STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of July 25, 1999 (the "STOCK
OPTION AGREEMENT"), between Texas Instruments Incorporated, a Delaware
corporation ("PARENT"), and Unitrode Corporation, a Maryland corporation
(the "COMPANY").
WHEREAS, Parent, Unicorn Acquisition Corp., a Maryland
corporation and a wholly owned subsidiary of Parent ("MERGER SUB"), and the
Company are parties to that certain Agreement and Plan of Merger, dated as
of the date hereof (the "MERGER AGREEMENT"), which provides, among other
things, that Merger Sub, on the terms and subject to the conditions
thereof, will merge with and into the Company with the Company surviving as
a wholly owned subsidiary of Parent;
WHEREAS, as a condition to its willingness to enter into the
Merger Agreement, Parent has requested that the Company grant to Parent an
option to purchase up to 6,470,760 shares of common stock, par value $0.01
per share ("COMMON STOCK") of the Company, upon the terms and subject to
the conditions hereof; and
WHEREAS, in order to induce Parent to enter into the Merger
Agreement, the Company is willing to grant Parent the requested option.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements set forth herein, the parties hereto agree
as follows:
1. The Option; Exercise; Adjustments.
(a) Subject to the other terms and conditions set forth
herein, the Company hereby grants to Parent an irrevocable option (the
"OPTION") to purchase up to 6,470,760 shares of Common Stock (the
"SHARES"). The purchase price per Share (the "PURCHASE PRICE") shall be
$38.60. The Purchase Price and the number of Shares shall be subject to
adjustment as provided in Section 1(c) hereof.
(b) Parent may exercise the Option with respect to any
or all of the Option Shares at any one time or from time to time, subject
to the provisions of Section 1(c) hereof, upon the occurrence of an
Exercise Event (as defined below). Subject to the last sentence of this
Section 1(b), the Option will terminate and be of no further force and
effect upon the earliest to occur of (i) the Effective Time (as defined in
the Merger Agreement), (ii) 120 days after the first occurrence of an
Exercise Event, and (iii) the termination of the Merger Agreement in
accordance with its terms so long as, in the case of this clause (iii), no
Exercise Event has occurred or could still occur under Section 8.5(b) of
the Merger Agreement, in which case the Option will terminate on the later
of (x) 120 days following the time such termination fee becomes
unconditionally payable and (y) the expiration of the period in which an
Exercise Event could occur pursuant to Section 8.5(b) of the Merger
Agreement. "Exercise Event" means any event as a result of which Parent is
unconditionally entitled to receive a termination fee pursuant to Section
8.5(b) of the Merger Agreement. Notwithstanding the termination of the
Option, Parent shall be entitled to purchase the Shares with respect to
which it has exercised the Option in accordance with the terms hereof prior
to the termination of the Option.
(c) In the event Parent is entitled to and wishes to
exercise the Option, the Parent shall send a written notice to the Company
(the "STOCK EXERCISE NOTICE") specifying a date (subject to the HSR Act (as
defined below)) not later than 20 business days and not earlier than three
business days following the date such notice is given for the closing of
such purchase and specifying the number of Shares Parent wishes to
purchase. In the event of any change in the number of issued and
outstanding shares of Common Stock by reason of any stock dividend, stock
split, split-up, recapitalization, merger or other change in the corporate
or capital structure of the Company, the number of Shares subject to this
Option and the purchase price per Share shall be appropriately adjusted to
restore the Parent to its rights hereunder, including its right to purchase
Shares representing approximately 19.9% of the capital stock or securities
convertible or otherwise exchangeable for capital stock of the Company
entitled to vote generally for the election of the directors of the Company
that are issued and outstanding immediately prior to the exercise of the
Option at an aggregate purchase price equal to the Purchase Price
multiplied by 6,470,760.
(d) At any time the Option is then exercisable pursuant
to the terms of Section 1(b) hereof, Parent may elect, in lieu of
exercising the Option to purchase Shares provided in Section 1(a) hereof,
to send a written notice to the Company (the "CASH EXERCISE NOTICE")
specifying a date not later than 20 business days and not earlier than 10
business days following the date such notice is given on which date the
Company shall pay to Parent an amount in cash equal to the Spread (as
hereinafter defined) multiplied by all or such portion of the Shares
subject to the Option as Parent shall specify in such Cash Exercise Notice.
