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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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
AST RESEARCH, INC.
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(NAME OF SUBJECT COMPANY)
SAMSUNG ELECTRONICS CO., LTD.
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(BIDDER)
Common Stock, $.01 par value per share (Including the Associated Rights)
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(TITLE OF CLASS OF SECURITIES)
001907104
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(CUSIP NUMBER OF CLASS OF SECURITIES)
Jae Chang Lee
Samsung Electronics Co., Ltd.
Samsung Main Building
250, 2-Ka, Taepyung-Ro, Chung-Ku
Seoul, Korea 100-742
011-82-2-727-7100
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDER)
Copy to:
Thomas Magill, Esq.
Gibson, Dunn & Crutcher
Jamboree Center, 4 Park Plaza
Irvine, CA 92714
(714) 451-3855
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CALCULATION OF FILING FEE
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Transaction
valuation* Amount of filing fee**
$128,040,000 $25,608
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*For purposes of calculating the amount of the filing fee only. The amount
assumes the purchase of 5,820,000 shares of Common Stock, $.01 par value per
share (including the associated rights), of AST Research, Inc. at $22.00
per share.
**1/50th of 1% of Transaction valuation.
[_] CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY RULES 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.
Amount previously paid: Not Applicable Filing party: Not Applicable
Form or registration no.: Not Applicable Date filed: Not Applicable
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CUSIP NO.: 001907104 14D-1 AND 13D
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1 NAME OF REPORTING PERSONS
S.S OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Samsung Electronics Co., Ltd.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [_]
(b) [_]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e) [_]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Korea
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7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
17,890,000*
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8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES* [_]
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9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
40.25%*
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10 TYPE OF REPORTING PERSON*
CO
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* Prior to the execution of the agreement described below, Samsumg Electronics
Co., Ltd. (the "Purchaser") did not beneficially own any shares of the common
stock, $.01 par value per share (the "Common Stock"), of AST Research, Inc.
(the "Company"). On February 27, 1995, the Purchaser and the Company entered
into a Stock Purchase Agreement (the "Stock Purchase Agreement") pursuant to
which the Purchaser has agreed to purchase 6,440,000 newly issued shares of
Common Stock for $19.50 per share (the "First Issuance Shares") and to
commence an offer to purchase 5,820,000 additional shares of Common Stock for
$22.00 per share from the Company's stockholders (the "Offer"). The Purchaser
has also agreed to purchase such additional number (5,630,000 assuming no
further issuances and full participation in the Offer) of shares of Common
Stock for $22.00 per share as may be required such that, upon issuance thereof
to the Purchaser at the closing of the transactions contemplated by the Stock
Purchase Agreement, and together with the First Issuance Shares and the number
of shares actually purchased by the Purchaser pursuant to the Offer, the
Purchaser's percentage ownership of the total number of votes that may be cast
in the election of directors of the Company at an annual meeting of the
Company's stockholders, assuming all shares of voting stock of the Company
were present and voting, equals 40.25%. The Stock Purchase Agreement is more
fully described in Section 14 of the Offer to Purchase, which is attached
hereto as Exhibit (a)(1). Based on the foregoing, after the consummation of
the Offer and the transactions contemplated by the Stock Purchase Agreement,
the Purchaser will beneficially own 40.25% of the outstanding shares of Common
Stock.
2
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This Statement relates to the offer by Samsung Electronics Co., Ltd., a
Korean corporation (the "Purchaser"), to purchase up to 5,820,000 shares of the
outstanding Common Stock, par value $.01 per share (the "Common Stock"), of AST
Research, Inc., a Delaware corporation (the "Company"), and the associated
preferred 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 January 28, 1994 between the Company and American Stock
Transfer & Trust Company, as amended as of March 1, 1995, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated March 6, 1995
and in the related Letter of Transmittal (which together constitute the
"Offer"), at the purchase price of $22.00 per Share, net to the tendering
stockholder in cash.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is AST Research, Inc., a
Delaware corporation, and the address of its principal executive
offices is 16215 Alton Parkway, Irvine, CA 92718.
(b) The securities to which this statement relates are the Shares.
The information set forth in the Introductory Section 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 a
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.
3
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ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) The information set forth in the Introductory Section 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.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
The information set forth in the Introductory Section and Sections 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; Stockholder Agreement; Strategic Alliance
Agreement; Other Agreements") 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 Introductory Section 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 Introductory Section 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; Stockholder Agreement; Strategic Alliance Agreement;
Other Agreements") 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.
4
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(d) The information set forth in Sections 8 ("Possible Effects of
the Offer on the Market for Common Stock; Stock Exchange
Listing; 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 March 6, 1995.
(2) Letter of Transmittal.
(3) Letter, dated March 6, 1995, from the Dealer Manager to
brokers, dealers, commercial banks, trust companies and
nominees.
(4) Letter, dated March 6, 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 March 6, 1995.
(8) Summary newspaper advertisement, dated March 6, 1995.
(b) Not applicable.
(c)(1) Confidentiality Agreement, dated December 21, 1994, between
the Purchaser and the Company.
(c)(2) Stock Purchase Agreement, dated February 27, 1995, between the
Purchaser and the Company.
(c)(3) Strategic Alliance Agreement, dated February 27, 1995, between
the Purchaser and the Company.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
5
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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: March 6, 1995
SAMSUNG ELECTRONICS CO., LTD.
/s/ Heon H. Chung
-------------------------------------------
Name: Heon H. Chung
Title: Executive Director
6
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
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<S> <C>
(a)(1) Offer to Purchase, dated March 6, 1995.
(2) Letter of Transmittal.
(3) Letter, dated March 6, 1995, from the Dealer
Manager to brokers, dealers, commercial banks, trust companies
and nominees.
(4) Letter, dated March 6, 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 March 6, 1995.
(8) Summary newspaper advertisement, dated March 6, 1995.
(b) Not applicable.
(c)(1) Confidentiality Agreement, dated December 21, 1994, between the
Purchaser and the Company.
(c)(2) Stock Purchase Agreement, dated February 27, 1995, between the
Purchaser and the Company.
(c)(3) Strategic Alliance Agreement, dated February 27, 1995, between
the Purchaser and the Company.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
</TABLE>
7
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EXHIBIT 99(a)(1)
OFFER TO PURCHASE FOR CASH
UP TO 5,820,000 SHARES OF COMMON STOCK
(Including the Associated Rights)
OF
AST RESEARCH, INC.
AT
$22.00 NET PER SHARE
BY
SAMSUNG ELECTRONICS CO., LTD.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, APRIL 20, 1995, UNLESS THE OFFER IS
EXTENDED.
THE OFFER IS BEING MADE PURSUANT TO THE TERMS OF A STOCK PURCHASE AGREEMENT
DATED AS OF FEBRUARY 27, 1995 (THE "STOCK PURCHASE AGREEMENT") BY AND BETWEEN
AST RESEARCH, INC., A DELAWARE CORPORATION (THE "COMPANY"), AND SAMSUNG
ELECTRONICS CO., LTD., A KOREAN CORPORATION (THE "PURCHASER"). UPON
CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THE STOCK PURCHASE AGREEMENT,
INCLUDING THE OFFER, THE PURCHASER WILL OWN 40.25% OF THE TOTAL NUMBER OF
SHARES OF THE COMPANY'S COMMON STOCK THEN OUTSTANDING.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, 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 RECEIPT BY THE PURCHASER AND THE COMPANY OF GOVERNMENTAL
AND REGULATORY APPROVALS AND APPROVAL OF THE STOCKHOLDER PROPOSAL (AS DEFINED
HEREIN) BY THE STOCKHOLDERS OF THE COMPANY. THE OFFER IS NOT CONDITIONED ON
ANY MINIMUM NUMBER OF SHARES BEING TENDERED.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE STOCK
PURCHASE AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE
OFFER, AND RECOMMENDS THAT THE STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES HEREUNDER.
THE PURCHASER IS UNABLE TO PREDICT THE AMOUNT OF TIME NECESSARY TO OBTAIN
THE GOVERNMENTAL AND REGULATORY APPROVALS REQUIRED TO COMPLETE THE OFFER AND
THE STOCK ACQUISITION DESCRIBED HEREIN. IT IS ANTICIPATED, HOWEVER, THAT THE
TIME NECESSARY TO OBTAIN SUCH APPROVALS WILL EXTEND BEYOND THE EXPIRATION
DATE, AND THE PURCHASER EXPECTS THAT IT WILL EXTEND THE OFFER FROM TIME TO
TIME UNTIL SUCH APPROVALS HAVE BEEN RECEIVED. SEE SECTIONS 6 AND 15.
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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
March 6, 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Introduction............................................................. 1
The Tender Offer
1.Terms of the Offer; Extension of Tender Period; Termination;
Amendments ........................................................... 3
2.Procedure for Tendering Shares ....................................... 5
3.Withdrawal Rights .................................................... 7
4.Acceptance for Payment and Payment of Purchase Price ................. 8
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 .......................................... 13
10.Certain Information Concerning the Company ........................... 13
11.Certain Information Concerning the Purchaser ......................... 15
12.Source and Amount of Funds ........................................... 16
13.Contacts with the Company; Background of the Offer ................... 17
14.Purpose of the Offer; Stock Purchase Agreement; Stockholder Agreement;
Strategic Alliance Agreement; Other Agreements ....................... 18
15.Certain Legal Matters ................................................ 29
16.Fees and Expenses .................................................... 32
17.Miscellaneous ........................................................ 32
Annex I--Information Relating to Directors and Executive Officers of the
Purchaser ...................................................... 34
</TABLE>
<PAGE>
To All Holders of Common Stock (Including the Associated Rights) of
AST Research, Inc.:
INTRODUCTION
THE OFFER
Samsung Electronics Co., Ltd., a Korean corporation (the "Purchaser"), hereby
offers to purchase up to 5,820,000 shares of Common Stock, par value $.01 per
share (the "Common Stock"), of AST Research, Inc., a Delaware corporation (the
"Company"), and the associated preferred 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 January 28, 1994 between the
Company and American Stock Transfer & Trust Company (the "Rights Agreement"),
as amended as of March 1, 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 $22.00 per
Share (the "Offer Price"), net to the tendering stockholder in cash. The Offer
is being made pursuant to the terms of the Stock Purchase Agreement dated as of
February 27, 1995 by and between the Company and the Purchaser (the "Stock
Purchase Agreement").
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE STOCK
PURCHASE AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE
OFFER, AND RECOMMENDS THAT THE STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES HEREUNDER.
The Offer is conditioned upon, among other things, 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 receipt by the Purchaser and the Company of all necessary
governmental and regulatory approvals and approval of the Stockholder Proposal
(as defined herein) by the stockholders of the Company. This Offer is not
conditioned on any minimum number of shares being tendered. See Section 6.
THE OFFER DOES NOT CONSTITUTE A SOLICITATION OF PROXIES FOR ANY MEETING OF
THE COMPANY'S STOCKHOLDERS. ANY SUCH SOLICITATION WOULD 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 Thursday,
April 20, 1995, unless extended.
THE PURCHASER IS UNABLE TO PREDICT THE AMOUNT OF TIME NECESSARY TO OBTAIN THE
GOVERNMENTAL AND REGULATORY APPROVALS REQUIRED TO COMPLETE THE OFFER AND THE
STOCK ACQUISITION (AS DEFINED HEREIN) AND TO SATISFY CERTAIN OTHER CONDITIONS
THERETO. IT IS ANTICIPATED, HOWEVER, THAT THE TIME NECESSARY TO OBTAIN SUCH
APPROVALS AND TO SATISFY SUCH OTHER CONDITIONS WILL EXTEND BEYOND THE
EXPIRATION DATE (AS DEFINED HEREIN), AND THE PURCHASER EXPECTS THAT IT WILL
EXTEND THE OFFER FROM TIME TO TIME UNTIL SUCH APPROVALS HAVE BEEN RECEIVED AND
SUCH OTHER CONDITIONS HAVE BEEN SATISFIED. SEE SECTIONS 6 AND 15.
Upon the terms and subject to the conditions of the Offer, the Purchaser will
purchase up to 5,820,000 Shares (approximately 18% of the outstanding Shares).
If more than 5,820,000 Shares are validly tendered prior to the expiration of
the Offer and not properly withdrawn in accordance with Section 3, such Shares
will be accepted for payment on a pro rata basis according to the number of
1
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Shares validly tendered and not properly withdrawn by the expiration of the
Offer (with appropriate adjustments to avoid the purchase of fractional
shares).
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"), Citibank, N.A., as Depositary (in such capacity, the "Depositary"),
and MacKenzie Partners, Inc., as Information Agent (in such capacity, 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.
THE STOCK ACQUISITION
Pursuant to the terms of the Stock Purchase Agreement, the Purchaser has
agreed to purchase 6,440,000 newly issued shares of Common Stock for $19.50 per
share (the "First Issuance Shares") and to commence the Offer. The Purchaser
has also agreed to purchase such additional number (5,630,000, assuming no
further issuances and full participation in the Offer) of shares of Common
Stock for $22.00 per share (the "Second Issuance Shares" and, together with the
First Issuance Shares, the "New Issue Shares") as may be required so that, with
the Shares purchased pursuant to this Offer (the "Offer Shares"), the
Purchaser's percentage ownership of the total number of votes that may be cast
in the election of directors of the Company ("Directors") at an annual meeting
of the Company's stockholders, assuming all shares of voting stock of the
Company were present and voting (the "Purchaser Interest"), shall equal 40.25%.
The obligations of the Purchaser to purchase the New Issue Shares from the
Company, and of the Company to issue such shares to the Purchaser, are subject
to satisfaction of certain conditions. See Section 14. The purchase by the
Purchaser of the New Issue Shares is referred to herein as the "Stock
Acquisition."
The Company has informed the Purchaser that as of February 27, 1995 there
were 32,376,500 shares of Common Stock issued and outstanding. The Offer Shares
and the New Issue Shares will represent 40.25% of all issued and outstanding
shares of Common Stock (based on the number of shares of Common Stock issued
and outstanding on February 27, 1995, increased to give effect to the issuance
of the New Issue Shares and assuming that no other shares of Common Stock are
issued).
The Company has informed the Purchaser that as of February 27, 1995 there
were 9,717,236 shares of Common Stock reserved for issuance upon the exercise
of outstanding stock options and warrants and upon conversion of the Liquid
Yield Option Notes of the Company due December 14, 2013 (the "LYONs" and,
together with such options and warrants, the "Convertible Securities"). Based
on these figures, immediately after consummation of the Offer and the Stock
Acquisition, the Purchaser would own approximately 33% of the shares of Common
Stock on a fully diluted basis giving effect to the exercise and conversion of
the Convertible Securities. The Purchaser will have certain rights to acquire
additional equity securities of the Company. See Section 14, "Stockholder
Agreement."
Simultaneously with the execution of the Stock Purchase Agreement, the
Purchaser and the Company entered into a Strategic Alliance Agreement (the
"Strategic Alliance Agreement") setting forth their mutual understanding and
agreement with respect to arrangements regarding component supply and joint
procurement, joint product development, cross licensing, employee exchange,
joint marketing, manufacturing, and other areas of technical collaboration. The
Strategic Alliance Agreement contemplates the preparation and execution of a
series of specific agreements in connection with the closing of the purchase
and sale of the Second Issuance Shares. The execution and delivery of these
agreements constitutes one of the conditions to the closing of the Offer and
the purchase and sale of
2
<PAGE>
the Second Issuance Shares. In addition, the Stock Purchase Agreement provides
for (i) the execution and delivery by the Company and the Purchaser, in
connection with the closing of the Offer and the purchase and sale of the
Second Issuance Shares, of a Letter of Credit Agreement in substantially the
form attached as an exhibit to the Stock Purchase Agreement (the "Letter of
Credit Agreement") pursuant to which the Purchaser will finance, by direct
advances or through draws under a standby letter of credit, up to $75 million
of principal payment obligations of the Company under its promissory note to
Tandy Corporation; and (ii) the execution and delivery by the Company and the
Purchaser, in connection with the purchase and sale of any New Issue Shares, of
a Stockholder Agreement in substantially the form attached as an exhibit to the
Stockholder Agreement to establish certain terms and conditions concerning the
Purchaser's investment in the Company and the Company's corporate governance
(the "Stockholder Agreement"), and a Registration Rights Agreement in
substantially the form attached as an exhibit to the Stockholder Agreement to
permit the Purchaser to require the Company to register pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), securities of the
Company owned by the Purchaser, and to include securities owned by the
Purchaser in registrations initiated by the Company or other stockholders (the
"Registration Rights Agreement"). See Section 14, "Letter of Credit Agreement,"
"Stockholder Agreement," and "Registration Rights Agreement," respectively.
Immediately following the consummation of the Offer, the Stock Acquisition
and the other transactions contemplated by the Stock Purchase Agreement, 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 Nasdaq National Market ("Nasdaq").
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS
MADE WITH RESPECT TO THE OFFER.
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 5,820,000
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 Thursday, April 20, 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 5,820,000 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 by 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 Nasdaq 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.
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
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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)
increase or decrease the maximum number of Shares sought pursuant to the Offer,
(iv) add to or modify the Offer Conditions (as defined herein), (v) otherwise
amend the Offer in any manner adverse to the Company's stockholders or (vi)
accept for payment or purchase any Offer Shares prior to the date of the
closing of the purchase and sale of the Second Issuance Shares.
The Purchaser may, without the Company's consent, (i) extend the Offer if at
the scheduled Expiration Date of the Offer any of the conditions to the
Purchaser's obligation to accept for payment, and pay for, the Offer Shares
shall not have been satisfied or waived, until such time as such conditions are
satisfied or waived, (ii) extend the Offer 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 and
(iii) extend the Offer for any reason on one or more occasions for an aggregate
period of not more than ten business days beyond the latest Expiration Date
that would otherwise be permitted under clauses (i) or (ii) of this sentence.
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.
Subject to the terms of the Stock Purchase Agreement, if by 12:00 midnight,
New York City time, on Thursday, April 20, 1995 (or any other date or time then
set as the Expiration Date), any or all conditions to the Offer have not been
satisfied or waived, the Purchaser reserves the right (but shall not be
obligated) (i) to decline to purchase any of the Shares tendered and terminate
the Offer, (ii) to waive all of the unsatisfied conditions (other than approval
of the Stockholder Proposal (as defined herein) by the Company's stockholders,
which condition may be waived only jointly by both the Purchaser and the
Company) and, subject to complying with applicable rules and regulations of the
Commission, to purchase all Shares validly tendered or (iii) to extend the
Offer and, subject to the right of stockholders to withdraw Shares until the
Expiration Date, retain the Shares that have been tendered during the period or
periods for which the Offer is extended. In the event that the Purchaser waives
any of the conditions set forth in Section 6, the Commission may, if the waiver
is deemed to constitute a material change to the information previously
provided to the stockholders, require that the Offer remain open for an
additional period of time and/or that the Purchaser 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.
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.
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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.
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 TENDERING SHARES.
Valid Tender of Shares. For a stockholder validly to 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 member firm of a registered national securities exchange, a member
of the National Association of Securities Dealers, Inc. or a commercial bank or
trust company having an office, branch or agency in the United States (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.
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 make a request to establish
accounts with respect to the Shares at The Depository Trust Company, the
Midwest Securities Transfer 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
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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 manually signed 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 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 6 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 Nasdaq 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 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. 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
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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 March 6, 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. 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. 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 May 5, 1995.
For a withdrawal to be effective, a written, telegraphic, telex 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
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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 again 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
notices 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 5,820,000
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 Exon-Florio Amendment to the Defense Production Act of 1950 (the "Exon-
Florio Amendment") and Korean law. 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
formally 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.
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. 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. See Section 15 for additional information concerning the
HSR Act.
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For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, validly tendered Shares 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
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.
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 for 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 or the Stock Purchase
Agreement, and subject to any applicable rules and regulations of the
Commission, including Rule 14e-1(c) relating to the Purchaser's obligation to
pay for or return tendered Shares after termination of the Offer, the
Purchaser's obligation to accept for payment or pay for any Shares tendered
pursuant to the Offer is subject to the condition that the Stock Purchase
Agreement shall not have been terminated and to the satisfaction of the
following conditions (together, the "Offer Conditions"):
(a) No statute, rule, regulation, judgment, order, decree, ruling,
injunction, or other action shall have been entered, promulgated, enforced,
or threatened by any governmental, quasi-
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governmental, judicial, or regulatory agency or entity or subdivision
thereof with jurisdiction over the Company or the Purchaser or any of their
subsidiaries or the purchase and sale of the Offer Shares or New Issue
Shares or any of the other transactions contemplated by the Stock Purchase
Agreement (each a "Governmental Authority") that purports, seeks, or
threatens to (i) prohibit, restrain, enjoin, or restrict in a material
manner, the purchase and sale of any New Issue Shares or the 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 New Issue Shares or the Offer Shares as
contemplated by the Stock Purchase Agreement (collectively, "Legal
Ability").
(b) All material filings with all Governmental Authorities required to be
made in connection with the purchase and sale of the New Issue Shares or
the Offer Shares as contemplated by the Stock Purchase Agreement
(including, without limitation, pursuant to the HSR Act and the Exon-Florio
Amendment) shall have been made, all waiting periods thereunder shall have
expired or terminated, 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 purchase and sale of the New
Issue Shares and Offer Shares in connection with the purchase and sale of
the New Issue Shares or 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 such closing, provided, however, that no provision of
the Stock Purchase Agreement will 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
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 New Issue Shares or the Offer Shares as contemplated by the Stock
Purchase Agreement.
(c) The Purchaser and the Company shall have delivered to the Committee
on Foreign Investment in the United States ("CFIUS") a voluntary notice of
the transactions contemplated by the Stock Purchase Agreement and (i) more
than 30 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, or (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. See Section 15.
(d) The Company shall have received such resignations, if any, from
members of its Board of Directors, and the Company's board of directors
shall have approved such resolutions, as are required to ensure that, as of
the closing of the purchase and sale of the New Issue Shares and Offer
Shares, the Purchaser will have the representation on the Company's board
of directors described in the Stockholder Agreement.
(e) The Company shall have performed in all material respects its
obligations under the Stock Purchase Agreement.
(f) Holders of a majority of the Common Stock shall have approved the
issuance and sale to the Purchaser of the Second Issuance Shares, the
purchase by the Purchaser of the Offer Shares, the amendment to the
Company's Restated Certificate of Incorporation, as amended, to be effected
by the Restated Certificate of Incorporation of the Company in the form
attached as an exhibit to the Stock Purchase Agreement (the "Restated
Charter"), and the Stockholder Agreement (together, the "Stockholder
Proposal").
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(g) The Restated Charter and the Bylaws (the "Bylaws") of the Company, in
the form attached as an exhibit to the Stock Purchase Agreement, shall have
been duly authorized, approved and effected, including without limitation
execution of the Restated Charter by an appropriate officer of the Company
and filing thereof with the Delaware Secretary of State.
(h) The amendment made as of March 1, 1995 to the Rights Agreement, in
the form attached as an exhibit to the Stock Purchase Agreement, shall not
have been modified or withdrawn.
(i) The Amendment to and Clarification of the Employment Agreement
between the Company and its Chief Executive Officer, in the form attached
as an exhibit to the Stock Purchase Agreement, shall not have been modified
or withdrawn.
(j) Consolidated operating income (loss) for the Company and its
subsidiaries for the fiscal quarter ended April 1, 1995, calculated in
accordance with United States generally accepted accounting principles
("GAAP") applied on a basis consistent with the immediately preceding
fiscal quarter, shall not have been less favorable than a specified level,
and consolidated net cash used in operating activities for the Company and
its subsidiaries for the fiscal quarter ended April 1, 1995, calculated in
accordance with GAAP applied on a basis consistent with the immediately
preceding fiscal quarter, shall not have exceeded a specified level.
(k) The Company shall have delivered the documents required to be
delivered by the Company pursuant to the Stock Purchase Agreement.
(l) Except as otherwise contemplated by the Stock Purchase Agreement, the
representations and warranties of the Company contained in the Stock
Purchase Agreement and in each other document contemplated by the Stock
Purchase Agreement, including, without limitation, the Company's
representation as to the absence of any material adverse change to the
business or financial condition of the Company, shall be true in all
material respects at and as of the closing of the purchase and sale of the
New Issue Shares and the Offer Shares 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.
(n) The Company shall have delivered to the Purchaser a certificate dated
as of the closing of the purchase and sale of the New Issue Shares and the
Offer Shares and signed by the Chief Financial Officer of the Company
certifying as to the accuracy in all material respects of the
representations and warranties of the Company set forth in the Stock
Purchase Agreement and the other documents contemplated by the Stock
Purchase Agreement and the performance in all material respects of the
obligations required by the Company to be performed under the Stock
Purchase Agreement as of such closing.
The Stock Purchase Agreement provides that the foregoing 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 (including
without limitation any action or inaction by the Purchaser), 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; provided that approval of the Stockholder
Proposal by the Company's stockholders is a condition to the Purchaser's
purchase of the Offer Shares that may only be waived jointly by both the
Purchaser and the Company. 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 all parties.
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.
11
<PAGE>
The Purchaser acknowledges that the Commission believes 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.
7. PRICE RANGE OF THE COMMON STOCK.
According to the Company's Annual Report on Form 10-K for the fiscal year
ended July 2, 1994 (the "1994 10-K"), the Common Stock is traded on Nasdaq.
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 July 3, 1993 and July 2, 1994, and as reported
by published financial sources with respect to periods after July 2, 1994.
<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
Year Ended July 3, 1993:
First Quarter............................................ $17 3/8 $11 1/4
Second Quarter........................................... $23 $12 3/4
Third Quarter............................................ $24 1/4 $13
Fourth Quarter........................................... $17 1/4 $12 3/4
Year Ended July 2, 1994:
First Quarter............................................ $18 1/2 $13 3/4
Second Quarter........................................... $25 1/2 $16 3/4
Third Quarter............................................ $33 $20 1/4
Fourth Quarter........................................... $22 1/2 $12 1/2
Year Ending July 1, 1995:
First Quarter............................................ $19 1/4 $12
Second Quarter........................................... $16 1/4 $10 3/8
Third Quarter (through March 3, 1995).................... $17 $13 1/8
</TABLE>
On February 27, 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 Nasdaq was $14 3/16 per share of Common Stock. On March 3,
1995, the last full trading day prior to the commencement of the Offer, such
last sales price was $15 3/8 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 Nasdaq for continued inclusion in Nasdaq or in the Shares
becoming eligible for deregistration under the Exchange Act. The Purchaser
believes that its purchase of the Offer Shares and the New 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."
12
<PAGE>
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 has not paid cash dividends to date.
Pursuant to the terms of the Stock Purchase Agreement, the Company is
prohibited from taking certain of the actions described in the two succeeding
paragraphs, and nothing herein shall constitute a waiver by the Purchaser of
any of its rights under the Stock Purchase Agreement or limitation of remedies
available to the Purchaser for any breach of the Stock Purchase Agreement,
including termination thereof.
If on or after the date of the Stock Purchase Agreement the Company should
(i) split, combine or otherwise change the Shares or its capitalization, (ii)
acquire presently outstanding Shares or otherwise cause a reduction in the
number of outstanding Shares, or (iii) issue or sell any shares of any class or
any securities convertible into any such shares, or any rights, warrants or
options to acquire any such shares or Convertible Securities (other than Shares
issued pursuant to, and in accordance with the terms in effect on February 28,
1995 of, the exercise or conversion of Convertible Securities) then, without
prejudice to the Purchaser's rights under Sections 6 and 15, the Purchaser, in
its sole discretion, may make such adjustments in the purchase price and other
terms of the Offer as it deems appropriate, including, without limitation, the
number or type of securities offered to be purchased.
If on or after the date of the Stock Purchase Agreement the Company should
declare or pay any cash or stock dividend or other distribution on, or issue
any rights with respect to, the Shares, payable or distributable to
stockholders of record on a date prior to the transfer to the name of the
Purchaser or its nominees or transferees on the Company's stock transfer
records of the Shares purchased pursuant to the Offer, then, without prejudice
to the Purchaser's rights under Section 6, (i) the purchase price per Share
payable by the Purchaser pursuant to the Offer may, in the sole discretion of
the Purchaser, be reduced by the amount of any such cash dividend or
distribution, and (ii) any non-cash dividend, distribution or right to be
received by the tendering stockholders will (a) be received and held by the
tendering stockholders for the account of the Purchaser and will be required to
be promptly remitted and transferred by each tendering stockholder to the
Depositary for the account of the Purchaser, accompanied by appropriate
documentation of transfer, or (b) at the direction of the Purchaser, be
exercised for the benefit of the Purchaser, in which case the proceeds of such
exercise will promptly be remitted to the Purchaser. Pending such remittance,
the Purchaser will be entitled to all rights and privileges as owner of any
such non-cash dividend, distribution or right or such proceeds and may withhold
the entire purchase price or deduct from the purchase price the amount or value
thereof, as determined by the Purchaser in its sole discretion.
10. CERTAIN INFORMATION CONCERNING THE COMPANY.
The Company is a Delaware corporation with its principal offices located at
16215 Alton Parkway, Irvine, California 92718. The following description of the
Company's business has been taken from the 1994 10-K:
The Company designs, manufactures, markets, services and supports a broad
line of personal computers including desktop, server and notebook computer
systems marketed under the Advantage!(R), AscentiaTM, BravoTM, PremmiaTM,
ManhattanTM SMP and PowerExecTM brand names.
13
<PAGE>
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 December 31, 1994.
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
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED FISCAL YEAR ENDED
---------------- ----------------------------------------
DECEMBER 31, JULY 2, JULY 3, JUNE 27,
1994 1994 1993 1992
---------------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Income Statement Data:
Net sales.............. $1,135,605 $2,367,274 $1,412,150 $944,079
Gross profit........... 103,617 381,333 285,698 293,260
Operating income
(loss)................ (70,098) 86,681(1) (64,578)(2) 97,526
Net income (loss)...... (77,754) 53,501 (53,738) 68,504
Net income (loss) per
share:
Primary............... $ (1.92) $ 1.64 $ (1.72) $ 2.16
Fully diluted......... $ * $ 1.59 $ * $ *
Shares used in
computing net income
(loss) per share:
Primary............... 32,358 32,548 31,289 31,758
Fully diluted......... * 34,866 * *
<CAPTION>
AT DECEMBER 31, AT JULY 2, AT JULY 3, AT JUNE 27,
1994 1994 1993 1992
---------------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Balance Sheet Data:
Cash and short-term
investments........... $ 68,654 $ 153,118 $ 121,600 $140,705
Working capital........ 374,753 434,474 301,046(3) 332,793
Total assets........... 1,031,448 1,038,312 886,159(3) 580,613
Long-term debt......... 218,158 215,294 92,258(3) 2,431
Total shareholders'
equity................ $ 322,142 $ 383,954 $ 318,806 $363,267
Shares outstanding at
end of period......... 32,374 32,334 31,579 30,787
</TABLE>
- --------
* Fully diluted earnings (loss) per share were anti-dilutive or not materially
different from primary earnings (loss) per share.
(1) Includes a $12.5 million pretax credit from the reversal of excess
restructuring charge amounts not used.
(2) Includes a $125 million pretax restructuring charge.
(3) Effective June 30, 1993, the Company purchased certain net assets of Tandy
Corporation's personal computer business. The Company's Consolidated
Statements of Operations do not include the revenues and expenses of the
acquired business until fiscal 1994.
14
<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 Nasdaq. 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 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 Korean corporation with its principal executive offices
located at 250, 2-Ka, Taepyung-Ro, Chung-Ku, Seoul, Korea 100-742. The
Purchaser is a leading international brand-name manufacturer of consumer
electronics, semiconductors and industrial electronics products. Each of the
Purchaser's three main business lines is divided into two divisions: consumer
electronics into Audio & Video and Household Appliances; semiconductors into
Memory Devices and Non-Memory Devices; and industrial electronics into
Information/Computer Systems and Telecommunication Systems.
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 ("GAAP"). 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,
except if the financial condition of the subsidiary or affiliated company has
significantly deteriorated, the investment is reduced to its estimated net
realizable value. 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. For the
convenience of the reader, the financial data have been translated into U.S.
Dollars at the rate of 788 Won per U.S. Dollar, which was the prevailing rate
on December 31, 1994.
15
<PAGE>
THE PURCHASER
SELECTED FINANCIAL DATA
(AMOUNTS IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER 31,
----------------------------------
1994 1993 1992
----------- ----------- ----------
<S> <C> <C> <C>
Income Statement Data:
Sales....................................... $14,616,853 $10,348,677 $7,744,635
Operating Profit............................ 3,309,040 1,660,837 1,058,588
Net Income.................................. 1,199,300 196,188 91,927
<CAPTION>
AT DECEMBER 31,
----------------------------------
1994 1993 1992
----------- ----------- ----------
<S> <C> <C> <C>
Balance Sheet Data:
Current Assets.............................. $ 5,058,649 $ 3,141,071 $2,699,614
Total Assets................................ 11,537,834 8,450,988 8,028,771
Current Liabilities......................... 4,315,441 3,347,074 3,770,792
Total Liabilities........................... 7,902,853 6,387,010 6,541,189
Shareholders' Equity........................ 3,634,981 2,063,978 1,487,582
</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 New Issue Shares and to pay related fees and expenses will be
approximately $382 million. The Purchaser will provide such funds from its
working capital or its affiliates' working capital or from existing credit
facilities or 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.
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
16
<PAGE>
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 Purchaser and certain of its subsidiaries supply components such as DRAMs
(Dynamic Random Access Memory chips) and monitors to the Company pursuant to
customary commercial arrangements. Sales of such components by the Purchaser
and its subsidiaries to the Company aggregated approximately $46 million, $13
million and $7 million, respectively, for the Company's fiscal years ended July
2, 1994, July 3, 1993 and June 27, 1992, and approximately $43 million for the
eight months ended March 1, 1995.
On November 1, 1994, a representative of Asia Pacific Ventures, Ltd. ("APV"),
an advisor to the Company, contacted the Purchaser to determine its possible
interest in a transaction with or an investment in the Company. After meetings
between the Purchaser and APV in Korea and the United States, the Purchaser
requested that an initial meeting with the Company be arranged.
On November 16, 1994, an initial meeting was held. Bo-Soon Song, Senior
Executive Managing Director of the Purchaser and Chief Executive Officer of
Samsung America, Inc., Robert Kim, a Managing Director of the Purchaser, and
other executives of the Purchaser met with Safi U. Qureshey, Chairman of the
Board and Chief Executive Officer of the Company, and a representative of APV.
The representatives from each company discussed the plans and goals of their
respective companies to determine whether the parties had mutual interests and
should proceed with further discussions.
On December 2, 1994, U.S. representatives of the Purchaser met with James
Schraith, President and Chief Operating Officer of the Company, Bruce Edwards,
Executive Vice President and Chief Financial Officer of the Company, and a
representative of APV at the Company's headquarters in Irvine, California to
discuss historical results of operations and to ask general questions regarding
the Company.
On December 12 and 13, 1994, Mr. Qureshey, Mr. Schraith and Mr. Edwards, met
in Seoul, Korea with Young Soo Kim, Executive Vice President of the Purchaser,
Wook Sun, Executive Vice President of the Purchaser, and Hee Dong Yoo, Senior
Executive Managing Director of the Purchaser, as well as other executives of
the Purchaser, to continue their earlier discussions of a possible significant
investment in the Company by the Purchaser and a strategic alliance between the
two companies. As a result of these meetings, on December 19, 1994 Mr. Yoo sent
a letter to Mr. Qureshey indicating that the Purchaser had an interest in
pursuing discussions concerning a significant minority investment coupled with
a strategic alliance, and requesting initiation of a formal information
gathering process.
On December 21, 1994, the Purchaser and the Company entered into a
Confidentiality Agreement (as defined herein) and, during the latter part of
December, representatives of the Purchaser and their legal and financial
advisors were furnished certain non-public information concerning the Company's
operations and financial condition.
On January 5 and 6, 1995, senior executives of both companies and their legal
and financial advisors held a series of meetings in Irvine, California to
continue the information gathering process and to discuss various alternative
structures for the proposed investment and strategic alliance. Throughout the
remainder of the month of January, executives of both companies and their
advisors exchanged correspondence and proposed terms for a transaction. These
exchanges of correspondence and related telephone conferences resulted in a
basic understanding of certain key aspects of the transaction and formed the
basis upon which the parties then began the process of negotiating definitive
agreements during a series of meetings which took place in Irvine, California
during the period from February 6 through February 18, 1995.
17
<PAGE>
On February 9, 1995, a news service reported certain statements regarding the
Purchaser's interest in and talks with the Company. Later that same day, the
Company issued a press release stating that it was in discussions with certain
parties, including the Purchaser, regarding a potentially significant minority
investment and possible strategic business arrangements.
On February 22, 1995, following a meeting of the Company's Board of
Directors, the Purchaser and its legal and financial advisors were informed
that the Board was willing to proceed with the transaction if the remaining
open issues could be expeditiously resolved and if definitive agreements could
then be promptly completed. During the next several days, the terms and
conditions of the definitive agreements were finalized, and were presented to
and unanimously approved by the Company's Board of Directors on February 27,
1995. Following such approval, the Stock Purchase Agreement and the Strategic
Alliance Agreement were executed and delivered by the parties.
Except as described above or as described elsewhere in this Offer to
Purchase, none of the Purchaser or, to the best knowledge of the Purchaser, any
of the persons listed in Annex I hereto, has had during the last three fiscal
years of the Company any business relationships or transactions with the
Company or any of its executive officers, directors or affiliates that would
require reporting under the rules of the Commission, and there have been no
contacts, negotiations or transactions between the Purchaser, its subsidiaries
or, to the best knowledge of the Purchaser, any of the persons listed on Annex
I, and the Company or its affiliates, concerning a merger, consolidation or
acquisition, tender offer or other acquisition of securities, election of
directors or a sale or other transfer of a material amount of assets.
14. PURPOSE OF THE OFFER; STOCK PURCHASE AGREEMENT; STOCKHOLDER AGREEMENT;
STRATEGIC ALLIANCE AGREEMENT; OTHER AGREEMENTS.
PURPOSE OF THE OFFER; PLANS FOR THE COMPANY
The purpose of the Offer is to acquire the Offer Shares as one step in
acquiring a 40.25% equity interest in the Company and establishing a strategic
relationship between the Company and the Purchaser. In connection with such
relationship, the Purchaser will have representation on the Company's Board of
Directors and certain other rights allowing the Purchaser to influence the
business of the Company, all pursuant to the Stockholder Agreement and related
documents 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.
The Share Issuances. Upon the terms and subject to satisfaction or waiver of
the Offer Conditions and the further conditions that (i) the Purchaser shall
have accepted for purchase (subject to proration) all Shares properly tendered
and not withdrawn pursuant to the Offer, and deposited with the Depositary
funds sufficient to pay for such Shares, and (ii) the Company shall have
secured amendments to or waivers under its material credit agreements and
arrangements such that none of the Offer or the Stock Acquisition or other
transactions contemplated by the Stock Purchase Agreement will constitute a
breach or default thereunder, the Company has agreed to issue and sell to the
Purchaser, and the Purchaser has agreed to purchase from the Company, the First
Issuance Shares (the "First Issuance") in exchange for $19.50 per First
Issuance Share (the "First Issuance Purchase Price") and the Second Issuance
Shares (the "Second Issuance") in exchange for $22.00 per Second Issuance Share
(the "Second Issuance Purchase Price"). In connection with the closing of the
purchase and sale of the New Issue Shares, the Purchaser and the Company will
enter into the Stockholder Agreement, the Registration Rights Agreement, the
Letter of Credit Agreement, and definitive agreements implementing the
arrangements contemplated by the Strategic Alliance Agreement (the "Commercial
Agreements").
18
<PAGE>
Notwithstanding the foregoing, however, the Offer Conditions apply separately
to (i) the First Issuance and (ii) the Offer and the Second Issuance. Subject
to satisfaction or waiver of the Offer Conditions listed in paragraphs (a), (b)
and (c) of Section 6 above, and to the performance by the Purchaser of its
obligations under the Stock Purchase Agreement and the truth of the Purchaser's
representations and warranties thereunder, the Purchaser may elect to purchase
from the Company, and the Company shall issue and sell to the Purchaser, the
First Issuance Shares prior to the purchase and sale of the Second Issuance
Shares and Offer Shares and whether or not the remaining Offer Conditions have
been satisfied. In connection with such a purchase, the Purchaser would pay
only the First Issuance Purchase Price and the Purchaser and the Company would
deliver the Stockholder Agreement and the Registration Rights Agreement but not
the Letter of Credit Agreement or any of the Commercial Agreements. The
purchase by the Purchaser of the First Issuance Shares would not preclude the
subsequent purchase by the Purchaser of the Second Issuance Shares and Offer
Shares if the conditions thereto are satisfied or waived, and in connection
with such a subsequent purchase, the Purchaser would pay the Second Issuance
Purchase Price and the Purchaser and the Company would enter into the Letter of
Credit Agreement and the Commercial Agreements.
If the Company terminates the Stock Purchase Agreement in connection with a
Superior Proposal (as defined herein), as described below under "Termination,"
the Purchaser may elect to purchase the First Issuance Shares in exchange for
the First Issuance Purchase Price, subject only to the condition that there
shall not have been entered, promulgated, enforced or threatened by any
Governmental Authority a statute, rule, regulation, judgment, order, decree,
injunction or other action that prohibits, restrains or enjoins the purchase
and sale of the First Issuance Shares. In connection with such a purchase by
the Purchaser of the First Issuance Shares, the Purchaser and the Company would
enter into the Stockholder Agreement and the Registration Rights Agreement, but
not the Letter of Credit Agreement or any of the Commercial Agreements.
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 had 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 no change may be made that decreases the Offer Price, changes the
form of consideration to be paid in the Offer, increases or decreases the
maximum number of shares sought pursuant to the Offer, adds to or modifies the
Offer Conditions, otherwise amends the Offer in a manner adverse to the
Company's stockholders or permits the Purchaser to accept for payment or
purchase any Offer Shares prior to the date of the closing of the Second
Issuance.
