<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 16, 1999
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
TEXAS INSTRUMENTS INCORPORATED
(Exact Name of Registrant as Specified in its Charter)
---------------------
<TABLE>
<S> <C> <C>
DELAWARE 3600 75-0289970
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
</TABLE>
---------------------
<TABLE>
<S> <C>
RICHARD J. AGNICH
SENIOR VICE PRESIDENT, SECRETARY & GENERAL COUNSEL
8505 FOREST LANE 8505 FOREST LANE
P.O. BOX 660199 P.O. BOX 660199
DALLAS, TEXAS 75266-0199 DALLAS, TEXAS 75266-0199
(972) 995-3773 (972) 995-3773
(Address, Including Zip Code, and Telephone (Name, Address, Including Zip Code, and Telephone
Number, Number, Including Area Code, of Agent for Service)
Including Area Code, of Registrant's Principal
Executive Offices)
</TABLE>
---------------------
Copies To:
<TABLE>
<S> <C> <C>
ALLAN R. CAMPBELL, ESQ.
SENIOR VICE PRESIDENT, GENERAL MARGARET A. BROWN, ESQ.
R. SCOTT COHEN, ESQ. COUNSEL & SECRETARY SKADDEN, ARPS, SLATE, MEAGHER &
WEIL, GOTSHAL & MANGES LLP UNITRODE CORPORATION FLOM LLP
100 CRESCENT COURT, SUITE 1300 7 CONTINENTAL BOULEVARD ONE BEACON STREET
DALLAS, TEXAS 75201 MERRIMACK, NEW HAMPSHIRE 03054 BOSTON, MASSACHUSETTS 02108
(214) 746-7700 (603) 424-2410 (617) 573-4800
</TABLE>
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: Upon the effective time of the merger described in 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. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
---------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED(1) REGISTERED(2) PER SHARE(3) PRICE(4) FEE(4)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $1.00 per
share...................... 20,504,545 $76.69 $1,572,464,939 $437,145.25
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Texas Instruments common stock being registered hereby includes
associated rights to acquire Series B Participating Cumulative Preferred
Stock of Texas Instruments.
(2) Represents the maximum number of shares of Texas Instruments common stock to
be issued in the merger described in this Registration Statement if the
maximum number of shares of Unitrode common stock are exchanged at the
maximum exchange rate.
(3) Represents the quotient obtained by dividing (i) the proposed maximum
aggregate offering price (determined as described in note 4 below) by (ii)
the number of shares of Texas Instruments common stock registered hereby.
(4) Estimated in accordance with Rule 457(c) and (f), solely for the purpose of
determining the registration fee. Represents the product of (i) $44.28, the
average of the high and low prices reported on the New York Stock Exchange
on September 9, 1999 for Unitrode common stock, multiplied by (ii)
35,511,855, the maximum number of shares of Unitrode common stock which will
be converted into shares of Texas Instruments common stock pursuant to the
merger. The registration fee has been offset by $245,498.69 previously paid
by Unitrode Corporation in connection with the filing of preliminary proxy
materials by Unitrode Corporation with the Commission on August 20, 1999 as
permitted by Rule 457(b). Accordingly, an additional fee of $191,646.56 has
been paid.
---------------------
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 DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
[UNITRODE LOGO]
MERGER PROPOSED -- YOUR VOTE IS VERY IMPORTANT
September 16, 1999
Dear Unitrode Corporation stockholder,
The boards of directors of Unitrode Corporation, Texas Instruments
Incorporated and Unicorn Acquisition Corp., a wholly owned subsidiary of Texas
Instruments, have approved, and the parties have entered into, a merger
agreement that, subject to Unitrode stockholder approval, will result in Unicorn
Acquisition being merged with and into Unitrode. As a result of the merger,
Unitrode will become a wholly owned subsidiary of Texas Instruments. The merger
agreement provides that Unitrode stockholders will receive a fraction of a share
of Texas Instruments common stock for each share of Unitrode common stock that
they own immediately before the merger. The exact fraction of a share will be
determined by dividing $38.60 by the average of the daily high and low trading
prices of Texas Instruments common stock for the 20 trading day period ending on
the second trading day prior to the merger, subject to a minimum of 0.5023 and a
maximum of 0.5774 of a share of Texas Instruments common stock for each share of
Unitrode common stock.
AFTER CAREFUL CONSIDERATION, YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY
DETERMINED THAT THE MERGER ON SUBSTANTIALLY THE TERMS AND CONDITIONS SET FORTH
IN THE MERGER AGREEMENT AMONG UNITRODE, TEXAS INSTRUMENTS AND UNICORN
ACQUISITION IS ADVISABLE AND IS FAIR TO, AND IN THE BEST INTERESTS OF, UNITRODE
AND ITS STOCKHOLDERS. YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE
MERGER AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" APPROVAL AND
ADOPTION OF THE MERGER.
The merger cannot be completed unless the holders of Unitrode common stock
representing at least 66 2/3% of the votes that may be cast by the holders of
all the Unitrode common stock approve and adopt it. We have scheduled a special
meeting for you to vote on the merger. YOUR VOTE IS VERY IMPORTANT.
The meeting will be held on Friday, October 15, 1999 at 10:00 a.m., local
time, at the principal offices of Unitrode at 7 Continental Boulevard,
Merrimack, New Hampshire 03054.
Whether or not you plan to attend the meeting, please take the time to vote
by completing and mailing the enclosed proxy card or by providing your proxy by
telephone or over the Internet, as described on the enclosed proxy card. If you
sign, date and mail your proxy card without indicating how you wish to vote,
your proxy will be voted in favor of approval and adoption of the merger. Your
failure to return your proxy card will be considered a vote against approval and
adoption of the merger. Returning the proxy does NOT deprive you of your right
to attend the meeting and to vote your shares in person.
The enclosed proxy statement/prospectus provides you with detailed
information about the proposed merger and about Texas Instruments. We encourage
you to read this entire document carefully. IN PARTICULAR, YOU SHOULD CONSIDER
CAREFULLY THE DISCUSSION IN THE SECTION ENTITLED "RISK FACTORS" BEGINNING ON
PAGE 13 OF THE PROXY STATEMENT/PROSPECTUS. You may also obtain information about
Unitrode and Texas Instruments from documents that they have filed with the
Securities and Exchange Commission. Some of these documents are included with or
incorporated by reference into the enclosed proxy statement/prospectus.
Thank you for your cooperation.
Sincerely,
/s/ ROBERT J. RICHARDSON
Robert J. Richardson
Chairman and Chief Executive Officer
<PAGE> 3
[UNITRODE LOGO]
UNITRODE CORPORATION
---------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
---------------------
TO BE HELD FRIDAY, OCTOBER 15, 1999
To The Stockholders:
A Special Meeting of Stockholders of Unitrode Corporation, a Maryland
corporation, will be held on Friday, October 15, 1999 at 10:00 a.m., local time,
at the principal offices of Unitrode at 7 Continental Boulevard, Merrimack, New
Hampshire 03054, to consider and to vote upon the following proposals:
1. To approve and adopt the merger on substantially the terms and
conditions set forth in the Agreement and Plan of Merger, dated as of July
25, 1999, by and among Texas Instruments Incorporated, a Delaware
corporation, Unicorn Acquisition Corp., a Maryland corporation and a wholly
owned subsidiary of Texas Instruments, and Unitrode, pursuant to which,
among other things, (i) Unicorn Acquisition will be merged with and into
Unitrode, with Unitrode surviving the merger, and (ii) each share of
Unitrode's common stock, $.01 par value per share, issued and outstanding
immediately prior to the effective time of the merger will be converted
into the right to receive between approximately 0.5023 and 0.5774 of a
share of common stock, $1.00 par value per share, of Texas Instruments,
other than fractional shares which will be paid in cash.
2. Such other business as may properly come before the Special Meeting
or any postponement or adjournment thereof.
These items of business are described in the enclosed proxy
statement/prospectus. The Board of Directors has fixed the close of business on
September 10, 1999 as the record date for determining the stockholders entitled
to notice of and to vote at the Special Meeting.
IN ORDER THAT YOUR STOCK MAY BE REPRESENTED AT THE SPECIAL MEETING IN CASE
YOU ARE NOT PERSONALLY PRESENT, PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED
PROXY CARD AND RETURN IT PROMPTLY IN THE ACCOMPANYING ADDRESSED ENVELOPE. NO
POSTAGE NEED BE AFFIXED IF MAILED IN THE U.S. REGISTERED STOCKHOLDERS MAY ALSO
AUTHORIZE THE PROXIES VIA (1) A TOLL-FREE TELEPHONE CALL FROM THE U.S. AND
CANADA OR (2) THE INTERNET. THE TELEPHONE AND INTERNET VOTING PROCEDURES ARE
DESIGNED TO AUTHENTICATE STOCKHOLDERS' IDENTITIES, TO ALLOW STOCKHOLDERS TO
PROVIDE VOTING INSTRUCTIONS TO THE PROXIES AND TO CONFIRM THAT THEIR VOTING
INSTRUCTIONS HAVE BEEN PROPERLY RECORDED. UNITRODE HAS BEEN ADVISED BY COUNSEL
THAT THE PROCEDURES WHICH HAVE BEEN PUT IN PLACE ARE CONSISTENT WITH THE
REQUIREMENTS OF APPLICABLE LAW. SPECIFIC INSTRUCTIONS TO BE FOLLOWED BY ANY
REGISTERED STOCKHOLDER INTERESTED IN PROXY VOTING VIA TELEPHONE OR THE INTERNET
ARE SET FORTH ON THE ENCLOSED PROXY CARD.
By order of the Board of Directors,
/s/ ALLAN R. CAMPBELL
Allan R. Campbell
Senior Vice President,
General Counsel and Secretary
7 Continental Boulevard
Merrimack, New Hampshire 03054
September 16, 1999
<PAGE> 4
<TABLE>
<S> <C>
[TI LOGO] [UNITRODE LOGO]
</TABLE>
PROXY STATEMENT/PROSPECTUS
---------------------
MERGER PROPOSED -- THE VOTE OF UNITRODE CORPORATION STOCKHOLDERS IS IMPORTANT
The boards of directors of Texas Instruments Incorporated, a Delaware
corporation, Unicorn Acquisition Corp., a Maryland corporation and a wholly
owned subsidiary of Texas Instruments, and Unitrode Corporation, a Maryland
corporation, have approved, and the parties have entered into, a merger
agreement under which Unicorn Acquisition would merge with and into Unitrode and
Unitrode would become a wholly owned subsidiary of Texas Instruments.
This proxy statement/prospectus is being sent to stockholders of Unitrode
in connection with the solicitation of proxies by the board of directors of
Unitrode for use at the special meeting of Unitrode stockholders to be held on
October 15, 1999, to consider and to vote upon the proposed merger. This proxy
statement also constitutes a prospectus with respect to the shares of Texas
Instruments common stock to be issued to Unitrode stockholders in the merger,
including shares that may be issued in connection with the exercise of
outstanding Unitrode stock options prior to the merger.
The merger agreement provides that Unitrode stockholders will receive a
fraction of a share of Texas Instruments common stock for each share of Unitrode
common stock that they own immediately before the merger. The exact fraction of
a share will be determined by dividing $38.60 by the average of the daily high
and low trading prices of Texas Instruments common stock for the 20 trading day
period ending on the second trading day prior to the merger, subject to a
minimum of 0.5023 and a maximum of 0.5774 of a share of Texas Instruments common
stock for each share of Unitrode common stock. If the merger is completed,
Unitrode stockholders will collectively own or be entitled to receive an
aggregate of between approximately 2.1% and 2.4% of outstanding Texas
Instruments common stock, depending upon the number of shares of Texas
Instruments common stock issued pursuant to the merger.
Pursuant to a voting agreement executed concurrently with the merger
agreement, officers and directors of Unitrode holding an aggregate of
approximately 2.6% of the shares of Unitrode common stock entitled to vote on
the merger have agreed to vote in favor of approval and adoption of the merger.
After careful consideration, the board of directors of Unitrode has
determined that the merger on substantially the terms and conditions set forth
in the merger agreement is advisable and is fair to, and in the best interests
of, its stockholders and recommends that its stockholders vote in favor of
approval and adoption of the merger.
---------------------
Texas Instruments common stock is traded on the New York Stock Exchange
under the symbol "TXN." Texas Instruments intends to have the shares of Texas
Instruments common stock offered in connection with the merger listed on the New
York Stock Exchange.
WE URGE YOU TO CAREFULLY REVIEW THE RISK FACTORS DESCRIBED IN THIS PROXY
STATEMENT/ PROSPECTUS BEGINNING ON PAGE 13.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROXY STATEMENT/ PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
This proxy statement/prospectus is dated September 16, 1999, and was first
mailed to the stockholders of Unitrode on or about September 16, 1999.
<PAGE> 5
SOURCES OF ADDITIONAL INFORMATION
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND
FINANCIAL INFORMATION ABOUT TEXAS INSTRUMENTS AND UNITRODE FROM DOCUMENTS THAT
ARE NOT INCLUDED IN OR DELIVERED WITH THIS DOCUMENT. THIS INFORMATION IS
AVAILABLE TO YOU WITHOUT CHARGE UPON YOUR WRITTEN OR ORAL REQUEST. YOU CAN
OBTAIN DOCUMENTS INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT/PROSPECTUS,
OTHER THAN SOME OF THE EXHIBITS TO THOSE DOCUMENTS, BY REQUESTING THEM IN
WRITING OR BY TELEPHONE AT THE FOLLOWING ADDRESSES OR TELEPHONE NUMBERS:
<TABLE>
<S> <C>
TEXAS INSTRUMENTS INCORPORATED UNITRODE CORPORATION
ATTENTION: INVESTOR RELATIONS ATTENTION: INVESTOR RELATIONS
8505 FOREST LANE 7 CONTINENTAL BOULEVARD
DALLAS, TEXAS 75243 MERRIMACK, NEW HAMPSHIRE 03054
(972) 995-3773 (603) 424-2410
</TABLE>
IF YOU WOULD LIKE TO REQUEST DOCUMENTS, PLEASE DO SO BY OCTOBER 8, 1999 IN
ORDER TO RECEIVE THEM BEFORE THE SPECIAL MEETING OF UNITRODE STOCKHOLDERS.
ALSO SEE THE SECTIONS ENTITLED "INCORPORATION BY REFERENCE TO OTHER
DOCUMENTS" ON PAGES 65 AND 66 AND "WHERE YOU CAN FIND MORE INFORMATION ABOUT
TEXAS INSTRUMENTS" ON PAGE 66 AND "WHERE YOU CAN FIND MORE INFORMATION ABOUT
UNITRODE" ON PAGE 67 OF THIS PROXY STATEMENT/PROSPECTUS.
TEXAS INSTRUMENTS HAS SUPPLIED ALL OF THE INFORMATION CONTAINED IN THIS
PROXY STATEMENT/PROSPECTUS RELATING TO TEXAS INSTRUMENTS AND UNICORN
ACQUISITION, AND UNITRODE HAS SUPPLIED ALL OF THE INFORMATION RELATING TO
UNITRODE.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROXY
STATEMENT/PROSPECTUS OR IN THE DOCUMENTS INCORPORATED BY REFERENCE. NONE OF
TEXAS INSTRUMENTS, UNICORN ACQUISITION OR UNITRODE HAS AUTHORIZED ANYONE TO GIVE
YOU ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS ABOUT EITHER THE MERGER OR
THE OTHER TRANSACTIONS THAT ARE DISCUSSED IN THIS PROXY STATEMENT/PROSPECTUS
OTHER THAN THE INFORMATION OR REPRESENTATIONS CONTAINED IN THIS PROXY
STATEMENT/PROSPECTUS OR IN THE DOCUMENTS INCORPORATED BY REFERENCE. IF YOU ARE
GIVEN ANY INFORMATION ABOUT THESE MATTERS THAT IS NOT DISCUSSED OR INCORPORATED
BY REFERENCE IN THIS PROXY STATEMENT/PROSPECTUS, YOU MUST NOT RELY ON THAT
INFORMATION.
THIS PROXY STATEMENT/PROSPECTUS IS NOT AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY SECURITIES IN ANY LOCATION WHERE OR TO ANY PERSON TO WHOM
TEXAS INSTRUMENTS IS NOT PERMITTED TO OFFER OR TO SELL SECURITIES UNDER
APPLICABLE LAW.
THE DELIVERY OF THIS PROXY STATEMENT/PROSPECTUS OR THE COMMON STOCK OF
TEXAS INSTRUMENTS OFFERED BY THIS PROXY STATEMENT/PROSPECTUS DOES NOT, UNDER ANY
CIRCUMSTANCE, MEAN THAT THERE HAS NOT BEEN A CHANGE IN THE AFFAIRS OF TEXAS
INSTRUMENTS OR UNITRODE SINCE THE DATE OF THIS PROXY STATEMENT/PROSPECTUS. IT
ALSO DOES NOT MEAN THAT THE INFORMATION IN THIS PROXY STATEMENT/PROSPECTUS IS
CORRECT AFTER THIS DATE OR THAT THE INFORMATION IN THE DOCUMENTS INCORPORATED BY
REFERENCE IS CORRECT AFTER THE RESPECTIVE DATES OF THOSE DOCUMENTS.
i
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ANSWERS TO FREQUENTLY ASKED QUESTIONS
ABOUT THE MERGER..................... 1
SUMMARY................................ 3
RISK FACTORS........................... 13
The value of the merger consideration
is not fixed and, therefore, could
be less than anticipated by
Unitrode stockholders............. 13
Unitrode officers and directors have
conflicts of interest that may
influence them to support or
recommend the merger.............. 13
Texas Instruments may have difficulty
integrating Unitrode's operations
and retaining important employees
of Unitrode....................... 13
The integration of Unitrode will
require substantial time and
effort of key managers of Texas
Instruments, which could divert
the attention of those managers
from other matters................ 14
Unitrode stockholders should not
place undue reliance on
forward-looking information....... 14
TEXAS INSTRUMENTS UNAUDITED PRO FORMA
COMBINED FINANCIAL INFORMATION....... 15
THE UNITRODE SPECIAL MEETING........... 23
General.............................. 23
Matters to be Considered at the
Unitrode Special Meeting.......... 23
Date, Time and Place................. 23
Record Date; Quorum.................. 23
Votes Required....................... 23
Voting by Unitrode's Executive
Officers and Directors............ 24
Voting of Proxies; Revocability of
Proxies........................... 24
Solicitation of Proxies.............. 25
Availability of Principal
Accountants....................... 25
THE MERGER............................. 25
Background........................... 25
Reasons for the Merger............... 26
Recommendation of the Board of
Directors of Unitrode............. 28
Opinion of Financial Advisor to the
Board of Directors of Unitrode.... 28
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Interests of Certain Persons in the
Merger............................ 35
Employee Benefit Plans............... 37
No Dissenters' Appraisal Rights...... 37
Accounting Treatment................. 37
Federal Securities Laws
Consequences...................... 37
Comparison of Rights of Stockholders
of Texas Instruments and
Unitrode.......................... 38
U.S. Federal Income Tax Consequences
of the Merger..................... 47
Regulatory Matters................... 48
THE MERGER AGREEMENT................... 49
General.............................. 49
Completion and Effectiveness of the
Merger............................ 49
Conversion of Shares of Unitrode
Common Stock...................... 49
Treatment of Stock Options........... 50
Treatment of Restricted Stock........ 50
Exchange Procedures.................. 50
Directors and Officers............... 51
Charter and Bylaws................... 51
Representations and Warranties....... 51
Conduct of Business Before Completion
of the Merger..................... 53
Conditions to the Completion of the
Merger............................ 55
Additional Covenants of Unitrode and
Texas Instruments................. 58
Termination of the Merger
Agreement......................... 60
Indemnification of Unitrode's
Directors and Officers............ 62
Amendment of the Merger Agreement.... 62
Extension and Waiver................. 63
VOTING AGREEMENT....................... 63
STOCK OPTION AGREEMENT................. 63
General.............................. 63
Exercise of the Option; Profit
Limitations....................... 63
Termination of the Option............ 64
Other Provisions..................... 64
BUSINESS OF TEXAS INSTRUMENTS.......... 64
Incorporation by Reference to Other
Documents......................... 65
Where You Can Find More Information
About Texas Instruments........... 66
BUSINESS OF UNITRODE................... 66
</TABLE>
ii
<PAGE> 7
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Incorporation by Reference to Other
Documents......................... 66
Where You Can Find More Information
About Unitrode.................... 67
DESCRIPTION OF CAPITAL STOCK OF TEXAS
INSTRUMENTS.......................... 67
General.............................. 67
The Common Stock..................... 67
The Preferred Stock.................. 68
The Rights Plan...................... 68
LEGAL MATTERS.......................... 69
INDEPENDENT AUDITORS................... 70
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
STOCKHOLDER PROPOSALS FOR UNITRODE'S
2000 ANNUAL MEETING OF STOCKHOLDERS
IF THE MERGER IS NOT CONSUMMATED..... 70
ANNEX A -- Agreement and Plan of
Merger...................... A-1
ANNEX B -- Voting Agreement............ B-1
ANNEX C -- Stock Option Agreement...... C-1
ANNEX D -- Opinion of Broadview
International LLC........... D-1
</TABLE>
iii
<PAGE> 8
ANSWERS TO FREQUENTLY ASKED QUESTIONS ABOUT THE MERGER
Q: When do you expect the merger to be completed?
A: We are working towards completing the merger as quickly as possible. For the
merger to be completed, the Unitrode stockholders must approve and adopt it at
the special meeting of Unitrode stockholders. We expect to complete the merger
promptly following the Unitrode special meeting.
Q: What will Unitrode stockholders receive in the merger?
A: For each share of Unitrode common stock you own, you will receive a fraction
of a share of Texas Instruments common stock equal to the exchange ratio, which
is determined as set forth below:
- - if the average of the daily high and low trading prices of Texas Instruments
common stock for the 20 trading day period ending on the second trading day
prior to the merger is greater than $76.85, the exchange ratio will be 0.5023;
- - if the average of the daily high and low trading prices of Texas Instruments
common stock for the 20 trading day period ending on the second trading day
prior to the merger is less than or equal to $76.85 but greater than or equal
to $66.85, the exchange ratio will be determined by dividing $38.60 by that
average trading price; and
- - if the average of the daily high and low trading prices of Texas Instruments
common stock for the 20 trading day period ending on the second trading day
prior to the merger is less than $66.85, the exchange ratio will be 0.5774.
The following chart shows a range of exchange ratios and the value of
consideration you would receive for each share of your Unitrode common stock
based on several assumed average trading prices of Texas Instruments common
stock during the 20 day trading period. To determine the number of shares of
Texas Instruments common stock you would receive in the merger, simply multiply
the number of shares of Unitrode common stock you own by the applicable exchange
ratio. Any resulting fractional shares will be paid in cash.
<TABLE>
<CAPTION>
AVERAGE TRADING VALUE OF A
PRICE OF SHARE OF
TEXAS INSTRUMENTS EXCHANGE UNITRODE
COMMON STOCK RATIO COMMON STOCK
----------------- -------- ------------
<S> <C> <C>
$90.00................ .5023 $45.21
85.00................ .5023 42.70
80.00................ .5023 40.18
76.85................ .5023 38.60
75.00................ .5147 38.60
70.00................ .5514 38.60
66.85................ .5774 38.60
65.00................ .5774 37.53
60.00................ .5774 34.64
</TABLE>
If the 20 day average trading price had been determined on September 13,
1999, it would have been $81.36, which would have resulted in an exchange ratio
of .5023. The average trading price does not represent the actual value of the
shares of Texas Instruments common stock you will receive in the merger. The
value of those shares will depend on the market price of Texas Instruments
common stock at the time you receive them.
For a more detailed discussion of the formula that will be used under the
merger agreement to determine the number of shares of Texas Instruments common
stock that you will receive in connection with the merger, see the section
entitled "The Merger Agreement -- Conversion of Shares of Unitrode Common Stock"
on page 49.
Q: When will Unitrode stockholders receive shares of Texas Instruments common
stock?
A: Shortly following the merger you will receive a letter of transmittal to
complete and return along with your Unitrode stock certificates. Once you have
done so, Texas Instruments will issue you shares of Texas Instruments common
stock.
Q: What are the U.S. federal income tax consequences of the merger to Unitrode
stockholders?
A: In general, holders of Unitrode common stock will not recognize gain or loss
for U.S. federal income tax purposes on the exchange of their stock in the
merger, except with respect to any
1
<PAGE> 9
cash they receive in lieu of fractional shares of Texas Instruments common
stock.
Q: What percentage of Texas Instruments will Unitrode stockholders own following
the merger?
A: Based on the number of shares of Unitrode common stock outstanding as of the
record date, Unitrode stockholders will collectively own between 16,578,952 and
19,057,708 shares of Texas Instruments common stock in connection with the
merger, depending upon the average trading price of Texas Instruments common
stock. The table below shows the approximate minimum and maximum percentage
ownership of Texas Instruments that shares of Texas Instruments common stock
issued to Unitrode stockholders will represent following the merger, based on
the number of shares of Texas Instruments common stock outstanding as of
September 10, 1999.
<TABLE>
<CAPTION>
SHARES OF TEXAS INSTRUMENTS PERCENTAGE
COMMON STOCK ISSUED OWNERSHIP OF
OR ISSUABLE TO UNITRODE TEXAS
STOCKHOLDERS INSTRUMENTS
--------------------------- ------------
<S> <C>
16,578,952....................... 2.1%
19,057,708....................... 2.4%
</TABLE>
Q: What should Unitrode stockholders do now?
A: After you have carefully read this proxy statement/prospectus, indicate how
you want to vote by completing and signing the enclosed proxy card. After
completing the proxy card, sign and mail it in the enclosed prepaid return
envelope marked "Proxy" as soon as possible so that your shares may be
represented and voted at the special meeting. Please do not send your Unitrode
stock certificates with your proxy card. After the merger is completed, you will
receive written instructions for exchanging your stock certificates.
You may also provide your proxy by a toll-free telephone call from the U.S.
and Canada or over the Internet. The enclosed proxy card contains specific
instructions for you to follow if you are interested in proxy voting by
telephone or over the Internet.
If you sign and send your proxy card and do not indicate how you want to
vote, we will count your proxy as a vote in favor of approval and adoption of
the merger. If you abstain from voting or do not vote, it will have the effect
of a vote against approval and adoption of the merger.
The special meeting will take place on October 15, 1999. Even if you have
signed and mailed your proxy card or provided your proxy by telephone or over
the Internet, you may still attend the special meeting and vote your shares in
person.
Q: Can Unitrode stockholders change their votes after mailing signed proxy cards
or providing their proxy by telephone or over the Internet?
A: Yes. There are five ways in which you may revoke your proxy before it is
exercised and change your vote:
- - First, you may send a written notice revoking your proxy to the Secretary of
Unitrode.
- - Second, you may complete and submit a new, later-dated proxy card.
- - Third, you may proxy vote by telephone on a later date than an earlier
submitted proxy.
- - Fourth, you may proxy vote over the Internet on a later date than an earlier
submitted proxy.
- - Fifth, you may attend the Unitrode special meeting and vote in person.
Simply attending the Unitrode special meeting, however, will not revoke
your proxy.
Q: If my Unitrode shares are held in "street name" by my broker, will my broker
vote my shares for me?
A: Your broker will vote your Unitrode shares only if you provide instructions
on how to vote. You should follow the directions provided by your broker
regarding how to instruct your broker to vote your shares. Without instructions,
your shares will not be voted, which will have the effect of a vote against
approval and adoption of the merger.
2
<PAGE> 10
SUMMARY
This brief summary highlights selected information from this proxy
statement/prospectus. It does not contain all of the information that may be
important to you in deciding how to vote. We urge you to read carefully the
entire proxy statement/prospectus and the other documents to which this proxy
statement/ prospectus refers for further information about the merger. Except
for documents included as annexes, all information with respect to Texas
Instruments common stock included in this proxy statement/prospectus reflects a
two-for-one stock split declared by Texas Instruments' board of directors on
July 15, 1999 and paid to Texas Instruments stockholders on August 16, 1999. To
learn how to obtain more information about Texas Instruments, see page 66. To
learn how to obtain more information about Unitrode, see page 67. Each item in
this summary includes a page reference directing you to a more complete
description of that item.
THE COMPANIES
TEXAS INSTRUMENTS INCORPORATED (See page 64)
8505 FOREST LANE, P.O. BOX 660199
DALLAS, TEXAS 75266-0199
(972) 995-3773
Texas Instruments is a global semiconductor company and the world's leading
designer and supplier of digital signal processing and analog technologies, the
engines driving the digitalization of electronics. Headquartered in Dallas,
Texas, Texas Instruments' businesses also include materials and controls,
educational and productivity solutions and digital imaging. Texas Instruments
has manufacturing or sales operations in more than 25 countries.
UNITRODE CORPORATION (See page 66)
7 CONTINENTAL BOULEVARD
MERRIMACK, NEW HAMPSHIRE 03054
(603) 424-2410
Unitrode is a major designer and supplier of power management components
and interface products. Unitrode designs and manufactures analog/linear and
mixed-signal integrated circuits, modules and non-volatile products, principally
to perform power management, portable power and interface functions.
Headquartered in Merrimack, New Hampshire, Unitrode's products, branded under
the Unitrode and Benchmarq Microelectronics names, are sold throughout the world
for a variety of computer, tele- and data-communications, defense/aerospace,
industrial and automotive applications.
THE SPECIAL MEETING (See page 23)
Unitrode will hold the special meeting at its principal offices at 7
Continental Boulevard, Merrimack, New Hampshire 03054, at 10:00 a.m., local
time, on October 15, 1999. At the special meeting, Unitrode is asking the
holders of its common stock to approve and adopt the merger.
RECOMMENDATION OF UNITRODE'S BOARD OF DIRECTORS (See page 23)
After careful consideration, the Unitrode board of directors has determined
that the merger on substantially the terms and conditions set forth in the
merger agreement is advisable and is fair to, and in the best interests of,
Unitrode and its stockholders. The Unitrode board of directors has unanimously
approved the merger and the merger agreement and unanimously recommends that
Unitrode stockholders vote "for" approval and adoption of the merger.
OPINION OF UNITRODE'S FINANCIAL ADVISOR (See page 28)
Broadview International LLC, Unitrode's financial advisor, delivered an
opinion to Unitrode's board of directors that, subject to the considerations
described in the opinion, the exchange ratio in the merger is fair, from a
financial point of view, to Unitrode stockholders. The complete opinion of
Broadview is attached as Appendix D. We urge you to read the opinion in its
entirety.
UNITRODE STOCKHOLDER APPROVAL (See page 23)
The approval and adoption of the merger requires the affirmative vote of at
least 66 2/3% of the shares of Unitrode common stock outstanding on September
10, 1999, the record date for the special meeting. You are entitled to cast one
vote per share of Unitrode common stock you owned as of the record date.
3
<PAGE> 11
As of the record date for the special meeting, directors and executive
officers of Unitrode beneficially owned and were entitled to vote shares of
Unitrode common stock representing approximately 2.7% of the total voting power
of all outstanding shares of Unitrode common stock. The directors and executive
officers of Unitrode have agreed or indicated they intend to vote the Unitrode
common stock owned by them "for" approval and adoption of the merger.
PROCEDURE FOR CASTING YOUR VOTE (See page 24)
Please mail your signed proxy card in the enclosed return envelope or
provide your proxy by telephone or over the Internet, as described on the proxy
card enclosed with this proxy statement/prospectus, as soon as possible so that
your shares of Unitrode common stock may be represented and voted at the special
meeting. If you do not include instructions on how to vote your proxy, your
shares will be voted "for" approval and adoption of the merger.
PROCEDURE FOR CASTING YOUR VOTE IF YOUR SHARES ARE HELD BY YOUR BROKER IN
"STREET NAME" (See page 24)
Your broker will vote your shares only if you provide instructions on how
to vote by following the instructions provided to you by your broker. If you do
not provide your broker with voting instructions, your shares will not be voted
at the Unitrode special meeting and it will have the same effect as voting
against approval and adoption of the merger.
PROCEDURE FOR CHANGING YOUR VOTE (See page 24)
If you want to change your vote, just send a later-dated, signed proxy
card, or proxy vote by telephone or over the Internet on a later date than your
earlier submitted proxy, before the Unitrode special meeting or attend the
special meeting and vote your shares in person. You may also revoke your proxy
by sending written notice to the Secretary of Unitrode before the special
meeting.
PROCEDURE FOR EXCHANGING YOUR STOCK CERTIFICATES (See page 50)
After the merger is completed, you will receive written instructions for
exchanging your Unitrode stock certificates for Texas Instruments stock
certificates. Do not send your Unitrode stock certificates now.
THE MERGER AGREEMENT
The merger agreement is attached to this proxy statement/prospectus as
Annex A. Please read the merger agreement in its entirety. It is the legal
document that governs your rights in connection with the merger.
Conditions to Completion of the Merger (See page 55)
Texas Instruments' and Unitrode's obligations to complete the merger are
subject to a number of conditions, including the following:
- approval and adoption of the merger by the Unitrode stockholders;
- the expiration or termination of the waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976; and
- no injunction being entered by a court preventing the merger and no
continuing injunction proceeding being instituted by a governmental
entity.
Unitrode's obligation to complete the merger is also subject to the
following additional conditions:
- the representations and warranties made by Texas Instruments and Unicorn
Acquisition in the merger agreement are accurate in all material
respects;
- Texas Instruments has performed or complied with all conditions to the
consummation of the merger contained in the merger agreement; and
- Unitrode has received an opinion of its tax counsel, Skadden, Arps,
Slate, Meagher & Flom LLP, to the effect that the merger will qualify as
a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code.
4
<PAGE> 12
Each of Texas Instruments' and Unicorn Acquisition's obligation to complete
the merger is also subject to the following additional conditions:
- the representations and warranties made by Unitrode in the merger
agreement are accurate in all material respects;
- Unitrode has performed or complied with all conditions to the
consummation of the merger contained in the merger agreement;
- Texas Instruments has received an opinion of its tax counsel, Weil,
Gotshal & Manges LLP, to the effect that the merger will qualify as a
reorganization within the meaning of Section 368(a) of the Internal
Revenue Code;
- the receipt of all authorizations, consents or other approvals of any
domestic or foreign governmental entity (including Germany) required in
connection with the merger; and
- the receipt of letters from Pricewaterhouse-Coopers LLP and Ernst & Young
LLP regarding the treatment of the merger as a "pooling of interests" for
accounting purposes.
In the event Texas Instruments or Unitrode determines to waive compliance
with any of these conditions, they will seek the advice of counsel with respect
to whether this proxy statement/prospectus should be revised and recirculated to
stockholders to reflect the waiver.
Termination of the Merger Agreement (See page 60)
As summarized below, the merger agreement may be terminated under certain
circumstances at any time before the completion of the merger.
The merger agreement may be terminated by mutual consent of Texas
Instruments and Unitrode, whether before or after the vote by Unitrode
stockholders.
The merger agreement may also be terminated by either Texas Instruments or
Unitrode under any of the following circumstances:
- if the merger is not completed by February 29, 2000, except that either
Texas Instruments or Unitrode may extend that termination date if they
reasonably determine in good faith that additional time is necessary to
obtain any required governmental consents or approvals;
- if Unitrode stockholders do not approve and adopt the merger at the
special meeting;
- if any final and non-appealable law prohibits the completion of the
merger; or
- if any governmental entity has failed to issue an order or ruling or has
not taken any action necessary for certain conditions to the closing of
the merger to be met.
Unitrode may terminate the merger agreement under the following
circumstances:
- if, pursuant to the terms and conditions of the merger agreement, prior
to Unitrode stockholder approval of the merger, the Unitrode board of
directors authorizes Unitrode to enter into a binding agreement relating
to an unsolicited proposal by a third party to acquire Unitrode on terms
determined by the Unitrode board of directors to be more favorable than
the terms of the merger with Texas Instruments; or
- if Texas Instruments or Unicorn Acquisition has breached any
representation, warranty, covenant or agreement in the merger agreement
that cannot be cured and would cause certain conditions to the
consummation of the merger not to be met before February 29, 2000.
Texas Instruments may terminate the merger agreement under the following
circumstances:
- if Unitrode enters into a binding agreement for a proposal by a third
party to acquire Unitrode on terms determined by the Unitrode board of
directors to be more favorable than the terms of the merger with Texas
Instruments;
- if the Unitrode board of directors has withdrawn or adversely modified
its approval or recommendation of the merger; or
- if Unitrode has breached any representation, warranty, covenant or
agreement in the merger agreement that cannot be cured and would cause
certain conditions to the
5
<PAGE> 13
consummation of the merger not to be met before February 29, 2000.
Termination Fees (See page 62)
Unitrode has agreed to pay Texas Instruments a termination fee of
$41,700,000 if the merger agreement is terminated in any of the following
circumstances:
- if, prior to Unitrode stockholder approval of the merger, Unitrode
terminates the merger agreement pursuant to the terms and conditions of
the merger agreement after the Unitrode board of directors authorizes
Unitrode to enter into a binding agreement relating to an unsolicited
proposal by a third party to acquire Unitrode on terms determined by the
Unitrode board of directors to be more favorable than the terms of the
merger with Texas Instruments;
- if either Texas Instruments or Unitrode terminates the merger agreement
because Unitrode's stockholders do not approve and adopt the merger after
a third party has made or announced an intention to make an unsolicited
acquisition proposal to acquire Unitrode, and within nine months of the
termination, Unitrode has entered into an agreement with, or completes an
extraordinary transaction with, a third party regarding an acquisition of
Unitrode;
- if Texas Instruments terminates the merger agreement because Unitrode
enters into a binding agreement for a proposal by a third party to
acquire Unitrode on terms determined by the Unitrode board of directors
to be more favorable than the terms of the merger with Texas Instruments,
or the Unitrode board of directors withdraws or adversely modifies its
approval or recommendation of the merger; or
- if Texas Instruments terminates the merger agreement because Unitrode, in
violation of the terms and conditions of the merger agreement, solicits a
proposal to acquire Unitrode from any party other than Texas Instruments
or Unicorn Acquisition or participates in any discussions or negotiations
regarding an acquisition, furnishes any information to any third person
or takes any other actions that may reasonably be expected to lead to a
proposal for an acquisition of Unitrode by any party other than Texas
Instruments or Unicorn Acquisition.
NO DISSENTERS' APPRAISAL RIGHTS (See page 37)
Because Unitrode's common stock is traded on the New York Stock Exchange,
holders of Unitrode common stock who do not vote in favor of approval and
adoption of the merger will not be entitled under the Maryland General
Corporation Law to exercise dissenting stockholders' appraisal rights with
respect to their shares of Unitrode common stock.
ACCOUNTING TREATMENT (See page 37)
We expect the merger to qualify as a "pooling of interests" under generally
accepted accounting principles, which means that for accounting and financial
reporting purposes, the recorded assets and liabilities of Unitrode will be
carried forward and combined with those of Texas Instruments at their recorded
amounts.
U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO UNITRODE STOCKHOLDERS (See
page 47)
The merger is intended to qualify as a nontaxable transaction and we expect
that the exchange of your shares of Unitrode common stock for shares of Texas
Instruments common stock will generally not cause you to recognize any gain or
loss for U.S. federal income tax purposes. You will, however, have to recognize
income or gain in connection with any cash you receive in lieu of fractional
shares of Texas Instruments common stock.
TAX MATTERS ARE VERY COMPLICATED AND THE TAX CONSEQUENCES OF THE MERGER TO
YOU WILL DEPEND ON THE FACTS OF YOUR OWN SITUATION. YOU SHOULD CONSULT YOUR OWN
TAX ADVISORS FOR A FULL UNDERSTANDING OF THE TAX CONSEQUENCES OF THE MERGER TO
YOU.
REGULATORY MATTERS (See page 48)
The merger is subject to antitrust laws in the United States and Germany.
We have made the required filings with the U.S. Department of Justice and the
Federal Trade Commission as well as the appropriate German regulatory agency. On
6
<PAGE> 14
August 17, 1999, the Federal Trade Commission granted early termination of the
applicable waiting period. On September 13, 1999, the appropriate German
regulatory agency approved the transaction. Despite the termination of
applicable waiting periods under U.S. antitrust laws, we cannot assure you that
the U.S. Department of Justice or the Federal Trade Commission, appropriate
foreign regulatory agencies or others will not challenge the merger at any time
before or after its completion.
VOTING AGREEMENT (See page 63)
In order to induce Texas Instruments to enter into the merger agreement,
some officers and directors of Unitrode entered into a voting agreement with
Texas Instruments on July 25, 1999. Those officers and directors who signed the
voting agreement have agreed to vote an aggregate of 867,962 shares of Unitrode
common stock held by them, representing approximately 2.6% of the total
outstanding voting power as of the record date, in favor of approval and
adoption of the merger.
STOCK OPTION AGREEMENT (See page 63)
In order to induce Texas Instruments to enter into the merger agreement,
Unitrode and Texas Instruments entered into a stock option agreement, pursuant
to which Unitrode granted Texas Instruments an irrevocable option to purchase
for $38.60 per share up to 6,470,760 shares of Unitrode common stock, subject to
adjustment. The shares granted in the option give Texas Instruments the right to
purchase up to 19.9% of the stock entitled to vote for the election of directors
of Unitrode that is issued and outstanding at the time of the exercise of the
option. The option is exercisable in the event the merger agreement is
terminated under circumstances in which Texas Instruments is or may be entitled
to receive a termination fee.
INTERESTS OF CERTAIN PERSONS IN THE MERGER (See page 35)
In considering the recommendation of the Unitrode board of directors with
respect to the merger and the transactions contemplated by the merger agreement,
stockholders of Unitrode should be aware that some members of management and the
board of directors of Unitrode have particular interests in the merger that are
different from, or in addition to, the interests of stockholders of Unitrode
generally.
RISK FACTORS (See page 13)
Stockholders of Unitrode are urged to consider the items under the section
entitled "Risk Factors" beginning on page 13 in determining whether to vote in
favor of approval and adoption of the merger.
7
<PAGE> 15
SELECTED HISTORICAL FINANCIAL DATA OF TEXAS INSTRUMENTS
Set forth below is selected financial data for Texas Instruments for and as
of the periods indicated. This selected historical financial data is only a
summary and we urge you to read this summary in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the financial statements and related notes to those financial statements
contained in Texas Instruments' annual report on Form 10-K for the year ended
December 31, 1998, as amended, and quarterly report on Form 10-Q for the quarter
ended June 30, 1999.
<TABLE>
<CAPTION>
IN MILLIONS, EXCEPT PER-SHARE DATA
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, JUNE 30,
---------------------------------------------------- -------------------
1998 1997 1996 1995 1994 1999 1998
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net revenues................. $ 8,460 $ 9,750 $ 9,940 $ 11,409 $ 8,608 $ 4,385 $ 4,353
Operating costs and
expenses................... 8,061 9,135 9,966 9,970 7,682 3,632 4,413
-------- -------- -------- -------- -------- -------- --------
Profit (loss) from
operations................. 399 615 (26) 1,439 926 753 (60)
Other income (expense),
net........................ 218 98 3 31 (39) 106 156
-------- -------- -------- -------- -------- -------- --------
Income (loss) from continuing
operations before provision
for income taxes and
extraordinary item......... 617 713 (23) 1,470 887 859 96
Provision for income taxes... 210 411 23 474 295 292 33
-------- -------- -------- -------- -------- -------- --------
Income (loss) from continuing
operations before
extraordinary item......... $ 407 $ 302 $ (46) $ 996 $ 592 $ 567 $ 63
======== ======== ======== ======== ======== ======== ========
Diluted earnings (loss) per
common share from
continuing operations
before extraordinary
item(1).................... $ .51 $ .38 $ (.06) $ 1.29 $ .78 $ .70 $ .08
Basic earnings (loss) per
common share from
continuing operations
before extraordinary
item(1).................... $ .52 $ .39 $ (.06) $ 1.33 $ .81 $ .72 $ .08
Dividends declared per common
share(1)................... $ .128 $ .17 $ .17 $ .16 $ .118 $ .085 $ .043
Average common and dilutive
potential common shares
outstanding during period,
in thousands(1)............ 801,858 795,454 758,776 774,524 763,418 810,444 801,690
</TABLE>
<TABLE>
<CAPTION>
IN MILLIONS
AS OF DECEMBER 31, AS OF
---------------------------------------------------- JUNE 30,
1998 1997 1996 1995 1994 1999
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and short-term investments.......... $ 2,249 $ 3,020 $ 978 $ 1,553 $ 1,290 $ 1,743
Working capital.......................... 2,650 3,607 1,968 2,566 1,965 2,743
Total assets............................. 11,250 10,849 9,360 8,748 6,468 11,047
Long-term debt........................... 1,027 1,286 1,697 804 808 1,223
Total stockholders' equity............... 6,527 5,914 4,097 4,095 3,039 6,721
</TABLE>
- ---------------
(1) Reflects a two-for-one stock split declared by Texas Instruments' board of
directors on July 15, 1999 and paid to Texas Instruments stockholders on
August 16, 1999.
8
<PAGE> 16
SELECTED HISTORICAL FINANCIAL DATA OF UNITRODE
Set forth below is selected financial data for Unitrode for and as of the
periods indicated. This selected historical financial data is only a summary and
we urge you to read this summary in conjunction with "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the financial
statements and related notes to those financial statements contained in
Unitrode's annual report on Form 10-K for the year ended January 31, 1999 and
quarterly report on Form 10-Q for the quarter ended July 31, 1999.
<TABLE>
<CAPTION>
IN THOUSANDS, EXCEPT PER-SHARE DATA
YEAR ENDED JANUARY 31, SIX MONTHS ENDED
---------------------------------------------------- ------------------------------
1999 1998 1997 1996 1995 JULY 31, 1999 AUGUST 1, 1998
-------- -------- -------- -------- -------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues................. $157,801 $222,040 $173,679 $145,363 $118,386 $94,739 $75,829
Cost of revenues............. 85,988 105,133 85,571 72,572 62,821 48,760 42,929
-------- -------- -------- -------- -------- ------- -------
Gross profit............... 71,813 116,907 88,108 72,791 55,565 45,979 32,900
Operating costs and
expenses................... 61,079 65,226 52,185 44,780 43,532 35,716 30,579
-------- -------- -------- -------- -------- ------- -------
Income from operations....... 10,734 51,681 35,923 28,011 12,033 10,263 2,321
Other income (expense),
net........................ 4,479 6,396 5,032 4,013 2,703 5,208 521
-------- -------- -------- -------- -------- ------- -------
Income before taxes.......... 15,213 58,077 40,955 32,024 14,736 15,471 2,842
Provision for income taxes... 6,567 21,171 13,216 10,703 3,333 6,991 1,880
-------- -------- -------- -------- -------- ------- -------
Net income................... $ 8,646 $ 36,906 $ 27,739 $ 21,321 $ 11,403 $ 8,480 $ 962
======== ======== ======== ======== ======== ======= =======
Basic earnings per share..... $ .27 $ 1.20 $ .93 $ .75 $ .39 $ .26 $ .03
Diluted earnings per share... .27 1.13 .89 .71 .37 .25 .03
Average common and dilutive
potential common shares
outstanding during period,
in thousands............... 32,601 32,709 31,096 30,087 30,815 33,613 32,524
</TABLE>
<TABLE>
<CAPTION>
IN THOUSANDS
AS OF JANUARY 31, AS OF
---------------------------------------------------- JULY 31,
1999 1998 1997 1996 1995 1999
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and short-term investments.......... $ 91,551 $ 85,107 $ 67,466 $ 48,881 $ 36,313 $102,856
Working capital.......................... 126,403 100,367 78,277 62,530 45,133 139,888
Total assets............................. 239,964 242,887 179,212 142,309 117,912 260,300
Long-term debt........................... -- 702 1,260 891 2,632 --
Total stockholders' equity............... 209,320 193,586 141,883 110,673 89,285 223,472
</TABLE>
9
<PAGE> 17
COMPARATIVE MARKET PRICE AND DIVIDEND INFORMATION
COMPARATIVE MARKET PRICE DATA
The following table presents trading information for Texas Instruments
common stock and Unitrode common stock on the New York Stock Exchange on July
23, 1999 and September 13, 1999. July 23, 1999 was the last full trading day
prior to our announcement of the signing of the merger agreement. September 13,
1999 was the last trading day for which it was practicable to include
information in this proxy statement/prospectus. YOU ARE URGED TO OBTAIN CURRENT
MARKET QUOTATIONS FOR THE TEXAS INSTRUMENTS COMMON STOCK AND THE UNITRODE COMMON
STOCK.
<TABLE>
<CAPTION>
TEXAS INSTRUMENTS COMMON STOCK UNITRODE COMMON STOCK
-------------------------------- ------------------------
HIGH LOW CLOSE HIGH LOW CLOSE
-------- -------- -------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
July 23, 1999........................... $70.13 $68.63 $69.50 $26.75 $26.50 $26.75
September 13, 1999...................... 90.06 88.63 89.00 45.25 43.94 44.13
</TABLE>
On September 10, 1999 there were approximately 28,233 holders of record of
Texas Instruments common stock and 496 holders of record of Unitrode common
stock.
HISTORICAL MARKET PRICE DATA FOR TEXAS INSTRUMENTS
Texas Instruments common stock is listed on the New York Stock Exchange
under the symbol "TXN." The table below sets forth for each of the calendar
quarters indicated, the high and low sales prices per share of Texas Instruments
common stock on the composite tape as reported by The Wall Street Journal and
the dividends per share paid on the Texas Instruments common stock, both as
adjusted for two-for-one stock splits in November 1997 and August 1999.
Additional stock splits may be considered in the future based on a variety of
factors, including market conditions and the trading price of Texas Instruments
common stock.
<TABLE>
<CAPTION>
CALENDAR QUARTER
-----------------------------------
1ST 2ND 3RD 4TH
------ ------ ------ ------
<S> <C> <C> <C> <C>
Stock prices:
1999 High............................................. $53.94 $72.50 $91.75(1)
Low................................................ 43.00 49.50 67.09(1)
1998 High............................................. 31.38 33.50 31.85 $45.22
Low................................................ 20.13 23.44 23.03 22.69
1997 High............................................. 21.82 24.10 35.50 35.63
Low................................................ 15.53 18.41 21.07 19.82
1996 High............................................. 27.88 29.82 29.63 34.19
Low................................................ 21.38 24.32 20.25 23.75
Dividends:
1999.................................................. .043 .043
1998.................................................. .043 .043 .043 .043
1997.................................................. .043 .043 .043 .043
1996.................................................. .043 .043 .043 .043
</TABLE>
- ---------------
(1) Through September 13, 1999.
10
<PAGE> 18
HISTORICAL MARKET PRICE DATA FOR UNITRODE
Unitrode common stock is listed on the New York Stock Exchange under the
symbol "UTR." The table below sets forth for each of the calendar quarters
indicated, the high and low sales prices per share of Unitrode common stock on
the composite tape as reported by The Wall Street Journal, as adjusted for a
two-for-one stock split in October 1997. Unitrode has not declared or paid a
dividend on its common stock since September 1987.
<TABLE>
<CAPTION>
CALENDAR QUARTER
-----------------------------------
1ST 2ND 3RD 4TH
------ ------ ------ ------
<S> <C> <C> <C> <C>
Stock prices:
1999 High.............................................. $18.88 $30.25 $45.44(1)
Low................................................. 11.81 13.50 26.50(1)
1998 High.............................................. 22.50 18.69 17.38 $18.50
Low................................................. 16.44 10.44 10.31 8.12
1997 High.............................................. 19.44 26.44 42.31 38.69
Low................................................. 14.44 15.88 25.00 15.94
1996 High.............................................. 24.19 15.38 11.44 14.69
Low................................................. 23.19 9.25 7.38 11.25
</TABLE>
- ---------------
(1) Through September 13, 1999.
TEXAS INSTRUMENTS
SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
<TABLE>
<CAPTION>
IN MILLIONS, EXCEPT PER-SHARE DATA
SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------- ---------------
1998 1997 1996 1999 1998
------ ------ ------- ------ ------
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:(1)
Total revenues............................................ $8,618 $9,972 $10,114 $4,480 $4,429
Income (loss) from continuing operations before
extraordinary item...................................... 416 339 (18) 579 64
Income (loss) from continuing operations before
extraordinary item per share -- diluted................. 0.51 0.42 (0.02) 0.70 0.08
Income (loss) from continuing operations before
extraordinary item per share -- basic................... 0.52 0.43 (0.02) 0.72 0.08
</TABLE>
<TABLE>
<CAPTION>
AS OF
JUNE 30,
1999
--------
<S> <C>
Balance Sheet Data:(1)
Total assets.............................................. $11,307
Long-term debt............................................ 960
Stockholders' equity...................................... 6,927
</TABLE>
- ---------------
(1) See notes to unaudited pro forma combined financial statements contained
elsewhere in this proxy statement/prospectus.
11
<PAGE> 19
COMPARATIVE PER SHARE DATA
We have summarized below the per share information of Texas Instruments and
Unitrode on a historical, pro forma combined and pro forma equivalent basis. The
information should be read in conjunction with the historical financial
statements and related notes to those financial statements of Texas Instruments
and Unitrode that are incorporated by reference in this proxy
statement/prospectus. For information on where you can find more information
about Texas Instruments and Unitrode, see pages 66 and 67.
You should be aware that this pro forma information may not be indicative
of what actual results will be in the future or what the results would have been
for the periods presented.
<TABLE>
<CAPTION>
YEAR ENDED
JANUARY 31, SIX MONTHS ENDED
--------------------- ------------------------------
1999 1998 1997 JULY 31, 1999 AUGUST 1, 1998
----- ----- ----- ------------- --------------
<S> <C> <C> <C> <C> <C>
Unitrode Historical
Income per common share, basic............................ $ .27 $1.20 $ .93 $ .26 $.03
Income per common share, diluted.......................... .27 1.13 .89 .25 .03
Cash dividends declared per share......................... -- -- -- -- --
Book value per share(1)................................... 6.53 6.87
YEAR ENDED
DECEMBER 31, SIX MONTHS ENDED
--------------------- ------------------------------
1998 1997 1996 JUNE 30, 1999 JUNE 30, 1998
----- ----- ----- ------------- --------------
Texas Instruments Historical
Income (loss) per common share from continuing operations,
basic................................................... $ .52 $ .39 $(.06) $ .72 $.08
Income (loss) per common share from continuing operations,
diluted................................................. .51 .38 (.06) .70 .08
Cash dividends declared per share......................... .128 .17 .17 .085 .043
Book value per share(1)................................... 8.35 8.55
YEAR ENDED
DECEMBER 31, SIX MONTHS ENDED
--------------------- ------------------------------
1998 1997 1996 JUNE 30, 1999 JUNE 30, 1998
----- ----- ----- ------------- --------------
Unaudited Pro Forma Combined(2)
Income (loss) per common share from continuing operations,
basic................................................... $ .52 $ .43 $(.02) $ .72 $.08
Income (loss) per common share from continuing operations,
diluted................................................. .51 .42 (.02) .70 .08
Cash dividends declared per share......................... .128 .17 .17 .085 .043
Book value per share...................................... 8.42 8.64
Unitrode Per Share Equivalent(3)............................
Income (loss) per common share from continuing operations,
basic................................................... .26 .22 (.01) .36 .040
Income (loss) per common share from continuing operations,
diluted................................................. .26 .21 (.01) .35 .040
Cash dividends declared per share......................... .064 .085 .085 .043 .022
Book value per share...................................... 4.23 4.34
</TABLE>
- ---------------
(1) Historical book value per share is computed by dividing stockholders' equity
by the number of shares of common stock outstanding at the end of each
period.
(2) For purposes of the unaudited pro forma combined share data, Unitrode's
historical financial data has been combined for the years ended January 31,
1999, 1998 and 1997 and the six months ended July 31, 1999 and August 1,
1998 with Texas Instruments' historical financial data for the years ended
December 31, 1998, 1997 and 1996 and the six months ended June 30, 1999 and
1998. The unaudited pro forma combined share data has been prepared as if
the merger had occurred at the beginning of each respective Texas
Instruments fiscal period, except with respect to book value data, which has
been prepared as if the merger had occurred at the end of each respective
Texas Instruments fiscal period. Pro forma cash dividends declared per share
represent historical dividends per share declared by Texas Instruments.
(3) The equivalent pro forma share amounts of Unitrode are calculated by
multiplying unaudited pro forma combined income per share and book value per
share amounts by an assumed exchange ratio of .5023, based on the closing
price of Texas Instruments common stock of $90.63 on September 10, 1999.
12
<PAGE> 20
RISK FACTORS
We urge you to carefully consider the risk factors set forth below, as well
as the other information set forth in this proxy statement/prospectus, before
voting in favor of approval and adoption of the merger. In addition, you are
strongly urged to consider the risk factors set forth elsewhere in this proxy
statement/ prospectus. This proxy statement/prospectus contains forward-looking
statements which involve risks and uncertainties. Our actual results may differ
significantly from the results discussed in the forward-looking statements.
Factors that might cause these differences include, but are not limited to, the
risk factors set forth below.
THE VALUE OF THE MERGER CONSIDERATION IS NOT FIXED AND, THEREFORE, COULD BE LESS
THAN ANTICIPATED BY UNITRODE STOCKHOLDERS.
The number and market price of the shares of Texas Instruments common stock
that Unitrode stockholders will receive in connection with the merger is subject
to fluctuation. Based on the number of Unitrode shares of common stock
outstanding as of the record date, Unitrode stockholders will receive an
aggregate of between approximately 16.6 million and 19.1 million shares of Texas
Instruments common stock depending upon the average high and low trading prices
of Texas Instruments common stock during the 20 trading day period ending on the
second trading day prior to the merger. See the section entitled "The Merger
Agreement -- Conversion of Shares of Unitrode common stock" on page 49 for more
information. Although the number of shares of Texas Instruments common stock
Unitrode stockholders will receive in the merger is based on that average
trading price, the market price of Texas Instruments common stock may fluctuate.
Accordingly, on the date of the merger and on the date Unitrode stockholders
actually receive their shares of Texas Instruments common stock in exchange for
their Unitrode stock certificates, the market price of Texas Instruments common
stock may be more or less than the average trading price of Texas Instruments
common stock used to determine the merger consideration.
UNITRODE OFFICERS AND DIRECTORS HAVE CONFLICTS OF INTEREST THAT MAY INFLUENCE
THEM TO SUPPORT OR RECOMMEND THE MERGER.
The officers and directors of Unitrode participate in arrangements that
provide them with interests in the merger that are different from, or are in
addition to, yours. In particular, certain officers of Unitrode, consisting of
Robert J. Richardson, Allan R. Campbell, Raymond G. Hawkins, John L. Kokulis, S.
Kelley MacDonald and Patrick J. Moquin, have retention agreements with Unitrode
which provide for, among other things, continued or extended employment with
Unitrode or Texas Instruments after the merger and other payments and benefits.
Furthermore, Texas Instruments has agreed to indemnify the officers and
directors of Unitrode for their acts and omissions as officers and directors of
Unitrode prior to the merger to the maximum extent permitted by Maryland law.
See the section entitled "The Merger -- Interests of Certain Persons in the
Merger" on page 35 for more information.
As a result of these interests, these officers and directors could be more
likely to support or recommend the approval and adoption of the merger on
substantially the terms and conditions set forth in the merger agreement than if
they did not have these interests. Unitrode stockholders should consider whether
these interests may have influenced these officers and directors to support or
recommend the approval and adoption of the merger.
TEXAS INSTRUMENTS MAY HAVE DIFFICULTY INTEGRATING UNITRODE'S OPERATIONS AND
RETAINING IMPORTANT EMPLOYEES OF UNITRODE.
There can be no guarantee that management will be able to successfully
integrate Unitrode's employees and operations following the merger and there is
the risk that Texas Instruments will be unable to retain all of Unitrode's key
employees for a number of reasons, including the risk that the cultures of the
companies will not blend. There also can be no assurance that any contemplated
synergies from the integration of the businesses will be realized.
13
<PAGE> 21
THE INTEGRATION OF UNITRODE WILL REQUIRE SUBSTANTIAL TIME AND EFFORT OF KEY
MANAGERS OF TEXAS INSTRUMENTS, WHICH COULD DIVERT THE ATTENTION OF THOSE
MANAGERS FROM OTHER MATTERS.
The merger will place significant demands on key managers of Texas
Instruments. Risks exist in the consolidation of the systems, operations and
administrative functions of Unitrode and Texas Instruments. Managing the growth
of the Unitrode business may limit the time available for those managers of
Texas Instruments to attend to other operational, financial and strategic
issues.
UNITRODE STOCKHOLDERS SHOULD NOT PLACE UNDUE RELIANCE ON FORWARD-LOOKING
INFORMATION.
Information contained in this proxy statement/prospectus may contain
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934 which can be
identified by the use of forward-looking terminology like "may," "will,"
"expect," "intend," "anticipate," "believe," "estimate," "continue" or "pro
forma" or the negative or other variations of those words or comparable
terminology.
All forward-looking statements contained in this proxy statement/prospectus
are expressly qualified in their entirety by the cautionary statements set forth
in this proxy statement/prospectus and the documents incorporated by reference.
Stockholders of Texas Instruments and Unitrode are cautioned not to place undue
reliance on these forward-looking statements which speak only as of the date of
this proxy statement/prospectus. Neither Texas Instruments nor Unitrode
undertakes any responsibility to update you on the occurrence of any anticipated
events which may cause actual results to differ from those expressed or implied
by the forward-looking statements contained in this proxy statement/prospectus
or in documents incorporated by reference to this proxy statement/prospectus.
We urge you to carefully consider the following important factors that
could cause actual results to differ materially from the expectations of Texas
Instruments or its management:
- Market demand for semiconductors, particularly for digital signal
processors and analog integrated circuits in key markets, such as
telecommunications and computers;
- Texas Instruments' ability to develop, manufacture and market innovative
products in a rapidly changing technological environment;
- Texas Instruments' ability to compete in products and prices in an
intensely competitive industry;
- Texas Instruments' ability to maintain and enforce a strong intellectual
property portfolio and obtain needed licenses from third parties;
- Timely completion by customers and suppliers of their Year 2000 programs,
accurate assessment of Texas Instruments' Year 2000 readiness and of
risks associated with its current and past products, and effective
implementation of contingency plans and corrective actions;
- Timely completion of announced acquisitions;
- Global economic, social and political conditions in the countries in
which Texas Instruments and its customers and suppliers operate,
including fluctuations in foreign currency exchange rates;
- Losses or curtailments of purchases from key customers;
- Texas Instruments' ability to recruit and retain skilled personnel;
- Availability of raw materials and critical manufacturing equipment; and
- Realization of savings from announced worldwide corporate restructuring
efforts and consolidation of manufacturing operations.
For a more detailed discussion of these factors, see the text under the
heading "Cautionary Statements Regarding Future Operations" in Item 1 of Texas
Instruments' annual report on Form 10-K for the year ended December 31, 1998, as
amended.
14
<PAGE> 22
TEXAS INSTRUMENTS
UNAUDITED PRO FORMA COMBINED
FINANCIAL INFORMATION
The following unaudited pro forma combined financial information gives
effect to the merger using the "pooling of interests" method of accounting,
after giving effect to the pro forma adjustments described in the accompanying
notes. The unaudited pro forma combined financial information should be read in
conjunction with the audited historical consolidated financial statements and
related notes of Texas Instruments and Unitrode, which are incorporated by
reference into this proxy statement/prospectus.
