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EXHIBIT 4.1
$1,128,000,000
WESTERN DIGITAL CORPORATION
ZERO COUPON CONVERTIBLE SUBORDINATED DEBENTURES DUE 2018
PURCHASE AGREEMENT
February 12, 1998
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February 12, 1998
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxx, Sachs & Co.
Xxxxx Xxxxxx Inc.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs and Mesdames:
Western Digital Corporation, a Delaware corporation (the "COMPANY"),
proposes to issue and sell to the several purchasers named in Schedule I hereto
(the "INITIAL PURCHASERS") $1,128,000,000 principal amount at maturity of its
Zero Coupon Convertible Subordinated Debentures due 2018 (the "FIRM SECURITIES")
to be issued pursuant to the provisions of an Indenture dated as of February 18,
1998 (the "INDENTURE") between the Company and State Street Bank and Trust
Company of California, N.A., as Trustee (the "TRUSTEE"). The Company also
proposes to issue and sell to the Initial Purchasers not more than an additional
$169,200,000 principal amount at maturity of its Zero Coupon Convertible
Subordinated Debentures due 2018 (the "ADDITIONAL SECURITIES") if and to the
extent that the Initial Purchasers shall have determined to exercise the right
to purchase such Zero Coupon Convertible Subordinated Debentures due 2018
granted to the Initial Purchasers in Section 2 hereof. The Firm Securities and
the Additional Securities are hereinafter collectively referred to as the
"SECURITIES." The Securities will be convertible into shares of Common Stock,
$0.01 par value of the Company (the "COMMON STOCK"), together with the rights
(the "RIGHTS") evidenced by such Common Stock to the extent provided in the
Rights Agreement (the "RIGHTS AGREEMENT"), dated as of December 1, 1988, between
the Company and American Stock Transfer & Trust Company, as successor rights
agent thereunder, as amended (such shares of Common Stock and the associated
Rights herein, the "UNDERLYING SECURITIES").
The Securities and the Underlying Securities will be offered without
being registered under the Securities Act of 1933, as amended (the "SECURITIES
ACT"), in reliance on exemptions therefrom.
The Initial Purchasers and their direct and indirect transferees will
be entitled to the benefits of a Registration Rights Agreement dated as of the
date of the Indenture between the Company and the Initial Purchasers (the
"REGISTRATION RIGHTS AGREEMENT").
In connection with the sale of the Securities, the Company has prepared
a preliminary offering memorandum (the "PRELIMINARY MEMORANDUM") and will
prepare a final offering memorandum (the "FINAL MEMORANDUM" and, with the
Preliminary Memorandum, each a "MEMORANDUM"), including or incorporating by
reference a description of the terms of the
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Securities and the Underlying Securities, the terms of the offering and a
description of the Company. Any reference to the "MEMORANDUM" in this Agreement
refers to the Preliminary Memorandum, and after such time as the Final
Memorandum is delivered by the Initial Purchasers to confirm sales on the
Closing Date, also refers to the Final Memorandum as so delivered by the Initial
Purchasers to confirm sales on such Closing Date. As used herein, the term
"Memorandum" shall include in each case the documents incorporated by reference
therein. The terms "SUPPLEMENT", "AMENDMENT" and "AMEND" as used herein with
respect to a Memorandum shall include all documents deemed to be incorporated by
reference in the Preliminary Memorandum or Final Memorandum that are filed
subsequent to the date of such Memorandum with the Securities and Exchange
Commission (the "COMMISSION") pursuant to the Securities Exchange Act of 1934,
as amended (the "EXCHANGE ACT").
1. Representations and Warranties. The Company represents and warrants
to, and agrees with, each of the Initial Purchasers that:
(a) (i) Each document, if any, filed or to be filed pursuant
to the Exchange Act and incorporated by reference in either Memorandum complied
or will comply when so filed in all material respects with the Exchange Act and
the applicable rules and regulations of the Commission thereunder and (ii) the
Preliminary Memorandum does not contain and the Final Memorandum, in the form
used by the Initial Purchasers to confirm sales when so used and on the Closing
Date (as defined in Section 4), will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except that the representations and warranties set forth in this
paragraph do not apply to statements or omissions in either Memorandum based
upon information relating to any Initial Purchaser furnished to the Company in
writing by such Initial Purchaser through you expressly for use therein.
(b) The Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the jurisdiction of
its incorporation, has the corporate power and authority to own its property and
to conduct its business as described in the Memorandum and is duly qualified to
transact business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the condition,
financial or otherwise, earnings, business or operations of the Company and its
subsidiaries, taken as a whole, or on the power or ability of the Company to
perform its obligations under this Agreement, the Indenture, the Registration
Rights Agreement or the Securities or to consummate the transactions
contemplated by the Memorandum (a "Material Adverse Effect").
(c) Each subsidiary of the Company has been duly incorporated,
is validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to own
its property and to conduct its business as described in the Memorandum and is
duly qualified to transact business and is in good standing in
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each jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not have a Material
Adverse Effect; all of the issued shares of capital stock of each Significant
Subsidiary of the Company have been duly and validly authorized and issued, are
fully paid and non-assessable and are owned directly by the Company, free and
clear of all liens, encumbrances, equities or claims. Other than Western Digital
Deutschland GmbH, Western Digital (U.K.) Limited, Western Digital Ireland
Limited and Western Digital (S.E. Asia) Pte Ltd, the Company has no subsidiaries
that are "significant subsidiaries" as defined in Rule 1-02(w) of Regulation S-X
of the Securities Act (a "Significant Subsidiary").
(d) This Agreement has been duly authorized, executed and
delivered by the Company.
(e) The authorized capital stock of the Company and the Rights
and the Rights Agreement conform as to legal matters to the description thereof
contained in the Memorandum.
(f) The shares of Common Stock outstanding on the date hereof
have been duly authorized and are validly issued, fully paid and non-assessable.
(g) The Securities have been duly authorized and, when
executed and authenticated in accordance with the provisions of the Indenture
and delivered to and paid for by the Initial Purchasers in accordance with the
terms of this Agreement, will be valid and binding obligations of the Company,
enforceable in accordance with their terms, subject to applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally and general
principles of equity, and will be entitled to the benefits of the Indenture and
the Registration Rights Agreement.
(h) The Underlying Securities reserved for issuance upon
conversion of the Securities have been duly authorized and reserved and, when
issued upon conversion of the Securities in accordance with the terms of the
Securities, will be validly issued, fully paid and non-assessable, and the
issuance of the Underlying Securities will not be subject to any preemptive
rights or other rights to purchase such Underlying Securities.
(i) Each of the Indenture and the Registration Rights
Agreement has been duly authorized, executed and delivered by, and is a valid
and binding agreement of, the Company, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and general principles of equity and except as
rights to indemnification and contribution under the Registration Rights
Agreement may be limited under applicable law.
