended in accordance with its terms and as provided by law
and this Merger Agreement.
Section 2.2 By-laws. The By-laws of Sub as in effect on the Effective
Date shall be the By-laws of the Surviving Corporation.
Section 2.3 Board of Directors; Officers. The directors of Sub
immediately prior to the Effective Date shall be the directors of the Surviving
Corporation and the officers of the Company immediately prior to the Effective
Date shall be the officers of the Surviving Corporation, in each case until
their respective successors are duly elected and qualified.
ARTICLE III
CONVERSION OF SECURITIES
Section 3.1 Exchange Ratio. As of the Effective Date, by virtue of the
Merger and without any action on the part of any holder of any capital stock of
the Company:
(a) All shares of capital stock of the Company which are held by the
Company or any subsidiary of the Company as treasury stock, and any shares
of capital stock of the Company owned by Parent, Sub or any other
subsidiary of Parent, shall be cancelled.
(b) Subject to Section 3.4, each remaining outstanding share of common
stock, $.004 par value, of the Company ("Company Common Stock") issued and
outstanding immediately prior to the Effective Date shall be converted into
0.825 (the "Exchange Ratio") fully paid and nonassessable shares of the
common stock, $.50 par value, of Parent ("Parent Common Stock"). One
preferred share purchase right issuable pursuant to the Rights Agreement
dated as of August 8, 1988 between Parent and The First National Bank of
Boston, as amended, or any other purchase right issued in substitution
thereof (the "Parent Rights"), shall be issued together with and shall
attach to each share of Parent Common Stock issued pursuant to this Section
3.1(b), unless the Parent Rights have been redeemed prior to the Effective
Date.
(c) In the event of any stock dividend, stock split, reclassification,
recapitalization, combination or exchange of shares with respect to, or
rights issued in respect of, Parent Common Stock prior to the Effective
Date, the Exchange Ratio shall be adjusted accordingly.
(d) Each issued and outstanding share of capital stock of Sub shall be
converted into and become one fully paid and nonassessable share of common
stock, $.01 par value, of the Surviving Corporation.
(e) Each option to purchase Company Common Stock ("Company Stock
Options") granted under the Company Plans (as defined herein) which is
outstanding and unexercised immediately prior to the Effective Date shall
cease to represent a right to acquire shares of Company Common Stock and
shall be converted into an option to purchase shares of Parent Common Stock
in an amount and at an exercise
A-2
<PAGE> 69
price determined as follows: (i) the number of shares of Parent Common
Stock to be subject to the new option shall be equal to the product of the
number of shares of Company Common Stock subject to the original option
multiplied by the Exchange Ratio and rounded to the nearest whole share;
and (ii) the exercise price per share of Parent Common Stock under the new
option shall be equal to the quotient of the exercise price per share of
Company Common Stock under the original option divided by the Exchange
Ratio and rounded to the nearest whole cent. The terms and conditions of
the new option, including vesting provisions, shall be the same as the
original option except that all references to the Company shall be deemed
to be references to Parent. The adjustment provided herein with respect to
any Company Stock Options which are "incentive stock options" (as defined
in Section 422 of the Code) shall be and is intended to be effected in a
manner which is consistent with Section 424(a) of the Code. Prior to the
Effective Date, Parent and the Company shall take all action necessary to
permit the adjustments set forth in this Section 3.1(e). Parent shall
reserve for issuance a sufficient number of shares of Parent Common Stock
for delivery with respect to the converted Company Stock Options. As soon
as practicable after the Effective Date, Parent shall file a registration
statement on Form S-8 (or any successor or other appropriate form) with
respect to the shares of Parent Common Stock subject to such options.
(f) The Company's 5 1/2% Convertible Subordinated Notes due June 1,
2001 (the "Company Notes") outstanding immediately prior to the Effective
Date shall be assumed by Parent and remain outstanding thereafter as an
obligation of Parent and the Surviving Corporation as co-obligors, and,
from and after the Effective Date, the holders of the Company Notes shall
have the right to convert such Company Notes into the number of shares of
Parent Common Stock receivable in the Merger by a holder of the number of
shares of Company Common Stock into which such Company Notes could have
been converted immediately prior to the Merger. Parent shall enter into a
supplemental indenture with respect to such obligations in accordance with
the terms of the indenture pursuant to which the Company Notes were issued.
Section 3.2 Parent to Make Certificates Available. Prior to the Effective
Date, Parent shall select Boston Equiserve or such other person or persons
reasonably satisfactory to the Company to act as exchange agent for the Merger
(the "Exchange Agent"). As soon as practicable after the Effective Date, Parent
shall make available, and each holder of Company Common Stock to be converted
pursuant to Section 3.1 (each, a "Company Holder") will be entitled to receive,
upon surrender to the Exchange Agent of one or more certificates representing
such stock ("Certificates") for cancellation, certificates representing the
number of shares of Parent Common Stock into which such shares are converted in
the Merger and cash in consideration of fractional shares as provided in Section
3.4. Such shares of Parent Common Stock issued in the Merger shall each be
deemed to have been issued at the Effective Date.
Section 3.3 Dividends; Transfer Taxes. No dividends or other
distributions that are declared or made on Parent Common Stock will be paid to
persons entitled to receive certificates representing Parent Common Stock
pursuant to this Merger Agreement until such persons surrender their
Certificates representing Company Common Stock. Upon such surrender, there shall
be paid to the person in whose name the certificates representing such Parent
Common Stock shall be issued any dividends or other distributions which shall
have become payable with respect to such Parent Common Stock in respect of a
record date after the Effective Date. In no event shall the person entitled to
receive such dividends be entitled to receive interest on such dividends. In the
event that any certificates for any shares of Parent Common Stock are to be
issued in a name other than that in which the Certificates representing shares
of Company Common Stock surrendered in exchange therefor are registered, it
shall be a condition of such exchange that the person requesting such exchange
shall pay to the Exchange Agent any transfer or other taxes required by reason
of the issuance of certificates for such shares of Parent Common Stock in a name
other than that of the registered holder of the Certificate surrendered, or
shall establish to the satisfaction of the Exchange Agent that such tax has been
paid or is not applicable. Notwithstanding the foregoing, neither the Exchange
Agent nor any party hereto shall be liable to a Company Holder for any shares of
Parent Common Stock or dividends thereon delivered to a public official pursuant
to any applicable escheat laws.
A-3
<PAGE> 70
Section 3.4 No Fractional Shares. No certificates or scrip representing
less than one full share of Parent Common Stock shall be issued upon the
surrender for exchange of Certificates representing Company Common Stock
pursuant to Section 3.1(b). In lieu of any such fractional share, each Company
Holder who would otherwise have been entitled to a fraction of a share of Parent
Common Stock upon surrender of Certificates for exchange pursuant to Section
3.1(b) shall be paid upon such surrender cash (without interest) in an amount
equal to the product of the closing price of Parent Common Stock on the New York
Stock Exchange ("NYSE") Composite Tape on the Effective Date multiplied by the
fractional interest such Company Holder would otherwise be entitled to receive.
For purposes of paying such cash in lieu of fractional shares, all Certificates
surrendered for exchange on the same letter of transmittal shall be aggregated,
with the holder thereof receiving the aggregate whole number of shares of Parent
Common Stock, and no Company Holder shall receive cash in lieu of fractional
shares in an amount equal to or greater than the value of one full share of
Parent Common Stock with respect to such surrendered Certificates.
Section 3.5 Company Shareholders' Meeting. Unless this Merger Agreement
has been terminated pursuant to Section 9.1, the Company shall take all action
necessary, in accordance with applicable law and its Restated Certificate of
Incorporation and By-laws, to convene a special meeting of the holders of
capital stock of the Company entitled to vote thereat (the "Company Meeting") as
promptly as practicable for the purpose of considering and taking action upon
this Merger Agreement. Subject to Section 7.9(c), the Board of Directors of the
Company will recommend that holders of any capital stock of the Company entitled
to vote thereon vote in favor of and approve the Merger and the adoption of this
Merger Agreement at the Company Meeting. At the Company Meeting, all of the
shares of Company Common Stock then owned by Parent, Sub, or any other
subsidiary of Parent, or with respect to which Parent, Sub, or any other
subsidiary of Parent holds the power to direct the voting, will be voted in
favor of approval of the Merger and adoption of this Merger Agreement.
Section 3.6 Closing of the Company's Transfer Books. At the close of
business on the Effective Date, the stock transfer books of the Company shall be
closed and no transfer of any shares of capital stock of the Company shall be
made thereafter. In the event that, after the Effective Date, Certificates are
presented to the Surviving Corporation, they shall be cancelled and exchanged
for Parent Common Stock and/or cash as provided in Sections 3.1(b) and 3.4.
Section 3.7 Assistance in Consummation of the Merger. Each of Parent, Sub
and the Company shall provide all reasonable assistance to, and shall cooperate
with, each other to bring about the consummation of the Merger as soon as
possible in accordance with the terms and conditions of this Merger Agreement.
Parent shall cause Sub to perform all of its obligations in connection with this
Merger Agreement.
Section 3.8 Closing. The closing of the transactions contemplated by this
Merger Agreement shall take place (i) at the offices of Wachtell, Lipton, Rosen
& Katz, 51 West 52nd Street, New York, New York 10019, at 10:00 A.M. local time
as soon as practicable (but in any event within three business days) after the
day on which the last of the conditions set forth in Article VIII is fulfilled
or waived or (ii) at such other time and place as Parent and the Company shall
agree in writing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as follows:
Section 4.1 Organization and Qualification. Each of Parent and Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the corporate power to carry on its business as
it is now being conducted or currently proposed to be conducted. Parent is duly
qualified as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of its properties owned or held under
lease or the nature of its activities make such qualification necessary, except
where the failure to be so qualified will not, individually or in the aggregate,
have a Parent Material Adverse Effect. As used in this Merger Agreement, "Parent
Material Adverse Effect" shall mean a material adverse effect on the business,
assets, liabilities, financial condition or results of operations of Parent
A-4
<PAGE> 71
and its subsidiaries taken as a whole, but excluding any such effect resulting
directly and primarily from (i) general economic or financial market conditions
or (ii) the announcement or consummation of the Merger.
Section 4.2 Capitalization. (a) Parent. The authorized capital stock of
Parent consists of 300,000,000 shares of Parent Common Stock and 1,000,000
shares of preferred stock, $.50 par value. As of June 22, 1997, 145,674,568
shares of Parent Common Stock were validly issued and outstanding, fully paid
and nonassessable and no shares of Parent Common Stock were held in treasury. As
of May 25, 1997, Parent had reserved (x) 6,048,387 shares of Parent Common Stock
for future issuance upon conversion of Parent's 6.50% Convertible Subordinated
Notes and (y) 48,105,495 shares of Parent Common Stock for issuance under
Parent's stock option, benefit and stock purchase plans, of which options
representing the right to purchase an aggregate of 15,327,741 shares of Parent
Common Stock were outstanding and 20,931,318 shares were issued (pursuant to
option plans). As of June 22, 1997, there were no bonds, debentures, notes or
other indebtedness having the right to vote on any matters on which the Parent's
shareholders may vote issued or outstanding. As of May 25, 1997, except for the
aforementioned and the Parent Rights, there are no options, warrants, calls or
other rights, agreements or commitments presently outstanding obligating Parent
to issue, deliver or sell shares of its capital stock or debt securities, or
obligating Parent to grant, extend or enter into any such option, warrant, call
or other such right, agreement or commitment. All of the shares of Parent Common
Stock issuable in accordance with this Merger Agreement in exchange for Company
Common Stock at the Effective Date in accordance with this Merger Agreement will
be, when so issued, duly authorized, validly issued, fully paid and
nonassessable.
(b) Sub. The authorized capital stock of Sub consists of 100 shares of
common stock, par value $0.01 per share, all of which are validly issued and
outstanding, fully paid and nonassessable and are owned by Parent free and clear
of all liens, claims and encumbrances.
Section 4.3 Subsidiaries. The only "Significant Subsidiaries" (as such
term is defined in Rule 1-02 of Regulation S-X of the Securities and Exchange
Commission (the "Commission")) ("Significant Subsidiaries") of Parent are those
named in the Parent SEC Reports (as defined herein) filed prior to the date of
this Merger Agreement. Each Significant Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has the corporate power to carry on its
business as it is now being conducted or currently proposed to be conducted.
Each Significant Subsidiary is duly qualified as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
its properties owned or held under lease or the nature of its activities makes
such qualification necessary except where the failure to be so qualified will
not have a Parent Material Adverse Effect. All the outstanding shares of capital
stock of each Significant Subsidiary are validly issued, fully paid and
nonassessable and are owned by Parent or by a Significant Subsidiary of Parent
free and clear of any liens, claims or encumbrances. There are no existing
options, warrants, calls or other rights, agreements or commitments of any
character relating to the issued or unissued capital stock or other securities
of any Significant Subsidiaries of Parent.
Section 4.4 Authority Relative to This Merger Agreement. Parent and Sub
have the corporate power to enter into this Merger Agreement and to carry out
their respective obligations hereunder. The execution and delivery of this
Merger Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by the Board of Directors of Parent and Sub. This
Merger Agreement constitutes a valid and binding obligation of Parent and Sub
enforceable against such parties in accordance with its terms. No other
corporate proceedings on the part of Parent or Sub are necessary to authorize
this Merger Agreement and the transactions contemplated hereby. Parent and Sub
are not subject to or obligated under (i) any charter or by-law provision or
(ii) any contract, license, indenture or other loan document, franchise, permit,
order, decree, concession, lease, instrument, judgment, statute, law, ordinance,
rule or regulation applicable to Parent or Sub or any of their respective
subsidiaries or their respective properties or assets, which would be breached
or violated, or under which there would be a default (with or without notice or
lapse of time, or both), or under which there would arise a right of
termination, cancellation or acceleration of any obligation or the loss of a
material benefit, by its executing and carrying out this Merger Agreement other
than, in the case of clause (ii) only, (A) any breaches, violations, defaults,
terminations, cancellations, accelerations or losses
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which, either individually or in the aggregate, will not have a Parent Material
Adverse Effect or prevent the consummation of the transactions contemplated
hereby and (B) the laws and regulations referred to in the next sentence. Except
as referred to herein or in connection, or in compliance, with the provisions of
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), the Securities Act of 1933, as amended (the "Securities Act"), the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and other
governmental approvals required under the applicable laws of any foreign
jurisdiction ("Foreign Laws") and the environmental, corporation, securities or
blue sky laws or regulations of the various states, no filing or registration
with, or authorization, consent or approval of, any public body or authority is
necessary for the consummation by Parent and Sub of the Merger or the other
transactions contemplated by this Merger Agreement, other than filings,
registrations, authorizations, consents or approvals the failure of which to
make or obtain would not have a Parent Material Adverse Effect or prevent the
consummation of the transactions contemplated hereby.
