<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION
14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
ZENITH ELECTRONICS CORPORATION
(NAME OF SUBJECT COMPANY)
LG ELECTRONICS INC.
(BIDDER)
COMMON STOCK, PAR VALUE $1.00 PER SHARE
(INCLUDING THE ASSOCIATED RIGHTS)
(TITLE OF CLASS OF SECURITIES)
989349 10 5
(CUSIP NUMBER OF CLASS OF SECURITIES)
K.S. CHO
MANAGING DIRECTOR
LG ELECTRONICS INC.
LG TWIN TOWERS
20, YOIDO-DONG
YOUNGDUNGPO-GU
SEOUL, KOREA 150-721
011-82-2-3777-3480
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDER)
COPY TO:
SCOTT J. DAVIS
MAYER, BROWN & PLATT
190 SOUTH LASALLE STREET
CHICAGO, ILLINOIS 60603
(312) 782-0600
CALCULATION OF FILING FEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TRANSACTION VALUATION* AMOUNT OF FILING FEE**
- --------------------------------------------------------------------------------
<S> <C>
$186,190,000 $37,240
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
* For purposes of calculating the amount of the filing fee only. The amount
assumes the purchase of 18,619,000 shares of Common Stock, par value $1.00
per share (including the associated rights), of Zenith Electronics
Corporation at $10.00 per share.
** 1/50th of 1% of transaction valuation.
[_]Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
<TABLE>
<S> <C> <C> <C>
Amount previously paid: Not Applicable Filing party: Not Applicable
Form or registration no.: Not Applicable Date filed: Not Applicable
</TABLE>
(Page 1 of 6 Pages)
<PAGE>
CUSIP NO.: 14D-1 AND 13D
989349105
1NAMES OF REPORTING PERSONS
S.S. OR I.R.S IDENTIFICATION NOS. OF ABOVE PERSONS
LG ELECTRONICS INC.
(NOT APPLICABLE)
- --------------------------------------------------------------------------------
2CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [_]
(B) [_]
- --------------------------------------------------------------------------------
3SEC USE ONLY
- --------------------------------------------------------------------------------
4SOURCE OF FUNDS
BK, WC
- --------------------------------------------------------------------------------
5CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(E) OR 2(F)
[_]
- --------------------------------------------------------------------------------
6CITIZENSHIP OR PLACE OF ORGANIZATION
REPUBLIC OF KOREA
- --------------------------------------------------------------------------------
7AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
36,569,000*
- --------------------------------------------------------------------------------
8CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
[_]
- --------------------------------------------------------------------------------
9PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
57.68%*
- --------------------------------------------------------------------------------
10TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*On July 17, 1995, LG Electronics Inc. (the "Purchaser") and Zenith Electronics
Corporation (the "Company") entered into a Stock Purchase Agreement (the
"Stock Purchase Agreement") pursuant to which the Purchaser has agreed to
purchase 16,500,000 newly issued shares of the Company's common stock, par
value $1.00 per share, (the "Common Stock") for $10.00 per share (the "Issue
Shares") and to commence an offer to purchase up to 18,619,000 additional
shares of Common Stock for $10.00 per share from the Company's stockholders
(the "Offer"). The Stock Purchase Agreement is more fully described in
Section 14 of the Offer to Purchase, which is attached hereto as Exhibit
(a)(1). Prior to July 17, 1995, the Purchaser beneficially owned 1,450,000
shares of Common Stock representing 3.09% of the outstanding shares of
Common Stock. After the consummation of the Offer and the purchase of the
Issue Shares, the Purchaser will beneficially own 57.68% of the outstanding
shares of Common Stock.
Page 2 of 6 pages
<PAGE>
This Statement relates to the offer by the Purchaser to purchase up to
18,619,000 shares of the outstanding Common Stock of the Company and the
associated Common Stock purchase rights (the "Rights" and, together with the
Common Stock, the "Shares") issued pursuant to the Amended and Restated Rights
Agreement dated as of October 3, 1986 between the Company and The Bank of New
York, as Successor Rights Agent, as amended as of April 26, 1988, July 7, 1988,
May 30, 1991, and July 17, 1995, upon the terms and subject to the conditions
set forth in the Offer to Purchase dated July 21, 1995 and in the related
Letter of Transmittal (which together constitute the "Offer"), at the purchase
price of $10.00 per Share, net to the tendering stockholder in cash.
ITEM 1.
SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Zenith Electronics Corporation, a
Delaware corporation, and the address of its principal executive offices is
1000 Milwaukee Avenue, Glenview, Illinois 60025-2493.
(b) The securities to which this statement relates are the Shares. The
information set forth in the Introduction and Section 1 ("Terms of the Offer;
Extension of Tender Period; Termination; Amendments") of the Offer to Purchase
annexed hereto as Exhibit (a)(1) (the "Offer to Purchase") is incorporated
herein by reference.
(c) The information set forth in Section 7 ("Price Range of the Common
Stock") of the Offer to Purchase is incorporated herein by reference.
ITEM 2.
IDENTITY AND BACKGROUND.
(a)-(d); (g) The Purchaser is incorporated under the laws of the Republic of
Korea. The information set forth in Section 11 ("Certain Information Concerning
the Purchaser") of the Offer to Purchase is incorporated herein by reference.
The name, business address, present principal occupation or employment, the
material occupations, positions, offices or employments for the past five years
and citizenship of each executive officer of the Purchaser and the persons
carrying out functions in the Purchaser similar to that of a director in a
United States corporation, and the name, principal business and address of any
corporation or other organization in which such occupations, positions, offices
and employments are or were carried on are set forth in Annex I to the Offer to
Purchase and incorporated herein by reference.
(e); (f) During the last five years, neither the Purchaser nor, to the best
of the Purchaser's knowledge, any of the executive officers of the Purchaser or
the persons carrying out functions in the Purchaser similar to that of a
director in a United States corporation has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or was a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction as result of which any such person was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any
violation of such law.
ITEM 3.
PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) The information set forth in the Introduction and Section 13
("Contacts with the Company; Background of the Offer") of the Offer to Purchase
is incorporated herein by reference.
ITEM 4.
SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in Section 12 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
Page 3 of 6 pages
<PAGE>
(c) Not applicable.
ITEM 5.
PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
The information set forth in the Introduction and Sections 6 ("Certain
Conditions of the Offer"), 8 ("Possible Effects of the Offer on the Market for
Common Stock; Stock Quotation; Registration Under the Exchange Act") and 14
("Purpose of the Offer; Stock Purchase Agreement; Mutual Non-Disclosure
Agreement; Plans for the Company") of the Offer to Purchase is incorporated
herein by reference.
ITEM 6.
INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth in the Introduction and Section 11
("Certain Information Concerning the Purchaser") of the Offer to Purchase is
incorporated herein by reference.
ITEM 7.
CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction and Sections 11 ("Certain
Information Concerning the Purchaser"), 13 ("Contacts with the Company;
Background of the Offer") and 14 ("Purpose of the Offer; Stock Purchase
Agreement; Mutual Non-Disclosure Agreement; Plans for the Company") of the
Offer to Purchase is incorporated herein by reference.
ITEM 8.
PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in Section 16 ("Fees and Expenses") of the Offer to
Purchase is incorporated herein by reference.
ITEM 9.
FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 11 ("Certain Information Concerning the
Purchaser") of the Offer to Purchase is incorporated herein by reference.
ITEM 10.
ADDITIONAL INFORMATION.
(a) Not applicable.
(b)-(c) The information set forth in Section 15 ("Certain Legal Matters") of
the Offer to Purchase is incorporated herein by reference.
(d) The information set forth in Sections 8 ("Possible Effects of the Offer
on the Market for Common Stock; Stock Quotation; Registration Under the
Exchange Act") and 15 ("Certain Legal Matters") of the Offer to Purchase is
incorporated herein by reference.
(e) Not applicable.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, to the extent not otherwise set forth herein, is incorporated
herein by reference.
ITEM 11.
MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase, dated July 21, 1995.
(2) Letter of Transmittal.
Page 4 of 6 pages
<PAGE>
(3) Letter, dated July 21, 1995, from the Dealer Manager to brokers, dealers,
commercial banks, trust companies and nominees.
(4) Letter, dated July 21, 1995, to be sent by brokers, dealers, commercial
banks, trust companies and nominees to their clients.
(5) Notice of Guaranteed Delivery.
(6) IRS Guidelines to Substitute Form W-9.
(7) Press Release, dated July 17, 1995.
(8) Summary newspaper advertisement, dated July 21, 1995.
(b)Not applicable.
(c)(1)Mutual Non-Disclosure Agreement, dated November 25, 1994, between the
Purchaser and the Company.
(c)(2)Stock Purchase Agreement, dated as of July 17, 1995, between the
Purchaser and the Company.
(d)Not applicable.
(e)Not applicable.
(f)Not applicable.
Page 5 of 6 pages
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Dated: July 21, 1995
LG Electronics Inc.
/s/ John Koo
-------------------------------------
Name: Cha Hong (John) Koo
Title:President
Page 6 of 6 pages
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
(a)(1) Offer to Purchase, dated July 21, 1995.
(2) Letter of Transmittal.
(3) Letter, dated July 21, 1995, from the Dealer Manager to brokers, dealers,
commercial banks, trust companies and nominees.
(4) Letter, dated July 21, 1995, to be sent by brokers, dealers, commercial banks,
trust companies and nominees to their clients.
(5) Notice of Guaranteed Delivery.
(6) IRS Guidelines to Substitute Form W-9.
(7) Press Release, dated July 17, 1995.
(8) Summary newspaper advertisement, dated July 21, 1995.
(b) Not applicable.
(c)(1) Mutual Non-Disclosure Agreement, dated November 25, 1994, between the Purchaser and
the Company.
(c)(2) Stock Purchase Agreement, dated as of July 17, 1995, between the Purchaser and the
Company.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
</TABLE>
(i)
<PAGE>
OFFER TO PURCHASE FOR CASH
UP TO 18,619,000 SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
ZENITH ELECTRONICS CORPORATION
AT
$10.00 NET PER SHARE
BY
LG ELECTRONICS INC.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, SEPTEMBER 19, 1995, UNLESS THE
OFFER IS EXTENDED.
THIS OFFER IS BEING MADE PURSUANT TO THE TERMS OF A STOCK PURCHASE AGREEMENT
DATED AS OF JULY 17, 1995 (THE "STOCK PURCHASE AGREEMENT") BY AND BETWEEN
ZENITH ELECTRONICS CORPORATION, A DELAWARE CORPORATION (THE "COMPANY"), AND LG
ELECTRONICS INC., A CORPORATION ORGANIZED UNDER THE LAWS OF THE REPUBLIC OF
KOREA (THE "PURCHASER"). UPON CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY
THE STOCK PURCHASE AGREEMENT, INCLUDING THE OFFER, AND BASED ON THE NUMBER OF
SHARES OUTSTANDING AS OF JUNE 30, 1995 AND THE SALE OF THE ISSUE SHARES (AS
DEFINED BELOW), THE PURCHASER WILL OWN 57.68% OF THE TOTAL NUMBER OF SHARES OF
THE COMPANY'S OUTSTANDING COMMON STOCK. THE PURPOSE OF THE OFFER IS TO ACQUIRE
A PORTION OF THIS INTEREST IN THE COMPANY AS PART OF THE ACQUISITION BY THE
PURCHASER OF A CONTROLLING INTEREST IN THE COMPANY.
THE OFFER IS CONDITIONED UPON THE SATISFACTION OR WAIVER OF CERTAIN
CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER AND THE COMPANY TO CONSUMMATE
THE TRANSACTIONS CONTEMPLATED BY THE STOCK PURCHASE AGREEMENT, INCLUDING THE
PURCHASE BY THE PURCHASER OF 16,500,000 SHARES TO BE ISSUED BY THE COMPANY FOR
$10.00 PER SHARE (THE "ISSUE SHARES"), TO BE CONSUMMATED SIMULTANEOUSLY WITH
THE PURCHASE OF 18,619,000 SHARES UNDER THE OFFER, RECEIPT BY THE PURCHASER AND
THE COMPANY OF ALL NECESSARY GOVERNMENTAL AND REGULATORY APPROVALS, APPROVAL OF
THE STOCKHOLDER PROPOSALS (AS DEFINED HEREIN) BY THE STOCKHOLDERS OF THE
COMPANY, THERE BEING AT LEAST 18,619,000 SHARES VALIDLY TENDERED IN ACCORDANCE
WITH THE TERMS OF THE OFFER PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN) OF
THE OFFER AND NOT WITHDRAWN AND A NUMBER OF OTHER CONDITIONS SET FORTH HEREIN.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE
STOCK PURCHASE AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING
THE OFFER, ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS
AND HAS APPROVED THE STOCK PURCHASE AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING THE OFFER. THE BOARD RECOMMENDS THAT STOCKHOLDERS ACCEPT THE
OFFER AND TENDER THEIR SHARES HEREUNDER.
THE PURCHASER IS UNABLE TO DETERMINE WITH CERTAINTY THE AMOUNT OF TIME
NECESSARY TO OBTAIN THE APPROVAL OF THE STOCKHOLDER PROPOSALS AND ALL NECESSARY
GOVERNMENTAL AND REGULATORY APPROVALS REQUIRED TO COMPLETE THE OFFER AND THE
PURCHASE OF THE ISSUE SHARES AND TO SATISFY CERTAIN OTHER CONDITIONS DESCRIBED
HEREIN. THE TIME NECESSARY TO OBTAIN SUCH APPROVALS AND TO SATISFY SUCH OTHER
CONDITIONS MAY EXTEND BEYOND THE INITIALLY SCHEDULED EXPIRATION DATE, AND,
THEREFORE, THE PURCHASER WILL EXTEND THE OFFER FROM TIME TO TIME UNTIL SUCH
APPROVALS HAVE BEEN RECEIVED AND SUCH OTHER CONDITIONS HAVE BEEN SATISFIED,
UNLESS THE STOCK PURCHASE AGREEMENT HAS BEEN TERMINATED. SEE SECTIONS 6 AND 15.
--------------
IMPORTANT
Any stockholder desiring to tender Shares (as defined herein) should either
(1) complete and sign the Letter of Transmittal, or a facsimile copy thereof,
in accordance with the instructions in the Letter of Transmittal, mail or
deliver it and any other required documents to the Depositary and either
deliver the certificates for such Shares to the Depositary along with the
Letter of Transmittal or tender such Shares pursuant to the procedure for book-
entry transfer set forth in Section 2 of this Offer to Purchase or (2) request
such stockholder's broker, dealer, commercial bank, trust company or other
nominee to effect the transaction for the stockholder. Stockholders having
Shares registered in the name of a broker, dealer, commercial bank, trust
company or other nominee must contact such broker, dealer, commercial bank,
trust company or other nominee if they desire to tender such Shares.
A stockholder who desires to tender Shares and whose certificates for Shares
are not immediately available, or who cannot comply with the procedures for
book-entry transfer described in this Offer to Purchase on a timely basis, may
tender such Shares by following the procedure for guaranteed delivery set forth
in Section 2.
Questions and requests for assistance, or for additional copies of this Offer
to Purchase, the Letter of Transmittal or other tender offer materials, may be
directed to the Dealer Manager or the Information Agent at their respective
addresses and telephone numbers set forth on the back cover of this Offer to
Purchase. Holders of Shares may also contact brokers, dealers, commercial banks
or trust companies for assistance concerning the Offer.
--------------
The Dealer Manager for the Offer is:
SALOMON BROTHERS INC
--------------
July 21, 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<C> <S> <C>
INTRODUCTION ........................................................... 1
THE TENDER OFFER ....................................................... 3
1. Terms of the Offer; Extension of Tender Period; Termination;
Amendments.................................................... 3
2. Procedure for Tender of Shares................................. 4
3. Withdrawal Rights.............................................. 6
4. Acceptance for Payment and Payment of Purchase Price .......... 7
5. Certain Federal Income Tax Consequences........................ 9
6. Certain Conditions of the Offer................................ 9
7. Price Range of the Common Stock................................ 12
8. Possible Effects of the Offer on the Market for Common Stock;
Stock Quotation; Registration Under the Exchange Act ......... 12
9. Dividends and Distributions.................................... 12
10. Certain Information Concerning the Company .................... 13
11. Certain Information Concerning the Purchaser .................. 14
12. Source and Amount of Funds .................................... 15
13. Contacts with the Company; Background of the Offer ............ 16
14. Purpose of the Offer; Stock Purchase Agreement; Mutual Non-
Disclosure Agreement; Plans for the Company................... 19
15. Certain Legal Matters.......................................... 25
16. Fees and Expenses.............................................. 28
17. Miscellaneous.................................................. 28
ANNEX I--Officers and Directors of Purchaser............................ AI-1
ANNEX II--Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated. AII-1
</TABLE>
<PAGE>
To All Holders of Common Stock (Including the Associated Rights)
of Zenith Electronics Corporation:
INTRODUCTION
THE OFFER
LG Electronics Inc., a corporation organized under the laws of the Republic
of Korea (the "Purchaser"), hereby offers to purchase up to 18,619,000 shares
of common stock, par value $1.00 per share (the "Common Stock"), of Zenith
Electronics Corporation, a Delaware corporation (the "Company"), and the
associated Common Stock purchase rights (the "Rights" and, together with the
Common Stock, the "Shares") issued pursuant to the Amended and Restated Rights
Agreement dated as of October 3, 1986 between the Company and The Bank of New
York as successor Rights Agent (the "Rights Agreement"), as amended as of April
26, 1988, July 7, 1988, May 30, 1991 and July 17, 1995, upon the terms and
subject to the conditions set forth in this Offer to Purchase and in the
related Letter of Transmittal (which together constitute the "Offer"), at the
purchase price of $10.00 per Share (the "Offer Price"), net to the tendering
stockholder in cash, without interest thereon. The Offer is being made pursuant
to the terms of the Stock Purchase Agreement dated as of July 17, 1995 by and
between the Company and the Purchaser (the "Stock Purchase Agreement").
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE
STOCK PURCHASE AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING
THE OFFER, ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS
AND HAS APPROVED THE STOCK PURCHASE AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING THE OFFER. THE BOARD RECOMMENDS THAT STOCKHOLDERS ACCEPT THE
OFFER AND TENDER THEIR SHARES HEREUNDER.
The Offer is conditioned upon the satisfaction or waiver of certain
conditions to the obligations of the Purchaser and the Company to consummate
the transactions contemplated by the Stock Purchase Agreement, including the
purchase by the Purchaser of 16,500,000 Shares to be issued by the Company for
$10.00 per Share (the "Issue Shares") to be consummated simultaneously with the
purchase of 18,619,000 Shares under the Offer (the "Offer Shares"), receipt by
the Purchaser and the Company of all necessary governmental and regulatory
approvals, approval of the Stockholder Proposals (as defined herein) by the
stockholders of the Company, there being at least 18,619,000 Shares validly
tendered in accordance with the terms of the Offer prior to the Expiration Date
(as defined herein) of the Offer and not withdrawn and a number of other
conditions set forth herein. See Sections 6 and 14.
THE OFFER DOES NOT CONSTITUTE A SOLICITATION OF PROXIES FOR ANY MEETING OF
THE COMPANY'S STOCKHOLDERS. ANY SUCH SOLICITATION WILL BE MADE ONLY PURSUANT TO
SEPARATE PROXY MATERIALS COMPLYING WITH THE REQUIREMENTS OF SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT").
The Offer will expire at 12:00 midnight, New York City time, on Tuesday,
September 19, 1995, unless extended.
THE PURCHASER IS UNABLE TO DETERMINE WITH CERTAINTY THE AMOUNT OF TIME
NECESSARY TO OBTAIN THE APPROVAL OF THE STOCKHOLDER PROPOSALS AND ALL NECESSARY
GOVERNMENTAL AND REGULATORY APPROVALS REQUIRED TO COMPLETE THE OFFER AND THE
PURCHASE OF THE ISSUE SHARES AND TO SATISFY CERTAIN OTHER CONDITIONS THERETO.
THE TIME NECESSARY TO OBTAIN SUCH APPROVALS AND TO SATISFY SUCH OTHER
CONDITIONS MAY EXTEND BEYOND THE INITIALLY SCHEDULED EXPIRATION DATE, AND,
THEREFORE, THE PURCHASER WILL EXTEND THE OFFER FROM TIME TO TIME UNTIL SUCH
APPROVALS HAVE BEEN RECEIVED AND SUCH OTHER CONDITIONS HAVE BEEN SATISFIED,
UNLESS THE STOCK PURCHASE AGREEMENT HAS BEEN TERMINATED. SEE SECTIONS 6 AND 14.
<PAGE>
Upon the terms and subject to the conditions of the Offer, the Purchaser will
purchase up to 18,619,000 Shares (approximately 39.70% of the Shares
outstanding as of June 30, 1995). If more than 18,619,000 Shares are validly
tendered prior to the Expiration Date and not properly withdrawn in accordance
with Section 3, the Purchaser will, upon the terms and subject to the
conditions of the Offer, accept such Shares for payment on a pro rata basis,
with adjustments to avoid purchases of fractional Shares, based upon the number
of Shares validly tendered prior to the Expiration Date and not properly
withdrawn in accordance with Section 3. Under the Stock Purchase Agreement, the
Purchaser may not purchase less than 18,619,000 Shares under the Offer.
Tendering stockholders will not be obligated to pay brokerage commissions,
solicitation fees or, subject to Instruction 6 of the Letter of Transmittal,
stock transfer taxes on the purchase of Shares by the Purchaser pursuant to the
Offer. However, any tendering stockholder or other payee who fails to complete
and sign the Substitute Form W-9 that is included in the Letter of Transmittal
may be subject to a required backup federal income tax withholding of 31% of
the gross proceeds payable to such stockholder or other payee pursuant to the
Offer. See Section 2. The Purchaser will pay all charges and expenses of
Salomon Brothers Inc, as Dealer Manager (in such capacity, the "Dealer
Manager"), The Bank of New York, as Depositary (in such capacity, the
"Depositary"), and MacKenzie Partners, Inc., as Information Agent (the
"Information Agent"), incurred in connection with the Offer. For a description
of the fees and expenses to be paid by the Purchaser, see Section 16 hereof.
THE STOCK ACQUISITION
Pursuant to the terms of the Stock Purchase Agreement, the Purchaser has
agreed to purchase from the Company the Issue Shares for $10.00 per share and
to commence the Offer. The obligations of the Purchaser to purchase the Issue
Shares, and of the Company to issue such shares to the Purchaser, are subject
to satisfaction of certain conditions. See Sections 6 and 14. The purchase by
the Purchaser of the Issue Shares is referred to herein as the "Stock
Acquisition."
The Company has informed the Purchaser that as of June 30, 1995 there were
46,896,492 Shares of Common Stock issued and outstanding. The Offer Shares and
the Issue Shares together with the 1,450,000 Shares already owned by the
Purchaser will represent 57.68% of all issued and outstanding shares of Common
Stock (based on the number of shares of Common Stock issued and outstanding on
June 30, 1995, increased to give effect to the issuance of the Issue Shares and
assuming that no other shares of Common Stock are issued).
The Company has informed the Purchaser that as of June 30, 1995 there were
not more than 13,248,745 shares of Common Stock reserved for issuance upon the
exercise of outstanding stock options and convertible debt instruments
(collectively, the "Convertible Securities"). Based on these figures,
immediately after consummation of the Offer and the Stock Acquisition and
assuming exercise and conversion of all Convertible Securities reasonably
expected to be exercised or converted in the foreseeable future, the Purchaser
would own approximately 50.12% of the shares of Common Stock. Prior to the
execution of the Stock Purchase Agreement the Purchaser was the beneficial
owner of 1,450,000 Shares representing 3.09% of the Shares outstanding as of
June 30, 1995. Other than such Shares and any Shares which may be deemed to be
beneficially owned by the Purchaser as a result of the Stock Purchase
Agreement, none of the persons identified on Annex I hereto beneficially own
any Shares.
