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Exhibit 4.1
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WARRANT AGREEMENT
BY AND BETWEEN
KOMAG, INCORPORATED
AND
FLEET NATIONAL BANK
F/K/A BANKBOSTON, N.A.
BANK OF MONTREAL
BEAR, XXXXXXX & CO. INC.
COMERICA BANK - CALIFORNIA
OLYMPUS SECURITIES, LTD.
XXXXXX PARTNERS LTD.
THE BANK OF NOVA SCOTIA
UNION BANK OF CALIFORNIA, X.X.
XXXX PARTNERS CORPORATION
THE DAI-ICHI KANGYO BANK, LIMITED
THE INDUSTRIAL BANK OF JAPAN, LIMITED, SAN FRANCISCO AGENCY
THE MITSUBISHI TRUST AND BANKING CORPORATION
SANWA BANK CALIFORNIA
THE FIRST NATIONAL BANK OF CHICAGO
THE FUJI BANK, LIMITED
THE SUMITOMO BANK, LIMITED
DATED AS OF MAY 25, 2000
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TABLE OF CONTENTS(1)
Page
SECTION 1. Warrant Certificates; Issuance of Warrants.......................................1
SECTION 2. Execution of Warrant Certificates................................................2
SECTION 3. Registration.....................................................................2
SECTION 4. Registration of Transfers and Exchanges..........................................2
SECTION 5. Warrants; Exercise of Warrants...................................................3
SECTION 6. Payment of Taxes.................................................................5
SECTION 7. Mutilated or Missing Warrant Certificates........................................5
SECTION 8. Reservation of Warrant Shares; Rights............................................5
SECTION 9. Obtaining Stock Exchange Listings................................................6
SECTION 10. Adjustment of Exercise Price and Number of Warrant Shares Issuable..............6
(a) Adjustment for Change in Capital Stock....................................6
(b) Adjustment for Rights Issue...............................................7
(c) Adjustment for Other Distributions........................................8
(d) Adjustment for Common Stock Issue.........................................8
(e) Adjustment for Convertible Securities Issue...............................9
(f) Current Market Price.....................................................10
(1) Current Market Price..............................................10
(2) Fair Market Value.................................................11
(3) Independent Expert................................................11
(g) Consideration Received...................................................11
(h) When De Minimis Adjustment May Be Deferred...............................12
(i) When No Adjustment Required..............................................12
(j) Notice of Adjustment.....................................................12
(k) Voluntary Reduction......................................................12
(l) Reorganization of Company................................................13
(m) When Issuance or Payment May Be Deferred.................................14
(n) Adjustment in Number of Shares...........................................14
(o) Form of Warrants.........................................................14
SECTION 11. Fractional Interests...........................................................14
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(1) This Table of Contents does not constitute a part of this Agreement or have
any bearing upon the interpretation of any of its terms or provisions.
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SECTION 12. Representations and Warranties to the Company..................................15
(a) Corporate Organization...................................................15
(b) Authorization............................................................15
(c) Governmental Consents....................................................15
(d) Validity.................................................................16
(e) Not an Investment Company................................................16
(f) Reports..................................................................16
(g) Authorized Shares........................................................16
(h) Status of the Warrants and the Warrant Shares............................17
SECTION 13. Purchase for Investment; Authority; Binding Agreement..........................17
SECTION 14. Notices to Warrant Holders.....................................................17
SECTION 15. Notices to Company and Warrant Holder..........................................19
SECTION 16. Supplements and Amendments.....................................................19
SECTION 17. Successors.....................................................................19
SECTION 18. Governing Law..................................................................20
SECTION 19. Benefits of This Agreement.....................................................20
SECTION 20. Counterparts...................................................................20
SCHEDULE 1...................................................................................1
EXHIBIT A....................................................................................1
EXHIBIt B....................................................................................1
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THIS WARRANT AGREEMENT (the "Agreement") is dated as of May 25, 2000,
and entered into by and among Komag, Incorporated, a Delaware corporation (the
"Company"), and Fleet National Bank f/k/a BankBoston, N.A., Bank of Montreal,
Bear, Xxxxxxx & Co. Inc., Comerica Bank - California, Olympus Securities, Ltd.,
Xxxxxx Partners Ltd., The Bank of Nova Scotia, Union Bank of California, N.A.,
Loeb Partners Corporation, The Dai-Ichi Kangyo Bank, Limited, The Industrial
Bank of Japan, Limited, San Francisco Agency, The Mitsubishi Trust and Banking
Corporation, Sanwa Bank California, The First National Bank of Chicago, The Fuji
Bank, Limited, and The Sumitomo Bank, Limited (collectively, "Banks").
WHEREAS, the Banks have made loans and otherwise extended credit in the
aggregate outstanding principal amount of $260,000,000 to the Company pursuant
to certain existing credit facilities;
WHEREAS, pursuant to a Loan Restructure Agreement dated as of the date
hereof (the "Loan Restructure Agreement"), Banks propose to restructure such
existing credit facilities (as so restructured, the "Credit Facilities"); and
WHEREAS, to induce Banks to enter into the Loan Restructure Agreement
and to restructure such existing credit facilities, pursuant thereto the Company
proposes to issue to Banks, or their respective designees, Common Stock Purchase
Warrants as hereinafter described (the "Warrants"), to collectively purchase
common stock of the Company, $0.01 par value (the "Common Stock") equal to, in
the aggregate, 3.5% of the issued and outstanding Common Stock (the Common Stock
issuable on exercise of the Warrants being referred to herein as the "Warrant
Shares"), pursuant to this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
SECTION 1. Warrant Certificates; Issuance of Warrants. The certificates
evidencing the Warrants (the "Warrant Certificates") to be delivered to the
Banks or their respective designees permitted as assignees under the Loan
Restructure Agreement, in the respective amounts set forth in Schedule 1 hereto,
pursuant to this Agreement shall be in registered form only and shall be
substantially in the respective forms set forth in Exhibits A and B attached
hereto.
The Warrants shall be issuable as follows:
(a) Series A Warrants: The Series A Warrants shall be exercisable
into a number of shares of Common Stock equal to, in the aggregate, 2.5% of the
issued and outstanding Common Stock as of the date of issuance of the Warrants.
(b) Series B Warrants: The Series B Warrants shall be exercisable
into a number of shares of Common Stock equal to, in the aggregate, 1.0% of the
issued and outstanding Common Stock as of the date of issuance of the Warrants.
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SECTION 2. Execution of Warrant Certificates. Warrant Certificates shall
be signed on behalf of the Company by its Chairman of the Board of Directors of
the Company (the "Board") or its President or a Vice President and by its
Secretary or an Assistant Secretary under its corporate seal. Each such
signature upon the Warrant Certificates may be in the form of a facsimile
signature of the present or any future Chairman of the Board, President, Vice
President, Secretary or Assistant Secretary and may be imprinted or otherwise
reproduced on the Warrant Certificates and for that purpose the Company may
adopt and use the facsimile signature of any person who shall have been Chairman
of the Board, President, Vice President, Secretary or Assistant Secretary,
notwithstanding the fact that, at the time the Warrant Certificates shall be
delivered or disposed of, he shall have ceased to hold such office. The seal of
the Company may be in the form of a facsimile thereof and may be impressed,
affixed, imprinted or otherwise reproduced on the Warrant Certificates.
In case any officer of the Company who shall have signed any of the
Warrant Certificates shall cease to be such officer before the Warrant
Certificates so signed shall have been disposed of by the Company, such Warrant
Certificates nevertheless may be delivered or disposed of as though such person
had not ceased to be such officer of the Company; and any Warrant Certificate
may be signed on behalf of the Company by any person who, at the actual date of
the execution of such Warrant Certificate, shall be a proper officer of the
Company to sign such Warrant Certificate, although at the date of the execution
of this Warrant Agreement any such person was not such officer.
SECTION 3. Registration. The Company shall number and register the
Warrant Certificates in a register as they are issued.
SECTION 4. Registration of Transfers and Exchanges. The Company shall
from time to time register the transfer of any outstanding Warrant Certificates
in a Warrant register to be maintained by the Company upon surrender of such
Warrant Certificates accompanied by a written instrument or instruments of
transfer in form satisfactory to the Company, duly executed by the registered
holder or holders thereof or by the duly appointed legal representative thereof
or by a duly authorized attorney. Upon any such registration of transfer, a new
Warrant Certificate shall be issued to the transferee(s) and the surrendered
Warrant Certificate shall be canceled and disposed of by the Company.
