<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 17, 1999
REGISTRATION NO. 333-87665
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
METRON TECHNOLOGY N.V.
(Exact name of registrant as specified in its charter)
--------------------------
<TABLE>
<S> <C> <C>
THE NETHERLANDS 3559 98-0180010
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
------------------------
1350 OLD BAYSHORE HIGHWAY
SUITE 360
BURLINGAME, CALIFORNIA 94010
(650) 373-1133
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
--------------------------
EDWARD D. SEGAL
PRESIDENT AND CHIEF EXECUTIVE OFFICER
METRON TECHNOLOGY N.V.
1350 OLD BAYSHORE HIGHWAY
SUITE 360
BURLINGAME, CALIFORNIA 94010
(650) 373-1133
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
--------------------------
COPIES TO:
<TABLE>
<S> <C>
ALAN C. MENDELSON, ESQ. CHRISTOPHER L. KAUFMAN, ESQ.
SUZANNE SAWOCHKA HOOPER, ESQ. WILLIAM DAVISSON, ESQ.
COOLEY GODWARD LLP LATHAM & WATKINS
FIVE PALO ALTO SQUARE 135 COMMONWEALTH DRIVE
3000 EL CAMINO REAL MENLO PARK, CA 94025
PALO ALTO, CA 94306-2155 (650) 328-4600
(650) 843-5000
</TABLE>
------------------------
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE REGISTRATION STATEMENT BECOMES EFFECTIVE.
--------------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), check the following box. / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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<PAGE>
SUBJECT TO COMPLETION, DATED NOVEMBER 17, 1999
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and we are not soliciting offers to buy these
securities in any state where the offer or sale is not permitted.
<PAGE>
3,750,000 SHARES
<TABLE>
<S> <C>
[METRON TECHNOLOGY LOGO]
</TABLE>
COMMON SHARES
----------------
Metron Technology N.V. is offering 2,300,000 common shares, and the selling
shareholders are offering 1,450,000 common shares in a firmly underwritten
offering. Metron will not receive any of the proceeds from the sale of shares by
the selling shareholders. This is Metron's initial public offering, and no
public market currently exists for Metron's common shares. Metron anticipates
that the initial public offering price for its shares will be between $11.00 and
$13.00 per share. After the offering, the market price for Metron's shares may
be outside of this range.
------------------------
The common shares have been approved for quotation on the Nasdaq National
Market under the symbol "MTCH," subject to official notice of issuance.
------------------------
INVESTING IN THE COMMON SHARES INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 6.
---------------------
<TABLE>
<CAPTION>
Per Share Total
--------- -----
<S> <C> <C>
Offering Price $ $
Discounts and Commissions to Underwriters $ $
Offering Proceeds to Metron $ $
Offering Proceeds to the Selling Shareholders $ $
</TABLE>
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
Metron Technology N.V. has granted the underwriters the right to purchase up
to an additional 562,500 common shares to cover over-allotments. The
underwriters can exercise this right at any time within thirty days after the
offering. Banc of America Securities LLC expects to deliver the common shares to
investors on , 1999.
BANC OF AMERICA SECURITIES LLC
SG COWEN
U.S. BANCORP PIPER JAFFRAY
----------------
The date of this Prospectus is , 1999.
<PAGE>
Graphic depicting certain of Metron's principals' names with arrows pointing
toward the Metron logo in the center of the page, below which arrows point
toward the names of certain of Metron's customers.
<PAGE>
Graphic depicting a map of the world indicating the locations of Metron's
offices and facilities.
<PAGE>
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE
HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. WE
ARE OFFERING TO SELL, AND SEEKING OFFERS TO BUY, COMMON SHARES ONLY IN
JURISDICTIONS WHERE OFFERS AND SALES ARE PERMITTED. THIS PROSPECTUS MAY ONLY BE
USED WHERE IT IS LEGAL TO SELL THESE SECURITIES. THE INFORMATION IN THIS
DOCUMENT MAY ONLY BE ACCURATE ON THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE
TIME OF DELIVERY OF THIS PROSPECTUS OR OF ANY SALE OF OUR EQUITY SHARES.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Prospectus Summary.......................................... 3
Risk Factors................................................ 6
Use of Proceeds............................................. 18
Dividend Policy............................................. 18
Capitalization.............................................. 19
Dilution.................................................... 20
Selected Consolidated Financial Data........................ 21
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 22
Business.................................................... 33
Management.................................................. 42
Certain Transactions........................................ 54
Principal and Selling Shareholders.......................... 57
Description of Capital Shares............................... 59
Shares Eligible for Future Sale............................. 64
Underwriting................................................ 66
Legal Matters............................................... 68
Experts..................................................... 68
Where You Can Find Additional Information................... 68
Index to Financial Statements............................... F-1
</TABLE>
"METRON" AND THE METRON LOGO ARE REGISTERED TRADEMARKS OF METRON
TECHNOLOGY N.V. IN THE UNITED STATES AND OTHER JURISDICTIONS. ALL OTHER
TRADEMARKS OR SERVICE MARKS APPEARING IN THIS PROSPECTUS ARE TRADEMARKS OR
SERVICE MARKS OF THE RESPECTIVE COMPANIES THAT USE THEM.
<PAGE>
PROSPECTUS SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION CONTAINED ELSEWHERE IN THIS
PROSPECTUS. THIS SUMMARY DOES NOT CONTAIN ALL OF THE INFORMATION THAT YOU SHOULD
CONSIDER BEFORE INVESTING IN OUR COMMON SHARES. YOU SHOULD READ THE ENTIRE
PROSPECTUS CAREFULLY BEFORE MAKING AN INVESTMENT DECISION. THIS PROSPECTUS
CONTAINS FORWARD-LOOKING STATEMENTS WHICH INVOLVE RISKS AND UNCERTAINTIES. OUR
RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING
STATEMENTS AS A RESULT OF VARIOUS FACTORS, INCLUDING THOSE SET FORTH IN "RISK
FACTORS" AND THE CONSOLIDATED FINANCIAL STATEMENTS AND THE RELATED NOTES. EXCEPT
AS OTHERWISE INDICATED, ALL INFORMATION IN THIS PROSPECTUS ASSUMES NO EXERCISE
OF THE UNDERWRITERS' OVER-ALLOTMENT OPTION, THE EFFECTIVENESS OF AN AMENDMENT TO
OUR ARTICLES OF ASSOCIATION UPON COMPLETION OF THIS OFFERING AND THE CONVERSION
OF METRON TECHNOLOGY FROM A "B.V." INTO AN "N.V." UNDER NETHERLANDS LAW.
REFERENCES TO "GUILDERS" AND "NLG" ARE TO DUTCH GUILDERS, AND REFERENCES TO
"DOLLARS," "U.S.$" AND "$" ARE TO UNITED STATES DOLLARS.
METRON TECHNOLOGY
We are a leading global provider of marketing, sales, service and support
solutions to semiconductor materials and equipment suppliers and semiconductor
manufacturers. On behalf of semiconductor materials and equipment suppliers,
which we refer to as our principals, we provide a broad range of materials and
equipment to leading semiconductor manufacturers such as Advanced Micro Devices,
IBM, Intel, Lucent, Motorola, NEC Electronics, Philips, Infineon (Siemens) and
STMicroelectronics. This enables our customers to purchase a broad range of
products from a single supplier. We also provide semiconductor manufacturers
with the ability to outsource a wide variety of silicon wafer fabrication
facility, or fab, and equipment support services, such as materials management,
cleanroom services and facility maintenance. These services enable our customers
to increase fab productivity in a cost-effective manner, simplify and
standardize their materials and equipment purchases and focus on their core
competencies, such as product development, manufacturing and marketing. By
partnering with us, our principals can focus on product development and other
core competencies, reduce their time to market and use our global network to
better compete with larger companies that often have established sales, service
and support infrastructures. Our principals are both independent companies that
have developed emerging technologies and divisions of larger companies that have
other primary products and markets and include Cabot, Entegris, FSI, Komatsu,
Pall, Schumacher, SDI, Seiko Instruments and Zeiss.
Demand by semiconductor manufacturers for global solutions is being driven
by profitability pressures. As semiconductors have become increasingly complex,
the manufacturing process requires a wide range of complex and expensive
fabrication equipment and materials, and modern fabs can cost over $2.0 billion
to build. At the same time, semiconductor average selling prices have
consistently declined. Therefore, it is imperative that fabs quickly reach and
maintain optimal productivity levels in order to maximize their return on
investment. This necessitates around-the-clock manufacturing, which in turn
requires effective materials management and support services to minimize
equipment downtime.
We work closely with our principals to support semiconductor manufacturers
in numerous ways, from supplying materials to installing and servicing complex
equipment. Our materials offerings include an extensive array of over 15,000
items, including wafer carriers and shippers, fluid and gas handling components,
high purity chemicals and cleanroom products. Our equipment offerings include
cleaning, microlithography, which refers to the part of the fabrication process
during which an image is projected on to a wafer by passing light through a
photomask, which is a high-purity quartz or glass plate used as the stencil in
semiconductor device fabrication to create an integrated circuit design pattern
on a semiconductor wafer, metrology, which refers to the measurement and
inspection of the wafer during the fabrication process, photomask inspection and
repair, which refers to the inspection and repair, if necessary, of the glass or
quartz photomasks used during the microlithography process, and inspection and
defect characterization, which refers to the process by which silicon wafers are
inspected during
3
<PAGE>
and after fabrication, equipment. Our global infrastructure, developed over our
25-year history in the semiconductor industry, provides our principals with
access to our extensive customer base, a technically sophisticated sales force
and the ability to effectively provide global product service and support in all
major semiconductor manufacturing markets in the world, except Japan.
Our goal is to be the leading global provider of marketing, sales, service
and support solutions to semiconductor materials and equipment suppliers and
semiconductor manufacturers. The key elements of our strategy include:
- leveraging our global infrastructure and expanding our leadership
position;
- continuing to broaden product and service offerings;
- expanding our materials business;
- fostering long-term relationships with our principals;
- acquiring complementary businesses; and
- expanding into Japan.
We were incorporated under the laws of The Netherlands in October 1975. Our
principal executive offices are located at 1350 Old Bayshore Highway,
Suite 360, Burlingame, California 94010, and our telephone number is
(650) 373-1133. The address of our web site is "www.metrontech.com." Information
contained on our web site is not a part of this prospectus.
THE OFFERING
<TABLE>
<S> <C>
Common shares offered by Metron...................... 2,300,000 shares
Common shares offered by the selling shareholders.... 1,450,000 shares
Common shares to be outstanding after this 12,404,261 shares
offering...........................................
Use of proceeds...................................... For working capital and general corporate
purposes. We may also use a portion of the
proceeds to acquire complementary businesses.
See "Use of Proceeds."
Proposed Nasdaq National Market symbol............... MTCH
</TABLE>
The number of common shares to be outstanding after this offering is based
on the number of shares outstanding as of August 31, 1999 and does not include
the following:
- 1,986,348 shares subject to options outstanding as of August 31, 1999 at a
weighted average exercise price of $5.50 per share;
- 828,952 shares that we could issue under employee stock plans; and
- 562,500 shares that may be purchased by the underwriters to cover
over-allotments, if any.
4
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS
FISCAL YEAR ENDED MAY 31, ENDED AUGUST 31,
------------------------------ -------------------
1997 1998 1999 1998 1999
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Net revenue................................. $298,576 $275,024 $228,618 $56,922 $69,473
Cost of revenue............................. 241,675 222,028 189,295 46,596 57,332
-------- -------- -------- ------- -------
Gross profit................................ 56,901 52,996 39,323 10,326 12,141
Selling, general, administrative and other
expenses.................................. 49,417 48,997 43,391 11,321 10,489
Restructuring and merger costs.............. 258 881 2,550 806 --
-------- -------- -------- ------- -------
Operating income (loss)..................... 7,226 3,118 (6,618) (1,801) 1,652
Equity in net income (loss) of joint
ventures.................................. 273 (497) 267 44 (85)
Other expense, net.......................... (602) (71) (397) (212) (198)
-------- -------- -------- ------- -------
Income (loss) before income taxes........... 6,897 2,550 (6,748) (1,969) 1,369
Provision (benefit) for income taxes........ 2,699 1,448 (2,214) (703) 466
-------- -------- -------- ------- -------
Net income (loss)........................... $ 4,198 $ 1,102 $ (4,534) $(1,266) $ 903
======== ======== ======== ======= =======
Basic net income (loss) per share........... $ 0.40 $ 0.11 $ (0.44) $ (0.12) $ 0.09
Diluted net income (loss) per share......... $ 0.37 $ 0.10 $ (0.44) $ (0.12) $ 0.08
Shares used to compute basic net income
(loss) per share(1)....................... 10,386 10,369 10,325 10,341 10,104
Shares used to compute diluted net income
(loss) per share(1)....................... 11,195 11,112 10,325 10,341 11,179
</TABLE>
<TABLE>
<CAPTION>
AUGUST 31, 1999
----------------------------------------
PRO FORMA
ACTUAL PRO FORMA(2) AS ADJUSTED(3)
-------- ------------ --------------
<S> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents.............................. $ 17,128 $ 17,128 $ 42,146
Working capital........................................ 23,993 23,993 49,011
Total assets........................................... 112,431 112,431 137,449
Total shareholders' equity............................. 30,831 32,804 57,822
</TABLE>
- ------------------------
(1) See Note 1 of Notes to Consolidated Financial Statements for an explanation
of the determination of the number of shares used in computing per share
data.
(2) Pro forma to give effect to the termination of certain put rights as a
result of the termination of a buy and sell agreement upon completion of
this offering.
(3) Adjusted to reflect the sale by Metron of 2,300,000 common shares, assuming
no exercise of the underwriters' over-allotment option, at an assumed
initial public offering price of $12.00 per share and the application of the
estimated net proceeds after deducting the underwriting discounts and
commissions and our estimated offering expenses.
5
<PAGE>
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS AND ALL OTHER
INFORMATION CONTAINED IN THIS PROSPECTUS BEFORE PURCHASING OUR COMMON SHARES.
INVESTING IN OUR COMMON SHARES INVOLVES A HIGH DEGREE OF RISK. THE RISKS AND
UNCERTAINTIES DESCRIBED BELOW ARE NOT THE ONLY ONES THAT WE FACE. ADDITIONAL
RISKS AND UNCERTAINTIES NOT PRESENTLY KNOWN TO US OR THAT WE CURRENTLY BELIEVE
ARE IMMATERIAL ALSO MAY IMPAIR OUR BUSINESS OPERATIONS. IF ANY OF THE EVENTS
DESCRIBED IN THE FOLLOWING RISKS OCCUR, OUR BUSINESS, OPERATING RESULTS AND
FINANCIAL CONDITION COULD BE MATERIALLY ADVERSELY AFFECTED. IN ADDITION, THE
TRADING PRICE OF OUR COMMON SHARES COULD DECLINE DUE TO ANY OF THE EVENTS
DESCRIBED IN THESE RISKS, AND YOU MAY LOSE ALL OR PART OF YOUR INVESTMENT.
RISKS RELATED TO METRON.
WE ARE DEPENDENT ON A FEW KEY PRINCIPALS FOR A MAJORITY OF OUR REVENUE;
THEREFORE, THE LOSS OF ONE OR MORE OF OUR KEY PRINCIPALS COULD SERIOUSLY HARM
OUR BUSINESS.
If, for any reason, any of our key principals were to materially reduce
their business or terminate their relationship with us, the loss of the key
principal would have a material adverse effect on our business. In particular,
if our commercial relationship with FSI or Entegris were to materially change or
were terminated, our business would be significantly adversely affected due to
the large percentage of our revenue generated by sales of these companies'
products. For the fiscal year ended May 31, 1999, 24% of our total revenue was
generated from the sale of products manufactured by FSI and 21% from the sale of
products manufactured by Entegris. For more information about our relationships
with FSI and Entegris, see also the risk titled "We are significantly controlled
by FSI and Entegris, which may limit your ability to influence the outcome of
director elections and other shareholder matters" and "Certain Transactions." In
each of our last three fiscal years, a majority of our revenue came from the
sale of products from five or fewer of the semiconductor materials and equipment
companies we represent, who we refer to as our principals. Although the
principals that comprise our largest sources of revenue may change from period
to period, we expect that revenue from the sale of products of a relatively
small number of principals will continue to account for a substantial portion of
our revenue for at least the next five years.
All of the semiconductor materials, equipment and products we market, sell,
service and support are sold pursuant to agreements with our principals. These
agreements are generally cancelable at will, subject to notification periods
which range from 30 days to two years. We generally do not sell competing
products in the same market, and therefore the number of principals we can
represent at any one time is limited. It is likely that in the future some of
our principals will terminate their relationships with us upon relatively short
notice. If we lose a key principal, we may not be able to find a replacement
quickly, or at all. The loss of a key principal may cause us to lose customers
and incur expenses associated with ending our agreement with that principal. We
may lose principals for various reasons, including:
- mergers and acquisitions involving our principals and other semiconductor
materials and equipment manufacturers that we do not represent;
- a principal's decision to attempt to build a direct sales organization;
- the expansion of a principal's product offerings to compete with the
products of another principal, because we generally do not offer competing
product lines;
- a principal's dissatisfaction with our level or quality of service; and
- the failure of a principal's business.
We have lost principals in the past. For example, after Ontrak was acquired
by Lam Research in August 1997, we ceased marketing and selling Ontrak products
in Europe in September 1998 and in
6
<PAGE>
South Korea in June 1998. In March 1999, A.G. Associates was acquired by Steag.
As a result of this acquisition, we will cease marketing and selling A.G.
Associates' products in September 1999. In July 1999, FSI sold its chemical
management division to BOC Edwards. As a result of this divestiture, we are
phasing out our marketing and sale of products of this division. In
October 1999, Applied Materials acquired Obsidian. As a result of the
acquisition, we expect that Obsidian will terminate its agreement with us.
THE SEMICONDUCTOR INDUSTRY IS HIGHLY CYCLICAL, AND THEREFORE, A DOWNTURN MAY
RESULT IN POOR OPERATING RESULTS.
The recent downturn in the semiconductor industry has had a material adverse
effect on our recent operating results. Our business depends in large part on
the procurement expenditures of semiconductor manufacturers, which, in turn,
depend on the current and anticipated demand for semiconductors and products
utilizing semiconductors. The semiconductor industry is highly cyclical and
historically has experienced periodic downturns, which often have resulted in
decreased expenditures by semiconductor manufacturers. These downturns generally
have adversely affected the sales, gross profits and operating results of
semiconductor materials and equipment suppliers. From 1996 through 1998, the
semiconductor industry experienced a downturn, which led semiconductor
manufacturers to delay or cancel capital expenditures. During this downturn,
some of our customers delayed or canceled purchases of semiconductor materials
and equipment, which had a negative impact on our sales, gross profits and
operating results. We cannot predict when downturns will occur and how we will
be affected by future downturns.
IF WE ARE UNABLE TO SUCCESSFULLY IDENTIFY NEW PRODUCTS AND ENTER INTO AND
IMPLEMENT ARRANGEMENTS WITH THE SUPPLIERS OF THESE PRODUCTS, OUR BUSINESS WILL
BE SERIOUSLY HARMED.
Any failure by us to enter into relationships with principals that
anticipate or respond adequately to technological developments or customer
requirements, or any significant delays in product development or introductions
by these principals, could result in a loss of competitiveness and could
materially adversely effect our business. The semiconductor materials and
equipment market is subject to rapid technological change, changing customer
requirements and frequent new product introductions. Because of this, the life
cycle of products that we market and sell is difficult to determine. Our future
success will depend to a significant extent on our principals' ability to keep
pace with changes in the market and on our ability to identify and carry
successful new product lines, particularly because we generally do not carry
competing product lines.
WE FACE INTENSE COMPETITION FROM COMPANIES WITH SIGNIFICANTLY GREATER FINANCIAL,
TECHNICAL AND MARKETING RESOURCES, WHICH COULD ADVERSELY AFFECT OUR ABILITY TO
MAINTAIN OR INCREASE SALES.
We face intense competition on two distinct fronts: competition for product
lines and competition for customers.
IF WE ARE UNABLE TO COMPETE SUCCESSFULLY FOR PRODUCT LINES AGAINST INDEPENDENT
SALES AND DISTRIBUTION COMPANIES THAT HAVE GREATER FINANCIAL RESOURCES, ARE
MORE ESTABLISHED OR HAVE LONG-STANDING RELATIONSHIPS WITH SEMICONDUCTOR
MATERIALS AND EQUIPMENT MANUFACTURERS, WE WILL BE UNABLE TO OFFER COMPETITIVE
PRODUCTS, WHICH WILL NEGATIVELY IMPACT OUR SALES.
We compete with independent sales and distribution companies for the right
to sell specific product lines in specific territories. We believe that our most
formidable competition comes from regionally established semiconductor materials
and equipment distribution companies. Some of these independent sales and
distribution companies have substantially greater financial resources to devote
to a particular region than we do, are better established in particular regions
than we are, have greater name recognition in their chosen markets than we have
and have long-standing collaborative business
7
<PAGE>
relationships with semiconductor materials and equipment manufacturers which are
difficult to overcome. If we are unable to effectively compete with sales and
distribution companies to attract and retain principals, our business will be
adversely effected.
IF WE ARE UNABLE TO COMPETE FOR CUSTOMERS DUE TO OUR INABILITY TO PROVIDE
SALES, MARKETING AND SUPPORT SERVICES OR PARTICULAR PRODUCT OFFERINGS, IT
WILL ADVERSELY AFFECT OUR ABILITY TO MAINTAIN OR INCREASE SALES.
We compete for orders from semiconductor manufacturers with established
semiconductor materials and equipment manufacturers who sell directly to
customers and with independent sales and distribution companies and sales
representatives. We believe that to compete effectively for customers we must
maintain a high level of investment in marketing, customer service and support
in all of the markets in which we operate, and we may not have sufficient
financial resources, technical expertise or marketing, services and support
capabilities to continue to compete successfully in the future. Some of our
competitors have greater name recognition in the territories they serve and have
long-standing relationships with semiconductor manufacturers that may give them
an advantage in attracting and retaining customers. Furthermore, we believe that
once a semiconductor manufacturer has selected a particular product for a
specific use from a vendor that is not one of our principals, it may be
difficult to achieve significant sales of a competing product to that customer
unless there are compelling reasons for the customer to switch products, such as
significant performance or cost advantages.
We anticipate that as we continue to diversify our product portfolio and
expand into new markets for our principals' products, we will encounter
additional competition for customers. If we cannot continue to compete
successfully for customers in the future, it will have a significant negative
impact on our business.
THE MANAGEMENT INFORMATION SYSTEMS THAT WE CURRENTLY USE IN OUR DAY-TO-DAY
OPERATIONS ARE NOT INTEGRATED ACROSS COUNTRY BORDERS AND NEED TO BE UPGRADED.
UPGRADING THEM WILL BE COSTLY, AND IF THE NEW SYSTEM IS NOT SUCCESSFULLY
IMPLEMENTED, OUR BUSINESS MAY SUFFER MATERIAL ADVERSE CONSEQUENCES.
While our financial reporting management information system is integrated
and operational, our current management information systems that we use to
control our day-to-day operations are not integrated across country borders. To
accommodate growth in the past, we have had to hire additional people to
compensate for the lack of a fully-functional, integrated operations management
information system. We anticipate that we will need to invest in a new
operations management information system in order to maintain our current level
of business and accommodate any future growth. We anticipate that the total
costs associated with the implementation of the new system will be approximately
$3.0 to $4.0 million and that the system will be implemented over the next
18 months. Any failure to successfully choose and implement a new operations
management information system may result in delayed growth, increased
inefficiency due to a lack of centralized data, higher inventories, increased
expenses associated with employing additional employees, a loss of our
investment in the new operations management information system and may have
additional material adverse effects on our business.
WE NEED TO SUCCESSFULLY MANAGE THE ANTICIPATED EXPANSION IN OUR OPERATIONS OR
OUR BUSINESS MAY SUFFER MATERIAL ADVERSE CONSEQUENCES.
Any failure by us to effectively manage future expansion and the system and
procedural transitions required by expansion could seriously harm our business
and our operating results. We have expanded our operations in the past and
anticipate future expansion of our operations through acquisitions and
otherwise. Our growth has placed and will continue to place significant demands
on our management, operational, financial and technical resources, as well as
our accounting and control systems, as we work to integrate geographically
dispersed offices and administrative personnel, diverse service and
8
<PAGE>
maintenance operations and different accounting and financial systems. Our
future operating results will depend on the ability of our management and other
employees to:
- continue to implement and improve our operational, customer support and
financial control systems;
- recruit, train, manage and motivate our employees;
- identify companies that are strategic acquisition candidates and
successfully acquire and integrate them with our existing business;
- communicate information efficiently throughout our organization; and
- work effectively with principals and customers.
We cannot predict whether these efforts will be successful or will occur in
a timely or efficient manner. We may not be able to install adequate control
systems in an efficient and timely manner, and our current or planned
operational systems, procedures and controls may not be adequate to support our
future operations. The difficulties associated with installing and implementing
new systems, procedures and controls may place a significant burden on our
management and our internal resources. Delays in the implementation of new
systems or operational disruptions when we transition to new systems would
impair our ability to accurately forecast sales demand, manage our product
inventory and record and report financial and management information on a timely
and accurate basis.
WE MAY NOT BE SUCCESSFUL IN ANY EFFORT TO PENETRATE JAPAN, WHICH COULD LIMIT OUR
FUTURE GROWTH.
We do not market and sell products to semiconductor manufacturers in Japan.
However, approximately 21% of the world's production of semiconductors takes
place in Japan. Accordingly, to reach all of the world's major semiconductor
markets, we will need to establish or acquire sales and marketing capabilities
in Japan. Historically, it has been difficult for non-Japanese companies to
succeed in establishing themselves in Japan, and we believe that expanding our
operations to Japan would be both expensive and time-consuming and would place
additional demands on our management. In addition, FSI and Entegris have
existing arrangements for the sale, service and support of their products in
Japan and have not indicated that they would modify such arrangements in the
event that Metron establishes or acquires sales and marketing capabilities in
Japan. We cannot predict whether any of our efforts to penetrate the Japanese
market will be successful. If we are not successful in our efforts to penetrate
the Japanese market, our future growth may be limited.
WE EXPECT CONTINUED DOWNWARD PRESSURE ON THE GROSS MARGINS OF THE PRODUCTS WE
SELL, AND AS A RESULT, IF WE ARE UNABLE TO CONTINUE TO DECREASE OUR EXPENSES AS
A PERCENTAGE OF SALES, WE WILL BE UNABLE TO INCREASE OR MAINTAIN OUR OPERATING
MARGINS.
Particularly during industry down cycles, pressure on the gross margins of
the products we sell is intense and can adversely impact our financial
performance. We have experienced significant downward pressure on our gross
margins mainly as a result of sales discounts offered by our competitors and
pressure from our customers to reduce prices and from our principals to reduce
the discounts they provide to us. This, in turn, has put significant downward
pressure on our operating margins. To maintain or increase our gross margins, we
must develop and maintain relationships with principals who introduce new
products and product enhancements on a timely basis. As a result of continued
pressure on gross margins, we must find ways to decrease our selling, general,
administrative and other expenses as a percentage of sales to increase or
maintain our operating margins. If our principals cannot continue to innovate,
if we cannot maintain our relationships with the innovating principals, or if we
cannot successfully manage our selling, general, administrative and other
expenses, our operating margins may decrease. If our operating margins decline
as a result of these factors, our business would be harmed.
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OUR EMPLOYMENT COSTS IN THE SHORT-TERM ARE TO A LARGE EXTENT FIXED, AND
THEREFORE ANY UNEXPECTED REVENUE SHORTFALL COULD ADVERSELY AFFECT OUR OPERATING
RESULTS.
Our operating expense levels are based in significant part on our head
count, which is generally driven by longer-term revenue goals. For a variety of
reasons, particularly the high cost and disruption of lay-offs and the costs of
recruiting and training, our head count in the short-term is, to a large extent,
fixed. In particular, approximately half of our employees are in Europe, and the
costs associated with the reduction of our labor force in Europe are high.
Accordingly, we may be unable to reduce employment costs in a timely manner to
compensate for any unexpected revenue or gross margin shortfall, which could
have a material adverse effect on our operating results.
WE MAY BEAR INVENTORY RISK DUE TO AN INABILITY TO RETURN PRODUCTS, AND IF WE ARE
UNABLE TO MANAGE OUR INVENTORY EFFECTIVELY, OUR OPERATING RESULTS COULD BE
ADVERSELY AFFECTED.
We bear inventory risk because we generally take title to our products when
we receive them from our principals, and we cannot always return products to the
principal in the event the products are not sold. Our customers do not always
purchase at the time or in the quantities we originally anticipated. For
example, as a result of the industry downturn in 1997 and 1998, we had excess
inventory for which we booked reserves in both the United States and Asia.
Typically, products cannot be returned to principals after they have been in our
inventory for a certain period of time; this time period varies depending on the
product and the principal. In addition, although it is typical when a
relationship with a principal terminates for that principal to repurchase most
of the inventory we have of that principal's products, it is possible under
certain circumstances that a principal may be unable or unwilling to repurchase
our inventory. If we fail to manage our inventory and accumulate substantial
product that cannot be returned, our operating results could be adversely
affected. Furthermore, if a principal cannot provide refunds in cash for the
inventory we desire to return, we may be forced to dispose of inventory below
cost, and this may have a material adverse effect on our financial condition.
OUR REVENUE AND OPERATING RESULTS MAY FLUCTUATE IN FUTURE PERIODS, WHICH COULD
ADVERSELY AFFECT OUR SHARE PRICE.
In the past, we have experienced fluctuations in our quarterly and annual
operating results and anticipate that these fluctuations will continue in the
future due to a variety of factors, many of which are out of our control.
Fluctuations in our results could cause our share price to decline
substantially. We believe that period-to-period comparisons of our results of
operations may not be meaningful, and you should not rely upon them as
indicators of our future performance. Our sales in, and the operating results
for, a particular quarter can vary significantly due to a variety of factors,
including those described elsewhere in this prospectus and the following:
- THE TIMING OF SIGNIFICANT CUSTOMER ORDERS AND CUSTOMER SPENDING PATTERNS.
During industry downturns, our customers may ask us to delay or even
cancel the shipment of previously firm orders. Delays and cancellations
may adversely affect our operating results in any particular quarter if we
are unable to recognize revenue for particular sales in the quarter in
which those sales were expected.
- THE TIMING OF PRODUCT SHIPMENTS BY OUR PRINCIPALS. For the most part, we
recognize sales upon the shipment of goods to our customers. Most of the
equipment and some of the materials we sell are shipped by the principal
directly to our customers, and we do not necessarily have any control over
the timing of a particular shipment. If we are unable to recognize revenue
for a particular sale in the quarter in which that sale was expected, our
operating results in that particular quarter will be negatively affected.
- THE TIMING OF NEW PRODUCT AND SERVICE ANNOUNCEMENTS BY OUR PRINCIPALS AND
THEIR COMPETITORS. New product announcements by our principals and their
competitors could cause our customers to
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delay a purchase or to decide to purchase products of one of our
principal's competitors which would adversely affect our revenue and,
therefore, our results of operations. New product announcements by others
may make it necessary for us to reduce prices on our products or offer
more service options, which could adversely impact operating margins and
net income.
- THE MIX OF PRODUCTS SOLD AND THE MARKET ACCEPTANCE OF OUR NEW PRODUCT
LINES. The mix of products we sell varies from period to period, and
because margins vary amongst or within different product lines, this can
adversely affect our results of operations. If we fail to sell our
products which generate higher margins, our average gross margins may be
lower than expected. If we fail to sell our new product lines, our revenue
may be lower than expected.
- GENERAL GLOBAL ECONOMIC CONDITIONS OR ECONOMIC CONDITIONS IN A PARTICULAR
REGION. When economic conditions in a region or worldwide worsen,
customers may delay or cancel their orders. There may also be an increase
in the time it takes to collect from our customers or even outright
defaults in payments. This can negatively affect our cash flow and our
results.
- COSTS WE MAY INCUR IF WE BECOME INVOLVED IN FUTURE LITIGATION. Litigation
is often costly, and even if we are successful in defending or making any
claim, the expenses incurred may significantly impact our results.
As a result of the factors listed above, our future operating results are
difficult to predict. Further, we base our current and future expense plans in
significant part on our expectations of our longer-term future revenue. As a
result, we expect our expense levels to be relatively fixed in the short-run. An
unanticipated decline in revenue for a particular quarter may disproportionately
affect our net income in that quarter. If our revenue is below our projections,
then our operating results will also be below expectations and, as we have in
the past, we may even have losses in the short-run. Any one of the factors
listed above, or a combination thereof, could adversely affect our quarterly
results of operations, and consequently may cause a decline in our share price.
WE DEPEND ON SALES TO A RELATIVELY SMALL NUMBER OF CUSTOMERS FOR A SIGNIFICANT
PORTION OF OUR REVENUE, AND IF ANY OF OUR LARGE CUSTOMERS WERE TO STOP OR REDUCE
THEIR PURCHASING FROM US, IT WOULD MATERIALLY AND ADVERSELY AFFECT OUR REVENUE.
A loss or a significant reduction or delay in sales to any of our major
customers could materially and adversely affect our revenue. We depend on a
small number of customers for a substantial portion of our revenue. During
fiscal 1999, our top 10 customers accounted for an aggregate of 32% of our
sales. Although a ranking by revenue of our largest customers will vary from
period to period, we expect that revenue from a relatively small number of
customers will account for a substantial portion of our revenue in any
accounting period for the foreseeable future. Consolidation in the semiconductor
industry may result in increased customer concentration and the potential loss
of customers as a result of acquisitions. Unless we diversify and expand our
customer base, our future success will significantly depend upon certain factors
which are not within our control, including:
- the timing and size of future purchase orders, if any, from our larger
customers;
- the product requirements of our customers; and
- the financial and operational success of our customers.
If any of our largest customers were to stop or reduce their purchasing from
us, our financial results could be adversely affected. A significant decrease in
sales to a major customer or the deferral or cancellation of any significant
order would have a material adverse effect on our operating results.
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OUR SALES CYCLE, PARTICULARLY FOR EQUIPMENT, IS LONG AND UNPREDICTABLE, WHICH
COULD REQUIRE US TO INCUR HIGH SALES AND MARKETING EXPENSES WITH NO ASSURANCE
THAT A SALE WILL RESULT.
Sales cycles for some of our products, particularly equipment, can run as
long as 12 to 18 months. As a result, we may not recognize revenue from efforts
to sell particular products for extended periods of time. We believe that the
length of the sales cycle may increase as some current and potential customers
of our key principals centralize purchasing decisions into one decision-making
entity. We expect this may intensify the evaluation process and require us to
make additional sales and marketing expenditures with no assurance that a sale
will result.
WE HAVE NOT YET DEVELOPED A STRATEGY TO SELL TO OUR CUSTOMERS OVER THE INTERNET,
AND IF A COMPETITOR DEVELOPS AND IMPLEMENTS AN EFFECTIVE E-COMMERCE STRATEGY, WE
MAY LOSE SOME OF OUR CUSTOMERS, WHICH WOULD HAVE A NEGATIVE IMPACT ON OUR
RESULTS OF OPERATIONS.
We have not developed a strategy to sell to our customers over the Internet,
but we plan to develop an e-commerce strategy in the future. Because rights to
sell principals' products are granted only for specific territories and sales
conducted over the Internet may occur anywhere around the globe, it is difficult
to adopt e-commerce practices in this industry. If principals decide to directly
distribute their products over the Internet, if our competitors develop a
successful strategy for engaging in e-commerce or if our customers require
e-commerce capability, we may lose customers, which would have a negative impact
on our revenue and on our operating results.
WE FACE YEAR 2000 RISKS.
The year 2000 problem arises because many older computer hardware and
software systems use only two digits to represent the year. As a result, these
systems and programs cannot distinguish between 20(th) and 21(st) century dates,
which may cause errors in information or system failures. Failure by us to
identify and remediate all material year 2000 risks could adversely affect our
business, financial condition and results of operations. Some of the risks you
should be aware of include:
- we cannot assure you that the entities that we rely on for products and
services that are important for our business, including our principals,
will be successful in addressing all of their software and systems
problems in order to operate without disruption in the year 2000;
- our customers or potential customers may be affected by year 2000 issues
that may, in part, cause a reduction, delay or cancellation of customer
orders; cause a delay in payments for products shipped; or cause customers
to expend significant resources on year 2000 compliance matters rather
than the products we sell; and
- we have not developed a contingency plan related to a failure of our, or a
third party's, year 2000 remediation efforts and may not be prepared if
this occurs.
Although we have not yet determined the most-likely worst-case year 2000
scenarios or quantified the likely impact of these scenarios, it is clear that
the occurrence of one or more of the risks described above could have a material
adverse effect on our business, financial condition or results of operations.
While we have made efforts to notify our customers who have purchased
potentially non-compliant products, we cannot be sure that these customers will
not assert claims against us alleging that the purchased products should have
been year 2000 compliant at the time of purchase, which could result in costly
litigation and divert management's attention.
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RISKS RELATED TO OUR INTERNATIONAL OPERATIONS.
ECONOMIC DIFFICULTIES IN COUNTRIES IN WHICH WE SELL OUR PRODUCTS CAN LEAD TO A
DECREASE IN DEMAND FOR OUR PRODUCTS AND IMPAIR OUR FINANCIAL RESULTS.
The volatility of general economic conditions and fluctuations in currency
exchange and interest rates can lead to decreased demand in countries in which
we sell product. For example, in 1997 and 1998 many Asian countries experienced
economic and financial difficulties. During this period, we experienced
cancellation or delay of orders for our products from customers in Asia, thus
adversely affecting our results of operations. Moreover, any economic, banking
or currency difficulties experienced by countries in which we have sales may
lead to economic recession in those countries. This in turn may result in the
cancellation or delay of orders for our products from customers in these
countries, thus adversely affecting our results of operations.
MOST OF OUR PRODUCT SALES ARE OUTSIDE THE UNITED STATES, AND CURRENCY
FLUCTUATIONS MAY IMPAIR OUR FINANCIAL RESULTS.
While most of our international sales are denominated in dollars, some are
denominated in various foreign currencies. To the extent that our sales and
operating expenses are denominated in foreign currencies, our operating results
may be adversely affected by changes in exchange rates. For example, in fiscal
1997, we recorded exchange losses of approximately $600,000. Given the number of
currencies involved, the substantial volatility of currency exchange rates, and
our constantly changing currency exposures, we cannot predict the effect of
exchange rate fluctuations on our future operating results. Although we engage
in foreign currency hedging transactions from time to time, these hedging
transactions can be costly, and therefore, we do not attempt to cover all
potential foreign currency exposures. These hedging techniques do not eliminate
all of the effects of foreign currency fluctuations on anticipated revenue.
In addition, the transition period from legacy currencies to the euro
currently is set to expire January 1, 2002. We are assessing our information
technology systems to determine whether they will accommodate the eventual
elimination of the legacy currencies. If our information technology systems are
unable to do so, they would have to be upgraded or replaced.
IF WE OR OUR NON-UNITED STATES SUBSIDIARIES ARE DEEMED SUBJECT TO UNITED STATES
TAXES, OUR BUSINESS, FINANCIAL CONDITION AND RESULTS MAY SUFFER.
Metron and its non-United States subsidiaries conduct most of their
activities in a manner which we believe does not constitute the conduct of a
trade or business in the United States. Accordingly, although we report taxable
income and pay taxes in the countries where we operate, including the United
States, we believe that income earned by Metron and its non-United States
subsidiaries from operations outside the United States is not reportable in the
United States for tax purposes and is not subject to United States income tax.
If income earned by us or our non-United States subsidiaries from operations
outside the United States is determined to be income effectively connected to an
United States trade or business and as a result becomes taxable in the United
States, we could be subject to United States taxes on this income. If we were to
be deemed to be subject to these taxes, our business, financial condition and
results of operations might be materially and adversely affected.
RISKS RELATED TO INVESTING IN OUR INITIAL PUBLIC OFFERING.
WE ARE SIGNIFICANTLY CONTROLLED BY FSI AND ENTEGRIS, WHICH MAY LIMIT YOUR
ABILITY TO INFLUENCE THE OUTCOME OF DIRECTOR ELECTIONS AND OTHER SHAREHOLDER
MATTERS.
Prior to this offering, FSI owned 32.7% and Entegris owned 32.7% of our
outstanding shares, and following the offering, FSI will own 21.8% and Entegris
will own 21.8% of our outstanding shares. By
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virtue of their share ownership and the fact that each holds one of the four
seats on our supervisory board, FSI and Entegris can exercise significant voting
and management control over Metron. As a result, each of these shareholders will
have significant influence over all matters requiring shareholder or supervisory
board approval, including the election of directors and approval of significant
corporate transactions, which may have the effect of delaying or preventing a
third party from acquiring control over us.
WE WILL HAVE BROAD DISCRETION AS TO THE USE OF THE OFFERING PROCEEDS.
We have not allocated the majority of the net proceeds of this offering for
specific uses, and our shareholders may disagree with the uses to which
management puts the proceeds from this offering. We may use a portion of the net
proceeds to acquire additional businesses or to invest in one or more principals
that we believe will complement or enhance our current or future business. We
cannot be certain that we will be able to use the proceeds to earn a favorable
return.
WE MAY NEED TO RAISE ADDITIONAL CAPITAL, AND ANY INABILITY TO RAISE REQUIRED
FUNDS COULD HARM OUR BUSINESS.
We expect the net proceeds from this offering, cash from operations and
borrowings under our credit facilities will be sufficient to meet our working
capital and capital expenditure needs for the foreseeable future. However, we
may need to raise additional capital to acquire or invest in complementary
businesses. Further, if we issue additional equity securities, the ownership
stakes of our existing shareholders would be reduced, and the new equity
securities may have rights, preferences or privileges senior to those of our
existing common shares. If we cannot raise funds, if needed, on acceptable
terms, we may not be able to develop our business, take advantage of future
opportunities or respond to competitive pressures or unanticipated requirements,
all of which could seriously harm our business and results of operations.
NEW INVESTORS IN OUR COMMON SHARES WILL EXPERIENCE IMMEDIATE AND SUBSTANTIAL
DILUTION.
The initial public offering price is substantially higher than the book
value per share of our common shares. Investors purchasing common shares in this
offering will, therefore, incur immediate dilution of $7.54 in net tangible book
value per common share. Investors will incur additional dilution upon the
exercise of outstanding share options. See "Dilution."
THERE IS CURRENTLY NO PUBLIC MARKET FOR OUR COMMON SHARES AND FOLLOWING THE
OFFERING, OUR SHARE PRICE MAY BE VOLATILE.
There has not been a public market for our common shares prior to this
offering, and a liquid trading market for our shares may not develop following
this offering. The initial price for our common shares to be sold in the
offering has been determined by negotiations between us and the representatives
of the underwriters and may not be indicative of prices that will prevail in the
trading market. The trading price of our common shares could be subject to wide
fluctuations in response to various factors, some of which are beyond our
control, including factors discussed elsewhere in this prospectus and the
following:
- failure to meet the published expectations of securities analysts for a
given quarterly period;
- changes in financial estimates by securities analysts;
- changes in market values of comparable companies;
- stock market price and volume fluctuations, which are particularly common
among securities of high technology companies;
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- stock market price and volume fluctuations attributable to inconsistent
trading volume levels;
- additions or departures of key personnel; and
- commencement of our involvement in litigation.
In the past, securities class action litigation has often been brought
against a company following periods of volatility in the market price of its
securities. We may in the future be the target of similar litigation. Securities
litigation may result in substantial costs and divert management's attention and
resources, which may seriously harm our business.
SUBSTANTIAL SALES OF SHARES MAY IMPACT THE MARKET PRICE OF OUR COMMON SHARES.
If our shareholders sell substantial amounts of our common shares, including
shares issued upon the exercise of outstanding options, the market price of our
common shares may fall. These sales also might make it more difficult for us to
sell equity or equity-related securities in the future at a time and price that
we deem appropriate. After completion of this offering, we will have outstanding
12,404,261 common shares, assuming no exercise of outstanding options after
August 31, 1999. All of the shares sold in this offering will be freely
tradable. 139,341 additional shares are eligible to be sold immediately, of
these 12,300 are subject to volume limitations, under federal securities laws.
2,200 restricted shares will be eligible for sale 90 days after the date of this
offering. 8,590,945 shares are subject to lock-up arrangements between the
shareholders and us or the underwriters. 8,590,945 shares will be eligible for
sale in the public market 180 days following the date of this prospectus. Of
these shares 8,060,867 shares will be subject to volume limitations, under
federal securities laws. The remaining 5,000 shares will be eligible for sale in
the public market subject to volume restrictions on March 17, 2000.
If our shareholders sell substantial amounts of common shares (including
shares issued upon the exercise of outstanding options) in the public market,
the market price of our common shares could fall.
WE DO NOT INTEND TO PAY DIVIDENDS.
We have never declared or paid any cash dividends on our capital shares. We
currently intend to retain any future earnings for funding growth and,
therefore, do not expect to pay any dividends in the foreseeable future.
RISKS RELATED TO BEING A DUTCH COMPANY.
OUR SUPERVISORY BOARD HAS THE AUTHORITY TO ISSUE SHARES WITHOUT SHAREHOLDER
APPROVAL, WHICH MAY MAKE IT MORE DIFFICULT FOR A THIRD PARTY TO ACQUIRE US.
As a Netherlands "NAAMLOZE VENNOOTSCHAP," or N.V., we are subject to
requirements not generally applicable to corporations organized in United States
jurisdictions. Among other things, under Netherlands law the issuance of shares
of a N.V. company must be approved by the shareholders unless the shareholders
have delegated this authority to issue shares to another corporate body. Our
articles of association provide that the shareholders have the authority to
resolve to issue shares, common or preferred, and may designate the Metron board
of supervisory directors as the corporate body with the authority to adopt the
resolution to issue shares, but this designation may not exceed a period of five
years. Our articles also provide that as long as the supervisory board has the
authority to adopt a resolution to issue shares, the shareholders shall not have
the authority to adopt this resolution. Pursuant to the Metron articles, the
supervisory board will have the authority to adopt resolutions to issue shares
until five years from the date of the deed of conversion from a B.V. to an N.V.
and the related amendment of the articles. This authorization of the supervisory
board may be renewed by the
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shareholders from time to time. As a result, our supervisory board has the
authority to issue common and preferred shares without shareholder approval.
The issuance of preferred shares could have the effect of making it more
difficult for a third party to acquire, or of discouraging a third party from
acquiring, a majority of the outstanding shares of our share capital.
IT MAY NOT BE POSSIBLE TO ENFORCE UNITED STATES JUDGMENTS AGAINST NETHERLANDS
CORPORATIONS, DIRECTORS AND OTHERS.
Our articles provide that Metron has two separate boards of directors, a
managing board and a supervisory board. One of our managing directors resides
outside of the United States. A significant percentage of our assets are located
outside the United States. As a result, it may not be possible to effect service
of process within the United States upon the managing director who lives outside
the United States. Furthermore, judgments of United States courts, including
judgments against us, our directors or our officers predicated on the civil
liability provisions of the federal securities laws of the United States, are
not directly enforceable in The Netherlands.
PROVISIONS OF OUR CHARTER DOCUMENTS AND DUTCH LAW COULD DISCOURAGE POTENTIAL
ACQUISITION PROPOSALS AND COULD DELAY, DETER OR PREVENT A CHANGE IN CONTROL.
Our articles of association and the applicable law of The Netherlands
contain provisions that may be deemed to have anti-takeover effects. These
provisions may delay, defer or prevent a takeover attempt that a shareholder
might consider in the best interest of our shareholders. For example, our
articles may be amended only pursuant to a proposal of the supervisory board
followed by a resolution of the general meeting of shareholders. To amend our
articles requires that at a general meeting of shareholders, (1) more than half
of the issued share capital is represented and (2) the resolution to amend the
articles is supported by a two-thirds majority of the valid votes cast. This
supermajority voting requirement may have the effect of discouraging a third
party from acquiring a majority of the outstanding Metron shares. In addition,
these provisions could have a negative impact on our stock price. Furthermore,
some United States tax laws may discourage third parties from accumulating
significant blocks of our common shares. For a more full description of
anti-takeover measures, see "Description of Capital Shares."
IF WE ARE CLASSIFIED AS A "CONTROLLED FOREIGN CORPORATION," OUR 10% OR MORE
UNITED STATES SHAREHOLDERS COULD BE TAXED ON DIVIDENDS PAID BY OUR OPERATING
SUBSIDIARIES TO US, EVEN IN THE ABSENCE OF A DISTRIBUTION OF OUR INCOME TO THEM.
BECAUSE UNITED STATES SHAREHOLDERS OF MORE THAN 10% OF OUR COMMON SHARES HELD,
IN THE AGGREGATE, 65.6% OF OUR COMMON SHARES AS OF AUGUST 31, 1999, THEY MIGHT
DISCOURAGE US FROM HAVING OUR OPERATING SUBSIDIARIES PAY US DIVIDENDS, WHICH
MIGHT LIMIT OUR ABILITY TO MOVE OUR FINANCIAL RESOURCES AROUND OUR OPERATIONS.
Following this offering, we do not believe that we will be a "controlled
foreign corporation" for the purposes of United States tax law. However, we are
currently classified as a "controlled foreign corporation" and we may again be
so classified if the sum of the percentage ownership by all United States
holders of more than 10% of our common shares were greater than 50% by voting
power or value. As of August 31, 1999, United States shareholders of more than
10% of our common shares held, in the aggregate, 65.6% of our common shares. In
the event we are determined to be a "controlled foreign corporation" after this
offering, our 10% or more United States shareholders could be taxed on dividends
paid by our operating subsidiaries to us, even in the absence of a distribution
of our income to them. Because United States shareholders of more than 10% of
our common shares held a majority of our common shares as of August 31, 1999,
they might discourage us from having our operating subsidiaries pay us
dividends, which might limit our flexibility in utilizing our financial
resources throughout the consolidated company.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements under the captions "Prospectus Summary," "Risk
Factors," "Use of Proceeds," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business" and elsewhere in this
prospectus are "forward-looking statements." These statements involve known and
unknown risks, uncertainties, and other factors that may cause our, or our
industry's, actual results, levels of activity, performance or achievements to
be materially different from any future results, levels of activity, performance
or achievements expressed or implied by the forward-looking statements. These
factors are listed under "Risk Factors" and elsewhere in this prospectus.
In some cases, you can identify forward-looking statements by terminology
such as "expects," "anticipates," "intends," "may," "should," "plans,"
"believes," "seeks," "estimates," "could," "would" or the negative of such terms
or other comparable terminology.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Moreover, neither we nor any other person
assumes responsibility for the accuracy and completeness of these statements. We
are under no duty to update any of the forward-looking statements after the date
of this prospectus to conform these statements to actual results.
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USE OF PROCEEDS
We expect to receive net proceeds of approximately $25,018,000, after
deducting underwriting discounts and estimated offering expenses, from the sale
of 2,300,000 common shares, and an additional $6,277,500 from the sale of
562,500 common shares if the underwriters' over-allotment option is exercised in
full, at an assumed initial public offering price of $12.00 per share. We will
not receive any proceeds from the sale of common shares by the selling
shareholders.
We intend to use the proceeds of the offering for working capital and
general corporate purposes, including sales, marketing, customer support and
other activities related to our business. We may also use a portion of the net
proceeds to acquire additional businesses or to invest in one or more of our
principals that we believe will complement or enhance our current or future
business. However, we have no specific plans, agreements or commitments to do so
and are not currently engaged in any negotiations for any acquisition or joint
venture.
The amounts that we actually expend for working capital and other general
corporate purposes will vary significantly depending on a number of factors,
including future revenue growth, if any, and the amount of cash we generate from
operations. As a result, we will retain broad discretion in the allocation of
the net proceeds of this offering. Pending such uses, we intend to invest the
net proceeds of the initial public offering in investment grade interest-bearing
securities.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our common shares. We
currently intend to retain any future earnings to fund the development and
growth of the our business. Therefore, we currently do not anticipate paying any
cash dividends.
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CAPITALIZATION
The following table sets forth our capitalization as of August 31, 1999: (1)
on an actual basis; (2) pro forma to give effect to the termination of certain
put rights as a result of the termination of a buy-sell agreement upon
completion of this offering; and (3) pro forma as adjusted to give effect to the
sale of 2,300,000 common shares offered in this offering and to give effect to
the receipt of the estimated net proceeds from the sale of such shares at an
assumed initial public offering price of $12.00 per share and the application of
the net proceeds from such sale.
The capitalization information set forth in the table below is qualified by,
and you should read it in conjunction with, our more detailed Consolidated
Financial Statements and the related Notes and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" appearing elsewhere
in this prospectus.
<TABLE>
<CAPTION>
AUGUST 31, 1999
------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
-------- ----------- -----------
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C>
Short-term debt (including current portion of
long-term debt)...................................
$ 15,111 $ 15,111 $ 15,111
======== ======== ========
Long-term debt (excluding current portion).......... $ 1,101 $ 1,101 $ 1,101
Common shares subject to Buy-Sell Agreement......... 1,973 -- --
Shareholders' equity:
Preferred shares: NLG 0.96 par value, 10,000,000
shares authorized; no shares issued and
outstanding, actual; no shares issued and
outstanding, pro forma and pro forma as
adjusted........................................ -- -- --
Common shares: NLG 0.96 par value, 40,000,000
shares authorized; 10,385,268 shares issued and
10,104,261 shares outstanding, actual and pro
forma; 12,685,268 shares issued and
12,404,261 shares outstanding, pro forma as
adjusted........................................ 3,030 5,003 30,021
Retained earnings................................. 31,089 31,089 31,089
Cumulative other comprehensive loss............... (3,157) (3,157) (3,157)
Treasury shares: 281,007.......................... (131) (131) (131)
-------- -------- --------
Total shareholders' equity...................... $ 30,831 $ 32,804 $ 57,822
-------- -------- --------
Total capitalization............................ $ 33,905 $ 33,905 $ 58,923
======== ======== ========
</TABLE>
This table excludes the following shares as of August 31, 1999:
- 1,986,348 shares subject to options outstanding as of August 31, 1999 at a
weighted average exercise price of $5.50 per share; and
- 828,952 additional shares that could be granted under our stock plans.
19
<PAGE>
DILUTION
Our pro forma tangible book value as of August 31, 1999 was $30,338,000, or
approximately $3.00 per share. Pro forma net tangible book value per share
represents the amount of our total assets less total liabilities, divided by the
number of common shares outstanding. Dilution in net tangible book value per
share represents the difference between the amount per share paid by purchasers
of common shares in this offering and the net tangible book value per common
share immediately after the completion of this offering. After giving effect to
the sale of the 2,300,000 common shares in this offering at an assumed initial
public offering price of $12.00 per share and after deducting the estimated
underwriting discounts and commissions and estimated offering expenses payable
by us, our pro forma net tangible book value at August 31, 1999 would have been
$55,356,000, or approximately $4.46 per share. This represents an immediate
increase in pro forma net tangible book value of $1.46 per share to existing
shareholders and an immediate dilution in net tangible book value of $7.54 per
share to purchasers of common shares in this offering. The following table
illustrates this dilution on a per share basis:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share......... $ 12.00
Pro forma net tangible book value per share as of
August 31, 1999..................................... $ 3.00
Increase in net tangible book value per share
attributable to new investors....................... 1.46
--------
Pro forma net tangible book value per share after
offering.............................................. 4.46
--------
Dilution in net tangible book value per share to new
investors............................................. $ 7.54
========
</TABLE>
The following table sets forth, on a pro forma basis as of August 31, 1999,
after giving effect to the difference between the number of common shares
purchased from us, the total cash consideration paid and the average price per
share paid by existing holders of common shares and by the new investors, before
deducting underwriting discounts and commissions and estimated offering expenses
payable by us, at an assumed initial public offering price of $12.00 per share:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
---------------------- ---------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
----------- -------- ----------- -------- ---------
<S> <C> <C> <C> <C> <C>
Existing shareholders.... 11,355,809 83.2% $10,147,000 26.9% $ 0.89
New investors............ 2,300,000 16.8 27,600,000 73.1 $12.00
----------- ----- ----------- -----
Total................ 13,655,809 100.0% $37,747,000 100.0%
=========== ===== =========== =====
</TABLE>
This table includes the following shares as of August 31, 1999:
- 1,251,548 shares subject to exercisable options outstanding as of August
31, 1999 at a weighted average exercise price of $4.11 per share.
This table excludes the following shares as of August 31, 1999:
- 734,800 shares subject to unexercisable options outstanding as of
August 31, 1999 at a weighted average exercise price of $7.87 per share;
and
- 828,952 additional shares that could be issued under our stock plans.
The sale of common shares by the selling shareholders in this offering will
reduce the number of common shares held by existing shareholders to 9,905,809,
or approximately 72.5% of the total number of common shares outstanding upon the
closing of this offering; and will increase the number of shares held by new
public investors to 3,750,000, or approximately 27.5% of the total number of
common shares outstanding after this offering.
20
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The tables that follow present portions of our consolidated financial
statements and are not complete. You should read the following selected
consolidated financial data in conjunction with our Consolidated Financial
Statements and the related Notes and with "Management's Discussion and Analysis
of Financial Condition and Results of Operations" included elsewhere in this
prospectus. The consolidated statement of operations data for the years ended
May 31, 1997, 1998 and 1999, and the consolidated balance sheet data as of
May 31, 1998 and 1999, are derived from and are qualified in their entirety by
our Consolidated Financial Statements that have been audited by KPMG LLP,
independent auditors, and are included elsewhere in this prospectus. The
consolidated statement of operations data for the years ended May 31, 1995 and
1996, and the consolidated balance sheet data as of May 31 1995, 1996 and 1997
are derived from our audited consolidated financial statements which do not
appear elsewhere in this prospectus. The selected consolidated statement of
operations data for the three-month periods ended August 31, 1998 and 1999 and
the selected consolidated balance sheet data at August 31, 1999 have been
derived from unaudited consolidated financial statements included elsewhere in
this prospectus. The unaudited consolidated financial statements include, in the
opinion of management, all adjustments, consisting only of normal recurring
adjustments, that management considers necessary for a fair statement of the
results for those periods. The historical results presented below are not
necessarily indicative of the results to be expected for any future fiscal year.
<TABLE>
<CAPTION>
THREE MONTHS
FISCAL YEAR ENDED MAY 31, ENDED AUGUST 31,
---------------------------------------------------- -------------------
1995 1996 1997 1998 1999 1998 1999
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Net revenue................................... $167,681 $283,325 $298,576 $275,024 $228,618 $56,922 $ 69,473
Cost of revenue............................... 130,921 223,292 241,675 222,028 189,295 46,596 57,332
-------- -------- -------- -------- -------- ------- --------
Gross profit.................................. 36,760 60,033 56,901 52,996 39,323 10,326 12,141
Selling, general, administrative and other
expenses.................................... 23,229 43,989 49,417 48,997 43,391 11,321 10,489
Restructuring and merger costs................ -- -- 258 881 2,550 806 --
-------- -------- -------- -------- -------- ------- --------
Operating income (loss)....................... 13,531 16,044 7,226 3,118 (6,618) (1,801) 1,652
Equity in net income (loss) of joint
ventures.................................... 97 355 273 (497) 267 44 (85)
Minority interest in net income of
consolidated entities....................... (116) -- -- -- -- -- --
Other income (expense), net................... (1,401) 15 (602) (71) (397) (212) (198)
-------- -------- -------- -------- -------- ------- --------
Income (loss) before income taxes............. 12,111 16,414 6,897 2,550 (6,748) (1,969) 1,369
Provision (benefit) for income taxes.......... 3,682 5,435 2,699 1,448 (2,214) (703) 466
-------- -------- -------- -------- -------- ------- --------
Net income (loss)............................. $ 8,429 $ 10,979 $ 4,198 $ 1,102 $ (4,534) $(1,266) $ 903
======== ======== ======== ======== ======== ======= ========
Basic net income (loss) per share............. $ 0.93 $ 1.07 $ 0.40 $ 0.11 $ (0.44) $ (0.12) $ 0.09
======== ======== ======== ======== ======== ======= ========
Diluted net income (loss) per share........... $ 0.93 $ 1.02 $ 0.37 $ 0.10 $ (0.44) $ (0.12) $ 0.08
======== ======== ======== ======== ======== ======= ========
Shares used to compute basic in per share
calculation................................. 9,094 10,289 10,386 10,369 10,325 10,341 10,104
Shares used to compute diluted in per share
calculation................................. 9,094 10,801 11,195 11,112 10,325 10,341 11,179
</TABLE>
<TABLE>
<CAPTION>
MAY 31,
---------------------------------------------------- AUGUST 31,
1995 1996 1997 1998 1999 1999
-------- -------- -------- -------- -------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents........................ $11,008 $ 13,683 $ 17,033 $ 10,387 $10,601 $ 17,128
Working capital.................................. 17,782 23,296 26,383 24,469 22,630 23,993
Total assets..................................... 68,869 125,791 110,791 114,161 99,625 112,431
Total shareholders' equity....................... 22,825 32,908 36,399 36,049 29,955 30,831
</TABLE>
21
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information in this Management's Discussion and Analysis of Financial
Condition and Results of Operations, except for the historical information,
contains forward-looking statements. These statements are subject to risks and
uncertainties. You should not place undue reliance on these forward-looking
statements as actual results could differ materially. We do not assume any
obligation to publicly release the results of any revision or updates to these
forward-looking statements to reflect future events or unanticipated
occurrences. This discussion and analysis should be read in conjunction with our
Consolidated Financial Statements and the related Notes, which are included
elsewhere in this prospectus. This discussion of fiscal 1997, 1998 and 1999
refers to the fiscal years ended on May 31 of each year.
OVERVIEW
Metron Technology N.V. is a holding company organized under the laws of The
Netherlands. Through our various operating subsidiaries, we are a leading global
provider of marketing, sales, service and support solutions to semiconductor
materials and equipment suppliers and semiconductor manufacturers. We operate in
Europe, Asia and the United States. We were founded in Europe in 1975 by our two
corporate shareholders, who own a majority of our shares, and certain of our
current and former management. In 1995, we reorganized Metron to combine three
Asian companies as a reorganization under common control, and purchased
Transpacific Technology Corporation and its subsidiaries, referred to as TTC.
TTC was founded in California in 1982 as a semiconductor equipment
manufacturers' representative company and expanded into the distribution
business in 1990. In July 1998, we acquired T.A. Kyser Co., which we refer to as
Kyser, in a transaction accounted for as a pooling of interests. Founded in
1977, Kyser markets and sells materials in nine states within the United States
principally to the semiconductor industry.
We derive our revenue from sales of materials, equipment, service and spare
parts to the semiconductor industry, as well as from commissions on sales of
equipment and materials. We recognize revenue for most of an equipment sale and
all other product sales upon the shipment of goods to customers. We defer the
portion of our equipment revenue associated with our estimate of our
installation and warranty obligations. We amortize the deferred revenue over the
applicable installation and warranty periods. We recognize service revenue in
the periods the services are rendered to customers.
In each of our three fiscal years ended May 31, 1999, a majority of our
revenue came from the sale of products from five or fewer of the semiconductor
materials and equipment companies we represent, who we refer to as our
principals. For fiscal 1999, 24% of our total revenue was generated from the
sale of products manufactured by FSI and 21% from the sale of products
manufactured by Entegris. In addition to representing our two largest sources of
revenue, FSI and Entegris are also our two largest shareholders, and after the
offering FSI will hold 21.8% and Entegris will hold 21.8% of our outstanding
shares. Although the principals that comprise our largest sources of revenue may
change from period to period, we expect that revenue from the sale of products
of a relatively small number of principals will continue to account for a
substantial portion of our revenue for at least the next five years.