The unaudited pro forma combined balance sheet gives effect to the merger
as if it had occurred on the balance sheet date. The unaudited pro forma
combined balance sheet combines Texas Instruments' June 30, 1999 unaudited
consolidated balance sheet with Unitrode's July 31, 1999 unaudited consolidated
balance sheet. The unaudited pro forma combined statements of operations give
effect to the merger as if it had occurred at the beginning of the periods
presented. The unaudited pro forma combined statements of operations combine
Texas Instruments' historical operating results for the six months ended June
30, 1999 and 1998 and for the fiscal years ended December 31, 1998, 1997 and
1996 with the corresponding Unitrode historical operating results for the six
months ended July 31, 1999 and August 1, 1998 and for the fiscal years ended
January 31, 1999, 1998 and 1997, respectively.
For purposes of the preparation of the unaudited pro forma combined balance
sheet, merger-related expenses (which the companies anticipate will be
approximately $21 million on a pre-tax basis) were included. The estimate of
merger-related expenses is preliminary and subject to change. The unaudited pro
forma combined balance sheet does not give effect to $400 million of debt issued
by Texas Instruments during the third quarter of 1999.
Certain financial statement balances of Unitrode have been reclassified to
conform with the Texas Instruments financial statement presentation.
The unaudited pro forma combined financial information is presented for
illustrative purposes only and does not purport to be indicative of the
operating results or financial position that would have actually occurred if the
merger had been in effect on the dates indicated, nor is it necessarily
indicative of future operating results or financial position of the merged
companies. The pro forma adjustments are based on the information and
assumptions available as of the date of this proxy statement/prospectus. The
unaudited pro forma combined financial statements do not give effect to any cost
savings or synergies which may result from the integration of Texas Instruments'
and Unitrode's operations. The unaudited pro forma combined financial statements
also do not give effect to compensation expenses related to Unitrode's amended
change of control severance agreements (as described on page 36), which
expenses, at September 13, 1999, are estimated to be approximately $48 million
in the aggregate. The actual amount of these expenses, which Texas Instruments
expects will be recognized over a short transition period following the merger,
will vary based on changes in the market price of Texas Instruments common
stock.
15
<PAGE> 23
TEXAS INSTRUMENTS
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
IN MILLIONS, EXCEPT PER-SHARE DATA
HISTORICAL
-----------------------------
TEXAS
INSTRUMENTS UNITRODE PRO FORMA PRO FORMA
JUNE 30, 1999 JULY 31, 1999 ADJUSTMENTS COMBINED
------------- ------------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents.................. $ 334 $ 103 $ -- $ 437
Short-term investments..................... 1,409 -- -- 1,409
Accounts receivable, net................... 1,749 30 -- 1,779
Inventories................................ 689 24 -- 713
Prepaid expenses........................... 87 9 -- 96
Deferred income taxes...................... 553 6 -- 559
------- ------- ------- -------
Total current assets............... 4,821 172 -- 4,993
Property, plant and equipment, net........... 3,407 81 -- 3,488
Investments.................................. 1,987 1 -- 1,988
Deferred income taxes........................ 38 -- -- 38
Other assets................................. 794 6 -- 800
------- ------- ------- -------
Total assets....................... $11,047 $ 260 $ -- $11,307
======= ======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Loans payable and current portion long term
debt.................................... $ 263 $ -- $ -- $ 263
Accounts payable........................... 554 18 -- 572
Accrued and other current liabilities...... 1,261 14 17(c) 1,292
------- ------- ------- -------
Total current liabilities.......... 2,078 32 17 2,127
Long term debt............................... 960 -- -- 960
Accrued retirement costs..................... 776 -- -- 776
Deferred income taxes........................ 264 4 -- 268
Deferred credits and other liabilities....... 248 1 -- 249
Stockholders' equity......................... 6,721 223 (17)(c) 6,927
------- ------- ------- -------
Total liabilities and stockholders'
equity........................... $11,047 $ 260 $ -- $11,307
======= ======= ======= =======
</TABLE>
16
<PAGE> 24
TEXAS INSTRUMENTS
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
IN MILLIONS, EXCEPT PER-SHARE DATA
HISTORICAL
-----------------------------------
TEXAS
INSTRUMENTS UNITRODE
SIX MONTHS ENDED SIX MONTHS ENDED PRO FORMA PRO FORMA
JUNE 30, 1999 JULY 31, 1999 ADJUSTMENTS COMBINED
---------------- ---------------- ----------- ---------
<S> <C> <C> <C> <C>
Net revenues............................ $ 4,385 $ 95 $ -- $ 4,480
Operating costs and expenses:
Cost of revenues...................... 2,307 49 -- 2,356
Research and development.............. 666 11 -- 677
Marketing, general and
administrative..................... 659 25 (4)(c) 680
-------- ------- ------- --------
Total......................... 3,632 85 (4) 3,713
-------- ------- ------- --------
Profit from operations.................. 753 10 4 767
Other income (expense), net............. 106 5 -- 111
-------- ------- ------- --------
Income from continuing operations before
provision for income taxes............ 859 15 4 878
Provision for income taxes.............. 292 7 -- 299
-------- ------- ------- --------
Income from continuing operations....... $ 567 $ 8 $ 4 $ 579
======== ======= ======= ========
Diluted earnings per common share from
continuing operations................. $ 0.70 $ 0.25 $ 0.70
======== ======= ========
Basic earnings per common share from
continuing operations................. $ 0.72 $ 0.26 $ 0.72
======== ======= ========
Weighted average common shares
outstanding (in thousands):
Diluted............................... 810,444(a) 33,613 827,328(b)
Basic................................. 784,244(a) 32,182 800,409(b)
</TABLE>
17
<PAGE> 25
TEXAS INSTRUMENTS
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
<TABLE>
<CAPTION>
IN MILLIONS, EXCEPT PER-SHARE DATA
HISTORICAL
-----------------------------------
TEXAS
INSTRUMENTS UNITRODE
SIX MONTHS ENDED SIX MONTHS ENDED PRO FORMA PRO FORMA
JUNE 30, 1998 AUGUST 1, 1998 ADJUSTMENTS COMBINED
---------------- ---------------- ----------- ---------
<S> <C> <C> <C> <C>
Net revenues............................ $ 4,353 $ 76 $ -- $ 4,429
Operating costs and expenses:
Cost of revenues...................... 2,958 46 -- 3,004
Research and development.............. 634 9 -- 643
Marketing, general and
administrative..................... 821 19 -- 840
-------- ------- ------- --------
Total......................... 4,413 74 -- 4,487
-------- ------- ------- --------
Profit (loss) from operations........... (60) 2 -- (58)
Other income (expense), net............. 156 1 -- 157
-------- ------- ------- --------
Income from continuing operations before
provision for income taxes............ 96 3 -- 99
Provision for income taxes.............. 33 2 -- 35
-------- ------- ------- --------
Income from continuing operations....... $ 63 $ 1 $ -- $ 64
======== ======= ======= ========
Diluted earnings per common share from
continuing operations................. $ 0.08 $ 0.03 $ 0.08
======== ======= ========
Basic earnings per common share from
continuing operations................. $ 0.08 $ 0.03 $ 0.08
======== ======= ========
Weighted average common shares
outstanding (in thousands):
Diluted............................ 801,690(a) 32,524 818,027(b)
Basic.............................. 780,796(a) 31,517 796,627(b)
</TABLE>
18
<PAGE> 26
TEXAS INSTRUMENTS
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
IN MILLIONS, EXCEPT PER-SHARE DATA
HISTORICAL
-------------------------------------
TEXAS
INSTRUMENTS UNITRODE
YEAR ENDED YEAR ENDED PRO FORMA PRO FORMA
DECEMBER 31, 1998 JANUARY 31, 1999 ADJUSTMENTS COMBINED
----------------- ---------------- ----------- ---------
<S> <C> <C> <C> <C>
Net revenues............................ $ 8,460 $ 158 $ -- $ 8,618
Operating costs and expenses:
Cost of revenues...................... 5,394 91 -- 5,485
Research and development.............. 1,206 19 -- 1,225
Marketing, general and
administrative..................... 1,461 37 -- 1,498
-------- ------ -------- -------
Total................................... 8,061 147 -- 8,208
-------- ------ -------- -------
Profit from operations.................. 399 11 -- 410
Other income (expense), net............. 218 4 -- 222
-------- ------ -------- -------
Income from continuing operations before
provision for income taxes............ 617 15 -- 632
Provision for income taxes.............. 210 6 -- 216
-------- ------ -------- -------
Income from continuing operations....... $ 407 $ 9 $ -- $ 416
======== ====== ======== =======
Diluted earnings per common share from
continuing operations................. $ 0.51 $ 0.27 $ 0.51
======== ====== =======
Basic earnings per common share from
continuing operations................. $ 0.52 $ 0.27 $ 0.52
======== ====== =======
Weighted average common shares
outstanding (in thousands):
Diluted............................... 801,858(a) 32,601 818,233(b)
Basic................................. 780,990(a) 31,639 796,882(b)
</TABLE>
19
<PAGE> 27
TEXAS INSTRUMENTS
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
IN MILLIONS, EXCEPT PER-SHARE DATA
HISTORICAL
------------------------------------
TEXAS
INSTRUMENTS UNITRODE
YEAR ENDED YEAR ENDED PRO FORMA PRO FORMA
DECEMBER 31, 1997 JANUARY 31, 1998 ADJUSTMENTS COMBINED
----------------- ---------------- ----------- ---------
<S> <C> <C> <C> <C>
Net revenues............................... $ 9,750 $ 222 $ -- $ 9,972
Operating costs and expenses:
Cost of revenues......................... 6,067 111 -- 6,178
Research and development................. 1,536 21 -- 1,557
Marketing, general and administrative.... 1,532 38 -- 1,570
-------- ------- ----- --------
Total............................ 9,135 170 -- 9,305
-------- ------- ----- --------
Profit from operations..................... 615 52 -- 667
Other income (expense), net................ 98 6 -- 104
-------- ------- ----- --------
Income from continuing operations before
provision for income taxes and
extraordinary item....................... 713 58 -- 771
Provision for income taxes................. 411 21 -- 432
-------- ------- ----- --------
Income from continuing operations before
extraordinary item....................... $ 302 $ 37 $ -- $ 339
======== ======= ===== ========
Diluted earnings per common share from
continuing operations before
extraordinary item....................... $ 0.38 $ 1.13 $ 0.42
======== ======= ========
Basic earnings per common share from
continuing operations before
extraordinary item....................... $ 0.39 $ 1.20 $ 0.43
======== ======= ========
Weighted average common shares outstanding
(in thousands):
Diluted.................................. 795,454(a) 32,709 811,884(b)
Basic.................................... 770,282(a) 30,673 785,689(b)
</TABLE>
20
<PAGE> 28
TEXAS INSTRUMENTS
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
IN MILLIONS, EXCEPT PER-SHARE DATA
HISTORICAL
---------------------------------------
TEXAS
INSTRUMENTS UNITRODE
YEAR ENDED YEAR ENDED PRO FORMA PRO FORMA
DECEMBER 31, 1996 JANUARY 31, 1997 ADJUSTMENTS COMBINED
----------------- ---------------- ----------- ---------
<S> <C> <C> <C> <C>
Net revenues...................... $ 9,940 $ 174 $ -- $ 10,114
Operating costs and expenses:
Cost of revenues............. 7,146 86 -- 7,232
Research and development..... 1,181 21 -- 1,202
Marketing, general and
administrative............. 1,639 31 -- 1,670
-------- ------- ------- --------
Total................... 9,966 138 -- 10,104
-------- ------- ------- --------
Profit (loss) from operations..... (26) 36 -- 10
Other income (expense), net....... 3 5 -- 8
-------- ------- ------- --------
Income from continuing operations
before provision for income
taxes........................... (23) 41 -- 18
Provision for income taxes........ 23 13 -- 36
-------- ------- ------- --------
Income (loss) from continuing
operations...................... $ (46) $ 28 $ -- $ (18)
======== ======= ======= ========
Diluted earnings (loss) per common
share from continuing
operations...................... $ (0.06) $ 0.89 $ (0.02)
======== ======= ========
Basic earnings (loss) per common
share from continuing
operations...................... $ (0.06) $ 0.93 $ (0.02)
======== ======= ========
Weighted average common shares
outstanding (in thousands):
Diluted......................... 758,776(a) 31,096 773,694(b)
Basic........................... 758,776(a) 29,700 773,694(b)
</TABLE>
21
<PAGE> 29
TEXAS INSTRUMENTS
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The unaudited pro forma combined financial information reflects the merger,
and gives effect to the following:
(a) On August 16, 1999, Texas Instruments effected a two-for-one stock
split in the form of a 100 percent stock dividend. Accordingly, all data
shown in the accompanying unaudited pro forma combined financial
information has been retroactively adjusted to reflect the August stock
split.
(b) Unaudited pro forma combined basic and diluted earnings per share
is based on the combined weighted average shares of both Texas Instruments
and Unitrode, with Unitrode shares included based upon an assumed exchange
ratio of 0.5023 of a share of Texas Instruments common stock for each share
of Unitrode common stock. The assumed exchange ratio is based on the
closing price of Texas Instruments common stock of $90.63 on September 10,
1999. The assumed exchange ratio reflects the August stock split. The
actual exchange ratio will be determined by dividing $38.60 by the average
of the daily high and low trading prices for the 20 trading day period
ending on the second trading day prior to the merger, subject to a minimum
of 0.5023 and a maximum of 0.5774 of a share of Texas Instruments common
stock for each share of Unitrode common stock. In addition, unaudited pro
forma combined diluted earnings per share for 1996 excludes the impact of
potentially dilutive securities as their impact would be anti-dilutive.
(c) It is expected that approximately $21 million will be incurred for
direct costs of the merger, consisting primarily of transaction costs for
investment banking, legal and accounting fees. Unitrode's historical
operating results for the six months ended July 31, 1999 include $4 million
of expenses for direct costs of the merger. The unaudited pro forma
combined balance sheet gives effect to $21 million of direct costs of the
merger as if they had been incurred as of June 30, 1999, but the unaudited
pro forma combined statements of operations do not give effect to any
merger related costs.
An adjustment has been made to the unaudited pro forma combined
statement of operations to remove the $4 million effect of direct merger
costs included in Unitrode's historical operating results for the six
months ended July 31, 1999, and an adjustment has been made to the
unaudited pro forma combined balance sheet as of June 30, 1999 to reflect
the effect of an additional $17 million of direct merger costs.
22
<PAGE> 30
THE UNITRODE SPECIAL MEETING
GENERAL
We are furnishing this proxy statement/prospectus to you in connection with
the solicitation of proxies by the Unitrode board of directors for use at the
Unitrode special meeting of stockholders. This proxy statement/prospectus, the
attached notice of special meeting of stockholders and the enclosed proxy card
are first being mailed to the stockholders of Unitrode on or about September 16,
1999.
MATTERS TO BE CONSIDERED AT THE UNITRODE SPECIAL MEETING
At the Unitrode special meeting, Unitrode stockholders will consider and
vote on the proposal to approve and adopt the merger.
A copy of the merger agreement is attached as Annex A to this proxy
statement/prospectus. We urge you to read carefully the merger agreement.
AFTER CAREFUL CONSIDERATION, THE UNITRODE BOARD OF DIRECTORS HAS
UNANIMOUSLY DETERMINED THAT THE MERGER ON SUBSTANTIALLY THE TERMS AND CONDITIONS
SET FORTH IN THE MERGER AGREEMENT IS ADVISABLE AND IS FAIR TO, AND IN THE BEST
INTERESTS OF, UNITRODE AND ITS STOCKHOLDERS. THE UNITRODE BOARD OF DIRECTORS HAS
UNANIMOUSLY APPROVED THE MERGER AND THE MERGER AGREEMENT AND UNANIMOUSLY
RECOMMENDS THAT HOLDERS OF UNITRODE COMMON STOCK VOTE "FOR" THE APPROVAL AND
ADOPTION OF THE MERGER.
DATE, TIME AND PLACE
The Unitrode special meeting is scheduled to be held at 10:00 a.m., local
time, on Friday, October 15, 1999, at the principal offices of Unitrode at 7
Continental Boulevard, Merrimack, New Hampshire 03054.
PLEASE COMPLETE THE ENCLOSED PROXY CARD AND MAIL IT IN THE ENCLOSED PREPAID
RETURN ENVELOPE OR PROVIDE YOUR PROXY BY TELEPHONE OR OVER THE INTERNET AS SOON
AS POSSIBLE SO THAT YOUR SHARES MAY BE REPRESENTED AND VOTED AT THE SPECIAL
MEETING.
You should not send your Unitrode stock certificates with your proxy. A
transmittal form with instructions for the surrender of your Unitrode common
stock certificates will be mailed to you as soon as practicable after completion
of the merger.
RECORD DATE; QUORUM
The Unitrode board of directors has fixed the close of business on
September 10, 1999 as the record date for the determination of the stockholders
entitled to notice of, and to vote at, the Unitrode special meeting. On that
date, Unitrode had 33,006,076 shares of common stock outstanding. The holders of
these shares will be entitled to one vote per share on the merger.
A quorum is present at a special meeting if a majority of the shares of
Unitrode common stock entitled to vote at the meeting is represented in person
or by proxy. Shares of Unitrode common stock represented at the special meeting,
but for which the holders have abstained from voting, will be treated as present
at the special meeting for purposes of determining the presence or absence of a
quorum for the transaction of business.
VOTES REQUIRED
The merger will be approved and adopted if the holders of shares
representing at least 66 2/3% of the votes that may be cast by the holders of
all of the shares of Unitrode common stock vote in favor of approval and
adoption of the merger.
23
<PAGE> 31
VOTING BY UNITRODE'S EXECUTIVE OFFICERS AND DIRECTORS
As of the record date, Unitrode's executive officers and directors owned
and held the power to vote 904,622 shares of Unitrode common stock, representing
approximately 2.7% of the voting power of Unitrode common stock outstanding, and
have each indicated their present intention to vote, or cause to be voted, such
shares in favor of approval and adoption of the merger. In addition, to induce
Texas Instruments to enter into the merger agreement, certain officers and
directors of Unitrode have agreed, by entering into a voting agreement and
without any additional consideration being paid to them, to vote a total of
867,962 shares of Unitrode common stock, representing approximately 2.6% of the
total outstanding voting power of Unitrode common stock as of the record date,
held by them in favor of approving and adopting the merger at the Unitrode
special meeting. A copy of the voting agreement is attached as Annex B to this
proxy statement/prospectus.
VOTING OF PROXIES; REVOCABILITY OF PROXIES
Shares of Unitrode common stock represented by properly executed proxies
received in advance of the special meeting will, unless these proxies have been
properly revoked, be voted in accordance with the instructions indicated on such
proxies or, if no instructions have been indicated, will be voted in favor of
approval and adoption of the merger, and, in the discretion of the individuals
named in the accompanying proxy card, on any other matters which may properly
come before the Unitrode special meeting. Abstentions may be specified with
respect to the approval and adoption of the merger by properly marking the
"ABSTAIN" box on the proxy card for such proposal.
You may also authorize the proxies to vote your shares by a toll-free
telephone call from the U.S. and Canada or over the Internet. The telephone and
Internet voting procedures are designed to authenticate stockholders'
identities, to allow stockholders to authorize the proxies to vote their shares
and to confirm that their voting instructions have been properly recorded.
Unitrode has been advised by counsel that the procedures that have been put in
place are consistent with the requirements of applicable law. The enclosed proxy
card contains specific instructions to be followed by you if you are interested
in proxy voting by telephone or over the Internet.
Any proxy may be revoked by the stockholder giving it, at any time prior to
its being exercised, by filing a notice of revocation with the Secretary of
Unitrode at the address given on the notice of stockholders' meeting
accompanying this proxy statement/prospectus, by submitting a duly executed
proxy card bearing a later date or by proxy voting by telephone or over the
Internet on a later date than an earlier submitted proxy. Any proxy may also be
revoked by the stockholder's attendance at the Unitrode special meeting and
voting in person. A notice of revocation need not be on any specific form, but
must be in writing.
Only shares affirmatively voted for the approval and adoption of the
merger, including properly executed proxies that do not contain voting
instructions, will be counted as favorable votes for that proposal. If a
Unitrode stockholder abstains from voting or does not vote, either in person or
by proxy, it will have the same effect as if that Unitrode stockholder had voted
against the approval and adoption of the merger. Brokers who hold shares of
Unitrode common stock in street name for customers who are the beneficial owners
of such shares may not authorize a proxy to vote those customers' shares in the
absence of specific instructions from those customers. These non-voted shares
are referred to as "broker non-votes" and have the effect of votes against the
approval and adoption of the merger.
The persons named as proxies by a stockholder may propose and vote for one
or more adjournments of the special meeting, including adjournments to permit
further solicitations of proxies. No proxy voted against the proposal to approve
and adopt the merger will be voted in favor of any such adjournment or
postponement.
Unitrode does not expect that any matter other than the proposal to approve
and adopt the merger will be brought before the special meeting. If, however,
the Unitrode board of directors properly presents other matters, the persons
named as proxies will vote in accordance with their discretion.
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<PAGE> 32
SOLICITATION OF PROXIES
Proxies are being solicited by and on behalf of the Unitrode board of
directors. Unitrode will bear the costs relating to the solicitation of proxies.
In addition to solicitation by mail, Unitrode's directors, officers and
employees, without additional remuneration, may solicit proxies by telephone,
facsimile machine and personal interviews, and Unitrode reserves the right to
retain outside agencies for the purpose of soliciting proxies, which may be paid
customary fees for performing those services.
AVAILABILITY OF PRINCIPAL ACCOUNTANTS
PricewaterhouseCoopers LLP, independent auditors and principal accountants
to Unitrode for the current fiscal year and the most recently completed fiscal
quarter, are not expected to be present at the special meeting of Unitrode
stockholders and will therefore not be available to respond to any questions.
THE MERGER
BACKGROUND
Pursuant to a letter agreement dated March 12, 1999, Unitrode engaged
Broadview to assist Unitrode in connection with its pursuit of a corporate
development program, including analysis and recommendation of potential
strategic alliances and relationships, potentially involving joint ventures,
acquisitions or a merger of Unitrode, with another company.
On May 6, 1999, Broadview contacted Texas Instruments to outline a
potential acquisition opportunity with an unidentified client in the power
management area. Texas Instruments expressed interest in pursuing exploratory
discussions, and over the next several days representatives of Texas Instruments
and Broadview negotiated and signed a confidentiality agreement. During those
discussions, Broadview identified this client to be Unitrode.
On May 19, 1999, representatives of Unitrode, Broadview and Texas
Instruments met to discuss Unitrode's strategy and recent performance. During
this week, Texas Instruments organized an internal team to begin evaluating this
acquisition opportunity.
On May 21, 1999, Texas Instruments contacted Broadview to express its
interest in Unitrode and to make arrangements to proceed with negotiations
regarding a potential transaction involving the two companies. During this week,
Texas Instruments continued its internal review and engaged Morgan Stanley & Co.
Incorporated, as financial advisors, and Weil, Gotshal & Manges LLP, as legal
advisors.
On May 24, 1999, Unitrode management briefed members of the Unitrode board
of directors on the status of discussions with Texas Instruments and received
instructions to continue to explore the possibility of a transaction with Texas
Instruments and to report back to the board of directors of Unitrode.
During the period from June 1 through June 18, 1999, the Texas Instruments
team and its financial and legal advisors reviewed materials provided by
Unitrode, as well as publicly available information, and met with Unitrode and
Broadview representatives to discuss various aspects of Unitrode's business
operations, including product development staff experience and retention,
product development process and programs, wafer fabrication operational
performance, revenue growth opportunities and financial information.
On July 7, 1999, members of the Texas Instruments team met with Texas
Instruments' board of directors to brief them on the proposed transaction, and
the board gave its approval to continue discussions with Unitrode.
On July 9, 1999, Morgan Stanley verbally relayed Texas Instruments'
proposed terms to Broadview. Texas Instruments' proposal provided for a
tax-free, stock-for-stock merger, subject to customary conditions and approvals,
and a 30-day exclusivity period for negotiating the transaction.
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<PAGE> 33
On July 11, 1999, Unitrode's board of directors met with the Unitrode
management team and its financial and legal advisors to discuss the proposal and
the board gave its approval to continue to pursue discussions with Texas
Instruments. After this meeting, Broadview contacted Morgan Stanley to discuss
specific items that needed to be addressed before a transaction could proceed.
On July 12, 1999, representatives from Texas Instruments and Unitrode
negotiated and signed an exclusivity agreement.
On July 15, 1999, the Texas Instruments team, together with its financial
and legal advisors, presented the proposed transaction to the Texas Instruments
board of directors. Following a discussion of the proposed transaction, the
board authorized the acquisition of Unitrode within specific parameters.
From July 15 through July 21, 1999, the Texas Instruments team and its
financial and legal advisors conducted due diligence at the Boston offices of
Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to Unitrode, toured
several of Unitrode's production facilities and began to discuss and negotiate
definitive agreements. During this same time period, representatives of
Broadview had discussions with members of the Texas Instruments team for
purposes of rendering a fairness opinion to the Unitrode board of directors.
On July 23, 1999, representatives of Texas Instruments and Unitrode, and
their respective advisors, met in the Dallas office of Weil Gotshal and
continued to negotiate definitive agreements. Following discussions over the
next two days, the parties ultimately agreed to a stock-for-stock merger which
would deliver $38.60 of value to the Unitrode stockholders within a range of
Texas Instruments share prices.
During the evening of July 25, and into the morning of July 26, 1999, the
Unitrode board of directors met along with members of Unitrode's management,
representatives of Skadden Arps, representatives of Ballard Spahr Andrews &
Ingersoll, LLP, Maryland counsel to Unitrode, and representatives of Broadview.
At this meeting, Broadview orally informed the Unitrode board of directors of
Broadview's opinion that the proposed exchange ratio in the merger was fair,
from a financial point of view, to the Unitrode stockholders, and responded to
various questions raised by members of the Unitrode board of directors regarding
Broadview's opinion. The Unitrode board of directors reviewed the merger
agreement, the voting agreement, the stock option agreement and related
documents and Skadden Arps responded to questions regarding those documents from
the Unitrode board of directors. After considering the terms of the proposed
transaction and the opinion of Broadview, the Unitrode board of directors
determined that the merger on substantially the terms and conditions set forth
in the merger agreement was advisable and fair to, and in the best interests of,
Unitrode and its stockholders. The Unitrode board of directors then unanimously
approved the merger on substantially the terms and conditions set forth in the
merger agreement and unanimously approved the exhibits to the merger agreement,
including the form of the stock option agreement, and unanimously resolved to
recommend that the stockholders of Unitrode vote in favor of the approval and
adoption of the merger on substantially the terms and conditions set forth in
the merger agreement.
Following the approval of the merger, the merger agreement and related
matters by the Unitrode board of directors, Unitrode and Texas Instruments
finalized, executed and delivered the merger agreement, the stock option
agreement and related documents. Broadview subsequently confirmed in writing its
oral opinion delivered to the Unitrode board of directors that the proposed
exchange ratio in the merger was fair, from a financial point of view, to the
Unitrode stockholders.
On July 26, Unitrode and Texas Instruments issued a joint press release
announcing the execution of the merger agreement and the terms of the merger.
REASONS FOR THE MERGER
Texas Instruments' Reasons for the Merger.
Texas Instruments believes the combination of Unitrode's position as a
major designer and supplier of power management components with Texas
Instruments' position as the world's leading provider of analog products will
strengthen its analog catalog portfolio of standard products targeted at a
breadth of customers
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<PAGE> 34
and applications for the mass market. Unitrode's primary products are power
management components in the areas of power supply control, interface and
battery management. These product families fully complement Texas Instruments'
existing analog catalog offering with virtually no overlap. In addition to the
many mass market applications, devices such as cellular phones and notebook
computers depend on battery management technology to effectively and efficiently
manage the charging and monitoring of batteries and extend battery life. In the
future, this technology is expected to be used in digital cameras, Internet
audio players and other emerging products.
Additionally, Texas Instruments believes that Unitrode's leadership,
expertise and strong systems understanding in power supply control and battery
management combined with Texas Instruments' strength in digital signal
processors, process technology and packaging, will bring customers a more
complete solution. Equipment manufacturers can expect more advanced products
that continue to improve battery life and system performance while reducing
design cycle time. Consumers, in turn, can expect more efficient products with
longer battery time and intelligent controls.
Unitrode's Reasons for the Merger and Factors Considered by the Unitrode Board
of Directors
In making its determination that the merger on substantially the terms and
conditions set forth in the merger agreement is advisable and to recommend
approval and adoption of the merger by the Unitrode stockholders, the Unitrode
board of directors consulted with its management team and advisors and
independently considered the proposed merger agreement and the transactions
contemplated by the merger agreement. The Unitrode board of directors considered
the following factors as reasons that the merger will be beneficial to Unitrode
and its stockholders:
- the complementary nature of the companies' product offerings and possible
synergies from combining Unitrode and Texas Instruments, particularly
synergies relating to Texas Instruments' lower manufacturing costs;
- the trend toward increasing consolidation in, and the highly competitive
nature of, the market in which Unitrode operates and the competitive
benefits of combining with a large, diversified company such as Texas
Instruments;
- Texas Instruments' established relationships with large strategic
customers, particularly in Japan, which will enable Unitrode to take
advantage of Texas Instruments' existing design and applications
engineers in Japan;
- the potential of the combined companies to offer customers a more
complete solution by combining Unitrode's power supply control and
battery management expertise with Texas Instruments' strength in digital
signal processing, process technology and packaging;
- Unitrode's current portfolio of manufacturing process technologies and
the addition of the manufacturing process technologies of Texas
Instruments to this portfolio;
- the terms and conditions of the merger agreement, including termination
fees, closing conditions and the fact that the exchange ratio is fixed at
0.5023 shares of Texas Instruments common stock for each outstanding
share of Unitrode common stock if the average of the daily high and low
trading prices of Texas Instruments common stock for the 20 day trading
period ending on the second trading day prior to the merger is more than
$76.85;
- the expected qualification of the merger as a reorganization under
Section 368(a) of the Internal Revenue Code; and
- the opinion of Unitrode's financial advisor, Broadview, that, as of the
date of the merger agreement and subject to the considerations set forth
in Broadview's opinion addressed to the Unitrode board of directors, the
exchange ratio is fair, from a financial point of view, to the Unitrode
stockholders.
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<PAGE> 35
In the course of deliberations, the Unitrode board of directors also
considered a number of additional factors relevant to the merger, including:
- information relating to the business, assets, management, competitive
position, operating performance and prospects of each of Unitrode and
Texas Instruments, including the prospects of Unitrode if it were to
continue as an independent company;
- current industry, market and economic conditions;
- the possibility of strategic alternatives to the merger for enhancing
long-term stockholder value, including the possibility of other potential
strategic transactions or remaining as an independent company;
- the impact of the merger on Unitrode's and Texas Instruments' customers,
suppliers and employees; and
- the likelihood that the merger would be completed.
The Unitrode board of directors also identified and considered a number of
potentially negative factors in its deliberations concerning the merger,
including:
- the risk that the operations of Unitrode and Texas Instruments might not
be successfully integrated;
- a recognition that Texas Instruments common stock has traded at high
multiples, and the risk that these multiples might not be sustained in
the future;
- the fact that the exchange ratio is fixed at 0.5774 shares of Texas
Instruments common stock for each outstanding share of Unitrode common
stock if the average of the daily high and low trading prices of Texas
Instruments common stock for the 20 trading day period ending on the
second trading day prior to the merger is less than $66.85;
- the risk that, despite the efforts of Unitrode and Texas Instruments
after the merger, key employees might leave Unitrode; and
- the risk that the potential benefits of the merger might not be fully
realized.
The Unitrode board of directors believed that some of these risks were
unlikely to occur, that Unitrode and Texas Instruments could avoid or mitigate
others, and that, overall, these risks were outweighed by the potential benefits
of the merger.
In view of the variety of factors considered in connection with its
evaluation of the merger agreement and the merger, the Unitrode board of
directors considered the factors as a whole and did not find it practicable to,
and did not quantify or otherwise assign relative weight to, the specific
factors considered in reaching its determination. In addition, individual
members of the Unitrode board of directors may have given different weight to
different factors.
RECOMMENDATION OF THE BOARD OF DIRECTORS OF UNITRODE
After careful consideration, the Unitrode board of directors has
unanimously determined that the terms of the merger agreement and the merger on
substantially the terms and conditions set forth in the merger agreement are
advisable and are fair to, and in the best interests of, Unitrode and its
stockholders. The Unitrode board of directors has approved the merger agreement
and the merger on substantially the terms and conditions set forth in the merger
agreement and unanimously recommends that the stockholders of Unitrode vote
"for" the approval and adoption of the merger.
OPINION OF FINANCIAL ADVISOR TO THE BOARD OF DIRECTORS OF UNITRODE
Pursuant to a letter agreement dated as of March 12, 1999, Broadview was
engaged to assist Unitrode in connection with Unitrode's pursuit of a corporate
development program, including analysis and recommendation of potential
strategic alliances and relationships, potentially involving joint ventures,
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<PAGE> 36
acquisitions or a merger of Unitrode, with another company. During a Unitrode
board of directors meeting on July 11, 1999, the board of directors asked
Broadview to act as financial advisor in the context of the discussions between
Unitrode and Texas Instruments. The Unitrode board of directors selected
Broadview to act as financial advisor based on Broadview's reputation and
experience in the information technology, communication and media sector and the
semiconductor industry in particular. Broadview focuses on providing merger and
acquisition advisory services to information technology, communications and
media companies. In this capacity, Broadview is continually engaged in valuing
these businesses and maintains an extensive database of information technology,
communications and media mergers and acquisitions for comparative purposes. At
the meeting of the Unitrode board of directors on July 25, 1999, Broadview
rendered its oral opinion that, as of July 25, 1999, based upon and subject to
the various factors and assumptions described in the Broadview opinion, the
exchange ratio provided in the merger agreement was fair, from a financial point
of view, to Unitrode stockholders. On July 26, 1999, Broadview confirmed its
oral opinion in writing, delivered to the Unitrode board of directors.
BROADVIEW'S OPINION, WHICH DESCRIBES THE ASSUMPTIONS MADE, MATTERS
CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN BY BROADVIEW, IS ATTACHED AS
APPENDIX D TO THIS PROXY STATEMENT/PROSPECTUS. UNITRODE STOCKHOLDERS ARE URGED
TO, AND SHOULD, READ THE BROADVIEW OPINION CAREFULLY AND IN ITS ENTIRETY. THE
BROADVIEW OPINION IS DIRECTED TO THE UNITRODE BOARD OF DIRECTORS AND ADDRESSES
ONLY THE FAIRNESS OF THE EXCHANGE RATIO FROM A FINANCIAL POINT OF VIEW TO THE
HOLDERS OF SHARES OF UNITRODE COMMON STOCK AS OF THE DATE OF THE OPINION. THE
BROADVIEW OPINION DOES NOT ADDRESS ANY OTHER ASPECT OF THE MERGER AND DOES NOT
CONSTITUTE A RECOMMENDATION TO ANY HOLDER OF UNITRODE COMMON STOCK AS TO HOW TO
VOTE AT THE UNITRODE SPECIAL MEETING. THE SUMMARY OF THE BROADVIEW OPINION SET
FORTH IN THIS PROXY STATEMENT/ PROSPECTUS, ALTHOUGH MATERIALLY COMPLETE, IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH OPINION.
In connection with rendering its opinion, Broadview, among other things:
- reviewed the terms of the merger agreement;
- reviewed publicly available financial statements and other information of
Unitrode and Texas Instruments, respectively;
- reviewed financial projections for Unitrode prepared and provided to
Broadview by Unitrode management;
- participated in discussions with Unitrode and Texas Instruments
management concerning the operations, business strategy, financial
performance and prospects for Unitrode and Texas Instruments,
respectively;
- discussed the strategic rationale for the merger with Unitrode and Texas
Instruments management, respectively;
- reviewed the recent reported closing prices and trading activity for
Unitrode common stock and Texas Instruments common stock;
- compared aspects of the financial performance of Unitrode and Texas
Instruments with other comparable public companies;
- analyzed available information, both public and private, concerning other
comparable mergers and acquisitions;
- reviewed recent equity research analyst reports covering Unitrode and
Texas Instruments;
- analyzed the anticipated effect of the merger on the future financial
performance of Texas Instruments;
- assisted in negotiations and discussions related to the merger among
Unitrode, Texas Instruments and their respective financial and legal
advisors; and
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<PAGE> 37
- conducted other financial studies, analyses and investigations as
Broadview deemed appropriate for purposes of its opinion.
In rendering its opinion, Broadview relied, without independent
verification, on the accuracy and completeness of all the financial and other
information, including without limitation the representations and warranties
contained in the merger agreement, that was publicly available or furnished to
Broadview by Unitrode, Texas Instruments or advisors of Texas Instruments. With
respect to the financial projections examined by Broadview, Broadview assumed
that they were reasonably prepared and reflected the best available estimates
and good faith judgments of the management of Unitrode as to the future
performance of Unitrode. Broadview also assumed that neither Unitrode nor Texas
Instruments is currently involved in any material transaction as of the date of
Broadview's opinion other than the merger, other publicly announced transactions
and those activities undertaken in the ordinary course of conducting their
respective businesses.
Broadview did not make or obtain any independent appraisal or valuation of
any of Unitrode's assets. Broadview did not review any internal financial
projections prepared by Texas Instruments management as such projections have
not been made available to Broadview. Broadview's opinion is necessarily based
upon market, economic, financial and other conditions as they existed and could
be evaluated as of July 25, 1999, and any change in such conditions since that
date would require a reevaluation of Broadview's opinion. The Broadview opinion
did not express any opinion as to the price at which Texas Instruments common
stock will trade at any time.
The following is a brief summary of some of the sources of information and
valuation methodologies employed by Broadview in rendering its opinion. These
analyses were presented to the Unitrode board of directors at its meeting on
July 25, 1999. This summary includes the financial analyses used by Broadview
and deemed to be material, but does not purport to be a complete description of
analyses performed by Broadview in arriving at its opinion. Broadview did not
explicitly assign any relative weights to the various factors of analyses
considered. This summary of financial analyses includes information presented in
tabular format. In order to fully understand the financial analyses used by
Broadview, the tables must be read together with the text of each summary. The
tables alone do not constitute a complete description of the financial analyses.
Unitrode Stock Performance Analysis
Broadview compared the recent stock performance of Unitrode with that of
the S&P 500 and the Unitrode Comparable Index. The Unitrode Comparable Index is
comprised of public companies that Broadview deemed comparable to Unitrode.
Broadview selected companies competing in the analog/ mixed-signal semiconductor
industry with revenues between $60 million and $400 million for the last
reported 12 months. The Unitrode Comparable Index consists of the following
companies: Micrel, Incorporated; Power Integrations, Inc.; Semtech Corporation;
Burr-Brown Corporation; SIPEX Corporation; and Dallas Semiconductor Corporation.
Public Company Comparable Analysis
Broadview considered ratios of share price and market capitalization,
adjusted for cash and debt when necessary, to selected historical and projected
operating results in order to derive multiples placed on a company in a
particular market segment. In order to perform this analysis, Broadview compared
financial information of Unitrode with publicly available information for the
companies comprising the Unitrode Comparable Index. For this analysis, as well
as other analyses, Broadview examined publicly available information, as well as
a range of estimates based on securities research analyst reports.
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The following table presents, as of July 25, 1999, the median multiples and
the range of multiples for the Unitrode Comparable Index of total market
capitalization (defined as equity market capitalization plus total debt minus
cash and cash equivalents), equity market capitalization and share price divided
by selected operating metrics:
<TABLE>
<CAPTION>
MEDIAN MULTIPLE RANGE OF MULTIPLES
--------------- ------------------
<S> <C> <C>
Total Market Capitalization to Last 12 Months
Revenue............................................. 5.9x 3.8x - 10.5x
Equity Market Capitalization to Last 12 Months Income
Before Taxes........................................ 30.0x 17.1x - 39.2x
Share Price to Last 12 Months Earnings Per Share...... 45.3x 26.3x - 62.9x
Total Market Capitalization to Projected Calendar Year
1999 Revenue........................................ 5.1x 3.4x - 8.9x
Share Price to Projected Calendar Year 1999 Earnings
Per Share........................................... 39.1x 24.1x - 51.5x
Total Market Capitalization to Projected Calendar Year
2000 Revenue........................................ 4.1x 2.9x - 7.0x
Share Price to Projected Calendar Year 2000 Earnings
Per Share........................................... 29.1x 20.3x - 43.5x
</TABLE>
The following table presents, as of July 25, 1999, the median implied per
share values and the range of implied per share values of Unitrode's common
stock, calculated by using the multiples shown above and the appropriate
Unitrode operating metric:
<TABLE>
<CAPTION>
MEDIAN IMPLIED RANGE OF IMPLIED
VALUE VALUES
--------------- ------------------
<S> <C> <C>
Total Market Capitalization to Last 12 Months
Revenue............................................. $29.89 $19.98 - $50.68
Equity Market Capitalization to Last 12 Months Income
Before Taxes........................................ $29.65 $16.93 - $38.80
Share Price to Last 12 Months Earnings Per Share...... $31.04 $18.07 - $43.12
Total Market Capitalization to Projected Calendar Year
1999 Revenue........................................ $29.70 $21.01 - $50.28
Share Price to Projected Calendar Year 1999 Earnings
Per Share........................................... $33.58 $20.72 - $44.19
Total Market Capitalization to Projected Calendar Year
2000 Revenue........................................ $29.11 $21.40 - $47.60
Share Price to Projected Calendar Year 2000 Earnings
Per Share........................................... $32.81 $22.88 - $49.00
</TABLE>
No company utilized in the public company comparables analysis as a
comparison is identical to Unitrode. In evaluating the comparables, Broadview
made numerous assumptions with respect to semiconductor industry performance and
general economic conditions, many of which are beyond the control of Unitrode.
Mathematical analysis, such as determining the median, average or range, is not
in itself a meaningful method of using comparable company data.
Transaction Comparables Analysis
Broadview considered ratios of equity purchase price, adjusted for the
seller's cash and debt when appropriate, to selected historical operating
results in order to indicate multiples strategic and financial acquirers have
been willing to pay for companies in a particular market segment. In order to
perform this analysis, Broadview reviewed a number of transactions that they
considered similar to the merger. Broadview selected these transactions by
choosing recent transactions involving profitable sellers in the semiconductor
integrated circuit industry with revenues greater than $10 million in the last
reported 12 months before the acquisition. For this analysis, as well as other
analyses, Broadview examined publicly
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available information, as well as information from Broadview's proprietary
database of published and confidential merger and acquisition transactions in
the information technology, communication and media industries. These
transactions consisted of the acquisition of:
- Level One Communications, Incorporated by Intel Corporation;
- Edge Semiconductor Corporation by Semtech Corporation;
- BENCHMARQ Microelectronics, Inc. by Unitrode Corporation;
- IC WORKS, Inc. by Cypress Semiconductor Corporation;
- Chips and Technologies, Inc. by Intel Corporation;
- Zilog, Inc. by Texas Pacific Group;
- Integrated Circuit Systems, Inc. by Bain Capital Inc. and Bear, Sterns &
Co. Inc.; and
- VLSI Technology, Inc. by Royal Philips Electronics NV.
The following table presents, as of July 25, 1999, the median multiple and
the range of multiples of adjusted price (defined as equity price plus total
debt minus cash and cash equivalents) divided by the seller's revenue in the
last reported 12 months prior to acquisition for the transactions listed above:
<TABLE>
<CAPTION>
MEDIAN MULTIPLE RANGE OF MULTIPLES
--------------- ------------------
<S> <C> <C>
Adjusted Price to Last Reported 12 Months Revenue..... 1.8x 1.5x - 8.2x
Price to Last Reported 12 Months Income Before
Taxes............................................... 15.8x 9.1x - 48.2x
</TABLE>
The following table presents, as of July 25, 1999, the median implied per
share value and the range of implied per share values of Unitrode's common
stock, calculated by multiplying the multiples shown above by the appropriate
Unitrode operating metric for the 12 months ended April 30, 1999:
<TABLE>
<CAPTION>
MEDIAN IMPLIED
VALUE RANGE OF IMPLIED VALUES
-------------- -----------------------
<S> <C> <C>
Adjusted Price to Last Reported 12 Months
Revenue.......................................... $10.98 $9.80 - $40.25
Price to Last Reported 12 Months Income Before
Taxes............................................ $15.67 $9.01 - $47.64
</TABLE>
No transaction utilized as a comparable in the transaction comparables
analysis is identical to the merger. In evaluating the comparables, Broadview
made numerous assumptions with respect to the semiconductor industry's
performance and general economic conditions, many of which are beyond the
control of Unitrode or Texas Instruments. Mathematical analysis, such as
determining the average, median or range, is not in itself a meaningful method
of using comparable transaction data.
Transaction Premiums Paid Analysis
Broadview considered the premiums paid above a seller's share price in
order to determine the additional value that strategic and financial acquirers,
when compared to public stockholders, are willing to pay for companies in a
particular market segment. In order to perform this analysis, Broadview reviewed
a number of transactions involving publicly-held hardware companies. Broadview
selected these transactions from its proprietary database by choosing recent
transactions with an equity purchase price between $500 million and $2.5
billion. These transactions consisted of the acquisition of:
- Coherent Communications Systems Corporation by Tellabs, Inc.;
- Berg Electronics Corporation by Framatone Connectors International;
- Tencor Instruments by KLA Instruments Corporation;
- Zytec Corporation by Computer Products, Inc.;
- Dialogic Corporation by Intel Corporation;
- RELTEC Corporation by General Electric Company;
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- Stratus Computer, Inc. by Ascend Communications, Inc.;
- Verifone, Inc. by Hewlett Packard Company;
- Yurie Systems, Inc. by Lucent Technologies Inc.;
- Octel Communications Corporation by Lucent Technologies Inc.;
- Measurex Corporation by Honeywell Inc.;
- Fluke Corporation by Danaher Corporation;
- Level One Communications, Incorporated by Intel Corporation;
- Cyrix Corporation by National Semiconductor Corporation;
- Zilog, Inc. by Texas Pacific Group; and
- Boston Technology, Inc. by Comverse Technology, Inc.
The following table presents, as of July 25, 1999, the median premium and
the range of premiums for these transactions calculated by dividing:
(1) the offer price per share minus the closing share price of the
seller's common stock 20 trading days or one trading day prior to the
public announcement of the transaction, by
(2) the closing share price of the seller's common stock 20 trading
days or one trading day prior to the public announcement of the
transaction:
<TABLE>
<CAPTION>
MEDIAN PREMIUM RANGE OF PREMIUMS
-------------- -----------------
<S> <C> <C>
Premium Paid to Seller's Share Price One
Trading Day Prior to Announcement.......... 34.8% (0.3%) - 79.7%
Premium Paid to Seller's Share Price 20
Trading Days Prior to Announcement......... 47.4% 10.4% - 81.4%
</TABLE>
The following table presents the median implied value and the range of
implied values of Unitrode's stock, calculated by using the premiums shown above
and Unitrode's share price 20 trading days and one trading day prior to July 25,
1999:
<TABLE>
<CAPTION>
MEDIAN IMPLIED
VALUE RANGE OF IMPLIED VALUES
-------------- -----------------------
<S> <C> <C>
Premium Paid to Seller's Share Price One Trading
Day Prior to Announcement........................ $36.07 $26.67 - $48.08
Premium Paid to Seller's Share Price 20 Trading
Days Prior to Announcement....................... $42.75 $32.01 - $52.60
</TABLE>
No transaction utilized as a comparable in the transaction premiums paid
analysis is identical to the merger. In evaluating the comparables, Broadview
made numerous assumptions with respect to hardware industry performance and
general economic conditions, many of which are beyond the control of Unitrode or
Texas Instruments. Mathematical analysis, such as determining the average,
median or range is not in itself a meaningful method of using comparable
transaction data.
Present Value of Projected Share Price Analysis
Broadview calculated the present value of potential future share prices of
Unitrode common stock on a stand-alone basis using analyst estimates for
Unitrode for the 12 months ending January 31, 2001. The implied share price was
calculated using the median price to last 12 months earnings multiple for the
Unitrode Comparable Index and a discount rate determined by the Capital Asset
Pricing Model with the risk implied by the past stock performance of the
Unitrode Comparable Index was $39.84. The implied share price calculated using
the price to last 12 months earnings multiple for Unitrode and a discount rate
determined by the Capital Asset Pricing Model with the risk implied by the past
stock performance of Unitrode was $34.33.
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<PAGE> 41
Exchange Ratio Analysis
Broadview reviewed the ratios of the closing prices of Unitrode common
stock divided by the corresponding prices of Texas Instruments common stock over
the period from July 24, 1998 through July 25, 1999 in contrast with the
exchange ratio defined in the merger agreement. Based on this analysis, the
historical exchange ratio has ranged from 0.2420 to 0.5754 with an average of
0.3804.
Texas Instruments Stock Performance Analysis
Broadview compared the recent stock performance of Texas Instruments with
that of the S&P 500 and the Texas Instruments Comparable Index. The Texas
Instruments Comparable Index is comprised of public companies that Broadview
deemed comparable to Texas Instruments. Broadview selected companies competing
in the semiconductor industry, with the following financial characteristics:
- revenues greater than $1 billion for the last reported 12 months; and
- positive net income for the calendar year ending December 31, 1999, as
projected by consensus of equity research analysts.
The Texas Instruments Comparable Index consists of the following companies:
Intel Corporation; Analog Devices, Inc.; Conexant Systems, Inc.; LSI Logic
Corporation; STMicroelectronics NV; and Atmel Corporation.
Evaluation of Texas Instruments Equity
Broadview compared financial information of Texas Instruments with publicly
available information for companies comprising the Texas Instruments Comparable
Index. For this analysis, as well as other analyses, Broadview examined publicly
available information, as well as a range of estimates based on securities
research analyst reports.
Pro Forma Combination Analysis
Broadview calculated the pro forma impact of the merger on the combined
entity's projected earnings per share for the calendar years ending December 31,
1999 and December 31, 2000 taking into consideration various financial effects
which will result from consummation of the merger. This analysis relies upon
certain financial and operating assumptions provided by equity research analysts
and publicly available data about Texas Instruments and Unitrode. Broadview
assumed that the merger would be treated as a "pooling of interests" for
accounting purposes and that no opportunities for cost savings or revenue
enhancements exist. Based on this analysis, the pro forma pooling model
indicates marginal earnings-per-share dilution, excluding acquisition expenses,
for both calendar years ending December 31, 1999 and December 31, 2000.
Broadview also examined the effects of potential cost savings and revenue
enhancements, and the incremental accretion related to those synergies.
Consideration of the Discounted Cash Flow Methodology
While discounted cash flow is a commonly used valuation methodology,
Broadview did not employ such an analysis for the purposes of its opinion.
Discounted cash flow analysis is most appropriate for companies that exhibit
relatively steady or somewhat predictable streams of future cash flow. For a
company with high projected revenue growth, such as Unitrode, a preponderance of
the value in a valuation based on discounted cash flow will be in the terminal
value of the entity, which is extremely sensitive to assumptions about the
sustainable long-term growth rate of the company. Given the uncertainty in
estimating both the future cash flows and a sustainable long-term growth rate,
Broadview considered a discounted cash flow analysis inappropriate for valuing
Unitrode.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. In arriving
at its opinion, Broadview considered the results of all of its analyses as a
whole and did not attribute any particular weight to any analysis or factor
considered by it.
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<PAGE> 42
Furthermore, Broadview believes that selecting any portion of its analyses,
without considering all analyses, would create an incomplete view of the process
underlying its opinion.
In performing its analyses, Broadview made numerous assumptions with
respect to industry performance and general business and economic conditions and
other matters, many of which are beyond the control of Unitrode or Texas
Instruments. The analyses performed by Broadview are not necessarily indicative
of actual values or actual future results, which may be significantly more or
less favorable than suggested by such analyses. The exchange ratio pursuant to
the merger agreement and other terms of the merger agreement were determined
through arm's length negotiations between Unitrode and Texas Instruments, and
were approved by the Unitrode board of directors. Broadview provided advice to
the Unitrode board of directors during such negotiations. However, Broadview did
not recommend any specific consideration to the Unitrode board of directors or
that any specific consideration constituted the only appropriate consideration
for the merger. In addition, Broadview's opinion and presentation to the
Unitrode board of directors was one of many factors taken into consideration by
the Unitrode board of directors in making its decision to approve the merger.
Consequently, the Broadview analyses as described above should not be viewed as
determinative of the opinion of the Unitrode board of directors with respect to
the value of Unitrode or of whether the Unitrode board of directors would have
been willing to agree to a different consideration.
Upon consummation of the merger, Unitrode will be obligated to pay
Broadview a transaction fee of approximately $9,447,800. Unitrode has already
paid Broadview a one-time commitment fee of $75,000 and a fairness opinion fee
of $995,000. One-half of the commitment fee and the entire fairness opinion fee
will be credited against the transaction fee payable by Unitrode upon completion
of the merger. In addition, Unitrode has agreed to reimburse Broadview for its
reasonable expenses, including fees and expenses of its counsel, and to
indemnify Broadview and its affiliates against certain liabilities and expenses
related to their engagement, including liabilities under the federal securities
laws. The terms of the fee arrangement with Broadview, which Unitrode and
Broadview believe are customary in transactions of this nature, were negotiated
at arm's length between Unitrode and Broadview, and the Unitrode board of
directors was aware of the nature of the fee arrangement, including the fact
that a significant portion of the fees payable to Broadview is contingent upon
completion of the merger.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Unitrode board of directors to
approve and adopt the merger, stockholders of Unitrode should be aware that some
members of the management and the board of directors of Unitrode have interests
in the merger that are different from, or in addition to, the interests of
stockholders of Unitrode generally.
Stock Options
All directors and executive officers of Unitrode are beneficial owners of
stock options to purchase Unitrode common stock. Pursuant to the merger
agreement, all stock options of Unitrode (including those held by directors and,
subject to the retention agreements described below, officers of Unitrode) will
be assumed by Texas Instruments and will be deemed to constitute options to
acquire shares of Texas Instruments common stock with appropriate adjustments in
share amounts and exercise price to reflect the exchange ratio in the merger.
See the discussion under the section entitled "The Merger Agreement -- Treatment
of Stock Options." In addition, Unitrode stock options held by officers and
directors subject to the retention agreements described below, whether or not
fully exercisable, will effectively be converted into shares of Texas
Instruments common stock as a result of the merger.
Restricted Stock
As a result of the merger, 32,000 shares of restricted Unitrode common
stock held by Robert J. Richardson will become fully vested and converted into
unrestricted shares of Texas Instruments common stock.
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<PAGE> 43
Indemnification of Officers and Directors
Texas Instruments has agreed to indemnify the officers and directors of
Unitrode for their acts and omissions as officers and directors of Unitrode
prior to the merger to the maximum extent permitted by Maryland law, and to
provide and maintain insurance coverage for such purposes for a period of at
least six years after the consummation of merger.
Amended Change of Control Severance Agreements
Prior to signing the merger agreement, Unitrode had change of control
severance agreements (referred to herein as retention agreements) with six of
its executive officers: Robert J. Richardson, Chief Executive Officer; Allan R.
Campbell, Senior Vice President, General Counsel and Secretary; Raymond G.
Hawkins, Executive Vice President -- Sales and Marketing; John L. Kokulis,
Executive Vice President and Chief Financial Officer; S. Kelley MacDonald, Vice
President -- Corporate Communications; and Patrick J. Moquin, Vice
President -- Human Resources.
In connection with the signing of the merger agreement, each of these
retention agreements was supplemented and amended to include the following
provisions, subject to the consummation of the merger:
- each executive's employment with either Unitrode or Texas Instruments
will continue until the first anniversary of the merger, except for Mr.
Richardson, whose employment will continue until November 15, 2000;
- each executive agreed not to exercise his or her right to resign for
"good reason" due to the change in his or her responsibilities after the
merger;
- each executive will be paid a monthly base salary as specified in the
retention agreement and will not be eligible for any bonus compensation;
- each executive may be entitled to receive a retention bonus equal to his
or her base salary rate with respect to a portion of the six-month period
following the merger if the executive's duties exceed those contemplated
by the retention agreement;
- each executive will receive a special payment of $500,000, payable in six
equal monthly installments following the merger, except for Mr.
Richardson who will receive $2,000,000;
- each of Messrs. Campbell, Hawkins, Kokulis and Moquin and Ms. MacDonald
will resign effective as of the first anniversary of the merger and will
be paid $576,061, $256,200, $220,000, $474,380 and $305,699,
respectively, plus any other unpaid retention bonus or salary, and Mr.
Richardson will resign effective as of November 15, 2000 and will be paid
$596,694 plus any other unpaid retention bonus or salary, subject to
certain adjustments;
- upon such resignation, in lieu of Texas Instruments common stock issuable
upon exercise of outstanding options, such options will be cancelled and
each executive will receive Texas Instruments common stock having a fair
market value on the date of or nearest such termination of employment
equal to the product of (1) the excess of the greater of (x) the fair
market value of Texas Instruments common stock on the date of or on the
date nearest before such termination of employment and (y) the fair
market value of the common stock of Texas Instruments on the closing date
of the merger, over the exercise price of each option (as exchanged and
adjusted pursuant to the merger agreement), whether or not fully
exercisable, and (2) the number of shares of Texas Instruments common
stock covered by each such option;
- upon such resignation, each executive will be entitled to the
continuation of certain employee benefits for a period of one year from
the date of resignation; and
- in the event an officer's employment is terminated before the first
anniversary of the closing of the merger agreement, or, in the case of
Mr. Richardson, before November 15, 2000, for any reason
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<PAGE> 44
other than resignation, the executive will be entitled, subject to
certain adjustments, to all payments under the retention agreement, as
amended.
To the extent that payments to the executive pursuant to the retention
agreement (together with any other payments or benefits received by the
executive in connection with a change of control) would result in the imposition
of excise taxes under Section 4999 of the Internal Revenue Code, the retention
agreement provides for the payment of an additional amount such that the
executive would receive, net of excise taxes, the amount he or she would have
been entitled to receive in the absence of the excise tax imposed by Section
4999 of the Internal Revenue Code.
EMPLOYEE BENEFIT PLANS
Pursuant to the merger agreement, Texas Instruments will honor the
obligations of Unitrode and its subsidiaries under Unitrode's employee benefit
plans. The employees of Unitrode, including the executive officers, will be
eligible to participate in Texas Instruments' applicable employee benefit plans
as soon as administratively convenient following the merger. Service with
Unitrode and its affiliates will be treated as service with Texas Instruments
for some purposes to the same extent such service was counted under the
corresponding Unitrode benefit plan, if any; provided that such service will not
be recognized to the extent that it would result in a duplication of benefits.
NO DISSENTERS' APPRAISAL RIGHTS
Because Unitrode's common stock is traded on the New York Stock Exchange,
holders of Unitrode common stock who do not vote in favor of approval and
adoption of the merger will not be entitled under the Maryland General
Corporation Law to exercise dissenting stockholders' appraisal rights with
respect to their shares of Unitrode common stock.
ACCOUNTING TREATMENT
The merger is intended to qualify as a "pooling of interests" for financial
reporting purposes under generally accepted accounting principles. Under this
method of accounting, the recorded assets and liabilities of Texas Instruments
and Unitrode will be carried forward to the combined company at their recorded
amounts. The operating results of the combined company will include operating
results of Texas Instruments and Unitrode for the periods subsequent to the
combination and, to the extent material, the combined recorded operating results
of the separate companies for periods prior to the combination on a restated
basis.
FEDERAL SECURITIES LAWS CONSEQUENCES
All shares of Texas Instruments common stock received by Unitrode
stockholders in the merger will be freely transferable, except that shares of
Texas Instruments common stock received by persons who are deemed to be
"affiliates," as such term is defined under the Securities Act, of Unitrode
prior to the merger may be resold by them only in transactions permitted by the
resale provisions of Rule 145 promulgated under the Securities Act or as
otherwise permitted under the Securities Act. Persons who are affiliates of
Unitrode generally include individuals or entities that control, are controlled
by, or are under common control with, Unitrode and may include certain officers
and directors of Unitrode as well as principal stockholders of Unitrode. All
current "affiliates" of Unitrode have delivered to Texas Instruments a letter
agreement to the effect that he or she will not offer or sell or otherwise
dispose of any of the shares of Texas Instruments common stock issued to him or
her in or in connection with the merger in violation of the Securities Act or
the rules and regulations promulgated by the Securities and Exchange Commission
under such Act.
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<PAGE> 45
COMPARISON OF RIGHTS OF STOCKHOLDERS OF TEXAS INSTRUMENTS AND UNITRODE
Upon the completion of the merger, the holders of Unitrode common stock
will become holders of Texas Instruments common stock. The rights of Texas
Instruments stockholders are governed by Texas Instruments' restated certificate
of incorporation, its bylaws, as amended, and Delaware law, including the
Delaware General Corporation Law (the "DGCL"). The rights of Unitrode
stockholders are governed by its charter, its bylaws, as amended, and Maryland
law, including the Maryland General Corporation Law (the "MGCL").
The following is a summary of the material differences between the rights
of the holders of Unitrode common stock and the rights of holders of Texas
Instruments common stock.
The following summary does not purport to be a complete statement of the
rights of Texas Instruments stockholders under Delaware law, Texas Instruments'
restated certificate of incorporation and Texas Instruments' bylaws as compared
with the rights of the Unitrode stockholders under Maryland law, Unitrode's
charter and Unitrode's bylaws, does not purport to be a complete description of
the specific provisions referred to below. The identification of specific
differences is not meant to indicate that other equally or more significant
differences do not exist. This summary is qualified in its entirety by reference
to the governing corporate instruments of Texas Instruments incorporated by
reference to the registration statement of which this proxy statement/prospectus
is a part, to which stockholders are referred. The material terms of Texas
Instruments common stock are described under the heading "Description of Capital
Stock of Texas Instruments" on page 67.
Number of Directors
Unitrode. In general, the MGCL requires a corporation to have at least
three directors. The corporation's bylaws may alter the number of directors,
unless the corporation has elected to be governed by certain provisions that
require, among other things, that the number of directors may be fixed only by a
vote of the board of directors. Unitrode has not elected to be governed by these
provisions. Under the Unitrode bylaws, the number of directors of Unitrode is
determined by the vote of a majority of the entire board of directors; provided,
however, that the number of directors shall not be less than three nor more than
15. There are currently six directors of Unitrode, divided into three classes.
At each annual meeting of stockholders, successors to the class of directors
whose term has expired as of the annual meeting are elected to serve for a
three-year term. Classification of directors has the effect of making it more
difficult for stockholders to change the composition of the board. At least two
annual meetings, rather than one, will generally be required to effect a change
in a majority of the Unitrode board of directors.
Texas Instruments. The DGCL permits the certificate of incorporation or
bylaws to contain a provision regarding the number of directors. Under the Texas
Instruments bylaws, the maximum number of directors of Texas Instruments is 15
until changed by resolution of the board of directors. There are currently 10
directors serving on the Texas Instruments board of directors. The DGCL permits
a Delaware corporation's board of directors to be divided into up to three
classes with staggered terms of office by adopting a classification provision in
the corporation's certificate of incorporation or bylaws. Texas Instruments does
not have a classified board and neither its certificate of incorporation nor its
bylaws provides for classification.
Removal of Directors
Unitrode. Under the MGCL, except as otherwise provided in a corporation's
charter, the stockholders generally may remove any director, with or without
cause, by the affirmative vote of a majority of all the votes entitled to be
cast for the election of directors. Unless the charter provides otherwise, if
the directors have been divided into classes, a director may not be removed
without cause. The Unitrode charter provides that a director may be removed for
cause by the affirmative vote of not less than an absolute majority of all votes
entitled to be cast for the election of that director, and a director may be
removed without cause by the affirmative vote of not less than two-thirds of all
votes of the holders of stock entitled to be cast for the election of that
director. Unitrode has not elected to be
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<PAGE> 46
governed by the provision in the MGCL that provides, notwithstanding anything in
a corporation's charter or bylaws to the contrary, directors may not be removed
except by the affirmative vote of at least two-thirds of all the votes entitled
to be cast in the election of directors.
