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EXHIBIT 2.3
COMPANY STOCK OPTION AGREEMENT
THIS COMPANY STOCK OPTION AGREEMENT (this "AGREEMENT") is made and
entered into as of April 26, 2000, among Komag, Incorporated, a Delaware
corporation ("PARENT"), and HMT Technology Corp., a Delaware corporation (the
"COMPANY"). Capitalized terms used but not otherwise defined herein will have
the meanings ascribed to them in the Merger Agreement (as defined below).
RECITALS
A. The Company, Merger Sub (as defined below) and Parent have entered
into an Agreement and Plan of Reorganization (the "MERGER AGREEMENT") which
provides for the merger (the "MERGER") of a wholly-owned subsidiary of Parent
("MERGER SUB") with and into the Company. Pursuant to the Merger, all
outstanding capital stock of the Company will be converted into Common Stock of
Parent.
B. As a condition to Parent's willingness to enter into the Merger
Agreement, Parent has requested that the Company agree, and the Company has so
agreed, to grant to Parent an option to acquire shares of the Company's Common
Stock, par value $.001 per share (the "COMPANY SHARES"), upon the terms and
subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein and in the Merger Agreement and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:
1. Grant of Option. The Company hereby grants to Parent an irrevocable
option (the "OPTION") to acquire up to 9,193,051 Company Shares (the "OPTION
SHARES"), in the manner set forth below by paying cash at a price of $2.7566 per
share (the "EXERCISE PRICE").
2. Exercise of Option; Maximum Proceeds.
(a) The Option may be exercised by Parent, in whole or in part,
at any time or from time to time (i) if the Merger Agreement is terminated
pursuant to 7.1(h) thereof or (ii) immediately prior to the occurrence of any
event causing the Company Termination Fee to become payable pursuant to Section
7.3(b)(ii) thereof (any of the events being referred to herein as an "EXERCISE
EVENT"). In the event Parent wishes to exercise the Option, Parent will deliver
to the Company a written notice (each an "EXERCISE NOTICE") specifying the total
number of Option Shares it wishes to acquire. Each closing of a purchase of
Option Shares (a "CLOSING") will occur on a date and at a time prior to the
termination of the Option designated by Parent in an Exercise Notice delivered
at least two (2) business days prior to the date of such Closing, which Closing
will be held at the principal offices of the Company.
(b) The Option will terminate upon the earliest of (i) the
Effective Time, (ii) twelve (12) months following the date on which the Merger
Agreement is terminated pursuant to Section 7.1(b) or 7.1(d) thereof, if no
event causing the Termination Fee to become payable pursuant
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to Section 7.3(b)(ii) of the Merger Agreement has occurred, (iii) six (6) months
following the date on which the Merger Agreement is terminated pursuant to
Section 7.1(h) thereof, (iv) in the event the Merger Agreement has been
terminated pursuant to Section 7.1(b) or 7.1(d) thereof and the Termination Fee
became payable pursuant to Section 7.3(b)(ii) thereof, six (6) months after
payment of the Termination Fee; and (v) the date on which the Merger Agreement
is otherwise terminated; provided, however, that if the Option cannot be
exercised by reason of any applicable government order, judgment or decree or
because the waiting period related to the issuance of the Option Shares under
the HSR Act will not have expired or been terminated, then the Option will not
terminate until the tenth (10th) business day after such impediment to exercise
will have been removed or will have become final and not subject to appeal.
3. Conditions to Closing. The obligation of the Company to issue Option
Shares to Parent hereunder is subject to the conditions that (A) any waiting
period under the HSR Act applicable to the issuance of the Option Shares
hereunder will have expired or been terminated; (B) all material consents,
approvals, orders or authorizations of, or registrations, declarations or
filings with, any Federal, state or local administrative agency or commission or
other Federal state or local governmental authority or instrumentality, if any,
required in connection with the issuance of the Option Shares hereunder will
have been obtained or made, as the case may be; and (C) no preliminary or
permanent injunction or other order by any court of competent jurisdiction
prohibiting or otherwise restraining such issuance will be in effect. It is
understood and agreed that at any time during which the Option is exercisable,
the parties will use their respective commercially reasonable efforts to satisfy
all conditions to Closing, so that a Closing may take place as promptly as
practicable.
