EXHIBIT 10.1
EXECUTION VERSION
EXCHANGE AGREEMENT
By and Between
APPLIED MAGNETICS CORPORATION
and
KENILWORTH PARTNERS II LP
Dated as of May 10, 1999
TABLE OF CONTENTS
PAGE
1. DEBENTURE EXCHANGE; STOCK SALE. . . . . . . . . . . . . . . . . . . . . .1
1.1 Debenture Exchange . . . . . . . . . . . . . . . . . . . . . . . . .1
1.2 Adjustment to Principal Amount of Debentures . . . . . . . . . . . .1
1.3 Stock Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.4 Purchase Price for Preferred Shares. . . . . . . . . . . . . . . . .2
1.5 Closing Obligations. . . . . . . . . . . . . . . . . . . . . . . . .2
2. RESTRICTIONS ON TRANSFER OF SECURITIES. . . . . . . . . . . . . . . . . .3
2.1 Securities Legend. . . . . . . . . . . . . . . . . . . . . . . . . .3
2.2 Lock-Up Legend . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.3 Removal of Legends . . . . . . . . . . . . . . . . . . . . . . . . .4
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . . . . . . .4
3.1 Organization and Good Standing . . . . . . . . . . . . . . . . . . .4
3.2 Capitalization .. . . . . . . . . . . . . . . . . . . . . . . . . .5
3.3 Authority; No Conflict . . . . . . . . . . . . . . . . . . . . . . .5
3.4 Approvals or Notices . . . . . . . . . . . . . . . . . . . . . . . .6
3.5 Compliance with the Law and other Instruments. . . . . . . . . . . .6
3.6 Securities Act Reports . . . . . . . . . . . . . . . . . . . . . . .7
3.7 Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . .8
3.8 Absence of Material Changes. . . . . . . . . . . . . . . . . . . . .8
3.9 Certain Proceedings. . . . . . . . . . . . . . . . . . . . . . . . .8
4. REPRESENTATIONS AND WARRANTIES OF KENILWORTH. . . . . . . . . . . . . . .9
4.1 Organization and Good Standing . . . . . . . . . . . . . . . . . . .9
4.2 Authority; No Conflict . . . . . . . . . . . . . . . . . . . . . . .9
4.3 Approvals or Notices . . . . . . . . . . . . . . . . . . . . . . . 10
4.4 Ownership of Debentures. . . . . . . . . . . . . . . . . . . . . . 10
4.5 Investment Matters. . . . . . . . . . . . . . . . . . . . . . . . 10
4.6 Certain Proceedings. . . . . . . . . . . . . . . . . . . . . . . . 11
4.7 Brokers or Finders. . . . . . . . . . . . . . . . . . . . . . . . 11
5. COVENANTS OF THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . 11
5.1 Other Debenture Exchanges. . . . . . . . . . . . . . . . . . . . 11
6. CONDITIONS PRECEDENT TO KENILWORTH'S OBLIGATION TO CLOSE . . . . . . . 11
6.1 Accuracy of Representations. . . . . . . . . . . . . . . . . . . . 11
6.2 The Company's Performance. . . . . . . . . . . . . . . . . . . . . 12
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6.3 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.4 No Prohibition . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.5 Additional Documents . . . . . . . . . . . . . . . . . . . . . . . 12
7. CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATION TO CLOSE . . . . . . . 13
7.1 Accuracy of Representations. . . . . . . . . . . . . . . . . . . . 13
7.2 Kenilworth's Performance . . . . . . . . . . . . . . . . . . . . . 13
7.3 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.4 No Prohibition . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.5 Additional Documents . . . . . . . . . . . . . . . . . . . . . . . 14
7.6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.7 Effectiveness of Registration Statement. . . . . . . . . . . . . . 14
8. INDEMNIFICATION; REMEDIES.. . . . . . . . . . . . . . . . . . . . . . . 14
8.1 Indemnification and Payment of Damages by Kenilworth . . . . . . . 14
8.2 Indemnification and Payment of Damages by the Company. . . . . . . 15
8.3 Procedure for Indemnification--Third Party Claims. . . . . . . . . 15
8.4 Procedure for Indemnification--Other Claims. . . . . . . . . . . . 16
9. GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
9.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
9.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
9.3 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . 17
9.4 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . 18
9.5 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
9.6 Jurisdiction; Service of Process . . . . . . . . . . . . . . . . . 19
9.7 Survival of Representations and Warranties . . . . . . . . . . . . 19
9.8 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . 19
9.9 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9.10 Entire Agreement and Modification. . . . . . . . . . . . . . . . . 20
9.11 Assignments, Successors, and No Third-Party Rights . . . . . . . . 20
9.12 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9.13 Section Headings, Construction . . . . . . . . . . . . . . . . . . 21
9.14 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9.15 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9.16 Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . . . . . . 21
10. Waiver of Jury Trial. . . . . . . . . . . . . . . . . . . . . . . . . . 21
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EXCHANGE AGREEMENT
This Exchange Agreement (the "Agreement") is made as of May 10,
1999, by Kenilworth Partners II LP, a Delaware limited partnership
("Kenilworth"), and Applied Magnetics Corporation, a Delaware corporation
(the "Company").
WHEREAS, Kenilworth is the owner of certain 7% Convertible
Subordinated Debentures issued by the Company in the principal amount of
forty-three million dollars ($43,000,000) (the "Debentures");
WHEREAS, Kenilworth desires to deliver, and the Company desires to
receive, the Debentures in exchange (the "Debenture Exchange") for six
million (6,000,000) shares of the common stock, $.10 par value, of the
Company (the "Common Shares"); and
WHEREAS, Kenilworth desires to purchase, and the Company desires to
sell (the "Stock Sale"), two hundred fifty thousand (250,000), shares of
Series B Convertible Preferred Stock of the Company (the "Preferred Shares")
to Kenilworth for the sum of twenty-five million dollars ($25,000,000).
