Page 9 of 18 Pages
CONFORMED COPY
STOCKHOLDERS VOTING AGREEMENT
STOCKHOLDERS VOTING AGREEMENT (this "Agreement") dated
as of July 20, 1997, among TPG Partners II, L.P, ("Parent"), on
the one hand, and Warburg, ▇▇▇▇▇▇ Capital Company, L.P. and
Warburg, ▇▇▇▇▇▇ & Co. (each a "Stockholder" and, collectively,
the "Stockholders"), on the other hand.
WHEREAS Parent, TPG and Zilog, Inc., a Delaware
corporation (the "Company"), propose to enter into an Agreement
and Plan of Merger dated as of the date hereof (as the same may
be amended or supplemented, the "Merger Agreement"; capitalized
terms used but not defined herein shall have the meanings set
forth in the Merger Agreement) providing for the merger (the
"Merger") of a to-be formed Delaware corporation and wholly owned
subsidiary of Parent ("Sub") with and into the Company with the
Company being the surviving corporation (hereinafter sometimes
referred to as the "Surviving Corporation"), upon the terms and
subject to the conditions set forth in the Merger Agreement;
WHEREAS each Stockholder owns beneficially and (except
as set forth on Schedule A attached hereto) of record the number
of shares of Common Stock, par value $.01 per share, of the
Company (the "Common Stock") set forth opposite its name on
Schedule A attached hereto (such shares of Common Stock, together
with any other shares of capital stock of the Company acquired
(including, without limitation, through the exercise of any
option or by reason of any split, reclassification, stock
dividend or other distribution with respect to the capital stock
of the Company) by such Stockholder after the date hereof and
during the term of this Agreement, being collectively referred to
herein as the "Subject Shares");
WHEREAS, as a condition to its willingness to enter
into the Merger Agreement, Parent has required that each
Stockholder enter into this Agreement.
NOW, THEREFORE, to induce Parent to enter into, and in
consideration of its entering into, the Merger Agreement, and in
consideration of the premises and the representations, warranties
and agreements contained herein, the parties agree as follows:
1. Representations and Warranties of each Stockholder.
Each Stockholder hereby, severally and not jointly, represents
and warrants to Parent as of the date hereof in respect of itself
as follows:
(a) Authority. The Stockholder has all requisite power
and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly
authorized, executed and delivered by the Stockholder (or in the
case of a Stockholder which is a partnership, by a general
partner on behalf of such partnership) and constitutes a valid
and binding obligation of the Stockholder enforceable in
accordance with its terms, except that such enforceability (i)
may be limited by bankruptcy, insolvency, moratorium
Page 10 of 18 Pages
or other similar laws affecting or relating to the enforcement of
creditors' rights generally and (ii) is subject to general
principles of equity. The execution and delivery of this
Agreement does not, and the consummation of the transactions
contemplated hereby and compliance with the terms hereof will
not, conflict with, or result in any violation of, or default
(with or without notice or lapse of time or both) under any
provision of, any trust agreement, loan or credit agreement,
note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise, license, judgment,
order, notice, decree, statute, law, ordinance, rule or
regulation applicable to the Stockholder or to the Stockholder's
property or assets the effect of which, in any case, would be
material and adverse to the ability of the Stockholder to
consummate the transactions contemplated hereby or to comply with
the terms hereof.
(b) The Subject Shares. The Stockholder is the
beneficial and (except as set forth on Schedule A attached
hereto) record owner of, and has good and marketable title to,
the Subject Shares set forth opposite such Stockholder's name on
Schedule A attached hereto, free and clear of any claims, liens,
encumbrances and security interests whatsoever. The Stockholder
does not own, of record or beneficially, any shares of capital
stock of the Company other than the Subject Shares set forth
opposite such Stockholder's name on Schedule A attached hereto.
The Stockholder has the sole right to vote such Subject Shares,
and none of such Subject Shares is subject to any voting trust or
other agreement, arrangement or restriction with respect to the
voting of such Subject Shares, except as contemplated by this
Agreement.
2. Representations and Warranties of Parent. Parent
hereby represents and warrants to each Stockholder that Parent
has all requisite power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by Parent, and the
consummation of the transactions contemplated hereby, have been
duly authorized by all necessary action on the part of Parent.
This Agreement has been duly executed and delivered by Parent and
constitutes a valid and binding obligation of Parent enforceable
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. The execution and delivery of this
Agreement does not, and the consummation of the transactions
contemplated hereby and compliance with the terms hereof will
not, conflict with, or result in any violation of, or default
(with or without notice or lapse of time or both) under any
provision of, any trust agreement, loan or credit agreement,
note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise, license, judgment,
order, notice, decree, statute, law, ordinance, rule or
regulation applicable to Parent or to Parent's property or assets
the effect of which, in any case, would be material and adverse
to the ability of Parent to consummate the transactions
contemplated hereby or to comply with the terms hereof.
