EXHIBIT (c)(2)
CONFORMED COPY
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT dated as of May 10, 1999 (this "Agreement")
among ReSound Corporation, a California corporation (the "Company"), GN Great
Nordic Ltd., a Danish corporation ("Parent"), and GN Acquisition Corporation,
a California corporation and an indirect wholly owned subsidiary of Parent
("Merger Subsidiary").
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this
Agreement, the parties hereto are entering into an Agreement and Plan of
Merger (as such agreement may hereafter be amended from time to time, the
"Merger Agreement") which provides, upon the terms and subject to the
conditions set forth therein, for (i) the commencement by Merger Subsidiary of
an offer (the "Offer") to purchase any and all of the outstanding shares of
the Company's common stock, par value $0.01 per share (the "Shares"), at a
price of $8.00 per Share (or any higher price paid for each Share in the
Offer, the "Offer Price"), and (ii) the subsequent merger of Merger Subsidiary
with and into the Company (the "Merger"), whereby each Share then outstanding
(other than Shares owned by Parent or any of its Subsidiaries or held by the
Company and other than dissenting Shares) will be converted into the right to
receive the Offer Price;
WHEREAS, as a condition to the willingness of Parent and Merger
Subsidiary to enter into the Merger Agreement, Parent and Merger Subsidiary
have required that the Company agree, and in order to induce Parent and Merger
Subsidiary to enter into the Merger Agreement, the Company has agreed, to
grant to Merger Subsidiary certain options to purchase Shares upon the terms
and subject to the conditions of this Agreement; and
WHEREAS, capitalized terms used but not defined in this Agreement
shall have the meanings ascribed to them in the Merger Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
THE TOP-UP OPTION
SECTION 1.01. Grant of Top-Up Stock Option. Subject to the terms and
conditions set forth herein, the Company hereby grants to Merger Subsidiary an
irrevocable option (the "Top-Up Stock Option") to purchase that number of
Shares (the "Top-Up Option Shares") equal to the number of Shares that, when
added to the number of Shares owned by Merger Subsidiary, Parent and their
Subsidiaries immediately following consummation of the Offer, shall constitute
90% of the Shares then outstanding (assuming the issuance of the Top-Up Option
Shares) at a purchase price per Top-Up Option Share equal to the Offer Price;
provided, however, that the Top-Up Stock Option shall not be exercisable if
the number of Shares subject thereto exceeds the number of authorized Shares
available for issuance. The Company agrees to provide Parent and Merger
Subsidiary with information regarding the number of Shares available for
issuance on an ongoing basis.
SECTION 1.02. Exercise of Top-Up Stock Option. (a) Merger Subsidiary
may, at its election, exercise the Top-Up Stock Option in whole, but not in
part, at any one time after the occurrence of a Top-Up Exercise Event (as
defined below) and prior to the Top-Up Termination Date (as defined below).
(b) A "Top-Up Exercise Event" shall occur for purposes of this
Agreement upon the Purchaser's acceptance for payment pursuant to the Offer of
Shares constituting more than 50% but less than 90% of the Shares then
outstanding on a fully diluted basis.
(c) Except as provided in the last sentence of this Section 1.02(c),
the "Top-Up Termination Date" shall occur for purposes of this Agreement upon
the earliest to occur of: (i) the Effective Time; (ii) the date which is 20
business days after the occurrence of a Top-Up Exercise Event; (iii) the
termination of the Merger Agreement; and (iv) the date on which Merger
Subsidiary waives the Minimum Condition and accepts for payment the Revised
Minimum Number of Shares.
Notwithstanding the occurrence of the Top-Up Termination Date, Merger
Subsidiary shall be entitled to purchase the Top-Up Option Shares if it has
exercised the Top-Up Stock Option in accordance with the terms hereof prior to
such occurrence, and the occurrence of the Top-Up Termination Date shall not
affect any rights hereunder which by their terms do not terminate or expire
prior to or as of such date.
