FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest
event reported): July 17, 1995
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Zenith Electronics Corporation
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(Exact name of registrant as specified in its charter)
Delaware 1-4115 36-1996520
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(State or jurisdiction (Commission File (IRS Employer
of incorporation) Number) identification No.)
1000 Milwaukee Avenue
Glenview, Illinois 60025
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code (708) 391-7000
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Not applicable
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
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On July 17, 1995, Zenith Electronics Corporation issued a press
release announcing the execution and delivery of a Stock Purchase
Agreement dated July 17, 1995 with LG Electronics Inc. Copies of
the press release and the Stock Purchase Agreement are attached
as exhibits hereto and are incorporated by reference herein. In
connection with the transactions contemplated by the Stock Purchase
Agreement, the Company amended its Stockholder Rights Agreement.
A copy of the Amendment is attached as Exhibit 4 hereto and is
incorporated by reference herein.
Item 7. Financial Statements, Pro forma Financial Information and Exhibits.
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(c) The following exhibits are included as part of this report:
Exhibit 2 - Stock Purchase Agreement dated July 17, 1995
between Zenith Electronics Corporation and LG Electonics Inc.
Exhibit 4 - Amendment to Rights Agreement dated as of July 17,
1995
Exhibit 20 - Zenith Electronics Corporation Press Release dated
July 17, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ZENITH ELECTRONICS CORPORATION
By: /s/ David S. Levin
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David S. Levin, Secretary
Date: July 19, 1995
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Exhibit Index
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Exhibit
Number Exhibit Description
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2 Stock Purchase Agreement dated July 17, 1995 between Zenith
Electronics Corporation and LG Electronics Inc.
4 Amendment to Rights Agreement dated as of July 17, 1995
20 Zenith Electronics Corporation Press Release dated July 17, 1995
STOCK PURCHASE AGREEMENT
DATED AS OF JULY 17, 1995
BY AND BETWEEN
ZENITH ELECTRONICS CORPORATION
AND
LG ELECTRONICS INC.
<PAGE>
CONTENTS
ARTICLE 1. DEFINITIONS 1
1.1. Definitions 1
ARTICLE 2. SALE AND PURCHASE OF ISSUE SHARES 5
2.1. Sale and Purchase of the Shares 5
2.2. Closing and Deliveries 5
2.2.1. Deliveries by the Purchaser 5
2.2.2. Deliveries by the Company 6
ARTICLE 3. THE OFFER 6
3.1. Commencement of the Offer 6
3.2. Changes to the Offer 6
3.3. Purchase 6
3.4. Schedule 14D-1 and other Offer Documents 7
3.5. Actions by the Company 7
3.5.1. Approval and Recommendation of Offer 7
3.5.2. Schedule 14D-9 8
3.5.3. Stockholder Information 8
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY 9
4.1. Organization and Standing; Charter and Bylaws 9
4.2. Authority 9
4.3. Capital Stock 10
4.4. Governmental Consents 10
4.5. Compliance with Applicable Law 10
4.6. No Default 11
4.7. Reports and Financial Statements 11
4.8. Absence of Changes 12
4.9. Litigation 12
4.10. Tax Matters 12
4.11. Registration Rights 13
4.12. Offering 13
4.13. Insurance 13
4.14. Certain Transactions 13
4.15. Employees and ERISA 13
4.16. Intellectual Property 14
4.17. Environmental Laws and Regulations 14
4.18. Brokers 15
4.19. Company Letter 15
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER 15
5.1. Organization, Good Standing, and Qualification 15
5.2. Authority 15
5.3. No Violation 16
5.4. Governmental Consents 16
5.5. Securities Laws 16
5.5.1. Investment Intent 16
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5.5.2. Sophistication 16
5.6. Offer and Proxy Materials 16
5.7. Brokers 17
ARTICLE 6. COVENANTS 17
6.1. Proxy Solicitation and Stockholder Approval 17
6.1.1. Proxy Materials 17
6.1.2. Stockholders' Meeting 18
6.2. Conduct of Business of the Company 18
6.3. Other Potential Bidders 20
6.4. Access to Information; Confidentiality 21
6.4.1. Access 21
6.4.2. Confidentiality 21
6.5. Additional Agreements; Reasonable Efforts 21
6.6. HSR and Exon-Florio 22
6.7. Public Announcements 22
6.8. Amendment of Rights Agreement 22
6.9. Notification of Certain Matters 22
6.10. Disclosure 22
6.11. Election of Directors 22
6.11.1. Directors 22
6.11.2. Compliance with Section 14(f) 23
6.12. Director and Officer Liability 23
6.13. Change in Control 24
ARTICLE 7. CONDITIONS TO PURCHASE AND SALE OF ISSUE SHARES 24
7.1. Conditions to Obligations of the Purchaser and
the Company 24
7.1.1. Stockholder Approval 24
7.1.2. No Prohibition 24
7.1.3. Regulatory Compliance 24
7.1.4. Exon-Florio 24
7.2. Conditions to Obligations of the Purchaser 25
7.2.1. Directors 25
7.2.2. Performance 25
7.2.3. Amended Bylaws 25
7.2.4. Amendment of Rights Agreement 25
7.2.5. Tender of Shares 25
7.2.6. Closing Deliveries 25
7.2.7. Representations and Warranties True 25
7.2.8. Certificate 25
7.2.9. Credit Agreements 25
7.2.10. Items in Company Letter 26
7.3. Conditions to Obligations of the Company 26
7.3.1. Performance 26
7.3.2. Representations and Warranties True 26
7.3.3. Closing Deliveries 26
7.3.4. Certificate 26
7.3.5. Offer 26
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ARTICLE 8. TERMINATION 26
8.1. Termination by the Company 26
8.2. Termination by the Purchaser 27
8.3. Termination by the Purchaser or the Company 27
8.4. Effect of Termination 27
ARTICLE 9. MISCELLANEOUS 28
9.1. Survival of Representations and Warranties 28
9.2. Governing Law; Consent to Jurisdiction 28
9.3. Expenses 28
9.4. Notices 28
9.5. Waiver 29
9.6. The Purchaser Subsidiaries; Successors,
Assignment, and Parties in Interest 29
9.7. Entire Agreement 30
9.8. Amendment 30
9.9. Severability 30
9.10. Cumulation of Remedies 30
9.11. Fair Construction 30
9.12. Headings; References 30
9.13. Counterparts 30
EXHIBIT A - Amended Bylaws
ANNEX A - Conditions to Purchaser's Acceptance of Shares in the Offer
iii
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is entered into
as of July 17, 1995 by and between LG Electronics Inc., a corporation
organized under the laws of the Republic of Korea (the "Purchaser"),
and Zenith Electronics Corporation, a Delaware corporation (the
"Company").
WHEREAS, the Purchaser desires, directly and/or through a
direct or indirect majority owned subsidiary, to purchase from the
Company 16,500,000 newly issued shares of the Company's Common
Stock and to offer to purchase, directly or indirectly, from existing
stockholders of the Company 18,619,000 outstanding shares of the
Company's Common Stock, and the Company desires to sell certain
newly issued shares of its Common Stock to the Purchaser or its
subsidiary; and
WHEREAS, upon the consummation of the transactions contemplated
by this Agreement, the Purchaser or its Affiliates intend to
purchase an aggregate of 35,119,000 shares of the Company's
Common Stock resulting in the Purchaser and its Affiliates owning a
majority of the outstanding shares of the Company's Common Stock.
NOW THEREFORE, in consideration of the foregoing and the
representations, warranties, and agreements set forth in this
Agreement, the Purchaser and the Company hereby agree as follows:
ARTICLE 1.
DEFINITIONS
1.1. Definitions. Capitalized terms used in this Agreement
and not otherwise defined herein shall have the meanings set forth
below.
"Affiliate" of a party means any person or entity controlling,
controlled by, or under common control with such party. For purposes
of this definition, "control" (including, with correlative meanings, the
terms "controlling," "controlled by" and "under common control
with"), as used with respect to any person, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of
the management or policies of such person, whether through the
ownership of voting securities, by agreement or otherwise.
"Amended Bylaws" means the Bylaws of the Company in the form of
Exhibit A hereto, to be adopted by the Company prior to the Closing.
"Amendment to Rights Agreement" means the amendment to the Rights
Agreement effecting the changes to the Rights Agreement referred to
in Section 6.8.
"Antitrust Division" has the meaning set forth in Section 6.6.
"Beneficially Owned" shall have the meaning provided in Rule 13d-3
under the Exchange Act without giving effect to subsection (d)(1)(i)
thereof.
"Board" means the Board of Directors of the Company.
"Business Day" means any day other than a Saturday, a Sunday, or a
bank holiday in the State of Illinois or in the Republic of Korea.
"CFIUS" means the Committee on Foreign Investment in the United
States, as established through Executive Order No. 11858 in connection
with Exon-Florio.
"Closing" means the closing of the purchase and sale of the Issue
Shares pursuant to Section 2.1 and the time that the Purchaser accepts
the Offer Shares for purchase.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the common stock of the Company, par value $1.00
per share.
"Company Letter" means the letter, dated as of the date hereof, from
the Company to the Purchaser regarding certain matters related to this
Agreement.
"Confidentiality Agreement" means that certain Mutual Non-Disclosure
Agreement between the Purchaser and the Company, dated November 25, 1994.
"Consent" has the meaning set forth in Section 4.4.
"Convertible Debentures" has the meaning set forth in Section 4.3.
"Employee Benefit Plan" means each "employee benefit plan" (as defined
in section 3(3) of ERISA) and each retirement or deferred compensation
plan, incentive compensation plan, stock plan, unemployment compensation
plan, vacation pay, severance pay, bonus or benefit arrangement, insurance
or hospitalization program or any other fringe benefit arrangements which
does not constitute an employee benefit plan, maintained by or contributed
to by the Company or any of its subsidiaries or with respect to which the
Company or any of its subsidiaries may have any liability.
"Environmental Claim" has the meaning set forth in Section 4.17.
"Environmental Laws" has the meaning set forth in Section 4.17.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exon-Florio" means Section 721 of the Exon-Florio Amendment to the
Defense Production Act of 1950.
"FTC" has the meaning set forth in Section 6.6.
"GAAP" means generally accepted accounting principles as in effect in
the United States of America (as such principles may change from time
to time).
"Governmental Authority" means any governmental, quasi-governmental,
judicial, self-regulatory or regulatory agency or entity or subdivision
thereof with jurisdiction over the Company or the Purchaser or any of
their subsidiaries or any of the transactions contemplated by this
Agreement.
"Hazardous Material" means any substance: (i) the presence of which
requires investigation or remediation under any federal, state or
local statute, regulation, ordinance, order, action policy or
common law; or (ii) which is defined and regulated as a "hazardous
waste," "hazardous substance," pollutant or contaminant under any
federal, state or local statute, regulation, rule or ordinance
or amendments thereto; or (iii) which is toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic, mutagenic, or
otherwise hazardous and is regulated by any governmental authority,
agency, department, commission, board, agency or instrumentality of
the United States, the state in which such substance is located or any
political subdivision thereof; or (iv) the presence of which poses or
threatens to pose a hazard to the health or safety of persons or the
environment on or about the property on which such substance is
located or adjacent properties. Hazardous Material shall include,
without limitation, petroleum, including crude oil and any fraction
thereof, asbestos and polychlorinated biphenyls (PCBs).
"HSR" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
"Indemnified Party" has the meaning set forth in Section 6.12.
"Indemnity Agreements" has the meaning set forth in Section 6.12.
"Independent Director" means a director who is not (apart from such
directorship) an Affiliate, officer, employee, agent, principal or
partner of the Purchaser or the Company or any subsidiary of either
of them.
"Instruments" has the meaning set forth in Section 4.6.
"Intellectual Property" has the meaning set forth in Section 4.16.
"Issue Price" means $10.00 per share of Common Stock.
"Issue Shares" means the 16,500,000 shares of Common Stock to be
issued and sold by the Company to the Purchaser at the Closing pursuant
to Article 2.
"knowledge", when used in reference to the Company, means the knowledge
of those officers of the Company identified in the Company Letter.
"Lien" means any mortgage, lien, security interest, pledge, lease
or other charge or encumbrance of any kind, including, without limitation,
the lien or retained security title of a purchase money creditor or
conditional vendor, and any easement, right of way or other encumbrance
on title to real property, and any agreement to give any of the foregoing.
"Material Adverse Effect" means a material adverse effect, or the
occurrence or existence of facts or circumstances reasonably expected
to result in a material adverse effect, on the business, assets,
results of operations, properties, financial or operating condition or
prospects of the Company and its subsidiaries taken as a whole, or the
ability of the Company (and, to the extent applicable, its subsidiaries)
to perform its (or their) obligations under this Agreement or consummate
the transactions contemplated hereby or by the other Transaction Documents.
For purposes of this definition a consolidated net loss by the Company
and its subsidiaries for the quarter ended June 30, 1995 of $45.3
million or less shall not be deemed to have a Material Adverse Effect.
"Notice of Superior Proposal" has the meaning set forth in Section 6.3.
"Offer" has the meaning set forth in Section 3.1.
"Offer Conditions" has the meaning set forth in Section 3.1.
"Offer Documents" has the meaning set forth in Section 3.4.
"Offer Price" means $10.00 per share of Common Stock.
"Offer Shares" means those shares of Common Stock, if any, purchased by
the Purchaser pursuant to the Offer.
"Permitted Liens" means (i) Liens (other than Liens imposed under
ERISA or any Environmental Law or in connection with any Environmental
Claim) for taxes or other assessments or charges of Governmental
Authorities that are not yet delinquent or that are being contested
in good faith by appropriate proceedings, in each case, with respect
to which adequate reserves or other appropriate provisions are being
maintained to the extent required by GAAP; (ii) statutory Liens of
landlords and mortgagees of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens (other than
Liens imposed under ERISA or any Environmental Law or in connection
with any Environmental Claim) imposed by law and created in the
ordinary course of business for amounts not yet more than 30 days
overdue or which are being contested in good faith by appropriate
proceedings, in each case, with respect to which adequate reserves
or other appropriate provisions are being maintained to the extent
required by GAAP; (iii) leases or subleases, easements, rights-
of-way, covenants, and consents which do not interfere materially with
the ordinary conduct of the business of the Company or any of its
subsidiaries or detract materially from the value of the property to
which they attach or materially impair the use thereof to the Company
and its subsidiaries; and (iv) Liens granted by the Company or any of
its subsidiaries to lenders pursuant to credit agreements in existence on
the date hereof.
"Preferred Stock" has the meaning set forth in Section 4.3.
"Proxy Materials" has the meaning set forth in Section 6.1.
"Returns" has the meaning set forth in Section 4.10.