NOW, THEREFORE, in consideration of the terms and conditions set
forth herein, the parties agree as follows:
1. DEBENTURE EXCHANGE; STOCK SALE.
1.1 DEBENTURE EXCHANGE. Subject to the terms and conditions of
this Agreement and that certain Lock-Up Agreement of even date herewith (the
"Lock-Up Agreement"), on the date of the closing of the transactions
contemplated hereby (the "Closing Date"), Kenilworth shall transfer such
principal amount of Debentures to the Company, as may be determined in
accordance with the terms of Section 1.2 hereof and, in consideration of and
in exchange for the Debentures, the Company shall deliver to Kenilworth the
Common Shares. The Closing Date shall be as soon as reasonably practicable
following the fulfillment (or valid waiver) of the conditions to closing set
forth in Sections 6 and 7 below.
1.2 ADJUSTMENT TO PRINCIPAL AMOUNT OF DEBENTURES. In the event
that the average closing price of the Company's common stock ("Common Stock")
as reported by the New York Stock Exchange on the date of the execution and
delivery of this Agreement (the "Market Price") is less than four dollars
($4.00) per share, the principal amount of Debentures to be exchanged for the
Common Shares shall be reduced on a pro rata basis by one million dollars
($1,000,000) for every one-sixteenth of a dollar ($1/16)
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by which the Market Price is below four dollars ($4.00) per share. For
example, if the Market Price is three dollars and fifteen-sixteenths per
share ($3-15/16), the principal amount of Debentures to be exchanged shall be
reduced from forty-three million dollars ($43,000,000) to forty-two million
dollars ($42,000,000).
1.3 STOCK SALE. Subject to the terms and conditions of this
Agreement, on the Closing Date the Company will issue and sell the Preferred
Shares to Kenilworth, and Kenilworth will purchase the Preferred Shares from
the Company.
1.4 PURCHASE PRICE FOR PREFERRED SHARES. The purchase price (the
"Purchase Price") for the Preferred Shares will be twenty-five million
dollars ($25,000,000). Such Purchase Price shall be paid to the Company in
U.S. dollars by wire transfer of immediately available funds to an account
designated in writing by the Company.
1.5 CLOSING OBLIGATIONS. On the Closing Date:
(a) The Company will deliver to Kenilworth:
(i) four certificates, each representing one million five
hundred thousand (1,500,000) Common Shares;
(ii) a certificate representing the Preferred Shares;
(iii) a registration rights agreement in the form of
Exhibit 1.5(a)(iii), executed by the Company (the "Registration Rights
Agreement");
(iv) the Lock-Up Agreement, executed by the Company;
(v) a certificate executed by the Company representing and
warranting to Kenilworth that each of the Company's representations and
warranties in this Agreement is accurate in all material respects as of the
Closing Date; and
(vi) such other agreements, certificates or documents as may
be reasonably requested by Kenilworth.
(b) Kenilworth will deliver to the Company:
(i) the Purchase Price;
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(ii) certificates representing Debentures in the principal
amount of forty-three million dollars ($43,000,000), subject to adjustment in
accordance with Section 1.2 above, duly endorsed (or accompanied by duly
executed stock powers);
(iii) the Registration Rights Agreement, executed by
Kenilworth;
(iv) the Lock-Up Agreement, executed by Kenilworth;
(v) a certificate executed by Kenilworth representing and
warranting to the Company that each of Kenilworth's representations and
warranties in this Agreement is accurate in all material respects as of the
Closing Date; and
(vi) such other agreements, certificates or documents as may
be reasonably requested by the Company.
2. RESTRICTIONS ON TRANSFER OF SECURITIES.
2.1 SECURITIES LEGEND. All certificates evidencing (i) the Preferred
Shares, (ii) subject to the terms of the Lock-Up Agreement and the Registration
Rights Agreement, the Common Shares, and (iii) subject to the terms of the
Registration Rights Agreement, the Common Stock issued upon conversion of the
Preferred Shares (collectively with the Common Stock, if any, issued as
dividends, the "Securities") shall be endorsed with the following, or a
substantially similar, legend (the "Securities Legend") and, to the extent
necessary, with any other legends required pursuant to applicable state
securities laws:
THE SALE OF THE SECURITIES REPRESENTED BY THIS INSTRUMENT
WAS NOT REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"ACT"). NO SALE OR OTHER DISPOSITION OF THE SECURITIES MAY
BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
RELATING THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE
ACT.
2.2 LOCK-UP LEGEND. Certificates representing seventy-five percent
(75%) of the Common Shares shall be endorsed with the following, or a
substantially similar, legend (the "Lock-Up Legend"):
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THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON SALE OR TRANSFER CONTAINED IN A LOCK-UP
AGREEMENT. COPIES OF SUCH AGREEMENT MAY BE INSPECTED AT THE
PRINCIPAL OFFICE OF THE COMPANY.
2.3 REMOVAL OF LEGENDS.
(a) The Securities Legend endorsed on the certificates
evidencing the Securities shall be removed, and the Company shall issue
certificates without such legends to the holder of such shares, if, and to the
extent that, the Securities are registered under the Securities Act of 1933, as
amended (the "Securities Act"), or qualified under applicable state securities
laws or if such holder provides to the Company an opinion of counsel for such
holder, in form and substance reasonably satisfactory to the Company's counsel,
to the effect that a sale, transfer or assignment of such Securities may be made
without registration under the Securities Act, or qualification under applicable
state securities laws.
(b) The Lock-Up Legend endorsed on the certificates representing
the Common Shares shall be removed, and the Company shall issue certificates
without such legends to the holders of such shares, in accordance with the terms
of the Lock-Up Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to Kenilworth as follows:
3.1 ORGANIZATION AND GOOD STANDING. The Company (i) is a corporation
duly organized, validly existing and in good standing under the laws of the
state of Delaware, (ii) has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as it is now being
conducted and (ii) is duly qualified or licensed and in good standing to do
business in each jurisdiction in which the properties owned, leased or operated
by it or the nature of the business conducted by it makes such qualification or
license necessary, except in such jurisdictions where the failure to be so duly
qualified or licensed and in good standing has not had, either individually or
in the aggregate, a material adverse effect on the business, assets, results of
operations or financial condition of the Company. The Company has delivered to
Kenilworth true and complete copies of its Certificate of Incorporation and
Bylaws, each as amended through and in effect as of the date hereof.
