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EXHIBIT 10.16
WARRANT PURCHASE AGREEMENT
THIS WARRANT PURCHASE AGREEMENT (this "Agreement") dated as of May
29, 1998, by and between StorMedia Incorporated, a Delaware corporation (the
"Company"), and CIBC [Asia] Ltd., Banque Nationale de Paris, Singapore Branch,
Union Bank of California N.A., Sanwa Bank California and Fleet National Bank
(each a "Purchaser" and collectively the "Purchasers").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Credit Agreement dated as of
August 23, 1996, as amended, among StorMedia International, Ltd.
("International"), Strates Pte. Ltd. ("Strates"), the Company, the Purchasers,
Canadian Imperial Bank of Commerce, New York Agency as Agent for the Purchasers
(the "Agent") and Banque Nationale de Paris as Co-Agent (the "Co-Agent"), the
Purchasers made certain loans (the "Loans") to International and Strates, each
of which is a subsidiary of the Company;
WHEREAS, repayment of the Loans heretofore has been guaranteed by
the Company and by StorMedia Foreign Sales Corporation, another subsidiary of
the Company;
WHEREAS, pursuant to that certain Amended and Restated Credit
Agreement of even date herewith, among International, Strates, the Company, the
Purchasers, the Agent and the Co-Agent (the "Amended and Restated Credit
Agreement"), the Purchasers are extending the maturity and otherwise amending
the terms, of the Loans and Akashic Memories Corporation, another subsidiary of
the Company, also is guarantying the repayment of the Loans;
WHEREAS, in order to induce the Purchasers to enter into the Amended
and Restated Credit Agreement, the Company has agreed to issue and sell to the
Purchasers warrants initially exercisable for an aggregate of 2,000,000 shares
of the Class A Common Stock, par value $0.013 per share, of the Company (the
"Class A Common Stock");
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which is hereby acknowledged, the parties mutually agree as follows:
SECTION 1. DEFINITIONS
The terms hereinafter set forth when used herein shall have the
following meanings, and any terms not otherwise defined herein that are defined
in the Amended and Restated Credit Agreement shall have the respective meanings
specified in the Amended and Restated Credit Agreement:
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"Code" shall mean the Internal Revenue Code of 1986, as amended, or
any successor statute.
"Common Stock" shall mean the Class A Common Stock and the Class B
Common Stock, par value $0.013 per share, of the Company ("Class B Common
Stock").
"Commission" shall mean the Securities and Exchange Commission, or
any other federal agency then administering the Securities Act.
"Contractual Obligation" shall mean, with respect to any person, any
provision of any mortgage or security issued by such person or of any lease,
franchise, agreement, guaranty, instrument or undertaking to which such person
is a party or by which such person or any of its properties is bound.
"Governmental Authority" shall mean any nation or government, any
state or other political subdivision thereof, and any entity, body or official
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Requirement of Law" shall mean any applicable law, statute, treaty,
rule, regulation, arbitration award, judgment, decree, order or other
determination of any Governmental Authority.
"Securities Act" shall mean the Securities Act of 1933, as amended,
or any similar Federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect at the time.
"Warrant" shall have the meaning assigned in Section 2.01 hereof.
SECTION 2. ISSUE AND SALE OF WARRANTS
2.01 Issue of Warrants. Concurrently with the execution and delivery
hereof, the Company is issuing and selling to the Purchasers, and the Purchasers
are purchasing from the Company, five warrants (each a "Warrant"), one issuable
to each Purchaser, initially exercisable for the purchase of an aggregate of
2,000,000 shares of Class A Common Stock.
2.02 Consideration; Nature of Warrants. The parties hereto
acknowledge that the Warrants are being issued in consideration of services
rendered to the Company in connection with the transactions contemplated by the
Amended and Restated Credit Agreement and will be treated by all parties for
federal and state income tax purposes as options without a readily ascertainable
fair market value.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser hereby represents and warrants to the Company,
severally and not jointly with any other Purchaser or Purchasers, as follows:
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3.01 Authority. Such Purchaser has full legal right, power and
authority to enter into and perform this Agreement, and the execution and
delivery of this Agreement by such Purchaser and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action of such Purchaser. This Agreement constitutes the legal, valid
and binding obligation of such Purchaser, enforceable against it in accordance
with the terms hereof, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally and subject to general principles of equity.
