AMENDMENT NO. 2 TO AGREEMENT AND PLAN OF MERGER
AMENDMENT
NO. 2 TO AGREEMENT AND PLAN OF MERGER
This
Amendment No. 2 (this “Amendment No.
2”) to that certain Agreement and Plan of Merger, dated as of February 2,
2010 (the “Original Merger
Agreement”), by and among Silicon Storage Technology, Inc., a California
corporation (the “Company”),
Microchip Technology Incorporated, a Delaware corporation (“Parent”),
and Sun Acquisition Corporation, a California corporation and wholly-owned
subsidiary of Parent (“Merger
Sub”), as amended by that certain Amendment No. 1 to the Agreement and
Plan of Merger, dated as of February 22, 2010 (“Amendment No.
1” and, together with the Original Merger Agreement, the “Merger
Agreement”), is made and entered into as of March 8, 2010 by and among
the Company, Parent and Merger Sub. All capitalized terms that are
used in this Amendment No. 2 but not defined in this Amendment No. 2 shall have
the respective meanings ascribed thereto in the Merger Agreement.
WHEREAS,
on March 2, 2010, the Strategic Committee received an Acquisition Proposal (the
“Cerberus
Proposal”) from Cerberus California, LLC (“Cerberus”);
for the avoidance of doubt, no Acquisition Proposal submitted after the date
hereof shall constitute a “Cerberus Proposal” hereunder;
WHEREAS,
on March 3, 2010, the Strategic Committee notified Parent that the Strategic
Committee had determined in good faith, after consultation with its outside
counsel and financial advisor, that the Cerberus Proposal constitutes a Superior
Proposal, and that the Strategic Committee is prepared to terminate the Merger
Agreement and enter into a binding written definitive agreement concerning the
Superior Proposal no less than three Business Days after the date of notice
thereof in accordance with Section 8.1(c)(ii) of the Merger
Agreement;
WHEREAS,
on March 7, 2010, Parent offered to amend the Merger Agreement on the terms set
forth herein;
WHEREAS,
the boards of directors of Merger Sub and Parent have approved this Amendment
No. 2, and have determined that it is advisable and in the best interests of
their respective shareholders to consummate, the acquisition of the Company by
Parent and Merger Sub upon the terms and subject to the conditions set forth in
the Merger Agreement (as amended by this Amendment No. 2);
WHEREAS,
the Company Board, acting upon the recommendation of the Strategic Committee,
has approved this Amendment No. 2 and recommended approval and adoption of the
Merger Agreement (as amended by this Amendment No. 2) by the shareholders of the
Company;
NOW,
THEREFORE, in consideration of the foregoing premises and the representations,
warranties, covenants and agreements set forth herein, as well as other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and accepted, and intending to be legally bound hereby, Parent,
Merger Sub and the Company hereby agree as follows:
1. Amendment to Section
2.6(a). Section 2.6(a) of the
Merger Agreement is hereby amended by replacing, in the definition of Merger
Consideration set forth therein, the reference to “$3.00” with
“$3.05”.
2. Amendment to Article
II. Article II of the
Merger Agreement is hereby amended by adding at the end thereof the following
new Section:
Section
2.8 Issuance and Purchase of
Issued Shares.
(a) On March
8, 2010 (the “Share Issuance
Date”), the Company shall issue and sell to Parent and Parent shall
purchase from the Company 19,148,149 shares of Common Stock (the “Issued
Shares”) in exchange for $58,401,854.45 (the “Share
Consideration”), free and clear of all Liens.
(b) On the
Share Issuance Date, (i) Parent shall pay to the Company cash in an amount equal
to the Share Consideration by wire transfer of immediately available funds to an
account designated by the Company pursuant to wire instructions provided by the
Company prior to the Share Issuance Date and (ii) the Company shall deliver to
Parent a certificate (in definitive form) duly executed on behalf of the Company
registered in the name of Parent representing the number of Issued Shares
purchased by Parent from the Company pursuant hereto.