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(d) In the event Merger Subsidiary wishes to exercise the Top-Up
Stock Option, Merger Subsidiary shall send to the Company a written notice (a
"Top-Up Exercise Notice," the date of which notice is referred to herein as
the "Top-Up Notice Date") specifying the denominations of the certificate or
certificates evidencing the Top-Up Option Shares which Merger Subsidiary
wishes to receive, the place for the closing of the purchase and sale pursuant
to the Top-Up Stock Option (the "Top-Up Closing") and a date not earlier than
one day nor later than ten business days from the Top-Up Notice Date for the
Top-Up Closing; provided, however, that (i) the Top-Up Closing shall occur
concurrently with the consummation of the Offer, (ii) if the Top-Up Closing
cannot be consummated by reason of any applicable laws or orders, the period
of time that otherwise would run pursuant to this sentence shall run instead
from the date on which such restriction on consummation has expired or been
terminated, and (iii) without limiting the foregoing, if prior notification to
or approval of any governmental entity is required in connection with such
purchase, Merger Subsidiary and the Company shall promptly file the required
notice or application for approval and shall cooperate in the expeditious
filing of such notice or application, and the period of time that otherwise
would run pursuant to this sentence shall run instead from the date on which,
as the case may be, (A) any required notification period has expired or been
terminated or (B) any required approval has been obtained, and in either
event, any requisite waiting period has expired or been terminated. The
Company shall, promptly after receipt of the Top-Up Exercise Notice, deliver a
written notice to Merger Subsidiary confirming the number of Top-Up Option
Shares and the aggregate purchase price therefor.
ARTICLE 2
CLOSING
SECTION 2.01. Conditions to Closing. The obligation of the Company to
deliver Top-Up Option Shares upon the exercise of the Top-Up Stock Option is
subject to the following conditions:
(a) any applicable waiting period under the HSR Act relating to the
issuance of the Top-Up Option Shares hereunder shall have expired or been
terminated; and
(b) no provision of any applicable law or regulation and no
judgment, injunction, order or decree shall prohibit the exercise of the
Top-Up Stock Option or the delivery of the Top-Up Option Shares in respect of
any such exercise.
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SECTION 2.02. Closing. (a) At the Top-Up Closing (i) the Company
shall deliver to Merger Subsidiary a certificate or certificates evidencing
the applicable number of Top-Up Option Shares (in the denominations designated
by Merger Subsidiary in the Top-Up Exercise Notice) and (ii) Merger Subsidiary
shall purchase each Top-Up Option Share from the Company at the Offer Price.
Payment by Merger Subsidiary of the purchase price for the Top-Up Option
Shares may be made, at the option of Merger Subsidiary, by delivery of (i)
cash by wire transfer or (ii) a promissory note, in form and substance
reasonably satisfactory to the Company and in a principal face amount equal to
the aggregate amount of the purchase price, which promissory note shall bear
interest at a rate equal to 5% per annum and shall be payable in full with
accrued interest five business days following written demand given by the
Company to Merger Subsidiary or Parent at any time following the Effective
Time.
(b) The Company shall pay all expenses, and any and all federal,
state and local taxes and other charges, that may be payable in connection
with the preparation, issuance and delivery of stock certificates under this
Section 2.02.
(c) Certificates evidencing Top-Up Option Shares delivered hereunder
may include legends legally required including the legend in substantially the
following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED
OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE.
It is understood and agreed that the foregoing legend shall be
removed by delivery of substitute certificate(s) without such legend upon the
sale of the Top-Up Option Shares pursuant to a registered public offering or
Rule 144 under the Securities Act, or any other sale as a result of which such
legend is no longer required.
ARTICLE 3
ADDITIONAL AGREEMENTS
SECTION 3.01. Reasonable Best Efforts. Subject to the terms and
conditions of this Agreement, Parent, Merger Subsidiary and the Company will
use their reasonable best efforts to take, or cause to be taken, all actions
and to do,
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or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate the transactions contemplated by
this Agreement.