The Stock Purchase Agreement requires that the Offer expire at midnight, New
York City time, on the date that is 45 days from the date the Offer is first
published or sent to stockholders, provided that the Purchaser may extend the
Offer (i) if the Offer Conditions have not been met, (ii) as required by the
Commission or (iii) for any reason on one or more occasions for an aggregate
period of not more than ten business days beyond the latest expiration
otherwise permitted as aforesaid.
Subject to the Offer Conditions, the Purchaser is required to accept for
payment, purchase, and pay for, in accordance with the terms of the Offer,
Shares validly tendered and not withdrawn pursuant to the Offer at the earliest
time following expiration of the Offer that all conditions to the Offer and its
consummation shall have been satisfied or waived by the Purchaser. 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
(including without limitation any action or inaction by the Purchaser) or may
be waived by the Purchaser, in whole or in part at any time and from time to
time, in the Purchaser's
19
<PAGE>
sole discretion; provided that approval of the Stockholder Proposal by the
Company's stockholders is a condition to the Purchaser's purchase of the Offer
Shares that may only be waived jointly by both the Purchaser and the Company.
Amendment to Rights Agreement. As required by the Stock Purchase Agreement,
the Company amended the Rights Agreement to permit the Offer and the Stock
Acquisition and certain potential additional acquisitions by the Purchaser of
the Company's equity securities to be completed without triggering the Rights
Agreement. The amendment provides that (i) neither the Purchaser nor any of its
affiliates is an "Acquiring Person" thereunder unless and until (A) the Stock
Purchase Agreement terminates in accordance with its terms without the purchase
by the Purchaser of any shares of Common Stock pursuant thereto, (B) the
Purchaser and its affiliates cease to own at least 15% of the outstanding
shares of Common Stock, or (C) the Purchaser or any of its affiliates becomes
the beneficial owner of any shares of Common Stock in violation of the
Stockholder Agreement; (ii) beneficial ownership of shares of Common Stock by
the Purchaser and/or its affiliates not in violation of the Stockholder
Agreement will not result in a "Distribution Date;" and (iii) ownership by the
Purchaser or its affiliates (as long as none of them is an "Acquiring Person")
of more than 15% of the outstanding Common Stock would not be a "Triggering
Event."
Representations and Warranties. The Stock Purchase Agreement contains various
customary representations and warranties of the parties thereto, including
representations by the Company as to (i) the absence of a material adverse
change to the business or financial condition of the Company and (ii) the
absence of certain changes or events concerning the Company's business,
compliance with law, litigation, insurance, employee benefit plans, labor
matters, intellectual property, environmental matters and taxes.
Conduct of Business of the Company. The Stock Purchase Agreement provides
that until the closing of the purchase and sale of the New Issue Shares, 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.
Accordingly, except as otherwise expressly approved by the Purchaser in
writing, which approval shall not be unreasonably withheld, neither the Company
nor any of its subsidiaries may, prior to such closing, engage or agree to
engage in an enumerated list of transactions generally characterized as being
outside the ordinary course of business. Such transactions requiring the
Purchaser's prior approval include, without limitation (but subject to certain
exceptions stated in the Stock Purchase Agreement), (i) securities issuances,
(ii) new borrowings, loans, or investments, (iii) changes to compensation or
benefits arrangements for any director or officer, (iv) business combinations
or sales or acquisitions of substantial assets and (v) the specified corporate
actions that will be subject to the prior approval of the Purchaser in
accordance with the Stockholder Agreement, as described below.
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 with respect to any (i) acquisition of more
than 20% of the total assets of the Company or any of its subsidiaries, (ii)
acquisition of 20% or more of the Common Stock or any equity securities of any
subsidiary of the Company, or (iii) merger or other combination of the Company
or any of its subsidiaries (each a "Third Party Acquisition"). The Company will
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 any Third Party Acquisition, or
(ii) hold any such discussions or enter into any agreement concerning any Third
Party Acquisition, subject to the fiduciary obligations of the Board as
provided in the next 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, provided, that if the Company's Board of Directors 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
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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 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, 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.
Termination. The Stock Purchase Agreement provides that either the Purchaser
or the Company may terminate its obligations thereunder (i) to the extent that
performance 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 shall
use its best efforts to remove such prohibition, injunction, or restraint, or
(ii) if the purchase by the Purchaser of the New Issue Shares and the Offer
Shares is not completed by June 30, 1995 and the failure to close 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, or (iii) if the party seeking
to terminate has not committed a material uncured breach of any representation,
warranty, covenant or agreement and there has been a material breach by the
other party of any representation, warranty, covenant, or agreement that has
not been cured within ten days' notice of such breach.
Additionally, the Company may terminate its obligation to sell and issue the
Second Issuance Shares and certain of its other obligations under the Stock
Purchase Agreement if (i) five business days have elapsed following the
Purchaser's receipt from the Company of a Notice of Superior Proposal, (ii) the
Superior Proposal described in such notice 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, and (iii) the Company shall have paid to the Purchaser $10
million (the "Termination Fee"). In the event of such a termination, the
Purchaser may within 15 days elect to purchase the First Issuance Shares,
subject only to its having Legal Ability. In connection with such a purchase by
the Purchaser of the First Issuance Shares, the Purchaser and the Company would
enter into the Stockholder and Registration Rights Agreements but not the
Letter of Credit Agreement or any of the Commercial Agreements.
The Purchaser may terminate its obligations under the Stock Purchase
Agreement if the Company's board of directors has withdrawn or modified in an
adverse manner its recommendation of the Offer or other transactions
contemplated by the Stock Purchase Agreement or recommended another offer or if
a Third Party Acquisition has occurred or any definitive agreement or agreement
in principle has been executed with respect to a Third Party Acquisition.
Transaction Expenses. The Stock Purchase Agreement provides that, except for
any Termination Fee, each of the parties will pay its own expenses incurred in
connection with the negotiation and preparation of the Stock Purchase
Agreement, the Stockholder Agreement, the Registration Rights Agreement, the
Letter of Credit Agreement, and related documents, the performance of its
obligations thereunder, and the effectuation of the transactions contemplated
thereby including, without limitation, all fees and disbursements of its
respective legal counsel, advisors, and accountants.
STOCKHOLDER AGREEMENT
In connection with the purchase and sale of any New Issue Shares, the
Purchaser and the Company will enter into the Stockholder Agreement to
establish certain terms and conditions concerning the Purchaser's investment in
the Company and the Company's corporate governance. The
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following summary of certain terms of the Stockholder Agreement does not
purport to be complete and is qualified in its entirety by reference to the
complete text of the Stockholder Agreement, which is filed as an exhibit to the
Schedule 14D-1 and incorporated herein by reference.
Standstill. Pursuant to the terms of the Stockholder Agreement, the
Purchaser has agreed that until completion of the purchase of the New Issue
Shares and the Offer Shares, neither the Purchaser nor any of its affiliates
will, directly or indirectly, acquire or offer to acquire beneficial ownership
of any equity securities of the Company or interest therein except pursuant to
the Offer or the purchase of the New Issue Shares. During the period of four
years after the closing of the purchase and sale of the First Issuance Shares
or, if there is a later closing of the purchase and sale of the Second Issuance
Shares, the period of four years thereafter (the "Standstill Period"), neither
the Purchaser nor any of its affiliates will, directly or indirectly, acquire
beneficial ownership of any equity securities of the Company or interest
therein, except in enumerated circumstances, including purchases to fund
payments made under the Letter of Credit Agreement, as discussed below, open
market purchases at prices per share at least equal to $21.10, transactions
approved by a majority of the Directors not designated by the Purchaser, as
discussed below, and purchases pursuant to its pro rata purchase rights as
described below.
Additionally, unless the Purchaser Interest has been less than 30% for a
period of 25 consecutive days, in the event that a third party shall make an
offer to acquire a 20% or greater interest in equity securities of the Company,
the Purchaser and/or its affiliates shall be permitted to make a competing
offer and acquire equity securities pursuant to such offer, subject to certain
conditions, including, without limitation, that (i) (A) the third party offer
is approved or recommended by a majority vote of the Directors not designated
by the Purchaser or (B) the Rights Agreement is not in effect or the Rights
thereunder will not become exercisable if the third party offer proceeds, (ii)
such third party offer is not withdrawn or terminated prior to the Purchaser
making a competing offer and (iii) if the third party offer is withdrawn or
terminated before the Purchaser acquires equity securities of the Company
pursuant to the competing offer, the Company's board of directors determines in
good faith that such third party offer was withdrawn or terminated primarily as
a result of the Purchaser's competing offer having superior terms to or a
substantially greater likelihood of success than such third party offer. The
Company may not enter into any agreement with the third party offeror or take
any action as a condition of the third party offer unless and until the
Purchaser shall have received notice under the Stockholder Agreement and has
been afforded not less than ten business days following receipt of such notice
from the Company to respond with a competing offer.
In no case during the Standstill Period may the Purchaser or any of its
affiliates, directly or indirectly, acquire or offer to acquire beneficial
ownership of any voting stock, if after such acquisition, the Purchaser
Interest would exceed 49.9%, unless such acquisition or offer (together with
related transactions) is (i) made pursuant to the Purchaser's rights with
regard to third party offers as described in the next preceding paragraph, or
(ii) has been approved by a majority of Directors not designated by the
Purchaser and would result in the Purchaser and/or its affiliates owning 100%
of the Company's voting stock. After the Standstill Period, the right of the
Purchaser and/or its affiliates to acquire or offer to acquire any equity
security or interest therein will not be restricted; provided, however, that
the Purchaser shall not acquire or offer to acquire any equity securities of
the Company if, as the result of or after giving effect to such acquisition,
the Purchaser Interest would exceed 66.67%, except pursuant to a cash tender
offer for all equity securities not owned by the Purchaser and/or its
affiliates.
Pro Rata Purchase Right. From and after the closing of the Second Issuance
until such time as the Purchaser Interest has been less than 30% for a period
of 25 consecutive days, the Company must give the Purchaser prior written
notice of any issuance by the Company of new securities as the result of which
the Purchaser Interest would be reduced, either immediately upon issuance of
such new securities, or upon subsequent exercise or conversion thereof. The
Purchaser may generally elect to
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purchase up to its pro rata share of such new securities on the same terms as
the balance of the issuance of such new securities. The Purchaser's pro rata
purchase rights shall not apply to the following issuances: (i) any issuance
pursuant to (A) any stock option or purchase right or plan exclusively for one
or more employees and/or directors of the Company or any of its subsidiaries or
(B) warrants issued to directors prior to the date of the Stockholder
Agreement, (ii) any issuance in consideration of any part of the acquisition by
the Company or any of its subsidiaries of any stock, assets or business; (iii)
any issuance upon conversion of the LYONs, (iv) any issuance pursuant to the
exercise or conversion of a new security issued after the date of the
Stockholder Agreement in which the Purchaser was entitled to participate
pursuant to its pro rata purchase rights and (v) any issuance in payment of any
portion of the promissory note due July 11, 1996, issued by the Company to
Tandy Corporation. In addition, if the number of outstanding shares of the
Company's voting stock is increased through the issuance of additional shares,
including issuances that do not trigger a pro rata purchase right but excluding
issuances pursuant to stock splits or stock dividends issued or distributed
proportionately on all outstanding shares, then in connection with each such
issuance the Purchaser and/or its affiliates will have the right, but not the
obligation, for designated periods to purchase in the open market at any
available price, up to the number of additional shares as is necessary solely
as a result of such issuance to restore the Purchaser Interest to the same
percentage as existed immediately prior to such increase.
Transfer Restriction. The Purchaser may not sell or otherwise transfer
(except to an affiliate of the Purchaser that agrees to be bound by the
Stockholder Agreement) any of the Company's equity securities, or interest
therein, for a period of five years from the purchase and sale of the First
Issuance Shares, except that (i) shares acquired under the Letter of Credit
Agreement, as described below, may be sold at any time pursuant to certain
public offerings or open market transactions and (ii) other shares may be sold
in transactions from and after the third anniversary of the purchase and sale
of the First Issuance Shares (A) in which all other stockholders may
participate on a pro rata basis on the same terms as the Purchaser, (B)
pursuant to such public offerings or open market transactions and (C) approved
by a majority of Directors not designated by the Purchaser, as described below.
Board Representation. After the Purchaser acquires the New Issue Shares and
the Offer Shares, subject to the next following sentence, the Purchaser will
have the right to designate the number of Directors of the Company that will be
one fewer than a majority of the Directors then authorized under the Restated
Charter. If (i) the Purchaser acquires the First Issuance Shares, but does not
acquire the Second Issuance Shares and the Offer Shares or (ii) the Purchaser
Interest is less than 30% for a period of 25 consecutive days, then the
Purchaser will have the right to designate that number of Directors that will
result in the total number of Directors designated by the Purchaser being equal
to the product (rounded to the nearest whole number) of (A) the total number of
Directors then authorized under the Restated Charter, and (B) the Purchaser
Interest at that time. While entitled to representation on the Company's board
of directors, the Purchaser will also be entitled to designate one of its
Director designees to serve on each committee of the Company's board of
directors, and to select any of the Directors as alternates for each of its
Director designees serving on committees of the Company's board of directors.
At all times after the purchase and sale of any New Issue Shares and until
the Purchaser Interest is less than 30% or greater than 90%, the Company's
board of directors must include at least three Directors who are not
affiliates, officers, employees, agents, principal stockholders, consultants or
partners of the Purchaser, the Company or any affiliate of either of them or of
any entity that was dependent on the Purchaser, the Company or any affiliate of
either of them for more than 5% of its revenues or earnings in its most recent
fiscal year (each, an "Independent Director"). During the Standstill Period,
the Purchaser-designated directors will not participate in the nomination of
Independent Directors. Thereafter, the Stockholder Agreement does not limit the
Purchaser's right to nominate Directors (subject to the three-Independent
Director requirement).
Certain Covenants. The Stockholder Agreement provides that during the
Standstill Period, neither the Purchaser nor its affiliates will, directly or
indirectly, (i) solicit, initiate or participate in any solicitation
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of proxies or become a participant in any election contest; call, or in any way
participate in a call for, any special meeting of stockholders of the Company
(or take any action with respect to acting by written consent of the Company's
stockholders); request, or take any action to obtain or retain any list of
holders of any securities of the Company; or initiate or propose any
stockholder proposal or participate in the making of, or solicit stockholders
for the approval of, one or more stockholder proposals; (ii) deposit any voting
stock of the Company in a voting trust or subject them to any voting agreement
or arrangements, except as provided in the Stockholder Agreement; (iii) form,
join or in any way participate in a "group" (as defined in the Stockholder
Agreement) with respect to any voting stock; (iv) except as specifically
permitted by the Stockholder Agreement, otherwise act to control or influence
the Company or its management, board of directors, policies or affaires; or (v)
disclose any intent, purpose, plan or proposal with respect to the Stockholder
Agreement, the Company or its affiliates or the Company's board of directors,
management, policies, affairs, securities or assets of the Company or its
affiliates that is inconsistent with the Stockholder Agreement. Notwithstanding
the foregoing, however, the Stockholder Agreement provides that nothing therein
will be deemed to prevent the Purchaser or its affiliates from voting their
respective shares, or taking such other action as it may deem necessary or
appropriate to cause the election as Directors of those persons the Purchaser
is entitled to designate pursuant to the Stockholder Agreement, or prohibit or
restrict any action taken by the Purchaser or any of its affiliates in
connection with the exercise of the rights of the Purchaser and its affiliates
to make a competing offer in response to an offer by a third party for a Third
Party Acquisition.
Certain Approval Rights. So long as the Purchaser Interest is not less than
30% for a period of 25 consecutive days, the Company shall not enter into the
following transactions without the prior written consent of the Purchaser or,
in the case of action by the Company's board of directors, the affirmative vote
or written consent of not less than a majority of the Directors designated by
the Purchaser: (i) acquire or agree to acquire, or permit any of its
subsidiaries to acquire or agree to acquire, by merger, consolidation, or
acquisition of assets or stock, or otherwise, any corporation, partnership, or
other business organization or division thereof, or any other business
operation ("Acquired Entity") if the total assets, or the total revenues or
operating profits of such Acquired Entity as at the end of or for the most
recently completed four fiscal quarters preceding the agreement for such
acquisition shall exceed 20% of the total assets or the total revenues or
operating profits of the Company as at the end of or for such four fiscal
quarters, provided, however, the Purchaser's written consent shall not be
required for an acquisition in which the total value of all consideration paid
or given by the Company in such acquisition (including without limitation the
value of any funded debt or other capitalized obligations assumed by the
Company or any subsidiary of the Company) is less than $50 million; (ii) sell,
contribute or otherwise transfer or agree to sell, contribute or otherwise
transfer, or permit any of its subsidiaries to sell, contribute or otherwise
transfer or agree to sell, contribute or otherwise transfer, any product line
or line of business of the Company or any of its subsidiaries or any interest
therein to any person other than a subsidiary of the Company that is or, if it
were a United States entity, would be, required to be consolidated for Federal
income tax purposes, if the assets, revenues or operating profit of such
product line or line of business as at the end of or for the most recently
completed four fiscal quarters preceding the agreement for such transfer shall
exceed 20% of the assets, revenues or operating profits of the Company as at
the end of or for such four fiscal quarters; (iii) authorize for issuance,
issue, sell, deliver or agree or commit to issue, sell or deliver (whether
through the issuance or exercise of options, warrants, subscriptions, rights to
purchase or otherwise), in any transaction or series of related transactions,
any equity securities if such securities would represent an increase of 10% or
more in the voting power outstanding immediately prior to the issuance of such
securities; (iv) approve any annual capital expenditure budget, or authorize or
make capital expenditures in excess of $15 million in the aggregate for the
Company and all of its subsidiaries (other than pursuant to the approved
budget); (v) effect any amendments to the Restated Charter or Bylaws or change
in the number of authorized Directors; and (vi) enter, or permit any of its
subsidiaries to enter, into any joint venture, partnership, or exclusive
licensing agreement with any third party that (A) 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
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from the Company and/or its subsidiaries during the duration of such agreement
or relationship, or the four-year period commencing on the date of such
agreement, whichever is less, in excess of $100 million, or (B) 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 that is material
to the business of the Company and its subsidiaries, taken as a whole;
provided, however, the Purchaser's written consent shall not be required for
any agreement for the procurement of central processing units and licenses for
the use of patents, basic input-output system software, disk operating system
software, Windows(R) operating system software, and network operating system
software, or other similar agreements, in each case entered into in the
ordinary course of business not substantially inconsistent with past practice
and for procurement of components to be used in or with the Company's products,
or provided to purchasers of the Company's products in or with such products.
Results of Operations. Following the acquisition by the Purchaser of the New
Issue Shares and the Offer Shares, and provided that the Purchaser Interest is
not less than 30% for a period of 25 consecutive days, if (i) the consolidated
revenues or gross profits of the Company and its subsidiaries for the fiscal
year ended July 1996 shall be less than $2.6 billion or $430 million,
respectively, (ii) the consolidated revenues or gross profits of the Company
and its subsidiaries for the fiscal year ended July 1997 shall be less than the
greater of (A) $2.75 billion or $450 million, respectively, or (B) 85% of the
amounts therefor set forth in the fiscal 1997 operating plan of the Company
approved by the Company's board of directors; or (iii) the consolidated net
income after taxes of the Company and its subsidiaries for either of such
fiscal years shall be less than 1% of net revenues, then a management committee
of the Company's board of directors (the "Management Committee") will be formed
to review the desirability of changes in the management of the Company and take
such action, if any, as may be determined to be advisable including without
limitation the reassignment, changes in the responsibilities, removal,
termination or replacement of any members of management. For purposes of the
foregoing, the "management" of the Company shall refer to all persons who
presently have the title of "Vice President" or higher, whether or not any such
person is an officer of the corporation, and all such persons who may perform
the functions presently performed by any of the foregoing, without regard to
title, but shall not include the Company's Chief Executive Officer. The
Management Committee shall make any determination with respect to the
termination or reassignment of an existing member of management, or the
decision to hire any new member of management within 60 days following the
availability of the audited financial statements for the relevant year (or such
longer period of time as may be determined by a majority of the Company's board
of directors), and no such determination shall be made thereafter; provided
that: (a) the Management Committee shall have such additional time as is
reasonably necessary for the recruitment and selection of any such new member
of management; and (b) no action or inaction by the Management Committee
following the fiscal year ended July 1996 shall impair its ability to act as
herein authorized following the fiscal year ended July 1997. The Management
Committee shall not be authorized to take such actions if they would violate
applicable law or if the shortfall in consolidated revenues, gross profits or
net income of the Company and its subsidiaries referred to above shall be the
direct result of certain "force majeure" events or a decline in the unit volume
of the world market for personal computers.
The Management Committee will consist of those members of the Company's board
of directors designated by the Purchaser in accordance with the Stockholder
Agreement, the Chief Executive Officer of the Company, if he is then a Director
(or, if he is not then a Director, another Director who is an employee of the
Company), and up to a maximum of four Directors who are not officers or
employees of the Company. In the event there shall be more than four Directors
who were not designated by the Purchaser and are not officers or employees of
the Company at a time when the Management Committee is authorized to act in
accordance with the foregoing, those Directors who were not designated by the
Purchaser will select the four such Directors who will be members of the
Management Committee in addition to the Chief Executive Officer (or, if he is
not then a Director, another Director who is an employee of the Company) and
the Directors designated by the Purchaser,
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and unless and until such selection is made the Management Committee shall
consist solely of the Directors designated by the Purchaser and the Chief
Executive Officer of the Company (or, if he is not then a Director, another
Director who is an employee of the Company).
Material Transactions. At all times that the Purchaser Interest is less than
100%, neither the Purchaser nor any of its Affiliates shall engage in any
material transaction with the Company or any of its subsidiaries unless such
transaction has been approved by a majority of the Independent Directors or, in
the case of a series of related transactions, is in accordance with guidelines
approved by a majority of the Independent Directors. "Material transaction"
shall generally mean (i) any amendment to, or termination of, the Stockholder
Agreement or any of the other documents that have been executed and delivered
in connection with the Stock Purchase Agreement (the "Transaction Documents")
and (ii) any transaction between the Company, any of its subsidiaries or the
Company's stockholders (as such), on the one hand, and the Purchaser or any of
its affiliates, on the other hand; provided that "material transaction" shall
not include any (i) transactions with stockholders which are expressly
permitted by the Stockholder Agreement, (ii) transactions in accordance with
the terms of the Transaction Documents and (iii) other transactions or series
of related transactions involving payments by or obligations or transfer of
property of the Company with an aggregate value in any calendar or fiscal year
of less than $5 million.
The Bylaws will be amended, in the form attached as an exhibit to the Stock
Purchase Agreement, to implement changes consistent with certain of the
foregoing transactions.
Termination of Certain Rights. The rights and obligations of the Company and
the Purchaser with respect to representation on the Company's board of
directors, approval rights and certain covenants under the Stockholder
Agreement generally terminate at the first time after the date of such
Agreement that the Purchaser Interest is less than 15% for a period of 90
consecutive days.
STRATEGIC ALLIANCE AGREEMENT
The following summary of the Strategic Alliance Agreement does not purport to
be complete and is qualified in its entirety by reference to the complete text
of the Strategic Alliance Agreement, which is filed as an exhibit to the
Schedule 14D-1 and incorporated herein by reference.
The Strategic Alliance Agreement requires the Purchaser and the Company to
negotiate and enter into the Commercial Agreements embodying the principles
summarized below as a condition to consummating the Second Issuance.
Component Supply Agreements. Such agreements shall provide that the
Purchaser will supply the Company with certain components used in the
manufacture of the Company's products, including DRAMs, hard disk drives,
monitors and liquid crystal display panels ("LCDs"), with the Company being
eligible for supply and terms which, when considered in the aggregate, are
at least as favorable as those offered by the Purchaser to its most favored
customer group.
Joint Procurement Agreement. Such agreement shall provide a mechanism
pursuant to which the Purchaser and the Company will coordinate their
purchases from third parties in order to obtain more favorable pricing as a
result of leveraging the combined purchasing power of both parties.
Joint Marketing Agreement. Such agreement shall provide that the Company
and the Purchaser will share expertise to jointly market currently existing
and newly developed products of both parties in order to achieve maximum
market penetration for both parties.
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Cross OEM Agreement. Such agreement shall provide that the Company and the
Purchaser will coordinate the utilization of the manufacturing and assembly
capacity of each other.
Joint Product Development. Such agreement shall provide that the Company
and the Purchaser will share expertise to jointly develop products in order
to accelerate product time to market for both parties.
Cross License Agreement. Such agreement shall provide that the Company and
the Purchaser will license to each other their respective patents,
copyrights, and other intellectual property in order to foster rapid
product development and low-cost production.
Employee Exchange Agreement. Such agreement shall provide that the Company
and the Purchaser will coordinate a program to provide opportunities for
employees of one company to spend time as employees of the other company
("Transfer Employees") in order to facilitate a mutual understanding of
each party's respective business and corporate culture and attainment of
the mutual goals set forth in the Strategic Alliance Agreement, and to
provide assistance and training to each other in areas where each party has
particular expertise. Such agreement shall provide that certain Transfer
Employees designated by the Purchaser will report directly to the Chief
Executive Officer of the Company.
Technical Collaboration Agreement. Such agreement shall provide that the
Company and the Purchaser will collaborate regarding technical information.
LETTER OF CREDIT AGREEMENT
The following summary of the Letter of Credit Agreement does not purport to
be complete and is qualified in its entirety by reference to the complete text
of the Letter of Credit Agreement, which is filed as an exhibit to the Schedule
14D-1 and incorporated herein by reference.
The Letter of Credit Agreement is required to be executed and delivered at
the closing of the purchase and sale of the Second Issuance Shares and provides
that the Purchaser will finance up to $75 million of principal payment
obligations of the Company under its existing $96.7 million note to Tandy
Corporation. Such financing will be provided either by direct advances by the
Purchaser to the Company or through draws under a standby letter of credit.
Establishment fees charged by an issuing bank with respect to any such letter
of credit will be paid or reimbursed by the Company. The Company will repay the
Purchaser for any such financing, at the Purchaser's option, either by
repayment in cash at the end of three years (with semi-annual interest paid
during such three years at an announced "prime" lending rate), or by the
issuance of additional shares of Common Stock (subject to the 49.9% ownership
limitation during the Standstill Period described above) at market price, or a
combination of both.
REGISTRATION RIGHTS AGREEMENT
The following summary of the Registration Rights Agreement does not purport
to be complete and is qualified in its entirety by reference to the complete
text of the Registration Rights Agreement, which is filed as an exhibit to the
Schedule 14D-1 and incorporated herein by reference.
The Registration Rights Agreement is required under the terms of the Stock
Purchase Agreement to be executed and delivered at the closing of the purchase
and sale of any New Issue Shares and provides, among other things, that the
Purchaser shall have the right to require the Company to file a registration (a
"Demand Registration") under the Securities Act for any or all of the Common
Stock acquired by it or its affiliates from time to time not in violation of
the Stock Purchase Agreement or the Stockholder Agreement (the "Registrable
Shares"). The right to a Demand Registration is limited, however, in that (i)
it may be invoked in each instance only with respect to 2,000,000 or more
Registrable Shares, (ii) the Company is not required to honor a Demand
Registration request within
27
<PAGE>
18 months of the effectiveness of a previous Demand Registration, and (iii) the
Company may defer its obligation to honor a Demand Registration request for up
to 180 days if the Company's board of directors determines in good faith that a
registration would require public disclosure of material non-public information
related to a significant pending transaction of the Company that could be
impaired by such disclosure. If the Purchaser purchases the First Issuance
Shares but not the Second Issuance Shares and the Offer Shares, the Company
shall not be required to effect more than three Demand Registrations; if the
Purchaser purchases all of the New Issue Shares and the Offer Shares, the
Company shall not be required to effect more than six Demand Registrations. The
Purchaser shall also have the right, with respect to most registered offerings
of Common Stock for cash, to require the Company to include Registrable Shares
in such offering (together with Demand Registrations, "Registrations"). The
Registration Rights Agreement provides that expenses relating to Registrations
(other than selling expenses and commissions) will be paid by the Company and
otherwise contains terms that are customary to registration rights agreements
of its type.
CONFIDENTIALITY AGREEMENT
The following summary of the Confidentiality Agreement (as defined herein)
does not purport to be complete and is qualified in its entirety by reference
to the complete text of the Confidentiality Agreement, which is filed as an
exhibit to the Schedule 14D-1 and incorporated herein by reference.
In anticipation of a possible transaction and potential future business
collaborations (the "transaction") between the Purchaser and the Company, the
parties entered into a confidentiality agreement on December 21, 1994 (the
"Confidentiality Agreement"). The Confidentiality Agreement provides that the
Purchaser and the Company will each provide the other with certain information
to be used solely for the purpose of evaluating the proposed transaction and
that each will keep all such information confidential. The Confidentiality
Agreement further provides that (i) each party may disclose
such confidential information to the extent required by law, but must first
notify the other party, (ii) disclosure of information shall only be to those
representatives necessary for the purpose of the evaluation, (iii) each party
must promptly return all documents furnished by the other party upon such
party's written request, (iv) for a period of one year from the execution of
the Confidentiality Agreement neither party will solicit employment of
officers, directors or other key employees of the other party without the prior
written consent of the other party and (v) prior to the execution or after the
termination of the Stock Purchase Agreement (or any other definitive agreement)
the Purchaser will not acquire any securities of the Company, enter into any
business combination transaction involving the Company, or solicit proxies with
respect to stock of the Company.
OTHER MATTERS
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 involving the Company, 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. Any plans or proposals relating thereto will be subject to the terms
of the Stockholder Agreement and the other agreements contemplated by the Stock
Purchase Agreement, as applicable. Subject to the provisions of the Stock
Purchase Agreement and the Stockholder Agreement, the Purchaser and its
affiliates reserve the right to purchase, following consummation or termination
of the Offer, additional shares from the Company, in the open market or
otherwise. Any additional purchases of Shares could be at a price greater or
less than the price to be paid for Shares in the Offer.
28
<PAGE>
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 license
or regulatory 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 "Other 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.
In order for the President to exercise his or her 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
interests exercising control might take action that threatens to impair the
national security and (ii) that provisions of law other than the Exon-Florio
Amendment 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 or she may take action for such time as he or she 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.
29
<PAGE>
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 5
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. 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 negotiations continue. 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 New
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.
30
<PAGE>
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 New 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
sale 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. The Korean approval process typically takes up to ninety
days from the date the approval application is filed with the BOK.
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 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
31
<PAGE>
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 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, Salomon Brothers will receive an initial fee of $100,000, will
receive an additional fee of $1,400,000 upon consummation of the Offer or the
purchase of any New Issue Shares, and will receive additional fees equal to
0.5% of amounts paid or liabilities assumed by the Purchaser in connection with
the Letter of Credit Agreement or any subsequent acquisition of more than 50%
of the voting securities of the Company by the Purchaser, less certain fees
previously paid and subject to certain limitations. The Purchaser will also
reimburse the Dealer Manager for out-of-pocket expenses, including reasonable
attorneys' fees, and the Dealer Manager will be indemnified against certain
liabilities in connection with the Offer, including certain liabilities under
the federal securities laws.
The Purchaser has retained MacKenzie Partners, Inc. to act as the Information
Agent and Citibank, N.A. 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
$15,000 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
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.
32
<PAGE>
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 with the 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).
Samsung Electronics Co., Ltd.
March 6, 1995
33
<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. Except as otherwise
indicated, all of the persons listed below are citizens of the Republic of
Korea.
<TABLE>
<CAPTION>
NAME AND BUSINESS ADDRESS PRINCIPAL OCCUPATION OR EMPLOYMENT
------------------------- ----------------------------------
<C> <C> <S>
1. Kwang-Ho Kim Vice Chairman and Chief Executive Officer since
Samsung Electronics Co., Ltd. January 1995; President and Chief Executive
11th Floor Samsung Main Building Officer from March 1990 to December 1994.
250 Taepyung-Ro 2 Ka
Chung-Ku, Seoul, Korea
2. Suek Namgoong President since December 1994 of Telecommunication
Samsung Electronics Co., Ltd. & Systems Business; Non-employee Director from
7th Floor Samsung Main Building February 1994 to December 1994; President and
250 Taepyung-Ro 2 Ka Chief Executive Officer from September 1993 to
Chung-Ku, Seoul, Korea present of Samsung Data Systems, Ltd.; President
of Korea PC Telecom Ltd. from February 1992 to
September 1993; Executive Vice President of
Hyundai Electronics Industries, Ltd. from January
1986 to February 1991.
3. Young Soo Kim Executive Vice President since February 1993;
Samsung Electronics Co., Ltd. Executive Vice President and Chief Executive
11th Floor Samsung Main Building Officer from November 1988 to January 1993.
250 Taepyung-Ro 2 Ka
Chung-Ku, Seoul, Korea
(Citizen of the United States)
4. Yoon Woo Lee Executive Vice President and Chief Executive
Samsung Electronics Co., Ltd. Officer since January 1994; Executive Vice
San #24 Nongseo-Ri, President from March 1992 to December 1993; Senior
Kiheung-Eup, Yongin-Gun, Executive Managing Director from July 1989 to
Kyungki-Do, Korea February 1992.
5. Bon-Guk Koo Executive Vice President since March 1993; Senior
Samsung Electronics Co., Ltd. Executive Managing Director from March 1990 to
416 Maetan-3 Dong Paldal-Gu February 1993.
Suwon City, Kyungki-Do, Korea
6. Hai-Min Lee Executive Vice President since March 1993; Senior
Samsung Electronics Co., Ltd. Executive Managing Director from March 1990 to
416 Maetan-3 Dong Paldal-Gu February 1993.
Suwon City, Kyungki-Do, Korea
7. Myeong Sub Son Executive Vice President since January 1994;
Samsung Electronics Co., Ltd. Senior Executive Managing Director from March 1990
84-11 Namdaemun-Ro 5-Ka, to December 1993.
Chung-Ku, Seoul, Korea
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
NAME AND BUSINESS ADDRESS PRINCIPAL OCCUPATION OR EMPLOYMENT
------------------------- ----------------------------------
<C> <C> <S>
8. Wook Sun Executive Vice President since January 1994;
Samsung Electronics Co., Ltd. Senior Executive Managing Director from November
11th Floor Samsung Main Building 1993 to December 1994; Senior Executive Managing
250 Taepyung-Ro 2 Ka Director of Samsung Electro Mechanics Co., Ltd.
Chung-Ku, Seoul, Korea from March 1990 through October 1993.
9. Hyeon-Gon Kim Executive Vice President since January 1995;
Samsung Electronics Co., Ltd. Senior Executive Managing Director from March 1991
10th Floor Samsung Main Building to December 1994; Senior Managing Director from
250 Taepyung-Ro 2 Ka March 1987 to February 1991.
Chung-Ku, Seoul, Korea
10. Geun Sik Noh Executive Vice President since January 1995;
Samsung Electronics Co., Ltd. Senior Executive Managing Director from March 1989
Joong-Ang Daily News Building 7 to December 1994.
Soonwha-Dong, Chung Ku
Seoul, Korea
11. Hee Dong Yoo Senior Executive Managing Director since March
Samsung Electronics Co., Ltd. 1990.
416 Maetan-3 Dong Paldal-Ku
Suwon City, Kyungki-Do, Korea
12. Bo-Soon Song Senior Executive Managing Director of the
Samsung Electronics America, Inc. Purchaser and Chief Executive Officer of Samsung
105 Challenger Road Electronics America, Inc. since January 1995;
Ridgefield Park, NJ 07660 Senior Managing Director of Samsung Electronics
America, Inc. from March 1992 to December 1994;
Director of Samsung Electronics America, Inc. from
July 1991 to February 1992; Acting Director from
March 1989 to June 1991.
13. Nobyung Park Senior Managing Director since January 1995;
Samsung Electronics Co., Ltd. Director from March 1993 to December 1994; Acting
416 Maetan Dong Kwansun-Ku Director from March 1990 to February 1993.
Suwon City, Kyungki-Do, Korea
</TABLE>
35
<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:
CITIBANK, N.A.
By Mail: By Facsimile Transmission: By Hand:
Citibank N.A. (For Eligible Citibank, N.A.
c/o Citicorp Data Institutions Only) Corporate Trust Window
Distribution, Inc. (201) 262-3240 111 Wall Street, 5th Floor
P.O.Box 7072 New York, New York
Paramus, New Jersey 07653
By Overnight Courier: Confirm by Telephone: By Telex:
Citibank, N.A. (800) 422-2066 (710) 990-4964
c/o Citicorp Data Answer Back: CDDI PARA
Distribution, Inc.
404 Sette Drive
Paramus, New Jersey 07652
----------------
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 OF 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:
[LOGO OF SALOMON BROTHERS INC]
Seven World Trade Center
New York, New York 10048
(212) 783-5581
(Call Collect)
<PAGE>
EXHIBIT 99(a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(Including the Associated Rights)
OF
AST RESEARCH, INC.
AT
$22.00 NET PER SHARE
PURSUANT TO THE OFFER TO PURCHASE DATED MARCH 6, 1995
OF
SAMSUNG ELECTRONICS CO., LTD.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON THURSDAY, APRIL 20, 1995, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
CITIBANK, N.A.
By Mail: By Facsimile Transmission: By Hand:
Citibank, N.A. (For Eligible Citibank, N.A.
c/o Citicorp Data Institutions Only) Corporate Trust Window
Distribution, Inc. (201) 262-3240 111 Wall Street,
P.O. Box 7072 5th Floor New York, New York
Paramus, New Jersey 07653
By Overnight Courier: Confirm by Telephone: By Telex:
Citibank, N.A. (800) 422-2066 (710) 990-4964
c/o Citicorp Data Answer Back: CDDI PARA
Distribution, Inc.
404 Sette Drive
Paramus, New Jersey 07652
--------------
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN ONE LISTED ABOVE
DOES NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER OF TRANSMITTAL
IN THE APPROPRIATE SPACE PROVIDED THEREFOR AND COMPLETE THE SUBSTITUTE FORM W-9
SET FORTH BELOW.
THE INSTRUCTIONS ACCOMPANYING 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 are to be
forwarded herewith or, unless an Agent's Message (as defined in the Offer to
Purchase) is utilized, if delivery is to be made by book-entry transfer to the
account maintained by the Depositary at The Depository Trust Company, the
Midwest Securities Trust Company, or the Philadelphia Depository Trust Company
(individually, a "Book-Entry Transfer Facility" and collectively, the "Book-
Entry Transfer Facilities") pursuant to the procedures set forth in Section 2
of the Offer to Purchase. Stockholders whose certificates are not immediately
available or who cannot deliver their certificates or deliver confirmation of
the book-entry transfer of their Shares (as defined below) into the
Depositary's account at a Book-Entry Transfer Facility ("Book-Entry
Confirmation") and all other documents required hereby to the Depositary on or
prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase)
must tender their Shares according to the guaranteed delivery procedures set
forth in Section 2 of the Offer to Purchase. See Instruction 2. Delivery of
documents to a Book-Entry Transfer Facility does not constitute delivery to the
Depositary.
<PAGE>
[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution: _____________________________________________
Check box of Book-Entry Transfer Facility:
[_]The Depository Trust Company
[_]Midwest Securities Trust Company
[_]Philadelphia Depository Trust Company
Account Number _____________________________________________________________
Transaction Code Number ____________________________________________________
[_]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 Owner(s): ____________________________________________
Window Ticket Number (if any): _____________________________________________
Date of Execution of Notice of Guaranteed Delivery: ________________________
Name of Institution that Guaranteed Delivery: ______________________________
If Delivered by Book-Entry Transfer, Check box of Book-Entry Transfer
Facility:
[_]The Depository Trust Company
[_]Midwest Securities Trust Company
[_]Philadelphia Depository Trust Company
Account Number _____________________________________________________________
Transaction Code Number ____________________________________________________
DESCRIPTION OF SHARES TENDERED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE(S) TENDERED
(PLEASE FILL IN, IF BLANK) (ATTACH ADDITIONAL LIST IF NECESSARY)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TOTAL NUMBER OF
CERTIFICATE SHARES REPRESENTED NUMBER OF
NUMBER(S)* BY CERTIFICATE(S) SHARES TENDERED**
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
TOTAL SHARES
</TABLE>
- --------------------------------------------------------------------------------
* Need not be completed by stockholders tendering by book-entry
transfer.
** Unless otherwise indicated, it will be assumed that all Shares
being delivered to the Depositary are being tendered. See
Instruction 4.
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ CAREFULLY THE ACCOMPANYING INSTRUCTIONS.
GENTLEMEN AND LADIES:
The undersigned hereby tenders to Samsung Electronics Co., Ltd., a Korean
corporation (the "Purchaser"), the above described shares of Common Stock, par
value $.01 per share (the "Common Stock"), of AST Research, Inc., a Delaware
corporation (the "Company"), and the associated Rights, as defined in the Offer
to Purchase (collectively, the "Shares"), pursuant to the Purchaser's offer to
purchase up to 5,820,000 of the outstanding Shares upon the terms and subject
to the conditions set forth in the Offer to Purchase dated March 6, 1995 (the
"Offer to Purchase"), receipt of which is hereby acknowledged, and in this
Letter of Transmittal (which together constitute the "Offer"), at the purchase
price of $22.00 per Share, net to the tendering stockholder in cash.
<PAGE>
Subject to, and effective upon, acceptance for payment of the Shares tendered
herewith in accordance with the terms and subject to the conditions of the
Offer, 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 (and any and all other Shares or other
securities issued or issuable in respect thereof on or after March 6, 1995) and
irrevocably constitutes and appoints the Depositary the true and lawful agent
and attorney-in-fact of the undersigned with respect to such Shares (and any
such other Shares or securities) 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 any such other Shares or
securities), or transfer ownership of such Shares (and any such other Shares or
securities) on the account books maintained by a Book-Entry Transfer Facility,
together in either such case with all accompanying evidences of transfer and
authenticity, to or upon the order of the Purchaser upon receipt by the
Depositary, as the undersigned's agent, of the purchase price (adjusted, if
appropriate, as provided in the Offer to Purchase), (b) present such Shares
(and any such other Shares or securities) 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 any such other Shares or securities),
all in accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints each designee of the Purchaser as
the attorney-in-fact and proxy of the undersigned, each with full power of
substitution, to vote in such manner as each such attorney and proxy or his
substitute shall in his sole discretion deem proper, and otherwise act
(including pursuant to written consent) with respect to all the Shares tendered
hereby which have been accepted for payment by the Purchaser prior to the time
of such vote or action (and any and all other Shares or securities issued or
issuable in respect thereof on or after March 6, 1995), which the undersigned
is entitled to vote at any meeting of stockholders (whether annual or special
and whether or not an adjourned meeting) of the Company, or consent in lieu of
any such meeting, or otherwise. This proxy is coupled with an interest in the
Company and in the Shares and is irrevocable and is granted in consideration
of, and is effective upon, the deposit by the Purchaser with the Depositary of
the purchase price for such Shares in accordance with the terms of the Offer.