The Warrant holders agree that each certificate representing Warrant
Shares will bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND
MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES
LAWS OR AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH
ACT OR SUCH LAWS. SUCH
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SALE OR OTHER DISPOSITION MUST ALSO BE IN COMPLIANCE WITH THE
RESTRICTIONS ON TRANSFER SET FORTH IN THE WARRANT AGREEMENT DATED AS OF
MAY 25 2000, AS MODIFIED OR SUPPLEMENTED FROM TIME TO TIME, A COPY OF
WHICH MAY BE OBTAINED FROM KOMAG, INCORPORATED AT ITS PRINCIPAL
EXECUTIVE OFFICE.
Warrant Certificates may be exchanged at the option of the holder(s)
thereof, when surrendered to the Company at its office for another Warrant
Certificate or other Warrant Certificates of like tenor and representing in the
aggregate a like number of Warrants, and such holder(s) shall pay all reasonable
out-of-pocket expenses actually incurred by Company in connection with such
exchange. Warrant Certificates surrendered for exchange shall be canceled and
disposed of by the Company.
SECTION 5. Warrants; Exercise of Warrants. Subject to the terms of this
Agreement, each holder of Series A Warrants shall have the right, which may be
exercised commencing as of the date hereof until 5:00 p.m., Los Angeles time on
May 25, 2010, to receive from the Company the number of fully paid and
nonassessable Warrant Shares which the holder may at the time be entitled to
receive on exercise of such Warrants and payment to the Company of the Exercise
Price (as defined below) then in effect for such Warrant Shares. Each Series A
Warrant not exercised prior to 5:00 p.m., Los Angeles time, on May 25, 2010
shall become void and all rights thereunder and all rights in respect thereof
under this Agreement shall cease as of such time. The Company shall notify each
holder of Series A Warrants in writing 90 days prior to the expiration of all
unexercised Series A Warrants, of the upcoming expiration of all such
unexercised Warrants.
Subject to the terms of this Agreement, each holder of Series B Warrants
shall have the right, which may be exercised commencing at the opening of
business on May 25, 2001 and until 5:00 p.m., Los Angeles time on May 25, 2011,
to receive from the Company the number of fully paid and nonassessable Warrant
Shares which the holder may at the time be entitled to receive on exercise of
such Warrants and payment to the Company of the Exercise Price then in effect
for such Warrant Shares. Each Series B Warrant not exercised prior to 5:00 p.m.,
Los Angeles time on May 25, 2011, shall become void and all rights thereunder
and all rights in respect thereof under this Agreement shall cease as of such
time. The Company shall notify each holder of Series B Warrants in writing 90
days prior to the expiration of all unexercised Series B Warrants, of the
upcoming expiration of all such unexercised Warrants. Notwithstanding anything
to the contrary in this Agreement, the Series B Warrants shall become void and
all rights thereunder and all rights in respect thereof under this Agreement
shall cease if the unpaid loan balances on the notes issued pursuant to the
Credit Facilities, in the aggregate, does not exceed $160,000,000.
A Warrant may be exercised upon surrender to the Company at its office
designated for such purpose (the address of which is set forth in Section 14
hereof) of the certificate or certificates evidencing the Warrants to be
exercised with the form of election to purchase duly filled in and signed, which
signature shall be guaranteed by a bank or trust company having an
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office or correspondent in the United States or a broker or dealer which is a
member of a registered securities exchange or the National Association of
Securities Dealers, Inc., and upon payment to the Company of the exercise price
(the "Exercise Price") which is set forth in the applicable form of Warrant
Certificate attached here as Exhibit A or B, respectively, subject to adjustment
pursuant to Section 10, for the number of Warrant Shares in respect of which
such Warrants are then exercised. For Warrants exercised within two years of
their date of issuance, payment of the aggregate Exercise Price shall be made,
in lieu of any cash payment, by surrendering such Warrants in exchange for a
number of Warrant Shares equal to the product of (x) the number of Warrant
Shares issuable upon exercise of the Warrants being surrendered multiplied by
(y) a fraction, the numerator of which is the Current Market Price (determined
in accordance with Section 10(f) hereof) of the Warrant Shares less the Exercise
Price, and the denominator of which is such Current Market Price (the surrender
of Warrants in lieu of any cash payment is hereinafter referred to as a
"Cashless Exercise"). For Warrants exercised after two years from their date of
issuance, payment of the aggregate Exercise Price shall be made (i) in cash or
by immediately available funds payable to the order of the Company or (ii) by a
Cashless Exercise.
Upon such surrender of Warrants and payment of the Exercise Price, the
Company shall, at its sole cost and expense, issue and cause to be delivered
with all reasonable dispatch to or upon the written order of the holder and in
such name or names as the Warrant holder may designate, a certificate or
certificates for the number of full Warrant Shares issuable upon the exercise of
such Warrants together with cash as provided in Section 11; provided, however,
that if any reclassifications, consolidation, merger or lease or sale of assets
is proposed to be effected by the Company as described in subsection (1) of
Section 10 hereof, or a tender offer or an exchange offer for shares of Common
Stock of the Company shall be made, upon such surrender of Warrants and payment
of the Exercise Price as aforesaid, the Company shall, as soon as possible, but
in any event not later than five business days thereafter, issue and cause to be
delivered the full number of Warrant Shares issuable upon the exercise of such
Warrants in the manner described in this sentence together with cash as provided
in Section 11. Such certificate or certificates shall be deemed to have been
issued and any person so designated to be named therein shall be deemed to have
become a holder of record of such Warrant Shares as of the date of the surrender
of such Warrants and payment of the Exercise Price.
The Warrants shall be exercisable, at the election of the holders
thereof, either in full or from time to time in part; provided, however, that no
partial exercise shall be for an amount less than 2,000 Warrant Shares or, if
less, the total number of Warrant Shares purchasable by the exercising holder.
In the event that a certificate evidencing Warrants is exercised in respect of
fewer than all of the Warrant Shares issuable on such exercise at any time prior
to the date of expiration of the Warrants, a new certificate evidencing the
remaining Warrant or Warrants will be issued and delivered pursuant to the
provisions of this Section and Section 2 hereof.
All Warrant Certificates surrendered upon exercise of Warrants shall be
canceled and disposed of by the Company. The Company shall keep copies of this
Agreement and any notices given or received hereunder available for inspection
by the holders during normal business hours
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at its office or such other place as the Company may from time to time designate
by written notice to the holders.
SECTION 6. Payment of Taxes. The Company will pay all stamp,
documentary, transfer or similar taxes attributable to the initial issuance of
the Warrants and the Warrant Shares upon the exercise of Warrants.
SECTION 7. Mutilated or Missing Warrant Certificates. In case any of the
Warrant Certificates shall be mutilated lost, stolen or destroyed, the Company
shall issue, in exchange and substitution for and upon cancellation of the
mutilated Warrant Certificate, or in lieu of and substitution for the Warrant
Certificate lost, stolen or destroyed, a new Warrant Certificate of like tenor
and representing an equivalent number of Warrants, but only upon receipt of
evidence reasonably satisfactory to the Company of such loss, theft or
destruction of such Warrant Certificate and indemnity also reasonably
satisfactory to it. Applicants for such substitute Warrant Certificates shall
also comply with such other reasonable regulations as the Company may prescribe
and shall pay all reasonable out of pocket expenses actually incurred by Company
in connection with any such exchange and substitution described in this Section
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SECTION 8. Reservation of Warrant Shares; Rights. The Company will at
all times reserve and keep available free from preemptive rights, out of the
aggregate of its authorized but unissued Common Stock or its authorized and
issued Common Stock held in its treasury, for the purpose of enabling it to
satisfy any obligation to issue Warrant Shares upon exercise of Warrants, the
maximum number of shares of Common Stock which may then be deliverable upon the
exercise of all outstanding Warrants.