Texas Instruments. Under the DGCL, the affirmative vote of a majority of
the shares entitled to vote for the election of directors is required to remove
directors, with or without cause, subject to certain exceptions relating to
directors elected by the holders of a class or series, and corporations that
have a classified board of directors.
Filling Vacancies on the Board of Directors
Unitrode. Under the MGCL, stockholders may elect a successor to fill a
vacancy on the board of directors that results from the removal of a director. A
director elected by the stockholders to fill a vacancy that results from the
removal of a director serves the balance of the term of the removed director.
The MGCL also provides that a majority of the remaining directors, even if that
number of directors does not constitute a quorum, may fill a vacancy resulting
from any cause except from an increase in the number of directors. Any vacancy
resulting from an increase in the number of directors may be filled by a
majority of the entire board. A director elected by the board of directors to
fill a vacancy serves until the next annual meeting of stockholders and until
his successor is elected and qualifies. Unitrode has not elected to be governed
by the provision of the MGCL that provides that vacancies created by an increase
in the number of directors or the death, resignation or removal of a director
may be filled only by a majority of the remaining directors in office, even if
the remaining directors do not constitute a quorum. There is no provision in the
MGCL providing for the filling of vacancies on the board of directors by
Maryland courts. The Unitrode bylaws contain substantially the same provisions
with respect to the filling of vacancies of the Unitrode board of directors as
the provisions of the MGCL. Under the Unitrode bylaws, if a director is removed
by the stockholders for cause, the affirmative vote of not less than the
absolute majority of all votes of the holders of stock entitled to vote for the
election of such directors is required to elect a successor. If a director is
removed by the stockholders without cause, the affirmative vote of the holders
of not less than two-thirds of all shares of stock entitled to vote for the
election of such director is required to elect a successor.
Texas Instruments. The DGCL provides that, unless otherwise provided in a
corporation's certificate of incorporation or bylaws, vacancies and newly
created directorships may be filled by a majority of the directors then in
office or a sole remaining director, even though less than a quorum, unless
otherwise provided in the certificate of incorporation or bylaws. However, the
DGCL also provides that if the directors then in office constitute less than a
majority of the corporation's whole board of directors, as constituted prior to
any such increase, then, upon application by stockholders representing at least
10% of outstanding shares entitled to vote for such directors, the Delaware
Court of Chancery may order a stockholder election of directors to be held. The
Texas Instruments bylaws provide substantially the same provisions with respect
to the filling of vacancies on the Texas Instruments board of directors as the
provisions of the DGCL, and provide further that any vacancy not filled by the
directors may be filled by the stockholders at any special meeting of the
stockholders called for that purpose.
Interested Director Transactions
Under both the MGCL and the DGCL, certain contracts or transactions in
which one or more of a corporation's directors has an interest are not void or
voidable solely because of such interest if such contract or transaction (1) is
ratified by the stockholders (as set forth below) or a majority of disinterested
members of the board of directors or a committee thereof if the material facts
of the contract or transaction are disclosed or known or (2) was fair (and,
under the MGCL, reasonable) to the corporation at the time it was approved.
Under the MGCL, any ratification of such a contract or transaction by the
stockholders must be made by a majority of the disinterested stockholders. Under
the DGCL, any ratification of such a contract or transaction by the stockholders
must be made by a majority of all stockholders in good faith.
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<PAGE> 47
Amendment to Charter/Certificate of Incorporation
Unitrode. Under the MGCL, a corporation's charter may be amended upon
adoption by the board of directors of a resolution setting forth the proposed
amendment and declaring its advisability, followed by the affirmative vote of at
least two-thirds of the votes entitled to be cast on the matter. The charter,
however, may provide for a greater or lesser proportion of the votes entitled to
be cast to approve an amendment to the charter as long as the vote is not less
than a majority of the votes entitled to be cast. Unitrode's charter requires
two-thirds of the votes entitled to be cast to approve amendments to Unitrode's
charter and requires the vote of the holders of two-thirds of the shares of any
existing class for which certain rights would be affected by the amendment.
Texas Instruments. The DGCL provides that the certificate of incorporation
of a corporation may be amended upon adoption by the board of directors of a
resolution setting forth the proposed amendment and declaring its advisability,
followed by the affirmative vote of a majority of the outstanding shares
entitled to vote. It also provides that a certificate of incorporation may
provide for a greater or lesser vote than would otherwise be required by the
DGCL. The certificate of incorporation of Texas Instruments does not contain a
provision requiring a vote greater or lesser than that specified in the DGCL to
amend the certificate of incorporation.
Amendment of Bylaws
Unitrode. Under the MGCL, the power to adopt, amend, or repeal a
corporation's bylaws is vested in the corporation's stockholders, except to the
extent the corporation's bylaws grant such power to the board of directors. The
Unitrode bylaws vest the power to adopt, alter and repeal the bylaws in the
board of directors, but only by a vote of a majority of the entire board of
directors then in office.
Texas Instruments. Under the DGCL, a corporation's bylaws may be amended by
the action of the stockholders and, if so provided in the certificate of
incorporation, the directors. The Texas Instruments certificate of incorporation
and bylaws provide that the Texas Instruments bylaws may be adopted, altered, or
repealed by the affirmative vote of a majority of the board of directors or the
stockholders at any regular or special meeting of directors or stockholders, as
applicable. Any addition, alteration, amendment or repeal of a bylaw effected by
the board of directors may be altered, amended or repealed by the stockholders.
Stockholder Meetings and Provisions for Notices
Under the MGCL and the DGCL, stockholder meetings may be held at any place,
as provided in the bylaws. Under both the MGCL and the DGCL, written notice of a
stockholders meeting must state the place, date and time of the meeting, and for
a special meeting and certain other meetings, the purpose or purposes for which
the meeting is to be held. Unitrode has not elected to be governed by a
provision of the MGCL providing, notwithstanding any provision in the charter or
bylaws, that the secretary of a corporation may call a special meeting of
stockholders only on the written request of stockholders entitled to cast at
least a majority of all of the votes entitled to be cast at the meeting.
Unitrode. Under the Unitrode bylaws, written notice of every meeting of the
stockholders, stating the place, day and hour of the meeting and, for special
meetings and certain other meetings, the purpose or purposes for which the
meeting is called, must be given not less than 10 nor more than 90 days before
the date of the meeting to each stockholder of record entitled to vote at such
meeting and such other stockholder entitled to notice of the meeting. A special
meeting of the stockholders of Unitrode may be called at any time by the
president, the board of directors, the chairman of the board of directors, any
executive vice president or any senior vice president. Upon written request
delivered to the Secretary by the stockholders entitled to cast at least 25% of
all the votes entitled to be cast at the meeting, the Secretary must call a
special meeting of the stockholders. The stockholders calling a special meeting
are required to pay Unitrode for the costs of preparing and mailing a notice of
the meeting. Unless requested by stockholders entitled to cast a majority of all
the votes entitled to be cast at a special meeting of the
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<PAGE> 48
stockholders, a special meeting need not be called to consider any matter that
is substantially the same as any matter voted on at any special meeting of the
stockholders held during the preceding 12 months.
Texas Instruments. The Texas Instruments bylaws provide that written notice
of every meeting of the stockholders, stating the place, date and hour of the
meeting and, if a special meeting, the purpose or purposes for which the meeting
is called, will be given not less than 10 nor more than 60 calendar days before
the date of the meeting to each stockholder of record entitled to vote at that
meeting. Special meetings of the stockholders may be called by the chairman of
the board of directors, president or the board of directors of Texas
Instruments.
Advance Notice Provisions for Stockholder Proposals and Nominations
Unitrode. The Unitrode bylaws provide that in order for a stockholder to
nominate a candidate for election as a director at an annual meeting of Unitrode
stockholders or propose business for consideration at such meeting, notice must
generally be given to the Secretary of Unitrode no more than 90 days nor less
than 60 days prior to the first anniversary of the preceding year's annual
meeting.
Texas Instruments. Under the Texas Instruments bylaws, for stockholders to
nominate persons for election to the board of directors at the annual meeting of
stockholders or to properly introduce business to be transacted at the annual
meeting, a stockholder must deliver timely notice in a proper written form to
Texas Instruments' principal executive offices. To be timely, the notice must be
delivered or mailed and received by Texas Instruments not less than 70 days
prior to the first anniversary of the preceding year's annual meeting.
Voting by Stockholders; Proxies
Unitrode. The MGCL provides that unless the charter provides for a greater
or lesser number of votes per share or limits or denies voting rights, each
outstanding share of stock, regardless of class, is entitled to one vote on each
matter submitted to a vote at a meeting of stockholders. Under the MGCL, a
stockholder may vote in person or by proxy and proxies are valid for only 11
months from their date, unless the proxy provides otherwise.
Texas Instruments. The Texas Instruments bylaws provide that except as
otherwise expressly provided by law or by the certificate of incorporation or
the bylaws, each stockholder of Texas Instruments is entitled to one vote in
person or by proxy for each share of the stock of Texas Instruments having
voting powers held by him and registered in his name on the books of Texas
Instruments on the date fixed by the board of directors for the determination of
stockholders entitled to vote at the meeting. Under the DGCL, stockholder
proxies are valid for three years from their date unless the proxy provides for
a longer period.
Stockholder Action Without a Meeting
Unitrode. Under the MGCL, stockholders may act by written consent only if
all stockholders entitled to vote on the matter that is the subject of the
written consent sign the consent and the corporation obtains a written waiver of
any right to dissent signed by each stockholder entitled to notice of the
meeting but not entitled to vote at the meeting.
Texas Instruments. Under the DGCL, unless otherwise provided in the
certificate of incorporation, actions may be taken by the stockholders of a
Delaware corporation by written consent, provided that the written consent is
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take the action at a
meeting at which all shares entitled to vote on the matter were present and
voted. The Texas Instruments certificate of incorporation prohibits the
stockholders from acting by written consent.
Mergers, Consolidations and Sales of Assets
Unitrode. In general, under the MGCL, the sale, lease, exchange or transfer
of all or substantially all of the assets of a corporation not in the ordinary
course of business conducted by it, as well as any merger,
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consolidation or share exchange involving the corporation, requires approval of
the stockholders by the affirmative vote of two-thirds of all the votes entitled
to be cast on the matter, unless the charter of the corporation requires a
greater or lesser proportion of votes (but not less than a majority of all the
votes entitled to be cast on the matter). Unitrode's charter does not contain
such a provision.
Texas Instruments. The DGCL generally requires approval of any merger,
consolidation or sale of substantially all the assets of a corporation, other
than parent-subsidiary mergers, by vote of the holders of a majority of all
outstanding shares entitled to vote on the matter, unless the certificate of
incorporation specifies a different percentage. The certificate of incorporation
of Texas Instruments does not contain such a provision.
Business Combinations
Unitrode. Under the MGCL, certain "business combinations," including a
merger, consolidation, share exchange or, in certain circumstances, an asset
transfer or issuance or reclassification of equity securities, between a
Maryland corporation and an interested stockholder, which means
- any person who beneficially owns 10% or more of the voting power of the
corporation's outstanding voting stock, or
- an affiliate or an associate of such corporation, who, at any time within
the two-year period before the date in question, was the beneficial owner
of 10% or more of the voting power of the corporation's outstanding
voting stock,
or any affiliate of an interested stockholder, are prohibited for five years
after the most recent date on which the interested stockholder became an
interested stockholder. After the five year moratorium period, any such business
combination must be recommended by the board of directors of the Maryland
corporation and approved by the affirmative vote of at least (1) 80% of the
votes entitled to be cast by holders of its outstanding voting shares, and (2)
two-thirds of the votes entitled to be cast by holders of such outstanding
voting shares, other than shares held by the interested stockholder with whom,
or with whose affiliate, the business combination is to be effected unless,
among other conditions, the corporation's stockholders receive a minimum price,
as defined in the MGCL, for their shares and the consideration is received in
cash or in the same form as previously paid by the interested stockholder for
its shares. These provisions of the MGCL do not apply to business combinations
that are approved or exempted by the board of directors of the corporation
before the interested stockholder becomes an interested stockholder and,
effective October 1, 1999, will not apply if prior to the most recent time at
which a person would otherwise have become an interested stockholder, the board
of directors of the corporation approved the transaction which otherwise would
have resulted in the person being an interested stockholder. In approving such a
transaction, the board of directors may provide that its approval is subject to
compliance at or after the time of approval with any terms and conditions
determined by the board.
Texas Instruments. Texas Instruments is subject to the provisions of
Section 203 of the DGCL. In general, Section 203 prohibits a public Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the time such person became an
interested stockholder unless:
- prior to such time, the board of directors approved either the business
combination or the transaction in which the stockholder became an
interested stockholder; or
- upon becoming an interested stockholder, the stockholder owned at least
85% of the corporation's outstanding voting stock other than shares held
by directors who are also officers and certain employee benefit plans; or
- the business combination is approved by both the board of directors and
by holders of at least 66 2/3% of the corporation's outstanding voting
stock at a meeting and not by written consent, excluding shares owned by
the interested stockholder.
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For these purposes, the term "business combination" includes mergers, asset
sales and other similar transactions with an "interested stockholder," and the
term "interested stockholder" means a person who, together with its affiliates
and associates, owns or, under certain circumstances, has owned within the prior
three years more than 15% of the outstanding voting stock of the corporation.
Affiliates and associates of an "interested stockholder" are also considered
"interested stockholders" for purposes of Section 203. Although Section 203
permits a corporation to elect not to be governed by its provisions in its
certificate of incorporation, Texas Instruments has not made this election.
Control Share Acquisitions
The MGCL provides that "control shares" of a Maryland corporation acquired
in a "control share acquisition" have no voting rights except to the extent
voting rights are approved by a vote of two-thirds of the votes entitled to be
cast on the matter, excluding shares of stock owned by the acquiror, by officers
or by directors who are employees of the corporation. "Control shares" are
voting shares of stock which, if aggregated with all other such shares of stock
previously acquired by the acquiror, or in respect of which the acquiror is able
to exercise or direct the exercise of voting power, except solely by virtue of a
revocable proxy, would entitle the acquiror to exercise voting power in electing
directors within one of certain specified ranges of voting power. Unitrode has
adopted a bylaw provision to make it exempt from the applicability of the
control share provisions. The DGCL does not have a comparable statutory
provision.
Stockholder Rights Plan
Unitrode. In 1999, the MGCL was amended to validate stockholder rights
plans. The Unitrode rights plan provides for the distribution of a dividend of
one preferred stock purchase right for each outstanding share of Unitrode common
stock. Each Unitrode right entitles the registered holder to purchase from
Unitrode one-hundredth of a share of Series A Junior Participating Preferred
Stock of Unitrode at a price of $30.00 per one-hundredth of a share of Series A
Preferred Stock, subject to adjustment. The Unitrode rights plan provides that,
until the distribution date, which is the date on which the rights become
exercisable, or earlier redemption or expiration of the Unitrode rights, the
Unitrode rights will be transferred with and only with shares of Unitrode common
stock. Generally, the Unitrode rights will be automatically exchangeable into
Unitrode common stock and become exercisable on the tenth day after public
announcement, or notice to Unitrode, that a person or group has acquired, or has
the right to acquire, beneficial ownership of 20% or more of Unitrode's shares
without the prior written consent of Unitrode. In the event that a person
becomes an acquiring person, each holder of a Unitrode right (other than the
acquiring person) will have the right to receive, upon exercise, Unitrode
shares, or in some circumstances, cash, property or other securities of
Unitrode; having a value equal to twice the then current purchase price. In the
event that Unitrode is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning power are sold
after a person or group has become an acquiring person, each holder of a
Unitrode right (other than an acquiring person) will have the right to receive,
upon exercise, the number of shares of common stock of the acquiring company
having a value of two times the then current purchase price of the Unitrode
right. The Unitrode rights, which can be redeemed or exchanged by Unitrode's
board of directors in certain circumstances, will expire by their terms on May
13, 2000. As a condition for entering into the merger agreement, Unitrode has
amended the rights plan so that none of the transactions associated with the
merger agreement or the merger will trigger the rights under the plan.
Texas Instruments. Texas Instruments has adopted a rights plan that is
described under the heading "Description of Capital Stock of Texas
Instruments -- The Rights Plan" on page 68. As described in that section, the
rights plan may have antitakeover effects.
No Appraisal Rights
Pursuant to Section 3-202 of the MGCL, because the Unitrode common stock is
listed on the New York Stock Exchange, holders of shares of Unitrode common
stock are not entitled to appraisal rights under Maryland law, which would give
them the right to obtain the payment of the fair value for
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their shares. Pursuant to Section 262 of the DGCL, holders of Texas Instruments
common stock will not be entitled to appraisal rights with respect to the merger
because Texas Instruments is not one of the two merging corporations.
Dividends
Unitrode. The MGCL permits a corporation, if authorized by the board of
directors and subject to any provision in its charter, to make a distribution,
including dividends, redemptions or stock repurchases, unless, after such
distribution, the corporation would not be able to pay its debts as they become
due in the usual course of business or the corporation's total assets would be
less than the sum of its liabilities plus, unless the charter provides
otherwise, which Unitrode's charter does not, the amount that would be needed,
if the corporation were to be dissolved at the time of the distribution, to
satisfy liquidation preferences of stock senior to the stock on which the
distribution is proposed. For purposes of determining whether a distribution is
lawful, the board's determination may be based upon financial statements
prepared on the basis of accounting practices and principles that are reasonable
under the circumstances or a fair valuation or other method that is reasonable
under the circumstances.
Texas Instruments. The DGCL permits a corporation to declare and pay
dividends out of surplus or, if there is no surplus, out of net profits for the
fiscal year in which the dividend is declared and/or for the preceding fiscal
year as long as the amount of capital of the corporation following the
declaration and payment of the dividend is not less than the aggregate amount of
the capital represented by the issued and outstanding stock of all classes
having a preference upon the distribution of assets. In addition, the DGCL
generally provides that a corporation may redeem or repurchase its shares only
if such redemption or repurchase would not impair the capital of the
corporation. However, a corporation may repurchase shares having a preference
upon the distribution of any of its assets or, if no shares entitled to a
preference are outstanding, any of its shares, if it retires such shares upon
acquisition and reduces the corporation's capital in connection therewith, and
provided that, after any reduction in capital made in connection with such
retirement of shares, the corporation's remaining assets are sufficient to pay
any debts not otherwise provided for.
Standard of Conduct for Directors
Unitrode. Under Maryland law, the standard of conduct for directors is
governed by statute. Section 2-405.1(a) of the MGCL requires that a director of
a Maryland corporation perform his or her duties:
- in good faith;
- in a manner he or she reasonably believes to be in the best interests of
the corporation; and
- with the care of an ordinarily prudent person in a like position under
similar circumstances.
Section 2-405.1 was recently amended to provide that an act of director is
presumed to satisfy the statutory standard of conduct and an act of a director
relating to or affecting an acquisition or potential acquisition of control may
not be subject to a higher duty or greater scrutiny than is applied to any other
act of a director. Section 2-405.1 now provides, among other things, that the
duty of directors does not require them to:
- accept, recommend or respond on behalf of the corporation to any proposal
by an "acquiring person";
- authorize the corporation to redeem any rights under, modify or render
inapplicable, a stockholder rights plan; or
- act or fail to act solely because of:
(1) the effect the act or failure to act may have on an acquisition or
potential acquisition of control of the corporation; or
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(2) the amount or type of any consideration that may be offered or
paid to stockholders in an acquisition.
Texas Instruments. Under Delaware law, the standards of conduct for
directors have developed through written opinions of the Delaware courts.
Generally, directors of Delaware corporations are subject to a duty of loyalty
and a duty of care. The duty of loyalty has been said to require directors to
refrain from self-dealing and the duty of care requires directors in managing
the corporate affairs to use that amount of care which ordinarily careful and
prudent persons would use in similar circumstances. In general, gross negligence
has been established as the test for breach of the standard for the duty of care
in the process of decision-making by directors of Delaware corporations. When
directors act consistently with their duties of loyalty and care, their
decisions generally are presumed to be valid under the business judgment rule.
Limitation of Liability and Indemnification of Directors and Officers
Unitrode. The MGCL permits a Maryland corporation to include a provision in
its charter limiting the liability of its directors and officers to the
corporation and its stockholders for money damages except for liability
resulting from:
- actual receipt of an improper benefit or profit in money, property or
services; or
- active and deliberate dishonesty established by a final judgment as being
material to the cause of action.
The Unitrode charter contains a provision limiting such liability to the
maximum extent permitted by Maryland law.
The Unitrode bylaws require Unitrode, to the maximum extent permitted by
Maryland law, to indemnify, and pay or reimburse reasonable expenses in advance
of final dispositions of a proceeding to, its currently acting and its former
directors and officers and any currently acting or former director, who while a
director and at the request of the corporation serves or has served another
corporation, partnership, joint venture, trust, employee benefit plan or any
other enterprise as a director, officer, partner or trustee of such entity.
Unitrode is authorized, with approval of its board of directors, to indemnify
and advance expenses to a person who served a predecessor of Unitrode in any
manner described above or to any employee or agent of Unitrode or a predecessor
of Unitrode. The MGCL requires a corporation, unless its charter provides
otherwise, which the Unitrode charter does not, to indemnify a director or
officer who has been successful, on the merits or otherwise, in the defense of
any proceeding to which he is made a party by reason of his service as a
director or officer. The MGCL permits a corporation to indemnify its present and
former directors and officers, among others, against judgments, penalties,
fines, settlements and reasonable expenses actually incurred by them in
connection with any proceeding to which they may be made a party by reason of
their service in those or other capacities unless it is established that:
- the act or omission of the director or officer was material to the matter
giving rise to the proceeding and was committed in bad faith or was the
result of active and deliberate dishonesty;
- the director or officer actually received an improper personal benefit in
money, property or services; or
- in the case of any criminal proceeding, the director or officer had
reasonable cause to believe that the act or omission was unlawful.
However, under the MGCL, a Maryland corporation may not indemnify a director or
officer for an adverse judgment in a suit by or in the right of the corporation
or for a judgment of liability on the basis that personal benefit was improperly
received, unless in either case a court orders indemnification and then only for
expenses. In addition, the MGCL permits a corporation to advance reasonable
expenses to a director or officer upon the corporation's receipt of a written
affirmation by such director or officer of his good faith belief that he has met
the standard of conduct necessary for indemnification by the corporation, and a
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written undertaking by him or on his behalf to repay the amount paid or
reimbursed by the corporation if it shall ultimately be determined that the
standard of conduct was not met.
Texas Instruments. The DGCL provides that a corporation's certificate of
incorporation may include a provision limiting the personal liability of a
director to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director. However, no such provision can eliminate or
limit the liability of a director for:
- any breach of the director's duty of loyalty to the corporation or its
stockholders;
- acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
- unlawful payments of dividends and unlawful stock purchases or
redemptions under Section 174 of the DGCL; or
- any transaction from which the director derived an improper personal
benefit.
As permitted by the DGCL, the certificate of incorporation of Texas Instruments
contains a provision limiting the personal liability of a director of Texas
Instruments to the corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director. The liability of officers may not be
eliminated or limited under the DGCL.
The DGCL generally permits indemnification for expenses incurred in the
defense or settlement of third party actions or action by or in right of the
corporation, and for judgments in third party actions, provided there is a
determination by directors who were not parties to the action, or if directed by
such directors, by independent legal counsel or by a majority vote of a quorum
of the stockholders, that the person seeking indemnification acted in good faith
and in a manner reasonably believed to be in, or not opposed to, the best
interests of the corporation, or in a criminal proceeding that the person had no
reason to believe his or her conduct to be unlawful. Without court approval,
however, no indemnification may be made in respect of any action by or in right
of the corporation in which such person is adjudged liable. The DGCL states that
the indemnification provided by statute shall not be deemed exclusive of any
rights under any bylaw, agreement, vote of stockholders or disinterested
directors or otherwise. The Texas Instruments bylaws authorize Texas Instruments
to indemnify any former or present director, officer or employee of Texas
Instruments, to the fullest extent permitted by Delaware law.
Authorized Capital
Unitrode. The authorized stock of Unitrode consists of 60,000,000 shares of
Unitrode common stock, of which there were 33,006,076 shares outstanding as of
the record date, and 1,000,000 shares of preferred stock, of which 300,000
shares have been designated Series A Junior Participating Preferred Stock, none
of which were outstanding as of the record date.
Texas Instruments. The authorized capital stock of Texas Instruments
consists of 1,200,000,000 shares of Texas Instruments common stock, of which
there were 792,292,398 shares outstanding as of September 10, 1999, and
10,000,000 shares of Texas Instruments preferred stock, none of which were
outstanding as of September 10, 1999.
Inspection Rights
Unitrode. One or more persons who have been holders of record for more than
six months of at least 5% of the outstanding stock of any class of a Maryland
corporation are entitled to inspect and copy the corporation's books of account
and stock ledger and receive a written statement of the corporation's affairs
and a verified list of stockholders.
Texas Instruments. A stockholder of a Delaware corporation may inspect the
stockholder list and any stockholder making a written demand may inspect any
other corporate books and records for any purpose reasonably related to such
person's interest as a stockholder.
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Denial of Voting Rights
Unitrode. Under the MGCL, holders of the outstanding shares of any class of
stock may be denied all voting rights.
Texas Instruments. The DGCL provides that holders of the outstanding shares
of a class of stock shall be entitled to vote as a class upon a proposed
amendment to the certificate of incorporation, whether or not entitled to vote
thereon by the certificate of incorporation, if the amendment would change the
par value of the class or adversely affect the powers, preferences or special
rights of the class.
U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following general discussion summarizes the anticipated material U.S.
federal income tax consequences of the merger to holders of Unitrode common
stock who exchange such stock for Texas Instruments common stock in the merger.
This discussion addresses only those stockholders who hold their Unitrode common
stock as a capital asset, and does not address all of the U.S. federal income
tax consequences that may be relevant to particular stockholders in light of
their individual circumstances or to stockholders who are subject to special
rules, such as financial institutions, tax-exempt organizations, insurance
companies, dealers in securities or foreign currencies, traders in securities
who elect to apply a mark-to-market method of accounting, foreign holders,
persons who hold such shares as a hedge against currency risk or as a part of a
straddle, constructive sale or conversion transaction, or holders who acquired
their shares upon the exercise of employee stock options or otherwise as
compensation. The following discussion is not binding on the Internal Revenue
Service. It is based upon the Internal Revenue Code, laws, regulations, rulings
and decisions in effect as of the date of this proxy statement/prospectus, all
of which are subject to changes, possibly with retroactive effect. Tax
consequences under state, local and foreign laws are not addressed.
HOLDERS OF UNITRODE COMMON STOCK ARE STRONGLY URGED TO CONSULT THEIR TAX
ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE MERGER, INCLUDING
THE APPLICABILITY AND EFFECT OF FEDERAL, STATE, LOCAL AND FOREIGN INCOME AND
OTHER TAX LAWS IN THEIR PARTICULAR CIRCUMSTANCES.
It is a condition to the consummation of the merger that (i) Unitrode
receives an opinion from Skadden, Arps, Slate, Meagher & Flom LLP, special
counsel to Unitrode, to the effect that the merger will qualify as a
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
and (ii) Texas Instruments receives an opinion from Weil, Gotshal & Manges LLP,
counsel to Texas Instruments, to the effect that the merger will qualify as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code. Such opinions will be based on customary assumptions and representations
made by Unitrode, Unicorn Acquisition and Texas Instruments.
Assuming the merger qualifies as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code, holders of Unitrode common stock
who exchange their Unitrode common stock solely for Texas Instruments common
stock in the merger will not recognize gain or loss for U.S. federal income tax
purposes, except with respect to cash, if any, they receive in lieu of a
fractional share of Texas Instruments common stock. Each holder's aggregate tax
basis in the Texas Instruments common stock received in the merger will be the
same as his or her aggregate tax basis in the Unitrode common stock surrendered
in the merger, decreased by the amount of any tax basis allocable to any
fractional share for which cash is received. The holding period of the Texas
Instruments common stock received in the merger by a holder of Unitrode common
stock will include the holding period of Unitrode common stock that he or she
surrendered in the merger.
A holder of Unitrode common stock who receives cash instead of a fractional
share of Texas Instruments common stock generally will be treated as if the
fractional share of Texas Instruments common stock had been distributed to him
or her as part of the merger and then redeemed by Texas Instruments in exchange
for the cash actually distributed in lieu of the fractional share, with such
redemption qualifying as an exchange under Section 302 of the Internal Revenue
Code. Consequently, such holders generally will recognize capital gain or loss
with respect to cash payments they receive in lieu
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of fractional shares. In the case of an individual stockholder, any such capital
gain will generally be subject to a maximum U.S. federal income tax rate of 20%
if the individual has held his or her Unitrode common stock for more than 12
months at the effective time of the merger. The deductibility of capital losses
is subject to limitations for both individuals and corporations.
REGULATORY MATTERS
The Antitrust Division of the Department of Justice, the Federal Trade
Commission, appropriate foreign regulatory agencies and others may challenge the
merger on antitrust grounds either before or after the expiration of the
applicable waiting periods. Accordingly, at any time before or after the
completion of the merger, the Antitrust Division of the Department of Justice,
the Federal Trade Commission, appropriate foreign regulatory agencies or others
could take action under the applicable antitrust laws as they deem necessary or
desirable in the public interest, including without limitation seeking to enjoin
the consummation of the merger or permitting such consummation subject to
certain regulatory concessions or conditions. There can be no assurance that a
challenge to the merger will not be made or that, if a challenge is made, that
such challenge will not prevail.
United States
The merger is subject to the requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 and the rules promulgated thereunder by the
Federal Trade Commission, which prevent certain transactions from being
completed until required information and materials are furnished to the
Antitrust Division of the Department of Justice and the Federal Trade Commission
and waiting periods end or expire. On August 17, 1999, the parties received a
notice of early termination of the applicable waiting period from the Federal
Trade Commission.
Germany
Pursuant to the German Act Against Restraints of Competition, Texas
Instruments filed a notification of the merger with the Federal Cartel Office on
August 13, 1999. On September 13, 1999, Texas Instruments received a letter from
the Cartel Office approving the transaction.
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THE MERGER AGREEMENT
The following is a summary of the material provisions of the merger
agreement, dated as of July 25, 1999, among Unitrode, Texas Instruments and
Unicorn Acquisition, a copy of which is attached as Annex A to this proxy
statement/prospectus and incorporated by reference. Unitrode stockholders should
read carefully the merger agreement. The following summary is qualified in its
entirety by reference to the text of the merger agreement.
GENERAL
The merger agreement provides that, following the approval and adoption of
the merger by the stockholders of Unitrode and the satisfaction or waiver of the
other conditions to the merger:
- Unicorn Acquisition will merge with and into Unitrode; and
- Unicorn Acquisition will cease to exist and Unitrode will continue as the
surviving corporation and as a wholly owned subsidiary of Texas
Instruments following the merger.
As a result of the merger, and as of the effective time of the merger,
Unitrode will succeed to and assume all of the rights and obligations of Unicorn
Acquisition, in accordance with the MGCL.
COMPLETION AND EFFECTIVENESS OF THE MERGER
The merger agreement provides that, subject to the requisite approval of
the stockholders of Unitrode and the satisfaction or waiver of other conditions,
the merger will be consummated by the filing of articles of merger and any other
appropriate documents, in accordance with the relevant provisions of the MGCL,
with the State Department of Assessments and Taxation of Maryland.
CONVERSION OF SHARES OF UNITRODE COMMON STOCK
Upon the consummation of the merger:
- each share of Unitrode common stock issued and outstanding immediately
prior to the merger, other than shares held by Texas Instruments or
Unicorn Acquisition, will be converted into and become exchangeable for
the right to receive the number of shares of Texas Instruments common
stock equal to the exchange ratio, together with any associated right to
acquire shares of Series B Participating Cumulative Preferred Stock of
Texas Instruments under Texas Instruments' stockholder rights plan.
However, in the event of changes in Texas Instruments common stock prior
to the merger, such as stock dividends or stock splits, the exchange
ratio and the price of Texas Instruments common stock used to calculate
the exchange ratio will be adjusted in accordance with the merger
agreement to the extent necessary to reflect the change. The exchange
ratio will be calculated as follows:
(1) if the average of the daily high and low trading prices of Texas
Instruments common stock for the 20 trading day period ending on the
second trading day prior to the consummation of the merger, is
greater than $76.85, the exchange ratio will be 0.5023 ($38.60
divided by $76.85);
(2) if the average of the daily high and low trading prices of Texas
Instruments common stock for the 20 trading day period ending on the
second trading day prior to the consummation of the merger, is less
than or equal to $76.85 but greater than or equal to $66.85, the
exchange ratio will be determined by dividing $38.60 by that average
trading price; and
(3) if the average of the daily high and low trading prices of Texas
Instruments common stock for the 20 trading day period ending on the
second trading day prior to the consummation of the merger, is less
than $66.85, the exchange ratio will be 0.5774 ($38.60 divided by
$66.85);
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- each share of common stock of Unicorn Acquisition outstanding immediately
prior to the merger will be converted into one share of common stock of
the surviving corporation.
No fractional shares of Texas Instruments common stock will be issued in
the merger. A holder of Unitrode common stock who would otherwise be entitled to
receive fractional shares of Texas Instruments common stock as a result of the
merger will receive, in lieu of fractional shares, cash in an amount equal to
the closing price per share of Texas Instruments common stock on the date of the
merger multiplied by the fraction to which the holder would otherwise be
entitled. Texas Instruments will make available to Harris Trust & Savings Bank,
as exchange agent, from time to time sufficient cash amounts to satisfy payment
for fractional shares and Harris Trust will distribute such proceeds, without
interest, to the holders of the fractional interests.
TREATMENT OF STOCK OPTIONS
Upon the consummation of the merger, subject to certain conditions and
limitations contained in the merger agreement, each outstanding option to
purchase shares of Unitrode common stock will be assumed by Texas Instruments
and converted into an option, or a new substitute option will be granted, to
purchase the number of shares of Texas Instruments common stock, rounded up to
the nearest whole share, equal to the number of shares of Unitrode common stock
subject to the original option multiplied by the exchange ratio in the merger
agreement. The exercise price per share of Texas Instruments common stock under
the new option will be equal to the former exercise price per share of Unitrode
common stock under the option immediately prior to the merger divided by the
exchange ratio, and rounded down to the nearest penny. All other terms of the
options, including the vesting schedule, will remain unchanged.
The conversion of any option to purchase shares of Unitrode common stock
that is deemed to be an "incentive stock option" for U.S. federal income tax
purposes may involve an adjustment of the exchange ratio for the conversion to
comply with certain U.S. federal income tax laws.
TREATMENT OF RESTRICTED STOCK
Upon the consummation of the merger, subject to certain conditions and
limitations contained in the merger agreement, any restricted shares of Unitrode
common stock will be converted into that number of shares of Texas Instruments
common stock equal to the number of shares of restricted Unitrode common stock
multiplied by the exchange ratio in the merger agreement, and rounded up to the
nearest whole share.
EXCHANGE PROCEDURES
As soon as reasonably practical after the merger, Harris Trust will mail a
letter of transmittal and instructions to each record holder of certificates
that, immediately prior to the merger, represented outstanding shares of
Unitrode common stock that were converted to Texas Instruments common stock in
the merger. After receipt of the transmittal form, each holder should surrender
their Unitrode stock certificates to Harris Trust, together with the letter of
transmittal duly executed and completed in accordance with the instructions
provided by Harris Trust. Upon surrender of the certificates to and acceptance
of the certificates by Harris Trust, each holder will be entitled to receive:
- certificates of Texas Instruments common stock evidencing the whole
number of shares of Texas Instruments common stock to which the holder is
entitled; and
- a check in the amount equal to the cash that the holder has the right to
receive pursuant to the merger agreement, including cash in lieu of any
dividends and other distributions with respect to the shares represented
by the Texas Instruments stock certificates and cash in lieu of
fractional shares.
If any shares of Texas Instruments common stock are to be issued in a name
other than that in which the certificate(s) representing Unitrode common stock
surrendered in exchange for shares of Texas
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Instruments common stock is registered, the certificates surrendered must be
properly endorsed or otherwise be in proper form for transfer and the person
requesting the exchange must pay to Harris Trust any applicable stock transfer
taxes or must establish to the satisfaction of Harris Trust that the taxes have
been paid or are not applicable. No interest will be paid on any merger
consideration.
After the merger, no holder of a certificate which, immediately prior to
the merger, represented shares of Unitrode common stock will be entitled to
receive any dividend or other distribution from Texas Instruments until the
holder surrenders its Unitrode stock certificate for a certificate representing
shares of Texas Instruments common stock. Upon surrender, the holder will
receive the amount of any dividends or other distributions that, after the
consummation of the merger, became payable with respect to the number of whole
shares of Texas Instruments common stock into which the shares of Unitrode
common stock were converted. No interest will be paid on the dividends or other
distributions.
Any portion of the merger consideration, including any certificates of
Texas Instruments common stock, any dividends or distributions, or any cash owed
in lieu of fractional shares of Texas Instruments common stock, that has not
been distributed to the holders of Unitrode common stock within 12 months after
the merger will be delivered to the surviving corporation. At the end of that 12
month period, any holders who have not surrendered their certificates in
accordance with the relevant provisions of the merger agreement may look only to
the surviving corporation and Texas Instruments for payment of their claims for
any merger consideration and any dividends or distributions with respect to the
shares of Texas Instruments common stock to which they are entitled.
None of Texas Instruments, Unicorn Acquisition, Unitrode, the surviving
corporation or Harris Trust, or any of their respective directors, officers,
employees or agents will be liable in respect of any merger consideration
delivered to a public official under applicable abandoned property, escheat or
similar law.
UNITRODE STOCKHOLDERS SHOULD NOT SEND THEIR UNITRODE STOCK CERTIFICATES TO
TEXAS INSTRUMENTS OR UNITRODE. UNITRODE STOCK CERTIFICATES WILL ONLY BE
EXCHANGED FOR CERTIFICATES OF SHARES OF TEXAS INSTRUMENTS COMMON STOCK FOLLOWING
THE CONSUMMATION OF THE MERGER IN ACCORDANCE WITH INSTRUCTIONS WHICH UNITRODE OR
HARRIS TRUST WILL SEND TO UNITRODE STOCKHOLDERS AFTER THE MERGER.
DIRECTORS AND OFFICERS
The board of directors of the surviving corporation after the merger will
consist of the directors of Unicorn Acquisition immediately prior to the merger.
The officers of the surviving corporation after the merger will be the officers
of Unitrode immediately prior to the merger.
Each director and officer of the surviving corporation will hold office
from the effective time of the merger until his or her respective successor is
duly elected or appointed and qualified in the manner provided in the charter or
bylaws of the surviving corporation, or as otherwise provided by applicable law.
CHARTER AND BYLAWS
The charter of Unicorn Acquisition in effect immediately prior to the
merger will be the charter of the surviving corporation until it is amended in
accordance with its terms or as provided by applicable law. The bylaws of
Unicorn Acquisition in effect immediately prior to the merger will be the bylaws
of the surviving corporation until they are amended in accordance with their
terms or as provided by applicable law.
REPRESENTATIONS AND WARRANTIES
The merger agreement contains various customary representations and
warranties of Unitrode relating to, among other things:
- its organization, standing and similar corporate matters;
- its capital structure and the capital structure of its subsidiaries;
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- authorization, execution, delivery, performance and enforceability of the
merger agreement;
- documents filed by Unitrode with the Securities and Exchange Commission
and financial statements;
- the absence of undisclosed liabilities of Unitrode and any of its
subsidiaries;
- the absence of material changes or events relating to Unitrode and its
subsidiaries;
- the accuracy of information supplied by Unitrode in connection with the
registration statement filed with the Securities and Exchange Commission
by Texas Instruments and this proxy statement/prospectus;
- regulatory consents or approvals required in connection with the merger;
- the absence of any material violation of the charter, bylaws, any
material agreement or any law, rule or regulation entered by a
governmental entity, which violation would prevent or materially delay
the performance of the merger agreement by Unitrode or would reasonably
be expected to have a material adverse effect on Unitrode or its
subsidiaries, taken as a whole;
- real property;
- the absence of any pending or threatened litigation against Unitrode or
any of its subsidiaries;
- permits and licenses;
- employee arrangements and benefit plans;
- labor matters;
- environmental matters;
- tax matters;
- the absence of any questionable payments made by Unitrode, its
subsidiaries or, to the knowledge of Unitrode, any director, officer or
employee of Unitrode or any of its subsidiaries;
- material contracts;
- subsidies between or among Unitrode or any of its subsidiaries and any
governmental entity or other person;
- intellectual property;
- year 2000 matters;
- receipt by Unitrode of an opinion from Broadview, its financial advisor;
- the absence of any broker's, finder's or investment banker's fees owed in
connection with the merger, except for that of Broadview;
- accounting matters regarding the treatment of the merger as a "pooling of
interests";
- product recalls;
- exemption of the merger agreement from the Maryland takeover statute; and
- the inapplicability of Unitrode's stockholders rights agreement to the
transactions contemplated by the merger agreement.
The merger agreement also contains various representations and warranties
of Texas Instruments and Unicorn Acquisition relating to, among other things:
- their organization, standing and similar corporate matters;
- authorization, execution, delivery, performance and enforceability of the
merger agreement;
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- documents filed by Texas Instruments with the Securities and Exchange
Commission and financial statements;
- the absence of undisclosed liabilities of Texas Instruments or any of its
subsidiaries;
- the capital structure of Texas Instruments;
- the accuracy of information supplied by Texas Instruments or Unicorn
Acquisition in connection with the registration statement filed with the
Securities and Exchange Commission by Texas Instruments and this proxy
statement/prospectus;
- regulatory consents or approvals required in connection with the merger;
- the absence of any liability or obligation or engagement in any business
activity by Unicorn Acquisition, except in connection with the merger
agreement;
- the absence of any broker's, finder's or investment banker's fees owed in
connection with the merger, except for that of Morgan Stanley & Co.
Incorporated; and
- accounting matters regarding the treatment of the merger as a "pooling of
interests."
CONDUCT OF BUSINESS BEFORE COMPLETION OF THE MERGER
During the period from the date of the merger agreement until the merger,
Unitrode has agreed to:
- conduct its operations in the ordinary and usual course of business
consistent with past practice; and
- use its reasonable best efforts to:
(1) preserve intact its current business organizations;
(2) keep available the service of its current officers and employees;
and
(3) preserve its relationships with customers, suppliers and others
having business dealings with it.
Further, Unitrode has agreed that, among other things and subject to
various conditions and exceptions, it and its subsidiaries will not, without the
prior written consent of Texas Instruments:
- amend its charter or bylaws;
- authorize for issuance, issue, sell, deliver or agree to commit to issue,
sell or deliver any stock of any class or any other securities
convertible into or exchangeable for any stock or any equity equivalents
except for the issuance of Unitrode common stock pursuant to outstanding
stock options;
- split, combine or reclassify any shares of its capital stock;
- declare, set aside or pay any dividend or other distribution in respect
of its capital stock;
- make any other actual, constructive or deemed distribution in respect of
any shares of its capital stock or otherwise make payments to
stockholders in their capacity as stockholders;
- redeem, repurchase or otherwise acquire any of its securities or any
securities of any of its subsidiaries;
- adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of
Unitrode or any of its subsidiaries;
- alter through merger, liquidation, reorganization, restructuring or in
any other fashion the corporate structure or ownership of any subsidiary
of Unitrode;
- incur or assume any long-term or short-term debt or issue any debt
securities;
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- assume, guarantee, endorse or otherwise become liable or responsible for
the obligations of any other person;
- make any loans, advances or capital contributions to, or investments in,
any other person, other than to the wholly owned subsidiaries of Unitrode
or customary loans or advances to employees in the ordinary and usual
course of business consistent with past practice and in amounts not
material to the maker of such loan or advance;
- pledge or otherwise encumber shares of capital stock of Unitrode or its
subsidiaries;
- mortgage or pledge any of its material tangible or intangible assets or
create or suffer to exist any material lien upon those assets;
- except as set forth in the merger agreement or as required under existing
agreements, increase in any manner the compensation or fringe benefits of
any director, officer or employee or pay any benefit not required by any
plan and arrangement as in effect as of the date of the merger agreement,
including, the granting of stock appreciation rights or performance
units, or grant any completion bonuses or change of control payments in
respect of the merger or that will be affected by the merger;
- promote or change the classification or status of or, except in the
ordinary and usual course of business consistent with past practice, hire
any employee or individual;
- acquire, sell, lease or dispose of any material assets outside the
ordinary and usual course of business consistent with past practice or
any assets which in the aggregate are material to Unitrode and its
subsidiaries taken as a whole, or grant any exclusive distribution
rights;
- except as may be required as a result of a change in law or in generally
accepted accounting principles, change any of its accounting principles
or practices;
- revalue in any material respect any of its assets, including writing down
the value of inventory or writing off notes or accounts receivable other
than in the ordinary and usual course of business consistent with past
practice or as required by generally accepted accounting principles;
- acquire, by merger, consolidation or acquisition of stock or assets, any
corporation, partnership or other business organization or division of
them or any equity interest in them;
- enter into any material contract or agreement, other than in the ordinary
and usual course of business consistent with past practice, or amend in
any material respect any material contracts or agreements;
- authorize any new capital expenditure or expenditures which are not
provided for in Unitrode's current capital expenditure plan and which,
individually, is in excess of $100,000 or, in the aggregate, are in
excess of $250,000;
- enter into or amend any contract, agreement, commitment or arrangement
providing for the taking of any action that would be prohibited by the
merger agreement;
- make or revoke any tax election, or settle or compromise any tax
liability, or change, or make a request to any taxing authority to
change, any aspect of Unitrode or any of its subsidiaries' method of
accounting for tax purposes;
- pay, discharge or satisfy any material claims, liabilities or
obligations, other than the payment, discharge or satisfaction in the
ordinary and usual course of business consistent with past practice or in
accordance with their terms of liabilities reflected or reserved against
in, the consolidated financial statements of Unitrode and its
subsidiaries or incurred since the date of those financial statements or
waive the benefits of, or agree to modify in any manner, any
confidentiality, standstill or similar agreement to which Unitrode or any
of its subsidiaries is a party;
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- settle or compromise any pending or threatened suit, action or claim
relating to the transactions contemplated by the merger agreement;
- take any action that would prevent or impede the merger from qualifying
as a "pooling of interests" for accounting purposes or as a
reorganization under Section 368 of the Internal Revenue Code;
- enter into any agreement or arrangement that limits or otherwise
restricts Unitrode or any of its subsidiaries or any successor to them or
that could, after the merger, limit or restrict the surviving corporation
and its affiliates, including Texas Instruments or any of its successors,
from engaging or competing in any line of business or in any geographic
area;
- fail to comply in any material respect with any law applicable to
Unitrode, its subsidiaries or their respective assets;
- enter into any direct or indirect arrangements for financial subsidies;
- adopt, enter into, amend, alter or terminate, partially or completely,
any of Unitrode's benefit plans or employee arrangements except as
contemplated by the merger agreement or to the extent required by
applicable law;
- enter into any contract with an officer, director, employee, agent, or
other similar representative of Unitrode or any of its subsidiaries that
is not terminable, without penalty or other liability, upon less than 60
calendar days' notice; or
- take, propose to take, or agree to take, any of the foregoing actions or
any action which would make any of the representations or warranties of
Unitrode contained in the merger agreement untrue, incomplete or
incorrect.
Texas Instruments has agreed that, among other things and subject to
various conditions and exceptions, it will not and will cause its subsidiaries
not to, without the prior consent of Unitrode:
- amend its certificate of incorporation or bylaws;
- take any action that would or would reasonably be expected to prevent,
impair or materially delay the ability of Unitrode or Texas Instruments
to consummate the transactions contemplated by the merger agreement;
- take any action that would prevent or impede the merger from qualifying
as a "pooling of interests" for accounting purposes or as a
reorganization under Section 368 of the Internal Revenue Code; or
- take, propose to take, or agree to take, any of the foregoing actions or
any action which would make any of the representations or warranties of
Texas Instruments or Unicorn Acquisition contained in the merger
agreement untrue, incomplete or incorrect.
CONDITIONS TO THE COMPLETION OF THE MERGER
The respective obligations of Unicorn Acquisition, Texas Instruments and
Unitrode to consummate the merger are subject to the satisfaction or waiver of
certain conditions, including that:
- the holders of at least 66 2/3% of the voting power of all outstanding
shares of Unitrode common stock have approved and adopted the merger;
- any waiting periods applicable to the merger under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 have expired or been terminated
without limitation, restriction or condition;
- there is no law of any governmental entity of competent jurisdiction in
effect restraining, enjoining or otherwise preventing consummation of the
merger;
- the Securities and Exchange Commission has declared the registration
statement, of which this proxy statement/prospectus is a part and filed
by Texas Instruments in connection with the registration under the
Securities Act of shares of Texas Instruments common stock to be issued
in
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the merger, effective and the registration statement is still effective
at the time of the merger, with no stop order suspending its
effectiveness having been issued and no action, suit, proceeding or
investigation by the Securities and Exchange Commission to suspend its
effectiveness having been initiated and be continuing; and
- the Texas Instruments common stock required to be issued under the merger
agreement has been approved for listing on the New York Stock Exchange,
subject only to official notice of issuance.
The obligations of Texas Instruments and Unicorn Acquisition to consummate
the merger are further subject to satisfaction or waiver of the following
conditions:
- the representations and warranties of Unitrode contained in the merger
agreement, are and have been true, except where the failure to be true,
individually or in the aggregate, has not had or is not reasonably
expected to have a Material Adverse Effect (as defined below) on Unitrode
and its subsidiaries taken as a whole, in each case when made and on and
as of the date of the merger as though made on and as of that date,
except for representations and warranties made as of a specified date,
which speak only as of the specified date;
- Unitrode has performed or complied in all material respects with all
agreements and conditions contained in the merger agreement required to
be performed or complied with by it prior to or at the time of the
merger;
- Unitrode has delivered to Texas Instruments a certificate, dated the date
of the merger, signed by the President or any Vice President of Unitrode,
certifying as to the fulfillment of the conditions specified in the
preceding two bullets;
- Texas Instruments has received an opinion of its tax counsel, Weil,
Gotshal & Manges LLP, dated the date of the merger to the effect that the
merger will qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code;
- all authorizations, consents or approvals of any domestic or foreign
(including Germany) governmental entity required in connection with the
execution and delivery of the merger agreement and the performance of the
obligations under the merger agreement have been made or obtained,
without any limitation, restriction or condition that is reasonably
expected to have a Material Adverse Effect on Unitrode and its
subsidiaries taken as a whole, or an effect on Texas Instruments and its
subsidiaries that, were that effect applied to Unitrode and its
subsidiaries, is reasonably expected to have a Material Adverse Effect on
Unitrode, except for any authorizations, consents or approvals, the
failure of which to have been made or obtained is not reasonably expected
to have a Material Adverse Effect on Unitrode and its subsidiaries taken
as a whole, or an effect on Texas Instruments and its subsidiaries that,
were that effect applied to Unitrode and its subsidiaries, is reasonably
expected to have a Material Adverse Effect on Unitrode;
- at least 45 days prior to the date of Unitrode's special stockholders
meeting, Texas Instruments has received an affiliate letter from each
person who is an "affiliate" of Unitrode for purposes of Rule 145 under
the Securities Act; and
- Unitrode has received and delivered to Texas Instruments a letter from
PricewaterhouseCoopers LLP dated the date of the merger, stating that no
conditions exist that would preclude Unitrode from being party to a
business combination for which the "pooling of interests" method of
accounting would be available and Texas Instruments has received and,
unless waived by Unitrode, delivered to Unitrode a letter from Ernst &
Young LLP, dated the date the registration statement filed by Texas
Instruments is declared effective and dated the date of the merger,
stating that treatment of the merger as a "pooling of interests" for
accounting purposes is appropriate if the merger is consummated as
contemplated by the merger agreement.
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The obligations of Unitrode to consummate the merger are further subject to
satisfaction or waiver of the following conditions:
- the representations and warranties of Texas Instruments and Unicorn
Acquisition contained in the merger agreement are and have been true,
except where the failure to be true, individually or in the aggregate,
has not had or is not reasonably expected to have, a Material Adverse
Effect on Texas Instruments and its subsidiaries taken as a whole, in
each case when made and on and as of the date of the merger as though
made on and as of that date, except for representations and warranties
made as of a specified date, which speak only as of the specified date;
- Texas Instruments has performed or complied in all material respects with
all agreements and conditions contained in the merger agreement required
to be performed or complied with by it prior to or at the time of the
merger;
- Texas Instruments has delivered to Unitrode a certificate, dated the date
of the merger, signed by the President or any Vice President of Texas
Instruments, certifying as to the fulfillment of the conditions specified
in the preceding two bullets; and
- Unitrode has received an opinion of its tax counsel, Skadden, Arps,
Slate, Meagher & Flom LLP, dated the date of the merger, to the effect
that the merger will qualify as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code.
"Material Adverse Effect" is defined as, with respect to any entity, any
change, circumstance, effect or development that, individually or in the
aggregate with all other changes, circumstances and effects, is or is reasonably
likely to be materially adverse to:
- the assets, properties, financial condition or results of operations of
that entity and its subsidiaries taken as a whole, other than any change,
circumstance, effect or development:
(1) relating to the economy in general in any country in which that
entity operates or owns assets;
(2) relating to the semiconductor industry (but not excluding, with
respect to Unitrode, any change, circumstance, effect or
development relating to the semiconductor industry that
disproportionately impacts Unitrode);
(3) arising out of or resulting from actions contemplated by the
parties in connection with, or which is attributable to, the
announcement of the merger agreement and the transactions
contemplated by the merger agreement (including loss of customers
or suppliers or the delay or cancellation of orders for products,
but excluding in the case of Unitrode the loss of employees); or
(4) any shareholder litigation or litigation by any governmental
entity, in each case brought or threatened against that entity or
any member of its board of directors in respect of the merger
agreement or the transactions contemplated by the merger
agreement;
provided that neither:
(a) any change in the market price or trading volume of the Unitrode
common stock or Texas Instruments common stock; nor
(b) a failure by Unitrode or Texas Instruments to meet the revenue or
earnings predictions of equity analysis reflected in equity
research analysts' revenue or earnings predictions or
expectations, for any period ending on or after the date of the
merger agreement
will, in and of itself, constitute a Material Adverse Effect (although
this proviso, as it relates to paragraph (b) above, does not exclude any
underlying change, circumstance, effect or development which resulted in
the failure to meet the estimates, predictions or expectations); or
- the ability of that entity to consummate the transactions contemplated by
the merger agreement.
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ADDITIONAL COVENANTS OF UNITRODE AND TEXAS INSTRUMENTS
Each of Texas Instruments, Unicorn Acquisition and Unitrode have also
agreed, among other things and subject to various conditions and exceptions,
that:
- as soon as practicable following the date of the merger agreement, Texas
Instruments and Unitrode will jointly prepare this proxy
statement/prospectus in connection with the vote of the stockholders of
Unitrode in respect of the merger and Texas Instruments will file with
the Securities and Exchange Commission a registration statement, of which
this proxy statement/prospectus is a part, in connection with the
registration under the Securities Act of the shares of Texas Instruments
common stock to be issued in connection with the merger;
- Unitrode will use all reasonable best efforts to cause
PricewaterhouseCoopers LLP to deliver a customary "comfort" letter dated
the date on which the registration statement filed by Texas Instruments
will become effective and addressed to Texas Instruments;
- Texas Instruments will use all reasonable best efforts to cause Ernst &
Young LLP to deliver a customary "comfort" letter dated the date on which
the registration statement will become effective and addressed to
Unitrode;
- Unitrode will:
(1) hold a special meeting of its stockholders as soon as practicable
after the date of the merger agreement for the purpose of voting
on the approval and adoption of the merger on substantially the
terms and conditions set forth in the merger agreement; and
(2) solicit proxies from its stockholders to obtain the requisite vote
for that approval;
- the Unitrode board of directors will recommend approval and adoption of
the merger by Unitrode's stockholders and will not withdraw, amend or
modify in a manner adverse to Texas Instruments such recommendation, or
announce publicly its intention to do so;
- each party will use its reasonable best efforts to take, or cause to be
taken, all actions and do, or cause to be done, all things necessary,
proper or advisable under applicable laws to consummate the merger;
- each party will use its reasonable best efforts to obtain all requisite
approvals and authorizations for the merger, including, without
limitation, those required under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976;
- each party will use its reasonable best efforts to resolve any objections
asserted by a governmental entity or other person in respect of the
merger under any antitrust law;
- Unitrode will inform Texas Instruments of any litigation brought against
Unitrode or its directors relating to the merger and will consult with
and obtain Texas Instruments' prior written consent before entering into
any settlement or compromise of any such litigation;
- Unitrode will provide, and will cause its respective subsidiaries to
provide, Texas Instruments and Unicorn Acquisition and their authorized
representatives reasonable access to all employees, plants, offices,
warehouses and other facilities and to all books and records of Unitrode
and its subsidiaries;
- each party will consult with each of the others before issuing any press
release or otherwise making any public statements in respect of the
merger;
- each party will give prompt notice to each of the others of the
occurrence of particular events;
- each party will, and will cause its respective subsidiaries to, use its
reasonable best efforts to cause the merger to qualify as a tax-free
reorganization within the meaning of Section 368(a) of the Internal
Revenue Code;
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- Texas Instruments and Unicorn Acquisition will do or cause to be done
certain things related to employee matters, including, without
limitation, to honor the obligations of Unitrode under the provisions of
all employment, consulting, termination, severance, change of control,
individual compensation indemnification agreements and certain other
benefits arrangements;
- Texas Instruments will use its reasonable best efforts to cause the
shares of Texas Instruments common stock to be issued in connection with
the merger to be listed on the New York Stock Exchange, subject only to
official notice of issuance;
- Texas Instruments will take all action necessary to cause Unicorn
Acquisition to perform its obligations under the merger agreement and to
consummate the merger on the terms and conditions set forth in the merger
agreement;
- at least 45 days prior to the date of Unitrode's special meeting,
Unitrode will deliver to Texas Instruments an affiliate letter from each
person who is an "affiliate" of Unitrode for purposes of Rule 145 under
the Securities Act;
- if any state takeover statute is or may become applicable to the merger
or the stock option agreement, each of Texas Instruments and Unitrode
will take all actions that are necessary to consummate the merger or the
transactions contemplated by the stock option agreement as promptly as
practicable and will otherwise act to eliminate or minimize the effects
of any state takeover statute on the merger or the option agreement;
- prior to the merger, Unitrode will prepay any amounts outstanding under,
and will use its reasonable best efforts to terminate, the Loan
Agreement, dated as of March 19, 1999, among Unitrode, Fleet National
Bank and certain other banks; and
- at the request of Texas Instruments, Unitrode will merge or liquidate
Benchmarq Microelectronics, Inc., a wholly owned subsidiary of Unitrode,
into Unitrode on terms and conditions satisfactory to Texas Instruments.
Unitrode has also further agreed not to, and not to permit its subsidiaries
to, nor authorize or permit any officer, director or employee of or any
investment banker, attorney, accountant or other advisor or representative of
Unitrode or any of its subsidiaries to, directly or indirectly:
- solicit, initiate or encourage the submission of any Acquisition Proposal
(as defined below); or
- participate in any discussions or negotiations regarding, or furnish to
any person any information in respect of, or take any other action to
facilitate, any Acquisition Proposal or any inquiries or the making of
any proposal that constitutes, or may reasonably be expected to lead to,
any Acquisition Proposal.
However, in response to an unsolicited Acquisition Proposal, Unitrode may
take any of the actions described in the second bullet above if, and only to the
extent that:
- the special meeting of Unitrode stockholders to approve the merger has
not occurred;
- the Unitrode board of directors, after consultation with independent
legal counsel, determines in good faith that action is necessary for the
Unitrode board of directors to comply with its duties to Unitrode's
stockholders under applicable law;
- the Unitrode board of directors determines in good faith that the
Acquisition Proposal, if accepted, is reasonably likely to be consummated
after taking into account all legal, financial, regulatory and other
aspects of the proposal and the person making the proposal, and believes
in good faith, after consultation with its financial advisor and after
taking into account the strategic benefits to be derived from the merger
and the long-term prospects of Texas Instruments and its subsidiaries,
that the Acquisition Proposal would, if consummated, result in a
transaction more favorable to Unitrode's stockholders than the merger
(any such Acquisition Proposal that the Unitrode board of
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directors has determined to be more favorable to Unitrode stockholders
than the merger is referred to as a "Superior Proposal"); and
- prior to taking action, Unitrode:
(1) provides reasonable notice to Texas Instruments that it is taking
action; and
(2) receives from the person making the Acquisition Proposal an executed
confidentiality/standstill agreement in reasonably customary form
and containing terms at least as stringent as those contained in the
confidentiality agreement entered into between Texas Instruments and
Unitrode in connection with the merger.
Unitrode will notify Texas Instruments of its receipt of any Acquisition
Proposal as promptly as practicable. Unitrode has also agreed to terminate any
existing activities, discussions or negotiations with any parties conducted
before the merger agreement in respect of any possible Acquisition Proposal.
Subject to certain exceptions, Unitrode's board of directors will not
withdraw or modify, or propose to withdraw or modify, in a manner adverse to
Texas Instruments, its approval or recommendation of the merger unless the
Unitrode board of directors, after consultation with independent legal counsel,
determines in good faith that such action is necessary to comply with the
Unitrode board of directors' duties to Unitrode's stockholders under applicable
law. The Unitrode board of directors may not approve or recommend, and in
connection with that approval or recommendation withdraw or modify its approval
or recommendation of the merger, an Acquisition Proposal unless it is a Superior
Proposal and the board of directors has first consulted with independent legal
counsel and determined that such action is necessary to comply with the Unitrode
board of directors' duties to Unitrode's stockholders under applicable law.
"Acquisition Proposal" means any inquiry, offer or proposal regarding any
of the following, other than the transactions contemplated by the merger
agreement, involving Unitrode or any of its subsidiaries:
- any merger, consolidation, share exchange, recapitalization, business
combination or other similar transaction;
- any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of all or substantially all the assets of Unitrode and its
subsidiaries, taken as a whole, in a single transaction or series of
related transactions;
- any tender offer or exchange offer for 20% or more of the outstanding
capital stock of Unitrode or the filing of a registration statement under
the Securities Act in connection with any such tender or exchange offer;
or
- any public announcement of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in any of the foregoing.
TERMINATION OF THE MERGER AGREEMENT
Termination by either Unitrode or Texas Instruments
The merger agreement may be terminated, and the merger abandoned, at any
time prior to the merger by mutual written consent of Unitrode and Texas
Instruments. The merger agreement may also be terminated by either Unitrode or
Texas Instruments if:
- the merger is not consummated by February 29, 2000; except that either
Unitrode or Texas Instruments may extend the termination date if it
reasonably determines in good faith that additional time is necessary in
connection with obtaining any required governmental consent or approval,
provided that the termination date may not be extended beyond March 31,
2000;
- the required approval of the stockholders of Unitrode has not been
obtained;
- any law permanently restraining, enjoining or otherwise prohibiting the
consummation of the merger has become final and non-appealable; or
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- any governmental entity has failed to issue an order, decree or ruling or
to take any other action which is necessary to fulfill certain conditions
to the consummation of the merger, and that denial of a request to issue
such order, decree or ruling or to take such other action is final and
non-appealable.
However, the right of either party to terminate the merger agreement is not
available to a party that has breached, in any material respect, its obligations
to consummate the merger set forth in the merger agreement in any manner that
has proximately contributed to the failure of the merger to be consummated.