Section 4.5 Reports and Financial Statements. Parent has previously
furnished the Company with true and complete copies of (i) its Annual Report on
Form 10-K for the fiscal year ended May 26, 1996, as filed with the Commission,
(ii) its Quarterly Reports on Form 10-Q for the quarters ended August 25, 1996,
November 24, 1996 and February 23, 1997, as filed with the Commission, (iii) its
proxy statements related to all meetings of its stockholders (whether annual or
special) since December 31, 1995, and (iv) all other reports or registration
statements filed by Parent with the Commission since December 31, 1995, except
registration statements on Form S-8 relating to employee benefit plans, which
are all the documents (other than preliminary material) that Parent was required
to file with the Commission since that date (clauses (i) through (iv) being
referred to herein collectively as the "Parent SEC Reports"). As of their
respective dates, the Parent SEC Reports complied in all material respects with
the requirements of the Securities Act or the Exchange Act, as the case may be,
and the rules and regulations of the Commission thereunder applicable to such
Parent SEC Reports. As of their respective dates, the Parent SEC Reports did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
audited consolidated financial statements and unaudited interim financial
statements of Parent included in the Parent SEC Reports comply as to form in all
material respects with applicable accounting requirements and with the published
rules and regulations of the Commission with respect thereto, and the financial
statements included in the Parent SEC Reports have been prepared in accordance
with United States generally accepted accounting principles ("GAAP") applied on
a consistent basis (except as may be indicated therein or in the notes thereto)
and fairly present the financial position of Parent and its subsidiaries as at
the dates thereof and the results of their operations and changes in financial
position for the periods then ended, subject, in the case of the unaudited
interim financial statements, to normal year-end audit adjustments and any other
adjustments described therein. The financial information set forth in the
earnings release promulgated by Parent on June 5, 1997, will not be materially
different from the corresponding financial information contained in the audited
consolidated financial statements of Parent included in its Annual Report on
Form 10-K for the fiscal year ended May 25, 1997, as filed with the Commission.
Section 4.6 Absence of Certain Changes or Events. Except as disclosed in
the Parent SEC Reports filed prior to the date hereof, since December 31, 1996,
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), individually or in the aggregate, having a Parent
Material Adverse Effect; or (ii) any damage, destruction or loss, whether or not
covered by insurance, which, insofar as reasonably can be foreseen, in the
future would be likely to have a Parent Material Adverse Effect.
Section 4.7 Litigation. Except as disclosed in the Parent SEC Reports
filed prior to the date hereof, there is no suit, action or proceeding pending
or, to the knowledge of Parent, threatened against or affecting Parent or any of
its subsidiaries which, alone or in the aggregate, is likely to have a Parent
Material Adverse Effect, nor is there any judgment, decree, injunction, rule or
order of any court, governmental department, commission, agency, instrumentality
or arbitrator outstanding against Parent or any of its subsidiaries having, or
which in the future is likely to have, either alone or in the aggregate, any
Parent Material Adverse Effect.
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Section 4.8 Information in Disclosure Documents, Registration Statements,
Etc. None of the information supplied or to be supplied by Parent or Sub for
inclusion or incorporation by reference in (i) the Registration Statement to be
filed with the Commission by Parent on Form S-4 under the Securities Act for the
purpose of registering the shares of Parent Common Stock to be issued in the
Merger (the "Registration Statement") and (ii) the proxy statement of the
Company (the "Proxy Statement") required to be mailed to the shareholders of the
Company in connection with the Merger will, in the case of the Proxy Statement
or any amendments or supplements thereto, at the time of the mailing of the
Proxy Statement and any amendments or supplements thereto, and at the time of
the Company Meeting to be held in connection with the Merger, or, in the case of
the Registration Statement, at the time it becomes effective and at the
Effective Date, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not misleading. The Registration Statement will comply as to form in all
material respects with the provisions of the Securities Act, and the rules and
regulations promulgated thereunder.
Section 4.9 Parent Action. The Board of Directors of Parent (at a meeting
duly called and held) has by the requisite vote of directors (a) approved the
Merger in accordance with the DGCL, (b) taken any necessary steps to render
Section 203 of the DGCL and the Parent Rights inapplicable to the Merger and the
transactions contemplated by this Merger Agreement, and (c) adopted any
necessary resolution having the effect of causing Parent not to be subject, to
the extent permitted by applicable law, to any state takeover law that may
purport to be applicable to the Merger and the transactions contemplated by this
Merger Agreement.
Section 4.10 Compliance With Applicable Laws. Parent and its subsidiaries
hold all permits, licenses, variances, exemptions, orders and approvals of all
courts, administrative agencies or commissions or other governmental authorities
or instrumentalities, domestic or foreign (each, a "Governmental Entity"),
except for such permits, licenses, variances, exemptions, orders and approvals
the failure of which, individually or in the aggregate, to hold would not have a
Parent Material Adverse Effect (the "Parent Permits"). Parent and its
subsidiaries are in compliance with the terms of the Parent Permits, except for
such failures to comply which, singly or in the aggregate, would not have a
Parent Material Adverse Effect. Except as disclosed in the Parent SEC Reports
filed prior to the date of this Merger Agreement, the businesses of Parent and
its subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any Governmental Entity, except for possible violations which,
individually or in the aggregate, do not and would not have a Parent Material
Adverse Effect. Except as disclosed in the Parent SEC Reports, no investigation
or review by any Governmental Entity with respect to Parent or any of its
subsidiaries is pending or threatened, nor has any Governmental Entity indicated
an intention to conduct the same, other than those the outcome of which would
not have a Parent Material Adverse Effect.
Section 4.11 Tax and Accounting Matters. Neither Parent nor, to its best
knowledge, any of its affiliates, has, through the date hereof, taken or agreed
to take any action, nor are they aware of any circumstances relating to Parent
or its affiliates which currently exist, that would (i) prevent Parent from
accounting for the business combination to be effected by the Merger as a
"pooling of interests" or (ii) prevent the Merger from constituting a
reorganization within the meaning of Section 368(a) of the Code.
Section 4.12 Intel License. To the knowledge of Parent, as of the date of
this Merger Agreement, the License Agreement dated June 1, 1976 between Intel
Corporation ("Intel") and Parent, as amended on January 1, 1983, constitutes a
valid and binding agreement, remains in full force and effect and does not
conflict in any material respect with, or violate in any material respect, the
terms of this Merger Agreement or the transactions contemplated hereby.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent, except as set forth in a
disclosure schedule delivered by the Company concurrently herewith (the "Company
Disclosure Schedule"), as follows:
Section 5.1 Organization and Qualification. The 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 to carry on its business as it is
now being conducted or currently proposed to be conducted. The Company is duly
qualified as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of its properties owned or held under
lease or the nature of its activities makes such qualification necessary, except
where the failure to be so qualified will not, individually or in the aggregate,
have a Company Material Adverse Effect. As used in this Merger Agreement,
"Company Material Adverse Effect" shall mean a material adverse effect on the
business, assets, liabilities, financial condition, or results of operations of
the Company and its subsidiaries, taken as a whole, but excluding any such
effect resulting directly and primarily from (i) general economic or financial
market conditions, (ii) the announcement or consummation of the Merger,
including any effect therefrom on the Company's silicon wafer manufacturing
agreements, or (iii) adverse developments in the pending litigation between the
Company and Intel or between the Company and Creative Labs, Inc. or new
litigation between the Company and Intel or between the Company and Creative
Labs, Inc. Complete and correct copies as of the date hereof of the Restated
Certificate of Incorporation and Bylaws of the Company and each of its
Significant Subsidiaries have, to the extent requested, been delivered to Parent
as part of the Company Disclosure Schedule.
Section 5.2 Capitalization. The authorized capital stock of the Company
consists of 60,000,000 shares of Company Common Stock, and 20,000,000 shares of
preferred stock, par value $.004 per share ("Company Preferred Stock"). As of
June 29, 1997, 19,681,940 shares of Company Common Stock were validly issued and
outstanding, fully paid and nonassessable, no shares of Company Preferred Stock
were outstanding, and 545,938 shares of Company Common Stock were held in
treasury. There have been no material changes in such numbers of shares through
the date hereof. As of the date hereof, there are no bonds, debentures, notes or
other indebtedness having the right to vote on any matters on which the
Company's shareholders may vote issued or outstanding. As of June 29, 1997,
except for (i) employee and director stock options to acquire 3,483,104 shares
of Company Common Stock pursuant to the Cyrix Corporation 1988 Incentive Stock
Plan, the Cyrix Corporation Employee Stock Purchase Plan, and the Cyrix
Corporation Non-Employee Directors Stock Plan and (ii) 3,182,386 shares of
Company Common Stock issuable upon conversion of the Company's 5 1/2%
Convertible Subordinated Notes due June 1, 2001 (issued pursuant to an Indenture
dated May 28, 1996), there are no options, warrants, calls or other rights,
agreements or commitments presently outstanding obligating the Company to issue,
deliver or sell shares of its capital stock or debt securities, or obligating
the Company to grant, extend or enter into any such option, warrant, call or
other such right, agreement or commitment, and there have been no material
changes in such numbers through the date hereof. No options will accelerate as a
result of the execution of this Merger Agreement or consummation of the
transactions contemplated hereby.
Section 5.3 Subsidiaries. The only direct or indirect subsidiaries of the
Company are those set forth in Schedule 5.3 of the Company Disclosure Schedule.
Each such subsidiary is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation and has the
corporate power to carry on its business as it is now being conducted or
currently proposed to be conducted. Each such subsidiary is duly qualified as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities makes such qualification necessary except where the
failure to be so qualified will not have a Company Material Adverse Effect. All
the outstanding shares of capital stock of each such subsidiary are validly
issued, fully paid and nonassessable and are owned by the Company or by a
subsidiary of the Company free and clear of any liens, claims or encumbrances.
There are no existing options, warrants, calls or other rights, agreements or
commitments of any character relating to the issued or unissued capital stock or
other securities of any of the subsidiaries of the Company. Except as set forth
in the Company's Annual Report on Form 10-K for the fiscal
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year ended December 29, 1996, the Company does not directly or indirectly own
any securities of or any other interest in any other corporation, partnership,
joint venture or other business association or entity.
Section 5.4 Authority Relative to This Merger Agreement. The Company has
the corporate power to enter into this Merger Agreement, subject to the
requisite approval of this Merger Agreement by the holders of a majority of the
Company Common Stock, and to enter into the Stock Option Agreement and to carry
out its obligations hereunder and thereunder. The execution and delivery of this
Merger Agreement and the Stock Option Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by the
Board of Directors of the Company. Each of this Merger Agreement and the Stock
Option Agreement constitutes a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms. Except for the
requisite approval by the holders of Company Common Stock, no other corporate
proceedings on the part of the Company are necessary to authorize this Merger
Agreement and the transactions contemplated hereby. No other corporate
proceedings are necessary to authorize the Stock Option Agreement and the
transactions contemplated thereby. The Company is not subject to or obligated
under (i) any charter or by-law provision or (ii) except as set forth in
Schedule 5.4 of the Company Disclosure Schedule, any indenture or other loan
document, contract, license, franchise, permit, order, decree, concession,
lease, instrument, judgment, statute, law, ordinance, rule or regulation
applicable to the Company or any of its subsidiaries or their respective
properties or assets which would be breached or violated, or under which there
would be a default (with or without notice or lapse of time, or both), or under
which there would arise a right of termination, cancellation or acceleration of
any obligation or the loss of a material benefit, by its executing and carrying
out this Merger Agreement or the Stock Option Agreement, other than, in the case
of clause (ii) only, (A) any breaches, violations, defaults, terminations,
cancellations, accelerations or losses which, either individually or in the
aggregate, will not have a Company Material Adverse Effect or prevent the
consummation of the transactions contemplated hereby or thereby and (B) the laws
and regulations referred to in the next sentence. Except as referred to herein
or, with respect to the Merger or the transactions contemplated thereby, in
connection, or in compliance, with the provisions of the HSR Act, the Securities
Act, the Exchange Act, the Foreign Laws and the environmental, corporation,
securities or blue sky laws or regulations of the various states, no filing or
registration with, or authorization, consent or approval of, any public body or
authority is necessary for the consummation by the Company of the Merger or the
other transactions contemplated by this Merger Agreement or by the Stock Option
Agreement, other than filings, registrations, authorizations, consents or
approvals the failure of which to make or obtain would not have a Company
Material Adverse Effect or prevent the consummation of the transactions
contemplated hereby or thereby.
Section 5.5 Reports and Financial Statements. The Company has previously
furnished Parent with true and complete copies of (i) its Annual Report on Form
10-K for the year ended December 29, 1996, as filed with the Commission, (ii)
its Quarterly Report on Form 10-Q for the quarter ended March 30, 1997, as filed
with the Commission, (iii) its proxy statements related to all meetings of its
stockholders (whether annual or special) since December 31, 1995, and (iv) all
other reports or registration statements filed by the Company with the
Commission since December 31, 1995, except registration statements on Form S-8
relating to employee benefit plans, which are all the documents (other than
preliminary material) that the Company was required to file with the Commission
since that date (the documents listed in clauses (i) through (iv) being referred
to herein collectively as the "Company SEC Reports"). As of their respective
dates, the Company SEC Reports complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations of the Commission thereunder applicable to such
Company SEC Reports. As of their respective dates, the Company SEC Reports did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. The
audited consolidated financial statements and unaudited interim financial
statements of the Company included in the Company SEC Reports comply as to form
in all material respects with applicable accounting requirements and with the
published rules and regulations of the Commission with respect thereto, and the
financial statements included in the Company SEC Reports have been prepared in
accordance with GAAP applied on a consistent basis (except as may be indicated
therein or in the notes thereto) and fairly present the financial position of
the Company and its subsidiaries as at the dates thereof and the results of
their operations
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and changes in financial position for the periods then ended, subject, in the
case of the unaudited interim financial statements, to normal year-end audit
adjustments and any other adjustments described therein.
Section 5.6 Absence of Certain Changes or Events. Except as disclosed in
the Company SEC Reports filed prior to the date hereof or in Schedule 5.6 of the
Company Disclosure Schedule, since December 31, 1996, 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),
individually or in the aggregate, having a Company Material Adverse Effect; (ii)
any damage, destruction or loss, whether or not covered by insurance, which,
insofar as reasonably can be foreseen, in the future would be likely to have a
Company Material Adverse Effect; (iii) any declaration, setting aside or payment
of any dividend or other distribution (whether in cash, stock or property) with
respect to the capital stock of the Company; (iv) any material increase in the
benefits under, or the establishment or amendment of, any bonus, insurance,
severance, deferred compensation, pension, retirement, profit sharing,
performance awards (including, without limitation, the granting of stock
appreciation rights or restricted stock awards), stock purchase or other
employee benefit plan, or any increase in the compensation payable or to become
payable to any of the directors or officers of the Company or the employees of
the Company or its subsidiaries as a group, except for (A) increases in salaries
or wages payable or to become payable in the ordinary course of business and
consistent with past practice or (B) the granting of stock options in the
ordinary course of business to employees of the Company or its subsidiaries who
are not directors or executive officers of the Company; (v) any change by the
Company or its subsidiaries in their significant accounting policies; or (vi)
any entry into any commitment or transaction material to the Company and its
subsidiaries taken as a whole (including, without limitation, any borrowing or
sale of assets) except in the ordinary course of business consistent with past
practice.