Immediately following the consummation of the Offer and the Stock
Acquisition, the Company will remain a public company subject to the
informational filing requirements of the Exchange Act, and the Shares are
expected to continue to trade on The New York Stock Exchange, Inc. (the
"NYSE").
THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
2
<PAGE>
THE TENDER OFFER
1. TERMS OF THE OFFER; EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), the Purchaser will accept for payment and pay for up to 18,619,000
Shares that are validly tendered on or prior to the Expiration Date and not
theretofore withdrawn as provided in Section 3. The term "Expiration Date"
shall mean 12:00 midnight, New York City time, on Tuesday, September 19, 1995,
unless and until the Purchaser, in its sole discretion (but subject to the
terms of the Stock Purchase Agreement), shall from time to time have extended
the period of time for which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by the Purchaser, shall expire.
If more than 18,619,000 Shares are validly tendered prior to the Expiration
Date and not properly withdrawn, such Shares will be accepted for payment on a
pro rata basis according to the number of Shares validly tendered and not
properly withdrawn prior to the Expiration Date (with appropriate adjustments
to avoid the purchase of fractional Shares). In the event that such proration
is required, because of the time required to determine the precise number of
Shares validly tendered and not properly withdrawn, the Purchaser does not
expect to announce the final results of proration or to pay for any Shares
immediately after the Expiration Date. The Purchaser will announce the
preliminary results of proration by press release as soon as practicable
following the Expiration Date, and expects to be able to announce the final
results of proration within eight NYSE trading days after the Expiration Date.
Holders of Shares may obtain such preliminary information from the Depositary
or the Information Agent and may be able to obtain such information from their
brokers. Under the Stock Purchase Agreement, the Purchaser may not purchase
less than 18,619,000 Shares under the Offer.
Pursuant to the Stock Purchase Agreement, 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 (as
defined herein) or (v) otherwise amend the Offer in any manner adverse to the
Company's stockholders.
Under the Stock Purchase Agreement, the Purchaser has agreed to extend the
Offer (A) if at 12:00 midnight, New York City time, on Tuesday, September 19,
1995 (or any other date or time then set as the Expiration Date), any of the
conditions to the Offer have not been satisfied or waived, until such time as
such Offer Conditions (as defined herein) are satisfied or waived and (B) for
any period required by any rule, regulation, interpretation or position of the
Securities and Exchange Commission or the staff thereof (the "Commission")
applicable to the Offer; provided however, that the Purchaser may terminate the
Offer if the Stock Purchase Agreement is terminated. In the event that the
Purchaser waives any of the conditions set forth in Section 6, if the waiver is
deemed to constitute a material change to the information previously provided
to the stockholders, the Offer may be required to remain open for an additional
period of time and/or the Purchaser may be required to disseminate information
concerning such waiver.
Any extension, amendment or termination will be followed as promptly as
practicable by public announcement in accordance with the public announcement
requirements of Rule 14e-1(d) under the Exchange Act. Subject to applicable law
(including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which require
that any material change in the information published, sent or given to
stockholders in connection with the Offer be promptly disseminated to
stockholders in a manner reasonably designed to inform stockholders of such
change) and without limiting the manner in which the Purchaser may choose to
make any public announcement, the Purchaser shall have no obligation to
publish, advertise or otherwise communicate any such public announcement other
than by making a release to the Dow Jones News Service.
3
<PAGE>
If the Purchaser extends the Offer, or if the Purchaser (whether before or
after its acceptance for payment of Shares) is delayed in its payment for
Shares or is unable to pay for Shares pursuant to the Offer for any reason,
then, without prejudice to the Purchaser's rights under the Offer, the
Depositary may retain tendered Shares on behalf of the Purchaser, and such
Shares may not be withdrawn except to the extent tendering stockholders are
entitled to withdrawal rights as described in Section 3. However, as described
above, the ability of the Purchaser to delay payment for Shares that the
Purchaser has accepted for payment is limited by Rule 14e-1(c) under the
Exchange Act.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
the Purchaser will disseminate additional tender offer materials (including by
public announcement as set forth above) and extend the Offer to the extent
required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. Such
rules generally provide that the minimum period during which a tender offer
must remain open following a material change in the terms of the offer or
information concerning the offer, other than a change in price or a change in
percentage of securities sought, will depend upon the facts and circumstances,
including the relative materiality of the changes in the terms or information.
With respect to a change in price or a change in percentage of securities
sought, a minimum ten business day period is generally required to allow for
adequate dissemination to stockholders and for investor response. As used in
this Offer to Purchase, "business day" has the meaning set forth in Rule 14d-1
under the Exchange Act. The Purchaser confirms that its right to delay payment
for Shares that it has accepted for payment is limited by Rule 14e-1(c) under
the Exchange Act, which requires that a tender offeror pay the consideration
offered or return the tendered securities promptly after the termination or
withdrawal of a tender offer.
The Company has provided the Purchaser with the Company stockholder list, a
non-objecting beneficial owners list, if any, and security position listings
for the purpose of disseminating the Offer to holders of Shares. This Offer to
Purchase and the Letter of Transmittal and other relevant materials will be
mailed to record holders of Shares and furnished to brokers, dealers,
commercial banks, trust companies and similar persons whose names, or the names
of whose nominees, appear on the stockholder list or, if applicable, who are
listed as participants in a clearing agency's security position listing, for
subsequent transmittal to beneficial owners of Shares.
2. PROCEDURE FOR TENDER OF SHARES
Valid Tender of Shares. For a stockholder to validly tender Shares pursuant
to the Offer, a properly completed and duly executed Letter of Transmittal (or
manually signed facsimile thereof), with any required signature guarantees and
any other required documents, or an Agent's Message (as defined herein) in case
of book-entry delivery as described below, must be received by the Depositary
at one of its addresses set forth on the back cover of this Offer to Purchase,
and either certificates for tendered Shares must be received by the Depositary
at one of such addresses or such Shares must be delivered pursuant to the
procedure for book-entry transfer set forth below (and a confirmation of
receipt of such delivery received by the Depositary), in each case prior to the
Expiration Date, or the tendering stockholder must comply with the guaranteed
delivery procedures set forth below.
Signature Guarantees. No signature guarantee on the Letter of Transmittal is
required if the Letter of Transmittal is signed by the registered holder of the
Shares tendered therewith (unless such holder has completed either the box
entitled "Special Delivery Instructions" or the box entitled "Special Payment
Instructions" in the Letter of Transmittal) or if Shares are tendered for the
account of a financial institution that is a member of the Securities Transfer
Agents Medallion Program, the Stock Exchange Medallion Program or the New York
Stock Exchange, Inc. Medallion Signature Program (each being hereinafter
referred to as an "Eligible Institution"). In all other cases, all signatures
on the Letter of Transmittal must be guaranteed by an Eligible Institution. See
Instructions 1 and 5 of the Letter of Transmittal.
4
<PAGE>
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES,
IS AT THE OPTION AND SOLE RISK OF THE TENDERING STOCKHOLDER. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
Book-Entry Transfers. The Depositary will establish accounts with respect to
the Shares at The Depository Trust Company, the Midwest Securities Trust
Company and the Philadelphia Depository Trust Company (each individually, a
"Book-Entry Transfer Facility" and, collectively, the "Book-Entry Transfer
Facilities") for purposes of the Offer within two business days after the date
of this Offer to Purchase, and any financial institution that is a participant
in any of the Book-Entry Transfer Facilities' systems may make book-entry
delivery of the Shares by causing any Book-Entry Transfer Facility to transfer
such Shares into the Depositary's account in accordance with such Book-Entry
Transfer Facility's procedure for such transfer. Although delivery of Shares
may be effected through book-entry transfer at any Book-Entry Transfer
Facility, a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), with any required signature guarantees and any other
required documents, must, in any case, be transmitted to and received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase prior to the Expiration Date, or the guaranteed delivery procedures
described below must be complied with. DELIVERY OF THE LETTER OF TRANSMITTAL
AND ANY OTHER REQUIRED DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN
ACCORDANCE WITH THAT BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
Backup Federal Income Tax Withholding. To prevent backup federal income tax
withholding on payments made with respect to Shares purchased pursuant to the
Offer, a tendering stockholder must provide the Depositary with such
stockholder's correct taxpayer identification number by completing the
Substitute Form W-9 included in the Letter of Transmittal. See Instruction 8 of
the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available (or the procedures for book-entry transfer cannot be completed on a
timely basis) or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such Shares may nevertheless be
tendered provided that all of the following conditions are satisfied:
(a) such tender is made by or through an Eligible Institution;
(b) the Depositary receives, prior to the Expiration Date, a properly
completed and duly executed Notice of Guaranteed Delivery substantially
in the form provided by the Purchaser; and
(c) the certificates for all tendered Shares, in proper form for transfer
(or confirmation of book-entry transfer of such Shares into the
Depositary's account at one of the Book Entry Transfer Facilities),
together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) and any other documents required by
the Letter of Transmittal, are received by the Depositary within five
NYSE trading days after the date of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, or may be
transmitted by telegram, telex, facsimile transmission or mail, to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such Notice of Guaranteed Delivery and a representation that the
stockholder on whose behalf the tender is being made is deemed to own the
Shares being tendered within the meaning of Rule 14e-4 under the Exchange Act.
Notwithstanding any other provision of the Offer, payment for Shares accepted
for payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of certificates
5
<PAGE>
for such Shares (or a timely confirmation of a book-entry transfer of such
Shares into the Depositary's account at one of the Book-Entry Transfer
Facilities), a properly completed and duly executed Letter of Transmittal (or
manually signed facsimile thereof) or an Agent's Message in connection with a
book-entry transfer and any other documents required by the Letter of
Transmittal. The term "Agent's Message" means a message transmitted through
electronic means by a Book-Entry Transfer Facility to and received by the
Depositary and forming a part of a book-entry confirmation, which states that
such Book-Entry Transfer Facility has received an express acknowledgment from
the participant in such Book-Entry Transfer Facility tendering the Shares that
such participant has received and agrees to be bound by the Letter of
Transmittal.
Appointment as Proxy After Acceptance for Payment. A TENDER OF SHARES DOES
NOT CONSTITUTE A VOTE, OR THE APPOINTMENT OF A PROXY, IN CONNECTION WITH THE
STOCKHOLDER PROPOSALS. IN ORDER TO VOTE FOR THE STOCKHOLDER PROPOSALS, A
TENDERING STOCKHOLDER IS REQUIRED TO SUBMIT A PROXY OR VOTE IN PERSON AT THE
STOCKHOLDER MEETING. By executing the Letter of Transmittal, a tendering
stockholder irrevocably appoints designees of the Purchaser as such
stockholder's proxies, in the manner set forth in the Letter of Transmittal,
each with full power of substitution, to the full extent of such stockholder's
rights with respect to the Shares tendered by such stockholder (and any and all
other Shares or other securities or rights issued or issuable in respect of
such Shares on or after July 21, 1995), effective when, if and to the extent
that the Purchaser accepts such Shares for payment pursuant to the Offer. Upon
such acceptance for payment, all prior proxies given by such stockholder with
respect to such Shares accepted for payment or other securities or rights will,
without further action, be revoked, and no subsequent proxies may be given.
Such designees of the Purchaser will, with respect to such Shares, be empowered
to exercise all voting and other rights of such stockholder as they in their
sole discretion may deem proper in respect of any annual, special or adjourned
meeting of the Company's stockholders, by consent in lieu of any such meeting
or otherwise. In order for Shares to be deemed validly tendered, immediately
after the Purchaser's acceptance for payment of such Shares, the Purchaser must
be able to exercise full voting and other rights with respect to such Shares.
The Purchaser's acceptance for payment of Shares tendered pursuant to any of
the procedures described above will constitute a binding agreement between the
tendering stockholder and the Purchaser upon the terms and subject to the
conditions of the Offer.
Determination of Validity; Rejection of Shares; Waiver of Defects; No
Obligation to Give Notice of Defects. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tendered Shares will be determined by the Purchaser in its sole discretion, and
its determination will be final and binding. The Purchaser reserves the
absolute right to reject any or all tenders of any Shares that it determines
are not in appropriate form or the acceptance for payment of or payment for
which may, in the opinion of the Purchaser's counsel, be unlawful. Subject to
the terms of the Stock Purchase Agreement, the Purchaser also reserves the
absolute right to waive any of the conditions of the Offer or any defect or
irregularity in any tender with respect to any particular Shares or any
particular stockholder and the Purchaser's interpretation of the terms and
conditions of the Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding. No tender of Shares will be
deemed to have been validly made until all defects or irregularities have been
cured or expressly waived. None of the Purchaser, the Dealer Manager, the
Depositary, the Information Agent or any other person will be obligated to give
notice of any defects or irregularities in tenders or incur any liability for
failure to give any such notice.
3. WITHDRAWAL RIGHTS
Tenders of Shares made pursuant to the Offer will be irrevocable, except that
Shares tendered may be withdrawn at any time prior to the Expiration Date, and,
unless theretofore accepted for payment and paid for as provided herein, may
also be withdrawn at any time on or after September 18, 1995.
6
<PAGE>
For a withdrawal to be effective, a written, telegraphic, or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase. Any
notice of withdrawal must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name in
which the certificates representing such Shares are registered, if different
from that of the person who tendered such Shares. If certificates for Shares to
be withdrawn have been delivered or otherwise identified to the Depositary, the
serial numbers shown on the particular certificates evidencing such Shares to
be withdrawn must also be furnished to the Depositary as aforesaid prior to the
physical release of the Shares to be withdrawn, together with a signed notice
of withdrawal with signatures guaranteed by an Eligible Institution (except,
with respect to signature guarantees, in the case of Shares tendered by an
Eligible Institution). If Shares have been delivered pursuant to the procedure
for book-entry transfer set forth in Section 2, any notice of withdrawal must
specify the name and number of the account at the appropriate Book-Entry
Transfer Facility to be credited with such withdrawn Shares and must otherwise
comply with such Book-Entry Transfer Facility's procedures.
If the Purchaser extends the Offer, is delayed in its acceptance for payment
of or payment for Shares, or is unable to accept or pay for Shares for any
reason, then, without prejudice to the Purchaser's rights under the Offer,
tendered Shares may be retained by the Depositary on behalf of the Purchaser
and such Shares may not be withdrawn except to the extent that tendering
stockholders are entitled to withdrawal rights as set forth in this Section 3.
Withdrawals of tendered Shares may not be rescinded, and any Shares properly
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. However, withdrawn Shares may be re-tendered by following the procedures
described in Section 2 at any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notice of withdrawal will be determined by the Purchaser in its sole
discretion, and its determination will be final and binding. None of the
Purchaser, the Dealer Manager, the Depositary, the Information Agent or any
other person will be obligated to give notice of any defects or irregularities
in any notice of withdrawal, nor shall any of them incur any liability for
failure to give any such notice.
4. ACCEPTANCE FOR PAYMENT AND PAYMENT OF PURCHASE PRICE
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any extension or
amendment), the Purchaser will accept for payment and pay for up to 18,619,000
Shares validly tendered prior to the Expiration Date (and not properly
withdrawn in accordance with Section 3 above) as soon as practicable after the
Expiration Date. Any determination concerning the satisfaction of such terms
and conditions shall be within the sole discretion of the Purchaser and such
determination shall be final and binding on all tendering stockholders. See
Section 6. The Purchaser expressly reserves the right to delay acceptance for
payment of, or payment for, Shares in order to comply in whole or in part with
any applicable law, including, without limitation, the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), Section 721 of
the Defense Production Act of 1950, as amended (the "Exon-Florio Amendment"),
and the laws of the Republic of Korea. If the Purchaser desires to delay
payment for Shares purchased pursuant to the Offer, and such delay would
otherwise be in contravention of Rule 14e-1(c) of the Exchange Act, the
Purchaser will extend the Offer. In all cases, payment for Shares accepted for
payment pursuant to the Offer will be made only after timely receipt by the
Depositary of certificates for such Shares (or a timely confirmation of a book-
entry transfer of such Shares into the Depositary's account at one of the Book-
Entry Transfer Facilities, as described in Section 2), a properly completed and
duly executed Letter of Transmittal (or manually signed facsimile thereof) or
an Agent's Message in connection with a book-entry transfer and any other
documents required by the Letter of Transmittal.
7
<PAGE>
The Purchaser expects to file a Notification and Report Form with respect to
the Offer and the Stock Acquisition under the HSR Act as soon as practicable
following commencement of the Offer. The waiting period under the HSR Act with
respect to the Offer will expire at 11:59 p.m., New York City time, on the 15th
day after the date such form is filed and the waiting period with respect to
the Stock Acquisition will expire at 11:59 p.m., New York City time, on the
30th day after the date such form is filed by both the Purchaser and the
Company, in each case unless early termination of the waiting period is
granted. In addition, the Antitrust Division of the Department of Justice (the
"Antitrust Division") or the Federal Trade Commission (the "FTC") may extend
such waiting periods by requesting additional information or documentary
material from the Purchaser or, in case of the waiting period applicable to the
Stock Acquisition, the Company as well. If such a request is made with respect
to the Offer, the waiting period related to the Offer will expire at 11:59
p.m., New York City time, on the 10th day after substantial compliance by the
Purchaser with such request. If such request is made with respect to the Stock
Acquisition, the waiting period related to the Stock Acquisition will expire at
11:59 p.m., New York City time, on the 20th day after substantial compliance
with such request by each party to whom such a request is made. The Offer will
not be consummated until the waiting periods under the HSR Act with respect to
both the Offer and the Stock Acquisition have expired or have been terminated.
See Section 15 for additional information concerning the HSR Act.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares which have been validly tendered and not
withdrawn when, as and if the Purchaser gives oral or written notice to the
Depositary of the Purchaser's acceptance for payment of such Shares pursuant to
the Offer. Upon the terms and subject to the conditions of the Offer, payment
for Shares so accepted for payment will be made by the deposit of the purchase
price therefor with the Depositary, which will act as agent for the tendering
stockholders for the purpose of receiving such payment from the Purchaser and
transmitting such payment to tendering stockholders. IN NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE BY REASON OF ANY DELAY IN MAKING SUCH
PAYMENT.
If for any reason (including, without limitation, proration) acceptance for
payment of or payment for any Shares tendered pursuant to the Offer is delayed
or the Purchaser is unable to accept for payment or pay for tendered Shares,
then, without prejudice to the Purchaser's rights under Section 6, the
Depositary may, nevertheless, on behalf of the Purchaser, retain tendered
Shares, and such Shares may not be withdrawn except to the extent that
tendering stockholders are entitled to withdrawal rights as described in
Section 3.
If any tendered Shares are not accepted for payment and paid for,
certificates for such Shares will be returned (or, in the case of Shares
delivered by book-entry transfer with any Book-Entry Transfer Facility as
permitted by Section 2, such Shares will be credited to an account maintained
with such Book-Entry Transfer Facility) without expense to the tendering
stockholder as promptly as practicable following the expiration or termination
of the Offer, as the case may be.
If, prior to the Expiration Date, the Purchaser increases the consideration
to be paid for Shares pursuant to the Offer, the Purchaser will pay such
increased consideration for all Shares accepted for payment pursuant to the
Offer, whether or not such Shares have been tendered or accepted for payment
prior to such increase in the consideration.
The Purchaser reserves the right to transfer or assign to one or more
majority-owned subsidiaries of the Purchaser the right to purchase Shares
tendered pursuant to the Offer, but any such transfer or assignment will not
relieve the Purchaser of its obligations under the Offer or prejudice the
rights of tendering stockholders to receive payment for Shares validly tendered
and accepted for payment pursuant to the Offer.
8
<PAGE>
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The receipt of cash for Shares pursuant to the Offer will be a taxable
transaction for federal income tax purposes (and may also be a taxable
transaction under applicable state, local, foreign and other tax laws).
Accordingly, a stockholder will recognize gain or loss for federal income tax
purposes equal to the difference between the amount of cash received and such
stockholder's tax basis in the Shares. Such gain or loss will be capital gain
or loss if the Shares were held as a capital asset and any such gain or loss
will be long term if, as of the date of sale, the Shares were held for more
than one year or will be short term if, as of such date, the Shares were held
for one year or less.
IN VIEW OF THE INDIVIDUAL NATURE OF TAX CONSEQUENCES, STOCKHOLDERS ARE URGED
TO CONSULT THEIR OWN ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF
THE OFFER.
6. CERTAIN CONDITIONS OF 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 following being referred to as
the "Offer Conditions") the purchase by the Purchaser of the Issue Shares, to
be consummated simultaneously with the purchase of the Offer Shares, and to the
conditions that (i) the Stock Purchase 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 and not withdrawn at least 18,619,000
Shares, and (iii) to the satisfaction or waiver of the following conditions:
(a) Stockholder Approval. The Company's stockholders shall have approved
the transactions contemplated by the Stock Purchase Agreement, including
the issuance and sale to the Purchaser of the Issue Shares and the purchase
by the Purchaser of the Offer Shares as contemplated by the Stock Purchase
Agreement, which transactions shall be described in a proxy statement and
related proxy materials, and submitted to a vote of the Company's
stockholders (the "Stockholder Proposals").
(b) No Prohibition. No statute, rule, regulation, judgment, order,
decree, ruling, injunction, or other action shall have been entered,
promulgated or enforced by 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 the Stock Purchase Agreement
("Governmental Authorities") 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 Stock Purchase
Agreement or (ii) impose material adverse terms or conditions (not set
forth in the Stock Purchase Agreement) upon the purchase and sale of any
Offer Shares as contemplated by the Stock Purchase Agreement.
(c) 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 Stock Purchase 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 of the transactions contemplated by the Stock Purchase Agreement
(the "Closing") in connection with the purchase and sale of the Offer
Shares as contemplated by the Stock Purchase Agreement shall have been
issued, and 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 Stock Purchase 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 in the Stock Purchase
Agreement) upon the purchase and sale of any Offer Shares as contemplated
by the Stock Purchase Agreement.
9
<PAGE>
(d) Exon-Florio. The Purchaser and the Company shall have delivered to
the Committee on Foreign Investment in the United States ("CFIUS")
appropriate notification and report forms pursuant to the Exon-Florio
Amendment, 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 Stock Purchase 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 Stock
Purchase Agreement, or (iii) if CFIUS commences an investigation of the
transactions contemplated by the Stock Purchase Agreement, such
investigation shall have been resolved to the mutual satisfaction of the
Purchaser and the Company.
(e) Directors. Provision shall have been made to the satisfaction of
Purchaser that, immediately following the Closing, the Board of Directors
of the Company will be composed of ten directors and six of such directors
shall be designees of the 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 persons who are not (apart
from such directorship) affiliates, officers, employees, agents, principals
or partners of the Purchaser or the Company or any subsidiary of either of
them who are, if they are willing to serve, members of the Board of
Directors of the Company immediately prior to the Closing.
(f) Performance. The Company shall have performed in all material
respects its obligations under the Stock Purchase Agreement to the date of
the Closing.
(g) Amended Bylaws. The Company shall have amended its Bylaws in the
manner contemplated by the Stock Purchase Agreement (as amended, the
"Amended Bylaws") immediately prior to the Closing and such amendments
shall have been duly authorized, approved and effected.
(h) Amendment of Rights Agreement. The Rights Agreement shall have been
amended by the Company to specifically exclude the Purchaser and its
affiliates from the definition of "Acquiring Person" (as defined in the
Rights Agreement) and to otherwise avoid any adverse consequence to
Purchaser or the Company, including, without limitation, the occurrence of
a "Distribution Date" (as defined in the Rights Agreement) as a consequence
of the transactions contemplated by the Stock Purchase Agreement, the
Company Letter (as defined below), the Tender Offer Statement on Schedule
14D-1 and related Offer to Purchase, form of letter of transmittal and
summary advertisement to be used in connection with the Offer (the "Offer
Documents"), the Solicitation/Recommendation Statement on Schedule 14D-9
pertaining to the Offer and the Amended Bylaws (collectively, together with
any amendments thereof, and all supplements, annexes and exhibits thereto,
the "Transaction Documents").
(i) 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 the Stock Purchase
Agreement.