Termination by Unitrode
The merger agreement may be terminated, and the merger abandoned, by
Unitrode at any time prior to the merger if each of the following occurs:
- Unitrode is not in breach of its obligations with respect to Acquisition
Proposals, as set forth above;
- the merger has not been approved by Unitrode's stockholders;
- Unitrode's board of directors authorizes Unitrode, subject to complying
with the terms of the merger agreement, to enter into a binding written
agreement concerning a transaction that constitutes a Superior Proposal
and Unitrode notifies Texas Instruments in writing that it intends to
enter into that agreement, attaching the most current version of that
agreement to the notice; and
- during the three business day period after that notice:
(1) Unitrode negotiates with, and causes its financial and legal
advisors to negotiate with, Texas Instruments to attempt to make
commercially reasonable adjustments in the terms and conditions of
the merger agreement as would enable Unitrode to proceed with the
transactions contemplated by the merger agreement; and
(2) Unitrode's board of directors concludes, after considering the
results of these negotiations, that the Superior Proposal giving
rise to Unitrode's notice continues to be a Superior Proposal.
The merger agreement may also be terminated, and the merger abandoned, by
Unitrode at any time prior to the merger if there is a breach by Texas
Instruments or Unicorn Acquisition of any representation, warranty, covenant or
agreement contained in the merger agreement that cannot be cured and would
prevent certain conditions to the consummation of the merger from being
satisfied before February 29, 2000.
Termination by Texas Instruments
The merger agreement may be terminated, and the merger abandoned, by Texas
Instruments at any time prior to the merger if:
- Unitrode enters into a binding agreement for a Superior Proposal or
Unitrode's board of directors withdraws or adversely modifies its
approval or recommendation of the merger; or
- there is a breach by Unitrode of any representation, warranty, covenant
or agreement contained in the merger agreement that cannot be cured and
would prevent certain conditions to the consummation of the merger from
being satisfied before February 29, 2000.
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Effect of Termination
If the merger agreement is terminated:
- because (1) a bona fide Acquisition Proposal has been made or any person
has publicly announced an intention, whether or not conditional, to make
a bona fide Acquisition Proposal in respect of Unitrode or any of its
subsidiaries, (2) the merger agreement is subsequently terminated by
either Texas Instruments or Unitrode because Unitrode's stockholders have
not approved and adopted the merger and (3) within nine months of the
termination of the merger agreement any Acquisition Proposal by a third
party is entered into, agreed to or consummated by Unitrode;
- by Unitrode pursuant to the reasons and conditions relating to an
Acquisition Proposal set forth in the four bullets under "Termination by
Unitrode" above; or
- by Texas Instruments because:
(1) Unitrode enters into a binding agreement for a Superior Proposal
or Unitrode's board of directors withdraws or adversely modifies
its approval or recommendation of the merger; or
(2) Unitrode materially breaches its covenant not to solicit, initiate
or encourage the submission of any Acquisition Proposal or
participate in any discussions or negotiations regarding, or
furnish to any person any information in respect of, or take any
other action to facilitate, any Acquisition Proposal or any
inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Acquisition Proposal,
then Unitrode has agreed to pay Texas Instruments a termination fee of
$41,700,000 on the date of the termination, except in the case of the first
bullet above, for which the termination fee shall be payable on the earlier of
the date an agreement is entered into in respect of an Acquisition Proposal or
an Acquisition Proposal is consummated. However, notwithstanding the foregoing,
Unitrode will not pay Texas Instruments a termination fee in the event the
Acquisition Proposal entered into, agreed to or consummated after the
termination is an Acquisition Proposal by which:
- Unitrode or any of its subsidiaries acquires a third party pursuant to a
merger, consolidation, recapitalization, share exchange or similar
transaction in which Unitrode survives and the shareholders of that
acquired third party receive shares of Unitrode common stock which,
immediately following consummation of the acquisition, represent no more
than 45% of the issued and outstanding shares of Unitrode common stock
(or securities convertible or exchangeable into, or exercisable for
Unitrode common stock, whether upon the passage of time or otherwise);
and
- the acquired third party, or any of its affiliates, was not the subject
of an Acquisition Proposal at any time after the date of the merger
agreement and prior to the termination of the merger agreement.
INDEMNIFICATION OF UNITRODE'S DIRECTORS AND OFFICERS
Unitrode and Texas Instruments have agreed to indemnify the present and
former directors and officers of Unitrode and its subsidiaries against all
losses, claims, damages, costs, expenses, liabilities or amounts that are paid
in connection with any claim based on or arising out of or pertaining to the
fact that such person is or was a director or officer of Unitrode or any of its
subsidiaries, or based on or arising out of any of the transactions contemplated
by the merger agreement, and to provide and maintain insurance coverage for such
purposes, for a period of six years commencing on the effective date of the
merger.
AMENDMENT OF THE MERGER AGREEMENT
The merger agreement may be amended at any time in writing signed by all
parties to the merger agreement before or after the approval of the merger by
the Unitrode stockholders but, after their approval, the merger agreement may
not be amended without the approval of the Unitrode stockholders if their
approval is required under any applicable law.
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EXTENSION AND WAIVER
At any time before the merger, each party to the merger agreement may
extend the time for performance of any obligation or act of another party, waive
any inaccuracies in the representations and warranties of another party or waive
compliance by the other party with any of the agreements or conditions contained
in the merger agreement.
VOTING AGREEMENT
The following description of certain terms of the voting agreement is only
a summary of the material provisions of the described agreement and does not
purport to be complete. Stockholders should read carefully the voting agreement.
The voting agreement is attached to this proxy statement/prospectus as Annex B.
In order to induce Texas Instruments to enter into the merger agreement,
some of Unitrode's officers and directors entered into a voting agreement with
Texas Instruments on July 25, 1999. Those stockholders who signed the voting
agreement have agreed to vote an aggregate of 867,962 shares of Unitrode common
stock, representing approximately 2.6% of the total outstanding voting power as
of the record date, in favor of approval and adoption of the merger.
The voting agreement provides that, during the period commencing on the
date of the voting agreement and continuing until the earlier of the effective
time of the merger or the termination of the merger agreement in accordance with
its terms, at any meeting of Unitrode stockholders (or at any adjournment of
that meeting or pursuant to action by written consent) called to approve and
adopt the merger, the stockholders party to the voting agreement will vote the
shares held by such stockholder and subject to the voting agreement in favor of
approval and adoption of the merger. In addition, each stockholder party to the
voting agreement will not enter into any other voting agreement or grant a proxy
or power of attorney with respect to Unitrode common stock held by such
stockholder and subject to the voting agreement.
STOCK OPTION AGREEMENT
The following description of certain terms of the option agreement is only
a summary of the material provisions of the described agreement and does not
purport to be complete. Stockholders should read carefully the stock option
agreement. The option agreement is attached to this proxy statement/prospectus
as Annex C.
GENERAL
In order to induce Texas Instruments to enter into the merger agreement,
Unitrode and Texas Instruments entered into a stock option agreement, pursuant
to which Unitrode granted Texas Instruments an irrevocable option to purchase up
to 6,470,760 shares of Unitrode common stock at a purchase price of $38.60 per
share, subject to adjustment as set forth in the stock option agreement. The
shares granted in the option give Texas Instruments the right to purchase up to
19.9% of the stock entitled to vote for the election of directors of Unitrode
that is issued and outstanding at the time of the exercise of the option. The
option is intended to increase the likelihood that the merger will be completed
in accordance with the terms of the merger agreement. Consequently, certain
aspects of the option agreement may have the effect of discouraging persons who
might now or at any time prior to the completion of the merger be interested in
acquiring all or a significant interest in Unitrode or its assets.
EXERCISE OF THE OPTION; PROFIT LIMITATIONS
The stock option agreement allows Texas Instruments to exercise the option
with respect to any or all of the option shares at any time, or from time to
time, when Texas Instruments is entitled to receive a termination fee under the
merger agreement by sending prior written notice to Unitrode specifying the
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number of shares Texas Instruments wishes to purchase. The purchase price and
number of shares exercisable under the option are subject to adjustment in the
event of any change in the number of issued and outstanding shares. In lieu of
exercising the option, Texas Instruments may elect to receive cash in an amount
equal to the excess, if any, over the purchase price of the option of the higher
of (1) the highest price of Unitrode common stock paid or proposed to be paid
under any other definitive acquisition agreement executed by Unitrode or (2) the
average closing price, for the five trading day period ending on the trading day
immediately prior to the date Texas Instruments gives notice of such exercise,
of Unitrode common stock as reported on the New York Stock Exchange.
The stock option agreement provides, however, that Texas Instruments'
profit from (1) the net profit of any sale of Unitrode common stock received
pursuant to exercises made under the stock option agreement, (2) the receipt of
cash from cash exercises made under the stock option agreement and (3) the
receipt of cash from termination fees payable under the merger agreement may not
exceed $55,600,000 in the aggregate.
TERMINATION OF THE OPTION
The stock option agreement specifies that the agreement, and Texas
Instruments' option, will terminate upon the earliest of:
- the effective time of the merger;
- 120 days after the occurrence of an event that unconditionally entitles
Texas Instruments to receive the termination fee under the merger
agreement; or
- the termination of the merger agreement in accordance with its terms, so
long as Texas Instruments has not received, or is no longer entitled to
receive, a termination fee under the merger agreement, in which case the
option will terminate on the later of 120 days following the time such
termination fee becomes unconditionally payable or the expiration of the
period in which an exercise event could occur pursuant to the merger
agreement.
Texas Instruments is, however, still entitled to purchase the shares with
respect to which it has exercised the option in accordance with the terms of the
stock option agreement prior to termination of the option.
OTHER PROVISIONS
The stock option agreement contains other provisions regarding transfer
restrictions, notice requirements, registration rights and representations and
warranties made by Texas Instruments and Unitrode.
BUSINESS OF TEXAS INSTRUMENTS
Texas Instruments is a global semiconductor company and the world's leading
designer and supplier of digital signal processors and analog integrated
circuits, the engines driving the digitalization of electronics. These two types
of semiconductor products work together in digital electronic devices such as
digital cellular phones. Analog technology converts analog signals like sound,
light, temperature and pressure into the digital language of zeros and ones,
which can then be processed in real-time by a digital signal processor. Analog
integrated circuits also translate digital signals back to analog. Digital
signal processors and analog integrated circuits enable a wide range of new
products and features for Texas Instruments' more than 30,000 customers in
commercial, industrial and consumer markets.
Texas Instruments is also a world leader in the design and manufacturing of
other semiconductor products. Those products include standard logic,
application-specific integrated circuits, reduced instruction-set computing
microprocessors, and microcontrollers.
The semiconductor business comprised 80% of Texas Instruments' 1998
revenues when the divested memory business is excluded. Texas Instruments'
semiconductor products are used in a diverse range of
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electronic systems, including digital cellular phones, computers, printers, hard
disk drives, modems, networking equipment, digital cameras and video recorders,
motor controls, autos and home appliances. Products are sold primarily to
original-equipment manufacturers and through distributors. Texas Instruments'
semiconductor patent portfolio has been established as an ongoing contributor to
semiconductor revenues. Revenues generated from sales to Texas Instruments' top
three semiconductor customers accounted for approximately 24% of total
semiconductor revenues in 1998.
Texas Instruments' restated certificate of incorporation and bylaws provide
for the indemnification of directors and officers in the event they become
parties to legal proceedings arising in connection with their positions with
Texas Instruments. The Securities and Exchange Commission has expressed its
position that the indemnification of directors, officers and controlling persons
against liabilities arising under the Securities Act is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
All of the current directors and executive officers of Texas Instruments
will be the directors and executive officers of Texas Instruments following the
merger. For information regarding these directors and executive officers and
executive compensation, see the sections of Texas Instruments' annual meeting
proxy statement referenced below under "Incorporation by Reference to Other
Documents."
INCORPORATION BY REFERENCE TO OTHER DOCUMENTS
As allowed by the rules of the Securities and Exchange Commission, this
proxy statement/prospectus does not contain all of the information you can find
in the registration statement or the exhibits to the registration statement.
Specifically, the Securities and Exchange Commission allows Texas Instruments to
"incorporate by reference" information into this proxy statement/prospectus,
which means that Texas Instruments can disclose important information to you by
referring you to another document filed separately by it with the Securities and
Exchange Commission. The information incorporated in this proxy
statement/prospectus by reference is deemed to be part of this proxy
statement/prospectus, except for any information superseded by information that
we include in this proxy statement/prospectus. This proxy statement/prospectus
incorporates by reference the documents set forth below that have previously
been filed with the Securities and Exchange Commission. These documents contain
important information about Texas Instruments and its finances.
<TABLE>
<CAPTION>
DOCUMENT FILED PERIOD OR DATE FILED
- -------------- --------------------
<S> <C>
Annual Report on Form 10-K for Fiscal Year ended December
31, 1998 (as amended on Form 10-K/A).................... Filed on February 22, 1999
(August 9, 1999)
Quarterly Reports on Form 10-Q for three months ended
March 31, 1999 (as amended on Form 10-Q/A) and June 30,
1999.................................................... Filed on April 23, 1999
(August 9, 1999) and August
13, 1999
Current Report on Form 8-K................................ Filed on May 24, 1999
Sections of Annual Meeting Proxy Statement on Schedule 14A
under headings "Election of Directors," "Directors'
Compensation," "Executive Compensation" and
"Compensation Committee Report on Executive
Compensation"........................................... Filed on March 5, 1999
</TABLE>
Texas Instruments is also incorporating by reference any additional
documents that it may file with the Securities and Exchange Commission pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934
between the date of this proxy statement/prospectus and the date of the special
meeting of Unitrode stockholders.
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WHERE YOU CAN FIND MORE INFORMATION ABOUT TEXAS INSTRUMENTS
Texas Instruments (File No. 1-3761) files annual, quarterly and current
reports, proxy statements and other information with the Securities and Exchange
Commission. You may read and copy any reports, statements and other information
filed by Texas Instruments at the Securities and Exchange Commission's public
reference room, at 450 Fifth Street, N.W., Washington, D.C. 20549, as well as at
public reference rooms in New York, New York, and Chicago, Illinois. Please call
(800) SEC-0330 for further information on the public reference rooms. Texas
Instruments' filings are also available to the public from commercial document
retrieval services and at the Internet web site maintained by the Securities and
Exchange Commission at http://www.sec.gov.
Texas Instruments has filed a registration statement on Form S-4 to
register with the Securities and Exchange Commission the Texas Instruments
common stock to be issued to stockholders of Unitrode in the merger. This proxy
statement/prospectus is part of that registration statement and constitutes a
prospectus of Texas Instruments in addition to being a proxy statement of
Unitrode for its special meeting of stockholders.
Texas Instruments has supplied all information contained or incorporated by
reference in this proxy statement/prospectus relating to Texas Instruments or
Unicorn Acquisition.
BUSINESS OF UNITRODE
Unitrode Corporation currently designs, manufactures, markets and sells a
range of analog/linear and mixed-signal integrated circuits (ICs), modules, and
non-volatile products. Unitrode's analog IC business was founded in 1981;
additional analog and mixed-signal battery management products, as well as the
modular and non-volatile product lines, were added as a result of the merger
with Benchmarq Microelectronics, Inc. Today, Unitrode's principal products are
proprietary, high-performance analog/linear and mixed-signal ICs that are used
in a variety of applications in EDP/computer, telecommunications, industrial
control and instrumentation, space communications, and consumer/automotive
markets. For the most part, these ICs are used either to control switching power
supplies, to control charging, conditioning, and monitoring of rechargeable
batteries, or to act as an interface between various pieces of electronic
equipment. Unitrode's Benchmarq-branded lines of non-volatile static random
access memory products and real time clock products provide back-up memory, time
and date functions in telecommunications and computer equipment.
Slightly more than half of Unitrode's revenues are derived from power
management applications either in the control of switching power supplies and
DC/DC converters or in battery management. About one-third of revenues comes
from interface products, principally Small Computer Systems Interface active
terminators. Altogether, these comprise 90% of Unitrode's revenues and represent
the strategic thrust of new product development. The non-volatile product lines
represent the remaining 10%.
INCORPORATION BY REFERENCE TO OTHER DOCUMENTS
As allowed by the rules of the Securities and Exchange Commission, this
proxy statement/prospectus does not contain all of the information you can find
in the registration statement or the exhibits to the registration statement.
Specifically, the Securities and Exchange Commission allows Unitrode to
"incorporate by reference" information into this proxy statement/prospectus,
which means that Unitrode can disclose important information to you by referring
you to another document filed separately by it with the Securities and Exchange
Commission. The information incorporated in this proxy statement/prospectus by
reference is deemed to be part of this proxy statement/prospectus, except for
any information superseded by information that we include in this proxy
statement/prospectus. This proxy statement/ prospectus incorporates by reference
the documents set forth below that have previously been filed with
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the Securities and Exchange Commission. These documents contain important
information about Unitrode and its finances.
<TABLE>
<CAPTION>
DOCUMENT FILED PERIOD OR DATE FILED
- -------------- --------------------
<S> <C>
Annual Report on Form 10-K for Fiscal Year ended January
31, 1999................................................ Filed on April 23, 1999
Quarterly Reports on Form 10-Q for three months ended May
1, 1999 and July 31, 1999............................... Filed on June 11, 1999
and September 10, 1999
Current Reports on Form 8-K............................... Filed on June 29, 1999
and July 27, 1999
Annual Meeting Proxy Statement on Schedule 14A............ Filed on April 23, 1999
</TABLE>
Texas Instruments is also incorporating by reference any additional
documents that Unitrode may file with the Securities and Exchange Commission
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934 between the date of this proxy statement/prospectus and the date of the
special meeting of Unitrode stockholders.
WHERE YOU CAN FIND MORE INFORMATION ABOUT UNITRODE
Unitrode (File No. 1-5609) files annual, quarterly and current reports,
proxy statements and other information with the Securities and Exchange
Commission. You may read and copy any reports, statements and other information
filed by Unitrode at the Securities and Exchange Commission's public reference
room, at 450 Fifth Street, N.W., Washington, D.C. 20549, as well as at public
reference rooms in New York, New York, and Chicago, Illinois. Please call (800)
SEC-0330 for further information on the public reference rooms. Unitrode's
filings are also available to the public from commercial document retrieval
services and at the Internet web site maintained by the Securities and Exchange
Commission at http://www.sec.gov.
Unitrode has supplied all information contained or incorporated by
reference in this proxy statement/ prospectus relating to Unitrode.
DESCRIPTION OF CAPITAL STOCK OF TEXAS INSTRUMENTS
GENERAL
The authorized capital stock of Texas Instruments consists of 1,200,000,000
shares of common stock, $1.00 par value per share, and 10,000,000 shares of
preferred stock, $25.00 par value, of which shares have been designated Series B
Participating Cumulative Preferred Stock. As of September 10, 1999, there were
issued 793,163,176 shares of common stock, of which 870,778 were treasury shares
and 792,292,398 were outstanding, and Texas Instruments had no preferred stock
issued or outstanding. The following summary of the terms of Texas Instruments'
capital stock does not purport to be complete and is qualified in its entirety
by reference to the applicable provisions of Delaware law and Texas Instruments'
restated certificate of incorporation, as amended.
THE COMMON STOCK
The holders of shares of Texas Instruments common stock, subject to the
preferential rights of the holders of any shares of preferred stock of Texas
Instruments, are entitled to dividends when and as declared by the Texas
Instruments board of directors. The holders of the Texas Instruments common
stock have one vote per share on all matters submitted to a vote of the
stockholders, and the right to share pro rata in the net assets of Texas
Instruments in liquidation after payment of any amounts due to creditors and in
respect of any preferred stock of Texas Instruments. Holders of shares of Texas
Instruments common stock are not entitled as a matter of right to any preemptive
or subscription rights and are not
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entitled to cumulative voting for directors. All outstanding shares of Texas
Instruments common stock are, and the shares of Texas Instruments common stock
issued upon any conversion or exchange of any debt securities or preferred stock
providing for such conversion or exchange will be, fully paid and nonassessable.
The bylaws of Texas Instruments provide that the annual meeting of
stockholders shall be held on the third Thursday in April each year or on such
other date as may be fixed by the Texas Instruments board of directors and as
stated in a written notice, which must be mailed or delivered to each
stockholder at least 10 days prior to any stockholder meeting.
Texas Instruments is authorized to issue additional shares of common stock
without further stockholder approval, except as may be required by applicable
law or stock exchange regulations.
The transfer agent and registrar for Texas Instruments' common stock is
Harris Trust and Savings Bank, 311 West Monroe Street, Chicago, Illinois 60690.
THE PREFERRED STOCK
Under its restated certificate of incorporation, Texas Instruments is
authorized to issue up to 10,000,000 shares of preferred stock, in one or more
series, with such designations and such relative voting, dividend, liquidation,
conversion and other rights, preferences and limitations as are stated in the
restated certificate of incorporation, or any certificate of designation
establishing such series adopted by the Texas Instruments board of directors.
The 10,000,000 authorized but unissued shares of preferred stock may be issued
pursuant to resolution of the Texas Instruments board of directors without the
vote of the holders of any capital stock of Texas Instruments.
THE RIGHTS PLAN
On June 18, 1998, the Texas Instruments board of directors declared a
dividend of one preferred stock purchase right (a "Right") for each outstanding
share of Texas Instruments common stock. The dividend was paid on June 30, 1998
(the "Record Date") to holders of record of Texas Instruments common stock as of
the close of business on that date. The terms and conditions of the Rights are
set forth in a Rights Agreement dated as of June 19, 1998 between Texas
Instruments and Harris Trust and Savings Bank, as Rights Agent (as amended, the
"Rights Agreement"). The Rights will expire on June 18, 2008, unless earlier
exchanged or redeemed.
Prior to the Distribution Date (as defined below), the Rights will be
evidenced by the certificates for and will be transferred with the Texas
Instruments common stock, and the registered holders of the Texas Instruments
common stock will be deemed to be the registered holders of the Rights. After
the Distribution Date, the Rights Agent will mail separate certificates
evidencing the Rights to each record holder of the common stock as of the close
of business on the Distribution Date, and thereafter the Rights will be
transferable separately from the common stock. The "Distribution Date" generally
means the earlier of (1) the close of business on the 10th day after the date of
the first public announcement that a person, other than Texas Instruments or any
of its subsidiaries or any employee benefit plan of Texas Instruments or any
such subsidiary, has acquired beneficial ownership of 20% or more of the
outstanding shares of common stock (an "Acquiring Person") and (2) the close of
business on the 10th business day, or such later day as may be designated by the
Texas Instruments board of directors before any person has become an Acquiring
Person, after the date of the commencement of a tender or exchange offer by any
person which would, if consummated, result in such person becoming an Acquiring
Person.
Prior to the Distribution Date, the Rights will not be exercisable to
purchase Series B Participating Cumulative Preferred Stock (the "Series B
Preferred Stock"). After the Distribution Date, each Right will be exercisable
to purchase, for $200 (the "Purchase Price"), one one-thousandth of a share of
Series B Preferred Stock.
At any time after any person has become an Acquiring Person, but before the
occurrence of any of the events described in the second succeeding sentence,
each Right, other than Rights beneficially owned
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by the Acquiring Person and certain affiliated persons, will entitle the holder
to purchase, for the Purchase Price, a number of shares of Texas Instruments
common stock having a market value of twice the Purchase Price. At any time
after any person has become an Acquiring Person, but before any person becomes
the beneficial owner of 50% or more of the outstanding shares of Texas
Instruments common stock or the occurrence of any of the events described in the
next sentence, the Texas Instruments board of directors may exchange all or part
of the Rights, other than Rights beneficially owned by an Acquiring Person and
certain affiliated persons, for shares of Texas Instruments common stock at an
exchange ratio of one share of Texas Instruments common stock per Right. If,
after any person has become an Acquiring Person, (1) Texas Instruments is
involved in a merger or other business combination in which Texas Instruments is
not the surviving corporation or its common stock is exchanged for other
securities or assets or (2) Texas Instruments and/or one or more of its
subsidiaries sell or otherwise transfer assets or earning power aggregating more
than 50% of the assets or earning power of Texas Instruments and its
subsidiaries, taken as a whole, then each Right, other than Rights beneficially
owned by an Acquiring Person and certain affiliated persons, will entitle the
holder to purchase, for the Purchase Price, a number of shares of common stock
of the other party to such business combination or sale, or in certain
circumstances, an affiliate, having a market value of twice the Purchase Price.
The Texas Instruments board of directors may redeem all of the Rights at a
price of $0.01 per Right at any time before any person has become an Acquiring
Person. For so long as the Rights are redeemable, the Rights Agreement may be
amended in any respect. At any time when the Rights are no longer redeemable,
the Rights Agreement may be amended in any respect that does not adversely
affect Rights holders, other than any Acquiring Person and certain affiliated
persons, cause the Rights Agreement to become amendable other than as described
in this sentence or cause the Rights again to become redeemable.
Rights holders have no rights as holders of Texas Instruments common stock,
including the right to vote and to receive dividends.
The Rights Agreement includes antidilution provisions designed to prevent
efforts to diminish the effectiveness of the Rights.
Each outstanding share of Texas Instruments common stock on the Record Date
received one Right. Shares of common stock issued after the Record Date and
prior to the Distribution Date will be issued with a Right attached so that all
shares of Texas Instruments common stock outstanding prior to the Distribution
Date will have Rights attached.
The Rights may have antitakeover effects. The Rights may cause substantial
dilution to a person that attempts to acquire Texas Instruments without a
condition to such an offer that a substantial number of the Rights be acquired
or that the Rights be redeemed or declared invalid. The Rights should not
interfere with any merger or other business combination approved by the Texas
Instruments board of directors since the Rights may be redeemed by Texas
Instruments as described above.
The foregoing description of the Rights Agreement is qualified in its
entirety by reference to the full text of the Rights Agreement and Amendment No.
1 to the Rights Agreement, which are included as exhibits to documents filed
with the Securities and Exchange Commission and incorporated by reference.
LEGAL MATTERS
The validity of the shares of Texas Instruments common stock to be issued
in the merger and certain United States federal income tax consequences of the
merger will be passed upon by Weil, Gotshal & Manges LLP, Dallas, Texas and New
York, New York.
Certain United States federal income tax consequences of the merger will be
passed upon by Skadden, Arps, Slate, Meagher & Flom LLP.
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INDEPENDENT AUDITORS
The financial statements and schedule of Texas Instruments appearing in its
annual report on Form 10-K for the year ended December 31, 1998, as amended,
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon included therein and incorporated by reference in this
proxy statement/prospectus. The audited financial statements incorporated in
this proxy statement/prospectus by reference to the annual report on Form 10-K
of Unitrode for the year ended January 31, 1999, except as they relate to
Benchmarq Microelectronics, Inc., have been audited by PricewaterhouseCoopers
LLP, independent accountants, and, insofar as they relate to Benchmarq
Microelectronics, Inc., by Ernst & Young LLP, independent auditors; whose report
thereon appears as an exhibit to the annual report on Form 10-K of Unitrode for
the year ended January 31, 1999. These financial statements are incorporated by
reference in this proxy statement/prospectus in reliance on the reports of these
independent auditors given on the authority of those firms as experts in
auditing and accounting.
STOCKHOLDER PROPOSALS FOR UNITRODE'S 2000 ANNUAL MEETING
OF STOCKHOLDERS IF THE MERGER IS NOT CONSUMMATED
Unitrode's management knows of no matters other than the merger proposal
that may properly be, or which are likely to be, brought before the special
meeting of Unitrode stockholders.
The Unitrode 2000 Annual Meeting of Stockholders will be held only if the
merger is not consummated. If the merger is not consummated, under the rules and
regulations of the Securities and Exchange Commission, stockholder proposals
intended to be presented at the Unitrode 2000 Annual Meeting of Stockholders and
included in Unitrode's proxy statement and form of proxy must be received by
Unitrode at its principal executive offices no later than January 4, 2000 to be
considered for inclusion in Unitrode's proxy statement and proxy cards for that
meeting.
Under Unitrode's bylaws, in order for a stockholder to nominate a candidate
for election as a director of Unitrode at an annual meeting of stockholders or
propose business for consideration at that meeting, a stockholder must generally
give notice to the Secretary of Unitrode no more than 90 days nor less than 60
days prior to June 7, 2000.
All notices of proposals by stockholders, whether or not included in
Unitrode's proxy materials, should be sent to Unitrode Corporation, 7
Continental Boulevard, Merrimack, New Hampshire 03054-4334, Attention:
Secretary.
70
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ANNEX A
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
DATED AS OF JULY 25, 1999
AMONG
UNITRODE CORPORATION
TEXAS INSTRUMENTS INCORPORATED
AND
UNICORN ACQUISITION CORP.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
A-1
<PAGE> 79
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
Article I THE MERGER..................................................... A-8
SECTION 1.1 The Merger.................................................. A-8
SECTION 1.2 Effective Time.............................................. A-8
SECTION 1.3 Closing of the Merger....................................... A-8
SECTION 1.4 Effects of the Merger....................................... A-8
SECTION 1.5 Charter and Bylaws.......................................... A-8
SECTION 1.6 Directors................................................... A-8
SECTION 1.7 Officers.................................................... A-8
Article II CONVERSION OF SECURITIES...................................... A-9
SECTION 2.1 Conversion of Shares........................................ A-9
SECTION 2.2 Stock Options............................................... A-9
SECTION 2.3 Exchange Fund............................................... A-10
SECTION 2.4 Exchange Procedures......................................... A-11
SECTION 2.5 Distributions with Respect to Unsurrendered Certificates.... A-11
SECTION 2.6 No Further Ownership Rights in Company Common Stock......... A-11
SECTION 2.7 No Fractional Shares of Parent Common Stock................. A-12
SECTION 2.8 Termination of Exchange Fund................................ A-12
SECTION 2.9 No Liability................................................ A-12
SECTION 2.10 Investment of the Exchange Fund............................. A-12
SECTION 2.11 Lost Certificates........................................... A-12
SECTION 2.12 Withholding Rights.......................................... A-12
SECTION 2.13 Stock Transfer Books........................................ A-13
Article III REPRESENTATIONS AND WARRANTIES OF THE COMPANY................. A-13
SECTION 3.1 Organization and Qualification; Subsidiaries................ A-13
SECTION 3.2 Capitalization of the Company and Its Subsidiaries.......... A-13
SECTION 3.3 Authority Relative to This Agreement........................ A-14
SECTION 3.4 SEC Reports; Financial Statements........................... A-14
SECTION 3.5 No Undisclosed Liabilities.................................. A-15
SECTION 3.6 Absence of Changes.......................................... A-15
SECTION 3.7 Information Supplied........................................ A-16
SECTION 3.8 Consents and Approvals...................................... A-17
SECTION 3.9 No Default.................................................. A-17
SECTION 3.10 Real Property............................................... A-18
SECTION 3.11 Litigation.................................................. A-19
SECTION 3.12 Compliance with Applicable Law; Permits..................... A-19
SECTION 3.13 Employee Plans.............................................. A-20
SECTION 3.14 Labor Matters............................................... A-21
SECTION 3.15 Environmental Matters....................................... A-22
SECTION 3.16 Tax Matters................................................. A-24
SECTION 3.17 Absence of Questionable Payments............................ A-24
</TABLE>
A-2
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<TABLE>
<S> <C> <C>
SECTION 3.18 Material Contracts.......................................... A-25
SECTION 3.19 Subsidies................................................... A-25
SECTION 3.20 Intellectual Property....................................... A-25
SECTION 3.21 Year 2000................................................... A-27
SECTION 3.22 Opinion of Financial Advisor................................ A-28
SECTION 3.23 Brokers..................................................... A-28
SECTION 3.24 Accounting Matters.......................................... A-28
SECTION 3.25 Recalls..................................................... A-28
SECTION 3.26 Takeover Statute............................................ A-28
SECTION 3.27 Company Rights Agreement.................................... A-28
Article IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB........
A-29
SECTION 4.1 Organization................................................ A-29
SECTION 4.2 Authority Relative to This Agreement........................ A-29
SECTION 4.3 SEC Reports; Financial Statements........................... A-29
SECTION 4.4 Undisclosed Liabilities..................................... A-30
SECTION 4.5 Capitalization of Parent.................................... A-30
SECTION 4.6 Information Supplied........................................ A-30
SECTION 4.7 Consents and Approvals; No Violations....................... A-30
SECTION 4.8 No Prior Activities......................................... A-31
SECTION 4.9 Brokers..................................................... A-31
SECTION 4.10 Accounting Matters.......................................... A-31
Article V COVENANTS RELATED TO CONDUCT OF BUSINESS....................... A-31
SECTION 5.1 Conduct of Business of the Company.......................... A-31
SECTION 5.2 Conduct of Business of Parent............................... A-33
SECTION 5.3 Access to Information....................................... A-33
Article VI ADDITIONAL AGREEMENTS.......................................... A-34
SECTION 6.1 Preparation of S-4 and the Proxy Statement.................. A-34
SECTION 6.2 Letter of Accountants....................................... A-34
SECTION 6.3 Meeting..................................................... A-35
SECTION 6.4 Reasonable Best Efforts..................................... A-35
SECTION 6.5 Acquisition Proposals....................................... A-36
SECTION 6.6 Public Announcements........................................ A-37
SECTION 6.7 Indemnification............................................. A-37
SECTION 6.8 Notification of Certain Matters............................. A-38
SECTION 6.9 Tax-Free Reorganization Treatment........................... A-38
SECTION 6.10 Employee Matters............................................ A-39
SECTION 6.11 Company Affiliate Agreements................................ A-39
SECTION 6.12 SEC and Other Filings....................................... A-39
SECTION 6.13 Fees and Expenses........................................... A-39
SECTION 6.14 Obligations of Merger Sub................................... A-40
</TABLE>
A-3
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<TABLE>
<S> <C> <C>
SECTION 6.15 Listing of Stock............................................ A-40
SECTION 6.16 Antitakeover Statutes....................................... A-40
SECTION 6.17 Termination of Credit Agreement............................. A-40
SECTION 6.18 Benchmarq................................................... A-40
Article VII CONDITIONS TO CONSUMMATION OF THE MERGER....................... A-40
SECTION 7.1 Conditions to Each Party's Obligations to Effect the
Merger...................................................... A-40
SECTION 7.2 Conditions to the Obligations of Parent and Merger Sub...... A-40
SECTION 7.3 Conditions to the Obligations of the Company................ A-41
Article VIII TERMINATION; AMENDMENT; WAIVER................................. A-42
SECTION 8.1 Termination by Mutual Agreement............................. A-42
SECTION 8.2 Termination by Either Parent or the Company................. A-42
SECTION 8.3 Termination by the Company.................................. A-43
SECTION 8.4 Termination by Parent....................................... A-43
SECTION 8.5 Effect of Termination and Abandonment....................... A-43
SECTION 8.6 Amendment................................................... A-44
SECTION 8.7 Extension; Waiver........................................... A-44
Article IX MISCELLANEOUS.................................................. A-44
SECTION 9.1 Entire Agreement; Assignment................................ A-44
SECTION 9.2 Notices..................................................... A-44
SECTION 9.3 Governing Law............................................... A-45
SECTION 9.4 Descriptive Headings........................................ A-45
SECTION 9.5 Parties in Interest......................................... A-46
SECTION 9.6 Severability................................................ A-46
SECTION 9.7 Specific Performance........................................ A-46
SECTION 9.8 Counterparts................................................ A-46
SECTION 9.9 Interpretation.............................................. A-46
SECTION 9.10 Definitions................................................. A-47
</TABLE>
EXHIBITS
<TABLE>
<S> <C>
Voting Agreement............................................ A
Company Affiliate Agreement................................. B
Option Agreement............................................ C
</TABLE>
A-4
<PAGE> 82
GLOSSARY OF DEFINED TERMS
<TABLE>
<CAPTION>
DEFINED TERMS DEFINED IN SECTION
- ------------- ------------------
<S> <C>
Acquisition Proposal........................................ 6.5(a)
Antitrust Law............................................... 3.8
Articles of Merger.......................................... 1.2
Assumed Stock Option........................................ 2.2(a)
Average Parent Stock Price.................................. 2.1(b)
beneficial ownership........................................ 9.10(a)
beneficially own............................................ 9.10(a)
business day................................................ 9.10(b)
Benefit Plans............................................... 3.13(a)(i)
Certificates................................................ 2.4
Closing..................................................... 1.3
Closing Date................................................ 1.3
Code........................................................ Recitals
Company..................................................... Preamble
Company Affiliate Agreements................................ Recitals
Company Balance Sheet....................................... 3.4
Company Balance Sheet Date.................................. 3.4
Company Board............................................... 3.3(b)
Company Common Stock........................................ 2.1(b)
Company Common Stock Price.................................. 2.1(b)
Company Disclosure Schedule................................. Article III
Company Option Plan......................................... 2.2(a)
Company Permits............................................. 3.12
Company Requisite Vote...................................... 3.3(b)
Company Rights Agreement.................................... 3.27
Company SEC Reports......................................... 3.4
Company Securities.......................................... 3.2(a)
Company Stock Options....................................... 2.2(a)
Company Stockholder Meeting................................. 6.3
Confidentiality Agreement................................... 5.3(c)
Covered Transactions........................................ 3.26
Department.................................................. 1.2
DOJ......................................................... 6.4(b)
Effective Time.............................................. 1.2
Employee Arrangements....................................... 3.13(a)(ii)
Environmental Law........................................... 3.15(a)(i)
ERISA....................................................... 3.13(a)(i)
Exchange Act................................................ 3.4
Exchange Agent.............................................. 2.3
Exchange Fund............................................... 2.3
Exchange Ratio.............................................. 2.1(b)
Expenses.................................................... 6.13
Financial Advisor........................................... 3.22
Former Facilities........................................... 3.10(a)
FTC......................................................... 6.4(b)
GAAP........................................................ 3.4
Governmental Entity......................................... 3.8
Hazardous Material.......................................... 3.15(a)(ii)
HSR Act..................................................... 3.8
</TABLE>
A-5
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<TABLE>
<CAPTION>
DEFINED TERMS DEFINED IN SECTION
- ------------- ------------------
<S> <C>
Indemnified Party(ies)...................................... 6.7(a)
Intellectual Property....................................... 3.20(a)
IRS......................................................... 3.13(b)
know........................................................ 9.10(c)
knowledge................................................... 9.10(c)
Law......................................................... 3.9
Lien........................................................ 3.2(b)
Material Adverse Effect..................................... 9.10(d)
Material Contracts.......................................... 3.18(a)
Merger...................................................... 1.1
Merger Sub.................................................. Preamble
MGCL........................................................ 1.1
NYSE........................................................ 2.1(b)
Option Agreement............................................ Recitals
Parent...................................................... Preamble
Parent Board................................................ 4.2(b)
Parent Common Stock......................................... Recitals
Parent Disclosure Schedule.................................. Article IV
Parent SEC Reports.......................................... 4.3
person...................................................... 9.10(e)
Product..................................................... 3.25(c)
Proxy Statement............................................. 3.7
Real Property Leases........................................ 3.10(c)(i)
Recalls..................................................... 3.25(a)
Release..................................................... 3.15(a)(iii)
Remedial Action............................................. 3.15(a)(iv)
Rights...................................................... 3.27
S-4......................................................... 3.7
Scheduled Intellectual Property............................. 3.20(a)
SEC......................................................... 2.2(a)
Share(s).................................................... 2.1(b)
Share Consideration......................................... 2.1(b)
Stock Purchase Plan......................................... 2.2(c)
subsidiary.................................................. 9.10(f)
Superior Proposal........................................... 6.5(a)
Surviving Corporation....................................... 1.1
Systems..................................................... 3.21(e)
Takeover Statutes........................................... 3.26
Tax(es)..................................................... 3.16(a)
Tax Returns................................................. 3.16(a)
Termination Date............................................ 8.2(a)
Voting Agreements........................................... Recitals
WARN........................................................ 3.14(d)
</TABLE>
A-6
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of July 25, 1999, is among
Unitrode Corporation, a Maryland corporation (the "COMPANY"), Texas Instruments
Incorporated, a Delaware corporation ("PARENT"), and Unicorn Acquisition Corp.,
a Maryland corporation and a direct wholly owned subsidiary of Parent ("MERGER
SUB"). Certain capitalized and non-capitalized terms used herein are defined in
Section 9.10.
RECITALS
WHEREAS, the Boards of Directors of the Company, Parent and Merger Sub each
have, in light of and subject to the terms and conditions set forth herein,
approved this Agreement and the transactions contemplated hereby, including the
Merger, and the Boards of Directors of the Company and Merger Sub have declared
the Merger advisable on substantially the terms and conditions set forth herein
and fair to, and in the best interests of, their respective stockholders;
WHEREAS, pursuant to the Merger, among other things, and subject to the
terms and conditions of this Agreement, all of the issued and outstanding shares
of stock of the Company shall be converted into the right to receive shares of
common stock, par value $1.00 per share, of Parent (together with any associated
rights to acquire shares of Cumulative Preferred Stock of Parent pursuant to the
Rights Agreement dated as of June 18, 1998, as amended, between Parent and
Harris Trust and Savings Bank, as Rights Agent) (collectively, "PARENT COMMON
STOCK");
WHEREAS, as an inducement to Parent and Merger Sub to enter into this
Agreement, certain stockholders of the Company have concurrently herewith
entered into (i) voting agreements in the form attached hereto as EXHIBIT
A("VOTING AGREEMENTS") pursuant to which, among other things, such stockholders
have agreed to vote the shares of Company Common Stock (as hereinafter defined)
owned by them in favor of the Merger and (ii) Company Affiliate Agreements in
the form attached hereto as EXHIBIT B ("COMPANY AFFILIATE AGREEMENTS") pursuant
to which, among other things, such stockholders have agreed to refrain from
selling shares of Company Common Stock or Parent Common Stock during a specified
period prior to and following consummation of the Merger;
WHEREAS, as an inducement to Parent and Merger Sub to enter into this
Agreement, the Company has entered into a stock option agreement in the form
attached hereto as EXHIBIT C ("OPTION AGREEMENT") pursuant to which the Company
has granted to Parent an option to purchase from the Company, upon the terms and
conditions described in the Option Agreement, Shares (as hereinafter defined);
WHEREAS, for U.S. 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 that this
Agreement shall be, and is hereby, adopted as a plan of reorganization for
purposes of Section 368(a) of the Code;
WHEREAS, for accounting purposes, it is intended that the Merger shall be
accounted for as a "pooling of interests"; and
WHEREAS, the Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger as set forth in this Agreement.
A-7
<PAGE> 85
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements herein contained, and intending to be
legally bound hereby, the Company, Parent and Merger Sub hereby agree as
follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Merger. At the Effective Time and upon the terms and
subject to the conditions of this Agreement and in accordance with the Maryland
General Corporation Law (the "MGCL"), Merger Sub shall be merged with and into
the Company (the "MERGER"). Following the Merger, the Company shall continue as
the surviving corporation (the "SURVIVING CORPORATION") and the separate
corporate existence of Merger Sub shall cease.
SECTION 1.2 Effective Time. Subject to the provisions of this Agreement,
Parent, Merger Sub and the Company shall cause the Merger to be consummated by
filing appropriate Articles of Merger (the "ARTICLES OF MERGER") for record with
the State Department of Assessments and Taxation of Maryland (the "DEPARTMENT")
in such form as required by, and executed in accordance with, the relevant
provisions of the MGCL, as soon as practicable on or after the Closing Date (as
hereinafter defined). The Merger shall become effective upon acceptance for
record of such Articles of Merger by the Department or at such time thereafter
(but not exceeding 30 days after such acceptance for record) as is provided in
the Articles of Merger (the "EFFECTIVE TIME").
SECTION 1.3 Closing of the Merger. The closing of the Merger (the
"CLOSING") will take place at a time and on a date to be specified by the
parties (the "CLOSING DATE"), which shall be no later than the second business
day after satisfaction or waiver of the conditions set forth in Article VII
(other than those conditions that by their nature are to be satisfied at the
Closing, but subject to the fulfillment or waiver of those conditions), at the
offices of Weil, Gotshal & Manges LLP, 100 Crescent Court, Suite 1300, Dallas,
Texas 75201, or at such other time, date or place as agreed to in writing by the
parties hereto.
SECTION 1.4 Effects of the Merger. The Merger shall have the effects set
forth in the MGCL. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, all of the properties, rights, privileges,
powers and franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
SECTION 1.5 Charter and Bylaws. Effective immediately following the
Merger, the charter of Merger Sub, as in effect immediately prior to the
Effective Time, shall be the charter of the Surviving Corporation until amended
in accordance with applicable Law (as hereinafter defined). Effective
immediately following the Merger, the bylaws of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the bylaws of the Surviving
Corporation until amended in accordance with applicable Law.
SECTION 1.6 Directors. The directors of Merger Sub immediately prior to
the Effective Time shall be the initial directors of the Surviving Corporation
and shall hold office from the Effective Time in accordance with the charter and
bylaws of the Surviving Corporation until their successors are duly elected or
appointed and qualified or until their earlier death, resignation or removal.
SECTION 1.7 Officers. The officers of the Company immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation and
shall hold office from the Effective Time in accordance with the charter and
bylaws of the Surviving Corporation until their successors are duly elected or
appointed and qualified or until their earlier death, resignation or removal.
A-8
<PAGE> 86
ARTICLE II
CONVERSION OF SECURITIES
SECTION 2.1 Conversion of Shares.
(a) At the Effective Time, each issued and outstanding share of the common
stock, par value $.01 per share, of Merger Sub shall, by virtue of the Merger
and without any action on the part of Parent, Merger Sub or the Company, be
converted into one fully paid and non-assessable share of common stock of the
Surviving Corporation.
(b) At the Effective Time, each share of common stock, par value $.01 per
share, of the Company, including the associated Rights (as hereinafter defined)
("COMPANY COMMON STOCK"), issued and outstanding immediately prior to the
Effective Time (individually, a "SHARE" and collectively, the "SHARES") (other
than (i) Shares held by the Company and (ii) Shares held by Parent or Merger
Sub) shall, by virtue of the Merger and without any action on the part of
Parent, Merger Sub, the Company or any holder thereof, be converted into and be
exchangeable for the right to receive the number (rounded to the nearest
thousandth) of fully paid and non-assessable shares of Parent Common Stock,
determined by dividing $38.60 (the "COMPANY COMMON STOCK PRICE") by the Average
Parent Stock Price (such quotient being hereinafter referred to as the "EXCHANGE
RATIO," and all such shares of Parent Common Stock issued pursuant to this
Section 2.1(b), together with any cash in lieu of fractional shares of Parent
Common Stock to be paid pursuant to Section 2.7, being referred to herein as the
"SHARE CONSIDERATION"). As used herein, the "AVERAGE PARENT STOCK PRICE" means
the average of the daily high and low sales prices, regular way, of one share of
Parent Common Stock (rounded to the nearest thousandth) on the New York Stock
Exchange ("NYSE") (as reported in the New York City edition of The Wall Street
Journal or, if not reported thereby, another nationally recognized source)
during the 20 consecutive trading day period ending on the second trading day
prior to the Effective Time; provided, however, that (i) if the Average Parent
Stock Price is less than $133.70 the Average Parent Stock Price for purposes of
determining the Exchange Ratio shall be equal to $133.70 (the "MINIMUM AVERAGE
PARENT STOCK PRICE"), and (ii) if the Average Parent Stock Price is greater than
$153.70, the Average Parent Stock Price for purposes of determining the Exchange
Ratio shall be equal to $153.70 (the "MAXIMUM AVERAGE PARENT STOCK PRICE").
(c) At the Effective Time (i) each Share of Company Common Stock owned by
Parent shall be contributed to Merger Sub immediately prior to the Effective
Time and (ii) all shares held by Merger Sub, including any shares so
contributed, shall become one share of authorized but unissued stock of the
Surviving Corporation.
(d) If between the date of this Agreement and the Effective Time Parent
changes (or establishes a record date for changing) the outstanding shares of
Parent Common Stock into a different number of shares or a different class of
shares as a result of any stock dividend, subdivision, reclassification,
recapitalization, split (including a reverse split), combination, exchange of
shares or extraordinary dividend (in cash or otherwise), or any similar event,
then the Minimum Average Parent Stock Price, the Maximum Average Parent Stock
Price and the Exchange Ratio and the Average Parent Stock Price shall be
appropriately adjusted to the extent necessary to reflect such stock dividend,
subdivision, reclassification, recapitalization, split, combination or exchange
of shares, extraordinary dividend or such similar event.
SECTION 2.2 Stock Options.
(a) As soon as practicable following the date of this Agreement, Parent and
the Company (or, if appropriate, any committee of the Board of Directors of the
Company administering the Company's 1999 Equity Incentive Plan (the "COMPANY
OPTION PLAN") or any committee of the Board of Directors administering Parent's
option plans) or any other Company stock option plans shall take such action as
may be required to effect the following provisions of this Section 2.2. As of
the Effective Time, each option to purchase shares of Company Common Stock,
including all options granted pursuant to the Company Option Plan, the Company's
1983 Stock Option Plan, 1986 Non-Employee Director Option Plan and 1992 Employee
Stock Option Plan (each, a "COMPANY STOCK OPTION") which is then outstanding
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<PAGE> 87
shall be assumed by Parent and converted into an option (or a new substitute
option shall be granted) (an "ASSUMED STOCK OPTION") to purchase the number of
shares of Parent Common Stock (rounded up to the nearest whole share) equal to
(x) the number of shares subject to such option multiplied by (y) the Exchange
Ratio, at an exercise price per share of Parent Common Stock (rounded down to
the nearest penny) equal to (A) the former exercise price per share of Company
Common Stock under such option immediately prior to the Effective Time divided
by (B) the Exchange Ratio; provided, however, that in the case of any Company
Stock Option to which Section 421 of the Code applies by reason of its
qualification under Section 422 of the Code, the conversion formula shall be
adjusted, if necessary, to comply with Section 424(a) of the Code. Except as
provided above, each Assumed Stock Option shall be subject to the same terms and
conditions (including expiration date and vesting) as were applicable to such
converted Company Stock Option immediately prior to the Effective Time. Parent
shall use its reasonable best efforts to promptly prepare and file with the
Securities and Exchange Commission (the "SEC") a registration statement on Form
S-8 or other appropriate form with respect to shares of Parent Common Stock
subject to the Assumed Stock Options and to maintain the effectiveness of such
registration statement or registration statements covering such Assumed Stock
Options (and maintain the current status of the prospectus or prospectuses
contained therein) for so long as such Assumed Stock Options remain outstanding.
(b) Prior to Closing, the Company shall provide all information reasonably
requested by Parent in respect of the Company Stock Options and shall fully
cooperate with Parent to effect the transactions contemplated by this Section
2.2.
(c) No later than July 30, 1999, the Company shall terminate any offerings
under its 1999 Employee Stock Purchase Plan (the "STOCK PURCHASE PLAN"), and
such plan shall terminate immediately prior to the Effective Time.
(d) As of the Effective Time, any restricted shares of Company Common Stock
shall be converted into shares of Parent Common Stock equal to the number of
restricted shares of Company Common Stock multiplied by the Exchange Ratio (and
rounded up to the nearest whole share), and such shares of Parent Common Stock
shall otherwise be subject to the same terms as in effect immediately prior to
the Effective Time (including any terms that would result in the restrictions on
such shares lapsing as of the Effective Time as disclosed in Section 3.13(a) of
the Company Disclosure Schedule (as hereinafter defined)). As of the Effective
Time, any stock appreciation rights ("SAR") with respect to shares of Company
Common Stock which are outstanding as of the Effective Time shall be converted
into stock appreciation rights with respect to the number of shares of Parent
Common Stock equal to: (x) the number of shares subject to such SAR multiplied
by (y) the Exchange Ratio, at a strike price per share of Parent Common Stock
(rounded down to the nearest penny) equal to (A) the former strike price per
share of Company Common Stock under such option immediately prior to the
Effective Time divided by (B) the Exchange Ratio.
(e) The Company Option Plan (including all predecessor plans) and all
Company Stock Options shall terminate (other than with respect to the right to
receive the consideration specified in this Section 2.2) at and as of the
Effective Time. The provisions in any other plan, program or arrangement
providing for the issuance or grant of any Company Stock Options or similar
instruments shall be canceled at and as of the Effective Time (subject only to
the rights to receive the consideration, if any, specified in this Section 2.2).
The Company shall take all action necessary to ensure that following the
Effective Time no participant in the Company Option Plan, the Stock Purchase
Plan or other plans, programs or arrangements shall have any right thereunder to
acquire equity securities of the Company, the Surviving Corporation or any
subsidiary thereof and to terminate all such plans, programs and arrangements.
SECTION 2.3 Exchange Fund. Prior to the Effective Time, Parent shall
appoint a commercial bank or trust company reasonably acceptable to the Company
to act as exchange agent hereunder for the purpose of exchanging Shares for the
Share Consideration (the "EXCHANGE AGENT"). At or prior to the Effective Time,
Parent shall deposit with the Exchange Agent, in trust for the benefit of
holders of Shares, certificates representing the Parent Common Stock issuable
pursuant to Section 2.1 in exchange for
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<PAGE> 88
outstanding Shares. Parent agrees to make available to the Exchange Agent from
time to time as needed, sufficient cash amounts payable in lieu of fractional
shares of Parent Common Stock pursuant to Section 2.7 and any dividends and
other distributions payable pursuant to Section 2.5. Any cash and certificates
of Parent Common Stock, together with any dividends or distributions with
respect thereto, deposited with the Exchange Agent shall hereinafter be referred
to as the "EXCHANGE FUND."
SECTION 2.4 Exchange Procedures. As soon as reasonably practicable after
the Effective Time, the Surviving Corporation shall cause the Exchange Agent to
mail to each holder of a certificate or certificates which immediately prior to
the Effective Time represented outstanding Shares (the "CERTIFICATES") whose
shares were converted pursuant to Section 2.1(b) into Parent Common Stock (i) a
letter of transmittal which shall specify that delivery shall be effective, and
risk of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent, and which letter shall be in customary form
and have such other provisions as Parent and the Company may reasonably specify;
and (ii) instructions for effecting the surrender of such Certificates in
exchange for the Share Consideration. Upon surrender of a Certificate to the
Exchange Agent together with such letter of transmittal, duly executed and
completed in accordance with the instructions thereto, and such other documents
as may reasonably be required by the Exchange Agent, the holder of such
Certificate shall be entitled to receive in exchange therefor (A) a certificate
or certificates representing that number of shares of Parent Common Stock
representing, in the aggregate, the whole number of shares that such holder has
the right to receive pursuant to Section 2.1 and (B) a check in the amount equal
to the cash that such holder has the right to receive pursuant to the provisions
of this Article II, including cash in lieu of any dividends and other
distributions made in accordance with Section 2.5 and cash in lieu of fractional
shares pursuant to Section 2.7 and the Certificate so surrendered shall
forthwith be cancelled. No interest will be paid or will accrue on any cash
payable pursuant to Section 2.5 or Section 2.7. In the event of a transfer of
ownership of Company Common Stock which is not registered in the transfer
records of the Company, certificates evidencing, in the aggregate, the proper
number of shares of Parent Common Stock, a check in the proper amount of cash in
lieu of any fractional shares of Parent Common Stock pursuant to Section 2.7 and
any dividends or other distributions to which such holder is entitled pursuant
to Section 2.5, may be issued with respect to such Shares to such a transferee
if the Certificate representing such Shares is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer and
to evidence that any applicable stock transfer Taxes have been paid.
SECTION 2.5 Distributions with Respect to Unsurrendered Certificates. No
dividends or other distributions declared or made with respect to shares of
Parent Common Stock with a record date after the Effective Time shall be paid to
the holder of any unsurrendered Certificate with respect to the shares of Parent
Common Stock that such holder would be entitled to receive upon surrender of
such Certificate and no cash payment in lieu of fractional shares of Parent
Common Stock shall be paid to any such holder pursuant to Section 2.7 until such
holder shall surrender such Certificate in accordance with Section 2.4. Subject
to the effect of applicable Laws, following surrender of any such Certificate,
there shall be paid to such holder of shares of Parent Common Stock issuable in
exchange therefor, without interest, (a) promptly after the time of such
surrender, the amount of any cash payable in lieu of fractional shares of Parent
Common Stock to which such holder is entitled pursuant to Section 2.7 and the
amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares of Parent
Common Stock, and (b) at the appropriate payment date, the amount of dividends
or other distributions with a record date after the Effective Time but prior to
such surrender and a payment date subsequent to such surrender payable with
respect to such shares of Parent Common Stock.
SECTION 2.6 No Further Ownership Rights in Company Common Stock. All
shares of Parent Common Stock issued and cash paid upon conversion of the Shares
in accordance with the terms of Article I and this Article II (including any
cash paid pursuant to Sections 2.5 and 2.7) shall be deemed to have been issued
or paid in full satisfaction of all rights under the MGCL pertaining to the
Shares.
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SECTION 2.7 No Fractional Shares of Parent Common Stock.
(a) No certificates or scrip of shares of Parent Common Stock representing
fractional shares of Parent Common Stock or book-entry credit of the same shall
be issued upon the surrender for exchange of Certificates and such fractional
share interests will not entitle the owner thereof to vote or to have any rights
of a stockholder of Parent or a holder of shares of Parent Common Stock.
(b) Notwithstanding any other provision of this Agreement, each holder of
Shares exchanged pursuant to the Merger who would otherwise have been entitled
to receive a fraction of a share of Parent Common Stock (after taking into
account all Certificates delivered by such holder) shall receive, in lieu
thereof, cash (without interest) in an amount equal to the product of (i) such
fractional part of a share of Parent Common Stock multiplied by (ii) the closing
price on the NYSE (as reported in the New York City edition of The Wall Street
Journal or, if not reported thereby, another nationally recognized source) for a
share of Parent Common Stock on the date of the Effective Time. As promptly as
practicable after the determination of the aggregate amount of cash to be paid
to holders of fractional interests, the Exchange Agent shall notify Parent and
Parent shall cause the Surviving Corporation to deposit such amount with the
Exchange Agent and shall cause the Exchange Agent to forward payments to such
holders of fractional interests subject to and in accordance with the terms
hereof.
SECTION 2.8 Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the holders of Certificates for twelve months
after the Effective Time shall be delivered to the Surviving Corporation or
otherwise on the instruction of the Surviving Corporation, and any holders of
the Certificates who have not theretofore complied with this Article II shall
thereafter look only to the Surviving Corporation and Parent for the Share
Consideration with respect to the Shares formerly represented thereby to which
such holders are entitled pursuant to Section 2.1 and Section 2.4, any cash in
lieu of fractional shares of Parent Common Stock to which such holders are
entitled pursuant to Section 2.7 and any dividends or distributions with respect
to shares of parent Common Stock to which such holders are entitled pursuant to
Section 2.5.
SECTION 2.9 No Liability. None of Parent, Merger Sub, the Company, the
Surviving Corporation or the Exchange Agent, or any directors, officers,
employees or agents of each of the foregoing shall be liable to any person in
respect of any Parent Common Stock, any dividends or distributions with respect
thereto, any cash in lieu of fractional shares of Parent Common Stock or any
cash from the Exchange Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar Law.
SECTION 2.10 Investment of the Exchange Fund. The Exchange Agent shall
invest any cash included in the Exchange Fund as directed by Parent on a daily
basis. Any interest and other income resulting from such investments promptly
shall be paid to Parent.
SECTION 2.11 Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such person of a bond in such
reasonable amount as the Surviving Corporation may direct as indemnity against
any claim that may be made against it with respect to such Certificate, the
Exchange Agent will deliver in exchange for such lost, stolen or destroyed
Certificate the applicable Share Consideration with respect to the Shares
formerly represented thereby, any cash in lieu of fractional shares of Parent
Common Stock and unpaid dividends and distributions on shares of Parent Common
Stock deliverable in respect thereof, pursuant to this Agreement.
SECTION 2.12 Withholding Rights. Each of the Surviving Corporation and
Parent shall be entitled to deduct and withhold from the Share Consideration
otherwise payable pursuant to this Agreement to any holder of Shares such
amounts as it is required to deduct and withhold with respect to the making of
such payment under the Code and the rules and regulations promulgated
thereunder, or any applicable Law. To the extent that amounts are so withheld by
the Surviving Corporation or Parent, as the case may be, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of
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the Shares in respect to which such deduction and withholding was made by the
Surviving Corporation or Parent, as the case may be.
SECTION 2.13 Stock Transfer Books. The stock transfer books of the Company
shall be closed immediately upon the Effective Time and there shall be no
further registration of transfers of Shares thereafter on the records of the
Company. On or after the Effective Time, any Certificates presented to the
Exchange Agent or Parent for any reason shall be converted into the Share
Consideration with respect to the Shares formerly represented thereby, any cash
in lieu of fractional shares of Parent Common Stock to which the holders thereof
are entitled pursuant to Section 2.7 and any dividends or other distributions to
which the holders thereof are entitled pursuant to Section 2.5 and the
Certificates so presented shall be cancelled.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedule delivered by the Company to
Parent prior to the execution of this Agreement (the "COMPANY DISCLOSURE
SCHEDULE") (each section of which qualifies the correspondingly numbered
representation and warranty or covenant to the extent specified therein), the
Company hereby represents and warrants to each of Parent and Merger Sub as
follows:
SECTION 3.1 Organization and Qualification; Subsidiaries.
(a) The Company and each of its subsidiaries is a corporation or legal
entity duly organized, validly existing and in good standing under the
applicable Laws of the jurisdiction of its incorporation or organization and has
all requisite corporate, partnership or similar power and authority to own,
lease and operate its properties and to carry on its businesses as now being
conducted.
(b) Section 3.1 of the Company Disclosure Schedule sets forth a list of all
subsidiaries of the Company. Except as listed in Section 3.1 of the Company
Disclosure Schedule, the Company does not own, directly or indirectly,
beneficially or of record, any shares of capital stock or other securities of
any other entity or any other investment in any other entity.
(c) Each of the Company and its subsidiaries is duly qualified or licensed
and in good standing to do business in each jurisdiction in which the property
owned, leased, or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except where the failure to be
so duly qualified or licensed and in good standing is not reasonably expected to
have, individually or in the aggregate, a Material Adverse Effect on the Company
and its subsidiaries taken as a whole.
(d) The Company has heretofore delivered to Parent accurate and complete
copies of the charter or articles or certificate of incorporation and bylaws (or
other similar organizational and governing documents), as currently in effect,
of the Company and each of its subsidiaries.
SECTION 3.2 Capitalization of the Company and Its Subsidiaries.
(a) The authorized stock of the Company consists of: (i) 60,000,000 shares
of Company Common Stock, of which 32,516,383 shares were issued and outstanding
as of July 13, 1999, and (ii) 1,000,000 shares of Preferred Stock, par value
$.01 per share, of which 300,000 shares are designated as Series A Junior
Participating Preferred Stock, no shares of which are outstanding. All of the
issued and outstanding Shares have been validly issued, and are duly authorized,
fully paid, non-assessable and free of preemptive rights. As of the date hereof,
6,260,252 shares are reserved for issuance and issuable upon or otherwise
deliverable in connection with the exercise of outstanding Company Stock
Options. Except as set forth above and except for the Option Agreement and the
Company Rights Agreement (as hereinafter defined), as of the date hereof, there
are outstanding (i) no shares of stock or other voting securities of the
Company; (ii) no securities of the Company or any of its subsidiaries
convertible into or exchangeable for shares of stock or voting securities of the
Company; (iii) no options or other rights to acquire from the Company or any of
its subsidiaries, and no obligations of the Company or any of its subsidiaries
to issue,
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any stock, voting securities, or securities convertible into or exchangeable for
stock or voting securities of the Company; and (iv) no equity equivalents,
interests in the ownership or earnings of the Company, or other similar rights
(including stock appreciation rights) (collectively, "COMPANY SECURITIES").
Except for the Option Agreement, there are no outstanding obligations of the
Company or any of its subsidiaries to repurchase, redeem or otherwise acquire
any Company Securities. There are no stockholder agreements, voting trusts or
other agreements or understandings to which the Company or any of its
subsidiaries is a party or to which it is bound relating to the voting of any
shares of capital stock of the Company (other than the Voting Agreement).