The Company shall issue, together with each Warrant Share issued upon
exercise of a Warrant, any rights issued to holders of Common Stock in addition
thereto or in replacement therefor, whether or not such rights shall be
exercisable at such time, but only if such rights are issued and outstanding and
held by other holders of Common Stock at such time and have not expired.
The Company or, if appointed, the transfer agent for the Common Stock
(the "Transfer Agent") and every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of any of the rights of
purchase aforesaid will be irrevocably authorized and directed at all times to
reserve such number of authorized shares as shall be required for such purpose.
The Company will keep a copy of this Agreement on file with the Transfer Agent
and with every subsequent transfer agent for any shares of the Company's capital
stock issuable upon the exercise of the rights of purchase represented by the
Warrants. The Company will furnish such Transfer Agent a copy of all notices of
adjustments and certificates related thereto, transmitted to each holder
pursuant to Section 14 hereof.
Before taking any action which would cause an adjustment pursuant to
Section 10 hereof to reduce the Exercise Price below the then par value (if any)
of the Warrant Shares, the Company will take any corporate action which may, in
the opinion of its counsel, be necessary in
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order that the Company may validly and legally issue fully paid and
nonassessable Warrant Shares at the Exercise Price as so adjusted.
SECTION 9. Obtaining Stock Exchange Listings. The Company will from time
to time take all action which may be necessary so that the Warrant Shares,
immediately upon their issuance upon the exercise of Warrants, will be listed or
quoted on the principal securities exchanges and markets within the United
States of America, if any, on which other shares of Common Stock are then
listed.
SECTION 10. Adjustment of Exercise Price and Number of Warrant Shares
Issuable. The Exercise Price and the number of Warrant Shares issuable upon the
exercise of each Warrant are subject to adjustment from time to time upon the
occurrence of the events enumerated in this Section 10. For purposes of this
Section 10, "Common Stock" means shares now or hereafter authorized of any class
of common stock of the Company and any other stock of the Company, however
designated, that has the right (subject to any prior rights of any class or
series of preferred stock) to participate in any distribution of the assets or
earnings of the Company without limit as to per share amount.
(a) Adjustment for Change in Capital Stock.
If the Company:
(1) pays a dividend or makes a distribution on its Common Stock
in shares of its Common Stock;
(2) subdivides its outstanding shares of Common Stock into a
greater number of shares; or
(3) combines its outstanding shares of Common Stock into a
smaller number of shares;
then the Exercise Price in effect immediately prior to such action shall then be
adjusted in accordance with the formula:
O
E' = E x --
A
where:
E' = the adjusted Exercise Price
E = the current Exercise Price
O = the number of Shares of Common Stock outstanding prior to such
action
A = the number of shares of Common Stock outstanding immediately
after such action
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In the case of a dividend or distribution, the adjustment shall
become effective immediately after the record date for determination of holders
of shares of Common Stock entitled to receive such dividend or distribution, and
in the case of a subdivision or combination, the adjustment shall become
effective immediately after the effective date of such corporate action.
If after an adjustment a holder of a Warrant upon exercise of it
may receive shares of two or more classes of capital stock of the Company, the
Company shall determine the allocation of the adjusted Exercise Price between
the classes of capital stock. After such allocation, the exercise privilege, the
number of shares issuable upon such exercise, and the Exercise Price of each
class of capital stock shall thereafter be subject to adjustment on terms
comparable to those applicable to Common Stock in this Section 10.
Such adjustment shall be made successively whenever any event
listed above shall occur in accordance with this Section 10(a).
(b) Adjustment for Rights Issue.
If the Company distributes any rights, options or warrants to any
holder of its Common Stock entitling such holder at any time after the record
date mentioned below to purchase shares of Common Stock at a price per share
less than the current market price per share on that record date, the Exercise
Price shall be adjusted in accordance with the formula:
N x P
O + _____
M
E' = E x ____________________
O + N
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
O = the number of Shares of Common Stock outstanding on the
record date.
N = the number of additional shares of Common Stock issuable upon
exercise of the rights, options or warrants offered.
P = the exercise price per share of the additional shares
issuable upon exercise of the rights, options or warrants.
M = the current market price per share of Common Stock on the
record date.
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The adjustment shall be made successively whenever any such
rights, options or warrants are issued and shall become effective immediately
after the record date for the determination of stockholders entitled to receive
the rights, options or warrants. If at the end of the period during which such
rights, options or warrants are exercisable, not all rights, options or warrants
shall have been exercised, the Exercise Price shall be immediately readjusted to
what it would have been if "N" in the above formula had been the number of
shares actually issued.
(c) Adjustment for Other Distributions.
If the Company distributes to any holder of its Common Stock any
of its assets (including but not limited to securities and cash), debt
securities, capital stock, or any rights or warrants to purchase assets, debt
securities, capital stock, or other securities of the Company, the Exercise
Price shall be adjusted in accordance with the formula:
M - F
E'= E x ___________
M
where:
E'= the adjusted Exercise Price.
E = the current Exercise Price.
M = the current market price per share of Common Stock on the
record date mentioned below.
F = the Fair Market Value (as defined in Section 10(f)) on the
record date of the assets, debt securities, capital stock,
rights or warrants or other securities applicable to one
share of Common Stock.
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the distribution.
This subsection does not apply to (i) dividends, distributions,
subdivisions, or combinations referred to in subsection (a) of this Section 10,
(ii) rights, options or warrants referred to in subsection (b) of this Section
10, or (iii) ordinary course quarterly cash dividends distributed to all holders
of Common Stock.
(d)Adjustment for Common Stock Issue.
If the Company issues shares of Common Stock for a consideration
per share less than the current market price per share of Common Stock on the
date the Company fixes the offering price of such additional shares, the
Exercise Price shall be adjusted in accordance with the formula:
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P
O + ____
M
E' = E x _________________
A
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
O = the number of shares outstanding immediately prior to the
issuance of such additional shares.
P = the aggregate consideration received for issuance of such
additional shares.
M = the current market price per share of Common Stock on the
date of issuance of such additional shares.
A = the number of shares outstanding immediately after the
issuance of such additional shares.
The adjustment shall be made successively whenever any such
issuance is made, and shall become effective immediately after such issuance.
This subsection (d) does not apply to:
(1) rights, options, warrants or other distributions referred to
in subsections (b), (c) or (e) of this Section 10,
(2) Common Stock issued to the Company's directors, employees and
non-employee service providers under bona fide benefit plans, if such
Common Stock would otherwise be covered by this subsection (d), or
(3) Common Stock issued in a bona fide underwritten public
offering.
(e) Adjustment for Convertible Securities Issue.
If the Company issues any securities convertible into or
exchangeable for Common Stock (other than securities issued in transactions
described in subsections (b) and (c) of this Section 10) for a consideration per
share of Common Stock initially deliverable upon conversion or exchange of such
securities less than the current market price per share of Common Stock on the
date of issuance of such securities, the Exercise Price shall be adjusted in
accordance with this formula:
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P
O + ____
M
E' = E x _________________
O + D
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares outstanding immediately prior to the
issuance of such additional shares.
P = the aggregate consideration received for issuance of such
securities.
M = the current market price per share of Common Stock on the
date of issuance of such securities.
D = the maximum number of shares deliverable upon conversion or
in exchange for such securities at the initial conversion or
exchange rate.
The adjustment shall be made successively whenever any such
issuance is made, and shall become effective immediately after such issuance.
If all of the Common Stock deliverable upon conversion or
exchange of such securities have not been issued when such securities are no
longer outstanding, then the Exercise Price shall promptly be readjusted to the
Exercise Price which would then be in effect had the adjustment upon the
issuance of such securities been made on the basis of the actual number of
shares of Common Stock issued upon conversion or exchange of such securities.
(f) Current Market Price.