Section 5.7 Litigation. Except as disclosed in the Company's SEC Reports
filed prior to the date hereof or in Schedule 5.7 of the Company Disclosure
Schedule, there is no suit, action or proceeding pending or, to the knowledge of
the Company, threatened against or affecting the Company or any of its
subsidiaries which, either alone or in the aggregate, is likely to have a
Company Material Adverse Effect, nor is there any judgment, decree, injunction,
rule or order of any court, governmental department, commission, agency,
instrumentality or arbitrator outstanding against the Company or any of its
subsidiaries having, or which, in the future is likely to have, either alone or
in the aggregate, any Company Material Adverse Effect.
Section 5.8 Information in Disclosure Documents. None of the information
supplied or to be supplied by the Company or its subsidiaries for inclusion or
incorporation by reference in the Proxy Statement or the Registration Statement
will, in the case of the Proxy Statement or any amendments or supplements
thereto, at the time of the mailing of the Proxy Statement and any amendments or
supplements thereto, and at the time of the Company Meeting to be held in
connection with the Merger, or, in the case of the Registration Statement, at
the time it becomes effective and at the Effective Date, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The Proxy Statement
will comply as to form in all material respects with the provisions of the
Exchange Act and the rules and regulations thereunder.
Section 5.9 Labor Matters. No labor organization or group of employees of
the Company or any of its subsidiaries has made a pending demand for recognition
or certification, and there are no representation or certification proceedings
or petitions seeking a representation proceeding presently pending or threatened
to be brought or filed, with the National Labor Relations Board or any other
labor relations tribunal or authority. There are no organizing activities,
strikes, work stoppages, slowdowns, lockouts, material arbitrations or material
grievances, or other material labor disputes pending or threatened against or
involving the Company or any of its subsidiaries which, individually or in the
aggregate, have had or would have a Company Material Adverse Effect.
Section 5.10 Employee Benefit Plans; ERISA. (a) Schedule 5.10 of the
Company Disclosure Schedule lists all employee benefit plans, programs,
policies, practices, and other arrangements providing benefits to any employee
or former employee, or director or former director (or beneficiary or dependent
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thereof) sponsored or maintained by the Company or any of its subsidiaries to
which the Company or any of its subsidiaries contributes or is obligated to
contribute ("Company Plans"). Without limiting the generality of the foregoing,
the term "Company Plans" includes all employee welfare benefit plans within the
meaning of Section 3(1) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), and all employee pension benefit plans within the meaning
of Section 3(2) of ERISA.
(b) With respect to each Company Plan, the Company has delivered to Parent
a true, correct and complete copy of: (i) each writing constituting a part of
such Company Plan, including without limitation all plan documents, benefit
schedules, trust agreements, and insurance contracts and other funding vehicles;
(ii) the most recent Annual Report (Form 5500 Series) and accompanying schedule,
if any; (iii) the current summary plan description, if any; (iv) the most recent
annual financial report, if any; (v) the most recent actuarial report, if any;
and (vi) the most recent determination letter from the Internal Revenue Service
("IRS"), if any. Except as specifically provided in the foregoing documents
delivered to Parent, there are no amendments to any Company Plan that have been
adopted or approved nor has the Company or any of its subsidiaries undertaken to
make any such amendments.
(c) The IRS has issued a favorable determination letter with respect to
each Company Plan that is intended to be a "qualified plan" within the meaning
of Section 401(a) of the Code (a "Qualified Company Plan") that has not been
revoked, and there are no existing circumstances nor any events that have
occurred that could adversely affect the qualified status of any Qualified
Company Plan or the related trust. No Company Plan is intended to meet the
requirements of Code Section 501(c)(9).
(d) All contributions required to be made to any Company Plan by applicable
law or regulation or by any plan document or other contractual undertaking, and
all premiums due or payable with respect to insurance policies funding any
Company Plan, for any period through the date hereof have been timely made or
paid in full or, to the extent not required to be made or paid on or before the
date hereof, have been fully reflected on the Company's Annual Report on Form
10-K for the year ended December 29, 1996, as filed with the Commission.
(e) The Company and each of its subsidiaries has complied, and is now in
compliance, in all material respects with all provisions of ERISA, the Code and
all laws and regulations applicable to the Company Plans, other than any
noncompliance which does not have, or which in the future would not be likely to
have, either alone or in the aggregate, a Company Material Adverse Effect. There
is not now, nor do any circumstances exist that could give rise to, any
requirement for the posting of security with respect to a Company Plan or the
imposition of any lien on the assets of the Company or any of its subsidiaries
under ERISA or the Code. No prohibited transaction has occurred with respect to
any Company Plan.
(f) No Company Plan is subject to Title IV or Section 302 of ERISA or
Section 412 or 4971 of the Code.
(g) No Company Plan is a "multiemployer plan" within the meaning of Section
4001(a)(3) of ERISA (a "Multiemployer Plan") or a plan that has two or more
contributing sponsors at least two of whom are not under common control, within
the meaning of Section 4063 of ERISA (a "Multiple Employer Plan"), nor has the
Company or any Company ERISA Affiliate (as defined below), at any time since
September 2, 1974, contributed to or been obligated to contribute to any
Multiemployer Plan or Multiple Employer Plan.
(h) There does not now exist, nor do any circumstances exist that could
result in, any Controlled Group Liability (as defined below) that would be a
liability of Parent or any of its subsidiaries following the Effective Date,
having, or which in the future would be likely to have, either alone or in the
aggregate, a Company Material Adverse Effect.
(i) Neither the Company nor any of its subsidiaries has any liability for
life, health, medical or other welfare benefits to former employees or
beneficiaries or dependents thereof, except for health continuation coverage as
required by Section 4980B of the Code or Part 6 of Title I of ERISA.
(j) Neither the execution and delivery of this Merger Agreement nor the
consummation of the transactions contemplated hereby will (either alone or in
conjunction with any other event) result in, cause the
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accelerated vesting or delivery of, or increase the amount or value of, any
payment or benefit to any employee of the Company or any of its subsidiaries.
Without limiting the generality of the foregoing, no amount paid or payable by
the Company or any of its subsidiaries in connection with the transactions
contemplated hereby (either solely as a result thereof or as a result of such
transactions in conjunction with any other event) will be an "excess parachute
payment" within the meaning of Section 280G of the Code.
(k) There are no pending or threatened claims (other than claims for
benefits in the ordinary course), lawsuits or arbitrations which have been
asserted or instituted against the Company Plans, any fiduciaries thereof with
respect to their duties to the Company Plans or the assets of any of the trusts
under any of the Company Plans which could reasonably be expected to result in
any liability of the Company or any of its subsidiaries, to the Pension Benefit
Guaranty Corporation, the Department of Treasury, the Department of Labor or any
Multiemployer Plan, having, or which in the future would be likely to have,
either alone or in the aggregate, a Company Material Adverse Effect.
(l) For purposes of this Section 5.10, the following terms shall have the
following meanings: "Controlled Group Liability" means any and all liabilities
under (i) Title IV of ERISA, (ii) Section 302 of ERISA, (iii) Sections 412 and
4971 of the Code, (iv) the continuation coverage requirements of Section 601 et
seq. of ERISA and Section 4980B of the Code, and (v) corresponding or similar
provisions of foreign laws or regulations, other than such liabilities that
arise solely out of, or relate solely to, the Company Plans; "Company ERISA
Affiliate" means any entity, trade or business that is a member of a group
described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1)
of ERISA that includes the Company or any of its subsidiaries or that is a
member of the same "controlled group" as the Company or any of its subsidiaries,
pursuant to Section 4001(a)(14) of ERISA; and "employee" means any employee or
officer of the Company or any of its subsidiaries, and any individual providing
services as an independent contractor to the Company or any of its subsidiaries.
Section 5.11 Takeover Provisions Inapplicable. As of the date hereof and
at all times on or prior to the Effective Date, Section 203 of the DGCL is and
shall be inapplicable to the Merger and the transactions contemplated by this
Merger Agreement and the Stock Option Agreement.
Section 5.12 Company Action. The Board of Directors of the Company (at a
meeting duly called and held) has by the requisite vote of directors (i)
determined that the Merger is advisable and fair and in the best interests of
the Company and its shareholders, (ii) approved the Merger in accordance with
the provisions of Section 251 of the DGCL, (iii) recommended the approval of
this Merger Agreement and the Merger by the holders of the Company Common Stock
and directed that the Merger be submitted for consideration by the Company's
shareholders entitled to vote thereon at the Company Meeting and (iv) adopted
any necessary resolution having the effect of causing the Company not to be
subject, to the extent permitted by applicable law, to any state takeover law
that may purport to be applicable to the Merger and the transactions
contemplated by this Merger Agreement and the Stock Option Agreement.
Section 5.13 Fairness Opinion. The Company has received the opinion of
Goldman, Sachs & Co., financial advisors to the Company, dated the date hereof,
to the effect that the consideration to be received by the Company's
shareholders in the Merger is fair to the shareholders of the Company.
Section 5.14 Financial Advisor. Except for Goldman, Sachs & Co., no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the Merger or the transactions
contemplated by this Merger Agreement based upon arrangements made by or on
behalf of the Company, and the fees and commissions payable to Goldman, Sachs &
Co. as contemplated by this Section 5.14 will be the amount set forth in that
certain letter, dated September 13, 1996, from Goldman, Sachs & Co. to the
Company, a copy of which has been delivered to Parent.
Section 5.15 Compliance With Applicable Laws. The Company and its
subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities, except for such permits, licenses,
variances, exemptions, orders and approvals the failure of which, individually
or in the aggregate, to hold would not have a Company Material Adverse Effect
(the "Company Permits"). The Company and its subsidiaries are in compliance with
the terms of the Company Permits, except for such failures to comply
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which, singly or in the aggregate, would not have a Company Material Adverse
Effect. Except as disclosed in the Company SEC Reports filed prior to the date
of this Merger Agreement, the businesses of the Company and its subsidiaries are
not being, and have not been, conducted in violation of any law, ordinance or
regulation of any Governmental Entity, except for possible violations which,
individually or in the aggregate, do not and would not have a Company Material
Adverse Effect. No investigation or review by any Governmental Entity with
respect to the Company or any of its subsidiaries is pending or threatened, nor
has any Governmental Entity indicated an intention to conduct the same, other
than those the outcome of which would not have a Company Material Adverse
Effect.
Section 5.16 Liabilities. As of June 29, 1997, neither the Company nor
any of its subsidiaries had any liability or obligation (absolute, accrued,
contingent or otherwise, in contract, tort or otherwise and whether or not
required by GAAP to be reflected in such Person's balance sheet or other books
and records) (a "Liability"), except as and to the extent disclosed or provided
for in the most recent Company SEC Reports filed prior to the date of this
Merger Agreement or as set forth in Schedule 5.6 of the Company Disclosure
Schedule, other than such Liabilities which, individually or in the aggregate,
would not have a Company Material Adverse Effect. From and after June 29, 1997,
neither the Company nor any of its subsidiaries has incurred, suffered,
permitted to exist or otherwise become subject to any Liability, other than
Liabilities incurred in the ordinary course of business in accordance with past
practice which, individually or in the aggregate, would not have a Company
Material Adverse Effect.
Section 5.17 Taxes. Each of the Company and its subsidiaries has filed
all material tax returns, declarations and reports required to be filed by any
of them (taking into account all valid extensions of filing dates) and has paid
(or the Company has paid on its behalf), or has set up an adequate liability
reserve in accordance with GAAP for the payment of, all material taxes required
to be paid in respect of the periods covered by such returns, declarations and
reports. The information contained in such tax returns, declarations and reports
is true, complete and accurate in all material respects. Neither the Company nor
any subsidiary of the Company is delinquent in the payment of any tax,
assessment or governmental charge, except where such delinquency has not had or
would not reasonably be expected to have, a Company Material Adverse Effect. No
material deficiencies for any taxes have been proposed, asserted or assessed
against the Company or any of its subsidiaries that have not been finally
settled or paid in full and no requests for waivers of the time to assess any
such tax are pending. No material tax return, declaration or report is currently
under audit by any taxing authority, and as of the date hereof no written notice
of any such audit has been received. For the purposes of this Merger Agreement,
the term "tax" shall include all federal, state, local and foreign income,
profits, franchise, gross receipts, payroll, sales, employment, use, property,
withholding, excise and other taxes, duties and assessments of any nature
whatsoever together with all interest, penalties and additions imposed with
respect to such amounts.
Section 5.18 Certain Agreements. Except as disclosed in Schedule 5.18 of
the Company Disclosure Schedule or in the Company SEC Reports filed prior to the
date of this Merger Agreement, neither the Company nor any of its subsidiaries
is a party or subject to any oral or written (i) agreement, contract, indenture
or other instrument relating to Indebtedness (as defined below) in an amount
exceeding $1,000,000; (ii) joint venture agreement or arrangement or any other
agreement which has involved or is expected to involve a sharing of revenues of
$1,000,000 per annum or more with other persons; (iii) lease for real or
personal property in which the amounts of payments which the Company or any
subsidiary is required to make on an annual basis exceeds $250,000; (iv)
agreement, contract, policy, license, document, instrument, arrangement or
commitment that limits in any material respect the freedom of the Company or any
subsidiary of the Company to compete in any line of business or with any person
or in any geographical area or which would so limit the freedom of the Company
or any subsidiary of the Company after the Effective Date; (v) agreement,
contract, policy, license, document, instrument, arrangement or commitment
which, after giving effect to the transactions contemplated by this Merger
Agreement, purports to restrict or bind Parent or any of its subsidiaries other
than the Surviving Corporation and its subsidiaries in any respect; (vi)
employment, consulting, severance, termination, or indemnification agreement,
contract or arrangement providing for future payments with any current or former
officer, consultant, director or employee which (A) exceeds $100,000 per annum
or (B) requires aggregate annual payments or total payments over the life of
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such agreement, contract or arrangement to such current or former officer,
consultant, director or employee in excess of $100,000 or $250,000,
respectively, and is not terminable before and after the Merger by it or its
subsidiary on 30 days' notice or less without penalty or obligation to make
payments related to such termination; or (vii) other agreement, contract,
policy, license, document, instrument, arrangement or commitment not made in the
ordinary course of business which is material to the Company and its
subsidiaries taken as a whole. "Indebtedness" means any liability in respect of
(A) borrowed money, (B) capitalized lease obligations, (C) the deferred purchase
price of property or services (other than trade payables in the ordinary course
of business) and (D) guarantees of any of the foregoing. Neither the Company nor
any of its subsidiaries is in default (or would be in default with notice or
lapse of time, or both) under any indenture, note, credit agreement, loan
document, lease, contract, policy, license, document, instrument, arrangement or
commitment (a "Contract"), including, but not limited to, any Company Plan,
whether or not such default has been waived, which default, alone or in the
aggregate with other such defaults, would have a Company Material Adverse
Effect. Neither the Company nor any of its subsidiaries is a party to or bound
by any Contract which upon execution of this Merger Agreement or consummation of
the transactions contemplated hereby will (either alone or upon the occurrence
of additional acts or events) result in the loss of any material benefit, the
termination thereof or any payment becoming accelerated or due from the Company
or Parent or any of their subsidiaries, which loss, termination or acceleration
would have a Company Material Adverse Effect.