Section 3.2 of the Company Disclosure Schedule sets forth information regarding
the current exercise price, the date of grant, and the number of Company Stock
Options granted for each holder thereof.
(b) All of the outstanding capital stock of the Company's subsidiaries is
owned by the Company, directly or indirectly, free and clear of any Lien or any
other limitation or restriction (including, any restriction on the right to vote
or sell the same) except as may be provided as a matter of Law. There are no
securities of the Company or its subsidiaries convertible into or exchangeable
for, no options or other rights to acquire from the Company or its subsidiaries,
and no other contract, understanding, arrangement, or obligation (whether or not
contingent) providing for the issuance or sale, directly or indirectly of, any
capital stock or other ownership interests in, or any other securities of, any
subsidiary of the Company. There are no outstanding contractual obligations of
the Company or its subsidiaries to repurchase, redeem, or otherwise acquire any
outstanding shares of capital stock or other ownership interests in any
subsidiary of the Company. For purposes of this Agreement, "LIEN" means, in
respect of any asset (including any security) any mortgage, lien, pledge,
charge, security interest, or encumbrance of any kind in respect of such asset.
SECTION 3.3 Authority Relative to This Agreement.
(a) The Company has all necessary corporate power and authority to execute
and deliver this Agreement and the Option Agreement and to consummate the
transactions contemplated hereby. No other corporate proceedings on the part of
the Company are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby and thereby (other than, in respect of the
Merger and this Agreement, the Company Requisite Vote (as hereinafter defined)).
This Agreement and the Option Agreement have been duly and validly executed and
delivered by the Company and constitute valid, legal, and binding agreements of
the Company, enforceable against the Company in accordance with their respective
terms.
(b) As of the date hereof, the Board of Directors of the Company (the
"COMPANY BOARD") has, by unanimous vote of those present (who constituted 100%
of the directors then in office), duly and validly authorized the execution and
delivery of this Agreement and the Option Agreement and approved the
consummation of the transactions contemplated hereby and thereby, taken all
corporate actions required to be taken by the Company Board for the consummation
of the transactions, including the Merger, contemplated hereby and has resolved
(i) this Agreement and the transactions contemplated hereby, including the
Merger, taken together, to be advisable and fair to, and in the best interests
of, the Company and its stockholders; and (ii) to recommend that the
stockholders of the Company approve and adopt the Merger on substantially the
terms and conditions set forth in this Agreement. The Company Board has directed
that the Merger on substantially the terms and conditions set forth in this
Agreement be submitted to the stockholders of the Company for their approval.
The affirmative approval of the holders of Shares representing 66 2/3% of the
votes that may be cast by the holders of all outstanding Shares (voting as a
single class) as of the record date for the Company (the "COMPANY REQUISITE
VOTE"), are the only votes of the holders of any class or series of stock of the
Company necessary to approve the Merger on substantially the terms and
conditions set forth in this Agreement.
SECTION 3.4 SEC Reports; Financial Statements. The Company has filed all
required forms, reports and documents with SEC since February 1, 1997, each of
which complied in all material respects with all applicable requirements of the
Securities Act and the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), each as in effect on the dates such forms, reports, and
documents were filed. The
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Company has heretofore delivered or made available to Parent, in the form filed
with the SEC (including, any amendments thereto), (i) its Annual Report on Form
10-K for each of the fiscal years ended January 31, 1997, 1998 and 1999; (ii)
all definitive proxy statements relating to the Company's meetings of
stockholders (whether annual or special) held since February 1, 1997; and (iii)
all other reports (including, all Forms 10-Q filed since February 1, 1997) or
registration statements filed by the Company with the SEC since February 1, 1997
(the "COMPANY SEC REPORTS"). None of the Company SEC Reports contained, when
filed, any untrue statement of a material fact or omitted to state a material
fact required to be stated or incorporated by reference therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The consolidated financial statements of the
Company included in the Company SEC Reports complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC in respect thereof and fairly presented, in conformity
with generally accepted accounting principles applied on a consistent basis
("GAAP") (except as may be indicated in the notes thereto), the consolidated
financial position of the Company and its consolidated subsidiaries, in each
case as of the dates thereof and their consolidated results of operations and
cash flows for the periods then ended (subject, in the case of the unaudited
interim financial statements, to normal year-end adjustments). For purposes of
this Agreement, "COMPANY BALANCE SHEET"means the consolidated balance sheet of
the Company as of May 1, 1999, as set forth in the Company's Quarterly Report on
Form 10-Q for the fiscal quarter ended May 1, 1999, and "COMPANY BALANCE SHEET
DATE" means May 1, 1999. Since May 1, 1999, there has not been any change, or
any application or request for any change, by the Company or any of its
subsidiaries in accounting principles, methods or policies for financial
accounting or Tax purposes (subject, in the case of the unaudited interim
financial statements, to normal year-end adjustments).
SECTION 3.5 No Undisclosed Liabilities. There are no liabilities of the
Company or any of its subsidiaries of any kind whatsoever, whether accrued,
contingent, absolute, determined, determinable or otherwise which are required
to be reflected in its financial statements (or in the notes thereto) in
accordance with GAAP, other than: (a) liabilities disclosed, provided for or
reserved against in the Company Balance Sheet or in the notes thereto; (b)
liabilities arising in the ordinary course of business after the date of the
Company Balance Sheet; (c) liabilities disclosed in the Company SEC Reports
prior to the date hereof; and (d) liabilities under this Agreement.
SECTION 3.6 Absence of Changes. Except as contemplated by this Agreement
and except as and to the extent publicly disclosed in the Company SEC Reports
prior to the date hereof, since the Company Balance Sheet Date, the Company and
its subsidiaries have conducted their business in the ordinary and usual course
consistent with past practice and there has not been:
(a) any event, occurrence or development which is reasonably expected to
have, individually or in the aggregate, a Material Adverse Effect on the Company
and its subsidiaries taken as a whole;
(b) any declaration, setting aside or payment of any dividend or other
distribution in respect of any shares of stock of the Company or any subsidiary,
or any repurchase, redemption or other acquisition by the Company or any of its
subsidiaries of any Company or subsidiary securities;
(c) any amendment of any term of any outstanding security of the Company or
any of its subsidiaries that would materially increase the obligations of the
Company or any such subsidiary under such security;
(d) (i) any incurrence or assumption by the Company or any subsidiary of
any indebtedness for borrowed money other than under existing credit facilities
(or any renewals, replacements or extensions that do not increase the aggregate
commitments thereunder) except (A) in the ordinary and usual course of business
consistent with past practice or (B) in connection with any acquisition or
capital expenditure permitted by Section 5.1, or (ii) any guarantee,
endorsement, or other incurrence or assumption of liability (whether directly,
contingently or otherwise) by the Company or any of its subsidiaries for the
obligations of any other person (other than any wholly owned subsidiary of the
Company), other than in the ordinary and usual course of business consistent
with past practice;
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(e) any creation or assumption by the Company or any of its subsidiaries of
any Lien on any material asset of the Company or any of its subsidiaries other
than in the ordinary and usual course of business consistent with past practice;
(f) any making of any loan, advance or capital contribution to or
investment in any person by the Company or any of its subsidiaries other than
(i) any acquisition permitted by Section 5.1, (ii) loans, advances or capital
contributions to or investments in wholly owned subsidiaries of the Company,
(iii) loans or advances to employees of the Company or any of its subsidiaries
or (iv) extensions of credit to customers in the ordinary course of business
consistent with past practice;
(g) (i) any contract or agreement entered into by the Company or any of its
subsidiaries on or prior to the date hereof relating to any material acquisition
or disposition of any assets or business, other than contracts or agreements in
the ordinary and usual course of business consistent with past practice and
those contemplated by this Agreement or (ii) any modification, amendment,
assignment, termination or relinquishment by the Company or any of its
subsidiaries of any contract, license or other right (including any insurance
policy naming it as a beneficiary or a loss payable payee) that is reasonably
expected to have a Material Adverse Effect on the Company and its subsidiaries
taken as a whole;
(h) any material change in any method of accounting or accounting
principles or practice by the Company or any of its subsidiaries, except for any
such change required by reason of a change in GAAP;
(i) any (i) grant of any severance or termination pay to any director,
officer or employee of the Company or any of its subsidiaries; (ii) entering
into of any employment, deferred compensation or other similar agreement (or any
amendment to any such existing agreement) with any director, officer or employee
of the Company or any of its subsidiaries; (iii) increase in benefits payable
under any existing severance or termination pay policies or employment
agreements; or (iv) increase in compensation, bonus or other benefits payable to
directors, officers or employees of the Company or any of its subsidiaries other
than, in the case of clause (iv) only, increases prior to the date hereof in
compensation, bonus or other benefits payable to employees of the Company or any
of its subsidiaries in the ordinary and usual course of business consistent with
past practice or merit increases in salaries of employees at regularly scheduled
times in customary amounts consistent with past practices;
(j) any change or amendment of the contracts, salaries, wages or other
compensation of any officer, director, employee, agent or other similar
representative of the Company or any of its subsidiaries whose annual
compensation exceeds $100,000 other than changes or amendments that do not and
will not result in increases of more than five percent in the salary, wages or
other compensation of any such person;
(k) any adoption, entering into, amendment, alteration or termination of
(partially or completely) any Benefit Plan or Employee Arrangement except as
contemplated by this Agreement or to the extent required by applicable Law or
GAAP;
(l) any entering into of any contract with an officer, director, employee,
agent or other similar representative of the Company or any of its subsidiaries
that is not terminable, without penalty or other liability, upon not more than
60 calendar days' notice; or
(m) any (i) making or revoking of any material election relating to Taxes,
(ii) settlement or compromise of any material claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or controversy relating to Taxes,
or (iii) change to any material methods of reporting income or deductions for
federal income tax purposes.
SECTION 3.7 Information Supplied. None of the information supplied or to
be supplied by the Company specifically for inclusion or incorporation by
reference in (i) the registration statement on Form S-4 to be filed with the SEC
by Parent in connection with the issuance of Parent Common Stock as required by
the terms of this Agreement pursuant to the Merger (the "S-4"), at the time the
S-4 is filed with the SEC and at the time it becomes effective under the
Securities Act, will contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading, and (ii) the proxy statement relating to the
Company
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Stockholder Meeting to be held in connection with the Merger (the "PROXY
STATEMENT") will, at the date mailed to stockholders and at the time of the
Company Stockholder Meeting, 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. If at any time prior to the Effective Time any
event in respect of the Company, its officers and directors or any of its
subsidiaries should occur which is required to be described in an amendment of,
or a supplement to, the S-4 or the Proxy Statement, the Company shall promptly
so advise Parent and such event shall be so described, and such amendment or
supplement (which Parent shall have a reasonable opportunity to review) shall be
promptly filed with the SEC and, as required by Law, disseminated to the
stockholders of the Company. The Proxy Statement, insofar as it relates to the
Company Stockholder Meeting, will comply as to form in all material respects
with the provisions of the Exchange Act and the rules and regulations
thereunder. No representation is made under this Section 3.7 with respect to any
statements made or incorporated by reference in the S-4 or the Proxy Statement
based on information supplied by Parent specifically for inclusion or
incorporation by reference therein.
SECTION 3.8 Consents and Approvals. Except for filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Securities Act, state securities or blue sky
Laws, the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR ACT"), or other Antitrust Law, the filing and acceptance for record of the
Articles of Merger as required by the MGCL, and such other filings, permits,
authorizations, consents and approvals which, if not obtained or made, are not
reasonably expected to have a Material Adverse Effect on the Company and its
subsidiaries taken as a whole, no filing with or notice to, and no permit,
authorization, consent or approval of, any court or tribunal or administrative,
governmental or regulatory body, agency or authority, whether domestic or
foreign (a "GOVERNMENTAL ENTITY") is necessary for the execution and delivery by
the Company of this Agreement or the Option Agreement or the consummation by the
Company of the transactions contemplated hereby or thereby. For purposes of this
Agreement, "ANTITRUST LAW" means the Sherman Act, as amended, the Clayton Act,
as amended, the HSR Act, the Federal Trade Commission Act, as amended, and all
other Laws that are designed or intended to prohibit, restrict or regulate
actions having the purpose or effect of monopolization or restraint of trade or
lessening of competition through merger or acquisition.
SECTION 3.9 No Default. Neither the Company nor any of its subsidiaries is
in violation of any term of (i) its charter, certificate or articles of
incorporation or bylaws (or other similar organizational or governing
documents), (ii) any agreement or instrument related to indebtedness for
borrowed money or any other agreement to which it is a party or by which it is
bound, or (iii) any domestic or foreign law, order, writ, injunction, decree,
ordinance, award, stipulation, statute, judicial or administrative doctrine,
rule or regulation entered by a Governmental Entity ("LAW") applicable to the
Company, its subsidiaries or any of their respective assets or properties, the
consequence of which violation is reasonably expected to (A) have, individually
or in the aggregate, a Material Adverse Effect on the Company and its
subsidiaries taken as a whole or (B) prevent or materially delay the performance
of this Agreement by the Company. The execution, delivery and performance of
this Agreement and the Option Agreement and the consummation of the transactions
contemplated hereby and thereby will not (A) result in any violation of or
conflict with, constitute a default under (with or without due notice or lapse
of time or both), require any consent, waiver or notice under any term of, or
result in the reduction or loss of any benefit or the creation or acceleration
of any right or obligation (including any termination rights) under, (i) the
charter, certificate of incorporation or bylaws (or other similar organizational
or governing documents) of the Company or any of its subsidiaries, (ii) any
agreement, note, bond, mortgage, indenture, contract, lease, Company Permit or
other obligation or right to which the Company or any of its subsidiaries is a
party or by which any of the assets or properties of the Company or any of its
subsidiaries is bound, or (iii) any applicable Law, except in the case of clause
(ii) and (iii) where any of the foregoing is not reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company and
its subsidiaries taken as a whole, or (B) result in the creation of (or impose
any obligation on the Company or any of its subsidiaries to create) any Lien
upon any of the material assets or properties of the Company or any of its
subsidiaries pursuant to any such term.
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SECTION 3.10 Real Property.
(a) Except as otherwise set forth on the Company Balance Sheet or in the
Company SEC Reports, Section 3.10 of the Company Disclosure Schedule identifies
the address, general use of, and period of ownership or occupancy of each of the
Company's OWNED FACILITIES, defined as all of the real property owned in fee as
of the date hereof by the Company and its subsidiaries, and the Company's LEASED
FACILITIES, defined as all of the real property the Company and its subsidiaries
use or occupy or have the right to use or occupy, now or in the future, pursuant
to any lease, sublease, or other occupancy agreement. No real property is owned,
leased or used by the Company or its current subsidiaries in the course of their
respective businesses other than the Owned Facilities and Leased Facilities.
(b) With respect to each Owned Facility and except as set forth on the
Company Balance Sheet or in the SEC Reports:
(i) the Company or its subsidiary has good and marketable title to
Owned Facilities free and clear of all Liens, except (x) Taxes and general
and special assessments not in default and payable without penalty and
interest, and (y) easements, covenants and other restrictions or
imperfections of title that do not materially impair the current use,
occupancy, or value, or the marketability of title of such Owned
Facilities;
(ii) to the Company's knowledge, there are no pending or threatened
condemnation proceedings, lawsuits or administrative actions relating to
any Owned Facility that would materially and adversely affect the current
use, occupancy or value thereof;
(iii) there are no leases, subleases, licenses, concessions or other
agreements, written or oral, granting to any party or parties the right of
use or occupancy of any portion of any Owned Facility;
(iv) there are no outstanding options or rights of first refusal to
purchase any Owned Facility, or any portion thereof or interest therein;
(v) there are no parties (other than the Company or its subsidiaries)
in possession of any Owned Facility, other than tenants under any leases
disclosed in Section 3.10 of the Company Disclosure Schedule who are in
possession of space to which they are entitled;
(vi) all facilities located on Owned Facilities are now, and will be
at the time of Closing, in good operating condition and repair, and
structurally sound and free of known defects, with no material alterations
or repairs required thereto (other than ordinary and routine maintenance
and repairs) under applicable Laws, Company Permits or insurance company
requirements. All such Owned Facilities have been operated and maintained
in all material respects in accordance with applicable Laws and Company
Permits. All such Owned Facilities are supplied with utilities and other
services, including gas, electricity, water, telephone, sanitary sewer and
storm sewer, all of which services are adequate for the uses to which such
Owned Facility is being put.
(c) With respect to each Leased Facility and except as set forth on the
Company Balance Sheet or in the SEC Reports:
(i) the Company has made available to Parent a true, correct, and
complete copy of the lease, sublease or other occupancy agreement for such
Leased Facility (and all modifications, amendments, and supplements thereto
and all side letters to which Company or any of its subsidiaries is a party
affecting the obligations of any party thereunder) (each such agreement is
referred to herein as a "REAL PROPERTY LEASE");
(ii) to the Company's knowledge, the Company or its subsidiary has a
good and valid leasehold interest in such Leased Facilities, where the
Company or its subsidiaries own fee title to the improvements thereof, free
and clear of all Liens, except (x) Taxes and general and special
assessments not in default and payable without penalty and interest, and
(y) easements, covenants and other restrictions that do not materially
impair the current use, occupancy or value, or the marketability of the
Company's or its subsidiary's interest in such real property;
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(iii) each Real Property Lease constitutes the valid and legally
binding obligation of the parties thereto, enforceable in accordance with
its terms, and is in full force and effect;
(iv) all rent and other sums and charges payable by the Company or its
subsidiary as tenant under the Real Property Lease covering the Leased
Facility are current, no termination event or condition or uncured default
on the part of the tenant or, to the Company's knowledge, the landlord,
exists under any Real Property Lease. No party to such Real Property Lease
has given written notice to the Company or its subsidiary or made a claim
in writing against the Company or its subsidiary in respect of any breach
or default thereunder;
(v) neither the Company nor its subsidiary has assigned, transferred,
conveyed, mortgaged, deeded in trust or encumbered its leasehold interest
in the Leased Facility; and
(vi) the Company's leased facilities located in Singapore are now, and
will be at the time of Closing, in good operating condition and repair, and
structurally sound and free of known defects, with no material alterations
or repairs required thereto (other than ordinary and routine maintenance
and repairs) under applicable Laws, Company Permits or insurance company
requirements. All such Singapore leased facilities have been operated and
maintained in all material respects in accordance with applicable Laws and
Company Permits. All such facilities are supplied with utilities and other
services, including gas, electricity, water, telephone, sanitary sewer, and
storm sewer, all of which services are adequate for the uses to which such
facilities are being put.
SECTION 3.11 Litigation. Set forth in Section 3.11 of the Company
Disclosure Schedule is (i) a list, as of the date hereof, of each suit, claim,
action, proceeding or, to the Company's knowledge, investigation pending or, to
the Company's knowledge, threatened against the Company or any of its
subsidiaries or any of their respective assets or properties and (ii) a list of
each such suit, claim, action, proceeding or, to the Company's knowledge,
investigation, settled or otherwise resolved since July 31, 1997. Except as
disclosed in the Company Disclosure Schedule pursuant to clause (i) of the
preceding sentence, there is no other suit, claim, action, proceeding or, to the
Company's knowledge, investigation, pending or, to the Company's knowledge,
threatened which is reasonably expected to have, individually and in the
aggregate, a Material Adverse Effect on the Company and its subsidiaries taken
as a whole. Except as disclosed in Section 3.11 of the Company Disclosure
Schedule, none of the Company or its subsidiaries is subject to any outstanding
order, writ, injunction or decree which is reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company and
its subsidiaries taken as a whole. To the Company's knowledge, there is no
action, suit, proceeding or investigation pending or threatened against any
current or former officer, director, employee or agent of the Company or any of
its subsidiaries (in his or her capacity as such) which is reasonably expected
to give rise to a claim for contribution or indemnification against the Company
or any of its subsidiaries. Notwithstanding the foregoing, any shareholder
litigation or litigation by any Governmental Entity, in each case brought or
threatened against the Company or any officer, director, employee or agent of
the Company in respect of this Agreement or the transactions contemplated hereby
shall not be deemed to have a Material Adverse Effect on the Company and its
subsidiaries taken as a whole.
SECTION 3.12 Compliance with Applicable Law; Permits. The Company and its
subsidiaries hold all permits, licenses, variances, exemptions, orders, and
approvals of all Governmental Entities necessary for the lawful conduct of their
respective businesses (the "COMPANY PERMITS"), except for failures to hold such
permits, licenses, variances, exemptions, orders and approvals which are not
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company and its subsidiaries taken as a whole. The Company
and its subsidiaries are in compliance with the terms of the Company Permits,
except where the failure to comply is not reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company and
its subsidiaries taken as a whole. The businesses and operations of the Company
and its subsidiaries comply in all respects with all Laws applicable to the
Company or its subsidiaries, except where the failure to so comply is not
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company and its subsidiaries taken as a whole. To the
Company's knowledge, no investigation or review by any
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Governmental Entity in respect of the Company or its subsidiaries is pending or
threatened, nor, to the Company's knowledge, has any Governmental Entity
indicated an intention to conduct the same; provided that for purposes of this
Section 3.12 any such investigation or review arising after the date hereof
shall not be deemed to have a Material Adverse Effect on the Company and its
subsidiaries taken as a whole if and to the extent such investigation or review
(or any relevant part thereof) is based on this Agreement or the transactions
contemplated hereby.
SECTION 3.13 Employee Plans.
(a) Section 3.13(a) of the Company Disclosure Schedule sets forth a true,
correct, and complete list of:
(i) all "employee benefit plans," as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
which the Company or any of its subsidiaries has any obligation or
liability, contingent or otherwise (the "BENEFIT PLANS"); and
(ii) all employment, consulting, termination, severance, change of
control, individual compensation or indemnification agreements, and all
bonus or other incentive compensation, deferred compensation, salary
continuation, disability, severance, stock award, stock option, stock
purchase, educational assistance, legal assistance, club membership,
employee discount, employee loan, credit union or vacation agreements,
policies or arrangements under which the Company or any of its subsidiaries
has any obligation or liability (contingent or otherwise) (the "EMPLOYEE
ARRANGEMENTS").
(b) In respect of each Benefit Plan and Employee Arrangement, a complete
and correct copy of each of the following documents (if applicable) has been
provided to Parent, except in the case of foreign Benefit Plans and foreign
Employee Arrangements (which shall be provided as soon as practicable after the
date hereof, but in no event later than ten days after the date hereof): (i) the
most recent plan and related trust documents, and all amendments thereto; (ii)
the most recent summary plan description, and all related summaries of material
modifications thereto; (iii) the most recent Form 5500 (including, schedules and
attachments); (iv) the most recent Internal Revenue Service ("IRS")
determination letter; (v) the forms of stock option grant agreements used to
make grants under the Company Option Plans; (vi) each written employment,
consulting or individual severance or other compensation agreement, and all
amendments thereto; and (vii) the most recent actuarial reports (including for
purposes of Financial Accounting Standards Board report nos. 87, 106 and 112).
The Company has provided to Parent a true, correct and complete summary of the
employee payroll deduction elections in effect as of the date hereof in respect
of its stock purchase plans, together with the term of the current offering
period and applicable purchase price at the beginning of such period.
(c) None of the Benefit Plans or Employee Arrangements is subject to Title
IV of ERISA, constitutes a defined benefit retirement plan or is a
multi-employer plan described in Section 3(37) of ERISA, and the Company and its
subsidiaries do not have any obligation or liability (contingent or otherwise)
in respect of any such plans. The Company and its subsidiaries are not members
of a group of trades or businesses (other than that consisting of the Company
and its subsidiaries) under common control or treated as a single employer
pursuant to Section 414 of the Code.
(d) The Benefit Plans and their related trusts intended to qualify under
Sections 401 and 501(a) of the Code, respectively, so qualify. Any voluntary
employee benefit association which provides benefits to current or former
employees of the Company and its subsidiaries, or their beneficiaries, is and
has been qualified under Section 501(c)(9) of the Code.
(e) All contributions or other payments required to have been made by the
Company and its subsidiaries to or under any Benefit Plan or Employee
Arrangement by applicable Law or the terms of such Benefit Plan or Employee
Arrangement (or any agreement relating thereto) have been timely and properly
made.
(f) The Benefit Plans and Employee Arrangements have been maintained and
administered in all material respects in accordance with their terms and
applicable Laws. In particular, no individual who has
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performed services for the Company or any of its subsidiaries has been
improperly excluded from participation in any Benefit Plan or Employee
Arrangement.
(g) There are no pending or, to the Company's knowledge, threatened
actions, claims, or proceedings against or relating to any Benefit Plan or
Employee Arrangement (other than routine benefit claims by persons entitled to
benefits thereunder), and, to the knowledge of the Company, there are no facts
or circumstances which could form a reasonable basis for any of the foregoing.
(h) The Company and its subsidiaries do not have any obligation or
liability (contingent or otherwise) to provide post-retirement life insurance or
health benefits coverage for current or former officers, directors, or employees
of the Company or any of its subsidiaries except (i) as may be required under
Part 6 of Title I of ERISA at the sole expense of the participant or the
participant's beneficiary, (ii) a medical expense reimbursement account plan
pursuant to Section 125 of the Code, or (iii) through the last day of the
calendar month in which the participant terminates employment with the Company
or any subsidiary of the Company.
(i) None of the assets of any Benefit Plan is stock of the Company or any
of its affiliates, or property leased to or jointly owned by the Company or any
of its affiliates.
(j) Except as disclosed in Section 3.13(j) of the Company Disclosure
Schedule or in connection with equity compensation, neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (i) result in any payment becoming due to any employee (current,
former, or retired) of the Company or any of its subsidiaries, (ii) increase any
benefits under any Benefit Plan or Employee Arrangement, or (iii) result in the
acceleration of the time of payment of, vesting of, or other rights in respect
of any such benefits.
(k) Each of the Benefit Plans covering employees outside of the United
States is fully funded through adequate reserves on financial statements of the
Company or its subsidiaries, insurance contracts, annuity contracts, trust funds
or similar arrangements, except where any failure to be so funded, either
individually or in the aggregate, does not exceed $2,500,000. The benefits and
compensation under the Benefit Plans and Employee Arrangements covering
employees outside of the United States are no more than customary and reasonable
for the country in which such employees work and the industry in which the
Company and its subsidiaries conduct their business.
(l) No employee of the Company or its subsidiaries has any outstanding
option under the Company's 1999 Employee Stock Purchase Plan to purchase stock.
SECTION 3.14 Labor Matters.
(a) The Company and its subsidiaries are not a party to any labor or
collective bargaining agreement, and no employees of the Company or any of its
subsidiaries are represented by any labor organization. Within the preceding
three years, there have been no representation or certification proceedings, or
petitions seeking a representation proceeding, pending or, to the Company's
knowledge, threatened in writing to be brought or filed with the National Labor
Relations Board or any other labor relations tribunal or authority. Within the
preceding three years, to the Company's knowledge, there have been no organizing
activities involving the Company or any of its subsidiaries in respect of any
group of employees of the Company or any of its subsidiaries.
(b) There are no strikes, work stoppages, slowdowns, lockouts, material
arbitrations or material grievances or other material labor disputes pending or
threatened in writing against or involving the Company or any of its
subsidiaries. There are no unfair labor practice charges, grievances or
complaints pending or, to the Company's knowledge, threatened in writing by or
on behalf of any employee or group of employees of the Company or any of its
subsidiaries which, if individually or collectively resolved against the Company
or any of its subsidiaries, would reasonably be expected to have a Material
Adverse Effect on the Company and its subsidiaries taken as a whole, and, to the
knowledge of the Company, there are no facts or circumstances which could form a
reasonable basis for any of the foregoing.
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(c) There are no complaints, charges or claims against the Company or any
of its subsidiaries pending or, to the Company's knowledge, threatened to be
brought or filed with any Governmental Entity or arbitrator based on, arising
out of, in connection with, or otherwise relating to the employment or
termination of employment of any individual by the Company or any of its
subsidiaries which, if individually or collectively resolved against the Company
or any of its subsidiaries, would reasonably be expected to have a Material
Adverse Effect on the Company and its subsidiaries taken as a whole, and, to the
knowledge of the Company, there are no facts or circumstances which could form a
reasonable basis for any of the foregoing.
(d) There has been no "mass layoff" or "plant closing" as defined by the
Worker Adjustment and Retraining Notification Act, as amended ("WARN") in
respect of the Company or any of its subsidiaries within the six months prior to
the Effective Time.
(e) All employees of the Company and its subsidiaries possess all
applicable passports, visas, permits and other authorizations required by all
applicable immigration or similar Laws to be employed by and to perform services
for and on behalf of the Company and its subsidiaries. The Company and its
subsidiaries, and their employees, have complied in all material respects with
all applicable immigration and similar Laws.
SECTION 3.15 Environmental Matters.
(a) For purposes of this Agreement:
(i) "ENVIRONMENTAL LAW" means all federal, state, local or foreign
Law, or other legal requirement regulating or prohibiting Releases of
Hazardous Materials into the indoor or outdoor environment, or pertaining
to the protection of natural resources or wildlife, the environment or
public and employee health and safety or pollution or the exposure to
Hazardous Materials, including the Comprehensive Environmental Response,
Compensation, and Liability Act ("CERCLA") (42 U.S.C. Section 9601 et
seq.), the Hazardous Materials Transportation Act (49 U.S.C. Section 1801
et seq.), the Resource Conservation and Recovery Act (42 U.S.C. Section
6901 et seq.), the Clean Water Act (33 U.S.C. Section 1251 et seq.), the
Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances
Control Act (15 U.S.C. Section 7401 et seq.), the Atomic Energy Act (42
U.S.C. Section 2014 et seq.), the Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. Section 136 et seq.), the Communications Act (47
U.S.C. Section 151 et seq.), and the Occupational Safety and Health Act (29
U.S.C. Section 651 et seq.) ("OSHA"), as such laws or other legal
requirements have been and may be amended or supplemented through the
Closing Date;
(ii) "HAZARDOUS MATERIAL" means any substance, material or waste which
is regulated pursuant to any applicable Environmental Law as a "hazardous
waste," "hazardous material," "hazardous substance," "extremely hazardous
waste," "restricted hazardous waste," "contaminant," "toxic waste," "toxic
substance," "source material," "special nuclear material," "byproduct
material," "high-level radioactive waste," "low-level radioactive waste,"
"spent nuclear material" or "radiofrequency" and includes petroleum,
petroleum products and petroleum by-products and waste;
(iii) "RELEASE" means any release, spill, emission, leaking, pumping,
dumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment, or into or out of any
property currently or formerly owned, operated or leased by the applicable
party or its subsidiaries; and
(iv) "REMEDIAL ACTION" means all actions, including any capital
expenditures, required by a Governmental Entity or required under or taken
pursuant to any Environmental Law, or voluntarily undertaken to (A) clean
up, remove, treat, remediate or address any Hazardous Materials in the
indoor or outdoor environment; (B) prevent the Release or threat of
Release, or minimize the further Release of any Hazardous Material so it
does not endanger or threaten to endanger the public or employee health or
welfare or the indoor or outdoor environment; (C) perform pre-remedial
studies and investigations or post-remedial monitoring and care pertaining
or relating to a Release.
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(b) Except as set forth in Section 3.15 of the Company Disclosure Schedule:
(i) The operations of the Company and its subsidiaries have been and
are in material compliance with all Environmental Laws, and the Company is
not aware of any facts, circumstances or conditions, which without
significant capital expenditures, would prevent material compliance in the
future;
(ii) To the Company's knowledge, the Company and its subsidiaries have
obtained all Company Permits, required under applicable Environmental Laws
for the continued operations of their respective businesses; the Company
and its subsidiaries have made all material filings, reports and notices
required under any Environmental Law for the past and future operations of
their respective businesses;
(iii) The Company and its subsidiaries are not subject to any
outstanding written orders or material contracts or agreements with any
Governmental Entity or other person respecting (A) Environmental Laws, (B)
any Remedial Action, (C) any Release or threatened Release of a Hazardous
Material, or (D) an assumption of responsibility for environmental claims
of another person or entity;
(iv) The Company and its subsidiaries have not received any written
communication alleging, in respect of any such party, the violation of or
liability (real or potential) under any Environmental Law; or requesting,
with respect to any such party, information with respect to an
investigation pursuant to CERCLA, or any foreign or state counterpart
thereto, or any other Environmental Law;
(v) To the Company's knowledge, neither the Company nor any of its
subsidiaries has any material contingent liability in connection with any
Remedial Action or the Release of any Hazardous Material (whether on-site
or off-site) or employee or third party exposure to Hazardous Materials;
(vi) To the Company's knowledge, the operations of the Company and its
subsidiaries involving the generation, transportation, treatment, storage
or disposal of Hazardous Materials are in material compliance with
applicable Environmental Laws and, to the Company's knowledge, there has
been no disposal by the Company or its subsidiaries of any Hazardous
Materials on or in any site listed or formally proposed to be listed on the
National Priorities List promulgated pursuant to CERCLA or any foreign or
state remedial priority list promulgated or maintained pursuant to
comparable foreign or state law, except where such disposal would not
reasonably be expected to create a material adverse liability for the
Company;
(vii) To the Company's knowledge, there is not now nor has there been
in the past, on, in or at any Owned Facility, Leased Facility, Former
Facility (defined as all of the real property formerly owned, leased or
used, other than those used solely for office or administrative purposes,
by the Company or any of its current or former subsidiaries or corporate
predecessors in interest at any time in the past), or any other facility
for which the Company or its subsidiaries has assumed responsibility for
environmental claims, any of the following: (A) any underground storage
tanks; (B) landfills, dumps or surface impoundments; (C) any planned,
ongoing or completed Remedial Action; (D) any asbestos-containing
materials; or (E) any polychlorinated biphenyls;
(viii) There is not now, nor to the Company's knowledge, has there
been in the past, on, in or at any Owned Facility, Leased Facility, Former
Facility, or any other facility for which the Company or its subsidiaries
has assumed responsibility for environmental claims, any site on or
nominated for the National Priority List promulgated pursuant to CERCLA or
any foreign or state remedial priority list promulgated or published
pursuant to any comparable foreign or state law; and
(ix) No judicial or administrative proceedings are pending or, to the
Company's knowledge, threatened against the Company or its subsidiaries
alleging the violation of or seeking to impose liability pursuant to any
Environmental Law and to the Company's knowledge, there are no
investigations pending or threatened against the Company or any of its
subsidiaries under Environmental Laws.
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(c) The Company has made available to Parent copies of all environmentally
related assessments, audits, investigations, or similar reports (and has
provided, upon reasonable specific request, sampling reports) in its possession
or control and which were prepared in the last five years (and has provided,
upon reasonable specific request, earlier information) relating to the Company
or its subsidiaries or any real property currently or formerly owned, operated
or leased by or for the Company or its subsidiaries, including any Owned
Facility, Leased Facility, or Former Facility.
SECTION 3.16 Tax Matters.
(a) The Company and its Subsidiaries have (A) duly filed (or there has been
filed on their behalf) with the appropriate governmental authorities all Tax
Returns (as defined in Section 3.16(g)) required to be filed by them on or prior
to the date hereof, other than those Tax Returns the failure of which to file
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company and its subsidiaries taken as a whole, and such Tax Returns are
true, correct and complete in all material respects, and (B) duly paid in full
or made provision in accordance with generally accepted accounting principles
(or there has been paid or provision has been made on their behalf) for the
payment of all Taxes (as defined in Section 3.16(g)) shown to be due with such
Tax Returns.
(b) There is no audit, examination, deficiency, refund litigation, proposed
adjustment or matter in controversy with respect to any Taxes due and owing by
the Company or its subsidiaries.
(c) There are no outstanding requests, agreements, consents or waivers to
extend the statutory period of limitations applicable to the assessment of any
Taxes or deficiencies against the Company or any of its subsidiaries, and no
power of attorney granted by either the Company or any of its subsidiaries with
respect to any Taxes is currently in force.
(d) Neither the Company nor any of its subsidiaries is a party to any
agreement providing for the allocation or sharing of Taxes.
(e) There are no liens relating to Taxes not yet due and payable.
(f) Neither the Company nor any of its subsidiaries has any liability under
Treasury Regulation Section 1.1502-6 for U.S. federal income Taxes of any Person
other than the Company and its subsidiaries.
(g) For purposes of this Agreement: (A) "Taxes" means any and all federal,
state, local, foreign or other taxes of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any taxing authority, including, without limitation,
taxes or other charges on or with respect to income, franchises, windfall or
other profits, gross receipts, property, sales, use, capital stock, payroll,
employment, social security, workers' compensation, unemployment compensation or
net worth, and taxes or other charges in the nature of excise, withholding, ad
valorem or value added, and (B) "Tax Return" means any return, report or similar
statement (including the attached schedules) required to be filed with respect
to any Tax, including, without limitation, any information return, claim for
refund, amended return or declaration of estimated Tax.
(h) To the Company's knowledge, neither the Company nor any of its
subsidiaries has any material income or gain that has been or continues to be
deferred under Regulations Section 1.1502-13 or Regulations Section 1.1502-13T
(or under Regulations Section 1.1502-13, 1.1502-13T, 1.1502-14, or 1.1502-14T,
all as in effect prior to Treasury Decision 8597) and the Company does not have
any material excess loss accounts in a subsidiary under Regulations Section
1.1502-19.
SECTION 3.17 Absence of Questionable Payments. Neither the Company nor any
of its subsidiaries nor, to the Company's knowledge, any director, officer,
agent, employee or other person acting on behalf of the Company or any of its
subsidiaries, has used any corporate or other funds for unlawful contributions,
payments, gifts or entertainment, or made any unlawful expenditures relating to
political activity to government officials or others or established or
maintained any unlawful or unrecorded funds in violation of the Foreign Corrupt
Practices Act of 1977, as amended, or any other domestic or foreign Law. Neither
the Company nor any of its subsidiaries nor, to the Company's knowledge, any
director, officer, agent,
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employee or other person acting on behalf of the Company or any of its
subsidiaries, has accepted or received any unlawful contributions, payments,
gifts or expenditures.
SECTION 3.18 Material Contracts.
(a) Section 3.18 of the Company Disclosure Schedule sets forth a list of
all Material Contracts. The Company has heretofore made available to Parent
true, correct and complete copies of all written or oral contracts and
agreements (and all amendments, modifications and supplements thereto and all
side letters to which the Company or any of its subsidiaries is a party
affecting the obligations of any party thereunder) to which the Company or any
of its subsidiaries is a party or by which any of its assets or properties are
bound that are of the following type: (i) to the extent material to the
business, assets or properties of the Company and its subsidiaries taken as a
whole, product design or development, or indemnification contracts (including,
any contract to which the Company or any of its subsidiaries is a party
involving employees of the Company); (ii) merchandising or distribution
agreements involving the payment of in excess of $2,500,000 per year; (iii) to
the extent material to the business, assets or properties of the Company and its
subsidiaries taken as a whole, contracts granting a right of first refusal or
first negotiation; (iv) to the extent material to the business, assets or
properties of the Company and its subsidiaries taken as a whole, partnership or
joint venture agreements; (v) agreements for the acquisition, sale or lease of
material assets or properties of the Company (by merger, purchase or sale of
assets or stock or otherwise) entered into since January 1, 1996 involving in
excess of $1,000,000; (vi) to the extent material to the business, assets or
properties of the Company and its subsidiaries taken as a whole, contracts or
agreements with any Governmental Entity; (vii) loan or credit agreements,
mortgages, indentures or other agreements or instruments evidencing indebtedness
for borrowed money by the Company or any of its subsidiaries or any such
agreement pursuant to which indebtedness for borrowed money, in each case
involving in excess of $1,000,000; (viii) to the extent material to the
business, assets or properties of the Company and its subsidiaries taken as a
whole, agreements that purport to limit, curtail or restrict the ability of the
Company or any of its subsidiaries to compete in any geographic area or line of
business; (ix) to the extent material to the business, assets or properties of
the Company and its subsidiaries taken as a whole, foundry, wafer manufacturing
or fabricating agreements, (x) supply or second source agreements involving the
payment of in excess of $2,500,000 per year, (xi) agreements with customers
relating to the sale of products involving the payment of in excess of
$2,500,000 per year and (xii) commitments and agreements to enter into any of
the foregoing (collectively, together with any such contracts entered into in
accordance with Section 5.1, the "MATERIAL CONTRACTS").
(b) Each of the Material Contracts constitutes the valid and legally
binding obligation of the Company or its subsidiaries, enforceable in accordance
with its terms, and is in full force and effect. There is no default under any
Material Contract so listed either by the Company (or its subsidiaries) or, to
the Company's knowledge, by any other party thereto, and no event has occurred
that with the giving of notice, the lapse of time, or both would constitute a
default thereunder by the Company (or its subsidiaries) or, to the Company's
knowledge, any other party.
(c) No party to any such Material Contract has given notice to the Company
of or made a claim against the Company in respect of any breach or default
thereunder.
SECTION 3.19 Subsidies. Section 3.19 of the Company Disclosure Schedule
sets forth a list of all grants, subsidies and similar arrangements directly or
indirectly between or among the Company or any of its subsidiaries, on the one
hand, and any domestic or foreign Governmental Entity or any other person, on
the other hand. Except as set forth on Section 3.19 of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries has requested, sought,
applied for or entered into any grant, subsidy or similar arrangement directly
or indirectly from or with any domestic or foreign Governmental Entity or any
other person.
SECTION 3.20 Intellectual Property.
(a) As used herein, the term "SCHEDULED INTELLECTUAL PROPERTY" means
domestic and foreign letters patent, patents, patent applications, exclusive
patent licenses, exclusive know-how licenses, trademark
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registrations and applications, service mark registrations and applications and
copyright registrations and applications. Section 3.20(a) of the Company
Disclosure Schedule sets forth all right, title and interest of the Company and
its subsidiaries in and to all of the Scheduled Intellectual Property owned or
used by the Company and its subsidiaries and material to the operation of their
respective businesses. Such Scheduled Intellectual Property and the goodwill of
the Company's and its subsidiaries' respective businesses associated therewith,
together with all copyrights, databases, non-exclusive patent licenses, software
licenses, non-exclusive know-how licenses, trade names, trademarks, service
marks, trade secrets, technical knowledge, know-how, confidential information,
customer lists, proprietary processes, techniques, formulae, "semiconductor chip
product" and "mask works" (as such terms are defined in 17 U.S.C. 901), and
related ownership, use and other rights (including rights of renewal and rights
to sue for past, present and future infringements or misappropriations thereof),
shall be collectively referred to herein as the "INTELLECTUAL PROPERTY."
(b) To the Company's knowledge or the knowledge of those persons who have
Company responsibility for such matters, and except as are not reasonably
expected to have a Material Adverse Effect on the Company and its subsidiaries
taken as a whole; (i) each item of Scheduled Intellectual Property is in
compliance with applicable legal requirements relating to the enforceability or
maintenance of such item (including payment of filing, examination and
maintenance fees and proofs of working or use, as applicable) other than any
requirement that if, not satisfied, would not result in a revocation or
otherwise materially affect the enforceability of the item of Scheduled
Intellectual Property in question, and the Company has taken reasonable steps to
protect the Intellectual Property; (ii) the Company and its subsidiaries own or
have the right to use, free and clear of all Liens, all Intellectual Property
necessary for the operation of the businesses of the Company and its
subsidiaries as presently conducted and as presently proposed to be conducted;
(iii) each material item of Intellectual Property owned or used by the Company
and its subsidiaries immediately prior to the Effective Time will be owned or
available for use by Parent and the Surviving Corporation immediately subsequent
to the Effective Time; (iv) the Company and its subsidiaries have taken all
action deemed by the Company or the relevant subsidiary to be necessary or
reasonable, but in no event less than all commercially reasonable action, to
protect and preserve the confidentiality of all technical Intellectual Property
not otherwise protected by patents, patent applications or copyrights; (v) each
employee of the Company and its subsidiaries has executed a non-disclosure
agreement which included an agreement to assign to the Company or its
subsidiaries all rights to Intellectual Property originated or invented by such
employee relating to the business of the Company and its subsidiaries; and (vi)
no trade secret or confidential know-how material to the business of the Company
or any of its subsidiaries as currently operated has been disclosed or
authorized to be disclosed to any third party, other than pursuant to a
non-disclosure agreement that protects the Company's or such subsidiary's
proprietary interests in and to such trade secrets and confidential know-how.
(c) To the Company's knowledge, neither the Company nor any of its
subsidiaries has interfered with, infringed upon, misappropriated or otherwise
come into conflict with any Intellectual Property rights of third parties, and
neither the Company nor any of its subsidiaries has, within the three years
prior to the date of this Agreement, received any charge, complaint, claim or
notice alleging any such interference, infringement, misappropriation or
violation. No third party has, to the Company's knowledge, interfered with,
infringed upon, misappropriated or otherwise come into conflict with any
Intellectual Property rights of the Company or its subsidiaries, except where
such actions are not reasonably expected to have a Material Adverse Effect on
the Company and its subsidiaries taken as a whole.
(d) Section 3.20(d) of the Company Disclosure Schedule lists each license,
sublicense, agreement or permission pursuant to which the Company uses any
material item of Scheduled Intellectual Property that any third party owns and
that any of the Company or any of its subsidiaries uses pursuant to license,
sublicense, agreement or permission that either (i) if such license, sublicense,
agreement or permission were denied, would reasonably be expected to have a
Material Adverse Effect on the Company or its Subsidiaries taken as a whole, or
(ii) includes any past due obligation to pay any royalty amount or any
obligation to pay a royalty, whether fixed or determined based on usage,
following the Effective Date.
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(e) Except as set forth in Section 3.20(e) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries has granted (i) any
exclusive or non-exclusive licenses (other than implied patent licenses in the
ordinary course of business) in any patents owned by the Company or any of its
subsidiaries or (ii) any exclusive licenses in any other Intellectual Property
owned by the Company or any of its subsidiaries to any third party.
(f) Except as may have been given in connection with patent licenses set
forth in Section 3.20(e) of the Company Disclosure Schedule or given in the
ordinary course of business within the scope of the Company's standard terms and
conditions of sale, neither the Company nor any of its subsidiaries has entered
into any agreement to indemnify any other person against any charge of
infringement or misappropriation of any Intellectual Property.
(g) The Company owns or has the right to use all Intellectual Property
incorporated or used in the Company's existing websites.
(h) The execution, delivery and performance by the Company of this
Agreement, and the consummation of the transactions contemplated hereby, will
not (i) result in the loss or impairment of, or give rise to any right of any
third party to terminate or alter, any of the Company's or any of its
subsidiaries' rights to own any of its Intellectual Property except as are not
unreasonably expected to have a Material Adverse Effect on the Company and its
Subsidiaries taken as a whole, nor (ii) require the consent of any Governmental
Entity or third party in respect of any such Intellectual Property.
SECTION 3.21 Year 2000.
(a) Based on a comprehensive assessment of the Systems that are used or
relied on by the Company or by any of its subsidiaries in the conduct of their
respective businesses, neither the Company nor any of its subsidiaries knows of
any such System that will malfunction, will cease to function, will generate
incorrect data or will provide incorrect results when processing, providing
and/or receiving (i) date-related data in, into or between the twentieth and
twenty-first centuries or (ii) date-related data in connection with any valid
date in the twentieth or twenty-first centuries.
(b) Based on a comprehensive assessment of the products and services that
are or have been sold, licensed, rendered or otherwise provided or offered by
the Company or by any of its subsidiaries in the conduct of their respective
businesses, neither the Company nor any of its subsidiaries knows of any such
products or services which will malfunction, will cease to function, will
generate incorrect data or will produce incorrect results when processing,
providing or receiving (i) date-related data in, into or between the twentieth
and twenty-first centuries or (ii) date-related data in connection with any
valid date in the twentieth or twenty-first centuries; and, to the knowledge of
the Company or any of its subsidiaries, neither the Company nor any of its
subsidiaries is or will be subject to claims or liabilities arising from any
such malfunction, cessation of function, generation of incorrect data or
production of incorrect results.
(c) Neither the Company nor any of its subsidiaries has made other
representations or warranties regarding the ability of any product or service
that is or has been sold, licensed, rendered or otherwise provided or offered by
the Company or by any of its subsidiaries, or of any of the Systems used or
relied on by the Company or any of its subsidiaries, in the conduct of their
respective businesses to operate without malfunction, to operate without ceasing
to function, to generate correct data or to produce correct results when
processing, providing or receiving (i) date-related data in, into and between
the twentieth and twenty-first centuries or (ii) date-related data in connection
with any valid date in the twentieth and twenty-first centuries.
(d) Based on a comprehensive inquiry of all material suppliers, service
providers and customers of the Company and its subsidiaries, neither the Company
nor any of its subsidiaries knows of any inability on the part of any such
supplier, service provider or customer to timely ensure that its own (and its
material suppliers' and service providers') Systems continue to operate without
malfunction, to operate without ceasing to function, to generate correct data
and to produce correct results when processing, providing and/or receiving (i)
date-related data in, into and between the twentieth and twenty-first
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centuries and (ii) date-related data in connection with any valid date in the
twentieth and twenty-first centuries.
(e) For the purposes of this Agreement, "SYSTEMS" means, with respect to a
person, any and all material hardware, software and firmware used by the Company
or any of its subsidiaries in the course of their respective businesses,
including (i) any and all source and object code; (ii) databases and
compilations, including any and all data and collections of data, whether
machine readable or otherwise; (iii) billing, reporting and other management
information systems; (iv) all descriptions, flow-charts and other work product
used to design, plan, organize and develop any of the foregoing; (v) all content
contained on any Internet site(s) maintained by such person or any of its
subsidiaries; and (vi) all documentation, including user manuals and training
materials, relating to any of the foregoing.
SECTION 3.22 Opinion of Financial Advisor. Broadview International LLC
(the "FINANCIAL ADVISOR") has delivered to the Company Board its opinion, dated
the date of this Agreement, to the effect that, as of such date, the Exchange
Ratio is fair to the stockholders of the Company from a financial point of view,
and such opinion has not been withdrawn or modified.
SECTION 3.23 Brokers. No broker, finder, investment banker or other person
(other than the Financial Advisor, a true and correct copy of whose engagement
letter has been provided to Parent) is entitled to any brokerage, finder's or
other fee or commission or expense reimbursement in connection with the
transactions contemplated by this Agreement based upon arrangements made by and
on behalf of the Company or any of its affiliates.
SECTION 3.24 Accounting Matters. Neither the Company nor, to the Company's
knowledge, any of its affiliates, has taken or agreed to take any action or is
aware of any fact or circumstance that would prevent the Merger from qualifying
as a "pooling of interests" under APB 16 and the applicable SEC rules and
regulations.
SECTION 3.25 Recalls. There has not been any recall made generally to
customers since December 31, 1998 of any product designed, manufactured,
shipped, sold or otherwise introduced into the stream of commerce by or on
behalf of the Company or any of its past or present subsidiaries ("PRODUCT"),
and (ii) to the Company's knowledge, there are currently no material defects in
design, manufacturing, materials or workmanship which involve any Product that
accounts for a material portion of the Company's sales.
SECTION 3.26 Takeover Statute. The Company has taken all action required
to be taken by it in order to exempt this Agreement, the Option Agreement and
the transactions contemplated hereby and thereby from, and this Agreement, the
Option Agreement and the transactions contemplated hereby and thereby (the
"COVERED TRANSACTIONS") are exempt from, the requirements of any "moratorium,"
"control share," "fair price," "affiliate transaction," "interested
stockholder," "business combination" or other antitakeover Laws of any state
(collectively, "TAKEOVER STATUTES"). Subtitle 6 (Sections 3-601 through 3-603)
and Subtitle 7 (Sections 3-701 through 3-709) of the MGCL are not applicable to
the Covered Transactions. Holders of Shares do not have dissenters' or appraisal
rights in connection with the Merger.
SECTION 3.27 Company Rights Agreement. The Company Board has taken all
necessary action (including, any amendment thereof) under the Rights Agreement,
dated as of May 2, 1990, between the Company and the First National Bank of
Boston, as Rights Agent (the "COMPANY RIGHTS AGREEMENT"), so that none of the
execution or delivery of this Agreement or the Option Agreement, the exchange of
the shares of Parent Common Stock for the Shares in accordance with Article II,
or any other transaction contemplated hereby or thereby will cause (i) the
rights (the "RIGHTS") issued pursuant to the Company Rights Agreement to become
exercisable under the Company Rights Agreement, (ii) Parent or Merger Sub to be
deemed an "Acquiring Person" (as defined in the Company Rights Agreement), or
(iii) the "Stock Acquisition Date" or "Distribution Date" (each as defined in
the Company Rights Agreement) to occur upon any such event.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB
Except as set forth in the disclosure schedule delivered by Parent to the
Company prior to the execution of this Agreement (the "PARENT DISCLOSURE
SCHEDULE") (each section of which qualifies the correspondingly numbered
representation and warranty or covenant to the extent specified therein), Parent
and Merger Sub hereby represent and warrant to the Company as follows:
SECTION 4.1 Organization.
(a) Each of Parent and Merger Sub is a corporation duly organized, validly
existing and in good standing under the Laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its businesses as now being
conducted.
(b) Each of Parent and Merger Sub is duly qualified or licensed and in good
standing to do business in each jurisdiction in which the property owned, leased
or operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except where the failure to be so duly
qualified or licensed and in good standing is not reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect on Parent and its
subsidiaries taken as a whole.
(c) Parent has heretofore delivered to the Company accurate and complete
copies of the certificate of incorporation and bylaws of Parent and the charter
and bylaws of Merger Sub as currently in effect.
SECTION 4.2 Authority Relative to This Agreement.
(a) Each of Parent and Merger Sub has all necessary corporate power and
authority to execute and deliver this Agreement and the Option Agreement and to
consummate the transactions contemplated hereby and thereby. No other corporate
proceedings on the part of Parent or Merger Sub are necessary to authorize this
Agreement and the Option Agreement or to consummate the transactions
contemplated hereby or thereby. This Agreement and the Option Agreement have
been duly and validly executed and delivered by each of Parent and Merger Sub
and constitute valid, legal and binding agreements of each of Parent and Merger
Sub, enforceable against each of Parent and Merger Sub in accordance with their
respective terms.
(b) The Board of Directors of Parent (the "PARENT BOARD"), the Board of
Directors of Merger Sub and Parent as the sole stockholder of Merger Sub have
duly and validly authorized the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, and taken all corporate
actions required to be taken by such Boards of Directors and Parent as the sole
stockholder of Merger Sub for the consummation of the transactions.
SECTION 4.3 SEC Reports; Financial Statements. Parent has filed all
required forms, reports and documents with the SEC since January 1, 1997, each
of which complied in all material respects with all applicable requirements of
the Securities Act and the Exchange Act, each as in effect on the dates such
forms, reports, and documents were filed. Parent has heretofore delivered or
made available to the Company, in the form filed with the SEC (including, any
amendments thereto), (i) its Annual Report on Form 10-K each of the fiscal years
ended December 31, 1996, 1997 and 1998, (ii) all definitive proxy statements
relating to Parent's meetings of stockholders (whether annual or special) held
since January 1, 1997 and (iii) all other reports or registration statements
filed by Parent with the SEC since January 1, 1997 (the "PARENT SEC REPORTS").
None of the Parent SEC Reports contained, when filed, any untrue statement of a
material fact or omitted to state a material fact required to be stated or
incorporated by reference therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The consolidated financial statements of Parent included in the
Parent SEC Reports complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC in
respect thereof and fairly presented, in conformity with GAAP on a consistent
basis (except as may be indicated in the notes thereto), the consolidated
financial position of Parent and its consolidated subsidiaries, in each case as
of the dates thereof and their
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consolidated results of operations and cash flows for the periods then ended
(subject, in the case of the unaudited interim financial statements, to normal
year-end adjustments). For purposes of this Agreement "PARENT BALANCE SHEET"
means the consolidated balance sheet of Parent as of March 31, 1999, and "PARENT
BALANCE SHEET DATE" means March 31, 1999. Except as and to the extent disclosed
in the Parent SEC Reports, since the Parent Balance Sheet Date, there has not
been any event, occurrence or development which is reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect on the Parent and
its subsidiaries taken as a whole.
SECTION 4.4 Undisclosed Liabilities. There are no liabilities of Parent or
any of its subsidiaries of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise which are required to be
reflected in its financial statements (or in the notes thereto) in accordance
with GAAP, other than: (a) liabilities disclosed, provided for or reserved
against in the Parent Balance Sheet or in the notes thereto; (b) liabilities
arising in the ordinary course of business after the date of the Parent Balance
Sheet; (c) liabilities disclosed in the Parent SEC Reports prior to the date
hereof and (d) liabilities under this Agreement.
SECTION 4.5 Capitalization of Parent. The authorized capital stock of
Parent consists of: (i) 500,000,000 shares of Common Stock, par value $1.00 per
share (the "PARENT SHARES"), of which 392,940,778 shares are issued and
outstanding as of July 20, 1999 and 858,938 shares of which are held in Parent's
treasury, and (ii) 10,000,000 shares of Preferred Stock, par value $25.00 per
share, no shares of which are outstanding as of July 20, 1999. All of the issued
and outstanding Parent Shares have been validly issued, and are duly authorized,
fully paid, non-assessable and free of preemptive rights. As of July 23, 1999,
45,800,485 Parent Shares were available for issuance under Parent's option
plans, of which 30,836,160 were issuable upon or otherwise deliverable in
connection with the exercise of options outstanding on such date. Except as set
forth above and except for the Parent Rights Agreement (as hereinafter defined),
as of July 23, 1999, there are outstanding (i) no shares of capital stock or
other voting securities of Parent; (ii) no securities of Parent convertible into
or exchangeable for shares of capital stock or voting securities of Parent;
(iii) no options or other rights to acquire from Parent and no obligations of
Parent to issue, any capital stock, voting securities, or securities convertible
into or exchangeable for capital stock or voting securities of Parent; and (iv)
no equity equivalents, interests in the ownership or earnings of Parent, or
other similar rights (including stock appreciation rights).
SECTION 4.6 Information Supplied. None of the information supplied or to
be supplied by Parent or Merger Sub specifically for inclusion or incorporation
by reference in (i) the S-4 will, at the time the S-4 is filed with the SEC and
at the time it becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading and
(ii) the Proxy Statement will, at the date mailed to stockholders of the Company
and at the time of the Company Stockholder Meeting, 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. If at any time prior to
the Effective Time any event in respect of Parent, its officers and directors,
or any of its subsidiaries should occur which is required to be described in an
amendment of, or a supplement to, the S-4 or the Proxy Statement, Parent shall
promptly so advise the Company and such event shall be so described, and such
amendment or supplement (which the Company shall have a reasonable opportunity
to review) shall be promptly filed with the SEC. The S-4 will comply as to form
in all material respects with the provisions of the Securities Act and the rules
and regulations thereunder. No representation is made under this Section 4.6
with respect to any statements made or incorporated by reference in the S-4 or
the Proxy Statement based on information supplied by the Company specifically
for inclusion or incorporation by reference therein.
SECTION 4.7 Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Act, the Exchange Act, state
securities or blue sky Laws, the HSR Act, any other Antitrust Law, the filing
and acceptance for record of the Articles of Merger as required by the MGCL, as
otherwise set forth in Section 4.7 to the Parent Disclosure Schedule, and such
other filings, permits, authorizations, consents and
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approvals which, if not obtained or made, are not reasonably expected to have a
Material Adverse Effect on Parent and its subsidiaries taken as a whole no
filing with or notice to, and no permit, authorization, consent or approval of,
any Governmental Entity is necessary for the execution and delivery by Parent or
Merger Sub of this Agreement or the Option Agreement or the consummation by
Parent or Merger Sub of the transactions contemplated hereby or thereby. The
execution, delivery, and performance of this Agreement and the Option Agreement
by Parent or Merger Sub and the consummation by Parent or Merger Sub of the
transactions contemplated hereby and thereby will not result in any violation of
or conflict with, constitute a default under (with or without due notice or
lapse of time or both), require any consent, waiver or notice under any term of,
or result in the reduction or loss of any benefit or the creation or
acceleration of any right or obligation under, (i) the respective certificate or
articles of incorporation or bylaws of Parent or the charter and bylaws of
Merger Sub, (ii) any agreement, note, bond, mortgage, indenture, contract,
lease, permit or other obligation or right to which Parent or Merger Sub is a
party or by which any of their respective assets or properties is bound, or
(iii) any Law, except in the case of (ii) or (iii) where any of the foregoing is
not reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect on Parent and its subsidiaries taken as a whole.
SECTION 4.8 No Prior Activities. Except for obligations incurred in
connection with its incorporation or organization or the negotiation and
consummation of this Agreement and the transactions contemplated hereby, Merger
Sub has neither incurred any obligation or liability nor engaged in any business
or activity of any type or kind whatsoever or entered into any agreement or
arrangement with any person.
SECTION 4.9 Brokers. No broker, finder, investment banker or other person
(other than Morgan Stanley & Co.) is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by and on behalf of Parent, Merger Sub or
any of their affiliates.
SECTION 4.10 Accounting Matters. Neither Parent nor, to Parent's
knowledge, any of its affiliates, has taken or agreed to take any action or is
aware of any fact or circumstance that would prevent the Merger from qualifying
as a "pooling of interests" under APB 16 and the applicable SEC rules and
regulations.