(c) Each
certificate representing (a) the Issued Shares, or (b) any other securities
issued in respect of the Issued Shares upon any stock split, stock dividend,
recapitalization, merger, consolidation or similar event (collectively, the
“Restricted
Securities”), shall (unless otherwise permitted or unless the securities
evidenced by such certificate shall have been registered under the Securities
Act or sold pursuant to Rule 144 or Regulation A thereunder) be stamped or
otherwise imprinted with a legend in the following form (in addition to any
legend required under applicable state securities laws):
THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR
OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN
EXEMPTION FROM SUCH REGISTRATION UNDER SAID ACT.
Upon
request of a holder of such a certificate, the Company shall remove the
foregoing legend from the certificate or issue to such holder a new certificate
therefor free of any transfer legend, if, with such request, the Company shall
have received the opinion to the effect that any transfer by such holder of the
securities evidenced by such certificate will not violate the Securities Act and
applicable state securities Laws. If Parent reasonably determines
that an effective registration statement is necessary to enable Parent to sell
shares of Common Stock at the volume levels contemplated by Section 2.8(d)(D),
then upon the request of Parent, at any time after the termination of this
Agreement, the Company shall file a shelf registration statement with the SEC
permitting the resale of the Issued Shares as expeditiously as possible, and use
its reasonable best efforts to have such registration statement declared
effective as soon as practicable after the filing thereof and to keep such
registration statement continuously effective for a period of one
year. This Section 2.8(c) shall
survive the termination of this Agreement.
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(d) Parent
agrees that, for a period of eighteen (18) months following the Share Issuance
Date, it shall not, directly or indirectly, (i) sell, assign, transfer
(including by operation of law), lien, pledge, dispose of or otherwise encumber
any of the Issued Shares or otherwise agree to do any of the foregoing,
(ii) deposit any Issued Shares into a voting trust or enter into a voting
agreement or arrangement or grant any proxy or power of attorney with respect
thereto that is inconsistent with this Agreement or (iii) enter into any
contract, option or other arrangement or undertaking with respect to the direct
or indirect acquisition or sale, assignment, transfer (including by operation of
law) or other disposition of any Issued Shares. Notwithstanding the
foregoing, Parent shall be permitted to take any of the actions described in
preceding clauses (i) and (iii) (A) in one or more transactions with the Company
or any of its Subsidiaries, including in accordance with Section 6.17, (B) in
one or more transactions with any Person, so long as prior to or concurrent with
any such transaction such Person agrees in writing to be bound by the terms of
Section
6.17(a), (C) pursuant to the terms of any tender offer, exchange offer,
merger, reclassification, reorganization, recapitalization or other similar
transaction in which stockholders of the Company are offered, permitted or
required to participate as holders of Common Stock, provided that such tender
offer, exchange offer, merger, reclassification, reorganization,
recapitalization or other transaction has been approved or recommended by the
Company Board or the Strategic Committee, and (D) in one or more “brokers’
transactions” (as defined in Rule 144 under the Securities Act) effected at any
time following the date which is six (6) months after the Share Issuance Date,
not to exceed in any three (3) month period more than a number of shares of
Common Stock equal to four percent (4%) of the number of shares of Common Stock
outstanding as of the Share Issuance Date after giving effect to the issuance
and sale of the Issued Shares.
3. Additional Representations
and Warranties of the Company. The Company represents and warrants to
Parent and Merger Sub as follows:
(a) The
following representations and warranties shall be deemed, for all purposes of
and under the Merger Agreement, to form a part of Section 4.2 of the
Merger Agreement:
There are
issued and outstanding 96,221,857 shares of Common Stock as of the date of this
Amendment No. 2. The issuance, sale and delivery of the Issued Shares
in accordance with this Amendment No. 2 have been duly authorized by all
necessary corporate action on the part of the Company. The Issued
Shares have been duly authorized, validly issued, fully paid and nonassessable,
free and clear of any Liens with the holder being entitled to all rights
accorded to a holder of Common Stock under the CCC and the certificate of
incorporation and bylaws of the Company. No person has any preemptive
right or right of first refusal which would be triggered by reason of the
issuance of the Issued Shares.
