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CONFORMED COPY
AMENDMENT NUMBER ONE TO THE
AGREEMENT AND PLAN OF MERGER
THIS AMENDMENT NUMBER ONE TO THE AGREEMENT AND PLAN OF
MERGER (this "Amendment"), dated as of November 18, 1997, by and
between TPG PARTNERS II, L.P., a Delaware limited partnership
("Parent"), TPG ZEUS ACQUISITION CORPORATION, a Delaware
corporation ("Sub") and ZILOG, INC., a Delaware corporation (the
"Company"),
W I T N E S S E T H:
WHEREAS, Parent and the Company are parties to that certain
Agreement and Plan of Merger (the "Merger Agreement"), dated as
of July 20, 1997; and
WHEREAS, pursuant to Section 8.3 of the Merger Agreement,
the parties hereto wish to amend the Merger Agreement as provided
herein:
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein
contained, the parties hereto hereby agree as follows:
SECTION 1. Definitions. Capitalized terms used but not
defined herein shall the meanings set forth in the Merger
Agreement.
SECTION 2. Amendments to the Merger Agreement.
SECTION 2.1. The Preamble to the Merger Agreement shall be
amended and restated in its entirety, and shall be replaced by
the following:
"AGREEMENT AND PLAN OF MERGER, dated as of July 20, 1997
(as amended by Amendment Number One, dated November 18,
1997, this "Agreement"), between TPG PARTNERS II, L.P., a
Delaware limited partnership ("Parent"), and ZILOG, INC., a
Delaware corporation (the "Company"),"
SECTION 2.2. Section 1.5(a) of the Merger Agreement shall
be amended and restated in its entirety, and shall be replaced by
the following:
"(a) The Certificate of Incorporation of the Company,
as in effect immediately prior to the Effective Time, shall
be amended as of the Effective Time so that Article IV of
such Certificate of Incorporation is amended to read in its
entirety as follows:
FOURTH: The Corporation shall be authorized to issue
10,000,000 shares of common stock and 5,000,000 shares of
preferred stock. There shall be two classes of common stock
of the Corporation. The first class of common stock of
CUSIP NO. 00000000 13D Page 7 of 16 Pages
the Corporation shall have a par value of $0.01 and shall
be designated "Common Stock" and the number of shares
constituting such class shall be 4,000,000. The second
class of stock of the Corporation shall have a par value of
$0.01 and shall be designated "Class A Non-Voting Common
Stock" and the number of shares constituting such class
shall be 6,000,000. Holders of shares of Common Stock shall
be entitled to one vote for each share of such stock held
on all matters as to which stockholders may be entitled to
vote pursuant to the Delaware General Corporation Law.
Holders of shares of Class A Non-Voting Common Stock shall
not have any voting rights, except that the holders of
shares of Class A NonVoting Common Stock shall have the
right to vote as a class to the extent required by the
Delaware General Corporation Law. In all other respects the
rights, powers, preferences and limitations of the Common
Stock and Class A NonVoting Common Stock shall be
identical. The preferred stock shall have a par value of
$100.00 and the board of directors may authorize the
issuance from time to time of the preferred stock in one or
more classes and/or series and with such powers,
designations, preferences, rights and qualifications,
limitations or restrictions (which may differ with respect
to each such class and/or series) as the board may fix by
resolution."
"As so amended, such Certificate of Incorporation shall be
the Certificate of Incorporation of the Surviving
Corporation until thereafter changed or amended as provided
therein or by applicable law."
SECTION 2.3. Section 2.1(a) of the Merger Agreement shall
be amended and restated in its entirety, and shall be replaced by
the following:
"(a) Conversion (or Retention) of Shares. Except as
otherwise provided herein and subject to Section 2.1(d),
each Share issued and outstanding immediately prior to the
Effective Time, other than Shares to be canceled pursuant
to Section 2.1(b) ("Excluded Shares") and any Dissenting
Shares, shall be converted into the following (the "Merger
Consideration"):
(i) for each Share with respect to which an
election to retain pursuant to Section 2.1(c) has been
effectively made, and not revoked or lost ("Electing
Shares"), the right to retain one fully paid and
nonassessable Share (a "Non-Cash Election Share"); and
(ii) for each Share (other than Electing Shares),
the right to receive in cash from the Company
following the Merger an amount equal to $20.00 (the
"Cash Election Price")."
