Strategic Alliance Agreement

EXHIBIT 99(c)(3)


STRATEGIC ALLIANCE AGREEMENT


DATED AS OF FEBRUARY 27, 1995


BY AND BETWEEN


SAMSUNG ELECTRONICS CO., LTD.,


A KOREAN CORPORATION


AND


AST RESEARCH, INC.,


A DELAWARE CORPORATION


CONTENTS


ARTICLE 1 DEFINITIONS 1 ARTICLE 2 COVENANTS TO ENTER INTO CERTAIN STRATEGIC AGREEMENTS 2
2.1 Covenant to Enter Into Component Supply Agreements 2
2.1.1 Component Supply Agreements - Statement of
Purpose 2
2.1.2 Component Supply Agreements - Principles 3
2.2 Covenant to Enter Into A Joint Procurement Agreement 4
2.2.1 Joint Procurement Agreement - Statement of
Purpose 4
2.2.2 Joint Procurement Agreement - Principles 4
2.3 Covenant to Enter Into A Joint Marketing Agreement 4
2.3.1 Joint Marketing Agreement - Statement of
Purpose 4
2.3.2 Joint Marketing Agreement - Principles 5
2.4 Covenant to Enter Into A Cross OEM Agreement 5
2.4.1 Cross OEM Agreement - Statement of Purpose 5
2.4.2 Cross OEM Agreement - Principles 5
2.5 Covenant to Enter Into A Joint Product Development
Agreement 7
2.5.1 Joint Product Development Agreement -
Statement of Purpose 7
2.5.2 Joint Product Development - Principles 7
2.6 Covenant to Enter Into A Cross License Agreement 8
2.6.1 Cross License Agreement - Statement of
Purpose 8
2.6.2 Cross License Agreement - Principles 8
2.7 Covenant to Enter Into An Employee Exchange
Agreement 9
2.7.1 Employee Exchange Agreement - Statement of
Purpose 9
2.7.2 Employee Exchange Agreement - Principles 9
2.8 Covenant to Enter Into A Technical Collaboration
Agreement 10


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2.8.1 Technical Collaboration Agreement - Statement
of Purpose 10
2.8.2 Technical Collaboration Agreement -
Principles 10 ARTICLE 3 REPRESENTATIONS AND WARRANTIES 10
3.1 Disclosure. 10 ARTICLE 4 COVENANTS 11
4.1 Access to Information; Confidentiality 11
4.1.1 Access 11
4.1.2 Confidentiality 11
4.2 Additional Agreements; Reasonable Efforts 11
4.3 Public Announcements 12
4.4 Notification of Certain Matters 12
4.5 Indemnities 12
4.5.1 Indemnification of Samsung 12
4.5.2 Indemnification of AST 12
4.5.3 Third Party Claims 13 ARTICLE 5 CONDITIONS TO ENTER INTO CERTAIN STRATEGIC AGREEMENTS 14
5.1 Conditions to Obligations of Samsung and AST 14
5.1.1 No Prohibition 14
5.1.2 Regulatory Compliance 14
5.2 Conditions to Obligations of Samsung 14
5.2.1 Performance 14
5.2.2 Representations and Warranties True 15
5.3 Conditions to Obligations of AST 15
5.3.1 Performance 15
5.3.2 Representations and Warranties True 15 ARTICLE 6 TERMINATION 15
6.1 Termination by AST 15
6.2 Termination by Samsung 15
6.3 Termination by Samsung or AST 15
6.4 Effect of Termination 16 ARTICLE 7 MISCELLANEOUS 16
7.1 Compliance with Law 16
7.2 Stock Purchase Agreement 16


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STRATEGIC ALLIANCE AGREEMENT


This Strategic Alliance Agreement (this "AGREEMENT") is entered into as of February 27, 1995 by and between Samsung Electronics Co., a Korean corporation ("SAMSUNG") and AST Research, Inc., a Delaware corporation ("AST").


A. Samsung and AST have entered into that certain Stock Purchase Agreement dated as of the date hereof (as the same may be amended from time to time, the "Stock Purchase Agreement") pursuant to which Samsung is acquiring certain shares of AST Common Stock.


B. As a result of the transactions contemplated by the Stock Purchase Agreement, Samsung will be a significant stockholder of AST.


C. Samsung and AST have engaged in discussions regarding various commercial arrangements between the parties as contemplated hereinbelow including, without limitation, the sale by Samsung to AST of various components used in the manufacture of AST products and based upon those discussion both parties expect that those anticipated commercial relationships will be mutually beneficial.


D. It is a condition to the transactions contemplated by the Stock Purchase Agreement and the desire of Samsung and AST that they enter into this Agreement to provide for the formation of a strategic alliance involving various mutually beneficial commercial relationships intended to enhance the business prospects and competitive position of both Samsung and AST, and AST's Board of Directors has determined that such an Agreement is in the best interests of AST's stockholders.


NOW, THEREFORE, in consideration of the foregoing premises and the representations, warranties, and agreements set forth in this Agreement, Samsung and AST hereby agree as follows:


ARTICLE 1.
DEFINITIONS


Capitalized terms used in this Agreement without definition shall have the respective meanings accorded to them in the Stock Purchase Agreement. Capitalized terms used in this Agreement and not otherwise defined herein or in the Stock Purchase Agreement shall have the respective meanings set forth below.


"COMPONENT SUPPLY AGREEMENTS" means the Component Supply Agreements to be entered into by and between Samsung and AST in accordance with Section 2.1 hereof.


"CROSS LICENSING AGREEMENT" means the Cross Licensing Agreement to be entered into by and between Samsung and AST in accordance with Section 2.6 hereof.


