PATENT PURCHASE AGREEMENT
THIS PATENT PURCHASE AGREEMENT is entered into on December 15, 1997,
effective as of the 28th day of November 1997, by and between Kubota
Corporation, a Japanese corporation ("Kubota"), StorMedia Incorporated, a
Delaware corporation ("Buyer") and StorMedia International Ltd., a Cayman
Islands corporation ("SMIL").
RECITALS
WHEREAS, Akashic Memories Corporation, a California corporation ("Akashic")
is a subsidiary of Akashic International Inc., a California corporation ("AII")
which in turn is an indirect wholly owned subsidiary of Kubota. Akashic (a) is
the owner and operator of a business consisting of the design, development,
manufacture, sale, marketing and distribution of thin film media and substrates
therefore which business has been operated at facilities located in California
and in Malaysia (the "Business") and (b) owns the assets that are used in the
Business.
WHEREAS, Buyer, StorMedia Acquisition Corporation ("Sub"), Kubota, AII and
Akashic have entered into an Agreement and Plan of Reorganization (the
"Reorganization Agreement") of even date herewith pursuant to which Buyer will
acquire Akashic through a merger (the "Merger") of Sub with and into Akashic
pursuant to an Agreement of Merger (the "Agreement of Merger") which shall occur
upon the filing of the Agreement of Merger with the California Secretary of
State (the "Effective Time").
WHEREAS, as of the date hereof Kubota owns certain patents, patent
applications and other intellectual property as developed for the Business at
the Itami laboratory, such patents and patent applications to be listed on
Exhibit A hereto ("Itami IP").
WHEREAS, immediately prior to the date hereof, for good and valuable
consideration, the receipt of which Kubota has acknowledged, Kubota shall have
granted an exclusive, perpetual, fully paid royalty free license of the Itami IP
to SMIL for exploitation and use of such Itami IP outside the U.S. (the "SMIL
License").
WHEREAS, Buyer desire to purchase the Itami IP subject to the SMIL
License.
WHEREAS, Buyer and Kubota agree that time is of the essence in the closing
of the transactions contemplated in this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants set
forth in this Agreement, Kubota and Buyer agree as follows:
ARTICLE 1
CONSIDERATION AND CLOSING
1.1 PURCHASE PRICE. Buyer hereby agrees to purchase and Kubota hereby
agrees to sell to Buyer, the Itami IP subject to the to SMIL License. As
consideration for the Itami IP, Buyer agrees, subject to the terms, conditions
and limitations set forth in this Agreement, to pay, and Kubota agrees to
accept, as the "IP Purchase Price," 2,000,000 shares of Buyer's Class A Common
Stock. With respect to the payment for the SMIL License, SMIL has previously
paid adequate consideration to Kubota. Thereby, after the Closing, the entire
Itami IP shall have been acquired by Buyer and its affiliates.
1.2 CLOSING. The Closing will take place at the offices of Xxxxxx Xxxxxxx
Xxxxxxxx & Xxxxxx at 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, XX on a date mutually agreed
to by the parties which the parties shall use reasonable efforts to be prior to
December 31, 1997 (the "Closing"). Each of the parties shall use their
reasonable efforts to satisfy the closing conditions set forth in Article 4
hereof and to consummate the transactions contemplated hereby.
1.3 DELIVERIES AT THE CLOSING. At the Closing, (i) Kubota will deliver
to Buyer the various certificates, instruments, and documents referred to in
Section 4.1 below, and (ii) Buyer will deliver to Kubota the various
certificates, instruments, and documents referred to in Section 4.2 below.
ARTICLE 2
REPRESENTATIONS OF KUBOTA
Kubota hereby represents to Buyer as follows:
2.1 ORGANIZATION. Kubota is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all necessary corporate power and authority to own and
lease its properties and assets and to carry on its businesses as now being
conducted.
2.2 AUTHORITY. Kubota has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by Kubota and the
consummation by Kubota of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Kubota. This
Agreement has been duly executed and delivered by Kubota and constitutes a valid
and binding obligation of Kubota, enforceable in accordance with its terms
except as enforcement may be limited by bankruptcy, insolvency or other similar
laws affecting the enforcement of creditors' rights generally, and subject to
rules of law governing specific performance, injunctive relief and other
equitable remedies. Except for certain third party consents which shall be
obtained prior to the Closing, the execution and delivery of this Agreement do
not, and the consummation of the transactions
-2-
contemplated hereby and compliance with the provisions hereof will not,
conflict with, or result in any violation of, or default (with or without
notice or lapse of time or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of a
material benefit under, any provision of the charter documents of Kubota or
any loan or credit agreement, note, bond, mortgage, indenture, license, lease
or other agreement or instrument, permit, concession, franchise, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to
Kubota or the properties or assets of Kubota.
