EXHIBIT 10AH
AMENDED AND RESTATED
RESTRUCTURING AGREEMENT
AMENDED AND RESTATED RESTRUCTURING AGREEMENT, dated as of June 14,
1999 (this "Agreement"), by and between ZENITH ELECTRONICS CORPORATION, a
Delaware corporation (the "Company"), and LG ELECTRONICS INC., a corporation
organized under the laws of the Republic of Korea ("LGE").
WHEREAS, LGE owns 36,569,000 shares of common stock, par value $1 per
share, of the Company (the "Old Common Stock"), representing approximately 55%
of the outstanding Old Common Stock, and LGE owns vested and unvested options to
purchase additional shares of Old Common Stock at a price of $.01 per share (the
"Options");
WHEREAS, from time to time LGE and the Company have entered into
certain contractual arrangements and LGE has provided financial support to the
Company;
WHEREAS, on April 20, 1999, June 30, 1998 and September 23, 1998, LGE
paid $30 million, $50 million and $22 million, respectively, to certain of the
Company's creditors to satisfy a portion of LGE's guarantee obligation in
respect of loans extended by such creditors to the Company;
WHEREAS, pursuant to the Reimbursement Agreement (as defined in
Section 1), the Company is required to reimburse LGE for amounts paid by LGE
under such guarantees and to pay interest at the rate specified therein to LGE
on such amounts from the date of payment by LGE to the date of reimbursement by
the Company;
WHEREAS, on July 22, 1998, LGE paid $90,086,653.08 to certain of the
Company's creditors to satisfy the obligations of the Company under the
Leveraged Lease Documents (as defined in Section 1);
WHEREAS, pursuant to the Financial Support Agreement (as defined in
Section 1), the Company is required to reimburse LGE for amounts paid by LGE to
satisfy the Company's obligations under the Leveraged Lease Documents and to pay
interest at the rate specified therein to LGE on such amounts from the date of
payment by LGE to the date of reimbursement by the Company;
WHEREAS, under the Leveraged Lease Documents, LGE (as beneficial
owner of the owner trusts created thereby) is the indirect owner of the
equipment subject to the Leveraged Lease Documents and may exercise one or more
of several remedies specified in the Leveraged Lease Documents with respect to
such equipment;
WHEREAS, prior to the date hereof, LGE has directed the owner trusts
to sell certain of such equipment and has applied the net proceeds of such sales
to reduce the amount the Company is required to reimburse LGE;
WHEREAS, with respect to the remainder of such equipment LGE has
determined to (i) retain a portion of the equipment in satisfaction of a portion
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of its claims under the Leveraged Lease Documents and (ii) transfer the balance
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of the equipment to the Company and retain the balance of its claims under the
Leveraged Lease Documents;
WHEREAS, a special committee of the Board of Directors of the Company
composed of independent directors (the "Special Committee") considered in detail
various proposals for the reorganization of the Company and negotiated with LGE
with respect to several proposed restructuring plans;
WHEREAS, the Special Committee made certain recommendations to the
full Board of Directors of the Company;
WHEREAS, the Board of Directors of the Company determined that it is
in the best interests of the Company to restructure the business and operations
of the Company (the "Operational Restructuring") as contemplated by the Business
Plan and Projections, dated Xxxxx 00, 0000 (xx amended in accordance with
Section 10(e) of this Agreement, the "Operating Plan"), prepared by the
management of the Company (a copy of which is attached hereto as Annex A);
WHEREAS, the Board of Directors of the Company determined that it is
in the best interests of the Company to alter the capital structure of the
Company in accordance with the terms of the Outline for Proposed Restructuring
of Zenith Electronics Corporation dated May 21, 1998 (the "Proposal") a copy of
which is attached as Annex B, and the modifications to the Proposal as may be
further mutually agreed to by the Company and LGE, through confirmation of a
plan of reorganization (the "Plan"), under the Bankruptcy Code (as defined
below) using acceptances of the Plan to be solicited (the "Plan Solicitation")
from the requisite holders of claims against, and interests in, the Company
pursuant to Section 1125 of the Bankruptcy Code (the "Financial Restructuring,"
and together with the Operational Restructuring, the "Restructuring");
WHEREAS, the Company and LGE entered into a Restructuring Agreement,
dated as of August 7, 1998 (the "Original Agreement"), pursuant to which LGE
agreed to participate in the Financial Restructuring on the terms and conditions
set forth therein;
WHEREAS, the Company and LGE have entered into a Forbearance, Lock-Up
and Voting Agreement, dated as of March 31, 1999 (the "Lock-Up Agreement"), with
certain holders of the Company's 6 1/4% Convertible Subordinated Debentures due
2011 (the "Old Subordinated Debentures") pursuant to which such holders have
agreed to vote in favor of the Plan;
WHEREAS, the Company and LGE have decided to amend and restate the
Original Agreement to reflect certain terms of the Lock-Up Agreement and other
developments relating to the Company's Restructuring;
NOW, THEREFORE, in consideration of the premises and mutual agreements
herein set forth, upon the terms and subject to the conditions set forth herein,
the parties agree as follows:
ARTICLE I
1. Definitions. As used in this Agreement, the following terms
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shall have the following meanings (each such meaning to be equally applicable to
both the singular and plural forms of the respective terms so defined):
"Alternative Proposal" has the meaning set forth in Section 6.8.
"Bankruptcy Code" means Title 11 of the United States Code, as
amended, and the rules and orders thereunder.
"Bankruptcy Court" means the United States Bankruptcy Court for the
District of Delaware.
"Closing" has the meaning set forth in Section 3.
"Closing Date" has the meaning set forth in Section 3.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Disclosure Letter" means the Disclosure Letter, dated August
7, 1998, from the Company to LGE as amended and modified by the Disclosure
Letter, dated as of the date hereof, from the Company to LGE.
"Company SEC Documents" has the meaning set forth in Section 4.4.
"Confirmation Order" has the meaning set forth in Section 4.3.
"Cumulative Funding Requirement" means cash flow from operations
before Restructuring and Reorganization Charges, plus interest expense and
capital expenditures, in each case as set forth in the Operating Plan. If LGE
(in its sole discretion) grants the Company an extension of the time for payment
to LGE of any interest owed to LGE or for the use of the credits under the
Philips Letter Agreement, calculation of cash flow from operations shall be
adjusted as if payment of all such amounts was made as and when due in the
absence of such extension.
"Disclosure Letters" means the Company Disclosure Letter and the LG
Disclosure Letter.
"EBITDA" means, for any period, the sum of:
(i) the net income (or net loss) of the Company (determined in
accordance with GAAP) for such period, without giving effect to any GAAP
extraordinary gains or losses and without deduction for Restructuring and
Reorganization Charges; plus (or minus)
(ii) to the extent that any of the items referred to in any of
clauses (A) though (D) below were deducted or added in calculating such net
income:
(A) interest expense of the Company for such period;
(B) federal, state or local income tax expense of the Company
with respect to operations for such period;
(C) the amount of all depreciation and amortization and other
non-cash charges for such period; and
(D) non-cash gains or losses from the sale or disposal of
property (other than inventory).
"Environmental Laws" means any and all applicable federal, state,
local or municipal laws, rules, orders, regulations, statutes, ordinances,
codes, decrees or requirements of any Regulatory Authority regulating, relating
to or imposing liability or standards of conduct concerning protection of human
health or the environment, including without limitation, Hazardous Materials, as
now or may at any time during the term hereof be in effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any entity that is treated as a single
employer with the Company for purposes of Section 414 of the Code.
"ERISA Plan" means an employee benefit plan within the meaning of
Section 3(3) of ERISA or any other material benefit plan maintained for
employees of the Company or any of its ERISA Affiliates.
"Exchange Act" means the Securities and Exchange Act of 1934, as
amended.
"Financial Restructuring" has the meaning set forth in the thirteenth
whereas clause.
"Financial Support Agreement" means the Financial Support Agreement,
dated March 31, 1997, as amended, between the Company and LGE.
"GAAP" means generally accepted accounting principles in the United
States as in effect from time to time.
"Hazardous Materials" means any hazardous materials, hazardous wastes,
hazardous constituents, hazardous or toxic substances, petroleum products
(including crude oil or any fraction thereof), polychlorinated biphenyls, urea-
formaldehyde insulation, asbestos containing materials defined or regulated as
such in or under any Environmental Law.
"HDTV Patents" shall mean all of the Company's United States patents
and patent applications relating to its digital vestigial side band technology
or relating to and used in connection with HDTV or digital television technology
of the Company.
"Implementation Program" means the Company's implementation program
attached hereto as Annex C.
"Intellectual Property" means, with respect to any person,
collectively, such person's Patent Property and Trademark Property.
"Leveraged Lease Documents" means (i) the Participation Agreement,
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dated as of March 26, 1997, by and among the Company, General Foods Credit
Corporation ("General Foods"), Fleet National Bank ("Fleet") as owner trustee
and the lenders party thereto, and the Lease Agreement, dated as of March 26,
1997, by and among the Company and Fleet as owner trustee, and the other
agreements and documents executed and delivered in connection therewith, and
(ii) the Participation Agreement, dated as of March 26, 1997, by and among
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Zenith Texas, General Foods, Fleet as owner trustee and the lenders party
thereto, and the Lease Agreement, dated as of March 26, 1997, by and among
Zenith Texas and Fleet as owner trustee, and the other agreements and documents
executed and delivered in connection therewith.
"LGE Disclosure Letter" means the Disclosure Letter, dated as of
August 7, 1998, from LGE to the Company.
"Lien" has the meaning set forth in Section 4.2.
"Lock-Up Agreement" has the meaning set forth in the fifteenth whereas
clause.
"Material Adverse Effect" means a material adverse effect on the
business, properties, assets, results of operations, liabilities, condition
(financial or otherwise) or prospects of the Company and its subsidiaries taken
as a whole or on the ability of the Company or its subsidiaries to consummate
the transactions contemplated by this Agreement, including the Restructuring, or
to perform their respective obligations under the definitive transaction
agreements to be entered into in connection herewith.