Such acceptance for payment shall revoke all prior proxies granted by the
undersigned at any time with respect to such Shares (and any such other Shares
or other securities) and no subsequent proxies will be given (and if given will
be deemed not to be effective) with respect thereto by the undersigned.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby (and any and all other Shares or other securities issued or issuable in
respect thereof on or after March 6, 1995) and that, when the same are accepted
for payment by the Purchaser, the Purchaser will acquire good and unencumbered
title thereto, free and clear of all liens, restrictions, charges and
encumbrances and the same will not be subject to any adverse claim. The
undersigned, upon request, will 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 tendered hereby (and
any and all such other Shares or other securities).
All authority herein conferred or agreed to be conferred in this Letter of
Transmittal shall not be affected by, and shall survive, the death or
incapacity of the undersigned and any obligation of the undersigned hereunder
shall be binding upon the successors, assigns, heirs, executors, administrators
and legal representatives 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 in Section 2 of 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 understands that if more than 5,820,000 Shares are validly
tendered prior to the expiration of the Offer and not validly withdrawn in
accordance with Section 3 of the Offer to Purchase, Shares so tendered and not
validly withdrawn shall be accepted for payment on a pro rata basis according
to the number of Shares validly tendered and not withdrawn by the Expiration
Date (with appropriate adjustments to avoid the purchase of fractional Shares).
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or any certificates for
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 certificates for
Shares not tendered or accepted for payment (and accompanying documents, as
appropriate) to the undersigned at the address shown below the undersigned's
signature. In the event that both the Special Delivery Instructions and the
Special Payment Instructions are completed, please issue the check for the
purchase price and/or any certificates for Shares not tendered or accepted for
payment in the name of, and deliver said check and/or return such certificates
to the person or persons so indicated. Stockholders delivering Shares by book-
entry transfer may request that any Shares not accepted for payment be returned
by crediting such account maintained at a Book-Entry Transfer Facility as such
stockholder may designate by making an appropriate entry under "Special Payment
Instructions." 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 the Shares so tendered.
<PAGE>
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 To be completed ONLY if
certificates for Shares not certificates for Shares not
tendered or not purchased and/or tendered or not purchased and/or
the check for the purchase price of the check for the purchase price of
Shares purchased are to be issued Shares purchased are to be sent to
in the name of someone other than someone other than the undersigned,
the undersigned, or if Shares or to the undersigned at an address
delivered by book-entry which are other than that shown above.
not purchased are to be returned by
credit to an account maintained at
a Book-Entry Transfer Facility
other than that designated above.
Issue check and/or certificate to:
Name _______________________________
(Please Print)
Issue check and/or certificate to:
Address ____________________________
Name _______________________________
(Please Print) ------------------------------------
(Include Zip Code)
Address ____________________________
------------------------------------
------------------------------------ (Tax Identification or Social
(Include Zip Code) Security Number)
------------------------------------ (See Substitute Form W-9 on Reverse
(Tax Identification or Social Side)
Security Number)
[_] Credit unpurchased Shares
delivered by book-entry transfer
to the Book-Entry Transfer
Facility account set forth below.
Check appropriate box.
[_] The Depository Trust Company
[_] Midwest Securities Trust Company
[_] Philadelphia Depository Trust
Company
------------------------------
(Account Number)
<PAGE>
SIGN HERE
(COMPLETE SUBSTITUTE FORM W-9 ON REVERSE)
X...........................................................
X...........................................................
SIGNATURE(S) OF OWNER(S)
Dated: .............................................. , 1995
(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 trustees, executors,
administrators, guardians, attorneys-in-fact, agents,
officers of corporations or others acting in a fiduciary or
representative capacity, please provide the following
information. See Instruction 5.)
Name(s).....................................................
......................................................
(PLEASE PRINT)
Capacity (Full Title).......................................
(See Instruction 5)
Address.....................................................
......................................................
(INCLUDE ZIP CODE)
Area Code and Telephone Number..............................
Tax Identification or
Social Security No..........................................
(COMPLETE SUBSTITUTE FORM W-9 ON REVERSE)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature........................................
Name........................................................
(PLEASE PRINT)
Title.......................................................
Name of Firm................................................
Address.....................................................
......................................................
(INCLUDE ZIP CODE)
Area Code and Telephone Number..............................
Dated: .............................................. , 1995
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required (i) if this Letter of Transmittal is signed by the
registered holder of the Shares (which term, for purposes of this document,
shall include any participant in a Book-Entry Transfer Facility whose name
appears on a security position listing as the owner of Shares) tendered
herewith, unless such holder has completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on
the reverse hereof, or (ii) if such Shares are tendered for the account of a
member firm of a registered national securities exchange or a member of the
National Association of Securities Dealers, Inc. or by a commercial bank or
trust company having an office, branch or agency in the United States
(collectively, "Eligible Institutions"). In all other cases, all signatures on
this Letter of Transmittal must be guaranteed by an Eligible Institution. See
Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of
Transmittal is to be completed by stockholders either if certificates are to be
forwarded herewith or if tenders of Shares are to be made pursuant to the
procedures for delivery by book-entry transfer set forth in Section 2 of the
Offer to Purchase. Certificates for all physically tendered Shares, or any
Book-Entry Confirmation of Shares, as the case may be, as well as a properly
completed and duly executed Letter of Transmittal (or facsimile thereof),
unless an Agent's Message (as defined in the Offer to Purchase) is utilized,
and any other documents required by this Letter of Transmittal, must be
received by the Depositary at one of its addresses set forth herein on or prior
to the Expiration Date (as defined in Section 1 of the Offer to Purchase).
Stockholders whose certificates for Shares are not immediately available or who
cannot deliver their certificates and all other required documents to the
Depositary on or prior to the Expiration Date may tender their Shares by
properly completing and duly executing the Notice of Guaranteed Delivery
pursuant to the guaranteed delivery procedure set forth in Section 2 of the
Offer to Purchase. Pursuant to such procedure, (i) such tender must be made by
or through an Eligible Institution, (ii) a properly completed and duly executed
Notice of Guaranteed Delivery, substantially in the form provided by the
Purchaser, must be received by the Depositary prior to the Expiration Date, and
(iii) the certificates for all physically tendered Shares or Book-Entry
Confirmation of Shares, as the case may be, together with a properly completed
and duly executed Letter of Transmittal (or facsimile thereof), unless an
Agent's Message (as defined in the Offer to Purchase) is utilized, and any
other documents required by this Letter of Transmittal, must be received by the
Depositary within five Nasdaq National Market System trading days after the
date of execution of such Notice of Guaranteed Delivery, all as provided in
Section 2 of the Offer to Purchase.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE CERTIFICATE FOR
SHARES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH A BOOK-
ENTRY TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER
AND, EXCEPT AS OTHERWISE PROVIDED IN THIS INSTRUCTION 2, 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 INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO INSURE TIMELY
DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution
of this Letter of Transmittal (or facsimile thereof), waive any right to
receive any notice of the acceptance of their Shares for payment.
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
signed schedule attached hereto.
4. PARTIAL TENDERS. (Not applicable to stockholders who tender by book-entry
transfer.) If fewer than all the Shares evidenced by any certificate submitted
are to be tendered, fill in the number of Shares which are to be tendered in
the box entitled "Number of Shares Tendered." In such case, new certificate(s)
for the remainder of the Shares that were evidenced by your old certificate(s)
will be sent to you, unless otherwise provided in the appropriate box on this
Letter of Transmittal, as soon as practicable after the Expiration Date. 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 exactly with the name(s) as
written on the face of the certificate(s) without alteration, enlargement or
any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more joint
owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares are registered in different names on several
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 or any certificates or stock powers are 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 such person's authority so to act must be submitted.
<PAGE>
When this Letter of Transmittal is signed by the registered owner(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment or certificates for Shares
not tendered or purchased are to be issued to a person other than the
registered owner(s). Signatures on 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
owner(s) of the Shares listed, the certificates must be endorsed or accompanied
by appropriate stock powers, in either case signed exactly as the name or names
of the registered owner or owners appear on the certificates. Signatures on
such certificates or stock powers must be guaranteed by an Eligible
Institution.
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, the
Purchaser will pay or cause to be paid any stock transfer taxes with respect to
the transfer and sale of purchased Shares to it or its order pursuant to the
Offer. If payment of the purchase price is to be made to, or if certificates
for Shares not tendered or purchased are to be registered in the name of, any
person other than the registered holder, or if tendered certificates are
registered in the name of any person other than the person(s) signing this
Letter of Transmittal, the amount of any stock transfer taxes (whether imposed
on the registered holder or such person) payable on account of the transfer to
such person will be deducted from the purchase price unless satisfactory
evidence of the payment of such taxes or exemption therefrom is submitted.
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 a check and/or certificates
for unpurchased Shares are to be issued in the name of a person other than the
signer of this Letter of Transmittal or if a check is to be sent and/or such
certificates are to be returned to someone other than the signer of this Letter
of Transmittal or to 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 maintained at a Book-Entry Transfer Facility as such
stockholder may designate hereon. If no such instructions are given, such
Shares not purchased will be returned by crediting the account at the Book-
Entry Transfer Facility designated above.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance may
be directed to, or additional copies of the Offer to Purchase and this Letter
of Transmittal may be obtained from, the Information Agent or the Dealer
Manager at their respective addresses set forth below or from your broker,
dealer, commercial bank or trust company.
9. WAIVER OF CONDITIONS. Subject to the terms of the Stock Purchase Agreement
(as defined in the Offer to Purchase), the conditions of the Offer 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, in the case of any Shares tendered.
10. SUBSTITUTE FORM W-9. The tendering stockholder is required to provide the
Depositary with a correct Taxpayer Identification Number ("TIN") on Substitute
Form W-9 which is provided under "Important Tax Information" below, and to
certify whether the stockholder is subject to backup withholding of Federal
income tax. If a tendering stockholder is subject to backup withholding, the
stockholder must cross out item (2) of the Certification box of the Substitute
Form W-9. Failure to provide the information on the Substitute Form W-9 may
subject the tendering stockholder to 31% Federal income tax withholding on the
payment of the purchase price. If the tendering stockholder has not been issued
a TIN and has applied for a number or intends to apply for a number in the near
future, he or she should write "Applied For" in the space provided for the TIN
in Part I, and sign and date the Substitute Form W-9. If "Applied For" is
written in Part I and the Depositary is not provided with a TIN within 60 days,
the Depositary will withhold 31% on all payments of the purchase price until a
TIN is provided to the Depositary.
11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s)
representing Shares or Rights has been lost, destroyed or stolen, the
stockholder should promptly notify the Depositary. The stockholder will then be
instructed as to the steps that must be taken in order to replace the
certificate(s). This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost or destroyed certificates
have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF), TOGETHER WITH
CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED
DOCUMENTS, MUST BE RECEIVED BY THE DEPOSITARY, OR THE NOTICE OF GUARANTEED
DELIVERY MUST BE RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE EXPIRATION
DATE.
<PAGE>
IMPORTANT TAX INFORMATION
Under Federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary with such
stockholder's correct TIN on Substitute Form W-9 below. If such stockholder is
an individual, the TIN is his social security number. If a tendering
stockholder is subject to backup withholding, he must cross out item (2) of the
Certification box on the Substitute Form W-9. If the Depositary is not provided
with the correct TIN, the stockholder may be subject to a $50 penalty imposed
by the Internal Revenue Service. In addition, payments that are made to such
stockholder with respect to Shares purchased pursuant to the Offer may be
subject to backup withholding.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that stockholder must submit a statement, signed under penalties of
perjury, attesting to that individual's exempt status. Such statements may be
obtained from the Depositary. Exempt stockholders, other than foreign
individuals, should furnish their TIN, write "Exempt" on the face of the
Substitute Form W-9 below and sign, date and return the Substitute Form W-9 to
the Depositary. See the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons 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.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder with
respect to Shares purchased pursuant to the Offer, the stockholder is required
to notify the Depositary of his correct TIN by completing the form below
certifying that the TIN provided on the Substitute Form W-9 is correct (or that
such stockholder is awaiting a TIN).
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security number
or employer identification number of the record owner of the Shares. If the
Shares are in more than one name or are not in the name of the actual owner,
consult the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional guidelines on which number to
report. If the tendering stockholder has not been issued a TIN and has applied
for a number or intends to apply for a number in the near future, he should
write "Applied For" in the space provided for in the TIN in Part I, and sign
and date the Substitute Form W-9. If "Applied For" is written in Part I and the
Depositary is not provided with a TIN within 60 days, the Depositary will
withhold 31% on all payments of the purchase price until a TIN is provided to
the Depositary.
<PAGE>
PAYER'S NAME: CITIBANK N.A.
PART I--PLEASE PROVIDE SOCIAL SECURITY NUMBER
SUBSTITUTE FORM W-9 YOUR TIN IN THE BOX AT OR_____________________
RIGHT AND CERTIFY BY EMPLOYER
SIGNING AND DATING IDENTIFICATION NUMBER
BELOW.
Department of the Treasury (If awaiting TIN write
Internal Revenue Service "Applied For")
-------------------------------------------------
Payer's Request for Taxpayer PART II--For Payees exempt from backup
Identification Number (TIN) withholding, see the enclosed Guidelines for
Certification of Taxpayer Identification Number
on Substitute Form W-9 and complete as
instructed therein.
- --------------------------------------------------------------------------------
CERTIFICATION--Under the penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification
Number (or a Taxpayer Identification Number has not been issued to me)
and either (a) I have mailed or delivered an application to receive a
Taxpayer Identification Number to the appropriate Internal Revenue
Service ("IRS") or Social Security Administration office or (b) I intend
to mail or deliver an application in the near future. (I understand that
if I do not provide a Taxpayer Identification Number within (60) days,
31% of all reportable payments made to me thereafter will be withheld
until I provide a number); and
(2) I am not subject to backup withholding either because I have not been
notified by the IRS that I am subject to backup withholding as a result
of a failure to report all interest or dividends, or 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 subject to backup withholding because
of underreporting interest 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 item (2). (Also see instructions in the
enclosed Guidelines.)
- --------------------------------------------------------------------------------
SIGNATURE DATE 1995
-------------------- ----------------
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.
The Information Agent for the Offer is:
[LOGO OF 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:
[LOGO OF SALOMON BROTHERS INC]
Seven World Trade Center
New York, New York 10048
(212) 783-5581
(Call Collect)
<PAGE>
EXHIBIT 99(a)(3)
[LOGO OF SALOMON BROTHERS INC]
------------------------------
[LOGO OF SALOMON BROTHERS]
-----------------------
OFFER TO PURCHASE FOR CASH
UP TO 5,820,000 SHARES OF COMMON STOCK
(Including the Associated Rights)
OF
AST RESEARCH, INC.
AT
$22.00 NET PER SHARE
BY
SAMSUNG ELECTRONICS CO., LTD.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY,
APRIL 20, 1995, UNLESS THE OFFER IS EXTENDED.
March 6, 1995
To Brokers, Dealers, Commercial Banks,
Trust Companies And Other Nominees:
We have been engaged to act as Dealer Manager in connection with the offer by
Samsung Electronics Co., Ltd., a Korean corporation (the "Purchaser"), to
purchase up to 5,820,000 outstanding shares of Common Stock, par value $.01 per
share (including the Rights, as defined in the Offer to Purchase)
(collectively, the "Shares"), of AST Research, Inc., a Delaware corporation
(the "Company"), at $22.00 per Share, net to the seller in cash, upon the terms
and subject to the conditions set forth in the Purchaser's Offer to Purchase
(the "Offer to Purchase") dated March 6, 1995 and the related Letter of
Transmittal (which together constitute the "Offer").
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, 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, DATED
AS OF FEBRUARY 27, 1995, BETWEEN THE PURCHASER AND COMPANY, INCLUDING RECEIPT
BY THE PURCHASER AND THE COMPANY OF GOVERNMENTAL AND REGULATORY APPROVALS AND
APPROVAL OF THE STOCKHOLDER PROPOSAL (AS DEFINED IN THE OFFER TO PURCHASE) BY
THE STOCKHOLDERS OF THE COMPANY. THE OFFER IS NOT CONDITIONED ON ANY MINIMUM
NUMBER OF SHARES BEING TENDERED.
Enclosed herewith are copies of the following documents:
1. Offer to Purchase dated March 6, 1995;
2. Letter of Transmittal to be used by stockholders of the Company in
accepting the Offer;
3. Letter which may be sent to your clients for whose account you hold
Shares in your name or in the name of your nominees, with space provided
for obtaining such clients' instructions with regard to the Offer;
4. Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares are not immediately available or time will not
permit all required documents to reach the Depositary prior to the
Expiration Date (as defined in the Offer to Purchase) or if the procedures
for book-entry transfer cannot be completed on a timely basis;
<PAGE>
5. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9; and
6. Return envelope addressed to Citibank, N.A., as Depositary.
The Purchaser will not pay any fees or commissions to any broker or dealer or
other person (other than the Dealer Manager, the Depositary and the Information
Agent as described in the Offer to Purchase) in connection with the
solicitation of tenders of Shares pursuant to the Offer. However, the Purchaser
will reimburse you for customary mailing and handling expenses incurred by you
in forwarding the enclosed materials to your clients.
The Purchaser will pay or cause to be paid any Stock transfer taxes payable
on the transfer of Shares to it, except as otherwise provided in Instruction 6
of the enclosed Letter of Transmittal.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, APRIL 20, 1995,
UNLESS THE OFFER IS EXTENDED.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal and any other required documents should be sent
to the Depositary and certificates representing the tendered Shares should be
delivered, or such Shares should be tendered by book-entry transfer, all in
accordance with the Instructions set forth in the Letter of Transmittal and the
Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their certificates or other required documents prior to the expiration
of the Offer, a tender may be effected by following the guaranteed delivery
procedures specified under Section 2, "Procedure for Tendering Shares" in the
Offer to Purchase.
Any inquiries you may have with respect to the Offer should be addressed to
Salomon Brothers Inc or MacKenzie Partners, Inc., at their respective addresses
and telephone numbers set forth on the back cover page of the Offer to
Purchase.
Additional copies of the enclosed materials may be obtained from the
undersigned, Salomon Brothers Inc, at (212) 783-5581, or by calling the
Information Agent, MacKenzie Partners, Inc., at (800) 322-2885.
Very truly yours,
SALOMON BROTHERS INC
Enclosures
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY PERSON AS AN AGENT OF THE PURCHASER, THE DEPOSITARY, THE INFORMATION AGENT
OR THE DEALER MANAGER OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT
OR MAKE ANY STATEMENTS ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER
OTHER THAN THE DOCUMENTS ENCLOSED AND THE STATEMENTS CONTAINED THEREIN.
<PAGE>
EXHIBIT 99(a)(4)
OFFER TO PURCHASE FOR CASH
UP TO 5,820,000 SHARES OF COMMON STOCK
(Including the Associated Rights)
OF
AST RESEARCH, INC.
AT
$22.00 NET PER SHARE
BY
SAMSUNG ELECTRONICS CO., INC.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON THURSDAY, APRIL 20, 1995, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration is an Offer to Purchase dated March 6, 1995
and the related Letter of Transmittal (which together constitute the "Offer")
relating to an offer by Samsung Electronics Co., Ltd. , a Korean corporation
(the "Purchaser"), to purchase up to 5,820,000 of the outstanding shares of
Common Stock, par value $.01 per share (including the associated Rights, as
defined in the Offer to Purchase) (collectively, the "Shares"), of AST
Research, Inc., a Delaware corporation (the "Company"), at a purchase price of
$22.00 per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer. We are the holder of record of Shares held
by us for your account. The Letter of Transmittal is furnished to you for your
information only and cannot be used by you to tender Shares. A tender for such
Shares can be made only by us as the holder of record and pursuant to your
instructions.
We request instructions as to whether you wish to tender any or all of such
Shares held by us for your account, pursuant to the terms and conditions set
forth in the Offer.
Your attention is invited to the following:
1. The tender price is $22.00 per Share, net to the seller in cash.
2. This Offer is being made pursuant to the terms of a Stock Purchase
Agreement, dated as of February 27, 1995 ("Stock Purchase Agreement"),
between Company and the Purchaser. Upon the consummation of the
transactions contemplated by the Stock Purchase Agreement, including the
Offer, the Purchaser will own 40.25% of the total number of shares of the
Company's Common Stock then outstanding. Upon the terms and subject to the
conditions of the Offer, if more than 5,820,000 Shares are validly tendered
prior to the expiration of the Offer and not properly withdrawn in
accordance with Section 3 of the Offer to Purchase, such Shares will be
accepted for payment on a pro rata basis (with appropriate adjustments to
avoid the purchase of fractional Shares) according to the number of Shares
validly tendered and not properly withdrawn by the expiration of the Offer.
3. The Offer, proration period and withdrawal rights will expire at 12:00
Midnight, New York time, on Thursday, April 20, 1995, unless extended.
4. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, 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 RECEIPT BY THE PURCHASER AND THE COMPANY OF
GOVERNMENTAL AND REGULATORY APPROVALS AND APPROVAL OF THE STOCKHOLDER
PROPOSAL (AS DEFINED IN THE OFFER TO PURCHASE) BY THE STOCKHOLDERS OF THE
COMPANY. THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED.
5. Stockholders who tender Shares will not be obligated to pay brokerage
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares by the Purchaser
pursuant to the Offer.
If you wish to have us tender any or all of your Shares, please complete,
sign and return the form set forth on the reverse side of this letter. Your
instructions to us should be forwarded in ample time to permit us to submit a
tender on your behalf prior to the expiration of the Offer.
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER
TO PURCHASE UP TO 5,820,000 SHARES OF COMMON STOCK
(Including the Associated Rights)
OF
AST RESEARCH, INC.
BY
SAMSUNG ELECTRONICS CO., LTD.
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase of Samsung Electronics Co., Inc. (the "Purchaser") dated March 6,
1995 and the related Letter of Transmittal relating to shares of Common Stock,
par value $.01 per share (including the associated Rights, as defined in the
Offer to Purchase) (collectively, the "Shares"), of AST Research, Inc.
This will instruct you to tender to the Purchaser the number of Shares
indicated below held by you for the account of the undersigned, on the terms
and subject to the conditions set forth in the Offer to Purchase and Letter of
Transmittal.
SIGN HERE
NUMBER OF SHARES TO BE TENDERED:* ______________________________________
_____ SHARES ______________________________________
Signature(s)
_____________________________________
Account Number: _____________________ _____________________________________
Please print name(s) and address(es)
here
Dated: ________________________, 1995 _____________________________________
Tax Identification or Social Security
Number
- --------
* Unless otherwise indicated, it will be assumed that all of your Shares held
by us for your account are to be tendered.
2
<PAGE>
EXHIBIT 99(a)(5)
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
(Including the Associated Rights)
OF
AST RESEARCH, INC.
TO
SAMSUNG ELECTRONICS CO., LTD.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, APRIL 20, 1995,
UNLESS THE OFFER IS EXTENDED.
This form, or one substantially equivalent hereto, must be used to accept the
Offer (as defined below) if certificates representing shares of Common Stock,
par value $.01 per share (including the associated Rights, as defined in the
Offer to Purchase) (collectively, the "Shares"), of AST Research, Inc., a
Delaware corporation, are not immediately available, if the procedure for book-
entry transfer cannot be completed on a timely basis, or if time will not
permit all required documents to reach the Depositary prior to the Expiration
Date (as defined in Section 1 of the Offer to Purchase). Such form may be
delivered by hand or transmitted by telegram, telex, facsimile transmission or
mail to the Depositary. See Section 2 of the Offer to Purchase.
The Depositary for the Offer is:
CITIBANK, N.A.
By Mail: By Facsimile Transmission: By Hand:
Citibank, N.A. (For Eligible Citibank, N.A.
c/o Citicorp Data Institutions Only) Corporate Trust Window
Distribution, Inc. (201) 262-3240 111 Wall Street,
P.O. Box 7072 5th Floor New York, New York
Paramus, New Jersey 07653
By Overnight Courier: Confirm by Telephone: By Telex:
Citibank, N.A. (800) 422-2066 (710) 990-4964
c/o Citicorp Data Answer Back: CDDI PARA
Distribution, Inc.
404 Sette Drive
Paramus, New Jersey 07652
----------------
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
Ladies and Gentlemen:
The undersigned hereby tenders to Samsung Electronics Co., Ltd., a Korean
corporation, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated March 6, 1995 and the related Letter of Transmittal
(which together constitute the "Offer"), receipt of which is hereby
acknowledged, Shares (indicated below) pursuant to the guaranteed
delivery procedures set forth in Section 2 of the Offer to Purchase.
<PAGE>
Certificate No(s). Name(s) of Record Holder(s) _________
(if available) ______________________
Number of Shares:____________________ _____________________________________
_____________________________________ _____________________________________
Check ONE box if Shares will be Please Type or Print
tendered by book-entry transfer:
Address _____________________________
[_]The Depository Trust Company _____________________________________
[_]Midwest Securities Trust Company Zip Code
[_]Philadelphia Depository Trust Company
Area Code and Tel. No. ______________
Account Number ______________________ Signature(s)_________________________
Dated ________________________ , 1995 _____________________________________
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member firm of a registered national securities exchange
or a member of the National Association of Securities Dealers, Inc. or a
commercial bank or trust company having an office, branch or agency in the
United States, (a) represents that the above named person(s) "own(s)" the
Shares tendered hereby within the meaning of Rule 14e-4 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), (b)
represents that such tender of Shares complies with Rule 14e-4 under the
Exchange Act, (c) guarantees delivery to the Depositary, at one of its
addresses set forth above, of certificates representing the Shares tendered
hereby in proper form for transfer, or confirmation of book-entry transfer of
such Shares into the Depositary's accounts at The Depository Trust Company,
Midwest Securities Trust Company or Philadelphia Depository Trust Company, in
each case with delivery of a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), and any other required documents, within
five Nasdaq National Market trading days after the date hereof.
_____________________________________ _____________________________________
Name of Firm Authorized Signature
_____________________________________ _____________________________________
Address Title
_____________________________________ Name ________________________________
Zip Code Please Type or Print
Area Code and Tel. No._______________ Date _________________________ , 1995
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE.
CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
2
<PAGE>
EXHIBIT 99(a)(6)
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 or incompetent
for a designated ward, person(3)
minor, 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
</TABLE>
- ---------------------------------------------------
- ---------------------------------------------------
<TABLE>
<CAPTION>
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF --
- ---------------------------------------------------
<S> <C>
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 an 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 nonresident 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. Payers must generally withhold 31% of taxable interest,
dividend, and certain other payments to a payee who does not furnish a tax-
payer identification number to a payer. Certain penalties 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)
NEWS RELEASE
MACKENZIE
PARTNERS, INC.
156 Fifth Avenue
New York, NY 10010
212 929-5500
FAX 212 929-0308
CONTACT:
Stanley J. Kay
MacKenzie Partners, Inc.
(212) 929-5940
FOR IMMEDIATE RELEASE:
- ----------------------
SAMSUNG COMMENCES AST TENDER OFFER
IRVINE, CA, March 6, 1995 -- Samsung Electronics Co., Ltd. today commenced
its previously announced tender offer for the purchase of 5.82 million shares
(approximately 18% of the currently outstanding shares) of common stock of AST
Research, Inc. (NASDAQ: ASTA) at a price of $22 per share. The offer is being
made pursuant to the previously announced agreement between Samsung and AST
under which Samsung will purchase an aggregate of 40.25% of AST. In addition to
the shares to be purchased in the tender offer, Samsung will purchase from AST
6.44 million newly issued shares of common stock (approximately 19.9% of the
currently outstanding shares) at a price of $19.50 per share, and concurrently
with the acceptance of the shares for purchase in the tender offer, Samsung will
purchase from AST 5.63 million newly issued shares of common stock at $22 per
share so that its aggregate ownership, after completion of all of the purchases,
is approximately 40.25%. The closing of each of the purchases, other than the
19.9% investment, is subject to approval by the stockholders of AST at a special
meeting currently expected to be held in May 1995. Samsung may elect to close
the purchase of the 19.9% interest at any time, subject to regulatory approval
and certain other conditions.
The offer, proration period and withdrawal rights will expire at 12:00
midnight, New York City time, on Thursday, April 20, 1995, unless Samsung elects
(subject to the terms of its agreement with AST) to extend the offer. Samsung
anticipates that the time required to obtain necessary regulatory and
stockholder approvals will extend beyond April 20, 1995 and accordingly expects
that it will extend the offer from time to time until all necessary approvals
have been obtained. Salomon Brothers Inc is acting as dealer manager in
connection with the offer. MacKenzie Partners, Inc. is acting as information
agent.
###
<PAGE>
EXHIBIT 99(a)(8)
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 March 6,
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 5,820,000 Shares of Common Stock
(Including the Associated Rights)
of
AST Research, Inc.
at
$22.00 Net Per Share
by
Samsung Electronics Co., Ltd.
Samsung Electronics Co., Ltd., a Korean corporation (the "Purchaser"), is
offering to purchase up to 5,820,000 shares of Common Stock, par value $0.01 per
share (including the associated Rights, as defined in the Offer to Purchase)
(collectively, the "Shares"), of AST Research, Inc., a Delaware corporation (the
"Company"), at $22.00 per Share, net to the seller in cash, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated March 6, 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
THURSDAY, APRIL 20, 1995, UNLESS THE OFFER IS EXTENDED.
The Offer is being made pursuant to the terms of a Stock Purchase Agreement
dated as of February 27, 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, the
Purchaser's interest in the Company will equal approximately 40.25% of the total
number of shares of the Company's Common Stock then outstanding. The purpose of
the Offer is to acquire a portion of this interest in the Company as part of the
establishment of a strategic relationship between the Purchaser and the Company.
The Offer is conditioned upon, among other things, 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 receipt by the
<PAGE>
Purchaser and the Company of governmental and regulatory approvals and approval
of the Stockholder Proposal (as defined in the Offer to Purchase) by the
stockholders of the Company. The Offer is not conditioned on any minimum number
of Shares being tendered.
The Board of Directors of the Company has unanimously approved the Stock
Purchase Agreement and the transactions contemplated thereby, including the
Offer, and recommends that stockholders accept the Offer and tender their Shares
pursuant thereto.
The Purchaser is unable to predict the amount of time necessary to obtain the
governmental and regulatory approvals required to complete the Offer and the
Stock Acquisition (as defined in the Offer to Purchase). It is anticipated,
however, that the time necessary to obtain such governmental and regulatory
approvals will extend beyond the Expiration Date, and the Purchaser expects that
it will extend the Offer from time to time until such approvals have been
received.
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 a Book-Entry 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
Thursday, April 20, 1995, unless and until the Purchaser shall have extended the
period of time during which the Offer is open, 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 period of time during which the Offer is open
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 period of time during which the Offer is open 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
<PAGE>
applicable regulation or practice. During any such extension, all Shares
previously tendered and not withdrawn will remain subject to the Offer, subject
to the right of a tendering stockholder to withdraw such stockholder's Shares.
If more than 5,820,000 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 would 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 promptly as
practicable, and expects to be able to announce the final results of proration
within eight NASDAQ 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 pursuant to the Offer will be irrevocable, except
that Shares tendered pursuant to the Offer 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 May, 5, 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 having tendered the Shares to
be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder of the Shares to be withdrawn, if different from the name of
the person who tendered the 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 guaranteed by
an Eligible Institution. If Shares have been tendered pursuant to the procedures
for book-entry transfers as set forth in Section 2 of the Offer to Purchase, any
notice of withdrawal must also specify the name and number of the account at the
appropriate Book-Entry Transfer Facility to be credited with the withdrawn
Shares and otherwise comply with such Book-Entry Transfer Facility's procedures.
Withdrawals of tenders of Shares may not be rescinded, and any Shares properly
withdrawn will thereafter be deemed not validly tendered for any purposes of the
Offer. However, withdrawn Shares may be retendered by again following one of 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 notices 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
<PAGE>
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:
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
Seven World Trade Center
New York, New York 10048
(212) 783-5581
(Call Collect)
March 6, 1995
<PAGE>
EXHIBIT 99(c)(1)
AST RESEARCH, INC.
16215 Alton Parkway
Irvine, California 92718
December 21, 1994
Samsung Electronics Co., Ltd.
Samsung Main Building
250, 2-Ga, Taopyung-Ro, Chung-Ku
Seoul, Korea
Re: Confidentiality Agreement
--------------------------
Ladies and Gentlemen:
In connection with a possible transaction and potential future
business collaborations (a "Transaction") involving AST Research, Inc. ("AST")
and Samsung Electronics Co., Ltd. ("SEC"), each party has agreed to provide
certain information relating to it and to its operating divisions and affiliates
to the other party and to the other party's Representatives (as defined below).
The party providing such information is referred to herein as the "Providing
Party" and the party receiving such information is referred to herein as the
"Recipient." As a condition to such information being furnished to the
Recipient and certain of the Recipient's directors, officers, employees, agents,
investment bankers, advisors, attorneys and accountants (collectively,
"Representatives"), the Recipient agrees, and agrees to cause its
Representatives, to treat in accordance with the provisions of this letter any
information concerning the Providing Party (whether prepared and delivered by or
on behalf of the Providing Party or otherwise, and irrespective of the form of
communication) that is furnished by the Providing Party or any of its
Representatives to the Recipient or its Representatives before, on or after the
date of this letter (the "Confidential Information"). Further, each party
agrees to take or abstain from taking certain other actions herein set forth.
The term "Confidential Information" shall be deemed to include,
without limitation, all notes, analyses, compilations, studies, interpretations
or other documents prepared by the Recipient or its Representatives which
contain, reflect or are based upon, in whole or in part, the information
furnished to the Recipient or its Representatives by or on behalf of the
Providing Party pursuant
<PAGE>
Samsung Electronics Co., Ltd.
December 21, 1994
Page 2
hereto. The term "Confidential Information" does not include information which
(i) was or becomes generally available to the public other than as a result of a
disclosure by the Recipient or its Representatives, or (ii) was known to the
Recipient or its Representatives prior to being furnished to the Recipient by or
on behalf of the Providing Party, provided that the source of such information
was not known to the Recipient or any such Representative to be bound by a
confidentiality agreement with or other contractual, legal or fiduciary
obligation of confidentiality to the Providing Party or any other party with
respect to such information and the Recipient or any such Representative had no
reasonable basis for concluding that such source may be so bound, or (iii) was
or becomes available to the Recipient on a non-confidential basis from a source
other than the Providing Party, provided that such source was not known by the
Recipient to be bound by a confidentiality agreement with or other contractual,
legal or fiduciary obligation of confidentiality to the Providing Party or any
other party with respect to such information and the Recipient had no reasonable
basis for concluding that such source may be so bound.
The Recipient hereby agrees that the Confidential Information will be
kept confidential and will be used solely for the purpose of evaluating the
proposed Transaction (such evaluation being hereafter referred to as the
"Evaluation"), and that the Recipient and its Representatives will not disclose
any of the Confidential Information in any manner whatsoever; provided, however,
-------- -------
that (i) the Recipient may make any disclosure of such information to which the
Providing Party gives its prior written consent and (ii) any of such information
may and shall only be disclosed to the parties' respective Representatives who
need to know such information for the sole purpose of the Evaluation. The
Recipient further agrees to take such steps to protect and maintain the security
and confidentiality of the Confidential Information as the Recipient would in
the case of its own confidential business information. The Recipient shall
direct its Representatives to keep such information confidential and shall be
responsible for the unauthorized release of any Confidential Information
received by it or its Representatives from the Providing Party or any of its
Representatives or any copy of any such Confidential Information.
Neither party will, without the prior written consent of the other
party, and will direct its respective Representatives not to, disclose to any
person (unless such disclosure is legally compelled, subject to the provisions
of the
<PAGE>
Samsung Electronics Co., Ltd.
December 21, 1994
Page 3
following paragraph) either the fact that the Confidential Information has been
made available to it or that it is performing the Evaluation or that discussions
or negotiations are taking place concerning the possible Transaction referenced
above or the status of any of the foregoing. Such facts shall be deemed to be
included in the Confidential Information for all purposes of this Agreement.
The term "person" as used in this letter shall be broadly interpreted to
include, without limitation, any corporation, entity, trust, group, company,
partnership or individual.
If the Recipient or its Representatives are requested or required (by
oral questions, interrogatories, requests for information or documents,
subpoena, civil investigative demand or similar process) to disclose any
Confidential Information, the Recipient will promptly notify the Providing Party
of such request or requirement so that the Providing Party may seek to avoid or
minimize the required disclosure and/or to obtain an appropriate protective
order or other appropriate relief to ensure that any information so disclosed is
maintained in confidence to the maximum extent possible by the agency or other
person receiving the disclosure, or, in the sole discretion of the Providing
Party, to waive compliance with the provisions of this letter agreement. In any
such case, the Recipient will each use its reasonable efforts in cooperation
with the Providing Party or otherwise to avoid or minimize the required
disclosure and/or to obtain such protective order or other relief. If, in the
absence of a protective order or the receipt of a waiver hereunder, the
Recipient or its Representatives are compelled to disclose the Confidential
Information or else stand liable for contempt or suffer other censure or
penalty, the Recipient or such Representatives will disclose only so much of the
Confidential Information to the party compelling disclosure as such party
believes in good faith on the basis of advice of counsel is required by law.
The Recipient shall give the Providing Party prior notice of the Confidential
Information it believes it is required to disclose. Without limitation of the
foregoing, the Recipient expressly confirms and agrees that (a) no public
disclosure with respect to any discussions or negotiations taking place as
referred to herein is now required by reasons of securities laws or similar
requirements related to general disclosure and in the event either party
determines that such disclosure is required in the future, no such disclosures
shall be made unless and until such party consults with the other party
regarding the necessity and form of any such disclosure; and (b) no government
or regulatory filings shall be made with respect to the possible Transaction
contemplated
<PAGE>
Samsung Electronics Co., Ltd.
December 21, 1994
Page 4
hereby, except in either case pursuant to mutual agreement of the parties with
respect to the making and the form and content of any such disclosure or
filings.
Until the earlier of (a) the execution by the parties hereto of a
definitive agreement regarding the Transaction or (b) one year from the date
this letter agreement is executed, neither party nor their respective
Representatives who have knowledge of the Transaction will take any action to
solicit employment of officers, directors or other key employees of the other
party or the other party's subsidiaries so long as they are employed by the
other party or its subsidiaries, without the prior written consent of the other
party. The parties agree that the restrictions set forth in the immediately
preceding sentence shall not apply to any solicitation directed at the public in
general in publications available to the public in general or any contact
initiated by any such officer, director or key employee.
Until the earlier of (a) the execution by the parties hereto of a
definitive agreement regarding the Transaction or (b) one year from the date of
this Agreement, neither SEC nor any of its affiliates (including any person or
entity directly or indirectly, through one or more intermediaries, controlling
SEC or controlled by or under common control with SEC) will, either alone or as
part of a "group" (within the meaning of the Securities Exchange Act of 1934, as
amended), without the prior written consent of AST, (i) directly or indirectly
purchase, acquire or cause to be acquired, or offer or agree to so purchase or
acquire, any securities, rights to purchase securities or rights to vote
securities, or any assets, of AST; (ii) enter into, or offer or agree to enter
into, an acquisition or other business combination transaction involving AST;
(iii) make, or in any way participate in, any "solicitation" of "proxies" (as
such terms are used in the rules of the Securities and Exchange Commission) to
vote, or seek to advise or influence any person with respect to the voting of,
any voting securities of, AST; or (iv) propose any of the foregoing.
The parties hereby acknowledge that they are aware and will advise
their respective Representatives that the United States and Korean Securities
laws prohibit any person who has received from an issuer material, nonpublic
information concerning the matters which are the subject of this letter
agreement from purchasing or selling securities of such issuer or from
communicating such
<PAGE>
Samsung Electronics Co., Ltd.
December 21, 1994
Page 5
information to any other person under circumstances in which it is reasonably
foreseeable that such person is likely to purchase or sell such securities.
All documents and other materials in the possession of the Recipient
or its Representatives which embody any of the written Confidential Information
regardless of whether such document or material was prepared by the Providing
Party or by the Recipient or its Representatives will be returned to the
Providing Party immediately upon the request of the Providing Party, and except
as required by law or judicial or investigative process no copies, extracts or
other reproductions shall be retained by the Recipient or its Representatives;
provided, however, that all documents, memoranda, notes and other writings
- -------- -------
whatsoever prepared by the Recipient or its Representatives based on the
Confidential Information received from the Providing Party or its
Representatives, and any and all copies thereof in such party's possession shall
be returned to the Providing Party, or, at the option of the Recipient,
destroyed and such destruction shall be certified in writing to the Providing
Party by an authorized officer supervising such destruction.
Although the Providing Party agrees to provide in good faith
information which it believes to be reliable and relevant for the purpose of the
Evaluation, the Recipient acknowledges that neither the Providing Party nor any
of its Representatives makes any representation or warranty as to the accuracy
or completeness of any information which is so provided, and neither the
Providing Party nor any of its Representatives shall have any liability to the
Recipient, any of its Representatives or any other person resulting from the use
of such information by the Recipient or its Representatives. Only those
representations or warranties which are made in a final definitive agreement
regarding the Transaction, when, as and if executed and subject to such
limitations and restrictions as may be specified therein, will have any legal
effect. For the purpose of this paragraph "information" is deemed to include
all information furnished by or on behalf of the Providing Party to the
Recipient or its Representatives, whether or not Confidential Information as
defined herein.
