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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 13, 1998
--------------------------
STORMEDIA INCORPORATED
(Exact name of registrant as specified in Charter)
<TABLE>
<S> <C> <C>
DELAWARE 0-25796 77-0373062
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(State or other jurisdiction of (Commission File Number) (IRS Employer Identification
incorporation) Number)
</TABLE>
385 REED STREET
SANTA CLARA, CA 95050-3118
(Address of Principal Executive Offices)
(408) 327-8400
(Registrant's Telephone Number, Including Area Code)
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ITEM 2 ACQUISITION OR DISPOSITION ASSETS.
Pursuant to an Agreement and Plan of Reorganization dated December 15,
1997 by and among the Registrant, StorMedia Acquisition Corporation, a Delaware
corporation and an indirect, wholly-owned subsidiary of Registrant, Akashic
International, Inc., a California corporation ("AII") and Akashic Memories
Corporation, a California corporation ("Akashic"), Registrant acquired Akashic
by means of a merger of StorMedia Acquisition Corporation into Akashic, with
Akashic remaining as the surviving corporation in the Merger. Prior to the
Merger, Registrant assigned its duties, obligations and interest under the
Agreement and Plan of Reorganization to StorMedia Foreign Sales Corporation, its
wholly owned U.S. Virgin Islands subsidiary ("FSC"). FSC owned all of the
outstanding shares of StorMedia Acquisition Corporation and now owns all of the
outstanding shares of Akashic. The Merger became effective December 31, 1997,
immediately upon the filing of a Certificate of Merger with the Secretary of
State of the State of California. $10 million was paid for the capital stock
of Akashic from working capital. As part of the transaction, the Registrant
delivered 2 million shares of its Class A Common Stock to acquire certain
intellectual property, patents and applications pending from Kubota
Corporation, a Japanese corporation and the indirect parent of Akashic
("Kubota") under the terms of the Patent Purchase Agreement dated December 15,
1997 and received certain indemnifications from Kubota pursuant to the Kubota
Guaranty and Indemnification dated December 15, 1997.
ITEM 7 FINANCIAL STATEMENTS AND EXHIBITS.
The following financial statements and exhibits are filed as part of
this Report, where indicated.
(a) Financial statements of business acquired, prepared pursuant to
Rule 3-05 of Regulation S-X:
Financial statements are unavailable as of the date of this
filing. Such information will be filed on or before the sixtieth
day following the filing date of this Current Report on Form 8-
K.
(b) Pro forma financial information required pursuant to Article 11
of Regulation S-X:
The pro forma financial information is unavailable as of the
date of this filing. Such information will be filed on or before
the sixtieth day following the filing date of this Current
Report on Form 8-K.
(c) Exhibits in accordance with Item 601 of Regulation S-K:
Exhibit No. Description
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2.1 Agreement and Plan of Reorganization, dated as of December
15, 1997, among the Registrant, AII, Akashic, and
StorMedia Acquisition Corporation.
2.2 Form of Agreement of Merger between Akashic and StorMedia
Acquisition Corporation.
99.1 Press release dated January 5, 1998.
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99.2 Patent Purchase Agreement dated as of December 15, 1997
between Kubota, Registrant and StorMedia International
Ltd.
99.3 Kubota Guaranty and Indemnification dated as of December
15, 1997 between Kubota and Registrant.
99.4 Assignment from Registrant to FSC dated December 31, 1997.
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INDEX TO EXHIBITS
EXHIBIT DESCRIPTION
NUMBER -----------
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2.1 Agreement and Plan of Reorganization, dated as of December 15,
1997, among the Registrant, AII, Akashic, and StorMedia
Acquisition Corporation.
2.2 Form of Agreement of Merger between Akashic and StorMedia
Acquisition Corporation.
99.1 Press release dated January 5, 1998.
99.2 Patent Purchase Agreement dated as of December 15, 1997 between
Kubota, Registrant and StorMedia International Ltd.
99.3 Kubota Guaranty and Indemnification dated as of December 15,
1997 between Kubota and Registrant.
99.4 Assignment from Registrant to FSC dated December 31, 1997
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
STORMEDIA INCORPORATED
Dated: January 13, 1998 By: /s/ Judith M. O'Brien
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Judith M. O'Brien
Secretary
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EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION is entered into on December
15, 1997, effective as of the 28th day of November 1997, by and among Akashic
International Inc., a California corporation and a indirect wholly-owned
subsidiary of Kubota Corporation ("AII"), Akashic Memories Corporation, a
California corporation and a subsidiary of AII ("Akashic"), StorMedia
Incorporated, a Delaware corporation ("Buyer"), and StorMedia Acquisition
Corporation, a Delaware corporation and a wholly-owned subsidiary of Buyer
("Sub").
RECITALS
WHEREAS, Akashic, (a) is the owner and operator of a business consisting
of the design, development, manufacture, sale, marketing and distribution of
thin film media and substrates therefore which business has been operated at
facilities located in California and in Malaysia (the "Business") and (b) owns
the assets that are used in the Business.
WHEREAS, Buyer and AII agree that time is of the essence in the closing
of the transactions contemplated in this Agreement.
WHEREAS, AII has sought to sell the Business "as is" and to do so by
selling Akashic and Buyer understands and acknowledges that it is acquiring
Akashic on such basis.
WHEREAS, The Boards of Directors of Buyer, Sub, AII and Akashic believe
it is in the best interests of their respective companies and the shareholders
of their respective companies that Buyer acquire Akashic through a statutory
merger of Sub with and into Akashic (the "Merger") and, in furtherance thereof,
have approved the Merger.
WHEREAS, Pursuant to the Merger, among other things, all of the
outstanding shares of Akashic capital stock ("Akashic Capital Stock") shall be
converted into cash, at the rates set forth herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants
set forth in this Agreement, the parties agree as follows:
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ARTICLE 1
THE MERGER
1.1 THE MERGER. At the Effective Time (as defined in Section 1.2)
and subject to and upon the terms and conditions of this Agreement, the
Agreement of Merger attached hereto as Exhibit A (the "Agreement of Merger") and
the applicable provisions of the California Corporations Code ("California
Law"), Sub shall be merged with and into Akashic, the separate corporate
existence of Sub shall cease and Akashic shall continue as the surviving
corporation and a wholly owned subsidiary of Buyer. Akashic as the surviving
corporation after the Merger is hereinafter sometimes referred to as the
"Surviving Corporation."
1.2 CLOSING; EFFECTIVE TIME. The Closing will take place at the
offices of Wilson Sonsini Goodrich & Rosati at 650 Page Mill Road, Palo Alto, CA
on a date mutually agreed to by the parties which the parties shall use
reasonable efforts to cause to be prior to December 31, 1997 (the "Closing").
Each of the parties shall use their reasonable efforts to satisfy the closing
conditions set forth in Article 4 hereof and to consummate the transactions
contemplated hereby. In connection with the Closing, the parties hereto shall
cause the Merger to be consummated by filing the Agreement of Merger with the
Secretary of State of the State of California, in accordance with the relevant
provisions of California Law (the time of such filing being the "Effective
Time").
1.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement, the Agreement of Merger and the
applicable provisions of California Law. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the property, rights,
privileges, powers and franchises of Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of Sub shall become the
debts, liabilities and duties of the Surviving Corporation and Surviving
Corporation shall become a wholly owned subsidiary of Buyer.
1.4 ARTICLES OF INCORPORATION; BYLAWS.
(a) At the Effective Time, the Restated Articles of
Incorporation attached as Exhibit I to the Agreement of Merger shall be the
Articles of Incorporation of the Surviving Corporation until thereafter amended
as provided by California Law and such Articles of Incorporation.
(b) The Bylaws of Sub, as in effect immediately prior to the
Effective Time, shall be the Bylaws of the Surviving Corporation until
thereafter amended.
1.5 EFFECT ON CAPITAL STOCK. By virtue of the Merger and without any
action on the part of Buyer, Sub, Akashic or the holders of any of the following
securities:
(a) Capital Stock of Sub. All issued and outstanding shares
of capital stock of Sub shall be converted into one thousand shares of Common
Stock of the Surviving Corporation.
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Each stock certificate of Sub evidencing ownership of any such shares of Sub
shall evidence ownership of such shares of Common Stock of the Surviving
Corporation.
(b) Cancellation of Buyer Owned Stock. All shares of Akashic
Capital Stock that are owned directly or indirectly by any subsidiary of Akashic
and any shares of Akashic Capital Stock owned by Buyer, Sub or any other
affiliate of Buyer shall be canceled and no stock of Buyer or other
consideration shall be delivered in exchange therefor.
(c) Exchange of Akashic Capital Stock for Cash. Each issued
and outstanding share of Akashic Preferred Stock and Common Stock (other than
shares to be canceled pursuant to Section 1.5(b) and shares, if any, which shall
then or thereafter constitute "dissenting shares" within the meaning of Section
1300 of the California Corporation Code ("Dissenting Shares")) shall be
converted into the right to receive from Buyer in cash an amount per share such
that the aggregate amount paid for all shares of outstanding Akashic Capital
Stock is Ten Million U.S. Dollars ($10,000,000) (the "Aggregate Conversion
Price"), the per share price to be calculated as set forth in the Agreement of
Merger and in accordance with the liquidation preferences of each class and
series of such shares (the "Per Share Conversion Prices"). The Per Share
Conversion Prices shall be calculated immediately prior to the Effective Time of
the Merger based on the total number of shares outstanding and the relative
liquidation preferences of such shares at such time.
(d) Dissenters' Rights. If holders of Akashic Capital Stock
are entitled to dissenters' rights in connection with the Merger under Section
1300 of the California Corporation Code, any Dissenting Shares shall not be
converted into cash hereunder, but shall be converted into the right to receive
such consideration as may be determined to be due with respect to such
Dissenting Shares pursuant to the laws of the State of California.
(e) Akashic Stock Option Plans. At the Effective Time,
Akashic's 1996, Stock Option Plan (the "Option Plan") and all options to
purchase Akashic Common Stock then outstanding under the Option Plan shall be
terminated and canceled in accordance with the terms of the Option Plan. No
options, warrants or rights to acquire Akashic Capital Stock shall survive the
Merger.
1.6 SURRENDER OF CERTIFICATES.
(a) Exchange Agent. Wilson Sonsini Goodrich & Rosati shall
act as exchange agent (the "Exchange Agent") in the Merger.
(b) Buyer to Provide Cash. At the Effective Time, Buyer
shall make available to the Exchange Agent for exchange in accordance with this
Article I, Ten Million U.S. Dollars ($10,000,000).
(c) Exchange Procedures. At the Effective Time, the
Surviving Corporation shall cause to be mailed to each holder of record of a
certificate or certificates (the "Certificates") which immediately prior to the
Effective Time represented outstanding shares of Akashic Capital Stock,
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whose shares were converted into the right to receive cash pursuant to Section
1.5, (i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
receipt of the Certificates by the Exchange Agent, and shall be in such form and
have such other provisions as Buyer may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for cash. Upon surrender of a Certificate for cancellation to the Exchange Agent
or to such other agent or agents as may be appointed by Buyer, together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, the holder of such Certificate shall be entitled
to receive in exchange therefor the amount of cash payable based on the Per
Share Conversion Price of the class or series of the shares surrendered. Each
outstanding Certificate that, prior to the Effective Time, represented shares of
Akashic Capital Stock will be deemed from and after the Effective Time, for all
corporate purposes, to evidence only the right to receive, without interest
thereon, the amount of cash calculated based on the applicable Per Share
Conversion Price. All cash delivered upon surrender for exchange of shares of
Akashic Capital Stock in accordance with the terms hereof shall be deemed to
have been delivered in full satisfaction of all rights pertaining to such
shares.