3. Covenants of each Stockholder. Until the
termination of this Agreement in accordance with Section 8, each
Stockholder, severally and not jointly, agrees as follows:
(a) Vote for the Merger. At any meeting of stockholders of
the Company called to vote upon the Merger and the Merger Agreement
or at any adjournment thereof or in any other circumstances upon
which a vote, consent or other approval (including by written
2
Page 11 of 18 Pages
consent) with respect to the Merger and the Merger Agreement is
sought, the Stockholder shall vote (or cause to be voted), or
execute a written consent in respect of, the Subject Shares in
favor of the Merger, the adoption by the Company of the Merger
Agreement and the approval of the terms thereof and each of the
other transactions contemplated by the Merger Agreement. The
Stockholder hereby waives any appraisal rights granted pursuant
to Section 262 of the General Corporation Law of the State of
Delaware (the "DGCL") (or any successor provision) to which it
may otherwise be entitled as a result of the Merger or the other
transactions contemplated by the Merger Agreement.
(b) Vote Against Takeover Proposals. At any meeting of
stockholders of the Company or at any adjournment thereof or in
any other circumstances upon which the Stockholder's vote,
consent or other approval is sought, the Stockholder shall be
present (in person or by proxy) and shall vote (or cause to be
voted) the Subject Shares against (and shall not execute any
written consent in favor of) (i) any merger agreement or merger
(other than the Merger Agreement and the Merger), consolidation,
combination, sale of substantial assets, reorganization,
recapitalization, dissolution, liquidation or winding up of or by
the Company or any other Takeover Proposal or (ii) any amendment
of the Company's certificate of incorporation or by-laws or other
proposal or transaction involving the Company or any of its
subsidiaries, which amendment or other proposal or transaction
would in any manner impede, frustrate, delay, prevent or nullify
the Merger, the Merger Agreement or any of the other transactions
contemplated by the Merger Agreement. The Stockholder further
agrees not to commit or agree to take any action inconsistent
with the foregoing.
(c) Transfer of Subject Shares. Except pursuant to
this Agreement and except as provided in the immediately
succeeding sentence of this Section 3(c), the Stockholder agrees
not to (i) transfer, sell, pledge, assign or otherwise dispose of
(including by gift) (collectively, "Transfer"), or enter into any
contract, option or other arrangement (including any profit
sharing arrangement) with respect to the Transfer of, any of the
Subject Shares to any person other than pursuant to the terms of
the Merger or (ii) enter into any voting arrangement, whether by
proxy, power-of-attorney, voting agreement, voting trust or
otherwise, in connection with, directly or indirectly, any
Takeover Proposal, and agrees not to commit or agree to take any
of the foregoing actions.
(d) No Solicitation. During the term of this
Agreement, the Stockholder shall not (i) directly or indirectly
solicit, initiate or encourage the submission of, any Takeover
Proposal or (ii) directly or indirectly participate in any
discussions or negotiations regarding, or furnish to any person
any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any
Takeover Proposal.
(f) The Stockholders shall each execute and deliver an
"affiliate letter" in the form attached as an exhibit to the
Merger Agreement as contemplated by the Merger Agreement.
4. Election to Retain Company Stock and Stockholders
Agreement. Each Stockholder hereby agrees that it will make and
not revoke an effective Non-Cash Election with
3
Page 12 of 18 Pages
respect to and otherwise cause that number of Subject Shares
specified as "Number of Pre-Closing Electing Shares" on Schedule
A hereof (subject to adjustment in accordance with the adjustment
mechanism set forth in Section 2.4 of the Merger Agreement) to be
"Electing Shares" under the Merger Agreement. Each of the
Stockholders and Parent agrees that it and the Company will prior
to the Effective Time enter into a Stockholders Agreement
consistent with the provisions of Schedule B hereto (all of the
material terms of which are summarized therein).
5. Grant of Irrevocable Proxy.
(a) Existing Proxies Revoked. The Stockholders represent
that any proxies heretofore given in respect of the Subject
Shares are not irrevocable, and that any such proxies are hereby
revoked.