"Rights" has the meaning ascribed thereto in the Rights Agreement.
"Rights Agreement" means that certain Rights Agreement by and
between the Company and The Bank of New York, as successor Rights
Agent, originally dated as of October 3, 1986, as amended April 28,
1988, July 7, 1988, May 24, 1991 and February 1, 1993, and any
extension thereof and any comparable or similar successor or
replacement agreement.
"Schedule 14D-1" has the meaning set forth in Section 3.4.
"Schedule 14D-9" has the meaning set forth in Section 3.5.2.
"SEC Reports" has the meaning set forth in Section 4.7.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" means issued and outstanding shares of Common Stock.
"Stockholder Proposals" means the transactions contemplated hereby,
including the issuance and sale to the Purchaser of the Issue Shares
and the purchase by the Purchaser of the Offer Shares, which
transactions shall be described in the Proxy Materials and submitted
to a vote of the Company's stockholders as set forth in Section 6.1.
"Superior Proposal" has the meaning set forth in Section 6.3.
"Tax" has the meaning set forth in Section 4.10.
"Third Party" means any person (including a "person" as defined in
Section 13(d)(3) of the ExchangeAct) or entity other than, or group not
including, the Purchaser or any Affiliate of the Purchaser or the Company.
"Third Party Acquisition" means (i) the acquisition by a Third Party
of more than twenty percent of the total assets of the Company or any
of its subsidiaries, (ii) the acquisition by a Third Party of twenty
percent or more of (a) the Shares or (b) the Total Voting Power or
(c) the equity securities of any subsidiary of the Company, or
(iii) any merger or other combination of the Company or any of
its subsidiaries with any Third Party.
"Total Voting Power" means, at any date, the total number of votes
that may be cast in the election of directors of the Company at
any meeting of stockholders of the Company held on such date assuming
all shares of Voting Stock were present and voted at such meeting,
other than votes that may be cast only by one class or series
of stock (other than Common Stock) or upon the happening of a
contingency.
"Transaction Documents" means this Agreement, the Company Letter,
the Offer Documents, the Schedule 14D-9 and the Amended Bylaws,
amendments thereof, and all annexes and exhibits hereto and thereto.
"Voting Stock" means Common Stock and all other securities of the
Company, if any, entitled to votegenerally in the election of directors.
ARTICLE 2.
SALE AND PURCHASE OF ISSUE SHARES
2.1. Sale and Purchase of the Shares. Upon the terms and subject
to satisfaction or waiver of all of the conditions set forth in
Article 7, at the Closing, the Company shall issue and sell to the
Purchaser, and the Purchaser shall purchase from the Company, the
Issue Shares in exchange for the Issue Price. The Purchaser shall pay
the Issue Price with respect to the Issue Shares to the Company at the
Closing by bank wire transfer of immediately available funds to an
account designated by the Company, or by such other means as is
acceptable to the Company and the Purchaser.
2.2. Closing and Deliveries. Subject to satisfaction or waiver of
all of the conditions set forth in Article 7, the Closing of the
purchase and sale of the Issue Shares shall take place on such date and
at such time as may be designated by the Purchaser within five
Business Days after the last to occur of satisfaction or waiver of the
conditions set forth in Article 7. Such Closing shall occur at the
offices of Mayer, Brown & Platt, 190 South LaSalle Street, Chicago,
Illinois 60603, or at such other place and time as the Purchaser and
the Company agree in writing.
2.2.1. Deliveries by the Purchaser. At the Closing, the Purchaser
shall deliver to the Company the following:
(a) the Issue Price with respect to the Issue Shares; and
(b) such other documents and instruments, duly executed to the extent
required, as may be reasonably requested by the Company in order to
consummate the transactions contemplated hereby.
2.2.2. Deliveries by the Company. At the Closing,
the Company shall deliver to the Purchaser the following:
(a) a certificate, or certificates in such denominations as may
be requested by the Purchaser, evidencing the Issue Shares; and
(b) such other documents and instruments, duly executed to the extent
required, as may be reasonably requested by the Purchaser in order to
consummate the transactions contemplated hereby.
ARTICLE 3.
THE OFFER
3.1. Commencement of the Offer. Provided that nothing shall
have occurred that would result in a failure to satisfy any of the
Offer Conditions, as promptly as practicable, but in no event later than
five Business Days, after the public announcement of the entering into
this Agreement by the parties, the Purchaser shall commence within
the meaning of Rule 14d-2 under the Exchange Act a tender offer (the
"Offer") to purchase for the Offer Price up to 18,619,000 Shares.
The obligations of the Purchaser to accept for payment, and pay for,
any Offer Shares tendered pursuant to the Offer shall be subject to (the
following being referred to as the "Offer Conditions") the purchase
by Purchaser of the Issue Shares, to be consummated simultaneously
with the purchase of the Offer Shares, and to the conditions that (i)
this Agreement shall not have been terminated, (ii) there shall be
validly tendered in accordance with the terms of the Offer prior to the
expiration date of the Offer and not withdrawn at least 18,619,000
Shares, and (iii) to the satisfaction or waiver of the other conditions set
forth in Annex A attached hereto.
3.2. Changes to the Offer. The Purchaser may increase
the Offer Price and may make any other changes in the terms and
conditions of the Offer, provided that, unless previously approved by
the Company in writing, the Purchaser may not (i) decrease the Offer
Price, (ii) change the form of consideration payable in the Offer, (iii)
decrease the maximum number of Shares sought pursuant to the Offer,
(iv) add to or modify the Offer Conditions or (v) otherwise amend the
Offer in any manner adverse to the Company's stockholders. Subject
to the terms and conditions thereof, the Offer shall expire at midnight,
New York City time, on the date that is sixty days from the date the
Offer is first published or sent to holders of Shares. The Purchaser
shall extend the Offer (A) if at the scheduled expiration date of the
Offer any of the Offer Conditions shall not have been satisfied or
waived, until such time as such Offer Conditions are satisfied or
waived and (B) for any period required by any rule, regulation,
interpretation or position of the Commission or the staff thereof
applicable to the Offer; provided, however, that Purchaser may
terminate the Offer if this Agreement is terminated.
3.3. Purchase. Provided that this Agreement shall not have
been terminated in accordance with Article 8 and provided that all
Offer Conditions shall have been satisfied or waived by the Purchaser
in accordance with this Article 3, the Purchaser shall accept for
payment and purchase, in accordance with the terms of the Offer,
Shares validly tendered and not withdrawn pursuant to the Offer (up to
the amount sought pursuant to the Offer or such greater amount as
Purchaser, in its sole discretion, shall determine) at the Closing. The
Offer Conditions are for the sole benefit of the Purchaser and may be
asserted by the Purchaser regardless of the circumstances giving rise to
any such condition or may be waived by the Purchaser, in whole or in
part at any time and from time to time, in the Purchaser's sole
discretion. The failure by the Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right
and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time. Any determination (which
shall be made in good faith) by the Purchaser with respect to any of the
foregoing conditions (including without limitation the satisfaction of
such conditions) shall be final and binding on the parties. The Offer
Price (to the extent, if any, adjusted pursuant to the Offer) shall be
paid net to the seller in cash, less any required withholding of taxes,
upon the terms and subject to the conditions of the Offer. It is the
intention of the Purchaser and the Company that the purchase by the
Purchaser of the Issue Shares be a condition to the purchase by the
Purchaser of the Offer Shares and that the purchase by the Purchaser
of the Offer Shares be a condition to the purchase by the Purchaser of
the Issue Shares.
3.4. Schedule 14D-1 and Other Offer Documents. On the
date the Offer is commenced, the Purchaser shall file with the
Commission a Tender Offer Statement on Schedule 14D-1 (together
with all amendments and supplements thereto, the "Schedule 14D-1")
with respect to the Offer. The Schedule 14D-1 shall contain as an
exhibit or incorporate by reference the Offer to Purchase (or portions
thereof) and form of the related letter of transmittal and summary
advertisement to be used in connection with the Offer (the Schedule
14D-1 and such other documents, together with any supplements
thereto or amendments thereof, being referred to herein collectively as
the "Offer Documents"). The Company shall provide to the Purchaser
in writing all information regarding the Company necessary
for the preparation of the Offer Documents, which information shall
be accurate and shall not contain any material misstatement of fact or
omit to state any material fact necessary to make the statements
included in such information, in light of the circumstances under
which they are made, not misleading. The Company and its counsel
shall be given a reasonable opportunity to review and comment on the
Offer Documents prior to the filing thereof with the Commission and
the distribution thereof to the Company's stockholders. The Purchaser
shall provide to the Company and its counsel any comments that the
Purchaser receives (directly or through its counsel) from the
Commission or its staff with respect to the Offer Documents promptly
after receipt of such comments. The Offer Documents shall comply in
all material respects with the provisions of applicable federal securities
laws and shall not, on the date the Offer Documents are filed with the
Commission and on the date first published, sent or given to the
Company's stockholders, as the case may be, contain any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made by the Purchaser
with respect to information supplied by the Company in writing
specifically for inclusion in the Offer Documents. The Purchaser and
the Company shall each promptly correct any information provided by
it for use in the Offer Documents if and to the extent that it shall have
become false or misleading in any material respect, and the Purchaser
shall promptly amend and supplement the Offer Documents if and to
the extent that they shall have become false or misleading in any
material respect and shall promptly cause the Offer Documents as so
amended and supplemented to be filed with the Commission and to be
disseminated to the Company's stockholders, in each case as and to the
extent required by applicable federal securities laws.
3.5. Actions by the Company.
3.5.1. Approval and Recommendation of Offer. The
Company hereby consents to the Offer and represents and
warrants that the Board, at its meeting duly called and held
on July 17, 1995, unanimously has (i) determined that this
Agreement and the transactions contemplated hereby,
including the Offer, are fair to and in the best interests of the
Company's stockholders, (ii) approved this Agreement and
the transactions contemplated hereby, including the Offer,
and such approval constitutes the Board's approval of the
acquisition by the Purchaser of the Offer Shares and the Issue
Shares and subsequent acquisitions of capital stock of the
Company for purposes of Section 203(a)(1) of the Delaware
General Corporation Law, and (iii) resolved to recommend
that the stockholders of the Company accept the Offer, tender
their Shares thereunder to the Purchaser and, to the extent
necessary or appropriate under applicable law or regulations,
approve and adopt the transactions contemplated by this
Agreement. The Company further represents and warrants
that Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch") has delivered to the Board its written
opinion dated July 17, 1995 to the effect that, as of the date of
such opinion, the proposed consideration to be received by the
Company and the holders of Shares is fair to the Company
and such holders from a financial point of view. The
Company has been authorized by Merrill Lynch to permit the
inclusion of such fairness opinion in the Offer Documents
and the Schedule 14D-9 referred to below and the Proxy
Materials referred to in Section 6.1.1. The Company hereby
consents to the inclusion in the Offer Documents of the
recommendations of the Board described in this Section 3.5.1.
3.5.2. Schedule 14D-9. Simultaneously with the
filing by the Purchaser of the Schedule 14D-1, the Company
shall file with the Commission a
Solicitation/Recommendation Statement on Schedule 14D-9
pertaining to the Offer (together with any amendments or
supplements thereto, the "Schedule 14D-9") containing the
Board's recommendation described in Section 3.5.1. The
Company shall, promptly following the commencement of the
Offer and, if practicable, simultaneously with the mailing by
Purchaser of the Offer Documents, mail the Schedule 14D-9
to the Company's stockholders. The Purchaser and its
counsel shall be given a reasonable opportunity to review and
comment on the Schedule 14D-9 prior to the filing thereof
with the Commission and its dissemination to the Company's
stockholders. The Company shall provide to the Purchaser
and its counsel any comments that the Company receives
(directly or through its counsel) from the Commission or its
staff with respect to the Schedule 14D-9 promptly after
receipt of such comments. The Schedule 14D-9 shall comply
in all material respects with the provisions of applicable
federal securities laws and shall not, on the date filed with the
Commission and on the date first published, sent or given to
the Company's stockholders, contain any untrue statement of
a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading, except that no representation is made
by the Company with respect to information supplied by the
Purchaser in writing specifically for inclusion in the Schedule
14D-9. The Purchaser and the Company shall each promptly
correct any information provided by it for use in the Schedule
14D-9 if and to the extent that it shall have become false or
misleading in any material respect, and the Company shall
promptly amend and supplement the Schedule 14D-9 if and
to the extent that it shall have become false or misleading in
any material respect and shall promptly cause the Schedule
14D-9 as so amended and supplemented to be filed with the
Commission and disseminated to the Company's stockholders
in each case as and to the extent required by applicable
federal securities laws.
3.5.3. Stockholder Information. In connection with
the Offer, the Company shall promptly furnish the Purchaser
with mailing labels, security position listings and any
available listing or computer files containing the names and
addresses of the record holders of the Shares as of a recent
date and shall furnish the Purchaser with such additional
information and assistance (including, without limitation,
updated lists of stockholders, mailing labels and lists of
securities positions) as the Purchaser or its agents may
reasonably request for the purpose of communicating the
Offer to the record and beneficial holders of Shares. Subject
to the requirements of applicable law, and except for such
steps as are necessary to disseminate the Offer Documents
and any other documents necessary to consummate the
transactions contemplated by this Agreement, the Purchaser
shall, and shall cause its Affiliates, associates, agents and
advisors to, hold the information contained in any such
labels, listings and files confidential and use such information
only in connection with the Offer, and, if this Agreement
shall be terminated, shall deliver to the Company all copies of
such information then in their possession or control.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser as
follows:
4.1. Organization and Standing; Charter and Bylaws.
The Company is a corporation duly incorporated, validly existing
under and by virtue of the laws of the State of Delaware and is in good
standing under such laws, and each of the Company's subsidiaries is a
corporation or similar entity under foreign laws duly organized,
validly existing, and in good standing under the laws of its jurisdiction
of incorporation, except where the failure to be in good standing, in
the case of foreign subsidiaries, would not reasonably be expected to
have a Material Adverse Effect. All the capital stock of each of the
Company's subsidiaries is duly authorized, validly issued, fully paid
and non-assessable and is, directly or indirectly, owned by the
Company (other than, in the case of any foreign subsidiary, directors',
officers' or other shares required to be held by other persons under
applicable law) free and clear of all Liens other than Permitted Liens
and except for transfer restrictions imposed by federal or state
securities laws or applicable foreign laws. There are no outstanding
rights to acquire any securities of any subsidiary of the Company. The
Company and each of its subsidiaries (i) are qualified, licensed or
domesticated as a foreign corporations in all jurisdictions where such
qualification, license or domestication is required to own and operate
their respective properties and conduct their respective businesses in
the manner and at the places presently conducted; (ii) hold all
franchises, grants, licenses, certificates, permits, consents and orders,
all of which are valid and in full force and effect, from all state, federal
and other domestic and foreign regulatory authorities necessary to own
and operate their respective properties and to conduct their respective
businesses in the manner and at the places presently conducted; and
(iii) have full power and authority (corporate and other) to own, lease
and operate their respective properties and assets and to carry on their
respective businesses as presently conducted and as proposed to be
conducted, except where the failure to be so qualified, licensed or
domesticated, or to hold such franchises, grants, licenses, certificates
permits, consents and orders or to have such power and authority
would not reasonably be expected to have a Material Adverse Effect.
