KUBOTA GUARANTY AND INDEMNIFICATION
THIS KUBOTA GUARANTY AND INDEMNIFICATION, dated as of December 15,
1997 (the "Guaranty"), is executed by KUBOTA CORPORATION., a Japanese
corporation ("PARENT"), in favor of STORMEDIA INCORPORATED, a Delaware
corporation ("STORMEDIA").
RECITALS
A. Pursuant to the Agreement and Plan of Reorganization, of even
date hereof (the "AGREEMENT"), between StorMedia, Akashic International Inc.,
an indirect wholly owned subsidiary of Parent ("AII") and Akashic Memories
Corporation, a subsidiary of Parent ("AKASHIC"), StorMedia has agreed to
acquire Akashic through a statutory merger of one of its subsidiaries with
and into Akashic (the "MERGER"). Unless otherwise defined herein, all other
capitalized terms used herein and defined in the Agreement shall have the
respective meanings given to those terms in the Agreement.
B. StorMedia's obligation to consummate the Merger is subject,
among other conditions to receipt by StorMedia of this Guaranty, duly
executed by Parent.
C. In addition, in the event AII is dissolved, Parent shall assume
all obligations and liabilities of every nature of AII now or hereafter
existing under the terms of the Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Parent hereby agrees with StorMedia as follows:
1. GUARANTY.
a. Parent unconditionally guarantees all obligations and
liabilities of AII now or hereafter existing arising in any manner in
connection with, as a result of or under the terms of the Agreement.
b. This Guaranty is absolute, unconditional, continuing and
irrevocable and if AII shall dissolve, liquidate or fail to pay or perform
any obligations to StorMedia as and when such payments or performance are due
under the Agreement which is subject to this Guaranty, Parent shall forthwith
pay to StorMedia when such payments or performance are due in the place of
AII.
2. CONSENT TO DISSOLUTION. StorMedia agrees that at such time
that AII is dissolved or liquidated, it shall, at the request of Parent,
provide acknowledgment of AII's release of all obligations under the
Agreement, so long as Parent is then still obligated as guarantor and
indemnitor hereunder.
3. REPRESENTATIONS AND WARRANTIES. Parent represents and warrants
to StorMedia that (a) Parent is a corporation duly organized, validly,
existing and in good standing under the laws of its country of incorporation
and is duly qualified and in good standing in each jurisdiction where the
nature of its business or properties requires such qualification; (b) the
execution, delivery and performance by Parent of this Guaranty are within the
power of Parent and have been duly authorized by all necessary actions on the
part of Parent; (c) this Guaranty has been duly executed and delivered by
Parent and constitutes a legal, valid and binding obligation of Parent,
enforceable against it in accordance with its terms, except as limited by
bankruptcy, insolvency or other laws of general application relating to or
affecting the enforcement of creditors' rights generally; (d) the execution,
delivery and performance of this Guaranty do not (i) violate any laws, rules
or regulations applicable to Parent or (ii) contravene any material
contractual obligation of Parent; and (e) no consent, approval, order or
authorization of, or registration, declaration or filing with, any
governmental authority or other person or entity (including, without
limitation, the shareholders of any Parent) is required in connection with
the execution, delivery and performance of this Guaranty, except such
consents, approvals, orders, authorizations, registrations, declarations and
filings that are so required and which have been obtained and are in full
force and effect.
4. INDEMNIFICATION. Parent will indemnify and hold harmless
StorMedia and the Surviving Corporation and its respective officers,
directors, agents and employees, and each person, if any, who controls or may
control StorMedia or the Surviving Corporation within the meaning of the
Securities Act of 1933, as amended (hereinafter referred to individually as
an "Indemnified Person" and collectively as "Indemnified Persons") from and
against any and all losses, costs, damages, liabilities and expenses arising
from claims, demands, actions, causes of action, including, without
limitation, reasonable legal fees arising out of or relating to claims by
minority shareholders, holders of Akashic Capital Stock or options to
purchase Akashic Common Stock of Akashic prior to the Merger (each a
"Minority Shareholder" and collectively the "Minority Shareholders") alleging
breach of fiduciary duty, fraud, misrepresentation or any other claim
relating to the Merger or the consideration (or lack thereof) received by
such Minority Shareholder(s) in the Merger or the termination of options or
rights to purchase Akashic Common Stock.
