STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT dated as of January 27, 2000 (this "Stock
Option Agreement") is by and between Zing Technologies, Inc., a New York
corporation ("ZT"), and IRC Acquisition Corporation ("Merger Sub"), a New York
corporation and a direct wholly owned subsidiary of International Rectifier
Corporation, a Delaware corporation ("IR").
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this Stock
Option Agreement, the parties hereto and IR 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 (a) the commencement of an offer (the "Offer")
by Merger Sub to purchase any and all of the outstanding shares of common stock,
$0.01 par value, of ZT ("ZT Common Stock"), and (b) a business combination
whereby Merger Sub will be merged with and into ZT, with ZT continuing as the
surviving corporation of such merger and a direct wholly-owned subsidiary of IR
(the "Merger").
WHEREAS, as a condition to the willingness of IR and Merger Sub to enter
into the Merger Agreement, IR and Merger Sub have required that ZT agree, and in
order to induce IR and Merger Sub to enter into the Merger Agreement, ZT has
agreed, to grant to Merger Sub certain options to purchase shares of ZT Common
Stock upon the terms and subject to the conditions of this Stock Option
Agreement; and
WHEREAS, capitalized terms used but not defined in this Stock Option
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, ZT hereby grants to Merger Sub an irrevocable
option (the "Top-Up Stock Option") to purchase that number of shares of ZT
Common Stock (the "Top-Up Option Shares") equal to the number of shares of ZT
Common Stock that, when added to the number of shares of ZT Common Stock owned
by Merger Sub and IR immediately following consummation of the Offer, shall
constitute 90% of the shares of ZT Common Stock then outstanding (assuming the
issuance of the Top-Up Option Shares) at a purchase price per Top-Up Option
Share equal to the Merger Consideration per share of ZT Common Stock; provided,
however, that the Top-Up Stock Option shall not be exercisable if the number of
shares of ZT Common Stock subject thereto exceeds the number of authorized
shares of ZT Common Stock available for issuance. ZT agrees to provide IR and
Merger Sub with information regarding the number of shares of ZT Common Stock
available for issuance on an ongoing basis.
Section 1.02. Exercise of Top-Up Stock Option. (a) Merger Sub 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 Stock
Option Agreement upon Merger Sub's payment pursuant to the Offer of shares of ZT
Common Stock constituting, together with shares of ZT Common Stock owned
directly or indirectly by IR, more than two-thirds but less than 90% of the
shares of ZT Common Stock then outstanding. IR or Merger Sub shall deliver a
certificate or letter from ChaseMellon Shareholder Services, L.L.C. (the
"Depositary") stating that such payment has been made.
(c) The "Top-Up Termination Date" shall occur for purposes of this
Stock Option 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; and (iii) the termination of the Merger Agreement.
Notwithstanding the occurrence of the Top-Up Termination Date, Merger
Sub 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.
(d) In the event Merger Sub wishes to exercise the Top-Up Stock
Option, Merger Sub shall send to ZT 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 Sub 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 after the Top-Up Notice Date for the Top-Up Closing; provided,
however, that (i) 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 (ii) without limiting the
foregoing, if prior notification to or approval of any governmental entity is
required in connection with such purchase, Merger Sub and ZT 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. ZT shall,
promptly after receipt of the Top-Up Exercise Notice, deliver a written notice
to Merger Sub 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 ZT 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 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.
Section 2.02. Closing. (a) At the Top-Up Closing (i) ZT shall deliver
to Merger Sub (against payment as herein provided) a certificate or certificates
evidencing the applicable number of Top-Up Option Shares (in the denominations
designated by Merger Sub in the Top-Up Exercise Notice) and (ii) Merger Sub
shall purchase each Top-Up Option Share from ZT at the Offer Price. Payment by
Merger Sub of the purchase price for the Top-Up Option Shares may be made, at
the option of Merger Sub, by delivery of (i) immediately available funds by wire
transfer to an account designated by ZT or (ii) a promissory note, in form and
substance reasonably satisfactory to ZT and in a principal face amount equal to
the aggregate amount of the purchase price, which promissory note shall be
secured with property (other than the Top-Up Option Shares) reasonably
acceptable to the parties, shall bear interest at a rate equal to 5% per annum
and shall be payable in full with accrued interest immediately prior to the
Effective Time.
(b) ZT 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 Stock Option Agreement, Merger Sub and ZT will use their
reasonable best efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate the transactions contemplated by this Stock
Option Agreement.
Section 3.02. Further Assurances. ZT shall perform such further acts
and execute such further documents and instruments as may reasonably be required
to vest in Merger Sub and IR the power to carry out the provisions of this Stock
Option Agreement. If Merger Sub shall exercise the Top-Up Stock Option granted
hereunder in accordance with the terms of this Stock Option Agreement, ZT shall,
without additional consideration, execute and deliver all such further documents
and instruments and take all such further action as Merger Sub or IR may
reasonably request to carry out the transactions contemplated by this Stock
Option 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 8.2 of the Merger Agreement.
Section 4.02. Amendments; No Waivers. (a) Any provision of this Stock
Option 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 Stock Option 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 5.8 of the Merger Agreement, all costs and expenses incurred in
connection with this Stock Option Agreement shall be paid by the party incurring
such cost or expense.
Section 4.04. Successors and Assigns. The provisions of this Stock
Option Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, provided that no party may
assign, delegate or otherwise transfer any of its rights or obligations under
this Stock Option Agreement without the consent of each other party hereto,
except that Merger Sub 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 Stock Option Agreement, but no such transfer or assignment will relieve
Merger Sub of its obligations under this Stock Option Agreement.
Section 4.05. Governing Law. This Stock Option Agreement shall be
governed by and construed in accordance with the law of the State of New York,
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 Stock Option
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 Stock Option 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 Stock Option 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 Stock Option Agreement, the Merger
Agreement and the Confidentiality Agreement constitute the entire agreement
between the parties with respect to the subject matter of this Stock Option
Agreement and supersede all prior agreements and understandings, both oral and
written, between the parties with respect to the subject matter of this Stock
Option 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 Stock Option 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 Stock
Option 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 materially
adverse to any party. Upon such a determination, the parties shall negotiate in
good faith to modify this Stock Option 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 Stock Option 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
Stock Option 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.
IN WITNESS WHEREOF, the parties hereto have caused this Stock Option
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
ZING TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
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Name: Xxxxxx X. Xxxxxxxx
Title: Chief Executive Officer
IRC ACQUISITION CORPORATION
By: /s/ L. Xxxxxxx Xxxxxxx
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Name: L. Xxxxxxx Xxxxxxx
Title: Vice President
