SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
March 3, 1995
February 27, 1995
AST RESEARCH, INC.
(Exact name of registrant as specified in charter)
Delaware 0-13941 95-3525565
(State or other (Commission (I.R.S. employer
jurisdiction of file number) identification
incorporation No.)
AST Research, Inc.
16215 Alton Parkway
Irvine, California 92718
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (714) 727-4141
Item 5. Other Events.
On February 27, 1995, AST Research, Inc. (the "Registrant") entered
into a Stock Purchase Agreement (the "Purchase Agreement") with Samsung
Electronics Company, Ltd. (the "Purchaser"). Subject to the terms and
conditions of the Purchase Agreement, the Purchaser will purchase from the
Registrant 6.44 million newly issued shares of Common Stock, representing ap
proximately 19.9 percent of the currently outstanding shares of Common Stock,
at $19.50 per share (the "First Issuance"), and will commence a cash tender
offer to purchase from the Registrant's stockholders 5.82 million shares of
Common Stock (the "Offer Shares"), representing approximately 18 percent of
the of the currently outstanding shares of Common Stock, at $22.00 per share
(the "Offer"). Concurrently with the acceptances of the Offer Shares for
purchase under the tender offer, the Purchaser will purchase from the Regis
trant 5.63 million additional newly issued shares of Common Stock at $22.00
per share so that its aggregate ownership in the Registrant, giving effect to
all the purchases, is approximately 40.25%.
The closing of each of the purchases, other than the First
Issuance, is subject to approval by the stockholders of the Registrant at a
special meeting currently expected to be held in May 1995. The Purchaser may
elect to close the purchase of the First Issuance at any time, subject to
regulatory approval and certain other conditions as set forth in the Purchase
Agreement. In addition to the approval by the Registrant's stockholders, the
closing of the transactions is subject to United States and Korean regulatory
approval, as well as a number of other conditions.
The Offer is expected to commence on or before March 6, 1995, and
to remain open for at least 45 days. The Offer is subject to the same condi
tions as the Second Issuance, including receipt of regulatory approval.
As part of its investment, the Purchaser will be entitled to
certain rights, so long as its ownership does not fall below 30 percent.
This would include the right to designate for election one less than a
majority of the Registrant's Board of Directors, approval over certain sig
nificant transactions and the right to purchase additional equity securities
to maintain its ownership level. The Purchaser has agreed to restrict the
disposition of its shares of the Registrant and to restrict, for a period of
four years following the closing of the transactions, purchases of additional
shares that would increase its ownership interest above 49.9 percent.
The parties have also executed a Strategic Alliance Agreement,
dated as of February 27, 1995 (the "Strategic Alliance Agreement"). The stra
tegic arrangements provided for in the Strategic Alliance Agreement will
cover a broad range of commercial relationships between the parties, includ
ing, among others, expanded and improved supply of critical components
manufactured by the Purchaser and used by the Registrant in the manufacture
of personal computers, joint product development, cross-OEM (Original
Equipment Manufacturer) arrangements and cross-licensing of patents.
The Registrant has agreed not to solicit proposals from others
regarding a competing transaction; however, the Registrant has the right to
provide certain information in response to unsolicited proposals and, in
certain circumstances, may terminate its agreement with the Purchaser upon
payment of a customary fee.
The foregoing description of the Registrant's Purchase Agreement
and exhibits thereto, Strategic Alliance Agreement and the transactions con
templated thereby, does not purport to be complete and is qualified in its en
tirety by reference to the Registrant's Purchase Agreement and exhibits
thereto and Strategic Alliance Agreement, copies of which are attached hereto
as Exhibits 2.1, and 99.1 to 99.8, respectively, and are hereby incorporated
herein by reference. A copy of the Registrant's press release, dated
February 27, 1995, relating to the above-described transactions is attached
hereto as Exhibit 99.9
Item 7. Financial Statements, Pro Forma
Financial Information and Exhibits.
