EXHIBIT 2.1
EXECUTION COPY
COMBINATION AGREEMENT
by and among
REALNETWORKS, INC.,
RN INTERNATIONAL HOLDINGS B.V.
AND
WIDERTHAN CO., LTD.
Dated as of September 12, 2006
TABLE OF CONTENTS
Page
----
ARTICLE I THE CASH TENDER OFFER.......................................... 1
1.1 The Offer...................................................... 1
1.2 Company Actions................................................ 5
1.3 Post-Tender Offer Acquisitions................................. 7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY................. 7
2.1 Organization, Standing and Power............................... 7
2.2 Capitalization................................................. 8
2.3 Subsidiaries................................................... 9
2.4 Authority; No Conflict; Required Filings and Consents.......... 10
2.5 SEC Filings; Financial Statements; Information Provided........ 11
2.6 No Undisclosed Liabilities..................................... 13
2.7 Absence of Certain Changes or Events........................... 13
2.8 Taxes.......................................................... 13
2.9 Owned and Leased Real Properties............................... 14
2.10 Intellectual Property.......................................... 15
2.11 Contracts...................................................... 16
2.12 Litigation..................................................... 18
2.13 Environmental Matters.......................................... 18
2.14 Employee Benefit Plans......................................... 19
2.15 Compliance With Laws........................................... 22
2.16 Permits........................................................ 22
2.17 Labor and Employment Matters................................... 22
2.18 Insurance...................................................... 23
2.19 Opinion of Financial Advisor................................... 23
2.20 Brokers........................................................ 23
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE BUYER, THE OFFERING
SUBSIDIARY AND THE TRANSITORY SUBSIDIARY..................... 23
3.1 Organization, Standing and Power............................... 23
3.2 Authority; No Conflict; Required Filings and Consents.......... 24
3.3 Funds.......................................................... 25
ARTICLE IV CONDUCT OF BUSINESS........................................... 25
4.1 Covenants of the Company....................................... 25
4.2 Confidentiality................................................ 28
ARTICLE V ADDITIONAL AGREEMENTS.......................................... 28
5.1 No Solicitation................................................ 28
5.2 Company Stockholders Meeting; Company Board Recommendation;
Buyer or Offering Subsidiary to Vote Company Securities........ 29
5.3 Access to Information.......................................... 31
-i-
5.4 Commercially Reasonable Efforts................................ 31
5.5 Public Disclosure.............................................. 33
5.6 Indemnification................................................ 33
5.7 Notification of Certain Matters................................ 34
5.8 Service Credit................................................. 34
5.9 Offer Consideration............................................ 35
5.10 Termination of Company Employee Plans.......................... 35
5.11 Company ADSs................................................... 35
5.12 Company Stock Options.......................................... 36
ARTICLE VI TERMINATION AND AMENDMENT..................................... 37
6.1 Termination.................................................... 37
6.2 Effect of Termination.......................................... 38
6.3 Fees and Expenses.............................................. 38
6.4 Amendment...................................................... 39
6.5 Extension; Waiver.............................................. 39
ARTICLE VII MISCELLANEOUS................................................ 39
7.1 Survival of Representations, Warranties and Covenants.......... 39
7.2 Notices........................................................ 40
7.3 Entire Agreement............................................... 41
7.4 No Third Party Beneficiaries................................... 41
7.5 Assignment..................................................... 41
7.6 Severability................................................... 42
7.7 Counterparts and Signature..................................... 42
7.8 Interpretation................................................. 42
7.9 Governing Law.................................................. 42
7.10 Remedies....................................................... 43
7.11 Jurisdiction; Arbitration...................................... 43
7.12 Company Disclosure Schedule.................................... 44
7.13 Company's Knowledge............................................ 44
Annex I Conditions of the Offer
Schedule A Schedule of Defined Terms
Schedule B Parties to Stockholder Tender and Voting Agreement
Schedule C Terms of Company Voting Proposal and Additional Voting Proposals
Exhibit A Form of Stockholder Tender and Voting Agreement
-ii-
EXECUTION COPY
COMBINATION AGREEMENT
THIS COMBINATION AGREEMENT (this "Agreement") is entered into as of
September 12, 2006, by and among RealNetworks, Inc., a Washington corporation
(the "Buyer"), RN International Holdings B.V., a besloten vennootschap duly
organized under the laws of the Netherlands and an indirect wholly owned
subsidiary of the Buyer (the "Offering Subsidiary") and WiderThan Co., Ltd., a
chusik hoesa duly organized under the laws of the Republic of Korea (the
"Company"). All capitalized terms that are used in this Agreement shall have the
respective meanings ascribed thereto in Schedule A hereto.
WHEREAS, the respective Boards of Directors of the Buyer, the Offering
Subsidiary and the Company have determined that it would be advisable and in the
best interest of their respective stockholders for the Offering Subsidiary to
acquire the Company upon the terms and conditions set forth in this Agreement;
WHEREAS, in furtherance of the foregoing, the Offering Subsidiary will make
a cash tender offer (as it may be amended from time to time as permitted under
this Agreement, the "Offer") to purchase all of the issued and outstanding
shares of capital stock of the Company (individually, a "Company Share" and
collectively, the "Company Shares") and all of the issued and outstanding
Company ADSs (together with the Company Shares, the "Company Securities" and
each a "Company Security") in each case (and without duplication for Company
Shares underlying any Company ADSs) at a price of U.S. $17.05 per Company
Security (the "Per Share Cash Consideration"), net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set forth
in this Agreement;
WHEREAS, concurrently with the execution and delivery of this Agreement and
as a condition and inducement to the Buyer's willingness to enter into this
Agreement, the stockholders of the Company listed on Schedule B have entered
into a Stockholder Tender and Voting Agreement, dated as of the date of this
Agreement, in the form attached hereto as Exhibit A (collectively, the "Company
Stockholder Agreements"), pursuant to which such stockholders have, among other
things, agreed to tender their Company Securities in the Offer and agreed to
vote all of the shares of voting capital stock of the Company that such
stockholders own in favor of the Company Voting Proposal and the Additional
Voting Proposals.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Buyer, the Offering Subsidiary and the Company agree as
follows:
ARTICLE I
THE CASH TENDER OFFER
1.1 The Offer.
(a) Terms of Offer; Conditions to Offer. Provided that this Agreement
shall not have been terminated pursuant to Article VI hereof, as promptly as
practicable after the date
hereof (but in no event more than fifteen (15) calendar days thereafter), the
Offering Subsidiary shall (and Buyer shall cause the Offering Subsidiary to)
commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) the Offer to purchase all of the Company
Securities at a price per Company Security, subject to the terms of Section
1.1(b) hereof, equal to the Per Share Cash Consideration, net to the seller in
cash, without interest thereon (the "Offer Consideration"). The obligation of
the Offering Subsidiary to (and the obligation of Buyer to cause the Offering
Subsidiary to) accept for payment and to pay for any Company Securities tendered
shall be subject only to:
(i) the condition (the "Minimum Condition") that, prior to the
then scheduled expiration date of the Offer (as it may be extended from time to
time pursuant to Section 1.1(c) hereof), there be validly tendered in accordance
with the terms of the Offer and not withdrawn a number of Company Shares
(including Company Shares underlying Company ADSs) that, together with the
Company Shares (including Company Shares underlying Company ADSs) then owned by
the Offering Subsidiary (collectively, the "Owned and Tendered Shares"),
represent a number of shares equal to at least 67% of the sum of (x) all then
outstanding Company Shares (including Company Shares underlying Company ADSs)
plus (y) all Company Shares (including Company Shares underlying Company ADSs)
issuable upon the exercise of all then outstanding options, warrants and other
rights to purchase or otherwise acquire Company Shares (including Company Shares
underlying Company ADSs) which are or will be exercisable at any time from and
after the expiration date of the Offer; and
(ii) the other conditions set forth in Annex I hereto.
The Offering Subsidiary expressly reserves the right to increase the Offer
Consideration or to make any other changes in the terms and conditions of the
Offer; provided, however, that unless otherwise provided by this Agreement or
previously approved by the Company in writing, the Offering Subsidiary may not
make any change to the terms and conditions of the Offer that (A) decreases the
Offer Consideration, (B) changes the form of consideration to be paid in the
Offer, (C) reduces the number of Company Securities to be purchased in the
Offer, (D) imposes conditions to the Offer in addition to the conditions to the
Offer set forth in Section 1.1(a)(i) and Annex I hereto, (E) amends the
conditions to the Offer set forth in Section 1.1(a)(i) and Annex I hereto so as
to broaden the scope of such conditions to the Offer or amends any other terms
of the Offer set forth in this Agreement in any manner materially adverse to the
holders of Company Securities, (F) extends the Offer in any manner other than
pursuant to and in accordance with the terms of Section 1.1(c) hereof or (G)
amends or waives the Minimum Condition. The Minimum Condition may be waived (x)
by the Buyer and the Offering Subsidiary if the Owned and Tendered Shares
represent at least a majority of the then outstanding Company Shares (including
Company Shares underlying Company ADSs) and (y) in all other cases, by the Buyer
and the Offering Subsidiary only with the prior written consent of the Company.
The conditions to the Offer set forth in clauses (a) through (e) of Annex I
hereto (the "Mutual Conditions") may be waived by the Buyer and the Offering
Subsidiary only with the prior written consent of the Company. The conditions to
the Offer set forth in Annex I hereto that are not Mutual Conditions are for the
sole benefit of the Buyer and the Offering Subsidiary and may be waived by the
Buyer and the Offering Subsidiary in whole or in part, at any time and from time
to time, in their sole discretion. The failure by the Buyer and the Offering
Subsidiary at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such
-2-
right, and each such right shall be deemed an ongoing right that may be asserted
at any time and from time to time.
(b) Adjustments to Offer Consideration. The Offer Consideration shall
be adjusted appropriately to reflect the effect of any stock split, reverse
stock split, stock dividend (including any dividend or distribution of
securities convertible into Company Securities), cash dividend, reorganization,
recapitalization, reclassification, combination, exchange of shares or other
like change with respect to Company Securities occurring on or after the date
hereof and prior to the Offering Subsidiary's acceptance for payment of, and
payment for, Company Securities pursuant to the Offer.
(c) Extension and Expiration of Offer. Subject to the terms and
conditions of this Agreement and the Offer, the Offer shall expire at midnight,
New York Time, on the date that is twenty (20) Business Days (for this purpose
calculated in accordance with Section 14d-1(g)(3) under the Exchange Act) after
the date the Offer is commenced (within the meaning of Rule 14d-2 under the
Exchange Act); provided, however, that notwithstanding the foregoing or anything
to the contrary set forth in this Agreement, (i) the Offering Subsidiary shall
extend the Offer for any period required by any rule, regulation, interpretation
or position of the Securities and Exchange Commission (the "SEC") or its staff,
or the Nasdaq Global Market that is applicable to the Offer, (ii) the Offering
Subsidiary shall extend the Offer for a period required in order for the closing
of the Offer to occur immediately prior to the adoption of the Company Voting
Proposal at the Company Meeting by the Required Company Stockholder Vote and
(iii) in the event that any of the conditions to the Offer, including the
Minimum Condition and the other conditions set forth on Annex I hereto, are not
satisfied or waived as of any then scheduled expiration date of the Offer, the
Offering Subsidiary shall extend the Offer for successive extension periods of
ten (10) Business Days each (or such other period as may be mutually agreed by
the Buyer and the Company) in order to permit the satisfaction of the conditions
to the Offer; provided, however, that notwithstanding the foregoing clauses (i),
(ii) and (iii) of this Section 1.1(c), in no event shall the Offering Subsidiary
be required to extend the Offer beyond the Initial Outside Date (or, if
applicable, the Extended Outside Date); and provided further, that the foregoing
clauses (i), (ii) and (iii) of this Section 1.1(c) shall not be deemed to
impair, limit or otherwise restrict in any manner the right of the Buyer or the
Offering Subsidiary to terminate this Agreement pursuant to the terms of Article
VI hereof. The time at which the Offer expires (including all extensions to the
Offer but excluding any subsequent offering period) is referred to herein as the
"Initial Offer Closing".
(d) Payment for Company Securities. Subject to the terms and
conditions of this Agreement and the Offer, the Offering Subsidiary shall (and
the Buyer shall cause the Offering Subsidiary to) accept for payment, and pay
for, all Company Securities validly tendered and not withdrawn pursuant to the
Offer, as promptly as practicable after the applicable expiration date of the
Offer (as it may be extended in accordance with Section 1.1(c) hereof). The
Offer Consideration payable in respect of each Company Security validly tendered
and not withdrawn pursuant to the Offer shall be paid net to the holder thereof
in cash, subject to reduction only for any applicable withholding or other Taxes
required to be deducted or withheld under applicable law.
-3-
(e) Subsequent Offering Period. The Offering Subsidiary may (but shall
not be required to), and the Offer Documents shall reserve the right to, extend
the Offer for a subsequent offering period (within the meaning of Rule 14d-11
under the Exchange Act) of not less than three (3) nor more than twenty (20)
Business Days immediately following the Initial Offer Closing. Subject to the
terms and conditions of this Agreement and the Offer, the Offering Subsidiary
shall (and the Buyer shall cause the Offering Subsidiary to) accept for payment,
and pay for, all Company Securities validly tendered and not withdrawn pursuant
to the Offer as so extended by such subsequent offering period, as promptly as
practicable after any such Company Securities are tendered during such
subsequent offering period. The Per Share Cash Consideration payable in respect
of each Company Security validly tendered and not withdrawn pursuant to the
Offer, as so extended by such subsequent offering period, shall be paid net to
the holder thereof in cash, subject to reduction only for any applicable
withholding or other Taxes required to be deducted or withheld under applicable
law.
(f) Schedule TO; Offer Documents. As soon as practicable on the date
the Offer is commenced (within the meaning of Rule 14d-2 under the Exchange
Act), the Buyer and the Offering Subsidiary shall:
(i) prepare and file with the SEC a Tender Offer Statement on
Schedule TO (together with all amendments and supplements thereto, and including
all exhibits thereto, the "Schedule TO") with respect to the Offer, which shall
contain as an exhibit or incorporate by reference an Offer to Purchase, or
portions thereof (the "Offer to Purchase"), and forms of the letter of
transmittal, proxy and summary advertisement, if any, in respect of the Offer
(together with any supplements or amendments thereto, the "Offer Documents");
and
(ii) cause the Offer Documents to be disseminated to all holders
of Company Securities (collectively, the "Company Stockholders"), as and to the
extent required by applicable U.S. federal securities laws and other applicable
laws.
The Schedule TO and the Offer Documents may include a description of the
determinations, approvals and recommendations of the Company Board set forth in
Section 1.2(a) hereof. The Company shall promptly furnish to the Buyer and the
Offering Subsidiary in writing all information concerning the Company that may
be required by applicable securities laws or reasonably requested by the Buyer
and the Offering Subsidiary for inclusion in the Schedule TO or the Offer
Documents so as to enable the Buyer and the Offering Subsidiary to comply with
their obligations under Section 1.1. The Buyer, the Offering Subsidiary and the
Company shall cooperate in good faith to determine the information regarding the
Company that is necessary or reasonably appropriate to include in the Schedule
TO and the Offer Documents in order to satisfy applicable laws. The Buyer and
the Offering Subsidiary shall cause the Schedule TO and the Offer Documents to
comply in all material respects with the Exchange Act and all other Laws. Except
to the extent subsequently amended, modified or supplemented in a subsequently
filed Schedule TO or Offer Document, each of the Buyer and the Offering
Subsidiary hereby agrees that the Schedule TO and the Offer Documents shall not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that no representation or warranty is made by the
Buyer or the Offering Subsidiary with respect to information supplied by the
Company in writing specifically
-4-
for inclusion or incorporation by reference in the Schedule TO or the Offer
Documents. Except to the extent subsequently amended, modified or supplemented
in a subsequently filed Schedule TO or Offer Document, the Company hereby agrees
that the information provided by the Company in writing specifically for
inclusion or incorporation by reference in the Schedule TO or the Offer
Documents shall not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. Each of the Buyer, the Offering Subsidiary and the Company
shall promptly correct any information provided by it for use in the Schedule TO
or the Offer Documents if and to the extent that such information shall have
become false or misleading in any material respect. The Buyer and the Offering
Subsidiary shall take all steps necessary to cause the Schedule TO and the Offer
Documents, as so corrected, to be filed with the SEC and the other Offer
Documents, as so corrected, to be disseminated to the Company Stockholders, in
each case as and to the extent required by applicable U.S. federal securities
laws and other applicable laws. The Buyer and the Offering Subsidiary shall
provide the Company and its counsel a reasonable opportunity to review and
comment on the Schedule TO and the Offer Documents prior to the filing thereof
with the SEC. The Buyer and the Offering Subsidiary shall provide to the Company
and its counsel any and all written comments that the Buyer, the Offering
Subsidiary or their counsel may receive in writing from the SEC or its staff
with respect to the Schedule TO and the Offer Documents promptly after receipt
thereof, and the Buyer and the Offering Subsidiary shall provide the Company and
its counsel a reasonable opportunity to participate in the formulation of any
written response to any such written comments of the SEC or its staff.
(g) Withholding Rights. The Buyer, the Offering Subsidiary, their
designated payment agent and the Company shall be entitled to deduct and
withhold from any cash amounts payable pursuant to this Agreement such amounts
as may be required to be deducted or withheld therefrom under any applicable
Law. To the extent that such amounts are so deducted or withheld, such amounts
shall be treated for all purposes under this Agreement as having been paid to
the Person to whom such amounts would otherwise have been paid.
1.2 Company Actions.
(a) Company Determinations, Approvals and Recommendations. The Company
hereby approves and consents to the Offer and represents and warrants to the
Buyer and the Offering Subsidiary that, at a meeting duly called and held prior
to the date hereof, the Company Board has, upon the terms and subject to the
conditions set forth herein, taken such other actions and has made such
determinations, recommendations and approvals as are set forth in the second
sentence of Section 2.4(a). The Company hereby consents to the inclusion of the
above referenced determinations, recommendations and approvals in the Offer
Documents.