(j) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement, the
Indenture, the Registration Rights Agreement and the Securities do not and will
not contravene any provision of applicable law or
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the certificate of incorporation or bylaws of the Company or any agreement or
other instrument binding upon the Company or any of its subsidiaries (except for
contraventions of any such agreement or instrument which would not have a
Material Adverse Effect) or any judgment, order or decree of any governmental
body, agency or court having jurisdiction over the Company or any subsidiary,
and no consent, approval, authorization or order of, or qualification or filing
with, any governmental body or agency is required for the performance by the
Company of its obligations under this Agreement, the Indenture, the Registration
Rights Agreement or the Securities, except such as may be required by the
securities or Blue Sky laws of the various states in connection with the offer
and sale of the Securities and by Federal and state securities laws with respect
to the Company's obligations under the Registration Rights Agreement as
expressly contemplated by the provisions thereof.
(k) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the condition,
financial or otherwise, or in the earnings, business or operations of the
Company and its subsidiaries, taken as a whole, from that set forth in the
Memorandum.
(l) There are no legal or governmental proceedings pending or,
to the knowledge of the Company, threatened to which the Company or any of its
subsidiaries is a party or to which any of the properties of the Company or any
of its subsidiaries is subject other than proceedings fairly described in all
material respects in the Memorandum and proceedings that would not have a
Material Adverse Effect and any class action lawsuits of the type described in
the Preliminary Memorandum filed since the date thereof based on similar facts
and similar class periods as the class actions described therein.
(m) The Company and its subsidiaries (i) are in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and conditions
of such permits, licenses or approvals would not, singly or in the aggregate,
have a Material Adverse Effect.
(n) Neither the Company nor any of its subsidiaries is liable
or otherwise legally responsible for any costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related constraints
on operating activities and any potential liabilities to third parties) which
would, singly or in the aggregate, have a Material Adverse Effect.
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(o) The Company and its subsidiaries possess all consents,
approvals, orders, certificates, authorizations and permits issued by, and have
made all declarations and filings with, all appropriate federal, state or
foreign governmental or self-regulatory authorities and all courts and other
tribunals necessary to conduct its business and to own, lease, license and use
its properties in the manner described in the Memorandum, except to the extent
that the failure to obtain or file would not have a Material Adverse Effect, and
neither the Company nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such consent,
approval, order, certificate, authorization or permit that, singly or in the
aggregate, if the subject of any unfavorable decision, ruling or finding, or
failure to obtain or file, would have a Material Adverse Effect.
(p) The Company and its subsidiaries maintain systems of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded assets are compared with the existing
assets at reasonable intervals and appropriate action is taken with respect to
any differences.
(q) The Company and its subsidiaries own or possess adequate
licenses or other rights to use all patents, copyrights, trademarks, service
marks, trade names, technology and know-how necessary to conduct their
respective businesses in the manner described in the Memorandum or could obtain
such licenses or rights on terms that would not have a Material Adverse Effect
and, except as disclosed in the Memorandum, neither of the Company nor any of
its subsidiaries has received any notice of infringement or conflict with
asserted rights of others with respect to any patents, copyrights, trademarks,
service marks, trade names, technology or know-how which could reasonably be
expected to result in any Material Adverse Effect; and, except as disclosed in
the Memorandum, the discoveries, inventions, products or processes of the
Company and its subsidiaries referred to in the Memorandum do not, to the best
knowledge of the Company, infringe or conflict with any patent or other
intellectual property right of any third party, except for any such infringement
or conflict which would not have a Material Adverse Effect.
(r) Since December 27, 1997, (i) neither the Company nor any
of its subsidiaries has incurred any material liability or obligation, direct or
contingent, nor entered into any material transaction not in the ordinary course
of business; (ii) the Company has not purchased any of its outstanding capital
stock, nor declared, paid or otherwise made any dividend or distribution of any
kind on its capital stock other than ordinary and customary dividends; and (iii)
there has not been any material change in the capital stock, short-term debt or
long-term debt of the Company or any of its subsidiaries, except in each case as
described in or contemplated by the Memorandum.
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(s) Neither the Company nor any of its subsidiaries, nor to
the Company's knowledge, any other party thereto, is in violation or breach of,
or in default with respect to, any material provision of any contract,
agreement, instrument, lease or license that is material to the Company and its
subsidiaries, taken as a whole. The Company and its subsidiaries enjoy peaceful
and undisturbed possession under all leases and licenses under which they
operate except as would not have a Material Adverse Effect. Neither the Company
nor any of its Significant Subsidiaries is in violation or breach of, or in
default with respect to, any term of its certificate of incorporation or bylaws.
(t) The Company and each of its subsidiaries have timely filed
all necessary federal, state and foreign income and franchise tax returns and
have paid all taxes shown thereon as due (except for any failure to so file or
so pay which would not have a Material Adverse Effect), and there is no tax
deficiency that has been or, to the Company's knowledge, might reasonably be
expected to be asserted against the Company or any of its subsidiaries that
would have a Material Adverse Effect; and all tax liabilities are adequately
provided for on the books of the Company.
(u) Since the date of the Preliminary Memorandum, to the
Company's knowledge after due inquiry, no executive officer or director of the
Company has sold, contracted to sell or otherwise transferred or agreed to
transfer the economic consequences or ownership of any shares of common stock of
the Company or any securities convertible into or exchangeable or exercisable
for or any rights to purchase or acquire common stock of the Company.
(v) No labor dispute with employees of the Company or any of
its subsidiaries exists or, to the knowledge of the Company, is imminent that
could result in a Material Adverse Effect.
(w) The Company is not, and after giving effect to the
offering and sale of the Securities and the application of the proceeds thereof
as described in the Memorandum, will not be an "investment company" as such term
are defined in the Investment Company Act of 1940, as amended.
(x) Neither the Company nor any affiliate (as defined in Rule
501(b) of Regulation D under the Securities Act, an "AFFILIATE") of the Company
has directly, or through any agent, (i) sold, offered for sale, solicited offers
to buy or otherwise negotiated in respect of, any security (as defined in the
Securities Act) which is or will be integrated with the sale of the Securities
in a manner that would require the registration under the Securities Act of the
Securities or (ii) engaged in any form of general solicitation or general
advertising in connection with the offering of the Securities (as those terms
are used in Regulation D under the Securities Act), or in any manner involving a
public offering within the meaning of Section 4(2) of the Securities Act.
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(y) Assuming the accuracy of the Initial Purchasers'
representations and warranties in Section 7 of this Agreement and compliance by
them with their covenants set forth in Section 7 of this Agreement, it is not
necessary in connection with the offer, sale and delivery of the Securities to
the Initial Purchasers and the initial resale by them to investors in the manner
contemplated by this Agreement to register the Securities under the Securities
Act or to qualify the Indenture under the Trust Indenture Act of 1939, as
amended.
(z) The Securities satisfy the requirements set forth in Rule
144A(d)(3) under the Securities Act.
(aa) None of the Company, its Affiliates or any person acting
on its or their behalf (other than the Initial Purchasers and persons acting on
their behalf) has engaged in any directed selling efforts (as that term is
defined in Regulation S under the Securities Act ("Regulation S")) with respect
to the Securities and the Company and its Affiliates and any person acting on
its or their behalf (other than the Initial Purchasers and persons acting on
their behalf) have complied with the offering restrictions requirement of
Regulation S.