3.02 Investment Intention. Each Purchaser is acquiring the Warrant
issued to the that Purchaser for investment and not with a view to the
distribution thereof. Each Purchaser acknowledges that the Warrants and the
Class A Common Stock issuable on exercise thereof have not been and will not be
registered under the Securities Act or under any state securities laws and are
being offered and sold in reliance upon exemptions, for transactions not
involving any public offering. Each Purchaser acknowledges that it has had an
opportunity to ask questions of and receive answers from officers of the Company
regarding the Warrants, the Company and its business prospects and financial
condition.
3.03 Brokers and Finders. No brokerage or finder's commissions or
fees are payable in connection with the transactions contemplated by this
Agreement on account of any action taken by such Purchaser or its
representatives, and such Purchaser will indemnify the Company against and hold
the Company harmless from any liability, loss or expense (including, without
limitation, reasonable attorneys' fees) arising in connection with any claim for
any such commissions or fees.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each Purchaser as
follows:
4.01 Organization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
with all requisite power to own its properties and assets and to conduct its
business as now conducted, and is duly qualified as a foreign corporation and is
in good standing in all other jurisdictions in which such qualification is
required.
4.02 Capitalization. (a) As of May 27, 1998, the Company's
authorized capital stock consists of: (i) 50,000,000 shares of Class A Common
Stock, of which 16,317,932 shares were issued and outstanding, (ii) 5,000,000
shares of Class B Common Stock, of which 4,362,000 shares were issued and
outstanding (all of which have been tendered for conversion into Class A Common
Stock effective as of the date of this Agreement), and (iii) 1,000,000 shares of
preferred stock, par value $0.01 per share, of which 500,000 shares are being
designated Series A Preferred Stock, none of which shares were issued and
outstanding. All of the outstanding shares of capital stock of the Company (x)
have been duly authorized and validly issued, are fully paid and nonassessable,
and free of preemptive rights, and (y) have been offered and issued without
violation of the Securities Act or any applicable state securities or blue sky
law or any preemptive rights of any person. Schedule A hereto accurately sets
forth, as of the
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date hereof, the number of issued and outstanding shares of Common Stock held by
each person known by the Company to own beneficially or of record five percent
(5%) of more of the outstanding shares of any class of the Company's capital
stock.
(b) Except as disclosed on Schedule B hereto: (i) there are no
issued or outstanding securities that are convertible into or exchangeable for
shares of the Company's capital stock ("Convertible Securities"); (ii) there are
no issued or outstanding subscriptions, options, warrants or other rights to
purchase or acquire any shares of the capital stock of the Company or any
Convertible Securities ("Option Rights") other than the Warrants; (iii) the
Company is not a party to any agreement or understanding pursuant to which the
Company is obligated to purchase, redeem or otherwise reacquire or cancel any
shares of the Company's capital stock or any Convertible Securities or Option
Rights, and the Company is not otherwise under any obligation to repurchase,
redeem or otherwise acquire any shares of the Company's capital stock or any
Convertible Securities or Option Rights; (iv) the Company is not a party to any
agreement or understanding pursuant to which the Company is obligated to
register any shares of its capital stock or other securities under the
Securities Act or any state securities laws; and (v) to the best knowledge of
the Company, no securities holder of the Company is a party to any voting
agreement, voting trust, irrevocable proxy or other agreement affecting the
voting rights of any shares of the Company's capital stock or any agreement
providing for any call or put option, right of first refusal or offer or other
right to acquire or dispose of any shares of the Company's capital stock or any
Convertible Securities or Option Rights. Other than the shares of Class A Common
Stock reserved for issuance upon exercise of the Warrants, except as disclosed
on Schedule B hereto no shares of Common Stock are issuable upon the exercise of
any outstanding Convertible Securities or Option Rights and no additional shares
of Common Stock will become issuable upon exercise of such Convertible
Securities or Option Rights on account of the issuance of the Warrants.