The Company has made available to the Purchaser copies of the
Certificate of Incorporation, as amended to date, and the Bylaws of the
Company and each of its subsidiaries, as currently in effect, all
available minutes of meetings of the Board (including committees
thereof) and stockholders of the Company and the board of directors of
each of its subsidiaries, all written consents executed by the Board
(including committees thereof) and/or stockholders of the Company
and the board of directors of each of its subsidiaries, and the SEC
Reports. The documents so made available are true, correct and
complete copies of the original documents, contain all modifications,
amendments, deletions and revocations through the date of this
Agreement and subsequent dates as of which this representation is
deemed to be made and are in full force and effect. The Company is
not in violation of any of the provisions of its Certificate of
Incorporation or Bylaws and no subsidiary of the Company is in
violation of any of the provisions of such subsidiary's equivalent
organizational documents. The Company has heretofore furnished to
Purchaser a complete and correct list of the subsidiaries of the
Company, which list sets forth the amount of capital stock of or other
equity interests in such subsidiaries owned by the Company, directly or
indirectly. No entity in which the Company owns, directly or
indirectly, less than a 50% equity interest is, individually or when
taken together with all other such entities, material to the business of
the Company and its subsidiaries, taken as a whole.
4.2. Authority. The Company has all requisite corporate
power and authority to execute, enter into and carry out the terms and
conditions of this Agreement, each of the other Transaction
Documents to be executed and delivered by the Company, and all
other agreements and instruments contemplated hereby and thereby,
and to perform its obligations hereunder and thereunder. This
Agreement has been duly executed and delivered by the Company and
is, and the other Transaction Documents to be entered into by the
Company at or prior to the Closing will be, when executed and
delivered by the Company (and assuming this Agreement and such
other Transaction Documents to be entered into by the Purchaser
constitute legal, valid, and binding obligations of the Purchaser), legal,
valid and binding obligations of the Company, enforceable in
accordance with their respective terms, except that the enforceability
of this Agreement and the other Transaction Documents that are
contracts may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and that the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
4.3. Capital Stock. The authorized, issued and outstanding
capital stock of the Company consists solely of 150,000,000 shares of
Common Stock and 8,000,000 shares of preferred stock, par value
$1.00 per share (the "Preferred Stock"), of which 46,896,492 shares
of Common Stock and no shares of Preferred Stock were issued and
outstanding as of June 30, 1995. In addition, at such date not more
than 2,733,499 shares of Common Stock were reserved for issuance
upon exercise of options and warrants outstanding as of such date,
5,635,246 shares of Common Stock were reserved for issuance upon
conversion of the Company's 8.5% Senior Subordinated Convertible
Debentures due 2000, 1,200,000 shares of Common Stock were
reserved for issuance upon conversion of the Company's 8.5% Senior
Subordinated Convertible Debentures due 2001 and 3,680,000 shares
of Common Stock were reserved for issuance upon conversion of the
Company's 6 1/4% Convertible Debentures Due 2011 (the Company's
8.5% Senior Subordinated Convertible Debentures due 2000, 8.5%
Senior Subordinated Convertible Debentures due 2001 and 6 1/4%
Convertible Debentures Due 2011 are collectively referred to herein as
the "Convertible Debentures"). Additional shares of Common Stock
are reserved for issuance pursuant to the Rights Agreement. Since
such date (i) no shares of Common Stock have been issued except for
subsequent issuances, if any, pursuant to the foregoing reservations,
stock option agreements or Employee Benefit Plans and (ii) the
Company has not issued or granted any option, warrant, convertible
security or other right or agreement which affords any person the right
to purchase or otherwise acquire any shares of the Common Stock or
any other security of the Company other than options not prohibited by
this Agreement and granted in the ordinary course of business under
stock option and Employee Benefit Plans in existence on such date and
issuance of Rights pursuant to the Rights Agreement. Except pursuant
to the terms of the Convertible Debentures, the Company is not subject
to any obligation (contingent or otherwise) to purchase or otherwise
acquire or retire any of its securities. All of the issued and outstanding
securities of the Company have been duly authorized and validly
issued, are fully paid and non-assessable, and were issued in
compliance with all applicable state and federal laws regulating the
offer, sale or issuance of securities (assuming, in the case of issuances
not effected pursuant to an effective registration statement under the
Securities Act, compliance with all such laws by the persons to whom
such securities were issued or sold and by any transferee of such
persons). No person or entity has any right of first refusal or any
preemptive rights in connection with the issuance of the Issue Shares,
or with respect to any future offer, sale or issuance of securities by the
Company, other than rights of the Purchaser hereunder. The Issue
Shares to be purchased by the Purchaser have been duly authorized
and, when delivered pursuant to this Agreement, will be duly and
validly issued and outstanding, fully paid and non-assessable, and free
of any Liens or restrictions (unless created by the Purchaser or any of
its Affiliates), other than restrictions under applicable securities laws.
4.4. Governmental Consents. No consent, approval, order
or authorization of, or registration, qualification, designation,
declaration or filing with, any Governmental Authority ("Consent") is
required on the part of the Company or any of its subsidiaries in
connection with the transactions contemplated by this Agreement and
the other Transaction Documents, except (i) those required under HSR
and Exon-Florio, (ii) those required by federal and state securities
laws, (iii) filing reports with the U.S. Department of Commerce
regarding foreign direct investment in the United States and (iv) where
failure to obtain such Consent would not reasonably be expected to
have a Material Adverse Effect.
4.5. Compliance with Applicable Law. The Company and
its subsidiaries have and are in compliance with all licenses, permits,
and other authorizations necessary to conduct their respective
businesses, except where failure to have or comply with such licenses,
permits and authorizations would not reasonably be expected to have a
Material Adverse Effect. Neither the Company nor any of its
subsidiaries is in default or violation (and no event has occurred which
with notice or the lapse of time or both would constitute a default or
violation) of any judgment, decree, order, law, statute, rule or
regulation of any Governmental Authority, except for such defaults or
violations as would not reasonably be expected to have a Material
Adverse Effect. Subject to obtaining the governmental consents
referred to in Section 4.4, the execution, delivery, and performance of
this Agreement, the issuance and sale of the Issue Shares, and the
taking of the other actions contemplated by this Agreement and the
other Transaction Documents will not result in any default or violation
of any judgment, decree, order, law, statute, rule or regulation of any
Governmental Authority, except for such defaults or violations as
would not reasonably be expected to have a Material Adverse Effect
either individually or in the aggregate .
4.6. No Default. Neither the Company nor any of its subsidiaries
is in default or violation (and no event has occurred which
with notice or lapse of time or both would constitute a default or
violation) of its Certificate of Incorporation or Bylaws or other
governing document, or any material agreement, mortgage, indenture,
debenture, trust, lease, license, or other instrument or obligation to
or by which it or any of its properties is subject or bound (the
"Instruments"), except for such defaults or violations as would not
reasonably be expected to have a Material Adverse Effect either
individually or in the aggregate. The Company has no knowledge of
any default or breach (or event or circumstance that with notice or
lapse of time or both would constitute a breach or default) by other
parties to any Instrument, which default or breach would reasonably be
expected to have a Material Adverse Effect. Except as set forth in the
Company Letter and except pursuant to the terms of the Convertible
Debentures, the execution, delivery and performance of this Agreement,
the issuance and sale of the Issue Shares, and the taking of any
other action contemplated by this Agreement or the other Transaction
Documents, will not (i) result in any violation of or be in
conflict with or constitute a breach or default (with or without notice
or lapse of time or both) under (a) the Certificate of Incorporation or
Bylaws of the Company or (b) any of the other Instruments, breach of
or default under which would reasonably be expected to have a
Material Adverse Effect, (ii) result in or constitute an event entitling
any party to an Instrument to effect an acceleration of the maturity of
any material indebtedness of the Company or any of its subsidiaries or
an increase in the rate of interest presently in effect with respect to
such indebtedness, or (iii) result in the creation of any Lien upon any
of the material properties or assets of the Company or any of its
subsidiaries, subject, in the case of clauses (i)(b) and (ii), to the
Company's receipt of the amendments or waivers referred to in
Sections 7.2.6 and 7.2.10. prior to the Closing.
4.7. Reports and Financial Statements. The Company has
filed all required forms, reports and documents with the SEC since
January 1, 1992 (collectively, the "SEC Reports"), each of which
when filed complied in all material respects with all applicable
requirements of the Securities Act and the Exchange Act. As of their
respective dates, none of the SEC Reports, including, without
limitation, any financial statements or schedules included or
incorporated by reference therein, contained when filed, any untrue
statement of a material fact, or omitted when filed, to state a material
fact required to be stated or incorporated by reference therein or
necessary in order to make the statements therein, in light of the
circumstances under which made, not misleading. The audited
consolidated financial statements and unaudited consolidated interim
financial statements of the Company included in the SEC Reports
fairly present, in conformity with generally accepted accounting
principles applied on a consistent basis (except as may be indicated in
the notes thereto), the consolidated financial position of the Company
and its consolidated subsidiaries as of the dates thereof and their
consolidated results of operations and cash flows for the periods then
ended. The Company has heretofore made available to the Purchaser
complete and correct copies of each of the SEC Reports. Except as
reflected or reserved against in the audited consolidated balance sheet
of the Company and its subsidiaries at December 31, 1994, the
Company and its subsidiaries have no liabilities of any nature (whether
accrued, absolute, contingent or otherwise), except for liabilities
incurred in the ordinary course of business since December 31, 1994
and liabilities which would not, individually or in the aggregate, have
a Material Adverse Effect.
4.8. Absence of Changes. Except as and to the extent specifically
disclosed in the SEC Reports filed prior to the date of this
Agreement or as set forth in the Company Letter, since December 31,
1994, (i) none of the actions, events or circumstances listed in Section
6.2 has been taken or occurred or exists; (ii) there has not been one or
more events, occurrences or developments of a state of circumstances
or facts which individually or collectively has had or reasonably would
be expected to result in a Material Adverse Effect; and (iii) there has
not been one or more breaches or defaults or events that have resulted
or with notice or lapse of time or both would result in any breach or
default under any material contract of the Company or any of its
subsidiaries, except for any such breach or default or, if more than one,
any such breaches or defaults that individually or collectively would
not reasonably be expected to have a Material Adverse Effect.
4.9. Litigation. Except as specifically disclosed in the SEC
Reports filed prior to the date of this Agreement or as set forth in the
Company Letter, there are no actions, suits, claims, proceedings or
investigations (or, to the knowledge of the Company, any basis for any
person to assert any claim likely to result in liability or any other
adverse determination) pending against, or to the knowledge of the
Company, threatened against or affecting, the Company or any of its
subsidiaries or any of their respective properties before any
Governmental Authority which (i) individually or in the aggregate
would reasonably be expected to have a Material Adverse Effect; (ii) in
any manner challenges or seeks to prevent, enjoin, alter or delay the
Offer or any of the other transactions contemplated hereby; or (iii)
alleges criminal action or inaction. As of the date hereof, neither the
Company nor any of its subsidiaries nor any of their respective
properties is subject to any order, writ, judgment, injunction, decree,
determination or award having, or which would reasonably be
expected to have, a Material Adverse Effect or which would prevent or
delay the consummation of the transactions contemplated hereby.
4.10. Tax Matters. Except as set forth in the SEC Reports
filed prior to the date of this Agreement or as set forth in the Company
Letter, (a) the Company and its subsidiaries have filed, been included
in or sent, all material returns, declarations and reports and
information returns and statements required to be filed or sent by or
relating to any of them relating to any Taxes (as defined below) with
respect to any material income, properties or operations of the
Company or any of its subsidiaries (collectively, "Returns"); (b) as of
the time of filing, the Returns correctly reflected in all material
respects the income, business, assets, operations, activities and status
of the Company and its subsidiaries and any other information
required to be shown therein; (c) the Company and its subsidiaries
have timely paid or made provision for all material Taxes that have
been shown as due and payable on the Returns that have been filed; (d)
the Company and its subsidiaries have made or will make provision
for all material Taxes payable for any periods that end before the
Closing for which no Returns have yet been filed and for any periods
that begin before the Closing and end after the Closing to the extent
such Taxes are attributable to the portion of any such period ending at
the Closing; (e) the charges, accruals and reserves for taxes reflected
on the books of the Company and its subsidiaries are adequate to cover
the liabilities for Taxes accruing or payable by the Company and its
subsidiaries in respect of periods prior to the date hereof; (f) neither
the Company nor any of its subsidiaries is delinquent in the payment
of any material Taxes or has requested any extension of time within
which to file or send any material Return, which Return has not since
been filed or sent (except Returns with respect to which the time
within which to file (whether or not extended) has not expired as of
the date hereof); (g) no material deficiency for any Taxes has been
proposed, asserted or assessed in writing against the Company or any
of its subsidiaries (or any member of any affiliated or combined group
of which the Company or any of its subsidiaries is or has been a
member for which either the Company or any of its subsidiaries could
be liable) other than those Taxes being contested in good faith by
appropriate proceedings; (h) neither the Company nor any of its
subsidiaries has granted any extension of the limitation period
applicable to any material Tax claims other than those Taxes being
contested in good faith by appropriate proceedings; (i) neither the
Company nor any of its subsidiaries is subject to liability for Taxes of
any person (other than the Company or its subsidiaries), including,
without limitation, liability arising from the application of U.S.
Treasury Regulation section 1.1502-6 or any analogous provision of
state, local or foreign law; and (j) neither the Company nor any of its
subsidiaries is or has been a party to any material tax sharing
agreement with any corporation which is not currently a member of
the affiliated group of which the Company is currently a member.
"Tax" means with respect to any person (i) any net income,
gross income, gross receipts, sales, use, ad valorem, franchise, profits,
license, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property, value-added or windfall profit tax,
custom duty or other tax, governmental fee or other like assessment or
charge of any kind whatsoever, together with any interest and any
penalty, addition to tax or additional amount imposed by any taxing
authority (domestic or foreign) on such person and (ii) any liability of
the Company or any subsidiary for the payment of any amount of the
type described in clause (i) as a result of being a member of an
affiliated or combined group.