"Multiemployer Plan" shall have the meaning set forth in Section
4001(a)(3) of ERISA.
"New Investor" has the meaning set forth in Section 11.1(d)(iii).
"New Salaried Employee Documents" has the meaning set forth in Section
6.6.
"Note Agreement" means the Note Agreement, dated March 31, 1998,
between the Company and LGE, as amended by the First Amendment to the Note
Agreement, dated as of June 21, 1998, between the Company and LGE, and as
amended from time to time thereafter.
"Old Common Stock" has the meaning set forth in the first whereas
clause.
"Old Subordinated Debentures" has the meaning set forth in the
fifteenth clause.
"Operating Plan" has the meaning set forth in the twelfth whereas
clause.
"Operational Restructuring" has the meaning set forth in the twelfth
whereas clause.
"Options" has the meaning set forth in the first whereas clause.
"Original Agreement" has the meaning set forth in the fourteenth
whereas clause.
"Patent Property" shall mean, with respect to any person:
(i) all of such person's patents (including, with respect to the
Company, the Tuner Patents and HDTV Patents), patent applications
(including, without limitation, all patents and patent applications in
preparation for filing) and patent disclosures throughout the world,
including without limitation, with respect to the Company, each patent and
patent application referred to in Part A-1 of Section 4.14 of the Company
Disclosure Letter;
(ii) all reissues, divisions, continuations, continuations-in-part,
revisions, extensions, renewals and reexaminations of any of the items
described in clause (i) of this definition; and
(iii) all patent licenses of such person (whether as licensee or
licensor), including, with respect to the Company, each patent license
referred to in Part A-2 of Section 4.14 of the Company Disclosure Letter.
"Philips Letter Agreement" has the meaning set forth in Section 2(f).
"Plan" has the meaning set forth in the thirteenth whereas clause.
"Plan Disclosure Documents" means the Disclosure Statement and Proxy
Statement-Prospectus (as amended or supplemented and including documents
incorporated by reference therein), to be used in connection with the Plan
Solicitation by the Company and the Rule 13e-3 Transaction Statement (as amended
or supplemented and including documents incorporated by reference therein) filed
jointly by the Company and LGE.
"Plan Solicitation" has the meaning set forth in the thirteenth
whereas clause.
"Property" shall mean any real property or personal property, plant,
building, facility, structure, underground storage tank or unit, equipment,
inventory or other asset owned, leased or operated by the Company or any of its
subsidiaries (including, without limitation, any surface water thereon or
adjacent thereto, and soil and groundwater thereunder).
"Regulatory Authority" means any court or government, administrative
agency or commission or other governmental or regulatory authority or agency,
federal, state, local or foreign.
"Reimbursement Agreement" means the Reimbursement Agreement, dated
November 3, 1997, between the Company and LGE, together with the other
agreements and documents executed and delivered in connection therewith (as
amended, modified or supplemented from time to time), pursuant to which the
Company agreed to repay amounts paid by LGE (as guarantor of the Company's
obligations) to certain of the Company's third party creditors.
"Reportable Event" shall have the meaning set forth in Section 4043(c)
of
ERISA and the regulations thereunder.
"Representatives" has the meaning set forth in Section 6.6.
"Restructuring" has the meaning set forth in the thirteenth whereas
clause.
"Restructuring and Reorganization Charges" means charges incurred by
the Company to execute the Operating Plan and the Plan that are of the type
included in "Restructuring Charges" or "Reorganization Charges" in the Operating
Plan and determined on a basis consistent with the principles used to prepare
the Operating Plan.
"Reynosa Assets" means all of the right, title and interest of Zenith
Reynosa and Zenith Texas in and to (i) the land and buildings that comprise
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Zenith Xxxxxxx'x production facilities # 00, #00 xxx #00 xx Xxxxxxx, Xxxxxx,
(xx) all of the fixtures, equipment, personal property and other assets located
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therein and identified in Section 1(a) of the Company Disclosure Letter (as
amended pursuant to Section 6.6) and (iii) all agreements relating to access
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thereto.
"Reynosa Assets Claim Amount" has the meaning set forth in Section
6.6.
"Reynosa Leveraged Lease Assets" means all of its right, title and
interest of the owner trust created under the Leveraged Lease Documents in and
to the assets subject to the Leveraged Lease Documents located at Zenith
Reynosa's production facility # 27 in Reynosa, Mexico to the extent set forth on
Section 1(b) of the Company Disclosure Letter. The Reynosa Leveraged Lease
Assets have a fair market value equal to $8,000,750.00.
"Reynosa Operating Agreement" has the meaning set forth in Section
2(b).
"Reynosa Purchase Agreement" has the meaning set forth in Section
2(b).
"Securities Act" means the Securities Act of 1933, as amended.
"SEC" means the Securities and Exchange Commission.
"Senior Secured PIK Notes" means the Senior Secured PIK Notes of the
Company having the terms set forth on Annex D.
"Special Committee" has the meaning set forth in the tenth whereas
clause.
"Taxes" means any net income, alternative minimum, accumulated
earnings, personal holding company, gross income, asset, gross receipts, sales,
use, goods and services, ad valorem, value added, mortgage, conveyance,
transfer, customs duties, franchise, capital stock, net worth, capital, profits,
license, withholding, payroll, employment, unemployment insurance, social
security, disability, workers' compensation, health care, excise, stamp,
property, rent, occupancy, occupational, documentary, recording, premium,
severance, environmental or windfall profit tax, duty, governmental fee or other
like assessment or charge, together with all interest or penalties thereon and
additions thereto, imposed by any taxing authority.
"Tax Return" means any return, report, declaration, form, claim for
refund or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"Trademark" shall have the meaning ascribed to that term in the
definition of Trademark Property.
"Trademark Property" shall mean, with respect to any person:
(i) all of such person's trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, certification marks, collective marks, logos, trade dress
other source of business identifiers, prints and labels on which any of the
foregoing have appeared or appear, designs and general intangibles of a
like nature (all of the foregoing items in this clause (i) being
collectively called a "Trademark"), now existing anywhere in the world or
hereafter adopted or acquired, whether currently in use or not, whether or
not registered, all registrations and recordings thereof and all
applications in connection therewith, whether pending or in preparation for
filing, including registrations, recordings and applications in the United
States Patent and Trademark Office or in any office or agency of the United
States of America or
any State thereof or any foreign country, including, with respect to the
Company, those referred to in Part B-1 of Section 4.14 of the Company
Disclosure Letter;
(ii) all reissues, extensions, renewals, translations, adaptations,
derivations and combinations of any of the items described in clause (i) of
this definition;
(iii) all Trademark licenses and other agreements providing such
person with the right to use any of the types of items referred to in
clauses (i) and (ii) of this definition, including, with respect to the
Company, each Trademark license referred to in Part B-2 of Section 4.14 of
the Company Disclosure Letter;
(iv) all of the goodwill of the business connected with the use of,
and symbolized by the items described in, clauses (i) and (ii) of this
definition;
(v) the right to xxx third parties for past, present and future
infringements of any Trademark property described in clauses (i) or (ii) of
this definition and, to the extent applicable in clause (iii) of this
definition; and
(vi) all proceeds of, and rights associated with, the foregoing,
including any claim by such person against third parties for past, present
or future infringement or dilution of any Trademark, Trademark registration
or (to the extent applicable and if permitted by applicable law) Trademark
license, referred to on clause (iii) of this definition, or for any injury
to the goodwill associated with the use of any such Trademark or for breach
or enforcement of any Trademark license, and all rights corresponding
thereto throughout the world.
"Transaction Expenses" has the meaning set forth in Section 11.3(a).
"Transaction Fee" has the meaning set forth in Section 11.3(b).
"Tuner Patents" shall mean, collectively, U.S. Patent No. 4,002,986,
U.S. Patent No. 4,317,227, U.S. Patent No. 4,516,170, and U.S. Patent No.
4,598,425, together with all applications, reissues, divisions, continuations,
continuations-in-part, revisions, extensions, renewals and reexaminations
relating thereto; and "Tuner Patent" shall mean any of the foregoing.
"Zenith Reynosa" means Partes de Television xx Xxxxxxx, a Mexican
sociedad anonima de capital variable and a wholly-owned subsidiary of the
Company.
"Zenith Texas" means Zenith Electronics Corporation of Texas, a Texas
corporation and a wholly-owned subsidiary of the Company.