(j) Representations and Warranties True. Except as otherwise contemplated
by the Stock Purchase Agreement and except for the representations and
warranties of the Company with respect to capital stock set forth in the
Stock Purchase Agreement 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 Stock Purchase 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,
except that the Company's financial statements shall continue to be true
only as of the respective dates covered thereby.
(k) Certificate. The Company shall have delivered to the Purchaser a
certificate dated as of the Closing and signed by the Chief Financial
Officer and the General Counsel of the Company
10
<PAGE>
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 the Stock
Purchase Agreement with respect to capital stock and the representations
and warranties contained in the Stock Purchase Agreement that 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 Stock Purchase Agreement that are not so qualified,
provided that the Company's representations and warranties contained in the
Stock Purchase 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 Stock Purchase Agreement as of the Closing.
(l) 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 Stock Purchase 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.
(m) Items in Company Letter. The Purchaser shall be satisfied that
certain claims and matters described in the letter, dated as of the date of
the Stock Purchase Agreement, from the Company to the Purchaser (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 Stock Purchase Agreement have not resulted in, and would not
reasonably be expected to result in, a "Material Adverse Effect." "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 the Stock Purchase Agreement or consummate the
transactions contemplated thereby. 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.
The Stock Purchase Agreement provides that 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
rights 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)
will be final and binding on the parties. 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.
To the extent required by applicable law, a public announcement shall be made
of a material change in, or waiver of, such conditions, and the Offer may, in
certain circumstances, be extended in connection with any such change or
waiver.
The Purchaser acknowledges that (a) if the Purchaser is delayed in accepting
the Shares it must either extend the Offer or terminate the Offer and promptly
return the Shares, and (b) the circumstances in which a delay in payment is
permitted are limited and do not include unsatisfied conditions of the Offer,
except with respect to any approval required under the HSR Act and most other
regulatory approvals.
11
<PAGE>
7. PRICE RANGE OF THE COMMON STOCK
According to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1994 (the "1994 10-K"), the Common Stock is principally
traded on the NYSE. The following table sets forth, for the periods indicated,
the high and low sales prices of the Common Stock as reported by the Company in
the 1994 10-K with respect to the years ended December 31, 1993 and December
31, 1994, and as reported by published financial sources with respect to
periods after December 31, 1994.
<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
Year Ended December 31, 1993:
First Quarter........................................... $ 8 3/8 $ 5 3/4
Second Quarter ......................................... 10 1/2 6 1/2
Third Quarter........................................... 8 3/8 6 1/4
Fourth Quarter ......................................... 8 1/8 6 1/4
Year Ended December 31, 1994:
First Quarter........................................... 13 1/2 7
Second Quarter ......................................... 10 1/2 8 1/4
Third Quarter........................................... 12 1/8 8 5/8
Fourth Quarter ......................................... 14 1/8 10 5/8
Year Ending December 31, 1995:
First Quarter........................................... 12 1/8 7 1/2
Second Quarter.......................................... 8 1/2 6 7/8
Third Quarter (through July 20, 1995)................... 9 1/4 7 1/4
</TABLE>
On July 14, 1995, the last full trading day prior to the date of the
announcement of the execution of the Stock Purchase Agreement and the
Purchaser's intention to commence the Offer, the last sales price of the Common
Stock on the NYSE was $8 1/2 per share of Common Stock. On July 20, 1995, the
last full trading day prior to the commencement of the Offer, such last sales
price was $8 7/8 per share. STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET
QUOTATION FOR THE COMMON STOCK.
8. POSSIBLE EFFECTS OF THE OFFER ON THE MARKET FOR COMMON STOCK; STOCK
QUOTATION; REGISTRATION UNDER THE EXCHANGE ACT
The purchase of Shares pursuant to the Offer will likely reduce the number of
Shares that might otherwise trade publicly. However, a significant percentage
of the outstanding Shares will continue to be held by persons other than the
Purchaser, and the Purchaser does not believe that its purchase of the Offer
Shares is likely to result in the Company's failure to meet the requirements of
the NYSE for continued listing on the NYSE or in the Shares becoming eligible
for deregistration under the Exchange Act. The Purchaser believes that its
purchase of the Offer Shares and the Issue Shares should not have a material
adverse effect on the liquidity and market value of the remaining Shares held
by the public.
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System, which has the effect, among
other things, of allowing brokers to extend credit on such Shares as
collateral. Following the Offer, the Shares will continue to be "margin
securities."
The Shares are currently registered under the Exchange Act and will continue
to be registered thereunder after the Offer.
9. DIVIDENDS AND DISTRIBUTIONS
According to the 1994 10-K, the Company did not pay cash dividends during the
two years ended December 31, 1994.
12
<PAGE>
10. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a Delaware corporation with its principal offices located at
1000 Milwaukee Avenue, Glenview, Illinois 60025. The following description of
the Company's business has been taken from the 1994 10-K:
The Company was founded in 1918 and has been a leader in consumer
electronics, first in radio and later in monochrome and color television and
other video products. The Company's operations involve a dominant industry
segment, the design, development and manufacture of video products (including
color television sets and other consumer products) along with parts and
accessories for such products. These products along with purchased video
cassette recorders are sold principally to major retail dealers and independent
and wholly-owned regional wholesale distributors in the United States, Canada
and other foreign countries. The Company intends to change over to an entirely
direct-to-retail distribution organization during 1995. The Company also sells
directly to buying groups and private label customers in the lodging, health
care and rent-to-own industries.
The Company's video products also include color picture tubes that are
produced for and sold to other manufacturers and Network Systems products such
as cable and telecommunication set-top devices, interactive television and data
communication products which are sold primarily to cable television operators
and other commercial users of these products.
The Company has announced a second-quarter 1995 net loss of $45.3 million or
$.97 per Share, compared with a net loss of $8.4 million, or $.20 per Share in
the second quarter of 1994. Second quarter 1995 results included $18.0 million
in special charges for severance and other non-recurring items. Total second
quarter sales were $284.6 million in 1995 and $299.0 million in 1994.
Summary Financial Information
The following table sets forth certain summary consolidated financial
information with respect to the Company and its consolidated subsidiaries
derived from the audited financial statements contained in the 1994 10-K and
from the unaudited financial statements of the Company in the Company's
quarterly report on Form 10-Q for the fiscal quarter ended April 1, 1995. The
summary below is qualified by reference to such documents (which may be
inspected and obtained as described below), including the financial statements
and related notes contained therein.
THE COMPANY AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
FIRST FISCAL FISCAL YEAR ENDED DECEMBER
QUARTER ENDED 31,
APRIL 1, ----------------------------
1995 1994 1993 1992
------------- -------- -------- --------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Results of operations:
Net sales....................... $262.1 $1,469.0 $1,228.2 $1,243.5
Pre-tax income (loss) from
continuing operations.......... (24.3) (14.5) (97.0) (121.8)
Net income (loss)............. $(24.3) $ (14.2) $ (97.0) $ (105.9)
====== ======== ======== ========
Per share of common stock (primary
and fully diluted):
Net income (loss)............. $ (.53) $ (.34) $ (3.01) $ (3.59)
====== ======== ======== ========
Financial position:
Total assets.................... $680.1 $ 653.6 $ 559.4 $ 578.6
Long-term debt.................. 182.0 182.0 170.0 149.5
Stockholders' equity............ 212.8 228.3 152.4 210.1
Book value per share.............. $ 4.53 $ 5.00 $ 4.25 $ 6.94
</TABLE>
13
<PAGE>
Other Information
The Shares are registered under the Exchange Act. Accordingly, the Company is
subject to the informational filing requirements of the Exchange Act and, in
accordance therewith, is obligated to file periodic reports, proxy statements
and other information with the Commission relating to its business, financial
condition and other matters. Information, as of particular dates, concerning
the Company's directors and officers, their remuneration, options granted to
them, the principal holders of the Company's securities and any material
interest of such persons in transactions with the Company is required to be
disclosed in such proxy statements and distributed to the Company's
stockholders and filed with the Commission. Such reports, proxy statements, and
other information should be available for inspection at the public reference
facilities of the Commission located in Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and should also be available for inspection and
copying at the regional offices of the Commission located in Citicorp Center,
500 West Madison Street, Chicago, Illinois 60661, and Seven World Trade Center,
Suite 1300, New York, New York 10048. Copies of this material may also be
obtained by mail, upon payment of the Commission's customary fees, from the
Commission's principal office at 450 Fifth Street, N.W., Washington, D.C.
20549. In addition, such material should also be available for inspection at
the library of the NYSE. Except as otherwise noted in this Offer to Purchase,
all of the information with respect to the Company set forth in this Offer to
Purchase has been provided by the Company or derived from publicly available
information. Although the Purchaser has no knowledge that any such information
is untrue, the Purchaser takes no responsibility for the accuracy or
completeness of information contained in this Offer to Purchase with respect to
the Company or for any failure by the Company to disclose events which may have
occurred or may affect the significance or accuracy of any such information.
11. CERTAIN INFORMATION CONCERNING THE PURCHASER
The Purchaser is a corporation organized under the laws of the Republic of
Korea with its principal offices located at LG Twin Towers, 20, Yoido-dong,
Youngdungpo-gu, Seoul, 150-721, Korea. The Purchaser is a leading international
brand-name manufacturer of five main groups of products: televisions; audio and
video equipment; home appliances; computers and office automation equipment;
and other products, including video displays, telecommunications products and
components, and magnetic media.
Set forth below is a summary of certain financial data with respect to the
Purchaser for and as of its fiscal years ended December 31, 1994, December 31,
1993 and December 31, 1992. The financial information set forth below was
prepared in accordance with Korean generally accepted accounting principles
("Korean GAAP"), which differ in certain respects from United States generally
accepted accounting principles. For example, under Korean GAAP, property, plant
and equipment are recorded at cost, except for upward revaluation to give
accounting recognition to some extent to the loss in purchasing power of the
Korean Won. Such revaluation presents production facilities and buildings at
their depreciated replacement cost and land at the prevailing market value, as
of the effective date of the revaluation.
Investments in subsidiaries and affiliated companies are reported at cost.
Neither consolidation of subsidiaries nor the equity method of accounting for
minority-owned companies is applied in the financial statements of the
Purchaser.
The official accounting records of the Purchaser are maintained in Korean Won
in accordance with the laws and regulations of the Republic of Korea. The
financial data for the Purchaser's fiscal years ended December 31, 1994, 1993
and 1992, respectively, have been translated into U.S. Dollars at the
respective rates of 789, 808 and 788 Won per U.S. Dollar, which were the
respective official rates on December 31, 1994, 1993 and 1992.
14
<PAGE>
THE PURCHASER
<TABLE>
<CAPTION>
FISCAL YEARS ENDED DECEMBER 31,
--------------------------------
1994 1993 1992
---------- ---------- ----------
(IN THOUSANDS OF U.S. DOLLARS)
<S> <C> <C> <C> <C>
Net sales
Domestic................................. $2,881,084 $2,462,150 $2,266,709
Overseas................................. 3,645,109 2,888,796 2,539,699
---------- ---------- ----------
Total.................................. $6,526,193 $5,350,946 $4,806,408
========== ========== ==========
Operating results
Revenue.................................. $6,572,020 $5,377,287 $4,811,478
Expenses................................. 6,415,450 5,271,226 4,756,262
Net income................................. 132,619 81,226 33,653
<CAPTION>
AT DECEMBER 31,
------------------------------------
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C> <C>
Financial position
Total assets............................. $5,612,650 $4,520,010 $4,361,399
Shareholders' equity..................... 1,584,555 1,550,554 1,044,548
</TABLE>
The name, business address, present principal occupation or employment and
citizenship of each of the executive officers of the Purchaser and each of the
persons carrying out functions in the Purchaser similar to that of a director
and/or executive officer in a United States corporation are set forth in Annex
I hereto.
Except as described in this Offer to Purchase (i) none of the Purchaser or,
to the best knowledge of the Purchaser, any of the persons listed in Annex I
hereto, or any associate or majority-owned subsidiary of the Purchaser or any
of the persons so listed, beneficially owns any security of the Company or has
any contract, arrangement, understanding or relationship with any other person
with respect to any securities of the Company, including, but not limited to,
any contract, arrangement, understanding or relationship concerning the
transfer or the voting of any securities of the Company, joint ventures, loan
or option arrangements, puts or calls, guaranties of loans, guaranties against
loss, or the giving or withholding of proxies, and (ii) none of the Purchaser
or, to the best knowledge of the Purchaser, any of the other persons referred
to above, or any of the respective directors, executive officers or
subsidiaries of any of the foregoing, has effected any transaction in any
security of the Company during the past 60 days.
12. SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by the Purchaser to purchase the Offer
Shares and the Issue Shares and to pay related fees and expenses will be
approximately $360 million. The Purchaser will provide such funds from its
existing funds or its affiliates' existing funds, from existing credit
facilities or from new credit facilities established for this purpose or from a
combination of the foregoing. No decision has been made concerning which of the
foregoing sources the Purchaser will utilize. Such decision will be made based
on the Purchaser's review from time to time of the advisability of particular
actions, as well as on prevailing interest rates and financial and other
economic conditions and such other factors as the Purchaser may deem
appropriate. The Purchaser will file an amendment to its Tender Offer Statement
on Schedule 14D-1 and Schedule 13D (the "Schedule 14D-1") promptly after any
such decision is made. The Purchaser has not conditioned the Offer or the Stock
Acquisition on obtaining financing.
15
<PAGE>
The Purchaser anticipates that any indebtedness incurred through borrowings
under credit facilities will be repaid from a variety of sources, which may
include, but may not be limited to, funds generated internally by the Purchaser
and its affiliates, bank financing, and the public or private sale of debt or
equity securities. No decision has been made concerning the method the
Purchaser will employ to repay such indebtedness. Such decision will be made
based on the Purchaser's review from time to time of the advisability of
particular actions, as well as on prevailing interest rates and financial and
other economic conditions and such other factors as the Purchaser may deem
appropriate.
13. CONTACTS WITH THE COMPANY; BACKGROUND OF THE OFFER
The Company's primary business has been the consumer electronics business in
the United States. This business in the United States has been marked by
intense competition, with the Company's major competitors being significantly
larger foreign owned companies, generally with greater worldwide television
volume and overall resources. In efforts to increase market share or achieve
higher production volumes, the Company's competitors have aggressively lowered
their selling prices in the past several years. Despite the Company's
significant cost reduction measures, the Company's achievement of record unit
sales in 1994, recent growth in the Company's market share in the United
States, significant sales growth in Latin America and its growing cable
products business, the Company has incurred losses in all but one of the years
since 1985.
As part of its strategy to return to profitability, the Company developed a
plan in 1994 to expand and modernize its Melrose Park, Illinois color picture
tube plant by adding a fifth color picture tube production line, capable of
handling larger, wider-screen tubes, and by increasing automation on existing
production lines. In seeking the $150 million funding necessary for this
program, the Company initiated discussions in June 1994 with the Purchaser with
respect to a possible joint venture involving the Melrose Park plant. At a
meeting on November 15, 1994 among Jerry K. Pearlman, Chairman of the Company
(and at the time its chief executive officer), certain other officers of the
Company, and Mr. Cha Hong (John) Koo, President of the Purchaser, and certain
other officers of the Purchaser, the Company suggested that, as an alternative,
the Purchaser consider an equity investment in the Company. However, the
Purchaser indicated that at that time it was interested only in the joint
venture. The Company and the Purchaser executed a Mutual Non-Disclosure
Agreement dated as of November 25, 1994. Numerous discussions concerning the
possible joint venture were held between the Purchaser and the Company over the
next several months. In late March 1995, the Purchaser submitted a proposal to
the Company for the joint venture, and the parties subsequently discussed a
number of revised proposals, with the last proposal being submitted to the
Company at the June 27, 1995 meeting of the Company's board of directors
described below.
The Company's selection of the Purchaser as a possible joint venture partner
grew out of a long-standing business relationship with the Purchaser, as well
as the Company's high regard for the Purchaser's manufacturing and automation
expertise. This relationship began in the mid-1970's when the Purchaser
produced radios for the Company. Since then the Company has purchased
electronic components from the Purchaser and in recent years the Company has
produced color picture tubes and other components for the Purchaser, and the
Purchaser has produced VCRs and TV-VCR combination products for the Company. In
1991, the Purchaser purchased 1,450,000 shares of newly issued shares of the
Company's Common Stock. At that time, the Company and the Purchaser also
entered into a number of additional technology agreements, providing for, among
other things, expanded cooperative engineering efforts on products, including
high definition television.
In January 1995, Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill
Lynch") began assisting the Company in exploring possible strategic
alternatives, especially focusing on alternatives for raising equity capital to
fund the Melrose Park expansion and modernization program.
On February 23, 1995, the Company announced that, effective on April 24, 1995
(the date of its annual meeting of stockholders), Mr. Albin F. Moschner would
become President and Chief Executive Officer and Mr. Pearlman would retire,
remaining as Chairman until December 31, 1995.
16
<PAGE>
In March and early April, 1995, the Company began the process for a public
equity offering, but this process ended in mid-April in light of the Company's
first quarter results and its expectations for the year.
In April 1995, the Chairman of the Executive Committee of the Board of the
Company, Mr. T. Kimball Brooker, was contacted by representatives of a non-
United States entity involved in the consumer electronics business (the "Other
Consumer Products Entity") which had an interest in a possible change of
control transaction involving the Company.
On April 24, 1995, the Company retained Merrill Lynch in connection with
either (i) a possible offering by the Company of equity or equity-linked
securities, (ii) a possible investment by the Purchaser in one of the Company's
operating facilities or businesses or in the Company or (iii) another
alternative strategic transaction involving the sale of an interest in, or all
of, the Company's stock or assets.
On April 28, 1995, the Company entered into a confidentiality agreement with
the Other Consumer Products Entity and subsequently provided such entity with
confidential information concerning the Company. The confidentiality agreement
provided for a two-week period ending May 15, 1995 during which the Company
agreed that it would not sell, or enter into discussions with any third party
regarding the sale of, stock of the Company. The confidentiality agreement
permitted the Company to continue discussions with the Purchaser with respect
to a possible equity investment by the Purchaser in the Company's picture tube
operations. The confidentiality agreement also contained "standstill"
provisions which precluded such entity for a period of 18 months from, among
other things, acquiring shares of Common Stock of the Company without the
Company's consent, provided that such provisions would terminate if the Company
entered into negotiations with a third party for the issue and sale of 25% or
more of the Company's stock.
In May and June 1995, the Company and its financial and legal advisors had
numerous meetings and telephone calls with representatives of the Other
Consumer Products Entity at which various matters concerning the Company, the
possible synergies of a combination with the Other Consumer Products Entity and
the structure and terms of a possible transaction were discussed. The Other
Consumer Products Entity proposed a transaction which was rejected by the
Company, which countered seeking a higher price. Neither the proposed
transaction nor the counterproposal involved payment to the Company's
stockholders, and the proposal was at a per Share value less than $10.00 per
Share. The counterproposal was not accepted.
On May 16, 1995, after the expiration of the two-week exclusivity period
afforded to the Other Consumer Products Entity, Mr. Albin F. Moschner,
President and Chief Executive Officer of the Company, spoke with Mr. Koo and
advised him that the Company had been approached on an unsolicited basis by
another entity (not identified to Mr. Koo) about a possible transaction that
would involve a change of control of the Company and that because of the
Company's long relationship with the Purchaser, Mr. Moschner wanted to inform
Mr. Koo of that fact.
On May 20 and May 22, 1995, certain executives of the Company met with
certain executives of the Purchaser and representatives of its financial
advisor, Salomon Brothers Inc. The Purchaser indicated that it would consider
making a proposal to the Company concerning a possible investment in the
Company, as well as proceeding with the joint venture.
On May 23, 1995, the Executive Committee of the Company's Board met with
Company executives, Merrill Lynch and the Company's legal advisors to review
the status of negotiations with the Other Consumer Products Entity and the
discussions with the Purchaser. The Executive Committee authorized discussions
to continue with both parties and authorized Merrill Lynch to contact two
"financial buyers" to ascertain their interest in a private equity investment.
17
<PAGE>
On May 31, June 1 and June 2, 1995, the Purchaser and its legal and financial
advisors met with various Company executives to discuss due diligence matters.
Following these meetings, the Company was advised that the Purchaser would need
several weeks before it could get back to the Company with any proposal. The
Company advised the Purchaser of its desire to have a proposal before the
Company's regularly scheduled board meeting on June 27, 1995.
On June 20 and June 21, 1995, Mr. Moschner met with representatives of the
two financial buyers contacted by Merrill Lynch in early June. The
representatives of one of the entities indicated little interest in a
transaction at that time. The representatives of the other entity indicated
that they were unfamiliar with the consumer electronics industry and would
require a lengthy review of the industry and the Company before they could
decide whether they had any interest in a transaction involving the Company.
On June 22, 1995, legal and financial advisors for both the Company and the
Purchaser met to discuss the manner in which the Purchaser's proposal would be
presented to the Company.
On June 27, 1995, Mr. Pyong Won (Peter) Suh, Executive Vice President and
Chief Technology Officer of the Purchaser, two other officers of the Purchaser,
and representatives of Salomon Brothers Inc and of the Purchaser's legal
advisors appeared at a regular meeting of the Company's Board of Directors. Mr.
Suh presented two alternative proposals--the first proposal being a tender
offer by the Purchaser to the Company's stockholders for 17,863,000 shares of
Common Stock at $10.00 per share in cash, the purchase of 7,882,000 shares of
Common Stock from the Company at $7.875 per share in cash and the purchase of
10,118,000 shares of Common Stock from the Company at $10.00 per share in cash;
the second proposal being the establishment of a joint venture to own the
Melrose Park picture tube plant. Following this presentation and a discussion
with Merrill Lynch and the Company's legal advisors, the Board of Directors
authorized the Company's officers to commence negotiations with the Purchaser
concerning the first proposal. The Company notified the Other Consumer Products
Entity that its obligations under the standstill provisions contained in the
April 28, 1995 confidentiality agreement were terminated as a result of
negotiations and offered to provide updated financial information to the extent
such entity continued to have an interest in pursuing discussions. No such
information has been requested.
Following the June 27 Board meeting, Mr. Moschner and Mr. Suh and their
respective financial advisors met to discuss the terms of the Purchaser's
proposal. On June 28, 1995, certain executives of the Company and of the
Purchaser met to discuss the synergies that could be expected to result from a
closer relationship between the Company and the Purchaser, and the Company
provided the Purchaser with updated financial information about the Company.
On July 11, 1995, the Purchaser delivered a revised proposal to the Company
wherein it proposed to make a tender offer to the Company's stockholders for
18,619,000 shares of Common Stock of the Company at $10.00 per share in cash
and to purchase 16,500,000 shares of Common Stock from the Company for $10.00
per share in cash.
On July 12, 1995, the Company's Board of Directors held a special meeting to
consider the revised proposal. Following a presentation by Merrill Lynch, the
Board authorized the Company's officers to commence the negotiation of a
definitive agreement with the Purchaser. During the next several days,
discussions were held on a range of legal issues and the terms and conditions
of the definitive agreement were negotiated subject to approval by the
Company's Board of Directors.
On July 17, 1995, a special meeting of the Board of Directors was held at
which the Board reviewed the definitive agreement in detail and considered
various factors related to the proposal, Merrill Lynch delivered its written
opinion to the Board, and the Board unanimously approved the terms of the
Purchaser's Offer and investment as described above. On the same day, following
such Board approval,
18
<PAGE>
the Company and the Purchaser entered into the Stock Purchase Agreement and
publicly announced their agreement. A copy of the written opinion of Merrill
Lynch delivered to the Board, which sets forth certain assumptions made,
matters considered and limits of the review by Merrill Lynch in rendering such
opinion, is attached as Annex II hereto. STOCKHOLDERS ARE URGED TO READ THE
OPINION CAREFULLY IN ITS ENTIRETY.