The parties further acknowledge and agree that they each reserve the
right in their sole and absolute discretion, to reject any or all proposals and
to terminate discussions and negotiations with, or directly or indirectly
involving, the other party at any time. Unless and until a definite agreement
regarding the
<PAGE>
Samsung Electronics Co., Ltd.
December 21, 1994
Page 6
Transaction has been executed by the parties hereto, neither party will be under
any legal obligation of any kind with respect to the Transaction by virtue of
this letter or any other written or oral expression with respect to such
Transaction.
No failure or delay in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any right, power or privilege hereunder.
All questions and communications regarding either party or the
Transaction will be submitted or directed only to the persons designated by such
party. Except as set forth in the preceding sentence, each party agrees that
neither it nor any of its respective Representatives shall contact any other
officers, directors or employees of the other party directly without the consent
of the other party.
The parties hereby acknowledge the importance of maintaining the
confidentiality of the Confidential Information and the possibility and
discussions of a Transaction between them. Therefore, the parties agree that
money damages, which the parties agree would be substantial, would not be a
sufficient remedy for any breach or the material breach of this letter agreement
by either party or their respective Representatives, and the aggrieved party
shall be entitled, in addition to money damages, to specific performance and
injunctive relief and any other appropriate equitable remedies for any such
breach. Each party agrees not to oppose the granting of such equitable relief,
and to waive, and to cause its Representatives to waive, any requirement for the
securing or posting of any bond in connection with such remedy. Such remedies
shall not be deemed to be the exclusive remedies for a breach of this letter
agreement by either of us or our Representatives but shall be in addition to all
other remedies available at law or in equity to the parties hereto.
This letter agreement shall be governed by, and construed in
accordance with the laws of the State of California applicable to agreements
made and to be performed within such state. The parties hereto agree to submit
to the exclusive jurisdiction of the state courts and United States federal
courts sitting in Los Angeles, California for any actions, suits or proceedings
arising out of or relating to this letter agreement and the transactions
contemplated hereby (and
<PAGE>
Samsung Electronics Co., Ltd.
December 21, 1994
Page 7
each party agrees not to commence any action, suit or proceeding relating
thereto except in such courts).
If you are in agreement with the foregoing, please so indicate by
signing and returning one copy of this letter, whereupon this letter will
constitute our agreement with respect to the subject matter hereof.
Very truly yours,
AST RESEARCH, INC.
By: /s/ BRUCE C. EDWARDS
---------------------------------
Name: Bruce C. Edwards
Title: Executive Vice President
Accepted and Agreed to
this 21st day of December, 1994.
SAMSUNG ELECTRONICS CO., LTD.
By: /s/ MICHAEL MIN-JEONG YANG
---------------------------
Name: Michael Min-Jeong Yang
Title: Senior Manager
<PAGE>
EXHIBIT 99(c)(2)
STOCK PURCHASE AGREEMENT
DATED AS OF FEBRUARY 27, 1995
BY AND BETWEEN
AST RESEARCH, INC.
AND
SAMSUNG ELECTRONICS CO., LTD.
<PAGE>
CONTENTS
<TABLE>
<S> <C>
ARTICLE 1 DEFINITIONS 1
1.1 Definitions 1
ARTICLE 2 SALE AND PURCHASE OF NEW ISSUE SHARES 6
2.1 Sale and Purchase of the Shares 6
2.2 Closing and Deliveries 6
2.2.1 Deliveries by the Purchaser 6
2.2.2 Deliveries by the Company 7
2.3 Sale and Purchase Only of the First Issuance Shares 7
ARTICLE 3 THE OFFER 8
3.1 Commencement of the Offer 8
3.2 Changes to the Offer 8
3.3 Purchase 9
3.4 Schedule 14D-1 and other Offer Documents 9
3.5 Actions by the Company 10
3.5.1 Approval and Recommendation of Offer 10
3.5.2 Schedule 14D-9 10
3.5.3 Stockholder Information 11
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY 11
4.1 Organization and Standing; Articles and Bylaws 11
4.2 Authority 12
4.3 Capital Stock 12
4.4 Governmental Consents 13
4.5 Compliance with Applicable Law 13
4.6 No Default 14
4.7 Reports and Financial Statements 14
4.8 Absence of Changes 15
4.9 Litigation 15
4.10 Tax Matters 15
4.11 Registration Rights 15
4.12 Offering 15
4.13 Insurance 15
4.14 Certain Transactions 16
4.15 Employees and ERISA 16
4.16 Intellectual Property 16
4.17 Environmental Laws and Regulations 17
4.18 Brokers 17
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER 18
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
5.1 Organization, Good Standing, and Qualification 18
5.2 Authority 18
5.3 No Violation 18
5.4 Governmental Consents 18
5.5 Securities Laws 19
5.5.1 Investment Intent 19
5.5.2 Sophistication 19
5.6 Offer and Proxy Materials 19
5.7 Brokers 19
5.8 Ownership of Voting Stock 20
5.9 Financing 20
ARTICLE 6 COVENANTS 20
6.1 Proxy Solicitation and Stockholder Approval 20
6.1.1 Proxy Materials 20
6.1.2 Stockholders' Meeting 21
6.2 Conduct of Business of the Company 21
6.3 Other Potential Bidders 23
6.4 Access to Information; Confidentiality 24
6.4.1 Access 24
6.4.2 Confidentiality 24
6.5 Additional Agreements; Reasonable Efforts 25
6.6 HSR and Exon-Florio 25
6.7 Public Announcements 25
6.8 Amendment to Rights Agreement 25
6.9 IBM License 25
6.10 Notification of Certain Matters 26
6.11 Disclosure 26
ARTICLE 7 CONDITIONS TO PURCHASE AND SALE OF NEW ISSUE
SHARES 26
7.1 Conditions to Obligations of the Purchaser and the
Company 26
7.1.1 No Prohibition 26
7.1.2 Regulatory Compliance 26
7.1.3 Exon-Florio 27
7.2 Conditions to Obligations of the Purchaser 27
7.2.1 Board Representation 27
7.2.2 Performance 27
7.2.3 Stockholder Approval 27
7.2.4 Amended and Restated Certificate and Amended
Bylaws 27
7.2.5 Amendment to Rights Agreement 27
7.2.6 Founder's Agreement Waiver 27
7.2.7 Third Quarter Results 28
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
7.2.8 Closing Deliveries 28
7.2.9 Representations and Warranties True 28
7.2.10 Certificate 28
7.3 Conditions to Obligations of the Company 28
7.3.1 Conditions Applicable to Issuance and Sale
of All New Issue Shares 28
7.3.2 Conditions Applicable Only to Issuance and
Sale of Second Issuance Shares 29
ARTICLE 8 TERMINATION 30
8.1 Termination by the Company 30
8.2 Termination by the Purchaser 30
8.3 Termination by the Purchaser or the Company 30
8.4 Effect of Termination 31
ARTICLE 9 MISCELLANEOUS 31
9.1 Survival of Representations and Warranties 31
9.2 Governing Law; Consent to Jurisdiction 31
9.3 Export Controls 31
9.4 Expenses 32
9.5 Notices 32
9.6 Waiver 33
9.7 The Purchaser Subsidiaries; Successors, Assignment,
and Parties in Interest 33
9.8 Entire Agreement 34
9.9 Amendment 34
9.10 Severability 34
9.11 Cumulation of Remedies 34
9.12 Fair Construction 34
9.13 Headings; References 35
9.14 Counterparts 35
</TABLE>
iii
<PAGE>
LIST OF EXHIBITS
Exhibit A Amended and Restated Certificate of Incorporation
Exhibit B Amended Bylaws
Exhibit C Amendment to Rights Agreement
Exhibit D Founder's Agreement Waiver
Exhibit E Letter of Credit Agreement
Exhibit F Registration Rights Agreement
Exhibit G Stockholder Agreement
iv
<PAGE>
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "AGREEMENT") is entered into as of
February 27, 1995 by and between Samsung Electronics Co., Ltd., a Korean
corporation (the "PURCHASER") and AST Research, Inc., a Delaware corporation
(the "COMPANY").
The Purchaser desires, directly and/or through a wholly owned subsidiary, to
purchase from the Company certain newly issued shares of the Company's Common
Stock, and to offer to purchase from existing stockholders of the Company
certain 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.
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 AND RESTATED CERTIFICATE" means the Amended and Restated Certificate
of Incorporation of the Company in the form of Exhibit A to be adopted by the
Company prior to the Purchaser's purchase of the Second Issuance Shares or Offer
Shares.
"AMENDED BYLAWS" means the Bylaws of the Company in the form of Exhibit B, to
be adopted by the Company prior to the Purchaser's purchase of the Second
Issuance Shares or Offer Shares.
"AMENDMENT TO RIGHTS AGREEMENT" means the First Amendment to Rights Agreement
in the form of Exhibit C to be effected by the Company within three (3) days of
the execution and delivery of this Agreement.
"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.
<PAGE>
"BUSINESS DAY" means any day other than a Saturday, a Sunday, or a bank
holiday in the State of California.
"CFIUS" means the Committee on Foreign Investment in the United States, as
established through Executive Order No. 11858 in connection with Exon-Florio.
"CLOSING" means the closing of the purchase and sale of the First Issuance
Shares and Second Issuance Shares pursuant to Section 2.1, and each separate
closing, if any, of the purchase and sale of the First Issuance Shares and the
Second Issuance Shares pursuant to Section 2.3.
"COMMERCIAL AGREEMENTS" means definitive agreements between the Company and
the Purchaser implementing the arrangements contemplated by the Strategic
Alliance Agreement.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means Common Stock of the Company, par value $.01 per share.
"CONFIDENTIALITY AGREEMENT" means that certain Confidentiality Agreement
between the Purchaser and the Company, dated December 21, 1994.
"ENVIRONMENTAL LAWS" has the meaning set forth in Section 4.17.
"ENVIRONMENTAL CLAIM" 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 and Exchange Act of 1934, as amended.
"EXON-FLORIO" means Section 721 of the Exon-Florio Amendment to the Defense
Production Act of 1950.
"FIRST ISSUANCE PURCHASE PRICE" means Nineteen Dollars and Fifty Cents
($19.50) per First Issuance Share.
"FIRST ISSUANCE SHARES" means 6,440,000 shares of Common Stock, to be newly
issued and sold by the Company to the Purchaser at the Closing pursuant to
Article 2.
"FOUNDER'S AGREEMENT WAIVER" means the Amendment to and Clarification of
Employment Agreement in the form of Exhibit D delivered by the Company's Chief
Executive Officer concurrently with the execution and delivery of this
Agreement.
2
<PAGE>
"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, or regulatory agency or entity or subdivision thereof with
jurisdiction over the Company or the Purchaser or any of their subsidiaries or
any of the transactions contemplated by this Agreement.
"HAZARDOUS MATERIAL" means any substance: (i) the presence of which requires
investigation or remediation under any federal, state or local statute,
regulation, ordinance, order, action policy or common law; or (ii) which is
defined and regulated as a "hazardous waste," "hazardous substance," pollutant
or contaminant under any federal, state or local statute, regulation, rule or
ordinance or amendments thereto; or (iii) which is toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic, mutagenic, or otherwise
hazardous and is regulated by any governmental authority, agency, department,
commission, board, agency or instrumentality of the United States, the State in
which such substance is located or any political subdivision thereof; or (iv)
the presence of which poses or threatens to pose a hazard to the health or
safety of persons or the environment on or about the property on which such
substance is located or adjacent properties.
"HSR" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
"INSTRUMENTS" has the meaning set forth in Section 4.6.
"INTELLECTUAL PROPERTY" has the meaning set forth in Section 4.16.
"INVESTMENT AGREEMENTS" means the Letter of Credit Agreement, the
Registration Rights Agreement, and the Stockholder Agreement.
"LETTER OF CREDIT AGREEMENT" means the Letter of Credit Agreement, in
substantially the form of Exhibit E, to be entered into by and between the
Purchaser and the Company at the Closing of the purchase and sale of the Second
Issuance Shares.
"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 on the business,
assets, results of operations, properties, or financial or operating condition
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 any of the other Transaction
Documents or consummate the transactions contemplated hereby or thereby.
"NEW ISSUE SHARES" means the First Issuance Shares and the Second Issuance
Shares.
3
<PAGE>
"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 Twenty-Two Dollars ($22.00) per share of Common Stock.
"OFFER SHARES" means those shares of Common Stock, if any, purchased by the
Purchaser pursuant to the Offer.
"OFFER TO PURCHASE" means the Purchaser's Offer to Purchase distributed to
the Company's stockholders in connection with the Offer.
"PERMITTED LIENS" means (i) Liens (other than Liens imposed under ERISA or
any Environmental Law or in connection with any Environmental Claim) for taxes
or other assessments or charges of Governmental Authorities that are not yet
delinquent or that are being contested in good faith by appropriate proceedings,
in each case, with respect to which adequate reserves or other appropriate
provisions are being maintained to the extent required by GAAP; (ii) statutory
Liens of landlords and mortgagees of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens (other than Liens imposed
under ERISA or any Environmental Law or in connection with any Environmental
Claim) imposed by law and created in the ordinary course of business for amounts
not yet more than 30 days overdue or which are being contested in good faith by
appropriate proceedings, in each case, with respect to which adequate reserves
or other appropriate provisions are being maintained to the extent required by
GAAP; (iii) leases or subleases, easements, rights-of-way, covenants, and
consents which do not interfere materially with the ordinary conduct of the
business of the Company or any of its subsidiaries or detract materially from
the value of the property to which they attach or materially impair the use
thereof to the Company and its subsidiaries; and (iv) Liens granted by the
Company or any of its subsidiaries to lenders pursuant to credit agreements in
existence on the date hereof.
"PROXY MATERIALS" has the meaning set forth in Section 6.1.
"PURCHASER INTEREST" means, as of any date, the percentage of the Total
Voting Power Beneficially Owned by the Purchaser and its Affiliates on such
date.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement, in
substantially the form of Exhibit F, to be entered into by and between the
Purchaser and the Company at the Closing.
"RIGHTS" has the meaning ascribed thereto in the Rights Agreement.
"RIGHTS AGREEMENT" means that certain Amended and Restated Rights Agreement
by and between the Company and American Stock Transfer and Trust Company dated
as of January 28, 1994 and any extension thereof and any comparable or similar
successor or replacement agreement.
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"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.
"SECOND ISSUANCE PURCHASE PRICE" means Twenty-Two Dollars ($22.00) per
Second Issuance Share.
"SECOND ISSUANCE SHARES" means 5,630,000 shares of Common Stock, or such
greater number of such shares as may be required such that, upon issuance
thereof to the Purchaser and together with the First Issuance Shares and the
number of Offer Shares actually purchased by the Purchaser, the Purchaser
Interest equals 40.25%, to be newly issued and sold by the Company to the
Purchaser at the Closing pursuant to Article 2.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARES" means issued and outstanding shares of Common Stock.
"STOCKHOLDER AGREEMENT" means the Stockholder Agreement, in substantially
the form of Exhibit G, to be entered into by and between the Purchaser and the
Company at the Closing.
"STOCKHOLDER PROPOSALS" means the issuance and sale to the Purchaser of the
Second Issuance Shares, the purchase by the Purchaser of the Offer Shares, the
amendments to the Company's Certificate of Incorporation to be effected by the
Amended and Restated Certificate, and the grant to the Purchaser of the rights
and the acceptance and performance by the Company of the restrictions and
obligations contained in the Stockholder Agreement, which actions shall be
described in the Proxy Materials and submitted to a vote of the Company's
stockholders as set forth in Section 6.1.
"STRATEGIC ALLIANCE AGREEMENT" means that certain Strategic Alliance
Agreement entered into by and between the Purchaser and the Company concurrently
with the execution and delivery hereof to set forth their mutual understanding
and agreement with respect to arrangements regarding component supply and joint
procurement, joint product development, cross licensing, employee exchange,
joint marketing, manufacturing, and other areas of technical collaboration.
"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.
"THIRD PARTY ACQUISITION" means (i) the acquisition by a Third Party of more
than twenty percent (20%) of the total assets of the Company or any of its
subsidiaries , (ii) the acquisition by a Third Party of twenty percent (20%) or
more of (a) the Shares or (b) the Total
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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 Investment Agreements, the
Strategic Alliance Agreement (except to the extent superseded by the Commercial
Agreements), the Commercial Agreements, the Offer Documents, the Schedule 14D-9,
the Amended and Restated Certificate, the Amended Bylaws, and the Amendment to
Rights Agreement, amendments thereof, and all schedules 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 NEW ISSUE SHARES
2.1. SALE AND PURCHASE OF THE SHARES.
Upon the terms and subject to satisfaction or waiver 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 First Issuance
Shares in exchange for the First Issuance Purchase Price and the Second Issuance
Shares in exchange for the Second Issuance Purchase Price. The Purchaser shall
pay the First Issuance Purchase Price and the Second Issuance Purchase Price 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, and subject to Section 2.3, the Closing of the purchase and sale of
the New Issue Shares shall take place on such date and at such time as may be
designated by the Purchaser within five (5) Business Days after the last to
occur of satisfaction or waiver of the conditions set forth in Sections 7.1.2,
7.1.3, 7.2.3 and 7.3.2(a). Such Closing (as well as any Closing under Section
2.3) shall occur at the offices of Gibson, Dunn & Crutcher, 4 Park Plaza, Suite
1700, Irvine, California, 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 but subject to Section 2.3, the Purchaser shall deliver to
the Company the following:
(a) the First Issuance Purchase Price;
(b) the Second Issuance Purchase Price;
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(c) the Investment Agreements, duly executed by the Purchaser;
(d) the Commercial Agreements, duly executed by the Purchaser;
and
(e) 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 but subject to Section 2.3, 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 First Issuance Shares and the Second
Issuance Shares;
(b) the Investment Agreements, duly executed by the Company;
(c) the Commercial Agreements, duly executed by the Company; and
(d) 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.
2.3. SALE AND PURCHASE ONLY OF THE FIRST ISSUANCE SHARES.
Notwithstanding anything herein to the contrary, subject to the last
sentence of this Section 2.3 and to the satisfaction or waiver of all of the
conditions set forth in Sections 7.1.1 through 7.1.3 and 7.3.1, the Purchaser
may elect to purchase from the Company, and the Company shall issue and sell to
the Purchaser, the First Issuance Shares prior to the Closing, if any, of the
purchase and sale of the Second Issuance Shares and whether or not the Offer
Conditions have been satisfied. In the event of such election by the Purchaser,
the Closing of such purchase and sale of the First Issuance Shares shall take
place on such date and at such time as the Purchaser shall specify not later
than five (5) Business Days after the later of the date the Purchaser delivers
notice to the Company of the election to purchase the First Issuance Shares
pursuant to this Section 2.3 or the date the conditions set forth in Sections
7.1.2 and 7.1.3 to the purchase and sale of the First Issuance Shares have been
satisfied or waived (or on such later date as may be specified in such notice).
By such election, the Purchaser shall be deemed to have waived the conditions
set forth in Sections 7.2.3 and 7.2.4 as conditions to the purchase and sale of
the First Issuance Shares. At such Closing the Purchaser shall pay only the
First Issuance Purchase Price and the Purchaser and the Company shall deliver
the Stockholder Agreement and the Registration Rights Agreement, but shall not
deliver the Letter of Credit Agreement or the Commercial Agreements. The
purchase by the Purchaser of the First Issuance Shares at such Closing shall not
preclude the subsequent purchase by the Purchaser of the Second Issuance Shares
at a subsequent Closing if the conditions thereto are satisfied or waived, and
at such subsequent Closing, the Purchaser shall pay the Second Issuance Purchase
Price and the Purchaser and the Company shall deliver the Letter of Credit
Agreement and the Commercial Agreements. If this Agreement has been terminated
in accordance with its terms, the Purchaser shall have no right to purchase any
of the New Issue Shares; provided, that if the Company terminates this Agreement
pursuant to and in accordance
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with the terms of the second sentence of Section 8.1 and, within fifteen (15)
days after such termination, the Company receives written notice from the
Purchaser of the Purchaser's election to purchase the First Issuance Shares,
then, on such day as the Purchaser may designate within 15 days following such
Purchaser notice (or such longer period, not to exceed 120 days from the date of
this Agreement, as is necessary for the Purchaser to receive all required
regulatory approval therefor) (i) the Company shall issue and sell and the
Purchaser shall purchase the First Issuance Shares in exchange for the First
Issuance Purchase Price and (ii) the Purchaser and the Company shall execute and
deliver to one another the Stockholder Agreement and the Registration Rights
Agreement, subject in each case only to the condition that there shall not have
been entered, promulgated, enforced or threatened by any Governmental Authority
a statute, rule, regulation, judgment, order, decree, injunction or other action
that prohibits, restrains or enjoins the purchase and sale of the First Issuance
Shares pursuant to this sentence, and the Company's obligations under Section
6.6 shall be applicable to such issuance and sale notwithstanding termination of
this Agreement.
ARTICLE 3.
THE OFFER
3.1. COMMENCEMENT OF THE OFFER.
Provided that this Agreement shall not have been terminated in accordance
with Article 8, 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 an offer (the "Offer") to purchase for the Offer Price up
to 5,820,000 Shares. The obligations of the Purchaser to accept for payment, and
pay for, any Offer Shares tendered pursuant to the Offer shall be subject only
to the condition that this Agreement shall not have been terminated and to the
satisfaction or waiver of the conditions set forth in Sections 7.1 and 7.2,
provided that, for purposes of this Section 3.1, the conditions set forth in
Section 7.1, in addition to applying to the New Issue Shares, shall be deemed to
apply to the Purchaser's purchase of the Offer Shares in the same manner as to
the purchase and sale of the New Issue Shares (the "OFFER CONDITIONS").
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) increase or
decrease the maximum number of Shares sought pursuant to the Offer, (iv) add to
or modify the Offer Conditions, (v) otherwise amend the Offer in any manner
adverse to the Company's stockholders or (vi) accept for payment or purchase any
Offer Shares prior to the date of the Closing of the purchase and sale of the
Second Issuance Shares. Subject to the terms and conditions thereof, the Offer
shall expire at midnight, New York City time, on the date that is forty-five
(45) days from the date the Offer is first published or sent to holders of
Shares; provided, however, that without the Company's consent, the Purchaser may
(A) extend the Offer, if at the scheduled expiration date of the Offer any of
the conditions to the Purchaser's obligation to accept for payment, and pay for,
the Offer Shares shall not have been satisfied or waived, until such time as
such conditions are satisfied or waived, (B) extend the Offer for any period
required by any rule, regulation, interpretation or position of the Commission
or the staff thereof applicable to the Offer
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and (C) extend the Offer for any reason on one or more occasions for an
aggregate period of not more than ten (10) Business Days beyond the latest
expiration date that would otherwise be permitted under clause (A) or (B) of
this sentence.
3.3. PURCHASE.
Provided that this Agreement shall not have been terminated in accordance
with Article 8, the Purchaser shall accept for payment, purchase, and pay for,
in accordance with the terms of the Offer, Shares validly tendered and not
withdrawn pursuant to the Offer at the earliest time following expiration of the
Offer that all Offer Conditions shall have been satisfied or waived by the
Purchaser in accordance with this Article 3. 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 (including without
limitation any action or inaction by the Purchaser) 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; provided that approval of the Stockholder Proposals
by the Company's stockholders is a condition to the Purchaser's purchase of the
Offer Shares that may only be waived jointly by both the Purchaser and the
Company. 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.
3.4. SCHEDULE 14D-1 AND OTHER OFFER DOCUMENTS.
As soon as practicable on the date the Offer is commenced, the Purchaser
shall file with the Commission a Tender Offer Statement on Schedule 14D-1
(together with all amendments and supplements thereto, the "Schedule 14D-1")
with respect to the Offer. The Schedule 14D-1 shall contain as an exhibit or
incorporate by reference the Offer to Purchase (or portions thereof) and form of
the related letter of transmittal and summary advertisement to be used in
connection with the Offer (which documents, together with any supplements
thereto or amendments thereof, are 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,
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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 file 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 the date hereof has, subject
to the terms and conditions set forth herein, (i) 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 New Issue Shares and other acquisitions of capital stock of
the Company not in violation of the Stockholder Agreement for purposes of
Section 203(a)(1) of the Delaware General Corporation Law, and (ii) 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 shall provide to the Purchaser a
copy of the written opinion of Merrill Lynch & Co. regarding the transactions
contemplated hereby.
3.5.2. Schedule 14D-9.
As soon as practicable after commencement of the Offer, the Company shall
(i) 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 recommendation described in
Section 3.5.1, and (ii) promptly mail the Schedule 14D-9 to the Company's
stockholders. The Purchaser and its counsel shall be given a reasonable
opportunity to review and comment on the Schedule 14D-9 prior to the filing
thereof with the Commission and its dissemination to the Company's stockholders.
The Company shall provide to the Purchaser and its counsel any comments that the
Purchaser 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
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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 and
its Affiliates, associates, agents and advisors shall 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; ARTICLES 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, 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) is
qualified, licensed or domesticated as a foreign corporation in all
jurisdictions where such qualification, license or domestication is required to
own and operate its properties and conduct its business in the manner and at the
places presently conducted; (ii) holds 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 its properties and to
conduct its business in the manner and at the places presently conducted; and
(iii) has full power and authority (corporate and other) to own, lease and
operate its properties and assets and to carry on its business 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,
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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 furnished the Purchaser with copies of its Certificate
of Incorporation, as amended to date, its Bylaws, as currently in effect, all
available minutes of meetings of the Board (including committees thereof) and
stockholders of the Company, all written consents executed by the Board
(including committees thereof) and stockholders of the Company, and the SEC
Reports. The documents so furnished are true, correct and complete copies of the
original documents, and 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.
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 (except that the Amended and Restated
Certificate is subject to approval by the Company's stockholders, which approval
will be obtained prior to the Closing, and except that the Company's
representations and warranties in this sentence regarding the Commercial
Agreements shall be deemed made only as of the Closing at which such Commercial
Agreements are to be executed and delivered). 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 200,000,000 shares of Common Stock and 1,000,000 shares of preferred
stock, par value $0.01 per share, of which 32,376,500 shares of Common Stock and
no shares of preferred stock were issued and outstanding as of January 27, 1995.
In addition, at such date 9,717,236 shares of Common Stock were reserved for
issuance upon exercise of options and warrants outstanding as of such date and
upon conversion of the LYONs and 500,000 shares of Preferred Stock were reserved
for issuance pursuant to the Rights Agreement. Since such date (i) no shares of
Common Stock have been issued except for subsequent issuance, if any, pursuant
to reservations, stock option agreements, employee benefit plans or the
conversion of LYONs, 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. The Company is not subject to
any obligation (contingent or otherwise) to purchase or otherwise acquire or
retire any of its securities other than the
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LYONs and warrants issued to directors prior to the date hereof. All of the
issued and outstanding securities of the Company have been duly authorized and
validly issued, are fully paid and nonassessable, 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 New
Issue Shares, or with respect to any future offer, sale or issuance of
securities by the Company or its stockholders, other than rights of the
Purchaser under the Stockholder Agreement. The New 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
nonassessable, and free of any Liens or restrictions (unless created by the
Purchaser or any of its Affiliates), other than restrictions under the
Stockholder Agreement or 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 by HSR and as may
be required under 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, (iv) stockholder
approval and execution and filing with the Delaware Secretary of State of the
Amended and Restated Certificate, and (v) where failure to obtain such Consent
would not 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 and the Transaction Documents to be executed, delivered, and performed
by the Company, the issuance and sale of the New Issue Shares, and the taking of
the other actions contemplated by this Agreement and the other Transaction
Documents to be executed, delivered and performed by the Company prior to the
date or dates as of which the representations and warranties herein are made or
deemed made, 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 (except
that the Amended and Restated Certificate is subject to approval by the
Company's stockholders, which approval will be obtained prior to the Closing).
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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. The execution, delivery and
performance of this Agreement and the Transaction Documents to be executed,
delivered, and performed by the Company, the issuance and sale of the New Issue
Shares, and the taking of any other action contemplated by this Agreement or the
Transaction Documents to be executed, delivered, and performed by the Company,
will not (i) result in any violation of or be in conflict with or constitute a
breach or default (with or without notice or lapse of time or both) under (a)
the Certificate of Incorporation or Bylaws of the Company (except that the
Amended and Restated Certificate is subject to approval by the Company's
stockholders, which approval will be obtained prior to the Closing of the
purchase and sale of the Second Issuance Shares) 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 Section 7.3.2(c) prior to the Closing of the purchase and sale of
the Second Issuance Shares.
4.7. REPORTS AND FINANCIAL STATEMENTS.
The Company's Annual Report on Form 10-K for the fiscal year ended July 2,
1994, the Company's definitive proxy statement relating to its annual meeting of
stockholders held October 27, 1994, and the Company's quarterly reports on Form
10-Q for quarters ended after July 2, 1994 (collectively, the "SEC Reports"),
complied when filed in all material respects with all applicable requirements of
the Securities Act and the Exchange Act. 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 of the Company
included in its Annual Report on Form 10-K referred to in the first sentence of
this Section 4.7 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 changes in financial position for the periods then
ended.
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4.8. ABSENCE OF CHANGES.
Except as and to the extent disclosed in the SEC Reports, since December 31,
1994, (i) none of the actions, events or circumstances listed in Section 6.2
(other than actions, events, or circumstances of the sort described in
subsections (a), (d), and (e) of Section 6.2 that have been disclosed in writing
by the Company to the Purchaser prior to the date hereof) has been taken or
occurred or exists; (ii) there has been no event or circumstance that would
reasonably be expected to result in a Material Adverse Effect; and (iii) there
has been no breach or default or event that with notice or lapse of time or both
would result in a breach or default under any material contract of the Company
or any of its subsidiaries, except as would not reasonably be expected to have a
Material Adverse Effect.
4.9. LITIGATION.
Except as disclosed in the SEC Reports, there are no actions, proceedings or
investigations pending against the Company or any of its subsidiaries before any
Governmental Authority (or, to the knowledge of the Company, any basis therefor
or threat thereof) which would reasonably be expected to have a Material Adverse
Effect.
4.10. TAX MATTERS.
The Company and its subsidiaries (i) have timely filed all tax returns that
are required to have been filed by them with all appropriate federal and
material state, county, local and foreign governmental agencies (and all such
returns are true and correct in all material respects), and (ii) timely paid or
made adequate provision for payment of all taxes shown on such returns to be
owed by them or which they are obligated to withhold from amounts owing to any
employee (including, but not limited to, social security taxes), creditor or
third party, except in each case as would not reasonably be expected to have a
Material Adverse Effect. Except as disclosed in the SEC Reports, there is no
pending or, to the Company's knowledge, threatened dispute with any taxing
authority relating to any of said returns which would reasonably be expected to
result in a Material Adverse Effect.
4.11. REGISTRATION RIGHTS.
Except as set forth in (i) the Registration Rights Agreement, (ii) Section
4(f) of the Tandy Note, (iii) Section 3.8 of the Indenture dated as of December
1, 1993 between the Company and First National Trust Association, as trustee,
and (iv) warrants issued to directors of the Company prior to the date of this
Agreement, 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 New 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 New 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
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customary for companies similarly situated as the Company and its subsidiaries
to insure. The Company and its subsidiaries have complied in all material
respects with all of their insurance policies and bonds.
4.14. CERTAIN TRANSACTIONS.
Except as set forth in the SEC Reports or as contemplated by 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 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. The Company is not aware that any 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 (as defined in ERISA
Section 3(3)) maintained or contributed to by the Company or any of its
subsidiaries that is subject to ERISA conforms in all material respects to, and
its administration is in conformity in all material respects with, all
applicable federal laws; no material liability under ERISA has been or is
expected to be incurred by the Company or any of its subsidiaries with respect
to any such 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 such plans; there is not in the
aggregate any accumulated funding deficiency with respect to such plans; and 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.
4.16. INTELLECTUAL PROPERTY.
The Company and each of its subsidiaries own or possess, or has the right to
use, the patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential
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information, systems or procedures), trademarks, service marks and trade names
(collectively, "Intellectual Property") to be employed by them in connection
with 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 the right to use
the Intellectual Property would reasonably be expected to have a Material
Adverse Effect. Except as disclosed in the SEC Reports, 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 of or conflict with asserted rights of others with respect to any
of the foregoing which, singly or in the aggregate, would reasonably be expected
to have a Material Adverse Effect. The unlicensed use of such Intellectual
Property in connection with the business and operations of the Company and its
subsidiaries 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.
4.17. ENVIRONMENTAL LAWS AND REGULATIONS.
Except as set forth in the SEC Reports, (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 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 are reasonably likely
to prevent or materially 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 not 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 & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Asia
Pacific Ventures 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 Company has provided to the Purchaser copies
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of the Company's engagement letters with Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated and Asia Pacific Ventures in connection with
the transactions contemplated by this Agreement.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Company as follows:
5.1. ORGANIZATION, GOOD STANDING, AND QUALIFICATION.
The Purchaser is a corporation duly incorporated, validly existing, and in
good standing under the laws of the Republic of Korea and has all necessary
power and authority under applicable law to own its property and to conduct its
business as now owned and conducted.
5.2. AUTHORITY.
The Purchaser has all requisite corporate power and authority to execute,
enter into and carry out the terms and conditions of this Agreement, each of the
other Transaction Documents to be executed and delivered by the Purchaser, and
all other agreements and instruments contemplated hereby and thereby, and to
perform its obligations hereunder and thereunder (except that the Purchaser's
representations and warranties in this sentence regarding the Commercial
Agreements shall be deemed made only as of the Closing at which such Commercial
Agreements are to be executed and delivered). This Agreement has been duly
executed and delivered by the Purchaser and is, and the other Transaction
Documents to be entered into by the Purchaser will be, when executed and
delivered by the Purchaser (and assuming this Agreement and such other
Transaction Documents to be entered into by the Company constitute legal, valid,
and binding obligations of the Company), legal, valid and binding obligations of
the Purchaser, enforceable in accordance with their respective terms, except
that the enforceability of this Agreement and the other Transaction Documents
that are contracts to which the Purchaser is or is expected to be party 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 or any of the other
Transaction Documents to be executed and delivered by the Purchaser, nor the
consummation of the transactions contemplated hereby or thereby, 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 ("Consent") is required on the part of the Purchaser in connection
with the transactions
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contemplated by this Agreement and the other Transaction Documents to which the
Purchaser is or is expected to be party, except (i) those required by HSR and as
may be required under 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 Purchaser.
5.5. SECURITIES LAWS.
5.5.1. Investment Intent.
The New 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 New 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 New
Issue Shares pursuant to this Agreement and can afford to sustain a total loss
on such investment, and has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of the
proposed investment and therefore has the capacity to protect its own interests
in connection with the purchase of the New 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 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 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.
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5.8. OWNERSHIP OF VOTING STOCK.
Neither the Purchaser or any of its Affiliates nor any person with whom the
Purchaser or any Affiliate of the Purchaser is acting (within the meaning of
Section 13(d)(3) of the Exchange Act) as a partnership, limited partnership,
syndicate or other group (within the meaning of Section 13(d)(3) of the Exchange
Act) for the purpose of acquiring, holding or disposing of securities issued by
the Company Beneficially Owns Voting Stock as of the date of this Agreement or
will, as of any Closing, Beneficially Own any Voting Stock or rights to acquire
Voting Stock of the Company other than the Common Stock to be purchased by the
Purchaser hereunder or pursuant to the Offer.
5.9. FINANCING.
The Purchaser has the funds, or has written commitments from responsible
financial institutions, to provide the funds necessary to consummate the Offer
and the transactions to occur at (and will have the same at the time of) the
Closing.
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 twenty (20) 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 not later than May 1, 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 be accurate and
shall not contain any 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 Purchaser and its
counsel shall be given an opportunity to review the Proxy Materials prior to the
filing thereof with the Commission and distribution thereof to the Company's
stockholders. The Company shall provide to the Purchaser and its counsel any
comments that the Company receives (directly or through its counsel) from the
Commission or its staff with respect to the Proxy Materials promptly after
receipt of such comments. The Proxy Materials (i) shall comply in all material
respects with applicable federal securities laws, and (ii) when first filed in
final form with the Commission and distributed to the Company's stockholders and
on the date of the special meeting of stockholders shall not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, except that no
representation is made by the Company with respect to information supplied by
the Purchaser for inclusion in the Proxy Materials. The Company shall thereafter
supplement or correct the Proxy Materials if and to the extent that they shall
have become false or misleading in any material respect, subject to correction
by the Purchaser of any information provided by it for use in the Proxy
Materials to the extent it shall be
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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 omitted therefrom or withdrawn or modified to the extent that the Board
determines by majority vote and in its good faith judgment, based as to legal
matters upon the written opinion of outside legal counsel, that it is required
to do so in the exercise of its fiduciary duties.
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 May 31, 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.
6.2. CONDUCT OF BUSINESS OF THE COMPANY.
Except as contemplated by this Agreement, 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. Without limiting the generality of the foregoing,
and except as otherwise expressly approved by the Purchaser in writing (which
approval shall not be unreasonably withheld unless it relates to any action
described in Section 6.2(h), in which case such approval may be withheld in the
Purchaser's sole discretion), 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 and except for grants made
under existing employee benefit plans consistent in amounts and terms with past
practice to (i) employees other than officers and directors, and (ii) persons
who become officers or directors of the Company after the date of this
Agreement, or amend any of the terms of any such securities or agreements
outstanding as of the date hereof (except for amendments to arrangements with
officers and directors of the Company in substantially the forms and amounts
provided to the Purchaser by the Company in writing prior to the date hereof);
(b) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock,
or redeem or otherwise acquire any of its securities (other than as required in
accordance with their terms as in effect on the date hereof) or any securities
of its subsidiaries not owned directly or indirectly by the Company;
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(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 loans or advances
to employees (other than officers and directors of the Company) 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; provided, however, that
the Company may (a) enter into and borrow pursuant to a credit arrangement up to
$100 million secured by its foreign receivables, and (b) refinance or replace
the Company's existing Credit Agreement dated December 23, 1994, as amended
through the date hereof (the "Credit Agreement") if the maximum borrowing
ability under such refinanced or replacement financing arrangement does not
exceed $225 Million and the other terms of such refinanced or replacement
financing arrangement are not materially less favorable to the Company than the
Credit Agreement.
(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
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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 used by it or revalue in any material
respect any of its assets, including, without limitation, writing down the value
of inventory or writing-off notes or accounts receivable other than in the
ordinary course of business;
(g) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof or any equity interest therein, or (ii) authorize any new capital
expenditure or expenditures that, in the aggregate, are in excess of $7.5
Million, provided that none of the foregoing shall limit any capital expenditure
already included in the Company's 1995 capital expenditure budget previously
provided to the Purchaser;
(h) take any of the actions listed in Section 5.1 of the Stockholder
Agreement, to the extent that such actions would otherwise not be proscribed by
this Section 6.2, or
(i) take, or agree in writing or otherwise to take, any of the actions
described in Sections 6.2(a) through 6.2(h).
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 to the extent required by the fiduciary obligations of
the Board, as determined in good faith by the Board based on the written advice
of outside counsel, 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
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the event the Board receives a Superior Proposal (as defined below), the Board
may (subject to the following sentences and compliance with Section 8.1) to the
extent required by the fiduciary obligations of the Board, as determined in good
faith by the Board based on the written advice of outside counsel, 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.
6.4. ACCESS TO INFORMATION; CONFIDENTIALITY.
6.4.1. Access.
Between the date hereof and the Closing, during normal business hours and
without undue disruption of the Company's business, 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. However, access to
information concerning (i) the pricing of competing products of the Purchaser
and the Company, and principal components of such products, and (ii) the
customers for competing products of the Purchaser and the Company, shall be
limited as may be required by applicable law.
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
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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.
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 or other public statement with respect to the transactions
contemplated by this Agreement without the prior written consent of the other,
except as may be required by applicable law or by obligations pursuant to any
listing agreement with the Nasdaq National Market (or any other securities
exchange upon which the Company's securities are traded), provided that if
either party believes that any press release or other public statement is so
required, such party shall promptly notify and consult with the other party with
respect thereto.
6.8. AMENDMENT TO RIGHTS AGREEMENT.
Within three (3) days of the date hereof, the Company shall effect the
Amendment to Rights Agreement.
6.9. IBM LICENSE.
The Company shall exercise its rights under Section 5.2 of that certain
Agreement between International Business Machines Corporation, a New York
corporation ("IBM") and the Company dated as of January 1, 1990 (the "IBM
AGREEMENT") to convert the license, immunities and other rights granted to the
Company pursuant to the terms and conditions of the IBM Agreement to be fully
paid up by making payment of Ten Million Dollars ($10,000,000) to IBM on or
before July 1, 1995.
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6.10. 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
contained in this Agreement, provided, however, that the delivery of any notice
pursuant to this Section 6.10 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 6.10, "prompt notice" shall mean notice delivered
within two (2) days of discovery of the breach, occurrence, or nonoccurrence
precipitating such notice.
6.11. DISCLOSURE.
The Company shall deliver to the Purchaser promptly (but in any event within
two (2) days) after transmission thereof, copies of any general 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 any securities exchange, the
National Association of Securities Dealers, Inc., or the Commission.
ARTICLE 7.
CONDITIONS TO PURCHASE AND SALE OF NEW ISSUE SHARES
7.1. CONDITIONS TO OBLIGATIONS OF THE PURCHASER AND THE COMPANY.
The obligations of the Purchaser to purchase the New Issue Shares from the
Company, and of the Company to issue and sell the New Issue Shares to the
Purchaser, are subject to satisfaction of the following conditions at the
Closing, provided that such conditions shall apply separately to the purchase
and sale of the First Issuance Shares and the Second Issuance Shares and may be
satisfied or waived with respect to the purchase and sale of the First Issuance
Shares or the Second Issuance Shares or both:
7.1.1. No Prohibition.
No statute, rule, regulation, judgment, order, decree, ruling, injunction,
or other action shall have been entered, promulgated, enforced, or threatened 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
New 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 New Issue Shares as contemplated by this Agreement.