1.7 TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any time
after the Effective Time, any further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving Corporation with
full right, title and possession to all assets, property, rights, privileges,
powers and franchises of Sub or Akashic, the officers and directors of Surviving
Corporation are fully authorized in the name of the respective corporations or
otherwise to take, and will take, all such lawful and necessary action, so long
as such action is not inconsistent with this Agreement.
1.8 DELIVERIES AT THE CLOSING. At the Closing, (i) the AII will
deliver to Buyer the various certificates, instruments, and documents referred
to in Section 4.1 below, and (ii) Buyer will deliver to AII the various
certificates, instruments, and documents referred to in Section 4.2 below.
ARTICLE 2
REPRESENTATIONS OF AII
AII and Akashic hereby represent to Buyer as follows:
2.1 ORGANIZATION. AII and Akashic are each corporations duly
organized, validly existing and in good standing under the laws of the
jurisdiction of their respective incorporation and each has all necessary
corporate power and authority to own and lease their respective properties and
assets and to carry on their respective businesses as now being conducted. Prior
to the Closing, Akashic shall deliver to Buyer a true and correct copy of its
Articles of Incorporation and Bylaws, as amended to date and shall not amend
such documents thereafter without the prior approval of Buyer.
2.2 AUTHORITY. AII and Akashic each have all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by each of the AII and Akashic and the consummation by each of the
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AII and Akashic of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of each of the AII and
Akashic. This Agreement has been duly executed and delivered by each of the AII
and Akashic and constitutes a valid and binding obligation of each of the AII
and Akashic, enforceable in accordance with its terms except as enforcement may
be limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally, and subject to rules of law
governing specific performance, injunctive relief and other equitable remedies.
Except for certain third party consents which shall be obtained prior to the
Closing, the execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated hereby and compliance with the
provisions hereof will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time or both) under, or given rise
to a right of termination, cancellation or acceleration of any obligation or
loss of a material benefit under, any provision of the charter documents of
Akashic or either of the AII or any loan or credit agreement, note, bond,
mortgage, indenture, license, lease or other agreement or instrument, permit,
concession, franchise, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Akashic or AII or any of them or the properties or
assets of Akashic.
2.3 GOVERNMENTAL APPROVALS. Subject to compliance with the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), no consent, approval, order or authorization of, or registration,
declaration or filing with any governmental authority is required by or with
respect to AII or Akashic in connection with the execution and delivery of this
Agreement by AII and Akashic or the consummation by AII and Akashic of the
transactions contemplated hereby.
2.4 COMPLIANCE WITH LAWS. Akashic has materially complied with, is
not in violation of, and has not received any notices of violation with respect
to, any federal, state or local statute, law or regulation with respect to the
operation of its business.
2.5 CAPITALIZATION. As of the date hereof, the authorized capital
stock of Akashic consists of 36,556,583 shares of Akashic Common Stock, par
value $0.001 per share, and 31,756,583 shares of Preferred Stock, consisting of
19,200,000 shares of Series A Preferred Stock, par value $0.79828 per share, and
12,556,583 shares of Series B Preferred Stock, par value $0.001 per share. As of
the date hereof, 23,335 shares of Akashic Common Stock were validly issued,
fully paid and outstanding, and 19,200,000 shares of Series A Preferred Stock
were issued and outstanding, and 3,546,187 shares of Akashic Common Stock were
reserved for issuance upon exercise of stock options outstanding as of such date
(the "Akashic Options") under the Option Plan. Between the date hereof and the
Closing, any loan from AII to Akashic will be converted into Preferred Stock as
follows: (i) The outstanding loan in the principal amount of $100,000,000 will
be converted into 12,556,583 shares of Series B Preferred Stock, and (ii) new
loans made or to be made between the date hereof and the date of Closing in the
aggregate principal amount of up to $135,000,000 will be converted into up to
13,500,000 shares of newly created Series C Preferred Stock. All outstanding
shares of Akashic Capital Stock are, and any shares of Akashic Capital Stock
are, and any shares of Akashic Common Stock issued upon exercise of any Akashic
Option will be, when issued pursuant to exercise of any Akashic Option, validly
issued, fully paid and non-assessable and not subject to any preemptive rights.
All Akashic Options not exercised prior to the Effective Time, by their terms
shall terminate and cease to represent the right to acquire Akashic Common Stock
effective as of the
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Effective Time. After the date hereof, Akashic shall not grant any options or
rights to acquire Akashic Common Stock, shall issue Common Stock only in
connection with the exercise of Akashic Options outstanding as of the date
hereof, and shall notify and coordinate with Buyer concerning the issuance of
any shares of Preferred Stock. Following the Effective Time, there will be no
outstanding options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights, or other contracts or commitments that could require
Akashic to issue, sell, or otherwise cause to become outstanding any of its
capital stock. There are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights with respect to Akashic.
There are no voting trusts, proxies, or other agreements or understandings with
respect to the voting of the Akashic Capital Stock.
2.6 FINANCIAL STATEMENTS. Prior to the Effective Time, AII has
delivered to Buyer the following financial statements (collectively the
"Financial Statements"): (i) audited consolidated balance sheets and statements
of income, changes in stockholders' equity, and cash flow as of and for the
fiscal years ended December 31, 1996, December 31, 1995 and December 31, 1994
for Akashic and its subsidiaries; and (ii) unaudited consolidated balance sheets
and statements of income, changes in stockholders' equity, and cash flow as of
and for the eleven (11) months ended November 30, 1997 (the "November Financial
Statements") for Akashic and its subsidiaries. The Financial Statements
(including the notes thereto) have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods covered thereby, present fairly the financial condition of Akashic and
its subsidiaries as of such dates and the results of operations of Akashic and
its subsidiaries for such periods, are correct and complete, and are consistent
with the books and records of Akashic and its subsidiaries (which books and
records are correct and complete); provided, however, that the November
Financial Statements are subject to normal year-end adjustments (which will not
be material individually or in the aggregate) and lack footnotes and other
presentation items. All material contingent liabilities of Akashic known to
Akashic are reflected in such Financial Statements.
2.7 DISCLOSURE. To the best of Akashic's knowledge, the materials
delivered to Buyer by AII and their representations disclose all material facts
about the business of Akashic and do not omit to state any material facts
necessary for an understanding of the material liabilities of Akashic.
2.8 ASSETS OF BUSINESS. To the best of Akashic's knowledge, Akashic
owns and has good title to all of the assets of the Business as described to
Buyer and there are no other assets, except the Itami IP (as defined in the
Patent Purchase Agreement between Kubota and Buyer of even date herewith (the
"Patent Purchase Agreement")), necessary to operate the Business as presently
conducted.
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ARTICLE 3
REPRESENTATIONS OF BUYER
Buyer represents to AII as follows:
3.1 ORGANIZATION. Buyer and Sub are each corporations duly
organized, validly existing and in good standing under the laws of the
jurisdiction of their respective incorporation and each has all necessary
corporate power and authority to own and lease all of its respective properties
and assets and to carry on its business as it is now being conducted.
3.2 AUTHORITY. Buyer and Sub have all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Buyer and
Sub and the consummation by Buyer and Sub of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Buyer and Sub. This Agreement has been duly executed and delivered by Buyer
and Sub and constitutes a valid and binding obligation of Buyer and Sub,
enforceable in accordance with its terms except as enforcement may be limited by
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights generally, and subject to rules of law governing specific
performance, injunctive relief and other equitable remedies. Except for certain
third party consents which shall be obtained prior to the Closing, the execution
and delivery of this Agreement will not, and the consummation of the
transactions contemplated hereby and compliance with the provisions hereof will
not, conflict with or result in any violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or loss of a material benefit
under, any provision of the charter documents of Buyer or Sub or any loan or
credit agreement, note, bond mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Buyer or Sub or its
properties or assets, which has not been waived.
3.3 GOVERNMENTAL APPROVALS. Subject to compliance with the HSR Act,
no consent, approval, order or authorization of, or registration, declaration or
filing with any governmental authority is required by or with respect to Buyer
or Sub in connection with the execution and delivery of this Agreement by Buyer
and Sub or the consummation by Buyer and Sub of the transactions contemplated
hereby.
ARTICLE 4
CONDITIONS TO CLOSING
4.1 CONDITIONS TO OBLIGATION OF BUYER. The obligation of Buyer to
consummate the transaction to be performed by it in connection herewith is
subject to the satisfaction of the following conditions:
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(a) Representations. The representations set forth in
Section 2 hereof shall be true and correct in all material respects as of the
Closing.
(b) Shareholder Approval. The Agreement and the Agreement of
Merger shall have been approved and adopted by the holders of the requisite
number of outstanding shares of Akashic Capital Stock in accordance with
Akashic's Articles of Incorporation and Bylaws and with the California Law.
(c) Patent Purchase Agreement. The transactions contemplated
by the Patent Purchase Agreement shall close simultaneously with the Effective
Time.
(d) Cancellation of Debt. Without creating taxable income to
Akashic, all long term debt and debentures of Akashic or its subsidiaries (other
than the loan from Western Digital Corporation) shall be extinguished, and Buyer
shall receive evidence satisfactory to Buyer that all such debt has been
extinguished. Notwithstanding the foregoing, Buyer acknowledges that (i)
Akashic, through its wholly owned subsidiary Akashic Kubota Technologies Sdn.
Bhd., a Malaysian corporation ("AKT") owes the aggregate principal amount of
U.S. $45,000,000 plus any accrued interest thereon through the Closing in the
approximate amount of U.S. $2,000,000 (the "Loan") to Sumitomo Bank Ltd., Sanwa
Bank Ltd., and Tokyo Mitsubishi Bank (the "Banks") and that such Loan is
guaranteed by AII's parent corporation, Kubota Corporation, a Japanese
corporation, ("Kubota") and (ii) that AII may not have received all government
approvals necessary to extinguish the Loan prior to the Closing. In the event
that such approvals have not been obtained prior to the Closing, the parties
agree that AII shall deposit with the Banks funds sufficient for repayment of
the Loans, along with irrevocable instructions that such funds will be used to
repay the Loan.
(e) Regulatory Approvals. All applicable regulatory
approvals, authorizations and consents shall have been obtained.
(f) Officer's Certificate. AII shall deliver a certificate
to Buyer executed by duly authorized officers certifying compliance with
subsections 4.1(a), (b), (d) and (e).
(g) Kubota Guaranty and Indemnification. Kubota and Buyer
shall have executed the Kubota Guaranty and Indemnification.
4.2 CONDITIONS TO OBLIGATIONS OF AII. The obligations of AII and
Akashic to consummate the transactions to be performed by them in connection
herewith is subject to the satisfaction of the following conditions:
(a) Purchase Price. Buyer shall deliver to the Exchange
Agent a check in the amount of Ten Million U.S. Dollars ($10,000,000).
(b) Representations. The representations of Buyer set forth
in Section 3 hereof shall be true and correct in all material respects as of the
Closing.
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(c) Shareholder Approval. The Agreement and the Agreement of
Merger shall have been approved and adopted by the holders of the requisite
number of outstanding shares of Sub's capital stock in accordance with Sub's
Articles of Incorporation and Bylaws and with the California Law.
(d) Patent Purchase Agreement. The transactions contemplated
by the Patent Purchase Agreement shall close simultaneously with the Effective
Time.