ARTICLE II
2. The Transactions. Upon the terms and subject to the conditions
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set forth herein, on the Closing Date, pursuant to the Plan,
(a) LGE will purchase from the Company, and the Company will issue to
LGE, shares of newly issued common stock, par value $.01 per share, of the
Company (the "New Common Stock"), representing 100% of the New Common Stock, in
exchange for the forgiveness by LGE of $200 million of LGE claims consisting of
(i) unsecured claims for amounts outstanding as of the Closing Date up to $140
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million arising out of the delivery of goods to the Company in the ordinary
course of business, (ii) a $50 million secured claim pursuant to the
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Reimbursement Agreement, (iii) an unsecured claim for guarantee fees accrued and
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unpaid through the Closing Date payable to LGE under the Reimbursement Agreement
and (iv) a portion, if any, of the secured claim pursuant to the Note Agreement
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sufficient when aggregated with the amounts described in clauses (i), (ii) and
(iii) of this Section 2(a) to equal $200 million;
(b) LGE or one of its subsidiaries and Zenith Reynosa and Zenith
Texas will enter into an agreement (the "Reynosa Purchase Agreement") pursuant
to which Zenith Reynosa and Zenith Texas will sell to LGE or one of its
affiliates the Reynosa Assets in exchange for the release by LGE of claims equal
to the Reynosa Asset Claim Amount as reimbursement for the payment by LGE of the
Company's and Zenith Texas' obligations to certain third party creditors under
the Leveraged Lease Documents, provided, however, that if the transactions
contemplated by this Section 2(b) would have adverse Tax consequences that are
unacceptable to either the Company or LGE, then (i) the Company shall retain the
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Reynosa Assets, (ii) the Company and LGE shall enter into an agreement with
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respect to the operation by LGE of such Reynosa Assets and the Reynosa Leveraged
Lease Assets (the "Xxxxxxx Operating Agreement") and (iii) the amount of LGE
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claims that would have been exchanged for the Reynosa Assets under this
Section 2(b) shall be exchanged for an equal principal amount of Senior Secured
PIK Notes;
(c) LGE will purchase from the Company, and the Company will issue to
LGE, Senior Secured PIK Notes in a principal amount equal to and in exchange for
the forgiveness by LGE of claims equal to the aggregate of (i) a secured claim
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for principal amounts owed LGE pursuant to the Reimbursement Agreement, if any,
other than the $50 million exchanged for New Common Stock under Section 2(a),
(ii) the amount of the claim for reimbursement of the payment by LGE of the
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obligations of the Company and Zenith Texas to certain third party creditors
under the Leveraged Lease Documents remaining after release of the portion of
the claim exchanged for the Reynosa Assets pursuant to Section 2(b) and the
retention of the Reynosa Leveraged Lease Assets pursuant to Section 2(f), (iii)
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an unsecured claim for all servicing fees (the "Technical Service Fees") accrued
and unpaid through the Closing Date resulting from LGE's provision of certain
technical and other related services to the Company in connection with the
Company's research and development activities, and (iv) the amount of the
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secured claim pursuant to the Note Agreement remaining after conversion of the
portion of the claim exchanged for New Common Stock pursuant to Section 2(a);
(d) each share of Old Common Stock owned by LGE and the Options owned
by LGE will be canceled, and LGE will have no rights or claims against the
Company in respect of such canceled Old Common Stock and Options;
(e) LGE will agree to lend or provide additional credit support to the
Company in an amount necessary to enable the Company to execute the Operating
Plan according to its terms, not to exceed $60 million, on terms mutually
acceptable to LGE and the Company;
(f) LGE will transfer to the Company all of its right, title and
interest in the equipment subject to the Leveraged Lease Documents (other than
the Reynosa Leveraged Lease Assets and any such equipment sold on or before the
Closing Date) and any credits outstanding under the Letter Agreement, dated
November 2, 1998 (the "Philips Letter Agreement"), between the Company and
Philips Electronics North America Corporation, provided, however, if the Company
and LGE do not enter into the Reynosa Purchase Agreement, then LGE will also
transfer to the Company the Reynosa Leveraged Lease Assets in exchange for
Senior Secured PIK Notes in a principal amount of $8,000,750.00; and
(g) LGE's claims other than those described under Sections 2(a),
2(b), 2(c), 2(d) and 2(f), including without limitation all accrued but unpaid
interest on amounts owed by the Company to LGE under the Reimbursement
Agreement, the Financial Support Agreement and the Note Agreement, shall be
treated as unimpaired general unsecured claims under the Plan.
ARTICLE III
3.1 Closing. At the Closing, subject to the terms and conditions of
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this Agreement, the Company and LGE shall consummate the transactions
contemplated by Section 2 hereof. The closing (the "Closing") shall take place
at the offices of Xxxxxxxx & Xxxxx, 000 Xxxx Xxxxxxxx Xxxxx, Xxxxxxx, XX 00000,
at 10:00 a.m., Chicago time, as promptly as practicable following the
satisfaction or waiver of the conditions to Closing set forth in Sections 8, 9
and 10 hereof, or at such other place and time as the parties may mutually
agree. The Company shall give LGE three business days prior written notice of
the date the Closing is scheduled to occur. The "Closing Date" shall be the
date the Closing occurs.
3.2 No Survival. The sole and exclusive recourse and remedy for a
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material breach of a representation or warranty shall be the non-breaching
party's right pursuant to Section 9(a) or 10(a), as the case may be, not to
consummate the transactions contemplated hereby. At Closing all representations
and warranties shall expire, and in any case, result in no future liability for
the Company or LGE or their respective subsidiaries, officers, directors and
employees.
ARTICLE IV
4. Representations and Warranties of the Company. The Company
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represents and warrants to LGE that:
4.1 Organization; Authorization; Enforceability. It is a corporation
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duly organized, validly existing and in good standing under the laws of the
State of Delaware, and has all requisite power and authority to execute and
deliver this Agreement
and to perform its obligations hereunder. The execution, delivery and
performance by it of this Agreement have been duly authorized by all requisite
corporate action on its part. This Agreement has been duly executed and
delivered by it and constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms.
4.2 No Conflicts. The execution, delivery and performance of this
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Agreement by it will not: (x) conflict with or violate its organizational
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documents; or (y) subject to the governmental filings and approvals referred to
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in Section 4.3 and in the case of clauses (y)(i) and (y)(ii) as would not
reasonably be likely to result in or have a Material Adverse Effect, (i) breach
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or violate any statute, law, rule, regulation, judgment, order or decree
applicable to it or any of its subsidiaries or by which any of their respective
properties are bound or affected, (ii) result in any breach of, or constitute a
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default or give rise to any right of termination, revocation, cancellation,
acceleration or increased payments under (with or without the giving of notice
or the lapse of time or both), any note, mortgage, agreement, contract,
indenture, permit, lease, license, commitment, understanding or other
arrangement to which it or any of its subsidiaries is a party or by which it or
any of its subsidiaries or any of their respective properties or assets are
bound or affected, or (iii) result in the creation or imposition of any lien,
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mortgage, security interest, restriction or other encumbrance (a "Lien") on it
or any of its subsidiaries or any of their respective assets or properties.
4.3 Consents. Except for (i) applicable requirements of the
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Securities Act, the Exchange Act, and filings under state securities or "blue
sky" laws, (ii) approval by the Bankruptcy Court of the Plan and this Agreement
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and the entry by the Bankruptcy Court of an order confirming the Plan (the
"Confirmation Order"), (iii) filing with the Secretary of State of the State of
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Delaware of the Certificate of Amendment of the Certificate of Incorporation of
the Company with respect to the amendments contemplated by this Agreement, and
(iv) as set forth in Section 4.3 of the Company Disclosure Letter, no consent,
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approval or authorization of, or filing with or notification to, any Regulatory
Authority or any third party is required on its part in connection with the
execution, delivery or performance of this Agreement.
4.4 SEC Documents. Except for the Company's Annual Report on Form
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10K for the fiscal year ended December 31, 1998, which was filed by the Company
on April 1, 1999, the Company has timely filed all reports, schedules, forms,
statements and other documents required to be filed by it with the SEC under the
Securities Act and the Exchange Act since December 31, 1995 (the "Company SEC
Documents"). As of its filing date, each Company SEC Document filed, as amended
or supplemented, if
applicable, (i) complied in all material respects with the applicable
-
requirements of the Securities Act or the Exchange Act, as applicable, and the
rules and regulations thereunder, and (ii) did not, at the time it was filed,
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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.
4.5 Financial Statements; Absence of Undisclosed Liabilities. The
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financial statements of the Company included in the Company SEC Documents
complied as to form, as of their respective dates of filing with the SEC, in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles ("GAAP") (except, in
the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied
on a consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly present in all material respects the consolidated
financial position of the Company and its consolidated subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal recurring year-end audit adjustments). Except as set forth in Section
4.5 of the Company Disclosure Letter or as reflected in such financial
statements as of and for the period ending December 31, 1997 or in the notes
thereto, neither the Company nor any of its subsidiaries has any liabilities of
any nature, whether known or unknown, absolute, accrued, contingent or otherwise
and whether due or to become due, that, individually or in the aggregate, have
had or are reasonably likely to have or result in a Material Adverse Effect.
4.6 Plan Disclosure Documents. The Plan Disclosure Documents will
-------------------------
not, at the date mailed by the Company to the creditors and equity security
holders of the Company, the date the Bankruptcy Court enters the Confirmation
Order or the Closing Date, 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 are made, not misleading. The Plan Disclosure Documents will comply as to
form in all material respects with the provisions of the Securities Act, the
Exchange Act and the Bankruptcy Code and all other rules, regulations, orders or
decrees thereunder.
4.7 Confirmation of Plan. To the knowledge of the officers of the
--------------------
Company, the Company has not taken any action, or failed to take any action,
which might prevent, materially impede or delay or result in the revocation of
(i) the confirmation of the Plan (as provided in Section 1144 of the Bankruptcy
-
Code), (ii) a full and complete discharge (to the fullest extent possible under
--
Section 1141(d) of the Bankruptcy Code) of the debts of the Company intended to
be discharged under the Plan, and (iii) the vesting upon the entry of the
---
Confirmation Order of the property of the Company in the reorganized Company
free and clear of all claims and interests of creditors and equity security
holders except as otherwise provided in the Plan.
4.8 Compliance with Law. Except as disclosed in the Company SEC
-------------------
Documents or the Plan Disclosure Documents, neither the Company nor any of its
subsidiaries is in violation of or default under (i) any statute, law,
-
regulation, rule, judgment, order or decree of any Regulatory Authority
applicable to the Company or any of its subsidiaries or by which any of the
Company or its subsidiaries or any of their respective assets or properties are
bound or affected or (ii) any note, mortgage, indenture, contract, agreement,
--
permit, lease, license, commitment, understanding or other arrangement to which
the Company or any of its subsidiaries is a party or by which the Company or any
of its subsidiaries or any of their respective assets or properties are bound or
affected, and neither the Company nor any of its subsidiaries has received any
notice alleging noncompliance, except with reference to all the foregoing where
the failure to be in compliance would not, individually or in the aggregate,
have or result in a Material Adverse Effect.