Section 5.19 Inventory. The inventories of the Company and its
subsidiaries as reflected in the most recent financial statements contained in
the Company SEC Reports, and the inventories reflected on the books of the
Company and its subsidiaries as of the date hereof, except for normal year-end
adjustments made in accordance with GAAP applied consistently with prior
periods, (i) are carried as provided in the Company SEC Reports not in excess of
the lower of cost or net realizable value and (ii) do not include any inventory
which, as of the date of such financial statements, is obsolete, surplus or not
usable or saleable in the lawful and ordinary course of business of the Company
and its subsidiaries as heretofore conducted, in each case net of reserves
provided therefor, except for such discrepancies which, individually or in the
aggregate, would not have a Company Material Adverse Effect.
Section 5.20 Patents, Trademarks, Etc. (a) The Company and its
subsidiaries exclusively own, or are licensed or otherwise have the right to
use, all patents, trademarks, trade names, service marks, copyrights and any
applications therefor, maskworks, net lists, schematics, inventories,
technology, trade secrets, source codes, know-how, computer software programs or
applications and tangible or intangible proprietary information or material that
in any material respect are used or proposed by the Company to be used in the
business of the Company and any of its subsidiaries as currently conducted or
proposed by the Company to be conducted (the "Company Intellectual Property
Rights"), the lack of which, individually or in the aggregate, would have a
Company Material Adverse Effect. Schedule 5.20 of the Company Disclosure
Schedule lists, as of the date hereof, all material: (A) patents, trademarks,
trade names, service marks, registered and unregistered copyrights included in
the Company Intellectual Property Rights, the Company's currently marketed
software products and a list of which, if any, of such products have been
registered for copyright protection with the United States Copyright Office and
any foreign offices; and (B) licenses and other agreements to which the Company
or any of its subsidiaries is a party and pursuant to which the Company or any
of its subsidiaries is authorized to use any Company Intellectual Property
Right. Neither the Company nor any of its subsidiaries is, or as a result of the
execution, delivery or performance of the Company's obligations hereunder will
be, in violation of, or lose any rights pursuant to, any material license or
agreement described in Schedule 5.20 of the Company Disclosure Schedule, except
for such violations or losses which, individually or in the aggregate, would not
have a Company Material Adverse Effect. The Company has previously provided
Parent with a list of any applications for patents, trademarks, trade names,
service marks and registered and unregistered copyrights.
(b) As of the date hereof, except as set forth in Schedule 5.20(b) of the
Company Disclosure Schedule, no claims with respect to the Company Intellectual
Property Rights have been asserted or, to the knowledge of the Company, are
threatened by any person, nor does the Company or any subsidiary of the Company
know of any valid grounds for any bona fide claims against the use by the
Company or any subsidiary of the Company
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of any Company Intellectual Property Rights which, insofar as reasonably can be
foreseen, could, individually or in the aggregate, have a Company Material
Adverse Effect. All granted and issued patents and all registered trademarks and
service marks listed in Schedule 5.20 of the Company Disclosure Schedule and all
copyrights held by the Company or any of its subsidiaries are valid, enforceable
and subsisting, other than those the invalidity of which, individually or in the
aggregate, would not have a Company Material Adverse Effect. To the Company's
knowledge, as of the date hereof, there has not been and there is not any
material unauthorized use, infringement or misappropriation of any of the
Company Intellectual Property Rights by any third party, employee or former
employee which, individually or in the aggregate, would result in a Company
Material Adverse Effect.
(c) No Company Intellectual Property Right is subject to any outstanding
order, judgment, decree, stipulation or agreement restricting in any manner the
licensing thereof by the Company or any of its subsidiaries, except for such
orders, judgments, decrees, stipulations or agreements which, individually or in
the aggregate, would not have a Company Material Adverse Effect. Except as set
forth in Schedule 5.20(c) of the Company Disclosure Schedule, 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 Company Intellectual
Property Right, except infringement indemnities agreed to in the ordinary course
included as part of the Company's license agreements or terms of sale. Neither
the Company nor any of its subsidiaries has entered into any agreement granting
any third party the right to bring infringement actions with respect to, or
otherwise to enforce rights with respect to, any Company Intellectual Property
Rights owned by the Company. The Company and its subsidiaries have the exclusive
right to file, prosecute and maintain all applications and registrations with
respect to the Company Intellectual Property Rights owned by the Company.
Section 5.21 Product Liability. The Company is not aware of any claim, or
the basis of any claim, against the Company or any of its subsidiaries for
injury to person or property of employees or any third parties suffered as a
result of the sale of any product or performance of any service by the Company
or any of its subsidiaries, including claims arising out of the defective or
unsafe nature of its products or services, which could, individually or in the
aggregate, have a Company Material Adverse Effect. The Company and its
subsidiaries have, and on the Effective Date will have, full and adequate
insurance coverage for potential product liability claims against it.
Section 5.22 Environment. (a) As used herein, the term "Environmental
Laws" means all federal, state, local or Foreign Laws relating to pollution or
protection of human health or the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata),
including, without limitation, laws relating to emissions, discharges, releases
or threatened releases of chemicals, pollutants, contaminants, or industrial,
toxic or hazardous substances or wastes into the environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of chemicals, pollutants, contaminants, or
industrial, toxic or hazardous substances or wastes, as well as all
authorizations, codes, decrees, demands or demand letters, injunctions,
judgments, licenses, notices or notice letters, orders, permits, plans or
regulations issued, entered, promulgated or approved thereunder.
(b) To the knowledge of the Company, there are, except as disclosed in the
Company SEC Reports, with respect to the Company or any of its subsidiaries, no
past or present violations of Environmental Laws, releases of any material into
the environment, actions, activities, circumstances, conditions, events,
incidents, or contractual obligations which may give rise to any common law
liability or any liability under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA") or similar state or local
laws, which liabilities, either individually or in the aggregate, would have a
Company Material Adverse Effect.
Section 5.23 Tax and Accounting Matters. Neither the Company nor, to its
best knowledge, any of its affiliates, has through the date hereof, taken or
agreed to take any action, nor are they aware of any circumstances relating to
the Company or its affiliates which currently exist, that would (i) prevent
Parent from accounting for the business combination to be effected by the Merger
as a "pooling of interests" or (ii) prevent the Merger from constituting a
reorganization within the meaning of Section 368(a) of the Code.
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Section 5.24 Authorized Stock. The Company has taken all necessary
corporate and other action to authorize and reserve and to permit it to issue,
and, at all times from the date hereof until the obligation to deliver Company
Common Stock upon the exercise of the Option terminates, will have reserved for
issuance, upon exercise of the Option, shares of Company Common Stock necessary
for Parent to exercise in full the Option, and the Company will take all
necessary corporate action to authorize and reserve for issuance all additional
shares of Company Common Stock or other securities which may be issued pursuant
to the Stock Option Agreement upon exercise of the Option. The shares of Company
Common Stock to be issued upon due exercise of the Option, including all
additional shares of Company Common Stock or other securities which may be
issuable pursuant to the Stock Option Agreement, upon issuance pursuant thereto,
shall be duly and validly issued, fully paid and nonassessable, and shall be
delivered free and clear of all liens, claims, charges and encumbrances of any
kind or nature whatsoever, including any preemptive rights of any stockholder of
the Company.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Conduct of Business by the Company Pending the Merger. Prior
to the Effective Date, unless Parent shall otherwise agree in writing:
(i) the Company shall, and shall cause its subsidiaries to, carry on
their respective businesses in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted, and shall, and shall
cause its subsidiaries to, use their diligent efforts to preserve intact
their present business organizations, keep available the services of their
present officers and employees and preserve their relationships with
customers, suppliers and others having business dealings with them to the
end that their goodwill and ongoing businesses shall be unimpaired at the
Effective Date. The Company shall, and shall cause its subsidiaries to, (A)
maintain insurance coverages and its books, accounts and records in the
usual manner consistent with prior practices; (B) comply in all material
respects with all laws, ordinances and regulations of Governmental Entities
applicable to the Company and its subsidiaries; (C) maintain and keep its
properties and equipment in good repair, working order and condition,
ordinary wear and tear excepted; and (D) perform in all material respects
its obligations under all contracts and commitments to which it is a party
or by which it is bound, in each case other than where the failure to so
maintain, comply or perform, either individually or in the aggregate, would
not result in a Company Material Adverse Effect;
(ii) except as required by this Merger Agreement, the Company shall
not and shall not propose to (A) sell or pledge or agree to sell or pledge
any capital stock owned by it in any of its subsidiaries; (B) amend its
Restated Certificate of Incorporation or Bylaws; (C) split, combine or
reclassify its outstanding capital stock or issue or authorize or propose
the issuance of any other securities in respect of, in lieu of or in
substitution for shares of capital stock of the Company, or declare, set
aside or pay any dividend or other distribution payable in cash, stock or
property; or (D) directly or indirectly redeem, purchase or otherwise
acquire or agree to redeem, purchase or otherwise acquire any shares of
Company capital stock;
(iii) the Company shall not, nor shall it permit any of its
subsidiaries to, (A) except as contemplated by this Merger Agreement,
issue, deliver or sell or agree to issue, deliver or sell any additional
shares of, or rights of any kind to acquire any shares of, its capital
stock of any class, any Indebtedness or any options, rights or warrants to
acquire, or securities convertible into, shares of capital stock other than
issuances of Company Common Stock pursuant to the exercise of Company Stock
Options or the conversion of Company Notes outstanding on the date hereof
(other than as set forth in Schedule 6.1 of the Company Disclosure
Schedule); (B) acquire, lease or dispose of, or agree to acquire, lease or
dispose of, any capital assets or any other assets other than in the
ordinary course of business; (C) incur additional Indebtedness or encumber
or grant a security interest in any asset or enter into any other material
transaction other than in each case in the ordinary course of business
(other than as set forth in Schedule 6.1 of the Company Disclosure
Schedule); (D) acquire or agree to acquire by merging
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or consolidating with, or by purchasing a substantial equity interest in,
or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof, in each
case in this clause (D) which are material, individually or in the
aggregate, to the Company and its subsidiaries taken as a whole; or (E)
enter into any contract, agreement, commitment or arrangement with respect
to any of the foregoing;
(iv) the Company shall not, nor shall it permit any of its
subsidiaries to, except as required to comply with applicable law and
except as provided in Section 7.5 and Section 7.11, (A) adopt, enter into,
terminate or amend any bonus, profit sharing, compensation, severance,
termination, stock option, pension, retirement, deferred compensation,
employment or other Company Plan, agreement, trust, fund or other
arrangement for the benefit or welfare of any current or former director,
officer, employee or independent contractor; (B) increase in any manner the
compensation or fringe benefit of any director, officer, employee or
independent contractor (other than in the ordinary course of business
consistent with past practice but in no event in excess of 3%); (C) other
than as set forth in Schedule 6.1 of the Company Disclosure Schedule, pay
any benefit not provided under any existing plan or arrangement; (D) other
than as set forth in Schedule 6.1 of the Company Disclosure Schedule, grant
any awards under any bonus, incentive, performance or other compensation
plan or arrangement or Company Plan (including, without limitation, the
grant of stock options, stock appreciation rights, stock based or stock
related awards, performance units or restricted stock, or the removal of
existing restrictions or the acceleration of exercisability in any Company
Plan or agreements or awards made thereunder) (other than payments of
bonuses in the ordinary course of business pursuant to the Company's
Management-By-Objective (MBO) bonus plan or arrangement); (E) take any
action to fund or in any other way secure the payment of compensation or
benefits under any employee plan, agreement, contract or arrangement or
Company Plan; or (F) adopt, enter into, amend or terminate any contract,
agreement, commitment or arrangement to do any of the foregoing;
(v) the Company shall not, nor shall it permit any of its subsidiaries
to, make any investments in non-investment grade securities, provided,
however, that the Company will be permitted to create new wholly owned
subsidiaries in the ordinary course of business;
(vi) the Company shall not, nor shall it permit any of its
subsidiaries to, take or cause to be taken any action, whether before or
after the Effective Date, which would disqualify the Merger as a "pooling
of interests" for accounting purposes or as a "reorganization" within the
meaning of Section 368(a) of the Code; and
(vii) the Company shall not, nor shall it permit any of its
subsidiaries to, except as required by law or GAAP, change any of its
significant accounting policies or make or rescind any express or deemed
election relating to taxes, settle or compromise any claim, action, suit,
litigation, proceeding, arbitration, investigation, audit or controversy
relating to taxes, or change any of its methods of reporting income or
deductions for federal income tax purposes from those employed in the
preparation of the federal income tax returns for the last taxable year.
Section 6.2 Conduct of Business by Parent and Sub Pending the Merger. (a)
Parent. Prior to the Effective Date, unless the Company shall otherwise agree
in writing or except as otherwise required by this Merger Agreement: (i) Parent
shall, and shall cause its subsidiaries to, carry on their respective businesses
in the usual, regular and ordinary course in substantially the same manner as
heretofore conducted, and shall, and shall cause its Significant Subsidiaries
to, use their diligent efforts to preserve intact their present business
organizations, keep available the services of their present officers and
employees and preserve their relationships with customers, suppliers and others
having business dealings with them to the end that their goodwill and ongoing
businesses shall be unimpaired at the Effective Date, provided, however, that
nothing contained herein shall prevent Parent from creating new wholly owned
subsidiaries in the ordinary course of business as long as the creation of such
subsidiaries (either alone or in the aggregate) will not have a Parent Material
Adverse Effect; and (ii) the Parent shall not, nor shall it permit any of its
subsidiaries to, take or cause to be taken any action, whether before or after
the Effective Date, which would disqualify the Merger as
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a "pooling of interests" for accounting purposes or as a "reorganization" within
the meaning of Section 368(a) of the Code.
(b) Sub. During the period from the date of this Merger Agreement to the
Effective Date, Sub shall not engage in any activities of any nature except as
provided in or contemplated by this Merger Agreement.