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SECTION 2.4. Section 2.1(d)(i) of the Merger Agreement
shall be amended and restated in its entirety, and shall be
replaced by the following:
"(i) Notwithstanding anything in this Agreement
to the contrary (but subject to the provisions of
Section 2.4), the aggregate number of Shares to be
converted into the right to retain Shares at the
Effective Time (the "Non-Cash Election Number") shall
equal 375,000 Shares."
SECTION 2.5. Section 2.1(f) of the Merger Agreement shall
be amended and restated in its entirety, and shall be replaced by
the following:
"(f) Capital Stock of Sub. The shares of capital stock
of Sub issued and outstanding immediately prior to the
Effective Time shall be converted into and become in the
aggregate 3,375,000 shares of Common Stock of the Surviving
Corporation, 1,250,000 shares of Class A Non-Voting Common
Stock of the Surviving Corporation and 250,000 shares of a
new series of Non-Voting 13.5% Pay-in-Kind Preferred Stock,
stated value $100.00 per share, of the Surviving
Corporation."
SECTION 2.6. Section 3.7 of the Merger Agreement shall be
amended and restated in its entirety, and shall be replaced by
the following:
"SECTION 3.7 Absence of Material Adverse Change.
Except as disclosed in items 3.7 or 3.12(a) of the Company
Letter or in the Company SEC Documents filed and publicly
available prior to the date of this Agreement (the "Company
Filed SEC Documents"), since December 31, 1996, the Company
and its Subsidiaries have conducted their respective
businesses in all material respects only in the ordinary
course consistent with past practice, and there has not
been (i) any declaration, setting aside or payment of any
dividend or other distribution with respect to its capital
stock or any redemption, purchase or other acquisition of
any of its capital stock, (ii) any split, combination or
reclassification of any of its capital stock or any
issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for
shares of its capital stock, (iii) (x) any granting by the
Company or any of its Subsidiaries to any officer of the
Company or any of its Subsidiaries of any increase in
compensation, except in the ordinary course of business
(including in connection with promotions) consistent with
past practice or as was required under employment
agreements in effect as of December 31, 1996, (y) any
material change to the Company's or any of its
Subsidiaries' severance or termination plans, agreements or
arrangements with any of their employees, except as part of
a standard employment package to any person promoted or
hired (but not including the five most senior officers), or
as was required under employment, severance or termination
agreements in effect as of December 31, 1996, or (z) except
for employment agreements in the ordinary course of
business consistent with past practice with employees other
than any executive officer of the Company, any entry by the
Company or any of its Subsidiaries into any employment,
consulting, severance, termination or indemnification
agreement with any such employee or executive officer, (iv)
any damage, destruction or loss, whether or not covered by
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insurance, that would reasonably be expected to have a
Material Adverse Effect on the Company, (v) any revaluation
by the Company of any of its material assets, (vi) any
material change in accounting methods, principles or
practices by the Company or (vii) any other action that
occurred prior to the date hereof that, if it occurred
after the date of this Agreement and prior to the Closing
Date, would be prohibited by paragraphs (a), (b) (only with
respect to the Company's Subsidiaries), (c), (f), (g) or
(p) of Section 5.1 of this Agreement.