4.11. Registration Rights. The Company is not a party to
any agreement or commitment which obligates the Company to
register under the Securities Act any of its presently outstanding
securities or any of its securities which may hereafter be issued.
4.12. Offering. Subject to the accuracy of the Purchaser's
representations in Section 5.5, the offer, issuance and sale of the Issue
Shares will constitute transactions exempt from the registration and
prospectus delivery requirements of the Securities Act, and the
Company has obtained (or is exempt from the requirement to obtain)
all qualifications, permits, and other consents required by all
applicable United States state securities or blue sky laws and
regulations governing the offer, sale or issuance of the Issue Shares.
4.13. Insurance. The Company and its subsidiaries maintain
(i) adequate insurance on all assets and activities of a type customarily
insured by companies similarly situated, covering property damage
and loss of income by fire or other casualty, and (ii) adequate
insurance protection against all liabilities (including products
liability), claims and risks against which it is customary for companies
similarly situated as the Company and its subsidiaries to insure. The
Company and its subsidiaries have complied in all material respects
with all of their insurance policies and bonds.
4.14. Certain Transactions. Except as specifically set forth
in the SEC Reports filed prior to the date of this Agreement, (i) neither
the Company nor any of its subsidiaries is indebted directly or
indirectly to any of its officers or directors, or to members of their
respective immediate families, other than for payment of salary for
services rendered and reasonable expenses; and none of said officers or
directors or any members of their immediate families, are indebted to
the Company or any of its subsidiaries, and (ii) no transaction or series
of similar transactions in which the amount involved exceeds $60,000
has been effected between the Company or any of its subsidiaries and
any director or officer of the Company or any of its subsidiaries or any
members of their respective immediate families, other than
amendments to arrangements with officers of the Company in
substantially the forms and amounts provided to the Purchaser by the
Company in writing prior to the date hereof.
4.15. Employees and ERISA. The SEC Reports filed prior
to the date of this Agreement and the Company Letter describe in all
material respects all plans and arrangements pursuant to which the
Company or any of its subsidiaries is obligated to make any payment
or confer any benefit upon any officer, director, employee or agent of
the Company as a result of or in connection with any of the
transactions contemplated by this Agreement or any of the other
Transaction Documents or any transaction or transactions resulting in
a change of control of, or investment by a Third Party in, or
combination by a Third Party with, the Company or any of its
subsidiaries. To the Company's knowledge, no officer, director,
executive or key employee of the Company or any of its subsidiaries or
any group of employees of the Company or any of its subsidiaries has
any plans to terminate his, her or its employment with the Company or
any of its subsidiaries (other than as previously disclosed to the
Purchaser in writing). The Company and each of its subsidiaries has
complied with all laws relating to the employment of labor, including
provisions thereof relating to wages, hours, equal opportunity, and
collective bargaining except where the failure so to comply would not
reasonably be expected to have a Material Adverse Effect. No labor
dispute with employees of the Company or any of its subsidiaries exists
or, to the knowledge of the Company, is threatened, except as would
not reasonably be expected to have a Material Adverse Effect. Each
Employee Benefit Plan conforms in all material respects to, and its
administration is in conformity in all material respects with, all
applicable laws; no material liability under ERISA or the Internal
Revenue Code of 1986, as amended, has been or is expected to be
incurred by the Company or any of its subsidiaries with respect to any
Employee Benefit Plan except regular periodic contributions to such
plans; full payment has been made of all amounts that the Company
and its subsidiaries are required to have paid as contributions to each
Employee Benefit Plan; and there is not in the aggregate any
accumulated funding deficiency with respect to any Employee Benefit
Plan. To the Company's knowledge, the current value of accrued
benefits of each such plan does not exceed the current value of such
plan's assets; none of the Employee Benefit Plans is subject to Title IV
of ERISA; except as set forth in the Company Letter, none of the
Employee Benefit Plans is a multiemployer plan (as defined in section
3(37) of ERISA); the Company has made available to the Purchaser a
true and correct copy of each of the Employee Benefit Plans and all
contracts relating thereto, or to the funding thereof; there have been no
amendments to any Employee Benefit Plan which is an employee
pension benefit plan (within the meaning of section 3(2) of ERISA)
which are not the subject of a favorable determination letter issued
with respect thereto by the Internal Revenue Service; and actuarially
adequate accruals for all obligations under the Employee Benefit Plans
are reflected in the financial statements of the Company.
4.16. Intellectual Property. The Company and each of its
subsidiaries own or possess, or has all necessary rights and licenses in,
all patents, patent rights, licenses, inventions (whether or not
patentable or reduced to practice), copyrights (whether registered or
unregistered), know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems
or procedures), registered and unregistered trademarks, service marks
and trade names and other intellectual property rights (collectively,
"Intellectual Property") necessary to conduct its business as
conducted and proposed to be conducted to the extent that the failure
of the Company and its subsidiaries to own or have such rights and
licenses in such Intellectual Property would reasonably be expected to
have a Material Adverse Effect. Except as disclosed in the SEC
Reports filed prior to the date of this Agreement or as set forth in the
Company Letter, neither the Company nor any of its subsidiaries has
received any unresolved notice of, or is aware of any fact or
circumstance that would give any Third Party a right to assert,
infringement or misappropriation of, or conflict with, asserted rights
of others or invalidity or unenforceability of any Intellectual Property
owned by the Company or any of its subsidiaries with respect to any of
the foregoing which, singly or in the aggregate, would reasonably be
expected to have a Material Adverse Effect. The use of such
Intellectual Property to conduct the business and operations of the
Company and its subsidiaries as conducted or proposed to be
conducted does not infringe on the rights of any person in any case
where such infringement would reasonably be expected to have a
Material Adverse Effect. Except as set forth in the Company Letter, to
the knowledge of the Company, no person is challenging, infringing
on or otherwise violating any right of the Company or any of its
subsidiaries with respect to any Intellectual Property owned by and/or
licensed to the Company and its subsidiaries. Except as set forth in
the Company Letter, neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby or by the other
Transaction Documents will result in a loss or limitation in (i) the
rights and licenses of the Company or any of its subsidiaries to use or
enjoy the benefit of any Intellectual Property employed by them in
connection with their business as conducted or proposed to be
conducted or (ii) the amount of any royalties or other benefits received
by the Company from Intellectual Property owned by it.
4.17. Environmental Laws and Regulations. Except as
specifically set forth in the SEC Reports filed prior to the date of this
Agreement or as set forth in the Company Letter, (i) the Company and
each of its subsidiaries is in compliance with all applicable laws and
regulations of any Governmental Authority relating to pollution or
protection of human health or the environment (including, without
limitation, ambient air, surface water, ground water, land surface or
subsurface strata) (collectively, "Environmental Laws"), which
compliance includes, but is not limited to, the possession by the
Company and its subsidiaries of all permits and other governmental
authorizations required under applicable Environmental Laws, and
compliance with the terms and conditions thereof except for non-
compliance that individually or in the aggregate would not reasonably
be expected to have a Material Adverse Effect; (ii) neither the
Company nor any of its subsidiaries has received written notice of, or,
to the knowledge of the Company, is the subject of, any action, cause
of action, claim, investigation, demand or notice by any person or
entity alleging liability under or non-compliance with or requesting
information regarding compliance with any Environmental Law (an
"Environmental Claim") threatened against the Company or any of
its subsidiaries or, to the knowledge of the Company, against any
person or entity whose liability for any Environmental Claim the
Company or any of its subsidiaries has or may have retained or
assumed either contractually or by operation of law, except for such
Environmental Claims as, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect; (iii) to the
knowledge of the Company, there are no circumstances that would
reasonably be expected to prevent or interfere with such material
compliance in the future; (iv) there are no Hazardous Materials
presently constructed, deposited, stored, or otherwise located on,
under, in or about any property which has been owned, occupied or
otherwise operated by the Company, the investigation and remediation
of which would reasonably be expected to have Material Adverse
Effect; and (v) no Hazardous Materials have been sent offsite by or on
behalf of the Company from any property owned, occupied or
otherwise operated by the Company, except to the extent that any
investigation and remediation of such Hazardous Materials would not
reasonably be expected to have a Material Adverse Effect.
4.18. Brokers. No finder, broker, agent, financial advisor or
other intermediary other than Merrill Lynch has acted on behalf of the
Company in connection with any of the transactions contemplated by
this Agreement or any of the other Transaction Documents, or is
entitled to any payment in connection herewith or therewith. The fee
to which Merrill Lynch is entitled as a result of its activities on behalf
of the Company in connection with any of the transactions
contemplated hereby and by the other Transaction Documents shall
not exceed one percent of the aggregate purchase price of the Issue
Shares and the Offer Shares plus reimbursement of expenses
(including attorneys' fees and expenses) not to exceed $100,000,
exclusive of indemnification rights customary in transactions of the
type contemplated by this Agreement and the other Transaction
Documents.
4.19. Company Letter. The Company Letter is accurate in
all material respects.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Company as follows:
5.1. Organization, Good Standing, and Qualification.
The Purchaser is a corporation duly incorporated, validly existing, and
in good standing under the laws of the Republic of Korea and has all
necessary power and authority under applicable law to own its
property and to conduct its business as now owned and conducted.
5.2. Authority. The Purchaser has all requisite corporate
power and authority to execute, enter into and carry out the terms and
conditions of this Agreement, each of the other Transaction
Documents to be executed and delivered by the Purchaser, and all
other agreements and instruments contemplated hereby and thereby,
and to perform its obligations hereunder and thereunder. This
Agreement has been duly executed and delivered by the Purchaser and
is (and assuming this Agreement constitutes a legal, valid, and
binding obligation of the Company) a legal, valid and binding
obligation of the Purchaser, enforceable in accordance with its terms,
except that the enforceability of this Agreement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally
and that the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may
be brought.
5.3. No Violation. Neither the execution or delivery of this
Agreement nor the consummation of the transactions contemplated
hereby or by the other Transaction Documents, will conflict with or
result in the material breach of any term or provision of, or constitute a
default under, any charter provision, bylaw, material contract, order,
law or regulation to which the Purchaser is a party or by which the
Purchaser or any of its material assets or properties is in any way
bound or obligated.
5.4. Governmental Consents. No consent, approval, order
or authorization of, or registration, qualification, designation,
declaration or filing with, any Governmental Authority is required on
the part of the Purchaser in connection with the transactions
contemplated by this Agreement and the other Transaction Documents
to which the Purchaser is or is expected to be party, except (i) those
required under HSR and Exon-Florio, (ii) those required by federal
and state securities laws, (iii) approval by all necessary government
officials and agencies of the Republic of Korea, (iv) filing reports with
the U.S. Department of Commerce regarding foreign direct investment
in the United States, and (v) where failure to obtain such Consents
would not have a material adverse effect on the business, assets, results
of operations, properties or financial or operating condition of the
Purchaser and its subsidiaries taken as a whole, or the ability of the
Purchaser (and, to the extent applicable, its subsidiaries) to perform its
(or their) obligations under this Agreement or consummate the
transactions contemplated hereby or by the other Transaction
Documents. As of the date of this Agreement, the Purchaser has no
reason to believe that it will not obtain approval by all necessary
government officials and agencies of the Republic of Korea.
5.5. Securities Laws.
5.5.1. Investment Intent. The Issue Shares are being
acquired by the Purchaser solely for its own account, for
investment purposes only, and with no present intention of
distributing, selling or otherwise disposing of such shares.
The Purchaser understands that the Issue Shares will not have
been registered under the Securities Act and that any
disposition thereof by the Purchaser must be registered under
the Securities Act or exempt from such registration.
5.5.2. Sophistication. The Purchaser is able to bear
the economic risk of an investment in the Issue Shares
pursuant to this Agreement and can afford to sustain a total
loss on such investment, and has such knowledge and
experience in financial and business matters that it is capable
of evaluating the merits and risks of the proposed investment
and therefore has the capacity to protect its own interests in
connection with the purchase of the Issue Shares.
5.6. Offer and Proxy Materials. The Offer Documents to
be filed with the Commission and distributed to the Company's
stockholders pursuant to Section 3.4 (i) will comply in all material
respects with all applicable federal securities laws, and (ii) will not, on
the date first so filed and distributed, contain any statement which, at
such time and in light of the circumstances under which it is made, is
false or misleading with respect to any material fact or omit to state
any material fact necessary in order to make the statements therein not
false or misleading or necessary to correct any statement in any earlier
communication with respect to the solicitation of a proxy for the
meeting referred to in Section 6.1.2 which has become false or
misleading (except that no representation is made by the Purchaser
with respect to information supplied by the Company in writing for
inclusion in the Offer Documents), and thereafter the Purchaser will
supplement or correct the Offer Documents if and to the extent that
they shall be false or misleading in any material respect, subject to
correction by the Company of any information provided by the
Company for use in the Offer Documents to the extent it shall be false
or misleading in any material respect. None of the information
relating to the Purchaser supplied in writing by the Purchaser for
inclusion in the Schedule 14D-9 or the Proxy Materials will, at the
time they are first filed with the Commission or distributed to the
Company's stockholders, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, and thereafter the
Purchaser will correct such information if and to the extent it may be
false or misleading in any material respect.
5.7. Brokers. No finder, broker, agent, financial advisor,
or other intermediary other than Salomon Brothers Inc has acted on
behalf of the Purchaser in connection with any of the transactions
contemplated by this Agreement or any of the other Transaction
Documents, or is entitled to any payment in connection herewith or
therewith.
ARTICLE 6.
COVENANTS
6.1. Proxy Solicitation and Stockholder Approval.
6.1.1. Proxy Materials. As promptly as practicable
and in no event later than thirty days after the execution and
delivery of this Agreement, the Company shall prepare and
file with the Commission pursuant to the Exchange Act and
the rules promulgated thereunder preliminary proxy materials
related to the solicitation of proxies from the Company's
stockholders to approve the Stockholder Proposals, and
thereafter shall use its best efforts to respond to any comments
of the Commission with respect thereto and to distribute a
proxy statement and related proxy materials with respect
thereto (the "Proxy Materials") to the Company's
stockholders as soon as practicable after the date hereof but in
any event not later than October 15, 1995. The Purchaser
shall provide to the Company in writing all information
regarding the Purchaser necessary for the preparation of the
Proxy Materials, which information shall not contain any
statement which, at the time and in light of the circumstances
under which it is made, is false or misleading with respect to
any material fact, or omit to state any material fact necessary
in order to make the statements therein not false or
misleading or necessary to correct any statement in any
earlier communication with respect to the solicitation of a
proxy for the meeting referred to in Section 6.1.2 which has
become false or misleading. The Purchaser and its counsel
shall be given an opportunity to review the Proxy Materials
prior to the filing thereof with the Commission and
distribution thereof to the Company's stockholders. The
Company shall provide to the Purchaser and its counsel any
comments that the Company receives (directly or through its
counsel) from the Commission or its staff with respect to the
Proxy Materials promptly after receipt of such comments.
