Item 1.01 Entry into a Material Definitive Agreement.
On July 9, 2008, Centillium Communications, Inc., a Delaware corporation ("Centillium" or the "Company"), entered into
an Agreement and Plan of Merger (the "Merger Agreement") with TranSwitch Corporation, a Delaware corporation
("TranSwitch"), and two wholly owned subsidiaries of TranSwitch, which provides for TranSwitch to acquire Centillium (the
"Merger"). The Merger Agreement has been approved by the Boards of Directors of both Centillium and TranSwitch and is subject to
Centillium stockholder approval.
Under the terms of the Merger Agreement, TranSwitch will issue an aggregate of 25 million shares of common stock and $15 million, which
will be allocated pro rata among holders of Centillium common stock and vested, in-the-money, stock options outstanding at the closing of the
Merger.
Any outstanding Centillium stock option that is unvested and exercisable at a price per share that is greater than the Per Share Merger
Consideration Value (as defined in the Merger Agreement) immediately prior to the effective time of the Merger, or any outstanding option that is
vested and exercisable at a price per share that is greater than the Per Share Merger Consideration Value but less than $5.00, will be converted
into a TranSwitch stock option. Centillium restricted stock units that remain unvested immediately prior to the effective time of the Merger will be
converted into TranSwitch restricted stock units.
Consummation of the Merger is subject to several closing conditions, including the approval of the principal terms of the Merger Agreement
and the Merger by the stockholders of Centillium, the absence of certain governmental restraints, the effectiveness of a Form S-4 registration
statement to be filed by TranSwitch, and the receipt of specified consents. The Merger is intended to qualify as a tax-free reorganization under
Section 368(a) of the Internal Revenue Code of 1986, as amended.
TranSwitch and Centillium may terminate the Merger Agreement under specified circumstances including, in the case of Centillium, to accept
a superior acquisition proposal. The agreement also provides that in specified circumstances, Centillium must pay TranSwitch, or TranSwitch must
pay Centillium, a termination fee of $1.23 million.
Concurrently with the execution of the Merger Agreement, TranSwitch entered into voting agreements (the "Voting Agreements")
with all of the directors and certain of the executive officers of Centillium, in their respective capacities as stockholders of the Company, pursuant
to which each such director and executive officer has agreed to vote all of his or her shares of Centillium common stock in favor of the approval
and adoption of the Merger Agreement and the Merger.
The foregoing description of the Merger Agreement and the Voting Agreements is qualified in its entirety by reference to the full text of the
Merger Agreement and the form of Voting Agreement, copies of which are filed herewith as Exhibits 2.1 and 99.1 respectively. A copy of the press
release issued by Centillium and TranSwitch on July 9, 2008 concerning the transaction is filed herewith as Exhibit 99.2 and is incorporated
herein by reference.
For Additional Information
:
TranSwitch expects to file a SEC Registration Statement on Form S-4, and TranSwitch and Centillium will file a proxy statement/prospectus
with the SEC, in connection with the proposed merger. TRANSWITCH AND CENTILLIUM URGE INVESTORS AND STOCKHOLDERS TO READ
THE PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED BY EITHER
PARTY WITH THE SEC BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
Investors and stockholders will be able to obtain the proxy statement/prospectus and other documents filed with the SEC free of charge at the
website maintained by the SEC at www.sec.gov. In addition, documents filed with the SEC by TranSwitch will be available free of charge on the
investor relations portion of the TranSwitch website at www.transwitch.com. Documents filed with the SEC by Centillium will be available free of
charge on the investor relations portion of the Centillium website at www.centillium.com.
Participants in the Solicitation
This communication is not a solicitation of a proxy from any security holder of Centillium. However, Centillium, and certain of its directors
and executive officers, may be deemed participants in the solicitation of proxies from the stockholders of Centillium in connection with the Merger.
The names of Centillium's directors and executive officers and a description of their interests in Centillium (including their ownership of Centillium
stock) are set forth in the proxy statement for Centillium's 2008 annual meeting of stockholders, which was filed with the SEC on April 29, 2008.
Investors and stockholders can obtain more detailed information regarding the direct and indirect interests of Centillium's directors and executive
officers in the Merger by reading the definitive proxy statement/prospectus when it becomes available.
Item 3.03 Material Modification to Rights of Security Holders.
On July 9, 2008, the Board of Directors of Centillium approved an amendment (the "Amendment") to Centillium's Preferred
Stock Rights Agreement (the "Rights Agreement"), dated as of December 30, 2002, to (a) render the Rights Agreement inapplicable to
the Merger Agreement, the Merger, the Voting Agreements executed in connection with the Merger and the other transactions contemplated by
the Merger Agreement, (ii) ensure that (a) none of TranSwitch nor any affiliate of TranSwitch is an "Acquiring Person" pursuant to the
Rights Agreement by reason of the Merger, the execution of the Merger Agreement or the Voting Agreements or any other transaction
contemplated by the Merger Agreement and (b) neither a "Distribution Date" nor a "Shares Acquisition Date," as such terms
are defined under the Rights Agreement, will occur, in the case of clauses (a) and (b), by reason of the execution of the Merger Agreement, the
execution of the Voting Agreements or the consummation of the Merger or the other transactions contemplated by the Merger Agreement and (c)
provide that the Rights Agreement shall expire immediately prior to the effective time of the Merger. The foregoing description of the Amendment is
qualified in its entirety by reference to the full text of the Amendment, a copy of which Centillium will file as an exhibit to a Form 8-A/A, and is
incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.