(1) Current Market Price. In subsections (b), (c), (d) and (e) of
this Section 10, the current market price per share of Common Stock on
any date is:
(i) if the Common Stock is not registered under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), then
the Fair Market Value of the Common Stock based upon the Fair Market
Value of 100% of the Company if sold as a going concern and without
regard to any discount for the lack of liquidity or on the basis that
the relevant shares of the Common Stock do not constitute a majority or
controlling interest in the Company; or
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(ii) if the Common Stock is registered under the Exchange
Act, the average of the Quoted Prices of the Common Stock for no fewer
than 10 consecutive trading days during a period of no more than 20
consecutive trading days ending on the date in question. The "Quoted
Price" of the Common Stock is the last reported sales price of the
Common Stock as reported by NASDAQ National Market, or if the Common
Stock is listed on a national securities exchange, the last reported
sales price of the Common Stock on such exchange (which shall be for
consolidated trading if applicable to such exchange), or if neither so
reported or listed, the last reported bid price of the Common Stock. In
the absence of one or more such quotations, the current market price of
the Common Stock shall be determined as if the Common Stock was not
registered under the Exchange Act.
(2) Fair Market Value. Fair Market Value means the value
obtainable upon a sale in an arm's-length transaction to a third party
under usual and normal circumstances, with neither the buyer nor the
seller under any compulsion to act, with equity to both, as determined
by the Board in good faith; provided, however, that if the holder of a
Warrant shall dispute the Fair Market Value as determined by the Board,
such holder may undertake to have it and the Company retain an
Independent Expert. The determination of Fair Market Value by the
Independent Expert shall be final, binding and conclusive on the Company
and such holder. All costs and expenses of the Independent Expert shall
be borne by such holder unless the Fair Market Value as determined by
the Independent Expert exceeds the Fair Market Value as determined by
the Board by 5% but less than 10%, in which case the cost of the
Independent Expert shall be shared equally by such holder and the
Company, and unless the Fair Market Value as determined by the
Independent Expert exceeds the Fair Market Value as determined by the
Board by 10% or more, in which case the cost of the Independent Expert
shall be borne solely by the Company.
(3) Independent Expert. Independent Expert means a nationally
recognized investment banking firm reasonably acceptable to the Company
and the holder of this Warrant who does not (and whose affiliates do
not) have a financial interest in the Company, any holder or any of
their affiliates. For purposes of this Section 10(f)(3), an "affiliate"
shall mean any such firm in which the Company or any holder owns or
controls, directly or indirectly, a voting interest greater than 10% of
the outstanding voting securities of such firm, or a firm which owns or
controls, directly or indirectly, a voting interest greater than 10% of
the outstanding voting securities of the Company or any holder.
(g) Consideration Received.
For purposes of any computations respecting consideration
received pursuant to subsections (d) and (e) of this Section 10, the following
shall apply:
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(1) in the case of the issuance of shares of Common Stock for
cash, the consideration shall be the amount of such cash, provided that
in no case shall any deduction be made for any commissions, discounts or
other expenses incurred by the Company for any underwriting of the issue
or otherwise in connection therewith;
(2) in the case of the issuance of shares of Common Stock for a
consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair market value thereof as
determined in good faith by the Board (irrespective of the accounting
treatment thereof), whose determination shall be conclusive, and
described in a Board resolution; and
(3) in the case of the issuance of securities convertible into or
exchangeable for Common Stock, the aggregate consideration received
therefore shall be deemed to be the consideration received by the
Company for the issuance of such securities plus the additional minimum
cash consideration, if any, to be received by the Company upon the
conversion or exchange thereof (the consideration in each case to be
determined in the same manner as provided in clauses (1) and (2) of this
subsection).
(h) When De Minimis Adjustment May Be Deferred.
No adjustment in the Exercise Price need be made unless the
adjustment would require an increase or decrease of at least 1% in the Exercise
Price. Any adjustments that are not made shall be carried forward and taken into
account in any subsequent adjustment.
All calculations under this Section shall be made to the nearest
cent or to the nearest 1/100th of a share, as the case may be.
(i) When No Adjustment Required.
No adjustment need be made for rights to purchase Common Stock
pursuant to a Company plan for reinvestment of dividends or interest.
No adjustment need be made for a change in the par value or no
par value of the Common Stock.
To the extent Warrants become convertible into cash, no
adjustment need be made thereafter as to the cash. Interest will not accrue on
the cash.
(j) Notice of Adjustment.
Whenever the Exercise Price is adjusted, the Company shall
provide the notices required by Section 14 hereof.
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(k) Voluntary Reduction.
The Company from time to time may reduce the Exercise Price by
any amount for any period of time if the period is at least 20 days and if the
reduction is irrevocable during the period; provided, however, that in no event
may the Exercise Price be less than the par value of a share of Common Stock.
Whenever the Exercise Price is reduced, the Company shall mail to
Warrant holders a notice of the reduction. The Company shall mail the notice at
least 15 days before the date the reduced Exercise Price takes effect. The
notice shall state the reduced Exercise Price and the period it will be in
effect.
A reduction of the Exercise Price does not change or adjust the
Exercise Price otherwise in effect for purposes of subsections (a), (b), (c),
(d) and (e) of this Section 10.
(l) Reorganization of Company.
If any reclassification of the Common Stock of the Company or any
consolidation or merger of the Company with another entity, or the sale or lease
of all or substantially all of the Company's assets to another entity shall be
effected in such a way that holders of the Common Stock of the Company shall be
entitled to receive stock, securities or assets with respect to or in exchange
for such Common Stock, then, as a condition precedent to such reclassification,
consolidation, merger, sale or lease, lawful and adequate provisions shall be
made whereby the Warrant holder shall thereafter have the right to purchase and
receive upon the basis and the terms and conditions specified in this Agreement
and in lieu of the shares of Common Stock immediately theretofore purchasable
and receivable upon the exercise of the rights represented hereby, such shares
of stock, securities or assets as may be issued or payable in such
reclassification, consolidation, merger, sale or lease with respect to or in
exchange for the number of shares of Common Stock purchasable and receivable
upon the exercise of the rights represented hereby had such rights been
exercised immediately prior thereto, and in any such case appropriate provision
shall be made with respect to the rights and interests of the holders of the
Warrants to the end that the provisions hereof (including without limitation
provisions for adjustments of the Exercise Price and of the number of shares of
Common Stock purchasable and receivable upon the exercise of the Warrant) shall
thereafter be applicable, as nearly as may be, in relation to any shares of
stock, securities or assets thereafter deliverable upon the exercise hereof. The
Company will not effect any such reclassification, consolidation, merger, sale
or lease, unless prior to the consummation thereof the successor corporation (if
other than the Company) resulting from such reclassification, consolidation or
merger or the corporation purchasing or leasing such assets shall assume by a
supplemental Warrant Agreement, executed and mailed or delivered to the holders
of the Warrants at the last address thereof appearing on the books of Company,
the obligation to deliver to such holders such shares of stock, securities or
assets as, in accordance with the foregoing provisions, such holders may be
entitled to purchase.
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17
If the issuer of securities deliverable upon exercise of Warrants
under the supplemental Warrant Agreement is an affiliate of the formed,
surviving, transferee or lessee corporation, that issuer shall join in the
supplemental Warrant Agreement.
If this subsection (1) applies, subsections (a), (b), (c), (d)
and (e) of this Section 10 do not apply.
(m) When Issuance or Payment May Be Deferred.
In any case in which this Section 10 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event (i) issuing to the holder of any Warrant exercised after such record date
the Warrant Shares and other capital stock of the Company, if any, issuable upon
such exercise over and above the Warrant Shares and other capital stock of the
Company, if any, issuable upon such exercise on the basis of the Exercise Price
and (ii) paying to such holder any amount in cash in lieu of a fractional share
pursuant to Section 11; provided, however, that the Company shall deliver to
such holder a due xxxx or other appropriate instrument evidencing such holder's
right to receive such additional Warrant Shares, other capital stock and cash
upon the occurrence of the event requiring such adjustment.
(n) Adjustment in Number of Shares.
Upon each adjustment of the Exercise Price pursuant to this
Section 10, each Warrant outstanding prior to the making of the adjustment in
the Exercise Price shall thereafter evidence the right to receive upon payment
of the adjusted Exercise Price that number of shares of Common Stock (calculated
to the nearest hundredth) obtained from the following formula:
E
N' = N x ______
E'
where:
N'= the adjusted number of Warrant Shares issuable upon exercise
of a Warrant by payment of the adjusted Exercise Price.
N = the number of Warrant Shares previously issuable upon
exercise of a Warrant by payment of the adjusted Exercise
Price.
E' = the adjusted Exercise Price.
E = the Exercise Price prior to adjustment.