14. PURPOSE OF THE OFFER; STOCK PURCHASE AGREEMENT; MUTUAL NON-DISCLOSURE
AGREEMENT; PLANS FOR THE COMPANY
Purpose of the Offer
The purpose of the Offer is to acquire the Offer Shares as one step toward
the acquisition of a controlling equity interest in the Company. Following
completion of such acquisition, the Purchaser will have majority representation
on the Company's Board of Directors, as more fully described below.
Stock Purchase Agreement
The following summary of certain terms of the Stock Purchase Agreement does
not purport to be complete and is qualified in its entirety by reference to the
complete text of the Stock Purchase Agreement, which is filed as an exhibit to
the Schedule 14D-1 and incorporated herein by reference.
Sale and Purchase of Issue Shares. Upon the terms and subject to satisfaction
or waiver of the Conditions described below under "Conditions" and the further
condition that the Purchaser shall have accepted for purchase pursuant to the
Offer not less than 18,619,000 Shares, the Company has agreed to issue and sell
to the Purchaser, and the Purchaser has agreed to purchase from the Company,
the Issue Shares for $10.00 cash per Issue Share.
The Offer. Pursuant to the terms of the Stock Purchase Agreement, the
Purchaser was required to commence the Offer no later than five business days
after the public announcement that the Purchaser and the Company entered into
the Stock Purchase Agreement. The obligations of the Purchaser to accept for
payment, and pay for, any Shares tendered pursuant to this Offer are subject
only to the Offer Conditions. The Purchaser may increase the Offer Price and
may make any other changes in the terms and conditions of the Offer, provided
that the Purchaser may not decrease the Offer Price, change the form of
consideration payable in the Offer, decrease the maximum number of Shares
sought pursuant to the Offer, add to or modify the Offer Conditions, or
otherwise amend the Offer in any manner adverse to the Company's stockholders.
The Stock Purchase Agreement requires that the Offer 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 stockholders. The Purchaser must extend the Offer (i) if
at the scheduled expiration date of the Offer any of the Offer Conditions has
not been satisfied or waived, until such time as such Offer Conditions are
satisfied or waived and (ii) for any period required by any rule, regulation,
interpretation or position of the Commission applicable to the Offer; provided,
however, that the Purchaser may terminate the Offer if the Stock Purchase
Agreement is terminated.
Provided that the Stock Purchase Agreement has not been terminated and that
all Offer Conditions have been satisfied or waived by the Purchaser, the
Purchaser is required to 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 the Purchaser, in its sole discretion, shall determine) at the Closing.
Representations and Warranties. The Stock Purchase Agreement contains
customary representations and warranties of the Company relating, with respect
to the Company and its subsidiaries, to, among other things, (a) organization,
standing and similar corporate matters; (b) the
19
<PAGE>
authorization, execution, delivery, performance and enforceability of the Stock
Purchase Agreement and related matters; (c) capital structure; (d) government
authorization; (e) the compliance with all licenses and permits necessary to
conduct its businesses and the non-contravention of the Stock Purchase
Agreement and related transactions with any judgment, decree, order, law,
statute, rule or regulation; (f) the compliance of the Company and its
subsidiaries and the non-contravention of the Stock Purchase Agreement and
related transactions with the Company's and its subsidiaries' certificates of
incorporation and bylaws or any material agreements, mortgages, indentures,
debentures, trusts, leases, licenses, or other instruments or obligations to or
by which it or any of its properties is subject or bound; (g) the compliance as
to form of the documents filed by the Company and its subsidiaries with the
Commission and the accuracy of information contained therein and the absence of
undisclosed liabilities; (h) the absence of any event, occurrence, development,
breach or default which individually or collectively has had or would be
expected to result in a Material Adverse Effect; (i) the absence of pending or
threatened litigation which could reasonably be expected to have a Material
Adverse Effect; (j) the filing of tax returns and payment of taxes; (k)
registration rights and the exemption from registration and prospectus delivery
requirements; (l) adequate insurance protection and compliance with such
policies and bonds; (m) the absence of certain transactions between the Company
or its subsidiaries and any of either's directors, officers or their immediate
families; (n) benefit plans and other matters relating to the Employee
Retirement Income Security Act of 1974, as amended; (o) possession of all
necessary rights and licenses in all intellectual property; (p) the absence of
Environmental Claims and compliance with all Environmental Laws (as such terms
are defined in the Stock Purchase Agreement); (q) broker's fees and expenses;
and (r) the accuracy of the Company Letter.
The Stock Purchase Agreement contains customary representations and
warranties of the Purchaser relating to (a) organization, standing and similar
corporate matters; (b) the authorization, execution, delivery, performance and
enforceability of the Stock Purchase Agreement; (c) the non-contravention of
the Stock Purchase Agreement and related transactions with any charter
provision, bylaw, material contract, order, law or regulation to which the
Purchaser is a party or by which it is bound or obligated; (d) government
authorization; (e) investment intent and sophistication of the Purchaser; (f)
the accuracy of information supplied by the Purchaser in connection with the
Offer and the proxy statement; and (g) broker's fees and expenses.
Conduct of Business of the Company. The Stock Purchase Agreement provides
that until the Closing, the business 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.
Accordingly, except as otherwise expressly approved by the Purchaser in
writing, neither the Company nor any of its subsidiaries may, prior to the
Closing, engage or agree to engage in an enumerated list of transactions
generally characterized as being outside the ordinary course of business.
Transactions requiring the Purchaser's prior approval include, without
limitation (but subject to certain exceptions stated in the Stock Purchase
Agreement), actions by the Company or its subsidiaries to (i) authorize for
issuance, issue, sell, deliver or agree or commit to issue, sell or deliver any
voting stock or any other securities or equity equivalents (including, without
limitation, any stock options or stock appreciation rights) or amend any of the
terms of any such securities or agreements outstanding as of the date of the
Stock Purchase Agreement; (ii) 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
any of the securities of the Company or its subsidiaries, or redeem or
otherwise acquire any of its securities or any securities of its subsidiaries
not owned directly or indirectly by the Company; (iii) incur or assume any debt
or issue any debt securities, become liable or responsible for the obligations
of any other person, make any loans or investments in any other person, pledge
or otherwise encumber shares of capital stock of the Company or any of its
20
<PAGE>
subsidiaries, or mortgage or pledge any of its material assets or create any
lien thereupon; (iv) enter into, adopt, or amend or terminate any compensation,
severance, termination, or benefits arrangement, or pay any benefit not
required by any plan or arrangement; (v) 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 acquire,
sell, lease or dispose of any assets of the Company and its subsidiaries; (vi)
enter, or permit any of its subsidiaries to enter, into any joint venture,
partnership or exclusive licensing agreement; (vii) authorize any new capital
expenditure or expenditures; and (viii) amend or propose to amend its
Certificate of Incorporation or Bylaws or alter the corporate structure or
ownership of any subsidiary.
Other Potential Bidders. The Stock Purchase Agreement requires the Company
and its affiliates and their respective officers, directors, employees,
representatives and agents to immediately cease any existing discussions or
negotiations with any third party regarding (i) the acquisition of more than
20% of the total assets of the Company or any of its subsidiaries, (ii) the
acquisition of 20% or more of the Shares, all of the Company's voting stock or
the equity securities of any subsidiary of the Company, or (iii) the merger or
other combination of the Company or any of its subsidiaries (each a "Third
Party Acquisition"). The Company shall not, unless and until the Stock Purchase
Agreement is terminated in accordance with its terms, as described below,
directly or indirectly, (i) initiate, solicit or encourage any discussions
regarding a Third Party Acquisition, or (ii) hold any such discussions or enter
into any agreement concerning any Third Party Acquisition; provided that if the
Company's Board of Directors 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. The Company's Board of Directors 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
agreement with respect to any such Third Party Acquisition, provided that if
the Company's Board receives a 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) provides a
greater aggregate value to the Company and/or the Company's stockholders than
the transactions contemplated by the Stock Purchase Agreement (a "Superior
Proposal"), the Board may, to the extent required under its fiduciary duties,
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 the Stock Purchase 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, and provided that the Superior Proposal continues to be a Superior
Proposal in light of any improved transaction proposed by the Purchaser prior
to the expiration of such five-business-day period.
Director and Officer Liability. The Stock Purchase Agreement provides that
from and after the Closing, the Purchaser shall cause the Company to indemnify
and hold harmless each person who is, or has been at any time prior to the date
of the Stock Purchase Agreement 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 any affiliate of the Company, an employee benefit
plan, or a 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 the Stock Purchase Agreement), to the extent
provided under the Company's Certificate of Incorporation, Bylaws and indemnity
agreements between the Company and any of its officers in effect, 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
21
<PAGE>
Indemnified Parties for three years after the date of the Stock Purchase
Agreement. For six years after the Closing, the Purchaser shall cause the
Company to maintain its current or substantially equivalent policies of
officers' and directors' liability insurance covering each of the Persons
currently covered by its current policy, or who becomes covered by such policy
prior to the Closing; provided that 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, but provided further
that the Company must provide such coverage as may be obtained for 150% of the
premium for such insurance in the fiscal year ending December 31, 1995.
Conditions. The obligations of the Purchaser and of the Company respecting
the sale and purchase of the Issue Shares are conditioned upon (i) the
Company's stockholders having approved the Stockholder Proposals, (ii) no
Governmental Authority having taken action to restrict, in a material manner,
the purchase of the Issue Shares or to impose material adverse terms or
conditions thereon, (iii) all material filings with all Governmental
Authorities required in connection with the Stock Acquisition having been made,
all waiting periods thereunder having expired or been terminated and all
material orders, permits, waivers, authorizations, exemptions or approvals
having been obtained and remaining in effect, and (iv) the Purchaser and the
Company shall have delivered to CFIUS appropriate notification and report forms
pursuant to the Exon-Florio Amendment and satisfactory resolution thereof.
The obligation of the Purchaser to purchase the Issue Shares is further
conditioned upon (i) provision having been made to the satisfaction of
Purchaser that the Company's Board of Directors will be composed of 10 persons
immediately following the Closing, six of whom are to be designees of
Purchaser, one of whom is to be the Company's President and Chief Executive
Officer immediately prior to the Closing and three of whom shall be, if they
are willing to serve, members of the Board of Directors immediately prior to
the Closing who are not otherwise affiliated with the Company or the Purchaser
or any subsidiary of either of them, (ii) the Company having performed in all
material respects its obligations under the Stock Purchase Agreement, (iii) the
Amended Bylaws having been duly authorized, approved and effected, (iv) the
Rights Agreement having been amended by the Company to specifically exclude the
Purchaser and its affiliates from the definition of "Acquiring Person" (as
defined in the Rights Agreement) and to otherwise avoid any adverse
consequences to Purchaser or the Company, including, without limitation, the
occurrence of a "Distribution Date" (as defined in the Rights Agreement) as a
consequence of the transactions contemplated by the Transaction Documents, (v)
there having been validly tendered and not withdrawn pursuant to the Offer not
less than 18,619,000 Shares, (vi) the Company having delivered, prior to or
concurrently with the Closing, the documents and instruments required to be
delivered by the Company, (vii) except as otherwise contemplated by the Stock
Purchase Agreement and except for the representations and warranties of the
Company set forth in the Stock Purchase Agreement which shall be accurate in
all respects as of the date when made and at and as of the Closing, the
representations and warranties of the Company contained in the Stock Purchase
Agreement which are qualified as to materiality being true and correct and
which are not so qualified being true and correct in all material respects, in
each case, as of the date when made and at and as of the Closing, except that
the Company's financial statements shall continue to be true only as of the
respective dates covered thereby; (viii) the Company having delivered to the
Purchaser a certificate dated as of the Closing and signed by the Chief
Financial Officer and the General Counsel of the Company certifying as to the
accuracy of certain of the representations and warranties of the Company set
forth in the Stock Purchase Agreement and the performance of the obligations
required by the Company to be performed under the Stock Purchase Agreement as
of the Closing; (ix) the Company having 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 Stock Purchase 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; and (x) the Purchaser being satisfied that
certain claims and matters described in the Company Letter, individually,
collectively
22
<PAGE>
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 Stock Purchase Agreement have not resulted in, and would
not reasonably be expected to result in, a Material Adverse Effect.
The obligation of the Company to issue and sell the Issue Shares to the
Purchaser is further conditioned upon (i) the Purchaser having performed in all
material respects its obligations under the Stock Purchase Agreement, (ii)
except as otherwise contemplated by the Stock Purchase Agreement, the
representations and warranties of the Purchaser set forth in the Stock Purchase
Agreement which are qualified as to materiality being true and correct and
which are not so qualified, being true in all material respects, as of the date
when made and at and as of the Closing as though newly made at and as of that
time, (iii) the Purchaser having delivered, or be delivering concurrently with
the Closing, the documents and instruments required to be delivered by the
Purchaser pursuant to the Stock Purchase Agreement, (iv) the Purchaser having
delivered 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 and the performance of
the obligations of the Purchaser under the Stock Purchase Agreement and (v) the
Purchaser having accepted for purchase pursuant to the Offer not less than
18,619,000 Shares.
Termination. The Stock Purchase Agreement provides that the Company may
terminate the Stock Purchase Agreement if (i) there has not been a material
uncured breach by the Company of any representation, warranty, covenant or
agreement and there has been a material breach by the Purchaser of any
representation, warranty, covenant or agreement that has not been cured within
ten days' notice of such breach and the Company's intention to terminate, (ii)
upon payment to the Purchaser of $7,023,800 (the "Termination Fee") and either
(a) five business days have elapsed following the Purchaser's receipt of a
Notice of Superior Proposal and the 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 such notice, or (b) the Board of Directors of the
Company has withdrawn, modified or changed in an adverse manner its approval or
recommendations of the Offer or other transactions contemplated by the Stock
Purchase Agreement or recommended another offer, or has adopted any resolutions
to effect any of the foregoing to the extent that 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 Purchaser may terminate the Stock Purchase Agreement if there has not
been a material uncured breach by the Purchaser of any representation,
warranty, covenant or agreement and there has been a material breach by the
Company of any representation, warranty, covenant or agreement that has not
been cured within ten days' of receipt of written notice of such breach and the
Purchaser's intention to terminate. In addition, the Purchaser may terminate
any or all of its obligations under this Agreement if (a) the Board of
Directors of the Company has withdrawn, modified or changed in a manner adverse
to the Purchaser, its approval or recommendation of the Offer or other
transactions contemplated by the Stock Purchase Agreement or recommended
another offer, or has adopted any resolutions to effect any of the foregoing,
(b) a Third Party Acquisition has occurred or any definitive agreement or
agreement in principle has been executed with respect to a Third Party
Acquisition, (c) the Company does not conduct a stockholders' meeting and take
all reasonable action to obtain stockholder approval of the Stockholder
Proposals, because the Board has determined in good faith, after consultation
with and based upon written advice of outside legal counsel, that taking such
action consistent with the Certificate of Incorporation, Bylaws and applicable
law as may be required would be contrary to its fiduciary obligations, or (d)
the Company does not 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 to, and to consummate and make effective, the transactions
contemplated by this Agreement and the other Transaction Documents, because the
Board has determined in good faith, after consultation with
23
<PAGE>
and based upon written advice of outside legal counsel, that taking such action
would be contrary to its fiduciary obligations. The Company shall pay to the
Purchaser the Termination Fee if the Purchaser terminates pursuant to clauses
(a), (b), (c) or (d) of the preceding sentence.
Additionally, either the Purchaser or the Company may terminate the Stock
Purchase Agreement (i) to the extent that performance thereof if 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 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 to fulfill in all material respects any undertaking or
commitment that is required to be fulfilled by such party prior to such time,
(iii) if the Company's stockholders do not approve the Stockholder Proposals
(provided that the Company immediately pays to the Purchaser the Termination
Fee if the stockholders did not approve the proposals because of a Superior
Proposal) or (iv) by mutual written consent of the Purchaser and the Company.
Transaction Expenses. The Stock Purchase Agreement provides that, except for
any Termination Fee, each of the parties shall pay its own expenses incurred in
connection with the negotiation and preparation of the Stock Purchase Agreement
and the other Transaction Documents, the performance of its covenants
thereunder, and the effectuation of the transactions contemplated thereby,
including, without limitation, all fees and disbursements of its respective
legal counsel, advisors and accountants. Each of the parties 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 the Stock
Purchase Agreement and the other Transaction Documents.
Mutual Non-Disclosure Agreement
The following summary of the Mutual Non-Disclosure Agreement (as defined
herein) does not purport to be complete and is qualified in its entirety by
reference to the complete text of the Mutual Non-Disclosure Agreement, which is
filed as an exhibit to the Schedule 14D-1 and incorporated herein by reference.
The parties entered into a mutual non-disclosure agreement on November 25,
1994 (the "Mutual Non-Disclosure Agreement") relating to the consideration of a
possible investment by Purchaser or an affiliate in certain assets of the
Company or in the form of debt or equity in the Company (the "transaction").
The Mutual Non-Disclosure Agreement provides that the Purchaser and the Company
will each disclose to one another certain confidential information to be used
solely for the transaction and that each will protect such confidential
information from unauthorized use and disclosure. The Mutual Non-Disclosure
Agreement further provides, among other things, that (i) the disclosure of
confidential information shall only be to responsible employees with a bona
fide need to know, (ii) each party shall not disclose such confidential
information to third parties, including consultants, without the prior written
permission of the disclosing party, (iii) each party may disclose such
confidential information to the extent required by law, provided the receiving
party uses reasonable efforts to give the disclosing party reasonable notice of
such required disclosure, (iv) each party will promptly return all tangible
items containing or consisting of the disclosing party's confidential
information upon the disclosing party's written request, (v) each party will
have the right to an immediate injunction enjoining any breach of the Mutual
Non-Disclosure Agreement, as well as the right to pursue any and all other
rights and remedies available at law or in equity and (vi) it will remain in
effect for three years from the date of the last disclosure of confidential
information.
24
<PAGE>
Plans for the Company
The Purchaser intends to evaluate the Company's business, operations,
facilities, products, personnel and other matters from time to time after
consummation of the Offer and the Stock Acquisition. However, except as
otherwise described in this Offer to Purchase, the Purchaser has no current
plans or proposals that would relate to, or result in, any extraordinary
corporate transaction, such as a merger, reorganization or liquidation,
involving the Company or any of its subsidiaries, a sale or transfer of a
material amount of assets of the Company or any of its subsidiaries, any change
in the Company's capitalization or dividend policy or any other material change
in the Company's business, corporate structure or personnel.
15. CERTAIN LEGAL MATTERS
General
Except as described below, based on its examination of publicly available
filings by the Company with the Commission and other publicly available
information concerning the Company, the Purchaser is not aware of any
regulatory license or permit that appears to be material to the business of the
Company and its subsidiaries, taken as a whole, that might be adversely
affected by the Purchaser's acquisition of Shares pursuant to the Stock
Acquisition or the Offer, or of any approval or other action by any
Governmental Authority or public body, domestic or foreign, that would be
required for the acquisition or ownership of Shares by the Purchaser pursuant
to the Stock Acquisition or the Offer. Should any such approval or other action
be required, it is presently contemplated that such approval or action would be
sought except as described below under "State Takeover Statutes." While the
Purchaser does not currently intend to delay acceptance for payment of Shares
tendered pursuant to the Offer pending the outcome of any such matter, there
can be no assurance that any such approval or other action, if needed, would be
obtained without substantial conditions or that adverse consequences might not
result to the Company's business or that certain parts of the Company's
business might not have to be disposed of in the event that such approvals were
not obtained or such other actions were not taken or in order to obtain any
such approval or other action. The Purchaser's obligation under the Offer to
accept for payment and pay for shares is subject to the Offer Conditions,
including conditions relating to legal matters discussed in this Section 15.
THE OFFER IS SUBJECT TO THE CONDITION THAT PURCHASER SHALL HAVE RECEIVED ALL
NECESSARY GOVERNMENTAL AND REGULATORY APPROVALS FOR THE ACQUISITION OF SHARES
PURSUANT TO THE OFFER AND FOR CONSUMMATION OF THE STOCK ACQUISITION. UNLESS
EARLIER TERMINATED, THE PURCHASER EXPECTS THAT IT WILL EXTEND THE OFFER FROM
TIME TO TIME UNTIL ALL SUCH APPROVALS HAVE BEEN RECEIVED.
Exon-Florio Amendment
The Exon-Florio Amendment authorizes the President of the United States or
his designee to make an investigation to determine the effects on national
security of mergers, acquisitions and takeovers by or with foreign persons
which could result in foreign control of persons engaged in interstate commerce
in the United States. The President has delegated authority to investigate
proposed transactions to CFIUS.
Reviews under the Exon-Florio Amendment are made in accordance with the
following timetable: (i) within 30 days following the receipt by CFIUS of
written notification of a proposed acquisition, CFIUS must determine whether to
commence an investigation; (ii) if CFIUS commences an investigation, it must
complete the investigation and submit a report and recommendation to the
President within 45 days following the determination to commence an
investigation; and (iii) the President has 15 days following the completion of
the investigation to take action or suspend or prohibit the relevant
acquisition.
25
<PAGE>
In order for the President to exercise his authority to suspend or prohibit
an acquisition, the President must make two findings: (i) that there is
credible evidence that leads the President to believe that the foreign interest
exercising control might take action that threatens to impair national security
and (ii) that provisions of law other than the Exon-Florio Amendment and the
International Emergency Economic Powers Act do not provide adequate and
appropriate authority for the President to protect the national security in
connection with the acquisition. Such findings are not subject to judicial
review. If the President makes such findings, he may take action for such time
as he considers appropriate to suspend or prohibit the relevant acquisition.
The President may direct the Attorney General to seek appropriate relief,
including divestment relief, in the District Courts of the United States in
order to implement and enforce the Exon-Florio Amendment.
The Exon-Florio Amendment does not obligate the parties to an acquisition to
notify CFIUS of a proposed transaction. However, if notice of a proposed
acquisition is not submitted to CFIUS, then the transaction remains
indefinitely subject to review by the President under the Exon-Florio
Amendment.
The Purchaser and the Company plan to file with CFIUS a joint notice of the
transactions contemplated by the Stock Purchase Agreement and the agreements
contemplated thereby. Although the Purchaser believes that the transactions
contemplated by the Agreement should not raise any national security concerns,
there can be no assurance that CFIUS will not determine to conduct an
investigation of the proposed transaction and, if an investigation is
commenced, there can be no assurance regarding the outcome of such
investigation. If the results of such investigation are adverse to the
Purchaser, the Purchaser may not be obligated to accept for payment or pay for
any Shares tendered pursuant to the Offer.
Antitrust
Under the HSR Act and the rules that have been promulgated thereunder by the
FTC, certain acquisition transactions may not be consummated unless certain
information has been furnished to the Antitrust Division and the FTC and
certain waiting period requirements have been satisfied. The acquisition of
Shares pursuant to the Offer is subject to such requirements. See Sections 4
and 6.
The Purchaser expects to file a Notification and Report Form with respect to
the Offer and the Stock Acquisition under the HSR Act as soon as practicable
following commencement of the Offer. The waiting period under the HSR Act with
respect to the Offer will expire at 11:59 p.m., New York City time, on the 15th
day after the date such form is filed, and the waiting period with respect to
the Stock Acquisition will expire at 11:59 p.m. New York City time on the 30th
day after the date such form is filed by both the Purchaser and the Company, in
each case unless early termination of the waiting period is granted. In
addition, the Antitrust Division or the FTC may extend such waiting periods by
requesting additional information or documentary material from the Purchaser
or, in case of the waiting period applicable to the Stock Acquisition, the
Company as well. If such a request is made with respect to the Offer, the
waiting period related to the Offer will expire at 11:59 p.m. New York City
time on the 10th day after substantial compliance by the Purchaser with such
request. If such request is made with respect to the Stock Acquisition, the
waiting period related to the Stock Acquisition will expire at 11:59 p.m. New
York City time on the 20th day after substantial compliance with such request
by each party to whom such a request is made. It is expected that the Offer
will not be consummated until the waiting periods under the HSR Act with
respect to both the Offer and the Stock Acquisition have expired or have been
terminated. With respect to each acquisition, the Antitrust Division or the FTC
may issue only one request to each party for additional information. In
practice, complying with a request for additional information or material can
take a significant amount of time. In addition, if the Antitrust Division or
the FTC raises substantive issues in connection with a proposed transaction,
the parties may engage in negotiations with the relevant governmental agency
concerning possible means of addressing those issues and may agree to delay
consummation of the transaction while such
26
<PAGE>
negotiations continue; alternatively, the relevant agency could seek an
extension in Federal court. Expiration or termination of applicable waiting
periods under the HSR Act is a condition to the Purchaser's obligation to
accept for payment and pay for Shares tendered pursuant to the Offer.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed purchase of the Issue
Shares and Offer Shares by the Purchaser. At any time before or after such
purchase, the Antitrust Division or the FTC could take such action under the
antitrust laws as it deems necessary or desirable in the public interest,
including seeking to enjoin the transaction or seeking divestiture of the
Shares so acquired or divestiture of substantial assets of the Purchaser or the
Company. Litigation seeking similar relief could be brought by private parties.