4. Closing. At any Closing, (A) the Company will deliver to Parent a
single certificate in definitive form representing the number of Company Shares
designated by Parent in its Exercise Notice, such certificate to be registered
in the name of Parent and to bear the legend set forth in Section 11 hereof,
against delivery of (B) payment by Parent to the Company of the aggregate
purchase price for the Company Shares so designated and being purchased by
delivery of a certified check or bank check.
5. Representations and Warranties.
(a) By the Company. The Company represents and warrants to Parent
that (A) the Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has the corporate
power and authority to enter into this Agreement and to carry out its
obligations hereunder; (B) the execution and delivery of this Agreement by the
Company and consummation by the Company of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of the
Company and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or any of the transactions contemplated
hereby; (C) this Agreement has been duly executed and delivered by the Company
and constitutes a legal, valid and binding obligation of the Company and,
assuming this Agreement constitutes a legal, valid and binding obligation of
Parent, is enforceable against the Company in accordance with its terms; (D)
except for any filings required under the HSR Act, the Company has taken all
necessary corporate and other action to authorize and reserve for issuance and
to permit it to issue upon exercise of the Option, and at all times from the
date hereof until the
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termination of the Option will have reserved for issuance, a sufficient number
of unissued Company Shares for Parent to exercise the Option in full and will
take all necessary corporate or other action to authorize and reserve for
issuance all additional Company Shares or other securities which may be issuable
pursuant to Section 8(a) upon exercise of the Option, all of which, upon their
issuance and delivery in accordance with the terms of this Agreement, will be
validly issued, fully paid and nonassessable; (E) upon delivery of the Company
Shares and any other securities to Parent upon exercise of the Option, Parent
will acquire such Company Shares or other securities free and clear of all
material claims, liens, charges, encumbrances and security interests of any kind
or nature whatsoever, excluding those imposed by Parent; (F) the execution and
delivery of this Agreement by the Company do not, and the performance of this
Agreement by the Company will not, (i) conflict with or violate the Certificate
of Incorporation or Bylaws or equivalent organizational documents of the Company
or any of its subsidiaries, (ii) conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to the Company or any of its
subsidiaries or by which its or any of their respective properties is bound or
affected or (iii) result in any breach of or constitute a default (or an event
that with notice or lapse of time or both would become a default) under, or
impair the Company's or any of its subsidiaries' rights or alter the rights or
obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of the
Company or any of its subsidiaries pursuant to, any material note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries or its or any of
their respective properties are bound or affected; and (G) the execution and
delivery of this Agreement by the Company does not, and the performance of this
Agreement by the Company will not, require any consent, approval, authorization
or permit of, or filing with, or notification to, any Governmental Entity except
pursuant to the HSR Act.
(b) By Parent. The Option and any Option Shares which Parent may
hereafter acquire are being acquired by Parent for its own account, for
investment and not with a view to the distribution or resale thereof, except in
compliance with the Securities Act of 1933, as amended, and applicable state
securities and blue sky laws. Parent has sufficient knowledge and experience in
investing in securities similar to the Option and to the Option Shares so as to
be able to evaluate the risks and merits of any investment in the Option and in
the Option Shares and is able financially to bear the risks thereof, including a
complete loss of its investment.
6. Parent Put. At the request of and upon notice by Parent (the "PUT
NOTICE"), at any time during the period during which the Option is exercisable
pursuant to Section 2 (the "PURCHASE PERIOD"), the Company (or any successor
entity thereof) will purchase from Parent the Option, to the extent not
previously exercised, at the price set forth in subparagraph (i) below (as
limited by Section 10, below), and the Option Shares, if any, acquired by Parent
pursuant thereto, at the price set forth in subparagraph (ii) below (as limited
by Section 10, below):
(i) The amount, if any, by which the "MARKET/TENDER OFFER
PRICE" for the Company Shares as of the date Parent gives notice of its intent
to exercise its rights under this Section 6(a) exceeds the Exercise Price,
multiplied by the number of Company Shares purchasable pursuant to the Option.