We operate in all areas of the world in which there is a significant
semiconductor industry, except Japan. The following tables show our sales in
Europe, Asia and the United States in dollars and as a
22
<PAGE>
percentage of net revenue for each of the three fiscal years ended May 31, 1997,
1998 and 1999 and for the three month periods ended August 31, 1998 and 1999:
<TABLE>
<CAPTION>
THREE MONTHS
FISCAL YEAR ENDED MAY 31, ENDED AUGUST 31,
------------------------------------ ----------------------
1997 1998 1999 1998 1999
-------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net revenue
Europe................................. $179,853 $155,472 $112,369 $29,040 $31,705
Asia................................... 58,839 53,047 62,243 14,285 19,345
United States.......................... 59,884 66,505 54,006 13,597 18,423
-------- -------- -------- ------- -------
Total net revenue.................... $298,576 $275,024 $228,618 $56,922 $69,473
======== ======== ======== ======= =======
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS
FISCAL YEAR ENDED MAY 31, ENDED AUGUST 31,
------------------------------------ --------------------
1997 1998 1999 1998 1999
-------- -------- -------- ------- -------
(PERCENTAGE OF NET REVENUE)
<S> <C> <C> <C> <C> <C>
Net revenue
Europe................................. 60.2% 56.5% 49.2% 51.0% 45.7%
Asia................................... 19.7 19.3 27.2 25.1 27.8
United States.......................... 20.1 24.2 23.6 23.9 26.5
----- ----- ----- ----- -----
Total net revenue.................... 100.0% 100.0% 100.0% 100.0% 100.0%
===== ===== ===== ===== =====
</TABLE>
Since the beginning of fiscal 1999, we have been organized into two
worldwide operating divisions, equipment and materials. Our equipment division
derives the majority of its revenue from the sale of capital equipment. The
remainder of the division's revenue comes from service, which includes the
installation, maintenance and repair of semiconductor equipment, spare part
sales and commissions. Our equipment sales represent products that support
various production activities for the manufacture of semiconductors. The sales
of the equipment division principally represent a small number of high-dollar
value transactions for which the products are generally shipped directly to the
customer by the manufacturer. As a result, our equipment sales are significantly
affected by the pattern of capital spending by customers, the timing of customer
orders and the timing of product shipments by the equipment manufacturer.
Our materials division derives the majority of its revenue from sales of
materials and components. The remainder of the division's revenue comes from
commissions. The materials and components we sell are used both in the
production of semiconductors and in the building and maintenance of
semiconductor equipment and manufacturing facilities. Materials include products
such as wafer handling cassettes and accessories, wafer surface preparation
materials, fluid-handling components such as fittings, valves and tubing, and
disposable cleanroom clothing. Sales of these products tend to be less cyclical
than sales of semiconductor equipment and generally offer higher gross margins.
RESULTS OF OPERATIONS
Beginning in the second half of 1996, as the result of excess capacity and
significant price erosion, especially for memory chips, semiconductor industry
growth slowed significantly. This slowdown caused semiconductor manufacturers to
exercise caution in making capital equipment purchasing decisions. Some
semiconductor manufacturers reduced or delayed the expansion or construction of
facilities. This directly affected the sales of semiconductor capital equipment
and, to a lesser extent, the sales of materials. As a result of the slowdown, we
experienced order cancellations, delays in booking new orders and delays in
shipping orders to customers, all of which contributed to the reductions in our
23
<PAGE>
revenue in fiscal 1998 and 1999. We believe that, despite short term slowdowns,
the semiconductor industry has long term growth opportunities. As a result, we
believe we must maintain our infrastructure, even during periodic slowdowns, in
order to continue to serve our customers and to be in a position to take
advantage of long term growth opportunities. Accordingly, we did not reduce our
operating expenses sufficiently to prevent us from recording an operating loss
in fiscal 1999.
The following table summarizes our historical results of operations as a
percentage of net revenue for the fiscal years and periods indicated. The
historical financial data for fiscal 1997, 1998 and 1999 were derived from, and
should be read in conjunction with, our audited Consolidated Financial
Statements and the related Notes included elsewhere in this prospectus. The
historical financial data for the three month periods ended August 31, 1998 and
1999 have been derived from unaudited consolidated financial statements included
elsewhere in this prospectus.
<TABLE>
<CAPTION>
THREE MONTHS
FISCAL YEAR ENDED MAY 31, ENDED AUGUST 31,
------------------------------------ ----------------------
1997 1998 1999 1998 1999
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net revenue........................................ 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenue.................................... 80.9 80.7 82.8 81.9 82.5
----- ----- ----- ----- -----
Gross margin....................................... 19.1 19.3 17.2 18.1 17.5
Selling, general, administrative, and other
expenses......................................... 16.6 17.8 19.0 19.9 15.1
Restructuring and merger costs..................... 0.1 0.3 1.1 1.4 --
----- ----- ----- ----- -----
Operating margin................................... 2.4 1.2 (2.9) (3.2) 2.4
</TABLE>
The following table shows our materials division and equipment division
revenue as a percent of net revenue, together with the related gross margins:
<TABLE>
<CAPTION>
THREE MONTHS
FISCAL YEAR ENDED MAY 31, ENDED AUGUST 31,
--------------------------- ------------------
1997 1998 1999 1998 1999
----- ----- ----- ------ ------
<S> <C> <C> <C> <C> <C>
Net revenue
Equipment division............................... 62.9% 55.1% 55.7% 59.5% 53.0%
Materials division............................... 37.1 44.9 44.3 40.5 47.0
Gross margins
Equipment division............................... 18.2% 17.4% 14.9% 16.5% 14.1%
Materials division............................... 20.5 21.6 20.1 20.5 21.3
</TABLE>
THREE MONTHS ENDED AUGUST 31, 1999 COMPARED TO THREE MONTHS ENDED AUGUST 31,
1998
NET REVENUE.
EQUIPMENT DIVISION. The equipment division's net revenue for the three
months ended August 31, 1999 was $36.8 million, an increase of $2.8 million or
8.3% from the three months ended August 31, 1998. Revenue gains in Asia and
Europe were offset by lower revenue in the United States, where revenue is
particularly dependent on a small number of high-dollar transactions. Service
revenue was lower in the three months ended August 31, 1998, principally as a
result of a reduction in the amount of deferred revenue realized from the
installation and warranty of equipment. This reduction was due to lower
equipment sales during the second through fourth quarters of fiscal 1999
compared to the same quarters in fiscal 1998. The division's revenue decreased
as a percentage of total revenue owing to higher growth of materials division
revenue.
MATERIALS DIVISION. The materials division's net revenue for the three
months ended August 31, 1999 was $32.7 million, an increase of $9.8 million or
42.3% from the three months ended August 31,
24
<PAGE>
1998. The division recorded higher revenue in all regions, with particularly
strong growth coming from the United States.
GROSS MARGINS
EQUIPMENT DIVISION. The equipment division's gross margin was 2.4
percentage points lower for the three months ended August 31, 1999 compared to
the three months ended August 31, 1998. The decline was due to the lower service
revenues cited above which were insufficient to cover the largely fixed costs of
Metron's service organization, and to lower commission revenue in the three
months ended August 31, 1998.
MATERIALS DIVISION. The gross margin of the materials division increased
0.8 percentage points for the three months ended August 31, 1999 compared to the
three months ended August 31, 1998. Higher gross margins in Asia and the United
States offset a slight margin decline in Europe.
SELLING, GENERAL, ADMINISTRATIVE AND OTHER (SG&A) EXPENSES. SG&A expenses
for the three months ended August 31, 1999 were $10.5 million, down
$0.8 million or 7.0% from the $11.3 million incurred in the three months ended
August 31, 1998. The decline is due to reduced salary and other employment
related costs as a result of lower headcount.
RESTRUCTURING AND MERGER COSTS. There was no restructuring expense in
either period, but in the three months ended August 31, 1998, Metron incurred
$806,000 of expenses in connection with the acquisition of Kyser which was
consummated during the period. There were no comparable merger costs in the
three months ended August 31, 1999.
FISCAL YEAR ENDED MAY 31, 1999 COMPARED TO FISCAL YEARS ENDED MAY 31, 1998 AND
1997
NET REVENUE
EQUIPMENT DIVISION. The equipment division's net revenue in fiscal 1999 was
$127.4 million, down $24.2 million or 16.0% from fiscal 1998. Net revenue in
fiscal 1998 was $151.6 million, down $36.3 million or 19.3% from $187.9 million
in fiscal 1997. The revenue decline over the three-year period was primarily the
result of reduced equipment sales in Europe, our largest geographic segment. The
decline in our equipment sales during the three-year period ended May 31, 1999
reflected the influence of the cyclical slowdown in the growth of the
semiconductor industry. In the third and fourth quarters of fiscal 1999, as the
industry began to emerge from its prolonged downturn, revenue grew by 16.2% in
the third quarter and 6.4% in the fourth quarter of fiscal 1999.
MATERIALS DIVISION. The materials division's net revenue in fiscal 1999 was
$101.2 million, down $22.2 million or 18.0% from fiscal 1998. Net revenue in
fiscal 1998 was $123.4 million, up $12.8 million or 11.6% from the
$110.6 million in fiscal 1997. The decline in net revenue in fiscal 1999 was a
result of the reduced and delayed expansion and construction of semiconductor
facilities and lower than expected increases in the number of wafers processed.
In fiscal 1999, materials revenue was lower in all geographic areas. However, as
the industry began to emerge from its prolonged downturn, revenue grew
sequentially from the two year low in the first quarter and, in the fourth
quarter of fiscal 1999, was 21.3% higher than in the third quarter. The increase
in fiscal 1998 from fiscal 1997 was primarily due to revenue growth in Europe
and the United States, with a smaller amount of revenue growth in Asia.
GROSS MARGINS
EQUIPMENT DIVISION. The equipment division's gross margin declined in both
fiscal 1999 and fiscal 1998. The decline in gross margin in fiscal 1999 was due
principally to the lower proportion of division revenue represented by
commission sales. This reflected both the closure of our United States
25
<PAGE>
manufacturers' representative sales business in December 1998 and the decline in
equipment sales in South Korea, most of which are structured as commission
sales. The decline in gross margin in fiscal 1998 was due principally to the
fact that we recorded a small loss on service in fiscal 1998, whereas we
recorded a small profit in fiscal 1997.
MATERIALS DIVISION. The gross margin of the materials division declined in
fiscal 1999. The decline was due principally to changes in product mix,
increased reserves which we booked for potential inventory obsolescence and
higher period costs. Gross margin increased in fiscal 1998 as a result of
changes in product mix and higher margins on materials sales in Asia.
SELLING, GENERAL, ADMINISTRATIVE AND OTHER (SG&A) EXPENSES. SG&A expenses
in fiscal 1999 were $43.4 million, down $5.6 million or 11.4% from the
$49.0 million incurred in fiscal 1998. Fiscal 1998 expenses were down by
$0.4 million or less than 1% from the $49.4 million incurred in fiscal 1997.
SG&A expenses consist principally of salaries and other employment-related
costs, travel and entertainment, occupancy, communications and computer-related
expense, trade show and professional services, depreciation and amortization of
acquisition goodwill. Our SG&A expenses are a function principally of our total
headcount. Over 60% of SG&A expenses consist of salaries and other
employment-related costs.
The decrease in SG&A expenses in fiscal 1999 was primarily the result of the
reduction in headcount levels which we made to match the lower than expected
levels of revenue. However, because we base our headcount levels on longer term
revenue goals, we did not reduce headcount sufficiently to prevent SG&A expense
from increasing as a percentage of net revenue.
RESTRUCTURING AND MERGER COSTS. The following table summarizes the
restructuring and merger costs we incurred in the periods indicated.
<TABLE>
<CAPTION>
THREE MONTHS
FISCAL YEAR ENDED MAY 31, ENDED AUGUST 31,
-------------------------------------- -----------------------
1997 1998 1999 1998 1999
-------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Restructuring costs.............................. -- $261 $1,835 -- --
Merger costs..................................... $258 620 715 $806 --
---- ---- ------ ---- ----
Restructuring and merger costs................. $258 $881 $2,550 $806 --
==== ==== ====== ==== ====
</TABLE>
Restructuring costs represent primarily severance costs associated with the
implementation of our new organizational structure and other reductions in
headcount. During fiscal 1998, we began the transition from our organizational
structure based on individual Metron subsidiaries in each country to a global
organization built around our product lines in order to improve our service to
our principals and customers. This organizational change allowed us to eliminate
several positions in fiscal 1998 and fiscal 1999 that had been duplicated under
the previous subsidiary structure. The restructuring costs incurred during
fiscal 1998 represent termination costs for 13 employees, primarily in finance
and administration. This change did not have a material impact on restructuring
and merger expenses in fiscal 1998, but we incurred approximately $856,000 of
charges in fiscal 1999. This represents the termination costs of 51 employees,
most of whom worked in the equipment division. In February 1999, we entered into
an early retirement agreement with one of our managing directors in connection
with the termination of his employment agreement. To cover the entire cost of
the early retirement agreement, we recorded a pre-tax charge of $979,000 in
fiscal 1999.
All the merger costs we incurred, primarily professional fees, were in
connection with the acquisition of Kyser. We began discussions with Kyser
regarding a possible combination of the two companies in fiscal 1997.
Discussions were terminated for extended periods of time and subsequently
resumed several times before completion of the transaction in July 1998.
26
<PAGE>
OTHER EXPENSE. The following table summarizes the components of other
income (expense) for the periods indicated.
<TABLE>
<CAPTION>
THREE MONTHS
FISCAL YEAR ENDED MAY 31, ENDED AUGUST 31,
------------------------------------ ----------------------
1997 1998 1999 1998 1999
-------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Foreign exchange gain (loss).................... $ (578) $ 489 $ 211 $ 58 $(114)
Interest income................................. 487 514 438 83 69
Interest expense................................ (1,260) (1,110) (913) (252) (263)
Loss on the sale of joint ventures.............. -- -- (140) -- --
Miscellaneous income............................ 749 36 7 (101) 110
------- ------- ----- ----- -----
Other expense................................... $ (602) $ (71) $(397) $(212) $(198)
======= ======= ===== ===== =====
</TABLE>
We engage in limited hedging activities to reduce our exposure to exchange
risks arising from fluctuations in foreign currency, but because hedging
activities can be costly, we do not attempt to cover all potential foreign
currency exposures. During the three-year period ended May 31, 1999, we entered
into contracts to hedge firm purchase commitments, to hedge the maturities of
foreign currency denominated liabilities with foreign currency denominated
assets and to hedge differences existing between foreign currency assets and
liabilities. The currencies in which we purchase forward exchange contracts have
numerous market makers to provide ample depth and liquidity for our hedging
activities.
Interest income represents primarily earnings on our available cash
balances. The decrease in our interest income in fiscal 1999 is a result of
lower average cash balances and of declining interest rates. Our interest
expense decreased year over year primarily as the result of reduced interest
rates, and the reduction in average borrowings from our various overdraft
facilities.
QUARTERLY RESULTS OF OPERATIONS
The following tables present certain consolidated statements of operations
data in dollars and as a percentage of net revenue for the eight quarters ended
August 31, 1999. In management's opinion, this unaudited information has been
prepared on the same basis as our audited annual Consolidated Financial
Statements and includes all adjustments (consisting only of normal recurring
adjustments) necessary for fair presentation of the unaudited information for
the quarters presented. The results of operations for any quarter are not
necessarily indicative of results that we may achieve for any subsequent
quarters.
27
<PAGE>
<TABLE>
<CAPTION>
QUARTER ENDED
-------------------------------------------------------------------------------------------
NOV. 30, FEB. 28, MAY 31, AUG. 31, NOV. 30, FEB. 28, MAY 31, AUG. 31,
1997 1998 1998 1998 1998 1999 1999 1999
--------- --------- -------- --------- --------- --------- -------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Net revenue................. $72,209 $78,249 $63,014 $56,922 $51,296 $56,559 $63,840 $69,473
Gross profit................ 13,432 14,343 12,689 10,326 8,445 9,022 11,530 12,141
Income (loss) from
operations................ 158 1,364 271 (1,801) (2,595) (2,832) 610 1,652
Net income (loss)........... (308) 563 (39) (1,266) (1,513) (1,899) 144 903
Basic net income (loss) per
share..................... $ (0.03) $ 0.05 $ 0.00 $ (0.12) $ (0.15) $ (0.18) $ 0.01 $ 0.09
Diluted net income (loss)
per share................. $ (0.03) $ 0.05 $ 0.00 $ (0.12) $ (0.15) $ (0.18) $ 0.01 $ 0.08
PERCENTAGE OF NET REVENUE:
Net revenue................. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Gross profit................ 18.6 18.3 20.1 18.1 16.5 16.0 18.1 17.5
Income (loss) from
operations................ 0.2 1.7 0.4 (3.2) (5.1) (5.0) 1.0 2.4
Net income (loss)........... (0.4) 0.7 (0.1) (2.2) (2.9) (3.4) 0.2 1.3
</TABLE>
Our quarterly operating results have fluctuated significantly and are likely
to continue to fluctuate significantly due to a number of factors including:
- the timing of significant customer orders and customer spending patterns;
- the timing of product shipments by our principals;
- the loss of any significant customer or principal;
- the timing of new product and service announcements by our principals and
their competitors;
- the mix of products sold and the market acceptance of our new product
lines;
- the efficiencies we are able to achieve in managing inventories of
materials and spare parts;
- the timing of expenditures intended to increase future sales of materials
and equipment;
- general global economic conditions or economic conditions in a particular
region;
- changes in pricing by us, our principals or our competitors;
- changes in currency valuations relative to the U.S. dollar;
- costs we may incur if we become involved in future litigation; and
- other factors, many of which are beyond our control.
28
<PAGE>
Net revenue has fluctuated over the past eight quarters primarily due to the
cyclical downturn of the semiconductor industry. The following table shows our
materials division and equipment division net revenue, together with their
related gross margins:
<TABLE>
<CAPTION>
QUARTER ENDED
------------------------------------------------------------------------------------------
NOV. 30, FEB. 28, MAY 31, AUG. 31, NOV. 30, FEB. 28, MAY 31, AUG. 31,
1997 1998 1998 1998 1998 1999 1999 1999
--------- --------- -------- -------- --------- --------- -------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenue
Equipment
division.......... $39,352 $47,804 $32,812 $33,975 $27,507 $31,950 $33,991 $36,807
Materials
division.......... 32,857 30,445 30,201 22,948 23,790 24,609 29,849 32,666
Gross margins
Equipment
division.......... 16.9% 15.7% 18.9% 16.5% 13.9% 12.9% 15.9% 14.1%
Materials
division.......... 20.7 22.5 21.4 20.5 19.4 19.9 20.5 21.3
</TABLE>
Equipment division revenue for the past eight quarters fluctuated primarily
due to the factors described above. The decline in materials division revenue
during the first quarter of fiscal 1999 was primarily due to the slowdown in the
construction of semiconductor fabrication facilities. In the fourth quarter of
fiscal 1999, the increase in equipment and materials division revenue reflects
the beginning of the industry's emergence from its prolonged downturn.
Equipment division gross margins fluctuate primarily due to changes in
product mix. Materials division gross margins have remained relatively stable
for the past eight quarters except for the second and third quarters of fiscal
1999 when we recorded additional provisions for inventory which we purchased for
customer orders in Asia that were subsequently delayed or canceled.
LIQUIDITY AND CAPITAL RESOURCES
Our principal sources of liquidity to date have been cash flow from
operations and bank borrowings. We define liquidity as our ability to generate
resources to pay our current obligations and to finance our growth during
periods of business expansion. Our principal requirement for capital is for
working capital to finance receivables and inventories. Our working capital,
current assets less current liabilities, at August 31, 1999 was $24.0 million.
Our working capital at May 31, 1999 was $22.6 million. As a result of lower
revenue, our working capital decreased 7.5% from May 31, 1998, and our current
ratio, current assets divided by current liabilities, was 1.3 at May 31, 1998
and 1.4 at May 31, 1999.
OPERATING ACTIVITIES. Cash flows from operating activities in fiscal 1998
were $1.1 million. The net total of items which did not affect operating cash
flows, $4.1 million, was offset by net changes in assets and liabilities of a
similar amount. As a result, the $1.1 million of cash flows from operating
activities in fiscal 1998 were approximately equal to net income. Cash flows
from operating activities in fiscal 1999 were a negative $3.0 million, largely
as the result of Metron's net loss of $4.5 million. In fiscal 1999, the net
total of items which did not affect operating cash flows increased to
$4.8 million. The increase was principally due to the fact that we provided
additional reserves against inventory purchased for customers in Asia who
subsequently deferred or canceled their orders, and took a reserve against a
receivable from a customer in Europe who filed for bankruptcy. The net effect of
changes in assets and liabilities in fiscal 1999 was approximately
$3.3 million. A significant reduction in receivables caused by the reduction in
revenue was offset by reductions in accounts payable and amounts due to
affiliates, which are also accounts payable. The decline in equipment revenue in
fiscal 1999 also caused a significant reduction in the amounts deferred for
installation and warranty. The net effect of all these items was a positive
$1.5 million.
INVESTING ACTIVITIES. In fiscal 1998, we contributed $526,000 to increase
our investment in FSI-CME, a joint venture with FSI in Europe, and invested
$583,000 to purchase a 35% interest in a
29
<PAGE>
new Korean joint venture with FSI called FSI-CMK. In February 1999, we sold our
interests in these joint ventures to FSI for $2.5 million.
During fiscal 1999, through our wholly-owned subsidiary Metron Technology
(United Kingdom) Ltd. we formed a joint venture with WS Atkins Plc., a publicly
traded provider of engineering and facilities maintenance services around the
world. This joint venture Metron Atkins Partnership Limited, of which we own a
50% interest, makes available the services of both joint venturers to the
semiconductor industry and coordinates the supply of services from others. These
services include the design and engineering of manufacturing facilities changes,
facilities management and comprehensive technical support.
Our capital expenditures for property, plant and equipment totaled
$3.6 million for fiscal 1997, $4.0 million for fiscal 1998 and $1.4 million for
fiscal 1999. Most of our capital expenditures are for leasehold improvements and
computer and communications equipment. We expect that our total capital
expenditures in fiscal 2000 will be about $2.5 million, excluding whatever
portion we incur this year of the costs of a new operations management
information system which we estimate could total $3.0 to $4.0 million over a 24
to 36 month period. At May 31, 1999, we had commitments to spend approximately
$21.9 million for the purchase of equipment, materials and spare parts for
resale.
FINANCING ACTIVITIES. During the three-year period ending May 31, 1999, we
satisfied our funding requirements principally from internally generated funds
and our various borrowing facilities. In fiscal 1999, we repurchased common
shares from two employee shareholders for a total of $1.2 million pursuant to
the Amended and Restated Buy and Sell Agreement. We expect that the net proceeds
from this offering, along with cash generated from operations, will be
sufficient to meet our anticipated needs for working capital both in the
short-term and the long-term. We do not anticipate that we will need to raise
additional capital to permit us to conduct our operations in the ordinary
course. However, we may need to raise additional capital for significant
acquisitions or other extraordinary transactions. We do not currently have any
specific plans, agreements or commitments related to any such transaction and
are not currently engaged in any negotiations related to any such transaction.
We have no plans to pay any dividends on our common shares and intend to retain
all of our future profits to fund future growth. However, our future growth,
including potential acquisitions, may require additional external financing, and
from time to time we may need to raise additional funds through public or
private sales of equity and/or additional borrowings. If we are unable to obtain
this additional funding, we might have to curtail our expansion plans. The
issuance of additional equity or debt securities convertible into equity could
result in dilution to our existing shareholders.
The following table summarizes our material borrowing facilities as of
August 31, 1999:
<TABLE>
<CAPTION>
RECENT
U.S. $ EQUIVALENT AMOUNT AMOUNT INTEREST
LENDER FACILITY AMOUNT CURRENTLY OUTSTANDING AVAILABLE RATE
- ------ ----------------- --------------------- --------- ----------
<S> <C> <C> <C> <C>
Deutsche Bank......................... 4,283,000 3,273,000 1,011,000 7.50%
Royal Bank of Scotland................ 3,428,000 1,692,000 1,735,000 7.25%
Silicon Valley Bank................... 4,000,000 3,200,000 800,000 8.00%
Compass Bank.......................... 8,500,000 6,985,000 1,515,000 7.50%
ING Bank.............................. 1,402,000 217,000 1,185,000 7.50%
All Others............................ 2,056,000 845,000 1,211,000 5.0 to 8.5%
---------- ---------- ---------
Total................................. 23,669,000 16,212,000 7,457,000
========== ========== =========
</TABLE>
YEAR 2000 IMPLICATIONS
The year 2000 problem arises because many older computer hardware and
software systems use only two digits to represent the year. As a result, these
systems and programs cannot distinguish
30
<PAGE>
between 20(th) and 21(st) century dates, which may cause errors in information
or system failures. Since uncertainty is inherent in any assessment of the
potential year 2000 issues, we recognize the need to remain vigilant and are
continuing our analysis, assessment and conversion for the various year 2000
issues which we have identified across our business.
We utilize many third party software packages for our business applications
and computer systems that support our day-to-day operations. We are upgrading
our business applications and computer systems to be year 2000 compliant as the
result of our analysis of identified year 2000 deficiencies.
Many of the pieces of equipment we sold to customers in prior years and sell
now rely on specialized integrated software to monitor and control their
functions. Since the beginning of 1998, we have been working with suppliers and
customers to review and assess the software in these older products and in our
current product portfolio to identify any year 2000 issues. In January 1999, we
completed a report on all our current equipment principals, including our key
principals FSI and Entegris, and sent it to all of our customers. To date, we
have completed analysis of approximately 80% of our installed base and found
that about 10% require modification or upgrading to be year 2000 compliant. Our
goal is to complete this analysis as soon as we can, but we are significantly
dependent for information on our customers and on former principals, and we
cannot predict whether we will be able to complete the project before
December 31, 1999. We believe that those principals that are not currently
year 2000 compliant will be compliant before the year 2000. Wherever possible,
we are letting our customers know what upgrades or modifications are necessary
to be year 2000 ready. We are in the process of upgrading the software for
certain customers and are working with all of our customers to insure that any
necessary upgrades can be scheduled for completion in a timely manner. In
addition, we have asked those customers that do not wish to receive an upgrade
to sign a disclaimer. We also intend to support our customers with spare parts
and technical support, after the year 2000 commences.
Our internal systems include both information technology, or IT, and non-IT
systems. We are in the process of completing an assessment of our material
internal IT systems, including both our own software products and third-party
software and hardware technology, but we have not initiated an assessment of our
non-IT systems. We expect to complete testing of our IT systems in 1999. To the
extent that we are not able to test the technology provided by principals and
third-party vendors, we are seeking assurances from vendors that their systems
are year 2000 compliant and/or installing upgrades and modifications where
recommended. We are not currently aware of any material operational issues or
costs associated with preparing our internal IT and non-IT systems for the year
2000. However, we may experience material unanticipated problems and costs
caused by undetected errors or defects in the technology used in our internal IT
and non-IT systems. Although the year 2000 project team has not yet determined
the most-likely worst-case year 2000 scenarios or quantified the likely impact
of these scenarios, it is clear that the occurrence of one or more of the risks
described above could have a material adverse effect on our business, financial
condition or results of operations.
While we have made efforts to notify our customers who have purchased
potentially non-compliant products, we cannot be sure that these customers will
not assert claims against us alleging that the purchased products should have
been year 2000 compliant at the time of purchase, which could result in costly
litigation and divert management's attention. We cannot be sure that we will not
encounter unforeseen problems related to year 2000 issues, but we currently
expect that the year 2000 program and any resulting issues will be resolved in a
timely manner. We are currently incurring staff costs and may incur other costs
to complete our program to resolve year 2000 issues, but we do not account for
these costs separately. Although we do not separately account for year 2000
expenses, we estimate that the expenses we have incurred to date to address
year 2000 issues have not been material and, although we have not completed our
full assessment of our year 2000 readiness, we do not expect to incur material
expenses in connection with any required future remediation efforts.
31
<PAGE>
We have not developed a contingency plan related to a failure of our, or a
third party's, year 2000 remediation effort and may not be prepared if this
occurs. We are also subject to external forces, both in the United States and
elsewhere, that might affect generally affect industry and commerce, such as
utility or transportation company year 2000 compliance failures and related
service interruptions.
EFFECT OF CURRENCY EXCHANGE RATE AND EXCHANGE RATE RISK MANAGEMENT
A significant portion of our business is conducted outside of the United
States through our foreign subsidiaries. While most of our international sales
are denominated in dollars, some are denominated in various foreign currencies.
To the extent that our sales and operating expenses are denominated in foreign
currencies, our operating results may be adversely affected by changes in
exchange rates. Owing to the number of currencies involved, the substantial
volatility of currency exchange rates, and our constantly changing currency
exposures, we cannot predict the effect of exchange rate fluctuations on our
future operating results. Although we engage in foreign currency hedging
transactions from time to time, these hedging transactions can be costly, and
therefore, we do not attempt to cover all potential foreign currency exposures.
These hedging techniques do not eliminate all of the effects of foreign currency
fluctuations on anticipated revenue.
In addition, the transition period from legacy currencies to the euro
currently is set to expire January 1, 2002. We are assessing our information
technology systems to determine whether they will accommodate the eventual
elimination of the legacy currencies. If our information technology systems are
unable to do so, they would have to be upgraded or replaced.
MARKET RISK
At May 31, 1999 we had aggregate forward exchange contracts in various
currencies as follows:
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
CONTRACT AMOUNT US$ BUY SELL CONTRACT RATE FAIR VALUE EXPIRATION DATE
- --------------------- ----------------- ----------------- ---------------- ---------- ---------------
<C> <S> <C> <C> <C> <C>
$3,773,000 -- Singapore Dollars 1.69 $ 98,319 January 2000
$4,889,000 Japanese Yen 107.26 (1,439) March 2000
$2,022,000 Singapore Dollars 1.67 3,578 January 2000
$1,700,000 Italian Lira 1,864.90 5,492 July 1999
$ 500,000 British Pound 1.63 (475) June 1999
$ 700,000 Deutsch Mark 1.79 (36,445) July 1999
--------
$ 69,030
========
</TABLE>
The building mortgage with the Royal Bank of Scotland plc interest rate is
comprises a variable LIBOR rate, a fixed rate of 1.5%, and a regulatory bank
charge. In May 1996 we entered into an interest rate swap, expiring June 2001,
to convert only the variable LIBOR portion of the interest rate to a fixed
interest rate of 7.72%. The interest rates at May 31, 1998 and 1999 for the
mortgage were 9.25% and 6.87%, while the interest rates for the swap were 9.27%
and 9.24%, respectively. At May 31, 1999, the notional amount for the interest
rate swap was $1,002,000 and its estimated fair value was a payable of $43,000.
32
<PAGE>
BUSINESS
OVERVIEW
We are a leading global provider of marketing, sales, service and support
solutions to semiconductor materials and equipment suppliers and semiconductor
manufacturers. On behalf of semiconductor materials and equipment suppliers,
which we refer to as our principals, we provide a broad range of materials and
equipment to leading semiconductor manufacturers such as Advanced Micro Devices,
IBM, Intel, Lucent, Motorola, NEC Electronics, Philips, Infineon (Siemens) and
STMicroelectronics. We also provide semiconductor manufacturers with the ability
to outsource a wide variety of silicon wafer fabrication, or fab, and equipment
support services, such as materials management, cleanroom services and facility
maintenance. Our principals are both independent companies that have developed
emerging technologies and divisions of larger companies that have other primary
products and markets and include Cabot, Entegris, FSI, Komatsu, Pall,
Schumacher, SDI, Seiko Instruments and Zeiss. Our materials offerings include an
extensive array of over 15,000 items, including wafer carriers and shippers,
fluid and gas handling components, high purity chemicals and cleanroom products.
Our equipment offerings include cleaning, microlithography, which refers to the
part of the fabrication process during which an image is projected on to a wafer
by passing light through a photomask, which is a high-purity quartz or glass
plate used as the stencil in semiconductor device fabrication to create an
integrated circuit design pattern on a semiconductor wafer, metrology, which
refers to the measurement and inspection of the wafer during the fabrication
process, photomask inspection and repair, which refers to the inspection and
repair, if necessary, of the glass or quartz photomasks used during the
microlithography process, and inspection and defect characterization, which
refers to the process by which silicon wafers are inspected during and after
fabrication, equipment.
INDUSTRY BACKGROUND
Semiconductor Industry Association, or SIA, data indicates that the
semiconductor industry grew from $21.5 billion in revenue in 1985 to
$125.5 billion in revenue in 1998, representing a compound annual growth rate of
14.6%. Although the industry recently experienced one of its periodic down
cycles, The SIA estimates that semiconductor industry revenue will exceed
$144.0 billion in 1999 and will increase at a compound annual growth rate of
17.6% to $234.0 billion in 2003. The increase in demand for semiconductors is
driven by the communications industry, particularly the Internet, as well as
growth in traditional markets for semiconductors such as computers, automobiles
and other consumer and industrial products.
The manufacture of semiconductors requires a wide array of equipment and
materials. The semiconductor capital equipment industry consists of equipment
for wafer manufacture and processing and equipment for assembly, packaging and
testing of semiconductors. According to Semiconductor Equipment and Materials
International, in 1998, the semiconductor wafer fabrication equipment industry
generated $14.2 billion in revenue. The high cost of equipment development and
the desire of semiconductor manufacturers to buy products from financially and
technically strong suppliers have led to consolidation among equipment
manufacturers. At the same time, the long-term growth prospects of the industry
continue to attract small players with new technologies to fill product niches.
In addition, some suppliers to the industry are divisions of larger companies
which have other primary products and markets.
The semiconductor manufacturing materials industry provides the wide variety
of consumable and manufacturing materials that are required by semiconductor
manufacturers, including wafer carriers and shippers, fluid and gas handling
components, high purity chemicals and cleanroom products. According to Rose
Associates, in 1998, the semiconductor manufacturing materials industry
generated $19.8 billion in revenue. Rapid changes in technology have led to the
creation and emergence of newer
33
<PAGE>
semiconductor materials manufacturers offering innovative products. The
materials industry is more fragmented and less cyclical than the equipment
industry, in part because demand for semiconductor materials is driven more by
the volume of semiconductors produced than by industry capacity and expectations
of future revenue growth. The lower barriers to entry in this industry also
attracts new competitors.
As semiconductors continually become smaller and more complex, the number of
manufacturing steps increases, which requires more complex and costly
semiconductor equipment. The complex manufacturing process also entails the use
of a large variety of materials from many sources. In addition, the high capital
cost of semiconductor fabrication plants, called fabs, which can now exceed
$2.0 billion, requires that fabs quickly reach and maintain optimal productivity
levels in order to maximize their return on investment. This also necessitates
around-the-clock manufacturing, which in turn requires that spare parts,
materials and service be delivered quickly and on short notice.
The semiconductor industry has evolved into a global industry as
semiconductor manufacturers are increasingly operating fabs in multiple
locations throughout the world in proximity to their customers. The requirement
for the rapid ramp-up of new facilities and new products has led semiconductor
manufacturers increasingly to standardize all aspects of their operations and to
require that their suppliers do the same. We believe that in order to ensure
standardization, semiconductor manufacturers are increasingly seeking materials
and equipment suppliers that offer a comprehensive and cost-effective global
procurement solution to their materials, equipment and service needs.
Semiconductor equipment and materials suppliers and semiconductor
manufacturers are increasingly focusing on their core competencies and
outsourcing other aspects of their operations to third parties. The increasing
complexity of semiconductors and related capital investment, combined with
long-term pricing pressures, have led semiconductor manufacturers to
increasingly focus on design, development and manufacturing and outsource to
third parties equipment service, materials management, cleanroom services and
facility maintenance, as well as other similar services. We believe that
outsourcing enables these companies to increase fab productivity in a
cost-effective manner. In addition, semiconductor equipment and materials
suppliers often focus on product development and manufacturing and outsource to
third parties the marketing, sale, installation, service and support of their
products. In particular, smaller semiconductor equipment and materials
manufacturers that cannot afford to invest the time or the capital resources
required to build a global infrastructure, and divisions of larger companies
whose main focus is on other products or markets, often benefit from
outsourcing. Outsourcing enables these companies to reduce time to market,
financial risk and marketing investment while maintaining the ability to compete
with often larger companies with established infrastructures.
Providers of outsourcing services to the semiconductor industry are able to
take advantage of operational efficiencies due to their ability to offer
products and services from multiple suppliers and leverage their infrastructure
costs over a larger revenue base. There are a large number of generally smaller
companies that provide outsourcing services, including regional, privately-held
companies that focus on a portion of, or a specific geographic market in, the
semiconductor manufacturing industry. We believe that semiconductor equipment
and materials manufacturers and semiconductor manufacturers are increasingly
seeking an international services and support company that offers a
comprehensive global solution.
THE METRON SOLUTION
We are a leading global provider of marketing, sales, service and support
solutions to semiconductor materials and equipment suppliers and semiconductor
manufacturers. We provide an important link between semiconductor manufacturers
and our principals. We provide semiconductor manufacturers, who otherwise might
be required to purchase materials and equipment from a range of suppliers
worldwide, with the ability to purchase their materials and equipment through a
single
34
<PAGE>
supplier and the ability to outsource equipment service, materials management,
cleanroom services and facility maintenance. These services enable our customers
to:
- simplify and standardize their materials and equipment purchases in
multiple locations throughout the world;
- focus their resources on product design, development and marketing; and
- increase fab productivity in a cost-effective manner.
We also provide timely and comprehensive marketing, sales, installation,
service and support for materials and equipment manufacturers, enabling our
principals to:
- focus their resources on technology and product development and
manufacturing;
- reduce their time to market, financial risk and marketing investment; and
- enable them to compete more effectively with larger companies with
established infrastructures without investing the time or capital
resources required to build their own infrastructures.
STRATEGY
Our goal is to be the leading global provider of marketing, sales, service
and support solutions to semiconductor materials and equipment suppliers and
semiconductor manufacturers. The key elements of our strategy include:
- LEVERAGE OUR GLOBAL INFRASTRUCTURE AND EXPAND OUR LEADERSHIP POSITION. We
believe that our global infrastructure, as well as our 25-year history of
serving the semiconductor industry, provide us a significant competitive
advantage in serving our principals and customers. As of August 31, 1999,
we had approximately 390 sales and marketing and customer service and
support employees in 33 offices in Asia (except Japan), Europe and the
United States. We plan to continue to leverage our global infrastructure
by offering an increasing variety of products and services.
- CONTINUE TO BROADEN PRODUCT AND SERVICE OFFERINGS. We offer a wide range
of semiconductor manufacturing materials and equipment and plan to
selectively broaden our product lines and territories to meet the needs of
our customers. We believe our competitive advantage is generally greater
in product areas that are not served by one of the large
globally-integrated equipment or materials manufacturers. We will also
seek to enter into additional relationships with non-United States
principals seeking to penetrate the United States market and other markets
outside their home territories. We also plan to expand on-site maintenance
and other support services, including specialized parts cleaning,
inventory management and engineering services. We believe these efforts
will strengthen our long-term relationships with our customers.
- EXPAND MATERIALS BUSINESS. While continuing to expand our equipment
business, we intend to increase the relative size of our materials
business. We believe that the materials business is particularly
well-suited to benefit from the global infrastructure that we have
developed, in part because addressable markets are more fragmented, there
are a large number of individual products and typical transactions are
smaller. Materials products generally offer relatively favorable gross
margins, and the materials business is generally less cyclical than the
equipment business.
- FOSTER LONG-TERM RELATIONSHIPS WITH OUR PRINCIPALS. We seek to continue to
develop long-term relationships with our principals. Generally, within the
territories we serve for a principal, we operate as the exclusive
representative of the principal and do not offer competing product lines.
To foster long-term relationships with our principals, we will continue
the joint training of our sales, service and applications personnel, the
investment in inventories and demonstration equipment, as appropriate, and
the joint participation in trade shows with our principals. In
35
<PAGE>
addition, to help us secure longer term relationships with our principals,
we plan to selectively invest in principals during their later stage
financings.
- ACQUIRE COMPLEMENTARY BUSINESSES. To enable us to better serve our
principals and customers, we plan to selectively acquire complementary
businesses. Potential acquisition candidates include independent regional
sales, service and support companies, which currently operate in a highly
fragmented segment of the semiconductor industry. We believe that our
acquisition strategy will allow us to gain access to new principals and
territories, broaden our offerings to existing customers and gain new
customers. Our acquisition of T.A. Kyser Co. in 1998, an example of our
execution of this strategy, established our United States materials and
components business.
- EXPAND INTO JAPAN. Japan is the second largest producer of semiconductors
in the world and accounted for approximately 21% of world production in
1998. Although we represent a limited number of Japanese principals, we do
not currently operate an office in Japan. We currently intend to open an
office in Japan in 2000 to foster closer relations with Japanese materials
and equipment suppliers and to explore opportunities to service the
Japanese semiconductor manufacturing industry.
PRODUCTS AND SERVICES
We believe Metron markets and sells a wider range of materials, equipment,
spare parts, service and support solutions to the semiconductor industry than
any other independent provider of these products and services. We are organized
into two worldwide operating divisions, materials and equipment. In fiscal 1999,
sales by our equipment division accounted for approximately 56% of our revenue,
and sales by our materials division accounted for approximately 44% of our
revenue.
We operate under a series of agreements with our principals. These
agreements generally give us the exclusive right to market, sell and support
particular products in specific geographic regions. Generally, within the
territories we serve for a principal, we operate as the exclusive representative
of the principal and do not offer competing product lines. The agreements with
our principals are typically cancelable without cause with notice periods that
range from 30 days to two years. In addition to maintaining appropriate
inventories of materials and spare parts, we sometimes purchase equipment for
demonstration purposes which may be installed in a customer's fab for evaluation
purposes or at one of our facilities.
Product selection is critical to our success. We evaluate a large number of
product opportunities, relatively few of which we ultimately add to our product
offerings. In our evaluation of new product lines, we thoroughly review numerous
factors, including the product line's current and projected revenue stream and
market share, whether the product line is sufficiently developed for its
targeted market segment, whether distribution arrangements for the product line
are currently in place, the prospective principal's anticipated ability to offer
innovative and advanced products, the history and stability of the prospective
principal and our ability to market, sell and provide a consistent level of
service and support for the product line.
MATERIALS
Our materials business includes the marketing and sale of an extensive array
of over 15,000 items, including wafer carriers and shippers, fluid and gas
handling components, high purity chemicals and cleanroom products, to
semiconductor manufacturers, manufacturers of semiconductor equipment and to a
lesser extent, customers in other industries such as pharmaceuticals and
petroleum. As of August 31, 1999, our materials division represented over 50
principals. The table below lists the
36
<PAGE>
business units in our materials division, the types of products sold and the
largest principals within each business unit:
<TABLE>
<CAPTION>
BUSINESS UNIT TYPES OF PRODUCTS LARGEST PRINCIPALS
- ------------- ----------------- ------------------
<S> <C> <C>
Gas and fluid handling Valves, fittings and other components for Entegris
ultrapure applications
High end filtration products and systems Pall
Stainless steel control valves and regulators Tescom
Wafer management Wafer transport carriers Entegris
Pellicles MLI
Device handling Semiconductor device transport carriers Entegris
Vacuum release chip trays Gelpak
Quartz components MGI Products
Cleanroom products Latex gloves Omni Sales
Face masks Tecnol
Wipers and swabs Texwipe
Integrated shippers products Wafer and disc shippers Entegris
</TABLE>
We believe the materials business is particularly well-suited to benefit
from our global infrastructure because addressable markets are more fragmented,
there are a large number of individual products and average transaction sizes
are generally smaller than in the equipment business. As a result, we believe
that many companies are often unable to cost-effectively provide materials,
service and support globally in order to meet semiconductor manufacturer
requirements and can benefit from Metron's ability to distribute their products
through our international sales and marketing organization. Similarly, by
working with Metron, a customer can increase sales by improving fab productivity
while reducing inventory, warehousing and other costs. For some fabs of our
customers in the United States, including Motorola and Philips, our materials
division has primary responsibility for the operation of the customer's on-site
warehouse of materials and components we sell. Our experience, infrastructure
and systems in the United States enable us to maintain a highly reliable
materials inventory management and order processing system, which allows us to
increase the speed of order fulfillment and provide other value-added services
to both customers and principals. We plan to expand our activities in this area
to other parts of the world to provide more comprehensive support to more of our
customers.
EQUIPMENT
Our equipment business includes the marketing and sale of equipment,
including products for cleaning, coating, developing and etching; detection,
measurement and quality control tools; equipment used in the manufacture, fault
diagnosis and repair of the masks used to create the complex patterning of
semiconductors; automatic wafer handling, particle counting and cleanroom
monitoring equipment. The equipment division also markets specialized containers
of high purity chemicals which are used in the chemical vapor deposition and
diffusion phases of semiconductor wafer processing. As of
37
<PAGE>
August 31, 1999, our equipment division represented over 40 principals. The
table below lists the largest products by revenue in the equipment division and
the principals for those products:
<TABLE>
<CAPTION>
TYPES OF PRODUCTS PRINCIPALS
- ----------------- ----------
<S> <C>
Environmental gas cleaning systems ATMI
Wafer cleaning tools FSI
Photo-lithography processing tools FSI
High purity wafer processing chemicals Schumacher
Wafer characterization and diagnostic tools SDI
Photomask inspection and repair tools Seiko Instruments
</TABLE>
In July 1999, we signed an agreement with Carl Zeiss to market, sell,
service and support its semiconductor inspection tools in the United States. In
August 1999, we signed an agreement with Komatsu Ltd. to market, sell, service
and support its deep UV excimer lasers in Europe.
Particularly in the equipment business, we believe our competitive advantage
is generally greater in product areas that are not served by one of the large
globally-integrated manufacturers. We have sought, and expect to continue to
seek, relationships with non-United States principals seeking to penetrate the
United States market and other markets outside their home territories.
SERVICE AND SPARE PARTS
We believe that as semiconductor manufacturers become increasingly sensitive
to the costs of system downtime, they direct their purchases to suppliers who
can offer comprehensive local installation, maintenance and repair service and
spare parts. To meet these needs, we provide installation, maintenance, repair
and service for the equipment we sell, and we employ skilled service engineers
in 18 offices located in approximately 13 countries. In some cases, our service
engineers are located on-site at a semiconductor manufacturer's facility. By
continuing to maintain local offices in most major markets and staffing those
offices with nationals fluent in local languages and customs, we are able to
provide our principals and customers with sales, service and support 24 hours a
day, seven days a week where necessary. We provide our customers with
applications services and help them develop customized solutions to technical
problems. To better serve our customers, during fiscal 1999 Metron formed a
joint venture with WS Atkins Plc. to provide additional services to the
semiconductor industry, including facilities management and comprehensive
technical support of production equipment.
Our service personnel receive extensive initial and follow-up training
internally and/or from the principals whose products they service. Our service
personnel generally receive the same training from our principals as their own
personnel and receive and maintain the same certification. We generally warrant
the products we sell for a period of one year, and our warranty liability is
generally backed by a warranty from the principal. If we install the equipment
in a customer's fab, we are generally responsible for the costs of the labor
component of the warranty, and the principal is responsible for replacing parts
which are under warranty. After the warranty period has expired, we also offer
service contracts or on-call service support for equipment which we have
supplied.
We also provide our customers with the spare parts required to maintain and
repair the equipment we have supplied and to operate other systems in their
fabs. We work with our principals to maintain an inventory of mission-critical
spare parts and materials close to our customers' sites so we can deliver the
required parts in the shortest time possible. In some cases, we are responsible
for maintaining inventories at our customers' sites, and we plan to expand the
service we provide in this area.
38
<PAGE>
SALES AND MARKETING
Our worldwide sales and marketing organization is an essential part of our
strategy of maintaining close relationships with our principals and with our
semiconductor manufacturer customers. We provide timely and comprehensive
marketing, sales, service and support for materials and equipment manufacturers,
enabling these manufacturers to focus their resources on technology and product
development. As of August 31, 1999, we had 204 sales and marketing employees in
33 offices in Asia, Europe and the United States. Through these sales and
support offices, we maintain an important link between our principals and
semiconductor manufacturers. Our sales and marketing organization identifies
customer requirements, assists in product selection and monitors each
transaction through final sale, shipment and installation. We also employ
approximately 183 highly-skilled technical and engineering personnel around the
world to support our sales and marketing organization and our customers. In
Europe, we have approximately 114 support personnel in eight countries located
in eleven offices as well as at several semiconductor manufacturers' facilities.
In Asia, we have approximately 57 support personnel in five countries located in
seven offices as well as at several semiconductor manufacturers' facilities. In
the United States, we have approximately eleven support personnel located in two
states. Most of our employees are fully conversant in local languages and
familiar with local business culture and practices.
We offer comprehensive sales and marketing technical support services,
including materials and equipment specification review from the initial sales
effort through on-going product improvement programs; demonstration of materials
and equipment; tool installation, including customer site preparation and final
system acceptance; on-going customer support and process improvement; editing,
improving and writing of operation and maintenance manuals; and customer
training programs including maintenance training and on-site operator training.
Our ability to offer these extensive support services is due in part to
extensive initial and follow-up training of our sales and marketing technical
support personnel both in-house and by the principals whose products we sell. We
also conduct technical seminars, training sessions and user group meetings, and
we own and operate a 720 square foot, Class 100 cleanroom facility in Sunnyvale,
California.
We also employ applications engineers who work closely with our customers to
solve particular customer problems and develop innovative processing solutions
using particular equipment supplied by our principals. In some cases, our
customers' engineers have collaborated with our engineers to produce and publish
technical papers. Application selling and application support is a key part of
our strategy to introduce and sell new technology into the semiconductor
marketplace.
We utilize a number of other marketing techniques that enable our principals
to access new markets and semiconductor manufacturers. We seek to actively
involve our principals in the marketing and sales process and often conduct
joint sales calls on existing and potential customers with representatives from
our principals. We assign product managers to some of our principals to provide
particular attention to the marketing, service and support of specific product
lines. We participate in various trade shows around the world, including Semicon
Europa in Europe, Semicon Korea, Semicon Singapore and Semicon Taiwan in Asia
and Semicon Southwest and Semicon West in the United States.
CUSTOMERS
We market semiconductor materials and equipment to most of the world's
semiconductor manufacturers and to many suppliers to the semiconductor industry,
including semiconductor equipment manufacturers. In fiscal 1999, our 10 largest
customers accounted for approximately 32% of our net revenue. We expect that
sales to relatively few semiconductor manufacturers will always account for a
significant percentage of our revenue, although the relative revenue ranking of
individual
39
<PAGE>
customers may change from period to period. The table below sets forth our 10
largest customers in 1999 based on revenue and the geographic regions where we
support these customers:
<TABLE>
<CAPTION>
CUSTOMER LOCATIONS
- -------- ---------
<S> <C>
Advanced Micro Devices Germany, Singapore, United States
Dupont Photomask France, United States
IBM France, Germany, United States
Intel Ireland, Israel, United States
Lucent France, Singapore, United States
Motorola France, Hong Kong, United Kingdom,
United States
NEC Electronics United Kingdom, United States
Philips France, Hong Kong, The Netherlands
Infineon (Siemens) Germany
STMicroelectronics France, Italy
</TABLE>
COMPETITION
The semiconductor industry is highly competitive. We face substantial
competition on two distinct fronts: competition for product lines and
competition for customers.
COMPETITION FOR PRODUCT LINES
For those semiconductor equipment and materials manufacturers who elect to
sell through independent sales and distribution companies, we must compete with
other companies for the right to sell specific product lines. Some of these
independent sales and distribution companies have long-standing collaborative
business relationships with semiconductor equipment and materials manufacturers
which are difficult to overcome. We believe that the most significant
competition on this front comes from regional semiconductor equipment and
materials distribution companies. Furthermore, many equipment and materials
manufacturers choose to sell directly to semiconductor manufacturers in some or
all markets. In Europe and Asia, we compete with equipment and materials
manufacturers who choose to sell their products directly to semiconductor
manufacturers as well as with regional independent distribution companies such
as Hermes in Taiwan and Macrotron and Teltec in Europe. In the United States, we
compete primarily with United States semiconductor equipment and materials
manufacturers who choose to sell their products directly to semiconductor
manufacturers.
We believe that our competitive advantage is greater in product areas that
are not served by one of the large globally-integrated equipment or materials
manufacturers. We believe that to compete effectively we must maintain a high
level of investment in marketing, customer service and support in all of the
markets in which we operate. Although we consider our global operations and
reputation to be significant competitive advantages, we cannot be certain that
we will have sufficient financial resources, technical expertise, or marketing,
services and support capabilities to continue to compete successfully on this
front in the future.
COMPETITION FOR CUSTOMERS
We compete with established semiconductor equipment and materials
manufacturers who sell directly to customers and with other independent sales
and distribution companies for orders from semiconductor manufacturers. Some of
these competitors have greater name recognition in the territories they serve
and have long-standing relationships with semiconductor manufacturers that may
40
<PAGE>
give them a competitive advantage. Other significant competitive factors in the
semiconductor equipment and materials market include product specifications and
quality, product performance, product reliability, process repeatability,
customer service and support, timeliness of new product introductions, in
addition to total cost of ownership and price. We anticipate that as we expand
our product portfolio and expand into new markets, we will encounter additional
competition, and the competitive factors listed above, among others, might make
it difficult for us to establish sales and distribution capability in new
markets such as Japan. This competition, as well as the local political climate
and local business practices, may limit our ability to successfully expand into
new markets. We cannot be certain that we will continue to compete successfully
in the future.
EMPLOYEES
As of August 31, 1999, we had 571 full-time employees, including 142 in our
materials division, 246 in our equipment division and 183 in general
administrative activities, including finance and accounting, sales
administration, shipping and receiving and corporate management. Of our
full-time employees, 125 are located in the United States, 311 are located in
Europe and 135 are located in Asia. None of our employees is covered by a
collective bargaining arrangement. We consider our relationships with our
employees to be good.
FACILITIES
Our corporate headquarters are located in Burlingame, California. The head
of our global materials division is also based in Burlingame, California, and
the head of our global equipment division is based in the United Kingdom. We own
our 30,000 square foot facility in Livingston, Scotland, 18,000 square foot
facility in Aschheim, Germany and 6,500 square foot facility in Almere, The
Netherlands. In addition, we leased space for marketing and customer service and
support purposes in 33 locations worldwide as of August 31, 1999. We operate a
720 square foot, Class 100 cleanroom in our leased facility in Sunnyvale,
California.
LEGAL PROCEEDINGS
We are not a party to any material pending legal proceedings.
41
<PAGE>
MANAGEMENT
SUPERVISORY AND MANAGING DIRECTORS
The following tables set forth, as of August 31, 1999, certain information
with respect to the supervisory directors and managing directors of Metron:
SUPERVISORY BOARD
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- -------- --------
<S> <C> <C>
Robert R. Anderson(1)(2).................. 61 Supervisory Director
James E. Dauwalter(1)(2).................. 48 Supervisory Director
Joel A. Elftmann(1)(2).................... 59 Supervisory Director
Sho Nakanuma(3)(4)........................ 67 Supervisory Director
</TABLE>
MANAGING BOARD
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- -------- --------
<S> <C> <C>
Edward D. Segal(5)........................ 59 President, Chief Executive Officer and
Managing Director
Michael A. Grandinetti(6)................. 51 Executive Vice President, Materials
Division and Managing Director
C. Garry Hendricks(6)..................... 65 Vice Chairman of T.A. Kyser Co. and
Managing Director
Peter V. Leigh(6)......................... 54 Vice President, Finance, Chief Financial
Officer and Managing Director
J. Christopher Levett-Prinsep(6).......... 53 Executive Vice President, Equipment
Division and Managing Director
Keith Reidy(6)............................ 42 Vice President, Marketing and Managing
Director
</TABLE>
- ------------------------
(1) Member of the audit committee.
(2) Member of the compensation committee.
(3) Has agreed to serve as a supervisory director of Metron upon completion of
this offering.
(4) Expected to become a member of the audit committee and the compensation
committee.
(5) Managing director A.
(6) Managing director B.
ROBERT R. ANDERSON has been a supervisory director of Metron since
November 1995. Mr. Anderson is presently Chairman of the Board and Chief
Executive Officer of Yield Dynamics, Inc., (YDI) a semiconductor yield
management software start-up company. He became a director of YDI in
August 1997 and Chairman and Chief Executive Officer in October 1998.
Mr. Anderson has been Chairman of the Board of Silicon Valley Research, a
semiconductor design automation software company, since January 1994 and served
as Chief Executive Officer from April 1994 until July 1995 and from
December 1996 until October 1997 and as Chief Financial Officer from
September 1994 to November 1995. Mr. Anderson co-founded KLA Instruments
Corporation, now KLA-Tencor Corporation, a supplier of equipment for
semiconductor process control, in 1975 and served in various
42
<PAGE>
capacities including Chief Operating Officer, Chief Financial Officer, Vice
Chairman and Chairman. Mr. Anderson also serves as a director of Applied
Science & Technology Inc., a supplier of systems components for the
semiconductor industry.
JAMES E. DAUWALTER has been a supervisory director of Metron since
November 1995 and was a managing director from June 1979 until November 1995.
Mr. Dauwalter is Executive Vice President of Fluoroware, Inc., a wholly-owned
subsidiary of Entegris, Inc. which is a principal and a large minority
shareholder of Metron. Mr. Dauwalter joined Fluoroware in 1973. Mr. Dauwalter
also serves as a director of Nippon Fluoroware K.K., Fluoroware-Valqua Japan
K.K. and Fluoroware Southeast Asia PTE Ltd.
JOEL A. ELFTMANN, a co-founder of Metron, has been a supervisory director
since November 1995 and was a managing director from October 1975 until
November 1995. Mr. Elftmann is Chairman of the Board, President and Chief
Executive Officer of FSI International, Inc., a principal and a large minority
shareholder of Metron. Mr. Elftmann is also a co-founder of FSI and has served
as a director of FSI since 1973 and as Chairman of the Board since August 1983.
From August 1983 to August 1989, and from May 1991 until the present,
Mr. Elftmann also has served as Chief Executive Officer of FSI. From 1977 to
August 1983, from May 1991 until January 1998 and from August 1999 to the
present, Mr. Elftmann has served as President of FSI. Mr. Elftmann also serves
as a director of Veeco, Inc.
SHO NAKANUMA, who has agreed to become a supervisory director of Metron
prior to completion of this offering, has been Chairman of the Board of
Directors of Ando Electric Company in Japan since June 1997. From 1988 to 1997,
Mr. Nakanuma served as President of Ando Electric Company. From 1984 to 1986,
Mr. Nakanuma served as President of NEC Electronics Inc. in the United States.
From 1985 to 1988, Mr. Nakanuma served as a member of the Board of Directors of
NEC Corporation in Japan. Mr. Nakanuma is a member of the Board of Directors of
Semiconductor Equipment and Materials Internationals in the United States.
Mr. Nakanuma holds a B.S. degree in Chemical Engineering from the University of
Kyoto and a Ph.D. in Engineering from the University of Tokyo.
EDWARD D. SEGAL has been a managing director of Metron since November 1995.
He joined Metron as President and Chief Executive Officer in July 1995. Prior to
joining Metron, Mr. Segal served as President and Chief Executive Officer of
Transpacific Technology Corporation, a company which he founded in 1982.
Mr. Segal is a member of the Board of Directors of Semiconductor Equipment &
Materials International, a trade association for suppliers to the semiconductor
industry. Mr. Segal holds a B.S. degree in Metallurgical Engineering from
Rensselaer Polytechnic Institute.
MICHAEL A. GRANDINETTI has been a managing director and served as Executive
Vice President, Materials Division of Metron since December 1997. From 1990 to
1997, Mr. Grandinetti served in several management positions at Tylan
General, Inc., a publicly-traded manufacturer of mass flow controllers, vacuum
gauges and other engineering products, most recently as Senior Vice President,
and prior to that as Vice President of Sales and Marketing. Mr. Grandinetti
holds a B.S. degree in Mechanical Engineering and an M.S. degree in Engineering
Management from Northeastern University.
C. GARRY HENDRICKS has been a managing director of Metron since
January 1999. He was a founding associate of T.A. Kyser Co. and Chief Executive
Officer since its inception in 1977 until Kyser became a wholly-owned subsidiary
of Metron in July of 1998, at which point he joined Metron and was appointed
Vice Chairman of Kyser. Mr. Hendricks has served on various distributor councils
of principals represented by Metron and its subsidiary, Kyser. Mr. Hendricks
holds a B.B.A. degree from North Texas State University in production
management.
PETER V. LEIGH has served as Vice President, Finance and Chief Financial
Officer of Metron since November 1995 and has been a managing director of Metron
since November 1996. From 1992 to 1995 Mr. Leigh served as Vice President,
Finance and Chief Financial Officer of Sequus Pharmaceuticals, a
43
<PAGE>
publicly-traded bio-pharmaceutical firm. From 1982 until 1992, Mr. Leigh served
as Corporate Controller of Bio-Rad Laboratories, a publicly-traded
multi-national manufacturer and marketer of analytical chemistry, diagnostic and
semiconductor metrology equipment and materials. Mr. Leigh holds a B.A. degree
from the University of Oxford and an M.B.A. degree from the Harvard Business
School.
J. CHRISTOPHER LEVETT-PRINSEP has been a managing director of Metron since
July 1983 and has served as managing director of Metron's United Kingdom
subsidiary, of which he was the founder and first employee, since 1978.
Mr. Levett-Prinsep served as President of Metron's European Operations from
August 1994 until December 1997, when he became Executive Vice President,
Equipment Division. Mr. Levett-Prinsep holds an Ordinary Certificate in
Technology from Coventry Technical College and an Advanced Certificate from
Wednesbury College of Technology.
KEITH REIDY has been a managing director of Metron since April 1999 and has
served as Vice President, Marketing since March 1999. Mr. Reidy has also served
as Director, Product Development and Director, U.S. Representative Organization.
Prior to joining Metron in July 1995, Mr. Reidy served as the Vice President,
Sales of Transpacific Technology. Mr. Reidy holds a B.S. degree in engineering
from the University of California, Davis and an M.S. in engineering from Purdue
University.
DUTIES OF METRON MANAGEMENT
Metron has a supervisory board and a managing board. Under the laws of The
Netherlands, supervisory directors cannot be managing directors of a company.
The primary responsibilities of the supervisory board are supervising the
managing board of Metron and the general affairs and business of Metron and
advising the managing board. The managing board is responsible for the
management of the day-to-day operations of Metron and is required to keep the
supervisory board informed about such operations. Under Metron's articles of
association, the managing board is required to obtain the prior approval of the
supervisory board for those resolutions of the managing board as the supervisory
board has designated by resolution and so informed the managing board. No
resolution to this effect has been passed to date. Generic references in this
prospectus to directors refer to members of either the supervisory board or
managing board. Other executives do not bear the responsibilities attributed to
members of the managing board and the supervisory board, or the related
liabilities, if any.
The Metron articles provide for a supervisory board of one or more persons.
The Metron articles also provide for the appointment of one or more managing
directors A and one or more managing directors B under the supervision of the
supervisory board. The number of supervisory directors and the number of
managing directors is determined by the supervisory board. Metron presently has
three supervisory directors, one managing director A, Mr. Segal, its President
and Chief Executive Officer, and five managing directors B.
The general meeting of shareholders appoints the supervisory directors and
at all times has the power to suspend or dismiss any supervisory director. A
resolution to appoint a supervisory director can only be passed upon
recommendation by the supervisory board. Under the Metron articles, each member
of the supervisory board holds office for a one-year term following that
member's election as a member of the supervisory board, or until that member's
earlier resignation, death or removal by a decision of a general meeting.
However, a member of the supervisory board elected not at the general meeting of
shareholders but at an extraordinary meeting of shareholders serves until the
next general meeting of shareholders or until that member's earlier resignation,
death or removal by a decision of the general meeting. Each member of the
supervisory board holds office until that member's resignation, death or removal
by a decision of a general meeting of shareholders. In addition, each
supervisory director is required to resign as of the date of the general meeting
of shareholders held in the year in which that director attains the age of 72. A
shareholders' resolution to suspend or dismiss a supervisory director must be
adopted by a two-thirds majority of the valid votes cast representing more than
half of the issued share capital.