(b) Schedule 14D-9. The Company shall (i) file with the SEC, to the
extent reasonably practical concurrently with the filing by the Offering
Subsidiary of the Schedule TO, a Solicitation/ Recommendation Statement on
Schedule 14D-9 (together with all amendments and supplements thereto, and
including all exhibits thereto, the "Schedule 14D-9") and (ii) cause the
Schedule 14D-9 to be mailed to the Company Stockholders, to the extent
reasonably practical together with the Offer Documents, promptly after the
commencement of the Offer (within the meaning of Rule 14d-2 under the Exchange
Act). The Schedule 14D-9 shall include a
-5-
description of the determinations, approvals and recommendations of the Company
Board set forth in Section 1.2(a) hereof. The Buyer and the Offering Subsidiary
shall promptly furnish to the Company in writing all information concerning the
Buyer and the Offering Subsidiary that may be required by applicable laws or
reasonably requested by the Company for inclusion in the Schedule 14D-9. The
Company shall cause the Schedule 14D-9 to comply in all material respects with
the Exchange Act and all other Laws. Except to the extent subsequently amended,
modified or supplemented in a subsequently filed Schedule 14D-9, the Company
hereby further agrees that the Schedule 14D-9 shall not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading; provided, however,
that no representation or warranty is made by the Company with respect to
information supplied by the Buyer and the Offering Subsidiary or any of their
officers, directors, representatives, agents or employees in writing
specifically for inclusion or incorporation by reference in the Schedule 14D-9.
Except to the extent subsequently amended, modified or supplemented in a
subsequently filed Schedule 14D-9, the Buyer and the Offering Subsidiary hereby
agree that the information provided by them specifically in writing for
inclusion or incorporation by reference in the Schedule 14D-9 shall not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Each of the Company, the Buyer and the Offering Subsidiary shall
promptly correct any information provided by it for use in the Schedule 14D-9 if
and to the extent that such information shall have become false or misleading in
any material respect. The Company shall take all steps necessary to cause the
Schedule 14D-9, as so corrected, to be filed with the SEC and disseminated to
the Company Stockholders, in each case as and to the extent required by
applicable U.S. federal securities laws and other applicable laws. The Company
shall provide the Buyer and the Offering Subsidiary and their counsel reasonable
opportunity to review and comment on the Schedule 14D-9 prior to the filing
thereof with the SEC. The Company shall provide in writing to the Buyer and the
Offering Subsidiary and their counsel any written comments the Company or its
counsel may receive in writing from the SEC or its staff with respect to the
Schedule 14D-9 promptly upon receipt thereof, and the Company shall provide the
Buyer and the Offering Subsidiary and their counsel a reasonable opportunity to
participate in the formulation of any written response to any such written
comments of the SEC or its staff.
(c) Company Information. In connection with the Offer, the Company
shall, or shall cause its transfer agent to, promptly following a request by the
Offering Subsidiary, furnish the Offering Subsidiary with such assistance and
such information as the Offering Subsidiary or its agents may reasonably request
in order to disseminate and otherwise communicate the Offer to the record and
beneficial holders of Company Securities, including a list, as of the most
recent practicable date, of the stockholders of the Company, mailing labels and
any available listing or computer files containing the names and addresses of
all record and beneficial holders of Company Securities, and lists of security
positions of Company Securities held in stock depositories (including updated
lists of stockholders, mailing labels, listings or files of securities
positions). Subject to any and all Laws, and except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Offer, the Buyer and the Offering Subsidiary (and their
respective agents) shall:
-6-
(i) hold in confidence the information contained in any such
lists of stockholders, mailing labels and listings or files of securities
positions;
(ii) use such information only in connection with the Offer and
the transactions contemplated pursuant to this Agreement; and
(iii) if (A) this Agreement shall be terminated pursuant to
Article VI hereof and (B) the Offering Subsidiary shall (and the Buyer shall
cause the Offering Subsidiary to) withdraw the Offer, deliver (and shall use
their reasonable efforts to cause their agents to deliver) to the Company any
and all copies and any extracts or summaries from such information then in their
possession or control.
1.3 Post-Tender Offer Acquisitions. The Buyer agrees that if the Initial
Offer Closing occurs, during the twelve-month period following the date of this
Agreement, it will not (and will cause its Subsidiaries not to) acquire, or seek
or offer to acquire, by way of tender offer, share purchase, capital
restructuring, share exchange, capital repayment or otherwise, any Company
Securities for a per share price less than the Per Share Cash Consideration
(subject to adjustment for stock splits, recapitalizations and similar
transactions); provided, however, that this provision will not apply to any
amounts offered or paid by the Buyer, the Company or any of their Subsidiaries
pursuant to any appraisal or similar proceeding or any existing contractual
arrangement relating to restricted stock or similar arrangement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Buyer and the Offering
Subsidiary that the statements contained in this Article II are true and
correct, except as set forth herein or in the disclosure schedule delivered by
the Company to the Buyer and the Offering Subsidiary and dated as of the date of
this Agreement (the "Company Disclosure Schedule").
2.1 Organization, Standing and Power. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the Republic
of Korea ("Korea"), has all requisite corporate power and authority to own,
lease and operate its Properties and to carry on its business as now being
conducted and is duly qualified to do business and, where applicable as a legal
concept, is in good standing as a foreign corporation in each jurisdiction in
which the character of the Properties it owns, operates or leases or the nature
of its activities makes such qualification necessary, except for such failures
to be so organized, qualified or in good standing that, individually or in the
aggregate, would not be reasonably expected to have a Company Material Adverse
Effect. The Company has made available to the Buyer complete and accurate copies
of its charter, by-laws or other organizational documents. The Company's minute
books are accurate and reflect all material actions taken by the incorporators,
stockholders and directors (including any committee of the board of directors)
of the Company since January 1, 2002.
-7-
2.2 Capitalization.
(a) The authorized capital stock of the Company as of the date of this
Agreement consists of 30,000,000 shares of common stock, par value KRW500 per
share ("Company Common Stock"). As of September 12, 2006, 19,807,216 shares of
Company Common Stock were issued and outstanding, have been duly authorized, are
validly issued in compliance with Korean law and are fully paid and
nonassessable. Each Company ADS represents one share of Company Common Stock and
as of September 8, 2006, 11,667,019 Company ADSs were issued and outstanding.
(b) Section 2.2(b) of the Company Disclosure Schedule sets forth a
complete and accurate list, as of September 12, 2006, of all outstanding Company
Stock Options, indicating with respect to each such Company Stock Option the
name of the holder thereof, the number of shares of Company Common Stock subject
to such Company Stock Option, the exercise price, the date of grant, and the
vesting schedule, including whether (and to what extent) the Company Stock
Option may be exercised prior to vesting and any vesting will be accelerated in
any way by the Offer or by termination of employment or change in position
following consummation of the Offer. The Company has made available to the Buyer
complete and accurate copies of the forms of all stock option agreements
evidencing Company Stock Options.
(c) Except as set forth in this Section 2.2, as of the date of this
Agreement, (A) there are no equity securities of any class of the Company, or
any security exchangeable into or exercisable for such equity securities,
issued, reserved for issuance or outstanding and (B) there are no options,
warrants, equity securities, calls, rights, commitments or agreements of any
character to which the Company or any of its Subsidiaries is a party or by which
the Company or any of its Subsidiaries is bound obligating the Company or any of
its Subsidiaries to issue, exchange, transfer, deliver or sell, or cause to be
issued, exchanged, transferred, delivered or sold, additional shares of capital
stock or other equity interests of the Company or of any Subsidiary (as the case
may be) or any security or rights convertible into or exchangeable or
exercisable for any such shares or other equity interests, or obligating the
Company or any of its Subsidiaries to grant, extend, accelerate the vesting of,
otherwise modify or amend or enter into any such option, warrant, equity
security, call, right, commitment or agreement. The Company does not have any
outstanding stock appreciation rights, phantom stock, performance based rights
or similar rights or obligations. Other than the Company Stockholder Agreements,
neither the Company nor any of its Affiliates is a party to or is bound by any
agreements or understandings with respect to the voting (including voting trusts
and proxies) or sale or transfer (including agreements imposing transfer
restrictions) of any shares of capital stock or other equity interests of the
Company. Except as contemplated by this Agreement and except to the extent
arising pursuant to applicable state takeover or similar laws, there are no
registration rights, and there is no rights agreement, "poison pill"
anti-takeover plan or other similar agreement or understanding to which the
Company or any of its Subsidiaries is a party or by which it or they are bound
with respect to any equity security of any class of the Company.
(d) All outstanding shares of Company Common Stock are, and all shares
of Company Common Stock subject to issuance as specified in Section 2.2(b)
above, upon issuance on the terms and conditions specified in the instruments
pursuant to which they are issuable, will be, duly authorized, validly issued,
fully paid and nonassessable and not subject to or issued in
-8-
violation of any purchase option, call option, right of first refusal,
preemptive right, subscription right or any similar right under any provision of
the Korean Commercial Code, or other applicable Law, the Company's Articles of
Incorporation or any agreement to which the Company is a party or is otherwise
bound.
(e) There are no obligations, contingent or otherwise, of the Company
or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares
of Company Common Stock or the capital stock of the Company or any of its
Subsidiaries or to provide funds to the Company or any Subsidiary of the Company
other than guarantees of bank obligations of Subsidiaries of the Company entered
into in the ordinary course of business consistent in all material respects with
past practice (the "Ordinary Course of Business").
(f) Each stockholder listed on Schedule B is the holder of record of
the shares as set forth in Schedule B.
2.3 Subsidiaries.
(a) Section 2.3 of the Company Disclosure Schedule sets forth, as of
the date of this Agreement, for each Subsidiary of the Company: (i) its name;
(ii) the number and type of outstanding equity securities and a list of the
holders thereof; and (iii) the jurisdiction of organization. All of the issued
and outstanding equity securities of each Subsidiary have been duly authorized,
are validly issued in compliance with applicable Laws and are fully paid and
nonassessable.
(b) Each Subsidiary of the Company is a corporation duly organized,
validly existing and in good standing (to the extent such concepts are
applicable) under the laws of the jurisdiction of its incorporation, has all
requisite corporate power and authority to own, lease and operate its Properties
and to carry on its business as now being conducted and as proposed to be
conducted, and is duly qualified to do business and is in good standing as a
foreign corporation (to the extent such concepts are applicable) in each
jurisdiction where the character of its Properties owned, operated or leased or
the nature of its activities makes such qualification necessary, except for such
failures to be so organized, qualified or in good standing, individually or in
the aggregate, that would not be reasonably expected to have a Company Material
Adverse Effect. All of the outstanding shares of capital stock and other equity
securities or interests of each Subsidiary of the Company are duly authorized,
validly issued, fully paid, nonassessable and free of preemptive rights and all
such shares (other than directors' qualifying shares in the case of non-U.S.
Subsidiaries, all of which the Company has the power to cause to be transferred
for no or nominal consideration to the Company or the Company's designee) are
owned, of record and beneficially, by the Company or another of its Subsidiaries
free and clear of all security interests, liens, claims, pledges, agreements,
limitations in the Company's voting rights, charges or other encumbrances. There
are no outstanding or authorized options, warrants, rights, agreements or
commitments to which the Company or any of its Subsidiaries is a party or which
are binding on any of them providing for the issuance, disposition or
acquisition of any capital stock of any Subsidiary of the Company. There are no
outstanding stock appreciation, phantom stock or similar rights with respect to
any Subsidiary of the Company. There are no voting trusts, proxies or other
agreements or understandings with respect to the voting of any capital stock of
any Subsidiary of the Company.
-9-
(c) The Company has made available to the Buyer complete and accurate
copies of the charter, by-laws or other organizational documents of each
Subsidiary of the Company. Each Subsidiary's minute books are accurate and
reflect all material actions taken by the incorporators, stockholders and
directors (including any committee of the board of directors) of each Subsidiary
since inception, respectively.
(d) The Company does not Control directly or indirectly or have any
direct or indirect equity participation or similar interest in any corporation,
partnership, limited liability company, joint venture, trust or other business
association or entity which is not a Subsidiary of the Company, other than
securities in a publicly traded company held for investment by the Company or
any of its Subsidiaries and consisting of less than 5% of the outstanding
capital stock of such company.
2.4 Authority; No Conflict; Required Filings and Consents.
(a) The Company has all requisite corporate power and authority to
enter into this Agreement. Without limiting the generality of the foregoing, the
Board of Directors of the Company (the "Company Board"), at a meeting duly
called and held, by the unanimous vote of all directors present at the meeting
(i) authorized this Agreement, (ii) approved the Offer and recommended that the
holders of Company Securities tender their Company Securities to the Buyer
pursuant to the Offer, and (iii) directed that the stockholder proposal set
forth on Schedule C-1 (the "Company Voting Proposal") and the stockholder
proposals set forth on Schedule C-2 (the "Additional Voting Proposals") be
submitted to the stockholders of the Company for their adoption and resolved to
recommend that the stockholders of the Company vote in favor of the adoption of
the Company Voting Proposal and the Additional Voting Proposals (the "Company
Stockholder Approval"). The execution and delivery of this Agreement and the
consummation of the Offer and the transactions contemplated by this Agreement by
the Company has been duly authorized by all necessary corporate action on the
part of the Company, subject only to the required approval of the Company Voting
Proposal by the Required Company Stockholder Vote. This Agreement has been duly
executed and delivered by the Company and constitutes the valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles (the "Bankruptcy
and Equity Exception").
(b) The execution and delivery of this Agreement by the Company does
not, and the consummation by the Company of the transactions contemplated by
this Agreement shall not, (i) conflict with, or result in any violation or
breach of, any provision of the Articles of Incorporation of the Company or of
the charter, by-laws, or other organizational document of any Subsidiary of the
Company, (ii) conflict with, or result in any violation or breach of, or
constitute (with or without notice or lapse of time, or both) a default (or give
rise to a right of termination, cancellation or acceleration of any obligation
or loss of any material benefit) under, require consent, notice, report or any
other filing under, or necessitate the payment of a fee, or give to others any
rights of termination, amendment, acceleration, suspension, revocation or
cancellation of, or result in the creation of any Lien on any of the Properties
or result in the Company or its Subsidiaries not being permitted or entitled to
continue to use all of the
-10-
Properties currently employed by it in the conduct of its business as currently
conducted pursuant to, any note, bond, mortgage or indenture, Company Material
Contract, lease, sublease, license, permit, franchise or other instrument or
arrangement to which the Company or any of its Subsidiaries is a party or by
which any of such Properties is bound or affected, or (iii) subject to obtaining
the Company Stockholder Approval and compliance with the requirements specified
in clauses (i) through (vi) of Section 2.4(c), conflict with or violate any
permit, concession, franchise, license, or Law applicable to the Company or any
of its Subsidiaries or any of its or their respective Properties, except in the
case of clauses (ii) and (iii) of this Section 2.4(b) for any such conflicts,
violations, breaches, defaults, terminations, cancellations, accelerations,
losses, penalties or Liens, and for any consents or waivers not obtained, that,
individually or in the aggregate, would not be reasonably expected to result in
any material liability to the Company and its Subsidiaries, taken as a whole.
(c) No consent, approval, license, permit, Order or authorization of,
or registration, declaration, notice, report or filing with, any Governmental
Entity or any stock market or stock exchange on which shares of Company Common
Stock or Company ADSs are listed for trading is required by or with respect to
the Company or any of its Subsidiaries in connection with the execution and
delivery of this Agreement by the Company or the consummation by the Company of
the transactions contemplated by this Agreement, except for (i) the notification
requirements under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), (ii) the administrative report under the Korean Foreign
Investment Promotion Act, (iii) the business combination report under the Korean
Monopoly Regulation and Fair Trade Act, (iv) the filing of such reports,
schedules or materials under Section 13 of the Exchange Act and the transactions
contemplated hereby, (v) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
state securities laws, and (vi) such other consents, approvals, licenses,
permits, orders, authorizations, registrations, declarations, notices and
filings which, if not obtained or made, would not be reasonably expected to have
a Company Material Adverse Effect.
(d) The affirmative vote for adoption of the Company Voting Proposal
by (i) the holders of a majority of Company Common Stock present and represented
at a duly constituted company stockholders meeting (the "Company Meeting") and
(ii) at least one-third of all outstanding shares of Company Common Stock (the
"Required Company Stockholder Vote") is the only vote of the holders of any
class or series of the Company's capital stock or other securities necessary for
the adoption of the Company Voting Proposal. There are no bonds, debentures,
notes or other indebtedness of the Company having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote) on
any matters on which stockholders of the Company may vote.
2.5 SEC Filings; Financial Statements; Information Provided.
(a) The Company has filed all registration statements, forms, reports
and other documents required to be filed by the Company with the Securities and
Exchange Commission ("SEC"). All such registration statements, forms, reports
and other documents (including those that the Company may file after the date
hereof until the Initial Offer Closing) are referred to herein as the "Company
SEC Reports." The Company SEC Reports (i) were or will be filed on a timely
basis, (ii) at the time filed, complied, or will comply when filed, as to form
in all material
-11-
respects with the applicable requirements of the Securities Act and the Exchange
Act, as the case may be, and the rules and regulations of the SEC thereunder
applicable to such Company SEC Reports, and (iii) did not or will not at the
time they were or are filed contain any untrue statement of a material fact or
omit to state a material fact required to be stated in such Company SEC Reports
or necessary in order to make the statements in such Company SEC Reports, in the
light of the circumstances under which they were made, not misleading. No
Subsidiary of the Company is subject to the reporting requirements of Section
13(a) or Section 15(d) of the Exchange Act.
(b) Each of the consolidated financial statements (including, in each
case, any related notes and schedules) contained or to be contained in the
Company SEC Reports at the time filed (i) complied or will comply as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, (ii) were or will be
prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes to such financial statements),
and (iii) fairly presented or will fairly present in all material respects the
consolidated financial position of the Company and its Subsidiaries as of the
dates indicated and the consolidated results of its operations and cash flows
for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments.