The Proxy Materials (i) shall comply in all material respects
with applicable federal securities laws, and (ii) when first
filed in final form with the Commission and distributed to the
Company's stockholders and on the date of the special
meeting of stockholders shall not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading, except that no representation
is made by the Company with respect to information supplied
by the Purchaser for inclusion in the Proxy Materials. The
Company shall thereafter supplement or correct the Proxy
Materials if and to the extent that they shall have become
false or misleading in any material respect, subject to
correction by the Purchaser of any information provided by it
for use in the Proxy Materials to the extent it shall be false or
misleading in any material respect. The Proxy Materials
shall include the Board's recommendation that the Company's
stockholders grant proxies to approve the Stockholder
Proposals; provided, however, that such recommendation may
be withdrawn, modified or amended if and to the extent the
Board determines in good faith, after consultation with and
based upon written advice of outside legal counsel, that a
failure to do so would be contrary to its fiduciary obligations.
6.1.2. Stockholders' Meeting. As promptly as practicable,
the Company shall schedule and set a record date for a special
meeting of its stockholders to occur not later than December
1, 1995 at which the Stockholder Proposals will be submitted
to a vote of the Company's stockholders. The Company shall
conduct such stockholders' meeting and shall take all
reasonable actions thereat and in connection therewith,
consistent with its Certificate of Incorporation and Bylaws
and applicable law, as may be required to obtain stockholder
approval of the Stockholder Proposals, including, without
limitation, causing all proxies received from the Company
stockholders to vote on the Stockholder Proposals to be voted
in accordance with the instructions set forth therein. The
Stockholder Proposals shall be deemed approved if they
receive a majority of votes cast, in person or by proxy, at the
stockholders' meeting; provided that, the total votes cast at
the meeting shall represent over fifty percent in interest of all
securities entitled to vote at the meeting. Notwithstanding the
foregoing, the Company may decline to take any action
required by this Section 6.1.2 if and to the extent the Board
determines in good faith, after consultation with and based
upon written advice of outside legal counsel, that taking such
action would be contrary to its fiduciary obligations.
6.2. Conduct of Business of the Company. Except as
contemplated by this Agreement or agreed to in writing by Purchaser,
during the period from the date hereof until the Closing, the
businesses and operations of the Company and each of its subsidiaries
shall be conducted in the ordinary course of business consistent with
past practice, and the Company and its subsidiaries will each use its
best efforts to preserve intact its business organization, to keep
available the services of its officers and employees and to maintain
existing relationships with licensors, licensees, suppliers, contractors,
distributors, customers and others having business relationships with
it. Without limiting the generality of the foregoing, and except as
otherwise expressly approved by the Purchaser in writing, neither the
Company nor any of its subsidiaries shall, prior to the Closing:
(a) authorize for issuance, issue, sell, deliver or
agree or commit to issue, sell or deliver (whether
through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or
otherwise) any Voting Stock or any other securities or
equity equivalents (including, without limitation, any
stock options or stock appreciation rights), except as
required by agreements as in effect as of the date hereof
or by the Convertible Debentures and except for grants
made under existing Employee Benefit Plans consistent
in amounts and terms with past practice to (i)
employees other than officers and directors, and (ii)
persons who become officers or directors of the
Company after the date of this Agreement, or amend
any of the terms of any such securities or agreements
outstanding as of the date hereof (except for
amendments to arrangements with officers and
directors of the Company in substantially the forms and
amounts provided to the Purchaser by the Company in
writing prior to the date hereof);
(b) split, combine or reclassify any shares of its
capital stock, declare, set aside or pay any dividend or
other distribution (whether in cash, stock or property or
any combination thereof) in respect of its capital stock,
or redeem or otherwise acquire any of its securities
(other than as required in accordance with their terms
as in effect on the date hereof) or any securities of its
subsidiaries not owned directly or indirectly by the
Company;
(c) (i) incur or assume any long-term or short-
term debt or issue any debt securities except for
borrowings under existing lines of credit in the
ordinary course of business, (ii) assume, guarantee,
endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the
obligations of any other person except in the ordinary
course of business and in amounts not material to the
Company and its subsidiaries taken as a whole, and
except for obligations of subsidiaries of the Company
that are wholly owned by the Company or that are
foreign subsidiaries wholly owned by the Company
except for directors', officers', or other shares required
to be held by other persons under applicable law, (iii)
make any loans, advances or capital contributions to, or
investments in, any other person (other than customary
advances to officers and employees (other than outside
directors of the Company) in connection with travel on
Company business and loans to subsidiaries of the
Company that are wholly owned by the Company or
that are foreign subsidiaries wholly owned by the
Company except for directors', officers', or other shares
required to be held by other persons under applicable
law, in each case in the ordinary course of business and
in amounts not material to the Company and its
subsidiaries taken as a whole), (iv) pledge or otherwise
encumber shares of capital stock of the Company or any
of its subsidiaries, or (v) mortgage or pledge any of its
material assets, tangible or intangible, or create any
Lien thereupon other than Permitted Liens;
(d) except as may be required by law or as
contemplated by this Agreement, enter into, adopt, or
amend or terminate any bonus, profit sharing,
compensation, severance, termination, stock option,
stock appreciation right, restricted stock, performance
unit, stock equivalent, stock purchase agreement,
pension, retirement, deferred compensation,
employment, severance or other Employee Benefit
Plan; or enter into or amend any employment or
severance agreement with, increase in any manner the
salary, wages, bonus, commission, or other
compensation or benefits of any director or officer of
the Company or any of its subsidiaries except that the
Company may enter into employment, severance, or
other employee benefit agreements in the ordinary
course of business and consistent with the past practice
with officers hired after the date hereof; or increase in
any manner the salary, wages, bonus, commission, or
other compensation or benefits of any employee or
agent (other than directors and officers) of the
Company or any of its subsidiaries, except for increases
in the ordinary course of business and consistent with
past practice or amendments to arrangements with
officers and directors of the Company in substantially
the forms and amounts provided to the Purchaser by the
Company in writing prior to the date hereof; or pay any
benefit not required by any plan and arrangement as in
effect as of the date hereof (including, without
limitation, the granting of stock appreciation rights or
performance units);
(e) acquire, sell, lease or dispose of any assets
(including, without limitation, patents, trademarks,
copyrights, trade secrets, or other intangible assets)
outside the ordinary course of business consistent with
past practice or any assets that in the aggregate are
material to the Company and its subsidiaries taken as a
whole, or take any action that would materially and
adversely affect the Intellectual Property rights of the
Company;
(f) except as may be required by GAAP or as a
result of a change in law, change any of the accounting
principles, tax accounting methods or tax elections used
by it or revalue in any material respect any of its assets,
including, without limitation, writing down the value of
inventory or writing-off notes or accounts receivable
other than in the ordinary course of business;
(g) (i) acquire (by merger, consolidation, or
acquisition of stock or assets) any corporation,
partnership or other business organization or division
thereof or any equity interest therein, or (ii) authorize
any new capital expenditure or expenditures;
(h) amend or propose to amend its Certificate of
Incorporation or Bylaws (other than as contemplated
hereby) or alter through merger, liquidation,
reorganization restructuring or in any other fashion the
corporate structure or ownership of any subsidiary;
(i) enter into any agreement providing for acceleration or
payment or performance or other consequence as a
result of a change of control of the Company or its
subsidiaries;
(j) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment,
discharge or satisfaction in the ordinary course of
business consistent with past practice or in accordance
with their terms, of liabilities reflected or reserved
against in the consolidated financial statements (or the
notes thereto) of the Company and its consolidated
subsidiaries or incurred in the ordinary course of
business consistent with past practice;
(k) enter, or permit any of its subsidiaries to enter, into any
joint venture, partnership or exclusive licensing
agreement with any Third Party that (i) involves an
explicit or projected commitment of cash and/or other
resources of the Company and/or of its subsidiaries or
forecasted payments to or from the Company and/or its
subsidiaries during the duration of such agreement or
relationship in excess of $1 million in the aggregate,
and (ii) restricts or impairs in any material respect the
ability or right of the Company or any of its
subsidiaries to compete in any line of business or
product which is material to the business of the
Company and its subsidiaries, taken as a whole.
(l) take, or agree in writing or otherwise to take, any of the
actions described in Sections 6.2(a) through 6.2(k).
6.3. Other Potential Bidders. The Company and its
Affiliates and their respective officers, directors, employees,
representatives and agents shall immediately cease any existing
discussions or negotiations with any parties conducted heretofore with
respect to any Third Party Acquisition. The Company agrees that it
will not, unless and until this Agreement is terminated in accordance
with its terms, directly or indirectly:
(1) initiate, solicit or encourage any discussions
with any Third Party regarding any Third
Party Acquisition, or
(2) hold any such discussions with Third Parties
(whether or not such discussions have
heretofore been held with such Third Party) or
enter into any agreement with any party other
than the Purchaser concerning any Third Party
Acquisition;
provided, however, that if and to the extent the Board determines in
good faith, after consultation with and based upon written advice of
outside legal counsel, that a failure to do so would be contrary to its
fiduciary obligations, the Company may (A) in response to a request
therefor, furnish information with respect to the Company to any
person pursuant to a customary confidentiality agreement and discuss
such information with such person and (B) upon receipt by the
Company of a proposal with respect to a Third Party Acquisition,
following delivery to the Purchaser of the Notice of Superior Proposal
described below, participate in negotiations regarding such proposal.
Subject to the following sentence, the Board shall not (i)
approve or recommend any Third Party Acquisition or (ii) approve or
authorize the Company's entering into any agreement with respect to
any such Third Party Acquisition. Notwithstanding the foregoing, in
the event the Board receives a Superior Proposal (as defined below),
the Board may (subject to the following sentences and compliance with
Section 8.1 and 8.2), if and to the extent the Board determines in good
faith, after consultation with and based upon written advice of outside
legal counsel, that a failure to do so would be contrary to its fiduciary
obligations, approve or recommend any such Superior Proposal,
approve or authorize the Company's entering into an agreement with
respect to such Superior Proposal, approve the solicitation of
additional takeover or other investment proposals or terminate this
Agreement, in each case at any time after the fifth Business Day
following notice to the Purchaser (a "Notice of Superior Proposal")
advising the Purchaser that the Board has received a Superior Proposal
and specifying the structure and material terms of such Superior
Proposal. The Company may take any of the foregoing actions
pursuant to the preceding sentence only if a proposal for a Third Party
Acquisition that was a Superior Proposal at the time of delivery of a
Notice of Superior Proposal continues to be a Superior Proposal in
light of any improved transaction proposed by the Purchaser prior to
the expiration of the five Business Day period specified in the
preceding sentence. For purposes of this Agreement, a "Superior
Proposal" means any bona fide proposal for a Third Party Acquisition
that the Board determines in its good faith reasonable judgment (based
on the advice of a financial advisor of nationally recognized
reputation) to provide greater aggregate value to the Company and/or
the Company's stockholders than the transactions contemplated by this
Agreement (or otherwise proposed by the Purchaser as contemplated
above). Nothing contained herein shall prohibit the Company from
taking and disclosing to its stockholders a position contemplated by
Rule 14e-2(a) under the Exchange Act prior to the fourth Business
Day following the Purchaser's receipt of a Notice of Superior Proposal,
provided that the Company does not approve or recommend a proposal
until after the fifth Business Day following a Notice of Superior
Proposal.
6.4. Access to Information; Confidentiality.
6.4.1. Access. Between the date hereof and the Closing,
the Company shall give the Purchaser and its authorized
representatives access to all employees, plants, offices,
warehouses and other facilities and to all books and records of
the Company and its subsidiaries, shall permit the Purchaser
to make such inspections as the Purchaser may reasonably
require and shall cause the Company's officers and those of
its subsidiaries to furnish the Purchaser with such financial
and operating data and other information with respect to the
business and properties of the Company and any of its
subsidiaries as the Purchaser may from time to time
reasonably request.
6.4.2. Confidentiality. Any Confidential Information (as
defined in the Confidentiality Agreement) disclosed by the
Purchaser or the Company to the other pursuant hereto or in
connection with the transactions contemplated by this
Agreement or the other Transaction Documents shall be
subject to and handled by the Purchaser and the Company in
accordance with the Confidentiality Agreement; provided,
however, that notwithstanding the Confidentiality
Agreement, (i) the Confidential Information may be used for
purposes of effecting the transactions contemplated by this
Agreement and the other Transaction Documents as well as
for evaluation thereof, (ii) return and destruction of
Confidential Information pursuant to the Confidentiality
Agreement shall be subject to the needs of the parties to use
such Confidential Information in connection with the
transactions and activities contemplated by this Agreement
and the other Transaction Documents and to the right of each
party to its work product, and (iii) the Confidentiality
Agreement shall not vitiate or alter any representation,
warranty, or covenant set forth herein or in any other
Transaction Document.
6.5. Additional Agreements; Reasonable Efforts. Subject to
the terms and conditions herein provided, each of the parties hereto
shall as promptly as practicable use all reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
reasonably necessary, proper or advisable under applicable laws and
regulations to cause satisfaction of the conditions (including as set
forth in Article 7) to, and to consummate and make effective, the
transactions contemplated by this Agreement and the other
Transaction Documents. Without limiting the generality of the
foregoing, Purchaser and the Company shall cooperate with one
another (i) in the preparation and filing of the Offer Documents, the
Schedule 14D-9, the Proxy Statement and any required filings under
the HSR Act and the other laws referred to in Sections 4.4 and 5.4; (ii)
in determining whether action by or in respect of, or filing with, any
governmental body, agency, official or authority (either domestic or
foreign) is required, proper or advisable or any actions, consents,
waivers or approvals are required to be obtained from parties to any
contracts, in connection with the transactions contemplated by this
Agreement; and (iii) in seeking timely to obtain any such actions,
consents and waivers and to make any such filings. In case at any
time after the date hereof any further action is necessary or desirable to
carry out the purposes of this Agreement, the proper officers and
directors of each party hereto shall take all such necessary action.
Notwithstanding the foregoing, the Company may decline to take any
action required by this Section 6.5 if and to the extent the Board
determines in good faith, after consultation with and based upon
written advice of outside legal counsel, that taking such action would
be contrary to its fiduciary obligations.