44
<PAGE>
The entire managing board, as well as each managing director A individually,
has the power to represent Metron and bind Metron in agreements with third
parties. A managing director B may only represent Metron together with another
managing director. The general meeting of shareholders appoints the managing
directors for an unlimited period of time, determines whether the managing
director shall serve as a managing director A or as a managing director B and at
all times has the power to suspend or dismiss any managing director. A
resolution to appoint a managing director can only be passed upon recommendation
by the supervisory board. Each managing director can at all times also be
suspended by the supervisory board for a period of up to three months. A
shareholders' resolution to suspend or dismiss a managing director must be
adopted by a two-thirds majority of the valid votes cast representing more than
half of the issued share capital. The supervisory board decides on the
remuneration and further terms and conditions of employment for each of the
managing directors. Managing directors, along with other employees of
subsidiaries of Metron, are eligible for options under the terms of Metron's
employee option plans.
Metron's managing directors have been appointed by the general meeting of
Metron's shareholders to serve for an indefinite period of time.
COMMITTEES OF THE SUPERVISORY BOARD
In March 1996, the supervisory board created two supervisory board
committees. The compensation committee has responsibility for providing
recommendations to the supervisory board for final decision concerning salaries
and incentive compensation for managing directors, executive officers and
certain key employees of, and consultants to, Metron. The audit committee has
responsibility for reviewing the internal accounting procedures and controls of
Metron and the results and scope of the audit and other services provided by
Metron's independent auditors. At the present time, and until the general
meeting appoints further supervisory board members, all of the existing
supervisory directors are members of both committees.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Our compensation committee consists of Messrs. Anderson, Dauwalter and
Elftmann.
None of the current members of our compensation committee is an officer or
employee of Metron. Mr. Elftmann is Chairman of the Board and Chief Executive
Officer of FSI, one of our principals and shareholders. Mr. Dauwalter is
Executive Vice President of Fluoroware, a wholly-owned subsidiary of Entegris,
one of our principals and shareholders. See "Certain Transactions" for a more
detailed description of the relationship between Metron and each of FSI and
Entegris.
SUPERVISORY DIRECTOR COMPENSATION
The supervisory board may grant a remuneration to one or more of the
supervisory directors. Members of the supervisory board are paid annual
director's fees of $1,000 for each meeting which they attend in person or by
telephone. In addition, supervisory board members are paid $500 for each meeting
they attend of a board committee of which they are a member, but only when the
board committee meets on a day when the supervisory board itself is not meeting.
Beginning in January 1998, the supervisory directors voluntarily opted to forego
receiving their directors fees. The supervisory directors may at any time choose
to accept their director fees and at that point the fees would again be paid by
Metron to the supervisory directors. Each member of the supervisory board will
receive an initial grant of 15,000 options and subsequent annual grants of 3,750
options.
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<PAGE>
MANAGING DIRECTOR COMPENSATION
The following table sets forth certain information for fiscal 1999 regarding
the compensation of Metron's Chief Executive Officer and each of the four most
highly compensated managing directors of Metron whose salary and bonus for such
year were in excess of $100,000 on an annualized basis, which we refer to as the
Named Executive Officers:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------------------------
OTHER ANNUAL ALL OTHER
NAME AND POSITION SALARY BONUS COMPENSATION(1) COMPENSATION
- ----------------- -------- -------- --------------- ------------
<S> <C> <C> <C> <C>
Edward D. Segal .............................. $281,730 $86,000 -- $ 699(2)
President and Chief Executive Officer and
Managing Director
J. Christopher Levett-Prinsep ................ 207,611 60,644 -- 44,338(3)
Executive Vice President, Equipment Division
and Managing Director
Keith Reidy .................................. 192,500 60,000 $1,308(4) 677(2)
Vice President, Marketing and Managing
Director
C. Garry Hendricks ........................... 190,818 25,000 -- 13,940(2)
Vice Chairman of T.A. Kyser Co. and Managing
Director
Peter V. Leigh ............................... 155,513 51,000 -- 614(2)
Vice President, Finance and Chief Financial
Officer and Managing Director
</TABLE>
- ------------------------
(1) None of the perquisites and other benefits paid to any Named Executive
Officer exceeded the lesser of $50,000 or 10% of the total annual salary and
bonus received by the Named Executive Officer.
(2) Represents insurance premiums.
(3) Represents $8,654 in insurance premiums and $35,684 in payments to a defined
contribution plan.
(4) Represents commissions.
OPTION GRANTS IN LAST FISCAL YEAR
There were no options or stock appreciation rights awarded to any of the
Named Executive Officers during fiscal 1999.
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<PAGE>
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
None of the Named Executive Officers exercised options in the last fiscal
year. The following table sets forth the number and value of securities
underlying unexercised options held by the Named Executive Officers at May 31,
1999:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY OPTIONS
MAY 31, 1999(1) AT MAY 31, 1999(2)
------------------------------ ------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Edward D. Segal .......................... 493,076 32,872 $2,490,034 $166,004
President and Chief Executive Officer
and Managing Director
J. Christopher Levett-Prinsep ............ 84,375 5,625 426,094 28,406
Executive Vice President, Equipment
Division and Managing Director
Keith Reidy .............................. 84,375 5,625 426,094 28,406
Vice President, Marketing and Managing
Director
C. Garry Hendricks ....................... -- -- -- --
Vice Chairman of T.A. Kyser Co. and
Managing Director
Peter V. Leigh ........................... 78,750 11,250 397,688 56,813
Vice President, Finance and Chief
Financial Officer and Managing Director
</TABLE>
- ------------------------
(1) The weighted average exercise price for these options is $2.78 per share.
(2) The value of unexercised "in-the-money" options is based on the fair market
value of $7.83 as of May 31, 1999, as determined by the supervisory board,
minus the exercise price, multiplied by the number of shares underlying the
option.
EQUITY AND PROFIT SHARING PLANS
EMPLOYEE STOCK OPTION PLAN. The Amended and Restated Employee Stock Option
Plan (Option Plan) was adopted by our supervisory board in February 1995 and
approved by our shareholders in June 1995. An amendment and restatement of the
Option Plan, adopted by our supervisory board in October 1999, amended the
Option Plan in preparation for this offering. Our shareholders will also be
asked to approve the amendment and restatement of the Option Plan.
There are 2,750,000 common shares reserved for issuance under the Option
Plan. Shares subject to share awards that have lapsed or terminated, without
having been exercised in full, and any shares repurchased by Metron pursuant to
a repurchase option provided under the Option Plan may again become available
for the grant of awards under the Option Plan.
The Option Plan provides for grants of incentive stock options that qualify
under Section 422 of the Internal Revenue Code of 1986, as amended (Code), to
our employees, including officers and employee directors, or the employees of
any of our affiliates. Nonqualified stock options, rights to acquire restricted
shares and share bonuses may be granted to employees, including officers,
directors of and consultants to Metron or any of our affiliates. Options, rights
to acquire restricted shares and share bonuses are referred to collectively as
"stock awards" for purposes of the Option Plan. The Option Plan may be
administered by the supervisory board or a committee appointed by the
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supervisory board; references herein to the supervisory board shall include any
such committee. After this offering, it is intended that the Option Plan will be
administered by the compensation committee, currently consisting of
Messrs. Anderson, Dauwalter and Elftmann, all of whom are "non-employee
directors" under applicable securities laws and "outside directors," as defined
under the Code. The supervisory board has the authority to determine to whom
awards are granted, the terms of such awards, including the type of awards to be
granted, the exercise price, the number of shares subject to the awards and the
vesting and exercisability of the awards.
The term of an option granted under the Option Plan generally may not exceed
ten years. The exercise price of options granted under the Option Plan is
determined by the supervisory board, but cannot be less than 100% of the fair
market value of the underlying common shares on the date of grant. Options
granted under the Option Plan vest at the rate specified in the option
agreement. No option may be transferred by the optionee other than by will or
the laws of descent or distribution, provided that an optionee may designate a
beneficiary who may exercise the option following the optionee's death. An
optionee whose relationship with Metron or any of our affiliates ceases for any
reason, other than due to disability, generally may exercise vested options
during the 90-day period following such cessation, unless such options terminate
or expire sooner by their terms, or during such longer or shorter period as may
be determined by the supervisory board and set forth in the option agreement.
Vested options generally may be exercised during the 12-month period after an
optionee's relationship with Metron or any of our affiliates ceases due to the
optionee's disability.
No incentive stock options may be granted to any person who, at the time of
the grant, owns, or is deemed to own, shares possessing more than 10% of the
total combined voting power of Metron or any of our affiliates, unless the
option exercise price is at least 110% of the fair market value of the shares
subject to the option on the date of grant and the term of the option does not
exceed five years from the date of grant. In addition, the aggregate fair market
value, determined at the time of grant, of the common shares underlying
incentive stock options which become exercisable by an optionee during any
calendar year may not exceed $100,000. Any options, or portions thereof, which
exceed this limit are treated as nonqualified stock options.
If Metron becomes subject to Section 162(m) of the Code, which denies a
deduction to publicly held corporations for certain compensation paid to
specific employees in a taxable year to the extent that the compensation exceeds
$1,000,000, no person may be granted options under the Option Plan covering more
than 1,000,000 common shares in any calendar year.
Rights to acquire restricted shares granted under the Option Plan may be
granted subject to a repurchase option in favor of Metron that will expire
pursuant to a vesting schedule. The purchase price of such awards will be at
least 85% of the fair market value of the common shares on the date of grant.
Share bonuses may be awarded in consideration for past services without the
payment of a purchase price. Rights under a share bonus or restricted share
bonus agreement may not be transferred other than by will, the laws of descent
and distribution or a qualified domestic relations order while the shares
awarded pursuant to such an agreement remain subject to the agreement, provided
that a holder of such rights may designate a beneficiary who may exercise the
right following the holder's death.
Upon certain changes in control of Metron, all outstanding share awards
under the Option Plan may be assumed by the surviving entity or replaced with
similar share awards granted by the surviving entity. If the surviving entity
does not assume such awards or provide substitute awards, then with respect to
persons whose service with Metron or an affiliate has not terminated prior to
such change in control, the awards shall become fully vested and will terminate
if not exercised prior to such change in control.
As of August 31, 1999, there were 1,986,348 options outstanding under the
Option Plan, held by 331 employees including all of the managing directors, to
purchase shares of Metron at a weighted average exercise price of $5.50 per
share. No other share awards were outstanding under the Option
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Plan. The Option Plan will terminate in February 2005, unless terminated sooner
by the supervisory board.
1999 EMPLOYEE STOCK PURCHASE PLAN. In October 1999, our supervisory board
adopted, subject to shareholder approval, the 1999 Employee Stock Purchase Plan
(Purchase Plan). A total of 300,000 common shares have been reserved for
issuance under the Purchase Plan. The Purchase Plan is intended to qualify as an
employee stock purchase plan within the meaning of Section 423 of the Code.
The Purchase Plan provides a means by which employees may purchase common
shares of Metron through payroll deductions. The Purchase Plan is implemented by
offerings of rights to eligible employees. Under the Purchase Plan, the
supervisory board may specify offerings with a duration of not more than
12 months, and may specify shorter purchase periods within each offering. The
initial offering will begin on the effective date of this offering and terminate
on June 1, 2000. Purchase dates under the offerings will occur each June 1 and
December 1. New offerings are expected to begin each June 1 and December 1 after
the initial offering.
Employees who participate in an offering may have up to 5% of their earnings
withheld pursuant to the Purchase Plan. The amount withheld is then used to
purchase common shares on specified purchase dates determined by the supervisory
board, up to a maximum of 10,000 common shares on each specified purchase date.
The price of common shares purchased under the Purchase Plan will be equal to
85% of the lower of the fair market value of the common shares on the
commencement date of each offering period or the fair market value of the common
shares on the relevant purchase date. Employees who become eligible to
participate in the Purchase Plan for the first time during an ongoing offering
will be permitted to begin participating in the Purchase Plan on the day after
the next purchase date that occurs under the offering. The price of common
shares purchased under the Purchase Plan for employees who begin participating
in the Purchase Plan during an ongoing offering will be equal to 85% of the
lower of the fair market value of the common shares on the day they begin
participating in the Purchase Plan or the fair market value of the common shares
on the relevant purchase date. Employees may end their participation in an
offering at any time during such offering except during the 15-day period
immediately prior to a purchase date. Employees' participation in all offerings
will end automatically on termination of their employment with us or one of our
subsidiaries.
Unless otherwise determined by our supervisory board, employees are eligible
to participate in the Purchase Plan only if they are customarily employed by us
or one of our subsidiaries designated by the supervisory board for at least
20 hours per week and five months per calendar year. No employee shall be
eligible for the grant of any rights under the Purchase Plan if immediately
after such rights are granted, such employee will have voting power over 5% or
more of our outstanding capital shares. Eligible employees may be granted rights
only if the rights together with any other rights granted under employee stock
purchase plans do not permit such employees' rights to purchase shares of Metron
to accrue at a rate which exceeds $25,000 of fair market value of those shares
for each calendar year in which those rights are outstanding.
Upon a change in control of Metron, each right to purchase common shares
will be assumed or an equivalent right substituted by the successor corporation;
if the rights are not assumed or substituted, all sums collected by payroll
deductions will be applied to purchase shares immediately prior to the change in
control. The supervisory board has the authority to amend or terminate the
Purchase Plan; provided, however, that no action may adversely affect any
outstanding rights to purchase common shares.
1997 SUPERVISORY DIRECTORS' STOCK OPTION PLAN. Effective October 1997, our
supervisory board and managing board adopted, and our shareholders approved, the
1997 Supervisory Directors' Stock Option Plan (Directors' Plan), to provide for
the automatic grant of options to purchase common shares to supervisory
directors of Metron. The Directors' Plan is administered by the supervisory
board. In
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October 1999, an amendment and restatement of the Directors' Plan was adopted by
the supervisory board in connection with this offering.
The aggregate number of common shares that may be issued pursuant to options
granted under the Directors' Plan is 225,000. Pursuant to the terms of the
Directors' Plan, each of our directors who is not an employee of or consultant
to Metron or one of our affiliates was automatically granted an option to
purchase 15,000 common shares on the effective date of the Directors' Plan. Each
person who is elected or appointed for the first time to be a non-employee
director after the effective date of the Directors' Plan will be granted an
option to purchase 15,000 common shares upon such election or appointment. In
addition, each non-employee director who has served as a non-employee director
for six months prior to an annual meeting and who is reelected at such annual
meeting will be automatically granted an option to purchase 3,750 common shares
on the day of each such annual meeting. The exercise price of options under the
Directors' Plan will equal the fair market value of the common shares on the
date of grant. No option granted under the Directors' Plan may be exercised
after the expiration of ten years from the date on which it was granted.
Each option granted under the Directors' Plan will vest in four equal annual
installments, with the first installment vesting on the first anniversary of the
date of grant, provided that the optionee has, during the entire period prior to
each vesting installment date, continuously served as a non-employee director or
employee of or consultant to Metron or one of our affiliates. If a non-employee
director's service as a non-employee director or employee of or consultant to
Metron or one of our affiliates ceases for any reason other than a voluntary
termination by the optionee or an involuntary termination for cause, the option
will become fully vested on the date of termination. A non-employee director
whose service as a non-employee director or employee of or consultant to Metron
or any of our affiliates ceases for any reason other than death may exercise
outstanding options in the 12-month period following such cessation (unless
these options terminate or expire sooner by their terms). Outstanding options
may be exercised during the 18-month period after such service ceases due to
death.
Upon specified changes in control of Metron, all outstanding share awards
under the Directors' Plan may be assumed by the surviving entity or replaced
with similar share awards granted by the surviving entity. If the surviving
entity does not assume the awards or provide substitute awards, then the awards
will terminate if not exercised prior to the change in control.
As of August 31, 1999, there were 67,500 options outstanding under the
Directors' Plan, held by three non-employee directors, to purchase common shares
of Metron at a weighted average exercise price of $8.03 per share. The
Directors' Plan will terminate in October 2007, unless terminated sooner by the
supervisory board.
T.A. KYSER COMPANY EMPLOYEE STOCK OWNERSHIP PLAN. Prior to our acquisition
of Kyser, Kyser established a stock bonus plan that qualifies as a tax-qualified
employee stock ownership plan under Sections 401(a) and 4975(e)(7) of the Code
and Section 407(d)(6) of ERISA, the T.A. Kyser Company Employee Stock Ownership
Plan (Kyser ESOP). Employees of Kyser are eligible to participate in the Kyser
ESOP. Unlike our 401(k) plan, eligible employees may not make deferrals from
their own compensation as contributions to the Kyser ESOP. Instead, we may make
discretionary contributions to the Kyser ESOP on behalf of eligible employees.
These contributions are then used to purchase common shares of Metron, which is
held in the Kyser ESOP in participants' accounts. Participants may also elect to
invest a portion of their account balances in other investment options. Eligible
employees may not sell the Metron shares held in their accounts until they
retire or otherwise terminate employment with Kyser. Contributions to the Kyser
ESOP, if any, are subject to a vesting schedule. Although Kyser made
contributions to the Kyser ESOP prior to our acquisition of Kyser, we do not
intend to make, and have not made, any contributions to the Kyser ESOP following
that acquisition.
As of August 31, 1999, the Kyser ESOP held an aggregate of 460,683 common
shares.
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METRON TECHNOLOGY CORPORATION 401(k) RETIREMENT PLAN. We have established a
tax-qualified employee savings and retirement plan, the Metron Technology
Corporation 401(k) Retirement Plan (401(k) Plan), for eligible employees.
Eligible employees may elect to defer a percentage of their pre-tax gross
compensation in the 401(k) Plan, subject to the statutorily prescribed annual
limit. We may make matching contributions on behalf of all participants in the
401(k) Plan in an amount determined by our supervisory board. We may also make
additional discretionary profit sharing contributions in such amounts as
determined by the supervisory board, subject to statutory limitations. Matching
and profit-sharing contributions, if any, are subject to a vesting schedule; all
other contributions are at all times fully vested. We intend the 401(k) Plan,
and the accompanying trust, to qualify under Sections 401 and 501 of the Code so
that contributions by employees or by Metron to the 401(k) Plan, and income
earned, if any, on plan contributions, are not taxable to employees until
withdrawn from the 401(k) Plan, and so that we will be able to deduct our
contributions, if any, when made. The trustee under the 401(k) Plan, at the
direction of each participant, invests the assets of the 401(k) Plan in any of a
number of investment options.
The Named Executive Officers, along with other members of management, are
also entitled to participate in various annual profit sharing plans which are
adopted on an annual basis by our supervisory board on the recommendation of our
Chief Executive Officer. These profit sharing plans generally provide that we
will reserve various amounts, a profit sharing pool, calculated in accordance
with certain pre-determined formulas, and that participants in a particular
profit sharing pool will be entitled to receive a pre-determined share of such
pool. In addition, the compensation committee of the supervisory board does,
from time to time, grant discretionary bonuses to our employees, including the
Named Executive Officers.
EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
All of the Named Executive Officers are employed pursuant to employment
contracts with a subsidiary of Metron which is incorporated in their country of
residence.
Edward D. Segal is employed at will pursuant to an employment contract
entered into in September 1999 with Metron Technology Corporation (MTC), a
California corporation and with Metron Technology N.V. The employment contract
provides that Mr. Segal will serve as a managing director of Metron and as
Metron's President and Chief Executive Officer at an annual salary of not less
than $295,000. The agreement also provides for Mr. Segal's participation in an
annual incentive compensation plan approved by the supervisory board and for
other usual and customary benefits. Metron and MTC agreed to indemnify
Mr. Segal against any liability to which he may be subject for judgments,
settlements, penalties, fees and expenses of defense, including attorney's fees,
bonds and costs of investigation, arising out of or in any way related to acts
or omissions as a member of the management board, or an executive officer, or in
any other capacity in which services are rendered to Metron or MTC and its
subsidiaries. However, Mr. Segal would not be entitled to indemnification under
this agreement under certain circumstances including if indemnification is
expressly prohibited under applicable law and if indemnification is expressly
prohibited by Metron's articles or MTC's charter. If Mr. Segal's employment is
terminated by MTC without cause or by Mr. Segal for good reason or due to
disability, in exchange for Mr. Segal's signing a release of all claims, he will
continue to receive his base salary for a period of 12 months in addition to
other customary benefits.
Michael A. Grandinetti is employed pursuant to an employment contract
entered into in September 1999 with MTC and with Metron Technology N.V. The
employment contract provides that Mr. Grandinetti will serve as a managing
director and as Executive Vice President, Materials of Metron at an annual
salary of not less than $190,000. The agreement also provides for
Mr. Grandinetti's participation in an annual incentive compensation plan
approved by the supervisory board and for other usual and customary benefits.
Metron and MTC agreed to indemnify Mr. Grandinetti against any liability to
which he may be subject for judgments, settlements, penalties, fees and expenses
of defense,
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including attorney's fees, bonds and costs of investigation, arising out of or
in any way related to acts or omissions as a member of the management board, or
an executive officer, or in any other capacity in which services are rendered to
Metron or MTC and its subsidiaries. However, Mr. Grandinetti would not be
entitled to indemnification under this agreement under specified circumstances,
including if indemnification is expressly prohibited under applicable law or
prohibited by Metron's articles or MTC's charter. If Mr. Grandinetti's
employment is terminated by MTC without cause or by Mr. Grandinetti for good
reason or due to disability, in exchange for Mr. Grandinetti's signing a release
of all claims, he will continue to receive his base salary for a period of
12 months in addition to other customary benefits.
C. Garry Hendricks is employed pursuant to an employment contract entered
into July 1998 with Kyser, MTC and Metron Technology N.V. The employment
contract provides that Mr. Hendricks will serve as Vice Chairman of Kyser at an
annual salary of not less than $195,000. The agreement also provides that if
Mr. Hendricks' employment is terminated by Metron for cause or by Mr. Hendricks
for good reason prior to July 2001, Mr. Hendricks will enter into a consulting
arrangement with Metron and will continue to receive his base salary until
July 2001. Under the agreement, Mr. Hendricks participates in an annual
incentive compensation plan approved by the supervisory board of Metron and an
incentive compensation plan for employees of Kyser and receives other usual and
customary benefits. Kyser agreed to indemnify Mr. Hendricks against any
liability to which he may be subject for judgments, settlements, penalties, fees
and expenses of defense, including attorney's fees, bonds and costs of
investigation, arising out of or in any way related to acts or omissions as an
employee, officer, director or agent in which services are rendered to Kyser.
However, Mr. Hendricks would not be entitled to indemnification under this
agreement under specified circumstances, including if indemnification is
expressly prohibited under applicable law or prohibited by Kyser's charter.
Peter V. Leigh is employed pursuant to an employment contract entered into
in September 1999 with MTC and with Metron Technology N.V. The employment
contract provides that Mr. Leigh will serve as a managing director of Metron and
as Metron's Vice President, Finance and Chief Financial Officer at an annual
salary of not less than $170,000. The agreement also provides for Mr. Leigh's
participation in an annual incentive compensation plan approved by the
supervisory board and for other usual and customary benefits. Metron and MTC
agreed to indemnify Mr. Leigh against any liability to which he may be subject
for judgments, settlements, penalties, fees and expenses of defense, including
attorney's fees, bonds and costs of investigation, arising out of or in any way
related to acts or omissions as a member of the management board, or an
executive officer, or in any other capacity in which services are rendered to
Metron or MTC and its subsidiaries. However, Mr. Leigh would not be entitled to
indemnification under this agreement under specified circumstances including if
indemnification is expressly prohibited under applicable law or prohibited by
Metron's articles or MTC's charter. If Mr. Leigh's employment is terminated by
MTC without cause or by Mr. Leigh for good reason or due to disability, in
exchange for Mr. Leigh's signing a release of all claims, he will continue to
receive his final base salary for a period of 12 months in addition to other
customary benefits.
J. Christopher Levett-Prinsep is employed by Metron Technology (U.K.) Ltd.,
pursuant to an employment contract entered into in May 1996. The employment
contract provides that Mr. Levett-Prinsep will serve as a managing director of
Metron and of Metron Technology (U.K.) Ltd. and as President of Metron's
European Operations at an annual salary of not less than L103,000, or
approximately $173,000. The agreement also provides for Mr. Levett-Prinsep's
participation in an annual incentive compensation plan approved by our
supervisory board and for other usual and customary benefits. The employment
contract may be terminated by either party on twelve months' notice.
Keith Reidy is employed by Metron Technology Corporation, pursuant to an
employment contract entered into in September 1999 with MTC and with Metron
Technology N.V. The employment contract
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provides that Mr. Reidy will serve as a managing director and as Vice President,
Marketing of Metron at an annual salary of not less than $200,000. The agreement
also provides for Mr. Reidy's participation in an annual incentive compensation
plan approved by the supervisory board, and for other usual and customary
benefits. Metron and MTC agreed to indemnify Mr. Reidy against any liability to
which he may be subject for judgments, settlements, penalties, fees and expenses
of defense, including attorney's fees, bonds and costs of investigation, arising
out of or in any way related to acts or omissions as a member of the management
board, or an executive officer, or in any other capacity in which services are
rendered to Metron or MTC and its subsidiaries. However, Mr. Reidy would not be
entitled to indemnification under this agreement under specified circumstances,
including if indemnification is expressly prohibited under applicable law or
prohibited by Metron's articles or MTC's charter. If Mr. Reidy's employment is
terminated by MTC without cause or by Mr. Reidy for good reason or due to
disability, in exchange for Mr. Reidy's signing a release of all claims, he will
continue to receive his base salary for a period of 12 months in addition to
other customary benefits.
LIMITATION OF LIABILITY AND INDEMNIFICATION
In addition to the indemnification provisions included in some of the
managing directors' employment agreements discussed above, under the Metron
articles, except in case of willful misfeasance, bad faith or gross negligence
or improper personal benefit, every person or legal entity who is, or has been,
a managing director, a supervisory director or an officer with the power to
represent Metron, employee or agent of Metron, who is made a party or is
threatened to be made a party to any claim by virtue of such capacity, shall be
indemnified by Metron, to the fullest extent permitted under any applicable law,
against (1) any and all liabilities imposed on him or it, (2) any and all
expenses and (3) any and all amounts paid in settlement by him or it, in each
case in connection with any such claim.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers or persons
controlling Metron pursuant to the foregoing provisions, Metron has been
informed that in the opinion of the SEC, such indemnification is against public
policy as expressed in the Securities Act and therefore is unenforceable.
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CERTAIN TRANSACTIONS
The following is a description of transactions since June 1, 1996, to which
Metron has been a party, in which the amount involved in the transaction exceeds
$60,000, and in which any of our directors, executive officers or holders of
more than 5% of our capital stock had or will have a direct or indirect material
interest other than compensation arrangement which are otherwise required to be
described under "Management."
TRANSACTIONS WITH FSI
Prior to this offering, FSI held approximately 32.7% of Metron's outstanding
shares, and in fiscal 1999, products from FSI accounted for 24% of Metron's
revenue. In addition, Mr. Elftmann, a supervisory director of Metron, is
Chairman of the Board of FSI.
DISTRIBUTION AGREEMENT. In March 1998, Metron and FSI entered into a
distribution agreement which has been amended to reflect FSI's sale of its
chemical management division in July 1999. Pursuant to the terms of this
agreement, FSI and Metron agreed that, with some exceptions, Metron would
distribute some of FSI's products and related spare parts in specific countries
primarily in Europe and Asia. Metron, as distributor, agreed to use its best
efforts to sell the agreed upon products and spare parts in the designated
territory. Provided that FSI does not provide Metron with a termination notice
prior to the closing of this offering, the distribution agreement shall continue
for a term of two years from the date of the closing of the offering. Either
party may terminate the agreement after the expiration of this initial term by
providing at least 12 months prior written notice. In the event that, in
connection with a public offering, the agreement with Entegris is amended to
change the term and termination provisions which are in effect, and if those
terms are more favorable to Entergis, then the agreement with FSI shall be
amended to include the terms of the Entegris amendment regarding the term and
termination.
FSI sells products to Metron and Metron receives from FSI discounts ranging
from 5% to 20% of the net sales price. The exact percentage varies depending on
the product. For some products, the discounts may be renegotiated at the request
of FSI if FSI's ownership of Metron drops below 25%. In cases where customers
receive discounts off of the net sales price, the discounts are generally
divided between FSI and Metron. The actual terms vary depending on product,
location and the extent of the discount.
JOINT VENTURE AND SHARE PURCHASE AGREEMENTS. Prior to February 27, 1999,
Metron and FSI were parties to joint venture agreements. Pursuant to these
agreements, Metron owned 50% of FSI-CME and 35% of FSI-CMK. Metron contributed
470,925,000 South Korean won, or approximately $583,000, as an initial capital
contribution to FSI-CMK in June 1997 and was responsible for 35% of any further
capital contributions. Metron was responsible for 50% of any capital
contributions to FSI-CME. Metron distributed some of the products of FSI-CME
pursuant to a distribution agreement with FSI-CME. Metron was entitled to elect
two members to FSI-CME's board and one member to the board of FSI-CMK.
As of February 27, 1999, Metron entered into share purchase agreements with
FSI pursuant to which Metron sold, and FSI purchased, all of Metron's ownership
interest in FSI-CMK for $310,000 and all of Metron's ownership interest in
FSI-CME for $2,200,000. Metron recorded a loss on the sale of its interest in
FSI-CMK of $263,000 and a gain on the sale of its interest in FSI-CME of
$123,000. Pursuant to the share purchase agreements, Metron agreed to execute
whatever documentation was reasonably determined necessary for the parties to
terminate the joint venture agreements and the distribution agreement with
FSI-CME. In addition, the directors appointed by Metron to the boards of FSI-CMK
and FSI-CME resigned from these board positions. On May 18, 1999 Metron and FSI
entered into an agreement, effective as of February 27, 1999, to terminate the
joint venture agreements and the distribution agreement with FSI-CME.
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OTHER AGREEMENTS. FSI is also party to an investor rights agreement which
grants FSI registration rights pursuant to the shares it owns. See "Summary of
Certain Provisions of the Metron Articles and Other Matters--Registration
Rights" for a description of the registration rights granted to FSI.
As a supervisory director of Metron, Mr. Elftmann receives yearly option
grants. In connection with Mr. Elftmann's service as the Chairman of the Board
of FSI, he has entered into an agreement with FSI pursuant to which he agrees to
exercise his options to purchase common shares of Metron at the request of FSI,
to vote the shares received upon exercise of the options as directed by FSI and
to hold title to these shares only as a nominee for FSI, without any beneficial
right, ownership, or interest in the shares. In addition, Mr. Elftmann agreed to
convey title to the option (if this is permitted by its terms) and any shares
received upon exercise of the option to FSI or to sell the shares and remit the
proceeds to FSI upon FSI's request.
TRANSACTIONS WITH ENTEGRIS
Prior to this offering, Entegris held approximately 32.7% of Metron's
outstanding shares, and in fiscal 1999, products from Entegris accounted for 21%
of Metron's revenue. In addition, Mr. Dauwalter, a supervisory director of
Metron, is Executive Vice President and Chief Operating Officer of Fluoroware, a
wholly-owned subsidiary of Entegris.
DISTRIBUTION AGREEMENTS. In July 1995, Metron and Fluoroware, now a
wholly-owned subsidiary of Entegris, entered into a distribution agreement.
Pursuant to the terms of this agreement, Entegris and Metron agreed that, with
some exceptions, Metron would be the exclusive, independent distributor of some
of Entegris's products in specific countries primarily in Europe and Asia.
Metron, as distributor, agreed to use its best efforts to sell the agreed upon
products in the designated territory. Unless the contract is terminated under
specific conditions, the contract will remain in place until July 1, 2000, and
is automatically renewed thereafter for additional terms of two years. The
contract can be terminated upon written notification given more than twelve
months prior to the expiration of the applicable term.
Entegris may sell products for use in the territories on a representative
basis, but agrees to pay Metron a commission of 10% of the applicable sales list
price of the products for all such sales, such commission may, at the option of
Entegris, be divided between Metron and a third party on an equitable basis and
consistent with past practices between Metron and Entegris. With certain
exceptions, products are sold to Metron at the U.S. domestic sales list prices,
less a discount which ranges from 5% to 40% depending on the product, unless
another amount is agreed to in writing.
In September of 1997, Fluoroware entered into a distribution agreement with
Kyser. Pursuant to the terms of this agreement, Fluoroware and Kyser agreed that
Kyser would be stocking distributor for specific Fluoroware gas and liquid
handling products in certain states in the United States. Kyser, as distributor,
agreed to use its best efforts to stock, market and sell products within the
states which comprise its territory. The agreement is for a term of five years,
expiring August 31, 2002, and, unless either party terminates, the agreement is
renewed automatically for successive five year terms. Notice of termination must
be given one year prior to the expiration of the term of the agreement for
termination without cause. Termination for cause may occur at any time if
specific conditions are met.
Fluoroware agreed to sell its products to Kyser at a 15% to 40% discount
from the Fluoroware published list price, with the exact percentage dependent on
the product. In some instances, Kyser may act as a manufacturer's representative
rather than as a stocking distributor. As a manufacturer's representative, Kyser
receives a commission of between 10% and 2% of the sales price depending on the
discount off of the list price given to the customer and the products sold. In
some instances the commission is not specified and is to be negotiated prior to
the sale.
OTHER AGREEMENTS. Entegris is also party to an investor rights agreement
which grants Entegris registration rights pursuant to the shares it owns. See
"Summary of Certain Provisions of the Metron
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Articles and Other Matters--Registration Rights" for a description of the
registration rights granted to Entegris.
As a supervisory director of Metron, Mr. Dauwalter receives yearly option
grants. In connection with Mr. Dauwalter's service as the Executive Vice
President of Fluoroware, he has entered into an agreement with Fluoroware
pursuant to which he agrees to exercise his options to purchase common shares of
Metron at the request of Fluoroware, to vote the shares received upon exercise
of the options as directed by Fluoroware and to hold title to these shares only
as a nominee for Fluoroware, without any beneficial right, ownership, or
interest in the shares. In addition, Mr. Dauwalter agreed to convey title to the
option (if this is permitted by its terms) and any shares received upon exercise
of the option to Fluoroware or to sell the shares and remit the proceeds to
Fluoroware upon the request of Fluoroware.
KYSER TRANSACTIONS
In July 1998, Metron entered into a merger and reorganization agreement with
Kyser pursuant to which all of the outstanding shares of Kyser stock were
converted into 1,582,683 common shares of Metron, of which 10,230 have been
returned to Metron in accordance with the agreement. The transaction was valued
by an independent appraiser at approximately $12.3 million. Pursuant to the
transaction, Kyser became a wholly-owned subsidiary of Metron. Mr. Hendricks,
currently a managing director of Metron and Vice Chairman of Kyser, was the
Chief Executive Officer and large minority shareholder of Kyser at the time.
Pursuant to the merger agreement, Mr. Hendricks received 694,585 shares in the
transaction, valued at approximately $5.4 million, he entered into an employment
agreement with us, was elected as a managing director of Metron and appointed as
Vice Chairman of Kyser. For additional information on the terms of the
employment agreement, see "Employment Agreements and Termination of Employment
Arrangements."
Prior to Kyser's becoming a subsidiary of Metron, Mr. Hendricks personally
guaranteed loans and revolving credit agreements made by banks to Kyser for
general operating expenses. Mr. Hendricks was the guarantor on a revolving
credit agreement in a maximum amount of $11,000,000 with Compass Bank at the
time of the Kyser transaction. In October 1998, following the acquisition of
Kyser by Metron, the note was amended and Metron became the guarantor and
Mr. Hendricks was released as a guarantor.
EARLY RETIREMENT AGREEMENT
Udo Jaensch was the managing director of Metron Technology Deutschland Gmbh
(MTD), a subsidiary of Metron, until 1998 and a managing director of Metron
until February 15, 1999. Pursuant to a cancellation and early retirement
agreement among Metron, MTD and Mr. Jaensch, Mr. Jaensch resigned from both
positions. In exchange, MTD agreed to pay Mr. Jaensch early retirement payments
of DM 270,000 (approximately $150,000) per year in monthly installments until
April 2, 2005. The early retirement payment is to be adjusted yearly for changes
in the cost of living. In the event MTD fails to make these payments, Metron
agreed to make the payments to Mr. Jaensch. MTD also agreed to transfer certain
property owned by MTD and used by Mr. Jaensch to Mr. Jaensch. Mr. Jaensch is
selling 83,225 common shares in this offering.
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PRINCIPAL AND SELLING SHAREHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of our common shares as of August 31, 1999, and as adjusted to reflect
the sale of our common shares offered in this offering: (1) each shareholder who
is known by us to own beneficially more than 5% of our common shares; (2) each
of our supervisory directors; (3) each of our Named Executive Officers; (4) all
of our supervisory directors and managing directors as a group; and (5) all
selling shareholders as a group. Unless otherwise indicated, to our knowledge,
all persons listed below have sole voting and investment power with respect to
their common shares, except to the extent authority is shared by spouses under
applicable law. Unless otherwise noted, the address of each shareholder is
c/o Metron Technology N.V., 1350 Old Bayshore Highway, Suite 360, Burlingame,
California 94010.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO THE NUMBER OF OWNED AFTER THE
OFFERING(1) SHARES OFFERING(1)
-------------------- BEING ----------------------
NAME AND ADDRESS NUMBER PERCENT OFFERED NUMBER PERCENT(2)
- ---------------- --------- -------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
Entegris, Inc.(3) ........................ 3,315,774 32.8% 611,962 2,703,812 21.8%
3500 Lyman Boulevard
Chaska, MN 55318
FSI International, Inc.(4) ............... 3,315,774 32.8 611,962 2,703,812 21.8
322 Hazeltime Drive
Chaska, MN 55318
Udo Jaensch .............................. 440,000 4.0 83,225 356,775 2.9
Burgmaierstrasse 9A
D-85521 Ottobrunn
Germany
Joel A. Elftmann(5) ...................... 3,315,774 32.8 611,962 2,703,812 21.8
James E. Dauwalter(6) .................... 3,315,774 32.8 611,962 2,703,812 21.8
Robert R. Anderson(7) .................... 57,600 * 0 57,600 *
Edward D. Segal(8) ....................... 1,077,046 10.1 0 1,077,046 8.3
J. Christopher Levett-Prinsep(9) ......... 710,712 7.0 142,851 567,861 4.5
C. Garry Hendricks ....................... 694,585 6.9 0 694,585 5.6
Keith Reidy(10) .......................... 164,856 1.6 0 164,856 1.3
Peter V. Leigh(11) ....................... 84,375 * 0 84,375 *
Michael A. Grandinetti(12) ............... 39,375 * 0 39,375 *
All supervisory directors and managing
directors as a group (9 persons)(13) ... 9,460,097 86.2 1,366,775 8,093,322 61.0
All selling shareholders as a 7,782,260 76.1 1,450,000 6,332,260 50.6
group(14) ..............................
</TABLE>
- ------------------------
* Represents beneficial ownership of less than one percent of the common
shares.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. Applicable percentage ownership based
on 10,104,261 common shares outstanding as of August 31, 1999 and
12,404,261 common shares outstanding immediately following the completion
of this offering, both numbers include 0 shares issuable upon exercise of
warrants, together with applicable options for such shareholder. Common
shares subject to options currently exercisable, or exercisable within
60 days of August 31, 1999, are not deemed outstanding for computing the
percentage ownership of any other person.
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(2) After giving effect to the issuance of 2,300,000 common shares offered in
this offering, assuming no exercise of the underwriters' over-allotment
option.
(3) Includes 13,125 shares issuable to Mr. Dauwalter pursuant to an agreement
between Mr. Dauwalter and Entegris in which Mr. Dauwalter assigned
ownership rights to all shares issuable upon exercise of the options to
Entegris.
(4) Includes 13,125 shares issuable to Mr. Elftmann pursuant to an agreement
between Mr. Elftmann and FSI in which Mr. Elftmann assigned ownership
rights to all shares issuable upon exercise of the options to FSI.
(5) Mr. Elftmann is Chairman of the Board and Chief Executive Officer of FSI.
The shares listed consist of 3,302,649 shares held by FSI prior to this
offering, or 2,690,687 shares to be held by FSI after this offering, and
13,125 shares issuable pursuant to options exercisable within 60 days of
August 31, 1999. The shares being offered consist of 611,962 shares being
offered by FSI. Mr. Elftmann disclaims beneficial ownership of all shares
held by FSI and of all shares issuable pursuant to the exercise of options,
pursuant to an agreement with FSI in which Mr. Elftmann assigned ownership
rights to all shares issuable upon exercise of the options to FSI.
(6) Mr. Dauwalter is Executive Vice President and Chief Operating Officer of
Entegris. The shares listed consist of 3,302,649 shares held by Entegris
prior to this offering, or 2,690,687 shares to be held by Entegris after
this offering, and 13,125 shares issuable pursuant to options exercisable
within 60 days of August 31, 1999. The shares being offered consist of
611,962 shares being offered by Entegris. Mr. Dauwalter disclaims
beneficial ownership of all shares held by Entegris and of all shares
issuable pursuant to the exercise of options, pursuant to an agreement with
Entegris in which Mr. Dauwalter assigned ownership rights to all shares
issuable upon exercise of the options to Entegris.
(7) Includes 13,125 shares issuable pursuant to options exercisable within
60 days of August 31, 1999.
(8) Consists of 421,570 shares held by Mr. Segal, 129,528 shares held by Segal
Investments LP, an investment partnership of which Mr. Segal is the
Managing Partner and 525,948 shares issuable pursuant to options
exercisable within 60 days of August 31, 1999. Mr. Segal disclaims
beneficial ownership of the shares held by Segal Investment LP.
(9) Consists of 620,712 shares held by Mr. Levett-Prinsep prior to this
offering, or 477,861 shares to be held by Mr. Levett-Prinsep after this
offering, and 90,000 shares issuable pursuant to options exercisable within
60 days of August 31, 1999.
(10) Consists of 74,856 shares held by Mr. Reidy and 90,000 shares issuable
pursuant to options exercisable within 60 days of August 31, 1999.
(11) Consists of 84,375 shares issuable pursuant to options exercisable within
60 days of August 31, 1999.
(12) Consists of 39,375 shares issuable pursuant to options exercisable within
60 days of August 31, 1999.
(13) Includes an aggregate of 869,073 shares issuable pursuant to options
exercisable within 60 days of August 31, 1999. Also includes an aggregate
of 3,302,649 shares held by Entegris, 3,302,649 shares held by FSI and
129,528 shares owned by the investment partnership of Mr. Segal.
(14) Includes an aggregate of 116,250 shares issuable pursuant to options
exercisable within 60 days of August 31, 1999, including 13,125 options
held by Mr. Dauwalter and 13,125 options held by Mr. Elftmann, pursuant to
agreements with Entegris and FSI.
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DESCRIPTION OF CAPITAL SHARES
Following the closing of the sale of the common shares offered by this
prospectus, our authorized capital shares will consist of 48,000,000 Dutch
guilders, divided into 40,000,000 common shares, NLG 0.96 par value, and
10,000,000 preferred shares, NLG 0.96 par value.
Harris Trust and Savings Bank will maintain the registry and act as transfer
agent and registrar for the shares sold in this offering.
Unless otherwise set forth in a supplement to this prospectus, all of the
common shares sold in this offering will initially be represented by a single
global certificate held through the Depository Trust Company, DTC, and
registered in the name of Cede & Co., the nominee of DTC. Beneficial interests
in the shares represented by the global certificate or otherwise held through
DTC will be represented, and transfers of such beneficial interests will be
effected through accounts of financial institutions acting on behalf of
beneficial owners as direct and indirect participants in DTC. Investors may hold
beneficial interests in the shares directly through DTC if they are a
participant in such system, or indirectly through organizations that are
participants in such system.
COMMON SHARES
As of August 31, 1999, there were 10,104,261 Metron common shares
outstanding, which were held of record by 32 shareholders. Each shareholder of
record is entitled to one vote for each Metron share held on every matter
submitted to a vote of shareholders. The shareholders, at a general meeting, may
decide upon a distribution of Metron's annual profits to all shareholders out of
nonreserved profits insofar as permitted by Netherlands law. In the event of the
dissolution of Metron, holders of Metron common shares are entitled to receive,
on a pro rata basis, all assets of Metron remaining after the payment of all
debts, liquidation expenses and taxes and after payment to the holders of
preferred shares of all amounts paid by such holders on such shares. The Metron
articles make no provision for cumulative voting and, as a result, the holders
of a majority of Metron's voting power will have the power to elect all members
of the supervisory and managing boards. The holders of Metron common shares are
entitled to preemptive rights to subscribe for a pro rata portion of future
issuances of Metron common shares, with the exception of shares issued to
employees of Metron or of a group company. However, pursuant to the Metron
articles, the supervisory board has the authority to limit or exclude these
preemptive rights with respect to issuances of Metron common shares until
5 years from the date of execution of the deed of conversion and amendment of
the articles or a later date if the general meeting of shareholders extends the
term of this authority.
PREFERRED SHARES
Pursuant to the Metron articles, the supervisory board has authority to
issue authorized but unissued preferred shares of Metron until 5 years from the
date of execution of the deed of conversion and amendment of the articles or a
later date if the general meeting of shareholders extends the term of this
authority. Each preferred share would have voting rights equal to those of the
Metron common shares. Preferred shares could be issued quickly for a
subscription price equal to their par value, irrespective of the then current
market value of the common shares. Furthermore, it can be agreed between Metron
and the subscriber that upon issuance, only 25% of the nominal value of the
preferred shares needs to be paid at the time of issuance, with the balance
subject to call by Metron. Consequently, the issuance of preferred shares could
effectively delay or prevent a change in control of Metron or make removal of
management more difficult. In addition, the issuance of preferred shares may
have the effect of decreasing the value of the Metron common shares. As of
August 31, 1999, there were no preferred shares outstanding and Metron has no
plans to issue any of the preferred shares.
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SUMMARY OF CERTAIN PROVISIONS OF THE METRON ARTICLES AND OTHER MATTERS
GENERAL MEETINGS OF SHAREHOLDERS. All holders of Metron shares are entitled
to attend any general meeting in person or by proxy and to cast one vote for
each share held. The annual general meeting is required to be held in The
Netherlands no later than six months after the end of Metron's financial year.
Other general meetings may be called by the managing board, the supervisory
board or, subject to certain conditions, by the holders of not less than 10% of
the outstanding share capital. Metron will mail notices to the shareholders at
least 14 days before any general meetings. Most resolutions at general meetings
may be adopted by an absolute majority of the votes cast but only when a quorum
of at least half of the outstanding shares entitled to vote are represented in
person or by proxy. There are no laws currently in effect in The Netherlands or
provisions in the Metron articles limiting the rights of non-resident or foreign
investors to hold or vote the Metron common shares. A resolution to legally
merge, to legally split-up, to amend the Metron articles, to dissolve Metron or
to suspend or dismiss a managing director or a supervisory director requires at
least two-thirds of the validly cast votes in a general meeting at which more
than half of the issued capital is present or represented. In addition, such a
resolution to legally merge, to legally split-up, to amend the Metron articles
or to dissolve the company must be proposed by the supervisory board.
Shareholders must give notice of at least 60 days and no more than 90 days prior
to the one year anniversary of the date of the previous year's annual general
meeting of any shareholder proposal to be discussed at an annual general meeting
of shareholders. Proposals by shareholders for extraordinary general meetings of
shareholders will be discussed only if timely notice has been given to Metron.
ADOPTION OF STATUTORY ANNUAL ACCOUNTS; DIVIDENDS. Within five months after
the close of Metron's financial year, except where this period is extended for a
further period of up to a maximum of six months by the general meeting on
account of special circumstances, the managing board is required to submit to
the general meeting its annual report with respect to such financial year and
Metron's statutory annual accounts for such year, prepared in accordance with
Dutch GAAP and accompanied by a report of an independent auditor on such
statutory annual accounts. The statutory annual accounts are submitted by the
managing board to the general meeting for confirmation and adoption by the
shareholders at the annual general meeting which must be held no later than six
months after the close of Metron's financial year; in the event that the period
for submitting the annual accounts has been extended as set forth above, a
special shareholders' meeting will be called for such purpose. Under the Metron
articles such confirmation and adoption shall, subject to compliance with
certain requirements of Dutch law, including disclosure of all relevant facts to
the general meeting, to the extent permitted by law, constitute a full release
from liability of the managing directors and the members of the supervisory
board for the exercise of their duties during the financial year concerned.
Under the Metron articles, the supervisory board may set aside as reserves a
part or all of the annual profits of Metron. The amount reserved is not
available to be distributed as a dividend. Out of the remaining profits, a
non-cumulative cash dividend of one tenth of one percent (0.1%) of the par value
of the preferred shares will be paid to the holders of such shares, if any. At
any general meeting, the shareholders are entitled to decide upon a distribution
of the remaining profits to all common shareholders insofar as permitted by law.
Metron can only make distributions to its shareholders to the extent that its
equity exceeds the aggregate of (1) the par value of its issued share capital
and (2) the reserves to be maintained pursuant to the law. In addition, subject
to statutory provisions, the supervisory board may distribute one or more
interim dividends on the common shares before the annual financial statements
for any financial year have been adopted at a general meeting. The general
meeting may also declare and pay dividends out of reserves other than reserves
set aside by the supervisory board. Dividends may be paid either in cash or in
kind. Dividends and distributions must be claimed within five years and one day
following the date on which they become payable. There are no laws currently in
force in The Netherlands or provisions of the Metron articles restricting
payment of dividends to holders of Metron common shares not resident in The
Netherlands.
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LIQUIDATION RIGHTS. In the event of dissolution of Metron, the liquidation
proceeds remaining after payment of all debts, liquidation expenses and taxes
are to be distributed ratably first to the holders of the preferred shares to
the extent of the amount paid by them on their shares and then to the holders of
Metron common shares.
PREEMPTIVE RIGHTS. Under the Metron articles, the holders of Metron shares
have preemptive rights with regard to any issue of Metron shares pro rata to the
aggregate amount of the Metron shares held by them. Metron shareholders have no
preemptive rights to subscribe for the Metron common shares issued to employees
of Metron or of a company belonging to the Metron group. Preemptive rights may
be limited or excluded by the supervisory board until 5 years from the date of
the execution of the deed of conversion and amendment of the Metron articles and
thereafter, provided that the supervisory board is so authorized by the general
meeting.
ACQUISITION BY METRON OF ITS OWN SHARES. Subject to certain restrictions
contained in Netherlands law and the Metron articles, the general meeting of
shareholders may delegate to the managing board for a period of not longer than
18 months the authority to cause Metron to acquire its own fully-paid shares in
an amount not to exceed 10% of the issued share capital. No such authorization
will be required if Metron acquires shares in its own capital for the purpose of
transferring the same to employees of Metron or of a group company under a plan
applicable to such employees, provided that such shares are officially listed on
an exchange, including the Nasdaq National Market.
ISSUANCE OF ADDITIONAL SHARES. Pursuant to the Metron articles, the
supervisory board has authority to issue authorized but unissued common shares
of Metron until five years from the date of execution of the deed of conversion
and amendment of the Metron articles or a later date if the general meeting
extends the term of this authority. As long as the supervisory board has the
authority to adopt a resolution to issue shares, the general meeting shall not
have the authority to adopt such resolutions. In the event that a future
supervisory board no longer has the authority to issue shares, pursuant to the
Metron articles any resolution of the general meeting to issue shares will
require the prior approval of the supervisory board.
PUT AND CALL RIGHTS WITH RESPECT TO CERTAIN METRON COMMON SHARES. Pursuant
to the terms of the Kyser ESOP, Metron is required in certain limited
circumstances to repurchase Metron common shares from the trustee of the Kyser
ESOP or participants or beneficiaries of the Kyser ESOP. However, there are
certain restrictions imposed by Netherlands law on the ability of Metron to
repurchase its common shares. See "Acquisition by Metron of its own Shares." To
the extent Metron is prohibited by Netherlands law from repurchasing any shares
when required to do so by the Kyser ESOP, Metron has agreed to use its best
efforts to timely obtain an alternate purchaser for Metron common shares
required to be purchased from the Trustee of the Kyser ESOP or participants or
beneficiaries of the Kyser ESOP.
REGISTRATION RIGHTS. Pursuant to an investor rights agreement entered into
in July 1995 and two accession agreements entered into in 1998, a limited number
of shareholders have the right to require Metron to register their common shares
under specific circumstances. In the event Metron decides to offer shares
pursuant to underwritten registrations, Metron must notify these shareholders
and include the shares of those who elect to be included in the offering. In the
case of an initial public offering involving net proceeds of more than
$7,500,000 and a gross offering price of at least $1.33 per share with a par
value of 0.10 Dutch guilders, the underwriters and Metron have the right to
reduce pro rata the number of shares proposed to be registered in view of market
conditions. The combined holders of at least 375,000 common shares of Metron, as
adjusted for share splits, share dividends and the like, may request that Metron
file a registration statement on Form S-3, if available to Metron. However,
Metron shall not be obligated to file more than one Form S-3 registration in any
12 month period or within 180 days after completing Metron's initial public
offering. In addition, if the majority of the members of the supervisory board
determine in good faith that a registration on Form S-3 would be
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seriously detrimental to Metron, the registration may be delayed for up to
130 days. Metron will bear all registration expenses related to the above
mentioned registrations.
The registration rights are transferable to anyone acquiring all of a
shareholder's common shares and who agrees to be bound by the terms of the
investor rights agreement. The registration rights of each shareholder entitled
to such rights terminate on the earlier of the date three years after the date
of Metron's initial public offering and the date the holder may sell all of its
shares pursuant to Rule 144 during any 90 day period.
CERTAIN NETHERLANDS TAX CONSEQUENCES OF HOLDING METRON COMMON SHARES
The following discussion is a summary of the material anticipated tax
consequences of an investment in Metron common shares by non-Dutch resident
shareholders under the Netherlands tax laws. The discussion does not deal with
all possible tax consequences relating to an investment in Metron common shares.
In particular, the discussion does not address the tax consequences under any
non-Netherlands tax laws, nor does it address special circumstances that may
apply to any individual investor. Accordingly, prospective investors should
consult their respective tax advisors regarding the tax consequences to them of
an investment in the Metron common shares.
The anticipated tax consequences are subject to change, and such change may
be retroactively effective. In particular, a complete revision of the
Netherlands income tax act is planned. See "--Taxes in the 21st century" below.
The revision, if enacted, may affect the Netherlands tax position as described
below. Further, any variation or differences from the facts or representations
recited below, for any reason, might affect the following discussion, perhaps in
an adverse manner, and make them inapplicable. In addition, Metron does not
expect to update this discussion for changes in facts or laws occurring
subsequent to the date of this prospectus.
The summary represents solely the views of Metron as to the interpretation
of existing law and, accordingly, no assurance can be given that the tax
authorities or courts in the Netherlands will agree with the summary below.
The following is a summary of Netherlands tax consequences to an owner of
Metron common shares who is not, or is not deemed to be, a resident of the
Netherlands for purposes of the relevant tax codes (a "non-resident
shareholder"). The summary does not address taxes imposed by the Netherlands and
its political subdivisions, other than the dividend withholding tax, individual
income tax, corporate income tax, net wealth tax and gift and inheritance tax.
NETHERLANDS DIVIDEND WITHHOLDING TAX. Metron does not expect to pay
dividends on its capital stock. To the extent that dividends are distributed by
Metron, such dividends would, in principle, be subject under Netherlands tax law
to withholding tax at a statutory rate of 25%. Dividends, in principle, include
dividends in cash or in kind, constructive dividends and liquidation proceeds in
excess of, for Netherlands tax purposes, recognized paid-in capital. Stock
dividends are also subject to withholding tax unless distributed out of Metron's
paid-in share premium as recognized for Netherlands tax purposes.
No withholding tax applies on the sale or disposition of Metron common
shares to persons other than Metron.
A non-resident shareholder may be eligible for a reduction or a refund of
Netherlands dividend withholding tax pursuant to be EU Parent-Subsidiary
Directive or under a tax convention which is in effect between the country of
residence of the non-resident shareholder and the Netherlands. The Netherlands
has concluded such conventions with, among others, the United States, most
European Union countries, Canada, Switzerland and Japan. Under most of these
conventions, Netherlands dividend withholding tax is reduced to a rate of 15% or
under certain circumstances a lower rate unless (i) the non-resident shareholder
has an enterprise or an interest in an enterprise that is, in whole or in part,
carried on through a permanent establishment in the Netherlands or performs
independent
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services from a fixed base in the Netherlands and to which enterprise, part of
an enterprise or fixed base the Metron common shares are attributable and
(ii) the participation exemption is not applicable.
NETHERLANDS INCOME TAX AND CORPORATE INCOME TAX. A non-resident shareholder
will not be subject to Netherlands individual or corporate income tax with
respect to dividends distributed by Metron on the Metron common shares or with
respect to capital gains derived from the sale or disposal of Metron common
shares, provided that:
(a) the non-resident shareholder does not have an enterprise or an interest
in an enterprise that is, in whole or in part, carried on through a
permanent establishment or permanent representative in the Netherlands
and to which enterprise or part of an enterprise the Metron common shares
are attributable unless the participation exemption is applicable; and
(b) neither the non-resident shareholder nor his/her spouse, other persons
sharing his/her household or certain other close relatives have a
substantial interest or a deemed substantial interest in the share
capital of Metron or, in the event that the non-resident shareholder or
one or more of the other persons referred to does have such an interest,
the substantial interest(s) form part of the assets of an enterprise; and
(c) the non-resident shareholder does not carry out and has not carried out
employment activities with which the holding of the Metron common shares
is connected.
In general terms, a substantial interest in the share capital of Metron does
not exist if the non-resident shareholder, his/her spouse, other persons sharing
his/her household or certain other close relatives, do not hold alone or
together, whether directly or indirectly, the ownership of, or certain other
rights over, shares representing 5% or more of the total issued and outstanding
capital (or the issued and outstanding capital of any class of shares) of
Metron.
The substantial interest tax rate for individuals is 25%, which percentage
will probably be raised to 30% in the future. The substantial interest tax rate
for corporate shareholders is the Dutch corporate income tax rate of 35%. If a
tax treaty is in force between The Netherlands and the country where the
shareholder is resident, the shareholder may, depending on the treaty
provisions, be entitled to protection under the treaty, which could prohibit the
levying tax on substantial interest income or capital gains.
NETHERLANDS NET WEALTH TAX. A non-resident shareholder who is an individual
is not subject to Netherlands net wealth tax with respect to the Metron common
shares, provided the non-resident shareholder does not have an enterprise or an
interest in an enterprise that is, in whole or in part, carried on through a
permanent establishment or a permanent representative in the Netherlands and to
which enterprise or part of an enterprise the Metron common shares is
attributable. The applicable tax rate is 0.7%. Corporations are not subject to
Netherlands net wealth tax.
NETHERLANDS GIFT AND INHERITANCE TAX. A gift or inheritance of Metron
common shares from a non-resident shareholder will not be subject to a
Netherlands gift and inheritance tax, provided that the non-resident shareholder
does not have an enterprise or an interest in an enterprise that is, in whole or
in part, carried on through a permanent establishment or a permanent
representative in the Netherlands to which the Metron common shares are
attributable.
TAXES IN THE 21ST CENTURY. Recently, the Dutch government submitted its
draft bill for personal taxation in 2001 to the Dutch Parliament. These tax
reforms entail extensive changes to the current Dutch personal income tax
system. The new legislation is expected to come into force on January 1, 2001.
EACH PROSPECTIVE PURCHASER IS URGED TO CONSULT ITS OWN TAX ADVISORS ABOUT THE
SPECIFIC NETHERLANDS TAX CONSEQUENCES TO SUCH PROSPECTIVE PURCHASER AND THE
EFFECTS, IF ANY, OF APPLICABLE NETHERLANDS TAX LAWS.
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SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for the common
shares. We cannot provide any assurances that a significant public market for
the common shares will develop or be sustained after this offering. Future sales
of substantial amounts of common shares in the public market, or the possibility
of such sales occurring, could adversely affect prevailing market prices for the
common shares or our future ability to raise capital through an offering of
equity securities.
After this offering, we will have outstanding 12,404,261 common shares. Of
these shares, the 3,750,000 shares to be sold in this offering, 4,312,500 shares
if the underwriters' over-allotment option is exercised in full, will be freely
tradable in the public market without restriction under the Securities Act,
unless such shares are held by "affiliates" of Metron, as that term is defined
in Rule 144 under the Securities Act.
The remaining 8,654,261 shares outstanding upon completion of this offering
will be "restricted securities" as that term is defined under Rule 144. We
issued and sold the restricted shares in private transactions in reliance on
exemptions from registration under the Securities Act. Restricted shares may be
sold in the public market only if they are registered or if they qualify for an
exemption from registration under Rule 144 or Rule 701 under the Securities Act,
as summarized below.
139,341 of the restricted shares are available for immediate sale, of which
12,300 shares will be subject to certain volume, manner of sale and other
limitations under Rule 144. 2,200 of the restricted shares will be available for
sale 90 days from the date of this offering. Pursuant to certain "lock-up"
agreements between our shareholders and either Metron or the underwriters, the
holders of 8,590,945 restricted shares have agreed not to offer, sell, pledge or
otherwise dispose of, directly or indirectly, or announce their intention to do
the same, any common shares of Metron or security convertible into, or
exchangeable or exercisable for any security of Metron for a period of 180 days
from the date of this offering. However, if the holder of the restricted shares
is an individual, he or she may transfer any such securities either during his
or her lifetime or on death by will or intestacy to his or her immediate family
or to a trust the beneficiaries of which are exclusively the holder of the
securities and/or a member of his or her immediate family. We also have entered
into an agreement with the underwriters that we will not offer, sell or
otherwise dispose of common shares for a period of 180 days from the date of
this offering. On the date of the expiration of the lock-up agreements,
8,590,945 of the restricted shares will be eligible for immediate sale, of which
8,060,867 shares will be subject to certain volume, manner of sale and other
limitations under Rule 144, and 5,000 shares will be eligible for sale subject
to volume restrictions on March 17, 2000.
Following the expiration of such lock-up periods, certain shares issued upon
exercise of options we granted prior to the date of this offering will also be
available for sale in the public market pursuant to Rule 701 under the
Securities Act. Rule 701 permits resales of such shares in reliance upon
Rule 144 under the Securities Act but without compliance with certain
restrictions, including the holding-period requirement, imposed under Rule 144.
In general, under Rule 144 as in effect at the closing of this offering,
beginning 90 days after the date of this prospectus, a person, or persons whose
shares are aggregated, who has beneficially owned Restricted shares for at least
one year, including the holding period of any prior owner who is not an
Affiliate, would be entitled to sell, within any three-month period, a number of
shares that does not exceed the greater of (1) 1% of the then-outstanding common
shares or (2) the average weekly trading volume of the common shares during the
four calendar weeks preceding the filing of a Form 144 with respect to such
sale. Sales under Rule 144 are also subject to certain manner of sale and notice
requirements and to the availability of current public information about us.
Under Rule 144(k), a person who is not deemed to have been an Affiliate at any
time during the 90 days preceding a sale and who has beneficially owned the
shares proposed to be sold for at least two years, including the holding period
of any prior owner who is not an Affiliate, is entitled to sell
64
<PAGE>
such shares without complying with the manner of sale, public information,
volume limitation or notice provisions of Rule 144.
We intend to file, after the effective date of this offering, a Registration
Statement on Form S-8 to register approximately 3,735,683 common shares reserved
for issuance under the Option Plan, the Directors' Plan, the Purchase Plan and
the Kyser ESOP. The Registration Statement will become effective automatically
upon filing. Shares issued under the foregoing plans, after the filing of a
Registration Statement on Form S-8, may be sold in the open market, subject, in
the case of certain holders, to the Rule 144 limitations applicable to
affiliates, the above-referenced lock-up agreements and vesting restrictions
imposed by us.
In addition, following this offering, the holders of 7,606,759 common shares
will, under certain circumstances, have rights to require us to register their
shares for future sale.