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(o) Form of Warrants.
Irrespective of any adjustments in the Exercise Price or the
number or kind of shares purchasable upon the exercise of the Warrants, Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in the Warrants initially issuable
pursuant to this Agreement.
SECTION 11. Fractional Interests. The Company shall not be required to
issue fractional Warrant Shares on the exercise of Warrants. If more than one
Warrant shall be presented for exercise in full at the same time by the same
holder, the number of full Warrant Shares which shall be issuable upon the
exercise thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrants so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section 11,
be issuable on the exercise of any Warrants (or specified portion thereof), the
number of Warrant Shares which shall be issued by the Company on exercise of
such Warrants shall be rounded (i) to the last previous whole number if the
fraction is less than 0.5 of a Warrant Share or (ii) to the next higher whole
number if the fraction is greater than or equal to 0.5 of a Warrant Share.
SECTION 12. Representations and Warranties of the Company. The Company
represents and warrants to each of the Banks, as of the date hereof, as follows:
(a) Corporate Organization.
The Company is duly organized, validly existing and in good
standing under the laws of the state of its formation. The Company is also duly
authorized, qualified and licensed in all applicable jurisdictions, and under
all applicable laws, regulations, ordinances or orders of public authorities, to
carry on its business in the locations and in the manner presently conducted, to
the extent that the failure to do so would not reasonably be expected to
materially adversely affect the consolidated financial condition or operations
of the Company and could not reasonably be expected to have a material adverse
effect on the Company's ability to perform its obligations under the Restructure
Loan Documents (as defined in the Loan Restructure Agreement), having regard for
its other financial obligations.
(b) Authorization.
The execution, delivery and performance by the Company of this
Agreement and the Registration Rights Agreement of even date hereof between the
parties hereto (the "Registration Rights Agreement," and, together with this
Agreement, the "Warrant Documents"), and the issuance by the Company of the
Warrants, are within the Company's corporate powers, have been duly authorized
by all necessary corporate action and do not contravene (i) the Company's
certificate of incorporation, bylaws or other organizational documents or (ii)
any law or regulation or any contractual restriction binding on or affecting the
Company.
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19
(c) Governmental Consents.
No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body (except routine
reports required pursuant to the Securities Exchange Act of 1934, as amended (if
such act is applicable to the Company), which reports will be made in the
ordinary course of business) is required for the due execution, delivery and
performance by the Company of the Warrant Documents or for the issuance by the
Company of the Warrants or the Warrant Shares.
(d) Validity.
The Warrant Documents are the binding obligations of the Company,
enforceable in accordance with their respective terms and when executed and
delivered by the Company in accordance with the terms hereof, the Warrants will
constitute a legally valid and binding obligation of the Company; except in each
case as such enforceability may be limited by bankruptcy, insolvency,
reorganization, liquidation, moratorium or other similar laws of general
application and equitable principles relating to or affecting creditors' rights.
(e) Not an Investment Company.
The Company is not an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
(f) Reports.
The Company has filed all required forms, reports and documents
with the Securities and Exchange Commission (the "SEC") since January 1, 1997
(collectively, the "SEC Reports"), all of which have complied in all material
respects with all applicable requirements of the Securities Act of 1933, as
amended (the "Securities Act") and the Exchange Act. Except as set forth in
subsequent filings with the SEC, none of the SEC Reports, including without
limitation any financial statements or schedules including therein, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading. Each of the balance sheets (including the related notes)
included in the SEC Reports fairly presents the consolidated financial position
of the Company and its consolidated subsidiaries as of the respective dates
thereof, and the other related statements (including the related notes) included
therein fairly present the results of operations and the changes in financial
position of the Company and its consolidated subsidiaries for the respective
fiscal years, except, in the case of interim financial statements, for year-end
audit adjustments, consisting only of normal recurring accruals. Each of the
financial statements (including the related notes) included in the SEC Reports
has been prepared in accordance with generally accepted accounting principles
consistently applied during the periods involved, except as otherwise noted
therein.
16
20
(g) Authorized Shares.
As of May 10, 2000, (i) the Company has 151,000,000 authorized
shares of capital stock, of which 66,054,041 shares of Common Stock and no
shares of Preferred Stock are issued and outstanding, (ii) the Company has
83,945,959 authorized but unissued shares of Common Stock which will be required
to be issued to satisfy conversions or exercises of the Warrants, (iii) the
Series A Warrants are exercisable into a number of shares of Common Stock equal
to, in the aggregate, 2.5% of the issued and outstanding Common Stock, and (iv)
the Series B Warrants are exercisable into a number of shares of Common Stock
equal to, in the aggregate, 1% of the issued and outstanding Common Stock.
(h) Status of the Warrants and the Warrant Shares.
Upon issuance hereunder, the Warrants will be validly issued and
outstanding, fully paid and nonassessable, and the issuance thereof is not
subject to preemptive rights of any other stockholder of the Company. The
Warrant Shares will be duly authorized by all necessary corporate action on the
part of the Company (no consent or approval of stockholders being required by
law, the corporate documents of the Company, the qualification criteria of any
securities exchange or market or otherwise), and upon issuance in accordance
with the terms of this Agreement, will be validly issued and outstanding, fully
paid and nonassessable, and the issuance thereof is not subject to preemptive
rights of any other stockholder of the Company. The Warrant Shares have been
validly reserved for issuance upon the exercise of the Warrants.
SECTION 13. Purchase for Investment; Authority; Binding Agreement . Each
of the Banks represents and warrants to the Company that:
(a) such Bank is an Accredited Investor within the meaning of Rule
501(a) under the Securities Act and the Warrants to be acquired by it pursuant
to this Agreement are being acquired for its own account for investment and
without intent to resell, and such Bank will not offer, sell, transfer, pledge,
hypothecate or otherwise dispose of any of such Warrants, unless pursuant to a
transaction either registered under, or exempt from registration under, the
Securities Act;
(b) the execution, delivery and performance of each of the Warrant
Documents and the receipt of the Warrants pursuant hereto are within such Bank's
corporate powers and has been duly and validly authorized by all requisite
corporate action;
(c) each of the Warrant Documents has been duly executed and delivered
by such Bank;
(d) each of the Warrant Documents constitutes a legally valid and
binding agreement of such Bank; and
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21
(e) such Bank has knowledge and experience in financial and business
matters so as to be capable of evaluating the merits and risks of its
investments in the Warrants and such Bank is capable of bearing the economic
risks of such investments.
SECTION 14. Notices to Warrant Holders. Upon any adjustment of the
Exercise Price pursuant to Section 10, the Company shall promptly thereafter (i)
cause the Company's Chief Financial Officer to execute a certificate setting
forth the Exercise Price after such adjustment and setting forth in reasonable
detail the method of calculation and the facts upon which such calculations are
based and setting forth the number of Warrant Shares (or portion thereof)
issuable after such adjustment in the Exercise Price, upon exercise of a Warrant
and payment of the adjusted Exercise Price, and (ii) cause to be given to each
of the registered holders of the Warrant Certificates at his address appearing
on the Warrant register written notice of such adjustments by first-class mail,
postage prepaid. Where appropriate, such notice may be given in advance and
included as a part of the notice required to be mailed under the other
provisions of this Section 14.