6.6. HSR and Exon-Florio. As soon as practicable after
the date hereof, the Purchaser and the Company shall jointly prepare
and file with the United States Federal Trade Commission (the
"FTC"), the Antitrust Division of the United States Department of
Justice ("Antitrust Division") and CFIUS notification and report
forms, as applicable, with respect to the sales and purchases
contemplated by this Agreement pursuant to HSR and Exon-Florio and
the regulations promulgated thereunder. Such notification and report
forms shall materially comply as to form with all requirements
applicable thereto, and all of the data and information supplied by the
parties and reported in such forms shall be true, correct and complete
in all material respects. The Purchaser and the Company shall comply
promptly with a request for additional information and documents
from the FTC, Antitrust Division or CFIUS, and shall cooperate in any
review or investigation by the FTC, Antitrust Division, or CFIUS of
the transactions contemplated by this Agreement in a joint effort to
have any such review or investigation resolved without adverse effect
upon the transactions contemplated hereby.
6.7. Public Announcements. Neither the Purchaser nor the
Company shall, directly or indirectly, issue any press release with
respect to the transactions contemplated by this Agreement without
consulting with the other except as may be required by applicable law
or by obligations pursuant to any listing agreement with the New York
Stock Exchange (or any other securities exchange upon which the
Company's securities are traded).
6.8. Amendment of Rights Agreement. The Company and
its directors shall take (or shall have taken) all necessary action to
amend, prior to the tenth day following the date of this Agreement, the
Rights Agreement to (i) specifically exclude the Purchaser and its
Affiliates from the definition of "Acquiring Person" (as defined in the
Rights Agreement) and (ii) otherwise avoid the occurrence of any
adverse consequence to the Purchaser or the Company, including,
without limitation, the occurrence of a Distribution Date (as defined in
the Rights Agreement) pursuant to the Rights Agreement, as a
consequence of the transactions contemplated hereby and by the other
Transaction Documents.
6.9. Notification of Certain Matters. The Company shall
give prompt notice to the Purchaser, and the Purchaser shall give
prompt notice to the Company, of any material breach, or the
occurrence or nonoccurrence of any event that with notice or lapse of
time or both would be a material breach, of any representation or
warranty or covenant, condition or agreement contained in this
Agreement, provided, however, that the delivery of any notice
pursuant to this Section 6.9 shall not cure such breach or limit or
otherwise affect the remedies available hereunder to the party
receiving such notice. For purposes of this Section 6.9, "prompt
notice" shall mean notice delivered within two Business Days after the
Company obtains knowledge of the breach, occurrence, or
nonoccurrence precipitating such notice.
6.10. Disclosure. The Company shall deliver to the
Purchaser promptly (but in any event within two Business Days) after
transmission thereof, copies of any general written communication
from the Company or any of its subsidiaries to its stockholders
generally, or the financial community at large, and any reports and
amendments thereto filed by the Company or any of its subsidiaries
with the New York Stock Exchange, any other securities exchange, or
the Commission.
6.11. Election of Directors.
6.11.1. Directors. Immediately following the Closing, the
Board shall consist of ten directors. Six of such directors
shall be designees of Purchaser, one of such directors shall be
the Company's President and Chief Executive Officer
immediately prior to the Closing and three of such directors
shall be Independent Directors who are, if they are willing to
serve, members of the Board immediately prior to the
Closing. The parties shall use their best efforts to obtain the
resignations of certain existing directors, and to provide for
the appointment of Purchaser's designees, in order to
effectuate the immediately preceding sentence.
6.11.2. Compliance with Section 14(f). The provisions of
this Section 6.11 shall be subject to Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder. The
Company shall promptly take all actions required pursuant to
Section 14(f) and Rule 14f-1 in order to fulfill its obligations
under this Section 6.11 and shall include in the Schedule
14D-9 such information with respect to the Company and its
officers and directors as is required under Section 14(f) and
Rule 14f-1. Purchaser will supply to the Company in writing
and be solely responsible for any information with respect to
either of them and their nominees, officers, directors and
affiliates required by Section 14(f) and Rule 14f-1.
6.12. Director and Officer Liability. (a) From and after the
Closing, Purchaser shall (as long as it controls the Company) cause
the Company to indemnify and hold harmless each person who is, or
has been at any time prior to the date hereof or who becomes prior to
the Closing, an officer or director of the Company or is or was serving
at the request of the Company as a director or officer of an Affiliate of
the Company, an Employee Benefit Plan or related trust, in respect of
acts or omissions occurring prior to the Closing (the "Indemnified
Parties") (including but not limited to the transactions contemplated
by this Agreement) to the extent provided under the Company's
Certificate of Incorporation, Bylaws and Indemnity Agreements
between the Company and any of its officers ("Indemnity
Agreements") in effect on the date hereof and, with respect to the
Company's Certificate of Incorporation and Bylaws, shall not permit
the amendment of such provisions in any manner adverse to the
Indemnified Parties for a period of three years from and after the date
hereof; provided, however, that such indemnification shall be subject
to any limitation imposed from time to time under applicable law. For
six years after the Closing, Purchaser shall (as long as it controls the
Company) cause the Company to maintain current policies of officers'
and directors' liability insurance maintained by the Company
(provided that the Company may substitute therefor policies of a least
the same coverage containing terms and conditions substantially
equivalent) with respect to the acts or omissions occurring prior to the
Closing, including but not limited to the transactions contemplated by
this Agreement, covering each Person currently covered by the
Company's officers' and directors' liability insurance policy, or who
becomes covered by such policy prior to the Closing; provided that in
satisfying its obligation under this Section, the Company shall not be
obligated to pay premiums in excess of 150% of the premium to be
paid by the Company for such insurance in the fiscal year ending
December 31, 1995, which amount has been disclosed to Purchaser,
but provided further that the Company shall nevertheless be obligated
to provide such coverage as may be obtained for 150% of the premium
to be paid by the Company for such insurance in the fiscal year ending
December 31, 1995.
(b) Except as otherwise set forth in the Indemnity
Agreements, any determination to be made as to whether any
Indemnified Party has met any standard of conduct imposed by law
shall be made by legal counsel reasonably acceptable to such
Indemnified Party and Purchaser, retained at the Company's expense.
(c) This Section 6.12 intended to benefit the Indemnified
Parties, their heirs, executors and personal representatives and shall be
binding on successors and assigns of Purchaser.
(d) In the event any Indemnified Party is or becomes
involved in any capacity in any action, proceeding or investigation for
which he or she has a claim for indemnification against the Company
under its Certificate of Incorporation or Bylaws or under an Indemnity
Agreement, including without limitation, the transactions
contemplated by this Agreement, Purchaser shall (as long as it
controls the Company) cause the Company to pay as incurred such
Indemnified Party's legal and other expenses actually and reasonably
incurred in connection therewith upon receipt of an undertaking by or
on behalf of such Indemnified Party to repay such amount if it shall
ultimately be determined that he or she is not entitled to be
indemnified by the Company.
6.13. Change in Control. The Purchaser hereby
acknowledges that the transactions contemplated by this Agreement
and the other Transaction Documents will trigger certain "change of
control" provisions contained in agreements identified in the Company
Letter (including therewith a schedule of (i) payments required to be
made thereunder, (ii) stock options which vest and (iii) restricted
shares which vest) between the Company and certain of its officers and
agrees that, after the Closing, the Company shall perform each of its
obligations pursuant to such agreements.
ARTICLE 7.
CONDITIONS TO PURCHASE AND SALE OF ISSUE SHARES
7.1. Conditions to Obligations of the Purchaser and the
Company. The obligations of the Purchaser to purchase the Issue
Shares from the Company, and of the Company to issue and sell the
Issue Shares to the Purchaser, are subject to satisfaction or waiver of
the following conditions at the Closing:
7.1.1. Stockholder Approval. The Company's stockholders
shall have approved the Stockholder Proposals.
7.1.2. No Prohibition. No statute, rule, regulation,
judgment, order, decree, ruling, injunction, or other action
shall have been entered, promulgated or enforced by any
Governmental Authority that purports, seeks, or threatens to
(i) prohibit, restrain, enjoin, or restrict in a material manner,
the purchase and sale of any Issue Shares as contemplated by
this Agreement, or (ii) impose material adverse terms or
conditions (not set forth herein) upon the purchase and sale of
any Issue Shares as contemplated by this Agreement.
7.1.3. Regulatory Compliance. All material filings
with all Governmental Authorities required to be made in
connection with the purchase and sale of the Issue Shares as
contemplated by this Agreement shall have been made, all
waiting periods thereunder shall have expired or terminated
and all material orders, permits, waivers, authorizations,
exemptions, and approvals of such entities required to be in
effect on the date of the Closing in connection with the
purchase and sale of the Issue Shares as contemplated by this
Agreement shall have been issued, all such orders, permits,
waivers, authorizations, exemptions or approvals shall be in
full force and effect on the date of the Closing; provided,
however, that no provision of this Agreement shall be
construed as requiring any party to accept, in connection with
obtaining any requisite approval, clearance or assurance of
non-opposition, avoiding any challenge, or negotiating any
settlement, any condition that would (i) materially change or
restrict the manner in which the Company or the Purchaser
conducts or proposes to conduct its businesses, or (ii) impose
material terms or conditions (not set forth herein) upon the
purchase and sale of any Issue Shares as contemplated by this
Agreement.
7.1.4. Exon-Florio. The Purchaser and the Company
shall have delivered to CFIUS the voluntary notice described
in Section 6.6, and (i) more than thirty days shall have passed
from the calendar day following acceptance by CFIUS of such
notice without advice from CFIUS of the commencement of
an investigation of the transactions contemplated by this
Agreement, (ii) the Purchaser and the Company shall have
been advised by CFIUS that CFIUS has determined not to
undertake an investigation of the transactions contemplated
by this Agreement, or (iii) if CFIUS commences an
investigation of the transactions contemplated hereby, such
investigation shall have been resolved to the mutual
satisfaction of the Purchaser and the Company.
7.2. Conditions to Obligations of the Purchaser. In addition
to the conditions set forth in Section 7.1, the obligation of the
Purchaser to purchase from the Company any Issue Shares is subject to
satisfaction or waiver of the following conditions at the Closing of
such purchase:
7.2.1. Directors. Provision shall have been made to the
satisfaction of the Purchaser that the Board will have the
composition described in Section 6.11.1.
7.2.2. Performance. The Company shall have
performed in all material respects its obligations under this
Agreement to the date of the Closing.
7.2.3. Amended Bylaws. The Amended Bylaws shall
have been duly authorized, approved and effected.
7.2.4. Amendment of Rights Agreement. The
Amendment to Rights Agreement shall have become effective
as contemplated by Section 6.8.
7.2.5. Tender of Shares. There shall have been
validly tendered and not withdrawn pursuant to the Offer not
less than 18,619,000 Shares.
7.2.6. Closing Deliveries. The Company shall have
delivered, or shall be delivering concurrently with the
Closing, the documents and instruments required to be
delivered by the Company pursuant to Section 2.2.2.
7.2.7. Representations and Warranties True. Except
as otherwise contemplated by this Agreement and except for
the representations and warranties of the Company set forth
in Section 4.3 which shall be accurate in all respects as of the
date when made and at and as of the Closing as though newly
made at and as of that time, the representations and
warranties of the Company contained in this Agreement
which are qualified as to materiality (which shall include
Section 4.8) shall be true and correct and which are not so
qualified shall be true and correct in all material respects, in
each case, as of the date when made and at and as of the
Closing as though newly made at and as of that time, except
that the Company's financial statements shall continue to be
true only as of the respective dates covered thereby.
7.2.8. Certificate. The Company shall have
delivered to the Purchaser a certificate dated as of the Closing
and signed by the Chief Financial Officer and General
Counsel of the Company certifying as to (i) the accuracy, as
of the date when made and at and as of the Closing as though
newly made at and as of that time, of the representations and
warranties of the Company set forth in Section 4.3 and the
representations and warranties of the Company contained in
this Agreement which are qualified as to materiality, (ii) the
accuracy, as of the date when made and at and as of the
Closing as though newly made at and as of that time, in all
material respects of the representations and warranties of the
Company contained in this Agreement which are not so
qualified; provided that the Company's representations and
warranties contained in this Agreement as to the Company's
financial statements shall continue to be true only as of the
respective dates covered thereby and (iii) the performance of
the obligations required by the Company to be performed
under this Agreement as of the Closing.
7.2.9. Credit Agreements. The Company shall have
secured amendments to or waivers under, in each case, in
form and substance reasonably satisfactory to the Purchaser,
its material credit agreements and arrangements such that
none of the transactions contemplated by this Agreement or
the other Transaction Documents will constitute a breach or
default of or an event that, with notice or lapse of time or both
would be a breach or default, under such credit agreements or
arrangements.
7.2.10. Items in Company Letter. Purchaser shall be
satisfied that the claims and matters described in Item D of
Schedule 4.16A to the Company Letter and Items 1, 8, 9 and
10 of Schedule 4.17 to the Company Letter, individually,
collectively with each other or collectively with any breaches
of representations and warranties and/or other facts and
circumstances, which have not been disclosed as of the date of
this Agreement have not resulted in, and would not
reasonably be expected to result in, a Material Adverse Effect.
7.3. Conditions to Obligations of the Company. In
addition to the conditions set forth in Section 7.1, the obligation of the
Company to issue and sell to the Purchaser the Issue Shares is subject
to satisfaction or waiver of the following conditions at the Closing:
7.3.1. Performance. The Purchaser shall have
performed in all material respects its obligations under this
Agreement to the date of the Closing.
7.3.2. Representations and Warranties True. Except
as otherwise contemplated by this Agreement, the
representations and warranties of the Purchaser contained in
this Agreement which are qualified as to materiality shall be
true and correct and which are not so qualified shall be true
and correct in all material respects, in each case, as of the
date when made and at and as of the Closing as though newly
made at and as of that time.
7.3.3. Closing Deliveries. The Purchaser shall have
delivered, or shall be delivering concurrently with the
Closing, the documents and instruments required to be
delivered by the Purchaser pursuant to Section 2.2.1.
7.3.4. Certificate. The Purchaser shall have
delivered to the Company a certificate dated as of the Closing
and signed by a duly authorized officer of the Purchaser
certifying as to the accuracy in all material respects of the
representations and warranties of the Purchaser set forth in
this Agreement and the performance of the obligations
required by the Purchaser to be performed under this
Agreement as of the Closing.
7.3.5. Offer. The Purchaser shall have accepted for
purchase pursuant to the Offer not less than 18,619,000
Shares.
ARTICLE 8.