SECTION 2.7. Section 4.7 of the Merger Agreement shall be
amended and restated in its entirety, and shall be replaced by
the following:
"SECTION 4.7 Financing. Parent has binding written
commitments, addressed to Parent or Sub, from one or more
financially responsible financial institutions, dated as of
November 18, 1997, true and complete copies of which have
been furnished to the Company (collectively, the
"Commitments") to obtain, together with the other funds to
be provided by Parent, the financing necessary to pay the
Cash Election Price with respect to each Share outstanding
at the Effective Time (other than Electing Shares), to pay
(or provide the funds for the Company to pay) all amounts
contemplated by Section 2.2 when due, to refinance any
indebtedness or other obligation of the Company and its
Subsidiaries which may become due as a result of this
Agreement or any of the transactions contemplated hereby,
to pay all related fees and expenses and to provide for the
anticipated working capital needs of the Surviving
Corporation following the Merger (the financing necessary
to provide such funds being hereinafter referred to as the
"Financing"), which Commitments are in full force and
effect as of November 18, 1997. There are no conditions
precedent or other contingencies related to the funding of
the full amount of the Financing other than as set forth in
the Commitments. Subject to the terms and conditions of
this Agreement and receipt of the proceeds of the Financing
as set forth in the Commitments (or on other terms
reasonably satisfactory to Parent), at the closing of the
Merger, Parent will capitalize Sub with an aggregate equity
contribution of at least $117.5 million. Parent will be
under no obligation pursuant to the preceding sentence
unless and until the proceeds of the Financing are received
as set forth in the Commitments. In addition, Parent will
be under no obligation under any circumstances to
capitalize Sub with equity of more than $117.5 million."
SECTION 2.8. Section 5.2(a) of the Merger Agreement shall
be amended and restated in its entirety, and shall be replaced by
the following:
"(a) The Company shall, and shall direct and cause its
officers, directors, employees, representatives and agents
to, immediately cease any discussions or negotiations with
any parties that may be ongoing with respect to a Takeover
Proposal (as hereinafter defined). The Company shall not,
nor shall it permit any of its Subsidiaries to, nor shall
it authorize or permit any of its officers, directors or
employees or any investment banker, financial advisor,
attorney, accountant or other representative or agent
retained by it or any of its Subsidiaries to, directly or
indirectly, (i) solicit, initiate or knowingly encourage
(including by way of furnishing information) any inquiries
or the
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making of any proposal which constitutes, or may reasonably
be expected to lead to, any Takeover Proposal or (ii)
participate in any discussions or negotiations regarding
any Takeover Proposal; provided, however, that if, at any
time prior to the receipt of the Company Stockholder
Approval, the Board of Directors of the Company determines
in good faith, after consultation with outside counsel,
that it would be consistent with its fiduciary
responsibilities to the Company's stockholders under
applicable law, the Company may, in response to a Takeover
Proposal which was not solicited subsequent to the date
hereof, (x) furnish information with respect to the Company
to any person pursuant to a confidentiality agreement
substantially identical to the Confidentiality Agreement
(as defined in Section 6.2 hereof) and (y) participate in
discussions, investigations and/or negotiations regarding
such Takeover Proposal. The Company will promptly notify
Parent in the event of the occurrence of any matter
referred to in the foregoing proviso. For purposes of this
Agreement, "Takeover Proposal" means any inquiry, proposal
or offer from any person relating to any direct or indirect
acquisition or purchase of 25% or more of the aggregate
assets of the Company and its Subsidiaries, taken as a
whole, or 25% or more of the voting power of the shares of
Common Stock then outstanding or any tender offer or
exchange offer that if consummated would result in any
person beneficially owning 25% or more of the voting power
of the shares of Common Stock then outstanding or any
merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar
transaction involving the Company, other than the
transactions contemplated by this Agreement."
SECTION 2.9. Section 5.2(b) of the Merger Agreement shall
be amended and restated in its entirety, and shall be replaced by
the following:
"(b) Except as set forth in this Section 5.2, neither
the Board of Directors of the Company nor any committee
thereof shall (i) withdraw or modify, or propose publicly
to withdraw or modify, in a manner adverse to Parent, the
approval or recommendation by such Board of Directors or
such committee of the Merger or this Agreement; provided
that, the Board of Directors may, (A) in response to any
Takeover Proposal, suspend such recommendation pending its
analysis of such Takeover Proposal or (B) at any time prior
to the receipt of the Company Stockholder Approval, modify
or withdraw such recommendation if the Board of Directors
of the Company determines in good faith that a Takeover
Proposal is a Superior Proposal (as hereinafter defined)
and, after consultation with outside counsel, that it would
be consistent with its fiduciary responsibilities to so
modify or withdraw such recommendation, (ii) approve or
recommend, or propose publicly to approve or recommend, any
Takeover Proposal or (iii) cause the Company to enter into
any acquisition agreement or other similar agreement (an
"Acquisition Agreement") related to any Takeover Proposal.