4.9 Environmental Matters. Except as set forth in the Company SEC
---------------------
Documents and in Section 4.9 of the Company Disclosure Letter:
(a) To the best of the Company's and its subsidiaries' knowledge,
after reasonably diligent inquiry, the Property does not contain, in, on or
under, including, without limitation, the soil and groundwater thereunder, any
Hazardous Materials in violation of Environmental Laws or in amounts that could
give rise to liability under Environmental Laws.
(b) The Company and each of its subsidiaries is in material
compliance with all applicable Environmental Laws, and there is no contamination
or violation of any Environmental Law which could materially interfere with the
continued operation of any of the Properties or have or result in a Material
Adverse Effect.
(c) Neither the Company nor any of the Company's subsidiaries has
received from any Regulatory Authority or other person or entity any complaint,
or notice of violation, alleged violation, investigation or advisory action or
notice of potential liability regarding matters of environmental protection or
permit compliance under applicable Environmental Laws with regard to the
Properties, nor is the Company aware that any such notice is pending or
threatened.
(d) Hazardous Materials have not been generated, treated, stored,
disposed of, at, on or under any of the Property in violation of any
Environmental Laws or in a manner that could give rise to material liability
under Environmental Laws nor have any Hazardous Materials been transported or
disposed of from any of the Properties to any other location in violation of any
Environmental Laws or in a manner that could give rise to material liability
under Environmental Laws.
(e) Neither the Company nor any of its subsidiaries is a party to any
administrative actions or judicial proceedings pending under any Environmental
Law with respect to any of the Properties, nor are there any consent decrees or
other decrees, consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any Environmental Law
with respect to any of the Properties.
(f) There has been no release or threat of release of Hazardous
Materials into the environment at or from any of the Properties, or arising from
or relating to the operations of the Company or any of its subsidiaries, in
violation of Environmental Laws or in amounts that could give rise to material
liability under Environmental Laws.
(g) All information, reports, and other papers and data furnished by
the Company to LGE relating to (x) the environmental conditions on, under or
-
about the Properties currently or formerly owned, leased, operated to used by
the Company or any of its subsidiaries or any predecessor in interest thereto
and (y) any Hazardous Materials used, managed, handled, transported, treated,
-
generated, stored, discharged, emitted, or otherwise released by the Company or
any of its subsidiaries or any other person or entity on, under about or from
any Properties currently or formerly owned or leased, or otherwise in connection
with the use or operation of any of the Properties of the Company or any of its
subsidiaries, or their respective businesses and operations were, at the time
the same were so furnished, (i) to the extent prepared by third parties, to the
-
best of the Company's knowledge, and (ii) to the extent prepared by the Company,
--
complete and
correct in all material respects in light of all such information, reports and
other papers and data taken as a whole at such time. No fact is currently known
to the officers of the Company which had or resulted in, or could reasonably be
expected to have or result in a Material Adverse Effect.
4.10 Title to New Common Stock. Assuming the entry of the
-------------------------
Confirmation Order, all shares of New Common Stock issued at the Closing
pursuant to this Agreement, will have been duly authorized by all necessary
corporate action on the part of the Company, and, upon such issuance, such
shares of New Common Stock will be validly issued, fully paid and nonassessable,
and the issuance of such shares will not be subject to preemptive rights of any
other stockholder of the Company.
4.11 ERISA Matters. Except as set forth in the Company SEC Documents
-------------
or Section 4.11 of the Company Disclosure Letter,
(a) The Company and each ERISA Affiliate and each of their respective
ERISA Plans are in substantial compliance with ERISA and the Code and neither
the Company nor any of its ERISA Affiliates has incurred any accumulated funding
deficiency with respect to any such ERISA Plan within the meaning of ERISA or
the Code. The Company and each of its ERISA Affiliates have complied with all
material requirements of ERISA Sections 601 through 608 and Code Section 4980B.
Neither the Company nor, to the best of the Company's knowledge, any of its
ERISA Affiliates has made any promises of retirement or other benefits to
employees, except as set forth in the ERISA Plans. Neither the Company nor any
of its ERISA Affiliates has incurred any material liability to the Pension
Benefit Guaranty Corporation in connection with any such ERISA Plan. The assets
of each such ERISA Plan which is subject to Title IV of ERISA are sufficient to
provide the benefits under such ERISA Plan, the payment of which the Pension
Benefit Guaranty Corporation would guarantee if such ERISA Plan were terminated,
and such assets are also sufficient to provide all other "benefit liabilities"
(as defined in ERISA Section 4001(a)(16)) due under the plan upon termination.
No Reportable Event has occurred and is continuing with respect to any such
ERISA Plan. No such ERISA Plan or trust created thereunder, or party in
interest (as defined in Section 3(14) of ERISA, or any fiduciary (as defined in
Section 3(21) of ERISA), has engaged in a "prohibited transaction" (as such term
is defined in Section 406 of ERISA or Section 4975 of the Code) which would
subject such ERISA Plan or any other ERISA Plan of the
Company or any of its ERISA Affiliates, any trust created thereunder, or any
such party in interest or fiduciary, or any party dealing with any such ERISA
Plan or any such trust to any material penalty or tax on "prohibited
transactions" imposed by Section 502 of ERISA or Section 4975 of the Code.
Neither the Company nor any of its ERISA Affiliates is a participant in or is
obligated to make any payment to a Multiemployer Plan.
(b) Neither the approval or execution of this Agreement nor the
consummation of the transactions contemplated by this Agreement will (i) entitle
-
any individual to severance pay or (ii) accelerate the time of payment or
--
vesting of, or increase the amount of, compensation due to any individual (other
than in the form of Old Common Stock).
(c) Except as set forth in Section 4.11(c) of the Company Disclosure
Letter, there is no strike, walkout or other work stoppage or lockout pending
or, to the knowledge of the Company, threatened against or affecting the
business of the Company or any of its subsidiaries.
4.12 Taxes. Except set forth in Section 4.12 of the Company
-----
Disclosure Letter, all Tax Returns in respect of the Company and its
subsidiaries required to be filed on or before the Closing Date have (or by the
Closing Date will have) been duly and timely filed, except to the extent the
failure to file any such Tax Return would not, individually or in the aggregate,
have or result in a Material Adverse Effect. Except as set forth in Section
4.12 of the Company Disclosure Letter, all Taxes (whether or not shown on such
Tax Returns) due and payable with respect to the Company and its subsidiaries on
or before the Closing Date have (or by the Closing Date will have) been duly and
timely paid. All Taxes required to be withheld by the Company or any of its
subsidiaries on or before the Closing Date have (or by the Closing Date will
have) been duly and timely withheld and properly paid to the applicable taxing
authority.
4.13 Operating Plan. The projections contained in the Operating Plan
--------------
represent the Company's good faith estimate of the results of its operations
both before and after the Restructuring for which it believes it has a
reasonable basis. The Company believes that the assumptions which underlie the
projections continue to be reasonable in light of current circumstances.
4.14 Intellectual Property; Licenses. Except as set forth in Section
-------------------------------
4.5 of the Company Disclosure Letter, the Company possesses adequate
Intellectual Property to continue to conduct its business as heretofore
conducted by it or as projected to be
conducted in the Operating Plan, and all Intellectual Property existing on the
date hereof, together with in the case of patents and Trademarks, the date of
issuance thereof, is listed in Section 4.14 of the Company Disclosure Letter.
With respect to Intellectual Property of the Company unless such Intellectual
Property has become obsolete or is no longer used or useful in the conduct of
the business of the Company:
(a) it is valid and enforceable, is subsisting, and has not been
adjudged invalid or unenforceable, in whole or in part;
(b) the Company has made all necessary filings and recordations to
protect its interest therein, including, without limitation, recordations of all
of its interest in its Patent Property and Trademark Property in the United
States Patent and Trademark Office and, to the extent necessary for the conduct
of the Company's business, in corresponding offices throughout the world;
(c) except as set forth in Section 4.5 of the Company Disclosure
Letter, the Company is the exclusive owner of the entire and unencumbered right,
title and interest in and to such Intellectual Property owned by it and no claim
has been made that the use of any of its owned Intellectual Property does or may
violate the asserted rights of any third party; and
(d) the Company has performed, and the Company will continue to
perform, all acts, and the Company has paid and will continue to pay, all
required fees and taxes, to maintain each and every item of such Intellectual
Property in full force and effect throughout the world, as applicable.
The Company owns directly or is entitled to use, by license or otherwise, all
patents, Trademarks, copyrights, mask works, licenses, technology, know-how,
processes and rights with respect to any of the foregoing used in, necessary for
or of importance to the conduct of the Company's business.
4.1 Year 2000. The replacement of business critical software or
---------
other solutions necessary to address the year 2000 issue in respect of such
software is expected to be completed by July 31, 1999. The projected cost to
the Company and its subsidiaries of such replacement or other solution is
properly reflected in the Operating Plan.
ARTICLE V
5. Representations and Warranties of LGE. LGE represents and
-------------------------------------
warrants to the Company that:
5.1 Organization; Authorization; Enforceability. It is a corporation
-------------------------------------------
duly organized and validly existing under the laws of the Republic of Korea and
has all requisite power and authority to execute and deliver this Agreement and
to perform its obligations hereunder. The execution, delivery and performance
by it of this Agreement have been duly authorized by all requisite corporate
action on its part. This Agreement has been duly executed and delivered by it
and constitutes its legal, valid and binding obligation, enforceable against it
in accordance with its terms.
5.2 No Conflicts. The execution, delivery and performance of this
------------
Agreement by it will not (i) conflict with or violate its organizational
-
documents or (ii) subject to the governmental filings and approvals referred to
--
in Section 5.3, breach or violate any statute, law, rule, regulation, judgment,
order or decree applicable to it or any of its subsidiaries or by which any of
their respective properties are bound or affected.