(c) The Company maintains disclosure controls and procedures required
by Rule 13a-15 or 15d-15 under the Exchange Act. Except as set forth in the
Company SEC Reports, such disclosure controls and procedures are reasonably
designed to (i) ensure that all material information concerning the Company is
made known on a timely basis to the individuals responsible for the preparation
of the Company's filings with the SEC and other public disclosure documents,
(ii) require the maintenance of records that in reasonable detail accurately and
fairly reflect the material transactions and dispositions of the assets of the
Company and its Subsidiaries, and (iii) provide reasonable assurance regarding
presentation or timely direction of unauthorized acquisition, use or disposition
of the assets of the Company and its Subsidiaries. To the Company's Knowledge,
except as set forth in the Company SEC Reports, neither the Company nor its
independent auditors have identified (A) any significant deficiency or material
weakness in the system of internal accounting controls utilized the Company and
its Subsidiaries, (B) any fraud, whether or not material, that involves the
Company's management or other employees who have a role in the preparation of
financial statements or the internal accounting controls utilized by the Company
and its Subsidiaries or (C) any claim or allegations regarding any of the
foregoing.
(d) Neither the Company nor any of its Subsidiaries is a party to, or
has any commitment to become a party to, any joint venture, partnership
agreement or any similar Contract (including any Contract relating to any
transaction, arrangement or relationship between or among the Company or any of
its Subsidiaries, on the one hand, and any unconsolidated affiliate, including
any structured finance, special purpose or limited purpose entity or Person, on
the other hand (such as any arrangement described in Section 303(a)(4) of
Regulation S-K of the SEC)) where the purpose or effect of such arrangement is
to avoid disclosure of any material transaction involving the Company or any of
its Subsidiaries in the Company's consolidated financial statements.
-12-
(e) Neither the Company nor any of its Subsidiaries nor, to the
Company's Knowledge, any director, officer, auditor, accountant, consultant or
representative of the Company or any of its Subsidiaries has received or
otherwise had or obtained knowledge of any substantive complaint, allegation,
assertion or claim, whether written or oral, that the Company or any of its
Subsidiaries has engaged in questionable accounting or auditing practices. No
current or former attorney representing the Company or any of its Subsidiaries
has reported evidence or a material violation of securities laws, breach of
fiduciary duty or similar violation by the Company or any of its officers,
directors, employees or agents to the current Company Board or any committee
thereof or to any current director or executive officer of the Company.
(f) To the Company's Knowledge, no employee of the Company or any of
its Subsidiaries has provided or is providing information to any law enforcement
agency regarding the commission or possible commission of any crime or the
violation or possible violation of any applicable Law of the type described in
Section 806 of the Sarbanes-Oxley Act by the Company or any of its Subsidiaries.
Neither the Company nor any of its Subsidiaries nor, to the Company's Knowledge,
any director, officer, employee, contractor, subcontractor or agent of the
Company or any such Subsidiary has discharged, demoted, suspended, threatened,
harassed or in any other manner discriminated against an employee of the Company
or any of its Subsidiaries in the terms and conditions of employment because of
any lawful act of such employee described in Section 806 of the Sarbanes-Oxley
Act.
(g) Except as set forth in the Company SEC Reports, the Company is in
compliance in all material respects with all effective provisions of the
Sarbanes-Oxley Act which are applicable to the Company.
2.6 No Undisclosed Liabilities. Except as reflected in the Company's
balance sheet as of June 30, 2006 included in the Company SEC Report furnished
on August 9, 2006 (the "Company Balance Sheet"), the Company and its
Subsidiaries have no material indebtedness, obligations or liabilities of any
kind or nature (whether accrued, absolute, fixed, contingent or otherwise, and
whether due or to become due) which are not reflected or adequately reserved
against on the Company Balance Sheet, other than such indebtedness, obligations
or liabilities (i) permitted or incurred pursuant to this Agreement or (ii)
incurred in the Ordinary Course of Business since the date of the Company
Balance Sheet.
2.7 Absence of Certain Changes or Events. Since the date of the Company
Balance Sheet, neither the Company nor any Subsidiary has experienced or
suffered any changes, events, circumstances or developments which, individually
or in the aggregate, have had or would be reasonably expected to have a Company
Material Adverse Effect. Since the date of the Company Balance Sheet neither the
Company nor any Subsidiary has taken any action that would have required the
consent of the Buyer under Section 4.1 of this Agreement (other than paragraph
(k)) had such action or event occurred after the date of this Agreement.
2.8 Taxes.
(a) The Company and each of its Subsidiaries has filed all Tax Returns
that it was required to file, and all such Tax Returns were correct and
complete, except for any failure to file or errors or omissions that,
individually or in the aggregate, would not be reasonably
-13-
expected to have a Company Material Adverse Effect. The Company and each of its
Subsidiaries has paid on a timely basis all Taxes owed, whether or not shown to
be due on any such Tax Returns, except for any payments that, individually or in
the aggregate, would not be reasonably expected to have a Company Material
Adverse Effect. There are (a) no Liens for unpaid Taxes (other than Taxes not
yet due and payable) upon the assets of the Company or any Subsidiary, (b) no
claims or deficiencies for Taxes have been asserted or assessed in writing
against the Company or any Subsidiary which remain unpaid, and (c) no waivers of
statutes of limitation are in effect in respect of Taxes of the Company or any
Subsidiary. The Company and each of its Subsidiaries has withheld and paid all
Taxes required to have been withheld and paid by it in connection with payments
or distributions to its employees, stockholders or other recipients, except
where such failure to withhold would not be reasonably expected to have a
Company Material Adverse Effect.
(b) The Company has made available to the Buyer correct and complete
copies of all income Tax Returns, other material Tax Returns, examination
reports and statements of deficiencies assessed against or agreed to by the
Company or any of its Subsidiaries for all periods beginning January 1, 2004. No
examination or audit of any Tax Return of the Company or any of its Subsidiaries
by any Governmental Entity is currently in progress or, to the Company's
Knowledge, threatened or contemplated.
(c) Neither the Company nor any of its Subsidiaries has any actual or
potential liability for any Taxes of any person (other than the Company and its
Subsidiaries) under United States Treasury Regulation Section 1.1502-6 (or any
similar provision of Law in any jurisdiction), or as a transferee or successor,
by contract or otherwise.
(d) Neither the Company nor any of its Subsidiaries (i) is or has ever
been a member of a group of corporations with which it has filed (or been
required to file) consolidated, combined or unitary Tax Returns, other than a
group of which only the Company and its Subsidiaries are or were members or (ii)
is a party to or bound by any Tax indemnity, Tax sharing or Tax allocation
agreement.
(e) The Company and each of its Subsidiaries is in substantial
compliance with all terms and conditions of any Tax incentives, Tax holidays,
Tax rebates or special Tax rate relief or other favorable Tax benefits
authorized by any governmental authority (collectively, the "Tax Benefits"), and
the transactions contemplated in this Agreement will not cause the Company or
any of its Subsidiaries to lose or no longer qualify for any such Tax Benefits
to which the Company or any of its Subsidiaries was entitled prior to the
effectiveness of this Agreement, except for losses of any Tax Benefit, that
individually or in the aggregate, would not be reasonably expected to have a
Company Material Adverse Effect.
2.9 Owned and Leased Real Properties.
(a) Neither the Company nor any of its Subsidiaries owns any real
property.
(b) Section 2.9(b) of the Company Disclosure Schedule sets forth a
complete and accurate list as of the date of this Agreement of all real property
leased, subleased or licensed by the Company or any of its Subsidiaries
(collectively "Company Leases") and the location of
-14-
the premises. Each Company Lease is in full force and effect and is legal,
valid, binding and enforceable against the parties thereto. Neither the Company
nor any of its Subsidiaries nor, to the Company's Knowledge, any other party to
any Company Lease is in material default under any of the Company Leases. No
Person has any right to terminate any Company Lease prior to its scheduled
expiration other than for material breach of the terms thereof. Neither the
Company nor any of its Subsidiaries' leases, subleases or licenses any real
property to any person other than the Company and its Subsidiaries. The Company
has made available to the Buyer complete and accurate copies of all Company
Leases.
2.10 Intellectual Property.
(a) The Company and its Subsidiaries own, license, sublicense or
otherwise possess legally enforceable rights to use all material Intellectual
Property Rights used in or necessary to conduct the business of the Company and
its Subsidiaries as currently conducted (in each case excluding generally
commercially available, off-the-shelf software programs), free and clear of any
Liens, (the "Company Intellectual Property Rights"). Section 2.10(a) of the
Company Disclosure Schedule contains a true and complete list of all issued
letters patent or an application therefor, all registered copyrights and all
trade and service marks which have been registered or for which an application
for registration is pending, in each case which are owned and used or held for
use exclusively by the Company or a Subsidiary (the "Company Owned Intellectual
Property Rights") and all other material Intellectual Property Rights that are
licensed to the Company that constitute, or are used, in critical components of
the Company services or solutions.
(b) The execution and delivery of this Agreement by the Company and
the consummation by the Company of the transactions contemplated by this
Agreement will not result in (i) the breach of, or create on behalf of any third
party the right to terminate or modify, (A) any license, sublicense or other
agreement relating to any Company Intellectual Property Rights that is material
to the business of the Company and its Subsidiaries, taken as a whole, or (B)
any license, sublicense or other agreement as to which the Company or any of its
Subsidiaries is a party and pursuant to which the Company or any of its
Subsidiaries is authorized to use any third party Intellectual Property Rights
that is material to the business of the Company and its Subsidiaries, taken as a
whole, excluding generally commercially available, off-the-shelf software
programs (the "Third Party Intellectual Property"), (ii) Buyer being obligated
to pay any royalties or other amounts to any third party that would not have
been due if the Company did not enter into this Agreement, or (iii) Buyer
becoming bound by or made subject to any non compete or other restriction on the
operation or scope of its business.
(c) To the Company's Knowledge, the Company Intellectual Property
Rights are valid and enforceable. All registrations and applications for
registration for the Company Owned Intellectual Property Rights are subsisting
and have not been expired or cancelled. Neither the Company nor any of its
Subsidiaries knows of any facts or circumstances that could affect the validity
or enforceability of any Company Intellectual Property Rights. Neither the
Company nor any of its Subsidiaries is aware of (i) any material infringement,
violation or misappropriation of the Company Owned Intellectual Property Rights
by any third party, (ii) any third party that claims to own or exclusively
license any Company Owned Intellectual Property
-15-
Rights owned by the Company, or (iii) facts or circumstances that could affect
the validity or enforceability of any Company Owned Intellectual Property
Rights.
(d) To the Company's Knowledge, the conduct of the business of the
Company and its Subsidiaries as currently conducted does not, and will not when
conducted by the Buyer in substantially the same manner following the Closing,
infringe, violate or constitute a misappropriation of any Intellectual Property
of any third party. Neither the Company nor any of its Subsidiaries has received
any written claim or notice alleging any such infringement, violation or
misappropriation.
(e) Each of the Company and its Subsidiaries may exercise, transfer,
or license the Company Owned Intellectual Property Rights without restriction or
payment to a third party. Neither the Company nor any of its Subsidiaries is
obligated to transfer or license any Intellectual Property Rights later obtained
by the Company or any of its Subsidiaries, to a third party.
(f) Each of the Company and its Subsidiaries has, and enforces, a
policy requiring each current and former employee, consultant and contractor to
execute sufficient proprietary information and confidentiality agreements and
all current and former employees, consultants and contractors of the Company or
any Subsidiary that have created any material Company Intellectual Property
Rights have executed such agreements.
2.11 Contracts.
(a) For purposes of this Agreement, the term "Company Material
Contract" means any of the following Contracts to which the Company or any of
its Subsidiaries is a party or otherwise bound: (i) any Contract pursuant to
which the Company and its Subsidiaries reasonably expect to spend or may
receive, in the aggregate, more than $1,000,000 during the fiscal year ended
December 31, 2006, (ii) any Contract containing any covenant (A) limiting the
right of the Company or any of its Subsidiaries to engage in any line of
business, to make use of any material Intellectual Property or to compete with
any Person in any line of business, (B) granting to any customer or partner of
the Company exclusive rights to use services, software or application of the
Company, or (C) otherwise having a material adverse effect on the right of the
Company or its Subsidiaries to sell or distribute any products or services or to
purchase or otherwise obtain any software, (iii) any "material contract" (as
such term is defined in Item 601(b)(10) of Regulation S-K) with respect to the
Company and its Subsidiaries, (iv) any employment, consulting or indemnification
Contract (other than a standard stock option, assignment of inventions or
confidentiality agreement) with any executive officer or other employee of the
Company, a Subsidiary of the Company or any member of the Company Board earning
an annual salary in excess of $150,000, other than those that are terminable by
the Company or any of its Subsidiaries on no more than 30 days' notice without
material liability or financial obligation to the Company or any of its
Subsidiaries, (v) any Contract relating to indebtedness or other commitment
relating to the incurrence of indebtedness of the Company or an of its
Subsidiaries, with respect to an amount in excess of $250,000, (vi) any Contract
relating to the disposition or acquisition by the Company or any of its
Subsidiaries, after the date of this Agreement, of a material amount of assets
not in the Ordinary Course of Business or pursuant to which the Company or any
of its Subsidiaries has any material ownership interests in any other
-16-
Person other than the Company's Subsidiaries, (vii) any Contract relating to
capital expenditures by the Company or any Subsidiary and involving future
payments which, together with future payments under all other Contracts or
commitments relating to the same capital project, exceed $1,000,000, (viii) any
Contract providing for the administration by any Person of any part of the
leases, loans, installment financing contracts, installment sales contracts,
conditional sales agreements or financial instruments of a similar type of the
Company or any of its Subsidiaries, (ix) any Contract limiting the right of the
Company or any Subsidiary to pay dividends or distributions to its shareholders,
(x) any Contract in which the Company or any Subsidiary participates as a
general partner or joint venture, (xi) any Contract between or among the
Company, on the one hand, and any of its Affiliates (other than the Company or a
Subsidiary), on the other hand, (xii) any Contract providing for indemnification
or any guaranty that is material to the Company and its Subsidiaries, taken as a
whole (in each case, under which the Company has continuing obligations as of
the date hereof), other than any guaranty by the Company of any of its
Subsidiaries' obligations or any Contract providing for indemnification entered
into in connection with the distribution, sale or license of services or
hardware or software products in the Ordinary Course of Business, or otherwise
in accordance with the Company's standard forms of software license agreement as
provided or made available to Buyer, (xiii) any Contract to provide source code
to any third party for any products that are material to the Company, including
any Contract to put such source code in escrow with a third party on behalf of a
licensee or contracting party, other than any customer Contracts entered into in
the Ordinary Course of Business consistent with past practice and substantially
on the Company's standard terms and conditions providing for placement of such
source code into escrow solely for the purpose of permitting the customer or its
agents to use such source code in support of internal use of the Company's
products, and (xiv) any settlement Contract other than (A) releases immaterial
in nature or amount entered into with former employees or independent
contractors of the Company in the Ordinary Course of Business or (B) settlement
Contracts only involving the payment of cash (which has been paid) in amounts
that do not exceed $500,000 in any individual case. All Company Material
Contracts are described in Section 2.11(a)(i) and (ii) are listed in Section
2.11(a)(i) and (ii), respectively, of the Company Disclosure Schedule.
(b) The Company has made available to the Buyer a complete and
accurate copy of each Company Material Contract as the same may have been
amended, modified or supplemented. Section 2.11(b) of the Company Disclosure
Schedule sets forth a list of all Company Material Contracts.
(c) Each Company Material Contract is in full force and effect except
to the extent it has previously expired in accordance with its terms or where
the failure to be in full force and effect, individually or in the aggregate,
would not reasonably be likely to result in material liability to the Company
and its Subsidiaries, taken as a whole. Neither the Company nor any of its
Subsidiaries nor, to the Company's Knowledge, any other party to any Company
Material Contract is in material violation of or in material default under (nor
does there exist any condition which, upon the passage of time or the giving of
notice or both, would cause such a violation of or default under) any Company
Material Contract.
(d) Except as disclosed in the Company SEC Reports filed prior to the
date of this Agreement, neither the Company nor any of its Subsidiaries has
entered into any transaction
-17-
with any Affiliate of the Company or any of its Subsidiaries or any transaction
that would be subject to disclosure pursuant to Item 404 of Regulation S-K.
2.12 Litigation. Except as disclosed in the Company SEC Reports filed prior
to the date of this Agreement, there is no action, suit, proceeding, claim,
arbitration or investigation pending or, to the Company's Knowledge, threatened
against the Company or any of its Subsidiaries that, individually or in the
aggregate, would reasonably be likely to result in material liability to the
Company and its Subsidiaries, taken as a whole. There are no material Orders
outstanding against the Company or any of its Subsidiaries.
2.13 Environmental Matters.
(a) Except as disclosed in the Company SEC Reports filed prior to the
date of this Agreement and except for matters that, individually or in the
aggregate, would not be reasonably expected to have a Company Material Adverse
Effect:
(i) the Company and its Subsidiaries have complied and are
currently in compliance with all Environmental Laws applicable to the Company,
its Subsidiaries, and neither the Company nor its Subsidiaries has received any
written notice alleging any of them has not complied with applicable
Environmental Laws;
(ii) to the Company's Knowledge, the real properties currently
owned or operated by the Company and its Subsidiaries (including soils,
groundwater, surface water, buildings or other structures) are not contaminated
with any Hazardous Substances in an amount or concentration that would give rise
to an obligation to act or disclose that condition under any Environmental Law;
(iii) to the Company's Knowledge, the real properties formerly
owned or operated by the Company or any of its Subsidiaries were not
contaminated with Hazardous Substances in an amount or concentration that would
give rise to an obligation for the Company or its Subsidiaries to act or
disclose that condition under any Environmental Law during the period of
ownership or operation by the Company or any of its Subsidiaries;
(iv) neither the Company nor any of its Subsidiaries has received
a written notice that it is subject to liability for any Hazardous Substance
disposal or contamination in violation of any Environmental Law on the real
property of any third party;
(v) neither the Company nor any of its Subsidiaries have released
any Hazardous Substance into the environment except (A) in compliance with Law
or (B) in an amount or concentration that would not be expected to give rise to
a liability or obligation under any Law;
(vi) neither the Company nor any of its Subsidiaries has received
any written notice, demand, claim or request for information alleging that the
Company or any of its Subsidiaries may be in violation of, liable under or have
obligations under any Environmental Law or otherwise with respect to Hazardous
Substances; and
-18-
(vii) neither the Company nor any of its Subsidiaries is subject
to any Orders, decrees or injunctions by any Governmental Entity or is subject
to any indemnity agreement with any third party addressing liability under any
Environmental Law or otherwise with respect to Hazardous Substances.