2. Agreements to Sell and Purchase. The Company hereby agrees to sell
to the several Initial Purchasers, and each Initial Purchaser, upon the basis of
the representations and warranties herein contained, but subject to the
conditions hereinafter stated, agrees, severally and not jointly, to purchase
from the Company the respective principal amount of Firm Securities set forth in
Schedule I hereto opposite its name at a purchase price of $344.07 per $1,000
principal amount at maturity thereof (the "PURCHASE PRICE").
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Initial Purchasers the Additional Securities, and the Initial Purchasers
shall have a one-time right to purchase, severally and not jointly, up to
$169,200,000 principal amount at maturity of Additional Securities at the
Purchase Price. If you, on behalf of the Initial Purchasers, elect to exercise
such option, you shall so notify the Company in writing not later than 30 days
after the date of this Agreement, which notice shall specify the principal
amount at maturity of Additional Securities to be purchased by the Initial
Purchasers and the date on which such Additional Securities are to be purchased.
Such date may be the same as the Closing Date but not earlier than the Closing
Date nor later than ten business days after the date of such notice. Such
Additional Securities may be purchased as provided in Section 4 solely for the
purpose of covering over-allotments made in connection with the offering of the
Firm Securities. If any such Additional Securities are to be purchased, each
Initial Purchaser agrees, severally and not jointly, to purchase the principal
amount at maturity of Additional Securities (subject to such adjustments to
eliminate fractional Securities as you may determine) that bears the same
proportion to the total principal amount at maturity of Additional Securities to
be purchased as the principal amount at maturity of Firm Securities set forth
Schedule I opposite the name of such Initial Purchaser bears to the total
principal amount at maturity of Firm Securities.
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The Company hereby agrees that, without the prior written consent of
Xxxxxx Xxxxxxx & Co. Incorporated on behalf of the Initial Purchasers, it will
not, during the period ending 90 days after the date of the Final Memorandum,
(i) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, lend, or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock or (ii) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery
of common stock or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to (A) the sale of the Securities under this Agreement
or (B) the ability of the Company to grant options or issue stock upon the
exercise of outstanding stock options pursuant to the Company's stock option
plans and issue stock upon the exercise of outstanding warrants or (C)
performance under contractual commitments entered into prior to the date hereof
specifically identified in the Final Memorandum or any of the documents
incorporated by reference therein as of the date hereof.
3. Terms of Offering. You have advised the Company that the Initial
Purchasers will make an offering of the Securities purchased by the Initial
Purchasers hereunder on the terms to be set forth in the Final Memorandum, as
soon as practicable after this Agreement is entered into as in your judgment is
advisable.
4. Payment and Delivery. Payment for the Firm Securities shall be made
to the Company in Federal or other funds immediately available in New York City
against delivery of such Firm Securities for the respective accounts of the
several Initial Purchasers at 10:00 a.m., New York City time, on February 18,
1998, or at such other time on the same or such other date, not later than
February 25, 1998, as shall be designated in writing by you. The time and date
of such payment are hereinafter referred to as the "CLOSING DATE."
Payment for any Additional Securities shall be made to the Company in
Federal or other funds immediately available in New York City against delivery
of such Additional Securities for the respective accounts of the several Initial
Purchasers at 10:00 a.m., New York City time, on the date specified in the
notice described in Section 2 or at such other time on the same or on such other
date, in any event not later than March 18, 1998, as shall be designated in
writing by you. The time and date of such payment are hereinafter referred to as
the "OPTION CLOSING DATE."
Certificates for the Firm Securities and Additional Securities shall be
in definitive form or global form, as specified by you, and registered in such
names and in such denominations as you shall request in writing not later than
one full business day prior to the Closing Date or the Option Closing Date, as
the case may be. The certificates evidencing the Firm Securities and Additional
Securities shall be delivered to you on the Closing Date or the Option Closing
Date, as the case may be, for the respective accounts of the several Initial
Purchasers, with any transfer taxes payable in connection with the transfer of
the Securities to the Initial Purchasers duly paid, against payment of the
Purchase Price.
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5. Conditions to the Initial Purchasers' Obligations. The several
obligations of the Initial Purchasers to purchase and pay for the Firm
Securities on the Closing Date are subject to the following conditions:
(a) Subsequent to the execution and delivery of this Agreement
and prior to the Closing Date:
(i) there shall not have occurred any downgrading,
nor shall any notice have been given of any intended or potential downgrading or
of any review for a possible change that does not indicate the direction of the
possible change, in the rating accorded any of the Company's securities by any
"nationally recognized statistical rating organization," as such term is defined
for purposes of Rule 436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Company and its
subsidiaries, taken as a whole, from that set forth in the Memorandum (exclusive
of any amendments or supplements thereto subsequent to the date of this
Agreement) that, in your judgment, is material and adverse and that makes it, in
your judgment, impracticable to market the Securities on the terms and in the
manner contemplated in the Memorandum.
(b) The representations and warranties of the Company
contained in this Agreement shall have been true and correct as of the date of
this Agreement and as of the Closing Date and the Company shall have complied
with all of the agreements and satisfied all of the conditions on its part to be
performed or satisfied hereunder on or before the Closing Date.
(c) The Initial Purchasers shall have received on the Closing
Date a certificate, dated the Closing Date and signed on behalf of the Company
by an executive officer of the Company, to the effect set forth in Section
5(a)(i) and (b).
(d) The Initial Purchasers shall have received on the Closing
Date (i) an opinion of Xxxxxx, Xxxx & Xxxxxxxx LLP, counsel for the Company,
dated the Closing Date, to the effect set forth in Exhibit A-1 and (ii) an
opinion of Xxxxxxx X. Xxxxxxxxx, Esq., President--Law & Administration,
Secretary of the Company, dated the Closing Date, to the effect set forth in
Exhibit A-2. Such opinion shall be rendered to the Initial Purchasers at the
request of the Company and shall so state therein.
(e) The Initial Purchasers shall have received on the Closing
Date an opinion of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation,
counsel for the Initial Purchasers, dated the Closing Date, to the effect set
forth in Exhibit B.
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(f) The Initial Purchasers shall have received on each of the
date hereof and the Closing Date a letter, dated the date hereof or the Closing
Date, as the case may be, in form and substance satisfactory to the initial
Purchasers, from KPMG Peat Marwick LLP, independent public accountants,
containing statements and information of the type ordinarily included in
accountants "comfort letters" to underwriters with respect to the financial
statements and certain financial information contained in or incorporated by
reference into the Memorandum; provided that the letter delivered on the Closing
Date shall use a "cut-off date" not earlier than the date hereof.
(g) The "lock-up" agreements, each substantially in the form
of Exhibit C hereto, between you and executive officers and directors of the
Company relating to sales and certain other dispositions of shares of common
stock or certain other securities, delivered to you on or before the date
hereof, shall be in full force and effect on the Closing Date.
The Company shall have furnished to you such further certificates and
documents as you shall reasonably request (including certificates on behalf of
the Company by officers of the Company), as to the accuracy of the
representations and warranties of the Company herein, as to the performance by
the Company of its obligations hereunder and as to the other conditions
concurrent and precedent to the obligations of the Initial Purchasers hereunder.