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Exhibit No. Description
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2.1 Stock Purchase Agreement, dated as of February 27,
1995, by and between AST Research, Inc. and Samsung
Electronics Company, Ltd.
99.1 Form of Amended and Restated Certificate of
Incorporation of AST Research, Inc.
99.2 Form of Amended Bylaws of AST Research, Inc.
99.3 Amendment to Rights Plan, dated as of March 1,
1995, by and between AST Research, Inc. and American
Stock Transfer and Trust Company
99.4 Amendment to and Clarification of Employment Agreement,
dated as of February 27, 1995, by and between AST Research,
Inc. and Safi U. Qureshey
99.5 Form of Letter of Credit Agreement, by and between AST
Research, Inc. and Samsung Electronics Company, Ltd.
99.6 Form of Registration Rights Agreement, by and between
AST Research, Inc. and Samsung Electronics Company, Ltd.
99.7 Form of Stockholder Agreement, by and between AST
Research, Inc. and Samsung Electronics Company, Ltd.
99.8 Strategic Alliance Agreement, dated as of February 27,
1995, by and between AST Research, Inc. and Samsung
Electronics Company, Ltd.
99.9 Press Release of AST Research, Inc. and Samsung
Electronics Company, Ltd., issued February 27, 1995
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AST RESEARCH, INC.
Date: March 3, 1995 By: Bruce C. Edwards
Executive Vice President
and Chief Financial Officer
STOCK PURCHASE AGREEMENT
DATED AS OF FEBRUARY 27, 1995
BY AND BETWEEN
AST RESEARCH, INC.
AND
SAMSUNG ELECTRONICS CO., LTD.
CONTENTS
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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
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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
7.2.8 Closing Deliveries 28
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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 35
9.13 Headings; References 35
9.14 Counterparts 35
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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
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.
"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.
"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.
"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.
"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 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;
(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 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 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, 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 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, 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 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).
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.
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 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 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 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 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.
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 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;
(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 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 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
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.
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 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.
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.
(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.
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.
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 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.
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
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.
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.
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
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:
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 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 resolu
tions 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.
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 indemnifica
tion to which employees other than directors and officers may be entitled by
law.
(b) No director of the Corporation shall be liable to the Corpo
ration 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.
(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.
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
EXHIBIT B
BYLAWS
OF
AST RESEARCH, INC.
A DELAWARE CORPORATION
(AS AMENDED, THROUGH MAY__, 1995)
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 5
Section 7. Special Meetings 5
Section 8. Quorum; Vote Required for Action; Adjournment 5
Section 9. Action by Written Consent 6
Section 10. Telephone Meetings 6
Section 11. Committees 6
Section 12. Management Committee 6
Section 13. Compensation 6
Section 14. Interested Directors 7
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 8
Section 6. Powers and Duties 8
</TABLE>
<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 9
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 10
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 12
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 13
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>
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.
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.
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
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 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.
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 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.
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.
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 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.
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 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.
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 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).
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 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."
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 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.
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
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
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.
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
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:
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.
"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 obliga
tions 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 reimburse 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 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.
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.
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:
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.
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.
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:
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.
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.
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:
EXHIBIT F
REGISTRATION RIGHTS AGREEMENT
DATED AS OF ____, 1995
BY AND BETWEEN
AST RESEARCH, INC.
AND
SAMSUNG ELECTRONICS CO., LTD.
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).
"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.
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 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 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 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 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.
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.
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:
EXHIBIT G
STOCKHOLDER AGREEMENT
DATED AS OF ____, 1995
BY AND BETWEEN
AST RESEARCH, INC.
AND
SAMSUNG ELECTRONICS CO., LTD.
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.
"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.
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 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 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 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.
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 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 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 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 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 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.
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.
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.
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:
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
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>
<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>
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.
"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 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).
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.
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:
(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);
(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
(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).
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;
(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 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.