"Market/Tender Offer Price" shall mean the highest of: (i) the highest purchase
price per share paid after the date of this Agreement and on or prior to the
delivery of the
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Put Notice pursuant to any tender or exchange offer made for shares of Company
Common Stock, (ii) the highest price per share paid or to be paid by any Person
for shares of Company Common Stock pursuant to any agreement contemplating a
merger or other business combination transaction involving the Company that was
entered into after the date of this Agreement and on or prior to the delivery of
the Put Notice or (iii) the average of the highest bid prices per share of
Company Common Stock as quoted on the Nasdaq National Market (or if Company
Common Stock is not quoted on the Nasdaq National Market, the highest bid price
per share of Company Common Stock as quoted on any other market comprising a
part of the Nasdaq Stock Market or, if the shares of Company Common Stock are
not quoted thereon, on the principal trading market (as defined in Regulation M
under the Exchange Act) on which such shares are traded as reported by a
recognized source) during the 20-day period ending on the date of delivery of
the Put Notice. For purposes of determining the highest price offered pursuant
to any Company Acquisition Proposal which involves consideration other than
cash, the value of such consideration will be equal to the higher of (x) if
securities of the same class of the proponent as such consideration are traded
on any national securities exchange or by any registered securities association,
a value based on the closing sale price or asked price for such securities on
their principal trading market on such date and (y) the value ascribed to such
consideration by the proponent of such Company Acquisition Proposal, or if no
such value is ascribed, a value determined in good faith by the Board of
Directors of the Company.
(ii) The Exercise Price paid by Parent for the Company
Shares acquired pursuant to the Option plus the amount by which the
Market/Tender Offer Price exceeds the Exercise Price multiplied by the number of
Company Shares so purchased.
7. Payment and Redelivery of Option or Shares. In the event Parent
exercises its rights under Section 6, the Company will, within five (5) business
days after Parent delivers notice pursuant to Section 6, pay the required amount
to Parent in immediately available funds and Parent will surrender to the
Company the Option and the certificates evidencing the Company Shares purchased
by Parent pursuant thereto.
8. Registration Rights.
(a) Following the termination of the Merger Agreement and until
such time as all Option Shares issued to Parent may be sold pursuant to Rule
144(k) of the Securities Act of 1933 (the "REGISTRATION PERIOD"), Parent
(sometimes referred to herein as the "HOLDER") may by written notice (a
"REGISTRATION NOTICE") to the Company (the "REGISTRANT") request the Registrant
to register under the Securities Act all or any part of the shares acquired by
the Holder pursuant to this Agreement (such shares requested to be registered,
the "REGISTRABLE SECURITIES") in order to permit the sale or other disposition
of any or all shares of the Registrable Securities that have been acquired by or
are issuable to Holder upon exercise of the Option in accordance with the
intended method of sale or other disposition stated by Holder, including a
"shelf" registration statement under Rule 415 under the Securities Act or any
successor provision. Holder agrees to cause, and to cause any underwriters of
any sale or other disposition to cause, any sale or other disposition pursuant
to such registration statement to be effected on a widely distributed basis so
that upon consummation thereof no purchaser or transferee will own beneficially
more than 5.0% of the then-outstanding voting power of Registrant. Upon a
request for registration, the Registrant will have the option exercisable
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by written notice delivered to the Holder within ten (10) business days after
the receipt of the Registration Notice, irrevocably to agree to purchase all or
any part of the Registrable Securities for cash at a price (the "OPTION PRICE"
equal to the product of (i) the number of Registrable Securities so purchased
and (ii) the per share average of the closing sale prices of the Registrant's
Common Stock on Nasdaq for the ten (10) trading days immediately preceding the
date of the Registration Notice. Any such purchase of Registrable Securities by
the Registrant hereunder will take place at a closing to be held at the
principal executive offices of the Registrant or its counsel at any reasonable
date and time designated by the Registrant in such notice within ten (10)
business days after delivery of such notice. The payment for the shares to be
purchased will be made by delivery at the time of such closing of the Option
Price in immediately available funds.