(b) The parties agree that the only representations and warranties of
the Company in this Agreement as to any environmental matters or any other
obligation or liability with respect to Hazardous Substances or materials of
environmental concern are those contained in this Section 2.13.
2.14 Employee Benefit Plans.
(a) Section 2.14(a) of the Company Disclosure Schedule sets forth a
complete and accurate list of all Employee Benefit Plans maintained, or
contributed to, by the Company, any of the Company's Subsidiaries or any of
their ERISA Affiliates or with respect to which the Company, or any of the
Company's Subsidiaries has any liability or obligation (together, the "Company
Employee Plans"). The Company and its ERISA Affiliates have performed in all
material respects all obligations required to be performed by them under, are
not in default or violation of, and have no knowledge of any default or
violation by any other party to each Company Employee Plan, and each Company
Employee Plan has been maintained in compliance with its terms and with the
requirements prescribed by any and all legal requirements in all material
respects. Neither the Company nor any Subsidiary has undertaken or communicated
to any of its Employees any intention or commitment to modify any Company
Employee Plan or to establish or implement any other Employee Benefit Plan.
(b) The Company has provided or made available to Buyer correct and
complete copies of: (i) all documents embodying each Company Employee Plan
including (without limitation and to the extent applicable) all amendments
thereto and all related trust documents and administrative service agreements
for each Company Employee Plan; (ii) the most recent annual actuarial
valuations, if any, prepared for each Company Employee Plan; (iii) the three
most recent annual reports (Form Series 5500 and all schedules and financial
statements attached thereto), if any, required under ERISA or the Code in
connection with each Company Employee Plan; (iv) if the Company Employee Plan is
funded, the most recent annual and periodic accounting of Company Employee Plan
assets; (v) the most recent summary plan description together with the
summary(ies) of material modifications thereto, if any, required under ERISA
with respect to each Company Employee Plan; (vi) all IRS determination, opinion,
notification and advisory letters; (vii) all communications material to any
Employee or Employees, relating to any Company Employee Plan or and any proposed
Company Employee Plan, in each case, relating to any amendments, terminations,
establishments, increases or decreases in benefits, acceleration of payments or
vesting schedules or other events which would result in any material liability
to the Company; and (viii) all material correspondence to or from any
governmental agency relating to any Company Employee Plan.
(c) Neither the Company nor any of its Subsidiaries has any current
projected liability with respect to post-employment or post-retirement health or
medical or life insurance benefits for retired or former employees of the
Company or any Subsidiary.
-19-
(d) Each Company Employee Plan is being administered in all material
respects in accordance with Laws applicable in the jurisdiction in which such
Company Employee Plan is being administered, ERISA, the United States Internal
Revenue Code of 1986, as amended (the "Code") and all other applicable laws and
the regulations thereunder and in accordance with its terms.
(e) With respect to the Company Employee Plans, there are no benefit
or funding obligations for which contributions have not been made or properly
accrued to the extent required by GAAP. The assets of each Company Employee Plan
which is fully funded are reported at their fair market value on the books and
records of such Employee Benefit Plan.
(f) All the Company Employee Plans that are intended to be qualified
under Section 401 (a) of the Code have received determination letters from the
United States Internal Revenue Service ("IRS") to the effect that such Company
Employee Plans are qualified and the plans and trusts related thereto are exempt
from federal income taxes under Sections 401 (a) and 501(a), respectively, of
the Code, no such determination letter has been revoked and revocation has not
been threatened, and no such Employee Benefit Plan has been amended or operated
since the date of its most recent determination letter or application therefor
in any respect, and no act or omission has occurred, that would adversely affect
its qualification or materially increase its cost. No "prohibited transaction,"
within the meaning of Section 4975 of the Code or Sections 406 and 407 of ERISA,
and not otherwise exempt under Section 408 of ERISA, has occurred with respect
to any Company Employee Plan that has resulted in material liability to the
Company. There are no actions, suits or claims pending, or, to the Company's
Knowledge, threatened or reasonably anticipated (other than routine claims for
benefits) against any Company Employee Plan or against the assets of any Company
Employee Plan. Each Company Employee Plan maintained in the United States can be
amended, terminated or otherwise discontinued after the Initial Offer Closing in
accordance with its terms, without liability to Buyer, Company or any of its
ERISA Affiliates (other than for ordinary administration expenses or accrued
benefits). There are no audits, inquiries or proceedings pending or, to the
Company's Knowledge, threatened by the IRS or United States Department of Labor,
or any Governmental Entity with respect to any Company Employee Plan. Neither
the Company nor any of the Company's Subsidiaries is subject to any material
penalty or tax with respect to any Company Employee Plan under Section 502(i) of
ERISA or Sections 4975 through 4980 of the Code. The Company and each ERISA
Affiliate have made all contributions and other payments required by and due
under the terms of each Company Employee Plan.
(g) Neither the Company nor any ERISA Affiliate has ever maintained,
established, sponsored, participated in, or contributed to, any (i) Pension Plan
which is subject to Title IV of ERISA or Section 412 of the Code, (ii)
Multiemployer Plan, (iii) "multiple employer plan" as defined in ERISA or the
Code, or (iv) a "funded welfare plan" within the meaning of Section 419 of the
Code. No Company Employee Plan provides health benefits that are not fully
insured through an insurance contract.
(h) None of the Company Employee Plans promises or provides retiree
medical or other retiree welfare benefits to any person, except as required by
applicable Law. Neither the Company nor any ERISA Affiliate has ever
represented, promised or contracted in writing to any Employee (either
individually or to Employees as a group) or any other person
-20-
that such Employee(s) or other person would be provided with retiree medical or
other retiree welfare benefits, except to the extent required by applicable Law.
(i) Neither the Company nor any ERISA Affiliate is currently obligated
to provide an Employee with any compensation or benefits pursuant to an
agreement (e.g., an acquisition agreement) with a former employer of such
Employee.
(j) The execution of this Agreement or the consummation of the
transactions contemplated hereunder or thereunder will not, either alone or in
combination with other events, (i) entitle any Employee to severance pay,
unemployment compensation, forgiveness of indebtedness, or any other payment,
except as expressly provided in this Agreement or (ii) accelerate the time of
payment or vesting, or increase the amount of compensation or employee benefit
due any such employee, contractor, director or officer.
(k) No payment or benefit which will or may be made by the Company or
any ERISA Affiliate with respect to any Employee or any other "disqualified
individual" (as defined in Code Section 280G and the regulation thereunder) will
be characterized as a "parachute payment," within the meaning of Section 280G
and the regulations thereunder) will be characterized as a "parachute payment,"
within the meaning of Section 280G(b)(2) of the Code. There is no contract,
agreement, plan or arrangement to which the Company or any ERISA Affiliate is a
party or by which it is bound to compensate any Employee for excise taxes paid
pursuant to Section 4999 of the Code. Section 2.14(k) of the Company Disclosure
Schedule lists all persons who are "disqualified individuals" (within the
meaning of Section 280G of the Code and the regulations promulgated thereunder)
as determined as of the date hereof.
(l) Section 2.14(l) of the Company Disclosure Schedule lists each
Company Employee Plan that is a "nonqualified deferred compensation plan" (as
defined in Section 409A(d)(1) of the Code that covers individuals who are tax
residents of the United States. No stock option or other right to acquire
Company Common Stock or other equity of the Company (i) has an exercise price
that has been or may be less than the fair market value of the underlying equity
as of the date such option or right was granted, (ii) has any feature for the
deferral of compensation other than the deferral of recognition of income until
the later of exercise or disposition of such option or rights, or (iii) has been
granted after December 31, 2004, with respect to any class of stock of the
Company that is not "service recipient stock" (within the meaning of applicable
regulations under Section 409A).
(m) The Company and its Subsidiaries have performed in all material
respects all obligations required to be performed by them under, are not in
default or violation of, and have no knowledge of any default or violation by
any other party to each Contractor Agreement. No Contractor Agreement provides
for any remuneration (including without limitation any pension benefits, welfare
benefits, stock options or other equity awards), other than cash compensation
for services rendered under the terms of the Contractor Agreement. To the
Knowledge of the Company, neither the Company nor any Subsidiary has undertaken
or communicated to any of its Contractors any intention or commitment to
materially modify any Contractor Agreement. Each Contractor Agreement maintained
in the United States can be amended, terminated or otherwise discontinued in
accordance with its terms, without any material liability to Buyer or the
Company and their Subsidiaries and the execution of this
-21-
Agreement and the consummation of the Offer will not entitle the Contractor to
any material severance pay, unemployment compensation, forgiveness of
indebtedness or other payment.
2.15 Compliance With Laws. The Company and each of its Subsidiaries and the
conduct of the Company's business and the business of its Subsidiaries (a) are
and at all times have been in compliance with all Laws and Orders applicable to
them or to the conduct and operations of the Company's business and the business
of the Subsidiaries (including the Foreign Corrupt Practices Act of 1977, as
amended), (b) have had at all times all approvals required to conduct its
business and has conducted its business and has owned and operated its
Properties at all times in compliance with all Laws and all Orders, and (c)
since January 1, 2002, has not received any written notice alleging any
violation with respect to, any applicable Law with respect to the conduct of its
business, or the ownership or operation of its Properties, except for failures
to comply or violations that, individually or in the aggregate, would not be
reasonably expected to have a Company Material Adverse Effect.
2.16 Permits. The Company and each of its Subsidiaries have all Company
Permits required to conduct their businesses as now being conducted, except for
such Company Permits the absence of which, individually or in the aggregate,
would not be reasonably expected to result in material liability to the Company
and its Subsidiary, taken as a whole. The Company and each of its Subsidiaries
are in compliance with the terms of the Company Permits, except for such
failures to comply that, individually or in the aggregate, would not be
reasonably expected to result in any material liability to the Company and its
Subsidiary, taken as a whole. Section 2.16 of the Company Disclosure Schedule
sets forth a complete and accurate list of all Company Permits required to
conduct their businesses outside the United States, except for such Company
Permits the absence of which, individually or in the aggregate, would not be
reasonably expected to result in material liability to the Company and its
Subsidiary, taken as a whole.
2.17 Labor and Employment Matters. Neither the Company nor any of its
Subsidiaries is the subject of any proceeding asserting that the Company or any
of its Subsidiaries has committed an unfair labor practice. There are no pending
or, to the Company's Knowledge, threatened labor strikes, disputes, walkouts,
work stoppages, slow-downs or lockouts involving the Company or any of its
Subsidiaries and during the past three years there has not been any such action.
Neither the Company nor any of its Subsidiaries is a party to or bound by any
collective bargaining agreement and, to the Company's Knowledge, there are no
union organizing activities among the employees of the Company or any of its
Subsidiaries. To the Company's Knowledge, the Company (i) is in compliance, in
all material respects, with all applicable Laws respecting employment,
employment practices, terminated employees, terms and conditions of employment,
wages and hours, and occupational safety and health, and is not engaged in any
unfair labor practices; (ii) has withheld and reported all amounts required by
Law or by agreement to be withheld and reported with respect to wages, salaries
and other payments to Employees; (iii) is not liable for any arrears of wages or
any taxes or any penalty for failure to comply with any of the foregoing; and
(iv) is not liable for any payment to any trust or other fund governed by or
maintained by or on behalf of any Governmental Entity, with respect to
unemployment compensation benefits, social security or other benefits or
obligations for Employees (other than routine payments to be made in the normal
course of business and consistent with past practice). To the Company's
Knowledge, there are no pending, threatened or reasonably anticipated claims or
actions against the Company under any worker's
-22-
compensation policy or long term disability policy. The Company has no direct or
indirect material liability with respect to any misclassification of any person
as an independent contractor or consultant rather than as an Employee, or with
respect to any misclassification of any Employee leased from another employer.
2.18 Insurance. The Company has made available to the Buyer a complete and
accurate copy of all liability, property, workers compensation, directors and
officers' liability and other policies of insurance that insure the assets,
business, Properties, operations, prospects or financial condition of the
Company or any of its Subsidiaries or affect or relate to the ownership, use or
operations of any of the Properties or assets of the Company or any of its
Subsidiaries as of the date hereof, all of which are in full force and effect
and no written notice of cancellation or non-renewal has been received by the
Company or any of its Subsidiaries in respect of any such policies of insurance.
Each of the insurance policies are with reputable insurance carriers and insure
against all risks of a character and in such amounts as are usually insured
against by similarly situated companies in the same or similar businesses.
2.19 Opinion of Financial Advisor. The financial advisor of the Company,
Jefferies Broadview, has delivered to the Company an opinion dated the date of
this Agreement to the effect that, as of such date, the Per Share Cash
Consideration is fair to the holders of Company Common Stock from a financial
point of view and such opinion has not been withdrawn, revoked or modified.
2.20 Brokers. No agent, broker, investment banker, financial advisor or
other firm or person is or shall be entitled, as a result of any action,
agreement or commitment of the Company or any of its Affiliates, to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with any of the transactions contemplated by this Agreement, except
Jefferies Broadview, whose fees and expenses shall be paid by the Company. The
Company has made available to the Buyer a complete and accurate copy of all
agreements pursuant to which Jefferies Broadview is entitled to any fees and
expenses in connection with any of the transactions contemplated by this
Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER, THE
OFFERING SUBSIDIARY AND THE TRANSITORY SUBSIDIARY
The Buyer and the Offering Subsidiary represent and warrant to the Company
that the statements contained in this Article III are true and correct, except
as set forth herein or in the disclosure schedule delivered by the Buyer and the
Offering Subsidiary to the Company and dated as of the date of this Agreement
(the "Buyer Disclosure Schedule").
3.1 Organization, Standing and Power. Each of the Buyer and the Offering
Subsidiary is a corporation duly organized, validly existing and in good
standing (to the extent such consents are applicable) under the laws of the
jurisdiction of its incorporation, has all requisite corporate power and
authority to own, lease and operate its Properties and to carry on its business
as now being conducted, and is duly qualified to do business and, where
applicable as a legal concept, is in good standing as a foreign corporation (to
the extent such consents are applicable) in each jurisdiction in which the
character of the Properties it owns, operates or
-23-
leases or the nature of its activities makes such qualification necessary,
except for such failures to be so organized, qualified or in good standing,
individually or in the aggregate, that would not be reasonably expected to have
a Buyer Material Adverse Effect.
3.2 Authority; No Conflict; Required Filings and Consents.
(a) Each of the Buyer and the Offering Subsidiary has all requisite
corporate power and authority to enter into this Agreement and to consummate the
Offer and the other transactions contemplated by this Agreement. The execution
and delivery of this Agreement and the consummation of the Offer and the other
transactions contemplated by this Agreement by the Buyer and the Offering
Subsidiary have been duly authorized by all necessary corporate action on the
part of the Buyer and the Offering Subsidiary. This Agreement has been duly
executed and delivered by the Buyer and the Offering Subsidiary and constitutes
the valid and binding obligation of the Buyer and the Offering Subsidiary,
enforceable against the Buyer and the Offering Subsidiary in accordance with its
terms, subject to the Bankruptcy and Equity Exception.
(b) The execution and delivery of this Agreement by each of the Buyer
and the Offering Subsidiary do not and the consummation by the Buyer and the
Offering Subsidiary of the Offer and the other transactions contemplated by this
Agreement, as applicable, shall not, (i) conflict with, or result in any
violation or breach of, any provision of the charter, bylaws or other
organizational documents of the Buyer or the Offering Subsidiary, (ii) conflict
with, or result in any violation or breach of, or constitute (with or without
notice or lapse of time, or both) a default (or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of any
material benefit) under, require a consent or waiver under, constitute a change
in control under, require the payment of a penalty under or result in the
imposition of any Lien on the Buyer's or the Offering Subsidiary's assets under,
any of the terms, conditions or provisions of any lease, license, contract or
other agreement, instrument or obligation to which the Buyer or the Offering
Subsidiary is a party or by which any of them or any of their properties or
assets may be bound, or (iii) subject to compliance with the requirements
specified in clauses (i)-(iv) of Section 3.2(c), conflict with or violate any
Order or Law applicable to the Buyer or the Offering Subsidiary or any of its or
their respective Properties, except, in the case of clause (ii) or (iii) of this
Section 3.2(c), for any such conflicts, violations, breaches, defaults,
terminations, cancellations, accelerations, losses, penalties or Liens, and for
any consents or waivers not obtained, that, individually or in the aggregate,
would not be reasonably expected to have a Buyer Material Adverse Effect.
(c) No consent, approval, license, permit, Order or authorization of,
or registration, declaration, notice or filing with, any Governmental Entity or
any stock market or stock exchange on which shares of Buyer common stock ("Buyer
Common Stock") are listed for trading is required by or with respect to the
Buyer or the Offering Subsidiary in connection with the execution and delivery
of this Agreement by the Buyer or the Offering Subsidiary or the consummation by
the Buyer or the Offering Subsidiary of the transactions contemplated by this
Agreement, except for (i) the notification requirements under the HSR Act, (ii)
the administrative report under the Korean Foreign Investment Promotion Act,
(iii) the business combination report under the Korean Monopoly Regulation and
Fair Trade Act, (iv) the filing of the appropriate corresponding documents with
the appropriate authorities of other jurisdictions in
-24-
which the Company is qualified as a foreign corporation to transact business and
(v) such filing and notices with the SEC or The Nasdaq Global Market as may be
required for the consummation of the Offer and the other transactions
contemplated by this Agreement.