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:
(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 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 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 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
FOR IMMEDIATE RELEASE
Media Contact: Emory Epperson
(714) 727- 7958
Deborah Paquin
(714) 727-7960
Analyst Contact: Misty Ohmart
(714) 727- 7728
AST RESEARCH ANNOUNCES STRATEGIC INVESTMENT
IRVINE, Calif., Feb. 27, 1995 -- AST Research, Inc. (ASTA-NASDAQ) announced
today it has entered into an agreement providing for an investment by Samsung
Electronics Co., Ltd., based in Seoul, Korea, of up to 40.25 percent in AST, as
well as other strategic relationships, including component supply and joint
procurement.
Under the terms of the agreement, Samsung will purchase an aggregate of
40.25 percent of AST as follows:
Samsung will purchase from AST 6.44 million newly issued shares of Common
Stock, representing approximately 19.9 percent of the currently outstanding
shares, at a price of $19.50 per share.
Samsung will commence a tender offer to purchase 5.82 million additional
shares, representing approximately 18 percent of the currently outstanding
Common Stock, from AST's shareholders at a price of $22 per share.
Concurrently with the acceptance of the shares for purchase under the
tender offer, Samsung will purchase from AST 5.63 million additional 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 percent.
The closing of each of the purchases, other than the 19.9 percent
investment, is subject to approval by the shareholders 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 percent interest at any time, subject to regulatory
approval and certain other conditions.
Samsung has also agreed to provide a Letter of Credit to support AST's
existing $96.7 million note to Tandy Corp., of Fort Worth, TX, and to provide
funds to satisfy $75 million of the note obligation which is due in July 1996.
Such funds will be provided, at Samsung's option, by a loan to AST on market
terms or the purchase of additional newly issued shares of Common Stock, or a
combination of both.
As part of its investment, Samsung will be entitled to certain rights, so
long as its ownership does not fall below 30 percent. This would include the
right to designate for election one less than a majority of the AST Board of
Directors, approval over certain significant transactions and the right to
purchase additional equity securities to maintain its ownership level. Samsung
has agreed to restrict the disposition of its shares of AST and to restrict, for
a period of four years following the closing of the transactions, purchases of
additional shares that would increase its ownership interest above 49.9 percent.
The strategic arrangements will cover a broad range of commercial
relationships between the parties, including expanded and improved supply of
critical components manufactured by Samsung and used by AST in the manufacture
of personal computers, joint product development, cross-OEM (Other Equipment
Manufacturer) arrangements and cross-licensing of patents.
"AST's new relationship with Samsung represents the next step in
solidifying AST's position as a leading global supplier of personal computers,"
said Safi Qureshey, AST chairman and chief executive officer. "This strategic
relationship provides us with not only $250 million of new equity capital, but a
committed source of supply for critical components. This partnership is
especially exciting as AST teams up with one of the world's preeminent
diversified companies and a leader in consumer electronics. The long-term
aspects of such a strategic partnership will enhance AST's future product
offerings to customers as it leverages the convergence of consumer electronics
and personal computer technologies and innovation."
In addition to the approval by AST shareholders, the closing of the
transactions is subject to the U.S. and Korean regulatory approval, as well as a
number of other conditions. AST has agreed not to solicit proposals from others
regarding a competing transaction; however, it has the right to provide certain
information in response to unsolicited proposals and, in certain circumstances,
may terminate its agreement with Samsung upon payment of a customary fee. AST
has received an opinion from one of its financial advisors, Merrill Lynch & Co.,
that the consideration to be received by AST and its shareholders is fair from a
financial point of view.
AST, a $2.367 billion company, is represented in 100 countries and operates
43 subsidiaries and sales offices worldwide. Corporate headquarters is located
at 16215 Alton Parkway, P.O. Box 57005, Irvine, Calif. 92619-7005. Telephone:
(714) 727-4141 or (800) 876-4278. Fax: (714) 727-9355.
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