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3.2 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of
120,000,000 shares of Common Stock, par value $.10 per share, and
5,000,000 shares of preferred stock, par value $.10 per share ("Preferred
Stock"), of which 200,000 shares are designated as Series A Participating
Preferred Stock and 377,767 shares of which are designated as Series B
Convertible Preferred Stock. As of the date hereof, (i) 41,867,293 shares of
Common Stock are issued and outstanding and 7,010,645 shares of Common Stock are
reserved for issuance upon the exercise of outstanding options and warrants, and
(ii) no shares of Preferred Stock are issued and outstanding. All outstanding
shares of Common Stock are duly authorized, validly issued, fully paid and
nonassessable, are not subject to and have not been issued in violation of any
preemptive rights and have not been issued in violation of any federal or state
securities laws. Except as set forth on SCHEDULE 3.2, there are no issued or
outstanding bonds, debentures, notes or other indebtedness of the Company which
have the right to vote (or which are convertible into other securities which
have the right to vote) on any matters on which the Company's stockholders have
the right to vote ("Voting Debt"). Except as set forth on SCHEDULE 3.2, there
are no outstanding or authorized subscriptions, options, warrants, calls,
rights, commitments or any other agreements of any character to or by which the
Company is a party or is bound which, directly or indirectly, obligate the
Company to issue, deliver or sell or cause to be issued, delivered or sold any
shares of Common Stock or Preferred Stock or any other capital stock, equity
interest or Voting Debt of the Company or any securities convertible into, or
exercisable or exchangeable for, or evidencing the right to subscribe for, any
such shares, interests or Voting Debt or obligating the Company to grant, extend
or enter into any such subscription, option, warrant, call or right.
(b) The Securities, upon issuance and delivery in accordance
with the terms and provisions of this Agreement, will be duly authorized, fully
paid and non-assessable, will be free of any liens, claims, charges, security
interests, pledges, voting or shareholder agreements encumbrances (excepting the
Lock-Up Agreement) or equities of any kind whatsoever and will not be issued in
violation of any preemptive rights.
3.3 AUTHORITY; NO CONFLICT.
(a) The Company has all requisite right, power and authority to
execute, deliver and perform its obligations under, and consummate the
transactions contemplated by, this Agreement and the other agreements and
instruments contemplated hereby. All proceedings have been taken and all
authorizations have been secured by the Company which are necessary to authorize
the execution, delivery and performance by the Company of this Agreement and the
other agreements and instruments contemplated hereby.
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(b) This Agreement, the Lock-Up Agreement and the Registration
Rights Agreement (together, "Company's Closing Documents") have been duly
executed and delivered by the Company and each of the Company's Closing
Documents constitutes the valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except insofar as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
or by principles governing the availability of equitable remedies.
(c) Neither the execution and delivery of the Company's Closing
Documents by the Company nor the consummation or performance of any of the
transactions contemplated by the Company's Closing Documents will, directly or
indirectly (with or without notice or lapse of time), result in a violation or
breach of (A) any provision of the organizational documents of the Company or
(B) any resolution adopted by the board of directors or the stockholders of the
Company.
3.4 APPROVALS OR NOTICES. Except as set forth in SCHEDULE 3.4, no
authorization, approval, order, license, permit, franchise or consent, and no
registration, declaration, notice or filing by or with any domestic or foreign
governmental authority (including, without limitation, any filing or
registration pursuant to the Securities Act, the Securities Exchange Act of 1934
(the "Exchange Act") or the securities or blue sky laws of the United States of
America or any state or territory thereof) by the Company is required in
connection with the execution and delivery of the Company's Closing Documents,
the performance by the Company of its obligations thereunder and the
consummation of the transactions contemplated thereby. Except as set forth in
SCHEDULE 3.4, the Company is not and will not be required to give any notice to
or obtain any consent or approval from any individual, corporation, partnership,
limited liability company, association or other entity (each, a "Person") in
connection with the execution and delivery of the Company's Closing Documents or
the consummation or performance of any of the transactions contemplated by the
Company's Closing Documents.
3.5 COMPLIANCE WITH THE LAW AND OTHER INSTRUMENTS. The Company is in
material compliance with, and is conducting its businesses in all material
respects so as to comply with, all applicable laws, ordinances, rules and
regulations of all authorities (including, without limitation, any federal,
state or local laws, rules, or regulations regulating the safety of the
workplace and/or the discharge of materials into the environment or otherwise
relating to the protection of the environment). The Company maintains in full
force and effect all licenses, approvals, permits and consents for the lawful
conduct of its business. To its knowledge, the Company is not in default under
or with respect to, nor has it been charged with or threatened with a charge of
any violation or received any notice of any violation of, and is not under
investigation with respect to a possible violation of, any provision of any
federal, state or local law, ruling or regulation, or any judgment, order or
decree of any court, arbitrator or arbitration tribunal
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or any governmental authority, agency or other instrumentality, domestic or
foreign, against, relating to or otherwise affecting the Company or any of
its assets. The Company is not in violation of, or in default under, any
term or provision of its Certificate of Incorporation or Bylaws (as amended
or revised) or of any material lien, indenture, mortgage, lease, agreement,
instrument, contract, commitment or other arrangement, or subject to any
material restriction of any kind or character, which could have a material
adverse effect on the Company as a whole. The execution and delivery of this
Agreement and the other agreements and instruments contemplated hereby, and
the consummation of the transactions contemplated herein and therein, will
not (a) result in the violation or breach of any material term or provision
of, or constitute a default under any statute, order, judgment, writ,
injunction, decree, license, permit, approval, authorization, rule or
regulation of any court or any governmental or regulatory body applicable to
the Company or by which any of its assets or properties are bound or
affected; or (b) result in the breach of, constitute a default under, or
result in the acceleration of any obligation under, any provision of any
agreement, lease, contract, document, instrument, commitment, obligation or
arrangement of any kind or nature to which the Company is a party or by which
it is bound, unless such breach will not have a material adverse effect on
the business or operations of the Company, which default, breach or
acceleration has not been waived; (c) result in the creation of any lien,
claim or charge on or against any of the assets or properties of the Company;
or (d) result in the termination of any license, franchise, lease or permit
to which the Company is a party or by which it is bound.