5.3 Consents. Except for (i) applicable requirements of the
-------- -
Securities Act, the Exchange Act and filings under state securities or "blue
sky" laws, (ii) approval by the Bankruptcy Court of the Plan and this Agreement
--
and the entry by the Bankruptcy Court of the Confirmation Order, (iii) filing
---
with the Secretary of State of the State of Delaware of the Certificate of
Amendment of the Certificate of Incorporation of the Company with respect to the
amendments contemplated by this Agreement, and (iv) as set forth in Section 5.3
--
of the LGE Disclosure Letter, no consent, approval or authorization of, or
filing with or notification to, any Regulatory Authority (including, without
limitation, any Korean Regulatory Authority) or any third party is required on
its part in connection with the execution, delivery or performance of this
Agreement.
5.4 Plan Disclosure Documents. Those portions of the Plan Disclosure
-------------------------
Documents made in reliance upon and in conformity with information furnished to
the Company by LGE in writing for use in connection with the preparation thereof
will not, at the date mailed by the Company to the creditors and equity security
holders of the Company, the date the Bankruptcy Court enters the Confirmation
Order or the Closing Date, contain any untrue statement of 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 are made, not misleading. The Company
acknowledges that the portions of the Plan Disclosure Documents set forth in
Section 5.4 of the LGE Disclosure Letter constitute the only information
furnished in writing by LGE.
ARTICLE VI
6. Agreements of the Company.
-------------------------
6.1 Reorganization Proceedings. The Company shall, and shall cause
--------------------------
its subsidiaries to, use commercially reasonable efforts to consummate the
Financial Restructuring, including, without limitation:
(a) the preparation and filing of the Plan Disclosure Documents with
the SEC as soon as practicable after the date hereof and the clearance of the
Plan Disclosure Documents by the SEC;
(b) subject to Section 6.4, the preparation and filing of supplements
or amendments to the Plan Disclosure Documents with the SEC and the clearance of
such supplements or amendments to the Disclosure Statement by the SEC if at any
time prior to the Closing Date any fact, event or development should occur or
exist that is required under the Securities Act, the Exchange Act or the
Bankruptcy Code or the rules and regulations thereunder to be set forth in a
supplement or amendment to the Plan Disclosure Documents;
(c) the solicitation and receipt of the acceptances of the requisite
holders of claims against the Company pursuant to the Plan Solicitation;
(d) the filing with, and approval of, the Bankruptcy Court of the
Plan Disclosure Documents;
(e) the confirmation of the Plan under the Bankruptcy Code using the
acceptances of the Plan received by the Company pursuant to the Plan
Solicitation; and
(f) the consummation of the transactions provided for in the Plan,
including, without limitation, the transactions described in Section 2 of this
Agreement.
6.2 Compliance with Bankruptcy Code. The Company shall, and shall
-------------------------------
cause its subsidiaries, to the extent applicable, to, comply in all material
respects with the
Bankruptcy Code and all other laws, rules, regulations, decrees and orders
promulgated thereunder in connection with obtaining the Confirmation Order.
6.3 Consummation of the Plan. The Company shall, and shall cause its
------------------------
subsidiaries to, use commercially reasonable efforts to obtain, and shall
obtain, and shall refrain from taking any action that would be likely to
prevent, materially impede or delay or result in the revocation of (i) the entry
-
by the Bankruptcy Court of the Confirmation Order; (ii) the full and complete
--
discharge (to the fullest extent possible under Section 1141(d) of the
Bankruptcy Code) of the debts of the Company intended to be discharged under the
Plan; and (iii) the vesting upon the entry of the Confirmation Order of the
---
property of the Company in the reorganized Company free and clear of all claims
and interests of creditors and equity security holders except as otherwise
provided in the Plan.
6.4 Amendments to Plan and Plan Disclosure Documents. The Company
------------------------------------------------
shall not consent to any amendment or supplement to, or modification of, the
Plan or the Plan Disclosure Documents without the prior written consent of LGE,
which consent may be evidenced by the execution of the Plan or the Plan
Disclosure Documents by the LGE-designated members of the Board of Directors of
the Company.
6.5 Conduct of the Business. From the date hereof until the Closing
-----------------------
Date, except to the extent that LGE otherwise consents in writing or except as
contemplated or permitted by the Operating Plan or the Financial Restructuring,
(a) the Company shall, and shall cause its subsidiaries to, conduct business in
-
the ordinary course in substantially the same manner as presently conducted and
use commercially reasonable efforts to keep available the services of Xxxxxxx X.
Xxxxxx and his "Tier 1" and "Tier 2" reports and to preserve the relationships
with key customers, suppliers and others having business dealings with the
Company or its subsidiaries, and (b) the Company shall not, and shall cause its
-
subsidiaries not to:
(i) acquire or agree to acquire by merging or consolidating with,
or by purchasing a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquire or agree to
acquire any assets (other than inventory) in any such case, that would be
material to the Company;
(ii) sell, lease, license, encumber or otherwise dispose of, or
agree to sell, lease, license, encumber or otherwise dispose of, any of the
assets or properties of the Company or its subsidiaries other than in the
ordinary course of business or pursuant to the Operating Plan or to
existing contractual obligations set forth in Section 6.5(ii) of the
Company Disclosure Letter for the sale or other disposition of equipment;
(iii) amend its Certificate of Incorporation, By-laws or other
organizational documents, except as set forth in the Plan;
(iv) redeem or otherwise acquire any shares of its capital stock or
issue any capital stock or any option, warrant or right relating thereto;
(v) incur any liabilities, obligations or indebtedness for borrowed
money or guarantee any such liabilities, obligations or indebtedness;
(vi) permit, allow or suffer any of the assets or properties of the
Company or any subsidiary to be subject to any Lien other than Liens (A)
-
securing debt reflected on the balance sheet of the Company as of December
31, 1997 or the notes thereto or contained in the Company SEC Documents,
(B) referred to in Section 6.5 of the Company Disclosure Letter, (C) for
- -
Taxes not yet due or payable or being contested in good faith, (D) that
-
constitute mechanics', carriers', workmens' or like Liens, Liens arising
under original purchase price conditional sales and other similar contracts
and equipment leases with third parties entered into in the ordinary
course, (E) incurred in the ordinary course of business consistent with
-
past practice in connection with workers' compensation, unemployment
insurance and social security, retirement and other legislation and in the
case of Liens described in clauses (B), (C), (D) or (E) that, individually
or in the aggregate, would not reasonably be expected to have or result in
a Material Adverse Effect;
(vii) cancel any material indebtedness (individually or in the
aggregate) or waive any claims or rights of material value;
(viii) make any change in any method of accounting or accounting
practice or policy, except as may be required by GAAP;
(ix) modify, amend, terminate or permit the lapse of any material
lease of real property (except modifications or amendments associated with
renewals of
leases in the ordinary course of business consistent with past practice of
the Company);
(x) enter into any material contract or arrangement;
(xi) enter into any agreement or take any action in violation of the
terms of this Agreement or the Restructuring;
(xii) settle any material tax audit, make or change any material tax
election;
(xiii) hire any new executive officers of the Company or any of its
subsidiaries;
(xiv) except as contemplated by the New Salaried Employee Documents,
(A) grant any director, executive officer or other employee of the Company
-
or any of its subsidiaries any increase in compensation, except, in the
case of employees who are not executive officers or directors, normal
salary increases consistent with past practice or as was required under
employment agreements or arrangements in effect as of the date of the most
recent audited financial statements included in the Company SEC Documents,
(B) grant any such director, executive officer or other employee any
-
severance or termination pay, except as was required under any employment,
severance or termination agreements or arrangements or plans in effect as
of the date of the most recent audited financial statements included in the
Company SEC Documents, (C) enter into any employment, severance or
-
termination agreement with, or adopt any plan or arrangement covering, any
such director, executive officer, or employee or (D) adopt any new benefit
-
plan or arrangement (including, without limitation, an Employee Benefit
Plan, a bonus plan, a severance plan or any equity-based plan) or amend any
such plan, except as required by law;
(xv) enter any new line of business; or
(xvi) agree, whether in writing or otherwise, to do any of the
foregoing.
For purposes for this Section 6.5 only, "material" means involving $5 million or
more.
6.6 Xxxxxxx Asset Claim Amount. The Company and LGE estimated the
--------------------------
value of the Xxxxxxx Assets to be $32,364,300.00 as of August 7, 1998. At least
five days prior to the Closing, the Company and LGE shall agree in writing on
the value of the Xxxxxxx Assets as of the Closing Date (the "Xxxxxxx Asset Claim
Amount"). The Xxxxxxx Asset Claim Amount shall equal $32,364,300.00 plus (i)
-
the aggregate amount of capital expenditures made in respect of the Xxxxxxx
Assets by the Company since August 7, 1998 and approved by LGE; minus (ii) the
--
sum of (x) the amount of depreciation (determined in accordance with GAAP) in
-
respect of the Xxxxxxx Assets since August 7, 1998 and (y) the amount of any
-
liabilities assumed by LGE in connection with the transactions contemplated by
the Xxxxxxx Purchase Agreement; plus or minus, as the case may be, (iii) the
---
value of any equipment, personal property or other assets added or subtracted
from the list set forth on Schedule 1(a) hereto pursuant to the mutual written
agreement of the Company and LGE.
6.7 [Intentionally omitted.]