The Purchaser does not believe that consummation of the Offer and the Stock
Acquisition and the other transactions contemplated by the Stock Purchase
Agreement will result in violation of any applicable antitrust laws. However,
there can be no assurance that a challenge to the Offer and the other
transactions contemplated by the Stock Purchase Agreement on antitrust grounds
will not be made, or if such a challenge is made, what the result will be. See
Section 6 for certain conditions to the purchase and sale of the Offer Shares
and the Issue Shares, including conditions with respect to litigation and
certain governmental actions.
Korean Governmental Approvals
The Offer and the Stock Acquisition are subject to certain governmental
review and approvals under Korean law. The Purchaser will submit an approval
application with the Bank of Korea (the "BOK") pursuant to the Foreign Exchange
Control Act of Korea (the "FECA") in connection with the Offer and the Stock
Acquisition. Under FECA and the rules promulgated thereunder, overseas
investments by a Korean resident are permissible in principle when the Shares
to be acquired by the Korean investor will constitute 20% or more of the
outstanding Shares of the Company. Because the Offer and the Stock Acquisition
contemplate an investment of over $10 million in a foreign country, the
Purchaser must also obtain approval of the Overseas Investment Deliberation
Committee (the "OIDC"), a committee of Korean government officials operating
under the auspices of the BOK and the Korean Ministry of Finance and Economy
(the "MOFE"). The OIDC considers factors such as the general appropriateness of
the investment, possible negative effects of the transaction upon the Korean
economy or Korean foreign policy, whether the transaction would be against
Korean social or public order, and whether the Korean investor has previously
violated Korean foreign investment policies.
Once all the necessary documents for the BOK approval are prepared and filed
with the BOK, the BOK preliminarily reviews the application and forwards it to
the MOFE. The MOFE then arranges for review of the application by the OIDC, and
the OIDC determines whether or not to approve the application. Following the
OIDC decision, the MOFE returns the application to the BOK along with the
OIDC's decision. The BOK then issues its final decision on approval shortly
after such receipt.
State Takeover Statutes
A number of states have adopted "takeover" statutes that purport to apply to
attempts to acquire corporations that are incorporated in such states, or whose
business operations have substantial economic effects in such states, or which
have substantial assets, security holders, employees, principal executive
offices or places of business in such states.
In Edgar v. MITE Corporation, the Supreme Court of the United States
invalidated on constitutional grounds the Illinois Business Takeover Act,
which, as a matter of state securities law, made takeovers of corporations
meeting certain requirements more difficult. However, in CTS Corp. v. Dynamics
Corp. of America, the Supreme Court held that a state may, as a matter of
corporate law and, in particular, those laws concerning corporate governance,
constitutionally disqualify a potential acquiror from voting
27
<PAGE>
on the affairs of a target corporation without prior approval of the remaining
stockholders, provided that such laws were applicable under certain conditions,
in particular, that the corporation has a substantial number of stockholders in
the state and is incorporated there.
The Company, directly or through subsidiaries, conducts business in a number
of states throughout the United States, some of which have enacted "takeover"
statutes. The Purchaser does not know whether any of these statutes will, by
their terms, apply to the Offer or the Stock Acquisition, and has not complied
with any such statutes. To the extent that certain provisions of these statutes
purport to apply to the Offer or the Stock Acquisition, the Purchaser believes
that there are reasonable bases for contesting such statutes. If any person
should seek to apply any state takeover statute, the Purchaser would take such
action as then appears desirable, which action may include challenging the
validity or applicability of any such statute in appropriate court proceedings.
If it is asserted that one or more takeover statutes apply to the Offer or the
Stock Acquisition, and it is not determined by an appropriate court that such
statute or statutes do not apply or are invalid as applied to the Offer or the
Stock Acquisition, the Purchaser might be required to file certain information
with, or receive approvals from, the relevant state authorities, and the
Purchaser might be unable to purchase or pay for shares tendered pursuant to
the Offer, or be delayed in continuing or consummating the Offer or the Stock
Acquisition. In such case, the Purchaser may not be obligated to accept for
payment or pay for Shares tendered pursuant to the Offer.
16. FEES AND EXPENSES
Salomon Brothers Inc ("Salomon") is acting as financial advisor to the
Purchaser in connection with the transactions contemplated by the Stock
Purchase Agreement and is also acting as Dealer Manager for the Offer. In
consideration for such services, the Purchaser will pay Salomon $3,511,900 and
will also reimburse Salomon for out-of-pocket expenses, including attorneys'
fees and indemnify Salomon against certain liabilities in connection with the
transactions contemplated by the Stock Purchase Agreement including the Offer.
The Purchaser has retained MacKenzie Partners, Inc. to act as the Information
Agent and The Bank of New York to act as the Depositary in connection with the
Offer. The Information Agent may contact holders of Shares by mail, telephone,
telex, telegraph and personal interview and may request brokers, dealers and
other nominee stockholders to forward the Offer materials to beneficial owners.
The Information Agent will receive a fee for services as Information Agent of
$10,000 plus $4 for each shareholder contact and will be reimbursed for certain
out-of-pocket expenses. The Depositary will receive reasonable and customary
compensation for services relating to the Offer and will be reimbursed for
certain out-of-pocket expenses. The Purchaser has also agreed to indemnify the
Information Agent and the Depositary against certain liabilities and expenses
in connection with the Offer, including certain liabilities under the federal
securities laws.
The Purchaser will not pay any fees or commissions to any broker or dealer or
any other person for soliciting tenders of Shares pursuant to the Offer (other
than to the Dealer Manager and the Information Agent). Brokers, dealers,
commercial banks and trust companies will, upon request, be reimbursed by the
Purchaser for customary mailing and handling expenses incurred by them in
forwarding offering materials to their customers.
17. MISCELLANEOUS
The Offer is being made to all holders of Shares. The Purchaser is not aware
of any state where the making of the Offer is prohibited by administrative or
judicial action pursuant to any valid state statute. If the Purchaser becomes
aware of any valid state statute prohibiting the making of the Offer or the
acceptance of the Shares pursuant thereto, the Purchaser will make a reasonable
good faith effort to comply with such statute or seek to have such statute
declared inapplicable to the Offer. If, after such reasonable good faith
effort, the Purchaser cannot comply with any such statute, the Offer will not
28
<PAGE>
be made to (and tenders will not be accepted from or on behalf of) the holders
of Shares in such state. In any jurisdiction where the securities, Blue Sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer will be deemed to be made on behalf of the Purchaser by the Dealer
Manager or one or more registered brokers or dealers licensed under the laws of
such jurisdiction.
No person has been authorized to give any information or make any
representation on behalf of the Purchaser or the Company not contained in this
Offer to Purchase or in the Letter of Transmittal and, if given or made, such
information or representation must not be relied upon as having been
authorized.
The Purchaser has filed Schedule 14D-1 with the Commission, together with all
exhibits thereto, pursuant to Rule 14d-3 of the General Rules and Regulations
under the Exchange Act, furnishing certain additional information with respect
to the Offer. Such Tender Offer Statement and any amendments thereto, including
exhibits, may be inspected and copies may be obtained from the offices of the
Commission in the manner set forth in Section 10 (except that they will not be
available at the regional offices of the Commission).
LG Electronics Inc.
July 21, 1995
29
<PAGE>
ANNEX I
INFORMATION RELATING TO DIRECTORS AND
EXECUTIVE OFFICERS OF THE PURCHASER
The following table sets forth the names, addresses, present principal
occupations or employment and material occupations, positions, offices or
employment, during the last five years of the executive officers of the
Purchaser and the persons carrying out functions in the Purchaser similar to
that of a director in a United States corporation. Unless otherwise indicated,
all occupations, offices or positions of employment listed opposite an
individual's name are or were with the Purchaser. All of the persons listed
below are citizens of the Republic of Korea.
<TABLE>
<CAPTION>
NAME AND BUSINESS ADDRESS PRINCIPAL OCCUPATION OR EMPLOYMENT
------------------------- ----------------------------------
<C> <S>
Hun Jo Lee Chairman and Chief Executive Officer since January
LG Electronics Inc. 1, 1995 and President and Chief Executive Officer
LG Twin Towers since 1989.
20, Yoido-dong
Youngdungpo-gu
Seoul, 150-721, Korea
Cha Hong (John) Koo President and Co-Chief Executive Officer since
LG Electronics Inc. January 1, 1995. Prior to that, Mr. Koo had been
LG Twin Towers employed by the Purchaser in varying capacities
20, Yoido-dong since 1987.
Youngdungpo-gu
Seoul, 150-721, Korea
Chan Ho Lee Executive Director. Mr. Lee has been employed by the
LG Electronics Inc. Purchaser since 1992. Prior to that Mr. Lee was
LG Twin Towers employed by LG International Corporation in varying
20, Yoido-dong capacities since prior to 1990.
Youngdungpo-gu
Seoul, 150-721, Korea
Eun Jun Lee Senior Managing Director. Mr. Lee has been employed
LG Electronics Inc. by the Purchaser since 1969.
LG Twin Towers
20, Yoido-dong
Youngdungpo-gu
Seoul, 150-721, Korea
Byung Sung Lee Executive Director. Mr. Lee has been employed by the
LG Electronics Inc. Purchaser since 1976.
LG Twin Towers
20, Yoido-dong
Youngdungpo-gu
Seoul, 150-721, Korea
Il Sung Kim Executive Director. Mr. Kim has been employed by the
LG Electronics Inc. Purchaser since 1970.
LG Twin Towers
20, Yoido-dong
Youngdungpo-gu
Seoul, 150-721, Korea
</TABLE>
AI-1
<PAGE>
<TABLE>
<CAPTION>
NAME AND BUSINESS ADDRESS PRINCIPAL OCCUPATION OR EMPLOYMENT
------------------------- ----------------------------------
<C> <S>
Seon Dong Kim Senior Managing Director. Mr. Kim has been employed
LG Electronics Inc. by the Purchaser since 1968.
LG Twin Towers
20, Yoido-dong
Youngdungpo-gu
Seoul, 150-721, Korea
Hong Gwang Hahn Senior Managing Director. Mr. Hahn has been employed
LG Electronics Inc. by the Purchaser since 1967.
LG Twin Towers
20, Yoido-dong
Youngdungpo-gu
Seoul, 150-721, Korea
Sang Kyu Choi Senior Managing Director. Mr. Choi has been employed
LG Electronics Inc. by the Purchaser since 1968.
LG Twin Towers
20, Yoido-dong
Youngdungpo-gu
Seoul, 150-721, Korea
Young Ak Ro Executive Vice President and President and Chief
LG Electronics Inc. Executive Officer--China Region. Mr. Ro has been
LG Twin Towers employed by the Purchaser since 1965.
20, Yoido-dong
Youngdungpo-gu
Seoul, 150-721, Korea
In Ku Kang Executive Vice President--Technical Liaison since
LG Electronics Inc. 1989.
LG Twin Towers
20, Yoido-dong
Youngdungpo-gu
Seoul, 150-721, Korea
Chang Soo Kim Executive Vice President and Director, Central
LG Electronics Inc. Research Laboratory since 1993. Prior to that time,
LG Twin Towers Mr. Kim was employed by LG Semiconductor Company
20, Yoido-dong Limited since prior to 1990.
Youngdungpo-gu
Seoul, 150-721, Korea
Kyu Chang Park Executive Vice President--Advanced Technology since
LG Electronics Inc. 1993. Prior to that time, Mr. Park was employed as
LG Twin Towers a Senior Advisor by International Business Machines
20, Yoido-dong Corporation since 1988.
Youngdungpo-gu
Seoul, 150-721, Korea
Kun Hi Yu Executive Vice President--Corporate Production
LG Electronics Inc. Engineering Research Laboratory. Mr. Yu has been
LG Twin Towers employed by the Purchaser since 1965.
20, Yoido-dong
Youngdungpo-gu
Seoul, 150-721, Korea
</TABLE>
AI-2
<PAGE>
<TABLE>
<CAPTION>
NAME AND BUSINESS ADDRESS PRINCIPAL OCCUPATION OR EMPLOYMENT
------------------------- ----------------------------------
<C> <S>
Young Jun Kim Executive Vice President and Chief Financial
LG Electronics Inc. Officer. Mr. Kim has been employed by the Purchaser
LG Twin Towers since 1969.
20, Yoido-dong
Youngdungpo-gu
Seoul, 150-721, Korea
Pyong Won Suh Executive Vice President and Chief Technology
LG Electronics Inc. Officer. Mr. Suh has been employed by the Purchaser
LG Twin Towers since 1966.
20, Yoido-dong
Youngdungpo-gu
Seoul, 150-721, Korea
Chang Soo Huh Director. Mr. Huh has been employed as Chairman and
LG Electronics Inc. Chief Executive Officer of LG Cable & Machinery
LG Twin Towers Limited since 1995. Prior to that time, Mr. Huh was
20, Yoido-dong employed as the Executive Vice President of LG
Youngdungpo-gu Industrial Systems Company Limited since 1991.
Seoul, 150-721, Korea Prior to that, Mr. Huh was employed as Executive
Vice President of LG Chemical Limited since 1989.
Kyoo Chill Byun Director. Mr. Byun has been employed as an Executive
LG Electronics Inc. Vice Chairman of the LG Group since 1995. Prior to
LG Twin Towers that time, Mr. Byun was employed as the President
20, Yoido-dong of the Chairman's Office of the LG Group since
Youngdungpo-gu 1991. Prior to that, Mr. Byun was employed as the
Seoul, 150-721, Korea President of LG International Corporation since
1989.
Cha Hak Koo Director. Mr. Koo has been employed as Chairman and
LG Electronics Inc. Chief Executive Officer of LG Semiconductor Company
LG Twin Towers Limited since 1989. Mr. Koo has also been employed
20, Yoido-dong as Chairman and Chief Executive Officer of LG
Youngdungpo-gu Construction Company and LG Engineering Company
Seoul, 150-721, Korea since 1995.
Bon Moo Koo Director. Mr. Koo has been employed by the LG Group
LG Electronics Inc. as Chairman since 1995 and as Executive Vice
LG Twin Towers Chairman prior to that time.
20, Yoido-dong
Youngdungpo-gu
Seoul, 150-721, Korea
Moon Ho Lee Director. Mr. Lee has been employed by the LG Group
LG Electronics Inc. as President of the Chairman's Office since 1995
LG Twin Towers and as Executive Vice President of the Chairman's
20, Yoido-dong Office from 1991 to 1994. Prior to that time, Mr.
Youngdungpo-gu Lee was Senior Managing Director of Honam Oil
Seoul, 150-721, Korea Refinery Company Limited.
</TABLE>
AI-3
<PAGE>
ANNEX II
Investment
Banking Group
5500 Sears Tower
Chicago, Illinois
60606
312 906 6200
FAX 312 906 6262
[LOGO--MERRILL LYNCH]
July 17, 1995
Board of Directors
Zenith Electronics Corporation
1000 Milwaukee Avenue
Glenview, IL 60025
Members of the Board:
Zenith Electronics Corporation (the "Company") and LG Electronics, Inc. (the
"Acquiror" or "LGE") have entered into a Stock Purchase Agreement, as of July
17, 1995 (the "Agreement"), pursuant to which LGE has agreed to purchase 16.5
million newly issued shares of the Company's common stock, par value $1.00 per
share (the "Issue Shares"), at $10.00 per share in cash (the "Purchase") and to
make a tender offer (the "Offer") for 18.619 million shares of the Company's
common stock (the "Offer Shares"; together with the Issue Shares, the
"Shares"), at $10.00 per share, net to the seller in cash. The closings of the
Purchase and the Offer, both of which are subject to the approval of the
Company's stockholders, are to occur simultaneously. At completion of the
Purchase and Offer, LGE will own 57.7% of the outstanding common stock of the
Company. Pursuant to the terms of the Agreement, LGE will also have the right
to designate a majority of the members of the Company's Board of Directors.
You have asked us whether, in our opinion, the proposed cash consideration to
be received by the Company and the holders of the Offer Shares pursuant to the
terms of the Agreement, taken as a whole, is fair to the Company and such
stockholders from a financial point of view.
In arriving at the opinion set forth below, we have, among other things:
(1) Reviewed the Company's Annual Reports, Forms 10-K and related financial
information for the five fiscal years ended December 31, 1994 and the
Company's Form 10-Q and the related unaudited financial information for
the quarterly period ending April 1, 1995;
(2) Reviewed certain of the Company's estimated unaudited financial
information for the quarterly period ending June 30, 1995;
(3) Reviewed certain information, including financial forecasts, relating
to the business, earnings, cash flow, assets and prospects of the
Company, furnished to us by the Company;
(4) Conducted discussions with members of senior management of the Company
concerning its businesses and prospects;
(5) Reviewed the historical market prices and trading activity for the
Company's common stock;
(6) Compared the proposed financial terms of the transactions contemplated
by the Agreement with the financial terms of certain other transactions
which we deemed to be relevant;
(7) Reviewed the Agreement; and
AII-1
<PAGE>
[LOGO--MERRILL LYNCH]
(8) Reviewed such other financial studies and analyses and performed such
other investigations and took into account such other matters as we
deemed appropriate, including our assessment of general economic,
market, monetary and other conditions as they exist on the date hereof.
In preparing our opinion, we have assumed and relied upon the accuracy and
completeness of all information that was available to us from public sources
and that was supplied or otherwise made available to us by the Company. We have
not assumed any responsibility for independent verification of such information
or any independent valuation or appraisal of any of the assets of the Company.
With respect to the financial forecasts and estimated unaudited financial
information furnished by the Company, we have assumed that they have been
reasonably prepared and reflect the best currently available estimates and
judgment of the Company's management as to the expected future financial
performance of the Company.
In connection with the preparation of this opinion, while we assisted the
Company in its response to an indication of interest from a party other than
LGE, we have not been authorized to solicit, nor have we solicited, except for
limited exceptions, third-party indications of interest for the acquisition of
all or any part of the Company.
Our opinion set forth below is directed to the Board of Directors of the
Company and does not constitute a recommendation to any stockholder of the
Company with respect to the approval of the transactions contemplated by the
Agreement or as to whether they should tender their shares pursuant to the
Offer. This letter is for the information of the Board of Directors of the
Company only in connection with its consideration of the Agreement and is not
to be quoted or referred to, in whole or in part, in any proxy statement or
other document prepared in connection with the transactions contemplated by the
Agreement, nor shall this letter be used for any other purposes or publicly
disclosed, without our prior written consent; provided, however, the Company is
authorized to include this letter in its entirety in the Offer documents, the
Schedule 14D-9 and the proxy materials contemplated by the Agreement.
We have acted as financial advisor to the Board of Directors of the Company
in connection with the transactions contemplated by the Agreement and will
receive a fee for our services, most of which is conditioned upon the
completion of the Purchase and Offer. In the ordinary course of our business,
we and our affiliates may actively trade the debt and equity securities of the
Company for our or their own accounts and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
We have, in the past, provided financing services to an affiliate of the LG
Group and have received fees for the rendering of such services.
On the basis of, and subject to the foregoing, we are of the opinion that, as
of the date hereof, the proposed cash consideration to be received by the
Company and the holders of the Offer Shares pursuant to the terms of the
Agreement, taken as a whole, is fair to the Company and such stockholders from
a financial point of view.
Very truly yours,
Merrill Lynch, Pierce, Fenner &
Smith Incorporated
[SIGNATURE OF DANIAL M. DICKINSON]
By ______________________________________
Director
Investment Banking Group
AII-2
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. Letters of Transmittal and certificates for Shares should be sent or
delivered by each stockholder of the Company or his broker, dealer, commercial
bank or trust company to the Depositary at one of its addresses set forth
below:
The Depositary for the Offer is:
THE BANK OF NEW YORK
By Mail: By Facsimile By Hand or Overnight
Transmission: Courier:
Tender & Exchange
Department (For Eligible Tender & Exchange
P.O. Box 11248 Institutions Only) Department
Church Street Station (212) 815-6213 101 Barclay Street
New York, NY 10286-1248 Receive and Deliver
Confirm Facsimile by Window
Telephone: New York, NY 10286
(For Confirmation Only)
(800) 507-9357
----------------
Any questions or requests for assistance may be directed to the Information
Agent or Dealer Manager at their respective addresses and telephone numbers set
forth below. Requests for additional copies of this Offer to Purchase and the
Letter of Transmittal may be directed to the Information Agent, the Dealer
Manager or the Depositary. Stockholders may also contact their brokers,
dealers, commercial banks or trust companies for assistance concerning the
Offer.
The Information Agent for the Offer is:
[LOGO--MACKENZIE PARTNERS, INC.]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (call collect)
or
Call Toll Free (800) 322-2885
THE DEALER MANAGER FOR THE OFFER IS:
SALOMON BROTHERS INC
8700 Sears Tower
Chicago, Illinois 60606
(312) 876-8478
(call collect)
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
ZENITH ELECTRONICS CORPORATION
PURSUANT TO THE OFFER TO PURCHASE DATED JULY 21, 1995
OF
LG ELECTRONICS INC.
- --------------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, SEPTEMBER 19, 1995, UNLESS THE OFFER IS
EXTENDED.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
To: THE BANK OF NEW YORK, Depositary
<S> <C> <C>
BY MAIL: BY FACSIMILE BY HAND OR
TRANSMISSION: OVERNIGHT COURIER:
Tender & Exchange Department
P.O. Box 11248 (For Eligible Institutions Only) Tender & Exchange Department
Church Street Station (212) 815-6213 101 Barclay Street
New York, NY 10286-1248 Receive and Deliver Window
CONFIRM FACSIMILE BY TELEPHONE: New York, NY 10286
(For Confirmation Only)
(800) 507-9357
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO A
NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE VALID DELIVERY.
THE INSTRUCTIONS CONTAINED IN THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used either if certificates for Shares
(as defined below) are to be forwarded herewith or, unless an Agent's Message
(as defined in the Offer to Purchase) is utilized, if delivery of Shares is to
be made by book-entry transfer to the Depositary's account at The Depository
Trust Company, Midwest Securities Trust Company or Philadelphia Depository Trust
Company (hereinafter collectively referred to as the "Book-Entry Transfer
Facilities") pursuant to the procedures set forth under "The Tender Offer--2.
Procedure for Tender of Shares" in the Offer to Purchase dated July 21, 1995
(the "Offer to Purchase"). Stockholders who tender Shares by book-entry transfer
are referred to herein as "Book-Entry Stockholders."
Stockholders who cannot deliver their Shares and all other documents
required hereby to the Depositary on or prior to the Expiration Date (as defined
in the Offer to Purchase) or who cannot complete the procedures for book-entry
transfer on a timely basis, must tender their Shares pursuant to the guaranteed
delivery procedure set forth under "The Tender Offer--2. Procedure for Tender of
Shares" in the Offer to Purchase. See Instruction 2. Delivery of documents to
one of the Book-Entry Transfer Facilities does not constitute delivery to the
Depositary.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- -----------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(Please fill in, if blank, exactly as name(s) SHARES TENDERED
appear(s) on Share Certificates (ATTACH ADDITIONAL LIST IF NECESSARY)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TOTAL NUMBER
OF SHARES
CERTIFICATE REPRESENTED BY NUMBER OF
NUMBER(S)* CERTIFICATE(S)* SHARES TENDERED**
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
--------------------------------------------------------------
---------------------------------------------------------------
Total Shares
- -----------------------------------------------------------------------------------------------------------------
*Need not be completed by stockholders tendering by book-entry transfer.