ARTICLE V
COVENANTS RELATED TO CONDUCT OF BUSINESS
SECTION 5.1 Conduct of Business of the Company. Except as set forth in
Section 5.1 of the Company Disclosure Schedule, as consented to by Parent or as
contemplated by this Agreement, during the period from the date hereof to the
Effective Time, the Company will, and will cause each of its subsidiaries to,
conduct its operations in the ordinary and usual course of business consistent
with past practice and use reasonable best efforts to preserve intact its
current business organizations, keep available the service of its current
officers and employees and preserve its relationships with customers, suppliers
and others having business dealings with it to the end that goodwill and ongoing
businesses shall be unimpaired at the Effective Time. Without limiting the
generality of the foregoing, and except as otherwise expressly provided in this
Agreement or in Section 5.1 of the Company Disclosure Schedule, prior to the
Effective Time, neither the Company nor any of its subsidiaries will, without
the prior written consent of Parent:
(a) amend its charter or bylaws (or other similar organizational or
governing instruments) or amend, modify or terminate the Company Rights Plan;
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any stock
of any class or any other securities convertible into or exchangeable for any
stock or any equity equivalents (including, any stock options or stock
appreciation rights), except for the issuance or sale of Shares pursuant to
outstanding Company Stock Options;
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(c) (i) split, combine or reclassify any shares of its capital stock; (ii)
declare, set aside or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock;
(iii) make any other actual, constructive or deemed distribution in respect of
any shares of its capital stock or otherwise make any payments to stockholders
in their capacity as such; or (iv) redeem, repurchase or otherwise acquire any
of its securities or any securities of any of its subsidiaries (including
redeeming any Rights);
(d) adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of the
Company or any of its subsidiaries (other than the Merger);
(e) alter through merger, liquidation, reorganization, restructuring or in
any other fashion the corporate structure or ownership of any subsidiary of
Company;
(f) (i) incur or assume any long-term or short-term debt or issue any debt
securities, except for borrowings under existing lines of credit in the ordinary
and usual course of business consistent with past practice and in amounts not
material to the Company and its subsidiaries taken as a whole; (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person, except in
the ordinary and usual course of business consistent with past practice and in
amounts not material to the Company and its subsidiaries, taken as a whole, and
except for obligations of the wholly owned subsidiaries of the Company; (iii)
make any loans, advances or capital contributions to, or investments in, any
other person (other than to the wholly owned subsidiaries of the Company or
customary loans or advances to employees in the ordinary and usual course of
business consistent with past practice and in amounts not material to the maker
of such loan or advance); (iv) pledge or otherwise encumber shares of capital
stock of the Company or its subsidiaries; or (v) mortgage or pledge any of its
material assets, tangible or intangible, or create or suffer to exist any
material Lien thereupon;
(g) (i) except as set forth in Section 5.1(g) of the Company Disclosure
Schedule and as required under existing agreements, increase in any manner the
compensation or fringe benefits of any director, officer or employee or pay any
benefit not required by any plan and arrangement as in effect as of the date
hereof (including, the granting of stock appreciation rights or performance
units) or grant any completion bonuses or change of control payments in respect
of the Merger or that will be affected thereby; or (ii) promote or change the
classification or status of, or except in the ordinary course of business
consistent with past practice, hire any employee or individual;
(h) acquire, sell, lease or dispose of any material assets outside the
ordinary and usual course of business consistent with past practice or any
assets which in the aggregate are material to the Company and its subsidiaries
taken as a whole, or grant any exclusive distribution rights;
(i) except as may be required as a result of a change in Law or in GAAP,
make any material change in any of the accounting principles or practices used
by it;
(j) revalue in any material respect any of its assets, including, writing
down the value of inventory or writing-off notes or accounts receivable other
than in the ordinary and usual course of business consistent with past practice
or as required by GAAP;
(k) (i) acquire (by merger, consolidation or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof or any equity interest therein; (ii) enter into any material contract or
agreement, other than in the ordinary and usual course of business consistent
with past practice, or amend in any material respect any of the Material
Contracts or the agreements referred to in Section 3.18; (iii) authorize any new
capital expenditure or expenditures which are not provided for in the Company's
current capital expenditure plan and which, individually, is in excess of
$100,000 or, in the aggregate, are in excess of $250,000; or (iv) enter into or
amend any contract, agreement, commitment or arrangement providing for the
taking of any action that would be prohibited hereunder;
(l) make or revoke any Tax election, or settle or compromise any Tax
liability, or change (or make a request to any taxing authority to change) any
aspect of its method of accounting for Tax purposes;
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(m) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
and usual course of business consistent with past practice or in accordance with
their terms of liabilities reflected or reserved against in, the consolidated
financial statements of the Company and its subsidiaries or incurred since the
date of such financial statements or waive the benefits of, or agree to modify
in any manner, any confidentiality, standstill or similar agreement to which the
Company or any of its subsidiaries is a party;
(n) settle or compromise any pending or threatened suit, action or claim
relating to the transactions contemplated hereby;
(o) take any action (including, any action otherwise permitted by this
Section 5.1) that would prevent or impede the Merger from qualifying as a
"pooling of interests" under APB 16 and the applicable SEC rules and regulations
or as a reorganization under Section 368 of the Code;
(p) enter into any agreement or arrangement that limits or otherwise
restricts the Company or any of its subsidiaries or any successor thereto or
that could, after the Effective Time, limit or restrict the Surviving
Corporation and its affiliates (including Parent) or any successor thereto, from
engaging or competing in any line of business or in any geographic area;
(q) fail to comply in any material respect with any Law applicable to the
Company, its subsidiaries, or their respective assets;
(r) enter into any direct or indirect arrangements for financial subsidies;
(s) adopt, enter into, amend, alter or terminate (partially or completely)
any Benefit Plan or Employee Arrangement except as contemplated by this
Agreement or to the extent required by applicable Law;
(t) enter into any contract with an officer, director, employee, agent or
other similar representative of the Company or any of its subsidiaries that is
not terminable, without penalty or other liability, upon not more than 60
calendar days' notice; or
(u) take, propose to take, or agree in writing or otherwise to take, any of
the actions described in Sections 5.1(a) through 5.1(t) or any action which
would cause the condition set forth in Section 7.2(a) not to be satisfied.
SECTION 5.2 Conduct of Business of Parent. Except as consented to by the
Company or as contemplated by this Agreement, during the period from the date
hereof to the Effective Time, neither Parent nor any of its subsidiaries will:
(a) amend Parent's certificate of incorporation or bylaws;
(b) take any action that would or would reasonably be expected to prevent,
impair or materially delay the ability of the Company or Parent to consummate
the transactions contemplated by this Agreement;
(c) take any action (including, any action otherwise permitted by this
Section 5.2) that would prevent or impede the Merger from qualifying as a
"pooling of interests" under APB 16 and the applicable SEC rules and regulations
or as a reorganization under Section 368 of the Code; or
(d) take, propose to take, or agree in writing or otherwise to take, any of
the actions described in Section 5.2(a) through 5.2(c) or any action which would
cause the condition set forth in Section 7.3(a) not to be satisfied.
SECTION 5.3 Access to Information.
(a) Between the date hereof and the Effective Time and subject to
applicable Law, the Company will give Parent and Merger Sub and their authorized
representatives (including, counsel, financial advisors, environmental
consultants and auditors) reasonable access to all employees, plants, offices,
warehouses and other facilities and to all books and records of the Company and
its subsidiaries, will
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permit Parent and Merger Sub to make such inspections as Parent and Merger Sub
may reasonably require, including the right to conduct sampling of surface
water, groundwater, soil and outdoor air quality, and building materials and
will cause the Company's officers and those of its subsidiaries to furnish
Parent and Merger Sub with such financial and operating data and other
information in respect of the business, properties and personnel of the Company
and its subsidiaries as Parent or Merger Sub may from time to time reasonably
request, provided that no investigation pursuant to this Section 5.3(a) shall
affect or be deemed to modify any of the representations or warranties made by
the Company.
(b) Between the date hereof and the Effective Time, the Company shall
furnish to Parent and Merger Sub (i) within five business days after the
delivery thereof to management, such monthly financial statements and data as
are regularly prepared for distribution to Company management and (ii) at the
earliest time they are available, such quarterly and annual financial statements
as are prepared for the Company Board, which (in the case of this clause (ii))
shall be in accordance with the books and records of the Company.
(c) Each of Parent and the Company will hold and will cause its authorized
representatives to hold in confidence all documents and information furnished to
the other in connection with the transactions contemplated by this Agreement
pursuant to the terms of that certain Confidentiality Agreement entered into
between the Company and Parent dated May 19, 1999 (the "CONFIDENTIALITY
AGREEMENT").
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 Preparation of S-4 and the Proxy Statement. Parent and the
Company will, as promptly as practicable, jointly prepare and file with the SEC
the Proxy Statement in connection with the vote of the stockholders of the
Company in respect of the Merger. Parent will, as promptly as practicable,
prepare, following receipt of notification from the SEC that it has no further
comments on the Proxy Statement, and file with the SEC the S-4 in connection
with the registration under the Securities Act of the shares of Parent Common
Stock issuable upon conversion of the Shares and the other transactions
contemplated hereby. Parent and the Company will, and will cause their
accountants and lawyers to, use their reasonable best efforts to have or cause
the S-4 to be declared effective as promptly as practicable after filing with
the SEC, including, causing their accountants to deliver necessary or required
instruments such as opinions, consents and certificates, and will take any other
action required or necessary to be taken under federal or state securities Laws
or otherwise in connection with the registration process (other than qualifying
to do business in any jurisdiction which it is not now so qualified or filing a
general consent to service of process in any jurisdiction). The Company and
Parent shall, as promptly as practicable after the receipt thereof, provide to
the other party copies of any written comments and advise the other party of any
oral comments, in respect of the Proxy Statement or the S-4 received from the
staff of the SEC. The Company will provide Parent with a reasonable opportunity
to review and comment on any amendment or supplement to the Proxy Statement
prior to filing with the SEC and will provide Parent with a copy of all such
filings with the SEC. Parent will provide the Company with a reasonable
opportunity to review and comment on any amendment or supplement on the S-4
prior to filing with SEC and will provide the Company with a copy of all such
filings with the SEC. Parent will advise the Company, promptly after it receives
notice thereof, of the time when the Form S-4 has become effective or any
supplement or amendment has been filed, the issuance of any stop order, the
suspension of the qualification of the Parent Common Stock issuable in
connection with the Merger for offering or sale in any jurisdiction, or any
request by the SEC for amendment of the Form S-4 or comments thereon and
responses thereto or requests by the SEC for additional information. The Company
will use its reasonable best efforts to cause the Proxy Statement to be mailed
to its stockholders at the earliest practicable date.
SECTION 6.2 Letter of Accountants.
(a) The Company shall use all reasonable best efforts to cause to be
delivered to Parent a letter of PricewaterhouseCoopers LLP, the Company's
independent auditors, dated as of the date on which the S-4
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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 S-4.
(b) Parent shall use all reasonable best efforts to cause to be delivered
to the Company a letter of Ernst & Young LLP, the Parent's independent auditors,
dated as of the date on which the S-4 shall become effective and addressed to
the Company, in form and substance reasonably satisfactory to the Company and
customary in scope and substance for letters delivered by independent public
accountants in connection with registration statements similar to the S-4.
SECTION 6.3 Meeting. The Company shall take all lawful action to (i) cause
a special meeting of its stockholders (the "COMPANY STOCKHOLDER MEETING") to be
duly called and held as soon as practicable after the date of this Agreement for
the purpose of voting on the approval of the Merger on substantially the terms
and conditions set forth in this Agreement and (ii) solicit proxies from its
stockholders to obtain the Company Requisite Vote for such approval. Subject to
the provisions of Section 6.5(b), the Company Board shall recommend approval of
the Merger by the Company's stockholders and the Company Board shall not
withdraw, amend or modify in a manner adverse to Parent such recommendation (or
announce publicly its intention to do so).
SECTION 6.4 Reasonable Best Efforts.
(a) Subject to the terms and conditions of this Agreement, each party will
use its reasonable best 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 to consummate the Merger and the other transactions contemplated
by this Agreement. In furtherance and not in limitation of the foregoing, each
party hereto shall make an appropriate filing of a Notification and Report Form
pursuant to the HSR Act in respect of the transactions contemplated hereby as
promptly as practicable and in any event within ten business days of the date
hereof and to supply as promptly as practicable any additional information and
documentary material that may be requested pursuant to the HSR Act and use its
reasonable best efforts to take, or cause to be taken, all other actions
consistent with this Section 6.4 necessary to cause the expiration or
termination of the applicable waiting periods under the HSR Act as soon as
practicable.
(b) Each of Parent and the Company shall, in connection with the efforts
referenced in Section 6.4(a) to obtain all requisite approvals and
authorizations for the transactions contemplated by this Agreement under the HSR
Act, or any other Antitrust Law (as hereinafter defined), use its reasonable
best efforts to (i) cooperate in all respects with each other in connection with
any filing or submission and in connection with any investigation or other
inquiry, including any proceeding initiated by a private party; (ii) keep the
other party informed in all material respects of any material communication
received by such party from, or given by such party to, the Federal Trade
Commission (the "FTC"), the Antitrust Division of the Department of Justice (the
"DOJ") or any other Governmental Entity and of any material communication
received or given in connection with any proceeding by a private party, in each
case regarding any of the transactions contemplated hereby; and (iii) permit the
other party to review any material communication given by it to, and consult
with each other in advance of any meeting or conference with, the FTC, the DOJ
or any such other domestic or foreign Governmental Entity or, in connection with
any proceeding by a private party, with any other person, and to the extent
permitted by the FTC, the DOJ or such other applicable domestic or foreign
Governmental Entity or other person, give the other party the opportunity to
attend and participate in such meetings and conferences.
(c) In furtherance and not in limitation of the covenants of the parties
contained in Sections 6.4(a) and (b), each of Parent and the Company shall use
its reasonable best efforts to resolve such objections if any, as may be
asserted by a Governmental Entity or other person in respect of the transactions
contemplated hereby under any Antitrust Law. In connection with the foregoing,
if any administrative or judicial action or proceeding, including any proceeding
by a private party, is instituted (or threatened to be instituted) challenging
any transaction contemplated by this Agreement as violative of any Antitrust
Law, each of Parent and the Company shall cooperate in all respects with each
other and use its respective reasonable best efforts to contest and resist any
such action or proceeding and to have vacated, lifted,
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reversed or overturned any decree, judgment, injunction or other order, whether
temporary, preliminary or permanent, that is in effect and that prohibits,
prevents or restricts consummation of the transactions contemplated by this
Agreement. Notwithstanding the foregoing or any other provision of this
Agreement, nothing in this Section 6.4 shall (i) limit a party's right to
terminate this Agreement pursuant to Section 8.2 so long as such party has up to
then complied in all material respects with its obligations under this Section
6.4, (ii) require Parent to dispose or hold separate any part of its business or
operations or agree not to compete in any geographic area or line of business or
(iii) require Parent to dispose or hold separate any part of the Company's
business or operations or agree to cause the Company not to compete in any
geographic area or line of business which would in any such case impair in any
material respect any of the benefits intended to be derived by Parent after the
Effective Time as a result of the Merger.
(d) The Company agrees that in connection with any litigation which may be
brought against the Company or its directors relating to the transactions
contemplated hereby, the Company will keep Parent, and any counsel which Parent
may retain at its own expense, informed of the course of such litigation, to the
extent Parent is not otherwise a party thereto. The Company agrees that it will
consult with Parent prior to entering into any settlement or compromise of any
such litigation, and that no such settlement or compromise will be entered into
without Parent's prior written consent, which consent shall not be unreasonably
withheld.
SECTION 6.5 Acquisition Proposals.
(a) The Company will not, nor will it permit any of its subsidiaries to,
nor will it authorize or permit any officer, director or employee of or any
investment banker, attorney, accountant or other advisor or representative of,
the Company or any of its subsidiaries to, directly or indirectly, (i) solicit,
initiate or encourage the submission of any Acquisition Proposal or (ii)
participate in any discussions or negotiations regarding, or furnish to any
person any information in respect of, or take any other action to facilitate,
any Acquisition Proposal or any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Acquisition Proposal
provided, however, that nothing contained in this Section 6.5(a) shall prohibit
the Company Board from furnishing any information to, or entering into
discussions or negotiations with, any person that makes an unsolicited bona fide
Acquisition Proposal if, and only to the extent that (A) the Company Stockholder
Meeting shall not have occurred, (B) the Company Board, after consultation with
independent legal counsel, determines in good faith that such action is
necessary for the Company Board to comply with its duties to the Company's
stockholders under applicable Law, (C) the Company Board determines in good
faith that such Acquisition Proposal, if accepted, is reasonably likely to be
consummated taking into account all legal, financial, regulatory and other
aspects of the proposal and the person making the proposal, and believes in good
faith, after consultation with its Financial Advisor and after taking into
account the strategic benefits to be derived from the Merger and the long-term
prospects of Parent and its subsidiaries, would, if consummated, result in a
transaction more favorable to the Company's stockholders than the Merger (any
such more favorable Acquisition Proposal being referred to herein as a "SUPERIOR
PROPOSAL"), and (D) prior to taking such action, the Company (x) provides
reasonable notice to Parent to the effect that it is taking such action and (y)
receives from such person an executed confidentiality/standstill agreement in
reasonably customary form and in any event containing terms at least as
stringent as those contained in the Confidentiality Agreement between Parent and
the Company. The Company shall notify Parent of any Acquisition Proposal
(including, the material terms and conditions thereof and the identity of the
person making it) as promptly as practicable (but in no case later than 24
hours) after its receipt thereof, and shall thereafter inform Parent on a prompt
basis of the status of any discussions or negotiations with such a third party,
and any material changes to the terms and conditions of such Acquisition
Proposal, and shall promptly give Parent a copy of any information delivered to
such person which has not previously been reviewed by Parent. The Company has
ceased and terminated, and has caused its subsidiaries and affiliates, and their
respective officers, directors, employees, investment bankers, attorneys,
accountants and other agents and representatives to cease and terminate, any
existing activities, discussions or negotiations with any parties conducted
heretofore in respect of any possible Acquisition Proposal. The Company shall
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take all necessary steps to promptly inform the individuals or entities referred
to in the first sentence of this Section 6.5 of the obligations undertaken in
this Section 6.5. "ACQUISITION PROPOSAL" means an inquiry, offer or proposal
regarding any of the following (other than the transactions contemplated by this
Agreement) involving the Company or any of its subsidiaries: (w) any merger,
consolidation, share exchange, recapitalization, business combination or other
similar transaction; (x) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition of all or substantially all the assets of the Company and
its subsidiaries, taken as a whole, in a single transaction or series of related
transactions; (y) any tender offer or exchange offer for 20% or more of the
outstanding Shares or the filing of a registration statement under the
Securities Act in connection therewith; or (z) any public announcement of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing.
(b) The Company Board will not withdraw or modify, or propose to withdraw
or modify, in a manner adverse to Parent, its approval or recommendation of the
Merger unless the Company Board after consultation with independent legal
counsel, determines in good faith that such action is necessary for the Company
Board to comply with its duties to the Company's stockholders under applicable
Law; provided, however, that the Company Board may not approve or recommend (and
in connection therewith, withdraw or modify its approval or recommendation of
the Merger) an Acquisition Proposal unless such an Acquisition Proposal is a
Superior Proposal (and the Company shall have first complied with its
obligations set forth in Section 8.3(a) and the time referred to in the last
sentence of Section 8.3(a) has expired) and unless it shall have first consulted
with independent legal counsel, and have determined that such action is
necessary for the Company Board to comply with its duties to the Company's
stockholders under applicable Law. Nothing contained in this Section 6.5(b)
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 the Company's stockholders which, in the good
faith reasonable judgment of the Company Board, after consultation with
independent legal counsel, is required under applicable Law; provided, however,
that except as otherwise permitted in this Section 6.5(b), the Company does not
withdraw or modify, or propose to withdraw or modify, its position in respect of
the Merger or approve or recommend, or propose to approve or recommend, an
Acquisition Proposal. Notwithstanding anything contained in this Agreement to
the contrary, any action by the Company Board permitted by, and taken in
accordance with, this Section 6.5(b) shall not constitute a breach of this
Agreement by the Company. Nothing in this Section 6.5(b) shall (i) permit the
Company to terminate this Agreement (except as provided in Article IX hereof) or
(ii) affect any other obligations of the Company under this Agreement.
SECTION 6.6 Public Announcements. Each of Parent, Merger Sub and the
Company will consult with one another before issuing any press release or
otherwise making any public statements in respect of the transactions
contemplated by this Agreement, including, the Merger, and shall not issue any
such press release or make any such public statement prior to such consultation,
except as may be required by applicable Law or by obligations pursuant to any
listing agreement with the NYSE, as determined by Parent, Merger Sub or the
Company, as the case may be.
SECTION 6.7 Indemnification.
(a) From and after the Effective Time, the Surviving Corporation shall, and
Parent shall cause the Surviving Corporation to the fullest extent permitted by
applicable Law to, indemnify, defend, and hold harmless each person who is now,
or has been at any time prior to the date hereof, or who becomes prior to the
Effective Time, a director or officer of the Company or any subsidiary thereof
(each an "INDEMNIFIED PARTY" and, collectively, the "INDEMNIFIED PARTIES")
against all losses, expenses (including, reasonable attorneys' fees and
expenses), claims, damages, costs or liabilities or, subject to the proviso of
the next succeeding sentence, amounts paid in settlement, arising out of actions
or omissions occurring at or prior to the Effective Time and whether asserted or
claimed prior to, at or after the Effective Time that are in whole or in part
(i) based on, or arising out of the fact that such person is or was a director
or officer of such party or a subsidiary of such party or (ii) based on, arising
out of or pertaining to the transactions contemplated by this Agreement. Without
limiting the foregoing, in the event of any such loss, expense, claim, damage,
cost or liability (whether or not arising before the Effective Time), (A) the
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Surviving Corporation shall pay the reasonable fees and expenses of counsel
selected by the Indemnified Parties, which counsel shall be reasonably
satisfactory to the Surviving Corporation, promptly after statements therefor
are received and otherwise advance to such Indemnified Party upon request for
reimbursement of documented expenses reasonably incurred, in either case to the
extent not prohibited by the MGCL and upon receipt of any affirmation and
undertaking required by the MGCL, (B) the Surviving Corporation will cooperate
in the vigorous defense of any such matter and (C) any determination required to
be made in respect of whether an Indemnified Party's conduct complies with the
standards set forth under the MGCL and the Surviving Corporation's charter or
bylaws shall be made by independent counsel mutually acceptable to the Surviving
Corporation and the Indemnified Party; provided, however, that the Surviving
Corporation shall not be liable for any settlement effected without its written
consent (which consent shall not be unreasonably withheld). The Indemnified
Parties as a group may retain only one law firm in respect of each related
matter except to the extent there is, in the opinion of counsel to an
Indemnified Party, under applicable standards of professional conduct, a
conflict on any significant issue between positions of any two or more
Indemnified Parties.
(b) For a period of six years after the Effective Time, the Surviving
Corporation shall cause to be maintained in effect the policies of directors'
and officers' liability insurance maintained by the Company for the benefit of
those persons who are covered by such policies at the Effective Time (or the
Surviving Corporation may substitute therefor policies of at least the same
coverage and amounts containing terms not less advantageous to the insured
parties in respect of matters occurring prior to the Effective Time), to the
extent that such liability insurance can be maintained annually at a cost to the
Surviving Corporation not greater than 200% of the premium for the current
Company directors' and officers' liability insurance; provided, however, that if
such insurance cannot be so maintained or obtained at such costs, the Surviving
Corporation shall maintain or obtain as much of such insurance as can be so
maintained or obtained at a cost equal to 200% of the current annual premiums of
the Company for such insurance.
(c) In the event the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity or such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any person, then and in either such case, proper provision shall be made so
that the successors and assigns of the Surviving Corporation shall assume the
obligations set for in this Section 6.7.
(d) To the fullest extent permitted by Law, from and after the Effective
Time, all rights to liability limitation, exculpation or indemnification now
existing in favor of the employees, agents, directors or officers of the Company
and its subsidiaries in respect of their activities as such prior to the
Effective Time, as provided in the Company's charter or bylaws, in effect on the
date thereof or otherwise in effect on the date hereof, shall survive the Merger
(and as of or prior to the Effective Time, Parent shall cause the bylaws of
Merger Sub to reflect such provisions) and shall continue in full force and
effect and shall not be amended or modified for a period of not less than six
years from the Effective Time.
(e) The provisions of this Section 6.7 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party, his or her heirs, and
his or her representatives.
SECTION 6.8 Notification of Certain Matters. The Company shall give prompt
notice to Parent and Merger Sub, and Parent and Merger Sub shall give prompt
notice to the Company, of (i) the occurrence or nonoccurrence of any event the
occurrence or nonoccurrence of which would be likely to cause any representation
or warranty contained in this Agreement to be untrue or inaccurate at or prior
to the Effective Time so as to cause the conditions set forth in Article VII
hereof to fail to be satisfied, or (ii) any material failure of the Company,
Parent or Merger Sub, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder so as to cause the conditions set forth in Article VII hereof to fail
to be satisfied; provided, however, that the delivery of any notice pursuant to
this Section 6.8 shall not cure such breach or non-compliance or limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
SECTION 6.9 Tax-Free Reorganization Treatment. The parties hereto intend
that the Merger will qualify as a reorganization within the meaning of Section
368(a) of the Code. Each of the parties hereto
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shall, and shall cause its respective subsidiaries to, use its reasonable best
efforts to cause the Merger to so qualify.
SECTION 6.10 Employee Matters. Except as contemplated by this Agreement,
Parent will and will cause the Surviving Corporation to honor the obligations of
the Company or any of its subsidiaries under the provisions of each Benefit Plan
and Employee Arrangement; provided that the Company shall have the right at any
time to amend or terminate any such Benefit Plan and Employee Arrangement in
accordance with their terms. The employees of the Company will be eligible to
participate in Parent's applicable employee benefit plans, as such plans may be
in effect from time to time, as soon as administratively convenient (as
determined at Parent's sole discretion) after the Effective Time and, at
Parent's sole discretion, will become employees of Parent or any of its
subsidiaries. Until such time as employees of the Company immediately (the
"COMPANY EMPLOYEES") become eligible to participate in Parent's applicable
employee benefit plans (the "BENEFITS INTEGRATION DATE"), Parent shall cause
such employee welfare benefits to be maintained for such Company Employees that
are, in the aggregate, no less favorable than those provided to such Company
Employees immediately prior to the Effective time. Following the Benefits
Integration Date, with respect to each plan maintained by Parent in which any
Company Employee participates (each, a "PARENT PLAN") that is an "employee
benefit plan" as defined in Section 3(3) of ERISA, for purposes of eligibility
to participate, vesting and, solely with respect to severance and vacation,
level of benefit entitlement (but in no event for purposes of benefits accrual),
service with the Company and its affiliates (or predecessor employers to the
extent the Company and its affiliates provided past service credit) shall be
treated as service with Parent to the same extent such service was counted under
the corresponding Benefit Plan, if any; provided, however, that such service
shall not be recognized to the extent that such recognition would result in a
duplication of benefits. Such service also shall apply for purposes of
satisfying any waiting periods, evident of insurability requirements, or the
application of any preexisting condition limitations. Each Parent Plan shall
waive preexisting condition limitations to the same extent waived under the
corresponding Benefit Plan. Company Employees shall be given credit under the
applicable Parent Plan for amounts paid under a corresponding Benefit Plan
during the same period for though such amounts had been paid in accordance with
the terms and conditions of the Parent Plan.
SECTION 6.11 Company Affiliate Agreements. Section 6.11 of the Company
Disclosure Schedule sets forth a list of all persons who are, and all persons
who to the Company's knowledge will be at the Closing Date, "affiliates" of the
Company for purposes of Rule 145 under the Securities Act. The Company will
cause such list to be updated promptly through the Closing Date. Not later than
45 days prior to the date of the Company Stockholder Meeting, the Company shall
cause its "affiliates" to deliver to Parent a Company Affiliate Agreement
substantially in the form attached as EXHIBIT B.
SECTION 6.12 SEC and Other Filings. Each of Parent and the Company shall
promptly provide the other party (or its counsel) with copies of all filings
made by the other party or any of its subsidiaries with the SEC or any other
state, federal or foreign Governmental Entity in connection with this Agreement
and the transactions contemplated hereby.
SECTION 6.13 Fees and Expenses. Whether or not the Merger is consummated,
all Expenses incurred in connection with this Agreement, the Option Agreement
and the transactions contemplated hereby and thereby shall be paid by the party
incurring such Expenses, except (a) Expenses incurred in connection with the
filing, printing and mailing of the Proxy Statement and the S-4, which shall be
shared equally by the Company and Parent, (b) the filing fees required under the
HSR Act, which shall be shared equally by the Company and Parent and (c) if
applicable, as provided in Section 8.5. As used in this Agreement, "EXPENSES"
includes all out-of-pocket expenses (including all fees and expenses of counsel,
accountants, investment bankers, experts and consultants to a party hereto and
its affiliates) incurred by a party or on its behalf in connection with, or
related to, the authorization, preparation, negotiation, execution and
performance of this Agreement and the transactions contemplated hereby,
including the preparation, filing, printing and mailing of the Proxy Statement
and the S-4 and the solicitation of stockholder approvals and all other matters
related to the transactions contemplated hereby.
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SECTION 6.14 Obligations of Merger Sub. Parent will take all action
necessary to cause Merger Sub to perform its obligations under this Agreement
and to consummate the Merger on the terms and conditions set forth in this
Agreement.
SECTION 6.15 Listing of Stock. Parent shall use its reasonable best
efforts to cause the shares of Parent Common Stock to be issued in connection
with the Merger to be approved for listing on the NYSE on or prior to the
Closing Date, subject to official notice of issuance.
SECTION 6.16 Antitakeover Statutes. If any Takeover Statute is or may
become applicable to the Merger or the Option Agreement, each of Parent and the
Company shall take such actions as are necessary so that the transactions
contemplated by this Agreement or the Option Agreement, as applicable, may be
consummated as promptly as practicable on the terms contemplated hereby and
otherwise act to eliminate or minimize the effects of any Takeover Statute on
the Merger or the Option Agreement.
SECTION 6.17 Termination of Credit Agreement. Prior to Closing, the
Company shall prepay any amounts outstanding under, and shall use its reasonable
best efforts to terminate, the Loan Agreement dated as of March 19, 1999 between
the Company, Fleet National Bank and the other banks party thereto.
SECTION 6.18 Benchmarq. At the request of Parent, the Company shall merge
or liquidate Benchmarq Microelectronics, Inc., a Delaware corporation, into the
Company on terms and conditions as are satisfactory to Parent.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.1 Conditions to Each Party's Obligations to Effect the
Merger. The respective obligations of each party to consummate the transactions
contemplated by this Agreement are subject to the fulfillment at or prior to the
Effective Time of each of the following conditions, any or all of which may be
waived in whole or in part by the party being benefited thereby, to the extent
permitted by applicable Law:
(a) The Merger shall have been approved and adopted by the Company
Requisite Vote.
(b) Any waiting periods applicable to the Merger under the HSR Act shall
have expired or early termination thereof shall have been granted.
(c) There shall not be in effect any Law of any Governmental Entity of
competent jurisdiction restraining, enjoining or otherwise preventing
consummation of the transactions contemplated by this Agreement and no
Governmental Entity shall have instituted any proceeding which continues to be
pending seeking any such Law.
(d) The S-4 shall have been declared effective by the SEC and shall be
effective at the Effective Time, and no stop order suspending effectiveness
shall have been issued and no action, suit, proceeding or investigation by the
SEC to suspend the effectiveness thereof shall have been initiated and be
continuing.
(e) The Parent Common Stock required to be issued hereunder shall have been
approved for listing on the NYSE, subject only to official notice of issuance.
SECTION 7.2 Conditions to the Obligations of Parent and Merger Sub. The
respective obligations of Parent and Merger Sub to consummate the transactions
contemplated by this Agreement are subject to the fulfillment at or prior to the
Effective Time of each of the following additional conditions, any or all of
which may be waived in whole or part by Parent and Merger Sub, as the case may
be, to the extent permitted by applicable Law:
(a) The representations and warranties of the Company contained herein,
shall have been true, except where the failure to be true, individually or in
the aggregate, has not had or is not reasonably expected to have a Material
Adverse Effect on the Company and its subsidiaries taken as a whole, in each
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case when made and on and as of the Closing Date as though made on and as of the
Closing Date (except for representations and warranties made as of a specified
date, which shall speak only as of the specified date).
(b) The Company shall have performed or complied in all material respects
with all agreements and conditions contained herein required to be performed or
complied with by it prior to or at the time of the Closing.
(c) The Company shall have delivered to Parent a certificate, dated the
date of the Closing, signed by the President or any Vice President of the
Company (but without personal liability thereto), certifying as to the
fulfillment of the conditions specified in Sections 7.2(a) and 7.2(b).
(d) Parent shall have received an opinion of its tax counsel, Weil, Gotshal
& Manges LLP, dated the Effective Time, to the effect that the Merger will
qualify as a reorganization within the meaning of Section 368(a) of the Code.
The issuance of such opinion shall be conditioned on the receipt by such tax
counsel of representation letters from each of the Parent, Merger Sub and the
Company, in each case, in form and substance reasonably satisfactory to Weil,
Gotshal & Manges LLP. Each such representation letter shall be dated on or
before the date of such opinion and shall not have been withdrawn or modified in
any material respect.
(e) All authorizations, consents or approvals of (i) any German
Governmental Entity required under any German Antitrust Laws in connection with
the execution and delivery of this Agreement and the performance of the
obligations hereunder and (ii) any other Governmental Entity (other than those
specified in Section 7.1(b)) required in connection with the execution and
delivery of this Agreement and the performance of the obligations hereunder
shall have been made or obtained, without any limitation, restriction or
condition that is reasonably expected to have a Material Adverse Effect on the
Company and its subsidiaries taken as a whole (or an effect on Parent and its
subsidiaries that, were such effect applied to the Company and its subsidiaries,
is reasonably expected to have a Material Adverse Effect on the Company), except
for such authorizations, consents or approvals, the failure of which to have
been made or obtained is not reasonably expected to have a Material Adverse
Effect on the Company and its subsidiaries taken as a whole (or an effect on
Parent and its subsidiaries that, were such effect applied to the Company and
its subsidiaries, is reasonably expected to have a Material Adverse Effect on
the Company).
(f) Not later than 45 days prior to the date of the Company Stockholder
Meeting, Parent shall have received from the Company's "affiliates" a Company
Affiliate Agreement substantially in the form attached as EXHIBIT B.
(g) The Company shall have received and delivered to Parent a letter from
PricewaterhouseCoopers LLP dated as of the Closing Date, stating that no
conditions exist that would preclude the Company from being party to a business
combination for which the "pooling of interests" method of accounting would be
available. Parent shall have received and (unless waived by the Company)
delivered to the Company a letter from Ernst & Young LLP, dated as of the date
the S-4 is declared effective and dated as of the Closing Date, stating that
accounting of the Merger as a "pooling of interests" under APB 16 and the
applicable SEC rules and regulations is appropriate if the Merger is consummated
as contemplated by this Agreement. Notwithstanding the foregoing, the
satisfaction of this Section 7.2(g) shall not be a condition to the obligations
of Parent and Merger Sub to effect the Merger if the failure to satisfy this
condition results from any action taken or agreed to be taken by or on behalf of
Parent or Merger Sub.
SECTION 7.3 Conditions to the Obligations of the Company. The obligations
of the Company to consummate the transactions contemplated by this Agreement are
subject to the fulfillment at or prior to the Effective Time of each of the
following conditions, any or all of which may be waived in whole or in part by
the Company to the extent permitted by applicable Law:
(a) The representations and warranties of Parent and Merger Sub contained
herein shall have been true, except where the failure to be true, individually
or in the aggregate, has not had or is not reasonably expected to have, a
Material Adverse Effect on Parent and its subsidiaries taken as a whole, in each
case
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when made and on and as of the Closing Date as though made on and as of the
Closing Date (except for representations and warranties made as of a specified
date, which shall speak only as of the specified date).
(b) Parent shall have performed or complied in all material respects with
all agreements and conditions contained herein required to be performed or
complied with by it prior to or at the time of the Closing.
(c) Parent shall have delivered to the Company a certificate, dated the
date of the Closing, signed by the President or any Vice President of Parent
(but without personal liability thereto), certifying as to the fulfillment of
the conditions specified in Sections 7.3(a) and 7.3(b).
(d) The Company shall have received an opinion of its tax counsel, Skadden,
Arps, Slate, Meagher & Flom LLP, dated the Effective Time, to the effect that
the Merger will qualify as a reorganization within the meaning of Section 368(a)
of the Code. The issuance of such opinion shall be conditioned on the receipt by
such tax counsel of representation letters from each of the Parent, Merger Sub
and the Company, in each case, in form and substance reasonably satisfactory to
Skadden, Arps, Slate, Meagher & Flom LLP. Each such representation letter shall
be dated on or before the date of such opinion and shall not have been withdrawn
or modified in any material respect.
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
SECTION 8.1 Termination by Mutual Agreement. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, whether before or after the approval of the Merger by the Company
Requisite Vote referred to in Section 7.1(a), by mutual written consent of the
Company and Parent by action of their respective Boards of Directors.
SECTION 8.2 Termination by Either Parent or the Company. This Agreement
may be terminated and the Merger may be abandoned at any time prior to the
Effective Time by action of the Board of Directors of either Parent or the
Company if:
(a) the Merger shall not have been consummated by February 29, 2000,
whether such date is before or after the date of approval of the Merger by the
Company Requisite Vote (the "TERMINATION DATE"); provided, however, that if
either Parent or the Company reasonably determines in good faith that additional
time is necessary in connection with obtaining any consent, registration,
approval, permit or authorization required to be obtained from any Governmental
Entity, the Termination Date may be extended by Parent or the Company from time
to time by written notice to the other party to a date not beyond March 31,
2000;
(b) the Company Requisite Vote shall not have been obtained at the Company
Stockholder Meeting or at any adjournment or postponement thereof;
(c) any Law permanently restraining, enjoining or otherwise prohibiting
consummation of the Merger shall become final and non-appealable (whether before
or after the approval of the Merger by the Company Requisite Vote); or
(d) any Governmental Entity shall have failed to issue an order, decree or
ruling or to take any other action which is necessary to fulfill the conditions
set forth in Sections 7.1(b), 7.1(d) and 7.2(e), as applicable, and such denial
of a request to issue such order, decree or ruling or take such other action
shall have been final and nonappealable; provided, however, that the right to
terminate this Agreement pursuant to this Section 8.2 shall not be available to
any party that has breached in any material respect its obligations under this
Agreement in any manner that shall have proximately contributed to the
occurrence of the failure of the Merger to be consummated.
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SECTION 8.3 Termination by the Company. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time, whether
before or after the approval of the Merger by the Company Requisite Vote
referred to in Section 7.1(a), by action of the Company Board:
(a) if (i) the Company is not in breach of Section 6.5, (ii) the Merger
shall not have been approved by the Company Requisite Vote, (iii) the Company
Board authorizes the Company, subject to complying with the terms of this
Agreement, to enter into a binding written agreement concerning a transaction
that constitutes a Superior Proposal and the Company notifies Parent in writing
that it intends to enter into such an agreement, attaching the most current
version of such agreement to such notice, and (iv) during the three business day
period after the Company's notice, (A) the Company shall have negotiated with,
and shall have caused its respective financial and legal advisors to negotiate
with, Parent to attempt to make such commercially reasonable adjustments in the
terms and conditions of this Agreement as would enable the Company to proceed
with the transactions contemplated hereby and (B) the Company Board shall have
concluded, after considering the results of such negotiations, that any Superior
Proposal giving rise to the Company's notice continues to be a Superior
Proposal. The Company may not effect such termination unless contemporaneously
therewith the Company pays to Parent in immediately available funds the fees
required to be paid pursuant to Section 8.5. The Company agrees (x) that it will
not enter into a binding agreement referred to in clause (iii) above until at
least the day following the third business day after it has provided the notice
to Parent required thereby and (y) to notify Parent promptly if its intention to
enter into a written agreement referred to in its notification shall change at
any time after giving such notification; or
(b) if there is a breach by Parent or Merger Sub of any representation,
warranty, covenant or agreement contained in this Agreement that cannot be cured
and would cause a condition set forth in Section 7.3(a) or 7.3(b) to be
incapable of being satisfied as of the Termination Date.
SECTION 8.4 Termination by Parent. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time by Parent,
if:
(a) the Company enters into a binding agreement for a Superior Proposal, or
the Company Board shall have withdrawn or adversely modified its approval or
recommendation of the Merger; or
(b) there is a breach by the Company of any representation, warranty,
covenant or agreement contained in this Agreement that cannot be cured and would
cause a condition set forth in Section 7.2(a) or 7.2(b) to be incapable of being
satisfied as of the Termination Date.
SECTION 8.5 Effect of Termination and Abandonment.
(a) In the event of termination of this Agreement and the abandonment of
the Merger pursuant to this Article VIII, this Agreement (other than this
Section 8.5, Sections 5.2(c) and 6.13, and Article IX) shall become void and of
no effect with no liability on the part of any party hereto (or of any of its
directors, officers, employees, agents, legal and financial advisors, or other
representatives); provided, however, that except as otherwise provided herein,
no such termination shall relieve any party hereto of any liability or damages
resulting from any willful breach of this Agreement.
(b) In the event that (i) a bona fide Acquisition Proposal shall have been
made or any person shall have publicly announced an intention (whether or not
conditional) to make a bona fide Acquisition Proposal in respect of the Company
or any of its subsidiaries and thereafter this Agreement is terminated by either
Parent or the Company pursuant to Section 8.2(b) (provided that within 9 months
of the termination of this Agreement any Acquisition Proposal by a third party
is entered into, agreed to, or consummated by the Company) or (ii) this
Agreement is terminated by the Company pursuant to Section 8.3(a), or (iii) this
Agreement is terminated by Parent pursuant to Section 8.4(a) or Section 8.4(b)
as a result of a material breach by the Company of any of the covenants set
forth in Section 6.5 hereof, then the Company shall pay Parent a termination fee
of $41,700,000 in same-day funds, on the date of such termination, in the case
of clause (ii) or (iii), or on the earlier of the date an agreement is entered
into in respect of an Acquisition Proposal or an Acquisition Proposal is
consummated in the case of clause (i), provided, however, that notwithstanding
the foregoing, Parent will not be entitled
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to a termination fee pursuant to clause (i) above in the event the Acquisition
Proposal entered into, agreed to or consummated after such termination is an
Acquisition Proposal whereby (A) the Company or any of its subsidiaries acquires
a third party (the "EXEMPT ACQUIRED PERSON") pursuant to a merger,
consolidation, recapitalization, share exchange or similar transaction in which
the Company survives and the shareholders of the Exempt Acquired Person receive
shares of Company Common Stock which, immediately following consummation of such
merger, consolidation, recapitalization, share exchange or similar transaction,
will represent no more than 45% of the issued and outstanding shares of Company
Common Stock (or securities convertible or exchangeable into, or exercisable for
Company Common Stock, whether upon the passage of time or otherwise) and (B)
such Exempt Acquired Person, or any affiliate or affiliates thereof, was or were
not the subject of an Acquisition Proposal at any time after the date hereof
prior to the termination of this Agreement.
(c) The Company acknowledges that the agreements contained in Section
8.5(b) are an integral part of the transactions contemplated by this Agreement,
and that, without these agreements, Parent and Merger Sub would not have entered
into this Agreement; accordingly, if the Company fails to promptly pay the
amount due pursuant to Section 8.5(b), and, in order to obtain such payment,
Parent commences a suit which results in a judgment against the Company for the
fee set forth in this Section 8.5, the Company shall pay to Parent its costs and
expenses (including, attorneys' fees) in connection with such suit, together
with interest from the date of termination of this Agreement on the amounts owed
at the prime rate of Bank of America, N.A., in effect from time to time during
such period.
SECTION 8.6 Amendment. This Agreement may be amended by action taken by
the Company, Parent and Merger Sub at any time before or after approval of the
Merger by the Company Requisite Vote but, after any such approval, no amendment
shall be made which requires the approval of such stockholders under applicable
Law without such approval. This Agreement may not be amended except by an
instrument in writing signed on behalf of the parties hereto.
SECTION 8.7 Extension; Waiver. At any time prior to the Effective Time,
each party hereto (for these purposes, Parent and Merger Sub shall together be
deemed one party and the Company shall be deemed the other party) may (i) extend
the time for the performance of any of the obligations or other acts of the
other party, (ii) waive any inaccuracies in the representations and warranties
of the other party contained herein or in any document, certificate or writing
delivered pursuant hereto, or (iii) waive compliance by the other party with any
of the agreements or conditions contained herein. Any agreement on the part of
either party hereto to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party. The failure of
any party hereto to assert any of its rights hereunder shall not constitute a
waiver of such rights.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Entire Agreement; Assignment.
(a) This Agreement (including the documents and instruments referred to
herein) constitutes the entire agreement between the parties hereto in respect
of the subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, between the parties in respect of the
subject matter hereof, other than the Confidentiality Agreement (which shall
remain in effect).
(b) Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by operation of Law (including by merger or
consolidation) or otherwise without the prior written consent of the other
parties. Any assignment in violation of the preceding sentence shall be null and
void. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of, and be enforceable by, the parties and their respective
successors and permitted assigns.
SECTION 9.2 Notices. All notices, requests, instructions or other
documents to be given under this Agreement shall be in writing and shall be
deemed given, (i) five business days following sending by
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registered or certified mail, postage prepaid, (ii) when sent if sent by
facsimile; provided, however, that the facsimile is promptly confirmed by
telephone confirmation thereof, (iii) when delivered, if delivered personally to
the intended recipient, and (iv) one business day following sending by overnight
delivery via a national courier service, and in each case, addressed to a party
at the following address for such party:
if to Merger Sub or to
Parent, to: Texas Instruments Incorporated
7839 Churchill Way, M/S 3995
Dallas, Texas 75251
-or-
P.O. Box 650311, M/S 3995
Dallas, Texas 75265
Attention: Charles D. Tobin
Facsimile No.: (972) 917-3804
with copies to: Texas Instruments Incorporated
8505 Forest Lane, M/S 8658
Dallas, Texas 75243
-or-
P.O. Box 660199, M/S 8658
Dallas, Texas 75266
Attention: Richard J. Agnich, Esq.
Facsimile No.: (972) 480-5061
and
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201-6950
Attention: R. Scott Cohen, Esq.
Facsimile: (214) 746-7777
if to the Company, to: Unitrode Corporation
7 Continental Boulevard
Merrimack, New Hampshire 03054-4334
Attention: Allan R. Campbell, Esq.
Facsimile: (603) 429-8771
with a copy to: Skadden, Arps, Slate, Meagher & Flom LLP
One Beacon Street
Boston, Massachusetts 02108
Attention: Margaret Brown, Esq.
Facsimile: (617) 573-4815
or to such other address or facsimile number as the person to whom notice is
given may have previously furnished to the other in writing in the manner set
forth above.
SECTION 9.3 Governing Law. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Maryland, without giving
effect to the choice of Law principles thereof.
SECTION 9.4 Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
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SECTION 9.5 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and its successors and
permitted assigns, and, except as provided in Section 6.7, nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement.
SECTION 9.6 Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
SECTION 9.7 Specific Performance. The parties agree that irreparable
damage would occur in the event that any of the provisions of this 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
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the State of Maryland or in Maryland state court, this
being in addition to any other remedy to which they are entitled at Law or in
equity. In addition, each of the parties hereto (a) consents to submit itself to
the personal jurisdiction of any federal court located in the State of Maryland
or any Maryland state court in the event any dispute arises out of this
Agreement or any of the transactions contemplated hereby, (b) agrees that it
will not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, and (c) agrees that it will not bring any
action relating to this Agreement or any of the transactions contemplated hereby
in any court other than a federal or state court sitting in the State of
Maryland.
SECTION 9.8 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
SECTION 9.9 Interpretation.
(a) The words "hereof," "herein," "herewith" and words of similar import
shall, unless otherwise stated, be construed to refer to this Agreement as a
whole and not to any particular provision of this Agreement, and article,
section, paragraph, exhibit, and schedule references are to the articles,
sections, paragraphs, exhibits, and schedules of this Agreement unless otherwise
specified. Whenever the words "include," "includes," or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation," the word "or" shall mean "and/or." All terms defined in this
Agreement shall have the defined meanings contained herein when used in any
certificate or other document made or delivered pursuant hereto unless otherwise
defined therein. The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms. Any agreement,
instrument or statute defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement, instrument or
statute as from time to time, amended, qualified or supplemented, including (in
the case of agreements and instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes and all attachments
thereto and instruments incorporated therein. References to a person are also to
its permitted successors and assigns.
(b) The phrases "the date of this Agreement," "the date hereof," and terms
of similar import, unless the context otherwise requires, shall be deemed to
refer to July 25, 1999. The phrase "made available" in this Agreement shall mean
that the information referred to has been actually delivered to the party to
whom such information is to be made available.
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(c) The parties have participated jointly in the negotiation and drafting
of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
SECTION 9.10 Definitions. As used herein,
(a) "BENEFICIAL OWNERSHIP" or "BENEFICIALLY OWN" has the meaning provided
in Section 13(d) of the Exchange Act and the rules and regulations thereunder.
(b) "BUSINESS DAY" shall mean any day other than Saturday, Sunday or any
day on which banks in New York City, New York are required or authorized by Law
to be closed for business.
(c) "KNOW" or "KNOWLEDGE" means, in respect of any party, the actual
knowledge of such party's executive officers, without any requirement to
undertake an independent investigation.
(d) "MATERIAL ADVERSE EFFECT" means in respect of any entity, any change,
circumstance, effect or development that, individually or in the aggregate with
all other changes, circumstances and effects, is or is reasonably likely to be
materially adverse to (i) the assets, properties, financial condition or results
of operations of such entity and its subsidiaries taken as a whole, other than
any change, circumstance, effect or development (A) relating to the economy in
general in any country in which such entity operates or owns assets, (B)
relating to the semiconductor industry (it being understood that this clause (B)
shall not exclude, in the case of any Material Adverse Effect with respect to
the Company, any change, circumstance, effect or development relating to the
semiconductor industry that disproportionately impacts the Company), (C) arising
out of or resulting from actions contemplated by the parties in connection with,
or which is attributable to, the announcement of this Agreement and the
transactions contemplated hereby (including loss of customers or suppliers or
the delay or cancellation of orders for products, but excluding in the case of
the Company the loss of employees), or (D) any shareholder litigation or
litigation by any Governmental Entity, in each case brought or threatened
against such entity or any member of its board of directors in respect of this
Agreement or the transactions contemplated hereby; provided that neither (x) any
change in the market price or trading volume of the Company Common Stock or
Parent Common Stock nor (y) a failure by the Company or Parent to meet the
revenue or earnings predictions of equity analysis reflected in the First Call
consensus estimate, or any other revenue or earnings predictions or
expectations, for any period ending on or after the date of this Agreement
shall, in and of itself, constitute a Material Adverse Effect (it being
understood that this proviso, as it relates to (y), shall not exclude any
underlying change, circumstance, effect or development which resulted in such
failure to meet such estimates, predictions or expectations), or (ii) the
ability of such party to consummate the transactions contemplated by this
Agreement.
(e) "PERSON" means an individual, corporation, limited liability company,
partnership, association, trust, unincorporated organization, other entity or
group (as defined in the Exchange Act).
(f) "SUBSIDIARY" means, in respect of any party, any corporation,
partnership or other entity or organization, whether incorporated or
unincorporated, of which (i) such other party or any other subsidiary of such
party is a general partner (excluding such partnerships where such party or any
subsidiary of such party does not have a majority of the voting interest in such
partnership) or (ii) at least a majority of the securities or other interests
having by their terms ordinary voting power to elect a majority of the board of
directors or others performing similar functions in respect of such corporation
or other organization is directly or indirectly owned or controlled by such
party or by any one or more of its subsidiaries, or by such party and one or
more of its subsidiaries.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed on its behalf as of the date first above written.
UNITRODE CORPORATION
By: /s/ ROBERT J. RICHARDSON
----------------------------------
Name: Robert J. Richardson
Title: Chairman of the Board and
Chief Executive Officer
TEXAS INSTRUMENTS INCORPORATED
By: /s/ DELBERT A. WHITAKER
----------------------------------
Name: Delbert A. Whitaker
Title: Senior Vice President
UNICORN ACQUISITION CORP.
By: /s/ DELBERT A. WHITAKER
----------------------------------
Name: Delbert A. Whitaker
Title: President
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<PAGE> 126
ANNEX B
VOTING AGREEMENT
In consideration of Texas Instruments Incorporated, a Delaware corporation
("PARENT"), Unicorn Acquisition Corp., a Maryland corporation ("MERGER SUB"),
and Unitrode Corporation, a Maryland corporation (the "COMPANY"), entering into
on the date hereof an Agreement and Plan of Merger, dated as of the date hereof
(the "MERGER AGREEMENT") which provides, among other things, that Merger Sub,
upon the terms and subject to the conditions thereof, will be merged with and
into the Company (the "MERGER") and each outstanding share of Company Common
Stock (as defined in the Merger Agreement) will be converted into the Share
Consideration (as defined in the Merger Agreement) in accordance with the terms
of the Merger Agreement, each of the undersigned holders (each, a "STOCKHOLDER")
of shares of Company Common Stock agrees with each of Parent, Merger Sub and the
Company as follows:
1. Each Stockholder hereby agrees, in person or by proxy, to vote the
shares of Company Common Stock set forth opposite its name in SCHEDULE A
hereto (the "SCHEDULE A SECURITIES") to approve and adopt the Merger and
the transactions contemplated thereby at any meeting or meetings of the
stockholders of the Company, and at any adjournment thereof or pursuant to
action by written consent, at or by which the Merger or such other
transactions, are submitted for the consideration and vote of the
stockholders of the Company.
2. Each Stockholder hereby agrees that such Stockholder shall not
enter into any voting agreement or grant a proxy or power of attorney with
respect to the Schedule A Securities which is inconsistent with the
obligations of such Stockholder under this Agreement.
3. A Stockholder may sell, assign, encumber or otherwise dispose of,
or enter into any contract, option or other arrangement or understanding in
respect of the direct or indirect sale, assignment, transfer, encumbrance
or other disposition of, any Schedule A Securities during the term of this
Agreement provided such Stockholder provides written notice to Parent and
first obtains a written agreement from the proposed transferee pursuant to
which the proposed transferee agrees to be bound by the terms of this
Agreement.
4. Each Stockholder hereby represents and warrants to Parent and
Merger Sub that as of the date hereof:
(a) Such Stockholder (i) owns beneficially all of the shares of
Company Common Stock set forth opposite the Stockholder's name in
SCHEDULE A hereto, (ii) has the legal power, authority and right to
enter into, execute and deliver this Voting Agreement without the
consent or approval of any other person, and (iii) has not entered into
any voting agreement or other similar agreement with or granted any
person any proxy (revocable or irrevocable) in respect of such shares
(other than this Voting Agreement).
(b) Assuming due authorization, execution and delivery by the other
parties hereto, this Voting Agreement is the valid and binding agreement
of such Stockholder.
(c) No investment banker, broker or finder is entitled to a
commission or fee from such Stockholder in respect of this Voting
Agreement based upon any arrangement or agreement made by or on behalf
of the Stockholder.
5. If any provision of this Voting Agreement shall be invalid or
unenforceable under applicable law, such provision shall be ineffective to
the extent of such invalidity or unenforceability only, without in any way
affecting the remaining provisions of this Voting Agreement.
6. This Voting Agreement may be executed in two or more counterparts
each of which shall constitute one and the same instrument.
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<PAGE> 127
7. The parties hereto agree that if for any reason any party hereto
shall have failed to perform its obligations under this Voting Agreement,
then the party seeking to enforce this Voting Agreement against such
non-performing party shall be entitled to specific performance and
injunctive and other equitable relief, and the parties hereto further agree
to waive any requirement for the securing or posting of any bond in
connection with the obtaining of any such injunctive relief. This provision
is without prejudice to any other rights or remedies, whether at law or in
equity, that any party hereto may have against any other party hereto for
any failure to perform its obligations under this Voting Agreement.
8. This Voting Agreement shall be governed by and construed in
accordance with the laws of the State of Maryland.
9. This Agreement shall terminate upon the earlier of (a) the
Effective Time (as defined in the Merger Agreement) or (b) the termination
of the Merger Agreement in accordance with its terms.
10. Parent, Merger Sub and the Company understand and agree that this
Agreement pertains only to each Stockholder and not to any of its
affiliates, if any, or advisers.
11. Neither Parent, Merger Sub nor the Company will enter into any
agreement with any other stockholder of the Company having a purpose or
effect substantially similar to that of this Voting Agreement on financial
terms (in respect of such other stockholder) more favorable than the terms
of this Voting Agreement.
12. Any Stockholder who is also a director or officer of the Company
will not, by execution of this Agreement, be precluded from exercising his
or her duties under applicable law in his or her capacity as a director
with respect to the Company and nothing herein will limit or affect, or
give rise to any liability to a Stockholder by virtue of any actions taken
by such Stockholder in his or her capacity as a director or officer of the
Company.
13. Nothing contained in this Voting Agreement shall be deemed to vest
in Parent, Merger Sub or the Company any direct or indirect ownership or
incidence of ownership of or with respect to any Schedule A Securities. All
rights, ownership and economic benefits of and relating to the Schedule A
Securities shall remain and belong to the applicable Stockholder and
neither Parent, Merger Sub nor the Company shall have any power or
authority to direct any Stockholder in the voting of any Schedule A
Securities or the performance by any Stockholder of its duties or
responsibilities as a stockholder of the Company, except as otherwise
provided herein.
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IN WITNESS WHEREOF, the parties hereto have executed this Voting Agreement
as of July 25, 1999.
TEXAS INSTRUMENTS INCORPORATED
By: /s/ DELBERT A. WHITAKER
-------------------------------------
Delbert A. Whitaker
Senior Vice President
UNICORN ACQUISITION CORP.
By: /s/ DELBERT A. WHITAKER
-------------------------------------
Delbert A. Whitaker
Senior Vice President
UNITRODE CORPORATION
By: /s/ JOHN KOKULIS
-------------------------------------
Name: John Kokulis
Title: Executive Vice President/CFO
STOCKHOLDERS
/s/ DIETRICH R. ERDMANN
----------------------------------------
Dietrich R. Erdmann
/s/ ROBERT L. GABLE
----------------------------------------
Robert L. Gable
/s/ ROBERT J. RICHARDSON
----------------------------------------
Robert J. Richardson
/s/ ALLAN R. CAMPBELL
----------------------------------------
Allan R. Campbell
/s/ RAYMOND G. HAWKINS
----------------------------------------
Raymond G. Hawkins
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<PAGE> 129
SCHEDULE A
TO
VOTING AGREEMENT
<TABLE>
<CAPTION>
STOCKHOLDER CLASS NUMBER OF SHARES
- ----------- ----- ----------------
<S> <C> <C>
Dietrich R. Erdmann Common 605,212
Robert L. Gable Common 87,000
Robert J. Richardson Common 50,000
Allan R. Campbell Common 119,750
Raymond G. Hawkins Common 6,000
</TABLE>
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<PAGE> 130
ANNEX C
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of July 25, 1999 (the "STOCK OPTION
AGREEMENT"), between Texas Instruments Incorporated, a Delaware corporation
("PARENT"), and Unitrode Corporation, a Maryland corporation (the "COMPANY").
WHEREAS, Parent, Unicorn Acquisition Corp., a Maryland corporation and a
wholly owned subsidiary of Parent ("MERGER SUB"), and the Company are parties to
that certain Agreement and Plan of Merger, dated as of the date hereof (the
"MERGER AGREEMENT"), which provides, among other things, that Merger Sub, on the
terms and subject to the conditions thereof, will merge with and into the
Company with the Company surviving as a wholly owned subsidiary of Parent;
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, Parent has requested that the Company grant to Parent an option to
purchase up to 6,470,760 shares of common stock, par value $0.01 per share
("COMMON STOCK") of the Company, upon the terms and subject to the conditions
hereof; and
WHEREAS, in order to induce Parent to enter into the Merger Agreement, the
Company is willing to grant Parent the requested option.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein, the parties hereto agree as follows:
1. The Option; Exercise; Adjustments. (a) Subject to the other terms and
conditions set forth herein, the Company hereby grants to Parent an irrevocable
option (the "OPTION") to purchase up to 6,470,760 shares of Common Stock (the
"SHARES"). The purchase price per Share (the "PURCHASE PRICE") shall be $38.60.
The Purchase Price and the number of Shares shall be subject to adjustment as
provided in Section 1(c) hereof.
(b) Parent may exercise the Option with respect to any or all of the Option
Shares at any one time or from time to time, subject to the provisions of
Section 1(c) hereof, upon the occurrence of an Exercise Event (as defined
below). Subject to the last sentence of this Section 1(b), the Option will
terminate and be of no further force and effect upon the earliest to occur of
(i) the Effective Time (as defined in the Merger Agreement), (ii) 120 days after
the first occurrence of an Exercise Event, and (iii) the termination of the
Merger Agreement in accordance with its terms so long as, in the case of this
clause (iii), no Exercise Event has occurred or could still occur under Section
8.5(b) of the Merger Agreement, in which case the Option will terminate on the
later of (x) 120 days following the time such termination fee becomes
unconditionally payable and (y) the expiration of the period in which an
Exercise Event could occur pursuant to Section 8.5(b) of the Merger Agreement.
"Exercise Event" means any event as a result of which Parent is unconditionally
entitled to receive a termination fee pursuant to Section 8.5(b) of the Merger
Agreement. Notwithstanding the termination of the Option, Parent shall be
entitled to purchase the Shares with respect to which it has exercised the
Option in accordance with the terms hereof prior to the termination of the
Option.
(c) In the event Parent is entitled to and wishes to exercise the Option,
the Parent shall send a written notice to the Company (the "STOCK EXERCISE
NOTICE") specifying a date (subject to the HSR Act (as defined below)) not later
than 20 business days and not earlier than three business days following the
date such notice is given for the closing of such purchase and specifying the
number of Shares Parent wishes to purchase. In the event of any change in the
number of issued and outstanding shares of Common Stock by reason of any stock
dividend, stock split, split-up, recapitalization, merger or other change in the
corporate or capital structure of the Company, the number of Shares subject to
this Option and the purchase price per Share shall be appropriately adjusted to
restore the Parent to its rights hereunder, including its right to purchase
Shares representing approximately 19.9% of the capital stock or securities
convertible or otherwise exchangeable for capital stock of the Company entitled
to vote generally
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for the election of the directors of the Company that are issued and outstanding
immediately prior to the exercise of the Option at an aggregate purchase price
equal to the Purchase Price multiplied by 6,470,760.
(d) At any time the Option is then exercisable pursuant to the terms of
Section 1(b) hereof, Parent may elect, in lieu of exercising the Option to
purchase Shares provided in Section 1(a) hereof, to send a written notice to the
Company (the "CASH EXERCISE NOTICE") specifying a date not later than 20
business days and not earlier than 10 business days following the date such
notice is given on which date the Company shall pay to Parent an amount in cash
equal to the Spread (as hereinafter defined) multiplied by all or such portion
of the Shares subject to the Option as Parent shall specify in such Cash
Exercise Notice. As used herein "SPREAD" shall mean the excess, if any, over the
Purchase Price of the higher of (i) if applicable, the highest price per share
of Common Stock (including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid or proposed to be paid by any person pursuant to
a definitive agreement executed by the Company with respect to an Acquisition
Proposal (the "ALTERNATIVE PURCHASE PRICE") or (ii) the average closing price,
for the five trading days ending on the trading day immediately preceding the
date of the Cash Exercise Notice, per share of Common Stock as reported on the
New York Stock Exchange (the "CLOSING PRICE"). If the Alternative Purchase Price
includes any property other than cash, the Alternative Purchase Price shall be
the sum of (i) the fixed cash amount, if any, included in the Alternative
Purchase Price plus (ii) the fair market value of such other property. If such
other property consists of securities with an existing public trading market,
the average of the closing prices (or the average of the closing bid and asked
prices if closing prices are unavailable) for such securities in their principal
public trading market on the five trading days ending on the trading day
immediately preceding the date of the Cash Exercise Notice shall be deemed to
equal the fair market value of such property. If such other property consists of
something other than cash or securities with an existing public trading market
and, as of the payment date for the Spread, agreement on the value of such other
property has not been reached between the parties hereto, the Alternative
Purchase Price shall be deemed to equal the Closing Price. Upon exercise of its
right to receive cash pursuant to the exercise of the Option, the obligations of
the Company to deliver Shares pursuant to Section 3 shall be terminated with
respect to such number of Shares for which Parent shall have elected to be paid
the Spread.
2. Conditions to Delivery of Shares. The Company's obligation to deliver
Shares upon exercise of the Option is subject only to the conditions that:
(i) No preliminary or permanent injunction or other order issued by
any federal or state court of competent jurisdiction in the United States
prohibiting the delivery of the Shares shall be in effect; and
(ii) Any applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR ACT") shall have expired or
been terminated; and
(iii) All consents, approvals, orders, notifications, filings or
authorizations, the failure of which to make or obtain would have the
effect of making the issuance of Shares to Parent illegal ("OTHER REQUISITE
CONSENTS"), shall have been made or obtained.
3. The Closing. (a) Any closing hereunder shall take place on the date
specified by Parent in its Stock Exercise Notice or Cash Exercise Notice, as the
case may be, at such reasonable time and place as may be indicated in the Stock
Exercise Notice or the Cash Exercise Notice, as applicable, or at the election
of the Company at 10:00 A.M., local time, at the offices of Weil, Gotshal &
Manges LLP, 100 Crescent Court, Suite 1300, Dallas, Texas, or, if the conditions
set forth in Section 2(i), 2(ii) or 2(iii) have not then been satisfied, on the
second business day following the satisfaction of such conditions, or at such
other time and place as the parties hereto may agree (the "CLOSING DATE"). On
the Closing Date, (i) in the event of a closing pursuant to Section 1(c) hereof,
the Company will deliver to Parent a certificate or certificates, duly endorsed
(or accompanied by duly executed stock powers), representing the Shares in the
denominations designated by Parent in its Stock Exercise Notice and Parent will
purchase such Shares from the Company at a cash price per Share equal to the
Purchase Price or (ii) in the event of a closing pursuant to Section 1(d)
hereof, the Company will deliver to Parent cash in
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an amount determined pursuant to Section 1(d) hereof. Any payment made by Parent
to the Company, or by the Company to Parent, pursuant to this Stock Option
Agreement shall be made by wire transfer of immediately available funds to a
bank designated by the party receiving such funds.
