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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
Date of Report (Date of earliest event reported) November 15, 1996
-------------------------------
Plasma & Materials Technologies, Inc.
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(Exact name of registrant as specified in its charter)
California 0-26482 95-4054321
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(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
9255 Deering Avenue, Chatsworth, California 91311
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (818) 886-8000
----------------------------
Not applicable
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
(a) On November 15, 1996 (the "Closing Date"), Plasma & Materials
Technologies, Inc. ("PMT" or the "Company") completed the acquisition (the
"Acquisition") of 100% of the outstanding capital stock of Electrotech Limited
("ET") and Electrotech Equipments Limited ("ETE" and, collectively with ET,
"Electrotech") and, directly or indirectly, each subsidiary thereof, pursuant to
that certain Share Purchase Agreement dated as of July 17, 1996, as amended (the
"Share Purchase Agreement"), among PMT, Electrotech, Christopher D. Dobson
("Dobson") and the other shareholders of Electrotech (collectively with Dobson,
the "Electrotech Shareholders"). Following the Acquisition, each of ET and ETE
became a wholly-owned subsidiary of PMT.
The consideration paid by PMT on the Closing Date consisted of (i)
cash payments of (A) $72,100,254 to the Electrotech Shareholders for
distribution in accordance with the terms of the Share Purchase Agreement, (B)
$1,102,000 to Nigel Wheeler, the Chief Executive Officer of Electrotech, in full
payment of the Wheeler Bonus, as defined in Section 6.13(b) of the Share
Purchase Agreement, (C) $1,047,746 to Electrotech to fully fund the payment of
the Employee Bonus Amount, as defined in Section 6.13(a) of the Share Purchase
Agreement, (D) $500,000 to Mr. Dobson in full payment of the Non-Competition
Fee, as defined in Section 6.13 of the Share Purchase Agreement, and (E)
$250,000 to ETE in full payment of the purchase by PMT of all outstanding shares
of Energy Transfer Systems, Inc., a Delaware corporation and wholly-owned
subsidiary of ETE, and (ii) 5,600,000 shares of the Company's Common Stock, no
par value per share (the "Common Stock"), to the Electrotech Shareholders. On
the Closing Date, the closing sales price of the Common Stock on the Nasdaq
Stock Market was $13.375. As such, on the Closing Date the aggregate purchase
price paid by PMT for Electrotech equalled $149,900,000.
The parties arrived at the purchase price through extensive arm's
length negotiations of the Share Purchase Agreement. Additionally, each party
relied on its financial advisor to assist in the negotiation of the purchase
price. In that regard, PMT received the written opinion of its financial
advisor, Salomon Brothers Inc ("Salomon"), dated July 5, 1996, to the effect
that, as of such date and based upon and subject to the matters described
therein, the Acquisition was fair to PMT and its shareholders from a financial
point of view.
On October 7, 1996 the Company issued and sold $86,250,000 of its
7 1/8 % Convertible Notes Due 2001 (the "Convertible Notes") in a private
offering. A portion of the net proceeds from the issuance and sale of
Convertible Notes were used by the Company to pay the cash portion of the
purchase price paid to the Electrotech Shareholders in the Acquisition, as
described above. The Convertible Notes were issued pursuant to that certain
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Indenture dated as of October 7, 1996 between the Company and U.S. Trust Company
of California, N.A., as trustee ("U.S. Trust").
Prior to the Agreement, there was no material relationship between
either Electrotech, including its officers, directors and affiliates, or the
Electrotech Shareholders and the Company, including its officers, directors and
affiliates.
(b) At the time of the Acquisition, ET, ETE and their subsidiaries
were engaged in the business of developing, marketing and servicing
semiconductor fabrication equipment for the worldwide semiconductor
manufacturing industry. The Company presently intends to have ET, ETE and their
subsidiaries continue to engage in such business.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
The financial statements of Electrotech called for by Rule 3.05 of
Regulation S-X under the Securities Exchange Act of 1934, as amended, have been
previously filed by the Company with the Securities and Exchange Commission (the
"Commission") and can be found in the Company's Proxy Statement dated September
11, 1996 (the "Proxy Statement"), as supplemented on October 1, 1996 (the "Proxy
Supplement"). Such financial statements, which can be found at pages F-18
through F-36 of the Proxy Statement, are hereby incorporated by reference into
this Current Report on Form 8-K.
(b) PRO FORMA FINANCIAL INFORMATION.
The pro forma financial information required pursuant to Article 11 of
Regulation S-X have been previously filed by the Company with the Commission.
Such pro forma financial information can be found at pages 2 through 6 of the
Proxy Supplement and are hereby incorporated by reference into this Current
Report on Form 8-K.
(c) EXHIBITS.
1.1 Purchase Agreement dated as of October 7, 1996 among the Company,
Salomon and Unterberg Harris (collectively, the "Initial Purchasers").
2.1 Share Purchase Agreement dated July 17, 1996 (the "Share Purchase
Agreement") among PMT, Electrotech and the Electrotech Shareholders.
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2.2 Amendment No. 1 to Share Purchase Agreement dated as of
September 9, 1996.
2.3 Amendment No. 2 to Share Purchase Agreement dated as of October
16, 1996.
2.4 Amendment No. 3 to Share Purchase Agreement dated November 14,
1996.
4.1 Indenture dated as of October 7, 1996 between the Company and
U.S. Trust.
10.20 Registration Agreement dated as of October 7, 1996 between the
Company and the Initial Purchasers.
10.21 Employment Agreement dated November 15, 1996 between PMT and
Nigel Wheeler.
10.22 Registration Agreement dated November 15, 1996 between PMT and
Christopher D. Dobson.
ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S.
In connection with the Acquisition, as further described in Item 2(a)
above, on the Closing Date the Company issued an aggregate of 5,600,000 shares
of Common Stock to the Electrotech Shareholders pursuant to Regulation S
("Regulation S") under the Securities Act of 1933, as amended (the "'33 Act").
Such shares constituted approximately 50% of the aggregate consideration paid by
PMT in the Acquisition. Pursuant to Section 3.6 of the Share Purchase
Agreement, each of the Electrotech Shareholders made a number of representations
and covenants to the Company concerning Regulation S. Each Electrotech
Shareholder represented to PMT, that, among other things, such shareholder is
not a "U.S. person" and was not acquiring shares of Common Stock for the benefit
of any "U.S. person." With respect to the issuance of the 5,600,000 shares of
Common Stock referred to above, the Company relied on the representations and
covenants of the Electrotech Shareholders contained in Section 3.6 of the Share
Purchase Agreement in determining that Regulation S was available as an
exemption from the registration requirements of the '33 Act.
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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.
Date: November 26, 1996
PLASMA & MATERIALS TECHNOLOGIES, INC.
By: /s/ John W. LaValle
--------------------------------
John W. LaValle
Vice President, Chief Financial Officer
and Secretary
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
Number Description Number
- ------- ----------- ------
<S> <C> <C>
1.1 Purchase Agreement dated as of October 7, 1996 among the
Company, Salomon and Unterberg Harris (collectively, the
"Initial Purchasers")
2.1 Share Purchase Agreement dated July 17, 1996 (the "Share
Purchase Agreement") among PMT, Electrotech and the
Electrotech Shareholders
2.2 Amendment No. 1 to Share Purchase Agreement dated as of
September 9, 1996
2.3 Amendment No. 2 to Share Purchase Agreement dated as of
October 16, 1996
2.4 Amendment No. 3 to Share Purchase Agreement dated as of
November 14, 1996
4.1 Indenture dated as of October 7, 1996 between the Company and
U.S. Trust
10.20 Registration Agreement dated as of October 7, 1996 between the
Company and the Initial Purchasers
10.21 Employment Agreement dated as of November 15, 1996 between
PMT and Nigel Wheeler
10.22 Registration Agreement dated as of November 15, 1996 between
PMT and Christopher D. Dobson
</TABLE>
<PAGE>
EXHIBIT 1.1
PLASMA & MATERIALS TECHNOLOGIES, INC.
$75,000,000
7-1/8% Convertible Subordinated Notes Due 2001
PURCHASE AGREEMENT
New York, New York
October 1, 1996
Salomon Brothers Inc
Unterberg Harris
c/o Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Dear Sirs:
Plasma & Materials Technologies, Inc., a California corporation (the
"Company" or "PMT"), proposes to issue and sell to the parties named in Schedule
I hereto (the "Purchasers"), $75,000,000 principal amount of its 7-1/8%
Convertible Subordinated Notes due 2001 (the "Firm Securities"). The Securities
will be convertible into shares of Common Stock, no par value per share (the
"Common Stock"), of the Company at the conversion price set forth herein. The
Company also proposes to grant to you an option to purchase up to $11,250,000
additional principal amount of such Notes to cover over-allotments, if any (the
"Option Securities" and, together with the Firm Securities, the "Securities").
The Securities are to be issued under an indenture (the "Indenture") to be dated
as of October 7, 1996, between the Company and U.S. Trust Company of California,
N.A., as trustee (the "Trustee").
The sale of the Securities to you will be made without registration of
the Securities or the Common Stock issuable upon conversion thereof under the
Securities Act of 1933, as amended (the "Act"), in reliance upon the exemption
from the registration requirements of the Act provided by Section 4(2) thereof.
You have advised the Company that you will make an offering of the Securities
purchased by you hereunder in accordance with Section 4 hereof on the terms set
forth in the Final Memorandum (as defined below), as soon as you deem advisable
after this Agreement has been executed and delivered.
In connection with the sale of the Securities, the Company has
prepared a preliminary offering memorandum, dated September 13, 1996 (the
"Preliminary Memorandum"), and a final offering memorandum, dated October 1,
1996 (the "Final Memorandum"). The Company has also prepared a final proxy
statement dated September 11, 1996, and supplement dated October 1, 1996 (the
"Final Proxy Statement"), to be delivered to
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its shareholders in order to obtain shareholder approval of the Company's
acquisition of Electrotech Limited and Electrotech Equipments Limited
(collectively, "Electrotech") pursuant to the Share Purchase Agreement dated
July 17, 1996, as amended ("Share Purchase Agreement") among the Company,
Electrotech and the shareholders named therein, as well as certain other matters
described therein. Each of the Preliminary Memorandum and the Final Memorandum
sets forth certain information concerning the Company, the Securities and the
Common Stock issuable upon conversion thereof. The Company hereby confirms that
it has authorized the use of the Preliminary Memorandum and the Final Memorandum
in connection with the offering and resale by the Purchasers of the Securities.
Any references herein to the Preliminary Memorandum and the Final Memorandum
shall be deemed to include all exhibits thereto and all documents incorporated
by reference therein that were filed under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), on or before the date and time that this
Agreement is executed and delivered by the parties hereto (the "Execution
Time"), including but not limited to the Final Proxy Statement; and any
reference herein to the terms "amend", "amendment" or "supplement" with respect
to the Final Memorandum shall be deemed to refer to and include the filing of
any document under the Exchange Act after the Execution Time that is
incorporated by reference therein.
The holders of the Securities or the Common Stock issuable upon
conversion thereof will be entitled to the benefits of the Registration
Agreement to be dated October 7, 1996, between the Company and the Purchasers
(the "Registration Agreement").
1. Representations and Warranties. The Company represents and
------------------------------
warrants to, and agrees with, each Purchaser as set forth below in this Section
1.
(a) Each of the Preliminary Memorandum and the Final Memorandum as of
its respective date did not, and the Final Memorandum (as the same may have
been amended or supplemented) as of the Closing Date will not, contain any
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the
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Company makes no representations or warranties as to the information
contained in or omitted from the Preliminary Memorandum or the Final
Memorandum in reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of the Purchasers specifically for
inclusion in the Preliminary Memorandum or the Final Memorandum (or any
amendment or supplement thereof or thereto). All documents incorporated by
reference in the Preliminary Memorandum or the Final Memorandum that were
filed under the Exchange Act on or before the Execution Time complied, and
all such documents that are filed under the Exchange Act after the
Execution Time and on or before the Closing Date will
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comply, in all material respects with the applicable requirements of the
Exchange Act and the rules thereunder.
(b) The Company has not taken and will not take, directly or
indirectly, any action prohibited by Rule 10b-6 under the Exchange Act in
connection with the offering of the Securities.
(c) Neither the Company nor any affiliate (as defined in Rule 501(b)
of Regulation D under the Act ("Regulation D")) of the Company has
directly, or through any agent, (i) sold, offered for sale, solicited
offers to buy or otherwise negotiated in respect of, any security (as
defined in the Act) that is currently or will be integrated with the sale
of the Securities in a manner that would require the registration of the
Securities or the Common Stock issuable upon conversion thereof under the
Act or (ii) engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D) in connection with the
offering of the Securities.
(d) Assuming compliance by the Purchasers with their representations,
warranties and agreements set forth in Section 4 hereof and provided that
the Securities are otherwise offered and sold by the Purchasers in the
manner contemplated by this Agreement and the Final Memorandum, except as
contemplated by the Registration Agreement, it is not necessary in
connection with the offer, sale and delivery of the Securities in the
manner contemplated by this Agreement and the Final Memorandum to register
the Securities under the Act or to qualify the Indenture under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act").
(e) None of the Company, its affiliates or any person acting on
behalf of the Company or its affiliates has engaged in any directed selling
efforts (as that term is defined in Regulation S under the Act ("Regulation
S")) with respect to the Securities, and the Company and its affiliates and
any person acting on its or their behalf have complied with the offering
restrictions requirement of Regulation S with respect to the offering of
the Securities.
(f) The Company is subject to the reporting requirements of Section
13 or Section 15(d) of the Exchange Act.
(g) The Securities satisfy the eligibility requirements set forth in
Rule 144A(d)(3) under the Act.
(h) The Company has agreed to permit the Securities to be designated
PORTAL eligible securities, will pay the requisite fees related thereto and
has provided all necessary information to the National Association of
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Securities Dealers, Inc. in order to ensure that the Securities are
designated PORTAL eligible securities.
(i) The Company is not an "investment company" within the meaning of
the Investment Company Act of 1940, as amended (the "Investment Company
Act"), without taking account of any exemption arising out of the number of
holders of the Company's securities.
(j) The Company has not paid or agreed to pay to any person any
compensation for soliciting another to purchase any securities of the
Company (except as contemplated by this Agreement).
(k) The information provided by the Company pursuant to Section 5(h)
hereof will not, at the date thereof, contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(l) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of California,
with full corporate power and authority to own its properties and conduct
its business as described in the Final Memorandum, and is duly qualified to
do business as a foreign corporation and is in good standing under the laws
of each jurisdiction which requires such qualification wherein it owns or
leases properties or conducts business, and in which the failure to be so
qualified would, in the aggregate in all such cases, have a material
adverse effect on the business, condition (financial or otherwise), results
of operation, operations or prospects of the Company and its subsidiaries
on a consolidated basis (a "Material Adverse Effect").
(m) The Company's authorized equity capitalization is as set forth in
the Final Memorandum; the capital stock of the Company conforms to the
description thereof contained in the Final Memorandum; the outstanding
shares of Common Stock have been duly authorized and validly issued and are
fully paid and nonassessable; the Securities being sold hereunder have been
duly and validly authorized and, when validly authenticated, issued and
delivered in accordance with the Indenture and paid for by the Purchasers
pursuant to this Agreement, will be validly issued and outstanding
obligations enforceable in accordance with their terms and entitled to the
benefits of the Indenture. Upon delivery of the Securities pursuant to
this Agreement and payment therefor as contemplated herein, the Purchasers
will acquire good and marketable title to the Securities, free and clear of
any liens, claims, encumbrances, and security interests ("Liens"),
restriction on transfer (other than those imposed by state or Federal
securities laws) or other defect in title. The appropriate number of
shares of Common Stock
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issuable upon conversion of the Securities has been duly reserved for
issuance, and such shares have been duly and validly authorized, and will
when issued upon conversion of the Securities against delivery thereof, be
validly issued, fully paid and non-assessable. The holders of outstanding
shares of capital stock of the Company are not entitled to any preemptive
right or other similar rights to subscribe for the Securities or the shares
of Common Stock issuable upon conversion thereof.
(n) Except as described in the Final Memorandum, there are no
outstanding options, warrants or other rights calling for the issuance of,
and no commitments, plans or arrangements to issue, any shares of capital
stock of the Company or any security convertible into or exchangeable or
exercisable for capital stock of the Company; except as described in the
Final Memorandum, there is no holder of any securities of the Company or
any other person who has the right, contractual or otherwise, to cause the
Company to sell or otherwise issue to them, or to permit them to underwrite
the sale of, any of the Securities or the right to have any Common Stock or
other securities of the Company included in the offering.
(o) There is no pending or threatened action, suit or proceeding
before any court or governmental agency, authority or body or any
arbitrator involving the Company or any of its subsidiaries of a character
which would have a Material Adverse Effect which is not adequately
disclosed in the Final Memorandum. The descriptions in the Final
Memorandum of statutes, regulations, contracts, franchises, other
documents, and pending or threatened actions, suits or proceedings before
any court or arbitrator, or brought by any governmental agency, authority
or body are accurate in all material respects and fairly summarize the
matters therein described.
(p) The consolidated financial statements of the Company and its
consolidated subsidiaries, together with related schedules and notes,
included in the Final Memorandum present fairly the consolidated financial
position and the consolidated results of operations and cash flows of the
Company and its consolidated subsidiaries for the periods or at the dates
therein specified; the combined financial statements of Electrotech,
together with related schedules and notes, present fairly the combined
profit and loss accounts, combined statements of total recognized gains and
losses and combined balance sheets of Electrotech for the periods or at the
dates therein specified; such consolidated and combined financial
statements and related schedules and notes have been prepared in conformity
with generally accepted accounting principles, consistently applied
throughout the periods involved except as otherwise noted in such financial
statements; and the other financial data concerning the Company and its
subsidiaries and
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Electrotech set forth in the Final Memorandum (and any amendment or
supplement thereto) are accurately presented and were derived from such
financial statements and the books and records of the Company or
Electrotech, as the case may be. The pro forma consolidated financial
statements and other pro forma financial information included or
incorporated in the Final Memorandum present fairly the information shown
therein, have been prepared in accordance with the Commission's rules and
guidelines with respect to pro forma financial statements, have been
properly compiled on the pro forma bases described therein, and the
assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions
or circumstances referred to therein. Ernst & Young LLP are independent
public accountants under the Act and the Exchange Act and the related
published rules and regulations thereunder.
(q) Neither the Company nor any of its subsidiaries is in violation
of its articles of incorporation or bylaws, or other organizational
documents, or in violation in any material respect of any law, ordinance,
administrative or governmental rule or regulation applicable to the Company
or its subsidiaries, or in violation of any decree of any court or
governmental agency or body having jurisdiction over the Company or its
subsidiaries, or in default in any material respect in the performance of
any obligation, agreement or condition contained in any bond, debenture,
note or any other evidence of indebtedness or in any material agreement,
indenture, lease or other instrument to which the Company or its
subsidiaries are a party or by which it or any of their properties may be
bound.
(r) The Company and each of its subsidiaries has such permits,
licenses, franchises and authorizations of governmental or regulatory
authorities ("permits") as are necessary to own their properties and to
conduct their business in the manner described in the Final Memorandum,
except where the failure so to have would not, in all such cases in the
aggregate, result in a Material Adverse Effect; the Company and each
subsidiary has fulfilled and performed all of their material obligations
with respect to such permits and no event has occurred which allows, or
after notice or lapse of time would allow, revocation or termination
thereof or results in any other material impairment of the rights of the
holder of any such permit; and none of such permits contains any
restriction that is materially burdensome to the Company or its
subsidiaries in conducting its or their business as described in the Final
Memorandum.
(s) Subsequent to the respective dates of which information is given
in the Final Memorandum, there has not been (1) any material adverse change
in the condition (financial or otherwise), earnings, operations, business
or
6
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business prospects of the Company, (2) any transaction that is material to
the Company, except transactions entered into in the ordinary course of
business, (3) any obligation, direct or contingent, that is material to the
Company incurred by the Company, except obligations incurred in the
ordinary course of business, (4) any change in the capital stock or
outstanding indebtedness of the Company that is material to the Company,
(5) any dividend or distribution of any kind declared, paid or made on the
capital stock of the Company or (6) any loss or damage (whether or not
insured) to the property of the Company which has been sustained or will
have been sustained which has a Material Adverse Effect.
(t) Except as set forth in the Final Memorandum, (1) the Company has
good and marketable title to all properties and assets described in the
Final Memorandum as owned by it, free and clear of any pledge, lien,
security interest, encumbrance, claim or equitable interest, other than
such as would not have a Material Adverse Effect, (2) the agreements to
which the Company is a party described in the Final Memorandum are valid
agreements, enforceable by the Company and its subsidiaries (as
applicable), except as the enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally or by general
equitable principles or with respect to which any unenforceability would
not have a Material Adverse Effect and, to the Company's knowledge, the
other contracting party or parties thereto are not in material breach or
material default under any of such agreements, and (3) the Company has
valid and enforceable leases for all properties described in the Final
Memorandum as leased by it, except as the enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors' rights generally or
by general equitable principles or with respect to which any
unenforceability would not have a Material Adverse Effect. Except as set
forth in the Final Memorandum, the Company owns or leases all such
properties as are necessary to its operations as now conducted or as
proposed to be conducted.
(u) The Company and its subsidiaries have filed all material federal,
state, local, and foreign tax returns required to be filed, which returns
are true and correct in all material respects, and the Company and its
subsidiaries are not in default in the payment of any taxes which were
payable pursuant to said returns or any assessments with respect thereto,
except where either (i) the amount of such unpaid taxes is not in excess of
the amount reserved therefor, or (ii) the Company is contesting such
default in good faith through appropriate proceedings.
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(v) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that: (i) transactions are
executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii)
access to assets is permitted only in accordance with management's general
or specific authorizations; and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(w) The Company and its subsidiaries own or possess adequate licenses
or other rights to use all patents, trademarks, trademark registrations,
service marks, service mark registrations, trade names, copyrights,
licenses, inventions, trade secrets, and know-how or other similar rights
("Intellectual Property") described in the Final Memorandum as being owned
or possessed by them, or necessary for the conduct of its business as
described in the Final Memorandum; the Company has not infringed, is not
now infringing, and its business as presently conducted and as proposed to
be conducted will not cause it to infringe, any Intellectual Property
belonging to any other person, which infringement or infringements, either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect; the Company has not received any claim or notice
of infringement or potential infringement of any Intellectual Property of
any other person which could reasonably be expected to have a Material
Adverse Effect; and neither the Company nor any of its subsidiaries has any
claim against a third party with respect to the infringement by such third
party of Intellectual Property of the Company or any such subsidiary
material to the business or prospects of the Company and its subsidiaries
considered as a whole. To the Company's knowledge, the Company is not
using any confidential information or trade secrets of any former employer
of any past or present employees.
(x) Neither the Company nor any of its subsidiaries is involved in
any labor dispute with any union or group of employees nor, to the
knowledge of the Company, is any dispute threatened; and the Company is not
aware of any existing or imminent labor disturbance by the employees of any
of its principal suppliers, manufacturers, distributors, licensees or
contractors which might reasonably be expected to result in a Material
Adverse Effect or any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of
the Company.
(y) The Company and its subsidiaries maintain insurance of the types
and in the amounts generally deemed
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adequate for their respective businesses, including, but not limited to,
general liability insurance and insurance covering real and personal
property owned or leased by the Company or any of its subsidiaries against
theft, damage, destruction, acts of vandalism and all other risks
customarily insured against, all of which insurance is in full force and
effect.
(z) This Agreement, the Indenture and the Registration Rights
Agreement have been duly authorized, executed and delivered by the Company
and are valid and binding agreements enforceable against the Company in
accordance with their terms, except to the extent that rights to indemnity
and contribution hereunder may be limited by federal securities law or the
public policy of a state with respect to such matters.
(aa) Neither the issuance and sale of the Securities, the execution,
delivery or performance of this Agreement by the Company nor the
consummation by the Company of the transactions contemplated hereby, except
as contemplated by the Registration Agreement, (i) requires any consent,
approval, authorization or other order of or registration or filing with
any court, regulatory body, administrative agency or other governmental
body, agency or official (assuming compliance by the Purchasers with their
representations, warranties and agreements set forth in Section 4 hereof
and provided that the Securities are otherwise offered and sold by the
Purchasers in the manner contemplated by this Agreement and the Final
Memorandum) (except such as may have been obtained or such as may be
required for compliance with the securities or Blue Sky laws of various
jurisdictions) or conflicts or will conflict with or constitutes or will
constitute a breach of, or a default under, the articles of incorporation
or bylaws of the Company or (ii) conflicts or will conflict with or
constitutes or will constitute a breach of, or a default under, any
agreement, indenture, lease or other instrument to which the Company is a
party or by which it or any of its properties may be bound, or violates or
will violate any statute, law, regulation or filing or judgment,
injunction, order or decree applicable to the Company or any of its
properties, or will result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company pursuant
to the terms of any agreement or instrument to which it is a party or by
which it may be bound or to which any of its property or assets is subject.
(ab) The representations and warranties of the Company contained in
the Share Purchase Agreement are true and correct in all material respects
at and as of the date hereof as if made at and as of such date. The
Company has no reason to believe that such representations and warranties
will not be true and correct as of the consummation of the Acquisition
("Acquisition Closing
9
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Date"), that the representations and warranties of Electrotech contained in
the Share Purchase Agreement are or will be untrue or inaccurate as of the
date hereof and the Acquisition Closing Date, or that any of the conditions
to the obligations of Electrotech or the Company to consummate the
Acquisition will not be satisfied (without waiver) prior to the Acquisition
Closing Date.
2. Purchase and Sale.
-----------------
(a) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company agrees to sell
to the Purchasers, and the Purchasers agree to purchase from the Company,
the Firm Securities at a purchase price of 96.25% of the principal amount
thereof, plus accrued interest, if any, from October 7, 1996, to the
Closing Date (the difference between such amount and 100% of the principal
amount of the Firm Securities shall be referred to as the "Firm Discount");
provided, however, that the Company shall pay, or cause the Trustee to pay,
to the Purchasers the amount of the Discount, together with interest earned
thereon, only upon the release of the Collateral under Section 4.8(c)(i) of
the Indenture. Each such Security will be convertible at the option of the
holder into shares of Common Stock of the Company at a conversion price
$15.635 per share of Common Stock, subject to adjustment as specified in
the Final Memorandum.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company hereby grants
an option (the "Option") to the Purchasers to purchase the Option
Securities at a purchase price of 96.25% of the principal amount thereof,
plus accrued interest, if any, from October 7, 1996, to the settlement date
for the Option Securities (the difference between such amount and 100% of
the principal amount of the Option Securities purchased shall be referred
to as the "Option Discount"); provided, however, that the Company will pay,
or cause the Trustee to pay, to the Purchasers the amount of the Option
Discount, together with interest earned thereon, only upon the release of
the Collateral under Section 4.8(c)(i) of the Indenture. The Option may be
exercised only to cover over-allotments in the sale of the Firm Securities
by the Purchasers. The Option may be exercised in whole or in part at any
time (but not more than once) on or before the 30th day after the date of
the Final Memorandum upon written or telegraphic notice by the Purchasers
to the Company setting forth the principal amount of Option Securities as
to which the Purchasers are exercising the Option and the settlement date
therefor. Delivery of certificates for the Option Securities, and payment
therefor, shall be made as provided in Section 3 hereof.
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<PAGE>
(c) The Purchasers shall notify the Company of the completion of the
sale of the Securities by the Purchasers.
3. Delivery and Payment. Delivery of and payment for the Firm
--------------------
Securities and Option Securities (if the option provided for in Section 2(b)
hereof shall have been exercised on or before the third business day prior to
the Closing Date) shall be made at 10:00 AM, New York City time, on October 7,
1996, or such later date as the Purchasers and the Company shall agree (such
date and time of delivery and payment for the Securities being herein called the
"Closing Date"). Delivery of the Securities shall be made to the Purchasers
against payment by the Purchasers of 100% of the principal amount of the Firm
Securities to or upon the order of the Company by certified or official bank
check or checks drawn on or by a New York Clearing House bank and payable in
next day funds. Delivery of the Securities shall be made at such location as
the Purchasers shall reasonably designate at least one (1) business day in
advance of the Closing Date and payment for the Securities shall be made at the
office of Munger, Tolles & Olson, 355 South Grand Avenue, Los Angeles,
California. Certificates for the Securities shall be registered in such names
and in such denominations as the Purchasers may request not less than three full
business days in advance of the Closing Date.
The Company agrees to have the Securities available for inspection,
checking and packaging by the Purchasers in New York, New York, not later than
1:00 PM on the business day prior to the Closing Date.
If the Option is exercised after the third business day prior to the
Closing Date, the Company will deliver (at the expense of the Company) to the
Purchasers, at Seven World Trade Center, New York, New York, on the date
specified by the Purchasers (which shall be within three business days after
exercise of the Option), certificates for the Option Securities in such names
and denominations as the Purchasers shall have requested against payment of 100%
of the principal amount of the purchased Option Securities to or upon order of
the Company by certified or official bank check or checks drawn on or by a New
York Clearing House bank and payable in next day funds. If settlement for the
Option Securities occurs after the Closing Date, the Company will deliver to the
Purchasers on the settlement date for the Option Securities, and the obligation
of the Purchasers to purchase the Option Securities shall be conditioned upon
receipt of, supplemental opinions, certificates and letters confirming as of
such date the opinions, certificates and letters delivered on the Closing Date
pursuant to Section 6 hereof.
4. Offering of Securities; Restrictions on Transfer.
------------------------------------------------
(a) Each of the Purchasers, severally and not jointly, represents and
warrants to and agrees with the Company that (i) it has not solicited and
will not solicit any offer to buy, and has not offered and will not offer
to sell, the
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<PAGE>
Securities by means of any form of general solicitation or general
advertising (within the meaning of Regulation D) or in any manner involving
a public offering within the meaning of Section 4(2) of the Act or, with
respect to Securities sold in reliance on Regulation S, by means of any
directed selling efforts and (ii) it has solicited and will solicit offers
to buy the Securities only from, and has offered and will offer, sell or
deliver the Securities only to, (A) persons who it reasonably believes to
be qualified institutional buyers (as defined in Rule 144A under the Act)
or, if any such person is buying for one or more institutional accounts for
which such person is acting as fiduciary or agent, only when such person
has represented to it that each such account is a qualified institutional
buyer, to whom notice has been given that such sale or delivery is being
made in reliance on Rule 144A, and, in each case, in transactions under
Rule 144A, (B) persons who it reasonably believes to be institutional
"accredited investors" (as defined in Rule 501(a)(1), (2), (3) or (7) of
Regulation D), and who provide to it a letter in the form of Exhibit A
hereto or (C) persons to whom, and under circumstances which, it reasonably
believes offers and sales of Securities may be made without registration of
the Securities under the Act in reliance upon Regulation S thereunder.
Each of the Purchasers also represents and warrants and agrees that it has
offered and will offer to sell the Securities only to, and has solicited
and will solicit offers to buy the Securities only from, persons that in
purchasing such Securities will be deemed to have represented and agreed as
provided under "Investor Representations and Restrictions on Resale" in
Exhibit B hereto.
(b) Each of the Purchasers represents and warrants to and agrees with
the Company that (i) it has not offered or sold, and will not offer or sell
any Securities to persons in the United Kingdom, except to persons whose
ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or as agent) for the purposes of
their businesses or otherwise in circumstances which have not resulted and
will not result in an offer to the public in the United Kingdom, within the
meaning of the Public Offers of Securities Regulations 1995 (the
"Regulations"), (ii) it has complied and will comply with all applicable
provisions of the Financial Services Act 1986 and the Regulations with
respect to anything done by it in relation to the Securities in, from or
otherwise involving the United Kingdom, and (iii) it has only issued or
passed on and will only issue or pass on to any person in the United
Kingdom any document received by it in connection with the issue of the
Securities if that person is of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order
1996 or is a person to whom such document may otherwise lawfully be issued
or passed on.
12
<PAGE>
5. Agreements. The Company agrees with the Purchasers that:
----------
(a) The Company will furnish to the Purchasers, without charge,
during the period mentioned in paragraph (d) below, as many copies of the
Final Memorandum and any supplements and amendments thereof or thereto as
the Purchasers may reasonably request. The Company will pay the expenses of
printing or other production of all documents relating to the offering.
(b) The Company will not amend or supplement the Final Memorandum,
other than by filing documents under the Exchange Act that are incorporated
by reference therein, without the prior consent of the Purchasers. Prior
to the completion of the sale of the Securities by the Purchasers, the
Company will not file any document under the Exchange Act that is
incorporated by reference in the Final Memorandum unless the Company has
furnished you a copy for your review prior to filing and will not file any
such document to which you reasonably and timely object.
(c) The Company will promptly advise the Purchasers when, prior to
the completion of the sale of the Securities by the Purchasers, any
document filed under the Exchange Act which is incorporated by reference in
the Final Memorandum shall have been filed with the Securities and Exchange
Commission (the "Commission").
(d) If at any time prior to the completion of the sale of the
Securities by the Purchasers, any event occurs as a result of which the
Final Memorandum as then amended or supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein in the light of the circumstances under
which they were made not misleading, or if it shall be necessary to amend
or supplement the Final Memorandum (including any document incorporated by
reference therein which was filed under the Exchange Act) to comply with
the Exchange Act or the rules thereunder or other applicable law, the
Company promptly will notify the Purchasers of the same and, subject to
paragraph (b) of this Section 5, will prepare and provide to the Purchasers
pursuant to paragraph (a) of this Section 5 an amendment or supplement
which will correct such statement or omission or effect such compliance
and, in the case of such an amendment or supplement which is to be filed
under the Exchange Act and which is incorporated by reference in the Final
Memorandum, will file such amendment or supplement with the Commission.
(e) The Company will cooperate with you and your counsel in
endeavoring to obtain the qualification of the Securities for sale under
the laws of such jurisdictions as the Purchasers may reasonably designate,
and will maintain
13
<PAGE>
such qualifications in effect so long as reasonably required for the sale
of the Securities; provided, however, that the Company shall not be
-------- -------
required to file any general consent to service of process or to qualify as
a foreign corporation or as a dealer in securities in any jurisdiction in
which it is not so qualified or to subject itself to taxation in respect of
doing business in any jurisdiction in which it is not otherwise so subject.
The Company will promptly advise the Purchasers of the receipt by the
Company of any notification with respect to (i) the suspension of the
qualification of the Securities for sale in any jurisdiction or (ii) the
initiation or threatening of any proceeding for such purpose.
(f) Neither the Company nor any affiliate (as defined in Rule 501(b)
of Regulation D) of the Company will solicit any offer to buy or offer or
sell the Securities by means of any form of general solicitation or general
advertising (within the meaning of Regulation D).
(g) None of the Company, its affiliates nor any person (excluding the
Purchasers) acting on behalf of the Company or its affiliates will engage
in any directed selling efforts with respect to the Securities within the
meaning of Regulation S, and the Company, its affiliates and each such
person acting on its or their behalf will comply with the offering
restrictions requirement of Regulation S.
(h) The Company shall, during any period in the three years after the
Closing Date in which the Company is not subject to Section 13 or 15(d) of
the Exchange Act, make available, upon request, to any holder of the
Securities or Common Stock issued upon conversion thereof in connection
with any sale thereof and any prospective purchaser of Securities or Common
Stock issued upon conversion thereof from such holder the information
specified in Rule 144A(d)(4) under the Act.
(i) The Company will not, and will not permit any of its affiliates
(as defined in Rule 501(b) of Regulation D) to, sell any Securities or
Common Stock issued upon conversion thereof which constitute "restricted
securities" under Rule 144 that have been reacquired by any of them.
(j) Neither the Company nor any affiliate (as defined in Rule 501(b)
of Regulation D) will sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act) the
offering of which security will be integrated with the sale of the
Securities in a manner that would require the registration of the issuance
and sale by the Company of the Securities or Common Stock issuable upon
conversion thereof under the Act.
14
<PAGE>
(k) The Company shall include information substantially in the form
set forth in Exhibit B in each Final Memorandum.
(l) The Company shall use its best efforts in cooperation with the
Purchasers to permit the Securities to be eligible for clearance and
settlement through the Depository Trust Company.
(m) The Company will not, for a period of 90 days following the
Execution Time without prior written consent of the Purchasers (which
consent shall not be unreasonably withheld), offer, sell or contract to
sell, or otherwise dispose of, directly or indirectly, or announce the
offering of, any debt securities issued or guaranteed by the Company, any
preferred stock or Common Stock of the Company or any security convertible
into or exchangeable for preferred stock or Common Stock (other than the
Securities); provided, however, that the Company may (1) issue Common Stock
-------- -------
upon exercise of presently outstanding options and warrants, (2) grant
options pursuant to its 1991 Stock Option Plan, and (3) issue options and
shares of its Common Stock to the shareholders of Electrotech as provided
in the Share Purchase Agreement.
(n) The Company will apply the net proceeds from the sale of the
Securities substantially in accordance with the description set forth in
the Final Memorandum under the heading "Use of Proceeds."
6. Conditions to the Obligations of the Purchasers. The obligations
-----------------------------------------------
of the Purchasers to purchase the Firm Securities and the Option Securities, as
the case may be, shall be subject to the accuracy of the representations and
warranties on the part of the Company contained herein as of the Execution Time
and the Closing Date, to the accuracy of the statements of the Company made in
any certificates pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional conditions:
(a) The Company shall have furnished to the Purchasers the opinion of
Riordan & McKinzie, counsel for the Company, dated the Closing Date, to the
effect that:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction in which it is chartered or organized, with full
corporate power and authority to own and lease its properties and
conduct its business as described in the Final Memorandum and is duly
qualified to do business as a foreign corporation and is in good
standing under the laws of each jurisdiction which requires such
qualification wherein it owns or leases material properties or
conducts material business, and in which the failure to
15
<PAGE>
be so qualified or to be in good standing would, in the aggregate in
all such cases, have a Material Adverse Effect;
(ii) the Company's authorized equity capitalization is as set
forth in the Final Memorandum; the Securities and the Common Stock
conform to the description thereof contained in the Final Memorandum
in all material respects; the holders of the outstanding shares of
capital stock of the Company are not entitled to any preemptive or, to
such counsel's knowledge, any other similar rights to subscribe for
the Securities or the shares of Common Stock issuable upon conversion
thereof; and the shares of Common Stock initially issuable upon
conversion of the Securities have been duly and validly authorized and
reserved for issuance upon such conversion and, when issued upon such
conversion, will be validly issued, fully paid and nonassessable;
(iii) to the best knowledge of such counsel, except as described
in the Final Memorandum, there are no outstanding rights, warrants, or
options to acquire, or instruments convertible into or exchangeable
for, any shares of capital stock or equity interest in the Company or
its subsidiaries;
(iv) to the best knowledge of such counsel, there is no pending
or threatened action, suit or proceeding before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any of its subsidiaries that would have a Material Adverse
Effect on the Company that is not adequately disclosed in the Final
Memorandum, and there is no material franchise, contract or other
material document which would be required to be disclosed in a
Registration Statement on Form S-1 filed under the Act and which is
not described in the Final Memorandum; the descriptions in the Final
Memorandum of statutes, regulations, contracts, franchises or other
documents, pending or threatened actions, suits or proceedings before
any court or arbitrator, or brought by any governmental agency,
authority or body fairly present the information shown;
(v) the Indenture has been duly authorized, executed and
delivered by the Company, and, assuming due authorization, execution
and delivery by the Trustee, constitutes a legal, valid and binding
instrument enforceable against the Company in accordance with its
terms (subject, as to enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency, moratorium or other laws
affecting creditors' rights generally from time to time in effect and
general principles of equity, whether enforcement
16
<PAGE>
is considered in a proceeding in equity or at law and the discretion
of the court before which any proceeding therefor may be brought); and
the Securities have been duly authorized by the Company and, when
executed and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Purchasers pursuant to
this Agreement, will constitute legal, valid and binding obligations
of the Company entitled to the benefits of the Indenture; and the
statements set forth under the "Description of the Notes" in the Final
Memorandum, insofar as such statements purport to summarize certain
provisions of the Securities and the Indenture, provide a fair summary
of such provisions;
(vi) the Company has the corporate power and authority to enter
into this Agreement, the Registration Agreement and the Share Purchase
Agreement; this Agreement, the Registration Agreement and the Share
Purchase Agreement have been duly authorized, executed and delivered
by the Company;
(vii) provided that the Securities are offered and sold in the
manner contemplated by the Purchase Agreement and the Final
Memorandum, and assuming compliance by the Company and the Purchasers
with their respective representations, warranties and agreements with
respect thereto as set forth in the Purchase Agreement and the
compliance by the Shareholder parties thereto with their
representations, warranties and covenants set forth in the Share
Purchase Agreement, no consent, approval, authorization or order of
any court or governmental agency or body is required for the
performance by the Company of its obligations hereunder or under the
Share Purchase Agreement, except (i) such as may be required under the
blue sky laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the Purchasers (as to which such
counsel need express no opinion), (ii) as contemplated by the
Registration Agreement and the separate Registration Agreement
attached as Exhibit D to the Share Purchase Agreement and (iii) such
other approvals (specified in such opinion) as have been obtained;
(viii) provided that the Securities are offered and sold in the
manner contemplated by the Purchase Agreement and the Final
Memorandum, and assuming compliance by the Company and the Purchasers
with their respective representations, warranties and agreements with
respect thereto as set forth in the Purchase Agreement and the
compliance by the Shareholder parties thereto with their
representations, warranties and covenants set forth in the Share
Purchase Agreement, neither the issue and sale of the Securities, the
17
<PAGE>
execution and delivery of the Indenture, the performance by the
Company of its obligations under this Agreement, the Share Purchase
Agreement, the Indenture, the Registration Agreement or the Notes, nor
the fulfillment of the terms hereof will conflict with, result in a
breach or violation of, or constitute a default under any law (except
Blue Sky laws, as to which such counsel expresses no opinion) or the
articles of incorporation or by-laws of the Company or the terms of
any indenture or other agreement or instrument known to such counsel
to which the Company or any of its subsidiaries is a party or by which
it is bound or any judgment, order or decree known to such counsel to
be applicable to the Company or any of its subsidiaries of any court,
regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over the Company or any of its
subsidiaries; provided, however, that such counsel need express no
opinion as to whether any such conflict, breach, violation or default
will result under any covenant, restriction or provision with respect
to financial ratios or tests or any aspect of the financial condition
or results of operations of the Company;
(ix) provided that the Securities are offered and sold in the
manner contemplated by the Purchase Agreement and the Final
Memorandum, and assuming compliance by the Company and the Purchasers
with their respective representations, warranties and agreements with
respect thereto as set forth in the Purchase Agreement, it is not
necessary in connection with the offer, sale and delivery by the
Company of the Securities in the manner contemplated by this Agreement
to register the Securities under the Act or to qualify the Indenture
under the Trust Indenture Act; and
In addition, such counsel shall state that, in the course of
preparation by the Company of the Final Memorandum, such counsel has
participated in conferences with officers and other representatives of the
Company, representatives of the independent public accountants for the
Company, representatives of the Purchasers and representatives of counsel
for the Purchasers, at which conferences such counsel made inquiries of
such officers, representatives and accountants and discussed the contents
of the Final Memorandum and related matters and (without taking any further
action to verify independently the statements made in the Final Memorandum
and, except solely as expressly stated in the foregoing opinion, without
assuming responsibility for the accuracy, completeness or fairness of such
statements) nothing has come to the attention of such counsel which would
lead such counsel to believe that as of the date thereof or on the Closing
Date, the Final Memorandum contained or contains an untrue
18
<PAGE>
statement of a material fact or omitted or omits to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading (it being understood that such
counsel need not express any statement with respect to the financial
statements, schedules and other financial information included in the Final
Memorandum).
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State
of California or the United States, to the extent they deem proper and
specified in such opinion, upon the opinion of other counsel of good
standing whom they believe to be reliable and who are satisfactory to
counsel for the Purchasers and (B) as to matters of fact, to the extent
they deem proper, on certificates of responsible officers of the Company
and public officials. References to the Final Memorandum in this paragraph
(a) include any amendments or supplements thereof or thereto at the Closing
Date.
(b) The Purchasers shall have received from Munger, Tolles & Olson,
counsel for the Purchasers, such opinion or opinions, dated the Closing
Date, with respect to the issuance and sale of the Securities, the
Indenture, the Final Memorandum (together with any amendment or supplement
thereof or thereto) and other related matters as the Purchasers may
reasonably require, and the Company shall have furnished to such counsel
such documents as they request for the purpose of enabling them to pass
upon such matters.
(c) The Company shall have furnished to the Purchasers a certificate
of the Company, signed on behalf of the Company by the Chairman of the
Board or the President and the principal financial or accounting officer of
the Company, dated the Closing Date, to the effect that the signers of such
certificate have carefully examined the Final Memorandum, any amendment or
supplement to the Final Memorandum and this Agreement and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of
the Closing Date with the same effect as if made on the Closing Date
and the Company has complied in all material respects with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied pursuant to this agreement at or prior to the
Closing Date; and
(ii) since the date of the most recent financial statements
incorporated by reference in the Final Memorandum, there has been no
material adverse change in the condition (financial or other),
earnings, business or properties of the Company and its
19
<PAGE>
subsidiaries taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth
in or contemplated in the Final Memorandum.
(d) At the Execution Time and at the Closing Date, Ernst & Young LLP
shall have furnished to the Purchasers a letter or letters, dated
respectively as of the Execution Time and as of the Closing Date, in form
and substance satisfactory to the Purchasers, confirming that they are
independent accountants within the meaning of the Act and the Exchange Act
and the respective applicable published rules and regulations thereunder
and stating in effect that:
(i) in their opinion the audited financial statements and
financial statement schedules included or incorporated by reference in
the Final Memorandum and reported on by them comply in form in all
material respects with the applicable accounting requirements of the
Act and the published rules and regulations thereunder;
(ii) on the basis of procedures (but not an examination in
accordance with generally accepted auditing standards) consisting of
the following:
(1) a reading of the minutes of the meetings of
stockholders, directors and the Audit and Compensation Committees
of the Company and Electrotech and, where applicable, their
subsidiaries;
(2) performing the procedures specified by the American
Institute of Certified Public Accountants for a review of interim
financial information as described in SAS No. 71, Interim
Financial Information, on the unaudited interim financial
statements of the Company and its consolidated subsidiaries
included in the Final Memorandum and reading the unaudited
interim financial data for the period from the date of the latest
audited balance sheet included in the Final Memorandum to the
date of the latest available interim financial data; and
(3) inquiries of certain officials of the Company and
Electrotech who have responsibility for financial and accounting
matters of the Company and Electrotech regarding their
subsidiaries as to transactions and events subsequent to the
December 31, 1995 and June 30, 1996 audited financial statements
incorporated in the Final Memorandum,
20
<PAGE>
nothing came to their attention which caused them to believe that:
(1) the unaudited financial statements included in the
Final Memorandum do not comply in form in all material respects
with the applicable accounting requirements of the Act and the
related published rules and regulations;
(2) any material modifications should be made to the
unaudited financial statements for them to be in conformity with
generally accepted accounting principles; or
(3) with respect to the period subsequent to June 30,
1996, there were any changes, at a specified date not more than
five business days prior to the date of the letter, in the Long-
Term Debt or Capital Stock of the Company or Electrotech and
their consolidated subsidiaries or decreases in the Shareholders'
Equity of the Company or Electrotech as compared with the amounts
shown on the June 30, 1995 consolidated balance sheet of the
Company and combined balance sheet of Electrotech included in the
Final Proxy Statement, or for the period from July 1, 1996 to
such specified date there were any decreases, as compared with
the corresponding period in the preceding year, in Revenue, or in
total or per share amounts of Net Income (Loss) of the Company
and Electrotech and their consolidated subsidiaries, except in
all instances for changes or decreases set forth in such letter,
in which case the letter shall be accompanied by an explanation
by the Company or Electrotech as to the significance thereof
unless said explanation is not deemed necessary by the
Representatives; and
(iii) they are unable to and do not express any opinion on the
pro forma capitalization or the "Pro Forma Information" included or
incorporated in the Final Memorandum or on the pro forma adjustments
applied to the historical amounts included in such statements (the
"Pro Forma Information"); however, for purposes of such letter they
have:
(1) read the Pro Forma Information;
(2) made inquiries of certain officials of the Company
who have responsibility for financial and accounting matters
about the basis for their determination of the pro forma
adjustments and whether the Pro Forma Information above complies
in form in all material respects with the
21
<PAGE>
applicable accounting requirements of Rule 11-02 of Regulation S-
X;
(3) compared the historical amounts in the Pro Forma
Information with the Company's or Electrotech's audited financial
statements or accounting records; and
(4) proved the arithmetic accuracy of the application of
the pro forma adjustments to the historical amounts in the Pro
Forma Information; and
on the basis of such procedures, and such other inquiries and
procedures as may be specified in such letter, nothing came to
their attention that caused them to believe that the Pro Forma
Information included in the Final Memorandum does not comply as
to form in all material respects with the applicable requirements
of Rule 11-02 of Regulation S-X and that the pro forma
adjustments have not been properly applied to the historical
amounts in the compilation of such statements; and
(iv) they have performed certain other specified procedures as
a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Company and Electrotech and their
subsidiaries) included or incorporated by reference in the Final
Memorandum, including the information set forth under the captions
"Summary Financial and Pro Forma Data," "Risk Factors", "Selected
Consolidated Financial Data of PMT," "Selected Consolidated Financial
Data of Electrotech," "Management's Discussion and Analysis of
Financial Condition and Results of Operations of PMT," "Management's
Discussion and Analysis of Financial Condition and Results of
Operation of Electrotech," and "Business" therein, the information
included or incorporated in Items 1, 6, 7, and 11 of the Company's
Annual Report on Form 10-K, incorporated by reference in the Final
Memorandum, and the information included in the "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" included or incorporated in the Company's Quarterly
Reports on Form 10-Q incorporated by reference in the Final
Memorandum, agrees with the accounting records of the Company and its
subsidiaries, excluding any questions of legal interpretation.
22
<PAGE>
References to the Final Memorandum in this paragraph (d) include any
amendment or supplement thereof or thereto at the date of the letter.
(e) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the Final Memorandum (exclusive of any
amendment or supplement thereof or thereto), there shall not have been (i)
any change or decrease specified in the letter or letters referred to in
paragraph (d) of this Section 6 or (ii) any change, or any development
involving a prospective change, in or affecting the business or properties
of the Company and its subsidiaries the effect of which, in any case
referred to in clause (i) or (ii) above, is, in the reasonable judgment of
the Purchasers, so material and adverse as to make it impractical or
inadvisable to market the Securities as contemplated by the Final
Memorandum (exclusive of any amendment or supplement thereof or thereto).
(f) Prior to the Closing Date, the Company shall have furnished to
the Purchasers such further information, certificates and documents as the
Purchasers may reasonably request.
(g) At the Execution Time, the Company shall have furnished to the
Purchasers a letter substantially in the form of Exhibit C hereto from
persons listed on Exhibit C addressed to the Purchasers, in which each such
person agrees not to offer, sell or contract to sell, or otherwise dispose
of, directly or indirectly, or announce an offering of, any shares of
preferred stock or Common Stock beneficially owned by such persons or any
securities convertible into, or exchangeable for, shares of preferred stock
or Common Stock for a period of 90 days following the closing of the Share
Purchase Agreement without the prior written consent of Salomon Brothers
Inc, other than shares of Common Stock disposed of as bona fide gifts.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Purchasers and counsel for the Purchasers, this Agreement
and all obligations of the Purchasers hereunder may be canceled at, or at any
time prior to, the Closing Date by the Purchasers. Notice of such cancellation
shall be given to the Company in writing or by telephone or telefax confirmed in
writing.
The documents required to be delivered by this Section 6 shall be delivered
at the office of Munger, Tolles & Olson, counsel for the Purchasers, at 355
South Grand Avenue, Los Angeles, California 90071 on the Closing Date.
23
<PAGE>
7. Reimbursement of Purchasers' Expenses. If the sale of the
-------------------------------------
Securities provided for herein is not consummated because any condition to the
obligations of the Purchasers set forth in Section 6 hereof (other than the
condition set forth in Section 6(b) (solely to the extent the inability to
deliver such an opinion is due to general industry or economic conditions
affecting the business or properties of the Company and its subsidiaries), or
the condition set forth in Section 6(e)(ii) solely by reason of any change, or
any development involving a prospective change, relating to general industry or
economic conditions) is not satisfied, because of any termination pursuant to
clause (i) of Section 9 hereof or because of any refusal, inability or failure
on the part of the Company to perform any agreement herein or comply with any
provision hereof other than by reason of a default by the Purchasers, the
Company will reimburse the Purchasers upon demand for all reasonable and duly
documented out-of-pocket expenses (including reasonable fees and disbursements
of counsel) that shall have been incurred by it in connection with the proposed
purchase and sale of the Securities.
8. Indemnification and Contribution.
--------------------------------
(a) The Company agrees to indemnify and hold harmless each Purchaser,
the directors, officers, employees and agents of each Purchaser and each
person who controls each Purchaser within the meaning of either the Act or
the Exchange Act against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become
subject under the Act, the Exchange Act or other Federal or state statutory
law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Preliminary Memorandum, the Final Memorandum
or any information provided by the Company to any holder or prospective
purchaser of Securities pursuant to Section 5(h), or in any amendment
thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, and agrees to reimburse each such indemnified party, as
incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable
-------- -------
in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any such untrue statement or
alleged untrue statement or omission or alleged omission made in the
Preliminary Memorandum or the Final Memorandum, or in any amendment thereof
or supplement thereto, in reliance upon and in conformity with written
information furnished to the Company by or on behalf of a Purchaser
specifically for inclusion therein; provided, further, that the
indemnification contained in this paragraph 8(a) with
24
<PAGE>
respect to any Preliminary Memorandum shall not inure to the benefit of any
Purchaser (or of any person controlling such Purchaser) from whom the
person asserting any such loss, claim, damage or liability purchased the
Securities which are the subject thereof, if such person did not receive a
copy of the Final Memorandum, provided the Company has delivered the Final
Memorandum to the Purchasers in requisite quantity on a timely basis to
permit the delivery thereof at or prior to the confirmation of the sale of
such Securities to such person, and any untrue statement or omission of a
material fact contained in such Preliminary Memorandum was corrected in the
Final Memorandum. This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
(b) Each Purchaser severally agrees to indemnify and hold harmless
the Company, its directors, its officers, and each person who controls the
Company within the meaning of either the Act or the Exchange Act, to the
same extent as the foregoing indemnity from the Company to the Purchasers,
but only with reference to written information furnished to the Company by
or on behalf of such Purchaser specifically for inclusion in the
Preliminary Memorandum or the Final Memorandum, or in any amendment thereof
or supplement thereto. This indemnity agreement will be in addition to any
liability which the Purchasers may otherwise have. The Company acknowledges
that the statements set forth in the last paragraph of the cover page, in
the last two paragraphs of page 3 and under the heading "Plan of
Distribution" in the Preliminary Memorandum and the Final Memorandum
constitute the only information furnished in writing by or on behalf of the
Purchasers for inclusion in the Preliminary Memorandum or the Final
Memorandum.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party
(i) will not relieve it from liability under paragraph (a) or (b) above
unless and to the extent it did not otherwise learn of such action and such
failure results in the forfeiture by the indemnifying party of substantial
rights and defenses and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than
the indemnification obligation provided in paragraph (a) or (b) above. The
indemnifying party shall be entitled to appoint counsel of the indemnifying
party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in
which case the indemnifying party shall not thereafter be responsible for
the fees and expenses of any separate counsel retained by the indemnified
party or parties except as set forth below);
25
<PAGE>
provided, however, that such counsel shall be reasonably satisfactory to
-------- -------
the indemnified party. Notwithstanding the indemnifying party's election
to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel
(including local counsel), and the indemnifying party shall bear the
reasonable fees, costs and expenses of such separate counsel if (i) the use
of counsel chosen by the indemnifying party to represent the indemnified
party would present such counsel with a conflict of interest, (ii) the
actual or potential defendants in, or targets of, any such action include
both the indemnified party and the indemnifying party and the indemnified
party shall have reasonably concluded that there may be legal defenses
available to it and/or other indemnified parties which are different from
or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel reasonably satisfactory
to the indemnified party to represent the indemnified party within a
reasonable time after notice of the institution of such action or (iv) the
indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party. An indemnifying party
will not, without the prior written consent of the indemnified parties,
settle or compromise or consent to the entry of any judgment with respect
to any pending or threatened claim, action, suit or proceeding in respect
of which indemnification or contribution may be sought hereunder (whether
or not the indemnified parties are actual or potential parties to such
claim or action) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising
out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the Purchasers agree to
contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) (collectively "Losses") to which the
Company and one or both Purchasers may be subject in such proportion as is
appropriate to reflect the relative benefits received by the Company and by
the Purchasers from the offering of the Securities; provided, however, that
-------- -------
in no case shall a Purchaser be responsible for any amount in excess of the
purchase discount or commission applicable to the Securities purchased by
such Purchaser hereunder. If the allocation provided by the immediately
preceding sentence is unavailable for any reason, the Company and the
Purchasers shall contribute in such proportion as is appropriate to reflect
not only such relative benefits but also the relative fault of the Company
and of the Purchasers in connection with the statements or omissions that
resulted in such Losses as well
26
<PAGE>
as any other relevant equitable considerations. Benefits received by the
Company shall be deemed to be equal to the total net proceeds from the
offering (before deducting expenses), and benefits received by the
Purchasers shall be deemed to be equal to the total purchase discounts and
commissions, in each case as set forth on the cover page of the Final
Memorandum. Relative fault shall be determined by reference to whether any
alleged untrue statement or omission relates to information provided by the
Company or the Purchasers. The Company and the Purchasers agree that it
would not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation that does not take account of
the equitable considerations referred to above. Notwithstanding the
provisions of this paragraph (d), no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person
who controls a Purchaser within the meaning of either the Act or the
Exchange Act and each director, officer, employee and agent of a Purchaser
shall have the same rights to contribution as such Purchaser, and each
person who controls the Company within the meaning of either the Act or the
Exchange Act and each officer and director of the Company shall have the
same rights to contribution as the Company, subject in each case to the
applicable terms and conditions of this paragraph (d).
9. Termination. This Agreement shall be subject to termination in
-----------
the absolute discretion of the Purchasers, by notice given to the Company prior
to delivery of and payment for the Securities, if prior to such time (i) trading
in the Company's Common Stock shall have been suspended by the Commission or the
National Association of Securities Dealers Automated Quotation National Market
System ("NMS") (other than by reason of an event listed in Clauses (ii), (iii)
or (iv) of this Section 9), (ii) trading in securities generally on the New York
Stock Exchange or the NMS shall have been suspended or limited or minimum prices
shall have been established on either of such Exchange or NMS, (iii) a banking
moratorium shall have been declared either by Federal or New York State
authorities or (iv) there shall have occurred any outbreak or escalation of
hostilities, declaration by the United States of a national emergency or war or
other calamity or crisis the effect of which on financial markets is such as to
make it, in the reasonable judgment of the Purchasers, impracticable or
inadvisable to proceed with the offering or delivery of the Securities as
contemplated by the Final Memorandum (exclusive of any amendment or supplement
thereof or thereto).
10. Representations and Indemnities to Survive. The respective
------------------------------------------
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Purchasers set forth in or made pursuant to
this Agreement will
27
<PAGE>
remain in full force and effect, regardless of any investigation made by or on
behalf of the Purchasers or the Company or any of the officers, directors or
controlling persons referred to in Section 8 hereof, and will survive delivery
of and payment for the Securities. The provisions of Sections 7 and 8 hereof
shall survive the termination or cancellation of this Agreement.
11. Notices. All communications hereunder will be in writing and
-------
effective only on receipt, and, if sent to the Purchasers, will be mailed,
delivered or telefaxed and confirmed to it in writing, at Seven World Trade
Center, New York, New York, 10048, telefax no.: (212) 783-2274, attention of
Legal Department; or, if sent to the Company, will be mailed, delivered or
telefaxed and confirmed to it in writing at 9255 Deering Avenue, Chatsworth,
California 91311, telefax no.: (818) 886-8756, attention of Chief Executive
Officer.
12. Successors. This Agreement will inure to the benefit of and be
----------
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 8 hereof, and no
other person will have any right or obligation hereunder.
13. Applicable Law. This Agreement will be governed by and construed
--------------
in accordance with the laws of the State of New York without regard to the
conflicts of law provisions thereof.
28
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement between the
Company and the Purchasers.