65
<PAGE>
UNDERWRITING
Metron and the selling shareholders are offering the common shares described
in this prospectus through a number of underwriters. Banc of America Securities
LLC, SG Cowen Securities Corporation and U.S. Bancorp Piper Jaffray Inc. are the
representatives of the underwriters. Metron and certain of the selling
shareholders have entered into an underwriting agreement with the
representatives. Subject to the terms and conditions of the underwriting
agreement, Metron and the selling shareholders have agreed to sell to the
underwriters, and each underwriter has severally agreed to purchase, the number
of common shares listed next to its name in the following table:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
- ----------- ---------
<S> <C>
Banc of America Securities LLC..............................
SG Cowen Securities Corporation.............................
U.S. Bancorp Piper Jaffray Inc..............................
-------
Total...................................................
=======
</TABLE>
Shares sold by the underwriters to the public will initially be offered on
the terms set forth on the cover page of this prospectus. The underwriters may
allow to selected dealers a concession of not more than $ per share, and
the underwriters may also allow, and any other dealers may reallow, a concession
of not more than $ per share to other dealers. If all the shares are not
sold at the initial public offering price, the underwriters may change the
offering price and the other selling terms. The common shares are offered
subject to receipt and acceptance by the underwriters and other conditions,
including the right to reject orders in whole or in part.
If the underwriters sell more shares than the total number of shares set
forth in the table above, they have an option to buy up to a maximum of 562,500
additional shares from Metron and the selling shareholders to cover such sales.
The underwriters have 30 days to exercise this option. If any shares are
purchased pursuant to this option, the underwriters will severally purchase
shares in approximately the same proportion as set forth in the table above. If
purchased, the underwriters will offer such additional shares on the same terms
as those on which the 3,750,000 shares are being offered. The following table
sets forth the per share and total underwriting discounts and commissions to be
paid to the underwriters assuming both no exercise and full exercise of the
underwriters' option to purchase 562,500 additional shares.
<TABLE>
<CAPTION>
NO EXERCISE FULL EXERCISE
----------- -------------
<S> <C> <C>
Per share............................................ $ $
------ --------
Total................................................ $ $
====== ========
</TABLE>
Metron and holders of approximately 90% of our outstanding common shares,
including all of our executive officers and directors, as well as holders of
options to purchase common shares who are senior officers, have agreed with the
underwriters not to dispose of or hedge any of their common shares or securities
convertible into or exchangeable for common shares during the period from the
date of this prospectus continuing through 180 days after the date of this
prospectus without the prior written consent of Banc of America Securities LLC.
At any time and without notice, Banc of America Securities LLC may, in its sole
discretion, release all or any portion of the securities from these lock-up
agreements.
66
<PAGE>
The underwriting agreement provides that Metron and certain of the selling
shareholders will indemnify the underwriters against liabilities set forth in
such agreement, including civil liabilities under the Securities Act, or will
contribute to payments the underwriters may be required to make in respect
thereof.
At our request, the underwriters have reserved up to 115,000 of the common
shares offered by this prospectus for sale at the initial public offering price
to persons having business relationships with us. The number of shares of common
stock available to the general public will be reduced to the extent that these
persons purchase the reserved shares. Any reserved common shares that are not
purchased by such persons at the closing of the initial public offering will be
offered by the underwriters to the general public on the same terms as the other
shares in the initial public offering.
In connection with this offering, the underwriters may purchase and sell
common shares in the open market. These transactions may include:
- short sales;
- stabilizing transactions; and
- purchases to cover positions created by short sales.
Short sales involve the sale by the underwriters of a greater number of
shares than they are required to purchase in this offering. Stabilizing
transactions consist of bids or purchases made for the purpose of preventing or
retarding a decline in the market price of the common shares while this offering
is in progress.
The underwriters also may impose a penalty bid. This occurs when a
particular underwriter repays to the underwriters a portion of the underwriting
discount received by it because the representatives have repurchased shares sold
by or for the account of such underwriter in stabilizing or short covering
transactions.
The underwriters may engage in activities that stabilize, maintain or
otherwise affect the price of the common shares, including:
- over-allotment;
- stabilization;
- syndicate covering transactions; and
- imposition of penalty bids.
As a result of these activities, the price of the common shares may be
higher than the price that otherwise might exist in the open market. If the
underwriters commence these activities, they may discontinue them at any time.
The underwriters may carry out these transactions on the Nasdaq National Market,
in the over-the-counter market or otherwise.
The underwriters do not expect sales to discretionary accounts to exceed 5%
of the total number of common shares offered by this prospectus.
Prior to this offering, there has been no public market for the common
shares of Metron. The initial public offering price will be negotiated among
Metron and the underwriters. Among the factors to be considered in such
negotiations are:
- the history of, and prospects for, Metron and the industry in which it
competes;
- the past and present financial performance of Metron;
- an assessment of Metron's management;
67
<PAGE>
- the present state of Metron's development;
- the prospects for Metron's future earnings;
- the prevailing market conditions of the applicable U.S. securities market
at the time of this offering;
- market valuations of publicly traded companies that Metron and the
representatives believe to be comparable to Metron; and
- other factors deemed relevant.
The total expenses related to this initial public offering of our common
shares are estimated to be $650,000.
LEGAL MATTERS
The validity of the issuance of the common shares offered by this prospectus
will be passed upon for Metron by Nauta Dutilh, Netherlands counsel to the
company. Certain other legal matters in connection with the offering will be
passed upon for Metron by Cooley Godward LLP, Palo Alto, California. Certain
legal matters in connection with the offering will be passed upon for the
underwriters by Latham & Watkins, Menlo Park, California.
EXPERTS
The consolidated balance sheets of Metron Technology N.V. and subsidiaries
as of May 31, 1998 and 1999, and the related consolidated statements of income,
shareholders' equity and cash flows for each of the years in the three year
period ended May 31, 1999, have been included in this prospectus and in the
registration statement in reliance upon the report of KPMG LLP, independent
auditors, as set forth in their report thereon appearing elsewhere in this
prospectus, and upon the authority of said firm as experts in accounting and
auditing.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
A registration statement on Form S-1, including amendments to the
registration statement, relating to the common shares offered by this prospectus
has been filed by us with the Commission. This prospectus, which constitutes a
part of the registration statement, does not contain all of the information set
forth in the registration statement and the exhibits and schedules to the
registration statement. Statements contained in this prospectus as to the
contents of any contract or other document referred to are not necessarily
complete, and in each instance reference is made to the copy of such contract or
other document filed as an exhibit to the registration statement, each such
statement being qualified in all respects by such reference. For further
information with respect to us and the common shares offered by this prospectus,
reference is made to such registration statement, exhibits and schedules. A copy
of the registration statement may be inspected by anyone without charge at the
public reference facilities maintained by the Commission at 450 Fifth Street,
NW, Judiciary Plaza, Washington, D.C. 20549, and copies of all or any part
thereof maybe obtained from the Commission upon payment of certain fees
prescribed by the Commission. The telephone number for the public reference
facilities maintained by the Commission is (800) SEC-0330. The Commission
maintains a World Wide Web site that contains reports, proxy and information
statements and other information filed electronically with the Commission. The
address of the site is http://www.sec.gov.
68
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Accountants....................... F-2
Consolidated Statements of Income for the years ended
May 31, 1997, 1998 and 1999 and for the three months
ended August 31, 1998 and 1999......................... F-3
Consolidated Balance Sheets as of May 31, 1998 and 1999
and as of August 31, 1999.............................. F-4
Consolidated Statements of Cash Flows for the years
ended May 31, 1997, 1998 and 1999 and for the three
months ended August 31, 1998 and 1999.................. F-5
Consolidated Statements of Shareholders' Equity for the
years ended May 31, 1996, 1997, 1998 and 1999 and for
the three months ended August 31, 1999................. F-6
Notes to Consolidated Financial Statements.............. F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors and Shareholders
Metron Technology N.V.:
We have audited the accompanying consolidated balance sheets of Metron
Technology N.V. and subsidiaries as of May 31, 1999 and 1998, and the related
consolidated statements of income, shareholders' equity and cash flows for each
of the years in the three-year period ended May 31, 1999. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Metron
Technology N.V. and subsidiaries as of May 31, 1999 and 1998, and the results of
their operations and their cash flows for each of the years in the three-year
period ended May 31, 1999 in conformity with generally accepted accounting
principles.
KPMG LLP
Mountain View, California
July 22, 1999, except as to
Note 19 which is as of
November 17, 1999.
F-2
<PAGE>
METRON TECHNOLOGY N.V.
CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS EXCEPT PER SHARE)
<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED MAY 31 ENDED AUGUST 31,
------------------------------ -------------------
1997 1998 1999 1998 1999
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net revenue................................. $298,576 $275,024 $228,618 $56,922 $69,473
Cost of revenue............................. 241,675 222,028 189,295 46,596 57,332
-------- -------- -------- ------- -------
Gross profit................................ 56,901 52,996 39,323 10,326 12,141
Selling, general, administrative, and other
expenses.................................. 49,417 48,997 43,391 11,321 10,489
Restructuring and merger costs.............. 258 881 2,550 806 --
-------- -------- -------- ------- -------
Operating income (loss)..................... 7,226 3,118 (6,618) (1,801) 1,652
Equity in net income (loss) of joint
ventures.................................. 273 (497) 267 44 (85)
Other expense, net.......................... (602) (71) (397) (212) (198)
-------- -------- -------- ------- -------
Income (loss) before income taxes........... 6,897 2,550 (6,748) (1,969) 1,369
Provision (benefit) for income taxes........ 2,699 1,448 (2,214) (703) 466
-------- -------- -------- ------- -------
Net income (loss)........................... $ 4,198 $ 1,102 $ (4,534) $(1,266) $ 903
======== ======== ======== ======= =======
Earnings (loss) per common share
Basic..................................... $ 0.40 $ 0.11 $ (0.44) $ (0.12) $ 0.09
Diluted................................... $ 0.37 $ 0.10 $ (0.44) $ (0.12) $ 0.08
</TABLE>
The accompanying Notes are an integral part of the Consolidated Financial
Statements.
F-3
<PAGE>
METRON TECHNOLOGY N.V.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MAY 31 AUGUST 31, 1999
------------------- --------------------
1998 1999 ACTUAL PRO FORMA
-------- -------- -------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents................................. $ 10,387 $10,601 $ 17,128 $ 17,128
Accounts receivable, net of allowance for doubtful
accounts of $815, $1,312, $1,395, and $1,395,
respectively............................................ 53,216 42,150 49,044 49,044
Inventories, net.......................................... 25,881 24,079 24,413 24,413
Prepaid expenses and other current assets................. 8,375 10,126 9,766 9,766
-------- ------- -------- --------
Total current assets.................................. 97,859 86,956 100,351 100,351
Property, plant, and equipment, net....................... 9,901 8,152 7,757 7,757
Intangible assets, net.................................... 2,995 2,572 2,466 2,466
Investments in joint ventures............................. 2,342 185 100 100
Other assets.............................................. 1,064 1,760 1,757 1,757
-------- ------- -------- --------
Total Assets.......................................... $114,161 $99,625 $112,431 $112,431
======== ======= ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable.......................................... $ 26,633 $21,507 $ 24,341 $ 24,341
Amounts due affiliates.................................... 18,125 13,125 18,824 18,824
Accrued wages and employee-related expenses............... 5,716 5,304 4,537 4,537
Deferred revenue for installation and warranty............ 7,224 4,611 5,374 5,374
Short term borrowings and current portion of long-term
debt.................................................... 8,771 11,086 15,111 15,111
Amounts payable to shareholders........................... 76 1,016 1,016 1,016
Other current liabilities................................. 6,845 7,677 7,155 7,155
-------- ------- -------- --------
Total current liabilities............................. 73,390 64,326 76,358 76,358
Long-term debt, excluding current portion................... 1,379 1,141 1,101 1,101
Deferred credits and other long-term liabilities............ 1,343 2,230 2,168 2,168
-------- ------- -------- --------
Total liabilities..................................... 76,112 67,697 79,627 79,627
-------- ------- -------- --------
Commitments................................................. -- -- -- --
Common shares subject to Buy-Sell Agreement................. 2,000 1,973 1,973 --
-------- ------- -------- --------
Shareholders' Equity:
Preferred shares, par value NLG 0.96 Authorized;
10,000,000 shares Issued and outstanding; none.......... -- -- -- --
Common shares and additional paid-in capital, par value
NLG 0.96;
Authorized: 40,000,000
Issued: 10,383,068; 10,385,268; 10,385,268 and
10,385,268, respectively
Outstanding: 10,367,862; 10,104,261; 10,104,261; and
10,104,261, respectively................................ 3,177 3,030 3,030 5,003
Retained earnings......................................... 35,559 30,186 31,089 31,089
Cumulative other comprehensive loss....................... (2,405) (3,130) (3,157) (3,157)
Deferred compensation..................................... (275) -- -- --
Treasury shares; 15,206 shares in 1998 and 281,007 shares
in 1999................................................. (7) (131) (131) (131)
-------- ------- -------- --------
Total shareholders' equity............................ 36,049 29,955 30,831 32,804
-------- ------- -------- --------
Total Liabilities and Shareholders' Equity............ $114,161 $99,625 $112,431 $112,431
======== ======= ======== ========
</TABLE>
The accompanying Notes are an integral part of the Consolidated Financial
Statements.
F-4
<PAGE>
METRON TECHNOLOGY N.V.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED MAY 31 ENDED AUGUST 31
------------------------------ -------------------
1997 1998 1999 1998 1999
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from (used for) operating activities:
Net income (loss)..................................... $ 4,198 $ 1,102 $(4,534) $(1,266) $ 903
Adjustments to reconcile net income for items currently
not affecting operating cash flows:
Pooling adjustment relating to acquisition of T.A.
Kyser Co.......................................... -- (185) -- -- --
Depreciation and amortization....................... 2,748 2,911 3,047 761 682
Provision for inventory valuation and bad debts..... 2,724 1,701 2,781 244 242
Deferred income taxes............................... (604) (1,152) (1,157) (254) 291
Amortization of deferred compensation expense....... 329 245 275 69 --
Equity in net (income) loss of joint venture........ (273) 497 (267) (44) 85
Loss on disposition of assets....................... 9 80 126 8 15
Changes in assets and liabilities:
Accounts receivable, net.......................... 17,980 (5,779) 10,003 9,947 (6,989)
Inventories, net.................................. (654) (3,309) (21) 2,843 (464)
Prepaid expenses and other current assets......... (517) (1,123) (904) 597 45
Accounts payable.................................. (3,513) 1,246 (5,126) (8,105) 2,834
Amounts due affiliates............................ (9,419) 6,089 (5,000) (3,993) 5,699
Accrued wages and employee-related expenses....... 6 (378) (412) (1,161) (767)
Deferred revenue for installation and warranty.... 635 (16) (2,613) (249) 763
Other current liabilities......................... (6,761) (802) 832 47 (522)
------- ------- ------- ------- -------
Net cash flows from (used for) operating
activities.................................. 6,888 1,127 (2,970) (556) 2,817
------- ------- ------- ------- -------
Cash flows (used for) from investing activities:
Additions to property, plant, and equipment......... (3,598) (3,966) (1,369) (526) (377)
Proceeds from the sale of property, plant, and
equipment......................................... 383 66 334 39 190
Equity investment in joint venture.................. -- (1,109) -- -- --
Proceeds from the sale of equity investment in joint
ventures.......................................... -- -- 2,510 -- --
Other assets........................................ (191) (90) (418) (19) 33
Deferred credits and other long-term liabilities 121 254 283 102 (5)
------- ------- ------- ------- -------
Net cash flows (used for) from investing
activities.................................. (3,285) (4,845) 1,340 (404) (159)
------- ------- ------- ------- -------
Cash flows (used for) from financing activities:
Increase (decrease) in short-term borrowings........ 238 (1,522) 2,377 1,118 4,060
Proceeds from issuance of long-term debt............ 407 40 120 118 --
Principal payments on long-term debt................ (175) (283) (323) (75) (77)
Amounts payable to shareholders..................... 372 -- 1,582 (62) (62)
Principal payments on indebtedness to officer and
shareholders...................................... (465) (342) (76) -- --
Purchase of treasury stock.......................... -- (469) (1,152) -- --
Proceeds from issuance of common and treasury
shares............................................ -- 200 15 -- --
------- ------- ------- ------- -------
Net cash flows (used for) from financing
activities.................................. 377 (2,376) 2,543 1,099 3,921
------- ------- ------- ------- -------
Effect of exchange rate changes on cash and cash
equivalents........................................... (629) (553) (699) (90) (52)
------- ------- ------- ------- -------
Net change in cash and cash equivalents................. 3,351 (6,647) 214 49 6,527
Beginning cash and cash equivalents..................... 13,683 17,034 10,387 10,387 10,601
------- ------- ------- ------- -------
Ending cash and cash equivalents........................ $17,034 $10,387 $10,601 $10,436 $17,128
======= ======= ======= ======= =======
</TABLE>
The accompanying Notes are an integral part of the Consolidated Financial
Statements.
F-5
<PAGE>
METRON TECHNOLOGY N.V.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON
SHARES AND
ADDITIONAL CUMULATIVE
PAID-IN CAPITAL OTHER
------------------- TREASURY RETAINED COMPREHENSIVE DEFERRED COMPREHENSIVE
SHARES AMOUNT STOCK EARNINGS INCOME (LOSS) COMPENSATION TOTAL INCOME (LOSS)
-------- -------- -------- -------- ------------- ------------ -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at May 31, 1996.... 10,383 $3,221 $ (5) $30,444 $ 136 $(888) $32,908
Net income.................. 4,198 4,198 $ 4,198
Foreign translation
adjustment................ (1,088) (1,088) (1,088)
Amortization of deferred
compensation.............. 329 329
Issuance of shares for
license................... 8 52 52
------ ------ ----- ------- ------- ----- ------- -------
Balances at May 31, 1997.... 10,391 3,273 (5) 34,642 (952) (559) 36,399 $ 3,110
=======
Net income.................. 1,102 1,102 $ 1,102
Kyser pooling adjustment.... (185) (185)
Foreign translation
adjustment................ (1,453) (1,453) (1,453)
Amortization of deferred
compensation.............. (38) 284 246
Release of rights under
Buy-Sell Agreement........ 209 209
Purchase of treasury
stock..................... (75) (463) (6) (469)
Issuance of shares
For cash.................. 7 75 75
Exercise of stock
option.................. 45 121 4 125
------ ------ ----- ------- ------- ----- ------- -------
Balances at May 31, 1998.... 10,368 3,177 (7) 35,559 (2,405) (275) 36,049 $ (351)
=======
Net loss.................... (4,534) (4,534) $(4,534)
Foreign translation
adjustment................ (725) (725) (725)
Amortization of deferred
compensation.............. 275 275
Release of rights under
Buy-Sell Agreement........ 27 27
Purchase of treasury
stock..................... (266) (189) (124) (839) (1,152)
Issuance of shares
Exercise of stock
option.................. 2 15 15
------ ------ ----- ------- ------- ----- ------- -------
Balances at May 31, 1999.... 10,104 3,030 (131) 30,186 (3,130) -- 29,955 $(5,259)
=======
Net income (unaudited)...... 903 903 $ 903
Foreign translation
adjustment (unaudited).... (27) (27) (27)
------ ------ ----- ------- ------- ----- ------- -------
Balances at August 31, 1999
(unaudited)............... 10,104 $3,030 $(131) $31,089 $(3,157) $ -- $30,831 $ 876
====== ====== ===== ======= ======= ===== ======= =======
</TABLE>
The accompanying Notes are an integral part of the Consolidated Financial
Statements.
F-6
<PAGE>
METRON TECHNOLOGY N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION AS OF AUGUST 31, 1999 AND
FOR THE THREE MONTHS ENDED AUGUST 31, 1998 AND 1999 IS UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
Metron Technology N.V. ("Metron" or "the Company") is a holding company
organized under the laws of The Netherlands. Metron and its subsidiaries are
engaged in the marketing, sale and service of semiconductor equipment and
materials support in Europe, Asia and the United States. The majority of
Metron's revenue is derived from sales of materials and equipment. The Company's
principal subsidiaries include: Metron Technology (Deutschland) GmbH, Metron
Technology (United Kingdom) Ltd., Metron Technology (France) EURL, Metron
Technology (Italy) S.r.l., Metron Technology (Benelux) B.V., Metron Technology
(Israel) Ltd., Metron Technology (Asia) Ltd., Metron Technology (Hong Kong)
Ltd., T.A. Kyser Co. (a Nevada corporation), and Metron Technology Corporation
(a California corporation). Certain prior period items have been reclassified to
conform with the current year format.
In June 1995, the Company issued 1,595,376 common shares in exchange for all
of the outstanding capital stock of three companies trading in Asia, similarly
engaged in the distribution of semiconductor equipment and materials. These
three Asian companies were owned by the controlling shareholders of Metron.
Accordingly, the transaction has been treated as a reorganization of entities
under common control and is presented in a manner similar to a pooling-of
interests. Consequently, the Company's consolidated financial statements have
been restated to include the accounts and operations of the three Asian
companies for all reported periods prior to the reorganization.
In July 1995, the Company acquired Transpacific Technology Corporation
("TTC") and its subsidiaries in a business combination accounted for as a
purchase. The total purchase price for TTC was $5,035,000 and resulted in
goodwill of $4,229,000 which is being amortized over 10 years.
In July 1998, the Company issued common shares in exchange for substantially
all of the outstanding capital stock of T.A. Kyser Co ("Kyser"), which was
engaged in the marketing and sale of semiconductor materials. The transaction
has been treated as a pooling of interests. Consequently, the Company's
consolidated financial statements have been restated to include the accounts and
operations of Kyser for all reported periods prior to the merger.
The Consolidated Financial Statements have been prepared in accordance with
generally accepted accounting principles ("GAAP") applicable in the United
States. Conformity with GAAP requires the use of estimates and assumptions that
affect the reported amounts of assets and liabilities, disclosure of contingent
assets and liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses during the reporting period. Future results may
differ from these estimates.
UNAUDITED INTERIM INFORMATION
The interim consolidated financial statements (including notes to financial
statements) of the Company for the three months ended August 31, 1998 and 1999,
included herein have been prepared by the Company, without audit, pursuant to
the rules and regulations of the Securities and Exchange Commission ("SEC"). In
the opinion of management, the accompanying unaudited interim consolidated
financial statements reflect all adjustments, consisting only of normal
recurring adjustments, necessary to present fairly the financial position of the
Company at August 31, 1999, and
F-7
<PAGE>
METRON TECHNOLOGY N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AUGUST 31, 1999 AND
FOR THE THREE MONTHS ENDED AUGUST 31, 1998 AND 1999 IS UNAUDITED)
the results of its operations and its cash flows for the three months ended
August 31, 1998 and 1999. Historical results are not necessarily indicative of
the results to be expected in the future.
PRINCIPLES OF CONSOLIDATION
The Consolidated Financial Statements include the accounts of the Company
and all its subsidiaries. All significant intercompany balances and transactions
have been eliminated.
REVENUE RECOGNITION
Equipment and other product sales are recognized on the shipment of goods to
customers. The Company defers the revenue associated with its installation and
warranty obligations. The deferred revenue is recognized ratably over the
applicable installation and warranty periods. Service revenue is recognized in
the periods the services are rendered to customers.
COMPREHENSIVE INCOME (LOSS)
Effective June 1, 1998, the Company adopted the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 130, REPORTING COMPREHENSIVE INCOME.
SFAS No. 130 establishes standards of report and presentation of comprehensive
income and its components of net income and other comprehensive income. Other
comprehensive income pertains to revenues, expenses, gains, and losses that are
not included in net income, but rather are recorded directly in stockholders'
equity. For the years ended May 31, 1997, 1998, and 1999, the Company had one
item of other comprehensive loss related to the foreign currency translation
adjustment.
EARNINGS PER SHARE
Basic earnings per common share are based on the weighted-average number of
common shares outstanding in each year. Diluted earnings per common share
reflect the potential dilution that could occur if dilutive securities were
exercised into common shares. For all years presented the reported net income
(loss) was used in the computation of basic and diluted earnings per common
share.
A reconciliation of the shares used in the computation follows:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED MAY 31 ENDED AUGUST 31
------------------------------ -------------------
1997 1998 1999 1998 1999
-------- -------- -------- -------- --------
(SHARES IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Shares used for basic earnings per
common share...................... 10,386 10,369 10,325 10,341 10,104
Shares used for stock options having
a dilutive effect................. 809 743 -- -- 1,075
------ ------ ------ ------ ------
Shares used for diluted earnings per
share............................. 11,195 11,112 10,325 10,341 11,179
====== ====== ====== ====== ======
</TABLE>
As of May 31, 1999 there were 1,944,348 shares of stock options outstanding
to purchase the Company's common stock with a weighted-average exercise price of
approximately $5.41. These securities were not included in diluted earnings per
share for the fiscal 1999 periods as their effect was anti-dilutive, but could
potentially dilute basic earnings per share in the future.
F-8
<PAGE>
METRON TECHNOLOGY N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AUGUST 31, 1999 AND
FOR THE THREE MONTHS ENDED AUGUST 31, 1998 AND 1999 IS UNAUDITED)
CASH EQUIVALENTS
Cash equivalents are short-term, highly liquid investments with original
maturities of 90 days or less from the date of purchase.
INVENTORIES
Inventories consist primarily of purchased products and are stated at the
lower of cost (first-in, first-out basis) or net realizable value. Provision is
made for slow-moving and obsolete items.
FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS
Metron Technology N.V., Metron Technology (Asia) Ltd., and Metron Technology
(Hong Kong) Ltd. maintain their books in their respective local currencies, but
their functional currency is the U.S. dollar. Accordingly, the gains and losses
from the re-measurement of these financial statements into US dollars are
included in current results of operations. The functional currency for each of
the Company's other subsidiaries is the applicable local currency. The
translation from foreign currencies to U. S. dollars is performed for balance
sheet accounts using current exchange rates in effect at the balance sheet date
and for revenue and expense accounts using an average exchange rate during the
period. Translation gains or losses are included in "Cumulative other
comprehensive income" within shareholders' equity.
FINANCIAL INSTRUMENTS AND CREDIT RISK
The carrying value of the Company's financial instruments, including cash
and cash equivalents, and accounts receivable approximates fair value. Financial
instruments that subject the Company to concentrations of credit risk consist
primarily of cash and cash equivalents and accounts receivable.
The Company sells its products and services principally to leading well
established semiconductor companies. Credit risk is concentrated in North
America, Europe and Asia. The Company performs ongoing credit evaluations of its
customers' financial condition and, generally, requires no collateral from its
customers. The Company has had write-offs of accounts receivable, and based on
an ongoing evaluation of its accounts receivable collectibility and customer
creditworthiness, believes it has adequately provided for such losses, which
have been within management's expectations.
The Company attempts to reduce its exposure arising from foreign currency
fluctuations by matching the maturities of foreign currency assets and
liabilities, mainly accounts receivable and accounts payable. Metron enters into
forward exchange contracts that are designated to hedge differences existing
between foreign currency assets and liabilities. Any gains or losses on these
contracts are recognized in the income statement, and generally offset the
resulting gains and losses on the related balance sheet items. Metron also uses
forward exchange contracts that are designated to hedge firm purchase
commitments. Any unrealized gains or losses are deferred and realized gains or
losses adjust the carrying basis of assets acquired, principally inventory.
F-9
<PAGE>
METRON TECHNOLOGY N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AUGUST 31, 1999 AND
FOR THE THREE MONTHS ENDED AUGUST 31, 1998 AND 1999 IS UNAUDITED)
PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment is recorded at cost. Depreciation is
determined primarily by the straight-line method over the estimated useful life
of the related asset or the lease term if applicable, as follows:
<TABLE>
<S> <C>
Buildings and leasehold improvements........................ 10 - 50 years
Machinery, equipment, vehicles and fixtures................. 3 - 17 years
</TABLE>
Land is not depreciated. Gains and losses on disposals are included in
income at amounts equal to the difference between the net book value of the
disposed assets and the proceeds received upon disposal. Repair and maintenance
costs are capitalized only if they extend the useful life of the related asset.
The Company reviews the carrying value of these assets for impairment whenever
events and circumstances indicate that the carrying value of an asset may not be
recoverable from estimated future cash flows expected to result from its use and
disposition. Where undiscounted expected cash flows are less than the carrying
value, an impairment loss is recognized for the difference between the estimated
fair value and the carrying value of an asset. No impairment of property, plant,
and equipment existed at May 31, 1999.
INTANGIBLE ASSETS
Intangible assets consist primarily of goodwill, representing the excess of
the purchase price paid over the fair value of net assets acquired in a business
combination. Goodwill is amortized in selling, general, administrative, and
other expenses over ten years, using the straight-line method. The Company
periodically reviews intangible assets for recoverability using an undiscounted
cash flow approach to assess if there is impairment. If the undiscounted cash
flows are less than the carrying value, impairment is measured by the excess of
the carrying value over the undiscounted cash flows.
INVESTMENT IN JOINT VENTURES
The Company uses the equity method to account for its joint ventures. Metron
has the ability to influence the operating policies of, but does not control its
joint ventures.
INCOME TAXES
The Company uses the asset and liability method of accounting for income
taxes. Under this method deferred income taxes are provided to reflect the net
tax effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for tax
purposes.
DEFERRED REVENUE FOR WARRANTY AND INSTALLATION
Generally, the Company warrants products sold to customers to be free from
defects in material and workmanship for up to two years and defers the portion
of equipment revenue associated with its estimate of installation and warranty
obligations. Deferred revenue includes both the estimated cost of fulfilling the
obligations for installation and warranty and the related profit.
F-10
<PAGE>
METRON TECHNOLOGY N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AUGUST 31, 1999 AND
FOR THE THREE MONTHS ENDED AUGUST 31, 1998 AND 1999 IS UNAUDITED)
COMMON SHARES SUBJECT TO BUY-SELL AGREEMENT
The Company has reflected under the caption "Common shares subject to
Buy-Sell Agreement" the value as of the date of original issuance of the common
shares subject to put rights at the effective date of the Amended and Restated
Buy and Sell Agreement (the "Buy-Sell Agreement"). When shares are put to the
Company, the related value is released and reclassified to common shares. If the
offering contemplated by this prospectus is consummated, the Buy-Sell Agreement
will be terminated and the value ascribed to the put rights will be reclassified
to shareholders' equity.
The unaudited pro forma consolidated balance sheet at August 31, 1999
assumes the consummation of this offering, and reflects the value of the put
rights in shareholders' equity.
ACCOUNTING FOR STOCK OPTIONS
The Company uses the intrinsic value-based method to account for employee
stock-based compensation plans. The Company has adopted the disclosure
requirements of SFAS 123--"Accounting for Stock Based Compensation." (See
footnote 9)
2. ACQUISITION OF KYSER
On July 13, 1998, pursuant to an Agreement and Plan of Merger and
Reorganization ("Merger Agreement") dated as of June 12, 1998, the Company
acquired substantially all the outstanding shares of Kyser. Under the terms of
the Merger Agreement, each outstanding share of Kyser's common stock acquired
was converted into 16.5 shares of the Company's common shares. Accordingly, the
Company issued 1,572,453 new common shares to the shareholders of Kyser. Kyser
is a stocking distributor of materials and components which markets both
high-purity and industrial-use products in Texas and five other states.
The merger has been accounted for as a pooling of interests. There were no
transactions between the Company and Kyser prior to the combination. In
conjunction with the merger, Kyser changed its fiscal year end to coincide with
Metron's.
Certain amounts for Kyser have been reclassified to conform to the financial
statement classification followed by Metron. Since the fiscal years of Metron
and Kyser prior to May 31, 1998 differ, the consolidated statements of income
combine the operations of Kyser for its fiscal year ended July 31, 1997 with the
operations of Metron for the fiscal year ended May 31, 1997. The operations of
Metron for the year ended May 31, 1998 are combined with the operations of Kyser
for both the ten-month period ended May 31, 1998, and for the two-month period
ended July 31, 1997. Thus the two-month period ended July 31, 1997 is included
both in the Kyser fiscal year ended July 31, 1997 and the consolidated statement
of income for the fiscal year ended May 31, 1998. Accordingly, the net income of
Kyser for the two-month period ended July 31, 1997 is deducted from retained
earnings. Kyser revenue and net income for the two-month period was $8,842,000
and $185,000, respectively.
F-11
<PAGE>
METRON TECHNOLOGY N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AUGUST 31, 1999 AND
FOR THE THREE MONTHS ENDED AUGUST 31, 1998 AND 1999 IS UNAUDITED)
Total revenues and net income (loss) previously reported by the separate
enterprises prior to the acquisition were as follows.
<TABLE>
<CAPTION>
MAY 31
-----------------------
1997 1998
---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Total revenues:
Metron................................................ $255,283 $224,913
Kyser................................................. 43,293 50,111
-------- --------
$298,576 $275,024
Net income (loss):
Metron................................................ $ 4,614 $ 414
Kyser................................................. (416) 688
-------- --------
$ 4,198 $ 1,102
======== ========
</TABLE>
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
<TABLE>
<CAPTION>
MAY 31
-----------------------
1998 1999
-------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Land................................................... $ 951 $ 917
Buildings and leasehold improvements................... 4,107 4,056
Machinery, equipment, vehicles, and fixtures........... 13,338 13,141
------- -------
18,396 18,114
Less accumulated depreciation.......................... 8,495 9,962
------- -------
Property, plant and equipment.......................... $ 9,901 $ 8,152
======= =======
</TABLE>
Depreciation expense relating to property, plant and equipment for the years
ended May 31, 1997, 1998, and 1999 was $2,320,000, $2,474,000, and $2,617,000,
respectively.
4. INVESTMENT IN UNCONSOLIDATED JOINT VENTURES
The Company's interests in its joint ventures were as follows:
<TABLE>
<CAPTION>
MAY 31
-------------------------
1998 1999
-------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
FSI-CME.................................................. $2,127 $ --
FSI-CMK.................................................. 215 --
MAP...................................................... -- 185
------ ----
Investment in joint ventures............................. $2,342 $185
====== ====
</TABLE>
F-12
<PAGE>
METRON TECHNOLOGY N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AUGUST 31, 1999 AND
FOR THE THREE MONTHS ENDED AUGUST 31, 1998 AND 1999 IS UNAUDITED)
In 1995, the Company and FSI International, Inc. ("FSI"), a related party,
each acquired 50% of FSI-CME (formerly Vinylglass Ltd.). In 1998, Metron
Technology (Asia) Ltd. ("MTA"), a wholly owned subsidiary of the Company and FSI
established another joint venture in Korea, FSI-CMK. FSI-CMK was owned 65% by
FSI and 35% by MTA. The business of FSI-CMK is the design, construction,
installation, supply, support and servicing of chemical management equipment for
microelectronics fabrication facilities located within Korea. In February 1999,
the Company sold its interests in these joint ventures to FSI. Proceeds from the
sale of the Company's interests in FSI-CME and FSI-CMK amounted to $2,200,000
and $310,000, respectively. The Company recorded a gain on the sale of its
interest in FSI-CME of $123,000 and a loss on the sale of its interest in
FSI-CMK of $263,000.
During fiscal year 1999, Metron Technology (United Kingdom) Ltd., a wholly
owned subsidiary of the Company and WS Atkins Plc. formed a 50/50 joint venture
Metron Atkins Partnership Limited ("MAP"). MAP provides services to the
semiconductor industry including but not limited to design and engineering of
manufacturing facilities, facilities management, and comprehensive technical
support.
Condensed combined financial information for the unconsolidated investments
in FSI-CME, FSI-CMK, and MAP are as follows:
<TABLE>
<CAPTION>
MAY 31
-------------------------
1998 1999
-------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Current assets........................................... $6,971 $3,771
Noncurrent assets........................................ 1,536 --
Current liabilities...................................... (4,540) (3,400)
Noncurrent liabilities................................... (34) --
------ ------
Total shareholders' equity............................... 3,933 371
Other shareholder's share of equity...................... (2,059) (186)
------ ------
Metron's share of equity................................. 1,874 185
Goodwill and other items (10 year life).................. 468 --
------ ------
Investment in unconsolidated joint ventures.............. $2,342 $ 185
====== ======
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED MAY 31
------------------------------
1997 1998 1999
-------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Operating income (loss).............................. $946 $(1,804) $1,605
Net income (loss).................................... $682 $ (995) $ 705
Metron's share of net income (loss).................. $342 $ (437) $ 319
Amortization of goodwill and other intangible
items.............................................. (69) (60) (52)
---- ------- ------
Equity in net income (loss) of joint ventures........ $273 $ (497) $ 267
==== ======= ======
</TABLE>
Product sales to FSI-CME for the years ended May 31, 1997, 1998, and 1999
were $1,738,000, $632,000, and $441,000, respectively. Purchases from FSI-CME
during the same periods were $17,956,000, $6,470,000, and $4,560,000,
respectively. At May 31, 1998 and 1999, amounts receivable from joint ventures
were $49,469 and $449,000, respectively, and amounts payable were $1,035,000 and
none, respectively.
F-13
<PAGE>
METRON TECHNOLOGY N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AUGUST 31, 1999 AND
FOR THE THREE MONTHS ENDED AUGUST 31, 1998 AND 1999 IS UNAUDITED)
5. SHORT-TERM BORROWINGS AND DEBT
Short-term borrowings consist of the following:
<TABLE>
<CAPTION>
MAY 31
-----------------------
1998 1999
-------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Line of credit.......................................... $7,017 $ 7,669
Short-term credit facilities............................ 1,443 3,168
Current portion of long-term debt....................... 311 249
------ -------
Short-term borrowings and current portion of long-term
debt.................................................. $8,771 $11,086
====== =======
</TABLE>
A subsidiary of the Company has a revolving line of credit with a bank. The
line of credit provides borrowings not to exceed the lesser of $8,500,000 or a
borrowing base based upon inventory and accounts receivable, which collateralize
the line. The interest rate is 2.5% above LIBOR, and was 9.0% and 7.43% at
May 31, 1998 and 1999, respectively. The line of credit is also subject to the
maintenance of certain financial ratios and minimum levels of tangible net
worth. The Company has guaranteed the line of credit.
The Company and its subsidiaries have short-term credit facilities in
various currencies with a number of banks. Weighted average interest rates on
the outstanding facilities at May 31, 1998 and 1999 were 7.2% and 6.6%,
respectively. Certain assets of subsidiaries of the Company collateralize the
facilities. At May 31, 1999, the total amount available and unutilized under the
Company's short-term borrowings was approximately $8,000,000. The Company and
its subsidiaries have guaranteed certain short-term credit facilities.
F-14
<PAGE>
METRON TECHNOLOGY N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AUGUST 31, 1999 AND
FOR THE THREE MONTHS ENDED AUGUST 31, 1998 AND 1999 IS UNAUDITED)
Long-term debt consists of the following:
<TABLE>
<CAPTION>
MAY 31
-------------------
<S> <C> <C>
1998 1999
------ ------
<CAPTION>
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Building mortgage with The Royal Bank of Scotland plc with
an interest rate of 9.24% (9.27% in 1998) until
June 2001, and thereafter at LIBOR plus 1.5% per annum
until maturity. Principal and interest are payable in
quarterly installments through April 2006. The mortgage is
also subject to the maintenance of certain financial
ratios and minimum levels of tangible net worth........... $1,100 $ 953
Note payable to shareholder for purchase of retired treasury
shares. The note has an interest rate of 6.65%, payable in
annual installments until July 2002, and is collateralized
by an ESOP bond........................................... 310 248
Unsecured notes payable with principal and interest payable
quarterly. Two of the notes bear interest at the 6-month
Rome Interbank Offered Rate plus 1.75%, and one note bears
interest at the Italian Prime Rate plus 1.0%.............. 93 41
Various notes maturing through August 2005; interest rates
ranging from 3.4% to 7.5%................................. 263 210
------ ------
1,766 1,452
Less current portions:
Notes payable to shareholder.............................. 76 62
Long-term debt............................................ 311 249
------ ------
Long-term debt.............................................. $1,379 $1,141
====== ======
</TABLE>
Future fiscal year ("FY") annual maturities of long-term debt are as
follows: FY2000, $311,000; FY2001, $218,000; FY2002, $220,000; FY2003, $217,000;
FY2004, $155,000 and thereafter, $331,000.
F-15
<PAGE>
METRON TECHNOLOGY N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AUGUST 31, 1999 AND
FOR THE THREE MONTHS ENDED AUGUST 31, 1998 AND 1999 IS UNAUDITED)
6. RESTRUCTURING AND MERGER COSTS
The following table summarizes the restructuring and merger costs incurred
for fiscal years 1997, 1998, and 1999.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31
------------------------------------
<S> <C> <C> <C>
1997 1998 1999
---- ---- ------
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Restructuring costs................................ $ -- $261 $1,835
Merger costs (primarily professional fees)
associated with the acquisition of Kyser......... 258 620 715
---- ---- ------
Restructuring and merger costs..................... $258 $881 $2,550
==== ==== ======
</TABLE>
Restructuring costs are comprised primarily of severance costs and the early
retirement agreement ("ERA") associated with the implementation of the Company's
new organizational structure and other reductions in headcount. During fiscal
year 1998, Metron began the transition from an organizational structure based on
geography to a global organization built around the Company product lines. The
restructuring costs incurred during fiscal 1998 represent termination costs for
13 employees, primarily in finance and administration. In fiscal 1999,
approximately $856,000 pertains to the change in the organization and represents
the termination costs of 51 employees, most of whom worked in the equipment
division. At May 31, 1999, approximately $86,000 remained as a liability of the
Company.
In February 1999, the Company entered into an early retirement agreement
with one of its managing directors in connection with the termination of his
employment agreement, who had a lifetime employment agreement with the Company.
To cover the entire cost of the early retirement agreement, the Company recorded
a pre-tax charge of $979,000 in fiscal year 1999. Under the terms of the ERA,
the Managing Director resigned from his employment, and the Company agreed to
pay him a portion of his salary for the years remaining until he is eligible to
retire under the terms of his employment agreement. The Company also agreed to
provide him with certain other benefits. The present value of remaining
obligation discounted at an interest rate of 6.0% is $782,000 of which $154,000,
the current portion, is included in amounts payable to shareholders with the
remainder included in deferred credits and other long-term liabilities. The ERA
is payable monthly until March 2005.
7. RELATED PARTIES
Two of Metron's shareholders, Entegris (formerly Fluoroware) and FSI, each
own approximately 32.7% of the outstanding shares of the Company. The Company
purchases goods from these shareholders and their subsidiaries for resale in the
normal course of business under terms and conditions similar to those with
unrelated vendors. For the years ended May 31, 1997, 1998 and 1999 such
purchases totaled approximately $79,000,000, $83,400,000, and $65,300,000,
respectively. At May 31, 1998 and 1999, amounts payable to these affiliates were
$18,125,000 and $13,125,000, respectively. In addition, the Company receives
commissions from these shareholders for sales made to certain Asian customers.
For the years ended May 31, 1997, 1998 and 1999 such commissions totaled
approximately $677,000, $316,000, and $7,000, respectively. At May 31, 1998 and
1999, amounts receivable from these shareholders were $186,000 and $168,000,
respectively.
F-16
<PAGE>
METRON TECHNOLOGY N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AUGUST 31, 1999 AND
FOR THE THREE MONTHS ENDED AUGUST 31, 1998 AND 1999 IS UNAUDITED)
8. INCOME TAXES
The domestic and foreign components of income (loss) before taxes for each
year ended May 31 are as follows:
<TABLE>
<CAPTION>
YEARS ENDED MAY 31,
------------------------------
<S> <C> <C> <C>
1997 1998 1999
------ ------ -------
The Netherlands.................................... $ 360 $ 502 $ (792)
Other countries:
France........................................... (91) (91) (2,283)
Germany.......................................... 609 (1,374) (2,937)
United Kingdom................................... 1,792 764 553
Hong Kong........................................ 2,725 831 (254)
Korea............................................ (1,490) (1,460) (1,246)
United States.................................... 1,993 3,476 700
All other countries.............................. 999 (98) (489)
------ ------ -------
Income (loss) before income taxes.................. $6,897 $2,550 $(6,748)
====== ====== =======
</TABLE>
The components of income tax expense (benefit) for each year ended May 31
are as follows:
<TABLE>
<CAPTION>
YEARS ENDED MAY 31,
------------------------------
<S> <C> <C> <C>
1997 1998 1999
------ ------ -------
CURRENT:
The Netherlands.................................. $ 80 $ 117 $ (207)
Other countries:
France......................................... 303 12 (751)
Germany........................................ 115 (26) (180)
United Kingdom................................. 697 395 (132)
United States.................................. 1,497 1,735 (129)
All other countries............................ 435 347 341
------ ------ -------
Current tax...................................... 3,127 2,580 (1,058)
------ ------ -------
DEFERRED:
The Netherlands.................................. -- -- --
Other countries:
France......................................... (248) (19) 225
Germany........................................ (197) (723) (1,557)
United Kingdom................................. (3) 21 (44)
United States.................................. (321) (223) 552
All other countries............................ 341 (188) (332)
------ ------ -------
Deferred tax..................................... (428) (1,132) (1,156)
------ ------ -------
Total income taxes................................. $2,699 $1,448 $(2,214)
====== ====== =======
</TABLE>
At May 31, 1999, the Company had $9,473,000 in net operating loss
carryforwards, which represented approximately $3,100,000 of tax benefit, which
may be carried forward for periods ranging from 5 years to indefinitely. A
valuation allowance of $2,506,000 has been provided against the related deferred
tax asset because it is more likely than not that Metron will not fully utilize
these tax losses.
F-17
<PAGE>
METRON TECHNOLOGY N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AUGUST 31, 1999 AND
FOR THE THREE MONTHS ENDED AUGUST 31, 1998 AND 1999 IS UNAUDITED)
Significant components of the Company's deferred tax assets and liabilities
are set forth below.
<TABLE>
<CAPTION>
MAY 31
-------------------
<S> <C> <C>
1998 1999
------ ------
<CAPTION>
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Deferred revenue for installation and warranty............ $ 731 $ 251
Account receivable and inventory provisions............... 598 942
Unrealized foreign currency losses........................ 302 923
Accruals deductible when paid............................. 1,273 1,168
Tax loss carryforwards and other items.................... 2,261 3,264
------ ------
5,165 6,548
Less: Valuation allowance................................... 2,256 2,506
------ ------
2,909 4,042
Deferred tax liabilities.................................... 91 68
------ ------
Net deferred tax assets recorded in consolidated balance
sheets.................................................... $2,818 $3,974
====== ======
</TABLE>
Differences between the statutory income tax rate of The Netherlands and the
Company's effective income tax rate are reconciled as follows:
<TABLE>
<CAPTION>
YEARS ENDED MAY 31
------------------------------
<S> <C> <C> <C>
1997 1998 1999
---- ----- -----
Statutory income tax rate............................... 35.1% 35.1% (35.0)%
Increase (decrease) in taxes resulting from:
Tax rate differential in other countries.............. (5.7) (15.9) (6.5)
Current year net operating losses for which no benefit
is recognized....................................... -- 37.6 17.0
Utilization of prior year net operating losses for
which no benefit was previously recognized.......... -- (7.4) (2.3)
Amortization of Goodwill.............................. 2.1 6.9 2.5
All other............................................. 7.6 .5 (8.5)
---- ----- -----
Effective income tax rate............................... 39.1% 56.8% (32.8)%
==== ===== =====
</TABLE>
9. CAPITAL STOCK
CHANGES IN CAPITAL SHARES
During 1998, the Company amended and restated its Articles of Association to
include, among other things, changes in the par value and in the number of
authorized shares of its common stock. The Company increased the par value of
its common shares from NLG 0.24 to NLG 0.96, and issued one new share for each 2
shares then outstanding. As a result of the stock split, the Company issued
additional common shares, and the financial statements reflect changes in par
value and the stock split for all periods presented.
F-18
<PAGE>
METRON TECHNOLOGY N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AUGUST 31, 1999 AND
FOR THE THREE MONTHS ENDED AUGUST 31, 1998 AND 1999 IS UNAUDITED)
AMENDED AND RESTATED BUY AND SELL AGREEMENT
In conjunction with the acquisition of Transpacific Technology Corporation,
the Company and five shareholder-employees of the Company entered into an
Amended and Restated Buy and Sell Agreement (the "Buy-Sell Agreement") effective
as of July 1995. The Buy-Sell Agreement provides for the repurchase under
certain circumstances of the outstanding shares and options of the five
shareholder-employees. Under the terms of the Buy-Sell Agreement, the
shareholder-employees have certain put rights and the Company has certain call
rights on the shares and options owned by the shareholder-employees. Until
July 5, 2000, the put rights are triggered upon the occurrence of certain
specified events, namely death, permanent disability, termination of employment
of the shareholder-employee, and failure of the Company to complete a qualified
initial public offering by July 6, 2000.
Under the terms of the Buy-Sell Agreement, the maximum obligation of the
Company during any fiscal year is re-determined annually until the fiscal year
beginning June 1, 2000. In general, the Company's payment obligations are
subject to an annual limit equal to one half of the sum of the previous fiscal
year's net income and the non-cash flow items reported in the consolidated
financial statements. Any obligation remaining is carried forward to the
following fiscal year. At May 31, 1998 and 1999, the potential obligation to the
Company to settle the Buy-Sell Agreement rights for the shareholder-employees
amounted to approximately $9,700,000 and $9,000,000, respectively. Pursuant to
the payment cap provision of the Buy-Sell Agreement, the Company will have no
payment obligation for put rights exercised during fiscal 2000.
The Buy-Sell Agreement terminates upon a change in control or the completion
of a qualified initial public offering by the Company.
TREASURY SHARES
In July 1998 and May 1999, under the terms of the Buy-Sell Agreement, two
former employees exercised certain of their put rights, which required the
Company to repurchase 265,801 common shares for approximately $1,152,000.
STOCK OPTION PLAN
In fiscal 1996 the Company established an Employee Stock Option Plan to
award options to managing directors and employees, and in fiscal 1997
established a Supervisory Directors' Stock Option Plan to award options to
supervisory directors. The two plans consist of 2,362,500 common shares
(2,250,000 shares for managing directors and employees and 112,500 for
supervisory directors). The plans require that the exercise price of options be
the fair value of the common shares at the grant date, except for 1,065,948
shares awarded at amounts below fair value during the initial six-month period
following the establishment of the Plan. Deferred compensation expense of
$1,232,000 for the 1,065,948 shares was charged to income over the vesting
periods. Options generally vest over a four-year period, and are exercisable in
installments beginning one year after the grant date.
The following pro forma information has been prepared as if the Company had
accounted for its stock options using the fair value accounting method
established by SFAS No. 123--"Accounting for Stock Based Compensation."
Additional compensation expense arising from the application of SFAS 123 has
been estimated using the minimum value method from the date of grant without
F-19
<PAGE>
METRON TECHNOLOGY N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AUGUST 31, 1999 AND
FOR THE THREE MONTHS ENDED AUGUST 31, 1998 AND 1999 IS UNAUDITED)
considering the volatility of the underlying stock. For purposes of the pro
forma disclosures below, additional compensation cost is amortized to expense
over the options' vesting period.
<TABLE>
<CAPTION>
YEARS ENDED MAY 31
------------------------------
<S> <C> <C> <C>
1997 1998 1999
------ ------ -------
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Net income (loss):
As reported...................................... $4,198 $1,102 $(4,534)
Pro forma(a)..................................... $3,816 $ 761 $(4,822)
Earnings (loss) per common share
Basic
As reported.................................... $ 0.40 $ 0.11 $ (0.44)
Pro forma...................................... $ 0.37 $ 0.07 $ (0.47)
Diluted
As reported.................................... $ 0.37 $ 0.10 $ (0.44)
Pro forma...................................... $ 0.34 $ 0.07 $ (0.47)
</TABLE>
- ------------------------
(a) Based on the following assumptions for grants in fiscal years 1997, 1998,
and 1999: risk-free weighted average interest rates of 6.13%, 6.14%, and
5.16% in fiscal years 1997, 1998, and 1999, respectively; weighted average
expected option lives of 6.5 years, 5.6 years, and 4.8 years in fiscal years
1997, 1998, and 1999, respectively; and no dividend yield in each year.
There were approximately 326,000 and 45,000 shares available for future
employee awards and supervisory director awards, respectively, at May 31, 1999.
The following table summarizes award activity:
<TABLE>
<CAPTION>
1997 1998 1999
-------------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
--------- ----- --------- ----- --------- -----
Outstanding, beginning of period......... 1,410,348 $3.60 1,557,798 $3.99 1,669,998 $4.67
Stock options granted.................... 154,950 $7.70 302,700 $8.33 446,250 $7.83
Stock options exercised.................. -- -- (45,000) $2.78 (2,200) $7.00
Awards canceled.......................... (7,500) $7.08 (145,500) $5.57 (169,700) $5.46
--------- ----- --------- ----- --------- -----
Outstanding, end of period............... 1,557,798 $3.99 1,669,998 $4.67 1,944,348 $5.41
========= ===== ========= ===== ========= =====
Options exercisable at end of period..... 588,467 $3.51 666,244 $3.75 1,128,602 $3.91
========= ===== ========= ===== ========= =====
</TABLE>
F-20
<PAGE>
METRON TECHNOLOGY N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AUGUST 31, 1999 AND
FOR THE THREE MONTHS ENDED AUGUST 31, 1998 AND 1999 IS UNAUDITED)
Summary information concerning outstanding and exercisable options as of
May 31, 1999 is as follows:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
REMAINING AVERAGE AVERAGE
RANGE OF NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE
EXERCISE PRICES OUTSTANDING LIFE PRICE EXERCISABLE PRICE
- --------------------- ----------- ----------- -------- ----------- --------
<C> <C> <S> <C> <C> <C>
$0.00 - $2.78 885,948 6.1 yrs $ 2.78 824,951 $ 2.78
$2.79 - $6.16 229,650 5.9 yrs $ 6.16 175,047 $ 6.16
$6.17 - $7.00 8,400 5.5 yrs $ 7.00 4,200 $ 7.00
$7.01 - $7.83 421,500 8.9 yrs $ 7.83 8,377 $ 7.83
$7.84 - $8.00 129,600 6.0 yrs $ 8.00 49,804 $ 8.00
$8.01 - $8.33 269,250 7.5 yrs $ 8.33 66,223 $ 8.33
--------- ---------
1,944,348 1,128,602
========= =========
</TABLE>
Market price is the fair value of the Company's common stock as determined
by the Plan Committee on the grant date. All options issued during the past
three years have an exercise price equal to the market price on the date of
grant. The weighted average fair values below have been determined using the
Minimum Value Method.
<TABLE>
<CAPTION>
YEARS ENDED MAY 31
------------------------------
<S> <C> <C> <C>
1997 1998 1999
-------- -------- --------
Options granted............................... 154,950 302,700 446,250
Weighted average exercise price............... $ 7.70 $ 8.33 $ 7.83
Weighted average fair value................... $ 2.51 $ 2.35 $ 1.66
</TABLE>
10. EMPLOYEE BENEFITS
Most employees of the Company are covered by one of several defined
contribution retirement plans. Contributions are generally based on the
participant's compensation. The amount of pension expense charged to operating
expenses for defined contribution plans was $659,000 in fiscal 1997, $956,000 in
fiscal 1998, and $1,140,000 in fiscal 1999.
Kyser has an employee stock ownership plan ("ESOP") for its employees. Upon
the acquisition of Kyser, all Kyser shares held by the ESOP were exchanged for
shares of the Company. The subsidiary's full time employees generally become
eligible to participate after 12 months of continuous service. The cost of the
ESOP may be paid by the subsidiary or through contributions made by the
subsidiary to the ESOP in amounts determined by the Board of Directors. Shares
of common stock acquired from terminated employees by the plan and forfeitures
by terminated participants are allocated to each eligible participant account
under the plan. Participants are eligible for a distribution in the sixth year
after normal termination and in the second year after termination for
retirement, death, or disability. Participants vest in amounts allocated to them
according to a vesting schedule. Distributions of participant accounts to
participants in either cash or the Company's common stock may be made in the
event of termination, retirement, death or disability. To the extent the
participant elects to receive common stock in the event of retirement, death or
disability, and the common stock is not readily
F-21
<PAGE>
METRON TECHNOLOGY N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AUGUST 31, 1999 AND
FOR THE THREE MONTHS ENDED AUGUST 31, 1998 AND 1999 IS UNAUDITED)
tradable in an established market, such common stock may be put to the Company
during the put option period at the then current fair value.
11. FINANCIAL INSTRUMENTS
The carrying value of accounts receivable, accounts payable and long-term
debt approximate fair value. At May 31, 1999 the Company had aggregate forward
exchange contracts in various currencies as follows:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
CONTRACT AMOUNT EXCHANGE
US $ BUY SELL RATE FAIR VALUE EXPIRATION DATE
- --------------- ----------------- ----------------- -------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
$3,773,000 -- Singapore Dollars 1.69 $ 98,319 January 2000
$4,889,000 Japanese Yen 107.26 (1,439) March 2000
$2,022,000 Singapore Dollars 1.67 3,578 January 2000
$1,700,000 Italian Lira 1,864.90 5,492 July 1999
$500,000 British Pounds 1.63 (475) June 1999
$700,000 Deutsch Mark 1.79 (36,445) July 1999
--------
$ 69,030
========
</TABLE>
The building mortgage with the Royal Bank of Scotland plc interest rate
comprises a variable LIBOR rate, a fixed rate of 1.5%, and a regulatory bank
charge. In May 1996 the Company entered into an interest rate swap, expiring
June 2001, to convert the variable LIBOR portion of the interest rate to a fixed
interest rate of 7.72%. The interest rates at May 31, 1998 and 1999 for the
mortgage were 9.25% and 6.87%, while the interest rates for the swap were 9.27%
and 9.24%, respectively. At May 31, 1999, the notional amount for the interest
rate swap was $1,002,000 and its estimated fair value was a payable of $43,000.
12. COMMITMENTS
At May 31, 1999, Metron was committed to spending approximately $21,900,000,
principally to purchase equipment, materials, and spare parts for resale.
The Company and its subsidiaries lease certain facilities and equipment
under various operating lease agreements. Future minimum payments under
operating leases that have initial or remaining noncancelable lease terms of one
year or more consist of the following at May 31, 1999.
<TABLE>
<CAPTION>
FISCAL YEAR (DOLLARS IN THOUSANDS)
- ----------- ----------------------
<S> <C>
2000..................................................... $2,579
2001..................................................... 1,906
2002..................................................... 739
2003..................................................... 448
2004..................................................... 209
Thereafter............................................... 1,208
------
Total minimum lease payments............................. $7,089
======
</TABLE>
F-22
<PAGE>
METRON TECHNOLOGY N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AUGUST 31, 1999 AND
FOR THE THREE MONTHS ENDED AUGUST 31, 1998 AND 1999 IS UNAUDITED)
The Company's rental expense for operating leases for the fiscal years ended
May 31, 1997, 1998 and 1999, was $2,919,000, $2,976,000, and $3,330,000
respectively.
13. ADDITIONAL SALES INFORMATION AND CONCENTRATION OF RISK
In fiscal 1997, sales to Siemens and IBM represented approximately 11.4% and
11.3%, of net revenues, respectively. In fiscal 1998 and 1999, no individual
customer represented sales of 10% or more of operating revenues.
A large portion of the Company's sales is made to a number of major publicly
owned corporations. There is a concentration of credit risk in accounts
receivable from these customers. Metron performs ongoing credit evaluations of
its customers and generally does not require collateral. Although the credit
risk associated with nonpayment from these customers is affected by conditions
or occurrences within their industry, accounts receivable from these customers
were substantially current at May 31, 1999. The Company believes that there is
no significant credit risk with respect to these receivables.
14. SEGMENT AND GEOGRAPHIC DATA
The Company implemented SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," as of June 1, 1998. This Statement
establishes standards for the reporting of information pertaining to operating
segments in annual and in interim financial reports issued to shareholders.
Previously reported amounts are not presented to compare with operating results
for fiscal year 1999, except for net revenues. The Company is unable to restate
reported amounts in fiscal years 1997 and 1998 due to the reorganization 1999 of
its management structure to coincide with its product lines beginning in fiscal
1999.
The Company operates predominantly in the semiconductor industry. This
involves the marketing, sales, and service of semiconductor manufacturing and
test equipment and materials. Reportable segments are based on the way the
Company is organized, reporting responsibilities to the chief operating officer,
and on the nature of the products offered to customers. Reportable segments are
the equipment division (which includes equipment including certain specialized
process chemicals, and spare part sales, and equipment service), the materials
division (which includes components used in construction and maintenance), and
other which includes finance, administration and corporate functions.
The accounting policies of the segments are the same as those described in
Note 1 Summary of Significant Accounting Policies. Segment operating results are
measured based on profit (loss) before tax, adjusted if necessary, for certain
segment specific items. There are no inter-segment sales. Identifiable assets
are the Company's assets that are identified with classes of similar products or
operations in each geographic region. Corporate assets include primarily cash,
equity investments and administrative headquarters assets of the Company.