(e) Regulatory Approvals. All applicable regulatory
approvals, authorizations and consents shall have been obtained.
(f) Officer's Certificate. Buyer shall deliver a certificate
to AII executed by a duly authorized officer certifying compliance with
subsections 4.2(b), (c) and (e).
ARTICLE 5
COVENANTS
5.1 PREPARATION OF FINANCIAL STATEMENTS. AII shall cooperate with
Buyer in the preparation of audited financial statements for Akashic and its
subsidiaries for the year ended December 31, 1997. Buyer shall cooperate with
AII to provide it with sufficient financial information to prepare its
consolidated tax returns for periods prior to the Closing.
5.2 AMENDMENT TO NAME. Prior to the Closing, AII and Akashic shall
change the name of Akashic's Malaysian subsidiary to delete the name "Kubota"
from its name.
5.3 BUSINESS OFFICE. Buyer shall make available to representatives
of Kubota and AII one business office at the principal office of Akashic in San
Jose, California for the period from the Closing through March 31, 1998.
5.4 PAYMENT OF BONUSES. AII shall pay or have paid "all transaction
bonuses" if implemented owing at the time of Closing or then promised to the
employees of Akashic; provided that if this transaction closes prior to the
payment of the performance bonuses, Akashic shall be left with sufficient cash
at Closing to cover the payment of such bonuses.
5.5 OPERATION IN ORDINARY COURSE. Except as set forth in Section 5.6
below, since November 30, 1997 and through the Effective Time, Akashic has
operated and will operate its business in the ordinary course consistent with
past practices including, without limitation, collections of accounts
receivable, payment of accounts payable and efforts to qualify its products in
new customer programs.
5.6 PLANT CLOSURE. AII shall pay or have paid all severance,
withholding taxes and PTO costs and expenses (the "Severance Costs") relating to
the employee layoff of approximately 900
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employees scheduled to take place on or about December 23, 1997 provided,
however, that if such Severence Costs exceed $6.0 million, then Buyer shall
reimburse AII for such Severence Costs as are demonstrated to have been expended
beyond such $6.0 million. Buyer shall assume and guarantee the leases of the
Turquoise Facility, Tasmin Facility and Gibraltar Facility. Buyer further agrees
to move any and all equipment located in such facilities and to restore the
facilities such that they can be returned to the respective landlords.
5.7 TERMINATION OF TAX SHARING AGREEMENT. As of the Closing AII
shall release Akashic from any and all tax-sharing agreements with AII, if any,
and obtain for Akashic releases from AII's affiliates, if any, included in such
tax-sharing agreements.
ARTICLE 6
GENERAL PROVISIONS
6.1 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of California without giving
effect to any choice or conflict of law provision or rule (whether of the State
of California or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of California as applied to
contracts entered into and to be performed in the State of California.
6.2 NOTICES. All notices or reports permitted or required under this
Agreement shall be in writing and shall be delivered in person, mailed by first
class, registered or certified mail, postage prepaid, sent by overnight courier,
or sent by telex, telegram, telecopier or electronic mail to:
If to AII:
Akashic International Inc.
c/o Kubota Corporation
2-47 Shikitsuhigashi 1-chome,
Naniwa-ku Osaka, 556 Japan
Attn: Kunio Suwa
Fax: 06-648-3915
with a copy to:
Graham & James
600 Hansen Way
Palo Alto, CA 94304-1043
Attn: Robert E. Patterson
Fax: (650) 856-3619
-10-
<PAGE> 11
If to Akashic:
Akashic Memories Corporation
305 West Tasman Drive
San Jose, CA 95134
Attn: Ron Ritchie
Fax: (408) 325-3590
with a copy to:
Morrison & Forster LLP
755 Page Mill Road
Palo Alto, CA 94304
Attn: Michael Phillips
Fax: (650) 494-0792
If to Buyer:
StorMedia Incorporated
385 Reed Street
Santa Clara, California 95050
Attn: William J. Almon
Fax: (408) 727-4928
with a copy to:
Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, CA 94304
Attn: Judith M. O'Brien
Fax: 650-493-6811
By written notice to the other party, a party may change the address to which
notices and other communications shall be directed. Notice shall be deemed to
have been given upon the earlier to occur of (i) the third business day
following dispatch by one of the foregoing methods or (ii) actual receipt.
6.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND COVENANTS. The
representations and warranties of the parties set forth in this Agreement or any
certificate or instrument delivered pursuant hereto shall survive the Closing.
6.4 ENTIRE AGREEMENT. The Agreement and the Patent Purchase
Agreement represents and constitutes the entire agreement between the parties,
and supersedes all prior agreements and understandings with respect to the
matters covered by this Agreement and the Patent Purchase
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<PAGE> 12
Agreement, and, except for the Patent Purchase Agreement, Confidentiality
Agreement and Kubota Guaranty and Indemnification, there are no other
agreements, warranties or representations which are not set forth herein.
6.5 WAIVER. Any of AII or Buyer may, by written notice to the other,
(i) waive any of the conditions to its obligations hereunder or extend the time
for the performance of any obligations or actions of the other, (ii) waive any
inaccuracies in the representations of the other contained in this Agreement or
any documents delivered pursuant to this Agreement, (iii) waive compliance with
any of the covenants of the other contained in this Agreement and (iv) waive
performance of any obligations by the other. The waiver of one breach or default
hereunder shall not constitute the waiver of any subsequent breach or default.
6.6 EXPENSES. All expenses incurred by either party in connection
with the execution and performance of this Agreement shall be the obligation of
and shall be paid by such party (with any such fees or expenses of AII and
Akashic, including investment banking and finders fees, to be paid by Kubota).
6.7 DISPUTE FEES. In the event of a dispute arising under this
Agreement which results in arbitration or litigation, the prevailing party shall
be entitled to reimbursement of reasonable expenses, including but not limited
to reasonable attorneys' and expert witness fees incurred by it in pursuing such
dispute, as determined by the court in any such proceeding.
6.8 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon
the parties and inure to the benefit of the successors, assigns, heirs and legal
representatives of the respective parties hereto; provided, however, that this
Agreement and all rights hereunder may not be assigned by any party hereto
except by or with the prior written consent of the other party, with such
consent not to be unreasonably withheld.
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<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
the day and date first above written.
Akashic Memories Corporation
By: /s/ HIDEAKI KUSAKA
------------------------------------------
Title: V.P. - Corporate Development & Planning
---------------------------------------
Akashic International Inc.
By: /s/ HIDEAKI KUSAKA
------------------------------------------
Title: Secretary
---------------------------------------
StorMedia Incorporated
By: /s/ WILLIAM J. ALMON
------------------------------------------
William J. Almon
Title: Chairman of the Board and Chief Executive
Officer
StorMedia Acquisition Corporation
By: /s/ WILLIAM J. ALMON
------------------------------------------
William J. Almon
Title: President
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<PAGE> 1
EXHIBIT 2.2
AGREEMENT OF MERGER
OF
STORMEDIA ACQUISITION CORPORATION
AND
AKASHIC MEMORIES CORPORATION
This Agreement of Merger, dated as of the 31st day of December, 1997
("MERGER AGREEMENT"), is entered into by and between StorMedia Acquisition
Corporation ("MERGER SUB"), a Delaware corporation and a wholly owned subsidiary
of StorMedia Foreign Sales Corporation, a U.S. Virgin Islands corporation
("STORMEDIA"), and Akashic Memories Corporation, a California corporation
("AKASHIC" or the "SURVIVING CORPORATION").
RECITALS
A. Akashic was incorporated in the State of California on September
26, 1996 and as of December 31, 1997 had 23,335 shares of its Common Stock,
$0.001 par value, outstanding ("AKASHIC COMMON") and 19,200,000 shares of its
Series A Preferred Stock, $0.79828 par value outstanding ("Akashic Preferred").
The Akashic Common and the Akashic Preferred are herein collectively referred to
as the "AKASHIC CAPITAL STOCK".
B. Merger Sub was incorporated in the State of Delaware on December
31, 1997, and on the date hereof has 1,000 shares of its Common Stock, $.001 par
value, outstanding, all of which are owned by StorMedia.
C. The parent of StorMedia (which assigned its interest in such
agreement to StorMedia), Akashic and certain other entities which are direct or
indirect shareholders of Akashic have entered into an Agreement and Plan of
Reorganization dated as of November 28, 1997 (the "REORGANIZATION AGREEMENT")
providing for certain representations, warranties, covenants and agreements in
connection with the transactions contemplated hereby. This Agreement of Merger
and the Reorganization Agreement are intended to be construed together to
effectuate their purpose.
D. The shareholders of Akashic and Merger Sub and the Board of
Directors of StorMedia deem it advisable and in their mutual best interests and
in the best interests of the shareholders of Akashic and Merger Sub,
respectively, that Merger Sub be merged with and into Akashic (the "MERGER").
E. The Boards of Directors of StorMedia, Akashic and Merger Sub and
the shareholders of Merger Sub and Akashic have approved the Merger.
<PAGE> 2
AGREEMENTS
The parties hereto hereby agree as follows:
1. Merger Sub shall be merged with and into Akashic, and Akashic
shall be the Surviving Corporation.
2. The Merger shall become effective at 4:00 p.m. California time
on December 31, 1997 (the "EFFECTIVE TIME").
3. As of the Effective Time, each outstanding share of Common
Stock, $.001 par value, of Merger Sub shall be converted into and exchanged for
one (1) share of Common Stock, $.01 par value, of the Surviving Corporation.
4. a) Upon the Effective Time of the Merger, each outstanding share
of Akashic Preferred shall, by virtue of the Merger and without any action on
the part of the holder thereof, no longer be outstanding and shall be canceled
and retired and cease to exist, and shall automatically be converted into and
exchanged for the rights to receive $0.52 per share (the "Merger
Consideration"). In no event shall the aggregate consideration paid pursuant to
this Section 4(a) exceed $10,000,000.
b) Upon the Effective Time of the Merger, each outstanding share
of Akashic Common shall, by virtue of the Merger and without any action on the
part of the holder thereof, no longer be outstanding and shall be canceled. No
cash, securities of StorMedia or other consideration shall be paid or delivered
for any share of Akashic Common.
5. As of the Effective Time, all certificates representing shares
of Akashic Capital Stock, issued and outstanding immediately prior to the
Effective Time, shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each holder of a certificate
representing any such shares of Akashic Capital Stock shall cease to have any
rights with respect thereto except in the case of Akashic Preferred, the right
to receive the appropriate portion of the Merger Consideration upon surrender of
such certificate.
6. Any shares ("DISSENTING SHARES") of any holder of Akashic
Capital Stock who has demanded and perfected appraisal rights for such shares in
accordance with the California Corporation Code and who, as of the Effective
Time, has not effectively withdrawn or lost such appraisal rights, shall not be
converted into Merger Consideration but shall be converted into the right to
receive such consideration as may be determined to be due with respect to such
Dissenting Shares pursuant to the California Corporation Code. If, after the
Effective Time, any Dissenting Shares shall lose their status as Dissenting
Shares, then as of the occurrence of the event which causes the loss of such
status, such shares shall be converted into Merger Consideration in accordance
with Section 4 hereof.
7. The conversion of Akashic Capital Stock as provided by this
Agreement of Merger shall occur automatically at the Effective Time of the
Merger without action by the holders thereof. Each holder of Akashic Capital
Stock shall thereupon be entitled to receive Merger Consideration in
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<PAGE> 3
accordance with Section 4 hereof. Promptly after the Effective Time, such
shareholder shall be entitled to receive cash in the amount payable to such
shareholder under this Agreement of Merger, without interest thereon, upon
surrender as set forth in the Reorganization Agreement of such shareholder's
certificates which immediately prior to the Effective Time represented
outstanding shares of Akashic Capital Stock.