The several obligations of the Initial Purchasers to purchase
Additional Securities hereunder are subject to the delivery to you on the Option
Closing Date of such documents as you may reasonably request with respect to the
good standing of the Company, the due authorization and issuance of the
Additional Securities and other matters related to the issuance of the
Additional Securities including, without limitation, the certificates, opinions
and documents set forth in this Section 5.
6. Covenants of the Company. In further consideration of the agreements
of the Initial Purchasers contained in this Agreement, the Company covenants
with each Initial Purchaser as follows:
(a) To furnish to you in New York City, without charge, prior to
10:00 a.m. New York City time on the business day next succeeding the date of
this Agreement and during the period mentioned in Section 6(c), as many copies
of the Final Memorandum, any documents incorporated by reference therein and any
supplements and amendments thereto as you may reasonably request.
(b) Before amending or supplementing either Memorandum, to furnish
to you a copy of each such proposed amendment or supplement and not to use any
such proposed amendment or supplement to which you reasonably object.
(c) If, during such period after the date hereof and prior to the
date on which all of the Securities shall have been sold by the Initial
Purchasers, any event shall occur or
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condition exist as a result of which it is necessary to amend or supplement the
Final Memorandum in order to make the statements therein, in the light of the
circumstances when the Final Memorandum is delivered to a purchaser, not
misleading, or if, in the opinion of counsel for the Initial Purchasers or
counsel for the Company, it is necessary to amend or supplement the Final
Memorandum to comply with applicable law, forthwith to prepare and furnish to
the Initial Purchasers, at its own expense, either amendments or supplements to
the Final Memorandum so that the statements in the Final Memorandum as so
amended or supplemented will not, in the light of the circumstances when the
Final Memorandum is delivered to a purchaser, be misleading or so that the Final
Memorandum, as amended or supplemented, will comply with applicable law.
(d) To endeavor to qualify the Securities for offer and sale under
the securities or Blue Sky laws of such jurisdictions as you shall reasonably
request; provided that in connection therewith the Company shall not be required
to qualify to conduct business as a foreign corporation or to execute a general
consent to service of process in any jurisdiction.
(e) Whether or not the transactions contemplated in this Agreement
are consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of its obligations under this Agreement,
including: (i) the fees, disbursements and expenses of the Company's counsel and
the Company's accountants in connection with the issuance and sale of the
Securities and all other fees or expenses in connection with the preparation of
the Memorandum and all amendments and supplements thereto, including all
printing costs associated therewith, and the delivering of copies thereof to the
Initial Purchasers, in the quantities herein above specified, (ii) all costs and
expenses related to the transfer and delivery of the Securities to the Initial
Purchasers, including any transfer or other taxes payable thereon, (iii) the
cost of printing or producing any Blue Sky or legal investment memorandum in
connection with the offer and sale of the Securities under state securities laws
and all expenses in connection with the qualification of the Securities for
offer and sale as provided in Section 6(d) hereof, including filing fees and the
reasonable fees and disbursements of counsel for the Initial Purchasers in
connection with such qualification and in connection with the Blue Sky or legal
investment memorandum, (iv) any fees charged by rating agencies for the rating
of the Securities, (v) all document production charges and expenses of counsel
to the Initial Purchasers (but not including their fees for professional
services) in connection with the preparation of this Agreement, (vi) the fees
and expenses, if any, incurred in connection with the admission of the
Securities for trading in the PORTAL market or any appropriate market system,
(vii) the costs and charges of the Trustee and any conversion agent, transfer
agent, registrar or depositary, (viii) the cost of the preparation, issuance and
delivery of the Securities, (ix) the costs and expenses of the Company relating
to investor presentations on any "road show" undertaken in connection with the
marketing of the offering of the Securities, including, without limitation,
expenses associated with the production of road show slides and graphics, fees
and expenses of any consultants engaged by the Company in connection with the
road show presentations, travel and lodging expenses of the representatives and
officers of the Company and any such consultants, and the cost of any aircraft
chartered with the prior approval of the Company in connection with the road
show, and (x) all other cost and expenses incident to the performance of the
obligations of the
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Company hereunder for which provision is not otherwise made in this Section. It
is understood, however, that except as provided in this Section, Section 8, and
the last paragraph of Section 10, the Initial Purchasers will pay all of their
costs and expenses, including fees and disbursements of their counsel, transfer
taxes payable on resale of any of the Securities by them and any marketing
expenses connected with any offers they may make.
(f) Neither the Company nor any Affiliate will sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any security (as
defined in the Securities Act) which could reasonably be integrated under
applicable law with the sale of the Securities in a manner which would require
the registration under the Securities Act of the Securities.
(g) Not to solicit any offer to buy or offer or sell the Securities
or the Underlying Securities by means of any form of general solicitation or
general advertising (as those terms are used in Regulation D under the
Securities Act) or in any manner involving a public offering within the meaning
of Section 4(2) of the Securities Act.
(h) While any of the Securities or the Underlying Securities remain
"restricted securities" within the meaning of the Securities Act, to make
available, upon request, to any seller of such Securities the information
specified in Rule 144A(d)(4) under the Securities Act, unless the Company is
then subject to Section 13 or 15(d) of the Exchange Act.
(i) If requested by you, to use its best efforts to permit the
Securities to be designated PORTAL securities in accordance with the rules and
regulations adopted by the National Association of Securities Dealers, Inc.
relating to trading in the PORTAL market.
(j) During the period of two years after the Closing Date or the
Option Closing Date, if later, the Company will not, and will not permit any of
its affiliates (as defined in Rule 144A under the Securities Act) to resell any
of the Securities or the Underlying Securities which constitute "restricted
securities" under Rule 144A that have been acquired by any of them.
(k) Not to (and to use its best efforts to cause each of its
Affiliates and persons acting on its or their behalf (other than any Initial
Purchaser and persons acting on their behalf) not to) engage in any directed
selling effort (as that term is defined in Regulation S) with respect to the
Securities, and to comply (and use their best efforts to cause each of its
Affiliates and persons acting on its or their behalf (other than any Initial
Purchaser and persons acting on their behalf) to comply) with the offering
restrictions of Regulation S.
7. Offering of Securities; Restrictions on Transfer.
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(a) Each Initial Purchaser, severally and not jointly, represents
and warrants that such Initial Purchaser is a qualified institutional buyer as
defined in Rule 144A under the Securities Act (a "QIB"). Each Initial Purchaser,
severally and not jointly, agrees with the Company that (i) it will not solicit
offers for, or offer or sell, such Securities by any form of general
solicitation or general advertising (as those terms are used in Regulation D
under the Securities Act) or in any manner involving a public offering within
the meaning of Section 4(2) of the Securities Act and (ii) it will solicit
offers for such Securities only from, and will offer such Securities only to,
persons that it reasonably believes to be (A) in the case of offers in the
United States, QIBs or other institutional accredited investors (as defined in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act ("INSTITUTIONAL
ACCREDITED INVESTORS") that, prior to their purchase of the Securities, deliver
to such Initial Purchaser a letter containing the representations and agreements
set forth in Appendix A to the Memorandum and (B) in the case of offers outside
the United States, to persons other than U.S. persons ("FOREIGN PURCHASERS,"
which term shall include dealers or other professional fiduciaries in the United
States acting on discretionary basis for foreign beneficial owners (other than
an estate or trust)) in reliance upon Regulation S under the Securities Act
that, in each case, in purchasing such Securities are deemed to have represented
and agreed as provided in the Memorandum under the caption "Transfer
Restrictions".
