EXHIBIT 99.4
AST RESEARCH, INC.
00000 Xxxxx Xxxxxxx
Xxxxxx, Xxxxxxxxxx 00000
November 6, 1996
Samsung Electronics Co., Ltd.
Samsung Main Building
000, 0-Xx, Xxxxxxxx-Xx, Xxxxx-Xx
Xxxxx, Xxxxx 100-742
Gentlemen:
This letter confirms our mutual understandings regarding certain
support arrangements to be implemented by Samsung Electronics Co., Ltd., a
Korean corporation ("Samsung"), and AST Research, Inc., a Delaware corporation
("AST"), and also sets forth our understandings with respect to certain matters
related thereto. Except for the agreements set forth in paragraph 3 below,
which are intended to be binding, this letter and the transactions described
herein are not to be considered as a legally binding or enforceable agreement of
either AST or Samsung. Rather, this letter will serve to assist the parties in
negotiating and entering into enforceable Definitive Agreements. Subject to the
foregoing, our understanding is as follows:
1. The Support Arrangements. Subject to the terms and conditions of
definitive agreements to be entered into between AST and Samsung (all such
agreements and other instruments, the "Definitive Agreements"), Samsung, or one
or more wholly-owned subsidiaries of Samsung designated by Samsung, will provide
the support arrangements and Samsung and AST will enter into the other
transactions consistent with the terms set forth in this letter.
2. Definitive Agreements. AST and Samsung shall enter into as
expeditiously as possible the Definitive Agreements pertaining to Issuance of
Preferred Shares and Supplemental Samsung Support Transactions, each of which
shall be consistent with the terms set forth in this letter. The Supplemental
Samsung Support Transactions shall include Samsung providing supplemental
guarantees for one or more bank lines of credit for AST, such supplemental
guarantees to be in addition to the current US$ 200 million bank credit line
guarantee provided by Samsung to AST which expires on Dec. 31, 1997. The
supplemental guarantees to be provided by Samsung shall include a first part
being for US$ 100 million in credit starting on Dec. 1, 1996, and a second part
being for an additional US$ 100 million in credit starting on April 1, 1997;
with both parts of the supplemental guarantees extending until Dec. 31, 1998.
The intention is that, including the current guarantee and the supplemental
guarantees described in this letter, Samsung is guaranteeing bank credit lines
for AST in a total amount of US$ 300 million starting on Dec. 1, 1996, which
increases to US$ 400 million on April 1, 1997, which decreases to US$ 200
million on Dec. 31, 1997, and which ends on Dec. 31, 1998. The Supplemental
Samsung Support Transactions shall also require AST to repay to Samsung
Electronics America, Inc. the US$ 50 million bridge loan which was provided to
AST on October 11, 1996, and require that such repayment be made promptly upon
the availability of funds under the credit line(s) supported by the supplemental
guarantees, at which time the promissory note evidencing such bridge loan shall
be canceled. The Issuance of Preferred Shares is intended to be in
consideration of the Supplemental Samsung Support Transactions, and shall
include the issuance by AST of shares of non-voting preferred stock of AST, with
an agreed upon valuation of approximately US$ 15 million. Such shares of
preferred stock shall not be subject to any mandatory redemption, but shall be
redeemable by AST, at the option of the independent directors of AST, beginning
in 1999 for cash, or through the issuance of shares of AST common stock. The
exact valuation and redemption provisions of the Preferred Shares are subject to
further review by both AST and Samsung, and approval by the independent
directors of the board of directors of AST, and the valuation amount to be
provided for in the Definitive Agreements may be greater than or less than the
approximate amount stated in this letter of intent. The shares of such AST
preferred stock shall have a cumulative dividend which begins accruing in 1999,
at a rate to be agreed upon.
The transactions contemplated hereby shall be subject to the final
approval of the Independent Directors on the Board of Directors of AST and, if
so desired by the Independent Directors or the full Board of Directors of AST,
to the receipt by the Board of Directors of AST of a fairness opinion, in form
and substance satisfactory to the Independent Directors, from a nationally
recognized investment banking firm selected by the Independent Directors.
3. Public Announcements. Neither the parties nor their respective
agents shall make any public announcement with respect to this Letter of Intent
or the transactions contemplated hereby, except as required by applicable law,
without prior consultation with the other party. The parties agree to make all
filings required under the securities laws in connection with this Letter of
Intent.
4. Governing Law. This Letter of Intent shall be governed by and
construed in accordance with the laws of the State of California applicable to
contracts to be performed in such state.
If the foregoing is in accordance with your understanding, please
return a signed copy of this letter to the undersigned.
Very truly yours,
AST RESEARCH, INC.
By: /s/ XXXXX XXX XXX
----------------------------------
Name: Xxxxx Xxx Xxx
Title: President, Chief Executive Officer
Accepted and agreed to:
SAMSUNG ELECTRONICS CO., LTD.
By: /s/ XXXXX-XXX XXX
------------------------
Name: Xxxxx-Xxx Xxx
Title: Executive Vice President