3.6 SECURITIES ACT REPORTS. The Company has heretofore made
available to Kenilworth true and complete copies of the Company's Proxy
Statement for the meeting of stockholders held on February 26, 1999, the
Company's Quarterly Report on Form 10-Q for the quarter ended January 2, 1999,
the Company's Annual Report on Form 10-K for the fiscal year ended October 3,
1998, the Company's Current Reports on Form 8-K dated February 12, 1999, as
amended March 5, 1999, the Company's Current Report on Form 8-K dated November
24, 1998, the Company's Current Report on Form 8-K dated October 28, 1998, and
the Company's Registration Statement on Form S-3, as filed on March 8, 1999,
filed by the Company with the Securities and Exchange Commission (the "SEC")
pursuant to the Exchange Act or the Securities Act (collectively, the
"Commission Filings"). The Commission Filings constitute all of the documents
required to be filed by the Company with the SEC since October 1, 1998. As of
their respective dates, each of the Commission Filings complied in all material
respects with the applicable requirements of the Exchange Act, the Securities
Act and the rules and regulations promulgated thereunder, and none of the
Commission Filings contained as of such date any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. When filed with the
SEC, the financial statements included in the Commission Filings complied as to
form in all material respects with the applicable rules and regulations of the
SEC and were prepared in accordance with generally accepted accounting
principles (as in effect from time to
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time) applied on a consistent basis(except as may be indicated therein or in
the notes or schedules thereto), and such financial statements fairly present
the consolidated financial position of the Company as at the dates thereof
and the consolidated results of operations and consolidated cash flows of the
Company for the periods then ended, subject, in the case of the unaudited
interim financial statements, to normal, recurring year-end audit
adjustments.
3.7 BROKERS OR FINDERS. Except as set forth on SCHEDULE 3.7, the
Company and its agents have incurred no obligation or liability, contingent or
otherwise, for brokerage or finders' fees or agents' commissions or other
similar payment in connection with this Agreement.
3.8 ABSENCE OF MATERIAL CHANGES. Since January 2, 1999, except as
set forth in SCHEDULE 3.8, (a) the Company has not incurred any liability or
obligation of any kind which, individually or in the aggregate, is material to
the business, assets, results of operations, financial condition or prospects of
the Company; and (b) there has not been any material adverse change in, and no
event has occurred and no condition exists which, individually or together with
other events or conditions, has had a material adverse effect on, the business,
assets, results of operations, financial condition or prospects of the Company.
3.9 CERTAIN PROCEEDINGS. Except as set forth on SCHEDULE 3.9, there
is no action, claim, arbitration, hearing, investigation, litigation or suit
(each, a "Proceeding") pending or, to the Company's knowledge, threatened,
against, involving or affecting the Company or the Company's assets, properties
or business, nor is there any judgment, decree, injunction, rule or order of any
court, governmental department, commission, agency, instrumentality or
arbitrator outstanding against the Company which does or might (i) result in the
modification, termination, suspension, impairment or reformation of any material
contract to which the Company is a party; (ii) materially adversely affect the
manner in which the Company conducts its business; (iii) have a materially
adverse effect on the business, assets, results of operations or financial
condition of the Company; (iv) restrain, prohibit, invalidate or put aside, in
whole or in part, the transactions contemplated hereby; (v) question the
validity of this Agreement, the Registration Rights Agreement or the Lock-Up
Agreement or of any action taken or to be taken by the Company pursuant to or in
connection with the provisions of this Agreement and the transactions
contemplated hereby; or (vi) otherwise prevent or hinder the consummation of
this Agreement, the Registration Rights Agreement or the Lock-Up Agreement.
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4. REPRESENTATIONS AND WARRANTIES OF KENILWORTH.
Kenilworth represents and warrants to the Company as follows:
4.1 ORGANIZATION AND GOOD STANDING. Kenilworth (i) is a partnership
duly organized, validly existing and in good standing under the laws of the
state of Delaware,(ii) has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as it is now being
conducted and (ii) is duly qualified or licensed and in good standing to do
business in each jurisdiction in which the properties owned, leased or operated
by it or the nature of the business conducted by it makes such qualification or
license necessary, except in such jurisdictions where the failure to be so duly
qualified or licensed and in good standing has not had, either individually or
in the aggregate, a material adverse effect on the business, assets, results of
operations or financial condition of Kenilworth.
4.2 AUTHORITY; NO CONFLICT.
(a) Kenilworth has all requisite right, power and authority to
execute, deliver and perform its obligations under, and consummate the
transactions contemplated by, this Agreement and the other agreements and
instruments contemplated hereby. All proceedings have been taken and all
authorizations have been secured by Kenilworth which are necessary to authorize
the execution, delivery and performance by Kenilworth of this Agreement and the
other agreements and instruments contemplated hereby.
(b) This Agreement, the Lock-Up Agreement and the Registration
Rights Agreement (together, "Kenilworth's Closing Documents") have been duly
executed and delivered by Kenilworth and each of Kenilworth's Closing Documents
constitutes the valid and binding obligation of Kenilworth, enforceable against
Kenilworth in accordance with their respective terms, except insofar as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
or by principles governing the availability of equitable remedies.