As used herein "SPREAD" shall mean the excess, if any, over the Purchase
Price of the higher of (i) if applicable, the highest price per share of
Common Stock (including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid or proposed to be paid by any person
pursuant to a definitive agreement executed by the Company with respect to
an Acquisition Proposal (the "ALTERNATIVE PURCHASE PRICE") or (ii) the
average closing price, for the five trading days ending on the trading day
immediately preceding the date of the Cash Exercise Notice, per share of
Common Stock as reported on the New York Stock Exchange (the "CLOSING
PRICE"). If the Alternative Purchase Price includes any property other than
cash, the Alternative Purchase Price shall be the sum of (i) the fixed cash
amount, if any, included in the Alternative Purchase Price plus (ii) the
fair market value of such other property. If such other property consists
of securities with an existing public trading market, the average of the
closing prices (or the average of the closing bid and asked prices if
closing prices are unavailable) for such securities in their principal
public trading market on the five trading days ending on the trading day
immediately preceding the date of the Cash Exercise Notice shall be deemed
to equal the fair market value of such property. If such other property
consists of something other than cash or securities with an existing public
trading market and, as of the payment date for the Spread, agreement on the
value of such other property has not been reached between the parties
hereto, the Alternative Purchase Price shall be deemed to equal the Closing
Price. Upon exercise of its right to receive cash pursuant to the exercise
of the Option, the obligations of the Company to deliver Shares pursuant to
Section 3 shall be terminated with respect to such number of Shares for
which Parent shall have elected to be paid the Spread.
2. Conditions to Delivery of Shares. The Company's obligation
to deliver Shares upon exercise of the Option is subject only to the
conditions that:
(i) No preliminary or permanent injunction or other
order issued by any federal or state court of competent jurisdiction in the
United States prohibiting the delivery of the Shares shall be in effect;
and
(ii) Any applicable waiting periods under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000 (xxx "XXX XXX") shall
have expired or been terminated; and
(iii) All consents, approvals, orders, notifications,
filings or authorizations, the failure of which to make or obtain would
have the effect of making the issuance of Shares to Parent illegal ("OTHER
REQUISITE Consents"), shall have been made or obtained.
3. The Closing.
(a) Any closing hereunder shall take place on the date
specified by Parent in its Stock Exercise Notice or Cash Exercise Notice,
as the case may be, at such reasonable time and place as may be indicated
in the Stock Exercise Notice or the Cash Exercise Notice, as applicable, or
at the election of the Company at 10:00 A.M., local time, at the offices of
Weil, Gotshal & Xxxxxx LLP, 000 Xxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxx, Xxxxx,
or, if the conditions set forth in Section 2(i), 2(ii) or 2(iii) have not
then been satisfied, on the second business day following the satisfaction
of such conditions, or at such other time and place as the parties hereto
may agree (the "CLOSING DATE"). On the Closing Date, (i) in the event of a
closing pursuant to Section 1(c) hereof, the Company will deliver to Parent
a certificate or certificates, duly endorsed (or accompanied by duly
executed stock powers), representing the Shares in the denominations
designated by Parent in its Stock Exercise Notice and Parent will purchase
such Shares from the Company at a cash price per Share equal to the
Purchase Price or (ii) in the event of a closing pursuant to Section 1(d)
hereof, the Company will deliver to Parent cash in an amount determined
pursuant to Section 1(d) hereof. Any payment made by Parent to the Company,
or by the Company to Parent, pursuant to this Stock Option Agreement shall
be made by wire transfer of immediately available funds to a bank
designated by the party receiving such funds.
(b) The certificates representing the Shares may bear
an appropriate legend relating to the fact that such Shares have not been
registered under the Securities Act of 1933, as amended (the "SECURITIES
ACT").