(b) Grant of Irrevocable Proxy to Parent. Upon
Parent's request, each Stockholder hereby agrees to irrevocably
grant to, and appoint, Parent, and any person who may hereafter
be designated by Parent as permitted under applicable law, and
each of them individually, the Stockholder's proxy and
attorney-in-fact (with full power of substitution), for and in
the name, place and stead of the Stockholder, to vote the
Stockholder's Subject Shares, or grant a consent or approval in
respect of such Subject Shares, in favor of or against, as the
case may be, the matters set forth in Sections 3(a) and 3(b), and
to execute and deliver an appropriate instrument irrevocably
granting such proxy. The proxy granted herein shall terminate
upon any termination of this Agreement in accordance with its
terms.
(c) Affirmations. Each Stockholder hereby affirms that
any irrevocable proxy granted pursuant to Section 5(b) will be
given in connection with the execution of the Merger Agreement,
and that such irrevocable proxy will be given to secure the
performance of the duties of the Stockholder under this
Agreement. If so granted, the Stockholder hereby ratifies and
confirms all that such irrevocable proxy may lawfully do or cause
to be done by virtue thereof. Such irrevocable proxy, if and when
executed, is intended to be irrevocable in accordance with the
provisions of Section 212(e) of the DGCL.
6. Further Assurances. Each Stockholder will, from
time to time, execute and deliver, or cause to be executed and
delivered, such additional or further consents, documents and
other instruments as Parent may reasonably request for the
purpose of effectively carrying out the transactions contemplated
by this Agreement.
7. Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by
any of the parties without the prior written consent of the other
parties, except that Parent may assign, in its sole discretion,
any or all of its rights, interests and obligations hereunder to
any direct or indirect wholly owned subsidiary of Parent or Sub
or to any affiliate of Parent or Sub. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective
successors and assigns.
4
Page 13 of 18 Pages
8. Termination. This Agreement shall terminate upon the
earlier of (a) the termination of the Merger Agreement (for any
any reason, including a termination pursuant to Section 8.1(d) or
Section 8.1(e) thereof) and (b) the Effective Time of the Merger.
9. General Provisions.
(a) Amendments. This Agreement may not be amended
except by an instrument in writing signed by each of the parties
hereto.
(b) Notice. All notices and other communications
hereunder shall be in writing and shall be deemed given if
delivered personally, telecopied (which is confirmed) or sent by
overnight courier (providing proof of delivery) to Parent in
accordance with the notification provision contained in the
Merger Agreement and to the Stockholders at their respective
addresses set forth on Schedule A attached hereto (or at such
other address for a party as shall be specified by like notice).
(c) Interpretation. When a reference is made in this
Agreement to Sections, such reference shall be to a Section to
this Agreement unless otherwise indicated. The headings contained
in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this
Agreement. Wherever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to
be followed by the words "without limitation".
(d) Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one
and the same agreement, and shall become effective when one or
more of the counterparts have been signed by each of the parties
and delivered to the other party, it being understood that each
party need not sign the same counterpart.
(e) Entire Agreement; No Third-Party Beneficiaries.
This Agreement (including the documents and instruments referred
to herein) (i) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof and
(ii) is not intended to confer upon any person other than the
parties hereto and other than Sub, which is an express
beneficiary of this Agreement, any rights or remedies hereunder.
(f) Governing Law. This Agreement 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 law thereof.
(g) Severability. If any term, provision, covenant or
restriction herein, or the application thereof to any circumstance,
shall, to any extent, be held by a court of competent jurisdiction to
be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions herein and the application
thereof to any other circumstances, shall remain in full force and
effect, shall not in any way be affected, impaired or invalidated, and
5
Page 14 of 18 Pages
shall be enforced to the fullest extent permitted by law, and the
parties hereto shall reasonably negotiate in good faith a
substitute term or provision that comes as close as possible to
the invalidated and unenforceable term or provision, and that
puts each party in a position as nearly comparable as possible to
the position each such party would have been in but for the
finding of invalidity or unenforceability, while remaining valid
and enforceable.
10. Stockholder Representatives. Each Stockholder
signs solely in its capacity as the record holder and beneficial
owner of, or the general partner of a partnership which is the
beneficial owner of, such Stockholder's Subject Shares and
nothing contained herein shall limit or affect any actions taken
by any officer, director, partner, affiliate or representative of
a Stockholder who is or becomes an officer or a director of the
Company in his or her capacity as an officer or director of the
Company and none of such actions in such capacity shall be deemed
to constitute a breach of this Agreement.