(c) Neither the execution and delivery of Kenilworth's
Closing Documents by Kenilworth nor the consummation or performance of any of
the transactions contemplated by Kenilworth's Closing Documents by Kenilworth
will give any Person the right to prevent, delay, or otherwise interfere with
any of the transactions contemplated by this Agreement or the Registration
Rights Agreement pursuant to any legal requirement or order to which
Kenilworth may be subject; or any contract, agreement, obligation, promise or
undertaking (a "Contract") to which Kenilworth is a party or by which
Kenilworth may be bound.
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4.3 APPROVALS OR NOTICES. Except as set forth in SCHEDULE 4.3, no
authorization, approval, order, license, permit, franchise or consent, and no
registration, declaration, notice or filing by or with any domestic or foreign
governmental authority (including, without limitation, any filing or
registration pursuant to the Securities Act, the Exchange Act or the securities
or blue sky laws of the United States of America or any state or territory
thereof) by Kenilworth is required in connection with the execution and delivery
of Kenilworth's Closing Documents, the performance by Kenilworth of its
obligations thereunder and the consummation of the transactions contemplated
thereby. Kenilworth is not and will not be required to give any notice or
obtain any consent or approval from any Person in connection with the execution
and delivery of Kenilworth's Closing Documents or the consummation or
performance of any of the transactions contemplated by Kenilworth's Closing
Documents.
4.4 OWNERSHIP OF DEBENTURES. Kenilworth is the sole and absolute
record and beneficial owner and holder of the Debentures; has good and
marketable title to, full power of disposition over and full right to sell and
transfer such Debentures to the Company in accordance with the terms and
conditions of this Agreement; and, upon transfer at the Closing pursuant to
Section 1.1 hereof, such Debentures shall be free and clear of all liens,
encumbrances, charges, assessments and claims whatsoever.
4.5 INVESTMENT MATTERS. The Securities are being acquired for
Kenilworth's own account and not on behalf of any other Person, and the
Securities are being acquired by Kenilworth for investment purposes only and not
with a view to, or for sale in connection with, any resale or distribution of
the Securities which would be in violation of the Securities Act, the Exchange
Act or the securities or blue sky laws of the United States of America or any
state or territory thereof. Kenilworth has received and examined the Commission
Filings. Kenilworth has had the opportunity to ask questions of and receive
answers from the management of the Company concerning the Company, and has been
furnished with all other information about the Company which it has requested.
Kenilworth believes that it is an "accredited investor" as defined in Rule
501(a) of the Securities Act, that it has been fully apprised of all facts and
circumstances necessary to permit it to make an informed decision about
acquiring the Securities, that it has sufficient knowledge and experience in
business and financial matters, that it is capable of evaluating the merits and
risks of an investment in the Securities and that it has the capacity or protect
its own interests in connection with the transactions contemplated by
Kenilworth's Closing Documents. Kenilworth has been advised by the Company and
understands that, except as expressly contemplated by Kenilworth's Closing
Documents, (a) the Securities to be issued hereunder will not be registered
under any securities laws, including, without limitation, the securities laws of
the United States or any other jurisdiction, (b) the Securities must be held
indefinitely unless and until they are registered or an exemption from
registration becomes available, (c) the Securities shall bear appropriate
restrictive legends and (d) the Company shall have the right to place a stop
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order against the Securities prohibiting transfer of the Securities except in
accordance with the Securities Act and the Lock-Up Agreement.
4.6 CERTAIN PROCEEDINGS. There is no Proceeding pending or, to
Kenilworth's knowledge, threatened, against, involving or affecting Kenilworth
or Kenilworth's assets, properties or business, nor is there any judgment,
decree, injunction, rule or order of any court, governmental department,
commission, agency, instrumentality or arbitrator outstanding against Kenilworth
which does or might (i) restrain, prohibit, invalidate or put aside, in whole or
in part, the transactions contemplated hereby; (ii) question the validity of
this Agreement or of any action taken or to be taken by Kenilworth pursuant to
or in connection with the provisions of this Agreement and the transactions
contemplated hereby; or (iii) otherwise prevent or hinder the consummation of
this Agreement.
4.7 BROKERS OR FINDERS. Kenilworth has incurred no obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement and will
indemnify and hold the Company harmless from any such payment alleged to be due
by or through Kenilworth as a result of the action of Kenilworth or its agents.
5. COVENANTS OF THE COMPANY.
5.1 OTHER DEBENTURE EXCHANGES. To the extent that, after the date
hereof and on or prior to that date which is 135 days after the Closing Date,
the Company enters into any agreements with other holders of Company debentures
to exchange such debentures with other Company securities, any securities issued
by the Company with respect to such exchange shall become freely tradable, if at
all, only after that date which is 135 days after the Closing Date.
6. CONDITIONS PRECEDENT TO KENILWORTH'S OBLIGATION TO CLOSE.
Kenilworth's obligation to consummate the transactions contemplated by this
Agreement is subject to the satisfaction, at or prior to the Closing Date, of
each of the following conditions (any of which may be waived by Kenilworth, in
whole or in part):
6.1 ACCURACY OF REPRESENTATIONS. Each of the representations and
warranties contained in Section 3 hereof must be accurate in all material
respects as of the Closing Date.
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6.2 THE COMPANY'S PERFORMANCE.
(a) Each of the covenants and obligations that the Company is
required to perform or comply with pursuant to the Company's Closing Documents
at or prior to the Closing Date must have been performed or complied with in all
material respects.
(b) Each document required to be delivered to Kenilworth
pursuant to Section 1.5 must have been delivered.
6.3 CONSENTS . Each of the consents identified in Schedule 4.3 must
have been obtained and must be in full force and effect.