(b) The certificates representing the Shares may bear an appropriate legend
relating to the fact that such Shares have not been registered under the
Securities Act of 1933, as amended (the "SECURITIES ACT").
4. Representations and Warranties of the Company. The Company represents
and warrants to Parent that (a) the Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Maryland
and has the requisite corporate power and authority to enter into and perform
this Stock Option Agreement; (b) the execution and delivery of this Stock Option
Agreement by the Company and the consummation by it of the transactions
contemplated hereby have been duly authorized by the Board of Directors of the
Company and this Stock Option Agreement has been duly and validly executed and
delivered by a duly authorized officer of the Company and will constitute a
valid and binding obligation of the Company subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles; (c) the Company has taken all necessary corporate action to
authorize and reserve the Shares issuable upon exercise of the Option and the
Shares, when issued and delivered by the Company upon exercise of the Option,
will be duly authorized, validly issued, fully paid and non-assessable and free
of preemptive rights; (d) except as otherwise required by the HSR Act or for the
Other Requisite Consents, the execution and delivery of this Stock Option
Agreement by the Company and the consummation by it of the transactions
contemplated hereby do not require the consent, waiver, approval or
authorization of or any filing with any person or public authority and will not
violate, result in a breach of or the acceleration of any obligation under, or
constitute a default under, any provision of any charter or bylaw, indenture,
mortgage, lien, lease, agreement, contract, instrument, order, law, rule,
regulation, judgment, ordinance, or decree, or restriction by which the Company
or any of its subsidiaries or any of their respective properties or assets is
bound, except where the failure to obtain such consent, waiver, approval or
authorization or make such filing, or where such breach, acceleration or
default, is not reasonably expected to have a Material Adverse Effect (as
defined in the Merger Agreement) on the Company and its subsidiaries taken as a
whole or on the ability of the Company to consummate the transactions
contemplated hereby; and (e) no "fair price", "moratorium", "control share
acquisition", "interested stockholder" or other form of antitakeover statute or
regulation (including, without limitation, Subtitle 6 (Sections 3-601 through
3-603) and Subtitle 7 (Sections 3-701 through 3-709) of the Corporation Law of
the State of Maryland) is applicable to the acquisition of Shares pursuant to
this Stock Option Agreement.
5. Representations and Warranties of the Parent. Parent represents and
warrants to the Company that (a) Parent is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the requisite corporate power and authority to enter into and perform this Stock
Option Agreement; (b) the execution and delivery of this Stock Option Agreement
by Parent and the consummation by it of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of
Parent and this Stock Option Agreement has been duly and validly executed and
delivered by a duly authorized officer of Parent and will constitute a valid and
binding obligation of Parent enforceable in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles; and (c) Parent is acquiring the Option and, if
and when it exercises the Option, will be acquiring the Shares issuable upon the
exercise thereof for its own account and not with a view to distribution or
resale in any manner which would be in violation of the Securities Act.
6. Listing of Shares; HSR Act Filings; Governmental Consents. Subject to
applicable law and the rules and regulations of the New York Stock Exchange (or
any other national securities exchange or quotation system on which the Common
Stock is then listed) (as applicable, the "STOCK EXCHANGE"), when the Option
becomes exercisable hereunder, the Company will promptly file an application to
list the
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Shares on the Stock Exchange and will use all reasonable efforts to effect all
necessary filings by the Company under the HSR Act. Each of the parties hereto
will use all reasonable efforts to obtain consents of all third parties and
governmental authorities (including any Other Requisite Consents), if any,
necessary to the consummation of the transactions contemplated hereby.
7. Registration Rights. (a) In the event that Parent shall desire to sell
any of the Shares within two years after the purchase of such Shares pursuant
hereto, and such sale requires, in the opinion of counsel to Parent, which
opinion shall be reasonably satisfactory to the Company and its counsel,
registration of such Shares under the Securities Act, the Company will cooperate
with Parent and any underwriters in registering such Shares for resale,
including, without limitation, promptly filing a registration statement which
complies with the requirements of applicable federal and state securities laws,
entering into an underwriting agreement with such underwriters upon such terms
and conditions as are customarily contained in underwriting agreements with
respect to secondary distributions; provided that the Company shall not be
required to have declared effective more than two registration statements
hereunder and shall be entitled to delay the filing or effectiveness of any
registration statement for up to 120 days if the offering would, in the good
faith judgment of the Board of Directors of the Company, require premature
disclosure of any material corporate development or otherwise interfere with or
adversely affect any pending or proposed offering of securities of the Company
or any other material transaction involving the Company. Parent shall use its
reasonable efforts to cause, and to cause any underwriters of any sale or
disposition to cause, any sale or disposition pursuant to such registration
statement to be effected on a widely disseminated basis so that upon
consummation thereof no purchaser or transferee will own beneficially more than
5.0% of the then outstanding voting power of the Company.
(b) If the Common Stock is registered pursuant to the provisions of this
Section 7, the Company agrees (i) to furnish copies of the registration
statement and the prospectus relating to the Shares covered thereby in such
numbers as Parent may from time to time reasonably request and (ii) if any event
shall occur as a result of which it becomes necessary to amend or supplement any
registration statement or prospectus, to prepare and file under the applicable
securities laws such amendments and supplements as may be necessary to keep
available for at least 90 days a prospectus covering the Common Stock meeting
the requirements of such securities laws, and to furnish Parent such numbers of
copies of the registration statement and prospectus as amended or supplemented
as may reasonably be requested. Parent will provide information reasonably
requested by the Company for inclusion in any registration statement to be filed
pursuant to this Section 7. The Company shall bear the cost of the registration,
including, but not limited to, all registration and filing fees, printing
expenses, and fees and disbursements of counsel and accountants for the Company,
except that Parent shall pay the fees and disbursements of its counsel, and the
underwriting fees and selling commissions applicable to the shares of Common
Stock sold by Parent. In connection with any registration pursuant to this
Section 7, Parent and the Company shall provide each other and each underwriter
of the offering with customary representations, warranties and covenants,
including indemnification and contribution. If a requested registration pursuant
to this Section 7 involves an underwritten offering, the underwriter or
underwriters thereof shall be a nationally recognized firm or firms selected by
the Company, which firm or firms shall be reasonably satisfactory to Parent.
8. Expenses. Each party hereto shall pay its own expenses incurred in
connection with this Stock Option Agreement.
9. Specific Performance. The Company acknowledges that if the Company fails
to perform any of its obligations under this Stock Option Agreement immediate
and irreparable harm or injury would be caused to Parent for which money damages
would not be an adequate remedy. In such event, the Company agrees that Parent
shall have the right, in addition to any other rights it may have, to specific
performance of this Stock Option Agreement. Accordingly, if Parent should
institute an action or proceeding seeking specific enforcement of the provisions
hereof, the Company hereby waives the claim or defense that Parent has an
adequate remedy at law and hereby agrees not to assert in any such action or
proceeding the claim or defense that such a remedy at law exists. The Company
further agrees to waive any requirements for the securing or posting of any bond
in connection with obtaining any such equitable relief.
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10. Profit Limitation. (a) Notwithstanding any other provision of this
Stock Option Agreement, in no event shall Parent's Total Profit (as hereinafter
defined) exceed $55,600,000 and, if it otherwise would exceed such amount,
Parent, at its sole election, shall either (a) deliver to the Company for
cancellation Shares previously purchased by Parent, (b) pay cash to the Company
or (c) undertake any combination thereof, so that Parent's Total Profit shall
not exceed $55,600,000 after taking into account the foregoing actions.
(b) Notwithstanding any other provision of this Stock Option Agreement,
this Option may not be exercised for a number of Shares as would, as of the date
of the Stock Exercise Notice, result in a Notional Total Profit (as defined
below) of more than $55,600,000 and, if exercise of the Option otherwise would
exceed such amount, Parent, at its discretion, may increase the Purchase Price
for that number of Shares set forth in the Stock Exercise Notice so that the
Notional Total Profit shall not exceed $55,600,000; provided, that nothing in
this sentence shall restrict any exercise of the Option permitted hereby on any
subsequent date at the Purchase Price set forth in Section 1(a) hereof.
(c) As used herein, the term "TOTAL PROFIT" shall mean the aggregate amount
(before taxes) of the following: (i) the amount of cash received by Parent
pursuant to Section 1(d), (ii) (x) the cash amounts or the fair market value of
any property received by Parent pursuant to the sale of Shares (or any other
securities into which such Shares are converted or exchanged), less (y) Parent's
Purchase Price for such Shares, and (iii) any fees received pursuant to Section
8.5(b) of the Merger Agreement.
(d) As used herein, the term "NOTIONAL TOTAL PROFIT" with respect to any
number of Shares as to which Parent may propose to exercise this Option shall be
the Total Profit determined as of the date of the Stock Exercise Notice assuming
that this Option were exercised on such date for such number of Shares and
assuming that such Shares, together with all other Shares held by Parent and its
affiliates as of such date, were sold for cash at the closing market price for
the Common Stock as of the close of business on the preceding trading day (less
customary brokerage commissions).
11. Transfers. The Shares may not be sold, assigned, transferred, or
otherwise disposed of except (i) in an underwritten public offering as provided
in Section 7 hereof or (ii) to any purchaser or transferee who, to Parent's
knowledge, would immediately following such sale, assignment, transfer or
disposal, beneficially own more than 5.0% of the then outstanding voting power
of the Company; provided, however, that Parent shall be permitted to sell any
Shares if such sale is made pursuant to a tender or exchange offer.
12. Notice. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been fully given if
(i) delivered personally; (ii) sent by certified or registered mail, return
receipt requested; (iii) sent by overnight courier for delivery on the next
business day; or (iv) sent by confirmed facsimile, provided that a hard copy of
all such materials is thereafter sent within 24 hours in the manner described in
clauses (i), (ii) or (iii), to the parties at the following addresses or at such
other addresses as shall be specified by the parties by like notice:
If to Parent:
Texas Instruments Incorporated
7839 Churchill Way, M/S 3995
Dallas, Texas 75251
-- or --
P.O. Box 650311, M/S 3995
Dallas, Texas 75265
Attention: Charles D. Tobin
Facsimile No.: (972) 917-3804
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<PAGE> 135
With copies to:
Texas Instruments Incorporated
8505 Forest Lane, M/S 8658
Dallas, Texas 75243
-- or --
P.O. Box 660199, M/S 8658
Dallas, Texas 75266
Attention: Richard J. Agnich, Esq.
Facsimile No.: (972) 480-5061
and
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Attention: R. Scott Cohen
Facsimile No.: (214) 746-7777
If to the Company:
Unitrode Corporation
7 Continental Boulevard
Merrimack, New Hampshire 03054
Attention: Allan R. Campbell, Esq.
Facsimile No.: (603) 429-8771
With a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
One Beacon Street, 31st Floor
Boston, Massachusetts 02108
Attention: Margaret A. Brown, Esq.
Facsimile No.: (617) 573-4822
Notices provided in accordance with this Section 12 shall be deemed
delivered (i) on the date of personal delivery, (ii) four business days after
deposit in the mail, (iii) one business day after delivery to an overnight
courier, or (iv) on the date of confirmation of the facsimile transmission, as
the case may be.
13. Parties in Interest. This Stock Option Agreement shall inure to the
benefit of and be binding upon the parties named herein and their respective
successors and permitted assigns; provided, however, that such successor in
interest or permitted assigns shall agree to be bound by the provisions of this
Stock Option Agreement. Nothing in this Stock Option Agreement, express or
implied, is intended to confer upon any person other than the Company or Parent,
or their successors or assigns, any rights or remedies under or by reason of
this Stock Option Agreement.
14. Entire Agreement; Amendments. This Stock Option Agreement, together
with the Merger Agreement and the other documents referred to therein, contains
the entire agreement between the parties hereto with respect to the subject
matter hereof and supersedes all prior and contemporaneous agreements and
understandings, oral or written, with respect to such transactions. This Stock
Option Agreement may not be changed, amended or modified orally, but may be
changed only by an agreement in writing signed by the party against whom any
waiver, change, amendment, modification or discharge may be sought.
15. Assignment. No party to this Stock Option Agreement may assign any of
its rights or obligations under this Stock Option Agreement without the prior
written consent of the other party hereto.
16. Headings. The section headings herein are for convenience only and
shall not affect the construction of this Stock Option Agreement.
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17. Counterparts. This Stock Option Agreement may be executed in any number
of counterparts, each of which, when executed, shall be deemed to be an original
and all of which together shall constitute one and the same document.
18. Governing Law. This Stock Option Agreement shall be governed by and
construed in accordance with the laws of the State of Maryland, without giving
effect to the choice of law principles thereof.
19. Severability. If any term, provision, covenant or restriction of this
Stock Option Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Stock Option Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
[THIS REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Parent and the Company have caused this Stock
Option Agreement to be duly executed and delivered on the day and year first
above written.
TEXAS INSTRUMENTS INCORPORATED
By: /s/ DELBERT A. WHITAKER
----------------------------------
Delbert A. Whitaker
Senior Vice President
UNITRODE CORPORATION
By: /s/ ROBERT J. RICHARDSON
----------------------------------
Name: Robert J. Richardson
Title: Chairman of the Board and
Chief Executive Officer
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ANNEX D
[BROADVIEW LETTERHEAD]
July 26, 1999
CONFIDENTIAL
Board of Directors
Unitrode Corporation
7 Continental Boulevard
Merrimack, NH 03054
Dear Members of the Board:
We understand that Unitrode Corporation ("Unitrode" or "Company"), Texas
Instruments Incorporated ("TI" or "Parent") and Unitrode Acquisition Corp., a
wholly-owned subsidiary of Parent ("Merger Sub"), propose to enter into an
Agreement and Plan of Merger (the "Agreement") pursuant to which Merger Sub will
be merged with and into the Company (the "Merger"). Pursuant to the Merger each
share of Unitrode common stock ("Company Common Stock") will be converted into
the right to receive the number of shares of common stock of Parent ("TI Common
Stock") determined by dividing $38.60 by the Average Parent Stock Price (as
defined in the Agreement) provided, however, that (i) if the Average Parent
Stock Price is less than $133.70 then the Average Parent Stock Price will be
deemed to be equal to $133.70, and (ii) if the Average Parent Stock Price is
greater than $153.70 then the Average Parent Stock Price will be deemed to be
equal to $153.70. The quotient obtained in accordance with the preceding
sentence is referred to herein as the "Exchange Ratio". The terms and conditions
of the above described Merger are more fully detailed in the Agreement.
You have requested our opinion as to whether the Exchange Ratio is fair,
from a financial point of view, to Unitrode stockholders.
Broadview International LLC ("Broadview") focuses on providing merger and
acquisition advisory services to information technology ("IT"), communications
and media companies. In this capacity, we are continually engaged in valuing
such businesses, and we maintain an extensive database of IT, communications and
media mergers and acquisitions for comparative purposes. We are currently acting
as financial advisor to Unitrode's Board of Directors and will receive a fee
from Unitrode upon the successful conclusion of the Merger.
In rendering our opinion, we have, among other things:
1.) reviewed the terms of the executed Agreement furnished to us by
Weil, Gotshal & Manges LLP on July 26, 1999;
2.) reviewed Unitrode's annual report on Form 10-K for the fiscal year
ended January 31, 1998, including the audited financial statements included
therein, and Unitrode quarterly report on Form 10-Q for the period ended
May 1, 1999, including the unaudited financial statements included therein;
3.) reviewed certain internal financial and operating information,
including quarterly projections through January 31, 2001, relating to
Unitrode, prepared and furnished to us by Unitrode management;
4.) participated in discussions with Unitrode management concerning
the operations, business strategy, current financial performance and
prospects for Unitrode;
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<PAGE> 139
5.) discussed with Unitrode management its view of the strategic
rationale for the Merger;
6.) reviewed the recent reported closing prices and trading activity
for Company Common Stock;
7.) compared certain aspects of the financial performance of Unitrode
with public companies we deemed comparable;
8.) analyzed available information, both public and private,
concerning other mergers and acquisitions we believe to be comparable in
whole or in part to the Merger;
9.) reviewed recent equity research analyst reports covering Unitrode;
10.) reviewed TI's annual report on Form 10-K for the fiscal year
ended December 31, 1998, including the audited financial statements
included therein, TI's quarterly report on Form 10-Q for the period ended
March 31, 1999, including the unaudited financial statements included
therein and the press release issued by TI dated July 20, 1999 with respect
to TI's financial performance for the three months ended June 30, 1999;
11.) participated in discussions with TI management concerning the
operations, business strategy, financial performance and prospects for TI;
12.) reviewed the recent reported closing prices and trading activity
for TI Common Stock;
13) discussed with TI management its view of the strategic rationale
for the Merger;
14.) compared certain aspects of the financial performance of TI with
public companies we deemed comparable;
15.) considered the total number of shares of TI Common Stock
outstanding and the average weekly trading volume of TI Common Stock;
16.) reviewed recent equity analyst reports covering TI;
17.) analyzed the anticipated effect of the Merger on the future
financial performance of TI;
18.) assisted in negotiations and discussions related to the Merger
among Unitrode, TI and their respective financial and legal advisors; and
19.) conducted other financial studies, analyses and investigations as
we deemed appropriate for purposes of this opinion.
In rendering our opinion, we have relied, without independent verification,
on the accuracy and completeness of all the financial and other information
(including without limitation the representations and warranties contained in
the Agreement) that was publicly available or furnished to us by Unitrode, TI or
TI's advisors. With respect to the financial projections examined by us, we have
assumed that they were reasonably prepared and reflected the best available
estimates and good faith judgments of the management of Unitrode as to the
future performance of Unitrode. We have neither made nor obtained an independent
appraisal or valuation of any of Unitrode's assets. We have not reviewed any
internal financial projections prepared by TI management as such projections
have not been made available to us.
Based upon and subject to the foregoing, we are of the opinion that the
Exchange Ratio is fair, from a financial point of view, to Unitrode
stockholders.
For purposes of this opinion, we have assumed that neither Unitrode nor TI
is currently involved in any material transaction other than the Merger, other
publicly announced transactions and those activities undertaken in the ordinary
course of conducting their respective businesses. Our opinion is necessarily
based upon market, economic, financial and other conditions as they exist and
can be evaluated as of the date of this opinion, and any change in such
conditions would require a reevaluation of this opinion. We express no opinion
as to the price at which TI Common Stock will trade at any time.
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This opinion speaks only as of the date hereof. It is understood that this
opinion is for the information of the Board of Directors of Unitrode in
connection with its consideration of the Merger and does not constitute a
recommendation to any Unitrode stockholder as to how such stockholder should
vote on the Merger. This opinion may not be published or referred to, in whole
or part, without our prior written permission, which shall not be unreasonably
withheld. Broadview hereby consents to references to and the inclusion of this
opinion in its entirety in the Prospectus/Proxy Statement to be distributed to
Unitrode stockholders in connection with the Merger.
Sincerely,
/s/ Broadview International LLC
D-3
<PAGE> 141
PART II
INFORMATION NOT REQUIRED IN PROXY STATEMENT/PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The General Corporation Law of the State of Delaware, at Section 145,
provides, in pertinent part, that a corporation may indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, other than an action by or in the right of the corporation, by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as the
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding 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. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which 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 reasonable cause to believe that his conduct was unlawful. In
addition, the indemnification of expenses, including attorneys' fees, is allowed
in derivative actions, except no indemnification is allowed in respect to any
claim, issue or matter as to which any such person has been adjudged to be
liable to the corporation, unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought decides that
indemnification is proper. To the extent that any such person succeeds on the
merits or otherwise, he shall be indemnified against expenses, including
attorneys' fees, actually and reasonably incurred by him in connection
therewith. The determination that the person to be indemnified met the
applicable standard of conduct, if not made by a court, is made by the directors
of the corporation by a majority vote of the directors not party to such an
action, suit or proceeding even though less than a quorum, by a committee of
such directors designated by majority vote of such directors even though less
than a quorum, or, if there are no such directors, or if such directors so
direct, by independent legal counsel in a written opinion or by the
stockholders. Expenses may be paid in advance upon the receipt, in the case of
officers and directors, of undertakings to repay such amount if it shall
ultimately be determined that the person is not entitled to be indemnified by
the corporation as authorized in this section. A corporation may purchase
indemnity insurance.
The above described indemnification and advancement of expenses, unless
otherwise provided when authorized or ratified, continue as to a person who has
ceased to be a director, officer, employee or agent and inure to the benefit of
such person's heirs, executors and administrators. Article VI, Section 2 of the
Texas Instruments' Bylaws provides that Texas Instruments shall indemnify its
officers and directors for such expenses, judgments, fines and amounts paid in
settlement to the full extent permitted by the laws of the State of Delaware.
Section 102(b)(7) of the General Corporation Law of the State of Delaware, as
amended, permits a corporation to provide in its certificate of incorporation
that a director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the General Corporation Law of the
State of Delaware, or (iv) for any transaction from which the director derived
an improper personal benefit. Article Seventh of Texas Instruments' Restated
Certificate of Incorporation contains such a provision.
Under insurance policies of Texas Instruments, directors and officers of
Texas Instruments may be indemnified against certain losses arising from certain
claims, including claims under the Securities Act of 1933, which may be made
against such persons by reason of their being such directors or officers.
II-1
<PAGE> 142
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
EXHIBIT LIST
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<S> <C>
2 -- Agreement and Plan of Merger, dated as of July 25, 1999,
by and among Texas Instruments, Unitrode and Unicorn
Acquisition Corp.(1)
3(a) -- Restated Certificate of Incorporation of Texas
Instruments.(2)
3(b) -- Certificate of Amendment to Restated Certificate of
Incorporation of Texas Instruments.(2)
3(c) -- Certificate of Amendment to Restated Certificate of
Incorporation of Texas Instruments.(2)
3(d) -- Certificate of Amendment to Restated Certificate of
Incorporation of Texas Instruments.(3)
3(e) -- Certificate of Ownership and Merger Merging Texas
Instruments Automation Controls, Inc. into Texas
Instruments.(2)
3(f) -- Certificate of Elimination of Designations of Preferred
Stock of Texas Instruments.(2)
3(g) -- Certificate of Ownership and Merger Merging Tiburon
Systems, Inc. into Texas Instruments.(4)
3(h) -- Certificate of Ownership and Merger Merging Tartan, Inc.
into Texas Instruments.(4)
3(i) -- Certificate of Designation relating to Texas Instruments'
Participating Cumulative Preferred Stock.(5)
3(j) -- Certificate of Elimination of Designation of Preferred
Stock of Texas Instruments.(6)
3(k) -- Bylaws of Texas Instruments.(7)
4(a)(i) -- Rights Agreement, dated as of June 18, 1998, between
Texas Instruments and Harris Trust and Savings Bank as
Rights Agent, which includes as Exhibit B the form of
Rights Certificate.(8)
4(a)(ii) -- Amendment, dated as of September 18, 1998, to the Rights
Agreement.(9)
4(b) -- Texas Instruments agrees to provide the Commission, upon
request, copies of instruments defining the rights of
holders of long-term debt of Texas Instruments and its
subsidiaries
5 -- Opinion of Weil, Gotshal & Manges LLP.*
8(a) -- Opinion of Weil, Gotshal & Manges LLP regarding certain
tax matters.*
8(b) -- Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
regarding certain tax matters.*
10(a)(i) -- Texas Instruments' Deferred Compensation Plan.(10)
10(a)(ii) -- Amendment No. 1 to Texas Instruments' Deferred
Compensation Plan.(10)
10(a)(iii) -- Amendment No. 2 to Texas Instruments' Deferred
Compensation Plan.(11)
10(a)(iv) -- Amendment No. 3 to Texas Instruments' Deferred
Compensation Plan.(12)
10(b) -- Texas Instruments' Long-term Incentive Plan.(12)
10(c) -- Texas Instruments' 1996 Long-term Incentive Plan.(13)
10(d) -- Texas Instruments' Executive Officer Performance
Plan.(13)
10(e) -- Texas Instruments' Restricted Stock Unit Plan for
Directors.(14)
</TABLE>
II-2
<PAGE> 143
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<S> <C>
10(f) -- Texas Instruments' Directors Deferred Compensation
Plan.(14)
10(g) -- Texas Instruments' Stock Option Plan for Non-Employee
Directors.(16)
10(h) -- Agreement and Plan of Merger, dated as of May 29, 1999,
by and among Texas Instruments, Telogy Networks, Inc. and
TNI Acquisition Corp. (exhibits and schedules
omitted).(15)
10(i) -- Asset Purchase Agreement dated as of January 4, 1997
between Texas Instruments and Raytheon Company (exhibits
and schedules omitted).(16)
10(j) -- Acquisition Agreement dated as of June 18, 1998 between
Texas Instruments and Micron Technology, Inc. (exhibit C
omitted).(17)
10(k) -- Second Amendment to Acquisition Agreement dated as of
September 30, 1998 between Texas Instruments and Micron
Technology, Inc.(18)
10(l) -- Securities Rights and Restrictions Agreement dated as of
September 30, 1998 between Texas Instruments and Micron
Technology, Inc.(6)
10(m) -- Form of Voting Agreement, dated as of May 29, 1999, by
and among Texas Instruments, Telogy Networks, Inc., TNI
Acquisition Corp. and the stockholders party thereto.(15)
10(n) -- Form of Employment Agreement, dated as of May 29, 1999,
by and among Texas Instruments and the employees party
thereto.(15)
10(o) -- Voting Agreement, dated as of July 25, 1999, by and among
Texas Instruments, Unitrode, Unicorn Acquisition and the
stockholders party thereto.*
10(p) -- Stock Option Agreement, dated as of July 25, 1999, by and
between Texas Instruments and Unitrode.*
10(q) -- Retention Letter, dated July 25, 1999, from Unitrode to
Allan R. Campbell.*
10(r) -- Retention Letter, dated July 25, 1999, from Unitrode to
Raymond G. Hawkins.*
10(s) -- Retention Letter, dated July 25, 1999, from Unitrode to
John L. Kokulis.*
10(t) -- Retention Letter, dated July 25, 1999, from Unitrode to
S. Kelley MacDonald.*
10(u) -- Retention Letter, dated July 25, 1999, from Unitrode to
Patrick J. Moquin.*
10(v) -- Retention Letter, dated July 25, 1999, from Unitrode to
Robert J. Richardson.*
23(a) -- Consent of Ernst & Young LLP.*
23(b) -- Consent of PricewaterhouseCoopers LLP.*
23(c) -- Consent of Weil, Gotshal & Manges LLP (included in
exhibits 5 and 8(a)).
23(d) -- Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in exhibit 8(b)).
23(e) -- Consent of Broadview International LLC (included in the
opinion of Broadview International LLC attached as Annex
D to the proxy statement/prospectus).
24 -- Powers of Attorney (included on the signature pages to
this registration statement).
</TABLE>
- ---------------
* Filed herewith.
(1) Incorporated by reference to the Exhibits filed with Unitrode Corporation's
Current Report on Form 8-K dated July 27, 1999.
(2) Incorporated by reference to the Exhibits filed with Texas Instruments'
Annual Report on Form 10-K for 1993.
II-3
<PAGE> 144
(3) Incorporated by reference to the Exhibits filed with Texas Instruments'
Quarterly Report on Form 10-Q for the quarter ended June 30, 1996.
(4) Incorporated by reference to the Exhibits filed with Texas Instruments'
Registration Statement No. 333-41919 on Form S-8 filed December 10, 1997.
(5) Incorporated by reference to the Exhibits filed with Texas Instruments'
Quarterly Report on Form 10-Q for the quarter ended September 30, 1998.
(6) Incorporated by reference to the Exhibits filed with Texas Instruments'
Annual Report on Form 10-K for 1998.
(7) Incorporated by reference to the Exhibits filed with Texas Instruments'
Current Report on Form 8-K dated December 4, 1997.
(8) Incorporated by reference to the Exhibits filed with Texas Instruments'
Registration Statement on Form 8-A dated June 23, 1998.
(9) Incorporated by reference to the Exhibit filed with Texas Instruments'
Amendment No. 1 to Form 8-A, dated September 23, 1998.
(10) Incorporated by reference to the Exhibits filed with Texas Instruments'
Annual Report on Form 10-K for 1994.
(11) Incorporated by reference to the Exhibits filed with Texas Instruments'
Quarterly Report on Form 10-Q for the quarter ended June 30, 1997.
(12) Incorporated by reference to the Exhibits filed with Texas Instruments'
Quarterly Report on Form 10-Q for the quarter ended September 30, 1997.
(13) Incorporated by reference to the Exhibits filed with Texas Instruments'
Quarterly Report on Form 10-Q for the quarter ended March 31, 1997.
(14) Incorporated by reference to the Exhibits filed with Texas Instruments'
Quarterly Report on Form 10-Q for the quarter ended March 31, 1998.
(15) Incorporated by reference to the Exhibits filed with Texas Instruments'
Registration Statement No. 333-80157 on Form S-4 filed June 8, 1999.
(16) Incorporated by reference to the Exhibits filed with Texas Instruments'
Current Report on Form 8-K dated January 4, 1997.
(17) Incorporated by reference to the Exhibits filed with Texas Instruments'
Current Report on Form 8-K dated June 18, 1998.
(18) Incorporated by reference to the Exhibits filed with Texas Instruments'
Current Report on Form 8-K dated October 15, 1998.
ITEM 22. UNDERTAKINGS.
(a) 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 15(d) of the Exchange
Act of 1934 (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the 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.
(b) (1) 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.
II-4
<PAGE> 145
(2) The registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to
meet the requirements of Section 10(a)(3) of the Securities Act of 1933 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.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling the
registrant pursuant to the provisions described under Item 20 above, or
otherwise, the registrant has been informed that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expense 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 against the registrant 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 Securities Act of 1933 and will be governed by the final
adjudication of such issue.
(d) 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.
(e) 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-5
<PAGE> 146
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in Dallas, Texas, on
September 16, 1999.
TEXAS INSTRUMENTS INCORPORATED
By: /s/ WILLIAM A. AYLESWORTH
----------------------------------
William A. Aylesworth
Senior Vice President
Treasurer and
Chief Financial Officer
POWER OF ATTORNEY
Know all those by these presents, that each person whose signature appears
below constitutes and appoints each of Thomas J. Engibous, Richard J. Agnich,
William A. Aylesworth and M. Samuel Self, or any of them, each acting alone, his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for such person and in his name, place and stead, in any and all
capacities, in connection with the Registration Statement on Form S-4 of Texas
Instruments Incorporated under the Securities Act of 1933, as amended,
including, without limitation of the generality of the foregoing, to sign the
Registration Statement in the name and on behalf of Texas Instruments
Incorporated, or on behalf of the undersigned as a director or officer of Texas
Instruments Incorporated, and any and all amendments or supplements to the
Registration Statement, including any and all stickers and post-effective
amendments to the Registration Statement, and to sign any and all additional
Registration Statements relating to the same offering of Securities as the
Registration Statement that are filed pursuant to Rule 462 under the Securities
Act of 1933, as amended, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission and any applicable securities exchange or securities self-regulatory
body, granting unto said attorneys-in-fact and agents, each acting alone, full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or their substitutes or substitute, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ JAMES R. ADAMS Director September 16, 1999
- -----------------------------------------------------
James R. Adams
/s/ DAVID L. BOREN Director September 16, 1999
- -----------------------------------------------------
David L. Boren
Director
- -----------------------------------------------------
James B. Busey IV
/s/ DANIEL A. CARP Director September 16, 1999
- -----------------------------------------------------
Daniel A. Carp
</TABLE>
II-6
<PAGE> 147
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ THOMAS J. ENGIBOUS Chairman of the Board; September 16, 1999
- ----------------------------------------------------- President; Chief Executive
Thomas J. Engibous Officer; Director
/s/ GERALD W. FRONTERHOUSE Director September 16, 1999
- -----------------------------------------------------
Gerald W. Fronterhouse
/s/ DAVID R. GOODE Director September 16, 1999
- -----------------------------------------------------
David R. Goode
/s/ WAYNE R. SANDERS Director September 16, 1999
- -----------------------------------------------------
Wayne R. Sanders
/s/ RUTH J. SIMMONS Director September 16, 1999
- -----------------------------------------------------
Ruth J. Simmons
/s/ CLAYTON K. YEUTTER Director September 16, 1999
- -----------------------------------------------------
Clayton K. Yeutter
/s/ WILLIAM A. AYLESWORTH Senior Vice President; September 16, 1999
- ----------------------------------------------------- Treasurer; Chief Financial
William A. Aylesworth Officer
/s/ M. SAMUEL SELF Senior Vice President; September 16, 1999
- ----------------------------------------------------- Controller; Chief Accounting
M. Samuel Self Officer
</TABLE>
II-7
<PAGE> 148
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<S> <C>
2 -- Agreement and Plan of Merger, dated as of July 25, 1999,
by and among Texas Instruments, Unitrode and Unicorn
Acquisition Corp.(1)
3(a) -- Restated Certificate of Incorporation of Texas
Instruments.(2)
3(b) -- Certificate of Amendment to Restated Certificate of
Incorporation of Texas Instruments.(2)
3(c) -- Certificate of Amendment to Restated Certificate of
Incorporation of Texas Instruments.(2)
3(d) -- Certificate of Amendment to Restated Certificate of
Incorporation of Texas Instruments.(3)
3(e) -- Certificate of Ownership and Merger Merging Texas
Instruments Automation Controls, Inc. into Texas
Instruments.(2)
3(f) -- Certificate of Elimination of Designations of Preferred
Stock of Texas Instruments.(2)
3(g) -- Certificate of Ownership and Merger Merging Tiburon
Systems, Inc. into Texas Instruments.(4)
3(h) -- Certificate of Ownership and Merger Merging Tartan, Inc.
into Texas Instruments.(4)
3(i) -- Certificate of Designation relating to Texas Instruments'
Participating Cumulative Preferred Stock.(5)
3(j) -- Certificate of Elimination of Designation of Preferred
Stock of Texas Instruments.(6)
3(k) -- Bylaws of Texas Instruments.(7)
4(a)(i) -- Rights Agreement, dated as of June 18, 1998, between
Texas Instruments and Harris Trust and Savings Bank as
Rights Agent, which includes as Exhibit B the form of
Rights Certificate.(8)
4(a)(ii) -- Amendment, dated as of September 18, 1998, to the Rights
Agreement.(9)
4(b) -- Texas Instruments agrees to provide the Commission, upon
request, copies of instruments defining the rights of
holders of long-term debt of Texas Instruments and its
subsidiaries
5 -- Opinion of Weil, Gotshal & Manges LLP.*
8(a) -- Opinion of Weil, Gotshal & Manges LLP regarding certain
tax matters.*
8(b) -- Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
regarding certain tax matters.*
10(a)(i) -- Texas Instruments' Deferred Compensation Plan.(10)
10(a)(ii) -- Amendment No. 1 to Texas Instruments' Deferred
Compensation Plan.(10)
10(a)(iii) -- Amendment No. 2 to Texas Instruments' Deferred
Compensation Plan.(11)
10(a)(iv) -- Amendment No. 3 to Texas Instruments' Deferred
Compensation Plan.(12)
10(b) -- Texas Instruments' Long-term Incentive Plan.(12)
10(c) -- Texas Instruments' 1996 Long-term Incentive Plan.(13)
10(d) -- Texas Instruments' Executive Officer Performance
Plan.(13)
10(e) -- Texas Instruments' Restricted Stock Unit Plan for
Directors.(14)
10(f) -- Texas Instruments' Directors Deferred Compensation
Plan.(14)
</TABLE>
<PAGE> 149
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<S> <C>
10(g) -- Texas Instruments' Stock Option Plan for Non-Employee
Directors.(16)
10(h) -- Agreement and Plan of Merger, dated as of May 29, 1999,
by and among Texas Instruments, Telogy Networks, Inc. and
TNI Acquisition Corp. (exhibits and schedules
omitted).(15)
10(i) -- Asset Purchase Agreement dated as of January 4, 1997
between Texas Instruments and Raytheon Company (exhibits
and schedules omitted).(16)
10(j) -- Acquisition Agreement dated as of June 18, 1998 between
Texas Instruments and Micron Technology, Inc. (exhibit C
omitted).(17)
10(k) -- Second Amendment to Acquisition Agreement dated as of
September 30, 1998 between Texas Instruments and Micron
Technology, Inc.(18)
10(l) -- Securities Rights and Restrictions Agreement dated as of
September 30, 1998 between Texas Instruments and Micron
Technology, Inc.(6)
10(m) -- Form of Voting Agreement, dated as of May 29, 1999, by
and among Texas Instruments, Telogy Networks, Inc., TNI
Acquisition Corp. and the stockholders party thereto.(15)
10(n) -- Form of Employment Agreement, dated as of May 29, 1999,
by and among Texas Instruments and the employees party
thereto.(15)
10(o) -- Voting Agreement, dated as of July 25, 1999, by and among
Texas Instruments, Unitrode, Unicorn Acquisition and the
stockholders party thereto.*
10(p) -- Stock Option Agreement, dated as of July 25, 1999, by and
between Texas Instruments and Unitrode.*
10(q) -- Retention Letter, dated July 25, 1999, from Unitrode to
Allan R. Campbell.*
10(r) -- Retention Letter, dated July 25, 1999, from Unitrode to
Raymond G. Hawkins.*
10(s) -- Retention Letter, dated July 25, 1999, from Unitrode to
John L. Kokulis.*
10(t) -- Retention Letter, dated July 25, 1999, from Unitrode to
S. Kelley MacDonald.*
10(u) -- Retention Letter, dated July 25, 1999, from Unitrode to
Patrick J. Moquin.*
10(v) -- Retention Letter, dated July 25, 1999, from Unitrode to
Robert J. Richardson.*
23(a) -- Consent of Ernst & Young LLP.*
23(b) -- Consent of PricewaterhouseCoopers LLP.*
23(c) -- Consent of Weil, Gotshal & Manges LLP (included in
exhibits 5 and 8(a)).
23(d) -- Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in exhibit 8(b)).
23(e) -- Consent of Broadview International LLC (included in the
opinion of Broadview International LLC attached as Annex
D to the proxy statement/prospectus).
24 -- Powers of Attorney (included on the signature pages to
this registration statement).
</TABLE>
- ---------------
* Filed herewith.
(1) Incorporated by reference to the Exhibits filed with Unitrode Corporation's
Current Report on Form 8-K dated July 27, 1999.
(2) Incorporated by reference to the Exhibits filed with Texas Instruments'
Annual Report on Form 10-K for 1993.
<PAGE> 150
(3) Incorporated by reference to the Exhibits filed with Texas Instruments'
Quarterly Report on Form 10-Q for the quarter ended June 30, 1996.
(4) Incorporated by reference to the Exhibits filed with Texas Instruments'
Registration Statement No. 333-41919 on Form S-8 filed December 10, 1997.
(5) Incorporated by reference to the Exhibits filed with Texas Instruments'
Quarterly Report on Form 10-Q for the quarter ended September 30, 1998.
(6) Incorporated by reference to the Exhibits filed with Texas Instruments'
Annual Report on Form 10-K for 1998.
(7) Incorporated by reference to the Exhibits filed with Texas Instruments'
Current Report on Form 8-K dated December 4, 1997.
(8) Incorporated by reference to the Exhibits filed with Texas Instruments'
Registration Statement on Form 8-A dated June 23, 1998.
(9) Incorporated by reference to the Exhibit filed with Texas Instruments'
Amendment No. 1 to Form 8-A, dated September 23, 1998.
(10) Incorporated by reference to the Exhibits filed with Texas Instruments'
Annual Report on Form 10-K for 1994.
(11) Incorporated by reference to the Exhibits filed with Texas Instruments'
Quarterly Report on Form 10-Q for the quarter ended June 30, 1997.
(12) Incorporated by reference to the Exhibits filed with Texas Instruments'
Quarterly Report on Form 10-Q for the quarter ended September 30, 1997.
(13) Incorporated by reference to the Exhibits filed with Texas Instruments'
Quarterly Report on Form 10-Q for the quarter ended March 31, 1997.
(14) Incorporated by reference to the Exhibits filed with Texas Instruments'
Quarterly Report on Form 10-Q for the quarter ended March 31, 1998.
(15) Incorporated by reference to the Exhibits filed with Texas Instruments'
Registration Statement No. 333-80157 on Form S-4 filed June 8, 1999.
(16) Incorporated by reference to the Exhibits filed with Texas Instruments'
Current Report on Form 8-K dated January 4, 1997.
(17) Incorporated by reference to the Exhibits filed with Texas Instruments'
Current Report on Form 8-K dated June 18, 1998.
(18) Incorporated by reference to the Exhibits filed with Texas Instruments'
Current Report on Form 8-K dated October 15, 1998.
<PAGE> 1
EXHIBIT 5
September 16, 1999
Texas Instruments Incorporated
8505 Forest Lane
P.O. Box 660199
Dallas, Texas 75266-0199
Ladies and Gentlemen:
We have acted as counsel to Texas Instruments Incorporated, a Delaware
corporation (the "Company"), in connection with the preparation and filing on
the date hereof by the Company with the Securities and Exchange Commission of a
Registration Statement on Form S-4 (the "Registration Statement") under the
Securities Act of 1933, as amended, relating to the proposed offering of up to
20,504,545 shares (the "Shares") of the common stock, $1.00 par value per share,
of the Company pursuant to the Agreement and Plan of Merger (the "Merger
Agreement"), dated as of July 25, 1999, by and among the Company, Unitrode
Corporation, a Maryland corporation ("Unitrode"), and Unicorn Acquisition Corp.,
a Maryland corporation and wholly owned subsidiary of the Company. The Shares
are to be issued to the stockholders of Unitrode in accordance with terms of the
Merger Agreement in exchange for each such stockholder's shares of common stock,
$0.01 par value per share ("Unitrode Common Stock"), of Unitrode.
In so acting, we have examined originals or copies, certified or otherwise
identified to our satisfaction, of the Restated Certificate of Incorporation of
the Company, as amended, and such corporate records, agreements, documents and
other instruments, and such certificates or comparable documents of public
officials and of officers and representatives of the Company, and have made such
inquiries of such officers and representatives as we have deemed relevant and
necessary as a basis for the opinions hereinafter set forth.
<PAGE> 2
Texas Instruments Incorporated
September 16, 1999
Page 2
In such examination, we have assumed the genuineness of all signatures, the
legal capacity of natural persons, the authenticity of all documents submitted
to us as originals, the conformity to original documents of all documents
submitted to us as certified, conformed or photostatic copies and the
authenticity of the originals of such latter documents. As to all questions of
fact material to this opinion that have not been independently established, we
have relied upon certificates or comparable documents of officers and
representatives of the Company.
Based on the foregoing, and subject to the qualifications stated herein, we
are of the opinion that:
1. The Company is a corporation validly existing and in good standing under
the laws of the State of Delaware.
2. The Shares have been duly authorized and, when issued and delivered to
the stockholders of Unitrode in exchange for shares of Unitrode Common Stock in
accordance with the terms of the Merger Agreement, will be validly issued, fully
paid and nonassessable.
The opinions expressed herein are limited to the corporate laws of the
State of Delaware and we express no opinion as to the effect on the matters
covered by this letter of the laws of any other jurisdiction.
We hereby consent to the filing of this letter as an exhibit to the
Registration Statement and to the reference to this firm under the caption
"Legal Matters" in the Proxy Statement/Prospectus forming a part of the
Registration Statement.
Very truly yours,
/s/ WEIL, GOTSHAL & MANGES LLP
<PAGE> 1
EXHIBIT 8(a)
September 16, 1999
Texas Instruments Incorporated
8505 Forest Lane
P.O. Box 660199
Dallas, Texas 75266-0199
Ladies and Gentlemen:
We have acted as counsel to Texas Instruments Incorporated ("Texas
Instruments"), a Delaware corporation, in connection with (i) the Merger, as
defined and described in the Agreement and Plan of Merger, dated as of July 25,
1999, as amended (the "Merger Agreement"), among Unitrode Corporation
("Unitrode"), a Maryland corporation, Texas Instruments, and Unicorn Acquisition
Corp. ("Merger Sub"), a Maryland corporation and a direct wholly owned
subsidiary of Texas Instruments, and (ii) the preparation and filing of the
Registration Statement with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Securities
Act"), on September 16, 1999 (the "Registration Statement"), which includes the
Proxy Statement/Prospectus of Unitrode (the "Proxy Statement/Prospectus").
Unless otherwise indicated, each capitalized term used herein has the meaning
ascribed to it in the Merger Agreement.
In formulating our opinion, we have examined the Merger Agreement, the
Registration Statement, the Proxy Statement/Prospectus, and such other documents
and corporate records as we have deemed relevant and necessary as a basis for
the opinion hereinafter set forth. Our opinion set forth below assumes (i) the
validity and accuracy of the documents and corporate records that we have
examined and the facts and representations concerning the Merger that have come
to our attention during our engagement and (ii) that the Merger is consummated
in the manner contemplated by, and in accordance with the terms set forth in,
the Merger Agreement, the Registration Statement, and the Proxy
Statement/Prospectus.
Based on the foregoing, subject to the next succeeding paragraph, and
assuming full compliance with all the terms of the Merger Agreement, the
Registration Statement, and the Proxy Statement/Prospectus, it is our opinion
that the discussion included in the Proxy Statement/Prospectus under the heading
"U.S. Federal Income Tax Consequences of the Merger," insofar as it constitutes
statements of law or legal conclusions and except to the extent qualified
therein, is accurate in all material respects.
<PAGE> 2
Texas Instruments Incorporated
September 16, 1999
Page 2
No opinion is expressed on any matter other than those specifically covered by
the foregoing opinion.
The foregoing opinion is based on current provisions of the Internal
Revenue Code of 1986, as amended, the Treasury Regulations promulgated
thereunder, published pronouncements of the Internal Revenue Service, and case
law, any of which may be changed at any time with retroactive effect. Any change
in applicable laws or in the statements, facts, assumptions and representations
on which we have relied, may affect the continuing validity of the opinion set
forth herein. We assume no responsibility to inform you of any such change or
inaccuracy that may occur or come to our attention.
The opinion expressed herein is rendered solely for your benefit in
connection with the transactions described herein. This opinion may not be used
or relied upon by any other person, nor may this letter or any copies thereof be
furnished to a third party, filed with a governmental agency, quoted, cited or
otherwise referred to without our prior written consent.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to this firm under the headings
"SUMMARY - The Merger Agreement - Conditions to Completion of the Merger," "THE
MERGER - U.S. Federal Income Tax Consequences of the Merger," "THE MERGER
AGREEMENT - Conditions to the Completion of the Merger," and "LEGAL MATTERS" in
the Proxy Statement/Prospectus. In giving such consent, we do not thereby admit
that we are in the category of persons whose consent is required under Section 7
of the Securities Act or the rules and regulations of the Commission thereunder.
Very truly yours,
/s/ WEIL, GOTSHAL & MANGES LLP
<PAGE> 1
EXHIBIT 8(b)
September 16, 1999
Unitrode Corporation
7 Continental Boulevard
Merrimack, New Hampshire 03054
Gentlemen:
We have acted as tax counsel to Unitrode Corporation ("Unitrode"), a
Maryland corporation, in connection with (i) the Merger, as defined and
described in the Agreement and Plan of Merger, dated as of July 25, 1999, as
amended (the "Merger Agreement"), among Unitrode, Texas Instruments
Incorporated, a Delaware corporation ("Texas Instruments"), and Unicorn
Acquisition Corp., a Maryland corporation and a direct wholly owned subsidiary
of Texas Instruments ("Merger Sub"), and (ii) the preparation and filing of the
Registration Statement with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Securities
Act"), on September 16, 1999 (the "Registration Statement"), which includes the
Proxy Statement/Prospectus of Unitrode (the "Proxy Statement/Prospectus").
Unless otherwise indicated, each capitalized term used herein has the meaning
ascribed to it in the Merger Agreement.
In connection with this opinion, we have examined the Merger
Agreement, the Proxy Statement/Prospectus and such other documents and
corporate records as we have deemed necessary or appropriate in order to enable
us to render the opinion below. For purposes of this opinion, we have assumed
(i) the validity and accuracy of the documents and corporate records that we
have examined and the facts and representations concerning the Merger that have
come to our attention during our engagement and (ii) that the Merger will be
consummated in the manner described in the Merger Agreement and the Proxy
Statement/Prospectus.
<PAGE> 2
Unitrode Corporation
September 16, 1999
Page 1
Subject to the assumptions set forth above, the assumptions and
qualifications set forth in the Proxy Statement/Prospectus under the heading
"U.S. Federal Income Tax Consequences of the Merger" (the "Discussion") and the
fact that the Discussion is a summary and does not purport to discuss all
possible United States federal income tax consequences of the Merger, we are of
the opinion that the Discussion accurately summarizes the matters of United
States federal income tax law discussed therein. In addition, we express no
opinion as to the United States federal, state, local, foreign or other tax
consequences, other than as set forth in the Discussion. There can be no
assurances that the opinion expressed herein will be accepted by the Internal
Revenue Service (the "IRS") or, if challenged, by a court. This opinion is
delivered in accordance with the requirements of Item 601(b)(8) of Regulation
S-K under the Securities Act.
In rendering our opinion, we have considered the applicable provisions
of the Code, Treasury Department regulations promulgated thereunder, pertinent
judicial authorities, interpretive rulings of the IRS and such other
authorities as we have considered relevant. It should be noted that statutes,
regulations, judicial decisions and administrative interpretations are subject
to change at any time (possibly with retroactive effect). A change in the
authorities or the accuracy or completeness of any of the facts, information,
documents, corporate records, covenants, statements, representations or
assumptions on which our opinion is based could affect our conclusions. This
opinion is expressed as of the date hereof, and we are under no obligation to
supplement or revise our opinion to reflect any changes (including changes that
have retroactive effect) (i) in applicable law or (ii) in any fact,
information, document, corporate record, covenant, statement, representation or
assumption stated herein that becomes untrue or incorrect.
This letter is furnished to you for use in connection with the Merger,
as described in the Merger Agreement and the Proxy Statement/Prospectus, and is
not to be used, circulated, quoted, or otherwise referred to for any other
purpose without our express written permission. In accordance with the
requirements of Item 601(b)(23) of Regulation S-K under the Securities Act, we
hereby consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to our firm name under the headings "SUMMARY --
The Merger Agreement -- Conditions to Completion of the Merger," "THE MERGER --
U.S. Federal Income Tax Consequences of the Merger," "THE MERGER AGREEMENT --
Conditions to the Completion of the Merger," and "LEGAL MATTERS" in the Proxy
Statement/Prospectus. In giving such consent, we do not thereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Securities Act or the rules and regulations of the Commission thereunder.
Very truly yours,
/s/ SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
<PAGE> 1
EXHIBIT 10(o)
VOTING AGREEMENT
In consideration of Texas Instruments Incorporated, a Delaware
corporation ("PARENT"), Unicorn Acquisition Corp., a Maryland corporation
("MERGER SUB"), and Unitrode Corporation, a Maryland corporation (the
"COMPANY"), entering into on the date hereof an Agreement and Plan of Merger,
dated as of the date hereof (the "MERGER AGREEMENT") which provides, among other
things, that Merger Sub, upon the terms and subject to the conditions thereof,
will be merged with and into the Company (the "MERGER") and each outstanding
share of Company Common Stock (as defined in the Merger Agreement) will be
converted into the Share Consideration (as defined in the Merger Agreement) in
accordance with the terms of the Merger Agreement, each of the undersigned
holders (each, a "STOCKHOLDER") of shares of Company Common Stock agrees with
each of Parent, Merger Sub and the Company as follows:
1. Each Stockholder hereby agrees, in person or by proxy, to vote the
shares of Company Common Stock set forth opposite its name in SCHEDULE A hereto
(the "SCHEDULE A SECURITIES") to approve and adopt the Merger and the
transactions contemplated thereby at any meeting or meetings of the stockholders
of the Company, and at any adjournment thereof or pursuant to action by written
consent, at or by which the Merger or such other transactions, are submitted for
the consideration and vote of the stockholders of the Company.
2. Each Stockholder hereby agrees that such Stockholder shall not enter
into any voting agreement or grant a proxy or power of attorney with respect to
the Schedule A Securities which is inconsistent with the obligations of such
Stockholder under this Agreement.
3. A Stockholder may sell, assign, encumber or otherwise dispose of, or
enter into any contract, option or other arrangement or understanding in respect
of the direct or indirect sale, assignment, transfer, encumbrance or other
disposition of, any Schedule A Securities during the term of this Agreement
provided such Stockholder provides written notice to Parent and first obtains a
written agreement from the proposed transferee pursuant to which the proposed
transferee agrees to be bound by the terms of this Agreement.
4. Each Stockholder hereby represents and warrants to Parent and Merger
Sub that as of the date hereof:
(a) Such Stockholder (i) owns beneficially all of the shares
of Company Common Stock set forth opposite the Stockholder's name in
SCHEDULE A hereto, (ii) has the legal power, authority and right to
enter into, execute and deliver this Voting Agreement without the
consent or approval of any other person, and (iii) has not entered into
any voting agreement or other similar agreement with or granted any
person any proxy (revocable or irrevocable) in respect of such shares
(other than this Voting Agreement).
<PAGE> 2
(b) Assuming due authorization, execution and delivery by the
other parties hereto, this Voting Agreement is the valid and binding
agreement of such Stockholder.
(c) No investment banker, broker or finder is entitled to a
commission or fee from such Stockholder in respect of this Voting
Agreement based upon any arrangement or agreement made by or on behalf
of the Stockholder.
5. If any provision of this Voting Agreement shall be invalid or
unenforceable under applicable law, such provision shall be ineffective to the
extent of such invalidity or unenforceability only, without in any way affecting
the remaining provisions of this Voting Agreement.
6. This Voting Agreement may be executed in two or more counterparts
each of which shall constitute one and the same instrument.
7. The parties hereto agree that if for any reason any party hereto
shall have failed to perform its obligations under this Voting Agreement, then
the party seeking to enforce this Voting Agreement against such non-performing
party shall be entitled to specific performance and injunctive and other
equitable relief, and the parties hereto further agree to waive any requirement
for the securing or posting of any bond in connection with the obtaining of any
such injunctive relief. This provision is without prejudice to any other rights
or remedies, whether at law or in equity, that any party hereto may have against
any other party hereto for any failure to perform its obligations under this
Voting Agreement.
8. This Voting Agreement shall be governed by and construed in
accordance with the laws of the State of Maryland.
9. This Agreement shall terminate upon the earlier of (a) the Effective
Time (as defined in the Merger Agreement) or (b) the termination of the Merger
Agreement in accordance with its terms.
10. Parent, Merger Sub and the Company understand and agree that this
Agreement pertains only to each Stockholder and not to any of its affiliates, if
any, or advisers.
11. Neither Parent, Merger Sub nor the Company will enter into any
agreement with any other stockholder of the Company having a purpose or effect
substantially similar to that of this Voting Agreement on financial terms (in
respect of such other stockholder) more favorable than the terms of this Voting
Agreement.
12. Any Stockholder who is also a director or officer of the Company
will not, by execution of this Agreement, be precluded from exercising his or
her duties under applicable law in his or her capacity as a director with
respect to the Company and nothing herein will limit or affect, or give rise to
any liability to a Stockholder by virtue
2
<PAGE> 3
of any actions taken by such Stockholder in his or her capacity as a director or
officer of the Company.
13. Nothing contained in this Voting Agreement shall be deemed to vest
in Parent, Merger Sub or the Company any direct or indirect ownership or
incidence of ownership of or with respect to any Schedule A Securities. All
rights, ownership and economic benefits of and relating to the Schedule A
Securities shall remain and belong to the applicable Stockholder and neither
Parent, Merger Sub nor the Company shall have any power or authority to direct
any Stockholder in the voting of any Schedule A Securities or the performance by
any Stockholder of its duties or responsibilities as a stockholder of the
Company, except as otherwise provided herein.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have executed this
Voting Agreement as of July 25, 1999.
TEXAS INSTRUMENTS INCORPORATED
By: /s/ DELBERT A. WHITAKER
----------------------------------------
Name: Delbert A. Whitaker
Title: Senior Vice President
UNICORN ACQUISITION CORP.
By: /s/ DELBERT A. WHITAKER
----------------------------------------
Name: Delbert A. Whitaker
Title: Senior Vice President
UNITRODE CORPORATION
By: /s/ JOHN KOKULIS
----------------------------------------
Name: John Kokulis
Title: Executive Vice President/CFO
<PAGE> 5
STOCKHOLDERS
/s/ DIETRICH R. ERDMANN
---------------------------------------
Dietrich R. Erdmann
/s/ ROBERT L. GABLE
---------------------------------------
Robert L. Gable
/s/ ROBERT J. RICHARDSON
---------------------------------------
Robert J. Richardson
/s/ ALLAN R. CAMPBELL
---------------------------------------
Allan R. Campbell
/s/ RAYMOND G. HAWKINS
---------------------------------------
Raymond G. Hawkins
<PAGE> 6
SCHEDULE A
TO
VOTING AGREEMENT
<TABLE>
<CAPTION>
Stockholder Class Number of Shares
- ----------- ----- ----------------
<S> <C> <C>
Dietrich R. Erdmann Common 605,212
Robert L. Gable Common 87,000
Robert J. Richardson Common 50,000
Allan R. Campbell Common 119,750
Raymond G. Hawkins Common 6,000
</TABLE>
<PAGE> 1
EXHIBIT 10(p)
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of July 25, 1999 (the "STOCK
OPTION AGREEMENT"), between Texas Instruments Incorporated, a Delaware
corporation ("PARENT"), and Unitrode Corporation, a Maryland corporation (the
"COMPANY").
WHEREAS, Parent, Unicorn Acquisition Corp., a Maryland
corporation and a wholly owned subsidiary of Parent ("MERGER SUB"), and the
Company are parties to that certain Agreement and Plan of Merger, dated as of
the date hereof (the "MERGER AGREEMENT"), which provides, among other things,
that Merger Sub, on the terms and subject to the conditions thereof, will merge
with and into the Company with the Company surviving as a wholly owned
subsidiary of Parent;
WHEREAS, as a condition to its willingness to enter into the
Merger Agreement, Parent has requested that the Company grant to Parent an
option to purchase up to 6,470,760 shares of common stock, par value $0.01 per
share ("COMMON STOCK") of the Company, upon the terms and subject to the
conditions hereof; and
\
WHEREAS, in order to induce Parent to enter into the Merger
Agreement, the Company is willing to grant Parent the requested option.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements set forth herein, the parties hereto agree as
follows:
1. The Option; Exercise; Adjustments.
(a) Subject to the other terms and conditions set forth
herein, the Company hereby grants to Parent an irrevocable option (the "OPTION")
to purchase up to 6,470,760 shares of Common Stock (the "SHARES"). The purchase
price per Share (the "PURCHASE PRICE") shall be $38.60. The Purchase Price and
the number of Shares shall be subject to adjustment as provided in Section 1(c)
hereof.
(b) Parent may exercise the Option with respect to any
or all of the Option Shares at any one time or from time to time, subject to the
provisions of Section 1(c) hereof, upon the occurrence of an Exercise Event (as
defined below). Subject to the last sentence of this Section 1(b), the Option
will terminate and be of no further force and effect upon the earliest to occur
of (i) the Effective Time (as defined in the Merger Agreement), (ii) 120 days
after the first occurrence of an Exercise Event, and (iii) the termination of
the Merger Agreement in accordance with its terms so long as, in the case of
this clause (iii), no Exercise Event has occurred or could still occur under
Section 8.5(b) of the Merger Agreement, in which case the Option will terminate
on the later of (x) 120 days following the time such termination fee becomes
unconditionally payable and (y) the expiration of the period in which an
Exercise Event could occur pursuant to Section 8.5(b) of the Merger Agreement.
"Exercise Event" means any event as a result of which Parent is unconditionally
entitled to receive a termination fee pursuant to Section 8.5(b) of the Merger
Agreement. Notwithstanding the termination of the Option, Parent shall be
entitled to purchase the Shares with respect to which it has exercised the
Option in accordance with the terms hereof prior to the termination of the
Option.
<PAGE> 2
(c) In the event Parent is entitled to and wishes to
exercise the Option, the Parent shall send a written notice to the Company (the
"STOCK EXERCISE NOTICE") specifying a date (subject to the HSR Act (as defined
below)) not later than 20 business days and not earlier than three business days
following the date such notice is given for the closing of such purchase and
specifying the number of Shares Parent wishes to purchase. In the event of any
change in the number of issued and outstanding shares of Common Stock by reason
of any stock dividend, stock split, split-up, recapitalization, merger or other
change in the corporate or capital structure of the Company, the number of
Shares subject to this Option and the purchase price per Share shall be
appropriately adjusted to restore the Parent to its rights hereunder, including
its right to purchase Shares representing approximately 19.9% of the capital
stock or securities convertible or otherwise exchangeable for capital stock of
the Company entitled to vote generally for the election of the directors of the
Company that are issued and outstanding immediately prior to the exercise of the
Option at an aggregate purchase price equal to the Purchase Price multiplied by
6,470,760.
(d) At any time the Option is then exercisable pursuant
to the terms of Section 1(b) hereof, Parent may elect, in lieu of exercising the
Option to purchase Shares provided in Section 1(a) hereof, to send a written
notice to the Company (the "CASH EXERCISE NOTICE") specifying a date not later
than 20 business days and not earlier than 10 business days following the date
such notice is given on which date the Company shall pay to Parent an amount in
cash equal to the Spread (as hereinafter defined) multiplied by all or such
portion of the Shares subject to the Option as Parent shall specify in such Cash
Exercise Notice. As used herein "SPREAD" shall mean the excess, if any, over the
Purchase Price of the higher of (i) if applicable, the highest price per share
of Common Stock (including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid or proposed to be paid by any person pursuant to
a definitive agreement executed by the Company with respect to an Acquisition
Proposal (the "ALTERNATIVE PURCHASE PRICE") or (ii) the average closing price,
for the five trading days ending on the trading day immediately preceding the
date of the Cash Exercise Notice, per share of Common Stock as reported on the
New York Stock Exchange (the "CLOSING PRICE"). If the Alternative Purchase Price
includes any property other than cash, the Alternative Purchase Price shall be
the sum of (i) the fixed cash amount, if any, included in the Alternative
Purchase Price plus (ii) the fair market value of such other property. If such
other property consists of securities with an existing public trading market,
the average of the closing prices (or the average of the closing bid and asked
prices if closing prices are unavailable) for such securities in their principal
public trading market on the five trading days ending on the trading day
immediately preceding the date of the Cash Exercise Notice shall be deemed to
equal the fair market value of such property. If such other property consists of
something other than cash or securities with an existing public trading market
and, as of the payment date for the Spread, agreement on the value of such other
property has not been reached between the parties hereto, the Alternative
Purchase Price shall be deemed to equal the Closing Price. Upon exercise of its
right to receive cash pursuant to the exercise of the Option, the obligations of
the Company to deliver Shares pursuant to Section 3 shall be terminated with
respect to such number of Shares for which Parent shall have elected to be paid
the Spread.