F-23
<PAGE>
METRON TECHNOLOGY N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AUGUST 31, 1999 AND
FOR THE THREE MONTHS ENDED AUGUST 31, 1998 AND 1999 IS UNAUDITED)
SEGMENT INFORMATION
<TABLE>
<CAPTION>
EQUIPMENT MATERIALS
DIVISION DIVISION OTHER TOTAL
--------- --------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Year ended May 31, 1997
Net revenues...................................... $187,944 $110,632 $ -- $298,576
Year ended May 31, 1998
Net revenues...................................... $151,610 $123,414 $ -- $275,024
Year ended May 31, 1999
Net revenues...................................... $127,420 $101,198 $ -- $228,618
Depreciation expense.............................. $ 794 $ 475 $ 1,348 $ 2,617
Interest income................................... $ -- $ -- $ 438 $ 438
Interest expense.................................. $ -- $ -- $ 913 $ 913
Operating income (loss) before tax................ $ 3,161 $ 8,384 $(18,293) $ (6,748)
Assets............................................ $ 35,424 $ 48,635 $ 15,566 $ 99,625
Capital expenditures.............................. $ 409 $ 341 $ 619 $ 1,369
Three months ended August 31, 1998 (unaudited)
Net revenues...................................... $ 33,893 $ 23,029 $ -- $ 56,922
Operating income (loss) before tax................ $ 721 $ 2,308 $ (4,830) $ (1,801)
Assets............................................ $ 39,575 $ 28,303 $ 32,482 $100,360
Three months ended August 31, 1999 (unaudited)
Net revenues...................................... $ 36,807 $ 32,666 $ -- $ 69,473
Operating income (loss) before tax................ $ 1,877 $ 3,196 $ (3,421) $ 1,652
Assets............................................ $ 42,844 $ 30,371 $ 39,216 $112,431
</TABLE>
F-24
<PAGE>
METRON TECHNOLOGY N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AUGUST 31, 1999 AND
FOR THE THREE MONTHS ENDED AUGUST 31, 1998 AND 1999 IS UNAUDITED)
GEOGRAPHIC INFORMATION
<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED MAY 31 ENDED AUGUST 31
------------------------------ -------------------
1997 1998 1999 1998 1999
-------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net revenues:
United States........................... $ 59,884 $ 66,505 $ 54,285 $ 13,597 $ 18,423
Germany................................. 60,639 44,425 32,059 9,057 9,701
United Kingdom.......................... 58,645 47,483 30,952 6,806 7,702
France.................................. 36,512 29,393 17,701 5,525 4,867
Hong Kong............................... 33,342 29,218 27,672 7,148 9,535
Singapore............................... 21,148 17,155 29,000 6,415 8,610
The Netherlands......................... 9,126 14,219 10,780 3,516 2,558
Other nations........................... 19,280 26,626 26,169 4,858 8,077
-------- -------- -------- -------- --------
Geographic totals......................... $298,576 $275,024 $228,618 $ 56,922 $ 69,473
======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
MAY 31 AUGUST 31
------------------- -------------------
1998 1999 1998 1999
-------- -------- -------- --------
(DOLLARS IN (UNAUDITED)
THOUSANDS)
<S> <C> <C> <C> <C>
Assets:
United States............................................ $ 30,798 $23,171 $ 22,313 $ 27,309
Germany.................................................. 16,120 12,330 12,416 13,745
United Kingdom........................................... 22,276 13,868 16,477 14,060
Singapore................................................ 9,262 24,910 15,869 19,432
Hong Kong................................................ 14,302 11,821 7,181 12,706
The Netherlands.......................................... 6,855 5,787 5,972 5,578
Other nations............................................ 14,548 7,738 20,132 19,601
-------- ------- -------- --------
Geographic totals.......................................... $114,161 $99,625 $100,360 $112,431
======== ======= ======== ========
</TABLE>
F-25
<PAGE>
METRON TECHNOLOGY N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AUGUST 31, 1999 AND
FOR THE THREE MONTHS ENDED AUGUST 31, 1998 AND 1999 IS UNAUDITED)
15. SUPPLEMENTAL FINANCIAL INFORMATION
<TABLE>
<CAPTION>
MAY 31
-------------------
1998 1999
-------- --------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Other current liabilities:
Customer prepayments...................................... $2,143 $1,321
Accrued taxes including income taxes...................... 2,577 2,150
Project costs............................................. 840 1,677
Other..................................................... 1,285 2,529
------ ------
Total other current liabilities............................. $6,845 $7,677
====== ======
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED MAY 31
------------------------------
1997 1998 1999
-------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Other income (expense):
Foreign exchange gain (loss).............................. $ (578) $ 489 $ 211
Interest income........................................... 487 514 438
Interest expense.......................................... (1,260) (1,110) (913)
Loss on sale of joint ventures............................ -- -- (140)
Miscellaneous income...................................... 749 36 7
------- ------- -----
Other income (expense)...................................... $ (602) $ (71) $(397)
======= ======= =====
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED MAY 31
------------------------------
1997 1998 1999
-------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Supplemental cash flow information:
Cash payments for:
Interest................................................ $1,312 $ 982 $ 930
Income taxes............................................ $3,210 $3,622 $(604)
Noncash transactions:
Issuance of shares for license.......................... $ 52 $ -- $ --
Deferred compensation................................... $ -- $ (38) $ --
</TABLE>
F-26
<PAGE>
METRON TECHNOLOGY N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AUGUST 31, 1999 AND
FOR THE THREE MONTHS ENDED AUGUST 31, 1998 AND 1999 IS UNAUDITED)
16. QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
-------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Year ended May 31, 1998
Net revenues.......................................... $61,552 $72,209 $78,249 $63,014
Operating income...................................... $ 1,325 $ 158 $ 1,364 $ 271
Net income (loss)..................................... $ 886 $ (308) $ 563 $ (39)
Basic net income (loss) per share..................... $ 0.09 $ (0.03) $ 0.05 $ 0.00
Diluted net income (loss) per share................... $ 0.08 $ (0.03) $ 0.05 $ 0.00
Year ended May 31, 1999
Net revenues.......................................... $56,922 $51,296 $56,559 $63,840
Operating income (loss)............................... $(1,801) $(2,595) $(2,832) $ 610
Net income (loss)..................................... $(1,266) $(1,513) $(1,899) $ 144
Basic net income (loss) per share..................... $ (0.12) $ (0.15) $ (0.18) $ 0.01
Diluted net income (loss) per share................... $ (0.12) $ (0.15) $ (0.18) $ 0.01
</TABLE>
17. RECENT ACCOUNTING PRONOUNCEMENT
In June 1998, FASB issued SFAS No. 133, ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES, which, as amended, becomes effective for
fiscal years beginning after June 15, 2000, with early adoption encouraged. The
pronouncement requires companies to record derivatives on the balance sheet as
assets or liabilities, measured at fair value. Gains or losses resulting from
changes in the value of those derivatives would be accounted for depending on
the use of the derivative and whether it qualifies for hedge accounting. The
Company is presently analyzing this statement and the impact, if any, on the
Company's financial statements.
18. DIVIDEND RESTRICTION
Pursuant to the Company's Articles of Incorporation and Dutch law, the
Company has available for distribution to its shareholders approximately
$22,000,000.
19. SUBSEQUENT EVENTS
In July 1999, the Supervisory Board of the Company reserved an additional
500,000 shares for future grant under the Employee Stock Option Plan.
In October 1999 the Supervisory Board of the Company reserved an additional
112,500 shares for future grant under the Supervisory Directors' Stock Option
Plan.
On November 17, 1999, the Company amended its Articles of Association to
convert from a B.V. to an N.V. under the laws of The Netherlands, to increase
the number of authorized preferred shares from 1,500,000 to 10,000,000 and the
number of authorized common shares from 23,500,000 to 40,000,000 and to remove
the mandatory reserve of $7,000,000 created in connection with the Buy-Sell
Agreement.
F-27
<PAGE>
[Photographs of selected materials and equipment marketed and sold by Metron.]
<PAGE>
- ------------------------------------------------------------
- ------------------------------------------------------------
3,750,000 SHARES
<TABLE>
<S> <C>
[METRON TECHNOLOGY LOGO]
</TABLE>
------------
Prospectus
, 1999
-------------------
BANC OF AMERICA SECURITIES LLC
SG COWEN
U.S. BANCORP PIPER JAFFRAY
Until , 1999 (25 days after the date of this prospectus), all
dealers effecting transactions in the common shares, whether or not
participating in this distribution, may be required to deliver a prospectus.
This is in addition to the obligation of dealers to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
- ------------------------------------------------------------
- ------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the registrant in connection
with the distribution of the common shares being registered. All amounts are
estimated, except the SEC Registration Fee, the NASD Filing Fee and the Nasdaq
National Market Filing Fee:
<TABLE>
<S> <C>
SEC Registration Fee........................................ $ 15,985
NASD Filing Fee............................................. 6,250
Nasdaq National Market Filing Fee........................... 84,875
Blue Sky Fees and Expenses.................................. 10,000
Accounting Fees............................................. 150,000
Legal Fees and Expenses..................................... 265,000
Transfer Agent and Registrar Fees........................... 10,000
Printing and Engraving...................................... 100,000
Miscellaneous............................................... 7,890
--------
Total................................................... $650,000
========
</TABLE>
- ------------------------
* To be supplied by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Metron has entered into indemnification agreements with certain of its
managing directors, providing for indemnification by Metron against any
liability to which a managing director may be subject for judgments,
settlements, penalties, fees and expenses of defense (including attorney's fees,
bonds and costs of investigation), arising out of or in any way related to acts
or omissions as a member of the management board, or an executive officer, or in
any other capacity in which services are rendered to Metron or its subsidiaries.
Metron believes that the indemnification agreements will assist Metron in
attracting and retaining qualified individuals to serve as managing directors.
The agreements provide that a managing director is not entitled to
indemnification under these agreements under certain circumstances including
(i) if indemnification is expressly prohibited under applicable law and (ii) if
indemnification is expressly prohibited by Metron's articles.
Generally, under Dutch law, a director will not be held personally liable
for decisions made with reasonable business judgment, absent self dealing or, in
the event of bankruptcy, which do not qualify as clearly improper performance.
In addition, indemnification may not be available to directors or officers under
Dutch law if any act or omission by a director or officer would qualify as
willful misconduct or gross negligence (including not taking action to prevent
the consequences of improper performance by the board). Due to lack of
applicable case law, it is not clear whether indemnification is available in
case of breach of securities laws of the United States.
Under the Metron articles, except in case of willful misfeasance, bad faith
or gross negligence or improper personal benefit, every person or legal entity
who is, or has been, a managing director, supervisory director, or an officer
with the power to represent Metron, employee or agent of Metron, who is made a
party or is threatened to be made a party to any claim by virtue of such
capacity, shall be indemnified by Metron, to the fullest extent permitted under
any applicable law against (i) any and all liabilities imposed on him or it,
(ii) any and all expenses and (iii) any and all amounts paid in settlement by
him or it, in each case in connection with any such claim.
II-1
<PAGE>
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Since June 1, 1996, Metron has sold and issued the following unregistered
securities (references to shares of common stock reflect a three for two stock
split on April 22, 1998):
(1) On December 12, 1996, Metron issued 7,500 common shares to D.E. Lund
in exchange for the rights to use the name Metron in Texas, valued at
$52,000;
(2) On November 25, 1997, Metron issued 7,500 common shares to A. Inoue
in exchange for cash in the amount of $62,475;
(3) On July 18, 1998, Metron issued an aggregate of 1,582,683 common
shares valued at $12,392,407 to the former shareholders of T.A. Kyser Co. in
connection with a merger transaction in which Kyser became a wholly-owned
subsidiary of Metron, 10,230 have since been returned to Metron in
accordance with the Agreement and Plan of Merger and Reorganization entered
into a connection with the transaction; and
(4) As of August 31, 1999, Metron has granted options to purchase
2,466,948 common shares to employees, directors and consultants pursuant to
its Employee Stock Option Plan and 1997 Supervisory Directors' Stock Option
Plan. Of these options, 433,400 shares have been canceled without being
exercised, 47,200 shares have been exercised, 45,000 shares of which have
been repurchased and 2,200 shares remain outstanding.
The sales and issuances of securities in the transactions described in
paragraphs 1 and 2 above were deemed to be exempt from registration under the
Securities Act by virtue of Section 4(2) as a transaction not involving a public
offering.
The sale and issuance of securities in the transaction described in
paragraph 3 above was deemed to be exempt from registration under the Securities
Act by virtue of Section 4(2) and Rule 506 of Regulation D promulgated
thereunder as a transaction by an issuer not involving any public offering.
The sale and issuance of securities described in paragraph 4 above were
deemed to be exempt from registration under the Securities Act by virtue of
Rule 701 promulgated thereunder.
There were no underwritten offerings employed in connection with any of the
transactions set forth in Item 15(a).
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement
2.1+ Agreement and Plan of Merger and Reorganization among Metron
Technology B.V., Metron Acquisition Sub, Inc. and T.A.
Kyser Co., dated June 12, 1998
2.2+ Amendment to Agreement and Plan of Merger and Reorganization
among Metron Technology B.V., Metron Acquisition
Sub, Inc. and T.A. Kyser Co., dated July 13, 1998
2.3+ Joinder Agreement among certain stockholders of T.A. Kyser
Co, Metron Technology B.V. and Metron Acquisition
Sub, Inc. dated July 13, 1998
3.1 Articles of Association of the Registrant and translation
thereof
4.1 Reference is made to Exhibits 3.1, 10.23, 10.24 and 10.26
4.2+ Specimen Common Share Certificate
5.1 Form of Opinion of Nauta Dutilh
10.1+ 1997 Supervisory Directors' Stock Option Plan
10.2+ Form of 1997 Supervisory Directors' Stock Option Agreement
10.3+ Amended and Restated Metron Technology N.V. Employee Stock
Option Plan
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <S>
10.4+ Form of Metron Technology N.V. Employee Stock Option
Agreement (for employees in countries other than the
United States and the United Kingdom)
10.5+ Form of Metron Technology N.V. Employee Stock Option
Agreement (for employees in the United States)
10.6+ Form of Metron Technology N.V. Employee Stock Option
Agreement (for employees in the United Kingdom)
10.7+ Aufhebungs und Ruhestandsvertrag (Cancellation and Early
Retirement Agreement) between Metron Technology
(Deutschland) GmbH, Metron Technology B.V. and Udo Jaensch
dated February 2, 1999 and translation thereof
10.8+ Share Purchase Agreement (CME) between FSI
International, Inc. and Metron Technology B.V. dated
February 27, 1999
10.9+ Share Purchase Agreement (CMK) between FSI
International, Inc. and Metron Technology B.V. dated
February 27, 1999
10.10+ Agreement to Terminate Joint Venture Agreements and
Distribution Agreement between FSI International, Inc. and
Metron Technology B.V. dated May 18, 1999
10.11+ FSI/Metron Distribution Agreement dated March 31, 1998
between FSI International, Inc. and Metron Technology B.V.
10.12+ Distribution Agreement dated July 6, 1995 between
Fluoroware, Inc. (now a wholly-owned subsidiary of
Entegris, Inc.) and Metron Semiconductors Europa B.V. (now
Metron Technology N.V.)
10.13+ U.S. Stocking Distributor Five-Year Agreement as of
September 1, 1997 between Fluoroware, Inc. and Kyser
Company
10.14+ Form of Employment Agreement among Metron Technology B.V.,
Metron Technology Corporation and Edward D. Segal,
Michael A. Grandinetti, Peter V. Leigh and Keith Reidy
10.15+ Managing Director Service Agreement between Metron
Technology (U.K.) Ltd. and John Christopher Levett-Prinsep
dated May 1, 1996.
10.16+ Employment Agreement dated July 13, 1998 among T.A. Kyser
Co., Metron Technology Corporation, Metron Technology B.V.
and Garry Hendricks
10.17+ Metron Technology Employee Stock Purchase Plan
10.18+ T.A. Kyser Co. Employee Stock Ownership Trust as amended and
restated March 17, 1997
10.19+ Amendment No. 1 dated July 13, 1998 to the T.A. Kyser Co.
Employee Stock Ownership Trust
10.20+ T.A. Kyser Co. Employee Stock Ownership Plan as amended and
restated March 17, 1997
10.21+ Amendment No. 1 dated June 12, 1998 to the T.A. Kyser Co.
Employee Stock Ownership Plan
10.22+ Amendment No. 2 dated July 13, 1998 to the T.A. Kyser Co.
Employee Stock Ownership Plan
10.23+ Investors Rights Agreement dated July 6, 1995 among Metron
Semiconductors Europa B.V. and the Investors as defined
therein
10.24+ Accession Agreement dated October 15, 1998 among Metron
Technology B.V., the Original Parties as defined therein,
Segal Investments, L.P., M. Segal, N. Segal, M. Segal as
trustee of the Matthew Dean Segal 1997 Trust and N. Segal
as trustee of the Matthew Dean Segal 1997 Trust
10.25+ Confirmation Agreement dated October 15, 1998 among Metron
Technology B.V. and the Investors as defined in the
Investor Rights Agreement of July 6, 1995
10.26+ Accession Agreement dated July 13, 1998 among Metron
Technology B.V., the Stockholders and the Signing
Stockholders as defined therein
10.27+ Consent Agreement dated July 13, 1998 among Metron
Technology B.V. and the Investors as defined therein
10.28+ Incentive Compensation Plan for Edward D. Segal FY2000
</TABLE>
II-3
<PAGE>
<TABLE>
<C> <S>
10.29+ Incentive Compensation Plan for Michael A. Grandinetti
FY2000
10.30+ Incentive Compensation Plan for Peter V. Leigh FY2000
10.31+ Incentive Compensation Plan for J. Christopher
Levett-Prinsep FY2000
10.32+ Incentive Compensation Plan for Keith Reidy FY2000
10.33+ Amended and Restated Buy and Sell Agreement among Metron
Technology B.V. and the Significant Shareholders as
defined therein, as of July 6, 1995.
10.34+ Form of Indemnification Agreement among Metron Technology
B.V. and the Investors as defined therein
10.35+ Employment Agreement dated September 1, 1999 among Metron
Technology B.V., Metron Technology Corporation and
Edward D. Segal
10.36+ Employment Agreement dated September 1, 1999 among Metron
Technology B.V., Metron Technology Corporation and
Michael A. Grandinetti
10.37+ Employment Agreement dated September 1, 1999 among Metron
Technology B.V., Metron Technology Corporation and
Peter V. Leigh
10.38+ Employment Agreement dated September 1, 1999 among Metron
Technology B.V., Metron Technology Corporation and Keith
Reidy
21.1+ List of Subsidiaries of the Registrant
23.1 Consent of KPMG LLP, independent auditors
23.2 Consent of Nauta Dutilh (included in Exhibit 5.1)
23.3+ Consent of Cooley Godward LLP
24.1+ Power of Attorney
27.1 Financial Data Schedule
99.1+ Consent of Sho Nakanuma
</TABLE>
- ------------------------
* To be filed by amendment.
+ Previously filed.
(b) Financial Statement Schedules
Metron Technology N.V., Schedule II--Valuation and Qualifying Accounts.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers, and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
II-4
<PAGE>
497(h) under the Act shall be deemed to be a part of this Registration
Statement as of the time it was declared effective.
(2) For purposes of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Registrant has
duly caused this Amendment No. 3 to the Registration Statement to be signed on
its behalf, by the undersigned, thereunto duly authorized, in the City of
Burlingame, County of San Mateo, State of California, on November 17, 1999.
<TABLE>
<S> <C> <C>
METRON TECHNOLOGY N.V.
By: /s/ PETER V. LEIGH
-----------------------------------------
Peter V. Leigh
VICE PRESIDENT, FINANCE
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 3 to the Registration Statement on Form S-1 has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
*
------------------------------------------- Supervisory Board Member November 17, 1999
Robert R. Anderson
*
------------------------------------------- Supervisory Board Member November 17, 1999
James E. Dauwalter
*
------------------------------------------- Supervisory Board Member November 17, 1999
Joel A. Elftmann
President and Chief
* Executive Officer and
------------------------------------------- Managing Director November 17, 1999
Edward D. Segal (Principal Executive
Officer)
Vice President, Finance and
/s/ PETER V. LEIGH Chief Financial Officer
------------------------------------------- and Managing Director November 17, 1999
Peter V. Leigh (Principal Financial and
Accounting Officer)
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Executive Vice President,
------------------------------------------- Equipment Division and November 17, 1999
J. Christopher Levett-Prinsep Managing Director
* Executive Vice President,
------------------------------------------- Materials Division and November 17, 1999
Michael A. Grandinetti Managing Director
* Vice Chairman of
------------------------------------------- T.A. Kyser Co. and November 17, 1999
C. Garry Hendricks Managing Director
*
------------------------------------------- Vice President, Marketing November 17, 1999
Keith Reidy and Managing Director
*By: /s/ PETER V. LEIGH
---------------------------------------
Peter V. Leigh
(ATTORNEY-IN-FACT)
</TABLE>
II-7
<PAGE>
METRON TECHNOLOGY N.V.
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D COL. E
- ---------------------------------------- ------------ ----------------------- --------- ----------
ADDITIONS
-----------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING OF COSTS AND OTHER END OF
DESCRIPTION PERIOD EXPENSES ACCOUNTS DEDUCTION PERIOD
- ---------------------------------------- ------------ ---------- ---------- --------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Deducted from asset accounts:
Year ended May 31, 1997:
Allowance for doubtful accounts..... $ 749 $ 1,533 $ -- $ 508 $ 1,774
======= ======= ======= ======= =======
Inventory valuation allowance....... $ 2,247 $ 2,038 $ -- $ 949 $ 3,336
======= ======= ======= ======= =======
Deducted from asset accounts:
Year ended May 31, 1998:
Allowance for doubtful accounts..... $ 1,774 $ 434 $ -- $ 1,393 $ 815
======= ======= ======= ======= =======
Inventory valuation allowance....... $ 3,336 $ 2,644 $ -- $ 1,655 $ 4,325
======= ======= ======= ======= =======
Deducted from asset accounts:
Year ended May 31, 1999:
Allowance for doubtful accounts..... $ 815 1,029 $ -- $ 532 $ 1,312
======= ======= ======= ======= =======
Inventory valuation allowance....... $ 4,325 $ 2,696 $ -- $ 1,014 $ 6,007
======= ======= ======= ======= =======
</TABLE>
S-1
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- --------------------- -----------
<C> <S>
1.1 Form of Underwriting Agreement
2.1+ Agreement and Plan of Merger and Reorganization among Metron
Technology B.V., Metron Acquisition Sub, Inc. and
T.A. Kyser Co., dated June 12, 1998
2.2+ Amendment to Agreement and Plan of Merger and Reorganization
among Metron Technology B.V., Metron Acquisition
Sub, Inc. and T.A. Kyser Co., as of July 13, 1998
2.3+ Joinder Agreement among certain stockholders of
T.A. Kyser Co., Metron Technology B.V. and Metron
Acquisition Sub, Inc. dated July 13, 1998
3.1 Articles of Association of the Registrant and translation
thereof
4.1 Reference is made to Exhibits 3.1, 10.23, 10.24 and 10.26
4.2+ Specimen Common Share Certificate
5.1 Form of Opinion of Nauta Dutilh
10.1+ 1997 Supervisory Directors' Stock Option Plan
10.2+ Form of 1997 Supervisory Directors' Stock Option Agreement
10.3+ Amended and Restated Metron Technology N.V. Employee Stock
Option Plan
10.4+ Form of Metron Technology N.V. Employee Stock Option
Agreement (for employees in countries other than the
United States and the United Kingdom)
10.5+ Form of Metron Technology N.V. Employee Stock Option
Agreement (for employees in the United States)
10.6+ Form of Metron Technology N.V. Employee Stock Option
Agreement (for employees in the United Kingdom)
10.7+ Aufhebungs und Ruhestandsvertrag (Cancellation and Early
Retirement Agreement) between Metron Technology
(Deutschland) GmbH, Metron Technology B.V. and Udo Jaensch
dated February 2, 1999 and translation thereof
10.8+ Share Purchase Agreement (CME) between FSI
International, Inc. and Metron Technology B.V. dated
February 27, 1999
10.9+ Share Purchase Agreement (CMK) between FSI
International, Inc. and Metron Technology B.V. dated
February 27, 1999
10.10+ Agreement to Terminate Joint Venture Agreements and
Distribution Agreement between FSI International, Inc. and
Metron Technology B.V. dated May 18, 1999
10.11+ FSI/Metron Distribution Agreement dated March 31, 1998
between FSI International, Inc. and Metron
Technology B.V.
10.12+ Distribution Agreement dated July 6, 1995 between
Fluoroware, Inc. (now a wholly-owned subsidiary of
Entegris, Inc.) and Metron Semiconductors Europa B.V. (now
Metron Technology N.V.)
10.13+ U.S. Stocking Distributor Five-Year Agreement as of
September 1, 1997 between Fluoroware, Inc. and Kyser
Company
10.14+ Form of Employment Agreement among Metron Technology B.V.,
Metron Technology Corporation and Edward D. Seal,
Michael A. Grandinetti, Peter V. Leigh and Keith Reidy
10.15+ Managing Director Service Agreement between Metron
Technology (U.K.) Ltd. and John Christopher Levett-Prinsep
dated May 1, 1996.
10.16+ Employment Agreement dated July 13, 1998 among
T.A. Kyser Co., Metron Technology Corporation, Metron
Technology B.V. and Garry Hendricks
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- --------------------- -----------
<C> <S>
10.17+ Metron Technology Employee Stock Purchase Plan
10.18+ T.A. Kyser Co. Employee Stock Ownership Trust as amended and
restated March 17, 1997
10.19+ Amendment No. 1 dated July 13, 1998 to the T.A. Kyser Co.
Employee Stock Ownership Trust
10.20+ T.A. Kyser Co. Employee Stock Ownership Plan as amended and
restated March 17, 1997
10.21+ Amendment No. 1 dated June 12, 1998 to the T.A. Kyser Co.
Employee Stock Ownership Plan
10.22+ Amendment No. 2 dated July 13, 1998 to the T.A. Kyser Co.
Employee Stock Ownership Plan
10.23+ Investors Rights Agreement dated July 6, 1995 among Metron
Semiconductors Europa B.V. and the investors as defined
therein
10.24+ Accession Agreement dated October 15, 1998 among Metron
Technology B.V., the Original Parties as defined therein,
Segal Investments, L.P., M. Segal, N. Segal, M. Segal as
trustee of the Matthew Dean Segal 1997 Trust and N. Segal
as trustee of the Ned Douglas Segal 1997 Trust
10.25+ Confirmation Agreement dated October 15, 1998 among Metron
Technology B.V. and the Investors as defined in the
Investor Rights Agreement of July 6, 1995
10.26+ Accession Agreement dated July 13, 1998 among Metron
Technology B.V., the Stockholders and the Signing
Stockholders as defined therein
10.27+ Consent Agreement dated July 13, 1998 among Metron
Technology B.V. and the Investors as defined therein
10.28+ Incentive Compensation Plan for Edward D. Segal FY2000
10.29+ Incentive Compensation Plan for Michael A. Grandinetti
FY2000
10.30+ Incentive Compensation Plan for Peter V. Leigh FY2000
10.31+ Incentive Compensation Plan for J. Christopher
Levett-Prinsep FY2000
10.32+ Incentive Compensation Plan for Keith Reidy FY2000
10.33+ Amended and Restated Buy and Sell Agreement among Metron
Technology B.V. and the Significant Shareholders as
defined therein, as of July 6, 1995
10.34+ Form of Indemnification Agreement among Metron Technology
B.V. and the Investors as defined therein
10.35+ Employment Agreement dated September 1, 1999 among Metron
Technology B.V., Metron Technology Corporation and Edward
D. Segal
10.36+ Employment Agreement dated September 1, 1999 among Metron
Technology B.V., Metron Technology Corporation and Michael
A. Grandinetti
10.37+ Employment Agreement dated September 1, 1999 among Metron
Technology B.V., Metron Technology Corporation and Peter
V. Leigh
10.38+ Employment Agreement dated September 1, 1999 among Metron
Technology B.V., Metron Technology Corporation and Keith
Reidy
21.1+ List of Subsidiaries of the Registrant
23.1 Consent of KPMG LLP, independent auditors
23.2 Consent of Nauta Dutilh (included in Exhibit 5.1)
23.3+ Consent of Cooley Godward LLP
24.1+ Power of Attorney
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- --------------------- -----------
<C> <S>
27.1 Financial Data Schedule
99.1+ Consent of Sho Nakanuma
</TABLE>
- ------------------------
* To be filed by amendment.
+ Previously filed.
<PAGE>
EXHIBIT 1.1
3,750,000 SHARES
METRON TECHNOLOGY N.V.
COMMON SHARES
<PAGE>
FORM OF UNDERWRITING AGREEMENT
November [18], 1999
BANC OF AMERICA SECURITIES LLC
SG COWEN SECURITIES CORPORATION
U.S. BANCORP PIPER JAFFRAY, INC.
As Representatives of the several Underwriters
c/o BANC OF AMERICA SECURITIES LLC
600 Montgomery Street
San Francisco, California 94111
Ladies and Gentlemen:
INTRODUCTORY. Metron Technology N.V., a corporation organized
under the laws of The Netherlands (the "Company), proposes to issue and sell
to the several underwriters named in SCHEDULE A (the "Underwriters") an
aggregate of 2,300,000 of its common shares, par value NLG 0.96 per share
(the "Common Shares"); and FSI International, Inc. ("FSI"), Entegris, Inc.
("Entegris" and, together with FSI, the "Corporate Selling Shareholders"), J.
Christopher Levett-Prinsep ("Levett-Prinsep") and Udo Jaensch ("Jaensch" and,
together with Levett-Prinsep, the "Individual Selling Shareholders") propose
to sell to the Underwriters an aggregate of 1,450,000 Common Shares. The
Corporate Selling Shareholders and the Individual Selling Shareholders are
sometimes collectively referred to herein as the "Selling Shareholders." The
2,300,000 Common Shares to be sold by the Company and the 1,450,000 Common
Shares to be sold by the Selling Shareholders are collectively called the
"Firm Shares." In addition, the Company has granted to the Underwriters an
option to purchase up to an additional 562,500 Common Shares as provided in
Section 2. The additional 562,500 Common Shares to be sold by the Company
are called the "Optional Shares." The Firm Shares and, if and to the extent
such option is exercised, the Optional Shares are collectively called the
"Shares." Banc of America Securities LLC, SG Cowen Securities Corporation
and U.S. Bancorp Piper Jaffray, Inc. have agreed to act as representatives of
the several Underwriters (in such capacity, the "Representatives") in
connection with the offering and sale of the Shares.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (File No.
333-87665), which contains a form of prospectus to be used in connection with
the public offering and sale of the Shares. Such registration statement, as
amended, including the financial statements, exhibits and schedules thereto,
in the form in which it was declared effective by the Commission under the
Securities Act of 1933 and the rules and regulations promulgated thereunder
(collectively, the "Securities Act"), including any information deemed to be
a part thereof at the time of effectiveness pursuant to Rule 430A or Rule 434
under the Securities Act, is called the "Registration Statement." Any
registration statement filed by the Company pursuant to
1
<PAGE>
Rule 462(b) under the Securities Act is called the "Rule 462(b) Registration
Statement", and from and after the date and time of filing of the Rule 462(b)
Registration Statement the term "Registration Statement" shall include the
Rule 462(b) Registration Statement. Such prospectus, in the form first used
by the Underwriters to confirm sales of the Shares, is called the
"Prospectus"; PROVIDED, HOWEVER, if the Company has, with the consent of the
Representatives, elected to rely upon Rule 434 under the Securities Act, the
term "Prospectus" shall mean the Company's prospectus subject to completion
(each, a "preliminary prospectus") dated October 29, 1999 (such preliminary
prospectus is called the "Rule 434 preliminary prospectus"), together with
the applicable term sheet (the "Term Sheet") prepared and filed by the
Company with the Commission under Rules 434 and 424(b) under the Securities
Act and all references in this Agreement to the date of the Prospectus shall
mean the date of the Term Sheet. All references in this Agreement to the
Registration Statement, the Rule 462(b) Registration Statement, a preliminary
prospectus, the Prospectus or the Term Sheet, or any amendments or
supplements to any of the foregoing, shall include any copy thereof filed
with the Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval System ("EDGAR").
The Company and each of the Selling Shareholders hereby confirm
their respective agreements with the Underwriters as follows:
SECTION 1. REPRESENTATIONS AND WARRANTIES.
A. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents, warrants and covenants to each Underwriter as follows:
(a) COMPLIANCE WITH REGISTRATION REQUIREMENTS. Each of the
Registration Statement and any Rule 462(b) Registration Statement has been
declared effective by the Commission under the Securities Act. The Company
has complied to the Commission's satisfaction with all requests of the
Commission for additional or supplemental information. No stop order
suspending the effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement is in effect and no proceedings for such purpose have
been instituted or are pending or, to the best knowledge of the Company, are
contemplated or threatened by the Commission.
Each preliminary prospectus and the Prospectus when filed complied in
all material respects with the Securities Act and, if filed by electronic
transmission pursuant to EDGAR (except as may be permitted by Regulation S-T
under the Securities Act), was identical to the copy thereof delivered to the
Underwriters for use in connection with the offer and sale of the Shares.
Each of the Registration Statement, any Rule 462(b) Registration Statement
and any post-effective amendment thereto, at the time it became effective and
at all subsequent times up to and including the last to occur of (i) the
First Closing Date (and, if any Optional Shares are purchased, the Second
Closing Date, if applicable) and (ii) the last day of the Prospectus Delivery
Period, complied and will comply in all material respects with the Securities
Act and did not and will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading. The Prospectus, as amended or
supplemented, as of its date and at all subsequent times up to and including
the last to occur of (i) the First Closing Date (and, if any Optional Shares
are purchased, the Second Closing Date, if applicable) and (ii) the last day
of the Prospectus Delivery Period, did not and will not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the
2
<PAGE>
light of the circumstances under which they were made, not misleading. The
representations and warranties set forth in the two immediately preceding
sentences do not apply to statements in or omissions from the Registration
Statement, any Rule 462(b) Registration Statement, or any post-effective
amendment thereto, or the Prospectus, or any amendments or supplements
thereto, made in reliance upon and in conformity with information relating to
any Underwriter furnished to the Company in writing by the Representatives
expressly for use therein. There are no contracts or other documents
required to be described in the Prospectus or to be filed as exhibits to the
Registration Statement which have not been described or filed as required.
(b) OFFERING MATERIALS FURNISHED TO UNDERWRITERS. The Company
has delivered to the Representatives three complete manually signed copies of
the Registration Statement and of each consent and certificate of experts
filed as a part thereof, and conformed copies of the Registration Statement
(without exhibits) and preliminary prospectuses and the Prospectus, as
amended or supplemented, in such quantities and at such places as the
Representatives have reasonably requested for each of the Underwriters.
(c) DISTRIBUTION OF OFFERING MATERIAL BY THE COMPANY. The
Company has not distributed and will not distribute, prior to the later of
the Second Closing Date (as defined below) and the completion of the
Underwriters' distribution of the Shares, any offering material in connection
with the offering and sale of the Shares other than a preliminary prospectus,
the Prospectus or the Registration Statement.
(d) THE UNDERWRITING AGREEMENT. This 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, except as rights
to indemnification hereunder may be limited by applicable law and except as
the enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors or by general equitable principles.
(e) AUTHORIZATION OF THE SHARES. The Shares to be purchased by
the Underwriters from the Company have been duly authorized for issuance and
sale pursuant to this Agreement and, when issued and delivered by the Company
pursuant to this Agreement, will be validly issued, fully paid and
nonassessable.
(f) NO APPLICABLE REGISTRATION OR OTHER SIMILAR RIGHTS. There
are no persons with registration or other similar rights to have any equity
or debt securities registered for sale under the Registration Statement or
included in the offering contemplated by this Agreement, except for such
rights as have been duly waived or complied with.
(g) NO MATERIAL ADVERSE CHANGE. Except as otherwise disclosed
in the Prospectus, subsequent to the respective dates as of which information
is given in the Prospectus: (i) there has been no material adverse change,
or any development that could reasonably be expected to result in a material
adverse change, in the condition, financial or otherwise, or in the earnings,
business, operations or prospects, whether or not arising from transactions
in the ordinary course of business, of the Company and its subsidiaries,
considered as one entity (any such change is called a "Material Adverse
Change"); (ii) the Company and its subsidiaries, considered as one entity,
have not incurred any material liability or obligation, indirect, direct or
contingent, not in the ordinary course of business nor entered into any
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material transaction or agreement not in the ordinary course of business; and
(iii) there has been no dividend or distribution of any kind declared, paid
or made by the Company or, except for dividends paid to the Company or other
subsidiaries, any of its subsidiaries on any class of capital stock or
repurchase or redemption by the Company or any of its subsidiaries of any
class of capital stock.
(h) INDEPENDENT ACCOUNTANTS. KPMG LLP, who have expressed
their opinion with respect to the financial statements (which term as used in
this Agreement includes the related notes thereto) filed with the Commission
as a part of the Registration Statement and included in the Prospectus, are
independent public or certified public accountants as required by the
Securities Act.
(i) PREPARATION OF THE FINANCIAL STATEMENTS. The financial
statements filed with the Commission as a part of the Registration Statement
and included in the Prospectus present fairly the consolidated financial
position of the Company and its subsidiaries as of and at the dates indicated
and the results of their operations and cash flows for the periods specified.
Such financial statements have been prepared in conformity with United States
generally accepted accounting principles applied on a consistent basis
throughout the periods involved, except as may be expressly stated in the
related notes thereto. No other financial statements or supporting schedules
are required to be included in the Registration Statement. The financial data
set forth in the Prospectus under the captions "Prospectus Summary-Summary
Consolidated Financial Data", "Selected Consolidated Financial Data" and
"Capitalization" fairly present the information set forth therein on a basis
consistent with that of the audited financial statements contained in the
Registration Statement.
(j) ORGANIZATION AND GOOD STANDING OF THE COMPANY AND ITS
SUBSIDIARIES. Each of the Company and its subsidiaries has been duly
incorporated or organized, as applicable, and is validly existing as a
corporation in good standing (in jurisdictions in which, under the laws
thereof, the concept of good standing exists) under the laws of the
jurisdiction of its incorporation and has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectus and, in the case of the Company, to enter into
and perform its obligations under this Agreement. Each of the Company and
each subsidiary is duly qualified as a foreign corporation to transact
business and is in good standing (in jurisdictions in which, under the laws
thereof, the concept of good standing exists) in each jurisdiction in which
such qualification is required, whether by reason of the ownership or leasing
of property or the conduct of business, except for such jurisdictions where
the failure to so qualify or to be in good standing would not, individually
or in the aggregate, result in a Material Adverse Change. All of the issued
and outstanding capital stock of each subsidiary has been duly authorized and
validly issued, is fully paid and nonassessable and is owned by the Company,
directly or through subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance or claim. Metron Technology Corporation
is the only significant subsidiary (as defined in Rule 405 under the
Securities Act) of the Company. The Company does not own or control,
directly or indirectly, any corporation, association or other entity other
than the subsidiaries listed in Exhibit 21.1 to the Registration Statement.
(k) CAPITALIZATION AND OTHER CAPITAL SHARES MATTERS. The
authorized, issued and outstanding capital stock of the Company is as set
forth in the Prospectus under the caption "Capitalization" (other than for
subsequent issuances, if any, pursuant to employee benefit
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plans described in the Prospectus or upon exercise of outstanding options
described in the Prospectus). The Common Shares (including the Shares)
conform in all material respects to the description thereof contained in the
Prospectus. All of the issued and outstanding Common Shares (including the
Common Shares owned by Selling Shareholders) have been duly authorized and
validly issued, are fully paid and nonassessable and have been issued in
compliance with federal and state securities laws. None of the outstanding
Common Shares were issued in violation of any preemptive rights, rights of
first refusal or other similar rights to subscribe for or purchase securities
of the Company. There are no authorized or outstanding options, warrants,
preemptive rights, rights of first refusal or other rights to purchase, or
equity or debt securities convertible into or exchangeable or exercisable
for, any capital stock of the Company or any of its subsidiaries other than
those accurately described in the Prospectus. The description of the
Company's stock option, stock bonus and other stock plans or arrangements,
and the options or other rights granted thereunder, set forth in the
Prospectus accurately and fairly presents the information required to be
shown with respect to such plans, arrangements, options and rights.
(l) SHARES EXCHANGE LISTING. The Common Shares have been
approved for listing on the Nasdaq National Market, subject only to official
notice of issuance.
(m) NON-CONTRAVENTION OF EXISTING INSTRUMENTS; NO FURTHER
AUTHORIZATIONS OR APPROVALS REQUIRED. Neither the Company nor any of its
subsidiaries is in violation of its charter or by-laws or is in default (or,
with the giving of notice or lapse of time, would be in default) ("Default")
under any indenture, mortgage, loan or credit agreement, note, contract,
franchise, lease or other instrument to which the Company or any of its
subsidiaries is a party or by which it or any of them may be bound or to
which any of the property or assets of the Company or any of its subsidiaries
is subject (each, an "Existing Instrument"), except for such Defaults as
would not reasonably be expected to, individually or in the aggregate, result
in a Material Adverse Change. The Company's execution, delivery and
performance of this Agreement and consummation of the transactions
contemplated hereby and by the Prospectus (i) have been duly authorized by
all necessary corporate action and will not result in any violation of the
provisions of the charter or by-laws of the Company or any subsidiary, (ii)
will not conflict with or constitute a breach of, or Default or a Debt
Repayment Triggering Event (as defined below) under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Company or any of its subsidiaries pursuant to, or require
the consent of any other party to, any Existing Instrument, except for such
conflicts, breaches, Defaults, liens, charges or encumbrances as would not,
individually or in the aggregate, result in a Material Adverse Change and
(iii) will not result in any violation of any law, administrative regulation
or administrative or court decree applicable to the Company or any
subsidiary. No consent, approval, authorization or other order of, or
registration or filing with, any court or other governmental or regulatory
authority or agency, is required for the Company's execution, delivery and
performance of this Agreement and consummation of the transactions
contemplated hereby and by the Prospectus, except such as have been obtained
or made by the Company and are in full force and effect under the Securities
Act, applicable state securities or blue sky laws and from the National
Association of Securities Dealers, Inc. (the "NASD"). As used herein, a
"Debt Repayment Triggering Event" means any event or condition which gives,
or with the giving of notice or lapse of time would give, the holder of any
note, debenture or other evidence of indebtedness (or any person acting on
such holder's behalf) the right to require the repurchase, redemption or
repayment of all or a portion of such indebtedness by the Company or any of
its subsidiaries.
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(n) NO MATERIAL ACTIONS OR PROCEEDINGS. There are no legal or
governmental actions, suits or proceedings pending or, to the best of the
Company's knowledge, threatened (i) against the Company or any of its
subsidiaries, (ii) which has as the subject thereof any officer or director
of, or property owned or leased by, the Company or any of its subsidiaries or
(iii) relating to environmental or discrimination matters, where in any such
action, suit or proceeding if determined adversely to the Company or such
subsidiary, would reasonably be expected to result in a Material Adverse
Change or adversely affect the consummation of the transactions contemplated
by this Agreement. No labor dispute with the employees of the Company or any
of its subsidiaries which may reasonably be expected to result in a Material
Adverse Change exists or, to the best of the Company's knowledge, is
threatened or imminent. The Company is not aware of any existing or imminent
labor disturbance by the employees of any of its material suppliers which may
reasonably be expected to result in a Material Adverse Change.
(o) INTELLECTUAL PROPERTY RIGHTS. The Company and its
subsidiaries own or possess sufficient trademarks, trade names, patent
rights, copyrights, licenses, approvals, trade secrets and other similar
rights (collectively, "Intellectual Property Rights") reasonably necessary to
conduct their businesses as now conducted; and the expected expiration of any
of such Intellectual Property Rights would not result in a Material Adverse
Change. Neither the Company nor any of its subsidiaries has received any
notice of infringement or conflict with asserted Intellectual Property Rights
of others, which infringement or conflict, if the subject of an unfavorable
decision, would result in a Material Adverse Change.
(p) ALL NECESSARY PERMITS, ETC. The Company and each subsidiary
possess such valid and current certificates, authorizations or permits issued
by the appropriate state, federal or foreign regulatory agencies or bodies
necessary to conduct their respective businesses other than any certificates,
authorizations or permits the absence of which would not, singly or in the
aggregate, reasonably be expected to result in a Material Adverse Change.
Neither the Company nor any subsidiary has received any notice of proceedings
relating to the revocation or modification of, or non-compliance with, any
such certificate, authorization or permit which, singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, would
reasonably be expected to result in a Material Adverse Change.
(q) TITLE TO PROPERTIES. The Company and each of its
subsidiaries has good and marketable title to all the properties and assets
reflected as owned in the financial statements referred to in Section 1(A)(i)
above (or elsewhere in the Prospectus), in each case free and clear of any
security interests, mortgages, liens, encumbrances, equities, claims and
other defects, except as disclosed in the Prospectus or which do not
materially and adversely affect the Company and its subsidiaries. The real
property, improvements, equipment and personal property held under lease by
the Company or any subsidiary are held under valid and enforceable leases,
with such exceptions as are not material to the Company and its subsidiaries.
(r) TAX LAW COMPLIANCE. The Company and its subsidiaries have
filed all necessary federal, state and foreign income and franchise tax
returns or have properly requested extensions thereof and have paid all taxes
required to be paid by any of them and, if due and payable, any related or
similar assessment, fine or penalty levied against any of them, except as are
being contested in good faith and by appropriate procedures. The Company has
made
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adequate charges, accruals and reserves in the applicable financial
statements referred to in Section 1(A)(i) above in respect of all federal,
state and foreign income and franchise taxes for all periods as to which the
tax liability of the Company or any of its consolidated subsidiaries has not
been finally determined.
(s) COMPANY NOT AN "INVESTMENT COMPANY. The Company is not,
and after receipt of payment for the Shares to be sold by it will not be, an
"investment company" within the meaning of Investment Company Act of 1940, as
amended (the "Investment Company Act"), and will conduct its business in a
manner so that it will not become subject to the Investment Company Act.
(t) INSURANCE. Each of the Company and its subsidiaries are
insured by recognized, financially sound and reputable institutions with
policies in such amounts and with such deductibles and covering such risks as
are generally deemed adequate and customary for their businesses including,
but not limited to, policies covering real and personal property owned or
leased by the Company and its subsidiaries against theft, damage, destruction
and acts of vandalism. To the best of the Company's knowledge, the Company
and its subsidiaries will be able (i) to renew existing insurance coverage as
and when such policies expire or (ii) to obtain comparable coverage from
similar institutions as may be necessary or appropriate to conduct their
business as now conducted and at a cost that would not result in a Material
Adverse Change.
(u) NO PRICE STABILIZATION OR MANIPULATION. The Company has
not taken and will not take, directly or indirectly, any action designed to
or that might be reasonably expected to cause or result in stabilization or
manipulation of the price of the Common Shares to facilitate the sale or
resale of the Shares.
(v) RELATED PARTY TRANSACTIONS. There are no business
relationships or related-party transactions involving the Company or any
subsidiary or any other person required to be described in the Prospectus
which have not been described as required.
(w) NO UNLAWFUL CONTRIBUTIONS OR OTHER PAYMENTS. Neither the
Company nor any of its subsidiaries nor, to the best of the Company's
knowledge, any employee or agent of the Company or any subsidiary, has made
any contribution or other payment to any official of, or candidate for, any
federal, state or foreign office in violation of any law or of the character
required to be disclosed in the Prospectus.
(x) COMPANY'S ACCOUNTING SYSTEM. The Company maintains a
system of accounting controls sufficient to provide reasonable assurances
that (i) transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with United States
generally accepted accounting principles and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(y) COMPLIANCE WITH ENVIRONMENTAL LAWS. Except as would not,
individually or in the aggregate, result in a Material Adverse Change (i)
neither the Company nor any of its subsidiaries is in violation of any
federal, state, local or foreign law or regulation relating to
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pollution or protection of human health or the environment (including,
without limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) or wildlife, including without limitation, laws and
regulations relating to emissions, discharges, releases or threatened
releases of chemicals, pollutants, contaminants, wastes, toxic substances,
hazardous substances, petroleum and petroleum products (collectively,
"Materials of Environmental Concern"), or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern (collectively, "Environmental Laws"),
which violation includes, but is not limited to, noncompliance with any
permits or other governmental authorizations required for the operation of
the business of the Company or its subsidiaries under applicable
Environmental Laws, or noncompliance with the terms and conditions thereof,
nor has the Company or any of its subsidiaries received any written
communication, whether from a governmental authority, citizens group,
employee or otherwise, that alleges that the Company or any of its
subsidiaries is in violation of any Environmental Law; (ii) there is no
claim, action or cause of action filed with a court or governmental
authority, no investigation with respect to which the Company has received
written notice, and no written notice by any person or entity alleging
potential liability for investigatory costs, cleanup costs, governmental
responses costs, natural resources damages, property damages, personal
injuries, attorneys' fees or penalties arising out of, based on or resulting
from the presence, or release into the environment, of any Material of
Environmental Concern at any location owned, leased or operated by the
Company or any of its subsidiaries, now or in the past (collectively,
"Environmental Claims"), pending or, to the best of the Company's knowledge,
threatened against the Company or any of its subsidiaries or any person or
entity whose liability for any Environmental Claim the Company or any of its
subsidiaries has retained or assumed either contractually or by operation of
law; and (iii) to the best of the Company's knowledge, there are no past or
present actions, activities, circumstances, conditions, events or incidents,
including, without limitation, the release, emission, discharge, presence or
disposal of any Material of Environmental Concern, that reasonably could
result in a violation of any Environmental Law or form the basis of a
potential Environmental Claim against the Company or any of its subsidiaries
or against any person or entity whose liability for any Environmental Claim
the Company or any of its subsidiaries has retained or assumed either
contractually or by operation of law.
(z) ERISA COMPLIANCE. The Company and its subsidiaries and any
"employee benefit plan" (as defined under the Employee Retirement Income
Security Act of 1974, as amended, and the regulations and published
interpretations thereunder (collectively, "ERISA")) established or maintained
by the Company, its subsidiaries or their "ERISA Affiliates" (as defined
below) are in compliance in all material respects with ERISA. "ERISA
Affiliate" means, with respect to the Company or a subsidiary, any member of
any group of organizations described in Sections 414(b),(c),(m) or (o) of the
Internal Revenue Code of 1986, as amended, and the regulations and published
interpretations thereunder (the "Code") of which the Company or such
subsidiary is a member. Except as would not reasonably be expected to result
in a Material Adverse Change, no "reportable event" (as defined under ERISA)
has occurred or is reasonably expected to occur with respect to any "employee
benefit plan" established or maintained by the Company, its subsidiaries or
any of their ERISA Affiliates. Except as would not reasonably be expected to
result in a Material Adverse Change, no "employee benefit plan" established
or maintained by the Company, its subsidiaries or any of their ERISA
Affiliates, if such "employee benefit plan" were terminated, would have any
"amount of unfunded benefit liabilities" (as defined under ERISA). Except as
would not reasonably be expected to result in a Material Adverse
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Change, neither the Company, its subsidiaries nor any of their ERISA
Affiliates has incurred or reasonably expects to incur any liability under
(i) Title IV of ERISA with respect to termination of, or withdrawal from, any
"employee benefit plan" or (ii) Sections 412, 4971, 4975 or 4980B of the
Code. Each "employee benefit plan" established or maintained by the Company,
its subsidiaries or any of their ERISA Affiliates that is intended to be
qualified under Section 401(a) of the Code is so qualified and nothing has
occurred, whether by action or failure to act, which would cause the loss of
such qualification, except where the failure to so qualify would not
reasonably be expected to result in a Material Adverse Change.
(ee) YEAR 2000. All disclosure regarding year 2000 compliance that is
required to be described under the 1933 Act and 1933 Regulations (including
disclosures required by Staff Legal Bulletin No. 5) has been included in the
Prospectus. The Company has not incurred, and does not expect to incur, any
operating expenses or costs to ensure that its information systems will be
year 2000 complaint, other than as disclosed in the Prospectus or as would
not reasonably be expected to result in a Material Adverse Change.
Any certificate signed by an officer of the Company and delivered
to the Representatives or to counsel for the Underwriters in connection with
the consummation of the transactions contemplated hereby shall be deemed to
be a representation and warranty by the Company to each Underwriter as to the
matters set forth therein.
B. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS. Each
Selling Shareholder severally and not jointly represents, warrants and
covenants to each Underwriter as follows:
(a) THE UNDERWRITING AGREEMENT. This Agreement has been duly
authorized, executed and delivered by or on behalf of such Selling
Shareholder and is a valid and binding agreement of such Selling Shareholder,
enforceable in accordance with its terms, except as rights to indemnification
hereunder may be limited by applicable law and except as the enforcement
hereof may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to or affecting the rights and remedies of
creditors or by general equitable principles.
(b) THE CUSTODY AGREEMENT AND POWER OF ATTORNEY. Each of the
(i) Custody Agreement signed by such Individual Selling Shareholder and as
custodian (the "Custodian"), relating to the deposit of the Shares to be sold
by such Individual Selling Shareholder (the "Custody Agreement") and (ii)
Power of Attorney appointing certain individuals named therein as such
Individual Selling Shareholder's attorneys-in-fact (each, an
"Attorney-in-Fact") to the extent set forth therein relating to the
transactions contemplated hereby and by the Prospectus (the "Power of
Attorney"), of such Individual Selling Shareholder has been duly authorized,
executed and delivered by such Individual Selling Shareholder and is a valid
and binding agreement of such Individual Selling Shareholder, enforceable in
accordance with its terms, except as rights to indemnification thereunder may
be limited by applicable law and except as the enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the rights and remedies of creditors or
by general equitable principles. The representations and warranties
contained in this subsection (b) shall be deemed to be made, severally and
not jointly, by each of the Individual Selling Shareholders and not by any
Corporate Selling Shareholder.
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(c) TITLE TO SHARES TO BE SOLD; ALL AUTHORIZATIONS OBTAINED.
Such Selling Shareholder has, and on the First Closing Date (as defined
below) will have, valid title to all of the Shares which may be sold by such
Selling Shareholder pursuant to this Agreement on such date and the legal
right and power, and all authorizations and approvals required by law and, if
applicable, under its charter or by-laws, or other organizational documents
to enter into this Agreement and, with respect to each Individual Selling
Shareholder, its Custody Agreement and Power of Attorney, to sell, transfer
and deliver all of the Shares which may be sold by such Selling Shareholder
pursuant to this Agreement and to comply with its other obligations hereunder
and thereunder.
(d) DELIVERY OF THE SHARES TO BE SOLD. Delivery of the Shares
which are sold by such Selling Shareholder pursuant to this Agreement will
pass valid title to such Common Shares, free and clear of any security
interest, mortgage, pledge, lien, encumbrance or other claim.
(e) NON-CONTRAVENTION; NO FURTHER AUTHORIZATIONS OR APPROVALS
REQUIRED. The execution and delivery by such Selling Shareholder of, and the
performance by such Selling Shareholder of its obligations under, this
Agreement and, with respect to each Individual Selling Shareholder, the
Custody Agreement and the Power of Attorney will not contravene or conflict
with, result in a breach of, or constitute a Default under, or require the
consent of any other party to, the charter or by-laws, or other
organizational documents of such Selling Shareholder or any other agreement
or instrument to which such Selling Shareholder is a party or by which it is
bound or under which it is entitled to any right or benefit, any provision of
applicable law or any judgment, order, decree or regulation applicable to
such Selling Shareholder of any court, regulatory body, administrative
agency, governmental body or arbitrator having jurisdiction over such Selling
Shareholder. No consent, approval, authorization or other order of, or
registration or filing with, any court or other governmental authority or
agency, is required for the consummation by such Selling Shareholder of the
transactions contemplated in this Agreement, except such as have been, or
will be, obtained or made by the Company or the Underwriters and are, or will
be, in full force and effect under the Securities Act, applicable state
securities or blue sky laws and from the NASD.
(f) NO REGISTRATION OR OTHER SIMILAR RIGHTS. Such Selling
Shareholder does not have any registration or other similar rights to have
any equity or debt securities registered for sale by the Company under the
Registration Statement or included in the offering contemplated by this
Agreement, except for such rights as are described in the Prospectus under
"Shares Eligible for Future Sale."
(g) NO FURTHER CONSENTS, ETC. No consent, approval or waiver
is required under any instrument or agreement to which such Selling
Shareholder is a party or by which it is bound or under which it is entitled
to any right or benefit, in connection with the offering, sale or purchase by
the Underwriters of any of the Shares which may be sold by such Selling
Shareholder under this Agreement or the consummation by such Selling
Shareholder of any of the other transactions contemplated hereby.
(h) DISCLOSURE MADE BY SUCH SELLING SHAREHOLDER IN THE
PROSPECTUS. All information furnished by such Selling Shareholder in writing
expressly for use in the Registration Statement and Prospectus is, and on the
First Closing Date will be, true, correct, and complete in all material
respects, and does not, and on the First Closing Date will not, contain any
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untrue statement of a material fact or omit to state any material fact
necessary to make such information not misleading. Such Selling Shareholder
confirms as accurate the number of Common Shares set forth opposite such
Selling Shareholder's name in the Prospectus under the caption "Principal and
Selling Shareholders" (both prior to and after giving effect to the sale of
the Shares).
(i) NO PRICE STABILIZATION OR MANIPULATION. Such Selling
Shareholder has not taken and will not take, directly or indirectly, any
action designed to or that might be reasonably expected to cause or result in
stabilization or manipulation of the price of the Common Shares to facilitate
the sale or resale of the Shares.
(j) CONFIRMATION OF COMPANY REPRESENTATIONS AND WARRANTIES.
Such Selling Shareholder has no reason to believe that the representations
and warranties of the Company contained in Section 1(A) hereof are not true
and correct, is familiar with the Registration Statement and the Prospectus
and has no knowledge of any material fact, condition or information not
disclosed in the Registration Statement or the Prospectus which has had or
may have a Material Adverse Change and is not prompted to sell shares of
Shares by any information concerning the Company which is not set forth in
the Registration Statement and the Prospectus.
Any certificate signed by or on behalf of any Selling Shareholder and
delivered to the Representatives or to counsel for the Underwriters in
connection with the consummation of the transactions contemplated hereby
shall be deemed to be a representation and warranty by such Selling
Shareholder to each Underwriter as to the matters covered thereby.
SECTION 2. PURCHASE, SALE AND DELIVERY OF THE SHARES.
THE FIRM SHARES. Upon the terms herein set forth, (i) the Company
agrees to issue and sell to the several Underwriters an aggregate of
2,300,000 Firm Shares and (ii) the Selling Shareholders agree to sell to the
several Underwriters an aggregate of 1,450,000 Firm Shares, each Selling
Shareholder selling the number of Firm Shares set forth opposite such Selling
Shareholder's name on SCHEDULE B. On the basis of the representations,
warranties and agreements herein contained, and upon the terms but subject to
the conditions herein set forth, the Underwriters agree, severally and not
jointly, to purchase from the Company and the Selling Shareholders the
respective number of Firm Shares set forth opposite their names on SCHEDULE
A. The purchase price per Firm Share to be paid by the several Underwriters
to the Company and the Selling Shareholders shall be $_____ per share.
THE FIRST CLOSING DATE. Delivery of certificates for the Firm
Shares to be purchased by the Underwriters and payment therefor shall be made
at the offices of Banc of America Securities LLC, 600 Montgomery Street, San
Francisco, California (or such other place as may be agreed to by the
Company and the Representatives) at 6:00 a.m. San Francisco time, on November
[24], 1999, or such other time and date not later than 10:30 a.m. San
Francisco time, on [December 3], 1999, as the Representatives shall designate
by notice to the Company and the Selling Shareholders (the time and date of
such closing are called the "First Closing Date"). The Company and the
Selling Shareholders hereby acknowledge that circumstances under which the
Representatives may provide notice to postpone the First Closing Date as
originally scheduled include, but are in no way limited to, any determination
by the Company, the Selling
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Shareholders or the Representatives to recirculate to the public copies of an
amended or supplemented Prospectus or a delay as contemplated by the
provisions of Section 10.
THE OPTIONAL SHARES; THE SECOND CLOSING DATE. In addition, on the
basis of the representations, warranties and agreements herein contained, and
upon the terms but subject to the conditions herein set forth, the Company
hereby grants an option to the several Underwriters to purchase, severally
and not jointly, up to an aggregate of 562,500 Optional Shares from the
Company at the purchase price per share to be paid by the Underwriters for
the Firm Shares. The option granted hereunder is for use by the Underwriters
solely in covering any over-allotments in connection with the sale and
distribution of the Firm Shares. The option granted hereunder may be
exercised at any time (but not more than once) upon notice by the
Representatives to the Company, which notice may be given at any time within
30 days from the date of this Agreement. Such notice shall set forth (i) the
aggregate number of Optional Shares as to which the Underwriters are
exercising the option, (ii) the names and denominations in which the
certificates for the Optional Shares are to be registered and (iii) the time,
date and place at which such certificates will be delivered (which time and
date may be simultaneous with, but not earlier than, the First Closing Date;
and in such case the term "First Closing Date" shall refer to the time and
date of delivery of certificates for the Firm Shares and the Optional
Shares). Such time and date of delivery, if subsequent to the First Closing
Date, is called the "Second Closing Date" and shall be determined by the
Representatives and shall not be earlier than three nor later than five full
business days after delivery of such notice of exercise. If any Optional
Shares are to be purchased, (a) each Underwriter agrees, severally and not
jointly, to purchase the number of Optional Shares (subject to such
adjustments to eliminate fractional shares as the Representatives may
determine) that bears the same proportion to the total number of Optional
Shares to be purchased as the number of Firm Shares set forth on SCHEDULE A
opposite the name of such Underwriter bears to the total number of Firm
Shares and (b) the Company agrees to sell the total number of Optional
Shares. The Representatives may cancel the option at any time prior to its
expiration by giving written notice of such cancellation to the Company.
PUBLIC OFFERING OF THE SHARES. The Representatives hereby advise
the Company and the Selling Shareholders that the Underwriters intend to
offer for sale to the public, as described in the Prospectus, their
respective portions of the Shares as soon after this Agreement has been
executed and the Registration Statement has been declared effective as the
Representatives, in its sole judgment, has determined is advisable and
practicable.
PAYMENT FOR THE SHARES. Payment for the Shares to be sold by the
Company shall be made at the First Closing Date (and, if applicable, at the
Second Closing Date) by wire transfer of immediately available funds to the
order of the Company. Payment for the Shares to be sold by the Selling
Shareholders shall be made at the First Closing Date by wire transfer of
immediately available funds (i) with respect to the Corporate Selling
Shareholders, to the order of such Corporate Selling Shareholder and (ii)
with respect to the Individual Selling Shareholders, to the order of the
Custodian.
It is understood that the Representatives have been authorized, for
their own accounts and the accounts of the several Underwriters, to accept
delivery of and receipt for, and make payment of the purchase price for, the
Firm Shares and any Optional Shares the Underwriters have agreed to purchase.
Each of Banc of America Securities LLC, SG Cowen Securities Corporation and
U.S. Bancorp Piper Jaffray, Inc., individually and not as a Representatives
of the Underwriters, may (but shall not be obligated to) make payment for any
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Shares to be purchased by any Underwriter whose funds shall not have been
received by the Representatives by the First Closing Date or the Second
Closing Date, as the case may be, for the account of such Underwriter, but
any such payment shall not relieve such Underwriter from any of its
obligations under this Agreement.
Each Selling Shareholder hereby agrees that (i) it will pay all
stock transfer taxes, stamp duties and other similar taxes, if any, payable
upon the sale or delivery of the Shares to be sold by such Selling
Shareholder to the several Underwriters, or otherwise in connection with the
performance of such Selling Shareholder's obligations hereunder and (ii) the
Underwriters and/or the Custodian are authorized to deduct from such payment
any such amounts from the proceeds to such Selling Shareholder hereunder and
to hold such amounts for the account of such Selling Shareholder with the
Custodian under the Custody Agreement.
DELIVERY OF THE SHARES. The Company and the Selling Shareholders
shall deliver, or cause to be delivered, to the Representatives for the
accounts of the several Underwriters certificates, if any, for the Firm
Shares to be sold by them at the First Closing Date, against the irrevocable
release of a wire transfer of immediately available funds for the amount of
the purchase price therefor. The Company shall also deliver, or cause to be
delivered, to the Representatives for the accounts of the several
Underwriters, certificates, if any, for the Optional Shares the Underwriters
have agreed to purchase from them at the First Closing Date or the Second
Closing Date, as the case may be, against the irrevocable release of a wire
transfer of immediately available funds for the amount of the purchase price
therefor. The certificates for the Shares shall be in definitive form and
registered in such names and denominations as the Representatives shall have
requested at least two full business days prior to the First Closing Date (or
the Second Closing Date, as the case may be) and shall be made available for
inspection on the business day preceding the First Closing Date (or the
Second Closing Date, as the case may be) at a location in New York City as
the Representatives may designate. Time shall be of the essence, and
delivery at the time and place specified in this Agreement is a further
condition to the obligations of the Underwriters.
DELIVERY OF PROSPECTUS TO THE UNDERWRITERS. Not later than 12:00
p.m. on the second business day following the date the Shares are first
released by the Underwriters for sale to the public, the Company shall
deliver or cause to be delivered, copies of the Prospectus in such quantities
and at such places as the Representatives shall request.
SECTION 3. ADDITIONAL COVENANTS
A. COVENANTS OF THE COMPANY. The Company further covenants and
agrees with each Underwriter as follows:
(a) REPRESENTATIVES' REVIEW OF PROPOSED AMENDMENTS AND SUPPLEMENTS.
During such period beginning on the date hereof and ending on the later of
the First Closing Date or such date, as in the opinion of counsel for the
Underwriters, the Prospectus is no longer required by law to be delivered
in connection with sales by an Underwriter or dealer (the "Prospectus
Delivery Period"), prior to amending or supplementing the Registration
Statement (including any registration statement filed under Rule 462(b)
under the Securities Act) or the Prospectus, the Company shall furnish to
the Representatives for review a copy of
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each such proposed amendment or supplement, and the Company shall not file
any such proposed amendment or supplement to which the Representatives
reasonably object.
(b) SECURITIES ACT COMPLIANCE. After the date of this Agreement, the
Company shall promptly advise the Representatives in writing (i) of the
receipt of any comments of, or requests for additional or supplemental
information from, the Commission, (ii) of the time and date of any filing
of any post-effective amendment to the Registration Statement or any
amendment or supplement to any preliminary prospectus or the Prospectus,
(iii) of the time and date that any post-effective amendment to the
Registration Statement becomes effective and (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto or of any
order preventing or suspending the use of any preliminary prospectus or
the Prospectus, or of any proceedings to remove, suspend or terminate from
listing or quotation the Common Shares from any securities exchange upon
which it is listed for trading or included or designated for quotation, or
of the threatening or initiation of any proceedings for any of such
purposes. If the Commission shall enter any such stop order at any time,
the Company will use its best efforts to obtain the lifting of such order
at the earliest possible moment. Additionally, the Company agrees that it
shall comply with the provisions of Rules 424(b), 430A and 434, as
applicable, under the Securities Act and will use its reasonable efforts
to confirm that any filings made by the Company under such Rule 424(b)
were received in a timely manner by the Commission.