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(b) The
following representations and warranties shall be deemed, for all purposes of
and under the Merger Agreement, to form a part of Section 4.3 of the
Merger Agreement:
The
Company has the requisite corporate power and authority to execute and deliver
this Amendment No. 2, to perform its obligations and consummate the transactions
contemplated by the Merger Agreement (as amended by this Amendment No. 2) other
than the Merger and, subject to obtaining the affirmative vote for approval of
the principal terms of the Merger and adoption of the Merger Agreement (as
amended by this Amendment No. 2) and the transactions contemplated by the Merger
Agreement (as amended by this Amendment No. 2), by the Company Shareholder
Approval on the record date for the Company Shareholders Meeting to consider the
Company Voting Proposal, to consummate the Merger. The Strategic
Committee has determined that the transactions contemplated by the Merger
Agreement (as amended by this Amendment No. 2) are advisable and fair to and in
the best interests of the Company and its shareholders and has recommended that
the full Company Board approve this Amendment No. 2 and the transactions
contemplated by the Merger Agreement (as amended by this Amendment No.
2). Each of the Strategic Committee and the Company Board has
determined in good faith, (x) after consultation with its outside counsel and
financial advisor, that the Cerberus Proposal no longer constitutes, and could
not reasonably be likely to result in, a Superior Proposal, and (y) after
consultation with its outside counsel, that failure to take any of the actions
described in Sections 6.4(b) or 8.1(c)(ii) of the Merger Agreement would not
reasonably be expected to result in a breach of its fiduciary duties to the
Company shareholders under applicable Law. The execution, delivery
and performance by the Company of this Amendment No. 2 and the consummation by
the Company of the transactions contemplated by the Merger Agreement (as amended
by this Amendment No. 2) have been duly authorized by the Company Board (acting
upon the unanimous recommendation of the Strategic Committee), and no other
corporate action on the part of the Company is necessary to authorize the
execution and delivery by the Company of this Amendment No. 2, except (solely
with respect to the Merger) for the Company Shareholder Approval of the Company
Voting Proposal. This Amendment No. 2 has been duly executed and
delivered by the Company and is a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except that such
enforcement may be subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar Laws, now or hereafter in effect, affecting
creditors’ rights and remedies generally.
(c) The
following representations and warranties shall be deemed, for all purposes of
and under the Merger Agreement, to form a part of Section 4.4 of the
Merger Agreement:
The
execution and delivery of this Amendment No. 2 by the Company does not, and the
performance by the Company of this Amendment No. 2 and the consummation by the
Company of the transactions contemplated hereby will not, (i) violate any
provision of the Organizational Documents of the Company, (ii) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation
or acceleration) under, any of the material terms, conditions or provisions of
any Material Contract to which the Company or any of its Subsidiaries is a party
or by which any of them or any of their properties or assets is bound, (iii)
violate any Law applicable to the Company, any of its Subsidiaries or any of
their properties or assets that could result in a material Liability to the
Company or its Subsidiaries, taken as a whole, or (iv) other than in connection
with or compliance with the Securities Act, require the Company or any of its
Subsidiaries, as applicable, to make any filing or registration with or
notification to, or require the Company or any of its Subsidiaries, as
applicable to obtain any authorization, consent or approval of, any Governmental
Entity.
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(d) The following representations
and warranties shall be deemed, for all purposes of and under the Merger
Agreement, to form a part of Section 4.18 of the
Merger Agreement:
Since
September 30, 2009, there has not been any condition, event or occurrence
which has had or would be reasonably expected to have a Company Material Adverse
Effect.