4.03 Valid Issuance of Warrants. (a) The Warrants have been duly
executed and delivered by the Company, have been duly authorized and validly
issued free and clear of all liens, encumbrances, equities and claims created by
the Company, are fully paid and non-assessable, and constitute the legal, valid
and binding obligations the Company, enforceable in accordance with their terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally and subject
to general principles of equity.
(b) The shares of Class A Common Stock issuable upon exercise of the
Warrants have been duly authorized and reserved for issuance and, when issued in
accordance with the terms of the Warrants, will be validly issued, fully paid
and non-assessable, free and clear of all liens, encumbrances, equities and
claims created by the Company and without violation of any preemptive rights.
4.04 Authority. The Company has full legal right, power and
authority (i) to enter into and perform this Agreement and (ii) to issue the
Warrants and to perform all of the Company's obligations relating thereto. The
execution and delivery of this Agreement, the issuance of the Warrants by the
Company and the consummation of the transactions contemplated hereby and thereby
have all been duly authorized by the Board of Directors of the
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Company and, where required, the shareholders of the Company. No consent, waiver
or authorization of, or filing with any other Person (including without
limitation, any Governmental Authority) is required in connection with any of
the foregoing or with the validity or enforceability against the Company of this
Agreement or the Warrants. This Agreement has been duly executed and delivered
by the Company and constitutes the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally and subject to general principles of equity.
4.05 No Conflict. The execution, delivery and performance of this
Agreement and the Warrants and the consummation of the transactions contemplated
hereby and thereby do not and will not, with or without the passage of time or
the giving of notice or both, (i) conflict with or violate any provision of the
Company's certificate of incorporation or by-laws, (ii) conflict with or violate
any Requirement of Law or Contractual Obligation applicable to the Company or
any of its subsidiaries, (iii) result in, or require, the creation or imposition
of any Lien on any of the properties or revenues of the Company or any of its
subsidiaries pursuant to any Requirement of Law or Contractual Obligation or
(iv) require any action by or in respect of, or filing with, any Governmental
Authority other than filings under applicable securities laws and listing of the
Class A Common Stock with the Nasdaq National Market.
4.06 Litigation. No action, suit, claim, litigation, investigation
or proceeding (formal or informal) of or before any arbitrator or Governmental
Authority is pending or (to the best of the Company's knowledge) threatened by
or against the Company or any of its subsidiaries against any of their
respective properties or revenues with respect to this Agreement or the Warrants
or any of the transactions contemplated hereby or thereby.
4.07 Compliance With Laws. The Company and its subsidiaries are in
compliance, in all material respects, with all laws, ordinances, governmental
rules and regulations to which the Company or any such subsidiary is subject,
where the failure to so comply would have an adverse effect on the
enforceability against the Company of this Agreement or the Warrants or the
ability of the Company to perform its obligations hereunder and thereunder.
4.08 Brokers and Finders. Except as disclosed in the Amended and
Restated Credit Agreement and the schedules thereto, no brokerage or finder's
commissions or fees are payable in connection with the transactions contemplated
by this Agreement on account of any action taken by the Company, its
subsidiaries or other affiliates or their respective representatives, and the
Company will indemnify each Purchaser against and hold each Purchaser harmless
from any liability, loss or expense (including, without limitation, reasonable
attorneys' fees) arising in connection with any claim for any such commissions
or fees.
4.09 Securities Law Compliance. The offer and sale of the Warrants
hereunder is exempt from the registration and prospectus delivery requirements
of the Securities Act, and the rules and regulations thereunder, and all
applicable state securities laws. The Company has not offered the Warrants to
anyone other than the Purchasers.