(c) AMENDMENTS AND SUPPLEMENTS TO THE PROSPECTUS AND OTHER SECURITIES
ACT MATTERS. If, during the Prospectus Delivery Period, any event shall
occur or condition exist as a result of which it is necessary to amend or
supplement the Prospectus in order to make the statements therein, in the
light of the circumstances when the Prospectus is delivered to a
purchaser, not misleading, or if in the opinion of the Representatives or
counsel for the Underwriters it is otherwise necessary to amend or
supplement the Prospectus to comply with law, the Company agrees to
promptly prepare (subject to Section 3(A)(a) hereof), file with the
Commission and furnish at its own expense to the Underwriters and to
dealers, amendments or supplements to the Prospectus so that the
statements in the Prospectus as so amended or supplemented will not, in
the light of the circumstances when the Prospectus is delivered to a
purchaser, be misleading or so that the Prospectus, as amended or
supplemented, will comply with law. The Underwriters shall cease to use
the Prospectus upon reasonable notice from the Company that an amendment
or supplement to the Prospectus is required under this paragraph.
(d) COPIES OF ANY AMENDMENTS AND SUPPLEMENTS TO THE PROSPECTUS. The
Company agrees to furnish the Representatives, without charge, during the
Prospectus Delivery Period, as many copies of the Prospectus and any
amendments and supplements thereto as the Representatives may reasonably
request.
(e) BLUE SKY COMPLIANCE. The Company shall cooperate with the
Representatives and counsel for the Underwriters to qualify or register
the Shares for sale under (or obtain exemptions from the application of)
the state securities or blue sky laws or Canadian provincial Securities
laws of those jurisdictions reasonably designated by the Representatives,
shall comply with such laws and shall continue such qualifications,
registrations and exemptions in effect so long as required for the
distribution of the Common Shares. The Company shall not be required to
qualify as a foreign corporation or to take any action that
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would subject it to general service of process in any such jurisdiction
where it is not presently qualified or where it would be subject to
taxation as a foreign corporation. The Company will advise the
Representatives promptly of the suspension of the qualification or
registration of (or any such exemption relating to) the Shares for
offering, sale or trading in any jurisdiction or any initiation or threat
of any proceeding for any such purpose, and in the event of the issuance
of any order suspending such qualification, registration or exemption, the
Company shall use its best efforts to obtain the withdrawal thereof at the
earliest possible moment.
(f) USE OF PROCEEDS. The Company shall apply the net proceeds from the
sale of the Shares sold by it in the manner described under the caption
"Use of Proceeds" in the Prospectus.
(g) TRANSFER AGENT. The Company shall engage and maintain, at its
expense, a registrar and transfer agent for the Common Shares.
(h) EARNINGS STATEMENT. As soon as practicable, the Company will make
generally available to its security holders and to the Representatives an
earnings statement (which need not be audited) covering the twelve-month
period ending November 30, 2000 that satisfies the provisions of Section
11(a) of the Securities Act.
(i) PERIODIC REPORTING OBLIGATIONS. During the Prospectus Delivery
Period the Company shall file, on a timely basis, with the Commission and
the Nasdaq National Market all reports and documents required to be filed
under the Exchange Act. Additionally, the Company shall report the use of
proceeds from the issuance of the Common Shares as may be required under
Rule 463 under the Securities Act.
(k) AGREEMENT NOT TO OFFER OR SELL ADDITIONAL SECURITIES. During the
period of 180 days following the date of the Prospectus, the Company will
not, without the prior written consent of Banc of America Securities LLC
(which consent may be withheld at the sole discretion of Banc of America
Securities LLC), directly or indirectly, sell, offer, contract or grant
any option to sell, pledge, transfer or establish an open "put equivalent
position" within the meaning of Rule 16a-1(h) under the Exchange Act, or
otherwise dispose of or transfer, or announce the offering of, or file any
registration statement under the Securities Act in respect of, any Common
Shares, options or warrants to acquire Common Shares or securities
exchangeable or exercisable for or convertible into Common Shares (other
than as contemplated by this Agreement with respect to the Shares);
PROVIDED, HOWEVER, that the Company may issue Common Shares or options to
purchase its Common Shares, upon exercise of options, pursuant to any
stock option, stock bonus or other stock plan or arrangement described in
the Prospectus, but only if the holders of such shares, options, or shares
issued upon exercise of such options, agree in writing not to sell, offer,
dispose of or otherwise transfer any such shares or options during such
180 day period without the prior written consent of Banc of America
Securities LLC (which consent may be withheld at the sole discretion of
the Banc of America Securities LLC).
(l) FUTURE REPORTS TO THE REPRESENTATIVES. During the period of five
years hereafter the Company will furnish to the Representatives at c/o
Banc of America Securities LLC, 600 Montgomery Street, San Francisco, CA
94111 (i) as soon as practicable after the end of each fiscal year, copies
of the Annual Report of the Company containing the balance sheet of the
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Company as of the close of such fiscal year and statements of income,
shareholders' equity and cash flows for the year then ended and the
opinion thereon of the Company's independent public or certified public
accountants; (ii) as soon as practicable after the filing thereof, copies
of each proxy statement, Annual Report on Form 10-K, Quarterly Report on
Form 10-Q, Current Report on Form 8-K or other report filed by the Company
with the Commission, the NASD or any securities exchange; and (iii) as
soon as available, copies of any report or communication of the Company
mailed generally to holders of its capital stock.
B. COVENANTS OF THE SELLING SHAREHOLDERS. Each Selling
Shareholder further covenants and agrees with each Underwriter:
(a) AGREEMENT NOT TO OFFER OR SELL ADDITIONAL SECURITIES. Such
Selling Shareholder will not, without the prior written consent of Bank of
America Securities LLC (which consent may be withheld in its sole
discretion), directly or indirectly, sell, offer, contract or grant any
option to sell (including without limitation any short sale), pledge,
transfer, establish an open "put equivalent position" within the meaning of
Rule 16a-1(h) under the Exchange Act, or otherwise dispose of any Common
Shares, options or warrants to acquire Common Shares, or securities
exchangeable or exercisable for or convertible into Common Shares currently
or hereafter owned either of record or beneficially (as defined in Rule 13d-3
under Securities Exchange Act of 1934, as amended) by the undersigned, or
publicly announce the undersigned's intention to do any of the foregoing, for
a period commencing on the date hereof and continuing through the close of
trading on the date 180 days after the date of the Prospectus.
(b) DELIVERY OF FORMS W-8 AND W-9. To deliver to the
Representatives prior to the First Closing Date a properly completed and
executed United States Treasury Department Form W-8 (if the Selling
Shareholder is a non-United States person) or Form W-9 (if the Selling
Shareholder is a United States Person).
Banc of America Securities LLC, on behalf of the several
Underwriters, may, in its sole discretion, waive in writing the performance
by the Company or any Selling Shareholder of any one or more of the foregoing
covenants or extend the time for their performance.
SECTION 4. PAYMENT OF EXPENSES. The Company agrees to pay
all costs, fees and expenses incurred in connection with the performance of
its obligations hereunder and in connection with the transactions
contemplated hereby, including without limitation (i) all expenses incident
to the issuance and delivery of the Shares (including all printing and
engraving costs), (ii) all fees and expenses of the registrar and transfer
agent of the Shares, (iii) all necessary issue, transfer and other stamp
taxes in connection with the issuance and sale of the Shares to the
Underwriters, (iv) all fees and expenses of the Company's counsel,
independent public or certified public accountants and other advisors, (v)
all costs and expenses incurred in connection with the preparation, printing,
filing, shipping and distribution of the Registration Statement (including
financial statements, exhibits, schedules, consents and certificates of
experts), each preliminary prospectus and the Prospectus, and all amendments
and supplements thereto, and this Agreement, (vi) all filing fees, attorneys'
fees and expenses incurred by the Company or the Underwriters in connection
with qualifying or registering (or obtaining exemptions from the
qualification or registration of) all or any part of the Shares for offer and
sale under the state securities or blue sky laws or the provincial securities
laws of Canada, and, if requested by the Representatives, preparing and
printing a "Blue Sky Survey" or memorandum, and any supplements thereto,
advising the Underwriters of such qualifications, registrations and
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exemptions, (vii) the filing fees incident to, and the reasonable fees and
expenses of counsel for the Underwriters in connection with, the NASD's
review and approval of the Underwriters' participation in the offering and
distribution of the Shares, (viii) the fees and expenses associated with
listing the Common Shares on the Nasdaq National Market, and (ix) all other
fees, costs and expenses referred to in Item 13 of Part II of the
Registration Statement. Except as provided in this Section 4, Section 6,
Section 8 and Section 9 hereof, the Underwriters shall pay their own
expenses, including the fees and disbursements of their counsel.
The Selling Shareholders further agree with each Underwriter
to pay (directly or by reimbursement) all fees and expenses incident to the
performance of their obligations under this Agreement, including but not
limited to (i) fees and expenses of counsel and other advisors for such
Selling Shareholders, (ii) fees and expenses of the Custodian and (iii)
taxes incident to the sale and delivery of the Shares to be sold by such
Selling Shareholders to the Underwriters hereunder (which taxes, if any, may
be deducted by the Underwriters and/or the Custodian under the provisions of
Section 2 of this Agreement).
This Section 4 shall not affect or modify any separate, valid
agreement relating to the allocation of payment of expenses between the
Company, on the one hand, and the Selling Shareholders, on the other hand.
SECTION 5. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS tc
"Section 5. Conditions of the Obligations of the Underwriters" \l 1 . The
obligations of the several Underwriters to purchase and pay for the Shares as
provided herein on the First Closing Date and, with respect to the Optional
Shares, the Second Closing Date, shall be subject to the accuracy of the
representations and warranties on the part of the Company and the Selling
Shareholders set forth in Sections 1(A) and 1(B) hereof as of the date hereof
and as of the First Closing Date as though then made and, with respect to the
Optional Shares, as of the Second Closing Date as though then made, to the
timely performance by the Company and the Selling Shareholders of its
covenants and other obligations hereunder, and to each of the following
additional conditions:
(a) ACCOUNTANTS' COMFORT LETTER. On the date hereof, the
Representatives and the Selling Shareholders shall have received from
KPMG LLP, independent public or certified public accountants for the
Company, a letter dated the date hereof addressed to the Underwriters,
in form and substance satisfactory to the Representatives, containing
statements and information of the type ordinarily included in
accountant's "comfort letters" to underwriters, delivered according to
Statement of Auditing Standards No. 72 (or any successor bulletin), with
respect to the audited and unaided financial statements and certain
financial information contained in the Registration Statement and the
Prospectus (and the Representatives shall have received an additional
two conformed copies of such accountants' letter.
(b) COMPLIANCE WITH REGISTRATION REQUIREMENTS; NO STOP ORDER;
NO OBJECTION FROM NASD. For the period from and after effectiveness of
this Agreement and prior to the First Closing Date and, with respect to
the Optional Shares, the Second Closing Date:
(i) the Company shall have filed the Prospectus with the
Commission (including the information required by Rule 430A under
the Securities Act) in the manner and within the time period
required by Rule 424(b) under the Securities Act; or the
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Company shall have filed a post-effective amendment to the
Registration Statement containing the information required by such
Rule 430A, and such post-effective amendment shall have become
effective; or, if the Company elected to rely upon Rule 434 under
the Securities Act and obtained the Representatives' consent
thereto, the Company shall have filed a Term Sheet with the
Commission in the manner and within the time period required by
such Rule 424(b);
(ii) no stop order suspending the effectiveness of the
Registration Statement, any Rule 462(b) Registration Statement, or
any post-effective amendment to the Registration Statement, shall
be in effect and no proceedings for such purpose shall have been
instituted or threatened by the Commission; and
(iii) the NASD shall have raised no objection to the fairness
and reasonableness of the underwriting terms and arrangements.
(c) NO MATERIAL ADVERSE CHANGE OR RATINGS AGENCY CHANGE. For the
period from and after the date of this Agreement and prior to the First
Closing Date and, with respect to the Optional Shares, the Second
Closing Date:
(i) in the judgment of the Representatives there shall not
have occurred any Material Adverse Change; and
(ii) 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
securities of the Company or any of its subsidiaries by any
"nationally recognized statistical rating organization" as such
term is defined for purposes of Rule 436(g)(2) under the Securities
Act.
(d) OPINION OF COUNSEL FOR THE COMPANY. On each of the First
Closing Date and the Second Closing Date the Representatives shall have
received the favorable opinion of Cooley Godward LLP, United States
counsel for the Company, and Nauta Dutilh, Netherlands counsel for the
Company, dated as of such Closing Date, the form of which is attached as
EXHIBIT A (and the Representatives shall have received an additional two
conformed copies of such counsels' legal opinion).
(e) OPINION OF COUNSEL FOR THE UNDERWRITERS. On each of the First
Closing Date and the Second Closing Date the Representatives shall have
received the favorable opinion of Latham & Watkins, special United
States counsel for the Underwriters, dated as of such Closing Date, in
form and substance satisfactory to the Representatives (and the
Representatives shall have received an additional two conformed copies
of such counsel's legal opinion).
(f) OFFICERS' CERTIFICATE. On each of the First Closing Date and
the Second Closing Date the Representatives shall have received a
written certificate executed by the Chairman of the Board, Chief
Executive Officer or President of the Company and the Chief Financial
Officer or Chief Accounting Officer of the Company, dated as of such
Closing Date, to the effect set forth in subsections (b)(ii) and (c)(ii)
of this Section 5, and further to the effect that:
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(i) for the period from and after the date of this Agreement
and prior to such Closing Date, there has not occurred any Material
Adverse Change;
(ii) the representations, warranties and covenants of the
Company set forth in Section 1(A) of this Agreement which are
qualified as to materiality are true and correct, and all other
representations, warranties and covenants of the Company set forth
in Section 1(A) of this Agreement are true and correct in all
material respects, with the same force and effect as though
expressly made on and as of such Closing Date; and
(iii) the Company has complied in all material respects with
all the agreements hereunder and satisfied all the conditions on
its part to be performed or satisfied hereunder at or prior to such
Closing Date.
(g) BRING-DOWN COMFORT LETTER. On each of the First Closing Date
and the Second Closing Date the Representatives shall have received from
KPMG LLP, independent public or certified public accountants for the
Company, a letter dated such date, in form and substance satisfactory to
the Representatives, to the effect that they reaffirm the statements
made in the letter furnished by them pursuant to subsection (a) of this
Section 5, except that the specified date referred to therein for the
carrying out of procedures shall be no more than three business days
prior to the First Closing Date or Second Closing Date, as the case may
be (and the Representatives shall have received an additional two
conformed copies of such accountants' letter).
(h) OPINION OF COUNSEL FOR THE SELLING SHAREHOLDERS. On the First
Closing Date, the Representatives shall have received the favorable
opinion of counsel for the Selling Shareholders, dated as of the First
Closing Date, the form of which is attached as EXHIBIT B (and the
Representatives shall have received an additional two conformed copies
of such counsel's legal opinion).
(i) SELLING SHAREHOLDERS' CERTIFICATE. On the First Closing Date
the Representatives shall receive a written certificate executed by each
Selling Shareholder or its Attorney-in-Fact, dated as of the First
Closing Date, to the effect that:
(i) the representations, warranties and covenants of such
Selling Shareholder set forth in Section 1(B) of this Agreement
which are qualified as to materiality are true and correct, and all
other representations, warranties and covenants of such Selling
Shareholder set forth in Section 1(B) of this Agreement are true
and correct in all material respects, with the same force and
effect as though expressly made by such Selling Shareholder on and
as of such Closing Date; and
(ii) such Selling Shareholder has complied in all material
respects with all the agreements and satisfied all the conditions
on its part to be performed or satisfied at or prior to such
Closing Date.
(j) SELLING SHAREHOLDERS' DOCUMENTS. On the date hereof, the
Company and the Individual Selling Shareholders shall have furnished for
review by the Representatives copies of the Powers of Attorney and
Custody Agreements executed by each of the Individual Selling
Shareholders and such further information, certificates and documents as
the Representatives may reasonably request. On the date hereof, the
Corporate Selling
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Shareholders shall have furnished for review by the Representatives such
information, certificates and documents as the Representatives may
reasonably request.
(k) LOCK-UP AGREEMENT FROM CERTAIN PERSONS. On the date hereof,
the Company shall have furnished to the Representatives an agreement in
the form of EXHIBIT C hereto from each of the persons set forth on
SCHEDULE C, and such agreement shall be in full force and effect on each
of the First Closing Date and the Second Closing Date.
(l) ADDITIONAL DOCUMENTS. On or before each of the First Closing
Date and the Second Closing Date, the Representatives and counsel for
the Underwriters shall have received such information, documents and
opinions as they may reasonably require for the purposes of enabling
them to pass upon the issuance and sale of the Shares as contemplated
herein, or in order to evidence the accuracy of any of the
representations and warranties, or the satisfaction of any of the
conditions or agreements, herein contained.
If any condition specified in this Section 5 is not satisfied when and
as required to be satisfied, this Agreement may be terminated by the
Representatives by notice to the Company and the Selling Shareholders at any
time on or prior to the First Closing Date and, with respect to the Optional
Shares, at any time prior to the Second Closing Date, which termination shall
be without liability on the part of any party to any other party, except that
Section 4, Section 6, Section 8 and Section 9 shall at all times be
effective and shall survive such termination.
SECTION 6. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If this
Agreement is terminated by the Representatives pursuant to Section 5, Section
7, Section 10 or Section 11 or Section 17, or if the sale to the Underwriters
of the Shares on the First Closing Date is not consummated because of any
refusal, inability or failure on the part of the Company or the Selling
Shareholders to perform any agreement herein or to comply with any provision
hereof, the Company agrees to reimburse the Representatives and the other
Underwriters (or such Underwriters as have terminated this Agreement with
respect to themselves), severally, upon demand for all out-of-pocket expenses
that shall have been reasonably incurred by the Representatives and the
Underwriters in connection with the proposed purchase and the offering and
sale of the Shares, including but not limited to fees and disbursements of
counsel, printing expenses, travel expenses, postage, facsimile and telephone
charges.
SECTION 7. EFFECTIVENESS OF THIS AGREEMENT.
This Agreement shall not become effective until the later of (i)
the execution of this Agreement by the parties hereto and (ii) notification
by the Commission to the Company and the Representatives of the effectiveness
of the Registration Statement under the Securities Act.
Prior to such effectiveness, this Agreement may be terminated by
any party by notice to each of the other parties hereto, and any such
termination shall be without liability on the part of (a) the Company or the
Selling Shareholders to any Underwriter, except that the Company and the
Selling Shareholders shall be obligated to reimburse the expenses of the
Representatives and the Underwriters pursuant to Sections 4 and 6 hereof, (b)
of any Underwriter to the Company or the Selling Shareholders, or (c) of any
party hereto to any other party except
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that the provisions of Section 8 and Section 9 shall at all times be
effective and shall survive such termination.
SECTION 8. INDEMNIFICATION.
(a) INDEMNIFICATION OF THE UNDERWRITERS BY THE COMPANY. The
Company agrees to indemnify and hold harmless each Underwriter, its
officers and employees, and each person, if any, who controls any
Underwriter within the meaning of the Securities Act and the Exchange
Act against any loss, claim, damage, liability or expense, as incurred,
to which such Underwriter or such controlling person may become subject,
under the Securities Act, the Exchange Act or other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the
written consent of the Company), insofar as such loss, claim, damage,
liability or expense (or actions in respect thereof as contemplated
below) arises out of or is based (i) upon any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement, or any amendment thereto, including any
information deemed to be a part thereof pursuant to Rule 430A or Rule
434 under the Securities Act, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary
to make the statements therein not misleading; or (ii) upon any untrue
statement or alleged untrue statement of a material fact contained in
any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto), or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
or (iii) in whole or in part upon any inaccuracy in the representations
and warranties of the Company or the Selling Shareholders contained
herein; or (iv) in whole or in part upon any failure of the Company or
the Selling Shareholders to perform their respective obligations
hereunder or under law; or (v) any act or failure to act or any alleged
act or failure to act by any Underwriter in connection with, or relating
in any manner to, the Common Shares or the offering contemplated hereby,
and which is included as part of or referred to in any loss, claim,
damage, liability or action arising out of or based upon any matter
covered by clause (i) or (ii) above, PROVIDED that the Company shall not
be liable under this clause (v) to the extent that a court of competent
jurisdiction shall have determined by a final judgment that such loss,
claim, damage, liability or action resulted directly from any such acts
or failures to act undertaken or omitted to be taken by such Underwriter
through its bad faith or willful misconduct; and to reimburse each
Underwriter and each such controlling person for any and all expenses
(including the fees and disbursements of counsel chosen by Banc of
America Securities LLC) as such expenses are reasonably incurred by such
Underwriter or such controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action; PROVIDED, HOWEVER, that the
foregoing indemnity agreement shall not apply to any loss, claim,
damage, liability or expense to the extent, but only to the extent,
arising out of or based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in reliance upon and in
conformity with written information furnished to the Company and the
Selling Shareholders by the Representatives expressly for use in the
Registration Statement, any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto); and PROVIDED, FURTHER, that with
respect to any preliminary prospectus, the foregoing indemnity agreement
shall not inure to the benefit of any Underwriter from whom the person
asserting any loss, claim, damage, liability or expense purchased
Shares, or any person controlling such
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Underwriter, if copies of the Prospectus were timely delivered to the
Underwriter pursuant to Section 2 and a copy of the Prospectus (as then
amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) was not sent or given by or on behalf
of such Underwriter to such person, if required by law so to have been
delivered, at or prior to the written confirmation of the sale of the
Shares to such person, and if the Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such loss,
claim, damage, liability or expense. The indemnity agreement set forth
in this Section 8(a) shall be in addition to any liabilities that the
Company may otherwise have.
(b) INDEMNIFICATION OF THE UNDERWRITERS BY THE SELLING
SHAREHOLDERS. Each of the Selling Shareholders (1) jointly and
severally with respect to subsections (i), (ii), (iii)(x) and (v) below
and (2) severally and not jointly with respect to subsections (iii)(y)
and (iv) below, agrees to indemnify and hold harmless each Underwriter,
its officers and employees, and each person, if any, who controls any
Underwriter within the meaning of the Securities Act and the Exchange
Act against any loss, claim, damage, liability or expense, as incurred,
to which such Underwriter or such controlling person may become subject,
under the Securities Act, the Exchange Act or other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the
written consent of the Company), insofar as such loss, claim, damage,
liability or expense (or actions in respect thereof as contemplated
below) arises out of or is based (i) upon any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement, or any amendment thereto, including any
information deemed to be a part thereof pursuant to Rule 430A or Rule
434 under the Securities Act, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary
to make the statements therein not misleading; or (ii) upon any untrue
statement or alleged untrue statement of a material fact contained in
any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto), or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
or (iii) in whole or in part upon any inaccuracy in the representations
and warranties of (x) the Company (as if such Selling Stockholder had
made such representations and warranties jointly and severally with the
Company) or (y) such Selling Shareholder contained herein; or (iv) in
whole or in part upon any failure of such Selling Shareholder to perform
its obligations hereunder or under law; or (v) any act or failure to act
or any alleged act or failure to act by any Underwriter in connection
with, or relating in any manner to, the Common Shares or the offering
contemplated hereby, and which is included as part of or referred to in
any loss, claim, damage, liability or action arising out of or based
upon any matter covered by clause (i) or (ii) above, PROVIDED that no
Selling Shareholder shall be liable under this clause (v) to the extent
that a court of competent jurisdiction shall have determined by a final
judgment that such loss, claim, damage, liability or action resulted
directly from any such acts or failures to act undertaken or omitted to
be taken by such Underwriter through its bad faith or willful
misconduct; and to reimburse each Underwriter and each such controlling
person for any and all expenses (including the fees and disbursements of
counsel chosen by Banc of America Securities LLC) as such expenses are
reasonably incurred by such Underwriter or such controlling person in
connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action;
PROVIDED, HOWEVER, that the foregoing indemnity agreement shall not
apply to any loss, claim, damage, liability or expense to the extent,
but only to the extent, arising out of or based upon any untrue
statement or alleged untrue statement or omission or alleged omission
made in reliance upon
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and in conformity with written information furnished to the Company and
the Selling Shareholders by the Representatives expressly for use in the
Registration Statement, any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto); and PROVIDED, FURTHER, that with
respect to any preliminary prospectus, the foregoing indemnity agreement
shall not inure to the benefit of any Underwriter from whom the person
asserting any loss, claim, damage, liability or expense purchased
Shares, or any person controlling such Underwriter, if copies of the
Prospectus were timely delivered to the Underwriter pursuant to Section
2 and a copy of the Prospectus (as then amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) was
not sent or given by or on behalf of such Underwriter to such person, if
required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Shares to such person, and if the
Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such loss, claim, damage, liability or expense; and
PROVIDED, FURTHER, that the liability of each Selling Shareholder under
the foregoing indemnity agreement shall be limited (the "Indemnification
Limitation") to an amount equal to the product of (i) the number of
Shares sold by such Selling Shareholder multiplied by (ii) the per share
"Offering Price" less the per share "Discounts and Commissions to
Underwriters" set forth on the front cover page of the Prospectus. The
indemnity agreement set forth in this Section 8(a) shall be in addition
to any liabilities that the Selling Shareholders may otherwise have.
The indemnification provided by each Selling Shareholder pursuant to
this Section 8(b) shall be a primary obligation of such Selling
Shareholder and not in the nature of a guarantee or other secondary
obligation.
(c) The liability of the Company under Section 8(a) and the
liability of the Selling Shareholders under Section 8(b) shall be
proportional, as among the Company and the Selling Shareholders, to the
number of Shares sold by the Company or such Selling Shareholder, as
applicable, to the aggregate number of Shares sold by the Company and
the Selling Shareholders; PROVIDED, HOWEVER, that (i) the liability of
the Selling Shareholders under Section 8(b) shall be increased,
proportionately to the number of Shares sold by each Selling
Shareholder, to the extent that the Company does not pay its PRO RATA
share of any loss, claim, damage, liability or expense for which it is
liable under Section 8(a), subject to the Indemnification Limitation and
(ii) no Selling Shareholder shall be liable for the breach of any
representation or warranty of any other Selling Shareholder.
(d) INDEMNIFICATION OF THE COMPANY, ITS DIRECTORS AND OFFICERS
AND THE SELLING SHAREHOLDERS. Each Underwriter agrees, severally and
not jointly, to indemnify and hold harmless the Company, each of its
directors, each of its officers who signed the Registration Statement,
the Selling Shareholders and each person, if any, who controls the
Company or any Selling Shareholder within the meaning of the Securities
Act or the Exchange Act, against any loss, claim, damage, liability or
expense, as incurred, to which the Company, or any such director,
officer, Selling Shareholder or controlling person may become subject,
under the Securities Act, the Exchange Act, or other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the
written consent of such Underwriter), insofar as such loss, claim,
damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based upon any untrue or alleged
untrue statement of a material fact contained in the Registration
Statement, any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto), or arises out of or is based upon the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that
such
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untrue statement or alleged untrue statement or omission or alleged
omission was made in the Registration Statement, any preliminary
prospectus, the Prospectus (or any amendment or supplement thereto), in
reliance upon and in conformity with written information furnished to
the Company and the Selling Shareholders by the Representatives
expressly for use therein; and to reimburse the Company, or any such
director, officer, Selling Shareholder or controlling person for any
legal and other expense reasonably incurred by the Company, or any such
director, officer, Selling Shareholder or controlling person in
connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action. Each
of the Company and each of the Selling Shareholders, hereby acknowledges
that the only information that the Underwriters have furnished to the
Company and the Selling Shareholders expressly for use in the
Registration Statement, any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto) are the statements set forth in the
table in the first paragraph and the second paragraph under the caption
"Underwriting" in the Prospectus; and the Underwriters confirm that such
statements are correct. The indemnity agreement set forth in this
Section 8(d) shall be in addition to any liabilities that each
Underwriter may otherwise have.
(e) NOTIFICATIONS AND OTHER INDEMNIFICATION PROCEDURES. Promptly
after receipt by an indemnified party under this Section 8 of notice of
the commencement of any action, such indemnified party will, if a claim
in respect thereof is to be made against an indemnifying party under
this Section 8, notify the indemnifying party in writing of the
commencement thereof, but the omission so to notify the indemnifying
party will not relieve it from any liability which it may have to any
indemnified party for contribution or otherwise than under the indemnity
agreement contained in this Section 8 or to the extent it is not
prejudiced as a proximate result of such failure. In case any such
action is brought against any indemnified party and such indemnified
party seeks or intends to seek indemnity from an indemnifying party, the
indemnifying party will be entitled to participate in, and, to the
extent that it shall elect, jointly with all other indemnifying parties
similarly notified, by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified
party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party; PROVIDED, HOWEVER, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably
concluded that a conflict may arise between the positions of the
indemnifying party and the indemnified party in conducting the defense
of any such action or that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional
to those available to the indemnifying party, the indemnified party or
parties shall have the right to select one separate counsel to assume
such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties as a group. Upon
receipt of notice from the indemnifying party to such indemnified party
of such indemnifying party's election so to assume the defense of such
action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under
this Section 8 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof unless (i)
the indemnified party shall have employed separate counsel in accordance
with the proviso to the next preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the
expenses of more than one separate counsel (together with local
counsel), approved by the indemnifying party (Banc of America Securities
LLC in the case of Section 8(c) and Section 9 where the Underwriters are
the indemnifying parties), representing the indemnified parties who are
parties to such action) or (ii) the indemnifying party shall not have
employed counsel
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<PAGE>
satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of commencement of the action, in each
of which cases the fees and expenses of counsel shall be at the expense of
the indemnifying party.
(f) SETTLEMENTS. The indemnifying party under
this Section 8 shall not be liable for any 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 against any loss, claim, damage, liability or
expense 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 as contemplated by Section 8(e) hereof, 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 30 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, compromise or consent to the
entry of judgment in any pending or threatened action, suit or proceeding in
respect of which any indemnified party is or could have been a party and
indemnity was or could have been sought hereunder by such indemnified party,
unless such settlement, compromise or consent includes an unconditional
release of such indemnified party from all liability on claims that are the
subject matter of such action, suit or proceeding.
SECTION 9. CONTRIBUTION.
If the indemnification provided for in Section 8 is for any reason
held to be unavailable to or otherwise insufficient to hold harmless an
indemnified party in respect of any losses, claims, damages, liabilities or
expenses referred to therein, then each indemnifying party shall contribute
to the aggregate amount paid or payable by such indemnified party, as
incurred, as a result of any losses, claims, damages, liabilities or expenses
referred to therein (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Selling Shareholders, on
the one hand, and the Underwriters, on the other hand, from the offering of
the Shares pursuant to this Agreement or (ii) if the allocation provided by
clause (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
(i) above but also the relative fault of the Company and the Selling
Shareholders, on the one hand, and the Underwriters, on the other hand, in
connection with the statements or omissions or inaccuracies in the
representations and warranties herein which resulted in such losses, claims,
damages, liabilities or expenses, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the
Selling Shareholders, on the one hand, and the Underwriters, on the other
hand, in connection with the offering of the Shares pursuant to this
Agreement shall be deemed to be in the same respective proportions as the
total net proceeds from the offering of the Shares pursuant to this Agreement
(before deducting expenses) received by the Company and the Selling
Shareholders, and the total underwriting discount received by the
Underwriters, in each case as set forth on the front cover page of the
Prospectus (or, if Rule 434 under the Securities Act is used, the
corresponding location on the Term Sheet) bear to the aggregate initial
public offering price of the Shares as set forth on such cover. The
relative fault of the Company and the Selling Shareholders, on the one hand,
and the Underwriters, on the other hand, shall be determined by reference to,
among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or
25
<PAGE>
alleged omission to state a material fact or any such inaccurate or alleged
inaccurate representation or warranty relates to information supplied by the
Company or the Selling Shareholders, on the one hand, or the Underwriters, on
the other hand, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed
to include, subject to the limitations set forth in Section 8(e), any legal
or other fees or expenses reasonably incurred by such party in connection
with investigating or defending any action or claim. The provisions set
forth in Section 8(e) with respect to notice of commencement of any action
shall apply if a claim for contribution is to be made under this Section 9;
PROVIDED, HOWEVER, that no additional notice shall be required with respect
to any action for which notice has been given under Section 8(e) for purposes
of indemnification.
The Company, the Selling Shareholders and the Underwriters agree
that it would not be just and equitable if contribution pursuant to this
Section 9 were determined by pro rata allocation (even if the Underwriters
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations
referred to in this Section 9.
Notwithstanding the provisions of this Section 9, no Underwriter
shall be required to contribute any amount in excess of the underwriting
commissions received by such Underwriter in connection with the Shares
underwritten by it and distributed to the public. 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 Underwriters' obligations
to contribute pursuant to this Section 9 are several, and not joint, in
proportion to their respective underwriting commitments as set forth opposite
their names in SCHEDULE A. For purposes of this Section 9, each officer and
employee of an Underwriter and each person, if any, who controls an
Underwriter within the meaning of the Securities Act and the Exchange Act
shall have the same rights to contribution as such Underwriter, and each
director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company
with the meaning of the Securities Act and the Exchange Act shall have the
same rights to contribution as the Company.
Notwithstanding the provisions of this Section 9, no Selling
Shareholder shall be required to contribute any amount in excess of the
product of (i) the number of Shares sold by such Selling Shareholder
multiplied by (ii) the per share "Offering Price" less the per share
"Discounts and Commissions to Underwriters" set forth on the front cover page
of the Prospectus (the "Contribution Limitation").
The liability of the Company and the Selling Shareholders under this Section
9 shall be proportional, as among the Company and the Selling Shareholders,
to the number of Shares sold by the Company or such Selling Shareholder, as
applicable, to the aggregate number of Shares sold by the Company and the
Selling Shareholders; PROVIDED, HOWEVER, that (i) the liability of the
Selling Shareholders under this Section 9 shall be increased, proportionately
to the number of Shares sold by each Selling Shareholder, to the extent that
the Company does not pay its PRO RATA share of any loss, claim, damage,
liability or expense for which it is liable under this
27
<PAGE>
Section 9, subject to the Contribution Limitation and (ii) no Selling
Shareholder shall be liable for the breach of any representation or warranty
of any other Selling Shareholder.
SECTION 10. DEFAULT OF ONE OR MORE OF THE SEVERAL UNDERWRITERS.
Default of One or More of the Several Underwriters" . If, on the First
Closing Date or the Second Closing Date, as the case may be, any one or more
of the several Underwriters shall fail or refuse to purchase Shares that it
or they have agreed to purchase hereunder on such date, and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase does not exceed 10% of the aggregate number of
the Shares to be purchased on such date, the other Underwriters shall be
obligated, severally, in the proportions that the number of Firm Shares set
forth opposite their respective names on SCHEDULE A bears to the aggregate
number of Firm Common Shares set forth opposite the names of all such
non-defaulting Underwriters, or in such other proportions as may be specified
by the Representatives with the consent of the non-defaulting Underwriters,
to purchase the Shares which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase on such date. If, on the First
Closing Date or the Second Closing Date, as the case may be, any one or more
of the Underwriters shall fail or refuse to purchase Shares and the aggregate
number of Shares with respect to which such default occurs exceeds 10% of the
aggregate number of Shares to be purchased on such date, and arrangements
satisfactory to the Representatives and the Company for the purchase of such
Shares are not made within 48 hours after such default, this Agreement shall
terminate without liability of any party to any other party except that the
provisions of Section 4, Section 6, Section 8 and Section 9 shall at all
times be effective and shall survive such termination. In any such case
either the Representatives or the Company shall have the right to postpone
the First Closing Date or the Second Closing Date, as the case may be, but in
no event for longer than seven days in order that the required changes, if
any, to the Registration Statement and the Prospectus or any other documents
or arrangements may be effected.
As used in this Agreement, the term "Underwriter" shall be deemed
to include any person substituted for a defaulting Underwriter under this
Section 10. Any action taken under this Section 10 shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
SECTION 11. TERMINATION OF THIS AGREEMENT. Prior to the First
Closing Date this Agreement may be terminated by the Representatives by
notice given to the Company and the Selling Shareholders if at any time (i)
trading or quotation in any of the Company's securities shall have been
suspended or limited by the Commission or by the Nasdaq National Market, or
trading in securities generally on either the Nasdaq Stock Market or the New
York Stock Exchange shall have been suspended or limited, or minimum or
maximum prices shall have been generally established on any of such stock
exchanges by the Commission or the NASD; (ii) a general banking moratorium
shall have been declared by any of federal, New York, California or The
Netherlands authorities; (iii) there shall have occurred any outbreak or
escalation of national or international hostilities or any crisis or
calamity, or any change in the United States or international financial
markets, or any substantial change or development involving a prospective
substantial change in United States' or international political, financial or
economic conditions, as in the judgment of the Representatives is material
and adverse and makes it impracticable to market the Shares in the manner and
on the terms described in the Prospectus or to enforce contracts for the sale
of securities; (iv) in the judgment of the Representatives there shall have
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<PAGE>
occurred any Material Adverse Change; or (v) the Company shall have sustained
a loss by strike, fire, flood, earthquake, accident or other calamity of such
character as in the judgment of the Representatives may interfere materially
with the conduct of the business and operations of the Company regardless of
whether or not such loss shall have been insured. Any termination pursuant
to this Section 11 shall be without liability on the part of (a) the Company
or the Selling Shareholders to any Underwriter, except that the Company and
the Selling Shareholders shall be obligated to reimburse the expenses of the
Representatives and the Underwriters pursuant to Sections 4 and 6 hereof, (b)
any Underwriter to the Company or the Selling Shareholders, or (c) of any
party hereto to any other party except that the provisions of Section 8 and
Section 9 shall at all times be effective and shall survive such termination.
SECTION 12. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY.
The respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers, of the Selling Shareholders and
of the several Underwriters set forth in or made pursuant to this Agreement
will remain in full force and effect, regardless of any investigation made by
or on behalf of any Underwriter or the Company or any of its or their
partners, officers or directors or any controlling person, or the Selling
Shareholders, as the case may be, and will survive delivery of and payment
for the Shares sold hereunder and any termination of this Agreement.
SECTION 13 NOTICES. All communications hereunder shall be in
writing and shall be mailed, hand delivered or telecopied and confirmed to
the parties hereto as follows:
If to the Representatives:
Banc of America Securities LLC
600 Montgomery Street
San Francisco, California 94111
Facsimile: 415-913-5558
Attention: Richard A. Smith
with a copy to:
Banc of America Securities LLC
600 Montgomery Street
San Francisco, California 94111
Facsimile: (415) 913-5553
Attention: Jeffrey R. Lapic, Esq.
and with a copy to:
Latham & Watkins
135 Commonwealth Drive
Menlo Park, California 94025
Facsimile: (650) 463-2600
Attention: Christopher L. Kaufman, Esq.
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If to the Company:
Metron Technology N.V.
1350 Old Bayshore Highway, #360
Burlingame, California 94010
Facsimile: (650) 373-1135
Attention: Ed Segal, President and CEO
with a copy to:
Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, California 94306
Facsimile: (650) 857-0663
Attention: Suzanne Sawochka Hooper, Esq.
If to the Selling Shareholders:
FSI International, Inc.
322 Lake Hazeltine Drive
Chaska, Minnesota 55318
Facsimile: (612) 448-2825
Attention: Luke R. Komarek, Esq.
Entegris, Inc.
3500 Lyman Boulevard
Chaska, Minnesota 55318
Facsimile: (612) 448-2950
Attention: James E. Dauwalter
[Custodian]
[address]
Facsimile: [_____]
Attention: [_____]
Any party hereto may change the address for receipt of communications by
giving written notice to the others.
SECTION 14. SUCCESSORS. This Agreement will inure to the benefit
of and be binding upon the parties hereto, including any substitute
Underwriters pursuant to Section 10 hereof, and to the benefit of the
employees, officers and directors and controlling persons referred to in
Section 8 and Section 9, and in each case their respective successors, and no
other person will have any right or obligation hereunder. The term
"successors" shall not include any purchaser of the Shares as such from any
of the Underwriters merely by reason of such purchase.
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<PAGE>
SECTION 15. PARTIAL UNENFORCEABILITY. The invalidity or
unenforceability of any Section, paragraph or provision of this Agreement
shall not affect the validity or enforceability of any other Section,
paragraph or provision hereof. If any Section, paragraph or provision of
this Agreement is for any reason determined to be invalid or unenforceable,
there shall be deemed to be made such minor changes (and only such minor
changes) as are necessary to make it valid and enforceable.
SECTION 16. (A) GOVERNING LAW PROVISIONS. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE
OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE.
(b) CONSENT TO JURISDICTION. Any legal suit, action or proceeding
arising out of or based upon this Agreement or the transactions contemplated
hereby ("Related Proceedings") may be instituted in the federal courts of the
United States of America located in the Northern District of California or
the courts of the State of California located in the County of San Mateo
(collectively, the "Specified Courts"), and each party irrevocably submits to
the exclusive jurisdiction (except for proceedings instituted in regard to
the enforcement of a judgment of any such court (a "Related Judgment"), as to
which such jurisdiction is non-exclusive) of such courts in any such suit,
action or proceeding. Service of any process, summons, notice or document by
mail to such party's address set forth above shall be effective service of
process for any suit, action or other proceeding brought in any such court.
The parties irrevocably and unconditionally waive any objection to the laying
of venue of any suit, action or other proceeding in the Specified Courts and
irrevocably and unconditionally waive and agree not to plead or claim in any
such court that any such suit, action or other proceeding brought in any such
court has been brought in an inconvenient forum.
(c) WAIVER OF IMMUNITY. With respect to any Related Proceeding,
each party irrevocably waives, to the fullest extent permitted by applicable
law, all immunity (whether on the basis of sovereignty or otherwise) from
jurisdiction, service of process, attachment (both before and after judgment)
and execution to which it might otherwise be entitled in the Specified
Courts, and with respect to any Related Judgment, each party waives any such
immunity in the Specified Courts or any other court of competent
jurisdiction, and will not raise or claim or cause to be pleaded any such
immunity at or in respect of any such Related Proceeding or Related Judgment,
including, without limitation, any immunity pursuant to the United States
Foreign Sovereign Immunities Act of 1976, as amended.
SECTION 17. FAILURE OF ONE OR MORE OF THE SELLING SHAREHOLDERS TO
SELL AND DELIVER COMMON SHARES. If one or more of the Selling Shareholders
shall fail to sell and deliver to the Underwriters the Shares to be sold and
delivered by such Selling Shareholders at the First Closing Date pursuant to
this Agreement, then the Underwriters may at their option, by written notice
from the Representatives to the Company and the Selling Shareholders, either
(i) terminate this Agreement without any liability on the part of any
Underwriter or, except as provided in Sections 4, 6, 8 and 9 hereof, the
Company or the Selling Shareholders, or (ii) purchase the shares which the
Company and other Selling Shareholders have agreed to sell and deliver in
accordance
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<PAGE>
with the terms hereof. If one or more of the Selling Shareholders shall fail
to sell and deliver to the Underwriters the Shares to be sold and delivered
by such Selling Shareholders pursuant to this Agreement at the First Closing
Date, then the Underwriters shall have the right, by written notice from the
Representatives to the Company and the Selling Shareholders, to postpone the
First Closing Date, but in no event for longer than seven days in order that
the required changes, if any, to the Registration Statement and the
Prospectus or any other documents or arrangements may be effected.
SECTION 18. GENERAL PROVISIONS. This Agreement constitutes the
entire agreement of the parties to this Agreement and supersedes all prior
written or oral and all contemporaneous oral agreements, understandings and
negotiations with respect to the subject matter hereof. This Agreement may
be executed in two or more counterparts, each one of which shall be an
original, with the same effect as if the signatures thereto and hereto were
upon the same instrument. This Agreement may not be amended or modified
unless in writing by all of the parties hereto, and no condition herein
(express or implied) may be waived unless waived in writing by each party
whom the condition is meant to benefit. The section headings herein are for
the convenience of the parties only and shall not affect the construction or
interpretation of this Agreement.
Each of the parties hereto acknowledges that it is a sophisticated
business person who was adequately represented by counsel during negotiations
regarding the provisions hereof, including, without limitation, the
indemnification provisions of Section 8 and the contribution provisions of
Section 9, and is fully informed regarding said provisions. Each of the
parties hereto further acknowledges that the provisions of Sections 8 and 9
hereto fairly allocate the risks in light of the ability of the parties to
investigate the Company, its affairs and its business in order to assure that
adequate disclosure has been made in the Registration Statement, any
preliminary prospectus and the Prospectus (and any amendments and supplements
thereto), as required by the Securities Act and the Exchange Act.
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If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to the Company, the Selling Shareholders
and the Custodian the enclosed copies hereof, whereupon this instrument,
along with all counterparts hereof, shall become a binding agreement in
accordance with its terms.
Very truly yours,
METRON TECHNOLOGY N.V.
By:__________________________
Name:
Title:
ENTEGRIS INC.
By:__________________________
Name:
Title:
FSI INTERNATIONAL INC.
By:__________________________
Name:
Title:
J. CHRISTOPHER LEVETT-PRINSEP
UDO JAENSCH
By:__________________________
(Attorney-in-fact)
32
<PAGE>
The foregoing Underwriting Agreement is hereby confirmed and accepted by
the Representatives in San Francisco, California as of the date first above
written.
BANC OF AMERICA SECURITIES LLC
SG COWEN SECURITIES CORPORATION
U.S. BANCORP PIPER JAFFRAY, INC.
Acting as Representatives of the
several Underwriters named in
the attached Schedule A.
By BANC OF AMERICA SECURITIES LLC
By: __________________________
Name:
Title:
33
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
NUMBER OF
FIRM COMMON
UNDERWRITERS SHARES
TO BE PURCHASED
<S> <C>
Banc of America Securities LLC......................
SG Cowen Securities Corporation.....................
U.S. Bancorp Piper Jaffray, Inc.....................
[___]...............................................
-------------------
Total............................ 2,300,000
-------------------
</TABLE>
<PAGE>
SCHEDULE B
<TABLE>
<CAPTION>
NUMBER OF
SELLING SHAREHOLDER FIRM SHARES
TO BE SOLD
<S> <C>
Entegris Inc....................................... 611,962
FSI International, Inc............................. 611,962
Udo Jaensch........................................ 83,225
J. Christopher Levett-Prinsep...................... 142,851
-------------
Total........................................ 1,450,000
-------------
</TABLE>
<PAGE>
SCHEDULE C
<PAGE>
EXHIBIT A
Opinion of counsel for the Company to be delivered
pursuant to Section 5(d) of the Underwriting Agreement.
References to the Prospectus in this EXHIBIT A include any
supplements thereto at the Closing Date.
OPINION TO BE DELIVERED BY COOLEY GODWARD LLP
(i) The Company is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in the United States in which such qualification is
required, whether by reason of the ownership or leasing of property
or the conduct of business, except for such jurisdictions in the
United States where the failure to so qualify or to be in good
standing would not, individually or in the aggregate, result in a
Material Adverse Change.
(ii) Metron Technology Corporation has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the State of California, has corporate
power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus and, to the
best knowledge of such counsel, is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except for such jurisdictions where the failure to so
qualify or to be in good standing would not, individually or in the
aggregate, result in a Material Adverse Change.
(iii) All of the issued and outstanding capital stock
of Metron Technology Corporation has been duly authorized and
validly issued, is fully paid and non-assessable and is owned by
the Company, directly or through subsidiaries, free and clear of
any security interest, mortgage, pledge, lien, encumbrance or, to
the best knowledge of such counsel, any pending or threatened claim.
(iv) To the best of such counsel's knowledge, all of
the outstanding Common Shares (including the Common Shares owned by
Selling Shareholders) have been issued in compliance with the
registration and qualification requirements of federal and state
securities laws. The description of the Company's stock option,
stock bonus and other stock plans or arrangements, and the options
or other rights granted and exercised thereunder, set forth in the
Prospectus accurately and fairly presents the information required
to be shown with respect to such plans, arrangements, options and
rights.
(v) No shareholder of the Company or any other person
has any preemptive right, right of first refusal or other similar
right to subscribe for or purchase securities of the Company
arising pursuant to any material agreement of the Company.
<PAGE>
(vi) Each of the Registration Statement and the Rule
462(b) Registration Statement, if any, has been declared effective
by the Commission under the Securities Act. To the best knowledge
of such counsel, no stop order suspending the effectiveness of
either of the Registration Statement or the Rule 462(b)
Registration Statement, if any, has been issued under the
Securities Act and no proceedings for such purpose have been
instituted or are pending or are contemplated or threatened by the
Commission. Any required filing of the Prospectus and any
supplement thereto pursuant to Rule 424(b) under the Securities Act
has been made in the manner and within the time period required by
such Rule 424(b).
(vii) The Registration Statement, including any Rule
462(b) Registration Statement, the Prospectus and each amendment or
supplement to the Registration Statement and the Prospectus as of
their respective effective or issue dates (other than the financial
statements and supporting schedules included therein or in exhibits
to or excluded from the Registration Statement, as to which no
opinion need be rendered) comply as to form in all material
respects with the applicable requirements of the Securities Act.
(viii) The Common Shares have been approved for
listing on the Nasdaq National Market.
(ix) The statements (i) in the Prospectus under the
captions "Management's Discussion and Analysis and Results of
Operations-Liquidity," "Business-Legal Proceedings," "Certain
Transactions," "Shares Eligible for Future Sale" and "Underwriting"
and (ii) in Item 14 and Item 15 of the Registration Statement,
insofar as such statements constitute matters of law, summaries of
legal matters, documents or legal proceedings, or legal
conclusions, has been reviewed by such counsel and fairly present
and summarize, in all material respects, the matters referred to
therein.
(x) To the best knowledge of such counsel, there are
no legal or governmental actions, suits or proceedings pending or
threatened which are required to be disclosed in the Registration
Statement, other than those disclosed therein.
(xi) To the best knowledge of such counsel, there are
no Existing Instruments required to be described or referred to in
the Registration Statement or to be filed as exhibits thereto other
than those described or referred to therein or filed or
incorporated by reference as exhibits thereto; and the descriptions
thereof and references thereto are correct in all material respects.
(xii) No consent, approval, authorization or other
order of, or registration or filing with, any court or other
governmental authority or agency, is required for the Company's
execution, delivery and performance of the Underwriting Agreement
and consummation of the transactions contemplated thereby and by
the Prospectus, except as required under the Securities Act,
applicable state securities or blue sky laws and from the NASD.
<PAGE>
(xiii) The execution and delivery of the Underwriting
Agreement by the Company and the performance by the Company of its
obligations thereunder (other than performance by the Company of
its obligations under the indemnification section of the
Underwriting Agreement, as to which no opinion need be rendered)
(i) will not constitute a breach of, or Default or a Debt Repayment
Triggering Event under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the
Company or any of its subsidiaries pursuant to any material
agreement of the company; or (ii) to the best knowledge of such
counsel, will not result in any violation of any law,
administrative regulation or administrative or court decree
applicable to the Company or any subsidiary.
(xiv) The Company is not, and after receipt of payment
for the Shares to be sold by it will not be, an "investment
company" within the meaning of Investment Company Act.
(xv) Except as disclosed in the Prospectus under the
caption "Shares Eligible for Future Sale", to the best knowledge of
such counsel, there are no persons with registration or other
similar rights to have any equity or debt securities registered for
sale under the Registration Statement or included in the offering
contemplated by the Underwriting Agreement, other than the Selling
Shareholders, except for such rights as have been duly waived.
In addition, such counsel shall state that they have
participated in conferences with officers and other representatives
of the Company, representatives of the independent public or
certified public accountants for the Company and with
representatives of the Underwriters at which the contents of the
Registration Statement and the Prospectus, and any supplements or
amendments thereto, and related matters were discussed and,
although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the
Prospectus (other than as specified above), and any supplements or
amendments thereto, on the basis of the foregoing, nothing has come
to their attention which would lead them to believe that either the
Registration Statement or any amendments thereto, at the time the
Registration Statement or such amendments became effective,
contained an 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 or that the Prospectus,
as of its date or at the First Closing Date or the Second Closing
Date, as the case may be, contained an untrue statement of a
material fact or omitted 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 (it being
understood that such counsel need express no belief as to the
financial statements or schedules or other financial or statistical
data derived therefrom, included in the Registration Statement or
the Prospectus or any amendments or supplements thereto).
Such counsel shall state that their opinion is expressed
only with respect to the laws of the State of California and the
Federal securities laws of the United States of America, and that
such counsel expresses no opinion as to whether the laws of any
other
<PAGE>
jurisdiction apply and no opinion to the extent that the laws of
any jurisdiction other than those identified above are applicable
to the subject matter of the opinion. In rendering such opinion,
such counsel may rely as to matters of fact, to they extent they
deem proper, on certificates of officers of the Company and public
officials.
OPINION TO BE DELIVERED BY NAUTA DUTILH
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws
of The Netherlands.
(ii) The Company has corporate power and authority to
own, lease and operate its properties and to conduct its business
as described in the Prospectus and to enter into and perform its
obligations under the Underwriting Agreement.
(iii) The Company is duly qualified as a foreign
corporation to transact business and is in good standing in The
Netherlands.
(iv) The authorized, issued and outstanding capital
stock of the Company (including the Common Shares) conform to the
descriptions thereof set forth in the Prospectus. All of the
outstanding Common Shares (including the Common Shares owned by
Selling Shareholders) have been duly authorized and validly issued
and, subject to payment of the consideration set forth in the
Underwriting Agreement, are fully paid and nonassessable. The form
of certificate used to evidence the Common Shares is in due and
proper form and complies with all applicable requirements of the
articles of association of the Company and Netherlands law. The
description of the Company's stock option, stock bonus and other
stock plans or arrangements, and the options or other rights
granted and exercised thereunder, set forth in the Prospectus
accurately and fairly presents the information required to be shown
with respect to such plans, arrangements, options and rights.
(v) No shareholder of the Company or any other person
has any preemptive right, right of first refusal or other similar
right to subscribe for or purchase securities of the Company
arising (i) by operation of the charter or by-laws of the Company
or the applicable law or (ii) to the best knowledge of such
counsel, otherwise.
(vi) The Underwriting Agreement has been duly
authorized, executed and delivered by, and is a valid and binding
agreement of, the Company.
(vii) The Shares to be purchased by the Underwriters
from the Company have been duly authorized in conformity with the
authorized capital of the Company for issuance and sale pursuant to
the Underwriting Agreement and, when issued and delivered by the
Company pursuant to the Underwriting Agreement against payment of
the consideration set forth therein, will be validly issued, fully
paid and nonassessable.
<PAGE>
(viii) Each of the Selling Shareholders has valid
title to all of the Shares which may be sold by such Selling
Shareholder under the Underwriting Agreement.
(ix) The statements (i) in the Prospectus under the
captions "Risk Factors- "Risks related to being a Dutch Company,"
"Management-Duties of Metron Management," "Description of Capital
Shares" and "Shares Eligible for Future Sale," insofar as such
statements constitute matters of Netherlands law, summaries of
Netherlands legal matters, the Company's articles of association,
documents or legal proceedings, or legal conclusions, has been
reviewed by such counsel and fairly present and summarize, in all
material respects, the matters referred to therein.
(x) The execution and delivery of the Underwriting
Agreement by the Company and the performance by the Company of its
obligations thereunder (other than performance by the Company of
its obligations under the indemnification section of the
Underwriting Agreement, as to which no opinion need be rendered)
(i) have been duly authorized by all necessary corporate action on
the part of the Company and (ii) will not result in any violation
of the provisions of the articles of association of the Company.
(xi) To the best knowledge of such counsel, the
Company is not in violation of its articles of association or any
law, administrative regulation or administrative or court decree
applicable to the Company or is not in Default in the performance
or observance of any obligation, agreement, covenant or condition
contained in any material agreement of the Company, except in each
such case for such violations or Defaults as would not,
individually or in the aggregate, result in a Material Adverse
Change.
In rendering such opinion, such counsel may provide that
their opinion is limited to the laws of The Netherlands and may
rely as to matters of fact, to they extent they deem proper, on
certificates of officers of the Company and public officials.
<PAGE>
EXHIBIT B
The opinion of such counsel pursuant to Section 5(h) shall be
rendered to the Representatives at the request of the Company and shall so
state therein. References to the Prospectus in this EXHIBIT B include any
supplements thereto at the Closing Date.
(i) The Underwriting Agreement has been duly authorized,
executed and delivered by or on behalf of, and is a valid and binding
agreement of, such Selling Shareholder, enforceable in accordance with
its terms, except as rights to indemnification thereunder may be limited
by applicable law and except as the enforcement thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally or by general
equitable principles.
(ii) The execution and delivery by such Selling Shareholder of,
and the performance by such Selling Shareholder of its obligations
under, the Underwriting Agreement and its Custody Agreement and its
Power of Attorney will not contravene or conflict with, result in a
breach of, or constitute a default under, the charter or by-laws,
partnership agreement, trust agreement or other organizational
documents, as the case may be, of such Selling Shareholder, or, to the
best of such counsel's knowledge, violate or contravene any provision of
applicable law or regulation, or violate, result in a breach of or
constitute a default under the terms of any agreement or instrument to
which such Selling Shareholder is a party or by which it is bound
identified (a) as a material agreement in such Selling Shareholder's
Annual Report on Form 10-K or (b) by an officer of such Selling
Shareholder, or any judgment, order or decree applicable to such Selling
Shareholder of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over such Selling
Shareholder.
(iii) Such Selling Shareholder has the corporate power, or
legal right and power, and all authorizations and approvals required
under its charter and by-laws or other organizational documents to enter
into the Underwriting Agreement and its Custody Agreement and its Power
of Attorney, to sell, transfer and deliver all of the Shares which may
sold by such Selling Shareholder under the Underwriting Agreement and to
comply with its other obligations under the Underwriting Agreement, its
Custody Agreement and its Power of Attorney.
(iv) Each of the Custody Agreement and Power of Attorney of
such Selling Shareholder has been duly authorized, executed and
delivered by such Selling Shareholder and is a valid and binding
agreement of such Selling Shareholder, enforceable in accordance with
its terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally or by general
equitable principles.
<PAGE>
(v) Assuming that the Underwriters purchase the Shares which are
sold by such Selling Shareholder pursuant to the Underwriting Agreement
for value, in good faith and without notice of any adverse claim, the
delivery of such Shares pursuant to the Underwriting Agreement will pass
valid title to such Shares, free and clear of any security interest,
mortgage, pledge, lieu encumbrance or other claim.
(vi) To the best of such counsel's knowledge, no consent,
approval, authorization or other order of, or registration or filing
with, any court or governmental authority or agency, is required for the
consummation by such Selling Shareholder of the transactions
contemplated in the Underwriting Agreement, except as required under the
Securities Act, applicable state securities or blue sky laws, and from
the NASD.
In rendering such opinion, such counsel may provide that their
opinion is limited to the laws of the State of Minnesota and the federal laws
of the United States and may rely as to matters of fact, to they extent they
deem proper, on certificates of officers of the Selling Shareholders and
public officials.
<PAGE>
EXHIBIT C
__________, 1999
Banc of America Securities LLC
SG Cowen Securities Corporation
U.S. Bancorp Piper Jaffray, Inc.
As Representatives of the Several Underwriters
c/o Banc of America Securities LLC
600 Montgomery Street
San Francisco, California 94111
RE: Metron Technology N.V. (the "Company")
Ladies & Gentlemen:
The undersigned is an owner of record or beneficially of certain Common
Shares of the Company ("Common Shares") or securities convertible into or
exchangeable or exercisable for Common Shares. The Company proposes to carry
out a public offering of Common Shares (the "Offering") for which you will
act as the representatives of the underwriters. The undersigned recognizes
that the Offering will be of benefit to the undersigned and will benefit the
Company by, among other things, raising additional capital for its
operations. The undersigned acknowledges that you and the other underwriters
are relying on the representations and agreements of the undersigned
contained in this letter in carrying out the Offering and in entering into
underwriting arrangements with the Company with respect to the Offering.
In consideration of the foregoing, the undersigned hereby agrees that the
undersigned will not, without the prior written consent of Banc of America
Securities LLC (which consent may be withheld in its sole discretion),
directly or indirectly, sell, offer, contract or grant any option to sell
(including without limitation any short sale), pledge, transfer, establish an
open "put equivalent position" within the meaning of Rule 16a-1(h) under the
Securities Exchange Act of 1934, or otherwise dispose of any Common Shares,
options or warrants to acquire Common Shares, or securities exchangeable or
exercisable for or convertible into Common Shares currently or hereafter
owned either of record or beneficially (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended) by the undersigned, or publicly
announce the undersigned's intention to do any of the foregoing, for a period
commencing on the date hereof and continuing through the close of trading on
the date 180 days after the date of the Prospectus. The undersigned also
agrees and consents to the entry of stop transfer instructions with the
Company's transfer agent and registrar against the transfer of Common Shares
or securities convertible into or exchangeable or exercisable for Common
Shares held by the undersigned except in compliance with the foregoing
restrictions.
<PAGE>
With respect to the Offering only, the undersigned waives any registration
rights relating to registration under the Securities Act of any Common Shares
owned either of record or beneficially by the undersigned, including any
rights to receive notice of the Offering.
This agreement is irrevocable and will be binding on the undersigned and the
respective successors, heirs, personal representatives, and assigns of the
undersigned.
- ---------------------------------------------
Printed Name of Holder
By:
------------------------------------------
Signature
- ---------------------------------------------
Printed Name of Person Signing
(AND INDICATE CAPACITY OF PERSON SIGNING IF
SIGNING AS CUSTODIAN, TRUSTEE, OR ON BEHALF
OF AN ENTITY)
<PAGE>
NAUTA DUTILH
Heden, zeventien november negentienhonderd negenennnegentig verscheen voor
mij, Mr Frits Willem Oldenburg, notaris te Amsterdam:
Cornelius Heih Theodoor Koetsier, werkzaam ten Kantore van mif, notaris, te
1077 WV Amsterdam, Prinses Irenestraat 59, geboren te Heemstede op
vierentwintig juli negentienhondred negenenzestig.
De comparant verklaarde:
Bij een op [november] negentienhonderd negen en negentig genomen besluit van de
algemene vergadering van aandeelhouders van de statutair te Amsterdam, doch
feitelijk te 1322 AD Almere, op het adres Kabelstraat 19, gevestigde besloten
vennootschap met beperkte aansprakelijkheid: METRON TECHNOLOGY B.V., hierna te
noemen: de "Vennootschap" - is besloten de Vennootschap om te zetten in een
naamloze vennootschap en tegelijkertijd de statuten van de Vennootschap te
wijzigen zoals hierna bepaald. Van voormeld besluit blijkt uit een aan deze akte
gehecht exemplaar van de notulen, uit welke notulen blijkt dat de comparant
gemachtigd is om de notariele akte van omzetting en statutenwijziging te
verlijden. Ter uitvoering van voormeld besluit verklaarde de comparant bij dezen
de Vennootschap om te zetten in een naamloze vennootschap en tegelijkertijd de
statuten van de Vennootschap algeheel te wijzigen zodanig dat dezen komen te
luiden als volgt:
STATUTEN
BEGRIPSBEPALINGEN
ARTIKEL 1.