(b) The Registrant will use all reasonable efforts to effect, as
promptly as practicable, the registration under the Securities Act of the
unpurchased Registrable Securities requested to be registered in the
Registration Notice and to keep such registration statement effective for such
period not in excess of 120 calendar days from the day such registration
statement first becomes effective as may be reasonably necessary to effect such
sale or other disposition; provided, however, that the Holder will not be
entitled to more than an aggregate of two (2) effective registration statements
hereunder. The obligations of Registrant hereunder to file a registration
statement and to maintain its effectiveness may be suspended for up to 90
calendar days in the aggregate if the Board of Directors of Registrant shall
have determined that the filing of such registration statement or the
maintenance of its effectiveness would require premature disclosure of material
nonpublic information that would materially and adversely affect Registrant or
otherwise interfere with or adversely affect any pending or proposed offering of
securities of Registrant or any other material transaction involving Registrant.
The Registrant will use all reasonable efforts to cause any Registrable
Securities registered pursuant to this Section 8 to be qualified for sale under
the securities or blue sky laws of such jurisdictions as the Holder may
reasonably request and will continue such registration or qualification in
effect in such jurisdictions; provided, however, that the Registrant will not be
required to qualify to do business in, or consent to general service of process
in, any jurisdiction by reason of this provision. If during the Registration
Period, Registrant effects a registration under the Securities Act of the
Company Common Stock for its own account or for any other stockholders of
Registrant (other than on Form S-4 or Form S-8, or any successor form), it will,
in addition to the Registrant's other obligations under this Section 8, allow
Holder the right to participate in such registration by selling its Registrable
Securities; provided that the Holder participates in the underwriting; provided,
however, that, if the managing underwriter of such offering advises the
Registrant in writing that in its opinion the number of shares of Company Stock
requested to be included therein by Holder pro rata (based on the number of
shares intended to be included therein) with the shares intended to be included
therein by Persons other than the Registrant. In connection with any offering,
sale and delivery of Company Common Stock pursuant to a registration effected
pursuant to this Section 8, the Registrant and the Holder shall provide each
other and each underwriter of the offering with customary representations,
warranties and covenants, including covenants of indemnification and
contribution.
(c) The registration rights set forth in this Section 8 are
subject to the condition that the Holder will provide the Registrant with such
information with respect to the Holder's Registrable Securities, the plan for
distribution thereof, and such other information with respect to the Holder as,
in the reasonable judgment of counsel for the Registrant, is necessary to enable
the
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Registrant to include in a registration statement all facts required to be
disclosed with respect to a registration thereunder.
(d) A registration effected under this Section 8 will be effected
at the Registrant's expense, except for underwriting discounts and commissions
and the fees and expenses of counsel to the Holder, and the Registrant will
provide to the underwriters such documentation (including certificates, opinions
of counsel and "comfort" letters from auditors) as are customary in connection
with underwritten public offerings and as such underwriters may reasonably
require. In connection with any registration, the Holder and the Registrant
agree to enter into an underwriting agreement reasonably acceptable to each such
party, in form and substance customary for transactions of this type with the
underwriters participating in such offering.
(e) Indemnification.
(i) The Registrant will indemnify the Holder, each of its
directors and officers and each person who controls the Holder within the
meaning of Section 15 of the Securities Act, and each underwriter of the
Registrant's securities, with respect to any registration, qualification or
compliance which has been effected pursuant to this Agreement, against all
expenses, claims, losses, damages or liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were made,
not misleading, or any violation by the Registrant of any rule or regulation
promulgated under the Securities Act applicable to the Registrant in connection
with any such registration, qualification or compliance, and the Registrant will
reimburse the Holder and, each of its directors and officers and each person who
controls the Holder within the meaning of Section 15 of the Securities Act, and
each underwriter for any legal and any other expenses reasonably incurred in
connection with investigating, preparing or defending any such claim, loss,
damage, liability or action; provided, that the Registrant will not be liable in
any such case to the extent that any such claim, loss, damage, liability or
expense arises out of or is based on any untrue statement or omission or alleged
untrue statement or omission, made in reliance upon and in conformity with
written information furnished to the Registrant by such Holder or director or
officer or controlling person or underwriter seeking indemnification.