4. Additional Representations
and Warranties of Parent and Merger Sub. Parent and Merger Sub
jointly and severally represent and warrant to the Company as
follows:
(a) Parent is
acquiring the Issued Shares for its own account for investment purposes and not
with a view towards, or for resale in connection with, the public sale or
distribution thereof except pursuant to sales registered or exempted from
registration under the Securities Act; provided, however, that by making the
representation and warranty herein, Parent does not agree to hold any of such
Issued Shares for any minimum or other specific term and reserves the right to
dispose of such Issued Shares at any time in accordance with or pursuant to a
registration statement or an exemption from registration under the Securities
Act. Parent does not presently have any agreement or understanding
with any person as to the distribution of the Issued Shares. Parent
is an “accredited investor” (as that term is defined in Rule 501(a) of
Regulation D).
(b) The following representations
and warranties shall be deemed, for all purposes of and under the Merger
Agreement, to form a part of Section 5.2 of the
Merger Agreement:
Each of
Parent and Merger Sub has the requisite power and authority to execute and
deliver this Amendment No. 2 and to consummate the transactions contemplated the
Merger Agreement (as amended by this Amendment No. 2). The execution, delivery
and performance by Parent and Merger Sub of this Amendment No. 2, approval and
adoption of this Amendment No. 2 and the consummation of the transactions
contemplated the Merger Agreement (as amended by this Amendment No. 2) have been
duly and validly authorized by all
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necessary
action of Parent and Merger Sub, and no other action on the part of Parent or
Merger Sub is necessary to authorize the execution and delivery by Parent and
Merger Sub of this Amendment No. 2 and the consummation by them of the
transactions contemplated the Merger Agreement (as amended by this Amendment No.
2). This Amendment No. 2 has been duly executed and delivered by
Parent and Merger Sub and, assuming due and valid authorization, execution and
delivery hereof by the Company, is a valid and binding obligation of each of
Parent and Merger Sub, enforceable against each of them in accordance with its
terms, except that such enforcement may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar Laws, now or hereafter
in effect, affecting creditors’ rights generally.
5. Cerberus
Proposal. The following covenant shall be deemed, for all
purposes of and under the Merger Agreement, to form a part of Section 6.4(a) of the
Merger Agreement:
The
Company shall cease and cause to be terminated any solicitation, encouragement,
discussion or negotiation with Cerberus, its Affiliates and their respective
Representatives conducted heretofore by the Company, its Subsidiaries or any of
their respective Representatives with respect to the Cerberus
Proposal.
6. Amendment to Section
6.4(a). Section 6.4(a) of the
Merger Agreement is hereby amended by adding after the reference to “Superior
Proposal” at the end of clause (i) in the proviso the following:
(for the
avoidance of doubt, such Acquisition Proposal must, if consummated, be more
favorable to the Company’s shareholders from a financial point of view than the
transactions contemplated by this Agreement)
7. Amendment to Section
6.9(a). Section 6.9(a) of the
Merger Agreement is hereby amended by adding at the end thereof the
following:
The
Company shall set a new record date for the Company Shareholders Meeting so that
such record date will be as soon as practicable after the Share Issuance Date,
but in no event more than two Business Days after the Share Issuance Date,
unless Parent consents otherwise.
8. Amendment to Article
VI. Article VI of the
Merger Agreement is hereby amended by adding at the end thereof the following
new Section:
Section
6.17 Certain Rights and
Obligations Related to Issued Shares.