In case:
(a) the Company shall authorize the issuance to all holders of shares of
Common Stock of rights, options or warrants to subscribe for or purchase shares
off Common Stock or of any other subscription rights or warrants; or
(b) the Company shall authorize the distribution to all holders of
shares of Common Stock of evidences of its indebtedness or assets (other than
cash dividends or cash distributions payable out of earnings or earned surplus
or dividends or distributions payable in shares of Common Stock); or
(c) of any consolidation or merger to which the Company is a party and
for which approval of any shareholders of the Company is required, or of the
conveyance or transfer of all or substantially all of the properties and assets
of the Company, or of any reclassification or change of Common Stock issuable
upon exercise of the Warrants (other than a change in par value, or from par
value to no par value, or from no par value to par value, or as a result of a
subdivision or combination), or a tender offer or exchange offer for shares of
Common Stock; or
(d) of the voluntary or involuntary dissolution, liquidation or winding
up of the Company; or
(e) the Company proposes to take any action that would require an
adjustment in the Exercise Price pursuant to subsections (a), (b), (c), (d) or
(e) of Section 10, or if the Company takes any action that would require a
supplemental Warrant Agreement pursuant to subsection (1) of Section 10.
then the Company shall cause to be given to each of the registered holders of
the Warrant Certificates at his address appearing on the Warrant register, at
least 20 days (or 10 days in any case specified in clauses (a), (b) or (c)
above) prior to the applicable record date hereinafter
18
22
specified, or promptly in the case of events for which there is no record date,
by first-class mail, postage prepaid, a written notice stating (i) the date as
of which the holders of record of shares of Common Stock to be entitled to
receive any such rights, options, warrants or distribution are to be determined,
or (ii) the initial expiration date set forth in any tender offer or exchange
offer for shares of Common Stock, or (iii) the date on which any such
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up is expected to become effective or consummated, and the date as of which it
is expected that holders of record of shares of Common Stock shall be entitled
to exchange such shares for securities or other property, if any, deliverable
upon such reclassification, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up. The failure to give the notice required
by this Section 14 or any defect therein shall not affect the legality or
validity of any distribution, right, option, warrant, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up, or the vote upon
any action.
Nothing contained in this Agreement or in any of the Warrants shall be
construed as conferring upon the holders thereof the right to vote or to consent
or to receive notice as shareholders in respect of the meetings of shareholders
or the election of Directors of the Company or any other matter, or any rights
whatsoever as shareholders of the Company.
SECTION 15. Notices to Company and Warrant Holder. Any notice or demand
authorized by this Agreement to be given or made by the registered holder of any
Warrant Certificate to or on the Company shall be sufficiently given or made
when and if deposited in the mail, first class or registered, postage prepaid,
addressed to the office of the Company expressly designated by the Company at
its office for purposes of this Agreement (until the Warrant holders are
otherwise notified in accordance with this Section by the Company), as follows:
Komag, Incorporated
0000 Xxxxxxxxxx Xxxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000-0000
Facsimile: 000-000-0000
Attn: Chief Financial Officer
Any notice pursuant to this Agreement to be given by the Company to the
registered holder(s) of any Warrant Certificate shall be sufficiently given when
and if deposited in the mail, first-class or registered, postage prepaid,
addressed (until the Company is otherwise notified in accordance with this
Section by such holder) to such holder at the address appearing on the Warrant
register of the Company.
SECTION 16. Supplements and Amendments. The Company may not supplement
or amend this Agreement without the prior written approval of the holders of
Warrants representing at least 51% of the aggregate outstanding Warrants
affected by such supplement or amendment; provided however, that without the
written approval of the holders of all Warrants affected by such supplement or
amendment, no supplement or amendment shall do any of the following:
(a) reduce the number of Warrant Shares for which the Warrants may be
exercised;
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(b) amend the provisions of Section 10 of this Agreement;
(c) except as expressly provided in Section 10(a)(3) of this Agreement,
increase the Exercise Price applicable to the Warrants;
(d) reduce the duration of the Warrants;
(e) extend the issuance date of the Series B Warrants; or
(f) amend the provisions of this Section 16.
SECTION 17. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company shall bind and inure to the
benefit of its respective successors and assigns hereunder.
SECTION 18. Governing Law. This Agreement and each Warrant Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of California and for all purposes shall be construed in accordance with
the internal laws of said State.
SECTION 19. Benefits of This Agreement. Nothing in this Agreement shall
be construed to give to any person or corporation other than the Company and the
registered holders of the Warrant Certificates any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for the sole
and exclusive benefit of the Company and the registered holders of the Warrant
Certificates.
SECTION 20. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
[Signature Pages Follow]
20
24
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
KOMAG, INCORPORATED
By:
----------------------------------
Title:
-------------------------------
Address:
0000 Xxxxxxxxxx Xxxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Chief Financial Officer
FLEET NATIONAL BANK f/k/a BANKBOSTON, N.A.,
as Restructure Agent and as a Restructure Lender
By:
----------------------------------
Title:
-------------------------------
Address:
000 Xxxxxxx Xxxxxx, Xxxx Xxxx 00-00-00
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxxxx
BANK OF MONTREAL, as a Restructure Lender
By:
----------------------------------
Title:
-------------------------------
Address:
000 X. XxXxxxx Xxxxxx, 00 Xxxx
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxx
S-1
25
BEAR, XXXXXXX & CO. INC.,
as a Restructure Lender
By:
----------------------------------
Title:
-------------------------------
Address:
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention:
COMERICA BANK - CALIFORNIA,
as a Restructure Lender
By:
----------------------------------
Title:
-------------------------------
Address:
00 Xxxxxxx Xxxxxxxxx
Mail Code: 4041
Xxx Xxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx
OLYMPUS SECURITIES, LTD.,
as a Restructure Lender
By:
----------------------------------
Title:
-------------------------------
Address:
c/o Citadel Investment Group, LLC
000 Xxxx Xxxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx Xxxxx
S-2
26
XXXXXX PARTNERS LTD.,
as a Restructure Lender
By:
----------------------------------
Title:
-------------------------------
Address:
c/o Citadel Investment Group, LLC
000 Xxxx Xxxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx Xxxxx
THE BANK OF NOVA SCOTIA,
as a Restructure Lender
By:
----------------------------------
Title:
-------------------------------
Address:
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxxxx
UNION BANK OF CALIFORNIA, N.A.,
as a Restructure Lender
By:
----------------------------------
Title:
-------------------------------
Address:
000 Xxxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxxxx Xxxxxxxxx
S-3
27
LOEB PARTNERS CORPORATION,
as a Restructure Lender
By:
----------------------------------
Title:
-------------------------------
Address:
00 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxxx
THE DAI-ICHI KANGYO BANK, LIMITED,
as a Restructure Lender
By:
----------------------------------
Title:
-------------------------------
Address:
Corporate Finance Department I
Xxx Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxx
THE INDUSTRIAL BANK OF JAPAN, LIMITED,
SAN FRANCISCO AGENCY,
as a Restructure Lender
By:
----------------------------------
Title:
-------------------------------
Address:
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
S-4
28
THE MITSUBISHI TRUST AND BANKING CORPORATION,
as a Restructure Lender
By:
----------------------------------
Title:
-------------------------------
Address:
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxx
SANWA BANK CALIFORNIA,
as a Restructure Lender
By:
----------------------------------
Title:
-------------------------------
Address:
000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxx
THE FIRST NATIONAL BANK OF CHICAGO,
as a Restructure Lender
By:
----------------------------------
Title:
-------------------------------
Address:
The First National Bank of Chicago
x/x Xxxx Xxx
Xxxxxxx Xxxxxx Managed Assets
AZ1-1283
000 X. Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxxx
S-5
29
THE FUJI BANK, LIMITED,
as a Restructure Lender
By:
----------------------------------
Title:
-------------------------------
Address:
000 Xxxxx Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention:
THE SUMITOMO BANK, LIMITED,
as a Restructure Lender
By:
----------------------------------
Title:
-------------------------------
Address:
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxx
X-0
00
XXXXXXXX 0
XXXX XXXXXXX SHARES
---- --------------
Fleet National Bank f/k/a/ BankBoston, N.A.................................
Bank of Montreal...........................................................
Bear, Xxxxxxx & Co. Inc....................................................
Comerica Bank - California.................................................
Olympus Securities, Ltd....................................................
Xxxxxx Partners Ltd.
The Bank of Nova Scotia....................................................
Union Bank of California, N.A..............................................
Loeb Partners Corporation
The Dai-Ichi Kangyo Bank, Limited..........................................
The Industrial Bank of Japan, Limited, San Francisco Agency................
The Mitsubishi Trust and Banking Corporation...............................
Sanwa Bank California......................................................
The First National Bank of Chicago.........................................
The Fuji Bank, Limited.....................................................
The Sumitomo Bank, Limited.................................................
Schedule - 1
31
EXHIBIT A
[Form of Warrant Certificate]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE
EXEMPTION TO THE REGISTRATION REQUIREMENT OF SUCH ACT OR SUCH LAWS. SUCH SALE OR
OTHER DISPOSITION MUST ALSO BE IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER
SET FORTH IN THE WARRANT AGREEMENT DATED AS OF MAY 25, 2000, A COPY OF WHICH MAY
BE OBTAINED FROM KOMAG, INCORPORATED AT ITS PRINCIPAL EXECUTIVE OFFICE.