6.4 NO PROHIBITION. Neither the consummation nor the performance of
any of the transactions contemplated by Kenilworth's Closing Documents will,
directly or indirectly (with or without notice or lapse of time), materially
contravene, or conflict with, or result in a material violation of, or cause
Kenilworth or any person affiliated with Kenilworth to suffer any material
adverse consequence under, (a) any applicable legal requirement or order, or
(b) any legal requirement or order that has been published, introduced, or
otherwise proposed by or before any governmental body. There shall not have
been any action taken, or any statute, rule, regulation, order, judgment or
decree enacted, promulgated, entered, issued or enforced by any governmental
entity, and there shall be no action, suit or proceeding pending, which
(i) makes the transactions contemplated by this Agreement illegal or imposes, or
is reasonably likely to result in the imposition of, material damages or
penalties in connection therewith or (ii) would, as of or after the Closing,
impose material limitations on the ability of Kenilworth effectively to exercise
full rights of ownership of the securities issued to Kenilworth hereby, other
than those limitations imposed by the terms of Kenilworth's Closing Documents.
6.5 ADDITIONAL DOCUMENTS. Such other documents as Kenilworth may
reasonably request for the purpose of (i) evidencing the accuracy of any
representation or warranty of the Company, (ii) evidencing the performance by
the Company of, or the compliance by the Company with, any covenant or
obligation required to be performed or complied with by the Company,
(iii) evidencing the satisfaction of any condition referred to in this
Section 6, or (iv) otherwise facilitating the consummation of any of the
transactions contemplated by this Agreement, must have been delivered to
Kenilworth.
6.6 ABSENCE OF INJUNCTIONS. No permanent or preliminary injunction
or restraining order or other order by any court or governmental entity of
competent jurisdiction or other legal restraint or prohibition preventing
consummation of the transactions contemplated hereby shall be in effect.
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6.7 EFFECTIVENESS OF REGISTRATION STATEMENT. The SEC shall have
declared effective the Registration Statement (as such term is defined in the
Registration Rights Agreement) and the SEC shall not have issued any order
preventing or suspending the use of any preliminary or final prospectus included
in the Registration Statement or otherwise filed pursuant to Rule 424(b) of the
Securities Act.
6.8 NO MATERIAL ADVERSE CHANGE. (a) Since the date hereof nothing
shall have occurred which, individually or in the aggregate, has had or, in the
reasonable judgment of Kenilworth, is reasonably likely to have, a material
adverse effect on the business, assets, results of operations, financial
condition or prospects of the Company.
(b) The Company shall not (1) have applied for the appointment of, or
the taking of possession by, a receiver, custodian, sequestrator, trustee or
liquidator of itself, or of all or a substantially part of its property, (2) be
generally unable to pay its debts as they become due or have ceased operations
of its present businesses, (3) have made a general assignment for the benefit of
its creditors, (4) commence a voluntary case under any state or federal
bankruptcy laws, (5) have filed a petition seeking relief under the Bankruptcy
Code or to take advantage of any other law providing for the relief of debtors,
or (6) have taken any corporate action authorizing or otherwise consenting to
the institution of any such proceedings, filings or have taken any action for
the purpose of effecting any of the foregoing.
7. CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATION TO CLOSE. The
Company's obligation to consummate the transactions contemplated by this
Agreement is subject to the satisfaction, at or prior to the Closing Date, of
each of the following conditions (any of which may be waived by the Company, in
whole or in part):
7.1 ACCURACY OF REPRESENTATIONS. Each of the representations and
warranties contained in Section 4 hereof must be accurate in all material
respects as of the Closing Date.
7.2 KENILWORTH'S PERFORMANCE.
(a) Each of the covenants and obligations that Kenilworth is
required to perform or to comply with pursuant to Kenilworth's Closing Documents
at or prior to the Closing must have been performed and complied with in all
material respects.
(b) Each document required to be delivered to the Company
pursuant to Section 1.5 must have been delivered.
7.3 CONSENTS. Each of the consents identified in Schedule 3.4 must
have been obtained and must be in full force and effect.
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7.4 NO PROHIBITION. There shall not be in effect any legal
requirement or any injunction or other order that (a) prohibits the transactions
contemplated hereby and (b) has been adopted or issued, or otherwise become
effective, since the date hereof.
7.5 ADDITIONAL DOCUMENTS. Such other documents as the Company may
reasonably request for the purpose of (i) evidencing the accuracy of any
representation or warranty of Kenilworth, (ii) evidencing the performance by
Kenilworth of, or the compliance by Kenilworth with, any covenant or obligation
required to be performed or complied with by Kenilworth, (iii) evidencing the
satisfaction of any condition referred to in this Section 7, or (iv) otherwise
facilitating the consummation of any of the transactions contemplated by this
Agreement, must have been delivered to the Company.
7.6 ABSENCE OF INJUNCTIONS. No permanent or preliminary injunction
or restraining order or other order by any court of governmental entity of
competent jurisdiction or other legal restraint or prohibition preventing
consummation of the transactions contemplated hereby shall be in effect.
7.7 EFFECTIVENESS OF REGISTRATION STATEMENT. The SEC shall have
declared effective the Registration Statement (as such term is defined in the
Registration Rights Agreement) and the SEC shall not have issued any order
preventing or suspending the use of any preliminary of final prospectus included
in the Registration Statement or otherwise filed pursuant to Rule 424(b) of the
Securities Act.
8. INDEMNIFICATION; REMEDIES.
8.1 INDEMNIFICATION AND PAYMENT OF DAMAGES BY KENILWORTH. Kenilworth
will indemnify and hold harmless the Company, and its directors, officers,
employees, agents, advisors or other representatives ("Representatives"), and
will pay to the Company and its Representatives the amount of any damages
(including, without limitation, any and all attorneys' fees and expenses)
arising, directly or indirectly, from or in connection with (a) any Breach of
any representation or warranty made by Kenilworth in this Agreement or in any
certificate delivered by Kenilworth pursuant to this Agreement, (b) any Breach
by Kenilworth of any covenant or obligation of Kenilworth in this Agreement, or
(c) any claim by any person for brokerage or finder's fees or commissions or
similar payments based upon any agreement or understanding alleged to have been
made by such person with Kenilworth (or any person acting on its behalf) in
connection with any of the transactions contemplated by this Agreement. For
purposes of this Agreement, a "Breach" shall be deemed to have occurred if there
is any material inaccuracy in, or material failure to perform or comply with, a
representation, warranty, covenant, obligation or other provision.