**Unless otherwise indicated, it will be assumed that all Shares represented by any certificates delivered to
the Depositary are being tendered. See Instruction 4.
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ ACCOMPANYING INSTRUCTIONS CAREFULLY
[_] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution ________________________________________________
Account No. _______________________________________________________________ at
[_] The Depository Trust Company ("DTC")
[_] Midwest Securities Trust Company ("MSTC")
[_] Philadelphia Depository Trust Company ("PHILADEP")
Transaction Code No. _________________________________________________________
[_] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Stockholder(s) _________________________________________
Window Ticket Number (if any) ________________________________________________
Date of Execution of Notice of Guaranteed Delivery ___________________________
Name of Institution which Guaranteed Delivery ________________________________
If delivery is by book entry transfer:
Name of Tendering Institution _____________________________________________
[_] DTC [_] MSTC [_] PHILADEP (check one) Account No. ___________________
Transaction Code No. ______________________________________________________
Ladies and Gentlemen:
The undersigned hereby tenders to LG Electronics Inc., a corporation
organized under the laws of the Republic of Korea (the "Purchaser"), the above-
described shares of common stock, par value $1.00 per share, including the
associated Rights (as defined in the Offer to Purchase) (collectively, the
"Shares"), of Zenith Electronics Corporation, a Delaware corporation (the
"Company"), pursuant to the Purchaser's offer to purchase up to 18,619,000
Shares at a price of $10.00 per Share, net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated July 21, 1995, receipt of which is hereby acknowledged,
and in this Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer").
Subject to, and effective upon, acceptance for payment of the Shares tendered
herewith in accordance with the terms of the Offer, including, if the Offer is
extended or amended, the terms and conditions of any such extension or
amendment, the undersigned hereby sells, assigns and transfers to or upon the
order of the Purchaser all right, title and interest in and to all the Shares
that are being tendered hereby or orders the registration of such Shares
delivered by book-entry transfer (and any and all other Shares or other
securities issued or issuable in respect thereof on or after July 21, 1995 and
any or all dividends thereon or distributions with respect thereto
(collectively, "Distributions") and irrevocably appoints the Depositary the
true and lawful agent and attorney-in-fact of the undersigned with respect to
such Shares (and all Distributions), with full power of substitution (such
power of attorney being deemed to be an irrevocable power coupled with an
interest), to (a) deliver certificates for such Shares (and all such other
Shares or securities), or transfer ownership of such Shares (and all
Distributions) on the account books maintained by any of the Book-Entry
Transfer Facilities, together, in any such case, with all accompanying
evidences of transfer and authenticity,
<PAGE>
to or upon the order of the Purchaser upon receipt by the Depositary, as the
undersigned's agent, of the purchase price, (b) present such Shares (and all
Distributions) for transfer on the books of the Company and (c) receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Shares (and all Distributions), all in accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints Mr. K.S. Cho and Mr. Teddy Hwang
and each of them, the attorneys-in-fact and proxies of the undersigned, each
with full power of substitution, to exercise all voting and other rights of the
undersigned in such manner as each such attorney and proxy or his substitute
shall in his sole discretion deem proper, with respect to all of the Shares
tendered hereby which have been accepted for payment by the Purchaser prior to
the time of any vote or other action at any meeting of stockholders of the
Company (whether annual or special and whether or not an adjourned meeting), by
written consent or otherwise. This power of attorney and proxy is coupled with
an interest and is irrevocable and is granted in consideration of, and is
effective upon, the acceptance for payment of such Shares by the Purchaser in
accordance with the terms of the Offer. Such acceptance for payment shall
revoke, without any further action, any other power of attorney or proxy
granted by the undersigned at any time with respect to such Shares, and no
subsequent power of attorney or proxies will be given or will be executed by
the undersigned (and if given or executed, will not be deemed to be effective).
The undersigned understands that the Purchaser reserves the right to require
that, in order for such Shares to be deemed validly tendered, immediately upon
the Purchaser's acceptance for payment of such Shares, the Purchaser is able to
exercise full voting rights with respect to such Shares and other securities,
including voting at any meeting of stockholders.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares and all
Distributions tendered hereby and that when the same are accepted for payment
by the Purchaser, the Purchaser will acquire good and marketable title and
unencumbered ownership thereto, free and clear of all liens, restrictions,
charges, security interests, and encumbrances and not subject to any adverse
claims. The undersigned will, upon request, execute and deliver any additional
documents deemed by the Depositary or the Purchaser to be necessary or
desirable to complete the sale, assignment and transfer of the Shares and all
Distributions tendered hereby. In addition, the undersigned will promptly remit
and transfer to the Depositary for the account of the Purchaser any and all
Distributions in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer and, pending such remittance or
appropriate assurance thereof, the Purchaser shall be entitled to all rights
and privileges as owner of any such Distributions, and may withhold the entire
purchase price or deduct from the purchase price of Shares tendered hereby, the
amount or value thereof, as determined by the Purchaser in its sole discretion.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned. Except as stated in the Offer to Purchase, this
tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of the
procedures described under "The Tender Offer--2. Procedure for Tender of
Shares" in the Offer to Purchase and in the instructions hereto will constitute
a binding agreement between the undersigned and the Purchaser upon the terms
and subject to the conditions of the Offer.
The undersigned recognizes that, under certain circumstances set forth in the
Offer to Purchase, the Purchaser may terminate or amend the Offer or may not be
required to accept for payment any of the Shares tendered herewith or may
accept for payment, pro rata with Shares tendered by other stockholders, fewer
than all of the Shares tendered herewith.
Unless otherwise indicated under "Special Payment Instructions," please issue
the check for the purchase price and/or return any Shares not tendered or
accepted for payment in the name(s) of the undersigned. Similarly, unless
otherwise indicated under "Special Delivery Instructions," please mail the
check for the purchase price and/or return any Shares certificates not tendered
or accepted for payment (and accompanying documents, as appropriate) to the
undersigned at the address shown below the
<PAGE>
undersigned's signature(s). In the event that both "Special Payment
Instructions" and "Special Delivery Instructions" are completed, please issue
the check for the purchase price and/or return any Shares not tendered or
accepted for payment in the name(s) of, and deliver said check and/or return
certificates to, the person or persons so indicated. Stockholders tendering
Shares by book-entry transfer may request that any Shares not accepted for
payment be returned by crediting such account maintained at such Book-Entry
Transfer Facility as such stockholder may designate by making an appropriate
entry under "Special Payment Instruction." The undersigned recognizes that the
Purchaser has no obligation pursuant to the "Special Payment Instructions" to
transfer any Shares from the name of the registered holder thereof if the
Purchaser does not accept for payment any of such Shares.
------------------------------------ ------------------------------------
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check To be completed ONLY if the check
for the purchase price of Shares for the purchase price of Shares
purchased or stock certificates for purchased or stock certificates for
Shares not tendered or not Shares not tendered or not
purchased are to be issued in the purchased are to be mailed to
name of someone other than the someone other than the undersigned
undersigned. or to the undersigned at an address
other than that shown below the
Issue check and/or certificates to: undersigned's signature(s).
Name _______________________________
(Please Print) Mail check and/or certificates to:
Address ____________________________ Name _______________________________
(Please Print)
____________________________________
(Zip Code) Address ____________________________
____________________________________ ____________________________________
(Taxpayer Identification No. or (Zip Code)
Social Security No.)
(Complete Substitute Form W-9)
- ------------------------------------- ------------------------------------
- -------------------------------------------------------------------------------
ZENITH ELECTRONICS CORPORATION
DIVIDEND REINVESTMENT PLAN SHARES
(SEE INSTRUCTION 11)
This section is to be completed ONLY if Shares held in the
Dividend Reinvestment Plan are to be tendered.
[_] By checking this box, the undersigned represents that the undersigned is
a participant in the Dividend Reinvestment Plan and hereby tenders the
following number of Shares held in the Dividend Reinvestment Plan account
of the undersigned:
____________________________Shares*
*The undersigned understands and agrees that all Shares held in the Dividend
Reinvestment Plan account(s) of the undersigned will be tendered if the above
box is checked and the space above is left blank.
------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------
SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 BELOW)
SIGN
X HERE
____________________________________________________________ /__
Signature(s) of Owner(s) \
X
____________________________________________________________
Dated _______________________________________________ , 1995
Name(s) ____________________________________________________
(Please Print)
____________________________________________________________
Capacity (full title) ______________________________________
Address ____________________________________________________
____________________________________________________________
(Include Zip Code)
Area Code and Telephone No. ________________________________
Tax Identification or Social Security No. __________________
(Complete Substitute W-9 on Reverse Side)
(Must be signed by registered holder(s) exactly as
name(s) appear(s) on stock certificate(s) or on a security
position listing or by person(s) authorized to become
registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee,
executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a
fiduciary or representative capacity, please set forth full
title and see Instruction 5.)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Name of Firm _______________________________________________
Authorized Signature _______________________________________
Name _______________________________________________________
Address ____________________________________________________
Area Code and Telephone Number _____________________________
Dated _______________________________________________ , 1995
- -------------------------------------------------------------
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a financial
institution (including most banks, savings and loan associations and brokerage
houses) which is a participant in the Securities Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Program or the Stock
Exchange Medallion Program (an "Eligible Institution"). Signatures on this
Letter of Transmittal need not be guaranteed (a) if this Letter of Transmittal
is signed by the registered holder(s) of the Shares (which term, for purposes
of this document, shall include any participant in one of the Book-Entry
Transfer Facilities whose name appears on a security position listing as the
owner of Shares) tendered herewith and such holder(s) have not completed the
instruction entitled "Special Payment Instructions" on this Letter of
Transmittal or (b) if such Shares are tendered for the account of an Eligible
Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARES. This Letter of Transmittal
is to be used either if certificates are to be forwarded herewith or, unless an
Agent's Message is utilized, if delivery of Shares is to be made in connection
with a book-entry transfer pursuant to the procedures set forth in "The Tender
Offer--2. Procedure for Tender of Shares" of the Offer to Purchase.
Certificates for all physically delivered Shares, or a confirmation of a book-
entry transfer into the Depositary's account at one of the Book-Entry Transfer
Facilities of all Shares delivered electronically, as well as a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) and
any other documents required by this Letter of Transmittal, must be received by
the Depositary at one of its addresses set forth on the front page of this
Letter of Transmittal by the Expiration Date. Stockholders who cannot deliver
their Shares and all other required documents to the Depositary by the
Expiration Date must tender their Shares pursuant to the guaranteed delivery
procedure set forth in "The Tender Offer--2. Procedure for Tender of Shares" of
the Offer to Purchase. Pursuant to such procedure: (a) such tender must be made
by or through an Eligible Institution, (b) a properly completed and duly
executed Notice of Guaranteed Delivery substantially in the form provided by
the Purchaser must be received by the Depositary by the Expiration Date and (c)
the certificates for all physically delivered Shares, or a confirmation of a
book-entry transfer into the Depositary's account at one of the Book-Entry
Transfer Facilities of all Shares delivered electronically, as well as a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) (or, in the case of a book-entry delivery, an Agent's Message) and any
other documents required by this Letter of Transmittal, must be received by the
Depositary within five NYSE trading days after the date of execution of such
Notice of Guaranteed Delivery, all as provided in "The Tender Offer--2.
Procedure for Tender of Shares." If Shares are forwarded separately to the
Depositary, each must be accompanied by a duly executed Letter of Transmittal
(or facsimile thereof).
The method of delivery of stock certificates for Shares, the Letter of
Transmittal and all other required documents including delivery through Book-
Entry Transfer Facilities, is at the option and sole risk of the tending
stockholder and the delivery will be deemed made only when actually received by
the Depositary. If delivery is by mail, registered mail with return receipt
requested, properly issued, is recommended. In all cases, sufficient time
should be allowed to ensure timely delivery.
No alternative, conditional or contingent tenders will be accepted, and no
fractional Shares will be purchased. By executing this Letter of Transmittal
(or facsimile thereof), the tending stockholder waives any right to receive any
notice of the acceptance for payment of the Shares.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
schedule attached hereto and separately signed on each page thereof in the same
manner as this Letter of Transmittal is signed.
4. PARTIAL TENDERS (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares represented by any certificate(s) for
Shares are delivered to the Depositary are to be tendered, fill in the number
of Shares which are to be tendered in the box entitled "Number of Shares
<PAGE>
Tendered." In such case, a new certificate for the remainder of the Shares
represented by the old certificate(s) will be sent to the person(s) signing
this Letter of Transmittal, unless otherwise provided in the appropriate box on
this Letter of Transmittal, as promptly as practicable following the expiration
or termination of the Offer. All Shares represented by certificates delivered
to the Depositary will be deemed to have been tendered unless otherwise
indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written
on the face of the certificates without alteration, enlargement or any change
whatsoever.
If any of the Shares tendered hereby is held of record by two or more
persons, all such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in different names on
different certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of certificates or separate stock
powers are required unless payment of the purchase price is to be made, or
Shares not tendered or not purchased are to be returned, in the name of any
person other than the registered holder(s). Signatures on any such certificates
or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the registered
holder(s) of the Shares tendered hereby, certificates must be endorsed or
accompanied by appropriate stock powers, in either case, signed exactly as the
name(s) of the registered holder(s) appear(s) on the certificates for such
Shares. Signature(s) on any such certificates or stock powers must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal or any certificate or stock power is signed by
a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory
to the Purchaser of the authority of such person so to act must be submitted.
6. STOCK TRANSFER TAXES. The Purchaser will pay any stock transfer taxes with
respect to the sale and transfer of any Shares to it or its order pursuant to
the Offer. If, however, payment of the purchase price is to be made to, or
Shares not tendered or not purchased are to be returned in the name of, any
person other than the registered holder(s), or if a transfer tax is imposed for
any reason other than the sale or transfer of Shares to the Purchaser pursuant
to the Offer, then the amount of any stock transfer taxes (whether imposed on
the registered holder(s), such other person or otherwise) will be deducted from
the purchase price unless satisfactory evidence of the payment of such taxes,
or exemption therefrom, is submitted herewith.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If the check for the purchase
price of any Shares purchased is to be issued, or any Shares not tendered or
not purchased are to be returned, in the name of a person other than the
person(s) signing this Letter of Transmittal or if the check or any
certificates for Shares not tendered or not purchased are to be mailed to
someone other than the person(s) signing this Letter of Transmittal or to the
person(s) signing this Letter of Transmittal at an address other than that
shown above, the appropriate boxes on this Letter of Transmittal should be
completed. Stockholders tendering Shares by book-entry transfer may request
that Shares not purchased be credited to such account at any of the Book-Entry
Transfer Facilities as such stockholder may designate under "Special Payment
Instructions." If no such instructions are given, any such Shares not purchased
will be returned by crediting the account at the Book-Entry Transfer Facilities
designated above.
<PAGE>
8. SUBSTITUTE FORM W-9. Under the federal income tax laws, the Depositary
will be required to backup withhold 31% of the amount of any payments made to
certain stockholders pursuant to the Offer. In order to avoid such backup
withholding, each tendering stockholder, and, if applicable, each other payee,
must provide the Depositary with such stockholder's or payee's correct taxpayer
identification number and certify that such stockholder or payee is not subject
to such backup withholding by completing the Substitute Form W-9 set forth
above. In general, if a stockholder or payee is an individual, the taxpayer
identification number is the Social Security number of such individual. If the
Depositary is not provided with the correct taxpayer identification number, the
stockholder or payee may be subject to a $50 penalty imposed by the Internal
Revenue Service ("IRS"). Certain stockholders or payees (including, among
others, all corporations and certain foreign individuals) are not subject to
these backup withholding and reporting requirements. In order to satisfy the
Depositary that a foreign individual qualifies as an exempt recipient, such
stockholder or payee must submit a statement, signed under penalties of
perjury, attesting to that individual's exempt status. Such statements can be
obtained from the Depositary. For further information concerning backup
withholding and instructions for completing the Substitute Form W-9 (including
how to obtain a taxpayer identification number if you do not have one and how
to complete the Substitute Form W-9 if Shares are held in more than one name),
consult the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
Failure to complete the Substitute Form W-9 will not, by itself, cause Shares
to be deemed invalidly tendered, but may require the Depositary to withhold 31%
of the amount of any payments made pursuant to the Offer. Backup withholding is
not an additional federal income tax. Rather, the federal income tax liability
of a person subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained provided that the required information is furnished to the IRS.
NOTE: FAILURE TO COMPLETE AND RETURN THE SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance or
additional copies of the Offer to Purchase and this Letter of Transmittal may
be obtained from the Information Agent or Dealer Manager at their respective
addresses or telephone numbers set forth below.
10. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the stockholder should
promptly notify the Depositary. Instructions will then be given as to what
steps must be taken to obtain a replacement certificate(s). The Letter of
Transmittal and related documents cannot be processed until the procedures for
replacing such missing certificate(s) have been followed.
11. DIVIDEND REINVESTMENT PLAN. Stockholders who participate in the Company's
Dividend Reinvestment Plan who want to tender Shares held under that plan
pursuant to the Offer should mark the box under "DIVIDEND REINVESTMENT PLAN
SHARES" and indicate the number of Shares that are to be tendered. If such box
is marked but the number of Shares to be tendered is not indicated, all Shares
held for the shareholder's account in the Company's Dividend Reinvestment Plan
will be tendered.
<PAGE>
TO BE COMPLETED BY ALL TENDERING STOCKHOLDERS
(SEE INSTRUCTION 8)
- --------------------------------------------------------------------------------
PAYER'S NAME: THE BANK OF NEW YORK
- --------------------------------------------------------------------------------
SUBSTITUTE PART I--PLEASE PROVIDE YOUR TIN
FORM W-9 IN THE BOX AT THE RIGHT AND -------------------------
CERTIFY BY SIGNING AND DATING Social Security number
DEPARTMENT OF BELOW.
THE TREASURY OR
INTERNAL REVENUE
SERVICE ------------------------
Employer inentification
PAYER'S REQUEST number
FOR TAXPAYER
IDENTIFICATION
NUMBER (TIN)
- --------------------------------------------------------------------------------
CERTIFICATION.--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct taxpayer identification
number (or I am waiting for a number to be issued to me);
(2) I am not subject to backup withholding because (a) I am exempt from
backup withholding, or (b) I have not been notified by the Internal
Revenue Service ("IRS") that I am subject to backup withholding as
a result of a failure to report all interest or dividends, or (c)
the IRS has notified me that I am no longer subject to backup
withholding.
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if
you have been notified by the IRS that you are currently subject to
backup withholding because of underreporting or dividends on your tax
return. However, if after being notified by the IRS that you were
subject to backup withholding you received another notification from
the IRS that you are no longer subject to backup withholding, do not
cross out such item (2).
- -----------------------------------------------------------------------
/ SIGN
SIGNATURE DATE , 199 -- HERE
------------------------ --------------- --- \
- -----------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE
IF YOU ARE AWAITING A TAX IDENTIFICATION NUMBER.
-------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (2)
I intend to mail or deliver an application in the near future. I understand
that if I do not provide a taxpayer identification number by the time of
payment, 31% of all reportable payments made to me will be withheld, but that
such amounts will be refunded to me if I then provide a Taxpayer Identification
Number within sixty (60) days.
Signature Date
-------------------------------- ---------------------------
-------------------------------------------------------------------------------
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates of Shares
and any other required documents should be sent or delivered by each
stockholder of the Company or his broker, dealer, commercial bank, trust
company or other nominee to the Depositary at one of its addresses set forth
below:
Depositary for the Offer is:
The Bank of New York
BY MAIL: BY FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT
Tender & Exchange (For Eligible Institutions Only) COURIER:
Department (212) 815-6213 Tender & Exchange
P.O. Box 11248 Department
Church Street Station CONFIRM FACSIMILE BY TELEPHONE: 101 Barclay Street
New York, NY 10286-1248 (For Confirmation Only) Receive and
(800) 507-9357 Deliver Window
New York, NY 10286
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
listed below. Additional copies of this Offer to Purchase, the Letter of
Transmittal and other tender offer materials may be obtained from the
Information Agent as set forth below, and will be furnished promptly at
Purchaser's expense. You may also contact your broker, dealer, commercial bank,
trust company or other nominee for assistance concerning this Offer.
The Information Agent is:
[LOGO -- MACKENZIE PARTNERS, INC.]
156 Fifth Avenue
New York, New York 10010
(219) 929-5500 (call collect)
or
CALL TOLL FREE (800) 322-2885
The Dealer Manager for the Offer is:
SALOMON BROTHERS INC
8700 Sears Tower
Chicago, Illinois 60606
(312) 876-8478
(call collect)
<PAGE>
[SALOMON BROTHERS LETTERHEAD]
OFFER TO PURCHASE FOR CASH
UP TO 18,619,000 SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
ZENITH ELECTRONICS CORPORATION
AT
$10.00 NET PER SHARE
BY
LG ELECTRONICS INC.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, SEPTEMBER 19, 1995,
UNLESS THE OFFER IS EXTENDED.
July 21, 1995
To Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees:
We have been appointed by LG Electronics Inc., a corporation organized under
the laws of the Republic of Korea (the "Purchaser") to act as Dealer Manager in
connection with the Purchaser's offer to purchase up to 18,619,000 shares of
common stock, par value $1.00 per share, including the associated Rights (as
defined in the Offer to Purchase) (collectively, the "Shares"), of Zenith
Electronics Corporation, a Delaware corporation (the "Company"), at $10.00 per
Share, net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in the Purchaser's Offer to Purchase dated
July 21, 1995 (the "Offer to Purchase") and the related Letter of Transmittal
(which, together with any amendments or supplements thereto, collectively
constitute the "Offer"). The Offer is being made pursuant to the terms of a
Stock Purchase Agreement dated as of July 17, 1995 (the "Stock Purchase
Agreement") by and between the Company and the Purchaser.
The Offer is conditioned upon the satisfaction or waiver of certain conditions
to the obligations of the Purchaser and the Company to consummate the
transactions contemplated by the Stock Purchase Agreement, including the
purchase by the Purchaser of 16,500,000 Shares to be issued by the Company for
$10.00 per Share to be consummated simultaneously with the purchase of the
18,619,000 Shares under the Offer, receipt by the Purchaser and the Company of
all necessary governmental and regulatory approvals, approval of the
Stockholder Proposals (as defined in the Offer to Purchase) by the stockholders
of the Company, there being at least 18,619,000 Shares validly tendered in
accordance with the terms of the Offer prior to the Expiration Date (as defined
in the Offer to Purchase) of the Offer and not withdrawn, and a number of other
conditions set forth in the Offer to Purchase. Under the Stock Purchase
Agreement, the Purchaser may not purchase less than 18,619,000 Shares under the
Offer.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are enclosing
the following documents:
1. Offer to Purchase dated July 21, 1995;
2. Letter of Transmittal to tender Shares for your use and for the
information of your clients, together with Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 providing information
relating to backup federal income tax withholding (facsimile copies of the
Letter of Transmittal may be used to tender Shares);
3. Notice of Guaranteed Delivery to be used to accept the Offer if the
certificates for the Shares being tendered and all other required documents
cannot be delivered to the Depositary (as defined
<PAGE>
in the Offer to Purchase) by the Expiration Date or if procedures for book-
entry transfer cannot be completed by the Expiration Date;
4. A printed form of letter which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Offer; and
5. A letter to the Company's shareholders from Albin F. Moschner,
President and Chief Executive Officer and the Company's Schedule 14D-9.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER, PRORATION PERIOD AND
WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
TUESDAY, SEPTEMBER 19, 1995, UNLESS THE OFFER IS EXTENDED.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares that have been validly tendered and not
properly withdrawn when, as and if the Purchaser gives oral or written notice
to the Depositary of its acceptance for payment of such Shares. Upon the terms
and subject to the conditions of the Offer, payment for Shares so accepted for
payment will be made by deposit of the purchase price therefor with the
Depositary, which will act as agent for tendering stockholders for the purpose
of receiving payment from the Purchaser and transmitting such payment to
tendering stockholders. In no circumstances will interest be paid on the
purchase price by reason of any delay in making such payment. In all cases,
payment for Shares accepted for payment pursuant to the Offer will be made only
after timely receipt by the Depositary of (i) certificates for such Shares (or
timely confirmation of book-entry transfer of such Shares into the Depositary's
account at any Book-Entry Transfer Facility (as defined in the Offer to
Purchase) as described in Section 2 of the Offer to Purchase); (ii) a Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees (or in the case of a book-entry transfer, an
Agent's Message (as defined in the Offer to Purchase)); and (iii) any other
documents required by the Letter of Transmittal.