(d) No vote of the holders of any class or series of the Buyer's
capital stock or other securities is necessary for the consummation by the Buyer
of the Offer and the other transactions contemplated by this Agreement.
3.3 Funds. The Buyer has, and the Offering Subsidiary will have access to,
sufficient funds to perform all of their respective obligations under this
Agreement and to consummate the Offer.
ARTICLE IV
CONDUCT OF BUSINESS
4.1 Covenants of the Company. Except as contemplated by this Agreement, as
set forth in Section 4.1 of the Company Disclosure Schedule or as approved in
advance by the Buyer in writing, unless this Agreement is terminated in
accordance with its terms, during the period commencing on the date of this
Agreement and ending upon the later to occur of the Initial Offer Closing and
the date upon which Buyer's designees to the Company Board constitute at least a
majority of the members of the Company Board (the "Pre-Closing Period"), the
Company shall, and shall cause each of its Subsidiaries to, use commercially
reasonable efforts to act and carry on its business in the Ordinary Course of
Business and, to the Knowledge of the Company, in material compliance with all
Laws, maintain and preserve its and each of its Subsidiary's business
organization, Properties, preserve its business relationships with customers,
strategic partners, suppliers, distributors and others having business dealings
with it and file all registrations statements, forms, reports, and other
documents required to be filed by the Company with the SEC. Without limiting the
generality of the foregoing, except as contemplated by this Agreement, as set
forth in Section 4.1 of the Company Disclosure Schedule or as approved in
advance by the Buyer in writing, during the Pre-Closing Period the Company shall
not, and shall not permit any of its Subsidiaries to, directly or indirectly, do
any of the following:
(a) (i) declare, set aside or pay any dividends on, or make any other
distributions (whether in cash, securities or other Property) in respect of, any
of its capital stock (other than dividends and distributions by a direct or
indirect wholly owned Subsidiary of the Company to its parent), (ii) split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock or any of its other securities; or (iii)
purchase, redeem or otherwise acquire any shares of its capital stock or any
other of its securities or any rights, warrants or options to acquire any such
shares or other securities, except, in the case of this clause (iii), for the
acquisition of shares of Company Common Stock (A) from holders of Company Stock
Options in full or partial payment of the exercise price payable by such holder
upon exercise of Company Stock Options to the extent required or permitted under
the terms of such Company Stock Options or (B) from former employees, directors
and consultants in accordance with agreements
-25-
providing for the repurchase of shares at their original issuance price in
connection with any termination of services to the Company or any of its
Subsidiaries;
(b) except as permitted by Section 4.1(k), issue, deliver, sell,
grant, pledge or otherwise dispose of or encumber any shares of its capital
stock, any other voting securities or any securities convertible into or
exchangeable for, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible or exchangeable securities (other than
the issuance of shares of Company Common Stock upon the exercise of Company
Stock Options outstanding on the date of this Agreement);
(c) amend its articles of incorporation, bylaws or other comparable
charter or organizational documents;
(d) acquire (i) by merging or consolidating with, or by purchasing all
or a substantial portion of the assets or any stock of, or by any other manner,
any business or any corporation, partnership, joint venture, limited liability
company, association or other business organization or division thereof or (ii)
any assets that are material, in the aggregate, to the Company and its
Subsidiaries, taken as a whole, except purchases of inventory and raw materials
in the Ordinary Course of Business;
(e) sell, lease, license, pledge, or otherwise dispose of or encumber
any material Properties of the Company or of any of its Subsidiaries other than
in the Ordinary Course of Business;
(f) adopt or implement any stockholder rights plan;
(g) (i) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person (other than (A) in connection with the
financing of trade receivables in the Ordinary Course of Business, (B) letters
of credit or similar arrangements issued to or for the benefit of suppliers and
manufacturers in the Ordinary Course of Business and (C) pursuant to existing
credit facilities in the Ordinary Course of Business), (ii) issue, sell or amend
any debt securities or warrants or other rights to acquire any debt securities
of the Company or any of its Subsidiaries, guarantee any debt securities of
another person, enter into any "keep well" or other agreement to maintain any
financial statement condition of another person or enter into any arrangement
having the economic effect of any of the foregoing, (iii) make any loans,
advances (other than routine advances to employees of the Company and its
Subsidiaries in the Ordinary Course of Business) or capital contributions to, or
investment in, any other person, other than the Company or any of its direct or
indirect wholly owned Subsidiaries, provided, however, that the Company may, in
the Ordinary Course of Business, invest in debt securities maturing not more
than 90 days after the date of investment, or (iv) other than in the Ordinary
Course of Business, enter into any hedging agreement or other financial
agreement or arrangement designed to protect the Company or its Subsidiaries
against fluctuations in commodities prices or exchange rates;
(h) make any capital expenditures or other expenditures with respect
to property, plant or equipment in excess of $1,000,000 in the aggregate for the
Company and its
-26-
Subsidiaries, taken as a whole, other than the specific capital expenditures
disclosed in Section 4.1(h) of the Company Disclosure Schedule;
(i) make any material changes in accounting methods, principles or
practices, except insofar as may have been required by a change in GAAP or
Korean generally accepted accounting principles ("Korean GAAP");
(j) except in the Ordinary Course of Business, enter into any material
contract or agreement relating to the distribution, sale or marketing by third
parties of the products of the Company or any of its Subsidiaries;
(k) except as required to comply with applicable Law or agreements,
plans or arrangements existing on the date hereof and except for the payment of
bonuses to employees consistent with the Ordinary Course of Business, (i) adopt,
enter into, terminate or materially amend any employment, severance or similar
agreement or material benefit plan for the benefit or welfare of any current or
former director, officer or employee or any collective bargaining agreement
(except in the Ordinary Course of Business and only if such arrangement is
terminable on 60 days' or less notice without either a penalty or a termination
payment), (ii) increase in any material respect the compensation or fringe
benefits of, or pay any bonus to, any director, officer or employee (except for
annual increases of salaries in the Ordinary Course of Business), (iii)
accelerate the payment, right to payment or vesting of any material compensation
or benefits, including any outstanding options or restricted stock awards, other
than as contemplated by this Agreement, (iv) grant any stock options, stock
appreciation rights, stock based or stock related awards, performance units or
restricted stock, except for the grant of options to purchase up to 250,000
shares of Company Common Stock in the aggregate to new hires, which options
shall have an exercise price equal to the fair market value of the Company
Common Stock on the date of grant (determined in a manner consistent with the
Company's existing practice for establishing fair market value for option
grants) and which options shall otherwise be upon the Company's customary terms,
or (v) take any action other than in the Ordinary Course of Business to fund or
in any other way secure the payment of compensation or benefits under any
Company Employee Plan;
(l) open or close any facility or office;
(m) sell or otherwise transfer any accounts receivable of the Company
reflected on the Company Balance Sheet ("Accounts Receivable");
(n) directly or indirectly terminate or reduce or commit to terminate
or reduce (except by repayment as required by the terms of a previously issued
debt instrument) any line of credit or the availability of any funds under any
other loan or financing arrangement other than in the Ordinary Course of
Business;
(o) assume, guarantee, endorse or otherwise become responsible for the
obligations of, or make any advances to, any other Person except for such
obligations incurred in the Ordinary Course of Business in an amount not to
exceed $100,000 for any individual event or $1,000,000 for all such events;
-27-
(p) mortgage, pledge, otherwise encumber any of its Properties or
sell, lease, transfer or otherwise dispose of any of its Properties other than
in the Ordinary Course of Business;
(q) make any material change in its Tax reporting principles, methods
or policies other than as required by Law or GAAP, or make or rescind any
material election relating to Tax, or settle or compromise any claim or
proceeding relating to Tax;
(r) authorize any of, or commit or agree, in writing or otherwise, to
take any of, the foregoing actions; or
(s) directly or indirectly, sell, assign, abandon, allow to lapse,
transfer, license, or dispose of, in whole, or in part, any Company Intellectual
Property Rights.
4.2 Confidentiality. The parties acknowledge that the Buyer and the Company
have previously executed a confidentiality agreement, dated as of May 15, 2006
(the "Confidentiality Agreement"), which Confidentiality Agreement shall
continue in full force and effect in accordance with its terms, except as
expressly modified herein.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 No Solicitation.
(a) Cessation of Existing Discussions. The Company shall, and shall
direct its Representatives to, cease immediately all discussions and
negotiations that commenced prior to the date of this Agreement regarding any
proposal that constitutes, or could reasonably be expected to lead to, an
Acquisition Proposal.
(b) No Solicitation or Negotiation. At all times during the
Pre-Closing Period, the Company and its Subsidiaries shall not, and shall use
their reasonable best efforts to cause their respective directors, officers or
other employees, controlled affiliates, and any investment banker, attorney or
other advisor or representative (collectively, "Representatives") retained by
any of them not to (and in any event neither the Company nor any of its
Subsidiaries shall direct, authorize or permit any of such persons to), directly
or indirectly:
(i) solicit or initiate, or knowingly encourage or induce, the
making, submission or announcement of, an Acquisition Proposal;
(ii) furnish to any Person (other than Buyer, Offering
Subsidiary, or any designees of Buyer or Offering Subsidiary) any non-public
information relating to the Company or any of its Subsidiaries, or afford access
to the business, properties, assets, books or records of the Company or any of
its Subsidiaries to any Person (other than Buyer, Offering Subsidiary, or any
designees of Buyer or Offering Subsidiary), or take any other action, in any
such case with the intent to assist or facilitate any inquiries or the making of
any proposal that constitutes or could lead to an Acquisition Proposal;
-28-
(iii) participate or engage in discussions or negotiations with
any Person with respect to an Acquisition Proposal;
(iv) adopt, approve, endorse or recommend an Acquisition
Proposal;
(v) enter into any letter of intent, memorandum of understanding,
agreement in principle, merger, acquisition or other contract or agreement
contemplating or otherwise relating to an Acquisition Proposal; or
(vi) terminate, amend or waive any rights under any "standstill"
or other similar agreement between the Company or any of its Subsidiaries and
any Person (other than Buyer).
(c) Violations by Representatives. Without limiting the generality of
the foregoing, Buyer, the Offering Subsidiary and the Company acknowledge and
hereby agree that if any Representatives of the Company or any of its
Subsidiaries shall take any action which, if taken by the Company, would be a
breach of the restrictions set forth in Section 5.1(a), such action shall be
deemed to be a breach of Section 5.1(a) by the Company.
(d) Notices to the Buyer. The Company shall promptly, and in all cases
within 24 hours of its receipt, advise Buyer orally and in writing of (i) any
Acquisition Proposal, (ii) any request for information that would reasonably be
expected to lead to an Acquisition Proposal or (iii) any inquiry which would
reasonably be expected to lead to an Acquisition Proposal, including the
material terms and conditions of such Acquisition Proposal, request or inquiry
and the identity of the Person or group making any such Acquisition Proposal,
request or inquiry. The Company shall keep Buyer informed on a reasonably
current basis of the status and material terms and conditions (including all
material amendments or proposed material amendments) of any such Acquisition
Proposal, request or inquiry. In addition to the foregoing, the Company shall
provide Buyer with at least 48 hours prior notice of a meeting of the Company
Board (or such lesser notice as is provided to the members of the Company Board)
at which the Company Board is reasonably expected to consider an Acquisition
Proposal.
5.2 Company Stockholders Meeting; Company Board Recommendation; Buyer or
Offering Subsidiary to Vote Company Securities.
(a) As soon as practicable following the date hereof, the Company,
acting through the Company Board, shall take all actions in accordance with
applicable Law, its Articles of Incorporation and the rules of The Nasdaq Global
Market, to promptly and duly call, give notice of, convene and hold the Company
Meeting as promptly as practicable following the date hereof (but in conjunction
with the scheduled expiration date of the Offer) for the purpose of considering
and voting upon the Company Voting Proposal and the Additional Voting Proposals.
The Company shall take all action that is both reasonable and lawful to solicit
from its stockholders proxies in favor of the Company Voting Proposal and the
Additional Voting Proposals and shall take all other action reasonably necessary
or advisable to secure the vote or consent of the stockholders of the Company
required by the Korean Commercial Code or rules of The Nasdaq Global Market to
obtain the requisite stockholder approval of the Company Voting Proposal and the
Additional Voting Proposals. Notwithstanding anything to the contrary
-29-
contained in this Agreement, the Company, after consultation with the Buyer, may
adjourn or postpone the Company Meeting solely if as of the time for which the
Company Meeting is originally scheduled there are insufficient shares of Company
Common Stock represented (either in person or by proxy) to constitute a quorum
necessary to conduct the business of the Company Meeting.
(b) As promptly as practicable after the execution of this Agreement,
the Company, in cooperation with the Buyer, shall prepare a proxy statement to
be sent to the Company Stockholders (the "Company Meeting Proxy Statement") in
connection with the Company Meeting. The Company shall cause the Company Meeting
Proxy Statement to be mailed to the Company Stockholders at the earliest
practicable time after the date of this Agreement. The Company shall notify the
Buyer promptly upon the receipt of any comments from any government officials
and of any request by any government officials for amendments or supplements to
the Company Meeting Proxy Statement and shall supply the Buyer with copies of
all correspondence between the Company or any of its representatives, on the one
hand, and any government officials, on the other hand, with respect to the
Company Meeting Proxy Statement and the Company shall provide the Buyer and the
Offering Subsidiary and their counsel a reasonable opportunity to participate in
the formulation of any written response to any such written comments and
requests. The Company shall use commercially reasonable efforts to cause all
documents that it is responsible for filing with any regulatory authorities
under this Section 5.2 to comply in all material respects with all applicable
requirements of law and the rules and regulations promulgated thereunder. Except
to the extent subsequently amended, modified or supplemented, each of the Buyer,
the Offering Subsidiary and the Company hereby agree that the information
provided by each of them in writing specifically for inclusion or incorporation
by reference in the Company Meeting Proxy Statement shall not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Each of the Buyer,
the Offering Subsidiary and the Company agrees to provide any information
required for the Company to meet its obligations under this Section 5.2(b)
(including the names of nominees and any biographical information relating to
such nominees) and to promptly correct any information provided by each of them
for use in the Company Meeting Proxy Statement if and to the extent that such
information shall have become false or misleading in any material respect or in
the case that any event occurs which is required to be set forth in an amendment
or supplement to the Company Meeting Proxy Statement. The Company shall take all
steps necessary to cause the Company Meeting Proxy Statement, as so corrected,
to be disseminated to the Company Stockholders, in each case as and to the
extent required by applicable laws.
(c) The Company Board shall recommend that the stockholders of the
Company vote to adopt the Company Voting Proposal and the Additional Voting
Proposals at the Company Meeting. The Company Board shall not withhold, withdraw
or modify (or publicly propose to withhold, withdraw or modify) its approval of
this Agreement or the transactions contemplated hereby or its recommendation
that the stockholders of the Company vote to adopt the Company Voting Proposal
and the Additional Voting Proposals at the Company Meeting.
(d) Nothing contained in this Section 5.2 (or elsewhere in this
Agreement) shall be deemed to prohibit the Company from taking and disclosing to
its stockholders a
-30-
position with respect to a tender offer contemplated by Rule 14d-9 or Rule 14e-2
promulgated under the Exchange Act; provided, however, that, in any such case,
any statement(s) made by the Company Board pursuant to the foregoing shall be
subject to the terms and conditions of this Agreement, including the provisions
of Section 6.3 hereof.
(e) The Buyer shall cause all Company Securities purchased or owned by
the Buyer or any subsidiary of Buyer (including shares acquired pursuant to the
Offer) that Buyer may vote at the Company Meeting and shall use reasonable
commercial efforts to cause all other Company Securities as to which there is
voting power or authority held by the Buyer or the Offering Subsidiary or any
other subsidiary of the Buyer, to be present at the Company Meeting and to be
voted in favor of the Company Voting Proposal and the Additional Voting
Proposals.
5.3 Access to Information. During the Pre-Closing Period, and subject in
all respects to applicable Antitrust Laws and other applicable rules and
regulations, the Company shall (and shall cause each of its Subsidiaries to)
afford to the Buyer's Representatives reasonable access, upon reasonable notice,
during normal business hours, to all of its Properties, books, contracts,
commitments, personnel and records as the Buyer shall request, and, during such
period, the Company shall (and shall cause each of its Subsidiaries to) furnish
promptly to the Buyer (a) a copy of each report, schedule, registration
statement and other document filed or received by it during such period pursuant
to the requirements of federal or state securities laws and (b) all other
information concerning its business, Properties and personnel as the Buyer may
reasonably request. The Buyer will hold any such information which is nonpublic
in confidence in accordance with the Confidentiality Agreement.
5.4 Commercially Reasonable Efforts.
(a) Subject to the terms of Section 5.4(c), the Company and the Buyer
shall use their respective commercially reasonable efforts to:
(i) take, or cause to be taken, all actions, and do, or cause to
be done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to satisfy the conditions to the obligations of
the parties to effect the Offer, and otherwise to consummate and make effective
the transactions contemplated hereby as promptly as practicable following the
date hereof;
(ii) as promptly as practicable after the date hereof, obtain
from any Governmental Entity any consents, licenses, permits, waivers,
approvals, authorizations or orders required to be obtained or made by the
Company or the Buyer or any of their Subsidiaries in connection with the
authorization, execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby;
(iii) as promptly as practicable after the date hereof, make all
necessary filings, and thereafter make any other required submissions, with
respect to this Agreement and the transactions contemplated hereby under (A) the
Exchange Act, and any other applicable federal or state securities laws, (B) the
HSR Act and any related governmental request thereunder, (C) the Korean Monopoly
Regulation and Fair Trade Act and any related
-31-
governmental request thereunder, (D) the Korean Foreign Investment Promotion Act
and (E) any other applicable Law; and
(iv) execute or deliver any additional instruments necessary to
consummate the transactions contemplated by, and to fully carry out the purposes
of, this Agreement.