Section 6.3 Notice of Breach. Each party shall promptly give written
notice to the other party upon becoming aware of the occurrence or, to its
knowledge, impending or threatened occurrence, of any event which would cause or
constitute a breach of any of its representations, warranties or covenants
contained or referenced in this Merger Agreement and will use its best efforts
to prevent or promptly remedy the same. Any such notification shall not be
deemed an amendment of the Company Disclosure Schedule.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access and Information. Subject to the limitations imposed by
third party confidentiality agreements, each of the Company and Parent and their
respective subsidiaries shall afford to the other and to the other's
accountants, counsel and other representatives full access during normal
business hours (and at such other times as the parties may mutually agree)
throughout the period prior to the Effective Date to all of its properties,
books, contracts, commitments, records and personnel and, during such period,
each shall furnish promptly to the other (i) a copy of each report, schedule and
other document filed or received by it pursuant to the requirements of federal
or state securities laws, and (ii) all other information concerning its
business, properties and personnel as the other may reasonably request. Each of
the Company and Parent shall hold, and shall cause their respective employees
and agents to hold, in confidence all such information in accordance with the
terms of the Confidentiality Agreement, dated April 29, 1997, between Parent and
the Company (the "Confidentiality Agreement").
Section 7.2 Registration Statement/Proxy Statement. (a) As promptly as
practicable after the execution of this Merger Agreement, the Company and Parent
shall prepare and the Company shall file with the Commission preliminary proxy
materials which shall constitute the preliminary Proxy Statement and a
preliminary prospectus with respect to the Parent Common Stock to be issued in
connection with the Merger. As promptly as practicable after comments are
received from the Commission with respect to the preliminary proxy materials and
after the furnishing by the Company and Parent of all information required to be
contained therein, the Company shall file with the Commission the definitive
Proxy Statement and Parent shall file with the Commission the Registration
Statement and Parent and the Company shall use all reasonable efforts to cause
the Registration Statement to become effective as soon thereafter as
practicable.
(b) Parent and the Company shall make all necessary filings with respect to
the Merger under the Securities Act and the Exchange Act and the rules and
regulations thereunder and under applicable blue sky or similar securities laws
and shall use all reasonable efforts to obtain required approvals and clearances
with respect thereto.
Section 7.3 Affiliates; Publication of Combined Financial Results. (a)
Prior to the Effective Date the Company shall cause to be delivered to Parent an
opinion (satisfactory to counsel for Parent) of the general counsel of the
Company or such law firm as may be reasonably satisfactory to Parent,
identifying all persons who were, in his or its opinion, at the time of the
Company Meeting convened in accordance with Section 3.5, "affiliates" of the
Company as that term is used in paragraphs (c) and (d) of Rule 145 under the
Securities Act (the "Affiliates").
(b) The Company shall use its best efforts to obtain a written agreement in
the form set forth as Exhibit C to this Merger Agreement from each person who is
identified as a possible Affiliate in the opinion referred to in clause (a)
above, providing that such Affiliate will not (i) offer to sell, sell or
otherwise dispose of any of the capital stock of Parent issued to such Affiliate
pursuant to the Merger, except in compliance with Rule 145 or another exemption
from the registration requirements of the Securities Act, and (ii) except to the
extent and under the conditions permitted therein, during the period commencing
30 days prior to the Merger and
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ending at the time of publication of financial results (including combined sales
and net income) covering at least 30 days of post-merger operations, sell or in
any other way reduce such Affiliate's risk relative to any Parent Common Stock
received in the Merger (within the meaning of the Commission's Financial
Reporting Release No. 1, "Codification of Financing Reporting Policies,"
section 201.01 (47 F.R. 21030) (April 15, 1982)). The Company shall deliver such
written agreements to Parent on or prior to the earlier of (i) the mailing of
the Proxy Statement or (ii) the thirtieth day prior to the Effective Date.
(c) If the Effective Date is less than 30 days prior to the end of Parent's
fiscal quarter, Parent shall use reasonable efforts to prepare and publicly
release as soon as practicable following the end of the first month ending at
least 30 days after the Effective Date, a report filed with the Commission on
Form 8-K or any other public filing, statement or announcement which includes
the combined financial results (including combined sales and net income) of
Parent and the Company for a period of at least 30 days of combined operations
of Parent and the Company following the Effective Date; provided that Parent
need not prepare and release such results if, in its good faith judgment, it
determines that such release would not be in the best interests of Parent.
Section 7.4 Stock Exchange Listing. Parent shall use its best efforts to
list on the NYSE, upon official notice of issuance, the shares of Parent Common
Stock to be issued pursuant to the Merger.
Section 7.5 Employment Arrangements. (a) After the Effective Date, Parent
shall, or shall cause the Surviving Corporation to, honor in accordance with
their terms, all employment, severance, consulting and other compensation
contracts between the Company or any of its subsidiaries and any current or
former director, officer or employee thereof, and all provisions for vested
benefits or other vested amounts earned or accrued through the Effective Date
under any Company Plan, each as of the date hereof except for changes thereto
which are permitted by this Merger Agreement or otherwise agreed to by the
parties thereto.
(b) For a period of 12 months after the Effective Date, Parent shall
provide, or shall cause the Surviving Corporation to provide, generally to the
officers and employees of the Surviving Corporation and its subsidiaries
employee benefits, including, without limitation, pension benefits, health and
welfare benefits, and severance arrangements, on terms and conditions in the
aggregate that are no less favorable than those provided under the Company Plans
as of the date hereof. Parent shall, or shall cause the Surviving Corporation
to, credit officers and employees of the Company and its subsidiaries, with
their service with the Company and its subsidiaries for purposes of eligibility
to participate and vesting with respect to employee benefit plans of Parent and
the Surviving Corporation. Individual eligibility for participation in the
medical plans of Parent or the Surviving Corporation shall not be subject to any
exclusions for preexisting conditions other than any such exclusions provided in
the medical plans of the Company or its subsidiaries. Amounts paid before the
Effective Date by directors, officers and employees under medical plans of the
Company and its subsidiaries shall be taken into account after the Effective
Date in applying deductible and out-of-pocket limits applicable under the
medical plans of Parent and the Surviving Corporation to the same extent as if
such amounts had been paid under the medical plans of Parent and the Surviving
Corporation.
(c) It is the intent of Parent, after the Effective Date, to permit
employees of the Company and its subsidiaries to participate in the incentive
and compensation plans of Parent on a basis equivalent to similarly situated
employees of Parent.
Section 7.6 Indemnification. (a) From and after the Effective Date,
Parent shall indemnify, defend and hold harmless the officers, directors and
employees of the Company (the "Indemnified Parties") against all losses,
expenses, claims, damages or liabilities arising out of the transactions
contemplated by this Merger Agreement to the fullest extent permitted or
required under applicable law. Parent agrees that all rights to indemnification
existing in favor of the current or former directors, officers or employees of
the Company or any of its subsidiaries as provided in the Company's Restated
Certificate of Incorporation or By-laws, as in effect as of the date hereof,
with respect to matters occurring through the Effective Date, shall survive the
Merger and shall continue in full force and effect for a period of not less than
six years from the Effective Date. Parent agrees to maintain or cause the
Surviving Corporation to maintain in effect for not less than six years after
the Effective Date policies of directors' and officers' liability insurance
equivalent to those maintained by the Company with respect to matters occurring
on or prior to the Effective Date; provided,
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however, that the Surviving Corporation shall not be required to pay an
aggregate premium for such insurance in excess of $1.2 million, but in such case
shall purchase as much coverage as possible for such amount.
(b) In the event that any action, suit, proceeding or investigation
relating hereto or to the transactions contemplated by this Merger Agreement is
commenced, whether before or after the Effective Date, the parties hereto agree
to cooperate and use their respective reasonable efforts to vigorously defend
against and respond thereto.
(c) The provisions of the Certificate of Incorporation and By-laws of the
Surviving Corporation pertaining to indemnification of current and former
directors, officers and employees shall not be amended, repealed or otherwise
modified for a period of six years after the Effective Date (or, in the case of
matters which are pending but which have not been resolved prior to the sixth
anniversary of the Effective Date, until such matters are finally resolved), in
any manner that would adversely affect the rights thereunder of individuals who
at any time on or prior to the Effective Date were directors, officers or
employees of the Company in respect of actions or omissions occurring on or
prior to the Effective Date (including, without limitation, the transactions
contemplated by this Merger Agreement).
(d) The provisions of this Section 7.6 are intended for the benefit of, and
shall be enforceable by, the respective Indemnified Parties.
Section 7.7 HSR Act. The Company and Parent shall use their best efforts
to file as soon as practicable notifications under the HSR Act in connection
with the Merger and the transactions contemplated hereby, including, but not
limited to, the Stock Option Agreement and the transactions contemplated
thereby, and to respond as promptly as practicable to any inquiries received
from the Federal Trade Commission (the "FTC") and the Antitrust Division of the
Department of Justice (the "Antitrust Division") for additional information or
documentation and to respond as promptly as practicable to all inquiries and
requests received from any State Attorney General or other governmental
authority in connection with antitrust matters.
Section 7.8 Additional Agreements. (a) Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all actions 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 Merger Agreement, including using all reasonable efforts to
obtain all necessary waivers, consents and approvals, to effect all necessary
registrations and filings (including, but not limited to, filings with all
applicable Governmental Entities) and to lift any injunction or other legal bar
to the Merger or the Stock Option Agreement, subject to the appropriate vote of
the shareholders of the Company. Notwithstanding the foregoing, neither Parent
nor any of its subsidiaries shall be required to take any action, and without
Parent's prior written consent neither the Company nor any of its subsidiaries
shall agree to take any action, that would in any way restrict or limit the
conduct of business from and after the Effective Date by Parent, the Company or
any subsidiary of either (including, without limitation, any divestiture of any
business, product line or asset).
(b) In case at any time after the Effective Date any further action is
necessary or desirable to carry out the purposes of this Merger Agreement, the
proper officers and/or directors of Parent, the Company and the Surviving
Corporation shall take all such necessary action.
(c) Following the Effective Date, Parent shall use its best efforts to
conduct the business, and shall cause the Surviving Corporation to use its best
efforts to conduct its business, except as otherwise contemplated by this Merger
Agreement, in a manner which would not jeopardize the characterization of the
Merger as a reorganization within the meaning of Section 368(a) of the Code.
Section 7.9 No Solicitation. (a) As used herein, the term "Acquisition
Proposal" means any proposed (i) merger, consolidation or similar transaction
involving the Company, (ii) sale, lease or other disposition directly or
indirectly by merger, consolidation, share exchange or otherwise of assets of
the Company or its subsidiaries representing 30% or more of the consolidated
assets of the Company and its subsidiaries in one transaction or a series of
transactions, (iii) issue, sale, or other acquisition or disposition of
(including by way of merger, consolidation, share exchange or any similar
transaction) securities (or options, rights or warrants to purchase, or
securities convertible into, such securities) representing 20% or more of the
voting power of the
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Company or (iv) transaction in which any person shall or would acquire
beneficial ownership (as such term is defined in Rule 13d-3 under the Exchange
Act), or the right to acquire beneficial ownership, or any "group" (as such term
is defined under the Exchange Act) shall have been formed which beneficially
owns or would own or has or would have the right to acquire beneficial ownership
of 20% or more of the outstanding Company Common Stock, other than transactions
contemplated by this Merger Agreement or the Stock Option Agreement.
(b) Neither the Company nor any of its subsidiaries shall, nor shall the
Company authorize or permit its subsidiaries, officers, directors, employees,
representatives, investment bankers, attorneys, accountants or other agents or
affiliates to, take any action to (i) solicit, initiate or encourage (including
by way of furnishing information) the submission of any Acquisition Proposal or
(ii) participate in any discussions or negotiations with, or furnish any
information to, any person in connection with, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Acquisition Proposal; provided, however,
that if, at any time prior to the obtaining of Company stockholder approval of
the Merger, the Board of Directors of the Company determines in good faith by a
majority vote, based on the advice of outside counsel, that it is necessary to
do so to avoid a breach of its fiduciary duties to stockholders under applicable
law, the Company may, in response to a written Acquisition Proposal which the
Board of Directors of the Company determines in good faith by a majority vote,
based on the opinion of a financial advisor of nationally recognized reputation,
to be more favorable from a financial point of view to the Company's
stockholders than this Merger Agreement, the Merger and the transactions
contemplated hereby, and which proposal was not solicited by the Company or
otherwise result from a breach of this Section 7.9(b), and subject to the
Company's compliance with Section 7.9(d), (A) furnish information with respect
to it and its subsidiaries to any person pursuant to a customary confidentiality
agreement containing terms at least as favorable to the Company as those
contained in the confidentiality agreements in place between the Company and
Parent and (B) participate in discussions or negotiations with respect to such
Acquisition Proposal.
(c) Except as expressly permitted by this Section 7.9, neither the Board of
Directors of the Company, nor any committee thereof, shall (i) withdraw or
modify, or propose publicly to withdraw or modify, in a manner adverse to
Parent, the approval or recommendation by such Board of Directors or such
committee of the adoption and approval of the matters to be considered at the
Company Meeting, (ii) approve or recommend, or propose publicly to approve or
recommend, any Acquisition Proposal, or (iii) cause the Company to enter into
any letter of intent, agreement in principle, acquisition agreement or other
similar agreement or understanding (written or otherwise) related to any
Acquisition Proposal (each, an "Acquisition Agreement"). Notwithstanding the
foregoing, in the event that prior to the obtaining of Company stockholder
approval of the Merger, there exists a Superior Proposal (as defined herein),
the Board of Directors of the Company may, if it determines in good faith by a
majority vote, based on the advice of outside counsel, that it is necessary to
do so to avoid a breach of its fiduciary duties to stockholders under applicable
law, approve or recommend such Superior Proposal and terminate this Merger
Agreement, provided (i) the Company shall have given Parent written notice (a
"Superior Proposal Notice") at least five business days prior to such
termination advising Parent that the Board of Directors of the Company has
received a Superior Proposal which the Board of Directors has authorized and
intends to effect, specifying the material terms and conditions of such Superior
Proposal and identifying the person making such Superior Proposal, (ii) the
Company shall otherwise be in compliance with its obligations under this Merger
Agreement and the Stock Option Agreement and (iii) the Company pays, or causes
to be paid, to Parent the amounts contemplated by Section 9.2(b) prior to
terminating this Merger Agreement. For purposes of this Merger Agreement, a
"Superior Proposal" means any written proposal made by a third party to acquire,
directly or indirectly, more than 50% of the equity securities of the Company
entitled to vote generally in the election of directors or all or substantially
all of the assets of the Company, and otherwise on terms which the Board of
Directors of the Company determines in its good faith judgment, based on the
opinion of a financial advisor of nationally recognized reputation, to be more
favorable from a financial point of view to the Company's stockholders than this
Merger Agreement, the Merger and the transactions contemplated hereby and for
which financing, to the extent required, is then committed.