7.1.2. REGULATORY COMPLIANCE.
All material filings with all Governmental Authorities required to be made
in connection with the purchase and sale of the New 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 New 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
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requisite approval, clearance or assurance of non-opposition, avoiding any
challenge, or negotiating 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 New Issue Shares as
contemplated by this Agreement.
7.1.3. 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, or (ii) the Purchaser and the Company shall have
been advised by CFIUS that CFIUS has determined not to undertake an
investigation of the transactions contemplated by this Agreement, or (iii) if
CFIUS commences an investigation of the transactions contemplated hereby, such
investigation shall have been resolved to the mutual satisfaction of the
Purchaser and the Company.
7.2. CONDITIONS TO OBLIGATIONS OF THE PURCHASER.
In addition to the conditions set forth in Section 7.1, the obligation of
the Purchaser to purchase from the Company any New Issue Shares is subject to
satisfaction of the following conditions at the Closing of such purchase:
7.2.1. Board Representation.
The Company shall have received such resignations, if any, from members of
the Board, and the Board shall have approved such resolutions, as are required
to ensure that, as of the consummation of the Offer and the Closing, the
Purchaser will have the Board representation described in Article 4 of the
Stockholder Agreement.
7.2.2. PERFORMANCE.
The Company shall have performed in all material respects its obligations
under this Agreement to the date of the Closing, provided that in the event of a
first Closing pursuant to Section 2.3, performance of obligations hereunder
required to be performed only in connection with the purchase and sale of the
Second Issuance Shares and the Offer Shares shall not be conditions to such
first Closing.
7.2.3. STOCKHOLDER APPROVAL.
The Company's stockholders shall have approved the Stockholder Proposals.
7.2.4. AMENDED AND RESTATED CERTIFICATE AND AMENDED BYLAWS.
The Amended and Restated Certificate and Amended Bylaws shall have been duly
authorized, approved and effected, including without limitation execution of the
Amended and Restated Certificate by an appropriate officer of the Company and
filing thereof with the Delaware Secretary of State.
7.2.5. AMENDMENT TO RIGHTS AGREEMENT.
The Amendment to Rights Agreement shall have been effected by the Company
and shall not have been modified or withdrawn.
7.2.6. Founder's Agreement Waiver.
The Founder's Agreement Waiver shall not have been modified or withdrawn.
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7.2.7. THIRD QUARTER RESULTS.
Consolidated operating income (loss) for the Company and its subsidiaries
for the fiscal year quarter ended April 1, 1995, calculated in accordance with
GAAP applied on a basis consistent with the immediately preceding fiscal
quarter, shall not have been less favorable than negative $ 14 million, and
consolidated net cash used in operating activities for the Company and its
subsidiaries for the fiscal quarter ended April 1, 1995, calculated in
accordance with GAAP applied on a basis consistent with the immediately
preceding fiscal quarter, shall not have exceeded $70 million.
7.2.8. Closing Deliveries.
The Company shall have delivered, or shall be delivering concurrently with
the Closing, the documents required to be delivered by the Company pursuant to
Section 2.2.2 or Section 2.3, as applicable.
7.2.9. REPRESENTATIONS AND WARRANTIES TRUE.
Except as otherwise contemplated by this Agreement, the representations and
warranties of the Company contained in this Agreement and in each other
Transaction Document shall be true in all material respects 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.
7.2.10. CERTIFICATE.
The Company shall have delivered to the Purchaser a certificate dated as of
the Closing and signed by the Chief Financial Officer of the Company certifying
as to the accuracy in all material respects of the representations and
warranties of the Company set forth in this Agreement and the other Transaction
Documents and the performance in all material respects of the obligations
required by the Company to be performed under this Agreement as of the Closing.
7.3. CONDITIONS TO OBLIGATIONS OF THE COMPANY.
7.3.1. Conditions Applicable to Issuance and Sale of All New Issue Shares.
In addition to the conditions set forth in Section 7.1, the obligation of
the Company to issue and sell to the Purchaser the New Issue Shares is subject
to satisfaction of the following conditions at the Closing, provided that such
conditions shall apply separately to the purchase and sale of the First Issuance
Shares and the Second Issuance Shares and may be satisfied or waived with
respect to the purchase and sale of the First Issuance Shares or the Second
Issuance Shares or both:
(a) Performance. The Purchaser shall have performed in all material
respects its obligations under this Agreement to the date of the Closing,
provided that in the event of a first Closing pursuant to Section 2.3,
performance of obligations hereunder required to be performed only in connection
with the purchase and sale of the Second Issuance Shares and the Offer Shares
shall not be conditions to such first Closing.
(b) Representations and Warranties True. Except as otherwise contemplated
by this Agreement, the representations and warranties of the Purchaser contained
in this Agreement and in each other Transaction Document shall be true in all
material respects at and as of the Closing as though newly made at and as of
that time.
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(c) 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 or Section 2.3, as
applicable.
(d) 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 other Transaction Documents and the performance of the obligations required
by the Purchaser to be performed under this Agreement as of the Closing.
7.3.2. Conditions Applicable Only to Issuance and Sale of Second Issuance
Shares.
In addition to the conditions set forth in Section 7.1, the obligations of
the Company to issue and sell the Second Issuance Shares to the Purchaser are
subject to satisfaction of the following conditions at the Closing of such
issuance and sale:
(a) Stockholder Approval. The Company's stockholders shall have approved
the Stockholder Proposals.
(b) Offer. The Purchaser shall have accepted for purchase (subject to
proration) all shares of Common Stock properly tendered and not withdrawn
pursuant to the Offer, and deposited with the depositary funds sufficient to pay
the Offer Price.
(c) Credit Agreements. The Company shall have secured amendments to or
waivers under its material credit agreements and arrangements such that none of
the transactions contemplated by this Agreement or the other Transaction
Documents, including without limitation the arrangements contemplated by the
Strategic Alliance Agreement and the rights of the Purchaser to designate
certain directors of the Company and approve certain transactions under the
Stockholder Agreement, 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.
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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 (10) 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. In addition, subject only to the last sentence of
Section 2.3, the Company may terminate this Agreement if (i) five (5) Business
Days shall have elapsed following the Purchaser's receipt of a Notice of
Superior Proposal as defined in Section 6.3, (ii) the Superior Proposal
described in the Notice of Superior Proposal continues to be a Superior Proposal
in light of any improved transaction proposed by the Purchaser prior to the
expiration of the five (5) Business Day period following receipt by the
Purchaser of the Notice of Superior Proposal, and (iii) the Company shall have
paid to the Purchaser Ten Million Dollars ($10,000,000) by bank cashier's check
or wire transfer to an account designated by the Purchaser for this purpose.
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 (10) 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 (1) withdrawn or (2) modified (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, or (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.
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 or (ii) if the
purchase by the Purchaser of the New Issue Shares and the Offer Shares shall not
have been completed by June 30, 1995 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.
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8.4. EFFECT OF TERMINATION.
In the event of the termination of this Agreement pursuant to Section 8.3,
Section 8.2, or the first sentence of Section 8.1, neither the Purchaser nor the
Company shall have any obligation to perform hereunder from and after the date
of such termination, except that (i) termination hereof shall not void any
purchase of Common Stock by the Purchaser prior to such termination or the
provisions of any Transaction Document applicable to, or rights accruing to the
Purchaser by virtue of, the Purchaser's ownership of such Common Stock, (ii)
Sections 6.4.2 (Confidentiality), 6.7 (Public Announcements), 9.2 (Governing
Law), 9.4 (Expenses), and 9.5 (Notices) shall survive such termination and
remain in full force and effect notwithstanding such termination, and (iii) no
termination hereof shall relieve the Purchaser or the Company from liability for
any breach of this Agreement. In the event of termination of this Agreement
pursuant to the second sentence of Section 8.1, neither the Purchaser nor the
Company shall have any obligation to perform hereunder from and after the date
of such termination, except as provided in the last sentence of Section 2.3, and
if the Purchaser purchases the First Issuance Shares pursuant to the last
sentence of Section 2.3, the representations and warranties of the Purchaser set
forth in Article 4 shall survive the termination of this Agreement but shall be
deemed to have been made only as of the date hereof.
ARTICLE 9.
MISCELLANEOUS
9.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
Regardless of any party's investigations prior to the Closing, the
representations and warranties contained herein shall survive the Closing and
shall terminate and expire on the second anniversary of the date of the Closing,
except for Section 4.17 (Environmental), which shall terminate and expire on the
sixth anniversary of the date of the Closing, unless on or before such second or
sixth 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 9.5.
Nothing in the proceeding 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. EXPORT CONTROLS.
The Purchaser shall not export, directly or indirectly, (i) any technical
data it has or will acquire from the Company pursuant to this Agreement, or (ii)
any
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product utilizing any such data, to any country for which any Federal or
state regulatory agency or body at the time of export requires an export license
or other governmental approval without first obtaining such license or approval.
9.4. EXPENSES.
Except as set forth in the second sentence of Section 8.1, 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. 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 .
9.5. 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.
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To the Company: AST Research, Inc.
16215 Alton Parkway
Irvine, California 92718
Attention: Chief Executive Officer
with a copy to: Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue
Los Angeles, CA 90071-3144
Attention: Thomas C. Janson, Jr., Esq.
To the Purchaser: Samsung Electronics Co., Ltd.
Samsung Main Building
250, 2-Ka, Taepyung-Ro, Chung-Ku
Seoul, Korea 100-742
Attention: General Legal Counsel
with a copy to: Gibson, Dunn & Crutcher
333 South Grand Avenue
Los Angeles, CA 90071-3197
Attention: Andrew E. Bogen, Esq.
9.6. 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.
9.7. 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 New Issuance
Shares and Offer Shares) in conjunction with or through one or more wholly 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
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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, 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.
9.8. ENTIRE AGREEMENT.
This Agreement, together with 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 provisions of the
Confidentiality Agreement addressing matters other than the handling of
Confidential Information shall be inapplicable from the date of this Agreement
until the termination, if any, of this Agreement, and upon any such termination,
this Agreement shall cease to be deemed a "definitive agreement" under the
Confidentiality Agreement as if this Agreement were never entered into for
purposes thereof. Notwithstanding the foregoing, however, the provisions of the
Confidentiality Agreement related to nonsolicitation of employees shall continue
in effect until the date of the Closing of the purchase and sale of the Second
Issuance Shares, whereupon they shall terminate. The parties acknowledge that
their agreements hereunder and thereunder were not procured through
representations or agreements not set forth herein or therein.
9.9. 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.
9.10. SEVERABILITY.
The provisions set forth in this Agreement and the other Transaction
Documents are severable. If any provision of this Agreement or any other
Transaction Document is held invalid or unenforceable in any jurisdiction, the
remainder of this Agreement and the other Transaction Documents, and the
application of such provision to other persons or circumstances, shall not be
affected thereby, and shall remain valid and enforceable in such jurisdiction,
and any such invalidity or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
9.11. 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.
9.12. 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.
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9.13. 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, Schedules, and Exhibits are,
unless otherwise designated, references to the specified Section, Schedule, or
Exhibit hereof or hereto or thereof or thereto, as the case may be.
9.14. COUNTERPARTS.
This Agreement and the other Transaction Documents 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.
35
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
AST Research, Inc., SAMSUNG ELECTRONICS CO, LTD.
a Delaware corporation a Korean corporation
By: Safi U. Qureshey By: (Authorized Officer)
--------------------------- ----------------------------
Title: Chief Executive Officer Title:
and Chairman of the Board
36
<PAGE>
EXHIBIT A
RESTATED CERTIFICATE OF INCORPORATION
OF
AST RESEARCH, INC.
It is hereby certified that:
1. The present name of the corporation (hereinafter called the "Corporation")
is AST RESEARCH, INC., which is the name under which the corporation was
originally incorporated; and the date of filing the original Certificate of
Incorporation of the Corporation with the Secretary of State of the State
of Delaware is December 2, 1986.
2. This Restated Certificate of Incorporation was duly adopted pursuant to the
provisions of Sections 242 and 245 of the General Corporation Law of the
State of Delaware in the form set forth as follows:
<PAGE>
ARTICLE 1
NAME
The name of the Corporation is AST Research, Inc.
ARTICLE 2
REGISTERED OFFICE AND AGENT
The name and address of the registered office of the Corporation in the
State of Delaware is The Corporation Trust Company, 1209 Orange Street,
Wilmington, Delaware 19801, County of New Castle, Delaware. The name of the
Corporation's registered agent at that address is The Corporation Trust
Company.
ARTICLE 3
PURPOSE
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of the
State of Delaware, as amended from time to time.
ARTICLE 4
AUTHORIZED CAPITAL
(a) The total number of shares of capital stock which the Corporation has
the authority to issue is 201,000,000, consisting of 200,000,000 shares of
Common Stock, $0.01 par value per share (the "Common Stock"), and 1,000,000
shares of Preferred Stock, $0.01 par value per share (the "Preferred Stock").
(b) The Board of Directors is expressly authorized by resolution or
resolutions from time to time adopted, subject to any limitations and require
ments prescribed by the General Corporation Law of the State of Delaware
2
<PAGE>
and the provisions hereof, to provide for the issuance of the shares of
Preferred Stock in one or more series and, by filing a Certificate pursuant to
the applicable law of the State of Delaware, to establish from time to time the
number of shares to be included in each series, and to fix the designations,
powers, preferences, and relative, participating, optional or other special
rights, if any, of the shares of each such series and the qualifications,
limitations and restrictions thereof, if any, with respect to such series of
Preferred Stock.
(c) Shares of any series of Preferred Stock which have been redeemed
(whether through the operation of a sinking fund or otherwise) or which, if
convertible or exchangeable, have been converted into or exchanged for shares of
stock of any other class or classes or for other securities shall have the
status of authorized and unissued shares of Preferred Stock of the same series
and may be reissued as a part of the series of which they were originally a part
or may be reclassified and reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors or as part
of any other series of Preferred Stock, all subject to the conditions and the
restrictions on issuance set forth in the resolution or resolutions adopted by
the Board of Directors providing for the issue of any series of Preferred Stock.
(d) Except as otherwise provided by the resolution or resolutions
providing for the issue of any series of Preferred Stock, after payment shall
have been made to the holders of Preferred Stock of the full amount of dividends
to which they shall be entitled pursuant to the resolution or resolutions
providing for the issue of any series of Preferred Stock, the holders of Common
Stock shall be entitled, to the exclusion of the holders of Preferred Stock of
any and all series, to receive such dividends as from time to time may be
declared by the Board of Directors.
(e) Except as otherwise provided by the resolution or resolu tions
providing for the issue of any series of Preferred Stock, in the event of any
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, after payment shall have been made to the holders of Preferred
Stock of the full amounts to which they shall be entitled pursuant to the
resolution or resolutions providing for the issue of any series of Preferred
Stock, the holders of Common Stock shall be entitled, to the exclusion of the
holders of Preferred Stock of any and all series, to share, ratably according to
the number of shares of Common Stock held by them, in all remaining assets of
the Corporation available for distribution to its stockholders.
3
<PAGE>
ARTICLE 5
DIRECTORS
(a) The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors.
(b) The Board of Directors shall consist of not less than five nor more
than thirteen members. The exact number of authorized directors shall initially
be thirteen and, thereafter, shall be fixed from time to time, within the
foregoing limits, by resolution of the Board of Directors.
(c) Election of directors need not be by written ballot unless otherwise
provided in the Bylaws.
ARTICLE 6
LIMITATION OF DIRECTORS' LIABILITY
(a) The Corporation shall indemnify to the full extent authorized or
permitted by applicable law (as now or hereafter in effect) any person made, or
threatened to be made a party or witness to any action, suit or proceeding
(whether civil or criminal or otherwise) by reason of the fact that he, his
testator or intestate, is or was a director or officer of the Corporation or by
reason of the fact that such director or officer, at the request of the
Corporation, is or was serving any other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, in any capacity.
Nothing contained herein shall affect any rights to indemnification to which
employees other than directors and officer may be entitled by law.
(b) No director of the Corporation shall be liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty, provided,
however, that this limitation of liability shall not act to limit liability (i)
for any breach of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for any act or omission not in good faith or which involves
intentional misconduct or a knowing violation of law, (iii) arising under
Section 174 of the Delaware General Corporation Law or (iv) for any transaction
from which the director derived an improper benefit.
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<PAGE>
(c) Any repeal or modification of the foregoing provisions of this Article
6 by the stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
ARTICLE 7
AMENDMENT OF BYLAWS
The Board of Directors of the Corporation shall have concurrent power with
the stockholders to make, alter, amend, change, add to or repeal the Bylaws of
the Corporation; provided, that the Board of Directors of the Corporation may
not amend the second paragraph of Article III Section 3, Article III Section 7,
the second paragraph of Article III Section 8, Article III Section 12, Article
IV Section 4, Article VI, Article VII or Article IX Section 8 except in
accordance with Article IX Section 8 of the Bylaws.
ARTICLE 8
AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Restated Certificate of Incorporation or to adopt
new provisions, in the manner now or hereafter prescribed by the General
Corporation Law of the State of Delaware, as amended from time to time, and all
rights conferred on stockholders and directors herein are granted subject to
this reservation.
5
<PAGE>
IN WITNESS WHEREOF, AST Research, Inc. has caused this Certificate to be
signed by Safi U. Qureshey, its President, attested by Dennis R. Leibel, its
Secretary, and its corporate seal to be affixed hereto this ____ day of
___________, 1995.
AST RESEARCH, INC.
By: _______________________________
Safi U. Qureshey, President
[SEAL]
ATTEST:
By: Dennis R. Leibel, Secretary
6
<PAGE>
EXHIBIT B
BYLAWS
OF
AST RESEARCH, INC.
A DELAWARE CORPORATION
(AS AMENDED, THROUGH MAY__, 1995)
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I. OFFICES 1
Section 1. Registered Office 1
Section 2. Other Offices 1
Section 3. Books 1
ARTICLE II. MEETINGS OF STOCKHOLDERS 1
Section 1. Place of Meetings 1
Section 2. Annual Meetings 1
Section 3. Special Meetings 1
Section 4. Notification of Business
to be Transacted at Meeting 1
Section 5. Notice; Waiver of Notice 2
Section 6. Quorum; Adjournment 2
Section 7. Voting 2
Section 8. Stockholder Action by Written Consent
Without a Meeting 2
Section 9. List of Stockholders Entitled to Vote 3
Section 10. Stock Ledger 3
Section 11. Inspectors of Election 3
Section 12. Organization 3
Section 13. Order of Business 3
ARTICLE III. DIRECTORS 3
Section 1. Powers 3
Section 2. Number and Election of Directors 3
Section 3. Vacancies 4
Section 4. Time and Place of Meetings 4
Section 5. Annual Meeting 4
Section 6. Regular Meetings 4
Section 7. Special Meetings 5
Section 8. Quorum; Vote Required for Action;
Adjournment 5
Section 9. Action by Written Consent 5
Section 10. Telephone Meetings 6
Section 11. Committees 6
Section 12. Management Committee 6
Section 13. Compensation 6
Section 14. Interested Directors 6
ARTICLE IV. OFFICERS 7
Section 1. Executive Officers 7
Section 2. Election; Term of Office and
Remuneration 7
Section 3. Subordinate Officers 7
Section 4. Removal 7
Section 5. Resignations 7
Section 6. Powers and Duties 8
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
ARTICLE V. STOCK 8
Section 1. Form of Certificates 8
Section 2. Signatures 8
Section 3. Lost Certificates 8
Section 4. Transfers 8
Section 5. Registered Owners 8
ARTICLE VI. LIMITATION OF LIABILITY 9
ARTICLE VII. INDEMNIFICATION 9
Section 1. Action Other Than by or in the Right
of the Corporation 9
Section 2. Action by or in the Right of the
Corporation 9
Section 3. Determination of Right of
Indemnification 9
Section 4. Indemnification Against Expenses of
Successful Party 10
Section 5. Advances of Expenses 10
Section 6. Right of Agent to Indemnification
upon Application; Procedure Upon
Application 10
Section 7. Other Rights and Remedies 11
Section 8. Insurance 11
Section 9. Indemnity Fund 11
Section 10. Constituent Corporations 11
Section 11. Other Enterprises, Fines, and
Serving at Corporation's Request 11
Section 12. Indemnification of Other Persons 11
Section 13. Savings Clause 12
ARTICLE VIII. RECORDS 12
Section 1. Maintenance and Inspection of Share
Register 12
Section 2. Maintenance and Inspection of Bylaws 12
ARTICLE IX. GENERAL PROVISIONS 13
Section 1. Dividends 13
Section 2. Disbursements 13
Section 3. Fiscal Year 13
Section 4. Corporate Seal 13
Section 5. Record Date 13
Section 6. Voting of Stock Owned by the
Corporation 13
Section 7. Construction and Definitions 13
Section 8. Amendments 13
</TABLE>
ii
<PAGE>
BYLAWS
OF
AST RESEARCH, INC.
A DELAWARE CORPORATION
ARTICLE I
OFFICES
Section 1. Registered Office. The address of the registered office of the
Corporation in the State of Delaware shall be 1209 Orange Street, Wilmington,
New Castle County, Delaware, 19801, and the name of its registered agent at such
address is The Corporation Trust Company.
Section 2. Other Offices. 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.
Section 3. Books. The books of the Corporation may be kept within or 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. Place of Meetings. All meetings of the stockholders shall be held
at such place either within or without the State of Delaware and on such date
and at such time as may be designated from time to time by the Board of
Directors. If the Board of Directors shall fail to fix such place, the meetings
shall be held at the principal executive office of the Corporation.
Section 2. Annual Meetings. Annual meetings of stockholders shall be held at
a time and date designated by the Board of Directors for the purpose of electing
directors and transacting such other business as may properly be brought before
the meeting.
Section 3. Special Meetings. Special meetings of stockholders, for any
purpose or purposes, may be called by the Board of Directors, the Chairman of
the Board of Directors, the President, or the holders of shares entitled to cast
not less than a majority of the votes at such meeting. Special meetings may not
be called by any other person.
Section 4. Notification of Business to be Transacted at Meeting. To be
properly brought before a meeting, business must be (a) specified in the notice
of meeting (or any supplement thereto) given by or at the direction of the Board
of Directors, (b) otherwise properly brought before the meeting by or at the
direction of the Board of Directors, or (c) otherwise properly brought before
the meeting by a stockholder entitled to vote at the meeting.
<PAGE>
Section 5. Notice: Waiver of Notice. Whenever stockholders are required or
permitted to take any action at a meeting, a written notice of the meeting shall
be given which shall state the place, date and hour of the meeting, and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called. Unless otherwise required by law, such notice shall be given not less
than ten nor more than 60 days before the date of the meeting to each
stockholder of record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be given when deposited in the mail, postage prepaid,
directed to the stockholder at his address as it appears on the records of the
Corporation. A written waiver of any such notice signed by the person entitled
thereto, whether before or after the time stated therein, shall be deemed
equivalent to notice. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends the meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
Section 6. Quorum; Adjournment. Except as otherwise required by law or
provided by the Certificate of Incorporation, the holders of a majority of the
capital stock issued and outstanding and entitled to vote thereat, present in
person or represented by proxy, shall constitute a quorum for the transaction of
business at all meetings of the stockholders. 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 of the time and place of the adjourned meeting,
until a quorum shall be present 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 noticed. If after
the adjournment a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each stockholder entitled to vote at
the meeting.
Section 7. Voting. Except as otherwise required by law, or provided by the
Certificate of Incorporation or these Bylaws, any question brought before any
meeting of stockholders shall be decided by the vote of the holders of a
majority of the stock represented and entitled to vote thereat. Unless otherwise
provided in the Certificate of Incorporation, each stockholder represented at a
meeting of stockholders shall be entitled to cast one vote for each share of the
capital stock entitled to vote thereat held by such stockholder. Such votes may
be cast in person or by proxy, but no proxy shall be voted on or after three
years from its date, unless such proxy provides for a longer period. Elections
of directors need not be by ballot unless the Chairman of the meeting so directs
or unless a stockholder demands election by ballot at the meeting and before the
voting begins.
Section 8. Stockholder Action by Written Consent Without a Meeting. Any
action which may be taken at any annual or special meeting of stockholders may
be taken without a meeting and without prior notice, if a consent in writing,
setting forth the action so taken, is signed by the holders of all of the
outstanding shares of the Corporation. All such consents shall be filed with the
Secretary of the Corporation and shall be maintained in the corporate records.
Any stockholder giving a written consent, or the stockholder's proxy holders, or
a transferee of the shares or a personal representative of the stockholder or
their respective proxy holders, may revoke the consent by a writing received by
the Secretary of the Corporation before written consents of the number of shares
required to authorize the proposed action have been filed with the Secretary.
2
<PAGE>
Section 9. List of Stockholders Entitled to Vote. 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 the meeting, arranged in alphabetical order, and showing the
address of each stockholder 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 where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place of
the meeting during the whole time thereof, and may be inspected by any
stockholder of the Corporation who is present.
Section 10. Stock Ledger. The stock ledger of the Corporation shall be the
only evidence as to who are the stockholders entitled to examine the stock
ledger, the list required by Section 9 of this Article II or the books of the
Corporation, or to vote in person or by proxy at any meeting of stockholders.
Section 11. Inspectors of Election. In advance of any meeting of
stockholders, the Board of Directors may appoint one or more persons (who shall
not be candidates for office) as inspectors of election to act at the meeting.
If inspectors are not so appointed, or if an appointed inspector fails to appear
or fails or refuses to act at a meeting, the Chairman of any meeting of
stockholders may, and on the request of any stockholder or his proxy shall,
appoint inspectors of election at the meeting. In the event of any dispute
between or among the inspectors, the determination of the majority of the
inspectors shall be binding.
Section 12. Organization. At each meeting of stockholders the Chairman of
the Board of Directors, if one shall have been elected, (or in his absence or if
one shall not have been elected, the President) shall act as chairman of the
meeting. The Secretary (or in his absence or inability to act, the person whom
the Chairman of the meeting shall appoint secretary of the meeting) shall act as
secretary of the meeting and keep the minutes thereof.
Section 13. Order of Business. The order and manner of transacting business
at all meetings of stockholders shall be determined by the Chairman of the
meeting.
ARTICLE III
DIRECTORS
Section 1. Powers. Except as otherwise required by law or provided by the
Certificate of Incorporation, the business and affairs of the Corporation shall
be managed by or under the direction of the Board of Directors.
Section 2. Number and Election of Directors. Directors shall be elected at
each annual meeting of stockholders and each director so elected shall hold
office until his successor is duly elected and qualified, or until his earlier
death, resignation or removal. Any director may resign at any time effective
upon giving written notice to the Board of Directors, unless the notice
specifies a later time for such resignation to become effective. Unless
otherwise specified therein, the acceptance of such resignation shall not be
3
<PAGE>
necessary to make it effective. If the resignation of a director is effective at
a future time, the Board of Directors may elect a successor prior to such
effective time to take office when such resignation becomes effective. Directors
need not be stockholders.
Section 3. Vacancies. Except as otherwise set forth herein, vacancies in the
Board of Directors may be filled by a majority of the remaining directors,
though less than a quorum, or by a sole remaining director, except that a
vacancy created by the removal of a director by the vote or written consent of
the stockholders may be filled only by the vote of a majority of the shares
entitled to vote represented at a duly held meeting at which a quorum is
present, or by the written consent of holders of a majority of the outstanding
shares entitled to vote. Each director so elected shall hold office until the
next annual meeting of the stockholders and until a successor has been elected
and qualified.
Reference is made to the Stockholder Agreement (the "Stockholder Agreement")
dated as of _____, 1995 by and between the Corporation and Samsung Electronics
Co., Ltd. ("Samsung") and to Article 4 thereof. In the event of the death,
resignation or removal of a director designated by Samsung in accordance with
Section 4.1 of the Stockholder Agreement, such vacancy shall be filled by the
remaining directors only by another person designated by Samsung. In the event
of the death, resignation or removal of a director not designated by Samsung in
accordance with the Stockholder Agreement, during the Standstill Period, as
defined therein, such vacancy may be filled by the remaining directors only by
another person designated by those directors not designated by Samsung.
A vacancy or vacancies in the Board of Directors shall be deemed to exist in
the event of the death, resignation, or removal of any director, or if the
authorized number of directors is increased, or if the stockholders fail, at any
meeting of stockholders at which any director or directors are elected, to elect
the number of directors to be voted for at that meeting.
The stockholders may elect a director or directors at any time to fill any
vacancy or vacancies not filled by the directors, but any such election by
written consent shall require the consent of a majority of the outstanding
shares entitled to vote.
No reduction of the authorized number of directors shall have the effect of
removing any director before that director's term of office expires.
Section 4. Time and Place of Meetings. The Board of Directors shall hold its
meetings at such place, either within or without the State of Delaware, and at
such time as may be determined from time to time by the Board of Directors.
Section 5. Annual Meeting. The Board of Directors shall meet for the purpose
of organization, the election of officers and the transaction of other business,
as soon as practicable after each annual meeting of stockholders, on the same
day and at the same place where such annual meeting shall be held. Notice of
such meeting need not be given. In the event such annual meeting is not so held,
the annual meeting of the Board of Directors may be held at such place, either
within or without the State of Delaware, on such date and at such time as shall
be specified in a notice thereof given as hereinafter provided in Section 7 of
this Article III or in a waiver of notice thereof.
Section 6. Regular Meetings. Regular meetings of the Board of Directors may
be held at such places within or without the State of Delaware at such date and
time as
4
<PAGE>
the Board of Directors may from time to time determine and, if so
determined by the Board of Directors, notices thereof need not be given.
Section 7. Special Meetings. Special meetings of the Board of Directors may
be called by the Chairman of the Board, the President, by any Vice President,
the Secretary or by any two directors, provided that at any special meeting
called during the Standstill Period (as defined in the Stockholder Agreement) by
directors designated by Samsung, there shall not be a quorum (including for
purposes of Section 8) unless a majority of the directors present are directors
not designated by Samsung. Notice of the date, time and place of special
meetings shall be delivered personally or by telephone to each director or sent
by first class mail or telegram, charges prepaid, addressed to each director at
the director's address as it is shown on the records of the Corporation. In case
the notice is mailed, it shall be deposited in the United States mail at least
five days before the time of the holding of the meeting. In case the notice is
delivered personally or by telephone or telegram, it shall be delivered
personally or by telephone or to the telegraph company at least 48 hours before
the time of the holding of the meeting. The notice need not specify the purpose
of the meeting.
Section 8. Quorum; Vote Required for Action: Adjournment. Except as
otherwise required by law, or provided in the Certificate of Incorporation or
these Bylaws (including, without limitation, Section 7), a majority of the
directors shall constitute a quorum for the transaction of business at all
meetings of the Board of Directors and the affirmative vote of not less than a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors. 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. A meeting at which a quorum is
initially present may continue to transact business, notwithstanding the
withdrawal of directors, if any action taken is approved by at least a majority
of the required quorum to conduct that meeting. When a meeting is adjourned to
another time or place (whether or not a quorum is present), notice need not be
given of the adjourned meeting if the time and place thereof are announced at
the meeting at which the adjournment is taken. At the adjourned meeting, the
Board of Directors may transact any business which might have been transacted at
the original meeting.
Notwithstanding anything to the contrary herein, two-thirds (2/3) of the
directors shall be required to constitute a quorum for, and the affirmative vote
of not less than two-thirds (2/3) of all the directors shall be required to
approve, any action that would (i) amend that certain Amended and Restated
Rights Agreement between the Corporation and American Stock Transfer & Trust
Company as Successor Rights Agent dated as of January 28, 1994, as amended by
the First Amendment thereto dated _______, 1995, or any new stockholder rights
plan; or (ii) adopt any new stockholder rights plan, if such amendment or new
stockholder rights plan does not contain provisions equivalent to those set
forth in such First Amendment for the benefit of Samsung.
Section 9. Action by Written Consent. Unless otherwise restricted by the
Certificate of Incorporation, 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 the members of the Board of Directors 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 of Directors or committee.
5
<PAGE>
Section 10. Telephone Meetings. Unless otherwise restricted by the
Certificate of Incorporation, members of the Board of Directors of the
Corporation, or any committee designated by the Board of Directors, may
participate in a meeting of the Board of Directors or such committee, as the
case may be, by conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other.
Participation in a meeting pursuant to this Section 10 shall constitute presence
in person at such meeting.
Section 11. Committees. The Board of Directors may, by resolution passed by
a majority of the entire Board, designate one or more committees, each committee
to consist of one or more of the directors of the Corporation. The Board of
Directors may designate one or more directors as alternate members of any such
committee, who may replace any absent or disqualified member at any meeting of
the committee. Any committee, to the extent allowed by law and as provided in
the resolution establishing such committee, shall have and may exercise all the
power and authority of the Board of Directors in the management of the business
and affairs of the Corporation. Each committee shall report to the Board of
Directors when required.
SECTION 12. Management Committee. Reference is made to the
Stockholder Agreement and to Article 7 thereof. The Corporation shall have a
Management Committee of the Board of Directors which shall have and may exercise
the power and authority of the Board of Directors to the extent, and under the
circumstances set forth, in said Article 7. The Management Committee shall
consist of those members of the Board of Directors designated by Samsung in
accordance with the Stockholder Agreement, the Chief Executive Officer of the
Corporation, if he shall be a director (or, if he is not then a director,
another director who is an employee of the Corporation), and up to a maximum of
four (4) directors who are not officers or employees of the Corporation. In the
event there shall be more than four directors who were not designated by Samsung
and are not officers or employees of the Corporation at a time when the
Management Committee is authorized to act in accordance with the foregoing,
those directors of the Corporation who were not designated by Samsung shall
select the four such directors who shall be members of the Management Committee
in addition to the Chief Executive Officer (or, if he is not then a director,
another director who is an employee of the Corporation) and the Directors
designated by Samsung, and unless and until such selection is made the
Management Committee shall consist solely of the directors designated by Samsung
and the Chief Executive Officer of the Corporation (or, if he is not then a
director, another director who is an employee of the Corporation).
Section 13. Compensation. The directors may be paid such
compensation for their services as the Board of Directors shall from time to
time determine.
Section 14. Interested Directors. No contract or transaction between
the Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or the committee thereof
which authorizes the contract or traction, or solely because his or their votes
are counted for such purpose if: (i) the material facts as to his or their
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board of Directors or the committee, and the Board of Directors
or committee in good faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested directors, even
6
<PAGE>
though the disinterested directors be less than a quorum; or (ii) the material
facts as to his or their relationship or interest and as to the contract or
transaction are disclosed or are known to the stockholders entitled to vote
thereon, and the contract or transaction is specifically approved in good faith
by vote of the stockholders; or (iii) the contract or transaction is fair as to
the Corporation as of the time it is authorized, approved or ratified, by the
Board of Directors, a committee thereof, or the stockholders. Common or
interested directors may be counted in determining the presence of a quorum at a
meeting of the Board of Directors or of a committee which authorizes the
contract or transaction.
ARTICLE IV
OFFICERS
Section 1. Executive Officers. The executive officers of the
Corporation shall be a President, a Chief Executive Officer, a Chief Financial
Officer and a Secretary. The Secretary shall have the duty, among other things,
to record the proceedings of the meetings of stockholders and directors in a
book kept for that purpose. The Corporation may also have such other executive
officers, including one or more Vice Presidents, as the Board may in its
discretion appoint. The Board of Directors, if it so determines, may appoint a
Chairman of the Board and a Vice Chairman of the Board from among its members,
but such titles shall not confer upon such Board members executive officer
status. Any number of offices may be held by the same person.
Section 2. Election, Term of Office and Remuneration. The executive
officers of the Corporation shall be elected annually by the Board of Directors
at the annual meeting or a regular meeting thereof. Each such officer shall
hold office at the discretion of the Board of Directors until his successor is
elected and qualified, or until his earlier death, resignation or removal. The
remuneration of all officers of the Corporation shall be fixed by the Board of
Directors. Any vacancy in any office shall be filled in such manner as the
Board of Directors shall determine.
Section 3. Subordinate Officers. In addition to the executive
officers enumerated in Section 1 of this Article IV, the Corporation may have
one more assistant treasurers and assistant secretaries and such other
subordinate officers, agents and employees as the Board of Directors may deem
necessary, each of whom shall hold office for such period as the Board of
Directors may from time to time determine. The Board of Directors may delegate
to any executive officer the power to appoint and to remove any such subordinate
officers, agents or employees.
Section 4. Removal. Except as otherwise delegated to an executive
officer with respect to subordinate officers, any officer may be removed, with
or without cause, at any time, by resolution adopted by the Board of Directors
or by the Management Committee as provided in Article III Section 12. Such
removal shall be without prejudice to the contractual rights of such officer, if
any, with the Corporation.
Section 5. Resignations. Any officer may resign at any time by
giving written notice to the Board of Directors (or to a principal officer if
the Board of Directors has delegated to such principal officer the power to
appoint and to remove such officer). The resignation of any officer shall take
effect upon receipt of notice thereof or at such later time as shall be
specified in such notice; unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective.
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Section 6. Powers and Duties. The Board of Directors may designate
an officer as the Chief Executive Officer. The Chief Executive Officer shall,
subject to the direction and control of the Board of Directors, be the general
manager of, and supervise and direct, the business and affairs of the
Corporation and the conduct of the officers of the Corporation. The other
officers of the Corporation shall have such powers and perform such duties
incident to each of their respective offices and such other duties as may from
time to time be conferred upon or assigned to them by the Board of Directors or
the Chief Executive Officer.
ARTICLE V
STOCK
Section 1. Form of Certificates. Every holder of stock in the
Corporation shall be entitled to have a certificate signed, in the name of the
Corporation (i) by the Chairman of the Board of Directors, the President or a
Vice President and (ii) by the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary of the Corporation, certifying the number of
shares owned by him in the Corporation.
Section 2. Signatures. Any, or all, of the signatures on the
certificate may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the Corporation with the
same effect as if he were such officer, transfer agent or registrar at the date
of issue.
Section 3. Lost Certificates. The Corporation may issue a new
certificate to be issued in place of any certificate theretofore issued by the
Corporation, alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate to be lost,
stolen or destroyed. The Corporation may, in its discretion and as a condition
precedent to the issuance of such new certificate, require the owner of such
lost, stolen, or destroyed certificate, or his legal representative, to give the
Corporation a bond (or other security) sufficient to indemnify it against any
claim that may be made against the Corporation (including any expense or
liability) on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate.
Section 4. Transfers. Stock of the Corporation shall be transferable
in the manner prescribed by law and in these Bylaws or in any agreement with the
stockholder making the transfer. Transfers of stock shall be made on the books
of the Corporation only by the person named in the certificate or by his
attorney lawfully constituted in writing and upon the surrender of the
certificate therefor, which shall be cancelled before a new certificate shall be
issued.
Section 5. Registered Owners. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise required by
law.
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ARTICLE VI
LIMITATION OF LIABILITY
No person shall be liable to the Corporation for any loss or damage
suffered by it on account of any action taken or omitted to be taken by him as a
director or officer of the Corporation if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
Corporation or, with respect to any criminal matter, had no reasonable cause to
believe that his conduct was unlawful.
ARTICLE VII
INDEMNIFICATION
Section 1. Action Other Than by or in the Right of the Corporation.
Subject to Section 3 of this Article VII, the Corporation shall indemnify any
person 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, and whether external or internal to
the Corporation, (other than a judicial action or suit brought by or in the
right of the Corporation) by reason of the fact that he is or was a director or
officer of the Corporation, or is or was serving at the request of the
Corporation as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise (all such persons being referred to hereafter
as an "Agent"), 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 if he acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests of
the Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, that he had
reasonable cause to believe that his conduct was unlawful.
Section 2. Action by or in the Right of the Corporation. The
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed judicial action or suit
brought by or in the right of the Corporation to procure a judgment in its favor
by reason of the fact that he is or was an Agent (as defined in Section 1)
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation, except that no indemnification
shall be made in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to the Corporation unless and only to the
extent that the Court of Chancery or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court of
Chancery or other such court shall deem proper.
Section 3. Determination of Right of Indemnification. Any indemnification
under Sections 1 or 2 (unless ordered by a court) shall be made by the
Corporation unless a
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determination is reasonably and promptly made (i) by the Board by a majority
vote of a quorum consisting of directors who are or were not parties to such
action, suit or proceeding, or (ii) if such a quorum is not obtainable, or, even
if obtainable, if a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (iii) by the stockholders, that such
person acted in bad faith and in a manner that such person did not believe to be
in or not opposed to the best interests of the Corporation, or, with respect to
any criminal proceeding, that such person believed or had reasonable cause to
believe that his conduct was unlawful.
Section 4. Indemnification Against Expenses of Successful Party.
Notwithstanding the other provisions of this Article, to the extent that an
Agent has been successful on the merits or otherwise, including the dismissal of
an action without prejudice or the settlement of an action without admission of
liability, in defense of any proceeding or in defense of any claim, issue or
matter therein, such Agent shall be indemnified against all expenses incurred in
connection therewith.
Section 5. Advances of Expenses. Except as limited by Section 6 of
this Article VII, expenses incurred in defending or investigating any action,
suit, proceeding or investigation shall be paid by the Corporation in advance of
the final disposition of such matter, if the Agent shall undertake to repay such
amount in the event that it is ultimately determined, as provided herein, that
such person is not entitled to indemnification. However, no advance shall be
made by the Corporation if a determination is reasonably and promptly made by
the Board of Directors by a majority vote of a quorum of disinterested
directors, or (if such a quorum is not obtainable or, even if obtainable, a
quorum of disinterested directors so directs) by independent legal counsel in a
written opinion, that, based upon the facts known to the Board or counsel at the
time such determination is made, such person acted in bad faith and in a manner
that such person did not believe to be in or not opposed to the best interest of
the Corporation, or, with respect to any criminal proceeding, that such person
believed or had reasonable cause to believe his conduct was unlawful. In no
event shall any advance be made in instances where the Board or independent
legal counsel reasonably determines that such person deliberately breached his
duty to the Corporation or its stockholders.