If holders of Shares wish to tender, but it is impracticable for them to
forward their certificates or other required documents on or prior to the
Expiration Date or to comply with the book-entry transfer procedure on a timely
basis, a tender may be effected by following the guaranteed delivery procedures
specified in "The Tender Offer--2. Procedure for Tender of Shares" in the Offer
to Purchase.
The Purchaser will not pay any fees or commissions to any broker or dealer or
other person (other than to the Dealer Manager as described in the Offer to
Purchase) for soliciting tenders of Shares pursuant to the Offer. The Purchaser
will, however, upon request, reimburse brokers, dealers, commercial banks and
trust companies for reasonable and necessary costs and expenses incurred by
them in forwarding materials to their customers. The Purchaser will pay all
stock transfer taxes applicable to its purchase of Shares pursuant to the
Offer, subject to Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to,
and additional copies of the enclosed materials may be obtained from the
Information Agent or the undersigned at the addresses and telephone numbers set
forth on the back cover of the Offer to Purchase and the Letter of Transmittal.
Very truly yours,
Salomon Brothers Inc
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY PERSON AS AN AGENT OF THE PURCHASER, THE DEALER MANAGER, THE INFORMATION
AGENT OR THE DEPOSITARY, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY
DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE
OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED
THEREIN.
2
<PAGE>
OFFER TO PURCHASE FOR CASH
UP TO 18,619,000 SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
ZENITH ELECTRONICS CORPORATION
AT
$10.00 NET PER SHARE
BY
LG ELECTRONICS INC.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, SEPTEMBER 19, 1995, UNLESS THE
OFFER IS EXTENDED.
July 21, 1995
To Our Clients:
Enclosed for your consideration are the Offer to Purchase dated July 21, 1995
(the "Offer to Purchase") and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute
the "Offer") in connection with the offer by LG Electronics Inc., a corporation
organized under the laws of the Republic of Korea (the "Purchaser"), to
purchase up to 18,619,000 shares of common stock, par value $1.00 per share,
including the associated Rights (as defined in the Offer to Purchase)
(collectively, the "Shares"), of Zenith Electronics Corporation, a Delaware
corporation (the "Company"), at $10.00 per Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set
forth in the Offer. The Offer is being made pursuant to the terms of a Stock
Purchase Agreement dated as of July 17, 1995 (the "Stock Purchase Agreement")
by and between the Company and the Purchaser. We are the holder of record of
Shares held for your account. A tender of such Shares can be made only by us as
the holder of record and pursuant to your instructions. THE LETTER OF
TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY
YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE STOCK
PURCHASE AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE
OFFER, ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS AND
HAS APPROVED THE STOCK PURCHASE AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING THE OFFER. THE BOARD RECOMMENDS THAT STOCKHOLDERS ACCEPT THE
OFFER AND TENDER THEIR SHARES PURSUANT THERETO.
We request instructions as to whether you wish us to tender any or all of the
Shares held by us for your account, upon the terms and subject to the
conditions set forth in the Offer.
Please note carefully the following:
1. The tender price is $10.00 per Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set
forth in the Offer.
2. The Offer, proration period and withdrawal rights will expire at 12:00
Midnight, New York City time, on Tuesday, September 19, 1995, (the
"Expiration Date") unless the Offer is extended.
3. The Offer is being made for up to 18,619,000 Shares. If more than
18,619,000 Shares are validly tendered prior to the Expiration Date and not
properly withdrawn, the Purchaser will, upon the terms and subject to the
conditions of the Offer, accept such Shares for payment on a pro rata
<PAGE>
basis, with adjustments to avoid purchases of fractional Shares, based upon
the number of Shares validly tendered prior to the Expiration Date of the
Offer and not properly withdrawn.
4. The Offer is conditioned upon the satisfaction or waiver of certain
conditions to the obligations of the Purchaser and the Company to
consummate the transactions contemplated by the Stock Purchase Agreement,
including the purchase by the Purchaser of 16,500,000 Shares to be issued
by the Company for $10.00 per Share, to be consummated simultaneously with
the purchase of the 18,169,000 Shares under the Offer, receipt by the
Purchaser and the Company of all necessary governmental and regulatory
approvals, approval of the Stockholder Proposals (as defined in the Offer
to Purchase) by the stockholders of the Company, there being at least
18,619,000 Shares validly tendered in accordance with the terms of the
Offer prior to the Expiration Date of the Offer and not withdrawn and a
number of other conditions set forth in the Offer to Purchase. Under the
Stock Purchase Agreement, the Purchaser may not purchase less than
18,619,000 Shares under the Offer.
5. Any brokerage fees, commissions or stock transfer taxes applicable to
the sale of Shares to the Purchaser pursuant to the Offer will be paid by
the Purchaser, except as otherwise provided in Instruction 6 of the Letter
of Transmittal.
If you wish to have us tender any or all of your Shares, please so instruct us
by completing, executing, detaching and returning to us the instruction form
set forth below. An envelope to return your instructions to us is enclosed. If
you authorize tender of your Shares, all such Shares will be tendered unless
otherwise specified on the instruction form set forth below.
YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO
SUBMIT A TENDER ON YOUR BEHALF BY THE EXPIRATION DATE. THE OFFER, PRORATION
PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME,
ON TUESDAY, SEPTEMBER 19, 1995, UNLESS THE OFFER IS EXTENDED.
The Offer is not being made to, nor will tenders be accepted from or on behalf
of, holders of Shares in any jurisdiction in which the making of the Offer or
acceptance thereof would not be in compliance with the laws of such
jurisdiction. In those jurisdictions, the laws of which require that the Offer
be made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of the Purchaser by Salomon Brothers Inc or one or more registered
brokers or dealers licensed under the laws of such jurisdiction.
<PAGE>
INSTRUCTIONS WITH RESPECT TO
OFFER TO PURCHASE FOR CASH
UP TO
18,619,000 SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
ZENITH ELECTRONICS CORPORATION
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase dated July 21, 1995 and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute
the "Offer") in connection with the Offer by LG Electronics Inc., a corporation
organized under the laws of the Republic of Korea, to purchase up to 18,619,000
shares of common stock, par value $1.00 per share, including the associated
Rights (as defined in the Offer to Purchase) (collectively, the "Shares"), of
Zenith Electronics Corporation, a Delaware corporation.
This will instruct you to tender the number of Shares indicated below held by
you for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer to Purchase and the related Letter of
Transmittal.
Number of Shares to be Tendered: _________ Shares(1)
Account Number:
-------------------------------------
Dated: , 199
----------------
---------------------------------------------------------------------------
SIGN HERE
Signature(s):
--------------------------------------------------------------
---------------------------------------------------------------------------
Print Name(s):
-------------------------------------------------------------
---------------------------------------------------------------------------
Print Address(es):
---------------------------------------------------------
---------------------------------------------------------------------------
Area Code and Telephone No.:
-----------------------------------------------
Taxpayer ID No. or Social Security No.:
------------------------------------
(1) Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
<PAGE>
NOTICE OF GUARANTEED DELIVERY
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
ZENITH ELECTRONICS CORPORATION
PURSUANT TO THE OFFER TO PURCHASE DATED JULY 21, 1995
OF
LG ELECTRONICS INC.
This Notice of Guaranteed Delivery, or one substantially equivalent to the
attached form, must be used to accept the Offer (as defined below) if (i)
certificates for shares of common stock, par value $1.00 per share, including
the associated Rights as defined in the Offer to Purchase (collectively, the
"Shares"), of Zenith Electronics Corporation, a Delaware corporation, and all
other documents required by the Letter of Transmittal cannot be delivered to
the Depositary by the Expiration Date (as defined in the Offer to Purchase) or
(ii) the procedures for delivery of book-entry transfer cannot be completed on
a timely basis. This Notice of Guaranteed Delivery may be delivered by hand or
sent by facsimile transmission or mail to the Depositary. See "The Tender
Offer--2. Procedure for Tender of Shares" in the Offer to Purchase.
The Depositary for the Offer is:
The Bank of New York
By Mail: By Facsimile By Hand or
Tender & Exchange Transmission: Overnight Courier:
Department Tender & Exchange
P.O. Box 11248 (for Eligible Institutions Only) Department
Church Street Station (212) 815-6213 101 Barclay Street
New York, NY 10286-1248 Receive and Deliver
Confirm Facsimile by Telephone: Window
(For Confirmation Only) New York, NY 10286
(800) 507-9357
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO
A NUMBER OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee signatures.
If a signature on a Letter of Transmittal is required to be guaranteed by an
"Eligible Institution" under the instructions thereto, such signature guarantee
must appear in the applicable space provided in the signature box on the Letter
of Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to LG Electronics Inc., a corporation
organized under the laws of the Republic of Korea, upon the terms and subject
to the conditions set forth in the Offer to Purchase dated July 21, 1995 and
the related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer"), receipt of which is
hereby acknowledged, the number (indicated below) of Shares pursuant to the
guaranteed delivery procedure set forth in "The Tender Offer--2. Procedure for
Tender of Shares" of the Offer to Purchase.
Number of Shares Being Tendered Hereby
Certificate No(s). (if available): SIGN HERE
- --------------------------------- -------------------------------------
(Signature(s))
- ---------------------------------
If Shares will be tendered by
book-entry transfer: -------------------------------------
(Name(s) of Record Holders) (Please Print)
Name of Tendering Institution
---- -------------------------------------
Account No. at (Address)
--------------------
[_] The Depository Trust Company -------------------------------------
[_] Midwest Securities Trust Company (Zip Code)
[_] Philadelphia Depository Trust Company
-------------------------------------
(Area Code and Telephone No.)
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a member of a registered national securities
exchange or the National Association of Securities Dealers, Inc., or a
commercial bank or trust company having an office, branch or agency in the
United States, hereby (a) represents that the above named person(s) "own(s)"
the Shares tendered hereby within the meaning of Rule 14e-4 under the
Securities Exchange Act of 1934, as amended, (b) represents that such tender
complies with Rule 14e-4 and (c) guarantees to deliver to the Depositary the
Shares tendered hereby, together with a properly completed and duly executed
Letter(s) of Transmittal (or facsimile(s) thereof) or an Agent's Message as
defined in the Offer to Purchase in the case of a book-entry delivery, and any
other required documents, all within five New York Stock Exchange, Inc. trading
days of the date hereof.
- --------------------------------- -------------------------------------
(Name of Firm) (Authorized Signature)
- --------------------------------- -------------------------------------
(Address) (Name)
- --------------------------------- -------------------------------------
(Zip Code) (Title)
- ---------------------------------
(Area Code and Telephone No.)
Dated: , 199 .
-------------------
DO NOT SEND STOCK CERTIFICATES WITH THIS FORM. YOUR STOCK
CERTIFICATES MUST BE SENT WITH THE LETTER OF TRANSMITTAL.
2
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- ----------------------------------------------------
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
- -----------------------------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, any one of the
individuals(1)
3. Husband and wife (joint The actual owner
account) of the account
or, if
joint funds,
either person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if
account) the minor is the
only contributor,
the minor(1)
6. Account in the name of The ward, minor,
guardian or committee for or incompetent
a designated ward, minor, person(3)
or incompetent person
7. a. The usual revocable The grantor-
savings trust account trustee(1)
(grantor is also
trustee)
b. So-called trust The actual
account that is not owner(1)
a legal or valid trust
under State law
8. Sole proprietorship The owner(4)
account
- ----------------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF --
- ----------------------------------------------------
9. A valid trust, estate, or The legal entity
pension trust (Do not furnish
the identifying
number of the
personal
representative or
trustee unless
the legal entity
itself is not
designated in the
account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization
account
12. Partnership account held The partnership
in the name of the
business
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or registered The broker or
nominee nominee
15. Account with the The public entity
Department of Agriculture
in the name of a public
entity (such as a State or
local government, school
district, or prison) that
receives agricultural
program payments
- --------------------------------------- --------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER OF SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or
Form SS-4, Application for Employer Identification Number, at the local office
of the Social Security Administration or the Internal Revenue Service and
apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
.A corporation.
.A financial institution.
. An organization exempt from tax under section 501(a), or an individual
retirement plan.
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency, or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S.
or a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a)
. An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
. An entity registered at all times under the Investment Company Act of
1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not pro-
vided your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends un-
der section 852).
. Payments described in section 6049(b)(5) to non-resident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT
TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS,
ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend, inter-
est, or other payments to give taxpayer identification numbers to payers who
must report the payments to IRS. IRS uses the numbers for identification pur-
poses. Payers must be given the numbers whether or not recipients are required
to file tax returns. Beginning January 1, 1993, payers must generally withhold
31% of taxable interest, dividend, and certain other payments to a payee who
does not furnish a taxpayer identification number to a payer. Certain penal-
ties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you
fail to furnish your taxpayer identification number to a payer, you are sub-
ject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends, or pat-
ronage dividends in gross income, such failure will be treated as being due to
negligence and will be subject to a penalty of 5% on any portion of an under-
payment attributable to that failure unless there is clear and convincing evi-
dence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or im-
prisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE
<PAGE>
Exhibit 99(a)(7)
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.
(more)
<PAGE>
Page 2
"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, its 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.
(more)
<PAGE>
Page 3
"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 marketing
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. "LGE has been kept fully apprised of the
magnitude of this loss," Moschner said.
(more)
<PAGE>
Page 4
LG Electronics, Inc. is a leading manufacturer of consumer electronics,
multimedia and magnetic media products, including televisions, VCRs, VCPs,
VHS(R), VCR/double decks, ViewMax(TM) TVCRs, camcorders, DC-i, 3DO(TM) 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 Afflixio/Susan Butenhoff -- LGE (Access P.R.)
1-800-501-2945
John Taylor -- Zenith Electronics Corporation
708/391-8181
Investor Contact: Bill McNitt -- Zenith Electronics Corporation
708/391-7713
<PAGE>
[SUMMARY ADVERTISEMENT]
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase dated July
21,1995 and the related Letter of Transmittal and is being made to all holders
of Shares. The Purchaser is not aware of any state where the making of the Offer
is prohibited by administrative or judicial action pursuant to any valid state
statute. If the Purchaser becomes aware of any valid state statute prohibiting
the making of the Offer or the acceptance of the Shares pursuant thereto, the
Purchaser will make a reasonable good faith effort to comply with any such state
statute or seek to have such statute declared inapplicable to the Offer. If,
after such reasonable good faith effort, the Purchaser cannot comply with any
such state statute, the Offer will not be made to (nor will tenders be accepted
from or on behalf of) the holders of Shares in such state. In any jurisdiction
where the securities, Blue Sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer will be deemed to be made on behalf of the
Purchaser by Salomon Brothers Inc or one or more registered brokers or dealers
licensed under the laws of such jurisdiction.
Notice of Offer to Purchase for Cash
Up to 18,619,000 Shares of Common Stock
(Including the Associated Rights)
of
Zenith Electronics Corporation
at
$10.00 Net Per Share
by
LG Electronics Inc.
LG Electronics Inc., a corporation organized under the laws of the Republic of
Korea (the "Purchaser"), is offering to purchase up to 18,619,000 shares of
common stock, par value $1.00 per share (the "Common Stock"), including the
associated Rights as defined in the Offer to Purchase (collectively, the
"Shares"), of Zenith Electronics Corporation, a Delaware corporation (the
"Company"), at $10.00 per Share, net to the seller in cash, without interest
thereon, upon the terms and subject to the conditions set forth in the Offer to
Purchase dated July 21, 1995 (the "Offer to Purchase") and in the related
Letter of Transmittal (which, together with any amendments or supplements
thereto, collectively constitute the "Offer").
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY,
SEPTEMBER 19, 1995, UNLESS THE OFFER IS EXTENDED.
The Offer is being made pursuant to the terms of a Stock Purchase Agreement
dated as of July 17, 1995 (the "Stock Purchase Agreement") by and between the
Company and the Purchaser. Upon consummation of the transactions contemplated by
the Stock Purchase Agreement, including the Offer, and based on the number of
shares outstanding as of June 30, 1995 and the sale of the Issue Shares (as
described below), the Purchaser will own 57.68% of the total number of shares of
the Company's outstanding Common Stock. The purpose of the Offer is to acquire a
portion of this interest in the Company as part of the acquisition by the
Purchaser of a controlling interest in the Company.
The Offer is conditioned upon the satisfaction or waiver of certain conditions
to the obligations of the Purchaser and the Company to consummate the
transactions contemplated by the Stock Purchase Agreement, including the
purchase by the Purchaser of 16,500,000 shares to be issued by the Company for
$10.00 per share (the "Issue Shares") to be consummated simultaneously with the
purchase of 18,619,000 Shares under the Offer, receipt by the Purchaser and the
Company of all necessary governmental and regulatory approvals, approval of the
Stockholder Proposals (as defined in the Offer to Purchase) by the stockholders
of the Company, there being at least 18,619,000 Shares validly tendered in
accordance with the terms of the Offer prior to the Expiration Date of the Offer
and not withdrawn, and a number of other conditions set forth in the Offer to
Purchase. Under the Stock Purchase Agreement, the Purchaser may not purchase
less than 18,619,000 Shares under the Offer.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE STOCK
PURCHASE AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE
OFFER, ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY"S STOCKHOLDERS AND
HAS APPROVED THE STOCK PURCHASE AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING THE OFFER. THE BOARD RECOMMENDS THAT STOCKHOLDERS ACCEPT THE
OFFER AND TENDER THEIR SHARES PURSUANT THERETO.
<PAGE>
The Purchaser is unable to determine with certainty the amount of time necessary
to obtain the approval of the Stockholder Proposals and all necessary
governmental and regulatory approvals required to complete the Offer and the
purchase of the Issue Shares and to satisfy certain other conditions thereto.
The time necessary to obtain such approvals and to satisfy such other conditions
may extend beyond the initially scheduled Expiration Date, and, therefore, the
Purchaser will extend the Offer from time to time until such approvals have been
received and such other conditions have been satisfied, unless the Stock
Purchase Agreement has been terminated.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares that have been validly tendered and not
properly withdrawn when, as and if the Purchaser gives oral or written notice to
the Depositary (as defined in the Offer to Purchase) of its acceptance for
payment of such Shares. Upon the terms and subject to the conditions of the
Offer, payment for Shares so accepted for payment will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from the Purchaser
and transmitting such payment to tendering stockholders. In no circumstances
will interest be paid on the purchase price by reason of any delay in making
such payment. In all cases, payment for shares accepted for payment pursuant to
the Offer will be made only after timely receipt by the Depositary of (i)
certificates for such Shares (or timely confirmation of book-entry transfer of
such Shares into the Depositary"s account at any Book-Entry Transfer Facility
(as defined in the Offer to Purchase) as described in Section 2 of the Offer to
Purchase); (ii) a Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees (or in the
case of a book-entry transfer, an Agent's Message (as defined in the Offer to
Purchase)); and (iii) any other documents required by the Letter of Transmittal.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Tuesday, September 19, 1995, unless and until the Purchaser shall have extended
the Offer, in which event the term "Expiration Date" shall mean the latest time
and date on which the Offer, as so extended by the Purchaser, shall expire. The
Purchaser expressly reserves the right (subject to the terms of the Stock
Purchase Agreement), at any time or from time to time, to extend the Offer and
thereby delay acceptance for payment of, and the payment for, any Shares, by
giving oral or written notice of such extension to the Depositary. The Purchaser
shall not have any obligation to pay interest on the purchase price for tendered
Shares in the event the Offer is extended for any reason. Without limiting the
manner in which the Purchaser may choose to make any public announcement, the
Purchaser will have no obligation to publish, advertise or otherwise communicate
any such announcement other than by issuing a press release or as otherwise may
be required by law or applicable regulation or practice. In the event of any
such extension, all Shares previously tendered and not withdrawn will remain
subject to the Offer, subject only to the right of a tendering stockholder to
withdrawal rights as set forth in the Offer to Purchase.
If more than 18,619,000 Shares are validly tendered prior to the Expiration Date
and not properly withdrawn, the Purchaser will, upon the terms and subject to
the conditions of the Offer, accept such Shares for payment on a pro rata basis,
with adjustments to avoid purchases of fractional Shares, based upon the number
of Shares validly tendered prior to the Expiration Date and not properly
withdrawn. Because of the time required to determine the precise number of
Shares validly tendered and not properly withdrawn, if proration is required,
the Purchaser does not expect to announce the final results of proration or pay
for any Shares immediately after the Expiration Date. The Purchaser will
announce the preliminary results of proration by press release as soon as
practicable following the Expiration Date, and expects to be able to announce
the final results of proration within eight NYSE trading days after the
Expiration Date. Holders of Shares may obtain such preliminary information and
final results from the Depositary or the Information Agent and may be able to
obtain such information from their brokers.
Tenders of Shares made pursuant to the Offer will be irrevocable, except that
Shares tendered may be withdrawn at any time prior to the Expiration Date, and,
unless theretofore accepted for payment and paid for by the Purchaser pursuant
to the Offer, may also be withdrawn at any time on or after September 18, 1995.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of the Offer to Purchase and
must specify the name of the person who tendered the Shares to be withdrawn, the
number of Shares to be withdrawn and the name in which the certificates
representing such Shares are registered, if different from that of the person
who tendered such Shares. If certificates for Shares to be withdrawn have been
delivered or otherwise identified to the Depositary, then, prior to the physical
release of such certificates, the serial numbers shown on such certificates must
be submitted to the Depositary and, unless such Shares have been tendered by an
Eligible Institution (as defined in Section 2 of the Offer to Purchase), the
signatures on the notice of withdrawal must be
<PAGE>
guaranteed by an Eligible Institution. If Shares have been tendered pursuant to
the procedures for book-entry transfer as set forth in Section 2 of the Offer to
Purchase, any notice of withdrawal must specify the name and number of the
account at the appropriate Book-Entry Transfer Facility to be credited with such
withdrawn Shares and must otherwise comply with such Book-Entry Transfer
Facility's procedures. Withdrawals of tendered Shares may not be rescinded, and
any Shares properly withdrawn will thereafter be deemed not validly tendered for
purposes of the Offer. However, withdrawn Shares may be re-tendered by following
the procedures described in Section 2 of the Offer to Purchase at any time prior
to the Expiration Date. All questions as to the form and validity (including
time of receipt) of notice of withdrawal will be determined by the Purchaser in
its sole discretion, whose determination will be final and binding.
The Offer to Purchase and the related Letter of Transmittal and other relevant
materials will be mailed to record holders of Shares and furnished to brokers,
dealers, commercial banks, trust companies and similar persons whose names, or
the names of whose nominees, appear on the Company's stockholder list or, if
applicable, who are listed as participants in a clearing agency's security
position listing for subsequent transmittal to beneficial owners of Shares.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the General
Rules and Regulations under the Securities Exchange Act of 1934, as amended, is
contained in the Offer to Purchase and is incorporated herein by reference.
The Offer to Purchase and the Letter of Transmittal contain important
information which should be read carefully before any decision is made with
respect to the Offer.