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(d) In addition to the obligations set forth in paragraphs (b) and (c) of
this Section 7.9, the Company will promptly communicate to Parent in writing any
solicitation received, directly or indirectly, by the Company and will furnish
to Parent a copy of any such solicitation or proposal, if it is in writing, or a
written summary of the terms of such proposal or inquiry if it is not in
writing, including the identity of the person and its affiliates making the
same, that it may receive in respect of any such transaction, or of any such
information requested from it or of any such negotiations or discussions being
sought to be initiated with it. The Company shall promptly advise Parent of any
development relating to such proposal, including the results of any discussions
or negotiations with respect thereto.
(e) Nothing contained in this Section 7.9 shall prohibit the Company from
taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any disclosure to its
stockholders if, in the good faith judgment of its Board of Directors, based on
the advice of outside counsel, failure so to disclose would result in a
violation of applicable law; provided, however, that neither the Company nor its
Board of Directors nor any committee thereof shall withdraw or modify, or
propose publicly to withdraw or modify, its position with respect to the matters
to be considered at the Company Meeting or approve or recommend, or propose
publicly to approve or recommend, an Acquisition Proposal, except as provided in
Section 7.9(c).
Section 7.10 Employee Agreements. The Company shall use all reasonable
efforts to cause the individuals listed on Annex A hereto (and such additional
persons as Parent and the Company shall agree upon) to execute, at or prior to
the Effective Date, the agreements set forth next to their respective names on
such Annex A.
Section 7.11 Company Stock Plans. If the Effective Date occurs subsequent
to December 31, 1997, the Company shall terminate the Company Employee Stock
Purchase Plan ("Company Purchase Plan") by having its Board of Directors amend
the Company Purchase Plan to terminate at the earlier of (i) the end of the
current stock offering period under the Company Purchase Plan or (ii)
immediately prior to the Effective Date. If the Effective Date occurs on or
prior to December 31, 1997, the current stock offering period shall continue
through December 31, 1997, and any options issued under the Company Purchase
Plan which are outstanding and unexercised immediately prior to the Effective
Date shall be converted into options to purchase a number of shares of Parent
Common Stock pursuant to Section 3.1(e).
Section 7.12 Independent Auditors. The Company shall provide to Parent a
letter from Ernst & Young LLP, the Company's independent auditors, dated a date
within two business days before the date on which the Registration Statement
shall become effective and addressed to Parent, in form and substance reasonably
satisfactory to Parent and customary in scope and substance for letters
delivered by independent public accountants in connection with registration
statements similar to the Registration Statement.
ARTICLE VIII
CONDITIONS PRECEDENT
Section 8.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Date of the following
conditions:
(a) This Merger Agreement and the transactions contemplated hereby
shall have been approved and adopted by the requisite vote of the holders
of the Company Common Stock.
(b) The Parent Common Stock issuable in the Merger shall have been
authorized for listing on the NYSE upon official notice of issuance.
(c) The waiting period applicable to the consummation of the Merger
under the HSR Act shall have expired or been terminated.
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(d) The Registration Statement shall have become effective in
accordance with the provisions of the Securities Act. No stop order
suspending the effectiveness of the Registration Statement shall have been
issued by the Commission and remain in effect.
(e) No temporary restraining order, preliminary or permanent
injunction or other order by any court or other judicial or administrative
body of competent jurisdiction (each, an "Injunction") which prohibits or
prevents the consummation of the Merger shall have been issued and remain
in effect (each party agreeing to use its best efforts to have any such
Injunction lifted), and there shall not be any action taken, or any
statute, rule, regulation or order (whether temporary, preliminary or
permanent) enacted, entered or enforced which makes the consummation of the
Merger illegal or prevents or prohibits the Merger.
(f) The Company shall have received from Ernst & Young LLP,
independent auditors for the Company, a letter addressed to the Company
dated within two days prior to the Effective Date, in substance reasonably
satisfactory to Parent and the Company, to the effect that Ernst & Young
LLP concurs with Company management conclusions that no conditions exist
related to the Company that would preclude Parent from accounting for the
Merger as a pooling of interests and Parent shall have received from KPMG
Peat Marwick LLP, independent auditors for Parent, a letter addressed to
Parent dated within two days prior to the Effective Date, in substance
reasonably satisfactory to Parent and the Company, to the effect that KPMG
Peat Marwick LLP concurs with Parent management conclusions that no
conditions exist that would preclude Parent from accounting for the Merger
as a pooling of interests.
Section 8.2 Conditions to Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Date of the additional following
conditions, unless waived by the Company:
(a) Parent and Sub shall have performed in all material respects their
agreements contained in this Merger Agreement required to be performed on
or prior to the Effective Date and the representations and warranties of
Parent and Sub contained in this Merger Agreement shall be true in all
material respects (except for any such representations or warranties which
are qualified as to Parent Material Adverse Effect, which shall be true and
correct in all respects) when made and on and as of the Effective Date as
if made on and as of such date, except for representations and warranties
which are by their express provisions made as of a specific date or dates,
which were or will be true in all material respects (except for any such
representations or warranties which are qualified as to Parent Material
Adverse Effect, which were or will be true and correct in all respects) at
such time or times as stated therein, and the Company shall have received a
certificate of the President or Chief Executive Officer or a Vice President
of Parent to that effect.
(b) The Company shall have received a favorable opinion of Vinson &
Elkins L.L.P., based upon certain factual representations of the Company,
Parent and Sub reasonably requested by such counsel, dated the Effective
Date, to the effect that the Merger will constitute a "reorganization" for
federal income tax purposes within the meaning of Section 368(a) of the
Code.
Section 8.3 Conditions to Obligations of Parent and Sub to Effect the
Merger. The obligations of Parent and Sub to effect the Merger shall be subject
to the fulfillment at or prior to the Effective Date of the additional following
conditions, unless waived by Parent:
(a) The Company shall have performed in all material respects its
agreements contained in this Merger Agreement required to be performed on
or prior to the Effective Date and the representations and warranties of
the Company contained in this Merger Agreement shall be true in all
material respects (except for any such representations or warranties which
are qualified as to Company Material Adverse Effect, which shall be true
and correct in all respects) when made and on and as of the Effective Date
as if made on and as of such date, except for representations and
warranties which are by their express provisions made as of a specific date
or dates which were or will be true in all material respects (except for
any such representations or warranties which are qualified as to Company
Material Adverse Effect, which were or will be true and correct in all
respects) at such date or dates, and Parent and Sub shall
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have received a certificate of the President or Chief Executive Officer or
a Vice President of the Company to that effect.
(b) Parent shall have received a favorable opinion of Wachtell,
Lipton, Rosen & Katz, based upon certain factual representations of the
Company, Parent and Sub reasonably requested by such counsel, to the effect
that the Merger will be treated for federal income tax purposes as a
"reorganization" within the meaning of Section 368(a) of the Code.
(c) The Company shall have obtained all consents, appeals, releases or
authorizations from, and shall have made all filings and registrations to
or with, any person, including but not limited to any Governmental Entity,
necessary to be obtained or made in order to consummate the transactions
contemplated by this Merger Agreement.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination. This Merger Agreement may be terminated at any
time prior to the Effective Date, whether before or after approval by the
shareholders of the Company:
(a) by mutual consent of the Board of Directors of Parent and the
Board of Directors of the Company;
(b) by either Parent or the Company, if the Merger shall not have been
consummated on or before April 30, 1998; provided that the right to
terminate this Agreement pursuant to this Section 9.1(b) shall not be
available to any party whose failure to perform in any material respect any
covenant under this Merger Agreement has been the cause of or resulted in
whole or in part in the failure of the Merger to be consummated before such
date;
(c) by either Parent or the Company, if there shall be any Order which
is final and nonappealable preventing the consummation of the Merger;
(d) by either Parent or the Company, if this Merger Agreement and the
transactions contemplated hereby shall fail to receive the requisite vote
for approval and adoption by the stockholders of the Company at the Company
Meeting, or by Parent if this Merger Agreement and the transactions
contemplated hereby shall not have received the requisite vote for approval
and adoption by the stockholders of the Company at the Company Meeting
prior to February 28, 1998;
(e) by Parent, if the Board of Directors of the Company withdraws,
modifies in a manner adverse to Parent, or refrains from making its
recommendation concerning the Merger referred to in Section 3.5, or, other
than in connection with the Company's delivery of a Superior Proposal
Notice, discloses its intention to change such recommendation, or the Board
of Directors of the Company shall have recommended to the stockholders of
the Company any Acquisition Proposal or the Company shall have entered into
an Acquisition Agreement, or, other than in connection with the Company's
delivery of a Superior Proposal Notice, the Board of Directors of the
Company shall have resolved to do any of the foregoing; or
(f) by the Company, if, pursuant to Section 7.9(c), (A) the Board of
Directors of the Company has delivered to Parent a Superior Proposal
Notice, (B) the Company has paid the Termination Fee and Expenses (as
defined in Section 9.2), (C) the Company shall otherwise be in compliance
with its obligations under this Merger Agreement and the Stock Option
Agreement and (D) five business days have passed since Parent received the
Superior Proposal Notice.
Section 9.2 Effect of Termination; Fees. (a) In the event of termination
of this Merger Agreement by either Parent or the Company, as provided above,
this Merger Agreement shall forthwith become void and (except for the willful
breach of this Merger Agreement by any party hereto) there shall be no liability
on the part of either the Company, Parent or Sub or their respective officers or
directors; provided that Article V insofar as such representations and
warranties relate to the Stock Option Agreement, the last sentence of
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Section 7.1, Section 7.7 (with respect to the Stock Option Agreement and the
transactions contemplated thereby) and Section 7.8 (with respect to the Stock
Option Agreement and the transactions contemplated thereby) and Sections 9.2,
10.3 and 10.7 shall survive the termination.
(b) The Company shall pay to Parent (by wire transfer to an account
designated by Parent) a Termination Fee (as defined below) and, notwithstanding
Section 10.3, the out-of-pocket expenses (including, without limitation, all
fees and expenses of counsel, accountants, printing and mailing, investment
bankers, experts and consultants) incurred in connection with this Merger
Agreement and the transactions contemplated hereby ("Expenses") of Parent and
Sub up to $2 million, if: (i) Parent terminates this Merger Agreement pursuant
to Section 9.1(e); (ii) the Company terminates this Merger Agreement pursuant to
Section 9.1(f); or (iii) (A) the Company or Parent terminates this Agreement
pursuant to Section 9.1(d), and (B) within twelve months after such termination
(1) the Company enters into an Acquisition Agreement or (2) any Acquisition
Proposal is consummated with respect to the Company.
(c) The Termination Fee shall be equal to $25 million, less the Aggregate
Spread (as defined in the Stock Option Agreement) (if greater than zero) on the
date of issuance of shares of Company Common Stock theretofore issued to Parent
pursuant to the Stock Option Agreement; provided, however, that the Termination
Fee shall not be reduced by the Aggregate Spread if Parent has theretofore
exercised its right under Section 7(a) of the Stock Option Agreement to put all
of the Company Shares (as defined in the Stock Option Agreement) to the Company
in exchange for a payment equal only to the aggregate Exercise Price (as defined
in the Stock Option Agreement). The Termination Fee shall be paid as promptly as
practicable and in no event later than (A) in the event of termination by the
Company as described in clause (ii) of Section 9.2(b), immediately prior to such
termination (and no such termination shall be effective until such payment is
made); (B) in the event of termination by Parent as described in clause (i) of
Section 9.2(b), two business days after such termination; or (C) in the event of
the circumstances described in clause (iii) of Section 9.2(b), immediately prior
to the earlier of the entry into an Acquisition Agreement or the consummation of
any Acquisition Proposal. In the event that Expenses are payable pursuant to
this Section 9.2, such Expenses shall be reimbursed within two business days
following receipt by the Company from Parent of a statement of the amount
thereof.
Section 9.3 Amendment. This Merger Agreement may be amended by the
parties hereto, by or pursuant to action taken by their respective Boards of
Directors, at any time before or after approval hereof by the shareholders of
the Company, but, after such approval, no amendment shall be made which changes
the ratio at which Company Common Stock is converted into Parent Common Stock as
provided in Section 3.1 or which in any way materially adversely affects the
rights of such stockholders, without the further approval of such stockholders.
This Merger Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.
Section 9.4 Waiver. At any time prior to the Effective Date, the parties
hereto, by or pursuant to action taken by their respective Boards of Directors,
may (i) extend the time for the performance of any of the obligations or other
acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein or in any documents delivered
pursuant hereto, and (iii) waive compliance with any of the agreements or
conditions contained herein; provided, however, that no such waiver shall
materially adversely affect the rights of stockholders of the Company and
Parent. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid if set forth in an instrument in writing signed on behalf
of such party.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-Survival of Representations, Warranties and
Agreements. No representations, warranties or agreements in this Merger
Agreement shall survive the Merger, except for the agreements contained in
Sections 3.1, 3.2, 3.3, 3.4 and 3.6 and the agreements referred to in Sections
7.3(b), 7.3(c), 7.5, 7.6, 7.8, 10.1, 10.3 and 10.7.
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Section 10.2 Notices. All notices or other communications under this
Merger Agreement shall be in writing and shall be given (and shall be deemed to
have been duly given upon receipt) by delivery in person, by cable, telegram,
telex, telecopy or other standard form of telecommunications, or by registered
or certified mail, postage prepaid, return receipt requested, addressed as
follows:
If to the Company:
Cyrix Corporation
2703 North Central Expressway
Richardson, Texas 75080
Attention: James W. Swent, III
Telecopy No.: (972) 234-4443
With a copy to:
Vinson & Elkins L.L.P.
2001 Ross Avenue
Dallas, Texas 75201
Attention: Derek R. McClain, Esq.
Telecopy No.: (214) 220-7716
If to Parent or Sub:
National Semiconductor Corporation
2900 Semiconductor Drive
P.O. Box 58090
Santa Clara, California 95052
Attention: John M. Clark III, Esq.
Telecopy No.: (408) 733-0293
With a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Barry A. Bryer, Esq.
Telecopy No.: (212) 403-2000
or to such other address as any party may have furnished to the other parties in
writing in accordance with this Section 10.2.
Section 10.3 Expenses. Except as provided in Section 9.2(b) and (c), all
costs and expenses incurred in connection with this Merger Agreement and the
transactions contemplated hereby (regardless of whether the Merger is
consummated) shall be paid by the party incurring such expenses, except that the
Parent and Company agree to each pay 50% of all printing expenses incurred by
the parties hereto.