(ii) The Holder will indemnify the Registrant, each of its
directors and officers and each underwriter of the Registrant's securities
covered by such registration statement and each person who controls the
Registrant within the meaning of Section 15 of the Securities Act, against all
expenses, claims, losses, damages and liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any such
registration statement, prospectus, offering circular or other document, or any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
any violation by the Holder of any rule or regulation promulgated under the
Securities Act applicable to the Holder in connection with any such
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registration, qualification or compliance, and will reimburse the Registrant,
such directors, officers or control persons or underwriters for any legal or any
other expenses reasonably incurred in connection with investigating, preparing
or defending any such claim, loss, damage, liability or action, in each case to
the extent, but only to the extent, that such untrue statement (or alleged
untrue statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon and
in conformity with written information furnished to the Registrant by the Holder
for use therein; provided, that in no event will any indemnity under this
Section 8(e) exceed the net proceeds of the offering received by the Holder.
(iii) Each party entitled to indemnification under this
Section 8(e) (the "INDEMNIFIED PARTY") will give notice to the party required to
provide indemnification (the "INDEMNIFYING PARTY") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and will permit the Indemnifying Party to assume the defense of any such
claim or any litigation resulting therefrom, provided, that counsel for the
Indemnifying Party, who will conduct the defense of such claim or litigation,
will be approved by the Indemnified Party (whose approval will not unreasonably
be withheld), and the Indemnified Party may participate in such defense at such
party's expense; provided, however, that the Indemnifying Party will pay such
expense if representation of the Indemnified Party by counsel retained by the
Indemnifying Party would be inappropriate due to actual or potential differing
interests between the Indemnified Party and any other party represented by such
counsel in such proceeding, and provided further, however, that the failure of
any Indemnified Party to give notice as provided herein will not relieve the
Indemnifying Party of its obligations under this Section 8(e) unless the failure
to give such notice is materially prejudicial to an Indemnifying Party's ability
to defend such action. No Indemnifying Party, in the defense of any such claim
or litigation will, except with the consent of each Indemnified Party, consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation. No Indemnifying Party will be required to indemnify any Indemnified
Party with respect to any settlement entered into without such Indemnifying
Party's prior consent (which will not be unreasonably withheld).
9. Adjustment Upon Changes in Capitalization.
(a) In the event of any change in the Company Shares by reason of
stock dividends, stock splits, reverse stock splits, mergers (other than the
Merger), recapitalizations, combinations, exchanges of shares and the like, the
type and number of shares or securities subject to the Option and the Exercise
Price will be adjusted appropriately, and proper provision will be made in the
agreements governing such transaction so that Parent will receive, upon exercise
of the Option, the number and class of shares or other securities or property
that Parent would have received in respect of the Company Shares if the Option
had been exercised immediately prior to such event or the record date therefor,
as applicable.
(b) Without limiting the parties' relative rights and obligations
under the Merger Agreement, if the number of outstanding shares of the Company
Common Stock increases or decreases after the date of this Agreement (other than
pursuant to an event described in Section 9(a)), the number of shares of the
Company Common Stock subject to the Option (including
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those Option Shares which may have already been exercised) will be adjusted so
that it equals 19.99% of the number of shares of the Company Common Stock then
issued and outstanding, without giving effect to any Option Shares.
10. Profit Limitation.
(a) Notwithstanding any other provision in this Agreement or the
Reorganization Agreement, in no event shall Parent's Total Profit (as defined
below) exceed $6,000,000 (the "Maximum Profit") and, if Parent's Total Profit
otherwise would exceed the Maximum Profit, Parent, at its sole discretion, shall
either (i) reduce the number of Option Shares subject to the Option, (ii)
deliver to the Company for cancellation Option Shares (or other securities into
which such Option Shares are converted or exchanged) previously purchased by
Parent, (iii) pay cash to the Company, or (iv) any combination of the foregoing,
so that Parent's actually realized Total Profit shall not exceed the Maximum
Profit after taking into account the foregoing actions.