Requests for copies of the Offer to Purchase, the Letter of Transmittal and all
other tender offer materials may be directed to the Information Agent or the
Dealer Manager as set forth below, and copies will be furnished promptly at the
Purchaser's expense.
Questions or requests for assistance may be directed to the Information Agent or
the Dealer Manager.
The Information Agent for the Offer is:
MacKenzie Partners, Inc.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (call collect)
or
Call Toll-Free (800) 322-2885
The Dealer Manager for the Offer is:
Salomon Brothers Inc
8700 Sears Tower
Chicago, Illinois 60606
(312) 876-8478
(call collect)
July 21,1995
<PAGE>
MUTUAL NON-DISCLOSURE AGREEMENT
--------------------------------
THIS AGREEMENT is made as of the 25th day of November, 1994, between GOLDSTAR
CO., LTD. and ZENITH ELECTRONICS CORPORATION.
In order to pursue the mutual business purpose specified in Exhibit A (the
"Business Purpose"), the parties recognize that there is a need to disclose to
one another certain confidential information of each party to be used only for
the Business Purpose and to protect such confidential information from
unauthorized use and disclosure.
In consideration of the other party's disclosure of such information, each
party agrees as follows:
1. This Agreement will apply to all confidential and proprietary information
disclosed by one party to the other party, including information listed in
Exhibit A and other information which the disclosing party identifies in
writing as confidential before or within thirty (30) days after disclosure
to the receiving party ("Confidential Information").
2. Each party agrees (i) to hold the other party's Confidential Information
in strict confidence, (ii) not to disclose such Confidential Information to
any third parties, and (iii) not to use any Confidential Information for any
purpose except for the Business Purpose. Each party may disclose the other
party's Confidential Information to its responsible employees with a bona
fide need to know, but only to the extent necessary to carry out the
Business Purpose. Each party agrees to instruct all such employees not to
disclose such Confidential Information to third parties, including
consultants, without the prior written permission of the disclosing party.
3. Confidential Information will not include information which:
(i) is now, or hereafter becomes, through no act or failure to act on the
part of the receiving party, generally known or available to the public;
(ii) was acquired by the receiving party before receiving such information
from the disclosing party and without restriction as to use or disclosure;
(iii) is hereafter rightfully furnished to the receiving party by a third
party, without restriction as to use or disclosure;
(iv) is information which the receiving party can document was
independently developed by the receiving party;
(v) is required to be disclosed pursuant to law, provided the receiving
party uses reasonable efforts to give the disclosing party reasonable
notice of such required disclosure; or
(vi) is disclosed with the prior written consent of the disclosing party.
<PAGE>
4. Each party agrees not to remove any of the other party's Confidential
Information from the premises of the disclosing party without the disclosing
party's prior written approval.
5. Upon the disclosing party's request, the receiving party will promptly
return to the disclosing party all tangible items containing or consisting of
the disclosing party's Confidential Information and all copies thereof.
6. Each party recognizes and agrees that nothing contained in this
Agreement will be construed as granting any rights to the receiving party, by
license or otherwise, to any of the disclosing party's Confidential Information
except as specified in this Agreement.
7. Each party acknowledges that all of the disclosing party's
Confidential Information is owned solely by the disclosing party (or its
licensers) and that the unauthorized disclosure or use of such Confidential
Information would cause irreparable harm and significant injury, the degree of
which may be difficult to ascertain. Accordingly, each party agrees that the
disclosing party will have the right to obtain an immediate injunction enjoining
any breach of this Agreement, as well as the right to pursue any and all other
rights and remedies available at law or in equity for such a breach.
8. This Agreement will be construed, interpreted, and applied in
accordance with the laws of the State of California (excluding its body of law
controlling conflicts of laws). Subject to terms and conditions regarding the
removal of Confidential Information as set forth under Section 4, this Agreement
and Exhibit A attached hereto are the complete and exclusive statement regarding
the subject matter of this Agreement and supersede all prior agreements,
understandings and communications, oral or written, between the parties
regarding the subject matter of this Agreement.
9. This Agreement will remain in effect for three (3) years from the date
of the last disclosure of Confidential Information, at which time it will
terminate.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their duly authorized officers or representatives.
GOLDSTAR CO., LTD. ZENITH ELECTRONICS CORPORATION
/s/ Ki Song Cho /s/ Kell B. Benson
- ------------------------------ -------------------------------
Name: KI SONG CHO Kell B. Benson
Title: EXECUTIVE DIRECTOR Senior Vice President-Finance
CORPORATE PLANNING and Chief Financial Officer
AND COORDINATION
GOLDSTAR CO., LTD.
<PAGE>
MUTUAL NON-DISCLOSURE AGREEMENT
-------------------------------
GOLDSTAR CO., LTD.
------------------
AND
---
ZENITH ELECTRONICS CORPORATION
------------------------------
Exhibit A
---------
The mutual business purpose of the Agreement is consideration of a possible
investment by GoldStar or an affiliate in certain assets of Zenith or in the
form of debt, or equity in Zenith.
As used herein, (a) "Information" means information regarding either company
or any of its subsidiaries or their respective assets or operations which is
furnished to you, directly or indirectly, by that company or its
representatives, (b) "Affiliate" means any individual, partnership, corporation
or other entity or enterprise (i) directly or indirectly controlling a party,
(ii) directly or indirectly controlled by a party, or (iii) under direct or
indirect common control with a party.
<PAGE>
STOCK PURCHASE AGREEMENT
DATED AS OF JULY 17, 1995
BY AND BETWEEN
ZENITH ELECTRONICS CORPORATION
AND
LG ELECTRONICS INC.
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
<C> <S> <C>
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
5.5.2. Sophistication ........................................ 16
5.6. Offer and Proxy Materials ..................................... 16
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
<C> <S> <C>
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
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
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
<C> <S> <C>
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
</TABLE>
EXHIBIT A - Amended Bylaws
ANNEX A - Conditions to Purchaser's Acceptance of Shares in the Offer
iii
<PAGE>
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.
1
<PAGE>
"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
2
<PAGE>
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.
3
<PAGE>
"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 Exchange Act) or entity other than, or group not including, the
Purchaser or any Affiliate of the Purchaser or the Company.
4
<PAGE>
"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 vote generally 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
5
<PAGE>
(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
6
<PAGE>
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
7
<PAGE>
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 corporation in all jurisdictions where such qualification, license or
domestication is required to own
8
<PAGE>
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
9
<PAGE>
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
10
<PAGE>
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
11
<PAGE>
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.
12
<PAGE>
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
13
<PAGE>
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.
14
<PAGE>
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
15
<PAGE>
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
16
<PAGE>
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);
17
<PAGE>
(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;
18
<PAGE>
(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
19
<PAGE>
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
20
<PAGE>
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.
21
<PAGE>
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 at 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 is 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
22
<PAGE>
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.
23
<PAGE>
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.
24
<PAGE>
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
25
<PAGE>
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
26
<PAGE>
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.
27
<PAGE>
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
28
<PAGE>
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.
29
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
ZENITH ELECTRONICS CORPORATION LG ELECTRONICS INC.
By: By:
-------------------------------------------- --------------------------
Name: Albin F. Moschner Name: Cha Hong (John) Koo
Title: President and Chief Executive Officer Title: President
30
<PAGE>
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.
<PAGE>
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.
<PAGE>
EXHIBIT A
AMENDED AND RESTATED
BY-LAWS
OF
ZENITH ELECTRONICS CORPORATION
-------------------
Effective as of _________, 1995
-------------------
ARTICLE I
OFFICES
-------
Section 1. The registered office in the State of Delaware shall be in
the City of Wilmington, County of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such other places
both within and without the State of Delaware as the board of directors may from
time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
------------------------
Section 1. All meetings of the stockholders for the election of
directors shall be held at such place, either within or without the State of
Delaware, as may be fixed from time to time by the board of directors. Meetings
of stockholders for any other purpose may be held at such time and place, within
or without the State of Delaware, as shall be stated in the notice of the
meeting or in a duly executed waiver of notice thereof.
Section 2. An annual meeting of stockholders shall be held for the
purpose of electing directors and transacting such other business as may
properly be brought before the meeting. The date of the annual meeting shall be
determined by the board of directors.
Section 3. Written notice of the annual meeting stating the place,
date and hour of the meeting shall be given to each stockholder entitled to vote
thereat not less than twenty nor more than sixty days before the date of the
meeting. At an annual meeting of the stockholders, only such business shall be
conducted as shall have been brought before the meeting (a) by or at the
direction of the board of directors or (b) by any stockholder of the corporation
who complies with the notice procedures set forth in this Section 3. For
business to be properly brought before an annual meeting by a stockholder, the
stockholder must have given timely notice thereof in writing to the secretary of
the corporation. Except as otherwise provided in Regulation 14A under the
Securities Exchange Act of 1934, as amended, to be timely, a stockholder's
notice must be delivered to or mailed and received at the principal executive
offices of the corporation not less than sixty days nor more than ninety days
prior to the meeting;
<PAGE>
provided, however, that in the event that less than seventy-five days' notice or
prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be received not later
than the close of business on the tenth day following the day on which such
notice of the date of the annual meeting was mailed or such public disclosure
was made. A stockholder's notice to the secretary shall set forth as to each
matter the stockholder proposes to bring before the annual meeting (a) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (b) the name and
address, as they appear on the corporation's books, of the stockholder proposing
such business, (c) the number of shares of common stock of the corporation which
are beneficially owned by the stockholder and (d) any material interest of the
stockholder in such business. Notwithstanding anything in these by-laws to the
contrary, no business shall be conducted at an annual meeting except in
accordance with the procedures set forth in this Section 3. The Chairman of an
annual meeting shall, if the facts warrant, determine and declare to the meeting
that business was not properly brought before the meeting and in accordance with
the provisions of this Section 3, and if he should so determine, he shall so
declare to the meeting and any such business not properly brought before the
meeting shall not be transacted.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders a complete list of the stockholders entitled to vote at said
meeting, arranged in alphabetical order, showing the address of and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city, town or village where the meeting is
to be held and which place shall be specified in the notice of the meeting, or,
if not specified, at the place where said meeting is to be held, and the list
shall be produced and kept at the time and place of the meeting during the whole
time thereof, and subject to the inspection of any stockholder who may be
present.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the Chairman or president and shall be called by
the secretary at the direction of a majority of the board of directors or at the
request in writing of stockholders owning at least a majority of the entire
capital stock of the corporation issued and outstanding and entitled to vote.
Section 6. Written notice of a special meeting of stockholders,
stating the place, date and hour of the meeting and the purpose or purposes for
which the meeting is called, shall be given to each stockholder entitled to vote
thereat, not less than ten nor more than sixty days before the date fixed for
the meeting.
Section 7. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be presented or represented. At such
adjourned meeting at which a quorum shall be present or represented any business
may be transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having power present in person or represented
by proxy shall decide any question brought before such meeting, unless the
question is one upon which by express provision of the statutes or of the
certificate of incorporation, a
-2-
<PAGE>
different vote is required in which case such express provision shall govern and
control the decision of such question.
Section 10. Unless otherwise provided in the certificate of
incorporation and subject to statutory provisions relating to the fixing of
record dates, each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder, but no proxy shall be voted on
after three years from its date, unless the proxy provides for a longer period.
Section 11. Any action required to be taken at a meeting of the
stockholders, or any other action which may be taken at a meeting of the
stockholders, may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by stockholders having not less than
the minimum number of votes that would be necessary to authorize or to take such
action at a meeting at which all shares entitled to vote thereon were present
and voted.
ARTICLE III
DIRECTORS
---------
Section 1. The board of directors shall consist of ten members, until
this Section 1 is amended by a resolution duly adopted by the board or the
stockholders, in either case in accordance with the terms of the Certificate of
Incorporation. The directors shall be elected at the annual meeting of the
stockholders as provided in Section 2 of Article II, except as provided in
Section 2 of this Article III, and each director elected shall hold office until
his successor is elected and qualified or until his earlier resignation or
removal. Directors need not be residents of the state of Delaware or
stockholders of this corporation.
Section 2. Vacancies and newly created directorships resulting from
any increase in the authorized number of directors may be filled by a majority
of the directors then in office, though less than a quorum, and the directors so
chosen shall hold office until their successors are duly elected and shall
qualify, unless sooner displaced.
Section 3. The business of the corporation shall be managed by or
under the direction of its board of directors which may exercise all such powers
of the corporation and do all such lawful acts and things as are not by statute
or by the certificate of incorporation or by these by-laws directed or required
to be exercised or done by the stockholders.
Section 4. The board of directors at its first meeting after each
annual meeting of stockholders shall choose a Chairman from among the directors.
The Chairman shall act as Chairman of all meetings of stockholders and of the
board of directors. The Chairman shall from time to time report to the board of
directors all matters within his knowledge which the interest of the corporation
may require be brought to its notice.
If the Chairman of the Board is not elected or, if elected, is not
present, the President or, in the absence of the President, a Vice Chairman (who
is also a member of the board and, if more than one, in the order designated by
the board of directors or, in the absence of such designation, in the order of
their election), if any, or if no such Vice Chairman is present, a director
chosen by a majority of the directors present, shall act as chairman at meetings
of stockholders and of the board of directors.
Section 5. The board of directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Delaware.
Section 6. The first meeting of each newly elected board of directors
shall be held immediately following and at the place of the annual meeting of
stockholders and no notice of such meeting shall be necessary to the newly
-3-
<PAGE>
elected directors in order legally to constitute the meeting, provided a quorum
shall be present. In the event such meeting is not held at such time and place,
the meeting may be held at such other time and place as shall be specified in a
notice given as hereinafter provided for special meetings of the board of
directors, or as shall be specified in a written waiver signed by all of the
directors.
Section 7. Regular meetings of the board of directors shall be held
at such time and at such place as shall from time to time be determined by
resolution of the board. Written notice of each regular meeting of directors
stating the place, date and time, shall be given to each director at least five
(5) days before such meeting.
Section 8. Special meetings of the board and meetings of any
committee of the board may be called by the Chairman on one day notice to each
director or committee member, either by telephone, mail, facsimile or telegram;
special meetings of the board of directors shall be called by the Chairman or
secretary in like manner and on like notice on the written request of two
directors.
Section 9. At all meetings of the board a majority shall constitute a
quorum for the transaction of business and the act of a majority of the
directors present at any meeting at which there is a quorum shall be the act of
the board of directors, except as may be otherwise specifically provided by
statute or by the certificate of incorporation. If a quorum shall not be
present at any meeting of the board of directors the directors present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 10. Any action required or permitted to be taken at any
meeting of the board of directors or of any committee thereof may be taken
without a meeting, if all members of the board or committee, as the case may be,
consent thereto in writing, and the writing, or writings are filed with the
minutes of proceedings of the board or committee.
Section 11. Members of the board of directors, or any committee
designated by the board of directors, may participate in a meeting of the board
of directors, or any committee, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
Section 12. The board of directors may, by resolution passed by a
majority of the whole board, designate one or more committees, each committee to
consist of two or more of the directors of the corporation, which, to the extent
provided in the resolution and to the extent permitted by Delaware Law, shall
have and may exercise the powers of the board of directors in the management of
the business and affairs of the corporation and may authorize the seal of the
corporation to be affixed to all papers which may require it. Such committee or
committees shall have such name or names as may be determined from time to time
by resolution adopted by the board of directors.
Section 13. Each committee shall report to the board of directors on
the actions taken at its meetings, but need not keep regular minutes thereof
unless required to do so by the board of directors.
Section 14. There shall be an Executive Committee of the board of
directors of the corporation. The board of directors shall, at its first
meeting after the annual meeting of stockholders in each year, elect a Chairman
and other members of the Committee. The directors elected as members of the
Executive Committee shall serve as such for one year and until their respective
successors, willing to serve, shall have been elected. The Executive Committee
shall, when the board is not in session, have and may exercise all of the
authority of the board of directors in the management of the corporation;
provided, however, that the Executive Committee shall not have the authority of
the board of directors in reference to (1) amending the articles of
incorporation, (2) adopting a plan of merger or adopting a plan of consolidation
with another corporation or corporations, (3) recommending to the stockholders
the sale, lease, exchange, mortgage, pledge or other disposition of all or
substantially all of the property and assets of the corporation, (4)
recommending to the stockholders a voluntary dissolution of the
-4-
<PAGE>
corporation or a revocation thereof, (5) amending, altering or repealing the by-
laws of the corporation, (6) electing or removing officers of the corporation or
members of the Executive Committee, (7) fixing the compensation of any member of
the Executive Committee, (8) declaring dividends, (9) authorizing the issuance
of stock, or (10) amending, altering or repealing any resolution of the board of
directors which by its terms provides that it shall not be amended, altered or
repealed by the Executive Committee; provided further, that in the event of the
death, disability or refusal to act of the chief executive officer or the
Chairman, the Executive Committee shall appoint a chief executive officer or a
Chairman who shall serve until the next meeting of the board of directors.
Vacancies in the regular membership of the Executive Committee shall be filled
by the board of directors.
Section 15. The board of directors shall have the authority to fix the
compensation of directors.
ARTICLE IV
NOTICES
-------
Section 1. Notices to stockholders shall be in writing and delivered
personally or mailed to the stockholders at their addresses appearing on the
books of the corporation. Notice by mail shall be deemed to be given at the
time when the same shall be mailed.
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of these
by-laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
--------
Section 1. The officers of the corporation shall be chosen by the
board of directors and shall be a chief executive officer, a president, a vice
president, a secretary and a treasurer. The board of directors may also choose
additional vice presidents, executive vice presidents, senior vice presidents,
assistant secretaries and assistant treasurers. Two or more offices may be held
by the same person.
Section 2. The board of directors at its first meeting after each
annual meeting of stockholders shall choose a chief executive officer, a
president and one or more vice presidents, a secretary and a treasurer, none of
whom need be a member of the board.
Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board.
Section 4. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officer elected or appointed by
the board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Except as otherwise provided in Section 14
of Article III, any vacancy occurring in any office of the corporation shall be
filled by the board of directors.
Section 5. The chief executive officer of the corporation shall have,
under the direction of the board of
-5-
<PAGE>
directors, general charge of the affairs of the corporation. He shall see that
all orders and resolutions of the board of directors are carried into effect. He
may execute all contracts and agreements authorized by the board of directors
and shall vote all shares of stock in other corporations standing in the name of
the corporation. He may sign bonds, mortgages, certificates for shares of stock
and all other contracts and documents whether or not under the seal of the
corporation except in cases where the signing and execution thereof shall be
expressly delegated by law, by the board of signing and execution thereof shall
be expressly delegated by law, by the board of directors, or by these by-laws,
to some other officer or agent of the corporation. He shall from time to time
report to the board of directors all matters within his knowledge which the
interest of the corporation may require be brought to its notice. He shall have
the general powers of supervision and shall be the final arbiter in all
differences between all officers of the corporation and his decision as to any
matter affecting the corporation shall be final and binding as between officers
of the corporation subject only to the board of directors.
Section 6. The president shall have the direction and active
management of the business of the corporation under the general supervision of
the chief executive officer. He shall have concurrent power with the chief
executive officer to execute all contracts and agreements authorized by the
board of directors and shall have concurrent power with the chief executive
officer to vote all shares of stock in other corporations standing in the name
of the corporation. He may sign bonds, mortgages, certificates for shares of
stock and all other contracts and documents whether or not under the seal of the
corporation except in cases where the signing and execution thereof shall be
expressly delegated by law, by the board of directors, or by these by-laws, to
some other officer or agent of the corporation.
Section 7. The executive vice presidents, senior vice presidents and
vice presidents shall perform such duties and have such powers as may be
prescribed by the board of directors.
Section 8. The secretary shall keep the minutes of all meetings of
the board of directors, the minutes of all meetings of the stockholders, the
minutes of all meetings of the committees, which from time to time may be
appointed under authority of these by-laws, in books provided by the corporation
for such purpose. He shall attend to the giving and serving of all notices of
the corporation whereby meetings of the board of directors, stockholders and
committees are assembled. He shall prepare all lists of stockholders and their
addresses required to be prepared by the provisions of any present or future
statute of the State of Delaware. He may sign, with the chief executive officer
or the president or a vice president, in the name of the corporation, when
authorized by the board of directors so to do, all contracts or other
instruments requiring the seal of the corporation and may affix the seal
thereto. He shall have concurrent power, acting alone or jointly, with the
chief executive officer, or the president to vote all shares of stock in other
corporations the majority of the voting stock of which is owned by the
corporation. He shall have charge of such books and such papers as the board of
directors may direct. He shall, in general, perform all of the duties which are
incident to the office of secretary of a corporation, subject at all times, to
the direction and control of the board of directors.
Section 9. The treasurer shall have custody of all funds and
securities of the corporation. When necessary or proper he shall endorse for
collection checks, drafts and other instruments for the payment of money and
shall deposit them to the credit of the corporation in an authorized bank or
depository. Whenever required by the board of directors, he shall render an
account of his transactions. He shall perform all acts incident to the position
of treasurer, subject to the control of the board of directors. He shall have
such powers and perform such duties as may be assigned to him by the board of
directors. He shall submit such reports and records to the board of directors
as may be requested by them.
-6-
<PAGE>
ARTICLE VI
CERTIFICATES OF STOCK
---------------------
Section 1. The shares of the corporation shall be represented by
certificates signed by the chief executive officer or the Chairman or the
president or a vice president and by the treasurer or an assistant treasurer or
the secretary or an assistant secretary and may be sealed with the seal, or a
facsimile of the seal of the corporation. In case the seal of the corporation
is changed after the certificate is sealed with the seal or a facsimile of the
seal of the corporation, but before it is issued, the certificate may be issued
by the corporation with the same effect as if the seal had not been changed.
Any or all signatures on the certificate may be a facsimile. In case any
officer of the corporation, transfer agent or registrar, or any officer or
employee of the transfer agent or registrar who has signed or whose facsimile
signature has been placed upon such certificate ceases to be an officer of the
corporation, transfer agent or registrar before such certificate is issued, the
certificate may be issued by the corporation with the same effect as if the
officer of the corporation, transfer agent or registrar had not ceased to be
such at the date of its issue.
Section 2. The board of directors may by resolution adopt such
procedures as it deems appropriate for the issuance of certificates to replace
certificates which have been lost, stolen or destroyed.
Section 3. Upon surrender to the corporation or the transfer agent of
the corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, it shall be
the duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Section 4. In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.
ARTICLE VII
GENERAL PROVISIONS
------------------
Section 1. Dividends upon the capital stock of the corporation,
subject to the provisions of the certificate of incorporation, if any, may be
declared by the board of directors at any regular or special meeting, pursuant
to law. Dividends may be paid in cash, in property or in shares of the capital
stock, subject to the provisions of the certificate of incorporation.
Section 2. The board of directors may set apart out of any of the
funds of the corporation available for dividends a reserve or reserves for any
proper purpose and may abolish any such reserve.
Section 3. The chief executive officer shall present at each annual
meeting, and at any special meeting of the stockholders when called for by vote
of the stockholders, a full and clear statement of the business and condition of
the corporation.
-7-
<PAGE>
Section 4. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate.
Section 5. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
Section 6. The corporate seal shall have inscribed thereon the name
of the corporation and the words "Corporate Seal, Delaware". The seal may be
used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
ARTICLE VIII
INDEMNIFICATION
---------------
Section 1. The Corporation shall indemnify any director, officer or
employee who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding in accordance with, and to the fullest extent
authorized by, the General Corporation Law of the State of Delaware as it may be
in effect from time to time.
Section 2. The indemnification provided by this article shall not be
deemed exclusive of any other rights to which those indemnified may be entitled
under any by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer or employee and shall inure to the
benefit of the heirs, executors and administrators of such a person.
Section 3. The Corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not he would be entitled to indemnity against such liability under
the provisions of this article.
ARTICLE IX
AMENDMENTS
----------
Section 1. These by-laws may be altered or repealed at any regular
meeting of the stockholders or of the board of directors or at any special
meeting of the stockholders or of the board of directors if notice of such
alteration or repeal be contained in the notice of such special meeting.
-8-