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8.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY THE COMPANY. The
Company will indemnify and hold harmless Kenilworth and its partners, officers,
employees, agents, advisors or other representatives (the "Kenilworth
Representatives") and will pay to Kenilworth and the Kenilworth Representatives
the amount of any damages (including, without limitation, any and all attorneys'
fees and expenses) arising, directly or indirectly, from or in connection with
(a) any Breach of any representation or warranty made by the Company in this
Agreement or in any certificate delivered by the Company pursuant to this
Agreement, (b) any Breach by the Company of any covenant or obligation of the
Company in this Agreement, or (c) any claim by any person for brokerage or
finder's fees or commissions or similar payments based upon any agreement or
understanding alleged to have been made by such person with the Company (or any
person acting on its behalf) in connection with any of the transactions
contemplated by this Agreement.
8.3 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS.
(a) Promptly after receipt by an indemnified party of notice of
the commencement of any Proceeding against it, such indemnified party will give
notice to the indemnifying party of the commencement of such claim, but the
failure to notify the indemnifying party will not relieve the indemnifying party
of any liability that it may have to any indemnified party, except to the extent
that the indemnifying party demonstrates that the defense of such action is
prejudiced by the indemnified party's failure to give such notice.
(b) If any Proceeding referred to in Section 8.3(a) is brought
against an indemnified party and it gives notice to the indemnifying party of
the commencement of such Proceeding, the indemnifying party will, unless the
claim involves taxes, be entitled to participate in such Proceeding and, to the
extent that it wishes (unless (i) the indemnifying party is also a party to such
Proceeding and the indemnified party determines in good faith that joint
representation would be inappropriate, or (ii) the indemnifying party fails to
provide reasonable assurance to the indemnified party of its financial capacity
to defend such Proceeding and provide indemnification with respect to such
Proceeding), to assume the defense of such Proceeding with counsel satisfactory
to the indemnified party and, after notice from the indemnifying party to the
indemnified party of its election to assume the defense of such Proceeding, the
indemnifying party will not, as long as it diligently conducts such defense, be
liable to the indemnified party under this Section 8 for any fees of other
counsel or any other expenses with respect to the defense of such Proceeding, in
each case subsequently incurred by the indemnified party in connection with the
defense of such Proceeding, other than reasonable costs of investigation. If
the indemnifying party assumes the defense of a Proceeding, (i) it will be
conclusively established for purposes of this Agreement that the claims made in
that Proceeding are within the scope of and subject to indemnification; (ii) no
compromise or
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settlement of such claims may be effected by the indemnifying party without
the indemnified party's consent unless (A) there is no finding or admission
of any violation of legal requirements or any violation of the rights of any
person and no effect on any other claims that may be made against the
indemnified party, and (B) the sole relief provided is monetary damages that
are paid in full by the indemnifying party; and (iii) the indemnified party
will have no liability with respect to any compromise or settlement of such
claims effected without its consent. If notice is given to an indemnifying
party of the commencement of any Proceeding and the indemnifying party does
not, within ten days after the indemnified party's notice is given, give
notice to the indemnified party of its election to assume the defense of such
Proceeding, the indemnifying party will be bound by any determination made in
such Proceeding or any compromise or settlement effected by the indemnified
party.
(c) Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability that a
Proceeding may adversely affect it or its affiliates other than as a result of
monetary damages for which it would be entitled to indemnification under this
Agreement, the indemnified party may, by notice to the indemnifying party,
assume the exclusive right to defend, compromise, or settle such Proceeding, but
the indemnifying party will not be bound by any determination of a Proceeding so
defended or any compromise or settlement effected without its consent (which may
not be unreasonably withheld).
(d) The Company and Kenilworth each hereby consent to the
non-exclusive jurisdiction of any court in which a Proceeding is brought against
any indemnified person for purposes of any claim that an indemnified person may
have under this Agreement with respect to such Proceeding or the matters alleged
therein, and agree that process may be served on the Company or Kenilworth with
respect to such a claim anywhere in the world.
8.4 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS. A claim for
indemnification for any matter not involving a third-party claim may be asserted
by notice to the party from whom indemnification is sought.
9. GENERAL PROVISIONS.
9.1 TERMINATION. This Agreement may be terminated prior to the
Closing as follows:
(a) At the election of the Company, if Kenilworth has materially
breached any material representation, warranty, covenant or agreement contained
herein and such breach is not cured within a reasonable period following notice
thereof, such reasonable period to consist of not less than five (5) business
days;
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(b) At the election of Kenilworth, if the Company has materially
breached any material representation, warranty, covenant or agreement contained
herein and such breach is not cured within a reasonable period following notice
thereof, such reasonable period to consist of not less than five (5) business
days;
(c) At the election of the Company on the one hand, or
Kenilworth, on the other hand, if any action shall have been instituted and be
continuing by any governmental authority with proper authority to restrain,
modify or prohibit the carrying out of the transactions contemplated hereby;
and
(d) At any time prior to the Closing Date by mutual written
agreement of the Company and Kenilworth.
If the Company or Kenilworth, as the case may be, elects to terminate
this Agreement pursuant to Sections 9.1(a), (b) or (c) hereof, the terminating
party shall deliver a notice to the other party hereto declaring its election to
so terminate this Agreement in accordance with the provisions of such Section,
and setting forth therein the basis for such termination. If this Agreement so
terminates, it shall become null and void and have no further force or effect,
except as provided in Section 9.7 below; provided, that nothing contained in
this Section shall relieve any party hereto from liability for any breach of
such party's representations, warranties, covenants or agreements contained
herein.
9.2 EXPENSES. Except as otherwise expressly provided in this
Agreement, each party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the transactions contemplated by this Agreement, including all
fees and expenses of agents, representatives, counsel and accountants. In the
event of termination of this Agreement, the obligation of each party to pay its
own expenses will be subject to any rights of such party arising from a breach
of this Agreement by another party.