(b) For purposes of this Agreement, "Total Profit" shall mean:
(i) the aggregate amount (before taxes) of (A) any excess of (x) the net cash
amounts or fair market value of any property received by Parent pursuant to a
sale of Option Shares (or securities into which such shares are converted or
exchanged) over (y) the Parent's aggregate purchase price for such Option Shares
(or other securities), plus (B) any amounts received by Parent pursuant on the
repurchase of the Option by the Company pursuant to Section 6, plus (C) any
termination fee paid in cash by the Company and received by Parent pursuant to
the Reorganization Agreement, minus (ii) the amounts of any cash previously paid
by Parent to the Company pursuant to this Section 10 plus the value of the
Option Shares (or other securities) previously delivered by Parent to the
Company for cancellation pursuant to this Section 10.
(c) For purposes of Section 10(a) and clause (ii) of Section
10(b), the value of any Option Shares delivered by Parent to the Company shall
be the Market/Tender Offer Price of such Option Shares.
11. Restrictive Legends. Each certificate representing Option Shares
issued to Parent hereunder will include a legend in substantially the following
form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR
SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE. SUCH SECURITIES ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS
ON TRANSFER AS SET FORTH IN THE STOCK OPTION AGREEMENT DATED AS OF APRIL
25, 2000, A COPY OF WHICH MAY BE OBTAINED FROM THE ISSUER.
It is understood and agreed that (i) the reference to restrictions
arising under the Securities Act in the above legend will be removed by delivery
of substitute certificate(s) without such reference if such Option Shares have
been registered pursuant to the Securities Act, such Option Shares have been
sold in reliance on and in accordance with Rule 144 under the Securities Act or
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Holder has delivered to Registrant a copy of a letter from the staff of the SEC,
or an opinion of counsel in form and substance reasonably satisfactory to
Registrant and its counsel, to the effect that such legend is not required for
purposes of the Securities Act and (ii) the reference to restrictions pursuant
to this Agreement in the above legend will be removed by delivery of substitute
certificate(s) without such reference if the Option Shares evidenced by
certificate(s) containing such reference have been sold or transferred in
compliance with the provisions of this Agreement under circumstances that do not
require the retention of such reference.
12. Listing and HSR Filing. The Company, upon the request of Parent,
will promptly file an application to list the Company Shares to be acquired upon
exercise of the Option for quotation on Nasdaq and will use its best efforts to
obtain approval of such listing as soon as practicable. Promptly after the date
hereof, each of the parties hereto will promptly file with the Federal Trade
Commission and the Antitrust Division of the United States Department of Justice
all required premerger notification and report forms and other documents and
exhibits required to be filed under the HSR Act to permit the acquisition of the
Company Shares subject to the Option at the earliest possible date.
13. Binding Effect. This Agreement will be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. Nothing contained in this Agreement, express or implied, is intended to
confer upon any person other than the parties hereto and their respective
successors and permitted assigns any rights or remedies of any nature whatsoever
by reason of this Agreement. Any shares sold by a party in compliance with the
provisions of Section 8 will, upon consummation of such sale, be free of the
restrictions imposed with respect to such shares by this Agreement and any
transferee of such shares will not be entitled to the rights of such party.
Certificates representing shares sold in a registered public offering pursuant
to Section 8 will not be required to bear the legend set forth in Section 11.
14. Specific Performance. The parties hereto recognize and agree that if
for any reason any of the provisions of this Agreement are not performed in
accordance with their specific terms or are otherwise breached, immediate and
irreparable harm or injury would be caused for which money damages would not be
an adequate remedy. Accordingly, each party hereto agrees that in addition to
other remedies the other party hereto will be entitled to an injunction
restraining any violation or threatened violation of the provisions of this
Agreement or the right to enforce any of the covenants or agreements set forth
herein by specific performance. In the event that any action will be brought in
equity to enforce the provisions of the Agreement, neither party hereto will
allege, and each party hereto hereby waives the defense, that there is an
adequate remedy at law.