Very truly yours,
PLASMA & MATERIALS TECHNOLOGIES, INC.,
By: /s/ Gregor A. Campbell
---------------------------
Name: Gregor A. Campbell
Title: President and
Chief Executive Officer
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
SALOMON BROTHERS INC
UNTERBERG HARRIS
By: Salomon Brothers Inc
By: /s/ Douglas A. Brengel
----------------------
Its: Managing Director
29
<PAGE>
EXHIBIT A
Form of Investment Letter for
-----------------------------
Institutional Accredited Investors
----------------------------------
Plasma & Materials Technologies, Inc.
9255 Deering Avenue
Chatsworth, California 91311
Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Dear Sirs:
In connection with our proposed purchase of $ aggregate
principal amount of the 7-1/8% Convertible Subordinated Notes Due 2001 (the
"Securities") of Plasma & Materials Technologies, Inc., a California corporation
(the "Company"), we confirm that:
1. We understand that the Securities and the Common Stock issuable
upon conversion thereof have not been registered under the Securities Act
of 1933, as amended (the "Securities Act"), and may not be sold except as
permitted in the following sentence. We understand and agree, on our own
behalf and on behalf of any accounts for which we are acting as hereinafter
stated, (x) that such Securities are being offered only in a transaction
not involving any public offering within the meaning of the Securities Act,
(y) that if we should resell, pledge or otherwise transfer such Securities
or the Common Stock issuable upon conversion thereof within three years
after the date of the original issuance of the Securities or within three
months after we cease to be an Affiliate (within the meaning of Rule 144A
under the Securities Act) of the Company, such Securities or the Common
Stock issuable upon conversion thereof may be resold, pledged or
transferred only (i) to the Company, (ii) so long as the Securities or the
Common Stock issuable upon conversion thereof are eligible for resale
pursuant to Rule 144A under the Securities Act ("Rule 144A"), to a person
whom we reasonably believe is a "qualified institutional buyer" (as defined
in Rule 144A) ("QIB") that purchases for its own account or for the account
of a QIB to whom notice is given that the resale, pledge or transfer is
being made in reliance on Rule 144A (as indicated by the box checked by the
transferor on the Certificate of Transfer on the reverse of the certificate
for the Securities or the Common Stock issuable upon conversion thereof),
(iii) in an offshore transaction in accordance with Regulation S under the
30
<PAGE>
Securities Act (as indicated by the box checked by the transferor on the
Certificate of Transfer on the reverse of the certificate for the
Securities or the Common Stock issuable upon conversion thereof), (iv) to
an institution that is an "Accredited Investor" as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act (as indicated by the
box checked by the transferor on the Certificate of Transfer on the reverse
of the certificate for the Securities or the Common Stock issuable upon
conversion thereof) that has certified to the Company and the Trustee (or,
in the case of Common Stock, the Transfer Agent) that it is such an
accredited investor and is acquiring the Securities or the Common Stock
issuable upon conversion thereof for investment purposes and not for
distribution, (v) pursuant to an exemption from registration under the
Securities Act provided by Rule 144 (if applicable) under the Securities
Act, or (vi) pursuant to an effective registration statement under the
Securities Act, in each case in accordance with any applicable securities
laws of any state of the United States, and we will notify any purchaser of
the Securities or the Common Stock issuable upon conversion thereof from us
of the above resale restrictions, if then applicable. We further
understand that, in connection with any transfer of the Securities or
Common Stock issuable upon conversion thereof by us, the Company and the
Trustee (or, in the case of Common Stock, the Transfer Agent) may request,
and if so requested we will furnish, such certificates, legal opinions and
other information as they may reasonably require to confirm that any such
transfer complies with the foregoing restrictions.
2. We are able to fend for ourselves in the transactions
contemplated by this Offering Memorandum, we have such knowledge and
experience in financial and business matters as to be capable of evaluating
the merits and risks of our investment in the Securities, and we and any
accounts for which we are acting are each able to bear the economic risk of
our or its investment and can afford the complete loss of such investment.
3. We understand that the minimum principal amount of Securities
that may be purchased by an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act) is $250,000.
4. We understand that the Company, Salomon Brothers Inc and
Unterberg Harris as the initial purchasers of the Securities ("Initial
Purchasers") and others will rely upon the truth and accuracy of the
foregoing acknowledgements, representations and agreements and we agree
that if any of the acknowledgements, representations and warranties deemed
to have been made by us by our purchase of Securities, for our own account
or for one or more accounts as to each of which we exercise sole investment
discretion, are no longer
31
<PAGE>
accurate, we shall promptly notify the Company and the Initial Purchasers.
5. We are acquiring the Securities purchased by us for investment
purposes, and not for distribution, for our own account or for one or more
accounts as to each of which we exercise sole investment discretion and we
are or such account is an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act).
6. You are entitled to rely upon this letter and you are irrevocably
authorized to produce this letter or a copy hereof to any interested party
in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.
Very truly yours,
______________________________
(Name of Purchaser)
By:___________________________
Date:_________________________
32
<PAGE>
EXHIBIT B
NOTICE TO INVESTORS
Offers and Sales by the Initial Purchasers
- ------------------------------------------
The Securities and the Common Stock issuable upon conversion thereof
have not been registered under the Securities Act and may not be offered or sold
in the United States or to, or for the account or benefit of, U.S. persons
except in accordance with an applicable exemption from the registration
requirements thereof. Accordingly, the Securities are being offered and sold
only (1) in the United States to qualified institutional buyers ("Qualified
Institutional Buyers") under Rule 144A under the Securities Act and to a limited
number of other institutional "accredited investors" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) ("Institutional Accredited
Investors") in a private sale exempt from the registration requirements of the
Securities Act, and (2) outside the United States to non-U.S. persons ("foreign
purchasers") in reliance upon Regulation S under the Securities Act. Each
Institutional Accredited Investor that is a purchaser of Securities from the
Initial Purchasers will be required to sign a certificate in the form of Exhibit
A attached hereto. Each foreign purchaser that is a purchaser of Securities
from the Initial Purchasers (an "Initial Foreign Purchaser") will be required to
sign a certificate in the form provided by the Initial Purchasers.
Investor Representations and Restrictions on Resale
- ---------------------------------------------------
Each purchaser of the Securities will be deemed to have represented
and agreed as follows:
(1) it is acquiring the Securities for its own account or for an
account with respect to which it exercises sole investment discretion, and
that it or such account is a Qualified Institutional Buyer, an
Institutional Accredited Investor acquiring the Securities for investment
purposes and not for distribution or a foreign purchaser outside the United
States;
(2) it acknowledges that the Securities and the Common Stock issuable
upon conversion thereof have not been registered under the Securities Act
and may not be sold except as permitted below;
(3) it understands and agrees (x) that such Securities are being
offered only in a transaction not involving any public offering within the
meaning of the Securities Act, and (y) that (A) if within three years (or
such shorter period as may then be applicable under the Securities Act
regarding the holding period for securities under Rule 144(k) of the
Securities Act or any successor rule) after
33
<PAGE>
the date of original issuance of the Securities or if within three months
after it ceases to be an affiliate (within the meaning of Rule 144 under
the Securities Act) of the Company, it decides to resell, pledge or
otherwise transfer such Securities or the Common Stock issuable upon
conversion thereof on which the applicable legend as set forth below
appears, such Securities or the Common Stock issuable upon conversion
thereof may be resold, pledged or transferred only (i) to the Company, (ii)
so long as such Security or the Common Stock issuable upon conversion
thereof is eligible for resale pursuant to Rule 144A, to a person whom the
seller reasonably believes is a Qualified Institutional Buyer that
purchases for its own account or for the account of a Qualified
Institutional Buyer to whom notice is given that the resale, pledge or
transfer is being made in reliance on Rule 144A (as indicated by the box
checked by the transferor on the Certificate of Transfer on the reverse of
the Security if such Security is not in book-entry form) and a certificate
which may be obtained from the Company or the Trustee is delivered by the
transferee to the Company and the Trustee, (iii) in an offshore transaction
in accordance with Regulation S (as indicated by the box checked by the
transferor on the Certificate of Transfer on the reverse of the Security if
such Security is not in book-entry form), but, if such transfer is being
effected by an Initial Foreign Purchaser or any foreign purchaser who has
purchased Securities from an Initial Foreign Purchaser or from any person
other than a Qualified Institutional Buyer or an Institutional Accredited
Investor pursuant to this clause (iii) prior to the expiration of the "40
day restricted period" (within the meaning of Rule 903(c)(3) of Regulation
S under the Securities Act), the transferee shall have certified to the
Company and the Trustee that such transferee is a non-U.S. person (within
the meaning of Regulation S) and that such transferee is acquiring the
Securities in an offshore transaction; (iv) to an Institutional Accredited
Investor (as indicated by the box checked by the transferor on the
Certificate of Transfer on the reverse of the Security if such Security is
not in book-entry form) who has certified to the Company and the Trustee
(or, in the case of Common Stock, the Transfer Agent) that such transferee
is an Institutional Accredited Investor and is acquiring the Securities or
Common Stock for investment purposes and not for distribution (provided
that no Initial Foreign Purchaser or any foreign purchaser who has
purchased Securities from an Initial Foreign Purchaser or from any person
other than a Qualified Institutional Buyer or an Institutional Accredited
Investor pursuant to clause (iii) shall be permitted to transfer any
Securities (or the Common Stock issuable upon conversion thereof) so
purchased by it to an Institutional Accredited Investor pursuant to this
clause (iv) prior to the expiration of the "40 day restricted period" and a
certificate which may be obtained from the Company or the Trustee is
delivered by the transferee to the Company and the Trustee), (v) pursuant
to
34
<PAGE>
an exemption from registration under the Securities Act provided by Rule
144 (if applicable) under the Securities Act and a certificate which may be
obtained from the Company or the Trustee is delivered by the transferee to
the Company and the Trustee, in each case in accordance with any applicable
securities laws of any state of the United States, (B) the purchaser will,
and each subsequent holder is required to, notify any purchaser of
Securities or the Common Stock issuable upon conversion thereof from it of
the resale restrictions referred to in (A) above, if then applicable, and
(C) with respect to any transfer of Securities or the Common Stock issuable
upon conversion thereof by an Institutional Accredited Investor, such
holder will deliver to the Company and the Trustee (or, in the case of
Common Stock, the Transfer Agent) such certificates and other information
as they may reasonably require to confirm that the transfer by it complies
with the foregoing restrictions, including, without limitation, a
certificate in the form of Exhibit A hereto;
(4) with respect to the Securities, it understands that the
notification requirement referred to in (3) above will be satisfied, in the
case only of transfers by physical delivery of certificated Securities
other than a Global Note, by virtue of the fact that the following legend
will be placed on the Securities unless otherwise agreed by the Company:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY
PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT
THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X)
PRIOR TO THE THIRD ANNIVERSARY (OR SUCH SHORTER PERIOD AS MAY THEN BE
APPLICABLE UNDER THE SECURITIES ACT) OF THE ISSUANCE HEREOF (OR ANY
PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT WAS AN
AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING
THE DATE OF SUCH TRANSFER, IN EITHER CASE, OTHER THAN (1) TO THE
COMPANY, (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT
TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON WHOM
THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN ACCOUNT OR FOR
THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE
CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY) AND A
CERTIFICATE WHICH MAY BE OBTAINED FROM THE COMPANY OR THE TRUSTEE IS
DELIVERED BY THE TRANSFEREE TO THE COMPANY AND THE TRUSTEE, (3) IN AN
OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE
SECURITIES ACT (AS INDICATED BY THE BOX
35
<PAGE>
CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE
REVERSE OF THIS SECURITY), AND, IF SUCH TRANSFER IS BEING EFFECTED BY
CERTAIN TRANSFERORS SPECIFIED IN THE INDENTURE (AS DEFINED BELOW)
PRIOR TO THE EXPIRATION OF THE "40 DAY RESTRICTED PERIOD" (WITHIN THE
MEANING OF RULE 903(c)(3) OF REGULATION S UNDER THE SECURITIES ACT), A
CERTIFICATE WHICH MAY BE OBTAINED FROM THE COMPANY OR THE TRUSTEE IS
DELIVERED BY THE TRANSFEREE TO THE COMPANY AND THE TRUSTEE, (4) TO AN
INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT (AS INDICATED BY
THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON
THE REVERSE OF THIS SECURITY) THAT IS ACQUIRING THIS SECURITY FOR
INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION, AND A CERTIFICATE IN THE
FORM ATTACHED TO THIS SECURITY IS DELIVERED BY THE TRANSFEREE TO THE
COMPANY AND THE TRUSTEE (PROVIDED THAT CERTAIN HOLDERS SPECIFIED IN
THE INDENTURE MAY NOT TRANSFER THIS SECURITY PURSUANT TO THIS CLAUSE
(4) PRIOR TO EXPIRATION OF THE "40 DAY RESTRICTED PERIOD" (WITHIN THE
MEANING OF RULE 903(c)(3) OF REGULATION S UNDER THE SECURITIES ACT),
(5) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT AND
A CERTIFICATE WHICH MAY BE OBTAINED FROM THE COMPANY OR THE TRUSTEE IS
DELIVERED BY THE TRANSFEREE TO THE COMPANY AND THE TRUSTEE, OR (6)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT AND A CERTIFICATE WHICH MAY BE OBTAINED FROM THE COMPANY OR THE
TRUSTEE IS DELIVERED BY THE TRANSFEREE TO THE COMPANY AND THE TRUSTEE,
IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES OR OTHER JURISDICTIONS. AN INSTITUTIONAL
ACCREDITED INVESTOR HOLDING THIS SECURITY AGREES THAT IT WILL FURNISH
TO THE COMPANY AND THE TRUSTEE SUCH CERTIFICATES AND OTHER INFORMATION
AS THEY MAY REASONABLY REQUIRE TO CONFIRM THAT ANY TRANSFER BY IT OF
THIS SECURITY COMPLIES WITH THE FOREGOING RESTRICTIONS. THE HOLDER
HEREOF, BY PURCHASING THIS SECURITY, REPRESENTS AND AGREES FOR THE
BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A OR (2) AN INSTITUTION THAT IS AN
"ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7)
UNDER THE SECURITIES ACT AND THAT IS HOLDING THIS SECURITY FOR
INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION OR (3) A NON-U.S. PERSON
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR AN ACCOUNT
SATISFYING THE REQUIREMENTS OF PARAGRAPH (o)(2) OF RULE 902 UNDER)
REGULATION S UNDER THE SECURITIES ACT.";
(5) with respect to the Common Stock issuable upon conversion of the
Securities, it understands that the notification requirement referred to in
(3) above will be
36
<PAGE>
satisfied by virtue of the fact that the following legend will be placed on
the Common Stock unless otherwise agreed by the Company:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY
PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT
THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X)
PRIOR TO THE THIRD ANNIVERSARY (OR SUCH SHORTER PERIOD AS MAY THEN BE
APPLICABLE UNDER THE SECURITIES ACT) OF THE ISSUANCE HEREOF (OR ANY
PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT WAS AN
AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING
THE DATE OF SUCH TRANSFER, IN EITHER CASE, OTHER THAN (1) TO THE
COMPANY, (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT
TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON WHOM
THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN ACCOUNT OR FOR
THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE
CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY) AND A
CERTIFICATE WHICH MAY BE OBTAINED FROM THE COMPANY OR THE TRUSTEE IS
DELIVERED BY THE TRANSFEREE TO THE COMPANY AND THE TRUSTEE, (3) IN AN
OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE
SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON
THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), AND, IF
SUCH TRANSFER IS BEING EFFECTED BY CERTAIN TRANSFERORS SPECIFIED IN
THE INDENTURE (AS DEFINED BELOW) PRIOR TO THE EXPIRATION OF THE "40
DAY RESTRICTED PERIOD" (WITHIN THE MEANING OF RULE 903(c)(3) OF
REGULATION S UNDER THE SECURITIES ACT), A CERTIFICATE WHICH MAY BE
OBTAINED FROM THE COMPANY OR THE TRUSTEE IS DELIVERED BY THE
TRANSFEREE TO THE COMPANY AND THE TRUSTEE, (4) TO AN INSTITUTION THAT
IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR
(7) UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE
TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS
SECURITY) THAT IS ACQUIRING THIS SECURITY FOR INVESTMENT PURPOSES AND
NOT FOR DISTRIBUTION, AND A CERTIFICATE IN THE FORM ATTACHED TO THIS
SECURITY IS DELIVERED BY THE TRANSFEREE TO THE COMPANY AND THE
TRANSFER AGENT, (5) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE
SECURITIES ACT AND A CERTIFICATE WHICH MAY BE OBTAINED FROM THE
COMPANY OR THE TRUSTEE IS DELIVERED BY THE TRANSFEREE TO THE COMPANY
AND THE TRUSTEE, OR (6) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER
37
<PAGE>
THE SECURITIES ACT AND A CERTIFICATE WHICH MAY BE OBTAINED FROM THE
COMPANY OR THE TRUSTEE IS DELIVERED BY THE TRANSFEREE TO THE COMPANY
AND THE TRUSTEE, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER
JURISDICTIONS. AN INSTITUTIONAL ACCREDITED INVESTOR HOLDING THIS
SECURITY AGREES THAT IT WILL FURNISH TO THE COMPANY AND THE TRANSFER
AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS THEY MAY REASONABLY
REQUIRE TO CONFIRM THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES
WITH THE FOREGOING RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING
THIS SECURITY, REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY
THAT IT IS (1) A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A OR (2) AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT
AND THAT IS HOLDING THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR
DISTRIBUTION OR (3) A NON-U.S. PERSON OUTSIDE THE UNITED STATES WITHIN
THE MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH
(o)(2) OF RULE 902 UNDER) REGULATION S UNDER THE SECURITIES ACT.";
(6) it (i) is able to fend for itself in the transactions
contemplated by this Offering Memorandum; (ii) has such knowledge and
experience in financial and business matters as to be capable of evaluating
the merits and risks of its prospective investment in the Securities; and
(iii) has the ability to bear the economic risks of its prospective
investment and can afford the complete loss of such investment;
(7) it understands the Company, the Initial Purchasers and others
will rely upon the truth and accuracy of the foregoing acknowledgements,
representations and agreements and agrees that if any of the
acknowledgements, representations and warranties deemed to have been made
by it by its purchase of the Securities are no longer accurate, it shall
promptly notify the Company and the Initial Purchasers. If it is acquiring
the Securities as a fiduciary or agent for one or more investor accounts,
it represents that it has sole investment discretion with respect to each
such account and it has full power to make the foregoing acknowledgements,
representations and agreements on behalf of such account; and
(8) it has not engaged in, and prior to the expiration of the 40-
day period provided for in Rule 903 of Regulation S will not engage in, any
short selling of any equity issued by the Company (including, without
limitation, the Common Stock) or any hedging transaction with respect to
any such equity security, including without limitation put, call or other
option transactions, option writing and equity swaps.
38
<PAGE>
(Letterhead of officer, director or major shareholder of
Plasma & Materials Technologies, Inc.
Plasma & Materials Technologies, Inc.
Offering of 7-1/8% Convertible Subordinated
-------------------------------------------
Notes Due 2001
--------------
, 1996
Salomon Brothers Inc
Unterberg Harris
c/o Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Dear Sirs:
This letter is being delivered to you in connection with the proposed
Purchase Agreement (the "Purchase Agreement"), between Plasma & Materials
Technologies, Inc., a California corporation (the "Company"), and you as
purchasers relating to an offering of the Company's 7-1/8% Convertible
Subordinated Notes Due 2001, which are convertible into Common Stock, no par
value (the "Common Stock"), of the Company.
In order to induce you to enter into the Purchase Agreement, the
undersigned agrees not to offer, sell or contract to sell, or otherwise dispose
of, directly or indirectly, or announce an offering of, any shares of Common
Stock beneficially owned by the undersigned or any securities convertible into,
or exchangeable for, shares of Common Stock for a period of 90 days following
the day on which the Purchase Agreement is executed without Salomon Brothers
Inc's; provided, however, that the undersigned may exercise any outstanding
stock options without such prior written consent.
If for any reason the Purchase Agreement shall be terminated prior to
the Closing Date (as defined in the Purchase Agreement), the agreement set forth
above shall likewise be terminated.
Yours very truly,
-----------------------------------
Gregor A. Campbell
-----------------------------------
John A. Rollwagon
39
<PAGE>
-----------------------------------
James F. Marshall
-----------------------------------
John W. LaValle
-----------------------------------
Harvey J. Frye
-----------------------------------
Steve Rhoades
-----------------------------------
David J. Hemker, M.D.
-----------------------------------
Robert J. Snyder
-----------------------------------
Craig S. Montesanti
-----------------------------------
C. Bradford Jones
-----------------------------------
Brian D. Jacobs
ST. PAUL VENTURE CAPITAL, INC.
By:________________________________
BRENTWOOD ASSOCIATES
By:________________________________
40
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Principal Amount
of Firm Securities
to be Purchased
---------------
<S> <C>
Salomon Brothers Inc................................. $60,000,000
Unterberg Harris..................................... 15,000,000
-----------
TOTAL................................................ $75,000,000
===========
</TABLE>
41
<PAGE>
EXHIBIT 2.1
----------------
SHARE PURCHASE AGREEMENT
AMONG
PLASMA & MATERIALS TECHNOLOGIES, INC.,
ELECTROTECH LIMITED,
ELECTROTECH EQUIPMENTS LIMITED,
CHRISTOPHER D. DOBSON
AND
THE OTHER SHAREHOLDERS OF ELECTROTECH LIMITED AND
ELECTROTECH EQUIPMENTS LIMITED
----------------
DATED AS OF JULY 17, 1996
----------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
ARTICLE I
<S> <C>
PURCHASE AND SALE OF THE US SHARES AND ET SHARES........................... 1
1.1 Purchase and Sale of Stock.......................................... 1
1.2 Shareholder's Warranty and Waiver................................... 1
1.3 Consideration for US Shares......................................... 2
1.4 Consideration for ET Shares......................................... 2
1.5 Agreement of Shareholders........................................... 2
ARTICLE II
CLOSING.................................................................... 2
2.1 Closing Date........................................................ 2
2.2 Deliveries of the Shareholders and ETE.............................. 2
2.3 Deliveries of Buyer................................................. 2
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF EACH OF THE SHAREHOLDERS................. 3
3.1 Title to Shares..................................................... 3
3.2 Authority........................................................... 3
3.3 No Violation........................................................ 3
3.4 Brokers............................................................. 3
3.5 No Agreements to Sell Shares........................................ 3
3.6 Regulation S Representations and Covenants.......................... 4
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE MAJORITY SHAREHOLDER................. 5
4.1 Corporate Organization.............................................. 5
4.2 Subsidiaries........................................................ 5
4.3 Share Capital; Title to ET Shares................................... 6
4.4 Authority........................................................... 6
4.5 No Violations or Consents........................................... 6
4.6 Litigation.......................................................... 7
4.7 Financial Statements................................................ 7
4.8 No Liabilities...................................................... 7
4.9 Absence of Certain Changes or Events................................ 8
4.10 Insurance........................................................... 8
4.11 Employee Benefits and Pension Scheme................................ 10
4.12 Material Contracts and Other Agreements............................. 10
4.13 Suppliers and Customers............................................. 10
4.14 Real Property....................................................... 10
4.15 Condition of the Real Property; Rights of Use; Liabilities.......... 10
4.16 Compliance with Laws................................................ 11
4.17 Licenses and Permits................................................ 11
4.18 Title to Assets..................................................... 11
4.19 Inventory........................................................... 11
4.20 Backlog............................................................. 12
4.21 Taxes............................................................... 12
4.22 Environmental Matters............................................... 13
4.23 Board of Directors and Shareholder Approval......................... 14
4.24 Brokers; Certain Expenses........................................... 14
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
4.25 No Agreements to Sell Companies..................................... 14
4.26 Related-Party Transactions.......................................... 15
4.27 Employees; Labor Matters............................................ 15
4.28 Proprietary Rights.................................................. 16
4.29 Disclosure.......................................................... 16
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER.................................... 16
5.1 Corporate Organization.............................................. 16
5.2 Subsidiaries........................................................ 16
5.3 Capital Stock....................................................... 17
5.4 Buyer Shares........................................................ 17
5.5 Authority........................................................... 17
5.6 No Violations or Consents........................................... 17
5.7 Financial Statements and Reports.................................... 18
5.8 Litigation.......................................................... 18
5.9 Absence of Certain Changes or Events................................ 18
5.10 Insurance........................................................... 19
5.11 Employee Benefits................................................... 19
5.12 Employees; Labor Matters............................................ 19
5.13 Material Contracts and Other Agreements............................. 20
5.14 Suppliers and Customers............................................. 20
5.15 Compliance with Laws................................................ 20
5.16 Licenses and Permits................................................ 21
5.17 Title to Assets..................................................... 21
5.18 Inventory........................................................... 21
5.19 Backlog............................................................. 21
5.20 Tax Returns and Audits.............................................. 21
5.21 Environmental and Safety Laws....................................... 22
5.22 Board of Directors Approval......................................... 22
5.23 Related-Party Transactions.......................................... 22
5.24 Proprietary Rights.................................................. 23
5.25 Real Property....................................................... 23
5.26 Disclosure.......................................................... 23
5.27 Brokers............................................................. 23
ARTICLE VI
COVENANTS AND AGREEMENTS................................................... 23
6.1 Conduct of Business Prior to the Closing Date....................... 23
6.2 Access to Properties and Records.................................... 25
6.3 Acquisition Proposals............................................... 25
6.4 Proxy Statement and Meeting of Buyer's Shareholders................. 25
6.5 Indemnification by Buyer............................................ 26
6.6 Indemnification by the Shareholders................................. 27
6.7 General Indemnification Provisions.................................. 27
6.8 Best Efforts........................................................ 28
6.9 Consents............................................................ 28
6.10 No Transfer......................................................... 28
6.11 Environmental Investigations........................................ 28
6.12 Delivery of Financial Statements and Other Documents................ 28
6.13 Additional Payments at Closing...................................... 29
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
6.14 Company Employee Benefits and Stock Options......................... 29
6.15 Use of Company Information.......................................... 30
ARTICLE VII
CONDITIONS PRECEDENT....................................................... 30
7.1 Conditions to Each Party's Obligations.............................. 30
7.2 Conditions to the Obligations of the Shareholders................... 30
7.3 Conditions to the Obligations of Buyer.............................. 31
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER.......................................... 32
8.1 Termination......................................................... 32
8.2 Termination Fee; Expenses........................................... 32
8.3 Effect of Termination............................................... 33
8.4 Amendment........................................................... 33
8.5 Waiver.............................................................. 33
8.6 Conduct Following Termination....................................... 33
ARTICLE IX
MISCELLANEOUS.............................................................. 33
9.1 Survival............................................................ 33
9.2 Meaning of "Best Knowledge"......................................... 33
9.3 Notices............................................................. 33
9.4 Headings; Agreement................................................. 34
9.5 Publicity........................................................... 34
9.6 Entire Agreement.................................................... 35
9.7 Conveyance Taxes.................................................... 35
9.8 Company Pre-Closing Dividends....................................... 35
9.9 Advance of Reimbursable Expenses.................................... 35
9.10 Assignment.......................................................... 35
9.11 Counterparts........................................................ 35
9.12 Governing Law....................................................... 36
9.13 Third Party Beneficiaries........................................... 36
</TABLE>
EXHIBITS
<TABLE>
<C> <S>
Exhibit A Schedule of Consideration
Exhibit B Nigel Wheeler Employment Agreement
Exhibit C Form of Opinion of Riordan & McKinzie
Exhibit D Form of Registration Agreement
Exhibit E Form of Noncompetition Agreement
Exhibit F Form of Opinion of Veale Wasbrough
</TABLE>
iii
<PAGE>
SHARE PURCHASE AGREEMENT
SHARE PURCHASE AGREEMENT ("Agreement") dated as of July 17, 1996, as
amended, among Plasma & Materials Technologies, Inc., a California corporation
("Buyer"), Electrotech Limited (registered no. 1373344), whose registered
office is at Thornbury Laboratories, Littleton-Upon-Severn, Thornbury,
Bristol, BS12-INP, United Kingdom ("ET"), Electrotech Equipments Limited
(registered no. 939289), whose registered office is at Thornbury Laboratories,
Littleton-Upon-Severn, Thornbury, Bristol, BS12-INP, United Kingdom ("ETE"
and, together with ET, individually, a "Company," and collectively, the
"Companies"), Christopher D. Dobson (the "Majority Shareholder") and the other
shareholders of the Companies listed on Exhibit A hereto (individually, an
"Other Shareholder" and collectively, the "Other Shareholders;" the Majority
Shareholder and the Other Shareholders are sometimes herein collectively
referred to as the "Shareholders").
R E C I T A L S :
A. The Shareholders collectively own all of the issued and outstanding share
capital of each of the Companies (collectively, the "ET Shares").
B. ETE owns all of the issued and outstanding share capital of Energy
Transfer Systems, Inc., a Delaware corporation ("ET-US").
C. Buyer wishes to directly purchase, and ETE wishes to sell, all of the
issued and outstanding share capital of ET-US (the "US Shares").
D. Buyer wishes to purchase and the Shareholders wish to sell the ET Shares.
A G R E E M E N T :
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions contained
herein, the sufficiency of which is hereby acknowledged, the parties hereby
agree as follows:
ARTICLE I
PURCHASE AND SALE OF THE US SHARES AND ET SHARES
1.1 Purchase and Sale of Stock.
(a) Purchase and Sale of US Shares. Subject to the terms and conditions
of this Agreement, immediately prior to the Closing (as defined below), ETE
agrees to sell, assign, transfer and deliver to Buyer ownership of, with
full title guarantee, the US Shares, together with all rights now or
hereafter attaching thereto, and Buyer hereby agrees to purchase the same
from ETE, for the consideration set forth in Section 1.3 below.
(b) Purchase and Sale of ET Shares. Subject to the terms and conditions
of this Agreement, at the Closing, each of the Shareholders agrees to sell,
assign, transfer and deliver to Buyer ownership of, with full title
guarantee, all ET Shares held of record or beneficially by each such
Shareholder, as set forth opposite each Shareholder's name on Exhibit A
hereto, together with all rights now or hereafter attaching thereto, and
Buyer agrees to purchase the same from each Shareholder for the
consideration set forth in Section 1.4 below.
1.2 Shareholder's Warranty and Waiver. Each of the Shareholders warrants to
Buyer that such Shareholder is entitled to sell and transfer to Buyer the full
legal and beneficial ownership of the ET Shares held by him subject to the
terms of this Agreement and that such shares are free and clear of any and all
Encumbrances, as defined below. Each of the Shareholders hereby waives and
agrees to procure the waiver of any restrictions on transfer, including
without limitation, pre-emption rights, which may exist in relation to the ET
Shares under the existing Articles of Association (the "Articles") of either
of the Companies.
1
<PAGE>
1.3 Consideration for US Shares. The consideration for the sale, assignment,
transfer and delivery of the US Shares to Buyer by ETE shall be Two Hundred
Fifty Thousand Dollars (US$250,000), payable in cash.
1.4 Consideration for ET Shares. The consideration for the sale, assignment,
transfer and delivery of the ET Shares to Buyer (the "Purchase Price") shall
be payable in cash and in shares of the Common Stock of Buyer, no par value
per share ("Buyer's Common Stock"), as follows:
(a) An aggregate of Seventy-Five Million Dollars (US$75,000,000), less
the sum of the Employee Bonus Amount, the Dobson Noncompetition Fee, the
Wheeler Bonus and the Dobson Negotiation Fee (all as defined in Section
6.13 below), shall be payable by Buyer in cash at the Closing to each of
the Shareholders in the respective individual amounts set forth opposite
each Shareholder's name on Exhibit A hereto; and
(b) Buyer shall deliver Five Million Six Hundred Thousand (5,600,000)
shares (the "Buyer Shares") of Buyer's Common Stock. Such shares shall be
delivered to each of the Shareholders in the respective individual amounts
set forth opposite each Shareholder's name on Exhibit A hereto.
1.5 Agreement of Shareholders. Each of the Shareholders hereby consents and
agrees with the Companies, the other Shareholders and the Buyer to the
allocation of the Purchase Price among the Shareholders in the manner set
forth in Exhibit A hereto and each Shareholder additionally consents and
agrees with the Companies, the other Shareholders and the Buyer to the
payments to be made by or at the direction of the Buyer and the Companies
pursuant to Section 6.13 hereof.
ARTICLE II
CLOSING
2.1 Closing Date. Subject to the fulfillment of the conditions precedent
specified in Article VII (any or all of which may be waived in writing by the
respective parties whose performance is conditioned upon satisfaction of such
conditions precedent), the purchase and sale of the ET Shares and the US
Shares shall be consummated at a closing (the "Closing") to be held at the
offices of Veale Wasbrough, Solicitors, Orchard Court, Orchard Lane, Bristol
BS1 5DS, United Kingdom as soon as practicable, but no later than five (5)
days, following the satisfaction or waiver of all conditions precedent
specified in Article VII, or at such other time as Buyer and the Shareholders
shall mutually agree after the satisfaction or waiver of all conditions
precedent specified in Article VII, provided that in no circumstance shall the
Closing occur on or after December 31, 1996 (such date and time being herein
referred to as the "Closing Date").
2.2 Deliveries of the Shareholders and ETE. At the Closing, each Shareholder
shall deliver to Buyer, in form reasonably satisfactory to counsel for Buyer,
(a) duly completed and signed transfers in respect of the ET Shares in favor
of Buyer or as Buyer shall direct, together with the relevant certificates for
the ET Shares, and (b) all of the agreements, documents and instruments
required to be delivered by such Shareholder. Additionally, at the Closing,
ETE shall deliver to Buyer duly completed and signed transfers in respect of
the US Shares in favor of Buyer or as Buyer shall direct, together with the
relevant certificates for the US Shares.
2.3 Deliveries of Buyer. At the Closing, Buyer shall deliver to Veale
Wasbrough, counsel for the Shareholders, on behalf of each Shareholder (whose
receipt shall be a good discharge for the same) (a) payment of the cash
portion of the Purchase Price with respect to each Shareholder in accordance
with Section 1.4(a) hereof by wire transfer of immediately available funds in
the amount thereof, (b) certificates evidencing the Buyer Shares, registered
in the name of each Shareholder in accordance with Section 1.4(b) hereof, and
(c) all of the agreements, documents and instruments required to be delivered
to them at the Closing pursuant to this Agreement. Additionally, at the
Closing, Buyer shall deliver to ETE payment of the cash amount set forth in
Section 1.3 hereof.
2
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF EACH OF THE SHAREHOLDERS
Except as disclosed in the letter of disclosure (the "Shareholders
Disclosure Letter") delivered to Buyer in connection herewith and initialled
by the Buyer and each of the Shareholders for identification, each of the
Shareholders severally and not jointly represents and warrants to, and agrees
with, Buyer as follows:
3.1 Title to Shares. Such Shareholder has good and marketable title, and
full beneficial ownership, in and to the ET Shares shown as being held of
record by such Shareholder on Exhibit A hereto, and such ET Shares are, and on
the Closing Date will be, free and clear of any and all liens, security
interests, mortgages, deeds of trust, pledges, claims, rights of first
refusal, options, equities, encumbrances, restrictions, preemptive or
subscription rights or other rights of third parties ("Encumbrances"). There
are no voting trusts or other agreements, arrangements or understandings with
respect to the voting of any of the ET Shares to which such Shareholder is a
party. Upon the consummation of the transactions contemplated by this
Agreement, including delivery by Buyer of the consideration set forth in
Section 1.4 hereof, Buyer will acquire good and marketable title to such ET
Shares, free and clear of any and all Encumbrances.
3.2 Authority. This Agreement has been duly executed and delivered by such
Shareholder and constitutes the legal, valid and binding obligations of such
Shareholder, enforceable against such Shareholder in accordance with its
terms, subject to applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws affecting creditors' rights generally and
subject to general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
3.3 No Violation. The execution, delivery and performance of this Agreement
by such Shareholder and the consummation by such Shareholder of the
transactions contemplated hereby will not (a) violate any provision of law,
rule, regulation, order, writ, judgment, injunction, decree, determination or
award applicable to such Shareholder, (b) require the consent, waiver,
approval or authorization of or any filing by such Shareholder with any person
or governmental authority, or (c) violate, result (with or without notice or
the passage of time, or both) in a breach of, or give rise to the right to
terminate, accelerate or cancel any obligation under, or require the payment
of any fee, or constitute (with or without notice or the passage of time, or
both) a default under, any indenture, mortgage, lien, order, judgment,
ordinance, regulation, decree or other agreement or instrument to which such
Shareholder is subject or bound which, in any such case described in clauses
(a) through (c), could reasonably be expected to materially and adversely
affect or interfere in any way with such Shareholder's ability to consummate
the transactions contemplated by this Agreement, or (d) result in the creation
of any Encumbrance upon any of the ET Shares shown as being held of record by
such Shareholder on Exhibit A hereto. There are no actions, proceedings,
claims, complaints, grievances or investigations pending or, to the knowledge
of such Shareholder, threatened against such Shareholder that could be
reasonably expected to materially and adversely affect such Shareholder's
ability to consummate the transactions contemplated by this Agreement.
3.4 Brokers. Such Shareholder has not paid or become obligated to pay any
fee or commission to any broker, finder, investment banker or other
intermediary in connection with this Agreement.
3.5 No Agreements to Sell Shares. Except as contemplated by this Agreement,
such Shareholder has no legal obligation, absolute or contingent, to any other
person, firm or entity to sell, directly or indirectly, capital stock,
material assets or business of either Company or any Subsidiary or to effect
any merger, consolidation, liquidation, dissolution, recapitalization or other
reorganization of either Company or any Subsidiary or to enter into any
agreement with respect thereto.
3
<PAGE>
3.6 Regulation S Representations and Covenants.
(a) Such Shareholder understands and acknowledges that: (i) the Buyer
Shares have not been and will not be registered under the Securities Act of
1933, as amended (the "Securities Act"), or under any state securities or
blue sky laws, and may not be offered, sold, transferred, pledged or
otherwise disposed of in the United States or to, or for the account or
benefit of, any "U.S. person" (as defined in Regulation S), unless they are
registered under the Securities Act and any applicable state securities or
blue sky laws in exemptions from such laws are available; and (ii) the
Buyer Shares are being offered and sold in a manner intended to comply with
the conditions contained in Regulation S, which permits securities to be
sold in "offshore transactions" (as defined in Regulation S), subject to
certain terms and conditions. Such Shareholder represents and warrants that
he or she is not purchasing the Buyer Shares in any transaction or series
of transactions that, although in technical compliance with Regulation S,
is part of a plan or scheme to evade the registration provisions of the
Securities Act.
(b) Such Shareholder is not a "U.S. person" and is not acquiring the
Buyer Shares for the benefit of any "U.S. person." Such Shareholder is
knowledgeable, sophisticated and experienced in making, and qualified to
make, decisions with respect to investments in securities such as the Buyer
Shares and has requested, received, reviewed and considered all information
he or she deems relevant in making a decision to acquire the Buyer Shares.
(c) During the period of 40 days following the Closing (the "Restricted
Period"), such Shareholder will not engage in any activity for the purpose
of, or which may reasonably be expected to have the effect of, conditioning
the market in the United States for the Buyer Shares, or offer, sell,
transfer, pledge or otherwise dispose of the Buyer Shares in the United
States or to, or for the account or benefit of a "U.S. person." Any
proposed offer, sale, transfer, pledge or other disposition of any of the
Buyer Shares prior to the end of the Restricted Period will be subject to
the prior delivery by the Shareholder to the Buyer of: (i) a written
certification that the Buyer Shares have not been offered or sold in the
United States or to, or for the account or benefit of, any "U.S. person";
and (ii) a written certification of the proposed transferee, reasonably
acceptable to the Buyer, confirming that such transferee is outside the
United States, is not a "U.S. person," and that the transfer is otherwise
permissible under Regulation S. Such Shareholder will not, directly or
indirectly, offer, sell, pledge, transfer or otherwise dispose of (or
solicit any offers to buy, purchase or otherwise acquire or take a pledge
of) the Buyer Shares otherwise than in compliance with the Securities Act,
any applicable state securities or blue sky laws and any applicable
securities laws of jurisdictions outside the United States, and the rules
and regulations promulgated thereunder.
(d) Such Shareholder acknowledges that if he or she sells all or any part
of the Buyer Shares in the United States, he or she (and/or certain persons
who participate in any such sale) may be deemed, under certain
circumstances, to be an "underwriter," as defined in Section 2(11) of the
Securities Act. Such Shareholder understands that he or she should consult
with United States legal counsel prior to offering or selling all or any
part of the Buyer Shares in the United States.
(e) During the period that is five business days immediately prior to the
Closing, such Shareholder will not, and from the Closing and through the
expiration of the Restricted Period, such Shareholder will not, directly or
indirectly, execute or effect or cause to be executed or effected any short
sale, option or equity swap transaction in or with respect to the Common
Stock of Buyer or any other derivative security transaction, the purpose or
effect of which is to hedge or transfer to a third party all or any part of
the risk of loss associated with such Shareholder's ownership of the Buyer
Shares.
(f) Such Shareholder acknowledges and agrees that the certificates
evidencing the Buyer Shares shall have a legend substantially as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CONTRACTUAL RESTRICTIONS PURSUANT TO WHICH, PRIOR TO [40 DAYS AFTER THE
CLOSING] (THE "TERMINATION DATE"), NO OFFER, SALE, TRANSFER, PLEDGE OR
OTHER DISPOSITION (COLLECTIVELY, A "DISPOSITION") OF THE SECURITIES
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REPRESENTED BY THIS CERTIFICATE MAY BE MADE UNLESS (A) THE DISPOSITION
IS MADE OUTSIDE THE UNITED STATES AND TO, OR FOR THE ACCOUNT OR BENEFIT
OF, ANY PERSON WHO IS NOT A "U.S. PERSON," AND (B) PRIOR TO SUCH
DISPOSITION, THE BENEFICIAL OWNER OF SUCH SHARES AND THE PROPOSED
TRANSFEREE SUBMIT A CERTIFICATION AS DESCRIBED IN THAT CERTAIN SHARE
PURCHASE AGREEMENT PURSUANT TO WHICH THESE SECURITIES WERE ISSUED. SUCH
CONTRACTUAL RESTRICTIONS TERMINATE ON, AND THIS LEGEND MAY BE REMOVED
UPON PRESENTATION OF THIS STOCK CERTIFICATE TO THE TRANSFER AGENT OR
THE ISSUER AT ANY TIME AFTER THE TERMINATION DATE."
(g) Such Shareholder will be entitled to obtain from the Buyer's transfer
agent (the "Transfer Agent") at any time from the first business day
following the Restricted Period one or more substitute stock certificates
without the restrictive legend described above upon surrender to the
Transfer Agent of the stock certificate or certificates delivered pursuant
to the preceding paragraph which, in the case of any holder subsequent to a
Shareholder must be duly endorsed for transfer or surrender and, in any
event, must be accompanied by payment of any amount necessary to be paid
pursuant to any transfer tax or similar governmental charge relating to
such transaction.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE MAJORITY SHAREHOLDER
Except as disclosed in the letter of disclosure (the "Company Disclosure
Letter") delivered to Buyer in connection herewith and initialled by the Buyer
and the Majority Shareholder for identification, the Majority Shareholder
represents and warrants to Buyer as follows:
4.1 Corporate Organization. Each of the Companies is a corporation duly
organized, validly existing and in good standing under the laws of England,
with all requisite corporate power and authority to own, operate and lease its
properties and to carry on its business as it is now being conducted, and is
qualified or licensed to do business and is in good standing in each
jurisdiction in which the failure to be so qualified or licensed could
reasonably be expected, individually or in the aggregate, to have a material
adverse effect upon the financial condition, prospects or results of
operations of the Companies and the Subsidiaries considered as a whole (a
"Company Material Adverse Effect"). True and complete copies of the Memorandum
and Articles of each Company have been delivered to Buyer.
4.2 Subsidiaries. A true and complete list of all direct and indirect
subsidiaries other than the Dormant Subsidiaries (each, a "Subsidiary" and
collectively, the "Subsidiaries") of each of the Companies is set forth in the
Company Disclosure Letter. The Company Disclosure Letter also identifies the
inactive subsidiaries of the Companies (the "Dormant Subsidiaries"). None of
the Dormant Subsidiaries has any material assets or liabilities (contingent or
absolute) and none presently engages in any business activity. Since March 31,
1996 no Company or Subsidiary has paid any amounts to any of the Dormant
Subsidiaries, no amounts will be so paid at any time hereafter, and any net
intercompany payables of the Company and its Subsidiaries to the Dormant
Subsidiaries shall be forgiven or cancelled at the closing. As used in this
Article IV, references to a "Company" or the "Companies" shall, if appropriate
given the context of the representations being made, include each relevant
Subsidiary, even though no specific reference to any Subsidiary is so made.
Each Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, except that with
respect to the U.K. Subsidiaries, such Subsidiaries have been duly registered
in England and Wales under the Companies Act 1985. In each case such
Subsidiaries have all requisite corporate power and authority to own, operate
and lease its properties and to carry on its business as it is now being
conducted, and is qualified or licensed to do business and is in good standing
in each jurisdiction in which the failure to be so qualified or licensed could
reasonably be expected, individually or in the aggregate, to have a Company
Material Adverse
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Effect. All of the issued shares of capital stock of each such Subsidiary have
been duly and validly authorized and issued, are fully paid and non-
assessable, and are owned directly or indirectly by one of the Companies, free
and clear of any and all Encumbrances. Except with respect to the ownership of
the Subsidiaries by the Companies, neither Company nor any Subsidiary owns,
directly or indirectly, any stock, partnership interest, joint venture
interest or other security, investment or interest in any other corporation,
organization, partnership, limited liability company or entity.
4.3 Share Capital; Title to ET Shares.
(a) Capital Stock. As of the date hereof, the authorized share capital of
(i) ET consists in its entirety of five hundred seventy five (575) shares
of (Pounds)1 each, of which five hundred seventy (570) are issued and
outstanding, and (ii) ETE consists in its entirety of ten thousand (10,000)
shares of (Pounds)1 each, eighty-two (82) of which are Class A Shares and
nine thousand nine hundred and eighteen (9,918) of which are Class B
shares, all of which are issued and outstanding. All of the issued shares
of each of the Companies have been duly authorized and validly issued and
are fully paid and non-assessable and except as set forth in the Company
Disclosure Letter, free of preemptive rights with respect thereto and were
issued in compliance with all applicable securities laws and regulations.
There are no voting trusts or other agreements, arrangements or
understandings with respect to the voting of the shares of the Companies to
which either Company or, to the best knowledge (as defined in Section 9.2
hereof) of the Companies, any other person is a party. There are no
registration rights, subscriptions, options, warrants, rights, convertible
securities or other agreements or commitments of any character relating to
the issued or unissued share capital or other securities of either of the
Companies and there are no outstanding contractual obligations of either of
the Companies to repurchase, redeem or otherwise acquire or sell, issue or
otherwise transfer any of the share capital thereof.
(b) Title to Shares. Exhibit A hereto sets forth the record ownership of
the ET Shares. To the best knowledge of the Companies, (i) each Shareholder
has good and marketable title in and to the respective ET Shares set forth
opposite such Shareholder's name on Exhibit A hereto, (ii) the ET Shares
are, and on the Closing Date will be, free and clear of any and all
Encumbrances, and (iii) on the Closing, upon consummation of the
transactions contemplated by this Agreement, including delivery by Buyer of
the consideration set forth in Sections 1.3 and 1.4 hereof, Buyer will
acquire good and marketable title to all of the ET Shares and the US
Shares, free and clear of any and all Encumbrances.
4.4 Authority. Each Company has the full corporate power and authority to
execute and deliver this Agreement and each other agreement contemplated
hereby, to carry out its obligations hereunder and thereunder and to
consummate the transactions contemplated on its part hereby and thereby. The
execution, delivery and performance by each Company of this Agreement and the
consummation of the transactions contemplated on its part hereby have been
duly authorized by its Board of Directors and by the shareholders thereof, and
no other corporate proceedings on the part of either Company are necessary to
authorize the execution and delivery of this Agreement by such Company to
consummate the transactions contemplated hereby. This Agreement has been duly
executed and delivered by each Company and constitutes the legal, valid and
binding obligations of each Company, enforceable against each Company in
accordance with its terms, subject to applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting creditors' rights
generally and subject to general equitable principles (regardless of whether
such enforceability is considered in a proceeding in equity or at law). Each
other agreement to be executed in connection with this Agreement on or prior
to the Closing Date will be duly executed and delivered by each Company, and
will constitute a legal, valid and binding obligation of each Company,
enforceable against each Company in accordance with its respective terms,
subject to applicable bankruptcy, insolvency, moratorium, reorganization, or
similar laws affecting creditors' rights generally and subject to general
equitable principles (regardless of whether such enforceability is considered
in a proceeding in equity or at law).
4.5 No Violations or Consents. The execution, delivery and performance of
this Agreement by the Companies and the consummation by them of the
transactions contemplated hereby will not (a) violate or conflict
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with any provision of any law specifically applicable to their business or by
which any property or asset of theirs is bound, (b) require the consent,
waiver, approval, license or authorization of or any filing by them with any
public authority (other than (i) if necessary, the filing of a pre-merger
notification report under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act") and applicable U.K./EEC antitrust statutes,
and (ii) any other filings and approvals expressly contemplated by this
Agreement), (c) violate, conflict with, result in a breach of or the
acceleration of any obligation under, or constitute a default (or an event
which with notice or the lapse of time or both would become a default) under,
or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of any Encumbrance on any property
or asset of theirs pursuant to any provision of any charter or by-law,
indenture, mortgage, lien, lease, agreement, contract, instrument, order,
judgment, ordinance, regulation or decree to which either of the Companies are
subject or by which either Company or its respective properties or assets are
bound, or (d) result in a loss or adverse modification of any license, permit,
certificate, franchise or contract granted to or otherwise held by either of
the Companies which, in any such case described in clauses (a) through (d),
could reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect.
4.6 Litigation. There are no actions, proceedings, claims, complaints,
grievances, investigations or unfair labor practice complaints or grievances
or investigations (collectively, "Actions") pending or, to the best knowledge
of the Companies, threatened against either Company, any Subsidiary or any of
their assets or properties before any court or governmental or regulatory
authority or body or arbitrator (an "Authority") which could reasonably be
expected to have a Company Material Adverse Effect. There are no Actions
pending or, to the knowledge of the Companies, threatened against either
Company or any Subsidiary that could be reasonably expected to materially and
adversely affect on their part the consummation of the transactions
contemplated by this Agreement. None of the assets or property of either
Company or any Subsidiary is subject to any order, judgment, injunction, writ
or decree, which could reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
4.7 Financial Statements. Each Company has previously delivered to Buyer its
financial statements for the years ended June 30, 1991, 1992, 1993, 1994 and
1995, as audited by Watts Gregory & Daniel, which financial statements
included (a) a consolidated profit and loss account for the year then ended,
(b) a consolidated balance sheet as at such date, (c) a company balance sheet
as at such date, (d) a consolidated cash flow statement for the year then
ended, (e) a consolidated schedule of tangible fixed assets as at such date,
(f) a company schedule of tangible fixed assets as at such date and (g) notes
to the accounts for the year then ended (collectively, the "Audited Financial
Statements"). Each Company has also previously delivered to Buyer its
unaudited management accounts at March 31, 1996 (the "Unaudited Financial
Statements," and collectively with the Audited Financial Statements, the
"Financial Statements"). The Audited Financial Statements give a true and fair
view of the Companies as at the date (the "Accounting Date") on which such
accounts were made up and of the profits of each of the Companies for the
accounting reference period ending on that date, comply with all current
SSAP's applicable to a United Kingdom company and with the requirements of the
Companies Act 1985 and with all other applicable legislation, and each of the
said Audited Financial Statements properly reflect the financial position of
each of the Companies as at the relevant Accounting Date and were prepared in
accordance with the historical cost convention. "SSAP" for this purpose means
a Statement of Standard Accounting Practice in force at the relevant
Accounting Date as issued by the Institute of Chartered Accountants in England
and Wales. The Unaudited Financial Statements have been prepared in accordance
with the books and records of the Companies, contain no material inaccuracies,
and follow the same principles as consistently applied to the Audited
Financial Statements.
4.8 No Liabilities. Neither Company nor any Subsidiary has any material
liabilities, obligations or commitments of any nature (whether absolute,
accrued, contingent or otherwise and whether matured or unmatured), including
without limitation, any liabilities due or to become due to any taxing
authority having jurisdiction over such entities, except (a) liabilities
reflected in, reserved against, or disclosed in the footnotes of, the balance
sheet of such Company or Subsidiary at March 31, 1996 included in the
Unaudited Financial
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Statements, and (b) liabilities, obligations or commitments incurred since
March 31, 1996 in the ordinary course of such Company's or Subsidiary's
business or that are not material to the business of the Companies and the
Subsidiaries, taken as a whole.
4.9 Absence of Certain Changes or Events. Since March 31, 1996, each of the
Companies and the Subsidiaries have conducted their respective businesses in
the ordinary course and, except pursuant to this Agreement and the
transactions contemplated hereby, there has not been any:
(a) material adverse change in the financial condition, assets,
liabilities, business, operations, results of operations or prospects of
either Company or any Subsidiary or any other event or condition which in
any one case or in the aggregate has materially and adversely affected
either Company or any Subsidiary or any event or condition which it is
reasonable to expect will individually or in the aggregate materially
adversely affect the Companies and the Subsidiaries taken as a whole (any
such event being herein referred to as a "Company Material Adverse
Change");
(b) declaration, waiver or payment of any dividend or other distribution
or payment (whether in cash, shares or property) with respect to the share
capital of either Company or any Subsidiary, or any redemption, purchase or
other acquisition of any of the securities of any Company or Subsidiary, or
any other payment to any shareholder of any Company or Subsidiary in its
capacity as a shareholder;
(c) issuance by either Company or any Subsidiary of, or commitment by any
of them to issue, any share capital or obligations or any securities
convertible into or exchangeable or exercisable for shares or other
securities; or
(d) indebtedness for borrowed money incurred by either Company or any
Subsidiary or any commitment to incur indebtedness for borrowed money
entered into by such Company or Subsidiary, or any loans made or agreed to
be made to such Company or Subsidiary other than pursuant to commitments or
credit facilities existing on March 31, 1996 and described in the Unaudited
Financial Statements (or replacements thereof described in the Company
Disclosure Letter).
4.10 Insurance. Each Company and Subsidiary has in full force policies of
insurance issued by insurers of good repute insuring it and its properties and
business against such losses and risks, and in such amounts, as in its best
judgment, after advice from its insurance broker, are acceptable for the
nature and extent of such business and its resources. No Company or Subsidiary
is in default with respect to any material provision contained in any
insurance policy, and none has failed to give any notice or present any
existing claims it has under its insurance policies in a timely fashion.
4.11 Employee Benefits and Pension Scheme.
(a) Except as set forth in the Company Disclosure Letter, there are no
agreements, arrangements, customs or practice (whether legally enforceable
or not) in operation for the provision of, or payment or contributions
towards, and no Company or Subsidiary has any liability or obligation to
pay, any "relevant benefits" (as defined in Section 612 of the United
Kingdom Income and Corporation Taxes Act 1988 (the "Taxes Act of 1988")),
pensions, gratuities, allowances, lump sums or other like benefits on or
after retirement or death or during periods of sickness, accident,
incapacity or disablement for the benefit of any employee or former
employee of either Company or of any Subsidiary (each, an "Employee") or
such Employee's dependents, nor has any proposal been announced or promise
made to establish any such agreement, arrangement or practice.
(b) There have been disclosed to Buyer true and correct copies of (i) the
current trust deed and rules governing the Companies' Retirement Benefit
Scheme (the "Company's Scheme"), including deeds of alteration, (ii) the
current explanatory booklet issued to members of the Company's Scheme,
(iii) all announcements to members of the Company's Scheme (or to Employees
concerning the Company's Scheme) other than announcements to members of the
Company's Scheme generally which have been fully
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incorporated into the documents referred to in paragraph (d)(i) and (ii),
(iv) the latest trustee's report and the latest financial statements of the
Company's Scheme (the "Accounts"), (v) the most recent schedule of member
benefits, indicating the number of Employees who are members of the
Company's Scheme, category of membership, pensionable salary, prospective
pension and death in service benefits and pension paid, (vi) schedules of
Employees, indicating name, sex, date of birth, date of joining the
Companies or a Subsidiary, and current salary and (vii) schedules of
benefit structures indicating the relevant benefits provided or to be
provided for Employees under the Company's Scheme in respect of all
different categories of membership.
(c) To the best knowledge of the Companies, the pension arrangements of
each Company and Subsidiary, including without limitation, the Company's
Scheme (collectively, the "Pension Arrangements"), have, at all times, been
administered in all material respects in accordance with all applicable
laws, rules and regulations.
(d) To the best knowledge of the Companies, no discretion or power has
been exercised under the Company's Scheme in respect of the Employees to at
any time provide benefits in excess of those specifically provided for in
the Company's Scheme.
(e) No undertaking or assurance (whether or not constituting a legal
binding commitment) has been given to any Employee about the continuation
of the Company's Scheme or any alteration to or exception from its terms or
the increase or improvement of benefits.
(f) There are not, at the date of this Agreement, any outstanding
contributions due to or under any Pension Arrangement, or that may become
due to or under any Pension Arrangement with respect to any period prior to
the Closing, from any Company or Subsidiary or any Employee or former
Employee, except with respect to any such outstanding contributions that
have been reserved against in the Financial Statements or that have
occurred in the ordinary course of business since April 1, 1996.
(g) The Company's Scheme is exempt approved (within the meaning of
Section 592(1) of the Taxes Act of 1988) and is contracted out (for the
purposes of the Pension Schemes Act 1993) and, to the best knowledge of the
Companies, there are not facts or circumstances which may cause the
withdrawal of approval by the Inland Revenue or cancellation of the
contracted out status by the Occupational Pensions Board.
(h) In respect of any of the Employees: there are no Actions in progress,
pending or, to the best knowledge of the Companies, threatened against the
Company's Scheme, any of the Companies or Subsidiaries or any of their
trustees; and, to the best knowledge of the Companies, there are no
investigations, inquiries, complaints or disciplinary proceedings by or
before any government body or the Pensions Ombudsman concerning the
Company's Scheme and none are pending or threatened.
(i) To the best knowledge of the Companies, the Company's Scheme has and
the Companies and Subsidiaries and the trustee to the Company's Scheme and
the Employees have in relation to the each Pension Arrangement in all
material respects performed, observed and complied with, and each such
Pension Arrangement has been administered in all material respects in
accordance with, all requirements of all applicable laws, including without
limitation, all relevant statutes and subordinate legislation of the United
Kingdom and all relevant provisions of the law of the European Union, all
applicable laws in relation to the trusts, powers and provisions of each
such Pension Arrangement and all regulations, orders, contracts,
agreements, licenses or obligations of whatsoever nature, including without
limitation, requirements of the United Kingdom Inland Revenue or the
Occupational Pensions Board and of trust law, which affect each such
Pension Arrangement or its operation; and all exercises or purported
exercises of powers or discretions in relation to each such Pension
Arrangement, including without limitation, the power of amendment, have
been in all material respects proper and valid exercises of those powers or
discretions.
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4.12 Material Contracts and Other Agreements. The Company Disclosure Letter
discloses (a) all agreements or contracts whether or not fully performed
pursuant to which either Company or any Subsidiary has since July 1, 1995
acquired or disposed of any business or assets exceeding (Pounds)75,000 in
value, other than sales of inventory or contracts with suppliers, each in the
ordinary course of business; (b) all agreements containing covenants not to
compete on the part of either Company or any Subsidiary or otherwise
restricting the ability of such Company or Subsidiary in any material way to
engage in its business; (c) all material notes, mortgages, indentures, letters
of credit, guarantees, performance bonds and other obligations and agreements
and other instruments for or relating to any lending or borrowing (including
assumed debt) entered into by either Company or any Subsidiary or pursuant to
which any properties or assets of any Company or Subsidiary are pledged or
mortgaged as collateral; and (d) all agreements to which any of the Companies
or Subsidiaries is a party containing provisions restricting or providing
exclusive rights with respect to the development, manufacture or marketing of
products which, after the Closing, would be applicable to the business or
products of the Buyer or Buyer's Subsidiary (as defined in Section 5.2) by
reason of the transactions contemplated by this Agreement.