(a) If (i)
after the Share Issuance Date, the Company receives a proposal to enter into an
Alternate Acquisition Agreement and the Company validly terminates this
Agreement pursuant to, and in accordance with, Section 6.4(b) and
Section
8.1(c)(ii) (including the timely payment of the Termination Fee), or
terminates any future Alternate Acquisition Agreement pursuant to, and in
accordance with, the analogous provisions of any such Alternate Acquisition
Agreement, because such proposal constitutes a Superior Proposal pursuant to
this Agreement or any future Alternate Acquisition Agreement, in order to enter
into an Alternative
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Acquisition
Agreement implementing any such Superior Proposal (each such event, a “Superior Proposal
Event”) and (ii) the Company Board’s (or the Strategic Committee’s)
recommendation in favor of the adoption of any such Alternative Acquisition
Agreement remains in effect and has not been adversely modified or withdrawn,
then if the Company Board or the Strategic Committee requests in writing, at any
meeting of the holders of Common Stock for the purpose of voting on the
principal terms of the transactions contemplated by, and adoption of, any such
Alternative Acquisition Agreement, however called, and at every adjournment or
postponement thereof, Parent shall submit as promptly as practicable after the
record date of any such meeting an effective proxy pursuant to which it votes
(x) if Cerberus or any of its Affiliates is not a party to such Alternative
Acquisition Agreement, all of the Issued Shares in favor of the approval of the
principal terms of the transactions contemplated by, and adoption of, such
Alternative Acquisition Agreement, including any action required in furtherance
thereof, and (y) if Cerberus or any of its Affiliates is a party to such
Alternative Acquisition Agreement, a number of Issued Shares in favor of the
approval of the principal terms of the transactions contemplated by, and
adoption of, such Alternative Acquisition Agreement equal to the product of (A)
the Issued Shares and (B) a fraction, (I) the numerator of which is equal to the
number of shares of Common Stock entitled to vote at such meeting that have
voted in favor of such Alternative Acquisition Agreement (excluding the Issued
Shares, any shares of Common Stock beneficially owned by any Person that is a
party to a voting, support or other similar agreement with Cerberus or any of
its Affiliates and any shares of Common Stock beneficially owned by Bing Yeh),
and (II) the denominator of which is equal to total number of shares of Common
Stock entitled to vote and present, in person or by proxy, at such meeting
(excluding the Issued Shares, any shares of Common Stock beneficially owned by
any Person that is a party to a voting, support or other similar agreement with
Cerberus or any of its Affiliates and any shares of Common Stock beneficially
owned by Bing Yeh), including any action required in furtherance
thereof.
(b) Notwithstanding any other
provision of this Agreement, in the event a Superior Proposal Event has
occurred, then in no event shall Parent’s Total Profit exceed 1.286 times the
Termination Fee (the “Profit
Cap”). In the event a Superior Proposal Event has occurred and
Parent’s Total Profit exceeds the Profit Cap (the “Excess
Profit”), then Parent, at its sole election, shall either (i) deliver to
the Company for cancellation the Issued Shares (valued, for the purposes of this
Section 6.17(b)
at the highest value per share contemplated by the Alternative Acquisition
Agreement implementing the then pending Superior Proposal Event or (ii) pay cash
to the Company, or any combination of the foregoing, so long as the sum of the
foregoing equal the Excess Profit, in each case as promptly as practicable
following the day on which Parent’s Total Profit exceeds the Profit Cap, but no
later than five Business Days thereafter. For purposes of this
Agreement, the term “Total
Profit” shall mean the amount (before taxes) of the following (A) the
Termination Fee paid to Parent pursuant to this Agreement, plus (B) the amount
received (or retained) by Parent with respect to the Issued Shares in connection
with any Superior Proposal Event (valuing any publicly traded securities so
received (or retained) at the average closing sales price per share thereof (or
if there is no sale on such date then the average between the closing bid and
ask prices on any such day) as reported by the applicable primary trading market
for such securities for the five consecutive trading days preceding the
consummation of the applicable transaction in such Superior Proposal Event),
plus (C) the amount received by Parent pursuant to the sale of Issued Shares to
any unaffiliated party, less (D) the Share
Consideration. Notwithstanding the foregoing, nothing in this Section 6.17(b) shall
affect the ability of Parent to receive, nor relieve the Company’s obligation to
pay, the Termination Fee (in the circumstances so payable).