(b) Each Initial Purchaser, severally and not jointly represents,
warrants and agrees with respect to offers and sales outside the United States
that:
(i) it has not, and will not, take any action in any
jurisdiction that would permit a public offering of the Securities, or
possession or distribution of the Memorandum or any other offering or publicity
material relating to the Securities, in any country or jurisdiction where action
for that purpose is required;
(ii) such Initial Purchaser will comply with all applicable
laws and regulations in each jurisdiction in which it acquires, offers, sells or
delivers Securities or has in its possession or distributes the Memorandum or
any such other material, in all cases at its own expenses;
(iii) the Securities have not been and will not be registered
under the Securities Act (except as provided in the Registration Rights
Agreement) and may not be offered or sold within the United States or to, or for
the account or benefit of, U.S. persons except in accordance with Rule 144A or
Regulation S under the Securities Act or pursuant to another exemption from the
registration requirements of the Securities Act;
(iv) such Initial Purchaser has offered the Securities and
will offer and sell the Securities (A) as part of their distribution at any time
and (B) otherwise until 40 days after the later of the commencement of the
offering and the Closing Date (or Option Closing Date, if later), only in
accordance with Rule 903 of Regulation S or as otherwise permitted in Section
7(a). Accordingly, neither such Initial Purchaser, its Affiliates nor any
persons acting on its or their behalf have engaged or will engage in any
directed selling efforts (within the meaning
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of Regulation S) with respect to the Securities, and such Initial Purchaser, its
Affiliates and any such persons have complied and will comply with the offering
restrictions requirement of Regulation S;
(v) such Initial Purchaser has (A) not offered or sold and,
prior to the date six months after the Closing Date, will not offer or sell any
Securities to persons in the United Kingdom except to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995; (B) complied and will comply with all
applicable provisions of the Financial Services Xxx 0000 with respect to
anything done by it in relation to the Securities in, from or otherwise
involving the United Kingdom, and (C) only issued or passed on and will only
issue or pass on in the United Kingdom any document received by it in connection
with the issue of the Securities to a person who is of a kind described in
Article 11(3) of the Financial Services Xxx 0000 (Investment Advertisements)
(Exemptions) Order 1996 or is a person to whom such document may otherwise
lawfully be issued or passed on;
(vi) such Initial Purchaser understands that the Securities have
not been and will not be registered under the Securities and Exchange Law of
Japan, and represents that it has not offered or sold, and agrees that it will
not offer or sell, any Securities, directly or indirectly, in Japan or to or
from any resident of Japan except (i) pursuant to an exemption from the
registration requirements of the Securities and Exchange Law of Japan and (ii)
in compliance with any other applicable requirements of Japanese law; and
(vii) such Initial Purchaser agrees that at or prior to
confirmation of sales of the Securities, it will have sent to each distributor,
dealer or person receiving a selling concession, fee or other renumeration that
purchases Securities from it during the restricted period a confirmation or
notice to substantially the following effect:
"The Securities covered hereby have not been registered under
the U.S. Securities Act of 1933 (the "Securities Act") and may not be
offered and sold within the United States or to, or for the account or
benefit of, U.S. persons (i) as part of their distribution at any time
or (ii) otherwise until 40 days after the later of the commencement of
the offering and the closing date, except in either case in accordance
with Regulation S (or Rule 144A if available) under the Securities Act.
Terms used above have the meaning given to them by Regulation S."
Terms used in this Section 7 have the meanings given to them by Regulation S.
8. Indemnity and Contribution.
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(a) The Company agrees to indemnify and hold harmless each Initial
Purchaser and each person, if any, who controls any Initial Purchaser within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act from and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably incurred
in connection with defending or investigating any such action or claim) caused
by any untrue statement or alleged untrue statement of a material fact contained
in either Memorandum (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto), or caused by any omission or
alleged omission to state therein a material fact necessary to make the
statements therein in the light of the circumstances under which they were made
not misleading, except insofar as such losses, claims, damages or liabilities
are caused by any such untrue statement or omission or alleged untrue statement
or omission based upon information relating to any Initial Purchaser furnished
to the Company in writing by such Initial Purchaser through you expressly for
use therein.
(b) Each Initial Purchaser agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers and each
person, if any, who controls the Company within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act to the same extent as
the foregoing indemnity from the Company to such Initial Purchaser, but only
with reference to information relating to such Initial Purchaser furnished to
the Company in writing by such Initial Purchaser through you expressly for use
in either Memorandum or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to Section 8(a) or 8(b), such person (the "INDEMNIFIED PARTY")
shall promptly notify the person against whom such indemnity may be sought (the
"INDEMNIFYING PARTY") in writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the reasonable
fees and disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by Xxxxxx Xxxxxxx & Co. Incorporated, in the case of
parties indemnified pursuant to Section 8(a), and by the Company, in the case of
parties indemnified pursuant to Section 8(b). The indemnifying party shall not
be liable for any
-15-
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settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment. Notwithstanding
the foregoing sentence, if at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel and the indemnified party would be entitled thereto pursuant to the
second and third sentences of this paragraph, the indemnifying party agrees that
it shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in accordance
with such request prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding (and in the event of a settlement
that involves an unconditional release of such indemnified party, the
indemnifying party will send prompt written notice of such settlement to the
indemnified party).
(d) To the extent the indemnification provided for in Section 8(a) or
8(b) is unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Initial Purchasers on the other
hand from the offering of the Securities or (ii) if the allocation provided by
clause 8(d)(i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
8(d)(i) above but also the relative fault of the Company on the one hand and of
the Initial Purchasers on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Initial Purchasers on the other hand in
connection with the offering of the Securities shall be deemed to be in the same
respective proportions as the net proceeds from the offering of the Securities
(before deducting expenses) received by the Company and the total discounts and
commissions received by the Initial Purchasers, in each case as set forth in the
Final Memorandum, bear to the aggregate offering price of the Securities. The
relative fault of the Company on the one hand and of the Initial Purchasers on
the other hand shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or by the Initial Purchasers and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Initial Purchasers' respective obligations to
contribute pursuant to this Section 8 are several in proportion to the
respective principal amount of Securities they have purchased hereunder, and not
joint.
-16-
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(e) The Company and the Initial Purchasers agree that it would not
be just or equitable if contribution pursuant to this Section 8 were determined
by pro rata allocation (even if the Initial Purchasers were treated as one
entity for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in Section 8(d). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages and liabilities referred to in Section 8(d) shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 8, no Initial Purchaser shall be required to contribute any amount in
excess of the amount by which the total price at which the Securities resold by
it and placed to investors exceeds the amount of any damages that such Initial
Purchaser has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section 8 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in this
Section 8 and the representations, warranties and other statements of the
Company contained in this Agreement shall remain operative and in full force and
effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Initial Purchaser or any person
controlling any Initial Purchaser or by or on behalf of the Company, its
officers or directors or any person controlling the Company and (iii) acceptance
of and payment for any of the Securities.