4. Representations and Warranties of the Company. The Company
represents and warrants to Parent that (a) the Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Maryland and has the requisite corporate power and authority to
enter into and perform this Stock Option Agreement; (b) the execution and
delivery of this Stock Option Agreement by the Company and the consummation
by it of the transactions contemplated hereby have been duly authorized by
the Board of Directors of the Company and this Stock Option Agreement has
been duly and validly executed and delivered by a duly authorized officer
of the Company and will constitute a valid and binding obligation of the
Company subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles; (c) the Company has taken all necessary corporate action to
authorize and reserve the Shares issuable upon exercise of the Option and
the Shares, when issued and delivered by the Company upon exercise of the
Option, will be duly authorized, validly issued, fully paid and
non-assessable and free of preemptive rights; (d) except as otherwise
required by the HSR Act or for the Other Requisite Consents, the execution
and delivery of this Stock Option Agreement by the Company and the
consummation by it of the transactions contemplated hereby do not require
the consent, waiver, approval or authorization of or any filing with any
person or public authority and will not violate, result in a breach of or
the acceleration of any obligation under, or constitute a default under,
any provision of any charter or bylaw, indenture, mortgage, lien, lease,
agreement, contract, instrument, order, law, rule, regulation, judgment,
ordinance, or decree, or restriction by which the Company or any of its
subsidiaries or any of their respective properties or assets is bound,
except where the failure to obtain such consent, waiver, approval or
authorization or make such filing, or where such breach, acceleration or
default, is not reasonably expected to have a Material Adverse Effect (as
defined in the Merger Agreement) on the Company and its subsidiaries taken
as a whole or on the ability of the Company to consummate the transactions
contemplated hereby; and (e) no "fair price", "moratorium", "control share
acquisition", "interested stockholder" or other form of antitakeover
statute or regulation (including, without limitation, Subtitle 6 (Sections
3-601 through 3-603) and Subtitle 7 (Sections 3-701 through 3-709) of the
Corporation Law of the State of Maryland) is applicable to the acquisition
of Shares pursuant to this Stock Option Agreement.
5. Representations and Warranties of the Parent. Parent
represents and warrants to the Company that (a) Parent is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the requisite corporate power and authority to
enter into and perform this Stock Option Agreement; (b) the execution and
delivery of this Stock Option Agreement by Parent and the consummation by
it of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Parent and this Stock Option
Agreement has been duly and validly executed and delivered by a duly
authorized officer of Parent and will constitute a valid and binding
obligation of Parent enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles; and (c) Parent is acquiring the
Option and, if and when it exercises the Option, will be acquiring the
Shares issuable upon the exercise thereof for its own account and not with
a view to distribution or resale in any manner which would be in violation
of the Securities Act.
6. Listing of Shares; HSR Act Filings; Governmental Consents.
Subject to applicable law and the rules and regulations of the New York
Stock Exchange (or any other national securities exchange or quotation
system on which the Common Stock is then listed) (as applicable, the "STOCK
EXCHANGE"), when the Option becomes exercisable hereunder, the Company will
promptly file an application to list the Shares on the Stock Exchange and
will use all reasonable efforts to effect all necessary filings by the
Company under the HSR Act. Each of the parties hereto will use all
reasonable efforts to obtain consents of all third parties and governmental
authorities (including any Other Requisite Consents), if any, necessary to
the consummation of the transactions contemplated hereby.
7. Registration Rights.
(a) In the event that Parent shall desire to sell any
of the Shares within two years after the purchase of such Shares pursuant
hereto, and such sale requires, in the opinion of counsel to Parent, which
opinion shall be reasonably satisfactory to the Company and its counsel,
registration of such Shares under the Securities Act, the Company will
cooperate with Parent and any underwriters in registering such Shares for
resale, including, without limitation, promptly filing a registration
statement which complies with the requirements of applicable federal and
state securities laws, entering into an underwriting agreement with such
underwriters upon such terms and conditions as are customarily contained in
underwriting agreements with respect to secondary distributions; provided
that the Company shall not be required to have declared effective more than
two registration statements hereunder and shall be entitled to delay the
filing or effectiveness of any registration statement for up to 120 days if
the offering would, in the good faith judgment of the Board of Directors of
the Company, require premature disclosure of any material corporate
development or otherwise interfere with or adversely affect any pending or
proposed offering of securities of the Company or any other material
transaction involving the Company. Parent shall use its reasonable efforts
to cause, and to cause any underwriters of any sale or disposition to
cause, any sale or disposition pursuant to such registration statement to
be effected on a widely disseminated basis so that upon consummation
thereof no purchaser or transferee will own beneficially more than 5.0% of
the then outstanding voting power of the Company.