Section 6. Right of Agent to Indemnification Upon Application;
Procedure Upon Application. Any indemnification under Sections 2, 3, and 4, or
advance under Section 5 of this Article VII, shall be made promptly and in any
event within 45 days, upon the written request of the Agent, unless with respect
to applications under Sections 2, 3, or 5, a determination is reasonably and
promptly made by the Board of Directors by a majority vote of a quorum of
disinterested directors that such Agent acted in a manner set forth in such
Sections as to justify the Corporation's not indemnifying or making an advance
to the Agent. In the event no quorum of disinterested directors is obtainable,
the Board of Directors shall promptly direct that independent legal counsel
shall decide whether the Agent acted in the manner set forth in such Sections as
to justify the Corporation's not indemnifying or making an advance to the Agent.
The right to indemnification or advances as granted by this Article VII shall be
enforceable by the Agent in any court of competent jurisdiction if the Board or
independent legal counsel denies the claim, in whole or in part, or if no
disposition of such claim is made within 45 days. The Agent's expenses incurred
in connection with successfully establishing his right to indemnification, in
whole or in part, in any such proceeding shall also be indemnified by the
Corporation.
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Section 7. Other Rights and Remedies. The indemnification provided
by this Article VII shall not be deemed exclusive of any other rights to which
an Agent seeking indemnification may be entitled under any Bylaw, agreement,
vote of stockholders or disinterested directors, court order or otherwise, both
as to action in his official capacity and as to action in another capacity while
holding such office, since it is the policy of the Corporation that
indemnification of Agents shall be made to the fullest extent permitted by law.
The indemnification provided by this Article shall continue as to a person who
has ceased to be an Agent and shall inure to the benefit of the heirs, executors
and administrators of such a person. All rights to indemnification under this
Article shall be deemed to be provided by a contract between the Corporation and
the Agent who serves in such capacity at any time while these Bylaws and other
relevant provisions of the General Corporation Law of the State of Delaware and
other applicable law, if any, are in effect. Any repeal or modification thereof
shall not affect any rights or obligations then existing.
Section 8. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was an Agent 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 the Corporation would have the power to
indemnify him against such liability under the provisions of this Article.
Section 9. Indemnity Fund. Upon resolution passed by the Board, the
Corporation may establish a trust or other designated account, grant a security
interest or use other means (including, without limitation, a letter of credit),
to ensure the payment of certain of its obligations arising under this Article
and/or agreements which may be entered into between the Company and its officers
and directors from time to time.
Section 10. Constituent Corporations. For the purposes of this
Article, references to "the Corporation" include all constituent corporations
absorbed in a consolidation or merger as well as the resulting or surviving
corporation, so that any person who is or was a director or officer of such a
constituent corporation or is or was serving at the request of such constituent
corporation as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise shall stand in the same position under the
provisions of this Article with respect to the resulting or surviving
corporation as he would had he served such constituent corporation in the same
capacity.
Section 11. Other Enterprises, Fines, and Serving at Corporation's
Request. For purposes of this Article, references to "other enterprise" in
Sections 1 and 10 shall include employee benefit plans; references to "fines"
shall include any excise taxes assessed a person with respect to any employee
benefit plan; and references to "serving at the request of the Corporation"
shall include any service as a director or officer of the Corporation which
imposes duties on, or involves services by, such director or officer with
respect to any employee benefit plan, its participants, or beneficiaries; and a
person who acted in good faith and in a manner he reasonably believed to be in
the interest of the participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the best interests of
the Corporation" as referred to in this Article.
Section 12. Indemnification of Other Persons. The provisions of this
Article VII shall not be deemed to preclude the indemnification of any person
who is not an Agent (as defined in Section 1), but whom the Corporation has the
power or obligation to indemnify under the provisions of the General Corporation
Law of the State of Delaware or otherwise. The Corporation may, in its sole
discretion, indemnify an
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employee, trust or other agent as permitted by the General Corporation Law of
the State of Delaware. The Corporation shall indemnify an employee, trustee or
other agent where required by law.
Section 13. Savings Clause. If this Article or any portion thereof
shall be invalidated on any ground by any court of competent jurisdiction, then
the Corporation shall nevertheless indemnify each Agent against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
with respect to any action, suit or proceeding, whether civil, criminal,
administrative or investigative, and whether internal or external, including a
grand jury proceeding and an action or suit brought by or in the right of the
Corporation, to the full extent permitted by any applicable portion of this
Article that shall not have been invalidated, or by any other applicable law.
ARTICLE VIII
RECORDS
Section 1. Maintenance and Inspection of Share Register. The
Corporation shall keep at its principal executive office, or at the office of
its transfer agent or registrar, if either be appointed and as determined by
resolution of the Board of Directors, a record of its stockholders, giving the
names and addresses of all stockholders and the number and class of shares held
by each stockholder.
A stockholder or stockholders of the Corporation holding at least 5%
in the aggregate of the outstanding voting shares of the Corporation or who hold
at least l% of such voting shares and have filed a Schedule 14B with the United
States Securities and Exchange Commission relating to the election of directors
of the Corporation may (i) inspect and copy the records of stockholders' names
and addresses and stockholdings during usual business hours on 5 days' prior
written demand on the Corporation, or (ii) obtain from the transfer agent of the
Corporation, on written demand and on the tender of such transfer agent's usual
charges for such list, a list of the stockholders' names and addresses, who are
entitled to vote for the election of directors, and their stockholdings, as of
the most recent record date for which that list has been compiled or as of a
date specified by the stockholder after the date of demand. This list shall be
made available to any such stockholder by the transfer agent on or before the
later of 5 days after the demand is received or the date specified in the demand
as the date as of which the list is to be compiled. The record of stockholders
shall also be open to inspection on the written demand of any stockholder or
holder of a voting trust certificate, at any time during usual business hours,
for a purpose reasonably related to the holder's interests as a stockholder or
as the holder of a voting trust certificate. Any inspection and copying under
this Section I may be made in person or by an agent or attorney of the
stockholder or holder of a voting trust certificate making the demand.
Section 2. Maintenance and Inspection of Bylaws. The Corporation
shall keep at its principal executive office, the original or a copy of these
Bylaws, as amended, to date, which shall be open to inspection by the
stockholders at all reasonable times during office hours.
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ARTICLE IX
GENERAL PROVISIONS
Section 1. Dividends. Subject to limitations contained in the
General Corporation Law of the State of Delaware and the Certificate of
Incorporation, the Board of Directors may declare and pay dividends upon the
shares of capital stock of the Corporation, which dividends may be paid either
in cash, securities of the Corporation or other property.
Section 2. Disbursements. 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 3. Fiscal Year. The fiscal year of the Corporation shall be
fixed by resolution of the Board of Directors.
Section 4. Corporate Seal. The Corporation shall have a corporate
seal in such form as shall be prescribed by the Board of Directors.
Section 5. Record Date. 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 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 60 days nor less than ten days
before the date of such meeting, nor more than 60 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. Stockholders on the record date are entitled to notice and
to vote or to receive the dividend, distribution or allotment of rights or to
exercise the rights, as the case may be, notwithstanding any transfer of any
shares on the books of the Corporation after the record date, except as
otherwise provided by agreement or by applicable law.
Section 6. Voting of Stock Owned by the Corporation. The Board of
Directors may authorize any person, on behalf of the Corporation, to attend,
vote and grant proxies to be used at any meeting of stockholders of any
corporation (except this Corporation) in which the Corporation may hold stock.
Section 7. Construction and Definitions. Unless the context requires
otherwise, the general provisions, rules of construction and definitions in the
General Corporation law of the State of Delaware shall govern the construction
of these Bylaws.
Section 8. Amendments. Subject to the General Corporation Law of the
State of Delaware, the Certificate of Incorporation and these Bylaws, the Board
of Directors may by majority vote of those present at any meeting at which a
quorum is present amend or repeal these Bylaws, or enact other Bylaws as in
their judgment may be advisable for the regulation of the conduct of the affairs
of the Corporation. Unless otherwise restricted by the Certificate of
Incorporation, these Bylaws may be altered, amended or repealed at any annual
meeting of the stockholders (or at any special meeting thereof duly called for
that purpose) by a majority of the combined voting power of the
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then outstanding shares of capital stock of all classes and series of the
Corporation entitled to vote generally in the election of directors, voting as a
single class, provided that, in the notice of any such special meeting, notice
of such purpose shall be given.
Notwithstanding anything to the contrary herein, no amendment shall be
made to the second paragraph of Article III Section 3, Article III Section 7,
the second paragraph of Article III Section 8, Article III Section 12, Article
IV Section 4, Article VI, or Article VII hereof, or this Article IX Section 8,
except with the approval of a majority of the directors designated by Samsung in
accordance with the Stockholder Agreement (or, in the case of amendments to
Article VI or Article VII, to the extent required by law or the fiduciary
obligations of the Board of Directors as provided in Section 4.6 of the
Stockholder Agreement).
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EXHIBIT C
FIRST AMENDMENT TO RIGHTS AGREEMENT
THIS FIRST AMENDMENT to the Amended and Restated Rights Agreement (the
"Rights Agreement") dated as of January 28, 1994, between AST Research, Inc.
(the "Company") and American Stock Transfer and Trust Company, as successor
Rights Agent ("American Stock Transfer") is dated as of this day of March 1,
1995.
WHEREAS, the Company and American Stock Transfer are parties to the Rights
Agreement, pursuant to which American Stock Transfer acts as successor Rights
Agent; and
WHEREAS, the Company and Samsung Electronics Company, Ltd., a corporation
organized under the laws of the Republic of Korea (the "Purchaser"), have
entered into that certain Stock Purchase Agreement dated as of February 27, 1995
(the "Stock Purchase Agreement"), and as a result thereof the Purchaser will be
a significant stockholder of the Company; and
WHEREAS, it is in the best interests of the holders of the Common Stock of
the Company that the Rights Agreement be amended as set forth herein; and
WHEREAS, Section 27 of the Rights Agreement provides that prior to the
Distribution Date (as defined in the Rights Agreement), the Company and the
Rights Agent shall, if the Company so directs and upon the delivery of a certifi
cate from an appropriate officer of the Company which states that the proposed
amendment is in compliance with Section 27, amend any provision of the Rights
Agreement without the approval of holders of Common Stock;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties agree to amend the Rights Agreement as follows:
1. The first sentence of the definition of "Acquiring Person" in
Section 1(a) of the Rights Agreement which currently reads:
"Acquiring Person" shall mean any Person who or which, together with
all Affiliates and Associates of such Person, shall be the Beneficial
Owner of 15% or more of the shares of Common Stock then outstanding,
but shall not include (i) the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or of any Subsidiary of the
Company, or any Person or entity organized, appointed or established
by the Company for or
<PAGE>
pursuant to the terms of any such plan, (ii) any person who is the
Beneficial Owner of 15% or more of the shares of Common Stock on the date
hereof, or (iii) any person who shall become the Beneficial Owner of 15% or
more of the outstanding shares of Common Stock solely as a result of an
acquisition by the Company of shares of Common Stock until such time
thereafter as such Person shall become the Beneficial Owner (other than by
means of a stock dividend or stock split) of any additional shares of Common
Stock."
shall be amended to read in its entirety as follows:
"Acquiring Person" shall mean any Person who or which, together with
all Affiliates and Associates of such Person, shall be the Beneficial
Owner of 15% or more of the shares of Common Stock then outstanding,
but shall not include (i) the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or of any Subsidiary of the
Company, or any Person or entity organized, appointed or established
by the Company for or pursuant to the terms of any such plan, (ii) any
Person who is the Beneficial Owner of 15% or more of the shares of
Common Stock on January 28, 1994, (iii) any Person who shall become
the Beneficial Owner of 15% or more of the outstanding shares of
Common Stock solely as a result of an acquisition by the Company of
shares of Common Stock until such time thereafter as such Person shall
become the Beneficial Owner (other than by means of a stock dividend
or stock split) of any additional shares of Common Stock or (iv) the
Purchaser, together with its Affiliates and Associates, from and after
the commencement of the Offer (as defined in the Stock Purchase
Agreement) but only until the earlier to occur of (a) the termination
of the Stock Purchase Agreement in accordance with its terms without
the purchase by the Purchaser of any shares of Common Stock pursuant
thereto, (b) the Purchaser, its Affiliates or Associates collectively
ceasing to be, for a period of at 25 consecutive calendar days follow
ing the Closing (as defined in the Stock Purchase Agreement), of more
than 15.0% of the shares of Common Stock then outstanding or (c) the
Purchaser, its Affiliates and Associates collectively becoming the
Beneficial Owners of any shares of Common Stock in violation of the
terms of the Stockholder Agreement attached as Exhibit G to the Stock
Purchase Agreement."
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2. Clause (ii) of Section 3(a) of the Rights Agreement which
currently reads:
"(ii) the close of business on the tenth day (or such later date as
may be determined by action of a majority of Continuing Directors then
in office) after the date that a tender or exchange offer by any
Person (other than the Company, any Subsidiary of the Company, any em
ployee benefit plan of the Company or of any Subsidiary of the
Company, or any Person or entity organized, appointed or established
by the Company for or pursuant to the terms of any such plan) is first
published or sent or given within the meaning of Rule l4d-2(a) of the
General Rules and Regulation under the Exchange Act, if upon consum
mation thereof, such Person would be the Beneficial Owner of 15% or
more of the shares of Common Stock then outstanding . . ."
shal1 be amended to read:
"(ii) the close of business on the tenth day (or such later date as
may be determined by action of a majority of Continuing Directors then
in office) after the date that a tender or exchange offer by any
Person (other than the Purchaser, its Affiliates or Associates (so
long as none of the Purchaser, its Affiliates or Associates is an Ac
quiring Person), the Company, any Subsidiary of the Company, any em
ployee benefit plan of the Company or of any Subsidiary of the Compa
ny, or any Person or entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan)) is first pub
lished or sent or given within the meaning of Rule 14d-2(a) of the
General Rules and Regulations under the Exchange Act, if upon consum
mation thereof, such Person would be the Beneficial Owner of 15% or
more of the shares of Common Stock then outstanding . . ."
3. Clause (ii)(B) of Section 11(a) of the Rights Agreement which
currently reads:
"any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or of any Subsidiary of the
Company, or any Person or entity organized, appointed or established
by the Company for or pursuant to the terms of any such plan), alone
or together with its Affiliates and Associates, shall at any time
after the Record Date, become the Beneficial Owner of 15% or more of
the shares of Common Stock then
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outstanding, other than pursuant to any transaction set forth in Section
13(a) hereof, or"
shall be amended to read:
"any Person (other than the Purchaser, its Affiliates or Associates
(so long as none of the Purchaser, its Affiliates or Associates is an
Acquiring Person), the Company, any Subsidiary of the Company, any em
ployee benefit plan of the Company or of any Subsidiary of the Compa
ny, or any Person or entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan)), alone or
together with its Affiliates and Associates, shall at any time after
the Record Date, become the Beneficial Owner of 15% or more of the
shares of Common Stock then outstanding, other than pursuant to any
transaction set forth in Section 13(a) hereof, or"
4. The first line of text of clause (ii)(C) of Section 11(a) of the
Rights Agreement which currently reads:
"during such time as there is an Acquiring person, there"
shall be amended to read:
"during such time as there is an Acquiring Person, there"
5. Except as set forth herein, the Rights Agreement shall remain in
full force and effect.
6. This Amendment shall be deemed to be a contract made under the
laws of the State of Delaware, and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and performed entirely within such State.
7. This Amendment may be executed in any number of counterparts, and
each such counterpart shall for all purposes be deemed to be an original, with
all such counterparts together constituting one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the day and year first above written.
Attest: AST RESEARCH, INC.
By: Randall G. Wick By: Dennis R. Leibel
-------------------------- ------------------------------
Title: Assistant General Title: Vice President,
Counsel & Assistant Legal and Treasury
Secretary Operations and
Secretary
Attest: AMERICAN STOCK TRANSFER & TRUST
By: Susan Silber By: Herbert J. Lemmer
--------------------------- -----------------------------
Title: Assistant Secretary Title: Vice President
<PAGE>
EXHIBIT D
AMENDMENT TO AND CLARIFICATION OF EMPLOYMENT AGREEMENT
Pursuant to resolution of the Board of Directors of AST Research,
Inc., a Delaware corporation (the "Company"), dated February 27, 1995, that cer
tain Employment Agreement (the "Employment Agreement"), dated July 27, 1993, by
and between the Company and Safi U. Qureshey (the "Executive") is hereby
amended, effective as of the date hereof, as follows:
1. Section 18 of the Employment Agreement is amended by adding the
following sentence to the end thereof:
Notwithstanding the foregoing, the provisions of the immediately
preceding sentence shall not apply with respect to any change in
control that may occur in connection with (i) the transactions
contemplated by that certain Stock Purchase Agreement, Dated As Of
February 27, 1995, By And Between the Company and Samsung Electronics
Company, Ltd. ("Samsung"), as the same may be amended pursuant to the
terms thereof (the "Stock Purchase Agreement") or (ii) subject to the
first proviso to this sentence, the acquisition of Beneficial Owner
ship of Voting Stock by Samsung and/or its Affiliates in transactions
permitted by the Stockholder Agreement; provided, that the provisions
of the immediately preceding sentence shall apply in the event Samsung
and/or its Affiliates should at any time and by whatever means ac
quire, in the aggregate, Beneficial Ownership of more than 49.9% of
the Voting Stock of the Company, and the transaction(s) whereby any
such acquisition of Beneficial Ownership of more than 49.9% of the
Voting Stock of the Company occurs shall constitute a change in con
trol for purposes of the Severance Agreement; and provided, further,
that nothing in this sentence shall be construed to affect the
Executive's rights under the Severance Agreement as determined without
regard to this Section 18. Capitalized terms used without definition
<PAGE>
in this Section 18 shall have the meanings provided in the Stock
Purchase Agreement.
2. Section 14 of the Employment Agreement is clarified by deleting
the second sentence thereof and replacing it with the following:
The amount payable pursuant to the preceding sentence shall be
grossed- up to the extent necessary to pay any income, excise or
other taxes due on such amount.
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IN WITNESS WHEREOF, the Company and the Executive have executed this
Amendment to and Clarification of Employment Agreement as of the 27th day of
February, 1995.
EXECUTIVE: AST RESEARCH, INC.
SAFI U. QURESHEY
Chairman and Senior Vice-President
Chief Executive Officer Legal and Treasury Operations
and Secretary
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EXHIBIT E
LETTER OF CREDIT AGREEMENT
This Letter of Credit Agreement (this "AGREEMENT") is entered into as
of __________ __, 1995 by and between Samsung Electronics Company, Ltd., a
Korean corporation (the "PURCHASER") and AST Research, Inc., a Delaware corpora
tion (the "COMPANY").
A. The Purchaser and the Company have entered into that certain
Stock Purchase Agreement dated as of February 27, 1995 (the "STOCK PURCHASE
AGREEMENT") pursuant to which the Purchaser is acquiring certain shares of the
Company's Common Stock.
B. As a result of the transactions contemplated by the Stock
Purchase Agreement, the Purchaser will be a significant stockholder of the
Company.
C. It is a condition to certain of the transactions contemplated by
the Stock Purchase Agreement and the desire of the Purchaser and the Company
that this Agreement be entered into to establish certain terms and conditions
concerning the Purchaser's providing certain credit support to the Company as
set forth herein.
D. That certain Stockholder Agreement attached as Exhibit G to the
Stock Purchase Agreement provides for the ability of the Purchaser to acquire
additional shares of the Company's Common Stock as contemplated herein, which
shares would be covered by that certain Registration Rights Agreement attached
as Exhibit F to the Stock Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, and covenants set forth in this Agreement, the
Purchaser and the Company hereby agree as follows:
<PAGE>
ARTICLE 1
DEFINITIONS
Capitalized terms used in this Agreement without definition shall have
the respective means accorded to them in the Stock Purchase Agreement.
Capitalized terms used in this Agreement and not otherwise defined herein or in
the Stock Purchase Agreement shall have the respective meanings set forth below.
"ADVANCE AMOUNT" shall have the meaning provided in Section 3.2.
"ADVANCE DATE" shall have the meaning provided in Section 3.2.
"AMOUNT" means the Advance Amount or the Draw Amount, as applicable.
"BANK" shall have the meaning provided in Section 2.1.
"CLOSING PRICE" means the average of the closing bid and asked prices
of the Shares on the over-the-counter market on the day in question as reported
on the Nasdaq National Market; or, if the Shares are listed on the New York
Stock Exchange, the closing sales price, regular way, on the New York Stock
Exchange on such day or, in case no such sale takes place on such day, the
average of the reported closing bid and asked prices, regular way, on the New
York Stock Exchange, or, if the Shares are not listed or admitted to trading on
such Exchange, on the principal national securities exchange on which the Shares
are listed or admitted to trading; or, if not so listed or admitted for trading,
in such manner as may be reasonably determined by any New York Stock Exchange
member firm selected from time to time by the Board for that purpose.
"CURRENT MARKET PRICE" per Share on any date of determination means
the average of the daily closing prices for the twenty (20) consecutive Trading
Dates ending on the Trading Date immediately preceding the date of determination
of the Current Market Price.
"DATE" means the Advance Date or the Draw Date, as applicable.
"DRAW AMOUNT" shall have the meaning provided in Section 3.1.
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"DRAW DATE" means the date of a draw by Tandy pursuant to Section 2.2.
"REIMBURSEMENT DATE" shall have the meaning provided in Section 3.1.
"TANDY" means Tandy Corporation, a Delaware corporation.
"TANDY NOTE" means that certain promissory note due July 11, 1996,
issued by the Company to Tandy in the principal amount of $96,720,000.00 as of
the date hereof.
"TRADING DATE" means a date on which the Nasdaq National Market or the
New York Stock Exchange (or any successor to such Exchange), as applicable, is
open for the transaction of business.
ARTICLE 2
CREDIT SUPPORT
2.1 LETTER OF CREDIT. As credit support for the Company's obligations under
the Tandy Note, the Purchaser, as applicant (and without any participation by or
further obligation of the Company), shall cause Bank of America National Trust
and Savings Association ("BANK OF AMERICA") or any investment graded bank
permitted by the terms of the Tandy Note or otherwise acceptable to Tandy
(including, if applicable, Bank of America, the "BANK") to issue, on or prior to
the Closing of the purchase and sale of the Second Issuance Shares, a standby
letter of credit in the form required by the Tandy Note or otherwise acceptable
to Tandy and permitting the Company to withdraw and terminate any credit support
of its own for the Tandy Note, naming Tandy as the beneficiary thereunder, in an
amount not less than the lesser of (x) $75,000,000.00 or (y) the outstanding
principal amount of the Tandy Note on such date. Not later than three (3)
Business Days prior to the expiration or termina tion of such standby letter of
credit or any replacement standby letter of credit complying with the terms
hereof, the Purchaser, as applicant (and without any participation by or further
obligation of the Company), shall cause the Bank to deliver a replacement
standby letter of credit in the form required by the Tandy Note, or otherwise
acceptable to Tandy, naming Tandy as the benefi ciary thereunder, in an amount
not less than the lesser of (x) $75,000,000.00 or (y) the outstanding principal
amount of the Tandy Note at such time. The Company shall promptly pay to the
Bank (if requested in writing by the Purchas er) or reim-
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<PAGE>
burse the Purchaser, as applicable, for the fees charged by the Bank in
connection with the standby letters of credit issued in accordance with this
Section 2.1.
2.2 DRAWS UNDER LETTER OF CREDIT. Funds under the standby letter of
credit pursuant to Section 2.1 shall not be subject to Korean regulatory
approval (except for necessary approvals, if any, received prior to the date
hereof) and shall be available to Tandy by their draft drawn on the issuing bank
at sight, so long as accompanied by a statement dated on or before the date of
presentation and signed by a person stated to be an authorized officer of Tandy
reading as follows:
"We hereby certify that AST Research, Inc., has
defaulted under the terms of the Promissory Note dated July
12, 1993 between Tandy Corporation and AST Research, Inc.
and Tandy Corporation has exercised the right of
Acceleration pursuant to Section 8 of the Promissory Note."
Such standby letter of credit shall provide that it will be payable on a
Business Day within three days of sight as set forth in this Section 2.2.
Except as otherwise expressly provided in this Agreement, the Purchaser shall
have no obligation to perform any obligation of the Company under the Tandy
Note.
ARTICLE 3
REIMBURSEMENT; ADVANCEMENT OF FUNDS
3.1 REIMBURSEMENT. The Company hereby promises to reimburse the
Purchaser, as provided in Section 3.3, for any draws by Tandy pursuant to
Section 2.2, on a date (the "REIMBURSEMENT DATE") agreed upon by the Company and
the Purchaser, which shall be no later than ten (10) Business Days following the
receipt by the Company of a written notice setting forth the date and amount
(the "DRAW AMOUNT") of each draw by Tandy pursuant to Section 2.2.
3.2 ADVANCES OF FUNDS. Subject to any necessary Korean regulatory
approval, the Purchaser hereby promises to advance the Company in cash, and the
Company promises to repay the Purchaser as provided in Section 3.3, any amounts
requested by the Company, not to exceed $75,000,000.00 (less any amounts
previously drawn on the Letter of Credit in accordance with Section 2.2), solely
for prompt application in making required principal payments in respect of the
Tandy Note, on a date (the "ADVANCE DATE") agreed upon by the
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<PAGE>
Company and the Purchaser, which shall be no later than fifteen (15) Business
Days following the receipt by the Purchaser of a written notice setting forth
the date and amount (the "ADVANCE AMOUNT") of each required payment in respect
of the Tandy Note for which an advance is being requested under this Section
3.2. Notwithstanding the foregoing, the obligation of the Purchaser to advance
such funds shall be conditioned on the Company having provided to the Purchaser
written evidence reasonably satisfactory to the Purchaser that the Company has
available all other funds, if any, necessary to pay in full such required
principal payments. The Purchaser represents and warrants to the Company that it
will use its best efforts to obtain all necessary regulatory approvals for any
such advances which may be required as set forth herein.
3.3 REPAYMENT OF AMOUNTS. On each Date the Company shall, at the
Purchaser's election (which shall be made in writing and provided to the Company
no later than five (5) Business Days following the date of the notice required
under Section 3.1 or 3.2, as applicable), either (a) provide a promissory note
in favor of the Purchaser with a principal amount equal to the applicable
Amount, in the form of Schedule I hereto; or (b) agree to issue to the Pur
chaser, within ten (10) Business Days following receipt by the Company of a
written notice setting forth such election, that number of Shares (rounded to
the nearest whole Share) having a Current Market Price as of the Date equal to
the applicable Amount (subject to the 49.9% ownership limitation contained in
Section 2.1.7 of the Stockholder Agreement). At the election of the Purchaser,
the Company shall so repay the Purchaser using any combination of the mechanisms
provided in the preceding clauses (a) and (b), so long as the sum of the
principal amount of a loan under clause (a) and the Current Market Price of
Shares under clause (b) in no event exceed the applicable Amount. The Company
represents and warrants to the Purchaser that, assuming due execution, delivery
and performance by the Purchaser of its obligations under this Article 3, (x)
each promissory note to be provided under clause (a) will, at such time, be duly
authorized and enforceable against the Company in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws, now or hereafter in effect,
relating to or affecting creditors' rights and remedies generally and to general
principles of equity (regardless of whether enforcement is sought at law or in
equity), and (y) any Shares to be issued under clause (b) will, at such time, be
duly authorized, validly issued and outstanding, fully paid and nonassessable,
free and clear of any Liens or restrictions (unless created by the Purchaser),
other than restrictions under the Stockholder Agreement or under applicable law.
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<PAGE>
ARTICLE 4
MISCELLANEOUS
4.1 TERMINATION. This Agreement and the rights and obligations of
the Purchaser and the Company hereunder, other than under Article 4 hereof,
shall terminate on July 31, 1996.
4.2 STOCK PURCHASE AND OFFER AGREEMENT. The provisions of Article 9
(other than Section 9.2) of the Stock Purchase Agreement are incorporated herein
by reference and shall govern this Agreement as though set forth in full herein
and as though references in such Article 9 to"this Agreement" were references
to this Agreement.
4.3 GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement shall be
governed by, construed under and enforced in accordance with, the laws of the
State of California 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 California or
the Federal courts of the United States of America sitting in California, (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 9.5 of the Stock Purchase Agreement. 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.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written.
AST RESEARCH, INC. SAMSUNG ELECTRONICS COMPANY, LTD.
By: By:
Name: Name:
Title: Title:
<PAGE>
SCHEDULE I
[FORM OF]
PROMISSORY NOTE
$________ [insert date of applicable Draw]______________, 199__
Irvine, California
FOR VALUE RECEIVED, AST Research, Inc., a Delaware corporation ("Bor
rower"), hereby unconditionally promises to pay to Samsung Electronics Company,
Ltd., a Korean corporation ("Lender"), or assigns, at the address listed in
Section 7 below, or at such other place as the holder hereof may from time to
time notify Borrower in writing, the principal sum of ____________ DOLLARS
($________), together with interest from the date hereof, on the outstanding
principal amount at the rate set forth herein below. Lender has lent to
Borrower the sum of _________ DOLLARS ($________) on the date hereof.
1. The outstanding principal amount of this Note, together with all
accrued and unpaid interest thereon, shall bear interest at the Applicable Rate
(as defined below) determined as of the day (the "Determination Date") which is
three business days before the date on which interest is next due. The "Applica
ble Rate" for each interest accrual period during which this Note is outstanding
shall mean the rate, on an annualized basis, most recently announced as of the
Determination Date by Bank of America National Trust and Savings Association as
its reference rate. Interest on the outstanding principal amount shall be
payable semiannually on __________ and __________ of each year, commencing
__________, 199__, and shall be calculated on the basis of a 360-day year of
twelve 30-day months. Interest will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of
issuance.
2. The principal sum of this Note, together with all accrued and
unpaid interest hereon and all other amounts due hereunder, shall be due and
payable in full on the earlier to occur of (a) [insert the date which is three
years from the date hereof] (the "Maturity Date") or (b) such time as Lender
declares the entire amount of this Note due and payable in accordance with the
provisions of Section 4 hereof.
<PAGE>
3. Principal and interest and all other amounts due hereunder shall
be payable in lawful money of the United States of America. Payments shall be
applied first to interest on past due interest, second to past due interest,
third to accrued interest, fourth to all other amounts (other than principal)
due hereunder, and fifth to principal. The undersigned may prepay all or part
of this Note at any time and from time to time without penalty.
4. An event of default ("Event of Default") hereunder shall occur if:
a. Borrower shall fail to pay any amount due hereunder as and
when due;
b. there shall be a default under any evidence of indebtedness
for borrowed money of Borrower or any of its subsidiaries having a principal
amount in excess of $25 million (i) resulting from the failure to pay principal
at maturity or (ii) as a result of which the maturity of such indebtedness has
been accelerated prior to its stated maturity;
c. Borrower shall admit in writing its inability to pay or shall
be unable to pay its debts as they become due, or shall apply for a receiver,
trustee or similar officer with respect to all or a substantial part of its
property or shall institute by petition, application, answer, consent or other
wise, any bankruptcy, insolvency, reorganization, arrangement, readjustment of
debts, dissolution, liquidation or similar proceedings relating to Borrower
under the laws of any jurisdiction; or
d. Any creditor of Borrower shall apply for a receiver, trustee
or similar officer with respect to all or a substantial part of Borrower's prop
erty or shall institute by petition, application, answer, consent or otherwise,
any bankruptcy, insolvency, reorganization, arrangement, readjustment of debts,
dissolution, liquidation or similar proceedings relating to Borrower under the
laws of any jurisdiction, and such petition, bankruptcy, or other proceeding
shall not be stayed, bonded or discharged within ninety (90) days.
Upon the occurrence of any Event of Default, and at such time as any Event
of Default is continuing, the holder hereof, at its option, may declare all sums
due hereunder immediately due and payable without notice or demand.
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5. No failure or delay on the part of the holder of this Note or the
failure to exercise any power or right under this Note shall operate as a waiver
of such power or right or preclude other or further exercise thereof or the exer
cise of any other power or right. No waiver by the holder of this Note will be
effective unless and until it is in writing and signed by such holder. No
waiver of any condition or performance will operate as a waiver of any subse
quent condition or obligation. The undersigned hereby waives diligence, present
ment, demand for payment, notice of dishonor or acceleration, protest and notice
of protest, and any and all other notices or demands in connection with
delivery, acceptance, performance, default or enforcement of this Note.
6. In the event that any action, suit or other proceeding is
instituted concerning or arising out of this Note, the prevailing party shall
recover all of such party's costs, and reasonable attorneys' fees incurred in
each and every such action, suit, or other proceeding, including any and all
appeals or petitions therefrom.
7. Notices required or permitted to be given under this Note to any
party hereto by any other party shall be in writing and shall be deemed to have
been duly delivered and given when personally delivered to the party (including
by express courier service) or sent by facsimile transmission at the address or
number set forth below, or any such other address or number as shall be given in
writing by the respective party to all other parties:
Borrower: AST Research, Inc.
16215 Alton Parkway
Irvine, CA 92718
Attention: Chief Financial Officer
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue, 34th Floor
Los Angeles, CA 90071
Attn: Thomas C. Janson, Jr.
Lender: Samsung Electronics Company, Ltd.
Attn:
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with a copy to:
Gibson, Dunn & Crutcher
333 South Grand Avenue
Los Angeles, CA 90071
Attn: Andrew Bogen
8. This Note, its validity, construction and effect, shall be gov
erned by, construed under and enforced in accordance with, the laws of the State
of California without regard to its conflict-of-laws principles. Borrower and
Lender agree that (i) any legal action or proceeding arising out of or in connec
tion with this Note or the transactions contemplated hereby shall be brought
exclusively in the courts of the State of California or the Federal courts of
the United States of America sitting in California, (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 7 hereof. 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. It is the intent of Borrower and Lender in the execution of this
Note and in all transactions related hereto to comply with the usury laws of the
State of California (or the usury laws of any other state that might be deter
mined by a court of competent jurisdiction to be applicable notwithstanding such
choice of law, hereinafter collectively referred to as "Usury Laws"). In the
event that, for any reason, it should be determined that the Usury Laws apply to
the Loan evidenced hereby, Borrower and Lender stipulate and agree that none of
the terms and provisions contained herein shall ever be construed to create a
contract for use, forbearance or detention of money requiring payment of
interest at a rate in excess of the maximum interest rate permitted to be
charged by the Usury Laws. In such event, if Lender shall collect monies or
other property which are deemed to constitute interest which would otherwise
increase the effective interest rate on this Note to a rate in excess of the
maximum rate permitted to be charged by the Usury Laws, all such sums or
property deemed to constitute interest in excess of such maximum rate shall, at
the option of Lender, be credited to the payment of the principal sum due
hereunder.
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10. This Note shall not be assignable by Borrower. This Note shall
be assignable by Lender and shall inure to the benefit of Lender and its succes
sors and assigns.
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IN WITNESS WHEREOF, the undersigned has caused this Note to be duly
executed and delivered as of the day and year first above written.
AST RESEARCH, INC.
By:______________________________
Name:
Title:
<PAGE>
EXHIBIT F
REGISTRATION RIGHTS AGREEMENT
DATED AS OF ____, 1995
BY AND BETWEEN
AST RESEARCH, INC.
AND
SAMSUNG ELECTRONICS CO., LTD.
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "AGREEMENT") is entered into as of
, 1995 by and between Samsung Electronics Co., Ltd., a Korean
corporation (the "INVESTOR") and AST Research, Inc., a Delaware corporation (the
"COMPANY").
A. The Investor and the Company have entered into that certain Stock
Purchase Agreement dated as of February 27, 1995 (the "STOCK PURCHASE
AGREEMENT") pursuant to which the Investor is acquiring certain shares of the
Company's Common Stock.
B. The execution and delivery of this Agreement is a material
inducement and consideration to the Investor to enter into the Stock Purchase
Agreement and a condition to the transactions contemplated thereby.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, and covenants set forth in this Agreement, the
Investor and the Company hereby agree as follows:
ARTICLE 1
DEFINITIONS
Capitalized terms used in this Agreement without definition shall
have the respective meanings accorded to them in the Stock Purchase Agreement.
Capitalized terms used in this Agreement and not otherwise defined herein or in
the Stock Purchase Agreement shall have the respective meanings set forth below.
"ADVERSE DISCLOSURE" means public disclosure of material non-public
information relating to a Significant Transaction, which disclosure (i) would,
in the good faith judgment of the Board, based as to legal matters on the
written opinion of outside counsel, be required to be made in any registration
statement filed with the Commission by the Company so that such registration
statement would not be materially misleading; (ii) would not, in the good faith
judgment of the Board, based as to legal matters on the written opinion of
outside counsel, be required to be made but for the filing of such a
registration statement; and (iii) would have a material adverse effect on the
Company's ability to complete such Significant Transaction, or the terms upon
which such Significant Transaction can be completed.
"DEMAND REGISTRATION" has the meaning set forth in Section 2.1.
"REGISTER," "REGISTERED" and "REGISTRATION" refer to a registration
effected by preparing and filing of an appropriate registration statement with
the Commission in compliance with the Securities Act.
"REGISTRABLE SHARES" means (i) the New Issue Shares, (ii) the Offer
Shares, and (iii) other shares of Common Stock acquired by the Investor and/or
its Affiliates from time to time not in violation of the Stock Purchase
Agreement or the Stockholder Agreement. All Registrable Shares shall continue
to be Registrable Shares in the hands of such Affiliates of the Investor, but
shall cease to be Registrable Shares when transferred to any person other than
such an Affiliate of the Investor, or (a) when sold in a registered public
offering or in accordance with Rule 144 promulgated by the Commission under the
Securities Act, or (b) when permitted to be sold in accordance with Rule 144(k).
<PAGE>
"REGISTRATION EXPENSES" means all expenses, except Selling Expenses,
incurred by the Company in complying with Articles 2 and 3, including, without
limitation, all registration, qualification, and filing fees, printing expenses,
escrow fees, fees and disbursements of counsel for the Company, blue sky fees
and expenses, the expense of any special audits incident to or required by any
such registration, expenses of all marketing and promotional efforts reasonably
requested by the managing underwriter and the reasonable fees (not to exceed
$50,000) and reasonable disbursements of one counsel for the Investor.
"SELLING EXPENSES" means all underwriting discounts, selling
commissions, and stock transfer taxes applicable to the sale of the Registrable
Shares.
"SIGNIFICANT TRANSACTION" means a pending or imminent material
acquisition, disposition, or other business combination or divestiture or
transaction.
ARTICLE 2
DEMAND REGISTRATIONS
2.1 REQUEST FOR REGISTRATION. At any time and from time to time
after 180 days following the Closing of the purchase and sale of the First
Issuance Shares, the Investor may request that the Company effect the
registration of Registrable Shares (a "DEMAND REGISTRATION"). Upon receipt of
such request, the Company shall use its best efforts to effect such Demand
Registration, subject to the limitations set forth in Section 2.2. The Company
may include in any Demand Registration any other shares of Common Stock
(including issued and outstanding shares of Common Stock as to which the holders
thereof have contracted with the Company for "piggyback" registration rights) so
long as the inclusion in such registration of such shares will not, in the
reasonable judgment of the managing underwriter(s), if any, interfere with the
successful marketing in accordance with the intended method of sale or other
disposition of all the Registrable Shares sought to be registered. If it is
determined as provided above that there will be such interference, the other
shares of Common Stock sought to be included shall be excluded to the extent
deemed appropriate by the managing underwriter(s).
2.2 LIMITATIONS ON DEMAND REGISTRATIONS. Subject to Section 2.4, the
Company's obligation to effect a Demand Registration requested by the Investor
pursuant to Section 2.1 shall be subject to the following limitations:
2.2.1. The Company shall not be required to effect any Demand
Registration of fewer than 2,000,000 Registrable Shares (as adjusted for any
stock splits, reverse stock splits or similar events which occur after the date
hereof).
2.2.2. The Company shall not be required to effect any Demand
Registration within 18 months of the effectiveness of a Registration by the
Investor of Registrable Shares registered pursuant to the previous Demand
Registration effected by Company.
2.2.3. The Company may defer its obligations to effect a Demand
Registration if, in the good faith judgment of the Board, filing a registration
statement with the Commission at the time a Demand Registration is requested
would require Adverse Disclosure, provided that such deferral may not extend
beyond the earlier to occur of (i) 180 days after the receipt by the Company of
the Investor's request for such Demand Registration, or (ii) the date that
filing of a registration statement with the Commission would not require Adverse
Disclosure therein.
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2.2.4. If the Investor purchases the First Issuance Shares but
not the Second Issuance Shares and the Offer Shares, the Company shall not be
required to effect more than three (3) Demand Registrations. If the Investor
purchases all of the New Issuance Shares and the Offer Shares, the Company shall
not be required to effect more than six (6) Demand Registrations.
2.3 HOLDBACK. Subject to Section 2.4, if requested (pursuant to a
timely written notice) by the managing underwriter(s) of an underwritten
offering or the initial purchaser(s) in any offering being resold pursuant to
Rule 144A under the Securities Act of New Securities by the Company, the
Investor shall agree on the same terms applicable to officers and directors of
the Company not to effect any public sale or distribution of any of the
Registrable Shares for a period of up to 120 days following and 15 days prior to
the date of the final prospectus contained in the registration statement filed
in connection with such offering.
2.4 MINIMUM SALE AVAILABILITY. The limitations on the Company's
obligations to effect Demand Registrations set forth in Sections 2.2.3 and the
Investor's obligation under Section 2.3 shall not be applicable to the extent
that such limitations would result in the Investor not having a period of at
least 180 consecutive days within any 18-month period during which the Investor
may sell Registrable Shares under a Registration effected pursuant to the
provisions hereof.
2.5 SELECTION OF UNDERWRITER. Any Demand Registration and related
offering shall be managed by the Investor as follows: subject to the reasonable
approval of the Company, the Investor shall have the power to select the
managing underwriter(s) for such offering, and shall in consultation with the
managing underwriter(s) have the power to determine the number of Registrable
Shares to be included in such registration and offering (subject to applicable
limitations set forth herein), the offering price per Registrable Share, the
underwriting discounts and commissions per Registrable Share, the timing of the
registration and related offering (subject to applicable limitations set forth
herein), counsel to the Investor, and all other administrative matters related
to the registration and related offering. The Company shall enter into an
underwriting agreement in customary form with the underwriter(s) selected by the
Investor and shall enter into such other customary agreements and take all such
other customary actions as the Investor or its underwriter(s) may reasonably
request to facilitate the disposition of the Registrable Shares.