9. Termination. This Agreement shall be subject to termination by
notice given by you to the Company, if (a) after the execution and delivery of
this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, either of the
New York Stock Exchange or the National Association of Securities Dealers, Inc.,
(ii) trading of any securities of the Company shall have been suspended on any
exchange or in any over-the-counter market, (iii) a general moratorium on
commercial banking activities in New York shall have been declared by either
Federal or New York State authorities or (iv) there shall have occurred any
outbreak or escalation of hostilities or any change in financial markets or any
calamity or crisis that, in your judgment, is material and adverse and (b) in
the case of any of the events specified in clauses 9(a)(i) through 9(a)(iv),
such event, singly or together with any other such event, makes it, in your
judgment, impracticable to market the Securities on the terms and in the manner
contemplated in the Final Memorandum.
10. Effectiveness; Defaulting Initial Purchasers. This Agreement shall
become effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date, or the Option Closing Date, as the case may
be, any one or more of the Initial Purchasers shall fail or refuse to purchase
Securities that it or they have agreed to
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purchase hereunder on such date, and the aggregate principal amount of
Securities which such defaulting Initial Purchaser or Initial Purchasers agreed
but failed or refused to purchase is not more than one-tenth of the aggregate
principal amount of Securities to be purchased on such date, the other Initial
Purchasers shall be obligated severally in the proportions that the principal
amount of Firm Securities set forth opposite the names of all such
non-defaulting Initial Purchasers, or in such other proportions as you may
specify, to purchase the Securities which such defaulting Initial Purchaser or
Initial Purchasers agreed but failed of refused to purchase on such date;
provided that in no event shall the principal amount of Securities that any
Initial Purchaser has agreed to purchase pursuant to this Agreement be increased
pursuant to this Section 10 by an amount in excess of one-ninth of such
principal amount of Securities without the written consent of such Initial
Purchaser. If, on the Closing Date any Initial Purchaser or Initial Purchasers
shall fail or refuse to purchase Firm Securities which it or they have agreed to
purchase hereunder on such date and the aggregate principal amount of Securities
with respect to which such default occurs is more than one-tenth of the
aggregate principal amount of Firm Securities to be purchased on such date, and
arrangements satisfactory to you and the Company for the purchase of such Firm
Securities are not made within 36 hours after such default, this Agreement shall
terminate without liability on the part of any non-defaulting Initial Purchaser
or of the Company. In any such case either you or the Company shall have the
right to postpone the Closing Date, but in no event for longer than seven days,
in order that the required changes, if any, in the Final Memorandum or in any
other documents or arrangements may be effected. If, on the Option Closing Date,
any Initial Purchaser or Initial Purchasers shall fail or refuse to purchase
Additional Securities and the aggregate principal amount of Additional
Securities with respect to which such default occurs is more than one-tenth of
the aggregate principal amount of Additional Securities to be purchased, the
non-defaulting Initial Purchasers shall have the option to (a) terminate their
obligation hereunder to purchase Additional Securities or (b) purchase not less
than the principal amount of Additional Securities that such non-defaulting
Initial Purchasers would have been obligated to purchase in the absence of such
default. Any action taken under this paragraph shall not relieve any defaulting
Initial Purchaser from liability in respect of any default of such Initial
Purchaser under this Agreement.
If this Agreement shall be properly terminated by the Initial
Purchasers, or any of them, because of any failure or refusal on the part of the
Company to comply with the terms or to fulfill any of the conditions of this
Agreement required to be performed or fulfilled by the Company pursuant to this
Agreement, or if for any reason the Company shall be unable to perform its
obligations under this Agreement, the Company will reimburse the Initial
Purchasers or such Initial Purchasers as have so terminated this Agreement with
respect to themselves, severally, for all out-of-pocket expenses (including the
fees and disbursements of their counsel) reasonably incurred by such initial
Purchasers in connection with this Agreement or the offering contemplated
hereunder.
11. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
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12. Applicable Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
-19-
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13. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
Very truly yours.
Western Digital Corporation
By: /s/Xxxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Chairman of the Board,
President and Chief
Executive Officer
Accepted as of the date hereof
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxx, Sachs & Co.
Xxxxx Xxxxxx Inc.
Acting severally on behalf of themselves and
the several Initial Purchasers named
in Schedule I hereto.
By: Xxxxxx Xxxxxxx & Co. Incorporated
By: /s/Xxxxxxx Xxxxxx
-------------------------------
Name: Xxxxxxx Xxxxxx
Title: Principal
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SCHEDULE I
INITIAL PURCHASER PRINCIPAL AMOUNT AT
----------------- MATURITY OF FIRM
SECURITIES TO BE PURCHASED
--------------------------
Xxxxxx Xxxxxxx & Co. Incorporated $ 376,000,000
Xxxxxxx, Sachs & Co. 376,000,000
Xxxxx Xxxxxx Inc. 376,000,000
--------------
Total $1,128,000,000
==============
23
EXHIBIT A-1
OPINION OF XXXXXX XXXX & XXXXXXXX LLP
The opinion of the counsel for the Company to be delivered pursuant to
Section 5(d)(i) of the Purchase Agreement shall be to the effect that:
A. The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of Delaware, has the corporate power
and authority to own its property and to conduct its business as described in
the Final Memorandum and is duly qualified as a foreign corporation in the State
of California.
B. The Purchase Agreement has been duly authorized, executed and
delivered by the Company.
C. The authorized capital stock of the Company and the Rights and the
Rights Agreement conform as to legal matters to the description thereof
contained in the Final Memorandum.
D. The Securities have been duly authorized by the Company and, when
executed and authenticated in accordance with the provisions of the Indenture
and delivered to and paid for by the Initial Purchasers in accordance with the
terms of the Purchase Agreement, will be valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms, subject
to (i) the effect of any applicable bankruptcy, insolvency, reorganization
moratorium, arrangement or other similar laws affecting enforcement of
creditor's rights generally, including, without limitation, the effect of
statutory or other laws regarding fraudulent conveyances or transfers,
preferential transfers and laws affecting distributions by corporations to
stockholders and (ii) general principles of equity, regardless of whether a
matter is considered in a proceeding in equity, at law, in an arbitration or
otherwise, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing, and will be entitled to the
benefits of the Indenture and the Registration Rights Agreement.
E. The shares of Common Stock to be issued upon conversion of the
Securities have been duly authorized and reserved and, when issued upon
conversion of the Securities in accordance with the terms of the Securities,
will be validly issued, fully paid and non-assessable.
F. Each of the Indenture and the Registration Rights Agreement has been
duly authorized, executed and delivered by, and is a valid and binding agreement
of, the Company, enforceable against the Company in accordance with its terms,
subject to (i) the effect of any applicable bankruptcy, insolvency,
reorganization moratorium, arrangement or other similar laws affecting
enforcement of creditor's rights generally, including, without limitation, the
effect of statutory or other laws regarding fraudulent conveyances or transfers,
preferential transfers and laws affecting distributions by corporations to
stockholders and (ii) general principles of equity,
24
regardless of whether a matter is considered in a proceeding in equity, at law,
in an arbitration or otherwise, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing.