2.3 GOVERNMENTAL APPROVALS. Subject to compliance with the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act") and approval from Japan Ministry of Finance and the Bank of Japan, no
consent, approval, order or authorization of, or registration, declaration or
filing with any governmental authority is required by or with respect to
Kubota in connection with the execution and delivery of this Agreement by
Kubota or the consummation by Kubota of the transactions contemplated hereby.
ARTICLE 3
REPRESENTATIONS OF BUYER
Buyer represents to Kubota as follows:
3.1 ORGANIZATION. Buyer is a corporation duly organized, validly existing
and in good standing under the laws of Delaware and has all necessary corporate
power and authority to own and lease all of its properties and assets and to
carry on its business as it is now being conducted.
3.2 AUTHORITY. Buyer has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by Buyer and the
consummation by Buyer of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Buyer. This
Agreement has been duly executed and delivered by Buyer and constitutes a valid
and binding obligation of Buyer, enforceable in accordance with its terms except
as enforcement may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights generally, and subject to rules
of law governing specific performance, injunctive relief and other equitable
remedies. Except for certain third party consents which shall be obtained prior
to the Closing, the execution and delivery of this Agreement will not, and the
consummation of the transactions contemplated hereby and compliance with the
provisions hereof will not, conflict with or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or
loss of a material benefit under, any provision of the charter documents of
Buyer or any loan or credit agreement, note, bond mortgage, indenture, lease or
other agreement, instrument, permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to Buyer
or its properties or assets, which has not been waived.
-3-
3.3 GOVERNMENTAL APPROVALS. Subject to compliance with the HSR Act, and
approval from Japan Ministry of Finance and the Bank Japan, no consent,
approval, order or authorization of, or registration, declaration or filing with
any governmental authority is required by or with respect to Buyer in connection
with the execution and delivery of this Agreement by Buyer or the consummation
by Buyer of the transactions contemplated hereby.
ARTICLE 4
CONDITIONS TO CLOSING
4.1 CONDITIONS TO OBLIGATION OF BUYER. The obligation of Buyer to
consummate the transaction to be performed by it in connection herewith is
subject to the satisfaction of the following conditions:
(a) REPRESENTATIONS. The representations set forth in Section 2
hereof shall be true and correct in all material respects as of the Closing.
(b) INTELLECTUAL PROPERTY. Kubota shall quit claim to Buyer,
Akashic or any affiliate of Buyer designated by Buyer prior to Closing all of
the Itami IP and Kubota and Buyer shall enter into an agreement pursuant to
which Buyer grants to Kubota and its affiliates a fully paid, royalty free,
perpetual, worldwide, nonexclusive license to the Itami IP for use in the
area of sputtering targets and other areas, but excluding thin film media and
substrates.
(c) REGULATORY APPROVALS. All applicable regulatory approvals,
authorizations and consents shall have been obtained including, without
limitation, HSR, the Japanese Ministry of Finance and the Bank of Japan.
(d) OFFICER'S CERTIFICATE. Kubota shall deliver a certificate to
Buyer executed by duly authorized officers certifying compliance with
subsections 4.1(a), (b) and (c).
(e) WITHHOLDING TAX. Kubota shall deliver to Buyer a check in the
amount of any withholding taxes payable by Buyer as a result of the
transactions contemplated hereby and shall indemnify Buyer against the
payment of any such withholding taxes hereafter determined by any
governmental agency to be owing by Buyer in connection with the transactions
hereunder.
4.2 CONDITIONS TO OBLIGATIONS OF KUBOTA. The obligation of Kubota to
consummate the transactions to be performed by it in connection herewith is
subject to the satisfaction of the following conditions:
(a) PURCHASE PRICE. Buyer shall deliver at Closing a certificate
representing 2,000,000 of shares of Buyer's Class A Common Stock registered
in the name of Kubota.
(b) REPRESENTATIONS. The representations of Buyer set forth in
Section 3 hereof shall be true and correct in all material respects as of the
Closing.
-4-
(c) REGULATORY APPROVALS. All applicable regulatory approvals,
authorizations and consents shall have been obtained, including, without
limitation, HSR, the Japanese Ministry of Finance and the Bank of Japan.