2
<PAGE> 3
2. Conditions to Delivery of Shares. The Company's obligation
to deliver Shares upon exercise of the Option is subject only to the conditions
that:
(i) No preliminary or permanent injunction or other
order issued by any federal or state court of competent jurisdiction in the
United States prohibiting the delivery of the Shares shall be in effect; and
(ii) Any applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR ACT") shall have
expired or been terminated; and
(iii) All consents, approvals, orders, notifications,
filings or authorizations, the failure of which to make or obtain would have the
effect of making the issuance of Shares to Parent illegal ("OTHER REQUISITE
CONSENTS"), shall have been made or obtained.
3. The Closing.
(a) Any closing hereunder shall take place on the date
specified by Parent in its Stock Exercise Notice or Cash Exercise Notice, as the
case may be, at such reasonable time and place as may be indicated in the Stock
Exercise Notice or the Cash Exercise Notice, as applicable, or at the election
of the Company at 10:00 A.M., local time, at the offices of Weil, Gotshal &
Manges LLP, 100 Crescent Court, Suite 1300, Dallas, Texas, or, if the conditions
set forth in Section 2(i), 2(ii) or 2(iii) have not then been satisfied, on the
second business day following the satisfaction of such conditions, or at such
other time and place as the parties hereto may agree (the "CLOSING DATE"). On
the Closing Date, (i) in the event of a closing pursuant to Section 1(c) hereof,
the Company will deliver to Parent a certificate or certificates, duly endorsed
(or accompanied by duly executed stock powers), representing the Shares in the
denominations designated by Parent in its Stock Exercise Notice and Parent will
purchase such Shares from the Company at a cash price per Share equal to the
Purchase Price or (ii) in the event of a closing pursuant to Section 1(d)
hereof, the Company will deliver to Parent cash in an amount determined pursuant
to Section 1(d) hereof. Any payment made by Parent to the Company, or by the
Company to Parent, pursuant to this Stock Option Agreement shall be made by wire
transfer of immediately available funds to a bank designated by the party
receiving such funds.
(b) The certificates representing the Shares may bear an
appropriate legend relating to the fact that such Shares have not been
registered under the Securities Act of 1933, as amended (the "SECURITIES ACT").
4. Representations and Warranties of the Company. The Company
represents and warrants to Parent that (a) the Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Maryland and has the requisite corporate power and authority to enter into and
perform this Stock Option Agreement; (b) the execution and delivery of this
Stock Option Agreement by the Company and the consummation by it of the
transactions contemplated hereby have been
3
<PAGE> 4
duly authorized by the Board of Directors of the Company and this Stock Option
Agreement has been duly and validly executed and delivered by a duly authorized
officer of the Company and will constitute a valid and binding obligation of the
Company subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles; (c) the Company has taken
all necessary corporate action to authorize and reserve the Shares issuable upon
exercise of the Option and the Shares, when issued and delivered by the Company
upon exercise of the Option, will be duly authorized, validly issued, fully paid
and non-assessable and free of preemptive rights; (d) except as otherwise
required by the HSR Act or for the Other Requisite Consents, the execution and
delivery of this Stock Option Agreement by the Company and the consummation by
it of the transactions contemplated hereby do not require the consent, waiver,
approval or authorization of or any filing with any person or public authority
and will not violate, result in a breach of or the acceleration of any
obligation under, or constitute a default under, any provision of any charter or
bylaw, indenture, mortgage, lien, lease, agreement, contract, instrument, order,
law, rule, regulation, judgment, ordinance, or decree, or restriction by which
the Company or any of its subsidiaries or any of their respective properties or
assets is bound, except where the failure to obtain such consent, waiver,
approval or authorization or make such filing, or where such breach,
acceleration or default, is not reasonably expected to have a Material Adverse
Effect (as defined in the Merger Agreement) on the Company and its subsidiaries
taken as a whole or on the ability of the Company to consummate the transactions
contemplated hereby; and (e) no "fair price", "moratorium", "control share
acquisition", "interested stockholder" or other form of antitakeover statute or
regulation (including, without limitation, Subtitle 6 (Sections 3-601 through
3-603) and Subtitle 7 (Sections 3-701 through 3-709) of the Corporation Law of
the State of Maryland) is applicable to the acquisition of Shares pursuant to
this Stock Option Agreement.
5. Representations and Warranties of the Parent. Parent
represents and warrants to the Company that (a) Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the requisite corporate power and authority to enter into and
perform this Stock Option Agreement; (b) the execution and delivery of this
Stock Option Agreement by Parent and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Parent and this Stock Option Agreement has been duly and validly
executed and delivered by a duly authorized officer of Parent and will
constitute a valid and binding obligation of Parent enforceable in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles; and (c) Parent
is acquiring the Option and, if and when it exercises the Option, will be
acquiring the Shares issuable upon the exercise thereof for its own account and
not with a view to distribution or resale in any manner which would be in
violation of the Securities Act.
6. Listing of Shares; HSR Act Filings; Governmental Consents.
Subject to applicable law and the rules and regulations of the New York Stock
Exchange (or any other national securities exchange or quotation system on which
the Common Stock is
4
<PAGE> 5
then listed) (as applicable, the "STOCK Exchange"), when the Option becomes
exercisable hereunder, the Company will promptly file an application to list the
Shares on the Stock Exchange and will use all reasonable efforts to effect all
necessary filings by the Company under the HSR Act. Each of the parties hereto
will use all reasonable efforts to obtain consents of all third parties and
governmental authorities (including any Other Requisite Consents), if any,
necessary to the consummation of the transactions contemplated hereby.
7. Registration Rights.
(a) In the event that Parent shall desire to sell any of
the Shares within two years after the purchase of such Shares pursuant hereto,
and such sale requires, in the opinion of counsel to Parent, which opinion shall
be reasonably satisfactory to the Company and its counsel, registration of such
Shares under the Securities Act, the Company will cooperate with Parent and any
underwriters in registering such Shares for resale, including, without
limitation, promptly filing a registration statement which complies with the
requirements of applicable federal and state securities laws, entering into an
underwriting agreement with such underwriters upon such terms and conditions as
are customarily contained in underwriting agreements with respect to secondary
distributions; provided that the Company shall not be required to have declared
effective more than two registration statements hereunder and shall be entitled
to delay the filing or effectiveness of any registration statement for up to 120
days if the offering would, in the good faith judgment of the Board of Directors
of the Company, require premature disclosure of any material corporate
development or otherwise interfere with or adversely affect any pending or
proposed offering of securities of the Company or any other material transaction
involving the Company. Parent shall use its reasonable efforts to cause, and to
cause any underwriters of any sale or disposition to cause, any sale or
disposition pursuant to such registration statement to be effected on a widely
disseminated basis so that upon consummation thereof no purchaser or transferee
will own beneficially more than 5.0% of the then outstanding voting power of the
Company.
(b) If the Common Stock is registered pursuant to the
provisions of this Section 7, the Company agrees (i) to furnish copies of the
registration statement and the prospectus relating to the Shares covered thereby
in such numbers as Parent may from time to time reasonably request and (ii) if
any event shall occur as a result of which it becomes necessary to amend or
supplement any registration statement or prospectus, to prepare and file under
the applicable securities laws such amendments and supplements as may be
necessary to keep available for at least 90 days a prospectus covering the
Common Stock meeting the requirements of such securities laws, and to furnish
Parent such numbers of copies of the registration statement and prospectus as
amended or supplemented as may reasonably be requested. Parent will provide
information reasonably requested by the Company for inclusion in any
registration statement to be filed pursuant to this Section 7. The Company shall
bear the cost of the registration, including, but not limited to, all
registration and filing fees, printing expenses, and fees and disbursements of
counsel and accountants for the Company, except that Parent shall pay the fees
and disbursements of its counsel, and the underwriting fees and selling
5
<PAGE> 6
commissions applicable to the shares of Common Stock sold by Parent. In
connection with any registration pursuant to this Section 7, Parent and the
Company shall provide each other and each underwriter of the offering with
customary representations, warranties and covenants, including indemnification
and contribution. If a requested registration pursuant to this Section 7
involves an underwritten offering, the underwriter or underwriters thereof shall
be a nationally recognized firm or firms selected by the Company, which firm or
firms shall be reasonably satisfactory to Parent.
8. Expenses. Each party hereto shall pay its own expenses
incurred in connection with this Stock Option Agreement.
9. Specific Performance. The Company acknowledges that if the
Company fails to perform any of its obligations under this Stock Option
Agreement immediate and irreparable harm or injury would be caused to Parent for
which money damages would not be an adequate remedy. In such event, the Company
agrees that Parent shall have the right, in addition to any other rights it may
have, to specific performance of this Stock Option Agreement. Accordingly, if
Parent should institute an action or proceeding seeking specific enforcement of
the provisions hereof, the Company hereby waives the claim or defense that
Parent has an adequate remedy at law and hereby agrees not to assert in any such
action or proceeding the claim or defense that such a remedy at law exists. The
Company further agrees to waive any requirements for the securing or posting of
any bond in connection with obtaining any such equitable relief.
10. Profit Limitation.
(a) Notwithstanding any other provision of this Stock
Option Agreement, in no event shall Parent's Total Profit (as hereinafter
defined) exceed $55,600,000 and, if it otherwise would exceed such amount,
Parent, at its sole election, shall either (a) deliver to the Company for
cancellation Shares previously purchased by Parent, (b) pay cash to the Company
or (c) undertake any combination thereof, so that Parent's Total Profit shall
not exceed $55,600,000 after taking into account the foregoing actions.
(b) Notwithstanding any other provision of this Stock
Option Agreement, this Option may not be exercised for a number of Shares as
would, as of the date of the Stock Exercise Notice, result in a Notional Total
Profit (as defined below) of more than $55,600,000 and, if exercise of the
Option otherwise would exceed such amount, Parent, at its discretion, may
increase the Purchase Price for that number of Shares set forth in the Stock
Exercise Notice so that the Notional Total Profit shall not exceed $55,600,000;
provided, that nothing in this sentence shall restrict any exercise of the
Option permitted hereby on any subsequent date at the Purchase Price set forth
in Section 1(a) hereof.
(c) As used herein, the term "TOTAL PROFIT" shall mean
the aggregate amount (before taxes) of the following: (i) the amount of cash
received by Parent pursuant to Section 1(d), (ii) (x) the cash amounts or the
fair market value of any property received by Parent pursuant to the sale of
Shares (or any other securities into
6
<PAGE> 7
which such Shares are converted or exchanged), less (y) Parent's Purchase Price
for such Shares, and (iii) any fees received pursuant to Section 8.5(b) of the
Merger Agreement.
(d) As used herein, the term "NOTIONAL TOTAL PROFIT"
with respect to any number of Shares as to which Parent may propose to exercise
this Option shall be the Total Profit determined as of the date of the Stock
Exercise Notice assuming that this Option were exercised on such date for such
number of Shares and assuming that such Shares, together with all other Shares
held by Parent and its affiliates as of such date, were sold for cash at the
closing market price for the Common Stock as of the close of business on the
preceding trading day (less customary brokerage commissions).
11. Transfers. The Shares may not be sold, assigned,
transferred, or otherwise disposed of except (i) in an underwritten public
offering as provided in Section 7 hereof or (ii) to any purchaser or transferee
who, to Parent's knowledge, would immediately following such sale, assignment,
transfer or disposal, beneficially own more than 5.0% of the then outstanding
voting power of the Company; provided, however, that Parent shall be permitted
to sell any Shares if such sale is made pursuant to a tender or exchange offer.
12. Notice. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
fully given if (i) delivered personally; (ii) sent by certified or registered
mail, return receipt requested; (iii) sent by overnight courier for delivery on
the next business day; or (iv) sent by confirmed facsimile, provided that a hard
copy of all such materials is thereafter sent within 24 hours in the manner
described in clauses (i), (ii) or (iii), to the parties at the following
addresses or at such other addresses as shall be specified by the parties by
like notice:
If to Parent:
Texas Instruments Incorporated
7839 Churchill Way, M/S 3995
Dallas, Texas 75251
- or -
P.O. Box 650311, M/S 3995
Dallas, Texas 75265
Attention: Charles D. Tobin
Facsimile No.: (972) 917-3804
With copies to:
Texas Instruments Incorporated
8505 Forest Lane, M/S 8658
Dallas, Texas 75243
- or -
7
<PAGE> 8
P.O. Box 660199, M/S 8658
Dallas, Texas 75266
Attention: Richard J. Agnich, Esq.
Facsimile No.: (972) 480-5061
and
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Attention: R. Scott Cohen
Facsimile No.: (214) 746-7777
If to the Company:
Unitrode Corporation
7 Continental Boulevard
Merrimack, New Hampshire 03054
Attention: Allan R. Campbell, Esq.
Facsimile No.: (603) 429-8771
With a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
One Beacon Street, 31st Floor
Boston, Massachusetts 02108
Attention: Margaret A. Brown, Esq.
Facsimile No.: (617) 573-4822
Notices provided in accordance with this Section 12 shall be
deemed delivered (i) on the date of personal delivery, (ii) four business days
after deposit in the mail, (ii) one business day after delivery to an overnight
courier, or (iv) on the date of confirmation of the facsimile transmission, as
the case may be.
13. Parties in Interest. This Stock Option Agreement shall
inure to the benefit of and be binding upon the parties named herein and their
respective successors and permitted assigns; provided, however, that such
successor in interest or permitted assigns shall agree to be bound by the
provisions of this Stock Option Agreement. Nothing in this Stock Option
Agreement, express or implied, is intended to confer upon any person other than
the Company or Parent, or their successors or assigns, any rights or remedies
under or by reason of this Stock Option Agreement.
14. Entire Agreement; Amendments. This Stock Option Agreement,
together with the Merger Agreement and the other documents referred to therein,
contains the entire agreement between the parties hereto with respect to the
subject matter hereof and supersedes all prior and contemporaneous agreements
and understandings, oral or written, with respect to such transactions. This
Stock Option Agreement may not be changed, amended or modified orally, but may
be changed only by an agreement in
8
<PAGE> 9
writing signed by the party against whom any waiver, change, amendment,
modification or discharge may be sought.
15. Assignment. No party to this Stock Option Agreement may
assign any of its rights or obligations under this Stock Option Agreement
without the prior written consent of the other party hereto.
16. Headings. The section headings herein are for convenience
only and shall not affect the construction of this Stock Option Agreement.
17. Counterparts. This Stock Option Agreement may be executed
in any number of counterparts, each of which, when executed, shall be deemed to
be an original and all of which together shall constitute one and the same
document.
18. Governing Law. This Stock Option Agreement shall be
governed by and construed in accordance with the laws of the State of Maryland,
without giving effect to the choice of law principles thereof.
19. Severability. If any term, provision, covenant or
restriction of this Stock Option Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Stock Option Agreement shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated.
[THIS REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
9
<PAGE> 10
IN WITNESS WHEREOF, the Parent and the Company have caused
this Stock Option Agreement to be duly executed and delivered on the day and
year first above written.
TEXAS INSTRUMENTS INCORPORATED
By: /s/ DELBERT A. WHITAKER
----------------------------------------
Name: Delbert A. Whitaker
Title: Senior Vice President
UNITRODE CORPORATION
By: /s/ ROBERT J. RICHARDSON
----------------------------------------
Name: Robert J. Richardson
Title: Chairman of the Board and Chief
Executive Officer
<PAGE> 1
EXHIBIT 10(q)
UNITRODE CORPORATION
July 25, 1999
Mr. Allan R. Campbell
8 Suburban Park Drive
Billerica, MA 01821
Re: Employment
----------
Dear Mr. Campbell:
By letter dated April 15, 1991 from Unitrode Corporation ("Corporation") to
you ("Retention Letter"), the Corporation has agreed to provide you with certain
benefits in the event your employment is terminated either by the Corporation or
a successor without "Cause" or by you for "Good Reason" following a "change in
control" of the Corporation (as each such term is defined in the Retention
Letter). The Corporation is entering into that certain Agreement and Plan of
Merger, dated as of the date hereof, among the Corporation, Texas Instruments
Incorporated ("TI") and Unicorn Acquisition Corp. (the "Merger Agreement")
pursuant to which the Corporation will be acquired by TI (the "Acquisition").
This letter (this "Amendment") shall amend the Retention Letter effective as of
the Closing Date (as defined in the Merger Agreement). This Amendment shall be
null and void if the Acquisition is not consummated.
1. Continued Employment. From the Closing Date until the first anniversary
thereof, you will be employed by the Corporation or TI. As may be reasonably
requested by TI, you will perform transition services for up to the first six
(6) months following the Acquisition (the "Transition Period") and thereafter
perform other services, in each case consistent with your position with the
Corporation prior to the Acquisition. You shall initially report directly to
Bart Thomas. You shall be a member of the TI law department and shall represent
TI. You shall not be obligated to maintain office hours except as may be
reasonably requested by TI during the Transition Period. You may obtain other
full-time employment following the Transition Period. Your services following
the
<PAGE> 2
Mr. Allan R. Campbell
July 25, 1999
Page 2
Transition Period may be rendered at times and in a manner reasonably convenient
to you.
2. Acknowledgement of Good Reason. The Corporation acknowledges that you
have Good Reason by reason of the change in the status of your responsibilities
after the Acquisition. However, in consideration of the terms of this Amendment,
you have agreed not to resign your employment with the Corporation and/or TI for
Good Reason until the first anniversary of the Closing Date.
3. Compensation. You shall be paid during your employment with the
Corporation or TI after the Acquisition your base salary at a rate of $15,782.50
per month and you shall continue to receive employee benefits (as in effect from
time to time for employees of the Corporation). You shall not be eligible for
any bonuses. In addition, if TI requires you to maintain substantially full-time
office hours beyond the first three months of the Transition Period, you shall
receive, as a retention bonus, an additional amount equal to your base salary
rate with respect to such portion of the Transition Period so worked.
4. Special Payment. Subject to the other terms approved by the Board of
Directors of the Corporation, as an inducement for you to enter into this
Amendment and in consideration of both your continued employment until the first
anniversary of the Closing Date (notwithstanding the existence of Good Reason
following the Closing Date), and your agreement to the competition restrictions
set forth in Section 9 hereof, and in recognition of the fact that (a) your
services and expertise are essential to the success of the business combination
and (b) your continued employment hereunder may preclude your pursuit of certain
other employment opportunities (including opportunities which might otherwise
have allowed you to earn incentive bonuses and equity awards), the Corporation
shall pay to you a special payment (the "Special Payment") in the amount of
$500,000. The Special Payment shall be paid to you during the first six (6)
months following the Acquisition in equal monthly installments.
5. Employee Policies. You shall be entitled to and shall abide by all
applicable employment and personnel policies in effect from time to time.
6. Resignation. You shall resign your employment with TI and the
Corporation for Good Reason on the first anniversary of the Closing Date.
Immediately upon such resignation, you shall be paid $576,061, plus any unpaid
retention bonus and salary for the period from the Acquisition to the first
anniversary of the Closing Date (as defined in the Merger Agreement). You shall
also remain entitled to all of the benefits provided in the Retention Letter (as
amended hereby) including, without limitation, Sections 4(iii)(d) and 4(iv)
thereof.
<PAGE> 3
Mr. Allan R. Campbell
July 25, 1999
Page 3
7. Amendment to Severance Agreement. Section 4 of the Retention Letter is
hereby amended as follows:
a. Subsections 4(iii)(b) and (f) are stricken in their entirety;
provided, however, that the payments provided in Sections 6 and 7 hereof shall
be treated as Severance Payments (as such term is defined in the Retention
Letter).
b. Subsection 4(iii)(c) is stricken and replaced by the following
provision:
"in lieu of shares of common stock of TI ("Common Shares")
issuable upon exercise of outstanding options ("Options"), and stock
appreciation rights ("SARs"), if any, granted to you under the 1972
Stock Option Plan or 1983 Stock Option Plan, or any successor plans
(which Options shall be cancelled upon the making of the payment
referred to below), TI shall pay to you, at the time of your
termination of employment, the number of shares of common stock of TI
(rounded up to the nearest whole share) having a fair market value (as
defined below) on the date of or nearest before your termination of
employment equal to the product of (1) the excess of the greater of
(x) the fair market value of the common stock of TI on the date of or
on the date nearest before your termination of employment and (y) the
fair market value of the common stock of TI on the Closing Date (as
defined in the Merger Agreement), over the per share exercise price of
each Option (as exchanged and adjusted pursuant to the Merger
Agreement) held by you (whether or not then fully exercisable), and
(2) the number of shares of common stock of TI covered by each such
Option (as exchanged and adjusted pursuant to the Merger Agreement).
Additionally, any restrictions on transfer on any restricted stock
held by you pursuant to the Corporation's 1979 and 1984 Restricted
Stock and Cash Bonus Plan shall be removed, such stock shall be
delivered to you, and the Corporation shall pay to you such cash bonus
as you shall be entitled to pursuant to the said plans upon delivery
of the stock. For the purposes of this Section 4(iii)(c), "fair market
value" means the closing price on the applicable date of one share of
common stock of TI (rounded to the nearest thousandth) on the New York
Stock Exchange (as reported in the New York City edition of the Wall
Street Journal or, if not reported thereby, another nationally
recognized source);".
c. Subsection 4(iii)(e) is amended by replacing the words "twenty-four
(24)" with "twelve (12)" wherever they appear in such subsection.
8. Other Termination. In the event of your termination of employment for
any reason other than your resignation prior to the first anniversary of the
Closing Date (as
<PAGE> 4
Mr. Allan R. Campbell
July 25, 1999
Page 4
defined in the Merger Agreement), such termination shall be treated as a
resignation for Good Reason and you shall be entitled to the payments provided
for in Sections 6 and 7 hereof; provided, however, that if the period of your
employment hereunder is less than twelve (12) months following the Acquisition,
you shall receive an additional $15,782.50 for each full calendar month
remaining in such twelve-month period. You shall also remain entitled to all of
the benefits provided in the Retention Letter (as amended hereby) including,
without limitation, Sections 4(iii)(d) and 4(iv) thereof.
9. Competitive Activities. You agree that for a period of one (1) year from
the termination of your employment with the Corporation or TI, you will not (i)
perform services, as an employee, consultant or otherwise, for any competitor of
the Corporation or its subsidiaries for the purpose of assisting such competitor
in efforts intended to be competitive with those products described in the
Corporation's FY 2000 AOP/LRP planning documents, or (ii) hire, solicit for hire
or assist any person to hire or solicit for hire any employee of TI, the
Corporation or their subsidiaries without the consent of TI.
This Agreement shall be binding upon and inure to the benefit of the
Corporation and its successors and assigns. This Agreement shall be enforceable
by you and your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. The Corporation or any
successor to the Corporation may assign its rights under this Agreement to any
corporation which owns all of the outstanding equity of the Corporation or any
successor thereto.
If the foregoing accurately reflects our mutual understanding, please sign
and return the enclosed copy of this letter, as evidence of our agreement.
Very truly yours,
UNITRODE CORPORATION
By: /s/ Robert J. Richardson
-------------------------------
Robert J. Richardson
Chairman of the Board and
Chief Executive Officer
Agreed to this 26th day
of July, 1999.
/s/ ALLAN R. CAMPBELL
- ------------------------------
Allan R. Campbell
<PAGE> 1
EXHIBIT 10(r)
UNITRODE CORPORATION
July 25, 1999
Mr. Raymond G. Hawkins
12 Chandler Drive
Falmouth, MA 04105
Re: Employment
----------
Dear Mr. Hawkins:
By letter dated May 6, 1998 from Unitrode Corporation ("Corporation") to
you ("Retention Letter"), the Corporation has agreed to provide you with certain
benefits in the event your employment is terminated either by the Corporation or
a successor without "Cause" or by you for "Good Reason" following a "change in
control" of the Corporation (as each such term is defined in the Retention
Letter). The Corporation is entering into that certain Agreement and Plan of
Merger, dated as of the date hereof, among the Corporation, Texas Instruments
Incorporated ("TI") and Unicorn Acquisition Corp. (the "Merger Agreement")
pursuant to which the Corporation will be acquired by TI (the "Acquisition").
This letter (this "Amendment") shall amend the Retention Letter effective as of
the Closing Date (as defined in the Merger Agreement). This Amendment shall be
null and void if the Acquisition is not consummated.
1. Continued Employment. From the Closing Date until the first anniversary
thereof, you will be employed by the Corporation or TI. As may be reasonably
requested by TI, you will perform transition services for up to the first six
(6) months following the Acquisition (the "Transition Period") and thereafter
perform other services, in each case consistent with your position with the
Corporation prior to the Acquisition. You shall initially report directly to
Robert Richardson. You shall not be obligated to maintain office hours except as
may be reasonably requested by TI during the Transition Period. You may obtain
other full-time employment following the Transition Period. Your
<PAGE> 2
Mr. Raymond G. Hawkins
July 25, 1999
Page 2
services following the Transition Period may be rendered at times and in a
manner reasonably convenient to you.
2. Acknowledgement of Good Reason. The Corporation acknowledges that you
have Good Reason by reason of the change in the status of your responsibilities
after the Acquisition. However, in consideration of the terms of this Amendment,
you have agreed not to resign your employment with the Corporation and/or TI for
Good Reason until the first anniversary of the Closing Date.
3. Compensation. You shall be paid during your employment with the
Corporation or TI after the Acquisition your base salary at a rate of $21,250
per month and you shall continue to receive employee benefits (as in effect from
time to time for employees of the Corporation). You shall not be eligible for
any bonuses. In addition, if TI requires you to maintain substantially full-time
office hours beyond the first three months of the Transition Period, you shall
receive, as a retention bonus, an additional amount equal to your base salary
rate with respect to such portion of the Transition Period so worked.
4. Special Payment. Subject to the other terms approved by the Board of
Directors of the Corporation, as an inducement for you to enter into this
Amendment and in consideration of both your continued employment until the first
anniversary of the Closing Date (notwithstanding the existence of Good Reason
following the Closing Date), and your agreement to the competition restrictions
set forth in Section 9 hereof, and in recognition of the fact that (a) your
services and expertise are essential to the success of the business combination
and (b) your continued employment hereunder may preclude your pursuit of certain
other employment opportunities (including opportunities which might otherwise
have allowed you to earn incentive bonuses and equity awards), the Corporation
shall pay to you a special payment (the "Special Payment") in the amount of
$500,000. The Special Payment shall be paid to you during the first six (6)
months following the Acquisition in equal monthly installments.
5. Employee Policies. You shall be entitled to and shall abide by all
applicable employment and personnel policies in effect from time to time.
6. Resignation. You shall resign your employment with TI and the
Corporation for Good Reason on the first anniversary of the Closing Date.
Immediately upon such resignation, you shall be paid $256,200, plus any unpaid
retention bonus and salary for the period from the Acquisition to the first
anniversary of the Closing Date (as defined in the Merger Agreement); provided,
however, that to the extent you otherwise would be entitled to any further
amount relating to annual bonus in accordance with the terms of Section
4(iii)(b) of the Retention Letter (without giving effect to the amendments
effected hereby), the foregoing payment shall be increased to reflect such
entitlement. You shall
<PAGE> 3
Mr. Raymond G. Hawkins
July 25, 1999
Page 3
also remain entitled to all of the benefits provided in the Retention Letter (as
amended hereby) including, without limitation, Sections 4(iii)(d) and 4(iv)
thereof.
7. Amendment to Severance Agreement. Section 4 of the Retention Letter is
hereby amended as follows:
a. Subsections 4(iii)(b) and (f) are stricken in their entirety; provided,
however, that the payments provided in Sections 6 and 7 hereof shall be treated
as Severance Payments (as such term is defined in the Retention Letter).
b. Subsection 4(iii)(c) is stricken and replaced by the following
provision:
"in lieu of shares of common stock of TI ("Common Shares")
issuable upon exercise of outstanding options ("Options"), and stock
appreciation rights ("SARs"), if any, granted to you under the 1972
Stock Option Plan or 1983 Stock Option Plan, or any successor plans
(which Options shall be cancelled upon the making of the payment
referred to below), TI shall pay to you, at the time of your
termination of employment, the number of shares of common stock of TI
(rounded up to the nearest whole share) having a fair market value (as
defined below) on the date of or nearest before your termination of
employment equal to the product of (1) the excess of the greater of
(x) the fair market value of the common stock of TI on the date of or
on the date nearest before your termination of employment and (y) the
fair market value of the common stock of TI on the Closing Date (as
defined in the Merger Agreement), over the per share exercise price of
each Option (as exchanged and adjusted pursuant to the Merger
Agreement) held by you (whether or not then fully exercisable), and
(2) the number of shares of common stock of TI covered by each such
Option (as exchanged and adjusted pursuant to the Merger Agreement).
Additionally, any restrictions on transfer on any restricted stock
held by you pursuant to the Corporation's 1979 and 1984 Restricted
Stock and Cash Bonus Plan shall be removed, such stock shall be
delivered to you, and the Corporation shall pay to you such cash bonus
as you shall be entitled to pursuant to the said plans upon delivery
of the stock. For the purposes of this Section 4(iii)(c), "fair market
value" means the closing price on the applicable date of one share of
common stock of TI (rounded to the nearest thousandth) on the New York
Stock Exchange (as reported in the New York City edition of the Wall
Street Journal or, if not reported thereby, another nationally
recognized source);".
c. Subsection 4(iii)(e) is amended by replacing the words "twenty-four
(24)" with "twelve (12)" wherever they appear in such subsection.
<PAGE> 4
Mr. Raymond G. Hawkins
July 25, 1999
Page 4
8. Other Termination. In the event of your termination of employment for
any reason other than your resignation prior to the first anniversary of the
Closing Date (as defined in the Merger Agreement), such termination shall be
treated as a resignation for Good Reason and you shall be entitled to the
payments provided for in Sections 6 and 7 hereof; provided, however, that if the
period of your employment hereunder is less than twelve (12) months following
the Acquisition, you shall receive an additional $21,250 for each full calendar
month remaining in such twelve-month period. You shall also remain entitled to
all of the benefits provided in the Retention Letter (as amended hereby)
including, without limitation, Sections 4(iii)(d) and 4(iv) thereof.
9. Competitive Activities. You agree that for a period of one (1) year from
the termination of your employment with the Corporation or TI, you will not (i)
perform services, as an employee, consultant or otherwise, for any business
enterprise relating to the design or manufacture of power management products,
or (ii) hire, solicit for hire or assist any person to hire or solicit for hire
any employee of TI, the Corporation or their subsidiaries without the consent of
TI. The parties expressly acknowledge that you may accept employment with any
semiconductor company so long as the scope of your services to such company are
outside the area of power management products.
This Agreement shall be binding upon and inure to the benefit of the
Corporation and its successors and assigns. This Agreement shall be enforceable
by you and your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. The Corporation or any
successor to the Corporation may assign its rights under this Agreement to any
corporation which owns all of the outstanding equity of the Corporation or any
successor thereto.
If the foregoing accurately reflects our mutual understanding, please sign
and return the enclosed copy of this letter, as evidence of our agreement.
Very truly yours,
UNITRODE CORPORATION
By: /s/ JOHN KOKULIS
-------------------------------
John Kokulis
Executive Vice President
and Chief Financial Officer
Agreed to this 25th day
of July, 1999
/s/ RAYMOND G. HAWKINS
- ----------------------
Raymond G. Hawkins
<PAGE> 1
EXHIBIT 10(s)
UNITRODE CORPORATION
July 25, 1999
Mr. John L. Kokulis
18 Blackthorn Road
Shrewsbury, MA 01545
Re: Employment
----------
Dear Mr. Kokulis:
By letter dated February 15, 1999 from Unitrode Corporation ("Corporation")
to you ("Retention Letter"), the Corporation has agreed to provide you with
certain benefits in the event your employment is terminated either by the
Corporation or a successor without "Cause" or by you for "Good Reason" following
a "change in control" of the Corporation (as each such term is defined in the
Retention Letter). The Corporation is entering into that certain Agreement and
Plan of Merger, dated as of the date hereof, among the Corporation, Texas
Instruments Incorporated ("TI") and Unicorn Acquisition Corp. (the "Merger
Agreement") pursuant to which the Corporation will be acquired by TI (the
"Acquisition"). This letter (this "Amendment") shall amend the Retention Letter
effective as of the Closing Date (as defined in the Merger Agreement). This
Amendment shall be null and void if the Acquisition is not consummated.
1. Continued Employment. From the Closing Date until the first anniversary
thereof, you will be employed by the Corporation or TI. As may be reasonably
requested by TI, you will perform transition services for up to the first six
(6) months following the Acquisition (the "Transition Period") and thereafter
perform other services, in each case consistent with your position with the
Corporation prior to the Acquisition. You shall initially report directly to
Robert Richardson. You shall not be obligated to maintain office hours except as
may be reasonably requested by TI during the Transition Period. You may obtain
other full-time employment following the Transition Period. Your
<PAGE> 2
Mr. John L. Kokulis
July 25, 1999
Page 2
services following the Transition Period may be rendered at times and in a
manner reasonably convenient to you.
2. Acknowledgement of Good Reason. The Corporation acknowledges that you
have Good Reason by reason of the change in the status of your responsibilities
after the Acquisition. However, in consideration of the terms of this Amendment,
you have agreed not to resign your employment with the Corporation and/or TI for
Good Reason until the first anniversary of the Closing Date.
3. Compensation. You shall be paid during your employment with the
Corporation or TI after the Acquisition your base salary at a rate of $18,333.33
per month and you shall continue to receive employee benefits (as in effect from
time to time for employees of the Corporation). You shall not be eligible for
any bonuses. In addition, if TI requires you to maintain substantially full-time
office hours beyond the first three months of the Transition Period, you shall
receive, as a retention bonus, an additional amount equal to your base salary
rate with respect to such portion of the Transition Period so worked.
4. Special Payment. Subject to the other terms approved by the Board of
Directors of the Corporation, as an inducement for you to enter into this
Amendment and in consideration of both your continued employment until the first
anniversary of the Closing Date (notwithstanding the existence of Good Reason
following the Closing Date), and your agreement to the competition restrictions
set forth in Section 9 hereof, and in recognition of the fact that (a) your
services and expertise are essential to the success of the business combination
and (b) your continued employment hereunder may preclude your pursuit of certain
other employment opportunities (including opportunities which might otherwise
have allowed you to earn incentive bonuses and equity awards), the Corporation
shall pay to you a special payment (the "Special Payment") in the amount of
$500,000. The Special Payment shall be paid to you during the first six (6)
months following the Acquisition in equal monthly installments.
5. Employee Policies. You shall be entitled to and shall abide by all
applicable employment and personnel policies in effect from time to time.
6. Resignation. You shall resign your employment with TI and the
Corporation for Good Reason on the first anniversary of the Closing Date.
Immediately upon such resignation, you shall be paid $220,000, plus any unpaid
retention bonus and salary for the period from the Acquisition to the first
anniversary of the Closing Date (as defined in the Merger Agreement); provided,
however, that to the extent you otherwise would be entitled to any further
amount relating to annual bonus in accordance with the terms of Section
4(iii)(b) of the Retention Letter (without giving effect to the amendments
effected hereby), the foregoing payment shall be increased to reflect such
entitlement. You shall
<PAGE> 3
Mr. John L. Kokulis
July 25, 1999
Page 3
also remain entitled to all of the benefits provided in the Retention Letter (as
amended hereby) including, without limitation, Sections 4(iii)(d) and 4(iv)
thereof.
7. Amendment to Severance Agreement. Section 4 of the Retention Letter is
hereby amended as follows:
a. Subsections 4(iii)(b) and (f) are stricken in their entirety; provided,
however, that the payments provided in Sections 6 and 7 hereof shall be treated
as Severance Payments (as such term is defined in the Retention Letter).
b. Subsection 4(iii)(c) is stricken and replaced by the following
provision:
"in lieu of shares of common stock of TI ("Common Shares")
issuable upon exercise of outstanding options ("Options"), and stock
appreciation rights ("SARs"), if any, granted to you under the 1972
Stock Option Plan or 1983 Stock Option Plan, or any successor plans
(which Options shall be cancelled upon the making of the payment
referred to below), TI shall pay to you, at the time of your
termination of employment, the number of shares of common stock of TI
(rounded up to the nearest whole share) having a fair market value (as
defined below) on the date of or nearest before your termination of
employment equal to the product of (1) the excess of the greater of
(x) the fair market value of the common stock of TI on the date of or
on the date nearest before your termination of employment and (y) the
fair market value of the common stock of TI on the Closing Date (as
defined in the Merger Agreement), over the per share exercise price of
each Option (as exchanged and adjusted pursuant to the Merger
Agreement) held by you (whether or not then fully exercisable), and
(2) the number of shares of common stock of TI covered by each such
Option (as exchanged and adjusted pursuant to the Merger Agreement).
Additionally, any restrictions on transfer on any restricted stock
held by you pursuant to the Corporation's 1979 and 1984 Restricted
Stock and Cash Bonus Plan shall be removed, such stock shall be
delivered to you, and the Corporation shall pay to you such cash bonus
as you shall be entitled to pursuant to the said plans upon delivery
of the stock. For the purposes of this Section 4(iii)(c), "fair market
value" means the closing price on the applicable date of one share of
common stock of TI (rounded to the nearest thousandth) on the New York
Stock Exchange (as reported in the New York City edition of the Wall
Street Journal or, if not reported thereby, another nationally
recognized source);".
c. Subsection 4(iii)(e) is amended by replacing the words "twenty-four
(24)" with "twelve (12)" wherever they appear in such subsection.
<PAGE> 4
Mr. John L. Kokulis
July 25, 1999
Page 4
8. Other Termination. In the event of your termination of employment for
any reason other than your resignation prior to the first anniversary of the
Closing Date (as defined in the Merger Agreement), such termination shall be
treated as a resignation for Good Reason and you shall be entitled to the
payments provided for in Sections 6 and 7 hereof; provided, however, that if the
period of your employment hereunder is less than twelve (12) months following
the Acquisition, you shall receive an additional $18,333.33 for each full
calendar month remaining in such twelve-month period. You shall also remain
entitled to all of the benefits provided in the Retention Letter (as amended
hereby) including, without limitation, Sections 4(iii)(d) and 4(iv) thereof.
9. Competitive Activities. You agree that for a period of one (1) year from
the termination of your employment with the Corporation or TI, you will not (i)
perform services, as an employee, consultant or otherwise, for any competitor of
the Corporation or its subsidiaries for the purpose of assisting such competitor
in efforts intended to be competitive with those products described in the
Corporation's FY 2000 AOP/LRP planning documents, or (ii) hire, solicit for hire
or assist any person to hire or solicit for hire any employee of TI, the
Corporation or their subsidiaries without the consent of TI.
This Agreement shall be binding upon and inure to the benefit of the
Corporation and its successors and assigns. This Agreement shall be enforceable
by you and your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. The Corporation or any
successor to the Corporation may assign its rights under this Agreement to any
corporation which owns all of the outstanding equity of the Corporation or any
successor thereto.
If the foregoing accurately reflects our mutual understanding, please sign
and return the enclosed copy of this letter, as evidence of our agreement.
Very truly yours,
UNITRODE CORPORATION
By: /s/ ROBERT J. RICHARDSON
--------------------------------
Robert J. Richardson
Chairman of the Board
and Chief Executive Officer
Agreed to this 25th day
of July, 1999.
/s/ JOHN L. KOKULIS
- ---------------------------------------
John L. Kokulis
<PAGE> 1
EXHIBIT 10(t)
UNITRODE CORPORATION
July 25, 1999
Ms. S. Kelley MacDonald
8 Suburban Park Drive
Billerica, MA 01821
Re: Employment
----------
Dear Ms. MacDonald:
By letter dated February 26, 1993 from Unitrode Corporation ("Corporation")
to you ("Retention Letter"), the Corporation has agreed to provide you with
certain benefits in the event your employment is terminated either by the
Corporation or a successor without "Cause" or by you for "Good Reason" following
a "change in control" of the Corporation (as each such term is defined in the
Retention Letter). The Corporation is entering into that certain Agreement and
Plan of Merger, dated as of the date hereof, among the Corporation, Texas
Instruments Incorporated ("TI") and Unicorn Acquisition Corp. (the "Merger
Agreement") pursuant to which the Corporation will be acquired by TI (the
"Acquisition"). This letter (this "Amendment") shall amend the Retention Letter
effective as of the Closing Date (as defined in the Merger Agreement). This
Amendment shall be null and void if the Acquisition is not consummated.
1. Continued Employment. From the Closing Date until the first anniversary
thereof, you will be employed by the Corporation or TI. As may be reasonably
requested by TI, you will perform transition services for up to the first six
(6) months following the Acquisition (the "Transition Period") and thereafter
perform other services, in each case consistent with your position with the
Corporation prior to the Acquisition. You shall initially report directly to
Robert Richardson. You shall not be obligated to maintain office hours except as
may be reasonably requested by TI during the Transition Period. You may obtain
other full-time employment following the Transition Period. Your
<PAGE> 2
Ms. S. Kelley MacDonald
July 25, 1999
Page 2
services following the Transition Period may be rendered at times and in a
manner reasonably convenient to you.
2. Acknowledgement of Good Reason. The Corporation acknowledges that you
have Good Reason by reason of the change in the status of your responsibilities
after the Acquisition. However, in consideration of the terms of this Amendment,
you have agreed not to resign your employment with the Corporation and/or TI for
Good Reason until the first anniversary of the Closing Date.
3. Compensation. You shall be paid during your employment with the
Corporation or TI after the Acquisition your base salary at a rate of $8,244.67
per month and you shall continue to receive employee benefits (as in effect from
time to time for employees of the Corporation). You shall not be eligible for
any bonuses. In addition, if TI requires you to maintain substantially full-time
office hours beyond the first three months of the Transition Period, you shall
receive, as a retention bonus, an additional amount equal to your base salary
rate with respect to such portion of the Transition Period so worked.
4. Special Payment. Subject to the other terms approved by the Board of
Directors of the Corporation, as an inducement for you to enter into this
Amendment and in consideration of both your continued employment until the first
anniversary of the Closing Date (notwithstanding the existence of Good Reason
following the Closing Date), and your agreement to the competition restrictions
set forth in Section 9 hereof, and in recognition of the fact that (a) your
services and expertise are essential to the success of the business combination
and (b) your continued employment hereunder may preclude your pursuit of certain
other employment opportunities (including opportunities which might otherwise
have allowed you to earn incentive bonuses and equity awards), the Corporation
shall pay to you a special payment (the "Special Payment") in the amount of
$500,000. The Special Payment shall be paid to you during the first six (6)
months following the Acquisition in equal monthly installments.
5. Employee Policies. You shall be entitled to and shall abide by all
applicable employment and personnel policies in effect from time to time.
6. Resignation. You shall resign your employment with TI and the
Corporation for Good Reason on the first anniversary of the Closing Date.
Immediately upon such resignation, you shall be paid $305,699, plus any unpaid
retention bonus and salary for the period from the Acquisition to the first
anniversary of the Closing Date (as defined in the Merger Agreement). You shall
also remain entitled to all of the benefits provided in the Retention Letter (as
amended hereby) including, without limitation, Sections 4(iii)(d) and 4(iv)
thereof.
<PAGE> 3
Ms. S. Kelley MacDonald
July 25, 1999
Page 3
7. Amendment to Severance Agreement. Section 4 of the Retention Letter is
hereby amended as follows:
a. Subsections 4(iii)(b) and (f) are stricken in their entirety; provided,
however, that the payments provided in Sections 6 and 7 hereof shall be treated
as Severance Payments (as such term is defined in the Retention Letter).
b. Subsection 4(iii)(c) is stricken and replaced by the following
provision:
"in lieu of shares of common stock of TI ("Common Shares")
issuable upon exercise of outstanding options ("Options"), and stock
appreciation rights ("SARs"), if any, granted to you under the 1972
Stock Option Plan or 1983 Stock Option Plan, or any successor plans
(which Options shall be cancelled upon the making of the payment
referred to below), TI shall pay to you, at the time of your
termination of employment, the number of shares of common stock of TI
(rounded up to the nearest whole share) having a fair market value (as
defined below) on the date of or nearest before your termination of
employment equal to the product of (1) the excess of the greater of
(x) the fair market value of the common stock of TI on the date of or
on the date nearest before your termination of employment and (y) the
fair market value of the common stock of TI on the Closing Date (as
defined in the Merger Agreement), over the per share exercise price of
each Option (as exchanged and adjusted pursuant to the Merger
Agreement) held by you (whether or not then fully exercisable), and
(2) the number of shares of common stock of TI covered by each such
Option (as exchanged and adjusted pursuant to the Merger Agreement).
Additionally, any restrictions on transfer on any restricted stock
held by you pursuant to the Corporation's 1979 and 1984 Restricted
Stock and Cash Bonus Plan shall be removed, such stock shall be
delivered to you, and the Corporation shall pay to you such cash bonus
as you shall be entitled to pursuant to the said plans upon delivery
of the stock. For the purposes of this Section 4(iii)(c), "fair market
value" means the closing price on the applicable date of one share of
common stock of TI (rounded to the nearest thousandth) on the New York
Stock Exchange (as reported in the New York City edition of the Wall
Street Journal or, if not reported thereby, another nationally
recognized source);".
c. Subsection 4(iii)(e) is amended by replacing the words "twenty-four
(24)" with "twelve (12)" wherever they appear in such subsection.
8. Other Termination. In the event of your termination of employment for
any reason other than your resignation prior to the first anniversary of the
Closing Date (as
<PAGE> 4
Ms. S. Kelley MacDonald
July 25, 1999
Page 4
defined in the Merger Agreement), such termination shall be treated as a
resignation for Good Reason and you shall be entitled to the payments provided
for in Sections 6 and 7 hereof; provided, however, that if the period of your
employment hereunder is less than twelve (12) months following the Acquisition,
you shall receive an additional $8,244.67 for each full calendar month remaining
in such twelve-month period. You shall also remain entitled to all of the
benefits provided in the Retention Letter (as amended hereby) including, without
limitation, Sections 4(iii)(d) and 4(iv) thereof.
9. Competitive Activities. You agree that for a period of one (1) year from
the termination of your employment with the Corporation or TI, you will not (i)
perform services, as an employee, consultant or otherwise, for any competitor of
the Corporation or its subsidiaries for the purpose of assisting such competitor
in efforts intended to be competitive with those products described in the
Corporation's FY 2000 AOP/LRP planning documents, or (ii) hire, solicit for hire
or assist any person to hire or solicit for hire any employee of TI, the
Corporation or their subsidiaries without the consent of TI.
This Agreement shall be binding upon and inure to the benefit of the
Corporation and its successors and assigns. This Agreement shall be enforceable
by you and your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. The Corporation or any
successor to the Corporation may assign its rights under this Agreement to any
corporation which owns all of the outstanding equity of the Corporation or any
successor thereto.
If the foregoing accurately reflects our mutual understanding, please sign
and return the enclosed copy of this letter, as evidence of our agreement.
Very truly yours,
UNITRODE CORPORATION
By: /s/ ROBERT J. RICHARDSON
-------------------------------
Robert J. Richardson
Chairman of the Board
and Chief Executive Officer
Agreed to this 25th day
of July, 1999.
/s/ S. KELLEY MACDONALD
- ---------------------------------
S. Kelley MacDonald
<PAGE> 1
EXHIBIT 10(u)
UNITRODE CORPORATION
July 25, 1999
Mr. Patrick J. Moquin
7 Continental Boulevard
Merrimack, NH 03054
Re: Employment
----------
Dear Mr. Moquin:
By letter dated July 31, 1995 from Unitrode Corporation ("Corporation") to
you ("Retention Letter"), the Corporation has agreed to provide you with certain
benefits in the event your employment is terminated either by the Corporation or
a successor without "Cause" or by you for "Good Reason" following a "change in
control" of the Corporation (as each such term is defined in the Retention
Letter). The Corporation is entering into that certain Agreement and Plan of
Merger, dated as of the date hereof, among the Corporation, Texas Instruments
Incorporated ("TI") and Unicorn Acquisition Corp. (the "Merger Agreement")
pursuant to which the Corporation will be acquired by TI (the "Acquisition").
This letter (this "Amendment") shall amend the Retention Letter effective as of
the Closing Date (as defined in the Merger Agreement). This Amendment shall be
null and void if the Acquisition is not consummated.
1. Continued Employment. From the Closing Date until the first anniversary
thereof, you will be employed by the Corporation or TI. As may be reasonably
requested by TI, you will perform transition services for up to the first six
(6) months following the Acquisition (the "Transition Period") and thereafter
perform other services, in each case consistent with your position with the
Corporation prior to the Acquisition. You shall initially report directly to
Robert Richardson. You shall not be obligated to maintain office hours except as
may be reasonably requested by TI during the Transition Period. You may obtain
other full-time employment following the Transition Period. Your
<PAGE> 2
Mr. Patrick J. Moquin
July 25, 1999
Page 2
services following the Transition Period may be rendered at times and in a
manner reasonably convenient to you.
2. Acknowledgement of Good Reason. The Corporation acknowledges that you
have Good Reason by reason of the change in the status of your responsibilities
after the Acquisition. However, in consideration of the terms of this Amendment,
you have agreed not to resign your employment with the Corporation and/or TI for
Good Reason until the first anniversary of the Closing Date.
3. Compensation. You shall be paid during your employment with the
Corporation or TI after the Acquisition your base salary at a rate of $12,905.50
per month and you shall continue to receive employee benefits (as in effect from
time to time for employees of the Corporation). You shall not be eligible for
any bonuses. In addition, if TI requires you to maintain substantially full-time
office hours beyond the first three months of the Transition Period, you shall
receive, as a retention bonus, an additional amount equal to your base salary
rate with respect to such portion of the Transition Period so worked.
4. Special Payment. Subject to the other terms approved by the Board of
Directors of the Corporation, as an inducement for you to enter into this
Amendment and in consideration of both your continued employment until the first
anniversary of the Closing Date (notwithstanding the existence of Good Reason
following the Closing Date), and your agreement to the competition restrictions
set forth in Section 9 hereof, and in recognition of the fact that (a) your
services and expertise are essential to the success of the business combination
and (b) your continued employment hereunder may preclude your pursuit of certain
other employment opportunities (including opportunities which might otherwise
have allowed you to earn incentive bonuses and equity awards), the Corporation
shall pay to you a special payment (the "Special Payment") in the amount of
$500,000. The Special Payment shall be paid to you during the first six (6)
months following the Acquisition in equal monthly installments.
5. Employee Policies. You shall be entitled to and shall abide by all
applicable employment and personnel policies in effect from time to time.
6. Resignation. You shall resign your employment with TI and the
Corporation for Good Reason on the first anniversary of the Closing Date.
Immediately upon such resignation, you shall be paid $474,380, plus any unpaid
retention bonus and salary for the period from the Acquisition to the first
anniversary of the Closing Date (as defined in the Merger Agreement). You shall
also remain entitled to all of the benefits provided in the Retention Letter (as
amended hereby) including, without limitation, Sections 4(iii)(d) and 4(iv)
thereof.
<PAGE> 3
Mr. Patrick J. Moquin
July 25, 1999
Page 3
7. Amendment to Severance Agreement. Section 4 of the Retention Letter is
hereby amended as follows:
a. Subsections 4(iii)(b) and (f) are stricken in their entirety; provided,
however, that the payments provided in Sections 6 and 7 hereof shall be treated
as Severance Payments (as such term is defined in the Retention Letter).
b. Subsection 4(iii)(c) is stricken and replaced by the following
provision:
"in lieu of shares of common stock of TI ("Common Shares")
issuable upon exercise of outstanding options ("Options"), and stock
appreciation rights ("SARs"), if any, granted to you under the 1972
Stock Option Plan or 1983 Stock Option Plan, or any successor plans
(which Options shall be cancelled upon the making of the payment
referred to below), TI shall pay to you, at the time of your
termination of employment, the number of shares of common stock of TI
(rounded up to the nearest whole share) having a fair market value (as
defined below) on the date of or nearest before your termination of
employment equal to the product of (1) the excess of the greater of
(x) the fair market value of the common stock of TI on the date of or
on the date nearest before your termination of employment and (y) the
fair market value of the common stock of TI on the Closing Date (as
defined in the Merger Agreement), over the per share exercise price of
each Option (as exchanged and adjusted pursuant to the Merger
Agreement) held by you (whether or not then fully exercisable), and
(2) the number of shares of common stock of TI covered by each such
Option (as exchanged and adjusted pursuant to the Merger Agreement).
Additionally, any restrictions on transfer on any restricted stock
held by you pursuant to the Corporation's 1979 and 1984 Restricted
Stock and Cash Bonus Plan shall be removed, such stock shall be
delivered to you, and the Corporation shall pay to you such cash bonus
as you shall be entitled to pursuant to the said plans upon delivery
of the stock. For the purposes of this Section 4(iii)(c), "fair market
value" means the closing price on the applicable date of one share of
common stock of TI (rounded to the nearest thousandth) on the New York
Stock Exchange (as reported in the New York City edition of the Wall
Street Journal or, if not reported thereby, another nationally
recognized source);".
c. Subsection 4(iii)(e) is amended by replacing the words "twenty-four
(24)" with "twelve (12)" wherever they appear in such subsection.
8. Other Termination. In the event of your termination of employment for
any reason other than your resignation prior to the first anniversary of the
Closing Date (as
<PAGE> 4
Mr. Patrick J. Moquin
July 25, 1999
Page 4
defined in the Merger Agreement), such termination shall be treated as a
resignation for Good Reason and you shall be entitled to the payments provided
for in Sections 6 and 7 hereof; provided, however, that if the period of your
employment hereunder is less than twelve (12) months following the Acquisition,
you shall receive an additional $12,905.50 for each full calendar month
remaining in such twelve-month period. You shall also remain entitled to all of
the benefits provided in the Retention Letter (as amended hereby) including,
without limitation, Sections 4(iii)(d) and 4(iv) thereof.
9. Competitive Activities. You agree that for a period of one (1) year from
the termination of your employment with the Corporation or TI, you will not (i)
perform services, as an employee, consultant or otherwise, for any competitor of
the Corporation or its subsidiaries for the purpose of assisting such competitor
in efforts intended to be competitive with those products described in the
Corporation's FY 2000 AOP/LRP planning documents, or (ii) hire, solicit for hire
or assist any person to hire or solicit for hire any employee of TI, the
Corporation or their subsidiaries without the consent of TI.
This Agreement shall be binding upon and inure to the benefit of the
Corporation and its successors and assigns. This Agreement shall be enforceable
by you and your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. The Corporation or any
successor to the Corporation may assign its rights under this Agreement to any
corporation which owns all of the outstanding equity of the Corporation or any
successor thereto.
If the foregoing accurately reflects our mutual understanding, please sign
and return the enclosed copy of this letter, as evidence of our agreement.
Very truly yours,
UNITRODE CORPORATION
By: /s/ ROBERT J. RICHARDSON
--------------------------------
Robert J. Richardson
Chairman of the Board and
Chief Executive Officer
Agreed to this 25th day
of July, 1999.
/s/ PATRICK J. MOQUIN
- ----------------------------------
Patrick J. Moquin
<PAGE> 1
EXHIBIT 10(v)
UNITRODE CORPORATION
July 25, 1999
Mr. Robert J. Richardson
7 Continental Boulevard
Merrimack, New Hampshire 03054
Re: Employment
----------
Dear Mr. Richardson:
By letter dated November 11, 1997, from Unitrode Corporation
("Corporation") to you ("Retention Letter"), the Corporation has agreed to
provide you with certain benefits in the event your employment is terminated
either by the Corporation or a successor without "Cause" or by you for "Good
Reason" following a "change in control" of the Corporation (as each such term is
defined in the Retention Letter). The Corporation is entering into that certain
Agreement and Plan of Merger, dated as of the date hereof, among the
Corporation, Texas Instruments Incorporated ("TI") and Unicorn Acquisition Corp.
(the "Merger Agreement") pursuant to which the Corporation will be acquired by
TI (the "Acquisition"). This letter (this "Amendment") shall amend the Retention
Letter effective as of the Closing Date (as defined in the Merger Agreement).
This Amendment shall be null and void if the Acquisition is not consummated.
1. Continued Employment. From the Closing Date until November 15, 2000, you
will be employed by the Corporation or TI. As may be reasonably requested by TI,
you will perform transition services for up to the first six (6) months
following the Acquisition (the "Transition Period") and thereafter perform other
services, in each case consistent with your position with the Corporation prior
to the Acquisition. You shall initially report directly to Dan Reynolds. You
shall not be obligated to maintain office hours except as may be reasonably
requested by TI during the Transition Period. You may obtain other full-time
employment following the Transition Period. Your services
<PAGE> 2
Mr. Robert J. Richardson
July 25, 1999
Page 2
following the Transition Period may be rendered at times and in a manner
reasonably convenient to you.
2. Acknowledgement of Good Reason. The Corporation acknowledges that you
have Good Reason by reason of the change in the status of your responsibilities
after the Acquisition. However, in consideration of the terms of this Amendment,
you have agreed not to resign your employment with the Corporation and/or TI for
Good Reason until November 15, 2000.
3. Compensation. You shall be paid during your employment with the
Corporation or TI after the Acquisition your base salary at a rate of $30,000
per month and you shall continue to receive employee benefits (as in effect from
time to time for employees of the Corporation). You shall not be eligible for
any bonuses. In addition, if TI requires you to maintain substantially full-time
office hours beyond the first three months of the Transition Period, you shall
receive, as a retention bonus, an additional amount equal to your base salary
rate with respect to such portion of the Transition Period so worked.
4. Special Payment. Subject to the other terms approved by the Board of
Directors of the Corporation, as an inducement for you to enter into this
Amendment and in consideration of both your continued employment until November
15, 2000 (notwithstanding the existence of Good Reason following the Closing
Date), and your agreement to the competition restrictions set forth in Section 9
hereof, and in recognition of the fact that (a) your services and expertise are
essential to the success of the business combination and (b) your continued
employment hereunder may preclude your pursuit of certain other employment
opportunities (including opportunities which might otherwise have allowed you to
earn incentive bonuses and equity awards), the Corporation shall pay to you a
special payment (the "Special Payment") in the amount of $2,000,000. The Special
Payment shall be paid to you during the first six (6) months following the
Acquisition in equal monthly installments.
5. Employee Policies. You shall be entitled to and shall abide by all
applicable employment and personnel policies in effect from time to time.
6. Resignation. You shall resign your employment with TI and the
Corporation for Good Reason on November 15, 2000. Immediately upon such
resignation, you shall be paid $596,694, plus any unpaid retention bonus and
salary for the period from the Acquisition to November 15, 2000; provided,
however, that (a) if the period of your employment hereunder is less than twelve
(12) months following the Acquisition, you shall receive an additional $30,000
for each full calendar month remaining in such twelve-month period and (b) if
the period of your employment hereunder is greater than (12) months following
the Acquisition, $596,694 shall be reduced by $30,000 for each full calendar
month exceeding such twelve-month period.
<PAGE> 3
Mr. Robert J. Richardson
July 25, 1999
Page 3
You shall also remain entitled to all of the benefits provided in the Retention
Letter (as amended hereby) including, without limitation, Sections IV(C)(4) and
IV(D) thereof.
7. Amendment to Severance Agreement. Section IV of the Retention Letter is
hereby amended as follows:
a. Subsections IV(C)(2) and (6) are stricken in their entirety; provided,
however, that the payments provided in Sections 6 and 7 hereof shall be treated
a Severance Payments (as such term is defined in the Retention Letter).
b. Subsection (IV)(C)(3) is stricken and replaced by the following
provision:
"in lieu of shares of common stock of TI ("Common Shares")
issuable upon exercise of outstanding options ("Options"), and stock
appreciation rights ("SARs"), if any, granted to you under the 1972
Stock Option Plan or 1983 Stock Option Plan, or any successor plans
(which Options shall be cancelled upon the making of the payment
referred to below), TI shall pay to you, at the time of your
termination of employment, the number of shares of common stock of TI
(rounded up to the nearest whole share) having a fair market value (as
defined below) on the date of or nearest before your termination of
employment equal to the product of (1) the excess of the greater of
(x) the fair market value of the common stock of TI on the date of or
on the date nearest before your termination of employment and (y) the
fair market value of the common stock of TI on the Closing Date (as
defined in the Merger Agreement), over the per share exercise price of
each Option (as exchanged and adjusted pursuant to the Merger
Agreement) held by you (whether or not then fully exercisable), and
(2) the number of shares of common stock of TI covered by each such
Option (as exchanged and adjusted pursuant to the Merger Agreement).
Additionally, any restrictions on transfer on any restricted stock
held by you pursuant to the Corporation's 1979 and 1984 Restricted
Stock and Cash Bonus Plan shall be removed, such stock shall be
delivered to you, and the Corporation shall pay to you such cash bonus
as you shall be entitled to pursuant to the said plans upon delivery
of the stock. For the purposes of this Section IV(C)(3), "fair market
value" means the closing price on the applicable date of one share of
common stock of TI (rounded to the nearest thousandth) on the New York
Stock Exchange (as reported in the New York City edition of the Wall
Street Journal or, if not reported thereby, another nationally
recognized source);".
c. Subsection (IV)(C)(5) is amended by replacing the words "twenty-four
(24)" with "twelve (12)" wherever they appear in such subsection.
<PAGE> 4
Mr. Robert J. Richardson
July 25, 1999
Page 4
8. Other Termination. In the event of your termination of employment for
any reason other than your resignation prior to November 15, 2000, such
termination shall be treated as a resignation for Good Reason and you shall be
entitled to the payments provided for in Sections 6 and 7 hereof. You shall also
remain entitled to all of the benefits provided in the Retention Letter (as
amended hereby) including, without limitation, Sections IV(C)(4) and IV(D)
thereof.
9. Competitive Activities. You agree that for a period of one (1) year from
the termination of your employment with the Corporation or TI, you will not (i)
perform services, as an employee, consultant or otherwise, for any competitor of
the Corporation or its subsidiaries for the purpose of assisting such competitor
in efforts intended to be competitive with those products described in the
Corporation's FY 2000 AOP/LRP planning documents, or (ii) hire, solicit for hire
or assist any person to hire or solicit for hire any employee of TI, the
Corporation or their subsidiaries without the consent of TI.
This Agreement shall be binding upon and inure to the benefit of the
Corporation and its successors and assigns. This Agreement shall be enforceable
by you and your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. The Corporation or any
successor to the Corporation may assign its rights under this Agreement to any
corporation which owns all of the outstanding equity of the Corporation or any
successor thereto.
If the foregoing accurately reflects our mutual understanding, please sign
and return the enclosed copy of this letter, as evidence of our agreement.
Very truly yours,
UNITRODE CORPORATION
By: /s/ ALLAN R. CAMPBELL
--------------------------------
Allan R. Campbell
Senior Vice President, General
Counsel & Secretary
Agreed to this 26th day
of July, 1999.
/s/ ROBERT J. RICHARDSON
- --------------------------------
Robert J. Richardson
<PAGE> 1
EXHIBIT 23(a)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Independent
Auditors" in the Registration Statement on Form S-4 and related Prospectus of
Texas Instruments Incorporated and to the incorporation by reference therein of
our report dated January 19, 1999 with respect to the consolidated financial
statements and schedule of Texas Instruments Incorporated included in its
Annual Report on Form 10-K/A (Amendment No. 1) for the year ended December 31,
1998, filed with the Securities and Exchange Commission.
We also consent to the incorporation by reference in the Registration Statement
on Form S-4 and related Prospectus of Texas Instruments Incorporated of our
report dated January 26, 1998, with respect to the consolidated financial
statements of BENCHMARQ Microelectronics, Inc. included in the Annual Report on
Form 10-K of Unitrode Corporation for the year ended January 31, 1999, filed
with the Securities and Exchange Commission.
Dallas, Texas
September 13, 1999
/s/ ERNST & YOUNG LLP
<PAGE> 1
EXHIBIT 23(b)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on form S-4 of Texas Instruments Incorporated of our report dated
March 3, 1999 relating to the financial statements and financial statement
schedule appearing in Unitrode Corporation's Annual Report on Form 10-K for the
year ended January 31, 1999. We also consent to the reference to us under the
heading "Independent Auditors" in such Registration Statement.
/s/ PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts
September 16, 1999