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(c) In the
event of the termination of this Agreement pursuant to Section 8.1, then at
any time and from time to time thereafter until the eighteen (18) month
anniversary of the Share Issuance Date, Parent shall have the right (but not the
obligation) to require the Company to purchase, at a price of $3.05 per share in
cash, all or any portion of the Issued Shares, which right shall be exercisable
upon delivery of a written notice by Parent to the Company, stating the number
of Issued Shares that are subject to such exercise; provided, however, that if a
Superior Proposal Event has occurred prior to such termination, Parent may not
exercise its rights pursuant to this Section 6.17(c) until
after the record date for the meeting of the Company’s shareholders to consider
the approval of the principal terms of the transaction contemplated by such
Superior Proposal Event and adoption of the Alternate Acquisition Agreement
related thereto has been set and the Issued Shares have been voted in as
provided for in Section
6.17(a). The purchase of the Issued Shares that the Company is
required to purchase pursuant to this Section 6.17(c) shall
occur as promptly as practicable following the Company’s receipt of such written
notice, but in no event later than five Business Days
thereafter. Delivery of certificates (if any) evidencing the Issued
Shares that the Company is required to purchase pursuant to this Section 6.17(c), duly
endorsed for transfer and free and clear of all Liens, shall be made on such
date against payment in cash of the aggregate purchase price payable in respect
of such Issued Shares.
(d) This
Section 6.17
shall survive the termination of this Agreement.
9. Amendment to Section
8.2. Section 8.2 of the
Merger Agreement is hereby amended by amending and restating the last sentence
thereof as follows:
Notwithstanding
the foregoing, the provisions of Section 2.8(c), Section 6.3(b), Section 6.17, this
Section 8.2,
Section 8.3 and
Article IX
shall survive any such termination.
10. Amendment to Section
8.3(b). Section 8.3(b) of the
Merger Agreement is hereby amended by replacing, in the definition of
Termination Fee set forth therein, the reference to “$10,120,624” with
“$10,300,000”.
11. Merger Agreement
References. The parties hereto hereby agree that all
references to the “Agreement” set forth in the Merger Agreement (including,
without limitation, in the representations and warranties of the parties set
forth therein) shall be deemed to be references to the Merger Agreement as
amended by this Amendment No. 2.
12. Full Force and
Effect. Except as expressly amended or modified hereby, the
Merger Agreement and the agreements, documents, instruments and certificates
among the parties hereto as contemplated by, or referred to, in the Merger
Agreement shall remain in full force and effect without any amendment or other
modification thereto.
13. Counterparts. This
Amendment No. 2 may be executed and delivered (including by facsimile
transmission) in two or more counterparts, and by the different parties hereto
in separate counterparts, each of which when executed shall be deemed to be an
original but all of which taken together shall constitute one and the same
agreement. Signatures of the parties
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transmitted
by facsimile, PDF or other electronic file shall be deemed to be their original
signatures for all purposes and the exchange of copies of this Amendment No. 2
and of signature pages by facsimile transmission, PDF or other electronic file
shall constitute effective execution and delivery of this Amendment No. 2 as to
the parties and may be used in lieu of the original Amendment No. 2 for all
purposes. At the request of any party hereto, all parties hereto
agree to execute an original of this Amendment No. 2 as well as any facsimile,
telecopy, PDF or other reproduction hereof.
[Remainder
of Page Intentionally Left Blank]
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IN
WITNESS WHEREOF, the undersigned have caused this Amendment No. 2 to be executed
by their respective duly authorized officers to be effective as of the date
first above written.
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COMPANY
Silicon
Storage Technology, Inc.
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By:
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/s/ Bing Yeh
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Name: Bing
Yeh
Title: Chairman
and CEO
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PARENT
Microchip
Technology Incorporated
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By:
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/s/ Xxxxx Xxxxxx
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Name: Xxxxx
Xxxxxx
Title: Chairman,
President and CEO
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MERGER
SUB
Sun
Acquisition Corporation
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By:
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/s/ Xxxx Xxxxxxxxx
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Name: Xxxx
Xxxxxxxxx
Title: Director
and CFO
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