15. Entire Agreement. This Agreement and the Merger Agreement (including
the appendices thereto) constitute the entire agreement between the parties
hereto with respect to the subject matter hereof and supersede all other prior
agreements and understandings, both written and oral, between the parties hereto
with respect to the subject matter hereof.
16. Further Assurances. Each party hereto will execute and deliver all
such further documents and instruments and take all such further action as may
be necessary in order to consummate the transactions contemplated hereby.
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17. Validity. The invalidity or unenforceability of any provision of
this Agreement will not affect the validity or enforceability of the other
provisions of this Agreement, which will remain in full force and effect. In the
event any Governmental Entity of competent jurisdiction holds any provision of
this Agreement to be null, void or unenforceable, the parties hereto will
negotiate in good faith and will execute and deliver an amendment to this
Agreement in order, as nearly as possible, to effectuate, to the extent
permitted by law, the intent of the parties hereto with respect to such
provision.
18. Notices. All notices and other communications hereunder will be in
writing and will be deemed given if delivered personally or by commercial
delivery service, or sent via telecopy (receipt confirmed) to the parties at the
following addresses or telecopy numbers (or at such other address or telecopy
numbers for a party as will be specified by like notice):
(a) if to Parent, to:
Komag, Incorporated
1710 Automation Parkway
San Jose, CA 95131
Attention: Chief Executive Officer
Facsimile: (408) 944-9540
with copies to:
Wilson, Sonsini, Goodrich & Rosati,
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304-1050
Attention: Alan K. Austin, Esq./Kathleen B. Bloch, Esq.
Facsimile: (650) 461-5375
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<PAGE> 11
and to:
Wilson Sonsini Goodrich & Rosati,
Professional Corporation
One Market Street
Spear Street Tower, Suite 1600
San Francisco, California 94105
Attention: Steve L. Camahort, Esq.
Facsimile: (415) 947-2099
(b) if to the Company to:
HMT Technology Corp.
1055 Page Avenue
Fremont, CA 94538
Attention: Peter S. Norris
Facsimile: (510) 623-9570
with a copy to:
Cooley Godward LLP
3000 El Camino Real
Palo Alto, CA 94306
Attention: James C. Kitch, Esq.
Facsimile: (650) 849-7004
19. Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of Delaware applicable to agreements made
and to be performed entirely within such State.
20. Expenses. Except as otherwise expressly provided herein or in the
Merger Agreement, all costs and expenses incurred in connection with the
transactions contemplated by this Agreement will be paid by the party incurring
such expenses.
21. Attorney's Fees. In any action at law or suit in equity to enforce
this Option Agreement or the rights of any of the parties hereunder, the
prevailing party in such action or suit shall be entitled to receive a
reasonable sum for its attorney's fees and all other reasonable costs and
expenses incurred in such action or suit.
22. Amendments; Waiver. This Agreement may be amended by the parties
hereto and the terms and conditions hereof may be waived only by an instrument
in writing signed on behalf of each of the parties hereto, or, in the case of a
waiver, by an instrument signed on behalf of the party waiving compliance.
23. Assignment. Neither of the parties hereto may sell, transfer, assign
or otherwise dispose of any of its rights or obligations under this Agreement or
the Option created hereunder to
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<PAGE> 12
any other person, without the express written consent of the other party, except
that the rights and obligations hereunder will inure to the benefit of and be
binding upon any successor of a party hereto.
24. Counterparts. This Agreement may be executed in counterparts, each
of which will be deemed to be an original, but both of which, taken together,
will constitute one and the same instrument.
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<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers as of the date first above
written.
KOMAG, INCORPORATED
By: /s/ THIAN H. TAN
-------------------------------------
Name: Thian H. Tan
-----------------------------------
Title: President and CEO
----------------------------------
HMT TECHNOLOGY CORP.
By: /s/ RONALD J. BUSCHUR
-------------------------------------
Name: Ronald J. Buschur
-----------------------------------
Title: President and COO
----------------------------------
[SIGNATURE PAGE TO COMPANY STOCK OPTION AGREEMENT]