TERMINATION
8.1. Termination by the Company. The Company may
terminate this Agreement, to the extent not performed, if:
(a) there shall not have been a material uncured breach by
the Company of any representation, warranty, covenant
or agreement set forth herein and there shall have been
a material breach by the Purchaser of any
representation, warranty, covenant, or agreement set
forth herein, which breach shall not have been cured
within ten days of the Purchaser's receipt of written
notice specifying Purchaser's breach and the Company's
intention to terminate this Agreement pursuant to this
Section 8.1; or
(b) upon payment to the Purchaser of $7,023,800 (the
"Termination Fee") by bank cashier's check or wire
transfer to an account designated by the Purchaser for
this purpose and either (i) five Business Days shall
have elapsed following the Purchaser's receipt of a
Notice of Superior Proposal as defined in Section 6.3
and the Superior Proposal described in the Notice of
Superior Proposal continues to be a Superior Proposal
in light of any improved transaction proposed by the
Purchaser prior to the expiration of the five Business
Day period following receipt by the Purchaser of the
Notice of Superior Proposal or (ii) the Board shall have
withdrawn, modified or changed in a manner adverse
to the Purchaser its approval or recommendation of the
Offer or the other transactions contemplated by this
Agreement or shall have recommended another offer,
or shall have adopted any resolution to effect any of the
foregoing, in any case, to the extent the Board
determines in good faith, after consultation with and
based upon written advice of outside legal counsel, that
a failure to do so would be contrary to its fiduciary
obligations.
8.2. Termination by the Purchaser. The Purchaser may
terminate this Agreement to the extent not performed, if there shall
not have been a material uncured breach by the Purchaser of any
representation, warranty, covenant, or agreement set forth herein and
there shall have been a material breach by the Company of any
representation, warranty, covenant or agreement set forth herein,
which breach shall not have been cured within ten days of the
Company's receipt of written notice specifying the Company's breach
and the Purchaser's intention to terminate this Agreement pursuant to
this Section 8.2. In addition, the Purchaser may terminate any or all
of its obligations under this Agreement, to the extent not performed, if
(a) the Board shall have (i) withdrawn (ii) modified, or (iii) changed
(including by amendment of the Schedule 14D-9) in a manner adverse
to the Purchaser, its approval or recommendation of the Offer or the
other transactions contemplated by this Agreement or shall have
recommended another offer, or shall have adopted any resolution to
effect any of the foregoing, (b) a Third Party Acquisition has occurred
or any Third Person shall have entered into a definitive agreement or
an agreement in principle with the Company with respect to a Third
Party Acquisition, (c) the Company fails to comply with Section 6.1.2.
hereof because of the last sentence of Section 6.1.2. or (d) the
Company fails to comply with Section 6.5 hereof because of the last
sentence of Section 6.5. The Company shall immediately pay
Purchaser the Termination Fee if Purchaser terminates this Agreement
pursuant to clauses (a), (b), (c) or (d) of the immediately preceding
sentence.
8.3. Termination by the Purchaser or the Company. The
Purchaser or the Company may terminate this Agreement (i) to the
extent that performance thereof is prohibited, enjoined or otherwise
materially restrained by any final, non-appealable judgment, ruling,
order or decree of any Governmental Authority, provided that the
party seeking to terminate its obligations hereunder pursuant to this
Section 8.3(i) shall have used its best efforts to remove such
prohibition, injunction, or restraint, (ii) if the purchase by the
Purchaser of the Issue Shares and the Offer Shares shall not have been
completed by March 31, 1996 and the failure of such purchase to have
been completed on or before such date did not result from the failure
by the party seeking termination of this Agreement to fulfill in all
material respects any undertaking or commitment provided for herein
that is required to be fulfilled by such party prior to such time, (iii) if,
at the special meeting of the Company's stockholders contemplated by
Section 6.1.2 hereof, the Company's stockholders do not approve the
Stockholder Proposals (provided that the Company shall immediately
pay to the Purchaser the Termination Fee if the approval of the
Company's stockholders of the Stockholder Proposals shall not have
been obtained by reason of a Superior Proposal) or (iv) by mutual
written consent of the Purchaser and the Company.
8.4. Effect of Termination. In the event of the termination
of this Agreement, neither the Purchaser nor the Company shall have
any obligation to perform hereunder from and after the date of such
termination, except that Sections 6.4.2 (Confidentiality), 6.7 (Public
Announcements), 9.2 (Governing Law), 9.3 (Expenses), and 9.4
(Notices) shall survive such termination and remain in full force and
effect notwithstanding such termination. No termination hereof shall
relieve the Purchaser or the Company from liability for any breach of
this Agreement.
ARTICLE 9.
MISCELLANEOUS
9.1. Survival of Representations and Warranties.
Regardless of any party's investigations prior to the Closing, the
representations and warranties contained herein shall survive the
Closing and shall terminate and expire on the first anniversary of the
date of the Closing, except for Section 4.17 (Environmental), which
shall terminate and expire on the fourth anniversary of the date of the
Closing, unless on or before such first or fourth anniversary, as the
case may be, either party has notified the other party in writing of a
claim with respect to such representation or warranty in which case
such representation or warranty shall survive until termination or
resolution of such claim.
9.2. Governing Law; Consent to Jurisdiction. This
Agreement shall be governed by, construed under and enforced in
accordance with, the laws of the State of Delaware without regard to
its conflict-of-laws principles. The Purchaser and the Company agree
that (i) any legal action or proceeding arising out of or in connection
with this Agreement or the transactions contemplated hereby shall be
brought exclusively in the courts of the State of Delaware or the
Federal courts of the United States of America sitting in Delaware, (ii)
each irrevocably submits to the jurisdiction of each such court, and
(iii) any summons, pleading, judgment, memorandum of law, or other
paper relevant to any such action or proceeding shall be sufficiently
served if delivered to the recipient thereof by certified or registered
mail (with return receipt) at its address set forth in Section 9.4.
Nothing in the preceding sentence shall affect the right of any party to
proceed in any jurisdiction for the enforcement or execution of any
judgment, decree or order made by a court specified in said sentence.
9.3. Expenses. Each of the parties shall pay its own expenses
incurred in connection with the negotiation and preparation of this
Agreement and the other Transaction Documents, the performance of
its covenants herein and therein, and the effectuation of the
transactions contemplated hereby and thereby, including, without
limitation, all fees and disbursements of its respective legal counsel,
advisors, and accountants; provided, however, that nothing in this
Section 9.3 shall negate any obligation of the Company to pay the
Termination Fee. Each party to this Agreement shall indemnify and
hold harmless the other against any claim for fees or commissions of
brokers, finders, agents, or bankers retained or purportedly retained by
the indemnitor party in connection with the transactions contemplated
by this Agreement or any other Transaction Document.
9.4. Notices. In case of any event or circumstance giving
rise to an obligation of the Purchaser or the Company to provide notice
hereunder, such notice shall be delivered within the time specifically
set forth herein or, if no such time is specified, then as promptly as
practicable after becoming aware of such event or circumstance. Any
notice required or permitted to be given under this Agreement shall be
written, and may be given by personal delivery, by cable, telecopy,
telex or telegram (with a confirmation copy mailed as follows), by
Federal Express, United Parcel Service, DHL, or other reputable
commercial delivery service, or by registered or certified mail, first-
class postage prepaid, return receipt requested. Notice shall be
deemed given upon actual receipt. Mailed notices shall be addressed
as follows, but each party may change address by written notice in
accordance with this paragraph.
To the Company: Zenith Electronics Corporation
1000 Milwaukee Avenue
Glenview, Illinois 60025
Attention: Chief Executive Officer
with copies to: Zenith Electronics Corporation
1000 Milwaukee Avenue
Glenview, Illinois 60025
Attention: General Counsel
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Thomas A. Cole, Esq.
To the Purchaser: LG Electronics Inc.
20 Yoido-dong
Youngdungpo-gu
Seoul 150-721 Korea
Attention: Chief Executive Officer
with a copy to: Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
Attention: Robert A. Helman, Esq.
9.5. Waiver. Each party hereto may in its sole discretion (i)
extend the time for the performance of any of the obligations or other
acts of the other party hereunder, (ii) waive any inaccuracies in the
representations and warranties of the other party contained herein or
in any document, certificate or writing delivered pursuant hereto or
(iii) waive compliance by the other party with any of the agreements or
conditions contained herein. No term or provision hereof shall be
deemed waived and no breach hereof excused unless such waiver or
consent shall be in writing and signed by the party claimed to have
waived or consented. No waiver hereunder shall apply or be construed
to apply beyond its expressly stated terms. No failure to exercise and
no delay in exercising any right, remedy, power or privilege hereunder
shall operate as a waiver thereof, and no single or partial exercise of
any right, remedy, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right,
remedy, power or privilege. No failure to insist upon strict
performance of any term or provision of this Agreement, or to exercise
any right hereunder, shall be construed as a waiver or as a
relinquishment of such term, provision, or right.
9.6. The Purchaser Subsidiaries; Successors, Assignment,
and Parties in Interest. This Agreement and the rights hereunder
may not be assigned by the Purchaser or the Company without the
prior written consent of the other party, which may be given or
withheld in the other party's discretion, except that the Purchaser may
(i) exercise any or all rights and/or fulfill any or all obligations under
this Agreement (including, without limitation, the purchase of any
Issue Shares and Offer Shares) in conjunction with or through one or
more direct or indirect majority owned subsidiaries of the Purchaser;
and/or (ii) assign this Agreement to an Affiliate or Affiliates of the
Purchaser; provided that the Purchaser (a) may not perform any
obligations through a subsidiary or assign this Agreement to an
Affiliate prior to the Closing if doing so would delay the Closing, and
(b) shall remain liable for all of its obligations under this Agreement
not fully performed by its subsidiaries or assignees. This Agreement
shall be binding upon and inure solely to the benefit of the Purchaser
and the Company and their respective successors and permitted
assigns, and nothing in this Agreement (except for Section 6.12 or
6.13), express or implied, is intended to or shall confer upon any other
person any rights, benefits or remedies of any nature whatsoever under
or by reason of this Agreement.
9.7. Entire Agreement. This Agreement, together with the
Company Letter and the other Transaction Documents and the
Confidentiality Agreement, constitutes the entire agreement between
the Purchaser and the Company with respect to the subject matter
hereof and thereof and the transactions contemplated hereby and
thereby and supersedes all prior or contemporaneous, written or oral
agreements or understandings with respect thereto (including without
limitation all term sheets). The parties acknowledge that their
agreements hereunder and thereunder were not procured through
representations or agreements not set forth herein or therein.
9.8. Amendment. This Agreement may be amended only to
the extent permissible under applicable law and only by a written
instrument executed and delivered by a duly authorized officer of the
Purchaser and a duly authorized officer of the Company.
9.9. Severability. The provisions set forth in this
Agreement and the other Transaction Documents are severable. If any
provision of this Agreement or any other Transaction Document is
held invalid or unenforceable in any jurisdiction, the remainder of this
Agreement and the other Transaction Documents, and the application
of such provision to other persons or circumstances, shall not be
affected thereby, and shall remain valid and enforceable in such
jurisdiction, and any such invalidity or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision
in any other jurisdiction. Notwithstanding the foregoing, the purchase
by the Purchaser of the Issue Shares shall be a condition to the
purchase by the Purchaser of the Offer Shares and the purchase by the
Purchaser of the Offer Shares shall be a condition to the purchase by
the Purchaser of the Issue Shares.
9.10. Cumulation of Remedies. All remedies available to any
party for breach or non-performance of this Agreement or any other
Transaction Document are cumulative and not exclusive of any rights,
remedies, powers or privileges provided by law, and may be exercised
concurrently or separately, and the exercise of any one remedy shall
not be deemed an election of such remedy to the exclusion of other
remedies.
9.11. Fair Construction. This Agreement and the other
Transaction Documents shall be deemed the joint work product of the
Purchaser and the Company without regard to the identity of the
draftsperson, and any rule of construction that a document shall be
interpreted or construed against the drafting party shall not be
applicable. The representations and warranties contained in this
Agreement shall not be qualified or reduced in scope by the knowledge
of either party that one or more of the representations or warranties of
the other party are, or may be, inaccurate.
9.12. Headings; References. Headings used in this
Agreement and the other Transaction Documents are inserted as a
matter of convenience and for reference, do not constitute a part of this
Agreement or the other Transaction Document, as the case may be, for
any other purpose, and shall not affect the interpretation or
enforcement hereof or thereof. References herein or therein to
Sections, Exhibits and Annexes are, unless otherwise designated,
references to the specified Section, Exhibit or Annex hereof, as the
case may be.
9.13. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of thedate first above written.
ZENITH ELECTRONICS CORPORATION
By: /s/ Albin F. Moschner
------------------------------
Name: Albin F. Moschner
Title: President and Chief Executive Officer
LG ELECTRONICS INC.
By: /s/ John Koo
------------------------------
Name: Cha Hong (John) Koo
Title: President
ANNEX A
CONDITIONS TO PURCHASER'S ACCEPTANCE OF SHARES IN THE OFFER
Notwithstanding any other provision of the Offer, the
obligation of the Purchaser to accept for payment, and pay for, any
Offer Shares tendered pursuant to the Offer shall be subject to the
purchase by Purchaser of the Issue Shares, to be consummated
simultaneously with the purchase of the Offer Shares, and to the
conditions that (i) the Agreement shall not have been terminated, (ii)
there shall be validly tendered in accordance with the terms of the
Offer prior to the expiration date of the Offer and not withdrawn at
least 18,619,000 shares of Common Stock, and (iii) to the satisfaction
or waiver of the following conditions:
1. Stockholder Approval. The Company's
stockholders shall have approved the Stockholder Proposals.
2. No Prohibition. No statute, rule, regulation,
judgment, order, decree, ruling, injunction, or other action
shall have been entered, promulgated or enforced by any
Governmental Authority that purports, seeks, or threatens to
(i) prohibit, restrain, enjoin, or restrict in a material manner,
the purchase and sale of any Offer Shares as contemplated by
the Agreement, or (ii) impose material adverse terms or
conditions (not set forth herein) upon the purchase and sale of
any Offer Shares as contemplated by the Agreement.
3. Regulatory Compliance. All material filings with
all Governmental Authorities required to be made in
connection with the purchase and sale of the Offer Shares as
contemplated by the Agreement shall have been made, all
waiting periods thereunder shall have expired or terminated
and all material orders, permits, waivers, authorizations,
exemptions, and approvals of such entities required to be in
effect on the date of the Closing in connection with the
purchase and sale of the Offer Shares as contemplated by the
Agreement shall have been issued, all such orders, permits,
waivers, authorizations, exemptions or approvals shall be in
full force and effect on the date of the Closing; provided,
however, that no provision of the Agreement shall be
construed as requiring any party to accept, in connection with
obtaining any requisite approval, clearance or assurance of
non-opposition, avoiding any challenge, or negotiating any
settlement, any condition that would (i) materially change or
restrict the manner in which the Company or the Purchaser
conducts or proposes to conduct its businesses, or (ii) impose
material terms or conditions (not set forth herein) upon the
purchase and sale of any Offer Shares as contemplated by the
Agreement.