(b) If the Common Stock is registered pursuant to the
provisions of this Section 7, the Company agrees (i) to furnish copies of
the registration statement and the prospectus relating to the Shares
covered thereby in such numbers as Parent may from time to time reasonably
request and (ii) if any event shall occur as a result of which it becomes
necessary to amend or supplement any registration statement or prospectus,
to prepare and file under the applicable securities laws such amendments
and supplements as may be necessary to keep available for at least 90 days
a prospectus covering the Common Stock meeting the requirements of such
securities laws, and to furnish Parent such numbers of copies of the
registration statement and prospectus as amended or supplemented as may
reasonably be requested. Parent will provide information reasonably
requested by the Company for inclusion in any registration statement to be
filed pursuant to this Section 7. The Company shall bear the cost of the
registration, including, but not limited to, all registration and filing
fees, printing expenses, and fees and disbursements of counsel and
accountants for the Company, except that Parent shall pay the fees and
disbursements of its counsel, and the underwriting fees and selling
commissions applicable to the shares of Common Stock sold by Parent. In
connection with any registration pursuant to this Section 7, Parent and the
Company shall provide each other and each underwriter of the offering with
customary representations, warranties and covenants, including
indemnification and contribution. If a requested registration pursuant to
this Section 7 involves an underwritten offering, the underwriter or
underwriters thereof shall be a nationally recognized firm or firms
selected by the Company, which firm or firms shall be reasonably
satisfactory to Parent.
8. Expenses. Each party hereto shall pay its own expenses
incurred in connection with this Stock Option Agreement.
9. Specific Performance. The Company acknowledges that if the
Company fails to perform any of its obligations under this Stock Option
Agreement immediate and irreparable harm or injury would be caused to
Parent for which money damages would not be an adequate remedy. In such
event, the Company agrees that Parent shall have the right, in addition to
any other rights it may have, to specific performance of this Stock Option
Agreement. Accordingly, if Parent should institute an action or proceeding
seeking specific enforcement of the provisions hereof, the Company hereby
waives the claim or defense that Parent has an adequate remedy at law and
hereby agrees not to assert in any such action or proceeding the claim or
defense that such a remedy at law exists. The Company further agrees to
waive any requirements for the securing or posting of any bond in
connection with obtaining any such equitable relief.
10. Profit Limitation.
(a) Notwithstanding any other provision of this Stock
Option Agreement, in no event shall Parent's Total Profit (as hereinafter
defined) exceed $55,600,000 and, if it otherwise would exceed such amount,
Parent, at its sole election, shall either (a) deliver to the Company for
cancellation Shares previously purchased by Parent, (b) pay cash to the
Company or (c) undertake any combination thereof, so that Parent's Total
Profit shall not exceed $55,600,000 after taking into account the foregoing
actions.
(b) Notwithstanding any other provision of this Stock
Option Agreement, this Option may not be exercised for a number of Shares
as would, as of the date of the Stock Exercise Notice, result in a Notional
Total Profit (as defined below) of more than $55,600,000 and, if exercise
of the Option otherwise would exceed such amount, Parent, at its
discretion, may increase the Purchase Price for that number of Shares set
forth in the Stock Exercise Notice so that the Notional Total Profit shall
not exceed $55,600,000; provided, that nothing in this sentence shall
restrict any exercise of the Option permitted hereby on any subsequent date
at the Purchase Price set forth in Section 1(a) hereof.
(c) As used herein, the term "TOTAL PROFIT" shall mean
the aggregate amount (before taxes) of the following: (i) the amount of
cash received by Parent pursuant to Section 1(d), (ii) (x) the cash amounts
or the fair market value of any property received by Parent pursuant to the
sale of Shares (or any other securities into which such Shares are
converted or exchanged), less (y) Parent's Purchase Price for such Shares,
and (iii) any fees received pursuant to Section 8.5(b) of the Merger
Agreement.
(d) As used herein, the term "NOTIONAL TOTAL PROFIT"
with respect to any number of Shares as to which Parent may propose to
exercise this Option shall be the Total Profit determined as of the date of
the Stock Exercise Notice assuming that this Option were exercised on such
date for such number of Shares and assuming that such Shares, together with
all other Shares held by Parent and its affiliates as of such date, were
sold for cash at the closing market price for the Common Stock as of the
close of business on the preceding trading day (less customary brokerage
commissions).