In the event the Buyer or the Surviving Corporation becomes aware of a
claim by a Minority Shareholder(s) which Buyer or the Surviving Corporation
believes has or may result in Damages, StorMedia shall notify Parent of such
claim and Parent shall either defend against such claim or settle such claim, in
each case at its expense and in a manner which results in no Damages being
incurred by either StorMedia or the Surviving Corporation and in both StorMedia
and the Surviving Corporation being unconditionally released from all future
liability with respect to such claim. In the event Parent fails to so defend
against or settle such claim, StorMedia and Surviving Corporation may defend
against or settle such claim and Parent shall reimburse promptly, as incurred,
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all expenses and damages incurred in connection therewith upon request for
such reimbursement by StorMedia or the Surviving Corporation, as applicable.
5. CANCELLATION OF DEBT. Parent shall extinguish, or cause to be
extinguished, without creating taxable income to Akashic, all long term debt
and debentures of Akashic or its subsidiaries (other than the loan from
Western Digital Corporation) (the "Debt"), and shall deliver evidence
satisfactory to StorMedia that all such Debt has been extinguished. To the
extent StorMedia incurs any losses, costs, damages or liabilities due to
Parent's failure to extinguish all Debt by Closing, Parent shall indemnify
StorMedia for any damages, costs, expenses or other liabilities incurred as a
result of such failure.
6. WAIVERS. Parent waives (a) any right to require StorMedia to
(i) proceed against AII or (ii) pursue any other remedy in StorMedia's power
whatsoever; (b) any setoff or counterclaim of AII or any defense which
results from any disability or other defense of AII or the cessation or stay
of enforcement from any cause whatsoever of the liability of AII; and (c) all
presentments, demands for performance, notices of non-performance, notices
delivered under the Agreement.
7. MISCELLANEOUS.
(a) All notices and other communications given to or made upon any
party hereto in connection with this Agreement shall be in writing
(including telexed, telecopied or telegraphic communication) and mailed (by
certified or registered mail), telexed, telegraphed, telecopied or
delivered to the respective parties, as follows:
If to Parent
Kubota Corporation
0-00 Xxxxxxxxxxxxxxx 0-xxxxx,
Xxxxxx-xx Xxxxx, 000 Xxxxx
Attn: Xxxxx Xxxx
Fax: 00-000-0000
with a copy to:
Xxxxxx & Xxxxx
000 Xxxxxx Xxx
Xxxx Xxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxxxxx
Fax: (000) 000-0000
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If to StorMedia:
StorMedia Incorporated
000 Xxxx Xxxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx
Fax: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C.
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Attn: Xxxxxx X. X'Xxxxx
Fax: 000-000-0000
or in accordance with any subsequent written direction from either party to
the other. All such notices and other communications shall, except as
otherwise expressly herein provided, be effective when received; or in the
case of delivery by messenger or overnight delivery service, when left at
the appropriate address.
(b) NONWAIVER. No failure or delay on StorMedia's part in exercising
any right hereunder shall operate as a waiver thereof or of any other right
nor shall any single or partial exercise of any such right preclude any
other further exercise thereof or of any other right.
(c) AMENDMENTS AND WAIVERS. This Guaranty may not be amended or
modified, nor may any of its terms be waived, except by written instruments
signed by Parent and StorMedia. Each waiver or consent under any provision
hereof shall be effective only in the specific instances for the purpose
for which given.
(d) ASSIGNMENTS. This Guaranty shall be binding upon and inure to
the benefit of Company and Guarantor and their respective successors and
assigns; PROVIDED, HOWEVER, that without the prior written consent of
StorMedia, Parent may not assign its rights and obligations hereunder.
(e) CUMULATIVE RIGHTS, ETC. The rights, powers and remedies of
StorMedia under this Guaranty shall be in addition to all rights, powers
and remedies given to StorMedia by virtue of any applicable law, rule or
regulation of any Governmental Authority or the Agreement, all of which
rights, powers, and remedies shall be cumulative and may be exercised
successively or concurrently without impairing StorMedia's rights
hereunder.
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(f) PARTIAL INVALIDITY. If at any time any provision of this
Guaranty is or becomes illegal, invalid or unenforceable in any respect
under the law or any jurisdiction, neither the legality, validity or
enforceability of the remaining provisions of this Guaranty nor the
legality, validity or enforceability of such provision under the law of any
other jurisdiction shall in any way be affected or impaired thereby.
(g) GOVERNING LAW. This Guaranty shall be governed by and construed
in accordance with the laws of the State of California without reference to
conflicts of law rules.
(h) JURY TRIAL. EACH OF PARENT AND STORMEDIA, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL
BY JURY AS TO ANY ISSUE RELATING HERETO IN ANY ACTION, PROCEEDING, OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS GUARANTY.
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IN WITNESS WHEREOF, the parties have caused this Guaranty to be
executed as of the day and year first above written.
KUBOTA CORPORATION
By:
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Name:
Title:
STORMEDIA INCORPORATED
By:
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Xxxxxxx X. Xxxxx
Chief Executive Officer
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