G. The execution and delivery by the Company of, and the performance by
the Company of its obligations under, the Purchase Agreement, the Indenture, the
Registration Rights Agreement and the Securities do not and will not contravene
any provision of applicable law or the certificate of incorporation or bylaws of
the Company or the Revolving Credit and Term Loan Agreement, dated as of January
28, 1998, among the Company, BankBoston, N.A. and the other lending institutions
listed on Schedule 1 thereto, and BankBoston, N.A., as Agent for itself and such
other lending institutions, as amended (the "Senior Bank Facility") or any order
or decree of any governmental body, agency or court having jurisdiction over the
Company or any subsidiary known to such counsel and no consent, approval,
authorization or order of, or qualification or filing with, any governmental
body or agency is required for the performance by the Company of its obligations
under the Purchase Agreement, the Indenture, the Registration Rights Agreement
or the Securities, except such as may be required by the securities or Blue Sky
laws of the various states in connection with the offer and sale of the
Securities and by Federal and state securities laws with respect to the
Company's obligations under the Registration Rights Agreement or expressly
contemplated by the provisions thereof.
H. The Company is not, and after giving effect to the offering and sale
of the Securities and the application of the proceeds thereof as described in
the Final Memorandum, will not be an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended.
I. The statements in the Final Memorandum under the captions "Risk
Factors--Legal Proceedings" in the second paragraph thereunder, "Business--Legal
Proceedings" in the third paragraph thereunder, "Description of Debentures,"
"Description of Capital Stock," "Plan of Distribution" and "Transfer
Restrictions" and in "Certain Factors Affecting Western Digital Corporation
And/Or the Disk Drive Industry--Legal Proceedings" in the second paragraph
thereunder and in "Part II--Other Information, Item 1--Legal Proceedings" in the
second paragraph thereunder of the Company's most recent quarterly report on
Form 10-Q, insofar as such statements constitute summaries of the legal matters,
documents or proceedings referred to therein, fairly summarize the matters
referred to therein.
J. The statements in the Final Memorandum under the caption "Certain
Federal Income Tax Considerations," insofar as such statements constitute a
summary of the United States federal tax laws referred to therein, are accurate
and fairly summarize the matters referred to therein in all material respects.
K. Assuming the accuracy of the representations and warranties and
compliance with the agreements of the Company in Sections 1(x), 1(z), 1(aa),
6(f), 6(g), 6(j) and 6(k) of the Purchase Agreement and the Initial Purchasers
herein and referred to in "Plan of Distribution" and
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"Transfer Restrictions" in the Final Memorandum, it is not necessary in
connection with the offer, sale and delivery of the Securities to the Initial
Purchasers under the Purchase Agreement or in connection with the initial resale
of such Securities by the Initial Purchasers in accordance with the Purchase
Agreement and the Final Memorandum to register the Securities under the
Securities Act of 1933 or to qualify the Indenture under the Trust Indenture Act
of 1939, it being understood that no opinion is expressed as to any subsequent
resale of any Security or Underlying Security.
Such opinion may be made subject to other such qualifications as are
reasonable and customary for opinions with respect to such matters and such
counsel need express no opinion regarding the legality, validity, binding nature
or enforceability of any provision in the Purchase Agreement, the Securities,
the Indenture or the Registration Rights Agreement relating to indemnification
or contribution or the ability to obtain specific performance, injunctive relief
or other equitable relief as a remedy for noncompliance with any of the
foregoing agreements or instruments.
Such opinion shall also state such counsel has participated in
conferences with officers and other representatives of the Company,
representatives of the independent public accountants for the Company,
representatives of the Initial Purchasers and counsel for the Initial
Purchasers, at which conferences the contents of the Final Memorandum and
related matters were discussed; that such counsel is not passing upon and does
not assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Final Memorandum (other than with regard to the
opinions set forth in I and J above); that, on the basis of the foregoing, no
facts have come to such counsel's attention which lead such counsel to believe
that the Final Memorandum, on the date thereof or on the date such opinion is
delivered, contains an untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained therein, in light of
the circumstances under which they were made, not misleading (it being
understood that such counsel need express no view with respect to the financial
statements and related schedules and notes thereto and the other financial,
statistical and accounting data included in the Final Memorandum).
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EXHIBIT A-2
OPINION OF COMPANY GENERAL COUNSEL
The opinion of the counsel for the Company to be delivered pursuant to
Section 5(d)(ii) of the Purchase Agreement shall be to the effect that:
A. Each Significant Subsidiary of the Company has been duly
incorporated, is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described in the
Final Memorandum and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would not have
a Material Adverse Effect; all of the issued shares of capital stock of each
Significant Subsidiary have been duly and validly authorized and issued, are
fully paid and non-assessable, and are owned directly by the Company or a
subsidiary of the Company, free and clear of all liens, encumbrances, equities
or claims.
B. The shares of common stock outstanding on the Closing Date have been
duly authorized and are validly issued, fully paid and non-assessable. The
shares of Common Stock to be issued upon conversion of the Securities have been
duly authorized and reserved and, when issued upon conversion of the Securities
in accordance with the terms of the Securities, will be validly issued, fully
paid and non-assessable, and the issuance of such Common Stock will not be
subject to any preemptive or, to such counsel's knowledge, similar rights.
C. The execution and delivery by the Company of, and the performance by
the Company of its obligations under, the Purchase Agreement, the Indenture, the
Registration Rights Agreement and the Securities do not and will not contravene
any provision of applicable law or the certificate of incorporation or bylaws of
the Company or any agreement or other instrument binding upon the Company or any
of its subsidiaries or any judgment, order or decree of any governmental body,
agency or court having jurisdiction over the Company or any subsidiary known to
such counsel and no consent, approval, authorization or order of, or
qualification or filing with, any governmental body or agency is required for
the performance by the Company of its obligations under the Purchase Agreement,
the Indenture, the Registration Rights Agreement or the Securities, except such
as may be required by the securities or Blue Sky claws of the various states in
connection with the offer and sale of the Securities and by Federal and state
securities laws with respect to the Company's obligations under the Registration
Rights Agreement or expressly contemplated by the provisions thereof.
D. After due inquiry, such counsel does not know of any legal or
governmental proceedings pending or threatened to which the Company or any of
its subsidiaries is a party or to which any of the properties of the Company or
any of its subsidiaries is subject other than
27
proceedings fairly summarized in all material respects in the Final Memorandum
and proceedings which such counsel believes are not likely to have a Material
Adverse Effect.
E. The statements in the Final Memorandum under the captions "Risk
Factors -- Intellectual Property," "Risk Factors -- Legal Proceedings,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources," "Business -- Legal Proceedings,"
in "Item 3 - Legal Proceedings" of the Company's most recent annual report on
Form 10-K, and in "Certain Factors Affecting Western Digital Corporation And/Or
the Disk Drive Industry -- Legal Proceedings" and in "Part II -- Other
Information, Item 1 -- Legal Proceedings" of the Company's most recent quarterly
report on Form 10-Q, insofar as such statements constitute summaries of the
legal matters, documents or proceedings referred to therein, fairly summarize
the matters referred to therein.