Notwithstanding the foregoing, in the event that prior to
the receipt of the Company Stockholder Approval, the Board
of Directors of the Company determines in good faith, after
consultation with outside counsel, that it would be
consistent with its fiduciary responsibilities to the
Company's stockholders under applicable law, the Board of
Directors of the Company may approve or recommend a
Superior Proposal or
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terminate this Agreement, but in each case, subject to the
provisions of Section 6.3 hereof and only at a time that is
after the second business day following Parent's receipt of
written notice (a "Notice of Superior Proposal") advising
Parent that the Board of Directors of the Company has
received a Takeover Proposal that may constitute a Superior
Proposal, specifying the material terms and conditions of
such Superior Proposal and identifying the person making
such Superior Proposal. For purposes of this Agreement, a
"Superior Proposal" means any proposal determined by the
Board of Directors of the Company in good faith, after
consultation with outside legal counsel, to be a bona fide
proposal and made by a third party to acquire, directly or
indirectly, for consideration consisting of cash, property
and/or securities, more than 50% of the combined voting
power of the shares of Common Stock then outstanding or all
or substantially all the assets of the Company and
otherwise on terms which the Board of Directors of the
Company determines in its good faith judgment, after
consultation with outside counsel and with a financial
advisor of nationally recognized reputation, to be more
favorable to the Company's stockholders than the Merger."
SECTION 2.10. Section 5.3 of the Merger Agreement shall be
amended and restated in its entirety, and shall be replaced by
the following:
"SECTION 5.3 Third Party Standstill Agreements. During
the period from the date of this Agreement through the
Effective Time, the Company shall not, except in connection
with the making of a Takeover Proposal, terminate, amend,
modify or waive any provision of any confidentiality or
standstill agreement to which the Company or any of its
Subsidiaries is a party (other than any involving Parent)
unless the Company's Board of Directors shall have
determined in good faith, after consultation with outside
counsel, that such release of any third party or amendment,
modification or waiver of such provisions is necessary in
order to comply with its fiduciary duties to the Company's
stockholders under applicable law."
SECTION 2.11. Section 6.12(a) of the Merger Agreement shall
be amended and restated in its entirety, and shall be replaced by
the following:
"(a) With respect to any officer or employee who is
covered by a severance policy or plan separate from the
standard severance policy for the Company's employees (all
of which separate severance policies or plans are
incorporated in the terms of the employment agreements
listed in item 6.12 of the Company Letter), the Surviving
Corporation shall maintain (or shall cause to be
maintained) such separate policy or plan as in effect as of
the date hereof, and, as to all other officers and
employees, the Surviving Corporation shall maintain (or
shall cause to be maintained) the Company's standard
severance policy as in effect as of the date hereof until
at least June 30, 1998; provided, however, that with
respect to any severance policy maintained pursuant to any
statutory requirement, such policy shall continue to be
maintained in compliance with the applicable statute."
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SECTION 2.12. A new Section 6.20 shall be added to the
Merger Agreement, which shall read in its entirety as follows:
"SECTION 6.20 Surviving Corporation Preferred Stock.
Immediately after the Effective Time, the Board of
Directors of the Surviving Corporation shall adopt a
resolution providing for the creation of the series of
Non-Voting 13.5% Pay-in-Kind Preferred Stock, stated value
$100.00 per share, of the Surviving Corporation into which
the shares of capital stock of Sub are to be converted in
the Merger."