SECTION 3.02. Further Assurances. The Company shall perform such
further acts and execute such further documents and instruments as may
reasonably be required to vest in Merger Subsidiary and Parent the power to
carry out the provisions of this Agreement. If Merger Subsidiary shall
exercise the Top-Up Stock Option granted hereunder in accordance with the
terms of this Agreement, the Company shall, without additional consideration,
execute and deliver all such further documents and instruments and take all
such further action as Merger Subsidiary or Parent may reasonably request to
carry out the transactions contemplated by this Agreement.
ARTICLE 4
MISCELLANEOUS
SECTION 4.01. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including facsimile transmission)
and shall be given as specified in Section 12.01 of the Merger Agreement.
SECTION 4.02. Amendments; No Waivers. (a) Any provision of this
Agreement may be amended or waived if, but only if, such amendment or waiver
is in writing and is signed, in the case of an amendment, by each party to
this Agreement or, in the case of a waiver, by each party against whom the
waiver is to be effective.
(b) No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single
or partial exercise thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 4.03. Expenses. Except as otherwise provided herein or in
Section 12.04 of the Merger Agreement, all costs and expenses incurred in
connection with this Agreement shall be paid by the party incurring such cost
or expense.
SECTION 4.04. Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their
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respective successors and assigns, provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of each other party hereto, except that Merger Subsidiary
may transfer or assign, in whole or from time to time in part, to one or more
of its Affiliates, the right to purchase all or a portion of the Top-Up Option
Shares pursuant to this Agreement, but no such transfer or assignment will
relieve Merger Subsidiary of its obligations under this Agreement.
SECTION 4.05. Governing Law. This Agreement shall be governed by
and construed in accordance with the law of the State of California, without
regard to the conflicts of law rules of such state.
SECTION 4.06. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
SECTION 4.07. Counterparts; Effectiveness; Benefit. This Agreement
may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were
upon the same instrument. This Agreement shall become effective when each
party hereto shall have received counterparts hereof signed by all of the
other parties hereto. No provision of this Agreement is intended to confer any
rights, benefits, remedies, obligations, or liabilities hereunder upon any
Person other than the parties hereto and their respective successors and
assigns.
SECTION 4.08. Entire Agreement. This Agreement, the Merger Agreement
and the Confidentiality Agreement constitute the entire agreement between the
parties with respect to the subject matter of this Agreement and supersede all
prior agreements and understandings, both oral and written, between the
parties with respect to the subject matter of this Agreement.
SECTION 4.09. Captions. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
SECTION 4.10. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner
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materially adverse to any party. Upon such a determination, the parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner in order
that the transactions contemplated hereby be consummated as originally
contemplated to the fullest extent possible.
SECTION 4.11. Specific Performance. The parties hereto agree that
irreparable damage would occur if any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
or to enforce specifically the performance of the terms and provisions hereof,
in addition to any other remedy to which they are entitled at law or in
equity.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and
year first above written.
RESOUND CORPORATION
By: /s/ Xxxxxxx X. Xxxx
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Name: Xxxxxxx X. Xxxx
Title: President and Chief
Executive Officer
GN GREAT NORDIC LTD.
By: /s/ Xxxxxx Xxxxxxxxxx
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Name: Xxxxxx Xxxxxxxxxx
Title: President and Chief
Executive Officer
By: /s/ Xxxx Xxxxxxxxxx
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Name: Xxxx Xxxxxxxxxx
Title: Executive Vice President
GN ACQUISITION CORPORATION
By: /s/ Xxxxxx Xxxxxxxxxx
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Name: Xxxxxx Xxxxxxxxxx
Title: Vice President
By: /s/ Xxxx Xxxxxxxxxx
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Name: Xxxx Xxxxxxxxxx
Title: Vice President
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