(b) The Company and the Buyer shall cooperate with each other in
connection with the making of all such filings, including providing copies of
all such documents to the non-filing party and its advisors prior to filing and,
if requested, accepting reasonable additions, deletions or changes suggested in
connection therewith. The Company and the Buyer shall use their respective
commercially reasonable efforts to furnish to each other all information
required for any application or other filing to be made pursuant to the rules
and regulations of any applicable Law in connection with the transactions
contemplated by this Agreement. For the avoidance of doubt, the Buyer and the
Company agree that nothing contained in this Section 5.4(b) shall modify or
affect their respective rights and responsibilities under Section 5.4(c).
(c) Subject to the terms hereof, the Buyer and the Company agree, and
shall cause each of their respective Subsidiaries, to cooperate and to use their
respective commercially reasonable efforts to obtain any government clearances
or approvals required to consummate the Offer under the Korean Monopoly
Regulation and Fair Trade Act, HSR Act, the Sherman Act, as amended, the Clayton
Act, as amended, the Federal Trade Commission Act, as amended, and any other
federal, state or foreign law, regulation or decree designed to prohibit,
restrict or regulate actions for the purpose or effect of monopolization or
restraint of trade (collectively "Antitrust Laws"), to respond to any government
requests for information under any Antitrust Law, and to contest and resist any
action, including any legislative, administrative or judicial action, and to
have vacated, lifted, reversed or overturned any decree, judgment, injunction or
other order (whether temporary, preliminary or permanent) (an "Antitrust Order")
that restricts, prevents or prohibits the consummation of the Offer or any other
transactions contemplated by this Agreement under any Antitrust Law. The parties
hereto will consult and cooperate with one another, and consider in good faith
the views of one another, in connection with, and provide to the other parties
in advance, any analyses, appearances, presentations, memoranda, briefs,
arguments, opinions and proposals made or submitted by or on behalf of any party
hereto in connection with proceedings under or relating to any Antitrust Law.
Notwithstanding anything to the contrary set forth in this Agreement, nothing in
this Agreement shall be deemed to require Buyer or the Company or any Subsidiary
thereof to agree to (i) any divestiture by itself or any of its affiliates of
shares of capital stock or of any business, assets or property, or the
imposition of any limitation on the ability of any of them to conduct their
business or to own or exercise control of such assets, properties and stock, or
(ii) any limitations, restrictions or conditions on the Buyer's or any of its
Subsidiary's ability to vote, transfer, receive dividends with respect to or
otherwise exercise ownership rights with respect to the stock of the Offering
Subsidiary or the Company.
(d) Each of the Company and the Buyer shall give (or shall cause their
respective Subsidiaries to give) any notices to third parties, and use, and
cause their respective Subsidiaries to use, their commercially reasonable
efforts to obtain any third party consents required in connection with the
transactions contemplated hereby that are (i) necessary to
-32-
consummate the transactions contemplated hereby, (ii) disclosed or required to
be disclosed (whether or not actually disclosed) in the Company Disclosure
Schedule or the Buyer Disclosure Schedule, as the case may be, or (iii) required
to ensure that all Contracts to which the Company or any of its Subsidiaries is
a party or otherwise bound will remain in effect after the Initial Offer Closing
in accordance with their respective term in effect on the date hereof.
5.5 Public Disclosure. Except as may be required by Law or stock market
regulations, (a) the press release announcing the execution of this Agreement
shall be issued only in such form as shall be mutually agreed upon by the
Company and the Buyer and (b) the Buyer and the Company shall each use its
commercially reasonable efforts to consult with the other party before issuing
any other press release or otherwise making any public statement with respect to
the Offer or this Agreement.
5.6 Indemnification.
(a) During the ten year period following the Pre-Closing Period, each
of Buyer and the Company shall, jointly and severally, indemnify and hold
harmless each person who is now, or has been at any time prior to the date
hereof, or who becomes prior to the end of the Pre-Closing Period, a director or
officer of the Company or any of its Subsidiaries (the "Indemnified Parties"),
against all claims, losses, liabilities, damages, judgments, fines and
reasonable fees, costs and expenses, including attorneys' fees and
disbursements, incurred in connection with any claim, action, suit, proceeding
or investigation, whether civil, criminal, administrative or investigative,
arising out of or pertaining to the fact that the Indemnified Party is or was an
officer or director of the Company or any of its Subsidiaries, whether asserted
or claimed prior to, at or after the Pre-Closing Period, to the fullest extent
permitted under the Korean Commercial Code for officers and directors of Korean
corporations. Each Indemnified Party will be entitled to advancement of expenses
incurred in the defense of any such claim, action, suit, proceeding or
investigation from each of the Buyer and the Company within ten (10) Business
Days of receipt by the Buyer or the Company from the Indemnified Party of a
request therefor; provided, however, that any person to whom expenses are
advanced provides an undertaking, to the extent required by the Korean
Commercial Code, to repay such advances if it is determined by a court of
competent jurisdiction that such person is not entitled to indemnification.
(b) During the ten year period following the Pre-Closing Period, the
Articles of Incorporation of the Company or resolutions adopted by the
shareholders of the Company shall contain, and Buyer shall cause the Articles of
Incorporation of the Company or resolutions adopted by the shareholders of the
Company to so contain, provisions with respect to indemnification, advancement
of expenses and exculpation of present and former directors and officers of the
Company and its Subsidiaries that are no less favorable in the aggregate than
are presently set forth in the Articles of Incorporation and By-laws of the
Company or resolutions adopted by the shareholders of the Company prior to the
date of this Agreement.
(c) The Company shall maintain, and the Buyer shall cause the Company
to maintain, at no expense to the beneficiaries, in effect at all times during
the ten year period following the Initial Offer Closing, the policies of the
directors' and officers' liability insurance maintained by the Company as of the
date hereof (the "D&O Policy") with respect to matters
-33-
existing or occurring at or prior to the Initial Offer Closing (including the
transactions contemplated by this Agreement), so long as the annual premium
therefor would not be in excess of 200% of the last annual premium paid prior to
the Initial Offer Closing (such 200%, the "Maximum Premium"). If the Company's
D&O Policy expires, is terminated or canceled during such ten-year period or
exceeds the Maximum Premium, the Company shall obtain, and Buyer shall cause the
Company to obtain, as much directors' and officers' liability insurance as can
be obtained for the remainder of such period for an annualized premium not in
excess of the Maximum Premium, on terms and conditions that are no less
advantageous in the aggregate to the Indemnified Parties than the D&O Policy.
Notwithstanding the foregoing or anything to the contrary set forth in this
Agreement, the Buyer or the Company may purchase a "tail" prepaid policy on the
D&O Policy for a period of ten years after the Initial Offer Closing on terms
and conditions no less favorable in the aggregate to the Indemnified Parties
than the D&O Policy so long as the premium therefor would not be in excess of
200% of the last annual premium paid prior to the Initial Offer Closing. In the
event that the Buyer or the Company shall purchase such a "tail" policy, the
Buyer or the Company shall maintain such "tail" policy in full force and effect
and continue to honor its obligations thereunder, in lieu of all other
obligations of the Buyer and the Company under the first sentence of this
Section 5.6(c) for so long as such "tail" policy shall be maintained in full
force and effect, but if such "tail" policy is no longer in full force and
effect during the ten (10) years following the Initial Offer Closing, the
obligations of the Buyer and the Company under the first sentence of this
Section 5.6 (c) shall once again be in effect.
(d) The provisions of this Section 5.6 are intended to be in addition
to the rights otherwise available to the current officers and directors of the
Company by Law, charter, statute, by-law or agreement, and shall operate for the
benefit of, and shall be enforceable by, each of the Indemnified Parties, their
heirs and their Representatives.
5.7 Notification of Certain Matters. During the Pre-Closing Period, the
Buyer shall give prompt notice to the Company, and the Company shall give prompt
notice to the Buyer, of (a) the occurrence, or failure to occur, of any event,
which occurrence or failure to occur has caused or would be reasonably expected
to cause any representation or warranty of such party contained in this
Agreement to be untrue or inaccurate in any material respect, in each case at
any time from and after the date of this Agreement until the end of the
Pre-Closing Period, or (b) any material failure of the Buyer, the Offering
Subsidiary, or the Company, as the case may be, or of any officer, director,
employee or agent thereof, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement.
Notwithstanding the above, the delivery of any notice pursuant to this Section
5.7 shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice or the conditions to such party's obligation to
consummate the Offer.
5.8 Service Credit. Following the Pre-Closing Period, the Buyer will give
each employee of the Buyer or the Company or their respective Subsidiaries who
shall have been an employee of the Company or any of its Subsidiaries
immediately prior to the end of the Pre-Closing Period ("Continuing Employees")
full credit for prior service with the Company or its Subsidiaries for purposes
of (a) eligibility and vesting under any Buyer Employee Plans (but not for
purposes of (i) benefit accrual or benefit amounts under any defined benefit
pension plan, (ii) vesting of any Buyer stock option or other equity incentive
granted after the Pre-Closing
-34-
Period, or (iii) to the extent any such recognition would result in the
duplication of benefits), (b) determination of benefit levels under any Buyer
Employee Plan or policy relating to vacation or severance and (c) determination
of "retiree" status under any Buyer Employee Plan, in each case for which the
Continuing Employee is otherwise eligible and in which the Continuing Employee
is offered participation, but except where such credit would result in a
duplication of benefits. In addition, the Buyer shall waive, or cause to be
waived, any limitations on benefits relating to pre-existing conditions to the
same extent such limitations are waived under any comparable plan of the Buyer
and recognize for purposes of annual deductible and out-of-pocket limits under
its medical and dental plans, deductible and out-of-pocket expenses paid by
Continuing Employees in the calendar year in which the end of Pre-Closing Period
occurs.
5.9 Offer Consideration. The Buyer and the Offering Subsidiary shall be
jointly and severally liable for the payment of the Offer Consideration in
connection with the Offer.
5.10 Termination of Company Employee Plans. Effective as of no later than
the day immediately preceding the Initial Offer Closing, the Company or any of
its Subsidiaries shall (i) freeze participant participation and terminate all
Company-sponsored or cosponsored Company Employee Plans intended to include a
Code Section 401(k) arrangement (each, a "401(k) Plan") and/or (ii) freeze
participant participation and terminate Company participation in any and all
multiple employer 401(k) Plans, as such term is defined in Code Section 413(c),
intended to include a Code Section 401(k) arrangement. The Company shall provide
the Buyer with evidence that such 401(k) Plans have been frozen and terminated
and that Company participation in such multiple employer 401(k) Plans has been
terminated, as the case may be, (effective as of no later than the day
immediately preceding the Initial Offer Closing) pursuant to resolutions of the
Board of Directors of the Company and any such Subsidiary, as the case may be.
The form and substance of such resolutions shall be subject to review and
approval of Buyer.
5.11 Company ADSs.
(a) The Company shall use commercially reasonable efforts to continue
the quotation of the Company ADSs on The Nasdaq Global Market until immediately
after the Initial Offer Closing. Prior to the Initial Offer Closing, the Company
shall enter into an agreement with JP Morgan Chase Bank, N.A. (the "Depositary")
on terms that are reasonably acceptable to Buyer, providing for the
cancellation, effective immediately after the Initial Offer Closing, of the
Company ADSs and the deposit agreement dated December 8, 2005 (the "Deposit
Agreement").
(b) On or before the Initial Offer Closing, the Company shall deliver
to each holder of a Company ADS a written notice informing each such holder that
the Deposit Agreement will terminate on the Initial Offer Closing and
instructing each such holder to surrender the American Depositary Receipt (the
"Company ADR") evidencing such holder's Company ADSs to the Depositary in
exchange for the delivery of certificates representing Company Common Stock.
(c) Upon the Initial Offer Closing, the Company shall:
-35-
(i) request The Nasdaq Global Market to cancel the quotation of
the Company American Depositary Shares ("Company ADSs"), effective immediately
after the Initial Offer Closing, and
(ii) cancel the Company ADSs in accordance with the terms of the
Deposit Agreement.
5.12 Company Stock Options.
(a) Subject to Sections 5.12 (d), on or before the first Business Day
following the Option Waiting Period, the Buyer shall, or shall cause one of its
Subsidiaries to, make an offer to the holders of options to purchase Company
Common Stock (each, a "Company Stock Option"), in consideration for such
holder's agreement in writing to the cancellation of his, her or its Company
Stock Options in exchange for the right to receive (in the manner provided in
Section 5.12(b)), on the same terms and conditions as were applicable under such
Company Stock Option immediately prior thereto, a cash payment in the amount of
the Option Consideration (as defined below), if any, with respect to such
Company Stock Option, and upon such exchange the Company Stock Option would no
longer represent the right to purchase Company Common Stock or any other equity
security of the Company, the Buyer, or any other person or any other
consideration; provided, however, that Buyer or its Subsidiary, as applicable,
may structure such offer (including by offering such holders the right to
receive a substitution option) so that each option holder will only be entitled
to receive such payment after such holder's Company Stock Option becomes vested
in accordance with its normal vesting schedule.
(b) With respect to any Company Stock Option as to which an exchange
is effected pursuant to Section 5.12(a), if vested in whole or in part upon the
date of such exchange, upon such exchange, and thereafter as to any Company
Stock Option as to which an exchange is effected pursuant to Section 5.12(a), on
each Buyer payroll date which occurs after such Company Stock Option initially
or becomes further vested pursuant to its normal vesting schedule, the holder of
such Company Stock Option shall receive (without duplication) from the Buyer, an
amount of cash (net of applicable taxes) equal to the product of (i) the excess,
if any, of (A) the Per Share Cash Consideration over (B) the exercise price per
share of Company Common Stock subject to such Company Stock Option, multiplied
by (ii) the total number of shares of Company Common Stock of such Company Stock
Option in each case that was vested upon such exchange or first became vested
after the immediately preceding payroll date (the "Option Consideration").
(c) The Parties agree that the Buyer shall perform its obligations
under this Section 5.12 in compliance with applicable law. The Buyer shall at
all times from and after the Initial Offer Closing, maintain sufficient liquid
funds to satisfy its obligations to holders of Company Stock Options pursuant to
this Section 5.12.
(d) Notwithstanding anything in this Section 5.12 to the contrary, in
the event that the Buyer or any of its Subsidiaries shall have commenced and is
actively pursuing, or consummated a transaction or a series of related
transactions that resulted (or will result) in the holders of Company Stock
Options receiving (or being entitled to elect to receive) the Option
-36-
Consideration in respect of their Company Stock Options, then Section 5.12(a)
through Section 5.12(c) will not apply with respect to any such Company Stock
Options.
ARTICLE VI
TERMINATION AND AMENDMENT
6.1 Termination.
(a) This Agreement may be terminated and the Offer may be abandoned at
any time prior to the Initial Offer Closing (with respect to Sections 6.1(a)(ii)
through 6.1(a)(vii), by written notice by the terminating party to the other
party):
(i) by mutual written consent of the Buyer and the Company;
(ii) by either the Buyer or the Company if the Initial Offer
Closing shall not have occurred by February 28, 2007 (the "Initial Outside
Date"); (provided that the right to terminate this Agreement under this Section
6.1(a)(ii) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been a principal cause of or resulted in the
failure of the Offer to occur on or before the Initial Outside Date or the
Extended Outside Date, as applicable); provided, further, however, that in the
event the condition to the Offer set forth in clause (a) of Annex I hereto shall
not have been satisfied on or prior to the Initial Outside Date and all of the
other conditions to the Offer set forth on Annex I hereto shall have been
satisfied on or prior to the Initial Outside Date, either Buyer or the Company
may elect to extend the Initial Outside Date, by written notice to the other
prior to or on the Initial Outside Date, until March 31, 2007 (the "Extended
Outside Date");
(iii) by either the Buyer or the Company if a Governmental Entity
of competent jurisdiction shall have issued a nonappealable final Order or taken
any other nonappealable final action, in each case having the effect of
permanently restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement;
(iv) by either the Buyer or the Company if at the Company Meeting
at which a vote on the Company Voting Proposal is taken, the Required Company
Stockholder Vote in favor of the Company Voting Proposal shall not have been
obtained;
(v) by the Buyer, if prior to the Company Meeting at which a vote
on the Company Voting Proposal is taken: (i) the Company shall have breached the
terms of Section 5.1 in any material respect, (ii) the Company Board shall have
breached the terms of Section 5.2(c) in any material respect; or (iii) an
Acquisition Proposal shall have been published, sent or given to the
stockholders of the Company by a Person unaffiliated with Buyer and, promptly
(and in any event within ten (10) Business Days) following a request by Buyer,
the Company shall not have made or sent to the stockholders of the Company (in
the Buyer's discretion and at the Buyer's request) a statement unconditionally
reaffirming its recommendation of the Company Voting Proposal and
unconditionally recommending that the stockholders of the Company reject such
Acquisition Proposal and not tender any shares of Company stock into such
Acquisition Proposal if made in the form of a tender or exchange offer;
-37-
(vi) by the Buyer, if there has been a breach of or inaccuracy in
any representation or warranty of the Company set forth in this Agreement, or
any failure by the Company to perform any covenant or agreement of the Company
set forth in this Agreement, which breach, inaccuracy or failure to perform (i)
would result in the conditions set forth in clauses (g) and (h) of Annex I not
to be satisfied, and (ii) shall not have been cured within twenty (20) calendar
days following receipt by the Company of written notice of such breach or
failure to perform from the Buyer; or
(vii) by the Company, if there has been any material failure by
the Buyer or Offering Subsidiary to perform any covenant or agreement of the
Buyer or the Offering Subsidiary set forth in this Agreement (other than those
covenants and agreements which by their terms are to be performed after the
Initial Offer Closing) and which shall not have been cured within twenty (20)
calendar days following receipt by the Buyer of written notice of such breach or
failure to perform from the Company.
(b) This Agreement may be terminated at any time prior to the Initial
Offer Closing, whether before or after the adoption of the Company Voting
Proposal by the stockholders of the Company by the Required Company Stockholder
Vote, by mutual written consent of the Buyer or the Offering Subsidiary and the
Company.