In de statuten van deze vennootschap wordt verstaan onder:
a. DE VENNOOTSCHAP: de rechtspersoon waarop deze statuten betrekking
hebben;
b. DE DIRECTIE: het bestuur van de vennootschap;
c. DE RAAD VAN COMMISSARISSEN: de raad van commissarissen van de
vennootschap;
d. AANDELEN: de gewone aandelen en de preferente aandelen, tenzij uit de
context anders blijkt;
e. AANDEELHOUDERS: de houders van gewone aandelen en de houders van
preferente aandelen, tenzij uit de context anders blijkt;
f. CERTIFICAATHOUDERS: houders van met medewerking door de vennootschap
uitgegeven certificaten van aandelen;
g. CERTIFICAATRECHTEN: de rechten die het Burgerlijk Wetboek of deze
statuten toekennen aan houders van met medewerking van de vennootschap
uitgegeven certificaten van aandelen;
h. DE VERGADERGERECHTIGDEN: aandeelhouders, certificaathouders,
vruchtgebruikers en pandhouders met certificaatrechten;
i. DE ALGEMENE VERGADERING: het orgaan dat gevormd wordt door
stemgerechtigde aandeelhouders van de vennootschap en andere
stemgerechtigden in de vennootschap dan wel de bijeenkomst van
vergadergerechtigden van de vennootschap;
<PAGE>
-2-
j. VERGADERING VAN HOUDERS VAN AANDELEN VAN EEN BEPAALDE SOORT: het orgaan
dat gevormd wordt door stemgerechtigden op aandelen van een bepaalde
soort dan wel de bijeenkomst van de stemgerechtigden op aandelen van een
bepaalde soort;
k. UITKEERBARE RESERVES: het deel van het eigen vermogen van de
vennootschap dat het gestorte en opgevraagde deel van het kapitaal,
vermeerderd met de reserves die krachtens de wet en/of deze statuten
moeten worden aangehouden, te boven gaat;
l. JAARREKENING: de balans, de winst- en verliesrekening en de toelichting
op deze stukken zoals vereist naar Nederlands recht;
m. DOCHTERMAATSCHAPPIJ: een rechtspersoon
(a) waarin de vennootschap of een of meer van haar dochtermaatschappijen
al dan niet krachtens overeenkomst met andere stemgerechtigden alleen of
samen meer dan de helft van de stemrechten in de algemene vergadering
kunnen uitoefenen, of
(b) waarvan de vennootschap of een of meer van haar
dochtermaatschappijen aandeelhouder is/zijn en, al dan niet krachtens
overeenkomst met andere stemgerechtigden, alleen of samen meer dan de
helft van de bestuurders of van de commissarissen kunnen benoemen
of ontslaan, ook indien alle stemgerechtigden stemmen, alsmede andere
rechtspersonen en vennootschappen welke door de wet als
dochtervennootschappen worden aangemerkt, alles in de zin van het
bepaalde in artikel 2:24a Burgerlijk Wetboek;
n. GROEPSMAATSCHAPPIJ: een rechtspersoon waarmede de vennootschap in een
economische eenheid organisatorisch verbonden is.
NAAM, STATUTAIRE ZETEL EN DUUR.
ARTIKEL 2.
1. De vennootschap is genaamd: METRON TECHNOLOGY N.V.
2. Zij is gevestigd te Amsterdam.
3. De vennootschap zal voor onbepaalde duur voortbestaan.
DOEL
ARTIKEL 3.
1. De vennootschap heeft ten doel:
a. het importeren, exporteren, verkopen, distribueren, het leasen
van, het handelen in, de marketing van en het adviseren met
betrekking tot produkten voor de halfgeleiderindustrie of
daaraan verwante produkten, zomede andere produkten die van
belang zijn of kunnen zijn voor de vennootschap daaronder
begrepen haar dochtermaatschappijen;
b. het verkrijgen van en het deelnemen in, het financieren van en
het voeren van beheer over en het zich op andere wijze
interesseren bij andere vennootschappen en ondernemingen, van
welke aard ook;
<PAGE>
-3-
c. het bijeenbrengen van gelden door middel van waardepapieren,
bankleningen, uitgiften van obligaties en andere schuldbrieven,
en het op andere wijze opnemen van geldleningen, het verstrekken
van geldleningen, het verstrekken van garanties, al dan niet
voor schulden van anderen, en in het algemeen het verlenen van
diensten op het gebied van handel en financiering;
d. het investeren in effecten, spaarbewijzen en elke andere vorm
van waardepapieren;
e. het verkrijgen, het ontwikkelen, houden, het te gelde maken,
bezwaren, vervreemden of op enige andere wijze gebruik maken van
onroerende zaken alsmede het verrichten van
makelaarsactiviteiten met betrekking tot onroerende zaken;
f. het factoreren en factureren van handelsopbrengsten, het
salderen van kosten en opbrengsten, het uitvoeren van
onderzoeks- en ontwikkelingsactiviteiten;
g. het commercialiseren van licenties, auteursrechten, patenten,
ontwerpen, geheime procede's of formules, handelsmerken en
verwante belangen, het bevorderen van de verkoop en koop van -
alsmede de handel in - de hiervoor genoemde zaken, daaronder
begrepen het in gebruik geven van deze zaken, het verwerven van
royalties en andere inkomsten verband houdende met de hiervoor
genoemde activiteiten;
h. het voeren van alle handelingen die bevorderlijk zijn,
noodzakelijk, gebruikelijk zijn of verband houden met de
hiervoor genoemde doelstellingen.
2. De doelstellingen, zoals in het voorgaande lid omschreven, worden in de
ruimste zin des woords opgevat en omvatten elke activiteit of elk doel
dat verband houdt met of bevorderlijk kan zijn aan die doelstelling.
AANDELEN KAPITAAL, AANDELEN
ARTIKEL 4.
1. Het maatschappelijk kapitaal van de vennootschap bedraagt achtenveertig
miljoen gulden (NLG 48.000.000,--), verdeeld in veertig miljoen
(40.000.000) gewone aandelen en tien miljoen (10.000.000) preferente
aandelen, met een nominale waarde van zes en negentig cent (NLG 0,96)
elk.
2. De gewone aandelen en de preferente aandelen luiden op naam.
3. Indien de som van (i) het geplaatste kapitaal en (ii) de reserves die
krachtens de wet moeten worden aangehouden, geringer is dan het laatst
vastgestelde wettelijk minimumkapitaal, dan moet de vennootschap een
reserve aanhouden ter grootte van dat verschil.
UITGIFTE VAN AANDELEN
ARTIKEL 5.
1. Nog niet uitgegeven aandelen kunnen tot het bedrag van het
maatschappelijk kapitaal, met inachtneming van het in het Burgerlijk
Wetboek bepaalde, worden uitgegeven krachtens een besluit van de raad
van commissarissen. De bevoegdheid van de raad van commissarissen als
vermeld in de voorgaande zin, zal eindigen vijf jaar na het passeren van
deze akte, tenzij de algemene vergadering deze bevoegdheid heeft
verlengd. Zolang de raad van commissarissen,
<PAGE>
-4-
het orgaan is dat bevoegd is tot uitgifte te besluiten, kan de algemene
vergadering niet tot uitgifte besluiten.
2. Indien de raad van commissarissen de bevoegdheid, als genoemd in lid 1
van dit artikel, niet meer heeft, zal elk besluit tot uitgifte van
aandelen de voorafgaande goedkeuring van de raad van commissarissen
behoeven.
3. Elk besluit tot uitgifte van aandelen dient de voorwaarden en condities
van de uitgifte te bepalen.
4. De vennootschap kan geen eigen aandelen nemen.
FINANCIELE ONDERSTEUNING
ARTIKEL 6.
De vennootschap mag niet, met het oog op het nemen of verkrijgen door anderen
van aandelen in haar kapitaal of van certificaten daarvan, zekerheid stellen,
een koersgarantie geven, zich op andere wijze sterk maken of zich hoofdelijk of
anderszins naast of voor anderen verbinden. Dit verbod geldt ook voor haar
dochtermaatschappijen.
VOORKEURSRECHTEN
ARTIKEL 7.
1. Ingeval van uitgifte van nieuwe aandelen heeft, tenzij hieronder anders
bepaalt, elke houder van aandelen een voorkeursrecht met betrekking tot
aandelen van diezelfde soort naar evenredigheid van het gezamenlijke
bedrag van zijn aandelen van diezelfde soort. Er bestaat geen
voorkeursrecht met betrekking tot aandelen die worden uitgegeven aan
werknemers van de vennootschap of van een groepsmaatschappij.
2. Voorkeursrechten kunnen, met inachtneming van de toepasselijke
bepalingen van het Burgerlijk Wetboek, worden beperkt of uitgesloten
krachtens een besluit van de raad van commissarissen. De bevoegdheid van
de raad van commissarissen als vermeld in de voorgaande zin, zal
eindigen vijf jaar na het passeren van deze akte, tenzij de algemene
vergadering deze bevoegdheid heeft verlengd.
3. De vennootschap kondigt de uitgifte met voorkeursrecht en het tijdvak
waarin dat kan worden uitgeoefend binnen veertien dagen nadat een
besluit daartoe is genomen aan door middel van een schriftelijke
mededeling aan alle aandeelhouders. Het voorkeursrecht kan slechts
worden uitgeoefend gedurende vier weken na de dag van verzending van de
aankondiging.
4. Het bepaalde in artikel 5 leden 1 tot en met 3 en in dit artikel is
eveneens van toepassing op het verlenen van rechten tot het nemen van
aandelen. Aandeelhouders hebben echter geen voorkeursrecht op aandelen
die worden uitgegeven aan iemand die een voordien reeds verkregen recht
tot het nemen van aandelen uitoefent.
STORTING OP AANDELEN BIJ UITGIFTE
ARTIKEL 8.
1. Aandelen worden slechts uitgegeven voor een prijs uitgedrukt in guldens,
die ten minste gelijk is aan de nominale waarde van de aandelen.
Bedongen kan worden dat een deel, ten
<PAGE>
-5-
hoogste drie vierden van het nominale bedrag van de preferente aandelen
pas behoeft te worden gestort nadat de vennootschap het zal hebben
opgevraagd.
2. Storting moet in geld geschieden, voor zover niet een andere inbreng is
overeengekomen.
3. Storting in geld kan in vreemd geld geschieden mits met toestemming van
de vennootschap. Indien storting in vreemd geld is geschied, legt de
vennootschap binnen twee weken na de storting een verklaring van een
bankier neer ten kantore van het handelsregister van de Kamer van
Koophandel en Fabrieken, in welker gebied de vennootschap is
ingeschreven. De verklaring dient te vermelden het bedrag waartegen het
gestorte bedrag vrijelijk in guldens kon worden gewisseld tegen de
betreffende wisselkoers. De vennootschap kan storting verlangen tegen
de wisselkoers op een bepaalde dag binnen twee maanden voor de laatste
dag waarop moet worden gestort, mits de aandelen of certificaten
onverwijld na de uitgifte zullen worden opgenomen in de prijscourant
van een beurs buiten Nederland.
4. Indien storting anders dan in geld geschiedt, maakt de vennootschap een
beschrijving op van hetgeen wordt ingebracht, met vermelding van (i) de
toegekende waarde op een dag die niet eerder dan vijf maanden ligt voor
de dag waarop de aandelen worden uitgegeven, (ii) de toegepaste
waarderingsmethoden, welke moeten voldoen aan de normen die in het
maatschappelijk verkeer als aanvaardbaar worden beschouwd, (iii) het
aantal uit te geven aandelen en (iv) het bedrag van de stortingsplicht
in guldens uitgedrukt. De beschrijving moet ondertekend worden door
alle directeuren.
5. Een accountant moet een verklaring afleggen dat naar zijn mening de
waarde van hetgeen wordt ingebracht ten minste gelijk is aan het bedrag
van de stortingsplicht in guldens uitgedrukt.
6. De bepalingen van lid 4 en 5 zijn niet van toepassing indien de
uitzonderingen opgenomen in de artikelen 2:94b en 94a Burgerlijk Wetboek
van toepassing zijn.
7. De vennootschap legt, binnen acht dagen na de dag waarop de aandelen
zijn genomen, de accountantsverklaring als bedoeld in lid 5, neer bij
het handelsregister van de Kamer van Koophandel en Fabrieken in welker
gebied de vennootschap is ingeschreven, met opgave van de namen van de
verkrijgers van de aandelen waarop anders dan in geld is gestort en van
het bedrag van de storting.
VERKRIJGING EN VERVREEMDING DOOR DE VENNOOTSCHAP VAN EIGEN AANDELEN
ARTIKEL 9.
1. De directie kan, doch slechts met machtiging van de algemene
vergadering-welke machtiging slechts geldt voor ten hoogste achttien
maanden-, de vennootschap volgestorte aandelen in haar eigen kapitaal
onder bezwarende titel doen verkrijgen, indien:
a. het eigen vermogen, verminderd met de verkrijgingsprijs, niet
kleiner is dan de som van (i) het geplaatste kapitaal, en (ii)
de reserves die krachtens de wet en/of deze statuten moeten
worden aangehouden;
<PAGE>
-6-
b. het nominale bedrag van de aandelen van de te verkrijgen en de
reeds door de vennootschap en haar dochtermaatschappijen tezamen
gehouden aandelen in haar kapitaal niet meer dan tien procent
(10 %) van het geplaatste kapitaal bedraagt.
Voor de geldigheid van de verkrijging is bepalend de grootte van
het eigen vermogen volgens de laatst vastgestelde balans,
verminderd met de verkrijgingsprijs voor aandelen in het
kapitaal van de vennootschap en uitkeringen uit winst of
reserves aan anderen, die na de balansdatum opeisbaar zijn
geworden.
2. De algemene vergadering moet in de machtiging, als bedoeld in lid 1,
bepalen hoeveel aandelen mogen worden verkregen, hoe zij mogen worden
verkregen en tussen welke grenzen de prijs moet liggen.
3. De machtiging, als bedoeld in lid 1, is niet vereist indien de
vennootschap eigen aandelen verkrijgt om, krachtens een voor hen
geldende regeling, over te dragen aan werknemers in dienst van de
vennootschap of van een groepsmaatschappij, met dien verstande dat de
aandelen moeten zijn opgenomen in de prijscourant van een beurs.
4. Is een boekjaar meer dan zes maanden verstreken zonder dat de
jaarrekening is vastgesteld, dan is een verkrijging overeenkomstig lid 1
niet toegestaan.
5. Vervreemding door de vennootschap van aandelen in haar eigen kapitaal
kan slechts geschieden ingevolge een besluit van de raad van
commissarissen. Bij het nemen van het besluit tot vervreemding van zulke
aandelen zal de raad van commissarissen de voorwaarden waaronder die
vervreemding wordt geeffectueerd eveneens vaststellen.
6. Indien certificaten van aandelen in de vennootschap zijn uitgegeven
(ongeacht of die met of zonder medewerking van de vennootschap zijn
uitgegeven), worden bij de berekening op grond van en overeenkomstig het
bepaalde in lid 1 van dit artikel dergelijke certificaten mee geteld.
VERMINDERING VAN HET GEPLAATSTE KAPITAAL
ARTIKEL 10.
1. De algemene vergadering kan, op een daartoe strekkend voorstel van de
raad van commissarissen, besluiten tot vermindering van het geplaatste
kapitaal door (i) intrekking van aandelen of door (ii) vermindering van
het bedrag van de aandelen door statutenwijziging, mits (a) het
geplaatste kapitaal niet kleiner wordt dan het ten tijde van het besluit
laatst vastgestelde wettelijk minimumkapitaal en (b) artikel 4, lid 3
van deze statuten in acht genomen wordt.
2. Indien een voorgenomen kapitaalvermindering tot gevolg heeft dat minder
dan twintig procent (20%) van het maatschappelijk kapitaal is geplaatst,
dienen eerst deze statuten gewijzigd te worden teneinde het
maatschappelijk kapitaal te verlagen tot het ingevolge artikel 4, lid 3
van deze statuten toegestane bedrag.
<PAGE>
-7-
3. Een besluit tot intrekking van aandelen kan slechts aandelen betreffen
die de vennootschap zelf houdt of waarvan zij de certificaten houdt
(ongeacht of die met of zonder medewerking van de vennootschap zijn
uitgegeven).
4. Vermindering van het bedrag van aandelen zonder terugbetaling dan wel
gedeeltelijke terugbetaling op aandelen moet naar evenredigheid op alle
aandelen geschieden. Van het vereiste van evenredigheid mag worden
afgeweken met instemming van alle aandeelhouders.
5. De oproeping tot een algemene vergadering waarin een in dit artikel
bedoeld besluit wordt genomen, vermeldt het doel en de wijze van
uitvoering van de kapitaalvermindering.
6. In het besluit tot kapitaalvermindering moeten de aandelen waarop het
besluit betrekking heeft, worden aangewezen en moet de uitvoering van
het besluit zijn geregeld.
7. De vennootschap legt een besluit tot vermindering van het geplaatste
kapitaal neer bij het handelsregister van de Kamer van Koophandel en
Fabrieken in welker gebied de vennootschap is ingeschreven en kondigt de
nederlegging aan in een landelijk verspreid dagblad.
AANDEELBEWIJZEN
ARTIKEL 11
1. Op schriftelijk verzoek van een aandeelhouder worden aandeelbewijzen
afgegeven terzake van de door die aandeelhouder gehouden aandelen. De
vorm en de inhoud van de aandeelbewijzen zal worden vastgesteld door de
raad van commissarissen.
2. Aandeelbewijzen voor meer dan een aandeel kunnen worden afgegeven.
Dergelijke meervoudige aandeelbewijzen kunnen te allen tijde kosteloos
worden omgewisseld voor enkelvoudige bewijzen en vice versa.
3. De aandeelbewijzen worden getekend door een lid van de directie of door
een daartoe gemachtigde "transfer agent", hetzij door middel van een
originele handtekening hetzij door een facsimile handtekening.
4. Indien aandeelbewijzen beschadigd zijn, verloren zijn gegaan of zijn
vermist, kan de directie of een daartoe gemachtigde "transfer agent"
duplicaten daarvan afgeven en de voorwaarden voor een dergelijke afgifte
vaststellen. Als gevolg van de afgifte van duplicaten, zijn de originele
stukken waardeloos ten opzichte van de vennootschap. De nieuwe bewijzen
dragen dezelfde nummers en letters als de stukken voor welke zij in de
plaats zijn getreden.
5. De aandelen zijn per soort doorlopend genummerd van 1 af.
AANDEELHOUDERSREGISTER
ARTIKEL 12.
1. De directie of een daartoe gemachtigde "transfer agent" houdt een
register, waarin de namen en adressen van alle aandeelhouders worden
opgenomen, met vermelding van de datum waarop zij de aandelen hebben
verkregen, het aantal en soort van de door hen gehouden aandelen, de
datum van de erkenning of betekening, alsmede van het op ieder aandeel
gestorte bedrag bij uitgifte. Het register vermeldt voorts de namen en
adressen van hen die een recht
<PAGE>
-8-
van vruchtgebruik of pandrecht op aandelen hebben, met vermelding van de
datum waarop zij het recht hebben verkregen, de datum van erkenning of
betekening, alsmede met vermelding of het aan aandelen verbonden
stemrecht of de certificaathoudersrechten hen toekomt.
2. Het register wordt regelmatig bijgehouden.
3. Van het register kan, naar goeddunken van de directie, een deel of het
geheel in meer dan een exemplaren worden aangehouden op meer dan een
plaats, echter een exemplaar dient te allen tijde te worden gehouden ten
kantore van de vennootschap. De directie zal, met in achtneming van het
bepaalde in dit artikel, de vorm en inhoud van het (de) register(s)
vaststellen.
4. De directie legt het register ten kantore van de vennootschap ter inzage
van de aandeelhouders, alsmede van de vruchtgebruikers en pandhouders
die de certificaathoudersrechten hebben. De vorige zin is niet van
toepassing op (het gedeelte van) het register dat buiten Nederland ter
voldoening aan de aldaar geldende wetgeving of ingevolge
beursvoorschriften wordt gehouden. De gegevens van het register omtrent
niet-volgestorte aandelen zijn ter inzage van een ieder; afschrift of
uittreksel van deze gegevens wordt ten hoogste tegen kostprijs
verstrekt.
5. De directie of een daartoe gemachtigde "transfer agent" verstrekt
desgevraagd aan een aandeelhouder, een vruchtgebruiker en een pandhouder
om niet een uittreksel uit het register met betrekking tot zijn recht op
een aandeel. Rust op het aandeel een recht van vruchtgebruik of een
pandrecht, dan vermeldt het uittreksel aan wie certificaathoudersrechten
toekomen.
6. Iedere aandeelhouder, certificaathouder, vruchtgebruiker en pandhouder
is verplicht aan de directie zijn adres op te geven.
7. Indien een aandeel of een daarvoor (met medewerking van de vennootschap)
uitgegeven certificaat, tot een gemeenschap behoren, kunnen de
gezamenlijke deelgenoten zich slechts door een schriftelijk door hen
daartoe aangewezen persoon tegenover de vennootschap doen
vertegenwoordigen. De gezamenlijke deelgenoten kunnen ook meer dan een
persoon aanwijzen.
Indien de gemeenschap aandelen omvat, kunnen de gezamenlijke
deelgenoten - mits eenstemmig - bij de aanwijzing of later bepalen dat,
indien een deelgenoot dat verlangt, een zodanig aantal stemmen
overeenkomstig zijn aanwijzing zal worden uitgebracht als
overeenkomt met het gedeelte waarvoor hij in de gemeenschap is
gerechtigd.
OPROEPINGEN EN KENNISGEVINGEN
ARTIKEL 13.
1. Oproepingen en kennisgevingen geschieden bij al dan niet aangetekende
brief. Indien het betreft oproepingen en kennisgevingen aan
aandeelhouders, certificaathouders, vruchtgebruikers en pandhouders,
geschieden deze aan de laatstelijk aan de directie opgegeven adressen.
Betreft het kennisgevingen door aandeelhouders, certificaathouders,
vruchtgebruikers en pandhouders aan de directie of aan de raad van
commissarissen, dan geschieden deze aan het kantoor der vennootschap.
<PAGE>
-9-
2. Als datum van een oproeping en kennisgeving geldt de datum van het
stempel van het bewijs van terpostbezorging van de aangetekende brief
respectievelijk van verzending.
3. Kennisgevingen die krachtens de wet of deze statuten aan de algemene
vergadering moeten worden gericht, kunnen geschieden door deze
kennisgevingen op te nemen in de oproepingsbrieven.
OVERDRACHT VAN AANDELEN EN BEPERKTE RECHTEN OP AANDELEN
ARTIKEL 14.
1. Voor de levering van een aandeel of de levering van een beperkt recht
daarop zijn vereist een daartoe bestemde akte alsmede, behoudens in het
geval de vennootschap zelf bij die rechtshandeling partij is,
schriftelijke erkenning door de vennootschap van de levering.
2. Erkenning door de vennootschap van enige levering zal geschieden door
een lid van de directie of door een daartoe gemachtigde "transfer agent"
in de akte, of door een gedagtekende verklaring houdende de erkenning op
de akte of op een notarieel of door de vervreemder gewaarmerkt afschrift
of uittreksel daarvan. Indien voor een aandeel een aandeelbewijs is
afgegeven, dan is voor enige levering de afgifte van het betreffende
aandeelbewijs aan de vennootschap of aan een daartoe gemachtigde
"transfer agent" vereist. Indien het aandeelbewijs aan de vennootschap
of aan een daartoe gemachtigde "transfer agent" wordt afgegeven, kan de
vennootschap of de daartoe gemachtigde "transfer agent" de levering
tevens erkennen door op dat aandeelbewijs een aantekening te plaatsen
waaruit van de erkenning blijkt of door het afgegeven bewijs te
vervangen door een nieuw bewijs luidende ten name van de verkrijger.
3. Betekening van een akte, als bedoeld in lid 2, of van een afschrift of
uittreksel daarvan aan de vennootschap zal geacht worden hetzelfde
effect te hebben als een erkenning.
4. In het geval van levering van niet-volgestorte aandelen kan de erkenning
slechts geschieden wanneer de akte een geregistreerde of anderzins vaste
dagtekening draagt.
VRUCHTGEBRUIK EN PANDRECHT OP AANDELEN
ARTIKEL 15.
1. Elke aandeelhouder is gerechtigd op een of meer van de door hem geheel
of gedeeltelijk gehouden aandelen een recht van vruchtgebruik of een
pandrecht te vestigen. De aandeelhouder heeft het stemrecht op aandelen
waarop een recht van vruchtgebruik of pandrecht is gevestigd.
2. In afwijking van het bepaalde in de laatste zin van het voorgaande lid
komt het stemrecht toe aan de vruchtgebruiker of de pandhouder indien
zulks bij de vestiging van het beperkt recht is bepaald en is
goedgekeurd door de raad van commissarissen.
3. Indien een ander de rechten van een stemgerechtigde pandhouder verwerft
komt hem het stemrecht slechts toe, indien de overgang van het stemrecht
door de raad van commissarissen is goedgekeurd.
<PAGE>
-10-
4. De goedkeuring als hiervoor in de leden 2 en 3 bedoeld moet worden
verzocht aan de raad van commissarissen.
Zo spoedig mogelijk doch uiterlijk binnen dertig dagen na ontvangst
van het verzoek om goedkeuring wordt een vergadering van de raad van
commissarissen bijeengeroepen, waaraan het verzoek om goedkeuring
wordt voorgelegd. Indien de raad van commissarissen in gebreke blijft
bedoelde vergadering te houden, is de verzoeker zelf tot bijeenroeping
van de raad van commissarissen bevoegd met inachtneming van het
daaromtrent in deze statuten bepaalde.
5. De aandeelhouder die geen stemrecht heeft en de vruchtgebruiker en
pandhouder die stemrecht hebben, hebben certificaatrechten.
DIRECTIE
ARTIKEL 16.
1. De vennootschap heeft een directie bestaande uit een of meer directeuren
A en een of meer directeuren B onder toezicht van een raad van
commissarissen.
2. Het aantal directeuren wordt vastgesteld door de raad van
commissarissen.
3. Zowel een natuurlijke als een rechtspersoon kan directeur zijn.
4. De algemene vergadering benoemt de directeuren voor onbepaalde tijd en
is te allen tijde bevoegd iedere directeur te schorsen of te ontslaan.
Een besluit tot benoeming van een directeur kan slechts genomen worden
op voorstel van de raad van commissarissen. De algemene vergadering zal
tegelijk met de benoeming van een directeur bepalen of hij een directeur
A of een directeur B zal zijn. Elke directeur kan tevens te allen tijde
worden geschorst door de raad van commissarissen.
5. Een aandeelhoudersbesluit tot schorsing of ontslag van een directeur
moet genomen worden met een twee/derde meerderheid van de geldig
uitgebrachte stemmen, vertegenwoordigende meer dan de helft van het
geplaatste kapitaal. Het bepaalde in artikel 2:120 lid 3 Burgerlijk
Wetboek inhoudende dat een nieuwe vergadering bijeen geroepen kan worden
waarin het besluit kan worden genomen onafhankelijk van het op deze
vergadering vertegenwoordigd gedeelte van het kapitaal, is niet van
toepassing.
6. De benoeming van de directeuren kan geschieden uit een bindende
voordracht, welke tenminste twee personen voor iedere te vervullen
vacature bevat, opgemaakt door de raad van commissarissen binnen drie
maanden nadat de raad van commissarissen daartoe door de directie bij
aangetekende brief is uitgenodigd. Indien binnen bedoelde termijn geen
bindende voordracht is opgemaakt, is de algemene vergadering vrij in
haar keuze. De algemene vergadering is voorts vrij in haar keuze indien
zij aan een voordracht het bindend karakter ontneemt bij een besluit
genomen met ten minste twee/derden van de uitgebrachte stemmen in een
vergadering waarin meer dan de helft van het geplaatste kapitaal
aanwezig of vertegenwoordigd is. Het bepaalde n artikel 2:120 lid 3
Burgerlijk Wetboek is niet van toepassing.
<PAGE>
-11-
7. Indien, ingeval van schorsing van een directeur, de algemene vergadering
niet binnen drie maanden tot zijn ontslag heeft besloten eindigt de
schorsing.
8. Een directeur wordt in de algemene vergadering waarin zijn schorsing of
ontslag aan de orde komt in de gelegenheid gesteld zich te verantwoorden
en zich daarbij door een raadsman te doen bijstaan.
9. De raad van commissarissen stelt de beloning en de verdere
arbeidsvoorwaarden van ieder van de directeuren vast.
TAAK EN BEVOEGDHEDEN
ARTIKEL 17.
1. Behoudens de beperkingen opgenomen in deze statuten is de directie
belast met het besturen van de vennootschap.
2. Indien de directie uit een directeur A bestaat, zal deze directeur A de
voorzitter zijn van de directie. Indien de directie uit meer dan een
directeur A bestaat, bepalen zij onderling wie van hen de voorzitter van
de directie zal zijn.
3. De directie kan, met inachtneming van deze statuten en de wet, een
reglement opstellen, waarin aangelegenheden, haar intern betreffende,
worden geregeld. Voorts kunnen de directeuren, al dan niet bij
reglement, hun werkzaamheden onderling verdelen.
4. De directie vergadert, zo dikwijls een directeur dit verlangt.
5. De directie besluit bij volstrekte meerderheid van de uitgebrachte
stemmen, in een vergadering waarin ten minste de meerderheid van de
leden aanwezig of vertegenwoordigd is, waaronder te allen tijde begrepen
alle directeuren A. Een directeur kan ter vergadering schriftelijk
vertegenwoordigd worden door een andere directeur. Bij staking van
stemmen is het voorstel verworpen.
6. De directie kan ook buiten vergadering besluiten nemen, mits dit
geschiedt (i) met algemene stemmen en voorts schriftelijk, per telegram,
per telefax of per telexbericht, of (ii) per telefoon door een
meerderheid van de op dat moment in functie zijnde directeuren mits alle
directeuren zijn geraadpleegd terzake van het te nemen besluit en geen
van hen zich heeft verzet tegen deze wijze van besluitvorming.
7. Het door de voorzitter van de directie uitgesproken oordeel omtrent de
uitslag van een stemming, alsmede het oordeel over de inhoud van een
genomen besluit is, voorzover gestemd werd over een niet schriftelijk
vastgelegd voorstel, beslissend. Wordt echter onmiddellijk na het
uitspreken van het in de voorgaande zin bedoelde oordeel de juistheid
daarvan betwist, dan vindt een nieuwe stemming plaats, wanneer dit bij
meerderheid van stemmen wordt verlangd, of indien de oorspronkelijke
stemming niet hoofdelijk of schriftelijk geschiedde, een stemgerechtigde
aanwezige dit verlangt. Door deze nieuwe stemming vervallen de
rechtsgevolgen van de oorspronkelijke stemming.
<PAGE>
-12-
8. De directie behoeft de goedkeuring van de raad van commissarissen voor
zodanige bestuursbesluiten als de raad van commissarissen bij haar
specifiek omschreven besluit zal hebben vastgesteld en aan de directie
heeft medegedeeld.
9. Ingevolge het bepaalde in artikel 2:130 Burgerlijk Wetboek, zal het
ontbreken van de ingevolge het lid 8 van dit artikel vereiste
goedkeuring de vertegenwoordigingsbevoegdheid, zoals opgenomen in
artikel 18, van de directie of de directeuren niet aantasten.
10. De directie is verplicht de aanwijzingen van de raad van commissarissen
op te volgen omtrent de algemene lijnen van het te volgen financiele,
sociale en economische beleid en van het personeelsbeleid in de
vennootschap.
11. Ingeval van ontstentenis of belet van een of meer directeuren is (zijn)
de overblijvende directeur(en) met het gehele bestuur belast; ingeval
van ontstentenis of belet van alle directeuren of van de enige directeur
berust het bestuur tijdelijk bij een persoon, die daartoe door de raad
van commissarissen steeds moet zijn aangewezen.
12. De directeuren hebben het recht de algemene vergadering bij te wonen, in
de algemene vergaderingen hebben zij een adviserende stem.
VERTEGENWOORDIGING
ARTIKEL 18.
1. De directie, zomede iedere directeur A afzonderlijk, is bevoegd de
vennootschap te vertegenwoordigen en de vennootschap jegens derden te
verbinden. Een directeur B is slechts bevoegd de vennootschap te
vertegenwoordigen gezamenlijk handelend met een andere directeur.
2. Indien een directeur in prive een overeenkomst met de vennootschap sluit
of in prive enigerlei procedure tegen de vennootschap voert, kan de
vennootschap ter zake worden vertegenwoordigd, hetzij door een der
andere directeuren hetzij door een door de raad van commissarissen aan
te wijzen commissaris, alles tenzij de algemene vergadering daartoe een
persoon aanwijst of de wet op andere wijze in de aanwijzing voorziet.
Zodanige persoon kan ook zijn de directeur, te wiens aanzien het
strijdig belang bestaat. Indien een directeur op een andere wijze dan in
de eerste zin van dit lid omschreven een belang heeft, dat strijdig is
met dat der vennootschap, is hij, evenals iedere andere directeur,
bevoegd de vennootschap te vertegenwoordigen, met inachtneming van het
bepaalde in het eerste lid van dit artikel.
3. De directie kan aan een of meer personen, al dan niet in dienst der
vennootschap, procuratie of anderszins doorlopende
vertegenwoordigingsbevoegdheid verlenen. De vennootschap legt een
exemplaar van het betreffende besluit, waarin de grenzen van de
volmacht, indien die er zijn, worden opgesomd, neer bij het
handelsregister van de Kamer van Koophandel en Fabrieken in welker
gebied de vennootschap is ingeschreven. Tevens kan de directie aan
personen, als in de vorige zin bedoeld, alsook aan andere personen, mits
in dienst der vennootschap, zodanige titel (zoals directeur, officer of
anderszins) toekennen, als zij zal verkiezen.
<PAGE>
-13-
RAAD VAN COMMISSARISSEN
ARTIKEL 19.
1. De vennootschap heeft een raad van commissarissen bestaande uit een of
meer natuurlijke personen.
2. De raad van commissarissen stelt het aantal commissarissen in functie
vast.
3. De algemene vergadering zal alle commissarissen benoemen met
inachtneming van het bepaalde in artikel 16 lid 6 en zal te allen tijde
bevoegd zijn elk van die commissarissen te schorsen of te ontslaan met
inachtneming van het bepaalde in artikel 16 lid 5. Een besluit tot
benoeming van een commissaris kan slechts genomen worden op voorstel van
de raad van commissarissen.
4. De raad van commissarissen kan aan de commissarissen of aan een of meer
van hen een beloning toekennen. Aan commissarissen worden de door hen
alszodanig in redelijkheid gemaakte kosten vergoed.
5. De raad van commissarissen heeft tot taak toezicht te houden op het
beleid van de directie en op de algemene gang van zaken in de
vennootschap en de met haar verbonden onderneming. Hij staat de directie
met raad terzijde. Bij de vervulling van hun taak richten de
commissarissen zich naar het belang van de vennootschap en de met haar
verbonden onderneming.
6. De directie verstrekt alle inlichtingen betreffende de zaken van de
vennootschap aan iedere commissaris, die deze mocht verlangen. De raad
van commissarissen is bevoegd inzage te nemen van alle boeken,
bescheiden en correspondentie van de vennootschap en tot kennisneming
van alle plaats gehad hebbende handelingen; iedere commissaris heeft
toegang tot alle gebouwen en terreinen bij de vennootschap in gebruik.
7. De raad van commissarissen kan zich in de uitoefening van zijn taak voor
rekening van de vennootschap doen bijstaan door deskundigen. De raad van
commissarissen benoemt een secretaris, die geen lid van de raad van
commissarissen behoeft te zijn, en zal voorzieningen treffen voor het
geval de secretaris afwezig is bij de vergaderingen van de raad van
commissarissen. De secretaris zal notulen houden van de vergaderingen
van de raad van commissarissen. De notulen worden in de betreffende of
in een opvolgende vergadering aangenomen.
8. Indien de raad van commissarissen uit meer dan een lid bestaat benoemt
de raad van commissarissen een van hen tot voorzitter. In dat geval kan
de raad van commissarissen tevens een vice-voorzitter benoemen. De raad
van commissarissen kan voorts een of meer commissarissen benoemen tot
gedelegeerd commissaris, die meer in het bijzonder met het dagelijks
toezicht op de handelingen van de directie is belast. De raad van
commissarissen kan, met inachtneming van zodanige beperkingen als uit de
toepasselijke wet voortvloeien, elk van zijn bevoegdheden delegeren aan
commissies, bestaande uit een zodanig lid of zodanige leden uit zijn
midden, als de raad van com-
<PAGE>
-14-
missarissen wenselijk acht; elke commissie zal zich in de uitoefening
van de haar op die wijze toegekende bevoegdheden voegen naar de
regelingen waaraan zij door de raad van commissarissen onderworpen kan
worden. De raad van commissarissen kan een eigen reglement opstellen
dat, in aanvulling op de voorafgaande bepalingen, de in acht te nemen
formaliteiten regelt voor de vergaderingen van de raad van
commissarissen.
9. De raad van commissarissen komt steeds bijeen wanneer zijn voorzitter of
twee andere leden van de raad van commissarissen zulks nodig achten.
Oproeping voor vergaderingen van de raad van commissarissen geschieden
door de voorzitter van de raad van commissarissen - onder vermelding van
de te behandelen onderwerpen - en in geval van zijn verhindering of
blijvende afwezigheid door een van de andere commissarissen; de
oproepingstermijn voor een vergadering bedraagt minimaal acht dagen.
Indien zulks verzocht wordt zal de directie de vergaderingen van de raad
van commissarissen bijwonen; alsdan heeft de directie een adviserende
stem.
10. De raad van commissarissen kan besluiten eveneens buiten vergadering
nemen, mits dit geschiedt (i) met algemene stemmen en voorts
schriftelijk, per telegram, per telefax of per telexbericht, of (ii) per
telefoon door een meerderheid van de op dat moment in functie zijnde
commissarissen mits alle commissarissen zijn geraadpleegd terzake van
het te nemen besluit en geen van hen zich heeft verzet tegen deze wijze
van besluitvorming.
11. De raad van commissarissen besluit bij volstrekte meerderheid van de
uitgebrachte stemmen, in een vergadering waarin ten minste de
meerderheid van de leden aanwezig of vertegenwoordigd is. Een
commissaris kan ter vergadering vertegenwoordigd worden door een
schriftelijk gevolmachtigde mede-commissaris. Indien twee vergaderingen
bijeengeroepen zijn zonder dat een meerderheid van de commissarissen
aanwezig of vertegenwoordigd was op die betreffende vergadering, kunnen
de wel aanwezige of vertegenwoordigde commissarissen in een volgende
vergadering geldige besluiten nemen, ongeacht of het quorum aanwezig is
in deze vergadering. Bij staking van stemmen is het voorstel verworpen,
tenzij er meer dan twee commissarissen, met inbegrip van de voorzitter,
ter vergadering aanwezig zijn; alsdan heeft de voorzitter een
beslissende stem.
12. Het door de voorzitter van de raad van commissarissen uitgesproken
oordeel omtrent de uitslag van een stemming, alsmede het oordeel over de
inhoud van een genomen besluit is, voorzover gestemd werd over een niet
schriftelijk vastgelegd voorstel, beslissend. Wordt echter onmiddellijk
na het uitspreken van het in de voorgaande zin bedoelde oordeel de
juistheid daarvan betwist, dan vindt een nieuwe stemming plaats, wanneer
dit bij meerderheid van stemmen wordt verlangd, of indien de
oorspronkelijke stemming niet hoofdelijk of schriftelijk geschiedde, een
stemgerechtigde aanwezige dit verlangt.
<PAGE>
-15-
Door deze nieuwe stemming vervallen de rechtsgevolgen van de
oorspronkelijke stemming.
13. Alle besluiten van de raad van commissarissen, ook die welke buiten
vergadering zijn genomen, worden opgenomen in een notulenregister.
14. Wanneer de vennootschap van enig besluit van de raad van commissarissen
wil doen blijken is de ondertekening van het stuk, waarin het besluit is
vervat, door de secretaris, als vermeld in lid 7 van dit artikel, of
door een lid van de raad voldoende.
15. Een commissaris wordt benoemd voor een periode van in beginsel een jaar,
aanvangend op de dag volgend op de dag van zijn (her)benoeming in de
jaarlijkse algemene vergadering en eindigend op de dag van de jaarlijkse
algemene vergadering gehouden in het daarop volgende boekjaar. Indien
een commissaris niet is benoemd in de jaarlijkse algemene vergadering,
maar in een buitengewone algemene vergadering zal hij in beginsel
zitting hebben voor een periode korter dan een jaar, welke periode
aanvangt op de dag volgend op zijn (her)benoeming in de buitengewone
algemene vergadering en eindigt op de dag van de eerste jaarlijkse
algemene vergadering die zal worden gehouden na bovenvermelde
buitengewone algemene vergadering. Na verloop van zijn zittingsduur is
hij onmiddellijk herbenoembaar voor een volgende periode van een jaar,
tenzij hij in het boekjaar waarin de vergadering wordt gehouden de
leeftijd van twee en zeventig jaar heeft bereikt of zal bereiken.
Degene, die de leeftijd van twee en zeventig jaar heeft bereikt, kan
niet tot commissaris worden benoemd. Een commissaris treedt uiterlijk af
op de dag waarop de jaarlijkse algemene vergadering wordt gehouden in
het boekjaar, waarin hij de leeftijd van twee en zeventig jaar bereikt.
16. Indien door enige omstandigheid een of meer commissarissen komen te
ontbreken vormen de overgebleven commissarissen, zolang tenminste een
commissaris in functie is, een bevoegd college tot in de
vacature/vacatures is voorzien.
17. Indien slechts een commissaris in functie is zal hij alle rechten en
verplichtingen hebben die deze statuten aan de raad van commissarissen
en zijn voorzitter toekennen.
18. De leden van de raad van commissarissen hebben het recht de algemene
vergadering bij te wonen; zij hebben in de algemene vergadering een
adviserende stem.
VRIJWARING
ARTIKEL 20.
Onverminderd de in dit artikel opgenomen beperkingen, wordt iedere persoon of
rechtspersoon die directeur, commissaris of functionaris met
vertegenwoordigingsbevoegdheid als bedoeld in artikel 18 lid 3 ("functionaris"),
werknemer of agent voor de vennootschap of die op verzoek van de vennootschap
fungeert of heeft gefungeerd als directeur, commissaris, functionaris, werknemer
of agent van een andere vennootschap, vennootschap onder firma, joint venture,
trust of andere onderneming, en als partij betrokken is of betrokken dreigt te
raken bij een lopend(e) of beindigd(e) vordering, actie, procedure of geding,
hetzij van civiele, strafrechtelijke of administratiefrechtelijke aard hetzij
een enqueteprocedure, vanwege het feit dat hij directeur, commissaris,
functionaris, werknemer of agent van de vennootschap is of is geweest of als
zodanig op verzoek van de ven-
<PAGE>
-16-
nootschap fungeert of heeft gefungeerd bij een andere vennootschap, vennootschap
onder firma, joint venture, trust of andere onderneming, schadeloos gesteld door
de vennootschap tot het maximum als naar de Nederlandse wet of enige andere
toepasselijke wet toelaatbaar is, ter zake van:
(i) alle door hem gedragen aansprakelijkheden, daaronder begrepen als gevolg
van uitspraken, opgelegde betalingen en boetes;
(ii) alle door hem in redelijkheid gemaakte onkosten, daaronder begrepen
kosten en advocatenho noraria; en
(iii) alle bij wege van schikking door hem betaalde bedragen, welke verband
houden met zodanige vordering, actie, procedure of geding.
Een directeur, commissaris, functionaris, werknemer of agent heeft geen recht op
schadeloosstelling jegens de vennootschap vanwege enige aansprakelijkheid
waarvan onherroepelijk is vastgesteld dat zodanige aansprakelijkheid het gevolg
is van bewuste opzet, kwade trouw of grove nalatigheid of onfatsoenlijke
persoonlijke bevoordeling van die persoon of rechtspersoon. De beeindiging van
een actie, procedure of geding ten gevolge van een uitspraak, bevel, schikking,
veroordeling of niet-ontvankelijk verklaring of daarmee vergelijkbare
beeindiging, vormt op zichzelf geen veronderstelling dat een dergelijke persoon
of rechtspersoon niet te goeder trouw heeft gehandeld of dat een dergelijk
persoon of rechtspersoon niet heeft gehandeld overeenkomstig hetgeen die persoon
of rechtspersoon in het belang van de vennootschap, althans niet strijdig met
dit belang, achtte. Het recht op schadeloosstelling en vooruitbetaling van
kosten:
(i) mag worden verzekerd door middel van polissen op naam van de
vennootschap, ongeacht of de vennootschap op grond van het in dit
artikel bepaalde bevoegd is die directeur, commissaris, functionaris,
werknemer of agent schadeloos te stellen;
(ii) is splitsbaar;
(iii) laat onverlet enig ander huidig of toekomstig recht van een persoon of
rechtspersoon;
(iv) komt tevens toe aan een persoon of rechtspersoon die opgehouden heeft
directeur, commissa ris, functionaris, werknemer of agent van de
vennootschap te zijn of die opgehouden heeft op verzoek van de
vennootschap te fungeren als bestuurder, commissaris, functionaris,
werknemer of agent van een andere vennootschap, vennootschap onder
firma, joint venture, trust of andere onderneming; en
(v) komt toe aan erfgenamen, executeurs, administrateurs of rechtsopvolgers
van zodanig persoon of rechtspersoon.
Hetgeen in dit artikel is bepaald laat onverlet enig recht op schadeloosstelling
of vooruitbetaling van kosten dat toekomt aan personen of rechtspersonen op
grond van een overeenkomst of anderszins, zowel met betrekking tot de
uitoefening van hun functie als anderszins gedurende het functioneren als
zodanig.
<PAGE>
-17-
Kosten (daaronder begrepen advocaten honoraria) welke worden gemaakt door een
directeur, commissaris, functionaris, werknemer of agent, welke verband houden
met de voorbereiding en het voeren van verweer tegen een vordering, actie,
procedure of geding hetzij van civiele, strafrechtelijke of
administratiefrechtelijke aard, hetzij een enqueteprocedure, als bedoeld in dit
artikel, mogen door de vennootschap aan die directeur, commissaris,
functionaris, werknemer of agent worden voorgeschoten voor de definitieve
uitkomst bekend is, na ontvangst van een toezegging door of namens zodanige
directeur, functionaris, werknemer of agent dat bedrag terug te betalen indien
onherroepelijk komt vast te staan dat hij geen recht heeft op schadeloosstelling
op grond van dit artikel.
Indien de vennootschap geen kosten voorschiet, zal een tot vrijwaring gerechtigd
persoon met schriftelijke toestemming van de vennootschap vergoeding kunnen
verlangen. In dit artikel wordt onder "vennootschap" mede verstaan, naast de
verkrijgende vennootschap, iedere verdwenen vennootschap (daaronder begrepen een
in een verdwenen vennootschap verdwenen vennootschap) tengevolge van fusie,
welke, indien zij zelfstandig zou hebben voortbestaan, bevoegd zou zijn geweest
directeuren, commissarissen, functionarissen, werknemers of agenten schadeloos
te stellen, zodat iedere persoon of rechtspersoon die directeur, commissaris,
functionaris, werknemer of agent is of is geweest van zodanige verdwenen
vennootschap of op verzoek van zodanige verdwenen vennootschap fungeert of heeft
gefungeerd als directeur, commissaris, functionaris, werknemer of agent van een
andere vennootschap, vennootschap onder firma, joint venture, trust of andere
onderneming in dezelfde positie verkeert terzake van het in dit artikel
bepaalde, tegenover de verkrijgende vennootschap, als tegenover de verdwenen
vennootschap, indien deze zelfstandig zou hebben voortbestaan.
In dit artikel wordt onder "onderneming" mede verstaan een werknemers
participatie fonds, onder "boetes" wordt mede verstaan verschuldigde belasting
terzake van een werknemers participatie fonds en onder "op verzoek van de
vennootschap fungeren" wordt mede verstaan het verrichten van daden of diensten
door een directeur, commissaris, functionaris, werknemer of agent ten behoeve
van een werknemers participatie fonds, of ten behoeve van deelnemers of
begunstigden daarvan, en een persoon die te goeder trouw handelde en op een
wijze die hij mocht veronderstellen in het belang van de deelnemers en
begunstigden van een werknemers participatie fonds te zijn, wordt geacht niet
strijdig met het belang van de vennootschap te hebben gehandeld als bedoeld in
dit artikel.
ALGEMENE VERGADERINGEN
ARTIKEL 21.
1. Ten minste een keer per jaar wordt een algemene vergadering gehouden.
Die vergadering zal gehouden worden binnen zes maanden na afloop van het
boekjaar en is ondermeer bestemd tot:
<PAGE>
-18-
a. behoudens ingeval uitstel voor het opmaken van de jaarrekening
is verleend, de behandeling van de jaarrekening en, voorzover
door de wet voorgeschreven, van het jaarverslag en de overige
gegevens;
b. het vaststellen van de jaarrekening, behoudens ingeval uitstel
voor het opmaken van de jaarrekening is verleend;
c. het vaststellen van de winstbestemming;
d. voorts, het verrichten van al hetgeen de wet overigens
voorschrijft.
2. Voorts worden algemene vergaderingen gehouden zo dikwijls de meerderheid
van de alsdan in functie zijnde directeuren of de meerderheid van de
alsdan in functie zijnde commissarissen dit nodig acht, onverminderd het
bepaalde in lid 4 van dit artikel.
3. Voorstellen door aandeelhouders te doen, zowel voor de jaarlijkse als
voor de buitengewone vergadering van aandeelhouders, kunnen slechts dan
in behandeling worden genomen, indien zij zo tijdig schriftelijk ten
kantore van de vennootschap zijn ingediend, dat zij met inachtneming van
de voor oproeping gestelde termijn op gelijke wijze als de overige te
behandelen punten kunnen worden aangekondigd, met dien verstande dat met
betrekking tot de jaarlijkse algemene vergadering, aandeelhouders
gehouden zijn voor zulk een kennisgeving een termijn in acht te nemen
van ten minste zestig (60) dagen en niet meer dan negentig (90) dagen
voor de eerste verjaardag van de laatst gehouden algemene vergadering.
4. Een of meer houders van aandelen die gezamenlijk ten minste een tiende
gedeelte van het geplaatste kapitaal vertegenwoordigen, kunnen door de
president van de rechtbank op hun verzoek worden gemachtigd tot de
bijeenroeping van een algemene vergadering. De president wijst dit
verzoek af, indien hem niet is gebleken, dat verzoekers voordien aan het
bestuur en aan de raad van commissarissen, schriftelijk en onder
nauwkeurige opgave van de te behandelen onderwerpen het verzoek hebben
gericht een algemene vergadering bijeen te roepen, en dat noch het
bestuur noch de raad van commissarissen - daartoe in dit geval
gelijkelijk bevoegd - de nodige maatregelen hebben getroffen, opdat de
algemene vergadering binnen zes weken na het verzoek kon worden
gehouden.
5. Algemene vergaderingen worden gehouden in de statutaire plaats van
vestiging van de vennootschap, zoals opgenomen in deze statuten, alsmede
te Almere, Delft, Haarlemmermeer, Rotterdam, Den Haag of Utrecht. In een
algemene vergadering, gehouden in een andere plaats, kunnen geldige
besluiten eveneens worden genomen indien het gehele geplaatste kapitaal
vertegenwoordigd is.
6. De bijeenroeping van vergadergerechtigden geschiedt, onverminderd het
bepaalde in lid 3 van dit artikel, door of namens de directie of de raad
van commissarissen door middel van oproepingsbrieven; de
oproepingstermijn bedraagt ten minste veertien dagen, daaronder niet
begrepen de dag van de bijeenroeping en de dag van de vergadering.
7. De bijeenroeping houdt de agenda van de vergadering in.
<PAGE>
-19-
8. Indien een voorstel tot statutenwijziging aan de orde zal komen wordt -
in overeenstemming met de bepalingen van artikel 2:233 Burgerlijk
Wetboek - een afschrift van dat voorstel, waarin de voorgedragen
wijzigingen woordelijk zijn opgenomen, van de dag van de oproeping tot
na afloop van de vergadering onder andere ten kantore van de
vennootschap voor de vergadergerechtigden ter inzage gelegd en kan ieder
van hen daarvan op zijn verzoek kosteloos afschrift verkrijgen, tenzij
zodanig afschrift bij de oproeping wordt gevoegd.
9. Indien de door de wet of de statuten gegeven voor- schriften voor het
oproepen en agenderen van vergaderingen en het ter inzage leggen van te
behandelen onderwerpen niet in acht zijn genomen kunnen desondanks
rechtsgeldige besluiten worden genomen mits in de betreffende
vergadering het gehele geplaatste kapitaal vertegenwoordigd is en mits
met algemene stemmen.
ARTIKEL 22.
1. De algemene vergadering wordt voorgezeten door de voorzitter of in zijn
afwezigheid door de vice-voorzitter van de raad van commissarissen.
Indien die voorzitter niet ter vergadering aanwezig is, voorziet de
algemene vergadering zelf in haar leiding. De voorzitter van de
vergadering kan regels en voorschriften aannemen betreffende het verloop
van de vergadering.
2. De voorzitter wijst een van de aanwezigen aan als secretaris teneinde de
notulen te houden en stelt met deze secretaris de notulen vast, ten
blijke waarvan hij deze met de secretaris tekent. De notulen dienen in
een notulenregister te worden opgenomen. Indien van het verhandelde ter
vergadering een notarieel proces-verbaal wordt opgemaakt, behoeven
notulen niet te worden gehouden.
3. Iedere vergadergerechtigde kan zich ter vergadering doen
vertegenwoordigen door een schriftelijk gemachtigde.
ARTIKEL 23.
1. Ieder gewoon aandeel en ieder preferent aandeel geeft recht op het
uitbrengen van een (1) stem.
2. Voor een aandeel dat toebehoort aan de vennootschap of aan een
dochtermaatschappij kan in de algemene vergadering geen stem worden
uitgebracht. Vruchtgebruikers en pandhouders van aandelen, die aan de
vennootschap en haar dochtermaatschappijen toebehoren, zijn evenwel niet
van hun stemrecht uitgesloten, indien het vruchtgebruik of pandrecht is
gevestigd voordat het aandeel aan de vennootschap of een
dochtermaatschappij toebehoorde. De vennootschap of een
dochtermaatschappij kan geen stem uitbrengen voor aandelen waarop zij
een recht van vruchtgebruik of een pandrecht heeft.
3. Bij de vaststelling of een bepaald gedeelte van het kapitaal
vertegenwoordigd is dan wel of een meerderheid een bepaald gedeelte van
het kapitaal vertegenwoordigt, wordt het kapitaal verminderd met het
bedrag van de aandelen waarop geen stem kan worden uitgebracht.
<PAGE>
-20-
4. Stemmingen over zaken geschieden mondeling, die over personen bij
ongetekende gesloten briefjes, een en ander tenzij de voorzitter van de
vergadering zonder tegenspraak van een van de stemgerechtigde aanwezigen
een andere wijze van stemmen vaststelt of toelaat. Indien het een
stemming over personen betreft kan een bij de betreffende vergadering
aanwezige stemgerechtigde verlangen dat gestemd zal worden door middel
van geheime briefjes.
5. Alle besluiten van de algemene vergadering worden genomen met een
volstrekte meerderheid van de geldig uitgebrachte stemmen
vertegenwoordigende meer dan de helft van het geplaatste kapitaal,
behalve - onverminderd het bepaalde in artikel 16 leden 4 en 5 en
artikel 19 lid 3 - : besluiten strekkende (a) tot wijziging van de
statuten (b) tot juridische fusie of tot juridische splitsing, en (c)
tot ontbinding van de vennootschap, welke besluiten slechts genomen
kunnen worden met een meerderheid van twee/derden van de geldig
uitgebrachte stemmen, vertegenwoordigende meer dan de helft van het
geplaatste kapitaal en voorts alleen op voorstel van de raad van
commissarissen. Het bepaalde in artikel 2:120 lid 3 Burgerlik Wetboek
inhoudende dat een nieuwe vergadering bijeen geroepen kan worden waarin
het besluit kan worden genomen onafhankelijk van het op deze vergadering
vertegenwoordigd gedeelte van het kapitaal, is niet van toepassing.
6. Blanco stemmen en onthoudingen worden niet als uitgebrachte stemmen
geteld.
7. Staken de stemmen omtrent een voorstel over zaken, dan komt geen besluit
tot stand.
8. Ingeval bij een stemming tussen twee personen de stemmen staken beslist
het lot wie van hen beiden is verkozen met dien verstande, dat ingeval
van verkiezing van personen uit een bindende voordracht alsdan hij is
verkozen, die van de betrokkenen op de voordracht het hoogste is
geplaatst.
9. Het ter vergadering uitgesproken oordeel van de voorzitter omtrent de
uitslag van een stemming is beslissend. Hetzelfde geldt voor de inhoud
van een genomen besluit, voorzover gestemd werd over een niet
schriftelijk vastgelegd voorstel.
10. Wordt echter onmiddellijk na het uitspreken van het in het voorgaande
lid bedoelde oordeel de juistheid daarvan betwist, dan vindt een nieuwe
stemming plaats wanneer de meerderheid van de algemene vergadering of
indien de oorspronkelijke stemming niet hoofdelijk of schriftelijk
geschiedde, een stemgerechtigde dit verlangt. Door deze nieuwe stemming
vervallen de rechtsgevolgen van de oorspronkelijke stemming.
11. De directie houdt van de genomen besluiten aantekening. De aantekeningen
liggen ten kantore van de vennootschap ter inzage van de
vergadergerechtigden. Aan ieder van dezen wordt desgevraagd afschrift of
uittreksel van deze aantekeningen verstrekt tegen ten hoogste de
kostprijs.
ARTIKEL 24.
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1. Tenzij de vennootschap vruchtgebruikers en/of pandhouders met stemrecht
kent, kunnen besluiten van aandeelhouders in plaats van in algemene
vergaderingen ook schriftelijk - waaronder begrepen per telegram-,
telefax- en telexbericht - worden genomen, mits met algemene stemmen van
alle stemgerechtigden.
2. De directie neemt de besluiten, welke op de wijze als in het voorgaande
lid van dit artikel omschreven zijn tot stand gekomen, in het
notulenregister van de algemene vergaderingen op en doet daarvan in de
eerstvolgende algemene vergadering mededeling.
VERGADERINGEN VAN HOUDERS VAN AANDELEN VAN EEN BEPAALDE SOORT
ARTIKEL 25.
1. Vergaderingen van houders van aandelen van een bepaalde soort kunnen
slechts worden gehouden indien verschillende soorten aandelen zijn
uitgegeven. Met inachtneming van het bepaalde in de eerste zin van dit
lid, worden vergaderingen van houders van aandelen van een bepaalde
soort gehouden in alle gevallen, waarin krachtens deze statuten een
besluit van de vergadering van houders van aandelen van een bepaalde
soort nodig is alsmede zo dikwijls de directie en/of de raad van
commissarissen dit nodig acht(en) of een of meer stemgerechtigden met
betrekking tot aandelen van een bepaalde soort dit schriftelijk en onder
nauwkeurige opgave van de te behandelen onderwerpen aan de directie
en/of de raad van commissarissen verzoeken.
2. Artikel 21 leden 4 tot en met 8, artikel 22 leden 2 en 3 en artikel 23
zijn op vergaderingen van houders van aandelen van een bepaalde soort
van overeenkomstige toepassing.
3. Indien de directie en/of de raad van commissarissen in gebreke blijft,
na een verzoek als in het slot van lid 1 bedoeld, een vergadering van
houders van aandelen van een bepaalde soort bijeen te roepen zodanig,
dat deze binnen vier weken na ontvangst van het verzoek gehouden wordt,
zijn de aanvragers zelf tot de bijeenroeping bevoegd.
4. De vergadering van houders van aandelen van een bepaalde soort voorziet
zelf in haar leiding.
5. De voorzitter van de vergadering van houders van aandelen van een
bepaalde soort beslist omtrent de toelating tot de vergadering van
anderen dan stemgerechtigden ten aanzien van aandelen van de
desbetreffende soort.
6. Besluiten van de vergadering van houders van aandelen van een bepaalde
soort kunnen ook schriftelijk - waaronder begrepen per telegram-,
telefax- en telexbericht - worden genomen mits met algemene stemmen van
alle stemgerechtigden.
ACCOUNTANTONDERZOEK
ARTIKEL 26.
1. De algemene vergadering is bevoegd - en indien zulks wettelijk is
voorgeschreven verplicht - een accountant opdracht te verlenen teneinde
de door de directie opgemaakte jaarrekening te onderzoeken, daarover
verslag uit te brengen aan de directie en een verklaring af te leggen.
2. Indien de algemene vergadering nalatig is met het verlenen van de
opdracht aan de accountant als bedoeld in lid 1 van dit artikel
geschiedt deze benoeming door de directie.
<PAGE>
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3. De opdracht kan te allen tijde worden ingetrokken door de algemene
vergadering en door degene door wie de opdracht is verleend is geschied.
BOEKJAAR EN JAARREKENING
ARTIKEL 27.
1. Het boekjaar van de vennootschap loopt van een juni tot en met een en
dertig mei van het volgende kalenderjaar.
2. De directie sluit per de laatste dag van elk boekjaar de boeken van de
vennootschap af en maakt daaruit binnen vijf maanden - behoudens
verlenging van deze termijn met ten hoogste zes maanden door de algemene
vergadering op grond van bijzondere omstandigheden - een jaarrekening
op, bestaande uit een balans, een winst- en verliesrekening en een
toelichting en legt binnen deze termijn deze stukken voor aandeelhouders
ter inzage ten kantore der vennootschap. Deze stukken worden eveneens
overgelegd aan de raad van commissarissen. Binnen deze termijn legt de
directie ook het jaarverslag over aan de algemene vergadering. De
jaarrekening wordt ondertekend door alle directeuren en alle
commissarissen; ontbreekt de handtekening van een of meer hunner, dan
wordt daarvan onder opgave van de reden, melding gemaakt op de
jaarrekening.
3. De vennootschap zorgt dat de opgemaakte jaarrekening, het jaarverslag en
de krachtens de wet toe te voegen gegevens vanaf de oproep tot de
algemene vergadering, bestemd tot hun behandeling, te haren kantore
aanwezig zijn. De vergadergerechtigden kunnen deze stukken aldaar inzien
en er kosteloos een afschrift van verkrijgen.
4. Het in de leden 2 en 3 van dit artikel bepaalde om- trent het
jaarverslag en de krachtens de wet toe te voegen gegevens blijft buiten
toepassing, indien artikel 2:396, lid 6, eerste volzin of artikel 2:403
Burgerlijk Wetboek op de vennootschap van toepassing is.
5. De algemene vergadering stelt de jaarrekening vast. Deze vaststelling
strekt de directeuren en de commissarissen tot decharge voor alle
handelingen in verband met het uitoefenen van hun taken gedurende het
betreffende boekjaar, onverminderd hetgeen in de wet daaromtrent is of
zal worden bepaald.
OPENBAARMAKING
ARTIKEL 28.
1. De vennootschap is verplicht tot openbaarmaking van de jaarrekening
binnen acht dagen na de vaststelling. De openbaarmaking geschiedt door
de nederlegging van een volledig in de Nederlandse taal gesteld
exemplaar of, als dat niet is vervaardigd, een exemplaar in het Frans,
Duits of Engels, ten kantore van het handelsregister van de Kamer van
Koophandel en Fabrieken in welker gebied de vennootschap is
ingeschreven. Op het exemplaar moet de dag van vaststelling zijn
aangetekend.
2. Is de jaarrekening niet binnen zeven maanden na afloop van het boekjaar
overeenkomstig de wettelijke voorschriften vastgesteld en goedgekeurd,
dan maakt de directie onverwijld de
<PAGE>
-23-
opgemaakte jaarrekening op de in lid 1 voorgeschreven wijze openbaar. Op
de jaarrekening wordt vermeld dat zij nog niet is vastgesteld.
3. Indien de algemene vergadering de termijn voor het opmaken van de
jaarrekening heeft verlengd - in overeenstemming met het bepaalde in
artikel 27 lid 2 - dan is het voorgaande lid van toepassing per het
moment dat twee maanden na het einde van deze periode zijn verstreken.