SECTION 2.13. Section 8.1(b)(i) of the Merger Agreement
shall be amended and restated in its entirety, and shall be
replaced by the following:
"(b) by either Parent or the Company:
(i) if the Merger shall not have been consummated
by February 28, 1998; provided that the terminating
party shall not have breached in any material respect
its obligations under this Agreement in any manner
that shall have proximately contributed to the failure
to consummate the Merger by February 28, 1998;"
SECTION 2.14. Section 8.1(c) of the Merger Agreement shall
be amended and restated in its entirety, and shall be replaced by
the following:
"(c) by Parent or Sub if: (A) as of such time of
determination, any of the representations or warranties of
the Company set forth in this Agreement that are qualified
as to materiality shall not be true and correct in any
respect or any such representations or warranties that are
not so qualified shall not be true and correct in any
material respect, or (B) the Company shall have failed to
perform in any material respect any material obligation or
to comply in any material respect with any material
agreement or covenant of the Company to be performed or
complied with by it under this Agreement and, in the case
of (A) such untruth or incorrectness cannot be or has not
been cured within 60 days after the giving of written
notice to the Company, and, in the case of (B) such failure
cannot be or has not been cured within 20 days after the
giving of written notice to the Company;"
SECTION 3. Sub. Pursuant to Section 6.18 of the Merger
Agreement, each of Parent, Sub and the Company hereby agree that
by execution and delivery of this Amendment, Sub will be deemed
to have signed and become a party to the Merger Agreement as of
the date hereof and shall be entitled to all of the rights and
subject to all of the obligations and otherwise bound by all of
the provisions thereof, in each case applicable to Sub.
SECTION 4. Representations and Warranties.
(a) The Company. The execution, delivery and performance of
this Amendment by the Company have been duly authorized by the
Board of Directors of the Company and by all other necessary
corporate action on the part of the Company. This Amendment has
been duly executed
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and delivered by the Company and (assuming the valid
authorization, execution and delivery of this Amendment by Parent
and Sub) constitutes the valid and binding obligation of the
Company enforceable against the Company in accordance with its
terms, except that such enforceability (i) may be limited by
bankruptcy, insolvency, moratorium or other similar laws
affecting or relating to the enforcement of creditors' rights
generally and (ii) is subject to general principles of equity.
(b) Parent and Sub. The execution, delivery and performance
of this Amendment by each of Parent and Sub have been duly
authorized by the General Partner of Parent and the Board of
Directors of Sub, respectively, and by all other necessary
partnership or corporate action on the part of Parent or Sub,
respectively. This Amendment has been duly executed and delivered
by each of Parent and Sub and (assuming the valid authorization,
execution and delivery of this Amendment by the Company)
constitutes the valid and binding obligation of each of Parent
and Sub enforceable against them in accordance with its terms,
except that such enforceability (i) may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting or
relating to the enforcement of creditors' rights generally and
(ii) is subject to general principles of equity.
SECTION 5. Miscellaneous.
(a) Other than as set forth in Section 2.1 through Section
2.8 and Section 3 hereof, this Amendment does not modify, change
or delete any other addendum, term, provision, representation,
warranty or covenant (the "Provisions") relating to or contained
in the Merger Agreement, and all such Provisions remain in full
force and effect. For the avoidance of doubt, all references in
the Merger Agreement to "the date hereof" or "the date of this
Agreement" shall be deemed to be references to the date July 20,
1997.
(b) This Amendment shall be governed by, and construed in
accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles
of conflicts of laws thereof. This Amendment may be executed in
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.
(c) This Amendment and any of the provisions hereof may not
be amended, altered or added to in any manner except by a
document in writing and signed by each party.
IN WITNESS WHEREOF, Parent, Sub and the Company have caused
this Amendment
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to be signed by their respective officers thereunto duly
authorized all as of the date first written above.
TPG PARTNERS II, L.P.
By: TPG GenPar II, L.P., its General Partner
By: TPG Advisors II, Inc., its General Partner
By /s/ Xxxxx X. Xxxxxxx
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Title: Vice President
TPG ZEUS ACQUISITION CORPORATION
By /s/ Xxxxx X. Xxxxxxx
----------------------------------
Title: President
ZILOG, INC.
By /s/ Xxxxx X. Xxxx
----------------------------------
Name: Xxxxx X. Xxxx
Title: President and CEO
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