ARTICLE 3
PIGGYBACK REGISTRATIONS
3.1 REQUEST FOR REGISTRATION. At any time that the Company proposes
to register any Common Stock for sale solely for cash, either for its own
account or for the account of a stockholder or stockholders (a "COMPANY
REGISTRATION"), the Company shall give the Investor written notice of its
intention to do so and of the intended method of sale (the "REGISTRATION
NOTICE") not fewer than 25 days prior to the anticipated filing date of the
registration statement effecting such Company Registration. The Investor may
request inclusion of any Registrable Shares in such Company Registration by
delivering to the Company, within 15 days after receipt of the Registration
Notice, a written notice (the "PIGGYBACK NOTICE") stating the number of
Registrable Shares proposed to be included and that such shares are to be
included in any underwriting only on the same terms and conditions as the shares
of Common Stock otherwise being sold through underwriters under such
Registration. The Company shall use its best efforts to cause all Registrable
Shares specified in the Piggyback Notice to be included in the Company
Registration and any related offering, all to the extent requisite to permit the
sale by the Investor of such Registrable Shares in
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accordance with the method of sale applicable to the other shares of Common
Stock included in the Company Registration.
3.2 LIMITATIONS ON PIGGYBACK REGISTRATIONS. The Company's obligation
to include Registrable Shares in the Company Registration pursuant to Section
3.1 shall be subject to the following limitations:
3.2.1. The Company shall not be obligated to include any
Registrable Shares in a registration statement (i) filed on Form S-4 or Form S-8
or such other similar successor forms then in effect under the Securities Act,
(ii) pursuant to which the Company is offering to exchange its own securities,
or (iii) relating to dividend reinvestment plans.
3.2.2. If the managing underwriter(s), if any, of an offering
related to the Company Registration determines in its reasonable judgment that
marketing factors require a limitation of the number of shares of Common Stock
that can be included in such offering, the managing underwriter(s) may exclude
the appropriate number of shares of Common Stock held by the stockholders of the
Company, including the Investor, from such registration. If the managing
underwriter(s) determines to exclude from such offering any Registrable Shares
that the Investor desires to include or any shares of Common Stock that other
Company stockholders with applicable registration rights desire to include, the
Investor and such other Company stockholders (except for such person or persons,
if any, upon whose demand such Registration is being made) shall share pro rata
in the portion of such offering available to them (the "AVAILABLE PORTION"),
with the Investor and each such other Company stockholder entitled to include in
such Company Registration and related offering a number of shares of Common
Stock equal to the product of (i) the Available Portion and (ii) a fraction, the
numerator of which is the total number of Registrable Shares (in the case of the
Investor) or shares of Common Stock entitled to inclusion in such Company
Registration and related offering (in the case of other Company stockholders
desiring inclusion), and the denominator of which is the total of the number of
Registrable Shares and shares of Common Stock entitled to inclusion in such
Company Registration and related offering owned by the Company stockholders
other than the Investor desiring inclusion.
3.3 SELECTION OF UNDERWRITER. Any Company Registration and related
offering shall be managed by the Company; the Company shall have the power to
select the managing underwriter(s) for such offering, and shall in consultation
with the managing underwriter(s) have the power to determine the offering price,
the underwriting discounts and commissions, the terms of the underwriting
agreement, the timing of the registration and related offering, counsel to the
Company, and all other administrative matters related to the registration and
related offering. To the extent that the Investor participates in a Company
Registration and related offering pursuant to Section 3.1, the Investor shall
enter into, and sell its Registrable Shares only pursuant to, the underwriting
arranged by the Company, and shall either commit to attend the closing of the
offering and take such other actions as may be reasonably necessary to effect
the Investor's participation in the offering and to provide any assurances
reasonably requested by the Company and the managing underwriter(s) in that
regard, or shall deliver to the Company in custody certificates representing all
Registrable Shares to be included in the registration and shall execute and
deliver to the Company a custody agreement and a power of attorney, each in form
and substance appropriate for the purpose of effecting the Investor's
participation in the Company Registration and related offering and otherwise
reasonably satisfactory to the Company. If the Investor disapproves of the
features of the Company Registration and related offering, the Investor may
elect to withdraw therefrom (in whole or part) by written notice to the Company
and the managing underwriter(s) delivered no later than ten (10) days prior to
the effectiveness of the applicable
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registration statement and the Registrable Shares of the Investor shall
thereupon be withdrawn from such registration.
3.4 OTHER REGISTRATION RIGHTS. Notwithstanding anything in this
Article 3 to the contrary, the Investor shall be entitled to participate in any
Company Registration and related offering upon terms at least as favorable as
those upon which any other Company stockholder is entitled to participate
therein, subject to Section 3.2.2.
ARTICLE 4
REGISTRATION PROCEDURES AND EXPENSES
4.1 REGISTRATION PROCEDURES. If and whenever the Company is required
pursuant to this Agreement to use its best efforts to effect the registration of
any of the Registrable Shares, the Investor shall furnish in writing such
information regarding the Investor and its Affiliates, the Registrable Shares
being registered and offered, and the intended method of distribution of such
Registrable Shares as is reasonably requested by the Company for inclusion in
the registration statement relating to such offering pursuant to the Securities
Act and the rules of the Commission thereunder, and the Company shall, as
expeditiously as reasonably practicable:
4.1.1. prepare and file with the Commission a registration
statement (including a prospectus therein) with respect to such securities and
use its best efforts to cause such registration statement to become and remain
effective for such period as may be necessary to permit the successful marketing
of such securities, but not exceeding 120 days for an offering in connection
with a Demand Registration, or, with regard to an offering in connection with a
Company Registration, for the period associated with such offering;
4.1.2. prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to comply with the Securities Act and the rules of
the Commission thereunder; and to keep such registration statement effective for
that period of time specified in Section 4.1.1;
4.1.3. furnish to the Investor such number of prospectuses and
preliminary prospectuses in conformity with the requirements of the Securities
Act, and such other documents as the Investor may reasonably request in order to
facilitate the public sale or other disposition of the Registrable Shares being
sold;
4.1.4. upon written request by any underwriters of the offering,
and subject to applicable rules and guidelines, cause its certified public
accountants and attorneys, as applicable, to furnish to the Investor a signed
counterpart, addressed to the Investor and its underwriters, if any, of (i) a
letter from the independent certified public accountants of the Company in the
form customarily furnished to underwriters in firm commitment underwritten
offerings providing substantially that such accountants are independent
certified public accountants within the meaning of the Securities Act and that
in the opinion of such accountants, the financial statements and other financial
data of the Company included in the registration statement and the prospectus,
and any amendment or supplement thereto, comply as to form in all material
respects with the applicable accounting requirements of the Securities Act, and
additionally covering such other financial matters (including information as of
the date of such letter) with respect to the registration in respect of which
such letter is being given as the underwriters may reasonably request; and (ii)
an opinion of outside legal counsel to the Company, dated the effective date of
the registration statement, covering substantially the
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same matters with respect to the registration statement and the prospectus
included therein as are customarily covered (at the time of such registration)
in the opinions of issuer's counsel delivered to the underwriters in comparable
underwritten public offerings;
4.1.5 use its best efforts to register or qualify the
Registrable Shares covered by such registration statement under such securities
or blue sky laws of such jurisdictions within the United States as the Investor
or its underwriters, if any, shall reasonably request; provided, however, that
the Company shall not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified, or to take any action that would
subject it to general service of process in any such jurisdiction where it is
not then so subject, or subject the Company to any tax in any such jurisdiction
where it is not then so subject;
4.1.6. cause all such Registrable Shares to be listed on each
securities exchange on which similar securities issued by the Company are then
listed;
4.1.7. provide a transfer agent and registrar for all such
Registrable Shares not later than the effective date of such registration
statement;
4.1.8. make available for inspection by the Investor and its
attorneys, and any participating underwriter, accountant or other agent
retained by the Investor and any participating underwriter in a Demand
Registration, all financial and other records, pertinent documents and
properties of the Company, and cause the Company's Affiliates (to the extent it
controls such Affiliates), employees, and agents to supply all information
reasonably requested by the Investor and any such underwriter, attorney,
accountant or agent in connection with the preparation of such registration
statement.
4.2 EXPENSES. The Company shall pay all Registration Expenses,
except as may be required to update any registration statement kept effective
for more than the period of time required by Section 4.1.1. The Investor shall
pay all Selling Expenses.
ARTICLE 5
INDEMNIFICATION
5.1 INDEMNIFICATION BY THE COMPANY. In the event of a registration
of any Registrable Shares pursuant to this Agreement, the Company shall
indemnify and hold harmless each seller of Registrable Shares, and each person,
if any, who controls such seller or underwriter within the meaning of the
Securities Act, and each officer, director, employee and advisor of each of the
foregoing (each an "INVESTOR INDEMNITEE"), against any expenses, losses, claims,
damages or liabilities, joint or several, to which such Investor Indemnitee may
become subject under the Securities Act, any state securities law or otherwise,
including any of the foregoing incurred in settlement of any litigation,
commenced or threatened, insofar as such expenses, losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact contained
in any registration statement under which such shares are registered under the
Securities Act, any preliminary prospectus or final prospectus contained
therein, any summary prospectus used in connection with any securities being
registered, or any amendment or supplement thereto; or (ii) any omission or
alleged omission to state therein a 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; or (iii) any violation by the Company of
the Securities Act or rules of the Commission thereunder or any blue sky laws or
any rules promulgated thereunder, and shall reimburse each such Indemnitee for
any legal or
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any other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
however, that the Company shall not be liable in any such case to the extent
that any such expense, loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, said preliminary
prospectus or said prospectus or summary prospectus or said amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company by or on behalf of the Investor or any underwriter specifically
for use in the preparation thereof; and provided, further, that if any expenses,
losses, claims, damages or liabilities arise out of or are based upon an untrue
statement, alleged untrue statement, omission or alleged omission contained in
any preliminary prospectus which did not appear in the final prospectus, the
Company shall not have any liability with respect thereto to any Investor
Indemnitee if any Investor Indemnitee delivered a copy of the preliminary
prospectus to the person alleging such expenses, losses, claims, damages or
liabilities and failed to deliver a copy of the final prospectus as amended or
supplemented if it has been amended or supplemented, to such person at or prior
to the written confirmation of the sale to such person.
5.2 INDEMNIFICATION BY THE INVESTOR. In the event of a registration
of any Registrable Shares pursuant to this Agreement, the Investor shall
indemnify and hold harmless the Company and each person, if any, who controls
the Company within the meaning of the Securities Act, each officer of the
Company who signs the registration statement, each director of the Company and
each underwriter and each person who controls any underwriter within the meaning
of the Securities Act (each a "COMPANY INDEMNITEE"), against any and all such
expenses, losses, claims, damages or liabilities referred to in Section 5.1 if
the statement, alleged statement, omission or alleged omission in respect of
which such expense, loss, claim, damage or liability is asserted was made in
reliance upon and in conformity with information furnished in writing to the
Company by or on behalf of a holder of Registrable Shares specifically for use
in connection with the preparation of such registration statement, preliminary
prospectus, prospectus, summary prospectus, amendment or supplement; provided,
however, that if any expenses, losses, claims, damages or liabilities arise out
of or are based upon an untrue statement, alleged untrue statement, omission or
alleged omission contained in any preliminary prospectus which did not appear in
the final prospectus, the Investor shall not have any such liability with
respect thereto to any Company Indemnitee if any Company Indemnitee delivered a
copy of the preliminary prospectus to the person alleging much expenses, losses,
claims, damages or liabilities and failed to deliver a copy of the final
prospectus, as amended or supplemented if it has been amended or supplemented,
to such person at or prior to the written confirmation of the sale to such
person.
5.3 CONTRIBUTION. If the indemnification provided for in
Sections 5.1 or 5.2 above is unavailable to an indemnified party in respect of
any losses, claims, damages or liabilities referred to therein, then in lieu of
indemnifying such indemnified party thereunder, the indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities, in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and of the indemnified parties on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified parties shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the indemnifying party, or by the indemnified
parties, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
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The parties agree that it would not be just and equitable if contribution
pursuant to this Section 5.3 were determined by pro rata allocation or by any
other method of allocation which does not take into account the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages and liabilities or actions in respect thereof referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 5.3, no holder
of Registrable Shares (other than a person who controls the Company within the
meaning of the Securities Act) shall be required to contribute any amount in
excess of the amount by which the total price at which the Registrable Shares
sold by it exceeds the amount of any damages which such holder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentations
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
5.4 INDEMNIFICATION PROCEDURES. Promptly after receipt by an
indemnified party of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party, notify the indemnifying party in writing of the commencement
thereof; but the omission so to notify the indemnifying party shall not relieve
it from any liability which it may have to any indemnified party otherwise than
under this Article 5 or to the extent that it has not been prejudiced as a
proximate result of such failure. In case any such action shall be brought
against any indemnified party, and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, to assume the defense thereof,
with counsel satisfactory to such indemnified party; provided, however, that if
the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
Company, the indemnified party or parties shall have the right to select
separate counsel to assert such legal defenses (in which case the indemnifying
party shall not have the right to direct the defense of such action on behalf of
the indemnified party or parties). Upon the permitted assumption by the
indemnifying party of the defense of such action, and approval by the
indemnified party of counsel, the indemnifying party shall not be liable to such
indemnified party under this Article 5 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof (other than reasonable costs or investigation) unless (i) the
indemnified party shall have employed separate counsel in connection with the
assertion of legal defenses in accordance with the proviso to the next preceding
sentence, (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time, (iii) the indemnifying party and its counsel do not actively
and vigorously pursue the defense of such action or (iv) the indemnifying party
has authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party.
ARTICLE 6
MISCELLANEOUS
The provisions of Article 9 of the Stock Purchase Agreement are
incorporated herein by reference and shall govern this Agreement as though set
forth in full herein and as though references in such Article 9 to "this
Agreement" were references to this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written.
AST RESEARCH, INC., SAMSUNG ELECTRONICS CO., LTD.,
a Delaware corporation a Korean corporation
By: By:
Name: Name:
Title: Title:
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EXHIBIT G
STOCKHOLDER AGREEMENT
DATED AS OF ____, 1995
BY AND BETWEEN
AST RESEARCH, INC.
AND
SAMSUNG ELECTRONICS CO., LTD.
<PAGE>
STOCKHOLDER AGREEMENT
This Stockholder Agreement (this "AGREEMENT") is entered into as of ______, 1995
by and between SAMSUNG ELECTRONICS CO., LTD., a Korean corporation (the
"PURCHASER") and AST Research, Inc., a Delaware corporation (the "COMPANY").
A. The Purchaser and the Company have entered into that certain Stock
Purchase Agreement dated as of the date hereof (the "STOCK PURCHASE AGREEMENT")
pursuant to which the Purchaser is acquiring certain shares of the Company's
Common Stock.
B. As a result of the transactions contemplated by the Stock Purchase
Agreement, the Purchaser will be a significant stockholder of the Company.
C. It is a condition to the transactions contemplated by the Stock
Purchase Agreement and the desire of the Purchaser and the Company that this
Agreement be entered into to establish certain terms and conditions concerning
the Purchaser's investment in the Company and the Company's corporate
governance.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, and covenants set forth in this Agreement, the
Purchaser and the Company hereby agree as follows:
ARTICLE 1.
DEFINITIONS
Capitalized terms used in this Agreement without definition shall have the
respective meanings accorded to them in the Stock Purchase Agreement.
Capitalized terms used in this Agreement and not otherwise defined herein or in
the Stock Purchase Agreement shall have the respective meanings set forth below.
"ACQUIRED ENTITY" shall have the meaning set forth in Section 5.1.1.
"GAAP" means generally accepted accounting principles as in effect in the
USA (as such principles may change from time to time).
"CAPITAL EXPENDITURES" means, for any period, the aggregate of all
expenditures (including, without limitation, expenditures under leases that, in
conformity with GAAP, are required to be accounted for as capital leases) of the
Company and its subsidiaries during such period that are required to be
capitalized in conformity with GAAP.
"DIRECTOR" means a member of the Board.
"EQUITY SECURITY" means Voting Stock and any options, warrants, convertible
securities, or other rights to acquire Voting Stock but excluding the Rights and
securities issuable upon exercise of the Rights.
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"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"INDEPENDENT DIRECTOR" means a Director who is not (apart from such
directorship) an Affiliate, officer, employee, agent, principal stockholder,
consultant or partner of the Purchaser or the Company or any Affiliate of either
of them or of any entity that was dependent on the Purchaser or the Company or
any Affiliate of either of them for more than five percent (5%) of its revenues
or earnings in its most recent fiscal year.
"LYONS" means the Company's Liquid Yield Option Notes due December 14,
2013.
"MANAGEMENT COMMITTEE" shall mean the management committee of the Board
created pursuant to Section 12 of Article III of the Amended Bylaws.
"NEW SECURITIES" means Voting Stock or other shares of capital stock of the
Company and any options, warrants, convertible securities, or other rights to
acquire such Voting Stock or other capital stock or securities exercisable or
convertible for such Voting Stock or other capital stock, but excluding the
Rights and securities issuable upon exercise of the Rights.
"ORIGINAL INVESTMENT SHARES" means the New Issue Shares and the Offer
Shares.
"STANDSTILL PERIOD" means the period of four years after the Closing of the
purchase and sale of the First Issuance Shares, provided that if there is a
later Closing of the purchase and sale of the Second Issuance Shares, the
Standstill Period shall continue until the date that is four years after such
later Closing.
"TANDY NOTE" means that certain promissory note due July 11, 1996, issued
by the Company to Tandy Corporation in the principal amount of $96,720,000 as of
the date hereof.
ARTICLE 2.
ACQUISITION OF SHARES
2.1. STANDSTILL.
Until completion of the purchase of the Original Investment Shares, neither
the Purchaser nor any of its Affiliates shall (directly or indirectly) acquire
or offer to acquire Beneficial Ownership of any Equity Securities or interest
therein except pursuant to the First Issuance, the Second Issuance, and the
Offer. After completion of the purchase of the Original Investment Shares and
prior to the end of the Standstill Period, neither the Purchaser nor any of its
Affiliates shall directly or indirectly acquire or offer to acquire Beneficial
Ownership of any Equity Securities or interest therein except as set forth in
Sections 2.1.1 through 2.1.6, and provided that the Purchaser may at any time
submit a proposal to the Board for consideration by the Board as contemplated by
Section 2.1.3.
2.1.1. Letter of Credit Draw.
The Purchaser and/or its Affiliates may purchase Common Stock from the
Company pursuant to Section 3.3 of the Letter of Credit Agreement.
2.1.2. Open Market.
The Purchaser and/or its Affiliates may purchase Shares in the open
market at prices per share at least equal to $21.10.
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2.1.3. Directors' Approval.
The Purchaser and/or its Affiliates may purchase Common Stock in any
transactions approved by a majority of the Directors not designated by the
Purchaser pursuant to this Agreement.
2.1.4. Purchases to Restore Previous Purchaser Interest.
If at any time or from time to time the number of outstanding shares
of Voting Stock is increased for any reason through the issuance of additional
shares, including, without limitation, upon exercise of stock options or
directors' warrants or upon conversion or exchange of convertible securities,
conversion of any LYONs for Common Stock, payment on the Tandy Note with Common
Stock, or as consideration for acquisition of any corporation or other entity or
business or division thereof, but excluding any shares of Voting Stock issued
pursuant to stock splits or stock dividends issued or distributed
proportionately on all outstanding shares of Voting Stock, then in connection
with each such issuance the Purchaser and/or its Affiliates shall have the
right, but not the obligation, to purchase in the open market at any available
price, up to such number of additional shares of Voting Stock as may then be
necessary solely as a result of such issuance to restore the Purchaser Interest
to the same percentage of the Total Voting Power as existed immediately prior to
such increase in the number of outstanding shares of Voting Stock, which right
shall be exercisable at any time and from time to time until the earlier to
occur of (a) 180 days after the Purchaser's receipt of notice of such issuance
pursuant to Section 2.3, or (b) 90 days after the Purchaser's receipt of any
approval of any Governmental Authority required in connection with such
purchase.
2.1.5. New Equity Issuance.
The Purchaser and/or its Affiliates shall have the right, but not the
obligation, to participate in certain equity issuances pursuant to Section 2.2.
2.1.6. Third-Party Offers.
From and after the Closing of the purchase and sale of the Second
Issuance Shares until such time as the Purchaser Interest has been less than 30%
for a period of at least twenty-five (25) consecutive days, in the event any
Third Party shall make an offer to acquire a 20% or greater interest in Equity
Securities, the Purchaser and/or its Affiliates shall be permitted to make a
competing offer, and acquire Equity Securities pursuant thereto, subject to and
in accordance with the following:
(a) If (i) the Third Party offer is approved or recommended by a
majority vote of the Directors not designated by the Purchaser pursuant to this
Agreement, or (ii) there shall be in effect no Rights Agreement or the Board
shall have amended or rescinded the Rights Agreement to exclude the Third Party
from the definition of "Acquiring Person" or permit the Third Party offer to
proceed without resulting in a Distribution Date or a Triggering Event or the
Rights becoming exercisable or (iii) a court of competent jurisdiction shall
have entered an order invalidating the Rights Agreement with respect to the
Third Party offer or ordering that the Rights be rescinded or the Rights
Agreement be so amended, then the Purchaser shall have the right to make a
competing offer and to acquire Equity Securities pursuant to such competing
offer, provided that (1) the competing offer complies with Section 2.1.6(b), (2)
the competing offer is made prior to the withdrawal or termination of the Third
Party offer, and (3) if the Third Party offer is withdrawn or terminated before
the Purchaser acquires Equity Securities pursuant to the competing offer, the
Board determines in good faith that such Third Party offer was withdrawn or
terminated primarily as a result of the Purchaser's competing offer having
superior terms to or a
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substantially greater likelihood of success than such Third Party offer. The
Company shall not enter into any agreement with the Third Party offeror or take
any action required as a condition of the Third Party offer unless and until the
Purchaser shall have been notified in writing by the Company of the right of the
Purchaser and/or its Affiliates to submit a competing offer hereunder, and the
Purchaser and/or its Affiliates shall have been afforded not less than ten (10)
Business Days following receipt of such notice in which to submit its competing
offer for consideration by the Board.
(b) Any competing offer by the Purchaser pursuant to this
Section 2.1.6 shall be, as nearly as possible, for an identical amount of
securities and at a price per share no lower than and on terms no less favorable
than are offered by the Third Party, provided that any such offer may be subject
to any governmental or regulatory approvals required by Korean law. In the
event the consideration offered in any Third Party offer shall consist of
securities or property other than cash, the competing offer by the Purchaser may
in the Purchaser's discretion be for cash in an amount per share not less than
the fair market value of the consideration offered by the Third Party.
2.1.7. Maximum Purchaser Ownership.
Notwithstanding anything in this Section 2.1 to the contrary, from the
date of this Agreement until the expiration of the Standstill Period, neither
the Purchaser nor any of its Affiliates may (directly or indirectly) acquire, or
offer to acquire, Beneficial Ownership of any Voting Stock if, after such
acquisition, the Purchaser Interest (calculated as though Beneficial Ownership
of Voting Stock includes shares of Voting Stock that the Purchaser has the right
to acquire (other than pursuant to this Agreement) as described in
subsection (d)(1)(i) of Rule 13d-3 under the Exchange Act without regard to the
60-day limit set forth therein) would exceed 49.9%, unless such acquisition or
offer (together with related transactions) is (a) made pursuant to
Section 2.1.6, or (b) has been approved by a majority of the Directors not
designated by the Purchaser pursuant to this Agreement and would result in the
Purchaser and/or its Affiliates owning 100% of the Voting Stock.
2.2. PRO-RATA PURCHASE RIGHT.
From and after the Closing of the purchase and sale of the Second Issuance
Shares until such time as the Purchaser Interest has been less than 30% for a
period of at least twenty-five (25) consecutive days, the Company shall give the
Purchaser at least twenty-five (25) (and, when possible, at least ninety-five
(95)) days' prior written notice of the issuance by the Company of any New
Securities as a result of which the Purchaser Interest would be reduced, either
immediately upon issuance of such New Securities, or upon subsequent exercise or
conversion thereof. Such notice shall set forth (a) the approximate number and
type of securities proposed to be issued and sold to persons other than the
Purchaser and/or its Affiliates and the material terms of such securities,
(b) the proposed price or range of prices at which such securities are proposed
to be sold and the terms of payment, (c) the number of such securities offered
to the Purchaser and/or its Affiliates in compliance with this Section 2.2, and
(d) the proposed date of issuance of such securities. The Purchaser may, by
notice given to the Company within fifteen (15) days after such Company notice
and so long as permitted by applicable laws and regulations, elect to purchase
up to its pro rata share of such New Securities. Such pro rata share shall be a
percentage of the proposed issuance equal to the Purchaser Interest (calculated
as though Beneficial Ownership of Voting Stock includes shares of Voting Stock
that the Purchaser has the right to acquire (other than pursuant to this
Agreement) as described in
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subsection (d)(1)(i) of Rule 13d-3 under the Exchange Act without regard to the
60-day limit set forth therein) immediately prior to such issuance. The
Purchaser's pro-rata purchase shall be on the same terms as the balance of such
issuance, provided that if the sale price at which the Company proposes to
issue, deliver or sell any New Securities is to be paid with consideration other
than cash, then the purchase price at which the Purchaser may acquire such New
Securities shall be equal in value (as determined in good faith by the Board)
but payable entirely in cash. The closing of the Purchaser's purchase of New
Securities pursuant to this Section 2.2 shall occur simultaneously with the
closing of the balance of such issuance, provided that if as of the date of the
closing of the balance of such issuance the Purchaser has not received all
approvals of Governmental Authorities required in connection with the
Purchaser's participation in such issuance, then (i) the Purchaser shall not be
required to effect its purchase under this Section 2.2 until such approvals have
been received, and (ii) the Company may terminate the Purchaser's right to
participate in such issuance if the Purchaser has not effected its purchase
within 120 days of receipt from the Company of written notice of the New
Issuance. If the Purchaser elects such deferral, the Company may close the
portion of the issuance other than the Purchaser's portion prior to the closing
of the issuance of the Purchaser's portion. If the terms of the proposed
issuance are materially changed from those stated in the Company's notice to the
Purchaser of such issuance, then the proposed issuance shall be treated as a new
issuance, subject again to this Section 2.2, and any election to purchase made
prior to such change may, at the sole discretion of the Purchaser, be withdrawn.
The Purchaser's pro-rata purchase right pursuant to this Section 2.2 shall
not apply, however, to:
(i) any issuance pursuant to (a) any stock option or purchase
right or plan exclusively for one or more employees and/or directors of the
Company or any of its subsidiaries or (b) warrants issued to Directors prior to
the date hereof;;
(ii) any issuance in consideration of any part of the acquisition
by the Company or any subsidiary of any stock, assets or business;
(iii) any issuance upon conversion of the LYONs;
(iv) any issuance pursuant to the exercise or conversion of any
New Security issued after the date hereof in a transaction in which the
Purchaser was entitled to participate pursuant to this Section 2.2; or
(v) any issuance in payment of any portion of the Tandy Note.
2.3. NOTICE AND SUBSCRIPTION PROCEDURES.
In addition to the notice required under Section 2.2, the Company shall
notify the Purchaser of, and provide the Purchaser with an accurate and complete
description of, any event that will cause the rights of the Purchaser and/or its
Affiliates to acquire or offer to acquire Equity Securities under Section 2.1
(other than Section 2.1.2 or 2.1.5) to become exercisable. The Company shall
deliver such notice to the Purchaser as promptly as practicable after becoming
aware of such event, and when possible at least ninety-five (95) days prior to
the anticipated date of such event, provided that notice of
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issuances of a kind described in subsection (i), (iii), or (iv) of Section 2.2,
need only be delivered within 15 days following the end of each fiscal quarter
of the Company.
2.4. ACQUISITIONS AFTER STANDSTILL PERIOD.
After the Standstill Period, this Agreement shall not restrict the
acquisition or offer to acquire any Equity Securities or interest therein by the
Purchaser and/or its Affiliates; provided, however, that the Purchaser shall not
acquire or offer to acquire any Equity Securities if, as the result of or after
giving effect to such acquisition, the Purchaser Interest (calculated as though
Beneficial Ownership of Voting Stock includes shares of Voting Stock that the
Purchaser has the right to acquire (other than pursuant to this Agreement) as
described in subsection (d)(1)(i) of Rule 13d-3 under the Exchange Act without
regard to the 60-day limit set forth therein) would exceed 66.67%, except
pursuant to a cash tender offer for all Equity Securities not owned by the
Purchaser and/or its Affiliates.
ARTICLE 3.
TRANSFER OF SHARES
The Purchaser and its Affiliates shall not sell or otherwise transfer
(except to an Affiliate of the Purchaser which shall agree to be bound by this
Agreement) any Equity Securities Beneficially Owned by such persons or any
interest therein for a period of five (5) years from the Closing of the purchase
and sale of the First Issuance Shares, except as follows:
3.1. PRO-RATA TRANSACTIONS.
From and after the third anniversary of the Closing of the purchase and
sale of the First Issuance Shares, the Purchaser and/or any of its Affiliates
may sell any or all Equity Securities Beneficially Owned by such persons in any
transaction or transactions in which each other holder of Equity Securities has
the opportunity to sell the same percentage of such stockholder's Equity
Securities as the Purchaser and such Affiliates, at a price and on terms no less
favorable than those applicable to the sale by the Purchaser and/or its
Affiliates.
3.2. PUBLIC OFFERINGS AND MARKET TRANSACTIONS.
From and after the third anniversary of the Closing of the purchase and
sale of the First Issuance Shares (or, in the case of Common Stock acquired from
the Company pursuant to Section 3.3 of the Letter of Credit Agreement, at any
time and from time to time), the Purchaser and/or any of its Affiliates may sell
any or all Equity Securities Beneficially Owned by such persons in one or more
registered public offerings or in market transactions if the Purchaser and/or
its selling Affiliates invoke and follow or require participating underwriters
or brokers to invoke and follow appropriate and reasonable procedures (subject
to the Company's prior approval, which shall not be unreasonably withheld)
designed to prevent the sale of such Equity Securities to any person or "group"
(within the meaning of Section 13(d)(3) of the Exchange Act) that would, after
giving effect to its acquisition of such Equity Securities, Beneficially Own or
have the right to acquire more than ten percent (10%) of the Total Voting Power.
3.3. DIRECTORS' APPROVAL.
The Purchaser and/or any of its Affiliates may sell any or all Equity
Securities Beneficially Owned by such persons in any transaction or transactions
approved by a majority of the Directors other than Directors designated by the
Purchaser pursuant to this Agreement.
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In the event the Purchaser shall sell or otherwise transfer any Equity
Securities or any interest therein to an Affiliate, then so long as any such
Equity Securities are Beneficially Owned by such Affiliate, the provisions of
this Article shall apply to any sale or transfer of the capital stock or other
equity interests of such Affiliate such that it would cease to be an Affiliate
of the Purchaser.
ARTICLE 4.
BOARD REPRESENTATION
4.1. PURCHASER DESIGNEES.
4.1.1. Full Investment.
At all times and from time to time after acquisition by the Purchaser
of the Original Investment Shares, subject to Section 4.1.2 , the Purchaser
shall have the right to designate that number of Directors as will result in the
total number of Directors designated by the Purchaser being one fewer than a
majority of the total number of Directors then authorized under the Company's
Certificate of Incorporation. Subject to Section 4.2, this Section 4.1.1 shall
not limit the right of the Purchaser to nominate and seek the election of
additional Directors after the Standstill Period.
4.1.2. Partial Investment.
If (a) the Purchaser acquires the First Issuance Shares, but does not
also acquire all other Original Investment Shares, or (b) the Purchaser
acquires the Original Investment Shares but the Purchaser Interest shall
thereafter at any time have been less than thirty percent (30%) for a period of
at least twenty-five (25) consecutive days, then the Purchaser shall from time
to time have the right to designate that number of Directors as will result in
the total number of Directors designated by the Purchaser being equal to the
product (rounded to the nearest whole number) of (i) the total number of
Directors then authorized under the Company's Certificate of Incorporation, and
(ii) the Purchaser Interest at that time.
4.1.3. Purchaser Directors.
Any Director designated by the Purchaser shall not serve as a Director
if such person shall be prohibited from serving as a Director under applicable
law, including antitrust law.
4.2. INDEPENDENT DIRECTORS.
At all times until such time as the Purchaser Interest shall have been less
than 30% for a period of at least twenty-five (25) consecutive days or more than
90% for a period of at least twenty-five (25) consecutive days, the Board shall
include at least three Independent Directors.
4.3. ADDITIONAL AGREEMENTS.
4.3.1. By the Company.
The Company shall from time to time increase the number of Directors
constituting the Board and/or obtain resignations from Directors (other than
designees of the Purchaser and Independent Directors required by Section 4.2) as
may be required to ensure that there will at all times be sufficient Board seats
available to accommodate the full number of Directors that the Purchaser is then
entitled to designate pursuant to Section 4.1. The Company shall promptly and
at all times use its best efforts, and take all such actions as may be
appropriate or necessary for the election to the Board of the Purchaser
designees selected
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pursuant to Section 4.1 and the Independent Directors required pursuant to
Section 4.2. Such actions shall include, without limitation, the solicitation of
proxies for the election of such persons at each regular or special meeting of
stockholders of the Company at which Directors are to be elected, or in any
written consent solicited in lieu of such a meeting.
4.3.2. By the Purchaser.
The Purchaser and its Affiliates shall vote their Shares at each
regular or special meeting of the Company's stockholders at which Directors are
to be elected, or in any written consent solicited in lieu of such a meeting, in
favor of election to the Board, and shall otherwise use their best efforts to
cause the appointment or election to the Board, and to maintain as Directors:
(a) during the Standstill Period, such Independent Directors and such additional
Directors as shall be designated by a majority of the Directors of the Company
other than those designated by the Purchaser, consistently with Sections 4.1 and
4.2; and (b) after the Standstill Period, such Independent Directors as are
required by Section 4.2 and otherwise as the Purchaser and its Affiliates may
determine in their discretion. If at any time prior to the end of the
Standstill Period the number of Directors that the Purchaser is entitled to
designate pursuant to Section 4.1 is fewer than the number of Purchaser
designees then serving on the Board, the Purchaser shall promptly obtain
resignations from such of its designees (chosen by the Purchaser) as may be
required to cause the number of Purchaser designees serving on the Board to be
equal to the number of Directors that the Purchaser is then entitled to
designate.
4.3.3. By the Purchaser and the Company.
Names of all Director nominees designated by the Purchaser or by those
Directors of the Company not designated by the Purchaser shall be furnished to
the Purchaser and the Company (a) in the case of election of Directors at an
annual meeting or otherwise pursuant to a vote of the Company's stockholders, in
time to be included in the proxy materials related to such election, and (b) at
least ten (10) days prior to election or appointment of Directors by the Board.
4.4. COMMITTEES.
The Purchaser shall be entitled to designate one of its Director designees
to serve on each committee of the Board (except as otherwise provided in Section
12 of Article III of the Amended Bylaws with respect to the Management
Committee). The Purchaser shall be entitled to select any of the Directors as
alternates for each of its Director designees serving on committees of the
Board, which alternates shall be the designees of the Board for purposes of the
Amended Bylaws and Section 141(b) of the Delaware General Corporation Law and
may replace any of the Purchaser's Director designees serving on any committee
who are absent or disqualified at any meeting of the committee. With respect to
the audit committee, any Purchaser Director designee shall, as a condition to
membership thereon, meet all requirements imposed by the rules of any national
securities exchange, or the Nasdaq National Market, on which the Company's
Shares may then be listed or quoted. With respect to the compensation
committee, any Purchaser Director designee shall, as a condition to membership
thereon, qualify as "disinterested" within the meaning of Rule 16b-3 under the
Exchange Act or any similar rule then in effect.
4.5. VACANCIES.
If any Director or Director nominee designated by the Purchaser pursuant to
Section 4.1 shall decline to serve on, resign or be removed from, or for any
other reason be unable to serve on the Board or any committee thereof, the
vacancy resulting therefrom shall be filled in accordance with the Company's
Certificate of Incorporation and Bylaws by
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another person designated by the Purchaser pursuant to Section 4.1. If any
Director or Director nominee not designated by the Purchaser pursuant to Section
4.1 shall decline to serve on, resign or be removed from, or for any other
reason be unable to serve on the Board or any committee thereof during the
Standstill Period, the vacancy resulting therefrom shall be filled in accordance
with the Company's Certificate of Incorporation and Bylaws by a person
designated by a majority of the Directors of the Company other than those
designated by the Purchaser. This Section 4.5 shall not operate to allow the
Purchaser or the Directors other than those designated by the Purchaser to
designate more Directors or committee members than it or they would be entitled
to designate hereunder but for this Section 4.5.
4.6. DIRECTORS' INDEMNIFICATION AND INSURANCE.
As long as any designees of the Purchaser serve on the Board, (a) the
Amended and Restated Certificate of Incorporation and Bylaws of the Company
shall not be amended to contain provisions less favorable with respect to
indemnification and limitation of liability of Directors than are set forth in
the Amended and Restated Certificate and Amended Bylaws as of the date of this
Agreement, or in any other manner that would affect adversely the rights
thereunder of designees of the Purchaser serving on the Board, unless such
amendment, repeal or modification shall be required by law or the fiduciary
obligations of the Board, as determined in good faith by the Board based on the
written advice of outside counsel, and (b) such designees shall be covered by
any directors' and officers' liability insurance maintained from time to time on
the same terms and subject to the same conditions as the other members of the
Board, and (c) such designees shall be entitled to the benefit of any
indemnification agreements entered into by the Company with any of its
Directors; provided, that nothing in this Agreement shall obligate the Company
to maintain any such insurance or to enter into any such indemnification
agreements.
4.7. DIRECTORS' COMPENSATION.
The Directors designated by the Purchaser, if any, who are not officers or
employees of the Purchaser and its Affiliates shall have the right to receive
all fees paid and options and other awards granted and expenses reimbursed to
non-employee Directors generally, provided that all such fees and awards
allocable to Directors who are not officers or employees of the Purchaser and
its Affiliates shall not be paid or awarded or transferred to the Purchaser.
Directors designated by the Purchaser who are officers or employees of the
Purchaser or its Affiliates shall have the right to receive only such fees,
options and other awards and expense reimbursements, if any, as may be granted
to employee Directors of the Company for their service as Directors, provided
that, notwithstanding Article 2 (other than Section 2.1.7), any or all such fees
and awards allocable to Directors designated by the Purchaser shall, in the
Purchaser's discretion, be paid or awarded to the Purchaser.
ARTICLE 5.
APPROVAL RIGHTS
5.1. ACTIONS BY THE COMPANY.
Subject to applicable laws, including antitrust laws, at all times
following acquisition by the Purchaser and/or its Affiliates of the New Issue
Shares and the Offer Shares and until the Purchaser Interest has been less than
thirty percent (30%) for a period of at least twenty-five (25) consecutive
days, the Company shall not, without the prior written
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consent of the Purchaser or, in the case of Board action, the affirmative vote
or written consent of not less than a majority of the Directors designated by
the Purchaser:
5.1.1. Acquisitions.
Acquire or agree to acquire, or permit any of its subsidiaries to
acquire or agree to acquire, by merger, consolidation, or acquisition of assets
or stock, or otherwise, any corporation, partnership, or other business
organization or division thereof, or any other business operation ("ACQUIRED
ENTITY") if the total assets, or the total revenues or operating profits of such
Acquired Entity as at the end of or for the most recently completed four fiscal
quarters preceding the agreement for such acquisition shall exceed twenty
percent (20%) of the total assets, or the total revenues or operating profits of
the Company as at the end of or for such four fiscal quarters; provided however
that the Purchaser's consent shall not be required solely as the result of this
Section 5.1.1 for an acquisition in which the total value of all consideration
paid or given by the Company in such acquisition (including without limitation
the value of any funded debt or other capitalized obligations assumed by the
Company or any subsidiary of the Company) shall be less than fifty million
dollars ($50,000,000).
5.1.2. Divestitures.
Sell, contribute or otherwise transfer or agree to sell, contribute or
otherwise transfer, or permit any of its subsidiaries to sell, contribute or
otherwise transfer or agree to sell, contribute or otherwise transfer, any
product line or line of business of the Company or any of its subsidiaries or
any interest therein to any person other than a subsidiary of the Company that
is or, if it were a United States entity, would be, required to be consolidated
for Federal income tax purposes, if the assets, revenues or operating profit of
such product line or line of business as at the end of or for the most recently
completed four fiscal quarters preceding the agreement for such transfer shall
exceed twenty percent (20%) of the assets, revenues or operating profits of the
Company as at the end of or for such four fiscal quarters.
5.1.3. Issuances.
Authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or exercise of options,
warrants, subscriptions, rights to purchase or otherwise), in any transaction or
series of related transactions, any New Securities if such New Securities,
assuming full conversion and exercise of such New Securities, would represent an
increase of ten percent (10%) or more in the Total Voting Power represented by
the Voting Stock (other than such New Securities) outstanding immediately prior
to the issuance of such New Securities (or for New Securities issued in a series
of related transactions, immediately prior to the first issuance in such
series).
5.1.4. Capital Expenditures.
Approve any annual Capital Expenditure budget, or authorize or make,
or permit any of its subsidiaries to authorize or make, Capital Expenditures in
excess of $15 million, in the aggregate for the Company and all of its
subsidiaries, in any fiscal year commencing with the fiscal year beginning July
1995, except to the extent specifically provided for in a capital budget
approved by the Purchaser pursuant hereto.
5.1.5. Amendments.
Amend its Certificate of Incorporation or Bylaws or change the number
of authorized Directors.
5.1.6. Certain Strategic Relationships.
Enter, or permit any of its subsidiaries to enter, into any joint
venture, partnership, or exclusive licensing agreement with any Third Party
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that (a) 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, or the four-year period commencing on the date of such
agreement, whichever is less, in excess of $100 million, or (b) 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.