6.8 Access and Information. So long as this Agreement remains in
----------------------
effect, the Company will (and will cause each of its subsidiaries, and each of
the accountants, counsel, consultants, officers, directors, employees, agents
and representatives (the "Representatives") of or to any of the Company and its
subsidiaries, to) give LGE and its Representatives, subject to existing
confidentiality agreements and to be used only for the purposes of this
Agreement and the transactions contemplated hereby, full access during
reasonable business hours to all of their respective properties, assets, books,
contracts, commitments, reports, records, accountants and accountant's work
papers relating to the Company and its subsidiaries, excluding such material
which is attorney-client privilege or attorney work product, and furnish to
them, subject to existing confidentiality agreements and to be used only for the
purposes of this Agreement and the transactions contemplated hereby, all such
documents, records and information with respect to the properties, assets and
business of the Company and its subsidiaries and copies of any work papers
relating thereto, excluding such material which is subject to attorney-client
privilege or attorney work product, as LGE shall from time to time reasonably
request. The Company will keep LGE generally informed as to the affairs of the
Company and its subsidiaries. In addition, the Company shall deliver to LGE,
not later than the 20th business day following the end of each fiscal month
prior to the Closing, financial statements for the Company and its consolidated
subsidiaries as of the end of such fiscal month, together with a certificate of
the chief financial officer of the Company
demonstrating in reasonable detail that the Company is in compliance with the
financial covenants set forth in Section 10(f) of this Agreement. The Company
will promptly notify LGE if any information is requested from it or any
negotiations or discussions are sought to be initiated with the Company
concerning any merger, consolidation, business combination, liquidation,
reorganization, sale of substantial assets, sale of shares of capital stock,
purchase of claims or similar transactions involving the Company or any
subsidiary or any division of any thereof (an "Alternative Proposal"), and will
promptly communicate to LGE the terms of any proposal or inquiry which it may
receive in respect of any Alternative Proposal.
6.9 Further Actions. The Company shall, and shall cause each of its
---------------
subsidiaries to:
(a) use commercially reasonable efforts to take or cause to be taken
all actions, and to do or cause to be done all other things, necessary, proper
or advisable in order for it to fulfill and perform its obligations in respect
of this Agreement, or otherwise to consummate and make effective the
transactions contemplated hereby;
(b) as promptly as practicable, (i) make, or cause to be made, all
-
filings and submissions required under any applicable law or regulation, and
give such reasonable undertakings as may be required in connection therewith,
and (ii) use all reasonable efforts to obtain or make, or cause to be obtained
--
or made, all permits necessary to be obtained or made by the Company or any of
its subsidiaries, in each case in connection with this Agreement, the Plan, or
the consummation of the other transactions contemplated hereby or thereby;
(c) coordinate and cooperate with LGE in exchanging such information
and supplying such reasonable assistance as may be reasonably requested by LGE
in connection with the filings and other actions contemplated by this Agreement;
(d) not issue any press release or make any other public statement
regarding the Restructuring without the prior consent of LGE or except as
otherwise required by law (provided that in such an event the Company shall give
advance notice to LGE of any such release or statement); and
(e) the Company shall promptly notify LGE in writing of any fact,
condition, event or occurrence that could reasonably be expected to result in
the failure of any of the conditions contained in Sections 8, 9 and 10 to be
satisfied, promptly upon becoming aware of the same.
6.1 Operating Plan. As soon as practicable after the end of each
--------------
fiscal month, and in no event later than the 20th business day after the end
thereof, the Company shall deliver to LGE a certificate of the Company, duly
executed by the President, the chief financial officer and the restructuring
officer, restating the representations and warranties contained in Section 4.13
of the Agreement.
6.1 Leveraged Lease Documents. From the date hereof through the
-------------------------
Closing Date, except as otherwise consented to in writing by LGE, the Company
and its subsidiaries shall perform all of their respective obligations under and
comply with all terms and provisions of the Leveraged Lease Documents other than
its obligation to pay Basic Rent (as defined therein) thereunder.
6.1 Interest Charges. On May 31, 1999, and thereafter at the end of
----------------
each month, the Company will pay LGE all accrued but unpaid interest under the
Reimbursement Agreement and the Financial Support Agreement.
ARTICLE VII
7. Agreements of LGE.
-----------------
7.1 Voting. Subject to compliance with applicable bankruptcy and
------
non-bankruptcy laws, LGE hereby agrees to vote all claims against and interests
in the Company that it holds in favor of the Plan to effectuate this Agreement
and the Financial Restructuring.
7.2 Further Action. LGE shall, and shall cause each of its
--------------
subsidiaries to, use commercially reasonable efforts to take or cause to be
taken all actions, and to do or cause to be done all other things, necessary,
proper or advisable in order for it to fulfill and perform its obligations in
respect of this Agreement, or otherwise to consummate and make effective the
transactions contemplated hereby, including without limitation:
(a) as promptly as practicable, (i) make, or cause to be made, all
-
filings
and submissions required under any applicable law or regulation (including any
Korean law or regulation), and give such reasonable undertakings as may be
required in connection therewith, and (ii) use all reasonable efforts to obtain
--
or make, or cause to be obtained or made, all permits necessary to be obtained
or made by LGE or any of its subsidiaries, including such permits as are
required from any Korean Regulatory Authority, in each case in connection with
this Agreement, the Plan, or the consummation of the other transactions
contemplated hereby or thereby.
(b) make all necessary and desirable appearances before the
Bankruptcy Court and participate in the bankruptcy case;
(c) make in a timely fashion all necessary and desirable applications
and notices to any applicable entities in the United States for approval of this
Agreement and the transactions contemplated hereby, including, if applicable,
notice in accordance with the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976;
(d) promptly notify the Company in writing of any fact, condition,
event, or occurrence that could reasonable be expected to result in the failure
of any of the conditions contained in Sections 8 and 9 to be satisfied, promptly
upon becoming aware of the same; and
(e) to obtain, and to refrain from taking any action that would be
likely to prevent, materially impede or delay or result in the revocation of (i)
-
the entry by the Bankruptcy Court of the Confirmation Order; (ii) the full and
--
complete discharge (to the fullest extent possible under Section 1141(d) of the
Bankruptcy Code) of the debts of the Company intended to be discharged under the
Plan; and (iii) the vesting upon the entry of the Confirmation Order of the
---
property of the Company in the reorganized Company free and clear of all claims
and interests of creditors and equity security holders in accordance with the
Plan.
7.3 Information. So long as this Agreement remains in effect, LGE
-----------
shall coordinate and cooperate with the Company or its agents in exchanging such
information and supplying such reasonable assistance as may be reasonably
requested by the Company in connection with the filings and other actions
contemplated in this Agreement. LGE shall also, as the Company may from time to
time reasonably request,
timely provide the Company with any requested information regarding LGE's
performance under this Agreement, LGE's ability to perform under this Agreement,
LGE's ability to satisfy the conditions set forth in Section 9, and other
matters in any way related to this Agreement and the transactions contemplated
hereby.
7.4 Release of Zenith Texas. LGE hereby agrees to release Zenith
-----------------------
Texas upon consummation of the transactions contemplated by Sections 2(b) and
2(c) from any claims of LGE against Zenith Texas arising as a result of the
satisfaction by LGE of Zenith Texas' obligations under the Leveraged Lease
Documents.
ARTICLE VIII
8. Conditions to Obligations of the Parties. The Company and LGE
----------------------------------------
shall perform their obligations under this Agreement and implement the
transaction contemplated hereby in good faith and in accordance with the
standards of fair dealing. The obligations of the Company and LGE to consummate
the transactions contemplated to occur at the Closing shall be subject to the
satisfaction or waiver prior to the Closing of each of the following conditions;
any of which may be waived by the written consents of the Company and LGE to the
extent permitted by applicable law without the necessity for notice to, or
approval from, the Bankruptcy Court or any other party.
(a) Approvals. All material authorizations, permits, consents,
---------
orders or approvals of, or registrations, declarations or filings with, or
expirations of applicable waiting periods imposed by, any Regulatory Authority
(including, without limitation, the United States and the Republic of Korea)
necessary for the consummation of the transactions contemplated hereby
(collectively, the "Requisite Approvals"), shall have been obtained or filed or
shall have occurred, and such Requisite Approvals shall remain valid and
effective and shall not contain any condition or restriction that is reasonably
likely to have or result in a Material Adverse Effect or impair the Company's
ability to carry on its business as contemplated by the Operating Plan.
(b) No Litigation, Injunctions, or Restraints. Consummation of the
-----------------------------------------
transactions contemplated hereby or by the Plan shall not have been restrained,
enjoined or otherwise prohibited or made illegal by any applicable law, rule or
regulation, including any order, injunction, decree or judgment of any
Regulatory Authority; and no such law, rule, regulation, order, injunction,
decree or judgment that would have such an effect shall have been promulgated,
entered, issued or determined by any Regulatory Authority to be
applicable to this Agreement or the Plan. No action or proceeding shall be
pending or threatened by any Regulatory Authority or other person or entity on
the Closing Date before any Regulatory Authority to restrain, enjoin or
otherwise prevent the consummation of the transactions contemplated hereby or by
the Plan or to recover any material damages or to obtain other material relief
as a result of such transactions, or that otherwise relates to the application
of such law, rule or regulation.
(c) Confirmation of Plan and Entry of Confirmation Order. The Plan
----------------------------------------------------
shall have been confirmed by the Bankruptcy Court and the Confirmation Order, in
form and substance satisfactory to LGE and the Company, shall have been entered.
Any motion for rehearing or reconsideration of the Confirmation Order shall have
been denied or withdrawn. The time allowed for appeals of the Confirmation
Order shall have expired without any appeal having been taken or, if the
Confirmation Order shall have been appealed, a final order of the district court
having jurisdiction to hear such appeal shall have affirmed the Confirmation
Order and the time allowed to appeal from such affirmance or to seek review or
rehearing thereof shall have expired and no further hearing, appeal or petition
for certiorari can be taken or granted. The Confirmation Order shall not have
been modified, amended, dissolved, revoked or rescinded, shall be in full force
and effect on the Closing Date and, without the necessity of any further action
or proceedings by the Company, the Bankruptcy Court shall have (x) as of the
-
date of the Confirmation Order and as of the Closing Date, effected a full and
complete discharge and release of, and thereby extinguished, all debts of the
Company (to the fullest extent possible under Section 1141(d)(1) of the
Bankruptcy Code) except as otherwise provided in the Plan and (y) vested the
-
property of the Company in the reorganized Company, free and clear of all claims
and interests of creditors and equity security holders except as otherwise
provided in the Plan and the Confirmation Order. The Plan shall have been
substantially consummated (other than the occurrence of the Closing hereunder).