All Merger Consideration delivered upon the surrender for
exchange of shares of Akashic Capital Stock in accordance with the terms hereof
shall be deemed to have been delivered in full satisfaction of all rights
pertaining to such Akashic Capital Stock. If, after the Effective Time of the
Merger, certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and exchanged as provided in this Section 7.
8. At the Effective Time of the Merger, the separate existence of
Merger Sub shall cease, and Akashic shall succeed, without other transfer, to
all of the rights and properties of Merger Sub and shall be subject to all the
debts and liabilities thereof in the same manner as if Akashic had itself
incurred them.
9. Upon the Merger becoming effective, the Articles of
Incorporation of the Surviving Corporation shall be amended in full to read as
set forth in Exhibit I attached hereto.
10. (a) Notwithstanding the approval of this Agreement of Merger by
the shareholders of Akashic and Merger Sub, this Agreement of Merger may be
terminated at any time prior to the Effective Time of the Merger by mutual
agreement of the Boards of Directors of StorMedia and Akashic, and the
shareholders of Akashic.
(b) Notwithstanding the approval of this Agreement of Merger by
the shareholders of Akashic and Merger Sub, this Agreement of Merger shall
terminate forthwith in the event that the Reorganization Agreement shall be
terminated.
(c) In the event of the termination of this Agreement of Merger
as provided above, this Agreement of Merger shall forthwith become void and
there shall be no liability on the part of Akashic, StorMedia or Merger Sub or
their respective officers or directors.
(d) This Agreement of Merger may be signed in one or more
counterparts, each of which shall be deemed an original and all of which shall
constitute one agreement.
(e) This Agreement of Merger may be amended by the parties
hereto any time before or after approval hereof by the shareholders of Akashic
and Merger Sub, but, after such approval, no amendments shall be made which by
law require the further approval of such shareholders without obtaining such
approval. This Agreement of Merger may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
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<PAGE> 4
IN WITNESS WHEREOF, the parties have executed this Merger Agreement as
of the date first written above.
STORMEDIA ACQUISITION CORPORATION
/s/ WILLIAM J. ALMON
-----------------------------------------
William J. Almon, President
/s/ JUDITH M. O'BRIEN
-----------------------------------------
Judith M. O'Brien, Secretary
AKASHIC MEMORIES CORPORATION
/s/ RON RITCHIE
-----------------------------------------
President
/s/ RENE FELICE
-----------------------------------------
Secretary
-4-
<PAGE> 5
EXHIBIT I
RESTATED ARTICLES OF INCORPORATION
OF
AKASHIC MEMORIES CORPORATION
I
The name of this corporation is Akashic Memories Corporation.
II
The purpose of the corporation is to engage in any lawful act or
activity for which a corporation may be organized under the Corporation Code of
California other than the banking business, the trust company business or the
practice of a profession permitted to be incorporated by the California
Corporations Code.
III
This corporation is authorized to issue only one class of shares of
stock, designated as Common Stock; and the total number of shares which this
corporation is authorized to issue is 1000, $0.01 par value.
IV
1. Limitation of Liability. The liability of the directors of this
corporation for monetary damages shall be eliminated to the fullest extent
permissible under California law. This corporation is also authorized, to the
fullest extent permissible under California law, to indemnify its agents (as
defined in Section 317 of the California Corporations Code), whether by by-law,
agreement or otherwise, in excess of the indemnification expressly permitted by
Section 317 and to advance defense expenses to its agents in connection with
such matters as they are incurred. If, after the effective date of this Article,
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<PAGE> 6
California law is amended in a manner which permits a corporation to limit the
monetary or other liability of its directors or to authorize indemnification of,
or advancement of such defense expenses to, its directors or other persons, in
any such case to a greater extent than is permitted on such effective date, the
references in this Article to "California law" shall to that extent be deemed to
refer to California law as so amended.
2. Repeal or Modification. Any repeal or modification of the
foregoing provisions of this Article IV shall not adversely affect any right of
indemnification or limitation of liability of an agent of this corporation
relating to acts or omissions occurring prior to such appeal or modification.
-6-
<PAGE> 7
OFFICERS' CERTIFICATE
OF
AKASHIC MEMORIES CORPORATION
Ron Ritchie, President, and Rene Felice, Secretary, of Akashic Memories
Corporation, a corporation duly organized and existing under the laws of the
State of California (the "CORPORATION"), do hereby certify:
1. They are the duly elected, acting and qualified President and
the Secretary, respectively, of the Corporation.
2. The authorized capital stock of the Corporation consists of
36,556,583 shares of Common Stock, $.001 par value, of which there are 23,335
shares outstanding and entitled to vote on the Agreement of Merger in the form
attached, and 31,756,583 shares of Preferred Stock, of which 19,200,000 shares
are designated Series A Preferred Stock, $.79828 par value, 19,200,000 of which
are outstanding and entitled to vote on the Agreement of Merger in the form
attached, and $.001 par value, 12,556,583 shares are designated Series B
Preferred Stock, none of which are outstanding and entitled to vote on the
Agreement of Merger in the form attached.
3. The Agreement of Merger in the form attached was duly approved
by the shareholders of the Corporation in accordance with the Corporation Code
of the State of California and has been approved by the Board of Directors.
4. The shareholder approval was by the holders of 86.8% of the
outstanding shares of Common Stock and 100% of the outstanding shares of
Preferred Stock of the Corporation. The required vote was a majority of the
outstanding shares of Common Stock of the Corporation and a majority of the
outstanding shares of Preferred Stock of the Corporation, voting as a separate
class.
<PAGE> 8
Each of the undersigned declares under penalty of perjury that the
statements contained in the foregoing certificate are true of their own
knowledge. Executed in San Jose, California, on December 31, 1997.
/s/ RON RITCHIE
--------------------------------------------
President
/s/ RENE FELICE
--------------------------------------------
Secretary
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<PAGE> 9
OFFICERS' CERTIFICATE
OF
STORMEDIA ACQUISITION CORPORATION
William J. Almon, President, and, Judith M. O'Brien, Secretary, of
StorMedia Acquisition Corporation, a corporation duly organized and existing
under the laws of the State of Delaware (the "CORPORATION"), do hereby certify
that:
1. They are the duly elected, acting and qualified President and
the Secretary, respectively, of the Corporation.
2. There is only one authorized class of shares of the Corporation,
consisting of 1,000 shares of Common Stock, $.001 par value, and the total
number of issued and outstanding shares is 1,000.
3. The Agreement of Merger in the form attached was approved by the
board of directors and the shareholder of the Corporation in accordance with the
Corporation Code of the State of California.
4. The shareholder approval was by the holder of 100% of the
outstanding shares of the Corporation. The required vote was a majority of the
outstanding shares of Common Stock, $.001 par value, of the Corporation.
5. No vote of the stockholders of StorMedia Foreign Sales
Corporation ("StorMedia") (the sole shareholder of the Corporation and the
parent of the Corporation) was required by the Corporation Code of the State of
Delaware or the U.S. Virgin Islands or by the Certificate of Incorporation or
Bylaws of StorMedia or the Corporation.
<PAGE> 10
The undersigned declare under penalty of perjury that the statements
contained in the foregoing certificate are true of their own knowledge. Executed
in Santa Clara, California, on December 31, 1997.
/s/ WILLIAM J. ALMON
--------------------------------------------
William J. Almon, President
/s/ JUDITH M. O'BRIEN
--------------------------------------------
Judith M. O'Brien, Secretary
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<PAGE> 1
EXHIBIT 99.1
[STORMEDIA LOGO]
FOR IMMEDIATE RELEASE For Further Information Contact:
Henry Lo, Treasurer (408) 327-8281
STORMEDIA INCORPORATED
STORMEDIA COMPLETES ITS ACQUISITION OF AKASHIC
SANTA CLARA, CA,--(PR NEWSWIRE)--January 5, 1998 -- StorMedia Incorporated
(NASDAQ/NMS: STMD) announced that effective December 31, 1997 it has completed
its acquisition of Akashic Memories Corporation, a subsidiary of Kubota
Corporation. To effect the acquisition, StorMedia paid $10 million cash and
issued 2,000,000 shares of its Class A Common Stock in exchange for the stock of
Akashic and certain patents and applications pending of Kubota. The assets
include two Akashic media facilities and a substrate facility in California and
a new substrate plant in Malaysia.
The acquisition was accounted for as a purchase, and, accordingly, the purchase
price was allocated based upon fair values of assets acquired and liabilities
assumed as of December 31, 1997. The cost of the acquired plant and equipment
was reduced by the excess of the fair value of the net assets acquired over the
purchase price.
This acquisition provides StorMedia with not only Akashic's unique substrate
resources and expertise but also broadens its customer base while allowing for
potential economies of scale and further efficiencies from combined operations.
The Company believes that the drive industry today demands bigger players with
broader expertise to satisfy customer requirements. This acquisition provides
StorMedia with those key elements along with a patent portfolio of over 100
patents issued and applications pending.
The statements in this press release may contain forward-looking statements that
involve risks and uncertainties that could cause actual results to differ from
predicted results. Such risks include among others: dependence on a limited
number of customers; rapid changes in customer and product mix; reduction in
orders from existing customers; limited number of potential customers;
variability in gross margins and operating results; risk of excess industry
capacity; intensely competitive industry; rapid technological change; and
dependence on suppliers. Further risks are described in the Company's Form 10-K
and Form 10-Q, filed with the Securities and Exchange Commission on March 25,
1997 and November 10, 1997, respectively, and other risks detailed from time to
time in the Company's reports filed with the Securities and Exchange Commission.
The Company undertakes no obligation to publicly release the result of any
revisions to these forward-looking statements which may be made to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
ABOUT STORMEDIA:
StorMedia is a leading independent supplier of thin film disks for hard disk
drives used in portable and desktop computers, network servers and workstations.
The company designs, develops, manufactures and sells disks in 2 1/2 and 3 1/2
inch sizes. Within each size, the company provides a range of coercivities
(magnetics), fly heights and disk thicknesses to meet distinct customer
specifications.
<PAGE> 1
Exhibit 99.2
PATENT PURCHASE AGREEMENT
THIS PATENT PURCHASE AGREEMENT is entered into on December 15, 1997,
effective as of the 28th day of November 1997, by and between Kubota
Corporation, a Japanese corporation ("Kubota"), StorMedia Incorporated, a
Delaware corporation ("Buyer") and StorMedia International Ltd., a Cayman
Islands corporation ("SMIL").
RECITALS
WHEREAS, Akashic Memories Corporation, a California corporation
("Akashic") is a subsidiary of Akashic International Inc., a California
corporation ("AII") which in turn is an indirect wholly owned subsidiary of
Kubota. Akashic (a) is the owner and operator of a business consisting of the
design, development, manufacture, sale, marketing and distribution of thin film
media and substrates therefore which business has been operated at facilities
located in California and in Malaysia (the "Business") and (b) owns the assets
that are used in the Business.
WHEREAS, Buyer, StorMedia Acquisition Corporation ("Sub"), Kubota, AII
and Akashic have entered into an Agreement and Plan of Reorganization (the
"Reorganization Agreement") of even date herewith pursuant to which Buyer will
acquire Akashic through a merger (the "Merger") of Sub with and into Akashic
pursuant to an Agreement of Merger (the "Agreement of Merger") which shall occur
upon the filing of the Agreement of Merger with the California Secretary of
State (the "Effective Time").