4. Exon-Florio. The Purchaser and the Company
shall have delivered to CFIUS the voluntary notice described
in Section 6.6, and (i) more than thirty days shall have passed
from the calendar day following acceptance by CFIUS of such
notice without advice from CFIUS of the commencement of
an investigation of the transactions contemplated by the
Agreement, (ii) the Purchaser and the Company shall have
been advised by CFIUS that CFIUS has determined not to
undertake an investigation of the transactions contemplated
by the Agreement, or (iii) if CFIUS commences an
investigation of the transactions contemplated hereby, such
investigation shall have been resolved to the mutual
satisfaction of the Purchaser and the Company.
5. Directors. Provision shall have been made to the
satisfaction of the Purchaser that the Board will have the
composition described in Section 6.11.1 of the Agreement.
6. Performance. The Company shall have
performed in all material respects its obligations under the
Agreement to the date of the Closing.
7. Amended Bylaws. The Amended Bylaws shall
have been duly authorized, approved and effected.
8. Amendment of Rights Agreement. The
Amendment to Rights Agreement shall have become effective
as contemplated by Section 6.8 of the Agreement.
9. Closing Deliveries. The Company shall have
delivered, or shall be delivering concurrently with the
Closing, the documents and instruments required to be
delivered by the Company pursuant to Section 2.2.2.
10. Representations and Warranties True. Except as
otherwise contemplated by the Agreement and except for the
representations and warranties of the Company set forth in
Section 4.3 which shall be accurate in all respects as of the
date when made and at and as of the Closing as though newly
made at and as of that time, the representations and
warranties of the Company contained in the Agreement
which are qualified as to materiality (which shall include
Section 4.8) shall be true and correct and which are not so
qualified shall be true and correct in all material respects, in
each case, as of the date when made and at and as of the
Closing as though newly made at and as of that time, except
that the Company's financial statements shall continue to be
true only as of the respective dates covered thereby.
11. Certificate. The Company shall have delivered
to the Purchaser a certificate dated as of the Closing and
signed by the Chief Financial Officer and General Counsel of
the Company certifying as to (i) the accuracy, as of the date
when made and at and as of the Closing as though newly
made at and as of that time, of the representations and
warranties of the Company set forth in Section 4.3 and the
representations and warranties of the Company contained in
the Agreement which are qualified as to materiality, (ii) the
accuracy, as of the date when made and at and as of the
Closing as though newly made at and as of that time, in all
material respects of the representations and warranties of the
Company contained in the Agreement which are not so
qualified; provided that the Company's representations and
warranties contained in the Agreement as to the Company's
financial statements shall continue to be true only as of the
respective dates covered thereby and (iii) the performance of
the obligations required by the Company to be performed
under the Agreement as of the Closing.
12. Credit Agreements. The Company shall have
secured amendments to or waivers under, in each case, in
form and substance reasonably satisfactory to the Purchaser,
its material credit agreements and arrangements such that
none of the transactions contemplated by the Agreement or
the other Transaction Documents, will constitute a breach or
default of or an event that, with notice or lapse of time or both
would be a breach or default, under such credit agreements or
arrangements.
13. Items in Company Letter. Purchaser shall be
satisfied that the claims and matters described in Item D of
Schedule 4.16A to the Company Letter and Items 1, 8, 9 and
10 of Schedule 4.17 to the Company Letter, individually,
collectively with each other or collectively with any breaches
of representations and warranties and/or other facts and
circumstances which have not been disclosed as of the date of
the Agreement have not resulted in, and would not reasonably
be expected to result in, a Material Adverse Effect.
AMENDMENT TO RIGHTS AGREEMENT
THIS AMENDMENT to the Rights Agreement (the "Rights Agreement") dated as
of October 3, 1986, as amended as of April 28, 1988, July 7, 1988, and May 24,
1991, between Zenith Electronics Corporation, a Delaware corporation (the
"Company"), and The Bank of New York, a New York banking corporation and the
successor Rights Agent (the "Rights Agent"), is dated as of July 17, 1995.
Capitalized terms used but not defined herein shall have the meanings ascribed
to such terms in the Rights Agreement.
WHEREAS, the Company and LG Electronics Inc., a corporation organized under
the laws of the Republic of Korea (the "Purchaser"), are entering into that
certain Stock Purchase Agreement dated as of July 17, 1995 (the "Stock Purchase
Agreement"), and as a result thereof the Purchaser will be the majority
stockholder of the Company; and
WHEREAS, it is in the best interests of the holders of the Common Stock
that the Rights Agreement be amended as set forth herein; and
WHEREAS, Section 28 of the Rights Agreement provides that prior to the
Distribution Date (as defined in the Rights Agreement), the Company and the
Rights Agent shall, if the Company so directs and upon the delivery of a
certificate from an appropriate officer of the Company which states that the
proposed amendment is in compliance with Section 28, amend any provision of
the Rights Agreement (subject to certain exceptions) without the approval
of the holders of Common Stock;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties agree to amend the Rights Agreement as follows:
1. The following definition of Purchaser shall be added as Section 1(n)
of the Rights Agreement:
"(n) "Purchaser" shall mean LG Electronics Inc., a corporation
organized under the laws of the Republic of Korea."
2. The first sentence of the definition of "Acquiring Person" in Section
1(a) of the Rights Agreement which currently reads:
"Acquiring Person" shall mean any Person (as such term is hereinafter
defined) who or which, together with all Affiliates (as such term is
hereinafter defined) and Associates (as such term is hereinafter
defined) of such Person, shall be the Beneficial Owner (as such term
is hereinafter defined) of 25% or more of the shares of Common Stock
then outstanding, but shall not include the Company, any Subsidiary
(as such term is hereinafter defined) of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company or
any entity (including a trust) holding shares of Common Stock organized,
appointed or established by the Company for or pursuant to the terms of
any such plan.
shall be amended to read in its entirety as follows:
"Acquiring Person" shall mean any Person (as such term is hereinafter
defined) who or which, together with all Affiliates (as such term is
hereinafter defined) and Associates (as such term is hereinafter defined)
of such Person, shall be the Beneficial Owner (as such term is hereinafter
defined) of 25% or more of the shares of Common Stock then outstanding,
but shall not include the Company, any Subsidiary (as such term is
hereinafter defined) of the Company, any employee benefit plan of
the Company or of any Subsidiary of the Company, any entity (including a
trust) holding shares of Common Stock organized, appointed or established
by the Company for or pursuant to the terms of any such plan or the
Purchaser, together with its Affiliates and Associates, from and after
the date of the Stock Purchase Agreement but only until the termination
of the Stock Purchase Agreement in accordance with its terms without the
purchase by the Purchaser of shares of Common Stock pursuant thereto.
3. Clause (ii) of Section 3(a) of the Rights Agreement which
currently reads:
"the tenth day after the date of the commencement by any Person
(other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company or
any entity, including a trust, holding shares of Common Stock organized,
appointed or established by the Company for or pursuant to the terms
of any such plan) of, or first public announcement of the intent
of any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or of any Subsidiary of the
Company or any entity, including a trust, holding shares of Common
Stock organized, appointed or established by the Company for or
pursuant to the terms of any such plan) to commence, a tender or
exchange offer the consummation of which would result in any Person
having beneficial ownership of 25% or more of the then outstanding
shares of Common Stock (the earlier of clause (i) or clause (ii)
being herein referred to as the "Distribution Date"),"
shall be amended to read as follows:
"the tenth day after the date of the commencement by any Person (other
than the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company or any entity,
including a trust, holding shares of Common Stock organized, appointed
or established by the Company for or pursuant to the terms of any such
plan or the Purchaser, its Affiliates or Associates (so long as none
of the Purchaser, its Affiliates or Associates is an Acquiring Person))
of, or first public announcement of the intent of any Person (other than
the Company, any Subsidiary of the Company, any employee benefit plan of
the Company or of any Subsidiary of the Company, any entity, including
a trust, holding shares of Common Stock organized, appointed or
established by the Company for or pursuant to the terms of any such
plan or the Purchaser, its Affiliates or Associates (so long as none
of the Purchaser, its Affiliates or Associates is an Acquiring Person))
to commence, a tender or exchange offer the consummation of which would
result in any Person having beneficial ownership of 25% or more of the
then outstanding shares of Common Stock (the earlier of clause (i)
or clause (ii) being herein referred to as the "Distribution Date")"
4. This Amendment shall be deemed to be a contract made under the
laws of the State of Delaware, and for all purposes shall be governed by
and construed in accordance with the laws of such State applicable to
contracts to be made and to be performed entirely within such State.
5. This Amendment may be executed in any number of counterparts, and
each such counterpart shall for all purposes be deemed to be an original,
with all such counterparts together constituting one and the same instrument.
IN WITNESS WHEREOF, the parties hereto caused this Agreement to be duly
executed as of the day and year first above written.
ZENITH ELECTRONICS CORPORATION
By: /s/ Albin F. Moschner
______________________________________________
Name: Albin F. Moschner
______________________________________________
Title: President and Chief Executive Officer
______________________________________________
THE BANK OF NEW YORK
By: /s/ John I. Sivertsen
______________________________________________
Name: John I. Sivertsen
______________________________________________
Title: Vice President
______________________________________________
JOINT NEWS RELEASE FOR IMMEDIATE RELEASE
LG Electronics to Acquire Majority Interest in Zenith
Glenview, IL, July 17, 1995 -- LG Electronics, Inc. (LGE), formerly
Goldstar, and Zenith Electronics Corporation are building upon their more
than 20-year relationship by signing a definitive agreement under which
LGE plans to acquire a controlling interest in Zenith the companies
announced today. In this transaction, LGE will purchase for $10 per share
16.5 million newly issued shares of Zenith common stock and 18.619
million shares from Zenith shareholders in a tender offer. The total
transaction value is more than $350 million.
LGE currently owns 1.45 million shares of Zenith common stock, and upon
successful completion of this transaction, LGE will own 57.7 percent of the
outstanding common stock of Zenith. The tender offer will commence
within five business days and the transaction is subject to the completion of
a successful tender offer, Zenith shareholder approval, certain
governmental and regulatory approvals and the satisfaction of customary
closing conditions.
John Koo, President of LG Electronics, stated that this transaction will
create a leading global manufacturer and marketer of consumer electronics.
He further stated, "LGE has a great admiration for the Zenith brand name
and believes that its value can be utilized in markets worldwide. In
addition, this transaction builds on a 20-year relationship between our
companies and will provide numerous synergistic opportunities in
manufacturing and technology."
Al Moschner, who will continue as Zenith's President and Chief Executive
Officer, said that LGE's $165 million direct investment in Zenith will
support the $150 million expansion and modernization of its color picture
tube plant in Melrose Park, IL. and support its growing Network Systems
business.
"The alliance will strengthen Zenith's ability to compete. This infusion of
cash, access to additional technology and ability to expand into new
markets all provide great opportunities for Zenith, its shareholders, it
customers and its employees," Moschner said.
The combination of Zenith and LGE will create significant technical,
manufacturing, marketing and distribution synergies -- helping Zenith
accelerate its initiatives to:
- Provide increased value to its customers,
- Make strategic investments for global growth,
- Enrich its product and technology offerings, and
- Establish its position as the leading TV set producer in North America
Koo called the strengthened relationship with Zenith "a major component
of LGE,s strategy to be a global leader in consumer electronics, based on
its position in key markets around the world and utilizing the strengths of
local management and operations to achieve that goal."
Moschner said, "Joining forces with LGE, a worldwide leader in consumer
electronics, will give Zenith access to new markets and new technologies.
We'll be able to leverage LGE's purchasing power around the world and
draw on LG's tremendous manufacturing skills to further improve our
manufacturing operations. Plus, we'll be able to take full advantage of
LG's semiconductor capabilities, which will be increasingly important in
the era of digital television."
Koo further added: "This strategic combination will capitalize on the
complementary brand positions of Zenith and Goldstar (LGE's brand) in
the market. We plan to expand the share momentum Zenith has achieved
over the past three years by promoting the brand heavily.
"We have high regard for Zenith's technology leadership as well," Koo
said. "Among Zenith's strengths are core technologies such as digital
signal processing and transmission, which have wide-ranging applications
in HDTV, digital television, cable and wireless video and data delivery.
These complement LGE's strengths in product development, process
engineering and manufacturing."
Koo said the combination with LGE will help make Zenith a major global
competitor. "There are great opportunities for growing the Zenith brand
around the world. And, with our combined manufacturing, sales and
market capabilities, Zenith and LGE expect that, together, we will become
the largest consumer electronics manufacturer in North America."
The Zenith-LGE combination follows a 20-year-plus relationship, which
began with LGE producing radios for Zenith in the mid-70s. Over the
years, the relationship has grown -- with Zenith producing picture tubes
and other components for LGE and with LGE providing VCRs and TV-
VCR combinations to Zenith. In 1991, LGE strengthened the relationship
when it purchased 1.45 million shares of Zenith common stock and entered
into a range of technology agreements, including cooperative engineering
efforts on HDTV-related products.
Zenith, which will report its second-quarter financial results later this week,
expects to report a larger operating loss than the first quarter. Results will
include the previously announced $9 million restructuring charges as well
as additional non-recurring charges. "LEG has been kept fully apprised of
the magnitude of this loss," Moschner said.
LG. Electronics, Inc. is a leading manufacturer of consumer electronics,
multimedia and magnetic media products, including televisions, VCRs,
VCRs, VHS, VCR/double decks, ViewMaxTVCRs, camcorders, DC-i,
3DO and other multimedia products, compact disc players/changers,
portable and home audio products, including facsimile machines, a
complete line of computer monitors and CD-ROM drives, audio/video tape
and floppy discs.
Headquartered in Seoul, South Korea, LG Electronics, Inc. is a wholly
owned subsidiary of the LG Group, a $48 billion conglomerate with a wide
range of businesses that include electronics, telecommunications,
petrochemicals, energy, trading finance and a wide variety of other
products and services.
Zenith Electronics Corporation, based in Glenview, Ill., has been a leader in
electronics for more than 75 years. Zenith's core business -- Consumer
Electronics and Network Systems -- is at the center of the company's
digital strategy, which included interactive television, digital video disc
(DVD) players, digital and wireless cable, video dial-tone, data
communication and HDTV systems.
# # #
Media Contacts: Matt Afflizio/Susan Butenhoff -- LGE (Access P.R.)
1-800-501-2945
John Taylor -- Zenith Electronics Corporation
708/391-8081
Investor Contact: Bill McNitt -- Zenith Electronics Corporation
708/391-7713