Notwithstanding the generality of the foregoing, the Purchaser's written consent
shall not be required pursuant to this Section 5.1.6 for any agreement for the
procurement of central processing units (CPUs) and licenses for the use of
patents, basic input-output system software (BIOS), disk operating system
software (DOS), Windows operating system software, and network operating system
software, or other similar agreements, in each case entered into in the ordinary
course of business not substantially inconsistent with past practice and for
procurement of components to be used in or with the Company's products, or
provided to purchasers of the Company products in or with such products.
ARTICLE 6.
CERTAIN COVENANTS
6.1. PROXY SOLICITATIONS.
Prior to the end of the Standstill Period, neither the Purchaser nor its
Affiliates shall, directly or indirectly, (a) solicit, initiate or participate
in any "solicitation" of "proxies" or become a "participant" in any "election
contest" (as such terms are defined or used in Regulation 14A under the Exchange
Act, disregarding clause (iv) of Rule 14a-1(1)(2) and including any exempt
solicitation pursuant to Rule 14a-2(b)(1)); call, or in any way participate in a
call for, any special meeting of stockholders of the Company (or take any action
with respect to acting by written consent of the Company's stockholders);
request, or take any action to obtain or retain any list of holders of any
securities of the Company; or initiate or propose any stockholder proposal or
participate in the making of, or solicit stockholders for the approval of, one
or more stockholder proposals; (b) deposit any Voting Stock in a voting trust or
subject them to any voting agreement or arrangements, except as provided herein;
(c) form, join or in any way participate in a "group" (within the meaning of
Section 13(d)(3) of Exchange Act) with respect to any Voting Stock (or any
securities the ownership of which would make the owner thereof a Beneficial
Owner of Voting Stock ); (d) except as specifically permitted by this Agreement,
otherwise act to control or influence the Company or its management, Board of
Directors, policies or affairs, including, without limitation, (i) soliciting or
proposing to effect or negotiate any form of business combination,
restructuring, recapitalization or other extraordinary transaction involving, or
any change in control of, the Company, its Affiliates or any of their respective
securities or assets (other than pursuant to the Stock Purchase Agreement), or
(ii) seeking Board representation or the removal of any Directors or a change in
the composition or size of the Board (other than as necessary to obtain the
Board representation to which it is entitled hereunder); (e) disclose any
intent, purpose, plan or proposal with respect to this Agreement, the Company or
its Affiliates or the Board, management, policies, affairs, securities or assets
of the Company or its Affiliates that is inconsistent with this Agreement,
including any intent, purpose, plan or proposal that is conditioned on, or would
require the Company or any of its Affiliates to make any public disclosure
relating to, any such intent, purpose, plan, proposal or
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condition; or (f) assist, advise, encourage or act in concert with any person
with respect to, or seek to do, any of the foregoing. Notwithstanding the
generality of the foregoing, nothing herein shall (x) prevent the Purchaser or
its Affiliates from voting their respective shares, or taking such other action
as it may deem necessary or appropriate, to cause the election as Directors of
those persons the Purchaser is entitled to designate pursuant to Section 4.1, or
(y) prohibit or restrict any action taken by the Purchaser or any of its
Affiliates in connection with the exercise of the rights of the Purchaser and
its Affiliates under Section 2.1.6.
6.2. VOTING.
Except as otherwise set forth herein, prior to the end of the Standstill
Period, the Purchaser and its Affiliates shall vote any Voting Stock
Beneficially Owned by them in connection with any matter or proposal submitted
to a vote of the Company stockholders but not sponsored or supported by the
Board either (a) in accordance with the recommendation of a majority of the
Board, or (b) in the absence of a recommendation of a majority of the Board,
then proportionately in accordance with the votes of all stockholders of the
Company who have voted with respect to such matter or proposal. Prior to the
end of the Standstill Period, the Purchaser and its Affiliates shall be present
in person or represented by proxy at all stockholder meetings of the Company
called by the Company so that all Voting Stock of which they are the Beneficial
Owner may be counted for the purpose of determining the presence of a quorum at
such meetings.
6.3. MATERIAL TRANSACTIONS.
At all times that the Purchaser Interest is less than 100%, neither the
Purchaser nor any of its Affiliates shall engage in any material transaction
with the Company or any of its subsidiaries unless such transaction has been
approved by a majority of the Independent Directors or, in the case of a series
of related transactions, is in accordance with guidelines approved by a majority
of the Independent Directors. For purposes of this Section 6.3, "material
transaction" shall mean (i) any amendment to, or termination of, this Agreement
or, any of the other Transaction Documents that have been executed and delivered
and (ii) any transaction between the Company or any of its subsidiaries and the
Purchaser or any of its Affiliates, or any transaction (other than a transaction
of the type described in Section 2.1.6, Section 2.4 or Section 6.1) between the
stockholders of the Company, in their capacity as stockholders, and the
Purchaser or any of its Affiliates, including, without limitation: (a) any sale
of all or substantially all of the assets of the Company or any of its
subsidiaries or any business division or operation of the Company or any of its
subsidiaries, (b) any issuance of Voting Stock or other securities by the
Company or any of the Company's subsidiaries, (c) any transaction or series of
related transactions involving payments, the incurrence of obligations, or
transfers of property, and (d) any merger or other business combination
involving the Purchaser and/or any of its Affiliates; provided, that "material
transaction" shall not include any (i) transaction in accordance with the terms
of the Transaction Documents or (ii) other transaction or series of related
transactions involving payments by or obligations or transfer of property of the
Company with an aggregate value in any calendar or fiscal year of less than $5
million.
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ARTICLE 7.
RESULTS OF OPERATIONS
Following the acquisition by the Purchaser of the Original Investment
Shares, and provided that the Purchaser Interest shall not have been less than
thirty percent (30%) for a period of at least twenty-five (25) consecutive days,
if (a) the consolidated revenues or gross profits of the Company and its
subsidiaries for the fiscal year ended July 1996 shall be less than $2.6 billion
or $430 million, respectively, (b) the consolidated revenues or gross profits of
the Company and its subsidiaries for the fiscal year ended July 1997 shall be
less than the greater of (i) $2.75 billion or $450 million, respectively, or
(ii) 85% of the amounts therefor set forth in the 1997 operating plan of the
Company approved by the Board; or (c) the consolidated net income after taxes of
the Company and its subsidiaries for either of such fiscal years shall be less
than 1% of net revenues, then the Management Committee of the Board shall
review the desirability of changes in the management of the Company and take
such action, if any, as may be determined to be advisable including without
limitation the reassignment, changes in the responsibilities, removal,
termination or replacement of any members of management. For purposes of the
foregoing, the "management" of the Company shall refer to all persons who
presently have the title of "Vice President" or higher, whether or not any such
person is an officer of the corporation, and all such persons who may perform
the functions presently performed by any of the foregoing, without regard to
title, but shall not include the Chief Executive Officer. The Management
Committee shall make any determination with respect to the termination or
reassignment of an existing member of management, or the decision to hire any
new member of management within 60 days following the availability of the
audited financial statements for the relevant year (or such longer period of
time as may be determined by a majority of the Board), and no such determination
shall be made thereafter; provided that: (a) the Management Committee shall
have such additional time as is reasonably necessary for the recruitment and
selection of any such new member of management; and (b) no action or inaction by
the Management Committee following the fiscal year ended July 1996 shall impair
its ability to act as herein authorized following the fiscal year ended July
1997. Notwithstanding the generality of the foregoing, the Management Committee
shall not be authorized to take such actions if they would violate applicable
law or if the shortfall in consolidated revenues, gross profits or net income of
the Company and its subsidiaries referred to above, shall be the direct result
of (a) fire, flood, earthquake or other act of God, any war, whether or not
declared, insurrection, hostilities, or other armed conflict, acts of civil
disorder or riot, or the disruption of national or international financial,
currency or capital markets, in each case affecting the Company or any of its
significant suppliers, or (b) a decline in the unit volume of the world market
for personal computers.
ARTICLE 8.
MISCELLANEOUS
8.1. TERMINATION.
Article 4, Article 5 and Article 6 of this Agreement and the rights and
obligations of the Purchaser and the Company thereunder shall terminate at the
first time after the date hereof that the Purchaser Interest shall have been
less than fifteen percent (15%) for a period of at least ninety (90) consecutive
days.
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8.2. STOCK PURCHASE AGREEMENT.
The provisions of Article 9 of the Stock Purchase Agreement are
incorporated herein by reference and shall govern this Agreement as though set
forth in full herein and as though references in such Article 9 to "this
Agreement" were references to this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
AST RESEARCH, INC., SAMSUNG ELECTRONICS CO., LTD.,
a Delaware corporation a Korean corporation
By: By:
Name: Name:
Title: Title:
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EXHIBIT 99(c)(3)
STRATEGIC ALLIANCE AGREEMENT
DATED AS OF FEBRUARY 27, 1995
BY AND BETWEEN
SAMSUNG ELECTRONICS CO., LTD.,
A KOREAN CORPORATION
AND
AST RESEARCH, INC.,
A DELAWARE CORPORATION
<PAGE>
CONTENTS
<TABLE>
<S> <C>
ARTICLE 1 DEFINITIONS 1
ARTICLE 2 COVENANTS TO ENTER INTO CERTAIN STRATEGIC AGREEMENTS 2
2.1 Covenant to Enter Into Component Supply Agreements 2
2.1.1 Component Supply Agreements - Statement of
Purpose 2
2.1.2 Component Supply Agreements - Principles 3
2.2 Covenant to Enter Into A Joint Procurement Agreement 4
2.2.1 Joint Procurement Agreement - Statement of
Purpose 4
2.2.2 Joint Procurement Agreement - Principles 4
2.3 Covenant to Enter Into A Joint Marketing Agreement 4
2.3.1 Joint Marketing Agreement - Statement of
Purpose 4
2.3.2 Joint Marketing Agreement - Principles 5
2.4 Covenant to Enter Into A Cross OEM Agreement 5
2.4.1 Cross OEM Agreement - Statement of Purpose 5
2.4.2 Cross OEM Agreement - Principles 5
2.5 Covenant to Enter Into A Joint Product Development
Agreement 7
2.5.1 Joint Product Development Agreement -
Statement of Purpose 7
2.5.2 Joint Product Development - Principles 7
2.6 Covenant to Enter Into A Cross License Agreement 8
2.6.1 Cross License Agreement - Statement of
Purpose 8
2.6.2 Cross License Agreement - Principles 8
2.7 Covenant to Enter Into An Employee Exchange
Agreement 9
2.7.1 Employee Exchange Agreement - Statement of
Purpose 9
2.7.2 Employee Exchange Agreement - Principles 9
2.8 Covenant to Enter Into A Technical Collaboration
Agreement 10
</TABLE>
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<TABLE>
<S> <C>
2.8.1 Technical Collaboration Agreement - Statement
of Purpose 10
2.8.2 Technical Collaboration Agreement -
Principles 10
ARTICLE 3 REPRESENTATIONS AND WARRANTIES 10
3.1 Disclosure. 10
ARTICLE 4 COVENANTS 11
4.1 Access to Information; Confidentiality 11
4.1.1 Access 11
4.1.2 Confidentiality 11
4.2 Additional Agreements; Reasonable Efforts 11
4.3 Public Announcements 12
4.4 Notification of Certain Matters 12
4.5 Indemnities 12
4.5.1 Indemnification of Samsung 12
4.5.2 Indemnification of AST 12
4.5.3 Third Party Claims 13
ARTICLE 5 CONDITIONS TO ENTER INTO CERTAIN STRATEGIC AGREEMENTS 14
5.1 Conditions to Obligations of Samsung and AST 14
5.1.1 No Prohibition 14
5.1.2 Regulatory Compliance 14
5.2 Conditions to Obligations of Samsung 14
5.2.1 Performance 14
5.2.2 Representations and Warranties True 15
5.3 Conditions to Obligations of AST 15
5.3.1 Performance 15
5.3.2 Representations and Warranties True 15
ARTICLE 6 TERMINATION 15
6.1 Termination by AST 15
6.2 Termination by Samsung 15
6.3 Termination by Samsung or AST 15
6.4 Effect of Termination 16
ARTICLE 7 MISCELLANEOUS 16
7.1 Compliance with Law 16
7.2 Stock Purchase Agreement 16
</TABLE>
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<PAGE>
STRATEGIC ALLIANCE AGREEMENT
This Strategic Alliance Agreement (this "AGREEMENT") is entered into as of
February 27, 1995 by and between Samsung Electronics Co., a Korean corporation
("SAMSUNG") and AST Research, Inc., a Delaware corporation ("AST").
A. Samsung and AST have entered into that certain Stock Purchase
Agreement dated as of the date hereof (as the same may be amended from time to
time, the "Stock Purchase Agreement") pursuant to which Samsung is acquiring
certain shares of AST Common Stock.
B. As a result of the transactions contemplated by the Stock
Purchase Agreement, Samsung will be a significant stockholder of AST.
C. Samsung and AST have engaged in discussions regarding various
commercial arrangements between the parties as contemplated hereinbelow
including, without limitation, the sale by Samsung to AST of various components
used in the manufacture of AST products and based upon those discussion both
parties expect that those anticipated commercial relationships will be mutually
beneficial.
D. It is a condition to the transactions contemplated by the Stock
Purchase Agreement and the desire of Samsung and AST that they enter into this
Agreement to provide for the formation of a strategic alliance involving various
mutually beneficial commercial relationships intended to enhance the business
prospects and competitive position of both Samsung and AST, and AST's Board of
Directors has determined that such an Agreement is in the best interests of
AST's stockholders.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, and agreements set forth in this Agreement, Samsung
and AST hereby agree as follows:
ARTICLE 1.
DEFINITIONS
Capitalized terms used in this Agreement without definition shall
have the respective meanings accorded to them in the Stock Purchase Agreement.
Capitalized terms used in this Agreement and not otherwise defined herein or in
the Stock Purchase Agreement shall have the respective meanings set forth below.
"COMPONENT SUPPLY AGREEMENTS" means the Component Supply Agreements to
be entered into by and between Samsung and AST in accordance with Section 2.1
hereof.
"CROSS LICENSING AGREEMENT" means the Cross Licensing Agreement to be
entered into by and between Samsung and AST in accordance with Section 2.6
hereof.
<PAGE>
"CROSS OEM AGREEMENT" means the Cross OEM Agreement to be entered into
by and between Samsung and AST in accordance with Section 2.4 hereof.
"EMPLOYEE EXCHANGE AGREEMENT" means the Employee Exchange Agreement to
be entered into by and between Samsung and AST in accordance with Section 2.7
hereof.
"JOINT PROCUREMENT AGREEMENT" means the Joint Procurement Agreement to
be entered into by and between Samsung and AST in accordance with Section 2.2
hereof.
"JOINT PRODUCT DEVELOPMENT AGREEMENT" means the Joint Development
Agreement to be entered into by and between Samsung and AST in accordance with
Section 2.5 hereof.
"JOINT MARKETING AGREEMENT" means the Joint Marketing Agreement to be
entered into by and between Samsung and AST in accordance with Section 2.3
hereof.
"STRATEGIC AGREEMENTS" means the Component Supply Agreements, the
Joint Procurement Agreement, the Joint Marketing Agreement, the Cross OEM
Agreement, the Joint Product Development Agreement, the Cross Licensing
Agreement, the Employee Exchange Agreement and the Technical Collaboration
Agreement.
"TECHNICAL COLLABORATION AGREEMENT" means the Technical Collaboration
Agreement to be entered into by and between Samsung and AST in accordance with
Section 2.8 hereof.
ARTICLE 2.
COVENANTS TO ENTER INTO CERTAIN STRATEGIC AGREEMENTS
2.1. COVENANT TO ENTER INTO COMPONENT SUPPLY AGREEMENTS.
2.1.1. Component Supply Agreements - Statement of Purpose.
Both Samsung and AST believe that, in order to form a successful strategic
alliance during the term of Samsung's significant investment in AST that will
enhance the competitive position of each party, Samsung and AST should enter
into an agreement pursuant to which Samsung shall supply AST with certain
components used in the manufacture of AST's products ("Components"). Such
agreement shall provide that, to the extent permitted within the confines of
applicable law, Samsung shall provide AST with pricing, allocation and terms
which, when considered in the aggregate, are at least as favorable as those
offered by Samsung to its most favored customer group. The prices, allocation
and terms offered to AST for the Components during the first quarter covered by
such agreement (the "Initial Period") shall, when considered in the aggregate,
be more favorable than the prices, allocation and terms otherwise available to
AST pursuant to agreements between AST and Samsung
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<PAGE>
which were entered into prior to the effective date of this Agreement ("Existing
Samsung Agreements") to the extent that such Existing Samsung Agreements would
otherwise be effective during the Initial Period.
2.1.2. Component Supply Agreements - Principles.
Samsung and AST shall each allocate the necessary resources and meet
together as soon as possible following the execution of this Agreement and as
often as either party reasonably requests thereafter, in order to negotiate the
terms and conditions of definitive component supply agreements (the "Component
Supply Agreements") which shall be entered into between AST and the relevant
Affiliate of Samsung prior to the Closing of the purchase and sale of the Second
Issuance Shares. The Component Supply Agreements shall address, among other
things, the following:
(a) type of components to be supplied by Samsung (including DRAM, CD-
ROM, hard disk drives, monitors, LCD display panels and
printers);
(b) pricing by component type;
(c) quantity commitments by component type;
(d) payment terms;
(e) shipment method and terms;
(f) procedures for placing and accepting orders, needs/quantity
forecasting horizons, lead time, cycle time, demand/supply
planning, preliminary/firm order timing, change order process;
(g) allocate responsibility for customs/duties fees;
(h) allocate responsibility for compliance with applicable laws,
regulations including, without limitation, obtaining applicable
governmental approvals, registrations, notifications related to
import and export ;
(i) procedures pursuant to which AST will use its best efforts to
provide services necessary to test and qualify, new components or
new versions of existing components to be offered Samsung, as to
quality and compatibility for use in AST products;
(j) agreement term and termination provisions including the rights
and obligations of the parties on expiration or termination;
(k) dispute resolution mechanisms; and
(l) various legal matters (e.g., indemnities, representations and
warranties).
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<PAGE>
2.2. Covenant to Enter Into A Joint Procurement Agreement.
2.2.1. Joint Procurement Agreement - Statement of Purpose.
Both Samsung and AST believe that, in order to form a successful
strategic alliance that will enhance the competitive position of each party,
Samsung and AST should enter into an agreement pursuant to which Samsung and AST
shall coordinate their purchases from third parties in order to obtain more
favorable pricing as a result of leveraging the combined purchasing power of
both parties.
2.2.2. Joint Procurement Agreement - Principles.
Samsung and AST shall each allocate the necessary resources and meet
together as soon as possible following the execution of this Agreement and as
often as either party reasonably requests thereafter, in order to negotiate the
terms and conditions of a definitive joint procurement agreement (the "Joint
Procurement Agreement") which shall be entered into prior to the Closing of the
purchase and sale of the Second Issuance Shares. The Joint Procurement
Agreement shall address, among other things, the following:
(a) type of components and materials to be jointly procured
(e.g., microprocessors, video graphics chipsets);
(b) means by which joint purchasing can be accomplished
(e.g., consolidated procurement or resale arrangements between
the parties);
(c) means by which joint purchasing can be efficiently managed
(e.g., management level procurement coordinators for each party);
and
(d) effective means of exchange of procurement related information
(e.g., forecasted needs, prices, volumes, terms for all
components and materials to be jointly procured).
2.3. Covenant to Enter Into A Joint Marketing Agreement.
2.3.1. Joint Marketing Agreement - Statement of Purpose.
Both Samsung and AST believe that, in order to form a successful
strategic alliance that will enhance the competitive position of each party,
Samsung and AST should enter into an agreement pursuant to which Samsung and AST
shall cooperate to share expertise to jointly market currently existing and
newly developed products of both parties in order to achieve maximum market
penetration for both parties.
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<PAGE>
2.3.2. Joint Marketing Agreement - Principles.
Samsung and AST shall each allocate the necessary resources and meet
together as soon as possible following the execution of this Agreement and as
often as either party reasonably requests thereafter, in order to negotiate the
terms and conditions of a definitive joint marketing agreement (the "Joint
Marketing Agreement") which shall be entered into prior to the Closing of the
purchase and sale of the Second Issuance Shares. The Joint Marketing Agreement
shall address, among other things, the following:
(a) identify joint marketing projects on which the parties shall
collaborate (e.g., Samsung laser printers, Samsung subnotebook
computers, AST desktop personal computers, AST server computers,
AST computer front end software);
(b) resource commitments to joint marketing projects (e.g., personnel
(number, levels and type) and funding contribution levels);
(c) target schedule for commencement and completion of various joint
marketing projects;
(d) entity structure to maximize benefits to the parties;
(e) means by which joint marketing opportunities can be identified,
acted on and efficiently managed (e.g., management level joint
marketing coordinators for each party); and
(f) effective means of exchanging joint marketing opportunity related
information (e.g., technology marketing developments, product
marketing plans).
2.4. Covenant to Enter Into A Cross OEM Agreement.
2.4.1. Cross OEM Agreement - Statement of Purpose.
Both Samsung and AST believe that, in order to form a successful
strategic alliance that will enhance the competitive position of each party,
Samsung and AST should enter into an agreement pursuant to which Samsung and AST
shall cooperate to coordinate the utilization of the manufacturing and assembly
capacity of each other in order to maximize profit potential for both parties
by, among other things, achieving economies of scale.
2.4.2. Cross OEM Agreement - Principles.
Samsung and AST shall each allocate the necessary resources and meet
together as soon as possible following the execution of this Agreement and as
often as either party reasonably requests thereafter, in order to negotiate the
terms and conditions of a definitive cross OEM agreement (the "Cross OEM
Agreement") which shall be entered into prior to the Closing of the purchase and
sale of the Second Issuance Shares. The Cross OEM Agreement shall address,
among other things, the following:
5
<PAGE>
(a) components and materials to be the subject of the Cross OEM
Agreement (e.g., AST server computers, AST desktop personal
computers, Samsung notebook computers, Samsung subnotebook
computers);
(b) define the OEM territory;
(c) service and support responsibilities for the OEM product;
(d) parties right of first refusal regarding OEM opportunities
offered by the other;
(e) marketing channels for the OEM product;
(f) entity structure to maximize benefits to the parties;
(g) exclusivity, volume discounts, training;
(h) import/export compliance responsibilities;
(i) ordering methods, forecasting, ordering minimums, order changes
and cancellations (timing with associated cancellation fees);
(j) delivery method, terms and risk of loss;
(k) product acceptance criteria and testing procedure;
(l) OEM and user product warranty (and limitations);
(m) licenses for any software products and diagnostic material
(including right to sublicense where appropriate);
(n) payment terms and method;
(o) technical assistance commitments;
(p) intellectual property use including trademarks and trade names;
(q) term (renewal) and termination including wind down, sell-off
rights, post termination;
(r) legal issues including confidentiality and proprietary rights,
liability limitations, representations and warranties,
indemnification, end user license agreement (if applicable);
6
<PAGE>
(s) means by which additional cross OEM opportunities can be
identified, acted on and efficiently managed (e.g., management
level cross OEM coordinators for each party); and
(t) effective means of exchanging OEM opportunity-related information
(e.g., manufacturing capacities, forecasted needs volumes).
2.5. Covenant to Enter Into A Joint Product Development Agreement.
2.5.1. Joint Product Development Agreement - Statement of Purpose.
Both Samsung and AST believe that, in order to form a successful
strategic alliance that will enhance the competitive position of each party,
Samsung and AST should enter into an agreement pursuant to which Samsung and AST
shall cooperate to share expertise to jointly develop products in order to
accelerate product time to market for both parties.
2.5.2. Joint Product Development - Principles.
Samsung and AST shall each allocate the necessary resources and meet
together as soon as possible following the execution of this Agreement and as
often as either party reasonably requests thereafter, in order to negotiate the
terms and conditions of a definitive joint product development agreement (the
"Joint Product Development Agreement") which shall be entered into prior to the
Closing of the purchase and sale of the Second Issuance Shares. The Joint
Product Development Agreement shall address, among other things, the following:
(a) identify R&D projects on which the parties shall collaborate
(e.g., notebook computers, desktop computer monitors);
(b) resource commitments to R&D projects (e.g., personnel (number,
levels and type), funding, and intellectual property contribution
levels);
(c) target schedule for commencement and completion of R&D projects;
(d) entity structure to maximize benefits to the parties;
(e) ownership of resulting intellectual property;
(f) post-development marketing (e.g., allocations of worldwide
territories and/or field of use of developed technology);
(g) exclusivity, right of first refusal of parties to participate in
R&D projects of the other;
(h) means by which R&D projects can be identified, acted on and
efficiently managed (e.g., management level joint development
coordinators for each party); and
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<PAGE>
(i) effective means of exchanging R&D opportunity-related information
(e.g., technology developments, product development plans).
2.6. Covenant to Enter Into A Cross License Agreement.
2.6.1. Cross License Agreement - Statement of Purpose.
Both Samsung and AST believe that, in order to form a successful
strategic alliance that will enhance the competitive position of each party,
Samsung and AST should enter into an agreement pursuant to which Samsung and AST
shall license each other to use the patents, copyrights, and other intellectual
property of the other in order to foster rapid product development and low cost
product production.
2.6.2. Cross License Agreement - Principles.
Samsung and AST shall each allocate the necessary resources and meet
together as soon as possible following the execution of this Agreement and as
often as either party reasonably requests thereafter, in order to negotiate the
terms and conditions of a definitive royalty-free cross license agreement (the
"Cross License Agreement") which shall be entered into prior to the Closing of
the purchase and sale of the Second Issuance Shares. The Cross License
Agreement shall address, among other things, the following:
(a) scope, exclusivity, duration of the cross license ;
(b) field of use, territory;
(c) intellectual property covered by the cross license;
(d) entity structure to maximize benefits to the parties (e.g.,
patent holding company);
(e) means by which cross license related information can be
identified, exchanged on, and efficiently managed (e.g.,
management level cross license coordinators for each party); and
(f) effective means of exchanging joint marketing opportunity related
information (e.g., technology marketing developments, product
marketing plans).
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<PAGE>
2.7. Covenant to Enter Into An Employee Exchange Agreement.
2.7.1. Employee Exchange Agreement - Statement of Purpose.
Both Samsung and AST believe that, in order to form a successful
strategic alliance that will enhance the competitive position of both parties,
Samsung and AST should enter into an agreement pursuant to which Samsung and AST
shall coordinate a program to provide opportunities for employees of one company
to spend time as the employees of the other company ("Transfer Employees") in
order to facilitate a mutual understanding of each parties respective business
and corporate culture, facilitate cooperation in attaining the mutual goals set
forth in this Agreement, and provide assistance and training to each other in
areas where each party has particular expertise. Such agreement shall provide
that certain Transfer Employees designated by Samsung shall report directly to
the Chief Executive Officer of AST.
2.7.2. Employee Exchange Agreement - Principles.
Samsung and AST shall each allocate the necessary resources and meet
together as soon as possible following the execution of this Agreement and as
often as either party reasonably requests thereafter, in order to negotiate the
terms and conditions of a definitive employee exchange agreement (the "Employee
Exchange Agreement") which shall be entered into prior to the Closing of the
purchase and sale of the Second Issuance Shares. The Employee Exchange
Agreement shall address, among other things, the following:
(a) type of employees to be exchanged (e.g., engineering, marketing,
manufacturing);
(b) levels of employees to be exchanged including the range of titles
to be included (e.g., management);
(c) number of employees to be exchanged (by level and type);
(d) financial responsibilities of the parties for exchange employees;
(e) levels of compensation and benefits;
(f) term of exchanged employee stay with receiving company (1 to
5 years);
(g) method of selecting and approving exchanged employees (e.g.,
minimum qualifications, approval/rejection rights of the parties,
confidentiality agreement requirements);
(h) commitments as to work responsibilities provided to the exchanged
employees;
(i) immigration issues;
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(j) joint employer liability issues;
(k) restrictions on assignments of exchanged employee subsequent to
their return to the sending company to minimize inadvertent use
of unauthorized trade secrets of the other party; and
(l) means by which employee exchange can be efficiently managed
(e.g., employee exchange coordinators for each party).
2.8. Covenant to Enter Into A Technical Collaboration Agreement.
2.8.1. Technical Collaboration Agreement - Statement of Purpose.
Both Samsung and AST believe that, in order to form a successful
strategic alliance that will enhance the competitive position of each party,
Samsung and AST should enter into an agreement pursuant to which Samsung and AST
shall collaborate regarding technical information.
2.8.2. Technical Collaboration Agreement - Principles.
Samsung and AST shall each allocate the necessary resources and meet
together as soon as possible following the execution of this Agreement and as
often as either party reasonably requests thereafter, in order to negotiate the
terms and conditions of a definitive technical collaboration agreement (the
"Technical Collaboration Agreement") which shall be entered into prior to the
Closing of the purchase and sale of the Second Issuance Shares. The Technical
Collaboration Agreement shall address, among other things, the following:
(a) type of technology (e.g., advanced liquid crystal displays, high
capacity hard disks) and information to be within the scope of
the technical collaboration project (e.g., market research,
industry trends);
(b) means by which technical collaboration can be accomplished
(e.g., monthly meetings of coordinators);
(c) means by which technical collaboration can be efficiently managed
(e.g., management level technical collaboration coordinators for
each party); and
(d) effective means of exchange of technical information.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES
3.1. Disclosure.
None of this Agreement or any information, certificate, document,
writing or other instrument referred to herein or furnished by one party to the
other party in connection
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with this Agreement or contemplated hereby, contains or will, when delivered,
contain to the best of the providing party's knowledge, after due inquiry, any
untrue statement of any material fact or omit to state a material fact necessary
in order to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading.
ARTICLE 4.
COVENANTS
4.1. ACCESS TO INFORMATION; CONFIDENTIALITY.
4.1.1. Access.
Between the date hereof and the execution of all Strategic Agreements,
AST shall give Samsung and its authorized representatives reasonable access to
all employees, plants, offices, warehouses and other facilities and to all books
and records of AST and its subsidiaries, shall permit Samsung to make such
inspections as Samsung may reasonably require, and shall cause AST's officers
and those of its subsidiaries to furnish Samsung with such financial and
operating data and other information with respect to the business and properties
of AST and any of its subsidiaries as Samsung may from time to time reasonably
request.
4.1.2. Confidentiality.
Any Confidential Information (as defined in the Confidentiality
Agreement) disclosed by Samsung or AST to the other pursuant hereto or in
connection with the transactions contemplated by this Agreement shall be subject
to and handled by Samsung and AST 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 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 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.
4.2. 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 to, and to consummate and
make effective, the transactions contemplated by this Agreement, including,
without limitation, (i) the taking of all action reasonably necessary, proper or
advisable to secure any necessary consents of Governmental Authorities and third
parties, (ii) contesting any pending legal proceedings materially adverse to any
of the transactions contemplated by this Agreement, and (iii) the negotiation
and execution of any additional agreements or instruments and the taking of any
additional actions necessary to satisfy the conditions to, and to consummate,
the transactions contemplated hereby.
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4.3. Public Announcements.
Neither Samsung nor AST shall, directly or indirectly, issue any press
release or other public statement with respect to the transactions contemplated
by this Agreement without the prior written consent of the other, except as may
be required by applicable law or by obligations pursuant to any listing
agreement with the NASDAQ Stock Market (or any other securities exchange upon
which AST's securities are traded), provided that if either party believes that
any press release or other public statement is so required, such party shall
promptly notify and consult with the other party with respect thereto.
4.4. Notification of Certain Matters.
AST shall give prompt notice to Samsung, and Samsung shall give prompt
notice to AST, of (i) the occurrence or nonoccurrence of any event that would be
likely to cause any representation or warranty contained in this Agreement to be
untrue or inaccurate in any material respect at or prior to the execution of all
Strategic Agreements, and (ii) any material failure of AST or Samsung, as the
case may be, to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it hereunder, provided, however, that the
delivery of any notice pursuant to this Section 4.4 shall not cure such breach
or noncompliance or limit or otherwise affect the remedies available hereunder
to the party receiving such notice. For purposes of this Section 4.4, "prompt
notice" shall mean notice delivered within two (2) days of discovery of the
event or failure precipitating such notice.
4.5. Indemnities.
4.5.1. Indemnification of Samsung.
AST shall indemnify and hold harmless Samsung and its Affiliates and
their successors and the directors, officers, employees, and agents or any of
them from and against any and all claims, damages, losses, costs, and expenses
(including without limitation attorneys' fees and costs) (each a "Loss" and
collectively "LOSSES") incurred by, borne by or asserted against any of such
indemnified parties in any way relating to, arising out of or resulting from:
(a) the breach of any of the representations or warranties or
covenants made by AST in this Agreement;
(b) the breach or the failure of performance by AST of any of
its covenants, promises or agreements under this Agreement; or
(c) any claim or assertion that the execution or performance by
Samsung or AST or any of its Affiliates of this Agreement violates or interferes
with any contractual or other right or obligation or relationship of AST or any
of its subsidiaries or Affiliates to or with any other person or entity.
4.5.2. Indemnification of AST.
Samsung shall indemnify and hold harmless AST and its Affiliates and
their successors and the directors, officers, employees, and agents or any of
them from and against any and all Losses incurred by, borne by or asserted
against any of such indemnified parties in any way relating to, arising out of
or resulting from:
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(a) the breach of any of the representations or warranties or
covenants made by Samsung in this Agreement; or
(b) the breach or the failure of performance by Samsung of any
of its covenants, promises, or agreements under this Agreement.
4.5.3. Third Party Claims.
(a) Within 20 days after the receipt by the party entitled to
indemnity hereunder (the "Indemnified Party") of any claim or demand (including,
but not limited to, notice of any action, suit, or proceeding) by any third
party against an Indemnified Party which gives rise to a right to
indemnification hereunder, the affected Indemnified Party shall give each party
who may be obligated to provide indemnity hereunder (the "INDEMNIFYING PARTY")
written notice of such claim or demand; provided, however, that the failure to
give such notice shall not relieve the Indemnifying Party of its obligations
hereunder except to the extent that such failure is materially prejudicial to
the Indemnifying Party.
(b) The Indemnifying Party shall have the right (without
prejudice to the right of any Indemnified Party to participate at its own
expense through counsel of its own choosing), to defend against such claim or
demand at its expense and through counsel of its own choosing (the choice of
such counsel to be subject to the reasonable consent of the Indemnified Party)
and to control such defense if it gives written notice of its intention to do so
within ten (10) days of the receipt of the notice referred to in
Section 4.5.3(a), provided that the Indemnified Party shall be entitled to
separate counsel of its choice at the expense of the Indemnifying Party if the
defendants in such claim or demand (or other claims or demands arising from the
facts, circumstances, or Losses giving rise to the claim or obligation to
provide indemnification hereunder) include both the Indemnifying Party and the
Indemnified Party and the Indemnified Party reasonably concludes that there may
be legal defenses available to it that are different from or additional to those
available to the Indemnifying Party. If the Indemnifying Party shall decline or
fail to assume the defense of such claim or demand or to pursue such defense
actively and vigorously, the Indemnified Party shall have the right to assume
control of such defense at the expense of the Indemnifying Party. The
Indemnified Party shall cooperate fully in the defense of such claim or demand
to the extent being defended by the Indemnifying Party, and shall make available
to the Indemnifying Party or its counsel all pertinent information under its
control relating thereto. The Indemnifying Party shall cooperate with the
Indemnified Party in order to enable its counsel to participate in the defense
and shall make available to the Indemnified Party all pleadings and other
information within the Indemnifying Party's control reasonably requested by the
Indemnified Party that is relevant to the defense of any such claim or demand.
The Indemnifying Party and Indemnified Party and their respective counsel shall
maintain confidentiality with respect to all such information consistent with
the conduct of a defense hereunder.
(c) The Indemnifying Party shall have the right to elect to
settle any such claim or demand, for monetary damages only, subject to the
consent of the affected Indemnified Party; provided, however, if the Indemnified
Party fails to give such consent
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within 20 days of being requested to do so, the Indemnified Party shall, at its
expense and upon demand of the Indemnifying Party, assume the defense of such
claim or demand and regardless of the outcome of such matter, the Indemnifying
Party's liability hereunder shall be limited to the amount of any such proposed
settlement.
ARTICLE 5.
CONDITIONS TO ENTER INTO CERTAIN STRATEGIC AGREEMENTS
5.1. CONDITIONS TO OBLIGATIONS OF SAMSUNG AND AST.
The obligations of Samsung to enter into each of the Strategic
Agreements, and of AST to enter into each of the Strategic Agreements, are
subject to satisfaction of the following conditions at the execution of each
Strategic Agreement:
5.1.1. No Prohibition.
No statute, rule, regulation, judgment, order, decree, ruling,
injunction, or other action shall have been entered, promulgated, enforced, or
threatened by any Governmental Authority that purports, seeks, or threatens to
(i) prohibit, restrain, enjoin, or restrict in a material manner, or recover
material damages with respect to the Strategic Agreement, (ii) materially change
or restrict the manner in which AST or Samsung conducts or proposes to conduct
its businesses, or (iii) impose material terms or conditions (not set forth
herein) upon the Strategic Agreement as contemplated by this Agreement.
5.1.2. Regulatory Compliance.
All material filings with all Governmental Authorities required to be
made shall have been made and all material orders, permits, waivers,
authorizations, exemptions, and approvals of such entities required to be in
effect shall have been issued, all such orders, permits, waivers,
authorizations, exemptions or approvals shall be in full force and effect, and
all appeal periods for challenging any such orders, permits, waivers,
authorizations, exemptions or approvals shall have expired and no such appeal
shall be pending; 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 nonopposition, avoiding any
challenge, or negotiating settlement, any condition that would (i) materially
change or restrict the manner in which AST or Samsung conducts or proposes to
conduct its businesses, or (ii) impose material terms or conditions (not set
forth herein) upon the Strategic Agreement as contemplated by this Agreement.
5.2. Conditions to Obligations of Samsung.
In addition to the conditions set forth in Section 5.1, the obligation
of Samsung to enter into each of the Strategic Agreements is subject to
satisfaction of the following conditions at the execution of each Strategic
Agreement:
5.2.1. Performance.
AST shall have performed its material obligations under this Agreement
and the other Transaction Documents to the date of execution of each
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Strategic Agreement and the Closing of the purchase and sale of the Second
Issuance Shares shall have occurred prior to, or concurrent with, the execution
of the Strategic Agreement.
5.2.2. Representations and Warranties True.
Except as otherwise contemplated by this Agreement, the
representations and warranties of AST contained in this Agreement, any document
provided in connection herewith and in each Strategic Agreement shall be true in
all material respects at the execution of each Strategic Agreement as though
newly made at and as of that time.
5.3. Conditions to Obligations of AST.
In addition to the conditions set forth in Section 5.1, the obligation
of AST to enter into each of the Strategic Agreements is subject to satisfaction
of the following conditions at the execution of each Strategic Agreement:
5.3.1. Performance.
Samsung shall have performed its material obligations under this
Agreement and the other Transaction Documents to the date of execution of each
Strategic Agreement and the Closing of the purchase and sale of the Second
Issuance Shares shall have occurred prior to, or concurrent with, the execution
of the Strategic Agreement.
5.3.2. Representations and Warranties True.
Except as otherwise contemplated by this Agreement, the
representations and warranties of Samsung contained in this Agreement, any
document provided in connection herewith and in each Strategic Agreement shall
be true in all material respects at the execution of each Strategic Agreement as
though newly made at and as of that time.
ARTICLE 6.
TERMINATION
6.1. Termination by AST.
AST may terminate any or all of its obligations under this Agreement,
to the extent not performed, if there shall not have been a material breach by
AST of any representation, warranty, covenant, or agreement set forth herein and
there shall have been a material breach by Samsung of any representation,
warranty, covenant, or agreement set forth herein or in the Stock Purchase
Agreement.
6.2. Termination by Samsung.
Samsung may terminate any or all of its obligations under this
Agreement to the extent not performed, if there shall not have been a material
breach by Samsung of any representation, warranty, covenant, or agreement set
forth herein and there shall have been a material breach by AST of any
representation, warranty, covenant, or agreement set forth herein or in the
Stock Purchase Agreement.
6.3. Termination by Samsung or AST.
Samsung or AST may terminate any or all of its obligations under this
Agreement: (i) to the extent that performance thereof is prohibited, enjoined,
or otherwise materially restrained by any final, nonappealable judgment, ruling,
order or decree of any Governmental Authority, provided that the party seeking
to terminate its obligations hereunder pursuant to this Section 6.3 shall have
used its best efforts
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to remove such prohibition, injunction, or restraint, or (ii) if the Stock
Purchase Agreement is terminated for any reason.
6.4. Effect of Termination.
In the event of the termination of this Agreement pursuant to this
Article 6, neither Samsung nor AST shall have any obligation to perform
hereunder from and after the date of such termination, except that (i) Sections
4.1.2 (Confidentiality), 4.3 (Public Announcements), 4.5 (Indemnities), and the
sections with related to Governing Law, Expenses and Notices incorporated by
reference from the Stock Purchase Agreement pursuant to Section 7.2 hereof shall
survive such termination and remain in full force and effect notwithstanding
such termination, and (ii) no termination hereof shall relieve Samsung or AST
from liability for any breach of this Agreement.
ARTICLE 7.
MISCELLANEOUS
7.1. Compliance with Law.
The statements of purpose in this Agreement shall be implemented by
Samsung and AST within the confines of applicable law.
7.2. Stock Purchase Agreement.
The provisions of Article 9 of the Stock Purchase Agreement are
incorporated herein by reference and shall govern this Agreement as though set
forth in full herein and as though references in such Article 9 to "this
Agreement" and "herein" were references to this Agreement and as though
references to "the Purchaser" were references to Samsung and references to "the
Company" were references to AST.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written.
AST RESEARCH, INC., SAMSUNG ELECTRONICS CO.,
a Delaware corporation a Korean corporation
By: Safi U. Qureshey By: (Authorized Officer)
Title: Chief Executive Officer Title:
and Chairman of the Board
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