AMENDMENT NUMBER ONE TO THE
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AGREEMENT AND PLAN OF MERGER
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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
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shall the meanings set forth in the Merger Agreement.
SECTION 2. Amendments to the Merger Agreement.
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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
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("Parent"), and ZILOG, INC., a Delaware corporation (the "Company"),"
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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 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 Non-Voting 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
Non-Voting 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
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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
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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
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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
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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."
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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 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
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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 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
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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:
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"(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."
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.
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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;"
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SECTION 3. Sub. Pursuant to Section 6.18 of the Merger Agreement, each
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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.
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(a) The Company. The execution, delivery and performance of this
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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 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
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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.
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(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.
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IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Amendment 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
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Name:
Title:
TPG ZEUS ACQUISITION CORPORATION
By:
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Name:
Title:
ZILOG, INC.
By
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Name:
Title:
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