WHEREAS, as of the date hereof Kubota owns certain patents, patent
applications and other intellectual property as developed for the Business at
the Itami laboratory, such patents and patent applications to be listed on
Exhibit A hereto ("Itami IP").
WHEREAS, immediately prior to the date hereof, for good and valuable
consideration, the receipt of which Kubota has acknowledged, Kubota shall have
granted an exclusive, perpetual, fully paid royalty free license of the Itami IP
to SMIL for exploitation and use of such Itami IP outside the U.S. (the "SMIL
License").
WHEREAS, Buyer desire to purchase the Itami IP subject to the SMIL
License.
WHEREAS, Buyer and Kubota agree that time is of the essence in the
closing of the transactions contemplated in this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
set forth in this Agreement, Kubota and Buyer agree as follows:
<PAGE> 2
ARTICLE 1
CONSIDERATION AND CLOSING
1.1 PURCHASE PRICE. Buyer hereby agrees to purchase and Kubota
hereby agrees to sell to Buyer, the Itami IP subject to the to SMIL License. As
consideration for the Itami IP, Buyer agrees, subject to the terms, conditions
and limitations set forth in this Agreement, to pay, and Kubota agrees to
accept, as the "IP Purchase Price," 2,000,000 shares of Buyer's Class A Common
Stock. With respect to the payment for the SMIL License, SMIL has previously
paid adequate consideration to Kubota. Thereby, after the Closing, the entire
Itami IP shall have been acquired by Buyer and its affiliates.
1.2 CLOSING. The Closing will take place at the offices of Wilson
Sonsini Goodrich & Rosati at 650 Page Mill Road, Palo Alto, CA on a date
mutually agreed to by the parties which the parties shall use reasonable efforts
to be prior to December 31, 1997 (the "Closing"). Each of the parties shall use
their reasonable efforts to satisfy the closing conditions set forth in Article
4 hereof and to consummate the transactions contemplated hereby.
1.3 DELIVERIES AT THE CLOSING. At the Closing, (i) Kubota will
deliver to Buyer the various certificates, instruments, and documents referred
to in Section 4.1 below, and (ii) Buyer will deliver to Kubota the various
certificates, instruments, and documents referred to in Section 4.2 below.
ARTICLE 2
REPRESENTATIONS OF KUBOTA
Kubota hereby represents to Buyer as follows:
2.1 ORGANIZATION. Kubota is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all necessary corporate power and authority to own and
lease its properties and assets and to carry on its businesses as now being
conducted.
2.2 AUTHORITY. Kubota has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Kubota and
the consummation by Kubota of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of Kubota. This
Agreement has been duly executed and delivered by Kubota and constitutes a valid
and binding obligation of Kubota, enforceable in accordance with its terms
except as enforcement may be limited by bankruptcy, insolvency or other similar
laws affecting the enforcement of creditors' rights generally, and subject to
rules of law governing specific performance, injunctive relief and other
equitable remedies. Except for certain third party consents which shall be
obtained prior to the Closing, the execution and delivery of this Agreement do
not, and the consummation of the transactions
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<PAGE> 3
contemplated hereby and compliance with the provisions hereof will not, conflict
with, or result in any violation of, or default (with or without notice or lapse
of time or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of a material benefit under, any
provision of the charter documents of Kubota or any loan or credit agreement,
note, bond, mortgage, indenture, license, lease or other agreement or
instrument, permit, concession, franchise, judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to Kubota or the properties or
assets of Kubota.
2.3 GOVERNMENTAL APPROVALS. Subject to compliance with the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act")
and approval from Japan Ministry of Finance and the Bank of Japan, no consent,
approval, order or authorization of, or registration, declaration or filing with
any governmental authority is required by or with respect to Kubota in
connection with the execution and delivery of this Agreement by Kubota or the
consummation by Kubota of the transactions contemplated hereby.
ARTICLE 3
REPRESENTATIONS OF BUYER
Buyer represents to Kubota as follows:
3.1 ORGANIZATION. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of Delaware and has all necessary
corporate power and authority to own and lease all of its properties and assets
and to carry on its business as it is now being conducted.
3.2 AUTHORITY. Buyer has all requisite corporate power and authority
to enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by Buyer and the
consummation by Buyer of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Buyer. This
Agreement has been duly executed and delivered by Buyer and constitutes a valid
and binding obligation of Buyer, enforceable in accordance with its terms except
as enforcement may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights generally, and subject to rules
of law governing specific performance, injunctive relief and other equitable
remedies. Except for certain third party consents which shall be obtained prior
to the Closing, the execution and delivery of this Agreement will not, and the
consummation of the transactions contemplated hereby and compliance with the
provisions hereof will not, conflict with or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or
loss of a material benefit under, any provision of the charter documents of
Buyer or any loan or credit agreement, note, bond mortgage, indenture, lease or
other agreement, instrument, permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to Buyer
or its properties or assets, which has not been waived.
-3-
<PAGE> 4
3.3 GOVERNMENTAL APPROVALS. Subject to compliance with the HSR Act,
and approval from Japan Ministry of Finance and the Bank Japan, no consent,
approval, order or authorization of, or registration, declaration or filing with
any governmental authority is required by or with respect to Buyer in connection
with the execution and delivery of this Agreement by Buyer or the consummation
by Buyer of the transactions contemplated hereby.
ARTICLE 4
CONDITIONS TO CLOSING
4.1 CONDITIONS TO OBLIGATION OF BUYER. The obligation of Buyer to
consummate the transaction to be performed by it in connection herewith is
subject to the satisfaction of the following conditions:
(a) Representations. The representations set forth in
Section 2 hereof shall be true and correct in all material respects as of the
Closing.
(b) Intellectual Property. Kubota shall quit claim to Buyer,
Akashic or any affiliate of Buyer designated by Buyer prior to Closing all of
the Itami IP and Kubota and Buyer shall enter into an agreement pursuant to
which Buyer grants to Kubota and its affiliates a fully paid, royalty free,
perpetual, worldwide, nonexclusive license to the Itami IP for use in the area
of sputtering targets and other areas, but excluding thin film media and
substrates.
(c) Regulatory Approvals. All applicable regulatory
approvals, authorizations and consents shall have been obtained including,
without limitation, HSR, the Japanese Ministry of Finance and the Bank of Japan.
(d) Officer's Certificate. Kubota shall deliver a
certificate to Buyer executed by duly authorized officers certifying compliance
with subsections 4.1(a), (b) and (c).
(e) Withholding Tax. Kubota shall deliver to Buyer a check
in the amount of any withholding taxes payable by Buyer as a result of the
transactions contemplated hereby and shall indemnify Buyer against the payment
of any such withholding taxes hereafter determined by any governmental agency to
be owing by Buyer in connection with the transactions hereunder.
4.2 CONDITIONS TO OBLIGATIONS OF KUBOTA. The obligation of Kubota to
consummate the transactions to be performed by it in connection herewith is
subject to the satisfaction of the following conditions:
(a) Purchase Price. Buyer shall deliver at Closing a
certificate representing 2,000,000 of shares of Buyer's Class A Common Stock
registered in the name of Kubota.
(b) Representations. The representations of Buyer set forth
in Section 3 hereof shall be true and correct in all material respects as of the
Closing.
-4-
<PAGE> 5
(c) Regulatory Approvals. All applicable regulatory
approvals, authorizations and consents shall have been obtained, including,
without limitation, HSR, the Japanese Ministry of Finance and the Bank of Japan.
(d) Officer's Certificate. Buyer shall deliver a certificate
to Kubota executed by a duly authorized officer certifying compliance with
subsections 4.2(b) and (c).
ARTICLE 5
COVENANTS
5.1 PATENT APPLICATIONS. Upon request, Kubota and its affiliates
shall cooperate with Akashic and Buyer at Akashic's expense after the Closing to
file any U.S. or foreign patents or patent applications with respect to the
Itami IP. Kubota shall not be obligated to translate any patents contained in
the Itami IP into English.
5.2 COVENANT NOT TO SUE. Kubota on behalf of itself and its
affiliates hereby agrees not to sue or bring any cause of action or proceeding
against Buyer, its affiliates, licensees or customers or Akashic alleging
infringement or improper use of any patents, patent applications or other
intellectual property owned by or licensed to Kubota or any of its affiliates as
of the Closing, with respect to Akashic's thin film media and substrate
businesses.
5.3 LIST OF PATENTS. The parties agree to substitute an English
translation for Exhibit A prior to the closing, such list to include not less
than all patents described in Exhibit B hereto.
5.4 TRANSFER OF ITAMI IP. The parties acknowledge that it may not be
possible to complete all required paperwork to formally transfer all of the
Itami IP prior to the Closing. Kubota agrees to complete all such transfers and
make all necessary filings, at its expense, promptly following the Closing and
to cooperate with Buyer, upon request by Buyer, to complete such transfers. The
parties further agree and acknowledge that Buyer may request that certain rights
to the Itami IP which Kubota agrees to grant pursuant to Section 4.1(b) above be
granted to certain affiliates of Buyer and the parties agree to cooperate in
making such grants.
ARTICLE 6
GENERAL PROVISIONS
6.1 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of California without giving
effect to any choice or conflict of law provision or rule (whether of the State
of California or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of California as applied to
contracts entered into and to be performed in the State of California.
-5-
<PAGE> 6
6.2 NOTICES. All notices or reports permitted or required under this
Agreement shall be in writing and shall be delivered in person, mailed by first
class, registered or certified mail, postage prepaid, sent by overnight courier,
or sent by telex, telegram, telecopier or electronic mail to:
If to Kubota:
Kubota Corporation
2-47 Shikitsuhigashi 1-chome,
Naniwa-ku Osaka, 556 Japan
Attn: Kunio Suwa
Fax: 06-648-3915
with a copy to:
Graham & James
600 Hansen Way
Palo Alto, CA 94304-1043
Attn: Robert E. Patterson
Fax: (650) 856-3619
If to Buyer or SMIL:
StorMedia Incorporated
385 Reed Street
Santa Clara, California 95050
Attn: William J. Almon
Fax: (408) 727-4928
with a copy to:
Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, CA 94304
Attn: Judith M. O'Brien
Fax: 650-493-6811
By written notice to the other party, a party may change the address to which
notices and other communications shall be directed. Notice shall be deemed to
have been given upon the earlier to occur of (i) the third business day
following dispatch by one of the foregoing methods or (ii) actual receipt.
6.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND COVENANTS. The
representations and warranties of the parties set forth in this Agreement or any
certificate or instrument delivered pursuant hereto shall survive the Closing.
-6-
<PAGE> 7
6.4 ENTIRE AGREEMENT. The Agreement and the Reorganization Agreement
represent and constitute the entire agreement between the parties, and supersede
all prior agreements and understandings with respect to the matters covered by
this Agreement and the Reorganization Agreement, and, except for the
Reorganization Agreement, there are no other agreements, warranties or
representations which are not set forth herein.
6.5 WAIVER. Kubota or Buyer may, by written notice to the other, (i)
waive any of the conditions to its obligations hereunder or extend the time for
the performance of any obligations or actions of the other, (ii) waive any
inaccuracies in the representations of the other contained in this Agreement or
any documents delivered pursuant to this Agreement, (iii) waive compliance with
any of the covenants of the other contained in this Agreement and (iv) waive
performance of any obligations by the other. The waiver of one breach or default
hereunder shall not constitute the waiver of any subsequent breach or default.