(d) HSR Act Notification. The notifications of the Company and LGE
--------------------
pursuant to the HSR Act, if any, shall have been made and the applicable waiting
period and any extensions thereof shall have expired or been terminated.
(e) Releases. The Plan will contain releases, satisfactory in form
--------
and substance to LGE and the Company in their respective sole discretion, from
the Company and its creditors of any and all claims and liabilities against the
individual members of the
Company's Board of Directors, the Company and LGE and their respective
associates, affiliates, subsidiaries, officers, directors, stockholders,
representatives, employees, attorneys, financial or investment advisors,
consultants, accountants or agents, and their respective successors and assigns.
LGE hereby acknowledges its agreement relating to such releases contained in the
Lock-Up Agreement.
ARTICLE IX
9. Conditions to the Obligations of the Company. The obligations of
--------------------------------------------
the Company to consummate the transactions contemplated to occur at the Closing
shall be subject to the satisfaction or waiver prior to the Closing of each of
the following conditions, any of which may be waived in writing by the Company
by notice to LGE, without the necessity for notice to, or approval from, the
Bankruptcy Court or any other party:
(a) Representations and Warranties. The representations and
------------------------------
warranties of LGE set forth in this Agreement that are qualified as to
materiality shall be true and correct, and those that are not so qualified shall
be true and correct in all material respects, as of the date of this Agreement
and as of the time of the Closing as though made at and as of such time, except
to the extent such representations and warranties expressly relate to an earlier
date (in which case such representations and warranties that are qualified as to
materiality shall be true and correct and those that are not so qualified shall
be true and correct in all material respects, on and as of such earlier date),
and the Company shall have received a certificate signed by a duly authorized
officer of LGE to such effect.
(b) Performance of Obligations. LGE shall have performed or complied
--------------------------
in all material respects with all obligations and covenants required to be
performed or complied with by it under this Agreement.
ARTICLE X
10. Conditions to the Obligations of LGE. The obligations of LGE to
------------------------------------
consummate the transactions contemplated to occur at the Closing shall be
subject to the satisfaction or waiver prior to the Closing of each of the
following conditions, any of which may be waived in writing by the LGE by notice
to Company, without the necessity for notice to, or approval from, the
Bankruptcy Court or any other party:
(a) Representations and Warranties. The representations and
------------------------------
warranties of the Company set forth in this Agreement that are qualified as to
materiality shall be true and correct, and those that are not so qualified shall
be true and correct in all material respects, as of the date of this Agreement
and as of the time of the Closing as though made at and as of such time, except
to the extent such representations and warranties expressly relate to an earlier
date (in which case such representations and warranties that are qualified as to
materiality shall be true and correct, and those that are not so qualified shall
be true and correct in all material respects, on and as of such earlier date),
and LGE shall have received a certificate of the Company signed by the chief
executive officer and chief financial officer of the Company to such effect.
(b) Performance of Obligations. The Company shall have performed or
--------------------------
complied in all material respects with all obligations and covenants required to
be performed or complied with by the Company under this Agreement, and LGE shall
have received a certificate of the Company signed by the chief executive officer
and chief financial officer of the Company to such effect.
(c) Management. Xxxxxxx X. Xxxxxx and his "Tier 1" and "Tier 2"
----------
reports shall not have resigned or indicated an intention to resign or, if any
such officer or employee shall have resigned, the Company shall have engaged a
replacement reasonably satisfactory to LGE.
(d) New Financing. The Company shall have entered into definitive
-------------
documentation with third parties for new senior financing on the terms
reasonably satisfactory to LGE in an amount of not less than $150 million and
such definitive documentation shall be reasonably satisfactory in form and
substance to LGE.
(e) Operating Plan. (i) All material changes to the Operating Plan
--------------
shall be satisfactory to LGE.
(ii) The Company shall have implemented the programs contemplated by
the Implementation Program in a manner satisfactory to LGE.
(ii) The Company and its subsidiaries shall have entered into, as
contemplated by the timetable in the Operating Plan, binding commitments
for the sale or liquidation of those non-essential assets to be disposed of
pursuant to the
Operating Plan prior to the Closing Date at prices consistent with the
assumptions set forth in the Operating Plan for the 1999 fiscal year.
(f) Operating Results. The Company's operating results shall be
-----------------
consistent with the Operating Plan in the following respects:
(i) the projected Cumulative Funding Requirement from January 1,
1999 through August 31, 1999 shall not exceed $104 million;
(ii) the actual Cumulative Funding Requirement for any three-month
period commencing with the three-month period beginning January 1, 1999
shall not have exceeded the projections in the Operating Plan by more than
20%;
(iii) the projected cumulative EBITDA (loss) from January 1, 1999
through August 31, 1999 shall not exceed $(21) million; and
(iv) the actual EBITDA (loss) for any three-month period commencing
with the three-month period beginning January 1, 1999 shall not have
exceeded the loss projected by the Operating Plan by more than $3.75
million.
(g) Contingent Liabilities. The Company shall not have any material
----------------------
contingent liabilities (including environmental liabilities) other than
liabilities disclosed in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1997 included in the Company SEC Documents or in Section
4.5 of the Company Disclosure Letter.
(h) [Intentionally omitted.]
(i) Restructuring Costs. Actual and projected cash Restructuring
-------------------
and Reorganization Charges from January 1, 1999 through August 31, 1999 shall
not exceed $64 million and the sum of the projected cash Restructuring and
Reorganization Charges after January 1, 1999 (including, without limitation,
outstanding accruals for environmental costs) will not exceed $82 million.
(j) Plan Disclosure Documents. The Company shall have filed with
-------------------------
the SEC the Plan Disclosure Documents, which shall be reasonably satisfactory in
form and substance to LGE.
(k) Definitive Agreements. The Company and LGE (or one of its
---------------------
subsidiaries in the case of the agreements identified in clause (i)) shall have
(i) entered into the Xxxxxxx Purchase Agreement or the Xxxxxxx Operating
-
Agreement, as the case may be, and (ii) the New Salaried Employee Documents, all
--
of which shall be satisfactory in form and substance to LGE.
(l) Opinion of the Company's Counsel. LGE shall have received
--------------------------------
opinions dated the Closing Date of the general counsel of the Company, and
special counsel to the Company, in form and substance reasonably satisfactory to
LGE.
(m) Corporate Proceedings. All corporate proceedings of the Company
---------------------
and its subsidiaries in connection with the transactions contemplated by this
Agreement and the Financial Restructuring, and all documents and instruments
incident thereto, shall be satisfactory in form and substance to LGE and its
counsel, and LGE and its counsel shall have received all such documents and
instruments, or copies thereof, certified or requested, as may be reasonably
requested.
(n) Material Adverse Effect. No state of facts, event, change or
-----------------------
development shall exist or have occurred which would reasonably be expected to
have or result in a Material Adverse Effect subsequent to the date of this
Agreement.
(o) Calamities. There shall not have occurred since the date hereof
----------
(i) any increase or decrease of 20% or more in the United States/Republic of
-
Korea currency exchange rate from the rate existing on the date hereof or a
suspension of, or limitation on, the markets therefor, (ii) a declaration of a
--
banking moratorium or any suspension of payments in respect of banks in the
United States or the Republic of Korea, (iii) any limitation (whether or not
---
mandatory) by any Regulatory Authority or other event that materially adversely
affects the ability of LGE to consummate the transactions contemplated hereby,
or (iv) a commencement of a war or armed hostilities or other national or
--
international calamity involving the United States or the Republic of Korea.
(p) Settlement. Any settlement arrangements with respect to licensing
----------
of technology entered into by the Company with the Sony Corporation or any of
its affiliates shall be satisfactory in form and substance to LGE.
(q) Tuner Patent Royalties. LGE shall have determined in its sole
----------------------
discretion that the aggregate tuner patent royalties between the Closing Date
and December 31, 2003 will not be less than 70% of the aggregate amount of such
royalties
projected under the Operating Plan.
(r) Cross Defaults. Other than (i) that certain default pertaining to
-------------- -
the Old Subordinated Debentures with respect to the Company's failure to make an
interest and sinking fund payment on April 1, 1999 and (ii) that certain cross
--
default of the loan from Credit Agricole Indosuez related thereto, no default or
event of default shall have occurred and be continuing under any of the
Company's financing arrangements or any other agreement that is material to the
Company to which the Company or any of its subsidiaries is a party or by which
any of them is bound.