EXERCISABLE ON OR AFTER THE DATE HEREOF
AND ON OR BEFORE MAY 25, 2010
No. ___ Series A Warrants
Series A Warrant Certificate
KOMAG, INCORPORATED
This Warrant Certificate certifies that _________________, or registered
assigns, is the registered holder of ___ Series A Warrants expiring May 25, 2010
(the "Warrants") to purchase Common Stock, $0.01 par value (the "Common Stock"),
of Komag, Incorporated, a Delaware corporation (the "Company"). Each Series A
Warrant entitles the holder upon exercise on or after the date hereof to receive
from the Company on or before 5:00 p.m., Los Angeles time, on May 25, 2010, one
fully paid and nonassessable share of Common Stock (a "Warrant Share") at the
initial exercise price (the "Exercise Price") of $_______ payable as otherwise
provided in the Warrant Agreement referred to below, upon surrender of this
Warrant Certificate and payment of the Exercise Price at the office of the
Company designated for such purpose, but only subject to the conditions set
forth herein and in the Warrant Agreement. The Exercise Price and number of
Warrant Shares issuable upon exercise of the Warrants are subject to adjustment
upon the occurrence of certain events set forth in the Warrant Agreement.
No Warrant may be exercised after 5:00 p.m., Los Angeles time, on May
25, 2010, and to the extent not exercised by such time such Warrants shall
become void.
The Series A Warrants evidenced by this Warrant Certificate are part of
a duly authorized issue of Warrants expiring May 25, 2010 entitling the holder
on exercise to receive shares of Common Stock of the Company, and are issued
pursuant to a Warrant Agreement dated as of the date hereof (the "Warrant
Agreement"), duly executed and delivered by the Company, which Warrant Agreement
is hereby incorporated by reference in and made a part of this instrument and is
hereby referred to for a description of the rights, limitation of rights,
obligations, duties and
A-1
32
immunities thereunder of the Company and the holders (the words "holders" or
"holder" meaning the registered holders or registered holder) of the Warrants. A
copy of the Warrant Agreement may be obtained by the holder hereof upon written
request to the Company.
Warrants may be exercised at any time on or before May 25, 2010. The
holder of Warrants evidenced by this Warrant Certificate may exercise them by
surrendering this Warrant Certificate, with the form of election to purchase set
forth hereon properly completed and executed, together with payment of the
Exercise Price at the office of the Company designated for such purpose. In the
event that upon any exercise of Warrants evidenced hereby the number of Warrants
exercised shall be less than the total number of Warrants evidenced hereby,
there shall be issued to the holder hereof or his assignee a new Warrant
Certificate evidencing the number of Warrants not exercised. No adjustment shall
be made for any dividends on any Common Stock issuable upon exercise of this
Warrant.
The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price set forth on the face hereof may, subject to certain
conditions, be adjusted. If the Exercise Price is adjusted, the Warrant
Agreement provides that the number of shares of Common Stock issuable upon the
exercise of each Warrant shall be adjusted. No fractions of a share of Common
Stock will be issued upon the exercise of any Warrant, but the Company will pay
the cash value thereof determined as provided in the Warrant Agreement.
The holders of the Warrants are entitled to certain registration rights
with respect to the Common Stock purchasable upon exercise thereof. Said
registration rights are set forth in full in the Registration Rights Agreement
dated as of the date hereof, between the Company and the Banks identified in the
Warrant Agreement. A copy of the Registration Rights Agreement may be obtained
by the holder hereof upon written request to the Company.
Warrant Certificates, when surrendered at the office of the Company by
the registered holder thereof in person or by legal representative or attorney
duly authorized in writing, may be exchanged, in the manner and subject to the
limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Company, a new Warrant Certificate or Warrant
Certificates of like tenor and evidencing in the aggregate a like number of
Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
The Company may deem to treat the registered holder(s) thereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, of any distribution to the holder(s) hereof, and for all other
purposes, and the Company shall not be affected by an y notice to the contrary.
Neither the Warrants nor this Warrant Certificate entitles any holder hereof to
any rights of a stockholder of the Company.
A-2
33
This Warrant Certificate shall not be valid unless countersigned by the
Company, as such term is used in the Warrant Agreement.
[Signature Page to Follow]
A-3
34
IN WITNESS WHEREOF, the Company has caused this Warrant certificate to
be signed by its President and by its Secretary and has caused its corporate
seal to be affixed hereunto or imprinted hereon.
KOMAG, INCORPORATED,
a Delaware corporation
-------------------------------------------
Name:
Title:
X-0
00
[Xxxx xx Xxxxxxxx]
(Xx Xx Executed Upon Exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive _________ shares of Common
Stock and herewith tenders payment for such shares to the order of Komag,
Incorporated in the amount of $________ as follows: (check applicable box)
[ ] in the form of cash or in immediately available funds payable to the
order of the Company
* [ ] in lieu of cash, net shares of Common Stock calculated as follows:
Current Market Price - Exercise Price
--------------------------------------- x Warrant Shares Exercised
Current Market Price
The undersigned requests that a certificate for such shares be
registered in the name of ________________, whose address is
____________________________ and that such shares be delivered to
________________ whose address is ________________________. If said number of
shares is less than all of the shares of Common Stock purchasable hereunder, the
undersigned requests that a new Warrant Certificate representing the remaining
balance of such shares be registered in the name of _____________, whose address
is ___________________________, and that such Warrant Certificate be delivered
to _________________, whose address is _____________________.
Signature: _______________________________
Date: ________________
Signature Guaranteed: ____________________
* Please note that this is the only form of payment available if this Warrant
Certificate is to be exercised within two years of its issuance.
A-5
36
[Form of Assignment]
(To Be Executed Upon Assignment of Warrant)
If you, the holder, want to assign this Warrant, fill in the form below
and have your signature guaranteed:
For value received, I or we assign and transfer this Warrant to:
--------------------------------------------------------------------------------
(INSERT ASSIGNEE'S SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER)
-------------------------------------------------
-------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and appoints ______________________________________________________ agent to
transfer this security on the books of the Company. The agent may substitute
another to act for him.
In connection with the transfer of this Warrant, the undersigned
certifies that:
(Check one)
[ ] This Warrant is being transferred to Komag, Incorporated.
[ ] This Warrant is being transferred to a person or entity other
than Komag, Incorporated, in connection with which the Company
has received an opinion of counsel (satisfactory to it in form
and substance) to the effect that the transfer is being made
pursuant to an exemption from, or in a transaction not subject
to, the registration requirements of the Securities Act.
Date: __________________________________________________________________________
Your signature: ________________________________________________________________
(Sign exactly as your name appears on this Warrant)
Signature Guaranteed by *: _____________________________________________________
* Signature must be guaranteed by an eligible guarantor institution within the
meaning of Securities and Exchange Commission Rule 17Ad-15 (including banks,
stock brokers, savings and loan associations, national securities exchanges,
registered securities associations, clearing agencies and credit unions) with
membership or participation in the Securities Transfer Agents Medallion Program
("STAMP") or such other signature guarantee medallion program as may be approved
by the Registrar in addition to, or substitution for, STAMP, if this Security is
to be delivered other than to and in the name of the registered holder.
IF NONE OF THE FOREGOING BOXES IS CHECKED, THE TRUSTEE SHALL NOT BE OBLIGATED TO
REGISTER THE TRANSFER OF THIS SECURITY UNLESS AND UNTIL THE CONDITIONS TO ANY
SUCH TRANSFER OF REGISTRATION SET FORTH HEREIN, ON THE FACE HEREOF AND IN THE
WARRANT AGREEMENT SHALL HAVE BEEN SATISFIED.
A-6
37
EXHIBIT B
[Form of Warrant Certificate]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE
EXEMPTION TO THE REGISTRATION REQUIREMENT OF SUCH ACT OR SUCH LAWS. SUCH SALE OR
OTHER DISPOSITION MUST ALSO BE IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER
SET FORTH IN THE WARRANT AGREEMENT DATED AS OF MAY 25, 2000, A COPY OF WHICH MAY
BE OBTAINED FROM KOMAG, INCORPORATED AT ITS PRINCIPAL EXECUTIVE OFFICE.