4.13 Suppliers and Customers. The Companies have delivered to Buyer a list
which accurately sets forth (a) the ten (10) largest suppliers of the
Companies and the Subsidiaries (considered as a whole) for the nine months
ended March 31, 1996 (the "Large Suppliers"), (b) the amount of all payments
made to each Large Supplier for such fiscal period, (c) the ten (10) largest
customers or groups of related customers of the Companies and the Subsidiaries
(considered as a whole) for the nine months ended March 31, 1996 (the "Large
Customers") and (d) the amount of all payments made by such Large Customers
for such fiscal period. No supplier is a sole source of supply of any good or
service used by the Companies or by any Subsidiary. None of the Large
Suppliers or Large Customers has canceled or otherwise terminated, or
threatened in writing, by notice to any Company or Subsidiary, to cancel or
otherwise terminate, its relationship with either Company or with any
Subsidiary or, since March 31, 1996, decreased materially, or threatened to
decrease or limit materially, its services, supplies or materials to either
Company or any Subsidiary or its usage or purchase of the products or services
of such Company or Subsidiary, which, in any case, would result in a Company
Material Adverse Change.
4.14 Real Property. The Company Disclosure Letter sets forth all freehold
and leasehold real property of the Companies. All such freehold and leasehold
real property is collectively referred to herein as the "Real Property." The
Real Property comprises all land and premises owned, occupied or used by, or
in the possession of, the Companies and Subsidiaries. The Companies have good
and marketable title to the freehold Real Property, and true and correct
copies of all leases concerning the leasehold Real Property have been
delivered to the Buyer. There is appurtenant to the Real Property each right
and easement necessary in all material respects for its existing and continued
use.
4.15 Condition of the Real Property; Rights of Use; Liabilities.
(a) Neither the Real Property nor any of its title deeds is subject to an
encumbrance, agreement, obligation, condition, right, easement, exception,
reservation, overriding interest (as defined in sub-section 70(1) of the
Land Registration Act 1925) or other interest. There is no person in
possession or occupation of, or who has or claims a right or interest of
any kind in, the Real Property adversely to any Company's or Subsidiary's
interest.
(b) No Action concerning any Real Property is pending or, to the best
knowledge of any Company or Subsidiary, threatened. To the best knowledge
of each Company and Subsidiary, no matter exists which may give rise to a
proceeding of that type. To the best knowledge of the Companies, there is
no outstanding notice affecting the Real Property.
(c) To the best knowledge of each Company and Subsidiary, there is no
resolution or proposal for compulsory acquisition of the Real Property by a
local or other authority.
(d) Subject to the terms and conditions of the applicable leasehold
agreements, where any Company or Subsidiary holds Real Property under a
lease, tenancy or license, no person, including without limitation, the
landlord or licensor, may bring the term to an end before the expiry of the
lease, tenancy or license by
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effluxion of time (except by forfeiture). Subject to the terms and
conditions of the applicable leasehold agreements, to the best knowledge of
the Companies there is no matter which could (i) entitle or require a
person, including without limitation, a landlord or licensor, to forfeit or
enter on, or take possession of, or occupy, the Real Property, (ii)
restrict or terminate the Company's or Subsidiary's continued and
uninterrupted possession or occupation of the Real Property or (iii)
prevent or restrict the Real Property's development for which planning
permission has been or is expected to be obtained. No rent or fee payable
in respect of any of the Real Property is, as of the date hereof, being
reviewed except where such reviews could not reasonably be expected to
result in rent increases exceeding (Pounds)150,000 annually, in the
aggregate. No person, including without limitation, a landlord or licensor,
has elected to waive an exemption from payment by any Company or Subsidiary
of value added tax in respect of a payment made under the lease, tenancy or
license.
4.16 Compliance with Laws. The Companies and the Subsidiaries are in
compliance with applicable laws, statutes, ordinances, rules and regulations,
orders or other requirements, including without limitation, applicable
franchise, building, planning, health, environmental, sanitation, safety,
employment relations and other laws, ordinances or regulations, other than
violations, if any, which, individually or in the aggregate, could not
reasonably be expected to have a Company Material Adverse Effect. Neither
Company nor any Subsidiary has received any notice from any person asserting a
present or past failure by either Company or any Subsidiary to comply in any
material respect with such laws, statutes, ordinances, rules, regulations,
orders or other requirements.
4.17 Licenses and Permits. Each Company and Subsidiary has all material
governmental or regulatory licenses, permits and authorizations (all of which
are in full force and effect) reasonably necessary to conduct its business as
it is now being conducted, except for such governmental or regulatory
licenses, permits and authorizations the absence of which could not reasonably
be expected to have, individually or in the aggregate, a Company Material
Adverse Effect, and none of such governmental or regulatory licenses, permits
and authorizations will be impaired as a result of the transactions
contemplated by this Agreement, except in any case that could not reasonably
be expected to have, individually or in the aggregate, a Company Material
Adverse Effect. No Company or Subsidiary has received any notice to the effect
that, or otherwise been advised that, it is not in compliance with, or that it
is in violation of, any such governmental or regulatory licenses, permits and
authorizations in a manner that could reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, and, to
the best knowledge of each Company and Subsidiary, there are no currently
existing circumstances that are likely to result in a failure of any Company
or Subsidiary to comply with, or in a violation by any Company or Subsidiary
of, any such governmental or regulatory licenses, permits or authorizations
that could reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect.
4.18 Title to Assets. The Companies and the Subsidiaries have good and
marketable title to all of the owned tangible personal property used in the
conduct of their businesses, free and clear of all Encumbrances, except for
assets disposed of in the ordinary course of business. Each Company and each
Subsidiary has good and valid leasehold title to all leased tangible personal
property leased by it from third parties, free and clear of all Encumbrances,
except for imperfections which individually or in the aggregate could not
reasonably be expected to cause a Company Material Adverse Effect, and subject
to the rights of the lessor in and to such tangible personal property as is
subject to hire, leasing or rental agreements.
4.19 Inventory. The value at which the inventory of each Company and
Subsidiary is carried on each Company's consolidated balance sheet for the
fiscal year ended June 30, 1995 (the "Consolidated Balance Sheet") and each
Company's consolidated balance sheet for the quarter ended March 31, 1996 (the
"March Balance Sheet"), as included in the Financial Statements, reflects the
customary inventory valuation policy of each Company and its Subsidiaries and
is in accordance with SSAP and the Companies Act 1985. Since March 31, 1996,
the Companies and the Subsidiaries have in all material respects continued to
replenish their inventory in the ordinary course of business consistent with
past practice, and have not made any material change in their inventory
policies or procedures.
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4.20 Backlog. The Companies have delivered to Buyer a description of each
Company's and, to the extent applicable, each Subsidiary's backlog of orders
believed firm at March 31, 1996, indicating each applicable customer, purchase
order, type of product(s), scheduled shipment date(s), dollar amount(s) of
scheduled shipment(s) and customer deposits or payments, if any, made with
respect thereto.
4.21 Taxes.
(a) The Audited Financial Statements and, based upon information then
available and reasonably believed to be adequate, the Unaudited Financial
Statements, make full provision for all taxation for which each Company and
Subsidiary was at each applicable Accounting Date or thereafter became or
may hereafter become liable or accountable in respect of or by reference to
any income, profit, receipt, gain, transaction, agreement, distribution or
event which was earned, accrued, received, realized, entered into, paid,
made or accrued on or occurred before such Accounting Date and proper
provision was made therein for deferred taxation in accordance with SSAP,
and each Company and Subsidiary has promptly paid or fully provided in its
books of account for all taxation for which it has or may hereafter become
liable or accountable in the period from the Accounting Date to closing.
(b) All returns, computations and payments which should be or should have
been made by each Company and Subsidiary for any taxation purpose have been
made within the requisite periods and are up-to-date, correct and on a
proper basis.
(c) Since the relevant Accounting Date no further liability or contingent
liability for taxation on any Company or Subsidiary has arisen or is likely
to or will arise otherwise than as a result of transactions (not including
distributions) entered into by such Company or Subsidiary in the ordinary
course of trading after the relevant Accounting Date.
(d) No Company or Subsidiary is aware of any circumstance which will or
may, whether by lapse of time or the issue of any notice of assessment or
otherwise, give rise to any dispute with any relevant taxation authority in
relation to its liability or accountability for taxation, any claim made by
it, any relief, deduction or allowance afforded to it, or in relation to
the status or character of each Company and Subsidiary (whether as to its
status as an unquoted trading private close company or as a member of any
group) under or for the purpose of any provision of any legislation
relating to taxation.
(e) Each Company and Subsidiary has in all material respects duly
deducted and accounted for all amounts which it has been obliged to deduct
or withhold in respect of taxation and, in particular, has properly
operated the PAYE system, by deducting tax, as required by applicable law,
from all payments made, or treated as made, to its employees or former
employees, and in all material respects accounted to the Inland Revenue for
all tax so deducted and for all tax chargeable on benefits provided for its
Employees or former Employees.
(f) Each Company and Subsidiary is not nor will it become liable in any
material respect to pay or make reimbursement or indemnity in respect of
any taxation (or amounts corresponding thereto) in consequence of the
failure by any person (other than either Company or any Subsidiary (the
"Group")) to discharge that taxation within any specified period or
otherwise, where such taxation relates to a profit, income or gain,
transaction, event, omission or circumstance arising, occurring or deemed
to arise or occur (whether wholly or party) prior to closing.
(g) Each Company and Subsidiary has not since the relevant Accounting
Date incurred nor has it become liable to incur after that date any
material expenditure which will not be wholly deductible in computing its
taxable profits, except for expenditure on the acquisition of an asset to
be held otherwise than as stock-in-trade.
(h) If any Company or Subsidiary is or any time during the six (6) years
ended on March 31, 1996 has been a close company within the meaning of
Sections 414 and 415 of the Taxes Act of 1988, no apportionment within
Sections 423-430 of the Taxes Act of 1988 and Schedule 19 to the Taxes Act
of 1988 has ever been made or threatened against any Company or Subsidiary
nor are there circumstances under
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which any apportionment could be made; no loan or advance within Sections
419, 420 or 422 of the Taxes Act of 1988 has ever been made by any Company
or Subsidiary; and each Company and Subsidiary has at all times been a
"trading company" or a "member of a trading group" within paragraph 7 of
Schedule 19 to the Taxes Act of 1988.
(i) Each Company and Subsidiary has not since March 31, 1996 made or
received or agreed to make or receive any material surrender relating to
group relief or the benefit of advance corporation tax otherwise than to or
from another company in the Group.
(j) Except solely with respect to profit or gain accruing to ETE by
reason of the sale of the US Shares hereunder, the execution or completion
of this Agreement will not result in any profit or gain being deemed to
accrue to any Company or Subsidiary for taxation purposes.
(k) Each Company and Subsidiary has not in the six (6) years ended on the
date of this Agreement carried out or been engaged in any material
transaction or arrangement in respect of which there may be substituted for
the actual consideration given or received by any Company or Subsidiary a
different consideration for any taxation purposes.
(l) No Company or Subsidiary nor any other person has made any claim for
roll-over relief or any other claim which affects or could affect the
amount of the chargeable gains or allowable losses which would, but for
such claim, arise on a disposal by the relevant Company of any of its
assets.
(m) Each Company and Subsidiary has duly registered and is a taxable
person for the purposes of value added tax. Each Company and Subsidiary is
not and has not been, for such purposes, a member of any group of companies
(other than the Group), and no act or transaction has been effected in
consequence whereof the Company is or may be held liable for any material
value added tax chargeable against some other company except where that
other company is a company in the Group.
(n) No Company or Subsidiary has obtained any exemption or relief from
United Kingdom stamp duty or capital duty which has become liable to
forfeiture or obtained such exemption or relief in respect of a transaction
carried out within the period in which it may become liable to forfeiture.
(o) No Company or Subsidiary has given or been required to give any
security for taxation.
(p) No Company or Subsidiary has been or is now a party to any material
transaction or arrangement containing steps inserted without any commercial
or business purpose nor has it or any of its associates applied to the
United Kingdom Inland Revenue or any other taxation authority for any
clearance for taxation purposes in relation to any transaction or
arrangement involving the relevant Company or Subsidiary.
(q) In this subsection 4.21, "taxation" shall mean all forms of taxation,
dues, duties, imposts, levies and rates of the United Kingdom or any other
jurisdiction whenever and wheresoever charged, imposed or deducted together
with all costs, charges, interests, penalties, fines relating to or arising
in connection with any and all such taxes, dues, duties, imposts, levies
and rates or any actual claim in respect thereof, including without
limitation, income tax, PAYE, national insurance contributions, corporation
tax, advance corporation tax, capital gains tax, value added tax, customs
and other import duties, stamp duty, stamp duty reserve tax, withholding
tax, capital duty, capital transfer tax and inheritance tax and any
liability arising under Section 601 of the Taxes Act of 1988.
(r) Notwithstanding anything contained herein to the contrary, each of
the representations and warranties contained in this Section 4.21 shall
only relate to those events, facts, conditions or circumstances that have
or could reasonably be expected to have, either individually or in the
aggregate, a Company Material Adverse Effect.
4.22 Environmental Matters.
(a) To the best knowledge of each Company and Subsidiary, no land or
other asset owned occupied, possessed or used by any Company or Subsidiary
on or at any time before the date of this Agreement (i) contains or has
contained (in the case of land, above or below ground) a hazardous
substance or article,
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waste or other pollutant or contaminant, (ii) is or has been used for the
deposit, storage, treatment or disposal or waste or sewage or (iii) is
referred to or listed in a register of polluted or contaminated land, and
no matter exists which might give rise to an entry in such a register.
(b) To the best knowledge of each Company and Subsidiary, each Company
and Subsidiary has obtained and received no notice of breach of the terms
and conditions of each governmental or regulatory license, permit or
authorization (collectively, the "Environmental Permits"), and all
applicable legal and administrative requirements, concerned with the
pollution or protection of the environment (including the disposal of
waste) or harm to or the protection of the health of humans, animals or
plants. No Company or Subsidiary is aware of any expenditure or work which
is or will be necessary to comply with, maintain or obtain any such
Environmental Permit. To the best knowledge of each Company and Subsidiary,
no release or discharge or a hazardous substance or article, waste, sewage
or other pollutant or contaminant has exceeded an allowed quota or limit
prescribed or specified under any applicable legal or administrative
requirement or in a condition to an Environmental Permit.
(c) No Company or Subsidiary and, to the best knowledge of each Company
and Subsidiary, no person for whose acts or defaults the relevant Company
or Subsidiary may be vicariously liable is involved, or has during the five
(5) years ending on the date of this Agreement been involved, in a civil,
criminal, arbitration, administrative or other proceeding concerned with
the pollution or protection of the environment, or harm to or the
protection of the health of humans, animals or plants in any relevant
jurisdiction. No civil, criminal, arbitration, administrative or other
proceeding of that type is pending or, to the best knowledge of any Company
or Subsidiary, threatened by or against any Company or Subsidiary or a
person for whose acts or defaults any Company or Subsidiary may be
vicariously liable. To the best knowledge of each Company and Subsidiary,
no matter exists which might reasonably be expected to give rise to a
proceeding of that type.
(d) There is and has been no governmental or other investigation, enquiry
or disciplinary proceeding relating to the pollution or protection of the
environment, or harm to or the production of the health of humans, animals
or plants, concerning any Company or Subsidiary and none is pending or, to
the best knowledge of any Company or Subsidiary, threatened. To the best
knowledge of each Company and Subsidiary, no matter exists which might give
rise to an investigation, enquiry or proceeding of that type.
(e) To the best knowledge of each Company and Subsidiary, no Company or
Subsidiary has a liability (actual or contingent, or which might hereafter
arise) to make good, repair, re-instate or clean up land or any other asset
on or before the date of this Agreement owned, occupied, possessed or used
by the relevant Company or Subsidiary.
(f) Notwithstanding the foregoing, each of the representations or
warranties contained in clauses (a) through (e) above shall only relate to
those events, facts, conditions or circumstances that have or could be
reasonably expected to have, either individually or in the aggregate, a
Company Material Adverse Effect.
4.23 Board of Directors and Shareholder Approval. The Board of Directors of
each Company has unanimously approved the transactions contemplated by this
Agreement. Such actions of the Board of Directors remain in full force and
effect and no other action on the part of the Board of Directors or
shareholders of any Company or Subsidiary shall be necessary to consummate the
transactions contemplated by this Agreement.
4.24 Brokers; Certain Expenses. Except with respect to investment banking
fees payable to Hambrecht & Quist (in the amount previously disclosed to the
Buyer by the Companies which will be paid by Buyer at the Closing) and the
payment to be made by the Company referred to in Section 6.13(iii), no Company
or Subsidiary has paid or become obligated to pay any fee or commission to any
broker, finder, investment banker or other intermediary in connection with
this Agreement.
4.25 No Agreements to Sell Companies. Except as contemplated by this
Agreement, no Company or Subsidiary has any legal obligation, absolute or
contingent, to any other person, firm or entity to sell, directly or
indirectly, capital stock, material assets (other than inventory in the
ordinary course of business) or business of either Company or any Subsidiary
or to effect any merger, consolidation, liquidation, dissolution,
recapitalization or other reorganization of either Company or any Subsidiary
or to enter into any agreement with respect thereto.
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4.26 Related-Party Transactions. Except as described in the Company
Disclosure Letter, since July 1, 1993 no director or executive officer of any
Company or Subsidiary, nor any security holder owning more than 5% of the
outstanding shares of either Company, nor any Associate or member of the
immediate family of the foregoing persons (a) has engaged in any transaction,
or series of similar transactions, to which either Company or any Subsidiary
was or is to be a party, in which the amount involved exceeded or exceeds
US$60,000, except in respect of compensation for services rendered as an
employee in the ordinary course of business, (b) has owned, of record or
beneficially, in excess of a 10% equity interest in, any business or
professional entity that has made payments to, or received payments from,
either Company or any Subsidiary in the aggregate exceeding US$60,000 in any
full fiscal year, or (c) is or has been indebted to either Company or any
Subsidiary at any time in an amount in excess of US$60,000. "Associate" shall
mean, in relation to any person, a person who is connected with that person.
Whether a person is so connected shall be determined in accordance with
Section 839 of the Taxes Act of 1988 save that in construing Section 839 the
term "control" shall have the meaning given by Section 840 or Section 416 of
the said Taxes Act of 1988 so that there shall be control wherever either of
the said sections would so require.
4.27 Employees; Labor Matters.
(a) There is no employment or other contract of engagement (written or
otherwise) between any Company or Subsidiary and any of its directors or
officers, other than at-will employment agreements equivalent in all
material respects (except only as to position and compensation) to the
forms previously delivered by the Companies to the Buyer. No Company or
Subsidiary is a party to a consultancy contract with any such persons.
(b) There is no employment contract between any Company or Subsidiary and
any of its Employees which cannot be terminated by three months' notice or
less without giving rise to a claim for damage or compensation (other than
a statutory redundancy payment or statutory compensation for unfair
dismissal).
(c) The Company Disclosure Letter includes true and complete copies of
the employment contract of each director, other officer and Employee of
each Company and Subsidiary entitled to remuneration at an annual rate, or
an average annual rate over the last three financial years, of more than
Forty Thousand Pounds Sterling ((Pounds)40,000).
(d) The basis of the remuneration payable to each Company's directors,
other officers and Employees is the same as that in force at March 31,
1996. No Company or Subsidiary is obligated to increase, nor has it made
provision to increase, the total annual remuneration payable to its
directors, other officers and Employees by more than five percent (5%) or
to increase the rate of remuneration of a director, other officer or
Employee entitled to annual remuneration of more than Forty Thousand Pounds
Sterling ((Pounds)40,000).
(e) No Company or Subsidiary owes any amount to a present or former
director, other officer or Employee (or his or her dependent) other than
for accrued remuneration or reimbursement of business expenses.
(f) Each Company and Subsidiary has in all material respects complied
with (i) each legally binding obligation imposed on it by, and each order
and award made under, statute, regulation, code or conduct and practice,
collective agreement, custom and practice relevant to the relations between
it and its Employees or a trade union or the terms of employment or its
employees and (ii) each recommendation made by the Advisory Conciliation
and Arbitration Service and each award and declaration made by the Central
Arbitration Committee.
(g) Within the year ending on the date of this Agreement no Company or
Subsidiary has (i) given notice or redundancies to the relevant Secretary
of State or started consultations with a trade union under Part IV of the
Employment Protection Act 1975 or failed to comply with its obligations
under Part IV of that Act or (ii) been a transferor or transferee in
respect of a relevant transfer (as defined in the Transfer of Undertakings
(Protection of Employment) Regulations 1981) or failed to comply with a
duty to inform and consult a trade union under those Regulations.
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(h) No Company or Subsidiary has any agreement or arrangement with, and
does not recognize, a trade union, works council, staff association or
other body representing any of its Employees. No Company or Subsidiary is
involved in a dispute with a trade union, works council, staff association
or other body representing any of its Employees.
(i) No Company or Subsidiary has nor is proposing to introduce a share
incentive, share option, profit sharing, bonus or other incentive scheme
for any of its directors, officers or other Employees.
(j) There is and has been no training scheme, arrangement or proposal in
relation to any Company or Subsidiary in respect of which a levy may become
payable by it under the Industrial Training Act 1982.
4.28 Proprietary Rights. Each Company and Subsidiary (a) owns or has the
right to use, free and clear of all Encumbrances, all patents, patent
applications, trademarks, service marks, trade names, copyrights, trade
secrets, licenses and similar rights with respect to the foregoing, necessary
for and used in the conduct of its business as now conducted, to its best
knowledge, without infringing upon or otherwise acting adversely to the right
or claimed right of any person under or with respect to any of the foregoing,
(b) is not contractually or, to its best knowledge, otherwise obligated to
make any material payments by way of royalties, fees or otherwise to any owner
of, licensor of, or other claimant to, any patent, trade secret, trademark,
trade name, copyright or other intangible asset, with respect to the use
thereof or in connection with the conduct of its business or otherwise, (c)
has not received any notice of conflict with the asserted rights of others
with respect to such matters, (d) owns or has the unrestricted right to use
all trade secrets, including know-how, customer lists, inventions, designs,
processes, computer programs and technical data used by it in the development,
operation and sale of all products and services sold by it, to its best
knowledge free and clear of any rights, liens or claims of others, and (e) to
its best knowledge is not using any confidential information or trade secrets
of others. A list of all patent, patent applications, trademarks, trademark
applications, licenses and trade names which any Company or Subsidiary has
taken action to obtain, perfect or protect by filings with any governmental
agency are contained in the Company Disclosure Letter.
4.29 Disclosure. No representation or warranty by the Majority Shareholder
in this Agreement contains any untrue statement of a material fact or omits to
state any material fact necessary, in light of the circumstances under which
it was made, in order to make the statements herein not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Except as disclosed in the Letter of Disclosure delivered to the Companies
and the Shareholders in connection herewith and initialled by the Buyer and
the Majority Shareholder for identification (the "Buyer's Disclosure Letter"),
Buyer represents and warrants to the Shareholders as follows:
5.1 Corporate Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of California, with
all requisite corporate power and authority to own, operate and lease its
properties and to carry on its business as it is now being conducted, and is
qualified or licensed to do business and is in good standing in each
jurisdiction in which the failure to be so qualified or licensed could
reasonably be expected, individually or in the aggregate, to have a material
and adverse effect upon the financial condition, prospects or results of
operations of Buyer or Buyer's Subsidiary (as defined below), considered as a
whole (a "Buyer Material Adverse Effect"). True and complete copies of the
Certificate of Incorporation and the By-Laws of Buyer have been delivered to
the Shareholders.
5.2 Subsidiaries. Buyer has one (1) wholly-owned subsidiary, PMT Korea, a
corporation organized under the laws of the Republic of South Korea ("Buyer's
Subsidiary"). Buyer's Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, with all
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requisite corporate power and authority to own, operate and lease its
properties and to carry on its business as it is now being conducted, and is
qualified or licensed to do business and is in good standing in each
jurisdiction in which the failure to be so qualified or licensed could
reasonably be expected to have, individually or in the aggregate, a Buyer
Material Adverse Effect. All of the issued shares of capital stock of such
Subsidiary have been duly and validly authorized and issued, are fully paid
and non-assessable, and are owned directly by Buyer, free and clear of any and
all Encumbrances. Except with respect to its ownership of Buyer's Subsidiary,
its ownership of the capital stock of PMT CVD Partners, Inc. and its limited
partnership interest in PMT CVD Partners, L.P., Buyer does not own, directly
or indirectly, any stock, partnership interest, joint venture interest or
other security, investment or interest in any other corporation, organization,
partnership, limited liability company or entity. As used in this Article V,
references to "Buyer" shall include Buyer's Subsidiary, except to the extent
the context requires otherwise.
5.3 Capital Stock. The authorized capital stock of Buyer consists in its
entirety of Fifty Million (50,000,000) shares of Buyer's Common Stock, of
which, as of the date hereof, 8,692,065 are issued and outstanding, and Twenty
Million (20,000,000) shares of Preferred Stock, no par value, of which, as of
the date hereof, no shares were outstanding. All of the outstanding shares of
Common Stock have been duly and validly authorized and issued, are fully paid
and nonassessable and were issued in compliance with all applicable federal
and state securities laws. To the best of Buyer's knowledge, there are no
voting trusts or other agreements, arrangements or understandings with respect
to the voting of the capital stock of Buyer. Except as set forth in the Buyer
Disclosure Letter, there are no preemptive rights, registration rights,
subscriptions, options, warrants, rights, convertible securities or other
agreements or commitments of any character relating to the issued or unissued
capital stock or other securities of Buyer and there are no outstanding
contractual obligations of Buyer to repurchase, redeem or otherwise acquire or
sell, issue or otherwise transfer any shares of capital stock thereof.
5.4 Buyer Shares. The Buyer Shares have been duly authorized and, when
issued as contemplated hereby at the Closing, will be validly issued, fully
paid and non-assessable, will not be subject to any preemptive or other
similar rights and will be delivered to each Shareholder free and clear of all
Encumbrances, and each Shareholder will acquire good and marketable title to
the Buyer Shares acquired by such Shareholder, subject to any transfer
restrictions pursuant to applicable securities laws. The Buyer Shares are
being issued pursuant to an available exemption from registration under the
Securities Act of 1933, as amended, provided by Regulation S promulgated
thereunder.
5.5 Authority. Buyer has the full corporate power and authority to execute
and deliver this Agreement and each other agreement contemplated hereby, to
carry out its obligations hereunder and thereunder and to consummate the
transactions contemplated on its part hereby and thereby. The execution,
delivery and performance by Buyer of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by its Board of
Directors. Upon approval by Buyer's shareholders of the issuance of the Buyer
Shares to the Shareholders pursuant hereto, no other action on the part of
Buyer will be necessary to authorize the execution and delivery of this
Agreement by Buyer or the performance by Buyer of its obligations hereunder.
This Agreement has been duly executed and delivered by Buyer, and is a legal,
valid and binding obligation of Buyer, enforceable against Buyer in accordance
with its terms, except to the extent that its enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights generally or by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at
law). Each other agreement to be executed in connection with this Agreement on
or prior to the Closing Date will be duly executed and delivered by Buyer, and
will constitute a legal, valid and binding obligation of Buyer, enforceable
against it in accordance with its respective terms, subject to applicable
bankruptcy, insolvency, moratorium, reorganization, or similar laws affecting
creditors' rights generally and subject to general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
5.6 No Violations or Consents. The execution, delivery and performance of
this Agreement by Buyer and the consummation by it of the transactions
contemplated hereby will not (a) violate or conflict with any provision of any
law specifically applicable to Buyer or by which any property or asset of it
is bound, (b) require the
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consent, waiver, approval, license or authorization of or any filing by Buyer
with any public authority (other than (i) if necessary, the filing of a pre-
merger notification report under the HSR Act and under applicable U.K./EEC
antitrust statutes, (ii) in connection with or in compliance with the
provisions of each of the Securities Act, and the Securities Exchange Act of
1934, as amended (the "Exchange Act"), including without limitation, the
filing of the Proxy Statement (as defined in Section 6.4(b), and (iii) any
other filings and approvals expressly contemplated by this Agreement), (c)
violate, conflict with, result in a breach of or the acceleration of any
obligation under, or constitute a default (or an event which with notice or
the lapse of time or both would become a default) under, or give to others any
right of termination, amendment, acceleration or cancellation of, or result in
the creation of any Encumbrance on any property or asset of Buyer pursuant to
any provision of any charter or by-law, indenture, mortgage, lien, lease,
agreement, contract, instrument, order, judgment, ordinance, regulation or
decree to which Buyer is subject or by which Buyer or any of its property or
assets is bound, or (d) result in a loss or adverse modification of any
license, permit, certificate, franchise or contract granted to or otherwise
held by Buyer which, in any such case described in clauses (a) through (d),
could reasonably be expected to have, individually or in the aggregate, a
Buyer Material Adverse Effect.
5.7 Financial Statements and Reports. Buyer heretofore has delivered to each
Company true and complete copies of (a) the Company's Registration Statement
on Form S-1 (the "Registration Statement") as declared effective by the
Commission on August 23, 1995, (b) its Annual Report on Form 10-K for the
fiscal year ended December 31, 1995, as filed with the Commission, (c) its
Quarterly Report on Form 10-Q for the quarter ended March 31, 1996, as filed
with the Commission, and (d) all other reports, statements and registration
statements (including Current Reports on Form 8-K) filed by it with the
Commission subsequent to the filing of the Registration Statement, if any. The
reports, statements and registration statements referred to in the immediately
preceding sentence, including without limitation, any financial statements or
schedules or other information incorporated by reference therein, are referred
to in this Agreement as the "SEC Filings." As of the respective times such
documents were filed with the Commission, the SEC Filings complied as to form
and content, in all material respects, with the requirements of the Securities
Act and the Exchange Act, as the case may be, and the rules and regulations
promulgated thereunder, and did not contain any 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, in light of the circumstances under
which they were made, not misleading. The financial statements of Buyer
included in the SEC Filings ("Buyer's Financial Statements") were prepared in
accordance with generally accepted accounting principles ("GAAP"),
consistently applied, and (except as may be indicated therein or in the notes
thereto) present fairly the consolidated financial position, results of
operations and cash flows of Buyer as of the dates and for the periods
indicated (subject, in the case of unaudited interim consolidated financial
statements, to normal recurring year-end adjustments and any other adjustments
described therein). Except as set forth in Buyer's Financial Statements, Buyer
has no liabilities, contingent or otherwise, other than (i) liabilities
incurred in the ordinary course of business subsequent to March 31, 1996, (ii)
obligations under real and personal property leases disclosed in Buyer's
Financial Statements, and (iii) obligations incurred in the ordinary course of
business and not required under GAAP to be reflected in Buyer's Financial
Statements, which, individually or in the aggregate, are not material to the
financial condition or operating results of Buyer. Buyer is in full compliance
with the revenue recognition policies adopted and approved by its Board of
Directors on January 17, 1996.
5.8 Litigation. There are no Actions pending or, to the best knowledge of
Buyer, threatened against Buyer or any of the assets or properties thereof
before any Authority which could reasonably be expected to have a Buyer
Material Adverse Effect. There are no Actions pending or, to the knowledge of
Buyer, threatened against Buyer that could be reasonably expected to
materially and adversely affect Buyer's consummation of the transactions
contemplated by this Agreement. None of the assets or property of Buyer is
subject to any order, judgment, injunction, writ or decree, which could
reasonably be expected to have, individually or in the aggregate, a Buyer
Material Adverse Effect.
5.9 Absence of Certain Changes or Events. Since March 31, 1996, the Buyer
has conducted its business in the ordinary course and, except pursuant to this
Agreement and the transactions contemplated hereby, there has not been any:
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(a) material adverse change in the financial condition, assets,
liabilities, business, operations, results of operations or prospects of
the Buyer or any other event or condition which in any one case or in the
aggregate has materially and adversely affected the Buyer or any event or
condition which it is reasonable to expect will individually or in the
aggregate materially adversely affect the Buyer (any such event being
herein referred to as a "Buyer Material Adverse Change");
(b) declaration, waiver or payment of any dividend or other distribution
or payment (whether in cash, shares or property) with respect to the share
capital of the Buyer, or any redemption, purchase or other acquisition of
any of the securities of the Buyer, or any other payment to any shareholder
of the Buyer in its capacity as a shareholder;
(c) issuance by the Buyer of, or commitment by it to issue, any share
capital or obligations or any securities convertible into or exchangeable
or exercisable for shares or other securities other than pursuant to its
1991 Stock Option Plan and as contemplated by Section 7.3(g) hereof; or
(d) indebtedness for borrowed money incurred by the Buyer or any
commitment to incur indebtedness for borrowed money entered into by the
Buyer, or any loans made or agreed to be made by the Buyer other than
pursuant to commitments or credit facilities existing on March 31, 1996 and
described in the Buyer Disclosure Letter.
5.10 Insurance. Buyer has in full force policies of insurance issued by
insurers of recognized responsibility insuring Buyer and its properties and
business against such losses and risks, and in such amounts, as in Buyer's
best judgment, after advice from its insurance broker, are acceptable for the
nature and extent of such business and its resources. Buyer is not in default
with respect to any material provision contained in any insurance policy, and
has not failed to give any notice or present any existing claims it has under
its insurance policies in a timely fashion.
5.11 Employee Benefits. Buyer does not have any agreements, arrangements,
customs or practice (whether legally enforceable or not) relating to or
providing for employee benefits, including pensions, gratuities, allowances,
lump sums or other like benefits on or after severance, retirement or death,
during periods of sickness, incapacity or disablement or otherwise for the
benefit of any present or former employee of Buyer (a "Buyer Employee") or
dependent or beneficiary of a Buyer Employee, including any retirement plan in
which any Buyer Employee participates that is subject to any provision of the
Employee Retirement Income Security Act of 1974, as amended, and the
regulations thereof, nor has any proposal been announced or promise made to
establish any such agreement, arrangement or practice.
5.12 Employees; Labor Matters.
(a) There is no employment or other contract of engagement (written or
otherwise) between the Buyer and any of its directors or officers, other
than at-will employment agreements equivalent in all material respects
(except only as to position and compensation) to the form previously
delivered by the Buyer to the Companies. The Buyer is not a party to a
consultancy contract with any such persons.
(b) There is no employment contract between the Buyer and any Buyer
Employee which cannot be terminated by three months' notice or less without
giving rise to a claim for damage or compensation (other than a statutory
redundancy payment or statutory compensation for unfair dismissal).
(c) The Buyer Disclosure Letter contains details of the terms of the
employment contract of each director, officer and Buyer Employee entitled
to remuneration at an annual rate, or an average annual rate over the last
three financial years, of more than US$60,000.
(d) The basis of the remuneration payable to the Buyer's directors,
officers and Buyer Employees is the same as that in force at March 31,
1996. The Buyer is not obligated to increase, nor has it made provision to
increase, the total annual remuneration payable to its directors, officers
and Buyer Employees by more than five percent (5%) or to increase the rate
of remuneration of a director other officer or employee entitled to annual
remuneration of more than US$60,000.
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(e) The Buyer does not owe any amount to any present or former director
or officer of Buyer or Buyer Employee (or his or her dependent) other than
for accrued remuneration or reimbursement of business expenses.
(f) There is no agreement or arrangement between the Buyer and any Buyer
Employee with respect to his or her ceasing to be employed or his or her
retirement which is not included in the written terms of his or her
employment or previous employment. The Buyer has not provided, or agreed to
provide, a gratuitous payment or benefit to a director, officer or Buyer
Employee or to any of their dependents.
(g) The Buyer has not (i) incurred a liability for breach of termination
of an employment contract, including without limitation, a redundancy
payment, protective award and compensation or wrongful dismissal, unfair
dismissal and failure to comply with an order for the reinstatement or re-
engagement of an Employee, (ii) incurred a liability for breach or
termination of a consultancy agreement or (iii) made or agreed to make a
payment or provided or agreed to provide a benefit to a present or former
director, officer or Employee or to any of their dependents in connection
with the actual or proposed termination or suspension of employment or
variation of an employment contract.
(h) The Buyer has in all material respects complied with (i) each
obligation imposed on it by, and each order and award made under, any
statute, regulation, code or conduct and practice, custom and practice
relevant to the relations between it and its Employees.
(i) The Buyer has no agreement or arrangement with, and does not
recognize, a trade union, works council, staff association or other body
representing any of its Employees. The Buyer is not involved in, and to the
best knowledge of the Buyer, no matter exists which might give rise to, a
dispute with a trade union, works council, staff association or other body
representing any of its Employees.
5.13 Material Contracts and Other Agreements. The Buyer Disclosure Letter
discloses (a) all agreements or contracts whether or not fully performed
pursuant to which the Buyer has since December 31, 1990 acquired or disposed
of a material portion of its business or assets, other than sales of inventory
or contracts with suppliers, each in the ordinary course of business; (b) all
agreements containing covenants not to compete on the part of the Buyer or
otherwise restricting the ability of the Buyer in any material way to engage
in its business; (c) all material notes, mortgages, indentures, letters of
credit, guarantees, performance bonds and other obligations and agreements and
other instruments for or relating to any lending or borrowing (including
assumed debt) entered into by the Buyer or pursuant to which any properties or
assets of the Buyer are pledged or mortgaged as collateral; and (d) all
agreements to which either Buyer or Buyer's Subsidiary is a party containing
provisions restricting or providing exclusive rights with respect to the
development, manufacture or marketing of products which, after the Closing,
would be applicable to the business or products of any of the Companies or the
Subsidiaries by reason of the transactions contemplated by this Agreement.
5.14 Suppliers and Customers. The Buyer has delivered to the Company a list
which accurately sets forth (a) the ten largest suppliers of Buyer for the
fiscal year ended December 31, 1995 ("Buyer's Large Suppliers"), (b) the
amount of all payments made to each Buyer's Large Supplier for such fiscal
period, (c) the ten largest customers or groups of related customers for the
fiscal year ended December 31, 1995 (the "Buyer's Large Customers") and (d)
the amount of all payments made by Buyer's Large Customers for such fiscal
period. No supplier is a sole source of supply of any good or service used by
Buyer. None of Buyer's Large Suppliers or Buyer's Large Customers has canceled
or otherwise terminated, or threatened in writing, by notice to the Buyer, to
cancel or otherwise terminate, its relationship with Buyer or, since March 31,
1996, decreased materially, or threatened to decrease or limit materially, its
services, supplies or materials to Buyer or its usage or purchase of the
products or services of Buyer which, in any case, would result in a Buyer
Material Adverse Change.
5.15 Compliance with Laws. Buyer is in compliance with applicable laws,
statutes, ordinances, rules and regulations, orders or other requirements,
including without limitation, applicable franchise, building, zoning, health,
environmental, sanitation, safety, labor relations and other laws, ordinances
or regulations, other than
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violations, if any, which, individually or in the aggregate, could not
reasonably be expected to have, a Buyer Material Adverse Effect. Buyer has not
received any notice from any person asserting a present or past failure by
Buyer to comply in any material respect with such laws, statutes, ordinances,
rules, regulations, orders or other requirements.
5.16 Licenses and Permits. Buyer has all material governmental or regulatory
licenses, permits and authorizations (all of which are in full force and
effect) reasonably necessary to conduct their business as it is now being
conducted, except for such governmental or regulatory licenses, permits and
authorizations the absence of which could not reasonably be expected to have,
individually or in the aggregate, a Buyer Material Adverse Effect, and none of
such governmental or regulatory licenses, permits and authorizations will be
impaired as a result of the transactions contemplated by this Agreement,
except in any case that could not reasonably be expected to have, individually
or in the aggregate, a Buyer Material Adverse Effect. Buyer has not received
any notice to the effect that, or otherwise been advised that, it is not in
compliance with, or that it is in violation of, any such governmental or
regulatory licenses, permits and authorizations in a manner that could
reasonably be expected to have, individually or in the aggregate, a Buyer
Material Adverse Effect, and there are not currently existing circumstances
that are likely to result in a failure of Buyer to comply with, or in a
violation by Buyer of, any such governmental or regulatory licenses, permits
or authorizations that could reasonably be expected to have, individually or
in the aggregate, a Buyer Material Adverse Effect.
5.17 Title to Assets. Buyer has good and marketable title to all of the
owned tangible personal property used in the conduct of its business free and
clear of all Encumbrances, except for assets disposed of in the ordinary
course of business. Buyer has good and valid leasehold title to all leased
tangible personal property leased by it from third parties, free and clear of
all Encumbrances, except for imperfections individually or in the aggregate as
could not reasonably be expected to cause a Buyer Material Adverse Effect, and
subject to the rights of the lessor in and to such leased tangible personal
property as is subject to hire, leasing or rental agreements.
5.18 Inventory. The value at which the inventory of Buyer is carried on the
Buyer's consolidated balance sheet for the fiscal year ended December 31, 1995
and Buyer's consolidated balance sheet for the quarter ended March 31, 1996
reflects the customary inventory valuation policy of Buyer and is in
accordance with GAAP. Since March 31, 1996, the Buyer has in all material
respects continued to replenish its inventory in the ordinary course of
business consistent with past practice, and has not made any material change
in its inventory policies or procedures.
5.19 Backlog. The Buyer has delivered to the Companies a description of the
Buyer's backlog of orders believed firm at March 31, 1996, indicating each
applicable customer, purchase order, type of product(s), scheduled shipment
date(s), dollar amount(s) of scheduled shipment(s) and customer deposits or
payments, if any, made with respect thereto.
5.20 Tax Returns and Audits.
(a) Buyer has prepared and timely filed all federal, state and other tax
returns required by law to be filed by it, has paid or made provision for
the payment of all taxes shown to be due and all additional assessments,
and adequate provisions have been made and are reflected in Buyer's
Financial Statements to the extent required by GAAP for all current taxes
and other charges to which Buyer is subject and which are not currently due
and payable. None of the federal income tax returns of Buyer have been
audited by the Internal Revenue Service in such a manner to bring such
audit to the attention of Buyer. There are no additional assessments or
adjustments pending or, to the best knowledge of Buyer, threatened against
Buyer for any period, nor is Buyer aware of any basis for any such
assessment or adjustment.
(b) Since March 31, 1996, no further material liability or contingent
material liability for taxation of Buyer has arisen or is likely to arise
otherwise than as a result of transactions entered into by Buyer in the
ordinary course of business.
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(c) Buyer is not aware of any circumstance which will or may, whether by
lapse of time or by notice of assessment or otherwise, give rise to any
material dispute with any relevant taxation authority in relation to its
liability or accountability for taxation, any material claim made by it,
material relief, deduction or allowance afforded to it, or in any material
respect in relation to the status or character of Buyer under or for the
purpose of any provision of any legislation relating to taxation.
5.21 Environmental and Safety Laws.
(a) To the best knowledge of Buyer, no land or other asset owned
occupied, possessed or used by Buyer on or at any time before the date of
this Agreement (i) contains or has contained (in the case of land, above or
below ground) a hazardous substance or article, waste or other pollutant or
contaminant, (ii) is or has been used for the deposit, storage, treatment
or disposal or waste or sewage or (iii) is referred to or listed in a
register of polluted or contaminated land, and no matter exists which might
give rise to an entry in such a register.
(b) To the best knowledge of Buyer, Buyer has obtained and complied with
the terms and conditions of each governmental or regulatory license, permit
or authorization (collectively, the "Environmental Permits"), and all
applicable legal and administrative requirements, concerned with the
pollution or protection of the environment (including the disposal of
waste) or harm to or the protection of the health of humans, animals or
plants. Buyer is not aware of any expenditure or work which is or will be
necessary to comply with, maintain or obtain any such Environmental Permit.
No release or discharge of a hazardous substance or article, waste, sewage
or other pollutant or contaminant has exceeded an allowed quota or limit
prescribed or specified under any applicable legal or administrative
requirement or in a condition to an Environmental Permit.
(c) Neither Buyer nor any person for whose acts or defaults Buyer may be
vicariously liable is involved, or has during the five (5) years ending on
the date of this Agreement been involved, in a civil, criminal,
arbitration, administrative or other proceeding concerned with the
pollution or protection of the environment, or harm to or the protection of
the health of humans, animals or plants in any jurisdiction. No civil,
criminal, arbitration, administrative or other proceeding of that type is
pending or, to the best knowledge of Buyer, threatened by or against Buyer
or a person for whose acts or defaults Buyer may be vicariously liable. To
the best knowledge of Buyer, no matter exists which might give rise to a
proceeding of that type.
(d) There is and has been no governmental or other investigation, enquiry
or disciplinary proceeding relating to the pollution or protection of the
environment, or harm to or the production of the health of humans, animals
or plants, concerning Buyer and none is pending or, to the best knowledge
of Buyer, threatened. To the best knowledge of Buyer, no matter exists
which might give rise to an investigation, enquiry or proceeding of that
type.
(e) To the best knowledge of Buyer, Buyer has no liability (actual or
contingent, or which might hereafter arise) to make good, repair, re-
instate or clean up land or any other asset on or before the date of this
Agreement owned, occupied, possessed or used by Buyer.
(f) Notwithstanding the foregoing, each of the representations or
warranties contained in clauses (a) through (e) above shall only relate to
those events, facts, conditions or circumstances that have or could be
reasonably expected to have, either individually or in the aggregate, a
Buyer Material Adverse Effect.
5.22 Board of Directors Approval. The Board of Directors of Buyer has
unanimously approved the transactions contemplated by this Agreement and has
unanimously determined that such transactions are fair to and in the best
interests of Buyer and its shareholders. Such action of the Board of Directors
remains in full force and effect.
5.23 Related-Party Transactions. Except as described in the Buyer's
Disclosure Letter, since December 31, 1992 no director or executive officer of
Buyer, nor any security holder owning more than 5% of
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the outstanding shares of Buyer, nor any Associate or member of the immediate
family of the foregoing persons (a) has engaged in any transaction, or series
of similar transactions, to which the Buyer was or is to be a party, in which
the amount involved exceeded or exceeds US$60,000, except in respect of
compensation for services rendered as an employee in the ordinary course of
business, (b) has owned, of record or beneficially, in excess of a 10% equity
interest in, any business or professional entity that has made payments to, or
received payments from, the Buyer in the aggregate exceeding US$60,000 in any
full fiscal year, or (c) been indebted to the Buyer at any time in an amount
in excess of US$60,000.
5.24 Proprietary Rights. Buyer (a) owns or has the right to use, free and
clear of all Encumbrances, all patents, patent applications, trademarks,
service marks, trade names, copyrights, trade secrets, licenses and similar
rights with respect to the foregoing, necessary for and used in the conduct of
its business as now conducted, to Buyer's best knowledge, without infringing
upon or otherwise acting adversely to the right or claimed right of any person
under or with respect to any of the foregoing, (b) is not contractually or, to
Buyer's best knowledge, otherwise obligated to make any material payments by
way of royalties, fees or otherwise to any owner of, licensor of, or other
claimant to, any patent, trade secret, trademark, trade name, copyright or
other intangible asset, with respect to the use thereof or in connection with
the conduct of its business or otherwise, (c) has not received any notice of
conflict with the asserted rights of others with respect to such matters,
(d) owns or has the unrestricted right to use all trade secrets, including
know-how, customer lists, inventions, designs, processes, computer programs
and technical data used by Buyer in the development, operation and sale of all
products and services sold by it, to its best knowledge free and clear of any
rights, liens or claims of others, and (e) to its best knowledge, is not using
any confidential information or trade secrets of others. A list of all patent,
patent applications, trademarks and service marks, trademark and service mark
applications, licenses and trade names which the Buyer has taken action to
obtain perfect or protect by filings with any governmental agency are
contained in the Buyer Disclosure Letter.
5.25 Real Property. All real property owned, occupied, used by or in the
possession of the Buyer is listed in the Buyer Disclosure Letter (the "Buyer
Real Property"). Except as set forth in the Buyer Disclosure Letter, Buyer has
good and marketable title to all Buyer Real Property owned by it in fee, and
Buyer leases free and clear of all Encumbrances all Buyer Real Property not
owned by it in fee.
5.26 Disclosure. No representation or warranty by Buyer in this Agreement
contains any untrue statement of a material fact or omits to state any
material fact necessary, in light of the circumstances under which it was
made, in order to make the statements herein not misleading.
5.27 Brokers. Except with respect to any investment banking fee due to
Salomon Brothers and Unterberg Harris, Buyer has not paid or become obligated
to pay any fee or commission to any broker, finder, investment banker or other
intermediary in connection with this Agreement.
ARTICLE VI
COVENANTS AND AGREEMENTS
6.1 Conduct of Business Prior to the Closing Date. Each Company and
Subsidiary, on the one hand, and Buyer and Buyer's Subsidiary, on the other
hand, agrees with the other that, from the date hereof, and prior to the
Closing Date, except as otherwise consented to or approved in writing by the
other or expressly permitted by this Agreement:
(a) its business shall be conducted only in the ordinary course and
consistent with past practice and it shall not take any action inconsistent
therewith or with the transactions contemplated hereby;
(b) it shall not (i) amend its Articles of Association or Articles or
Certificates of Incorporation, as the case may be, Memorandum or Bylaws, as
the case may be, or other charter documents, (ii) change the number of
issued or outstanding shares of its capital stock, or issue any debt or
equity securities, or any
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options, warrants or other rights to acquire or subscribe for such
securities (except, in the case of the Buyer, for the grant of stock
options, not exceeding options covering 400,000 shares of Buyer's Common
Stock, plus the amount of options contemplated by Section 6.14(b), under
its Stock Option Plan, and the issuance of shares of Buyer's Common Stock
pursuant to the exercise of outstanding stock options and warrants and the
issuance of subordinate convertible debentures as contemplated by Section
7.3(g) hereof), (iii) declare, set aside or pay any dividend or other
distribution or payment in cash, stock or property in respect of shares of
its capital stock (except, in the case of the Companies, as contemplated by
and in accordance with Section 9.8 hereof), (iv) make any direct or
indirect redemption, retirement, purchase or other acquisition of any of
its capital stock, or (v) split, combine or reclassify its outstanding
shares of capital stock;
(c) it shall not, directly or indirectly, (i) other than in the ordinary
course of business and consistent with past practice, and except in the
case of Buyer for the subordinated debt financing referred to in Section
7.3(g), incur any indebtedness for borrowed money, except indebtedness for
borrowed money incurred under credit facilities existing as of the date
hereof (or replacements thereof), inter-group borrowings or which otherwise
does not exceed, at the date of each incurrence, the equivalent of
US$250,000 in principal amount, (ii) waive, release, grant or transfer any
rights of material value, except in the ordinary course of business, (iii)
sell, transfer, lease, license, sell, mortgage, pledge, dispose of or
encumber any of its assets with a value exceeding, as of the date of such
event, the equivalent of US$250,000 in the aggregate, other than inventory
sold in the ordinary course of business and consistent with past practice
or any pledge or other encumbrance pursuant to credit facilities in
existence on the date hereof (or replacements of facilities in existence on
the date hereof), (iv) purchase or acquire any business or any securities
or assets of a business, (v) enter into any joint venture or partnership,
(vi) settle any material litigation or waive or relinquish any material
right or benefit or (vii) accelerate payments on any indebtedness;
(d) it will use its reasonable best efforts to preserve intact its
business organization, to keep available the services of its operating
personnel and to preserve the goodwill of those having business
relationships with it, provided that the loss of any personnel as a result
of the announcement of the transactions contemplated by this Agreement
shall not be deemed to be a breach of this Section 6.1(d);
(e) it will not, directly or indirectly, (i) increase the compensation
payable or to become payable by it to any of its employees, officers or
directors, except in the ordinary course of business consistent with prior
practice, (ii) make any payment or provision to, or otherwise amend, other
than as required by the Company's Scheme or as permitted by the Buyer's
Stock Option Plan, in each case in the ordinary course of business and
consistent with prior practice, any stock option, bonus, profit sharing,
pension, group insurance, severance pay, deferred compensation or other
payment or employee compensation plan for the benefit of its employees,
(iii) grant any stock options or stock appreciation rights, except as
permitted by paragraph (b) above, (iv) enter into any new, or alter or
amend any, employment, severance, consulting or other compensation
agreement with any director, officer, Employee or Associate of it, except
in the ordinary course of business consistent with prior practice, (v) make
any loan or advance to, or enter into any written contract, lease or
commitment with, any officer, Employee or director of it except in the case
of travel, entertainment or other similar advances in the ordinary course
of business consistent with prior practice, or (vi) enter into any other
material transactions with any Associate of it or any of its shareholders,
directors or executive officers;
(f) it will not, directly or indirectly, assume, guarantee, endorse or
otherwise become responsible for the obligations of any other individual,
firm or corporation, or make any loans or advances to any other individual,
firm or corporation except in the ordinary course of business and
consistent with past practices;
(g) it will not incur capital expenditures (or commitments to make such
expenditures which are not terminable at its option) which in the aggregate
would exceed 110% of the amount forecasted therefor as of the date hereof
with respect to any calendar month including or following the date hereof,
nor shall it make any investment of a capital nature either by purchase of
stock or securities, contributions to capital, property transfers or
otherwise or by the purchase of any property or assets of any other
individual, firm or corporation;
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(h) it will not alter any practice with respect to accounting policies or
procedures or make any reclassification of assets or liabilities, except,
with respect to the Companies, for changes required by changes in SSAP or
in the Companies Act 1985 or changes required to conform their financial
statements to U.S. GAAP;
(i) it will not close any office, plant, facility or warehouse, except as
required by applicable law or in the event of a material casualty;
(j) it will not enter into, with respect to any office, plant, facility
and warehouse, any new lease, lease termination agreement or amendment of
any agreement to lease real property, including without limitation, any
amendments to any such agreement with respect to rent or additional rent,
term assignment, subletting, "keep-open" clauses, non-competition clauses
and required trade name clause, except, in the case of the Companies and
the Subsidiaries, for lease modifications reflecting the resolution of
currently pending rent reviews which would not in the aggregate reasonably
be expected to result in rent increases exceeding (Pounds)150,000 annually;
(k) it will not sell, assign or sublease any office, plant, facility or
warehouse;
(l) it will not enter into an agreement to do any of the things described
in clauses (a) through (k) immediately above; and
(m) it will promptly advise the other in writing of any event or
occurrence that could be reasonably expected to have a Company Material
Adverse Effect (in the case of notices by the Company) or a Buyer Material
Adverse Effect (in the case of notices by the Buyer) or of any breach of
any of its representations or warranties contained in Article IV or Article
V, as applicable, or any breach by it of a covenant contained herein.
6.2 Access to Properties and Records. Each Company and Subsidiary, on the
one hand, and the Buyer, on the other hand, shall afford to the other and its
investment bankers, accountants, legal counsel and other representatives
(including without limitation the Buyer's environmental experts, for the
purpose of conducting the investigation referred to in Section 7.3(j) hereof),
on reasonable notice, full access during normal business hours from the date
hereof to the Closing Date to all of its properties, books, accounts,
agreements, personnel, facilities, proprietary information, contracts,
commitments and records and shall make reasonably available its officers,
employees and accounting professionals to answer fully and promptly questions
put to them thereby. No investigation pursuant to this Section 6.2 will affect
or be deemed to modify any representation or warranty made herein. All such
corporate books, accounts and records shall remain the property of the
Companies and the Subsidiaries on and after the Closing and shall not be
removed from the facilities where they are presently maintained prior to the
Closing.
6.3 Acquisition Proposals. Following the execution of this Agreement and
prior to the termination of this Agreement under Section 8.1, each Company and
each Shareholder agrees that it shall not, nor shall any of the Companies'
directors, officers, Employees or other representatives or agents, directly or
indirectly, communicate, solicit, initiate, encourage or participate
(including furnishing non-public information concerning the business,
properties or assets of any Company or Subsidiary) in any discussions or
negotiations with regard to any proposal to acquire, directly or indirectly,
any of the share capital of any Company or Subsidiary, to invest any funds in
any Company or Subsidiary, whether such proposal, acquisition, investment or
other transaction involves a stock sale, a tender offer, exchange offer,
merger, consolidation or other business combination, or for the acquisition of
a substantial portion of the assets of any Company or Subsidiary (an
"Acquisition Proposal"). The Company and each Shareholder agree to immediately
communicate to the Buyer the identity of such other party and the initial
terms of any proposal it may receive from any other person or entity in
respect of an Acquisition Proposal.
6.4 Proxy Statement and Meeting of Buyer's Shareholders.
(a) As soon as reasonably practicable following the date hereof, Buyer
shall prepare and file with the Commission, and, within ten (10) business
days following clearance with the Commission, mail to its shareholders the
Proxy Statement with respect to a meeting of Buyer's shareholders to
consider and vote,
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among other things, upon this Agreement and the transactions contemplated
hereby, including without limitation, Buyer's purchase of the US Shares and
ET Shares and the issuance of the Buyer Shares in connection therewith.
Each Company, Subsidiary and Shareholder agrees to assist and cooperate
with the Buyer in the preparation of the Proxy Statement with respect to
information therein concerning any such Company, Subsidiary or Shareholder.
(b) The Buyer, on the one hand, and each Company and Subsidiary and the
Majority Shareholder, on the other hand, hereby represents, warrants and
agrees with the other that the Proxy Statement will not, at the time the
Proxy Statement is mailed, and at the date of the meeting of the
shareholders of the Buyer held to approve the matters described therein,
contain any 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, in light of the circumstances under which they are
made, not misleading, or to correct any statement made in any earlier
communication with respect to the solicitation of any proxy or approval of
the transactions contemplated by this Agreement in connection with which
the Proxy Statement shall be mailed, except that no representation or
warranty is being made by either with respect to information supplied by
the other for inclusion in the Proxy Statement. The Buyer further
represents, warrants and agrees that the Proxy Statement will comply as to
form in all material respects with the provisions of the Exchange Act. The
letter to shareholders, notice of meeting, proxy statement and form of
proxy, or any information statement filed under the Exchange Act, as the
case may be, that may be provided to shareholders of the Buyer in
connection with the transactions contemplated by this Agreement (including
any supplements), and any schedules required to be filed with the
Commission in connection therewith, as from time to time amended or
supplemented, are collectively referred to as the "Proxy Statement."
(c) Buyer shall take all actions necessary in accordance with the
California Corporations Code and the bylaws of Buyer to duly call, give
notice of, convene and hold a meeting of its shareholders within forty-five
(45) calendar days after the mailing of the Proxy Statement to approve the
transactions contemplated by this Agreement.
6.5 Indemnification by Buyer.
(a) Buyer agrees, upon and subject to the occurrence of the Closing, to
indemnify the Companies and the Shareholders against and hold the Companies
and each Shareholder harmless from any and all claims, obligations, costs
and expenses, including without limitation, reasonable attorneys' fees and
expenses, and liabilities of and damages thereto arising out of the
material breach of any representation, warranty, covenant or agreement of
Buyer contained in Sections 5.3 (Capital Stock), 5.4 (Buyer Shares),
5.5 (Authority) and 6.4(b) (Proxy Statement matters) hereof (the "Surviving
Buyer Warranties"). Buyer agrees to similarly indemnify the Majority
Shareholder and Nigel Wheeler against and hold them harmless from any such
claims, obligations, costs and expenses arising by reason that either such
person becomes an officer and/or director of Buyer upon or after the
Closing and based upon any alleged act, omission or misconduct of Buyer, or
its officers, directors or other agents, prior to the Closing to the same
extent as all other officers and directors of Buyer.
(b) The indemnified parties agree to give Buyer prompt written notice of
any claim, assertion, event or proceeding by or in respect of a third party
of which they have knowledge concerning any liability or damage as to which
they may request indemnification hereunder, provided that the failure to
give such notice shall not impair the rights of the indemnified parties
hereunder or otherwise if and to the extent that the Buyer is not
prejudiced thereby. Buyer shall have the right to direct, through counsel
of its own choosing, the defense or settlement of any such claim or
proceeding (provided that Buyer shall have first acknowledged its
indemnification obligations hereunder specifically in respect of such claim
or proceeding) at its own expense, which counsel shall be reasonably
satisfactory to the indemnified party or parties. If Buyer elects to assume
the defense of any such claim or proceeding, the indemnified party or
parties may participate in such defense, but in such case the expenses of
the indemnified party or parties incurred in connection with such
participation shall be paid by the indemnified party or parties, unless (i)
the indemnified party or parties have legal defenses available to them
which are different than those available
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to the indemnifying party such that representation by counsel of Buyer's
choosing would be inappropriate, or (ii) the indemnifying party agrees to
pay such expenses, then in either such case such expenses shall be paid by
the indemnifying party. Such expenses shall be paid as and when incurred.
The indemnified party or parties shall cooperate with Buyer in the defense
or settlement of any such claim, assertion, event or proceeding. If Buyer
elects to direct the defense of any such claim or proceeding, the
indemnified party or parties shall not pay, or permit to be paid, any part
of any claim or demand arising from such asserted liability, unless Buyer
consents in writing to such payment or unless Buyer withdraws from the
defense of such asserted liability, or unless a final judgment from which
no appeal may be taken by or on behalf of Buyer is entered against such
indemnified party for such liability. If Buyer shall fail to defend, or if,
after commencing or undertaking any such defense, Buyer fails to prosecute
or withdraws from such defense, the indemnified party or parties shall have
the right to undertake the defense or settlement thereof at Buyer's
expense.
6.6 Indemnification by the Shareholders.
(a) Each Shareholder agrees, severally and not jointly, upon and subject to
the occurrence of the Closing, to indemnify Buyer against and hold Buyer
harmless from any and all claims, obligations, costs and expenses, including
without limitation, reasonable attorneys' fees and expenses and liabilities of
and damages thereto arising out of any material breach of any representation,
warranty, covenant or agreement of such Shareholder contained in Article III
hereof and, with respect solely to the Majority Shareholder, Sections 4.3
(Share Capital; Title to ET Shares), 4.4 (Authority), and 6.4(b) (Proxy
Statement matters) hereof (the "Shareholder Surviving Warranties").
(b) Buyer agrees to give the Shareholders prompt written notice of any
claim, assertion, event or proceeding by or in respect of a third party of
which it has knowledge concerning any Loss as to which it may request
indemnification hereunder, provided that the failure to give such notice shall
not impair the rights of the Buyer hereunder or otherwise to the extent that
the Shareholders are not prejudiced thereby. The Shareholders shall have the
right to direct, through counsel of their own choosing, the defense or
settlement of any such claim or proceeding (provided that the Shareholders
shall have first acknowledged their indemnification obligations hereunder
specifically in respect of such claim or proceeding) at their own expense,
which counsel shall be reasonably satisfactory to Buyer. If the Shareholders
elect to assume the defense of any such claim or proceeding, Buyer may
participate in such defense, but in such case the expenses of Buyer incurred
in connection with such participation shall be paid by Buyer, unless (i) the
indemnified party or parties have legal defenses available to them which are
different than those available to the indemnifying party such that
representation by counsel of Buyer's choosing would be inappropriate, or (ii)
the indemnifying party agrees to pay such expenses, then in either such case
such expenses shall be paid by the indemnifying party. Such expenses shall be
paid as and when incurred. Buyer shall cooperate with the Shareholders in the
defense or settlement of any such claim, assertion, event or proceeding. If
the Shareholders elect to direct the defense of any such claim or proceeding,
Buyer shall not pay, or permit to be paid, any part of any claim or demand
arising from such asserted Loss, unless the Shareholders consent in writing to
such payment or unless the Shareholders withdraw from the defense of such
asserted Loss, or unless a final judgment from which no appeal may be taken by
or on behalf of the Shareholders is entered against Buyer for such Loss. If
the Shareholders shall fail to defend, or if, after commencing or undertaking
any such defense, the Shareholders fail to prosecute or withdraws from such
defense, Buyer shall have the right to undertake the defense or settlement
thereof at the Shareholders' expense.
6.7 General Indemnification Provisions. If the indemnifying party is
controlling the defense of a claim, the indemnifying party will not, without
the prior written consent of the indemnified party or parties, enter into any
settlement of such claim which could reasonably be expected to lead to
liability or create any financial or other obligation on the part of the
indemnified party or parties. If the indemnified party or parties are
controlling the defense of a claim, the indemnified party or parties will not
enter into any settlement of such claim without the consent of the
indemnifying party, which consent shall not be unreasonably withheld. The
indemnifying party shall advance amounts to the indemnified party or parties
then payable by the indemnifying party upon notice to the indemnifying party
and upon the indemnified party or parties entering into an agreement to repay
amounts
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advanced that it is ultimately determined not to be entitled to. The
controlling party shall deliver, or cause to be delivered, to the other party
or parties copies of all correspondence, pleadings, motions, briefs, appeals
or other written statements relating to or submitted in connection with the
defense of any such claim and timely notices of, and the right to participate
in (as observer), any hearing or other court proceeding relating to such
claim.
6.8 Best Efforts. Upon the terms and subject to the conditions herein
provided, Buyer, each Company and each Shareholder agrees to use its
reasonable efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or advisable to consummate the
transactions contemplated by this Agreement including (a) to lift or rescind
any injunction or restraining order or other order adversely affecting the
ability of the parties to consummate the transactions contemplated hereby and
(b) to fulfill all conditions on its part to be fulfilled under this
Agreement. In case at any time after the Closing Date any further action is
reasonably necessary or desirable to carry out the purposes of this Agreement,
the proper officers or directors of each party or the proper persons to this
Agreement shall take all such reasonably necessary action, including without
limitation, the delivery by each Shareholder to Buyer of a proxy to vote the
ET Shares in favor of this Agreement and the transactions contemplated hereby,
if so requested by Buyer. No party hereto will take any action for the purpose
of delaying, impairing or impeding the receipt of any required consent,
authorization, order or approval or the making of any required filing. Each
Company and Shareholder, on the one hand, and the Buyer, on the other hand,
shall give prompt notice to the other of (i) the occurrence, or failure to
occur, of any event which occurrence or failure would be likely to cause any
of its representations or warranties contained in this Agreement to be untrue
or inaccurate in any material respect any time from the date hereof to the
Closing Date and (ii) any material failure by it to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder, and each shall use all reasonable efforts to remedy such failure.
In addition, each shall give prompt notice to the other of any material
developments involving its operations or activities.
6.9 Consents. The Buyer, each Company and each Shareholder will use its
reasonable best efforts to obtain all necessary waivers, consents and
approvals of all third parties and governmental authorities necessary to the
consummation of the transactions contemplated by this Agreement.
6.10 No Transfer. Each Shareholder agrees that such Shareholder will not,
directly or indirectly, transfer, sell, assign, pledge, hypothecate, encumber
or otherwise dispose of any shares of either Company's share capital which
such Shareholder owns on and after the date hereof; provided, however, that
any Shareholder may transfer a portion of such shares (subject to his rights
and obligations hereunder with respect to such shares) to one or more trusts
established for the benefit of members of his family or established for
charitable purposes, provided that such trusts become a party hereto and
become otherwise bound hereby with respect to such transferred shares. ETE
agrees that it will not, directly or indirectly, transfer, sell, assign,
pledge, hypothecate, encumber or otherwise dispose of any of the US Shares.
6.11 Environmental Investigations. Buyer shall conduct such environmental
investigations and reviews with respect to the Real Properties of the
Companies, including without limitation, Phase I investigations, as it shall
deem appropriate, in its sole discretion.
6.12 Delivery of Financial Statements and Other Documents. Until the Closing
Date, each Company, on the one hand, and the Buyer, on the other hand, shall
deliver to the other:
(a) as soon as practicable, but in any event within thirty (30) days
after the end of each month, and within forty-five (45) days after the end
of each quarter (with respect to the first three quarters of the applicable
fiscal year) and within 60 days after the end of the last fiscal quarter,
its unaudited consolidated profit and loss account, consolidated balance
sheet and consolidated cash flow statement for such month or quarter, as
the case may be, and for the fiscal year-to-date. Buyer's independent
accountants, Ernst & Young, shall have reviewed all quarterly financial
statements submitted by Buyer in compliance with the foregoing covenant;
(b) as soon as practicable, but in any event within five (5) days of its
receipt thereof, copies of any management letters and other correspondence
of its independent auditors;
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(c) prompt notice of any material defaults under any material contracts
and of any litigation;
(d) monthly updates to the backlog descriptions described in Section 4.20
and 5.19, as applicable. Each such update shall serve to supersede and
replace in its entirety all previous backlog descriptions, provided that
such updated descriptions shall, thereafter, be subject to the
representations and warranties set forth in Sections 4.20 and 5.19, as
applicable;
(e) as soon as practicable, all other information requested by the other,
where such information is readily available and may be reduced to written
form.
6.13 Additional Payments at Closing. The Buyer agrees that, upon the Closing
and the purchase of the ET Shares and US Shares by Buyer hereunder, the Buyer
shall pay to Christopher D. Dobson the cash amount of US$500,000 pursuant to
the Noncompetition Agreement (the "Dobson Noncompetition Fee") and shall
deliver to the Companies (in such respective amounts as the Majority
Shareholder shall direct) the following aggregate amounts and property as
contributions to capital:
(a) at the discretion of the Board of Directors of ET and ETE, the cash
sum of approximately US$1,500,000, the precise amount of which shall be
specified by the Majority Shareholder prior to the Closing as the amount
which, when added to the cash amount paid by Buyer for the US Shares, as
specified in Section 1.3, represents the U.S. Dollar equivalent (the
"Employee Bonus Amount") of One Pound Sterling for each day that all
employees of the Companies and the Subsidiaries as of the Closing shall
have been continuously employed by such Company or Subsidiary, as
applicable, as of the Closing (such that the price paid for the US Shares,
together with the capital contribution pursuant to this clause (a), shall
be equal to the Employee Bonus Amount);
(b) a cash amount, the precise amount of which shall be specified by the
Majority Shareholder prior to the Closing, calculated to result in an
after-tax bonus payment (assuming the highest marginal income tax rates) to
Nigel Wheeler of approximately Six Hundred Thousand Dollars (US$600,000)
(such full pre-tax amount being referred to as the "Wheeler Bonus"), it
being understood and agreed that Mr. Wheeler will take all appropriate
action to minimize his actual income tax obligations in respect of the
Wheeler Bonus and that the actual after-tax portion of such bonus may
accordingly exceed US$600,000; and
(c) the cash sum of US$7,000,000 (the "Dobson Negotiation Fee").
The Companies agree to pay or deliver, or cause the Subsidiaries to pay
or deliver, the following aggregate sums or consideration (subject to any
applicable withholdings required by law) to the indicated persons at the
indicated times.
(i) to each employee of any Company or Subsidiary as of the Closing,
a bonus for past services rendered in an amount equal to One Pound
Sterling for each day that such employee shall have been continuously
employed by such Company or Subsidiary, as applicable, as of the
Closing, to be paid as soon as practicable after the Closing;
(ii) to Nigel Wheeler for past services rendered, the Wheeler Bonus,
to be paid at the Closing; and
(iii) to Christopher D. Dobson, the Dobson Negotiation Fee, to be
paid at the Closing.
6.14 Company Employee Benefits and Stock Options.
(a) At and following the Closing, the Buyer shall cause the Companies and
Subsidiaries to, from and after the Closing, honor in accordance with their
terms all existing employment arrangements with their respective directors,
other officers and Employees, provided that such arrangements have been
disclosed in accordance with the terms of this Agreement. Furthermore, the
Buyer represents and warrants that it presently intends to cause the
Companies and Subsidiaries to continue indefinitely to provide pension and
welfare benefits to their Employees (considered as a group) which benefits
are intended to be in the aggregate no less favorable than those currently
provided by the Companies and Subsidiaries in the aggregate to such
Employees. Nothing set forth above in this Section shall be deemed to
constitute an amendment of any existing employee benefit plan, program or
arrangement or to prevent the Buyer or any Company or any Subsidiary from
making any change in any plan, program or arrangement, including any change
required by law or deemed necessary or appropriate to comply with
applicable law or regulation.
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(b) Sufficiently prior to the Closing to facilitate the satisfaction of
the condition to Closing set forth in Section 7.2(f), the Buyer shall
recommend to its Board of Directors and Compensation Committee thereof the
grant, under the Buyer's Stock Option Plan, of options covering an
aggregate of approximately 800,000 shares of Buyer's Common Stock to such
employees of the Companies and Subsidiaries, and in such respective
individual amounts, as shall be jointly determined by the Buyer and the
Majority Shareholder prior to the Closing. Such recommended option grants
shall otherwise be at prices and upon such terms as are customarily
contained in options generally granted under the Stock Option Plan.
6.15 Use of Company Information. Buyer agrees that it shall not file with
the Securities and Exchange Commission of the United States any disclosure
document, including but not limited to the Proxy Statement, any document
relating to the financing referred to in Section 7.3(g), any report or other
document filed by the Buyer under the Exchange Act or otherwise made public,
that includes the names of either of the Companies, the Shareholders or any
Affiliate or Associate thereof, without the prior written consent of the
Majority Shareholder, except solely as and to the extent that the Buyer is
advised by its legal counsel that the same is required by law to be so filed
(in which case the Buyer shall use its best efforts to provide to the Majority
Shareholder, as early as possible prior to such filing, a copy of the document
proposed to be so filed, and shall give the Majority Shareholder, as and to
the extent practicable, reasonable opportunity to review and reasonably modify
such proposed filing).
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligations. The respective obligations of
each party to effect the transactions contemplated by the Agreement shall be
subject to the conditions that (a) no governmental authority or other agency
or commission or court of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, injunction or
other order (whether temporary, preliminary, or permanent) which is in effect
and has the effect of prohibiting consummation of the transactions
contemplated by this Agreement, (b) the sum of all cash and cash equivalent
assets plus amounts immediately available for additional borrowing under
credit arrangements, of Buyer and the Companies on a consolidated, proforma
basis immediately after and giving effect to the Closing, shall be not less
than US$35,000,000 and (c) holders of less than 5.0% of the outstanding shares
of Buyer's Common Stock shall have filed demands for payment or otherwise
become entitled to exercise any dissenters' or appraisal rights under Chapter
13 of the California Corporations Code.
7.2 Conditions to the Obligations of the Shareholders. The obligations of
each Shareholder to effect the transactions contemplated by this Agreement
shall be subject to the fulfillment at or prior to the Closing Date of the
following additional conditions:
(a) Buyer shall have performed in all material respects the obligations
under this Agreement required to be performed by it on or prior to the
Closing Date pursuant to the terms hereof.
(b) The representations and warranties of Buyer contained in this
Agreement shall be true and correct in all material respects at and as of
the Closing Date as if made at and as of such date, except to the extent
that any such representation or warranty is made as of a specified date in
which case such representation or warranty shall have been true and correct
as of such date.
(c) Buyer shall have delivered to the Shareholders a certificate to the
effect set forth in paragraphs (a) and (b) above in this Section.
(d) Christopher D. Dobson and Nigel Wheeler shall each have been elected
as members of the Board of Directors of the Buyer and additionally shall
have been elected as the Vice Chairman of the Board and the Chief Operating
Officer, respectively, of the Buyer.
(e) The Buyer and Nigel Wheeler shall have entered into an Employment
Agreement substantially in the form of Exhibit B hereto.
(f) The Buyer shall have granted the stock options referred to in Section
6.14(b).
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(g) The Companies and the Majority Shareholder shall have received such
other duly and validly executed documents and instruments from the Buyer in
connection with the Closing as have been reasonably requested by them and
are customary for transactions of this type.
(h) All necessary waivers, consents and approvals to or of the
transactions contemplated by this Agreement of any third parties or
governmental entities with respect to the Buyer, shall have been obtained
and delivered to the Companies and the Majority Shareholder except where
the failure to obtain any such waiver, consent or approval could not be
reasonably expected to have, individually or in the aggregate, a Company
Material Adverse Effect or Buyer Material Adverse Effect.
(i) The Shareholders shall have received the favorable opinion of Riordan
& McKinzie, counsel to Buyer, substantially in the form of Exhibit C
hereto, and otherwise in form and substance reasonably satisfactory to the
Shareholders.
(j) The Reimbursable Expenses (as defined in Section 8.2) shall have been
paid at the Closing by the Buyer.
(k) The Buyer and Christopher D. Dobson shall have entered into a
Registration Agreement substantially in the form of Exhibit D hereto.
(l) The Shareholders shall have obtained tax clearance to confirm that
the exchange of securities pursuant to this Agreement is covered by
Sections 135-137 of the Taxation of Chargeable Gains Act of 1992, by way of
clearance under Section 38 of such Act.
7.3 Conditions to the Obligations of Buyer. The obligations of Buyer to
effect the transactions contemplated by this Agreement shall be subject to the
fulfillment at or prior to the Closing Date of the following additional
conditions:
(a) Each Company and each Shareholder shall have performed in all
material respects its obligations under this Agreement required to be
performed by it on or prior to the Closing Date pursuant to the terms
hereof.
(b) The representations and warranties of each Shareholder contained in
this Agreement shall be true and correct in all material respects at and as
of the Closing Date as if made at and as of such date, except to the extent
that any such representation or warranty is made as of a specified date in
which case such representation or warranty shall have been true and correct
as of such date.
(c) The Companies and the Majority Shareholder shall have delivered to
Buyer a certificate to the effect set forth in paragraphs (a) and (b) above
in this Section.
(d) Buyer shall have received a fully executed original of the
Noncompetition Agreement from the Majority Shareholder substantially in the
form of Exhibit E hereto.
(e) Buyer shall have received the favorable opinion of Veale Wasbrough,
counsel to the Companies and each Shareholder, substantially in the form of
Exhibit F hereto and otherwise in form and substance reasonably
satisfactory to Buyer.
(f) Buyer shall have received such other duly and validly executed
documents and instruments from the Companies, the Subsidiaries and the
Shareholders in connection with the Closing as have been reasonably
requested by it and are customary for transactions of this type.
(g) Buyer shall have issued and sold to qualified institutional buyers
subordinate convertible debentures pursuant to Rule 144A (or other
available exemption) under the Securities Act in an amount at least equal
to Fifty Million Dollars (US$50,000,000), on terms and conditions
acceptable to Buyer, in its sole discretion, after consultation with the
Majority Shareholder, including the Majority Shareholder's participation in
the meeting of Buyer's pricing committee held to consider such terms and
conditions.
(h) All necessary waivers, consents and approvals to or of the
transactions contemplated by this Agreement of any third parties or
governmental entities with respect to any Company, Subsidiary or
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Shareholder shall have been obtained and delivered to Buyer except where
the failure to obtain any such waiver, consent or approval could not be
reasonably expected to have, individually or in the aggregate, a Company
Material Adverse Effect or a Buyer Material Adverse Effect.
(i) A majority of the outstanding shares of Buyer's Common Stock shall
have been voted in favor of this Agreement and the transactions
contemplated hereby.
(j) Buyer shall have completed the environmental investigations and
reviews of the Real Properties referred to in Section 6.11, and shall not
have reasonably concluded that any environmental conditions at any of the
Real Properties could reasonably be expected, individually or in the
aggregate, to have a Company Material Adverse Effect.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated and the transactions
contemplated herein may be abandoned at any time prior to the Closing Date:
(a) by the mutual written consent of Buyer and the Majority Shareholder;
(b) by any party, if by December 31, 1996 the Closing shall not have been
consummated, provided that no party may terminate this Agreement under this
Section 8.1(b) if such failure has been caused by that party's breach of
this Agreement;
(c) by Buyer, if there is a material breach of any of the representations
and warranties of any Company or Shareholder, or if any Company or
Shareholder fails to comply in any material respect with any of its
respective covenants or agreements contained herein; or
(d) by the Shareholders, if there is a material breach of any of the
representations and warranties of Buyer, or if Buyer fails to comply in any
material respect with any of its covenants or agreements contained herein.
8.2 Termination Fee; Expenses. Upon a termination of this Agreement (except
solely a No-Fee Termination, as defined below) the Buyer shall pay to the
Companies (in such respective amounts as they jointly instruct the Buyer) an
aggregate fee of US$1,000,000 (the "Termination Fee"), and the Buyer shall
additionally pay to them all reasonable fees and expenses actually incurred by
them in connection with the transactions contemplated hereby, including all
reasonable legal, investment banking, accounting and other fees and expenses
(the "Reimbursable Expenses"). The Termination Fee shall be payable in
immediately available funds on the second business day following any
termination giving rise to the obligation to pay such Termination Fee, and the
Reimbursable Expenses shall be payable within ten business days following the
submission to Buyer of a statement and accounting therefor.
"No-Fee Termination" shall mean the following:
(a) Any termination by Buyer or the Shareholders by reason of the non-
occurrence of the condition to Closing set forth in clause (a) of Section
7.1 (limited to United Kingdom matters in the case of a termination by
Buyer, and limited to United States matters in the case of a termination by
the Shareholders) or by the Shareholders by reason of the non-occurrence of
the condition to Closing set forth in Section 7.2(l);
(b) Any termination by Buyer by reason of the non-occurrence of any
condition to Closing set forth in clause (a), (b), (c), (d), (e), (f) or
(h) of Section 7.3; provided that any such termination by Buyer shall not
constitute a No-Fee Termination if such non-occurrence is the result of a
Company Material Adverse Change after the date of this Agreement; or
(c) Any termination by the Shareholders by reason of the non-occurrence
of any condition to Closing set forth in Section 7.2 if such non-occurrence
is the result of a Buyer Material Adverse Change after the date of this
Agreement.
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8.3 Effect of Termination. Except as otherwise provided in Section 8.2, in
the event of the termination of this Agreement as provided in Section 8.1
above, this Agreement shall forthwith become void and there shall be no
liability on the part of any party hereto, provided that nothing in this
Section 8.3 shall relieve any party of liability for any intentional breach of
the purchase and sale covenants herein, or the covenant to use reasonable
efforts to satisfy all conditions to Closing, which breach results in a
termination of this Agreement. Notwithstanding the foregoing, the covenant set
forth in Section 8.6 shall survive any termination of this Agreement for a
period of one year.
8.4 Amendment. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
8.5 Waiver. At any time prior to the Closing Date, the parties hereto may
(a) extend the time for the performance of any of the obligations or other
acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions herein, provided that any such waiver of or failure to insist on
strict compliance with any such representation, warranty, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party.
8.6 Conduct Following Termination. Following any termination of this
Agreement, neither Buyer nor its representatives, on the one hand, nor any
Company or Subsidiary nor any of their respective representatives nor the
Shareholders, on the other hand, shall publicly state any disparaging or
similar remark regarding the other.
ARTICLE IX
MISCELLANEOUS
9.1 Survival. The Surviving Shareholder Warranties and the Surviving Buyer
Warranties shall survive after the Closing until the applicable statute of
limitations provided by applicable law. All other representations and
warranties herein shall terminate and be extinguished upon the Closing.
9.2 Meaning of "Best Knowledge". Whenever the term "best knowledge" or "to
the best of its knowledge" or any substantially equivalent phrase is used in
this Agreement with respect to the representations and warranties of any
Company, Subsidiary or Shareholder, on the one hand, or the Buyer, on the
other hand, it shall mean both the actual knowledge of any such individual
person and, in the case of a corporation, the actual knowledge of each
executive officer thereof (including specifically the Majority Shareholder
with respect to each Company), and such knowledge as any such person, director
or officer could reasonably be expected to acquire in the course of reasonable
inquiry and investigation of the matters with respect to which such
representation and warranty is made.
9.3 Notices. All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been given or made if
in writing and (a) delivered personally, as of the date of such delivery, (b)
sent by registered or certified mail (postage prepaid, return receipt
requested), three (3) days after the mailing thereof, (c) by prepaid overnight
carrier, one (1) day after delivery thereof, or (d) transmitted by facsimile,
as of the date of receipt of a confirmation of transmission, to the parties at
the following addresses and numbers:
(i) If to Buyer, to:
Plasma & Materials Technologies, Inc.
9255 Deering Avenue
Chatsworth, California 91311
Attention: John LaValle, Chief Financial Officer
Facsimile No.: (818) 886-8098
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(ii) If to ET, to:
Electrotech Limited
Thornbury Laboratories
Littleton-Upon-Severn
Thornbury
Bristol, BS12-INP, U.K.
Attention: Nigel Wheeler, CEO
Facsimile No.: 011-44-1-454-411824
(iii) If to ETE, to:
Electrotech Equipments Limited
Thornbury Laboratories
Littleton-Upon-Severn
Thornbury
Bristol, BS12-INP, U.K.
Attention: Nigel Wheeler, CEO
Facsimile No.: 011-44-1-454-411824
(iv) If to the Shareholders, to:
Christopher David Dobson
Ann Dilys Dobson
Elberton Manor
Elberton, Bristol
Avon B512-3AA, U.K.
Facsimile No.: 011-44-1-454-418655
Frank Stanley Keeble
Patricia Ann Keeble
Whistlers
Kingston Seymour, Clevedon
Avon B321-EXS, U.K.
Facsimile No.: 0033 4182 6322
Kenneth Nash Knight Willmott
Peter Geoffrey Willmott
Kevin Nash Knight Willmott
6 Parc-y-Fro
Creigian, Cardiff, U.K.
Facsimile No.: 01222 345626
or at such other addresses as shall be furnished by the parties by like notice,
and such notice or communication shall be deemed to have been given or made as
of the date actually received.
9.4 Headings; Agreement. The headings contained in this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
The term "Agreement" for purposes of representations and warranties hereunder
shall be deemed to include the Schedules and Exhibits hereto to be executed and
delivered by a party.
9.5 Publicity. So long as this Agreement is in effect, the parties hereto
shall not, and shall cause their affiliates not to, issue or cause the
publication of any press release or other announcement with respect to the
transactions contemplated by this Agreement or this Agreement without the
consent of the other parties, which consent shall not be unreasonably withheld
or delayed.
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9.6 Entire Agreement. This Agreement, the Letter Agreement dated May 2, 1996
and the Mutual Non-Disclosure Agreement dated December 19, 1995, as amended by
that certain letter dated May 22, 1996 to ET's counsel from counsel to the
Buyer, constitute the entire agreement among the parties and supersede all
other prior agreements and understandings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof or thereof.
9.7 Conveyance Taxes. The Buyer agrees to assume liability for and to hold
the Shareholders harmless against any sales, use, transfer, stamp, stock
transfer, real property transfer or gains, and value added taxes, any
transfer, registration, recording or other fees (including without limitation,
any stamp duties), and any similar taxes incurred as a result of the
transactions contemplated hereby, other than capital gains taxes imposed upon
the Shareholders by virtue of the disposal of the ET Shares or with respect to
a higher rate of taxes due on any pre-Closing dividends due by reason of the
transactions permitted by Section 9.8 hereof, as to which the Shareholders
agree severally and not jointly to assume liability for and to hold Buyer and
the Companies harmless against.
9.8 Company Pre-Closing Dividends. The Companies may, prior to the Closing,
declare and pay cash dividends to the Shareholders up to an amount permitted
by law but not exceeding the net cash payment specified in Section 1.4(a)
hereof, in which case the parties agree that:
(a) Buyer shall, immediately prior to the Closing, loan to the Companies an
amount equal to the sum of such dividends, plus all taxes required to be paid
by the Companies in connection with the payment of such dividends (the
"Dividend Taxes"), in order to fund the payment of such dividends immediately
prior to the Closing and the payment of the Dividend Taxes;
(b) The cash portion of the Purchase Price payable to the Shareholders at
the Closing pursuant to Section 1.4 shall be reduced, prorata as to each
Shareholder, by an aggregate amount equal to such loan by the Buyer;
(c) Immediately after the Closing, the indebtedness of the Companies to the
Buyer in respect of the loan referred to in clause (a) shall be forgiven by
the Buyer as a contribution to the capital of the Companies but subject to the
contingent obligation of the Companies to make the payments described in
clause (d) below; and
(d) From time to time if and when the Companies are entitled to a credit for
the Dividend Taxes against other amounts due and payable for income taxes of
the Companies, then the Companies shall pay to the Shareholders (promptly
after such time as the Companies would have otherwise been required to pay to
the taxing authorities the amounts so reduced by such credit), prorata to each
Shareholder in the same proportion that the cash portion of the Purchase Price
was reduced under clause (b) above, the aggregate amount of such credit.
9.9 Advance of Reimbursable Expenses. Within seven (7) days after
presentation to the Buyer by the Companies of invoices or other reasonable
evidence thereof, the Buyer shall advance to the Companies a sum equal to all
Reimbursable Expenses incurred by the Companies prior to the execution of this
Agreement in respect of amounts payable to third parties other than Hambrecht
& Quist, and excluding any internal charges or expenses of the Companies or
any Subsidiary. Such payments shall be considered an advance in respect of any
amounts ultimately owed by the Buyer to the Companies pursuant to Section 8.2
hereof and, if no amounts are ever owed by the Buyer to the Companies pursuant
to Section 8.2 hereof by reason of the occurrence of a No-Fee Termination of
this Agreement, the Companies shall, within seven (7) days following the
occurrence of such No-Fee Termination, refund to the Buyer all amounts
advanced to the Companies pursuant to this Section 9.9.
9.10 Hold-back Agreement. Each of the Shareholders severally agrees that
such Shareholder will not offer, sell or contract to sell, or otherwise
dispose of, directly or indirectly, or announce an offering of any shares of
Buyer Common Stock beneficially owned by such Shareholder or any securities
convertible into, or exchangeable for, shares of Buyer Common Stock for a
period of 90 days following the Closing Date, without the prior written
consent of Salomon Brothers Inc, the lead investment banker engaged by the
Buyer in connection with the transaction described in Section 7.3(g).
35
<PAGE>
9.11 Assignment. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefits of the parties hereto and their
respective successors and permitted assigns. Neither this Agreement nor any of
the rights, interests or obligations shall be assigned by any of the parties
hereto without the prior written consent of the other parties, except as
permitted by Section 6.10 hereof.
9.12 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
9.13 Governing Law. The validity and interpretation of this Agreement shall
be governed by English law, without reference to the conflict of laws
principles thereof.
9.14 Third Party Beneficiaries. This Agreement is not intended to confer
upon any other person any rights or remedies hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by an individual thereunto duly authorized, all as of the date first
written above.
BUYER: PLASMA & MATERIALS TECHNOLOGIES,
INC.
a California corporation
By: /s/ Gregor A. Campbell
_________________________________
Name: Gregor A. Campbell
Chief Executive Officer
ET: ELECTROTECH LIMITED
an English corporation
By: /s/ Nigel Wheeler
_________________________________
Name: Nigel Wheeler
Chief Executive Officer
ETE: ELECTROTECH EQUIPMENTS LIMITED
an English corporation
By: /s/ Nigel Wheeler
_________________________________
Name: Nigel Wheeler
Chief Executive Officer
SHAREHOLDERS:
/s/ Christopher David Dobson
____________________________________
Name: Christopher David Dobson
/s/ Frank Stanley Keeble
____________________________________
Name: Frank Stanley Keeble
/s/ Kenneth Nash Knight Willmott
____________________________________
Name: Kenneth Nash Knight Willmott
/s/ Kevin Nash Knight Willmott
____________________________________
Name: Kevin Nash Knight Willmott
/s/ Ann Dilys Dobson
____________________________________
Name: Ann Dilys Dobson
/s/ Patricia Ann Keeble
____________________________________
Name: Patricia Ann Keeble
36
<PAGE>
EXHIBIT 2.2
AMENDMENT NO. 1 TO
------------------
SHARE PURCHASE AGREEMENT
------------------------
THIS AMENDMENT NO. 1 TO SHARE PURCHASE AGREEMENT ("Amendment") dated
as of September 9, 1996 is entered into among, and for the purpose of amending
that certain Share Purchase Agreement dated as of July 17, 1996 (the
"Agreement") among, Plasma & Materials Technologies, Inc., a California
corporation ("Buyer"), Electrotech Limited (registered no. 1373344), whose
registered office is at Thornbury Laboratories, Littleton-Upon-Severn,
Thornbury, Bristol, BS12-INP, United Kingdom ("ET"), Electrotech Equipments
Limited (registered no. 939289), whose registered office is at Thornbury
Laboratories, Littleton-Upon-Severn, Thornbury, Bristol, BS12-INP, United
Kingdom ("ETE" and, together with ET, individually, a "Company," and
collectively, the "Companies"), Christopher D. Dobson (the "Majority
Shareholder") and the other shareholders of the Companies listed on the
signature pages hereof (individually, an "Other Shareholder" and collectively,
the "Other Shareholders;" the Majority Shareholder and the Other Shareholders
are sometimes herein collectively referred to as the "Shareholders"). All
capitalized terms used in this Amendment and not otherwise defined herein shall
have the meanings ascribed to them in the Agreement.
NOW, THEREFORE, in consideration of the covenants, agreements and
conditions contained herein, the sufficiency of which is hereby acknowledged,
the parties hereby agree that the Agreement is amended in the following
respects:
1. Section 1.4(a). Paragraph (a) of Section 1.4 of the Agreement is
--------------
amended to read in full as follows:
"(a) An aggregate of Seventy Five Million Dollars (US$75,000,000),
less the sum of the Employee Bonus Amount, the Dobson Noncompetition
Fee, the Wheeler Bonus and the Dobson Negotiation Fee (all as defined
in Section 6.13 below), shall be payable by Buyer in cash at the
Closing to each of the Shareholders in the respective individual
amounts set forth opposite each Shareholder's name on Exhibit A
hereto; and"
2. Section 6.13(c). A new paragraph (c) shall be added to Section
---------------
6.13 of the Agreement, immediately following the existing paragraph (b), such
that the word "and" shall be deleted from the end of existing paragraph (a), the
period at the end of existing paragraph (b) shall be replaced by "; and" and the
following additional paragraph (c) shall be added immediately following
paragraph (b):
"(c) The cash sum of US$7,000,000 (the "Dobson Negotiation Fee")."
<PAGE>
3. Section 6.13(iii). A new subparagraph (iii) shall be added to
-----------------
Section 6.13 of the Agreement, such that the word "and" shall be deleted from
the end of existing paragraph (i), the period at the end of existing (ii) shall
be replaced by "; and" and the following additional clause (iii) shall be added
at the end of Section 6.13:
"(iii) To Christopher D. Dobson, the Dobson Negotiation Fee, to be
paid at the Closing."
4. Section 6.10. The parties acknowledge that, as a clarification
------------
to Section 6.10, the Majority Shareholder may, pursuant to and in accordance
with Section 6.10, transfer, to an educational trust, the 58 ordinary 'a' shares
of ETE presently held by the Majority Shareholder. The parties further
acknowledge that the equivalent of (Pounds)10,000,000 of the $35,000,000 cash
portion of the consideration allocated in respect of such ETE shares and the
other shares referenced in Exhibit A as being held by the Majority Shareholder
and Ann Dobson shall be assigned to such trust for payment from PMT (such that
(i) PMT shall pay to such trust the equivalent of (Pounds)10,000,000 as full
consideration for such 58 ordinary 'a' shares of ETE, (ii) the $35,000,000
otherwise payable to the Majority Shareholder and Ann Dobson shall be reduced by
the dollar equivalent of (Pounds)10,000,000, and (iii) the 4,853,344 shares of
Buyer Common Stock to be delivered to the Majority Shareholder and Ann Dobson
shall remain unchanged).
5. Section 7.1. The following new clause (c) shall be added to
-----------
Section 7.1 of the Agreement, such that the word "and" shall be deleted where it
appears immediately before "(b)" and the following language shall be inserted at
the end of Section 7.1 of the Agreement:
", and (c) holders of less than 5.0% of the outstanding shares of
Buyer's Common Stock shall have filed demands for payment or otherwise
become entitled to exercise any dissenters' or appraisal rights under
Chapter 13 of the California Corporations Code."
6. Exhibit E, Section 1. Section 1 of the Noncompetition Agreement
--------------------
attached as "Exhibit E" to the Agreement is amended to read in full as follows:
"1. In consideration of the noncompetition covenant of Shareholder
hereunder, the Buyer has paid to Shareholder the cash amount of Five
Hundred Thousand Dollars (US$500,000) (the "Noncompetition Fee")
concurrent with the execution of this Agreement."
7. New Section 9.10. A new Section, to be numbered 9.10, shall be
----------------
added to the Agreement, such that existing Sections 9.10, 9.11, 9.12 and 9.13
shall be
2
<PAGE>
renumbered 9.11, 9.12, 9.13 and 9.14, respectively, and the following new
Section 9.10 shall be added to the Agreement:
"9.10 Holdback Agreement. Each of the Shareholders severally agrees
------------------
that such Shareholder will not offer, sell or contract to sell, or
otherwise dispose of, directly or indirectly, or announce an offering
of, any shares of Buyer Common Stock beneficially owned by such
Shareholder or any securities convertible into, or exchangeable for,
shares of Buyer Common Stock for a period of 90 days following the
Closing Date, without the prior written consent of Salomon Brothers
Inc."
Except solely as amended in the manner set forth above, the Agreement
shall in all other respects remain in full force and effect without
modification.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be signed by an individual thereunto duly authorized, all as of the date first
written above.
BUYER: PLASMA & MATERIALS TECHNOLOGIES, INC.
a California corporation
By: /s/ Gregor A. Campbell
----------------------------------------
Name: Gregor A. Campbell
Chief Executive Officer
ET: ELECTROTECH LIMITED
an English corporation
By: /s/ Nigel Wheeler
----------------------------------------
Name: Nigel Wheeler
Chief Executive Officer
ETE: ELECTROTECH EQUIPMENTS LIMITED
an English corporation
By: /s/ Nigel Wheeler
----------------------------------------
Name: Nigel Wheeler
Chief Executive Officer
3
<PAGE>
SHAREHOLDERS: /s/ Christopher David Dobson
---------------------------------------------
Name: Christopher David Dobson
/s/ Frank Stanley Keeble
---------------------------------------------
Name: Frank Stanley Keeble
/s/ Kenneth Nash Knight Willmott
---------------------------------------------
Name: Kenneth Nash Knight Willmott
/s/ Kevin Nash Knight Willmott
---------------------------------------------
Name: Kevin Nash Knight Willmott
/s/ Ann Dilys Dobson
---------------------------------------------
Name: Ann Dilys Dobson
/s/ Patricia Ann Keeble
---------------------------------------------
Name: Patricia Ann Keeble
/s/ Peter Geoffrey Willmott
---------------------------------------------
Name: Peter Geoffrey Willmott
4
<PAGE>
EXHIBIT 2.3
AMENDMENT NO. 2 TO
------------------
SHARE PURCHASE AGREEMENT
------------------------
THIS AMENDMENT NO. 2 TO SHARE PURCHASE AGREEMENT ("Amendment") dated
as of October 16, 1996 is entered into among, and for the purpose of amending
that certain Share Purchase Agreement dated as of July 17, 1996, as amended by
an Amendment No. 1 dated as of September 9, 1996 (as so amended, the
"Agreement") among, Plasma & Materials Technologies, Inc., a California
corporation ("Buyer"), Electrotech Limited (registered no. 1373344), whose
registered office is at Thornbury Laboratories, Littleton-Upon-Severn,
Thornbury, Bristol, BS12-INP, United Kingdom ("ET"), Electrotech Equipments
Limited (registered no. 939289), whose registered office is at Thornbury
Laboratories, Littleton-Upon-Severn, Thornbury, Bristol, BS12-INP, United
Kingdom ("ETE" and, together with ET, individually, a "Company," and
collectively, the "Companies"), Christopher D. Dobson (the "Majority
Shareholder") and the other shareholders of the Companies listed on the
signature pages hereof (individually, an "Other Shareholder" and collectively,
the "Other Shareholders;" the Majority Shareholder and the Other Shareholders
are sometimes herein collectively referred to as the "Shareholders"). All
capitalized terms used in this Amendment and not otherwise defined herein shall
have the meanings ascribed to them in the Agreement.
NOW, THEREFORE, in consideration of the covenants, agreements and
conditions contained herein, the sufficiency of which is hereby acknowledged,
the parties hereby agree that the Agreement is amended in the following
respects:
1. Section 1.4(a). Paragraph (a) of Section 1.4 of the Agreement is
--------------
amended to read in full as follows:
"(a) An aggregate of Seventy Five Million Dollars (US$75,000,000),
less the sum of the Employee Bonus Amount, the Dobson Noncompetition
Fee and the Wheeler Bonus (all as defined in Section 6.13 below),
shall be payable by Buyer in cash at the Closing to each of the
Shareholders in the respective individual amounts set forth opposite
each Shareholder's name on Exhibit A hereto; and"
2. Section 6.13. Consistent with the amendment to "Exhibit E" to the
------------
Agreement effected pursuant to Section 5 of the Amendment No. 1 dated as of
September 9, 1996, in the introductory paragraph of Section 6.13 the sum
"US$7,500,000" shall be replaced by the sum "US$500,000."
3. Section 6.13(c). Existing paragraph (c) shall be deleted from
---------------
Section 6.13 of the Agreement. Consistent with such deletion, the word "and"
shall be added to the end of existing paragraph (a), the word "and" shall be
deleted from the end of existing
<PAGE>
paragraph (b), and the semicolon at the end of existing paragraph (b) shall be
replaced with a period.
4. Section 6.13(iii). Existing subparagraph (iii) shall be deleted
-----------------
from Section 6.13 of the Agreement. Consistent with such deletion, the word
"and" shall be added to the end of existing subparagraph (i), the word "and"
shall be deleted from the end of existing subparagraph (ii), and the semicolon
at the end of existing subparagraph (ii) shall be replaced with a period.
5. Exhibit A. Exhibit A to the Agreement shall be replaced in its
---------
entirety by Exhibit A ("Schedule of the Consideration") attached to this
Amendment.
Except solely as amended in the manner set forth above, the Agreement
shall in all other respects remain in full force and effect without
modification.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be signed by an individual thereunto duly authorized, all as of the date first
written above.
BUYER: PLASMA & MATERIALS TECHNOLOGIES, INC.
a California corporation
By: /s/ Gregor A. Campbell
-------------------------
Name: Gregor A. Campbell
Chief Executive Officer
ET: ELECTROTECH LIMITED
an English corporation
By: /s/ Nigel Wheeler
-------------------------
Name: Nigel Wheeler
Chief Executive Officer
ETE: ELECTROTECH EQUIPMENTS LIMITED
an English corporation
By: /s/ Nigel Wheeler
-------------------------
Name: Nigel Wheeler
Chief Executive Officer
2
<PAGE>
SHAREHOLDERS: /s/ Christopher David Dobson
----------------------------------------
Name: Christopher David Dobson
/s/ Frank Stanley Keeble
----------------------------------------
Name: Frank Stanley Keeble
/s/ Kenneth Nash Knight Willmott
----------------------------------------
Name: Kenneth Nash Knight Willmott
/s/ Kevin Knight Willmott
----------------------------------------
Name: Kevin Knight Willmott
/s/ Ann Dilys Dobson
----------------------------------------
Name: Ann Dilys Dobson
/s/ Patricia Ann Keeble
----------------------------------------
Name: Patricia Ann Keeble
/s/ Peter Jeffrey Willmott
----------------------------------------
Name: Peter Jeffrey Willmott
3
<PAGE>
EXHIBIT 2.4
AMENDMENT NO. 3 TO
------------------
SHARE PURCHASE AGREEMENT
------------------------
THIS AMENDMENT NO. 3 TO SHARE PURCHASE AGREEMENT ("Amendment") dated
as of November 14, 1996 is entered into among, and for the purpose of amending
that certain share Purchase Agreement dated as of July 17, 1996, as amended by
an Amendment No. 1 dated as of September 9, 1996 and Amendment No. 2 dated as of
October 16, 1996 (as so amended, the "Agreement") among Plasma & Materials
Technologies, Inc., a California corporation ("Buyer"), Electrotech Limited
(registered no. 1373344), whose registered office is at Coed Rhedyn, Ringland
Way, Newport, Gwent, NP6 2TA United Kingdom ("ET"), Electrotech Equipments
Limited (registered no. 939289), whose registered office is at Coed Rhedyn,
Ringland Way, Newport, Gwent, NP6 2TA United Kingdom ("ETE" and, together with
ET, individually, a "Company," and collectively, the "Companies"), Christopher
D. Dobson (the "Majority Shareholder") and the other shareholders of the
Companies listed on the signature pages hereof (individually, an "Other
Shareholder" and collectively, the "Other Shareholders;" the Majority
Shareholder and the Other Shareholders are sometimes herein collectively
referred to as the "Shareholders"). All capitalised terms used in this Amendment
and not otherwise defined herein shall have the meanings ascribed to them in the
Agreement.
NOW, THEREFORE, in consideration of the covenants, agreements and
conditions contained herein, the sufficiency of which is hereby acknowledged,
the parties hereby agree that the Agreement is amended in the following
respects:
1. Sections 6.14 (b) & 7.2 (f). Notwithstanding the provisions of
---------------------------
sections 6.14 (b) and the condition to the Closing set forth in section 7.2 (f),
Buyer shall be deemed to have complied with Sections 6.14 (b) and satisfied the
conditions in Section 7.2 (f) to the extent that Buyer's Board of Directors
Compensation Committee has unconditionally and irrevocably agreed to grant
options covering 800,000 shares of Buyer's Common Stock and that such options
shall either be granted under the Buyer's Stock Option Plan or upon such terms
and conditions as the Majority Shareholder shall specify (save as to the price
at which such options shall be exercisable which shall not be less than as may
be provided for under the terms of the Buyer's Stock Option Plan but which shall
otherwise be determined by the Majority Shareholder) to the employees of the
Companies and Subsidiaries and in the respective individual amounts as agreed
between the Buyer and Majority Shareholder prior to the date of this Amendment
and the Buyer hereby unconditionally and irrevocably agrees that it will grant
such of the said options upon such terms and in the said individual amounts
within 7 days of being so requested in writing by the Majority Shareholder and
the Buyer shall take all necessary action to facilitate such grants. For the
avoidance of doubt the parties hereby confirm that the provisions of this clause
shall survive completion of the Agreement.
2. Exhibit A. Exhibit A to the Agreement shall be replaced in its
---------
entirety by Exhibit A ("Schedule of Shareholders and Consideration") attached to
this Amendment.
<PAGE>
3. Dormant subsidiaries. The parties hereto confirm that as at 5th
--------------------
November 1996 they consented to the transfer to I.V. Products Limited for nil
value the entire issued share capital of the following dormant Subsidiaries:
Special Research Systems Limited
Vapor Instruments Limited
Summerell Construction Limited
Dryvac Limited
Celtec Limited
Unitek Electronics Limited
Energy Transfer Products Limited
Ionic Coatings Limited
Microtek Avon Limited
4. US Shares. The consideration for the sale, assignment, transfer
---------
and delivery of the US Shares to Buyer by ETE as referred to in Section 1.3 of
the Agreement shall be US$250,000.
5. Chairman. Section 7.2(d) of the Agreement shall be amended to
--------
refer to Christopher David Dobson as having been elected as Chairman rather than
Vice Chairman of the Board.
6. Section 2.2. The first part of Section 2.2 of the Agreement
-----------
shall be amended to read as follows "at the Closing each Shareholder shall
deliver to counsel for Buyer (a) valid share warrants to bearer in respect of
the ET Shares, and (b)..."
Except solely as amended in the manner set forth above, the Agreement
shall in all other respects remain in full force and effect without
modification.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be signed by an individual thereunto duly authorized, all as of the date first
written above.
BUYER: PLASMA & MATERIALS TECHNOLOGIES, INC.
a California corporation
By: /s/ Gregor Campbell
----------------------------------------
Name: Gregor Campbell
Chief Executive Officer
<PAGE>
ET: ELECTROTECH LIMITED
an English corporation
By: /s/ Nigel Wheeler
---------------------------
Name: Nigel Wheeler
Chief Executive Officer
ETE: ELETROTECH EQUIPMENTS LIMTED
an English corporation
By: /s/ Nigel Wheeler
---------------------------
Name: Nigel Wheeler
Chief Executive Officer
SHAREHOLDERS: /s/ Christopher David Dobson
----------------------------------
Name: Christopher David Dobson
/s/ Ann Dilys Dobson
----------------------------------
Name: Ann Dilys Dobson
/s/ Frank Stanley Keeble
----------------------------------
Name: Frank Stanley Keeble
/s/ Patricia Ann Keeble
----------------------------------
Name: Patricia Ann Keeble
/s/ Kenneth Nash Knight Willmott
----------------------------------
Name: Kenneth Nash Knight Willmott
/s/ Kevin Nash Knight Willmott
----------------------------------
Name: Kevin Nash Knight Willmott
/s/ Peter Jeffrey Willmott
----------------------------------
Name: Peter Jeffrey Willmott
<PAGE>
EXHIBIT 4.1
================================================================================
PLASMA & MATERIALS TECHNOLOGIES, INC.
as Company
_________________________
7 1/8% Convertible Subordinated Notes Due 2001
_________________________
INDENTURE
Dated as of October 7, 1996
_________________________
U.S. Trust Company of California, N.A.,
as Trustee
===============================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C> <C>
ARTICLE 1 Definitions and Incorporation by Reference.................................. 1
SECTION 1.1 Definitions................................................. 1
SECTION 1.2 Other Definitions........................................... 8
SECTION 1.3 Incorporation by Reference of Trust Indenture Act........... 9
SECTION 1.4 Rules of Construction....................................... 10
ARTICLE 2 The Notes................................................................... 10
SECTION 2.1 Form and Dating............................................. 10
(a) Global Notes................................................ 10
(b) Book-Entry Provisions....................................... 11
(c) Certificated Notes.......................................... 12
SECTION 2.2 Execution and Authentication................................ 12
SECTION 2.3 Registrar, Paying Agent and Conversion Agent................ 13
SECTION 2.4 Paying Agent to Hold Money in Trust......................... 13
SECTION 2.5 Noteholder Lists............................................ 13
SECTION 2.6 Transfer and Exchange....................................... 13
(a) Transfer and Exchange of Global Notes....................... 14
(b) Transfer and Exchange of Certificated Notes................. 16
(c) Transfer of a Beneficial Interest in a Restricted
Global Note or Unrestricted Global Note for a
Certificated Note........................................... 17
(d) Restrictions on Transfer and Exchange of Global
Notes....................................................... 18
(e) Transfer and Exchange of a Certificated Note for a
Beneficial Interest in a Global Note........................ 18
(f) Authentication of Certificated Note in Absence of
Depositary.................................................. 19
(g) Legends..................................................... 19
(h) Initial Purchasers.......................................... 20
SECTION 2.7 Replacement Notes........................................... 20
SECTION 2.8 Outstanding Notes........................................... 21
SECTION 2.9 Treasury Notes.............................................. 21
SECTION 2.10 Temporary Notes............................................. 21
SECTION 2.11 Cancellation................................................ 22
SECTION 2.12 Defaulted Interest or Liquidated Damages.................... 22
ARTICLE 3 Redemption.................................................................. 23
SECTION 3.1 Notices to Trustee.......................................... 23
SECTION 3.2 Selection of Notes to be Redeemed........................... 23
SECTION 3.3 Notice of Redemption........................................ 23
SECTION 3.4 Effect of Notice of Redemption.............................. 24
SECTION 3.5 Deposit of Redemption Price................................. 24
SECTION 3.6 Notes Redeemed in Part...................................... 24
</TABLE>
i
<PAGE>
<TABLE>
<S> <C> <C> <C>
SECTION 3.7 Optional Redemption......................................... 25
SECTION 3.8 Designated Event Offer...................................... 25
SECTION 3.9 Special Mandatory Redemption................................ 27
ARTICLE 4 Covenants................................................................... 27
SECTION 4.1 Payment of Notes............................................ 27
SECTION 4.2 SEC Reports................................................. 27
SECTION 4.3 Compliance Certificate...................................... 27
SECTION 4.4 Stay, Extension and Usury Laws.............................. 28
SECTION 4.5 Corporate Existence......................................... 28
SECTION 4.6 Taxes....................................................... 29
SECTION 4.7 Designated Event............................................ 29
SECTION 4.8 Deposit of Proceeds with Trustee Pending
Consummation of Acquisition................................. 29
ARTICLE 5 Conversion.................................................................. 30
SECTION 5.1 Conversion Privilege........................................ 30
SECTION 5.2 Conversion Procedure........................................ 31
SECTION 5.3 Fractional Shares........................................... 32
SECTION 5.4 Taxes on Conversion......................................... 32
SECTION 5.5 Company to Provide Stock.................................... 32
SECTION 5.6 Adjustment of Conversion Price.............................. 32
SECTION 5.7 No Adjustment............................................... 36
SECTION 5.8 Other Adjustments........................................... 36
SECTION 5.9 Adjustments for Tax Purposes................................ 36
SECTION 5.10 Adjustments by the Company.................................. 36
SECTION 5.11 Notice of Adjustment........................................ 37
SECTION 5.12 Notice of Certain Transactions.............................. 37
SECTION 5.13 Effect of Reclassifications, Consolidations, Mergers
or Sales on Conversion Privilege............................ 37
SECTION 5.14 Trustee's Disclaimer........................................ 38
ARTICLE 6 Subordination............................................................... 38
SECTION 6.1 Agreement to Subordinate.................................... 38
SECTION 6.2 No Payment on Notes if Senior Debt in Default............... 38
SECTION 6.3 Distribution on Acceleration of Notes; Dissolution
and Reorganization; Subrogation of Notes.................... 40
SECTION 6.4 Reliance by Senior Debt on Subordination
Provisions.................................................. 43
SECTION 6.5 No Waiver of Subordination Provisions....................... 43
SECTION 6.6 Trustee's Relation to Senior Debt........................... 43
SECTION 6.7 Other Provisions Subject Hereto............................. 44
ARTICLE 7 Successors.................................................................. 44
SECTION 7.1 Merger, Consolidation or Sale of Assets..................... 44
SECTION 7.2 Successor Corporation Substituted........................... 45
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C> <C> <C>
ARTICLE 8 Defaults and Remedies....................................................... 45
SECTION 8.1 Events of Default........................................... 45
SECTION 8.2 Acceleration................................................ 47
SECTION 8.3 Other Remedies.............................................. 47
SECTION 8.4 Waiver of Past Defaults..................................... 47
SECTION 8.5 Control by Majority......................................... 47
SECTION 8.6 Limitation on Suits......................................... 48
SECTION 8.7 Rights of Noteholders to Receive Payment.................... 48
SECTION 8.8 Collection Suit by Trustee.................................. 48
SECTION 8.9 Trustee May File Proofs of Claim............................ 48
SECTION 8.10 Priorities.................................................. 49
SECTION 8.11 Undertaking for Costs....................................... 49
ARTICLE 9 Trustee..................................................................... 49
SECTION 9.1 Duties of Trustee........................................... 49
SECTION 9.2 Rights of Trustee........................................... 50
SECTION 9.3 Individual Rights of Trustee................................ 51
SECTION 9.4 Trustee's Disclaimer........................................ 51
SECTION 9.5 Notice of Defaults.......................................... 51
SECTION 9.6 Reports by Trustee to Noteholders........................... 51
SECTION 9.7 Compensation and Indemnity.................................. 51
SECTION 9.8 Replacement of Trustee...................................... 52
SECTION 9.9 Successor Trustee by Merger, Etc............................ 53
SECTION 9.10 Eligibility; Disqualification............................... 53
SECTION 9.11 Preferential Collection of Claims Against Company........... 53
SECTION 9.12 Sections Applicable to Registrar, Paying Agent and
Conversion Agent............................................ 53
ARTICLE 10 Discharge of Indenture...................................................... 54
SECTION 10.1 Termination of Company's Obligations........................ 54
SECTION 10.2 Repayment to Company........................................ 54
ARTICLE 11 Amendments, Supplements and Waivers......................................... 54
SECTION 11.1 Without Consent of Noteholders.............................. 54
SECTION 11.2 With Consent of Noteholders................................. 55
SECTION 11.3 Compliance with Trust Indenture Act......................... 56
SECTION 11.4 Revocation and Effect of Consents........................... 56
SECTION 11.5 Notation on or Exchange of Notes............................ 57
SECTION 11.6 Trustee Protected........................................... 57
ARTICLE 12 Miscellaneous............................................................... 57
SECTION 12.1 Trust Indenture Act Controls................................ 57
SECTION 12.2 Notices..................................................... 57
SECTION 12.3 Communication by Noteholders with Other
Noteholders................................................. 58
SECTION 12.4 Certificate and Opinion as to Conditions Precedent.......... 58
SECTION 12.5 Statements Required in Certificate or Opinion............... 58
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C> <C> <C>
SECTION 12.6 Rules by Trustee and Agents................................. 58
SECTION 12.7 Legal Holidays.............................................. 58
SECTION 12.8 No Recourse Against Others.................................. 59
SECTION 12.9 Counterparts................................................ 59
SECTION 12.10 Variable Provisions......................................... 59
SECTION 12.11 Governing Law............................................... 59
SECTION 12.12 No Adverse Interpretation of Other Agreements............... 60
SECTION 12.13 Successors.................................................. 60
SECTION 12.14 Severability................................................ 60
SECTION 12.15 Table of Contents, Headings, Etc............................ 60
SECTION 12.16 Persons Deemed Owners....................................... 60
</TABLE>
iv
<PAGE>
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture Indenture
Act Section Section
<S> <C>
310(a)(1).................................................... 7.10
(a)(2).................................................... 7.10
(a)(3).................................................... N.A.
(a)(4).................................................... N.A.
(b).................................................. 7.8; 7.10
(c)....................................................... N.A.
311(a)....................................................... 7.11
(b)....................................................... 7.11
(c)....................................................... N.A.
312(a)....................................................... 2.5
(b)....................................................... 10.3
(c)....................................................... 10.3
313(a)....................................................... 7.6
(b)(1).................................................... N.A.
(b)(2).................................................... 7.6
(c)....................................................... 7.6
(d)....................................................... 7.6
314(a)................................................... 4.2, 4.3
(b)....................................................... N.A.
(c)(1).................................................... 10.4
(c)(2).................................................... 10.4
(c)(3).................................................... N.A.
(d)....................................................... N.A.
(e)....................................................... N.A.
(f)....................................................... N.A.
315(a).......................................................7.1(b)
(b)....................................................... 7.5
(c).......................................................7.1(a)
(d).......................................................7.1(c)
(e)....................................................... 6.11
316(a) (last sentence)....................................... 2.9
(a)(1)(A)................................................. 6.5
(a)(1)(B)................................................. 6.4
(a)(2).................................................... N.A.
(b)....................................................... 6.7
(c)....................................................... 9.4
317(a)(1).................................................... 6.8
(a)(2).................................................... 6.9
(b)....................................................... 2.4
318(a)....................................................... N.A.
</TABLE>
N.A. means not applicable.
__________
*This Cross-Reference Table is not part of the Indenture.
v
<PAGE>
INDENTURE dated as of October 7, 1996 between Plasma & Materials
Technologies, Inc., a California corporation (the "Company"), and U.S. Trust
Company of California, N.A., a national banking association duly organized and
existing under the laws of the State of California, as trustee (the "Trustee").
Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the Noteholders of the Company's 7 1/8% Convertible
Subordinated Notes due 2001 (the "Notes"):
ARTICLE 1
Definitions and Incorporation by Reference
------------------------------------------
SECTION 1.1 Definitions.
-----------
"Acquisition" means the acquisition by the Company of all of the
outstanding capital stock of Electrotech, and directly or indirectly, each
subsidiary thereof pursuant to the Share Purchase Agreement.
"Affiliate" of any specified person means any other person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified person. For the purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling",
"controlled by" and "under common control with"), as used with respect to any
person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such person,
whether through the ownership of voting securities or by agreement or otherwise;
provided, however, that beneficial ownership of 10% or more of the voting
- -------- -------
securities of a person shall be deemed to be control.
"Agent" means any Security Registrar, Paying Agent, Conversion Agent or co-
registrar.
"Board of Directors" means the Board of Directors of the Company or any
authorized committee of the Board.
"Board Resolution" means a duly authorized resolution of the Board of
Directors.
"Business Day" means any day that is not a Legal Holiday.
"Capital Stock" means any and all shares, interests, participations, rights
or other equivalents (however designated) of equity interests in any entity,
including, without limitation, corporate stock, including any preferred stock,
and partnership interests, whether general or limited.
"Cash Equivalents" means: (a) securities with maturities of one year or
less from the date of acquisition issued or fully guaranteed or insured by the
United States Government or
1
<PAGE>
any agency thereof, (b) certificates of deposit and Eurodollar time deposits
with maturities of one year or less from the date of acquisition and overnight
bank deposits of any commercial bank having capital and surplus in excess of
$500,000,000, (c) repurchase obligations of any commercial bank satisfying the
requirements of clause (b) of this definition, having a term of not more than 30
days, with respect to securities issued or fully guaranteed or insured by the
United States Government or any agency thereof, (d) commercial paper of a
domestic issuer at the time of acquisition having a rating of at least A-1 by
Standard and Poor's Ratings Group ("S&P") or P-1 by Moody's Investors Service,
Inc. ("Moody's"), (e) securities with maturities of one year or less from the
date of acquisition issued or fully guaranteed by any state, commonwealth or
territory of the United States, or by any political subdivision or taxing
authority of any such state, commonwealth or territory, the securities of which
state, commonwealth, territory, political subdivision, taxing authority (as the
case may be) are rated at least A by S&P or A by Moody's, or (f) shares of money
market mutual or similar funds which invest exclusively in assets satisfying the
requirements of clauses (a) through (e) of this definition.
"Change of Control" means any event where: (i) any "person" or "group" (as
such terms are used in Section 13(d) and 14(d) of the Exchange Act) is or
becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act) of shares representing more than 50% of the combined voting power
of the then outstanding securities entitled to vote generally in elections of
directors of the Company ("Voting Stock"), (ii) the Company consolidates with or
merges into any other corporation, or any other corporation merges into the
Company, and, in the case of any such transaction, the outstanding Common Stock
of the Company is reclassified into or exchanged for any other property or
security, unless the shareholders of the Company immediately before such
transaction own, directly or indirectly immediately following such transaction,
at least a majority of the combined voting power of the outstanding voting
securities of the corporation resulting from such transaction in substantially
the same proportion as their ownership of the Voting Stock immediately before
such transaction, (iii) the Company conveys, transfers or leases all or
substantially all of its assets (other than to one or more wholly-owned
subsidiaries of the Company) or (iv) any time the Continuing Directors do not
constitute a majority of the Board of Directors of the Company (or, if
applicable, a successor corporation to the Company); provided, that a Change of
--------
Control shall not be deemed to have occurred if at least 90% of the
consideration (excluding cash payments for fractional shares) in the transaction
or transactions constituting the Change of Control consists of shares of common
stock that are, or upon issuance will be, traded on a United States national
securities exchange or approved for trading on an established automated over-
the-counter trading market in the United States and as a result of such
transaction or transactions the Notes become convertible solely into such common
stock or a combination of such common stock and cash.
"Closing Date" means the date on which the Acquisition is consummated.
"Collateral" means (i) the Collateral Account, (ii) the Special Redemption
Amount and all other cash deposited in the Collateral Account from time to time
and the Eligible Investments made pursuant to Section 4.8 hereof, (iii) all
rights and privileges of the Company with respect to the Collateral Account and
the Eligible Investments, (iv) all
2
<PAGE>
dividends, interest and other payments and distributions made on or with respect
to the Eligible Investments or the Collateral Account and (v) all Proceeds of
any of the foregoing.
"Common Stock" means the common stock of the Company as the same exists at
the date of the execution of this Indenture or as such stock may be constituted
from time to time.
"Company" means the party named as such above until a successor replaces it
in accordance with Article 7 and thereafter means the successor.
"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of the Company who (i) was a member of such Board of
Directors on the date of this Indenture or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
"Corporate Trust Office" shall be at the address of the Trustee specified
in Section 12.10 or such other address as the Trustee may give notice to the
Company.
"Daily Market Price" means the price of a share of Common Stock on the
relevant date, determined (a) on the basis of the last reported sale price
regular way of the Common Stock as reported on the Nasdaq Stock Market's
National Market (the "NNM"), or if the Common Stock is not then listed on the
NNM, as reported on such national securities exchange upon which the Common
Stock is listed, or (b) if there is no such reported sale on the day in
question, on the basis of the average of the closing bid and asked quotations
regular way as so reported, or (c) if the Common Stock is not listed on the NNM
or on any national securities exchange, on the basis of the average of the high
bid and low asked quotations regular way on the day in question in the over-the-
counter market as reported by the National Association of Securities Dealers
Automated Quotation System, or if not so quoted, as reported by National
Quotation Bureau, Incorporated, or a similar organization.
"Default" means any event that is, or with the passage of time or the
giving of notice or both, would be an Event of Default.
"Depositary" means The Depository Trust Company, its nominees and their
respective successors.
"Designated Event" means the occurrence of a Change of Control or a
Termination of Trading.
"Designated Senior Debt" means (i) any Senior Debt which, as of the date of
the Indenture, has an aggregate principal amount outstanding of at least $20
million, (ii) any Senior Debt which, at the date of determination, has an
aggregate principal amount outstanding of, or commitments to lend up to, at
least $20 million, (iii) Senior Debt which, at the date of determination, has a
principal amount outstanding of at least $5 million and consists of one capital
leasing facility to which the Company is a party with respect to equipment used
in the operation of the Company, and (iv) any Senior Debt which, at the date of
determination, has an aggregate principal amount outstanding of, or commitments
to lend
3
<PAGE>
up to, at least $2.5 million and consists of obligations for borrowed money to a
bank, savings and loan association or foreign bank or savings and loan
association or equivalent institution as defined in Rule 144A(a)(1)(vi) pursuant
to the Securities Act; provided, further, that with respect to the Senior Debt
referenced in clauses (ii), (iii) and (iv) above, such Senior Debt is
specifically designated by the Company in the instrument evidencing or governing
such Senior Debt as "Designated Senior Debt" for purposes of this Indenture
(provided that such instrument may place limitations and conditions on the right
of such Senior Debt to exercise the rights of Designated Senior Debt).
"Electrotech" means Electrotech Limited and Electrotech Equipments Limited,
and each of their successors.
"Eligible Investments" means Cash Equivalents which, in order to provide
the Trustee with a perfected security interest therein, shall be either: (i)
evidenced by negotiable certificates or instruments, or if non-negotiable then
issued in the name of the Trustee, which (together with any appropriate
instruments of transfer) are delivered to, and held by, the Trustee or an agent
thereof in the State of New York; or (ii) in book-entry form and issued by the
United States Government or agency thereof and backed by the full faith and
credit of the United States and subject to pledge under applicable state law and
Treasury regulations.
"Excess Payment" means the excess of (i) the aggregate of the cash and fair
market value of other consideration paid by the Company or any of its
subsidiaries with respect to the shares acquired in a tender offer or other
negotiated transaction over (ii) the Daily Market Price on the Trading Day
immediately following the completion of such tender offer or other negotiated
transaction multiplied by the number of acquired shares.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, which are in effect from time to time.
"Global Notes" means, individually and collectively, the Unrestricted
Global Notes and the Restricted Global Notes.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Indebtedness" means, with respect to any person, all obligations, whether
or not contingent, of such person (i) (a) for borrowed money (including, but not
limited to, any indebtedness secured by a security interest, mortgage or other
lien on the assets of such person which is (1) given to secure all or part of
the purchase price of property subject
4
<PAGE>
thereto, whether given to the vendor of such property or to another, or (2)
existing on property at the time of acquisition thereof), (b) evidenced by a
note, debenture, bond or other written instrument, (c) under a lease required to
be capitalized on the balance sheet of the lessee under GAAP or under any lease
or related document (including a purchase agreement) which provides that such
person is contractually obligated to purchase or to cause a third party to
purchase such leased property, (d) in respect of letters of credit, bank
guarantees or bankers' acceptances (including reimbursement obligations with
respect to any of the foregoing), (e) with respect to indebtedness secured by a
mortgage, pledge, lien, encumbrance, charge or adverse claim affecting title or
resulting in an encumbrance to which the property or assets of such person are
subject, whether or not the obligation secured thereby shall have been assumed
or Guaranteed by or shall otherwise be such person's legal liability, (f) in
respect of the balance of deferred and unpaid purchase price of any property or
assets and (g) under interest rate or currency swap agreements, cap, floor and
collar agreements, spot and forward contracts and similar agreements and
arrangements; (ii) with respect to any obligation of others of the type
described in the preceding clause (i) or under clause (iii) below, assumed by or
Guaranteed in any manner by such person or in effect Guaranteed by such person
through an agreement to purchase (including, without limitation, "take or pay"
and similar arrangements), contingent or otherwise (and the obligations of such
person under any such assumptions, Guarantees or other such arrangements); and
(iii) any and all deferrals, renewals, extensions, refinancings and refundings
of, or amendments, modifications or supplements to, any of the foregoing.
"Indenture" means this Indenture, as amended or supplemented from time to
time, in accordance with the terms hereof.
"Initial Purchasers" means Salomon Brothers Inc and Unterberg Harris.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Notes.
"Issuance Date" means October 7, 1996.
"Liquidated Damages" means any liquidated damages payable pursuant to the
Registration Agreement.
"Material Subsidiary" means any Subsidiary of the Company which at the date
of determination is a "significant subsidiary" as defined in Rule 1-02(w) of
Regulation S-X under the Securities Act and the Exchange Act (as such Regulation
is in effect on the date hereof).
"Noteholder" or "holder" means a person in whose name a Note is registered.
"Notes" means the Notes described in the preamble above that are issued,
authenticated and delivered under this Indenture.
5
<PAGE>
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering Memorandum" means the offering memorandum relating to the Notes
dated October 1, 1996.
"Officers' Certificate" means a certificate signed by two Officers, one of
whom must be the Chairman of the Board, the President, the Treasurer or a Vice-
President of the Company. See Sections 12.4 and 12.5 hereof.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee. See Sections 12.4 and 12.5 hereof.
"person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization, limited
liability company or government or any agency or political subdivision thereof.
"principal" of a debt security means the principal of the security plus the
premium, if any, on the security.
"Proceeds" means all proceeds of, and all other profits, products, rents or
receipts, in whatever form arising from the collection, sale, lease, exchange,
assignment, licensing, or other disposition of, or other realization upon,
Collateral, whether now existing or hereafter arising.
"Record Date" for the interest payable on any Interest Payment Date means
the 15th day (whether or not a Business Day) next preceding such Interest
Payment Date.
"Registration Agreement" means the Registration Agreement relating to the
Notes dated October 7, 1996, between the Company and the Initial Purchasers, a
form of which is attached as Exhibit C hereto.
"Regulation S" means Regulation S promulgated under the Securities Act.
"Representative" means the trustee, agent or representative (if any) for an
issue of Senior Debt.
"Restricted Global Note" means a permanent global note that contains the
paragraph referred to in footnote 1 and Schedule A to the form of Note attached
hereto as Exhibit A-1, and that is deposited with and registered in the name of
the Depositary, representing the Notes sold in reliance on Rule 144A.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
6
<PAGE>
"SEC" means the Securities and Exchange Commission and any successor entity
thereto.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Debt" means the principal of, premium, if any, interest on and
other amounts due on Indebtedness of the Company, whether outstanding on the
date of the Indenture or thereafter created, incurred, assumed or Guaranteed by
the Company; unless, in the instrument creating or evidencing or pursuant to
which Indebtedness is outstanding, it is expressly provided that such
Indebtedness is not senior in right of payment to the Notes. Senior Debt
includes, with respect to the obligations described above, interest accruing,
pursuant to the terms of such Senior Debt, on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company, whether or
not post-filing interest is allowed in such proceeding, at the rate specified in
the instrument governing the relevant obligation. Notwithstanding anything to
the contrary in the foregoing, Senior Debt shall not include: (a) Indebtedness
of or amounts owed by the Company for compensation to employees, or for goods,
services or materials purchased in the ordinary course of business; (b)
Indebtedness of the Company to a Subsidiary of the Company; or (c) any liability
for Federal, state, local, foreign or other taxes, owed or owing by the Company.
"Share Purchase Agreement" means the Share Purchase Agreement, dated as of
July 17, 1996 entered into among the Company, Electrotech and the shareholders
of Electrotech, including all exhibits and schedules thereto and all related
agreements entered into on or prior to the Issuance Date, in each case as in
effect on the Issuance Date.
"Shelf Registration Statement" shall have the meaning set forth in the
Registration Agreement.
"Special Redemption Date" means January 16, 1997.
"Special Redemption Notice Date" means December 31, 1996.
"Stated Maturity" when used with respect to any Note or any installment of
interest thereon, means the date specified in such Note as the fixed date on
which the principal of such Note or such installment of interest is due and
payable.
"Subsidiary" means any corporation, association or other business entity of
which more than 50% of the total voting power of shares of Capital Stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by any person or one or more of the other
Subsidiaries of that person or a combination thereof.
"Termination of Trading" means an event where the Common Stock (or other
common stock into which the Notes are then convertible) is neither listed for
trading on a United States national securities exchange nor approved for trading
on an established automated over-the-counter trading market in the United
States.
7
<PAGE>
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code (S)(S)77aaa-
77bbbb) as in effect on the date of execution of this Indenture and as it may be
amended from time to time.
"Trading Day" shall mean (A) if the applicable security is listed or
admitted for trading on the New York Stock Exchange or another national
securities exchange, a day on which the New York Stock Exchange or another
national securities exchange is open for business, (B) if the applicable
security is quoted on The Nasdaq National Market, a day on which trades may be
made thereon or (C) if the applicable security is not so listed, admitted for
trading or quoted, any day other than a Saturday or Sunday or a day on which
banking institutions in the State of New York are authorized or obligated by law
or executive order to close.
"Transfer Restricted Securities" means securities that bear or are required
to bear the legend set forth in Section 2.6.
"Trustee" means U.S. Trust Company of California, N.A. and its successors
and any corporation resulting from or surviving any consolidation or merger to
which it or its successors may be a party and any successor trustee at the time
serving as successor trustee hereunder.
"Trust Officer" means any officer within the corporate trust division (or
any successor group) of the Trustee or any other officer of the Trustee
customarily performing functions similar to those performed by the persons who
at that time shall be such officers, and also means, with respect to a
particular corporate trust matter, any other officer or the Trustee to whom such
trust matter is referred because of his knowledge of and familiarity with the
particular subject.
"Unrestricted Global Note" means a permanent global note that contains the
paragraph referred to in footnote 1 and Schedule A to the form of Note attached
hereto as Exhibit A-1, and that is deposited with and registered in the name of
the Depositary, representing the Notes sold in reliance on Regulation S.
SECTION 1.2 Other Definitions.
-----------------
<TABLE>
<CAPTION>
Defined in
Term Section
- ---- ----------
<S> <C>
"Acquisition Date"............................ 4.8
"Agent Members"............................... 2.1
"Bankruptcy Law".............................. 8.1
"Cedel"....................................... 2.1
"Collateral Account".......................... 4.8
"Commencement Date"........................... 3.8
"Conversion Agent"............................ 2.3
"Conversion Date"............................. 5.2
"Conversion Price"............................ 5.1
"Conversion Shares"........................... 5.6
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
"Custodian"................................... 8.1
"Designated Event Offer"...................... 4.7
"Designated Event Payment".................... 4.7
"Designated Event Payment Date"............... 3.8
"Distribution Date"........................... 5.6
"Distribution Record Date".................... 5.6
"Euroclear"................................... 2.1
"Event of Default"............................ 8.1
"Global Note"................................. 2.1
"Institutional Accredited Investors........... 2.1(c)
"Legal Holiday"............................... 12.7
"Offer Amount"................................ 3.8
"Offering Proceeds"........................... 4.8
"Officer".....................................12.10
"Paying Agent"................................ 2.3
"Payment Blockage Notice"..................... 6.2
"Payment Blockage Period"..................... 6.2
"Payment Default"............................. 8.1
"Purchase Agreement".......................... 2.1
"Purchase Date"............................... 5.6
"QIBs"........................................ 2.1
"Registrar"................................... 2.3
"Regulation S"................................ 2.1
"Restricted Notes"............................ 2.1
"Rights"...................................... 5.6
"Rule 144A"................................... 2.1
"Special Redemption".......................... 3.1
"Special Redemption Amount"................... 4.8
"Tender Period"............................... 3.8
</TABLE>
SECTION 1.3 Incorporation by Reference of Trust Indenture Act. Whenever
-------------------------------------------------
this Indenture refers to a provision of the TIA, from and after the date this
Indenture becomes subject to the TIA, the provision is incorporated by reference
in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Notes;
"indenture security holder" means a Noteholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Notes means the Company or any other obligor on the Notes.
9
<PAGE>
All other terms used in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by SEC rule under the TIA have
the meanings so assigned to them.
SECTION 1.4 Rules of Construction. Unless the context otherwise requires:
---------------------
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP consistently applied;
(c) "or" is not exclusive;
(d) words in the singular include.the plural, and words in the plural
include the singular; and
(e) provisions apply to successive events and transactions.
ARTICLE 2
The Notes
---------
SECTION 2.1 Form and Dating. The Notes and the Trustee's certificate of
---------------
authentication shall be substantially in the form of Exhibit A which is hereby
incorporated in and expressly made a part of this Indenture. The Notes may have
notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Company is subject, if any, or usage (provided that any
such notation, legend or endorsement is in a form acceptable to the Company).
The Company shall furnish any such legend not contained in Exhibit A to the
Trustee in writing. Each Note shall be dated the date of its authentication.
The terms and provisions of the Notes set forth in Exhibit A are part of the
terms of this Indenture and to the extent applicable, the Company and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby. The Notes shall be issued
only in registered form and in denominations of $1,000 and integral multiples of
$1,000.
(a) Global Notes. The Notes are being offered and sold by the Company
------------
pursuant to a purchase agreement relating to the Notes, dated October 1,
1996, between the Company and the Initial Purchasers (the "Purchase
Agreement").
Notes offered and sold to Qualified Institutional Buyers as defined in
Rule 144A ("QIBs") in reliance on Rule 144A shall be issued initially in
the form of one or more Restricted Global Notes in definitive, fully
registered form without interest coupons, which shall be deposited on
behalf of the purchasers of the Notes represented thereby with the Trustee,
at its Corporate Trust Office, as custodian for the Depositary, and
registered in the name of the Depositary or a nominee of the Depositary,
duly executed by the Company and authenticated by the Trustee as
hereinafter provided. The aggregate principal amount of the Restricted
Global Note
10
<PAGE>
may from time to time be increased or decreased by adjustments made on the
records of the Trustee and the Depositary or its nominee as hereinafter
provided.
Notes offered and sold in reliance on Regulation S shall be issued
initially in the form of one or more Unrestricted Global Notes in
definitive, fully registered form without interest coupons, which shall be
deposited on behalf of the purchasers of the Notes represented thereby with
the Trustee, at its Corporate Trust Office, as custodian for the
Depositary, and registered in the name of the Depositary or a nominee of
the Depositary for the accounts of designated agents holding on behalf of
the Euroclear System ("Euroclear") or Cedel Bank Societe Anonyme ("Cedel")
duly executed by the Company and authenticated by the Trustee as
hereinafter provided. The aggregate principal amount of the Unrestricted
Global Note may from time to time be increased or decreased by adjustments
made on the records of the Trustee and the Depositary or its nominee as
hereinafter provided.
Each Global Note shall represent such of the outstanding Notes as
shall be specified therein and each shall provide that it shall represent
the aggregate amount of outstanding Notes from time to time endorsed
thereon and that the aggregate amount of outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. Any endorsement of a Global Note to
reflect the amount of any increase or decrease in the amount of outstanding
Notes represented thereby shall be made by the Trustee or the custodian, at
the direction of the Trustee, in accordance with instructions given by the
holder thereof as required by Section 2.6 hereof.
The provisions of the "Operating Procedures of the Euroclear System"
and "Terms and Conditions Governing Use of Euroclear" and the "Management
Regulations" and "Instructions to Participants" of Cedel shall be
applicable to interests in the Unrestricted Global Note that are held by
the Agent Member through Euroclear or Cedel.
Except as set forth in Section 2.6 hereof, the Global Notes may be
transferred, in whole and not in part, only to another nominee of the
Depositary or to a successor of the Depositary or its nominee.
(b) Book-Entry Provisions. This Section 2.1(b) shall apply only to a
---------------------
Global Note deposited with or on behalf of the Depositary.
The Company shall execute and the Trustee shall, in accordance with
this Section 2.1(b), authenticate and deliver initially one or more Global
Notes that (a) shall be registered in the name of the Depositary or nominee
of the Depositary and (b) shall be delivered by the Trustee to such
Depositary or pursuant to such Depositary's instructions or held by the
Trustee as custodian for the Depositary pursuant to a FAST Balance
Certificate Agreement between the Depositary and the Trustee.
11
<PAGE>
Members of, or participants in, the Depositary ("Agent Members") shall
have no rights under this Indenture with respect to any Global Note held on
their behalf by the Depositary or by the Trustee as the custodian of the
Depositary or under such Global Note, and the Depositary may be treated by
the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of such Global Note for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company,
the Trustee or any agent of the Company or the Trustee from giving effect
to any written certification, proxy or other authorization furnished by the
Depositary or impair, as between the Depositary and its Agent Members, the
operation of customary practices of such Depositary governing the exercise
of the rights of a holder of a beneficial interest in any Global Note.
(c) Certificated Notes. Except as provided in Sections 2.6(f) and
------------------
2.10, owners of beneficial interests in Global Notes will not be entitled
to receive physical delivery of certificated Notes. Purchasers of Notes
who are institutional "accredited investors" (as defined in Rule 501(a)(1),
(2), (3) or (7) under the Securities Act and are referred to as
"Institutional Accredited Investors") who are not QIBs will receive
certificated Notes bearing the Restricted Notes Legend set forth in Exhibit
A hereto.
After a transfer of any Notes during the period of the effectiveness
of a Shelf Registration Statement with respect to the Notes, all
requirements pertaining to legends on such Note will cease to apply, the
requirements requiring any such Note issued to certain holders be issued in
global form will cease to apply, and a certificated Note without legends
will be available to the holder of such Note.
SECTION 2.2 Execution and Authentication. Two Officers shall sign the
----------------------------
Notes for the Company by manual or facsimile signature. The Company's seal
shall be reproduced on the Notes.
If an Officer whose signature is on a Note no longer holds that office at
the time the Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature of an
authorized officer of the Trustee. The signature shall be conclusive evidence
that the Note has been authenticated under this Indenture.
Upon a written order of the Company signed by two Officers, the Trustee
shall authenticate the Notes for original issue up to an aggregate principal
amount of $75,000,000 (plus up to $11,250,000 aggregate principal amount of
Notes that may be sold by the Company pursuant to the overallotment option
granted pursuant to the Purchase Agreement). The aggregate principal amount of
Notes outstanding at any time shall not exceed such amount except as provided in
Section 2.7.
The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Notes. An authenticating agent may authenticate Notes whenever
the Trustee may do so. Each reference in this Indenture to authentication by
the Trustee includes
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<PAGE>
authentication by such agent. An authenticating agent has the same rights as an
Agent to deal with the Company or an Affiliate.
SECTION 2.3 Registrar, Paying Agent and Conversion Agent. The Company
--------------------------------------------
shall maintain in the Borough of Manhattan, City of New York, State of New York
(i) an office or agency where Notes may be presented for registration of
transfer or for exchange ("Registrar"), (ii) an office or agency where Notes may
be presented for payment ("Paying Agent") and (iii) an office or agency where
Notes may be presented for conversion ("Conversion Agent"). The Registrar shall
keep a register of the Notes and of their transfer and exchange. The Company
may appoint the Registrar, the Paying Agent and the Conversion Agent and may
appoint one or more co-registrars, one or more additional paying agents and one
or more additional conversion agents in such other locations as it shall
determine. The term "Paying Agent" includes any additional paying agent and the
term "Conversion Agent" includes any additional conversion agent. The Company
may change any Paying Agent, Registrar, co-registrar or Conversion Agent without
prior notice to any Noteholder. The Company shall notify the Trustee of the
name and address of any Agent not a party to this Indenture. If the Company
fails to appoint or maintain another entity as Registrar, Paying Agent or
Conversion Agent, the Trustee shall act as such. The Company or any of its
Affiliates may act as Paying Agent, Registrar, co-registrar or Conversion Agent.
The Company initially appoints the Trustee as Paying Agent, Registrar,
Conversion Agent and authenticating agent and the Trustee hereby accepts such
appointments.
SECTION 2.4 Paying Agent to Hold Money in Trust. The Company shall require
-----------------------------------
each Paying Agent other than the Trustee to agree in writing that the Paying
Agent will hold in trust for the benefit of Noteholders or the Trustee all money
held by the Paying Agent for the payment of principal of, premium, if any, or
interest on, the Notes, and will notify the Trustee of any default by the
Company in making any such payment. While any such default continues, the
Trustee may require a Paying Agent to pay all money held by it to the Trustee.
The Company at any time may require a Paying Agent to pay all money held by it
to the Trustee and to account for any money disbursed by it. Upon payment over
to the Trustee, the Paying Agent (if other than the Company or an Affiliate of
the Company) shall have no further liability for the money. If the Company or
an Affiliate of the Company acts as Paying Agent, it shall segregate and hold in
a separate trust fund for the benefit of the Noteholders all money held by it as
Paying Agent.
SECTION 2.5 Noteholder Lists. The Trustee shall preserve in as current a
----------------
form as is reasonably practicable the most recent list available to it of the
names and addresses of Noteholders. If the Trustee is not the Registrar, the
Company shall furnish to the Trustee on or before each interest payment date and
at such other times as the Trustee may request in writing a list in such form
and as of such date as the Trustee may reasonably require of the names and
addresses of Noteholders.
SECTION 2.6 Transfer and Exchange. Where Notes are presented to the
---------------------
Registrar or a co-registrar with a request to register the transfer or to
exchange them for an equal principal amount of Notes of other denominations, the
Registrar shall register the transfer or make the exchange if its requirements
for such transactions are met. To permit registrations
13
<PAGE>
of transfers and exchanges, the Company shall issue and the Trustee shall
authenticate Notes at the Registrar's request. No service charge shall be made
for any registration of transfer or exchange (except as otherwise expressly
permitted herein), but the Company may require payment of a sum sufficient to
cover any transfer tax or similar governmental charge payable in connection
therewith (other than any such transfer tax or similar governmental charge
payable upon exchanges pursuant to Sections 2.10, 3.6 or 11.5 hereof).
The Company and the Registrar shall not be required (i) to issue, register
the transfer of, or exchange Notes during a period beginning at the opening of
business 30 days before the day of any selection of Notes for redemption under
Section 3.2 hereof and ending at the close of business on the day of selection,
or (ii) to exchange or register the transfer of any Note so selected for
redemption in whole or in part, except the unredeemed portion of any Note being
redeemed in part.
(a) Transfer and Exchange of Global Notes. The transfer and exchange
-------------------------------------
of Global Notes or beneficial interests therein shall be effected through
the Depositary, in accordance with this Indenture and the procedures of the
Depositary therefor, which shall include restrictions on transfer
comparable to those set forth herein to the extent required by the
Securities Act. Beneficial interests in a Global Note may be transferred
to persons who take delivery thereof in the form of a beneficial interest
in the same Global Note in accordance with the transfer restrictions set
forth in the legend in subsection (g) of this Section 2.6. Transfers of
beneficial interests in the Global Notes to persons required to take
delivery thereof in the form of an interest in another Global Note shall be
permitted as follows:
(i) Restricted Global Note to Unrestricted Global Note. If, at
--------------------------------------------------
any time, an owner of a beneficial interest in a Restricted Global
Note deposited with the Depositary (or the Trustee as custodian for
the Depositary) wishes to transfer its interest in such Restricted
Global Note to a person who is required or permitted to take delivery
thereof in the form of an interest in an Unrestricted Global Note,
such owner shall, subject to compliance with the applicable procedures
described herein (the "Applicable Procedures"), exchange or cause the
exchange of such interest for an equivalent beneficial interest in an
Unrestricted Global Note as provided in this Section 2.6(a)(i). Upon
receipt by the Trustee of (1) instructions given in accordance with
the Applicable Procedures from an Agent Member directing the Trustee
to credit or cause to be credited a beneficial interest in the
Unrestricted Global Note in an amount equal to the beneficial interest
in the Restricted Global Note to be exchanged, (2) a written order
given in accordance with the Applicable Procedures containing
information regarding the participant account of the Depositary and
the Euroclear or Cedel account to be credited with such increase, and
(3) a certificate in the form of Exhibit B-1 hereto given by the owner
of such beneficial interest stating that the transfer of such interest
has been made in compliance with the transfer restrictions applicable
to the Global Notes and pursuant to and in accordance with Rule 903 or
Rule 904 of Regulation S, then the Trustee, as Registrar, shall
instruct the Depositary to reduce or cause to be reduced the aggregate
principal amount at maturity of
14
<PAGE>
the applicable Restricted Global Note and to increase or cause to be
increased the aggregate principal amount at maturity of the applicable
Unrestricted Global Note by the principal amount at maturity of the
beneficial interest in the Restricted Global Note to be exchanged, to
credit or cause to be credited to the account of the person specified
in such instructions a beneficial interest in the Unrestricted Global
Note equal to the reduction in the aggregate principal amount at
maturity of the Restricted Global Note, and to debit, or cause to be
debited, from the account of the person making such exchange or
transfer the beneficial interest in the Restricted Global Note that is
being exchanged or transferred.
(ii) Unrestricted Global Note to Restricted Global Note. If, at
--------------------------------------------------
any time, an owner of a beneficial interest in an Unrestricted Global
Note deposited with the Depositary or with the Trustee as custodian
for the Depositary wishes to transfer its interest in such
Unrestricted Global Note to a person who is required or permitted to
take delivery thereof in the form of an interest in a Restricted
Global Note, such owner shall, subject to the Applicable Procedures,
exchange or cause the exchange of such interest for an equivalent
beneficial interest in a Restricted Global Note as provided in this
Section 2.6(a)(ii). Upon receipt by the Trustee of (1) instructions
from Euroclear or Cedel, if applicable, and the Depositary, directing
the Trustee, as Registrar, to credit or cause to be credited a
beneficial interest in the Restricted Global Note equal to the
beneficial interest in the Unrestricted Global Note to be exchanged,
such instructions to contain information regarding the participant
account with the Depositary to be credited with such increase, (2) a
written order given in accordance with the Applicable Procedures
containing information regarding the participant account of the
Depositary and (3) if such transfer is being effected prior to the
expiration of the "40 day restricted period" (as defined by Regulation
S under the Securities Act), a certificate in the form of Exhibit B-2
attached hereto given by the owner of such beneficial interest stating
(A) if the transfer is pursuant to Rule 144A, that the person
transferring such interest in an Unrestricted Global Note reasonably
believes that the person acquiring such interest in a Restricted
Global Note is a QIB and is obtaining such beneficial interest in a
transaction meeting the requirements of Rule 144A and any applicable
blue sky or securities laws of any state of the United States, (B)
that the transfer complies with the requirements of Rule 144A under
the Securities Act and any applicable blue sky or securities laws of
any state of the United States or (C) if the transfer is pursuant to
any other exemption from the registration requirements of the
Securities Act, that the transfer of such interest has been made in
compliance with the transfer restrictions applicable to the Global
Securities and pursuant to and in accordance with the requirements of
the exemption claimed, such statement to be supported by an Opinion of
Counsel from the transferee or the transferor in form reasonably
acceptable to the Company and to the Registrar then the Trustee, as
Registrar, shall instruct the Depositary to reduce or cause to be
reduced the aggregate principal amount at maturity of such
Unrestricted Global Note and to increase or cause to be
15
<PAGE>
increased the aggregate principal amount at maturity of the applicable
Restricted Global Note by the principal amount at maturity of the
beneficial interest in the Unrestricted Global Note to be exchanged,
and the Trustee, as Registrar, shall instruct the Depositary,
concurrently with such reduction, to credit or cause to be credited to
the account of the person specified in such instructions a beneficial
interest in the applicable Restricted Global Note equal to the
reduction in the aggregate principal amount at maturity of such
Unrestricted Global Note and to debit or cause to be debited from the
account of the person making such transfer the beneficial interest in
the Unrestricted Global Note that is being transferred.
(b) Transfer and Exchange of Certificated Notes. When certificated
-------------------------------------------
Notes are presented by a holder to the Registrar with a request:
(x) to register the transfer of the certificated Notes; or
(y) to exchange such certificated Notes for an equal principal
amount of certificated Notes of other authorized denominations,
the Registrar shall register the transfer or make the exchange as
requested; provided, however, that the certificated Notes presented or
surrendered for register of transfer or exchange:
(i) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Registrar duly
executed by such holder or by his attorney, duly authorized in
writing; and
(ii) in the case of a certificated Note that is a Transfer
Restricted Note, such request shall be accompanied by the following
additional information and documents, as applicable:
(A) if such Transfer Restricted Note is being delivered to
the Registrar by a holder for registration in the name of such
holder, without transfer, or such Transfer Restricted Note is
being transferred to the Company, no certification is required;
(B) if such Transfer Restricted Note is being transferred to
a QIB in accordance with Rule 144A under the Securities Act or
pursuant to an exemption from registration in accordance with
Rule 144 or Rule 904 under the Securities Act or pursuant to an
effective registration statement under the Securities Act, a
certification to that effect from such holder (in substantially
the form of Exhibit B-3 hereto); or
(C) if such Transfer Restricted Note is being transferred in
reliance on any other exemption from the registration
requirements of the Securities Act, a certification to that
effect from such holder (in substantially the form of Exhibit B-3
hereto) and an Opinion of Counsel
16
<PAGE>
from such holder or the transferee reasonably acceptable to the
Company and to the Registrar to the effect that such transfer is
in compliance with the Securities Act.
(c) Transfer of a Beneficial Interest in a Restricted Global Note or
----------------------------------------------------------------
Unrestricted Global Note for a Certificated Note.
------------------------------------------------
(i) Any person having a beneficial interest in a Restricted
Global Note or Unrestricted Global Note may upon request, subject to
the Applicable Procedures, exchange such beneficial interest for a
certificated Note. Upon receipt by the Trustee of written
instructions or such other form of instructions as is customary for
the Depositary (or Euroclear or Cedel, if applicable), from the
Depositary or its nominee on behalf of any person having a beneficial
interest in a Restricted Global Note or Unrestricted Global Note, and,
in the case of a Transfer Restricted Note, the following additional
information and documents (all of which may be submitted by
facsimile):
(A) if such beneficial interest is being transferred to the
person designated by the Depositary as being the beneficial
owner, a certification to that effect from such person (in
substantially the form of Exhibit B-4 hereto);
(B) if such beneficial interest is being transferred to a
QIB in accordance with Rule 144A under the Securities Act or
pursuant to an exemption from registration in accordance with
Rule 144 under the Securities Act or pursuant to an effective
registration statement under the Securities Act, a certification
to that effect from the transferor (in substantially the form of
Exhibit B-4 hereto); or
(C) if such beneficial interest is being transferred in
reliance on any other exemption from the registration
requirements of the Securities Act, a certification to that
effect from the transferor (in substantially the form of Exhibit
B-4 hereto) and an Opinion of Counsel from the transferee or the
transferor reasonably acceptable to the Company and to the
Registrar to the effect that such transfer is in compliance with
the Securities Act,
in which case the Trustee or the custodian, at the direction of the
Trustee, shall, in accordance with the standing instructions and
procedures existing between the Depositary and the custodian, cause
the aggregate principal amount of Restricted Global Notes or
Unrestricted Global Notes, as applicable, to be reduced accordingly
and, following such reduction, the Company shall execute and, the
Trustee shall authenticate and deliver to the transferee a
certificated Note in the appropriate principal amount.
(ii) Certificated Notes issued in exchange for a beneficial
interest in a Restricted Global Note or Unrestricted Global Note, as
applicable, pursuant
17
<PAGE>
to this Section 2.6(c) shall be registered in such names and in such
authorized denominations as the Depositary, pursuant to instructions
from its direct or indirect participants or otherwise, shall instruct
the Trustee. The Trustee shall deliver such certificated Notes to the
persons in whose names such Notes are so registered. Following any
such issuance of certificated Notes, the Trustee, as Registrar, shall
instruct the Depositary to reduce or cause to be reduced the aggregate
principal amount at maturity of the applicable Global Note to reflect
the transfer.
(d) Restrictions on Transfer and Exchange of Global Notes.
-----------------------------------------------------
Notwithstanding any other provision of this Indenture (other than the
provisions set forth in subsection (f) of this Section 2.6 or Section
2.10), a Global Note may not be transferred as a whole except by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary
to the Depositary or another nominee of the Depositary or by the Depositary
or any such nominee to a successor Depositary or a nominee of such
successor Depositary.
(e) Transfer and Exchange of a Certificated Note for a Beneficial
-------------------------------------------------------------
Interest in a Global Note. A certificated Note may not be transferred or
-------------------------
exchanged for a beneficial interest in a Global Note except upon
satisfaction of the following requirements. Any holder having a
certificated Note may upon request, subject to the Applicable Procedures,
exchange such beneficial interest for a beneficial interest in a Global
Note. Upon receipt by the Registrar of a certificated Note, duly endorsed
or accompanied by a written instruction of transfer in form satisfactory to
the Registrar duly executed by such holder or his attorney, duly authorized
in writing, and the following additional information and documents (all of
which may be submitted by facsimile):
(1) If such certificated Note is a Transfer Restricted Note and
is being transferred to a QIB in accordance with Rule 144A under the
Securities Act, a certification to that effect from such holder (in
substantially the form of Exhibit B-2 hereto); and
(2) Whether or not such certificated Note is a Transfer
Restricted Note, written instructions of the holder directing the
Trustee or the custodian, at the direction of the Trustee, to make an
endorsement on the applicable Global Note to reflect an increase in
the aggregate principal amount of the Notes represented by such Global
Note,
then the Registrar shall cancel such certificated Note and the Trustee or
the custodian, at the direction of the Trustee, shall, in accordance with
the standing instructions and procedures existing between the Depositary
and the custodian, cause the aggregate principal amount of Restricted
Global Notes or Unrestricted Global Notes, as applicable, to be increased
accordingly. If no Global Notes are then outstanding, the Company shall
issue and the Trustee shall authenticate a new Global Note in the
appropriate principal amount.
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(f) Authentication of Certificated Note in Absence of Depositary. If
------------------------------------------------------------
at any time:
(i) the Depositary for the Notes notifies the Company that the
Depositary is unwilling or unable to continue as Depositary for the
Global Notes and a successor Depositary for the Global Notes is not
appointed by the Company within 90 days after delivery of such notice;
(ii) the Company, at its sole discretion, notifies the Trustee in
writing that it elects to cause the issuance of certificated Notes
under this Indenture; or
(iii) an Event of Default has occurred and is continuing.
then the Company shall execute, and the Trustee shall, upon receipt of an
authentication order in accordance with Section 2.2 hereof, authenticate
and deliver, certificated Notes in an aggregate principal amount equal to
the principal amount of the Global Notes in exchange for such Global Notes.
(g) Legends.
-------
(i) Except as permitted by the following paragraphs (ii) and
(iii), each Note certificate evidencing the Global Notes and the
certificated Notes (and all Notes issued in exchange therefor or
substitution thereof) shall bear legends in substantially the form set
forth in Exhibit A as the "Restricted Notes Legend".
(ii) Upon any sale or transfer of a Transfer Restricted Note
(including any Transfer Restricted Note represented by a Global Note)
pursuant to Rule 144 under the Securities Act or pursuant to an
effective registration statement under the Securities Act:
(A) in the case of any Transfer Restricted Note that is a
certificated Note, the Registrar shall permit the holder thereof
to exchange such Transfer Restricted Note for a certificated Note
that does not bear the legend set forth in (i) above and rescind
any restriction on the transfer of such Transfer Restricted Note
upon receipt of a certification from the transferring holder
substantially in the form of Exhibit B-4 hereto; and
(B) in the case of any Transfer Restricted Note represented
by a Global Note, such Transfer Restricted Note shall not be
required to bear the legend set forth in (i) above, but shall
continue to be subject to the provisions of Section 2.6(a) and
(b) hereof; provided, however, that with respect to any request
for an exchange of a Transfer Restricted Note that is represented
by a Global Note for a certificated Note that does not bear the
legend set forth in (i) above, which request
19
<PAGE>
is made in reliance upon Rule 144 under the Securities Act, the
holder thereof shall certify in writing to the Registrar that
such request is being made pursuant to Rule 144 under the
Securities Act (such certification to be substantially in the
form of Exhibit B-4 hereto).
(iii) Upon any sale or transfer of a Transfer Restricted Note
(including any Transfer Restricted Note represented by a Global Note)
in reliance on any exemption from the registration requirements of the
Securities Act (other than exemptions pursuant to Rule 144A or Rule
144 under the Securities Act) in which the holder or the transferee
provides an Opinion of Counsel to the Company and the Registrar in
form and substance reasonably acceptable to the Company and the
Registrar (which Opinion of Counsel shall also state that the transfer
restrictions contained in the legend are no longer applicable):
(A) in the case of any Transfer Restricted Note that is a
certificated Note, the Registrar shall permit the holder thereof
to exchange such Transfer Restricted Note for a certificated Note
that does not bear the legend set forth in (i) above and rescind
any restriction on the transfer of such Transfer Restricted Note;
and
(B) in the case of any Transfer Restricted Note represented
by a Global Note, such Transfer Restricted Note shall not be
required to bear the legend set forth in (i) above, but shall
continue to be subject to the provisions of Section 2.6(a) and
(b) hereof.
(h) Initial Purchasers. The Initial Purchasers shall not be required
------------------
to deliver, and neither the Company nor the Trustee shall demand therefrom,
any of the certifications or opinions described in this Section 2.6 in
connection with the initial issuance and delivery by the Company of the
Notes on the effective date hereof or on the date of any settlement in
connection with the exercise of the overallotment option granted to the
Initial Purchasers in the Purchase Agreement, including with respect to the
issuance and delivery of Notes that are Transfer Restricted Notes.
SECTION 2.7 Replacement Notes. If the holder of a Note claims that the
-----------------
Note has been lost, destroyed or wrongfully taken or if such Note is mutilated
and is surrendered to the Trustee, the Company shall issue and the Trustee shall
authenticate a replacement Note if the Trustee's and the Company's requirements
are met. If required by the Trustee or the Company, such holder shall be
required to provide an indemnity bond sufficient in the judgment of both to
protect and hold harmless the Company, the Trustee, any Agent or any
authenticating agent from any loss, liability or expense which any of them may
suffer if a Note is replaced. The Company may charge for its expenses in
replacing a Note.
In case any such mutilated, destroyed, lost or stolen Note has become or is
about to become due and payable, or is about to be purchased by the Company
pursuant to Article 3 hereof, the Company in its discretion may, instead of
issuing a new Note, pay or purchase such Note, as the case may be.
20
<PAGE>
Every replacement Note is an additional obligation of the Company and shall
be entitled to all the benefits provided under this Indenture equally and
proportionately with all other Notes duly issued hereunder.
SECTION 2.8 Outstanding Notes. The Notes outstanding at any time are all
-----------------
the Notes authenticated by the Trustee except for those cancelled by it, those
delivered to it for cancellation, and those described in this Section as not
outstanding.
If a Note is replaced, paid or purchased pursuant to Section 2.7 hereof, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced, paid or purchased Note is held by a bona fide purchaser.
If Notes are considered paid under Section 4.1 hereof, they cease to be
outstanding and interest on them ceases to accrue.
A Note does not cease to be outstanding because the Company or an Affiliate
of the Company holds the Note.
SECTION 2.9 Treasury Notes. In determining whether the Noteholders of the
--------------
required principal amount of Notes have concurred in any direction, waiver or
consent, Notes owned by the Company or an Affiliate of the Company shall be
considered as though they are not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Notes which a Trust Officer of the Trustee
actually knows are so owned shall be so disregarded. Notes that the Company or
any Affiliate of the Company offers to purchase or acquire pursuant to an
exchange offer, tender offer or otherwise shall not be deemed to be owned by the
Company or such Affiliate until legal title passes to the Company or such
Affiliate.
SECTION 2.10 Temporary Notes.
---------------
(a) Until definitive Notes are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Notes. Temporary
Notes shall be substantially in the form of definitive Notes but may have
variations that the Company considers appropriate for temporary Notes. As
promptly as is reasonably practicable, the Company shall prepare and the
Trustee shall authenticate definitive Notes in exchange for temporary
Notes.
(b) A Global Note deposited with the Depositary or with the Trustee as
custodian for the Depositary pursuant to Section 2.1 shall be transferred
to the beneficial owners thereof in the form of certificated Notes only if
such transfer complies with Section 2.6 and (i) the Depositary notifies the
Company that it is unwilling or unable to continue as Depositary for such
Global Note or if at any time such Depositary ceases to be a "clearing
agency" registered under the Exchange Act and a successor depositary is not
appointed by the Company within 90 days of such notice, or (ii) an Event of
Default has occurred and is continuing.
21
<PAGE>
(c) Any Global Note that is transferable to the beneficial owners
thereof in the form of certificated Notes pursuant to this Section 2.10
shall be surrendered by the Depositary to the Trustee located in The City
of New York, to be so transferred, in whole or from time to time in part,
without charge, and the Trustee shall authenticate and deliver, upon such
transfer of each portion of such Global Note, an equal aggregate principal
amount at maturity of Notes of authorized denominations in the form of
certificated Notes. Any portion of a Global Note transferred pursuant to
this Section shall be executed, authenticated and delivered only in
denominations of $1,000 and any integral multiple thereof and registered in
such names as the Depositary shall direct. Any Notes in the form of
certificated Notes delivered in exchange for an interest in the Global Note
shall, except as otherwise provided by Section 2.6(b) bear the Restricted
Notes Legend set forth in Exhibit A hereto.
(d) Subject to the provisions of Section 2.10(b), the registered
holder of a Global Note may grant proxies and otherwise authorize any
person, including Agent Members and persons that may hold interests through
Agent Members, to take any action which a holder is entitled to take under
this Indenture or the Notes.
(e) In the event of the occurrence of either of the events specified
in Section 2.10(b), the Company will promptly make available to the Trustee
a reasonable supply of certificated Notes in definitive, fully registered
form without interest coupons.
SECTION 2.11 Cancellation. The Company at any time may deliver Notes to
------------
the Trustee for cancellation. The Registrar, Paying Agent and Conversion Agent
shall forward to the Trustee any Notes surrendered to them for registration of
transfer, redemption, conversion, exchange or payment. The Trustee shall
promptly cancel all Notes surrendered for registration of transfer, redemption,
conversion, exchange, payment, replacement or cancellation and shall dispose of
cancelled Notes as the Company directs. The Company may not issue new Notes to
replace Notes that it has paid or that have been delivered to the Trustee for
cancellation or that any holder has converted.
SECTION 2.12 Defaulted Interest or Liquidated Damages. If the Company
----------------------------------------
fails to make a payment of interest or Liquidated Damages on the Notes, it shall
pay such defaulted interest or Liquidated Damages plus any interest payable on
the defaulted interest or Liquidated Damages, in any lawful manner. It may pay
such defaulted interest, plus any such interest payable on them, to the persons
who are Noteholders on a subsequent special record date. The Company shall fix
any such record date (which shall be at least 5 and not more than 30 days before
the payment date) and the payment date. At least 15 days before any such record
date, the Company shall mail to Noteholders a notice that states the record
date, payment date, and amount of such interest or Liquidated Damages to be
paid. Interest or Liquidated Damages to be paid prior to the expiration of the
30-day grace period specified in Section 8.1(a) of this Indenture shall be paid
to the holders on the regular record date for the interest payment that has not
been made.
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ARTICLE 3
Redemption
----------
SECTION 3.1 Notices to Trustee. If the Company elects to redeem
------------------
Notes pursuant to the Optional Redemption provision of Section 3.7 hereof, it
shall notify the Trustee of the redemption date and the principal amount of
Notes to be redeemed. The Company shall give each notice provided for in this
Section 3.1 with respect to any Optional Redemption at least 20 days before the
redemption date (unless a shorter notice period shall be satisfactory to the
Trustee). In the event the Company is required to redeem Notes pursuant to the
special redemption provision of Section 3.9 hereof (the "Special Redemption"),
it shall notify the Trustee ten Business Days before a redemption date (unless a
shorter notice period shall be satisfactory to the Trustee). The Company will
also provide the Trustee with any additional information that the Trustee
reasonably requests in connection with any redemption.
SECTION 3.2 Selection of Notes to be Redeemed. If less than all the
---------------------------------
Notes are to be redeemed, the Trustee shall select the Notes to be redeemed in
compliance with the requirements of the principal national securities exchange,
if any, on which the Notes are listed, or, if the Notes are not so listed, on a
pro rata basis, by lot or by such method as the Trustee shall deem fair and
appropriate. The Trustee shall make the selection not more than 60 days and not
less than 15 days before the redemption date from Notes outstanding not
previously called for redemption. The Trustee may select for redemption
portions of the principal of Notes that have denominations larger than $1,000.
Notes and portions of them it selects shall be in amounts of $1,000 or integral
multiples of $1,000. Provisions of this Indenture that apply to Notes called
for redemption also apply to portions of Notes called for redemption. The
Trustee shall notify the Company and each Registrar promptly of the Notes or
portions of Notes to be called for redemption.
If any Note selected for partial redemption is converted in part after
such selection, the converted portion of such Note shall be deemed (so far as
may be) to be the portion to be selected for redemption. The Notes (or portions
thereof) so selected shall be deemed duly selected for redemption for all
purposes hereof, notwithstanding that any such Note is converted in whole or in
part before the mailing of the notice of redemption. Upon any redemption of
less than all the Notes, the Company and the Trustee may treat as outstanding
any Notes surrendered for conversion during the period 15 days next preceding
the mailing of a notice of redemption and need not treat as outstanding any Note
authenticated and delivered during such period in exchange for the unconverted
portion of any Note converted in part during such period.
SECTION 3.3 Notice of Redemption. At least 15 days but not more than
--------------------
60 days before a redemption date (other than with respect to a Special
Redemption), the Company shall mail a notice of redemption to each holder whose
Notes are to be redeemed at such holder's registered address. In the event of a
Special Redemption, the Company shall mail a notice of redemption to each holder
at such holder's registered address at least ten Business Days before a
redemption date.
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The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the redemption
date, upon cancellation of such Note, a new Note or Notes in principal
amount equal to the unredeemed portion will be issued in the name of the
holder thereof;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price plus accrued interest and Liquidated
Damages, if any;
(f) that, unless the Company defaults in making such redemption
payment or the Paying Agent is prohibited from making such payment pursuant
to the terms of this Indenture, interest on Notes or portions thereof
called for redemption ceases to accrue on and after the redemption date;
and
(g) the paragraph of the Notes pursuant to which the Notes called for
redemption are being redeemed.
Such notice shall also state the current Conversion Price, if any, and the
date on which the right to convert such Notes or portions thereof into Common
Stock of the Company will expire.
At the Company's request, the Trustee shall give notice of redemption in
the Company's name and at its expense.
SECTION 3.4 Effect of Notice of Redemption. Once notice of redemption is
------------------------------
mailed, Notes called for redemption become due and payable on the redemption
date at the price set forth in the Note.
SECTION 3.5 Deposit of Redemption Price. On or before the redemption date
---------------------------
(other than for a Special Redemption), the Company shall deposit with the
Trustee or with the Paying Agent money sufficient to pay the redemption price of
and accrued interest and Liquidated Damages, if any, if up to but not including
the redemption date on all Notes to be redeemed on that date (subject to the
right of holders of record on the relevant record date to receive interest and
Liquidated Damages, if any, due on an interest payment date) unless theretofore
converted into Common Stock pursuant to the provisions hereof. The Trustee or
the Paying Agent shall return to the Company any money not required for that
purpose.
SECTION 3.6 Notes Redeemed in Part. Upon cancellation of a Note that is
----------------------
redeemed in part, the Company shall issue and the Trustee shall authenticate for
the holder at
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the expense of the Company a new Note equal in principal amount to the
unredeemed portion of the Note surrendered.
SECTION 3.7 Optional Redemption. The Company may redeem all or any
-------------------
portion of the Notes, upon the terms and at the redemption prices set forth in
each of the Notes. Any redemption pursuant to this Section 3.7 shall be made
pursuant to the provisions of Section 3.1 through 3.6 hereof.
SECTION 3.8 Designated Event Offer.
----------------------
(a) In the event that, pursuant to Section 4.7 hereof, the Company
shall commence a Designated Event Offer, the Company shall follow the
procedures in this Section 3.8.
(b) The Designated Event Offer shall remain open for a period
specified by the Company which shall be no less than 30 calendar days and
no more than 40 calendar days following its commencement on the date of the
mailing of notice in accordance with Section 4.7(b) hereof (the
"Commencement Date"), except to the extent that a longer period is required
by applicable law (the "Tender Period"). Upon the expiration of the Tender
Period (the "Designated Event Payment Date"), the Company shall purchase
the principal amount of Notes required to be purchased pursuant to Section
4.7 hereof (the "Offer Amount").
(c) If the Designated Event Payment Date is on or after an interest
payment record date and on or before the related interest payment date, any
accrued interest or Liquidated Damages, if any, to the related interest
payment date will be paid to the person in whose name a Note is registered
at the close of business on such record date, and no additional interest or
Liquidated Damages, if any, will be payable to Noteholders who tender Notes
pursuant to the Designated Event Offer.
(d) The Company shall provide the Trustee with notice of the
Designated Event Offer at least 5 Business Days before the Commencement
Date.
(e) On or before the Commencement Date, the Company or the Trustee (at
the request and expense of the Company) shall send, by first class mail, a
notice to each of the Noteholders, which shall govern the terms of the
Designated Event Offer and shall state:
(i) that the Designated Event Offer is being made pursuant to
this Section 3.8 and Section 4.7 hereof and that all Notes tendered
will be accepted for payment;
(ii) the purchase price (as determined in accordance with Section
4.7 hereof), the length of time the Designated Event Offer will remain
open and the Designated Event Payment Date;
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(iii) that any Note or portion thereof not tendered or accepted
for payment will continue to accrue interest and, if applicable,
Liquidated Damages, if any;
(iv) that, unless the Company defaults in the payment of the
Designated Event Payment, any Note or portion thereof accepted for
payment pursuant to the Designated Event Offer shall cease to accrue
interest or Liquidated Damages, if any, on and after the Designated
Event Payment Date;
(v) that Noteholders electing to have a Note or portion thereof
purchased pursuant to any Designated Event Offer will be required to
surrender the Note, with the form entitled "Option of Noteholder To
Elect Purchase" on the reverse of the Note completed, to the Paying
Agent at the address specified in the notice prior to the close of
business on the third Business Day preceding the Designated Event
Payment Date;
(vi) that Noteholders will be entitled to withdraw their election
if the Paying Agent receives, not later than the close of business on
the second Business Day preceding the Designated Event Payment Date,
or such longer period as may be required by law, a letter or a
telegram, telex or facsimile transmission (receipt of which is
confirmed and promptly followed by a letter) setting forth the name of
the Noteholder, the principal amount of the Note or portion thereof
the Noteholder delivered for purchase and a statement that such
Noteholder is withdrawing his election to have the Note or portion
thereof purchased; and
(vii) that Noteholders whose Notes are being purchased only in
part will be issued new Notes equal in principal amount to the
unpurchased portion of the Notes surrendered, which unpurchased
portion must be equal to $1,000 in principal amount or an integral
multiple thereof.
In addition, the notice shall contain all instructions and materials
that the Company shall reasonably deem necessary to enable such Noteholders
to tender Notes pursuant to the Designated Event Offer.
(f) On or prior to the Designated Event Payment Date, the Company
shall irrevocably deposit with the Trustee or a Paying Agent in immediately
available funds an amount equal to the Offer Amount to be held for payment
in accordance with the terms of this Section 3.8. On the Designated Event
Payment Date, the Company shall, to the extent lawful, (i) accept for
payment the Notes or portions thereof tendered pursuant to the Designated
Event Offer, (ii) deliver or cause to be delivered to the Trustee Notes so
accepted and (iii) deliver to the Trustee an Officers' Certificate stating
such Notes or portions thereof have been accepted for payment by the
Company in accordance with the terms of this Section 3.8. The Paying Agent
shall promptly (but in any case not later than ten (10) calendar days after
the Designated Event Payment Date) mail or deliver to each tendering
Noteholder an amount equal to the purchase price of the Notes tendered by
such Noteholder, and the
26
<PAGE>
Trustee shall promptly authenticate and mail or deliver to such Noteholders
a new Note equal in principal amount to any unpurchased portion of the Note
surrendered, if any; provided, that each new Note shall be in a principal
--------
amount of $1,000 or an integral multiple thereof. Any Notes not so
accepted shall be promptly mailed or delivered by or on behalf of the
Company to the holder thereof. The Company will publicly announce the
results of the Designated Event Offer on, or as soon as practicable after,
the Designated Event Payment Date.
(g) The Designated Event Offer shall be made by the Company in
compliance with all applicable provisions of all applicable securities
laws, including the Exchange Act, and all applicable tender offer rules
promulgated thereunder, and shall include all instructions and materials
that the Company shall reasonably deem necessary to enable such Noteholders
to tender their Notes.
SECTION 3.9 Special Mandatory Redemption. The Company will be required
----------------------------
to redeem all Notes on or prior to the Special Redemption Date, upon the terms
and at the redemption prices set forth in paragraph 5(b) of the Notes and in
Section 4.8 hereof.
ARTICLE 4
Covenants
---------
SECTION 4.1 Payment of Notes. The Company shall pay the principal of,
----------------
premium, if any, Liquidated Damages, if any, and interest on, the Notes on the
dates and in the manner provided in the Notes. Principal, premium, if any,
Liquidated Damages, if any, and interest shall be considered paid on the date
due if the Paying Agent (other than the Company or an Affiliate of the Company)
holds on that date money designated for and sufficient to pay all principal,
premium, if any, Liquidated Damages, if any, and interest then due and such
Paying Agent is not prohibited from paying such money to the Noteholders on that
date pursuant to the terms of this Indenture. To the extent lawful, the Company
shall pay interest and Liquidated Damages, if any (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue installments of
interest (without regard to any applicable grace period) at the rate borne by
the Notes, compounded semiannually. The Company shall also pay all Liquidated
Damages, if any, in the manner, on the dates and in the amounts set forth in the
Registration Agreement.
SECTION 4.2 SEC Reports. Whether or not required by the rules and
-----------
regulations of the SEC, so long as any Notes are outstanding, the Company will,
to the extent permitted by the SEC, file with the SEC and, if requested, furnish
to the Trustee and to the holders of Notes all quarterly and annual financial
information required to be contained in a filing with the SEC on Forms 10-Q and
10-K, including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and, with respect to annual information only, a
report thereon by the Company's certified independent accountants.
SECTION 4.3 Compliance Certificate. The Company shall deliver to the
----------------------
Trustee, within 120 days after the end of each fiscal year of the Company, an
Officers' Certificate stating that a review of the activities of the Company and
its subsidiaries during the
27
<PAGE>
preceding fiscal year has been made under the supervision of the signing
officers with a view to determining whether the Company has kept, observed,
performed and fulfilled its obligations under, and complied with the covenants
and conditions contained in, this Indenture, and further stating, as to each
such Officer signing such certificate, that to the best of his knowledge, the
Company has kept, observed, performed and fulfilled each and every covenant, and
complied with the covenants and conditions contained in this Indenture and is
not in default in the performance or observance of any of the terms, provisions
and conditions hereof (or, if a Default or Event of Default shall have occurred,
describing all such Defaults or Events of Default of which he may have
knowledge) and that to the best of his knowledge no event has occurred and
remains in existence by reason of which payments on account of the principal or
of interest, if any, on the Notes are prohibited.
One of the Officers signing such Officers' Certificate shall be either the
Company's principal executive officer, principal financial officer or principal
accounting officer.
The Company will, so long as any of the Notes are outstanding, deliver to
the Trustee, forthwith upon becoming aware of:
(a) any Default or Event of Default arising under this Indenture; or
(b) any event of default under any other mortgage, indenture or
instrument as that term is used in Section 8.1(e),
an Officers' Certificate specifying such Default, Event of Default or default.
Immediately upon the occurrence of any event giving rise to Liquidated
Damages in respect of the Notes in accordance with Section 11 of the form
thereof or the termination of any such Liquidated Damages, the Company shall
give the Trustee notice of such Liquidated Damages or termination, of the
interest rate borne by the Notes after giving effect to such Liquidated Damages
or termination and of the event giving rise to such Liquidated Damages or
termination thereof (such notice to be contained in an Officers' Certificate),
and prior to receipt of such Officers' Certificate the Trustee shall be entitled
to assume that no such Liquidated Damages are owing or termination has occurred,
as the case may be.
SECTION 4.4 Stay, Extension and Usury Laws. The Company covenants (to the
------------------------------
extent that it may lawfully do so) that it will not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law wherever enacted, now or at any time hereafter
in force, which may affect the covenants or the performance of this Indenture;
and the Company (to the extent it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and covenants that it will not, by
resort to any such law, hinder, delay or impede the execution of any power
herein granted to the Trustee, but will suffer and permit the execution of every
such power as though no such law has been enacted.
SECTION 4.5 Corporate Existence. Subject to Article 7 hereof, the Company
-------------------
will do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence and the corporate, partnership or other
existence of each subsidiary of the
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<PAGE>
Company in accordance with the respective organizational documents of each
subsidiary and all material rights (charter and statutory), licenses and
franchises of the Company and its subsidiaries; provided, however, that the
-------- -------
Company shall not be required to preserve any such right, license or franchise,
or the corporate, partnership or other existence of any subsidiary, if the Board
of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its subsidiaries
taken as a whole and that the loss thereof is not adverse in any material
respect to the Noteholders. Notwithstanding the foregoing, the corporate
existence of any Subsidiary may be terminated in connection with any Board
approved corporate restructuring or reorganization.
SECTION 4.6 Taxes. The Company shall, and shall cause each of its
-----
subsidiaries to, pay prior to delinquency all taxes, assessments and
governmental levies, except as contested in good faith and by appropriate
proceedings.
SECTION 4.7 Designated Event.
----------------
(a) Upon the occurrence of a Designated Event, each holder of Notes
shall have the right, in accordance with this Section 4.7 and Section 3.8
hereof, to require the Company to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of such holder's Notes pursuant to
the terms of Section 3.8 (the "Designated Event Offer") at a purchase price
equal to 101% of the principal amount thereof, together with accrued and
unpaid interest and Liquidated Damages, if any, thereon to the Designated
Event Payment Date (the "Designated Event Payment").
(b) Within 30 days following any Designated Event, the Company shall
mail to each holder the notice provided by Section 3.8(e) of this
Indenture, and shall comply with the provisions of Section 3.8 in regard to
the related Designated Event Offer.
SECTION 4.8 Deposit of Proceeds with Trustee Pending Consummation of
--------------------------------------------------------
Acquisition.
- -----------
(a) On the Issuance Date, the Company shall deposit with the Trustee
as hereinafter provided the proceeds from the issuance of the Notes (the
"Offering Proceeds") and such other amount as, when added to the Offering
Proceeds, equals $75,000,000 plus an amount equal to the interest that
would accrue on $75,000,000 from the Issuance Date to the Special
Redemption Date at an interest rate of 7 1/8% per annum plus $1,500,000
(the "Special Redemption Amount"). In the event that the overallotment
option granted in the Purchase Agreement is exercised, the Company shall
also deposit with the Trustee the proceeds from the issuance of Notes
pursuant to such option (the "Overallotment Proceeds") and such other
amount as, when added to the Overallotment Proceeds, equals the total
principal amount of Notes issued upon the exercise of such overallotment
(the "Overallotment Amount"), plus an amount equal to the interest that
would accrue on the Overallotment Amount from the Issuance Date to the
Special Redemption Date at an interest rate of 7 1/8% per annum, plus 2% of
the Overallotment Amount. Such additional amounts shall be deemed part of
the "Special Redemption Amount" upon deposit with the Trustee.
29
<PAGE>
(b) In order to secure the full and punctual payment and performance
of the Company's obligation to redeem the Notes upon a Special Redemption,
the Company hereby grants to the Trustee, for the benefit of the holders, a
continuing security interest in and to the Collateral, whether now owned or
existing or hereafter acquired or arising.
(c) At all times until the earlier to occur of (i) receipt by the
Trustee of (x) an Officers' Certificate stating that the Acquisition is to
be consummated concurrently with the release of the funds on the terms and
conditions described in the Offering Memorandum in all material respects
and requesting the Trustee to release the Collateral to the order of the
Company for application in connection with the Acquisition and to the order
of the Initial Purchasers for payment of amounts due to the Initial
Purchasers pursuant to the Purchase Agreement and (y) an Opinion of Counsel
to the effect that all conditions precedent described in the preceding
clause (x) have been satisfied in all material respects and (ii) the date
that the Notes are to be specially redeemed, there shall be maintained with
the Trustee an account (the "Collateral Account") designated "Plasma &
Materials Technologies, Inc. Account Pledged to U.S. Trust Company of
California, N.A., as Trustee." On the Issuance Date, the Company shall
cause the Special Redemption Amount to be deposited in the Collateral
Account. Amounts on deposit in the Collateral Account shall be invested
and reinvested from time to time in such Eligible Investments as the
Company shall direct and, if no direction is made, then in the Federated
Government Obligation Fund. Any income received with respect to the
balance from time to time standing to the credit of the Collateral Account,
including any interest or capital gains on Eligible Investments, shall
remain, or be deposited, in the Collateral Account; provided, that the
--------
Trustee shall release any amounts in the Collateral Account in excess of
the Special Redemption Amount upon request from the Company from time to
time as specified in an Officers' Certificate to the Trustee.
(d) Upon notice from the Company to the Trustee pursuant to subsection
(c)(i) above, the security interests in the Collateral shall terminate as
of the Acquisition Date and all funds in the Collateral Account shall be
released as of the Acquisition Date to the order of the Company and to the
Initial Purchasers; and on the date for redemption of the Notes pursuant to
subsection (c)(ii) above, the Trustee shall apply funds in the Collateral
Account to fund the Special Redemption and the Trustee shall pay any amount
in the Collateral Account in excess of the amount needed to fund the
Special Redemption to the Company.
ARTICLE 5
Conversion
----------
SECTION 5.1 Conversion Privilege. A holder of a Note may convert the
--------------------
principal amount thereof (or any portion thereof that is an integral multiple of
$1,000) into fully paid and nonassessable shares of Common Stock of the Company
at any time after the later to occur of (a) 90 days following the Issuance Date
or (b) the consummation of the Acquisition, and prior to the close of business
(New York time) on the Business Day immediately
30
<PAGE>
preceding the maturity date of the Notes at the Conversion Price then in effect,
except that, with respect to any Note called for redemption, such conversion
right shall terminate at the close of business on the Business Day immediately
preceding the redemption date (unless the Company shall default in making the
redemption payment when it becomes due, in which case the conversion right shall
terminate on the date such default is cured). The number of shares of Common
Stock issuable upon conversion of a Note is determined by dividing the principal
amount of the Note converted by the conversion price in effect on the Conversion
Date (the "Conversion Price").
The initial Conversion Price is stated in paragraph 10 of the Notes and is
subject to adjustment as provided in this Article 5.
Provisions of this Indenture that apply to conversion of all of a security
also apply to conversion of a portion of it. A holder of Notes is not entitled
to any rights of a holder of Common Stock until such holder of Notes has
converted such Notes into Common stock, and only to the extent that such Notes
are deemed to have been converted into Common Stock under this Article 5.
SECTION 5.2 Conversion Procedure. To convert a Note, a holder must
--------------------
satisfy the requirements in paragraph 10 of the Notes. The date on which the
holder satisfies all of those requirements is the conversion date (the
"Conversion Date"). As soon as practicable after the Conversion Date, the
Company shall deliver to the holder through the Conversion Agent a certificate
for the number of whole shares of Common Stock issuable upon the conversion and
a check for any fractional share determined pursuant to Section 5.3. The person
in whose name the certificate is registered shall become the stockholder of
record on the Conversion Date and, as of such date, such person's rights as a
Noteholder shall cease; provided, however, that no surrender of a Note on any
-------- -------
date when the stock transfer books of the Company shall be closed shall be
effective to constitute the person entitled to receive the shares of Common
Stock upon such conversion as the stockholder of record of such shares of Common
Stock on such date, but such surrender shall be effective to constitute the
person entitled to receive such shares of Common Stock as the stockholder of
record thereof for all purposes at the close of business on the next succeeding
day on which such stock transfer books are open; provided further, however, that
---------------- -------
such conversion shall be at the Conversion Price in effect on the date that such
Note shall have been surrendered for conversion, as if the stock transfer books
of the Company had not been closed.
No adjustment or payment will be made for accrued and unpaid interest on a
converted Note or for dividends or distributions on shares of Common Stock
issued upon conversion of a Note, but if any holder surrenders a Note for
conversion after the close of business on the record date for the payment of an
installment of interest and Liquidated Damages, if any, and prior to the opening
of business on the next succeeding interest payment date, then, notwithstanding
such conversion, the interest and Liquidated Damages, if any, payable on such
interest payment date shall be paid to the registered holder of such Note on
such record date. In such event, such Note, when surrendered for conversion
after October 15, 1999, must be accompanied by payment in funds acceptable to
the Company of an amount equal to the interest payable and Liquidated Damages,
if any, on such interest
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payment date on the portion so converted and, when surrendered for conversion on
or prior to October 15, 1999, need not be accompanied by such payment.
If a holder converts more than one Note at the same time, the number of
whole shares of Common Stock issuable upon the conversion shall be based on the
total principal amount of Notes converted.
Upon surrender of a Note that is converted in part, the Trustee shall
authenticate for the holder a new Note equal in principal amount to the
unconverted portion of the Note surrendered.
SECTION 5.3 Fractional Shares. The Company will not issue fractional
-----------------
shares of Common Stock upon conversion of a Note. In lieu thereof, the Company
will pay an amount in cash based upon the Daily Market Price of the Common Stock
on the trading day prior to the date of conversion.
SECTION 5.4 Taxes on Conversion. The issuance of certificates for shares
-------------------
of Common Stock upon the conversion of any Note shall be made without charge to
the converting Noteholder for such certificates or for any tax in respect of the
issuance of such certificates, and such certificates shall be issued in the
respective names of, or in such names as may be directed by, the holder or
holders of the converted Note; provided, however, that in the event that
-------- -------
certificates for shares of Common Stock are to be issued in a name other than
the name of the holder of the Note converted, such Note, when surrendered for
conversion, shall be accompanied by an instrument of transfer, in form
satisfactory to the Company, duly executed by the registered holder thereof or
his duly authorized attorney; and provided further, however, that the Company
---------------- -------
shall not be required to pay any tax which may be payable in respect of any
transfer involved in the issuance and delivery of any such certificates in a
name other than that of the holder of the converted Note,and the Company shall
not be required to issue or deliver such certificates unless or until the person
or persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid or is not applicable.
SECTION 5.5 Company to Provide Stock. The Company shall at all times
------------------------
reserve and keep available, free from preemptive rights, out of its authorized
but unissued Common Stock, solely for the purpose of issuance upon conversion of
Notes as herein provided, a sufficient number of shares of Common Stock to
permit the conversion of all outstanding Notes for shares of Common Stock.
All shares of Common Stock which may be issued upon conversion of the Notes
shall be duly authorized, validly issued, fully paid and nonassessable when so
issued.
SECTION 5.6 Adjustment of Conversion Price. The Conversion Price shall be
------------------------------
subject to adjustment from time to time as follows:
(a) In case the Company shall (1) pay a dividend in shares of Common
Stock to holders of Common Stock, (2) make a distribution in shares of
Common
32
<PAGE>
Stock to holders of Common Stock, (3) subdivide its outstanding shares of
Common Stock into a greater number of shares of Common Stock or (4) combine
its outstanding shares of Common Stock into a smaller number of shares of
Common Stock, the Conversion Price in effect immediately prior to such
action shall be adjusted so that the holder of any Note thereafter
surrendered for conversion shall be entitled to receive the number of
shares of Common Stock which he would have owned immediately following such
action had such Notes been converted immediately prior thereto. Any
adjustment made pursuant to this subsection (a) shall become effective
immediately after the record date in the case of a dividend or distribution
and shall become effective immediately after the effective date in the case
of a subdivision or combination.
(b) In case the Company shall issue rights or warrants to
substantially all holders of Common Stock entitling them (for a period
commencing no earlier than the record date for the determination of holders
of Common Stock entitled to receive such rights or warrants and expiring
not more than 45 days after such record date) to subscribe for or purchase
shares of Common Stock (or securities convertible into Common Stock) at a
price per share less than the Current Market Price (as determined pursuant
to subsection (f) below) of the Common Stock on such record date, the
Conversion Price shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior
to such record date by a fraction of which the numerator shall be the
number of shares of Common Stock outstanding on such record date, plus the
number of shares of Common Stock which the aggregate offering price of the
offered shares of Common Stock (or the aggregate conversion price of the
convertible securities so offered) would purchase at such Current Market
Price, and of which the denominator shall be the number of shares of Common
Stock outstanding on such record date plus the number of additional shares
of Common Stock offered (or into which the convertible securities so
offered are convertible). Such adjustments shall become effective
immediately after such record date.
(c) In case the Company shall distribute to all holders of Common
Stock shares of any class of Capital Stock of the Company other than Common
Stock, evidences of indebtedness or other assets (other than cash dividends
out of current or retained earnings), or shall distribute to substantially
all holders of Common Stock rights or warrants to subscribe for securities
(other than those securities referred to in subsection (b) above), then in
each such case the Conversion Price shall be adjusted so that the same
shall equal the price determined by multiplying the Conversion Price in
effect immediately prior to the date of such distribution by a fraction of
which the numerator shall be the Current Market Price (determined as
provided in subsection (f) below) of the Common Stock on the record date
mentioned below less the then fair market value (as determined by the Board
of Directors, whose determination shall be conclusive evidence of such fair
market value and described in a Board Resolution) of the portion of the
assets so distributed or of such subscription rights or warrants applicable
to one share of Common Stock, and of which the denominator shall be such
Current Market Price of the Common Stock. Such adjustment shall become
effective immediately after the record date for the determination of the
holders of
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<PAGE>
Common Stock entitled to receive such distribution. Notwithstanding the
foregoing, in the event that the Company shall distribute rights or
warrants to subscribe for additional shares of the Company's Capital Stock
(other than the Common Stock referred to in subsection (b) above)
("Rights") to substantially all holders of Common Stock, the Company may,
in lieu of making any adjustment pursuant to this Section 5.6, make proper
provision so that each holder of a Note who converts such Note (or any
portion thereof) after the record date for such distribution and prior to
the expiration or redemption of the Rights shall be entitled to receive
upon such conversion, in addition to the shares of Common Stock issuable
upon such conversion (the "Conversion Shares"), a number of Rights to be
determined as follows: (i) if such conversion occurs on or prior to the
date for the distribution to the holders of Rights of separate certificates
evidencing such Rights (the "Distribution Date"), the same number of Rights
to which a holder of a number of shares of Common Stock equal to the number
of Conversion Shares is entitled at the time of such conversion in
accordance with the terms and provisions of and applicable to the Rights;
and (ii) if such conversion occurs after the Distribution Date, the same
number of Rights to which a holder of the number of shares of Common Stock
into which the principal amount of the Note so converted was convertible
immediately prior to the Distribution Date would have been entitled on the
Distribution Date in accordance with the terms and provisions of and
applicable to the Rights.
(d) In case the Company shall, by dividend or otherwise, at any time
distribute to all holders of its Common Stock cash (including any
distributions of cash out of current or retained earnings of the Company
but excluding any cash that is distributed as part of a distribution
requiring a Conversion Price adjustment pursuant to paragraph (c) of this
Section) in an aggregate amount that, together with the sum of (x) the
aggregate amount of any other distributions to all holders of its Common
Stock made in cash plus (y) all Excess Payments, in each case made within
the 12 months preceding the date fixed for determining the shareholders
entitled to such distribution (the "Distribution Record Date") and in
respect of which no Conversion Price adjustment pursuant to paragraphs (c)
or (e) of this Section or this paragraph (d) has been made, exceeds 15% of
the product of the Current Market Price per share (determined as provided
in paragraph (f) of this Section) of the Common Stock on the Distribution
Record Date times the number of shares of Common Stock outstanding on the
Distribution Record Date (excluding shares held in the treasury of the
Company), the Conversion Price shall be reduced so that the same shall
equal the price determined by multiplying such Conversion Price in effect
immediately prior to the effectiveness of the Conversion Price reduction
contemplated by this paragraph (d) by a fraction of which the numerator
shall be the Current Market Price per share (determined as provided in
paragraph (f) of this Section) of the Common Stock on the Distribution
Record Date less the amount of such cash and other consideration (including
any Excess Payments) so distributed applicable to one share (based on the
pro-rata portion of the aggregate amount of such cash and other
consideration (including any Excess on the Distribution Record Date)) of
Common Stock and the denominator shall be such Current Market Price per
share (determined as provided in paragraph (f) of this Section) of the
Common Stock on the Distribution Record Date,
34
<PAGE>
such reduction to become effective immediately prior to the opening of
business on the day following the Distribution Record Date.
(e) In case a tender offer or other negotiated transaction made by the
Company or any Subsidiary of the Company for all or any portion of the
Common Stock shall be consummated, if an Excess Payment is made in respect
of such tender offer or other negotiated transaction and the amount of such
Excess Payment, together with the sum of (x) the aggregate amount of all
Excess Payments plus (y) the aggregate amount of all distributions to all
holders of the Common Stock made in cash (specifically including
distributions of cash out of retained earnings), in each case made within
the 12 months preceding the date of payment of such current negotiated
transaction consideration or expiration of such current tender offer, as
the case may be (the "Purchase Date"), and as to which no adjustment
pursuant to paragraph (c) or paragraph (d) of this Section or this
paragraph (e) has been made, exceeds 15% of the product of the Current
Market Price per share (determined as provided in paragraph (f) of this
Section) of the Common Stock on the Purchase Date times the number of
shares of Common Stock outstanding (including any tendered shares but
excluding any shares held in the treasury of the Company) on the Purchase
Date, the Conversion Price shall be reduced so that the same shall equal
the price determined by multiplying such Conversion Price in effect
immediately prior to the effectiveness of the Conversion Price reduction
contemplated by this paragraph (e) by a fraction of which the numerator
shall be the Current Market Price per share (determined as provided in
paragraph (f) of this Section) of the Common Stock on the Purchase Date
less the amount of such Excess Payments and such cash distributions, if
any, applicable to one share of Common Stock equal to the aggregate amount
of such Excess Payments and such cash distributions, divided by number of
the shares of Common Stock outstanding on the Purchase Date) and the
denominator shall be such Current Market Price per share (determined as
provided in paragraph (f) of this Section) of the Common Stock on the
Purchase Date, such reduction to become effective immediately prior to the
opening of business on the day following the Purchase Date.
(f) The "Current Market Price" per share of Common Stock on any date
shall be deemed to be the average of the Daily Market Prices for the
shorter of (i) 30 consecutive Business Days ending on the last full Trading
Day on the exchange or market referred to in determining such Daily Market
Prices prior to the time of determination or (ii) the period commencing on
the date next succeeding the first public announcement of the issuance of
such rights or such warrants or such other distribution or such negotiated
transaction through such last full trading day on the exchange or market
referred to in determining such Daily Market Prices prior to the time of
determination.
(g) In any case in which this Section 5.6 shall require that an
adjustment be made immediately following a record date for an event, the
Company may elect to defer, until such event, issuing to the holder of any
Note converted after such record date the shares of Common Stock and other
Capital Stock of the Company issuable upon such conversion over and above
the shares of Common Stock and other Capital
35
<PAGE>
Stock of the Company issuable upon such conversion only on the basis of the
Conversion Price prior to adjustment; and, in lieu of the shares the
issuance of which is so deferred, the Company shall issue or cause its
transfer agents to issue due bills or other appropriate evidence of the
right to receive such shares.
SECTION 5.7 No Adjustment. No adjustment in the Conversion Price shall be
-------------
required until cumulative adjustments amount to 1% or more of the Conversion
Price as last adjusted; provided, however, that any adjustments which by reason
-------- -------
of this Section 5.7 are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Article 5 shall be made to the nearest cent or to the nearest one-hundredth of a
share, as the case may be. No adjustment need be made for rights to purchase
Common Stock pursuant to a Company plan for reinvestment of dividends or
interest. No adjustment need be made for a change in the par value or no par
value of the Common Stock.
SECTION 5.8 Other Adjustments.
-----------------
(a) In the event that, as a result of an adjustment made pursuant to
Section 5.6 above, the holder of any Note thereafter surrendered for
conversion shall become entitled to receive any shares of Capital Stock of
the Company other than shares of its Common Stock, thereafter the
Conversion Price of such other shares so receivable upon conversion of any
Notes shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to
Common Stock contained in this Article 5.
(b) In the event that shares of Common Stock are not delivered after
the expiration of any of the rights or warrants referred to in Section
5.6(b) and Section 5.6(c) hereof, the Conversion Price shall be readjusted
to the Conversion Price which would otherwise be in effect had the
adjustment made upon the issuance of such rights or warrants been made on
the basis of delivery of only the number of shares of Common Stock actually
delivered.
SECTION 5.9 Adjustments for Tax Purposes. The Company may, at its option,
----------------------------
make such reductions in the Conversion Price, in addition to those required by
Section 5.6 above, as it determines to be advisable in order that any stock
dividend, subdivision of shares, distribution of rights to purchase stock or
securities or distribution of securities convertible into or exchangeable for
stock made by the Company to its stockholders will not be taxable to the
recipients thereof.
SECTION 5.10 Adjustments by the Company. The Company from time to time
--------------------------
may, to the extent permitted by law, reduce the Conversion Price by any amount
for any period of at least 20 days, in which case the Company shall give at
least 15 days' notice of such reduction in accordance with Section 5.11, if the
Board of Directors has made a determination that such reduction would be in the
best interests of the Company, which determination shall be conclusive.
36
<PAGE>
SECTION 5.11 Notice of Adjustment. Whenever the Conversion Price is
--------------------
adjusted, the Company shall promptly mail to Noteholders at the addresses
appearing on the Registrar's books a notice of the adjustment and file with the
Trustee an Officers' Certificate briefly stating the facts requiring the
adjustment and the manner of computing it. The certificate shall be conclusive
evidence of the correctness of such adjustment.
SECTION 5.12 Notice of Certain Transactions. In the event that:
------------------------------
(a) the Company takes any action which would require an adjustment in
the Conversion Price;
(b) the Company takes any action that would require a supplemental
indenture pursuant to Section 5.13; or
(c) there is a dissolution or liquidation of the Company;
a holder of a Note may wish to convert such Note into shares of Common Stock
prior to the record date for or the effective date of the transaction so that he
may receive the rights, warrants, securities or assets which a holder of shares
of Common Stock on that date may receive. Therefore, the Company shall mail to
Noteholders at the addresses appearing on the Registrar's books and the Trustee
a notice stating the proposed record or effective date, as the case may be. The
Company shall mail the notice at least 15 days before such date; however,
failure to mail such notice or any defect therein shall not affect the validity
of any transaction referred to in clause (a), (b) or (c) of this Section 5.12.
SECTION 5.13 Effect of Reclassifications, Consolidations, Mergers or Sales
-------------------------------------------------------------
on Conversion Privilege. If any of the following shall occur, namely: (i) any
- -----------------------
reclassification or change of outstanding shares of Common Stock issuable upon
conversion of Notes (other than a change in par value, or from par value to no
par value, or from no par value to par value, or as a result of a subdivision or
combination), (ii) any consolidation or merger to which the Company is a party
other than a merger in which the Company is the continuing corporation and which
does not result in any reclassification of, or change (other than a change in
name, or par value, or from par value to no par value, or from no par value to
par value or as a result of a subdivision or combination) in, outstanding shares
of Common Stock or (iii) any sale or conveyance of all or substantially all of
the property or business of the Company as an entirety, then the Company, or
such successor or purchasing corporation, as the case may be, shall, as a
condition precedent to such reclassification, change, consolidation, merger,
sale or conveyance, execute and deliver to the Trustee a supplemental indenture
in form satisfactory to the Trustee providing that the holder of each Note then
outstanding shall have the right to convert such Note into the kind and amount
of shares of stock and other securities and property (including cash) receivable
upon such reclassification, change, consolidation, merger, sale or conveyance by
a holder of the number of shares of Common Stock deliverable upon conversion of
such Note immediately prior to such reclassification, change, consolidation,
merger, sale or conveyance. Such supplemental indenture shall provide for
adjustments of the Conversion Price which shall be as nearly equivalent as may
be practicable to the adjustments of the Conversion Price provided for in this
Article 5. The foregoing, however, shall not in any way affect the right a
holder of a
37
<PAGE>
Note may otherwise have, pursuant to clause (ii) of the last sentence of
subsection (c) of Section 5.6, to receive Rights upon conversion of a Note. If,
in the case of any such consolidation, merger, sale or conveyance, the stock or
other securities and property (including cash) receivable thereupon by a holder
of Common Stock includes shares of stock or other securities and property of a
corporation other than the successor or purchasing corporation, as the case may
be, in such consolidation, merger, sale or conveyance, then such supplemental
indenture shall also be executed by such other corporation and shall contain
such additional provisions to protect the interests of the holders of the Notes
as the Board of Directors of the Company shall reasonably consider necessary by
reason of the foregoing. The provision of this Section 5.13 shall similarly
apply to successive consolidations, mergers, sales or conveyances.
In the event the Company shall execute a supplemental indenture pursuant to
this Section 5.13, the Company shall promptly file with the Trustee an Officers'
Certificate briefly stating the reasons therefor, the kind or amount of shares
of stock or securities or property (including cash) receivable by holders of the
Notes upon the conversion of their Notes after any such reclassification,
change, consolidation, merger, sale or conveyance and any adjustment to be made
with respect thereto.
SECTION 5.14 Trustee's Disclaimer. The Trustee has no duty to determine
--------------------
when an adjustment under this Article 5 should be made, how it should be made or
what such adjustment should be, but may accept as conclusive evidence of the
correctness of any such adjustment, and shall be protected in relying upon the
Officers' Certificate with respect thereto which the Company is obligated to
file with the Trustee pursuant to Section 5.11. The Trustee makes no
representation as to the validity or value of any securities or assets issued
upon conversion of Notes, and the Trustee shall not be responsible for the
Company's failure to comply with any provisions of this Article 5.
The Trustee shall not be under any responsibility to determine the
correctness of any provisions contained in any supplemental indenture executed
pursuant to Section 5.13, but may accept as conclusive evidence of the
correctness thereof, and shall be protected in relying upon, the Officers'
Certificate with respect thereto which the Company is obligated to file with the
Trustee pursuant to Section 5.13.
ARTICLE 6
Subordination
-------------
SECTION 6.1 Agreement to Subordinate. The Company, for itself and its
------------------------
successors, and each Noteholder, by his acceptance of Notes, agree that the
payment of the principal of or interest or Liquidated Damages, if any, on or any
other amounts due on the Notes is subordinated in right of payment, to the
extent and in the manner stated in this Article 6, to the prior payment in full
of all existing and future Senior Debt.
SECTION 6.2 No Payment on Notes if Senior Debt in Default. Anything in
---------------------------------------------
this Indenture to the contrary notwithstanding, no payment on account of
principal of or
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<PAGE>
redemption of, interest on or other amounts due on the Notes (including the
making of a deposit pursuant to Section 8.1), and no redemption, purchase, or
other acquisition of the Notes, shall be made by or on behalf of the Company (i)
unless full payment of amounts then due for principal, premium, if any, and
interest and of all other amounts then due on all Designated Senior Debt has
been made or duly provided for pursuant to the terms of the instrument governing
such Designated Senior Debt, (ii) if, at the time of such payment, redemption,
purchase or other acquisition, or immediately after giving effect thereto, there
shall exist under any Senior Debt, or any agreement pursuant to which any Senior
Debt is issued, any default, which default shall not have been cured or waived
and which default shall have resulted in the full amount of such Senior Debt
being declared due and payable and (iii) if, at the time of such payment,
redemption, purchase or other acquisition, the Trustee shall have received
written notice from the Representative of the holders of Designated Senior Debt
(a "Payment Blockage Notice") that there exists under such Designated Senior
Debt, or any agreement pursuant to which such Designated Senior Debt is issued,
any default, which default shall not have been cured or waived, permitting the
holders thereof to declare any amounts of such Designated Senior Debt due and
payable, but only for the period (the "Payment Blockage Period") commencing on
the date of receipt of the Payment Blockage Notice and ending (unless earlier
terminated by notice given to the Trustee by the Representative of the holders
of such Designated Senior Debt) on the earlier of (a) the date on which such
event of default shall have been cured or waived or (b) 180 days from the
receipt of the Payment Blockage Notice. Notwithstanding the provisions
described in the immediately preceding sentence (other than in clauses (i) and
(ii)), unless the holders of such Designated Senior Debt or the Representative
of such holders shall have accelerated the maturity of such Designated Senior
Debt, the Company may resume payments on the Notes after the end of such Payment
Blockage Period. Not more than one Payment Blockage Notice may be given in any
consecutive 365-day period, irrespective of the number of defaults with respect
to Senior Debt during such period.
In the event that, notwithstanding the provisions of this Section 6.2,
payments are made by or on behalf of the Company in contravention of the
provisions of this Section 6.2, such payments shall be held by the Trustee, any
Paying Agent or the holders, as applicable, in trust for the benefit of, and
shall be paid over to and delivered to, the Representative of the holders of
Senior Debt or the trustee under the indenture or other agreement (if any),
pursuant to which any instruments evidencing any Senior Debt may have been
issued for application to the payment of all Senior Debt ratably according to
the aggregate amounts remaining unpaid to the extent necessary to pay all Senior
Debt in full in accordance with the terms of such Senior Debt, after giving
effect to any concurrent payment or distribution to or for the holders of Senior
Debt.
The Company shall give prompt written notice to the Trustee and any Paying
Agent of any default or event of default under any Senior Debt or under any
agreement pursuant to which any Senior Debt may have been issued.
39
<PAGE>
SECTION 6.3 Distribution on Acceleration of Notes; Dissolution and
------------------------------------------------------
Reorganization; Subrogation of Notes.
- ------------------------------------
(a) If the Notes are declared due and payable because of the
occurrence of an Event of Default, the Company shall give prompt written
notice to the holders of all Senior Debt or to the trustee(s) for such
Senior Debt of such acceleration. The Company may not pay the principal of
or interest on or any other amounts due on the Notes until five days after
such holders or trustee(s) of Senior Debt receive such notice and,
thereafter, the Company may pay the principal of or interest on or any
other amounts due on the Notes only if the provisions of this Article 6
permit such payment.
(b) Upon (i) any acceleration of the principal amount due on the Notes
because of an Event of Default or (ii) any distribution of assets of the
Company upon any dissolution, winding up, liquidation or reorganization of
the Company (whether in bankruptcy, insolvency or receivership or upon an
assignment for the benefit of creditors or any other dissolution, winding
up, liquidation or reorganization of the Company):
(i) the holders of all Senior Debt shall first be entitled to
receive payment in full of the principal thereof, the interest thereon
and any other amounts due thereon before the holders are entitled to
receive payment on account of the principal of or interest on or any
other amounts due on the Notes;
(ii) any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities (other than
securities of the Company as reorganized or readjusted or securities
of the Company or any other corporation provided for by a plan of
reorganization or readjustment the payment of which is subordinate, at
least to the extent provided in this Article 6 with respect to the
Notes, to the payment in full without diminution or modification by
such plan of all Senior Debt), to which the holders or the Trustee
would be entitled except for the provisions of this Article 6, shall
be paid by the liquidating trustee or agent or other person making
such a payment or distribution, directly to the holders of Senior Debt
(or their representatives(s) or trustee(s) acting on their behalf),
ratably according to the aggregate amounts remaining unpaid on account
of the principal of or interest on and other amounts due on the Senior
Debt held or represented by each, to the extent necessary to make
payment in full of all Senior Debt remaining unpaid, after giving
effect to any concurrent payment or distribution to the holders of
such Senior Debt; and
(iii) in the event that, notwithstanding the foregoing, any
payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities (other than
securities of the Company as reorganized or readjusted, or securities
of the Company or any other corporation provided for by a plan of
reorganization or readjustment the
40
<PAGE>
payment of which is subordinate, at least to the extent provided in
this Article 6 with respect to the Notes, to the payment in full
without diminution or modification by such plan of Senior Debt), shall
be received by the Trustee or the holders before all Senior Debt is
paid in full, such payment or distribution shall be held in trust for
the benefit of, and be paid over to upon request by a holder of the
Senior Debt, the holders of the Senior Debt remaining unpaid (or their
representatives) or trustee(s) acting on their behalf, ratably as
aforesaid, for application to the payment of such Senior Debt until
all such Senior Debt shall have been paid in full, after giving effect
to any concurrent payment or distribution to the holders of such
Senior Debt.
Subject to the payment in full of all Senior Debt, the holders shall
be subrogated to the rights of the holders of Senior Debt to receive
payments or distributions of cash, property or securities of the Company
applicable to the Senior Debt until the principal of and interest on the
Notes shall be paid in full and, for purposes of such subrogation, no such
payments or distributions to the holders of Senior Debt of cash, property
or securities which otherwise would have been payable or distributable to
holders shall, as between the Company, its creditors other than the holders
of Senior Debt, and the holders, be deemed to be a payment by the Company
to or on account of the Senior Debt, it being understood that the
provisions of this Article 6 are and are intended solely for the purpose of
defining the relative rights of the holders, on the one hand, and the
holders of Senior Debt, on the other hand.
Nothing contained in this Article 6 or elsewhere in this Indenture or
in the Notes is intended to or shall (i) impair, as between the Company and
its creditors other than the holders of Senior Debt, the obligation of the
Company, which is absolute and unconditional, to pay to the holders the
principal of and interest on the Notes as and when the same shall become
due and payable in accordance with the terms of the Notes, (ii) affect the
relative rights of the holders and creditors of the Company other than
holders of Senior Debt or, as between the Company and the Trustee, the
obligations of the Company to the Trustee, or (iii) prevent the Trustee or
the holders from exercising all remedies otherwise permitted by applicable
law upon default under this Indenture, subject to the rights, if any, under
this Article 6 of the holders of Senior Debt in respect of cash, property
and securities of the Company received upon the exercise of any such
remedy.
Upon distribution of assets of the Company referred to in this Article
6, the Trustee, subject to the provisions of Section 9.1 hereof, and the
holders shall be entitled to rely upon a certificate of the liquidating
trustee or agent or other person making any distribution to the Trustee or
to the holders for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of the Senior Debt and other
indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article 6. The Trustee, however, shall not be deemed to
owe any fiduciary duty to the holders of Senior Debt. Nothing contained in
this Article 6 or elsewhere in this indenture, or in any of the Notes,
shall prevent the good faith application by the Trustee of any moneys which
were deposited with it
41
<PAGE>
hereunder, prior to its receipt of written notice of facts which would
prohibit such application, for the purpose of the payment of or on account
of the principal of or interest on the Notes unless, prior to the date on
which such application is made by the Trustee, the Trustee shall be charged
with actual notice under Section 6.3(d) hereof of the facts which would
prohibit the making of such application.
(c) The provisions of this Article 6 shall not be applicable to any
cash, properties or securities received by the Trustee or by any holder
when received as a holder of Senior Debt and nothing in Section 9.11 hereof
or elsewhere in this Indenture shall deprive the Trustee or such holder of
any of its rights as such holder.
(d) The Company shall give prompt written notice to the Trustee of any
fact known to the Company which would prohibit the making of any payment of
money to or by the Trustee in respect of the Notes pursuant to the
provisions of this Article 6. The Trustee, subject to the provisions of
Section 9.1 hereof, shall be entitled to assume that no such fact exists
unless the Company or any holder of Senior Debt or any trustee therefor has
given notice thereof to the Trustee. Notwithstanding the provisions of
this Article 6 or any other provisions of this Indenture, the Trustee shall
not be charged with knowledge of the existence of any fact which would
prohibit the making of any payment of moneys to or by the Trustee in
respect of the Notes pursuant to the provisions in this Article 6, unless
the Trustee shall have received written notice thereof from the Company or
any holder or holders of the Senior Debt or from any trustee therefor; and,
prior to the receipt of any such written notice, the Trustee, subject to
the provisions of Section 9.1 hereof, shall be entitled in all respects
conclusively to assume that no such facts exist.
The Trustee shall be entitled to conclusively rely on the delivery to
it of a written notice by a person representing himself to be a holder of
Senior Debt (or a trustee on behalf of such holder) to establish that such
notice has been given by a holder of Senior Debt (or a trustee on behalf of
any such holder or holders). In the event that the Trustee determines in
good faith that further evidence is required with respect to the right of
any person as a holder of Senior Debt to participate in any payment or
distribution pursuant to this Article 6, the Trustee may request such
person to furnish evidence to the reasonable satisfaction of the Trustee as
to the amount of Senior Debt held by such person, the extent to which such
person is entitled to participate in such payment or distribution and any
other facts pertinent to the rights of such person under this Article 6,
and, if such evidence is not furnished, the Trustee may defer any payment
to such person pending judicial determination as to the right of such
person to receive such payment; nor shall the Trustee be charged with
knowledge of the curing or waiving of any default of the character
specified in Section 6.2 hereof or that any event or any condition
preventing any payment in respect of the Notes shall have ceased to exist,
unless and until the Trustee shall have received written notice to such
effect.
(e) The provisions of this Section 6.3 applicable to the Trustee shall
(unless the context requires otherwise) also apply to any Paying Agent for
the Company.
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<PAGE>
SECTION 6.4 Reliance by Senior Debt on Subordination Provisions. Each
---------------------------------------------------
holder of any Note by his acceptance thereof acknowledges and agrees that the
foregoing subordination provisions are, and are intended to be, an inducement
and a consideration for each holder of any Senior Debt, whether such Senior Debt
was created or acquired before or after the issuance of the Notes, to acquire
and continue to hold, or to continue to hold, such Senior Debt, and such holder
of Senior Debt shall be deemed conclusively to have relied on such subordination
provisions in acquiring and continuing to hold, or in continuing to hold, such
Senior Debt. Notice of any default in the payment of any Senior Debt, except as
expressly stated in this Article 6, and notice of acceptance of the provisions
hereof are hereby expressly waived. Except as otherwise expressly provided
herein, no waiver, forbearance or release by any holder of Senior Debt under
such Senior Debt or under this Article 6 shall constitute a release of any of
the obligations or liabilities of the Trustee or holders of the Notes provided
in this Article 6.
SECTION 6.5 No Waiver of Subordination Provisions. Except as otherwise
-------------------------------------
expressly provided herein, no right of any present or future holder of any
Senior Debt to enforce subordination as herein provided shall at any time in any
way be prejudiced or impaired by any act or failure to act on the part of the
Company or by any act or failure to act, in good faith, by any such holder, or
by any noncompliance by the Company with the terms, provisions and covenants of
this Indenture, regardless of any knowledge thereof any such holder may have or
be otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Debt may, at any time and from time to time, without the
consent of, or notice to, the Trustee or the holders of the Notes, without
incurring responsibility to the holders of the Notes and without impairing or
releasing the subordination provided in this Article 6 or the obligations
hereunder of the holders of the Notes to the holders of Senior Debt, do any one
or more of the following: (i) change the manner, place or terms of payment of,
or renew or alter, Senior Debt, or otherwise amend or supplement in any manner
Senior Debt or any instrument evidencing the same or any agreement under which
Senior Debt is outstanding; (ii) sell, exchange, release or otherwise dispose of
any property pledged, mortgaged or otherwise securing Senior Debt; (iii) release
any person liable in any manner for the collection of Senior Debt; and (iv)
exercise or refrain from exercising any rights against the Company or any other
person.
SECTION 6.6 Trustee's Relation to Senior Debt. The Trustee in its
---------------------------------
individual capacity shall be entitled to all the rights set forth in this
Article 6 in respect of any Senior Debt at any time held by it, to the same
extent as any holder of Senior Debt, and nothing in Section 9.11 hereof or
elsewhere in this Indenture shall deprive the Trustee of any of its rights as
such holder.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform or to observe only such of its covenants and obligations, as are
specifically set forth in this Article 6, and no implied covenants or
obligations with respect to the holders of Senior Debt shall be read into this
Indenture against the Trustee. The Trustee shall not owe any fiduciary duty to
the holders of Senior Debt but shall have only such obligations to such holders
as are expressly set forth in this Article 6.
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Each holder of a Note by his acceptance thereof authorizes and directs the
Trustee on his behalf to take such action as may be necessary or appropriate to
effectuate the subordination provided in this Article 6 and appoints the Trustee
his attorney-in-fact for any and all such purposes, including, in the event of
any dissolution, winding up or liquidation or reorganization under any
applicable bankruptcy law of the Company (whether in bankruptcy, insolvency or
receivership proceedings or otherwise), the timely filing of a claim for the
unpaid balance of such holder's Notes in the form required in such proceedings
and the causing of such claim to be approved. If the Trustee does not file a
claim or proof of debt in the form required in such proceedings prior to 30 days
before the expiration of the time to file such claims or proofs, then any holder
or holders of Senior Debt or their representative or representatives shall have
the right to demand, sue for, collect, receive and receipt for the payments and
distributions in respect of the Notes which are required to be paid or delivered
to the holders of Senior Debt as provided in this Article 6 and to file and
prove all claims therefor and to take all such other action in the name of the
holders or otherwise, as such holders of Senior Debt or representative thereof
may determine to be necessary or appropriate for the enforcement of the
provisions of this Article 6.
SECTION 6.7 Other Provisions Subject Hereto. Expect as expressly stated
-------------------------------
in this Article 6, notwithstanding anything contained in this Indenture to the
contrary, all the provisions of this Indenture and the Notes are subject to the
provisions of this Article 6. However, nothing in this Article 6 shall apply to
or adversely affect the claims of, or payment to, the Trustee pursuant to
Section 9.7. Notwithstanding the foregoing, the failure to make a payment on
account of principal of or interest on the Notes by reason of any provision of
this Article 6 shall not be construed as preventing the occurrence of an Event
of Default under Section 8.1.
ARTICLE 7
Successors
----------
SECTION 7.1 Merger, Consolidation or Sale of Assets. The Company may not
---------------------------------------
consolidate or merge with or into any person (whether or not the Company is the
surviving corporation), or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its properties or assets unless:
(a) the Company is the surviving corporation or the entity or the
person formed by or surviving any such consolidation or merger (if other
than the Company) or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made is a corporation
organized or existing under the laws of the United States, any state
thereof or the District of Columbia;
(b) the entity or person formed by or surviving any such consolidation
or merger (if other than the Company) or the person to which such sale,
assignment, transfer, lease conveyance or other disposition will have been
made assumes all the Obligations of the Company, pursuant to a supplemental
indenture in a form reasonably satisfactory to the Trustee, under the Notes
and the Indenture;
44
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(c) such sale, assignment, transfer, lease, conveyance or other
disposition of all or substantially all of the Company's properties or
assets shall be as an entirety or virtually as an entirety to one person
and such person shall have assumed all the Obligations of the Company,
pursuant to a supplemental indenture in a form reasonably satisfactory to
the Trustee, under the Notes and the Indenture;
(d) immediately after such transaction no Default or Event of Default
exists; and
(e) the Company or such person shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
transaction and the supplemental indenture comply with the Indenture and
that all conditions precedent in the Indenture relating to such transaction
have been satisfied.
SECTION 7.2 Successor Corporation Substituted. Upon any consolidation or
---------------------------------
merger, or any sale, assignment, transfer, lease, conveyance or other
disposition of all or substantially all of the assets of the Company in
accordance with Section 7.1 hereof, the successor corporation formed by such
consolidation or into or with which the Company is merged or to which such sale,
assignment, transfer, lease, conveyance or other disposition is made shall
succeed to, and be substituted for and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor
person has been named as the Company herein; provided, however, that the
-------- -------
predecessor Company in the case of a sale, assignment, transfer, lease,
conveyance or other disposition shall not be released from the obligation to pay
the principal of and interest on the Notes.
ARTICLE 8
Defaults and Remedies
---------------------
SECTION 8.1 Events of Default. An "Event of Default" occurs if:
-----------------
(a) the Company defaults in the payment of interest on any Note when
the same becomes due and payable,whether or not such payments shall be
prohibited by Article 6, and the Default continues for a period of 30 days
after the date due and payable;
(b) the Company defaults in the payment of the principal of any Note
when the same becomes due and payable at maturity, upon redemption or
otherwise, whether or not such payment shall be prohibited by Article 6;
(c) the Company fails to observe or perform any covenant or agreement
contained in Section 4.7 or 4.8 hereof, whether or not such purchase shall
be prohibited by Article 6;
(d) the Company fails to observe or perform any other covenant or
agreement contained in this Indenture or the Notes, required by it to be
performed and the Default continues for a period of 60 days after the
receipt of written notice
45
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from the Trustee to the Company or from the holders of 25% in aggregate
principal amount of the then outstanding Notes to the Company and the
Trustee stating that such notice is a "Notice of Default";
(e) there is a default under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any
Subsidiary of the Company (or the payment of which is guaranteed by the
Company or any Subsidiary of the Company), whether such Indebtedness or
guarantee now exists or is created after the Issuance Date, which default
(i) is caused by a failure to pay when due principal of or interest on such
Indebtedness within the grace period provided for in such Indebtedness
(which failure continues beyond any applicable grace period) (a "Payment
Default") or (ii) results in the acceleration of such Indebtedness prior to
its express maturity without such acceleration being rescinded or annulled
and, in each case, the principal amount of any such Indebtedness, together
with the principal amount of any other such Indebtedness under which there
is a Payment Default or the maturity of which has been so accelerated,
aggregates $10 million or more;
(f) a final, nonappealable judgment or final, nonappealable judgments
(other than any judgment as to which a reputable insurance company has
accepted full liability except for customary deductibles or co-insurance
retentions) for the payment of money are entered by a court or courts of
competent jurisdiction against the Company or any Subsidiary of the Company
and remain undischarged, unstayed or unbonded for a period (during which
execution shall not be effectively stayed) of 60 days, provided that the
aggregate of all such judgments exceeds $10 million;
(g) the Company or any Material Subsidiary pursuant to or within the
meaning of any Bankruptcy Law: (i) commences a voluntary case, (ii)
consents to the entry of an order for relief against it in an involuntary
case in which it is the debtor, (iii) consents to the appointment of a
Custodian of it or for all or substantially all of its property, (iv) makes
a general assignment for the benefit of its creditors, or (v) makes the
admission in writing that it generally is unable to pay its debts as the
same become due; or
(h) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that: (i) is for relief against the Company or any
Subsidiary of the Company in an involuntary case, (ii) appoints a Custodian
of the Company or any Subsidiary of the Company or for all or substantially
all of its property, and the order or decree remains unstayed and in effect
for 60 days, or (iii) orders the liquidation of the Company or any
Subsidiary of the Company, and the order or decree remains unstayed and in
effect for 60 days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar Federal
or state law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.
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SECTION 8.2 Acceleration. If an Event of Default (other than an Event of
------------
Default specified in clauses (g) and (h) of Section 8.1 hereof) occurs and is
continuing, the Trustee by notice to the Company, or the Noteholders of at least
25% in principal amount of the then outstanding Notes by notice to the Company
and the Trustee, may declare all the Notes to be due and payable. Upon such
declaration, the principal of, premium, if any, and accrued and unpaid interest
on the Notes shall be due and payable immediately. If an Event of Default
specified in clause (g) or (h) of Section 8.1 hereof occurs, such an amount
shall ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Noteholder. If there
has been a declaration of acceleration of the Notes because an Event of Default
under Section 8.1(e) has occurred, such declaration of acceleration shall be
automatically annulled if the holders of the Indebtedness described in Section
8.1(e) have rescinded the declaration of acceleration in respect of such
Indebtedness within 60 days of such declaration and if: (1) the annulment of
the acceleration of the Notes would not conflict with any judgment or decree of
a court of competent jurisdiction, (2) all existing Events of Default, except
non-payment of principal of, or premium, if any, or interest on the Notes that
became due solely because of the acceleration of the Notes, have been cured or
waived, and (3) the Company has delivered an Officers' Certificate to the
Trustee to the effect of clauses (1) and (2) above. The Noteholders of a
majority in aggregate principal amount of the then outstanding Notes by notice
to the Trustee may rescind an acceleration and its consequences if the
rescission would not conflict with any judgment or decree and if all existing
Events of Default have been cured or waived except nonpayment of principal or
interest that has become due solely because of the acceleration.
SECTION 8.3 Other Remedies. If an Event of Default occurs and is
--------------
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of or interest on the Notes or to enforce the performance of any
provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Noteholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
SECTION 8.4. Waiver of Past Defaults. The Noteholders of a majority in
-----------------------
aggregate principal amount of the then outstanding Notes by notice to the
Trustee may waive an existing Default or Event of Default and its consequences
except a continuing Default or Event of Default in the payment of the Designated
Event Payment or the principal of, or interest on, any Note. When a Default or
Event of Default is waived, it is cured and ceases; but no such waiver shall
extend to any subsequent or other Default or impair any right consequent
thereon.
SECTION 8.5 Control by Majority. The Noteholders of a majority in
-------------------
principal amount of the then outstanding Notes may direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on it. However, the Trustee may refuse
to follow any direction that conflicts with law or this Indenture, is unduly
prejudicial to the rights of other Noteholders, or would involve the Trustee in
personal liability.
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SECTION 8.6 Limitation on Suits. A Noteholder may pursue a remedy with
-------------------
respect to this Indenture or the Notes only if:
(a) the Noteholder gives to the Trustee notice of a continuing Event
of Default;
(b) the Noteholders of at least 25% in principal amount of the then
outstanding Notes make a request to the Trustee to pursue the remedy;
(c) such Noteholder or Noteholders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of indemnity; and
(e) during such 60-day period the Noteholders of a majority in
principal amount of the then outstanding Notes do not give the Trustee a
direction inconsistent with the request.
A Noteholder may not use this Indenture to prejudice the rights of another
Noteholder or to obtain a preference or priority over another Noteholder.
SECTION 8.7 Rights of Noteholders to Receive Payment. Notwithstanding any
----------------------------------------
other provision of this Indenture, the right of any Noteholder of a Note to
receive payment of principal of and interest on the Note, on or after the
respective due dates expressed in the Note, or to bring suit for the enforcement
of any such payment on or after such respective dates, shall not be impaired or
affected without the consent of the Noteholder made pursuant to this Section.
SECTION 8.8 Collection Suit by Trustee. If an Event of Default specified
--------------------------
in Section 8.1(a) or (b) occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Company
for the whole amount of principal and interest remaining unpaid on the Notes and
interest on overdue principal and interest and such further amount as shall be
sufficient to cover the costs and, to the extent lawful, expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
SECTION 8.9 Trustee May File Proofs of Claim. The Trustee may file such
--------------------------------
proofs of claim and other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee and the Noteholders allowed in any
judicial proceedings relative to the Company, its creditors or its property.
Nothing contained herein shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any Noteholder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Noteholder thereof, or to authorize the Trustee to vote in
respect of the claim of any Noteholder in any such proceeding.
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SECTION 8.10 Priorities. If the Trustee collects any money pursuant to
----------
this Article 8, it shall pay out the money in the following order:
First: to the Trustee for amounts due under Section 9.7 hereof;
------
Second: to the holders of Senior Debt to the extent required by
-------
Article 6;
Third: to Noteholders for amounts due and unpaid on the Notes for
------
principal and interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Notes for principal
and interest, respectively; and
Fourth: to the Company.
-------
Except as otherwise provided in Section 2.12 hereof, the Trustee may fix a
record date and payment date for any payment to Noteholders made pursuant to
this Section.
SECTION 8.11 Undertaking for Costs. In any suit for the enforcement of
---------------------
any right or remedy under this Indenture or in any suit against the Trustee for
any action taken or omitted by it as a Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section does not apply to a suit by the
Trustee, a suit by a holder pursuant to Section 8.7 hereof, or a suit by
Noteholders of more than 10% in principal amount of the then outstanding Notes.
ARTICLE 9
Trustee
-------
SECTION 9.1 Duties of Trustee.
-----------------
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as
a prudent man would exercise or use under the circumstances in the conduct
of his own affairs.
(b) Except during the continuance of an Event of Default: (i) the
Trustee need perform only those duties that are specifically set forth in
this Indenture and no others and (ii) in the absence of bad faith on its
part, the Trustee may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements of
this Indenture.
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(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own wilful
misconduct, except that: (i) this paragraph does not limit the effect of
paragraph (b) of this Section 9.1; (ii) the Trustee shall not be liable for
any error of judgment made in good faith by a Trust Officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent facts
and (iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith and without negligence in accordance
with a direction received by it pursuant to Section 8.5 hereof.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section 9.1. No
provision of this Indenture shall require the Trustee to expend or risk its
own funds or otherwise incur any financial liability in the performance of
any of its duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(e) The Trustee may refuse to perform any duty or exercise any right
or power unless it receives indemnity satisfactory to it against any loss,
liability or expense.
(f) Except as provided in this Indenture, the Trustee shall not be
liable for interest on any money received by it except as the Trustee may
agree in writing with the Company. Money held in trust by the Trustee need
not be segregated from other funds except to the extent required by law.
SECTION 9.2 Rights of Trustee.
-----------------
(a) The Trustee may rely on any document reasonably believed by it to
be genuine and to have been signed or presented by the proper person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it (unless other
evidence be herein specifically prescribed) may require an Officers'
Certificate or an Opinion of Counsel, or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance
on such Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and nominees and shall not be
responsible for the misconduct or negligence of any agent (other than an
agent who is an employee of the Trustee) appointed with due care.
(d) The Trustee shall not be liable for any action that it takes or
omits to take in good faith, without negligence or wilful misconduct, and
that it reasonably believes to be authorized or within its rights or
powers.
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(e) The Trustee shall not be charged with knowledge of any Event of
Default under subsection (c), (d), (e) or (f) of Section 8.1 or of the
identity of any Material Subsidiary unless either (1) a Trust Officer
assigned to its Institutional Trust Administration shall have actual
knowledge thereof, or (2) the Trustee shall have received notice thereof in
accordance with Section 12.2 hereof from the Company or any holder.
SECTION 9.3 Individual Rights of Trustee. The Trustee in its individual
----------------------------
or any other capacity may become the owner or pledgee of Notes and may otherwise
deal with the Company or an Affiliate with the same rights it would have if it
were not Trustee. Any Agent may do the same with like rights. However, the
Trustee is subject to Sections 9.10 and 9.11 hereof.
SECTION 9.4 Trustee's Disclaimer. The Trustee makes no representation as
--------------------
to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from any Notes authenticated
and delivered by the Trustee in conformity with the provisions of this
Indenture, and it shall not be responsible for any statement of the Company in
the Indenture or any statement in the Notes other than the Trustee's
authentication thereof.
The Trustee in its capacity as Registrar hereunder, shall not be
charged with knowledge of the Applicable Procedures and may conclusively rely
that instructions and certificates presented to it are in accordance with such
Applicable Procedures in effecting transfers pursuant to Section 2.6 hereof.
SECTION 9.5 Notice of Defaults. If a Default or Event of Default occurs
------------------
and is continuing and if it is actually known to the Trustee, the Trustee shall
mail to Noteholders a notice of the Default or Event of Default within 90 days
after it occurs. Except in the case of a Default or Event of Default in payment
on any Note, the Trustee may withhold the notice if and so long as a committee
of its Trust Officers in good faith determines that withholding the notice is in
the interests of Noteholders.
SECTION 9.6 Reports by Trustee to Noteholders. Within 60 days after the
---------------------------------
reporting date stated in Section 12.10, the Trustee shall mail to Noteholders a
brief report dated as of such reporting date that complies with TIA (S) 313(a)
if and to the extent required by such (S) 313(a). The Trustee also shall comply
with TIA (S) 313(b)(2). The Trustee shall also transmit by mail all reports as
required by TIA (S) 313(c).
A copy of each report at the time of its mailing to Noteholders shall be
filed with the SEC and each stock exchange on which the Notes are listed. The
Company shall notify the Trustee when the Notes are listed on any stock
exchange.
SECTION 9.7 Compensation and Indemnity. The Company shall pay to the
--------------------------
Trustee from time to time reasonable compensation for its services hereunder.
The Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee upon
request for all reasonable and duly documented disbursements, expenses and
advances incurred or made by it. Such
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disbursements and expenses may include the reasonable and duly documented
disbursements, compensation and expenses of the Trustee's agents and counsel
(subject to the limitations set forth in this Section 9.7).
The Company shall indemnify the Trustee and its officers, directors,
employees and all other agents against any loss or liability incurred by it
except as set forth in the next paragraph. The Trustee shall notify the Company
promptly of any claim for which it may seek indemnity. The Company shall defend
the claim and the Trustee shall cooperate in the defense. If the Trustee is
advised by counsel in writing that it may have available to it defenses that are
in conflict with those available to the Company, the Trustee may have separate
counsel and the Company shall pay the reasonable and duly documented fees,
disbursements and expenses of such counsel. The Company need not pay for any
settlement made without its consent, which consent shall not be unreasonably
withheld.
The Company need not reimburse any expense or indemnify against any loss or
liability incurred by the Trustee through its negligence, bad faith or wilful
misconduct.
To secure the Company's payment obligations in this Section, the Trustee
shall have a lien prior to the Notes on all money or property held or collected
by the Trustee, except money or property held in trust to pay principal of and
interest on particular Notes.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 8.1(g) or (h) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The provisions of this Section 9.7 shall survive the termination of this
Indenture, as provided by Section 10.1 hereof.
SECTION 9.8 Replacement of Trustee. A resignation or removal of the
----------------------
Trustee and appointment of a successor Trustee shall become effective only upon
the successor Trustee's acceptance of appointment as provided in this Section.
The Trustee may resign by so notifying the Company. The Noteholders of a
majority in aggregate principal amount of the then outstanding Notes may remove
the Trustee by so notifying the Trustee and the Company. The Company may remove
the Trustee if:
(a) the Trustee fails to comply with Section 9.10 hereof, unless the
Trustee's duty to resign is stayed as provided in TIA (S) 310(b);
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
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If the Trustee resigns, is removed or becomes incapable of acting, or if a
vacancy exists in the office of Trustee for any reason, the Company shall
promptly appoint a successor Trustee. Within one year after the successor
Trustee takes office, the Noteholders of a majority in principal amount of the
then outstanding Notes may appoint a successor Trustee to replace the successor
Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Noteholders of at least 10% in principal amount of the then outstanding Notes
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee fails to comply with Section 9.10 hereof, unless the
Trustee's duty to resign is stayed as provided in TIA (S) 310(b), any Noteholder
who has been a bona fide holder of a Note for at least six months may petition
any court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon the resignation or
removal of the retiring Trustee shall become effective, the Company shall
promptly pay all amounts due and payable to the retiring Trustee pursuant to
Section 9.7 hereof and the successor Trustee shall have all the rights, powers
and duties of the Trustee under this Indenture. The successor Trustee shall
mail a notice of its succession to Noteholders. The retiring Trustee shall
promptly transfer all property and money held by it as Trustee to the successor
Trustee, subject to the lien provided for in Section 9.7 hereof.
Notwithstanding replacement of the Trustee pursuant to this Section 9.8, the
Company's obligations under Section 9.7 hereof shall continue for the benefit of
the retiring trustee with respect to expenses and liabilities incurred by it
prior to such replacement.
SECTION 9.9 Successor Trustee by Merger, Etc. If the Trustee
---------------------------------
consolidates, merges or converts into, or transfers all or substantially all of
its corporate trust business to, another corporation, the successor corporation
without any further act shall be the successor Trustee; provided that such
--------
successor shall otherwise be qualified and eligible to act as a Trustee pursuant
to the provisions of this Article.
SECTION 9.10 Eligibility; Disqualification. This Indenture shall always
-----------------------------
have a Trustee who satisfies the requirements of TIA (S) 310(a)(1) and (5). The
Trustee shall always have a combined capital and surplus as stated in Section
12.10 hereof. The Trustee is subject to TIA (S) 310(b).
SECTION 9.11 Preferential Collection of Claims Against Company. The
-------------------------------------------------
Trustee is subject to TIA (S) 311(a), excluding any creditor relationship listed
in TIA (S) 311(b). A Trustee who has resigned or been removed shall be subject
to TIA (S) 311(a) to the extent indicated therein.
SECTION 9.12 Sections Applicable to Registrar, Paying Agent and Conversion
-------------------------------------------------------------
Agent. The term "Trustee" as used in Sections 9.1, 9.2, 9.3, 9.4 and 9.7 hereof
- ------
shall
53
<PAGE>
(unless the context requires otherwise) be construed as extending to and
including the Trustee acting in its capacity, if any, as Registrar, Paying Agent
and Conversion Agent.
ARTICLE 10
Discharge of Indenture
----------------------
SECTION 10.1 Termination of Company's Obligations. This Indenture shall
------------------------------------
cease to be of further effect (except that the Company's obligations under
Sections 9.7 and 10.2 hereof shall survive) when all outstanding Notes
theretofore authenticated and issued have been delivered to the Trustee for
cancellation and the Company has paid all sums payable hereunder.
Thereupon, the Trustee upon request of the Company, shall acknowledge in
writing the discharge of the Company's obligations under this Indenture, except
for those surviving obligations specified above.
SECTION 10.2 Repayment to Company. The Trustee and the Paying Agent shall
--------------------
promptly pay to the Company upon request any excess money or securities held by
them at any time.
The Trustee and the Paying Agent shall pay to the Company upon request any
money held by them for the payment of principal or interest that remains
unclaimed for two years after the date upon which such payment shall have become
due; provided, however, that the Company shall have first caused notice of such
-------- -------
payment to the Company to be mailed to each Noteholder entitled thereto no less
than 30 days prior to such payment. After payment to the Company, the Trustee
and the Paying Agent shall have no further liability with respect to such money
and Noteholders entitled to the money must look to the Company for payment as
general creditors unless any applicable abandoned property law designates
another person.
ARTICLE 11
Amendments, Supplements and Waivers
-----------------------------------
SECTION 11.1 Without Consent of Noteholders. The Company and the Trustee
------------------------------
may amend or supplement this Indenture or the Notes without the consent of any
Noteholder:
(a) to cure any ambiguity, defect or inconsistency;
(b) to comply with Sections 5.13 and 7.1 hereof;
(c) to provide for uncertificated Notes in addition to certificated
Notes;
(d) to make any change that does not adversely affect in any material
respect the legal rights hereunder of any Noteholder;
54
<PAGE>
(e) to qualify this Indenture under the TIA or to comply with the
requirements of the SEC in order to maintain the qualification of the
Indenture under the TIA; or
(f) to make any change that provides any additional rights or benefits
to the holders of Notes.
An amendment under this Section may not make any change that adversely
affects the rights under Article 6 of any holder of Senior Debt then outstanding
unless the holders of such Senior Debt (or any group or representative thereof
authorized to give a consent) consent to such change by the requisite percent
approval applicable to such consent under the instrument governing such Senior
Debt.
SECTION 11.2 With Consent of Noteholders. Subject to Section 8.7 hereof,
---------------------------
the Company and the Trustee may amend or supplement this Indenture or the Notes
with the written consent (including consents obtained in connection with any
tender offer or exchange offer for Notes) of the Noteholders of at least a
majority in aggregate principal amount of the then outstanding Notes. Subject
to Sections 8.4 and 8.7 hereof, the Noteholders of a majority in aggregate
principal amount of the Notes then outstanding may also by their written consent
(including consents obtained in connection with any tender offer or exchange
offer for Notes) waive any existing Default as provided in Section 8.4 or waive
compliance in a particular instance by the Company with any provision of this
Indenture or the Notes. However, without the consent of each Noteholder
affected, an amendment, supplement or waiver under this Section may not (with
respect to any Notes held by a nonconsenting Noteholder):
(a) reduce the amount of Notes whose Noteholders must consent to an
amendment, supplement or waiver;
(b) reduce the rate of or change the time for payment of interest on
any Note;
(c) reduce the principal of or change the fixed maturity of any Note
or alter the redemption provisions with respect thereto;
(d) make any Note payable in money other than that stated in the Note;
(e) make any change in Section 8.4, 8.7 or 11.2 hereof (this
sentence);
(f) waive a default in the payment of the Designated Event Payment or
the principal of, or interest on, any Note (other than as provided in
Section 8.4);
(g) waive a redemption payment payable on any Note;
(h) make any change that adversely affects the right of Noteholders to
convert Notes into Common Stock of the Company; or
55
<PAGE>
(i) make any change in Articles 5 or 6 hereof that adversely affects
in any material respect the interests of the Noteholders.
To secure a consent of the Noteholders under this Section 11.2, it shall
not be necessary for the Noteholders to approve the particular form of any
proposed amendment, supplement or waiver, but it shall be sufficient if such
consent approves the substance thereof.
An amendment under this Section may not make any change that adversely
affects the rights under Article 6 of any holder of Senior Debt then outstanding
unless the holders of such Senior Debt (or any group or representative thereof
authorized to give a consent) consent to such change by the requisite percent
approval applicable to such consent under the instrument governing such Senior
Debt.
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any holder of Notes for or as an inducement to
any consent, waiver or amendment of any of the terms or provisions of this
Indenture or the Notes unless such consideration is offered to be paid or agreed
to be paid to all holders of the Notes that consent, waive or agree to amend in
the time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to Noteholders a notice briefly describing the
amendment or waiver.
SECTION 11.3 Compliance with Trust Indenture Act. After this Indenture
-----------------------------------
becomes subject to the TIA, every amendment to this Indenture or the Notes shall
be set forth in a supplemental indenture that complies with the TIA as then in
effect.
SECTION 11.4 Revocation and Effect of Consents. Until an amendment,
---------------------------------
supplement or waiver becomes effective, a consent to it by a Noteholder of a
Note is a continuing consent by the Noteholder and every subsequent Noteholder
of a Note or portion of a Note that evidences the same debt as the consenting
Noteholder's Note, even if notation of the consent is not made on any Note.
However, any such Noteholder or subsequent Noteholder may revoke the consent as
to such Noteholder's Note or portion of a Note if the Trustee receives the
notice of revocation before the date on which the Trustee receives an Officers'
Certificate certifying that the Noteholders of the requisite principal amount of
Notes have consented to the amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Noteholders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then notwithstanding the
provisions of the immediately preceding paragraph, those persons who were
Noteholders at such record date (or their duly designated proxies), and only
those persons, shall be entitled to consent to such amendment, supplement or
waiver or to revoke any consent previously given, whether or not such persons
continue to be Noteholders after such record date. No consent shall be valid or
effective for more than 90 days after such record date unless consents from
Noteholders of the principal amount of
56
<PAGE>
Notes required hereunder for such amendment or waiver to be effective shall have
also been given and not revoked within such 90-day period.
After an amendment, supplement or waiver becomes effective it shall bind
every Noteholder, unless it is of the type described in any of clauses (a)
through (i) of Section 11.2 hereof. In such case, the amendment or waiver shall
bind each Noteholder who has consented to it and every subsequent Noteholder
that evidences the same debt as the consenting Noteholder's Note.
SECTION 11.5 Notation on or Exchange of Notes. The Trustee may place an
--------------------------------
appropriate notation about an amendment or waiver on any Note thereafter
authenticated. The Company in exchange for all Notes may issue and the Trustee
shall authenticate new Notes that reflect the amendment or waiver. However,
failure to make such notation in any Note shall not affect the validity and
effect of such amendment or waiver.
SECTION 11.6 Trustee Protected. The Trustee shall sign all supplemental
-----------------
indentures, except that the Trustee may, but need not, sign any supplemental
indenture that adversely affects its rights.
ARTICLE 12
Miscellaneous
-------------
SECTION 12.1 Trust Indenture Act Controls. If, at any time that the TIA
----------------------------
is applicable to this Indenture, any provision of this Indenture limits,
qualifies, or conflicts with another provision which is automatically deemed to
be incorporated in this Indenture by the TIA, the incorporated provision shall
control.
SECTION 12.2 Notices. Any notice or communication by the Company or the
-------
Trustee to the other is duly given if in writing and delivered in person or
mailed by first-class mail to the other's address stated in Section 12.10
hereof. The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication to a Noteholder shall be mailed by first-class
mail to such Note holder's address shown on the register kept by the Registrar.
Failure to mail a notice or communication to a Noteholder or any defect in it
shall not affect its sufficiency with respect to other Noteholders.
If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives it.
If the Company mails a notice or communication to Noteholders, it shall
mail a copy to the Trustee and each Agent at the same time.
All other notices or communications shall be in writing.
57
<PAGE>
In case by reason of the suspension of regular mail service, or by reason
of any other cause, it shall be impossible to mail any notice as required by the
Indenture, then such method of notification as shall be made with the approval
of the Trustee shall constitute a sufficient mailing of such notice.
SECTION 12.3 Communication by Noteholders with Other Noteholders.
---------------------------------------------------
Noteholders may communicate pursuant to TIA (S) 312(b) with other Noteholders
with respect to their rights under this Indenture or the Notes. The Company,
the Trustee, the Registrar and anyone else shall have the protection of TIA (S)
312(c).
SECTION 12.4 Certificate and Opinion as to Conditions Precedent. Upon any
--------------------------------------------------
request or application by the Company to the Trustee to take any action under
this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(b) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 12.5 Statements Required in Certificate or Opinion. Each
---------------------------------------------
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture (other than pursuant to Section 4.3) shall
include:
(a) a statement that the person signing such certificate or rendering
such opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such person, such person has
made such examination or investigation as is necessary to enable such
person to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether or not, in the opinion of such person,
such condition or covenant has been complied with.
SECTION 12.6 Rules by Trustee and Agents. The Trustee may make reasonable
---------------------------
rules for action by, or a meeting of, Noteholders. The Registrar or Paying
Agent may make reasonable rules and set reasonable requirements for its
functions.
SECTION 12.7 Legal Holidays. A "Legal Holiday" is a Saturday, a Sunday or
--------------
a day on which banking institutions in the State of New York or California are
not required to be open. If a payment date is a Legal Holiday at a place of
payment, payment may be made
58
<PAGE>
at that place on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue for the intervening period. If any other operative date
for purposes of this Indenture shall occur on a Legal Holiday then for all
purposes the next succeeding day that is not a Legal Holiday shall be such
operative date.
SECTION 12.8 No Recourse Against Others. A director, officer, employee or
--------------------------
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Notes or the Indenture or for any claim
based on, in respect of or by reason of such obligations or their creation.
Each Noteholder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for the issue of the Notes.
SECTION 12.9 Counterparts. This Indenture may be executed in any number
------------
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
SECTION 12.10 Variable Provisions. "Officer" means the Chairman of the
-------------------
Board, the President, any Vice-President, the Treasurer, the Secretary, any
Assistant Treasurer or any Assistant Secretary of the Company.
The first certificate pursuant to Section 4.3 hereof shall be for the
fiscal year ending on December 31, 1996.
The reporting date for Section 9.6 hereof is March 15 of each year. The
first reporting date is March 15, 1997.
The Trustee shall always have a combined capital and surplus of at least
$100,000,000 as set forth in its most recent published annual report of
condition.
The Company's address is: Plasma & Materials Technologies, Inc.
9255 Deering Avenue
Chatsworth, California 91311
Telephone Number: (818) 886-8000
Telefax Number: (818) 886-8756
Attn: Chief Financial Officer
The Trustee's address is: U.S. Trust Company of California, N.A.
c/o U.S. Trust Company of New York, N.A.
770 Broadway, 13th Floor
New York, New York 10003
Telephone Number: (212)
Telefax Number: (212)
SECTION 12.11 Governing Law. THE INTERNAL LAWS OF THE STATE OF NEW YORK
-------------
SHALL GOVERN THIS INDENTURE AND THE Notes, WITHOUT REGARD TO THE CONFLICT OF
LAWS PROVISIONS THEREOF.
59
<PAGE>
SECTION 12.12 No Adverse Interpretation of Other Agreements. This
---------------------------------------------
Indenture may not be used to interpret another indenture, loan or debt agreement
of the Company or an Affiliate. Any such indenture, loan or debt agreement may
not be used to interpret this Indenture.
SECTION 12.13 Successors. All agreements of the Company in this Indenture
----------
and the Notes shall bind its successor. All agreements of the Trustee in this
Indenture shall bind its successor.
SECTION 12.14 Severability. In case any provision in this Indenture or in
------------
the Notes shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 12.15 Table of Contents, Headings, Etc. The Table of Contents,
---------------------------------
Cross-Reference Table, and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not to be
considered a part hereof, and shall in no way modify or restrict any of the
terms or provisions hereof.
SECTION 12.16 Persons Deemed Owners. Prior to the presentment, in proper
---------------------
form, of a Note for registration of transfer, the Trustee and the Company and
any agent of either may treat the Person in whose name such Note is then
registered as the absolute owner thereof for all purposes, and shall not be
affected by any notice to the contrary.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the date first written above.
Plasma & Materials Technologies, Inc.,
as Company,
By /s/ John W. LaValle
-----------------------------------
Name: John W. LaValle
Title: Secretary
U.S. Trust Company of California, N.A.,
as Trustee
By /s/ Sandee Parks
-----------------------------------
Name: Sandee Parks
Title: Vice President
60
<PAGE>
STATE OF CALIFORNIA )
) ss:
COUNTY OF LOS ANGELES )
On October 4, 1996 before me, Bunnie Dees, Notary
-------------------------------------------
Public, personally appeared John W. LaValle
--------------------------------------------------
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his authorized capacity, and
that by his signature on the instrument the person, or the entity upon behalf of
which the person acted, executed the instrument.
WITNESS my hand and official seal.
/s/ Bunnie Dees
- -------------------------------------
STATE OF CALIFORNIA )
) ss:
COUNTY OF LOS ANGELES )
On October 4, 1996 before me, Bunnie Dees, Notary
-------------------------------------------
Public, personally appeared Sandee Parks
-----------------------------------------------------
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that she executed the same in her authorized capacity, and
that by her signature on the instrument the person, or the entity upon behalf of
which the person acted, executed the instrument.
WITNESS my hand and official seal.
/s/ Bunnie Dees
- -------------------------------------
61
<PAGE>
EXHIBIT A-1
[FORM OF FACE OF NOTE]
[Global Notes Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW
YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[Restricted Notes Legend)
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE THIRD ANNIVERSARY (OR
SUCH SHORTER PERIOD AS MAY THEN BE APPLICABLE UNDER THE SECURITIES ACT REGARDING
THE HOLDING PERIOD FOR NOTES UNDER RULE 144(k) OF THE SECURITIES ACT OR ANY
SUCCESSOR RULE) OF THE ISSUANCE HEREOF (OR ANY PREDECESSOR SECURITY HERETO) OR
(Y) BY ANY HOLDER THAT WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE
THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN (1)
TO THE COMPANY, (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO
RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
<PAGE>
2
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS INDICATED BY THE BOX CHECKED
BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE SIDE OF THIS
SECURITY) AND A CERTIFICATE WHICH MAY BE OBTAINED FROM THE COMPANY OR THE
TRUSTEE IS DELIVERED BY THE TRANSFEREE TO THE COMPANY AND THE TRUSTEE, (3) IN AN
OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT
(AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF
TRANSFER ON THE REVERSE OF THIS SECURITY), AND, IF SUCH TRANSFER IS BEING
EFFECTED BY CERTAIN TRANSFERORS SPECIFIED IN THE INDENTURE (AS DEFINED BELOW)
PRIOR TO THE EXPIRATION OF THE "40 DAY RESTRICTED PERIOD" (WITHIN THE MEANING OF
RULE 903(c)(3) OF REGULATION S UNDER THE SECURITIES ACT), A CERTIFICATE WHICH
MAY BE OBTAINED FROM THE COMPANY OR THE TRUSTEE IS DELIVERED BY THE TRANSFEREE
TO THE COMPANY AND THE TRUSTEE, (4) TO AN INSTITUTION THAT IS AN "ACCREDITED
INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT
(AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF
TRANSFER ON THE REVERSE OF THIS SECURITY) THAT IS ACQUIRING THIS SECURITY FOR
INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION, AND A CERTIFICATE IN THE FORM
ATTACHED TO THIS SECURITY IS DELIVERED BY THE TRANSFEREE TO THE COMPANY AND THE
TRUSTEE (PROVIDED THAT CERTAIN HOLDERS SPECIFIED IN THE INDENTURE MAY NOT
TRANSFER THIS SECURITY PURSUANT TO THIS CLAUSE (4) PRIOR TO THE EXPIRATION OF
THE "40 DAY RESTRICTED PERIOD" (WITHIN THE MEANING OF RULE 903(c)(3) OF
REGULATION S UNDER THE SECURITIES ACT), (5) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER
THE SECURITIES ACT, AND A CERTIFICATE WHICH MAY BE OBTAINED FROM THE COMPANY OR
THE TRUSTEE IS DELIVERED BY THE TRANSFEREE TO THE COMPANY AND THE TRUSTEE, OR
(6) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT,
AND A CERTIFICATE WHICH MAY BE OBTAINED FROM THE COMPANY OR THE TRUSTEE IS
DELIVERED BY THE TRANSFEREE TO THE COMPANY AND THE TRUSTEE IN EACH CASE IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR OTHER JURISDICTION. AN INSTITUTIONAL ACCREDITED INVESTOR HOLDING THIS
SECURITY AGREES THAT IT WILL FURNISH TO THE COMPANY AND THE TRUSTEE SUCH
CERTIFICATES AND OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE TO CONFIRM
THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES WITH THE FOREGOING
RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, REPRESENTS AND
AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A OR (2) AN INSTITUTION THAT IS AN
"ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER
<PAGE>
3
THE SECURITIES ACT AND THAT IT IS HOLDING THIS SECURITY FOR INVESTMENT PURPOSES
AND NOT FOR DISTRIBUTION OR (3) A NON-U.S. PERSON OUTSIDE THE UNITED STATES
WITHIN THE MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH
(o)(2) OF RULE 902 UNDER) REGULATION S UNDER THE SECURITIES ACT."
<PAGE>
4
No. __________
Cusip No.
144A-72753MAA7
Reg S-U72608AA7
PLASMA & MATERIALS TECHNOLOGIES, INC.
7 1/8% CONVERTIBLE SUBORDINATED NOTE
DUE 2001
Plasma & Materials Technologies, Inc., a California corporation (the
"Company") promises to pay to or registered
------------------------------
assigns, the principal sum [indicated on Schedule A hereof] /1/ [of
Dollars] /2/ on October 15, 2001, and to pay interest thereon
- ---------------------
beginning October 7, 1996 at the rate of 7 1/8% per annum.
Interest Payment Dates: April 15 and October 15, commencing
April 15, 1997
Record Dates: April 1 and October 1
Reference is hereby made to the further provisions of this Convertible
Note set forth on the reverse hereof,
- ------------------
/1/ Applicable to Global Securities only.
/2/ Applicable to certificated Securities only.
<PAGE>
5
which further provisions shall for all purposes have the same effect as if set
forth at this place.
IN WITNESS WHEREOF, Plasma & Materials Technologies, Inc. has caused this
Convertible Note to be signed manually or by facsimile by its duly authorized
officers and a facsimile of its corporate seal to be affixed hereto or imprinted
hereon.
Dated: October 7, 1996
PLASMA & MATERIALS TECHNOLOGIES, INC.
By ______________________________
By ______________________________
[Seal]
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
This is one of the 7 1/8%
Convertible Subordinated Notes
due 2001 described in the
within-mentioned Indenture.
U.S. Trust Company of California, N.A.,
as Trustee,
By ________________________________
Authorized Officer
<PAGE>
6
PLASMA & MATERIALS TECHNOLOGIES, INC.
7 1/8% Convertible Subordinated Note Due 2001
1. Interest. PLASMA & MATERIALS TECHNOLOGIES, INC., a California
--------
corporation (the "Company"), is the issuer of this 7 1/8% Convertible
Subordinated Note due 2001 (the "Convertible Note"). The Company promises to pay
interest on the Convertible Notes in cash semiannually on each April 15 and
October 15, commencing on April 15, 1997, to holders of record on the
immediately preceding April 1 and October 1, respectively.
Interest on the Convertible Notes will accrue from the most recent
date to which interest has been paid, or if no interest has been paid from
October 7, 1996. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months. To the extent lawful, the Company shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest or Liquidated Damages, if
any (without regard to any applicable grace period) at the rate borne by the
Convertible Notes, compounded annually.
2. Method of Payment. The Company will pay interest and Liquidated
-----------------
Damages, if any, on the Convertible Notes (except defaulted interest) to the
persons who are registered holders of the Convertible Notes at the close of
business on the Record Date for the next Interest Payment Date even though
Convertible Notes are cancelled after the Record Date and on or before the
Interest Payment Date. The Noteholder hereof must surrender Convertible Notes
to a Paying Agent to collect principal payments. The Company will pay principal
and interest and Liquidated Damages, if any, in money of the United States that
at the time of payment is legal tender for payment of public and private debts.
However, the Company may pay principal and interest and Liquidated Damages, if
any, by check payable in such money. It may mail an interest check to a
holder's registered address.
3. Paying Agent and Registrar. The Trustee will act as Paying
--------------------------
Agent, Registrar and Conversion Agent. The Company may change any Paying Agent,
Registrar, co-registrar or Conversion Agent without prior notice. The Company
or any of its Affiliates may act in any such capacity.
4. Indenture. The Company issued the Convertible Notes under an
---------
indenture, dated as of October 7, 1996 (the "Indenture"), between the Company
and U.S. Trust Company of California, N.A., as Trustee. The terms of the
Convertible Notes include those stated in the Indenture and those made part of
the Indenture by the Trust Indenture Act of 1939 (15 U.S. Code (S)(S) 77aaa-
77bbbb) as in effect on the date of the Indenture. The Convertible Notes are
subject to, and qualified by, all such terms, certain of which are summarized
hereon, and Noteholders are referred to the Indenture and such Act for a
<PAGE>
7
statement of such terms. The Convertible Notes are general unsecured obligations
of the Company limited to (except as otherwise provided in the Indenture) an
aggregate principal amount of $75,000,000 (plus up to $11,250,000 aggregate
principal amount of Convertible Notes that may be sold by the Company pursuant
to the overallotment option granted pursuant to the Purchase Agreement), and are
subordinated in right of payment to all existing and future Senior Debt of the
Company as provided in the Indenture. The Indenture does not limit the ability
of the Company or any of its Subsidiaries to incur indebtedness or to grant
security interests or liens in respect of their assets. Any holder of this
Convertible Note shall be deemed to have agreed to and be bound by all the terms
and conditions contained in the Indenture applicable to a holder of a
Convertible Note.
5. Redemption.
----------
(a) Optional Redemption.
-------------------
The Convertible Notes are not subject to redemption at the Company's
option prior to October 15, 1999. On such date and thereafter, the Convertible
Notes will be subject to redemption at the option of the Company, in whole or in
part (in any integral multiple of $1,000), upon not less than 15 nor more than
60 days' prior notice by mail at the following redemption prices (expressed as
percentages of the principal amount set forth below), in each case together with
accrued and unpaid interest and Liquidated Damages, if any, up to but not
including the redemption date (subject to the right of holders of record on the
relevant Record Date to receive interest due on an Interest Payment Date). If
redeemed during the 12-month period beginning October 15 of the years indicated
below, such redemption price shall be as indicated:
<TABLE>
<CAPTION>
Redemption
Year Price
---- -----------
<S> <C>
1999........................ 102.85%
2000........................ 101.425%
</TABLE>
On or after the redemption date, interest will cease to accrue on the
Convertible Notes, or portion thereof, called for redemption.
(b) Special Mandatory Redemption.
----------------------------
If the Acquisition is not consummated in all material respects on or
before the Special Redemption Notice Date, the Company will be required to
redeem the Convertible Notes, in whole and not in part, on January 16, 1997 at a
redemption price equal to 102% of the principal amount of the Convertible Notes,
plus accrued and unpaid interest up to but not including the redemption date.
On and after the Special Redemption Date, interest will cease to accrue on the
Convertible Notes, if the Acquisition is not consummated on or prior to the
Special Redemption Notice Date. The Convertible Notes are also subject to
special mandatory redemption, in whole and not in part, at any time prior to the
Special
<PAGE>
8
Redemption Date, if it appears, in the sole judgment of the Company, that the
Acquisition cannot be consummated in all material respects on or prior to the
Special Redemption Notice Date, at a redemption price equal to 101% of the
principal amount thereof if notice is given prior to November 15, 1996 and at a
redemption price equal to 102% of the principal amount thereof if notice is
given on or after November 15, 1996, in each instance plus accrued and unpaid
interest to the date of redemption.
6. Notice of Redemption. Notice of redemption will be mailed at
--------------------
least 15 days but not more than 60 days before the redemption date (other than a
Special Redemption Date) to each holder of the Convertible Notes to be redeemed
at his address of record. The Convertible Notes in denominations larger than
$1,000 may be redeemed in part but only in integral multiples of $1,000. In the
event of a redemption of less than all of the Convertible Notes, the Convertible
Notes will be chosen for redemption by the Trustee in accordance with the
Indenture. In the event of a Special Redemption, the Company shall mail a
notice of redemption to each holder of the Convertible Notes at such holder's
address of record at least ten Business Days before a redemption date. Unless
the Company defaults in making such redemption payment, or the Paying Agent is
prohibited from making such payment pursuant to the Indenture, interest and
Liquidated Damages cease to accrue on the Convertible Notes or portions of them
called for redemption on and after the redemption date.
If this Convertible Note is redeemed subsequent to a Record Date with
respect to any Interest Payment Date specified above and on or prior to such
Interest Payment Date, then any accrued interest or Liquidated Damages, if any,
will be paid to the person in whose name this Convertible Note is registered at
the, close of business on such Record Date.
7. Mandatory Redemption. Other than the Special Redemption, the
--------------------
Company will not be required to make mandatory redemption payments with respect
to the Convertible Notes. There are no sinking fund payments with respect to
the Convertible Notes.
8. Repurchase at Option of Holder. If there is a Designated Event,
------------------------------
the Company shall be required to offer to purchase on the Designated Event
Payment Date all outstanding Convertible Notes at a purchase price equal to 101%
of the principal amount thereof on the date of purchase, plus accrued and unpaid
interest and Liquidated Damages, if any, to the Designated Event Payment Date.
Holders of Convertible Notes that are subject to an offer to purchase will
receive a Designated Event Offer from the Company prior to any related
Designated Event Payment Date and may elect to have such Convertible Notes or
portions thereof in authorized denominations purchased by completing the form
entitled "Option of Noteholder To Elect Purchase" appearing below. Noteholders
have the right to withdraw their election by delivering a written notice of
withdrawal or the Paying Agent in accordance with the terms of the Indenture.
9. Subordination. The payment of the principal of, premium, if any,
-------------
and Liquidated Damages, if any, and interest on or any other amounts due on the
Convertible
<PAGE>
9
Notes is subordinated in right of payment to all existing and future Senior Debt
of the Company, as described in the Indenture. Each Noteholder, by accepting a
Convertible Note, agrees to such subordination and authorizes and directs the
Trustee on its behalf to take such action as may be necessary or appropriate to
effectuate the subordination so provided and appoints the Trustee as its
attorney-in-fact for such purpose.
10. Conversion. The holder of any Convertible Note has the right,
----------
exercisable at any time after the later to occur of (i) 90 days following the
Issuance Date or (ii) the consummation of the Acquisition, and prior to the
close of business (New York time) on the Business Day immediately preceding the
maturity date of the Convertible Notes, to convert the principal amount thereof
(or any portion thereof that is an integral multiple of $1,000) into shares of
Common Stock at the initial Conversion Price of $15.635 per share, subject to
adjustment under certain circumstances, except that if a Convertible Note is
called for redemption, the conversion right will terminate at the close of
business on the Business Day immediately preceding the date fixed for
redemption.
To convert a Convertible Note, a holder must (1) complete and sign a
notice of election to convert substantially in the form set forth below, (2)
surrender the Convertible Note to a Conversion Agent, (3) furnish appropriate
endorsements or transfer documents if required by the Registrar or Conversion
Agent and (4) pay any transfer or similar tax, if required. Upon conversion, no
adjustment or payment will be made for accrued and unpaid interest on a
converted Convertible Note or for dividends or distributions on shares of Common
Stock issuable upon conversion of a Convertible Note, but if any Noteholder
surrenders a Convertible Note for conversion after the close of business on the
Record Date for the payment of an installment of interest and Liquidated
Damages, if any, prior to the opening of business on the next succeeding
Interest Payment Date, then, notwithstanding such conversion, the interest and
Liquidated Damages, if any, payable on such Interest Payment Date will be paid
to the registered holder of such Convertible Note on such Record Date. In such
event, such Convertible Note, when surrendered for conversion after October 15,
1999, must be accompanied by payment in funds acceptable to the Company of an
amount equal to the interest payable and Liquidated Damages, if any, on such
Interest Payment Date on the portion so converted and, when surrendered for
conversion on or prior to October 15, 1999, need not be accompanied by such
payment. The number of shares of Common Stock issuable upon conversion of a
Convertible Note is determined by dividing the principal amount of the
Convertible Note converted by the Conversion Price in effect on the Conversion
Date. No fractional shares will be issued upon conversion but a cash adjustment
will be made for any fractional interest.
A Convertible Note in respect of which a holder has delivered an
"Option of Noteholder to Elect Purchase" form appearing below exercising the
option of such holder to require the Company to purchase such Convertible Note
may be converted only if the notice of exercise is withdrawn as provided above
and in accordance with the terms of the Indenture. The above description of
conversion of the Convertible Notes is qualified by reference to, and is subject
in its entirety by, the more complete description thereof contained in the
Indenture.
<PAGE>
10
11. Registration Rights. The holder of this Convertible Note is
-------------------
entitled to the benefits of a Registration Agreement, dated October 7, 1996,
among the Company and the Initial Purchasers (the "Registration Agreement")
which agreement is attached to the Indenture as an Exhibit thereto. Such
benefits include the right of the holder to receive Liquidated Damages in the
event of the failure on the part of the Company to comply with certain covenants
pertaining to registration and availability of a prospectus for resale, as
provided in the Registration Agreement.
12. Denominations, Transfer, Exchange. The Convertible Notes are in
---------------------------------
registered form, without coupons, in denominations of $1,000 and integral
multiples of $1,000. The transfer of Convertible Notes may be registered, and
Convertible Notes may be exchanged, as provided in the Indenture. The Registrar
may require a Noteholder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not exchange or register
the transfer of any Convertible Note or portion of a Convertible Note selected
for redemption (except the unredeemed portion of any Convertible Note being
redeemed in part). Also, it need not exchange or, register the transfer of any
Convertible Note for a period of 30 days before a selection of Convertible Notes
to be redeemed.
13. Persons Deemed Owners. Except as provided in paragraph 2 of this
---------------------
Convertible Note, the registered Noteholder of a Convertible Note shall be
treated as its owner for all purposes.
14. Unclaimed Money. If money for the payment of principal,
---------------
Liquidated Damages, if any, or interest remains unclaimed for two years, the
Trustee and the Paying Agent shall pay the money back to the Company at its
request. After that, Noteholders of Convertible Notes entitled to the money
must look to the Company for payment unless an abandoned property law designates
another person and all liability of the Trustee and such Paying Agent with
respect to such money shall cease.
15. Defaults and Remedies. The Convertible Notes shall have the
---------------------
Events of Default so set forth in Section 8.1 of the Indenture. Subject to
certain limitations in the Indenture, if an Event of Default occurs and is
continuing, the Trustee by notice to the Company or the Noteholders of at least
25% in aggregate principal amount of the then outstanding Convertible Notes by
notice to the Company and the Trustee may declare all the Convertible Notes to
be due and payable immediately, except that in the case of an Event of Default
arising from, certain events of bankruptcy or insolvency, all unpaid principal,
Liquidated Damages, if any, and interest accrued on the Convertible Notes shall
become due and payable immediately without further action or notice. Upon
acceleration as described in either of the preceding sentences, the
subordination provisions of the Indenture preclude any payment being made to
Noteholders for at least 5 days except as otherwise provided in the Indenture.
The Noteholders of a majority in principal amount of the Convertible
Notes then outstanding by written notice to the Trustee may rescind an
acceleration and its
<PAGE>
11
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of the
acceleration. Noteholders may not enforce the Indenture or the Convertible
Notes except as provided in the Indenture. Subject to certain limitations,
Noteholders of a majority in principal amount of the then outstanding
Convertible Notes issued under the Indenture may direct the Trustee in its
exercise of any trust or power. The Company must furnish compliance
certificates to the Trustee annually. The above description of Events of
Default and remedies is qualified by reference to, and subject in its entirety
by, the more complete description thereof contained in the Indenture.
16. Amendments, Supplements and Waivers. Subject to certain
-----------------------------------
exceptions, the Indenture or the Convertible Notes may be amended or
supplemented with the consent of the Noteholders of at least a majority in
principal amount of the then outstanding Convertible Notes (including consents
obtained in connection with a tender offer or exchange offer for Convertible
Notes), and any existing default may be waived with the consent of the
Noteholders of a majority in principal amount of the then outstanding
Convertible Notes including consents obtained in connection with a tender offer
or exchange offer for Convertible Notes. Without the consent of any Noteholder,
the Indenture or the Convertible Notes may be amended, among other things, to
cure any ambiguity, defect or inconsistency, to provide for assumption of the
Company's obligations to Noteholders, to make any change that does not adversely
affect in any material respect the rights of any Noteholder, to qualify the
Indenture under the TIA, and to comply with the requirements of the SEC in order
to maintain the qualification of the Indenture under the TIA.
17. Trustee Dealings with the Company. The Trustee, in its
---------------------------------
individual or any other capacity, may become the owner or pledgee of Convertible
Notes and may otherwise deal with the Company or an Affiliate with the same
rights it would have if it were not Trustee, subject to certain limitations
provided for in the Indenture and in the TIA. Any Agent may do the same with
like rights.
18. No Recourse Against Others. A director, officer, employee or
--------------------------
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Convertible Notes or the Indenture or for
any claim based on, in respect of or by reason of such obligations or their
creation. Each Noteholder, by accepting a Convertible Note, waives and releases
all such liability. The waiver and release are part of the consideration for
the issue of the Convertible Notes.
19. Governing Law. THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL
-------------
GOVERN THE INDENTURE AND THE CONVERTIBLE NOTES WITHOUT REGARD TO CONFLICT OF LAW
PROVISIONS THEREOF.
20. Authentication. The Convertible Notes shall not be valid until
--------------
authenticated by the manual signature of an authorized officer of the Trustee or
an authenticating agent.
<PAGE>
12
21. Abbreviations. Customary abbreviations may be used in the name
-------------
of a Noteholder or an assignee, such as: TEN COM (for tenants in common, TENENT
(for tenants by the entireties), JT TEN (for joint tenants with right of
survivorship and not as tenants in common), CUST (for Custodian), and U/G/M/A
(for Uniform Gifts to Minors Act).
22. Definitions. Capitalized terms not defined in this Convertible
-----------
Note have the meaning given to them in the Indenture.
The Company will furnish to any Noteholder of the Convertible Notes
upon written request and without charge a copy of the Indenture and the
Registration Agreement. Request may be made to:
Plasma & Materials Technologies, Inc.
9255 Deering Avenue
Chatsworth, California 91311
Attention of: Investor Relations Department
<PAGE>
13
ASSIGNMENT FORM
To assign this Convertible Note, fill in the form below:
(I) or (we) assign and transfer this Convertible Note to
- -------------------------------------------------------------------------------
(Insert assignee's social security or tax I.D. no.)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint agent to transfer this
-------------------------------
Convertible Note on the books of the Company. The agent may substitute another
to act for him.
Your Signature:
------------------------------------------------------------
(Sign exactly as your name appears on the other side of
this Convertible Note)
Date:
------------------
Signature Guarantee: *
----------------------------------------------------
In connection with any transfer of any of the Convertible Notes evidenced by
this certificate occurring prior to the date that is three years (or such
shorter period as may then be applicable under the Securities Act) after the
later of the date of original issuance of such Convertible Notes and the last
date, if any, on which such Convertible Notes were owned by the Company or any
Affiliate of the Company, the undersigned confirms that such Convertible Notes
are being transferred:
- -------------------
*Signature must be guaranteed by a commercial bank, trust company or member firm
of the New York Stock Exchange.
<PAGE>
14
CHECK ONE BOX BELOW
(1) [_] to the Company; or
(2) [_] pursuant to and in compliance with Rule 144A under the Securities
Act of 1933; or
(3) [_] pursuant to and in compliance with Regulation S under the
Securities Act of 1933; or
(4) [_] to an institutional "accredited investor" (as defined in Rule
501(a)(1),(2),(3) or (7) under the Securities Act of 1933 that has
furnished to the Trustee a signed letter containing certain
representations and agreements (the form of which letter can be
obtained from the Trustee); or
(5) [_] pursuant to another available exemption from the registration
requirements of the Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Convertible Notes evidenced by this certificate in the name of any person
other than the registered holder thereof; provided, however, that if box (3),
-------- -------
(4) or (5) is checked, the Trustee may require, prior to registering any such
transfer of the Convertible Notes such legal opinions, certifications and other
information as the Company has reasonably requested to confirm that such
transfer is being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act of 1933, such as
the exemption provided by Rule 144 under such Act.
----------------------------------------
Signature
Signature Guarantee:*
- ---------------------------- ----------------------------------------
Signature must be guaranteed Signature
- -------------------------------------------------------------------------------
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Convertible Note for its own account with respect to which it exercises sole
investment discretion that it
- ------------------------
* Signature must be guaranteed by a commercial bank, trust company or
member firm of the New York Stock Exchange.
<PAGE>
15
and any such account is a "qualified institutional buyer" within the meaning of
Rule 144A under the Securities Act of 1933, and is aware that the sale to it is
being made in reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as the undersigned has requested pursuant to
Rule 144A or has determined not to request such information and that it is aware
that the transferor is relying upon the undersigned's foregoing representations
in order to claim the exemption from registration provided by Rule 144A.
Dated: ________________ _______________________________________________
NOTICE: To be executed by an executive officer
<PAGE>
16
[TO BE ATTACHED TO GLOBAL NOTES]
SCHEDULE A
The initial principal amount at maturity of this Global Note shall be
$_______. The following increases or decreases in the principal amount of this
Global Note have been made:
<TABLE>
<CAPTION>
======================================================================================================================
Amount of increase
in Principal Amount
of this Global Note Amount of decrease Principal Amount of Signature of
including upon in Principal Amount this Global Note authorized officer of
exercise of the over- of this Global Note following such Trustee or Notes
Date Made allotment option decrease or increase Custodian
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
======================================================================================================================
</TABLE>
<PAGE>
17
OPTION OF NOTEHOLDER TO ELECT PURCHASE
--------------------------------------
If you want to elect to have this Convertible Note or a portion
thereof repurchased by the Company pursuant to Section 3.8 or 4.7 of the
Indenture, check the box: [ ]
If the purchase is in part, indicate the portion (in denominations of
$1,000 or any integral multiple thereof) to be purchased:
Your Signature:
-----------------------------------------------------------
(Sign exactly as your name appears on the other side of this
Convertible Note)
Date:
--------------------
Signature Guarantee: *
-----------------------
- -------------------------
*Signature must be guaranteed by a commercial bank, trust company or member firm
of the New York Stock Exchange.
<PAGE>
18
ELECTION TO CONVERT
To Plasma & Materials Technologies, Inc.:
The undersigned owner of this Convertible Note hereby irrevocably
exercises the option to convert this Convertible Note, or the portion below
designated, into Common Stock of PLASMA & MATERIALS TECHNOLOGIES, INC. in
accordance with the terms of the Indenture referred to in this Convertible Note,
and directs that the shares issuable and deliverable upon conversion, together
with any check in payment for fractional shares, be issued in the name of and
delivered to the undersigned, unless a different name has been indicated in the
assignment below. If shares are to be issued in the name of a person other than
the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto.
Any Noteholder, upon the exercise of its conversion rights in
accordance with the terms of the Indenture and the Convertible Note, agrees to
be bound by the terms of the Registration Agreement relating to the Common Stock
issuable upon conversion of the Convertible Note.
Date:
in whole ___ Portions of Convertible Note to be converted
($1,000 or integral multiples thereof):
$
------------------------------------------
Signature (for conversion only)
------------------------------------------
Please Print or Typewrite Name and
Address, Including Zip Code, and Social
Note or Other Identifying Number
------------------------------------------
Name
------------------------------------------
Address
------------------------------------------
Social Security Number
Signature Guarantee: *
------------------------------------------------
__________________
*Signature must be guaranteed by a commercial bank, trust company or member firm
of the New York Stock Exchange.
<PAGE>
19
EXHIBIT B-1
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM RESTRICTED GLOBAL NOTE TO UNRESTRICTED GLOBAL NOTE
(Pursuant to Section 2.6(a)(i) of the Indenture)
U.S. Trust Company of California, N.A.
c/o U.S. Trust Company of New York, N.A.
770 Broadway, 13th Floor
New York, New York 10003
Attention: Corporate Trust Division
Re: 7 1/8% Convertible Subordinated Notes due 2001 of Plasma & Materials
Technologies, Inc. (the "Notes")
Reference is hereby made to the Indenture, dated as of October 7, 1996 (the
"Indenture"), between Plasma & Materials Technologies, Inc., as issuer (the
"Company") and U.S. Trust Company of California, N.A., as trustee. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to the Notes which are evidenced by one or more
Restricted Global Notes (CUSIP No. 72753M AA7) and held with the Depositary in
the name of Cede & Co. (the "Transferor"). The Transferor has requested a
transfer of such beneficial interest in the Notes to a Person who will take
delivery thereof in the form of an equal principal amount of Notes evidenced by
one or more Unrestricted Global Notes (SINS No. USU 72608 AA71), which amount,
immediately after such transfer, is to be held with the Depositary through
Euroclear or Cedel or both (Common Code ____________________).
In connection with such request and in respect of such Notes, the
Transferor hereby certifies that such transfer has been effected in compliance
with the transfer restrictions applicable to the Global Notes and pursuant to
and in accordance with Rule 903 or Rule 904 under the United States Securities
Act of 1933, as amended (the "Securities Act"), and accordingly the Transferor
hereby further certifies that:
(1) The offer of the Notes was not made to a person in the United States;
(2) either:
(a) at the time the buy order was originated, the transferee was
outside the United States or the Transferor and any person acting
on its behalf reasonably believed and believes that the
transferee was outside the United States; or
<PAGE>
20
(b) the transaction was executed in, on or through the facilities of a
designated offshore securities market and neither the Transferor nor any person
acting on its behalf knows that the transaction was prearranged with a buyer in
the United States;
(3) no directed selling efforts have been made in contravention of the
requirements of Rule 904(b) of Regulation S;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(5) upon completion of the transaction, the beneficial interest being
transferred as described above is to be held with the Depositary
through Euroclear or Cedel or both (Common Code _________).
Upon giving effect to this request to exchange a beneficial interest in a
Restricted Global Note for a beneficial interest in an Unrestricted Global Note,
the resulting beneficial interest shall, be subject to the restrictions on
transfer applicable to Unrestricted Global Notes pursuant to the Indenture and
the Securities Act.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and Salomon Brothers Inc and Unterberg
Harris, c/o Salomon Brothers, Seven World Trade Center, New York, New York, the
initial purchasers of such Notes being transferred., Terms used in this
certificate and not otherwise defined in the Indenture have the meanings set
forth in Regulation S under the Securities Act.
_______________________________________________
[Insert Name of Transferor]
By:_____________________________________________
Name:
Title:
Dated: _______________, ______
cc: Plasma & Materials Technologies, Inc.
Salomon Brothers Inc
Unterberg Harris
<PAGE>
21
EXHIBIT B-2
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM UNRESTRICTED GLOBAL NOTE TO RESTRICTED GLOBAL NOTE
(Pursuant to Section 2.6(a)(ii) of the Indenture)
U.S. Trust Company of California, N.A.
c/o U.S. Trust Company of New York, N.A.
770 Broadway, 13th Floor
New York, New York 10003
Attention: Corporate Trust Division
Re: 7 1/8% Convertible Subordinated Notes due 2001 of Plasma & Materials
Technologies, Inc. (the "Notes")
Reference is hereby made to the Indenture, dated as of October 7, 1996 (the
"Indenture"), between Plasma & Materials Technologies, Inc., as issuer (the
"Company") and U.S. Trust Company of California, N.A., as trustee. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to the Notes which are evidenced by one or more
Unrestricted Global Notes (SINS No. USU 72608AA71) and held with the Depositary
through [Euroclear] [Cedel] (Common Code ___________________________) in the
name of _____________________________ (the "Transferor"). The Transferor has
requested a transfer of such beneficial interest in the Notes to a Person who
will take delivery thereof in the form of an equal principal amount of Notes
evidenced by one or more Restricted Global Notes (CUSIP No. 72753M AA7), to be
held with the Depositary.
In connection with such request and in respect of such Notes, the
Transferor hereby certifies that:
[CHECK ONE]
[_] such transfer is being effected pursuant to and in accordance with
Rule 144A under the United States Securities Act of 1933, as amended
(the "Securities Act"), and, accordingly, the Transferor hereby
further certifies that the Notes are being transferred to a Person
that the Transferor reasonably believes is purchasing the Notes for
its own account, or for one or more accounts with respect to which
such Person exercises sole investment discretion, and such Person and
each such account is a "qualified institutional buyer" within the
meaning of Rule 144A in a transaction meeting the requirements of Rule
144A;
<PAGE>
22
or
[_] such transfer is being effected pursuant to and in accordance with
Rule 144 under the Securities Act;
or
[_] such transfer is being effected pursuant to an effective registration
statement under the Securities Act;
or
[_] such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A
or Rule 144, and the Transferor hereby further certifies that the
Notes are being transferred in compliance with the transfer
restrictions applicable to the Global Notes and in accordance with the
requirements of the exemption claimed, which certification is
supported by an Opinion of Counsel, provided by the Transferor or the
transferee (a copy of which the Transferor has attached to this
certification) in form reasonably acceptable to the Company and to the
Registrar, to the effect that such transfer is in compliance with the
Securities Act;
and such Notes are being transferred in compliance with any applicable blue sky
securities laws of any state of the United States.
Upon giving effect to this request to exchange a beneficial interest in
Unrestricted Global Notes for a beneficial interest in Restricted Global Notes,
the resulting beneficial interest shall be subject to the restrictions on
transfer applicable to Restricted Global Notes pursuant to the Indenture and the
Securities Act.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and Salomon Brothers Inc., c/o Salomon
Brothers, Seven World Trade Center, New York, New York, the initial purchasers
of such Notes being transferred.
_______________________________________________
[Insert Name of Transferor]
By:_____________________________________________
Name:
Title:
Dated: _______________, ______
<PAGE>
23
cc: Plasma & Materials Technologies, Inc.
Salomon Brothers Inc
Unterberg Harris
<PAGE>
24
EXHIBIT B-3
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION
OF TRANSFER OF CERTIFICATED NOTES
(Pursuant to Section 2.6(b) of the Indenture)
U.S. Trust Company of California, N.A.
c/o U.S. Trust Company of New York, N.A.
770 Broadway, 13th Floor
New York, New York 10003
Attention: Corporate Trust Division
Re: 7 1/8% Convertible Subordinated Notes due 2001 of Plasma & Materials
Technologies, Inc. (the "Notes")
Reference is hereby made to the Indenture, dated as of October 7, 1996 (the
"Indenture"), between Plasma & Materials Technologies, Inc., as issuer (the
"Company") and U.S. Trust Company of California, N.A., as trustee. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
In connection with such request and in respect of the Notes surrendered to
the Trustee herewith for exchange (the "Surrendered Notes"), the holder of such
Surrendered Notes hereby certifies that:
[CHECK ONE]
[_] the Surrendered Notes are being transferred pursuant to and in
accordance with Rule 144A under the United States Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, the
Transferor hereby further certifies that the Surrendered Notes are
being transferred to a Person that the Transferor reasonably believes
is purchasing the Surrendered Notes for its own account, or for one or
more accounts with respect to which such Person exercises sole
investment discretion, and such Person and each such account is a
"qualified institutional buyer" within the meaning of Rule 144A, in
each case in a transaction meeting the requirements of Rule 144A;
or
[_] the Surrendered Notes are being transferred in a transaction permitted
by Rule 144 under the Securities Act;
or
<PAGE>
25
[_] the Surrendered Notes are being transferred pursuant to an effective
registration statement under the Securities Act;
or
[_] such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A
or Rule 144, and the Transferor hereby further certifies that the
Notes are being transferred in compliance with the transfer
restrictions applicable to the Global Notes and in accordance with the
requirements of the exemption claimed, which certification is
supported by an Opinion of Counsel, provided by the transferor or the
transferee (a copy of which the Transferor has attached to this
certification) in form reasonably acceptable to the Company and to the
Registrar, to the effect that such transfer is in compliance with the
Securities Act;
and the Surrendered Notes are being transferred in compliance with any
applicable blue sky securities laws of any state of the United States.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and Salomon Brothers Inc and Unterberg
Harris, c/o Salomon Brothers, Seven World Trade Center, New York, New York, the
initial purchasers of such Notes being transferred. Terms used in this
certificate and not otherwise defined in the Indenture have the meanings set
forth in Regulation S under the Securities Act.
_______________________________________________
[Insert Name of Transferor]
By:_____________________________________________
Name:
Title:
Dated: _______________, ______
cc: Plasma & Materials Technologies, Inc.
Salomon Brothers Inc
Unterberg Harris
<PAGE>
26
EXHIBIT B-4
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM RESTRICTED GLOBAL NOTE OR UNRESTRICTED PERMANENT GLOBAL
NOTE TO CERTIFICATED CONVERTIBLE NOTE
(Pursuant to Section 2.6(c) of the Indenture)
U.S. Trust Company of California, N.A.
c/o U.S. Trust Company of New York, N.A.
770 Broadway, 13th Floor
New York, New York 10003
Attention: Corporate Trust Division
Re: 7 1/8% Convertible Subordinated Notes due 2001 of Plasma & Materials
Technologies, Inc. (the "Notes")
Reference is hereby made to the Indenture, dated as of October 7, 1996 (the
"Indenture"), between Plasma & Materials Technologies, Inc., as issuer (the
"Company") and U.S. Trust Company of California, N.A., as trustee. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
In connection with such request and in respect of the Notes surrendered to
the Trustee herewith for exchange (the "Surrendered Notes"), the holder of such
Surrendered Notes hereby certifies that:
[CHECK ONE]
[_] the Surrendered Notes are being transferred to the beneficial owner of
such Notes;
or
[_] the Surrendered Notes are being transferred pursuant to and in
accordance with Rule 144A under the United States Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, the
Transferor hereby further certifies that the Surrendered Notes are
being transferred to a person that the Transferor reasonably believes
is purchasing the Surrendered Notes for its own account, or for one or
more accounts with respect to which such person exercises sole
investment discretion, and such Person and each such account is a
"qualified institutional buyer" within the meaning of Rule 144A, in
each case in a transaction meeting the requirements of Rule 144A;
or
<PAGE>
27
[_] the Surrendered Notes are being transferred in a transaction permitted
by Rule 144 under the Securities Act;
or
[_] the Surrendered Notes are being transferred pursuant to an effective
registration statement under the Securities Act;
or
[_] such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A
or Rule 144, and the Transferor hereby further certifies that the
Notes are being transferred in compliance with the transfer
restrictions applicable to the Global Notes and in accordance with the
requirements of the exemption claimed, which certification is
supported by an Opinion of Counsel, provided by the transferor or the
transferee (a copy of which the Transferor has attached to this
certification) in form reasonably acceptable to the Company and to the
Registrar, to the effect that such transfer is in compliance with the
Securities Act;
and the Surrendered Notes are being transferred in compliance with any
applicable blue sky securities laws of any state of the United States.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and Salomon Brothers Inc and Unterberg
Harris, c/o Salomon Brothers, Seven World Trade Center, New York, New York, the
initial purchasers of such Notes being transferred. Terms used in this
certificate and not otherwise defined in the Indenture have the meanings set
forth in Regulation S under the Securities Act.
_______________________________________________
[Insert Name of Transferor]
By:_____________________________________________
Name:
Title:
Dated: _______________, ______
cc: Plasma & Materials Technologies, Inc.
Salomon Brothers Inc
Unterberg Harris
<PAGE>
Exhibit C to this Exhibit 4.1 is filed concurrently herewith as Exhibit 10.20.
<PAGE>
EXHIBIT 10.20
PLASMA & MATERIALS TECHNOLOGIES, INC.
7 1/8% Convertible Subordinated Notes Due 2001
REGISTRATION AGREEMENT
New York, New York
October 7, 1996
Salomon Brothers Inc
Unterberg Harris
c/o Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Ladies and Gentlemen:
Plasma & Materials Technologies, Inc., a California corporation (the
"Company"), proposes to issue and sell (such issuance and sale, the "Initial
Placement") to you (the "Initial Purchasers"), upon the terms set forth in a
purchase agreement of even date herewith (the "Purchase Agreement"), $75,000,000
principal amount (plus up to an additional $11,250,000 principal amount to cover
over-allotments, if any) of its 7 1/8% Convertible Subordinated Notes Due 2001
(the "Securities"). The Securities will be convertible into shares of Common
Stock, no par value per share (the "Common Stock"), of the Company at the
conversion price set forth in the Final Memorandum. As an inducement to you to
enter into the Purchase Agreement and in satisfaction of a condition to your
obligations thereunder, the Company agrees with you, (i) for your benefit and
(ii) for the benefit of the holders from time to time of the Securities or the
Common Stock issuable upon conversion of the Securities (including you) (each of
the foregoing, a "Holder" and together, the "Holders"), as follows:
1. Definitions. Capitalized terms used herein without definition
-----------
shall have the respective meanings set forth in the Purchase Agreement. As used
in this Agreement, the following capitalized terms shall have the following
meanings:
"Acquisition" means the transactions contemplated by the Share
-----------
Purchase Agreement dated as of July 17, 1996, as amended, entered into among the
Company, Electrotech Limited and Electrotech Equipments Limited (collectively,
"Electrotech"), and the shareholders of Electrotech, pursuant to which the
Company will acquire 100% of the outstanding capital stock of Electrotech.
1
<PAGE>
"Act" means the Securities Act of 1933, as amended, and the rules and
---
regulations of the Commission promulgated thereunder.
"Affiliate" of any specified person means any other person that,
---------
directly or indirectly, is in control of, is controlled by, or is under common
control with, such specified person. For purposes of this definition, control of
a person means the power, direct or indirect, to direct or cause the direction
of the management and policies of such person whether by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Business Day" means any day that is neither a Saturday or a Sunday
------------
nor a day on which banking institutions in The City of New York are authorized
or obligated by law or executive order to close.
"Closing Date" has the meaning set forth in the Purchase Agreement.
------------
"Commission" means the Securities and Exchange Commission.
----------
"Damages Accrual Period" has the meaning set forth in Section 2(c)
----------------------
hereof.
"Damages Payment Date" has the meaning set forth in Section 2(c)
--------------------
hereof.
"Event" has the meaning set forth in Section 2(c) hereof.
-----
"Event Date" has the meaning set forth in Section 2(c) hereof.
----------
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
and the rules and regulations of the Commission promulgated thereunder.
"Final Memorandum" has the meaning set forth in the Purchase
----------------
Agreement.
"Holder" has the meaning set forth in the preamble hereto.
------
"Indenture" means the Indenture relating to the Securities dated as of
---------
October 7, 1996, between the Company and U.S. Trust Company of California, N.A.,
as trustee, as the same may be amended from time to time in accordance with the
terms thereof.
"Initial Placement" has the meaning set forth in the preamble hereto.
-----------------
"Liquidated Damages" has the meaning set forth in Section 2(c) hereof.
------------------
"Majority Holders" means the Holders of a majority of the then
----------------
outstanding aggregate principal amount of Securities registered under a Shelf
Registration Statement; provided, that Holders of Common Stock issued upon
--------
conversion of Securities shall be deemed to be Holders of the aggregate
principal amount of Securities from which such Common Stock was converted.
2
<PAGE>
"Managing Underwriters" means the Underwriter or Underwriters that
---------------------
shall administer an Underwritten Offering.
"Notice Holder" has the meaning set forth in Section 2(b) hereof.
-------------
"Prospectus" means the prospectus included in any Shelf Registration
----------
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A under the Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Securities or Common Stock issuable upon
conversion thereof, covered by such Shelf Registration Statement, and all
amendments and supplements to such prospectus, including post-effective
amendments.
"Record Date" has the meaning set forth in Section 2(c) hereof.
-----------
"Record Holder" has the meaning set forth in Section 2(c) hereof.
-------------
"Registrable Securities" shall mean the Securities and shares of
----------------------
Common Stock issued upon conversion thereof, excluding any such securities that,
and any such securities the predecessors of which, were previously sold pursuant
to a registration statement of the Company filed under the Act or pursuant to
Rule 144 promulgated under the Act.
"Securities" has the meaning set forth in the preamble hereto.
----------
"Selling Confirmation" means, with respect to a Notice Holder and a
--------------------
Selling Notice given by such Notice Holder, a written notice given by the
Company to such Notice Holder instructing and notifying such Notice Holder that
the Shelf Registration Statement and Prospectus may be used during the
applicable Selling Period to effect the transactions described in such Selling
Notice, that the Company is then currently in compliance with Section 3(b) and
that the Company reaffirms the consent granted pursuant to Section 3(f).
"Selling Notice" has the meaning set forth in Section 2(b) hereof.
--------------
"Selling Period" means, with respect to a Notice Holder and a Selling
--------------
Notice given by such Notice Holder, a period of forty-five calendar days
commencing on the date such Notice Holder receives a Selling Confirmation in
respect of the transactions described in such Selling Notice; provided, that the
--------
Company may defer existing Selling Periods in accordance with Section 3(c)(2).
"Shelf Registration" means a registration effected pursuant to
------------------
Section 2 hereof.
"Shelf Registration Period" has the meaning set forth in Section 2(a)
-------------------------
hereof.
"Shelf Registration Statement" means a "shelf" registration statement
----------------------------
of the Company pursuant to the provisions of Section 2 hereof (including
additional registration statements filed pursuant to Section 3(d)) which covers
some or all of the Securities and the Common Stock issuable upon conversion
thereof, as applicable, on an appropriate form
3
<PAGE>
under Rule 415 promulgated under the Act, or any similar rule that may be
adopted by the Commission, and all amendments and supplements to such
registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"Trustee" means the trustee with respect to the Securities under the
-------
Indenture.
"Underwriter" means any underwriter of Securities or Common Stock
-----------
issuable upon conversion thereof in connection with an offering thereof under a
Shelf Registration Statement.
"Underwritten Offering" means an offering in which the Securities or
---------------------
Common Stock issuable upon conversion thereof are sold to an Underwriter or with
the assistance of an Underwriter for reoffering to the public.
2. Shelf Registration; Suspension of Use of Prospectus; Liquidated
---------------------------------------------------------------
Damages.
- -------
(a) The Company shall prepare and file with the Commission, as soon
as practicable and in any event within the later to occur of (i) sixty days
after the Closing Date or (ii) thirty days after the consummation of the
Acquisition, a Shelf Registration Statement under the Act registering the resale
from time to time by Holders thereof of all of the Registrable Securities. The
Shelf Registration Statement shall permit resales of Registrable Securities by
Holders in the manner or manners designated by them (including, without
limitation, one or more Underwritten Offerings) from time to time, which shall
be set forth in such Shelf Registration Statement. The Company shall cause the
Shelf Registration Statement to be declared effective under the Act within (x)
ninety days after the Closing Date or (y) if the Acquisition occurs sixty days
or more after the Closing Date, thirty days after such Shelf Registration
Statement is filed with the Commission. The Company shall keep the Shelf
Registration Statement continuously effective under the Act until the earlier of
(i) the third anniversary of the Closing Date, (ii) the date on which the
Securities or Common Stock issuable upon conversion thereof may be sold by non-
affiliates of the Company pursuant to paragraph (k) of Rule 144 (or any
successor provision) promulgated by the Commission and (iii) such date as of
which all the Securities or the Common Stock issuable upon conversion thereof
have been sold pursuant to the Shelf Registration Statement (the period ending
at such earlier date, the "Shelf Registration Period").
(b) Each Holder of Registrable Securities agrees that if such Holder
wishes to sell its Registrable Securities pursuant to the Shelf Registration
Statement and the Prospectus, it will do so only in accordance with this Section
2(b). Each Holder of Registrable Securities agrees to give written notice to the
Company at least three Business Days prior to any intended resale of Registrable
Securities under the Shelf Registration Statement, which notice shall specify
the date on which such Holder intends to begin such distribution and such
information with respect to such Holder and the intended distribution as may be
reasonably required to amend the Shelf Registration Statement or supplement the
Prospectus with respect to such intended distribution (each Holder providing the
notice described in this sentence and with respect to which the related Selling
Period is continuing
4
<PAGE>
or has been deferred, a "Notice Holder"; each such notice, a "Selling Notice").
As soon as practicable after the date a Selling Notice is received by the
Company, and in any event within two Business Days after such date, the Company
shall either:
(i) (A) provide a Selling Confirmation to such Notice Holder or (B)
file a supplement to the Prospectus or a post-effective amendment to the Shelf
Registration Statement as required by Section 3(b), cause any such amendment to
become effective and immediately provide a Selling Confirmation to such Notice
Holder; or
(ii) in the event of the happening of any event of the kind
described in Section 3(c)(2)(i), 3(c)(2)(ii), 3(c)(2)(iii) (y) or 3(c)(2)(iv)
hereof, the Company shall deliver to such Notice Holder the notice required by
Section 3(c)(2) and notify the Holder that the consent granted pursuant to
Section 3(f) is suspended until further notice.
Each such Notice Holder may sell all or any Registrable Securities
pursuant to the Shelf Registration Statement and the Prospectus only during the
Selling Period commencing with the earlier of (x) the date on which such Notice
Holder receives a Selling Confirmation and (y) the third Business Day after the
related Selling Notice has been received by the Company; provided that in the
--------
event the Company elects to take the actions permitted by Section 2(b)(ii), the
commencement of the Selling Period shall be deferred until such later date as
the Company delivers a Selling Confirmation. A Notice Holder shall not sell any
Registrable Securities pursuant to the Shelf Registration Statement or the
Prospectus after the expiration of the applicable Selling Period without giving
a new Selling Notice pursuant to Section 2(b) hereof and receiving a new Selling
Confirmation. Notwithstanding the foregoing, the Company shall not under any
circumstances be entitled to exercise its right under this paragraph to defer
the commencement of a Selling Period or its right under Section 3(c)(2) to defer
existing Selling Periods, in the aggregate, more than one time in any three
month period or three times in any twelve month period, and the period in which
a Selling Period is deferred shall not exceed thirty days. In no event shall the
Company be permitted to extend the period during which the commencement of any
such Selling Period is deferred (whether pursuant to this paragraph or Section
3(c)(2)) from and after the date a Notice Holder provides a Selling Notice to
the Company in accordance with this Section 2(b) (a "Deferral Period") beyond
such thirty day period.
In the event the Company elects to take the actions described in
Section 2(b)(ii), the Company will, at such time as it is in compliance with
Section 3(b) and as use of the Prospectus may be resumed, immediately provide
Selling Confirmations to all Notice Holders.
(c) The parties hereto agree that the Holders of the Registrable
Securities will suffer damages, and that it would not be feasible to ascertain
the extent of such damages with precision, if (i) the Shelf Registration
Statement has not been filed within the later to occur of (A) sixty days after
the Closing Date or (B) thirty days after the consummation of the Acquisition,
(ii) the Shelf Registration Statement has not been declared effective under the
Act within (A) ninety days after the Closing Date or (B) if the Acquisition
occurs sixty days or more after the Closing Date, thirty days after such Shelf
Registration Statement is filed with the Commission, (iii) prior to the end of
the Shelf Registration Period, the
5
<PAGE>
Commission shall have issued a stop order suspending the effectiveness of the
Shelf Registration Statement or proceedings have been initiated with respect to
the Shelf Registration Statement under Section 8(d) or 8(e) of the Act, (iv) the
aggregate number of days in any one Deferral Period exceeds the periods
permitted pursuant to Section 2(b) hereof or (v) the number of Deferral Periods
exceeds the number permitted pursuant to Section 2(b) hereof (each of the events
of a type described in any of the foregoing clauses (i) through (v) are
individually referred to herein as an "Event"; and the date (a) sixty days after
the Closing Date or thirty days after the consummation of the Acquisition, as
applicable, in the case of clause (i), (b) ninety days following the Closing
Date or thirty days after the Shelf Registration Statement is filed with the
Commission, as applicable, in the case of clause (ii), (c) on which the
effectiveness of the Shelf Registration Statement has been suspended or
proceedings with respect to the Shelf Registration Statement under Section 8(d)
or 8(e) of the Act have been commenced in the case of clause (iii), (d) on which
the duration of a Deferral Period exceeds the periods permitted by Section 2(b)
hereof in the case of clause (iv), and (e) of the commencement of a Deferral
Period that causes the limit on the number of Deferral Periods under Section
2(b) hereof to be exceeded in the case of clause (v), are referred to herein as
an "Event Date"). Events shall be deemed to continue until the date of the
termination of such Event, which shall be the following date with respect to the
respective types of Events: the date the Registration Statement is filed in the
case of an Event of the type described in clause (i), the date the Registration
Statement is declared effective under the Act in the case of an Event described
in clause (ii), the date that all stop orders suspending effectiveness of the
Shelf Registration Statement have been removed and the proceedings initiated
with respect to the Shelf Registration Statement under Section 8(d) or 8(e) of
the Act have terminated, as the case may be, in the case of Events of the types
described in clause (iii), termination of the Deferral Period which caused the
aggregate number of days in any one Deferral Period to exceed the number
permitted by Section 2(b) to be exceeded in the case of Events of the type
described in clause (iv), and termination of the Deferral Period the
commencement of which caused the number of Deferral Periods permitted by Section
2(b)(ii) to be exceeded in the case of Events of the type described in clause
(v).
Accordingly, upon the occurrence of any Event and until such time as
there are no Events which have occurred and are continuing (a "Damages Accrual
Period"), commencing on the Event Date on which such Damages Accrual Period
began, the Company agrees to pay, as liquidated damages, and not as a penalty,
an additional amount (the "Liquidated Damages") to each Holder of Registrable
Securities, accruing at a rate equal to one-half of one percent per annum (50
basis points) on (i) where such Registrable Securities are Securities, the
aggregate principal amount of such Securities held by such Holder and (ii) where
such Registrable Securities are shares of Common Stock issued upon conversion of
Securities, the aggregate principal amount of Securities that were converted
into such shares. Notwithstanding the foregoing, no Liquidated Damages shall
accrue as to any Securities or shares of Common Stock from and after the earlier
of (x) the date such Securities are no longer Registrable Securities, and (y)
the expiration of the Shelf Registration Period. The rate of accrual of the
Liquidated Damages with respect to any period shall not exceed the rate provided
for in this paragraph notwithstanding the occurrence of multiple concurrent
Events.
6
<PAGE>
Liquidated Damages due on any Securities or Common Stock shall be
payable on each Interest Payment Date on the Securities occurring (or if there
are no Securities outstanding, which would have occurred) during the Damages
Accrual Period and on the Interest Payment Date immediately following (or which
would have followed) the termination of such Period (a "Damages Payment Date").
The Company shall pay the Liquidated Damages due on any Securities or Common
Stock by depositing with the Trustee under the Indenture, in trust, for the
benefit of the Holders of Securities or Common Stock entitled thereto, at least
one Business Day prior to the applicable Damages Payment Date, sums sufficient
to pay the Liquidated Damages accrued or accruing since the last preceding
Damages Payment Date to such Damages Payment Date. The Liquidated Damages shall
be paid on each Damages Payment Date to the Holders of record of the Registrable
Securities (the "Record Holders") on the 1st day of April or the 1st day of
October (each a "Record Date") immediately preceding such Damages Payment Date
by wire transfer of immediately available funds to the accounts specified by
them or by mailing checks to their registered addresses as they appear in the
Securities register or stock transfer books of the Company, if no such accounts
have been specified on or before the applicable Record Date. The Trustee shall
be entitled, on behalf of the Holders of Securities and Common Stock, to seek
any available remedy for the enforcement of this Agreement, including for the
payment of such Liquidated Damages. Notwithstanding the foregoing, the parties
agree that the sole remedy payable for a violation of the terms of this
Agreement with respect to which Liquidated Damages are expressly provided shall
be such Liquidated Damages. Nothing shall preclude a Holder of Registrable
Securities from pursuing or obtaining specific performance or other equitable
relief with respect to any violation of this Agreement for which liquidated
damages are not expressly provided by this Agreement.
All of the Company's obligations set forth in this Section 2(c) which
are outstanding with respect to any Registrable Securities at the time such
Security ceases to be a Registrable Security shall survive until such time as
all such obligations with respect to such security have been satisfied in full
(notwithstanding termination of the Agreement).
The parties hereto agree that the Liquidated Damages provided for in
this Section 2(c) constitute a reasonable estimate of the damages that may be
incurred by Holders of Registrable Securities (other than the Initial
Purchasers) by reason of the failure of the Shelf Registration Statement to be
filed or declared effective or unavailable (absolutely or as a practical matter)
for effecting resales of Registrable Securities, as the case may be, in
accordance with the provisions hereof.
3. Registration Procedures. In connection with any Shelf
-----------------------
Registration Statement, the following provisions shall apply:
(a) The Company shall furnish to you, prior to the filing thereof
with the Commission, a copy of any Shelf Registration Statement, and each
amendment thereof and each amendment or supplement, if any, to the Prospectus
included therein and shall use its best efforts to reflect in each such
document, when so filed with the Commission, such comments as Salomon Brothers
Inc reasonably may propose.
7
<PAGE>
(b) The Company shall ensure that (i) any Shelf Registration
Statement and any amendment thereto and any Prospectus forming part thereof and
any amendment or supplement thereto comply in all material respects with the Act
and the rules and regulations thereunder, (ii) any Shelf Registration Statement
and any amendment thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading and
(iii) any Prospectus forming part of any Shelf Registration Statement, and any
amendment or supplement to such Prospectus, does not include an untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading; provided that no representation or agreement is made
--------
hereby with respect to information with respect to you or any Holder required to
be included in any Shelf Registration or Prospectus pursuant to the Act or the
rules and regulations thereunder or provided by you, any Holder, or any Managing
Underwriter specifically for inclusion in any such Shelf Registration Statement
or Prospectus.
(c) (1) The Company shall advise you and the Holders and, if
requested by you or any such Holder, confirm such advice in writing:
(i) when a Shelf Registration Statement and any amendment
thereto has been filed with the Commission and when the Shelf
Registration Statement or any post-effective amendment thereto has
become effective; and
(ii) of any request by the Commission for amendments or
supplements to the Shelf Registration Statement or the Prospectus
included therein or for additional information.
(2) During any Selling Period, during the deferral of any
-------------------
Selling Period and within two Business Days of receipt by the Company of any
Selling Notice, the Company shall notify you and the Notice Holders and, if
requested by you or any such Notice Holder, confirm such notification in
writing:
(i) of the issuance by the Commission of any stop order
suspending the effectiveness of the Shelf Registration Statement or
the initiation of any proceedings for that purpose;
(ii) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the Securities
included in any Shelf Registration Statement for sale in any
jurisdiction or the initiation or threat of any proceeding for such
purpose;
(iii) of (x) the suspension of the use of the Prospectus
pursuant to Section 2(b) hereof or (y) of the happening of any event
that requires the making of any changes in the Shelf Registration
Statement or the Prospectus so that, as of such date, the statements
therein are not misleading and do not omit to state a material fact
required to be stated therein or
8
<PAGE>
necessary to make the statements therein (in the case of the
Prospectus, in light of the circumstances under which they were made)
not misleading; and
(iv) of the determination by the Company, in its judgment,
that it is advisable to suspend use of the Prospectus for valid
business reasons (not including avoidance of the Company's obligations
hereunder) including, among other things, the acquisition or
divestiture of assets, public filings with the Commission, pending
corporate developments and similar events;
which notice shall be accompanied by an instruction to defer the use of the
Prospectus until the Company delivers a Selling Confirmation whereupon any
existing Selling Period shall be deferred and shall recommence upon
delivery of the aforementioned Selling Confirmation; provided, that such
--------
Selling Period shall be extended by the number of days elapsed in such
period prior to such deferral.
(d) The Company shall use its best efforts to obtain the withdrawal
of any order suspending the effectiveness of any Shelf Registration Statement at
the earliest possible time, and in any event shall within thirty days of any
such order amend the Shelf Registration Statement in a manner reasonably
expected to obtain the withdrawal of such order, or file an additional Shelf
Registration Statement covering all of the Registrable Securities (whereupon
references herein to the Shelf Registration Statement shall be deemed to include
reference to such additional filing).
(e) The Company shall furnish to each Holder of Securities or the
Common Stock issued upon conversion thereof included within the coverage of any
Shelf Registration Statement, without charge, at least one copy of such Shelf
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, and, if the Holder so requests in writing,
all exhibits (including those incorporated by reference).
(f) The Company shall, during the Shelf Registration Period, deliver
to each Holder of Securities or the Common Stock issued upon conversion thereof
included within the coverage of any Shelf Registration Statement, without
charge, as many copies of the Prospectus (including each preliminary Prospectus)
included in such Shelf Registration Statement and any amendment or supplement
thereto as such Holder may reasonably request; and, except during such periods
as the Company shall have suspended the use of the Prospectus pursuant to
Section 2(b) or 3(c)(2), the Company consents to the use of the Prospectus or
any amendment or supplement thereto by each of the selling Holders in connection
with the offering and sale of the Securities or the Common Stock issued upon
conversion thereof covered by the Prospectus or any amendment or supplement
thereto.
(g) Prior to any offering of Securities or the Common Stock issued
upon conversion thereof pursuant to any Shelf Registration Statement, the
Company shall register or qualify or cooperate with the Holders of Securities or
the Common Stock issued upon conversion thereof included therein and their
respective counsel in connection with the registration or qualification of such
Securities or Common Stock for offer and sale under the securities or blue sky
laws of such jurisdictions as any such Holders reasonably request in
9
<PAGE>
writing and do any and all other acts or things reasonably necessary or
advisable to enable the offer and sale in such jurisdictions of the Securities
and the Common Stock issued upon conversion thereof covered by such Shelf
Registration Statement; provided, however, that the Company will not be required
-------- -------
to qualify generally to do business in any jurisdiction where it is not then so
qualified or to take any action which would subject it to general service of
process or to taxation in any such jurisdiction where it is not then so subject.
(h) The Company shall cooperate with the Holders to facilitate the
timely preparation and delivery of certificates representing Securities or the
Common Stock issued upon conversion thereof to be sold pursuant to any Shelf
Registration Statement free of any restrictive legends and in such denominations
and registered in such names as Holders may request prior to sales of Securities
or the Common Stock issued upon conversion thereof pursuant to such Shelf
Registration Statement.
(i) Upon the occurrence of any event contemplated by paragraph
(c)(2)(iii) above, the Company shall promptly prepare a post-effective amendment
to any Shelf Registration Statement or an amendment or supplement to the related
Prospectus or file any other required document so that, as thereafter delivered
(when and as permitted pursuant to Section 2(b)) to purchasers of the Securities
or the Common Stock issued upon conversion thereof included therein, the
Prospectus will not include an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
(j) The Company shall use its best efforts to cause The Depository
Trust Company ("DTC") on the first Business Day following the effective date of
any Shelf Registration Statement hereunder or as soon as possible thereafter to
remove (i) from any existing CUSIP numbers assigned to the Securities and the
Common Stock issuable upon conversion thereof any designation indicating that
such Securities or Common Stock are "restricted securities" within the meaning
of Rule 144(a)(3) of the Act, which efforts shall include delivery to DTC of a
letter executed by the Company substantially in the form of Exhibit A hereto and
(ii) any other stop or restriction on DTC's system with respect to the
Securities or Common Stock. In the event the Company is unable to cause DTC to
take the actions described in the immediately preceding sentence, the Company
shall take such actions as Salomon Brothers Inc may reasonably request to
provide, as soon as practicable, CUSIP numbers for the Securities and Common
Stock registered under such Shelf Registration Statement and to cause such CUSIP
numbers to be assigned to the Securities and Common Stock (or to the maximum
aggregate principal amount of the Securities and the maximum amount of shares of
Common Stock to which such numbers may be assigned). Upon compliance with the
foregoing requirements of this Section 3(j), the Company shall provide the
Trustee with printed certificates for such Securities and Common Stock, in a
form eligible for deposit with The Depository Trust Company.
(k) The Company shall use its best efforts to comply with all
applicable rules and regulations of the Commission and shall make generally
available to its security holders as soon as practicable after the effective
date of the applicable Shelf Registration Statement an earnings statement
satisfying the provisions of Section 11(a) of the Act and Rule 158 promulgated
by the Commission thereunder.
10
<PAGE>
(l) The Company shall cause the Indenture to be qualified under the
Trust Indenture Act in a timely manner.
(m) The Company may require each Holder of Securities or the Common
Stock issued upon conversion thereof to be sold pursuant to any Shelf
Registration Statement to furnish to the Company such information regarding the
Holder and the distribution of such Securities or Common Stock as may, from time
to time, be required by the Act and the rules and regulations promulgated
thereunder, and the obligations of the Company to any Holder hereunder shall be
expressly conditioned on the compliance of such Holder with such request.
(n) The Company shall, if requested, use its best efforts to promptly
incorporate in a Prospectus supplement or post-effective amendment to a Shelf
Registration Statement (i) such information as the Majority Holders or, if the
Securities or Common Stock are being sold in an Underwritten Offering, as the
Managing Underwriters and the Majority Holders reasonably agree should be
included therein and provide to the Company in writing for inclusion in the
Shelf Registration Statement or Prospectus, and (ii) such information as a
Holder may provide from time to time to the Company in writing for inclusion in
a Prospectus or any Shelf Registration Statement concerning such Holder and the
distribution of such Holder's Securities and Common Stock and, in either case,
shall make all required filings of such Prospectus supplement or post-effective
amendment as soon as notified of the matters to be incorporated in such
Prospectus supplement or post-effective amendment.
(o) The Company shall enter into such agreements (including
underwriting agreements) and take all other appropriate actions in order to
expedite or facilitate the registration or the disposition of the Securities or
the Common Stock issuable upon conversion thereof, and in connection therewith,
if an underwriting agreement is entered into, cause the same to contain
indemnification provisions and procedures no less favorable to the Holders than
those set forth in Section 5 (or such other provisions and procedures acceptable
to the Majority Holders and the Managing Underwriters, if any, with respect to
all parties to be indemnified pursuant to Section 5 from Holders of Securities
or the Common Stock issuable upon conversion thereof to the Company).
(p) The Company shall (i) make reasonably available for inspection by
the Holders of Securities or the Common Stock issued upon conversion thereof to
be registered under a Shelf Registration Statement, any Underwriter
participating in any disposition pursuant to such Shelf Registration Statement,
and any attorney, accountant or other agent retained by the Holders or any such
Underwriter all relevant financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries; (ii) cause the
Company's officers, directors and employees to supply all relevant information
reasonably requested by the Holders or any such Underwriter, attorney,
accountant or agent in connection with any such Shelf Registration Statement as
is customary for similar due diligence examinations; provided, however, that any
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information that is designated in writing by the Company, in good faith, as
confidential at the time of delivery of such information shall be kept
confidential by the Holders or any such Underwriter, attorney, accountant or
agent, unless disclosure thereof is made in connection with a court proceeding
or required by law, or such information has become available to the public
generally or through a third
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party without an accompanying obligation of confidentiality; (iii) make such
representations and warranties to the Holders of Securities or the Common Stock
issued upon conversion thereof registered thereunder and the Underwriters, if
any, in form, substance and scope as are customarily made by issuers to
Underwriters and covering matters including, but not limited to, those set forth
in the Purchase Agreement; (iv) obtain opinions of counsel to the Company and
updates thereof (which counsel and opinions, in form, scope and substance, shall
be reasonably satisfactory to the Managing Underwriters, if any) addressed to
each selling Holder and the Underwriters, if any, covering such matters as are
customarily covered in opinions requested in underwritten offerings and such
other matters as may be reasonably requested by such Holders and Underwriters;
(v) obtain "cold comfort" letters and updates thereof from the independent
certified public accountants of the Company (and, if necessary, any other
independent certified public accountants of any subsidiary of the Company or of
any business acquired by the Company for which financial statements and
financial data are, or are required to be, included in the Shelf Registration
Statement), addressed to each selling Holder of Securities or the Common Stock
issued upon conversion thereof registered thereunder (provided such Holder
furnishes the accountants with such representations as the accountants
customarily require in similar situations) and the Underwriters, if any, in
customary form and covering matters of the type customarily covered in "cold
comfort" letters in connection with primary underwritten offerings; and (vi)
deliver such documents and certificates as may be reasonably requested by the
Majority Holders and the Managing Underwriters, if any, including those to
evidence compliance with Section 3(i) and with any customary conditions
contained in the underwriting agreement or other agreement entered into by the
Company. The foregoing actions set forth in clauses (iii), (iv), (v) and (vi)
of this Section 3(p) shall be performed at (A) the effectiveness of such Shelf
Registration Statement and each post-effective amendment thereto and (B) each
closing under any underwriting or similar agreement as and to the extent
required thereunder.
4. Registration Expenses. The Company shall bear all expenses
---------------------
incurred in connection with the performance of its obligations under Sections 2
and 3 hereof and shall reimburse the Holders for the reasonable fees and
disbursements of one firm or counsel designated by the Majority Holders to act
as counsel for the Holders in connection therewith.
5. Indemnification and Contribution.
--------------------------------
(a) (i) In connection with any Shelf Registration Statement, the
Company agrees to indemnify and hold harmless each Holder of Securities or
Common Stock issued upon conversion thereof covered thereby (including the
Initial Purchasers), the directors, officers, employees and agents of each such
Holder and each person who controls any such Holder within the meaning of either
the Act or the Exchange Act against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become subject
under the Act, the Exchange Act or other Federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained in
the Shelf Registration Statement as originally filed or in any amendment
thereof, or in any preliminary Prospectus or Prospectus, or in any amendment
thereof or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to
12
<PAGE>
make the statements therein not misleading, and agrees to reimburse each such
indemnified party, as incurred, for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company will not
-------- -------
be liable in any case to the extent that any such loss, claim, damage or
liability arises out of or is based upon (A) any such untrue statement or
alleged untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of any such Holder or any Initial Purchaser specifically
for inclusion therein, (B) use of a Shelf Registration Statement or the related
Prospectus during a period when a stop order has been issued in respect of such
Shelf Registration or any proceedings for that purpose have been initiated or
use of a Prospectus when use of such Prospectus has been deferred pursuant to
Section 2(b); provided, further, in each case, that the Company delivered prior
-------- -------
notice, and the Holders have received such prior notice, in accordance with
Section 6(c) hereof of such stop order, initiation of proceedings or deferral or
(C) if the Holder fails to deliver a Prospectus or the then current Prospectus.
This indemnity agreement will be in addition to any liability which the Company
may otherwise have.
(ii) The Company also agrees to indemnify or contribute to
Losses, as provided in Section 5(d), of any Underwriters of Securities or the
Common Stock issued upon conversion thereof registered under a Shelf
Registration Statement, their officers and directors and each person who
controls such Underwriters on substantially the same basis as that of the
indemnification of the Initial Purchasers and the selling Holders provided in
this Section 5(a) and shall, if requested by any Holder, enter into an
underwriting agreement reflecting such agreement, as provided in Section 3(o)
hereof.
(b) Each Holder of Securities or Common Stock issued upon conversion
thereof covered by a Shelf Registration Statement (including the Initial
Purchasers) severally agrees to indemnify and hold harmless (i) the Company,
(ii) each of its directors, (iii) each of its officers who signs such Shelf
Registration Statement and (iv) each person who controls the Company within the
meaning of either the Act or the Exchange Act to the same extent as the
foregoing indemnity from the Company to each such Holder, but only with
reference to written information relating to such Holder furnished to the
Company by or on behalf of such Holder specifically for inclusion in the
documents referred to in the foregoing indemnity. This indemnity agreement will
be in addition to any liability which any such Holder may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
5 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 5, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which
13
<PAGE>
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be reasonably satisfactory to the
- -------- -------
indemnified party. Notwithstanding the indemnifying party's election to appoint
counsel to represent the indemnified party in an action, the indemnified party
shall have the right to employ separate counsel (including local counsel), and
the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel (and local counsel) if (i) the use of counsel chosen by
the indemnifying party to represent the indemnified party would present such
counsel with a conflict of interest, (ii) the actual or potential defendants in,
or targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of the institution of such action or
(iv) the indemnifying party shall authorize the indemnified party to employ
separate counsel at the expense of the indemnifying party. An indemnifying
party will not, without the prior written consent of the indemnified parties,
settle or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 5 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall have a joint and several
obligation to contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in connection
with investigating or defending same) (collectively "Losses") to which such
indemnified party may be subject in such proportion as is appropriate to reflect
the relative benefits received by such indemnifying party, on the one hand, and
such indemnified party, on the other hand, from the Initial Placement and the
Shelf Registration Statement which resulted in such Losses; provided, however,
-------- -------
that in no case shall the Initial Purchasers or any subsequent Holder of any
Securities or the Common Stock issued upon conversion thereof be responsible, in
the aggregate, for any amount in excess of the purchase discount or commission
applicable to such Security, as set forth on the cover page of the Final
Memorandum, nor shall any Underwriter be responsible for any amount in excess of
the underwriting discount or commission applicable to the Securities and Common
Stock issued upon conversion thereof purchased by such Underwriter under the
Shelf Registration Statement which resulted in such Losses. If the allocation
provided by the immediately preceding sentence is unavailable for any reason,
the indemnifying party and the indemnified party shall contribute in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of such indemnifying party, on the one hand, and such
indemnified party, on the other hand, in connection with the statements or
omissions which resulted in such Losses as well as any other relevant equitable
considerations. Benefits
14
<PAGE>
received by the Company shall be deemed to be equal to the sum of (x) the total
net proceeds from the Initial Placement (before deducting expenses) as set forth
on the cover page of the Final Memorandum and (y) the total amount of Liquidated
Damages which the Company was not required to pay as a result of registering the
Securities and Common Stock issued upon conversion thereof covered by the Shelf
Registration Statement which resulted in such Losses. Benefits received by the
Initial Purchasers shall be deemed to be equal to the total purchase discounts
and commissions as set forth on the cover page of the Final Memorandum, and
benefits received by any other Holders shall be deemed to be equal to the value
of receiving Securities or the Common Stock issuable upon conversion thereof
registered under the Act. Benefits received by any Underwriter shall be deemed
to be equal to the total underwriting discounts and commissions, as set forth on
the cover page of the Prospectus forming a part of the Shelf Registration
Statement which resulted in such Losses. Relative fault shall be determined by
reference to whether any alleged untrue statement or omission relates to
information provided by the indemnifying party, on the one hand, or by the
indemnified party, on the other hand. The parties agree that it would not be
just and equitable if contribution were determined by pro rata allocation or any
other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this
paragraph (d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 5, each person who controls a Holder within the meaning of either
the Act or the Exchange Act and each director, officer, employee and agent of
such Holder shall have the same rights to contribution as such Holder, and each
person who controls the Company within the meaning of either the Act or the
Exchange Act, each officer of the Company who shall have signed the Shelf
Registration Statement and each director of the Company shall have the same
rights to contribution as the Company, subject in each case to the applicable
terms and conditions of this paragraph (d).
(e) The provisions of this Section 5 will remain in full force and
effect, regardless of any investigation made by or on behalf of any Holder or
the Company or any of the officers, directors or controlling persons referred to
in Section 5 hereof, and will survive the sale by a Holder of Securities covered
by a Shelf Registration Statement.
6. Miscellaneous.
-------------
(a) No Inconsistent Agreements. The Company has not, as of the date
--------------------------
hereof, entered into nor shall it, on or after the date hereof, enter into, any
agreement with respect to its securities that is inconsistent with the rights
granted to the Holders herein or otherwise conflicts with the provisions hereof.
(b) Amendments and Waivers. The provisions of this Agreement,
----------------------
including the provisions of this sentence, may not be amended, qualified,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Company has obtained the written
consent of the Majority Holders; provided that, with respect to any matter that
--------
directly or indirectly affects the rights of the Initial Purchasers hereunder,
the Company shall obtain the written consent of the Initial Purchasers against
which such amendment, qualification, supplement, waiver or consent is to
15
<PAGE>
be effective. Notwithstanding the foregoing (except the foregoing proviso), a
waiver or consent to departure from the provisions hereof with respect to a
matter that relates exclusively to the rights of Holders whose Securities are
being sold pursuant to a Shelf Registration Statement and that does not directly
or indirectly affect the rights of other Holders may be given by the Majority
Holders, determined on the basis of Securities being sold rather than registered
under such Shelf Registration Statement.
(c) Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telex, telecopier, or air courier guaranteeing overnight delivery:
1. if to you, initially at the address set forth in the
Purchase Agreement;
2. if to any other Holder, at the most current address given by
such Holder to the Company in accordance with the provisions of this
Section 6(c), which address initially is, with respect to each Holder,
the address of such Holder maintained by the Registrar under the
Indenture, with a copy in like manner to Salomon Brothers Inc; and
3. if to the Company, initially at its address set forth in the
Purchase Agreement.
All such notices and communications shall be deemed to have been duly
given when received, if delivered by hand or air courier, and when sent, if sent
by first-class mail, telex or telecopier.
The Initial Purchasers or the Company by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
(d) Successors and Assigns. This Agreement shall inure to the
----------------------
benefit of and be binding upon the successors and assigns of each of the
parties, including, without the need for an express assignment or any consent by
the Company thereto, subsequent Holders. The Company hereby agrees to extend the
benefits of this Agreement to any Holder and any such Holder may specifically
enforce the provisions of this Agreement as if an original party hereto.
(e) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
16
<PAGE>
(g) Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of California applicable to agreements
made and to be performed in said State, without regard to the conflicts of law
rules thereof.
(h) Severability. In the event that any one or more of the
------------
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired
or affected thereby, it being intended that all of the rights and privileges of
the parties shall be enforceable to the fullest extent permitted by law.
(i) Securities Held by the Company, etc. Whenever the consent or
-----------------------------------
approval of Holders of a specified percentage of principal amount of Securities
or the Common Stock issued upon conversion thereof is required hereunder,
Securities or the Common Stock issued upon conversion thereof held by the
Company or its Affiliates (other than subsequent Holders of Securities or the
Common Stock issuable upon conversion thereof if such subsequent Holders are
deemed to be Affiliates solely by reason of their holdings of such Securities)
shall not be counted in determining whether such consent or approval was given
by the Holders of such required percentage.
Please confirm that the foregoing correctly sets forth the agreement
between the Company and you.
Very truly yours,
PLASMA & MATERIALS TECHNOLOGIES, INC.
/s/ John W. LaValle
---------------------------------------
Name: John W. LaValle
Title: Secretary
The foregoing Agreement is hereby
confirmed and accepted as of the date
first above written.
SALOMON BROTHERS INC
UNTERBERG HARRIS
By Salomon Brothers Inc
/s/ Douglas A. Brengel
- -------------------------------------
Name: Douglas A. Brengel
Title: Managing Director
17
<PAGE>
EXHIBIT A
FORM OF LETTER TO BE PROVIDED BY ISSUER TO
THE DEPOSITORY TRUST COMPANY
The Depositary Trust Company
7 Hanover Square, 23rd Floor
New York, NY 10004
Re: 7 1/8% Convertible Subordinated Notes Due 2001 (the "Convertible
Notes") of Plasma & Materials Technologies, Inc. (the "Issuer")
Ladies and Gentlemen:
Please be advised that the Securities and Exchange Commission has declared
effective a Registration Statement on Form S-3 under the Securities Act of 1933,
as amended, with regard to all of the Convertible Notes referenced above and the
Common Stock, no par value, of Plasma & Materials Technologies, Inc. issuable
upon conversion of the Convertible Notes (collectively, the "Securities").
Accordingly, there is no longer any restriction as to whom the Securities may be
sold and any restrictions on the CUSIP designation are no longer appropriate and
may be removed. I understand that upon receipt of this letter, DTC will remove
any stop or restriction on its system with respect to this issue.
As always, please do not hesitate to call if we can be of further
assistance.
Very truly yours,
Authorized Officer
A-1
<PAGE>
EXHIBIT 10.21
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement"), dated November 15, 1996, is
entered into by and between Nigel Wheeler ("Executive") and Plasma & Materials
Technologies, Inc., a California corporation ("Employer").
WITNESSETH:
WHEREAS, concurrently herewith, Employer will acquire all of the outstanding
shares of Electrotech Limited and Electrotech Equipments Limited, companies
organized under the laws of England and in the business of manufacturing and
selling semiconductor capital equipment (the "Business");
WHEREAS, Executive has been employed as the Chief Executive Officer of
Electrotech Limited and Electrotech Equipments Limited and has skills and
experience in the Business and the technology associated therewith; and
WHEREAS, Employer desires to obtain Executive's services for the conduct of
its Business, and Executive desires to be employed in such Business by and for
Employer.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein set forth, the parties hereto agree as follows:
1. Definitions. As used in this Agreement, the following terms shall have
the meanings set forth below.
(a) "Affiliate" means any corporation, partnership, limited liability
company or other person or entity that directly, or indirectly through one
or more intermediaries, controls or is controlled by, or is under common
control with, the person or entity specified. For the purposes hereof,
"control" means both the right to direct or cause the direction of the
management and policies of an entity, whether through ownership of voting
rights, by contract or otherwise, including with limitation the right to
sell or cause the sale of all or substantially all of the assets of such
entity.
(b) "Board" means the Board of Directors of Employer.
(c) "Disability" or "Disabled" has the meaning set forth in Section 10(b)
hereof.
(d) "Effective Date of Termination" has the meaning set forth in Section
10(f) hereof.
(e) "Termination For Cause" means the termination by Employer of
Executive's employment because he has been convicted of a felony or been
adjudged by a court of competent jurisdiction to have defrauded Employer,
any Affiliate of Employer or any customer of Employer.
(f) "Termination For Good Reason" means a termination by Executive of his
employment with Employer based on (i) a material diminution of Executive's
duties as President and Chief Operating Officer, (ii) the imposition by the
Board of a requirement that Executive report to persons other than the
Board, the Chairman or the Chief Executive Officer, (iii) the breach by
Employer of any of its material obligations under this Agreement or (iv)
Employer ceasing to be engaged in the Business or in any business that is
substantially similar to the Business.
(g) "Termination Without Cause" means a termination by Employer of
Executive's employment that is not a Termination For Cause or a termination
resulting from Executive's death or Disability.
(h) "Termination Without Good Reason" means a termination by Executive of
his employment with Employer that is not a Termination For Good Reason or a
termination resulting from Executive's death or Disability.
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2. Employment. Employer hereby employs Executive as an executive officer and
Executive hereby accepts such employment upon the terms and conditions
hereinafter set forth.
3. Duties.
(a) Executive shall perform his services as President and Chief Operating
Officer, under the supervision of the Chairman and the Chief Executive
Officer of Employer and within the framework of the policies and objectives
of Employer. In such capacity, Executive (i) shall exercise general day-to-
day supervisory responsibility and operational and management authority
over Employer and its officers and executives and all of its Affiliates and
their respective officers and executives, (ii) shall provide advice and
input to members of Employer's Board and shall, at their request, attend
all meetings of the Board for that purpose, and (iii) shall perform such
other duties as may be assigned to him from time to time by the Board.
(b) Executive shall devote his entire business time, attention and
energies to the performance of his duties and functions under this
Agreement and shall not during the term of his employment hereunder be
engaged in any other substantial business activity for gain, profit or
other pecuniary advantage. Executive shall faithfully, loyally and
diligently perform his assigned duties and functions and shall not engage
in any activities whatsoever which conflict with the objectives of
Employer's Business during the term of his employment hereunder.
(c) Employer shall furnish Executive with such facilities at the
corporate offices of Electrotech Limited and services as are suitable to
his position and adequate for the performance of his duties and functions
hereunder. It is understood that Executive's "home base" location shall be
at Ringland Way, Newport, Gwent NP62TA.
4. Director. During the term of this Agreement, Executive shall be nominated
to serve as a director of the Board of Employer.
5. Term. The term of this Agreement shall commence on the date hereof and
shall continue until _________ , 1999 (the "Initial Term"), and thereafter shall
continue for additional one-year periods unless and until such time as either
party hereto provides written notice to the other thirty (30) days prior to
the end of the third year of the Initial Term or prior to the end of any such
additional one-year period (such additional one-year periods, together with
the Initial Term, the "Employment Term"). Upon any termination of Executive's
employment hereunder (other than a Termination Without Good Reason or a
Termination for Cause), Executive shall be retained as a consultant to
Employer until all of the stock options described in Section 6(c), and any
other stock options which may have been granted to Executive, have fully
vested, upon acceleration or otherwise.
6. Compensation. Employer shall pay to Executive, as compensation for the
services agreed to be rendered by Executive hereunder, the following:
(a) Base Salary. During the Employment Term, Employer shall pay to
Executive a salary of (pounds) 163,000 per annum payable in British pounds
sterling; provided, that the amount of such base salary shall be reviewed
and may be adjusted by Employer annually during the Employment Term in
light of the conditions then existing and the services then being rendered
by Executive, in which case Executive's base salary shall be such higher
amount as may be determined by Employer (such annual base salary, as in
effect from time to time, being referred to herein as the "Base Salary").
The Base Salary shall be payable monthly, less appropriate deductions for
federal, state and local income taxes, FICA contributions and any other
deductions required by law or authorized by Executive.
(b) Annual Performance Bonus. In addition to the Base Salary, Executive
shall be eligible to receive an annual performance bonus (the "Annual
Bonus") for each year of service (or any part thereof in the event of
termination of Executive's employment hereunder (other than a Termination
Without Good Reason or a Termination for Cause), in which case any Annual
Bonus shall be prorated for such partial year) during the Employment Term
(each such year or any partial such year referred to as an "Annual Bonus
Period"),
2
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to the maximum extent of eligibility permitted to executive officers, or if
no such bonus is permitted, in such amount, if any, as may be determined by
the Board in its discretion. Each Annual Bonus shall be payable in British
pounds sterling at the exchange rate prevailing at the date of payment
which shall be in accordance with Employer's normal annual bonus payment
schedule, less appropriate deductions for federal, state, and local income
taxes, FICA contributions and any other deductions required by law or
authorized by Executive.
(c) Options. Concurrently herewith, the Compensation Committee of the
Board of Employer shall grant to Executive, pursuant to Employer's 1991
Stock Option Plan, options to acquire 200,000 shares of Employer's common
stock at an exercise price equal to the fair market value of the underlying
shares of common stock on the date of such grant, 25% of which shall vest
on each anniversary of the date of grant over a period of four years (the
"Options), subject to Executive's continuous employment or consultancy with
Employer pursuant hereto.
(d) Payment of Additional Amount. Employer shall pay to Executive, for so
long as Executive is not a resident of the United States, as additional
payments, such amounts as may be necessary in order that every net payment
of Executive's salary, bonus or other payment, after deducting or
withholding for or on account of any present or future tax, assessment or
other governmental charge imposed upon, or as a result of, such payment by
the government of the United States or any state thereof or any political
subdivision or taxing authority of or in the United States, will not be
less than (x) the gross amount provided for herein, as may be adjusted by
the Board of Directors pursuant hereto, then due and payable minus (y) the
amount of income taxes payable by Executive or required to be deducted or
withheld for or on account of any present or future tax, assessment or
other governmental charge.
7. Benefits. During the Employment Term, Executive shall receive benefits,
in England, including, but not limited to (a) life insurance equal to four
times Executive's Base Salary, (b) medical insurance for Executive and his
family, (c) home telephone for business and private use, (d) company car for
business and private use, including fuel, (e) continuation of pension plan
benefits, including employer contributions based on actuarials, (f) business
class travel, and (g) all benefits offered to other executive officers of the
Employer to the maximum extent so offered.
8. Expenses. During the Employment Term, Employer shall reimburse Executive
for all reasonable travel, entertainment and other expenses incurred or paid
by Executive in performing his duties and functions hereunder, upon
Executive's submission of reasonable documentation thereof.
9. Vacations. In addition to such holidays, sick leave and personal time off
as is allowed under the policies of Employer to management generally,
Executive shall be entitled during each twelve-month period during the
Employment Term to twenty-five (25) days of vacation and all statutory bank
holidays of England, with full pay. The duration of such vacations and the
time or times when they shall be taken will be determined by Executive in
consultation with Employer.
10. Termination.
(a) Death. The Employment Term will terminate automatically in the event
of Executive's death. Upon such termination, Executive will be entitled to
receive the payments prescribed by subsection 10(c)(iii).
(b) Disability. If Executive becomes Disabled, Employer may elect to give
written notice of termination to Executive, which notice will specify the
date of termination. Upon such termination, Executive will be released from
any duties and obligations hereunder (except as set forth in Section 11)
and Executive will be entitled to receive the payments prescribed by
subsection 10(c)(i). "Disabled" as used in this Agreement means the
inability of Executive substantially to perform his duties for a period of
180 consecutive days or for a total of 180 days or more in any 360-day
period as a result of a physical or mental illness, all as determined in
good faith and on a reasonable basis by the Board. The Board will be deemed
to have acted in good faith only if it acts in reliance on the advice of at
least two physicians reasonably believed by the Board to be competent in
such matters.
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(c) Termination For Cause or Without Good Reason. The Employment Term may
be terminated by a Termination For Cause or a Termination Without Good
Reason. Upon either such termination, Executive will be released from any
duties and obligations under this Agreement (except as set forth in Section
11) and Executive will be entitled to receive the payments prescribed by
subsection 10(e)(ii). Executive will not be entitled to any other payment
in the event of a Termination For Cause or a Termination Without Good
Reason other than any payment prescribed by Section 10(c)(ii) relating to
the period before the Effective Date of Termination.
(d) Termination Without Cause or For Good Reason. The Employment Term
will be terminated by a Termination Without Cause or a Termination For Good
Reason. Upon either such termination, Executive will be released from any
duties under this Agreement (except as set forth in Section 11) and
Executive will be entitled to receive the payments prescribed by subsection
(10(e)(i).
(e) Payment Upon Termination. If the Employment Term is terminated before
the third anniversary of the date of this Agreement, in addition to any
rights Executive may have with respect to payments, if any, pursuant to
Section 6, Employer will pay to Executive the following compensation which
when paid will be deemed to be paid in final settlement of any claims in
connection with such termination Executive may have against Employer or any
Affiliate of Employer, and after such payments are made, Employer and its
Affiliates will have no liability or obligation of any kind to Executive in
connection with such termination:
(i) Payment Upon Termination Without Cause or For Good Reason. If a
Termination Without Cause or a Termination For Good Reason has
occurred, or if Executive becomes Disabled, Executive will be entitled
to receive his Base Salary (at the rate of effect at the Effective Date
of Termination) through the remainder of the Employment Term (which,
for purposes of this Section 10(e)(i), shall not be less than one
year), without setoff or reduction in respect of such amounts, if any,
earned by Executive from other employment after the Effective Date of
Termination either, at Executive's election, in a lump sum payment or
in the same manner as paid prior to the Effective Date of Termination
and Executive shall receive all the benefits to which he is entitled
pursuant to clauses (a), (b) and (e) of Section 7 through the remainder
of the Employment Term.
(ii) Payment Upon Termination For Cause or Without Good Reason. If a
Termination For Cause or a Termination Without Good Reason has
occurred, Employer will pay to Executive his Base Salary (as in effect
on the Effective Date of Termination) and other benefits, including
accrued vacation pay, (without setoff or reduction in respect of such
amounts) to which Executive is entitled pursuant to this Agreement
through the Effective Date of Termination.
(iii) Payment Upon Termination in the Event of Death. In the case of
a termination of this Agreement upon Executive's death, Executive's
estate shall be entitled to receive his Base Salary (at the rate in
effect on the date of death) through the end of the month in which the
Effective Date of Termination occurs and other benefits including those
specified in Section 7 hereof through the end of the month in which the
Effective Date of Termination occurs and accrued vacation pay (all
without setoff or reduction in respect of such amounts).
(f) Effective Date of Termination. The "Effective Date of Termination" of
Executive's employment will be: (i) in the case of a Termination Without
Cause, on the date specified in a notice given by Employer to Executive or,
if no date is specified, on the date such notice is given; (ii) in the case
of a Termination Without Good Reason, on the date specified in a notice
given by Executive to Employer or, if no date is specified, on the date
such notice is given; (iii) in the case of a Termination For Good Reason,
the date notice of termination is given by Executive; or (iv) in the case
of a Termination For Cause, the date notice of termination is given by
Employer; (v) in the case of Executive's death, the date of death; and (vi)
in case Executive is determined to be Disabled, the date the Board
determines that Executive is Disabled.
11. Confidentiality. During the Employment Term, Executive will not use for
his own advantage or disclose any proprietary or confidential information
relating to the business operations or properties of Employer,
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any Affiliate of Employer or any of their respective customers, suppliers,
landlords, licensors or licensees. Upon the expiration or termination of the
Employment Term, Executive will surrender and deliver to Employer all
documents and information of every kind relating to or connected with Employer
and its Affiliates and their respective businesses, customers, suppliers,
landlord, licensors and licensees. The foregoing confidential information
provisions shall not apply to information which: (i) is or becomes publicly
known through no wrongful act of the Executive; (ii) is rightfully received
from any third party without restriction and without breach by Executive of
this Employment Agreement; or (iii) is independently developed by Executive
after the term of his employment hereunder or is independently developed by a
competitor of Employer at any time. The provisions of this Section 11 shall
survive the expiration and/or termination of this Employment Agreement for a
period of two years from the Effective Date of Termination.
12. Non-Compete. During the Noncompetition Term (as defined below) Executive
will not directly or indirectly engage in competition with Employer by being
associated in any capacity (whether as employee, owner, consultant, agent or
otherwise) with any person or entity that sells or offers to sell any products
or services which are in the same line of business as the Business and which
directly compete in any area in the world where the Employer's products or
services are offered or sold by Employer. The foregoing sentence shall not
preclude the ownership by Executive of 10% or less of any class of security of
any issuer which is registered pursuant to the Securities Exchange Act of
1934, as amended, or which is listed on the London Stock Exchange. As used
herein, "Noncompetition Term" means the period of Executive's employment with
Employer and for such period after an Effective Date of Termination during
which Executive continues to receive any payments equal to his Base Salary
pursuant to subsection 10(e)(i) above.
13. Arbitration. Any dispute or controversy arising out of or relating to
this Agreement or any claimed breach hereof shall be settled, at the request
of either party, by an arbitration proceeding conducted in accordance with the
rules of the American Arbitration Association ("AAA"), with the award
determined to be appropriate by the arbitrator therein to be final, non-
appealable and binding on the parties hereto, and with judgment upon such
award as is rendered in any such arbitration proceeding available for entry
and enforcement in any court having jurisdiction of the parties hereto. The
arbitrator shall be an impartial arbitrator qualified to serve in accordance
with the rules of the AAA and shall be reasonably acceptable to each of the
Employer and the Executive. If no such acceptable arbitrator is so appointed
within fifteen (15) days after the initial request for arbitration of such
disputed matter, each of the parties promptly shall designate a person
qualified to serve as an arbitrator in accordance with the rules of the AAA,
and the two persons so designated promptly shall select the arbitrator from
among those persons qualified to serve in accordance with the rules of the
AAA. The arbitration shall be held in the State of California in the United
States at the time of the initiation of any such proceedings, or in such other
place as may be agreed upon at the time by the parties. The expenses of the
arbitration proceeding shall be borne by Employer.
14. Indemnification.
(a) Employer shall indemnify Executive to the fullest extent permitted by
the Articles of Incorporation and Bylaws of Employer as in effect on the
date hereof (or if such Articles of Incorporation or Bylaws are amended to
broaden such indemnification, then such broadened indemnification terms
shall apply) against all costs, expenses, liabilities and losses
(including, without limitation, attorneys' fees, judgments, penalties and
amounts paid in settlement) reasonably incurred by Executive in connection
with any action, suit or proceeding, whether civil, criminal,
administrative or investigative in which Executive is made, or is
threatened to be made, a party to or a witness in such action, suit or
proceeding by reason of the fact that he is or was an officer, director,
consultant, agent or Executive of the Employer or of any of Employer's
Affiliates or is or was serving as an officer, consultant, director,
member, Executive, trustee, agent or fiduciary of any other entity at the
request of the Employer (a "Proceeding"). Employer shall maintain policies
for insurance coverage of Executive to the fullest extent available to any
other director or officer of Employer, which shall include director and
officer insurance and insurance coverage relating to acts of Employer prior
to the commencement of Executive's employment hereunder. Employer shall
enter into an
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indemnification agreement with Executive to the same extent Employer has
entered into such agreements with other executive officers of Employer.
(b) The indemnification provided to Executive hereunder is in addition
to, and not in lieu of, any additional indemnification to which he may be
entitled pursuant to Employer's Articles of Incorporation or Bylaws, any
insurance maintained by Employer from time to time providing coverage to
Executive and other officers and directors of Employer, or any separate
written agreement with Executive. The provisions of this Section 14 shall
survive any termination of this Agreement.
15. Amendment and Modification. This Agreement contains the entire agreement
between the parties with respect to the subject matter hereof. Such to
applicable law and upon the consent of the Board of Employer, this Agreement
may be amended, modified and supplemented by written agreement of Employer and
Executive with respect to any of the terms contained herein.
16. Waiver of Compliance. Any failure of either party to comply with any
obligation, covenant, agreement or condition on its part contained herein may
be expressly waived in writing by the other party, but such waiver or failure
to insist upon strict compliance shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure. Whenever this Agreement
requires or permits consent by or on behalf of any party, such consent shall
be given in writing.
17. Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to
have been duly given if delivered by hand, sent by registered or certified
U.S. Mail, postage prepaid, commercial overnight courier service or
transmitted by facsimile and shall be deemed served or delivered to the
addressee at the address for such notice specified below when hand delivered,
upon confirmation of sending when sent by facsimile, on the second day after
being sent when sent by overnight delivery or ten (10) days after having been
mailed, certified or registered mail with postage prepaid:
If to Employer: If to Executive:
Plasma & Materials Technologies, Inc. Nigel Wheeler
9255 Deering Avenue Ringland Way
Chatsworth, CA 91311 Newport, Gwent NP62TA
Attention: Chief Executive Officer Facsimile: 011-44-1-633-414-040
Facsimile: (818) 886-8756
or, in the case of either such party, to such substitute address as such party
may designate from time to time for purposes of notices to be given to such
party hereunder, which substitute address shall be designated as such in a
written notice given to the other party addressed as aforesaid.
18. Assignment. This Agreement shall inure to the benefit of Executive and
Employer and be binding upon the successors and general assigns of Employer.
This Agreement shall not be assignable without consent of the parties hereto
which consent may be given or withheld in the sole discretion of the parties
hereto.
19. Enforceability. In the event it is determined that this Agreement is
unenforceable in any respect, it is the mutual intent of the parties that it
be construed to apply and be enforceable to the maximum extent permitted by
applicable law.
20. Applicable Law. This Agreement shall be construed and enforced in
accordance with the laws applicable to contracts executed, delivered and fully
to be performed in the State of California.
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IN WITNESS WHEREOF, the parties have executed this Agreement to be effective
on and as of the day and year first above written.
EMPLOYER:
PLASMA & MATERIALS TECHNOLOGIES,
INC.
By: /s/ Gregor A. Campbell
----------------------------------
Name: Gregor A. Campbell
Title: President and Chief
Financial Officer
EXECUTIVE:
/s/ Nigel Wheeler
-------------------------------------
Nigel Wheeler
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EXHIBIT 10.22
REGISTRATION AGREEMENT
THIS REGISTRATION AGREEMENT (this "Agreement") is made and entered into as
of November 15, 1996 by and between Plasma & Materials Technologies, Inc., a
California corporation (the "Company"), and Christopher D. Dobson, an
individual (the "Investor"). This Agreement is entered into pursuant to that
certain Share Purchase Agreement dated as of July 17, 1996 (the "Share
Purchase Agreement") by and among the Company, Electrotech Limited,
Electrotech Equipments Limited, the Investor and certain other parties.
1. Definitions. For purposes of this Agreement:
(a) The term "register," "registered," and "registration" refer to a
registration effected by preparing and filing with the Securities and
Exchange Commission (the "SEC") a registration statement or similar
document in compliance with the Securities Act of 1933, as amended (the
"Securities Act"), and the declaration or ordering of effectiveness of such
registration statement or document; and
(b) The term "Registrable Securities" means the 4,853,334 shares of the
Company's Common Stock issued to the Investor pursuant to the Share
Purchase Agreement, and any Common Stock of the Company issued as (or
issuable upon the conversion or exercise of any warrant, right or other
security which is issued as) a dividend or other distribution with respect
to, or in exchange for or in replacement of, such Common Stock.
2. Request for Registration.
(a) If the Company shall receive at any time after the first anniversary
of this Agreement, a written request from the Investor that the Company
file a registration statement under the Securities Act covering the
registration of any Registrable Securities (provided that the aggregate
amount of such Registrable Securities would exceed the amount specified in
paragraph (e) of Rule 144 under the Securities Act), then the Company shall
file as soon as practicable, and in any event within 90 days of the receipt
of such request, a registration statement under the Securities Act covering
all Registrable Securities which the Investor so requests to be registered.
(b) The Company is obligated to effect only three such registrations
pursuant to this Section 2; provided, however, that the Company shall not
be obligated to effect any such registration if the Company has, within the
six months preceding the date of receipt of the request for such
registration, already effected one such registration.
(c) Notwithstanding the foregoing, if the Company shall furnish to the
Investor a certificate signed by the President or Chief Executive Officer
of the Company stating that, in the good faith judgment of the Board of
Directors of the Company, it would be seriously detrimental to the Company
and its shareholders for such registration statement to be filed and it is
therefore essential to defer the filing of such registration statement, the
Company shall have the right to defer such filing for a period of not more
than an additional 120 days after receipt of the request of the Investor
referred to in Section 2(a) above; provided, however, that the Company may
not utilize this right more than once in any 12-month period.
3. Company Registration. If (but without any obligation to do so) the
Company proposes to register (including for this purpose a registration
effected by the Company for shareholders other than the Investor) any of its
stock or other securities under the Securities Act in connection with the
public offering, on or after the first anniversary of this Agreement, of such
securities solely for cash (other than a registration relating solely to the
sale of securities to participants in a Company stock option, purchase or
similar benefit plan or an SEC Rule 145 transaction), the Company shall, at
such time, promptly give the Investor written notice of such registration.
Upon the written request of the Investor given within 30 days after the
effectiveness of such notice by the Company, the Company shall, subject to the
provisions of Section 8, cause to be registered under the Securities Act all
of the Registrable Securities that the Investor has requested to be
registered. In the event the Investor determines not to include any or all of
the Registrable Securities held by the Investor in any such registration, the
Investor shall continue to have the right to include such Registrable
Securities in any subsequent registration, pursuant to the terms of this
Section 3.
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4. Obligations of the Company. Whenever required under this Agreement to
effect the registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with respect
to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and, upon the request of the
Investor, keep such registration statement effective for up to 120 days.
(b) Prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of
the Securities Act with respect to the disposition of all securities
covered by such registration statement.
(c) Furnish to the Investor such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of
the Securities Act, and such other documents as he may reasonably request
in order to facilitate the disposition of his Registrable Securities.
(d) Use its best efforts to register and qualify the securities covered
by such registration statement under such other securities or Blue Sky laws
of such jurisdictions as shall be reasonably requested by the Investor,
provided that the Company shall not be required in connection therewith or
as a condition thereto to qualify to do business or to file a general
consent to service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. The
Investor shall also enter into and perform its obligations under such an
agreement.
(f) Notify the Investor 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 result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing.
(g) Furnish, at the request of the Investor, on the date that such
Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this Agreement, if such
securities are being sold through underwriters, or, if such securities are
not being sold through underwriters, on the date that the registration
statement with respect to such securities becomes effective, (i) an
opinion, dated such date, of the counsel representing the Company for the
purposes of such registration, in form and substance as is customarily
given to underwriters in an underwritten public offering, addressed to the
underwriters, if any, and to the Investor, and (ii) a letter dated such
date, from the independent certified public accountants of the Company, in
form and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering, addressed
to the underwriters, if any, and to the Investor.
5. Furnish Information. It shall be a condition precedent to the obligations
of the Company to take any action pursuant to this Agreement that the Investor
shall furnish to the Company such information regarding himself, the
Registrable Securities held by him, and the intended method of disposition of
such securities as shall be required to effect the registration of the
Registrable Securities.
6. Expenses of Demand Registrations. All expenses other than underwriting
discounts and commissions incurred by the Company in connection with
registrations, filings or qualifications pursuant to Section 2, including
(without limitation) all registration, filing and qualification fees,
printers' and accounting fees, and fees and disbursements of counsel for the
Company, shall be borne by the Company.
7. Expenses of Company Registration. The Company shall bear and pay all
expenses incurred by the Company in connection with any registration, filing
or qualification of Registrable Securities with respect to the registrations
pursuant to Section 3, including (without limitation) all registration, filing
and qualification fees, printers' and accounting fees and fees and
disbursements of counsel for the Company, but excluding underwriting discounts
and commissions relating to Registrable Securities.
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8. Underwriting Requirements. In connection with any offering involving an
underwriting of shares being issued by the Company, the Company shall not be
required under Section 3 to include any of the Investor's securities in such
underwriting unless the Investor accepts the terms of the underwriting as
agreed upon between the Company and the underwriters selected by the Company,
and then only in such quantity as will not, in the opinion of the
underwriters, jeopardize the success of the offering by the Company. If the
total amount of securities, including Registrable Securities, requested by
stockholders to be included in such offering exceeds the amount of securities
sold other than by the Company that the underwriters reasonably believe
compatible with the success of the offering, then the Company shall be
required to include in the offering only that number of such securities,
including Registrable Securities, which the underwriters believe will not
jeopardize the success of the offering (the securities so included to be
apportioned pro rata among the selling shareholders according to the total
amount of securities entitled to be included therein owned by each selling
shareholder or in such other proportions as shall mutually be agreed to by
such selling shareholders), provided that any shares being sold by the
Investor in exercising a demand registration right granted in Section 2, or by
any other shareholder exercising a demand registration right similar to that
granted in Section 2, shall not be excluded from such offering.
9. Delay of Registration. The Investor shall not have any right to obtain or
seek an injunction restraining or otherwise delaying any registration as the
result of any controversy that might arise with respect to the interpretation
or implementation of this Agreement.
10. Indemnification. In the event any Registrable Securities are included in
a registration statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless the Investor, any underwriter (as defined in the Securities Act)
for the Investor and each person, if any, who controls such Investor or
underwriter within the meaning of the Securities Act or the Securities
Exchange Act of 1934, as amended (the "Exchange Act") against any losses,
claims, damages or liabilities (joint or several) to which they may become
subject under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations (collectively a "violation"):
(i) any untrue statement or alleged untrue statement of a material fact
contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, (ii) the omission or alleged omission to state therein
a material fact required to be stated therein, or necessary to make the
statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any state
securities law or any Rule or regulation promulgated under the Securities
Act, the Exchange Act or any state securities law; and, within 30 days
after the Company receives a written request containing a description in
reasonable detail of the expenses incurred, the Company will advance to the
Investor and each underwriter or controlling person any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action, whether prior
to or after final disposition of any claim or action (unless there has been
a final determination that such Investor, underwriter or controlling person
is not entitled to be indemnified for such expenses); provided, that at the
time of such advance, such Investor, underwriter or controlling person
shall agree to repay the amounts advanced if it is ultimately determined
that he or she is not entitled to be indemnified pursuant to the terms of
this Agreement; provided, however, that the indemnity agreement contained
in this Section 10(a) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is
effected without the consent of the Company (which consent shall not be
unreasonably withheld), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a violation which occurs in reliance upon
and in conformity with written information furnished expressly for use in
connection with such registration by any such Investor, underwriter or
controlling person.
(b) To the extent permitted by law, the Investor will indemnify and hold
harmless the Company, each of its directors, each of its officers who have
signed the registration statement, each person, if any, who controls the
Company within the meaning of the Securities Act, and any underwriter,
against any losses,
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claims, damages or liabilities (joint or several) to which the Company or
any such director, officer, controlling person, or underwriter may become
subject, under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise out of or are based upon any violation,
in each case to the extent (and only to the extent) that such violation
occurs in reliance upon and in conformity with written information
furnished by the Investor expressly for use in connection with such
registration; and the Investor will reimburse as incurred any legal or
other expenses reasonably incurred by the Company or any such director,
officer, controlling person or underwriter in connection with investigating
or defending any such loss, claim, damage, liability, or action; provided,
however, that the indemnity agreement contained in this Section 10(b) shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of
the Investor, which consent shall not be unreasonably withheld; provided,
that, in no event shall any indemnity under this Section 10(b) exceed the
net proceeds from the offering received by the Investor.
(c) Promptly after receipt by an indemnified party under this Section 10
of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to
be made against any indemnifying party under this Section 10, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with
counsel mutually satisfactory to the parties; provided, however, that an
indemnified party (together with all other indemnified parties that may be
represented without conflict by one counsel) shall have the right to retain
its own counsel, with the fees and expenses to be paid by the indemnifying
party, if representation of such indemnified party by the counsel retained
by the indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend
such action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 10, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under
this Section 10.
(d) The obligations of the Company and the Investor under this Section 10
shall survive the completion of any offering of Registrable Securities in a
registration statement under this Agreement, and otherwise.
(e) If the indemnification provided for in this Section 10 is held by a
court of competent jurisdiction to be unavailable to an indemnified party
with respect to any loss, liability, claim, damage or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall contribute to the amount paid or payable
by such indemnified party as a result of such loss, liability, claim,
damage or expense in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the
indemnified party on the other in connection with the statements or
omissions that resulted in such loss, liability, claim, damage or expense
as well as any other relevant equitable considerations. The relative fault
of the indemnifying party and of the indemnified party shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact
relates to information supplied by the indemnifying party or by the
indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. Notwithstanding the foregoing, to the extent that the provisions
on indemnification and contribution contained in the underwriting agreement
entered into in connection with the underwritten public offering are in
conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
11. Termination of Registration Rights. The Company's obligations pursuant
to this Agreement shall terminate when the Investor can sell all of the
Registrable Securities pursuant to Rule 144 under the Securities Act during
any 90-day period.
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13. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without regard to
principles of conflicts of laws.
14. Entire Agreement. This Agreement is intended by the parties hereto as a
final expression of their agreement and intended to be a complete and
exclusive statement of the parties hereto in respect of the subject matter
contained herein.
15. Notices. Unless otherwise provided, any notice required or permitted
under this Agreement shall be given in writing and shall be deemed effective
when given upon personal delivery to the party to be notified or, if sent by
telex or telecopier, upon receipt of the correct answer back, or three
business days after deposit with the United States Post Office, by registered
or certified mail, or upon delivery by Federal Express, DHL or similar
courier, in each case postage and delivery charges prepaid and addressed to
the party to be notified at the address indicated for such party on the
signature page hereof, or at such other address as such party may designate by
ten days' advance written notice to the other parties.
IN WITNESS WHEREOF, the Company, each of the Investors and the Founder have
caused this Agreement to be signed by an officer or partner thereunto duly
authorized, all as of the date first written above.
PLASMA & MATERIALS TECHNOLOGIES,
INC.
By: /s/ Gregor A. Campbell
---------------------------------
Name: Dr. Gregor A. Campbell
---------------------------
Title: President and Chief
Executive Officer
--------------------------
Address: 9255 Deering Avenue
----------------------------
Chatsworth, CA 91311
----------------------------
/s/ Christopher D. Dobson
-------------------------------------
CHRISTOPHER D. DOBSON
Address: Elberton Manov
----------------------------
Elberton, Bristol UK
----------------------------
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