Section 10.4 Publicity. So long as this Merger Agreement is in effect,
Parent, Sub and the Company agree to consult with each other in issuing any
press release or otherwise making any public statement with respect to the
transactions contemplated by this Merger Agreement, and none of them shall issue
any press release or make any public statement prior to such consultation,
except as may be required by law or by obligations pursuant to any listing
agreement with any national securities exchange. The commencement of litigation
relating to this Merger Agreement or the transactions contemplated hereby or any
proceedings in connection therewith shall not be deemed a violation of this
Section 10.4.
Section 10.5 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Merger Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an
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injunction or injunctions to prevent breaches of this Merger Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
Section 10.6 Interpretation. When a reference is made in this Merger
Agreement to subsidiaries of Parent or the Company, the word "subsidiaries"
means corporations more than 50% of whose outstanding voting securities are
directly or indirectly owned by Parent or the Company, as the case may be. The
headings contained in this Merger Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Merger
Agreement.
Section 10.7 Miscellaneous. This Merger Agreement and the Stock Option
Agreement (including the documents and instruments referred to herein and
therein) (a) constitute the entire agreement and supersede all other prior
agreements and understandings, both written and oral, among the parties, or any
of them, with respect to the subject matter hereof (other than as provided in
the Confidentiality Agreement, as the same may be amended, provided, that the
provisions set forth in the ninth paragraph of the Confidentiality Agreement
shall have no further force and effect); (b) except as provided in Section 7.6
of this Merger Agreement, are not intended to confer upon any other person any
rights or remedies hereunder; (c) shall not be assigned by operation of law or
otherwise, except that Sub shall have the right to assign to Parent or any
direct wholly owned subsidiary of Parent any and all rights and obligations of
Sub under this Merger Agreement; and (d) shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State of
Delaware (without giving effect to the provisions thereof relating to conflicts
of law). This Merger Agreement may be executed in two or more counterparts which
together shall constitute a single agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Merger Agreement to
be signed by their respective officers thereunder duly authorized all as of the
date first written above.
NATIONAL SEMICONDUCTOR CORPORATION
By: /s/ BRIAN L. HALLA
------------------------------------
Name: Brian L. Halla
Title: Chairman, President, CEO
NOVA ACQUISITION CORP.
By: /s/ DONALD MACLEOD
------------------------------------
Name: Donald Macleod
Title: CFO/VP
CYRIX CORPORATION
By: /s/ JAMES W. SWENT III
------------------------------------
Name: James W. Swent III
Title: Sr. V.P.
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APPENDIX B
[LETTERHEAD OF GOLDMAN SACHS]
October 16, 1997
Board of Directors
Cyrix Corporation
2703 N. Central Expressway
Richardson, TX 75085-3920
Gentlemen:
You have requested our opinion as to the fairness to the holders of the
outstanding shares of Common Stock, par value $.004 per share (the "Shares"), of
Cyrix Corporation (the "Company") of the exchange ratio of 0.825 shares of
Common Stock, par value $.50 per share (the "National Shares"), of National
Semiconductor Corporation ("National Semiconductor") to be received for each
Share (the "Exchange Ratio") pursuant to the Agreement and Plan of Merger, dated
as of July 28, 1997, by and among National Semiconductor, Nova Acquisition
Corp., a wholly owned subsidiary of National Semiconductor, and the Company (the
"Agreement").
Goldman, Sachs & Co., as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes. We are
familiar with the Company, having provided certain investment banking services
to the Company from time to time, including acting as managing underwriter of a
public offering of 5.50% Convertible Subordinated Notes of the Company in May
1996 and having acted as its financial advisor in connection with, and having
participated in certain of the negotiations leading to, the Agreement. We also
have provided certain investment banking services to National Semiconductor from
time to time, and may provide investment banking services to National
Semiconductor in the future.
In connection with this opinion, we have reviewed, among other things, the
Agreement; the Registration Statement on Form S-4, including the Proxy
Statement/Prospectus relating to the Special Meeting of Stockholders of the
Company to be held in connection with the Agreement; Annual Reports to
Stockholders and Annual Reports on Form 10-K of the Company for the five years
ended December 31, 1996, and of National Semiconductor for the five fiscal years
ended May 26, 1996; certain interim reports to stockholders and Quarterly
Reports on Form 10-Q for the Company and National Semiconductor; certain other
communications from the Company and National Semiconductor to their respective
stockholders; and certain internal financial analyses and forecasts for the
Company and National Semiconductor prepared by their respective managements. We
also have held discussions with members of the senior management of the Company
and National Semiconductor regarding the strategic rationale for, and the
potential benefits of, the transaction contemplated by the Agreement and the
past and current business operations, financial condition and future prospects
of their respective companies. In addition, we have reviewed the reported price
and trading activity for the Shares and the National Shares, compared certain
financial and stock market information for the Company and National
Semiconductor with similar information for certain other companies the
securities of which are publicly traded, reviewed the financial terms of certain
recent business combinations in the semiconductor industry specifically and the
technology industry generally, and performed such other studies and analyses as
we considered appropriate.
We have relied upon the accuracy and completeness of all of the financial and
other information reviewed by us and have assumed such accuracy and completeness
for purposes of rendering this opinion. In addition, we have not made an
independent evaluation or appraisal of the assets and liabilities of the Company
or National
B-1
<PAGE> 95
CYRIX CORPORATION
OCTOBER 16, 1997
PAGE TWO
Semiconductor or any of their respective subsidiaries and we have not been
furnished with any such evaluation or appraisal. We have assumed with your
consent that the transaction contemplated by the Agreement will be accounted for
as a pooling of interests under generally accepted accounting principles. Our
advisory services and the opinion expressed herein are provided for the
information and assistance of the Board of Directors of the Company in
connection with its consideration of the transaction contemplated by the
Agreement and such opinion does not constitute a recommendation as to how any
holder of Shares should vote with respect to such transaction.
Based upon and subject to the foregoing and based upon such other matters as we
consider relevant, it is our opinion that as of the date hereof, the Exchange
Ratio pursuant to the Agreement is fair to the holders of Shares.
Very truly yours,
/s/ GOLDMAN, SACHS & CO.
- ------------------------------------------
GOLDMAN, SACHS & CO.
B-2
<PAGE> 96
FORM OF PROXY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CYRIX CORPORATION
PROXY FOR SPECIAL MEETING OF STOCKHOLDERS TO BE HELD
NOVEMBER 17, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. The
undersigned, having received the Notice of Special Meeting to be held
on November 17, 1997 and the related Proxy Statement/Prospectus,
hereby appoint(s) Harvey B. Cash, James W. Swent, III and David N.
Pilotte, and each of them, proxies of the undersigned (with full power
of substitution) to attend the above Special Meeting and all
adjournments thereof (the "Meeting") and there to vote all shares of
Common Stock of Cyrix Corporation (the "Company") that the undersigned
would be entitled to vote if personally present, in regard to all
matters which may come before the Meeting, and especially to vote on
the matters set forth on the reverse side.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
SPECIFIED HEREIN. IF NO SPECIFICATION IS MADE, THE PROXIES INTEND TO
VOTE "FOR" PROPOSAL 1 AND IN THE PROXIES' DISCRETION ON ANY OTHER
MATTERS COMING BEFORE THE MEETING. THE BOARD OF DIRECTORS RECOMMENDS A
VOTE FOR PROPOSAL 1.
If you wish to vote in accordance with the Board of Directors'
recommendations, just sign on the reverse side. You need not mark any
boxes.
(continued, and to be signed, on other side)
<PAGE> 97
================================================================================
I,2
(continued from other side)
Proposal 1: To approve and adopt the Agreement and Plan of Merger,
dated as of July 28, 1997, by and among National
Semiconductor Corporation, Nova Acquisition Corp. and
Cyrix Corporation, and the transactions contemplated
thereby, including the Merger of Nova Acquisition Corp.
with and into Cyrix Corporation.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In signing please write name(s) as appearing in the imprint of
this card. If the person(s) signing hereon hold(s) any shares in a
fiduciary, custodial or joint capacity or capacities, this Proxy is
signed in every such capacity as well as individually.
Signature:
---------------------------------------
Date:
---------------------------------------
Signature:
---------------------------------------
Date:
---------------------------------------
<PAGE> 98
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
National Semiconductor Corporation (the "Company" or the "Registrant") is
incorporated under the laws of the state of Delaware. Section 102 of the
Delaware General Corporation Law (the "DGCL") allows a corporation to eliminate
the personal liability of directors of a corporation to the corporation or to
any of its stockholders for monetary damages for a breach of fiduciary duty as a
director, except (i) for breach of the director's duty of loyalty, (ii) for acts
or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (iii) for certain unlawful dividends and stock
repurchases or (iv) for any transaction from which the director derived an
improper personal benefit. Article Thirteenth of the Company's Second Restated
Certificate of Incorporation, as amended (the "Certificate"), provides that no
director shall be personally liable to the Company or its stockholders for
monetary damages for any breach of his fiduciary duty as a director, except as
provided in Section 102 of the DGCL.
Section 145 of the DGCL provides that in the case of any action other than
one by or in the right of the corporation, a corporation may indemnify any
person who was or is a party, or is threatened to be made a party to any action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that such person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
in such capacity on behalf of another corporation or enterprise, against
expenses (including attorney's fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action if he acted in good faith and in a manner he reasonably believed to be
in, or not opposed to, the best interests of the corporation and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful.
Section 145 of the DGCL provides that in the case of an action by or in the
right of a corporation to procure a judgment in its favor, a corporation may
indemnify any person who was or is a party, or is threatened to be made a party
to any action or suit by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation in such capacity on behalf of another corporation
or enterprise, against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit if he acted under standards similar to those set forth in the
preceding paragraph, except that no indemnification may be made in respect of
any action or claim as to which such person shall have been adjudged to be
liable to the corporation, unless a court determines that such person is fairly
and reasonably entitled to indemnification.
Article Thirteenth of the Company's Certificate provides that the Company
shall to the extent permitted by law indemnify any person for all liabilities
incurred by or imposed upon him as a result of any action or threatened action,
suit or proceeding, whether civil, criminal, administrative or investigative, in
which he shall be involved by reason of the fact that he is or was serving as a
director, officer or employee of the Company, or that, at the request of the
Company, he is or was serving another corporation or enterprise in any capacity.
Article VIII of the Company's By-Laws provides for indemnification of any person
who was or is a party to any threatened, pending or completed action, or to any
derivative proceeding by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or was serving at the request of
the corporation in that capacity for another corporation, if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct unlawful.
The Company has purchased and maintains at its expense, on behalf of
directors and officers, insurance, within certain limits, covering liabilities
that may be incurred by them in such capacities.
<PAGE> 99
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits. The following is a list of exhibits to this registration
statement:
<TABLE>
<C> <S> <C>
2.1 -- Agreement and Plan of Merger, dated as of July 28, 1997, by and among Registrant,
Nova Acquisition Corp. ("Sub") and Cyrix Corporation ("Cyrix") (included in Part I
hereof as Appendix A to the Proxy Statement/Prospectus)
3.1 -- Second Restated Certificate of Incorporation of the Registrant, as amended
(incorporated by reference from the Exhibits to the Registrant's Registration
Statement on Form S-3 Registration No. 33-52775, which became effective March 22,
1994); Certificate of Amendment of the Certificate of Incorporation, dated September
30, 1994 (incorporated by reference from the Exhibits to the Registrant's
Registration Statement on Form S-8 Registration No. 333-09957, which became effective
August 12, 1996)
3.2 -- By-laws of the Registrant (incorporated by reference from the Exhibits to the
Registrant's Registration Statement on Form S-8 Registration No. 333-36733, which
became effective September 30, 1997)
4.1 -- Form of Common Stock Certificate (incorporated by reference from the Exhibits to the
Company's Registration Statement on Form S-3 No. 33-48935, which became effective
October 5, 1992)
4.2 -- Rights Agreement (incorporated by reference from the Exhibits to the Registrant's
Registration Statement on Form 8-A, filed August 10, 1988). First Amendment to the
Rights Agreement, dated as of October 31, 1995 (incorporated by reference from the
Exhibit to the Registrant's Amendment No. 1 to the Registration Statement on Form 8-A
filed December 11, 1995). Second Amendment to the Rights Agreement, dated as of
December 17, 1996 (incorporated by reference from the Exhibits to the Registrant's
Amendment No. 2 to the Registration Statement on Form 8-A filed January 17, 1997)
5 -- Opinion of John M. Clark III, Esq. as to the legality of the securities being issued
8.1 -- Opinion of Vinson & Elkins L.L.P. as to certain federal income tax matters
8.2 -- Opinion of Wachtell, Lipton, Rosen & Katz as to certain federal income tax matters
23.1 -- Consent of KPMG Peat Marwick LLP
23.2 -- Consent of Ernst & Young LLP
23.3 -- Consent of Goldman Sachs & Co.
23.4 -- Consent of John E. Clark III, Esq. (included in Exhibit 5 hereof)
23.5 -- Consent of Vinson & Elkins L.L.P. (included in Exhibit 8.1 hereof)
23.6 -- Consent of Wachtell, Lipton, Rosen & Katz (included in Exhibit 8.2 hereof)
24 -- Powers of Attorney
</TABLE>
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
II-2
<PAGE> 100
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
The Registrant undertakes that every prospectus: (i) that is filed pursuant
to the paragraph immediately preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions referred to in Item 20 of this
registration statement, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
<PAGE> 101
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Santa Clara, California,
on the 16th day of October, 1997.
NATIONAL SEMICONDUCTOR CORPORATION
By: BRIAN L. HALLA*
-------------------------------------
Brian L. Halla
Chairman of the Board, and
Chief Executive Officer
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by or on behalf of the following persons in the
capacities and on the 16th day of October, 1997.
<TABLE>
<C> <S>
BRIAN L. HALLA* Chairman of the Board, President and Chief
- ------------------------------------------------- Executive Officer (Principal Executive
(Brian L. Halla) Officer)
DONALD MACLEOD* Executive Vice President, Finance and
- ------------------------------------------------- Chief Financial Officer (Principal
(Donald Macleod) Financial Officer)
RICHARD D. CROWLEY, JR.* Vice President and Controller (Principal
- ------------------------------------------------- Accounting Officer)
(Richard D. Crowley, Jr.)
GARY P. ARNOLD* Director
- -------------------------------------------------
(Gary P. Arnold)
ROBERT BESHAR* Director
- -------------------------------------------------
(Robert Beshar)
EDWARD R. MCCRACKEN* Director
- -------------------------------------------------
(Edward R. McCracken)
MODESTO A. MAIDIQUE* Director
- -------------------------------------------------
(Modesto A. Maidique)
J. TRACY O'ROURKE* Director
- -------------------------------------------------
(J. Tracy O'Rourke)
CHARLES E. SPORCK* Director
- -------------------------------------------------
(Charles E. Sporck)
DONALD E. WEEDEN* Director
- -------------------------------------------------
(Donald E. Weeden)
</TABLE>
*By: /s/ JOHN M. CLARK III
-----------------------------------
John M. Clark III
Attorney-in-Fact
II-4
<PAGE> 102
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DOCUMENT DESCRIPTION
- ------- ---------------------------------------------------------------------------
<C> <S> <C>
2.1 Agreement and Plan of Merger, dated as of July 28, 1997, by and among
Registrant, Nova Acquisition Corp. and Cyrix Corporation (included in Part
I hereof as Appendix A to the Proxy Statement/Prospectus)..................