EXERCISABLE ON OR AFTER MAY 25, 2001
AND ON OR BEFORE MAY 25, 2011
No. ___ Series B Warrants
Series B Warrant Certificate
KOMAG, INCORPORATED
This Warrant Certificate certifies that _________________, or registered
assigns, is the registered holder of ___ Series B Warrants expiring not later
than May 25, 2011 (the "Warrants") to purchase Common Stock, $0.01 par value
(the "Common Stock"), of Komag, Incorporated, a Delaware corporation (the
"Company"). Each Series B Warrant entitles the holder upon exercise on or after
May 25, 2001 to receive from the Company on or before 5:00 p.m., Los Angeles
time, on May 25, 2011, unless earlier terminated, one fully paid and
nonassessable share of Common Stock (a "Warrant Share") at the initial exercise
price (the "Exercise Price") of $_______ payable as otherwise provided in the
Warrant Agreement referred to below, upon surrender of this Warrant Certificate
and payment of the Exercise Price at the office of the Company designated for
such purpose, but only subject to the conditions set forth herein and in the
Warrant Agreement. The Exercise Price and number of Warrant Shares issuable upon
exercise of the Warrants are subject to adjustment upon the occurrence of
certain events set forth in the Warrant Agreement.
Notwithstanding anything to the contrary in this Warrant Certificate,
the Series B Warrants shall become void and all rights thereunder and all rights
in respect thereof under this Warrant Certificate shall cease if the unpaid loan
balances on the notes issued pursuant to the Credit Facilities, in the
aggregate, does not exceed $160 million.
No Warrant may be exercised after 5:00 p.m., Los Angeles time, on May
25, 2011, and to the extent not exercised by such time such Warrants shall
become void.
B-1
38
The Series B Warrants evidenced by this Warrant Certificate are part of
a duly authorized issue of Warrants expiring May 25, 2011 entitling the holder
on exercise to receive shares of Common Stock, $0.01 par value, of the Company
(the "Common Stock"), and are issued pursuant to a Warrant Agreement dated as of
the date hereof (the "Warrant Agreement"), duly executed and delivered by the
Company, which Warrant Agreement is hereby incorporated by reference in and made
a part of this instrument and is hereby referred to for a description of the
rights, limitation of rights, obligations, duties and immunities thereunder of
the Company and the holders (the words "holders" or "holder" meaning the
registered holders or registered holder) of the Warrants. A copy of the Warrant
Agreement may be obtained by the holder hereof upon written request to the
Company.
Warrants may be exercised at any time on or after May 25, 2001 and on or
before May 25, 2011. The holder of Warrants evidenced by this Warrant
Certificate may exercise them by surrendering this Warrant Certificate, with the
form of election to purchase set forth hereon properly completed and executed,
together with payment of the Exercise Price at the office of the Company
designated for such purpose. In the event that upon any exercise of Warrants
evidenced hereby the number of Warrants exercised shall be less than the total
number of Warrants evidenced hereby, there shall be issued to the holder hereof
or his assignee a new Warrant Certificate evidencing the number of Warrants not
exercised. No adjustment shall be made for any dividends on any Common Stock
issuable upon exercise of this Warrant.
The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price set forth on the face hereof may, subject to certain
conditions, be adjusted. If the Exercise Price is adjusted, the Warrant
Agreement provides that the number of shares of Common Stock issuable upon the
exercise of each Warrant shall be adjusted. No fractions of a share of Common
Stock will be issued upon the exercise of any Warrant, but the Company will pay
the cash value thereof determined as provided in the Warrant Agreement.
The holders of the Warrants are entitled to certain registration rights
with respect to the Common Stock purchasable upon exercise thereof. Said
registration rights are set forth in full in the Registration Rights Agreement
dated as of the date hereof, between the Company and the Banks identified in the
Warrant Agreement. A copy of the Registration Rights Agreement may be obtained
by the holder hereof upon written request to the Company.
Warrant Certificates, when surrendered at the office of the Company by
the registered holder thereof in person or by legal representative or attorney
duly authorized in writing, may be exchanged, in the manner and subject to the
limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Company, a new Warrant Certificate or Warrant
Certificates of like tenor and evidencing in the aggregate a like number of
Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
B-2
39
The Company may deem to treat the registered holder(s) thereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, of any distribution to the holder(s) hereof, and for all other
purposes, and the Company shall not be affected by any notice to the contrary.
Neither the Warrants nor this Warrant Certificate entitles any holder hereof to
any rights of a stockholder of the Company.
This Warrant Certificate shall not be valid unless countersigned by the
Company, as such term is used in the Warrant Agreement.
[Signature Page to Follow]
B-3
40
IN WITNESS WHEREOF, the Company has caused this Warrant certificate to
be signed by its President and by its Secretary and has caused its corporate
seal to be affixed hereunto or imprinted hereon.
KOMAG, INCORPORATED,
a Delaware corporation
-------------------------------------------
Name:
Title:
X-0
00
[Xxxx xx Xxxxxxxx]
(Xx Xx Executed Upon Exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive _________ shares of Common
Stock and herewith tenders payment for such shares to the order of Komag,
Incorporated in the amount of $________ as follows: (check applicable box)
[ ] in the form of cash or in immediately available funds payable to
the order of the Company
*[ ] in lieu of cash, net shares of Common Stock calculated as
follows:
Current Market Price - Exercise Price
-------------------------------------- x Warrant Shares Exercised
Current Market Price
The undersigned requests that a certificate for such shares be
registered in the name of ________________, whose address is
____________________________ and that such shares be delivered to
________________ whose address is ________________________. If said number of
shares is less than all of the shares of Common Stock purchasable hereunder, the
undersigned requests that a new Warrant Certificate representing the remaining
balance of such shares be registered in the name of _____________, whose address
is ___________________________, and that such Warrant Certificate be delivered
to _________________, whose address is ___________________.
Signature: _______________________________
Date: ________________
Signature Guaranteed: ____________________
* Please note that this is the only form of payment available if this Warrant
Certificate is to be exercised within two years of its issuance.
B-5
42
B-6
43
[Form of Assignment]
(To Be Executed Upon Assignment of Warrant)
If you, the holder, want to assign this Warrant, fill in the form below
and have your signature guaranteed:
For value received, I or we assign and transfer this Warrant to:
--------------------------------------------------------------------------------
(INSERT ASSIGNEE'S SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER)
-------------------------------------------------
-------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and appoints ______________________________________________________ agent to
transfer this security on the books of the Company. The agent may substitute
another to act for him.
In connection with the transfer of this Warrant, the undersigned
certifies that:
(Check one)
[ ] This Warrant is being transferred to Komag, Incorporated.
[ ] This Warrant is being transferred to a person or entity other
than Komag, Incorporated, in connection with which the Company
has received an opinion of counsel (satisfactory to it in form
and substance) to the effect that the transfer is being made
pursuant to an exemption from, or in a transaction not subject
to, the registration requirements of the Securities Act.
Date: __________________________________________________________________________
Your signature: ________________________________________________________________
(Sign exactly as your name appears on this Warrant)
Signature Guaranteed by *: _____________________________________________________
* Signature must be guaranteed by an eligible guarantor institution within the
meaning of Securities and Exchange Commission Rule 17Ad-15 (including banks,
stock brokers, savings and loan associations, national securities exchanges,
registered securities associations, clearing agencies and credit unions) with
membership or participation in the Securities Transfer Agents Medallion Program
("STAMP") or such other signature guarantee medallion program as may be approved
by the Registrar in addition to, or substitution for, STAMP, if this Security is
to be delivered other than to and in the name of the registered holder.
IF NONE OF THE FOREGOING BOXES IS CHECKED, THE TRUSTEE SHALL NOT BE OBLIGATED TO
REGISTER THE TRANSFER OF THIS SECURITY UNLESS AND UNTIL THE CONDITIONS TO ANY
SUCH TRANSFER OF REGISTRATION SET FORTH HEREIN, ON THE FACE HEREOF AND IN THE
WARRANT AGREEMENT SHALL HAVE BEEN SATISFIED.
X-0
00
X-0