11. Transfers. The Shares may not be sold, assigned,
transferred, or otherwise disposed of except (i) in an underwritten public
offering as provided in Section 7 hereof or (ii) to any purchaser or
transferee who, to Parent's knowledge, would immediately following such
sale, assignment, transfer or disposal, beneficially own more than 5.0% of
the then outstanding voting power of the Company; provided, however, that
Parent shall be permitted to sell any Shares if such sale is made pursuant
to a tender or exchange offer.
12. Notice. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have
been fully given if (i) delivered personally; (ii) sent by certified or
registered mail, return receipt requested; (iii) sent by overnight courier
for delivery on the next business day; or (iv) sent by confirmed facsimile,
provided that a hard copy of all such materials is thereafter sent within
24 hours in the manner described in clauses (i), (ii) or (iii), to the
parties at the following addresses or at such other addresses as shall be
specified by the parties by like notice:
If to Parent:
Texas Instruments Incorporated
0000 Xxxxxxxxx Xxx, X/X 0000
Xxxxxx, Xxxxx 00000
- or -
X.X. Xxx 000000, X/X 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Facsimile No.: (000) 000-0000
With copies to:
Texas Instruments Incorporated
0000 Xxxxxx Xxxx, X/X 0000
Xxxxxx, Xxxxx 00000
- or -
X.X. Xxx 000000, X/X 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
and
Weil, Gotshal & Xxxxxx LLP
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: R. Xxxxx Xxxxx
Facsimile No.: (000) 000-0000
If to the Company:
Unitrode Corporation
0 Xxxxxxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxx Xxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
With a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
Notices provided in accordance with this Section 12 shall be
deemed delivered (i) on the date of personal delivery, (ii) four business
days after deposit in the mail, (ii) one business day after delivery to an
overnight courier, or (iv) on the date of confirmation of the facsimile
transmission, as the case may be.
13. Parties in Interest. This Stock Option Agreement shall
inure to the benefit of and be binding upon the parties named herein and
their respective successors and permitted assigns; provided, however, that
such successor in interest or permitted assigns shall agree to be bound by
the provisions of this Stock Option Agreement. Nothing in this Stock Option
Agreement, express or implied, is intended to confer upon any person other
than the Company or Parent, or their successors or assigns, any rights or
remedies under or by reason of this Stock Option Agreement.
14. Entire Agreement; Amendments. This Stock Option
Agreement, together with the Merger Agreement and the other documents
referred to therein, contains the entire agreement between the parties
hereto with respect to the subject matter hereof and supersedes all prior
and contemporaneous agreements and understandings, oral or written, with
respect to such transactions. This Stock Option Agreement may not be
changed, amended or modified orally, but may be changed only by an
agreement in writing signed by the party against whom any waiver, change,
amendment, modification or discharge may be sought.
15. Assignment. No party to this Stock Option Agreement may
assign any of its rights or obligations under this Stock Option Agreement
without the prior written consent of the other party hereto.
16. Headings. The section headings herein are for convenience
only and shall not affect the construction of this Stock Option Agreement.
17. Counterparts. This Stock Option Agreement may be executed
in any number of counterparts, each of which, when executed, shall be
deemed to be an original and all of which together shall constitute one and
the same document.
18. Governing Law. This Stock Option Agreement shall be
governed by and construed in accordance with the laws of the State of
Maryland, without giving effect to the choice of law principles thereof.
19. Severability. If any term, provision, covenant or
restriction of this Stock Option Agreement is held by a court of competent
jurisdiction to be invalid, void or 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.
[THIS REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Parent and the Company have caused
this Stock Option Agreement to be duly executed and delivered on the day
and year first above written.
TEXAS INSTRUMENTS INCORPORATED
By: /s/ Xxxxxxx X. Xxxxxxxx
___________________________
Name: Xxxxxxx X. Xxxxxxxx
Title: Senior Vice President
UNITRODE CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxxx
___________________________
Name: Xxxxxx X. Xxxxxxxxxx
Title: Chairman of the Board and
Chief Executive Officer