6.6 EXPENSES. All expenses incurred by either party in connection
with the execution and performance of this Agreement shall be the obligation of
and shall be paid by such party.
6.7 DISPUTE FEES. In the event of a dispute arising under this
Agreement which results in arbitration or litigation, the prevailing party shall
be entitled to reimbursement of reasonable expenses, including but not limited
to reasonable attorneys' and expert witness fees incurred by it in pursuing such
dispute, as determined by the court in any such proceeding.
6.8 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon
the parties and inure to the benefit of the successors, assigns, heirs and legal
representatives of the respective parties hereto; provided, however, that this
Agreement and all rights hereunder may not be assigned by any party hereto
except by or with the prior written consent of the other party, with such
consent not to be unreasonably withheld.
-7-
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
the day and date first above written.
Kubota Corporation
By: /s/ KUNIO SUWA
---------------------------------------------
Title: Kunio Suwa, Manager
------------------------------------------
StorMedia Incorporated
By:
---------------------------------------------
Title:
------------------------------------------
StorMedia International Ltd.
By:
---------------------------------------------
Title:
------------------------------------------
-8-
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
the day and date first above written.
Kubota Corporation
By:
---------------------------------------------
Title:
------------------------------------------
StorMedia Incorporated
By: /s/ WILLIAM J. ALMON
---------------------------------------------
Title: CEO
------------------------------------------
StorMedia International Ltd.
By: /s/ WILLIAM J. ALMON
---------------------------------------------
Title: CEO
------------------------------------------
-8-
<PAGE> 10
EXHIBIT A
U.S. PATENT & APPLICATION LIST Dec. 12, 1997
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
United States Patent Priority
-----------------------------------------------------------------------------
No. Title of the Invention Application Patent Maintenance Application
Number Number Fee Country Number
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 Magnetic Recording Medium of 07/581266 5013616 paid for Japan S62-170547
Thin Metal Film Type Sep. 12, 1990 May 7, 1991 8 years
- ----------------------------------------------------------------------------------------------------------------------
2 Magnetic Recording Medium 07/424500 5082750 paid for Japan S63-266955
of Thin Metal Film Type Oct. 20, 1989 Jan. 21, 1992 8 years Japan H01-147640
- ----------------------------------------------------------------------------------------------------------------------
3 Magnetic Recording Medium 07/931366 5314745 paid for Japan H04-006791
having a Glass Substrate --- Aug. 18, 1992 May 24, 1994 8 years
- ----------------------------------------------------------------------------------------------------------------------
4 Metal thin film magnetic 08/208958 5480733 paid for Japan H05-054155
recording medium Mar. 11, 1994 Jan. 2, 1996 4 years
- ----------------------------------------------------------------------------------------------------------------------
5 Metal thin film magnetic 08/206849 Registered Japan H05-152403
recording medium Mar. 7, 1994 Jun. 12, 1997 Japan H05-257176
- ----------------------------------------------------------------------------------------------------------------------
6 Magnetic recording media of 08/692491 Japan H08-018701
metallic thin film type Aug. 6, 1996 Japan H08-174842
- ----------------------------------------------------------------------------------------------------------------------
7 Metal thin film magnetic 08/845441 Japan H07-279027
recording medium Apl. 25, 1997
- ----------------------------------------------------------------------------------------------------------------------
8 Metal thin film magnetic 08/847467 Japan H07-301248
recording medium Apl. 25, 1997
- ----------------------------------------------------------------------------------------------------------------------
9 Magnetic recording Medium 08/877,579 Japan H08-33710
and Process for Producing Jun. 17, 1997
Same
- ----------------------------------------------------------------------------------------------------------------------
10 Metal thin film magnetic 08/892,977 Japan H08-229617
recording medium Jly. 15, 1977 Japan H08-319462
- ----------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------
No. Summary
- --------------------------------------------------------------
<S> <C>
1 The Co-Ni-Cr-P alloy has a composition represented
by the (Co(100-a)Ni(a))(100-b-c)cr(b)P(c)
formula Wherein a, b and c each represent atomic %,
and a=3 to 40%, b=2 to 10%, c=2 to 7%
- --------------------------------------------------------------
2 Co1-x-zCrxNbz alloy, Co1-x-y-zCrxNiyNbz alloy
x is 0.08 to 0.15, y is 0.05 to 0.25, z is 0.03 to
0.1 atomic%
- --------------------------------------------------------------
3 Glass plate/nonmagnetic metal/NiP layer/ Under layer
/ Mag Nonmagnetic layer: Cr,Ti,Cr-Ti
- --------------------------------------------------------------
4 Glass plate/NiPx/Cr/Mag x is one or more elements
belonging to a group of 4,5 and 6 in a periodic
table.
- --------------------------------------------------------------
5 A seed layer comprising an oxygen-containing non-
magnetic amorphous metal or a non-magnetic amorphous
metal having an oxygen-containing layer on the
surface.
- --------------------------------------------------------------
A seed layer comprising an amorphous Cr- or V-alloy
6 Pre-layer is Cr-Ni, Cr-Ni-x, Cr-Ni-N, Cr-Ni-N-x
x is W, Mo, Ta, Nb, W-Mo
- --------------------------------------------------------------
7 Substrate/Ion irradiation/Under layer/Mag
ion: Ar ion or O ion or N ion
Ion irradiation on substrate surface to achieve high
Hc & better noise
- --------------------------------------------------------------
8 Substrate/Under layer/Mag
Under layer: Cr-Ta-Cu Ta: 1 to 6%, Cu: 1 to 6%
Combined technology of Cr-Ta-Cu as under layer and
Co-Cr-Ta-Pt as mag layer
- --------------------------------------------------------------
9 Appropriate cleaning condition for disks to decrease
the glide high-noise. The method to evaluate a very
surface contamination on a disk by using glide test
and clean disk created by applying this method.
- --------------------------------------------------------------
10 Pre-layer: Cr-Ni-Cu
Ni:36 to 46%, Cu:0.5 to 6%
Cr-Ni-Cu as prelayer refines Co structure and get
high Hc and reduce media noise
- --------------------------------------------------------------
</TABLE>
<PAGE> 11
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
United States Patent Priority
----------------------------------------------------------------------------
No. Title of the Invention Application Patent Number Maintenance Fee Country Application
Number Number
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
11 Metal thin film magnetic Applied Japan H08-315902
recording medium Jun.12.1997 Japan H08-315928
H08-153609
12 Metal thin film magnetic Applied Japan H08-318937
recording medium Jly.4.1997 Japan H08-319416
13 Method of Producing Magnetic Applied Japan H09-170081
Recording Medium Base Plate Nov.24.1997
and Magnetic Recording
Medium
14 Optimized recording medium- France 96-15214
magnetic head assembly
- --------------------------------------------------------------
No. Summary
<S> <C>
- --------------------------------------------------------------
11 Design of bump height & pitch to get excellent glide
and CSS performances
12 Substrate/amorphous Cr/crystalization Cr-Ni/Under
layer
Substrate/Ni-P-x/crystalization Cr-Ni/Under layer
Film structure for glass substrate.
13 More particularly, the invention relates to methods
of producing a magnetic recording medium base plate
and an anisotropy for improvement of an
electromagnetic conversion Characteristic which has
a close relationship with the magnetic anisotropy.
14 Optimized medium with Silmag Planer head
(Joint application with SILMAG)
</TABLE>
FRENCH PATENT & APPLICATION LIST Dec. 12, 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
French Patent Priority
----------------------------------------------------------------------------
No. Title of the Invention Application Patent Number Country Application
Number Number
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
1 ENSEMBLE SUPPORT 96-15214
D'ENREGISTREMENT-TETE Dec.11,1996
MAGNETIQUE OPTIMISE
- -------------------------------------------------
No. Summary
<S> <C>
- -------------------------------------------------
1 Optimized medium with Silmag Planer head
(Joint application with SILMAG)
</TABLE>
-2-
<PAGE> 12
KUBOTA HARD DISK DIVISION - JAPANESE PATENT LIST
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Request Limit to
Application Published Published for Exsam. Request Decision
No. Filing Date No. Title No. Date Date for Exsam. *1 Date
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 S61-272653 Nov/15/1986 1017492 PREPARATION OF FILM S63-127433 May/31/1988 Apr/14/1993 Apr/16/1996
ON MAGNETIC DISK
SUBSTRATE BY
SPUTTERING
- --------------------------------------------------------------------------------------------------------------------------------
2 S62-170547 Jul/07/1987 1018276 THIN METAL FILM TYPE H01-013220 Jan/18/1989 Aug/11/1987 Jan/23/1996
MAGNETIC RECORDING
MEDIUM
- --------------------------------------------------------------------------------------------------------------------------------
3 S63-057046 Mar/10/1988 1018747 STRUCTURE OF SOLID H01-232520 Sep/18/1989 Feb/01/1995 Jan/14/1997
LUBRICATING FILM OF
MAGNETIC RECORDING
MEDIUM
- --------------------------------------------------------------------------------------------------------------------------------
4 S63-057047 Mar/10/1988 1018793 STRUCTURE OF SURFACE H01-232521 Sep/18/1989 Feb/01/1995
LUBRICATING FILM OF
MAGNETIC RECORDING
MEDIUM
- --------------------------------------------------------------------------------------------------------------------------------
5 S63-266956 Oct/21/1988 1020032 THIN METALLIC FILM H02-113419 Apr/25/1990 Sep/28/1995
TYPE MAGNETIC
RECORDING MEDIUM
- --------------------------------------------------------------------------------------------------------------------------------
6 H01-147637 Jun/09/1989 1020538 THIN METALLIC FILM H03-012813 Jan/21/1991 Jun/02/1993 Feb/27/1996
TYPE MAGNETIC
RECORDING MEDIUM
- --------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------
Patent Registration
No. Date Remark
- ----------------------------------------
<S> <C> <C> <C>
1 02071152 Jul/10/1996 Oct/25/1988
*2
- ----------------------------------------
2 02048055 Apr/25/1996 Jul/31/1998
*2
- ----------------------------------------
3 02626737 Apr/18/1997 Apr/18/2000
*2
- ----------------------------------------
4
- ----------------------------------------
5
- ----------------------------------------
6 02527616 Jun/14/1996 Jun/14/1999
*2
- ----------------------------------------
</TABLE>
-3-
<PAGE> 13
KUBOTA HARD DISK DIVISION - JAPANESE PATENT LIST
------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Request Limit to
Application Published Published for Exsam. Request
No. Filing Date No. Title No. Date Date for Exsam. *1
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
7 H01-147638 Jun/09/1989 1020539 THIN METALLIC FILM H03-012814 Jan/21/1991 Jun/02/1993
TYPE MAGNETIC
RECORDING MEDIUM
- -------------------------------------------------------------------------------------------------------------------
8 H01-147639 Jun/09/1989 1020540 THIN METALLIC FILM H03-012815 Jan/21/1991 Jun/02/1993
TYPE MAGNETIC
RECORDING MEDIUM
- -------------------------------------------------------------------------------------------------------------------
9 H01-147640 Jun/09/1989 1020541 THIN METALLIC FILM H02-192010 Jul/27/1990 Jun/02/1993
TYPE MAGNETIC
RECORDING MEDIUM
- -------------------------------------------------------------------------------------------------------------------
10 H01-147641 Jun/09/1989 1021073 THIN METALLIC FILM H03-012816 Jan/21/1991 Jun/02/1993
TYPE MAGNETIC
RECORDING MEDIUM
- -------------------------------------------------------------------------------------------------------------------
11 H01-208930 Aug/11/1989 1020534 CARBONACEOUS SOLID H03-071419 Mar/27/1991 Jun/02/1993
LUBRICATING FILM
STRUCTURE ON SURFACE
OF MAGNETIC
RECORDING MEDIUM AND
FILM FORMATION
- -------------------------------------------------------------------------------------------------------------------
12 H01-208935 Aug/11/1989 1020536 PROTECTIVE FILM H03-073412 Mar/28/1991 Jun/02/1993
STRUCTURE FOR
MAGNETIC LAYER OF
MAGNETIC
- -------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------
Decision Patent Registration
Date No. Date Remark
- ----------------------------------------------------
<S> <C> <C> <C> <C>
7 Feb/27/1996 02527617 Jun/14/1996 Jun/14/1999
*2
- -----------------------------------------------------
8 Feb/27/1996 02527618 Jun/14/1996 Jun/14/1999
*2
- -----------------------------------------------------
9 May/14/1996 02544205 Jul/25/1996 Jul/25/1999
*2
- -----------------------------------------------------
10 Jun/04/1996 02552546 Aug/22/1996 Aug/22/1999
*2
- -----------------------------------------------------
11 May/14/1996 02544206 Jul/25/1996 Jul/25/1999
*2
- -----------------------------------------------------
12 Feb/27/1996 02527623 Jun/14/1996 Jun/14/1999
*2
- -----------------------------------------------------
</TABLE>
-4-
<PAGE> 14
KUBOTA HARD DISK DIVISION - JAPANESE PATENT LIST
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Request
Application Published Published for Exsam.