4. Gelijktijdig met en op dezelfde wijze als de jaarrekening wordt een in
dezelfde taal of in het Nederlands gesteld exemplaar van het jaarverslag
en van de overige krachtens de wet toe te voegen gegevens openbaar
maakt. Het voorafgaande geldt, voorzover de wet dit toestaat, niet,
indien de stukken ten kantore van de vennootschap ter inzage van een
ieder worden gehouden en op verzoek een volledig of gedeeltelijk
afschrift daarvan ten hoogste tegen de kostprijs wordt verstrekt;
hiervan doet de rechtspersoon opgaaf ter inschrijving in het
handelsregister van de Kamer van Koophandel en Fabrieken.
5. De openbaarmaking zal geschieden met inachtneming van toepasselijke
wettelijke uitzonderingen.
WINSTVERDELING
ARTIKEL 29.
1. Van de uit de vastgestelde jaarrekening blijkende winst zal een zodanig
bedrag door de vennootschap worden gereserveerd als zal worden
vastgesteld - met inachtneming van het bepaalde in lid 4 van dit artikel
- door de raad van commissarissen. De alsdan resterende winst wordt in
overeenstemming met de bepalingen in de navolgende leden van dit artikel
behandelt.
2. Van de na toepassing van het bepaalde in voormeld lid 1 en met
inachtneming van het bepaalde in lid 4 van dit artikel resterende en
voor uitkering beschikbare winst, zal eerst op de preferente aandelen
worden uitgekeerd een niet-cumulatief dividend van een tiende procent
(0,1%) van het nominale bedrag van de preferente aandelen verminderd met
enige, overeenkomstig lid 6, uitgekeerde interim-dividenden.
3. De winst welke resteert na de hierboven in lid 1 genoemde reservering en
na de hierboven in lid 2 genoemde uitkering, staat ter beschikking van
de algemene vergadering voor gelijke en proportionele uitkering op de
gewone aandelen en/of voor reservering.
4. De vennootschap kan aan aandeelhouders en andere gerechtigden tot de
voor uitkering vatbare winst slechts uitkeringen doen voorzover haar
eigen vermogen groter is dan de som van (i) het geplaatste kapitaal, en
(ii) de reserves die krachtens de wet of deze statuten moeten worden
aangehouden.
5. Ten laste van de door de wet voorgeschreven reserves mag een tekort
slechts worden gedelgd voor zover de wet dat toestaat.
6. De raad van commissarissen is met inachtneming van het bepaalde in lid 4
van dit artikel, bevoegd tot uitkering van een interimdividend te
besluiten.
<PAGE>
-24-
7. De raad van commissarissen kan besluiten dat (interim-) dividenden
geheel of gedeeltelijk anders dan in contanten worden uitgekeerd.
8. Tenzij de raad van commissarissen een ander tijdstip vaststelt zijn
dividenden onmiddellijk betaalbaar na vaststelling.
9. Dividenden, waarover binnen vijf jaar en een dag nadat zij betaalbaar
zijn geworden niet is beschikt, vervallen aan de vennootschap.
ONTBINDING EN VEREFFENING
ARTIKEL 30.
1. Ingeval van ontbinding van de vennootschap geschiedt de vereffening door
de directie tenzij de algemene vergadering anders beslist.
2. De algemene vergadering stelt de beloning van de vereffenaren en van
degenen, die met het toezicht op de vereffening zijn belast, vast.
3. Gedurende de vereffening blijven deze statuten voorzoveel mogelijk van
kracht.
4. Van hetgeen na voldoening van alle kosten van de ontbinding van de
vennootschap en van alle schulden van de vennootschap van haar vermogen
overblijft, wordt allereerst aan de houders van preferente aandelen de
op die aandelen gestorte bedragen uitgekeerd. Hetgeen na toepassing van
de onmiddellijk voorafgaande zin van het vermogen overblijft wordt
uitgekeerd aan de houders van gewone aandelen in verhouding tot ieders
bezit aan gewone aandelen. Op aandelen die de vennootschap zelf houdt,
kan geen liquidatie-uitkering aan de vennootschap zelf plaatshebben.
5. Na afloop van de vereffening blijven de boeken en bescheiden van de
ontbonden vennootschap gedurende zeven jaar berusten onder degene, die
daartoe door de algemene vergadering bij het besluit tot ontbinding kan
worden aangewezen. Indien een aanwijzing als voormeld door de algemene
vergadering niet is geschied, geschiedt deze door de vereffenaren.
SLOTVERKLARING
De comparant verklaarde tenslotte dat:
A. het geplaatste kapitaal tien miljoer vijfenzestig duizend
acthonderdzevenenvij ftig gulden en achten twintig cent (NLG
10.065.857,28) bedraagt, bestaande uit tien miljoen
vierhonderdvijtentachtig duizend tweehonderdachtenzestig (10.485.268)
gewone aandelen, met een nominale waarde van zesennegentig cent (NLG
0,96) elk;
B. de verklaring van geen bezwaar als bedoeld in artikel 2:235
Burgerlijk Wetboek is verleend blijkens een aan deze akte gehechte
Ministeriele verklaring, de dato vijftien november negentienhonderd
negenennegentig, nummer N.V. 157.527;
C. de verklaring van de accountant als bedoeld in artikel 2:72 lid 1 sub b
Burgerlijk Wetboek aan deze akte zal worden gehecht;
D. de statuten van de vennootschap laatstelijk gedeeltelijk zijn gewijzigd
bij akte van statutenwijziging op tweeentwintig april
negentienhonderdachtennegentig verleden voor een plaatsvervanger van
ondergetekende notaris.
WAARVAN AKTE
Deze akte is verleden te Amsterdam op de datum in het hoofd van deze akte
vermeld.
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Na zakelijke opgave van de inhoud van deze akte en toelichting door mij,
notaris, aan de comparant heeft deze mij, notaris, verklaard van de inhoud van
deze akte te hebben kennisgenomen en op volledige voorlezing daarvan geen prijs
te stellen. Vervolgens is deze akte, na beperkte voorlezing door de comparant en
mij, notaris, ondertekend.
(w.g.) C.H.T. Koetsier, F.W. Oldenburg
UITGEGEVEN VOOR AFSCHRIFT
-------------------------
<PAGE>
AMENDMENT TO THE ARTICLES OF ASSOCIATION
NAUTA DUTILH
On this the seventeenth day of November one thousand nine hundred and
ninety-nine, appeared before me, Maitre Frits Willem Oldenburg, civil law
notary, practising at Amsterdam:
Cornelius Hein Theodoor Koetsier, employed at my office at 1077 WV Amsterdam,
Prinses Irenestraat 59, born in Heemstede on the twenty-fourth day of July
nineteen hundred and sixty-nine.
The Appearer declared: By virtue of a resolution passed on the fifteen day of
November one thousand nine hundred ninety-nine by the shareholders of Metron
Technology B.V., a private company with limited liability under the laws of
the Netherlands having its corporate seat in Amsterdam, and having its
business address at 1322 AD Almere, Kabelstraat 19, hereinafter called: the
"company", it has been decided to convert the company into a "naamloze
vennootschap" (public limited liability company) and simultaneously to amend
the company's Articles of Association as hereinafter referred. By this
resolution, a copy of which is attached to this deed, the Appearer was
authorized to execute the notarial deed embodying the above conversion and
amendment. Giving effect to the foregoing, the Appearer stated his wish to
convert the company into a limited liability company and simultaneously to
amend the Articles of Association of the company in such a way that they in
their entirety shall read as follows:
- ---------------- ARTICLES OF ASSOCIATION
DEFINITIONS
ARTICLE 1.
The terms used in the Articles of Association of this company are defined below:
a. THE COMPANY: the legal entity to which these Articles of Association
appertain;
b. THE MANAGING BOARD: the management board of the company;
c. THE SUPERVISORY BOARD: the supervisory board of the company;
d. SHARES: the common shares and the preference shares, unless the context
requires otherwise;
e. SHAREHOLDERS: the holders of common shares and the holders of preference
shares, unless the context requires otherwise;
f. HOLDERS OF DEPOSITARY RECEIPTS FOR SHARES: holders of depositary
receipts for shares issued with the cooperation of the company;
g. RIGHTS ATTACHED TO DEPOSITARY RECEIPTS FOR SHARES: the rights which the
(Dutch) Civil Code or these Articles of Association grant to holders of
depositary
<PAGE>
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receipts for shares which have been issued with the cooperation of the
company;
h. PERSONS ENTITLED TO ATTEND MEETINGS: shareholders, holders of depositary
receipts for shares, usufructuaries and pledgees holding the rights
attached to depositary receipts for shares of the company;
i. THE GENERAL MEETING: either the body that comprises the voting
shareholders of the company and other persons within the company
entitled to vote or the meeting of persons entitled to attend meetings
of the shareholders of the company;
j. THE MEETING OF HOLDERS OF SHARES OF A SPECIFIC CLASS: either the body
that comprises the persons holding the voting rights over shares of a
specific class or the meeting of persons holding the voting rights over
shares of a special class;
k. DISTRIBUTABLE RESERVES: that part of the company's equity which exceeds
the sum of the paid and called-up capital and the reserves which have to
be maintained by virtue of the law and/or these Articles of Association;
l. ANNUAL ACCOUNTS: the balance sheet, the profit and loss account and
explanatory notes to these documents as required to be made up under
Dutch law;
m. SUBSIDIARY: a legal entity (a) in the general meeting of which the
company or one or more of its subsidiaries can, whether or not by virtue
of an agreement with other persons entitled to vote, exercise on its own
or together with others more than half of the voting rights or (b) of
which the company or one or more of its subsidiaries is or are a
shareholder and in which it or they can, whether or not by virtue of an
agreement with other persons entitled to vote, appoint or dismiss on its
own or together with others more than half of the managing or
supervisory directors, even if all those entitled to vote do so, as well
as other legal entities which the law equates with subsidiaries, all the
aforegoing within the meaning of article 2:24a of the (Dutch) Civil
Code;
n. GROUP COMPANY: a legal entity with which the company is structurally
associated into an economic unity.
NAME, CORPORATE SEAT, DURATION
ARTICLE 2.
1. The name of the company is: Metron Technology N.V.
2. It has its corporate seat at Amsterdam.
3. The company shall continue to exist for an indefinite period of time.
OBJECTS
<PAGE>
-3-
ARTICLE 3.
1. The objects of the company are:
a. to import, export, sell, distribute, lease, trade, market, and to
advise with respect to products for the semiconductor industry or
related products, as well as other products that are or may
become of interest to the company, including any of its
subsidiaries;
b. to acquire, participate in, finance, manage and to have or
dispose of any other interest in, other companies or enterprises
of any nature;
c. to raise funds by way of securities, bank loans, bond issues,
notes and to borrow in any other way, to lend, to provide
guarantees, to give security, including guarantees for debts of
other persons and in general to render services in the fields of
trade and finance;
d. to invest in securities, savings certificates and other
financial instruments;
e. to acquire, develop, hold, turn to account, to charge or encumber
with mortgages, dispose of or in any other way utilise immovables
as well as to engage in any kind of brokerage services in respect
of immovables;
f. to carry out factoring and invoicing of trade receivables,
netting of payables and receivables as well as to conduct
research and development activities;
g. to commercialise licences, copyrights, patents, designs, secret
processes or formulas, trademarks and similar interests, to
promote the sale and purchase of - and the trade in - these
items, including allowing the use of these items and receiving
royalties and other income connected with these activities;
h. to perform all acts that are advisable, necessary, usual or
related to the above-mentioned objects.
2. The objects specified in the preceding paragraph shall be construed in
the widest sense and include any activity or object which is incidental
or may be conducive thereto or connected therewith.
SHARE CAPITAL, SHARES
ARTICLE 4.
1. The authorized share capital of the company amounts to forty-eight
million Dutch Guilders (NLG 48,000,000), divided into forty million
(40,000,000) common shares and ten million (10,000,000) preference
shares, with a par value of ninety-six cents (NLG 0.96) each.
2. The common shares and preference shares shall be in registered form
only.
<PAGE>
-4-
3. In the event that the aggregate amount of (i) the issued share capital
and (ii) the reserves required to be maintained by the law, is less than
the minimum share capital as then required by the law, the company must
maintain a reserve up to an amount equal to the difference.
ISSUES OF SHARES
ARTICLE 5.
1. Shares that have not yet been issued shall, up to the amount of the
authorized capital, with due observance of the provisions of the (Dutch)
Civil Code, be capable of being issued by virtue of a resolution of the
supervisory board. The authority of the supervisory board, as referred
to in the preceding sentence, shall terminate five years after the date
of execution of this deed, unless the general meeting has extended such
authority. As long as the supervisory board has the authority to adopt a
resolution to issue shares, the general meeting shall not have the
authority to adopt such resolutions.
2. In case the supervisory board no longer has the authority referred to in
paragraph 1 of this article, any resolution to issue shares shall
require the prior approval of the supervisory board.
3. Any resolution to issue shares shall stipulate the terms and conditions
of issuance.
4. Upon any issue of shares the company cannot subscribe for its shares.
FINANCIAL ASSISTANCE
ARTICLE 6.
With respect to the subscription for or acquisition of shares in its share
capital or depositary receipts for shares by other persons, the company may
neither grant security rights nor give a guarantee as to the price of the shares
nor grant guarantees in any other manner nor bind itself either jointly or
severally in addition to or for other persons. This prohibition shall also
extend to its subsidiaries.
PRE-EMPTIVE RIGHTS.
ARTICLE 7.
1. Except as provided below, in the event of the issue of new shares, each
holder shall have pre-emptive rights of purchase of shares of the same
class as and pro rata to his existing holdings. No pre-emptive rights
are attached to shares issued to employees of the company or employees
of a group company.
2. Pre-emptive rights can, with due observance of the relevant provisions
of the (Dutch) Civil Code, be restricted or excluded by virtue of a
resolution of
<PAGE>
-5-
the supervisory board. The authority of the supervisory board, as
referred to in the preceding sentence, shall terminate five
years after the date of execution of this deed, unless the general
meeting has extended such authority.
3. The company shall announce the issue of shares to which pre-emptive
rights are attached and the period in which that right is capable of
being exercised in a written notification to all the shareholders within
fourteen days of such a resolution being passed.
Pre-emptive rights with respect to an issue shall be capable of being
exercised only during the four weeks after the day the announcement
relating to such issue has been sent out.
4. The provisions in article 5 paragraph 1 up to and including 3 and in
this article shall be applicable in cases when a right to subscribe for
shares is granted.
Shareholders, however, shall have no pre-emptive rights for shares
which are being issued to a person who exercises a previously acquired
right to subscribe for shares.
PAYMENT FOR SHARES UPON ISSUANCE.
ARTICLE 8.
1. Shares shall only be issued for a consideration which when expressed in
Dutch Guilders is at least equal to their par value. It may be
stipulated though that a part of the nominal amount of the preference
shares, not exceeding three quarters thereof, needs only be paid after
the company has called it in.
2. Payment must be made in cash, unless a contribution in kind has been
agreed upon.
3. Payment in cash may be made in a foreign currency, subject to the
company's consent. If payment is made in a foreign currency, the company
shall deposit with the trade register of the chamber of commerce and
industry in the district in which the company is listed, a statement
from a banker within two weeks after the payment. The statement must
mention the Dutch Guilders equivalent into which the amount paid was
freely convertible at the applicable rate of exchange.
The company may demand that payment is made at the rate of exchange on
a fixed day within two months before the last day on which payment must
be made, provided the shares or depositary receipts will, upon issue,
be quoted without delay on the price list of on exchange outside the
Netherlands.
<PAGE>
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4. If payment is made in kind, the company shall prepare a description
("beschrijving") of the contribution, stating (i) the value which has
been attributed thereto as at a date which may not be prior to the date
five months before the shares are issued, (ii) the valuation methods
applied which must be in conformity with Dutch generally accepted
accounting principles, (iii) the number of shares to be issued by the
company against such contribution and (iv) the aggregate amount of the
payment obligation expressed in Dutch Guilders. The description must be
signed by all managing directors.
5. An accountant must render a statement to the effect that in his opinion
the value of the contribution equals at least the aggregate amount of
the payment obligation expressed in Dutch Guilders.
6. The provisions of paragraphs 4 and 5 do not apply if the exceptions of
sections 2:94b and 94a of the (Dutch) Civil Code are applicable.
7. The company shall deposit a certified copy of the accountant's statement
referred to in paragraph 5 with the trade register of the chamber of
commerce and industry in the district in which the company is listed
within eight days after the date of issuance of the shares, and shall
simultaneously disclose the names of the subscribers for the shares
which have been paid in kind and the aggregate par value of such shares.
ACQUISITION AND TRANSFER BY THE COMPANY OF SHARES IN ITS OWN SHARE CAPITAL
ARTICLE 9.
1. Subject to the authorization of the managing board by the general
meeting, -which authorization shall be valid for not more than eighteen
months-, the managing board may cause the company to acquire fully paid
up shares in its own share capital for consideration, provided:
a. the company's equity ("eigen vermogen") minus the acquisition
price is not less than the aggregate of
(i) the par value of the issued share capital and
(ii) the reserves which must be maintained pursuant to the
law and/or the Articles of Association;
b. the aggregate par value of the shares in its share capital to be
acquired and already held by the company and its subsidiary
companies does not exceed ten percent (10%) of the issued share
capital.
The validity of the acquisition shall be determined on the basis
of the company's equity as it appears from the most recently
adopted balance sheet, minus the acquisition price for shares
in the company's share capital and any distribution of profits
or reserves to other persons
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which have become due by the company and its subsidiary
companies after the balance sheet date.
2. The general meeting must specify in the authorization as referred to in
paragraph 1 of this article the number of shares which may be acquired,
the manner in which they may be acquired and the limits in which the
price must be set.
3. No authorization, as referred to in paragraph 1, shall be required for
any acquisition by the company of its own shares for the purpose of
transferring the same to employees of the company or of a group company
under a scheme applicable to such employees, provided that such shares
are officially listed on an exchange.
4. No acquisition pursuant to paragraph 1 of this article is permitted if a
period of six months following the end of a financial year has expired
without the annual accounts for such year having been adopted.
5. Alienation of shares held by the company in its own capital to any party
shall be effected only in pursuance of a resolution of the supervisory
board. Upon taking the resolution to alienate such shares, the terms and
conditions of such alienation shall also be determined by the
supervisory board.
6. If depositary receipts for shares in the share capital of the company
have been issued (whether or not with cooperation of the company), such
depositary receipts shall be taken into account for the purpose of the
calculations to be made pursuant to and in accordance with the
provisions of paragraph 1.
REDUCTION OF ISSUED SHARE CAPITAL
ARTICLE 10.
1. The general meeting may - upon a proposal thereto by the supervisory
board - resolve to reduce the issued share capital by (i) cancelling
shares, or by (ii) reducing the par value of shares by an amendment of
the Articles of Association, provided that in both cases (a) the amount
of the issued share capital does not fall below the minimum share
capital as required by the law at the time of the resolution, and (b)
article 4 paragraph 3 of these Articles of Association is observed.
2. If the result of an intended reduction of the issued shares capital is
that the issued share capital will be less than twenty per cent (20%) of
the authorized share capital, these Articles of Association must first
be amended in order to reduce the authorized share capital to such an
amount as to permit that article 4, paragraph 3 of these Articles of
Association can be observed.
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3. A resolution to cancel shares can only apply to shares which are held by
the company itself or to shares for which the company holds depositary
receipts (whether or not such depositary receipts have been issued with
the cooperation of the company).
4. Reduction of the par value of shares without repayment or partial
repayment of the par value shall be effected pro rata with respect to
all shares. The shareholders may, by unanimous consent, waive the right
that such a reduction shall be effected pro rata with respect to all
shares.
5. The notice of a general meeting at which a resolution referred to in
this article is to be adopted shall mention the purpose of the reduction
of the share capital and the manner in which such reduction shall be
effected.
6. The resolution to reduce the share capital shall specify the shares to
which the resolution applies and shall describe how such resolution
shall be implemented.
7. The company must file a resolution to reduce the issued share capital
with the trade register of the chamber of commerce and industry in the
district in which the company is listed, and it must further announce
such filing in a nationally published daily newspaper.
SHARE CERTIFICATES
ARTICLE 11.
1. At the request in writing of a shareholder, share certificates shall be
issued in respect of the shares held by such shareholder. The form and
the contents of the share certificates shall be determined by the
supervisory board.
2. Share certificates for more than one share may be made available. Such
plural share certificates may at all times be exchanged for singular
certificates and vice versa, free of charge.
3. The share certificates shall be signed by a member of the managing board
or a transfer agent duly authorized by it for this purpose, either by an
original signature or by a facsimile signature.
4. If share certificates are damaged, lost or missing, the managing board
or a transfer agent duly authorized by it for this purpose, may issue
duplicates thereof and may establish conditions for such issuance. As a
result of the issuance of duplicates, the original documents shall
become null and void vis-a-vis the company. The new certificates will
bear the same numbers and letters of the documents they replace.
5. The shares shall be consecutively numbered per class from 1 onwards.
SHAREHOLDERS REGISTER
ARTICLE 12.
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1. The managing board or a transfer agent duly authorized by it for this
purpose, shall maintain a register in which the names and addresses of
all shareholders shall be recorded, the date on which they acquired the
shares, the number and class of shares held by each of them, the date of
acknowledgement of the transfer by the company or service of notice of
the transfer upon the company, as well as the amount of the par value
paid on each shares upon its issuance. The register must further state
the names and addresses of those persons who hold a right of usufruct or
a right of pledge on shares, the date on which they acquired such right,
the date of acknowledgement of the encumbrance by the company or service
of notice of the encumbrance upon the company and whether the voting
rights to the shares concerned or the rights of holders of depositary
receipts have been conferred on such person.
2. The register shall be kept up to date.
3. The register may, at the discretion of the managing board, be kept in
more than one copy at more than one place, however one copy should at
all times be kept at the offices of the company.
With due observance to the provisions of this article, the managing
board decides upon the form and the contents of the (a) shareholders
register(s).
4. The register, shall be made available at the offices of the company for
inspection by the shareholders, as well as by the holders of a right of
usufruct and by the holders of a right of pledge who are entitled to
vote.
The preceding sentence shall not apply to (that part of) the register
which is kept outside the Netherlands in compliance with applicable
legislation or pursuant to the rules of an exchange.
The information in the register in respect of shares which have not
been paid in full shall be available for public inspection; a copy of an
extract of such information shall be provided at no more than cost.
5. If so requested, the managing board or a transfer agent duly authorized
by it for this purpose shall, free of charge, furnish a shareholder, a
holder of a right of usufruct or a holder of a right of pledge with an
extract from the register regarding their respective rights with respect
to a share.
If a share is encumbered with a right of usufruct or a right of pledge,
the extract shall specify who is entitled to vote.
6. Each shareholder, holder of a depositary receipt for shares, holder of a
right of usufruct, and a holder of a right of pledge shall furnish his
address to the managing board.
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7. If a share, a registered depositary receipt for shares, issued with
cooperation of the company, a right of usufruct or a right of pledge
over a share forms part of undivided property to which Title 7 of Book 3
of the (Dutch) Civil Code is applicable, then the persons jointly
entitled thereto - whose names, moreover, must be recorded in the
register - shall only be capable of being represented vis a vis the
company by one person to be appointed by them for that purpose in a
written statement.
The personal details of the representative thus appointed shall be
entered into the register, and all notifications and notices to the
persons jointly entitled to that undivided property shall be capable
of being sent to the address, recorded in the register, of the person
thus appointed.
NOTICES TO ATTEND AND NOTIFICATIONS
ARTICLE 13.
1. Notices to attend meetings and notifications shall be given by
registered or regular letter. Notices to attend meetings and
notifications to shareholders as well as to holders of depositary
receipts for shares, holders of a right of usufruct and holders of a
right of pledge, shall be sent to the addresses most recently furnished
to the managing board. Notifications by shareholders or by holders of
depositary receipts for shares, holders of a right of usufruct and
holders of a right of pledge, to the managing board or to the
supervisory board shall be sent to the office of the company.
2. The date of a notice to attend a meeting and the date of a notification
shall be deemed to be the date stamped on the receipt issued for a
registered letter, or the date of mailing, as the case may be.
3. Any notification which, pursuant to the law or these Articles of
Association, must be addressed to the general meeting may be included in
the notice convening such meeting.
TRANSFER OF SHARES AND LIMITED RIGHTS TO SHARES
ARTICLE 14.
1. The transfer of a share or of a limited right thereto shall require an
instrument intended for such purpose and, save where the company itself
is a party to such legal act, the written acknowledgement by the company
of the transfer.
2. The acknowledgement by the company of any transfer shall be made by a
member of the managing board or a transfer agent duly authorized by it
for this purpose, in the instrument or by a dated statement on the
instrument or on a copy or extract thereof mentioning the
acknowledgement signed as a true copy by the civil-law notary or the
transferor. If a share certificate has
<PAGE>
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been issued for a share, the surrender of the relative share certificate
to the company or to a transfer agent duly authorized by it for this
purpose, shall also be required for any transfer. If the share
certificate is surrendered to the company or to a transfer agent duly
authorized by it for this purpose, the company or the transfer agent
duly authorized by it for this purpose, may alternatively acknowledge
the transfer by making an annotation on such share certificate as proof
of the acknowledgement or by replacing the surrendered certificate by a
new certificate registered in the name of the transferee.
3. Service of an instrument, as referred to in paragraph 2, or of a copy or
extract thereof on the company shall be considered to have the same
effect as an acknowledgement.
4. In the case of a transfer of shares not paid in full, the
acknowledgement may be made only if the instrument has a recorded, or
otherwise fixed, date.
THE RIGHT OF USUFRUCT IN RESPECT OF AND THE RIGHT OF PLEDGE ON SHARES
ARTICLE 15.
1. Each shareholder is entitled to create a right of usufruct in respect of
or a right of pledge on the shares held by him in whole or in part. The
shareholder shall have the voting rights for shares in respect of which
a right of usufruct or a right of pledge has been established.
2. In deviation from the provision in the last sentence of the previous
paragraph, the usufructuary or pledgee shall have the voting rights if
this was agreed upon when the limited right was established and this has
been approved by the supervisory board.
3. If any other person acquires the rights of a usufructuary or a pledgee
who is entitled to vote, he shall only be entitled to the right to vote
if the transfer of the voting right has been approved by the supervisory
board.
4. The approval referred to in paragraphs 2 and 3 hereof must be requested
by registered letter addressed to the supervisory board.
As promptly as practicable but at least within thirty days after a
request for that approval has been received, a meeting of the
supervisory board shall be called, to which the request for that
approval shall be submitted. If the supervisory board fails to hold the
said meeting, then the person who made the request shall himself have
authority to call the meeting of the supervisory board subject to due
observance of what has been provided thereon in these Articles of
Association.
<PAGE>
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5. Shareholders not entitled to vote and usufructuaries and pledgees
entitled to vote shall have the rights attached to depositary receipts
for shares.
MANAGEMENT
ARTICLE 16.
1. The company shall have a managing board, consisting of one or more
managing directors A and one or more managing directors B under the
supervision of a supervisory board.
2. The number of managing directors shall be fixed by the supervisory
board.
3. Natural as well as legal persons can hold the office of managing
director.
4. The general meeting shall appoint the managing directors for an
unlimited period of time and shall at all times have power to suspend or
dismiss any managing director. A resolution to appoint a managing
director can only be passed upon recommendation by the supervisory
board. Simultaneously with their appointment, the general meeting shall
determine whether the managing director shall serve as a managing
director A or a managing director B.
Each managing director can at all times also be suspended by the
supervisory board.
5. A shareholders resolution to suspend or dismiss a managing director must
be passed by a two thirds majority of the valid votes cast provided that
such votes represent more than half of the issued share capital.
The provision in Article 2:120, paragraph 3, of the (Dutch) Civil Code,
providing that a new meeting may be convened at which the resolution may
be passed, irrespective of the part of the capital represented at such
meeting, shall not be applicable.
6. The appointment of the managing directors may result from a binding
nomination, which provides for at least two persons for each vacancy to
be filled, made by the supervisory board within three months of such
board being invited by means of a registered letter to do so by the
managing board. In case no binding nomination has been made within the
abovementioned period, the general meeting shall be free in its choice.
The general meeting shall also be free in its choice if it deprives any
nomination of its binding character in a resolution passed by at least
two thirds of the valid votes cast at a meeting where more than half of
the issued share capital is present or represented. The provisions in
article 2:120, paragraph 3, of the (Dutch) Civil Code shall not be
applicable.
<PAGE>
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7. If, in the event of suspension of a managing director, after three
months no resolution has been passed by the general meeting to dismiss
him, the suspension shall terminate.
8. A managing director shall be given the opportunity to account for his
actions in the general meeting where his suspension or discharge is
discussed and have an adviser assist him therein.
9. The supervisory board shall decide on the remuneration and the further
terms and conditions of employment for each of the managing directors.
DUTIES AND POWERS
ARTICLE 17.
1. The managing board shall, subject to the limitations contained in these
Articles of Association, be in charge of the management of the company.
2. If the managing board consists of one managing director A, the managing
director A shall be chairman of the managing board. If the managing
board consists of more than one managing director A, they shall decide
among themselves, who shall be chairman of the managing board.
3. With due observance of these Articles of Association and the law, the
managing board may adopt rules governing its internal organisation.
Furthermore, the managing directors may divide their duties among
themselves, whether or not by way of such rules.
4. The managing board shall meet whenever a managing director so desires.
5. The managing board shall adopt its resolutions with an absolute majority
of votes cast in a meeting at which at least a majority of its members
is present or represented, including at all times, all managing
directors A. A managing director may cause himself to be represented at
a board meeting by another managing director, by proxy duly authorized
in writing. In a tie vote, the proposal shall have been rejected.
6. The managing board shall have power to pass resolutions outside meetings
as well, provided this be done (i) by unanimous vote and further in
writing, by telegraph, by telefax or by telex messages or (ii) by
telephone by a majority of the managing directors then in office and
provided that all the managing directors have been consulted on the
resolution to be passed and none of them objects against the applicable
manner of passing a resolution.
7. The ruling pronounced by the chairman of the managing board concerning
the result of a vote, as well as the ruling concerning the contents of a
resolution that has been passed, insofar as a vote was taken about a
proposal other than in a written form, shall be decisive.
<PAGE>
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If, however, immediately after a ruling as referred to in the previous
sentence is pronounced, its correctness is disputed, a new vote is taken
provided that this is required by a majority of votes, or if, in the
event of the first vote not being taken by call or not being a written
one, one of those present and entitled to vote should wish so.
This new vote nullifies the legal consequences of the original vote.
8. The managing board shall need the approval of the supervisory board for
such resolutions of the managing board as shall be determined by the
supervisory board, and of which the supervisory board has informed the
managing board in writing.
9. Pursuant to Article 2:130 of the (Dutch) Civil Code, the absence of the
approval required in accordance with paragraph 8 of this article shall
not affect the powers of representation of the managing board or of the
managing directors as laid down in article 18.
10. The managing board shall have the obligation to act in pursuance of the
directions of the supervisory board regarding the general outlines of
the financial, social and economic policies and regarding personnel
management within the company.
11. In the event of the prevention or permanent absence of one or more
managing directors the remaining managing director(s) shall be in charge
of the entire management of the company; in the event of the prevention
or permanent absence of all the managing directors or of the sole
managing director there must at all times be a person, who has been
appointed for that purpose by the supervisory board, to be in that event
temporarily in charge of the management of the company.
12. The managing directors may attend the general meetings; in these
meetings their role will be an advisory one.
REPRESENTATION
ARTICLE 18.
1. The managing board as well as each managing director A individually
shall have power to represent the company and bind the company vis-a-vis
third parties. A managing director B may only represent the company
together with another managing director.
2. In the event that a managing director, acting in his personal capacity,
enters into an agreement with the company, or if he, acting in his
personal capacity, conducts any litigation against the company, the
company may, with due observance of the provisions of the first
paragraph, be represented in that matter either by one of the other
managing directors or by a
<PAGE>
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supervisory director designated for that purpose by the supervisory
board, all of the foregoing unless the general meeting designates a
person for that purpose or unless the law otherwise provides for such
designation.
The designated person may also be the managing director with whom the
conflict of interest exists. If a managing director has a conflict of
interest with the company other than as referred to in the first
sentence of this paragraph, then he and each of the other managing
directors as well shall have power to represent the company, with due
observance of the provisions of the first paragraph of this article.
3. The managing board may grant to one or more persons, whether or not
employed by the company, the power to represent the company and bind the
company vis-a-vis third parties ("procuratie") on a continuing basis.
The company shall deposit a copy of its relevant resolution, listing the
limitations of such power of attorney, if any, with the trade register
of the chamber of commerce and industry in the district in which the
company is listed. The managing board may also grant such titles as it
may determine (such as director, officer or otherwise) to persons, as
referred to in the preceding sentence, as well as to other persons, but
in the latter event only if such persons are employed by the company.
THE SUPERVISORY BOARD
ARTICLE 19.
1. The company shall have a supervisory board consisting of one or more
natural persons.
2. The number of supervisory directors in office shall be fixed by the
supervisory board.
3. The general meeting shall appoint all supervisory directors with due
observance of and in the way as provided in article 16, paragraph 6 and
shall at all times be empowered to suspend or dismiss any such
supervisory director. A shareholders resolution to suspend or dismiss a
supervisory director can only be passed with due observance of the
provisions in article 16, paragraph 5. A resolution to appoint a
supervisory director can only be passed upon recommendation by the
supervisory board.
4. The supervisory board shall be empowered to grant to the supervisory
directors or to one or more of them a remuneration.
Any reasonable expenses incurred by supervisory directors in this
capacity shall be refunded to them.
5. It shall be the duty of the supervisory board to exercise supervision
over the managing board's conduct of affairs and over the general course
of business
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in the company and the business enterprise connected with it. It shall
offer advice to the managing board. In discharging their duties the
supervisory board shall have regard for the interests of the company and
the business enterprise connected with it.
6. The managing board shall supply all such information regarding the
affairs of the company to any one of the supervisory directors who
should require this. The supervisory board shall have power to examine
all books, documents and correspondence of the company and to take
cognizance of all acts that have taken place; each supervisory director
shall have access to all buildings and sites that are being used by the
company.
7. The supervisory board shall be entitled to ask the assistance of experts
in the exercise of its duties for account of the company.
The supervisory board shall appoint a secretary, who needs not be a
member of such board, and make arrangements for his substitution in case
of his absences at meetings of such board. The secretary shall keep
minutes of the proceedings at meetings of the supervisory board. The
minutes shall be adopted at the same or in a subsequent meeting.
8. If the supervisory board consists of more than one board member, the
supervisory board shall appoint one of them chairman. In that case, it
may also appoint a vice-chairman. The supervisory board shall
furthermore be empowered to appoint one or more of them to be primarily
in charge of the day-to-day supervision of the managing board.
Subject to any limitations that may be imposed by applicable law, the
supervisory board may delegate any of its powers to committees
consisting of such member or members of its body as it thinks fit; any
committee as formed shall in the exercise of the power so delegated
conform to any regulations that may be imposed on it by the supervisory
board.
The supervisory board may draw up its own charter, which will
regulate the formalities for meetings of the supervisory board to be
observed, in addition to the foregoing provisions.
9. The supervisory board shall meet whenever its chairman or two other
members of that board considers this necessary. Notice of its meetings
shall be given by the chairman of the supervisory board - stating the
matters to be dealt with - and in the event of his prevention or
permanent absence by one of the other supervisory directors; the period
of notice of the meeting being at least eight days.
If asked to do so, the managing board shall attend the meetings of the
supervisory board; in that event their role shall be an advisory one.
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10. The supervisory board shall have power to pass resolutions outside
meetings as well, provided this be done (i) by unanimous vote and
further in writing, by telegraph, by telefax or by telex messages or
(ii) by telephone by a majority of the supervisory directors then in
office and provided that all the supervisory directors have been
consulted on the resolution to be passed and none of them objects
against the applicable manner of passing a resolution.
11. The supervisory board shall adopt its resolutions with an absolute
majority of the votes cast in a meeting at which at least a majority of
its members is present or represented. A supervisory director may cause
himself to be represented at a meeting of the supervisory board by
another supervisory director, by proxy duly authorized in writing. If
two meetings have been convened without a majority of the supervisory
directors being present or represented at the meeting concerned, the
supervisory directors who are present or represented at a subsequent
meeting can adopt valid resolutions, regardless whether a quorum is
present or represented at that subsequent meeting.
In a tie vote, the proposal shall have been rejected, unless the meeting
is attended by more than two supervisory directors including the
chairman of the supervisory board, in which case the chairman of the
supervisory board shall have a casting vote.
12. The ruling pronounced by the chairman of the supervisory board regarding
the outcome of a vote as well as the ruling concerning the contents of a
resolution passed by the supervisory board, provided that a vote has
been held about a proposal not recorded in writing, shall be decisive.
If, however, the correctness of a ruling as referred to in the preceding
sentence is challenged immediately after the ruling has been pronounced,
then a new vote shall be held, whenever a majority of those present and
entitled to vote or, if the original vote was not taken by call or
ballot papers, whenever any one of those present and entitled to vote
should wish so. This new vote shall nullify the legal consequences of
the original vote.
13. All resolutions of the supervisory board, including those passed outside
meetings, shall be entered into a register of minutes.
14. When the company wants to establish proof of any resolution of the
supervisory board the signature of the secretary as referred to in
paragraph 7 of this article, or the signature of one member of the
supervisory board, on the document in which the resolution is contained
shall suffice.
15. Supervisory directors shall serve for a period of (in principle) one
year, such period to commence on the date following the date of his
(re-) appointment
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in the annual general meeting and ending on the date of the annual
general meeting held in the following financial year. If a supervisory
director has not been appointed in the annual general meeting but in an
extraordinary general meeting, he shall in principle serve for a period
less than one year, such period to commence on the date following the
date of his (re-) appointment in the extraordinary general meeting and
ending on the date of the first annual general meeting which will be
held after the extraordinary general meeting referred to above.
After his term of office has expired, each supervisory director shall
immediately be eligible for re-appointment for a subsequent year term,
unless he has reached or will reach the age of seventy-two in the
financial year in which the meeting is held. A person who has reached
the age of seventy-two shall not be eligible for being appointed a
supervisory director. A supervisory director shall not resign later than
on the day that the annual general meeting is held in the financial year
in which he reaches the age of seventy-two.
16. If for any reason whatsoever one or more supervisory directors are
permanently absent, then the remaining supervisory directors shall, as
long as at least one supervisory director is in office, constitute a
body capable of acting until the vacancy(ies) has/have been filled.
17. If there is only one supervisory director, he shall have all the powers
and obligations that these Articles of Association confer and impose on
the supervisory board and its chairman.
18. The supervisory directors may attend the general meetings; in these
meetings their role will be an advisory one.
INDEMNIFICATION.
ARTICLE 20.
Subject to the limitations of this article, every person or legal entity who is,
or has been, a managing director, a supervisory director or officer with the
power to represent the company as referred to in article 18, paragraph 3
("officer"), employee or agent of the company or who is serving or has served at
the request of the company as a managing director or supervisory director,
officer, employee or agent of another company, partnership, joint venture, trust
or other enterprise, who is made, or threatened to be made, a party to any
pending or completed claim, action, suit or proceeding, whether civil, criminal,
administrative or investigative, in which he or it becomes involved as a party
or otherwise by virtue of his or its being, or having been, a managing director,
a supervisory director, officer, employee or agent of the company or by virtue
of his serving or having served at
<PAGE>
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the request of the company as a managing director or supervisory director,
officer, employee or agent of another company, partnership, joint venture, trust
or other enterprise, shall be indemnified by the company, to the fullest extent
permitted under the laws of the Netherlands or any other applicable law, against
(i) any and all liabilities imposed on him or on it, including judgments, fines
and penalties, (ii) any and all expenses, including costs and attorney's fees,
reasonably incurred or paid by him or by it, and (iii) any and all amounts paid
in settlement by him or by it, in each case in connection with any such claim,
action, suit or other proceeding.
A managing director or supervisory director, officer, employee or agent shall
have no right to be indemnified against any liability towards the company if it
shall have been finally determined that such liability resulted from the wilful
misfeasance, bad faith or gross negligence or improper personal benefit of such
person or legal entity.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction or upon plea of nolo contendere or its equivalent, shall
not, of itself, create a presumption that such person or legal entity did not
act in good faith and in a manner which such person or legal entity reasonably
believed to be in or not opposed to the best interests of the company. The right
of indemnification and advancement of expenses herein provided (i) may be
insured against by policies maintained by the company, whether or not the
company would have the power to indemnify such managing director or supervisory
director, officer, employee or agent against such liability under this article,
(ii) shall be severable, (iii) shall not affect any other rights to which a
person or legal entity may now or hereafter be entitled, (iv) shall continue as
to a person or legal entity who has ceased to be a managing director, a
supervisory director, officer, employee or agent of the company or who has
ceased to serve at the request of the company as a managing director or
supervisory director, officer, employee or agent of another company,
partnership, joint venture, trust or other enterprise, and (v) shall insure to
the benefit of the heirs, executors, administrators or successors of such person
or legal entity.
Nothing included in this article will affect any right to indemnification to
which persons or legal entities seeking indemnification or advancement of
expenses may be entitled by contract or otherwise, both as to action in such
person's or legal entity's official capacity and as to action in another
capacity while holding such office.
Expenses (including attorney's fees) incurred by a managing director or
supervisory director, officer, employee or agent in connection with the
preparation
<PAGE>
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and presentation of a defence to any civil, criminal, administrative, or
investigative claim, action, suit or proceeding of the character described in
this article, may be advanced to such managing director or supervisory director,
officer, employee or agent by the company prior to final disposition thereof
upon receipt of an undertaking by or on behalf of such managing director or
supervisory director, officer, employee or agent to repay such amount if it is
ultimately determined that he or it is not entitled to indemnification under
this article. If the advancement of expenses shall not be made by the company, a
person entitled to indemnification may seek reimbursement from the company
subject to the written consent of the company.
For purposes of this article, reference to "the company" shall include, in
addition to the resulting company, any constituent company (including any
constituent of a constituent) absorbed in a consolidation or merger which, if
its separate existence had continued, would have had power and authority to
indemnify its managing directors or supervisory directors, officers, and
employees or agents, so that any person who is or was a managing director or
supervisory director, officer, employee or agent of such constituent company or
is or was serving at the request of such constituent company as a managing
director or supervisory director, officer, employee or agent of another company,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this article with respect to the resulting or surviving company
as he would have with respect to such constituent company if its separate
existence had continued.
For purposes of this article, references to "other enterprises" shall include
employee benefit plans; references to "fines" shall include any excise taxes
assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the company" shall include any
service as a managing director or supervisory director, officer, employee or
agent of the company which imposes duties on, or involves services by, such
managing director or supervisory director, officer, employee or agent with
respect to an employee benefit plan, its participants or beneficiaries; and a
person who acted in good faith and in a manner he reasonably believed to be
in the interest of the participants and beneficiaries of an employee benefit
plan shall be deemed to have acted in a manner "not opposed to the best
interests of the company" as referred to in this article.
GENERAL MEETINGS
ARTICLE 21.
1. At least once a year, a general meeting shall be held.
<PAGE>
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Such general meeting shall be held within six months after the end of
the financial year, at which, among other issues, the following shall be
dealt with:
a. except in case a delay in drawing up the annual accounts has
been approved, the consideration of the annual accounts and,
insofar as is required by law, of the annual report and
additional information;
b. the confirmation and adoption of the annual accounts, except if
a delay in drawing up the annual accounts has been approved;
c. deciding upon the allocation of profits;
d. in addition to the above, doing everything required by law.
2. Furthermore, general meetings shall be held as often as the majority of
the managing directors then in office or the majority of the supervisory
directors then in office considers it necessary, without prejudice to
the provisions in the paragraph 4 hereof.
3. Proposals by shareholders for both annual general meetings and
extraordinary general meetings, shall only be discussed in case
notification thereof has been sent timely to the office of the company,
so that in compliance with the stated period of notice for convening
meetings the same can likewise be announced with all other matters to be
considered, provided that with respect to annual general meetings,
shareholders will be required to give such notice at least sixty (60)
days and no more than ninety (90) days prior to the one year anniversary
of the date the previous year's annual general meeting was held.
4. One or more shareholders, who jointly represent at least ten percent
(10%) of the issued share capital may, on their application, be
authorized by the president of the District Court to convene a general
meeting. The president shall dismiss the application if it does not
appear to him that the applicants have previously requested the managing
board and the supervisory board in writing, stating the exact matters to
be considered, to convene a general meeting, and neither the managing
board nor the supervisory board, which in this case have equal powers,
have taken the necessary steps so that the general meeting could be held
within six weeks after the request.
5. General meetings shall be held in the place where the company has its
corporate seat as contained in these Articles of Association, as well as
in Almere, Delft, Haarlemmermeer, Rotterdam, The Hague or Utrecht. At a
general meeting, held at a different place, valid resolutions shall also
be capable of being passed if the entire issued share capital is
represented.
<PAGE>
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6. Notice of the meetings, without prejudice to the provisions of paragraph
3 of this article, must be given to the persons entitled to attend
meetings, by or on behalf of the managing board or the supervisory board
by means of notice letters; the period of notice shall be at least
fourteen days, not including the day of the notice and the day of the
meeting.
7. The notice of the meeting shall contain the agenda of the meeting.
8. If a proposal to amend the company's Articles of Association is to be
dealt with, a copy of that proposal, in which the proposed amendments
are stated verbatim, shall - in accordance with the provisions of
Article 2:123 of the (Dutch) Civil Code - be made available for
inspection to the persons who are entitled to attend meetings inter alia
at the office of the company where it maintains its corporate seat, as
from the day of the notice of the meeting until after the close of that
meeting, and each of them shall be entitled, upon his request, to obtain
a copy thereof, without charge unless such a copy is attached to the
notice of the meeting.
9. If the provisions laid down by law or by these Articles of Association
in relation to giving notice of meetings, drawing up the agendas for
such meetings and making available for inspection those matters which
are to be dealt with have not been complied with, then valid resolutions
shall nevertheless be capable of being passed, provided that the entire
issued share capital be represented at the meeting in question and
provided that the resolution be passed unanimously.
ARTICLE 22.
1. The chairman of the supervisory board or in his absence the
vice-chairman of the supervisory board shall chair the meeting. If such
chairman is not present at any such meeting, the general meeting shall
itself decide who is to chair the meeting. The chairman of the meeting
may adopt rules and regulations relating to the conduct of such meeting.
2. The chairman shall appoint one of those present to act as secretary
whose duty it shall be to draw up the minutes of the meeting and the
chairman shall, together with the secretary, confirm and adopt the
minutes, in proof of which they shall sign these.
The minutes shall be entered into a register of minutes. If an
official notarial record is made of the matters dealt with at a
meeting then minutes need not be drawn up.
3. Each of the persons entitled to attend meetings shall have the right to
be represented at a meeting by a proxy duly authorized in writing.
ARTICLE 23.
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1. Each common share and each preference share entitles the holder thereof
to cast one (1) vote.
2. At general meetings the company shall not be capable of casting votes
for shares in its own share capital which are held by itself or by one
of its subsidiaries. Usufructuaries and pledgees of shares held by the
company and its subsidiaries are not excluded from the right to vote,
provided the right of usufruct in respect of or the right of pledge on
shares was established before they were held by the company or one of
its subsidiaries. The company or one of its subsidiaries shall not be
capable of casting votes for shares in respect of which it has a right
of usufruct or a right of pledge.
3. When determining whether a particular proportion of the share capital is
represented, or alternatively, whether a majority represents a
particular proportion of the share capital, the amount of shares to
which no voting rights are attached shall be subtracted from the share
capital.
4. Votes on matters of business shall be held verbally, those concerning
persons by means of unsigned closed ballot papers, unless in either case
the chairman of the meeting should, without objection from any of those
present and entitled to vote, decide on or allow any other manner of
voting.
If the vote concerns an election of persons, a person entitled to
attend meetings present at the relative meeting can also demand a
vote by a secret ballot.
5. All resolutions of the general meeting shall be passed with an absolute
majority of the valid votes cast provided that such votes represent more
than half of the issued share capital, except - without prejudice to the
provisions in article 16, paragraphs 4 and 5 and article 19,
paragraph 3 -: for the resolutions (a) to amend the Articles of
Association (b) to legally merge or to legally split-up, and (c) to
dissolve the company, which resolutions can only be passed with a
two-thirds majority of the valid votes cast provided that such votes
represent more than half of the issued share capital and further only
on the proposal of the supervisory board.
The provision in Article 2:120, paragraph 3 of the (Dutch) Civil
Code, providing that a new meeting may be convened at which the
resolution may be passed, irrespective of the part of the capital
represented at such meeting, shall not be applicable.
6. Blank votes and abstentions shall not be counted as votes cast.
7. If there is an equal division of votes on a proposal about business
matters, no decision shall be taken.
<PAGE>
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8. In the event a vote is taken to elect one of two candidates and there is
an equal division of votes, it shall be decided by drawing lots which of
these has been elected, under the restriction, however, that if persons
from a binding nomination list are to be elected, then the higher
ranking nominee is elected.
9. The ruling concerning voting results pronounced by the chairman during
the meeting shall be decisive. The same shall also apply to the contents
of a resolution passed by the meeting, provided that a vote has been
held about a proposal not recorded in writing.
10. If the correctness of a ruling as referred to in the preceding paragraph
is challenged, however, immediately after the ruling has been
pronounced, then a new vote shall be held whenever a majority of the
general meeting should wish so, or, if the original vote was not taken
by call or by ballot papers, whenever any one of the persons entitled to
vote should wish so. This new vote shall nullify the legal consequences
of the original vote.
11. The managing board shall keep a record of the resolutions that have been
passed. This record shall be open to inspection by the persons entitled
to attend meetings at the registered office of the company. Upon
request, each of them shall receive a copy of or an extract from this
record against payment of cost at most.
ARTICLE 24.
1. Except if the company has usufructuaries and pledgees entitled to vote,
resolutions of shareholders shall alternatively be capable of being
passed in writing - which shall include telegraphic, telefax and telex
messages - instead of at a general meeting, provided that these are
passed with a unanimous vote of all persons who are entitled to vote.
2. The managing board shall enter the resolutions that have been passed in
the manner specified in the preceding paragraph of this article, in the
register of minutes of the general meetings and shall mention this at
the next general meeting.
MEETINGS OF HOLDERS OF SHARES OF A SPECIFIC CLASS
ARTICLE 25.
1. Meetings of holders of shares of a specific class can only be held if
different classes of shares are issued. With due observance of the first
sentence of this paragraph, meetings of holders of shares of a specific
class shall be held in all instances, which by virtue of these Articles
of Association require a resolution of the meeting of holders of shares
of a specific class and, furthermore, whenever the managing board and/or
the supervisory board
<PAGE>
-25-
considers it necessary or whenever one or more persons holding the
voting rights over shares of a specific class submit(s) a written
request to this effect to the managing board and/or the supervisory
board, stating exactly what issues are to be dealt with.
2. Article 21 paragraph 4 to 8 inclusive, Article 22 paragraphs 2 and 3 and
Article 23 shall mutatis mutandis be applicable to meetings of holders
of shares of a specific class.
3. If, after a request as mentioned at the end of paragraph 1, the managing
board and/or the supervisory board fails to convene a meeting of holders
of shares of a specific class, in the sense that it be held within four
weeks of receipt of that request, the requestors shall themselves be
empowered to convene a meeting.
4. A meeting of holders of shares of a specific class shall itself decide
who is to chair its meetings.
5. The chairman of a meeting of holders of shares of a specific class shall
decide upon allowing other persons to attend the meeting, apart from
those holding the voting rights over the relative shares.
6. Resolutions of a meeting of holders of shares of a specific class shall
alternatively be capable of being passed in writing - which shall
include telegraphic, telefax, and telex messages - provided these are
passed unanimously by all the persons entitled to vote.
EXAMINATION BY ACCOUNTANT
ARTICLE 26.
1. The general meeting shall have authority - and if this is required by
provision of law it shall have the obligation - to instruct an
accountant, whose duty it shall be to examine the annual accounts drawn
up by the managing board, to lay a report of their findings before the
managing board and to make a statement with regard thereto.
2. If the general meeting fails to instruct the accountant as referred to
in paragraph 1 of this article, this instruction shall be made by the
managing board.
3. The instruction shall be capable of being cancelled at all times by the
general meeting and by the person who instructed the accountant.
FINANCIAL YEAR, ANNUAL ACCOUNTS
ARTICLE 27.
1. The financial year of the company runs from the first day of June up to
and including the thirty-first day of May of the following calendar
year.
<PAGE>
-26-
2. The managing board shall close the books of the company as at the last
day of every financial year and shall within five months thereafter -
except if extension of that period to a maximum of six months has been
granted by resolution of the general meeting because of special
circumstances - draw up annual accounts consisting of a balance sheet, a
profit and loss account and explanatory notes and within this period it
shall make these documents available for inspection by the shareholders
at the office of the company. These documents will also be submitted to
the supervisory board. Within this period the managing board shall
submit the annual report to the general meeting as well. The annual
accounts shall be signed by all the managing directors and the
supervisory directors; if any signature is missing, the reason therefor
shall be stated in the annual accounts.
3. The company shall ensure that the annual accounts that have been drawn
up and the annual report and the particulars that have to be added by
virtue of the law, are available at its office as from the day of the
notice of the general meeting at which they are to be dealt with.
The persons entitled to attend meetings shall have the right to
review these documents at the company's office and to obtain copies
thereof free of charge.
4. What has been provided in paragraphs 2 and 3 of this article in relation
to the annual report and the particulars to be added by virtue of the
law, shall not be applicable if Article 2:396, paragraph 6, first
sentence or Article 2:403 of the (Dutch) Civil Code is applicable to the
company.
5. The general meeting shall confirm and adopt the annual accounts. Such
confirmation and adoption shall, to the extent permitted by law,
constitute a full release from liability of the managing directors and
the supervisory directors for the exercise of their duties during the
financial year concerned.
PUBLICATION
ARTICLE 28.
1. The company shall publish the annual accounts within eight days
following the confirmation and adoption thereof. The publication shall
be effected by the deposit of a complete copy in the Dutch language or,
if such copy was not prepared, a copy in the French, German or English
language, with the trade register of the chamber of commerce and
industry in the district in which the company is listed. The date of
confirmation and adoption must be stated on the copy.
2. If the annual accounts are not confirmed and adopted within seven months
of the termination of the financial year, in accordance with the legal
<PAGE>
-27-
requirements, then the managing board shall, without further delay,
publish the prepared annual accounts in the manner prescribed in
paragraph 1; it shall be noted on the annual accounts that they have not
yet been confirmed and adopted.
3. In the event that the general meeting shall have extended the period for
the preparation of the annual accounts in accordance with article 27
paragraph 2, then the last preceding paragraph shall apply with effect
from the data falling two months from the termination of such period.
4. A copy of the annual report, produced in the same language or in Dutch,
shall, together with the additional information required by virtue of
the law, be published at the same time and in the same manner as the
annual accounts. Insofar as the law permits, the foregoing shall not
apply if copies of those documents are held at the office of the company
for inspection by any person and, upon request, full or partial copies
thereof are supplied at a price not exceeding the cost; the company
shall make an official return thereof for filing in the trade register
of the chamber of commerce and industry.
5. The publication shall be effected with due observance of the applicable
legal exemptions.
DISTRIBUTIONS
ARTICLE 29.
1. From the profits appearing from the annual accounts as adopted, such an
amount shall be reserved by the company as shall be determined - with
due observance of the provisions of paragraph 4 of this article - by the
supervisory board. The profits remaining thereafter shall be treated in
accordance with the provisions of the following paragraphs of this
article.
2. From the profits remaining, after application of the provision in
paragraph 1 above and with due observance of the provisions in paragraph
4 of this article, first a non-cumulative cash dividend of one tenth
percent (0.1%) of the par value of the preference shares shall be made
on the preference shares, less any interim distributions made in
accordance with paragraph 6 hereunder.
3. The profits remaining after reservation as referred to in paragraph 1
above and distribution as referred to in paragraph 2 above are - with
due observance of the provisions of paragraph 4 of this article - at the
disposal of the general meeting for distribution on the common shares
equally and proportionally and/or for reservation.
<PAGE>
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4. The company can only make distributions to its shareholders and other
persons entitled to its profits that are capable of being distributed to
the extent that its equity exceeds the aggregate of (i) the par value of
its issued share capital, and (ii) the reserves to be maintained
pursuant to the law or under the present Articles of Association.
5. A loss may only be applied against reserves to be maintained pursuant to
the law to the extent permitted by the law.
6. The supervisory board may resolve that an interim dividend shall be
paid, if the requirements of paragraph 4 have been met.
7. The supervisory board may resolve that (interim) dividends shall wholly
or partly be paid otherwise than in cash.
8. Unless the supervisory board decides on a specific date, dividends shall
be made payable promptly after they have been declared.
9. Dividends that have not been collected within five years and one day
after they have become payable, shall be forfeited to the company.
LIQUIDATION AND WINDING UP
ARTICLE 30.
1. In the event of the company being liquidated it shall be wound up by the
managing board unless the general meeting decides otherwise.
2. The general meeting shall decide on the remuneration of the liquidators
and of those who have been charged with the supervision of the winding
up.
3. During the winding up, these Articles of Association shall, in as far as
possible, remain of full force and effect.
4. Out of the balance of the company's equity, after the expenses of
liquidation and the company's debts have been paid, to the holders of
preference shares shall be distributed first the amounts paid up on such
preference shares. The balance remaining after application of the
immediately preceding sentence shall be distributed to the holders of
common shares pro rata to the amount of common shares each of such
shareholders holds. No distribution upon liquidation shall be made to
the company itself for shares which the company holds in its own share
capital.
After completion of the winding up the books and documents of the
liquidated company shall for seven years remain in the custody of a
person who shall be capable of being appointed for that purpose by the
general meeting in their resolution to liquidate the company. If an
appointment as aforesaid has not been made by the general meeting, then
the appointment shall be made by the liquidators.
<PAGE>
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CLOSING STATEMENT
The Appearer finally declared that:
A. the existing issued capital amounts to ten million sixty-five
thousand eight hundred fifty-seven Dutch Guilders and twenty-eight
cents (NLG 10,065,857.28) consisting of ten million four hundred
eighty-five thousand two hundred sixty-eight (10,485,268) common
shares, with a par value of ninety-six Dutch Guilder cents (NLG 0.96)
each ;
B. the declaration of non-objection, referred to in Article 2:235
(Dutch) Civil Code has been granted, as appears from a Ministerial
Declaration of non-objection number N.V.157.527 dated the fifteen day
of November one thousand nine hundred ninety-nine that has been
annexed to the Minute hereof;
C. the certificate from an auditor, referred to in Article 2:72, paragraph
1 sub b of the (Dutch) Civil Code shall be attached to this deed.
D. the Articles of Association lastly were amended partially by deed of the
twenty-second day of April one thousand nine hundred and ninety-eight,
passed before a substitute of the undersigned civil law notary.
The Appearer is known to me, civil law notary.
IN WITNESS WHEREOF
This Deed has been
executed in Amsterdam on the date mentioned at the head of this Deed. After the
material contents of this Deed had prior thereto been stated to the Appearer
by me, civil law notary, he has declared to have taken cognizance of the
contents of this Deed and not to require that it be read out in full.
Thereupon, after a limited part of this Deed had been read out, it has been
signed by the Appearer and by me, civil law notary, thereunto appended our
several signatures.
(signed:) C.H.T. Koetsier, F.W. Oldenburg
ISSUED FOR TRUE COPY
<PAGE>
Metron Technology N.V.
Kabelstraat 19
1322 AD Almere
November 17, 1999
Dear Sirs,
This opinion is rendered to you in connection with the Registration Statement on
Form S-1 (the "Registration Statement"), to which this opinion is attached as an
exhibit, filed with the Securities and Exchange Commission under the Securities
Act of 1933, as amended, covering an underwritten public offering and issuance
by Metron Technology N.V. (the "Company") of up to 3,750,000 common shares, with
a par value of NLG 0.96 each, (the "Shares").
As the basis for my opinion, we have exclusively examined the following
documents:
(i) a certified copy of the Articles of Association of the Company, as
currently in effect dated November 17, 1999 (the "Articles of
Association");
(ii) an excerpt dated November 3, 1999 from the Commercial Register issued
by the Chamber of Commerce and Industry of Flevoland, relating to the
Company, confirmed to me by telephone to be correct as of the date
hereof;
<PAGE>
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(iii) a copy of a resolution of the Supervisory Board ("RAAD VAN
COMMISSARISSEN") of the Company, dated September 22, 1999, relating to
the appointment of the Pricing Committee of the Supervisory Board of
the Company;
(iv) a copy of the minutes of the general meeting of shareholders of the
Company held in Amsterdam on November 15, 1999, relating to the
conversion and amendment of the articles of association of the Company;
(v) a draft copy of the Registration Statement dated November 12, 1999.
As to matters of fact, we have relied upon the documents we have examined and
upon statements or certificates of public officials.
The following opinion is limited in all respects to the laws of The Netherlands
as they stand at the date hereof and as they are presently interpreted under
published case law of the courts in The Netherlands. Nothing in this opinion
should be taken as expressing an opinion in respect of any representation or
warranties, or other information, contained in the Registration Statement. This
opinion shall be governed by and shall be construed and have effect in
accordance with the laws of the Kingdom of the the Netherlands, excluding Aruba
and the Netherlands Antilles. We do not express any opinion on tax laws of the
Netherlands or on public international law or on the rules of or promulgated
under or by any treaty or treaty organization.
In rendering this opinion, we have assumed that:
(a) all original documents are authentic and the signatures thereon are
genuine and the documents submitted to us as draft, photocopy or
facsimile copy are in conformity with the originals;
(b) any document purporting to have been signed by any person other than by
or on behalf of the Company is within the power of and is or will be
duly authorized by and signed on behalf of
<PAGE>
-3-
and constitute or will constitute the legal, valid and binding obligations,
enforceable in accordance with their terms, of such person; and
(c) the Shares will be sold by the underwriters at a price established by
the Pricing Committee of the Supervisory Board of the Company;
(d) the resolution of the general meeting of shareholders of the Company
dated November 15, 1999, relating to the conversion and amendment of
the articles of association of the Company is validly adopted in
accordance with the articles of association of the Company, complete
and correct and not has been or will be, wholly or partly, revoked by
the general meeting of shareholders, as the case may be, or declared
null and void by a court of law.
Based upon and subject to the foregoing and subject to the qualifications listed
below and to any factual matters, documents or events not disclosed to us in the
course our examination referred to above, we are at the date hereof of the
following opinion:
The Shares, when issued by the Company in full accordance with and
pursuant to the Articles of Association of the Company and in full
accordance with the Registration Statement, will be validly issued and
fully paid and non-assessable ("VOLGESTORT").
We have not investigated or independently verified any factual matter disclosed
to us in the course of our examination of the above-mentioned documents.
We consent to the use of this opinion as Exhibit 5.1 to the Registration
Statement. In giving such consent, we do not admit belonging to the category of
persons whose consent is required under Section 7 of the Securities Act or the
Rules or Regulations of the US Securities and Exchange Commission issued
thereunder.
Yours faithfully,
NAUTA DUTILH
<PAGE>
EXHIBIT 23.1
The Board of Directors and Shareholders
Metron Technology N.V.
The audits referred to in our report dated July 22, 1999, except as to
Note 19, which is as of November 17, 1999, included the related financial
statement schedule as of May 31, 1999, and for each of the years in the
three-year period ended May 31, 1999, included in the registration statement.
This financial statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion on this financial
statement schedule based on our audits. In our opinion, such financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.
We consent to the use of our reports included herein and to the references
to our firm under the headings "Selected Consolidated Financial Data" and
"Experts" in the prospectus.
KPMG LLP
Mountain View, California
November 17, 1999