3.1 Second Restated Certificate of Incorporation of the Registrant, as amended
(incorporated by reference from the Exhibits to the Registrant's
Registration Statement on Form S-3 Registration No. 33-52775, which became
effective March 22, 1994); Certificate of Amendment of the Certificate of
Incorporation, dated September 30, 1994 (incorporated by reference from the
Exhibits to the Registrant's Registration Statement on Form S-8
Registration No. 333-09957, which became effective August 12, 1996)........
3.2 By-laws of the Registrant (incorporated by reference from the Exhibits to
the Registrant's Registration Statement on Form S-8 Registration No.
333-36733, which became effective September 30, 1997)......................
4.1 Form of Common Stock Certificate (incorporated by reference from the
Exhibits to the Company's Registration Statement on Form S-3 No. 33-48935,
which became effective October 5, 1992)....................................
4.2 Rights Agreement (incorporated by reference from the Exhibits to the
Registrant's Registration Statement on Form 8-A, filed August 10, 1988).
First Amendment to the Rights Agreement, dated as of October 31, 1995
(incorporated by reference from the Exhibit to the Registrant's Amendment
No. 1 to the Registration Statement on Form 8-A filed December 11, 1995).
Second Amendment to the Rights Agreement, dated as of December 17, 1996
(incorporated by reference from the Exhibits to the Registrant's Amendment
No. 2 to the Registration Statement on Form 8-A filed January 17, 1997)....
5 Opinion of John M. Clark III, Esq., as to the legality of the securities
being issued...............................................................
8.1 Opinion of Vinson & Elkins L.L.P. as to certain federal income tax
matters....................................................................
8.2 Opinion of Wachtell, Lipton, Rosen & Katz as to certain federal income tax
matters....................................................................
23.1 Consent of KPMG Peat Marwick LLP...........................................
23.2 Consent of Ernst & Young LLP...............................................
23.3 Consent of Goldman Sachs & Co..............................................
23.4 Consent of John M. Clark III, Esq. (included in Exhibit 5 hereof)..........
23.5 Consent of Vinson & Elkins L.L.P. (included in Exhibit 8.1 hereof).........
23.6 Consent of Wachtell, Lipton, Rosen & Katz (included in Exhibit 8.2
hereof)....................................................................
24 Powers of Attorney.........................................................
</TABLE>
<PAGE> 1
EXHIBIT 5
[LETTERHEAD OF NATIONAL SEMICONDUCTOR CORPORATION]
October 16, 1997
Board of Directors
National Semiconductor Corporation
2900 Semiconductor Drive
Santa Clara, California 95052-8090
Gentlemen:
At your request, I have examined the proposed registration under the
Securities Act of 1933, as amended, of up to 22,083,332 shares of Common Stock,
par value, $0.50 per share (collectively, the "Shares"), of National
Semiconductor Corporation, a Delaware corporation (the "Company"), which are to
be issued by the Company upon consummation of the merger (the "Merger") of Nova
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of the
Company, with and into Cyrix Corporation, a Delaware corporation. In connection
with this opinion, I have examined such corporate records and other documents,
including the Registration Statement on Form S-4 relating to the Shares
(together with the Proxy Statement/ Prospectus contained in such Registration
Statement, and any amendments or supplements thereto, the "Registration
Statement") and have reviewed such matters of law as I have deemed necessary or
appropriate for this opinion. Based on such examination and review, it is my
opinion that, when issued upon consummation of the Merger as contemplated by the
Registration Statement, the Shares will be duly authorized, validly issued,
fully paid and nonassessable.
I consent to be named in the Registration Statement as the attorney who
passed upon the validity of the Shares, and to the filing of a copy of this
opinion as an exhibit to the Registration Agreement.
Very truly yours,
/s/ JOHN M. CLARK III
-----------------------------
JOHN M. CLARK III
Senior Vice President,
General Counsel and Secretary
<PAGE> 1
EXHIBIT 8.1
[LETTERHEAD OF VINSON & ELKINS L.L.P.]
OCTOBER 16, 1997
Cyrix Corporation
2703 North Central Expressway
Richardson, Texas 75080
Gentlemen:
You have requested our opinion with respect to certain federal income tax
consequences of the planned merger (the "Merger") of Nova Acquisition Corp.
("Sub"), a wholly owned subsidiary of National Semiconductor Corporation
("NSC"), with and into Cyrix Corporation ("Cyrix") pursuant to an Agreement and
Plan of Merger dated as of July 28, 1997 (the "Merger Agreement"). Defined terms
used in the Merger Agreement have the same meaning when used herein, unless
otherwise defined herein.
In rendering this opinion, we have examined and are relying upon (without
any independent investigation or review thereof) the truth and accuracy at all
relevant times of the statements, covenants, and representations contained in
(i) the Merger Agreement (including all disclosure schedules thereto), (ii) the
Joint Proxy Statement/Prospectus of NSC and Cyrix (the "Proxy Statement") (which
was included in the Registration Statement on Form S-4 filed by NSC and Cyrix
with the Securities and Exchange Commission (the "Registration Statement")), and
(iii) the officers' certificates dated October 15, 1997 which were provided to
us by NSC and Cyrix. Any inaccuracy in any of the aforementioned statements,
representations, and assumptions or breach of any of the aforementioned
covenants could adversely affect our opinion.
We hereby confirm to you our opinion as set forth under the heading "THE
MERGER -- Material Federal Income Tax Consequences" in the Registration
Statement, subject to the limitations set forth therein.
Our opinion is based on our interpretation of the Code, applicable Treasury
regulations, judicial authority, and administrative rulings and practice, all as
in effect as of the date hereof. There can be no assurance that future
legislative, judicial or administrative changes or interpretations will not
adversely affect the accuracy of the conclusions set forth herein. We do not
undertake to advise you as to any such future changes or interpretations unless
we are specifically retained to do so. Our opinion will not be binding upon the
Internal Revenue Service (the "IRS"), and the IRS will not be precluded from
adopting a contrary position.
No opinion is expressed as to any matter not specifically addressed above,
including, without limitation, the tax consequences of the Merger under any
foreign, state, or local tax law. Moreover, tax consequences which are different
from or in addition to those described herein may apply to holders of Cyrix
Common Stock who are subject to special treatment under the U.S. federal income
tax laws, such as persons who acquired their shares in compensatory transactions
in exchange for services rendered.
If the IRS successfully challenged the status of the Merger as a
reorganization, a holder of Cyrix Common Stock would recognize gain or loss in
an amount equal to the difference between the stockholder's tax basis in his or
her shares and the fair market value, as of the Effective Time, of NSC Common
Stock received in exchange therefor. In such event, the stockholder's tax basis
in NSC Common Stock so received would be equal to its fair market value as of
the Effective Time and the holding period for such stock would begin on the day
after the Effective Time.
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement on Form S-4
filed by NSC under the Securities Act of 1933, as amended ("Securities Act"),
and to the reference to our firm under the heading "THE MERGER -- Material
Federal Income Tax Consequences" in the Proxy Statement that constitutes a part
of the
<PAGE> 2
Registration Statement. By giving this consent we are not deeming ourselves
experts within the meaning of Section 11 of the Securities Act.
Very truly yours,
/s/ VINSON & ELKINS L.L.P.
--------------------------------------
Vinson & Elkins L.L.P.
<PAGE> 1
EXHIBIT 8.2
[LETTERHEAD OF WACHTELL, LIPTON, ROSEN & KATZ]
October 16, 1997
National Semiconductor Corporation
2900 Semiconductor Drive
P.O. Box 58090
Santa Clara, CA 95052
Re: National Semiconductor Corporation/Cyrix Corporation
Ladies and Gentlemen:
You have requested our opinion as to certain Federal income tax
consequences of the merger (the "Merger") of Nova Acquisition Corporation
("Sub"), a Delaware corporation and wholly-owned subsidiary of National
Semiconductor Corporation, a Delaware corporation ("NSC") with and into Cyrix
Corporation ("Cyrix"), a Delaware Corporation, pursuant to an Agreement and Plan
of Merger dated as of July 28, 1997 (the "Agreement") by and among NSC, Cyrix
and Sub. Capitalized terms not otherwise defined herein shall have the meaning
set forth in the Agreement.
In connection with this opinion, we have examined the Agreement, the Proxy
Statement/Prospectus of NSC and Cyrix substantially in the form to be delivered
to their stockholders (the "Proxy Statement") and such other documents as we
deem relevant for purposes of this opinion. In addition, we have assumed that
(i) the Merger will be consummated in the manner contemplated by the Proxy
Statement and in accordance with the provisions of the Agreement, (ii) the
statements concerning the Merger set forth in the Proxy Statement, including the
purposes of the parties for consummating the Merger, are accurate and complete,
and (iii) the statements and representations made to us by NSC and Cyrix in
connection with the Merger (in the form of letters signed by a duly appointed
officer) are accurate, and (iv) there will be no changes in any of the facts or
representations material to this opinion between the date of this opinion and
the Effective Date.
Based upon and subject to the foregoing, we hereby confirm to you our
opinion as set forth under the heading "THE MERGER -- Material Federal Income
Tax Consequences" in the Proxy Statement/Prospectus, subject to the limitations
set forth therein.
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement on Form S-4
filed by NSC under the Securities Act of 1933, as amended ("Securities Act"),
and to the reference to our firm under the heading "THE MERGER -- Material
Federal Income Tax Consequences" in the Proxy Statement that constitutes a part
of the Registration Statement. By giving this consent we are not deeming
ourselves experts within the meaning of Section 11 of the Securities Act.
Very truly yours,
/s/ WACHTELL, LIPTON, ROSEN & KATZ
--------------------------------------
<PAGE> 1
EXHIBIT 23.1
The Board of Directors
National Semiconductor Corporation:
We consent to the use of our report contained in National Semiconductor
Corporation's May 25, 1997 annual report on Form 10-K incorporated herein by
reference and to the reference to our firm under the heading "Experts" in the
prospectus. Our report refers to a change in accounting for depreciation in
fiscal 1996.
/s/ KPMG Peat Marwick LLP
San Jose, California
October 16, 1997
<PAGE> 1
EXHIBIT 23.2
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4 No. 333- ) to be filed on or about October
16, 1997, and related Joint Proxy of National Semiconductor Corporation and
Cyrix Corporation for the registration of National Semiconductor Corporation
common stock and to the incorporation by reference therein of our report dated
January 16, 1997, with respect to the consolidated financial statements and
schedule of Cyrix Corporation included in its Annual Report (Form 10-K) for the
year ended December 31, 1996, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Dallas, Texas
October 16, 1997
<PAGE> 1
EXHIBIT 23.3
[LETTERHEAD OF GOLDMAN, SACHS & CO.]
October 16, 1997
Board of Directors
Cyrix Corporation
2703 N. Central Expressway
Richardson, TX 75085-3920
Re: Registration Statement (File No. 1-6453) on Form S-4 of National
Semiconductor Corporation as filed on October 16, 1997
Gentlemen:
Attached is our opinion letter dated October 16, 1997, with respect to the
fairness to the holders of the outstanding shares of Common Stock, par value
$.004 per share (the "Shares"), of Cyrix Corporation (the "Company") of the
exchange ratio of 0.825 shares of Common Stock, par value $0.50 per share, of
National Semiconductor Corporation to be received for each share pursuant to the
Agreement and Plan of Merger, dated as of July 28, 1997, by and among National
Semiconductor, Nova Acquisition Corp., a wholly owned subsidiary of National
Semiconductor, and the Company.
The foregoing opinion letter is provided for the information and assistance
of the Board of Directors of the Company in connection with its consideration of
the transaction contemplated therein and is not to be used, circulated, quoted
or otherwise referred to for any other purpose, nor is it to be filed with,
included in or referred to in whole or in part in any registration statement,
proxy statement or any other document, except in accordance with our prior
written consent. We understand that the Company has determined to include our
opinion in the above-referenced Registration Statement.
In that regard, we hereby consent to the reference to the opinion of our
Firm under the captions "Summary -- Opinion of Cyrix's Financial Advisor," "The
Merger -- Background of the Merger," "The Merger -- Recommendation of the Cyrix
Board; Cyrix's Reasons for the Merger," and "The Merger -- Opinion of Cyrix's
Financial Advisors" and to the inclusion of the foregoing opinion in the Proxy
Statement/Prospectus included in the above-mentioned Registration Statement. In
giving such consent, we do not thereby admit that we come within the category of
persons whose consent is required under Section 7 of the Securities Act of 1933
or the rules and regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
/s/ GOLDMAN, SACHS & CO.
--------------------------------------
GOLDMAN, SACHS & CO.
<PAGE> 1
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned persons hereby
constitutes and appoints Brian L. Halla, Donald Macleod, and John M. Clark III,
and each of them singly, his true and lawful attorney-in-fact and in his name,
place, and stead, and in any and all of his offices and capacities with National
Semiconductor Corporation, to sign the Registration Statement with which this
Power of Attorney is filed, and any and all amendments to said Registration
Statement, and generally to do and perform all things and acts necessary or
advisable in connection therewith, and each of the undersigned hereby ratifies
and confirms all that each of said attorneys-in-fact may lawfully do or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has hereunto executed this
Power of Attorney as of the date set forth opposite his signature.
<TABLE>
<CAPTION>
SIGNATURE DATE
- ----------------------------------------------- --------------------------------------------
<S> <C>
/s/ BRIAN L. HALLA August 1, 1997
- -----------------------------------------------
Brian L. Halla
/s/ GARY P. ARNOLD July 29, 1997
- -----------------------------------------------
Gary P. Arnold
/s/ ROBERT BESHAR July 29, 1997
- -----------------------------------------------
Robert Beshar
/s/ MODESTO A. MAIDIQUE August 12, 1997
- -----------------------------------------------
Modesto A. Maidique
/s/ EDWARD R. MCCRACKEN July 30, 1997
- -----------------------------------------------
Edward R. McCracken
/s/ J. TRACY O'ROURKE July 29, 1997
- -----------------------------------------------
J. Tracy O'Rourke
/s/ CHARLES E. SPORCK July 21, 1997
- -----------------------------------------------
Charles E. Sporck
/s/ DONALD E. WEEDEN July 31, 1997
- -----------------------------------------------
Donald E. Weeden
/s/ DONALD MACLEOD July 30, 1997
- -----------------------------------------------
Donald Macleod
/s/ RICHARD D. CROWLEY, JR. July 30, 1997
- -----------------------------------------------
Richard D. Crowley, Jr.
</TABLE>