No. Filing Date No. Title No. Date Date
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
13 H02-042266 Feb/22/1990 1021710 CARBONACEOUS H03-245321 Oct/31/1991 Nov/30/1996
PROTECTIVE FILM FOR
METAL THIN FILM TYPE
MAGNETIC RECORDING
- --------------------------------------------------------------------------------------------------
14 H02-134595 May/24/1990 1021709 METALLIC THIN FILM H04-028013 Jan/30/1992 Nov/29/1995
TYPE MAGNETIC
RECORDING DISK
- --------------------------------------------------------------------------------------------------
15 H02-176797 Jul/03/1990 1022843 CARBON PROTECTIVE H04-064920 Feb/28/1992 Jan/10/1997
FILM FOR METALLIC
THIN FILM TYPE
MAGNETIC RECORDING
- --------------------------------------------------------------------------------------------------
16 H02-192607 Jul/19/1990 1022841 MANUFACTURE OF THIN H04-079025 Mar/12/1992 Nov/29/1995
METALLIC FILM TYPE
MAGNETIC RECORDING
DISK
- --------------------------------------------------------------------------------------------------
17 H03-094672 Jan/28/1991 1023426 THIN METALLIC FILM H04-253307 Sep/09/1992 Mar/30/1996
TYPE MAGNETIC
RECORDING MEDIUM
- --------------------------------------------------------------------------------------------------
18 H03-059105 Mar/22/1991 1023974 MAGNETIC RECORDING H04-295615 Oct/20/1992
MEDIUM
- --------------------------------------------------------------------------------------------------
19 H03-061978 Mar/26/1991 1023988 MANUFACTURE OF H04-295626 Oct/20/1992
MAGNETIC
RECORDING
MEDIUM
- --------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------
Limit to
Request Decision Patent Registration
for Exsam. *1 Date No. Date Remark
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------
13
- ---------------------------------------------------------------------
14
- ---------------------------------------------------------------------
15
- ---------------------------------------------------------------------
16
- ---------------------------------------------------------------------
17 Nov/18/1997
- ---------------------------------------------------------------------
18 Mar/22/1998
- ---------------------------------------------------------------------
19 Mar/26/1998
</TABLE>
-5-
<PAGE> 15
KUBOTA HARD DISK DIVISION - JAPANESE PATENT LIST
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Request
Application Published Published for Exsam.
No. Filing Date No. Title No. Date Date
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
20 H03-168476 Jul/09/1991 1024633 MAGNETIC RECORDING H05-020659 Jan/29/1993
MEDIUM
- --------------------------------------------------------------------------------------------------
21 H03-171369 Jul/11/1991 1024616 MAGNETIC RECORDING H05-020680 Jan/29/1993
MEDIUM
- --------------------------------------------------------------------------------------------------
22 H03-171370 Jul/11/1991 1024634 MAGNETIC RECORDING H05-020681 Jan/29/1993
MEDIUM
- --------------------------------------------------------------------------------------------------
23 H03-178462 Jul/18/1991 1024668 METALLIC THIN FILM H05-028469 Feb/05/1993
TYPE MAGNETIC
RECORDING MEDIUM
- --------------------------------------------------------------------------------------------------
24 H03-178463 Jul/18/1991 1024669 METALLIC THIN FILM H05-028470 Feb/05/1993
TYPE MAGNETIC
RECORDING MEDIUM
- --------------------------------------------------------------------------------------------------
25 H03-182690 Jul/23/1991 1024609 PRODUCTION OF H05-028483 Feb/05/1993
METALLIC THIN FILM
TAPE MAGNETIC
RECORDING MEDIUM
- --------------------------------------------------------------------------------------------------
26 H03-182691 Jul/23/1991 1024774 PRODUCTION OF H05-028473 Feb/05/1993
METALLIC THIN FILM
TYPE MAGNETIC
RECORDING MEDIUM
- --------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------
Limit to
Request Decision Patent Registration
for Exsam. *1 Date No. Date Remark
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
20 Jul/09/1998
- ---------------------------------------------------------------------
21 Jul/11/1998
- ---------------------------------------------------------------------
22 Jul/11/1998
- ---------------------------------------------------------------------
23 Jul/18/1998
- ---------------------------------------------------------------------
24 Jul/18/1998
- ---------------------------------------------------------------------
25 Jul/23/1998
- ---------------------------------------------------------------------
26 Jul/23/1998
- ---------------------------------------------------------------------
</TABLE>
-6-
<PAGE> 16
KUBOTA HARD DISK DIVISION - JAPANESE PATENT LIST
------------------------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Request Limit to
Application Published Published for Exsam. Request
No. Filing Date No. Title No. Date Date for Exsam. *1
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
27 H03-184774 Jul/24/1991 1024642 PRODUCTION OF H05-028484 Feb/05/1993 Jul/24/1998
METALLIC THIN FILM
TYPE MAGNETIC
RECORDING MEDIUM
- ---------------------------------------------------------------------------------------------------------------------
28 H03-184775 Jul/24/1991 1024643 PRODUCTION OF H05-028485 Feb/05/1993 Jul/24/1998
MAGNETIC RECORDING
MEDIUM
- ---------------------------------------------------------------------------------------------------------------------
29 H03-213928 Aug/26/1991 1024852 METALLIC THIN FILM H05-054372 Mar/05/1993 Aug/26/1998
TYPE MAGNETIC
RECORDING MEDIUM
- ---------------------------------------------------------------------------------------------------------------------
30 H03-303549 Nov/19/1991 1025035 METAL THIN FILM H05-143972 Jun/11/1993 Nov/19/1998
MAGNETIC RECORDING
MEDIUM AND ITS
PRODUCTION
- ---------------------------------------------------------------------------------------------------------------------
31 H03-303550 Nov/19/1991 1025036 METAL THIN FILM TYPE H05-143969 Jun/11/1993 Nov/19/1998
MAGNETIC RECORDING
MEDIUM
- ---------------------------------------------------------------------------------------------------------------------
32 H03-303551 Nov/19/1991 1025045 METAL THIN FILM TYPE H05-143970 Jun/11/1993 Jan/12/1995
MAGNETIC RECORDING
MEDIUM
- ---------------------------------------------------------------------------------------------------------------------
33 H03-303552 Nov/19/1991 1025046 METAL THIN FILM TYPE H05-143971 Jun/11/1993 Nov/19/1998
MAGNETIC RECORDING
MEDIUM
- ---------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------
Decision Patent Registration
Date No. Date Remark
- ----------------------------------------------------
<S> <C> <C> <C> <C>
- ----------------------------------------------------
27
- ----------------------------------------------------
28
- ----------------------------------------------------
29
- ----------------------------------------------------
30
- ----------------------------------------------------
31
- ----------------------------------------------------
32
- ----------------------------------------------------
33
- ----------------------------------------------------
</TABLE>
-7-
<PAGE> 17
KUBOTA HARD DISK DIVISION - JAPANESE PATENT LIST
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Request
Application Published Published for Exsam.
No. Filing Date No. Title No. Date Date
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
34 H04-006791 Jan/17/1992 1025546 THIN METAL FILM TYPE H05-197941 Aug/06/1993 Dec/13/1995
MAGNETIC RECORDING
MEDIUM
- ----------------------------------------------------------------------------------------------------
35 H04-253084 Sep/22/1992 1200032 METAL THIN FILM H06-104113 Apr/15/1994 Dec/13/1995
MAGNETIC RECORDING
MEDIUM
- ----------------------------------------------------------------------------------------------------
36 H05-054155 Mar/15/1993 1201080 METAL FILM TYPE H06-267050 Sep/22/1994 Dec/26/1996
MAGNETIC RECORDING
MEDIUM
- ----------------------------------------------------------------------------------------------------
37 H05-065502 Mar/24/1993 1201067 PRODUCTION OF H06-274870 Sep/30/1994 Dec/26/1996
MAGNETIC RECORDING
MEDIUM
- ----------------------------------------------------------------------------------------------------
38 H05-082122 Apr/08/1993 1201135 PRODUCTION OF H06-295433 Oct/21/1994 Jan/10/1997
MAGNETIC RECORDING
MEDIUM
- ----------------------------------------------------------------------------------------------------
39 H05-101564 Apr/27/1993 1201194 PRODUCTION OF H06-309666 Nov/04/1994
METALLIC THIN FILM
TYPE MAGNETIC
RECORDING MEDIUM
- ----------------------------------------------------------------------------------------------------
40 H05-101565 Apr/27/1993 1201263 THIN METALLIC FILM H06-310330 Nov/04/1994 Jan/10/1997
MAGNETIC RECORDING
MEDIUM
- ----------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------
Limit to
Request Decision Patent Registration
for Exsam. *1 Date No. Date Remark
- -------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------
34 Nov/11/1997
- -------------------------------------------------------------------
35 Oct/28/1997
- -------------------------------------------------------------------
36
- -------------------------------------------------------------------
37
- -------------------------------------------------------------------
38
- -------------------------------------------------------------------
39 Apr/27/2000
- -------------------------------------------------------------------
40
- -------------------------------------------------------------------
</TABLE>
-8-
<PAGE> 18
KUBOTA HARD DISK DIVISION - JAPANESE PATENT LIST
------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Request Limit to
Application Published Published for Exsam. Request
No. Filing Date No. Title No. Date Date for Exsam. *1
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
41 H05-101566 Apr/27/1993 1201623 METAL THIN FILM TYPE H06-309644 Nov/04/1994 Jan/10/1997
MAGNETIC RECORDING
MEDIUM
- -----------------------------------------------------------------------------------------------------------------------
42 H05-101567 Apr/27/1993 1201624 THIN METALLIC FILM H06-310328 Nov/04/1994 Jan/10/1997
MAGNETIC RECORDING
MEDIUM
- -----------------------------------------------------------------------------------------------------------------------
43 H05-143942 Jun/15/1993 1201551 METHOD FOR MODIFYING H07-006362 Jan/10/1995 Jan/10/1997
SURFACE OF MAGNETIC
RECORDING MEDIUM
- -----------------------------------------------------------------------------------------------------------------------
44 H05-149469 Jun/21/1993 1201688 METALLIC THIN FILM H07-006344 Jan/10/1995 Jun/21/2000
TYPE MAGNETIC
RECORDING MEDIUM
- -----------------------------------------------------------------------------------------------------------------------
45 H05-150754 Jun/22/1993 1201232 HEAD FLOATING AMOUNT H07-014334 Jan/17/1995 Jun/22/2000
MEASURING DEVICE FOR
HARD DISK
- -----------------------------------------------------------------------------------------------------------------------
46 H05-155554 Jun/25/1993 1201233 HEAD FLOATING AMOUNT H07-014335 Jan/17/1995 Jun/25/2000
MEASURING DEVICE FOR
HARD DISK
- -----------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------
Decision Patent Registration
Date No. Date Remark
- ------------------------------------------------------
<S> <C> <C> <C> <C>
- ------------------------------------------------------
41
- ------------------------------------------------------
42
- ------------------------------------------------------
43
- ------------------------------------------------------
44
- ------------------------------------------------------
45
- ------------------------------------------------------
46
- ------------------------------------------------------
</TABLE>
-9-
<PAGE> 1
EXHIBIT 99.3
KUBOTA GUARANTY AND INDEMNIFICATION
THIS KUBOTA GUARANTY AND INDEMNIFICATION, dated as of December 15, 1997
(the "Guaranty"), is executed by KUBOTA CORPORATION., a Japanese corporation
("Parent"), in favor of STORMEDIA INCORPORATED, a Delaware corporation
("StorMedia").