11. Enforcement. The parties agree, and the
beneficiaries of each trust which is a party hereto have agreed,
that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this
Agreement in any court of the United States located in the State
of Delaware or in a Delaware state court, this being in addition
to any other remedy to which they are entitled at law or in
equity. In addition, each of the parties hereto (i) consents to
submit such party to the personal jurisdiction of any Federal
court located in the State of Delaware or any Delaware state
court in the event any dispute arises out of this Agreement or
any of the transactions contemplated hereby, (ii) agrees that
such party will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such
court, (iii) agrees that such party will not bring any action
relating to this Agreement or the transactions contemplated
hereby in any court other than a Federal court sitting in the
state of Delaware or a Delaware state court, (iv) waives any
right to trial by jury with respect to any claim or proceeding
related to or arising out of this Agreement or any of the
transactions contemplated hereby, and (v) appoints The
Corporation Trust Company as such party's agent for service of
process in the state of Delaware.
6
Page 15 of 18 Pages
IN WITNESS WHEREOF, this Agreement has been executed and
delivered 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: s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
STOCKHOLDERS:
WARBURG, ▇▇▇▇▇▇ CAPITAL COMPANY,
L.P.
By: Warburg, ▇▇▇▇▇▇ & Co.,
its General Partner,
By: s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: A General Partner
WARBURG, ▇▇▇▇▇▇ & CO.
By: s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: A General Partner
7
Page 16 of 18 Pages
SCHEDULE A
Name
Shares Number of
of Common Pre-Closing
Stock Electing Shares
-------------------------------------------------------------------
WARBURG, ▇▇▇▇▇▇ CAPITAL 5,378,004 400,000
COMPANY, L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
WARBURG, ▇▇▇▇▇▇ & CO 99,500 0
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
---------- --------
Total 5,477,504 400,000
A-1
Page 17 of 18 Pages
SCHEDULE B
SUMMARY OF PRINCIPAL TERMS
OF
SHAREHOLDERS AGREEMENT
Parties The Company, TPG Partners II, L.P., together
with its affiliates ("TPG"), Warburg, ▇▇▇▇▇▇
Capital Company, L.P. ("Warburg") and other
shareholders who receive Shares in the Merger
(the "Investors").
Right of First Offer Warburg and the Investors will grant
to the Company (or an affiliate thereof)
a right of first offer with respect
to any proposed sales by them of Shares.
Reasonable and customary procedures
concerning this right of first offer will be
set forth in the Shareholders Agreement.
Right to Cause Sale If TPG decides to sell all of its
remaining Shares received in the Merger
(other than a sale to an affiliate), and
holds at that time (prior to giving effect of
the proposed sale) more than 40% of such
Shares, then TPG shall have the right to
require Warburg and the Investors to sell
their remaining Shares as part of that sale
on the same price and terms (or to vote in
favor of any merger or other transaction
which would effect such a sale).
Right to Participate In the event that, during the period
in Sale beginning immediately after the closing of
the Merger and ending upon a Public Offering,
TPG holds 40% or more of the voting power of the
Company and proposes to engage in a sale of
equity interests which would result in a
transfer of 40% or more of the voting power
of the Company to an unaffiliated purchaser,
then Warburg and the Investors shall have the
right to participate pro rata in such sale
transaction on the same price and terms as
TPG. (As used herein, "Public Offering" shall
mean a registered offering of equity
securities of the Company or an institutional
private placement or 144A offering of such
equity securities with or without
registration rights.)
B-1
Page 18 of 18 Pages
Registration Rights In the Shareholders Agreement (or by
separate registration rights agreement) the
Company will grant to Warburg and the
Investors "piggyback" registration rights at
the Company's expense (other than
underwriting discounts and selling
commissions), with customary provisions
regarding notice of intent to file a
registration statement, cutbacks in the event
of an underwritten offering, indemnification
and other customary provisions.
Warburg and the Investors will, if requested
by the underwriters for an underwritten public
offering of equity securities of the Company,
agree not to sell or transfer any equity
securities of the Company (other than equity
securities, if any, including in such
offering), without the consent of the
underwriters, for a period of not more than
180 days following effectiveness of the
registration statement relating to a Public
Offering.
Facilitation of If a Public Offering shall have not occurred
Disposition within five years of the Closing of the Merger,
the Company will reimburse Warburg for the
cost of investment banking fees, in an amount
not to exceed $50,000, in connection with an
analysis of Warburg's ownership position and
disposition strategies.
Affiliate Transactions The Shareholders Agreement will
provide that agreements or transactions
between the Company and TPG or any of its
affiliates shall require the prior approval
of the holders of a majority of the voting
common stock of the Company (excluding stock
held by TPG and its affiliates) other than
agreements or transactions which are on
arms-length terms or consulting fees with
terms which are customary as between TPG and
its portfolio companies.
B-2