ARTICLE XI
11.1 Termination. This Agreement may be terminated at any time prior
-----------
to the Closing:
(a) by mutual written consent of LGE and the Company;
(b) by LGE or the Company:
(i) if the Closing shall not have occurred prior to September
15, 1999, provided, that the right to terminate this Agreement
pursuant to this clause (i) shall not be available to any party whose
failure to fulfill any obligation under this Agreement results in the
failure of the Closing to occur; or
(ii) if there shall be any statute, law, regulation or rule
that makes consummating the transactions contemplated hereby illegal
or if any court or other Regulatory Authority of competent
jurisdiction shall have issued a judgment, order, decree or ruling, or
shall have taken such other action restraining, enjoining or otherwise
prohibiting the consummation of the transactions contemplated hereby
and such judgment, order, decree or ruling shall have become final and
non-appealable;
(c) by LGE:
(i) if the Company shall have failed to perform in any
material respect any of its obligations hereunder or shall have
breached in any respect any representation or warranty contained
herein qualified by materiality or shall have breached in any material
respect any representation or warranty not so qualified, and the
Company has failed to perform such obligation or cure any such breach
capable of being cured, within 30 days of its receipt of written
notice thereof from LGE, and such failure to perform shall not have
been waived in accordance with the terms of this Agreement;
(ii) if the Board of Directors of the Company or the Special
Committee withdraws or modifies (or publicly announces its intention
to do so, or resolves to do so) in a manner adverse to LGE (as
determined by LGE in its reasonable judgment) its approval or
recommendation of this Agreement or the transactions contemplated
hereby or by the Restructuring; or
(iii) if any of the conditions set forth in Sections 8 and 10
shall become impossible to fulfill (other than as a result of any
breach by LGE of the terms of this Agreement) and shall not have been
waived in accordance with the terms of this Agreement;
(d) by the Company:
(i) if LGE shall have failed to perform in any material
respect any of its obligations hereunder or shall have breached in any
respect any representation or warranty contained herein qualified by
materiality or shall have breached in any material respect any
representation or warranty not so qualified, and LGE have failed to
perform such obligation or cure any such breach capable of being
cured, within 30 days of its receipt of written notice thereof from
the Company, and such failure to perform shall not have been waived in
accordance with the terms of this Agreement;
(ii) if any of the conditions set forth in Sections 8 and 9
shall become impossible to fulfill (other than as a result of any
breach by the Company of the terms of this Agreement) and shall not
have been waived in accordance with the terms of this Agreement; or
(iii) if there is an Alternative Proposal which the Board of
Directors in good faith determines represents a superior transaction
for the Company as compared to the Financial Restructuring and the
Board of Directors determines, after consultation with counsel, that
failure to terminate this Agreement would be inconsistent with the
compliance by the Board of Directors with its fiduciary duties imposed
by law; provided, however, that the right to terminate this Agreement
pursuant to this Section 11.1(d) shall not be available (i) if the
-
Alternative Proposal is subject to a financing condition, unless the
Board of Directors is of the opinion, after consultation with Xxxxx X.
Xxxxxxx & Company or another nationally recognized investment banking
firm, that the Alternative Proposal is financeable, or (ii) if, prior
--
to or concurrently with any purported termination pursuant to this
Section 11.1(d), (x) the Company or the person or entity that made the
-
Alternative Proposal (the "New Investor") shall not have paid the
expenses and fees contemplated by Section 11.3 and (y) the Company and
-
the New Investor shall not have entered into a legal, valid and
binding agreement with LGE pursuant to which such New Investor agrees
to pay LGE the Transaction Fee contemplated by Section 11.3 upon the
earlier of (A) the consummation of such Alternative Proposal and (B)
- -
the termination of such Alternative Proposal, or (iii) if the Company
---
has not provided LGE with five business days' prior written notice of
its intent to so terminate this Agreement together with a summary of
the material terms and conditions of such Alternative Proposal.
11.2 Effect of Termination. In the event of termination of this
---------------------
Agreement by either the Company or LGE as provided in Section 11, this Agreement
shall forthwith become void and have no effect, without any liability or
obligation on the part of LGE or the Company with respect to the transactions
contemplated under this Agreement, other than the provisions of this Article XI
and Article XII and except to the extent that such termination results from the
wilful and material breach by a party of any of its representations, warranties,
covenants or agreements set forth in this Agreement.
11.3 Expenses; Transaction Fee. (a) In the event that (i) the Board
-------------------------
of Directors of the Company or the Special Committee shall have withdrawn or
modified in a manner adverse to LGE its approval of this Agreement or the
transactions contemplated
hereby or by the Restructuring and LGE terminates the Agreement pursuant to
Section 11(c)(ii), or (ii) the Bankruptcy Court approves, or enters an order
--
authorizing, an offer, proposal or agreement to effect an Alternative Proposal,
or (iii) during the period ending twelve months after the termination of this
---
Agreement, the Company cosummates, becomes a party to or enters into an
agreement relating to or publicly announces, an Alternative Proposal, the
Company shall promptly, but in no event later than three business days after the
first of such events to occur, reimburse LGE and its affiliates for all
reasonable out-of-pocket expenses and fees (including, without limitation, fees
and expenses payable to all banks, investment banking firms and other financial
institutions and their respective agents and counsel, for structuring the
transactions contemplated hereby and all reasonable fees of counsel,
accountants, experts and consultants to LGE and its affiliates, and all printing
and advertising expenses) incurred or accrued by it or on its behalf in
connection with the negotiation, preparation, execution and performance of this
Agreement and the Restructuring (the "Transaction Expenses"), provided, however,
that LGE shall not be entitled to such Transaction Expenses if the Company
terminates this Agreement due to a material breach by LGE of its obligations
under this Agreement.
(b) In the event that during the twelve months after the termination
of this Agreement the Company consummates, becomes a party to or enters into an
agreement relating to, or publicly announces, an Alternative Proposal, the
Company shall, or shall cause the New Investor to, pay LGE a transaction fee of
$8 million (the "Transaction Fee") upon the earlier of (x) the consummation of
-
such Alternative Proposal or (y) the termination of such Alternative Proposal.
-
(c) The Transaction Expenses and Transaction Fee, if any, payable
pursuant to this Section 11.3 shall not be subject to any offset, return,
recoupment or counterclaim. The Company and LGE agree that the provisions of
this Section 11.3 are commercially reasonable and necessary to induce LGE to
enter into and consummate the transactions contemplated hereby.
ARTICLE XII
12.1 Notices. All notices and other communications made in connection
-------
with this Agreement shall be in writing and shall be deemed to have been duly
given if (a) mailed by first-class, registered or certified mail, return receipt
-
requested, postage prepaid, (b) transmitted by hand delivery, (c) sent by next-
- -
day or overnight mail or
delivery, (d) transmitted by facsimile or (e) sent by telecopy or telegram,
- -
addressed as follows:
(i) if to LGE,
LG Electronics Inc.
LG Twin Towers
00, Xxxxx-xxxx
Xxxxxxxxxxx-xx
Xxxxx, Xxxxx 150-721
Telecopy: 011-82-2-3777-5303
Telephone: 000-00-0-0000-0000
Attention: Chief Financial Officer
and to:
LG Electronics Inc.
0000 Xxxxx Xxxxx Xxxx
Xxxxxxxx, XX 000000
Telecopy: 000-000-0000
Telephone: 000-000-0000
Attention: Xxx X. Xxx
with copies to:
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
(ii) if to the Company,
Zenith Electronics Corporation
0000 Xxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000-0000
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, General Counsel
with a copy to:
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxxxx X.X. Xxxxxxxxxx
or, in each case, at such other address as may be specified in writing to the
other party hereto in accordance with this Section 12.1.
12.2 Governing Law. This agreement shall be governed by the
-------------
internal laws of the State of Delaware without giving effect to the conflict of
laws rules thereof.
12.3 Specific Performance. The parties hereto agree that irreparable
--------------------
damage would occur in the event any of the provisions of this Agreement were not
to be performed in accordance with the terms hereof and that the parties shall
be entitled to specific performance of the terms hereof, in addition to any
other remedy at law or equity.
12.4 Miscellaneous. This Agreement (including the Annexes hereto) and
-------------
the Disclosure Letters constitute the entire agreement and supersede all prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof. In the event of any conflict between this
Agreement and the Commitment Letter between the Company and LGE relating to the
subject matter of Section 2(e), this Agreement shall govern. If any term,
provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, successors and permitted assigns. Nothing in
this Agreement shall confer any rights upon any person or entity other than the
parties hereto and their respective heirs, successors and permitted assigns. No
consequential, punitive or exemplary damages shall under any circumstances be
recoverable by either party in respect of any claim pursuant to this Agreement
or in connection with the consummation of or any failure to consummate the
transactions contemplated hereby. This Agreement may be executed in
counterparts, each of which shall be deemed an original and all of which shall
together constitute one and the same instrument. The headings contained in this
Agreement are for purposes of convenience only and shall not affect the meaning
or interpretation of this Agreement. None of the terms of this Agreement may be
waived, altered or amended except by an instrument in writing duly executed by
the parties hereto. No failure or delay in exercising any right, power or
privilege hereunder will operate as a waiver thereof, nor will any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided are cumulative and are not exclusive of any rights or remedies that any
party may otherwise have at law or in equity or otherwise. All information set
forth in any of the Annexes hereto or in any Section of the Company Disclosure
Letter shall be deemed as if also set forth in each and all of the Annexes
hereto and each and all Sections of the Company Disclosure Letter, whether
actually set forth therein or not. The Company and LGE agree that the
representations and warranties and the Operating Plan of the Company shall not
be affected or deemed waived, modified, qualified or supplemented by reason of
(i) any disclosure by the Company or any of its advisors, consultants or
-
representatives to LGE or any of LGE's advisors, consultants or representatives
(other than as set forth in this Agreement, the Company Disclosure Letter hereto
or in the Company SEC Documents as of the date hereof), (ii) any investigation
--
made by or on behalf of LGE or any of its advisors, consultants or
representatives or (iii) the fact that LGE or any of such advisors, consultants
---
or representatives knew or should have known that any such representation or
warranty or the Operating Plan is or might be inaccurate.
12.5 Recommendations. Notwithstanding anything else contained in this
---------------
Agreement, either the Board of Directors of the Company or the Special Committee
may at any time withdraw or modify its approval or recommendation of this
Agreement or the transactions contemplated hereby or by the Restructuring in the
event that it determines, after consultation with counsel, that failure to so
withdraw or modify its recommendation would not be consistent with compliance
with its fiduciary duties imposed by law; provided, however, that such
withdrawal or modification shall not in any manner release
the Company from its obligations under this Agreement unless LGE exercises its
right to terminate this Agreement pursuant to Section 11.1(c)(ii), in which case
Article XI shall govern.
IN WITNESS WHEREOF, the Company and LGE have caused this Agreement to
be duly executed as of the day and year first above written.
ZENITH ELECTRONICS CORPORATION
By____________________________________
Name: Xxxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
LG ELECTRONICS INC.
By_______________________________
Name: Cha Hong (Xxxx) Koo
Title: Vice Chairman and Chief Executive Officer