RECITALS
A. Pursuant to the Agreement and Plan of Reorganization, of even
date hereof (the "Agreement"), between StorMedia, Akashic International Inc., an
indirect wholly owned subsidiary of Parent ("AII") and Akashic Memories
Corporation, a subsidiary of Parent ("Akashic"), StorMedia has agreed to acquire
Akashic through a statutory merger of one of its subsidiaries with and into
Akashic (the "Merger"). Unless otherwise defined herein, all other capitalized
terms used herein and defined in the Agreement shall have the respective
meanings given to those terms in the Agreement.
B. StorMedia's obligation to consummate the Merger is subject,
among other conditions to receipt by StorMedia of this Guaranty, duly executed
by Parent.
C. In addition, in the event AII is dissolved, Parent shall assume
all obligations and liabilities of every nature of AII now or hereafter existing
under the terms of the Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Parent hereby agrees with StorMedia as follows:
1. Guaranty.
a. Parent unconditionally guarantees all obligations and
liabilities of AII now or hereafter existing arising in any manner in connection
with, as a result of or under the terms of the Agreement.
b. This Guaranty is absolute, unconditional, continuing and
irrevocable and if AII shall dissolve, liquidate or fail to pay or perform any
obligations to StorMedia as and when such payments or performance are due under
the Agreement which is subject to this Guaranty, Parent shall forthwith pay to
StorMedia when such payments or performance are due in the place of AII.
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2. Consent to Dissolution. StorMedia agrees that at such time that
AII is dissolved or liquidated, it shall, at the request of Parent, provide
acknowledgment of AII's release of all obligations under the Agreement, so long
as Parent is then still obligated as guarantor and indemnitor hereunder.
3. Representations and Warranties. Parent represents and warrants
to StorMedia that (a) Parent is a corporation duly organized, validly, existing
and in good standing under the laws of its country of incorporation and is duly
qualified and in good standing in each jurisdiction where the nature of its
business or properties requires such qualification; (b) the execution, delivery
and performance by Parent of this Guaranty are within the power of Parent and
have been duly authorized by all necessary actions on the part of Parent; (c)
this Guaranty has been duly executed and delivered by Parent and constitutes a
legal, valid and binding obligation of Parent, enforceable against it in
accordance with its terms, except as limited by bankruptcy, insolvency or other
laws of general application relating to or affecting the enforcement of
creditors' rights generally; (d) the execution, delivery and performance of this
Guaranty do not (i) violate any laws, rules or regulations applicable to Parent
or (ii) contravene any material contractual obligation of Parent; and (e) no
consent, approval, order or authorization of, or registration, declaration or
filing with, any governmental authority or other person or entity (including,
without limitation, the shareholders of any Parent) is required in connection
with the execution, delivery and performance of this Guaranty, except such
consents, approvals, orders, authorizations, registrations, declarations and
filings that are so required and which have been obtained and are in full force
and effect
4. Indemnification. Parent will indemnify and hold harmless
StorMedia and the Surviving Corporation and its respective officers, directors,
agents and employees, and each person, if any, who controls or may control
StorMedia or the Surviving Corporation within the meaning of the Securities Act
of 1933, as amended (hereinafter referred to individually as an "Indemnified
Person" and collectively as "Indemnified Persons") from and against any and all
losses, costs, damages, liabilities and expenses arising from claims, demands,
actions, causes of action, including, without limitation, reasonable legal fees
arising out of or relating to claims by minority shareholders, holders of
Akashic Capital Stock or options to purchase Akashic Common Stock of Akashic
prior to the Merger (each a "Minority Shareholder" and collectively the
"Minority Shareholders") alleging breach of fiduciary duty, fraud,
misrepresentation or any other claim relating to the Merger or the consideration
(or lack thereof) received by such Minority Shareholder(s) in the Merger or the
termination of options or rights to purchase Akashic Common Stock.
In the event the Buyer or the Surviving Corporation becomes aware of a
claim by a Minority Shareholder(s) which Buyer or the Surviving Corporation
believes has or may result in Damages, StorMedia shall notify Parent of such
claim and Parent shall either defend against such claim or settle such claim, in
each case at its expense and in a manner which results in no Damages being
incurred by either StorMedia or the Surviving Corporation and in both StorMedia
and the Surviving Corporation being unconditionally released from all future
liability with respect to such claim. In the event Parent fails to so defend
against or settle such claim, StorMedia and Surviving Corporation may defend
against or settle such claim and Parent shall reimburse promptly, as incurred,
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all expenses and damages incurred in connection therewith upon request for such
reimbursement by StorMedia or the Surviving Corporation, as applicable.
5. Cancellation of Debt. Parent shall extinguish, or cause to be
extinguished, without creating taxable income to Akashic, all long term debt and
debentures of Akashic or its subsidiaries (other than the loan from Western
Digital Corporation) (the "Debt"), and shall deliver evidence satisfactory to
StorMedia that all such Debt has been extinguished. To the extent StorMedia
incurs any losses, costs, damages or liabilities due to Parent's failure to
extinguish all Debt by Closing, Parent shall indemnify StorMedia for any
damages, costs, expenses or other liabilities incurred as a result of such
failure.
6. Waivers. Parent waives (a) any right to require StorMedia to (i)
proceed against AII or (ii) pursue any other remedy in StorMedia's power
whatsoever; (b) any setoff or counterclaim of AII or any defense which results
from any disability or other defense of AII or the cessation or stay of
enforcement from any cause whatsoever of the liability of AII; and (c) all
presentments, demands for performance, notices of non-performance, notices
delivered under the Agreement.
7. Miscellaneous.
(a) All notices and other communications given to or made
upon any party hereto in connection with this Agreement shall be in
writing (including telexed, telecopied or telegraphic communication) and
mailed (by certified or registered mail), telexed, telegraphed,
telecopied or delivered to the respective parties, as follows:
If to Parent
Kubota Corporation
2-47 Shikitsuhigashi 1-chome,
Naniwa-ku Osaka, 556 Japan
Attn: Kunio Suwa
Fax: 06-648-3915
with a copy to:
Graham & James
600 Hansen Way
Palo Alto, CA 94304-1043
Attn: Robert E. Patterson
Fax: (650) 856-3619
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<PAGE> 4
If to StorMedia:
StorMedia Incorporated
385 Reed Street
Santa Clara, California 95050
Attn: William J. Almon
Fax: (408) 727-4928
with a copy to:
Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, CA 94304
Attn: Judith M. O'Brien
Fax: 650-493-6811
or in accordance with any subsequent written direction from either party
to the other. All such notices and other communications shall, except as
otherwise expressly herein provided, be effective when received; or in
the case of delivery by messenger or overnight delivery service, when
left at the appropriate address.
(b) Nonwaiver. No failure or delay on StorMedia's part in
exercising any right hereunder shall operate as a waiver thereof or of
any other right nor shall any single or partial exercise of any such
right preclude any other further exercise thereof or of any other right.
(c) Amendments and Waivers. This Guaranty may not be amended
or modified, nor may any of its terms be waived, except by written
instruments signed by Parent and StorMedia. Each waiver or consent under
any provision hereof shall be effective only in the specific instances
for the purpose for which given.
(d) Assignments. This Guaranty shall be binding upon and
inure to the benefit of Company and Guarantor and their respective
successors and assigns; provided, however, that without the prior
written consent of StorMedia, Parent may not assign its rights and
obligations hereunder.
(e) Cumulative Rights, etc. The rights, powers and remedies
of StorMedia under this Guaranty shall be in addition to all rights,
powers and remedies given to StorMedia by virtue of any applicable law,
rule or regulation of any Governmental Authority or the Agreement, all
of which rights, powers, and remedies shall be cumulative and may be
exercised successively or concurrently without impairing StorMedia's
rights hereunder.
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<PAGE> 5
(f) Partial Invalidity. If at any time any provision of this
Guaranty is or becomes illegal, invalid or unenforceable in any respect
under the law or any jurisdiction, neither the legality, validity or
enforceability of the remaining provisions of this Guaranty nor the
legality, validity or enforceability of such provision under the law of
any other jurisdiction shall in any way be affected or impaired thereby.
(g) Governing Law. This Guaranty shall be governed by and
construed in accordance with the laws of the State of California without
reference to conflicts of law rules.
(h) Jury Trial. EACH OF PARENT AND STORMEDIA, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT
TO TRIAL BY JURY AS TO ANY ISSUE RELATING HERETO IN ANY ACTION,
PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS GUARANTY.
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<PAGE> 6
IN WITNESS WHEREOF, the parties have caused this Guaranty to be executed
as of the day and year first above written.
KUBOTA CORPORATION
By: /s/ KUNIO SUWA
---------------------------------------
Name: Kunio Suwa
-------------------------------------
Title: Manager
------------------------------------
STORMEDIA INCORPORATED
By:
---------------------------------------
William J. Almon
Chief Executive Officer
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<PAGE> 7
IN WITNESS WHEREOF, the parties have caused this Guaranty to be executed
as of the day and year first above written.
KUBOTA CORPORATION
By:
---------------------------------------
Name:
Title:
STORMEDIA INCORPORATED
By: /s/ WILLIAM J. ALMON
---------------------------------------
William J. Almon
Chief Executive Officer
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<PAGE> 1
EXHIBIT 99.4
ASSIGNMENT
For value received, StorMedia Incorporated hereby assigns, transfers and
conveys to StorMedia Foreign Sales Corporation all of its rights, duties and
obligations arising under the Plan and Agreement dated December 31, 1997.
Dated December 31, 1997
StorMedia Incorporated
By: /s/ WILLIAM J. ALMON
-----------------------
Its: President
-----------------------
We CONSENT AND APPROVE of the foregoing:
Akashic International, Inc.
/s/ KEIZO YAMADA
- ------------------------
By: Keizo Yamada
Title: Director
Akashic Memories Corporation
/s/ RONALD J. RITCHIE
- ------------------------
By: Ronald J. Ritchie
Title:
StorMedia Acquisition Corporation
/s/ WILLIAM J. ALMON
- ------------------------
By: William J. Almon
Title: