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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) March 18, 1997
Silicon Valley Group, Inc.
(Exact name of the registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-11348 94-2264681
(Commission File Number) (I.R.S. Employer Identification No.)
101 Metro Drive, Suite 400, San Jose, California 95110
(Address of principal executive offices) (Zip Code)
(408) 467-5910
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report)
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Item 5. Other Events.
The Registrant purchased from International Business Machines
Corporation ("IBM") for $3,000,000 their entire 6% minority interest position in
SVG Lithography Systems, Inc. ("SVGL"). This transaction results in the
Registrant owning substantially all of the voting securities of SVGL.
In a separate transaction, the Registrant satisfied in full its
royalty payment obligation of $38,000,000 to IBM in exchange for $23,000,000 of
SVGL products, 489,296 shares of the Registrant's Common Stock valued at
$10,000,000 and $5,000,000 in cash. The transaction will result in a before tax
charge taken against the Registrant's earnings for the quarter ended March 31,
1997 of approximately $33,000,000. The Registrant expects to amortize the
remainder of the charge over future periods.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
4.1 Stock Purchase and Registration Rights Agreement
dated as of March 18, 1997 among the Registrant and
IBM
4.2 Stockholder Agreement dated as of March 18, 1997
among the Registrant, SVGL and IBM
99.1 Agreement for Payment in Connection with Development
Agreement dated as of March 18, 1997 among the
Registrant, SVGL and IBM
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: April 2, 1997
SILICON VALLEY GROUP, INC.
By: /s/ Russell G. Weinstock
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Russell G. Weinstock
Vice President and Chief Financial Officer
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Exhibit 4.1
March 18, 1997
STOCK PURCHASE AND REGISTRATION RIGHTS AGREEMENT
DATED AS OF MARCH 18, 1997
BETWEEN
INTERNATIONAL BUSINESS MACHINES CORPORATION
AND
SILICON VALLEY GROUP, INC.
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STOCK PURCHASE AGREEMENT, dated as of March 18, 1997
(the "Agreement"), between INTERNATIONAL BUSINESS
MACHINES CORPORATION, a New York corporation
("Seller"), and SILICON VALLEY GROUP, INC., a Delaware
corporation (the "Company").
WHEREAS, Seller is the record holder of 600,000 shares of SVG
Lithography Systems, Inc.'s Common Stock, $.0l par value per share (the "Common
Stock"); and
WHEREAS, the Company is the record holder of 9,400,000 shares of SVG
Lithography Systems, Inc.'s common stock, $.01 par value per share; and
WHEREAS, Seller desires to sell and the Company desires to purchase
the Common Stock upon the terms and conditions hereinafter provided;
NOW, THEREFORE, it is hereby agreed as follows:
1. CERTAIN DEFINITIONS.
(a) As used in this Agreement, the following terms shall have the
meanings specified below:
(i) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder.
(ii) "NASD" shall mean the National Association of Securities
Dealers, Inc.
(iii) "NASDAQ" shall mean the National Association of Securities
Dealers Automated Quotation System.
(iv) "OPERATIVE AGREEMENTS" shall mean this Agreement, the Agreement
for Payment in Connection with Development Agreement among Seller, the Company
and SVG Lithography, Inc. ("SVGL") of even date herewith (the "Development
Agreement") and the Stockholders Agreement among Seller, the Company and SVGL of
even date herewith.
(v) "PERSON" shall mean any individual, firm, corporation,
partnership, trust, joint venture or other entity, and shall include any
successor (by merger or otherwise) of such entity.
(vi) "REGISTRATION SHARES" means (A) the Shares of common stock of
the Company issued to Seller pursuant to the Agreement for Payment in connection
with
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Development Agreement, among Seller, the Company and SVG Lithography, Inc.
("SVGL") of even date herewith (the "Development Agreement"), which number of
shares of common stock shall be calculated by dividing $10,000,000 (ten million
dollars) by a share price equal to the average closing sales price (or the
average closing bid price if no such sales were reported) as quoted on the
NASDAQ for the five business days beginning on March 11, 1997 and ending on
March 17, 1997; and (B) any securities issued or issuable with respect to any
common stock referred to in clause (A) of this definition by way of stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise,
which Registration Shares shall be registrable immediately upon the demand of
Seller pursuant to the terms of Section 7 hereof.
(vii) "SEC" shall mean the Securities and Exchange Commission or any
successor commission or agency having similar powers.
(viii) "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, and the rules and regulations thereunder.
(ix) "TAX" OR "TAXES" means all Federal, state, local and foreign
taxes, assessments and other governmental charges, including (A) taxes based
upon or measured by gross receipts, income, profits, sales, use or occupation
and (B) value added, ad valorem, transfer, franchise, withholding with (C) all
interest, penalties and additions imposed with respect to such amounts and (D
any obligations under any agreements or arrangements with any other person with
respect to such amounts.
(b) The following terms are defined in the specified sections of
this Agreement:
DEFINED TERM SECTION DEFINED IN
------------ ------------------
Common Stock First Recital Clause
Company Balance Sheet 4(i)
Company SEC Documents 4(h)
Demand Registration 7(a)
Encumbrances 3(b)
Piggyback Registration 7(b)
Purchase Consideration 2(a)
Registration Statement 7(i)(i)
Securities Laws 4(g)(i)
2. PURCHASE AND SALE OF COMMON STOCK.
(a) Seller hereby sells, conveys, transfers and delivers to the
Company, and the Company hereby purchases from Seller, the Common Stock for the
purchase consideration set forth in Section 2(b), below (the "Purchase
Consideration").
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(b) The Purchase Consideration shall be $3,000,000 (three million
dollars).
3. REPRESENTATIONS AND COVENANTS OF SELLER. Seller hereby
represents, warrants and covenants to the Company as follows:
(a) ORGANIZATION AND GOOD STANDING. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York.
(b) TITLE TO COMMON STOCK. Seller is the record holder and sole
beneficial owner of the Common Stock being sold pursuant to this Agreement and
such Common Stock is free and clear of any claim, lien, pledge, option, charge,
security interest or encumbrance of any nature whatsoever (collectively
"Encumbrances") with respect to Seller.
(c) AUTHORITY; EXECUTION AND DELIVERY. Seller has full power and
authority to enter into the Operative Agreements and to sell the Common Stock in
accordance with the terms hereof. The execution, delivery and performance of the
Operative Agreements have been duly authorized by Seller and no other actions on
the part of Seller are required. The Operative Agreements have been duly
executed and delivered by Seller and constitute the legal, valid and binding
obligation of Seller, enforceable against Seller in accordance with their
respective terms.
(d) CONSENTS; NO CONFLICTS. Neither the execution and delivery of
the Operative Agreements, the consummation by Seller of the transactions
contemplated by this Agreement nor compliance by Seller with any of the
provisions hereof will (with or without the giving of notice or the passage of
time), except where any such violation, conflict or lack of consent would not
have a material adverse effect on the business of Seller or the consummation by
Seller of the transactions contemplated hereby:
(i) violate or conflict with any provision of the Certificate of
Incorporation or By-Laws of Seller or any agreement, instrument, judgment,
decree, statute or regulation applicable to Seller or any assets or properties
of Seller;
(ii) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Seller or any assets or properties of Seller; or
(iii) require the consent, approval, permission or other
authorization of or by, or designation, declaration, filing, registration or
qualification with, any court, arbitrator or governmental, administrative or
self-regulatory authority or any other third party whatsoever.
(e) LITIGATION. There is no litigation, proceeding, labor dispute,
arbitral action or government investigation pending or, so far as known to
Seller,
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threatened against Seller with respect to the Common Stock or the Operative
Agreements which if adversely determined could prohibit or prevent Seller from
consummating the transactions contemplated hereby and thereby. There are no
decrees, injunctions or orders of any court or governmental department or agency
outstanding against Seller with respect to the Common Stock which prohibit or
prevent Seller from consummating the transactions contemplated hereby.
(f) NO BROKERS. Seller has not entered into and will not enter into
any agreement, arrangement or understanding with any person or firm which will
result in the obligation of the Company to pay any finder's fee, brokerage
commission or similar payment in connection with the transactions contemplated
hereby. Seller agrees to indemnify and hold the Company harmless from and
against any and all claims, liabilities or obligations with respect to any
finder's fees, brokerage commissions or similar payments asserted by any person
on the basis of any act or statement alleged to have been made by Seller.
(g) SECURITIES ACT.
The Registration Shares are being acquired for investment only and not
with a view to any public distribution thereof, and Seller will not offer to
sell or otherwise dispose of the Registration Shares so acquired in violation of
any of the registration requirements of the Securities Act or in violation of
any state securities laws.
4. REPRESENTATIONS AND COVENANTS OF THE COMPANY. The Company hereby
represents, warrants and covenants to Seller as follows:
(a) ORGANIZATION AND GOOD STANDING. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
(b) AUTHORITY; EXECUTION AND DELIVERY. The Company has full power and
authority to enter into the Operative Agreements, to purchase the Common Stock
and to issue, sell, convey, transfer and deliver the Registration Shares and
Purchase Consideration in accordance with the terms hereof and thereof. The
execution, delivery and performance of the Operative Agreements have been duly
authorized by the Company and no other actions on the part of the Company are
required. The Operative Agreements have been duly executed and delivered by the
Company and constitute the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with their respective terms.
(c) CONSENTS; NO CONFLICTS. Neither the execution and delivery of the
Operative Agreements, the consummation by the Company of the transactions
contemplated hereby or thereby, nor compliance by the Company with any of the
provisions hereof or thereof will (with or without the giving of notice or the
passage of time) except where any such violation, conflict or lack of consent
would not have a
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material adverse effect on the business of the Company or the consummation by
the Company of the transactions contemplated hereby :
(i) violate or conflict with any provision of the Certificate of
Incorporation or By-Laws of the Company or any agreement, instrument, judgment,
decree, statute or regulation applicable to the Company or any assets or
properties of the Company;
(ii) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Company or any assets or properties of the Company;
or
(iii) require the consent, approval, permission or other authorization
of or by, or designation, declaration, filing, registration or qualification
with, any court, arbitrator or governmental, administrative or self-regulatory
authority or any other third party whatsoever.
(d) COMMON STOCK OF THE COMPANY. The Registration Shares are validly
issued, fully paid, and nonassessable and will not have been issued in violation
of, and will not be subject to, any preemptive or subscription rights and will
not result in the antidilution provisions of any security of the Company
becoming applicable.
(e) LITIGATION. There is no litigation, proceeding, labor dispute,
arbitral action or government investigation pending or, so far as known to the
Company, threatened against the Company with respect to the Common Stock, the
Registration Shares, the Purchase Consideration or the Operative Agreements
which if adversely determined could prohibit or prevent the Company from
consummating the transactions contemplated hereby or thereby. There are no
decrees, injunctions or orders of any court or governmental department or agency
outstanding against the Company with respect to the Common Stock, the
Registration Shares or the Purchase Consideration which prohibit or prevent the
Company from consummating the transactions contemplated hereby.
(f) NO BROKERS. The Company has not entered into and will not enter
into any agreement, arrangement or understanding with any person or firm which
will result in the obligation of Seller to pay any finder's fee, brokerage
commission or similar payment in connection with the transactions contemplated
hereby. The Company agrees to indemnify and hold Seller harmless from and
against any and all claims, liabilities or obligations with respect to any
finder's fees, brokerage commissions or similar payments asserted by any person
on the basis of any act or statement alleged to have been made by the Company.
(g) SECURITIES ACT.
(i) The Common Stock to be purchased by the Company pursuant to this
Agreement is being acquired for investment only and not with a view to any
public distribution thereof, and the Company will not offer to sell or otherwise
dispose of the Common Shares so acquired in violation of any of the registration
requirements of the
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Securities Act or in violation of any state securities laws. The certificates
evidencing the Common Stock will bear a legend substantially as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR STATE SECURITIES LAWS (COLLECTIVELY "SECURITIES
LAWS") AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN COMPLIANCE WITH THE
SECURITIES LAWS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND
CONDITIONS OF A STOCKHOLDERS AGREEMENT, DATED AS OF MARCH 18, 1997, BY AND AMONG
SVG LITHOGRAPHY, INC., SILICON VALLEY GROUP, INC., INTERNATIONAL BUSINESS
MACHINES CORPORATION AND THE PERKIN-ELMER CORPORATION AND MAY NOT BE SOLD OR
TRANSFERRED EXCEPT IN ACCORDANCE THEREWITH. A COPY OF SUCH AGREEMENT IS ON FILE
AT THE PRINCIPAL EXECUTIVE OFFICES OF SVG LITHOGRAPHY, INC., AND SVG
LITHOGRAPHY, INC., WILL FURNISH A COPY OF SUCH AGREEMENT TO THE HOLDER OF THIS
CERTIFICATE UPON WRITTEN REQUEST AN WITHOUT CHARGE.
(ii) The Company is the current owner of approximately ninety four
percent (94%) of the outstanding shares of SVG Lithography, Inc. In addition,
the Company has been furnished access to the business records of SVG
Lithography, Inc. and such additional information and documents as the Company
has requested, and has been given the opportunity to meet with officials of SVG
Lithography, Inc. and to have such persons answer questions regarding the
affairs and condition of SVG Lithography, Inc.
(iii) The Company is an "accredited investor" within the meaning of
Rule 501(a) of Regulation D promulgated under the Securities Act and has
substantial experience in business and financial matters and is capable of
evaluating the merits and risks of its purchase of the Common Stock and is able
to bear the economic risks of its investment.
(h) SEC FILINGS; FINANCIAL STATEMENTS. The Company has furnished or
made available to Seller true and complete copies of its Annual Report on Form
10-K for the fiscal year ended September 30, 1996, and each report (including
any amendments and exhibits thereto and all material incorporated therein by
reference) filed under the Exchange Act by the Company with the SEC since such
date (the "Company SEC Documents"). None of the Company SEC Documents as of the
dates they were filed with the SEC contained, or as of the date of this
Agreement will contain, any untrue statement of a material fact or omitted, or
as of the date of this Agreement will omit, to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading, except to the
extent corrected by a subsequently filed Company SEC Document filed before the
date hereof. Each of the consolidated balance sheets (including any related
notes) for the fiscal year or periods ending on September 30, 1996, or
thereafter included in the
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Company SEC Documents filed before the date hereof, is complete in all material
respects and fairly presents the financial position of the Company as of its
date and each of the consolidated statements of income and changes in financial
position (including any related notes) for the fiscal year or periods ending
September 30, 1996, or thereafter included in the Company SEC Documents, is
complete in all material respects and fairly presents the consolidated results
of operations or changes in financial position, as the case may be, of the
Company for the respective periods set forth therein, in accordance with, in the
case of audited financial statements, generally accepted accounting principles
consistently applied except as otherwise disclosed therein, or, in the case of
unaudited financial statements, generally accepted accounting principles
consistently applied, except as otherwise disclosed therein or as otherwise
permitted by Form 10-Q of the SEC. All of the Company SEC Documents are in
accordance with the books and records of the Company.
(i) UNDISCLOSED LIABILITIES. To the knowledge of the Company except
for liabilities (i) reflected on the most recent balance sheet included in the
Company SEC Documents filed before the date hereof (the "Company Balance
Sheet"), or reflected in the notes thereto; and (ii) incurred since the date of
the Company Balance Sheet in the ordinary course of business, the Company does
not have any liabilities or obligations of any nature (whether accrued,
absolute, fixed, contingent, known or unknown, unasserted or otherwise) in
either case which either individually or in the aggregate would have a material
adverse effect on the business of the Company.
(j) ABSENCE OF CERTAIN CHANGES. Except as set forth in a current
report on Form 8-K filed with the SEC before the date hereof, and except for
actions which individually or in the aggregate would not have a material adverse
effect on the business of the Company , since the date of the Company Balance
Sheet, the Company has not:
(i) suffered any change or changes which, individually or in the
aggregate, have had or may reasonably be expected to have a material adverse
effect on the business or, to the Company's knowledge, the prospects of the
Company;
(ii) borrowed or agreed to borrow funds or incurred, or assumed or
become subject to, whether directly or by way of guarantee or otherwise, any
liabilities except liabilities incurred in the ordinary course of business and
consistent with past practice;
(iii) paid, discharged or satisfied any liabilities other than the
payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice of liabilities reflected or reserved against in
the Company Balance Sheet or incurred subsequent to the date thereof in the
ordinary course of business;
(iv) to the knowledge of the Company, the Company has not become
subject to any newly enacted or adopted law (whether before or after the date of
the
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Company Balance Sheet) which may reasonably be expected to have a material
adverse effect on the business or prospects of the Company;
(v) canceled or amended any debts or waived any claims or rights of
substantial value, or sold, transferred, or otherwise disposed of any of its
properties or assets (real, personal or mixed, tangible or intangible), except
in the ordinary course of business and consistent with past practice;
(vi) licensed, sold, transferred, pledged, modified, disclosed,
disposed of or permitted to lapse any right to use any intellectual property
right of the Company, except in the ordinary course of business and consistent
with past practice;
(vii) declared, paid or set aside for payment any dividend or other
distribution in respect of its capital stock or other securities or, directly or
indirectly, redeemed, purchased or otherwise acquired any shares of its capital
stock or other securities (other than repurchase of stock from terminated
employees);
(viii) made any change in any method of accounting or accounting
practice or any change in depreciation or amortization policies or rates
theretofore adopted;
(ix) entered into any other material transaction, contract, commitment
or arrangement other than in the ordinary course of business and consistent with
past practice;
(x) sold, leased or otherwise disposed of any substantial part of its
assets, except in the ordinary course of business and consistent with past
practice; or
(xi) agreed, whether in writing or otherwise, to take any action
described in this Section.
(k) DISCLOSURE. There is no fact which the Company has not disclosed
to Seller in writing which materially affects adversely or, so far as the
Company can now reasonably foresee, will materially affect adversely the ability
of the Company to perform its obligations under this Agreement, or its
obligations in respect of the Registration Shares.
(l) COMPLIANCE WITH APPLICABLE LAWS.
(i) The Company and each of its subsidiaries and each of their
respective properties, assets, operations and businesses, are in compliance in
all respect with all applicable statutes, laws, ordinances, rules and
regulations of any governmental authority and any filing requirements relating
thereto, except where the failure to be so in compliance would not have a
material adverse effect on the business of the Company.
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(ii) The Company and each of its subsidiaries has obtained all
permits, licenses and other authorizations which are required with respect to
the operation of its business and the ownership of its assets under applicable
Federal, state, local and foreign laws, including laws relating to pollution or
protection of the environment, except where the failure to have obtained such
permits, licenses and other authorizations would not have a material adverse
effect. The Company and each of its subsidiaries is in full compliance with all
terms and conditions of such permits, licenses and authorizations, except where
the failure to be so in compliance would not have a material adverse effect on
the business of the Company.
(iii) There are no past or present , conditions, circumstances,
activities, practices, incidents, actions or plans which may interfere with or
prevent compliance or, to the best of the Company's knowledge will not in the
future interfere with or prevent continued compliance by the Company or any of
its subsidiaries with any laws relating to pollution or protection of the
environment or with any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or approved
thereunder, except where the failure to be so in compliance would not have a
material adverse effect on the business of the Company or the value of the
Registration Shares, or which may give rise to any common law or legal liability
of the Company or any of its subsidiaries, including liability under the
Comprehensive Environment Response, Compensation and Liability Act of 1980 or
similar state or local laws, or otherwise form the basis of any claim, action,
demand, suit proceeding, hearing, notice of violation, study or investigation
against or affecting the Company or any of its subsidiaries which would have a
material adverse effect on the business of the Company or the value of the
Registration Shares, based on or related to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling, or the
emission, discharge, release or threatened release into the environment, of any
pollutant, contaminant, chemical or industrial, toxic or hazardous substance or
waste.
(m) TAXES. Neither the Company nor any of its subsidiaries is
delinquent in the payment of any material Tax, except where the failure to pay
such Tax on a timely basis would not have a material adverse effect on the
business of the Company.. No material deficiencies for any Taxes have been
asserted in writing or assessed against the Company or any of its subsidiaries,
and no waivers of the time to assess any such Tax are in effect. As of the date
of execution of this Agreement, none of the Federal income tax returns of the
Company and its subsidiaries consolidated in such returns have been audited by
the United States Internal Revenue Service.
(n) ERISA. The Company is in compliance in all material respects with
the provisions of the Employee Retirement Income Security 'Act of 1974, as
amended, ("ERISA"), and the regulations and published interpretations
thereunder. No Reportable Event, as that term is defined in Section 4043(b) of
ERISA, has occurred with respect to any employee plan which is subject to the
provisions of Title IV of ERISA and which is maintained for employees of the
Company or any of its subsidiaries or any of its affiliates. There are no
unfunded vested liabilities under any such employee plan.
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(o) PATENTS, TRADEMARKS, ETC. The Company owns or has the right to use
all patents, trademarks, trade names, service marks and copyrights used in or
necessary for the conduct of its business, the lack of which would result in a
material adverse effect on the business of the Company or the value of the
Registration Shares, and is in compliance with all terms of any material license
of software or technology except where noncompliance would not have a material
adverse effect on the business of the Company.. Except where the failure to take
such action would not have a material adverse effect on the business of the
Company all of the patents, trademarks, trade names, service marks and
copyrights of the Company have been duly registered and filed in or issued by
the appropriate governmental authority in all appropriate jurisdictions , all
necessary affidavits or continuing use have been filed, and all necessary
maintenance fees have been paid to continue all such rights in effect. The
Company has:
(i) no notice or knowledge of any objection or claim being asserted by
any person with respect to the ownership, validity, enforceability or use of any
such patents, trademarks, trade names, service marks, copyrights, applications
therefor, or trade secrets; and
(ii) no reason to believe that any such right of the Company conflicts
with or infringes upon the rights of any other person.
(p) EMPLOYEES. To the Company's knowledge, no activity of any employee
of the Company or any of its subsidiaries as or while an employee of the Company
or any of its subsidiaries has caused a material violation of any term of any
material employment contract, confidentiality agreement, patent disclosure
agreement or any other similar contract or agreement or any term of any
agreement relating to such employee's employment with the Company or such
obligations to the Company with respect to confidentiality or nondisclosure,
and, to the best of the Company's knowledge, the continued employment by the
Company and its subsidiaries of their respective present employees will not
result in any such violation, except where such violation would not result in a
material adverse effect in a material adverse effect on the business of the
Company . The Company either has obtained, or will use its best efforts to
obtain within the next 30 days, from each person employed by the Company or any
of its subsidiaries in a technical position, including all officers of the
Company and its subsidiaries, an executed proprietary information agreement
restricting such person's right to disclose proprietary information of the
Company, its subsidiaries and their respective clients and an agreement relating
to the assignment of patents, copyrights, or inventions to the Company.
(q) LABOR RELATIONS. There is, except where such event would not
result in a material adverse effect on the business of the Company :
(i) no unfair labor practice complaint pending or asserted against the
Company or any of its subsidiaries before the National Labor Relations Board and
no
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grievance or arbitration proceeding arising out of or under collective
bargaining agreements is so pending or asserted;
(ii) no strike, labor dispute, slowdown or stoppage pending or
threatened against the Company or any of its subsidiaries;
(iii) no union representation question existing with respect to the
employees of the Company or any of its subsidiaries and, to the knowledge of the
Company, no union organizing activities are taking place; and
(iv) no existing collective bargaining agreement or other contract
with a labor union to which the Company or any of its subsidiaries is a party.
5. DELIVERIES. On the date and upon execution hereof, Seller will make
the delivery specified in clause (a) below and the Company will make the
deliveries specified in clause (b) below.
(a) Seller will deliver to the Company a certificate or certificates
evidencing the Common Stock being purchased by the Company hereby, free and
clear of Encumbrances, duly endorsed for transfer to the Company's order or
accompanied by stock powers duly executed to the Company's order and with all
requisite documentary or stock transfer tax stamps affixed.
(b) The Company will deliver to Seller:
(i) a certificate or certificates evidencing the Registration Shares
free and clear of Encumbrances, validly issued in the Seller's name and with all
requisite documentary or stock transfer tax stamps affixed;
(ii) a copy of the charter of the Company, certified as of a recent
date by the Secretary of State of Delaware;
(iii) a certificate dated the date hereof of the secretary, assistant
secretary or another appropriate authorized signatory of the Company certifying
as to:
(A) the absence of amendments since the date of the last amendment
shown on the official evidence as to such charter furnished pursuant to clause
(ii) above;
(B) resolutions, delegations or other written evidence of corporate
action of the appropriate authority within the Company and if applicable, the
stockholders of the Company, duly authorizing or ratifying its execution,
delivery and performance of this Agreement and the transactions contemplated by
this Agreement and the absence of other resolutions, delegations or such other
corporate action relating thereto;
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(C) the absence of proceedings for the merger, consolidation, sale of
all or substantially all assets, dissolution, liquidation or similar proceedings
with respect to the Company; and
(D) incumbency certificates, dated the date hereof, for the officers
or authorized signatories of the Company executing this Agreement and the other
documents and agreements contemplated by this Agreement. .
7. REGISTRATION RIGHTS.
(a) DEMAND REGISTRATION. After the date hereof, the Company shall,
subject to the provisions of Section 7(o), below, upon the written demand of
Seller, use its best efforts to effect the registration (the "Demand
Registration") under the Securities Act of such number of Registration Shares
held by Seller as shall be indicated in a written demand sent to the Company by
Seller; provided that:
(i) the Company shall be obligated to effect a total of no more than
five (5) Demand Registrations; and
(ii) a Demand Registration shall not count as such until it has become
effective, except that if, after it has become effective, the offering of
Registration Shares pursuant to such registration is interfered with by any stop
order, injunction or other order or requirement of the SEC or other governmental
authority, such registration shall be deemed not to have been effected unless
such stop order, injunction or other order or requirement shall subsequently
have been vacated or otherwise removed. If a Demand Registration is initiated by
Seller and the Company or any holder of registrable securities seeks to
participate in such registration on the basis of piggyback registration rights
or otherwise and the managing underwriters for such registration selected by
Seller advise the Company in writing that in their opinion the number of
securities requested to be included in the registration exceeds the number which
can be sold in the offering, the Company shall include in the registration
first, the number of Registration Shares Seller proposes to sell and then the
number of other securities that may be included in such registration shall be
allocated among all holders who are exercising their piggyback registration
rights in proportion as nearly as practicable to the respective amounts of
securities entitled to inclusion therein. Upon receipt of Seller's written
demand, the Company shall expeditiously (but in any event within 21 days) file a
registration statement under the Securities Act for the Registration Shares and
use its best efforts to have such registration declared effective as soon as
practicable after the filing thereof. Seller shall have the right to select the
underwriters, if any, for the Demand Registration.
(b) PIGGYBACK REGISTRATIONS.
(i) If the Company proposes to register any of its securities under
the Securities Act for sale for cash (otherwise than in connection with the
registration of securities issuable pursuant to an employee or director stock
option, stock purchase or
<PAGE> 14
13
similar plan or pursuant to a merger, exchange offer or a transaction of the
type specified in Rule 145(a) under the Securities Act), the Company shall give
Seller written notice of such proposed registration at least 30 days prior to
the filing of a registration statement. At the written request of Seller
delivered to the Company within 20 days after the receipt of the notice from the
Company, which request shall state the number of Registration Shares that Seller
wishes to sell or distribute publicly under the registration statement proposed
to be filed by the Company, the Company shall use its best efforts to include
such Registration Shares in such registration of securities (the "Piggyback
Registration").
(ii) If a Piggyback Registration is an underwritten primary
registration on behalf of the Company, and the managing underwriters thereof
advise the Company in writing that in their opinion the number of securities
requested to be included in the registration exceeds the number which can be
sold in the offering, the Company shall include in the registration as many
shares as practicable in the determination of the underwriter, and the number of
Registration Shares and other securities that may be included in such
registration and underwriting shall be allocated among all holders in proportion
as nearly as practicable to the respective amounts of securities such holders
are entitled to include in such registration pursuant to this Section 7 and to
similar registration rights in such registration held by all such holders at the
time of filing of such registration statement.
(iii) If a Piggyback Registration is an underwritten secondary
registration on behalf of holders of the Company's securities who have demand
registration rights and the managing underwriters thereof advise the Company in
writing that in their opinion the number of securities requested to be included
in the registration exceeds the number which can be sold in the offering, the
Company shall include in the registration:
(A) first, that portion of the Registration Shares that Seller
proposes to sell representing 25% of such offering;
(B) second, the securities of the holders of the Company's securities
who have exercised their demand registration rights; and
(C) third, the securities any other security holders of the Company
(including any additional Registration Shares Seller desires to sell) propose to
sell in proportion to the number of securities each proposes to sell.
In the event the Company subsequently desires to participate in such a
registration of securities, the Company shall include in the registration:
(D) first, that portion of the Registration Shares Sellers proposes to
sell representing 25% of such offering;
(E) second, the securities of the holders of the Company's securities
who have exercised their demand registration rights; and
<PAGE> 15
14
(F) third, the securities the Company and any other security holders
of the Company propose to sell (including any additional Registration Shares
Seller desires to sell) in proportion to the number of shares each proposes to
sell.
(c) INDEMNIFICATION BY THE COMPANY. In the event of any registration
of any Registration Shares under the Securities Act, the Company shall, and
hereby does, indemnify and hold harmless, in the case of any registration
statement filed pursuant to Section 7(a) or 7(b), Seller, its directors,
officers and employees, each other person who participates as an underwriter in
the offering or sale of Registration Shares and each other person, if any, who
controls Seller or any such underwriter within the meaning of Section 15 of the
Securities Act, against:
(i) any losses, claims, damages or liabilities, joint or several, to
which Seller or any such director, officer, employee or underwriter or
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which the
Registration Shares were registered under the Securities Act, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein in light of the circumstances in which they were made not
misleading;
(ii) any violation by the Company of the Securities Act or any rule or
regulation promulgated under the Securities Act applicable to the Company in
connection with any such registration; and
(iii) any legal or any other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability, action or proceeding; provided that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense:
(A) arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in such registration
statement, any such preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement in reliance upon and in conformity with
written information furnished to the Company through an instrument duly executed
by or on behalf of Seller or such underwriter, as the case may be, specifically
stating that it is for use in the preparation thereof; and
(B) with respect to any person who participates as an underwriter in
the offering or sale of Registration Shares or any other person, if any, who
controls such underwriter within the meaning of the Securities Act, arises out
of such person's failure
<PAGE> 16
15
to send or give a copy of the final prospectus, as the same may be then
supplemented or amended, to the person asserting an untrue statement or alleged
untrue statement or omission or alleged omission at or prior to the written
confirmation of the sale of Registration Shares to such person if such statement
or omission was corrected in such final prospectus. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf of
Seller, or any such director, officer or controlling person and shall survive
the transfer of the Registration Shares by Seller.
(d) INDEMNIFICATION BY SELLER. The Company may require, as a condition
to including any Registration Shares in any registration statement filed
pursuant to Section 7(a) or 7(b), that the Company shall have received an
undertaking reasonably satisfactory to it from Seller (or the holder of the
Registration Shares), to indemnify and hold harmless (in the same manner and to
the same extent as set forth in Section 7(c)) the Company, each person who
participates as an underwriter in the offering or sale of Registration Shares,
each director of the Company, each officer of the Company who signs such
registration statement and each other person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act with respect to any
statement or alleged statement in or omission or alleged omission from such
registration statement, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, if such
statement or alleged statement or omission or alleged omission was made in
reliance upon and in conformity with written information about Seller (or the
holder of the Registration Shares) as a stockholder of the Company furnished to
the Company through an instrument duly executed by Seller specifically stating
that it is for use in the preparation of such registration statement,
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement. Such indemnity shall remain in full force and effect, regardless of
any investigation made by or on behalf of the Company or any such underwriter,
director, officer or controlling person and shall survive the transfer by Seller
of the securities of the Company being registered.
(e) NOTICES OF CLAIMS, ETC. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in Section 7(c) or 7(d), such indemnified party shall, if a
claim in respect thereof is to be made against an indemnifying party, give
written notice to the latter of the commencement of such action; provided that
the failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under Section 7(c) or 7(d),
except to the extent that the indemnifying party is actually prejudiced by such
failure to give notice. In case any such action is brought against an
indemnified party, unless in such indemnified party's reasonable judgment a
conflict of interest between such indemnified and indemnifying parties may exist
or the indemnified party may have defenses not available to the indemnifying
party in respect of such claim, the indemnifying party shall be entitled to
participate in and to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified party
for
<PAGE> 17
16
any legal or other expenses subsequently incurred by the latter in connection
with the defense thereof other than reasonable costs of investigation. No
indemnifying party shall be liable for any settlement of any action or
proceeding effected without its written consent. No indemnifying party shall,
without the consent of the indemnified party, consent to entry of any judgment
or enter into any settlement without the prior written consent of the
indemnified party..
(f) OTHER INDEMNIFICATION. Indemnification similar to that specified
in this Section 7 (with appropriate modifications) shall be given by the Company
and Seller with respect to any required registration or other qualification of
Registration Shares under any Federal or state law or regulation of any
Governmental Authority other than the Securities Act.
(g) INDEMNIFICATION PAYMENTS. The indemnification required by this
Section 7 shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred.
(h) ADJUSTMENTS AFFECTING REGISTRATION SHARES. The Company shall not
effect or permit to occur any combination, subdivision or other recapitalization
of any of its securities:
(i) which would materially adversely affect the ability of Seller to
include its Registration Shares, in any registration of securities of the
Company contemplated by this Section 7 ; or
(ii) solely for the purpose of adversely affecting the marketability
of such Registration Shares under any such registration.
(i) REGISTRATION COVENANTS OF THE COMPANY. In the event that any
Registration Shares of Seller are to be registered pursuant to Section 7(a) or
7(b), the Company covenants and agrees that it shall use its best efforts to
effect the registration and cooperate in the sale of the Registration Shares to
be registered and shall as expeditiously as reasonably possible:
(i)(A) prepare and file with the SEC a registration statement with
respect to the Registration Shares (as well as any necessary amendments or
supplements thereto) (a "Registration Statement"); and
(B) use its best efforts to cause the Registration Statement to become
effective;
(ii) prior to the filing described above in Section 7(i)(i), furnish
to Seller a final draft or drafts of the Registration Statement and any
amendments or supplements thereto and any prospectus forming a part thereof,
which documents shall be subject to
<PAGE> 18
17
the review of counsel for Seller (but not approval of such counsel except with
respect to any statement in the Registration Statement which relates to Seller);
(iii) notify Seller, promptly after the Company shall receive notice
thereof, of the time when the Registration Statement becomes effective or when
any amendment or supplement or any prospectus forming a part of the Registration
Statement has been filed;
(iv) notify Seller promptly of any request by the SEC for the amending
or supplementing of the Registration Statement or prospectus or for additional
information;
(v)(A) advise Seller after the Company shall receive notice or
otherwise obtain knowledge of the issuance of any order by the SEC suspending
the effectiveness of the Registration Statement or any amendment thereto or of
the initiation or threatening of any proceeding for that purpose; and
(B) promptly use its best efforts to prevent the issuance of any stop
order or to obtain its withdrawal promptly if a stop order should be issued;
(vi)(A) prepare and file with the SEC such post-effective amendments
and supplements to the Registration Statement and the prospectus forming a part
thereof as may be necessary to keep the Registration Statement effective for the
lesser of (I) a period of at least ninety (90) days from the effective date of
such registration statement; or (II) the period of time necessary to permit
Seller to dispose of all its Registration Shares registered under the
Registration Statement; and
(B) comply with the provision of the Securities Act with respect to
the disposition of all Registration Shares covered by the Registration Statement
during such period in accordance with the intended methods of disposition by
Seller set forth in the Registration Statement;
(vii) furnish to Seller such number of copies of the Registration
Statement, each amendment and supplement thereto, the prospectus included in the
Registration Statement (including each preliminary prospectus) and such other
documents as Seller may reasonably request in order to facilitate the
disposition of the Registration Shares owned by Seller;
(viii) use its best efforts to register or qualify such Registration
Shares under such other securities or blue sky laws of such jurisdictions as
determined by the underwriters after consultation with the Company and Seller
and do any and all other acts and things which may be reasonably necessary or
advisable to enable Seller to consummate the disposition in such jurisdictions
of the Registration Shares;
(ix) notify Seller, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any event
as a
<PAGE> 19
18
result of which the Registration Statement would contain an untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and, at the request
of Seller, prepare a supplement or amendment to the Registration Statement so
that the Registration Statement shall not, to the Company's knowledge, contain
an untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading;
(x) if the common stock of the Company comprising the Purchase
Consideration is not then listed on a securities exchange, use its best efforts
to facilitate the reporting of the Common Stock on NASDAQ or another nationally
recognized securities exchange;
(xi) provide a transfer agent and registrar, which may be a single
entity, for all the Registration Shares not later than the effective date of the
Registration Statement;
(xii) enter into such customary agreements (including an underwriting
agreement in customary form) and take all such other action, if any, as Seller
or the underwriters shall reasonably request in order to expedite or facilitate
the disposition of the Registration Shares;
(xiii)(A) make available for inspection by Seller, any underwriter
participating in any disposition pursuant to the Registration Statement and any
attorney, accountant or other agent retained by Seller or such underwriter all
financial and other records, pertinent corporate documents and properties of the
Company and
(B) cause the Company's officers, directors and employees to supply
all information reasonably requested by Seller, such underwriter, attorney,
accountant or agent in connection with the Registration Statement;
(xiv) use its best efforts to cause the Registration Shares covered by
the Registration Statement to be registered with or approved by such other
Governmental Authorities as may be necessary to enable Seller to consummate the
disposition of such Registration Shares; and
(j) EXPENSES. The Company shall pay (on behalf of Seller) all
expenses in connection with any Demand Registration and any Piggyback
Registration, including all registration, filing, listing and NASD fees, all
fees and expenses of complying with securities or blue sky laws, all word
processing, duplicating and printing expenses, all messenger and delivery
expenses, the fees and disbursements of counsel for the Company and of its
independent public accountants (including the expenses of comfort letters
required by or incident to such performance and compliance), the reasonable fees
and disbursements of not more than one counsel and accountants retained by
Seller and disbursements of underwriters customarily paid by issuers or
<PAGE> 20
19
sellers of securities, but excluding any underwriting discounts and commissions
and transfer taxes, if any. In any underwriting, Seller (or the holder of the
Registration Shares) shall pay its own underwriting discounts and commissions
and transfer taxes.
(k) ASSIGNMENT OF REGISTRATION RIGHTS. Seller may assign its rights
under this Section 7 to one person to whom Seller sells, transfers or assigns
over 50% of the Registration Shares it acquired pursuant to this Agreement;
provided that no assignment shall increase the Company's obligations to effect a
maximum of two Demand Registrations or to pay the expenses thereof.
.
(m) RULE 144. The Company shall take all actions reasonably necessary
to enable Seller to sell the Registration Shares without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144
under the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the SEC, including filing on a
timely basis all reports required to be filed by the Exchange Act. Upon the
request of Seller, the Company shall deliver to Seller a written statement as to
whether it has complied with such requirements.
(n) REGISTRATION ON FORM S-3.
(i) The Company will use its best efforts to qualify for the
registration of its securities on Form S-3 (or successor form). If the Company
is a registrant eligible to use Form S-3 to register the Registration Shares,
all demand registrations effected pursuant to Section 7(a), above, shall be
registered on Form S-3. If Seller requests that the Company file a Registration
Statement on Form S-3 (or any successor form to Form S-3) for a public offering
of shares of Registration Shares the reasonably anticipated aggregate price to
the public of which, net of underwriting discounts and commissions, would exceed
$500,000 and the Company is a registrant entitled to use Form S-3 to register
the Registration Shares for such an offering, the Company shall use its best
efforts to cause such Registration Shares to be registered for the offering on
such form and to cause such Registration Shares to be qualified in such
jurisdictions as Seller may reasonably request; provided, however, that the
Company shall not be required to effect more than five registrations at Seller's
request pursuant to this Section 7(o)(i) or more than an aggregate of five total
registrations at Seller's request pursuant to this Section 7(o)(i) and 7(a),
above.
(ii) Notwithstanding the foregoing, the Company shall not be obligated
to take any action pursuant to this Section 7(o)(i):
(A) if the Company, within ten days of the receipt of the request of
Seller pursuant to Section 7(o)(i), gives notice of its bona fide intention to
effect the filing of a Registration Statement with the Commission within ninety
days of receipt of such request (other than with respect to a registration
statement relating to a Rule 145 transaction, an
<PAGE> 21
20
offering solely to employees or any other registration which is not appropriate
for the registration of Registration Shares); or
(B) during the period starting with the date sixty days prior to the
Company's estimated date of filing of, and effective date of any Registration
Statement pertaining to securities of the Company (other than a registration of
securities in a Rule 145 transaction or with respect to an employee benefit
plan), provided that the Company is actively employing in good faith all
reasonable efforts to cause such Registration Statement to become effective.
(iii) Seller agrees in connection with any registration of the
Company's securities pursuant to which Seller is permitted to sell the number of
Registration Shares that Seller desires to sell (other than a registration of
securities in a Rule 145 transaction or with respect to an employee benefit
plan), upon the request of the Company or the underwriters managing any
underwritten offering of the Company's securities, not to sell, make any short
sale of, loan, grant any option for the purchase of or otherwise dispose of any
Registrable Shares (other than those included in such registration and other
than in a private sale of Registration Shares by Seller) without the prior
written consent of the Company or such underwriters, as the case may be, for
such period of time (not to exceed one hundred thirty five (135) days) from the
effective date of such registration statement as may be requested by the Company
or such managing underwriters, provide that each of the Company's officers,
directors, five percent (5%) stockholders and other stockholders selling shares
of the Company pursuant to any such registration statement, shall have agreed to
be bound by the same restrictions in connection with such offering.
8. MISCELLANEOUS.
(a) EXPENSES. Each party shall be liable for its own expenses in
connection with the transactions contemplated by this Agreement.
(b) TAXES. The Company shall be responsible for all stock transfer and
documentary taxes, if any, arising out of the transactions contemplated by this
Agreement.
(c) AMENDMENTS. All amendments or waivers of any provisions of this
Agreement may only be made pursuant to a written instrument executed by the
parties hereto or their successors and assigns.
(d) RULE 144(K). The Company shall not be obligated to undertake a
registration of the Seller's Registration Shares pursuant to Section 7 hereof at
any time that Seller's counsel agrees that Seller may sell its Registration
Shares pursuant to Rule 144(k) under the Securities Act.
(e) SUCCESSORS AND ASSIGNS. All covenants and agreements in this
Agreement contained by or on behalf of either of the parties hereto shall bind
and inure to
<PAGE> 22
21
the benefit of the respective successors and assigns of Seller and the Company,
whether so expressed or not.
(f) NOTICES. All notices, requests and other communications provided
for hereunder shall be effective upon receipt, shall be in writing and shall be
deemed to have been duly given if delivered in person or by courier, telegraph,
telex or by facsimile transmission with electromechanical report of delivery:
If to the Company:
Silicon Valley Group, Inc.
101 Metro Drive, Suite #400
San Jose, CA 95120
Attention:
Mr. Russell G. Weinstock
With a copy to:
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Pal Alto, CA 94304-1050
Attention: Larry W. Sonsini
If to Seller:
International Business Machines Corporation
Old Orchard Road
Armonk, New York, 10504
Attention:
Mr. Lee A. Dayton
Vice President,
Corporate Development and Real Estate
Telephone: (914) 765-7800
Facsimile: (914) 765-7803
<PAGE> 23
22
With a copy to:
Donald D. Westfall, Esq.,
Room 1C-63
Telephone: (914) 765-4478
Telecopier: (914) 765-6006
or to such other address with respect to either party as such party shall notify
the other in writing.
(g) GOVERNING LAW AND JURISDICTION. This Agreement shall be construed
and enforced in accordance with, and the rights of the parties shall be governed
by, the laws of the State of New York (without regard to the choice of law
provisions thereof).
(h) HEADINGS. The descriptive headings of the several paragraphs of
this Agreement are inserted for convenience only and do not constitute a part of
this Agreement.
(i) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and it shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart.
(j) PUBLIC ANNOUNCEMENTS. Neither Seller nor the Company will issue
any press release or public announcement of the transactions contemplated hereby
except:
(i) as they may mutually agree in writing; or
(ii) as may be required in the opinion of counsel under applicable law
in which case the party so required to make such an announcement shall provide a
draft of the proposed announcement and a copy of such opinion to the other party
no less than two (2) business days prior to the date of the proposed
announcement (unless it is unlawful or impracticable to do so).
(k) COMPLETE AGREEMENT. This Agreement contains the entire agreement
between the parties with respect to the subject matter hereof and, except as
provided herein, supersedes all previous negotiations, commitments and writings.
This Agreement is not intended to confer any benefit upon any person other than
the parties hereto.
<PAGE> 24
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement as of the date first above written.
INTERNATIONAL BUSINESS MACHINES CORPORATION
By: /s/ Lee A. Dayton
--------------------------
Name: Lee A. Dayton
Title: IBM Vice President, Corporate Development and Real Estate
SILICON VALLEY GROUP, INC.
By: /s/ Russell G. Weinstock
--------------------------
Name: Russell G. Weinstock
Title: Vice President and Chief Financial Officer
<PAGE> 1
Exhibit 4.2
STOCKHOLDER AGREEMENT
By and Among
INTERNATIONAL BUSINESS MACHINES CORPORATION,
SVG LITHOGRAPHY, INC.
and
SILICON VALLEY GROUP, INC.
Dated: March 18, 1997
IBM Confidential
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I - CERTAIN DEFINITIONS......................... 5
ARTICLE II - RIGHT OF FIRST REFUSAL ON NEW ISSUANCES..... 16
2.1 Issuance of Voting Securities of SVGL........ 16
2.2 Exclusions From Right of First Refusal....... 16
2.3 Notice....................................... 17
2.4 Permitted Issuance........................... 18
ARTICLE III - RIGHT OF FIRST OFFER....................... 19
3.1 Notice....................................... 19
3.2 Election to Purchase......................... 19
3.3 Calculation of Pro Rata Share................ 20
3.4 Exclusions................................... 20
ARTICLE IV - IBM OPTION TO PURCHASE OR SELL UPON
SVG CHANGE IN CONTROL.................... 21
4.1 SVG Change of Control........................ 21
4.2 Closing...................................... 23
ARTICLE V - SPECIAL COVENANTS AND AGREEMENTS SOLELY
FOR THE BENEFIT OF IBM................. 23
5.1 Merger; Sale of Assets....................... 23
5.2 Liquidation.................................. 24
5.3 Priority Transactions........................ 24
ARTICLE VI - AFFIRMATIVE COVENANTS OF THE COMPANY........ 26
6.1 Accounting System............................ 26
6.2 Periodic Reports; Budgets.................... 26
6.3 Certificates of Noncompliance................ 29
6.4 Other Reports and Inspection................. 30
6.5 Insurance.................................... 30
6.6 Business and Properties...................... 31
6.7 Material Changes............................. 31
6.8 Agreements with Employees.................... 32
6.9 Compliance with Applicable Laws.............. 33
IBM Confidential
<PAGE> 3
ARTICLE VII - BOARD OF DIRECTORS......................... 34
7.1 IBM Observer................................. 34
7.2 Notice of Meetings........................... 34
7.3 No Observer Fees or Expense.................. 35
7.4 Precedence................................... 35
ARTICLE VIII - LEGEND ON SHARE CERTIFICATES.............. 35
8.1 Legend....................................... 35
8.2 No Transfer.................................. 36
ARTICLE IX - AGREEMENT BY SUBSEQUENT PURCHASERS.......... 36
ARTICLE X - MISCELLANEOUS................................ 37
10.1 Assignment................................... 37
10.2 Consent to Jurisdiction...................... 38
10.3 Amendments; Waivers.......................... 38
10.4 Notices; Consents and Approvals.............. 39
10.5 Interpretation............................... 41
10.6 Counterparts................................. 41
10.7 Entire Agreement............................. 41
10.8 Severability................................. 41
10.9 Governing Law................................ 42
10.10 Specific Enforcement; Injunctive Relief...... 42
10.11 Governmental Approval........................ 42
10.12 SVG Pledge................................... 43
IBM Confidential
<PAGE> 4
STOCKHOLDERS AGREEMENT dated as of March 18, 1997, by and among
International Business Machines Corporation, a New York corporation ("IBM"), SVG
Lithography, Inc., a New York corporation ("SVGL"), and Silicon Valley Group,
Inc., a Delaware corporation ("SVG").
RECITALS
A. SVG, IBM, SVGL, and The Perkin-Elmer Corporation, a New York
Corporation entered into an Asset Transfer and Common Stock Purchase Agreement
dated May 15, 1990 (the "Asset and Stock Agreement") pursuant to which, inter
alia, IBM purchased 600,000 shares of Common Stock from SVGL, and a Stockholders
Agreement dated May 15, 1990 (the "Previous Stockholders Agreement") whereby
each party obtained certain rights.
B. SVG, IBM and SVGL have entered into a Stock Purchase and Registration
Rights Agreement dated as of March 18, 1997 (the "Stock Purchase Agreement"),
pursuant to which SVG will purchase IBM's 600,000 shares of Common Stock of SVGL
for three million dollars ($3,000,000).
C. IBM is a current shareholder of 489,296 shares of Common Stock of SVG.
D. SVG, IBM, and SVGL desire to provide for certain matters concerning the
ownership and transfer of equity
IBM Confidential
4
<PAGE> 5
securities of SVG and SVGL, management of SVGL, registration rights and the
other matters set forth herein.
E. Execution of this Stockholders Agreement is a condition to the
obligations of the parties under the Stock Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the foregoing recitals and the
agreements and covenants set forth herein, the parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
As used herein, the following terms shall have the following meanings:
"Actual Voting Power" of any Person which is a corporation shall mean the
total number of votes which may be cast in the election of directors of such
Person at any meeting of stockholders of such Person if all shares of common
stock and other securities of such Person entitled to vote generally in the
election of directors of such Person were present and voted at such meeting,
other than votes that may be cast only by one class or series of stock (other
than common stock and any other class or series of stock of such Person to the
extent that such class
IBM Confidential
5
<PAGE> 6
or series of stock is entitled to vote together as one class with the common
stock) or upon the happening of a contingency. In determining the percentage of
the Actual Voting Power of any issuing Person represented by Voting Securities
of such issuing Person beneficially owned by any other Person, any such
securities not outstanding which are subject to outstanding options, warrants or
rights beneficially owned by such other Person shall be deemed to be outstanding
for the purpose of computing the percentage of Actual Voting Power of the
issuing Person represented by Voting Securities of the issuing Person
beneficially owned by such other Person, and any securities not outstanding
which are subject to outstanding options, warrants or rights not beneficially
owned by such other Person shall not be deemed to be outstanding for the purpose
of computing the percentage of the Actual Voting Power of the issuing Person
represented by Voting Securities of the issuing Person beneficially owned by
such other Person.
"Affiliate" shall mean as to any Person, any other Person which directly
or indirectly controls, or is under common control with, or is controlled by,
such Person.
"Affiliate Transferee" shall mean, with respect to a Stockholder, an
Affiliate of such Stockholder to whom Voting
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Securities of SVGL have been transferred and continue to be owned by such
Affiliate, unless such transfer was made in compliance with the provisions of
Article III (but was not made pursuant to Section 3.5(v)) or in compliance with
the provisions of Article IV.
"Average Market Price" of the common stock of any issuer shall mean the
average of the daily market price of such common stock for the twenty
consecutive trading days immediately prior to the day in question. The "daily
market price" of such common stock is the price per share of such common stock
on the relevant day, determined on the basis of the last reported sale price,
regular way, of such common stock as reported on the composite tape, or similar
reporting system, for issues listed or admitted for trading on the New York
Stock Exchange (or if such common stock has not been so listed or admitted for
trading, on the principal national securities exchange on which such common
stock is then listed or admitted for trading) or, if there is no such reported
sale on the day in question, then the average of the closing bid and asked
quotations as so reported or, if such common stock is not then listed or
admitted for trading on any national securities exchange, then the closing price
for a share of such common stock on such day as reported on NASDAQ or, if such
closing prices shall not be reported on NASDAQ, then the average of the high bid
and low asked quotations on the day in
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question in the over-the-counter market as reported by NASDAQ, or if not so
quoted, as reported by the National Quotation Bureau, Incorporated, or a similar
organization. A "trading day" with respect to such common stock is a day on
which the principal national securities exchange on which such common stock is
listed or admitted to trading is open for the transaction of business or, if
such common stock is not listed or admitted to trading on any national
securities exchange, a business day.
A Person shall be deemed the "beneficial owner" of, and shall be deemed to
"beneficially own", any securities (a) which such Person or any of its
Affiliates is deemed to "beneficially own" within the meaning of Rule 13d-3
under the Exchange Act or (b) which such Person or any of its Affiliates has the
right to acquire (whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement or understanding or
upon the exercise of any right of conversion or exchange, warrant, option or
otherwise.
"Collateral" shall have the meaning set forth in Section 10.12.
"Common Stock" shall mean the Common Stock, par value $.01 per share, of
SVGL.
"Competitor of IBM" shall mean any Person that develops or has developed,
manufactures and sells any product (including a
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wafer) which incorporates a semiconductor die, which die (or wafer) has been
manufactured by such Person.
"Control Transaction" shall mean (i) any sale, lease, exchange or other
disposition (whether in one transaction or a series of related transactions) of
forty percent (40%) or more of the assets of SVG or SVGL, as the case may be,
(ii) any other transaction or series of transactions which results in or would
result in the holders of the Voting Securities of SVG or SVGL, as the case may
be, immediately prior to the first of such transactions continuing beneficially
to own Voting Securities of SVG or SVGL, as the case may be, (or the successor
or surviving entity) representing less than 70% of the Total Voting Power of SVG
or SVGL, as the case may be, (or the successor or surviving entity) immediately
after any of such transactions or (iii) entering into any agreement providing
for any of the foregoing; provided, however, that neither the pledge by SVG of
Collateral to any Lender in accordance with Section 10.12, the foreclosure by
any such Lender on its interest in such Collateral in accordance with Section
10.12 nor the disposition of the Collateral in accordance with Section 10.12
shall be deemed to effect a Control Transaction.
As used otherwise in this Agreement, "control" (including its correlative
meanings "controlled by" and "under common control with") shall mean possession,
directly or indirectly, of
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power to direct or cause the direction of management or policies (whether
through ownership of securities or other ownership interests, by contract or
otherwise).
"Eligible Stockholder" shall mean IBM, so long as IBM, together with all
its Affiliate Transferees, beneficially owns the applicable Minimum Equity
whether or not it has held such Minimum Equity continuously; provided, however,
that if IBM, together with all its Affiliate Transferees, fails to own
beneficially the applicable Minimum Equity for a period of 24 consecutive
months, then IBM shall not thereafter be an Eligible Stockholder, whether or not
IBM again owns beneficially the applicable Minimum Equity after such period of
24 consecutive months.
"Employee Shares" shall mean shares of Common Stock (i) issued to
employees, directors or individual consultants of SVGL and still outstanding or
(ii) issuable upon exercise of options approved by SVGL's Board of Directors or
any duly authorized committee thereof and granted to employees, directors or
individual consultants of SVGL. For purposes of determining the number of
Employee Shares outstanding at any time, (a) shares of Common Stock issuable
upon exercise of outstanding options at the time of determination shall be
deemed outstanding, (b) shares of Common Stock which were previously issued to
employees, directors or individual consultants of SVGL and which have been
repurchased
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by SVGL at the per share price originally paid therefor shall not be deemed
outstanding and (c) shares which were previously subject to outstanding options,
but which have been returned to the stock plan unexercised upon the termination
of such options, shall not be deemed outstanding.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"Fair Market Value" of any Voting Securities of SVGL shall mean (i) if
such Voting Securities of SVGL are then publicly traded, the Average Market
Price of such Voting Securities of SVGL or (ii) if such Voting Securities of
SVGL are not publicly traded, (x) the price mutually determined by SVGL, SVG and
IBM or (y) if SVGL, SVG and IBM do not agree on such a price, the price
established by an independent, nationally recognized investment banking firm
acceptable to SVGL, SVG and IBM. Such Fair Market Value shall be adjusted
following the date of determination thereof for any stock split, stock dividend,
reverse stock split, recapitalization or other similar event occurring after
such date and or prior to the relevant date of purchase of such Voting
Securities.
"First Offer Notice" shall have the meaning set forth in Section 3.1.
"Governmental Authority" shall mean any court, administrative agency or
commission or other governmental
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authority or instrumentality, domestic or foreign, of competent jurisdiction.
"Law" or "Laws" means all laws, treaties, statutes, ordinances, rules,
regulations, judgments, injunctions, stipulations, decrees and orders of any
Governmental Authority.
"Lender" shall have the meaning set forth in Section 10.12.
"Loan Agreement" shall have the meaning set forth in Section 10.12
"Minimum Equity" shall mean any Voting Securities in SVG or SVGL. It is
understood that any shares of Common Stock or other Voting Securities acquired
or reacquired by IBM after March 18, 1997 will, upon such acquisition or
reacquisition, be deemed to be owned beneficially by IBM for the purpose of
determining whether IBM holds the applicable Minimum Equity.
"NASDAQ" shall mean the National Association of Securities Dealers
Automated Quotations System.
"Offered Securities" shall have the meaning set forth in Section 3.1.
"Person" shall mean any individual, partnership, firm, corporation or
other entity, and shall include any successor (by merger or otherwise) of such
Person.
The terms "register", "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the
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declaration or ordering of the effectiveness of such registration statement.
"Related Company" of any Person shall mean a corporation, company, or
other entity (i) more than 20% of whose outstanding shares or securities
(representing the right to vote for the election of directors or other managing
authority) are, or (ii) which does not have outstanding shares or securities (as
may be the case in a partnership, joint venture, or other unincorporated
association), but more than 20% of whose ownership interest representing the
right to make decisions for, or designating the managing authority of, such
other entity is, owned or controlled, directly or indirectly, by such Person at
the time in question, but such corporation, company or other entity shall be
deemed to be a Related Company only for so long as such ownership or control
exists.
"SEC" shall mean the Securities and Exchange Commission or any successor
commission or agency having similar powers.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations thereunder.
"sell" or "transfer" or any variation thereof shall mean, for purposes of
this Agreement, to issue, assign, pledge, transfer otherwise dispose of.
"Seller" shall mean any Stockholder who proposes to sell any Voting
Securities of SVGL.
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"Stockholder" shall mean SVG and any Person who acquires beneficial
ownership of any Voting Securities of SVGL (other than a Person who acquires
ownership of any Voting Securities of SVGL pursuant to the exercise of an
employee stock option) and signs the agreement required by Article IX below.
"Subsidiary" of any Person shall mean a corporation, company, or other
entity (i) more than 50% of whose outstanding shares or securities (representing
the right to vote for the election of directors or other managing authority are,
or (ii) which does not have outstanding shares or securities (as may be the case
in a partnership, joint venture, or other unincorporated association), but more
than 50% of whose ownership interest representing the right to make decisions
for, or designating the managing authority of, such other entity is, owned or
controlled, directly or indirectly, by such Person at the time in question, but
such corporation, company or other entity shall be deemed to be a Subsidiary
only for so long as such ownership or control exists.
"SVG Change in Control" shall mean (a) (i) any sale, lease, exchange or
other disposition (whether in one transaction or a series of related
transactions) of forty percent (40%) or more of the assets of SVG (without
regard to the assets of SVGL which may be included in the consolidated balance
sheet of SVG or the Voting Securities of SVGL owned by SVG) to one or more
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Competitors of IBM or (ii) any other transaction or series of transactions with
one or more Persons which results in, or would result in, one or more
Competitors of IBM, beneficially owning, in the aggregate, Voting Securities of
SVG (or the successor or surviving entity) representing 40% or more of the Total
Voting Power of SVG (or the successor or surviving entity), (b) the failure of
SVG to own beneficially all the Voting Securities and other equity interests of
any Affiliate Transferee of SVG (except for directors' qualifying shares) or (c)
entering into agreement providing for any of the foregoing.
"Tax" or "Taxes" shall mean all federal, state, local and foreign taxes,
assessments and other governmental charges, duties, impositions and liabilities,
including taxes based upon or measured by gross receipts, income, profits,
sales, use and occupation, and value added, ad valorem, transfer, franchise,
withholding, payroll, recapture, employment, excise and property taxes, together
with all interest, penalties and additions imposed with respect to such amounts
and any obligations under any agreements or arrangements with any other person
with respect to such amounts.
"Total Voting Power" of any Person shall mean the total number of votes
that may be cast in the election of directors (or similar managing authority) of
such Person at any meeting of
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stockholders (or equity owners) of such Person if all Voting Securities of such
Person (assuming full conversion, exchange or exercise of all securities
(including rights, warrants and options) convertible into, exchangeable for or
exercisable for any securities entitled to vote generally in such election) were
present and voted at such meeting, other than votes that may be cast only by one
class or series of stock (other than common stock of such Person and any other
class or series of stock to the extent that such other class or series is
entitled to vote together as one class with such common stock) or only upon the
happening of a contingency.
"Voting Securities" shall mean, with respect to any Person, the shares of
common stock (or other equity interests) and any other securities of such Person
entitled to vote generally in the election of directors (or similar managing
authority) of such Person, and any other securities (including rights, warrants,
options and convertible debt) convertible into, exchangeable for or exercisable
for any common stock or other securities refereed to above (whether or not
presently convertible, exchangeable or exercisable).
ARTICLE II
RIGHT OF FIRST REFUSAL ON NEW ISSUANCES
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2.1 Issuance of Voting Securities of SVGL. SVGL hereby grants to IBM the
right of first refusal to purchase all (or any part) of IBM's pro rata share of
any Voting Securities of SVGL that SVGL may from time to time propose to sell or
issue. IBM's pro rata share, for purposes of this Section 2.1, shall be the
greater of: (a) the ratio of (X) the voting power represented by all Voting
Securities of SVG (whether or not then outstanding) beneficially owned by IBM
and its Affiliate Transferees immediately prior to such sale or issuance to (Y)
the Actual Voting Power of SVG; and (b) the ratio of (X) the voting power
represented by all Voting Securities of SVGL (whether or not then outstanding)
beneficially owned by IBM and its Affiliate Transferees immediately prior to
such sale or issuance to (y) the Actual Voting Power of SVGL.
2.2 Exclusions From Right of First Refusal. The right of first refusal set
forth in this Article II shall not apply to the following sales or issuances of
Voting Securities by SVGL:
(a) Employee Shares or options to acquire Employee Shares;
(b) Shares of Common Stock issued upon conversion of any convertible
securities issued by SVGL in compliance with this Article II;
(c) Voting Securities of SVGL offered to the public pursuant to a
registration statement filed under the Securities
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Act (so long as the distribution pursuant to such registration statement
represents a bona fide offer to the public.)
(d) Voting Securities of SVGL issued to a Person that is neither a
Competitor of IBM nor an Affiliate of a Competitor of IBM;
(e) Voting Securities of SVGL issued pro rata to all holders of
SVGL's equity securities in connection with any stock split, stock dividend,
recapitalization or similar event by SVGL.
2.3 Notice. In the event that SVGL proposes to undertake a sale or
issuance of Voting Securities of SVGL subject to Section 2.1 which is not
excluded from IBM's right of first refusal pursuant to Section 2.2, it shall
obtain a bona fide written offer from an unrelated third party with respect to
such sale or issuance and shall give IBM written notice of its intention,
describing the type and amount of Voting Securities of SVGL, the price and the
other material terms upon which SVGL proposes to sell or issue the same, the
identity of the Person or Persons to whom SVGL proposes to sell or issue the
same and a copy of such offer. IBM shall have thirty (30) days after receipt of
such notice to agree to purchase all or any part of its pro rata share of such
Voting Securities of SVGL at the price and upon the terms specified in the
notice by giving written notice to SVGL and stating therein the quantity of
Voting Securities of SVGL to be purchased. If IBM elects to purchase any of the
Voting
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Securities IBM agrees, by so electing, to make fully payment for such Voting
Securities on or before seventy-five (75) days after receipt of the notice
provided pursuant to this Section 2.3 subject to the provisions of Section 10.11
hereof. In the event IBM fails to pay the purchase price to SVGL within such
seventy-five (75) days or upon such later date as may be determined as
contemplated by Section 10.11, SVGL shall be free to sell, in accordance with
Section 2.4, those Voting Securities for which full payment has not been made.
2.4 Permitted Issuances. To the extent that IBM fails to exercise in full
the right of first refusal within the thirty (30) day period specified above,
SVGL shall have one hundred eighty (180) days thereafter (subject to Section
10.11) to sell the Voting Securities of SVGL respecting that portion as to which
IBM's rights were not exercised and purchased to the Person or Persons
identified in the notice specified in Section 2.3 at a price and upon terms no
more favorable to such Person or Persons than the terms specified in the SVGL's
notice. In the event SVGL has not sold such Voting Securities of SVGL to such
Person or Persons within such one hundred eighty (180) day (or longer, subject
to Section 10.11) period, SVGL shall not thereafter issue or sell any Voting
Securities of SVGL without first offering such Voting Securities of SVGL to IBM
in the manner provided above. No such sale shall have the effect of waiving or
diminishing any
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rights SVGL may have against IBM if IBM fails to pay for Voting Securities which
IBM agreed to purchase pursuant to this Article II.
ARTICLE III
RIGHT OF FIRST OFFER
Before any Seller may transfer any Voting Securities of SVGL to a
Competitor of IBM, such Voting Securities shall first be offered by such Seller
to IBM as set forth in this Article III.
3.1 Notice. The Seller shall deliver a notice (the "First Offer Notice")
to IBM and SVGL stating (i) the Seller's bona fide intention to sell or transfer
such Voting Securities of SVGL, (ii) the number of Voting Securities of SVGL to
be sold or transferred (the "Offered Securities") and (iii) the price and other
material terms on which the Seller proposes to offer to sell or transfer such
Voting Securities of SVGL.
3.2 Election to Purchase. IBM may elect to purchase all (but not less than
all) of the Offered Securities referenced in the First Offer Notice by
delivering to the Seller within thirty (30) days after receipt of the First
Offer Notice a written notice stating that IBM elects to purchase such Offered
Securities. If IBM fails to deliver such a written notice within such thirty
(30) days, IBM shall be deemed to have elected not to purchase any of the
Offered Securities. If IBM elects to
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purchase the Offered Securities, IBM agrees, by so electing, to make full
payment for such Offered Securities on or before seventy-five (75) days after
receipt of the First Offer Notice, subject to the provisions of Section 10.11
hereof. In the event IBM fails to pay the purchase price to the Seller within
such seventy-five (75) days or upon such later date as may be determined as
contemplated by Section 10.11, the Seller shall be free to sell, in accordance
with Section 3.3, the Offered Securities. No such sale shall have the effect of
waiving or diminishing any rights the Seller may have against IBM if IBM fails
to pay for Offered Securities which IBM agreed to purchase pursuant to this
Article III.
3.3 Sales of Unsubscribed Voting Securities of SVGL. To the extent that
IBM fails to exercise the right to purchase the Offered Securities or fails to
purchase the Offered Securities as agreed, the Seller shall have one hundred
eighty (180) days thereafter to sell the Offered Securities at a price and upon
terms no more favorable to the purchaser thereof than specified in the notice;
provided, that if the Seller has concluded an agreement within such one hundred
eighty (180) day period to sell such Offered Securities, but such sale is
subject to approval by any Governmental Authority, the one hundred eighty (180)
day period within which the sale must be completed shall be extended in
accordance with Section 10.11. Subject to such Section 10.11,
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in the event that the Seller has not sold such Offered Securities within such
one hundred eighty (180) day period, the Seller shall not thereafter sell the
Offered Securities without first offering such Offered Securities to IBM in the
manner provided above.
3.4 Exclusions. The provisions of Sections 3.1, 3.2, and 3.3 shall not
apply to a transfer of any of Voting Securities of SVGL by a Seller (i) to the
public pursuant to a registration statement declared effective under the
Securities Act (so long as the distribution pursuant to such registration
statement represents a bona fide offering to the public), (ii) through a broker
(so long as such sale is through an ordinary "broker's transactions" as such
term is defined in Rule 144 under the Securities Act or a transaction with a
"market maker" as such term is defined in Section 3(a)(38) of the Exchange Act)
when the Seller does not know the identity of the purchaser and does not direct
the purchase, (iii) if the Seller is SVG, to an employee of SVG or SVGL, (iv) in
a transaction effected in compliance with Section 5.1, (v) if such Seller is IBM
or SVG, to any Affiliate of such Seller that is directly or indirectly wholly
owned by such Seller, provided such Affiliate complies with the provisions of
Article IX hereof by signing the document referred to in such Article or (vi) to
any Person who is not a Competitor of IBM.
ARTICLE IV
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IBM OPTION TO PURCHASE SVGL UPON SVG CHANGE IN CONTROL
4.1 SVG Change of Control. In the event that an SVG Change in Control
should occur at a time when IBM is an Eligible Stockholder, SVG shall give IBM
written notice of such SVG Change in Control (the "Change in Control Notice").
The Change in Control Notice shall specify the identity of the relevant
Competitor of IBM and the percentage of Voting Securities of SVG owned by such
Competitor of IBM following the SVG Change in Control. Promptly after IBM
delivers a notice that it is exercising its appraisal rights hereunder, IBM and
SVG shall mutually select a nationally recognized, independent investment
banking firm acceptable to SVGL which shall determine the value of the
outstanding Voting Securities of SVGL beneficially owned by SVG (together with
its Affiliate Transferees). Such determination shall be set forth in writing and
delivered to IBM, SVGL and SVG. For a period of 60 days following the
determination of such value, IBM shall have the right to purchase all, but not
less than all, Voting Securities of SVGL then beneficially owned by SVG (and its
Affiliate Transferees) for a cash price equal to such value. Such investment
banking firm shall take into account, and give appropriate valuation to, a
control premium, if any, for the Voting Securities of SVGL held by SVG (and its
Affiliate Transferees). SVGL shall cooperate fully in assisting any such
investment banking firm in making its
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determinations, including giving such firm full access to the books and records
of SVGL and providing it with such other information as such firm may reasonably
request in connection with such determination. Each party hereto shall be free
to make written presentations to such investment banking firm to assist it in
making its determinations, as long as such party provides a copy of any such
written presentation to the other parties. SVG and IBM shall each pay that
fraction of the fees and expenses of any such investment banking firm as equals
the fraction determined by dividing the voting power represented by the
outstanding Voting Securities of SVGL then beneficially owned by such party by
the voting power represented by all outstanding Voting Securities of SVGL then
beneficially owned by IBM and SVG.
4.2 Closing. If IBM exercises its right to purchase all Voting Securities
of SVGL held by SVG (and its Affiliate Transferees) following an SVG Change in
Control, it shall give written notice of its election to SVG within 60 days
following delivery of the investment banking firm's written determination of
value pursuant to Section 4.1 and SVG (and its Affiliate Transferees) shall be
obligated to sell all Voting Securities of SVGL held by them to IBM. The closing
of such purchase and sale shall take place on a date mutually acceptable to IBM
and SVG, which date shall be no more than 80 days following delivery of the
investment banking firm's written determination of value
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pursuant to Section 4.1, subject to the provisions of Section 10.11 hereof.
ARTICLE V
SPECIAL COVENANTS AND AGREEMENTS
SOLELY FOR THE BENEFIT OF IBM
5.1 Merger; Sale of Assets. So long as IBM is an Eligible Stockholder,
without the prior written consent of IBM, SVGL shall not (a) become a party to
any merger, consolidation or other reorganization with any Competitor of IBM,
(b) sell, lease or otherwise dispose of (whether in one transaction or series of
transactions) more than 5% of its assets to any Competitor of IBM or any of its
Affiliates (other than the sale, lease or license of products to customers in
the ordinary course of business) (c) enter into any other transaction or series
of transactions with one or more Persons which results in or would result in one
or more Competitors of IBM owning, in the aggregate, Voting Securities of SVGL
representing 30% or more of the Total Voting Power of SVGL or (d) enter into any
agreement providing for any of the foregoing.
5.2 Liquidation. So long as IBM is an Eligible Stockholder, without the
prior written consent of IBM, SVGL shall not voluntarily dissolve, liquidate or
wind up SVGL, carry out any partial liquidation of SVGL, file or consent to the
filing of any
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petition in bankruptcy, consent to the appointment of a receiver for it or any
substantial part of its assets, make any general assignment for the benefit of
its creditors or take any similar action. For purposes of this Section 5.2 only,
if SVGL has complied with Section 5.1 hereof, the sale of SVGL through any
merger of consolidation of SVGL with or into any other corporation, or the
acquisition by any other Person of SVGL through any merger of any other
corporation or corporations into SVGL, or a sale of all or substantially all of
the assets of SVGL shall not be deemed a violation of this Section 5.2.
5.3 Priority Transactions. In the event that SVG and/or SVGL contemplates
entering into any transaction(s) with any Person(s) which has or will have the
effect of granting any Person(s) priority with respect to receipt of tools which
are intended to be made generally available to SVGL's customers, SVG and/or
SVGL, as the case may be, will offer IBM the opportunity to participate in the
transaction(s) on terms and conditions which are equivalent to the most
favorable terms and conditions offered to the other Person(s) participating in
the transaction(s).
a. Notice. In the event that SVG and/or SVGL contemplates entering into a
transaction of the type described in Section 5.3, it or they will give IBM
written notice of its intention, describing the material terms of the
transaction and identity of
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the proposed other Person(s). IBM shall have thirty (30) days after receipt of
such notice to provide SVG and SVGL with notice of IBM interest in participating
in the transaction. If IBM indicates such an interest, SVG and/or SVGL, as the
case may be, agrees to include IBM in the negotiations of such transactions and
allow IBM to participate in the transaction as provided in Section 5.3. In the
event IBM fails to provide notice of such interest, SVG and/or SVGL shall be
free to proceed with the transaction without IBM's participation as provided in
Section 5.3(b).
b. Permitted Transactions. To the extent that IBM fails to provide notice
as specified above, SVG and/or SVGL shall have one hundred eighty (180) days
thereafter (subject to Section 10.11) to conclude the proposed transaction with
the Person(s) specified in SVG and/or SVGL's notice, upon terms no more
favorable to such Person or Persons than the terms specified in the such notice.
In the event SVG and/or SVGL, as the case may be, has not concluded the propose
transaction with such Person(s) within such one hundred eighty (180) day (or
longer, subject to Section 10.11) period, neither SVG nor SVGL shall thereafter
enter into such a transaction without first offering IBM the ability to
participate therein in the manner provided above.
ARTICLE VI
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AFFIRMATIVE COVENANTS OF THE COMPANY
For purposes of this Article VI, SVGL shall cause each of its
Subsidiaries to comply with the obligations of SVGL (except in respect of
Sections 6.2 and 6.3).
6.1 Accounting System. SVGL shall maintain all its financial records in
accordance with generally accepted accounting principles consistently applied.
6.2 Periodic Reports; Budgets.
(a) SVGL shall furnish to IBM as soon as practicable and in any
event within 60 days after the end of each fiscal year of SVGL, beginning with
the fiscal year ending on September 30, 1997, an annual report of SVGL,
including an audited balance sheet as of the end of such fiscal year and the
related audited statements of operations, stockholders' equity and cash flows
for such fiscal year (similar statements if the foregoing statements change as
the result of changes in generally accepted accounting principles) setting forth
in each case in comparative form the corresponding figures for the preceding
fiscal year and for the budget the fiscal year just completed (provided,
however, that information as to the budgeted figures need not be audited), all
of which shall fairly present the financial condition of SVGL as of the dates
shown and the results of its operations for the periods then ended. Such
financial statements shall be accompanied by the report thereon of nationally
recognized
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independent public accountants to the effect that such financial statements have
been prepared in conformity with generally accepted accounting principles
applied on a basis consistent with prior years (except as otherwise specified in
such report). SVGL shall conduct its business so that such report of the
independent public accountants shall not contain any qualifications as to the
scope of the audit or with respect to SVGL's compliance with generally accepted
accounting principles consistently applied, except for changes in methods of
accounting in which such accountants concur. SVGL shall also include with such
financial statements a calculation of primary and, if applicable, fully diluted
earnings per share and a schedule of sales or repurchases of securities of SVGL
showing the amount and type of, the price paid for and the conversion prices of,
with respect to convertible securities, such security and the seller and
purchaser.
(b) SVGL shall furnish to IBM as soon as practicable and in any
event within 30 days after the end of each calendar quarter, a quarterly report
of SVGL consisting of an unaudited balance sheet as of the end of such quarter
and the related unaudited statements of operations and cash flows for quarter
and for the fiscal year to date, setting forth in each case in comparative form
the corresponding figures for the preceding fiscal year and for the budget for
the current fiscal year. All
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such reports shall be certified by SVGL's chief financial officer as fairly
presenting the financial condition of SVGL as of the date shown and its results
of operations for the periods then ended and to have been prepared in conformity
with generally accepted accounting principles consistently applied, except for
normal, recurring year-end audit adjustments.
(c) SVGL shall furnish to IBM, as soon as practicable and in any
event within 30 days after the end of each calendar month, a monthly report of
SVGL consisting of an unaudited balance sheet as of the end of such month and
the related unaudited statements of operations and cash flows for such month and
the fiscal year to date, setting forth in each case in comparative form the
corresponding figures for the budget for the current fiscal year. The reports
for each calendar month shall include a narrative discussion prepared by SVGL
describing the business operations of SVGL during such calendar period.
(d) SVGL shall furnish to IBM, for so long as IBM is an Eligible
Stockholder, as soon as practicable and in any event not less than 30 days prior
to the commencement of each fiscal year of SVGL (A) an annual operating budget
for SVGL, approved by the Board of Directors of SVGL, for the succeeding fiscal
year, containing projections of profit and loss, cash flow and ending balance
sheets for each quarter and each month of such fiscal year, (B) an annual
summary budget for the three fiscal years
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following the next fiscal year, containing projections of profit and loss for
each of such years, and (C) a business plan for SVGL relating to the succeeding
fiscal year setting forth a development plan, financial plan, marketing plan and
budgeted and projected figures. Promptly upon preparation thereof, SVGL shall
furnish to IBM, for as so long as IBM is an Eligible Stockholder, any other
operating budgets or business plans that SVGL may prepare and which are
submitted to or approved by the Board of Directors and any revisions of such
previously furnished budgets or business plans so approved.
(e) SVGL's obligations pursuant to Section 6.2 (a) and (b) shall be
suspended for so long as the Common Stock is registered pursuant to Section 12
of the Exchange Act of SVGL is required to file reports with the SEC pursuant to
Section 15(d) of the Exchange Act; provided that SVGL timely files its Annual
Report on Form 10-K and Quarterly Reports on Form 10-Q and provides a copy
thereof to each Stockholder.
6.3 Certificates of Noncompliance. SVGL covenants that promptly after the
occurrence of any material default (with or without notice or lapse of time or
both) under, or material breach of, this Agreement or any material agreement or
obligation, it shall deliver to IBM for so long as IBM is an Eligible
Stockholder, a certificate of an officer of SVGL specifying in detail the nature
and period of existence thereof
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and what actions SVGL has taken and proposes to take with respect thereto.
6.4 Other Reports and Inspection. SVGL shall furnish promptly to IBM (i)
copies of any financial statements or financial or other reports or compliance
certificates prepared by SVGL for or otherwise furnished to or filed with its
stockholders or any lender to SVGL of the SEC and (ii) such other documents,
reports, financial data and other information as IBM may reasonably request.
SVGL shall, upon reasonable prior notice, make available to IBM or its
representatives or designees all properties, assets, books of accounts,
corporate records and contracts (subject to the confidentiality provisions of
such contracts) of SVGL reasonably requested by IBM, and any other material
reasonably requested by IBM, for inspection and shall use its best efforts to
make available to IBM, the directors, officers, employees, customers,
independent accountants and vendors of SVGL for interviews at reasonable times
to verify all information furnished and otherwise to become familiar with SVGL
and its business, operations, properties and assets.
6.5 Insurance. SVGL shall maintain valid policies of workers'
compensation, fire and casualty, liability and other forms of insurance with
financially sound and reputable insurers, in such amounts, with such deductibles
and against such risk and losses as are reasonable for the business and assets
of SGL, and
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SVGL shall maintain such other insurance as may be required by law. The
activities and operations of SVGL shall be conducted in a manner so as to
conform in all material respects to all applicable provisions of such insurance
policies.
6.6 Business and Properties. SVGL shall obtain, preserve, renew and keep
in full force and effect all rights, licenses, permits, patents, copyrights,
trademarks, trade names and other authorizations which shall be necessary in any
material respect to the conduct of its business; provided that SVGL shall not be
deemed to be in breach of this Section 6.6 with respect to any such rights,
licenses, permits, patents, copyrights, trademarks and trade names which are not
in full force and effect but are contested diligently and in good faith by SVGL.
SVGL shall maintain and preserve all property material to the conduct of its
business and keep such property in good repair, working order and condition and
from time to time make, or cause to be made, all needful and proper repairs,
renewals, additions, improvements and replacements thereto necessary in order
that the business carried on in connection therewith may be properly conducted
at all times.
6.7 Material Changes. SVGL shall promptly notify IBM, so long as IBM is an
Eligible Stockholder, of (i) any material adverse change in the business,
properties, assets, condition (financial or otherwise), operations or prospects
of SVGL, and
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(ii) any lawsuit, claim, proceeding or investigation, pending or, to the best
knowledge of SVGL, threatened, or any judgment, order or decree involving SVGL
and which, if the result were adverse to SVGL, might have a material effect on
the business, properties, assets, condition (financial or otherwise) operations
or prospects of the SVGL.
6.8 Agreements with Employees. The Board of Directors shall cause all
members of management and all professional employees of SVGL to enter into
agreements as the Board of Directors determines from time to time, relating to
(A) nondisclosure of confidential information; (B) assignment of patents,
trademarks and copyrights to SVGL; and (C) noncompetition.
6.9 Compliance with Applicable Laws. SVGL shall comply in all material
respects with all applicable statutes, laws, ordinances, rules and regulations
of any Governmental Authority (whether now in effect or hereafter enacted) and
any filing requirements relating thereto. Such obligation shall include
complying in all material respects with the applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended, and filing in a
timely manner (within any applicable extension periods) all material returns,
reports and forms required to be filed under the Internal Revenue Code of 1986,
as amended, or under applicable state, local or foreign laws
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relating to taxes and timely paying all taxes required to be paid in respect of
the periods covered by such returns, reports and forms, except to the extent
such statues, laws, ordinances, rules, regulations or filing requirements are
being contested diligently and in good faith by SVGL (or in the case of taxes,
adequate reserves for payment thereof have been set up and if SVGL receives an
assessment for additional taxes from any taxing authority, such taxes are being
contested diligently and in good faith). SVGL shall do all things necessary to
preserve, renew and keep in full force and effect and in good standing its
corporate existence and authority necessary to continue its business.
Notwithstanding the foregoing, this Section 6.9 does not apply with respect to:
(i) any environmental matter which is defined in the Environmental Matters
Agreement as Specified Environmental Permits and Specified Environmental
Actions, or which constitutes a breach of representation and warranty contained
in the Environmental Matters Agreement, or (ii) any matter (other than any
environmental matter) to the extent it represents a substantial continuation (or
would represent a substantial continuation but for the passage of time) of the
state of affairs, activities or conduct (or the consummation of transactions or
events) that existed, occurred, or was contemplated prior to the May 15, 1990
(but not to the extent a matter formerly in compliance becomes noncompliant by
reason of a
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change in the law). For the purposes of this Section 6.9, the term
"Environmental Matters Agreement" has the meaning set forth in the Asset and
Stock Agreement. SVGL agrees to use its reasonable best efforts to correct
expeditiously any noncompliance with law existing immediately following March
18, 1997. This Section 6.9 shall in no way affect the rights and remedies of the
parties pursuant to the Environmental Matters Agreement and any other written,
executed agreements in place between the parties.
ARTICLE VII
BOARD OF DIRECTORS
7.1 IBM Observer. IBM shall be entitled to designate a nonvoting observer
who shall be entitled to attend all SVGL Board of Directors and committee
meetings. IBM acknowledges and agrees that the observer nominated by IBM will be
under an obligation to IBM not to disclose to any Person outside of IBM, or use
in other than IBM's business, any confidential information or material relating
to the business of IBM or its Subsidiaries and therefore no such information or
material will be disclosed SVGL even if such disclosure would be of interest or
value to SVGL.
7.2 Notice of Meetings. For so long as IBM has the right to designate a
nonvoting observer entitled to attend all SVGL Board and Committee meetings, it
shall have the right to receive
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reasonable prior notice of (with such notice to be sent to the address provided
in Section 10.4 below if it has not designated a specific individual), and have
its observer, attend, all meetings of the Board of Directors of SVGL or any
committee thereof and SVGL will promptly deliver to the observer designated, by
IBM copies of all minutes and other records of action by, and all written
information furnished to, the Board or such committee; provided that SVGL may,
to the extent permitted by applicable law, withhold specific information
regarding proprietary technology of SVGL which would (in the good faith opinion
of the Board of Directors of SVGL) if disclosed to IBM, result in a competitive
disadvantage to SVGL.
7.3 No Observer Fees or Expense. SVGL will not reimburse any observer sent
by IBM or IBM for expenses incurred in connection with attending any meeting of
SVGL's Board of Directors.
7.4 Precedence.
To the extent, if any, that any provision of this Article VII is
inconsistent with the provisions of Section 10.12, the provisions of Section
10.12 shall control.
ARTICLE VIII
LEGEND ON SHARE CERTIFICATES
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8.1 Legend. Each certificate representing Voting Securities of SVGL owned
by any Stockholder or any transferee shall bear the following legends (in
addition to any legends required under applicable state securities laws), except
that such certificate shall not be required to bear the first such restrictive
legend if the Stockholder shall provide to SVGL a legal opinion of such
Stockholder's counsel, in form and substance reasonably satisfactory to counsel
for SVGL, to the effect that such legend is not required in order to establish
compliance with any provisions of the Securities Act or any applicable state
securities or Blue Sky laws, and shall not bear the second such restrictive
legend to the extent no longer required under this Agreement.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR STATE SECURITIES LAWS (COLLECTIVELY
"SECURITIES LAWS") AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN COMPLIANCE
WITH THE SECURITIES LAWS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS
AND CONDITIONS OF A STOCKHOLDERS AGREEMENT, DATED AS OF MARCH 18, 1997, BY
AND AMONG SVG LITHOGRAPHY, INC., ("SVGL") SILICON VALLEY GROUP, INC., AND
INTERNATIONAL BUSINESS MACHINES CORPORATION AND MAY NOT BE SOLD OR
TRANSFERRED EXCEPT IN ACCORDANCE THEREWITH. A COPY OF SUCH AGREEMENT IS ON
FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF SVGL, AND SVGL WILL FURNISH A
COPY OF SUCH AGREEMENT TO THE HOLDER OF THIS CERTIFICATE UPON WRITTEN
REQUEST AND WITHOUT CHARGE.
8.2 No Transfer. SVGL agrees not to register the transfer of any
certificate so legended if SVGL has not received a
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certificate from the transferring party as to compliance with all provisions of
this Agreement (or if SVGL knows that such provisions have not been (or after
giving effect to such transfer would not be) complied with). The holder of each
certificate bearing the second of such legends by acceptance thereof agrees to
comply in all respects with the provisions of this Agreement. No holder will
offer to sell or otherwise dispose of Voting Securities of SVGL or any other
security of SVGL other than pursuant the registration requirements of the
Securities Act or an exemption therefrom.
ARTICLE IX
AGREEMENT BY SUBSEQUENT PURCHASERS
SVGL agrees to deliver to each Stockholder, and each Stockholder agrees to
deliver to all other Stockholders of SVGL and SVGL prior to issuing or making
any transfer of Voting Securities of SVGL to any Person not a party to this
Agreement, an appropriate document duly executed and delivered by such Person in
which such Person agrees that it shall be bound by, and that its beneficial
ownership of any Voting Securities of SVGL shall be subject to, all the terms
and conditions of this Agreement applicable to (i) a Stockholder generally and
(ii) in the case of a sale to a Person who, after giving effect to such sales,
would be an Affiliate Transferee, and Affiliate
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Transferee. Upon such delivery and transfer, such Person shall become a
Stockholder will all the rights hereunder of a Stockholder generally and all
other rights hereunder, if any, assigned to it pursuant to Section 10.1.
ARTICLE X
MISCELLANEOUS
10.1 Assignment. This Agreement and the rights hereunder shall not be
assignable or transferable by any party hereto (except by operation of law in
connection with a merger, consolidation or sale of all or substantially all the
assets of such party or pursuant to Section 10.12) without the prior written
consent of the other parties hereto and any purported assignment without such
consent shall be void; provided, however, that, without such consent, subject to
compliance with the provisions of Article IX, any Stockholder may assign all or
any part of its rights and obligations hereunder to an Affiliate or to any
transferee (provided such assignment shall not relieve it of its obligations
hereunder). This Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties hereto and their respective successors, heirs,
legatees and assigns. The assignment by any Stockholder on a nonexclusive basis
of any rights under this Agreement to any transferee of Voting Securities
acquired hereunder shall not affect or diminish
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the rights or obligations of such Stockholder under this Agreement.
10.2 Consent to Jurisdiction. The parties hereto and each other
Stockholder irrevocably submits to the exclusive jurisdiction of (i) the Supreme
Court of the State of New York, New York County, and (ii) the United States
District Court for the Southern District of New York for the purposes of any
suit, action or other proceeding arising out of this Agreement or any
transaction contemplated hereby or thereby.
10.3 Amendments; Waivers. No amendment to this Agreement shall be
effective unless it shall be in writing and signed by the parties hereto and any
other Stockholders of SVGL. Any failure of a Person to comply with any
obligation, covenant, agreement or condition contained in this Agreement may be
waived by the Person entitled to the benefits thereof only by a written
instrument signed by the Person granting such waiver, but such waiver or failure
to insist upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure of compliance. The rights and remedies of each of
the parties hereto and any other Stockholders of SVGL hereunder are cumulative
and are not exclusive of any rights or remedies such Person would otherwise
have.
10.4 Notices; Consents and Approvals.
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(a) All notices and other communications hereunder shall be in
writing and shall be deemed given when delivered personally or three days after
being mailed by registered or certified mail (return receipt requested), postage
prepaid, to the parties at the following addresses (or at such other address for
a Person as shall be specified by like notice to the parties hereto and nay
other Stockholders of SVGL):
(i) if to IBM,
International Business Machines Corporation
Microelectronics Division
P.O. Box 1580
Hopewell Junction, NY 12533
Attention: M. J. Attardo
General Manager
with copy to:
International Business Machines Corporation
Microelectronics Division
P.O. Box 1580
Hopewell Junction, NY 12533
Attention: John T. Higgins
Associate General Counsel
(ii) if to SVGL,
SVG Lithography, Inc.
77 Danbury Road
Wilton, Connecticut 06897
Attention: President
with copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
Attention: Larry W. Sonsini
(iii) if to SVG,
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Silicon Valley Group, Inc.
101 Metro Drive, Suite 400
San Jose, California 95110
Attention: President
with a copy to:
Wilson Sonsini Goodrich &Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
Attention: Larry W. Sonsini
(b) Any consent or approval required to be obtained hereunder from
any party (or any action that is required hereunder to be acceptable to a party
before it may be undertaken) shall be deemed not to have been given (and such
action shall be deemed not to have been acceptable) unless such consent or
approval or acceptance is evidenced by a writing signed on behalf of such party
by one of the following officers or employees (or such other Person as shall be
specified in a written notice from such party to all other parties):
(i) In the case of IBM:
IBM Microelectronics Division General Manager or any
Vice President
(ii) In the case of SVGL:
The President
(iii)In the case of SVG:
The President or any Vice President Without limiting the
generality of the foregoing, resolutions adopted by the Board of Directors of
SVGL (whether at
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a meeting or by written consent) shall not constitute any such consent or
approval, which consent or approval must be separately obtained.
10.5 Interpretation. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.6 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more such counterparts have been signed by
each of the parties and delivered to the other parties.
10.7 Entire Agreement. This Agreement and the Stock Purchase Agreement
contain the entire agreement and understanding among the parties hereto with
respect to matters covered hereby and supersede all prior agreements and
understandings, written or oral, among the parties with respect to the subject
matter hereof prior to the date hereof, except as specifically set forth in the
Stock Purchase Agreement.
10.8 Severability. If any provision of this Agreement or the application
of any such provision to any person or circumstance shall be held invalid,
illegal or unenforceable in any respect by a court of competent jurisdictions,
such invalidity, illegality or unenforceability shall not affect any other
provision hereof.
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10.9 Governing Law. 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 entirely within such state, without regard
to the conflict of laws principles of such state, except as to matters required
by applicable law to be governed by and construed in accordance with the General
Corporation Law of the State of Delaware.
10.10 Specific Enforcement; Injunctive Relief. The parties and any other
Stockholders of SVGL acknowledge that damages would be an inadequate remedy for
any breach of the provisions of this Agreement. Therefore, the obligations of
the parties and any other Stockholders of SVGL hereunder shall be specifically
enforceable and each of SVGL, SVG and IBM and any other Stockholders of SVGL
agree that each of them shall be entitled to an injunction, restraining order or
other equitable relief from any court of competent jurisdiction, restraining any
party from committing any violations of the provisions of this Agreement.
10.11 Governmental Approval. The period of time provided in this Agreement
for the closing of the purchase of securities by any party shall be extended, at
the option of the purchaser, for a period not to exceed six months beyond the
end of the applicable exercise period, as and if necessary in order to permit
such purchaser to comply with all applicable laws, rules and regulations of any
Governmental Authority provided the
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purchaser uses its reasonable best efforts to obtain such approvals as soon as
practicable. Notwithstanding anything to the contrary herein, such purchaser may
elect not to proceed with such purchase if, in its good faith opinion, such
compliance would be burdensome or unduly expensive.
10.12 SVG Pledge. (a) Notwithstanding anything herein to the contrary, SVG
may pledge all, or any portion of, its right, title and interest in the Common
Stock, Voting Securities or other equity interest in SVGL now owned or hereafter
acquired and, in connection therewith, may assign its right, title and interest
in and to this Agreement and/or the Stock Purchase Agreement (collectively, the
"Collateral") to any commercial bank lender of group of lenders to SVG
(individually and collectively, a "Lender"), to secure (along with a security
interest in substantially all of SVG's other assets) SVG's obligations under a
loan agreement (the "Loan Agreement") between SVG and any such Lender, provided,
however, that any such Lender shall agree in a writing in substantially the form
attached hereto as Exhibit A that (i) the Lender's respective rights in the
Collateral (and those of any subsequent transferee of the Collateral) shall be
subject to all of the rights and obligations of the Stockholders under this
Stockholders Agreement, except that the Lender (or such transferee) shall have
no obligation to make any payment required by this Agreement or to purchase any
further interest in
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SVGL, (ii) the Lender will take action to foreclose its interest in the
Collateral only concurrently with or subsequent to other action to generally
foreclose upon other collateral held by the Lender securing the Loan Agreement
(i.e., concurrently with or subsequent to actions such as foreclosure upon the
share of other Subsidiaries of SVG or its successor, providing notices to the
obligors on accounts receivable to make payments directly to the Lender,
institution of proceedings to foreclose on equipment, providing notices to
bailees of cash equivalent accounts to hold funds, and the like), except to the
extent that so to do would, in the Lender's reasonable judgment, impair or
threaten to impair the Lender's interest in any material item of Collateral as a
result of any legal consequences arising from the order in which the Collateral
shall be realized upon (iii) all votes to be taken by the Stockholders following
the Lender's acquisition of voting power with respect to the Collateral shall be
required to be unanimous among the Stockholders before the subject action shall
be deemed approved except that the Lender will be entitled to elect one director
to SVGL's board of directors, such nominee to be subject to the prior written
consent of IBM, which consent shall not be unreasonably withheld, (iv) if the
Lender shall, upon any default, propose to retain the Collateral in satisfaction
of the obligations secured thereby or determine to purchase the Collateral at
any public or private sale or
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otherwise acquires the Collateral, such retention, purchase or other acquisition
and any subsequent disposition by such Lender shall not be subject to the
provisions of Article III for a period of five years from the date such Lender
so acquires the Collateral, (v) the Lender agrees to grant IBM the option
(exercisable by IBM by written notice to the Lender and all Stockholders) to
purchase for cash (without recourse to the transferor) all but not less than all
of the Collateral acquired by the Lender in any foreclosure or otherwise, at any
time and from time to time following such acquisition, the purchase price for
the purchase of such Collateral being the appraised value determined in
accordance with Section 4.1 of this Agreement as if an SVG Change in Control had
occurred, except that the Lender shall act in the stead of SVG for purposes of
selecting the investment banking firm referred to therein, the closing of such
purchase to take place within 15 days following such determination (subject to
10.11 hereof), and if any such notice exercising such option shall be given by
IBM, then the other shall have 30 days (and no more than 30 days) from receipt
of such notice by the party exercising such option, to exercise its option to
purchase the Collateral hereunder and the pro rata share to be purchase by IBM
in such event shall be determined pursuant to Section 3.3 hereof, (vi) the
Lender shall agree to a confidentiality agreement pertaining to SVGL
substantially in the
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form furnished by SVG to the other parties hereto concurrently herewith and each
Lender shall also agree that it will not transfer any interest in the Collateral
(whether by sale, participation or otherwise) to any other Person who shall not
have entered into such a confidentiality agreement and (vii) the Lender shall
not have access to any information which in the reasonable judgment of the SVGL
or IBM is proprietary technological or other nonfinancial operation information
of SVGL or IBM. The agent acting on behalf of the Lender with respect to the
Collateral shall at all times not be a Competitor of IBM (determined without
reference to the last proviso of the definition of such term).
(b) IBM agrees that (i) the pledge by SVG to any Lender of the
Collateral pursuant to the terms hereof and (ii) the retention, purchase or
other acquisition by any Lender (but no other Person) of any of the Collateral
foreclosed upon by any Lender and (iii) the subsequent disposition by the Lender
of any of the Collateral to another Person in a transaction in which IBM has
been afforded by the Lender a right of first refusal to purchase such
Collateral, but has not elected to purchase the same, shall not, by virtue of
(X) such foreclosure or (Y) any Lender or any other such Person so obtaining
beneficial ownership of such Collateral, give rise to the right of IBM to
terminate the Environmental Matters Agreement. The right of first refusal
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described in the preceding sentence shall be effected by a written notice from
the Lender to IBM specifying the identity of the proposed purchaser of the
Collateral and the price and other material terms on which the Lender proposes
to sell or transfer such Collateral, after receipt of which notice IBM shall
have 30 days to elect, by written notice to the Lender, to purchase all, but not
less than all, of such Collateral at the price and on the terms described in
such notice from the Lender, the closing of such purchase to occur within 15
days of the Lender's receipt of IBM's notice of election to purchase such
Collateral, subject to the provisions of Section 10.11 hereof. In the event that
IBM shall fail to deliver such a written notice to the Lender within such 30 day
period, or, if IBM has delivered such notice, but shall fail to tender the
required purchase price for the Collateral within such 15 day period, subject to
Section 10.11 hereof, then the Lender shall be fee to sell the Collateral in the
transaction described in the original notice from the Lender. This Section
10.12(b), however, shall not affect or diminish IBM's other rights or remedies
under any other agreement or otherwise or, except as set forth in the preceding
sentence, limit or act as a waiver of IBM's rights or remedies under any other
agreement or otherwise, nor shall it affect IBM's rights under this Agreement
with respect to any Collateral which shall be transferred by any Lender to
another Person.
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(c) SVG consents to the grant of the option by any Lender
contemplated to be granted pursuant to Section 10.12(a) and the purchase price
for the Collateral contemplated thereby.
(d) Each Stockholder agrees that the provisions of Article III shall
not apply to the grant of the option by any Lender referred to in Section
10.12(a) or to the exercise by IBM of its or their rights in respect thereof.
IN WITNESS WHEREOF, the parties have caused this Stockholders
Agreement to be duly executed as of the date first written above.
INTERNATIONAL BUSINESS MACHINES
CORPORATION
By: /s/ Patrick J. Glennon
---------------------------------
Patrick J. Glennon
Manager of Business Alliance and
Headquarter Operations
March 18, 1997
SVG LITHOGRAPHY, INC.
By: /s/ Russell G. Weinstock
---------------------------------
Russell G. Weinstock
Vice President and Chief
Financial Officer
March 18, 1997
SILICON VALLEY GROUP, Inc.
By: /s/ Russell G. Weinstock
---------------------------------
Russell G. Weinstock
Vice President and Chief
Financial Officer
March 18, 1997
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Exhibit A
LETTER AGREEMENT
FROM: [LENDER]
TO: International Business Machines Corporation
RE: Stockholders Agreement dated as of March __, 1990 (the "Stockholders
Agreement"), among SVG Lithography, Inc. (the "Company"), Silicon
Valley Group, Inc. ("SVG"), and International Business Machines
Corporation ("IBM"). Capitalized terms used herein and not defined
herein have the meanings assigned in the Stockholders Agreement.
DATE: ________________
Dear Sirs:
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We hereby agree with IBM as follows:
1. We agree that our interest in the Collateral shall be subject to the
terms and provisions of Paragraph 10.12(a) of the Stockholders Agreement, which
are, mutatis mutandis, hereby incorporated herein by reference.
2. We hereby confirm the grant to IBM of the option in respect of the
Collateral described in Paragraph 10.12(a) of the Stockholders Agreement.
3. We agree, effective upon our acquisition of ownership of the Collateral
pursuant to a foreclosure or otherwise of all or any part of the Collateral, to
be bound by, and that the ownership of such Collateral shall be subject to, all
the terms and conditions of the Stockholders Agreement applicable to a
Stockholder generally, but in no event shall we have any obligation to make any
payment required by the Agreement or to purchase any further interest in the
Company.
4. All notices and communications under this Letter Agreement shall be in
writing, mailed by registered or certified mail (return receipt requested),
postage prepaid to the party at its address (or at such other addresses as shall
be specified in a like notice to the other party) set forth below its signature.
5. The provisions of Sections 10.7, 10.8, 10.9 and 10.10 of the
Stockholders Agreement are, mutatis mutandis, hereby incorporated herein by
reference.
IBM Confidential
53
<PAGE> 54
Very truly yours,
[LENDER]
By:_____________________
Title:
Address:
Accepted and Agreed as of
the date first above written:
INTERNATIONAL BUSINESS MACHINES
CORPORATION
By:____________________________
Title:
Address:
54
<PAGE> 1
AGREEMENT FOR PAYMENT IN CONNECTION WITH DEVELOPMENT AGREEMENT
REFERENCE: Development Agreement ("Development Agreement") between International
Business Machines Corporation and SVG Lithography, Inc. dated May 15, 1990.
Agreement between International Business Machines Corporation and SVG
Lithography Systems, Inc. for the development, production and purchase of
nineteen (19) Micrascan I tools dated ("Purchase Agreement") May 15, 1990.
Whereas the Development Agreement requires certain payments by SVG Lithography,
Inc. ("SVGL") to International Business Machines Corporation ("IBM") in
connection with the IBM development funding as provided for in detail in Section
10 and Attachment D of such Agreement, and
Whereas SVGL and IBM ("the Parties") desire to settle such obligation at this
time.
Now therefore, the Parties agree that in consideration for (i) the payment by
SVGL to IBM of $5,000,000.00 (five million dollars) by wire transfer upon the
execution of this Agreement to the financial institution ("Financial
Institution") specified below which specification shall be deemed to amend pro
tanto Section 17 of the Development Agreement (ii) and the application by SVGL
of the below specified credit against IBM purchases from SVGL, and (iii) the
delivery of a number of shares of SVG Common Stock equal to $10,000,000 (ten
million dollars) divided by the average closing price of SVG Common Stock as
reported in the Wall Street Journal for the five (5) trading days preceding the
date hereof (which stock transfer shall be pursuant to the Stock Purchase and
Registration Rights Agreement by and between the parties), all of which SVGL and
Silicon Valley Group, Inc. ("SVG") agree hereby to do, SVGL's payment obligation
in connection with the aforementioned development funding has been settled in
full by SVGL with IBM and that the term of the Development Agreement has ended
pursuant to Section 11.1 thereof, subject to the survival of provisions of the
Development Agreement which have a longer period through the end of such
1
<PAGE> 2
longer period. Notwithstanding the foregoing provision regarding survival,
Section 11.5 of the Development Agreement shall not survive the execution of
this Agreement. Similarly, the term of the Purchase Agreement shall be hereby
adjusted by making Section 28 (Term) of such Agreement read a date even with the
date upon which the term of the Development Agreement ends as provided for
above. The aforementioned credit against IBM purchases from SVGL agreed to
hereby is a credit from SVGL of $23,000,000.00 (twenty three million dollars)
which IBM may, at IBM's option, utilize as a deduction from the price of any and
all products or services that (i) IBM has purchased for which payment has not
been made by IBM to SVGL at the time of execution of this Agreement, or (ii) IBM
will purchase in the future from SVGL. Such credit shall not be assignable by
IBM. The foregoing credit may be applied by IBM in any amount up to 100% (one
hundred percent) of the purchase price of any and all such SVGL products or
services until said credit is exhausted. SVGL shall have no obligation to refund
to IBM any of the foregoing unused credit.
Financial Institution:
Chase Manhattan Bank
4 New York Plaza, 15th Floor
New York, NY 10004
IBM Concentration Account
Account #323-213499
ABA Routing #021000021
Chemical Bank Contact: Ms. Joyce Leary-Bates
(212) 552-5684
Each party represents and warrants that it has full right and authority to enter
into this Agreement.
This Agreement will not be binding upon the parties until it has been signed by
or on behalf of each party, in which event, it shall be effective as of the date
last below written. No amendment or modification hereof shall be valid or
binding upon the parties unless made in writing and signed as aforesaid. This
Agreement represents the entire agreement between the parties
2
<PAGE> 3
regarding the subject matter hereof and shall supersede all previous
communications, representations, understandings and agreements, whether oral or
written, by or between the Parties or any officers or representatives thereof
with respect to the subject matter of this Agreement.
This Agreement may be executed in one or more counterparts, all of which shall
be considered one and the same agreement, and shall become effective when one or
more such counterparts have been signed by each of the parties and delivered to
the other parties.
ACCEPTED AND AGREED:
INTERNATIONAL BUSINESS MACHINES CORPORATION:
By: /s/ Patrick J. Glennon
----------------------------
Patrick J. Glennon
Manager of Business Alliance and Headquarter Operations
March 18, 1997
SILICON VALLEY GROUP, INC.
By: /s/ Russell G. Weinstock
----------------------------
Russell G. Weinstock
Vice President and Chief Financial Officer
March 18, 1997
SVG LITHOGRAPHY, INC.
By: /s/ Russell G. Weinstock
----------------------------
Russell G. Weinstock
Vice President and Chief Financial Officer
March 18, 1997
3