6.2 Effect of Termination. In the event of termination of this Agreement as
provided in Section 6.1, this Agreement shall immediately become void and there
shall be no liability or obligation on the part of the Buyer, the Company, the
Offering Subsidiary or their respective officers, directors, stockholders or
Affiliates; provided that (a) any such termination shall not relieve any party
from liability for any willful breach of this Agreement and (b) the provisions
of Sections 4.2 (Confidentiality) and 6.3 (Fees and Expenses), this Section 6.2
(Effect of Termination) and Article VII (Miscellaneous) of this Agreement and
the Confidentiality Agreement shall remain in full force and effect and survive
any termination of this Agreement.
6.3 Fees and Expenses.
(a) Each party shall pay any fees and expenses incurred in connection
with the Offer and any other transactions contemplated by this Agreement.
(b) The Company shall pay to the Buyer a fee equal to U.S. $13,000,000
(the "Termination Fee Amount"), by wire transfer of immediately available funds
to an account or accounts designated in writing by the Buyer, within one
Business Day after demand by the Buyer, in the event that:
(i) either (A) this Agreement is terminated by the Buyer or the
Company pursuant to Section 6.1(a)(ii) or Section 6.1(a)(iv) hereof or (B) this
Agreement is terminated by the Buyer pursuant to Section 6.1(a)(vi); and
(ii) following the execution and delivery of this Agreement and
prior to the termination of this Agreement (or the Company Meeting if this
Agreement is terminated pursuant to Section 6.1(a)(iv) hereof), an Acquisition
Proposal shall have been publicly announced or shall have become publicly known,
or shall have been communicated or otherwise made known to the Company; and
-38-
(iii) within twelve months following the termination of this
Agreement, either an Acquisition Transaction (whether or not the Acquisition
Transaction referenced in the preceding clause (ii)) is consummated or the
Company enters into a letter of intent or Contract providing for an Acquisition
Transaction (whether or not the Acquisition Transaction referenced in the
preceding clause (ii)); provided that, for purposes of this Section 6.3(b)(iii),
references to "10%" in the definition of "Acquisition Transaction" shall be
deemed to be references to "50%".
(c) The Company acknowledges and hereby agrees that the provisions of
this Section 6.3 are an integral part of the transactions contemplated by this
Agreement, and that, without such provisions, the Buyer would not have entered
into this Agreement. If the Company shall fail to pay in a timely manner the
amounts due pursuant to this Section 6.3, and, in order to obtain such payment,
the Buyer makes a claim against the Company that results in a judgment against
the Company, the Company shall pay to the Buyer the reasonable costs and
expenses of the Buyer (including its reasonable attorneys' fees and expenses)
incurred in connection with such suit, together with interest on the amounts set
forth in this Section 6.3 hereof at the prime rate of Citibank N.A. in effect on
the date such payment was required to be made. Payment of the fees described in
this Section 6.3 hereof shall not be in lieu of, or in replacement or
substitution for, damages incurred in the event of a breach of this Agreement.
6.4 Amendment. This Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors, at any time
before or after approval of the matters presented in connection with the Offer
by the stockholders of any party, but, after any such approval, no amendment
shall be made which by law requires further approval by such stockholders
without such further approval. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
6.5 Extension; Waiver. At any time prior to the Initial Offer Closing, the
parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party. Such extension
or waiver shall not be deemed to apply to any time for performance, inaccuracy
in any representation or warranty, or noncompliance with any agreement or
condition, as the case may be, other than that which is specified in the
extension or waiver. The failure of any party to this Agreement to assert any of
its rights under this Agreement or otherwise shall not constitute a waiver of
such rights.
ARTICLE VII
MISCELLANEOUS
7.1 Survival of Representations, Warranties and Covenants. None of the
representations or warranties set forth in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Initial Offer Closing.
The covenants and other agreements set forth in this Agreement shall survive the
Initial Offer Closing in accordance with their respective terms.
-39-
7.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed duly delivered (i) four (4) Business Days after
being sent by registered or certified mail, return receipt requested, postage
prepaid, (ii) one (1) Business Day after being sent for next Business Day
delivery, fees prepaid, via a reputable international overnight courier service,
or (iii) on the date of confirmation of receipt (or, the first Business Day
following such receipt if the date of such receipt is not a Business Day) of
transmission by facsimile, in each case to the intended recipient as set forth
below:
(a) if to the Buyer or the Offering Subsidiary, to
RealNetworks, Inc.
2601 Elliott Avenue, Suite 1000
Seattle, WA 98121
Attn: Tracy Daw
Telecopy: 206.674.2695
with a copy (which shall not constitute notice) to:
Wilson Sonsini Goodrich & Rosati
Professional Corporation
701 Fifth Avenue, Suite 5100
Seattle, Washington 90104
Attn: Patrick J. Schultheis, Esq.
Telecopy: (206) 883-2699
and:
Wilson Sonini Goodrich & Rosati
Professional Corporation
One Market Street
Spear Tower, Suite 3300
San Francisco, California 94105
Attn: Michael S. Ringler, Esq.
Telecopy: (415) 957-2099
-40-
(b) if to the Company, to
WiderThan Co., Ltd.
17F, K1 REIT Building, 463
Chungjeong-ro-3-ga Seodaemun-gu
Seoul 120-709, Korea
Attn: Hoseok Kim
Telecopy: 011-82-2-2014-5014
with a copy (which shall not constitute notice) to:
Wilmer Cutler Pickering Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Attn: John Burgess, Esq.
Jay Bothwick, Esq.
Telecopy: (617) 526-5000
Any party to this Agreement may give any notice or other communication
hereunder using any other means (including personal delivery, messenger service,
telex, ordinary mail or electronic mail), but no such notice or other
communication shall be deemed to have been duly given unless and until it
actually is received by the party for whom it is intended. Any party to this
Agreement may change the address to which notices and other communications
hereunder are to be delivered by giving the other parties to this Agreement
notice in the manner herein set forth.
7.3 Entire Agreement. This Agreement (including the Schedules, Annexes and
Exhibits hereto and the documents and instruments referred to herein that are to
be delivered at or prior to the Initial Offer Closing) constitutes the entire
agreement among the parties to this Agreement and supersedes any prior
understandings, agreements or representations by or among the parties hereto, or
any of them, written or oral, with respect to the subject matter hereof, and the
parties hereto specifically disclaim reliance on any such prior understandings,
agreements or representations to the extent not embodied in this Agreement.
Notwithstanding the foregoing, the Confidentiality Agreement shall remain in
effect in accordance with its terms.
7.4 No Third Party Beneficiaries. Except as provided in Section 5.6 (with
respect to which the Indemnified Parties shall be third party beneficiaries),
this Agreement is not intended, and shall not be deemed, to confer any rights or
remedies upon any person other than the parties hereto and their respective
successors and permitted assigns, to create any agreement of employment with any
person or to otherwise create any third-party beneficiary hereto.
7.5 Assignment. Neither this Agreement nor any of the rights, interests or
obligations under this Agreement may be assigned or delegated, in whole or in
part, by operation of Law or otherwise by any of the parties hereto without the
prior written consent of the other parties, and any such assignment without such
prior written consent shall be null and void. Subject to the
-41-
preceding sentence, this Agreement shall be binding upon, inure to the benefit
of, and be enforceable by, the parties hereto and their respective successors
and permitted assigns.
7.6 Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the parties hereto agree that the court making such determination
shall have the power to limit the term or provision, to delete specific words or
phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified. In the event such court does
not exercise the power granted to it in the prior sentence, the parties hereto
agree to replace such invalid or unenforceable term or provision with a valid
and enforceable term or provision that will achieve, to the extent possible, the
economic, business and other purposes of such invalid or unenforceable term.
7.7 Counterparts and Signature. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each of the parties hereto and
delivered to the other parties, it being understood that all parties need not
sign the same counterpart. This Agreement may be executed and delivered by
facsimile transmission.
7.8 Interpretation. When reference is made in this Agreement to an Article
or a Section, such reference shall be to an Article or Section of this
Agreement, unless otherwise indicated. The table of contents, table of defined
terms and headings contained in this Agreement are for convenience of reference
only and shall not affect in any way the meaning or interpretation of this
Agreement. The language used in this Agreement shall be deemed to be the
language chosen by the parties hereto to express their mutual intent, and no
rule of strict construction shall be applied against any party. Whenever the
context may require, any pronouns used in this Agreement shall include the
corresponding masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural, and vice versa. Any reference to
any federal, state, local or foreign statute or law shall be deemed also to
refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise. Whenever the words "include," "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation." No summary of this Agreement prepared by any party shall
affect the meaning or interpretation of this Agreement. Unless otherwise
specifically provided herein, all references in this Agreement to dollars or "$"
shall mean and refer to U.S. dollars.
7.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York without giving effect
to any choice or conflict of law provision or rule (whether of the State of New
York or any other jurisdiction) that would cause the application of laws of any
jurisdictions other than those of the State of New York. Notwithstanding the
foregoing or anything to the contrary set forth in this Agreement, the actions
of the Company Board and the Company stockholders, corporate actions relating to
the
-42-
Company Board meeting or stockholders' meeting and exercise of stockholders'
rights in connection with this Agreement, the Offer and any other transactions
contemplated hereby or thereby shall be governed exclusively by the laws of
Korea.
7.10 Remedies. Except as otherwise provided herein, any and all remedies
herein expressly conferred upon a party will be deemed cumulative with and not
exclusive of any other remedy conferred hereby, or by Law or equity upon such
party, and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy. The parties hereto agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement, this being in addition to any other
remedy to which they are entitled at law or in equity.
7.11 Jurisdiction; Arbitration.
(a) Any dispute, controversy or claim arising out of or in connection
with or relating to this Agreement, or the breach, termination, validity or
invalidity hereof, shall be finally settled by arbitration under the Rules of
Arbitration of the International Chamber of Commerce (the "Rules") as are in
force at the time of any such arbitration and as may be amended by the
provisions of this Section 7.11. For the purpose of such arbitration, there
shall be three arbitrators appointed (the "Arbitration Board") in accordance
with the Rules; provided, however, that each of the Company and Buyer shall
appoint one arbitrator and each such appointed arbitrator shall agree upon and
appoint the third arbitrator. The third arbitrator shall be the chairman of the
Arbitration Board. If the two appointed arbitrators are unable to agree on a
third arbitrator, the International Court of Arbitration of the International
Chamber of Commerce shall appoint the third arbitrator.
(b) The place of arbitration shall be New York, New York. All
arbitration proceedings shall be conducted in the English language. The
arbitrators shall decide any such dispute or claim strictly in accordance with
the governing law specified in Section 7.9 of this Agreement. Judgment upon any
arbitral award rendered hereunder may be entered in any court having
jurisdiction, or application may be made to such court for a judicial acceptance
of the award and an order of enforcement, as the case may be.
(c) Each party shall cooperate in good faith to expedite (to the
maximum extent practicable) the conduct of any arbitral proceedings commenced
under this Agreement.
(d) Any award made by the Arbitration Board shall be final and binding
on the parties. Subject to the provisions of the New York Convention that shall
apply to appeals, the parties expressly agree to waive the applicability of any
other Laws that would otherwise give the right to appeal the decisions of the
Arbitration Board so that there shall be no appeal on the merits to any court of
law for the award of the Arbitration Board.
-43-
(e) Notwithstanding the foregoing, the parties may seek preliminary
injunctive relief from any court of competent jurisdiction, pending the final
award of the Arbitration Board.
(f) The parties to an arbitration shall keep the arbitration
confidential and shall not disclose to any person other than those necessary to
the proceedings the existence of the arbitration, any information submitted
during the arbitration, any documents submitted in connection with the
arbitration, any oral submissions or testimony, or transcripts or any award,
unless disclosure is required by law or is necessary for permissible court
proceedings, such as proceedings to recognize or enforce an award.
7.12 Company Disclosure Schedule. The Company Disclosure Schedule shall be
arranged in Sections or Subsections corresponding to the numbered Sections or
lettered Subsections contained in this Agreement, and the disclosure in any
Section or Subsection shall qualify (a) the corresponding Section or Subsection
in this Agreement, and (b) the other Sections or Subsections in Article II, as
the case may be, to the extent that it is reasonably apparent from a reading of
such disclosure (without reference to the underlying documents referenced
therein) that it also qualifies or applies to such other Sections or
Subsections. The inclusion of any information in the Company Disclosure
Schedule, or in any update thereto, shall not be deemed to be an admission or
acknowledgment, in and of itself, that such information is required by the terms
hereof to be disclosed, is material, has resulted in or would result in a
Company Material Adverse Effect, or is outside the Ordinary Course of Business.
Any addition, revision or update to (or purported addition, supplement or update
to) the Company Disclosure Schedule shall not have any legal effect under this
Agreement, shall be disregarded for all purposes, and shall have no effect
whatsoever on the rights or remedies of the Buyer or the Offering Subsidiary
hereunder.
7.13 Company's Knowledge. For purposes of this Agreement, the term
"Company's Knowledge" means the actual knowledge of the individuals identified
in Section 7.13 of the Company Disclosure Schedule.
[Remainder of Page Intentionally Left Blank.]
-44-
IN WITNESS WHEREOF, the Buyer, the Offering Subsidiary and the Company have
caused this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
REALNETWORKS, INC.
By: /s/ Robert Glaser
------------------------------------
Name: Robert Glaser
Title: Chief Executive Officer
RN INTERNATIONAL HOLDINGS B.V.
By: /s/ Michael R. Eggers
------------------------------------
Name: Michael R. Eggers
Title: Managing Director
WIDERTHAN CO., LTD.
By: /s/ Sang Jun Park
------------------------------------
Name: Sang Jun Park
Title: Chief Executive Officer
-45-
ANNEX I
CONDITIONS OF THE OFFER
Capitalized terms used in this Annex I but not defined herein have the
meanings assigned to such terms in the Combination Agreement (the "Agreement")
of which this Annex I is a part.
Notwithstanding any other provisions of the Offer, but subject to
compliance with the terms and conditions of the Agreement and in addition to
(and not in limitation of) the rights and obligations of the Offering Subsidiary
to extend and/or amend the Offer pursuant to the terms and conditions of the
Agreement, including Section 1.1 thereof, Offering Subsidiary (i) shall not be
required to (and Buyer shall not be required to cause the Offering Subsidiary
to) accept for payment or, subject to any applicable rules and regulations of
the SEC (including Rule 14e-1(c) under the Exchange Act), pay for any Company
Securities, tendered pursuant to the Offer, and (ii) may terminate, amend or
delay the Offer or, subject to the restriction referred to above, the payment
for, any tendered Company Securities, in a manner consistent with the terms of
the Agreement, in the event that at or prior to the scheduled expiration of the
Offer (as it may be extended pursuant to Article I of the Agreement) any of the
following conditions shall not have been satisfied (or waived by Buyer or the
Offering Subsidiary) prior to the Initial Offer Closing:
(a) Korean Monopoly Regulation and Fair Trade Act. The business
combination report required for the Offer under the Korean Monopoly Regulation
and Fair Trade Act shall have been duly approved by the Korean Fair Trade
Commission or the relevant waiting period shall have expired or been terminated
after filing the report without any objection from the Korean Fair Trade
Commission.
(b) HSR Act. Any waiting period applicable to the consummation of the
Offer under the HSR Act shall have expired or been terminated.
(c) Other Governmental Approvals, Filings, Waiting Periods. (A) all
authorizations, consents, clearances, orders or approvals that are required
under applicable Law or by any Governmental Entity in connection with the Offer,
shall have been obtained without any conditions thereto; (B) all declarations or
filings that are required to be made or submitted under applicable Law or by any
Governmental Entity in connection with the Offer shall have been made or
submitted, and (C) all waiting periods that are imposed by applicable Law or by
any Governmental Entity in connection with the Offer shall have expired or been
terminated.
(d) No Injunctions. No Governmental Entity of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any Law or Order
which is in effect and which has the effect of making any of the transactions
contemplated by this Agreement illegal or otherwise prohibiting consummation of
any of the transactions contemplated by this Agreement.
(e) No Actions or Proceedings. There shall not be instituted or
pending any action or proceeding that would reasonably be likely to result in
any Governmental Entity of competent jurisdiction issuing an Order which would
have the effect of making any of the transactions contemplated by this Agreement
illegal or otherwise prohibiting consummation of any of the transactions
contemplated by this Agreement.
-46-
(f) Stockholder Approval. The Buyer and/or the Company shall have
received valid ballots voting, or proxies designating the Buyer or its designees
as proxy to vote, Company Securities in favor of the Company Voting Proposal in
an amount sufficient to duly adopt the Company Voting Proposal at the Company
Meeting, at which a quorum is present, by the Required Company Stockholder Vote.
(g) Representations and Warranties. The representations and warranties
of the Company set forth in this Agreement shall have been true and correct on
the date hereof and shall be true and correct on and as of the date of the
Initial Offer Closing as though made on and as of the date of the Initial Offer
Closing (except (i) to the extent such representations and warranties are
specifically made as of a particular date, in which case such representations
and warranties shall be true and correct as of such date, (ii) for changes
contemplated by this Agreement, and (iii) where the failure to be true and
correct (without regard to any materiality or Company Material Adverse Effect
qualifications contained therein), individually or in the aggregate, has not
had, and would not be reasonably expected to have, a Company Material Adverse
Effect); and the Buyer shall have received a certificate signed on behalf of the
Company by the chief executive officer and the chief financial officer of the
Company to such effect.
(h) Performance of Obligations of the Company. Other than those
covenants and other obligations which by their terms are to be performed after
the date of the Initial Offer Closing, the Company shall have performed in all
material respects all obligations required to be performed by it under this
Agreement on or prior to the date of the Initial Offer Closing; and the Buyer
shall have received a certificate signed on behalf of the Company by the chief
executive officer and the chief financial officer of the Company to such effect.