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4.10 Transfer Taxes. Except as have been paid by the Company or any
of its subsidiaries prior to the date hereof, no fees, taxes, charges or other
amounts imposed by any federal, state or local taxing or other Governmental
Authority are or will become payable by the Company or any Subsidiary or any
Purchaser as a consequence of the consummation of any of the transactions
contemplated hereby (including, without limitation, transfer taxes and filing
fees).
4.11 Full Disclosure. This Agreement, together with the Amended and
Restated Credit Agreement and the exhibits, schedules, attachments, documents,
certificates and other written items and materials prepared and supplied to the
Purchasers by or on behalf of the Company with respect to the transactions
contemplated hereby and thereby, taken as a whole, do not and will not, as the
case may be, as of the dates made contain any untrue statement of a material
fact or omit to state any material fact necessary to make the statements
contained therein not misleading in the context made. There is no fact known to
the Company or any of its subsidiaries that the Company has not disclosed to the
Purchasers in writing and that is reasonably likely to have a material adverse
effect on the business, operations, property, prospects or condition (financial
or otherwise) of the Company or any subsidiary or would have an adverse effect
on the enforceability against the Company of this Agreement or the Warrants or
the ability of the Company to perform its obligations hereunder or thereunder.
SECTION 5. MISCELLANEOUS
5.01 Expenses. The Company agrees to pay, and save each Purchaser
harmless against liability for the payment of, all reasonable expenses arising
in connection with the transactions contemplated by this Agreement or by the
Warrants, including, without limitation, any stamp or similar taxes (including
interest and penalties, if any) that may be determined to be payable in respect
of the execution, delivery, issue and sale of the Warrants, the reasonable fees
and out-of-pocket expenses of counsel to the Purchasers or any of them in
connection with the preparation of this Agreement and the issuance of the
Warrants, including any and all amendments or other modifications, waivers or
consents to or with respect to such agreements, the expense of preparing and
issuing the Warrants, the cost of delivering the Warrants to such place as the
Purchasers shall determine, insured to their satisfaction, and the costs and
expenses incurred in the preparation of all certificates and letters on behalf
of the Company and of the performance by the Company of and compliance with all
agreements and conditions contained herein to be performed or complied with.
5.02 Notices.
(a) All communications under this Agreement shall be in writing and
shall be mailed by first class mail, postage prepaid,
(1) if to the Purchasers, to their respective addresses set forth in
the Credit Agreement or at such other address as such Purchaser may have
furnished the Company in writing, or
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(2) if to the Company, to its address as set forth in the Amended
and Restated Credit Agreement or at such other address as the Company may
have furnished to each of the Purchasers in writing.
(b) Any notice so addressed and mailed by registered or certified
mail shall be deemed to have been given when mailed.
5.03 Survival. All warranties, representations and covenants made
herein or in any certificate or other instrument delivered by the parties hereto
or on their behalf under this Agreement shall be considered to have been relied
upon and shall survive the delivery of the Warrants and payment therefor,
regardless of any investigation made by any such party or on their behalf. All
statements in any such certificate or other instrument shall constitute
warranties and representations by such party hereunder.
5.04 Amendment. This Agreement may be amended or otherwise modified
only by a written instrument signed by the Majority Warrant Holders (as defined
in the Warrants) and the Company.
5.05 Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns. Any transfer of a Warrant in whole or in part shall be
deemed to constitute an automatic assignment of the rights of the transferor
hereunder (or, in the event of a partial transfer of a Warrant, an automatic
assignment of a pro rata portion of such rights) to the transferee.
5.06 Severability. Should any part of this Agreement for any reason
be declared invalid, such decision shall not affect the validity of any
remaining portion, which remaining portion shall remain in full force and effect
as if this Agreement had been executed with the invalid portion thereof
eliminated and it is hereby declared the intention of the parties hereto that
they would have executed the remaining portion of this Agreement without
including therein any such part or parts that may, for any reason, be hereafter
declared invalid.
5.07 Captions. The descriptive headings of the various Sections or
parts of this Agreement are for convenience only and shall not affect the
meaning or construction of any of the provisions hereof.
5.08 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD
TO THE CONFLICTS OF LAW RULES THEREOF.