(d) OFFICER'S CERTIFICATE. Buyer shall deliver a certificate to
Kubota executed by a duly authorized officer certifying compliance with
subsections 4.2(b) and (c).
ARTICLE 5
COVENANTS
5.1 PATENT APPLICATIONS. Upon request, Kubota and its affiliates shall
cooperate with Akashic and Buyer at Akashic's expense after the Closing to
file any U.S. or foreign patents or patent applications with respect to the
Itami IP. Kubota shall not be obligated to translate any patents contained in
the Itami IP into English.
5.2 COVENANT NOT TO XXX. Kubota on behalf of itself and its affiliates
hereby agrees not to xxx or bring any cause of action or proceeding against
Buyer, its affiliates, licensees or customers or Akashic alleging infringement
or improper use of any patents, patent applications or other intellectual
property owned by or licensed to Kubota or any of its affiliates as of the
Closing, with respect to Akashic's thin film media and substrate businesses.
5.3 LIST OF PATENTS. The parties agree to substitute an English
translation for Exhibit A prior to the closing, such list to include not less
than all patents described in Exhibit B hereto.
5.4 TRANSFER OF ITAMI IP. The parties acknowledge that it may not be
possible to complete all required paperwork to formally transfer all of the
Itami IP prior to the Closing. Kubota agrees to complete all such transfers and
make all necessary filings, at its expense, promptly following the Closing and
to cooperate with Buyer, upon request by Buyer, to complete such transfers. The
parties further agree and acknowledge that Buyer may request that certain rights
to the Itami IP which Kubota agrees to grant pursuant to Section 4.1(b) above be
granted to certain affiliates of Buyer and the parties agree to cooperate in
making such grants.
ARTICLE 6
GENERAL PROVISIONS
6.1 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of California without giving
effect to any choice or conflict of law provision or rule (whether of the State
of California or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of California as applied to
contracts entered into and to be performed in the State of California.
-5-
6.2 NOTICES. All notices or reports permitted or required under this
Agreement shall be in writing and shall be delivered in person, mailed by first
class, registered or certified mail, postage prepaid, sent by overnight courier,
or sent by telex, telegram, telecopier or electronic mail to:
If to Kubota:
Kubota Corporation
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
If to Buyer OR SMIL:
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
By written notice to the other party, a party may change the address to which
notices and other communications shall be directed. Notice shall be deemed to
have been given upon the earlier to occur of (i) the third business day
following dispatch by one of the foregoing methods or (ii) actual receipt.
6.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND COVENANTS. The
representations and warranties of the parties set forth in this Agreement or any
certificate or instrument delivered pursuant hereto shall survive the Closing.
-6-
6.4 ENTIRE AGREEMENT. The Agreement and the Reorganization Agreement
represent and constitute the entire agreement between the parties, and supersede
all prior agreements and understandings with respect to the matters covered by
this Agreement and the Reorganization Agreement, and, except for the
Reorganization Agreement, there are no other agreements, warranties or
representations which are not set forth herein.
6.5 WAIVER. Kubota or Buyer may, by written notice to the other,
(i) waive any of the conditions to its obligations hereunder or extend the time
for the performance of any obligations or actions of the other, (ii) waive any
inaccuracies in the representations of the other contained in this Agreement or
any documents delivered pursuant to this Agreement, (iii) waive compliance with
any of the covenants of the other contained in this Agreement and (iv) waive
performance of any obligations by the other. The waiver of one breach or
default hereunder shall not constitute the waiver of any subsequent breach or
default.
6.6 EXPENSES. All expenses incurred by either party in connection with
the execution and performance of this Agreement shall be the obligation of and
shall be paid by such party.
6.7 DISPUTE FEES. In the event of a dispute arising under this Agreement
which results in arbitration or litigation, the prevailing party shall be
entitled to reimbursement of reasonable expenses, including but not limited to
reasonable attorneys' and expert witness fees incurred by it in pursuing such
dispute, as determined by the court in any such proceeding.
6.8 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon the
parties and inure to the benefit of the successors, assigns, heirs and legal
representatives of the respective parties hereto; provided, however, that this
Agreement and all rights hereunder may not be assigned by any party hereto
except by or with the prior written consent of the other party, with such
consent not to be unreasonably withheld.
-7-
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
the day and date first above written.
Kubota Corporation
By:
---------------------------------
Title:
------------------------------
StorMedia Incorporated
By:
---------------------------------
Title:
------------------------------
StorMedia International Ltd.
By:
---------------------------------
Title:
------------------------------
-8-