F. Such counsel is of the opinion that each document incorporated by
reference in the Final Memorandum (except for financial statements and schedules
and other financial and statistical data included therein as to which such
counsel need not express any opinion), complied as to form when filed with the
Commission in all material respects with the Exchange Act and the rules and
regulations of the Commission thereunder.
Such opinion may be made subject to such qualifications as are
reasonable and customary for opinions with respect to such matters and such
counsel need express no opinion regarding the legality, validity, binding nature
or enforceability of any provision in the Purchase Agreement, the Securities,
the Indenture or the Registration Rights Agreement relating to indemnification
or contribution or the ability to obtain specific performance, injunctive relief
or other equitable relief as a remedy for noncompliance with any of the
foregoing agreements or instruments.
Such opinion shall also state such counsel has participated in
conferences with officers and other representatives of the Company,
representatives of the independent public accountants for the Company,
representatives of the Initial Purchasers and counsel for the Initial
Purchasers, at which conferences the contents of the Final Memorandum and
related matters were discussed; that such counsel is not passing upon and does
not assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Final Memorandum (other than with regard to the
Opinions set forth in E above); that, on the basis of the foregoing, no facts
have come to such counsel's attention which lead such counsel to believe that
the Final Memorandum, on the date thereof or on the date such opinion is
delivered, contains an untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained therein, in light of
the circumstances under which they were made, not misleading (it being
understood that such counsel need express no view with respect to the financial
statements and related schedules and notes thereto and the other financial,
statistical and accounting data included in the Final Memorandum).
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EXHIBIT B
OPINION OF XXXXXX XXXXXXX XXXXXXXX & XXXXXX
The opinion of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx to be delivered
pursuant to Section 5(d) of the Purchase Agreement shall be to the effect that:
A. The Purchase Agreement has been duly authorized, executed and
delivered by the Company.
B. The Securities have been duly authorized by the Company and, when
executed and authenticated in accordance with the provisions of the Indenture
and delivered to and paid for by the Initial Purchasers in accordance with the
terms of the Purchase Agreement, will be valid and binding obligations of the
Company, enforceable in accordance with their terms, and will be entitled to the
benefits of the Indenture and the Registration Rights Agreement.
C. The Underlying Securities reserved for issuance upon conversion of
the Securities have been duly authorized and reserved and, when issued upon
conversion of the Securities in accordance with the terms of the Securities,
will be validly issued, fully paid and non-assessable, and the issuance of the
Underlying Securities will not be subject to any preemptive or, to the knowledge
of such counsel, similar rights.
D. Each of the Indenture and the Registration Rights Agreement has been
duly authorized, executed and delivered by, and is a valid and binding agreement
of, the Company, enforceable against the Company in accordance with its terms.
E. The statements in the Final Memorandum under the captions
"Description of Debentures", "Plan of Distribution" and "Transfer Restrictions,"
insofar as such statements constitute summaries of the legal matters, documents
or proceedings referred to therein, fairly summarize the matters referred to
therein.
F. Such counsel has no reason to believe that (except for financial
statements and schedules and other financial, statistical and accounting data as
to which such counsel need not express any belief) the Final Memorandum when
issued contained, or as of the date such opinion is delivered contains, any
untrue statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
G. Based upon the representations, warranties and agreements of the
Company in Sections 1(x), 1(z), 1(aa), 6(f), 6(g), 6(j) and 6(k) of the Purchase
Agreement and of the Initial Purchasers in Section 7 of the Purchase Agreement
and the Final Memorandum, it is not necessary in connection with the offer, sale
and delivery of the Securities to the Initial Purchasers
29
under the Purchase Agreement or in connection with the initial resale of such
Securities by the Initial Purchasers in accordance with Section 7 of the
Purchase Agreement to register the Securities under the Securities Act of 1933
or to qualify the Indenture under the Trust Indenture Act of 1939, it being
understood that no opinion is expressed as to any subsequent resale of any
Security or Underlying Security.
Such opinion may be made subject to such qualifications as are
reasonable and customary for opinions with respect to such matters and such
counsel need express no opinion regarding the legality, validity, binding nature
or enforceability of any provision in the Purchase Agreement, the Securities,
the Indenture or the Registration Rights Agreement relating to indemnification
or contribution or the ability to obtain specific performance, injunctive relief
or other equitable relief as a remedy for noncompliance with any of the
foregoing agreements or instruments.
With respect to paragraph F above, Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx may
state that their opinion and belief are based upon their participation in the
preparation of the Final Memorandum (and any amendments or supplements thereto)
and review and discussion of the contents thereof (including the review of, but
not participation in the preparation of, the incorporated documents), but are
without independent check or verification except as specified.
-2-
30
EXHIBIT C
FORM OF LOCK-UP LETTER
February 12, 1998
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxx, Sachs & Co.
Xxxxx Xxxxxx, Inc.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Dear Sirs and Mesdames:
The undersigned understands that Xxxxxx Xxxxxxx & Co. Incorporated
("XXXXXX XXXXXXX") proposes to enter into a Purchase Agreement (the "PURCHASE
AGREEMENT") with Western Digital Corporation, a Delaware corporation (the
"COMPANY"), providing for the offering (the "OFFERING") by the several Initial
Purchasers, including Xxxxxx Xxxxxxx (the "INITIAL PURCHASERS"), of
$1,128,000,000 principal amount of Zero Coupon Convertible Subordinated
Debentures due 2018 of the Company (the "SECURITIES"). The Securities will be
convertible into shares of Common Stock, $0.01 par value, of the Company (the
"COMMON STOCK").
To induce the Initial Purchasers that may participate in the Offering
to continue their efforts in connection with the Offering, the undersigned
hereby agrees that, without the prior written consent of Xxxxxx Xxxxxxx on
behalf of the Initial Purchasers, the undersigned will not, during the period
commencing on the date hereof and ending 90 days after the date of the final
offering memorandum relating to the Offering (the "FINAL MEMORANDUM"), (1)
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or (2) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences
of ownership of the Common Stock, whether any such transaction described in
clause (1) or (2) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise. The foregoing sentence shall not apply
to transactions relating to shares of Common Stock or other securities acquired
in open market transactions after the completion of the Offering. In addition,
the undersigned agrees that, without the prior written consent of Xxxxxx Xxxxxxx
on behalf of the Initial Purchasers, the undersigned will not, during the period
commencing on the date hereof and ending 90 days after the date of the Final
Memorandum, make any demand for or exercise any
31
right with respect to, the registration of any shares of Common Stock or any
security convertible into or exercisable or exchangeable for Common Stock.
Notwithstanding the foregoing, the undersigned may, without the consent
of Xxxxxx Xxxxxxx & Co. Incorporated, sell up to ten percent of the number of
shares of Common Stock owned by the undersigned or issuable to the undersigned
upon exercise of stock options that are vested as of the date of the Purchase
Agreement; provided, however, that the executive officers and directors of the
Company, taken as a whole, may sell no more than an aggregate of 50,000 shares
pursuant to this exception.
Whether or not the Offering actually occurs depends on a number of
factors, including market conditions. Any Offering will be made only pursuant to
a Purchase Agreement, the terms of which are subject to negotiation between the
Company and the Initial Purchasers.
Very truly yours,
---------------------------------------
(Name)
---------------------------------------
(Address)
4