5.09 Waiver of Jury Trial. The Company and the Purchasers each
hereby expressly acknowledges that any dispute arising out of, connected with,
or incidental to the relationships established between the Company, on the one
hand, and any one or more Purchasers, on the other, in connection with, this
Agreement, will be a highly complex commercial matter inappropriate for
resolution by a jury. The Company, on the one hand, and each of the Purchasers,
on the other, each hereby waives any right to have a jury participate in
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resolving any such dispute, whether sounding in contract, tort or otherwise.
Instead, any and all disputes resolved in court will be resolved in a bench
trial without a jury.
5.10 Entire Agreement. This Agreement, together with the Amended and
Restated Credit Agreement, the Warrants and the other Loan Documents (as such
term is defined in the Amended and Restated Credit Agreement), is intended by
the parties as a final expression of, and a complete and exclusive statement, of
the agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein. There is no restriction, promise, warranty
or undertaking by any party or between any of the parties hereto with respect to
such subject matter other than those set forth or referred to herein and
therein. This Agreement, together with the other Loan Documents, supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
5.11 Attorneys' Fees. In any action or proceeding brought to enforce
any provision of this Agreement or any Warrant, or where any provision hereof or
thereof is validly asserted as a defense, the successful party shall be entitled
to recover reasonable attorneys' fees in addition to any other available remedy.
5.12 Counterparts. This Agreement may be executed in any number of
counterparts, each executed counterpart constituting an original but all
together only one agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
STORMEDIA INCORPORATED
By: /s/
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Title:
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S-1
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CIBC [Asia] LTD.
By: /s/
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Title:
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S-2
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ Branch,
By: /s/
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Title:
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By: /s/
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Title:
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S-3
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FLEET NATIONAL BANK
By: /s/
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Title:
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▇-▇
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▇▇▇▇▇ ▇▇▇▇ CALIFORNIA
By: /s/
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Title:
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S-5
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▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇, N.A.
By: /s/
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Title:
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S-6
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TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS..................................................... 1
SECTION 2. ISSUE AND SALE OF WARRANTS...................................... 2
2.01 Sale of Warrants......................................... 2
2.02 Allocated Purchase Price................................. 2
SECTION 3. REPRESENTATIONS AND WARRANTIES
OF THE PURCHASERS............................................... 2
3.01 Authority................................................. 3
3.02 Investment................................................ 3
3.03 Brokers and Finders....................................... 3
SECTION 4. REPRESENTATIONS AND WARRANTIES
OF THE COMPANY.................................................. 3
4.01 Organization.............................................. 3
4.02 Capitalization............................................ 3
4.03 Valid Issuance of Warrants................................ 4
4.04 Authority................................................. 4
4.05 No Conflict............................................... 5
4.06 Litigation................................................ 5
4.07 Compliance With Laws...................................... 5
4.08 Brokers and Finders....................................... 5
4.09 Securities Law Compliance................................. 5
4.10 Transfer Taxes............................................ 5
4.11 Full Disclosure........................................... 6
SECTION 5. MISCELLANEOUS................................................... 6
5.01 Expenses.................................................. 6
5.02 Notices................................................... 6
5.03 Survival.................................................. 7
5.04 Amendment................................................. 7
5.05 Successors and Assigns.................................... 7
5.06 Severability.............................................. 7
5.07 Captions.................................................. 7
5.08 Governing Law............................................. 7
5.09 Waiver of Jury Trial...................................... 7
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5.10 Entire Agreement.......................................... 7
5.11 Attorneys' Fee............................................ 8
5.12 Counterparts.............................................. 8
Schedule A -- Schedule of 5% Holders of Capital Stock
Schedule B -- Schedule of Outstanding Convertible
Securities and Option Rights and Shares Issuable
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WARRANT PURCHASE AGREEMENT
dated as of May 29, 1998,
by and between
StorMedia Incorporated
and
CIBC [Asia] Ltd.,
Banque Nationale de Paris, Singapore Branch,
Union Bank of California N.A.,
Sanwa Bank California
and
Fleet National Bank
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