"CROSS OEM AGREEMENT" means the Cross OEM Agreement to be entered into by and between Samsung and AST in accordance with Section 2.4 hereof.


"EMPLOYEE EXCHANGE AGREEMENT" means the Employee Exchange Agreement to be entered into by and between Samsung and AST in accordance with Section 2.7 hereof.


"JOINT PROCUREMENT AGREEMENT" means the Joint Procurement Agreement to be entered into by and between Samsung and AST in accordance with Section 2.2 hereof.


"JOINT PRODUCT DEVELOPMENT AGREEMENT" means the Joint Development Agreement to be entered into by and between Samsung and AST in accordance with Section 2.5 hereof.


"JOINT MARKETING AGREEMENT" means the Joint Marketing Agreement to be entered into by and between Samsung and AST in accordance with Section 2.3 hereof.


"STRATEGIC AGREEMENTS" means the Component Supply Agreements, the Joint Procurement Agreement, the Joint Marketing Agreement, the Cross OEM Agreement, the Joint Product Development Agreement, the Cross Licensing Agreement, the Employee Exchange Agreement and the Technical Collaboration Agreement.


"TECHNICAL COLLABORATION AGREEMENT" means the Technical Collaboration Agreement to be entered into by and between Samsung and AST in accordance with Section 2.8 hereof.


ARTICLE 2.
COVENANTS TO ENTER INTO CERTAIN STRATEGIC AGREEMENTS


2.1. COVENANT TO ENTER INTO COMPONENT SUPPLY AGREEMENTS.


2.1.1. Component Supply Agreements - Statement of Purpose.
Both Samsung and AST believe that, in order to form a successful strategic alliance during the term of Samsung's significant investment in AST that will enhance the competitive position of each party, Samsung and AST should enter into an agreement pursuant to which Samsung shall supply AST with certain components used in the manufacture of AST's products ("Components"). Such agreement shall provide that, to the extent permitted within the confines of applicable law, Samsung shall provide AST with pricing, allocation and terms which, when considered in the aggregate, are at least as favorable as those offered by Samsung to its most favored customer group. The prices, allocation and terms offered to AST for the Components during the first quarter covered by such agreement (the "Initial Period") shall, when considered in the aggregate, be more favorable than the prices, allocation and terms otherwise available to AST pursuant to agreements between AST and Samsung


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which were entered into prior to the effective date of this Agreement ("Existing Samsung Agreements") to the extent that such Existing Samsung Agreements would otherwise be effective during the Initial Period.


2.1.2. Component Supply Agreements - Principles.
Samsung and AST shall each allocate the necessary resources and meet together as soon as possible following the execution of this Agreement and as often as either party reasonably requests thereafter, in order to negotiate the terms and conditions of definitive component supply agreements (the "Component Supply Agreements") which shall be entered into between AST and the relevant Affiliate of Samsung prior to the Closing of the purchase and sale of the Second Issuance Shares. The Component Supply Agreements shall address, among other things, the following:


(a) type of components to be supplied by Samsung (including DRAM, CD-
ROM, hard disk drives, monitors, LCD display panels and
printers);


(b) pricing by component type;


(c) quantity commitments by component type;


(d) payment terms;


(e) shipment method and terms;


(f) procedures for placing and accepting orders, needs/quantity
forecasting horizons, lead time, cycle time, demand/supply
planning, preliminary/firm order timing, change order process;


(g) allocate responsibility for customs/duties fees;


(h) allocate responsibility for compliance with applicable laws,
regulations including, without limitation, obtaining applicable
governmental approvals, registrations, notifications related to
import and export ;


(i) procedures pursuant to which AST will use its best efforts to
provide services necessary to test and qualify, new components or
new versions of existing components to be offered Samsung, as to
quality and compatibility for use in AST products;


(j) agreement term and termination provisions including the rights
and obligations of the parties on expiration or termination;


(k) dispute resolution mechanisms; and


(l) various legal matters (e.g., indemnities, representations and
warranties).


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2.2. Covenant to Enter Into A Joint Procurement Agreement.


2.2.1. Joint Procurement Agreement - Statement of Purpose.
Both Samsung and AST believe that, in order to form a successful strategic alliance that will enhance the competitive position of each party, Samsung and AST should enter into an agreement pursuant to which Samsung and AST shall coordinate their purchases from third parties in order to obtain more favorable pricing as a result of leveraging the combined purchasing power of both parties.


2.2.2. Joint Procurement Agreement - Principles.
Samsung and AST shall each allocate the necessary resources and meet together as soon as possible following the execution of this Agreement and as often as either party reasonably requests thereafter, in order to negotiate the terms and conditions of a definitive joint procurement agreement (the "Joint Procurement Agreement") which shall be entered into prior to the Closing of the purchase and sale of the Second Issuance Shares. The Joint Procurement Agreement shall address, among other things, the following:


(a) type of components and materials to be jointly procured
(e.g., microprocessors, video graphics chipsets);


(b) means by which joint purchasing can be accomplished
(e.g., consolidated procurement or resale arrangements between
the parties);


(c) means by which joint purchasing can be efficiently managed
(e.g., management level procurement coordinators for each party);
and


(d) effective means of exchange of procurement related information
(e.g., forecasted needs, prices, volumes, terms for all
components and materials to be jointly procured).


2.3. Covenant to Enter Into A Joint Marketing Agreement.


2.3.1. Joint Marketing Agreement - Statement of Purpose.
Both Samsung and AST believe that, in order to form a successful strategic alliance that will enhance the competitive position of each party, Samsung and AST should enter into an agreement pursuant to which Samsung and AST shall cooperate to share expertise to jointly market currently existing and newly developed products of both parties in order to achieve maximum market penetration for both parties.


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2.3.2. Joint Marketing Agreement - Principles.
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