(i) No Other Governmental Proceedings. There shall not be instituted
or pending any action or proceeding in which a Governmental Entity is (i)
challenging or seeking to restrain or prohibit the consummation of any of the
transactions contemplated by this Agreement, (ii) seeking to prohibit or limit
the Buyer's or the Offering Subsidiary's ability to vote, transfer, receive
dividends with respect to or otherwise exercise ownership rights with respect to
the stock of the Company following the consummation of the transactions
contemplated by this Agreement or (iii) seeking any divestiture by the Buyer or
any of its Affiliates of shares of capital stock or any business, assets or
property of the Buyer or the Offering Subsidiary or the Company, as a condition
to approving any of the transactions contemplated by this Agreement, or the
imposition of any limitation on the ability of the Buyer, the Offering
Subsidiary or the Company or any of their respective Affiliates to conduct their
respective businesses or to own or exercise control of their respective stock,
assets or properties as a condition to approving any of the transactions
contemplated by this Agreement.
(j) Director Resignation. Buyer shall have received written and
notarized resignations in forms satisfactory to Buyer executed by each director
of the Company which shall be effective as of the Initial Offer Closing.
-47-
SCHEDULE A
DEFINED TERMS
For all purposes of and under the Agreement, the following capitalized terms
shall have the following respective meanings:
"Acquisition Proposal" means any proposal or offer for or relating to an
Acquisition Transaction.
"Acquisition Transaction" means (i) any merger, consolidation, dissolution, sale
of substantial assets outside the Ordinary Course of Business, tender offer,
recapitalization, share exchange or other business combination involving the
Company or any of its Subsidiaries, (ii) any issuance by the Company, directly
or indirectly, of 10% or more of its equity securities, or any issuance by any
Subsidiary of the Company of any of its equity securities (other than to the
Company or one or more of its other Subsidiaries), (iii) any acquisition from
the Company or any of its Subsidiaries, directly or indirectly, of more than 10%
of the equity securities of the Company or any equity securities of any of the
Subsidiaries of the Company, (iv) any acquisition of more than 10% of the
consolidated total assets of the Company and its Subsidiaries, in each case
other than the transactions contemplated by this Agreement or the sale of assets
in the ordinary course of business, or (v) any liquidation, dissolution, winding
up of the Company or other similar transaction involving the Company.
"Affiliate" when used with respect to any party shall mean any person who is an
"affiliate" of that party within the meaning of Rule 405 promulgated under the
Securities Act of 1933, as amended (the "Securities Act").
"Business Day" shall be any day other than (a) a Saturday or Sunday in Boston,
Massachusetts and/or Seoul, South Korea or (b) a day on which banking
institutions located in Boston, Massachusetts and/or Seoul, South Korea are
permitted or required by Law, executive order or governmental decree to remain
closed.
"Buyer Employee Plan" means any "employee pension benefit plan" (as defined in
Section 3(2) of ERISA), any "employee welfare benefit plan" (as defined in
Section 3(1) of ERISA), and any other written or oral plan, agreement or
arrangement, including insurance coverage, severance benefits, disability
benefits, deferred compensation, bonuses, stock options, stock purchase, phantom
stock, stock appreciation or other forms of incentive compensation or
post-retirement compensation and all unexpired severance agreements, for the
benefit of, or relating to, any current or former employee of the Buyer or any
of its Subsidiaries or any entity which is a member of (A) a controlled group of
corporations (as defined in Section 414(b) of the Code), (B) a group of trades
or businesses under common control (as defined in Section 414(c) of the Code) or
(C) an affiliated service group (as defined in Section 414(m) of the Code or the
regulations under Section 414(o) of the Code), any of which includes or included
the Buyer or a Subsidiary of the Buyer.
"Buyer Material Adverse Effect" means any material adverse change, event,
circumstance or development with respect to, or any material adverse effect on
the ability of the Buyer or the Offering Subsidiary to consummate the
transactions contemplated by this Agreement.
-48-
"Company Material Adverse Effect" means any material adverse change, event,
circumstance or development with respect to, or material adverse effect on, the
business, financial condition, operations or results of operations of the
Company and its Subsidiaries, taken as a whole; provided, however, that none of
the following shall constitute, or shall be considered in determining whether
there has occurred, or would or could occur, a Company Material Adverse Effect:
(i) changes in general global, national or regional economic conditions, or
arising out of acts of war or terrorism, provided that such changes do not have
a materially disproportionate effect or impact on the Company and its
Subsidiaries, taken as a whole, relative to other companies operating in the
industries in which the Company operates; (ii) changes that are the result of
factors generally affecting the industries or markets in which the Company
operates, provided that such changes do not have a materially disproportionate
effect or impact on the Company and its Subsidiaries, taken as a whole, relative
to other companies operating in the industries in which the Company operates;
(iii) any adverse change, effect or circumstance arising out of or resulting
from the pendency or announcement of this Agreement or any of the transactions
contemplated thereby, including actions of competitors or any delays or
cancellations of orders for products or services or losses of employees; (iv)
changes in law, rules or regulations or generally accepted accounting
principles; (v) any action required to be taken pursuant to or in accordance
with this Agreement or taken at the request of the Buyer; (vi) any failure by
the Company to meet any published securities analyst estimates of revenues or
earnings for any period ending on or after the date of this Agreement and prior
to the Initial Offer Closing (provided that the underlying causes of any such
failures may (subject to the other provisions of this Agreement) be taken into
account in making a determination as to whether there has been a Company
Material Adverse Effect); (vii) a decline in the price of the Company Common
Stock or Company ADSs (provided that the underlying causes of any such decline
may (subject to the other provisions of this Agreement) be taken into account in
making a determination as to whether there has been a Company Material Adverse
Effect); and (viii) any stockholder litigation arising from or relating to the
Offer (provided that the underlying basis for such litigation may be taken into
account in making a determination as to whether there has been a Company
Material Adverse Effect).
"Company Permits" means, with respect to any matter, (i) any and all permits,
licenses, franchises, concessions, grants, consents, approvals, orders,
registrations, authorizations, waivers, notices of no objection, clearances
from, or filings or registrations with, any Government Entity, and (ii) the
expiration of any and all waiting periods imposed by applicable Law, in each
case in respect of such matter.
"Contract" means any written or unwritten (whether express or implied)
agreement, contract, commitment, evidence of indebtedness, purchase order,
letter of credit, indenture, security or pledge agreement, covenant not to
compete, obligation, franchise, indemnity, instrument, lease, sublease, license,
sublicense, note, bond, security, undertaking, promise, covenant, arrangement or
understanding.
"Contractor" means any current or former independent contractor, consultant or
leased employee.
"Contractor Agreement" means any Contract providing for compensation, benefits,
insurance coverage, severance pay or benefits, disability pay or benefits,
deferred compensation, bonuses,
-49-
stock options, stock purchase, phantom stock, stock appreciation or other forms
of incentive compensation or post-retirement compensation to any Contractor and
with respect to which the Company or any of its Subsidiaries or any ERISA
Affiliate has or may have any material liability or obligation.
"Control" means the direct or indirect power to direct the management and
policies of the controlled Person through ownership of voting shares, by
contract or otherwise.
"Employee" means any current or former employee or director of the Company or
any of its Subsidiaries or an ERISA Affiliate.
"Employee Benefit Plan" means any "employee pension benefit plan" (as defined in
Section 3(2) of ERISA), any "employee welfare benefit plan" (as defined in
Section 3(1) of ERISA) and any other written or oral plan, agreement,
arrangement, policy or practice involving direct or indirect compensation
involving more than one person or monetary benefits in excess of $150,000,
including insurance coverage, severance benefits, disability benefits, deferred
compensation, bonuses, stock options, stock purchase, phantom stock, stock
appreciation or other forms of incentive compensation or post-retirement
compensation and all unexpired severance agreements, for the benefit of, or
relating to, any Employee or with respect to which the Company, any of its
Subsidiaries or an ERISA Affiliate has or may have any liability or obligation.
"Environmental Law" means any Law, regulation, Order, decree or permit
requirement of any governmental jurisdiction relating to (i) the protection,
investigation or restoration of the environment, human health and safety, or
natural resources, (ii) the handling, use, storage, treatment, transport,
disposal, presence, release or threatened release of any Hazardous Substance,
(iii) noise, odor or wetlands protection, (iv) the reporting, licensing,
abatement, mitigation, monitoring, investigation and/or cleanup of Hazardous
Substances, (v) pollution or the protection of human health, safety or the
environment, including ambient air (including air inside buildings), surface
water, ground water, land surface or subsurface strata and natural resources,
(vi) product related health and safety laws and regulations; or (vii) the
preservation or reclamation of the environment or natural resources, including
the Korean Air Environmental Preservation Act, the Korean Water Quality
Environmental Preservation Act, the Korean Noise and Vibration Control Act, the
Korean Soil Environmental Preservation Act, the Korean Act on Disposal of
Sewage, Excreta and Livestock Wastewater, the Korean Wastes Control Act, the
Korean Industrial Safety and Health Act, the Korean Toxic Chemicals Control Act
and the High-Pressure Gas Safety Control Act.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
"ERISA Affiliate" means any entity which is a member of (i) a controlled group
of corporations (as defined in Section 414(b) of the Code), (ii) a group of
trades or businesses under common control (as defined in Section 414(c) of the
Code), or (iii) an affiliated service group (as defined under Section 414(m) of
the Code or the regulations under Section 414(o) of the Code), any of which
includes or included the Company or a Subsidiary of the Buyer.
-50-
"Governmental Entity" means any national, federal, state, provincial, domestic,
foreign, local (including city) or international government in the United
States, Korea or any other state or country, any political subdivision thereof
or any other governmental, judicial, public, administrative, regulatory, or
statutory instrumentality, authority, body, agency, court or other tribunal,
department, bureau, commission, quasi-governmental unit, and any Person
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, the SEC or entity or any arbitrator
with authority to bind a party hereto at Law.
"Hazardous Substance" means (i) any substance that is regulated or which falls
within the definition of a "hazardous substance," "hazardous waste" or
"hazardous material" pursuant to any Environmental Law, or (ii) any petroleum
product or by-product, asbestos-containing material, polychlorinated biphenyls,
radioactive materials or radon.
"Intellectual Property Rights" means: (i) all inventions, patents, improvements
thereto, patent applications and registrations, computer program protection,
design right, utility models, utility model applications and registrations,
trademarks, trademark applications and registrations, service marks, service
mark applications and registrations, industrial design, industrial design
applications and registrations, trade names and internet domain names and all
registrations and applications to register the same; (ii) copyrights, copyright
applications and copyright registrations; (iii) trade secrets, know-how,
processes, technical information, drawings, specifications and inventions; (iv)
computer systems and application software, including all associated data and
compilations of data, regardless of their form or embodiment, documentation
relating thereto and the latest versions of all related object and source codes
therefore; and (v) rights of the same or similar effect or nature as the
foregoing rights in each case in any jurisdiction.
"Law" means any United States, Korean or local or foreign country's national,
federal, regional, state, provincial, local, municipal, international, or other
constitution, law (including common law), ordinance, regulation, requirement,
administrative ruling, Order, public notice, guidance, rule, code, statute or
treaty made or rendered by any Government Entity or any other requirement or
rule of law.
"Lien" means any mortgage, pledge, lien, security interest, easement,
conditional sale agreement, title retention agreement, encumbrance, any option
to acquire all or any portion of any real property, charge, conflicting or
adverse claim, community property interests, title defect, right of first
refusal, option, warrant, covenant, lease, rights of way, servitudes or
statutory liens, order, decree, judgment, stipulation, preferential arrangement
or restriction of any kind, or any other encumbrance of any nature whatsoever,
whether or not perfected, including any restriction on the use, voting,
transfer, receipt of income or other exercise of any attributes of ownership or
other similar restrictions or limitations.
"Multiemployer Plan" means any Company Employee Plan which is a "multiemployer
plan," as defined in Section 3(37) of ERISA.
"Option Waiting Period" means the sixty (60) calendar days after the later of
(i) the Initial Offer Closing or (ii) the expiration of any subsequent offering
period pursuant to Section 1.1(e).
-51-
"Order" means any decree, decision, directive, injunction, judgment, order,
ruling, award, assessment, writ, subpoena or verdict entered, issued, made or
rendered by any court, administrative agency or other Government Entity or by
any arbitrator.
"Pension Plan" means each Company Employee Plan which is an "employee pension
benefit plan," within the meaning of Section 3(2) of ERISA.
"Person" means any natural person, individual, partnership, corporation,
incorporated or unincorporated association, trust, unincorporated organization,
limited liability company, firm, joint venture, joint stock company, trust,
organization, incorporated or unincorporated foundation or other entity,
including any Government Entity.
"Property" means all property and assets of whatsoever nature, including
personal property, whether tangible or intangible, and claims, rights and choses
in action.
"Subsidiary" means, with respect to any party, any corporation, partnership,
trust, limited liability company or other non-corporate business enterprise in
which such party (or another Subsidiary of such party) holds stock or other
ownership interests representing (A) more than 50% of the voting power of all
outstanding stock or ownership interests of such entity or (B) the right to
receive more than 50% of the net assets of such entity available for
distribution to the holders of outstanding stock or ownership interests upon a
liquidation or dissolution of such entity.
"Taxes" means (i) any and all taxes, charges, fees, levies or other similar
assessments or liabilities in the nature of taxes payable to any Government
Entity, including corporate tax, income tax, value added tax, capital gain tax,
withholding tax, payroll tax, franchise tax, excise tax, sales tax,
comprehensive land tax, property tax, acquisition tax, registration tax, license
tax, estimated tax, customs, all other taxes, national health insurance and
social security dues, (including any surtax, interest, fines, penalties or
additions to tax that may become payable in respect of such taxes, whether or
not disputed), (ii) any liability for the payment of any amounts of the type
described in clause (i) of this definition as a result of being a member of an
affiliated, consolidated, combined or unitary group for any period, and (iii)
any liability for the payment of any amounts of the type described in clauses
(i) or (ii) of this definition as a result of any express or implied obligation
to indemnify any other person or as a result of any obligation under any
agreement or arrangement with any other person with respect to such amounts and
including any liability for Taxes of a predecessor entity.
"Tax Returns" means all reports, returns, declarations, statements or other
information required to be supplied to a taxing authority in connection with
Taxes.
-52-
For all purposes of and under the Agreement, the following capitalized terms
shall have the respective meanings ascribed thereto in the respective sections
of this Agreement set forth opposite each such capitalized term below:
Reference in
Terms Agreement
- ----- -----------------
401(k) Plan Section 5.10
Additional Voting Proposals Section 2.4(a)
Accounts Receivable Section 4.1(m)
Acquisition Proposal Schedule A
Acquisition Transaction Schedule A
Affiliate Schedule A
Agreement Preamble
Antitrust Laws Section 5.4(c)
Antitrust Order Section 5.4(c)
Arbitration Board Section 7.11(a)
Bankruptcy and Equity Exception Section 2.4(a)
Business Day Schedule A
Buyer Preamble
Buyer Common Stock Section 3.2(c)
Buyer Disclosure Schedule Article III
Buyer Employee Plan Schedule A
Buyer Material Adverse Effect Schedule A
Code Section 2.14(d)
Company Preamble
Company ADR Section 5.11(c)(i)
Company ADSs Section 5.11(b)
Company Balance Sheet Section 2.6
Company Board Section 2.4(a)
Company Common Stock Section 2.2(a)
Company Disclosure Schedule Article II
Company Employee Plans Section 2.14(a)
Company Intellectual Property Rights Section 2.10(a)
Company Leases Section 2.9(b)
Company Material Adverse Effect Schedule A
Company Material Contract Section 2.11(a)
Company Meeting Section 2.4(d)
Company Meeting Proxy Statement Section 5.2(b)
Company Owned Intellectual Property Rights Section 2.10(a)
Company Permits Schedule A
Company SEC Reports Section 2.5(a)
Company Share Preamble
Company Shares Preamble
Company Stock Options Section 5.12(a)
Company Stockholder Agreements Preamble
-53-
Reference in
Terms Agreement
- ----- -----------------
Company Stockholder Approval Section 2.4(a)
Company Stockholders Section 1.1(f)(ii)
Company Voting Proposal Section 2.4(a)
Company's Knowledge Section 7.13
Confidentiality Agreement Section 4.2
Continuing Employees Section 5.8
Contract Schedule A
Control Schedule A
D&O Policy Section 5.6(c)
Deposit Agreement Section 5.11(a)
Depositary Section 5.11(a)
Employee Benefit Plan Schedule A
Environmental Law Schedule A
ERISA Schedule A
ERISA Affiliate Schedule A
Exchange Act Section 1.1(a)
Extended Outside Date Section 6.1(a)(ii)
GAAP Section 2.5(b)
Governmental Entity Schedule A
Hazardous Substance Schedule A
HSR Act Section 2.4(c)
Indemnified Parties Section 5.7(a)
Initial Offer Closing Section 1.1(c)
Intellectual Property Rights Schedule A
Initial Outside Date Section 6.1(a)(ii)
IRS Section 2.14(f)
Korea Section 2.1(a)
Korean GAAP Section 4.1(i)
Law Schedule A
Lien Schedule A
Maximum Premium Section 5.6(c)
Minimum Condition Section 1.1(a)(i)
Multiemployer Plan Schedule A
Offer Preamble
Offer Consideration Section 1.1(a)
Offer Documents Section 1.1(f)(i)
Offer to Purchase Section 1.1(f)(i)
Option Consideration Section 5.12(b)
Order Schedule A
Ordinary Course of Business Section 2.2(e)
Owned and Tendered Shares Section 1.1(a)(i)
Pension Plan Schedule A
Per Share Cash Consideration Preamble
-54-
Reference in
Terms Agreement
- ----- -----------------
Person Schedule A
Pre-Closing Period Section 4.1
Property Schedule A
Representatives Section 5.1(b)
Rules Section 7.11(a)
Schedule TO Section 1.1(f)(i)
Schedule 14D-9 Section 1.2(b)
SEC Section 1.1(c)
Securities Act Schedule A
Subsidiary Schedule A
Tax Benefits Section 2.8(e)
Tax Returns Schedule A
Taxes Schedule A
Termination Fee Amount Section 6.3(b)
Third Party Intellectual Property Section 2.10(b)
-55-