9.3 PUBLIC ANNOUNCEMENTS. Announcements concerning the transactions
provided for in this Agreement by the Company or Kenilworth shall be subject to
the reasonable prior approval of the other party in all essential respects,
except that (a) the approval of Kenilworth shall not be required as to any
statements and other information which the Company may be required to make
pursuant to any rule or regulation of the SEC, or as otherwise required by law,
and (b) the approval of the Company shall not be required as to any statements
and other information which Kenilworth may be required to make pursuant to any
rule or regulation of the SEC or the New York Stock Exchange, or as otherwise
required by law. The provisions of this Section 9.3 shall not be
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interpreted to limit Kenilworth's ability to discuss information relating to
the transactions contemplated by this Agreement in accordance with Section
9.4 below.
9.4 CONFIDENTIALITY. Kenilworth and the Company will maintain in
confidence any confidential information obtained in the course of the
transactions contemplated by this Agreement, unless (a) such information is
already known to such party or to others not bound by a duty of confidentiality
or such information becomes publicly available through no fault of such party,
(b) the use of such information is necessary or appropriate in making any filing
or obtaining any consent or approval required for the consummation of the
transactions contemplated by this Agreement, or (c) the furnishing or use of
such information is required by legal proceedings. If the transactions
contemplated by this Agreement are not consummated, each party will return or
destroy as much of such written information as the other party may reasonably
request.
9.5 NOTICES. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when (a) delivered by hand (with written confirmation of
receipt), (b) sent by telecopier (with written confirmation of receipt),
provided that a copy is mailed by certified mail, return receipt requested, or
(c) when received by the addressee, if sent by a nationally recognized overnight
delivery service (receipt requested), in each case to the appropriate addresses
and telecopier numbers set forth below (or to such other addresses and
telecopier numbers as a party may designate by notice to the other parties):
If to Kenilworth:
Kenilworth Partners LP
00 Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Rosenman & Colin LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxxxxxxxxxxx, Esq.
Telephone: (000) 000-0000
Fax: (000) 000-0000
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If to the Company:
Applied Magnetics Corporation
00 Xxxxx Xxxx Xxxx
Xxxxxx, Xxxxxxxxxx 00000
Attn: Xx. Xxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Sheppard, Mullin, Xxxxxxx & Hampton LLP
000 Xxxxx Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
9.6 JURISDICTION; SERVICE OF PROCESS. Any action or proceeding
seeking to enforce any provision of, or based on any right arising out of, this
Agreement may be brought against any of the parties in the courts of the State
of California, County of Los Angeles, State of New York, New York County or, if
it has or can acquire jurisdiction, in the United States District Court for the
Central District of California or the United States District Court for the
Southern District of New York, and each of the parties consents to the
jurisdiction of such courts (and of the appropriate appellate courts) in any
such action or proceeding and waives any objection to venue laid therein.
Process in any action or proceeding referred to in the preceding sentence may be
served on any party anywhere in the world.
9.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Except as otherwise
expressly provided herein, all covenants and agreements of the parties hereto
shall survive the Closing Date until performed, and all representations,
warranties of the parties hereto shall survive for eighteen (18) months
following the Closing Date (except for the provisions of Sections 3.2(b), 4.4,
4.5, 8 and 9, which shall remain in full force and effect) and shall in no way
be affected by any investigation of the subject matter thereof made by or on
behalf of any party.
9.8 FURTHER ASSURANCES. The parties agree (a) to furnish upon
request to each other such further information (including, without limitation,
information reasonably requested to confirm fulfillment of the respective
party's conditions to closing), (b) to execute and deliver to each other such
other documents, and (c) to do such other acts and
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things, all as the other party may reasonably request for the purpose of
carrying out the intent of this Agreement and the documents referred to in
this Agreement.
9.9 WAIVER. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
party in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; and (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given.
9.10 ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by the parties hereto.
9.11 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. Neither
party may assign any of its rights under this Agreement without the prior
consent of the other parties, which will not be unreasonably withheld. Subject
to the preceding sentence, this Agreement will apply to, be binding in all
respects upon, and inure to the benefit of the successors and permitted assigns
of the parties. Nothing expressed or referred to in this Agreement will be
construed to give any person other than the parties to this Agreement any legal
or equitable right, remedy, or claim under or with respect to this Agreement or
any provision of this Agreement. This Agreement and all of its provisions and
conditions are for the sole and exclusive benefit of the parties to this
Agreement and their successors and assigns.
9.12 SEVERABILITY. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
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9.13 SECTION HEADINGS, CONSTRUCTION. The headings of Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
9.14 GOVERNING LAW. This Agreement will be governed by the internal
laws of the State of California without regard to the conflicts of laws
principles of such state.
9.15 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
9.16 ATTORNEYS' FEES. If any legal action or other proceeding is
brought for the enforcement of this Agreement, or because of an alleged dispute,
breach, default or misrepresentation in connection with any of the provisions of
this Agreement, the successful or prevailing party shall be entitled to recover
reasonable attorneys' fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it may be entitled.
10. WAIVER OF JURY TRIAL. THE COMPANY AND KENILWORTH HEREBY WAIVE THE
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO,
THE SUBJECT MATTER OF THIS AGREEMENT. THIS WAIVER IS KNOWINGLY, INTENTIONALLY,
AND VOLUNTARILY MADE BY THE COMPANY AND KENILWORTH, AND THE COMPANY AND
KENILWORTH ACKNOWLEDGE THAT NO PERSON ACTING ON BEHALF OF ANOTHER PARTY TO THIS
AGREEMENT HAS MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL BY
JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. THE COMPANY AND KENILWORTH
FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED (OR HAVE HAD THE OPPORTUNITY
TO BE REPRESENTED) IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS
WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF THEIR OWN FREE WILL,
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AND THAT THEY HAVE HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
"KENILWORTH"
KENILWORTH PARTNERS II LP
____________________________________
_____________________, General Partner
"COMPANY"
APPLIED MAGNETICS CORPORATION
Xxxxx X. Xxxxxxx
Chief Executive Officer
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